1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK 2 - - - - - - - - - - - - - - X 3 UNITED STATES OF AMERICA, : CR 96 1016(S-1) 4 v. : U.S. Courthouse 5 Uniondale, New York BRUCE W. GORDON, WHO'S WHO 6 WORLD WIDE REGISTRY, INC., : STERLING WHO'S WHO, INC., 7 TARA GARBOSKI, ORAL FRANK OSMAN, LAURA WEITZ, ANNETTE 8 HALEY, SCOTT MICHAELSON, : STEVE RUBIN, and MARTIN 9 REFFSIN, : TRANSCRIPT OF TRIAL 10 Defendants. :March 24, 1998 11 - - - - - - - - - - - - - - X 8:30 o'clock a.m. 12 BEFORE: 13 HONORABLE ARTHUR D. SPATT, U.S.D.J. and a jury 14 APPEARANCES: 15 For the Government: ZACHARY W. CARTER 16 United States Attorney One Pierrepont Plaza 17 Brooklyn, New York 11201 By: RONALD G. WHITE, ESQ. 18 CECIL SCOTT, ESQ. Assistant U.S. Attorneys 19 For the Defendants: NORMAN
TRABULUS, ESQ. 20 For Bruce W. Gordon 170 Old Country Road, Suite 600 21 Mineola, New York 11501 22 EDWARD P. JENKS, ESQ. For Who's Who Worldwide 23 Registry, Inc. and Sterling Who's, Who, Inc. 24 332 Willis Avenue Mineola, New York 11501 25 (cont'd)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8835
1 APPEARANCES (cont'd): 2 GARY SCHOER, ESQ. For Tara Garboski 3 6800 Jericho Turnpike Syosset, New York 11791 4 ALAN M. NELSON, ESQ. 5 For Oral Frank Osman 3000 Marcus Avenue 6 Lake Success, New York 11042 7 WINSTON LEE, ESQ. For Laura Weitz 8 319 Broadway New York, New York 10007 9 MARTIN GEDULDIG, ESQ. 10 For Annette Haley 400 South Oyster Bay Road 11 Hicksville, New York 11801 12 JAMES C. NEVILLE, ESQ. For Scott Michaelson 13 225 Broadway New York, New York 10007 14 THOMAS F.X. DUNN, ESQ. 15 For Steve Rubin 150 Nassau Street 16 New York, New York 10038 17 JOHN S. WALLENSTEIN, ESQ. For Martin Reffsin 18 215 Hilton Avenue Hempstead, New York 11551 19 20 Court Reporter: HARRY RAPAPORT, CSR United States District Court 21 Two Uniondale Avenue Uniondale, New York 11553 22 (516) 485-6558 23 Proceedings recorded by mechanical stenography, transcript 24 produced by Computer-Assisted Transcription 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8836
1 M O R N I N G S E S S I O N 2 3 (Whereupon, the following takes place in the 4 absence of the jury.) 5 THE COURT: Everybody here? 6 MR. DUNN: My client had a problem with a tooth. 7 He was at a dentist at 7:30 this morning. He should be here shortly. But he explained to me and he wanted me to 9 tell you that it is okay to proceed. 10 THE COURT: He
waives his presence and 11 understands he has a right to be here? 12 MR. DUNN: Yes, your Honor. 13 THE COURT: Going over the open matters now. 14 I revised the multiple conspiracy charge to 15 reflect the language that we discussed. Namely, if the 16 government establishes beyond a reasonable doubt that the 17 conspiracy, a conspiracy existed, the government must 18 prove that it is the single conspiracy alleged in the 19 indictment, etcetera. 20 Now, with respect to the Pinkerton charge, I have 21 somewhat revised the government's submission, which is the 22 Sand instruction, 19-13, as follows: There is another 23 method by which you may evaluate the possible guilt of all 24 the defendants other than the defendant Martin Reffsin -- 25 this having to do only with the mail fraud -- for the HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8837
1 substantive mail fraud charges in the indictment, even if 2 you do not find that the government satisfied its burden 3 of proof with respect to each element of the substantive 4 crime. If in light of my instructions you find beyond a 5 reasonable doubt that the defendant you are considering 6 was a member of the conspiracy charged in Count 1 of the 7 indictment and thus, guilty of the criminal charge, then you may also, and you are not required to -- and I 9 underlined this in the charge, then you may also, but are 10 not required to find him or her guilty of the substantive 11 mail fraud crime charged against him or her, provided you 12 find beyond a reasonable doubt each of the following five 13 elements. 14 First, that the mail fraud crime charged in the 15 substantive count was committed. 16 Second, that the person you find, person or 17 persons you find actually committed the charge were 18 members of the conspiracy you found existed. 19 Third, that the substantive crime was committed 20 pursuant to the common plan and understanding you found to 21 exist among the conspirators. 22 Fourth, that the defendant you are considering 23 was a member of that conspiracy at the time the 24 substantive crime was committed. And I am underlining 25 that also. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8838
1 Fifth, that the defendant you are considering 2 could have reasonably foreseen that the substantive crime 3 might be committed by his co-conspirators. 4 If you find all five of these elements to exist 5 beyond a reasonable doubt, then you may find the defendant 6 you are considering guilty of the substantive mail fraud 7 crime charged against him or her, even though he or she did not personally participate in the acts constituting 9 the crime, or did not have actual knowledge of it. 10 The reason for this rule is simply that a 11 co-conspirator who commits a substantive crime pursuant to 12 a conspiracy is deemed to be the agent of the other 13 conspirators. Therefore, all of the conspirators who were 14 members of the conspiracy at the time the substantive 15 crime was committed must bear criminal responsibility for 16 the commission of the substantive crimes. 17 If, however, you are not satisfied as to the 18 existence of any of these five elements, then you may not 19 find the defendant guilty of the substantive crime, unless 20 the government proves beyond a reasonable doubt that the 21 defendant personally committed, or aided and abetted the 22 commission of the substantive crime charged. 23 I will leave the lesser included for the time 24 being and get back to it. 25 The reliance charges. I am going to charge the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8839
1 reliance charges by both the defendant Gordon and the 2 defendant Reffsin on the Tevya theory. 3 Is that similar to the res ips loquitur? No, it 4 is not. 5 MR. TRABULUS: Are you going to strike the other 6 charge, your Honor, the one we talked about. 7 THE COURT: I am going to charge exactly as you set it forth in your request, your second request to the 9 charge. 10 MR. TRABULUS: My concern with respect to the 11 Reffsin charge, the second paragraph, on the other hand -- 12 I think we talked about crossing out, on the other hand, 13 you are persuaded beyond a reasonable doubt that because 14 that can shift the burden. 15 THE COURT: Right. Correct, that comes out.
16 That portion comes out. 17 Now, as to the three defendants not in the 18 conspiracy during the periods of time, I have accepted -- 19 let's take Osman first, I have added to it. For example, 20 it says, if you find that the government proved beyond a 21 reasonable doubt the existence of the single conspiracy 22 alleged in count one of the indictment, I instruct you as 23 a matter of law the defendant Oral Frank Osman cannot 24 found to be a member of the conspiracy. And I added, or 25 guilty of the subsequent mail fraud counts.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8840
1 MR. NELSON: Thank you, your Honor. 2 THE COURT: For the period of time. Correct? 3 MR. NELSON: Yes. 4 THE COURT: And then I add at the end, the 5 verdict sheet will set forth the names of each defendant 6 you will consider with regard to the mail fraud
counts, 7 two through 52. MR. NELSON: That's acceptable, your Honor. 9 THE COURT: Then for Steve Rubin, I also added 10 the same thing I instruct you as a matter of law the 11 defendant Steve Rubin cannot be found to be a matter -- 12 guilty of the conspiracy or any of is substantive counts 13 before March of 1994 since he was not employed before that 14 date. And also, he cannot be found to be a member of the 15 conspiracy, or guilty of the mail fraud counts for the 16 period of time after March 17th, 1995. 17 Mr. Jenks, as far as the defendant Sterling Who's 18 Who. 19 MR. JENKS: Yes, your Honor. 20 THE COURT: The same thing with Sterling, 21 Mr. Jenks. Can't be guilty of the substantive mail fraud 22 count. 23 MR. JENKS: The verdict sheet seems to sort of 24 explain that. 25 THE COURT: I wanted to explain it anyway. H
ARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8841 1 MR. JENKS: Yes. 2 THE COURT: That leaves the interesting subject 3 of the lesser included counts. 4 I have checked the law to the extent I could -- 5 of course, I can't keep up with Ms. Scott, but I try 6 because I have more help than she has. And as to the 7 Starnas, S T A R N A S, there is an interesting case that came back after -- came down after Starnas, and the point 9 is, should the jury be instructed that they must find the 10 defendant not guilty before they go to the lesser 11 included? Or should the jury be instructed that either 12 they find the defendant not guilty, or they are unable to 13 agree on a verdict. 14 Now, I happen to have written an opinion in the 15 Appellate Division -- I don't remember what it was or 16 when -- in which I soundly criticized the Starnas case.
17 And we were affirm by the New York Court of Appeals, but 18 we say in the state court it has nothing to do with this. 19 And I want to put on the record I am not a state court 20 judge. I don't have any state court leanings. I forgot 21 everything I learned in the state court. Please put that 22 on the record. But in the opinion I wrote I said that the 23 People have a right to get a decision on the main count 24 which they put in the indictment, which they tried to 25 prove, to put all their resources behind to prove that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8842
1 count, not anything else, just that. And I said they have 2 a right to get an up or down decision on that. 3 Now, Judge Friendly did not agree with that. And 4 that was way before my time. But in a case called United 5 States against Torres, T O R R E S, decided many
years 6 after Starnas, and the citation is 901 F.2d 205, Second 7 Circuit, 1990, cert. denied, 498 U.S. 906, and the Second Circuit again took up the interesting question. 9 The defendant contended in Torres, that in 10 accordance with Tsanas, he sought an instruction that -- 11 the judge in this I believe was Judge Mahoney who wrote 12 this, said in reviewing Starnas it calls for the Court to 13 instruct the jury to consider the greater offense first, 14 and then charge either, one, that it should consider the 15 lesser offense only, if it unanimously acquitted on the 16 greater; or, two, it should consider the lesser offense if 17 it could not agree on the greater. We added that neither 18 charge was wrong as a matter of law, but that the 19 defendant's preference should be honored upon request. 20 In this case the defendant made a request that 21 there be a unanimous decision on the main count, that 22 there be an acquittal before you go down to the lesser. 23 Then there was some talk about a special 24 interrogatory, which the Second Circuit said, don't use. 25 This is the interesting part of this decision, HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8843 1 and it is a field of law that is up in the air in the 2 federal court. It is about time that they took another 3 look at it. I am not suggesting that this case be the 4 vehicle for it, but listen to what the Second Circuit said 5 in 1990. 6 Quote, in any event, we do not believe that any 7 error which may have occurred in the District Court's instruction calls for reversal. As the foregoing recital 9 should make clear, this is a difficult and unsettled area 10 of the law, end quote. 11 I am going to charge the jury that they have to 12 acquit on the tax evasion before they may consider the 13 lesser included. I think that that is the proper rule of 14 law. It prevents compromises which we should not 15 tolerate. And that's what I am going to charge. 16 MR. TRABULUS: Your Honor, for the record, I 17 would except. 18 As I submitted the further request to charge 19 yesterday there was a drafting error. And as I submitted 20 it to you it left out the fact that the jury could 21 consider the lesser after acquitting. The one that I 22 submitted today on 7207 contains the correct language. 23 And I want to clarify what I would be requesting, and I 24 know your Honor has denied it. 25 It should read, and it is the final paragraph on
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8844
1 page 2 of the defendant Gordon's further request to 2 charge. 3
THE COURT: Is this your second or third? 4 MR. TRABULUS: The second one, the one I handed 5 up yesterday. The last sentence on the second page, after 6 the words "if you," the first two words, there should have 7 been included "unanimously find the defendant Bruce Gordon not guilty of tax evasion, or if you -- then it goes back 9 to the text. 10 The complete sentence would read: If you 11 unanimously find the defendant Bruce Gordon not guilty of 12 tax evasion, or if you should, after all reasonable 13 efforts be unable to reach a unanimous verdict on tax 14 evasion, you may then proceed to determine whether the 15 defendant has been proven guilty of the lesser offense of 16 willful failure to pay a tax when due. 17 Thank you. 18 THE COURT: All right. 19 With respect to the lesser included, this is 20 what -- first of all, Mr. Wallenstein, have you decided 21 whether you are entitled to it? 22 MR. WALLENSTEIN: I may be entitled to it, but I 23 don't want it, particularly if they have to find him first 24 not guilty on the first charge, and I will settle with 25 that.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8845
1 THE COURT: I am a little confused myself on your 2 last request to charge, the one received this morning. 3 In your second request to charge where you raised 4 the lesser included, you say there is -- 5 MR. TRABULUS: What page? 6 THE COURT: Where you talk about 7203, and you 7 say failure to pay tax. MR. TRABULUS: Willful failure to pay tax. 9 THE COURT: Yes. 10 7203 says that any person required by this title 11 or by regulations or authority thereof to -- requires to 12 make a return or willfully fails to make a return -- 13 MR. TRABULUS:
You have to continue. 14 THE COURT: You mean the latter part of the 15 statute? 16 MR. TRABULUS: Yes. 17 THE COURT: I have to take a look at it. So hold 18 on for now. 19 I see now. I read this from another charge. 20 MR. TRABULUS: There is no Sand charge for this 21 arrangement. 22 THE COURT: I know that. And that's why I asked 23 you for help, Mr. Trabulus. 24 MR. TRABULUS: Yes. 25 THE COURT: Here is what I am going to charge on
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8846
1 the lesser included. 2 To get it straight again, the two lesser included 3 are filing a false tax return and willfully failing to pay 4 tax. 5 MR. TRABULUS: False document. I don't think it 6 should be a return. 7 THE COURT: The document being -- MR. TRABULUS: The document being some document 9 fi
led in connection with the offer in compromise or the 10 offers in compromise. 11 THE COURT: What documents were those? 12 MR. TRABULUS: It is a whole bunch. I don't 13 think it should be a return. That would be wrong. 14 MS. SCOTT: The filing of a false return is a 15 felony, which is also charged. 16 THE COURT: All right. 17 Let's see if I have it here, and you can listen 18 to this and give me any corrections you want. 19 Lesser included offenses. 20 The law permits the jury to find the accused 21 guilty of any lesser offense, which is necessarily 22 included in the crime charged in the indictment. In this 23 case tax evasion. 24 Whenever such a course is consistent with the 25 facts found by the jury from the evidence in the case, and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8847
1 with the law given and
the instructions of the Court, if 2 the jury should unanimously find the accused not guilty of 3 the crime charged in Count 57, while finding Bruce Gordon 4 not guilty of the crime charged in Count 57 of the 5 indictment, namely, tax evasion, then you must proceed to 6 determine whether the guilt of the defendant has been 7 proven as to the lesser offenses which are necessarily included in the crime charged. The crime of willfully 9 attempting to evade or defeat a tax, which is the crime 10 charged in Count 57 of the indictment, necessarily 11 includes the lesser offenses of filing a false tax 12 document, and willful failure to pay tax when due, the 13 elements of which I shall now describe to you. 14 Filing of a false tax document. Section 7207 of 15 Title 26 of the United States Code provides as follows: 16 Any person who willfully delivers or discloses to the 17
Secretary of the Treasury any list, return, account, 18 statement or other document known by him to be fraudulent 19 or to be false as to any material matter shall be guilty 20 of an offense against the United States. 21 In considering this offense -- with regard to 22 this offense you should consider it independently of -- I 23 don't want to use "consider" twice. 24 See if you have any objection to this: With 25 regard to this offense you should consider it HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8848 1 independently of your review of the lesser included 2 offense of willfully failing to pay a tax when due. The 3 two lesser included offenses are independent of one 4 another and your verdict may properly be not guilty on 5 both, not guilty on one lesser include offense and guilty 6 on the other; or guilty on both lesser included offenses, 7 depending which course is consistent with the facts you find from the evidence in the case, and with the law given 9 and the instructions of the Court. 10 I shall now describe to you the elements of 11 filing a false document with the Internal Revenue Service 12 in violation of Section 7207 of the Internal Revenue 13 Service. 14 I have taken your instructions. I find they are 15 correct and I am adopting them, since I couldn't find 16 anything else. That's strange. 17 MR. TRABULUS: Yes. 18 THE COURT: Section -- I have already said what 19 the section provides. 20 I instruct you that filing a document with the 21 Internal Revenue Service constitutes delivery or 22 disclosure of that document to the secretary of the 23 treasury. 24 In order for the government to establish the 25 charge of filing a false document with the Internal
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8849
1 Revenue Service, it must establish beyond a reasonable 2 doubt each of the following two elements. 3 First, that the defendant Bruce Gordon filed a 4 document with the Internal Revenue Service which he knew 5 to be fraudulent or false as to a material matter; 6 Second, that the defendant Bruce Gordon did so 7 willfully; that is as a voluntary and intentional violation of a known legal duty. 9 It is not necessary that the government be 10 deprived of the payment of any tax by reason of the filing 11 of the document, or that the document was filed with the 12 intent of evading the payment of any tax. 13 The time of the offense would have to be included 14 within the same time period as alleged in the tax evasion 15 counts. 16 The document or documents filed would have to
17 have been filed in connection with the offer in compromise 18 or the amended offer in compromise. 19 Therefore, if the government establishes beyond a 20 reasonable doubt that the defendant Bruce Gordon filed a 21 false or fraudulent document with the Internal Revenue 22 Service, knowing it to be such as to a material matter, 23 and he did so willfully in the deliberate violation of a 24 known legal duty, and not as a result of accident or 25 negligence, then you would have a sufficient basis on
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8850
1 which to convict him of that offense. 2 The second lesser included, willful failure to 3 pay tax when due. 4 I shall now instruct you as to the elements of 5 willful failure to pay tax when due. 6 In order for the government to prove the charge 7 of willful failure to pay tax when due, it must establish beyond a reasonable doubt each of the following three 9 elements: 10 First, that at the time of the alleged offense 11 the defendant Bruce Gordon owed a federal tax that was 12 then due. That tax would have to be the same tax that is 13 alleged in the tax evasion count -- taxes representing an 14 income tax liability of Bruce Gordon from the years 1981 15 through 1990 at the time of the offense would also have to 16 be included within the same time period as alleged in the 17 tax evasion count. 18 Secondly, that the defendant Bruce Gordon did not 19 pay that tax at that time. 20 Third, that the defendant Bruce Gordon failed to 21 pay that tax knowingly and willfully. 22 An omission to act is done knowingly and 23 willfully if it is purposeful and willful, and not because 24 of mistake, accident, negligence, inability to perform the
25 act or other innocent reason.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8851
1 A failure to act is done willfully, if it is a 2 voluntary and intentional violation of a known legal duty. 3 Therefore, if the government establishes beyond a 4 reasonable doubt that the defendant Bruce Gordon knew that 5 he had taxes which were then due, owed taxes which were 6 then due and he intentionally failed to pay them, and not 7 as a result of accident, negligent, or financial inability to pay, then he would have willfully failed to pay taxes 9 when due, and you would have a sufficient basis on which 10 to convict him of that offense. 11 MR. TRABULUS: Your Honor, on that same further 12 request to charge that I filed yesterday, beginning on the 13 first page, there was material in bold type which 14 distinguishes tax evasion from willful omission to pay a 15 tax that is due, and sets forth the difference between tax 16 evasion which requires an affirmative active evasion, and 17 a failure to pay tax when due, it simply has the omission 18 to pay the tax. 19 I think it is important that that language, or 20 language that is substantially the same import, be 21 charged, so the jury understands that tax evasion requires 22 an affirmative act of evasion. 23 THE COURT: I will charge it. I agree. You are 24 referring to the matter in bold type? 25 MR. TRABULUS: Right.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8852
1 THE COURT: And it goes to the middle of the 2 second page? 3 MR. TRABULUS: That's right. 4 THE COURT: Very well. 5 Anything else? 6 Now, I have -- 7 MR. NELSON: Your Honor, over the evening I was reviewing some of
my notes, and there is one other request 9 to charge I would ask of the Court, and that's with 10 respect to judicial notice, Sand's 5-5. I asked the Court 11 to take judicial notice of the existence of the statute 12 under McKinney's law -- 13 THE COURT: I have not understood the first part, 14 judicial notice on what? 15 MR. NELSON: 5-5, the statute is McKinney's 16 Consolidated Law, McKinney's General Business Law, Section 17 396M, subdivision 3(b), as in Boy. 18 THE COURT: Have you got it there? 19 MR. NELSON: Yes, I do, your Honor. 20 THE COURT: Can I see it? 21 (Handed to the Court.) 22 THE COURT: That's the one about the 30-day 23 delay. 24 MR. NELSON: Yes, and the Court took judicial 25 notice on page 4,688 of the transcript during the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8853
1 examination of Mr. West. 2 THE COURT: I will do that. 3 MR. NELSON: Thank you. 4 THE COURT: Anything else? 5 MR. NELSON: No, your Honor. 6 THE COURT: I wanted to ask counsel, Mr. Trabulus 7 and Mr. White, how to put the lesser included offenses in the verdict sheet. And my idea is as follows: After I 9 put the tax evasion. 10 After Count 57, alleged evasion of payment of 11 tax, I will have to put that in the event the jury finds 12 the defendant Bruce Gordon not guilty of Count 57, you are 13 to answer -- you are to determine the two lesser included 14 offenses listed immediately below, something like that. 15 MR. TRABULUS: Your Honor, in light of your 16 Honor's ruling on the Starnas request that sounds correct, 17 and I say that without waiving my Starnas exception. 18 THE COURT: What do you think of that, 19 Mr. White? 20 MR. WHITE: That's fine, your Honor. 21 THE COURT: Anything else before we bring in the 22 jury when they get here? All ready to go? You are all 23 set, Mr. White? 24 MR. WHITE: I am ready, your Honor. 25 THE COURT: Are you sufficiently alert and a good
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8854
1 night's sleep and all of that? 2 MR. WHITE: I am alert. I wouldn't say I had a 3 good night sleep though. 4 Can I ask, your Honor, are we planning to take a 5 break at 11:00 o'clock? 6 THE COURT: Yes. 7 What I propose to do is to tell the jury what will happen, the order of summations, which I am going to 9 get right now. 10 I am going to tell the jury the order of 11 summations which I will confirm with you now, so make sure 12 there is no change. 13 The government's initial, or summation in 14 chief -- I will tell them that the government has a15 rebuttal summation also -- followed by the defendant 16 Martin Reffsin by John Wallenstein, the defendant Tara 17 Garboski by Gary Schoer, the defendant Who's Who and 18 Sterling Who's Who Who's Who by Edward Jenks, the 19 defendant Oral Frank Osman by Alan Nelson, the defendant 20 Steve Rubin by Thomas Dunn, the defendant Annette Haley by 21 Martin Geduldig, the defendant Laura Weitz by Winston Lee, 22 the defendant Scott Michaelson by James Neville, the 23 defendant Bruce Gordon by Norman Trabulus, followed by the 24 government's rebuttal. 25 Any objection to my telling the jury that?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8855
1 MR. TRABULUS: No. 2 THE COURT: All right. 3 The jurors have all not arrived. As soon as they 4 are here we will start. They are filling out their menus
5 now, as a matter of fact. 6 MR. SCHOER: Judge, as you know, last night we 7 tried to establish a list of the exhibits. I have two 8 exhibits which I am just not sure of with respect to the 9 defendants, as to whether or not, first of all, they were 10 introduced, and what exactly they were. 11 I understand that your Honor was keeping an 12 informal list. So I would ask if you could just look at13 that list.14 THE COURT: Do you want to take a look at it?15 MR. SCHOER: Yes, Judge. 16 THE COURT: I don't think I put down any notes 17 that would be revealing next to these. 18 MR. SCHOER: The first question is whether in 19 fact they are in evidence. I am not sure they are. 20 THE COURT: Which are they? 21 MR. SCHOER: AK and AU. 22 THE COURT: I have AK as being in evidence. It 23 was an information charged against Steven Watstein. 24 MR. JENKS: Yes, that's in evidence. 25 MR. SCHOER: And AU?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8856
1 THE COURT: AU I have for identification. 2 MR. TRABULUS: I am pretty sure it is a document 3 I questioned the witness about and it is not in evidence. 4 I can check. But I don't have it with me. 5 THE COURT: A letter from Sandra Barnes to 6 Bailey, April 8th -- 7 MR. SCHOER: That's not in evidence. 8 THE COURT: Right. 9 MR. SCHOER: Thank you, Judge. 10 MR. TRABULUS: Can we take a five-minute break? 11 THE COURT: Sure. 12 MS. SCOTT: I have something --13 THE COURT: After Ms. Scott tells us.14 Before you do that, do you have the indictment in15 good shape? 16 MS. SCOTT: Yes, I do. 17 THE COURT: Did you make some for your 18 colleagues? 19 MS. SCOTT: Yes, I did. 20 THE COURT:
Give them out to them, please. 21 (Distributed.) 22 THE COURT: This is the final one? 23 MS. SCOTT: Yes, but I forgot on the last page to 24 take out the reference to 7201 and the money laundering 25 count, so I have to print out the last page and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8857
1 redistribute it. It is not the last page, but I believe 2 it is the second to the last page. 3 THE COURT: I don't know what you mean. 4 MS. SCOTT: Yesterday your Honor deleted the 5 reference to the tax code and the money laundering count. 6 And I had forgotten to do that, take that out and I will 7 do that. 8 THE COURT: That leaves only the concealing 9 count? 10 MS. SCOTT: Yes. 11 I have a question with respect to the defendant's 12 request to charge on 7203, and there is a section here13 that your Honor read into the record that an omission to14 act is done knowingly and willfully if it is purposeful,15 willful, and not because of mistake, accident, negligence, 16 inability to perform the act or other innocent reason. 17 I would just ask if you can take out inability to 18 perform the act or inability to pay? I have not found it 19 anywhere in Sand? 20 MR. TRABULUS: How can it be willful if someone 21 wasn't able to pay? 22 THE COURT: I will leave it in. Probably with 23 this kind of an offense, and I think it is a misdemeanor, 24 isn't it? 25 MR. TRABULUS: Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8858
1 THE COURT: With this kind of offense if you are 2 financially unable to pay it cannot been willful. I will 3 leave it in. 4 MS. SCOTT: All right. But it is not in Sand. 5 THE COURT: I know that. But I
think it is so. 6 MS. SCOTT: Thank you, your Honor. 7 THE COURT: We will give you five minutes.
9 (Whereupon, a recess is taken.) 10 11 THE CLERK: Jury entering. 12 (Whereupon, the jury at this time entered the 13 courtroom.) 14 THE COURT: Good morning, members of the jury. 15 Please be seated. 16 Thank you again for your continued diligence, 17 sense of responsibility. 18 We are entering the closing phrase of this 19 trial. You will hear the summations or closing arguments 20 of counsel. 21 MR. NEVILLE: Your Honor, speaking of diligence, 22 can I go get Mr. Geduldig? 23 THE COURT: Surely. 24 (Whereupon, at this time there was a pause in the 25 proceedings.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8859
1 THE COURT: All right, first is now here. 2 Everybody was here very early this morning, 8:30, 3 as a matter of fact. 4 I will tell you what will be happening over the 5 next two days. 6 You will hear the summations and closing 7 arguments of counsel, probably in the following order. First, the government's summation -- initial 9 summation or summation in chief, because the government 10 will have two summations, the first summation and the last 11 summation. 12 Following the government will be the defendant 13 Martin Reffsin by John Wallenstein. Then the defendant 14 Tara Garboski by Gary Schoer. Then the defendants Who's 15 Who Worldwide and Sterling Who's Who, by Edward Jenks. 16 Then the defendant Oral Frank Osman by Alan Nelson. Then 17 followed by the defendant Steve Rubin by Thomas Dunn. 18 Then the defendant Annette Haley by Martin Geduldig. 19 Which is then followed by the defendant Laura Weitz by
20 Winston Lee. Scott Michaelson by James Neville. Then the 21 final defense summation, the defendant Bruce Gordon by 22 Norman Trabulus. 23 After the defense summations the government will 24 have a rebuttal summation. That will conclude the 25 summations.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8860
1 Now, I want to work as late as possible today and 2 tomorrow, so we can conclude the summations by tomorrow, 3 so I will be able to instruct you on the law on Thursday. 4 I would like to work as late as 6:00 o'clock tomorrow 5 afternoon if it is not going to inconvenience you very 6 much. The same thing tomorrow. Tomorrow we will 7 hopefully finish, whatever time it will be. Hopefully by that time. 9 When you start your deliberations, we will work 10 until 6:00 o'clock. If you do not reach a verdict, you 11 will go
home, come back the next day at 9:30 and start 12 deliberations again. 13 On Friday I have made a commitment to one of the 14 jurors to cease deliberations at 4:00 o'clock. You will 15 be under no time restraints of any kind. Take all the 16 time you need to fully consider the evidence, the issues 17 and the law. 18 You will have lunch at the expense of the United 19 States District Court. You will have from now on at our 20 expense, the Court's expense, lunch until you have reached 21 your verdict, your unanimous verdict, and that will be at 22 12:30 today hopefully. It may not fit in exactly right 23 with the summations, so we may have to change it around a 24 little bit. 25 Members of the jury, please give your attention
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8861
1 to the summation in chief of the government by Assistant
2 United States Attorney Ronald White. 3 Mr. White. 4 MR. WHITE: Thank you, your Honor. 5 Well, good morning. 6 It has taken quite a while, but you have now 7 heard all the evidence in the case. Soon you will be called upon to decide it. 9 Now, first of all, as all the lawyers give their 10 closing arguments, it is a pretty good bet that we are not 11 going to agree on very much. But the one thing that I am 12 sure all of us, the government and the defense counsel, 13 what we will agree upon, is that we owe you, the jury, a 14 debt of gratitude for your service at this trial. 15 The trial has been long, I know. I am sure it 16 was boring at times. But throughout you have been 17 attentive, diligent, and your service as jurors is 18 something that we really do all thank you for. 19 Now, as Ms. Scott told you in the government's 20 opening
statement back in January, this trial is about the 21 web of lies that was spun by the defendant Bruce Gordon 22 about the fraudulent schemes that he devised and he 23 carried out with the assistance of the other defendants. 24 Now, for the last nine or ten weeks you have 25 heard evidence about how Mr. Gordon, with the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8862 Summation - White
1 participation of the other defendants, lied to the IRS, 2 lied to the bankruptcy court, and lied to tens of 3 thousands of customers of his business, all to line his 4 own pockets, cheat his customers out of their money. 5 You have heard that the defendants in the case 6 are charged with multiple counts and a variety of 7 different offenses. But all the charges basically fall into two categories. The first category is the charges 9 against Mr. Gordon and
Mr. Reffsin, arising from their 10 scheme to hide Mr. Gordon's income from the IRS and evade 11 payment of his back taxes. 12 Now, Mr. Gordon and Mr. Reffsin are charged with 13 tax evasion, and with conspiring to defraud the government 14 by impairing the IRS in the collection of his outstanding 15 tax liability, the three and a half million dollars that 16 you heard about. 17 As part of that overall scheme they are charged 18 with other more specific substantive offenses. 19 Mr. Gordon is charged with filing three false 20 collection information statements, those forms 433 that we 21 have seen during the trial. 22 Mr. Gordon is charged with filing false tax 23 returns for the years 1991 through 1994, where he 24 misrepresented his true income. 25 Mr. Reffsin is charged with assisting Mr. Gordon
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8863 Summation - White
1 with filing those same four false tax returns. 2 You also heard that in order to cover up this tax 3 fraud scheme Mr. Gordon and Mr. Reffsin are charged with 4 obstruction of justice for trying to obstruct the Who's 5 Who Worldwide bankruptcy proceedings by submitting phony 6 documents to the Court and lying under oath in those 7 proceedings. Now, there are two obstruction of justice 9 counts. The first charge is Mr. Gordon and Mr. Reffsin, 10 relating to the phony usage logs for the Manhasset 11 condominium and that Manhattan penthouse. 12 Mr. Gordon and Reffsin are charged with 13 obstructing justice by ordering Maria Gaspar, the Who's 14 Who Worldwide controller who testified here to create 15 those logs, and by lying under oath about the use of the 16 condominium and the penthouse in the bankruptcy 17 proceeding. 18 Now, the second obstruction of justice count 19 relates only to Mr. Gordon, and that relates to his lying 20 about the ownership of Who's Who Worldwide. It relates to 21 his false statements in the bankruptcy petition and in his 22 sworn testimony where he said that his relatives, the 23 Grossmans, owned Who's Who Worldwide, and not him. 24 And you heard that Mr. Gordon is also charged 25 with money laundering, with taking the proceeds of a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8864 Summation - White
1 crime, namely, the mail fraud that is charged here, the 2 Who's Who scheme, taking that money from Who's Who, 3 sending it to Publishing Ventures, Inc., that shell 4 corporation that he formed, and then using it to buy that 5 condominium and furnish it and maintain it. That was done 6 so nothing would be in his name. He did it
to conceal his 7 ownership, his control in that money. Now, the second category of charges relate to the 9 scheme to defraud the customers of Who's Who Worldwide and 10 Sterling Who's Who that Mr. Gordon devised and which the 11 other defendants helped him carry out, Tara Garboski, 12 Mr. Osman, who are managers there, Annette Haley, Scott 13 Michaelson, Laura Weitz, and Steve Rubin, who are 14 salespeople there. 15 In addition, the two corporations themselves, 16 Who's Who Worldwide and Sterling Who's Who are charged 17 with a conspiracy to commit mail fraud, and numerous 18 counts of mail fraud, for making the false 19 misrepresentations to customers. 20 You also heard in order to cover up the fact that 21 Who's Who Worldwide hadn't actually held a conference in 22 Vietnam and Hong Kong, and that Mr. Gordon lied at a civil 23 trial where he said it actually had taken place, and for 24 that he is also charged with perjury. 25 Now, the government submits that the evidence you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8865 Summation - White
1 heard at this trial establishes that the defendants 2 knowingly participated in these fraudulent schemes, and 3 that it proved beyond a reasonable doubt that they are 4 guilty of these crimes. 5 So, what I would like to do now is to review the 6 evidence that you heard at the trial and explain how the 7 government believes it proves the defendants' guilt. Because the evidence at a trial, especially one 9 as long as this one, is kind of like a jigsaw puzzle. The 10 evidence comes in different forms from different 11 witnesses, at different times. It could sometimes be 12 difficult to figure out the significance of a particular 13 piece of evidence if you just look at it in isolation. So 14 what you need to do is to take a step back and look at the 15 whole picture and see how the pieces fit together. 16 So, what I am going to try to do is to show you 17 how all the pieces in this case fit together, and how, 18 when you look at them together they paint an unmistakeable 19 portrait of the defendant's guilt. 20 I will start with the first category of charges I 21 mentioned before, the one arising how Mr. Gordon's and 22 Mr. Reffsin's scheme to cheat the IRS. But first I need a 23 drink of water. 24 Now, you heard that by late 1991 Mr. Gordon owed 25 the IRS about three and a half million dollars in back
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8866 Summation - White
1 taxes, including the penalties and the interest on that. 2 You heard that the back taxes and penalties were
3 the result of Mr. Gordon investing in and promoting what 4 we called abusive tax shelters between 1981 and 1990. 5 Now, there is no dispute at this trial that 6 Mr. Gordon owed the IRS this money. He even signed 7 agreements with the government to pay it back. So, whether or not he owes these taxes isn't in issue. There 9 is no question that he did, and that he was supposed to 10 pay back those taxes and penalties. 11 What he and Mr. Reffsin are charged with doing is 12 evading the payment of that three and a half million by 13 concealing his income and his true financial condition 14 from the IRS when the IRS was trying to collect those back 15 taxes. 16 You heard Mr. Gordon sign two agreements with the 17 government with regard to the payment of those back taxes, 18 one was called the installment agreement, the other was 19 the collateral agreement.
