8217 1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK 2 - - - - - - - - - - - - - - X 3 UNITED STATES OF AMERICA, : CR 96 1016(S-1) 4 v. : U.S. Courthouse 5 Uniondale, New York BRUCE W. GORDON, WHO'S WHO 6 WORLD WIDE REGISTRY, INC., : STERLING WHO'S WHO, INC., 7 TARA GARBOSKI, ORAL FRANK OSMAN, LAURA WEITZ, ANNETTE 8 HALEY, SCOTT MICHAELSON, : STEVE RUBIN, and MARTIN 9 REFFSIN, : TRANSCRIPT OF TRIAL 10 Defendants. :March 18, 1998 11 - - - - - - - - - - - - - - X 9:45 o'clock a.m. 12 BEFORE: 13 HONORABLE ARTHUR D. SPATT, U.S.D.J. and a jury 14 APPEARANCES: 15 For the Government: ZACHARY W. CARTER 16 United States Attorney One Pierrepont Plaza 17 Brooklyn, New York 11201 By: RONALD G. WHITE, ESQ. 18 CECIL SCOTT, ESQ. Assistant U.S. Attorneys 19 For the Defendants: NORMAN
TRABULUS, ESQ. 20 For Bruce W. Gordon 170 Old Country Road, Suite 600 21 Mineola, New York 11501 22 EDWARD P. JENKS, ESQ. For Who's Who Worldwide 23 Registry, Inc. and Sterling Who's, Who, Inc. 24 332 Willis Avenue Mineola, New York 11501 25 (cont'd)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8218 1 APPEARANCES (cont'd): 2 GARY SCHOER, ESQ. For Tara Garboski 3 6800 Jericho Turnpike Syosset, New York 11791 4 ALAN M. NELSON, ESQ. 5 For Oral Frank Osman 3000 Marcus Avenue 6 Lake Success, New York 11042 7 WINSTON LEE, ESQ. For Laura Weitz 8 319 Broadway New York, New York 10007 9 MARTIN GEDULDIG, ESQ. 10 For Annette Haley 400 South Oyster Bay Road 11 Hicksville, New York 11801 12 JAMES C. NEVILLE, ESQ. For Scott Michaelson 13 225 Broadway New York, New York 10007 14 THOMAS F.X. DUNN, ESQ. 15 For Steve Rubin 150 Nassau Street 16 New York, New York 10038 17 JOHN S. WALLENSTEIN, ESQ. For Martin Reffsin 18 215 Hilton Avenue Hempstead, New York 11551 19 20 Court Reporter: HARRY RAPAPORT, CSR United States District Court 21 Two Uniondale Avenue Uniondale, New York 11553 22 (516) 485-6558 23 Proceedings recorded by mechanical stenography, transcript 24 produced by Computer-Assisted Transcription 25 HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8219 1 M O R N I N G S E S S I O N 2 3 THE COURT: Mr. Dunn, from now on, I don't care 4 where you get from, please start two hours earlier than 5 when you are starting. Get here on time. 6 I think I mentioned I give to the jury all the 7 exhibits when they start deliberating. I also give them a 8 list of exhibits. I assume that all sides of worked on 9 and are working on a list of exhibits so I don't have to 10 wait and the jury doesn't have to wait. I will expect a 11 list from the government and a list from the defense, a 12 consolidated list at the time they go out, so we can 13 photostat it and make it a Court Exhibit. In a case like 14 this with so many exhibits they should have that. 15 THE CLERK: Jury entering. 16 (Whereupon, the jury at this time entered the 17 courtroom.) 18 THE CLERK: Good morning, members of the jury. 19 Have a seat. 20 Again, I think you are doing very well as far as 21 getting here on time. I am sorry to have delayed you. 22 One of the reasons was that I had another matter where a 23 lawyer came in from California to appear this morning. 24 And since he came in from California, I had to talked to 25 him a little more than I generally allow the lawyers to HARRY RAPAPORT, CSR, CP,
CM OFFICIAL COURT REPORTER 8220 1 talk. It is a civil case, an antitrust case, very 2 interesting. It has nothing whatsoever to do with you, 3 but it is very interesting to me. And that's one of the 4 reasons for the delay. 5 You may proceed. 6 7 M A R T I N R E F F S I N , 8 called as a witness, having been previously 9 duly sworn, was examined and testified as 10 follows: 11 12 MR. TRABULUS: I have no other questions. 13 MR. SCHOER: I have some questions, your Honor. 14 15 CROSS-EXAMINATION 16 BY MR. SCHOER: 17 Q Good morning, Mr. Reffsin. 18 A Good morning. 19 Q Mr. Reffsin, I am going to hand you some of the 20 government exhibits. 21 THE COURT: Before you do that, can I call 22 counsel up for a minute, please. 23 24 25 HARRY RAPAPORT, CSR, CP,
CM OFFICIAL COURT REPORTER 8221 Reffsin-cross/Schoer
1 (Whereupon, at this time the following took place 2 at the sidebar.) 3 THE COURT: I got a telephone call from Sandra 4 Barnes. How she got my telephone number I shall never 5 know. I think Ms. Scott probably told her. 6 She says she is a witness for Trabulus. 7 Are you Mr. Trabulus? 8 MR. TRABULUS: Indeed I served a subpoena, but I 9 am not calling her. 10 THE COURT: She says she will be about a half an 11 hour late. That's the message I got. 12 MR. TRABULUS: Thank you, your Honor. 13 14 (Whereupon, at this time the following takes 15 place in open court.) 16 (Whereupon, at this time there was a pause in the 17 proceedings.) 18 MR. SCHOER: I apologize. 19 THE COURT: It is all right. 20 MR. SCHOER: And I apologize to Mr. White for 21 spilling water al
l over him. 22 THE COURT: I thought you were having a 23 conversation about exhibits. 24 MR. SCHOER: We were doing both. 25 THE COURT: I am glad to see only water was HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8222 Reffsin-cross/Schoer
1 spilled. 2 Q Mr. Reffsin, I will ask you some questions about 3 those exhibits. They are not particularly in order. And 4 you may have to leaf through them. 5 Would you look at Exhibit 652, please. 6 A Got it. 7 Q Can you tell the jury what that exhibit is? 8 A This is a general ledger summary. 9 Q Okay. 10 You prepared that -- does it have a date on it? 11 A March 2nd, 1991. 12 Q And what period of time does it cover? 13 A Current fiscal period, 12 -- from fiscal periods from 14 one to 12, meaning January to December. 15 Q 1990? 16 A 1990, yes. 17 Q And when you look at that -- let me ask you this: 18 You created that general ledger with the records of Who's 19 Who Worldwide; is that correct? 20 A My firm did, yes. 21 Q And what you did, I assume, is you looked at the 22 checkbook -- basically you looked at the checkbook to see 23 what monies were deposited into the accounts of Who's Who 24 Worldwide, and what monies were written out of the 25 accounts; is that correct? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8223 Reffsin-cross/Schoer
1 A Well, I looked at the checkbook to see what monies 2 were expended. And the deposits generally came from the 3 bank statements. 4 Q And that's how you generated this document; is that 5 fair to say? 6 A Yes. 7 Q This ledger? 8 A Yes. 9 Q Any other documents you look at in order to generate 10 this gener
al ledger? 11 A Yes, maybe payroll journals, and maybe other 12 documents which have an effect on the general ledger. 13 Q Okay. 14 In 1990 was Who's Who Worldwide doing their own 15 pay role, do you remember? 16 A No, they were not. 17 Q Did they have an outside service that did the 18 payroll? 19 A No, I had someone in my office doing it. 20 Q And in 1990 your office was doing the actual payroll 21 for Who's Who Worldwide; is that right? 22 A That's correct. 23 Q And later on in years there came a time in which 24 there was another service that did the payroll for Who's 25 Who Worldwide? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8224 Reffsin-cross/Schoer
1 A Yes, that's correct. 2 Q And that was ADP? 3 A There was one before that for a short period and 4 ultimately it became ADP, yes. 5 Q And ADP does the payroll, and they take care of all 6 the records with respect to payroll; is that correct? 7 A Yes. They file W-2s and do everything. 8 Q All right. 9 Looking at Exhibit 652, in that exhibit, in that 10 general ledger, there is a list in account -- mine is cut 11 off, but there is a list in an account called net payroll, 12 which I believe is on page 16? 13 A If I may? 14 Page 16 did you say? 15 Q Yes, toward the bottom of the page where it says net 16 payroll. 17 (Whereupon, at this time there was a pause in the 18 proceedings.) 19 A Yes. 20 Q It is the payroll of Who's Who Worldwide and it has a 21 list of the all the people who received payroll checks; is 22 that right? 23 A That's correct. 24 Q And that was on a weekly basis once the payroll 25 started to be paid; is that correct? HARRY
RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8225 Reffsin-cross/Schoer
1 A Yes. 2 Q And when you say net payroll, the number that is 3 listed there is the actual amount of the check that the 4 employee received? 5 A That's correct. 6 Q Without -- after taxes had been taken from their 7 gross salary; is that correct? 8 A Yes. 9 Q Can you tell us when salaries were first paid by 10 Who's Who Worldwide in 1990? 11 A It looks like August 2nd was the first salary -- I am 12 sorry, it is May 11th. I am sorry. 13 Q That salary was to Elizabeth Sautter; is that 14 correct? 15 A Yes, that's correct. 16 Q And looking at that document, can you tell us -- do 17 you know when Who's Who Worldwide started its operation? 18 A Sometime in 1990. 19 Q Okay. 20 Is it fair to say it was sometime in May of 1990? 21 A Yes. 22 Q Now, can you look on the following pages and tell us 23 when for the first time Tara Garboski received any sort of 24 salary from Who's Who Worldwide? 25 A July 13th, 1990 is the first I see. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8226 Reffsin-cross/Schoer
1 Q She didn't start working there for several months 2 after business started operation; is that correct? 3 A Based on the paychecks, yes. 4 Q And there were other employees who were paid weeks 5 before she started to work; isn't that correct? 6 A Yes. 7 Q And looking through that year, isn't it fair to say 8 that she received -- let me ask you this: These salaries 9 as far as you know did they include commissions this net 10 payroll? 11 A At the time, I don't know. 12 Q If you look at these numbers they are not consistent 13 week to week? Is that fai
r to say? For each employee. 14 A No. 15 Q For example, on July 13th Tara received $315.90; is 16 that correct? 17 A Yes. 18 Q My copy is hard to read. 19 A Yes, that's what it says. 20 Q And then on July 20th, which is a week later she also 21 received $315.90; is that correct? 22 A Yes. 23 Q And if you go down to August, and it looks like 24 August 3rd, several weeks later she received $397.85; is 25 that correct? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8227 Reffsin-cross/Schoer
1 A Yes. 2 Q So that reflects -- if you go to August 10th, the 3 next week she received $440.45? 4 A Yes, that's correct. 5 Q So, does that indicate to you that that number 6 includes the commissions as well, since it was fluctuating 7 on a weekly basis for Tara and obviously for other 8 individuals as you
look -- 9 A It indicates there is additional compensation, yes. 10 Q All right. 11 Now, is it fair to say that all of Tara's 12 compensation for the year is contained on that document, 13 her compensation from Who's Who Worldwide, as you go along 14 and you look through pages 16 through 24? 15 A The net payments, yes, it would be all, yes. 16 Q All right. 17 And just looking at it, they cover anywhere from 18 $288 a week, or $285 a week, up to $565 a week; is that 19 fair to? 20 A Yes, sir, I see the 440. 21 Q I believe on December 27th is the last payment of -- 22 on September 2nd there is 565 or 568, my copy is hard to 23 read. 24 A Yes. $565.54 on September 7th. 25 Q If you look at the last one at the very end, on HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8228 Reffsin-cross/Schoer
1 December 27th s
he received $288.70. 2 A December 7, 462.65. 3 Q The 27th. 4 A Yes, 288.70. $288.70. 5 Q Now, if you look at Exhibit 655, that is a journal 6 for July 31, 1991, covering the period up to July 31, 7 1991; is that correct? 8 A Yes, the general ledger journal. 9 Q The same thing that we have been talking about; is 10 that right, sir? 11 A Yes. 12 Q Is there a general ledger journal for the period in 13 1991 that ends in December of 1991, from January to 14 December of 1991? 15 A There was. 16 Q That is not one of the exhibits that you have there; 17 is that correct? 18 A No. 19 Q Go to the ones to your right there. 20 A There is a trial balance work sheet. 21 Q Which is which exhibit? 22 A This is the -- when the accountants come in and a 23 general ledger is prepared, from that general ledger they 24 prepare
a summary, which is called a trial balance. And 25 the accountant would put that trial balance on a work HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8229 Reffsin-cross/Schoer
1 sheet. And any adjustments that are required for purposes 2 of the tax return, or in cases of financial reporting, 3 they would put the adjustments on this work sheet and 4 extend them out and get a final trial balance. 5 Q What exhibit are you looking at, what number? 6 A Exhibit 656. 7 Q And that Exhibit 656 goes to the end of 1991; is that 8 correct? 9 A Yes. 10 Q And we don't have the underlying general ledger that 11 that is adjusting; is that fair to say? 12 A Yes. 13 Q Now, if you look at the 655, which was the general 14 ledger as of July 31, 1991, that, too, lists the salaries 15 that each of the employees received, again, in the net
16 payroll; is that fair to say? 17 A Yes. 18 Q And that's on pages 13 through 22 on the 655; is that 19 correct? 20 A Yes. 21 Q Again, if the jury wants they can look at that 22 exhibit and determine at least for the half a year to 23 determine what Tara earned as part of -- as her net salary 24 for working for Who's Who; is that correct? 25 A Actually seven months. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8230 Reffsin-cross/Schoer
1 Q Seven months? 2 A Yes. 3 Q Now, if we look to Exhibit 658-B -- 4 A Is that in the folder? 5 Q I am really not sure. 6 A There it is. 7 Q 658-B, maybe you can hold it up to the jury so they 8 can see it. 9 (The witness complies.) 10 Q They are oversized sheets of paper. And it is a 11 computer printout; is that right? 12 A That's right. 13 Q Looking at that document, the accounting system, if I 14 can call it an accounting system, changed, so that there 15 is no list specifically for individual payroll. 16 Can you look through that to make sure. 17 A The codes changed. There is a loans and exchange, 18 payroll. It is effectively the same thing. 19 Q There is a total and not broken down for each 20 individual employee; is that correct? 21 A In most cases, yes. 22 Q When we look at that document we can't tell how much 23 a particular employee earned in 1993; is that correct? 24 A No, they are -- 25 Q 1992, I am sorry. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8231 Reffsin-cross/Schoer
1 A You have to go to the underlying work sheets. 2 Q And we don't have those underlying work sheets here? 3 A I don't know. 4 Q Can you look through to see. 5 A We don't have them right here, no. 6 Q Okay. 7 We can -- in that document is there a breakdown 8 as to the salaries of the group leaders as opposed to the 9 other salaried employees? 10 I believe it is on page 23? 11 A Page 22, 7110. Selling expenses, payroll group 12 leaders. 13 Q And it continues on to page 23; is that correct? 14 A Yes, that's correct. 15 Q And that shows the salaries for all of the group 16 leaders that were employed at Who's Who Worldwide through 17 the year 1992; is that correct? 18 A That's correct. 19 Q And that shows a number of -- $180,000? 20 A Yes, $180,308. 21 Q And you heard testimony that there was always at 22 least three, and most of the time four group leaders that 23 were employed at Who's Who Worldwide? 24 A Yes, I believe so. 25 Q Now, going to Exhibit 660, that's the general ledger
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8232 Reffsin-cross/Schoer
1 for the year 1993; is that correct? 2 A That's correct. 3 Q And that, too, like the year, 1992, only has -- it 4 doesn't have each individual employee listed as to what 5 they earn, but has a breakdown with respect to group 6 leaders again; is that correct? I believe it is on page 7 19. 8 A Yes, that's correct. 9 Q And that shows that the group leaders in total were 10 paid the sum of $226,885.31 in salaries; is that correct? 11 A Yes. 12 Q In 1994 the company was in bankruptcy; is that 13 correct? 14 A That's correct. 15 Q And for 1994 the only record that you have before you 16 that has been introduced into evidence is Exhibit 662. 17 Can you tell us what that exhibit is, 662? 18 A This is a trial balance for the period ending
19 September 30th, 1994. 20 Q And does that cover the entire year of 1994 up to 21 September 30th, or -- 22 A This is the DIP account, which would only go from 23 March 31st, 1994 to September 30th, 1994. 24 Q So, on that account, again, there is only a gross 25 number for all the group leaders; is that correct? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8233 Reffsin-cross/Schoer
1 A Yes. The payroll exchange account would have been 2 wiped out or cleared out. 3 Q And that's approximately -- well, that was 4 $47,974.82; isn't that correct? 5 A What are you referring to? 6 Q Payroll group leaders, account 5,000 on that trial 7 balance? 8 A Yes. At that point they were paid $47,977.82. 9 Q And just so I am clear, that is for a six-month 10 period? 11 A Approximately, yes. 12 Q All right. 13 And t
hat's the only record we really have with 14 respect to what this company was doing in 1994? Is that 15 fair to say? That you have before you. 16 A Before me, yes. 17 Q Now, I am going to show you this document. 18 MR. SCHOER: Judge, I am sorry. 19 Who has the exhibit stickers? 20 (Mr. Schoer confers with Mr. Neville.) 21 Q I will show you what I marked as Exhibit BF. 22 Let me show it to Mr. White first. 23 (Document handed to Mr. White.) 24 (Counsel confer.) 25 MR. SCHOER: I am sorry, this is EF, Edward Fox. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8234 Reffsin-cross/Schoer
1 (Handed to the witness.) 2 Q Can you tell us what that is? 3 A This is a 1995 W-2 and earning summary. 4 Q And that is a document, that W-2, that was prepared 5 on behalf of Who's Who Worldwide? 6 A Yes, that's correct.
