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2 - - - - - - - - - - - - - - X
4 v. : U.S. Courthouse
5 Uniondale, New York BRUCE W. GORDON, WHO'S WHO
10 Defendants. :March 10, 1998
11 - - - - - - - - - - - - - - X 9:30 o'clock a.m.


15 For the Government: ZACHARY W. CARTER
16 United States Attorney One Pierrepont Plaza
17 Brooklyn, New York 11201
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

For Who's Who Worldwide
23 Registry, Inc. and
Sterling Who's, Who, Inc.
24 332 Willis Avenue
Mineola, New York 11501


1 APPEARANCES (cont'd):

2 GARY SCHOER, ESQ. For Tara Garboski
3 6800 Jericho Turnpike
Syosset, New York 11791
5 For Oral Frank Osman
3000 Marcus Avenue
6 Lake Success, New York 11042

For Laura Weitz
8 319 Broadway
New York, New York 10007
10 For Annette Haley
400 South Oyster Bay Road
11 Hicksville, New York 11801

For Scott Michaelson
13 225 Broadway
New York, New York 10007
15 For Steve Rubin
150 Nassau Street
16 New York, New York 10038

For Martin Reffsin 18 215 Hilton Avenue
Hempstead, New York 11551

20 Court Reporter: HARRY RAPAPORT
21 United States District Court
Two Uniondale Avenue
22 Uniondale, New York 11553
(516) 485-6558
24 Proceedings recorded by mechanical stenography, transcript
produced by Computer-Assisted Transcription


1 M O R N I N G S E S S I O N


3 (Whereupon, the following takes place in the

4 absence of the jury.)

5 THE COURT: Mr. White, you wanted to see me?

6 MR. WHITE: Yes, your Honor, at the risk of

7 incurring your wrath again, I would like to revisit the

8 allocution we discussed last night?

9 THE COURT: Go ahead.

10 MR. WHITE: Your Honor gave us your thoughts

11 yesterday and that was clear. And I wanted to address

12 what you said. And I think the two main points you made,

13 which perhaps I didn't do as clearly as I did yesterday.

14 One of what I understood your Honor's concerns

15 about the statement was that basically Maxes -- there was

16 a possibility that Mr. Maxes thought he was going to die.

17 Therefore, it wouldn't really be against his interest to

18 plead guilty.

19 It seems to me though from the case there was,

20 whether or not that is true is not relevant. Because

21 unless I am wrong in Scopo, the case we discussed a couple

22 of times, says precisely that you are not supposed to do

23 that. It says, quote, we stress -- not just we state, but
24 we stress, that a defendant's unilateral belief would not
25 suffice to neutralize the exposure ordinarily inherent in


1 a self-incriminating plea or a llocution.

2 It doesn't say it wouldn't ordinarily do that, or

3 typically. It says flatly, we stress it does not.

4 It seems to me, your Honor, that that is an

5 improper analysis whether or not that is what he thought.

6 It did expose him to possible punishment.

7 And I would also suggest that the evidence about

8 what he was thinking at the time is somewhat equivocal.

9 Your Honor cited the fact that he died six months

10 later. But, yes, he died of something else. He didn't

11 die of the illness at the time he had the plea.

12 THE COURT: I don't know what he died of.

13 MR. WHITE: Okay.

14 THE COURT: Neither do you.

15 MR. WHITE: That's true. But it seems to me that

16 Scopo says that it is not an inquiry we are supposed to

17 make. It says his private belief would not suffice to

18 neutralize the exposure inherent in a plea of guilty.

19 Now, wi th respect to the second point that your

20 Honor made about whether or not this allocution makes out

21 the existence of a conspiracy, I went back and looked at

22 the standard jury instruction from Sand regarding an

23 unlawful agreement, what your Honor would -- something
24 along the lines of what your Honor would tell the jury
25 what to determine -- how to determine if there is a


1 conspiracy.

2 The standard instruction says: The proof must

3 convince you that at least two persons joined together in

4 a common criminal scheme. Then it contains the language

5 that the agreement need not be expressed.

6 It says that it is sufficient for the government

7 to show that there was a mutual understanding, either

8 spoken or unspoken, between the defendants to cooperate

9 with each ot her to accomplish the unlawful acts by means

10 of a joint plan or common design.

11 Mr. Maxes's allocution at a minimum says, I

12 worked as a member of the sales staff and as such I

13 followed the pitch sheets given me by Mr. Gordon and they

14 contained misrepresentations. And it makes reference on

15 the page 33, the misrepresentations that I and company

16 salespeople made.

17 It seems to me, your Honor, it is clearly

18 suggesting there is at least, between Mr. Maxes and

19 Mr. Gordon at the minimum, a mutual understanding to

20 cooperate with each other to accomplish the unlawful acts.

21 So, while it could be clearer, it doesn't seem to

22 me that it fails to make out the existence of the

23 conspiracy.
24 I want to add that I believe I didn't make that
25 argument as clearly as I should have yesterday.


1 THE COURT: I heard your arguments. They are

2 very well put. The Scopo case does say what you say it

3 says.

4 I don't know if a defendant's unilateral belief

5 would not suffice to neutralize the exposure.

6 The Court went further on to say if Agro,

7 A G R O, privately believed that because of his illness

8 the Court would not require him to suffer incarceration,

9 there would be little reason for him to suppose that the

10 Court would also therefore excuse him from paying a fine.

11 The combination of the factors is what persuades

12 me not to allow this in. Not only is there -- I don't

13 think it is his personal belief alone. I think the man

14 was seriously ill, was obviously seriously ill in front of

15 me. In fact, I believe I put on the record, if you would

16 like to sit down during the allocution, that would be all

17 right.

18 He was just operated on for cancer. He was

19 taking chemotherapy. In addition to the fact that he --

20 whether he privately believed -- I don't think it is only

21 that he privately believed. I think it is the fact.

22 Secondly, he had a cooperation agreement with the

23 government, I believe, did he not?
24 MR. WHITE: He did.
25 THE COURT: And the Scopo case further says,


1 quote, if, however, a pleading defendant had an agreement

2 with the government, or with the Court, that he would not

3 be punished for the crimes to which he allocuted, than

4 that allocution would not subject him to criminal

5 liability and would not constitute a statement against his

6 penal interest within the meaning of Rule 804(b)(3).

7 There was no agreement he would not go to ja il.

8 There was just a cooperation agreement.

9 So, we have the following factors here: One, a

10 man seriously ill, visibly seriously ill before me, of

11 cancer; having been operated on and taking chemotherapy;

12 two, a cooperation agreement with the government; three,

13 having been fired by Bruce Gordon; four, an allocution

14 which did not expressly ask whether there was a

15 conspiracy. It is very unusual. Five, the only basis for

16 this to go in would be to show that there was a

17 conspiracy. It could not go in to show guilt on the part

18 of any defendant. The cases are clear about that.

19 That combination of factors in my view, if you

20 add 403 to the till, and that he allegedly perjured

21 himself in a Reed case, we don't want to have a mini-trial

22 on Mr. Maxes.

23 On the combination of the factors and in the
24 exercise of my discretion, I d ecline to allow that plea in
25 evidence.


1 Anything else?

2 MR. WHITE: Your Honor was going to consider

3 putting in the paragraph in that information.

4 THE COURT: Can I see the information?

5 MR. NELSON: If I may approach the bench for a

6 moment, your Honor, I have the information?

7 THE COURT: Is it in the same thing?

8 MR. NELSON: Yes.

9 THE COURT: I can't even open that book, it is so

10 full.

11 MR. NELSON: 3500-18-H, and I referred to

12 paragraph five, which is on page 2 of the information.

13 Your Honor, I had the opportunity this morning to

14 re-read United States against Muyet, M U Y E T,

15 958 F. Supp. 136. And as I noted yesterday on the record,

16 the case before Judge Keenan, United States v. Lopez, the

17 procedural history of that cas e was such that a motion in

18 limine was made to limit the scope of what could be

19 brought out in co-defendant's allocutions. At that time

20 Judge Keenan referred to Muyet. I re-read Muyet this

21 morning. And interestingly, and I can add to the Court

22 the significant pages found on pages 138 through 140.

23 What Judge Leisure did in the case was to redact
24 the allocution and limit it to those portions which were
25 specific statements against that individual's penal


1 interest and that's why they would be admissible.

2 I submit it premised upon the allocution that

3 took place with respect to Mr. Maxes, that in fact such a

4 redaction would not be possible. And there is nothing

5 that goes to the proof of the conspiracy and the

6 allocutions, therefore no portion should be admissib le at

7 all.

8 MR. TRABULUS: Your Honor, I would like to add to

9 that that yesterday the United States Supreme Court

10 decided a case called Gray against Maryland. I know it

11 only from having read the syllabus by the reporter.

12 THE COURT: That's a Bruton case?

13 MR. TRABULUS: Yes. It was a five to four

14 decision.

15 THE COURT: I am familiar with it.

16 MR. TRABULUS: They held that the redaction there

17 was improper. They ruled for the defendant. I have not

18 read the opinion. I just read the syllabus.

19 THE COURT: What I got from the summary that I

20 received is that up to that point, where there has been a

21 Bruton problem, namely a statement by a co-defendant who

22 doesn't testify inculpating another defendant, the Court

23 could redact or revise the statement to change the
24 pronouns, change the nouns. Instead of saying Joe Doe

25 committed the crime, another person committed the crime.


1 Of course, there are only two people there.

2 MR. TRABULUS: Right.

3 THE COURT: So that has been done with varying

4 effect, rather than severing the trial. Of course, the

5 better practice would be to sever the trial. But the

6 United States Supreme Court yesterday five to four said

7 substituting the pronoun or some other fictitious name or

8 noun for the co-defendant -- instead of saying Joe did it,

9 a person did it, or another human being did it, you can't

10 do that. You have to redact everything and not mention

11 anything about the other person even being there.

12 So, you will leave it, I did it, not the

13 co-defendant.

14 MR. TRABULUS: That's the whole point here.

15 Because in this paragraph that is bei ng discussed, it says

16 together with others.

17 When you look at the nature of the evidence in

18 this case, the others would clearly be understood to refer

19 to the other defendants here, or certainly Mr. Gordon.

20 On the basis of what the Supreme Court decided

21 yesterday, that would not be proper. Although it is not a

22 classic Bruton situation with respect to the co-defendant,

23 analytically it is the same.
24 You have an unavailable witness introducing a
25 statement, and the statement inferentially refers to


1 Mr. Gordon, and under this case it was decided yesterday

2 that it should not come in.

3 THE COURT: Do we have anything more to say other

4 than this? I don't want to keep the jury waiting. I will

5 talk to them and let them know we are delayed.

6 MS. SC OTT: I have the tapes to discuss.

7 THE COURT: I will then go in and tell the jury.

8 By the way, I like that point bringing very

9 current, something that happened yesterday in the Supreme

10 Court. Very good, Mr. Trabulus.

11 MR. TRABULUS: Thank you, your Honor.

12 THE COURT: A good thing I am aware of the case.

13 MR. JENKS: Judge, Mr. Trabulus stays out all

14 night on the Internet.

15 THE COURT: We are supposed to get advance

16 information. I don't know how you got it.

17 MR. TRABULUS: I stay on my computer to keep my

18 son off of it.

19 MR. WALLENSTEIN: He hasn't slept in eight weeks.

20 THE COURT: Sorry to put you at a disadvantage,

21 Mr. White. You will come back tomorrow with another case

22 to nullify that case.

23 MR. WHITE: I am working on it.
24 (The following takes place in the jury room.)
25 THE COURT: Good morning, members of this


1 wonderful jury, which has almost -- almost all of you have

2 very nice smiles on your face. If you go before I get in,

3 as soon as I walk in you have a smile. I don't know what

4 that means. I am not sure about that.

5 In any event, I am going over some matters of

6 law, which I have for the last 15 or 20 minutes with the

7 lawyers. We are going to be a little bit delayed. We

8 will be with you as soon as we can. I am sorry about

9 that, especially since you are always here on time I feel

10 badly. I like to get you in immediately as soon as I hear

11 that buzzer, get in there. But we will be with you

12 shortly. Sorry about that.


14 (Whereupon, at this time the following takes

15 place in open court.)

16 THE COURT: Before we finish with regard to the

17 declaration or statement against penal interest, I looked

18 at the case of United States against Muyet, and the

19 allocution in that case is a little different than the one

20 here. Even the redacted allocution by the defendant said,

21 quote, in or March 1992 I conspired with other people to

22 murder three individuals. Then he says it again, I

23 conspired with other people.
24 The judge said that this portion of the
25 allocution fits squarely within the 804(b)(3) exception to


1 the hearsay rule, because each of these statements tends

2 to establish an element or elements of a Section 1959(a)

3 offense.

4 Regrettably for the government the allocution in

5 this case was not a good one. As a matter of fact, I

6 probably shouldn't have accepted the allocution. I didn't

7 he ar a word about a conspiracy. And I failed myself to

8 ask the question which I generally do, which is: Did you

9 do this with other people? Did you have an agreement with

10 other people? I generally do that. For some reason I

11 didn't do it in this case. Nor did the prosecutor. When

12 I turned to the prosecutor and said, is that satisfactory

13 Mr. White, or words to that effect, Mr. White said yes.

14 So we both flubbed it. So I don't know what there is to

15 give to the jury when you have a defective allocution here

16 in relation to the other problems. I don't think I will

17 give any of that. I will deny your application in toto.

18 What is the next order of business?

19 MS. SCOTT: The government is moving to admit

20 three tapes which Mr. White described to you yesterday.

21 They contain statements made by a number of employees.

22 THE COURT: This is the stray comment s?

23 MS. SCOTT: Yes, comments of the knowledge of
24 defrauding people. The numbers of the tapes are 1382,
25 1383 and 1384.


1 THE COURT: Let me get them out.

2 MS. SCOTT: The exhibit numbers for the

3 corresponding transcripts we are talking about, I can give

4 you those.

5 THE COURT: Take them one at a time.

6 What is the first one?

7 MS. SCOTT: 1382, and transcript 1382(a).

8 THE COURT: Okay.

9 Sometimes I have to take a course in how to turn

10 pages in this kind of a looseleaf book. I can't manage it

11 right away.

12 All right.

13 MS. SCOTT: We are talking about the first two

14 paragraphs in that exhibit. The last one comes in as a

15 defendant admission.

16 THE COURT: Who was Ron Marsh and who is George

17 Robins.

18 MS . SCOTT: Marsh is an informant wearing a tape

19 recorder, and Robbins is in the employee of the company.

20 THE COURT: A salesperson?

21 MS. SCOTT: Yes.

22 We offered this under 801(d)(2)(E) as corporate

23 admissions. The test for admission is to test forth very
24 clearly in that Pappas case which we have discussed on a
25 prior occasion. The cite of Pappas is P A P P A S. And


1 the citation is 963 F. 2d 534. And the test is whether

2 there is an agency relationship between the person and the

3 corporation, the speaker and the corporation, and whether

4 the statement is made in the course of that relationship.

5 And, finally whether it relates within a matter within the

6 scope of the agency.

7 Here George Robins was an employee of Sterling

8 Who's Who at the time he made the st atement. He was

9 speaking about activities in which he had direct

10 responsibility. He was a salesperson.

11 THE COURT: Who is Ron Marsh supposed to be?

12 MS. SCOTT: Posing as a salesperson.

13 THE COURT: Hired by the company?

14 MS. SCOTT: Robbins worked for Worldwide.

15 THE COURT: Pardon me?

16 MS. SCOTT: I am sorry, George Robbins worked for

17 Worldwide and not for Sterling.

18 THE COURT: And Ron Marsh was also employed by

19 Worldwide, albeit a confidential?

20 MS. SCOTT: Yes.

21 THE COURT: This is against Who's Who Worldwide

22 only?

23 MS. SCOTT: That's correct.
24 THE COURT: Any objection to this?
25 MR. DUNN: Your Honor, we are talking about


1 1383-B?

2 THE COURT: You have both the number and the

3 letter wrong. Otherwise yo u are in good shape.

4 1382-A, for Abel.

5 MR. DUNN: Thank you.

6 MR. JENKS: Judge, I am going to object to the

7 introduction of these statements, all three of them, on

8 behalf of all the defendants here.

9 THE COURT: So far I have only seen one.

10 MR. JENKS: We are talking about 1382-A, a

11 Worldwide tape with Ron Marsh and so forth.

12 Although Ms. Scott outlines the law in the Second

13 Circuit clearly in the Pappas case. But you should note,

14 your Honor, that the Pappas case is in fact a civil case.

15 In addition, there is no right of confrontation that these

16 employees have with respect to the statements.

17 I would further argue, although she cites

18 801(d)(2)(E), none of these statements were made

19 concerning a matter within the scope, the direct scope of

20 the employment of that particular agent, Mr. Marsh.

21 So I make the same remarks for all of the

22 defendants on all three of these transcripts.

23 MR. SCHOER: I would add that the Pappas case is
24 a civil case. I know that these rules apply to civil and
25 criminal cases as well, but it seems to me that in a


1 criminal case, to allow any conversation of an employee,

2 without giving the defendants an opportunity to

3 cross-examine that person, or to test the trustworthiness

4 of that statement shouldn't be permitted. We have certain

5 constitutional rights to confront witnesses against us.

6 And while that statement was made, and I can't contest

7 that it wasn't during the existence of the relationship or

8 concerning a matter within the scope of the agency, I

9 submit, your Honor, I have no opportunity to test the

10 basis for that statement, to cross-examine a witness. And

11 it is being virtually offered against all the defendants,

12 although there would be a limiting instruction, I assume,

13 and that it is only to be offered against the

14 corporation. But I feel that the prejudice clearly

15 outweighs any probative value and your Honor should

16 exclude it for that reason.

17 MR. DUNN: Also, your Honor, if I may, in

18 reference to Ron Marsh, it is my understanding that he was

19 a government confidential informant put into Who's Who

20 Worldwide.

21 The government apparently doesn't know where he

22 is. We don't have an opportunity to cross-examine and

23 challenge him. So in the same vein as the confrontation
24 issue they addressed, I wanted to bring that to the
25 attention of the Court.


1 MR. TRABULUS: Also with reg ard to some of the

2 later transcripts, not 1382, but 1383, you have Ron Marsh

3 making the most damaging statements that are on these

4 tapes. And he is a government informant who is making

5 statements about how people are scamming. He is

6 characterizing statements made to him supposedly by other

7 Who's Who Worldwide people the day before or some other

8 day. It is extremely prejudicial. He is certainly not an

9 agent of Who's Who Worldwide. He is an agent of the

10 government, or an agent of Mr. Biegelman. He is making,

11 supposedly, factual statements and trying to get other

12 people to adopt them.

13 MR. NEVILLE: I second that.

14 THE COURT: Who said that?

15 MR. NEVILLE: Mr. Neville.

16 THE COURT: Okay. Now I really have to take a

17 look at it.

18 MS. SCOTT: With respect to the first contention,

19 the fact that it is a criminal case, and because of that

20 it requires some kind of special consideration, I can cite

21 to you several criminal cases in which corporate

22 admissions have been used not only against a corporate

23 defendant, or have been held admissible not only against a
24 corporate defendant, but against an individual defendant
25 who was the direct supervisor of the person who made the


1 statement.

2 Now, an example of this case is United States

3 against Rioux.

4 THE COURT: I have it before me. That's what I

5 was looking for, you noticed I was burrowing out there?

6 MS. SCOTT: Yes.

7 THE COURT: What is the citation?

8 MR. WHITE: 97 F.3d 648.

9 THE COURT: You have the only case that I found

10 on this subject.

11 MS. SCOTT: In that case there was no corporate

12 defendant. The Court considered a more -- as to whether

13 it could be used against the supervisor. And found it was

14 admissible.

15 In reaching that case, because of the

16 pre-supposition that it would be admissible against a

17 corporation, if the corporation was a defendant.

18 THE COURT: And used civil cases to back it up,

19 right?

20 MS. SCOTT: Yes.

21 THE COURT: Now with regard to -- that was

22 decided on October 2nd, 1996 by the Second Circuit, so it

23 is fairly recent.
24 MS. SCOTT: Yes.
25 In addition, the courts have always maintained


1 that the treatment of offered statement under 801(d)(2)(D)

2 is liberal. And for this again I look to the Pappas

3 case. And I would just refer you to a paragraph that

4 begins on page 538 of that opinion, and it is at the

5 bottom of the page.

6 It says: In light of the liberal treatment,

7 proof under 801(d)(2)(D) is accorded, there is sufficient

8 circumstantial evidence in this case to demonstrate -- it

9 talks about the declarant's agency.

10 I will refer you back to page 547 of the Pappas

11 case in which it talks generally about 801(d)(2)(D), and

12 one of the things it says is a statement of an employee of

13 a company is trustworthy because a person who is currently

14 employed by that company is likely -- less likely to make

15 damages statements unless that statement is true. And

16 that's on the bottom of 537 in the Pappas case.

17 THE COURT: Now I know how you got Rioux, because

18 it mentions Pappas, and you put this into the computer,

19 and out it came.

20 MS. SCOTT: You busted me.

21 THE COURT: See, I didn't get it that way,

22 because I don't know how t o work a computer.

23 MS. SCOTT: That paragraph, I believe you are
24 looking at the slip-opinion. It is the second paragraph
25 after the discussion starts.


1 THE COURT: I see it.

2 MS. SCOTT: Okay.

3 MR. SCHOER: Your Honor, can we have a chance to

4 look at the Rioux case?

5 THE COURT: Take a look.

6 MR. SCHOER: Thank you.

7 THE COURT: One thing Ms. Scott didn't mention is

8 that it was a supervisory person who made the statement in

9 the Rioux case.

10 MS. SCOTT: Yes. But not in Pappas. There was a

11 workman who arrived at the scene of the condominium where

12 the accident occurred and he was carrying a shovel and a

13 bucket. And his statements were held admissible against

14 the employer.

15 Now, just to address the other contention about

1 6 whether these statements are made in the scope of the

17 person's employment, there is no dispute that George

18 Robins and Ron Marsh were employed by Who's Who Worldwide

19 at the time the statements were made.

20 THE COURT: I have no problem with it. The only

21 question is, according to the authoritative test,

22 Weisenberger's Federal Evidence, 801(d)(2)(D), authorizes

23 the admissions of a statement by a party's agent or
24 servant concerning a matter within the scope of the
25 agencies or employment where the statement is offered


1 against the party employer. The proponent of the

2 vicarious admission must establish a foundation which

3 demonstrates that the declarant, Robbins, at the time of

4 the making of the statement was an employee of the party

5 against whom the statement is offered, and it must concern

6 a matter within the scope of the employment.

7 The question is: Is it within the scope of the

8 employment?

9 MS. SCOTT: That's your question?

10 THE COURT: Yes.

11 MS. SCOTT: Your Honor, first of all these two

12 men were employed at Who's Who Worldwide as salespeople.

13 They are making statements about the way they -- the

14 things that they say to people when trying to make a sale;

15 and the fact in their mind the things they are saying are

16 fraudulent.

17 I would refer you to a case called Zaken against

18 Boerer.

19 THE COURT: Also cited in Rioux.

20 MS. SCOTT: That's not where I got it.

21 THE COURT: That's Z A K E N?

22 MS. SCOTT: Yes, and Boerer is B as in Bagel,

23 O E R E R.
24 THE COURT: I would not pursue it too much. What
25 does the Zaken case say?


1 MS. SCOTT: In that case the offered statement

2 was the statement of a vice president of a company. The

3 suit was brought against the president of the company

4 because she was firing women who were pregnant. Once they

5 got pregnant she fired them.

6 The offered statement is the statement of a vice

7 president of I believe sales. And I will find out what he

8 says for sure. But a vice president in the company stated

9 that another woman in the past had been fired because she

10 was pregnant.

11 I would submit, your Honor, in a case, if that

12 kind of statement being in furtherance -- I mean in the

13 scope of his authority, then, in other words, it simply

14 had to do with his responsibilities. And let me just find

15 it.

16 Page 1323 of the Zaken against Boerer decision.

17 Ed Newman, the com pany's then vice president of

18 sales told the witness that another woman was fired

19 because she was pregnant. And that statement was held to

20 be within his -- within the scope of his employment with

21 the company.

22 Now, I don't see -- Robin Weinberg was I believe,

23 a salesperson and that's why it was within the scope of
24 his employment. And that's a fairly tenuous connection in
25 this case.


1 In this case here the connection is very clear.

2 These people are talking about what they do everyday as

3 salespeople of the company, what they say to people and

4 what the effect is on the people.

5 THE COURT: Your point is that in Zaken although

6 the declarant was a vice president, he spoke about a

7 matter that would not normally be within the scope of his

8 employ ment? That it would be has little more attenuated?

9 MS. SCOTT: The scope of the employment as

10 determined in Zaken is very broadly defined.

11 THE COURT: I agree with you.

12 MR. SCHOER: Except that in the Rioux case, and I

13 don't know if I am pronouncing it correctly.

14 THE COURT: Rioux.

15 MR. SCHOER: Rioux. That it seems to indicate

16 that someone has to be in a -- to be a participant in a

17 decision-making process that is the subject matter of the

18 statement.

19 THE COURT: In that case, yes. But not in this

20 case, Mr. Schoer. In this case a salesperson is one of

21 the people that would normally deal with how people are

22 nominated or they are going to be asked that question by

23 everybody they talk to. That's within the scope of their
24 employment. That's within their concern.
25 Of course, they say we don't know, or we can't


1 tell you, or it is anonymous. But it is a subject within

2 the scope of their employment. No question about it.

3 MR. SCHOER: I am still concerned about the 403

4 analysis. While this may be admissible, the question is

5 as to whether the probative value is outweighed by the

6 prejudice.

7 THE COURT: I don't think it is. It is not going

8 to be an emotional situation where someone is cutting up

9 bodies. It is not going to confuse the jury.