20 The installment agreement was between Mr. Gordon 21 and the IRS. He signed it in September of '91. You will 22 remember it was signed by the IRS by a woman by the name 23 of Robbie Peters, whom you may recall was the very first 24 witness at this trial. In that agreement Mr. Gordon 25 agreed to repay his approximately three and a half million
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8867 Summation - White
1 dollars in back taxes in installments of a hundred dollars 2 per month. The agreement provided that any change in his 3 financial condition would be grounds for the IRS to adjust 4 the amount that he was required to pay. 5 So, even though he owed over three million 6 dollars, he had to pay just $1,200 a year under the 7 agreement. And you will recall he was able to get such a good deal because he told Ms. Peters that he was so
9 strapped for money, that he had recently been living in 10 his car. And he submitted a disclosure form, one of those 11 433-A forms, where you said he was basically in desperate 12 financial straights. 13 Now, the second agreement he signed with the 14 government was the collateral agreement, which was with 15 the Department of Justice, Tax Division. And it covered a 16 particular portion of his tax liability, the one called 17 promoter penalties. And you will recall that those were 18 with respect to the tax shelters he created, and those 19 penalties added up to about $254,000. 20 Under the agreement he was required to pay those 21 penalties back based on a sliding scale of his income. 22 The more money he paid -- excuse me, the more money he 23 made, the more he would have to pay. And the scale went 24 to the point that he would have to give the government 25
half of everything he made over $50,000.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8868 Summation - White
1 The collateral agreement also contained an 2 important provision, that the income of any corporations 3 which he owned or controlled, would also be subject to 4 that same sliding scale. 5 So, even a part from whatever salary or 6 compensation that he got personally, any income that his 7 corporations, including Who's Who Worldwide, made, would also have to be paid over to the government according to 9 that formula in that agreement. 10 Now, Mr. Gordon's huge back tax liability, and 11 these two agreements that he signed are the backdrop to 12 everything else that goes on after this. 13 So, as of the early 1990's, Mr. Gordon had a 14 built-in incentive to try to hide and minimize his income, 15 because he knew that the more money he made, the more 16 money he would have to pay to the IRS. If he told them he 17 was making a lot of money, they would tell him he has to 18 pay back as much of the three and a half million that he 19 could. If he told them that he didn't have much money and 20 that he was barely getting by, maybe they would allow him 21 just a small amount of what he owed. 22 So, I want to review with you chronologically all 23 the tax returns, disclosure forms, and financial documents 24 and letters that Mr. Gordon and Mr. Reffsin submitted to 25 the IRS between '91 and '95. And I am going to do that to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8869 Summation - White
1 show you how the evidence clearly demonstrated that they 2 were engaged in an illegal scheme to evade payments on the 3 back taxing and cheat the government. 4 Before I do that
I want to mention a few points 5 you should keep in mind in analyzing the statements that 6 Mr. Gordon and Mr. Reffsin made to the IRS over those 7 several years. Now, first of all, Mr. Trabulus in his opening 9 statement and in his questioning of various witnesses, he 10 suggested that this case was really just a technical 11 dispute about the tax law. That he and Mr. Gordon, they 12 desperately want you to believe that this is a case which 13 is about some narrow technical tax issue. They would have 14 you believe that Mr. Gordon just made an honest mistake, 15 he didn't know any better. That he and Mr. Reffsin, they 16 just didn't think certain things, like his loans from 17 Who's Who Worldwide had to be included on the tax returns 18 or on the 433s. 19 I suggest a couple of things you should keep in 20 mind as you review the evidence in determining what you
21 really think if that is really what went on here. 22 First of all, before we look at the specific 23 evidence, take a step back and look at the big picture. 24 As I mentioned before, Mr. Gordon has a big incentive to 25 make it look like he has very little income.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8870 Summation - White
1 So, how do Mr. Gordon and Mr. Reffsin arrange 2 Mr. Gordon's finances? Look at how his entire financial 3 life is organized. 4 He reports to the IRS he has no assets, and he is 5 just getting a basic salary from his company. In fact, 6 you heard that he is getting paid less than some of his 7 own employees. He is the president of the company and he is making less than some new employees. 9 But then he has his company pay all his living 10 expenses. His utility bills, his Cablevision bills, his
11 medical and dental bills, his credit card bills, his 12 clothing, his jewelry, his vacation. 13 The company first pays his rent in 1990 through 14 '92. Starting in 1993 they actually own or rent two 15 luxury apartments for him. 16 The company leases a series of luxury cars for 17 him, a BMW, then a Lexus and then a Mercedes Benz. 18 What does that tell you? When you look at the 19 big picture, what does it tell you? 20 He has an incentive to make it look like he has 21 no assets. Do you think it is just a big coincidence that 22 he and Mr. Reffsin have structured his finances in a way 23 so that there is nothing in his name and the company pays 24 all his expenses? 25 They are not stupid people, Mr. Gordon and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8871 Summation - White
1 Mr. Reffsin. Do you think it just happened to work out 2 that way? 3 You heard Mr. Reffsin even admitted in his 4 testimony that he thought when he saw that situation, that 5 maybe Mr. Gordon was doing that to conceal his income. 6 Even he thought that, he admitted. 7 Now, his whole financial life is arranged in a way that conceals just how lavage his lifestyle is. But 9 they would have you believe that that has absolutely 10 nothing to do with his outstanding back taxes, just a big 11 coincidence. 12 But you know, that if he paid for all those items 13 himself, his cars, his luxury apartments, his American 14 Express bills and everything else, he would have to pay 15 himself a bigger salary. But if he did that, the IRS 16 would see that big salary, and say, hey, if you are making 17 that kind of money, you can pay back the IRS some of the 18 three and a half million you owe us. 19 The IRS would say, hey, rather than using that 20 money to buy Armani suits and $16,000 watches, you can 21 give us some of it. 22 Now, if we can figure that out, don't you think 23 Mr. Gordon and Mr. Reffsin figured that out? 24 On top of that Mr. Gordon has not just one, but a 25 maze of different dummy corporations funneling him money
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8872 Summation - White
1 and paying his personal expenses. 2 Now, remember this chart, 3 Government's Exhibit 837. 4 I am going to go over this in more detail later, 5 but look at all the corporations and bank accounts. What 6 is the explanation for all of this? What is the 7 explanation for hundreds of thousands of dollars being shifted back and forth from one account to another? It 9 goes in one day, and a few days later it goes off to 10 somewhere else. 11 Well, you heard from Neil Ackerman, who was the 12 attorney for Who's Who Worldwide, he was Mr. Gordon's 13 friend, and that Mr. Gordon told him that one of the 14 reasons for the transfers among the corporations was 15 because of his personal tax situation with the IRS. 16 That is not the government telling you that. 17 That's Mr. Gordon's friend and attorney, Mr. Ackerman, 18 telling you that. 19 As I said before, when you are analyzing all the 20 individual pieces of evidence in the case, keep this in 21 mind. He owes the IRS millions of dollars, the more he 22 shows, the more he has to pay back. Ask yourselves, is it 23 just a coincidence that he merely set it up that all his 24 expenses were paid by the companies. 25 Another thing I ask you to keep in mind when
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8873 Summation - White
1 analyzing the numerous tax charges is the numerous lies 2 that Mr. Gordon and Mr. Reffsin told the IRS. 3 Now, if, as Mr. Trabulus suggests, Mr. Gordon 4 made an honest mistake, he just didn't realize that 5 certain monies should be considered income, or certain 6 items should have been disclosed on those forms, then 7 there is no reason at all to lie. If they honestly thought that what they were doing was proper, they would 9 have no reason to lie. 10 But you heard evidence that they lied repeatedly 11 to the IRS. And I will review these items specifically as 12 we go through the evidence. But I want to highlight a few 13 of the most blatant lies they told the IRS. 14 Now, first of all, you heard that Mr. Gordon lied 15 to the IRS about getting a loan from his sister, Joyce 16 Grossman to pay for his son's funeral expenses. You will 17 remember that in late '93 or early '94, when the IRS was 18 evaluating Mr. Gordon's offer in compromise, 19 Mr. Gagliardi, he was the revenue officer who was the 20 second witness at the trial, that he asked Mr. Gordon and 21 Mr. Reffsin for copies of Gordon's personal bank account 22 statement. And he noticed several unusually large 23 deposits in the summer of '93. And he asked Mr. Gordon 24 through Mr. Reffsin what those deposits were for. 25 You will recall Mr. Reffsin wrote back to him,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8874 Summation - White
1 and in the letter he explained that Mr. Gordon's son had 2 died in July of '93, and that the money he saw -- that 3 Gagliardi saw, was transferred into Mr. Gordon's account 4 around that time from Joyce Grossman, that it was a loan 5 from Ms. Grossman to help him pay his son's funeral 6 expenses. 7 As proof of the loan Mr. Reffsin's letter actually attached a copy of the written promissory note. 9 It was signed by Mr. Gordon, in which he promised to pay 10 the $15,000 back to Joyce Grossman. 11 This is it, Exhibit 425-A, this is the note. 12 But you heard that this story was completely and 13 utterly bogus. You heard that the $15,000 wasn't from 14 Joyce Grossman. It was really just a wire transfer of 15 money from Who's Who Worldwide to Mr. Gordon. It was one 16 of these so called loans of his. 17 You will remember that the date on the promissory 18 note, which is July 25th, 1993, that's when he supposedly 19 borrowed the money from Joyce Grossman. But the date of 20 his son's death, according to the death certificate is 21 July 28th, 1993. The dates just don't match. Mr. Gordon 22 was supposedly borrowing money to pay his son's funeral 23 expenses. But on that day his son hadn't even died yet. 24 Now, when the death certificate was admitted in 25 evidence, it was with Mr. Gagliardi.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8875 Summation - White
1 Now, Mr. Trabulus asked some interesting 2 questions. You will remember that it was Mr. Gagliardi 3 from the IRS on the witness stand, and Mr. Trabulus asked 4 in substance, well, if that was an emergency situation and 5 somebody needed a loan in a hurry, they might just loan 6 the money, especially to a family member, and then go back 7 and make up a promissory note later, right? That's what he asked him. 9 And Gagliardi said, in substance, yes, that 10 sounds reasonable. I guess that can happen. 11 Mr. Trabulus went on, well, if they did that, 12 when they were upset from a death in the family, they may 13 not be careful
and put the wrong date on the promissory 14 note? 15 Again, Gagliardi said, well, I guess so. 16 That's a nice theory, and you might have been 17 saying to yourself at the time, well, that's possible. 18 Maybe that's what happened. But there is one problem. 19 That's not what happened. How do you know that? 20 Because a few days later Mr. Gordon's own sister, 21 Joyce Grossman, came into this courtroom and she told you 22 she had never loaned Mr. Gordon that money, and she had 23 never seen this promissory note. 24 So, what were all those questions that 25 Mr. Trabulus was asking Mr. Gagliardi?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8876 Summation - White
1 You see, they are desperately hoping that you 2 will not focus on Mr. Gordon's lies. 3 Now, what does this incident tell you about 4 Mr. Gordon's intent, his state of mind? 5 Well, if he has nothing to hide, why is he 6 lying? If he has nothing to hide, why is he making up 7 this phony story about his sister, about a loan from his testimony? If he has nothing to hide, why is he creating 9 and submitting bogus documents to the IRS? 10 Ask yourselves, if he is just an honest taxpayer 11 who made an innocent mistake in filling out some 12 complicated tax forms, why, as Mr. Trabulus would have you 13 believe, is he lying? 14 As you analyze all the other evidence in the 15 case, and you try to decide what Mr. Gordon's intent was, 16 just stop and think for a moment about what Mr. Gordon did 17 here. He lied about his own son's death just to save 18 himself from paying a few extra dollars in taxes. He 19 exploited his son's tragic death, just so he can pocket a 20 few extra bucks. He took a terrible tragedy, like the 21
loss of a child, and tried to use it to help his plan to 22 cheat the IRS. 23 When you consider Mr. Gordon's intent here, keep 24 that in mind. That's the kind of man you are dealing with 25 here, the kind who takes the unkindly death of his young
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8877 Summation - White
1 son as an opportunity to make a quick buck. 2 Now, what other lies did Mr. Gordon and 3 Mr. Reffsin tell, which would show you that they are 4 knowingly defrauding the IRS information? 5 Well, you heard that they lie about the ownership 6 of Who's Who Worldwide and Mr. Gordon's other 7 corporations. In all the 433 forms they specifically ask for what stocks you own and what assets you have. 9 Although Mr. Gordon owns 75 percent of a 10 corporation that is doing millions of dollars of business, 11 he never mentions it.
12 Again, you know he owns 75 percent because his 13 own sister, Joyce Grossman, and her husband, Dr. Richard 14 Grossman, told you that they always owned 25 percent and 15 Mr. Gordon owned the rest. And there are letters from 16 Mr. Gordon to Dr. And Mrs. Grossman explaining that they 17 are going to own only 20 percent -- 25 percent. 18 You heard that Mr. Gordon testified on several 19 occasions that he owns 75 percent. And you saw how he and 20 Mr. Reffsin created backdated and phony documents. 21 Remember, there were letters, stock certificates 22 and other documents to try to show that he owned nothing 23 and the Grossmans owned 100 percent. 24 Again, I will go into more detail about those 25 things later. But ask yourselves again, why are they
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8878 Summation - White
1 lying?
2 Remember that Dr. Grossman told you that he 3 confronted Mr. Grossman after he learned that Mr. Gordon 4 had been misrepresenting that the Grossmans owned the 5 whole company. 6 Remember what Dr. Grossman said Mr. Gordon's 7 response was? He said Mr. Gordon said, I forgot. I thought you did own 100 percent of the company. 9 He forgot? Ladies and gentlemen, he forgot? He 10 forgot he owned the company? It is hard to say that with 11 a straight face. That's about the lamest story anybody 12 ever heard. I forgot. It is the legal equivalent of the 13 dog ate my homework. How could he forget he owned the 14 company? 15 He works there day after day, five years, running 16 the whole show. And he just forgets he owned the 17 company? 18 Think of a real life example to show you how 19 ridiculous that that story is. Think about the single 20 most expensive thing each of you own, your biggest asset, 21 your most valuable possession. For some of you it might 22 be your home if you own it. For some of you it might be 23 your car or maybe a piece of jewelry, or something like 24 that. Do you think you would ever just forget that you 25 own your most valuable possession?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8879 Summation - White
1 If you owned a home and you are out in front 2 raking your leafs and a neighbor comes by and says, do you 3 own this house? 4 You say, gee, I don't know, maybe my sister and 5 brother-in-law own it, but I am not really sure. 6 So, why did they lie about that? 7 The big reason again is the collateral agreement. It says if Mr. Gordon owns or controls any 9 corporation the income is subject to being repaid to the 10 IRS subject to that agreement.
11 These companies are making a lot of money. Half 12 of what they make is supposed to go to the IRS if they 13 come under that agreement. And that is precisely why 14 Mr. Gordon doesn't want the IRS to know that, because then 15 he will have to end up paying back what he owes. 16 How else do you know that this is just not an 17 honest mistake of what needed to be included in the tax 18 forms? 19 Look at the conflicting statements that 20 Mr. Reffsin made at different times. He can't even get 21 his story straight. 22 First let's talk about these loans, the supposed 23 loans that Mr. Gordon took. 24 Now, when he was interviewed by Agent Jordan, 25 Mr. Reffsin said that Mr. Gordon had made little or no
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8880 Summation - White
1 repayments on these loans; that Mr. Reffsin said that he 2 and another accountant that worked for him were concerned 3 that this was really income. And he says, he talked to 4 Mr. Gordon and told him, that those loans, if you don't 5 pay them back, could be a problem. And Mr. Gordon said 6 basically I will deal with it at that time. I will deal 7 with it when it becomes a problem. Now at the trial Mr. Reffsin has got another 9 story. This one is, well, they are not income. They are 10 just loans. I was concerned before, but no, that really 11 wasn't true. 12 Now at the trial he says, well, there really were 13 repayments, and that's why I thought that it was okay. 14 That they really were loans. But before he said there 15 were little or no repayments. 16 Then he also, all of a sudden, remembers that 17 when he had this conversation with Mr. Gordon, Mr. Gordon 18 told him he would repay the loans back.
19 The first time he told him Mr. Gordon didn't say 20 anything about paying him back. Now he is here and he 21 knows that's the big issue, he is going to say, well, 22 Mr. Gordon, he told me that, too. 23 What else did Mr. Reffsin change his story 24 about? 25 Again, he told Agent Jordan in an interview that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8881 Summation - White
1 he thought, Mr. Reffsin thought, that what Gordon was 2 telling him about using the condo for business was, in his 3 words "bullshit." 4 That was his words "bullshit," which is a pretty 5 strong word to tell federal agents, that what Mr. Gordon 6 was telling Mr. Gordon was bullshit. 7 Now at the trial he says, I don't know, maybe Mr. Gordon was BS'ing, maybe I don't know one way or 9 another. 10 You also said that in an interview with 11
Mr. Jordan, Mr. Reffsin changed his story about the phony 12 logs submitted to the bankruptcy court. 13 First he denied everything about the logs. He is 14 putting as much distance between him and those logs as he 15 can. He says, I have never even seen them. I don't know 16 what was in them. I don't know who prepared them, I 17 didn't have any conversations with anyone about them, and 18 I don't know if they were falsified. 19 Then he is asked about them again later in the 20 interview, and he miraculously recovers his memory. Now 21 he recalls he really did talk to Mr. Gordon about the 22 logs, and he has a whole story about that. All of a 23 sudden he knows an awful lot about these logs. 24 You also heard that there was money that was 25 transferred from Who's Who Worldwide to Sterling and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8882 Summation - White
1 Publishing Ventures, and there were various notes created. 2 You heard that Mr. Gordon gave -- I am sorry, 3 Mr. Reffsin gave a whole series conflicting stories about 4 when he first saw those notes. He said four different 5 things at different points in the interview. 6 He said, first, they were prepared at the time 7 the loans were made; then they were prepared at a later date, but he didn't know when; then he didn't learn of 9 them until three or four months before the bankruptcy 10 filing; then it was, I learned about it the night before 11 the bankruptcy filing. 12 You know all four of them are false, because as 13 he admitted in his own testimony, Mr. Adler, who also 14 testified here, he is the one that Mr. Reffsin hired for 15 Who's Who Worldwide, that Mr. Adler hadn't even created 16 those documents until after the bankruptcy.
17 Then you heard Mr. Reffsin lied under oath in his 18 deposition in the bankruptcy case, and the transcript is 19 an exhibit here at the trial. 20 A month after he created those notes, Mr. Reffsin 21 testified they were created back in '93, the time when the 22 condo was purchased. 23 So look at all the lies Mr. Reffsin and 24 Mr. Gordon told when you are trying to determine if they 25 are knowingly defrauding the IRS or they are just making
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8883 Summation - White
1 an honest mistake. 2 Ask yourself if those are simple errors, just 3 honest mistakes or just a pattern of deception. 4 You will see the common thread, the common theme 5 of these lies, and that is that they all conceal 6 Mr. Gordon's income and lifestyle. 7 Ask yourself if you feel it is just a big coincidence,
that all the information that just doesn't 9 happen to get disclosed to the IRS, just happens to be 10 information about his lavish spending and true income. Do 11 you think it just innocently turned out that way? 12 Now, let's go back to the beginning. You will 13 remember in December of '91 Mr. Gordon owes three and a 14 half million in taxes. So, before they sign any agreement 15 with Mr. Gordon, the IRS wants to know what his financial 16 condition is, so Ms. Peters, the IRS revenue officer asks 17 Mr. Gordon to fill out a 433-A form. And let's take a 18 look at that form. 19 Now, as I said before, Mr. Gordon is charged with 20 not just conspiring to defraud the IRS and submitting 21 these documents as part of that, but as a substantive 22 crime for submitting this false documents. 23 How is it false? 24 Look at page 22, box 22, and asking here for bank
25 charge cards, he writes NA.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8884 Summation - White
1 If you look at page 4, it also has a box asking 2 for other liabilities. And it says include other charge 3 account. 4 One way or another it is supposed to be there. 5 Now, you heard he had an American Express card 6 since November of 1990. This is in September of '91. And 7 this very same months he is using his Amex card like crazy. 9 Now, is that just an innocent mistake? Did he 10 just forget he had an American Express card? Do you think 11 he didn't think he had to list it? 12 Of course not. 13 How do you know that? 14 He got a look at this form in context. Because 15 if you remember, about a year and a half later when they 16 submitted that offer in compromise and Mr. Gagliardi is 17 making requests for information, he is asking them for all 18 documents regarding Mr. Gordon's monthly payments if they 19 are not paid by his personal check. 20 You know that American Express charges are paid 21 by corporate check for Mr. Gordon. 22 So, if Mr. Gordon had nothing to hide, if he just 23 didn't understand this form, or forgot about it, or didn't 24 think it applied, you would think that when he is asked 25 for that information he would give it to Mr. Gagliardi.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8885 Summation - White
1 But he doesn't. Gagliardi gets nothing on that score. 2 Why? 3 Because if Gordon and Reffsin gave Gagliardi 4 that, he would find out the incredible amounts of money 5 that Mr. Gordon was charging on his American Express 6 bill. 7 This is a perfect illustration of what I said earlier, is that you have to
look at Mr. Gordon's and 9 Mr. Reffsin's lies as the backdrop to everything else in 10 the case. 11 When you look at the answers on this form in 12 context, you see the pattern. You see that it was done 13 intentionally. It was done to deceive the IRS. It is not 14 an innocent mistake or omission. 15 Look at page 3, line 29, where it asks for 16 stocks, bonds and investments. 17 He said he has basically no equity in any stocks, 18 bonds, investments. 19 But the Grossmans told you they own 25 percent 20 and Mr. Gordon owns 75 percent of the companies. And you 21 heard Mr. Gordon testify to that in other lawsuits. 22 If you look at the company's 1991 return, which 23 is the comparable one, it tells you how much the company 24 is worth. Line 25, it has the profits that the company 25 has made that are still unaccounted for basically. It is
HA
RRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8886 Summation - White
1 $16,000. So, he owns 75 percent of that, and stock worth 2 about $12,000. It is not listed. 3 Now, how else do you know that he is trying to 4 hide his ownership? Look at page 1, box seven where 5 Mr. Gordon lists his occupation. 6 He is the head of the company, however he wants 7 to call himself, president, chairman, CEO, whatever. He called the shots. And there is no dispute that he is in 9 charge of the company. 10 Do you think it is odd that he describes himself 11 as the sales manager? Doesn't it sound that he is just 12 trying to make himself sound like just another company 13 employee? 14 Now, let's look at necessary living expenses on 15 page 4. 16 He lists his household expenses. And where he 17 has other, he has $175 a month. 18 When you look at
his American Express bills, he 19 is charging $8,000 a month at this time. 20 From January of '91 to September of '91 when 21 Mr. Gordon is filling out this form, the company has paid 22 over $101,000 in his personal expenses in those nine 23 months immediately preceding this form. 24 Now, Mr. Trabulus suggested that this category, 25 necessary living expenses means just the necessary ones,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8887 Summation - White
1 not the actual ones. 2 He suggested that maybe Mr. Gordon thought he 3 didn't have to list all his expense, just the absolute 4 bear necessities. 5 So, let's humor him and let's take a look at that 6 theory. 7 As I said before, when you look at Mr. Gordon's answers in context, you will see that that argument is 9 ridiculous. Under Mr. Trabulus' theory, Mr. Gordon is not 10 trying to hide he is spending a lot of money on 11 unnecessary things. He thinks he just has to list the 12 necessary ones. 13 Again, if that's the case and he really has 14 nothing to hide and he just misunderstands the question, 15 why do he and Mr. Reffsin conceal his expenses when 16 Mr. Gagliardi asks about them a little bit later in '93? 17 Again, Gagliardi asks for all the checks that 18 Mr. Gordon writes, proof of all the payments, if not paid 19 by his personal check. Both of those items would reveal 20 Mr. Gordon's extravagant spending. If they are not trying 21 to conceal anything, you would expect they disclose that 22 to Gagliardi when he asks for it, but they don't. 23 What does it tell you as to whether this answer 24 on this 433 form is just an innocent mistake, or whether 25 it is an intentional lie?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8888 Summation - White
1 That's not the only time that Mr. Gordon conceals 2 his true expenses from the IRS. In August of '93 they 3 submitted an offer in compromise. Included in there is a 4 list of the Mr. Gordon's expenses, actual expenses through 5 1991, and a projection up through 1996. And it showed 6 that Mr. Gordon couldn't even begin to pay back all his 7 debts. It said his income barely covered his expenses. Now, this was not a form prepared by the IRS. 9 This is their own summary of Mr. Gordon's expenses. 10 Of course, you would expect that all of his 11 lavish expenditures would be listed here, especially 12 all -- in the column for 1991, which would be actual 13 expenses. 14 If he wasn't trying to hide anything you would 15 expect the real expenses to be listed on this form, on 16 this projection, but they are not. 17 Again, what does the whole context, the whole 18 pattern tell you about whether or not this answer is 19 intentionally false? 20 It tells you that he is intentionally trying to 21 hide his expense, not only that he thought he had to list 22 necessary ones. 23 Now, how else do you know that this theory that 24 Mr. Trabulus has about necessary expenses is wrong? 25 Well, for one, Mr. Trabulus is not even
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8889 Summation - White
1 consistent in his theory, because his argument is 2 apparently that Mr. Gordon -- 3 MR. TRABULUS: Objection as to my argument, your 4 Honor. 5 THE COURT: Overruled. 6 MR. WHITE: Mr. Trabulus' argument is apparently 7 that Mr. Gordon didn't list his true expenses, just the ones that are necessary. So, therefore, he didn't list it
9 if he spent money on things that were not strictly 10 necessary, like all the money he spent on expensive 11 clothing and what not. 12 Remember at one point Mr. Trabulus was 13 questioning a witness, and he suggested that Mr. Gordon's 14 Armani suits, and his custom-made suits, and his cashmere 15 overcoats were necessary expenses because he was an 16 executive, and he had to look good when he met with 17 important Who's Who members. Do you remember all that? 18 I am sure you recall it. And if you remember, 19 that's when on redirect I was pointing out that Mr. Gordon 20 was spending money on $35 a pair of underwear, and I don't 21 think you impressed important Who's Who members with your 22 underwear, no matter how fancy it is. But I don't know, I 23 am just a regular government employee. Maybe I don't 24 attend the same kind of top level executive meetings as
25 Mr. Gordon.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8890 Summation - White
1 But Mr. Trabulus' point was that his designer 2 suits and fancy clothes were necessary to his job. 3 They can't have it both ways. If it is 4 supposedly necessary, it should be listed, even according 5 to Mr. Trabulus' theory. 6 How else do you know that Mr. Gordon was 7 intentionally trying to give the IRS a false picture of his expenses? 9 Well, if he is really spending a lot of money and 10 makes no bones about it, that he has plenty of money to 11 spend, and this is just the bear necessities, why does he 12 write this at the bottom: After taxes there is a 13 substantial deficit? 14 He is saying, here is the money I make. And here 15 is the money I pay out. On top of this I have to pay 16 taxes, for that particular year, and not the back taxes. 17 And after taxes there is a substantial deficit. 18 He is not saying I have plenty of money left 19 after taxes, and I just list the necessary expenses here, 20 I am living great. 21 No, he says there is a substantial deficit. He 22 is trying to tell the IRS I can't barely make ends meet. 23 I am almost in the poor house is what he is saying. 24 Now, you will remember that Mr. Reffsin testified 25 that the IRS only wants to know what your necessary
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8891 Summation - White
1 expenses are. 2 Remember that I gave him a few days ago an 3 example of someone who lived in a mansion and paid rent of 4 $20,000 a month, when only $2,000 a month was reasonable 5 and necessary. And he said that that person would only 6 have to list what is necessary, 2,000 a month. 7 And I asked him, and the answer was so amazing, I had to write it down. 9 I asked him: 10 Question: Are you saying if a taxpayer is 11 squandering $18,000 a month on unnecessary luxuries, the 12 IRS doesn't want to know anything about it? 13 Do you remember what Mr. Reffsin's answer was? 14 Quote, no. They have no desire to know, unquote. 15 Think about that for a minute. Use your common 16 sense. Do you really think that's the way the IRS 17 operates? You owe them three and a half million dollars, 18 you are wasting tens of thousands of dollars a month that 19 you could be using to pay them back, and they don't care? 20 Does that really sound like the IRS we all know, they 21 don't care? They have no desire to know? 22 Now, what else does Mr. Gordon not disclose on 23 this form? 24 Well, he doesn't disclose the fact that he is 25 getting all this compensation from Who's Who Worldwide by
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8892 Summation - White
1 means of them paying his personal expenses. 2 Now, you know that these are not really loans 3 like he is calling them, because he never really intended 4 to pay them back. You know that from the evidence. 5 A little later I will go through the numerous 6 ways you know that. 7 For now, let's humor him and let's assume that they are loans. 9 Even if they are loans, they should be listed on 10 this form, box 28, other liabilities. He listed a lot of 11 debts he has. If he really owes that money it should be 12 listed there. It is a liability, something he has to pay 13 back, money he owes to someone else. 14 Why aren't they listed on page 3 under the 15 liabilities? He lists a lot of other debts he owes there. 16 By this time he owes Who's Who Worldwide about 17 $160,000. Why isn't it listed there? 18 Think about it for a minute. If these are 19 genuine loans and he really thought he would have to pay 20 them back, he has every incentive to put it on the form. 21 Keep in mind that the IRS is trying to determine what his 22 assets and income are, and how much he owes to other 23 people. 24 If he disclosed that in addition to those loans 25 he owed even more to his company, in theory it would show
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8893 Summation - White
1 that he was in even worse financial hole when this 2 existed, he was in the deeper hole than this form says, in 3 addition to everything listed, he owes another 160,000. 4 Think about it. The worse his financial position, the 5 more in debt supposedly, the less IRS will require him to 6 pay. So the real incentive was to list those loans if the 7 real incentive was to pay them back. It was suggested to you that Mr. Gordon didn't 9 lists the loans because he would eventually get paid 10 enough to pay the loans in compensation. In other words, 11 the money owed him by Who's Who Worldwide would be equal 12 to what he borrowed and one day that debt would be 13 cancelled out. 14 That theory doesn't make any sense, however. If 15 he was expecting to receive five or six or seven hundred 16 thousand dollars some day from Who's Who, the IRS should 17 have been told about it. Under that collateral agreement 18 the government comes first. They are first in line. They 19 are entitled to half of everything over 50,000 that he 20 makes. 21 And if he is expecting some big pay day in the 22 future, then the IRS is entitled to some of that. He 23 can't unilaterally decide when he gets that money sometime 24 in the future, that the one debt of all the ones he has 25 that he is going to pay is the one to his own company,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8894 Summation - White
1 basically paying himself back. 2 How else do you know he is trying to hide these 3 supposed loans from the IRS rather than just innocently 4 thinking he doesn't have to report them? 5 Well, use your common sense. Put yourself in 6 Mr. Gordon's shoes for a minute, look for a motive. 7 If he knows if he tells the IRS he is in a position to borrow hundreds of thousands of dollars from 9 his company, they will say, you should buy some back to 10 pay back the government. They will say if you can borrow 11 money to buy Armani coats, fur coats, suits, jewelry, you 12 can borrow some to pay us back. 13 How else do you know all this? Look at the 14 context. Look at what happens when the IRS is asking for 15 more information. 16 You heard from Mr. Rosenblatt, the government's 17 expert witness about the transfers into Mr. Gordon's 18 account in July of '93, the one supposedly for his son's 19 funeral expenses. We discussed that before. 20 Again, when Gagliardi asked about them, does 21 Mr. Gordon say, well, those are loans to me from my 22 corporation. But, don't worry, eventually I expect the 23 company will owe me so much in compensation, it will 24 eventually cancel out my debt. Does he say anything 25 approaching that?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8895 Summation - White
1 MR. TRABULUS: Objection. There is no evidence 2 of any conversation between Gagliardi and Mr. Gordon. 3 THE COURT: It is up to the jury. 4
If anything Mr. White says conflicts with your 5 recollection of the evidence, you use your own 6 recollection. That is true with all the lawyers. They 7 are going to tell you what their view of what the evidence is. If it doesn't coincide with your view, disregard all 9 of that. You use your own recollection of the evidence. 10 I can't see anybody with all these charts here, 11 but I think they all heard me. 12 MR. WHITE: What happens when he makes up that 13 request? He makes up the bogus note. There is not just 14 one bogus note, by the way, but there are two. Gagliardi 15 asked about unusual deposits in October of 1993, and the 16 answer to that is another bogus note, this one from 17 Madeline Middlemark who testified, she didn't think she 18 owed him the money. She wasn't sure but doesn't think she 19 did. And she knew she had not seen this note before. 20 Again, what does that tell you about his intent? 21 His state of mind? Does he innocently think he doesn't 22 have to disclose this on the form, or is he intentionally 23 concealing it from the IRS. 24 When you look at this Form 433, don't look at 25 each of the four statements in isolation. Look at it in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8896 Summation - White
1 context in light of all the facts and circumstances. Look 2 at the specific areas that are false. 3 His American Express card. His true income and 4 expenses. His so-called loans and his ownership of Who's 5 Who. All are things, if disclosed would expose his 6 extravagant lifestyle. Do you think it is a coincidence 7 that those things were left off? Do you think it happened to work out that way by chance because he didn't 9 understand the questions or didn't feel he had to list 10 something? 11 Now, just stop and think for a minute about how 12 he was living. From reading this 433, you would think he 13 couldn't even make ends meet. But he is living like a 14 king, according to the evidence. He is Mr. Armani suits. 15 He is Mr. BMW. He is Mr. Tiffany's. But you wouldn't 16 know that from looking at this form 433. 17 He is Mr. $7,000 overcoat, Mr. $35 a pair 18 underwear, Mr. $16,000 watch, Mr. Palm Beach vacation. 19 You would never know that from looking at these forms. 20 He is Mr. Mercedes Benz, Mr. Million dollar 21 condo, Mr. Persian rugs, Mr. Jacuzzi, Mr. Manhattan 22 penthouse. 23 You would never know that by looking at these 24 forms. 25 One more. He is Mr. $50,000 European vacation,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8897 Summation - White
1 Mr. Fur coat, Mr. Custom-made designer clothes, 2 Mr. Four-star restaurants. But you would never know it 3 from looking at these forms, because he didn't want the 4 IRS to know. 5 Given his motive to hide his income so he 6 wouldn't have to pay it back, do you really think it was 7 just a coincidence that they never were disclosed to the IRS? 9 What happens next after this is submitted? 10 Well, you heard Ms. Peters say that based on his 11 poor financial picture she agreed to let him pay back just 12 $100 a month to satisfy his liability. Remember, she said 13 that Gordon told her he had been living in his car. 14 The agreement he signed was to pay back $100 a 15 month. 16 Now, that was signed eight days after his form 17 433 was submitted in September of 1991. 18 Again, if you look at the American Express 19 records and other documents, you will see that in the time
20 period right before or right after he signed this 21 agreement, he went on a wild spending spree. It is almost 22 as if after pulling the wool over the government's eyes, 23 he goes out and celebrates with a luxury shopping spree. 24 Keep in mind the IRS determined based on the 25 information he has given them the most he can pay is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8898 Summation - White
1 $1,200 a year. But in the three weeks immediately 2 preceding before he signs the installment agreement, he 3 spends $6,000 on designer clothes. He spends over $7,800 4 in a one-month period from mid-September to mid-October 5 1991. It is enough to pay his $100 a month payment for 6 the next six and a half years. 7 Do you really think it was just an honest mistake? 9 What happens next? 10 November 1991, Gordon signs that collateral 11 agreement, and that's the one, again, that we talked about 12 before, that makes his income subject to this sliding 13 scale. And also the corporation's income. 14 He has this huge incentive now to hide his 15 income. He has three and a half million reasons to 16 conceal his true income and lifestyle. 17 Now, from late '91 Mr. Gordon is paying the IRS 18 the $100 a month he is owing them under the installment 19 agreement. But how he is paying tells a lot about his 20 intent. 21 Instead of having Who's Who write a check to the 22 IRS each month just like it is doing with all the other 23 monthly payments, he writes a company check to cash. Then 24 he has his trusted employee, Liz Sautter, the woman 25 referred to repeatedly here as his right-hand person, go
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8899 Summation - White
1 down to the bank and cash the checks and get money 2 orders. That's what Maria Gaspar told you. 3 Agent Rosenblatt when he was here showed you the 4 checking records with respect to those payments. 5 Why do this? The IRS takes checks, personal, 6 corporate, whatever you want. If you want to give them 7 money they are taking it. So why create the extra work and the hassle of sending someone down every month to get 9 money orders when you don't really need them. 10 It is because he doesn't want the IRS to see that 11 he has his company paying his taxes for him. 12 Remember, he told Robbie Peters that he was just 13 the sales manager at Who's Who and he wasn't the owner. 14 If he sent in his personal payments by corporate 15 check, they might start asking questions like, why is your 16 company paying the tax bill? And those $100 payments are 17 not
the only example of that. 18 Remember Government's Exhibit 797, a note from 19 the files of Who's Who that came from Mr. Reffsin's firm 20 addressed to Liz, presumably, Liz Sautter. And it is 21 dated June of '91. And they are forwarding Mister -- 22 Mr. Reffsin's firm are forwarded Mr. Gordon's returns they 23 prepared for him to send to the IRS. This is in -- for 24 1990, and taking place in June of 1991. 25 The note says to Liz Sautter, that since
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8900 Summation - White
1 Mr. Gordon has no personal checking account, I suggest you 2 get money orders to pay the tax. Sending a Who's Who 3 check isn't a good idea. 4 Why isn't it a good idea? 5 Because then the IRS might start asking 6 questions. 7 Now, what does that tell you about Mr. Gordon's and Mr. Reffsin's intent.
9 What happens next? 10 You see an interesting thing when you look at the 11 Who's Who 1991 and 1992 tax returns. The collateral 12 agreement that requires him and his corporations to pay on 13 a sliding scale. It is signed in late '91. The '91 14 returns are signed mid-'92. Mr. Reffsin signs those as 15 the preparer. 16 When he does that he puts the correct ownership 17 figure on that. He says Mr. Gordon owned 75 percent of 18 the company. And that's what the Grossmans told you, too. 19 If you look at the Who's Who returns after that, 20 all of a sudden he owns nothing. It says he owns none of 21 Who's Who Worldwide. The '92 return, filed in '93, all of 22 a sudden Mr. Gordon owns zero and the Grossmans own 100, 23 the '93 return filed in '94, shows the same thing. 24 Again, do you think that's a big coincidence? A 25 few months after the collateral agreement makes
his income
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8901 Summation - White
1 subject to this sliding scale, all of a sudden, I don't 2 own anything. 3 Keep in mind by that time Who's Who Worldwide is 4 really starting to take off. They are making a lot of 5 money. 6 What happens next? 7 By the end of '91, Mr. Gordon has had Who's Who pay for about $145,000 of his personal expenses in that 9 year. In '92, the company pays another $237,000 in 10 personal expenses. 11 By the way, you may say, how do you know that 12 these are Mr. Gordon's personal expenses? We tossed that 13 term around a lot. You may say who says they are his 14 personal expenses? 15 The answer is Mr. Reffsin and Mr. Gordon say that 16 in the books of Who's Who Worldwide. Because they put it 17 in Mr. Gordon's loan account. They acknowledge that it is 18 personal and not business. That's not the government's 19 position, it is how Mr. Gordon and Mr. Reffsin 20 characterize it. They were the ones who decide that they 21 were his personal expenses. 22 In addition to paying his expenses like his rent 23 and everything, Gordon decides to have his corporations 24 buy him a condo in late '92 or early '93. 25 You heard around that time Mr. Gordon bought the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8902 Summation - White
1 Manhasset condo at 200 Hummingbird Road for $600,000. 2 You heard from Ms. Callahan, the manager of the 3 development, telling you what a beautiful place it is, 4 with pool and tennis courts and everything else. 5 But you heard that the $600,000 condominium, it 6 just wasn't fancy enough for Mr. Gordon. It just wouldn't 7 do. So, he has his corporation spend another half a 9 million dollars renovating it and furnishing it. 10 You heard from Matchless Construction, 11 Mr. Dukoff, if you remember him, about the work he did on 12 the condo. He got paid around $224,000 in work. He told 13 you about the marble and granite floors and countertops 14 they had. $34,000 kitchen cabinets and all those other 15 stories about how lavish they were. 16 You heard from Ms. Ruggieri who made the 17 custom-made furniture there for $43,000. 18 You heard from Mr. Gordon's own sister, Joyce 19 Grossman who was an interior decorator also who paid a lot 20 of vendors and furniture from what she got, and she was 21 paid over $150,000. 22 You heard he didn't put the condo in his own 23 name, he created another company, PVI, and Who's Who 24 Worldwide transferred all the expenditures to PVI who paid 25 for all the work on the condo.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8903 Summation - White
1 You heard PVI is a dummy corporation, no 2 employees, and just exists on paper to own the condo. 3 He owns the IRS three and a half million dollars, 4 he is having his company pay the personal expenses, do you 5 think it is a coincidence he doesn't want the condo in his 6 name? It just fits the same pattern of deception you 7 heard before. You heard Mr. Gordon gave testimony that the 9 condo was used for business meetings. It was available 10 for Who's Who Worldwide members who were in New York from 11 out of town. 12 Let's look at that, is that really true? 13 The best response is Mr. Reffsin's own words. He 14 says that that is bullshit, to quote him. That's what he 15 told Agent Jordan, that's what Mr. Gordon was telling him 16 about using the condo for business, that's bullshit. 17 That's not the government saying that. It is 18 Mr. Reffsin, Mr. Gordon's confidant, his long time 19 accountant, who reviewed all these financial transactions, 20 he says it is bullshit, right from his own mouth. 21 How else do you know that that is true? 22 Well, look at all the solicitation letters and 23 all the pitch sheets of Who's Who Worldwide and Sterling 24 Who's Who. They list a lot of so-called benefits, and I 25 am sure when the defense attorneys get up you will hear a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8904 Summation - White
1 lot about that. But they describe every possible benefit 2 of being a member. 3 But never, not once in all the hundreds of pitch 4 sheets and solicitation letters between '92 and '95 that 5 are in evidence does it even mention that members could
6 stay at the condo. 7 Think about it. If they really could stay there? If that's really why Mr. Gordon got this 9 condominium, don't you think it would be in the pitch 10 sheets and solicitation letters? Wouldn't they say, oh, 11 by the way, as a member you can stay at our lavishly 12 furnished luxury condo, complete with jacuzzi, tennis 13 court, swimming pool. Isn't it a great selling point if 14 members could really stay there? 15 No, not a single mention anywhere, no place, with 16 respect to customers being allowed to use the condo. 17 There is not a single mention of members using 18 the condo anywhere in all the hours and hours of tape 19 recordings of sales calls in evidence. There is not a 20 single, solitary mention of it anywhere. 21 What does it tell you? It tells you the condo 22 was not for members. It was for Mr. Gordon himself. 23 It tells you that Mr. Reffsin was right when he 24 says that that claim was bullshit. 25 How else do you know it is so?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8905 Summation - White
1 The bogus logs submitted to the bankruptcy court 2 with respect to the condominium. 3 Again, I will discuss some more in depth later, 4 but what did they tell you about it? 5 The Court in effect said, if you are really using 6 it for business, prove it. Give me the logs. 7 Instead they order Maria Gaspar to make up phony logs. 9 When they are given the opportunity to show that 10 the condo is used for business purposes, they lie and 11 submit phony documents. Do you think they would do that 12 if the condo was really used for business? Of course not. 13 Now, you heard that Mr. Gordon is charged with 14 money laundering. Now, what is that?
15 Well, the judge is going to give you legal 16 instructions and you should, of course follow them. But 17 let me just try to explain it in layman's terms. 18 Money laundering is when you engage in financial 19 transactions, a crime, in this case mail fraud. You have 20 to know it is from the proceeds of a crime. And it has to 21 be for the purpose of concealing the source, the ownership 22 of that money. 23 So, here you know he is taking money from Who's 24 Who Worldwide. That's the proceeds of the mail fraud. 25 You will remember about the last thing that the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8906 Summation - White
1 government -- the last piece of evidence the government 2 put in was a stipulation about where certain credit card 3 charges were credited. When customers use an American 4 Express card, a Visa card, it is credit to a particular 5 bank, when you look at the bank statement, it goes from 6 there to Who's Who Worldwide, and then to PVI. And they 7 are transferring it to PVI to furnish and purchase this condo. And the indictment charges him with doing all that 9 to conceal his ownership and control of his money. 10 He doesn't want the IRS to see, to know that he 11 controls all this money. 12 Take a look at this. It is a chart that Agent 13 Rosenblatt prepared summarizing all these financial 14 transactions, he did one a year. This is in 1993. The 15 condo was purchased around this time. 16 Look at the money he is spending going out of 17 Who's Who Worldwide to Publishing Ventures, and they are 18 spending all this money. These are the transactions that 19 he is charged within that money laundering count. 20 All these transactions that Publishing Ventures 21 is using, where they are using this money, to purchase it, 22 to make mortgage payments, to pay the taxes, to make all 23 the improvements like Matchless Construction, furnishings, 24 the condo fees and various other things. 25 Now, here is 1994. The money is coming in from a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8907 Summation - White
1 variety of sources to Publishing Ventures, and they are 2 dispersing it again, $185,000 worth. 3 Mr. Trabulus made a point in questioning certain 4 witnesses about the fact that Mr. Gordon paid rent with 5 respect to this condominium. So let's look at that for a 6 moment. 7 First of all, why is he paying rent? Ask yourself that question. 9 The answer is simple. He starts paying rent in 10 early 1993 because he knows he has to submit an offer in 11 compromise in a few months, and he has to show that he is 12 paying rent. 13 When they ask him about his expenses, he has to 14 show he is paying rent. He can't say he owns a home. He 15 can't say my corporation owns it, and they let me live 16 there free. That would blow the whole plan. So he 17 strokes out a rent check to PVI so they can say he is 18 paying rent. 19 If you take a real look, is he really paying 20 rent? Is he digging into his own pockets to pay the 21 rent? 22 Agent Rosenblatt showed you if you trace the flow 23 of money from Mr. Gordon and his corporations, you will 24 see he is just shifting money around from one corporation 25 to another to make it look like he is paying rent.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8908 Summation - White
1 You see, here from Registry Publishing he gets 2 $12,500, from Who's Who he gets 5,000, and that's what he 3 is paying Publishing Ventures. 17,500. It is a big 4 circle. He is moving it around so there is a paper trail 5 which looks like he is paying rent. 6 How else do you know this is a big charade and 7 that Mr. Gordon really owns this condo? A witness testified, named Stanley Chase. Of all 9 the witnesses you probably don't remember him because he 10 was here for only five minutes. But Mr. Chase rented this 11 condominium from Mr. Gordon after Mr. Gordon moved out, I 12 think it was around '95. Mr. Chase was paying $5,250 in 13 rent, not 2,000. Mr. Gordon is not even paying a decent 14 rent. At least he is jacking the rent up more than twice 15 as much when Mr. Chase moves in. 16 What happened to that money? 17 Well, the check stubs from Publishing Ventures 18 are in evidence. Mr. Chase sends in a check for 5250 and 19 it goes back out to Mr. Gordon.