7 Q And it is the kind of record that Who's Who Worldwide 8 would prepare for its employees; is that correct? 9 A Yes, that's correct. 10 Q And they would -- by law they have to give that to 11 their employees, is that correct, with respect to showing 12 what the employees earned so that an employee can file an 13 income tax return; is that right? 14 A That's correct. 15 MR. SCHOER: Your Honor, at this time I would 16 offer Defendant's Exhibit EF. 17 THE COURT: Any objection? 18 MR. WHITE: No objection, your Honor. 19 THE COURT: Defendant's Exhibit EF, Easy Fox, in 20 evidence. 21 (Defendant's Exhibit EF received in evidence.) 22 Q Can you tell us whose W-2 that is? 23 A Tara Garboski. 24 Q And that's for the year 1995; is that correct? 25 A That's correct. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8235 R
effsin-cross/Schoer
1 Q And you heard testimony that Who's Who Worldwide -- 2 withdrawn. 3 Do you know when Who's Who Worldwide stopped 4 operations? 5 A I am not quite sure when it stopped. 6 Q All right. 7 Well, you heard testimony that Tara Garboski was 8 arrested on March 30th; is that correct? 9 A Yes. 10 Q And that's when she stopped working for Who's Who 11 Worldwide; is that correct? As far as you know, 12 Mr. Reffsin. 13 A As far as I know. 14 Q And March 30th would be 13 weeks into the year? 15 A Yes. 16 Q Is that correct? 17 A Yes. 18 Q The end of the first quarter? 19 A Roughly. 20 Q And that document indicates how much she earned in 21 1995? 22 A Yes. 23 Q From Who's Who Worldwide? 24 A Yes. 25 Q How much is that? HARRY RAPAPORT, CSR, CP, CM OFFICIAL C
OURT REPORTER 8236 Reffsin-cross/Schoer
1 A $15,600. 2 Q So that was $1,200 a week? 3 A Yes. 4 Q You heard testimony that Elizabeth Sautter earned 5 $1,500 per week; isn't that correct? Do you remember 6 that? 7 A Yes. I believe she earned about $60,000 a year. 8 Q All right. 9 In addition -- I am sorry. I withdraw that 10 question. 11 You heard testimony that Debra Benjamin earned 12 $1,500 a week; is that correct? 13 A Yes. 14 Q I confused the two names, and I apologize. 15 A Yes. 16 Q All right. 17 In addition, both Elizabeth Sautter and Debra 18 Benjamin received -- well, withdrawn. 19 In addition, both Elizabeth Sautter and Debra 20 Benjamin had cars that the company paid for; is that 21 correct? 22 A Yes. 23 Q And those are reflected on the books and records that 24 you k
ept as the accountant for Who's Who Worldwide; isn't 25 that right? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8237 Reffsin-cross/Schoer
1 A Yes. 2 Q All right. 3 In addition, not only did they have cars, but 4 those two people received payments for travel; isn't that 5 so? 6 A As I can remember, yes, there were some reimbursed 7 expenses. 8 Q All right. 9 For example, if you look at the general ledger 10 for December 31, 1993, which is Exhibit 660, at page 34, 11 there is an account, 7246 which shows travel; isn't that 12 so? 13 A Yes. 14 Q And under that account there is the car, cars that 15 were being leased; some of them; isn't that correct, sir? 16 A Yes, I see payments to car leasing companies, yes. 17 Q And there is limo service, a couple of those; isn't 18 that right, Mr. Reffsin?
19 A I can't tell which would be limo service. 20 Q A & B Limo is a limo service I assume? 21 A Yes, I missed that. 22 Q All right. 23 There are some gas charges in that account; isn't 24 that right? 25 A Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8238 Reffsin-cross/Schoer
1 Q All right. 2 There are a lot of checks to Elizabeth Sautter 3 for travel? 4 A Yes. 5 Q And to Debra Benjamin for travel; isn't that right? 6 A Yes. 7 Q And no checks to Tara Garboski for travel; isn't that 8 right? 9 A None that can be specifically identified, no. 10 Q Now, I am going to ask you to look at that exhibit 11 that you have in front of you, December 31, 1993. 12 A Yes. 13 Q What exhibit number is that again? 14 A 660. 15 Q 660? 16 A Yes. 17 Q Okay. 18 I am
going to use your -- first I am going to ask 19 you some questions about some of the accounts that are 20 there. 21 A Yes. 22 Q I am going to ask you some questions about some 23 accounts, and I will write them on this chart so we can 24 all get an idea. 25 We are going to talk about 1993. We are going to HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8239 Reffsin-cross/Schoer
1 talk about the expenses, some of the expenses of Who's Who 2 Worldwide. 3 A Yes. 4 Q I am going to ask you to look at account 1,500. And 5 I will ask you what that account is? 6 A That's an account which contains payments for fixed 7 assets. 8 Q Can you tell the jury what fixed assets are? 9 A It would be payment for office equipment, desks, 10 furniture, telephones, anything that had a value that 11 would be appropriately spread o
ver a period of time rather 12 than just being an expenditure which was incurred. 13 Q All right. 14 The number that is there are those expenditures 15 made in the year 1993, or other expenditures which were 16 carried over from other years as well? 17 A That's a carry-over account. 18 Q All right. 19 In that account, how much was the expenditures 20 for fixed assets? You can round off the number, 21 Mr. Reffsin. 22 A It looks like there were some dispositions in fixed 23 assets as well. So the net effect is a reduction. These 24 entries would be effectively -- yes, that's the opening. 25 Q What were the fixed assets at the end of 1993? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8240 Reffsin-cross/Schoer
1 A $438,881.97. 2 Q I am going to round it off. 3 Then there is an account 1520 which is called 4 s
oftware. 5 A Yes. 6 Q Do you know what that was? 7 A Yes. That was the cost of the setting up the 8 computer program that was used by Who's Who Worldwide. 9 Q And do you know what the cost of that was? 10 A $110,499. 11 Q I am going to ask you to look at account 5200. 12 Tell us what that account is? 13 A That account represents costs incurred in 1993 14 attributable to the Registry called the Platinum 15 Registry. 16 Q Okay. 17 How much is that? 18 A That's $1,500. 19 Q Then there is an account 5210, which is for the 20 printing and binding; is that correct? 21 A That's correct. 22 Q And how much is that? 23 A $114,392. 24 Q So that's for the printing and binding of the 25 registry; is that correct? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8241 Reffsin-cross/Schoer
1 A Yes. 2 Q And then there is an account 5230 called fulfillment 3 that also relates to the registry? 4 A Yes, it does. 5 Q How much is that? 6 A $3,243, rounded off to the nearest dollar. 7 Q Three two four three? 8 A Yes. 9 Q Is that right? 10 A Right. 11 Q And then there is also an account, 5240, which 12 relates to the registry and called the miscellaneous 13 account; is that right? 14 A Right. 15 Q And that is $6,250; is that right? 16 A Correct. 17 Q All right. 18 And then there is an account 5250 which relates 19 to the Global Registry; is that right? 20 A That's correct. 21 Q All right. 22 That's a different book; is that right? 23 A Yes. 24 Q And that's because the books were printed at the end 25 of the year and some of the costs would be paid the HARRY RAPAPORT, CSR
, CP, CM OFFICIAL COURT REPORTER 8242 Reffsin-cross/Schoer
1 following year, the early months of the following year. 2 And some costs for the new registry would be at the end of 3 the months at the end of the year; is that fair to say? 4 A That is correct. 5 Q And how much where was the cost of the Global 6 Registry? 7 A $222,007. 8 Q All right. 9 Then account 5251 is the cost of publishing and 10 printing the Tribute Magazine; is that right? 11 A Yes. 12 Q And that's one issue of the Tribute Magazine; is that 13 right? 14 A Yes. 15 Q And how much was spent to print one issue of the 16 Tribute Magazine? 17 A $25,916. 18 Q And we are not even talking about the cost of 19 preparing it, the salaries, the postage, all that? That's 20 just the cost of printing; is that right? 21 A That's correct. 22
Q And in addition, members received wall plaques; is 23 that right? 24 A Yes. 25 Q And that's account 5400? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8243 Reffsin-cross/Schoer
1 A That's correct. 2 Q And how much was spent in wall plaques in the year 3 1993? 4 A $829,751. 5 Q And then there is an account 5410, miscellaneous 6 gifts? 7 A That's correct. 8 Q And those are things that were given to members; is 9 that right? 10 A That is correct. 11 Q And how much was that? 12 A $45,868. 13 Q And then there is an account 5420, and that's leather 14 goods, right? 15 A Right. 16 Q And those are leather goods, again given to members 17 for certain things that they did? 18 A That's the purpose. 19 Q How much is that? 20 A $11,581. 21 Q And then there is acc
ount 5425, which is the CD-ROM. 22 How much was spent on the CD-ROM in 1993? 23 A $53,384. 24 Q Then there is an account 5428, which are auto 25 emblems; is that right? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8244 Reffsin-cross/Schoer
1 A Yes. 2 Q And that's again something given to members as part 3 of their membership; is that right? 4 A What I understand. 5 Q How much was spent on that? 6 A $6,273. 7 Q Now, I would ask you to look at accounts 7110, 7111, 8 7211 and 7212. 9 Those are payroll accounting; is that right? 10 A That's correct. 11 Q And 7110, we talked about, the group leaders; is that 12 right? 13 A Yes. 14 Q And 7111 is the general sales staff? 15 A Yes. 16 Q And 7211 is the administration? 17 A I believe so, but let me concur with that. Office, 18 y
es. 19 Q And 7212 is the computer? 20 A Yes. 21 Q And that's payroll? 22 A Right. 23 Q Can you tell us what the total of those four accounts 24 are? 25 I left the calculator up there if you want to use HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8245 Reffsin-cross/Schoer
1 it. 2 A It doesn't seem to work. 3 Q That's your calculator. 4 A Okay, I got it. 5 Again, I am rounding it to the nearest dollar. 6 Q Uh-huh. 7 A $2,066,777. 8 Q Look at accounts 7140 and 7141. And that's for 9 printing and brochures. 10 A 7140 is $127,258. And 7141 is $6,485.67. 11 Q 6,485? 12 A If you are looking for cost of the registry, you left 13 out paper. 14 Q Okay. 15 Let's go back up to the paper, and that's account 16 5450? 17 A Right. $16,032. 18 Q Now I would l
ike you to look at account 7240. 19 A Rent. 20 Q Rent, right? 21 A Right. 22 Q All right. 23 That's the rent for the Lake Success property; is 24 that right? 25 A Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8246 Reffsin-cross/Schoer
1 Q And what was the rent in 1993 for the Lake Success 2 property? 3 A $283,592. 4 Q And then look at account 7250? 5 A Equipment rental. 6 Q How much where was the equipment rental? 7 A $15,071. 8 Q And then finally, account 7263. 9 A Computer. 10 Q That's for a computer, right? 11 A No. That's the payroll service generally. 12 Q All right. We won't even count that. We will take 13 that off. 14 Mr. Reffsin, you are the accountant. Can you add 15 those numbers for me, please? 16 THE COURT: Have you done it yourself? 1
7 MR. SCHOER: We just took some off and changed 18 some. 19 THE COURT: I suspect that you have done this 20 previously. You might not have. 21 MR. SCHOER: I did, Judge, but my numbers are not 22 exactly these numbers. 23 THE COURT: What did you add to your numbers? 24 MR. SCHOER: I don't know that I added anything. 25 I may have rounded them differently. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8247 Reffsin-cross/Schoer
1 THE COURT: We certainly will not sit here while 2 Mr. Reffsin adds up all the figures. You tell us what the 3 round ballpark figure is. 4 MR. SCHOER: Four and a half million dollars. 5 THE COURT: That's round. 6 Q This was a company that was spending money, right? 7 A Absolutely. 8 Q And the people who were working in this place in 1993 9 saw a thriving business that was spending, without cos
ts 10 of attorneys and accountants and things like that, just 11 things that were visible to them, four and a half million 12 dollars, right? 13 A Right. 14 Q Okay. 15 Is it fair to say in 1994 it was similar? 16 A Well, because of the break it may have been a little 17 more. 18 MR. JENKS: Gary. 19 (Mr. Jenks confers with Mr. Trabulus and 20 Mr. Schoer.) 21 MR. SCHOER: Judge, I would like to mark this, my 22 artwork here, as Exhibit EG, Edward Gary. That's for me, 23 Gary. That's for me. And I would offer that in evidence. 24 THE COURT: Any objection? 25 MR. WHITE: I am sorry, your Honor, no. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8248 Reffsin-cross/Schoer
1 THE COURT: Defendant's Exhibit EG, Easy George, 2 in evidence. 3 (Defendant's Exhibit EG received in evidence.) 4 Q And, Mr.
Reffsin, there is one other area I would 5 like to go into with these records that you can help us 6 with. 7 Looking at Exhibit 662, which was that trial 8 balance? 9 A I have it. 10 Q In September of 1994. 11 A Yes. 12 Q That trial balance shows total sales for that period 13 of time; isn't that correct? 14 A That's correct. 15 Q And what were the total sales for that period of 16 time? 17 A $3,241,659. 18 Q And that's in account number 4,000; is that right? 19 A Yes. 20 Q In account number 4290 it shows refunds and returns; 21 isn't that right? 22 A That's correct. 23 Q And how much were the refunds and returns during that 24 period of time? 25 A $56,036. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8249 Reffsin-cross/Schoer
1 Q Is it fair to say that the percentage o
f refunds and 2 returns to the total sales was 1.1 percent? 3 A That looks about right. 4 Q So, 1.1 percent of three million dollars worth of 5 sales are people who were dissatisfied, who asked for 6 refunds and returns, or cancellations; is that right, 7 Mr. Reffsin? 8 A That's what it shows, yes. 9 Q And if you look at Exhibit 658-B, which is the 10 general ledger for December 31, 1992. 11 A Yes. 12 Q That's a big one. 13 A Yes. I have it. 14 Q If you look at account 4510 which is on page 17. 15 A I have it. 16 Q Okay. 17 That account shows sales, right? 18 A Right. 19 Q Okay. 20 And it shows refunds? 21 A Yes. 22 Q Right? 23 A Yes. 24 Q All right. 25 And it lists people that received refunds, refund HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8250 Reffs
in-cross/Schoer
1 checks, right? 2 A That is correct. 3 Q And it also shows in the debit column -- let me take 4 it a step back. The debit column would be the refunds 5 that people received, or cancellations; isn't that right? 6 A Mostly. There are some other things in there. 7 Q And the credit column would be the sales, the total 8 sales; is that right? 9 A That's correct. 10 Q Now, in addition to listing people who received 11 refunds of $97, and $297, there are some entries with 12 respect to charge backs? 13 A Yes. 14 Q Right? 15 A Yes. 16 Q And those are charge backs from the credit card 17 companies? 18 A Yes. 19 Q Right? 20 A Yes. 21 Q All right. 22 And those are people who said, after they made 23 their charge, after it was in their account, after Who's 24 Who Worldwide was paid, they
may have complained to their 25 credit card companies and requested a refund, really of HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8251 Reffsin-cross/Schoer
1 their credit card; isn't that correct? 2 A That's correct. 3 Q And the credit card company would charge Who's Who 4 Worldwide back for those people who were dissatisfied? 5 A Yes. 6 Q Is that right? 7 A Yes. 8 Q Okay. 9 And there are some numbers in the debits in that 10 account, 4510 which don't belong in that account, or 11 double entries, or things like that, right? 12 A There are some corrections. I believe there were New 13 York State sales tax where we didn't specifically 14 segregate them -- no, I believe we did segregate sales 15 taxes. 16 There may be some bank debits. 17 Q Is it fair to say that when you analyzed the numbers 18
with respect to that account, that again in 1992 the 19 returns and cancellations and exchanges came to 20 approximately 1.1 percent of the total sales; is that 21 right? 22 A I couldn't verify that without doing the calculation, 23 sir. 24 Q Okay. 25 In 1993, again we have a similar account; isn't HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8252 Reffsin-cross/Schoer
1 that correct, and that's Exhibit 660. 2 A Uh-huh. 3 Q The one we were looking at before? 4 A Right. 5 Q And it is the account 4510 which starts on page 13, 6 right? 7 A Yes. 8 Q Again, there is the New York State Tax Department 9 payment there not belonging in that account. And there 10 are numbers to correct, it says "to correct," sir, and 11 they don't belong with respect to refunds to members; is 12 that right? 13 A R
ight. 14 Q And is it fair to say that with respect to 1993, 15 again the total number of people who asked for refunds, or 16 received cancellations was approximately 1.1 -- well, one 17 percent of the total sales? 18 A Gain, I wouldn't be able to verify that without 19 making a calculation. 20 Q Okay. 21 (Mr. Schoer confers with Mr. Trabulus.) 22 Q Mr. Trabulus indicated to me that this number up here 23 is a little unclear. This number was taken off -- 24 A 662. 25 Q This is Exhibit 662, and that covers the period -- HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8253 Reffsin-cross/Schoer
1 A March 31st to September 30th. 2 Q September 30th of 1994? 3 A Right. 4 Q Is that clear now? 5 MR. SCHOER: Judge, I would like to mark this 6 second little chart as Defendant's Exhibit E as in Edward 7 H.