10 MR. SCHOER: I understand with respect to this

11 statement we are discussing right now that your Honor

12 might take that position. But I think when you listen to

13 the other statements, the lack of ability of the

14 defendants to cross-examine the witnesses making the

15 statements in a criminal case will lead your Honor to

16 believe that th e prejudice is outweighed by the probative

17 value.

18 THE COURT: 1382-A for Abel is in.

19 What is the next one?

20 MR. NEVILLE: Your Honor, I propose if the Court

21 is going to allow that in -- first, I should say it is

22 obvious why the government is putting the tapes in, not as

23 against the corporation. It is no coincidence or surprise
24 that there is Tara Garboski and Steve Walden on the tapes.
25 THE COURT: That's not going in. The Tara Green


1 part --

2 MR. NEVILLE: Is not going in.


4 MR. NEVILLE: Nor Steve Walden?

5 THE COURT: Looking at 1382-A for Abel, Steve

6 Walden is not on there. It is not going in with this, but

7 it is an admission.

8 Did you put this in as of now, Tara Green's

9 statement?

10 MR. SCHOER: No .

11 THE COURT: In 1382-A for Abel?

12 MS. SCOTT: We have not played it because we are

13 waiting for the ruling on the top part. We assumed that

14 the Tara Green statement would go in as an admission

15 against interests.

16 THE COURT: You will play the whole thing then?

17 MS. SCOTT: Yes.

18 THE COURT: All right, I was in error, all

19 right.

20 MR. NEVILLE: I would ask we be allowed to

21 express to the jury that in each of these instances there

22 is a government plant; that the jury understands that part

23 of the parties in these statements are informants.
24 MR. SCHOER: And I think also -- I am sorry.
25 MR. NELSON: If I might, returning to the issue


1 the Court raised with respect to the scope of the

2 employment, one of the concerns I have in meeting tha t

3 prong is that Mr. Marsh is actually wearing two hats at

4 the time he is engaging in this conversation. He might

5 ostensibly be employed at Who's Who Worldwide at the time

6 the statement is being elicited. But the point of fact is

7 that he is employed at Who's Who Worldwide at the

8 instruction and direction of the United States

9 Government. I think that that bears significantly --

10 THE COURT: I am going to tell the jury that.

11 MR. NELSON: Thank you, your Honor.

12 MR. SCHOER: Judge, with respect to the issue

13 raised by Mr. Neville, and the statement by Ms. Green --

14 Ms. Garboski -- I think it ought to be made clear to the

15 jury that there is a tremendous amount of tape in-between

16 these two statements. And they are not -- they weren't

17 during the course of the same conversation. The man was

18 wired for the whole day. And the conversation with

19 Mr. Robbins, I don't remember particularly how long before

20 the statement by Ms. Garboski, but I believe it was a

21 significant period of time. It wasn't the same

22 conversation. The same people weren't present. I

23 think --
24 MS. SCOTT: We agree there is a large expanse of
25 time in-between those two statements on the tape. We


1 agree with that.

2 MR. SCHOER: Really it should have been separate.

3 THE COURT: I think you will pay them separately

4 then?

5 MS. SCOTT: Yes.

6 THE COURT: At different times.

7 MS. SCOTT: We always agreed --

8 THE COURT: One minute, will you?

9 MS. SCOTT: Okay.

10 MR. NEVILLE: I would ask the government to

11 inform the defendants --

12 THE COURT: Would you wait one minute, please?

13 (Whereupon, at t his time there was a pause in the

14 proceedings.)

15 THE COURT: You will play them separately at

16 different times.

17 MS. SCOTT: Okay. And we will stick something

18 in-between them.

19 MR. NEVILLE: I am told the Ron Marsh person is

20 unavailable, and the government can't find them. We as

21 defendants have been trying to locate him also.

22 I would like to put in the record now for later

23 on in the jury instructions in terms of the availability
24 of witnesses, if we argue in our summation something about
25 Ron Marsh, I don't want Mr. White to ask for an


1 instruction that we could have called him if we wanted

2 to. We made efforts to find him. We can't find him. The

3 government can't find him, so he is fair game to the both

4 of us.

5 THE COURT: You cert ainly can comment on

6 summation.

7 MR. NEVILLE: But I don't want Mr. White to have

8 the Court instruct the jury that we could have somehow

9 called him if he didn't, which they undoubtedly would do

10 for Marty Biegelman.

11 MS. SCOTT: We submitted an instruction for your

12 Honor's consideration to the effect that neither party can

13 be held to account for failing to call certain witnesses.

14 It is toward the end of the instruction packet that we

15 gave you.

16 THE COURT: Right.

17 MR. WHITE: I don't mean to interrupt the

18 argument and I don't want to have dueling arguments, but

19 in response to something Mr. Neville said relating to a

20 conversation I had with defense counsel.

21 I never said that Mr. Marsh was unavailable and

22 didn't know where he was. Mr. Schoer asked me a specific

23 question, when was the last time I spoke to him. I told
24 him it was a fair number of months ago. I want to clarify
25 this so something is not left unclear.


1 The government and the defense had extensive

2 discussions.

3 We agreed that the defense would stipulate to the

4 authenticity of all of them on the condition that the

5 government call the three informants we have called,

6 Mr. Watstein, Mr. Zerring and Mr. Ihlenfeldt. And that

7 the remaining CIs would not have to come here and

8 authenticate the tapes because the defendants would agree

9 to their authenticity. I understood it was in the

10 defendants' interest because they would not then have to

11 track down informants that we couldn't call that made

12 tapes they consider favorable. For instance, Mr. Trabulus

13 indicated he wanted to play a tape favorable to

14 Mr. Gordon. The government didn't intend to call him. I

15 said, I will agree to the authenticity of that, and you

16 can play it without having the guy here.

17 That's the same with Mr. Marshisoto, the real

18 name of Mr. Marsh.

19 THE COURT: You have to spell that one.

20 MR. WHITE: M A R S H I S O T O.

21 THE COURT: Do you know where Mr. Marshisoto

22 was?

23 MR. WHITE: Yes.
24 THE COURT: Where is he?
25 MR. WHITE: I don't know off the top of my head.


1 THE COURT: Does the defense want his address?

2 MR. NEVILLE: Yes, your Honor.

3 THE COURT: All right. Produce his address.

4 MR. WHITE: If that's the case, your Honor, I

5 consider that a violation of a stipulation that we have

6 agreed to. And I may not now agree to the defense tapes

7 they want. I don't want to get into a tit for tat.

8 THE COURT: This stipulation, is it in writing?

9 MR. WHITE: I am sorry?

10 THE COURT: How was this stipulation entered

11 into?

12 MR. WHITE: The stipulation was in writing.

13 THE COURT: Where is the stipulation?

14 MR. WHITE: My point is it only specifies certain

15 of the defense exhibits, because they hadn't specified the

16 others yet. I don't want to do that. What they are

17 suggesting is violative of the agreement we have.

18 THE COURT: I want to see the stipulation.

19 MR. WHITE: The stipulation said the following

20 things are to be admitted, I want to explain the

21 background that led up to that. I feel if I have a chance

22 to talk to defense counsel it can be worked out.

23 MR. TRABULUS: I was party to some of the
24 discussions and I have to express some disagreement with
25 Mr. White's version o f the negotiations.


1 It is true that Mr. White agreed to produce

2 certain of the informants. I wanted Ihlenfeldt and

3 Zerring produced. Apparently other counsel wanted

4 Mr. West produced. I also wanted to play a tape, and

5 indicated I wanted to play a tape with regard to

6 Mr. Lindauer. And I believe in the discussion there were

7 two informants, two of the six, who Mr. White said they

8 served sentences, had gone over somewhere and there is no

9 assurance where they can be obtained. I believe one of

10 the two was Mr. Marshisoto, if I recall correctly. But I

11 know there were two he didn't know where they were. He

12 wanted to play their tapes. As a quid pro quo for us

13 playing tapes without calling various informants, we

14 entered into the stipulation. That's the factual

15 predicate for us agreeing to enter into the stipulation.

16 The stipulation itself does not embody that discussion.

17 But that discussion was --

18 THE COURT: Is the understanding that the

19 government was only to produce those three informants and

20 not anybody else? Is that the understanding?

21 MR. TRABULUS: Yes. And it was predicated upon

22 the government stating to us that they did not know where

23 two of the informants were. One I believe was
24 Mr. Marshisoto.
25 Q Was the agreement that you would not call either of


1 the other informants?


3 THE COURT: Why is that a breach of the

4 agreement, Mr. White?

5 MR. WHITE: Your Honor, precisely, and, again, we

6 are disagreeing. But my understanding was that

7 government -- that they w ere not going to call the other

8 informants.

9 THE COURT: That's not in writing, was it?

10 MR. WHITE: No.

11 THE COURT: There is a disagreement. I am

12 telling you now if they want to call the other informant I

13 will let them do it. So I am directing you to turn over

14 to them the address of this gentleman whose name I can't

15 pronounce.

16 MR. WHITE: Okay.

17 THE COURT: That's the end of that. Next case.

18 Do you want to go into the next tape?

19 MR. WHITE: Ms. Scott will.

20 THE COURT: If you want that address, whoever

21 wants it, you are going to have it.

22 MR. NEVILLE: Thank you.

23 THE COURT: You better give it to him as soon as
24 possible. They want to subpoena this person or have an
25 investigator go out.


1 What is the next tap e?

2 MS. SCOTT: Referring now to

3 Government's Exhibit 1383.

4 MR. JENKS: Is it B, Ms. Scott?

5 MR. WHITE: 1383. And the exhibits are -- I am

6 not talking about 1383-A, because that, it seems to me

7 comes in as an admission against interest. It is Steve

8 Walden and Ron Marsh speaking, an admission of the

9 defendant.

10 THE COURT: Okay.

11 What transcript is this?

12 MS. SCOTT: 1383-A. I am not asking you to admit

13 it under 801(d)(2)(E) because it is an admission of the

14 defendant.

15 1383-Baker, is a conversation of Ron Marsh and

16 George Robbins.

17 THE COURT: The same two people?

18 MR. SCHOER: And a third person whom we don't

19 know.

20 MR. JENKS: We don't know.

21 THE COURT: Let me read it.

22 (Whereupon, at this time there was a pause in the

23 proceedings.)
24 THE COURT: I will exclude the first, the
25 second -- the first, second, third, fourth and fifth


1 statements are out. They say something and mean nothing.

2 And like I said, we are not a marketing company

3 laughing, starting with that.

4 MS. SCOTT: Okay.

5 THE COURT: Any objection to that? Is it the

6 same objections?

7 MR. JENKS: The same objections. But in this

8 tape, your Honor, you should at least look at 403.

9 There are two statements here by Mr. Robbins, and

10 lying.

11 When you consider the prejudicial effect to all

12 the defendants versus the probativeness in light of all

13 the previous tapes played and introduced, I would suggest

14 it outweighs the probative value of this tape. And I ask

15 in your discretion to exclude the tape.

16 THE COURT: No, your motion is denied.

17 MR. LEE: Your Honor, I am asking the Court to

18 make the distinction between a statement of fact, I don't

19 know if it is in the scope, but a distinction between a

20 statement of a fact and an opinion by someone. And I

21 think an opinion is not within the scope. It certainly

22 lacks probative value. We don't know the motivation for

23 the opinions.
24 I am asking your Honor when you scrutinize this,
25 that this is important to distinguish between something


1 which is an absolute factual statement.

2 THE COURT: Objection overruled.

3 Next.

4 MR. NELSON: If I may be heard on a 403 issue on

5 a somewhat different ground as relating to Mr. Osman.

6 As the Court recalls I made a severance motion as

7 relating to Mr. Osman. My severance motion was with

8 regard to b eing tried with Mr. Gordon and the

9 corporations.

10 Your Honor, these recordings were made in August

11 of 1994, and are being introduced as vicarious admissions

12 of the corporation that Mr. Osman was not employed by at

13 the time the statements were made. He didn't come to be

14 employed until November of 1994.

15 I would submit as it relates to him and the

16 prejudicial spillover on all the other defendants are such

17 that the 403 issue should be explored much more closely,

18 than merely a balancing of their probative worth as

19 against the prejudicial effect, particularly as it relates

20 to my client, since he wasn't even an employee of the

21 company at that time.

22 MS. SCOTT: Mr. Osman's motion was to sever the

23 mail fraud from the tax. It wasn't to sever Mr. Osman
24 from the other mail fraud defendants.
25 THE COURT: Do you wish me to say at the time of


1 the charge that at the time the statement was made that

2 the defendant Osman was not an employee of the company?

3 MR. NELSON: Yes, your Honor.

4 THE COURT: All right.

5 MR. LEE: Your Honor, as we go on and analyze

6 each of these tapes, your Honor should know also that the

7 opinion of the person speaking is being offered actually

8 to prove what I feel is the pivotal issue in this whole

9 case, which is intent, and their knowledge of committing a

10 crime. I think that is the pivotal issue as far as I am

11 concerned. And these statements are opinions of a person

12 of his intent or criminal intent. And that's the pivotal

13 issue in this case. And I feel that it merely argues

14 toward excluding that.

15 MR. TRABULUS: More than. It is not saying I am

1 6 lying, it says we are lying, making a statement not only

17 about his own intent or other people.

18 THE COURT: Responding one at a time, I overrule

19 your objection, Mr. Lee and yours, Mr. Trabulus.

20 With respect to 403, Mr. Nelson, let me read to

21 you from the outstanding authoritative text,

22 Weisenberger's Federal Evidence on Rule 403.

23 Quote, exclusion on the basis of unfair prejudice
24 involves more than a balance of adverse prejudice. If
25 unfair evidence referred to any evidence prejudicial to a


1 party's case, anything adverse to a litigant's position at

2 trial would be excludable under 403: Emphasis must be

3 based on the word, inside quote, unfair. Unfair

4 prejudice -- which is the words in the rule -- and that

5 quality of evidence that might result in an improper,

6 usually irrational basis for a jury decision.

7 Consequently, if the evidence arouses the jury's emotional

8 sympathies, use of drugs, criminal actions -- I added

9 those last two -- evokes a sense of horror -- photographs

10 of an open wound close up, or appeals to an instinct to

11 punish -- the evidence may be unfairly prejudicial.

12 Usually, although not always, unfairly prejudicial

13 evidence appeals to the jury's emotions, rather than

14 intellect.

15 Unfair prejudice may be present when inflammatory

16 or otherwise shocking real proof or photographs are

17 offered.

18 It must be remembered that Rule 403 calls for a

19 balancing of probative value against the case

20 counterweight, and no evidence is admissible simply

21 because it is sensational or prejudicial.

22 Then it goes on to say other reasons for 403,

23 which is confusion of the issues, or misleading the jury.
24 I don't think that this evidence is unfairly
25 prejudicial. It is certainly prejudicial, but it is not


1 unfairly prejudicial.

2 MR. TRABULUS: Your Honor, if I may add one

3 additional ground for my objection?


5 MR. TRABULUS: This is to be admitted only

6 against the corporate defendants. So, with regard to the

7 individual defendants we are in a Bruton type situation,

8 because it is an admission by -- I will make the same kind

9 of distinction as the one in Bruton and Gravy against

10 Maryland, here. So there is a constitutional objection,

11 in addition to the objection -- there is a constitutional

12 objection on behalf of all the non-corporate defendants,

13 in addition to the objection under the Federal Rules of

1 4 Evidence.

15 MR. SCHOER: I was going to add and I think I

16 said it before, that I think that word "unfair" that your

17 Honor can consider the lack of the ability to confront the

18 witness and to test the trustworthiness of the statement

19 in determining whether or not there is unfair prejudice in

20 the balance with respect to probative value. And I think

21 that that is the key here.

22 THE COURT: You cannot confront George Robbins?

23 MR. SCHOER: We cannot.
24 THE COURT: Where is George Robbins? He is not
25 the confidential informant, is he?


1 MR. WHITE: No, your Honor.

2 THE COURT: Why can't you confront him? He is

3 the one making the statement and not Mr. Marsh.

4 MR. DUNN: Your Honor, we don't know where

5 Mr. Robbins is. It is my recollection is he was on th e

6 witness list originally from the government, so they know

7 where he is. If they want to give us his address I would

8 request that also.

9 THE COURT: Give them the address for George

10 Robbins.

11 MR. DUNN: I would like to step back a moment to

12 1383-A dealing with Mr. Walden, I would like to object to

13 the confrontation issue as well pertaining to Mr. Marsh.

14 THE COURT: Your objection is overruled.

15 MR. TRABULUS: Judge, with regard to the

16 confrontation issue, I don't believe the burden should be

17 on the defense to have to call individuals who

18 out-of-court statements are being introduced by the

19 government. I don't believe our right to confront

20 requires us -- puts the burden on us to put on the defense

21 case that includes the prosecution witnesses.

22 THE COURT: I don't either. But you raised the

23 right of confrontation . And the one who is given the
24 probative evidence against the corporation is George
25 Robbins, and not the confidential informant.


1 MR. TRABULUS: True with regard to Mr. Robbins,

2 but if our right of confrontation is to be honored, it is

3 their burden to produce him, not ours.

4 THE COURT: 801(d)(2)(D) permits it, right of

5 confrontation nevertheless, it permits it.

6 MR. WHITE: Your Honor, I would like to respond

7 to one thing Mr. Trabulus said and not Ms. Scott.

8 THE COURT: You mean he is using the new case?

9 And very well, I think, too.

10 MR. WHITE: I don't know, I have not read it yet.

11 THE COURT: Neither has he. But that hasn't

12 stopped him at all.

13 MR. TRABULUS: I did read the syllabus.

14 MR. WHITE: I want to make it clear with respect

15 to Mr. Marshisoto here. He made five tapes. Two of them

16 are already in evidence. The defendants stipulated that

17 it could -- that it can come in.

18 The only issue with respect to the remaining

19 three we are talking about now, the only issue they raised

20 pretrial is whether or not this is admissible as a

21 corporate admission. It is not like they were demanding

22 to have Mr. Marshisoto here.

23 THE COURT: But they raised their legal
24 arguments. They have a right to do that.
25 What is next?


1 MS. SCOTT: 1383-C, your Honor. And the same

2 principles would permit that person of the tape to come

3 in.

4 In that case we have a conversation between

5 Mr. Marsh the informant, and a person we have identified

6 as a male voice, but we know it to be an employee by the

7 name of Richard Pollito.

8 THE COURT: How do we know that?

9 MS. SCOTT: He is referred in other portions of

10 the tape. The transcriber didn't refer to him when he was

11 making his statements. She didn't mark his statements

12 with his name.

13 In draft transcripts provided to the defense we

14 made the attribution to Richard Pollito.

15 THE COURT: Where it says male voice, it is

16 Mr. Pollito?

17 MS. SCOTT: That's correct.

18 THE COURT: You have to put that in, don't you?

19 MS. SCOTT: All right.

20 THE COURT: Let me just read this.

21 (Whereupon, at this time there was a pause in the

22 proceedings.)

23 THE COURT: Who is Richard Pollito?
24 MS. SCOTT: An employee of the company, a
25 salesperson.


1 THE COURT: Any objection?

2 MR. TRABULUS: Yes, but with regard to this one,

3 this is basically Ron Marsh using these employees as a

4 foil. He is basically feeding them the points. It is Ron

5 Marsh talking and Ron Marsh making the statements.

6 MR. LEE: I would like to inform the fact as far

7 as I know, first of all what Mr. Trabulus says is true.

8 But these files as I understand it were employees there

9 for a very short period of time. I was there for maybe

10 two weeks and then left.

11 THE COURT: George Robbins was there for two

12 weeks?

13 MR. LEE: I am talking about two or three weeks.

14 Therefore, that goes -- again, it makes the statements

15 less reliable and more suspect. And it makes it more

16 tending to not be a statement based on observation -- the

17 operations of the corporation, but more an outsider's

18 opinion or a new person's opinion. And I think the

19 s tatement goes to the part of the defense.

20 MR. TRABULUS: They may be basing the opinion not

21 on the company's practices, but upon what Mr. Marsh is

22 telling them. It goes to the reliability of what they are

23 saying.
24 MS. SCOTT: Your Honor, that's an argument that
25 can be made to the jury in summation. The tape speaks for


1 itself. If people want to attribute a different meaning

2 to it they can do it in argument.

3 MR. TRABULUS: There is a certain threshold here

4 with respect to scope of employment and the opportunity to

5 have knowledge of what is being spoken about. If these

6 people were there only a couple of weeks, I am not sure

7 that is made, particularly if it is Marsh making the

8 assertion of going along with it or what appears to be a

9 humorous episode.

10 THE COURT: At the least how long was George

11 Robbins with the company, two weeks?

12 MR. TRABULUS: I don't know. It goes back to

13 1382-A.

14 THE COURT: I don't know how long he is with the

15 company.

16 MR. LEE: The defense is now prepared to take the

17 position without affidavits that it was at the top three

18 weeks. And if your Honor --

19 THE COURT: Does the government know how long he

20 was with the company?

21 MR. SCHOER: I believe we have some 3500 material

22 with respect to that, if I can have a second to find it

23 and we may have the answer.
24 MR. NEVILLE: My client Scott Michaelson says he
25 doesn't know who this person is.


1 MR. TRABULUS: Neither does Mr. Gordon.

2 MR. SCHOER: I have it here.

3 MR. WHITE: Your Honor, I don't know how long he

4 was there. He was an employee at the time he made the

5 statements. He was a salesperson.

6 MR. SCHOER: He worked for a month. According to

7 the 3500 material, the notes of -- I don't know who it is,

8 one of the postal inspectors, he claims he worked from

9 4/94 or 4/85, worked for a month. And this is August.

10 This doesn't even match up. It is April or May according

11 to the notes.

12 MR. TRABULUS: The government has all the

13 employment records of Who's Who Worldwide. They were in

14 the warehouse in Brooklyn.

15 MS. SCOTT: Your Honor, if I might direct you

16 back to Zaken against Boerer, which may help you with this

17 issue.

18 In that case they discuss the weight that can be

19 given to declarant's statement, who was Ed Newman, the

20 company's then vice president of sales. And the defense

21 challenged the statement o n the additional ground that

22 Mr. Newman had left the company in a bloodless cue at the

23 time he made the statement. And people believed at the
24 time he made the statement he was conspiring against the
25 company.


1 The Court found that it wasn't a reason to

2 exclude the statement. They said it goes to the weight of

3 the statement rather than the admissibility.

4 THE COURT: Does the government stipulate that he

5 was with the company a month?

6 MR. NELSON: His interview notes reflect, your

7 Honor, he was there for a short time where he never

8 reached the level of employment where he was given the new

9 lead cards. He was only given the NG cards which were

10 being redistributed for the people being retrained.

11 THE COURT: Where is this?

12 MR. NELSON: Page 5 of 3500-21-A, an interview

13 conducted by the government of George Robbins on March

14 30th, 1995. And it states in those records on page 5 of

15 the records.

16 MR. SCHOER: It says that all new telemarketers

17 would work NG cards only. After one month additional

18 training to work fresh cards. And he says he worked there

19 only a month.

20 MR. NELSON: It states on line 5, never made to

21 it fresh cards.

22 MR. SCHOER: GR took second training sessions.

23 Never made it to new, paren, fresh, close paren, cards.
24 MR. TRABULUS: Your Honor, the company's practice
25 was to keep people on old cards for only two weeks.


1 MR. LEE: The 3500 material says he didn't

2 complete the last week, which is the fourth week. So I

3 feel the original three weeks is more likely.

4 THE COURT: I am persuaded to disallow this not

5 under the basis of unfair prejudice, but confusion of the

6 issues or misleading the jury.

7 Here is what the text says:

8 If the jury is likely to ascribe excessive

9 unwarranted weight to the evidence, the offered proof is a

10 candidate for exclusion under Rule 403.

11 In any situation in which the evidence must be

12 accompanied by a limiting instruction so convoluted or

13 tortured that the jury would be at a loss to gauge the

14 proper application or weight of the evidence, Rule 403 may

15 operate to exclude the offer.

16 As a generalization the more remote from the fact

17 of the event sought to be proven the lower its probative

18 value; an extremely remote fact possessing extremely low

19 probative value may be excluded under 403 when an

20 appropriate counter weight is prejudice, e.g., confusion

21 or prejudice.

22 Now, reading this part, this 1383-C, when I read

23 the last portion on the first page, which by George
24 Robbins says, and this is the most damaging part, and it
25 is really the only damaging part, quote, we only take in


1 9,999, because we are the most exclusive directory in the

2 entire world.

3 That's in response to Mr. Marsh saying 10,000 to

4 15,000 we apply, we only take 1,000.

5 In response to that Mr. Robbins said, we only

6 take 9,999 because we are the most exclusive directory in

7 the entire world.

8 Now, when I first read it I thought he was being

9 cute, funny or making a joke when he said that. That's

10 the impression I got. It was like a flip statement.

11 My impression is fortified by the fact that this

12 man worked less than a month w as not a full statement, and

13 only working with NG cards. And for me to allow this to

14 go into evidence when it probably was a flip statement by

15 a salesman who wasn't very experienced in the company, I

16 think it would be unfairly prejudicial and would mislead

17 the jury, mislead the jury.

18 MS. SCOTT: Your Honor, there is no evidence that

19 he didn't move on from NG cards. We have no evidence of

20 that. The government has agreed to stipulate that he

21 wasn't there for more than a month. It is a very

22 uncomplicated instruction to give to the jury. And the

23 rest are things the defense can argue as going to weight.
24 These statements fall squarely within 801(d)(2)(E).
25 THE COURT: I don't know if they do. How does he


1 know if he worked a month how much they take?