Mr. Gordon is the 20 landlord and collecting the rent. 21 What happened next? We are up to August of '93, 22 Mr. Gordon and Mr. Reffsin submit the offer in compromise, 23 the offer to settle with the IRS. The offer is Mr. Gordon 24 will give them 150,000 over three years to settle this 25 entire three and a half million dollar liability.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8909 Summation - White
1 Now, the offer they submit is Exhibit 420. 2 Now, Mr. Reffsin says in that cover letter that 3 Mr. Gordon talked to various relatives, and that the 4 offer -- they are going to loan him some money. And the 5 offer presented is based on a sum of money he feels he can 6 borrow. 7 Look at that for a minute. They are saying he is going to borrow this money from relatives, and that's all 9 he can borrow. And that's all false.
10 Even if you accept his story, that he is getting 11 loans from Who's Who Worldwide, you know he can borrow a 12 lot more than 150,000 from the corporation. By this point 13 he borrowed hundreds of thousands of dollars. 14 If he can borrow money to buy Armani suits and 15 fur coats and European vacations, he can borrow some of it 16 to pay back the IRS. 17 He doesn't want the IRS to find out about that 18 money, because then they may take away all his toys, his 19 Mercedes, his suits, his jewelry and his vacation. 20 The letter even says that he cannot even pay his 21 back alimony to his former wife. But according to that 22 433 form he submits, he owes $60,000 in alimony. If he 23 wanted to he could borrow from Who's Who to pay that like 24 he can borrow to pay the IRS. It is part of a pattern to 25 show that he can't pay his expenses, when you know that he
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8910 Summation - White
1 can. 2 Now, Mr. Reffsin includes a projection in there 3 which we talked about before. This document puts the lie 4 to a lot of their phony arguments at the trial. It 5 exposes them as just excuses, and are made up after the 6 fact to justify their lies. 7 Now, for example, Mr. Reffsin when he testifies, he told you that in late '92, he told Mr. Gordon, listen, 9 you got to pay off your loans to Who's Who by 1994, and 10 that if he didn't, Mr. Reffsin was going to declare them 11 as income and he would have to pay taxes on them. But he 12 said that one way or another this whole loan situation was 13 going to be resolved. He was going to take it as income 14 or pay it back by 1994. 15 To do that he would have to take a substantial 16 amount of income and then turn a
round and pay off his loan 17 to the company. 18 If he was ever going to pay off the loan, which 19 is hundreds of thousands of dollars, he would have to make 20 that much in income. 21 If he expected he would be making all that money, 22 why isn't it on this projection? Because he doesn't want 23 to tell them, hey, I am expecting a big pay day. Then 24 they would say, we want a piece of that. 25 Another bogus argument disproved by this form is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8911 Summation - White
1 Dr. Grossman loaned Mr. Gordon 235,000 to reduce his loan 2 account in early 1993. 3 You heard Dr. Grossman testify that Mr. Gordon 4 didn't say anything to him about it being a loan, only 5 that the company needed the money back to pay for the 6 printing of the directories. 7 Well, if this really was a loan, then, again, why isn't it listed here as a debt that Mr. Gordon owes. 9 According to them he owes Dr. Grossman $235,000, you can 10 read this until you are blue in the face, and it is not 11 listed there. It would only help him to list it if it 12 really were a debt he owed. Because, again, it would make 13 him look like he was even deeper in debt. 14 But it is not listed, because it is not really a 15 loan. He has no intention of paying it back. 16 Dr. Grossman doesn't expect it back. He doesn't know that 17 it is a loan from Mr. Gordon. 18 The circumstances suggest he just sent the money 19 out to Dr. Grossman and got it back a week or two later so 20 he can say that it was a loan from Dr. Grossman. 21 Again look at the form 433 submitted with this 22 offer in compromise. 23 This one is July of 1993, and like the other one, 24 it is not only part of this conspiracy in this tax evasion 25 scheme, but it is also a separate charge of filing a false
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8912 Summation - White
1 collection information statement. 2 Now, again, I will not go into all the same 3 detail, but the same things are false about it. 4 Box 18, securities, he writes "none." 5 You know he owns 75 percent of the company. By 6 this time the company is probably worth three-quarters of 7 a million dollars. You look at the tax returns. He also owns PVI, which is the owner by this 9 point of a million dollar condo. And that's not listed. 10 Again, bank charge cards, he writes none. 11 No other Amex cards listed in box 28 either, 12 although he has got it and he is spending up a storm. 13 Page 4, income. Again, the payment of his 14 personal expenses are not listed. 15 Even if you consider it a loan, why isn't it back 16 over here under other liability? It is not. 17 Again, the expenses, you know that those expenses 18 bear absolutely no relation to what he is actually 19 spending. 20 As I said before, you have to look at these forms 21 in context. Don't look at each alleged false statement in 22 isolation. Look at the big picture. 23 Again, all the things that are not disclosed on 24 this form have a common theme, that if you disclosed them 25 they would expose his lifestyle and income.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8913 Summation - White
1 Do you think that that is a big coincidence? 2 THE COURT: Is this a good time to take a break, 3 Mr. White? 4 MR. WHITE: Yes, your Honor. 5 THE COURT: I don't want to interrupt your train 6 of thought. 7 MR. WHITE: It is fine.
8 THE COURT: Members of the jury, we will take a 9 ten-minute recess. Please keep an open mind and please 10 recess yourselves. 11 (Whereupon, at this time the jury leaves the 12 courtroom.) 13 THE COURT: I assume -- I have to tell you 14 something so stick around, please. 15 I assume you are keeping track of the time, 16 Mr. White. 17 MR. WHITE: I am. 18 THE COURT: According to my unofficial time 19 keeping, we started at 9:42 a.m. 20 MR. WHITE: That's correct, your Honor. 21 THE COURT: Good. I am glad you are watching 22 me. 23 MR. WHITE: I have my timekeeper working on it. 24 THE COURT: All right. 25 I have two things to state.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8914
1 One is that I noticed during the summation of the 2 prosecutor that Ms. Haley left the courtroom for about
3 five minutes. 4 Is that correct, Mr. Geduldig? 5 MR. GEDULDIG: Yes, Judge, it is. 6 THE COURT: Did she waive her appearance during 7 that time. MR. GEDULDIG: She does. 9 THE COURT: She knows she has a right to be here, 10 especially during summations. 11 MR. GEDULDIG: Yes, Judge, she does. 12 THE COURT: And it is not wise for her to leave 13 during summations unless it is some emergency. 14 Does she understand that? 15 MR. GEDULDIG: Yes, she does understand, Judge. 16 THE COURT: And she waives her appearance during 17 that time? 18 MR. GEDULDIG: Yes, she does. 19 THE COURT: Have a seat. 20 I have reviewed the cases again. 21 I have reviewed the cases again on Starnas and 22 the more recent case. 23 And I get from this, notwithstanding my feelings 24 about the Starnas case, that I have to go along with the
25 option given to the defendant.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8915
1 Another reason why I am doing that is just by 2 looking at it again more carefully, it just makes sense. 3 And the reason that it makes sense is that I was going to 4 charge the jury that they would have to find the defendant 5 Gordon not guilty on Count 57 before they could go to the 6 lesser included offenses. 7 What does the defendant need the lesser included offenses under those circumstances? It just doesn't make 9 sense. 10 So, I have to reverse myself. And I am doing it 11 before Mr. White got to that portion. 12 I am going to charge, Mr. Trabulus, as you have 13 recommended that the jury either finds the defendant 14 Gordon not guilty on Count 57, or after a reasonable 15 inquiry, cannot reach a verdict. And then they are to go
16 to the lesser included offenses. 17 We will take a ten-minute recess.
18 19 (Whereupon, a recess is taken.) 20 21 22 23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8916
1 THE COURT: Bring everybody in, please. 2 MR. WHITE: Your Honor, are we going straight 3 through until I finish? 4 THE COURT: We will take lunch at about 1:00 5 o'clock or thereabouts. 6 (Whereupon, the jury at this time entered the 7 courtroom.) THE COURT: In order for us to try to conclude 9 the first summation at least, we are going to have lunch 10 at 1:00 o'clock or thereabouts. We ordered it for that 11 time. So this way we will permit Mr. White to conclude 12 his summation in chief. 13 You may proceed. 14 MR. WHITE: Thank you, your Honor. 15 Let's look and see what
happens after the offer 16 in compromise is submitted. I will move a little more 17 quickly because some of these things we have already 18 talked about. 19 You know Mr. Gagliardi already asked Mr. Gordon 20 and Mr. Reffsin for more information. The first thing he 21 does is November of 1993, he writes this letter. It asks 22 for a whole bunch of things. Three things in particular 23 you need to focus on. 24 Number three, he asks for all the bank statements 25 and checks for which Mr. Gordon is a signator, paragraph
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8917 Summation - White
1 three. 2 Paragraph six, verification of all monthly 3 payments if not paid by monthly check. 4 Nine, motor vehicle registration, title 5 certificates and/or leasing agreements for vehicles you 6 own and/or operate. 7 Now, you know that virtually none of that was given to Mr. Gagliardi. You heard in response to number 9 three, all he got was Mr. Gordon's personal bank 10 statements, not the checks of Who's Who, PVI, any other 11 corporation. With respect to number six he got nothing 12 although the company is paying his American Express bills. 13 With respect to number nine, although Mr. Gordon 14 is tooling around in a BMW at this time and the company is 15 paying the lease, he gets nothing. 16 Now, what happens after that? When Gagliardi 17 does gets the personal bank statement, that's when he sees 18 the abnormal deposits and they have sets for another 19 number of requests and he asks to explain the abnormal 20 deposits and that's when he gets the two phony notes with 21 respect to Joyce Grossman and Madeline Middlemark. 22 Now, so what happens next? 23 Let's go to February of 1994. Now you
find out 24 that Sterling is renting a penthouse apartment on the east 25 side of Manhattan. They start in February of 1994 for
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8918 Summation - White
1 $8,000 a month. 2 Apparently living in this million dollar luxury 3 condo in Manhasset is too confining for Mr. Gordon. He 4 needs a nice pad in New York City. Not any apartment. It 5 has to be the best for Mr. Gordon, in one of those 6 penthouse apartments, with a doorman and concierge, and I 7 can barely pronounce it, so fancy. You heard Mr. McDonald, the building manager tell 9 that Mr. Gordon's apartment covers the entire floor like 10 you see in the movies with an elevator opening right up to 11 the living room. 12 He said the apartment was sold for 1.25 million 13 dollars soon after Mr. Gordon left. 14 How do you know Mr. Gordon lived there? 15 You know it from a variety of sources, the 16 building manager came in and testified, the building 17 manager saw Mr. Gordon going in to work in the morning, 18 and he complained to him about the heat in the study. The 19 lease was signed by Who's Who Worldwide. And it says only 20 for residential use and no other purpose. If the tenant 21 is a corporation, the apartment can only be occupied by 22 designated occupant, the person listed on the lease as 23 occupant, and that's Mr. Gordon. 24 Think about it. If the lease is really for out 25 of town members to stay in, and if that's the original
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8919 Summation - White
1 reason as to why the apartment was obtained, why does he 2 sign that lease that says that Mr. Gordon, and only 3 Mr. Gordon can live there? When the landlord gives him 4 the lease, does he say, this is unacceptable, I can't sign 5 this? The whole reason I am here to rent this place is 6 because I want out of town members staying here. 7 He signs on the dotted line because he knows he is living there. 9 How else do you know he is living there? 10 Early in 1996 you heard Mr. Mendelsohn, a defense 11 witness coming in. 12 Mr. Mendelsohn says the trustee came in and 13 locked him out, if the company is paying for the penthouse 14 we should be in charge for it. 15 What does Mr. Gordon do? He changes his tune 16 pretty fast. Before he was saying it is all for 17 business. Now that they got his stuff in there and he is 18 locked out. Hey, man, now it is personal. You got my 19 stuff and I want it back. 20 So, he writes a letter to Mr. Ackerman demanding 21 that he get his personal stuff back. He asks Mr. Ackerman 22 to sue Mr. Mendelsohn and others for ten million dollars 23 for taking his personal stuff. 24 Well, Mr. Ackerman won't do it. But eventually 25 you know that another lawyer did file the complaint, and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8920 Summation - White
1 that complaint is in evidence. 2 Mr. Gordon admits there that he used the condo as 3 his residence. That he stayed there with his child. That 4 he had numerous personal items there. 5 Also, as I said before, the condo is -- the 6 penthouse is not listed on any pitch sheets or anything. 7 You know that if members really could stay there that it would be. 9 Now, what happens next? 10 There is a big problem. In March of 1994, March 11 8th, 1994, is when you heard that Marquis Who's Who wins 12 this lawsuit against Who's Who Worldwide for 1.6 million
13 dollars. 14 Who's Who can't pay that so they have to declare
15 bankruptcy. And they file the bankruptcy petition March 16 21st, 1994. 17 Now, this upsets the apple cart that Mr. Gordon 18 and Mr. Reffsin have set up. The whole set up is that the 19 company is paying his personal expenses. 20 Now, in bankruptcy you have to have financial 21 disclosure. He has no choice. He can't pay the 1.6 22 million dollars to read, so he has to be into bankruptcy. 23 What does he do? He transfers, he transfers all 24 sorts of money out of Who's Who Worldwide, right after 25 that judgment. He knows he can't continue to be paying
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8921 Summation - White
1 his personal expense out of there. So he gets that money 2 out of Who's Who as fast as he can say it. It goes to all 3 those other companies. He doesn't want the gravy train to 4 end. He filters it out to all these other corporations 5 which ends up paying all his personal expenses. 6 THE COURT: Can all the jurors see those charts? 7 If not I would suggest you move the lectern out of the way. 9 Anybody not see it, raise your hand? 10 MR. WHITE: A suggestion as to what is the best 11 spot to see it? 12 THE COURT: Move the lectern back a little bit to 13 give them more vision. You don't have to be that close. 14 MR. WHITE: Okay? 15 THE COURT: That's good. 16 MR. WHITE: Now I am going to quit. 17 THE COURT: That gives you an extra minute. 18 Do you have it down, 60 seconds? 19 MR. WHITE: Good, because I can use it. 20 Again, Mr. Gordon's own friend, Mr. Ackerman 21 says, why did you do all those transactions? He asked 22 why? 23 He said because it was his own personal
tax 24 situation. It doesn't get clearer than that. It is right 25 from Mr. Gordon's own mouth.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8922 Summation - White
1 Now, they have a problem though. This bankruptcy 2 has interrupted their cozy little arrangement. In the 3 bankruptcy court they don't want to say that Mr. Gordon 4 owns 75 percent of the company. So they have 5 Mr. Reffsin's friend, Steven Adler, a lawyer, preparing 6 the backdated documents showing that the Grossmans always 7 owned 100 percent of the corporation, which is wrong. You have the documents, Exhibit 671, the fax from 9 Mr. Adler to Mr. Reffsin. 10 Think about it for a minute, and let me back up. 11 The documents he uses and that he creates here are 12 completely bogus. You heard Ms. Grossman coming in here 13 saying I own 75 percent and I authorize my brother, Bruce 14 Gordon to tell other people he owns my shares. 15 She said it is not the case. The information is 16 just inaccurate. 17 Why did they tell Mr. Adler to prepare those 18 documents? Why did they use Mr. Adler? 19 You heard they had a respected bankruptcy 20 attorney on retainer, and you heard the legal bills he 21 charges, goes to the bankruptcy court. They don't want 22 all that showing up on a legal bill, creation of phony 23 documents, $1,500, so they have Mr. Adler do it. And 24 Mr. Reffsin pays his fee. 25 He is doing work for Who's Who, but Mr. Reffsin HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8923 Summation - White
1 is stroking out the check to him. Does that sound odd to 2 you? Does it sound to you like someone who wants to go 3 and wants to have Mr. Adler do some kind of black bag job 4 and create these phony documents that they can use? 5 Now, you also heard that those blank stock 6 certificates were signed by Dr. Grossman, you remember 7 that? And he said he did this around this time. And he estimated he signed them around early '94. You know that 9 because if you remember there was an IRS lab expert who 10 came in here and testified that one of these documents 11 that Mr. Adler created was on top of the stock certificate 12 when it was signed, so she knows, and you can tell from 13 the impression as to when it was created. 14 Since you know that this wasn't created until 15 March of 1994, you know they are going back and creating 16 these phony documents. 17 Now, take a look at this letter, here is the 18 letter, Exhibit 582, that Mrs. Grossman says is completely 19 bogus. 20 Now, why does it say this? 21 Look at the situation that Mr. Gordon is
in in 22 March of 1994 when this was created. He knows he 23 testified numerous times under oath previously that he 24 owns 75 percent. And that was before he decided to change 25 his tune. He said that three different times,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8924 Summation - White
1 Exhibits 802, 815 and 804, all are in evidence. 2 He said it three times under oath that he is an 3 owner. But he doesn't want to put on the bankruptcy 4 petition he is the owner. He wants to say the Grossmans 5 are the 100 percent owner. 6 What does he come up with? It is a great plan. 7 He wants to say he owns 100, and he knows he is on record saying 75. So he has Mr. Adler draft this letter where 9 Joyce says she owns 75, but, Mr. Gordon, you can say to 10 other people that you own my 75. It is the perfect 11 solution to his problem. That way he can say, I am not 12 the owner. But I said it before because I got this letter 13 and Joyce said I can do that. 14 Of course, you know that none of the information 15 in this letter is true as Mrs. Grossman told you. 16 And then you heard that they submitted a 17 bankruptcy petition that says the Grossmans owned 100 18 percent, and Mr. Gordon testified numerous times under 19 oath, Exhibit 799 and 800, both of which are in evidence, 20 where he said falsely that the Grossmans owned 100 21 percent. 22 Now, Mr. Trabulus and also Mr. Reffsin when he 23 testified said that Mr. Gordon was going to pay back his 24 loans until the bankruptcy intervened, that that kind of 25 threw things off, that that somehow made his future income
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8925 Summation - White
1 questionable and he couldn't pay it. 2 It is a nice theory, but it doesn't fit with the 3 facts. Look at how he is living after the bankruptcy. He 4 is not living like someone who has future income in 5 jeopardy. He is spending like a maniac. When you look at 6 the money, the American Express receipts and others, he is 7 living more lavishly than he ever did before. He spends about three times as much in '94, as he does in the year 9 before that. He is not slowing down on his spending. He 10 is speeding up, to borrow a phrase we heard from Judge 11 Spatt during this trial, he is reaching flank speed on his 12 spending. All he has done is he shifted $500,000 out of 13 this bankrupt corporation to the others, and then he is 14 continuing business as usual. 15 Now, it is the summer of 1994 he takes this 16 lavish vacation to Europe that cost $50,000. 17 In the summer of '94, things are heating up in 18 the bankruptcy case. The trustee -- excuse me, the 19 creditors are saying why are we spending money on your 20 personal condo and your penthouse? And they ask the Court 21 to appoint a trustee. 22 They don't want a trustee. That is going to 23 upset things. Because the whole plan is dependent upon 24 Mr. Gordon being in charge of the corporations, and being 25 able to have his corporations pay his expenses. If a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8926 Summation - White
1 trustee comes in then the gravy train is over. 2 So, you heard that the bankruptcy court ordered 3 them to keep logs, and that's August of '94. 4 Now, Mr. Reffsin said that Mr. Gordon didn't want 5 the creditors to have these logs, Reffsin testified that 6 Gordon was ranting and raving about it, and that he didn't 7 want to do it. Then
you hear again, September of '94, there is 9 another one of these 341 Hearings in the bankruptcy court 10 where Mr. Gordon and Mr. Reffsin and Maria Gaspar are 11 present. 12 Now, after this meeting you heard Ms. Gaspar tell 13 you that in the car on the way back, Mr. Reffsin and 14 Mr. Gordon ordered her to create these phony logs. They 15 said it in Mr. Reffsin's car on the way back to the Who's 16 Who Worldwide office. She was told to get a calendar and 17 go and make up the meetings. They gave her phony topics 18 she could use. 19 Now, she said she didn't feel comfortable doing 20 this. And this takes place on the drive back to the 21 office. But then you also heard testimony from Debra 22 Benjamin. She said that around this time Ms. Gaspar came 23 into her office one day, and she was upset. She said she 24 had come from a meeting with Mr. Gordon and Mr. Reffsin,
25 where they asked her to do something.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8927 Summation - White
1 Now, she doesn't prepare the logs right away, 2 Ms. Gaspar. Eventually Reffsin calls her and says, hey, 3 we need them today. So she does them. And Mr. Gordon 4 gives her suggestions about what to put. And they fax it 5 to Mr. Reffsin for his approval. And he says it is okay. 6 She then sends it off to the attorneys, who then produces 7 them to the creditors. Here they are. Here is her pencilled, handwritten logs. It is Exhibit 643. 9 Now, in addition to being part of this whole 10 conspiracy to conceal Mr. Gordon's income and expenses, 11 they are also charged with obstruction of justice for 12 this. 13 Now, there is no dispute that these logs are 14 completely bogus. Maria Gaspar told you she made them 15 up.
And a number of Who's Who employees came in and 16 testified that they never attempted the meetings listed on 17 those logs. 18 It was obviously an attempt to obstruct the 19 bankruptcy proceedings. The bankruptcy court says show us 20 the logs. Put up or shut up. You say you are using it 21 for business use, so show us. 22 What do they do? They fabricate them. 23 Now, the defendants have attacked Maria Gaspar as 24 a liar. And lets look at that for a minute. 25 Now, put yourself in Ms. Gaspar's shoes at the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8928 Summation - White
1 time of these bankruptcy logs. She has absolutely no 2 personal motive to create those phony logs on her own. 3 She is an employee of the company with no financial 4 interest. Why would she care on her own if Who's Who won 5 or lost a motion in the bankruptcy case. 6 There are only two people in the entire world who 7 benefit from the submission of those phony logs. They are Mr. Gordon and Mr. Reffsin. Mr. Gordon, because it keeps 9 the gravy train flowing. He gets to live in the condo, in 10 the penthouse, it puts off the appointment of the 11 trustee. And Mr. Reffsin, because their secret is not 12 exposed, along with Mr. Gordon he has been telling the IRS 13 that Mr. Gordon is barely scraping by. He doesn't want to 14 admit that there are these two one million dollar 15 apartments for Mr. Gordon's use. 16 How else do you know that Ms. Gaspar is telling 17 the truth? Her testimony is corroborated by Ms. Benjamin 18 who says a few years -- weeks before Ms. Gaspar left, she 19 came into her office saying she was upset. 20 If you look at Debra Benjamin's testimony, it is 21 not just some normal workplace disagreement Ms. Gaspar was 22 having with Gordon or Reffsin. These were the words 23 Ms. Benjamin used to describe Ms. Gaspar at the meeting: 24 Very, very rattled. At the verge of tears, very upset and 25 nervous. She was falling apart. That's what Debra
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8929 Summation - White
1 Benjamin said about her. 2 You remember Ms. Benjamin. She was friendlier to 3 the defendants than she was to the government. Yet her 4 testimony corroborates what Gaspar says. 5 You have testimony from two witnesses who 6 according to Debra Benjamin, they have not spoken for two 7 or three years. That meshes perfectly. How else do you know that they ordered Ms. Gaspar 9 to create the phony logs? 10 Well, you know the condo and the penthouse were 11 not used for business. You know that from all the 12 evidence. They
know it wasn't used for business. 13 Mr. Reffsin tells Agent Jordan that it is bullshit they 14 were used for businesses. So if it has to be given to the 15 bankruptcy court it was bogus, and they know that. 16 How else do you know that they were involved in 17 creating it? 18 The records for Mr. Ackerman's law firm indicates 19 that they were both faxed copies of the logs on that day, 20 the same day they were sent to the creditor's attorneys. 21 Do either of them call up and say, wait a minute, 22 Mr. Ackerman, this doesn't look right to me. Gordon is 23 living there. He knows they are not having business 24 meetings there everyday. 25 The logs list Mr. Gordon as attempting meetings
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8930 Summation - White
1 at the condo a week before they are produced to him, to 2 the creditors and fax to him. But his Amex records show 3 he is staying at the Beverly Wilshire Hotel and buying 4 suits on Rodeo Drive. 5 Does he say wait a minute, I was in California, 6 and you have me at the condo. 7 Every man says he is a hands on CEO, literally opening up the mail at the company and deciding how many 9 lead cards go in a stock when they get sorted, writing 10 every single check. Is he the kind of guy who would not 11 notice that the logs were mistaken? 12 And also keep in mind that these guys are the 13 same guys who came up with other bogus documents on other 14 occasions. They are the ones who came up with this phony 15 Joyce Grossman and Madeline Middlemark note. They are the 16 ones who came up with this phony Joyce Grossman letter 17 that Mr. Adler prepared. 18 This is one of their specialties. Instead of 19 having one of those fancy French paintings that Mr. Gordon 20 bought on his summer vacation back in '94 at his office. 21 They might have a big sign saying bogus documents are us? 22 These -- this is one of the ways they get out of jams, 23 they created bogus documents. You know they did it 24 before, and they did it again here. 25 The defendants have suggested that Maria Gaspar
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8931 Summation - White
1 is lying, and they really offered a couple of reasons why 2 that may be. 3 First they said, well, she has immunity. But 4 they are forgetting that she voluntarily told agents 5 before she got immunity, that Gordon and Reffsin ordered 6 her to do this. She told them this several times before 7 she got immunity. Her story has been consistent from day one, according to the questions they have asked her. 9 Stop and think about it.
Agents come to her 10 office and she voluntarily tells them what they did. She 11 basically incriminates herself. She confesses. She gets 12 no guarantees, no promises. They ask her questions and 13 she answers. This is not a situation where someone 14 changes their story after they get immunity, or someone 15 will not talk unless they are promised with immunity. You 16 heard she didn't ask for it, that the government suggested 17 to her that she get an attorney and then worked it out 18 with her attorney. 19 Now, he also suggested she has a grudge against 20 Mr. Gordon and Mr. Reffsin. She was hired as a 21 comptroller and really worked as a bookkeeper. 22 With respect to Mr. Reffsin they said he 23 criticized her work as a bookkeeper. 24 Do either of those things sound like a witness 25 who is motivated to try to send an innocent person to
HARRY
RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8932 Summation - White
1 jail? Use your common sense. 2 Now, what happens next after these logs? 3 Well, in September of '94, in September of '94, 4 you heard that Mr. Gagliardi asked a question about why 5 Mr. Gordon hadn't paid a certain part of his tax 6 penalties, and then Mr. Reffsin writes back, you will 7 recall, giving him a big sob story about how he just can't pay it. It totals about $8,000. 9 That is like pocket change to Mr. Gordon. That 10 is like walking around money to him. 11 Mr. Reffsin says, he is going to have to borrow 12 the money that he has offered you, that's 150,000. Where 13 shall he borrow this money? Perhaps he should cease 14 eating. 15 He says that the IRS must be realistic as to the 16 financial hardship being imposed on the taxpayer. 17 Come on, ladies and gent
lemen. That's 18 ridiculous. You know that. 19 Now, how brazen, how arrogant do you have to be 20 to say something like that about a guy who is living the 21 way Mr. Gordon is. 22 Now, let me briefly discuss the whole issue about 23 are these loans, or are they income? 24 The key issue is: Did Mr. Gordon intend to pay 25 it back, and you know he never did, and let me tell you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8933 Summation - White
1 why. 2 First, again, there is a pattern. Look at how 3 his whole financial affairs are structured. He doesn't 4 really intend to pay those loans. It is just a convenient 5 way to funnel money to him. 6 Second, why is he lying about the loans? When 7 Gagliardi asked about the abnormal deposits, does he say, yes, those are loans for my company? No, he creates the 9 phony Jo
yce Grossman notes. 10 Why aren't they disclosed on the 433's? He has 11 every incentive to put them because they will only show he 12 is in worse shape that way. 13 Is he spending money like someone concerned about 14 having to pay it back? 15 19 '91 and '94, he spent over $800,000. 16 Mr. Ackerman wrote a letter in the bankruptcy 17 court where after he met with Mr. Gordon and Mr. Reffsin, 18 where they basically said, this is what he said, quote, 19 always assumed that the loans would be set off from his 20 compensation, that he would never actually pay it back 21 because he owed them more than -- they owed him more than 22 he actually owed them. 23 There are no repayments practically. Two 24 repayments you have to focus on, the one where he sends 25 the money to Dr. Grossman, and says I need it back for the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL C
OURT REPORTER 8934 Summation - White
1 printing of the books. We discussed that before. It is 2 ridiculous. 3 There is the repayment of allegedly $20,000. But 4 if you look at where the money is coming from. He is just 5 getting it from another corporation. It is just making a 6 big circle so he can show the bankruptcy court, hey, I am 7 trying to pay back the money. Now, as part of this overall scheme that 9 Mr. Gordon and Mr. Reffsin are involved in, they are also 10 charged with making false tax returns. All those returns 11 are in evidence and I will not go into all of them. But 12 they all fail to disclose the extra income and 13 compensation that Mr. Gordon received as a result of the 14 company paying his personal expenses. And the summaries, 15 the analyses how they are wrong are also in evidence from 16 Agent Rosenblatt. 17 Mr.
Gordon had unreported income in those four 18 years, '91 to '94 of over a million dollars, he owes over 19 $377,000 in taxes. 20 Now, that's the evidence on the tax part of the 21 case. The evidence is overwhelming that there was a 22 willful and deliberate plan by them to evade payments of 23 his taxes and file these false documents with the IRS. 24 You know this isn't just some innocent mistake. 25 It is not a misunderstanding of what has to be disclosed.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8935 Summation - White
1 There are too many lies, too many coincidences to believe 2 that. You know what went on here. 3 Gordon was living like a king, while he and 4 Mr. Reffsin were deliberating telling the IRS that he 5 could barely get by. 6 Okay, now let's discuss the other fraudulent 7 scheme you heard about in this trial, the s
cheme to defraud the customers of Who's Who Worldwide and Sterling. 9 Now, the defendants who are charged with 10 participating in the scheme are all the rest, Mr. Gordon, 11 his two corporations and all the managers and salespeople. 12 They are charged with conspiracy to commit mail 13 fraud and mail fraud. In layman's terms, a conspiracy is 14 simply an agreement by two or more people to do something 15 illegal, in this case defrauding their customers. 16 A scheme to defraud in a nutshell is any trick, 17 plan, to get people's money by false pretenses or by false 18 and misleading statements. The judge will instruct you 19 that the defendants did not have to sit around the table 20 and formally agree to participate in this criminal 21 scheme. It is sufficient if they had a mutual 22 understanding, a tacit understanding, whether spoken or 23 unspoken, to participat
e in the scheme. 24 You will hear a lot of legal instructions about 25 the elements of mail fraud and everything else. But,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8936 Summation - White
1 basically, there are two questions you have to answer. 2 One, was there a scheme to defraud here? Was 3 there a common plan to obtain money by false pretenses? 4 Second, if there was a fraudulent scheme, did 5 each of the defendants knowingly participate in it? So 6 let's look at that. 7 Now when you are considering as to whether this is a fraudulent scheme, start with the center, the man at 9 the center, the man who designed it, who wrote the 10 solicitation letters and pitch sheets. He is the one who 11 designed and controlled every aspect of this business. 12 Think about the evidence you heard at this trial 13 about Mr. Gordon. It paint
s a picture of a man who is 14 comfortable with lying, a man who uses lies to gain a 15 financial benefit for himself. 16 This is the man who deceived the people who are 17 closest to him in the whole world, his sister and husband; 18 the man who used his own son's death as an opportunity to 19 lie to save on taxes. 20 Do you think he would hesitate for a minute to 21 lie to total strangers, the customers of Who's Who, in 22 order to get their money? 23 Now, one other thing you should keep in mind in 24 evaluating if there is a fraudulent scheme here is two 25 very significant incidents you heard about in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8937 Summation - White
1 testimony. 2 The first is Wendi Springer, remember her? She 3 told you back in '92, a salesman named Martin Gross who 4 worked for Who's Who, for n
othing having to do with his 5 work at Who's Who Worldwide. You heard he previously 6 worked for that guy Steve West who testified. And the 7 postal inspectors were there to arrest him for what he had done previously at Steve West's company. 9 The postal inspectors show up at Who's Who 10 Worldwide offices. And Wendi says that Liz Sautter calls 11 up Mr. Gordon and says the postal inspectors are here. 12 And the instructions are to run around and take down all 13 the pitch sheets tacked up over everyone's desk? 14 If it is a perfectly honest and legitimate 15 business why is he worried about the inspectors seeing the 16 sales presentation, the pitch sheets? If he is not doing 17 anything wrong, why is he sending them around to tear down 18 the things. 19 The second incident is in 1994, and that comes 20 from Debra Benjamin. She says she was concerned that the
21 uses of the word "nominate" in those letters was 22 misleading. She had several conversations with Mr. Gordon 23 about it. And in 1994 she sent a copy of one of those 24 solicitation letters to Mr. Pierce, the company's 25 attorney.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8938 Summation - White
1 When Mr. Gordon found out about that he went 2 ballistic, he was, quote, very angry at her for sending 3 the letter to the attorney. And he said to her not to 4 send letters like that to the attorneys in the future, who 5 are not going to tell him how to run his business. 6 What does it tell you? He is afraid to have his 7 own attorney, much less postal inspectors to see his solicitation letters. It is his own lawyer, someone 9 paying for legal advice and he doesn't want to see it. 10 Why? Because he knows the attorney will say it is f
alse, 11 misleading, and you can't send it out that way. 12 If there is nothing false or misleading why is he 13 afraid to have his own attorney see the letter. 14 Now, the judge will instruct you about how to 15 determine someone's intent. But he will tell you also 16 that direct proof of a person's intent is almost never 17 available. You have to infer a person's intent from 18 conduct, actions of all surrounding circumstances. 19 It is something we do in everyday lives. We have 20 a phrase, a saying that action speaks louder than words. 21 That's how you figure out what someone's intent is. 22 In this case when you analyze all the evidence, 23 keep those two incidents in mind. Ask them what they tell 24 you about Mr. Gordon's intent. 25 If there is no scheme to defraud and if it is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8939 Su
mmation - White
1 really an honest and legitimate business, why is he so 2 afraid to have them see his sales presentations. 3 First, let's look at what the defendants are 4 selling here. They are selling memberships in a Who's Who 5 organization. They are selling honor. They are selling 6 prestige, selectivity, recognition. 7 Everybody knows what Who's Who means. It means the select few, it means important or accomplished 9 people. It has a common meaning that everyone 10 understands. 11 By its very nature the most important thing about 12 a Who's Who is how the people are selected to be in it, 13 whether it is really an honor to be in it. If virtually 14 everyone can be in it, it is not an honor to be in it. 15 Everyone can be listed in a telephone book, not 16 an honor. Nobody would pay $300 to be in the telephone 17 book. 18 Remember Reed R
otatori? Do you remember after he 19 got the letter he told his father, can you believe it, 20 dad, I was nominated by Who's Who. He recalled the 21 conversation because he said shortly thereafter his father 22 died, and he realized it was one of the last things he 23 said to his father. 24 Nobody tells their father they were just selected 25 to be in the telephone book. It is because it is a Who's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8940 Summation - White
1 Who. 2 You heard a lot of talk about networking, and 3 when Mr. Gordon created this operation, they didn't decide 4 to sell a business networking operation. They didn't call 5 people up and say we are compiling a list for business 6 networking, do you want to join? Those kind of business 7 to business directories are available. No, he said we are selling a Who's Who
9 directory. Because that's what hooks people. That's what 10 motivates them to buy. The fact that they are told they 11 are special enough to be one of the select few. 12 Now, how do you know that that is what people are 13 buying? You don't have to take my word for it. Listen to 14 Mr. Gordon. Government's Exhibit 1390, one of the tapes 15 played at trial. Quote from Mr. Gordon. People buy this 16 to be in the registry. There's got to be a reason why. 17 They get the wall plaque, the benefits, the networking. 18 It is just icing on the cake. But the true value of this 19 thing, for them anyway, it has been going on for a hundred 20 years, I didn't invent this, okay, is the ego fuck. They 21 want to be in the book. They want their 15 minutes of 22 fame. 23 In other words, people are buying this because 24 they are flattered, because they know Who's Who is 25
supposed to be about honor and selectivity.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8941 Summation - White
1 But you heard evidence that the customers were 2 lied to about that single most important thing, the 3 selection process and whether or not it was an honor to be 4 a member. And you heard all the things that the customers 5 were told. You have been nominated by someone who knows 6 you and thinks highly of you, select group of nominated 7 individuals, nominated by a board of governors. Even out of his already exclusive group of 9 nominees, a fraction get selected. The slots are 10 limited. They only become available through attrition, 11 once or twice a year. There is a waiting list sometimes. 12 It is a well known organization which has been in business 13 many, many years, which publishes a leading and 14 authoritative refer
ence publication. 15 You heard the evidence over the last few months, 16 you know it is not true. There is no board of governors. 17 No board of review. It was mailing lists exclusively. 18 You heard 98 percent of the customers were 19 accepted. The membership was not limited in number. It 20 wasn't through attrition. There was no limit. They were 21 all admitted. It hasn't been in business for many, many 22 years. They have fundamentally misrepresented to the 23 customers. It is not puffing or salesmanship. It is 24 making specific false factual misstatements about the 25 quality of the products, about the essence of what they
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8942 Summation - White
1 are selling. 2 The customers are not getting the product 3 represented to them. That's not just what the government 4 is telling you. That's what the customers who testified 5 told you. 6 You heard from 23 different
customers that came 7 from all over the country, from all different professions, walks of life. There were men, women, young and old. 9 Some dealt with Who's Who Worldwide, some dealt with 10 Sterling Who's Who. And they stand over the course of 11 several years from '91, '92, to '95. 12 The one thing they all told you in substance is 13 that the statements made to them about the selection 14 process, and about how it was an honor, or the most 15 important reason for their purchase. 16 All of them told you that if they had been told 17 the true selection process they would never have 18 purchased. 19 I want to review each of the false statements and 20 misrepresentations the defendants used as part of the 21 scheme. 22 First, nominations. 23 Defendants told people they were personally 24 nominated by another member or by someone who knew them. 25 How do you know that? Well, it is in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8943 Summation - White
1 solicitation letters, in the telephone scripts, it is on 2 tape. You heard the customers tell you that as well. I 3 will not go over all the places where that was evident. 4 You know that already. 5 You know that that is false and misleading. The 6 vast majority came from mailing lists, because those 7 letters have codes on them you can match up. Debra Benjamin told you that. 9 She told you that she was concerned the use of 10 that word was misleading and she had repeated 11 conversations with Mr. Gordon about that. 12 She was called by a government witness, but 13 didn't she seem to you she was more sympathetic to the 14 defendants than the government? She was trying to be 15 truthful but put the best spin, the best face of it for 16 the defendants. Even she said they were misleading, the 17 letters. 18 How else do you know that? You heard from Alan 19 Saffer, a salesman there for five years. You heard he 20 pled guilty in connection with his work at Who's Who 21 Worldwide and agreed to testify and cooperate. 22 He said the amount of nominations were very 23 small. Nomination ballots were instituted in 1993, and 24 before that the number of nominations were in his words, 25 very, very few, way less than one percent. And even after
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8944 Summation - White
1 that, after the ballots were instituted, he said it was a 2 little higher, maybe two percent of the cards he got. 3 How do you know it is accurate? It is 4
corroborated by other evidence. 5 Wendi Springer told she was in charge of 6 reviewing orders and would see the paperwork. 7 She said occasionally, she saw a couple or a few actual nominations. 9 Now, you heard a tape recording, 10 Government's Exhibit 1379, of Frank Martin, Mr. Osman. He 11 had a meeting at the Garden City Hotel where he was 12 applying for a job with Steve West who asked him about the 13 sales pitch at Who's Who, and asked him where was it 14 inconsistent with reality? 15 His answer, I expect the major flaw was telling 16 people that they were recommended by other members. 17 He said Who's Who never went out of their way to 18 get recommendations. 19 He says at the top, the few times people actually 20 did give names, we usually converted those into sales. 21 You know that there weren't really a significant 22 number of nominations because that's why Mr. Gordon 23 invented the line of how or what the salespeople would 24 tell people where their names came from. At my level, I 25 don't know, it is confidential, it can't be disclosed.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8945 Summation - White
1 It is part of the scheme. You can't tell them 2 that they weren't really nominated. You tell them, oh, 3 it's confidential. It is the perfect comeback. It 4 deflects the customer's question. But it also suggests 5 the process is secretive and selective, which you know is 6 nonsense. 7 Now, it is not really relevant the defendants will tell you where the names came from. But you know it 9 is wrong for several reasons. 10 Common sense. The most important attribute you 11 bring to your services here is common sense. Of course it 12 makes a difference if you are talking about a Who's Who 13 directory how you were picked. It is the most important 14 factor according to the customers you heard. 15 You know this from the customers. Virtually 16 every one of them told you that it was key to their 17 decision to purchase. 18 Now, you know that the customers thought that it 19 was material. 20 How do you know that the defendants also knew 21 that it was important to their customers and that they 22 were misleading them about important things. 23 Several ways. 24 Look at the tapes. When asked if their names 25 came from a mailing list, they all strenuously deny it.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8946 Summation - White
1 Why? Because they know they would get hung up on if they 2 tell people it came from a mailing list. 3 Six different customers told you that they asked
4 that question, did I come from a list. 5 If there is nothing to hide and if it is not 6 important to the customer, why do they not tell the 7 truth? If it is not material why lie about it? When they are asked, they say you came from a 9 list, do they say let me tell you about the exclusive 10 lists we use? 11 They would hear a click, no sale. 12 That's why Mr. Gordon told them not to say it is 13 from a mailing list. And time after time it was denied, 14 strenuously denied. It is like they were insulted if you 15 even ask the questions. 16 Look at another tape, 1369, one of the calls 17 going to Who's Who Worldwide. And they are told they 18 don't want to be chosen from a mailing list. 19 Mr. Martin's response, no. That's not the way we 20 go. Our registry, membership, if you will, is so 21 exclusive. That that is the last thing in the world we
22 do. The last thing he says. He is saying it is the polar 23 opposite, 180 degrees opposite from what we do. 24 You heard other tapes from the defendants, where 25 they also strenuously deny they came from mailing lists.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8947 Summation - White
1 Scott Michaelson, no, we don't have anything like 2 that that I know of, a number of occasions. 3 Annette Haley, no, no, mail, no. Only about 70 4 percent of our -- seven percent of our candidates are even 5 expected. 6 You see, they know that customers would equate 7 the mailing lists with a lack of selectivity. How else do you know that Mr. Gordon thought this 9 was material? 10 Well, again, Debra Benjamin says she went to him 11 multiple times about this word "nomination" in the 12 letters, and said it was misleading. 13 What was Mr. Gordon's responses? He said that 14 nominated works. That's what pulls the letters. She told 15 you what that meant, pulls the letters, a big response 16 rate. 17 In other words, he knows that telling people they 18 are nominated is what makes the difference. That's what 19 pulls the letters in. He knows that it is material. 20 Now, you heard the defendants say that they 21 thought -- you heard the defendants questioned suggest 22 that they thought it was okay to take the names from 23 mailing lists because Marquis Who's Who does it also. 24 Remember they called Sandra Barnes as a witness. 25 First of all, this trial is not a comparison
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8948 Summation - White
1 between how the defendants and how Marquis Who's Who does 2 its business. You have to decide based on the evidence 3 you heard if the defendant's conduct is fraudulent, not 4 how it compares to other people. 5 I have to confess, I don't know how the 6 defendants wanted to call Ms. Barnes? Why they think that 7 her testimony helped them. Because from their questioning, and the exhibits she introduced, she made it 9 clear that Marquis does the opposite of what Who's Who 10 does. In other words, they send out brochures where they 11 tell people where they come from. Those brochures are in 12 evidence, Exhibit 1622. They say we get people's names 13 from periodicals, newspapers, associations. 14 They are not making any big secret of it. That's 15 what they are sending out to their customers. 16 The defendants here, they do the opposite. When 17 you ask, they strenuously deny it. Oh, no, absolutely 18 not. We are totally opposed to that, one guy says. 19 Now, I want to briefly run through what the other 20 misrepresentations are. 21 They said there was a committee and a board of 22 governors reviewing the applications or nominations. 23 Everyone told you it is not the case, Debra 24 Benjamin, Alan Saffer, Wendi Springer. Springer said she 25 is the only one checking the applications.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8949 Summation - White
1 Acceptance rate, they said it was a very small 2 amount. When you look at the pitch sheets there is no 3 rhyme or reason to it. They are fluctuating daily. There 4 is no connection to reality. 5 In one three-day span in December of 1994, it 6 goes from seven percent, up to 20, and back down to 14. 7 If you listen to the tape telephone calls we played, it is the same thing. 9 Even if it was consistent, you know it is not 10 true. Mr. Saffer testified that
98 percent got accepted. 11 Mr. Martin says on the tape I said before that 99 percent 12 are accepted. He says everyone short of a porno shop gets 13 accepted. 14 You know they are not rejecting 80 or 90 15 percent. But this gives the customer the false impression 16 that it is very selective, very exclusive, that they made 17 the cut. 18 They tell people that memberships are only 19 available through attrition, that there is a waiting list, 20 that a few memberships have just become available. They 21 are only available once or twice a year. Four different 22 customers told you they got that line. 23 You know that is false, too. Mr. Saffer told you 24 there is no waiting list, you don't have to wait for 25 attrition to get a membership. And it is corroborated by
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8950 Summation - White
1 all the 91 calls that Mr. West and Mr. Ihlenfeldt made. 2 They never were told, no, there is no memberships 3 available. 4 You were told -- you heard that they were told 5 that it is a membership run operation. And you know it is 6 not true, Mr. Gordon was in charge there. 7 Customers were told that they didn't solicit new members. You know that's not true. 9 That they had been in business many, many years, 10 you know that is not the case. 11 Now, the defendants have talked a lot about the 12 screening of applicants. There is no evidence that this 13 took place, but I want to look at their theory. 14 First of all, the bottom line is 98 or 99 percent 15 of people got accepted. As I said, Mr. Saffer said it was 16 98 percent. He said the joke was at the company, if you 17 are breathing and you got a credit card you can be a 18 member of Who's Who
Worldwide. 19 How is Mr. Saffer corroborated? 20 The tape with Mr. Osman on it, he says 99 percent 21 get accepted. 22 Those 91 telephone calls that Ihlenfeldt and West 23 made, 90 out of 91 the -- or 91 got accepted. 24 Wendi Springer told you the only person checking 25 qualifications for both Who's Who Worldwide and Sterling
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8951 Summation - White
1 were her. 2 A question put to her, how often were people who 3 were willing to pay for membership actually rejected? 4 Her answer, I can't think of anyone who was 5 rejected. 6 Then she amended it, she said I can think of a 7 couple. She replied when Mr. Gordon was mad at Reed 9 Elsevier, and he went to the CD-ROM and kicked out the 10 people working for Reed Elsevier. 11 How else do you know that? 12
Do you remember Mr. Pierre, the young man from 13 Indiana who worked at Sterling in the summer of 1994, he 14 said they were taking everybody. He is the guy with the 15 assistance of a Robert Lamb, a manager there, who was 16 signing up a kid, who filled out the card in crayon. 17 How else do you know that they are not really 18 concerned about customers' qualifications? 19 Exhibit 1381, another tape, you hear Tara 20 Garboski, the sales manager, talking to new salespeople. 21 And she says, don't ask the customers about their 22 education or background. Don't ask them about any of that 23 crap. She says later it is irrelevant. 24 Let's look briefly at the four level screening 25 process, remember that phrase they loved to repeat?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8952 Summation - White
1 The first one was mailing lists, so let's
look at 2 that. 3 Debra Benjamin told you when they order the 4 mailing lists, they know nothing about the customers, not 5 even their names. 6 Do you remember the people who got letters, 7 Mr. Library, and two people got letters addressed to Ms. Ass, do you remember those. 9 You heard that Steve West, the guy they kicked 10 around a week on cross-examination, he was repeatedly 11 solicited for the honor of being in Who's Who Worldwide. 12 You heard from Mr. Saffer and on a tape to Frank 13 Martin they would cold call people at times. They would 14 just use Dunn & Bradstreet lists. 15 The defendants tried to suggest they used 16 selective lists, and all that means is they know their 17 targeted audience. You send people to -- letters to 18 people who might buy it. A guy who is a local dog catcher 19 might not want to be in Who's Who, and perhaps do
esn't 20 have the money to pay for it. 21 You have to know your targeted audience, business 22 people may have the money to drop at people like this, if 23 you sell hair tonic, you sell to it bald people. If you 24 sell diet pills, you sell it to heavy people. You have to 25 know your target audience.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8953 Summation - White
1 What is the second level of screening? They say 2 once the cards come back they are supposed to be sorted by 3 somebody for qualifications. 4 Wendi Springer told you that that didn't happen. 5 It was just sorted by those codes, that's all. 6 The next thing is the salesperson. They are 7 supposed to make a judgment. But, again, you heard it is 98, 99 percent they are taking. They are working on 9 quota. They have no incentive to uphold the lofty 10 standar
ds of Who's Who. 11 Then the fourth level of screening was supposedly 12 Wendi Springer. And she said as far as she knows she is 13 the only person checking qualifications. 14 She goes to Mr. Gordon periodically, with people 15 she doesn't think are qualified, and he tells her to 16 change people's titles from assistant to associate. If 17 you are a store manager you create -- you have a better 18 title, like operations manager. 19 He said change owner to president. You put I N C 20 at the end of the company name so it doesn't look like you 21 are the only employee. 22 He told her to accept people with lesser titles 23 if it was a longer, more expensive membership. 24 She said it depended on the length of the 25 membership, what his mood was, and if the sales were good.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8954 Summation - White
1 She said, quote, there were times I felt it was 2 bizarre for people getting accepted when I felt they 3 shouldn't be. 4 You heard tapes where Mr. Gordon says he doesn't 5 want McDonald's managers or postal employees in the 6 books. And the defendants are trying to suggest that it 7 shows he is concerned with qualifications. It really shows you that Gordon is concerned with 9 how the directory looks on the surface only. He is not 10 concerned with actual qualifications, with actual 11 complaints. He just wants to know their title, so it 12 looks good, it looks impressive in the registry. He 13 doesn't want to know if you are outstanding in your 14 field. He doesn't want to know if you are the president 15 of IBM or the president of your own company you operate 16 out of your living room. If you are a president you are 17 in. It looks good.