8 THE COURT: Any objection? 9 MR. WHITE: No, your Honor. 10 THE COURT: Defendant's Exhibit EH, Easy How, in 11 evidence. 12 (Defendant's Exhibit EH received in evidence.) 13 MR. SCHOER: I have no further questions. Thank 14 you. Thank you, Mr. Reffsin. 15 THE COURT: Anybody else? 16 MR. WALLENSTEIN: I have some redirect, your 17 Honor. 18 THE COURT: All right. 19 20 REDIRECT EXAMINATION 21 BY MR. WALLENSTEIN: 22 Q Good morning, Mr. Reffsin. 23 A Good morning. 24 Q Just a couple of matters that came up during your 25 examination by Mr. White and Mr. Trabulus that I would HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8254 Reffsin-redirect/Wallenstein
1 like to clarify. 2 With respect to Mr. Rigal, you testified 3 yesterday that despite the fact that you filed bankruptcy, 4 tha
t you intend to pay Mr. Rigal the monies that you owe 5 him; is that correct? 6 A That is correct. 7 Q Is it a fair statement that at the time of the 8 adversary proceeding within the bankruptcy proceeding that 9 Mr. Rigal had brought, that you were aware that your debt 10 to him was in fact going to be discharged by the 11 bankruptcy court? 12 A That was our feeling, yes. 13 Q And that was based upon a discussion with your 14 attorney, Mr. Flaum? 15 A That's correct. 16 Q And you understood that that was because there was no 17 fraud involved; is that correct? 18 A That is correct. 19 Q And despite knowing that you would not have to pay 20 him anything, you chose to pay him; is that correct? 21 A That is correct. 22 Q And why was that? 23 A Because I felt I had a moral obligation to do that. 24 He did lend me the money, and I wante
d to repay him. 25 Q You did in fact pay part of that after the bankruptcy HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8255 Reffsin-redirect/Wallenstein
1 proceeding? 2 A Yes, I was making payments to him. 3 Q And you intend to continue to do that? 4 A Hopefully, yes. 5 Q Okay. 6 Now, on another area, you were asked some 7 questions yesterday by both Mr. White and Mr. Trabulus, I 8 believe, with respect to the stock certificates that you 9 saw in 1993. 10 A Right. 11 Q In early 1993, the beginning of 1993, what was your 12 understanding with respect to the ownership of Who's Who 13 Worldwide? 14 A 25 percent was owned by the Grossmans, whether 15 directly or indirectly, and 75 percent was owned by 16 Mr. Gordon. 17 Q And some point in early 1993, or sometime in the 18 first quarter of the year y
ou saw proof of that from 19 Mr. Gordon; is that correct? 20 A Proof that Mr. Gordon owned the 75 percent? 21 Q Of the ownership of the corporation? 22 A I saw proof that Mr. Gordon didn't own 75 percent. 23 Q How did that come about? 24 A We had a discussion and he indicated he didn't own 75 25 percent. Actually we had an earlier discussion. The HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8256 Reffsin-redirect/Wallenstein
1 discussions were in 1992, late '92. And he said he was 2 going to -- I said I would like to see the stock 3 certificates to show that you owned it. And he showed it 4 to me in March. 5 Q He showed you the stock certificate demonstrating the 6 75 percent ownership by the Grossmans? 7 A That's correct. 8 Q And that was in March of 1993? 9 A That's correct. 10 Q Would it be a fair statement that
you don't know 11 whether in fact that the stock certificate you saw then is 12 the same that is in evidence here at trial? 13 A Not specifically, no. 14 Q But you were satisfied at the time that it was a 15 genuine certificate and indicated 75 percent ownership to 16 the Grossmans? 17 A That's correct. 18 Q Now, Mr. Trabulus asked you yesterday about 19 Mr. Gordon's execution of tax returns without reading 20 them; do you recall that series of questions? 21 A Yes. 22 Q He asked you if you would say it would be 23 Mr. Gordon's style to rely on you in preparing the return 24 without reading it, and you indicated he would; is that 25 right? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8257 Reffsin-redirect/Wallenstein
1 A I indicated he might, yes. 2 Q Is it fair to say that before you prepare a tax 3 retu
rn for Mr. Gordon, you had a lengthy discussion with 4 him with regard to the necessary back up? 5 A Generally, yes. 6 Q And would it be fair to say that when you asked him 7 with respect to documents to support the numbers that went 8 into the returns and schedules, that he would provide 9 those documents to you? 10 A That's correct. 11 Q And is it fair to say that if you needed explanation 12 of them, he would provide the explanation? 13 A Yes. 14 Q And is it then fair to say that if he signed the 15 return without reading it, it was simply that you had 16 prepared the return and come up with the numbers 17 physically on the paper based on all the information that 18 he and you had already discussed and that had been 19 provided? 20 A That is correct. 21 Q And when you prepared his returns, would it be fair 22 to say that your practice was
to prepare the return and 23 then mail it to Mr. Gordon for execution and filing? 24 A Sometimes I mailed it, and sometimes I delivered it. 25 Q But either way, you would see that it got into his HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8258 Reffsin-redirect/Wallenstein
1 hands and then it became his responsibility at that point; 2 is that correct? 3 A That's correct. 4 Q So, it would also be fair to say that you don't know 5 whether he read them or not? He may have and he may not 6 have? 7 A That's correct. 8 Q Now, you were ask questions yesterday by Mr. White 9 with respect to Mr. Gordon's ability to borrow funds to 10 repay the IRS; do you remember that series of questions? 11 A Some, yes. 12 Q You were asked, and you agreed that Mr. Gordon in 13 fact had ability to borrow funds to repay the Internal 14 R
evenue Service, or to repay Who's Who, or to obtain money 15 from any number of sources; is that correct? 16 A Yes. It is general ability. 17 Q He could have done what he wanted with the money he 18 could have obtained; is that correct? 19 A I would assume so, yes. 20 Q Was there anything you could have done about that? 21 A Nothing. 22 Q Did you have any input in all the time we have been 23 discussing in the past two and a half months here, did you 24 have any input in fact as to any of Mr. Gordon's spending? 25 A On the contrary. He would not discuss it at all. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8259 Reffsin-redirect/Wallenstein
1 Q Is it fair to say that Mr. Gordon did what Mr. Gordon 2 wanted to do when Mr. Gordon wanted to do it and left it 3 to you to try to clean up the mess afterward? 4 A That's right --
5 MR. TRABULUS: Objection. 6 THE COURT: Sustained as to form. Strike out the 7 answer. 8 Q Is it a fair statement that you gave Mr. Gordon 9 advice from time to time? 10 A If he requested it, yes. 11 Q Is it a fair statement that you can give Mr. Gordon 12 or any other client all the advice you want, but you can't 13 make them take it? 14 A That's correct. 15 Q Now, one other question. 16 Mr. White asked you yesterday as to whether you 17 would agree that Mr. Gordon had a financial motive to 18 avoid payments to the Internal Revenue Service, and you 19 indicated you agreed with that statement? 20 A A financial motive, yes. 21 Q He owed the IRS three and a half million dollars? 22 A Yes. 23 Q Did you owe the IRS any money? 24 A At that time? 25 Q Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8260 Reffsin-redirect/Wallenstein
1 A I don't think so, no. 2 Q Certainly not as a result of Mr. Gordon's activities; 3 is that right? 4 A No. 5 Q And if Mr. Gordon had succeeded in defrauding the 6 Internal Revenue Service would you have achieved any 7 benefit from that? 8 MR. TRABULUS: Objection. 9 THE COURT: Sustained. 10 MR. WALLENSTEIN: I have nothing further. 11 THE COURT: All right. 12 We will take a ten-minute recess. Please do not 13 discuss the case. And keep an open mind. 14 (Whereupon, at this time the jury leaves the 15 courtroom.) 16 17 (Whereupon, a recess is taken.) 18 19 THE CLERK: Jury enter entering. 20 (Whereupon, the jury at this time entered the 21 courtroom.) 22 THE COURT: Please be seated, members of the 23 jury. 24 Anybody wish to inquire? 25 MR. WHITE: Y
es, your Honor. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8261 Reffsin-recross/White
1 2 RECROSS-EXAMINATION 3 BY MR. WHITE: 4 Q Mr. Reffsin, correct me if I am wrong, but you said 5 yesterday that you believe with respect to certain things 6 you were deceived by Mr. Gordon; is that correct? 7 A Yes. 8 Q Now, I was listening to you this morning when 9 Mr. Schoer was questioning you. And you know an awful lot 10 about the finances of Who's Who Worldwide, don't you? 11 A I read them off the general ledger. 12 Q And you were involved in compiling those general 13 ledges, right? 14 A Not in detail. 15 Q You know the accounts, right? You know the expenses? 16 A I read them. 17 Q Mr. Schoer left one out and you suggested, and said 18 you forgot paper. Do you remember that? 19 A It was just below the
one he gave me. 20 Q I want to ask you something I am not clear about from 21 Mr. Trabulus' cross-examination yesterday. 22 First of all, yesterday when I was asking you 23 questions I asked you about what a taxpayer was supposed 24 to put on the 433 about his expenses. Do you remember 25 that? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8262 Reffsin-recross/White
1 A Yes. 2 Q And I gave you the example of someone who lived in a 3 $20,000 mansion, but really only a $2,000 rent was 4 reasonable or necessary. 5 A Right. 6 Q And I asked you what that person should put. And I 7 believe you said he should put 2,000; is that right? 8 A No. I said if he was subject to a contract of some 9 sort you would have to put what you were subject to. 10 Q Exactly. 11 Remember, I changed the hypothetical and said, 12 no,
the guy said, my lease is ending next month, and I 13 don't have to take this apartment again, but I want to 14 although it is unnecessary? Remember? And you said you 15 should put what is necessary; is that correct? 16 A That's correct. 17 Q Then Mr. Trabulus showed you the instructions to the 18 433; is that right? 19 A Yes. 20 Q And he was asking you about what you are supposed to 21 put for rent. Do you remember that? 22 A Vaguely, yes. 23 Q And let me read to you from the transcript, and page 24 8202. 25 Question: In the case of rent they tell you to HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8263 Reffsin-recross/White
1 list your monthly rent payment? 2 Answer: Yes. 3 Question: So that might be interpreted a little 4 differently than just what is necessary. In case of rent 5 they really want to k
now what you are actually paying? 6 Answer: Yes. 7 You said that yesterday to Mr. Trabulus, right? 8 A If I said that I meant based on any outstanding 9 contractual arrangement. That was intended. 10 Q Now, Mr. Trabulus also asked you about the time 11 period when you hoped that Mr. Gordon would be able to 12 repay his loan to Who's Who Worldwide, right? 13 A Right. 14 Q And he used a phrase that you agreed with, that 15 Mr. Gordon was hoping to pay back Who's Who Worldwide and 16 the IRS in one fell swoop. Do you remember that? 17 A I remember that, yes. 18 Q And is it correct that that is what you and 19 Mr. Gordon expected? 20 A Not in one fell swoop, but expected to pay it back, 21 yes. 22 Q So, is it fair to say that Mr. Gordon expected income 23 in the future which he would use to apply to both of those 24 obligations? 25 A I
can't say what Mr. Gordon expected. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8264 Reffsin-recross/White
1 Q Let me ask you, what did you expect? Did you expect 2 he was going to have income that he would use to pay both 3 those obligations? 4 A I didn't care as long as he would pay it. 5 Q How was he going to pay it if he didn't have income? 6 A Let him borrow it from somebody else if he can. 7 Q I am unclear. 8 Did Mr. Gordon tell you that I am owed 9 substantial amounts by Who's Who Worldwide, and some day I 10 would in effect take those and give it back and cancel out 11 my loan? 12 A That's what he said. 13 Q And are you saying that you didn't think that was the 14 case? 15 A I didn't know. I had not made the calculations as to 16 what Who's Who Worldwide owed him in terms -- 17 Q Well, didn't you indicate
if that did not take place 18 by 1994, you were on your own going to declare the amount 19 of his loan balance income to him? 20 A That's correct. I did say that. 21 Q Is it fair to say you expected whatever was going to 22 happen, one way or another, it was going to happen by 23 1994? 24 A That is correct. 25 Q Now, you recall in September of 1994 meeting with HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8265 Reffsin-recross/White
1 Mr. Gordon and Neil Ackerman in Mr. Ackerman's office? 2 A Yes, I recall we had a meeting there, yes. 3 Q And you had seen the evidence, the letter in evidence 4 that Mr. Ackerman prepared, where he summarized the status 5 of Mr. Gordon's loans? 6 A Yes, I have seen that. 7 MR. WALLENSTEIN: Objection, your Honor. It is 8 beyond the scope of redirect. And there was no other 9 cross wi
th respect to that area. 10 THE COURT: I don't know what Mr. White is going 11 to ask. He is asking some preliminary questions. We will 12 see. 13 MR. WHITE: Your Honor, it is responsive to the 14 area of loans that Mr. Trabulus raised. 15 Q Is it not correct that Mr. Ackerman says in that 16 letter that Mr. Gordon is due a substantial sum of money 17 from Who's Who Worldwide, even more than what he owes 18 Who's Who Worldwide? 19 A That's what it says. 20 Q And you were present at the meeting with 21 Mr. Ackerman. 22 Is that what you and Mr. Gordon told Mr. Ackerman 23 the day before he wrote the letter? 24 MR. WALLENSTEIN: Objection. 25 THE COURT: What grounds? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8266 Reffsin-recross/White
1 MR. WALLENSTEIN: Beyond the scope. 2 THE COURT: Sustained. 3
Q Well, at the time that it was written was that letter 4 inaccurate? 5 MR. WALLENSTEIN: Objection. 6 THE COURT: Sustained. 7 MR. WHITE: Your Honor, would you like me to 8 explain why it is relevant? 9 THE COURT: Yes. Explain. 10 MR. TRABULUS: I think this explanation should be 11 at the bench. 12 THE COURT: No. 13 MR. TRABULUS: Otherwise we will have a 14 summation. 15 THE COURT: All right, come up. 16 17 (Whereupon, at this time the following took place 18 at the sidebar.) 19 THE COURT: Before we go further, someone took a 20 stapler from me yesterday and never returned it? Do you 21 know who it is? 22 The stapler is not for your use. It is mine. 23 Does anybody have a stapler they took from me? 24 MR. NEVILLE: I have one, but you can use it. 25 THE COURT: How about you? HARRY RAPAPORT, CSR, CP
, CM OFFICIAL COURT REPORTER 8267 Reffsin-recross/White
1 MR. WHITE: I believe that's it. 2 THE COURT: I was about to start an 3 investigation. 4 Now, why is this relevant? 5 MR. WHITE: Mr. Trabulus raised the issue that 6 Mr. Reffsin and Mr. Gordon expected that in one fell swoop 7 that Mr. Gordon would receive this large amount of income 8 that would cancel out, that he can use to apply to both 9 the IRS debt and the Who's Who Worldwide debt, which is a 10 half a million dollars or more. 11 What I am trying to explore with Mr. Reffsin is 12 why -- I am sorry, in Mr. Ackerman's letter it says that 13 Mr. Gordon is going to get not just that money, but even 14 more. And Mr. Reffsin is supposed to be calculating how 15 much more. 16 What I am trying to lead to is why wasn't that 17 disclosed to the IRS. 18 Mr. Reffsin said that if
you were going to make 19 other money like that, so long as that loan didn't have 20 priority, the IRS didn't care. 21 Do you see what I mean? 22 THE COURT: Did you ask those questions, 23 Mr. Trabulus? 24 MR. TRABULUS: Your Honor, the questions I asked 25 were related to expectations as it existed at a time prior HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8268 Reffsin-recross/White
1 to the bankruptcy. 2 Mr. White is now talking about something that 3 happened well into the bankruptcy. 4 THE COURT: You didn't inquire as to that? 5 MR. TRABULUS: Not with regard to September of 6 1994. 7 MR. WHITE: Your Honor, he raised that in one 8 fell swoop Mr. Gordon was going to get all this money. I 9 am trying to figure out if that is what Mr. Reffsin 10 thought, why isn't it disclosed at certain points? 11 I don
't think the cross-examination of defense 12 counsel was quite as limited as this. A lot went by on 13 cross-examination when they were cross-examining 14 government witnesses which is pretty far afield. 15 THE COURT: This is not cross-examination. 16 MR. WHITE: It is, your Honor. 17 THE COURT: It is further cross-examination. It 18 is different. 19 MR. WALLENSTEIN: Your Honor, even if Mr. White 20 is correct that what Mr. Trabulus raised relates to that 21 issue -- I don't think it does, but even if he is right -- 22 this particular cross-examination doesn't implicate 23 Mr. Trabulus' questions. It implicates Mr. Reffsin's 24 credibility with respect to what Mr. Ackerman said to what 25 Mr. Reffsin thought. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8269 Reffsin-recross/White
1 MR. WHITE: Reffsin only said it in response to
2 Mr. Trabulus' questions. 3 THE COURT: Since Mr. White says -- an officer of 4 the Court -- that it was raised in cross-examination, 5 although I don't remember, by Mr. Trabulus, I will allow 6 it. 7 MR. TRABULUS: What I raised as I recall, is 8 sometime prior to the filing of the bankruptcy and prior 9 to the Reed judgment, which is early 1993 or very early 10 1994, at the latest, was there expectation that at some 11 point Who's Who Worldwide would do so well that he would 12 be able to repay his obligations to the company -- I think 13 he -- well, as well as -- I didn't say all of the tax 14 obligations. It was one of these long questions, some of 15 or all of, and that there would be a time -- 16 MR. WALLENSTEIN: If they can point to the part 17 of the transcript where this issue is raised, fine. We 18 have the transcripts. 19 MR. WHITE: I directed
your attention to the 20 parts where he said you can pay it off in one fell swoop. 21 THE COURT: Overruled. I will allow it. 22 23 24 25 HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8270 Reffsin-recross/White
1 (Whereupon, at this time the following takes 2 place in open court.) 3 Q Now, Mr. Reffsin, if Mr. Gordon were to receive 4 sufficient income so that he could in one fell swoop pay 5 off the Who's Who Worldwide loan, just those for a moment, 6 not adding any IRS, he would be getting significant 7 income; is that right? 8 A It was in the future, yes, possibly. 9 Q Yes, in the future. 10 Is it correct that monies sufficient to pay Who's 11 Who Worldwide and his other obligations are not reflected 12 as income on the projection that you prepared in 13 connection with the offer and compromise?
14 A The projection was prepared based on what existed at 15 the time it was prepared, and not upon what Mr. Gordon 16 felt was going to happen. He looked at those projections. 17 Q You submitted the offer in compromise in July of 18 1993; is that right? 19 A Yes. 20 Q And you said that one way or another these loans were 21 going to be either paid off or income by the end of '94, 22 right? 23 A That is correct. 24 Q And so, it was not more than 15 months, 16 months, 25 until one way or another that this was going to be taken HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8271 Reffsin-recross/White
1 care of; is that right? 2 A That's correct. 3 Q And the projection that you gave doesn't project that 4 he is going to get that income, right? Just yes or no. 5 A No. It does not reflect it. 6 Q Okay.