2 MS. SCOTT: Eric Ihlenfeldt knew after a week.

3 That's what this goes to, you figure it out quickly. You

4 saw that they were taking back everybody who was sending

5 back lead cards.

6 MR. SCHOER: They put Mr. Zerring there who was

7 there for ten weeks and he didn't say he knew anything

8 about anybody committing any fraud.

9 MS. SCOTT: Part of this is we are not allowed to

10 bring this out in the course of questioning.

11 MR. SCHOER: You brought it out when you

12 questioned Ilhenfeldt, and you didn't bring it out when

13 you questioned Zerring, and you didn't. You could have.

14 MS. SCOTT: Perhaps because the defense failed to

15 object to that.

16 THE COURT: I recall in this case that no one has

17 said that they accept everybody.

18 Also, no one has testified as of now that they

19 only turned down one out of 10,000 people, except for this

20 statement now. I have seen no evidence of that in this

21 case. In fact, it has been skirted around quite a bit

22 about what in fact they do accept and don't accept.

23 There is no doubt that the preponderance of the
24 evidence -- and I don't mean legal proof -- but most of
25 the evidence is that they accept almost everybody. But no


1 one has said that they take 9,999 out of 10,000. This is

2 entirely new. There is nothing in the case like this.

3 And to have an employee, who is a short term employee, not

4 yet a full salesman, apparently, to say a thing like this

5 and in a very casual and flip manner I think that would

6 confuse the jury unnecessarily, and unduly and in a

7 probative weight.

8 You had witnesses who knew about this.

9 Mr. Saffer working with the company for many years, he

10 never said they took 9,999 out of 10,000. You never asked

11 the question. I am excluding it.

12 MR. WHITE: You are excluding C?

13 THE COURT: Yes.

14 MR. SCHOER: Can we go back to B?

15 THE COURT: You can always go back to B, until

16 the jury is discharged, I told you.

17 MR. SCHOER: Until it gets in.

18 THE COURT: Even when it gets in.

19 I am looking at B.

20 MR. SCHOER: B also, Judge, I think if you listen

21 to the tape you will get the sense of these

22 conversations. And if you see where Mr. Robbins says, we

23 are lying, there is laughter before that.
24 Yes, these statements are very flip. And it is
25 the same analysis as you just entered into with respect to


1 C that is so with respect to B.

2 THE COURT: Except 9,999 is a concrete flip.

3 That's a real flip.

4 Your objection is overruled. That will go in.

5 1383-B, I do not revise my ruling.

6 What else do we have?

7 MS. SCOTT: 1383-D, as in Daniel. A conversation

8 between Richard Pace and Ron Marsh and --

9 THE COURT: How much more do we have?

10 MS. SCOTT: We have D, E and F.

11 THE COURT: I will go into the jury and tell them

12 they can walk around.

13 How much more do we have?

14 MS. SCOTT: D, E and F, and 1384-A, so we have

15 four more.

16 MR. TRABULUS: While you do that, may I leave to

17 go to the wash room upstairs?

18 THE COURT: Yes.

19 (Whereupon, at this time there was a pause in the

20 proceedings.)

21 THE COURT: Anybody have any objection to me

22 telling the jury as a sort of a quid pro quo, that it

23 appears that the government may rest today?
24 MR. WHITE: No objection.

25 THE COURT: Anybody objection to that?



2 MR. DUNN: No.

3 THE COURT: Mr. Gordon, do you think Mr. Trabulus

4 would object?

5 THE DEFENDANT GORDON: No, he would not.

6 THE COURT: All right.

7 (The following takes place in the jury room.)

8 THE COURT: I have some good news and some bad

9 news.

10 The bad news is we are still going over some

11 matters.

12 The good news is I am permitted to tell you that

13 it is likely that the government may rest their case

14 today. I bought that in to pave the way so you would not

15 throw some cards at me or something. But it may be.

16 Certainly by tomorrow probably.

17 What I am doing is going over certain evidentiary

18 offers which I am finding out whether it will go to you or

19 not. That's what I am doing.

20 So it will take a little more time, maybe another

21 half or three-quarters of an hour.

22 In return for which you heard what I just told

23 you.
24 That's the story; and I again apologize. I
25 didn't realize it will take this long, but I cannot avoid


1 this. It might save a lot of time as a matter of fact.

2 JUROR NO. 7: I have a question.

3 Based on your experience, how long do you think

4 the defense will be?

5 THE COURT: That's impossible to say. They have

6 no burden. They need not put in any defense. You can't

7 infer anything as a result of it. So that is an open

8 question. We will see.

9 A JUROR: Thank you.

10 (Whereupon, at this time the following takes

11 place in open court.)

12 THE COURT: We will take a short reces s at this

13 time.


15 (Whereupon, a recess is taken.)


17 MR. TRABULUS: Your Honor, one statement I made

18 before I wanted to correct because it may have given the

19 erroneous impression. I believe Mr. White did not tell me

20 that it was Mr. Marshisoto whose whereabouts he did not

21 know. Another informant in terms -- whose first name is

22 R, it was Mr. Greenberg. One was Lindauer, he tells me it

23 is Greenberg, and I spoke with Mr. Schoer and it is
24 consistent with his recollection.
25 THE COURT: I did tell the jury that the


1 government may rest today. I am sure you have no

2 objection to that?

3 MR. TRABULUS: Of course not.

4 THE COURT: I told them that to ease the way.

5 Are you all right?

6 THE DEFENDANT OSMAN: I am fine. Thank you for

7 your concern.

8 THE COURT: One of the jurors asked how long the

9 defense would be, and I told them you can't concern

10 yourself with that.

11 When I told them there is an end to the

12 government's case, they are now looking for the next end,

13 the real end.

14 What is next?

15 MS. SCOTT: 1383-D, offered under 801(d)(2)(D),

16 as a corporate admission. It is a conversation by

17 Marshisoto, Richard Pace and George Robbins.

18 THE COURT: Who is Richard Pace?

19 MS. SCOTT: Pollito, the other employee whose

20 name was left out in the prior tape.

21 THE COURT: He is not a confidential informant?

22 MS. SCOTT: No, an employee -- a salesperson.

23 THE COURT: Let me read it.
24 (Whereupon, at this time there was a pause in the
25 proceedings.)


1 THE COURT: It goes on for several pages?

2 MS. SCOTT: Three pages, I believe.

3 THE COURT: I didn't see anything in the first

4 page.

5 Any objection to this?

6 MR. NEVILLE: I object.

7 MR. TRABULUS: I object, too.

8 THE COURT: Objection sustained. I will not

9 allow it. There is nothing here until the third page when

10 Mr. Marsh says at the top of page 3, we are scamming

11 people on the phone, and we all fucking know it, okay, he

12 is not comfortable with it, there's the bottom line, man.

13 Then Mr. Robbins says, I act like I am perfectly

14 comfortable with it.

15 MS. SCOTT: May I propose a solution, your

16 Honor?

17 THE COURT: This is an obvious come on -- most of

18 the talking is by Mr. Marsh, the confidential informant

19 here.

20 MS. SCOTT: Let me direct your attention to the

21 first paragraph on page 1, and that's Richard Pace

22 speaking, talking about what it is like to call a person

23 up, how nervous he gets, what he is thinking about
24 offering the person.
25 THE COURT: You want to put that in?


1 MS. SCOTT: Yes.

2 THE COURT: I will let you put that in.

3 MS. SCOTT: Further down the page they discuss as

4 to whether they have a problem with it. Some say they

5 have a problem. And George Robbins talks about how he

6 deals with it. He says you have to modulate your voice --

7 you can't dance on the phone because they hear that in

8 your voice. That's when they think you are just another

9 telemarketer.

10 THE COURT: You can put that in.

11 MR. LEE: May I interject at this point and

12 inform your Honor, I think the same is true with Mr. Pace,

13 he was there for perhaps one month. And the first

14 paragraph is consistent with someone who is new and

15 nervous about how he is performing his functions on the

16 job. It might be misleading.

17 THE COURT: Objection overruled.

18 The reason I excluded the other statement is

19 because it made an obviously outrageous statement, without

20 knowledge and with sort of a tongue and cheek. And I am

21 talking about the 9,999.

22 Overruled. I will let it in.

23 You want the first page in?
24 MS. SCOTT: Yes, your Honor.
25 THE COURT: All right, first page.


1 MR. SCHOER: We object to the Brooklyn Bridge

2 comment.

3 THE COURT: Objection overruled.

4 What do you have against the Brooklyn Bridge?

5 MR. SCHOER: I think the term, trying to sell

6 them the effin Brooklyn Bridge over here has real

7 connotations and sensational.

8 THE COURT: Overruled.

9 MS. SCOTT: The next one is 1383-E, which is a

10 conversation between, E as in Edward.

11 The conversation between Ron Marshisoto, Richard

12 Pace and George Robbins.

13 THE COURT: One minute.

14 MS. SCOTT: Richard Price is Richard Pace, the

15 same person we call Richard Pollito a salesman of the

16 company.

17 THE COURT: Who is the male voice.

18 MS. SCOTT: The male voice says one word and

19 unintelligible after that. We don't know who it is. It

20 may be Pace, it may be Pace-Pollito.

21 MR. TRABULUS: I object to this on the grounds

22 that --

23 THE COURT: I have to read it first.
24 MR. TRABULUS: I am sorry.
25 (Whereupon, at this time there was a pause in the


1 proceedings.)

2 THE COURT: I will not allow page 2, starting

3 with Ron Marsh, now, who did you ask this to, George

4 Robbins, etcetera, from that point on to the end, I don't

5 know what they are talking about. It is confusing, and

6 prejudicial unduly to Tara Garboski.

7 MR. JENKS: And page 3 with respect to Gordon.

8 MS. SCOTT: We don't object, your Honor.

9 THE COURT: All right, 1383, page 1, and the top

10 three lines of page 2. All right.

11 MR. SCHOER: My only concern with respect to

12 that, and I appreciate your Honor redacting that, but the

13 attribution right before we started, where it says 100

14 percent mailing list, she did say that, because I asked

15 her, she said when a member -- when someone has been

16 nominated from another member, that's a whole different

17 ball game, I believe the jury will believe that he is

18 speaking about a conversation he had with Ms. Garboski.

19 She is the only supervisor who is a female.

20 MS. SCOTT: Your Honor, that is just not the

21 case. There is no way to draw that conclusion.

22 THE COURT: I will make sure.

23 MS. SCOTT: They may be talking about another
24 salesperson for all you know.
25 THE COURT: This is what we will do. 100 percent


1 mailing list.

2 MS. SCOTT: It talks about how nominations make

3 it a whole different situation. It is not even an

4 entirely incriminating statement. It talks about yes,

5 there are mailing lists, but there are also nominations to

6 cause a very different selection process to call in.

7 The one word, "she" a person making a statement

8 about what the procedures are, it doesn't mean that it is

9 a supervisor.

10 MR. TRA BULUS: Look at this one and then look at

11 F, which is the next one, but according to the tape

12 counter marking precedes it. In 1383-F it is Ron Marsh

13 the informants, instructing George Robbins about mailing

14 lists. He is planting the idea in George Robbins mind,

15 and the male voice's mind that he was told about mailing

16 lists. You have to look at this in context. The tape

17 counter on F is 918, on 1383 it is 983. So you have to

18 look at the predecessor which preceded it, which is the

19 government informant telling people whom he is talking to,

20 telling people about mailing lists. It seems the whole

21 thing is unreliable.

22 THE COURT: Does the government wish to play

23 1383-F, for Fox?
24 MS. SCOTT: Yes, we do.
25 If you look at the first page of 1383-E, the


1 fourth statement down, George Robbins' statement, that's

2 the topic of the sentence in this conversation.

3 He says, do you remember what she said yesterday,

4 a nomination card, a person who is actually nominated from

5 another member. That's what they talk about in the

6 conversation. They are not talking about Ron Marsh's

7 comments, and I don't know when before that.

8 THE COURT: I will allow you to put in what I

9 said, the first page and the top parts of the second page

10 of 1383-E, for Easy, but I will redact, notwithstanding

11 the new Bruton case, this is risky, you see the bottom

12 line George Robbins -- we can't do that because it is on

13 tape, right?

14 MS. SCOTT: What are you talking about?

15 THE COURT: The 100 percent mailing list, she

16 will say, what I was going to say is to change it to I

17 haven't told. But it is on a tape.

1 8 MS. SCOTT: Your Honor, it is so speculative that

19 they would believe that this is Tara Garboski. There

20 is --

21 THE COURT: There are other women in the company,

22 not there?

23 MS. SCOTT: Yes, many.
24 THE COURT: All right, overruled. I will allow
25 it.


1 MR. GEDULDIG: Can I ask a question?

2 Mr. Trabulus just brought up a point.

3 If the government is labelling these sections of

4 transcripts and tapes with letters, creating the

5 impression that they are being played, and we are

6 discussing them in a chronological order, and if that's

7 not the case, and if they are taking them, and section C

8 should go where section A is, and they are moving the

9 sections around and they are not in chronological order

10 they are taken out of context.

11 TH E COURT: That's all right unless it is

12 prejudicial. I see nothing prejudicial about it.

13 Let's take a look at 1383-F.

14 MS. SCOTT: For clarification, you are allowing

15 1333-A, the first paragraph on page 2 of that statement,

16 and the rest from Ron Marsh's statement is all redacted.

17 THE COURT: Yes.

18 MS. SCOTT: Thank you.

19 MR. SCHOER: For clarification, are we taking

20 this portion out of the transcripts that the jury has in

21 front of them.

22 MS. SCOTT: We will have to do it.

23 MR. TRABULUS: They don't have these yet.
24 MR. WHITE: We pulled them out of the book.
25 MR. SCHOER: Yes. Thank you.


1 THE COURT: 1383-F for Fox, let me read it.

2 (Whereupon, at this time there was a pause in the

3 proceedings.)

4 THE COURT: Objection sustaine d. It is all talk

5 by Marsh. We don't need that here.

6 What else?

7 MS. SCOTT: Finally 1384 is the tape and 1384-A,

8 is the transcript.

9 Again, it is a conversation between Richard Pace

10 and the informant Ron Marshisoto and George Robbins.

11 THE COURT: Let me read it, please.

12 (Whereupon, at this time there was a pause in the

13 proceedings.)

14 THE COURT: I will not let in anything after

15 Richard Pace, you have to be. After that it is Marsh, you

16 are driving home again. The first part is spontaneous

17 apparently. I will allow it. The last entry will be,

18 Richard Pace, you have to be. The rest is excluded.

19 MS. SCOTT: Your Honor, is it possible to take

20 out Ron Marsh's statement and start up with the statement

21 by Robbins, I sleep well, knowing that --

22 THE COURT: No, because I think he is seducing

23 them into some o f these things. I will let the first
24 five, that's what is going in.
25 MS. SCOTT: Your Honor, the very first statement


1 of Richard Pace is at a different point in the tape than

2 the later conversation between George Robbins and Ron

3 Marsh.

4 THE COURT: All right.

5 MR. SCHOER: If that's so, the next four

6 attributions, the only person saying it is a scam is

7 Marsh.

8 MS. SCOTT: That's not so. The first line by

9 Robbins --

10 THE COURT: I will allow one, two, three, four,

11 five entries, and say that the first portion was separated

12 in time from the second -- from the latter portions.

13 MR. TRABULUS: I don't want to be too belated

14 about this, but we have transcripts of only portions of

15 this. We don't have here, and I don't have in my head

16 what immediately preceded some of this stuff. So it seems

17 to me, and I know we took up a fair amount of time, but

18 perhaps we ought to take up a little more time, and play

19 for your Honor to hear and all of us to hear about what

20 occurred in the minute before the beginning of each one of

21 these that they plan to play. I think they have the tapes

22 queued up so it will not take long to do that. We will

23 find I believe that this was driven by Mr. Marsh. This is
24 all when Mr. Marsh was there.
25 THE COURT: Don't you have all that? Don't you


1 have these tapes, the full tapes?

2 MR. TRABULUS: Your Honor, I do have the full

3 tapes, your Honor.

4 THE COURT: I must say I have not had a chance to

5 listen to them, with all the things I have been doing, I

6 haven't bee n able to focus on it. And had I listened to

7 them, your Honor, your Honor would have had to have heard

8 that portion anyway, because I certainly don't have

9 transcripts of those tapes. I think it is a reasonable

10 thing to do at this time. It will be a total of an extra

11 five or ten minutes.

12 MR. NEVILLE: Wasn't also Robbins considered

13 unreliable because he hadn't worked at the company for

14 long and here he pops up again?

15 THE COURT: Yes.

16 MS. SCOTT: You excluded 1383-C, the one

17 exaggerated tape by Robbins. The rest you let in.

18 THE COURT: That's exactly right. It is a good

19 analysis of what I did. An exaggerated person.

20 MR. NEVILLE: I join in Mr. Trabulus' respectful

21 request to the Court that we hear the preceding portions

22 of the tapes, because Marsh is the common denominator in

23 these tapes.
24 THE COURT: Have yo u concluded the tape?
25 MS. SCOTT: Yes.


1 THE COURT: There are other tape recordings that

2 we need to play as well.

3 THE COURT: Let's play the other ones until

4 12:30, and we will give the defendants a chance during the

5 lunch hour to listen to the other tapes. And we will

6 conclude it in the afternoon.

7 Ready with the other tapes you have?

8 MS. SCOTT: Your Honor, the defense have had a

9 long time to listen to these tapes. The tapes were made

10 available for at least a year.

11 THE COURT: That's true. I just said that.

12 However, in view of the request, I believe it is a

13 reasonable request. What is the rush? We are taking all

14 this type anyway. You will put on what you have without

15 these. You have other tape recordings?

16 MS. SCOTT: We have oth er tapes to play, yes.

17 THE COURT: That will fill between now and the

18 lunch hour. During the lunch hour they will listen to the

19 tapes, the leading in portions that they say they want.

20 And we will come back at like a quarter after 1:00 and go

21 over that.

22 MS. SCOTT: One other clarification. Yesterday

23 your Honor admitted several exhibits as pieces of
24 commercial paper. They were copies of checks, and you
25 admitted them as business records. I was to come back and


1 give you precise list of what those exhibits are. I have

2 that list. There are six of them.

3 One is 13-E, 20-F, 58-A, 39-A, 40-E, and 47-E.

4 THE COURT: All right.

5 MS. SCOTT: Thank you.

6 THE COURT: Let's bring the jury in and go

7 through the rest of the tapes at this time, other than the

8 ones we went through just now.

9 One of the jurors requested to leave at 4:30 this

10 afternoon. I believe we will be able to accommodate that

11 juror.

12 MR. NELSON: Yesterday we heard that there was a

13 statement made with respect to Mr. Rubin. And I ask that

14 there be a limiting instruction that that statement is

15 attributable only to Mr. Rubin and not to the other

16 defendants on trial in this matter.

17 THE COURT: Any objection to that? I don't

18 recall what statement you are referring to?

19 MR. NELSON: A post arrest statement allegedly

20 made by Mr. Rubin when he was being transported from his

21 home to Who's Who Worldwide by Mr. Biegelman and Agent

22 Jordan.

23 THE COURT: What did he say in his statement?
24 MR. NELSON: That there were no nominations or
25 words to that effect.


1 MR. WHITE: He admitted lying about various

2 subjects.

3 THE COURT: It is attributable to him and not the

4 other defendants?

5 MR. WHITE: Yes.

6 MR. NEVILLE: In that instruction I request you

7 state to the jury it was an alleged statement, and if the

8 jury believes it was uttered, that it is only admissible

9 as to Mr. Rubin.

10 THE COURT: Very well.

11 MR. WHITE: Your Honor, I don't know if you need

12 to put it that way. You can say you heard testimony with

13 regard to a statement. That statement is only worded with

14 respect to -- the way Mr. Neville phrased it is that your

15 Honor is perhaps doubting the testimony.

16 THE COURT: He picked up what I said yesterday

17 about something. But I will say the testimony of Rubin

18 offered yesterday.

19 Was this statement made in a car?

20 MR. WHITE: Yes, in the car following his

21 arrest.

22 THE CLERK: Jury entering.

23 (Whereupon, the jury at this time entered the
24 courtroom.)
25 THE COURT: I wished you good morning earlier.


1 Now it is almost time for good afternoon.

2 Good afternoon.

3 Please be seated.

4 I want to thank you very much for your patience.

5 Every time I walked into the jury room I was greeted with

6 smiles and felt very much at home, instead of glares for

7 keeping you waiting, which I might be doing if I were in

8 your place.

9 I explained to you the necessity for holding you

10 up. We are ready to proceed.

11 First of all, I want to tell you that you heard

12 some testimony by Special Agent Jordan about a

13 conversation with Mr. Rubin.

14 This testimo ny is offered only against Mr. Rubin

15 himself and not any of the other defendants in this case.

16 You may proceed.

17 MR. WHITE: Your Honor, we will continue playing

18 some tapes.

19 THE COURT: One of the jurors wants to leave at

20 4:30. We will accommodate that juror.

21 MR. WHITE: The first tape is Exhibit 1339. The

22 transcript is 1339-A. The date is December 23rd, 1994.

23 The call is to Who's Who Worldwide and Sue Mantell.
24 (Whereupon, at this time there was a pause in the
25 proceedings.)


1 MR. JENKS: Can't hear it.

2 MR. NELSON: It is not working.

3 (Tape is played.)

4 MR. WHITE: Next is Exhibit 1349. The transcript

5 is 1349-A, for Abel. The date is February 2nd, 1995. The

6 call is to Sterling Who's Who and Scott Matthews.

7 (Tape is play ed.)

8 MR. WHITE: Next is 1357. The transcript is

9 1357-B, for Baker. The date is December 12th, 1994. The

10 call is to Sterling Who's Who and Barbara McCabe.

11 (Tape is played.)

12 MS. SCOTT: The next is 1364. The transcript is

13 1364-B, and the date is December 23rd, 1994. The call is

14 to Who's Who Worldwide and Greg Muller.

15 (Tape is played.)

16 MR. WHITE: Next is 1373. The transcript is

17 1373-A. The date is March 2nd, 1995. The call is to

18 Who's Who Worldwide and Alan Saffer.

19 (Tape is played.)

20 MR. WHITE: The next is 1301. The transcript is

21 1301-C, for Charley. The call is to Who's Who and

22 Madeline Bailey.

23 (Tape is played.)
24 MR. WHITE: The next is the same tape, 1301, the
25 transcript is 1301-D, for Dog. It is the same date and


1 same salesperson.

2 (Tape is played.)

3 MR. WHITE: Next is 1305. The transcript is

4 1305-B. The call is to Who's Who Worldwide, and the

5 date -- I am sorry -- let me start over again. 1305-B,

6 the date is September 6th, 1994, the call is to Who's Who

7 Worldwide and Roseanne Patton.

8 (Tape is played.)

9 MR. WHITE: Next on the same tape is transcript

10 1305-D. The date is the same, and the salesperson is the

11 same.

12 (Tape is played.)

13 MR. WHITE: 1307 is the exhibit, 1307-A is the

14 transcript, the date is October 24th, 1994. The call is

15 to Sterling Who's Who and Scott Matthews.

16 (Tape is played.)

17 MR. WHITE: Next is the same exhibit. The

18 transcript is 1307-D, for Dog, and the date and everything

19 else is the same.

20 (Tape is played.)

21 MR. WHITE: Next is 1309. The transcript is

22 1 309-C, for Charley. And the date is October 27th, 1994.

23 The call is to Sterling Who's Who and Andrea Franklin.
24 (Tape is played.)
25 MR. SCHOER: This is 1309-A.


1 MR. WHITE: Yes, I read it incorrectly. It is

2 1309-A. And I will back it up to the beginning. I will

3 start it again from the beginning.

4 (Tape is played.)

5 MR. WHITE: Next is the same tape. The

6 transcript is 1309-C, for Charley. The same date and same

7 participants.

8 (Tape is played.)

9 MR. WHITE: The next is 1320. The transcript is

10 1320-B. The date is November 4th, 1994. The call is to

11 Sterling Who's Who and Patricia Brent.

12 (Tape is played.)

13 MR. WHITE: Next is 1329. The transcript is

14 1329-B. The date is December 12th, 1994. The call is to

15 Sterling Who's Who and M ark Johnson.

16 (Tape is played.)

17 MR. WHITE: The next is 1331, the transcript is

18 1331-A, the date is September 14th, 1994. The call is to

19 Sterling Who's Who and Scott Matthews.

20 (Tape is played.)

21 MR. NEVILLE: Your Honor --

22 THE COURT: Just one minute, please.

23 (Whereupon, at this time there was a pause in the
24 proceedings.)
25 THE COURT: Hold it for a minute, please.


1 (Whereupon, at this time there was a pause in the

2 proceedings.)

3 THE COURT: Sorry to keep you waiting.

4 Yes, Mr. Neville.

5 MR. NEVILLE: I wanted to clarify, and I am sure

6 it was inadvertent. But some of the transcripts say Scott

7 Matthews, and some in the new series says just Scott. I

8 don't want the jury to be excused.

9 THE COURT: It obviously is not Scott Michaelson

10 because it is Sterling to begin with; is that right?

11 MR. NEVILLE: Right.

12 THE COURT: Members of the jury, did I get that

13 across?

14 (The jury answers in the affirmative.)

15 THE COURT: All right. Let's go.

16 (Tape is played.)

17 MR. WHITE: On the same exhibit we will also pay

18 1331-B, for Baker, the same date and the same

19 participant.

20 (Tape is played.)

21 MR. WHITE: Next is Exhibit 1334. The transcript

22 is 1334-B, for Baker. The date is December 19th, 1994.

23 And the call is to Who's Who Worldwide and Jill Barnes.
24 (Tape is played.)
25 MR. WHITE: The same exhibit, we are going to


1 play 1334-D, for Dog, and not B for Bake.

2 (Tape is played.)