18 No written qualifications whatsoever. You have 19 dozen of telemarketers talking to people on the phone. If 20 the standards are important, don't you think at least once 21 Mr. Gordon would have spent time to try to outline what 22 those qualifications were? 23 You heard him on the tapes explaining how you 24 should pronounce "it sounds wonderful Mr. Jones." You 25 remember that?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8955 Summation - White
1 If qualifications were so important he could have 2 spent that time explaining what the standards were. 3 You heard 1389, a tape from Tara Garboski saying 4 that's what you are paid to do, to sell them. 5 What did I say? You got to smell blood. You got 6 to be like you are a hunter, right? She is lecturing the 7 salespeople. You got to know when. It is an instinct in sales, as I ref
erred to it, go for the jugular. You got 9 to know when. It is an instinct. Go in for the kill, 10 that's what it is all about. 11 Further on down she says, if you don't ask for 12 the order it ain't coming to you. You got to have balls 13 as Bruce puts it, brass ones, because if you are afraid to 14 ask you are not going to get, meaning the order. 15 Does that sound like someone who is worried about 16 customers meeting strict criteria? Or does it sound like 17 someone who will send to anyone who is breathing and has a 18 credit card? 19 You also heard a tape where Mr. Gordon says, 20 don't lie. Anyone lies and you are out of here. 21 Well, Mr. Gordon has already done the lying for 22 them. He created the pitch sheets and solicitation 23 letters containing the lies. And you know that they have 24 lies. He is not stupid. He is not going to stand up in 25 the
middle of the office and announce that I want you to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8956 Summation - White
1 lie, I want you to defraud people. He puts it on the 2 pitch sheets and tells them to repeat it and they do. 3 Now, let's talk about the benefits. The 4 defendants have talked a lot about the benefits offered to 5 members, so let's take a look at it. 6 There is no dispute that they were offered 7 various things, the CD-ROM, discount and other things. The fact that there were benefits doesn't mean 9 that there is not a scheme to defraud here. Look at it in 10 the context of all the other things you heard. 11 First of all, most of them doesn't start until 12 late '93, '94, the last 15 months of a five-year 13 operation. So they weren't available to members who 14 joined in in, '91, '92 and most of '93. They claim to
15 have 15,000 members so the vast majority must have joined 16 before '93. 17 Even if the benefits excuse false statements to 18 customers in '94 and '95, which it doesn't, what about the 19 ones for the earlier years? What is their defense? Well, 20 we only defrauded 30 or 40 thousand people and not 60 21 thousand. 22 Another thing to consider is if the benefits of 23 this organization is so great, why not just tell the truth 24 about the organization? That's a novel idea. Why not 25 say, hey, we got your name from a mailing list. We take
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8957 Summation - White
1 almost everybody. But we do have some great benefits and 2 discounts. Do you want to join? If they did that then 3 customers can make an informed decision about whether or 4 not to join. 5 The defendants are not confident enough in their 6 product to tell the truth about it. Keep in mind the 7 benefits by and large are just additional money making opportunities for Mr. Gordon. 9 You trick them into buying memberships by false 10 statements. And then you sell them extra stuff. 11 You want a CD-ROM, give us more. You want 12 discounts? Mr. Gordon gets a cut and he doesn't want the 13 customers to even know that. 14 So, when you look at all the evidence, you know 15 that a conspiracy, a scheme to defraud existed here. 16 The judge will instruct you that a scheme to 17 defraud involves making false or misleading statements 18 about material things in order to obtain money. And 19 that's exactly what you have here. The defendants lied 20 about the nomination and selection process, the honor and 21 exclusivity of the organization. 22 Remember, I said that there are basically two
23 questions: Was there a scheme to defraud here? If so, 24 were the defendants members and participants of it? 25 So, let's look at the individual defendants.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8958 Summation - White
1 First, of course, there is Mr. Gordon. 2 There is no dispute that Mr. Gordon conceived and 3 designed and oversaw this scheme. He ran it on a 4 day-to-day basis. 5 The heart of this fraud is in the solicitation 6 letters and the telephone sales scripts that Mr. Gordon 7 wrote. There is no dispute about this. The solicitation letters, he is on tape talking about what he puts in the 9 letters. Debra Benjamin told you he wrote the letters. 10 There are draft letters he signed off on in his 11 handwriting, where he writes, okay, BG on it. 12 The pitch sheets, Mr. Saffer says that Mr. Gordon 13 prepared them. There is a tape in evidence where 14 Mr. Gordon say, I wrote all the lines, meaning the pitch 15 sheets, so they are all my favorite children. 16 He is the one directing the whole enterprise and 17 the other defendants follow his instructions. You know 18 they followed his instructions because here they are all 19 literally following the script. 20 You know that he knew this was a fraudulent 21 scheme from the two instances I described before. He is 22 afraid to let the postal inspectors and his own attorneys 23 see the sales presentations. 24 As the judge will instruct you, actions speak 25 louder than words.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8959 Summation - White
1 Let's look at the other defendants now. 2 Before I do that, though, a lot of the evidence 3 that you heard about the other defendants came from
tape 4 recordings that were made by government informants. And 5 you heard from three of them. Steven Watstein, or Steven 6 West, Elliott Zerring and Eric Ihlenfeldt. You heard they 7 all pled guilty to other crimes and cooperated with the government. 9 The defendant spent a lot of time cross-examining 10 them about their criminal record. But the most important 11 thing to ask yourselves is: Does any of that change what 12 the defendants said on those tapes? 13 All of that cross-examination was designed to 14 distract you. They are hoping you will say, they are bad 15 guys, Zerring and West, and not focus on what the 16 defendants say on the tapes. 17 You have to keep your eye on the ball, focus on 18 the real issue. The government is not asking you to take 19 the word of Steve West or Elliott Zerring. That's why 20 they were sent in with tape recorders, so
it would be on 21 tape and you wouldn't have to rely on their word. 22 It doesn't matter whether the guy with the 23 recorder is a convicted criminal or a priest or a rabbi or 24 a minister, the tapes speak for themselves. 25 The defendants made a lot of the questions that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8960 Summation - White
1 were asked, asked in the telephone calls, made a lot out 2 of it. 3 Do you have seminars, how did I get selected? 4 Look at the answers and not the questions. 5 Nobody made the defendants give false answers. 6 When asked, did I come from a mailing list, they 7 could have said yes. But they don't. They lie. Let's look first at Mr. Osman or Frank Martin. 9 You heard he worked at the company '91, to '92, and left 10 and came back the end of '94, the beginning of '95. 11 The first tape
to look at is 1379, as I mentioned 12 before. That's the one where he is meeting with Steve 13 West at the Garden City Hotel. Where he thinks he is 14 applying for a job with Steve West. 15 First he brags that he single-handedly built up 16 Who's Who Worldwide. 17 He says something interesting. He tells people 18 to stay with the presentation because, quote, the postal 19 authorities and all those other bad guys out there might 20 be listening, unquote. 21 Why does he think that the postal authorities are 22 the bad guys? What does it tell you about his mind set, 23 his intent? Why is he even thinking about postal 24 inspectors listening in? Do legitimate businesses think 25 about that? It is like Mr. Gordon afraid of law
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8961 Summation - White
1 enforcement finding out. 2 Then
he is asked, where is the sales presentation 3 inconsistent with reality?
4 He says, I suspect the major flaw was telling 5 people they were recommended by other members. 6 That's the major flaw. He knows it is not true. 7 He knows it is inconsistent with reality. West asks him, was everybody accepted there? 9 He gives the answer, basically everyone accepted, 10 except if you are a porno shop. 11 99 percent accepted? 12 He indicates, yeah, they got the money. 13 Listen to what he says when he knows -- doesn't 14 know he is being taped. You don't have to accept the 15 government's word 99 are accepted, take Mr. Martin's. 16 Don't take the government's word that everyone except a 17 porno shop get accepted. Take his. 18 After he returns in 1994 he has another telephone 19 conversation you heard about, Exhibit 1359. Look at what 20 he said, directly c
ontradictory to what he said in the 21 earlier tape. 22 He talks about Who's Who is a small member-run 23 organization. 24 Just the fact that you were nominated for 25 inclusion is quite an honor in itself. He says we have a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8962 Summation - White
1 lot of names in businesses, the creme did he la creme in 2 American Business Today, the sciences, the arts, and what 3 have you. And obviously someone thought enough of you to 4 nominate you for the registry. 5 This is the same guy who said everyone except the 6 porno shop gets in. 7 The same tape he is asked about the mailing list, and he says, that's the last thing in the world we do. 9 Now, you also heard that one of his jobs as a 10 salesman was to train new salespeople. And if you look at 11 Exhibit 1399, you hear him telling
the salespeople that 12 after that, after they talk about it to the says people, 13 you have to pause a little and say, you have to keep up 14 the whole facade, like you are considering whether they 15 are qualified. He says it is like you are really make the 16 decision with respect to what you have before you, and 17 wait the fraction of a second, well, based on the 18 information I have here, just like that. That's what he 19 tells them. He knows that there is no real decision. You 20 just get in. 21 You heard him say on Exhibit 1397 that economic 22 times aren't good when people are a little more careful 23 with their money. Quote, we have to be a little bit more 24 creative as to find out ways to separate them from their 25 monies.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8963 Summation - White
1 Other tapes he talks about
mailings, knowing that 2 mass mailings are going out. 3 By his own words on the tape he knows he 4 willingly participated in the scheme. 5 Next we talk about Steve Rubin or Walden. He 6 worked there a year from March of 1994 to early 1995. How 7 do you know that he participated in the fraud? Well, he admitted it to Agent Jordan when he was 9 arrested on March 30th, 1995 in his home. He said he knew 10 he lied to customers on the telephone at Who's Who 11 Worldwide. He lied to them by telling them that Hilton 12 Head took place when he knew it had not. He lied about 13 how long he had worked there. He said he was only there a 14 year and he told people five years. He lied when he told 15 people they were nominated. He knew that they were not 16 and their names came from lists. 17 Mr. Dunn tried to suggest it is in his opening 18 that Mr. Rubin didn't really
make that statement. 19 Why would Agent Jordan get up here and testify 20 that he did. You have seen him. He is from the IRS. He 21 has nothing to do with Steve Rubin. He is here for the 22 tax part of the case. He just happened to be there when 23 Mr. Rubin was arrested. He is not getting some gold star 24 if Mr. Rubin gets convicted. 25 Mr. Dunn suggested that there is no written
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8964 Summation - White
1 statement suggesting something. 2 You heard Mr. Rubin was in the car when this 3 happened. He had handcuffs on. It is difficult to write. 4 Look at all the other facts when you really think 5 if he said this really. 6 He said he was cooperative. He said he wanted to 7 sue Mr. Gordon because he got in trouble. He said it was Mr. Gordon's fault that he got arrested. He gives them
9 documents from the trunk, from the apartments. 10 He said he lied about Hilton Head. And Debra 11 Benjamin told you that she heard him lie about Hilton 12 Head, that it took place. 13 Look at the tapes, Exhibits 30 and 33 he is on, 14 he does the same thing, lying about how long he has been 15 in the company, nominations. There is a tape where he 16 talks in detail about the mailing lists. He knows how 17 much they cost, that they use it. 18 When you go through each of the tapes you will 19 hear each of the defendants make false statements. 20 Mr. Rubin talks about how the acceptance rate is 21 very low. It is not common he gets to talk to people who 22 are not multibillionaires and CEOs. 23 He is asked, did I actually get nominated or come 24 from a mailing list. 25 He says there is no doubt you were nominated. He
HARRY RAPAPORT, CSR, CP, CM
OFFICIAL COURT REPORTER 8965 Summation - White
1 says the Vietnam seminar was successful. He says Boris 2 Yeltsin was a member. 3 There is one very important thing you should 4 notice. In Exhibit 1330 -- I am sorry, 1333, the caller 5 says to him, well, I am not -- I just want to make sure. 6 You sound like a prestigious group. I just want to let 7 you know I had some legal problems like a few years ago. Is that going to be a problem? 9 Keep in mind he is supposed to be screening 10 people out so they are very qualified, and they might do 11 business and network with the other Who's Who members. 12 This guy is saying I had a legal problem. You 13 don't know what it is. Maybe his legal problem is I am 14 bankrupt, maybe I defrauded my clients or defrauded my 15 customers, maybe I am a mass murderer. 16 He says is that a problem, legal problems?
17 Mr. Rubin shoots back, no, why should it be. It 18 is not our concern, our concern is you have been rated for 19 exceptional excellence by your peers. He doesn't care. 20 He just sees the sale. 21 With respect to Mr. Rubin, you heard from several 22 customers, that you can match up the customer with the 23 defendant by looking at the order form that has their name 24 up on the top right. And Mr. Rubin dealt with three 25 customers you heard about here. Thomas Schaeffer, Linwood
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8966 Summation - White
1 Schultz and Fred Simmens, and all of them told you the 2 same thing. They were told they were nominated, it was 3 anonymous, it was a peer of mine that knew them 4 personally, that they were in very exclusive company. 5 Now, let's look at the other defendants. Did 6 they know what was going on? 7 Look at the way the company operated, and you will reach the conclusion that everybody knew. They had 9 to have known. All the rest of the defendants were there 10 three, four, five years. They were among the top sellers 11 at the company, and Ms. Garboski was a manager. 12 The fact that the names came from lists was known 13 at the company. Rubin it was there a year, he knew. 14 Ellery Pierre at Sterling, he is there nine weeks and 15 knows. 16 Saffer says that Mr. Gordon would talk about 17 mailing going out to specific industries. Mr. Gordon is 18 on tape talking about how much the card cost, the mailings 19 cost. Martin is on tape talking to new salespeople that a 20 mass mailing is going out. This is what they are telling 21 the new salespeople. How can people there three or four 22 years, not know this. 23 There was a pattern. Saffer said you knew a 24 mailing was going out. The cards would come back in 25 groups. All of a sudden you have cards coming back in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8967 Summation - White
1 engineers. You know it is not all of a sudden an engineer 2 tried to nominate his good friend, another engineer to 3 Who's Who. 4 When they are on the phone, they know the kind of 5 cards in front of them. Is it a nomination ballot or a 6 lead card. 7 1393, Ed Schaeffer, a manager has one of those cards where it is half and half, there is a lead card on 9 the one side, and they ask that person to nominate someone 10 else. 11 He talks about distinguishing the two sides, one 12 side is the person actually nominated, versus the person 13 who received the invitation to be included. There is no 14 secrets there what is going on.
15 You have to be deaf, dumb and blind to work there 16 three, four years, and not know. 17 What is going on? 18 Next Tara Garboski. She worked there for five 19 years. You heard she worked her way up from a salesperson 20 to a manager. There is no way she could be there in that 21 position for that long and not know. 22 People above her knew and people below her knew. 23 In other words, Mr. Gordon certainly knew what 24 was going on. You heard Mr. Rubin who is below her who 25 has only been there a year, he knows what the deal is.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8968 Summation - White
1 Frank Martin you know what his deal is, he is at the same 2 level as her. 3 How is it she could be there and not know no what 4 the story was? Does anybody say, don't tell Tara? She 5 doesn't know we use mailing lists. 6 She is in charge along with Mr. Gordon of 7 revising and changing the pitch sheets. You heard her explain on the tape how she the making changes. 9 You heard the same I smelled before -- I 10 mentioned before, you have to smell blood, and be like a 11 hunter. You have to go for the jugular. Does that sound 12 like someone interested in screening qualified 13 candidates? 14 Mr. Schoer asked a whole bunch of witnesses, do 15 you remember Tara's instructions, follow the pitch 16 verbatim? 17 I don't know how Mr. Schoer feels that that helps 18 her. The pitches contain lies, if she is telling people 19 to follow the pitch verbatim, she is instructing them to 20 lie. 21 Look at Scott Michaelson. Now, he has been there 22 for a number of years. He is one of the top salespeople. 23 He was in this black room that Saffer described for you. 24 Let's look at the tapes that he made. 25 First, Exhibits 1308. It is the one where
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8969 Summation - White
1 Mr. West was posing as Ed Grimaldi, the beauty salon 2 owner. 3 He tells him, again, acceptance rate is very 4 small, a thousand out of 6,000. He says, I am not on some 5 kind of mailing list, am I? 6 No, not that I know of. We have to reject more 7 people than we actually accept. Mr. Neville made a lot to do about when he 9 cross-examined Mr. West. That Scott Michaelson says, we 10 wouldn't take your money for the longer membership, we 11 would just sell you a two-year membership. 12 At the end of the application he is ready to take 13 Mr. West's credit card number. He is willing to sell him 14 the two-year membership. 15 Again, Exhibit 1326, another call with Scott 16 Michaelson on it. He is asked, I am not on some dumb 17 mailing list am I? 18 No. Because we don't have anything like that 19 that I know of. We have ballots and everything we work 20 on. 21 Would you say that you are quite selective? 22 Oh, yeah, I would have to say we receive roughly 23 6,000 requests each month for inclusion. We only accept a 24 thousand new members. 25 Again and again, he says that on the tapes. You
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8970 Summation - White
1 were nominated. It is very selective. Only a small 2 percentage get accepted. 3 Now, who are the customers who testified that 4 they related to Mr. Michaelson. 5 One was Rita Rieger, remember her? A pharmacist 6 from California. She was the first customer you heard 7 from. She was told that these was nominated for a very prestigious award. 9 She asked who? 10 Anonymous, but members were selected by 11 nomination from other members. 12 Her information would be submitted to and 13 considered by a board of directors. 14 If a person didn't review it, then that slot 15 would be going to somebody else. 16 She was told a small chance to be accepted into 17 membership. 18 If you remember Charles Smith, he is from 19 Illinois. He was the guy interested in trying to get his 20 methane gas off the ground. You remember that? 21 He also dealt, according to the order form with 22 Scott Michaelson. He was told the same thing. His name 23 was put in nomination. It was very exclusive. Someone 24 had to leave the directory before someone else could be 25 submitted for approval.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8971 Summation - White
1 He said,
I thought if someone went to the trouble 2 of recommending me, I would join. 3 Now, the defendants have also suggested that, 4 well, there is a lot of swapping going on. You can't 5 necessarily say because someone's name is listed on the 6 order form that they didn't necessarily speak to the 7 customer. That is a nice theoretical argument. But as a 9 practical matter, these defendants are the best sellers. 10 You heard that when swapping would occur is when someone 11 didn't make their quota, and needed to borrow a sale from 12 somebody else who had. But these are the people who are 13 in this so-called black room. They are the best sellers. 14 They are the people who hardly ever miss their quota. Of 15 all the people in the company they are the best. They are 16 the people who least frequently needed to swap. 17 Look at Annette Haley next. Exhibits 1325 and
18 1361 are the tapes she is on. 19 1325, she says, again, talking about exclusivity, 20 only 6,000 apply each month, but we don't accept 21 everybody. We only accept five percent. 22 She also says that the seminar in Vietnam took 23 place, when you know it didn't. 24 1361, this is the guy who is the president of -- 25 owns two sub shops. He says, how was I selected?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8972 Summation - White
1 You were nominated by an established member, she 2 says. 3 Mailing list? No, no, no, we don't. I would say 4 about seven percent of candidates are even accepted. 5 Again she says Vietnam and Hilton Head took 6 place. 7 Now, what customers relate to her? There is Wilma Pincham, James Spencer -- Wilma 9 Pincham and James Spencer. 10 You will remember, she was the woman from
11 Washington, Pincham, the person who ran a business to 12 train parents to take care of foster care children. She 13 was told she was nominated by someone who considered me 14 outstanding in my field or profession. 15 She was asked who, and she was told she wasn't 16 allowed to be told. That only the cream of the crop got 17 to be members. 18 She said there would be a special dinner, or she 19 would be brought back free and honored at the dinner, all 20 the new members. 21 James Spencer, again, was told he was nominated. 22 He was told it was a member-run organization. He said the 23 only two ways you can become members is one by nomination, 24 and the other being a certain limited number of people 25 invited to join on the basis of their publicized
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8973 Summation - White
1 accomplishments. 2 He said the whole business about nominations, 3 definitely made me feel good that somebody recognized my 4 accomplishments, level of success. 5 Finally, Laura Weitz. 6 THE COURT: Mr. White, please start to conclude 7 your summation. MR. WHITE: We are breaking at 1:00? 9 THE COURT: Yes. 10 MR. WHITE: I will finish by then. 11 Finally Laura Weitz, you heard she was at the 12 company the longest, there for five years. Mr. Saffer 13 testified that she was there before he was. Therefore 14 several tapes she was on. 1324, she said the Hong Kong 15 and Vietnam seminar was dynamite. Her words. They only 16 accepted one sixth of people who apply. Two ways to 17 become a member. Nomination by a member or having an 18 article published by you. 19 Exhibit 1327, again she says Vietnam took place, 20 only seven percent are accepted.
21 1350, only two ways, nomination, or if you have 22 been published or written about. 23 She says, you are not from a mailing list, and 24 only 14 percent are accepted. 25 Who are the customers that relate to Laura
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8974 Summation - White
1 Weitz? 2 There are three of them. Lester Wheeler, Terry 3 Swinney and David Ray. Swinney was the man who worked for 4 Boeing in Philadelphia. He said after his conversation, 5 he asked around in his company about who may have 6 nominated him. He said they told me I had been nominated, 7 and based on my credentials I would go before a board. She made me feel I was one out of a million people who 9 were nominated and only a very few select people would 10 ever be given the opportunity to join Who's Who Worldwide. 11 He asked about a mailing list, and
he was told, 12 no. He was truly nominated. 13 Lester Wheeler, do you remember him? From Fort 14 Worth, Texas. He was a retired military officer. He was 15 currently a Mr. Mom. His wife worked and he took care of 16 his kids. 17 He said that the customer -- that the 18 salesperson, in this case it turns out to be Ms. Weitz, 19 talked about his jobs, and she indicated it sounded like I 20 was a good candidate for selection in Who's Who. And she 21 would go forward with my nomination. 22 During that discussion I said, I feel very 23 honored about being nominated. Can you tell me who 24 nominated me? 25 She said, no. We are not at liberty to discuss
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8975 Summation - White
1 it. 2 She -- he asked who it might have been, she said 3 she couldn't disclose it. 4 He said the person at the other end of the line 5 in discussing my purchase, emphasized over and over again 6 that it was a selective process by which I was nominated. 7 Someone told them I was a qualified candidate. He said, I felt honored. He said selection by a nomination connotes 9 an honor and distinctive situation where an individual is 10 recognized for something that was done or to be done. 11 Finally, Mr. Ray. You will recall he was someone 12 who worked a long time for CVS, the pharmacy chain. He 13 was from Upstate New York. 14 He was told that I had been nominated to be a 15 candidate. That members were nominated. It was a process 16 of screening that he would go through. And that not all 17 the people who were nominated would become members. 18 Now, let's talk about the corporations. They are 19 also defendants here. 20 You heard -- Judge Spatt will instruct
you that 21 the corporations can be criminally liable for the acts of 22 their employees. And that's true even if they are 23 violating company policy. 24 Here they are following it. But even if they are 25 violating policy the corporations can still be liable.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8976 Summation - White
1 They have to have an intent to benefit the 2 corporation and what you are going to be told about the 3 law. But here every salesperson in making sales for those 4 two companies is acting to benefit both himself and the 5 corporation. They get a 12 percent commission. So every 6 sale they make, the company gets 88 percent, and they get 7 12. So, look at their actions, what they are doing in 9 the pitches, the telephone calls, including Mr. Gordon and 10 all the others. If you think that they engaged in a
11 scheme, then the corporations did as well. 12 Now, for their intent, the intent of the 13 corporations, you look at what the intent of the employees 14 is. 15 Take a brief look at that. Exhibit 1384, the 16 tape you heard near the end of the government's case. And 17 it is a conversation among two different -- among several 18 Worldwide salespeople. 19 You heard one, a guy named Richard Pace say this. 20 If they want to pay me a salary to fucking scam 21 and bullshit, I am not liable. 22 What does it suggest to the intent of the 23 corporation as a whole if that's what the salespeople are 24 thinking. 25 Exhibit 1383, a discussion with another
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8977 Summation - White
1 salesperson, George Robins, they talk about the line in 2 the pitch where we are not a marking comp
any. And Robbins 3 says, yes, we are lying. 4 Again, also on 1383, Mr. Pace again, he talks 5 about selling this Who's Who directory, he says it makes 6 him nervous on the phone. He says, quote, I am trying to 7 sell them the fucking Brooklyn Bridge over here, unquote. Now, you heard about Sterling from Ellery Pierre 9 who worked there. He said they are signing in everybody. 10 If you write it in crayon. If you are a kid, and your 11 mother gives you the credit card number, they sign you up. 12 You heard about -- all the tapes we played about 13 people who weren't defendants but who worked for Sterling, 14 and all that you can consider as to whether or not each of 15 these corporations had an intent to defraud. 16 There is a very significant tape, 1386, which is 17 a conversation recorded with a Sterling salesperson. 18 Mr. Ihlenfeldt who was here asked him about a
certain 19 document, a form he had to fill out when Ihlenfeldt worked 20 there for like a week. And, remember, he had been given a 21 phony name to use on the phone. So he asked the 22 salesperson, what do I put on this form? He said do I put 23 my real name down here? 24 The manager responds, no. You never put your 25 real name. In a court of law you won't be recognized.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8978 Summation - White
1 What does that tell you about his intent? They 2 are worried if they have the real name on company 3 documents they could be worried about being identified in 4 a court of law. Is that the way an honest, legitimate 5 operation operates? 6 Finally, let's look at the perjury count. You 7 heard that Mr. Gordon is charged with perjury in addition, about lying about this Vietnam conference.
9 Perjury is just lying under oath about a material 10 matter. The trial where he testified is that lawsuit 11 where you heard that Marquis Who's Who filed against him. 12 Now, Debra Benjamin told you that this conference 13 did not take place. There was an attorney's group that 14 was also going, they initially discussed sharing the hotel 15 or air reservations, but nothing ever came of it, no Who's 16 Who members wanted to go. Never went beyond the talking 17 stage. 18 Mr. Gordon knew this as the president of the 19 company. He had to. He was the guy who knew the number 20 of cards in every stack, who signed every check, worried 21 about people saying, this is wonderful, sounds wonderful. 22 Let's look at what he said here with respect to 23 sponsoring a seminar -- before we do that, the suggestion 24 from Mr. Trabulus when he was examining Ms. Benjamin and 25 others, he said the questions may have been misunderstood
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8979 Summation - White
1 and all that. 2 His trial testimony, by the way is in evidence. 3 First on February 17th, 1994, at that trial. 4 Question: When did you have your first Who's Who 5 Worldwide seminar? 6 Answer: December. I know the plane left the 7 conference about December 28th to Vietnam and Hong Kong. Then he clarified it was December of 1993. 9 Now, he is not asked when did you have to have 10 your first Who's Who seminar. He is not asked when did 11 you hope to have your first Who's Who seminar? When were 12 you scheduled to have your first seminar? He is asked, 13 when did you have it. 14 The plain meaning of that is when did it take 15 place? And he said, December of 1993, when we know that 16 is not correct.
17 From the next day he is asked additional 18 questions, and it refers from a document, a trial exhibit 19 at that trial, also an exhibit here, where it lists Who's 20 Who Worldwide business seminars. 21 He is asked: Has that actually occurred? Has 22 this benefit been provided Mr. Gordon? 23 He is asked, did that actually occur? He knows 24 they are not driving at, well, did you plan to have it? 25 Nothing like that.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8980 Summation - White
1 Has that actually occurred? Has that benefit 2 been provided, Mr. Gordon? 3 That's what he is asked: 4 Yes. 5 Next question: When did it start? 6 He says December 28th, 1993. 7 Does he say it didn't start? We never got beyond the talking? 9 Then he goes on to a long description about what 10 its purpose was.
11 Then a little bit later he is asked again, where 12 was this first seminar? And he answers Hong Kong and 13 Vietnam. 14 He wasn't asked, was there a seminar. He is not 15 asked, where is it supposed to have taken place? He is 16 asked, where was it. He says Hong Kong and Vietnam. 17 You know that that is false. There is no dispute 18 that it didn't take place. 19 How do you know it is material? 20 You had Mr. Tardera testify, who was an attorney 21 for Reed in the appeal from lawsuit. And you heard that 22 one of the issues there, was Reed an organization like 23 Who's Who Worldwide? And Worldwide thought it was helpful 24 to point out, no, we are a membership organization and we 25 have all these benefits.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8981 Summation - White
1 So, that's what he was trying to get across,
we 2 have benefits, members can go there and can network at the 3 conferences. 4 Next, it didn't take place. It is not true. 5 Nobody was interested in going? That's material. The 6 definition of material is if it is capable of influencing 7 the decision maker at that trial. And that certainly is. Now in sum, you know what went on here. When all 9 is said and done about this, it all boils down to the fact 10 that the defendants were lying on the telephone to 11 customers to get their money. It is as simple as that. 12 They were lying about things that were important, that 13 were material to customers. 14 All the charges in this case boil down to simple 15 lies: Lies to the IRS, lies to the bankruptcy court, lies 16 to the Court in the civil trademark lawsuit, and lies to 17 the customers of Who's Who Worldwide and Sterling Who's 18 Who. 19 You know there is just too many lies. There is 20 just too much of a pattern for these to be innocent 21 mistakes or harmless sales puffery. You know they were 22 intentional and that the defendants made them with the 23 purpose of concealing and with an intent to defraud. 24 So, in conclusion the government submits that the 25 evidence you heard at this trial proves the defendants
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8982 Summation - White
1 guilty beyond any reasonable doubt of the crimes charged 2 in this indictment. 3 Thank you. 4 THE COURT: Members of the jury, we are going to 5 recess now for lunch. Your lunch is waiting for you. 6 Please do not discuss the case. Keep an open mind. 7 You will not start deliberating until all the summations are concluded, my instructions to you on the 9 law is concluded, and you are in the
room exchanging views 10 for the first time. 11 We will recess until 2:00 o'clock. 12 Have a nice lunch. 13 (Whereupon, at this time the jury left the 14 courtroom.) 15 THE COURT: We need all the time. So I will make 16 it at 1:45. We are coming back at 1:45. 17 (Luncheon Recess.) 18 19 20 21 22 23 24 25
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8983 Summations-Wallenstein
1 A F T E R N O O N S E S S I O N. 2 THE COURT: Please be seated, members of the 3 justify. Please give your attention to the attorney for 4 John Reffsin, Mr. Wallenstein. 5 MR. WALLENSTEIN: Good afternoon. I will try to 6 keep you all awake after lunch. 7 You know, there's a couple of things that the government didn't tell you about this case and Mr. White 9 is wrong about one thing, we do agree on a couple points 10 but he said we didn't agree on any. One of the things he 11 didn't tell you until the very end of his three hours and 12 some-odd minutes of summation he has to prove guilt beyond 13 a reasonable doubt. Those are four very important words. 14 You heard them in the beginning of this trial, 15 you'll hear them from me, I dare say you will hear them 16 from all of my colleagues when they get up and follow me, 17 and you will hear them from Judge Spatt more than once. 18 Every element of every crime charged in this indictment 19 and there are 69 counts in this indictment, every element 20 of every crime charged in this indictment has to be proven 21 to your unanimous satisfaction beyond a reasonable doubt 22 by the government. Not by me, not by Mr. Trabulus, 23 Mr. Jenks, Mr. Schoer, Mr. Nelson, Mr. Lee, Mr. Dunn, 24 Mr. Neville, Mr. Geduldig, not one of us has to prove a 25 single solitary thing. None of us has to do anything in
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8984 Summations-Wallenstein
1 this trial except show up. I do not have to give you this 2 summation, none of them have to speak after me. We can 3 simply sit here and say by pleading not guilty, we've said 4 we didn't do it, it's the government's burden throughout 5 this trial to prove guilt beyond a reasonable doubt. Bear 6 that in mind throughout the summations, the charge and all 7 the way through your deliberations. You cannot, you cannot on your oaths as jurors convict any defendant of 9 any crime unless all of you are convinced beyond a 10 reasonable doubt of guilt and convinced by the 11 government's proof. 12 Now, I say that specifically because my client 13 testified and I called two other witnesses, I
called Jack 14 Hall and I called Vincent Rizino. I didn't have to do 15 that, I didn't have to put any case at all and Marty 16 Reffsin certainly didn't have to say anything to any of 17 you, but the fact that we chose to do so does not in any 18 way shift the burden from the government. I don't have to 19 prove that Marty Reffsin is innocent, he is presumed to be 20 innocent. He does not have to convince you by any 21 standard of proof that he did not commit the crimes he's 22 charged with, despite the fact that he testified, he 23 doesn't have to convince you of a thing. The government 24 has to convince you that he's guilty beyond a reasonable 25 doubt of every element of every crime that he is charged
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1 with. 2 He's charged with obstruction of justice, one 3 count, because there are two counts in the indictment. 4 He's charged with acting along with Bruce Gordon with 5 aiding and abetting Bruce Gordon and the two of them are 6 charged, I give up with the numbers in the indictment, but 7 charged with one count for obstructing justify for putting those phony logs in front of the bankruptcy court. I'll 9 deal with all of those things later. 10 There's a second count of obstruction that 11 Mr. Reffsin is not involved in. But he's charged with tax 12 evasion. He's charged with assisting in the filing of 13 false tax returns, three or four counts, if that, and he's 14 charged with conspiracy, conspiracy to impede the Internal 15 Revenue Service in the collection of Bruce Gordon's taxes. 16 What is this case really about? This case, the 17 tax case and the mail fraud case for that matter are about 18 greed. The case is about vanity, it's a
bout narcism, it's 19 about Bruce Gordon living the high life at the expense of
20 everyone around him. As a result of Bruce Gordon's vanity 21 and greed, these people are on trial here, Reffsin, all of 22 the salespeople are on trial here because Bruce Gordon 23 lied to everybody from day one. 24 I agree with Mr. White about that. I obviously 25 don't agree with Mr. White about Mr. Reffsin's role in all
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1 of this and I'll tell you why. But the fact is that Marty 2 Reffsin relied on his client to provide him with accurate 3 and complete information and to tell him the truth. Why 4 would a man lie to his accountant? The accountant is the 5 guy that can help him. The accountant is the guy that 6 will minimize legally his tax liability, the accountant 7 will be the guy that doeshis books. Why would you lie to your accountant? Having heard all the evidence in this 9 case you heard why now, but he didn't know then. 10 In 1998 every one ever us in this room has 20-20 11 hindsight. In 1992 and 1993 and 1994, nobody knew -- 12 well, not nobody, but Marty Reffsin didn't know. 13 Let's talk about some of the specific charges and 14 why the government has not proven guilt beyond a 15 reasonable doubt of all the elements of all the crimes 16 charged, and on that note Judge Spatt will instruct you 17 further on Thursday, if a crime has three or four or five 18 elements and the government convinces you of four out of 19 those five elements, that's not enough. You have to be 20 convinced of every element of the crime or you must acquit 21 the defendant, that's the law, that's what the Judge will 22 tell you and that's what you must follow. 23 The government says that Reffsin and Gordon 24 conspired to defraud the IRS. The government says that 25 because Marty Reffsin was Bruce Gordon's accountant for
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1 years and years, that therefore he knew and therefore he's 2 just as involved as Bruce Gordon. And that I think 3 ignores the fact that Gordon didn't care what Reffsin 4 thought and didn't ask Reffsin's advice in advance. 5 Gordon did what Gordon wanted to do when Gordon wanted to 6 do it and how Gordon wanted to do it. And anybody who 7 worked for Gordon or who was an outside professional employed by Gordon, wound up in the same boat, they did 9 what Gordon wanted them to do or they didn't work for 10 Gordon and they did it the way Gordon wanted it because 11 Gordon tailored the facts. Gordon told them what they 12 want to hear. 13 How do we know that? We heard it from the 14 witnesses here, we heard it from Marty Reffsin's own mouth 15 that Gordon told him of the things after the fact. Never 16 came to him in advance and said, Marty, what shall I do 17 now? He came to him and said, yeah, Marty, I did it, 18 clean up my mess. We know that's true because Debbie 19 Benjamin told us that that's what happened with Phil Peers 20 and Mr. White touched on that in morning. 21 Debbie Benjamin you will remember sent some 22 documents to Phil Peers, the attorney and lawyers don't 23 remember my business, I run my business, that's how he was 24 with Reffsin, that's how he was with every one of these 25 people. He ran it, he did what he wanted to do, he told
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1 you what you thought you ought to know.