7 Now, Mr. Reffsin, take a look at 8 Defendant's Exhibit EC, Easy Charley. 9 (Handed to the witness.) 10 MR. WHITE: Your Honor, I think the jury has 11 this, what Mr. Wallenstein handed out the other day. 12 Q Those are the instructions to completing the offer 13 and compromise; is that right? 14 A Yes. 15 Q You recognized this and introduced this yesterday; is 16 that correct? 17 A Yes, that's correct. 18 Q Do you recall yesterday I was asking you questions 19 about if the IRS cared whether or not you were squandering 20 money on unneeded expenses; do you remember that? 21 A Yes. 22 Q And you said that they don't care if you are 23 squandering, they just want to know what your necessary 24 expenses are; is that right? 25 A That's right. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8272 Reffsin-recross/White 1 Q Now, if you can look at these instructions which you 2 introduced, under where it says questions IRS will 3 consider -- 4 A Right. 5 Q It says, follow along while I read: The IRS goal is 6 a compromise that is in the best interest of both the 7 government and the taxpayer. It is your responsibility to 8 show us why it would be in the government's best interest 9 to accept your proposal. When we consider your offer we 10 must ask the following questions: 11 Number 2, among the questions they must consider 12 is: Could we collect more from your assets and future 13 income than you offered? If the answer is "yes" you must 14 offer a larger amount or we will reject your offer. 15 That is listed there, right, Mr. Reffsin? 16 A That's right. 17 Q Look at number 3, another thing the IRS would 18 consider. 19 Would we be better off waiting -
- the "we" is the 20 IRS they are referring to, right? 21 A Yes. 22 Q All right. 23 3, would we be better off waiting until a future 24 date because the evidence shows that collection in the 25 future would result in more money than you now offer? If HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8273 Reffsin-recross/White
1 the answer is "yes", you must offer a larger amount or we 2 will rejects your offer. 3 Do you see that? 4 A Yes. 5 Q So, if someone were squandering money, if someone 6 were expecting to get a substantial amount of money, that 7 would affect the IRS's consideration of whether or not to 8 accept the offer; is that right? 9 A That's correct. 10 MR. WALLENSTEIN: Objection. 11 THE COURT: Overruled. 12 A Prospectively. 13 Q Yesterday Mr. Trabulus asked you about the net effect
14 of not disclosing the loans on the 430's; do you remember 15 that? 16 A Yes. 17 Q He said that the net effect is that it would show 18 Mr. Gordon in worse financial shape than he already was; 19 is that correct? 20 A Correct. 21 Q And for example, if the loan from Dr. Grossman to 22 Mr. Gordon were disclosed it would show Mr. Gordon even 23 further in debt, right? 24 A Right. 25 Q And if the loan from Who's Who Worldwide to HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8274 Reffsin-recross/White
1 Mr. Gordon were disclosed, it would show him even deeper 2 in debt; is that right? 3 A That's correct. 4 Q And didn't you say yesterday though that you expected 5 the IRS to want more than the 150,000 you offered? 6 A Right. 7 Q So you anticipated that they would say 150 is not 8 enough, we want m
ore, right? 9 A No, I anticipated that they would look at the 10 corporation. 11 Q But ultimately say that 150 is not enough, we want 12 more, right? 13 A That is correct. 14 Q So, wouldn't it have been in Mr. Gordon's self 15 interest to list those debts? 16 A In his self-interest? 17 Q Yes. 18 A Yes. 19 Q Because that way the IRS only thinks he is -- using a 20 number for an example -- if they only think he's a million 21 dollars in debt, perhaps it is only a million and a half, 22 right? 23 A Yes. 24 Q It would be in the taxpayer's favor when the IRS 25 says, hey, we want more, and you would say this guy owes a HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8275 Reffsin-recross/White
1 million and a half and not just a million; is that right? 2 A The IRS would look at it that he is unable to pay
in 3 the future -- pay less in the future. 4 Q Right. 5 Now you were asked about the $400,000 payment to 6 Dr. Grossman by Mr. Trabulus; do you remember that? 7 A Right. 8 Q At that time the company was doing well enough that 9 it could pay Dr. Grossman 400,000; is that what you said 10 yesterday? 11 A That was Mr. Gordon's opinion, yes. 12 Q Now, who that $400,000 goes out to in salary, that 13 doesn't affect the corporation's financial picture any, 14 does it? 15 MR. TRABULUS: Objection to form only, your 16 Honor. 17 MR. WHITE: Let me rephrase that. 18 Q If a corporation issues a $400,000 salary check, 19 either to employee A or employee B, it really doesn't 20 matter whose name is on the check, right? 21 A From the corporation's point of view? 22 Q Yes. 23 A Possibly not. I don't know. 24 Q Now, so would it no
t have been possible if Mr. Gordon 25 would need to reduce his loan account and to have money HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8276 Reffsin-recross/White
1 for the printing of his books, to take $400,000 in income 2 himself, and then return to it the corporation to reduce 3 his loan balance and use it to print the books? 4 A I don't know what would be possible with respect to 5 Mr. Gordon and what he had to answer to with respect to 6 the Grossmans. 7 Q Had Mr. Gordon done so it would have appeared as an 8 additional $400,000 in income to him, right? 9 A Hypothetically? 10 Q Yes. 11 A Hypothetically, yes, another $400,000 in income. 12 Q Do you know approximately what Mr. Gordon was making 13 in 1991 -- 1992? 14 A He was drawing about 50,000. 15 Q And, so, if he had taken that his income would show 16
as 450 and not just 50, right? 17 A That's correct. 18 Q And when you filled out that projection where you had 19 the 1991 actual figures, it would show that he was making 20 450, not 50, right? 21 A I guess so. 22 Q Now, Mr. Trabulus asked you about your expectations 23 about the payment of the loans prior to the bankruptcy 24 proceeding. Do you remember that? 25 A Right. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8277 Reffsin-recross/White
1 Q And Mr. Trabulus asked you if it was fair that the 2 bankruptcy had sort of intervened and had changed 3 circumstances; is that right? 4 A Yes. 5 Q Now, it changed circumstances in your mind; is that 6 correct? 7 A As with respect to the debtor, it changed the 8 circumstances with respect to those particular loans. 9 Q I want to make sure I understand what you a
re 10 saying. Are you saying that since Who's Who's existence 11 or profitability was in danger, Mr. Gordon himself may not 12 be getting that much income from Who's Who and, therefore, 13 would not be able to pay back the loans; is that what you 14 are saying? 15 A No. I don't understand your question. 16 Q I am sorry. 17 Are you saying that since Who's Who was not in 18 bankruptcy and its existence was threatened, Mr. Gordon's 19 livelihood was in doubt to some degree? 20 A Absolutely. 21 Q If his source of income, the company he ran, if its 22 existence was in doubt, then his abilities to repay the 23 loan would certainly be in doubt? Is that what you are 24 saying? 25 A Yes, that's correct. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8278 Reffsin-recross/White
1 Q And that's your perception and it was your pe
rception 2 prior -- once the bankruptcy was filed; is that right? 3 A Once the bankruptcy was filed you don't know what is 4 going to happen. 5 Q Now, do you know whether or not that was also 6 Mr. Gordon's perception? Did you have any discussions 7 with him about it? 8 MR. TRABULUS: Objection to form, your Honor. 9 THE COURT: The latter part is permissible. 10 Overruled. 11 Q Did you have any discussion with him about that? 12 A About what? 13 Q About, hey, look, Bruce, the -- since the corporation 14 is in bankruptcy, you don't know if you are going to be 15 having a paycheck. You got to buckle down and don't spend 16 so much? 17 A I told him he was restricted from taking any 18 additional loans, yes. 19 Q Did you have any conversation with him whereby you 20 told him you got to stop spending so much? 21 A No. It is not the kind o
f a thing an accountant 22 would say to his client. I just said that he had to stop 23 and couldn't take any more loans. 24 Q Now, isn't it correct in the letter that Mr. Ackerman 25 wrote, that's in September of 1994, six months after the HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8279 Reffsin-recross/White
1 bankruptcy, right? 2 A Yes. 3 Q And in that letter Mr. Ackerman says not that 4 Mr. Gordon's income may not be enough to pay his loans, he 5 says that he is owed all that much and more? 6 A That's what he says. 7 Q He also says that you are calculating how much more? 8 A That's what he said. 9 Q Now, did you ever prepare such a calculation? 10 A No. 11 Q Is what Mr. Ackerman said in that letter accurate? 12 A No. 13 Q You were at a meeting with him the day before, right? 14 A Yes. And that never c
ame up. 15 Q But, so, even as late as September of 1994, 16 Mr. Ackerman, after meeting with you and Mr. Gordon got 17 the impression -- I am sorry, Mr. Ackerman after meeting 18 with you and Mr. Gordon wrote a letter where he said that 19 Mr. Gordon is supposed to get this money and more, he 20 wasn't worried about it. And that's what he said, right? 21 A Basically that's what he said in the letter, yes. 22 Q Let me show you -- on that point I want to show you 23 something and ask some questions. 24 If you step down, let me show you 824, a summary 25 of Mr. Gordon's supplemental American Express account. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8280 Reffsin-recross/White
1 Now, the bankruptcy proceeding was -- let me back 2 up. 3 The offer in compromise was in July of 1993; is 4 that right, the offer in compromise? 5
A Yes, the offer in compromise. 6 Q And that would be right here, July of 1993? 7 A Uh-huh. 8 Q And the bankruptcy proceeding was in March of 1994; 9 is that right? 10 A That's correct. 11 Q Now, if you look at the totals that were spent by 12 Mr. Gordon on the American Express card in 1994, after 13 March, does that look like someone who is worried about 14 where his next pay check is coming from? 15 A It certainly does not. 16 Q And the totals for 1994 is $183,000; is that right? 17 A Yes. 18 Q And that's the highest of any of the years before; is 19 that right? 20 A Obviously. 21 Q In fact, it is more than what he spent in 1992 or 22 1993 combined; is that right? 23 A Yes. 24 Q Okay. 25 You can sit back down. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8281 Reffsin-recross/White
1 (The witness resumes the witness stand.) 2 Q I am sorry, I will ask you to stand up again. 3 A I can use the exercise. 4 Q Look at 887, the chart of transfers we looked at 5 yesterday. 6 Now, all of this takes place from February 7 through December of 1994; is that right? 8 MR. TRABULUS: Objection to form. 9 Q Does the chart indicate that this took place between 10 February and December of 1994? 11 A Yes. 12 Q And I think we added up or made a rough approximation 13 of all these sums to Mr. Gordon in that time period and it 14 is over $200,000; is that right? 15 A That's right. 16 Q And on the same subject, Mr. Trabulus asked you about 17 these transfers, and whether they were disclosed to the 18 bankruptcy court, right? 19 A The transfers from Who's Who Worldwide were fully 20 discussed, yes. 21 Q And that's what you answere
d to Mr. Trabulus' 22 question? 23 A Yes. 24 Q And my question to you is: By that you meant the 25 transfers to Worldwide or to Sterling, or the first stop HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8282 Reffsin-recross/White
1 here; is that right? 2 A Yes. 3 Q In other words, the transfer from Worldwide to its 4 first destination was disclosed to the bankruptcy court? 5 A Yes. 6 Q If it went from Worldwide to the other accounts, the 7 rest of it was not disclosed? 8 A Not to the bankruptcy court. 9 MR. TRABULUS: Objection. 10 THE COURT: Overruled. 11 MR. TRABULUS: I didn't hear the answer. 12 THE WITNESS: Not to the bankruptcy courts. 13 Q What got disclosed was up here from Sterling to 14 the -- through the rest of the chart, it wasn't disclosed? 15 A Yes. 16 Q Thank you. You may now
sit down. 17 (The witness resumes the witness stand.) 18 Q In reference to that chart yesterday Mr. Trabulus 19 asked you about whether in your experience it was common 20 to have multiple bank accounts at multiple different 21 banks; is that right? 22 A Yes. 23 Q And you indicated there were perfectly legitimate 24 reasons for doing that; is that right? 25 A Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8283 Reffsin-recross/White
1 Q In your experiences as an accountant would you say 2 that there were also in some cases illegitimate reasons 3 for doing that? 4 MR. WALLENSTEIN: Objection to form. 5 THE COURT: Why do you object to the form? The 6 word "illegitimate?" 7 MR. WALLENSTEIN: The implication is in his 8 experience he has handled those transactions -- 9 MR. WHITE: I didn't mean to --
10 THE COURT: I didn't think of that. I will 11 sustain that. 12 MR. WHITE: Neither did I. 13 Q Mr. Reffsin, I am not suggesting you were involved in 14 any such transaction. But in your experience as an 15 accountant are you at least aware of the possibility that 16 people have multiple bank accounts at multiple banks to 17 make it more confusing to find where their money is? 18 A It makes it more difficult, definitely. 19 Q And you were here, were you not, when Mr. Ackerman 20 testified that Mr. Gordon -- when Ackerman asked him about 21 transactions among companies, told him that it had 22 something to do with his personal IRS situation? Do you 23 remember when he said that? 24 A I remember when he said that, yes. 25 Q I want to clarify something you said about the HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8284 Reffsin-recross/Wh
ite
1 condominium at Hummingbird Road. 2 I was asking you questions yesterday and you said 3 what you meant when you spoke to the agents about the 4 condominium is that you thought that Mr. Gordon's 5 explanation might be bullshit. Do you remember that? 6 A I said I couldn't make that determination at the 7 time. He gave me an explanation and I accepted it. 8 Q I want to focus for a minute on what you told the 9 agents on that day. 10 A Right. 11 Q If you remember, I asked you, didn't you tell them 12 that you thought Mr. Gordon's explanation was bullshit? 13 And I believe your response was, well, I told them that I 14 thought it might be. Is that fair? 15 A That's fair. 16 Q In response to one of Mr. Trabulus' questions though 17 you indicated that you really had no reason to presume one 18 way or the other about whether the condo was used for
19 business purposes; is that right? 20 A That's right. 21 Q Now, Mr. Trabulus asked you questions about 22 Mr. Gordon, his education and his background. Do you 23 remember that? 24 A Yes. 25 Q Now, would you say from your experience in dealing HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8285 Reffsin-recross/White
1 with Mr. Gordon that he is a sophisticated businessman? 2 A He is sophisticated, yes. How good a businessman he 3 is is another story. 4 Q Okay. 5 But he has been in business a long time, right? 6 A Yes. 7 Q He has run big companies, right? 8 A Yes. 9 Q He was running this business making millions of 10 dollars here, Who's Who Worldwide, right? 11 A Yes. 12 Q You never had any doubt that he was in control of the 13 day to day operations there? 14 A No question.
15 Q And he was sophisticated enough to be dealing with 16 these tax shelters that you described from back in the 17 80's, right? 18 A Yes. 19 Q And those kind of tax shelters attracted, is it fair 20 to say, fairly sophisticated investors? 21 A Oh, yes. 22 Q And to promote them you have to deal with those 23 people, and you have to be fairly sophisticated yourself; 24 is that right? 25 A Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8286 Reffsin-recross/White
1 Q And that's what Mr. Gordon was doing, he was the 2 promoter of those shelters; is that right? 3 A Yes. 4 Q If you take a look at Government's Exhibit 577 in 5 evidence. 6 That's a letter from Mr. Gordon to Dr. and Mrs. 7 Gordon in May of 1990; is that right? 8 (Handed to the witness.) 9 A Right. 10 Q Did you have anyth
ing to do with the preparation of 11 this letter? 12 A Nothing at all. 13 Q Next, this was -- correct me if I am wrong, but this 14 was before you even got back together with Mr. Gordon; is 15 that right? 16 A That's right. 17 Q You didn't get back together with him until 1991? 18 A No, I got back in '90, late '90, July, August. 19 Q In any event, it was after this letter? 20 A Yes. 21 Q Now, is it fair to say that what this letter 22 indicates, or what it says is that they are talking about 23 how the Grossmans' investment should be structured? 24 MR. TRABULUS: Objection, beyond the scope. 25 MR. WHITE: It has to do with Mr. Gordon's HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8287 Reffsin-recross/White
1 financial sophistication. 2 THE COURT: Overruled. 3 A Yes, it does mention restructuring.
4 Q In essence what it says that the Grossmans are 5 getting 125 percent. And the question is should this be 6 called a loan or should it be called an investment, right? 7 A Yes. 8 Q And the letter makes a distinction. It says in 9 essence, well, Dr. and Mrs. Grossman, if you call it a 10 loan you get repaid your money, but it is not income? 11 A Right. 12 Q It says, however, if you call it an investment, the 13 money you get back would be income, it would be some kind 14 of a dividend to a shareholder; is that right? 15 A That is correct. 16 Q And is it a fair reading of this letter that the 17 person who is writing it, namely, Mr. Gordon, knows the 18 essential financial principle, that if you call something 19 a loan it is not income? 20 A I would say so, yes. 21 Q Now, Mr. Trabulus asked you about the collateral 22 agreement? 23 A Right.
24 Q And about the phrase that says whether Mr. Gordon -- 25 let me rephrase the question. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8288 Reffsin-recross/White
1 It says that the income of any corporation that 2 he owns or controls is subject to the collateral 3 agreement, right? 4 A Yes. 5 Q And Mr. Trabulus asked you, well, if Mr. Gordon just 6 controlled, but didn't own, did that mean that the 7 corporation's income was subject to the collateral 8 agreement? 9 A That was the issue I had on the collateral 10 agreement. Because "control" as they defined it may not 11 necessarily be "control" as part of the compensation 12 agreements. If they control, they mean indirect 13 ownership. There are various rules with respect to 14 control. It was unclear. 15 Q Let me pick up on something you just said. 16
You understood what they were talking about was 17 that "control" meant indirect ownership? 18 A That's what I thought they meant, yes. 19 Q Is an example of what you are saying that if 20 something were in the name of a -- of somebody's wife, 21 but, in fact, that person ran the business, you would say 22 that they indirectly owned the business? 23 MR. TRABULUS: Objection, your Honor. 24 THE COURT: Overruled. 25 A Generally that would be an understanding, yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8289 Reffsin-recross/White
1 Q And you said yesterday in response to Mr. Trabulus' 2 questions that just because somebody controlled the 3 corporation, doesn't mean that its income is attributable 4 to them; is that right? 5 MR. TRABULUS: Objection. 6 A That's correct. 7 Q For example, if someone were just an employee, al
beit 8 one that controls the company, that doesn't mean that he 9 has any right to the corporation's income, right? 10 A Only to the extent of any agreement with the 11 shareholders. 12 Q For example, if you say that the president of IBM 13 controls the company, he certainly doesn't have any right 14 to the income that IBM earns, right? 15 A Not generally, no. 16 Q Unless there is some agreement? 17 A Right. 18 Q And if the president of IBM signed the same 19 collateral agreement, you couldn't say that IBM's income 20 could be used to satisfy his obligation just because he 21 controls the company, right? 22 A That's right. 23 MR. TRABULUS: Objection. 24 THE COURT: Sustained. 25 Strike out the answer. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8290 Reffsin-recross/White
1 MR. WHITE: Your Honor,
can I have one moment? 2 THE COURT: Yes. 3 (Whereupon, at this time there was a pause in the 4 proceedings.) 5 MR. WHITE: Your Honor, I have no further 6 questions. 7 8 FURTHER RECROSS-EXAMINATION 9 BY MR. TRABULUS: 10 Q Mr. Reffsin, you were just asked some questions about 11 the collateral agreement? 12 A Right. 13 Q Just briefly on that, is it not true that it provided 14 that corporate income was to be treated as Mr. Gordon's 15 income for purposes of collateral agreement -- corporate 16 income, if Mr. Gordon directly or indirectly controlled or 17 owned the company? 18 A Yes, that's what it said. 19 Q So by putting in the word "controlled" it indicated 20 it would pick up some income it might not pick up if it 21 simply said owned; is that correct? 22 A Directly, yes. 23 Q And directly or indirectly -- by putt
ing it in 24 indirectly it would pick up income that it might not if it 25 just said directly; is that right? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8291 Reffsin-recross/Trabulus
1 A Yes. 2 Q And on its face that collateral agreement was 3 designed to pick up income of the corporation and 4 attribute it to Mr. Gordon? 5 A Ridiculously so. 6 Q To the extent that it can pick up income in the 7 company's hands, although not in Mr. Gordon's hands? 8 A If you read it literally, yes. 9 Q If you read it literally you could have a situation 10 where Mr. Gordon could have to pay more in a given year 11 under that agreement than he actually received out of the 12 company; isn't that right? 13 A Yes, that's correct. 14 Q Can I see Exhibit 577, the one you were just shown. 15 A Right. 16 (Document handed to Mr.