3 MR. WHITE: Next is 1336. The transcript is

4 1336-B, for Baker. The date is December 20th, 1994. The

5 call is to Who's Who Worldwide and John Stevens.

6 (Tape is played.)

7 MR. WHITE: Next is the same exhibit, the

8 transcript is 1336-C, for Charley. And the dates and the

9 participants are the same.

10 (Tape is played.)

11 MR. WHITE: Next is Exhibit 1340. The transcript

12 is 1340-B, for Baker. The date is December 28th, 1994.

13 The call is to Who's Who Worldwide and Marilyn Pierce.

14 (Tape is played.)

15 MR. WHITE: Also on that exhibit we will pay

16 1340-A, for Abel, same date and participant.

17 (Tape is played.)

18 MR. WHITE: Next is Exhibit 1342. The transcript

19 is 1342-A, for Abel. The date is January 3rd, 1995. The

20 call is to Sterling Who's Who and Barbara McCabe.

21 (Tape is played.)

22 MR. WHITE: The next is 1354. The transcript is

23 1354-A, or Abel. The date is December 1s t, 1994. The
24 call is to Sterling Who's Who and Anthony Myers.
25 (Tape is played.)


1 MR. WHITE: Next on the same exhibit is 1354-B,

2 for Baker, the same date and participants.

3 (Tape is played.)

4 MR. WHITE: The next is 1356. The transcript is

5 1356-A, for Abel. The date is December 8th, 1994. The

6 call is to Sterling Who's Who and Mark Johnson.

7 (Tape is played.)

8 MR. WHITE: The next is 1363. The transcript is

9 1363-A, for Abel. The date is December 22nd, 1994. The

10 call is to Sterling Who's Who and Cathy Brady.

11 (Tape is played.)

12 MR. WHITE: Also on the same exhibit, is 1363-B,

13 for Baker, the same date and participants.

14 (Tape is played.)

15 MR. WHITE: Next is 1366. The tape -- transcript

16 is transcript 1366-A, the date is January 24th, 1995. The

17 call is to Who's Who Worldwide and Sue Mantell.

18 (Tape is played.)

19 MR. WHITE: On the same exhibit is 1366-B, for

20 Baker. It is the same date and participants.

21 (Tape is played.)

22 MR. WHITE: Next is 1369. The transcript is

23 1369-A, for Abel. The date is January 26th, 1995. The
24 call was to Sterling Who's Who and Michael Cain, C A I N.
25 (Tape is played.)


1 MR. WHITE: I will give it another try.

2 (Tape is played.)

3 MR. WHITE: I think it might have been

4 unintelligible with the speed varied.

5 We will try on that tape also 1369-B, for Baker.

6 (Tape is played.)

7 MR. WHITE: The next one is 1376. The transcript

8 is 1376-A, for Abel. The date is March 9th, 1995. The

9 call is to Sterling Who's Who and to Sam Christopher.

10 (Tape is played.)

11 MR. WHITE: Also on that date is 1376-B, for

12 Baker. Same date and same participants.

13 (Tape is played.)

14 THE COURT: I think we will take a recess at this

15 time.

16 Members of the jury we will recess until 1:45, 15

17 minutes later, because I have to discuss several things

18 with the lawyers. I don't want to keep you waiting

19 unnecessarily.

20 Please do not discuss the case among yourselves

21 or anyone else. Keep an open mind. Come to no

22 conclusions. We will recess until 1:45. Have a nice

23 lunch.
24 (Whereupon, at this time the jury left the
25 courtroom.)


1 THE COURT: Other than the tapes that counsel for

2 the defendants want to listen to, the other portions of

3 the tapes, the ones we discussed this mor ning, how many

4 other tapes do you have?

5 MR. WHITE: Maybe half a dozen, that's all.

6 THE COURT: In other words, within a half an hour

7 you will be through with them?

8 MR. WHITE: Yes. And I have a one-page or a

9 two-page stipulation to read.

10 THE COURT: That's it, other than the tapes we

11 discussed this morning?

12 MR. WHITE: Yes. I believe that's correct.

13 THE COURT: All right.

14 What I think I will do is -- what about the

15 defense? Are you ready to proceed today, or do you want

16 to go over until tomorrow?

17 MR. TRABULUS: We would certainly want to go over

18 until tomorrow -- when you say ready to proceed, you mean

19 with the Rule 29 motion?

20 THE COURT: That we will have this afternoon. I

21 may let the jury go until Wednesday morning.

22 MR. TRABULUS: That's probably a good idea.

23 THE COURT: See you at 1:30 . You will be here at
24 1:30.
25 (Luncheon Recess.)


1 A F T E R N O O N S E S S I O N.

2 THE COURT: Where are the rest of the defendants

3 and the lawyers?

4 Will somebody go out and take a look for them,

5 please.

6 Have you had an opportunity to hear the tapes?

7 MR. TRABULUS: Your Honor, we are nearly

8 finished, we are on the very last one. With regard to the

9 other ones, there is only one I would have an additional

10 comment and bring forth additional grounds for exclusion,

11 but we were listening to the very last one.

12 THE COURT: Why don't you finish the last one.

13 How long will that take?

14 MR. TRABULUS: Two minutes at most.

15 THE COURT: Go ahead.

16 (Pause in proceedings.)

17 MR. DUNN: Your Honor, just one minute, please.

18 (Pause in proceedings.)

19 THE COURT: Now that defense counsel have had an

20 opportunity to again go over the tapes, I assume they had

21 the opportunity to go over it during the months they had

22 the tapes, what, if anything, do you have to say?

23 MR. DUNN: I think it is the position of the
24 defense in the words that are leading up to what the
25 government was to introduce, it seems that Mr. Marsh's


1 leading on and creating an atmosphere to set people up

2 what to say. In discussion with a couple attorneys we

3 think it might be advisable for the Court to listen to a

4 couple of minutes that precedes this.

5 THE COURT: What part?

6 MR. TRABULUS: I think what we just heard. It is

7 on 1384-A, Your Honor. 1384-A is in two sections. You

8 see some stars there. It precede s the second section.

9 THE COURT: 1384-A is the last tape.

10 MR. TRABULUS: The last one, Your Honor. I think

11 Your Honor indicated that it would come up to the point

12 where Mr. Marsh says doesn't it.

13 You will hear Mr. Marsh starts to say that this

14 -- he's saying that I doubt very much the real Who's Who

15 Marquis does this. He says I was told this was the

16 biggest and I doubt that that was the oldest. I mean,

17 he's telling them that things that they may have been told

18 are false, and then after that you hear one of them well,

19 we're scamming somebody.

20 MR. NEVILLE: Your Honor, Mr. Marsh's voice is

21 the strongest of the voices because the mike is on him and

22 he has a very gruff way about it and he's leading this

23 conversation.
24 MR. WHITE: Since we are all giving our
25 commentary you will notice Mr. Robins was the first


1 talking about we're ripping people off.

2 MR. TRABULUS: After he's been told that we've

3 been lied to.

4 THE COURT: Okay.

5 MR. WHITE: I'm not sure how far back you want to

6 play it.

7 MR. TRABULUS: It was about two minutes ago.

8 MR. WHITE: It doesn't help me.

9 MR. TRABULUS: I thought you were looking at the

10 counter.

11 MR. WHITE: Well, let's play what immediately

12 precedes it and then we'll go back. Is that what you

13 want?

14 MR. TRABULUS: I would like to play like the two

15 or three minutes that preceded the second part of 1384-A,

16 the three minutes.

17 MR. WHITE: Like I said the machine doesn't go in

18 minutes.

19 MR. TRABULUS: Well, how many numbers are in a

20 minute? That should be standard.

21 MR. WHITE: No, that' s not standard.

22 MR. TRABULUS: The speed that it's set at should

23 also be standard.
24 MR. WHITE: That's also not the case.
25 THE COURT: Counsel, play it. Go back a period


1 of time and play it, will you.

2 MR. WHITE: I don't know how far back, Your

3 Honor.

4 THE COURT: They'll tell you if they want it back

5 further. Start it off.

6 MR. WHITE: Okay.

7 (Audiotape played.)

8 (Start and stop.)

9 THE COURT: Stop it.

10 Do you want it back more?

11 MR. TRABULUS: A little bit more.

12 MR. WHITE: A little bit more.

13 THE COURT: I don't know what the calibration is

14 on that machine but put it back for some period of time.

15 (Audiotape played.)

16 (Start and stop.)

17 THE COURT: Is that Mr. Marsh?

18 MR. WHITE: No, Yo ur Honor, that's Mr. Pace.

19 THE COURT: When Mr. Marsh appears, raise your

20 hands, will you.

21 MR. WHITE: So far all he has said was "yep."

22 But I'll raise my hand.

23 THE COURT: He wasn't very loud when he said
24 that.
25 (Audiotape played.)


1 (Start and stop.)

2 THE COURT: Is the next item the one you want to

3 play?

4 MR. WHITE: No, Your Honor. The last thing we

5 just heard is what we want to play.

6 MR. TRABULUS: The very last two lines.

7 THE COURT: I find nothing overly suggestive

8 about this conversation, nothing at all. As a matter of

9 fact, one of the other people said "not the original, not

10 the biggest," someone else said something like that. I

11 don't find that that is suggestive or overly enticing or

12 entrapping or sed ucing at all.

13 Anything else?

14 MR. TRABULUS: With regard to the first two lines

15 on 1342-A, there the situation is a little bit different.

16 It's the context. If you listen to what precedes that,

17 you'll hear this guy Pace is complaining when he's kind of

18 kept in the dark and he says he can't get a straight

19 answer. So he's not saying that he believes he's scamming

20 and bullshiting, the implication is that he doesn't know.

21 I mean, I leave that to other counsel to make a comment.

22 Read in isolation, that is misleading.

23 THE COURT: I disagree. I'll overrule your
24 objections. I'll let them play it as I originally said.
25 Anything else in the tapes?


1 MR. TRABULUS: With regard to 1382-A, they wait

2 for Tara to leave, wait for a supervisor to leave and I

3 believe it is Marsh that initiates a game where he

4 pretends to make a phone call to somebody else, gets to

5 say parts of the pitch and then they start extemporizing.

6 THE COURT: I overrule your objection. You

7 stated for the record repeatedly most of them your

8 objections. I'm overruling to the extent that I'm doing

9 that, I've redacted certain portions as I've previously

10 stated.

11 We're ready to go and bring in the jury.

12 MR. SCHOER: Judge, does the government have the

13 new transcripts? Might I look at them before they hand

14 them to the jury so they conform with Your Honor's

15 determination.

16 THE COURT: I don't know if they had an

17 opportunity to redact them.

18 MR. WHITE: Yes, we did.

19 THE COURT: Show them to Mr. Schoer.

20 MR. NEVILLE: Your Honor, how are we handling the

21 fact that Mr. Marsh is the undercover?

22 THE COURT: I'll tell them that.

23 (Jury enters.)
24 THE COURT: Good afternoon, members of the jury,
25 and I do mean afternoon. Have a seat.


1 Now that you've had a chance to have a large

2 sumptuous lunch, a banquet perhaps, I certainly

3 underestimated what we had to do and the lawyers in this

4 case have been very diligent. They are not responsible in

5 any way for any of the waiting, I am. So I want you to

6 know that.

7 All right. Let's proceed.

8 MR. WHITE: Your Honor, again we'll continue with

9 some tapes. The first one is 1390-D, rather 1390. The

10 transcript is 1390-D, for Dog.

11 The date is December 23, 1994, and it is a

12 conversation recorded by an informant at Who's Who

13 Worldwide.

14 (Audiotape played.)

15 (Start and stop.)

16 MR. WHITE: Next will be 1396. The transcript is

17 1396-A, for Able. The date is January 6, 1995.

18 It's a conversation recorded by an informant at

19 Who's Who Worldwide.

20 (Audiotape played.)

21 (Start and stop.)

22 MR. WHITE: Next is 1397. The transcript is

23 1397-A, for Able.
24 The date is January 11, 1995, and this was
25 recorded by an informant at Who's Who Worldwide.


1 (Audiotape played.)

2 (Start and stop.)

3 MR. LEE: At this pause I have an application as

4 to the name in the Exhibit 1397-A, it says Laura. That is

5 not Laura Weitz here on trial.

6 THE COURT: Is that correct, Mr. White?

7 MR. WHITE: I don't know who the Laura is.

8 THE COURT: Well, it says this is her first day.

9 MR. WHITE: That's what I mean. I'm assuming

10 that is not the defendant.

11 THE COURT: Well, it's not the defendant Laura

12 Weitz; is that correct?

13 MR. WHITE: I don't believe so, no.

14 THE COURT: Members of the jury, it's not the

15 defendant Laura Weitz.

16 (Audiotape played.)

17 (Start and stop.)

18 MR. WHITE: Next is 14-01. The date is February

19 9, 1995. I'm sorry, the transcript is 14-01-A, for Able.

20 Recorded by an informant at Who's Who Worldwide.

21 (Audiotape played.)

22 (Start and stop.)

23 MR. WHITE: I'm just fast forwarding to the next
24 part of the transcript.
25 (Start and stop.)


1 MR. WHITE: Next is 14-03. The transcript is

2 14-03-A, the second part. We played the first part of

3 14-03-A. We'll be picking up in the middle of page 2 in

4 that transcript.

5 The date is February 15, 1995, and recorded by an

6 informant at Who's Who Worldwide.

7 (Audiotape played.)

8 (Start and stop.)

9 MR. WHITE: Your Honor, the next two tapes that

10 we have are the ones that we have the transcripts for the

11 jury that wasn't previously in their books.

12 THE COURT: The ones we discussed earlier?

13 MR. WHITE: Yes.

14 THE COURT: Very well.

15 MR. NEVILLE: Your Honor, before we start the

16 tape, will Your Honor discuss this?

17 THE COURT: Yes.

18 Are you ready to go?

19 MR. WHITE: Yes.

20 THE COURT: What tape will you start with?

21 MR. WHITE: 1382.

22 THE COURT: Members of the jury, do you have

23 1382-A? That's the transcript, correct, Mr. White?
24 MR. WHITE: Yes.
25 THE COURT: Members of the jury, I instruct you

73 95

1 that on this tape there's a person named Ron Marsh. He is

2 a confidential informant that obtained employment with

3 Who's Who Worldwide Enterprises. Bear in mind he is a

4 confidential informant who is tape-recording this.

5 Also this evidence is only offered against the

6 defendant Who's Who Worldwide Enterprises, Inc., not

7 against any other defendant.

8 In addition, you'll see the three asterisks which

9 show that there's additional tape that was made that was

10 not set forth in this transcript. So it doesn't follow

11 consecutively. The first two entries are together and

12 then there's a space, a period of time, and then the last

13 entry.

14 You may proceed.

15 MR. NELSON: Your Honor, I also asked for an

16 instruction as it related to Mr. Osman and his recordings.

17 THE COURT: That he was not employed at the

18 time?

19 MR. NELSON: That's correct.

20 THE COURT: I also instruct you at the time that

21 these conversations were recorded, the defendant Oral

22 Frank Osman, also known as Frank Martin, was not employed

23 by the defendant Who's Who Worldwide Enterprises.
24 You may proceed.
25 MR. WHITE: We'll now play the first part of


1 1382-A.

2 (Audiotape played.)

3 (Start and stop.)

4 MR. WHITE: The next tape we'll play is 1383.

5 THE COURT: You'll not play the second part of

6 1382-A, for Able?

7 MR. WHITE: I thought Your Honor's instructions

8 were to play them separately. I'll go ahead, if that's

9 okay.

10 THE COURT: I instructed the jury that they would

11 be taken at a separate time, so I think you can play it

12 now.

13 MR. WHITE: Okay.

14 (A udiotape played.)

15 (Start and stop.)

16 MR. WHITE: This will be the second part of

17 1382-A.

18 THE COURT: Taken at a different time, members of

19 the jury.

20 (Start and stop.)

21 MR. WHITE: Now we'll go to 1383. The transcript

22 is 1383-A, as in Able.

23 THE COURT: I have 1383-B, for Baker. Is that
24 wrong?
25 MR. WHITE: There's a series of 1383's, Your


1 Honor. Do you want me to hand up the new set we've

2 prepared at lunchtime?

3 THE COURT: Well, we didn't discuss 1383-A, for

4 Able, correct?

5 MR. WHITE: That's correct, because if you look

6 at participants, it wasn't in issue.

7 THE COURT: Okay. Then you'll play that.

8 Go ahead.

9 Here again Ron Marsh is a confidential informant

10 who was employed and making the ta pe-recording.

11 MR. WHITE: Your Honor, do you have 1383-A or do

12 you need a copy of it?

13 THE COURT: I have it.

14 (Audiotape played.)

15 (Start and stop.)

16 THE COURT: What's happening, Mr. White?

17 MR. WHITE: We're just trying to find the right

18 space in the course of all the changes we've made.

19 (Pause in proceedings.)

20 MR. WHITE: Now we're ready to go on with 1383-A.

21 (Audiotape played.)

22 (Start and stop.)

23 MR. WHITE: Your Honor, the next one is one, if
24 the jury can remove its earphone, we have to forward it to
25 the right place in light of our discussion this morning.


1 THE COURT: Okay.

2 MR. NEVILLE: Your Honor, I'm sure that the

3 earphones are completely off, but sometimes you can hear

4 it from a distance.

5 THE COURT: I think everybody ought to take them

6 off because you can hear these things. I've excluded

7 testimony, rather this tape-recording.

8 MR. WHITE: Now we have it set.

9 THE COURT: Before you do that, I'm again

10 instructing the jury in this tape-recording Ron Marsh is a

11 confidential informant who obtained employment with Who's

12 Who Worldwide.

13 It's offered only against the corporation Who's

14 Who Worldwide Enterprises and the time that this was made

15 the defendant Osman, also known as Frank Martin, was not

16 an employee at Who's Who Worldwide.

17 You may proceed.

18 (Audiotape played.)

19 (Start and stop.)

20 MR. WHITE: Next is the same tape 1383. Now

21 we'll go to the transcript which is 1383-D, as in Dog.

22 THE COURT: You are not going to C as in

23 Charlie?
24 MR. WHITE: No, Your Honor.
25 THE COURT: Oka y.


1 Again, Ron Marsh is the confidential informant

2 and the defendant Osman, Frank Martin, was not employed at

3 the time. The evidence is only offered against the

4 corporation Who's Who Worldwide Enterprises.

5 MR. WHITE: I'm sorry, I wonder if the jury could

6 take their earphones off. The number is off on the

7 counter a little. I want to make sure we start at the

8 right place.

9 Okay. Now we've got it set.

10 THE COURT: This is 1383-D, for Dog.

11 MR. WHITE: Yes.

12 Your Honor, I think we better follow the same

13 procedure to make sure we start at the same place.

14 THE COURT: Where are you going now?

15 MR. WHITE: 1383-3, as in Echo.

16 Now we're set.

17 THE COURT: Again, Ron Marsh is a confidential

18 informant. The evidence is offered against Who's Who

19 Worldwide Enterprises and the defendant Osman, also known

20 as Frank Martin, was not employed at the time.

21 (Audiotape played.)

22 (Start and stop.)

23 MR. WHITE: Your Honor, the next one is 1384.
24 The transcript is 1384-A.
25 Once again, I think we better make sure it is


1 cued up to the right point.

2 (Audiotape played.)

3 (Start and stop.)

4 MR. NEVILLE: Your Honor, this again is Ron

5 Marsh.

6 THE COURT: Yes. This next tape-recording

7 involves Ron Marsh, the confidential informant.

8 Wait a minute. It involves Ron Marsh, the

9 confidential informant. The evidence is only offered

10 against the defendant Who's Who Worldwide Enterprises, and

11 the defendant Osman, also known as Frank Martin, was not

12 employed at the time.

13 You may proceed.

14 MR. WHITE: I still didn't cue it up exactly

15 here.

16 THE COURT: Oh, okay.

17 Also there are two segments on this transcript.

18 There are different times. In other words, you see the

19 three asterisks which indicate that there was a second

20 section which was recorded at a different time than the

21 first section, not consecutively.

22 MR. WHITE: Now, Your Honor, we'll play the first

23 excerpt on 1384-A.
24 (Audiotape played.)
25 (Start and stop.)


1 MR. WHITE: The next one we'll play is the second

2 entry on 1384-A, and again, we'll have to make sure it is

3 cued to the right part first.

4 MR. NEVILLE: Your Honor, may we approach on that

5 last tape?

6 THE COURT: No. You may play the tape first and

7 then you may approach.

8 MR. WHITE: Your Honor, maybe if Mr. Neville

9 wants to approach you should do this. I have a question

10 how to do this.

11 THE COURT: All right. Come up.

12 (Side bar.)

13 MR. NEVILLE: Your Honor, I could be mistaken,

14 but I'm referring to 1384-A, where the first attribution

15 to Richard Pace, he makes a statement. Immediately

16 following that I heard Ron Marsh's voice, something about

17 scamming and bullshit from Ron Marsh.

18 THE COURT: I heard a voice after that.

19 MR. WHITE: He repeated what he said.

20 THE COURT: That was not on the tape, on the

21 transcript.

22 I don't know what you want to do about that.

23 MR. WHITE: I think, Your Honor, it's apparent
24 that he repeated what was said.
25 THE COURT: If you want, I will have it run and

74 02

1 just play as to Pace, but I don't think it will help any

2 because they heard it. I don't know how prejudicial it

3 is. Frankly, I heard a voice and I couldn't make it out

4 myself.

5 MR. NEVILLE: I respectfully believe that it was

6 Ron Marsh.

7 THE COURT: What do you want me to do?

8 MR. NEVILLE: I would like the Court explain to

9 the jury that there was an attribution read immediately

10 preceding what Pace said and it was Ron Marsh the

11 informant.

12 MR. WHITE: That's fine.

13 MR. NEVILLE: Judge, you know, let it go.

14 MR. GEDULDIG: Judge, there was a tape played

15 from their packet we're just going through now with

16 Waldon and he talks in that tape about the costs of

17 mailing lists and that was a statement he makes that was

18 attributable to him and not the other defendants in the

19 case. I would like an instru ction.

20 THE COURT: Very well.

21 MR. DUNN: Your Honor, I know how Your Honor will

22 rule but I would like to object to that. I think the jury

23 knows what applies to who and I think it is just
24 highlighting Mr. Rubin in the case.
25 THE COURT: No, I'll give the request.


1 (End side bar.)

2 MR. WHITE: I still need a moment.

3 THE COURT: While you do that I will instruct the

4 jury that there was a tape-recording with the voice of

5 Steve Rubin. That evidence was offered against Steve

6 Rubin and not the other defendants, in addition to the

7 corporation Who's Who Worldwide Enterprises.

8 MR. WHITE: Okay. Now we're ready.

9 THE COURT: This is 1384-A, for Able.

10 MR. WHITE: Right, the second part of that one.

11 (Audiotape played.)

12 (Start and stop. )

13 MR. WHITE: Your Honor, that's it for the tapes.

14 THE COURT: That's the end. You've concluded all

15 the tape-recordings?

16 MR. WHITE: All the ones the government wishes to

17 play. I'm sure everyone is glad for that.

18 I have a stipulation I want to read. A

19 stipulation between the government and Mr. Trabulus.

20 It reads as follows: "It is hereby stipulated

21 and agreed by and between Ronald G. White, Assistant

22 United States Attorney for the Eastern District of New

23 York."
24 THE COURT: You have to go slow, Mr. White.
25 MR. WHITE: Sorry. I'll start again.


1 "It is hereby stipulated and agreed by and

2 between Ronald G. White, Assistant United States

3 Attorney --"

4 THE COURT: Before you go any further, a

5 stipulation is an agreement b etween the government in this

6 case and defendant Gordon, that the following facts are

7 true or agreed upon.

8 Okay.

9 MR. WHITE: Stipulation between myself and I'm

10 reading again "counsel for the defendant listed below,

11 that if called to testify at trial, document custodians of

12 NABANCO and American Express would testify that, one,

13 between approximately April 1992 and December 1994,

14 purchase was made by customers of Who's Who Worldwide by

15 Visa or Mastercard credit cards were credited by NABANCO,

16 the credit card clearing company, to Who's Who Worldwide's

17 bank account number 118-01619-5, at European American

18 Bank."

19 Paragraph two.

20 "Between approximately April 1993 and March

21 1994, purchases made by customers of Who's Who Worldwide

22 by American Express credit cards were credited by American

23 Express to Who's Who Wo rldwide's bank account number
24 2-021-62514-9 at National Westminster Bank."
25 It is dated today and it is signed by myself and


1 Mr. Trabulus on behalf of Mr. Gordon.

2 MR. SCHOER: Judge, may we approach with respect

3 to that stipulation?

4 THE COURT: Very well.

5 (Side bar.)

6 MR. SCHOER: Judge, I never saw that stipulation

7 before and I don't think any other counsel except

8 Mr. Trabulus saw it and what I'm fearful based on that

9 stipulation is that it implies that for a period of time

10 at least after March of 1994, that Who's Who Worldwide

11 didn't have authority to take credit cards and I think

12 that we have through cross-examination raised the issue

13 that their credit card authorization was not cancelled and

14 that stipulation seems to imply it was when it wasn't in

15 fact cancelled as far as I understand or know.

16 THE COURT: I didn't hear that in the

17 stipulation.

18 MR. SCHOER: I think the government could argue

19 based on the stipulation that the only proof is that the

20 credit cards were being used only during certain periods

21 of time which don't cover the whole time of the

22 indictment.

23 THE COURT: Why would the government do that?
24 MR. WHITE: Besides, some of our customers
25 charged things after that period.


1 THE COURT: Why would the government want to do

2 that?

3 MR. SCHOER: They might want to argue -- we're

4 going to argue there weren't sufficient chargebacks for

5 there to be a cancellation of the credit card. I think

6 that's in the record, the credit card authority. And I

7 d on't want the government to be able to say there was that

8 when it didn't happen based on that stipulation.