2 There is no evidence in this case that Marty 3 Reffsin had anything whatsoever to do with Bruce Gordon's 4 life-style. There is no evidence that Marty Reffsin knew 5 where Bruce Gordon was living let alone how he was 6 living. There is no evidence in this case that Marty 7 Reffsin ever was in Bruce Gordon's home, and the evidence is to the contrary and the only evidence is from 9 Mr. Reffsin, of course. 10 Mr. White says that this whole case is about the 11 scheme to keep the IRS from getting the money that Bruce 12 Gordon owed them and to a certain extent he's right. But 13 the fact is that Bruce Gordon's tax liability to the IRS, 14 that 3 and-a-half million we talked about was just that, 15 Bruce Gordon's tax liability. It wasn't Marty Reffsin's 16 tax liability, it wasnt anyone else's liability except 17 Bruce Gordon's. He's the only one who had the problem
18 with the Internal Revenue Service and Mr. White is right. 19 Mr. Gordon had 3 and-a-half million reasons not to pay the 20 IRS. But there's not one reason in this case, there's not 21 one single shred of evidence that points to a motive for 22 Marty Reffsin to put his license, 20 years of practice and 23 his family and freedom on the line for Bruce Gordon. That 24 just doesn't make any sense. 25 For a couple of thousand in accounting fees, he's
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1 owed money, you heard that. Will he risk his entire 2 career and freedom so that Bruce Gordon can get out from 3 under a three and-a-half million liability? I don't think 4 so and I don't think you think so either. 5 When Mr. White spoke this morning for about the 6 first hour and-a-half of his summation he spoke about the 7 tax
case, but when you analyze what he said Mr. Reffsin is an add-on. Mr. Reffsin is the afterthought because 9 everything that Mr. White said points to Bruce Gordon, 10 whether or not Gordon intended to defraud the IRS makes no 11 difference, whether there was a crime or wasn't a crime 12 Reffsin wasn't involved in it except to the extent he 13 prepared some returns, some documents. His people 14 balanced some books, did bank reconciliations. 15 Let's talk about the conspiracy now. The count 16 in the indictment charges that Gordon and Reffsin 17 conspired to impede the Internal Revenue Service, and the 18 Judge will read the entire count to you tomorrow and 19 explain all the terms to you, but basically it came down 20 to they got together, they made an agreement and in that 21 agreement they decided that they were going to beat the 22 IRS out of the money that Gordon owed to
the IRS, and 23 there's no dispute but that Gordon owed the money to the 24 IRS, that's clear. 25 In order for there to be a conspiracy, though,
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1 there has to be an agreement. There has to be a conscious 2 sharing of an intent to defeat the IRS. Reffsin must, 3 even if Gordon does intend to beat the IRS and I'll leave 4 Mr. Gordon's defense to Mr. Trabulus, but even if Gordon 5 intends to beat the IRS, if he doesn't have an agreement 6 with Reffsin, if Reffsin doesn't share that intent, then 7 there's no conspiracy and you can't find either of them guilty. 9 The government has to prove beyond a reasonable 10 doubt that Mr. Reffsin knowingly and willingly became a 11 member of a conspiracy to defraud the Internal Revenue 12 Service. 13 Now, everybody hates
the IRS with the possible 14 exception of Mr. Jordan who works for them and that's not 15 a reflection on him. Nobody likes the IRS, those are the 16 last words you want to hear when that knock comes to the 17 door, hi, I'm from the IRS -- oh, no, I'm not home. 18 Because the IRS only wants one thing from you, they want 19 from you, just like they wanted from Mr. Gordon, just like 20 they want from Mr. Reffsin, just like they want from 21 everybody else, they want your money, the money that you 22 worked so hard to earn, they want it. And what do you get 23 in return? In return they get to send foreign aid to 24 Bosnia, things like that. None of us want to pay taxes, 25 all of us realize we have to and most of us are willing to
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8991 Summations-Wallenstein
1 pay our fair share but the IRS wants your last dollar.
2 Now, how do we know that? 3 In this case we've talked about offers and 4 compromise and talked about collection statements and 5 we've heard testimony from collection people and from 6 examination people, revenue officers, revenue agents, all 7 of these people have one function in life, their life is to part you from your money, that is what they do, not by 9 selling you something but by coming and saying if you 10 don't give it to me, I'm going to take it anyway. That's 11 how the IRS works. 12 Part of this alleged conspiracy is that the 13 government claims that in order to hide Bruce Gordon's 14 true assets and true income that he and Mr. Reffsin15 concocted this scheme whereby they would submit this false 16 collection statement and submit a false offer and 17 compromise. That's the allegation, that's what the 18 government says. The government has to
prove that to you 19 beyond a reasonable doubt. 20 I'm going to keep saying that so get used to it, 21 I hope you will not tune it out. The reason I say that is 22 because when you think about it, when you think about what 23 I'm saying, when you think about what Mr. Trabulus will 24 say about it later and when you think about the evidence 25 that the government has adduced, that we have adduced, all
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1 of the evidence in the case and you apply the law that 2 Judge Spatt gives you to that evidence, if you come away 3 saying, you know, I'm not sure, maybe, then you have a 4 reasonable doubt. If you have a reasonable doubt you must 5 acquit the defendant. You must. You have no options. 6 Now, the government spent a lot of money to try 7 this case and we've all been here together, what is this, 12 weeks? I lost count. Hundreds and hundreds of 9 exhibits. I lost count of witnesses after Mr. Gagliardi 10 and he was the second one and that was back in January, 11 you remember, in the winter we never had, and they brought 12 all of these people in here, lots of witnesses, hundreds 13 of exhibits, all of these great blowup charts. The little 14 one I put in is just so puny compared to them, but they 15 have all the money, we have no resources, the government 16 has everything. And because they've done that there's 17 going to be a certain feeling on your part, I fear, I hope 18 it's not there, but I think there might logically be a 19 certain feeling on your part that you will say, well, they 20 might have done something. Well, they might have, but 21 that's not enough. They might have done it is not proof 22 beyond a reasonable doubt and you can't come
in here and 23 say the government spent that money, they must know things 24 we don't know so, therefore, we'll find these people 25 people guilty because they wouldn't have brought the
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1 charge. That's not the way it works. 2 The way it works is the government presents their 3 evidence and make their arguments and they try to convince 4 you beyond a reasonable doubt that the defendants are 5 guilty. It's up to you as jurors to sift through that 6 proof, to weigh the evidence, to carefully examine the 7 evidence and to consider what's not here, to consider the lack of evidence, the witnesses who did not testify, the 9 exhibits that were not presented because something that 10 you would have needed to dispel that reasonable doubt 11 that's not here, leaves that reasonable doubt and 12 therefore they will not have met their burden. But it is 13 their burden and it is your burden and your responsibility 14 as jurors to render a just and fair verdict based on what 15 you've heard and what you haven't heard. 16 The government has to prove in order to prove 17 this conspiracy charge that there was an agreement that 18 Marty Reffsin intended to defraud the IRS because they 19 claim that Bruce Gordon intended to defraud the IRS, but 20 if he alone intended to defraud the IRS that is not a 21 conspiracy. Reffsin would have to share his intent, would 22 have to share, would have to agree with him that this is 23 what they want to do. Now, that doesn't mean that 24 Mr. White has to bring somebody in here and say I heard 25 them conferring and I heard them say they agree, but there
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1 must be sufficient evidence to convince you beyond a 2 reasonable doubt that Marty Reffsin agreed with Bruce 3 Gordon that they were going to engage in this massive 4 scheme, the government's theory, that over a five-year 5 period they were going to do this in order to defraud the 6 Internal Revenue Service, that that was their purpose. If 7 they can't convince you of that beyond a reasonable doubt then you must find Mr. Reffsin not guilty of the 9 conspiracy. 10 The fact that Mr. Reffsin was Mr. Gordon's 11 accountant and had a long time accountant-client 12 relationship with him is not enough for you to be 13 convinced beyond a reasonable doubt that there was a 14 conspiracy to defraud the IRS. The fact that Mr. Reffsin15 and Mr. Gordon frequently had contact, frequently did 16 business together, the fact that Mr. Reffsin handled the
17 books of Who's Who Worldwide or handled Mr. Gordon's 18 personal tax affairs is not enough -- is not enough -- and 19 the Judge will so instruct you. That is not sufficient 20 proof to establish guilt of a conspiracy beyond a 21 reasonable doubt. 22 Conspiracy is a real sinister word, isn't it? It 23 doesn't have the same ring as "agreement." It doesn't 24 have the same ring as "joining together." It's a nasty 25 little word. It's a nasty little statute because it makes
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8995 Summations-Wallenstein
1 people guilty of things that they are not guilty of simply 2 because they know and associate with other people. But 3 you'll not let that happen because you'll not convict 4 Marty Reffsin of conspiracy unless Mr. White convinces you 5 beyond a reasonable doubt that he shared Mr. Gordon's 6 intent that he conspired with Mr. Gordon to do this. 7 Now, where -- the government doesn't have to prove any motive, but wouldn't you like to hear about 9 Mr. Reffsin's motive for this when you assess whether or 10 not he intended to defraud the IRS? What does he get out 11 of it? We know what Gordon gets out of it. Gordon gets 12 out of it a 3 and-a-half million tax liability. But what 13 does Reffsin get out of it? A couple of hundred 14 thousands. He has a family, he has a license, a practice 15 and he doesn't have them anymore if he gets involved in a 16 conspiracy with Bruce Gordon, but he has no motive to beat 17 the IRS. 18 Now, does he have an obligation as Gordon's 19 accountant to help him legally minimize his liability to 20 the Internal Revenue Service? Sure. Does he have a right 21 to do that? Absolutely. Does he have a right to say to 22 the IRS this is how you view these documents, this is how 23 you view these dollars, this is not income, these are 24 loans, he doesn't have to put that forward? Sure, he 25 does. That's his obligation and we know that. We know
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8996 Summations-Wallenstein
1 that from a number of things in this case. 2 One thing we do know, and you'll know again on 3 Thursday when Judge Spatt gives you the law, is there is 4 no requirement for either Mr. Reffsin as the accountant or 5 for that matter Mr. Gordon as the taxpayer to make it easy 6 for the IRS. Lord knows they can take as much as they 7 want anyway, but you don't have to go with them with that silver platter and say, here's everything I have, now 9 leave me alone because I have nothing left. You don't 10 have to do that. You don't have to make it easy for 11 them. That doesn't mean that you can commit a crime but 12 it does mean that you don't have to tell them anything 13 you're not required to tell them and it does mean that if 14 there are two interpretations of how a dollar amount 15 should be treated, whether it should be income or a loan 16 and there is a reasonable way for you to say it is a loan, 17 you can do it. You don't have to go along with what they 18 say it is. They have their interpretation, you have your 19 interpretation, you don't have to buy what they're 20 selling. 21 The government cannot convict Marty Reffsin with 22 conspiracy with Bruce Gordon to defraud the IRS unless 23 they can prove beyond a reasonable doubt, shared the 24 intent and acted together by deceitful and dishonest means 25 to hide their income from the IRS. If Marty Reffsin did
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1 what was in good faith, if what he did was done on a 2 reasonable reliance on his understanding of the law, if 3 what he did was done without a dishonest intent, then he 4 is not guilty. 5 Now, let's talk about some of these documents 6 that the government puts forward to show that there's a 7 conspiracy, to show that they attempted to evade taxes, to show that these returns are false. The big thing about 9 the false returns is that the government says that what 10 Gordon called a loan was really income. The government 11 says it's income because they didn't intend to pay it 12 back, that it's income because he took it and used it to 13 live on. Well, it's income if it's not a loan, I concede 14 that, but have they proven to you beyond a reasonable 15 doubt that these, all of these fancy charts that show 16 hundreds of thousands of dollars worth
of experiences paid 17 by Who's Who Worldwide on behalf of Mr. Gordon, those are 18 the numbers that Revenue Agent Rosenblatt says was 19 income. That's the basis of the false return charge. 20 That's the basis of the charge against Mr. Gordon that he 21 filed the false returns and the basis of the charge 22 against Mr. Reffsin that he assisted in the filing of the 23 false returns. But there's two ways to look at it. 24 Now, Mr. Reffsin, of course, testified that those 25 amounts were loans. I grant you that Mr. Reffsin is a
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1 defendant and I grant you that Mr. Reffsin has an interest 2 in the outcome of this proceeding more than any one of us, 3 I dare say. But just because Mr. Reffsin has an interest 4 in the outcome of the proceeding doesn't mean that he's 5 going to violate the oath that he took as a witness. He 6 took the same oath as every government witness took and he 7 swore to tell you the truth. I submit to you that he did and I submit to you when you analyze his testimony and you 9 evaluate his demeanor using the tests that you use every 10 day in deciding whether somebody is telling you the truth, 11 you are using it now when you listening to me, I hope, you 12 used it this morning when you listened to Mr. White and 13 you used it every day of the last two and-a-half months, 14 listening to those witnesses and deciding which ones of 15 them were telling the truth, as I suggest that they 16 weren't all, but when you examine Mr. Reffsin's testimony 17 I think you will find that he's an honest man. 18 He came here and he told you the truth. Told you 19 his interpretation and his interpretation differs from 20 Mr. Rosenblatt and Mr. Rosenblatt is an honest man too, 21 but Mr. Reffsin's honestly-held belief, Mr. Reffsin's 22 honestly put forward position that these dollar amounts, 23 these expenses that were paid by the corporation for Bruce 24 Gordon that they were loans, you believe, and I suggest 25 you should, that his position, Reffsin's position with
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1 respect to that is an honestly-held belief, then he has 2 acted in good faith and good faith is an absolute defense 3 in this case. The Judge will tell you that, he will give 4 you the elements and he will tell you how to evaluate that 5 and he will tell you one more thing. 6 He will tell you that we do not have to prove 7 that Mr. Reffsin acted in good faith. He will tell you that Mr. White, that the government must disprove that, 9 the government must prove lack of bad faith, lack of good 10 faith, excuse me, beyond a reasonable doubt. The 11 government has to establish that Reffsin acted evilly. 12 The government has to establish that he acted not out of 13 good faith and they have to prove that to you beyond a 14 reasonable doubt. If they cannot do that then you must 15 acquit him. 16 Mr. Rosenblatt, I suggest, backs up our 17 position. Mr. Reffsin says they were loans. Why were 18 they loans? They were loans because the corporation paid 19 the expenses, Mr. Gordon intended to pay it back and in 20 fact there were repayments. There's that $235,000 21 repayment in January of 1993 from Grossman. That's a 22 repayment. That substantially reduced the then 23 outstanding loan balance, although it did increase later, 24 but that's a repayment and that's one of the factors. 25 You know, looking at it in 1998 and saying, well,
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1 he left us with a half a million worth of debt there, he 2 left us a half a million that he owes these companies, 3 that's not the situation as it existed back in 1991 or 4 1992 or 1993. 5 Let me show you my puny little chart. My puny 6 little chart which I know you can't see, but that's the 7 best I can do for now. You all have copies of this someplace because I know we handed them out. But this 9 puny little chart shows that the loan balance at the end 10 of 1989 was all of 1,000 bucks, that it increased in 1990, 11 but not by that much, and in 1991 there's a big jump and 12 in 1992 there's another big jump, but then in 1993 there's 13 a tremendous payment, $235,000 is a lot of money. Then in 14 1994 there's another reduction, net for the year, it 15 leaves a big balance, but you have to remember that 16 there's a factor here. What comes into play now in 1994 17 when there's this big balance after these two big credits 18 is that Who's Who goals brought because of the Reed 19 litigation and when Who's Who goes bankrupt, everything 20 gets put on hold because the bankruptcy interferes with 21 the business of Who's Who Worldwide and then Reed's 22 attempt to insert a trustee into the picture makes it 23 worse. 24 I'm not going to go into detail about that 25 because I know Mr. Trabulus will cover all of that stuff
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1 tomorrow, but what happens is once Who's Who goes bankrupt 2 they are scrambling, everything is under the control of 3 the bankruptcy court as far as Who's Who is concerned and 4 the loans that are on the books can
now not be converted. 5 You will recall that Mr. Reffsin testified that it was his 6 intention, that he told Mr. Gordon in 1992 and 1993, 7 Bruce, you have to clean this up, you have to make some payments back. We know they are loans, well, they are 9 loans. There is nothing wrong with taking the money out 10 of a corporation by borrowing it from the corporation as 11 long as you will pay it back at some point and you can pay 12 it back by physically putting money back into the 13 corporation or you can pay it back by calling it salary 14 and paying taxes on it at that point in time, making the 15 bookkeeping entry and in fact that was done at one point 16 in time. 17 At the end of the year there was $51,000. This 18 was at the end of 1993. At the end of 1993 there was a 19 $52,000 conversion of the outstanding loan balance to 20 income to Bruce Gordon, paid taxes
on that money, Maria 21 Gaspar testified about that. There were no dollars that 22 changed hand at that point in time. That was simply a 23 recognition of income. Mr. Reffsin testified about that 24 as well and so did Agent Rosenblatt. 25 Agent Rosenblatt said that taking loans from the
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1 corporation is very common, happens all the time. 2 "Question: Is it a common practice for a closely 3 held corporation to lend money to its officers or 4 shareholders? 5 "Answer: Yes, it's a common practice. 6 "Question: In fact, it's a way for officers or 7 shareholders to take compensation over and above W-2 compensation; is that correct? 9 "Answer: It's a way for them to get money. 10 "Question: So they take that loan and ultimately 11 either pay it back or call it what it really is --" 12 THE COURT: You have to slow down considerably if 13 you want the jury to understand what you are saying. 14 MR. WALLENSTEIN: Sorry. 15 "Question: So they take a loan and either pay it 16 back or call it what it really is which is salary and pay 17 taxes, correct? 18 "Answer: Yes. 19 "Question: And that's not uncommon, is it? 20 "Answer: No. 21 "Question: It's not improper either, is it? 22 "Answer: No." 23 So Rosenblatt says it is okay to do it that way. 24 Now, Mr. Rosenblatt says, among other things, 25 that his computation of this additional taxable income is
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1 based on his belief that the items are income and he 2 agrees that other people might call it a loan and he said 3 so. 4 "Question: Would it be a fair statement that 5 there might be another revenue agent that would disagree 6 with you? 7 "Answer: Yes, that's possible. "Question: Would it be a fair statement that 9 attorneys, accountants, tax preparers might disagree with 10 you? 11 "Answer: Yes, that's possible." 12 That's what he said. And he said if in fact 13 those items were determined to be loans they would not be 14 income to Bruce Gordon. He said, yes, that's correct. 15 I submit to you that Mr. Rosenblatt is an honest 16 man. He has an honestly-held belief that the money that 17 Bruce Gordon borrowed from Who's Who Worldwide is income 18 to Bruce Gordon. He's entitled to that belief. 19 Martin Reffsin is also an honest man and he has 20 an honestly-held belief that those funds borrowed by Bruce 21 Gordon from Who's Who Worldwide are a loan, applying some 22 of the same factors that Mr. Rosenblatt used. For 23 instance, repayments. 24 Well, we see the repayments. Well, you could if 25 you could see the chart, but you know there are
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1 repayments, we've talked about them. One of the factors 2 that Rosenblatt talked about as being a key was the 3 passage of time so that in 1993 and 1994 you could not say 4 this is income because there's an insufficient passage of 5 time for you to say that he did not intend to pay it 6 back. Granted, it's a lot of money but he needs time to 7 pay back a lot of money, whether in small increments, large increments or by recognition of income at the end of 9 a taxable year. Time is what is required and time is what 10 the government is not giving credit for because at the 11 time that the offers and compromise were submitted, at the
12 time that the collections were submitted, at the time that 13 the tax returns were filed, Marty Reffsin didn't have the 14 benefit of hindsight. He didn't have the benefit of 15 analyzing these books in 1996 or 1997. He's preparing 16 those returns in 1992, 1993, 1994. He's not looking at 17 them from 1997 and saying five years have past, where is 18 the money? He's looking at it in 1993-1994 saying six 19 months have past, he will pay it back. 20 He had a conversation with Bruce Gordon, he said, 21 Bruce, you have to clean this up. If by '94 you haven't 22 made some substantial payments here we'll start 23 recognizing this income so we can get this money paid 24 back. Does that sound like a co-conspirator? Does that 25 sound like a guy who is out to stick the IRS? That sounds
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1 like an accountant who is saying to his recalcitrant 2 narcissistic client when he wants to do and does whenever 3 he wants to do it and takes what advice he wants to take, 4 that's a guy saying to Bruce Gordon, this is what you will 5 have to do, if you don't it is at your peril, but it 6 shouldn't be at Marty's peril (indicating.) 7 One of the things that the government says is a bad act here, an act in furtherance of this conspiracy is 9 the submission of the offer and compromise. Now, the 10 offer and compromise is a concept that is foreign to most 11 of us. It's apparently foreign to Mr. Rosenblatt to some 12 extent as well because he says he didn't handle it. He 13 has always been in what the new consumer friendly IRS 14 calls the "examination division" but which we all 15 recognize as being the "audit division" which are the guys 16 that come in and tear your books apart looking for every 17 last penny. 18 Mr. Gagliardi, on the other hand, he's the guy 19 that handled the offer and compromise. And interestingly 20 enough Ms. Peters, do you remember her, January 14th, the 21 first witness who testified in this case, she was the 22 revenue officer who said that she handled the initial 23 collection information statement, the initial attempt to 24 collect the money, she is the one who made the $100 a 25 month agreement with Bruce Gordon and let me point out on
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1 that score that Mr. Reffsin had nothing whatever to do 2 with that entire arrangement. He also had nothing 3 whatever to do with the collateral agreement with the 4 Justice Department. That was handled by some white shoe 5 law firm. They are the guys who made that deal with
the 6 justice department. Can't leave it on Mr. Reffsin. He's 7 coming in after the fact saying this is the situation as I find it, how can I present this in the best light for my 9 client? 10 By the way, Mr. Rosenblatt said that that is 11 perfectly appropriate and Mr. Rosenblatt, you will recall, 12 was qualified as an expert on federal tax matters, even he 13 said he never handled an offer and compromise, he knows 14 what they are, and he understands the role of an 15 accountant in dealing with the Internal Revenue Service. 16 And Mr. Rosenblatt said: 17 "Question: The accountant acts on behalf of the 18 taxpayer; is that right? 19 "Answer: That's correct, he represents the 20 taxpayer. 21 "Question: And what he's conveying to the IRS is 22 the taxpayer's position; is that correct? 23 "Answer: That's correct. 24 "Question: Basically it's the accountant who is 25 on his knees in your office saying please don't make him
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1 pay at all; is that right? 2 "Answer: It could be that. 3 "Question: And in that circumstance, the 4 accountant, whoever is putting forth the taxpayer's 5 position, is an advocate, correct? 6 "Answer: Yes, that's correct. 7 "Question: And he's going to portray the taxpayer's position in the best possible light for the 9 taxpayer so as to persuade the kindly IRS agent that he 10 really can't afford to pay the whole obligation, correct? 11 "Answer: Yes. 12 "Question: And in fact, that's his function, 13 isn't that so? 14 "Answer: Yes. He's supposed to be honest and 15 present the best possible case." 16 That's what Rosenblatt said. So it's clear that 17 wh
at Reffsin did was exactly what he was supposed to have 18 done. 19 Now, let us talk for a minute about this offer 20 and compromise. What does it mean? It's an offer to the 21 Internal Revenue Service, that's what it is, it's an 22 offer, it's a negotiation, it's the first shot. It's I 23 owe you 3 and-a-half million but I'm 60 years old and in 24 order to pay 3 and-a-half million to the IRS I have to 25 earn $7,000,000, because I have to earn tax in addition to
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9008 Summations-Wallenstein
1 paying 3 and-a-half million dollars, and I still have to 2 live, and that doesn't mean wearing Armani suits and that 3 means eating cat food, and that's what the IRS wants you 4 to do, eat cat food, that's their position, we want every 5 last dollar. That's why the 433 A's, the collection 6 information statements are not fraudulent. Because what 7 is on there or not on there is not material to the issues. Let me tell you why. 9 In evidence you have Defendant's Exhibit EC, 10 those are the instructions for the offer and compromise 11 which we blew up and I think we all have copies. When you 12 look at them and read them it has some very, very 13 interesting language. It says here, "our goal is to 14 collect what we can at the earliest possible time with the 15 least cost to the government." It says "how to figure an 16 acceptable offer." They tell you how to figure it out. 17 Do you know what it says? It says, number one "we want 18 the liquidating value of your assets, the value if you are 19 forced to sell." What does that mean? It means give us 20 your house, it's going on the auction block. Your 21 $200,000 house is going to the highest bidder which will 22 be 50 grand, we'll take it, we'll apply it to your tax 23 liability and you still owe us the rest, unless we have a 24 compromise. That's what a forced sale is. It means the 25 IRS comes in, they slap a document on your front door that
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9009 Summations-Wallenstein
1 says "seized" this is now the property of the Internal 2 Revenue Service. Take your kids, your dog and get out. 3 That's what it means. Now they sell the house. And that 4 value, this is how to figure an offer. They take that 5 value, what they could get if they threw you out of your 6 house tomorrow and they subtract from that debts against 7 specific assets that have priority over the IRS. Would you like to guess how many debts have priority over the 9 IRS? Well, your mortgage is one. Maybe, maybe your car 10 loan, unless there is enough equity to pay off the loan
11 and still leave a couple bucks for the IRS. A judgment 12 against the specific asset, a debt secured by a specific 13 asset, we don't want to do a lecture on commercial law 14 here but there aren't that many. All of those debts to 15 American Express, everything you owe on charge cards, 16 everything you owe your ex-wife, everything you owe your 17 brother-in-law, everything you owe your company, all of 18 that comes after the IRS. They want your first dollar and 19 your last one and every one in between. That's how we'll 20 figure. What do I have here? I have $100,000 worth of 21 property and if you force me to sell it it will be worth 22 50 grand, so I'll take that number and I'll subtract from 23 that my mortgage which is $48,000, and I have $2,000 24 left. That's what I'll offer the IRS. 25 It says here specifically, "the following
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9010 Summations-Wallenstein
1 examples are debts which you should not subtract because 2 the IRS has priority over them." What does that mean? In 3 English, which this form is supposed to be written in, 4 that means "we don't care. We're not interested in how 5 much you owe everybody else. We don't care what you owe 6 American Express, we don't care what you owe your 7 brother-in-law, we don't care what you owe to Who's Who Worldwide. We care what you have, not what you don't 9 have. Not what you owe. What can we get." That's the 10 IRS, the friendly IRS. 11 Now, what shouldn't you subtract. "Amounts you 12 owe on credit cards." It's right there in plain English. 13 "Amounts you owe on credit cards." Don't bother tell 14 telling us about those. We do not care. 15 "Loans you secured" means you got them, "without 16 pledging assets as security." For instance, any money you 17 might have borrowed from a corporation, any money you 18 might have borrowed from your brother-in-law. Don't 19 bother telling us about that stuff, we don't care. Any 20 amount you borrowed after we recorded a notice of federal 21 tax lien. Well, there's no tax liens in this case, 22 there's an ancient one but it is not important. A tax 23 lien is where the IRS comes in and grabs what you have, 24 your bank accounts and your house and all of these things 25 and they put a lien on it. The lien says before you can
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9011 Summations-Wallenstein
1 touch this, before your creditors can touch this, guess 2 who gets it? So if we put a federal tax lien against your 3 property or against your line of credit, anything you 4 borrow after that, we couldn't care less because we come 5 first, we're the IRS. They don't care. It's right here 6 in black and white. They don't care. They want to know 7 what you have. You know how we know that? Robbie Peters said 9 that, Robbie Peters, that's the first witness back in 10 January, that's how you got off on this tangent, I asked 11 they are this specifically, I said, how far back are you 12 looking? And her answer was "I look for current 13 information. I'm in collection, I look for assets." We 14 don't care about debts, we don't care about liabilities, 15 we don't think what anybody else thinks you have to give 16 to them, we're the IRS, we come first. That's what this 17 is all about. That's why when you look at those 433s that 18 Mr. White blew up so beautifully, in fact, Agent Jordan, 19 would you be so kind. May I have one? 20 AGENT JORDAN: Sure. 21 MR. WALLENSTEIN: I don't know
the exhibit 22 numbers, this is Exhibit 404. Of course he gave me the 23 one that Mr. Reffsin had nothing to do with, but that's 24 okay because the principal is the same. 25 When you start looking at liabilities, when you
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9012 Summations-Wallenstein
1 are the accountant and you are looking at liabilities, 2 bank cards, all of that stuff and you're filling out the 3 collection information statement to go along with the 4 offer and compromise, you know, you know because you're an 5 accountant, a CPA for 20 years and you know what the IRS 6 is looking for and the IRS knows what they are looking for 7 to. They are looking to see what you have. They don't care that you owe American Express, did I say that enough 9 times? 10 It doesn't matter what is here, it's not 11 material, and the reason it's
not material is because the 12 IRS doesn't care. It doesn't have priority. The IRS 13 comes first. So it's not material. You could owe a 14 billion. If you owe them one buck and the billion is 15 unsecured, they get the first dollar. It's more likely to 16 be the other way around though. 17 Now, Mr. White says that the necessary living 18 expenses part here (indicating) is part of his conspiracy 19 and, in fact, Mr. Gordon is charged separately with filing 20 false collection information statements. Mr. Reffsin is 21 not charged with that, but they are charged as part of the 22 conspiracy. Of course the fact that Mr. Gordon is charged 23 with it separately means you will have to listen to 24 Mr. Trabulus who will tell you all of this tomorrow too. 25 But the fact is that in evidence here we have
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9013 Summations-Wallenstein
1 Defendant's Exhibit ED. Now, what is that? That's 2 another IRS official form, "how to prepare a collection 3 information statement." Now, isn't it logical that when 4 you get a document from the Internal Revenue Service that 5 tells you how to fill out an Internal Revenue Service 6 form, that if you follow the instructions they give you, 7 that everything will be okay? Doesn't that make sense? If they say to you, "this is how you figure an offer" and 9 you do it that way, what's wrong with that? If they say 10 to you, "don't include this, we don't care," have you done 11 something wrong by not including it? 12 When they say to you how to prepare a collection 13 information statement, wouldn't you assume this is how 14 they want you to do it? Doesn't that make sense? To bad 15 the record doesn't get the sarcasm. 16 "Necessary living expenses."
The key word in 17 that phrase is "necessary." It says here "expenses must be 18 reasonable for the size of your family, your geographic 19 location and your unique circumstances" right there in 20 plain English. Now, what does that mean? Does that mean 21 tell us what you really spend or does that mean tell us 22 what's necessary? For a family of four you need more 23 money than a family of two, it makes sense. For a single 24 person you need less money than for a family of four. 25 To give you an example how they mean what she
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9014 Summations-Wallenstein
1 say, right down here it says under item 48, "medical. 2 Show recurring medical expenses only. Do not include an 3 occasional medical expense." Like if you happen to get 4 your teeth fixed or you happen to go to a doctor because 5 you had a particular
acute illness but the doctor gave you 6 this new medical drug that cured your illness in a week 7 and cost you $10,000, you can't put that down there as a necessary living expense because it's a one shot deal. 9 It says "recurring medical expenses only." What 10 does that mean? It means your medical premiums you pay 11 every month, it means if you go to the doctor on a regular 12 basis, it doesn't mean a one shot deal. So you get sick, 13 go to the doctor once in three years, you can't put down 14 that 10 grand because that is not a recurring medical 15 expense. Does that make any sense? Is going to that 16 doctor in that circumstance necessary? Sure. But they 17 tell you don't put it down. That tells you that they 18 don't care. They don't care. They want to know what does 19 this mean, "necessary living expenses." Does that mean I 20 would like to live in a $20,000 a month mansion? No. 21 Necessary means you can live in a car, you can live in a 22 card board box, take a $100 a week room. Necessary means 23 that you can eat cat food because the rest of the money 24 has to go to the IRS. That may be a bit of an 25 overdramatization, oversimplification, but they don't
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9015 Summations-Wallenstein
1 care. 2 If you spend $100,000 a month but you could live 3 on $5,000 a month, that document better show 5,000, not 4 100,000, because the rest of it is for the IRS. What do 5 you need to live, because we're taking the rest. That's 6 what that form means. "What do you need to live" because 7 anything you don't absolutely need is going to the IRS. Sell the Cadillac, by a Hundai, maybe a Kia. 9 Now, Mr. Gagliardi testified. Mr. Gagliardi 10 talked about the offers and compromise and he talked about 11 all of these things and he said, you know, I didn't know. 12 Gordon said in the forms that Reffsin submitted, they said 13 he's only got this, he's only making that. They didn't 14 tell me about anything else. But you know what -- do you 15 have that offer and compromise (addressing Mr. White.) 16 Here's the offer and compromise, Exhibit 420. You can 17 take all of these exhibits with you, by the way. I'm not 18 sure that you want to, but you can. 19 He says, Gagliardi says, that he didn't know 20 about Who's Who Worldwide and he couldn't get Who's Who 21 Worldwide's income so he couldn't figure out, couldn't get 22 into the books of Who's Who Worldwide to know that Bruce 23 Gordon had access to money. But you know what? That's 24 just not so because attached to the compensation -- I'm 25 sorry, attached to the offer and compromise and part of
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9016 Summations-Wallenstein
1 the offer and compromise which Mr. Gagliardi got was 2 number one, this collateral agreement with the Justice 3 Department that says, and Mr. White hammered on this this 4 morning, that the government gets half of every dollar 5 that Bruce Gordon gets over $50,000, and that agreement is 6 there, Gagliardi knew that, but in addition to that he had 7 the compensation agreement. Now, you know I listened to Mr. White for three 9 hours this morning and I didn't hear those two words 10 together in the same sentence once. He never mentioned 11 the compensation agreement and the compensation agreement 12 that Mr. Gagliardi had as part of the offer and compromise 13 that they say was so fraudulent and hid all of his assets, 14 says very clearly. This is an agreement between Bruce
15 Gordon and Who's Who regarding his compensation for 16 functioning as president and chief executive officer, the 17 responsibility for running the day-to-day operations. 18 Does that tell you that Bruce Gordon is in control of 19 Who's Who Worldwide? 20 Now, we know, hindsight, 1998, having heard all 21 of these witnesses over the last two and-a-half months, we 22 know that Bruce Gordon ran every aspect of Who's Who and 23 it lays out what his compensation will be, how much money 24 he will get and so on and so on, so they knew, Gagliardi 25 knew that Gordon was in control and command of the
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9017 Summations-Wallenstein
1 day-to-day operations of Who's Who. Why is that 2 important? It's important because Gagliardi said he did 3 all of these things in the investigation of the offer and 4 compromise. He researched data bases, went to the Motor 5 Vehicle Bureau, County clerk's office, and he dug deep but 6 he didn't get very deep, didn't get to the bottom of the 7 stack of the papers because he didn't see the compensation agreement and if he did he ignored it. 9 He went to his house, there wasn't anybody home 10 but he went to the address that he had for Bruce Gordon. 11 And he said specifically, his testimony on page 308 of 12 this close to 10,000 page record that we have here, he 13 said that he understood that Bruce Gordon was in control 14 of Who's Who Worldwide, that he was the president, the 15 director, a shareholder and all of those things and he 16 said I couldn't get the Who's Who records. 17 Well, he didn't get the Who's Who records because 18 if he had gotten Who's Who tax returns he would have seen 19 the percentage attributed to Mr. Gordon on the corporate
20 returns, the percentage of stock and he would have seen 21 the income of Who's Who and he would have been able to 22 say, hey, I want some more. Your offer is not good 23 enough. Offer is the key word there. That's just what it 24 was. It was an offer. They didn't have to accept it. 25 Ultimately they didn't accept it, but they could have said
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9018 Summations-Wallenstein
1 we'll take your $150,000 or they could have said, you know 2 where you can put your $150,000, we want the whole 3 3 and-a-half million or they could have wound up anywhere 4 in between, it was a negotiation. 5 Mr. Reffsin testified that he did not expect the 6 IRS to accept $150,000. He figured that it was going to 7 come out somewhere between $500 and $1,000,000 that Gordon was ultimately going to compromise his liability for and 9 it was going to be paid out. But it's not his function 10 (indicating) to be an IRS agent, that's for Rosenblatt and 11 Gagliardi. It's not his function to take the IRS's 12 position, it's not his function to make it easy for the 13 IRS and he has no legal obligation to do so. He's got a 14 legal obligation to his client, to present his client's 15 position in the best possible light to the Internal 16 Revenue Service and Mr. Rosenblatt said too (indicating) 17 he's got a right to say, hey, all we'll give you is 150 18 grand, that's what we have. You have all the information 19 you need to evaluate this offer. 20 You've got 433 A's that follow your 21 instructions. You've got 433 A's that lay out what he 22 has, what he spends and what he owes in accord with what 23 Marty Reffsin believes, honestly and in good faith are the 24 things that the IRS is looking for. And we know that 25 because we've seen these instructions.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9019 Summations-Wallenstein
1 Gagliardi had what he needed. Did he get what he 2 needed? No. Why not? Got me. All he said was I could 3 not get the records of Who's Who Worldwide, but you know 4 what? It was another witness, Mr. Rosenblatt. And 5 Mr. Rosenblatt said: 6 "Question: If a revenue officials such as 7 Mr. Gagliardi feels he needs more documentation, does he have the power to ask for it? 9 "Answer: Yes, he does. 10 "Question: And if he's not getting it from the 11 taxpayer, does he have the authority to obtain it from 12 other sources? 13 "Answer: Yes. 14 "Question: If, for instance, he needs a return 15 of a corporation in which the taxpayer is a shareholder or 16 an officer and the taxpayer refuses to produce the 17 returns, could he go to the corporation to get it? 18 "Answer: Yes. 19 "Question: Can he get them from the IRS's own 20 files? 21 "Answer: Yes. 22 "Question: Does he need any particular authority 23 to do that or can he simply say I need these in connection 24 with this investigation and therefore please provide these 25 copies?