Trabulus.) 17 Q Now, Mr. White -- excuse me. 18 (Whereupon, at this time there was a pause in the 19 proceedings.) 20 Q Mr. White asked you about this letter and said that 21 it was talking about whether the investment should be 22 called an investment or a loan; is that right? 23 A That is correct. 24 Q In fact, there is nothing in the letter about calling 25 it one thing or the other, right? It doesn't say calling HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8292 Reffsin-recross/Trabulus
1 it? 2 A No. It says "structured." 3 Q And it suggests they speak to their accountant? 4 A Yes. 5 Q It doesn't say we are calling it something? It says 6 there is one or two ways it could be done? 7 A Yes. 8 Q The way you understand it, that would be perfectly 9 legitimate; is that right? 10 A Yes. 1
1 Q And now, you were asked some questions by Mr. White 12 as to whether there might be illegitimate reasons to have 13 multiple accounts; do you recall that? 14 A Yes. 15 Q Could there be some occasion where there is an 16 illegitimate reason to have just a single account? 17 A I guess. 18 Q Couldn't there be a situation in which somebody 19 commingles into a single account thinks they are supposed 20 to keep segregated? 21 A Yes. 22 Q That could be illegitimate? 23 A It could be in certain circumstances. 24 Q Is it fair to say virtually any business practice 25 could be put to a legitimate or illegitimate purpose; is HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8293 Reffsin-recross/Trabulus
1 that right? 2 A It depends on how you define "illegitimate." 3 Q Now, you were asked -- you were shown that long
4 chart, 837, and you were asked whether in the bankruptcy 5 anything beyond the transfers from Who's Who Worldwide 6 were disclosed. Do you recall Mr. White asked you that? 7 A Yes. 8 Q And is it fair to say that the transfers from Who's 9 Who Worldwide to another entity were disclosed; is that 10 correct? 11 A That is correct. 12 Q And that's what was required to be disclosed to the 13 bankruptcy; is that correct? 14 A Yes. 15 Q Is it fair to say as you understand it everything 16 that was required to be disclosed in the bankruptcy was 17 disclosed? 18 A With respect to Who's Who Worldwide, yes. 19 Q I want to make sure that I understand. You are not 20 saying that there was something that was required to be 21 disclosed requiring or concerning something else was not 22 disclosed? 23 A No. 24 Q Basically all you are saying is all
that was required 25 to be disclosed was Who's Who Worldwide? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8294 Reffsin-recross/Trabulus
1 A Yes. 2 Q And that's the entity bankrupt? 3 A Yes. 4 Q Not Sterling? 5 A Right. 6 Q Not PVI? 7 A No. 8 Q Not Sterling -- 9 THE COURT: You have to go slower, Mr. Trabulus. 10 MR. TRABULUS: I will slow down. 11 Q Do you know as to whether additional transfers or 12 transactions may have been disclosed in the bankruptcy 13 proceeding subsequently to the filing of the petition, in 14 other words, in the exchange of the information between 15 the lawyers? 16 A Subsequent transfers? 17 Q I will withdraw the question. I misspoke. 18 Some of the other transactions shown there beyond 19 the transfer to -- from Who's Who Worldwide, do you know 20 whe
ther or not some of those may also have been disclosed 21 later on during to interrupt proceeding as the lawyers 22 were, you know, in discovery? 23 A Do I know that for a fact? No. 24 Q All right. 25 Were you here when Mr. Ackerman or Mr. Skalka HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8295 Reffsin-recross/Trabulus
1 indicated eventually information was obtained concerning 2 that? 3 A Yes. 4 Q And as far as you know all the information that was 5 given concerning that was accurate, correct? 6 A As far as I know. 7 Q And that was given pursuant to what was required in 8 the bankruptcy proceeding, right? 9 A Right. 10 Q And we heard stipulations entered into, and we heard 11 evidence of stipulations entered into concerning what 12 information would or would not be disclosed, right? 13 A Correct. 14 Q Now, Mr. White asked you some questions concerning -- 15 he -- well -- withdrawn. 16 You told Mr. White in connection with the 17 bankruptcy you told Mr. Gordon that he now could no longer 18 take loans; is that correct? 19 A That's right. 20 Q When you said that you were telling Mr. Gordon he 21 could no longer take loans from Who's Who Worldwide, 22 right? 23 A Yes. 24 Q Because it was Who's Who Worldwide which was in the 25 bankruptcy, right? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8296 Reffsin-recross/Trabulus
1 A That's correct. 2 Q And the restrictions only pertain to Who's Who 3 Worldwide; is that correct? 4 A Yes. 5 Q And you didn't tell him that you couldn't take loans 6 from Sterling or other entities; is that correct? 7 A No, I didn't discuss. 8 Q In fact, there was nothin
g to prevent him from doing 9 that because they weren't in bankruptcy; is that right? 10 A I guess. 11 Q So, if Mr. Gordon and you or anybody was talking 12 about any other possible sources of monies that he might 13 have, the fact that he might not take loans from Who's Who 14 Worldwide didn't mean that he might not get access to 15 monies from other companies; is that right? 16 A I believe it was brought out before, yes. 17 Q And in fact Sterling was doing quite well, was it 18 not? 19 A I didn't do the numbers, but it appeared to have 20 substantial sales. 21 Q Incidentally the restriction of taking loans from 22 Who's Who Worldwide once it was in bankruptcy, that didn't 23 reflect that there was anything improper in taking loans 24 as such, right? 25 A No. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8297 Reffsin-r
ecross/Trabulus
1 Q Just that once something is in bankruptcy there are 2 more stringent requirements what it can or cannot do, 3 particularly with respect to people who are insiders to 4 the company; is that right? 5 A That is correct. 6 Q Now, you were asked by Mr. White of a financial 7 motive on the part of Mr. Gordon not to pay taxes; is that 8 correct? 9 A Yes. 10 Q Everybody who pays taxes or who has a potential 11 liability has a financial motive either not to pay or to 12 reduce that liability; is that right? 13 A Yes. 14 Q And everybody who owes taxes or has a potential tax 15 liability has a financial incentive to attempt to reduce 16 it as much as possible within lawful means, right? 17 A Definitely. 18 Q And your job as an accountant was to advise 19 Mr. Gordon of how to reduce his liability and payment 20 obligati
ons within lawful means; is that correct? 21 A That's correct. 22 Q Now, you were asked some questions by Mr. Wallenstein 23 when he was questioning you again about learning that 75 24 percent was in the Grossmans -- 75 percent of Who's Who 25 Worldwide was in the Grossmans, 1993? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8298 Reffsin-recross/Trabulus
1 A Yes. 2 Q I want to make it clear. The remaining 25 percent as 3 you understood it at that time was in their trust; is that 4 right? 5 A Yes. 6 Q It wasn't a situation at that time where you thought 7 Mr. Gordon owned 25 percent; is that right? 8 A No. 9 THE COURT: How much more do you have, 10 Mr. Trabulus? 11 MR. TRABULUS: Well, maybe five minutes or so. 12 It is not one or two questions, but it is not a lot. 13 THE COURT: Does any other person want
to examine 14 after that? 15 MR. WALLENSTEIN: I will have two questions, 16 Judge. 17 THE COURT: All right. 18 Come up, counsel. 19 20 (Whereupon, at this time the following took place 21 at the sidebar.) 22 MR. WALLENSTEIN: Depending on what Norman does, 23 I may have more than two. 24 THE COURT: I am not precluding you. 25 Do you wish to put -- is this going to be the end HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8299 Reffsin-recross/Trabulus
1 of Mr. Reffsin's testimony within the short time? 2 MR. TRABULUS: I think so. 3 MR. WALLENSTEIN: We will probably finish the 4 whole thing in 15 minutes. 5 THE COURT: Do you intend to put Ms. Barnes on 6 after that? 7 MR. NEVILLE: Yes. 8 THE COURT: And we have to listen to her in 9 camera, do we not? 10 MR. NEVILLE: Yes.
11 THE COURT: I will have the jury come back about 12 20 minutes later so we can do that, and then we will take 13 Mr. Reffsin. Following that Ms. Barnes. 14 MR. NEVILLE: Fine. 15 THE COURT: Okay? 16 MR. WALLENSTEIN: Okay. 17 18 (Whereupon, at this time the following takes 19 place in open court.) 20 THE COURT: We will recess now until ten minutes 21 to 2:00 instead of 1:30, ten minutes to 2:00. I have to 22 take care of some things at 1:30. 23 Lunch will be from now to ten minutes to 2:00. 24 Please do not discuss the case, and keep an open mind. We 25 will recess until 1:50. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8300 Reffsin-recross/Trabulus
1 Have a nice lunch. 2 (Whereupon, at this time the jury left the 3 courtroom.) 4 (Luncheon Recess.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8301 Reffsin-recross/Trabulus
1 A F T E R N O O N S E S S I O N 2 3 (The following takes place in the absence of the 4 jury.) 5 (Also appearing for the witness Sandra Barnes is 6 Thomas G. Bailey, Jr.) 7 THE COURT: We are now in camera and in the 8 absence of the jury. 9 Do we have a witness? 10 MR. NEVILLE: Yes, your Honor. 11 The defense calls Ms. Sandra Barnes. 12 THE CLERK: Please raise your right hand. 13 14 S A N D R A S. B A R N E S , 15 called as a witness, having been first 16 duly sworn, was examined and testified 17 as follows: 18 19 THE CLERK: Ple
ase state your name and spell your 20 last name slowly for the record. 21 THE WITNESS: Sandra S. Barnes, B A R N E S, 22 first name, S A N D R A. 23 THE COURT: Have a seat, please. 24 Let's get to the point I am interested in. 25 HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8302 Barnes-voir dire/Neville (Jury Absent)
1 VOIR DIRE EXAMINATION 2 BY MR. NEVILLE: 3 Q Good afternoon, Ms. Barnes. 4 A Good afternoon. 5 Q My name is Jim Neville. 6 What is your position at Reed Publishing? 7 A I am vice president for fulfillment at LEXIS NEXIS in 8 Dayton, Ohio. 9 THE COURT: LEXIS NEXIS? 10 THE WITNESS: L E X I S, N E X I S. 11 THE COURT: In Dayton, Ohio? 12 THE WITNESS: Yes. 13 Q Was there a time that you were the publisher of 14 Marquis Who's Who? 15 A Yes, sir. 16 Q You are no
longer that? 17 A No. 18 Q And how long have you -- well, withdrawn. 19 The position you have now is still under the Reed 20 umbrella, correct? You are still a Reed employee? 21 A Yes. 22 Q And how long have you worked for Reed? 23 A Since October of 1991. 24 Q Now, you have worked for the same organization that 25 has been owned by various entities for some 25 years? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8303 Barnes-voir dire/Neville (Jury Absent)
1 A Yes. 2 Q And you first went to work for the Who's Who entity, 3 I believe it was owned at that time by IT&T in 1972? 4 A Yes, that's correct. 5 THE COURT: You have been with them since 1972? 6 THE WITNESS: I was with them before that, since 7 1964. 8 THE COURT: With Who's Who also? 9 THE WITNESS: No. 10 THE COURT: Your relationship with Who
's Who 11 started in 1972? 12 THE WITNESS: 1972. 13 Q I would like to relate back to the time you were the 14 publisher for Marquis Who's Who. 15 A All right. 16 Q At the time you were the publisher for Marquis 17 Who's Who, what were your duties? 18 A The publisher role under Reed was very similar to the 19 marketing role -- to the presidential role that I had 20 before that. I was responsible to assure that all the 21 publications got out as scheduled, and just to make sure 22 that we met the budgets. Under Reed the marketing was 23 done in another area. The editorial was done in another 24 area. The publisher was just responsible for assuring the 25 publications got out. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8304 Barnes-voir dire/Neville (Jury Absent)
1 Q As publisher for Marquis Who's Who in assuring that 2 the publication got out, did you also have participation 3 with those other officers or divisions within Reed who did 4 concern themselves with marketing? 5 A Yes, and I also attended all the trade shows; was 6 involved in the public relations piece of the Marquis 7 Who's Who, working with the libraries. 8 Q Now, the flagship, if you will, publication is Who's 9 Who in America? 10 A Yes, that's correct. 11 Q And branching from that flagship, if you will, is 12 various other some number of publications? 13 A Actually, I think we have at least between 18 and 20 14 titles. I haven't been involved recently. 15 Q Is Who's Who in Finance and Industry an example? 16 A Yes. 17 Q Who's Who in the World? 18 A Yes. 19 Q Who's Who in American Women? 20 A That's correct. 21 Q Who's Who in the East? 22 A Yes. 23 Q Who's Who in the W
est? 24 A Yes. 25 Q Who's Who in the Mid-west? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8305 Barnes-voir dire/Neville (Jury Absent)
1 A Yes. 2 THE COURT: You have to slow down a little. I am 3 not getting it, all of these titles is Who's Who. 4 THE WITNESS: All Marquis publications, yes. 5 THE COURT: They all say Who's Who? 6 THE WITNESS: All say Who's Who except for the 7 official directory of the American Board of Medical 8 Specialists. 9 THE COURT: All do say Who's Who? 10 THE WITNESS: That's right. 11 Q Can you describe for us how the -- again I am 12 focussing you to when you were the publisher, and it may 13 be somewhat different now, but as an aside, when were you 14 publisher? Up to what year of Marquis Who's Who? 15 A Unofficially I was still involved in 1997, the early 16 part of 1997.