9 THE COURT: Is the government going to do

10 anything like that?

11 MR. WHITE: No. Your Honor the only reason we

12 discussed that, the only reason we put in the stipulation,

13 it relates to the money laundering accounts, those two

14 accounts I mentioned, customer's credits get credited

15 there and it goes out to the other companies, that's the

16 only reason.

17 MR. TRABULUS: Maybe Mr. Schoer's concern can be

18 alleviated by an instruction that no inference is to be

19 drawn from the stipulation concerning the application of

20 any credit card charges at any other period of time other

21 than the period covered by the stipulation, something

22 along those lines.

23 THE COURT: I don't understand this.
24 MR. SCHOER: I'm more than satisfied if Mr. White
25 made the presentation if we make the argument based upon


1 what I believe is in the record at this point, that if

2 there were excess chargebacks then credit card

3 authorizations would have been cancelled and that's

4 evidence that people were satisfied because there weren't

5 those chargebacks. That as long as he says he will not

6 get up on rebuttal and make an argument there is no

7 evidence.

8 THE COURT: So you want to show there were no

9 chargebacks.

10 MR. TRABULUS: There were chargebacks but not a

11 lot.

12 MR. SCHOER: I want to show and I think it's in

13 the record, I want to argue in my summation there wasn't

14 sufficient chargebacks for them to lose their

15 authorization and therefore that is evidence that people

16 were satisfied with the product.

17 THE COURT: I understand. Will you argue to the

18 contrary?

19 MR. WHITE: No, I'm really not clear what

20 Mr. Schoer is trying to say but it seems to me that

21 problem can be addressed by saying something like

22 Mr. Trabulus said, this just covers, the stipulation just

23 covers this particular period and they are not to draw any
24 other inference to it and only relates to the money
25 laundering count. I don't want to limit what I can


1 potentially say in rebuttal.

2 (End side bar.)

3 THE COURT: Members of the jury, this stipulation

4 you've just heard which was read by Mr. White relates only

5 to the money laundering count and only with respect to the

6 periods of time involved in this stipulation.

7 You may proceed, Mr. White.

8 MR. WHITE: May I have just one moment?


10 MR. WHITE: Your Honor, the government rests.

11 THE COURT: All right. Members of the jury, the

12 government has rested. I have to speak to the lawyers

13 about certain points of law which are not your

14 consideration. It's likely to take a long time to do that

15 so I'm not going to keep you here any longer today.

16 We're going to recess until 9:30 tomorrow

17 morning.

18 In the meantime, please continue not to discuss

19 this case either among yourselves or with anyone else.

20 Keep an open mind. Come to no conclusions until the

21 entire case has been concluded, the summations are over,

22 my instructions to you on the law have been given and

23 they'll be quite lengthy, and you're in that jury room
24 discussing the case for the first time between you
25 listening to each other.


1 We're going to recess until 9:30 tomorrow

2 morning.

3 Have a nice afternoon and evening. We'll see you

4 then.

5 (Jury exits.)

6 THE COURT: We'll take a ten-minute recess and

7 we'll hear the motions.

8 (Recess taken.)

9 THE COURT: All right. Motions at the end of the

10 government's case.

11 MR. JENKS: Judge, before we begin motions, the

12 Rule 29 motion, I'm going to act as the spokesperson, I've

13 nominated myself to be the spokesperson for all defense

14 counsel as far as the defense case will go.

15 THE COURT: Spokesperson in what regard?

16 MR. JENKS: I'm going to speak for counsel.

17 THE COURT: On the motion?

18 MR. JENKS: No, on this application.


20 MR. JENKS: Quite frankly, all the defense

21 counsel here were taken off guard with Mr. White's

22 statement late last week that he would conclude the

23 government's case at the end of this week. As a result,
24 to be quite honest with you, we're having difficulty
25 pulling together some of the witnesses and I know


1 Mr. Wallenstein is having some difficulty with his defense

2 case and Mr. Trabulus is having some difficulty with his.

3 What we've discussed at the break and what

4 counsel have put together, we want to make a joint

5 application and that is to take a day off either tomorrow

6 or Thursday. I realize the jury has been home, has been

7 sent home for tomorrow.

8 THE COURT: You should have let me know before,

9 but I guess you didn't know.

10 MR. JENKS: We didn't know, Your Honor. It just

11 came up at the break and frankly we're scrambling for

12 witnesses and tapes. We, frankly, thought the case would

13 go much longer.

14 What counsel proposed we either should take a day

15 off tomorrow, allow us to put the defense case in Thursday

16 and have a full day Thursday or bring us here tomorrow and

17 then we'll take Thursday off and we'll come back Monday

18 and we'll be able to put on the defense case and go into

19 summations and charge. It is just that tomorrow we'll be

20 dragging feet and that's the way it appears at this

21 point. We're simply not ready to go forward.

22 THE COURT: You can't get any of your witnesses

23 ready for tomorrow?
24 MR. JENKS: I know Mr. Nelson and Mr. Schoer and
25 I know Mr. Trabulus can play some tapes they want to


1 play. But I think maybe Mr. Schoer has an hour's worth of

2 tape s, Mr. Nelson has about a half-hour and I don't know

3 about Mr. Trabulus. That will not fill up the day.

4 MR. TRABULUS: There may be some overlap but mine

5 will be an hour or two. I have no witnesses available

6 tomorrow.

7 THE COURT: Since we let the jury go -- Anna,

8 would you get Mary Ellen, please. The only way we can

9 take off tomorrow is to communicate with the jurors

10 individually which is a big job or have them come in and

11 send them home.

12 MR. WALLENSTEIN: Suppose we take the morning to

13 fill the morning. If we break tomorrow until Monday

14 morning I think that will resolve all the issues. I

15 realize that is some dead time there but we, frankly,

16 could use it.

17 MR. TRABULUS: That would be fine with me. I

18 have to be here tomorrow because we have some documents

19 delivered pursuant to subpoenas.

20 THE COURT: So what yo u want is hold session

21 tomorrow, have all the tape-recordings you want to play

22 tomorrow morning and break and not come back Thursday but

23 come back Monday instead.
24 MR. WHITE: That's correct.
25 MR. TRABULUS: That's correct.


1 THE COURT: I have no objection to that. Do you,

2 Mr. White?

3 MR. WHITE: No, Your Honor. I have two comments,

4 though. First of all, not that it makes that much of a

5 difference now that we're in the situation. My

6 recollection is not last week but the week before last the

7 jurors asked when the trial was going to conclude and I

8 told you then that the government would rest sometime the

9 week of March 9th which is this week.

10 THE COURT: I recall. We didn't believe you

11 though.

12 MR. WHITE: I always keep my word, Your Ho nor.

13 THE COURT: I don't mean that you would

14 consciously tell an untruth, of course not, but we thought

15 you were being optimistic.

16 MR. WHITE: I don't have an objection to the

17 procedure that was described.

18 THE COURT: All right.

19 MR. WHITE: I would ask if we are going to take

20 such a long break if I can get maybe the names if not just

21 the witnesses on Monday but Tuesday as well because

22 otherwise I'm going to be scrambling.

23 THE COURT: I think that's fair.
24 MR. WHITE: Okay.
25 THE COURT: You give the names of the witnesses


1 tomorrow.

2 MR. TRABULUS: Yes, sure, the ones I'll be

3 calling.

4 THE COURT: How about the other defendants?

5 MR. NELSON: Yes, Your Honor.

6 MR. WALLENSTEIN: That's not a problem, Your

7 Honor.

8 THE COURT: Okay.

9 MR. WHITE: The other thing I would ask, Your

10 Honor, if we're going to send the jury home early

11 tomorrow, maybe tomorrow afternoon we can take up some of

12 the issues that could arise in the defense case so we are

13 not wasting time. In other words, issues about whether or

14 not the whole business of Marquis Who's Who and their

15 practices is something that can be relevant and be

16 admitted. Those sorts of issues.

17 THE COURT: Very well.

18 MR. TRABULUS: The only difficulty with the

19 Marquis Who's Who documents are being delivered tomorrow.

20 They were not here yesterday. They are being delivered

21 tomorrow afternoon pursuant to the agreement with

22 Mr. Bailey, so I don't know that we'll be speaking at that

23 point with a full basis for speaking.
24 THE COURT: We can take up whatever we can.
25 All right. Motions.


1 MR. SCHOER: Judge, I'm going to begin the Rule

2 29 motions on behalf of, I believe, all the defendants

3 with respect to Counts 2 through 56 which are the

4 substantive mail fraud counts. I want to speak to one

5 particular --

6 THE COURT: You are not going to cover

7 conspiracy?

8 MR. SCHOER: We'll do that later but we would

9 like to just address this issue because I think it is one

10 that Your Honor can rule on fairly easily.

11 THE COURT: All right. These are Counts 2

12 through --

13 MR. SCHOER: 56. Not all the counts, I'm just

14 going to speak to certain of those counts, Judge, and --

15 THE COURT: Just let me get a copy of the

16 indictment.

17 MR. SCHOER: One by one which I think the

18 government has not shown any evidence of maili ng.

19 THE COURT: Okay. You are going to proceed with

20 counts.

21 MR. SCHOER: 2 through 56, Judge.

22 THE COURT: The mail fraud substantive.

23 MR. SCHOER: Not all of them but I want to
24 concentrate on the third element of what the government
25 must establish with respect to a scheme to defraud and


1 mail fraud, and that is the use of the mails. It is clear

2 that that is an element of the crime and I submit to Your

3 Honor that with respect to Count 2 the lead card with

4 respect to Mr. Terrance Wharton that the government has

5 not introduced that lead card nor has there been any

6 testimony relating to that lead card and therefore there

7 is no evidence of a mailing with respect to that count.

8 THE COURT: Is that right, Mr. White?

9 MR. WHITE: Ms. Scott will handl e the argument.

10 MS. SCOTT: That is correct, Your Honor. That is

11 correct.

12 THE COURT: So Count 2 would be dismissed.

13 MS. SCOTT: Yes.

14 THE COURT: Your motion to dismiss Count 2 under

15 Rule 29 is granted. Dismissed.

16 MR. SCHOER: Count 6 is an invoice allegedly sent

17 to a Mr. William Sisson, who was not called as a witness,

18 while the invoice, I believe, the company's record of the

19 invoice was introduced as an exhibit. There's absolutely

20 no evidence that that invoice was ever placed in the mails

21 at all.

22 THE COURT: Did he testify?

23 MR. SCHOER: No, he did not testify, Mr. Sisson.
24 THE COURT: Is that any evidence that that
25 invoice was placed in the mail?


1 MS. SCOTT: Your Honor, we do have as general

2 evidence of the comp any's business practices, that is

3 Wendi Springer testified about the procedures that were

4 followed with respect to all of these documents. She

5 stated several times in the record and I have the page

6 cites here that invoices were sent out to discuss

7 customers through the mail once they were generated. On

8 that we would be relying on that to support this count.

9 In addition, Your Honor, we have several people

10 who did come in to court to testify that they did receive

11 their invoices through the mail. On top of that we have a

12 number of invoices, and I can read their numbers into the

13 record if you like, that show postmarks on their pressure

14 sensitive copies and they show postmarks on them. The

15 case law does permit inferences of mailings when it is

16 clear that a common practice was followed in case after

17 case. And I would submit that this -- that thi s -- that

18 the jury should be permitted to make an inference with

19 respect to Count 6.

20 THE COURT: I'm going to rely to some extent on a

21 recent case, one of my cases in the Second Circuit in

22 which mail fraud counts were reversed by the Second

23 Circuit. The case is United States v. LaBarbara. It was
24 decided -- I don't know when it was decided. Let's see
25 here. I think May 31, 1997. And this is what the Second


1 Circuit said about the mailing part.

2 Three of LaBarbara's mail fraud convictions turn

3 on the alleged mailing by the training program of three

4 children to Easton, Easton is another company.

5 LaBarbara's challenge to the sufficiency of the evidence

6 faces a heavy burden. Because we must view the light most

7 favorable to the government and ask only wh ether a

8 rational jury could find beyond a reasonable doubt that

9 LaBarbara caused the three mailings. Nevertheless, we

10 agree that the evidence of mailing on those counts was

11 legally insufficient.

12 There is no direct evidence that the training

13 program mailed the three checks to Easton.

14 However, use of the mails may be established by

15 circumstantial evidence and they cite three cases. But

16 the standard of proof is as with every element of a crime,

17 beyond a reasonable doubt.

18 For example, in United States v. Srulowitz, 785

19 F.2d 382, (2d Cir. 1986). A mail fraud conviction was

20 overturned for insufficient proof of mailing.

21 I was going to say I caught it from you,

22 Ms. Scott, but I didn't.

23 The reason I'm going through this is because it
24 is one of the times that the Second Circuit went in detail
25 to the kind of p roof you need.


1 In Srulowitz a mail fraud conviction was

2 overturned for insufficient proof of mailing where the

3 letter in question was found only in the files of someone

4 other than the addressee. That person speculated that he

5 might have gotten it from the addressee who in turn

6 speculated that if the letter had been in his files, it

7 would have arrived by mail. That was held no good.

8 However, there was no envelope, date stamp or

9 testimony from the addressee's secretary who normally

10 opened the mail. We held that the evidence was "entirely

11 too thin" to support a conviction for mail fraud.

12 Furthermore, inferences drawn from circumstantial evidence

13 such as routine practice, which is what we have here, have

14 been held insufficient in cases where there is evidence of

15 alternative methods of delivery.

16 In Baker, United States v. Baker, 50 F.2d 122

17 (2d Cir. 1931), it must have been written by learned hand

18 or something. In Baker, for example, there was testimony

19 that the letters involved might have been delivered by

20 hand. I guess in 1931 it was by stage coach, and the

21 Court held that in those circumstances the circumstantial

22 proof of mailing was insufficient to exclude a reasonable

23 doubt.
24 In other words, the cases hold where there's
25 evidence of a routine, routine practice as there is in


1 this case, but there's evidence of an alternative method

2 of delivery, there can be no proof sufficient to convict

3 on the mailing element and the Second Circuit went on.

4 "See United States v. Huber, 603 F.2d 387

5 (2d Cir. 1979.)"

6 In Huber there was testimony that the checks in

7 issue were typically made in the ordinary course of

8 business. There was also testimony that other checks

9 apparently of a different kind were picked up by hand.

10 Nevertheless, we held that the evidence of alternative

11 methods did not undermine as a matter of law "the use of

12 customary business practices as proof of mailing."

13 "Thus, evidence of an alternative method of

14 delivery must cast significant doubt on the government's

15 circumstantial evidence of mailing to render the later

16 legally insufficient."

17 This is an excellent case. Of course they

18 reversed me and of course I'm not very happy, but it just

19 so happens there were many, many counts that were not

20 reversed so that the same sentence was applied, I mean by

21 the Second Circuit. It didn't even come back to me. We

22 believe that the circumstantial evidence relied upon by

23 the government in the instant matter is legally
24 insufficient. The checks were found in the files of the
25 funds after being cashed by Easton.


1 The government can argue one can infer the

2 mailing of the checks both the records from the mail

3 records and other documents such as contracts, change

4 orders and invoices and from the presence of Easton's

5 address on some of those other documents. However, the

6 three checks were handwritten and did not have Easton's

7 address on their face. Moreover, the fact that

8 La Barbara's father was an officer of Easton, renders

9 hand-delivery a plausible method and further undermines

10 any inference of mailing.

11 Finally, there was evidence that some of the

12 other docu ments relied upon by the government were in fact

13 not mailed. For example, there was testimony that change

14 orders, change order involved in the construction of a

15 building, change orders were generated at the construction

16 site and were not mailed. As in Srulowitz, the evidence

17 of mailing is "entirely too thin to support a

18 conviction."

19 Easton's -- the defendant's father was an officer

20 of Easton. Easton did landscaping at the scene of this

21 construction of this training building for this union.

22 The checks very well could have been given by the son to

23 the father. There was no evidence that they were mailed
24 whatsoever and the alternative method diminished the proof
25 beyond a reasonable doubt to the point that it was


1 entirely too thin.

2 In this case we have a routine that was testified

3 to, I believe, by somebody -- was it this Wendi --

4 MS. SCOTT: Wendi Springer repeatedly.

5 THE COURT: -- That the invoices were mailed.

6 There is no alternative method. How can there be an

7 alternative method of delivering invoices?

8 MR. SCHOER: But there is no proof that these

9 invoices charged in that particular count was ever

10 delivered. I mean, that's the difference.

11 THE COURT: They don't have to prove they were

12 delivered.

13 MR. SCHOER: That they were at least in the mails

14 and there is no proof they went into the mails at all. It

15 could have sat on somebody's desk.

16 THE COURT: I gave you an anomaly case,

17 Mr. Schoer, one of the few in which a conviction of mail

18 fraud was reversed on the mailing element. Now, you are a

19 criminal defense lawyer, you know that's so, but you don't

2 0 have to say it.

21 Here's what the law is, generally speaking. And

22 the last case that I read on the issue is an excellent

23 case, I commend it to all of you. I'm sure that Ms. Scott
24 knows it cold now. It's United States v. Tocco, excellent
25 case. It was decided on January 16, 1998 by the Second


1 Circuit, and it involved, among other things, a mail fraud

2 conviction. It involved arson, murder, it involved all

3 kinds of things, witness tampering. And here's what the

4 Second Circuit said two months ago.

5 A mail fraud conviction under 18 United States

6 Code Section 1341 requires proof that there was, one, a

7 scheme to defraud; two, furthered by use of the mails;

8 three, for the purpose of obtaining money or property.

9 Citation omitted.

10 Ferranti contests only the second prong, the

11 mailing. To meet this prong, the government must show

12 that the defendant caused the mailing and that it was in

13 furtherance of a fraudulent scheme. We have construed

14 Section 1341's causation requirement liberally.

15 See, for example, United States v. Bortnovsky,

16 879 F.2d 30 (2d Cir. 1989).

17 In order to show that the defendant caused "the

18 mailing" it need only be shown that he acted "with

19 knowledge that the use of the mails will follow in the

20 ordinary course of business" or that "such use can

21 reasonably be foreseen, even though not actually

22 intended." Moreover, a mailing is in furtherance of the

23 fraudulent scheme when it is incidental to an essential
24 part of the scheme.
25 Well, that doesn't exactly answer the situation


1 here or the mailing part. I think the LaBarbara case

2 does, squarely does. Where is the alternative method of

3 delivering an invoice? How do people get invoices all

4 over the country? They came from every part --

5 MR. SCHOER: Judge, we don't know that they ever

6 got those invoices. That's the leap Your Honor is making.

7 THE COURT: You show me a case that the

8 government has to prove that they received the invoice.

9 MR. SCHOER: No, I don't think that's what the

10 government has to prove. The government has to prove that

11 the mails were used, that someone deposited this document

12 in the stream of mail.

13 THE COURT: What do you call circumstantial

14 evidence of that? Did they have a routine? Where was

15 this invoice? Where did you find this invoice?

16 MS. SCOTT: This particular invoice? It was

17 found in the company's records. It was the company's

18 copy. Wendi Springer testified that copies of the

19 invoices were always mailed out to the customers after

20 they were generated. Of course the company keeps it's own

21 copy.

22 THE COURT: Where did she testify to that?

23 MS. SCOTT: Several pages and I can refer you to
24 them.
25 THE COURT: What is that?


1 MS. SCOTT: 2523, 2524.

2 THE COURT: Just one minute.

3 MS. SCOTT: Okay.

4 THE COURT: 2523.

5 MS. SCOTT: It is discussed, Your Honor, between

6 2523 through 2525, and then there are several page cites

7 on top of that.

8 THE COURT: Just let me take a look.

9 (Perusing.)

10 All right. She says after she signed off on the

11 order form, she sent them to the data entry people.

12 This is on page 2523.

13 "Question: Now, wha t was the purpose of sending

14 them to data entry?

15 "Answer: They would put the information in the

16 database and at the end of the day we would run the

17 invoices and they would be mailed out.

18 "Question: The data entry people issued the

19 invoices; is that correct?

20 "Answer: They were printed out and then whoever

21 was available to would put the mail together."

22 The bottom of page 2524.

23 "Question: But once these invoices had been
24 generated by the company, what happened to the invoice?
25 "Answer: They were put in the envelope. They


1 were -- you are talking about the order form with this

2 copy? That's what you are asking?"

3 Well, where else do you say that shows?

4 MS. SCOTT: Okay. Page 3029, in the middle of

5 the page.

6 THE COURT : I see it.

7 "Question: Can you tell us what that is?

8 "Answer: It is an invoice that would be attached

9 to the original order form. It would be a white copy that

10 would be sent out through the mail to the customer."

11 MS. SCOTT: Now, the next reference is at 3074.

12 THE COURT: Also Springer, direct.

13 MS. SCOTT: This is direct.

14 THE COURT: Okay.

15 "Question: What would happen to those invoices

16 at that point?

17 "Answer: They were checked by accuracy to make

18 sure that the data entry, whoever was, you know,

19 processing the orders, didn't make a mistake.

20 "Question: And who checked these invoices for

21 accuracy?

22 "Answer: I usually did.

23 "Question: What happened to the invoices after
24 that?
25 "Answer: The ones with mistakes on them were



1 fixed by the person who made the, you know, spelling,

2 typographical errors. The rest were bundled up. They

3 were all bundled up eventually and put in the back for

4 filing.

5 "Question: Were they sent out?

6 "Answer: Yes.

7 "Question: Who were they sent to?

8 "Answer: They were sent to the customers."

9 MS. SCOTT: And finally, Your Honor, at page

10 3157, in cross-examination.

11 THE COURT: Okay.

12 "Question: And the invoices that were mailed

13 out, you reviewed those invoices, right?

14 "Answer: Yes.

15 "Question: And were those sent out by

16 administration?"

17 This is a question by you, Mr. Schoer.

18 MR. SCHOER: Yes, I see.

19 THE COURT: Okay.

20 "Answer: Yes.

21 "Question: So other people in the office, in

22 your office, were the people who actually mailed the

23 invoices to members; is that right?
24 "Answer: That is correct."
25 Well, not ideal, I would say. For example, I


1 could think of some questions. Was there a custom and

2 practice invariably followed in the office of Worldwide

3 Enterprises to always send out invoices? Absolutely yes.

4 That would have been even better, would it not?

5 MS. SCOTT: That would have been better.

6 THE COURT: I thought so.

7 MS. SCOTT: I submit there is plenty of evidence

8 that all the invoices were sent out. That was the

9 practice of the company. She stated it not in so many

10 words as you just said but the meaning is clear.

11 THE COURT: I think it is. I think there is

12 sufficient circumstantial evidence and based on LaBarbara

13 which was very picky. It's one of the few times that the

14 Second C ircuit has stopped and said there is not

15 sufficient proof of mailing and this is what they said

16 repeatedly in that decision because there were alternate

17 methods, it was unclear how it got there, there was a

18 father and a son. The guy was working on the job. They

19 didn't put that in the opinion but that's what happened,

20 so there was insufficient proof of mailing.

21 I'm going to deny your motion on that ground as

22 far as Count 6 is concerned.

23 MR. SCHOER: Judge, just for the record, we would
24 have the same application with respect to Count 8, Count
25 10, Count 12, Count 13, Count 28, Count 31, Count 37,


1 Count 38, Count 45, Count 51, Count 54, Count 55 and Count

2 56. All of those are invoices of people who did not

3 testify.

4 THE COURT: I see. Okay. You lef t out people

5 like Rita Reiger and so forth.

6 MR. SCHOER: She testified. I'm not making an

7 application. She said she received a document.

8 THE COURT: What about those, are they covered

9 under the same umbrella?

10 MS. SCOTT: Yes.

11 THE COURT: Denied.

12 MR. SCHOER: Judge, the next group relates to the

13 solicitation letter with respect to people who did not

14 testify and that would be Count 19, Count 22, Count 29,

15 Count 49, those counts.

16 THE COURT: What about the solicitation letter?

17 MR. WHITE: Your Honor, with respect to the

18 solicitation letters --

19 THE COURT: On people that didn't testify,

20 right?

21 MR. SCHOER: Yes.

22 MR. WHITE: On people that did not testify. The

23 testimony, and I'll have to find the precise pages, the
24 testimony from Ms. Benjamin regarding the mailing of them
25 was that t hey were sent out by bulk mailing firms engaged


1 by Who's Who Worldwide and Sterling Who's Who. That's how

2 those letters were sent by them through the mail. And if

3 you remember I think she identified the post offices that

4 those mailing houses used to send them out.

5 THE COURT: Did anybody from the mailing company

6 testify?


8 MR. WHITE: No.

9 THE COURT: Where is the evidence that -- tell

10 me. Show me exactly where it is. That is even more

11 attenuated than the company themselves sending out the

12 invoices. Here they are relying on another company. This

13 is one more step away from evidence, direct evidence.

14 That's circumstantial, circumstantial, double

15 circumstantial evidence.

16 MR. WHITE: Well, maybe we can move on. I don't

1 7 want to hold up with the page cites. I'll have to find

18 them.

19 THE COURT: All right. I have a problem with

20 that.

21 MR. WHITE: I mean, I think Ms. Benjamin

22 testified that Who's Who engaged these firms precisely for

23 the purpose of mailing it out.
24 THE COURT: I know, but no one from that mailing
25 firm testified. Who knows.


1 MR. WHITE: I'll dig out the page references on

2 that one.

3 THE COURT: Is that evidence proof beyond a

4 reasonable doubt because that he hired a company? Who

5 knows what that company's practices are?

6 MR. WHITE: Well --

7 THE COURT: Maybe they have bad procedures in

8 that company. I don't know about that company.