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9020 Summations-Wallenstein
1 "Answer: He has to have an open investigation to 2 be able to show that it's related." 3 He has an open investigation. He has a 4 compensation agreement submitted by the taxpayer that says 5 I'm in control. Does that make it related? Sure, it 6 does, by any stretch of the imagination, by any definition 7 of the term, it's related. What does Gagliardi do? He does nothing. He 9 says, I didn't have the return so screw it. He doesn't 10 bother. You will send Marty Reffsin to prison because 11 Gagliardi didn't have to get the return that he didn't 12 bother to get and he didn't get that and says this whole 13 thing is a fraud. There's no crime here, there's no 14 conspiracy here. Reffsin and Gordon didn't get together 15 and decide to stick it to the IRS. Reffsin advocated 16 Gordon's position. Gordon's position is I owe the IRS a 17 ton of money, how can I pay less? Reffsin says, we'll 18 make an offer. We'll follow their instructions. Now, we 19 know that they are not interested in anything that they 20 don't have priority over and we know they are interested 21 in only necessary expenses. We'll put down that. I know 22 what they'll look at, what they are interested in. I'm 23 Mr. Peters, I'm in collections, I look for assets. 24 There's no crime here. The crime here is that Marty 25 Reffsin is on trial, that's the crime.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9021 Summations-Wallenstein
1 There's no conspiracy here to defraud the IRS and 2 do you know what, I have just demonstrated to you for the 3 last half-hour why there is no crime here, but I don't 4 have to do that. I don't have to do anything. Mr. White 5 has to prove to you that there is a conspiracy between 6 Marty Reffsin and Bruce Gordon to defraud the IRS or you 7 have to find Mr. Reffsin not guilty of that charge. That's the law. 9 I've talked enough about the IRS. We all know 10 they're the bad guys. Let's talk about the obstruction of 11 justice counts. 12 Now, there's a count here of obstruction of 13 justice that pertains to Mr. Reffsin and it has to do with 14 the submission of the logs to the bankruptcy court. 15 Speaking of bankruptcy, Jack Hall testified, do 16 you remember him? He's the first witness I called. Jack 17 Hall is an attorney, a partner in the law firm of Shaw, 18 Licitra and a couple of other people and he's a bankruptcy 19 expert. He testified that he handled bankruptcies and 20 retained Marty Reffsin to assist him in bankruptcies and 21 he has referred Marty Reffsin to other attorneys and he 22 said that Marty Reffsin has a good reputation in the 23 professional community for honesty and for truthfulness. 24 Judge Spatt will give you an instruction on how 25 you view character evidence and he's going to tell you
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9022 Summations-Wallenstein
1 that a character witness can help you assess Mr. Reffsin's 2 credibility, help you decide whether or not Mr. Reffsin 3 has been proven guilty beyond a reasonable doubt because
4 even if there's evidence that when you get together and 5 talk about it leads you to say, well, you know, I'm not 6 sure. Mr. White made some valid points. I think maybe 7 Reffsin, maybe he was involved with Gordon, maybe he did conspire? Then you think about Jack Hall. You say wait a 9 minute, is Reffsin the kind of guy who would do that, is 10 that the type of person he is? If the testimony of that 11 witness, Jack Hall, makes you think twice and makes you 12 say you know, this guy has a good reputation, he's 13 respected in his field, I'm not sure he's the kind of guy 14 who would do that? What does that say? That says 15 reasonable doubt and reasonable doubt says you must 16 acquit. 17 I got off on that tangent because we were talking 18 about the bankruptcy court and the obstruction counts. 19 The only witness, the only witness who says that 20 Marty Reffsin obstructed justice by being involved with 21 the preparation of those admittedly phoney logs is Maria 22 Gaspar. In order for you to convict Marty Reffsin of 23 obstruction of justice, you would have to be convinced 24 beyond a reasonable doubt that Maria Gaspar is telling you 25 the truth, the whole truth and nothing but the truth and
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9023 Summations-Wallenstein
1 that Jack Hall is not telling you the truth about Marty's 2 character and that Marty lied to you when he said he had 3 nothing to do with it. Because she is the only one who 4 says that he did. If you have a doubt, the slightest 5 reasonable doubt about Maria's veracity, about Maria 6 Gaspar to shade the truth, tell the truth or lie to you, 7 then you have to acquit Marty Reffsin. And having said that I could sit down right now because I think
her 9 testimony speaks for herself, of course I'm not going to 10 do that. 11 There's no dispute about certain of the facts 12 here. We know that the logs were ordered to be produced, 13 we know that the logs which are in evidence here -- do you 14 have those, Mr. White -- were, in fact, produced and we 15 know that they were created by Maria Gaspar in her own 16 handwriting. 17 She says in a nutshell and you can have all the 18 testimony if you want, she says that in the car on the way 19 from the bankruptcy court to Lake Success in Mr. Reffsin's 20 car with Mr. Reffsin's driving and Mr. Gordon in the front 21 seat and she in the back seat, both of them together 22 ordered her to produce these logs, to produce these phoney 23 logs and they gave her names and they gave her people and 24 they gave her dates and told her about the meetings. 25 That's what they
say.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9024 Summations-Wallenstein
1 Now, the name that appears most often in here is 2 Bruce Gordon and certainly that is a name that Mr. Reffsin 3 knows. But I submit to you that Mr. Reffsin has no reason 4 to know any of the other names that appear in this log and 5 when pressed, when I asked Maria Gaspar what names did 6 Mr. Reffsin give you, she couldn't give me an answer. The 7 only name that she could attribute to Marty Reffsin was Debra Benjamin. Yeah, he knows Debbie Benjamin but that's 9 the only one he knew and that's the only one that Maria 10 can give you. But she said Reffsin gave me names and the 11 names that appear here, Susan Konopka, she testified. She 12 said she doesn't know him (indicating.) Tracey Colletti, 13 she testified. She said she doesn't know him. Elizabeth 14 Sautter, she
didn't testify. She is not sitting here. 15 Ask yourselves why not? 16 You've heard all about Elizabeth Sautter. In 17 fact, there was some testimony that she was the one who 18 kept the logs. How come she is not here? Either there or 19 there (indicating.) 20 Maria Gaspar, well, that's certainly a name that 21 Mr. Reffsin knows, and Maria Gaspar put her own name down 22 here. She said she was at a meeting that she wasn't at. 23 You don't see the name Marty Reffsin any place. Marty 24 Lamb, Tara Green, sales strategies. 25 Reffsin is an accountant, he has his own office,
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1 his own practice, he's not an employee of Who's Who, he's 2 not there daily, he's there on a monthly basis to do the 3 bank recs. Most of the time it is his people. He doesn't 4 know these people except he's a codefendant. The only 5 reason he knows these people he has been thrown into this 6 indictment with them. 7 Gaspar again, Elizabeth Sautter again. Maybe these are the ones that Elizabeth Sautter created. Maybe 9 Elizabeth Sautter is the one that gave Maria Gaspar these 10 names. If you have to ask yourselves these questions, you 11 have a reasonable doubt. 12 Are these names that Marty Reffsin would have 13 known that he would have given? No. I know you could 14 answer that yourselves but I thought it was important. 15 Margaret -- I don't even remember Margaret's last 16 name, there was some testimony about Margaret. 17 Susan, Tracey, Debra Benjamin, Michael Powers. 18 I'll give this to Mr. Neville, maybe he can find Carl 19 Roper in here. 20 Marty Reffsin doesn't know these names. He 21 didn't give Maria Gaspar those names, she lied. I did
22 what Mr. White said I would do, he said I would call her a 23 liar and I did. But she is, she lied. Why? Because she 24 made up that document. This is her handwriting. She 25 created this out of whole cloth. She didn't fax this to
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9026 Summations-Wallenstein
1 Marty Reffsin for approval. He had no way of knowing 2 whether these meetings took place. 3 He saw one sheet of paper, you heard himself, I 4 saw a sheet of paper, it had a couple of names and dates 5 and I called her up and said, Maria, that's not what the 6 Court ordered, they want details. That's not enough. Now 7 she has waited a month. She has got to cover her butt because she didn't do what she had to do. Why didn't she 9 do it? She didn't do it because she knew Bruce Gordon 10 didn't want it done. But is there any evidence that he
11 told her not to do it? Is there any evidence that Reffsin 12 told her anything with respect to the logs other than what 13 she said? 14 Marty testified that the car ride was five 15 minutes. It went from the bankruptcy court over here in 16 Westbury to Neil Flaum's office in Mineola. He remembers 17 that because Bruce didn't know where the bankruptcy court 18 was, didn't want to drive there. So Bruce has Maria drive 19 him to Neil's office and Marty, whose office is in 20 Jericho, meets them there and takes him over to the 21 bankruptcy court. 22 It's five minutes from Merrick and Old Country 23 Road to Old Country Road and Glen Cove where Neil Flaum's 24 office is, that's with the traffic from Fortunoff's. So 25 the 20 minute car ride that Maria is talking about is the
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9027 Summations-Wallenstein
1 ride from Lake Success to Mineola. But Marty is not in 2 the car. It's Maria and Bruce. In the five minutes it 3 takes to get from the courthouse back to Flaum's office, 4 Bruce is ranting and raving. "I'm not giving them the 5 logs. I don't want to give them the logs." I'm sure that 6 the language was a bit more colorful than that. "I'm not 7 letting Reed Elsevier know what I'm doing in my business." Reffsin's response is, Bruce, you have to. Does that make 9 him guilty of obstruction of justice? "You have to, 10 Bruce, the Court said do it, now just do it. Bite the 11 bullet." Marty gets out of the car, not privy to the rest 12 of the conversation, but you can all hear it, 20 minutes 13 from Neil Flaum's office to Lake Success, I'm not redoing 14 those -- you get the picture. You know where it is going. 15 You know, you know what that conversation is 16 like, I'm
screaming and yelling, I'm not producing the 17 logs. So Maria knows she can either do the logs that she 18 heard the Court say do or she can keep her job. So she 19 doesn't do the logs. That's not on him. That's not on 20 Marty, he's got nothing whatever to do with that. Maybe 21 that's on Bruce, maybe that is on Maria, but that's not on 22 Marty Reffsin. 23 Now, now it's show time. The Court is saying 24 where are the logs? Now, Neil Ackerman who can't get 25 ahold of Bruce Gordon says to Marty Reffsin, Marty, where
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9028 Summations-Wallenstein
1 are the logs? Bruce will not return my calls. Marty has 2 a conversation with Maria and he says, Maria, the logs are 3 due, they are due today. Where are they? And she faxes 4 over a couple of names and dates. And he calls her up and 5 says, what are you kidding? This isn't what they 6 ordered. They want to know who is at the meetings, what 7 the purpose of the meetings are and where the meetings are? Now Maria has to scramble because she didn't do what 9 she was supposed to do was which keep a log all along. So 10 she creates them and she sends them to Neil Ackerman and 11 Neil Ackerman presents them to the bankruptcy court. How 12 is that on Marty Reffsin? That's the obstruction count 13 that he created those logs. 14 Now, you heard his testimony and you heard her 15 testimony. Why would Maria Gaspar come in here and lie? 16 Why would she come here and say all of these bad things 17 about my client if they weren't true? Let me tell you 18 why. Maria Gaspar thinks she is an accountant. Maria 19 Gaspar says she is an accountant. Maria Gaspar says in 20 Portugal I was the equivalent of a Certified Public 21 Accountant and
I was hired as the chief financial officer 22 for Who's Who Worldwide. In fact, she testified under 23 oath at one time that she was responsible for all the 24 financial affairs of the corporation. That was a lie. 25 That was perjury because in here she said "I was never
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9029 Summations-Wallenstein
1 responsible for the financial affairs. I was a 2 bookkeeper. He made me a clerk." She's angry, she is 3 bitter, she is not being used up to her potential. They 4 bamboozled her. They told her that she would be the CFO 5 and put that down on her resume' and she turns out to be a 6 bookkeeper. She said comptrollers, CFO, they make 7 decisions, I didn't make decisions. Didn't have signatory authority on the checkbooks, Bruce Gordon was the one that 9 could sign the checks. She's mad. She's mad because she 10
wanted to be the CPA and she wasn't. Not only wasn't she 11 but here is the outside CPA who is a CPA, who is a well 12 respected man in his field who taught for the American 13 Institute of Certified Public Accountants and he comes in 14 and says, hey, you screwed up, lady. You made a basic 15 error, bookkeeping 101, debts to the left, credits to the 16 right, you reversed them. They taught you that. You're 17 not an accountant. He didn't use those words but that's 18 the tone, that's the gist, that's the relationship. Maybe 19 he didn't say it directly but Vince Resini did. 20 Vince Resini who is now Marty's partner, a CPA 21 for 20 years himself, Vince came in and Vince said she 22 wasn't much of a bookkeeper. Well, maybe that's why they 23 wouldn't let her be the CFO, but the bottom line is all 24 she knew is when the accountant came in, I'm nothing. 25 She's mad. She has a
motive. She is pissed at Reffsin OWEN M. WICKER, RPR OFFICIAL COURT REPORTER
9030 Summations-Wallenstein
1 because he's doing what she thinks she should be doing and 2 he is criticizing her work and she doesn't take kindly to 3 criticism. She doesn't take kindly to questions that have 4 to be answered yes or no or otherwise. She has got a very 5 selective memory, did you notice that? Does that give you 6 some doubts about her credibility? When she sits up there 7 and says, if I recall correctly, something tells me that this is what I heard. What, you have a bird on your 9 shoulder? Either you remember or you don't remember. She 10 is making it up as she goes along. 11 Now, why else does she have a motive to lie 12 here? Because she has to tell you what the government 13 wants you to hear. She has to tell you that Marty Reffsin14 and Bruce Gord
on told her to create those logs that she 15 created because if she doesn't tell you that, she is going 16 to jail. She is going to jail. 17 Let me ask you, does her testimony make sense to 18 you? Does it have the ring of truth to you? Does what 19 she said sound like what really happened? 20 Here's a woman, a mother, a wife, bookkeeper, 21 accountant, whatever it is she is doing, in the catering 22 hall, sitting in her office in the catering hall and who 23 comes in, the men in suits and badges. Federal agents. 24 Now, Mr. Jordan is a nice guy but he and somebody 25 else from the Internal Revenue Service Criminal
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9031 Summations-Wallenstein
1 Investigation Division along with a postal inspector who 2 should probably remain nameless, come into her office and 3 she doesn't think anything of this? Give me
a break. 4 The second meeting, she still has no clue. I 5 grant you she is not a rocket scientist but can she be 6 that dumb? Does she really think they are not 7 investigating her? Does she really have no clue what this is all about? They are asking her questions about Who's 9 Who and they don't bring up the logs. Why not? Because 10 the only one who knows that the logs are phoney at that 11 point in time is Maria Gaspar. The government doesn't 12 know it, the government doesn't care, it's not an issue at 13 that point. Maria Gaspar knows that the logs are phony. 14 How does she know? She is the one who phonied them. So 15 now I'll lean it on her. Talk to me, tell me about all 16 the bad things that Bruce Gordon did. Tell me about all 17 the bad things that Marty Reffsin did. 18 She is sitting behind a desk in her own office 19 with three men, federal agents in suits with badges and 20 she is not intimidated? I don't think so. I'd be 21 intimidated. You'd be intimidated. They are not friendly 22 faces when they are out in the field doing investigations, 23 not like our smiling Special Agent here, and I'm not 24 putting him down in any way, shape or form because he's 25 doing his job and doing it well, but when he's sitting in
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9032 Summations-Wallenstein
1 Maria Gaspar's office she is the target of that 2 investigation and now she will get out of it. Let me tell 3 you about these phoney logs that Gordon and Reffsin told 4 me to do, because she knows they want to hear about Gordon 5 and Reffsin. So she pins it on Gordon and Reffsin and 6 once she does that she has to stick with it because it's a 7 crime to lie to a federal agent. So once she has told them that they have created these logs, if she doesn't 9 stick with that right through to here, she goes off to 10 jail and she knows it. She didn't call her lawyer until 11 the fourth meeting, maybe it was the third meeting, and 12 when they called her lawyer, who she just happened to 13 know, Vinnie Nicolosi, a criminal defense lawyer, she 14 picks up the phone, calls Nicolosi and what does she say? 15 Here, talk to Mr. White, I don't have a clue. Is that 16 real? Is that real? How about Mr. Nicolosi, help me, the 17 Feds are here, make me a deal. I think that's a little 18 more real. She knew what was going on here. She has 19 pinned it on them and she has to stick to it but her story 20 is not consistent. She lied. We know she lied because 21 she testified under oath that she told Susan Konopka, 22 Tracey Colletti and Debra Benjamin that they were in the 23 logs. She said I went into
them, they were having lunch 24 and I said, hey, guys, just so you know you were at 25 certain meetings at certain times. Now, wouldn't that
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9033 Summations-Wallenstein
1 evoke a response from Benjamin or Colletti or Konopka? A 2 response akin to Maria, what the hell are you talking 3 about? Or even, okay, Maria, how about giving us some 4 details, so if you need us to back you up we can back you 5 up? Either one of those responses would be appropriate, 6 and given the fact that Who's Who is in bankruptcy, given 7 the fact that people are attending meetings at the bankruptcy court and other proceedings at the bankruptcy 9 court and given the fact that Maria Gaspar has now come 10 into the room and said in essence "I'm asking you to lie," 11 don't you think that one of them would have remembered 12 that
meeting? But not one of them did. Every one of them 13 said, no, I never had such a conversation with Maria 14 Gaspar. No, she never told me my name was in the logs. 15 Susan Konopka said that. She has got no reason whatever 16 to lie about anything to anybody or about anybody. 17 Tracey Colletti said the same thing. No, I never 18 had that conversation. 19 Debra Benjamin said, no, I never had that 20 conversation. And she would have been in a position to 21 know. She would have been in a position to understand why 22 that was necessary. She was an administrator. And we 23 don't know what conversation Maria may have had with 24 Elizabeth Sautter because Elizabeth Sautter is not here. 25 Maria Gaspar says, and Mr. White made a point of
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9034 Summations-Wallenstein
1 this this morning, Debra Benjamin testified that Maria 2 came out of a meeting with Bruce and Marty and she was 3 upset, on the verge of tears. Well, she doesn't pin down 4 when the meeting was and there was no evidence of what 5 Maria said, only the fact that Maria was upset. We don't 6 know when it was, we don't know what was said inside the 7 office, we don't even know if Mr. Reffsin opened his mouth or he was sitting in the corner doing a tax return or 9 working on a checkbook or something, we have no idea what 10 went on inside the room that Maria Gaspar was in because 11 she didn't say anything. Debra Benjamin says something. 12 So who knows. Maybe Bruce told her if she didn't shape up 13 he was going to fire her. Maybe Bruce was having a 14 tirade. We've heard some testimony here that he was 15 capable of that. Maybe he was angry about some other 16 reason. 17 Maybe, maybe Mr. Reffsin criticized her work 18 because she was incompetent. We don't know. All we know 19 is she was upset and Mr. White would have you believe that 20 because Debbie Benjamin said that Maria Gaspar was upset, 21 Marty Reffsin created the logs. There seems to be a gap 22 in that logic some place. I don't buy it. 23 At the very, very, very least there is reasonable 24 doubt and, therefore, Mr. Reffsin is not guilty of 25 obstruction of justice.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9035 Summations-Wallenstein
1 What it comes down to is this. There's a lot of 2 exhibits, there's a lot of evidence, there's a lot of 3 testimony for you to sift through, the tax case, the mail 4 fraud case. There are a lot of things for you to 5 consider. We've been here a long time. Take your time, 6 sift through it all, reed back anything you want read 7 back. The reporter
will never talk to me again. Ask for it if you are not sure. If you don't think that I'm 9 accurate in my recollection of what the testimony was, ask 10 for it, it's in the record. Evaluate it. Judge it. 11 Apply your common sense, apply the life's skills we all 12 have. Every one of us makes important decisions every 13 day. Apply those skills, judge the credibility of the 14 witnesses. Apply the law that Judge Spatt gives you as he 15 gives it to you. He is supreme. What he says goes. 16 Apply that law to the facts that you find. You are the 17 fact-finders. 18 When you've done that for each defendant, each 19 one of these defendants here have to be considered 20 separately and individually as to each count, that's not 21 something you can do in a hurry. Evaluate the testimony 22 and the evidence as it applies to Mr. Reffsin. Evaluate 23 the Government's testimony. Evaluate Mr. Reffsin's 24 testimony, Mr. Resini's testimony, Mr. Hall's testimony, 25 but most of all remember that no matter who produced the
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9036 Summations-Wallenstein
1 witness, no matter what the witness said, no matter what 2 the evidence is, the government has, had, and will have 3 the burden of proof. They must prove every element of 4 every crime as to every defendant beyond a reasonable 5 doubt. If you sit down and you say I don't know, then you 6 are saying "I have a reasonable doubt." If you are saying 7 that you must acquit. Thank you. 9 THE COURT: All right. Members of the jury, 10 we'll take a ten-minute recess. 11 Please don't discuss the case. Keep an open 12 mind. Please recess yourself. 13 (Jury exits.) 14 THE COURT: Let the record indicate -- I'll put
1
5 it on the record some other time. 16 Have you got the revised indictment? 17 MS. SCOTT: Yes, Your Honor, I handed that to 18 you. 19 THE COURT: That's the finished product. 20 MS. SCOTT: Except for the one mistaken I told 21 you, the second to the last page. 22 THE COURT: I don't know about the mistake. Do 23 you want to fix it up for me? 24 MS. SCOTT: Yes. 25 THE COURT: Is this the one?
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9037 Summations-Schoer
1 MS. SCOTT: It's on the second to the last page. 2 THE COURT: All right (handing.) You can take 3 your recess. 4 You will fix it up and return it to me, right? 5 MS. SCOTT: I am, Your Honor. I have to get to a 6 computer which I'll do tonight to fix that last page. It 7 is just one page. THE COURT: Then you will give it to me tomorrow 9 morning.
10 MS. SCOTT: Yes. 11 (Recess taken.) 12 (Jury enters.) 13 THE COURT: Please be seated, members of the 14 justify. 15 Please give your attention to the attorney for 16 the defendant Tara Garbowski, Mr. Gary Schoer, Esq. 17 (Continued.) 18 19 20 21 22 23 24 25
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9038 Summations-Schoer
1 MR. SCHOER: May it please the Court, my 2 colleagues, ladies and gentlemen, members of the 3 prosecution team, and ladies and gentlemen of the jury. 4 Good afternoon. We've now reached that stage of 5 the trial after so many weeks that I told you about at the 6 beginning of the trial, that time when I told you that I'm 7 going to have the opportunity to come here and to demonstrate to you that the prosecution, the government 9 h
as not proven beyond a reasonable doubt each and every 10 element of the crimes charged against Tara. 11 Before I begin, I would like to take this 12 opportunity to thank Judge Spatt, thank my colleagues for 13 the courtesies that they've given to me throughout this 14 trial, and on behalf of Tara I would like to thank each 15 and every one of you. I want to thank you for the careful 16 attention you've paid to this trial because I watched you 17 closely and I watched the careful attention you've given 18 to all the evidence and I've watched the seriousness to 19 which you've approached your duties. 20 This has been a long, long trial and I think we 21 all can agree what you've done is very admirable. 22 As I told you at the beginning of the trial, you 23 have a duty and a responsibility. You have a duty to 24 uphold the law, as Judge Spatt will give it to you. Now, 2
5 he will charge you after the summations are over. It
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9039 Summations-Schoer
1 probably will be Thursday. Listen carefully to the law, 2 focus on it. Focus on what the prosecution has to prove 3 beyond a reasonable doubt to show that Tara knowingly was 4 part of and joined a conspiracy. Listen carefully to the 5 law that they have to prove beyond a reasonable doubt that 6 she knew that Who's Who Worldwide was doing something 7 illegal, that she knew Who's Who Worldwide was doing something unlawful. They have to prove that beyond a 9 reasonable doubt. 10 Focus on whether the prosecution has proved 11 beyond a reasonable doubt that she was part of any sort of 12 scheme to defraud anyone, part of a plan to knowingly, 13 knowingly deceive people and take property from them. 14 Listen carefully to Judge Spatt's charge on the law with 15 respect to materiality, to what the prosecution has to 16 prove beyond a reasonable doubt with respect to what was 17 material to the bargain between Who's Who Worldwide and 18 its members. Most importantly, focus on the definition of 19 intent to deceive. Focus on the definition of good 20 faith. Listen carefully to those charges and what the 21 prosecution has to prove beyond a reasonable doubt with 22 respect to each of them and I submit if you really focus 23 carefully on the definitions of those elements of the 24 crimes charged and you analyze what has been presented, 25 you will find, and I'll demonstrate to you in this
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9040 Summations-Schoer
1 summation, that despite all you've heard, despite the 2 weeks we've spent here, there is a lack of evidence in 3 this case,
a lack of proof beyond a reasonable doubt with 4 respect to each and every element of the crimes charged as 5 against Tara Garboski. 6 Now, in doing that, in holding the prosecution to 7 its proof in following the law to its letter, you may be a little bit uncomfortable. You may not be happy about 9 telling the government that dispute all the time and 10 effort and cost that they've expended, that they just 11 haven't proved a crime. You might be uncomfortable about 12 telling them that they just haven't proved that Tara 13 Garboski had anything to do with any criminal activity. 14 You might not like to be sent mail that you might consider 15 to be junk, you might not like telemarketers, about the 16 fact that Bruce Gordon earned a lot of money, but as a 17 matter of law you have to put all of those things aside 18 and you have to decide all of those things as I said at
19 beginning of the trial on the credible, believable 20 evidence that you've heard, that you've seen and upon the 21 law. It's easy to accuse, it's easy to indict, it's easy 22 to bring a whole bunch of charges into this courtroom but 23 it's another thing to prove those charges beyond a 24 reasonable doubt and that's their burden. 25 You have a duty and you have a responsibility.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9041 Summations-Schoer
1 Tara is entitled to every consideration that the law 2 allows. She is entitled to the same consideration that 3 you and I are entitled to under the laws and the 4 constitution of this country. Her life, her freedom is on 5 the line for performing a job, for earning a living, for 6 doing things for an employer whom she trusted and at the 7 time had no reason not to believe not to trust, for selling a product that she and others strongly believed in 9 and in which she honestly believed was a service to those 10 people who became members. You hold her fate in your 11 hands and to say the least this case is vitally important 12 to Tara. It's not magic, this case isn't special. The 13 purpose of this trial and the purpose of every trial is to 14 determine whether the prosecution has proved beyond a 15 reasonable doubt each and every element of the crimes 16 charged. They must prove beyond a reasonable doubt that 17 crimes were committed at Who's Who Worldwide and that Tara 18 committed the crimes charged. And I submit to you they 19 haven't. 20 Now, during this statement I'm going to make 21 arguments to you, I'm going to present arguments to you 22 which I submit will be grounded in reason and logic which 23 will appeal to your common sense, but most important which
24 will be based upon the evidence you heard and based upon 25 the law as Judge Spatt will give it to you. After I'm
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9042 Summations-Schoer
1 finished and after all my colleagues are finished, I think 2 the Judge told you the government has an opportunity to 3 get back up here, to make what is called a rebuttal 4 summation. The government will be able to have heard 5 everything that we've said. The government will be able 6 to have an opportunity to answer the arguments that we've 7 made. They have the luxury of having heard those arguments. We just don't get the last word. 9 Now, we're experienced lawyers and we can 10 anticipate the arguments that they are going to make in 11 rebuttal. We're all human and I don't expect that I can 12 anticipate every argument that the government will be able 13
to make on rebuttal, so I just ask you to do this. When 14 the government makes an argument, and I haven't 15 anticipated it, just think, just think for a little while 16 about what I might have been able to say if I had a chance 17 to get back up here based upon the evidence and the law, 18 based upon the credible, believable evidence and you don't 19 have to accept what I would have said. I just want you to 20 think about it. I just want you to think whether or not a 21 reasonable doubt might arise if I had had an opportunity 22 to answer those arguments. That's all I can ask you to 23 do, that's all Tara can ask you to do. 24 Before I begin to analyze the evidence I want to 25 warn you again of a few things of vital importance to this
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9043 Summations-Schoer
1 trial, things which the prosecution has ignored and in 2 which they want you to ignore. Not once during 3 Mr. White's statement did he use the words "my proof is 4 beyond a reasonable doubt." You have to listen to the 5 Judge's charge and if you do you will realize that you 6 can't ignore things that are fundamental to fairness, 7 things that are fundamental to impartiality, things that preserve all of our rights, things that make sure that 9 each of us have a right to a fair trial in which the 10 accuser, the government has to prove and has to be tested 11 to ensure that there's no reasonable doubt that a person 12 might be convicted of a crime that the government just 13 couldn't prove was a crime or might be convicted of a 14 crime that the government couldn't proof he or she 15 committed, couldn't prove beyond a reasonable doubt. 16 Beyond a reasonable doubt, that's the burden of 17 proof and that always stays
on the prosecution. Tara 18 doesn't have an obligation to present any evidence. She 19 has a right to rely on her presumption of innocence. She 20 pled not guilty and that's all she has to say. She didn't 21 testify, that was her constitutional right. The Judge 22 will tell you that. That was a decision she and I made 23 after assessing what the believable -- what we believed 24 was the believable credible evidence presented against her 25 and the lack of evidence. The Judge will tell you that
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9044 Summations-Schoer
1 you can draw no inference, no inference at all from the 2 fact that Tara chose not to testify. That was her 3 constitutional right and it would be unfair and it would 4 be improper, it would be unAmerican for you to hold that 5 against her in any way. 6 I want to warn you as I did at beginning of the 7 trial and as the Judge has and will again tell you that each of the men and women out there are to be considered 9 separately. They must be treated separately. The 10 credible evidence must be evaluated against each 11 separately. The first three weeks of this trial, if you 12 remember, most of the stuff had nothing to do with my 13 client, it had to do with things related to Bruce Gordon, 14 and the fact that she is here with others, even if it is 15 proven, even if it was proven it is conceded that she 16 worked with them is meaningless. Guilt by association is 17 intolerable. You can't hold against Tara things that 18 Mr. Gordon may have done. That's guilt by association. 19 The relative weight of what they proved or what they 20 didn't prove against Bruce Gordon or against any of the 21 other people on trial has no bearing on Tara. You are 22 required to make a decision on her solely on the proof 23 against her which I submit to you is lacking. 24 Remember that much of the evidence that was 25 introduced in this trial was not even introduced against
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9045 Summations-Schoer
1 Tara. You heard the Judge tell you over and over again 2 that what you were hearing or the documents you were 3 seeing were being admitted solely against Mr. Gordon or 4 solely against the corporation or solely against Sterling 5 or against a particular person, not against Tara. 6 The government talked about statements in their 7 summation of people who were not on trial, statements of people who didn't testify. People who weren't subject to 9 cross-examination here. None of those things that they 10 said were admissible against Tara and the Judge told you 11 that. You heard no evidence at all that Tara had anything 12 to do with Sterling. 13 Listen carefully to the Judge's charge on another 14 area of the law, it's called multiple conspiracies. The 15 government has chosen to lump together Who's Who Worldwide 16 and Sterling. That was their choice, that was their 17 election. But there is no proof that the people employed 18 at Who's Who Worldwide knew anything about what was going 19 on at Sterling, absolutely no proof. The government chose 20 to lump them together, and if you carefully listen to the 21 multiple conspiracy charge, I submit that you have to find 22 that the allegations in the indictment concerning a single 23 conspiracy, one conspiracy, just haven't been proven. 24 In any event, you have to separate the evidence, 25 the credible evidence presented and admitted against Tara
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER
9046 Summations-Schoer
1 and only apply that evidence in reaching your verdict with 2 respect to her. Now, that may not be an easy task because 3 you heard a lot of things, but remember that as you 4 deliberate. You have to separate out the evidence with 5 respect to each defendant and you can only use the 6 evidence that was introduced against them in reaching your 7 verdict with respect to that particular defendant. Now, nothing that I'm saying in this summation is 9 evidence, just as nothing that Mr. White said is 10 evidence. I told you before, and the Judge will tell you, 11 that the evidence comes from the witness stand, from the 12 exhibits that are introduced, but it is not just 13 everything that comes out of a witness' mouth. Your 14 decision has to be based on credible evidence, believable 15 evidence and Mr. Wallenstein spent some time on that on
16 showing you that certain witnesses were not credible. 17 Listen carefully to Judge Spatt's charge on how 18 to assess the credibility of a witness. There's no 19 magical test, it's your common sense. 20 You have to determine whether you would believe a 21 particular person's testimony if you had to rely upon it 22 in order to make an important decision in your life and 23 that's what you do in here. You are making an important 24 decision in Tara's life. When you listen carefully to the 25 charge, pay special attention to what the Judge says about
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9047 Summations-Schoer
1 witnesses who the government claims are so-called 2 accomplices or those who received immunity or those who 3 have entered into cooperation agreements. You have to 4 scrutinize carefully with great care and particular cause
5 of action those peoples' testimony. You have to judge 6 their testimony more carefully than other witnesses. 7 But most importantly the evidence in this case is not just the direct testimony, that's what the government 9 wants you to believe that only the direct testimony 10 counts, but you can't do that. You can't ignore 11 cross-examination. 12 You are required to evaluate all the testimony, 13 to assess the credible evidence and to apply the law. 14 You have to use that credible evidence, you have 15 to apply the law and you have to reach your determination 16 as to whether the prosecution has proven beyond a 17 reasonable doubt the elements of the crimes charged. 18 Remember that because that's your job. 19 So let's look at what they proved and what they 20 didn't prove. Let's look at how the law applies to the 21 credible, believable evidence that you have heard in this 22 courtroom. Despite the length of this trial, the issue in 23 this case is relatively simple as it applies to Tara. The 24 issue is did the prosecution prove beyond a reasonable 25 doubt that Tara Garboski knowingly and with the intent to
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9048 Summations-Schoer
1 deceive was part of an agreement to commit a crime, and 2 did the prosecution prove beyond a reasonable doubt that 3 knowingly and with the intent to deceive that Tara 4 Garboski was part of a plan or scheme to take property of 5 others by knowingly making false statements that were 6 material to the bargain between Who's Who Worldwide and 7 its members? I submit to you that they haven't proven that Tara agreed to do anything she believed was 9 criminal. I submit to you that they haven't proven that 10 false statements that were
material to the bargain were 11 made and most importantly I submit to you that they 12 haven't proven that Tara ever intended to deceive anyone. 13 Let's look at what the government produced with 14 respect to Tara. Mr. White on his summation told you some 15 things, didn't seem to have very much to do with Tara 16 Garboski. They showed you that she was an employee of 17 Who's Who Worldwide for about four and-a-half years. The 18 evidence showed that she was first a salesperson and then 19 a group leader and that at times she handed out lead cards 20 to sale people. You heard that she interviewed people for 21 jobs, you heard that with a tape in the interview, where 22 she interviewed Eric Ihlenfeldt for a job. You heard she 23 hired people. You heard that she trained new employees 24 and you also heard that she monitored telephone calls, 25 that she listened in for the salespeople to make sure they
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9049 Summations-Schoer
1 weren't lying. The government produced some tapes in 2 which she gave pep talks to the sales force but she always 3 told them if you listen to those tapes not to pressure the 4 potential member. She always told them it's not a hard 5 sell. You don't have to make a hard sell. 6 The government misleadingly played a tape in 7 which they contended that Tara told the sales staff not to ask about educational background. Yeah, they played that 9 one little clip, but then on the defense case you heard 10 the entire training session. I played it, and she 11 explained in that training session, she was going through 12 the questions asked, she explained there that there are 13 two sides to the order form and you only ask certain 14 questions and she explained that
education or background 15 wasn't included in the books so there was no need to ask 16 it. 17 There's many people who don't have a formal 18 education, like one of the richest businessman on earth, 19 Bill Gates, never graduated from high school. It doesn't 20 matter whether you have an education, it really doesn't 21 matter as to whether or not you are qualified to be in 22 this book, to be a member of Who's Who and that's what she 23 was telling the staff if you listen to the whole training 24 session. 25 They played another tape in which Tara told the
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9050 Summations-Schoer
1 staff to push a potential customer to make a decision. 2 Yeah, get him to say yea or nay, push him to the wall, get 3 them to make a decision, but they didn't play the 4 conclusion to that and I had to play it for you. S
he said 5 you have to ask for the order or you will never get it so 6 if you don't ask them, if you don't reach the point where 7 you say give me a decision, yea or nay, you're never going to get an order. But she also said if they don't want it 9 that's nice, that's okay, say thank you, get off the phone 10 and make your next call. 11 Finally, they played a tape in which Tara told 12 the staff to use ego as a selling point to distinguish 13 between a regular and a gold membership. No one claims 14 that ego gratification wasn't part of what Who's Who 15 Worldwide was selling and the customers and Sandra Barnes 16 of Marquis told you there's nothing wrong with that. 17 That's what people wanted, they wanted their ego to be 18 gratified. Surely it is not criminal to sell a product 19 that appeals to someone's ego. You heard about that 20 throughout this trial. That's
what Cadillac does, that's 21 what Armani does, that is what Patek Phillipe does when 22 they tell you wear our product, drive our car and you'll 23 be a better person. You'll be more recognizable. You'll 24 be -- your ego will be gratified by buying our product, 25 it's done every day. That's what the government has
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9051 Summations-Schoer
1 proved. That's it. Those things that we've just 2 discussed. So what? 3 You can't infer from that beyond a reasonable 4 doubt from that limited evidence that Tara knowingly 5 entered this enterprise, this company, knowing it was 6 illegal, knowing that it was doing illegal things. You 7 can't infer that she knew material misrepresentations were being made, that she intended to deceive people, that she 9 took their money deceitfully. From that evidence that the
10 government presented you can't infer that she didn't ask 11 in good faith. 12 It defies logic, it ignores the rest of the 13 evidence you heard, it ignores reality. And to believe 14 that that evidence, that limited evidence proves beyond a 15 reasonable doubt the government's case is enough to meet 16 their burden of proof, that ignores the law. Look 17 carefully what they claim they proved. Look carefully 18 what the rest of the evidence was. 19 Tara was first just a salesperson. She didn't 20 write any letters. She didn't draft any letters of 21 solicitation. She didn't write the pitches. They were 22 done before she ever was employed. They were done by 23 Bruce Gordon. The letters were his, the pictures were 24 his, the words were all his favorite children, he told you 25 that on tape. Tara had no reason to believe that what was
OWEN M. WICKER, R
PR OFFICIAL COURT REPORTER 9052 Summations-Schoer
1 in the script might at sometime later in hindsight be 2 claimed by the government or anyone else to be materially 3 misleading or intentionally deceiving. She had no reason 4 to believe it was anything more, the pitch was anything 5 more than recognized, accepted salesmanship, puffing. 6 Bruce Gordon specifically told them it was true. 7 You heard the tape that I played. He's talking about that one in six people and he specifically says to the people, 9 to his workers, to the employees, "and that's true, you 10 know." He told them "nominated" had many meanings. He 11 told that to Debra Benjamin and he told that to other 12 people too. He told them that it meant selected. Words 13 have many meanings. You heard that in the courtroom. 14 There is a big fight going over the word 15 necessary. Some people think it means one thing and other 16 people think it means something else, nominated can mean 17 lots of things. She was told by this man, this older 18 successful man who was autocratic, who was controlling and 19 who told them what they wanted them to know and there was 20 no reason for her to question it. No reason for her to 21 believe that it wasn't true, just as there was no reason 22 for Marty Reffsin to believe the things he was telling 23 them weren't true, just as there was no reason for his 24 brother and sister-in-law, he told you. There was no 25 reason to believe that Mr. Gordon wasn't telling them the
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9053 Summations-Schoer
1 truth. Just as there was no reason for Maria Gaspar who 2 also told you she had no reason not to believe what 3 Mr. Gordon told her or Debra Benjamin who also testified
4 that she had no reason not to believe what Mr. Gordon told 5 them. Just as a smart attorney like Neil Ackerman, who is 6 a smart man, an attorney, who gets up on the witness stand 7 and said I had no reason not to believe Bruce Gordon when he told me something. Tara had no reason not to believe 9 that the things in the pitch that he said were true were 10 not true. She didn't know about his tax problems. She 11 didn't know about his finances. He was her employer. She 12 was a worker. She didn't know about those things in this 13 trial, until you heard about. What he may have said to 14 the IRS, what he may have said about different things 15 about ownership of the company. She didn't know anything 16 about that. She had no reason to question his veracity. 17 You have to look back to what she knew at that 18 time when she was working there, not with hindsight. She 19 had no reason not to believe what Bruce Gordon told her. 20 But there's more than just his words that lead her to have 21 no reason not to believe the truth, there was that 22 separation of functions, that black door that she and the 23 salespeople were never allowed to enter. She is charged 24 with mail fraud and she never saw the letters, the 25 solicitation letters. She is charged with mail fraud and
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9054 Summations-Schoer
1 she never knew what was in the mailings. She wasn't even 2 allowed to open the mail. You heard that, the mail was 3 opened, all the mail that came into this place was opened 4 by certain people in administration and no other people 5 were even allowed to even see it. 6 If you are not allowed to see the mail when it is 7 being opened or you are not allowed to open the mail, how are you supposed to know what's coming in? How many lead 9 cards are coming in? You can't know it. 10 The solicitation letters were locked in a binder 11 in the administration office and you heard Mr. Saffer tell 12 you that if the salespeople entered the administration 13 office they would be fired, fired for going across that 14 black door. 15 Debra Benjamin, a person even higher up in the 16 company told you the only way the salespeople or even she 17 would have known about those percentages, the six in one, 18 the 16 percent, the 15 percent, if they were told by Liz 19 Sautter or Bruce Gordon and she also told you she was the 20 president of this company, that there was no reason, no 21 reason to question the numbers, the percentages that they 22 gave to the employees. Why? How was Tara to question? 23 How was Tara to know? 24 The government wants you to believe that Tara was 25 some sort of an insider. That's what they tried to say in
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9055 Summations-Schoer
1 their opening statement but they couldn't prove it because 2 it just wasn't true. She received a salary. She didn't 3 even receive a commission. She had no financial interests 4 in this business other than her paycheck and you saw that 5 was, that was $1,200 at the end of this whole time 6 period. She wasn't earning the most. Debra Benjamin was 7 earning $300 more a week, just like Maria Gaspar who the government holds out as having no financial interest in 9 this business other than her paycheck, Tara Garboski had 10 no financial interest in this business other than her 11 paycheck. She had no reason, the same way the government 12 argues that Maria Gaspar had no reason to falsify 13 documents, Tara Garboski had no reason to try and deceive 14 people. It was a job. She had jobs before, she'll have 15 jobs after, she has jobs after. She had no reason to 16 deceive anyone. She didn't have a company car like some 17 other people, she didn't receive perks like travel 18 payments like some other people. She wasn't second, third 19 in command. She didn't even have a key to the office. 20 She couldn't get in there unless Liz Sautter let her in or 21 Bruce Gordon let her in. 22 But the higher-ups, Liz Sautter, Debra Benjamin, 23 they weren't even arrested. The people who really knew 24 about the entire operation, they weren't even arrested. 25 Tara only knew what she was told and she was told that
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9056 Summations-Schoer