17 THE COURT: From what year? 18 THE WITNESS: From 1991. I think I was made 19 publisher in 1992. We were acquired in October of 1991. 20 I was still the president for approximately a year until 21 we moved the business from Illinois to New Jersey. 22 Q During the years, in other words, '93, '92, '94, you 23 were still the publisher of Marquis Who's Who? 24 A I was still the publisher, yes. 25 Q Is Who's Who in America the flagship publication as I HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8306 Barnes-voir dire/Neville (Jury Absent)
1 described it earlier? Is that the most highly respected 2 biographical reference directory available? 3 A I believe it is. It has been published since 1898. 4 The reviews have always been that it is the preeminent 5 publication. 6 Q We didn't name the remaining Who's Who publications, 7 you sai
d there are up to 18 or so; is that correct? 8 A Correct. 9 Q Can you describe for us the market that there is for 10 these publications reference and listee? 11 A There are two major markets. The first one is the 12 reference market which includes public library, special 13 libraries, corporate libraries, governments libraries, 14 university libraries. The second is the listee, and 15 that's the people who are listed in the publications. 16 Q Are the listees, individuals who have met the 17 standards to be included within the publication? 18 A Yes, they are. 19 Q As a listee, someone is able, if they wish, to 20 purchase a book with their name in it? 21 A Yes. After selection they are offered an opportunity 22 to purchase. 23 Q Does the market -- withdrawn. 24 The breakdown between listee and reference 25 market, was about 50/50 when you were publis
her? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8307 Barnes-voir dire/Neville (Jury Absent)
1 THE WITNESS: Yes. 2 THE COURT: What does that mean? 3 THE WITNESS: 50 percent of the revenue was from 4 the reference or library market, and 50 percent was from 5 the listee. 6 THE COURT: Mr. Neville, I would like you to 7 get -- I don't want to go through her whole testimony. I 8 want to get to the point that I am having this in camera 9 session for, which is the custom and usage in the 10 industry, or knowledge on the parts of other people. 11 That's what I want to get to. 12 MR. NEVILLE: Yes. 13 THE COURT: This is very good, but please, let's 14 get to it. 15 MR. NEVILLE: Very well. 16 Q Can you describe, Ms. Barnes, how Marquis Who's Who 17 and all the various publications acquire names of 18 individuals wh
o could possibly be included in the 19 directories or in the registries, or whatever the term 20 is? 21 A Yes. 22 For Who's Who in America we have a research staff 23 that goes through newspapers, journals, other 24 publications. There is a set of standards for America 25 that I don't know how many pages, it is several hundred HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8308 Barnes-voir dire/Neville (Jury Absent)
1 pages that the people have to meet certain criteria. 2 Those people are identified. They are handpicked. They 3 are sent solicitations. If they don't respond to those we 4 actually call the offices and try to get biographical data 5 on them. 6 If we can prepare the data from any other source, 7 we prepare the data, send it out, ask them to verify it 8 and return to it us. 9 For the other publications we do the
very same 10 thing with the must-name standard, the high profile people 11 who must go into the directories. They are all 12 researched, hand picked. And to get other names to fill 13 up the directory, we use high profile, association and 14 other types of lists. We always let people know that we 15 do do that. 16 THE COURT: Excuse me a moment. 17 You say for other names you use high profile 18 what? 19 THE WITNESS: Association lists and other lists. 20 THE COURT: And you say that you tell the persons 21 that their names come from a mailing list? 22 THE WITNESS: For many years, I don't know what 23 we do now, but for many years we had a brochure that 24 indicates and in the front of the book is also the 25 practice that we get the names from many different HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8309 Barnes-voir dire/Nevil
le (Jury Absent)
1 sources, including research and association lists, alumni 2 lists and other journal activities. I am not sure of the 3 exact wording. But we do let them know. 4 Q Did Marquis Who's Who -- withdrawn. 5 Who's Who in America does not use mailing lists; 6 is that correct? 7 A Who's Who in America does not use mailing lists to 8 the listee market, but it does use mailing lists to the 9 reference market. In other words, if we want to mail to 10 American libraries, we would use a list. 11 THE COURT: Do you use mailing lists to get the 12 names of the listees? 13 THE WITNESS: No, not for Who's Who in America. 14 THE COURT: Okay. 15 Q But for the other 17 or so Who's Who, some of which 16 we have mentioned, Who's Who in the East, for example, 17 Who's Who in the Mid-west, as another example, you do use 18 mailing lists, or Marquis Who'
s Who uses mailing lists? 19 A We use it in conjunction with other forms of getting 20 the names, yes. 21 Q Marquis Who's Who, in order to acquire these lists, 22 at least for the time you were publisher, and maybe they 23 still do, rented lists from list brokers? 24 A That's the only way you can get the list, yes. We 25 also used internal lists. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8310 Barnes-voir dire/Neville (Jury Absent)
1 Q Some of the lists that Marquis Who's Who rented were 2 lists of subscribers to the Wall Street Journal, for 3 example? 4 A We probably did use Wall Street as a test. I am not 5 so sure that we used that frequently. I don't recall. 6 Q Do you recall a company in Katonah, New York, 7 K A T O N A H? 8 A I didn't do list selections. No, I never heard of 9 that. 10 Q Did you as publish
er of Marquis Who's Who in or 11 around 1990, 1991, or for whatever position you had in 12 1990, I believe you said you became publisher in '91, or 13 maybe you said '90? 14 A '91, '92. I was president before that. 15 Q President? 16 A The same thing, yes. 17 Q Did you ever sign off on any purchase orders for the 18 McMillan directory division? 19 A Yes. The chief executive in charge had to sign off 20 on all purchase orders. 21 Q And do you recall whether in March of 1990, whether 22 you signed off on a purchase order where McMillan 23 Directory Division purchased 7,500 quantity, I take it, 24 that would be the number of names, of the Diner's Club 25 charge card holders, business address, key 903 in the HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8311 Barnes-voir dire/Neville (Jury Absent)
1 amount of $644.50? 2
A In my years as an executive I signed hundreds of 3 thousands of purchase orders. If you have my signature I 4 am sure I did it. 5 Q 9,333 names from the American City Business Journal? 6 A If my name is on there, I did it. 7 Q Wall Street Journal, active subscribers, 19,002, Wall 8 Street Journal active subscribers? 9 A If they are all in the same purchase order I signed 10 it. 11 Q Do you ever recall signing a purchase order for INC 12 magazine subscribers, a list of INC magazine subscribers? 13 A Again, if you have a purchase order with my name on 14 it. I don't recall. 15 THE COURT: Mr. Neville, I don't want to go 16 through all the type of mailing lists. 17 MR. NEVILLE: I am not going through them all. I 18 wanted to make my point. 19 THE COURT: You went through enough. The witness 20 testified as far as Who's Who in America the staff gets
21 the names through newspapers, standards of various kind. 22 They have criteria. They are hand picked. And they are 23 not from mailing lists. 24 Is that correct? 25 THE WITNESS: Absolutely correct. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8312 Barnes-voir dire/Neville (Jury Absent)
1 THE COURT: The other 17 or so Who's Who, mailing 2 lists are used, selective mailing lists are used. 3 THE WITNESS: That's correct. 4 THE COURT: Now, next. 5 Q In terms of the entire market in this country for 6 Who's Who type of publications, what would you say -- I 7 realize you can't give us an exact number -- but can you 8 tell us generally what percentage of the entire market 9 does Marquis Who's Who or the Reed umbrella, all these 10 different Who's Who publications, what percentage of the 11 entire market does Reed and its publicati
ons occupy? 12 MR. WHITE: Objection. Can we establish first 13 what the market is before we talk about the share? 14 Mr. Neville's question was all over the place. 15 THE COURT: He is talking about Who's Who. 16 MR. WHITE: I think there is a difference -- 17 THE WITNESS: There are two markets. 18 THE COURT: We are not talking about the 19 libraries, references. We are talking about the listees. 20 Are there books that have the names of people? 21 THE WITNESS: As far as I know, I don't know what 22 the market is for the listees. When I do any market 23 studies they were always for the reference market. 24 Q Let me -- 25 THE COURT: I didn't hear that. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8313 Barnes-voir dire/Neville (Jury Absent)
1 THE WITNESS: For the reference market always, 2 the library market. That was our key
focus on all our 3 books. 4 MR. WHITE: Your Honor, I am sorry, but my point 5 was not whether it was listee or library, but whether it 6 is Who's Who publications, or reference publications or 7 biographical reference publications, I want to make sure 8 we are talking about the right market before we get the 9 market share. 10 Q I am referring to the market of, for example, the 11 listees that would be in Who's Who in the East for 12 example, what share of the market -- withdrawn. 13 There are other Who's Who publications that are 14 not owned by Reed Elsevier; is that right? 15 A There are other publications that have the name Who's 16 Who in them. But I don't consider that they are reference 17 publications. So I am having a hard time following where 18 you are going. 19 Q As far as you consider, are there other people out 20 there competing for th
e listee dollar with Reed Elsevier, 21 yes or no? 22 A I am sure there are. I am not aware of any currently 23 that are in the same market that we are. Mr. Gordon was. 24 Q Aren't there certain smaller niche, if you will, 25 Who's Who directories that compete with Reed Publications HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8314 Barnes-voir dire/Neville (Jury Absent)
1 to a small extent for a small percentage? 2 A I am not sure if the other directories sell to 3 listees, I have no idea. 4 I know as an example, Gale has a publication, 5 Mr. Black America. 6 THE COURT: How do you spell Gale? 7 THE WITNESS: G A L E. 8 That's Who's Who in Black America. Whether they 9 sell to listees, I don't know. I don't know what the 10 practice is. 11 THE COURT: Does Marquis Who's Who have a 12 registry or a book that has the na
mes of the persons in 13 it? 14 THE WITNESS: Do we have -- I am sorry? 15 THE COURT: Who's Who Worldwide -- Who's Who in 16 America, is that a book with names in it? 17 THE WITNESS: Who's Who in America is a book with 18 100,000 names in it. 19 THE COURT: Do we have one of the books that are 20 in evidence here? 21 MR. JENKS: Right here. 22 THE COURT: I am talking about a book similar to 23 this book. 24 Would you show it to the witness, please. 25 (Handed to the witness.) HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8315 Barnes-voir dire/Neville (Jury Absent)
1 THE COURT: I don't mean exactly the same, but 2 similar. Have you seen the books before? 3 THE WITNESS: I have seen Who's Who Worldwide, 4 yes. 5 THE COURT: Do you have books that are like that 6 and they contain names like that.
7 THE WITNESS: Our book contains names like this. 8 THE COURT: That's what I wanted to know. 9 The question that Mr. Neville was asking you was 10 what share of the market do you and your companies, all of 11 them, the 17 Who's Who, what percentage of the market in 12 your opinion do you have? Half of the market, 25 percent 13 of the market, 95 percent of the market? 14 THE WITNESS: We have never undertaken any 15 studies like that because our primary focus has been in 16 the reference market. And I can tell you the reference 17 market. But I can't tell you the listee market. We start 18 out with a reference product. 19 THE COURT: What percentage of the reference 20 market? 21 THE WITNESS: Of the libraries, the large 22 libraries with budgets of a 100,000 or over, we have 23 approximately 97 percent penetration. Which means every 24 large library, public lib
rary, university library would 25 have a copy of Who's Who in America or one of the Marquis HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8316 Barnes-voir dire/Neville (Jury Absent)
1 Who's Who publications. 2 THE COURT: And what about the other market with 3 the listees? 4 THE WITNESS: The other publications? 5 THE COURT: All the Who's Who publications which 6 are not reference publications. You said there were two 7 types. 8 THE WITNESS: No. I didn't say that. I said 9 every Who's Who publication has standards, and a large 10 percentage of the names are researched just like Who's Who 11 in America. There are names in there that come from other 12 sources, but they all pass standards. 13 THE COURT: I understand. 14 What percentage of the market do -- you said that 15 Who's Who -- rather, your company has 97 percent
16 penetration in the libraries for references? 17 THE WITNESS: Yes. 18 THE COURT: What about outside the libraries? 19 THE WITNESS: We have never undertaken a study. 20 I can't answer that. 21 Q As an example, have you heard of a publication called 22 Who's Who of Intellectual Property Attorneys? 23 A I heard of it. I don't know where it is sold. I 24 don't know anything about it. I heard of it. 25 Q You testified in the past about that publication, HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8317 Barnes-voir dire/Neville (Jury Absent)
1 haven't you? 2 A I don't recall, I don't recall. 3 Q Doesn't Who's Who in Intellectual Property Attorneys, 4 compete with Who's Who in American Law which is a Marquis 5 publication? 6 A I thought it was a book of 100 names. I don't know. 7 Q Well, you mentioned earlier Who's Who among
Black 8 Americans; is that right? 9 A Yes. 10 Q And that's not a Marquis Who's Who publication? 11 A No, it is not a Marquis publication. 12 Q Is that a competitor of a Marquis publication? 13 A We never singled out ethnicity as a quality. I am 14 sure people are listed in there, in publications. But I 15 don't really consider it a competitive market. It is 16 competitive in the reference market, absolutely. 17 Q Referring to the listee market? 18 A We don't distinguish if someone is black, Asian. We 19 don't ask that. 20 Q There could be an overlap? In other words, the 21 people in Marquis Who's Who in the East, which obviously 22 could include black Americans? 23 A It could. 24 Q And that publication, which is Who's Who in the East, 25 which is a Marquis publication, could be in competition HARRY RAPAPORT, CSR, CP, CM OFFICIAL CO
URT REPORTER 8318 Barnes-voir dire/Neville (Jury Absent)
1 with Who's Who among Black Americans? 2 A It could. 3 Q How about international Who's Who? Did you ever hear 4 of that? 5 A Which one? 6 Q It primarily covers foreign dignitaries. 7 A There is a title International Who's Who, which is a 8 publication that is put out in Cambridge, England. There 9 are a couple of scam operations in the United States 10 called International. And I don't know much about that. 11 Q Who decides if they are a scam? You? 12 A There are ones that rip-off somebody else's name. 13 And they are not sold in the libraries. 14 Q The words Who's Who alone are generic? Is that 15 right? No one owns the copyright to use the words "Who's 16 Who?" 17 A The words "Who's Who" alone, it depends on where it 18 is, I believe that the words "Who's Who" alone may b
e 19 heard by A & C Black in London. 20 THE COURT: Mr. Neville, let's get to the point. 21 MR. NEVILLE: I want to establish there is a 22 competitive market. 23 THE COURT: I don't want to establish anything 24 more. I want to get to the point. 25 This woman has been in the business for 26 HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8319 Barnes-voir dire/Neville (Jury Absent)
1 years. She is obviously a very experienced person in this 2 industry. Let's ask her about it. Do you want to ask her 3 or do you want me to ask her? 4 MR. NEVILLE: I will ask her. 5 Q The general custom in your trade of these listee 6 journals or books other than Who's Who in America, which 7 we have already established does not use mailing lists, 8 the other publications that we have referred to, Who's Who 9 in the East, Who's Who in the West, Who'
s Who in the 10 Southwest, all those, there is a general custom and 11 practice in Marquis Who's Who publications and how the 12 names are acquired and how the books are put together 13 among other sources, lists are used to acquire names? 14 A I answered that, yes. 15 Q And that is a very accepted, general practice among 16 all those publications other than Who's Who in America? 17 A Marquis Who's Who -- I don't know what the other 18 biographical directories do, but Marquis Who's Who yes, we 19 use mailing lists as one of the sources to compile names. 20 We get the name. It is screened and reviewed. 21 Q We just wanted to know if you use the names. 22 A We don't necessarily use the names once we get them. 23 Q But you have lists which you cull names from; is that 24 correct? 25 A Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8320 Barnes-voir dire/Neville (Jury Absent)
1 Q And you have mass mailings you send -- 2 THE COURT: You have to wait until the question 3 is finished before you answer. 4 THE WITNESS: Okay. 5 THE COURT: Go ahead, Mr. Neville. 6 Q Marquis Who's Who culls names from mailing lists, 7 yes? 8 A Yes. 9 Q And those names are sent out in mass mailings to 10 prospective listees, correct? 11 A Correct. 12 Q And that practice, or that custom of using all kinds 13 of different lists -- highly selective, of course, but 14 nonetheless lists -- is a general custom and practice 15 among all the publications of Marquis Who's Who except 16 Who's Who in America? 17 A And one other, the physician directory. 18 Q But at least 16 out of 18 publications, there is the 19 general custom? 20 A Yes. 21 Q Repetitive and ongoing and accepted o
f using rented 22 lists, mailing lists from list brokers in order to acquire 23 names of possible new listees for those publications? 24 A That's correct. 25 Q You said the Reed publication in the reference market HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8321 Barnes-voir dire/Neville (Jury Absent)
1 has 97 percent penetration you said? 2 A Yes. 3 Q That means -- 4 A Market share, whatever. 5 Q Okay. 6 You worked in this business for 25 years, since 7 1992? 8 A Right. 9 Q So, you are very familiar with all of the -- many of 10 the Who's Who publications that have come out over the 11 years? 12 A Yes. 13 Q You in fact had a practice of keeping a file on what 14 you call third party infringers? 15 A When I became president, yes. 16 Q And you actually would police and count articles or 17 letters, etcetera, that would come in from other Who's Who 18 publications and watch them to see what they were doing? 19 A That's correct. 20 Q And your project manager kept files at your direction 21 of potential third party infringers? 22 A That's correct. 23 THE COURT: I think Mr. Neville shortened your 24 tour. You are 26 years with the company, right? 25 THE WITNESS: Actually I have -- HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8322 Barnes-voir dire/Neville (Jury Absent)
1 THE COURT: More than that, but with the Who's 2 Who connection. 3 THE WITNESS: Yes. 4 Q Reed Elsevier sued Who's Who Worldwide in a trademark 5 infringement lawsuit; is that correct? 6 A Yes. We were awarded 1.6 million. 7 Q Congratulations. 8 A We never got anything though. 9 THE COURT: Mr. Neville, this is not her direct
10 testimony in front of a jury. Don't get into anything not 11 important to this issue. Neville I am sorry. 12 THE COURT: Are you through with that subject, 13 the accepted general practice? 14 MR. NEVILLE: I was getting to the market share 15 and asking her to compare the market share that Who's Who 16 Worldwide had versus Marquis Who's Who so we could get an 17 idea how prominent Marquis Who's Who, to show whatever 18 they did is the custom in the trade. 19 THE COURT: Ask the witness directly. 20 You said it was the accepted general practice of 21 the Who's Who publications in your company other than 22 Who's Who in America and this other -- 23 THE WITNESS: The medical directory. 24 THE COURT: The medical directory? 25 THE WITNESS: Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8323 Barnes-voir dire/Neville (Jury Absent)
1 THE COURT: To use the selective mailing list; is 2 that correct? 3 THE WITNESS: That's correct. 4 THE COURT: In your opinion, was it the general 5 accepted practice in the industry as a whole to use 6 mailing lists? 7 THE WITNESS: I am not sure what the industry as 8 a whole does. All I know is what we do, and know what 9 people who are in the marketplace that cause confusion 10 that our listees come to us. I don't know what the 11 general population publishers do. 12 THE COURT: You say you attend trade shows, or 13 what do they call it? 14 THE WITNESS: We attend the library trade shows. 15 We look at the publications and look at the brochures. 16 But we never talk about how they do their business. Those 17 typically are trade secrets, and people don't share that. 18 Q Your company -- 19 THE COURT: Excuse me. 20 MR. NEVILLE: Sor
ry, your Honor. 21 THE COURT: They meaning the use of mailing 22 lists? 23 THE WITNESS: We do talk about how we put the 24 publications together. We talk about our market, what the 25 publications are, who they serve. We talk to librarians HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8324 Barnes-voir dire/Neville (Jury Absent)
1 and ask them what they want. 2 THE COURT: When you say the use of mailing lists 3 are accepted general practice in the Who's Who 4 publications -- 5 THE WITNESS: I said Marquis Who's Who. 6 THE COURT: In Marquis Who's Who which are 16 or 7 17 publications; is that correct. 8 THE WITNESS: That's correct. 9 THE COURT: Do you have an opinion as to whether 10 this use of mailing lists by your publication is known 11 outside of the employees of Marquis Who's Who? 12 THE WITNESS: We do put it in
a brochure, so 13 people getting the mailings, if they read all the creative 14 information that is sent along in the mailings, they will 15 read that we do get names from other sources, including 16 journals, alumni lists, we mention lists. 17 THE COURT: You mention lists in the brochure? 18 THE WITNESS: Yes, we do, or we did. 19 THE COURT: Who do you send the brochures to? 20 THE WITNESS: To potential listees. 21 Q What year would that have been that the brochure 22 included the word "lists"? 23 A Many of them from the time that I have been involved 24 with the company, up through the last time I looked at 25 something. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8325 Barnes-voir dire/Neville (Jury Absent)
1 There are different brochures that carry the 2 information. 3 Q You agree that if someone is looking to compete
with 4 a Marquis Who's Who publication wouldn't necessarily be 5 doing something wrong? 6 A Ask that's again? 7 Q It is not illegal to compete with your company, is 8 it? 9 A It is not illegal, as long as you don't come in and 10 represent yourself as my company. 11 Q You as president were monitoring the industry and 12 looking for competitors whom you felt were causing 13 confusion? 14 THE COURT: I don't think we have to get into 15 that, because that is not the subject of this in camera 16 interrogation of the witness. 17 Do you wish to add anything else as far as the 18 custom and practice, custom and usage, or any knowledge on 19 the part of people that this company uses mailing lists? 20 Anything else on that subject? 21 MR. NEVILLE: I have nothing further. 22 THE COURT: Do you wish to ask any questions, 23 anybody else? 24 MR. TRABULUS: Your Honor, I would like to, 25 without necessarily indicating I would call her as a HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8326 Barnes-voir dire/Neville (Jury Absent)
1 witness. I think the record is incomplete and I would 2 like to attempt to clarify it. 3 THE COURT: The record on the issue I am 4 interested in? 5 MR. TRABULUS: Yes, the use of mailing lists and 6 other things relating to it. I will be pretty limited on 7 that, okay? 8 9 VOIR DIRE EXAMINATION 10 BY MR. TRABULUS: 11 Q Ms. Barnes, my name is Norman Trabulus, and I am 12 Bruce Gordon's lawyer -- 13 THE COURT: First of all, Norman Trabulus, Bruce 14 Gordon's lawyer, slow down. 15 MR. TRABULUS: I will. 16 Q While you were the publisher or president of Who's 17 Who publications, was it the practice of those 1
8 publications to send letters to people who were being 19 considered for inclusion in the directories that utilize 20 mailing lists? 21 A Absolutely. 22 Q And those letters would be gotten from the mailing 23 lists -- excuse me, withdrawn. 24 Those letters would be sent to people on the 25 mailing list; is that correct? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8327 Barnes-voir dire/Trabulus (Jury Absent)
1 A One of the sources, yes. 2 Q And the mailing list would be rented through a 3 mailing house, and letters would be sent out to people on 4 the list; is that correct? 5 A Yes. 6 Q Now, would those letters indicate on occasion that 7 the person who is the recipient of the letter is being 8 nominated for inclusion in the publication? 9 A Typically we try to tell them you are a professional, 10 you are being c
onsidered for publication. There were 11 times when we did say, yes, dear nominee, you are being 12 considered for publication. 13 Q So, it is fair to say that you would have the 14 practice -- your company would have the practice of 15 telling people through letters, people who were getting 16 mailings because they were on a list, that they were being 17 nominated for inclusion in the publication; is that 18 correct? 19 A Nominated for consideration occasionally, yes. 20 Q I am going to show you what has been marked as 21 Defendant's Exhibit Z at this trial, it is already in 22 evidence for the trial, but for the record, as to what it 23 is, would this be one of the letters of that type? 24 (Handed to the witness.) 25 A No. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8328 Barnes-voir dire/Trabulus (Jury Absent)
1 Q You r
ead it? 2 A I am familiar with that letter. That letter happened 3 to be the result of an actual phone nomination that came 4 in. 5 Q Do you know if the same form would be used regardless 6 of whether this particular letter was for a form 7 nomination at all? You have been nominated as a 8 biographical candidate -- you have been -- this particular 9 language: You have been nominated as a biographical 10 candidate for the forthcoming 23rd edition of Who's Who in 11 the East? Would that language be utilized in a letter 12 being sent to someone via a mailing list? 13 A A variation, not identical. That's why I know that. 14 Q But there would be some people who would come from 15 mailing lists where it would say nominated; is that 16 correct? You indicated that? 17 A Your name has been brought to our attention, your 18 name has been nominated as a possible candida
te, yes. 19 THE COURT: Could you hold on for a moment, 20 Mr. Trabulus. 21 I think I will go into the jury and apologize for 22 keeping them waiting. 23 Can I get the last answer, Mr. Reporter, please. 24 (Whereupon, the court reporter reads the 25 requested material.) HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8329 Barnes-voir dire/Trabulus (Jury Absent)
1 THE COURT: Thank you. 2 (The following takes place in the jury room.) 3 THE COURT: I am sorry to keep you this long. 4 What I am doing with the lawyers, which is not 5 for your consideration, is taking longer than I thought. 6 So I apologize for keeping you waiting. It is necessary. 7 I can't help it. And we should be with you fairly soon. 8 I would say within 15 or 20 minutes. Again, I never like 9 to keep you waiting. As I explained to you the very first 10
day we met, I don't like to be kept waiting myself. In 11 fact, people tell me I am impatient sometimes,. 12 I once went to a movie, a long line, freezing 13 cold, and I made an oath, I will never do that ever, until 14 Titanic came along. 15 We will be with you as soon as possible. 16 17 (Whereupon, at this time the following takes 18 place in open court.) 19 THE COURT: Remember the point I am interested in 20 in this particular session. I am not interested in 21 anything else. 22 Q Ms. Barnes, do you regard there being a Who's Who 23 market? You regard it as a distinct market? 24 A Yes. 25 Q And it has two components, one reference and the HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8330 Barnes-voir dire/Trabulus (Jury Absent)
1 other listee? 2 A Revenue comes from two components. The real market 3 is
the library market, the reference market, the reference 4 quality of a publication. 5 Q Regardless of that is it not fair to say that Marquis 6 Publications compete with other publications in the listee 7 market? 8 A Marquis publications -- as a general rule the other 9 publications that are in the reference market -- there is 10 some competition for the dollar -- 11 Q Ms. Barnes, I am asking you about the Who's Who 12 market, regardless of whether you believe a particular 13 Who's Who publication is of reference quality or not? 14 A Then there is competition, absolutely. 15 Q And there is competition between Marquis and the 16 other Who's Whos, regardless of whether or not they are 17 reference quality; is that right? 18 A There is competition in that, yes, there is. 19 Q In the listee component of that market, do you know 20 Marquis' market share there?