9 MR. WHITE: Well, I think in addition to that,

10 you have the evidence, for example, from all the c ustomers

11 who did testify that they received solicitation letters in

12 the mail. I think the combination of the two suggests

13 that there is not some alternative means by which these

14 customers were sending these letters out. And I think

15 there's also -- and also Ms. Springer said with respect to

16 the lead cards which we know were included with the

17 letters, this is at page 2507. She says "it was sent --"

18 "Question: How did each customer obtain each of

19 those lead cards?

20 "Answer: It was sent with a letter, a nomination

21 letter, and this card was included in the information that

22 was sent to or I could say solicitation mail that was sent

23 to them."
24 THE COURT: Except no one testified from the
25 company that they had a practice of making sure that each


1 one of these lead cards was in a solicitation letter. I

2 don't know what practices they had.

3 MR. WHITE: Well, let me try to find more

4 precisely what Ms. Benjamin's testimony was and I'll be

5 able to cite that to you otherwise we'll be wasting time.

6 THE COURT: What else, Mr. Schoer?

7 MR. SCHOER: Judge, I would just say in addition

8 with respect to those counts, particularly Count 49,

9 there's no testimony -- well, I believe there is no

10 testimony with respect to Sterling Who's Who, the

11 solicitation letter and how those were sent. I believe --

12 I'm not sure but I believe Ms. Springer's testimony

13 relates -- I mean, Ms. Benjamin's testimony related to

14 Who's Who Worldwide.

15 THE COURT: So 49 is a Jodie Welch.

16 MR. SCHOER: That's an additional argument that

17 relates to Sterling.

18 THE COURT: That relates to Sterling.

19 MR. SCHOER: Yes.

20 THE COURT: So why does it say Sterling and Who's

21 Who?

22 MR. SCHOER: It says Sterling Who's Who as

23 opposed to the other company.
24 THE COURT: So you are not moving with respect to
25 the other count, 50, because she testifies.


1 MR. SCHOER: Absolutely.

2 THE COURT: What about that? Is there any

3 evidence that Sterling had a similar practice?

4 MR. WHITE: When we find it, Ms. Benjamin was

5 responsible, she testified, for the mailings while she was

6 there of both Who's Who and Sterling.

7 THE COURT: When was she there?

8 MR. WHITE: While she was at Who's Who

9 Worldwide? She has testified, I think she came -- I'll

10 have to check precisely, late '92, and she was there until

11 the arrests in March of '95.

12 THE COURT: Well , okay. You better show me it.

13 MR. SCHOER: The last group of -- relating to

14 this issue are Counts 39, 40, 47, which are checks of

15 people who did not testify at trial.

16 THE COURT: People who sent in checks.

17 MR. SCHOER: The government hasn't indicated how

18 those checks got to Who's Who Worldwide.

19 THE COURT: Are those checks in evidence?

20 MR. SCHOER: Yes, I believe the checks are in

21 evidence based on that commercial paper ruling Your Honor

22 made the other day, two days ago.

23 THE COURT: Well, what evidence is there that the
24 checks came through the mail?
25 MS. SCOTT: Your Honor, we did not have any


1 testimony concerning how the checks were transported to

2 the company. All we have is that all of these checks

3 except I believe Count 40 are from out of town. I mean,

4 the people had to get them somehow, get them to the

5 company in a way that crossed, you know, great

6 territories.

7 THE COURT: Well, Mr. Schoer has raised 39, 40,

8 and 47.

9 MR. SCHOER: Right. The other check issue which

10 was Count 17, the witness testified. So I believe those

11 were the only checks.

12 THE COURT: All right. Ms. Scott, New Rochelle,

13 New York, and Hicksville, New York, are not too far away.

14 I don't know where Allison Park, Pennsylvania is, but

15 there you have no evidence of a mailing, none, except that

16 the check was in the possession of the company. That's

17 it.

18 All right. Anything else on that?

19 MS. SCOTT: We don't have anything, Your Honor.

20 THE COURT: I'm going to grant the motion.

21 Dismissed. Counts 39, 40 and 47.

22 MS. SCOTT: You are dismissing 39 even though the

23 man is in Pennsylvania, Your Honor?
24 THE COURT: Yes. The government has failed to
25 prove beyond a reasonable doubt or so a jury could find


1 that that check was mailed. I don't know how the check

2 got there. The guy might have come to New York to watch a

3 show or something. I don't know. People do that from

4 time to time.

5 What else?

6 MR. SCHOER: On that issue, I believe, that

7 that's all we have to say at this point on the mailing

8 issue.

9 THE COURT: Okay.

10 What is the next issue?

11 MR. SCHOER: I think someone else will do that.

12 MR. NELSON: Your Honor, I would like to be heard

13 as it relates to the defendant Oral Frank Osman concerning

14 substantive mail fraud counts, Counts 6 through 52 of the

15 indictment and I would ask that those co unts be dismissed

16 as they relate to Mr. Osman for the following reasons.

17 THE COURT: Just one minute, will you. Just one

18 minute.

19 Now, what is that?

20 MR. NELSON: Your Honor, these would be counts,

21 starting with Count 6 which the date is December 17, 1992,

22 reflects an invoice from Who's Who Worldwide to William

23 Sisson. And it follows through chronologically to Count
24 52, the date of Count 52 is November 3, 1994, which is a
25 solicitation letter sent from Sterling Who's Who to Jack


1 Heinbaugh.

2 The basis of my application, Your Honor, is that

3 the uncontroverted testimony presented during the course

4 of the trial and that testimony would include the

5 transcript introduced by the government, Government's

6 Exhibit 1379 which was the interview of M r. Osman by

7 Steven West in the hotel room in 1993, January of 1993, as

8 well as the testimony of Wendi Springer and Alan Saffer,

9 clearly indicates that he was employed at Who's Who

10 Worldwide from November 1991 until mid-November of 1992.

11 He subsequently returned to the employ of Who's Who

12 Worldwide in mid or late November 1994.

13 All of the counts, those being Counts 6 through

14 52 relate to periods of time that would encompass the

15 period for which Mr. Martin, Mr. Osman, was not employed

16 at Who's Who Worldwide.

17 I would submit that as it relates to those

18 substantive counts it would be impossible for him to cause

19 the mailings to occur or to aid and abet in the mailings

20 to occur.

21 THE COURT: What about that?

22 MR. WHITE: Your Honor, I think the Tocco case

23 that you described before says he doesn't have to cause
24 it. He just has to know it is foreseeable in the
25 operation of the scheme.


1 THE COURT: But he wasn't an employee there.

2 MR. WHITE: I understand that. He was employed

3 there before and after. I think, on this one I think we

4 have to confess, I have to do some research. I think that

5 a mail fraud scheme is akin to a conspiracy in the sense

6 that if you joined it you have to do more than just stop

7 working there to withdraw from it, so that he would

8 continue to be liable for the intervening time between

9 when he's there and when he comes back.

10 THE COURT: Well, I would like to see some law on

11 that.

12 MR. WHITE: That's what I mean.

13 THE COURT: I tell you what, I'm going to reserve

14 decision for the time being until tomorrow after our

15 session.

16 MR. NELSON: Yes, Your Honor. It would be my

17 position there is certainly a difference between

18 substantive law where the government is charging that he

19 aided and abetted and the conspiracy. I'm not asking for

20 the dismissal of the first count of the indictment on that

21 basis because the argument of course could be that he

22 adopted the position of the company. We'll subsequently

23 address Count 1 of the indictment which is a separate
24 issue.
25 But as it relates to the substantive mail fraud


1 counts, I can't see how an individual can be charged with

2 aiding and abetting in an act he wasn't present for. It

3 would be the functional equivalent if there were acts of

4 numerous different robberies committed by a gang, joined

5 the gang at a later point in time and agreed to share in

6 the proceeds at some later point in time of some of the

7 ill-gotten gains of that robbery. Certainly he would be

8 responsible for the conspiracy, but as to the substantive

9 counts at best he could potentially be an accessory after

10 the fact which is not something that the government

11 charged with him here.

12 THE COURT: We'll have to take a look at the

13 law. Do you have any cases on that?

14 MR. NELSON: I do not, Your Honor.

15 THE COURT: Okay.

16 MR. DUNN: Your Honor, in a similar vein for

17 Mr. Rubin who there is evidence that the earliest that he

18 began work at Who's Who Worldwide was March 1st of 1994,

19 and that is the date that comes out in his so-called

20 statement to --

21 THE COURT: I missed you there. When did he

22 work?

23 MR. DUNN: Sometime in March of 1994 he commenced
24 work. In his statement, allege d statement it is March
25 1st.


1 Wendi Springer testified that she believed a year

2 before the arrest which would take it to March 30th of

3 '94, his statement says March 1st, Saffer testified March

4 of '94, and there is a customer that testified which is

5 count, I think, 43. Just give me a second. 43, Fred

6 Simmon which is dated March 14th of 1994. And on the

7 invoice there the account executive or the account person

8 is Mr. Rubin.

9 So clearly on March 14th he was working. But the

10 count that precedes that, the count that precedes that is

11 the Sterling count and all the other counts clearly

12 predate March of '94.

13 So my application in the first instance

14 concerning Mr. Rubin is to dismiss Counts 2 through 41, of

15 course, saving the ones that have alrea dy been dismissed.

16 Also addressing --

17 THE COURT: Just one minute now.

18 MR. DUNN: I'm sorry.

19 THE COURT: So that would be 3 through 41; is

20 that correct?

21 MR. DUNN: That's correct, Your Honor.

22 Also, according to the testimony of Agent Jordan,

23 Mr. Rubin was not employed at Worldwide at the date of his
24 arrest. The government has not made any showing when
25 during the month of March of 1995 that Mr. Rubin left


1 Who's Who Worldwide.

2 Counts 55 and 56. 55 is dated March 17th of 1995

3 and Count 56 is March 25th of 1995. Since there has been

4 no proof presented by the government to establish that

5 Mr. Rubin was employed on those dates, but we do know that

6 clearly he wasn't working at some point in March of '95, I

7 would also move to dismiss Counts 55 and 56.

8 THE COURT: Let's take it slowly now.

9 Your first motion is to dismiss Counts 3 through

10 41 because he was prior to being --

11 MR. DUNN: His employment.

12 THE COURT: To his employment, and those are the

13 same, which I'll reserve decision because we'll have to

14 look at the law.

15 MR. DUNN: Right. And I would also ask 55 and 56

16 be included in those, those counts.

17 THE COURT: Well, what is the evidence? What did

18 the government prove he worked until?

19 MR. DUNN: They haven't proved anything about how

20 long he worked. All they have established is that on the

21 date of his arrest he wasn't working at Who's Who

22 Worldwide, that he left employment based on a hearsay

23 statement from Liz Sautter and an alleged statement --
24 well, whatever, from information Agent Jordan had received
25 from Liz Sautter and apparen tly from Mr. Rubin.


1 THE COURT: Well, what do you say about that?

2 What does the proof show as to when he was working?

3 MR. WHITE: Your Honor, may I have one minute to

4 confer?


6 (Counsel confer.)

7 MR. WHITE: Your Honor, I think a quick perusal

8 here indicates that the evidence was that he worked at

9 least until December of 1994 because he's on tapes in

10 December of 1994. So I think at a minimum it goes through

11 December of '94.

12 THE COURT: Well, that would mean that Counts 54,

13 55 and 56 under the defendants' theory would go.

14 MR. WHITE: Under Mr. Dunn's theory, that's

15 right. And I'll also look to see if there was anything

16 else that puts him there later.

17 THE COURT: What about this Sterling Who's Who,

18 Count 5 2?

19 MR. DUNN: Your Honor, there are several

20 actually. On March 7th of 1994 --

21 THE COURT: Wait a minute.

22 MR. DUNN: Count 42 is also a Sterling Who's Who.

23 THE COURT: What about the Sterling Who's Who
24 counts?
25 MR. WHITE: I'm not sure what you mean, on what


1 theory?

2 THE COURT: They didn't work for Sterling Who's

3 Who.

4 MR. SCHOER: I think we'll make an application on

5 behalf of all the defendants that all Sterling counts

6 should be --

7 THE COURT: Let's wait with that. Let's get

8 through with Mr. Dunn.

9 MR. DUNN: I believe that is all I have now since

10 they will address the Sterling issue separately, Your

11 Honor.

12 MR. WHITE: So I should address the Sterling

13 separately?

14 THE COURT: What's the ne xt motion that the

15 defense wants to make?

16 MR. SCHOER: Perhaps I ought to raise that. We

17 have an application on behalf of all the defendants, other

18 than Mr. Gordon, I believe, I don't want to speak for

19 Mr. Trabulus, but other than Mr. Gordon, we would all, all

20 the other defendants would move to dismiss each of the

21 substantive counts that relate to mailings by Sterling

22 Who's Who as opposed to Who's Who Worldwide.

23 THE COURT: All the defendants except Gordon and
24 Sterling Who's Who?
25 MR. JENKS: And Sterling Who's Who. And even


1 Worldwide would join in that, Who's Who Worldwide.

2 MR. TRABULUS: Even Gordon will join in that,

3 because Your Honor may be anticipating my own argument

4 later.

5 THE COURT: One moment.

6 MR. SCHOER: Do you wa nt me to name you which

7 counts they are, Judge?


9 MR. SCHOER: Judge, just give me a second.

10 THE COURT: Yes.

11 MR. SCHOER: It's Count 42, Count 49, Count 50,

12 Count 52, Count 54.

13 THE COURT: All right. Let's hear from the

14 government on that. How can you -- these people were not

15 employed by Sterling. Let's not talk about Gordon for the

16 time being because I think he's in Sterling also, but what

17 about the other defendants?

18 MR. WHITE: Well, Sterling is another participant

19 in this scheme. In other words, Sterling is to Frank

20 Martin as Annette Haley is to Frank Martin, in other

21 words, another co-schemer in this. So even if they don't

22 work for Who's Who they are as responsible for those

23 counts as they are another person's count if they joined
24 the scheme, even though they didn't actually talk to the
25 person on the phone. And there is evidence that the


1 companies were run in sort of two offices but in sort of a

2 unitary fashion.

3 Ms. Springer said she performed the same

4 functions, processing the paperwork, invoices and whatnot

5 for both Sterling and Worldwide.

6 Ms. Benjamin said she was in charge for sending

7 out the solicitation letters for both Sterling and

8 Worldwide.

9 The evidence was that this CD ROM that

10 Mr. Trabulus was so fond of was both Sterling and

11 Worldwide combined, that they operated under the umbrella

12 of this Who's Who Executive Club, that members of both

13 Worldwide and Sterling became a member of that and that's

14 the entity that offered them the benefits. The pitch

15 sheets and the objection sheets that are in evidence from

16 Sterling indicate that there's a similarity, in other

17 words, when you compare them the basic pitch it's the

18 same, the sales presentation is the same, what they are

19 selling is the same. There is no dispute that Mr. Gordon

20 was the president and the person primarily in charge of

21 the operations of both, that he split his time between

22 both.

23 So I think there's a sufficient connection that
24 Sterling was participating in the same scheme as Worldwide
25 and the other defendants even if they worked for


1 Worldwide.

2 Now, they may challenge the sufficiency of

3 whether or not there was a scheme or whether or not they

4 joined in it, but I don't think based on the point they

5 are raising now that these counts should be dismissed.

6 MR. NELSON: Your Honor, if I may respond briefly

7 to the issue that the government has raised. It's sort of

8 tangential or interconnected to the argument I made

9 previously concerning the substantive counts and the

10 conspiracy. In essence one of the claims we are making

11 and certainly we'll be asking the Court for a charge on we

12 have multiple conspiracies here. The government has

13 chosen to charge 56 separate substantive counts of mail

14 fraud. And out of one side of the mouth they are saying

15 there are 56 substantive counts of mail fraud. On the

16 other they are saying there is really one ongoing scheme

17 which is one substantive count with two different

18 companies. Either we're dealing with a duplicitous

19 indictment here in the way it is drafted in Counts 2

20 through 56 or the government is mixing conspiracy and

21 substantive law which, quite frankly, it seems the law is

22 quite muddled as it relates to conspiracy and mail fraud

23 and what they're doing.
24 To argue that, people who at no time even
25 appeared at Sterling Who's Who, it should be included in


1 substantive counts as it relates to them is really

2 reaching rather afar, I would submit, certainly as it

3 relates to their attempt to prove an overarching

4 conspiracy. It is relevant and it is an issue for the

5 jury to decide. But as it relates to each substantive

6 count I would submit that the government chose to charge

7 56 separate counts, they could have charged one as an

8 ongoing count. They chose not to. Therefore, they have

9 the burden of proving each one separately and each element

10 separately and that's the basis of the Rule 29 as it

11 relates to that.

12 MR. TRABULUS: Your Honor, with regard to

13 Mr. Gordon, of course there is no issue that Mr. Gordon,

14 but that Mr. Gordon was in control of Sterling and thus

15 unlike any of the other defendants he has a connection to

16 Sterling. But under these substantive counts which

17 involve actions by other people at Sterling who sent

18 things and did things, his liability, under the

19 government's theory as I understand it, would be pursuant

20 to the conspiracy which they've allege.

21 Now, we'll be talking later on about whether or

22 not the government has made out any conspiracy at all.

23 But just leaving that aside, Your Honor, I think on the
24 evidence here there is no evidence that where you can find
25 a single conspiracy here embracing both Sterling and Who's


1 Who Worldwide. I think --

2 THE COURT: Are you talking about conspiracy or

3 mail fraud?

4 MR. TRABULUS: Well, Your Honor, it seems to me

5 that with regard to the mail fraud counts here, I'm

6 talking about conspiracy at this point.

7 THE COURT: Well, I'm not talking about

8 conspiracy and certainly there could be a conspiracy

9 between two corporations and individuals, it's done all

10 the time.

11 MR. TRABULUS: It could be.

12 THE COURT: I'm talking about a substantive mail

13 fraud. There has to be a scheme, artifice, or scheme to

14 defraud for the purpose of obtaining money or property.

15 Now, what defendant here that's not working for

16 Sterling obtained money or property or tried to obtain

17 money or property from a Sterling account? That's the

18 problem.

19 MR. WHITE: Your Honor, all they have to have

20 done is participated in a single scheme.

21 THE CO URT: How could they participate in

22 Sterling? Assuming they have some of the personnel that

23 were the same, assuming that the administration was
24 similar or the same which is what you say, with
25 Ms. Benjamin and Ms. Springer --


1 MR. WHITE: Right.

2 THE COURT: -- Sterling had their own sales

3 force, Who's Who had its own sales force. The salesmen

4 and the salespeople in Sterling were attempting to obtain,

5 under your theory, money under false pretenses. They

6 didn't give them what they represented, what they bought,

7 the material element that they wanted, that's the thrust

8 of your case. But that's the Sterling salespeople who did

9 that, not the Who's Who salespeople. You can't merge the

10 two together. It's two separate companies in two separate

11 offices with two separate sales forces. I could think

12 that even if they were in the same physical plant, that

13 there were two separate companies that you would have a

14 problem.

15 MR. WHITE: Your Honor, I think the fact that

16 they call or that they are called two separate companies

17 is sort of putting form over substance. For example, if

18 this was a scheme to defraud and Mr. Gordon had ten

19 different offices around the country and every day faxed

20 that day's pitch sheets to each of the offices and said

21 follow this fraudulent pitch sheet, the people in LA don't

22 know the people in New York and they don't care and they

23 never have been there but they are part of a common
24 scheme. So if mailings are made from the people in LA as
25 part of that scheme, these people don't have to be


1 involved in it. All they have to do is know that it is

2 reasonably foreseeable.

3 It seems to me that Sterling -- it seems to me

4 that the way it is charged, as I said before, Sterling is

5 another participant in this scheme generally, I mean, as a

6 corporate entity. And so just as I said before, just like

7 an individual salesman may not really care what the guy

8 next to him is doing, he also may not care what they are

9 doing at Sterling, but that doesn't mean that they are not

10 responsible for it. If it's part of one unitary scheme

11 which I think the evidence is clear that it is.

12 In other words, Mr. Gordon's operation just

13 happened to take place in two different offices and he

14 gave one a new corporate name. That in and of itself

15 doesn't mean that it's a separate scheme. It's the same

16 scheme.

17 THE COURT: How can it be the same sche me when

18 the salespeople for Sterling benefit from their alleged

19 misrepresentations and the salespeople from Who's Who

20 Worldwide don't benefit from Sterling's? It's a separate

21 company, separate employees. Your example of ten

22 officers, you can have ten officers of General Motors

23 Company and of course it will be the same scheme and the
24 same attempt to get money. That's what it is. We are
25 talking about an attempt to get money. How did the Who's


1 Who Worldwide salespeople attempt to get money from the

2 Sterling customers? It's as simple as that to me.

3 MR. WHITE: Your Honor, I understand what you're

4 saying now. I don't believe that we have to show that the

5 Who's Who Worldwide salespeople are trying to get money

6 from Sterling customers. If they are part of the sam e

7 scheme, okay, then the Who's Who try to get money from

8 Who's Who customers and the Sterling people try to get

9 money from the Sterling customers. If we sort of show it

10 is one unitary scheme --

11 THE COURT: But you have no defendants that work

12 for Sterling, except Mr. Gordon.

13 MR. WHITE: That's correct, but Sterling itself

14 is a defendant.

15 THE COURT: Sterling will remain a defendant.

16 But these salespeople didn't work for Sterling. They had

17 nothing fiscally to do with Sterling. It's as if two

18 separate corporations -- we know they had similar

19 administration and things like that, but that's not

20 unusual. How can they be convicted of a crime of

21 attempting to get money and property from Sterling

22 customers when they had nothing to do with Sterling,

23 didn't gain from it and couldn't gain from it? How could
24 there be criminal liability arising from that?
25 MR. WHITE: I mean, I don't want to repeat what I


1 said.

2 THE COURT: Show me a case.

3 MR. WHITE: I'm going to have to do that.

4 THE COURT: Yes, if you will not I will dismiss

5 it.

6 MR. WHITE: I think the analytical difference is

7 that they don't have to have dealt with Sterling customers

8 if irrespective of the fact that we're talking about two

9 corporations, if we've shown they are part of one scheme.

10 We know they are following the same pitch, they are

11 offering the same product, there was a substantial overlap

12 in the operations of the company.

13 So while I understand what Your Honor is saying,

14 I just don't think it is necessary to prove that they're

15 specifically dealing with Sterling customers.

1 6 THE COURT: Show me.

17 MR. WHITE: I will have to.

18 THE COURT: I agree with Mr. Nelson. You are

19 mixing up conspiracy and substantive mail fraud. In a

20 conspiracy it is another matter. It's an agreement by the

21 corporations and the individuals and everybody in the

22 shooting match. It doesn't matter which customers they're

23 trying to defraud allegedly, but in a mail fraud
24 substantive mail fraud, there's a scheme or artifice to
25 defraud by reason of false pretenses or representation to


1 deprive someone of money or property. These defendants

2 who worked for Who's Who didn't try to deprive any

3 Sterling customer of any money or property. It's as

4 simple as that with me.

5 Now, you say that doesn't matter if they don't

6 work for the company and have no financial i nterest in the

7 company and have no gain from the company. I don't see

8 that and you'll have to show me some cases or I'm going to

9 toss those counts.

10 MR. WHITE: I will do that. Let me just explain

11 what I think where we differ.

12 It's my understanding that the scheme, the scheme

13 that's alleged is all of these participants, these

14 defendants and Sterling participated in a scheme to obtain

15 that money and property from customers of both of them and

16 I -- it doesn't seem to me that you have to show that each

17 defendant dealt with each particular customer. If as part

18 of that scheme they all, they tried to obtain money and

19 property from customers of both companies.

20 THE COURT: Well, if you mean that an intended

21 loss is sufficient, it doesn't have to be an actual loss,

22 of course you're right. But here there could be no loss.

23 Th ere's no intended loss as a result of misrepresentations
24 to Sterling customers. Not by these defendants.
25 MR. WHITE: Okay. I will --


1 THE COURT: It doesn't make sense. It's not

2 rational to me, however, you might be able to show me that

3 you're right.

4 MR. WHITE: I will not waste any more time. I'll

5 do the research and talk about it tomorrow.

6 THE COURT: Okay.

7 MR. JENKS: Judge, I will make one argument with

8 respect to all the Sterling counts against Sterling Who's

9 Who which are Counts 42, 49, 50, 52 and 54. And the

10 argument that I make on behalf of the corporation is a

11 jurisdictional argument.

12 Sterling Who's Who was located at 750 Lexington

13 Avenue in New York City which is in the Southern District

14 of New York. The mailings that were mailed here, the

15 solicitation letters, the invoice which -- and even the

16 lead card, and there weren't in any of these counts, there

17 were solicitation letters and invoices were mailed in the

18 Southern District of New York, if they were mailed to any

19 place, to a location outside the Eastern District of New

20 York. So on those five substantive counts I make a

21 jurisdictional argument.

22 THE COURT: What is the nexus to the Eastern

23 District?
24 MR. WHITE: Mr. Jenks said 42 --
25 THE COURT: The same counts.


1 MR. JENKS: Same counts.

2 MR. WHITE: The answer on those --

3 THE COURT: Excuse me, 42, 49, 50, 52 and 54, as

4 I understand it those are the only Sterling counts, mail

5 fraud counts, correct?

6 MR. JENKS: Yes.

7 MR. WHITE: With respect to t he solicitation

8 letters, again, this is one of the items we're going to

9 look up tonight.

10 Ms. Benjamin testified that she was in charge of

11 the sending of a solicitation letter for both Who's Who

12 and Sterling and she said that those letters were sent out

13 by the particular mailing houses and I specifically asked

14 her about where those mailing houses were located and

15 where they mailed them from. And her testimony was that

16 they were either in Queens or Long Island.