1 there was a screening process before she got the cards. 2 That is what she was told. She was told that there was a 3 screening process at time of the mailings. She didn't 4 know anything about the mailing lists, but she knew there 5 was a screening process at that time. That's what she was 6 told and she was told there was another screening process 7 after the cards came back and she often observed that and people in the conference room sorting cards behind the 9 locked door. This is what she saw. 10 She knew that there was another level of 11 screening that her people, the salespeople were being told 12 to screen the cards. I'll give you the cards, hand them 13 back to me if the people don't qualify. You heard that on 14 the tapes over and over again. If they don't qualify even 15 before you call them, hand them back to me, I'll give them 16 new cards. You will not lose your chance for 17 commissions. After you talk to them on the phone if they 18 don't qualify, hand the cards back. She knew that the 19 sales force was doing that. Most importantly she was told 20 that there was a last level of review even after the 21 orders were written, it was Wendi Springer. Wendi 22 Springer told you it was her primary job, primary job to 23 review those orders and make sure people qualified and 24 that's what Tara was told. That's her job. She's in 25 there. She's working eight hours a day. She was
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9057 Summations-Schoer
1 reviewing orders to make sure people qualify. Contrary to 2 the government's argument, Wendi Springer did reject 3 people, she told you that, and Debra Benjamin also told 4 you that Wendi Springer on a weekly basis would come to 5 her and ask her about cards, about particular cards. Does 6 this person qualify? But it was even more than what she 7 was
being told, even more than the screening process that lead Tara to believe that the script wasn't materially 9 misleading. Lead Tara to not even deceive him. She knew 10 about the Rolls Royce, she knew about the Cadillac of the 11 industry, she knew about Marquis, and she knew that 12 Marquis set the standards for the industry. That's why we 13 called Sandra Barnes because Marquis set the standard for 14 this industry. 15 Tara knew that the use of the term "Who's Who" 16 wasn't exclusive to Marquis. There were hundreds of Who's 17 Whos. She knew just as Debra Benjamin told you, just as 18 Alan Saffer told you he knew that Marquis used mailing 19 lists. Everybody in Who's Who Worldwide knew Marquis used 20 mailing lists. And they knew that most of the people that 21 Marquis solicited came from maiming lists. 22 Look at Marquis' own document, I sort of blew up 23 one
of the pages from FK. This is Who's Who in Finance 24 and Industry. It's one day's mailing. 205 mailings and 25 out of -- I'm sorry, 205,000 mailings, 205,000 mailings.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9058 Summations-Schoer
1 Look at how many nominations there were, 276, the bulk of 2 what Marquis did was mailings, mass mailings, mailings to 3 people on mailing lists. Business Monthly Magazine. 4 Look at some of these others, Industry Week, the 5 Journal of Commerce, Cranes Business, these are 6 newspapers. These people aren't any more qualified to be 7 in a Who's Who, but that's what Tara knew. We don't claim as the government tried to say and that's basically all 9 they did say in their summation that Tara didn't know 10 there were mailing lists. We haven't claimed that. 11 The point is she didn't think she was deceiving 12 anyone
by using mailings. Marquis did it and Tara knew 13 also that not only did Marquis use mailing lists but that 14 Marquis used letters to people whose names came from a 15 mailing list where they say "Dear Marquis Who's Who 16 nominee." They used the word "nomination." 17 There's another letter, the one to Mr. Gordon 18 that says you've been nominated and that's the letter that 19 Mr. Gordon flashed around to all the employees. She knew 20 that Marquis did that, used the word nominated from people 21 who came from mailing lists and she also knew that Marquis 22 really didn't tell people their names came from a mailing 23 list. They danced around it. You heard what they have in 24 their brochures and you heard what Mr. Dunn read from the 25 trademark trial what Sandra Barnes said about whether or
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9059 Summations-Schoer
1 not they told people they were on mailing lists, only if 2 it was vitally important. That's the only time they told 3 somebody they were on a mailing list, and Mr. White brings 4 in this one brochure out of six boxes full, one brochure 5 that says something about using subscriptions. He was 6 supposed to bring in every brochure and he doesn't show 7 you one that even mentions anything remotely close to a mailing list, but the reality of the situation is that 9 that brochure was prepared if you look at it and it's 10 copyrighted in 1990. In 1994 they are using brochures 11 like this in Who's Who in American Law. They are sending 12 a brochure like that to a letter addressed to "Dear 13 professional," who they got from a mailing list and read 14 what it says. Why was I chosen to be considered for 15 inclusion? We contacted you because we believe your 16 accomplishments to be of significant reference value. How 17 do they know that from a mailing list? Could they? You 18 are part of a core group of highly qualified individuals 19 who are prominent because of their leadership positions. 20 How do they know that from a mailing list? 21 Sandra Barnes told you that this is what they 22 sent to people whose names they got off of mailing lists 23 and not only that, read the next question. "Is my 24 inclusion guaranteed?" They get your name from a mailing 25 list and now here's the question, "is my inclusion
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9060 Summations-Schoer
1 guaranteed?" "Unfortunately there are a few instances, a 2 few instances where you are not accepted if your name came 3 from a mailing list." That's what Marquis, that's what 4 the Cadillac of the industry did, that's what Tara 5 Garboski knew. It's puffery, it's sales puffery, just as 6 Suzanne Konopka told you, institutionalized lying, not any 7 different saying that a watch is a piece of work of art or a mark of distinction or that a car is a oasis of 9 serenity. It's salesmanship, puffing, it's what the 10 government does in their own ads for the Army. Be all 11 that you can recognize, you will not recognize yourself in 12 four years. It's all puffery, salesmanship, it's not a 13 crime. 14 Tara also knew what she saw. She saw the book, 15 she saw that the people in the book were from upper and 16 upper middle management. 17 I've got another exhibit, Defendant's Exhibit 18 AI. Look at this. These are the percentages of people in 19 high level positions that were in Who's Who Worldwide. 20 She knew that people were getting what they bargained for 21 to be in a membership organization that was selective, 22 that included major players, Russian presidents, CEO's, 23 officers of major corporations. It didn't matter how the 24 company got their names. Didn't matter if the president 25 of whatever company, whatever company we talked about in
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9061 Summations-Schoer
1 the Tribute magazine, what mattered is that they were in a 2 group of selected people. 3 Tara knew that people were getting what they were 4 bargained for, knew they were getting a nice plaque, knew 5 the great benefits if they took the trouble to use them, 6 networking, discounts, planned conferences, cocktail 7 parties, knew about the meeting facilities, knew about this great little magazine Tribute. Look at these 9 things. 10 Susan Konopka, Tracey Colletti, Debbie Benjamin, 11 they were proud of these and they had every reason
to be 12 proud of them and all the employees were proud of these
13 magazines. Debra Benjamin told you that that's what Tara 14 wanted most. She wanted to make the product better on a 15 daily basis and the product was being made better and the 16 services were expanding and everything was becoming more 17 valuable to the members until the government raided Who's 18 Who Worldwide, closed the place down and Tara was 19 arrested. 20 Tara also saw some other things that are 21 extremely important, things that show she didn't intend to 22 deceive. She knew that members were happy. She heard 23 that. She heard that from members. On the tapes she told 24 you that. The Tribute magazine there were letters from 25 members saying how happy they were. There were numerous
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9062 Summations-Schoer
1 people upgrading their membership. 2 THE COURT: Mr. Schoer, please start to conclude 3 your summation. 4 MR. SCHOER: Yes, Judge. 5 There were a minimum of complaints, you heard 6 that. You heard testimony that out of 70,000 members 7 before the government got their hooks in the membership, before they told them their theory, there were only 20 to 9 30 complaints out of 70,000 members. The government 10 argues that you saw customers come in who said they didn't 11 get what they paid for, but most of those customers if you 12 listen to them, they were upset about the B balance. They 13 didn't understand the B balance. And you heard all of 14 those tapes. There's not one tape where the B balance was 15 not mentioned. 16 The members who came in here, their 17 dissatisfaction arose after the government told them that 18 they, the government, believed that Who's Who Worldwide 19 wasn't injured. Listen carefully to the Judge's charge. 20 It's whether or not Tara had valued accounts. Whether or 21 not Tara believed the statements in the scripts, about 22 nominations, percentages, concerned about the quality, 23 adequacy and price of the product. It's what they 24 believed, caveat emptor, let the buyer beware, that's 25 business. That's what we learn early in life, it's not a
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9063 Summations-Schoer
1 crime. 2 In any event, the most telling evidence that 3 people were satisfied, that people were happy is right 4 here in a company where there were returns, refunds, given 5 gladly, a policy. 1.1 percent of the total sales, that's 6 minuscule, people who asked for refunds or got chargebacks 7 on their credit cards. Minuscule. Most importantly, Tara saw a thriving business 9 that was spending a tremendous amount of money,
10 4 and-a-half million. This was no fly by night 11 organization, this was no Eric Ihlenfeldt little hole in 12 the wall where people making telephone calls on bridge 13 tables. You saw the videotapes. This is no place where 14 people were standing over them telling them lie, lie, lie, 15 like Eric Ihlenfeldt's operation. There was no intent to 16 deceive here. People were fired for lying. Every 17 ex-employee who testified, all of them were government 18 witnesses, stated they did not believe they were 19 committing a crime when they worked at Who's Who 20 Worldwide. Every one of them said they didn't intend to 21 deceive anyone and that they didn't think their actions as 22 employees deceived any members. Even the government 23 informant, Elliot Zerring who worked there for six weeks, 24 curiously they didn't ask him whether he believed he was 25 deceiving people, he never told you that. And maybe they
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9064 Summations-Schoer
1 didn't ask him because they didn't want to hear the answer 2 that he would have been given. 3 Even Alan Saffer said and if you really evaluate 4 his credible testimony, he said that he didn't think he 5 was deceiving people. He had worked at West, he knew West 6 double billed, refused to give refunds. He was told by 7 the postal inspectors in 1990 that West is bad, don't get involved in a similar operation and he goes and starts 9 working at Who's Who Worldwide and he works there for five 10 years and he doesn't think anything about it. He thinks 11 everything is going good and it's not until he's arrested, 12 until he's terrified by being arrested. It's not until he 13 faces going to
jail for two to four years that he decides 14 well, maybe I better do something to help myself to take 15 away that possibility that I might go to jail. 16 He didn't want to take the chance of enduring 17 what these people have endured for the last several years 18 and the trial for the last 10 or 11 weeks. He didn't want 19 to take the chance about standing up for his rights, so he 20 caved in and now he tells you what the government wants to 21 you hear. Now he tells you what he thinks he wants the 22 government to hear. They weren't trying to deceive 23 anybody. If they were, why refer people to Biegelman? 24 Why sign up people from Hard Copy? There was no intent to 25 deceive. Debra Benjamin told you that. She told you that
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9065 Summations-Schoer
1 she didn't believe that the company deceived members by
2 saying the organization was highly selective. 3 Tara never intended to deceive, she never 4 intended to defraud anyone. She acted in good faith based 5 upon what she was told, what she knew and what she saw. 6 In fact, there is no proof that she made any 7 representation to any customer over the telephone. All those tapes and there's not one word from her mouth that 9 could be considered a misrepresentation to any member of 10 the public. All of those tapes and not one where she or 11 anyone else is telling the people to lie, to say that 12 names didn't come from mailing lists. There's not one 13 tape that says that and Zerring was taped for 10 weeks 14 wearing a tape every day. 15 You didn't hear all the tapes but there is no 16 tape that exists that showed that. There is no evidence 17 that she caused misrepresentations to be made. You heard 18 to the contrary. You heard the tapes that I played, 19 follow the script verbatim. Credibility is important, 20 accuracy is important, you must qualify potential members 21 through the interview process. You can't accept certain 22 people. You heard her say that. You heard her say "we 23 feel that we have to sell our membership. The product 24 itself is good enough that we don't have to drop anybody's 25 name. The pitch has to be followed verbatim. We're
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9066 Summations-Schoer
1 legitimate. We want to stay that way." That's what Tara 2 said. And the only way we can do it is by monitoring you 3 and what you're saying, so the pitch has to be followed. 4 You have to tell the truth. Don't make stuff up. It's 5 not even worth it. 6 And there's another tape that I played which is 7 very curious. It's someone telling her, one of these new people telling her, well, can we say something that isn't 9 in the script? And she says, that's why we don't want 10 people lying because people know. And the person says, 11 that's not lying, that's not lying. And Tara says, it's a 12 lie, it's a blatant lie. The script, that's the only 13 answer. 14 And in another part of that same tape someone 15 says, "can we say that the package enclosed with the 16 plaque gives them the 800 number for the discounts?" And 17 she says on something so inconsequential as that, she 18 says, "no, you can't tell them that, I don't know whether 19 they do that. I don't know if they are sending out 20 applications or not. Don't give people misinformation." 21 And the most telling tape is the one where Eric 22 Ihlenfeldt came in for an interview. She didn't know that 23 he had a tape-recorder. What does she say to him? She 24 says, "that's basically what it is. We have a set 25 presentation and we do require that it is followed to
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9067 Summations-Schoer
1 protect your own credibility. By following the script, 2 first of all, you will not confuse them, you will not lie 3 to them, you will not stretch the truth and you'll close 4 because it's all mapped out for you." Don't lie. Those 5 are the words of Tara. 6 The government wants you to rely on the words of 7 the tape when it suits them but they want you to ignore Tara's words. Those were her words that she didn't know. 9 Those were her words when she didn't know she was being 10 taped, words, words which demonstrate that she believes 11 strongly in the product of Who's Who Worldwide, words that 12 demonstrate that she did not believe she was engaged in 13 any
criminal activity. Words that demonstrate that she 14 didn't intend to deceive or defraud anyone. Words that 15 demonstrate that she acted in good faith in her 16 employment. Words that clearly demonstrate the government 17 has not proven beyond a reasonable doubt the elements of 18 the crimes charged, have not proven beyond a reasonable 19 doubt that there was a crime and have not proven beyond a 20 reasonable doubt that Tara was involved in any criminal 21 activity. 22 I told you at the beginning of the case that I 23 would return and that I would demonstrate that the 24 government didn't prove their case, didn't prove what they 25 were required to prove by law. They have not. I showed
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9068 Summations-Schoer
1 you that and I urge you to reach the only conclusion that 2 you can based upon the credible
evidence, the lack of 3 evidence and the law in this case and that is that Tara 4 Garboski is not guilty. 5 Thank you. 6 Thank you, Judge. 7 THE COURT: Members of the jury, please give your attention to counsel for the defendants Who's Who 9 Worldwide Registry, Inc. and Sterling Who's Who, Inc., 10 Edward Jenks, Esq. 11 Mr. Jenks. 12 MR. JENKS: Thank you, Your Honor. 13 Judge Spatt, Mr. White, Ms. Scott, Counsel, 14 ladies and gentlemen of the jury. This has been a 15 relatively long trial and I too like counsel want to thank 16 you for the attention that you paid during the last 10 or 17 11 weeks that we've been here in this courtroom. This 18 morning at 6 a.m. I got up and I said to my wife this 19 morning, it looks like I'm going to give my summation 20 today in the Who's Who case, any advice? She said to me, 21 yeah, I have. I've seen
a few of your summations and 22 nobody has ever complained about them being too short. 23 With that in mind I promise you that I'm going to 24 go to the point, I'm going to be brief and I'm going to 25 give you a broad overview, a broad brush painting as I
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9069 Summations-Jenks
1 think -- what I think you should take with you into the 2 jury room. 3 You know that a jury trial is in fact a search 4 for the truth, it's a rational and civilized way with 5 which we in the United States, a great country, go about 6 looking for proof or lack of proof. I want to give you a 7 blueprint, so to speak. There's a simple issue in this case. This mail fraud case, this conspiracy is really a 9 very simple case. Did the government prove to you beyond 10 a reasonable doubt that Who's Who Worldwide, Sterling 11
Who's Who and the other defendants conspired to commit 12 mail fraud along with other defendants, and did they in 13 fact commit the crimes of substantive mail fraud? As you 14 can see there's two separate trials going on here. 15 There's a mail fraud going on, there's a tax case going 16 on. The corporations that I represent are not charged in 17 the tax fraud case at all. 18 As the representative of the corporations, I said 19 to myself, why am I here? Maybe that's what you should 20 ask Mr. White when he gets back up here on his rebuttal 21 summation. Why are the corporations here? One 22 corporation Who's Who Worldwide is in Chapter 7 23 liquidation. It's dead. The assets have been sold off. 24 Sterling Who's Who is a defunct corporation, not 25 operating and hasn't been operating since 1995. So why
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9070
Summations-Jenks
1 are the corporations in the indictment? They are here, I 2 respectfully submit to you, so that the government was 3 able to get documents into evidence to try to prejudice 4 these defendants in this case with evidence that otherwise 5 wouldn't have come in. 6 I submit to you that despite that there are many 7 reasonable doubts in this case for you to latch your hats on with respect to all of these defendants and with 9 respect to the corporations. That's why as I told you in 10 my opening statement there's going to be no plea bargains 11 here, no deals, no rolling over playing dead for Mr. White 12 and Ms. Scott. 13 In this summation it's essentially my turn in the 14 barrel, if you will, to address the evidence in the case 15 or the lack of evidence. Unfortunately me as a criminal 16 defense lawyer I'm not at my best in a case of this type
17 because this is really a civil case. This is not a 18 criminal case. It should have never been a criminal 19 case. When you get into the jury room I ask you don't 20 check your logic and your common sense at the door, if you 21 can't remember something, if you forgot something about a 22 portion of the testimony you have an absolute right for us 23 to find it for you and to have the court reporter read it 24 back. 25 Now, during the trial if I said something you
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9071 Summations-Jenks
1 don't like, please don't hold it against the corporations 2 or against any individual defendant in the courtroom. 3 Occasionally as you know you've watched me for 11 weeks, 4 I'm a little rough on the edges. I'm just doing my job. 5 I am in a unique position in this criminal trial. I don't 6 have a defendant whose freedom is at stake here. I'm 7 almost like a freebie, I get to give a free summation here and say whatever I want. I don't have a live human being 9 as a client. And that takes a tremendous amount of 10 pressure off a lawyer. This is, frankly, the first time 11 in any criminal case I've been in a criminal case without 12 a live person as a client, but I'm going to be here and in 13 this summation I'm going to help my colleagues, colleagues 14 that I've been proud to work with during these 10 weeks. 15 You know all of us in this country are pretty 16 much fed up with crime. I mean, over this weekend you saw 17 the tragic death of this Asian Colombian law student, 18 Ms. Hong at Columbia Law School. I'm not here defending 19 crime, I'm not standing up here telling you crime is good, 20 I'm policing the system, I'm making sure that overzealous 21 prosecution by young prosecutors are not bringing 22 indictments and destroying peoples' lives in the process 23 without them having the opportunity to be heard. 24 The government claims that these people here, 25 these salespeople and these managers are criminals and
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9072 Summations-Jenks
1 they're felons, that's what the government claims. These 2 people are not criminals, Mr. White. They are your 3 neighbors. You know what this case is, Ms. Scott, the 4 mail fraud against these salespeople, it's a disgrace. 5 That's what this case is. These people sitting here are 6 not criminals. They are your neighbors too. You want to 7 see criminals? You want to see mail fraud? You want to know what mail fraud is at its finest? Look at Watstein, 9 look at Zerring, look at Ihlenfeldt. You, Mr. White, and 10 you Ms. Scott, you should be prosecuting these people 11 Zerring, Ihlenfeldt and Watstein instead of getting up 12 here and vouching for them as if you knew them since they 13 were born. Those are people that are involved in mail 14 fraud, in conspiracy to commit mail fraud, in theory. You 15 should be putting them in jail for as long as possible. 16 They are long-term professional conartists, ladies and 17 gentlemen, you saw them in this case. They cheated 18 literally tens of thousands of people out of dollars. 19 Zerring cheated insurance companies which comes 20 out of your pocket and mine for a quarter of a century and 21 drove a Rolls Royce and a boat while he did it. 22 Watstein, he speaks for himself, he's the 23 quintessential definition of a leopard who hasn't changed 24 his spots. Here's a guy who comes here and testifies and 25 has the arrogance to show up in the courthouse in a white
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9073 Summations-Jenks
1 stretch limousine. No jail sentence, none at all despite 2 the fact that he was looking at 70, 76, 78 months. What a 3 world this is. Watstein, a professional liar, a person 4 who could teach a course in lying at Harvard or maybe I 5 should say the University of Pennsylvania because that's 6 where Watstein was from. 7 My personal favorite of all is Mr. Ihlenfeldt, smooth, calm, relaxed, but don't let him near your credit 9 card number. He cheated simple decent hard-working people 10 out of $249 each day, day in and day out in three separate 11 companies. 12 I just ask you as an overview in evaluating what 13 they said, ask yourselves would you socialize with those 14 three people? Would you let them watch your children or 15 your grandchildren? Would you bring them to your house?
16 Would you go to the movies with them? Would you go out on 17 a date with any of them? If not, why would you even take 18 their testimony? Why would you accept their testimony? 19 Why would you dignify it? You are free to reject all of 20 their testimony and their tapes if you so choose. You 21 have that awesome power. You have the power of deciding 22 the faith of these people, not Judge Spatt, not Mr. White 23 or Ms. Scott and not any of the defense counsel. 24 I submit to you that you should reject their 25 testimony. Isn't it incredulous that a man could call up
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9074 Summations-Jenks
1 with 60 different identities and make a tape of each call 2 with a different identity and do it the way he did it? 3 I submit to you you should reject his testimony. 4 You know what this whole criminal case really
5 comes down to here in a nutshell, really boils down to its 6 finest points, the use of the word nominate and the use of 7 mailing lists. That's the whole case. We heard in the trial that nominate means 9 selected, chosen or appointed, has a variety of 10 definitions. Not one solicitation letter in this case 11 says anything is sent from the corporations that any 12 perspective member was nominated by an existing member or 13 in fact how specifically that individual was nominated. 14 Now, I have a duty to represent the corporations, 15 but I'm representing all of these people. But let's look 16 at what these people and the corporations provided. Well, 17 they provided much more than a listing in a book and you 18 saw the registry and you are free to look at it, they are 19 all evidence. They provided much more than this. There 20 was a magazine, Tribute. There was a
plaque, there was a 21 credit card, there was a CD ROM, a conference center in 22 New York, cocktail parties, promotional seminars that were 23 planned by the company but did not take place. Refunds 24 were given to members when requested. The company spent 25 in 1993, Who's Who Worldwide, 4 and-a-half million. We
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9075 Summations-Jenks
1 know in 1994 Who's Who Worldwide was up and running and 2 Sterling Who's Who was up and running until March of '95. 3 Look at these numbers. They are mind-boggling. These are 4 expenses. 5 The company was spending four and-a-half million 6 in 1993. The complaint that the companies had, 30 to 40 7 in the five years out of 70,000 members. If the business is a scam and designed to steal and the corporations 9 intended to deceive people and these people intended to
10 deceive people, why in the world would you have officers 11 at Sterling Who's Who that looked like they were good 12 enough for King Farouke to sit in? Why would you put an 13 office in a waterfront Brooklyn warehouse under the water 14 in the BQE in the basement and make the calls from there? 15 These corporations, they never intended to 16 deceive the members. What they intended to do was please 17 the members, to add more and more benefits, to grow the 18 corporations, to make the members happy members, to 19 provide services for those members. 20 Ladies and gentlemen, I'm taking a look here and 21 I want to talk about what I consider to be the most 22 critical witness in the case concerning the mail frauds 23 and that was Debra Benjamin. The number two person at the 24 company was she. 25 She really gave you a sneak peek, if you will, as
OWEN M. WI
CKER, RPR OFFICIAL COURT REPORTER 9076 Summations-Jenks
1 to the intent of the companies and the intent of the 2 employees that worked inside those companies. What do we 3 know from her? We know from the fall of '92, right up to 4 March of 1995 she was the director of marketing, the 5 number two person in charge and the executive editor of 6 Tribute. They oversaw the production of the solicitation 7 letters along with Gordon and the obtaining of the selective, and you use the word selective mailing lists 9 that were in fact used. 10 Nomination ballots she told us were distributed 11 to members in 1993. She put together seminars, brochures 12 she put into new member packets to send out. She tried to 13 said up Vietnam, Hilton Head for 1994. 600,000 a year 14 according to Debra Benjamin to produce Tribute magazine. 15 That is logical for a company who has only the intent to 16 scam and deceive people, that they would spend $600,000 to 17 produce a mapping when that $600,000 could be stolen out 18 of there? Do you think Eric Ihlenfeldt, if he was running 19 Who's Who Worldwide would have bothered to print Tribute 20 magazine? I don't think so. 21 She told us that they bothered to do profiles on 22 members so other members could read. She told us about 23 Gordon. Sure, Gordon had an aggressive selling technique 24 and aggressive sales tactics but so does every Ford 25 showroom in America when you walk in there. Do you think
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9077 Summations-Jenks
1 there is not pushing that takes place in a dealership? If 2 you don't take this black Ford today you'll have to wait 3 two months to get them when he has 400 of them in a lot in 4 the Bronx. Do you not think that happens? Perhaps the 5 government should indict those people too. 6 Gordon, stick with the pitch. If you lie, you're 7 out of here. Debra Benjamin told us that Gordon told them, the salespeople, not to lie. Benjamin: Four layers 9 of the acceptance process, even after a sale Wendi 10 Springer had to approve the entry. Springer said many 11 orders had to be returned to the sales reps. Benjamin 12 said the mailing lists used were extremely selective. 13 The government's contention, ladies and 14 gentlemen, that anybody could get by their way into the 15 registry is actually disproved by the actual contents of 16 the registry. Take a good hard look as to the kinds of 17 quality of people that are in there. There's a chart in 18 evidence which shows the break down of people, but the 19 most telling thing about Benjamin that you should consider 20 when you get into that jury room is that she started out 21 as their witness with immunity. They called her 22 (indicating.) When she got off the stand it was like the 23 defendants called her (indicating.) She became our 24 witness. She told you what went on there. She said she 25 believed as the number two person that no crime was ever
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9078 Summations-Jenks
1 committed when she was at the center of everything. 2 Trabulus in cross-examining her and I'm just 3 going to read to you a small blush. "Isn't it correct 4 that --" I'm sorry, withdrawn. 5 "Question: And isn't it correct that during the 6 time you worked at Who's Who Worldwide you did not believe 7 that you were committing any crime? "Answer: Absolutely. 9 "Question: That's correct? 10 "Answer: That's correct. 11 "Question: Indeed, when agents, when
postal 12 inspectors came, you initially spoke to them without an 13 attorney present; is that correct? 14 "Answer: That's correct. 15 "Question: And that's because you felt no crime 16 was done by you there; is that correct? 17 "Answer: Of course. 18 "Question: As you sit here today, you believe 19 that you committed no crime? 20 "Answer: Absolutely. 21 "Question: And you were involved in arranging 22 for mailings in mailing lists; is that correct? 23 "Answer: That's correct. 24 "Question: And mailings to people who were going 25 to get solicitation letters that said they were nominated;
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9079 Summations-Jenks
1 is that correct? 2 "Answer: That's correct. 3 "Question: And you knew the peoples' names came 4 from mailing lists; is that correct? 5 "Answer: Yes.
6 "Question: And you knew the solicitation --" 7 THE COURT: You have to slow down a little bit, Mr. Jenks. 9 MR. JENKS: Sorry. 10 "Question: And you knew the solicitation letter 11 would say "nominated," correct? 12 "Answer: Yes. 13 "Question: Is it also correct that none of the 14 solicitation letters ever told any member -- withdrawn. 15 Is it correct that none of the solicitation 16 letters actually said that the recipient had been 17 nominated by another member of Who's Who Worldwide, that 18 they always left open another possibility? 19 "Answer: To the best of my recollection, yes." 20 If the number two person at the company could 21 make those statements under oath after being immunized by 22 the government and given a free walk, she was the second 23 person in charge. How could you possibly hold these 24 salespeople and these managers responsible? 25 Bruce Gordon, she said, gave instructions that he
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9080 Summations-Jenks
1 didn't want certain types of people in the registry. You 2 remember the K-Mart tape, of course, where he says I don't 3 want any manager of an individual at K-Mart. You remember 4 the tape, if you lie you're out of here. She said, he 5 believed, as far as she could tell, the use of nomination 6 in solicitation letters was appropriate. I submit to you 7 that there was good faith on the part of the corporations. Marquis did it. "Dear Marquis nominee," 9 when the name came, according to Ms. Barnes from a 10 professional society roster association, annual report or 11 directory, which is just all fancy words for mailing 12 lists. Do you think for a moment that a professional 13 society roster is any different than a
mailing list? 14 Marquis, Mr. White said, is the complete -- did the 15 complete opposite of Who's Who Worldwide. Is he Marquis' 16 lawyer, Mr. White? What is in the pipe that he's smoking 17 to make that statement? 18 Marquis did exactly the same thing that Gordon 19 did. They got peoples' names from mailing lists and they 20 sent out letters, you've been nominated as Defendant's Z 21 which Gordon got which is in evidence and the letter "Dear 22 Prospective Marquis Nominee," when it is clear from that 23 letter if you look at it it is no different in actuality 24 from the Gordon letters and you knew those names came from 25 a mailing list.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9081 Summations-Jenks
1 She said, Debra Benjamin, that Gordon told her 2 that Marquis uses the word "nomination" in describing the 3 process by which somebody was selected, even though the 4 person may have been gotten from a mailing list. 5 Refunds. If a member -- she also tells us that 6 "if a member didn't want membership or was unhappy for 7 any reason, a refund was issued pretty immediately." Is that the intent of the corporation that just wants to 9 deceive and scam people to issue refunds? How many 10 refunds do you think Watstein issued? How many refunds do 11 you think Ihlenfeldt gave? Those people are guilty of 12 mail fraud, not these people. 13 The companies had simply delivered what they 14 promised and then some. The members were happy with the 15 services they were provided. If you intended to deceive 16 people why would you invite them to cocktail parties and 17 do profiles about them in a magazine? Look at all the 18 positive feedback letters that are in those Tribute 19 magazines. The companies are a
scam and they take a woman 20 from Hard Copy to profile it in a magazine? 21 Benjamin also said that she believed the 22 companies were being selective with respect to the members 23 it chose to include. 24 Good faith is a full and complete defense to mail 25 fraud. You've heard that from my co-counsel. There's
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9082 Summations-Jenks
1 been good faith on the part of Who's Who Worldwide and on 2 the part of Sterling. The issue of materiality, you will 3 listen to that as part of Judge Spatt's charge. If there 4 was any materiality to any of this puffing or alleged 5 misrepresentations that Mr. White claims were made to 6 members, why did many of the members upgrade their 7 membership? Does that show a level of dissatisfaction of the customers? 9 23 customers out of 70,000 were brought here,
10 they were flown in from all over the country. There are 11 6,000 members in New York here alone, how many of them did 12 we see? Why did the government drag all of these people 13 from all over the country? 14 If any people were misrepresenting at any 15 company, they were acting outside the scope of their 16 employment in ultra vires acts, acts that were not 17 authorized and permitted by the corporation, acts which 18 were outside the scope of the pitch, acts which were not 19 authorized by the corporations or by Gordon. 20 Ladies and gentlemen, I'm going to take a few 21 more moments of your time and I'm just going to ask you a 22 few questions to consider. Where is the architect of this 23 arrest, Biegelman? Why isn't he here? Why didn't the 24 government call Marty Biegelman? In this case Biegelman 25 was the architect of the arrests in this case, okay, of
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9083 Summations-Jenks
1 these people. Why isn't he here? They flew somebody in 2 from California to testify that she received a letter for 3 three minutes addressed to "Dear Ms. Ass." Certainly Marty 4 Biegelman, the case agent in charge of this prosecution, 5 the same agent that was up there a week before the actual 6 close down of the corporation speaking to Benjamin and 7 Gordon, certainly he could be made available to testify. Was he in bed with Marquis? Was he their boy? I submit 9 to you that he was. 10 Marquis had Biegelman do their dirty work after 11 the civil trial by convincing Biegelman and Mr. White to 12 take on this case and bringing a prosecution. Now, 13 Mr. White and Ms. Scott wants you to do their dirty work 14 by convicting these people here in this case and letting 15 Marquis just exist and have the monopoly they wanted. 16 Biegelman is not here, ladies and gentlemen, I 17 submit to you, that you could read between the lines if 18 you so choose. He's not here because he participated in a 19 conspiracy, driven hardest by Reed, a publisher whose 20 interests were competitive to Who's Who Worldwide. Reed 21 started the litigation with Gordon. They couldn't handle 22 this upstart, stealing 70,000 potential members. You 23 think Reed was happy about these kind of numbers 24 (indicating)? Reed brought a civil suit and instigated 25 the government to bring a criminal case because it's like
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9084 Summations-Jenks
1 David and Goliath. 2 The big corporation, Reed, the multi-billion 3 dollar foreign corporation with officers here in the 4 country convinces these people to go after the small
5 upstart Who's Who because they are taking a bite out of 6 their business and with these kind of numbers Reed is 7 feeling the pain. Sandra Barnes. You don't think Sandra Barnes and 9 Biegelman spoke? You don't think Tom Bailey after the 10 litigation with Gordon spoke to Biegelman? Everybody was 11 so interested in getting Who's Who, Watstein even took the 12 transcript from his lawyer to Biegelman. They knew where 13 to go, take it to Biegelman. 14 He's conspicuously absent. Why is he 15 conspicuously absent? The real victims in this case, 16 besides these people sitting here, ladies and gentlemen, 17 are the membership, the 70,000 members who paid, some of 18 them for 10 years, for life, for five years, who can't 19 receive what they paid for, an updated registry, a CD ROM, 20 the magazine, the ability to perhaps go to a cocktail 21 party and network,
more victims, 140 employees suddenly 22 out of work without a warning, treated roughly and put out 23 of jobs by government agents. The United States 24 Government, a victim, millions of dollars in payroll and 25 corporate taxes lost as a result of Marty Biegelman and
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9085 Summations-Jenks
1 Ron White. 2 You don't think for a moment these customers that 3 came in here when they received those vindictive 4 questionnaires, those questionnaires that hinted or 5 suggested to the 49,000 members that perhaps Who's Who 6 Worldwide was a scam? 7 You don't think those people saw those questionnaires and formed an opinion before they got 9 here? Those questions and the way they were designed 10 almost intimate to an individual that the United States 11 Government and the United States postal inspectors
12 believed that these companies were involved in a fraud. 13 THE COURT: Mr. Jenks, please start to conclude 14 your summation. 15 MR. JENKS: If the government really believed, 16 ladies and gentlemen, that the salespeople puffed to make 17 a living, why didn't Biegelman and Pagano tell Gordon that 18 they had tapes of the salespeople and let them hear them 19 the week before they arrested these people so he could 20 discipline or fire. Just one week before the raid they 21 were up there playing the game with Debra Benjamin and 22 Bruce Gordon. 23 The real winner here, ladies and gentlemen, is 24 Reed. They got a monopoly in the Who's Who business and 25 they will continue to have a monopoly and they will
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9086 Summations-Jenks
1 continue to send people letters with the word "nominate" 2
in them when they got them from a mailing list and nobody 3 is going to do anything about it and nobody from Marquis 4 is, let alone, will go to jail, nobody from Marquis will 5 get indicted or investigated. 6 You have to wonder as the representatives of 7 these two corporations that I represent, if Reed did not sue Who's Who Worldwide to put it out of business because 9 Who's Who Worldwide was siphoning off so much of Reed's 10 business, you would have to wonder whether or not we'd 11 even be sitting here right now. 12 Ladies and gentlemen, in summation and in 13 conclusion, the defendants in this courtroom are fighting 14 for their rights and they are fighting for their liberty, 15 they are fighting for the whole country basically. The 16 government has put 140 people out of work. They've lost a 17 fortune in corporate payroll taxes. What these people 18 did, ladies and gentlemen, to this company can happen at 19 the company that you work at, can happen at the company 20 where your relatives work, can happen at the company where 21 your children work, where your friends work. 22 THE COURT: Mr. Jenks, please don't do that. 23 Don't impose on the jurors anything. 24 MR. JENKS: Ladies and gentlemen, I submit to you 25 the ball is now in your court. You have the option to do
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9087 Summations-Jenks
1 what you want to do with this indictment. You have the 2 ability to stand up and to say not guilty. 3 I submit to you that the proof in this case has 4 demonstrated that the correct verdict, the reasonable 5 doubt verdict on the issue of the mail frauds and the 6 conspiracies, the conspiracy to commit mail fraud is not 7 guilty and I ask you to return that verdict on behalf of all the defendants. 9 Thank you. 10 THE COURT: Members of the jury, I would like to 11 hold one more summation which is an hour in length. The 12 reason I'm going to do that rather than tomorrow is 13 because there's been a request by one of the jurors to 14 leave by 6 o'clock and I'm going to grant that request one 15 way or the other. So, therefore, if no one has any 16 objection, let's proceed with one more summation. 17 Not hearing any objection, let's proceed. 18 Members of the jury, please give your attention 19 to the summation of counsel for the defendant Oral Frank 20 Osman. 21 Wait, don't say anything. 22 All right. We'll take a five-minute recess. 23 (Jury exits.) 24 (Recess taken.) 25 (Jury enters.)
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9088 Summations-Nelson
1 THE COURT: Please give your attention to the 2 counsel for the defendant Oral Frank Osman, Mr. Nelson. 3 MR. NELSON: Thank you, Your Honor. 4 If it please the Court, fellow brethren, 5 Co-counsel, members of the prosecution team, members of 6 the jury. I know the hour is late. 7 THE COURT: You take your time. They will do what they have to do. They will be patient. They've said 9 so. 10 MR. NELSON: I would like to thank you very much 11 for your patience and consideration. This has been a long 12 trial and it has taken up a great deal of your valuable 13 time. However, despite the sometime seemingly endless 14 questioning of witnesses, the direct examination and the 15 cross-examination and the redirect and the recross and the 16 re-redirect of witnesses, the reason why that's done and 17 the reason why the questioning is conducted is so that you 18 may determine whether or not the government has sustained 19 their burden of proof, proof beyond a reasonable doubt 20 against all of the defendants individually for the charges 21 that they have brought against each defendant. 22 You are being called upon to a make collective, 23 as a juror, factual determination that will affect the 24 remainders of the lives of each of these people here 25 before you. I know you will face that task with the same
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9089 Summations-Nelson
1 degree of diligence and attentiveness you have provided 2 throughout the trial and I would like to thank you very 3 much for that and I would like to take this final 4 opportunity to review with you the evidence that has been 5 presented during the course of this trial. 6 Ladies and gentlemen, the defense has no burden 7 of proof. We have to prove absolutely nothing.
The burden is entirely upon the government. They must prove 9 each and every element of each and every crime charged 10 beyond a reasonable doubt. Oral Frank Osman, known to all 11 of us as Frank Martin, is charged with conspiring to 12 commit mail fraud.
The government claims that Mr. Martin, 13 Frank, as we've heard in all of the tapes the government 14 has spoken about in his capacities as an employee of Who's 15 Who Worldwide participated in a scheme designed to defraud 16 the customers of Who's Who of their money. They claim 17 this was done by making false statements to the customers, 18 to entice them to become members. The government must 19 demonstrate to you that Mr. Osman knowingly, willfully and 20 with the specific intent to deceive the customers of Who's 21 Who Worldwide made or caused false representations to be 22 made. 23 In other words, the government must demonstrate 24 that Mr. Osman knew the company was engaging in a scheme 25 to defraud the customers and he knowingly participated in
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9090 Summations-Nelson
1 that scheme for the specific purpose of causing some loss 2 to the customers, and the government must prove that 3 beyond a reasonable doubt. 4 By Mr. Martin's plea of not guilty he denies that 5 he knowingly participated in any scheme designed to 6 defraud the customers of Who's Who. Frank Martin is a 7 salesperson. That's what he did at Who's Who Worldwide. He trained other persons to be salespersons and that's 9 what he always done. He denies he ever intended to 10 defraud anyone and that puts the government to their 11 burden of proof to prove beyond a reasonable doubt. I 12 want to examine with you the evidence that has been 13 presented as it relates to Frank Martin. 14 Frank Martin worked at Who's Who Worldwide at two 15 different times and in two different capacities. He 16 worked there from late November 1991 until late November 17 of 1992. Then he left the company. He was out of the 18 employ of the company for close to two years and then he 19 returned to the company in late November of 1994 and was 20 arrested working at Who's Who when the search warrant was 21 issued there in late March of 1995, in other words, about 22 four additional months. He commenced his initial 23 employment at Who's Who Worldwide after returning to New 24 York from Florida in 1991. He came back because he's an 25 only child and his mother had just sustained a heart
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9091 Summations-Nelson
1 attack. It's stated right there in the interview with 2 Steve West, the 1993 interview. 3 He had been in Florida and he returned after he 4 had just assisted in establishing a successful private 5 drug screening company, sales, that had always been 6 Mr. Martin's career. That's what he had always done, and 7 when he came back assisting his mother he sought a job and he became a salesperson and after two months he became a 9 group leader at Who's Who Worldwide in approximately 10 January of 1992 after they had already moved from their 11 Port Washington offices to the Lake Success offices. 12 As the testimony of Alan Saffer clearly 13 reflected, during the period of time that he worked as a 14 group leader which is approximately a ten-month period of 15 time from January of '92 to November of '92, his job was 16 to train and supervise the new sales staff, new people who 17 came into work at the company along with a number of other 18 group leaders who were working there at the time. He was 19 instructed by Bruce Gordon to teach the new sales staff 20 members to follow the sales presentation, to follow it 21 verbatim and to not deviate from it on penalty of being 22 terminated. 23 Now, Frank Martin didn't write the presentation, 24 it was given to him by Bruce Gordon. The presentation was 25 used as we know to speak to customers who returned cards.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9092 Summations-Nelson
1 These lead cards that we've heard all about. 2 Now, ladies and gentlemen, we know that mailing 3 lists were used. That's not something what has been in 4 dispute during the course of this trial and we know what 5 the presentation says and we know what the objections 6 sheets say. Mr. White has told us all about it, over and 7 over again and I'm sure we'll hear about it tomorrow once again. However, ladies and gentlemen, under the mail 9 fraud statute, even a false statement or an admission of a 10 material fact does not amount to a criminal fraud unless 11 done with fraudulent intent, a statement. A statement is 12 not fraudulent if made in good faith and unless the maker 13 believes it is material to the bargain. 14 The evidence clearly demonstrates that Frank 15 Martin and the entire sales staff at Who's Who were told 16 there were levels of screening conducted, levels of review 17 of the qualifications of candidates before these lead 18 cards ever reached them in their capacity in the sales 19 staff. We know from the testimony of Wendi Springer, 20 Debra Benjamin and Alan Saffer that the sales staff knew 21 that Bruce Gordon, Liz Sautter and others reviewed those 22 lead cards before they were handed out.