21 A No. 22 Q Would you say within a period of time, the late 23 1980's, 1990's, would you say that's -- within that market 24 Marquis would have more than half of the listee market? 25 A I have no way of knowing it. I never analyzed or HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8331 Barnes-voir dire/Trabulus (Jury Absent)
1 tried to find out or tried to study that. 2 Q Well, let me ask you about a couple of terms you used 3 before. You used the term must listee? 4 A Yes. 5 Q That's someone who is to be listed in the book 6 regardless of whether they buy the book? 7 A All listees in the Marquis publications are included 8 whether or not they buy. 9 Q What is a non-must listee? 10 A Someone who goes in the book who does or does not 11 buy. He may or may not be the governor of the state. But 12 he might be a Council
man in a local district as an 13 example. He qualifies, but he doesn't have to buy. 14 Q What is the difference between a must listee and 15 someone who is not a must listee? 16 A Those are the trade secrets and the standards of the 17 Marquis publications in existence for almost 100 years. 18 Q Let me ask you, isn't the must listee someone who 19 must be listed? 20 A Yes. 21 Q And someone who is not, must not be listed? 22 A Not a must, no. 23 Q Is it your testimony that it makes no difference 24 whether the non-must listee decides to buy? 25 A Absolutely no difference whatsoever. Never has been. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8332 Barnes-voir dire/Trabulus (Jury Absent)
1 Q Let me ask you now with regard to Who's Who in 2 Finance and Industry, is that a Marquis publication? 3 A Yes. 4 Q Is that som
ething you considered to be competed with 5 by Who's Who Worldwide publications? 6 A Yes. 7 Q And is it correct that 80 percent of the listees in 8 the Who's Who in finance and industry received -- 9 withdrawn -- came from mailing lists? 10 A No, it is not correct. 11 MR. WHITE: Your Honor, this has nothing to do 12 with custom and usage. 13 Q Let me ask you, was it the custom and usage of 14 Marquis Who's Who to send letters to the people who were 15 nominated for -- withdrawn. 16 Did Marquis Who's Who send letters to people who 17 were nominated for inclusion in Who's Who in Finance and 18 Industry? 19 A I said, I believe, yes, we sent letters. 20 Q With regard to that specific publication? 21 A Yes. 22 Q That went among others to people who came from 23 mailing lists? 24 A Among others, yes. 25 MR. TRABULUS: I think othe
r counsel have HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8333 Barnes-voir dire/Trabulus (Jury Absent)
1 questions. 2 THE COURT: I hope on the point we are interested 3 in. 4 MR. TRABULUS: I think mine were leading up to 5 the point. 6 THE COURT: Let's get to it, never mind leading 7 up to it. 8 9 VOIR DIRE EXAMINATION 10 BY MR. SCHOER: 11 Q Is it Ms. or Mrs. Barnes? 12 A It is Mrs. 13 Q Mrs. Barnes. 14 Marquis Who's Who -- we call it Marquis, because 15 that's what we were calling it. It is not to insult you. 16 A Okay. 17 Q Marquis Who's Who, is it fair to say that you print 18 literature that has language such as this: Marquis 19 Who's Who has earned a reputation for meticulous care in 20 the selection of "biographees", E E S, of genuine 21 reference interest and for the ac
curate compilation and 22 biographical data. Virtually every U.S. library and most 23 major libraries worldwide include Marquis Who's Who 24 publications in their collections, and specialized 25 libraries throughout the world include Marquis' volumes HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8334 Barnes-voir dire/Schoer (Jury Absent)
1 appropriate to their interest. Marquis Who's Who is 2 recognized globally for its contributions to biographical 3 reference information, an esteem so universal that 4 inclusion in a Marquis Who's Who publication is considered 5 by many as a signal mark of achievement. 6 Do you use language like that in your 7 publications, similar language? 8 A In the publications? 9 Q In your brochure. 10 A Yes, that's my brochure. 11 Q It is your brochure, right? 12 A Absolutely. 13 Q As far as
you are concerned Marquis is the Rolls 14 Royce, the Cadillac of Who's Who biographical directories; 15 isn't that so? 16 A Absolutely. 17 Q And it sets the standard for the industry, isn't that 18 so? 19 A I believe it is. That's my opinion. 20 Q And whatever your company's custom and usage is, that 21 sets the standard for the custom and usage in the 22 industry; isn't that so? 23 A I am assuming it is. 24 MR. SCHOER: Thank you. 25 MR. DUNN: Your Honor, I have a couple of HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8335 Barnes-voir dire/Schoer (Jury Absent)
1 questions. If you feel -- 2 THE COURT: I don't think you need it. 3 MR. DUNN: Then I will not ask it, your Honor. 4 THE COURT: We will let Mr. White, if he wishes 5 to ask some questions. 6 MR. WHITE: I do, your Honor. 7 8 VOIR
DIRE EXAMINATION 9 BY MR. WHITE: 10 Q Ms. Barnes, you said you regard Marquis as setting 11 the standard for the industry; is that right? 12 A That's correct. 13 Q By that you mean that you feel that the quality of 14 Marquis' books set the standard for the industry? 15 A It has to be the quality. 16 Q Please just answer yes or no. 17 A Yes, yes. 18 Q Thank you. 19 Is it fair to say that Marquis, aside from the 20 general description you put in the front of your books, 21 you don't tell your competitors how you get your names? 22 A No. 23 Q As far as you know your competitors don't know how 24 you get your names? 25 A No. We don't discuss it. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8336 Barnes-voir dire/White
1 Q You have absolutely no personal knowledge, do you, 2 about how other companies
obtain their names, do you? 3 A No. 4 Q You go to trade association meetings, and you said it 5 is never discussed how you get your names, right? 6 A That is correct. 7 Q You don't discuss how you get your names, right? 8 A Yes. 9 Q You don't discuss how the other people get their 10 names; is that right? 11 A That's right. 12 Q If, for example, Marquis changed how it got names, 13 that would not be communicated to the other people in the 14 industry, would it be? 15 A No. 16 Q And if other people changed how they got their names, 17 that would not be communicated to you at Marquis, right? 18 A No. 19 Q So, when you say it sets the standard for the 20 industry, you are not talking about because Marquis uses 21 lists, then after that everyone else follows after, 22 right? That's not what you mean? 23 A No, it is not what I m
ean. 24 Q Because if Marquis uses lists, you don't know what 25 the other people do, right? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8337 Barnes-voir dire/White
1 A No, I don't. 2 Q In this market we have been talking about -- let me 3 back up. 4 There are biographical reference publications, 5 rights? 6 A Yes. 7 Q Some may have "Who's Who" in the title, some may not? 8 A Yes. 9 Q For example, is there a publisher called Scribners? 10 A Of the 13 competitors we have most of them do not use 11 Who's Who. There is a Scribner publication, yes. 12 Q What kind of publication does Scribners have? 13 A They have a publication on contemporary authors. It 14 is biographical in nature. It is about authors. Wilson 15 has contemporary biographies. It is not the same style 16 and format as Marquis was. And I don't
know how they put 17 their books together. We do compete in the library market 18 for the budget dollar. 19 Q Is it fair to say that there are other very large 20 prominent publishing companies in the market we are 21 talking about? 22 A Yes, International Thompson owns Gale Publishing and 23 they have I believe three and maybe four Who's Who 24 biographical directories. 25 Q And you are talking about significant multi-million HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8338 Barnes-voir dire/White
1 dollar companies that compete with you; is that right? 2 A Absolutely. 3 Q And so, Marquis doesn't -- you are not even sure what 4 percentage of the market that Marquis controls; is that 5 right? 6 A No, no. 7 Q And is it at least fair to say that it is certainly 8 not even half? 9 A I don't really have any
idea because I have never 10 studied the market other than the library market. 11 Q Okay. 12 Now, speaking about the library market, you said 13 that Marquis had 97 percent penetration; is that right? 14 A In libraries of a budget of 100,000 or more. 15 Q And what that means is 97 percent of such libraries 16 have your book, right? 17 A That's correct. 18 Q And that does not mean that you have 97 percent 19 market share, does it? 20 A No, it doesn't. 21 Q Those libraries could have many such volumes, right? 22 A Absolutely. 23 Q Is it fair that Marquis regards how it obtains its 24 names as trade secrets? 25 A Absolutely. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8339 Barnes-voir dire/White
1 Q And it is therefore not something you share with 2 other members of the industry? 3 A No. 4
Q Now, speaking on an industry-wide basis, not just 5 what Marquis does, but on an industry-wide basis, can you 6 offer any opinion at all, or is it correct that you cannot 7 offer any opinion about what the industry as a whole does 8 in obtaining their names? 9 A I can't offer any opinion. I don't know. 10 Q The only opinion that you could offer is what your 11 one company, Marquis, does? 12 A That's right. 13 MR. WHITE: I have no further questions. 14 MR. SCHOER: Judge. 15 16 VOIR DIRE EXAMINATION 17 BY MR. SCHOER: 18 Q I am a little confused, didn't you indicate on the 19 front of your books, Marquis uses lists? 20 A Not in the fronts of the books. I think it is in the 21 promotional material that goes out to potential listees, 22 the foot of the book I am not sure. There is a preface 23 that tells the kind of names that go in the book.
If you 24 have a copy -- 25 Q The point is while you say it is a trade secret that HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8340 Barnes-voir dire/Schoer (Jury Absent)
1 you use lists, you also say if someone asks you tell 2 them. It is in the brochures and it may be in the front 3 of the books? 4 A The way we put our books together is a trade secret. 5 Q But the use of mailing lists to obtain the names of 6 listees, potential listees, is known in the industry; is 7 that right? 8 A We divulge the information whether or not other 9 people -- 10 Q So, that's not a trade secret? 11 A That piece of it is not a trade secret. 12 MR. JENKS: One question from here. 13 THE COURT: If you must 14 15 VOIR DIRE EXAMINATION 16 BY MR. JENKS: 17 Q If I were to call up after receiving a solicitation 1
8 letter in the mail from Marquis Who's Who, and asked you 19 if my name came from a mailing list, how would you, would 20 your representative respond typically? 21 A Generally we would try to tell you, or we would tell 22 you that your name can come from many different ways, from 23 association lists, from alumni lists, from newspaper 24 magazine articles, etcetera, what is published in the 25 brochure. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8341 Barnes-voir dire/Jenks
1 Q If my name came from a mailing lists, would you tell 2 me that? 3 A If you asked me that, yes. 4 MR. JENKS: Thank you. 5 THE COURT: Why don't you step outside for a few 6 minutes. Don't go back to Dayton, Ohio. 7 THE WITNESS: Dayton, Arizona. 8 THE COURT: Dayton, Arizona? 9 THE WITNESS: Phoenix, Arizona. Dayton Ohio. 10 THE COURT: I went
to judge's school in Phoenix. 11 THE WITNESS: You went to the university? 12 THE COURT: No. We went to a hotel designed by 13 Frank Lloyd Wright. Wasn't it beautiful? 14 THE WITNESS: Yes, it is beautiful. 15 THE COURT: All right, wait outside, will you? 16 (The witness exits the courtroom.) 17 THE COURT: I heard that this witness who is a 18 major player in the company, Reed Elsevier, Marquis, 19 whatever it is called. 20 She was the publisher of Marquis for some time. 21 She worked in this industry since 1972, some 26 22 years. This is a very experienced person in this 23 industry. 24 This company puts out some 18 to 20 titles. 25 Who's Who Worldwide Who's Who in America. They obtain HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8342 Barnes-voir dire/Jenks
1 their name from research and other materials. They are 2
not using mailing lists. 3 The other 17, except for a trade journal that I 4 don't recall, uses lists, including high profile 5 association lists and other lists. 6 The remarkable thing is they put out a brochure 7 to potential, potential customers. And the brochure says 8 they use mailing lists. 9 This is public. Anybody can get something like 10 this. 11 In answers to questions by I believe, Mr. Schoer, 12 she said -- I believe by Mr. Neville. She said the 13 accepted general practice other than Who's Who in America 14 in their company was to use mailing lists. She didn't 15 know what the accepted practice in the industry was. 16 She said on the one hand that mailing lists are 17 trade secrets; but then said the use of mailing lists is 18 not a trade secret, because we tell everyone who asks, and 19 we put it in the brochure. 20 The key to the who
le question of whether it is 21 admissible in this trial is that it is in brochures. 22 Anybody can get brochures. That is not a trade secret. 23 It is an open fact. It is sent to potential listees. It 24 is not even sent to customers. 25 That the print literature from Marquis Who's Who HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8343 Barnes-voir dire/Jenks
1 is recognized globally and esteemed universally, including 2 their brochure, which says they use mailing lists; that 3 Marquis is the Cadillac, sets the standard for the 4 industry. 5 Notwithstanding a valiant effort by Mr. White on 6 what I would normally call cross-examination, in which she 7 said how to obtain names is a trade secret -- on the other 8 hand within two minutes later she said that the use of 9 mailing lists is divulged and it is not a trade secret. 10 We tell
persons that we use mailing lists. 11 It is my ruling that that testimony is admissible 12 in this trial. 13 It is admissible for several reasons. 14 One, whether there is intent to deceive or 15 defraud by the defendants in this case, using mailing 16 lists. 17 Secondly, good faith, which is a defense. 18 Which the government must disprove beyond a 19 reasonable doubt. 20 One caveat, however, if the defendants put this 21 witness on the stand, the witness' entire testimony is 22 fair game, and the prosecutor certainly can bring out the 23 fact that they tell people that they use mailing lists; 24 both in the brochure and in response to questions. That 25 is my ruling. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8344 Barnes-voir dire/Jenks