17 MR. TRABULUS: There was one in Virginia, Your

18 Honor, there was one down south somewhere, and we don't

19 know where these particular letters came from.

20 THE COURT: If in fact Ms. Benjamin testified

21 that the Sterling solicitation letters or bundle or

22 package was sent to a mailing company in the Eastern

23 District of New York, that would be enough.
24 MR. JENKS: She didn't.
25 MR. SCHOER: She wasn't asked specifically.


1 MR. JENKS: I don't think there was any

2 specificity with respect to that, Your Honor.

3 MR. WHITE: Your Honor, I know, I'm anticipating

4 this issue about Sterling and where the mailings were sent

5 from. I specifically sent her what post offices they sent

6 them from.

7 THE COURT: Where? Where in the record is that?

8 MR. WHITE: That's what I said. That's

9 Ms. Benjamin's testimony about the mailing that I'll look

10 up.

11 THE COURT: All right. What's the next motion?

12 MR. TRABULUS: Your Honor, on behalf of

13 Mr. Gordon, I join in all the arguments submitted before

14 and also I want to state that we move for a judgment of

15 acquittal on each of the counts against him.

16 THE COURT: Are you talking abo ut the mail

17 frauds?

18 MR. TRABULUS: Well, Your Honor, I was going to

19 formally move on the record that I'm moving for a judgment

20 for acquittal on each count against him, to make sure I

21 don't miss any counts down the road, Your Honor.

22 THE COURT: Go ahead.

23 MR. TRABULUS: I'll break up my argument because
24 I have a fair amount of territory to cover including
25 counts that only Mr. Gordon is charged with. But I'd like


1 to address the -- begin addressing, I think other counsel

2 may have comments too, the conspiracy aspect under the

3 mail fraud and that would be Count 1.

4 Your Honor, I would like to go through some of

5 the allegations in the indictment and point out certain

6 ones that have not been supported by the evidence.

7 THE COURT: One minute now.

8 MR. TRABULUS: Actually, before doing that,

9 firstly, I think the government has failed to establish a

10 conspiracy as such. They have not sought the use of

11 co-conspirators' statements. They have not asked that

12 Your Honor make a finding which is required in applying

13 Bourgaily. I think that, and here I'm speaking on behalf

14 of Mr. Gordon, I think you have to separate out the things

15 which may properly be attributable to Mr. Gordon in terms

16 of the pitch sheets and things that individual

17 salespeople, most of whom are not on trial here, may have

18 added in. I mean, we've heard, for example, tremendous

19 variation. We had the pitch sheets that would indicate

20 that the things, the directories were not in libraries and

21 yet we heard a salesperson who is not on trial here say

22 that they were found in most libraries. And I was going

23 to comment with regard to some of the substantive counts,
24 Your Honor. And some of the Sterling counts, for example,
25 that we had statements there that were made by salespeople


1 that were certainly not -- could not be attributed to

2 Mr. Gordon in any way and were really contrary to his

3 instructions.

4 THE COURT: Before you continue, I have a

5 logistical problem that we ought to discuss and that is

6 it's obvious that we'll never get through the discussion

7 on the law with regard to the motions this afternoon. As

8 a matter of fact, Counsel will have to do some looking.

9 Now, there is a problem in that I should conclude

10 this discussion before the defendants start their case.

11 Now, if the defendants agree, since there will only be

12 tape-recordings tomorrow to put in their tape-recordi ngs

13 since we have the jury coming in, as far as thinking about

14 the jury, if we can put the tapes in and then with the

15 consent, express consent on the record of all the

16 defendants to continue this discussion on the Rule 29

17 motion at the end of the Government's case, to move it

18 until tomorrow afternoon or even the next day, if it is

19 necessary, fine. Otherwise, we'll have a problem with the

20 jury coming in tomorrow morning.

21 Do you want to think about that and talk to me

22 about that?

23 MR. SCHOER: Quickly, I think we all consent.
25 MR. SCHOER: We would consent to proceed to put


1 the tapes in.

2 THE COURT: So you are agreeing there will be no

3 error committed by me in continuing the discussion of Rule

4 29 motion at the end of the government's case tomorrow

5 afternoon, after you start the defendants' case.

6 MR. SCHOER: Yes, Judge.

7 THE COURT: Is that right?

8 MR. WALLENSTEIN: A very nice compromise on your

9 part. We all consent.

10 THE COURT: Mr. Trabulus, does your client know

11 what we're talking about?

12 MR. TRABULUS: Frankly, Your Honor, I don't think

13 he does.

14 THE COURT: Each lawyer please tell your clients

15 now what I'm talking about.

16 (Counsel confer.)

17 THE COURT: I overheard Mr. Trabulus. It's a

18 very good thing to say. It's limited as to the state of

19 the record as of the government resting, not the

20 defendants' case. And there will not be much of it

21 tomorrow morning. It's limited to the state of the record

22 as of now. It's like fixed for eternity.

23 MR. NEVILLE: Your Honor, speaking for Scott
24 Michaelso n we consent.
25 THE COURT: And he understands?



2 MR. DUNN: And I've advised Mr. Rubin and he

3 understands, Your Honor, and he has no objection.

4 THE COURT: He consents.

5 MR. DUNN: He consents.

6 MR. NELSON: I advised Mr. Osman and he

7 consents. Likewise pursuant to 29(a), the last sentence

8 it states specifically "if the defendant's motion for a

9 judgment of acquittal at the close of the evidence offered

10 by the government is not granted, the defendant may offer

11 evidence without having reserved the right." And

12 accordingly there wouldn't be a waiver under the statute.

13 THE COURT: Well, I'm old-fashioned. I know the

14 new law.

15 MR. NELSON: I wanted to note that for the

16 record.

17 THE COURT: We couldn't reserve prev iously but we

18 can now.

19 MR. NELSON: We consent.

20 MR. SCHOER: On behalf of Garboski, we consent.

21 MR. TRABULUS: We consent on behalf of the

22 corporation.

23 MR. LEE: And my client consents.
24 MR. TRABULUS: And Mr. Gordon consents.
25 MR. GEDULDIG: Ms. Haley consents.


1 MR. WALLENSTEIN: And Mr. Reffsin consents and he

2 understands as well.

3 THE COURT: Sorry to interrupt you, Mr. Trabulus,

4 but that was a practical matter that came to me, see.

5 MR. TRABULUS: Your Honor, I mean, one thought I

6 have. I don't know if Your Honor would like me to do

7 that, since the discussion on the conspiracy will be

8 tomorrow, I think and other people will have things to say

9 and it I might turn to something, for example, such as the

10 perjury count.

11 THE COURT: You can do what you want. We'll work

12 until 5 o'clock and we should work until tomorrow

13 afternoon.

14 MR. TRABULUS: I'll turn to the perjury counts,

15 Your Honor, because that's a very distinct part of the

16 case.

17 THE COURT: Just one minute now.

18 What count is that?

19 MR. TRABULUS: Your Honor, it's either 58 or 59.

20 MR. WALLENSTEIN: It's 57.

21 MR. TRABULUS: 57, I was close.

22 THE COURT: Let's hear about that.

23 MR. TRABULUS: Your Honor, they haven't
24 established falsity, they haven't established materiality
25 and they haven't established knowledge on the part of


1 Mr. Gordon. I'll go through it.

2 Firstly, there is no evidence that Mr. Gordon

3 knew -- I think the evidence is clear that it came from

4 Debbie Benjamin and I think there might have been other

5 salespeople who indicated that they had heard that this

6 was something that which had genuinely been planned but

7 nobody from Who's Who Worldwide signed up for it.

8 THE COURT: So that the record is clear, we are

9 now talking about Count 57 which alleges that on or about

10 February 17, 1994 and February 22, 1994, defendant Gordon

11 took an oath and testified untruthfully as to false

12 material declarations in the Reed trial with regard to

13 testimony as to the seminar in Hong Kong and Vietnam,

14 correct?

15 MR. TRABULUS: Right, Your Honor.

16 THE COURT: I'm just wondering whether we ought

17 to do -- whether we ought to use the time to discuss the

18 conspiracy instead where everybody else is involved.

19 What is the thought of the other lawyers? Do you

20 want to go through this first or do you want to deal with

21 the conspiracy?

22 MR. SCHOER: Judge, whichever Your Honor wishes.

23 THE COURT: I mean --
24 MR. TRABULUS: If other lawyers want to discuss
25 the conspiracy I would ask them to do it because my


1 thoughts are more concentrated at the moment on this.

2 THE COURT: Let's go with this. You started it

3 now.

4 So you say there is no proof of falsity.

5 MR. TRABULUS: No proof of falsity, no proof of

6 materiality and no proof of knowledge on the part of

7 Mr. Gordon.

8 The evidence is clear, and I mean the evidence is

9 uncontradicted coming out of the government's witnesses

10 that this seminar was planned and that indeed it was set

11 up, that it was arranged through an outside agent by the

12 name of Mr. Emstrom (ph), that it was arranged as a

13 piggyback, as a conference and seminar that was being done

14 by the American Bar Association. And the American Bar

15 Association did go. The seminar -- there's nothing to

16 indicate that as a single Who's Who Worldwide member, had

17 they signed up, could have gone.

18 Now, let's look at the testimony. I'm on page 19

19 of the indictment, paragraph 29.

20 "Question: When did you have your first Who's

21 Who Worldwide seminar?

22 "Answer: December. I know the plane left the

23 conference about December 28th to Vietnam and Hong Kong."
24 Then it goes on to say in 1993, in 1993, right?
25 THE COURT: Well, instead of you telling me that


1 it is not false, where does the government say it is

2 false? What did he say that was false? I'm talking about

3 Count 57. Tell me specifically.

4 MR. WHITE: Well, the part that Mr. Trabulus just

5 read --

6 THE COURT: What part?

7 MR. WHITE: He was reading from page 19 of the

8 indictment.

9 THE COURT: You mean "I know the plane left the

10 conference"?

11 MR. WHITE: No, I mean the following. I'll read

12 it.

13 "Question: When did you have your first Who's

14 Who Worldwide seminar?

15 "Answer: December."

16 And then he reads the part Your Honor just read.

17 THE COURT: Wait a minute. I'm lost here.

18 I see.

19 MR. WHITE: I think it is conceded that the

20 seminar did not take place.

21 THE COURT: The seminar took place but they

22 didn't participate in it.

23 MR. WHITE: No, Ms. Benjamin was clear -- I
24 should say this. Her testimony was such that the jury
25 could conclude that there was not a Who's Who Worldwide


1 seminar. She was very clear that although they were to go

2 together, like fly on the same plane, that the seminars

3 were to be different between the lawyers and Who's Who

4 Worldwide. The fact that someone was going to go there

5 and the lawyers had a seminar is quite different than

6 Who's Who Worldwide actually had a seminar there. They

7 weren't going to attend the same seminar. She said they

8 were going to prepare, if enough people signed up, a

9 separate thing, activities there for the Who's Who

10 members. The fact that they were going to fly on the same

11 plane is different.

12 For example, when the lawyers were in Vietnam

13 they weren't saying that was the Who's Who Worldwide

14 seminar, it was a momentary thing that maybe the travel

15 operator would have put these two groups together so they

16 could fly over on the plane and get a lower rate on their

17 hotel. It doesn't mean what took place there was a Who's

18 Who Worldwide seminar. I bet nobody there even knew who

19 Who's Who Worldwide was.

20 MR. TRABULUS: I think, Your Honor, the testimony

21 was I think she did indicate on direct and again I have to

22 look at the exact words, the groups were going to keep

23 separate if there were enough. But on cross she knew if a
24 single Who's Who Worldwide person had gone, signed up,
25 that person would have allowed to go and I don't think you


1 would have had a separate seminar with one person.

2 THE COURT: Let's look at the elements of

3 perjury. "The defendant gave testimony under oath before

4 a federal court." That's conceded.

5 MR. TRABULUS: Right.

6 THE COURT: "The defendant made false material

7 statements as detailed in the indictment, and the

8 defendant knew that the statements were false when he gave

9 the testimony."

10 Now, let's look at what's false. So far

11 Mr. White has said the first question and answer are

12 false.

13 "Question: When did you have your first Who's

14 Who Worldwide seminar?

15 "Answer: December -- I know the plane left the

16 conference about December 28th to Vietnam and Hong Kong."

17 Now, that's somewhat an ambiguous answer. "When

18 did you have your first --" I don't know what that means.

19 Does it mean that you actually held a seminar? There is

20 no question that they tried to have a seminar and the

21 testimony is clear that they weren't able to get people to

22 go to the seminar. They tried to have a seminar; is that

23 correct, Mr. White?
24 MR. WHITE: That I agree with.

2 5 THE COURT: Okay.


1 "When did you have your first Who's Who

2 Worldwide seminar?" And the answer "December. I know the

3 plane left the conference about December 28th to Vietnam

4 and Hong Kong."

5 Well, I think that's true, the plane did leave.

6 MR. WHITE: I don't think it is, Your Honor, for

7 this reason. If all they said "December" in response to

8 that, then the ambiguity that you are pointing out might

9 be the case. In other words, well, when you had the

10 seminar does that mean when you were planning to have it

11 or when you actually had it? But when he goes further, he

12 says I know the plane left. The conference, referring to

13 the Who's Who Worldwide conference, not being asked about

14 any other one. That clearly is implying that he's talking

15 about that convers ations actually taking place on those

16 dates and a plane leaving for that conference.

17 MR. TRABULUS: Your Honor, I think in fact that

18 he probably said or meant to say "I know the plane left

19 for the conference" because there is no evidence that

20 there was any conference or anything about any conference

21 beforehand and he wasn't asked about it, the plane leaving

22 before the conference. There was a plane that left for

23 the conference at that time and I think that is truthful,
24 Your Honor. There's nothing in the record to show he knew
25 at the time he gave the testimony that nobody from Who's


1 Who Worldwide had signed up.

2 THE COURT: I tend to agree with you,

3 Mr. Trabulus, and I distinguish this from the evidence

4 that the government put in by the salespersons who said in

5 answer to Mr. Watstein, well, did you really have that

6 seminar? Oh, yes, we had it. That's another matter.

7 That's an affirmative representation, false

8 representation. Of course it wasn't under oath, it was on

9 the telephone. But here:

10 "Question: When did you have your first Who's

11 Who Worldwide seminar?

12 "Answer: December. I know the plane left the

13 conference about December 28th to Vietnam and Hong Kong."

14 It's close but I'm not sure about this.

15 MR. TRABULUS: Let me continue.

16 MR. WHITE: Judge, if I can address that before

17 we go on to another part of it.

18 That is why the jury should make this decision

19 because there's enough there that the jury can say that

20 was a false answer, that when did you have your first

21 Who's Who Worldwide seminar, the common ordinary meaning,

22 especially in light of the other answe rs that he gives was

23 that that was false, that that is referring to something
24 actually taking place. Now, Your Honor, agreed.
25 Would it be clearer if Mr. Bailey or whoever


1 asked this question asked it like a prosecutor? Yes, but

2 I don't think that is required. It is sufficiently

3 clear. It's plain and ordinary meaning.

4 MR. TRABULUS: Where is the evidence -- I'll not

5 address that. I think we had mentioned this before.

6 There was no evidence that he doesn't know. There's no

7 evidence that Mr. Gordon knew that nobody from Who's Who

8 Worldwide signed up. He was never asked about how many

9 members attended. I think there's evidence that the

10 members dealt directly with the tour operator.

11 I would like to continue if Your Honor wishes

12 with the next page becaus e I think the problems with their

13 case become even more serious.

14 THE COURT: The next page is not as damning as

15 this page. There is nothing in the next page, in my

16 opinion, that could sustain a perjury conviction.

17 MR. TRABULUS: I agree, Your Honor.

18 MR. WHITE: Well, Your Honor -- do we want to go

19 by it?

20 THE COURT: What in the next page is there?

21 MR. WHITE: Well, if you look on the next page,

22 page 20, the second question, starting with "in the rest

23 of Exhibit 176." It talks about the Who's Who Worldwide
24 business seminars and then in clarification --
25 THE COURT: Wait a minute. I didn't see that.


1 You're right. Let me read that now.

2 MR. WHITE: To the extent that we need

3 clarification of what they're talking about, whether they

4 are talking about did this actually take place or did you

5 just plan to have it, the question is "has that actually

6 occurred? Has this benefit been provided Mr. Gordon?"

7 MR. TRABULUS: Well, that's the problem with the

8 question, Your Honor. After that, has that actually

9 occurred he changes the question, has this benefit been

10 provided to Mr. Gordon? And it had been. The benefit was

11 provided to the members. All they had to do was avail

12 themselves of it, it was literally true.

13 THE COURT: Well, I think that the combination of

14 these questions on page 20, on second look, may do it.

15 The question is:

16 "Question: There is listed as a member benefit

17 of Who's Who Worldwide business seminars, has that

18 actually occurred? Has this benefit been provided

19 Mr. Gordon?

20 "Answer: Yes."

21 That is definite, unambiguous, unequivocal and

22 could be the basis for a perjury conviction if it is

23 material and false.
24 MR. TRABULUS: And if knowledge of falsity is
25 established.


1 THE COURT: Knowledge of the falsity.

2 MR. TRABULUS: And Your Honor, let me go back.

3 The answer is unambiguous but the question at the very

4 least is ambiguous.

5 Indeed, earlier in this trial Your Honor

6 indicated that when a question was asked and then another

7 question followed before there was an answer, that

8 withdrew the first question. Now, I don't think it be

9 assumed that a layperson --

10 THE COURT: I can't keep up with you,

11 Mr. Trabulus. Don't you slow down as the day gets longer,

12 Mr. Trabulus? Does nothing slow you down?

13 MR. TRABULUS: Federal judges do, Your Honor.

14 THE COURT: Oh, not really.

15 MR. TRABULUS: Your Honor, I think several days

16 ago in the course of some discussion concerning a question

17 that was put to a witness or a motion to strike, Your

18 Honor expressed the view that when a lawyer asks a

19 question and then follows it up with a different question,

20 the former question is automatically withdrawn.

21 Now --

22 THE COURT: I did say that.

23 MR. TRABULUS: What?
24 THE COURT: I did say that.
25 MR. TRABULUS: That's what we have here. You


1 have two questions. There is -- first of all, it says it

2 is listed as a member benefit, the Who's Who Worldwide

3 business seminars. Then there are two questions. Has

4 that actually occurred? And then the next question which

5 could either be reviewed as withdrawing or clarifying the

6 previous question, has this benefit been provided? And I

7 think a fair reading of that question is asking

8 Mr. Gordon, hey, did you do for the people what you said

9 you were going to do? And he did. He provided the

10 benefit. There's no evidence that he didn't believe that

11 it was provided and, indeed, the evidence is unequivocal

12 it was provided. The only question is whether anybody

13 assuaged themselves of it. It's like the other benefits,

14 the accounts, the insurance, they were provided to the

15 members. We didn't necessarily have any evidence whether

16 any of the members took advantage of them. So I think the

17 testimony is literally true.

18 On top of that, Your Honor, I go back to the

19 point that every allegation of falsity here in this -- the

20 whole theory that the government has of falsity here rests

21 upon the fact not that this wasn't provided or wasn't

22 offered or that there wasn't an airplane or there weren't

23 facilities but simply nobody from Who's Who Worldwide
24 signed up for it and there is no evidence that at the time
25 he so testified Mr. Gordon knew that.


1 THE COURT: Well, I have to tell you that I think

2 that circumstantial evidence that he knew about it because

3 he knew everything. He was the sole control command of

4 this whole operation. He was a hands-on, according to the

5 evidence, hands-on president, CEO, whatever you want to

6 call him. He gave, made every material decision.

7 Everything had to go through Mr. Gordon. He was all over

8 the place, knew everything and did everything. So how

9 could -- there's circumstantial evidence that if the thing

10 didn't go -- if the seminar did not occur because there

11 were no people who applied to go, he knew about it.

12 MR. TRABULUS: Let me respond to that, Your

13 Honor. I don't think there is in this case. If this was

14 something that happened in-house, I would see Your Honor's

15 point. But this and the evidence is unequivocal was done

16 by an outside agency.

17 Now, I, perhaps whatever, I did ask Ms. Benjamin

18 whether she found out about it and she said she did

19 relatively soon after it happened, but there is no

20 indication that she ever told Mr. Gordon and, indeed, this

21 is the kind of thing that somebody who might have been

22 intimidated by Mr. Gordon or not anxious to incur his

23 wrath might not have told him unless specifically asked.
24 I don't think under the circumstances when you have
25 something done outside that you can infer that.



1 THE COURT: Slow down.

2 Okay, I think there's enough to go to the jury,

3 Mr. Trabulus. I really do, on Count 57. This answer

4 together with the other answers "has that actually

5 occurred? Has this benefit been provided?

6 "Answer: Yes."

7 MR. TRABULUS: Your Honor, let me just make one

8 more important point with regard to materiality. Now we

9 heard testimony yesterday from Mr. Tardera concerning

10 materiality and it had to do with a claim that there could

11 be confusion and advertising that was done by Who's Who

12 Worldwide could somehow cause confusion and people could

13 ascribe to Reid's Who's Who, things that Who's Who

14 Worldwide said.

15 Now, there is no evidence at all that this --

16 that any advertising between the date that the seminar

17 failed to attract members and the date of the testimony

18 that occurred which referred to the advertising, which

19 referred to the seminar and there is also nothing to

20 indicate that it would make a material difference because

21 this is really what we're talking about. This is the

22 difference we're talking about, even accepting the

23 government's position and accepting Mr. Gordon knew it,
24 the difference is between Who's Who Worldwide sponsoring a
25 seminar, having it ready and available for any member who


1 wanted to go, what in a sense is being concealed or

2 misrepresenting that if you accept that nobody signed up.

3 How does that -- how does that -- how is that material to

4 the claims in the Reed case? I mean, there is no

5 demonstration that that distinction between somebody

6 signing up or not signing up or a group of people signing

7 up or not signing up would in any way, shape or form be

8 material to that. It's not a situation where they are

9 advertising seminars that don't exist, that they are

10 advertising to people that they are offering a service

11 which in fact is not being offered, so people when they

12 attempt to sign up for it find it is not there. It's just

13 a question whether or not somebody had signed up or not.

14 That's it. That distinction, Your Honor, I don't think it

15 has been material in the Reed case.

16 THE COURT: How is it material?

17 MR. WHITE: Your Honor, the existence of Who's

18 Who Worldwide's seminars was material because as Mr.

19 Tardera testified yesterday it was relevant to the

20 trademark issues in that case. He explained one of the

21 issues was the closeness, I'm not using the trademark

22 legal term, but the closeness of the businesses, whether

23 they were bas ically in the same industry, and I'm
24 paraphrasing what he said. I think he said that the Reed
25 -- I'm sorry, Who's Who Worldwide's argument was Reed's


1 business is differ than ours because we have seminars and

2 they just publish books. In fact, Reed -- I'm sorry, in

3 fact Who's Who thought it was sufficiently material

4 according to Mr. Tardera that they used it in their

5 appellate brief on the Second Circuit on precisely this

6 point.

7 He testified on 7067, and he referred to

8 Mr. Gordon's testimony and he said "this testimony was

9 used in the appeal to show that Who's Who Worldwide's

10 products were different from Reed publications. They were

11 ready to show that Who's Who Worldwide's Registry was more

12 of a membership or service organization as opposed to a

13 co mpany that published books.

14 "Question: So in fact, Who's Who Worldwide --"

15 Let me back up.

16 "Question: So if, in fact, Who's Who Worldwide

17 did offer seminars and conferences to its members, what

18 would be the effect on the question whether it was

19 infringing the trademarks with respect to Reed Elsevier?

20 "Answer: That would be evidence that the

21 products were less in proximity or less close to each

22 other or less similar so there would be less of a

23 likelihood of confusion. That would be one of the
24 elements that a court would have considered in deciding
25 that there was less of a likelihood or more of a


1 likelihood of confusion."

2 THE COURT: Just hold it a minute, please.

3 Well, this is a very sophisticated point of law

4 here. Is it -- materi al means whether a false statement

5 has a natural tendency to influence or is capable of

6 influencing the decision. Fact-finder, in this case was

7 Judge Jordan. Did this statement, assuming it is a false

8 statement, did it influence the decision of the

9 fact-finder? Well, the government says it did influence

10 the decision of the fact-finder because in a copyright

11 infringement case there has to be proof of confusion as to

12 the source and if the two services that are rendered are

13 almost exactly alike but one offers seminars, then there's

14 less likelihood of confusion.

15 Now, we have to go one more step down in the

16 nuances. Is it material to say that we advertised

17 seminars? Does that make the difference or does it make a

18 difference that you actually have to hold a seminar? You

19 see, there could be a good argument made by Mr. Trabulus

20 that the mere fact that you advertised for a seminar, put

21 you in a membership type of business and that you were in

22 that type whereas Reed doesn't do that so they are

23 different.
24 MR. TRABULUS: That's the point, Your Honor.
25 They were advertising it and in more than good faith


1 attempting to hold it. And the happenstance that nobody

2 signed up for it is not material because the difference is

3 that this is a place that advertises it, not just

4 advertises but does it?

5 THE COURT: But that's an issue for the jury,

6 isn't it?

7 MR. TRABULUS: I don't think so.

8 THE COURT: Didn't the United States Supreme

9 Court say in a case that we used to say materiality was a

10 question for the Court, now it's a question for the jury?

11 MR. TRABULUS: Yes, but if under no rea sonable

12 view of the evidence you can find materiality, and I think

13 that's the case.