23 We also know from the testimony of Debra Benjamin 24 the selective criteria used in acquiring the mail lists in 25 the first instance. They came from specified industries,
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9093 Summations-Nelson
1 from specified publications to start with. They were 2 selective in scope. They targeted specific portions of 3 those lists. 4 Ms. Benjamin testified that the lists themselves 5 were what she called segmented lists. All they sought in 6 those lists were CEO's, presidents, vice-presidents, 7 nothing below that. That's how the selection procedure began at company. Bruce Gordon also instructed the sales 9 staff, not once, not twice, but every single day that 10 there's criteria you have to follow. We heard on the tape 11 and I played for you the Elliot Zerring tape. Look at the
12 transcript that I introduced.
He will not take people who 13 are not presidents or vice-presidents. He doesn't want 14 the owner of K-Mart, doesn't want one manager, it has to 15 be somebody who is a regional manager. He indicated to 16 you he doesn't want any teachers, doesn't want any people 17 in law enforcement. He made it very clear to the sales 18 staff the type of criteria he sought. More significantly 19 he told them if you get a lead card and he's not certified 20 based upon what my criteria is, give back the card. We'll 21 give you another one. You go out there and only call 22 qualified people. 23 The significant portion of this, ladies and 24 gentlemen, is it goes to the question of intent. What the 25 people in the company believed, what the sales staff
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9094 Summations-Nelson
1 believed in doing their job. Now, the government will get 2 up and say in rebuttal, but these aren't nominations, they 3 are just names off of a list, they are not as exclusive as 4 the company claimed they were. That missed the point, 5 folks. The company is not. Was the company as exclusive 6 as they claimed, that's the issue you must determine, the 7 issue that the government has to prove beyond a reasonable doubt is has the government proven that Frank Martin made 9 any representations with the intent to defraud? And the 10 uncontradicted evidence demonstrates that not only were 11 the sales staff members lead to believe that they were 12 indeed multiple levels of screening employed by the 13 company, the uncontradicted testimony demonstrates that 14 such procedures were in fact implemented by the company, 15 the knowledge of the sales staff. 16 That, ladies and gentlemen, demonstrates their
1
7 good faith belief in the selectivity of the company and 18 negates a specific intent to defraud. It's against that 19 backdrop that I would like to examine the evidence as it 20 relates to Frank Martin. Frank Martin's job at the 21 company was twofold. First, he tried to teach the 22 salespersons how to be good sales persons, how far to 23 follow the presentation without sounding like they were 24 reading from a prepared text, and second, he watched them 25 like a hawk to make sure they followed the presentations,
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9095 Summations-Nelson
1 to make sure they didn't make any form of 2 misrepresentations. 3 Now, why would Frank Martin demand that the 4 workers stick to the presentation? Why would he watch 5 them like a hawk to make sure they did so? And why would 6 he demand that they make no misrepresentations on the 7 phone if he believed that the presentation itself contained a material falsehood that would subject himself 9 or the company to some form of difficulties? Ask yourself 10 that question. 11 Mr. White got up here and said to you that the 12 presentation itself is lies and everybody knew it. Well, 13 why for God's sake would they have him monitoring 14 everybody and what was in that presentation like a hawk if 15 he knew or had reason to believe that the presentation 16 itself could have gotten him into trouble? The answer is 17 obvious, folks. Frank Martin never believed the 18 presentation contained a material misrepresentation. He 19 at no time believed that the company was engaged in a 20 scheme to defraud. He never had any specific intent to 21 defraud anyone. 22 How do we know that? From Alan Saffer's 23 testimony and from Frank Martin's o
wn words during that 24 interview on January 20, 1993. His interview with Steven 25 West.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9096 Summations-Nelson
1 Let's first look at transcript of the recording 2 Steven West made of Frank Martin on January 20, 1993, less 3 than two months after he first left Who's Who Worldwide. 4 Now, you recall Steve West. I will not go over who or 5 what he's all about, just listening to him for a week made 6 us all sick to our stomachs. But remember this, Mr. West 7 had entered into a cooperation agreement with the government in September of 1992 where it was mandatory 9 that he go to prison for 70 months unless he provided 10 substantial assistance to law enforcement personnel. As 11 he told us the only cooperation that he had provided as of 12 the time of the interview with Frank Martin in that hotel
13 room was against people who had formerly been his 14 employees. 15 Now, Mr. West is certainly no dummy, he knew 16 giving up his employees was nowhere near enough 17 cooperation to be put in a letter to Judge Mishler who was 18 going to be the Judge sentencing him to keep out of jail. 19 He had to get other fish to fry, certainly as big as him. 20 He had to go fishing. In fact, we heard from him, he 21 literally brought his own bait with him. 22 West came up with the idea of running an ad in 23 the local papers. He came up with the concept of having 24 people come in for job interviews in a company that he was 25 purportedly going to set up where he would interview
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9097 Summations-Nelson
1 people from other companies that were formerly his 2 competitors in order to attempt to get dirt against those
3 companies for the purpose of benefiting himself. He came 4 up with a scheme, he paid for the ads, he paid for the 5 hotel room and came up with the script and the questions 6 to tried to ensnare those people in order to benefit 7 himself. We heard from him when I questioned him. He knew 9 nothing about those companies, never worked there, never 10 seen the solicitation letters, never even seen their sales 11 presentations at the time he conducted the interviews of 12 people in December of 1992 and January of 1993. But the 13 knowledge of how he operated his company, he figured he 14 could get dirt on them. It's against that backdrop in 15 evaluating the recording that I ask you keep three things 16 in mind. 17 One, West's intention was solely one thing. To 18 get dirt on other people so he could possibly keep himself 19 out of jail. 20 The second o
ne, Frank Martin believed he was at a 21 job interview. He was told, he was being interviewed for 22 a job where he's going to be paid between 50 and $75,000 a 23 year. 24 And, third, Frank Martin was specifically advised 25 that it was West's intention to make certain that the
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9098 Summations-Nelson
1 business operated completely within the bounds of the 2 law. West was very explicit about that. He made clear to 3 Frank Martin on page 22 of that transcript, and you can 4 look at it because it is something that aids you during 5 the course of your deliberation, where he tells Frank, 6 "the trauma I went through taught me quite a lesson." 7 With these three things in mind, let's look at the actual transcript starting on page 6. 9 Frank Martin tells West, he watched the new 10 employees like a h
awk to make sure that they stuck to the 11 presentation. Why he tells West? One, it works. Two, 12 all those postal inspectors and other bad guys are out 13 there monitoring telemarketing companies. You have to 14 stay with the script. Stay within the bounds of the law. 15 You can't have anyone making up stuff on the phone. It 16 will get the company in trouble. Now, that statement by 17 Frank Martin demonstrates, folks, that in 1993, just about 18 two months after he first left the employ of Who's Who 19 Worldwide, he believed, and after he completed his first 20 tenure there, he believed the presentation which he 21 trained the workers at Who's Who to follow verbatim was 22 truthful, accurate and honest. Why would Frank Martin 23 knowing the postal authorities monitor telemarketing 24 demand that the sales staff stick to scripts and not 25 deviate if he had any reason to bel
ieve it contained false
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER
9099 Summations-Nelson
1 and misleading statements? Because he had no reason to 2 believe the statement also contained in the presentation 3 were false or misleading. Remember, Frank Martin never 4 once saw those solicitation letters that were sent out. 5 He knew the company was providing, was aware that the 6 company was engaged in predistribution screening prior to 7 the time he received the letters that went out and he knew the company was providing the product promised, the 9 plaque, registry were sent to all of the people who 10 joined. 11 We heard from every single witness on the witness 12 stand here that the government called who was a customer 13 that their name was in that registry. Every person who 14 paid for that book, every person who paid for that plaque
15 got what they paid for and he knew it at the time that he 16 left that company clearly this statement of Frank Martin's 17 during the course of that interview with Steven West 18 demonstrates that he had no reason to believe that the 19 company while he was working there in '91-'92 was 20 defrauding anyone. 21 Now, the government has pointed to certain 22 passages of this transcript, the claim that Frank Martin 23 knew he was making false statements and intent to defraud 24 others. Let's look at some of these statements, folks. 25 On page 9, Steve West states to Frank Martin,
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9100 Summations-Nelson
1 I've seen a lot of puffing in the presentation. Now, 2 Judge Spatt is going to tell you during the course of his 3 instruction puffing is not a crime, folks. The government 4 has to prove a material misre
presentation that goes to the 5 value of the bargain. And more significantly it has to 6 prove beyond a reasonable doubt that the statement was 7 made with the specific intent to defraud the customer out of his or her money. 9 West goes on to ask Frank Martin during the 10 course of the interview where was it, meaning the 11 presentation, inconsistent with reality? Now, you heard 12 me question Mr. West and you listened to the tape as I 13 played it to him as I went through it. After pausing a 14 full six seconds, Frank Martin states to Mr. West, "he 15 suspects the major flaw was telling other people they were 16 recommended by others." Let's dissect that for a moment, 17 folks. 18 First of all, what's going on here and don't 19 forget Frank Martin is in a job interview and the guy who 20 is interviewing him is saying, well, tell me what is 21 wrong, tell
me what is a problem, I want to hire you but 22 tell me what you think is problematic. So Frank is 23 thinking, what can I tell this guy? So I can get myself a 24 job. I want to work here, I would like to make 50 to 25 $75,000 a year in a company that Steve West has told me
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9101 Summations-Nelson
1 will be completely legitimate and aboveboard and is going 2 to be the kind of company that I just came from doing a 3 similar type of job, that I'm well qualified to do. What 4 can I tell him? So he tells him "he suspects it's telling 5 people they were recommended by others." 6 You know I think we heard the word "nomination" 7 so many times during the last ten weeks that it is coming out of our ears. Frank Martin doesn't use that word, 9 talks about recommending to others. What does he focus 10 on, not that
it is improper, but, you know it would be a 11 great idea to actually have members nominate other 12 members, good for business, ensures quality of the people 13 who come into there. 14 Does Frank Martin state here he thinks they are 15 misleading the customer by saying this? Does he say he 16 thinks it affects the customer's desire to purchase the 17 product in any way? No. Well, why not? Because Frank 18 Martin did not believe the statement affected the value of 19 the product in any material way. He did not have an 20 intent to defraud anyone in making the statement. How do 21 we know that? Well, there is significant evidence to 22 demonstrate that nobody else thought it was deceptive 23 either. Let's start with the government's star witness, 24 Alan Saffer. 25 Mr. Saffer specifically stated that from the day
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1 he started at Who's Who Worldwide until sometime in 1994, 2 he had at no time believed he was making any form of 3 misrepresentation. He testified that at no time up to 4 that date that he believed he made any misstatement for 5 the script, telephone sheet or telephone discussions with 6 the specific intent to defraud anyone. Well, Saffer came 7 to work at Who's Who Worldwide before Frank Martin did and he stayed there well after he left the company. If 9 Saffer, the government's own witness, tell us that at no 10 time during the course of Frank Martin's first tenure at 11 Who's Who Worldwide did he believe he was acting with the 12 intent to defraud anyone, how could Frank Martin have been 13 doing so? And why is it that Alan Saffer didn't think he 14 was committing a fraud? Well, the answer is simple, 15 folks, and it is demonstr
ated by the evidence. Alan 16 Saffer knew, as did Bruce Gordon, as did Frank Martin, as 17 did every single one of the people here in this courtroom 18 who are salespeople and sales managers who are on trial 19 here at this time that it was the custom and practice in 20 the industry as established by the practices of the leader 21 in the industry, Reed Elsevier, the owner of Marquis Who's 22 Who, to send letters to prospective members telling them 23 they were nominated when in fact their names were acquired 24 from mailing lists. How do we know it? Sandra Barnes 25 from Reed told us exactly that. Marquis sent letters to
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1 prospective customers telling them they were nominated 2 when in fact their names had been culled from mailing 3 lists. 4 And Bruce Gordon we know received a let
ter from 5 Marquis. It was Defense Exhibit Z which had been 6 introduced by Mr. Trabulus dated December 20, 1989. As 7 Debra Benjamin told us, there was a letter that he received saying that he had been nominated and Debra 9 Benjamin told us that Bruce Gordon told the staff that 10 Marquis used the mailing lists and he told Debra Benjamin 11 about the nominating letter he had received when she 12 questioned him about the use of the word "nominate" in the 13 company's solicitation letter. So the sales staff was 14 aware of Marquis' custom and practice. 15 Now, I'm not telling you, ladies and gentlemen, 16 that because Reed does that that it's okay. That's not 17 what we're doing here, folks. We are not trying to 18 compare or determine whether or not Reed is better than 19 Who's Who or Who's Who is better than Reed. That was a 20 civil lawsuit that took place a few y
ears ago. 21 The point is the government must prove beyond a 22 reasonable doubt that Frank Martin made or instructed 23 others to make false representations regarding nominations 24 with the intent to defraud. If he in good faith believed 25 that there was nothing improper about making such a
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1 representation, then the government cannot demonstrate 2 that he specifically intended to defraud anyone. The 3 custom and practice by Reed is the reason why Saffer and 4 Bruce Gordon and hence Frank Martin and the rest of the 5 sales staff believed there was nothing improper about such 6 a representation. If the Cadillac of the industry Reed 7 can do it with impunity, certainly it must be okay. To Frank Martin's state of mind the 9 recommendation wasn't the central issue, that wasn't the
10 central component as it related to the product. It was 11 the product's value to the customer that was the central 12 point and he believed the value of the product. As He 13 tells Mr. West during this January 20th interview on page 14 22, he believes in the product. He believes in its 15 value. 16 Now, the next portion of this transcript 17 Mr. White pointed to during the course of his summation 18 was on page 17 saying that this demonstrates an intent to 19 defraud. West is real cute here and you remember how far 20 I went through this line-by-line with him during the 21 course of my cross-examination. He asks, well, was anyone 22 accepted here, I mean, if a person can breathe, I mean, I 23 believe those were his words and you can listen to the 24 tape again. West of course wants Frank Martin to say, 25 yes, but Frank calls him up, he tells him, we'll not take
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1 a porno shop or something like that here and that's how he 2 starts off his response. West cuts him off. 3 You remember the questions that went back and 4 forth between Larry Flint that was brought up being inside 5 of there, you know maybe a multimillionaire like Larry 6 Flint did come in even though I engaged on some form of 7 pornography on some multinational basis. Certainly he can state that he's marketing with 9 and networking with. If you look at the registry you will 10 see that he didn't get in there until after the '93-'94 11 registry until after Martin left the company. Martin goes 12 on to say, not that Mr. White didn't bring up conveniently 13 and as we go through these transcripts we will go through 14 the selected portions that we try to paint his picture.
15 He goes on to say that, you know, a used car dealer could 16 be turned around. Recall how I asked West about Wayne 17 Huzinger. West acknowledged that what Frank Martin was 18 talking about was how the CO's telephone screening 19 interview facilitates screening and selectivity. When we 20 speak to these people we find out what he's really all 21 about. He's talking about the fact that he truly believes 22 talking to the people on the telephone is a way of finding 23 out about them and ensures the form of selectivity into 24 this registry that's required and that he feels is 25 appropriate. But Mr. West, not liking what he hears as
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1 the answer there because after all all of these things are 2 being recorded, he twists the words and we saw how adept 3 he was in twisting. 99 percent are
accepted, is that what 4 you are saying. Martin says, yeah, as long as they are 5 not outright, he's cut off by Mr. West, they start to 6 laugh. Mr. West comes up with his most appropriate and 7 favorite line we've heard over and over again, I got yeah. 9 Well, that's what West was up to here, folks. He 10 was trying to ensnare whoever he could in order to keep 11 himself out of jail, but don't forget this, folks. Frank 12 Martin thought he was at a job interview. He was puffing, 13 trying to say during the interview what he thought Mr. 14 West wanted to hear, that he was certainly suggesting to 15 him in order to try to get a job. And what West wants to 16 hear is what can keep him out of jail. What West doesn't 17 ask Frank Martin, what isn't raised during the course of 18 the interview is the fact that Frank Martin was aware on 19 January 20, 1993, of the multiple levels of screening of 20 people who come in which were employed by the company. 21 Frank Martin's only discussing here the 22 percentage of people accepted from lead cards after 23 predistribution screening and before the order forms were 24 reviewed by Wendi Springer's department. And Wendi 25 Springer told us she was there working full-time in that
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1 capacity in 1990. I ask that you keep the interview in 2 context when you review it. Who the person is who said 3 it, what the circumstances were under which it was said. 4 I also ask that you look at certain other 5 portions of that same transcript regarding other 6 statements made by Frank Martin that the government didn't 7 talk about but which were fully corroborated by the record. First the record is uncontradicted that Frank 9 Martin received no commission, he had no ownership 10 interest in the company, he received a separate salary of 11 maximum of $1,200 per week and that he had no added 12 incentives for more sales by his staff, for example, he 13 had no insensitive to have the staff accept anyone and 14 everyone. 15 In fact, on page 13 of that very same transcript 16 Frank Martin states he agrees that there should be no 17 incentives for extra sales because it defeats the concept 18 of exclusivity. That's a clear indication of Frank Martin 19 truly believed both in the product, it's value and most 20 significantly it's exclusivity. 21 Folks, that negates a specific intent to 22 defraud. 23 Finally, I ask that you look to two other 24 portions of this transcript before I move on. 25 On page 5 Frank Martin tells West this is a very
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1 unique concept. It gets away from the boiler room 2 concept. They are looking for very intelligent people to 3 begin with and the very last thing he says to him before 4 the tape dials out on page 23, he says what he likes about 5 Who's Who Worldwide is the concept. He thinks it's sound, 6 he thinks it's viable, profitable if it is used properly. 7 Are those the words of someone who thinks the company is a scam or are those the words of a person who truly believes 9 in the value of what Who's Who is intending to provide and 10 intends to provide in the future? 11 I submit to you that the interview does not 12 demonstrate an intent on the part of Frank Martin to 13 defraud, nor does it demonstrate proof by any agreement by 14 Frank Martin to participate in a scheme by the company to 15 defraud others. And you k
now what, the clear irrefutable 16 proof of that are the actions or rather the lack of 17 actions by the government with respect to Frank Martin or 18 Who's Who Worldwide following the recording on January 20, 19 1993. 20 As we heard from Mr. West, he had recorded the 21 employees of another company at or around the same time. 22 That was Oxford Who's Who. And we heard from Mr. West how 23 that summer a few months after West recorded Frank Martin, 24 the former employees of Who's Who were arrested, Oxford 25 Who's Who was shut down, by the postal authorities for
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1 mail fraud and then an investigation continued from the 2 date of those recordings right up to the point in time 3 where oxford was shut down and arrests were made in the 4 summer of 1993. That didn't happen with respect
to Who's 5 Who Worldwide. We have heard absolutely no evidence that 6 any investigation into the conduct of Who's Who Worldwide 7 was conducted after April of 1993 by the postal authorities. 9 To the contrary, what we heard is that Inspector 10 Biegelman was at Who's Who Worldwide and met with Bruce 11 Gordon numerous times during that period of time. We 12 heard from Alan Saffer that not only Who's Who Worldwide 13 given a clean bill of health by the postal authorities, he 14 and the other sales staff were instructed by Bruce Gordon 15 to forward complaints from customers about the company 16 directly to Inspector Biegelman. Now, if Bruce Gordon or 17 the sales staff believed they were defrauding their 18 customers, would they have been inviting Inspector 19 Biegelman to investigate them? Would they be referring 20 customers with complaints to him? No. The evidence
21 directly contradicts any intent on the part of the 22 employees of Who's Who to defraud anyone during this 23 period of time. In fact, the first time we hear about any 24 investigation into Who's Who Worldwide being renewed comes 25 once again from the lips of Steven West.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9110 Summations-Nelson
1 How was it renewed? What we hear is this 2 investigation into Who's Who is renewed in June of 1994, a 3 full one and-a-half years after his interview with Frank 4 Martin, more than one and-a-half years after Frank Martin 5 had left the company. How was it renewed? Steve West 6 calls Inspector Biegelman to tell him, guess what, that 7 civil lawsuit brought by Reed against Who's Who, Reed won the lawsuit. West advises Biegelman this is an opportune 9 time to go after Who's Who Worldwide again. 10 He suspected once Reed won the lawsuit he will 11 meet financial difficulties as a result of paying the 12 litigation and as we heard as a result of the judgment 13 Who's Who Worldwide was indeed forced to declare 14 bankruptcy. West hoped that Who's Who's financial 15 difficulties would affect its ability to deliver its 16 product to its customers just as it happened to him. 17 Remember he told us that he didn't think he was 18 defrauding anybody until he couldn't deliver a product. 19 Now he thought that Who's Who as a result of this 20 litigation was going to be in some kind of financial 21 straits so he wouldn't be able to deliver a product and 22 that would the basis for a mail fraud prosecution. He 23 hoped that the financial difficulties at Who's Who would 24 allow a new investigation to bear fruit, to put another 25 notch or paragraph into his cooperation letter that was
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9111 Summations-Nelson
1 eventually going to go in front of the Judge that was very 2 shortly going to be sentencing him. 3 I want to stop here for a moment, folks, and I 4 want to look at two things other than West's continued 5 need to cooperate that were taking place between January 6 of 1993 which is when Mr. Martin left the company, and the 7 time of the renewal of the investigation in June of 1994. First, Who's Who was continuing a business. It 9 was growing. It was improving. It was providing a 10 greater array of membership benefits, and it had 11 implemented what Frank Martin suggested during that hotel 12 interview with Steve West back on January 20th, a 13 full-blown nomination procedure which was receiving more 14 and more responses by the day. 15 Alan Saffer told us 2 percent of
the sales came 16 from nomination ballots. 17 If you examine Defendant's Exhibit FT which 18 Mr. Schoer had put up and shown you which reflects Who's 19 Who in Finance and Industry which is the Marquis' 20 publication which was the direct competitor of Who's Who 21 Worldwide, the percentages are identical. 2 percent of 22 the total people came from nominations, 98 percent of them 23 came from mailing lists. However, we know that the 24 percentage of nomination ballots at Who's Who Worldwide 25 was actually a lot higher than the number Mr. Saffer gave
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9112 Summations-Nelson
1 us. How do we know that? The college student working at 2 Sterling during the summer of '94, Ellery Pierre told us 3 in the three months he worked there he received close to 4 100 nomination ballots. If a summer intern was receiving
5 those many nomination ballots, certainly isn't it 6 reasonable to assume more experienced sales personnel were 7 receiving a much greater and ever increasing percentage of nomination ballots? 9 The second thing I ask for you to do is keep in 10 mind during this period of time was that Frank Martin was 11 not employed at Who's Who Worldwide in '93 into '94. His 12 second tenure at Who's Who is less than four months and he 13 comes back in late November of 1994 until the time of the 14 raid. 15 As I asked you during my opening statement, I 16 asked that you compare Who's Who as Frank Martin described 17 it to West during the January 20, 1993 interview with the 18 company as he perceived it operated when he returned in 19 November of 1994 as an outsider coming to work there in 20 the company. The evidence shows that when he returned he 21 was aware that the
nomination procedure which he called 22 for which he considered "the major flaw" in the 23 presentation, had indeed been implemented. He had been 24 aware that nomination ballots were in Tribute magazine and 25 that four separate editions had been sent out to the
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1 $50,000 members. He was aware that the additional 2 benefits, the credit cards, medjet insurance and all the 3 other benefits you heard about were in existence and were 4 being provided to the customers. 5 In summary, when Frank Martin agreed to return to 6 Who's Who Worldwide based upon what he objectively saw and 7 that's objectively demonstrated, folks, by the amount of money 4.5 million that was being expended in 1993 to 9 provide membership benefits to members, as well as the 10 representations that were made to
him by Bruce Gordon that 11 the company had a clean bill of health from Inspector 12 Biegelman, what he saw was anything but a fraudulent 13 operation to him, everything that he helped the company 14 could become when he left in 1992, did had indeed 15 achieved. This was a true membership organization as he 16 perceived it. 17 In summary, when Frank Martin returned to Who's 18 Who Worldwide in November of 1994, he believed he was 19 entering a business that was fully reaching the potential 20 he believed it had when he left. What he didn't know and 21 certainly it would have been impossible for him to become 22 aware of was that starting three months before his return, 23 at the instigation of Steve West and fueled by the desires 24 of Reed Elsevier, the government had started a full court 25 press against the company.
OWEN M. WICKER, RPR OFFICIAL COURT REPO
RTER 9114 Summations-Nelson
1 Let's look at their investigation for a moment, 2 folks. Biegelman puts West on the phone to make these 60 3 telephone calls into Who's Who in order to get employees 4 to make false representations. Now, remember, Frank 5 Martin is not on a single one of these 60 recordings. 6 Biegelman then recruits another pillar of society, Eric 7 Ihlenfeldt to go work at Sterling to record representations being made by employees at that company. 9 Now, we heard about Ihlenfeldt, he's the guy who worked in 10 his office, lies, lies, lies, tell him all lies. He's the 11 person who Biegelman takes him off one case and puts him 12 in Sterling. That doesn't work and gets fired after a 13 poor employee put him on the phone. Ihlenfeldt told us 14 not only did he make calls at the specific instruction of 15 Inspector Biegelman into Who's Who Worldwide, Biegelman 16 told him exactly what to ask and Biegelman told him who 17 specifically to target. 18 I ask you folks, what's going on here? How far 19 can you go? When do the means no longer justify the end? 20 We get a picture of how far this manipulation by Biegelman 21 can get in the one recording Ihlenfeldt makes of Frank 22 Martin. 23 In Government's Exhibit 1359 Ihlenfeldt calls 24 into Who's Who Worldwide looking for Alan Saffer who we 25 know Biegelman has already targeted. Saffer is not there
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1 so he speaks to Martin Graham, also known as Martin 2 Gross. We find out during my cross-examination of 3 Ihlenfeldt that Gross was another informant Biegelman had 4 planted in Who's Who World Wide. We have one government 5 agent lying to another government agent, both
of whom were 6 working for Biegelman, trying to get evidence against 7 Who's Who Worldwide. I mean, this is pretty incredible when you think about it. But it goes even further than 9 that, folks. Gross realizes after the third planted 10 question, what's going on? So he gets a supervisor, he 11 puts Frank Martin on the phone. Gross sets him up for 12 this telephone recording that the government is talking 13 about that is so clearly reflective on an intent to 14 defraud on the part of Frank Martin. The one time Frank 15 Martin speaks to Ihlenfeldt is when one government agent 16 sets him up to speak to another government agent. The 17 government tells you it doesn't matter who they are or who 18 they employ or what means they are employed, what matters 19 is what is said on the tapes. That's what controls. 20 Let's look at what Martin tells Ihlenfeldt. 21 Before you do that I want you to keep in mind this. At 22 the time of this recording Frank Martin had been back at 23 Who's Who Worldwide for approximately two weeks. The 24 recording is made on December 16, 1994. He returned 25 around Thanksgiving of 1994. Frank Martin was focused on
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1 the fact that there was now a fully implemented nomination 2 procedure, that there was a public affairs office that was 3 going through screening of people and they have all of the 4 membership benefits in place when they came back for the 5 company. 6 What the government characterizes as a 7 misrepresentation by Frank Martin evincing his intent to defraud is Frank Martin telling the informant he wasn't 9 selected from a mailing list, that's not the way it would 10 go. Look at that in context. First Frank
Martin tells 11 the informant not once but twice, generally speaking, most
12 members are nominated and he sets forth the alternative 13 means of the company's acquisition of names through the 14 public affairs office perusals of magazines and 15 periodicals. 16 Now, I ask you, how does that differ from what 17 Sandra Barnes told us Marquis tells its customers when 18 they ask how their names were acquired? You heard 19 Mr. Dunn read to Ms. Barnes her prior testimony given 20 during the lawsuit brought by Reed against Who's Who. She 21 testified about Reed's policy when a potential customer 22 called to ask how his or her name was acquired. She 23 stated that only if the customer insisted would they know 24 -- would they even give them the time of day to attempt 25 to answer the question. And what would Reed tell them if
OWEN M. WICKER, RPR OFFICIAL COURT RE
PORTER 9117 Summations-Nelson
1 they provided an answer? What they would say is your name 2 came from "a selective professional roster as reviewed by 3 our research staff." Come on, folks. Whose fooling who? 4 The procedures that Marquis followed didn't 5 differ one iota from what Frank Martin's statements were 6 when he was speaking there on the phone and the government 7 sanctions Marquis' statements. If the government sanctions it why can't Frank Martin rely upon that custom 9 and policy as well? Folks, that negates a specific intent 10 to defraud and the government has to prove that Frank 11 Martin made representations with a specific intent to 12 defraud customers out of their money. 13 Second, and most significantly when we look at 14 this recording, Frank Martin doesn't attempt to sell 15 Ihlenfeldt anything. He doesn't ask him to buy. He never
16 solicits him. This is the one conversation that 17 Ihlenfeldt made clear where he was never asked to make a 18 purchase, he was never accepted as a member and there was 19 no solicitation made to him at any point in time by 20 Mr. Martin. How can the government possibly claim that 21 the statement was made with the intent to defraud if Frank 22 Martin isn't asking to call him to buy anything? It shows 23 nothing with respect to intent to defraud. He's simply 24 providing information about the value of the product. 25 Look at the transcript, folks, look at it yourself.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9118 Summations-Nelson
1 Now, the final evidence introduced against 2 Mr. Martin are the recordings of Elliot Zerring. We heard 3 Mr. Zerring testify here in the Court. He was literally 4 working for Biegelman seven days a week to try to work off 5 the jail sentence he was looking at and quite a sentence 6 he must be looking at. 7 Remember Mr. Zerring, he defrauded the insurance companies out of millions and millions of dollars in 9 inflated claims. He sanctioned claims before they even 10 occurred. He knew his clients were going to either cause 11 water damage or potentially burn down buildings that he 12 was prepared to accept claims for. 13 Now, the government will tell you that maybe he's 14 a bad person, they have to take the witnesses as they find 15 them. It doesn't take anything away from what the tapes 16 say. Well, it doesn't take anything away from the fact 17 that the government is prepared to help somebody like him 18 avoid jail, to put someone like Frank Martin or any of 19 these poor souls into jail. 20 THE COURT: Mr. Nelson, please start to conclude 21 your summation.
22 MR. NELSON: Mr. Zerring made more in one week 23 than Frank Martin made in the total of 15 months he worked 24 in Who's Who Worldwide, but yet for the government to 25 facilitate this prosecution is prepared to give him a
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9119 Summations-Nelson
1 sentence by Mr. West, six months by his Florida mansion by 2 the pool. 3 Getting back to what the government says, getting 4 back to the tapes, ladies and gentlemen, yes, it doesn't 5 take anything away from what the tapes say and on this 6 score I partially agree with the government. Let's look 7 at those recordings, not the ones introduced by me, the ones introduced by Mr. Schoer and myself. 9 Remember Mr. Zerring worked in the company from 10 December 6, 1994, to February 15, 1995, he made over 350 11 hours of recordings. What does the government introduce? 12 Maybe an hour's worth of recordings. In fact, we 13 introduced more recordings than the government introduced 14 with respect to what took place there. And he doesn't 15 testify with respect to a single word that is stated while 16 he's working inside of Who's Who Worldwide. Why is that, 17 folks? Well, let's look at some of the those tapes 18 quickly. 19 The first tape that the government points to is 20 1399. This is a sales meeting during which Frank Martin 21 goes through the written sales presentation which is 22 provided to him by Bruce Gordon. He goes through it 23 line-by-line with Zerring. He tells the salespeople how 24 to find out information about that. There's no intent to 25 defraud in finding out what a person does, that is
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 9120 Summations-Nelson
1 required to complete the
order form. 2 In the middle of page 2, Frank Martin states that 3 they received 6,000 recommendations and only 1,000 are 4 accepted. Now, this ratio comes from the script. This is 5 not something Frank Martin is making up, it's what Bruce 6 Gordon has told him to be a true state of affairs, as the 7 testimony of Benjamin, Alan Saffer and Wendi Springer makes very clear the date to support those statistics was 9 something the sales staff was not privy to. Recall their 10 testimony about the compartmentalization of the company 11 into the different departments, how far the sales 12 department couldn't go into the black door. 13 THE COURT: You have to go a little slower. 14 MR. NELSON: I'm trying to fit in my last 15 statement. 16 THE COURT: That's inconsistent, but I'll give 17 you a chance. Slow down. 18 MR. NELSON: They relied upon Bruce Gordon's
19 representations on these points and relied upon the 20 screening procedure that the company had implemented. 21 Remember Frank Martin didn't write the presentation, Bruce 22 Gordon in fact as some of the other transcripts made clear 23 he complained about many of the changes Bruce Gordon 24 made. 25 Now, on the top of page 4 Frank Martin discusses
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1 split billing and how the sales staff must advise the 2 customers of it. We heard a lot about the split billing 3 and we heard the customers complaints. The bottom line is 4 Frank Martin always advised sales staff that they must 5 advise the customers about it. He says it here and he 6 says it to West in his 1993 interview. How could he be 7 held accountable for any customer misunderstandings about split billing? He's training people, this is a training 9 session. 10 What other transcripts did the government 11 introduce? I'm going to look very briefly at a couple of 12 them. There's a tape introduced, 1397, I ask you look at 13 the transcript. He's telling the staff compared to when 14 he started in 1991, there is a full complement of benefits 15 to supplement the registry, plaque and networking 16 capability. What kind of proof is it to say to the sales 17 staff we have a lot more to offer towards intent to 18 deceive. He's telling him the company has improved and 19 believes it has improved. 20 The next transcript is 1401, look at this one 21 very closely. In this one Frank Martin tells the sales 22 staff if you are not writing it means you are not sticking 23 to the script. Michael Maxes, an old-timer who based upon 24 the testimony of Alan Saffer and Wendi Springer, was fired 25 f
or not sticking to the script goes on to say "when you
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1 write that means that you are not staying with the script, 2 when you stick to the script you don't write." 3 The transcript goes on to say that Frank Martin 4 and Maxes has a discussion which is conveniently off of 5 the tape and Maxes is out of the room. How come? Because 6 Martin kicked him out of the room, he was telling him that 7 differentiated from company policy and didn't want nothing to do with it. He tells the sales staff, stay with the 9 pitch. He's telling the staff to ignore bad advice. 10 What I would like to point out now is some of the 11 other tapes, the tapes that I introduced as it relates to 12 Frank Martin, not the ones that the government chose to 13 introduce but rather the ones they purposely avoid from
14 providing you, the ones I introduced are EZ 15 where Bruce 15 Gordon tells the staff they will be fired if they deviate, 16 follow the presentation verbatim. 17 At the bottom of page 1 of the transcript Frank 18 Martin states there is absolutely no reason to 19 misrepresent in any way, shape or form because the package 20 is all inclusive. He states there is no reason to 21 embellish and he tells the sales staff he cringes when he 22 hears people go off of the presentation. What does that 23 tell you? It tells you that he fully believes in the 24 legitimacy of the presentation and in the value of the 25 product.
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1 I also played for you a number of the other tapes 2 and ask that you review the transcript. The substance of 3 those transcripts are that he and Ed Schaeffer tell
the 4 sales staff what we have here is a membership, a concept, 5 a full-blown organization with continuing benefits, that 6 he truly believes in these benefits and he believes in the 7 value of those benefits. Finally, I played for you a recording of another 9 sales meeting conducted on January 25, 1995. Frank Martin 10 again says to the staff, stay with the script verbatim, if 11 they stay away from the script and Gordon hears them, they 12 are history. The membership is only offered to select 13 people. That they are not selling this to anyone. Why 14 does he say it? Because he believes it, folks. He 15 believes in the four levels of screening that was mocked 16 by Mr. White but was implemented and existed and the 17 members of the sales staff knew existed, the selective 18 match of the mailing list, precard screening, interview 19 procedure itself and Wendi Spr
inger's subsequent review of 20 order forms. In fact, the last thing he tells the sales 21 staff is stay with the presentation. Burn these people 22 off every now and then, it's not for everybody. If they 23 can't appreciate the value of what we have to offer, they 24 don't deserve to be a member and Frank Martin says he 25 really feels that way.
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1 I ask you, ladies and gentlemen, is that the 2 statement of a person who agreed to participate in a 3 scheme to obtain money from others by false 4 representations or is it proof of Frank Martin's honest 5 heart felt good faith belief and the truth and value of 6 the membership offered by Who's Who? The tapes do speak 7 for themselves and what they show, what they make abundantly clear is that the government cannot demonstrate
9 that Frank Martin knowingly, willfully and with the 10 specific intent to defraud the customers of Who's Who made 11 or taught others to make false representations with the 12 specific intent of defrauding them out of their money and 13 they must prove that beyond a reasonable doubt. To do 14 that, the government has resorted to tactics that they put 15 in its most favorable light are deplorable. 16 If Biegelman thought there was a reason to 17 believe there was a problem in the company in '93, why 18 didn't he tell them to stop? If they thought there was a 19 problem in the company in '94 when West had them renew the 20 investigation, why didn't he tell them to stop? No. What 21 he did instead is he brought in West, Ihlenfeldt, 22 Marchisoto, Graham, Zerring and who knows how many other 23 planted informants both inside and outside of this company 24 to bring this case aga
inst who, Frank Martin as compared 25 to Zerring and West.
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1 What kind of value judgment is the government 2 making here? If they felt the statements were improper, 3 why did Biegelman just come in and ask them to stop? 4 Sometimes the means no longer justify the ends. The 5 government had to go to these lengths, to these extremes 6 to attempt to demonstrate an intent on the part of these 7 people to defraud and I submit to you that despite the length that they went to, the government has failed to do 9 so. 10 Simply put, the government failed to demonstrate 11 beyond a reasonable doubt that Frank Martin intended to 12 defraud anyone. I beseech you to hold the government to 13 their burden. Examine not what the disgruntled customer, 14 overreaching agent, competing multi
national conglomerate 15 or overambitious prosecutor thinks Frank Martin's 16 intentions were. 17 Examine the evidence, if you do so you will 18 clearly find that the government cannot clearly 19 demonstrate it was the intention of Frank Martin to 20 defraud the customers of Who's Who. 21 Frank Martin is a salesperson, he trained other 22 salespersons. He honestly believed in the representations 23 he was making regarding the value of membership in Who's 24 Who Worldwide. His intentions weren't to defraud. His 25 intentions were to do his job and to do it well. To train
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1 the sales staff, to sell a concept and a product, 2 membership in Who's Who. Something he truly believed in. 3 I ask you to do justice. To find Frank Martin 4 not guilty of conspiracy to commit mail fraud
and mail 5 fraud. 6 Thank you. 7 THE COURT: All right. Members of the jury, we're going to recess now 9 until 9 a.m. tomorrow morning. We'll start early and 10 we'll try to finish earlier and certainly as I said we'll 11 get out of here by 6 o'clock because I'm making that 12 commitment to one of the jurors. So in the meantime, it's 13 very important, you continue not to discuss this case 14 either among yourselves or with anyone else. 15 Keep an open mind. Don't start making 16 decisions. Wait until you're in that jury room 17 deliberating. Come to no conclusions. 18 Have a nice whatever is left of the evening and 19 we'll see you at 9 o'clock. Have a nice evening. 20 (Jury exits.) 21 THE COURT: I want to recess until 8:45 22 tomorrow. 23 May I have my copy back? 24 MS. SCOTT: Your Honor asked me to take it from 25 you.
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1 THE COURT: But you have another one. 2 MS. SCOTT: Yes, I do. 3 THE COURT: I want to keep that one in the 4 meanwhile to take a look at it. I haven't seen the rest 5 of it. You will have the new one tomorrow morning. 6 MS. SCOTT: That's right, Your Honor. 7 THE COURT: I want you to give to counsel and review it and approve it. While I can't get the revised 9 verdict sheet down because my secretary is working on the 10 charge, I will tell you tomorrow how it will be, that part 11 about the lesser included. So we'll see you all tomorrow 12 at 8:45. 13 MS. SCOTT: Your Honor, for the Court's 14 information I made this clear this morning, the indictment 15 handed out this morning to all counsel is only going to 16 have one change made on it on 39. That is I'm going
to 17 take out the reference to the tax. If they want to get a 18 head start in reviewing the indictment they can do it 19 tonight. 20 THE COURT: Tomorrow morning at 8:45. 21 (Proceedings adjourned.) 22 OWEN M. WICKER, RPR OFFICIAL COURT REPORTER