14 Your Honor, I would like to turn back to one of

15 the other points I was talking about because if you look

16 at the testimony that immediately followed the testimony

17 that is set forth in the indictment, you will see that

18 Mr. Gordon in talking about the seminar, the seminar, was

19 not referring just to something that included Who's Who

20 people, but he was talking about the overall package that

21 involved the ABA, and with that understanding his

22 testimony was clearly truthful even accepting all the

23 things we say. It's not laid out in the indictment but it
24 is in Exhibit 811 which is in evidence.
25 Go going to the indictment, the last question and


1 answer set forth in the indictment is:

2 "Question: This is something arranged by or on

3 behalf of Who's Who Worldwide?

4 "Answer: Yes."

5 I'm reading now from Exhibit 811.

6 "Question: Were anybody but members invited to

7 attend the seminar?

8 "Answer: A law group, lawyers.

9 "Question: Okay. And what was the purpose of

10 having lawyers?

11 "Answer: You get several groups together and

12 it's cheaper that way.

13 "Question: Okay. But the invitation went out to

14 the membership?

15 "Answer: Yes."

16 Now, Mr. Gordon -- excuse me, Mr. White -- I mean

17 Mr. Gordon is testifying about a seminar which he seems is

18 including both Who's Who Worldwide and the ABA. Mr. White

19 made the point that there was, that according to Debra

20 Benjamin it was contemplated the two groups would be

21 separate and they be separate seminars. To infer that

22 pe ople didn't sign up I don't think that would be a fair

23 inference that he would be involved in that level of
24 detail. In any event, it's clear in talking about the
25 seminar he's talking about something that did happen, it


1 involves the ABA. He's talking about a single thing.

2 MR. WHITE: Your Honor, Mr. Trabulus can argue

3 that to the jury and the government can argue that it is

4 hardly unclear, the first question and answer on page 19

5 of the indictment refers to a Who's Who Worldwide

6 seminar. The second one on page 20 specifically refers to

7 Exhibit 176 in that trial which is an exhibit in our

8 trial, and that's a Who's Who Worldwide brochure

9 advertising Who's Who Worldwide's seminar.

10 So if Mr. Trabulus has that argument to the jury,

11 that's fine, he can make it. The government can make a

12 counter argument. That doesn't mean that it ought to be

13 dismissed.

14 MR. TRABULUS: If you look at what the thrust of

15 the question in the Reed thing was, what they were asking

16 Mr. Gordon was, are you really delivering on your

17 advertising, not when they signed up. He was accused of

18 maybe offering something they weren't delivering on. He

19 wasn't asked how many people signed up. He was being

20 asked did you really deliver and he was giving answers to

21 say, yeah, I really delivered and they really did

22 deliver. It's completely unfair and an outrage to charge

23 him with perjury when nobody asked him, how many people
24 signed up, did you know? He was really testifying
25 truthfully in response to these answers, and the point he


1 was makin g was, yeah, we really made this available, we

2 really provided this benefit just as we provided a credit

3 card, just as we provided a discount. It doesn't mean

4 that every member or any member signed up for it. That

5 was the issue in the case, not whether anybody signed up

6 for it. And now they are taking this and in retrospect

7 they are nitpicking and looking for an issue not presented

8 in that litigation and staying because he didn't kind of

9 volunteer it and fix up the problems what really are the

10 ambiguities and the lack of focus in some of the questions

11 put to him perhaps they weren't focused --

12 THE COURT: Mr. Trabulus, please slow down, for

13 goodness sake.

14 MR. TRABULUS: They are saying because he didn't

15 do that, because with the benefit of hindsight, at a time

16 when other issues may become considered relevant, he

17 didn't go back and look at it in a microscope and qualify

18 his answer to say, yeah, we provided it but nobody showed

19 up except the lawyers. It is accusing him of perjury and

20 it's not right. I don't think it makes out perjury.

21 THE COURT: Well, giving favorable inferences to

22 the government at this stage which I must, I think there's

23 enough to go to the jury and it's a close question. I'm
24 going to let it go to the jury. I'm reserving decision on
25 your motion, Rule 29 motion as to Count 57.



2 THE COURT: All right. I think we better recess

3 now until tomorrow morning at 9:30. We'll conclude the

4 motion with the consent of all the lawyers after the

5 afternoon session.

6 MR. WHITE: May I ask one thing? I don't know if

7 it is feasible or if the defense attorne ys want to do it,

8 so not to slow things down, I tried to anticipate as many

9 as these Rule 29 arguments by the defense as we could and

10 sort of marshal the evidence but with as many weeks of

11 testimony and all the exhibits we have, some of it, some

12 of the arguments you have to pull together, it will take

13 me some time. I don't know if there is anyway I can get a

14 little bit of a preview so I can pull together things that

15 are responsive tonight so we don't waste time tomorrow.

16 THE COURT: Mr. White, a weak case brings strong

17 arguments.

18 MR. WHITE: That's why I want to prepare for

19 them, Your Honor.

20 THE COURT: A weak case to begin with brings

21 strong arguments and that's what you have, in my opinion.

22 MR. WHITE: Strong arguments.

23 THE COURT: No, a weak case.
24 MR. WHITE: I got you.
25 THE COURT: However, you may very well get to the


1 jury on most of it, but it's not to me impressive. Not

2 that your and Ms. Scott's efforts have been not

3 impressive. In fact, the weaker the case the more

4 impressive the prosecutor's efforts are. But you will be

5 presented with where is the evidence of a conspiracy.

6 MR. WHITE: That I understand. I'm just

7 wondering if there is any other novel issues.

8 THE COURT: Well, the mail fraud counts are

9 replete with issues.

10 MR. WHITE: Right, and I think we've gone all

11 over those.

12 THE COURT: Let's see. Next we have obstruction

13 of justice. The first obstruction of justice is Count 58,

14 that's the logs, right?

15 MR. WHITE: Yes.

16 THE COURT: And then Count 59 obstruction is the

17 bankruptcy petition.

18 MR. WHITE: The issu e of ownership.

19 THE COURT: Of ownership.

20 MR. TRABULUS: Your Honor, with regard to the

21 latter one, I mean, you want me to start arguing it?


23 MR. WHITE: I just need a general ground so I'll
24 be prepared, otherwise I'll be looking through every --
25 sometimes a little focus will help me so I'm not wasting


1 time.

2 THE COURT: A little focus will take an hour to a

3 half-hour if Mr. Trabulus does the focusing.

4 MR. WALLENSTEIN: Not at his speed. At his speed

5 he'll be done in ten minutes.

6 THE COURT: Mr. Trabulus, any unique theory that

7 Mr. White would have to do research on?

8 MR. WHITE: Or review all the trial transcript

9 for it.

10 MR. TRABULUS: Your Honor, with regard to the one

11 on ownership, there was testimony by Mr. Ackerman that it

12 was relevant to any of the determinations in the

13 bankruptcy proceeding. Does that set forth this unusual

14 theory?

15 MR. WHITE: No, that one I already anticipated.

16 Are there any others?

17 THE COURT: How about conspiracy to impair,

18 impede and defeat the Internal Revenue Service?

19 MR. TRABULUS: That's involved, Your Honor.

20 MR. WALLENSTEIN: But my client is not involved.

21 THE COURT: I was afraid of that.

22 MR. TRABULUS: Your Honor, there are a lot of

23 sub-parts there and we also have to talk about specific
24 things that were and were not proven, among the overt
25 acts.


1 THE COURT: It will be very difficult for you to

2 get a preview.

3 Count 61, evasion of tax. Counts 62 through 65,

4 filing of false tax retu rns. Counts 66 through 69,

5 assisting in the filing of a false tax return. That's for

6 Mr. Reffsin. Counts 70 and 71 and 72, filing false

7 collection information statements. And Count 73, money

8 laundering.

9 Anything unusual?

10 MR. TRABULUS: I don't think it is unusual. I

11 mean, I have arguments on all of them.

12 THE COURT: I think you'll have to wait to hear

13 it, Mr. White.

14 All right. 9:30 tomorrow morning.

15 MR. NELSON: Before we recess for the evening, I

16 anticipate the Court would wish to have the tapes played

17 first before we continue with the Rule 29 arguments so as

18 not to delay the jury.

19 One of the transcripts that I wish to introduce,

20 the government is opposing, I have a copy of that

21 transcript for the Court which I would like to provide at

22 this time. It's marked as Defendant's Exhibit BR off of

23 G overnment's Exhibit 1321. I made the transcript defense
24 Exhibit BR. I would like to provide a copy to the Court
25 at this time. I believe that the government is opposing


1 my playing and utilization of the portion of that

2 transcript and possibly we can resolve this before

3 tomorrow.

4 THE COURT: Why are you opposing it, Mr. White?

5 MR. WHITE: I'm sorry, I didn't hear Your Honor.

6 THE COURT: This Defendant's Exhibit BR, Baker

7 Roger. Do you have a copy of that transcript?

8 MR. WHITE: I do. I'm just pulling it out right

9 now.

10 Is the question why am I objecting?

11 THE COURT: Yes.

12 MR. WHITE: Because it's hearsay. There's a

13 self-serving statement here by another employee about what

14 he thinks about the propriety of the company's sales

15 present ation. I think this is different than the

16 corporate admissions that the government was offering this

17 morning because those were admissions against the

18 corporation. And when you were reading from I think it

19 was Weissenberger on Evidence, you talk about there's a

20 distinction between them offering it or it being offered

21 against the corporation.

22 MR. NELSON: Your Honor, I'm offering the

23 statement against the corporation. I'm offering it under
24 801(d)(2)(E) against the corporation. This is an
25 informant who is working in Who's Who Worldwide who in


1 essence is saying do you think this is a scam, us working

2 here to an employee of the corporation? And that employee

3 is saying, no, there's absolutely nothing wrong here with

4 what's going on. It might not be worth what the people

5 are paying for it but I don't perceive it to be a scam.

6 Now, first I would note, Your Honor, that there's

7 been -- that's an understatement, a plethora of vicarious

8 admissions that had been produced as they relate to every

9 single one of the defendants in the case ostensibly as

10 vicarious admissions from the government's claim from day

11 one that we'll connect all of this that there is a

12 conspiracy and introduced as co-conspirators statements

13 and the government has rested and they have not done that,

14 Your Honor.

15 So to some extent they pulled the wool over the

16 eyes of the entire defense team and the entire court

17 claiming they will introduce literally 100 tapes of

18 employees as co-conspirator admissions when in fact none

19 of them were so introduced. They were introduced as

20 vicarious admissions, 80 percent of them were vica rious

21 admissions of Sterling Who's Who of people working at

22 Who's Who Worldwide and there were statements made when he

23 was even working at Who's Who Worldwide.
24 Here we have an individual who is working as a
25 government informant who is attempting to acquire evidence


1 that will be a vicarious admission that will come into

2 evidence. You can be sure that had I had this, Mr. Langer

3 said, gee, I find there is something improper here, it

4 would have been immediately admissible against the

5 corporation as vicarious admission. Why would it not be

6 likewise admissible on behalf of a defendant employee

7 under 801(d)(2)(E) as a statement against the party

8 opponent? If they are able to demonstrate and prove my

9 client's good faith reliance upon representations that

10 were made to him by his employer, Mr. Gordon and Who's Who

11 Worldwide. And that's the basis upon which I'm seeking to

12 introduce it.

13 MR. TRABULUS: Your Honor, there's some other

14 things that should be addressed with regard to that

15 statement. It sheds light on the statements which the

16 government has just introduced today. They have had

17 statements where their confidential informant was, you

18 know, engendering conversation about work and the

19 impression, generally when supervisors weren't present and

20 the impression that could be obtained from the evidence

21 that came in today that it was universal thought from

22 people at the working level, the sales level, this was a

23 scam and I think --
24 THE COURT: But the question is is it
25 admissible? If you put Mr. Langer on the stand he could


1 stay I think it is a great system and I don't think it is

2 a scam or anything else, but here you are offering an out

3 of court declaration for the truth when you do not conform

4 to any exception of the hearsay rule nor do you confirm to

5 801(d)(2)(E) which makes it not hearsay.

6 MR. TRABULUS: Let it not be admissible for the

7 truth. Let's consider it this way. They introduce what

8 purports to be a sample what people were talking about in

9 Who's Who Worldwide. I think we should be able to get

10 across to the jury these informants were out there looking

11 for this kind of stuff and not that they got it whenever

12 they looked for it but they sometimes didn't find it and

13 what is being presented to them is just a selection.

14 We're not offering it to show it wasn't a scam but wasn't

15 representative.

16 MR. NELSON: I would agree with that.

17 The second basis it goes to state of mind. When

18 we are speaking of state of mind of the declarant, being

19 Elliot Zerring, a government informant working there.

20 This goes to his state of mind and likewise because he's

21 an agent of the government, it goes to the government's

22 state of mind as to the knowledge of the individuals who

23 were working there on a lower level. The people who were
24 being trained by my client at that time because both Mr.
25 Zerring and Mr. Langer were being trained by my client at


1 that time, they were the new employees who were working

2 for the company. So with a limiting curative instruction

3 that this is being introduced only for the state of mind

4 rather than the truth of the matter, I would ask that it

5 be admissible.

6 MR. WHITE: Admissible for the government's state

7 of mind? I never heard of that. And with respect to

8 Mr. Trabulus' argument, the government didn't argue that

9 what was played was representative in any way. I'm sure

10 they will argue in summation that listen, you only heard X

11 number of tapes and you saw all the informants that were

12 there and you know they were there and hours and hours of

13 tapes and this is all the government has for you. That's

14 fine. They can make that argument. That doesn't mean

15 that something is otherwise hearsay should come in.

16 THE COURT: The rule says, 801(d)(2). Statements

17 which are not hearsay. "A statement is not hearsay if the

18 statement is offered against a party and is a statement by

19 the party's agent or servant concerning a matter within

20 the scope of the agency or employment made during the

21 existence of th e relationship."

22 Well, I don't know how you can say, Mr. Nelson,

23 that this is being offered against a party when the
24 purpose of it is to support the party. This is not being
25 offered against Who's Who Worldwide or whichever company


1 was involved here?

2 MR. NELSON: Your Honor, if I understand

3 correctly the most recent rulings of the United States

4 Supreme Court in interpreting 801(d)(2)(E) there was no

5 longer a requirement for purposes of reliability that the

6 statement be against the person's interest.

7 THE COURT: I didn't say that.

8 MR. NELSON: The statement that was made --

9 THE COURT: Excuse me. I didn't say that it has

10 to be against his interest. That's true. Any statement

11 is admissible. Against the interest is totally

12 irrelevant, but it has to be offered against a party. It

13 has to be in an adversarial position. You are not in an

14 adversarial position by offering this statement. You are

15 supporting this party. You are not offering it against

16 the party.

17 MR. NELSON: Then I'll fall back to point two,

18 the state of mind argument.

19 THE COURT: I don't see that. Who's mind?

20 MR. NELSON: That would be the state of mind

21 first of Elliot Zerring's and as an operative of the

22 government who has already testified that he reported on a

23 daily basis to Inspector Biegelman as to what was taking
24 place and review those tapes on a daily basis with them,
25 by inference, the government's state of mind or of the


1 investigator's state of mind in this case.

2 THE COURT: I never heard that one before. I

3 don't understand why it is his state of mind. I can see

4 that you want to show that Elliot Zerring heard adverse

5 things, rather heard supporting things for the company.

6 MR. NELSON: That's correct.

7 THE COURT: But how could it not be for the

8 truth? It has to be for the truth.

9 MR. TRABULUS: Your Honor, there are issues in

10 this case of intent and intent of the people who were

11 working for these companies and the purport of what has

12 been introduced today by the government. All of these

13 conversations with scams and so forth, whether the general

14 coherency among the salespeople, the people at the bottom

15 was this, was a scam.

16 I think whether or not the Rules of Evidence

17 whether or not they are (a), a limiting instruction is

18 given, they can't infer one person's state of mind from

19 another, but when everybody is talking scam or scammi ng

20 people the inference is what they are seeing is leading

21 them to believe that and we have a situation what they are

22 seeing leads different people to different conclusions and

23 the government had sent these informants out fishing to
24 get things that are favorable to their position and we
25 should know they didn't always, despite their best efforts


1 come up with that.

2 They sometimes came up with people who were

3 defending Who's Who Worldwide because these people didn't

4 believe they were committing a fraud.

5 MR. LEE: Just -- can I put in my two cents?

6 THE COURT: Yes, but before you do that I'm

7 saying you are absolutely right but I'll certainly permit

8 you to do in permissible documents, not through documents

9 that are not admissible in evidence.

1 0 MR. NELSON: I have one further argument.

11 MR. LEE: My position is this is circumstantial

12 evidence as to the belief or the state of mind of the

13 declarant, it's not being offered for the truth of the

14 matter asserted. We don't know if it is true or not,

15 whether it is or is not a legitimacy or a scam here,

16 circumstantial evidence of his belief or state of mind.

17 THE COURT: Whose belief?

18 MR. LEE: The declarant. The

19 salesperson-employee and as circumstantial evidence it is

20 just not hearsay, period. So it is not to overcome any

21 hearsay -- it's not hearsay.

22 THE COURT: You say it is offered to show the

23 state of mind of Henry Langer.
24 MR. LEE: His belief that there's nothing wrong
25 here.


1 MR. TRABULUS: It's not so much Henry Langer,

2 Your Honor, it's there was not a uniform state of mind

3 among the employees, among the members of the so-called

4 conspiracy.

5 THE COURT: I certainly will let you prove that

6 or offer -- you don't have to prove anything. Offer

7 evidence showing that. Yes, I will certainly let you do

8 that but this is not admissible, Defendant's Exhibit BR,

9 Baker Roger.

10 MR. TRABULUS: It should be if there's a

11 cautionary, curative instruction given that it is not to

12 be considered for the truth of whether it is a scam or

13 not, but just upon the state of mind in the people in the

14 organization. Then we don't have it coming in as hearsay,

15 we just have it coming in as evidencing the state of mind

16 of that particular person, an inferentially -- it is not a

17 uniform state of mind in the organization.

18 MR. NELSON: If I might add another point as a

19 potential basis f admissibility. That would be Rule

20 803(24), other exceptions. A statement not specifically

21 covered by any of the foregoing exceptions, but having

22 equivalent circumstantial guarantees of trustworthiness,

23 if the Court determines that; (a), the statement that is
24 offered as evidence of a material fact; (b), the statement
25 is more probative on the point for which it is offered


1 than any other evidence for which the proponent can

2 produce cure through reasonable efforts and; (c), the

3 general purpose of these rules and the interest of justice

4 will best be served by admission of the statement into

5 evidence.

6 I would ask the Court to consider for the

7 foregoing reasons that we've explained and set forth to

8 the Court that under 803(24) that the statement would be

9 admissible.

10 Certainly it goes to a material issue and that is

11 going to be probably the most material issue for the jury

12 to determine in this case and that is going to be the

13 intent or lack of intent to defraud or knowledge or lack

14 of knowledge on the part of the individual employees of

15 Who's Who Worldwide who were named defendants.

16 On the issue of the probative worth of the

17 statement to some extent the Court has already made a

18 determination of that as it relates to all of the

19 statements that were earlier admitted today as they

20 related to the other employees where there were

21 unfavorable statements made as to that person's state of

22 mind as it relates to the corporation, and third the lack

23 of the availability of this individual Henry Langer as
24 bespoken by my inability to locate him even after going
25 throu gh some of the records through my investigator at the


1 post office for employment records and the home address of

2 Mr. Langer to potentially call him as a witness.

3 THE COURT: Good move. That was a good move. My

4 compliments.

5 Very rarely is 803(24) the residual hearsay

6 exception used in the in the federal courts. Let me see

7 here.

8 Here's what the law is on that. The residual

9 exceptions, and there are two, one where the declarant is

10 not available which is what you really have here which is

11 804(b)(5), and 803(24) where the declarant is not

12 unavailable -- is available. They both say the same

13 thing. This provides a vehicle for admitting hearsay "in

14 situations unanticipated by the other exceptions but

15 involving equal guarantees of trustworthiness."

16 MR. NELSON: Your Honor I would submit to the

17 Court certainly the same guarantees of trustworthiness as

18 to this statement.

19 THE COURT: Just one minute.

20 MR. NELSON: I apologize, Your Honor.

21 THE COURT: All right. Here's the five factors

22 to be admissible under this rule, and this is going to be

23 the final thing because we're all exhausted here,
24 especially one person.
25 First that the statement must possess


1 circumstantial guarantees of trustworthiness which must be

2 supported to those specific hearsay exceptions.

3 Well, I think there is trustworthiness. The

4 government has vouched for these tapes. They've offered

5 them and implicitly they've said they are trustworthy, so

6 that is met.

7 MR. WHITE: The government said they are

8 authen tic, not that the statements made on them are

9 necessarily trustworthy.

10 THE COURT: That's what you say. I say it

11 differently.

12 Second, the statement must be offered as evidence

13 of a material fact. Well, it certainly is a material fact

14 as to whether this whole operation is a scam or whether it

15 is a legitimate operation. So it complies with the second

16 element.

17 Third, the hearsay statement must be "more

18 probative on the point for which it is offered than any

19 other evidence which the proponent can procure through

20 reasonable efforts. " This requirement imposes a duty of

21 diligence on the proponent in seeking better evidence than

22 the proffered hearsay.

23 In determining what constitutes reasonable
24 efforts, the Court should weigh the importance of the
25 evidence, the financial resources available to the


1 proponent and the amount at stake in the actions. Taking

2 these factors into consideration, the Court must find that

3 the hearsay statement is more probative than other

4 available evidence in order to render the statement

5 admissible."

6 Well where is this gentleman? What's his name,

7 Henry Langer? Where is he?

8 MR. NELSON: Judge, the only ability we have to

9 attempt to locate him was to go to the post office, go

10 through the various different employment records. This is

11 an individual who worked for the company for about three

12 weeks in 1995. We were unable.

13 THE COURT: You could not find him.

14 MR. NELSON: We could not find him.

15 THE COURT: Does the government know where he

16 is?

17 MR. WHITE: No, Your Honor.

18 THE COURT: I find that the third requirem ent is

19 met.

20 Fourth. The proponent of the statement must show

21 that its admission would serve "the general purposes of

22 these rules and the interests of justice. " I think that

23 this statement clearly meets that and for the reasons
24 stated by Mr. Trabulus to even the playing field.
25 And finally the statement is not admissible


1 unless the proponent notifies the opponent of his

2 intention to offer it. Is this so in a criminal case, I

3 believe so.

4 MR. NELSON: I provided the government a copy of

5 the transcript approximately a week ago.

6 THE COURT: You must after it sufficiently in

7 advance of the trial provides the adversary the

8 opportunity to be prepared to meet it. Did you give him a

9 copy of it?

10 MR. NELSON: Approximately a week ago.

11 MR. TRABULUS: And of course the tape came from

12 the government, Your Honor.

13 THE COURT: The proponent of the evidence.

14 That's you, Mr. Nelson.

15 MR. NELSON: Yes.

16 THE COURT: Offered under the residual exception

17 bears the burden of proving that the five requirements had

18 been satisfied.

19 MR. NELSON: I believe under 104(b) I would be

20 required to demonstrate that by a preponderance of the

21 evidence, Your Honor.

22 THE COURT: Where all the requirements are met

23 the court retains discretion to exclude the statement
24 pursuant to 403. Rule 403, to prevent unfair prejudice,
25 confusion of the issues or undue delay.


1 I find that there is no unfair prejudice. On the

2 contrary, it is fair and equitable to allow it in. I just

3 didn't th ink it was admissible and it will not confuse

4 anything or cause undue delay.

5 Further, constitutional considerations may bar

6 admission -- well, there is no constitutional

7 consideration.

8 MR. WHITE: Your Honor, I disagree with two of

9 the five factors here. There's nowhere near the

10 equivalent guarantees of trustworthiness as set forth in

11 the other hearsay objection because precisely the reason

12 that these corporate admissions come in against the party

13 as Pappas said it's unlikely that an employee while an

14 employee is there, is something that is damaging to his

15 employer. This is precisely the opposite. This guy is

16 making a self-serving statement. Hey, we're not doing

17 anything wrong when somebody asks don't you think this is

18 a little strange? That has absolutely no guarantees of

19 trustworthiness. It is a self-serving statement. That

20 would not be the case where they say something like the

21 tapes the government played today. With respect to

22 whether it is more probative than the other available

23 evidence, I don't think the inquiry should be limited to
24 just whether they can find this Mr. Langer, if they want
25 to prove in fact they can have as many Who's Who World


1 Wide employees they want to come in and testify under oath

2 subject to cross-examination, not just Mr. Langer. They

3 can get their point across in other ways.

4 THE COURT: Have you concluded?

5 MR. WHITE: Yes. Except I have to confess I've

6 never had the residual exception used, and again if Your

7 Honor at least will give us the chance to look at it

8 overnight to see if there are any cases.

9 THE COURT: You can do it as long as you do it by

10 9:30 in the morning and submit it to me earlier than

11 that.

12 I haven't allowed any that I recall. It is very

13 rarely used. Its use is discouraged, but if there ever

14 was a proper use to be used in my opinion this is it.

15 Your objection is overruled, but I'll let you

16 until 9:30 show me otherwise.

17 MR. WHITE: Okay.

18 MR. SCHOER: Very quickly, Judge. I know it's

19 late. There were certain tape transcripts. I believe

20 that the government did not use them during the course of

21 the trial. I have a list of them. I would ask that those

22 transcripts be removed from the jury's volumes of the

23 transcripts, the ones that were not played.
24 MR. WHITE: Why, they are in evidence. We just
25 chose not to play them for the sake of time because they


1 were either duplicative or other things.

2 MR. SCHOER: Is it the government's position at

3 the time of deliberations the jury can take in those tapes

4 and play all of the tapes?

5 THE COURT: Are the tapes in evidence?

6 MR. SCHOER: The tapes are in evidence.

7 THE COURT: They can play them.

8 Anything else?

9 9:30 tomorrow morning.

10 (Recess taken.).

11 (Proceedings adjourned.)














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