1 MR. WHITE: I was going to say -- never mind. I 2 will not add anything.
3 THE COURT: Good thinking, Mr. White. 4 We have Mr. Reffsin to conclude. 5 Bring in the jury. 6 (Whereupon, at this time there was a pause in the 7 proceedings.) 8 THE COURT: Of course, you will also get together 9 a statement of the judge who told Mr. Gordon not to do 10 this or use this. I will get together with you and 11 counsel on some statement. 12 MR. WHITE: I will, your Honor, yes. 13 THE COURT: Which I will tell the jury is not 14 applicable to the other defendants. 15 MR. WHITE: Yes. 16 Can I ask, your Honor, the timing of that will be 17 when? After Ms. Barnes' testimony? 18 THE COURT: I think it will have to be in your 19 rebuttal case. 20 MR. WHITE: All right. 21 (Whereupon, the jury at this time entered the 22 courtroom.) 23 THE COURT: Please be seated, members of the 24 jury. Thank you for your pat
ience. 25 I will have to interrupt again something between HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8345 Reffsin-recross/Trabulus
1 3:00 and 3:15 again once more for a short time. I tell 2 you in advance. I always cover my tracks, you see. 3 You may proceed. 4 5 M A R T I N R E F F S I N , 6 called as a witness, having been previously 7 duly sworn, was examined and testified as 8 follows: 9 10 MR. TRABULUS: Thank you, your Honor. 11 12 RECROSS-EXAMINATION (Cont'd) 13 BY MR. TRABULUS: 14 Q You were asked some questions with regard to 15 Mr. Gordon signing tax returns and I wanted to make it 16 clear. Certainly he would sign the tax returns without 17 looking at it? It is certainly consistent with his style? 18 A On rare occasions he would, yes. 19 Q Let me ask you then -- I think I sh
owed you a 20 corporate tax return in 1990, which showed he owned 100 21 percent of the shares? 22 A Yes. 23 Q And that's something your company put in there 24 because you assumed that; is that right? 25 A Yes, that's correct. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8346 Reffsin-recross/Trabulus
1 Q And certainly you don't believe that he reviewed that 2 because it was inaccurate, right? 3 A I don't recall. 4 Q Do you recall -- let me see if I can help you 5 remember. 6 Do you recall being -- a deposition that you gave 7 back in, on May -- back in May 1994, which is marked in 8 evidence in this case as Government Exhibit 816, and do 9 you recall at that deposition you were asked questions 10 concerning the 1990 corporate tax return? 11 A I might have been. I am not specific about it. 12 Q I will go
to page 10, and do you recall being asked 13 these questions and giving these answers: Could you refer 14 to the -- 15 THE COURT: Question. 16 MR. TRABULUS: Sorry, your Honor. 17 Question: Could you refer to the -- I believe it 18 is the second page, where the description of the ownership 19 is listed. It seems to indicate that Mr. Gordon owns 100 20 percent of the shares. 21 Answer: Yes. 22 Question: Does that reflect your understanding 23 at that time? 24 Answer: Well, we thought -- what we thought was 25 our understanding. We had no better knowledge at the HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8347 Reffsin-recross/Trabulus
1 time. 2 Question: Mr. Gordon signed that tax return? 3 Answer: I assume so, yes, or his officer. 4 Question: So, to the best of your knowledge he 5 thought it was accurate a
t the time? 6 Answer: I would doubt that Mr. Gordon even 7 looked at the tax return. 8 Question: Is that his style? 9 Answer: Yes. 10 Q Do you recall now that back at that time at least it 11 was closer to when these things were happening, you recall 12 Mr. Gordon's style as being someone who would just sign a 13 tax return signed by an accountant without even looking at 14 it? 15 MR. WALLENSTEIN: Objection. 16 THE COURT: Sustained. 17 That is not proper use of the questions and 18 answers in a deposition. 19 MR. WALLENSTEIN: I move to strike the question 20 and answer. 21 THE COURT: I didn't hear an answer. 22 MR. WALLENSTEIN: I would ask that the jury be 23 asked to disregard Mr. Trabulus' question. 24 THE COURT: They never pay attention to an 25 unanswered question. My goodness, they can go out and HARRY RAPAPO
RT, CSR, CP, CM OFFICIAL COURT REPORTER 8348 Reffsin-recross/Trabulus
1 lecture on that subject by now, each one of them. 2 Q Mr. Reffsin, you gave that testimony? 3 A Yes. 4 Q And that was back in 1994? 5 A Yes. 6 Q And that was closer in time to the events that we are 7 talking about in this trial than today is; is that 8 correct? 9 A Yes. 10 Q At the time you gave that answer it was true as best 11 as you knew at that time? 12 A Yes, I believed it, yes. 13 Q And is it also correct that not in every case, 14 Mr. Reffsin, were the tax -- were the tax returns that 15 Mr. Gordon signed came from information based on a 16 sit-down between you and him? 17 A As far as pertinent information, it was always 18 prepared based on discussions with Mr. Gordon, earlier 19 discussions. 20 Q Did you not have other people who w
orked for you 21 prepare returns involving Mr. Gordon or his companies? 22 A Yes. 23 Q And you -- do you know if they would speak to 24 Mr. Gordon or perhaps to Liz Sautter or other people who 25 worked at his company? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8349 Reffsin-recross/Trabulus
1 A They might speak to Liz, but I don't know if they 2 would speak to Bruce. 3 Q And some of the returns might have had information 4 that would come from conversations between somebody 5 working for you and somebody working for Mr. Gordon; is 6 that correct? 7 A That's correct. 8 Q So, that would not be a situation in which the 9 information would come from a meeting between you and 10 Mr. Gordon; is that correct? 11 A Not in all cases, that's correct. 12 Q Did you yourself sometimes speak to Liz Sautter 13 concern
ing the termination of Mr. Gordon's company -- 14 withdrawn. 15 Did you on occasion speak to Liz Sautter 16 concerning information to be included on the tax return? 17 A Yes. 18 Q And that's for inclusion in Mr. Gordon's personal 19 returns as well as corporate tax returns? 20 A She would sometimes give me the information that was 21 included in Mr. Gordon's personal tax returns. 22 Q Would you sometimes also speak to a bookkeeper for 23 the same sort of information? 24 A It is possible, yes. 25 MR. TRABULUS: I have no further questions. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8350 Reffsin-recross/Trabulus
1 THE COURT: Anybody else? 2 MR. WALLENSTEIN: I think it is still two 3 questions, Judge. 4 5 FURTHER REDIRECT EXAMINATION 6 BY MR. WALLENSTEIN: 7 Q Mr. Reffsin, you were asked earlier wit
h respect to a 8 letter written by Mr. Ackerman. Do you recall those 9 questions? 10 A Yes. 11 Q And prior to the submission of that letter to the 12 bankruptcy court by Mr. Ackerman, did you ever see that 13 letter or read its contents? 14 A Which letter are you specifically talking about. 15 Q The September 8th letter, the letter you were shown 16 by Mr. White previously? 17 A The September 8th letter I did not see earlier. 18 Q And that letter makes reference to the fact that you 19 were allegedly -- that an accountant was calculating 20 certain numbers to be presented to the Court; is that 21 correct? 22 A That's correct. 23 Q And Mr. Ackerman wrote that letter after he had a 24 conference with you and Mr. Gordon? 25 A That is correct. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8351 Reffsin-redirect/Wall
enstein
1 Q And did the subject of those calculations ever come 2 up during those discussions with Mr. Ackerman? 3 A No. 4 Q Did you tell Mr. Ackerman that you were preparing 5 those calculations? 6 A Did I tell him I was preparing them? 7 Q Yes. 8 A No. 9 Q Did you ever prepare those calculations? 10 A No. 11 Q So, would it be a fair statement then that 12 Mr. Ackerman's inclusion of that statement in his letter 13 was to cover his own butt, so to speak? 14 A He put it in. I don't know particularly why. 15 Q Okay. 16 MR. WALLENSTEIN: Nothing further. 17 THE COURT: Anything else. 18 19 FURTHER RECROSS-EXAMINATION 20 BY MR. WHITE: 21 Q Mr. Trabulus asked you about advice you gave to 22 Mr. Gordon that he could no longer take loans from Who's 23 Who Worldwide after the bankruptcy? 24 A Right. 25 Q You gave him that advice, is it correct, that you HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8352 Reffsin-recross/White
1 gave him that advice when Who's Who was contemplating 2 filing bankruptcy? 3 A At the time it was contemplating bankruptcy I told 4 him he couldn't take loans. 5 Q Between the time the judgment came down and he knew 6 he had to pay the 1.6 million, or the company did, and the 7 actual bankruptcy petition was filed? 8 A No, there was a -- 9 MR. TRABULUS: Objection to form. The question 10 is unclear if that's the time he gave the advice or 11 whether he gave the loans. 12 Q I am trying to focus on when you gave the advice. 13 A At the time we filed the bankruptcy petition I told 14 him he cannot take any loans, or just before we filed, or 15 as we were preparing it. 16 Q As it was being pr
epared? 17 A Right. 18 Q You said in substance, listen, you have to face the 19 consequences of this, if you go ahead and file this, one 20 of them is that you will not continue to be able to take 21 loans from Worldwide? 22 A Yes. 23 Q And that chart we had showed a lot of transfers out 24 of Worldwide in that period that we are talking about; is 25 that right? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8353 Reffsin-recross/White
1 A Just before the period. 2 Q Just before the bankruptcy filing? 3 A That's correct. 4 Q And so, is it fair to say that you could accomplish 5 the same objective by transferring a lot of money out of 6 Who's Who Worldwide to other companies and then taking 7 loans from those companies? 8 A It would be hard to do that without disclosing it. 9 Q Not if the transfers were befor
e the petition was 10 filed, right? 11 A You have to review all the transfer activity 12 12 months prior to the transfer -- prior to the bankruptcy. 13 Q And those only show, as you said before, from 14 Worldwide to the first destination of the money; is that 15 right? 16 A Yes. 17 Q Let me show you Exhibit 641 in evidence, the 18 Mr. Ackerman letter we talked about. 19 (Handed to the witness.) 20 A Yes. 21 Q Look at the last page. You are cc'd there, right? 22 A I am cc'd, I never got it. 23 Q You don't recollect getting that letter? 24 A In fact, I had a fight with Mr. Ackerman because this 25 went out without me seeing it. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8354 Reffsin-recross/White
1 MR. WHITE: That's all. 2 THE COURT: Anything else? 3 MR. TRABULUS: No. 4 MR. WALLENSTEIN:
Nothing further. 5 THE COURT: You may step down. 6 (Whereupon, at this time the witness left the 7 witness stand.) 8 THE COURT: You may proceed, if you wish. 9 MR. TRABULUS: Your Honor, there was a 10 stipulation that was going to be read into the record, and 11 then I have a document that I believe the government is 12 not going to be objecting to. 13 THE COURT: Do you wish to start with the 14 stipulation? 15 MR. TRABULUS: Yes. 16 THE COURT: The jury has been told a number of 17 times that a stipulation is an agreement between counsel 18 that certain facts are true and there need be no other 19 proof to support that fact. 20 MR. TRABULUS: The stipulation reads as follows: 21 It is hereby stipulated and agreed between the government 22 and Bruce Gordon that beginning about June 14th, 1995, the 23 postal inspectors mailed 49,264 questionnair
es to members 24 of Who's Who Worldwide and Sterling Who's Who, whose names 25 and addresses were taken from a version of the Who's Who HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8355 1 Executive Club CD-ROM which was issued in or about the 2 fall of 1994. By August 3rd, 1995, somewhat over 7,000 3 members have returned the questionnaire, and about 5,100 4 had been returned by the post office as undeliverable. Of 5 those returned as undeliverable -- I will say that again. 6 Of those returned as undeliverable about 2,730 7 had expired forwarding addresses, signifying that the 8 forwarding address had been given more than a year before. 9 That's the end of the stipulation. 10 THE COURT: Very well. 11 MR. TRABULUS: Your Honor, I would also offer 12 Defendant's Exhibit TA. 13 THE COURT: Tiger Abel? 14 MR. TRABULUS: Correct.
The T indicates it is a 15 transcript. 16 THE COURT: Any objection? 17 MR. WHITE: I just need to refresh my 18 recollection as to what it is. 19 (Whereupon, at this time there was a pause in the 20 proceedings.) 21 MR. WHITE: Your Honor, the government has no 22 objection. 23 THE COURT: Defendant's Exhibit TA, Tiger Abel, 24 in evidence. 25 (Defendant's Exhibit TA received in evidence.) HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8356 1 THE COURT: You say it is a transcript? 2 MR. TRABULUS: Yes, your Honor. 3 MR. WHITE: Portions of a transcript. 4 MR. TRABULUS: Portions, yes. 5 If I may I will hand your Honor a copy. 6 At this point I would like to read the contents 7 of TA. 8 THE COURT: Very well. 9 MR. TRABULUS: Your Honor, I will not read the 10 full first page, the cover
page. It indicates it is a 11 transcript of a hearing held before Judge Seybert in this 12 courthouse in April 20th, 1995. We have excerpts. It 13 reads as follows. 14 Mr. Brown -- 15 THE COURT: Mr. Brown was an Assistant United 16 States Attorney? 17 MR. TRABULUS: Yes. 18 He states as follows: 19 The United States called Martin Biegelman to the 20 stand. 21 It says Martin Biegelman having been first duly 22 sworn by the Clerk of the Court, was examined and 23 testified as follows. 24 The witness, Martin Biegelman, indicating the 25 name is spelled out. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8357 1 Mr. Shargel -- your Honor, I can state that he is 2 an attorney who questioned Mr. Biegelman, not on behalf of 3 the government. 4 I will just skip it, your Honor. 5 It continues, direc
t examination by Mr. Brown. 6 Question: Sir, by whom are you employed? 7 Answer: The United States Postal Inspection 8 Service. 9 Question: In what capacities? 10 Answer: As a postal inspector. 11 Then there is a skip. And continuing at page 12 109, and this is the cross-examination of Mr. Biegelman. 13 Question: Let me ask you this question: Before 14 you executed the search warrant, what was the date, March 15 22nd? 16 Answer: The date of the execution of the search 17 warrant? 18 Question: Yes. 19 Answer: March 30, 1995. 20 Question: March 30. 21 Before March 30th, 1995, before that date, you 22 told us a few moments ago that you had not spoken to a 23 single member, correct? 24 Answer: No. You said members from these books. 25 Question: Well, did you speak to members outside HARRY RAPAPORT, CSR, CP, CM OFFICIA
L COURT REPORTER 8358 1 the books? 2 Answer: Spoke to some. 3 Some, and received correspondence from people who 4 send money, who were dissatisfied, and many people who did 5 not pay, but felt they were misrepresented. 6 Question: Yes? 7 Answer: Yes. 8 Question: Those people were not in the book? 9 Answer: I believe not. 10 Question: Are those people identified not 11 necessarily by name, don't get excited, but by a CI number 12 or any other denomination in the complaint? 13 Answer: They are referred to in general in the 14 complaint? 15 Question: In general as people who complained to 16 the better business bureau? 17 Answer: Or to our agency or to the New York 18 State Attorney General's office, New York State Department 19 of Law, Nassau County Consumer Affairs, and referred to 20 us. 21 Skipping.
22 Question: How many people are we talking about? 23 Answer: We received about 100 complaints. Not 24 all paid. Many did not pay. 25 Question: Well, how many paid? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8359 1 Answer: 20 to 30, I believe. 2 Question: 20 to 30 people in a company that has 3 70,000 members paid and made complaints to your agency or 4 other agencies, right? 5 Answer: Basically, correct. 6 That's the end of that exhibit. 7 MR. NEVILLE: Your Honor, may we have about three 8 minutes for the lawyers to caucus before we continue? 9 THE COURT: Yes. I told you I needed to take a 10 recess anyway. 11 We will take a ten-minute recess. Please do not 12 discuss the case, and please keep an open mind. 13 (Whereupon, at this time the jury leaves the 14 courtroom.) 15 16 (Whereupon
, a recess is taken.) 17 18 MR. NEVILLE: We will call Sandra Barnes, and I 19 would request pursuant to 611 of the Rules of Evidence, 20 that your Honor deem Ms. Barnes a hostile witness, an 21 adverse party in a sense, which is exactly what she is. 22 And, therefore, interrogation may be by leading questions 23 it is 611(c). 24 MR. WHITE: Your Honor, Ms. Barnes didn't seem 25 hostile to me. She seemed like she was trying to answer HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8360 1 the questions honestly. I don't see why they need to have 2 a crutch of asking leading questions. 3 MR. NELSON: Your Honor, I might note in addition 4 to her demeanor on the stand, she did testify and the 5 record is rather clear, that there is an outstanding 1.6 6 million dollars judgment by her employer against two of 7 the corporate defenda
nts in this case, which is still 8 pending in bankruptcy and capable of resolution. 9 Accordingly as a matter of law she is a hostile party in 10 the matter. 11 THE COURT: As a matter of law, that is very 12 assuredly said, Mr. Nelson. 13 Reading from a text source about the Federal Rule 14 611(c), the rule applies to both civil and criminal cases, 15 and applies not only to adverse parties, but to an hostile 16 witness, and to any witness who is unwilling or biased. 17 Rule 611(c) greatly expanded the definition of 18 the hostile witness. 19 The problem I am having is what is an adverse 20 problem in a criminal case. 21 MR. NELSON: Your Honor, I would suggest to the 22 Court that the testimony so far elicited during the course 23 of the trial with respect to counsel on behalf of Reed 24 Elsevier while the civil matter was still pending -- the 25 tes
timony established during the course of the trial has HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8361 1 demonstrated that counsel on behalf of Reed Elsevier met 2 with Mr. Biegelman and also I believe with Agent Jordan 3 while the civil matter was still pending, while there was 4 an adversarial relationship between Reed Elsevier and 5 Who's Who Worldwide. There seems to be a commonality of 6 interest at least to that point in time, and Ms. Barnes 7 was identified as the individual who was most acutely 8 aware of what was taking place in the Reed litigation at 9 that time. I would say by analogy the adverse party 10 interest can be drawn from the adverse relationship they 11 had at the commencement of the relationship between the 12 government and Marquis Who's Who Wallenstein to go one 13 step further, your Honor, there is still a pending
14 bankruptcy proceeding in which Reed Elsevier is the major 15 creditor of the corporate defendant in this case. 16 THE COURT: I think the tenor of the cases was to 17 enlarge the previous rule which set forth certain 18 designated hostile witnesses. 19 This witness is associated with the company that 20 has a judgment against one of the defendants in this 21 case. That judgment is before the bankruptcy court. This 22 criminal trial may have an issue with regard to whether 23 that judgment is dischargeable or not. Therefore, I will 24 hold she is a hostile witness and allow you to ask leading 25 questions. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8362 1 MR. NEVILLE: Thank you. 2 MR. TRABULUS: Your Honor, if I may, before the 3 testimony begins, based upon your Honor's indication that 4 if this witness is called, and the tes
timony is elicited, 5 which I think co-counsel intends to elicit, that an 6 instruction will be given that Mr. Gordon was aware that a 7 federal judge had said the use of the term "nomination" 8 was improper or false or something to that effect, under 9 the circumstances of which his company operated, number 10 one, I would object to giving that instruction. If your 11 Honor intends to give it at this point, I would move for a 12 severance. 13 The effect of that instruction would be also to 14 effect the corporate defendants, since he was their 15 president. And I think Mr. Jenks is telling me or told me 16 he wishes to move for a severance at this point as well, 17 so Mr. Gordon and the corporate defendants would be tried 18 separately. 19 MR. JENKS: Yes, your Honor. I would join in the 20 application of Mr. Trabulus. I am opposed to the calling 21 of Sandra
Barnes as a witness. I have been outvoted by 22 co-counsel. I will join in Mr. Trabulus' application. 23 THE COURT: I don't think we have an antagonistic 24 defense to the extent that it is prejudicial to the 25 defendants. I don't think so at all. In my opinion there HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8363 1 is no ground, especially in the eighth or ninth week of a 2 trial of this kind where I have not seen to any extent any 3 antagonistic defenses. 4 I am going to deny the motion. 5 MR. TRABULUS: Your Honor, I agree up to this 6 point there were no antagonistic defenses. The motion for 7 a severance is predicated on what I understand the 8 consequences would be. 9 I, too am opposed to the calling of Ms. Barnes 10 after your Honor indicated what the instructions would 11 be. I wanted to say that for the record.
12 THE COURT: Very well. 13 Bring in the jury. 14 THE CLERK: Jury entering. 15 (Whereupon, the jury at this time entered the 16 courtroom.) 17 THE COURT: Please be seated, members of the 18 jury. 19 You may proceed. 20 MR. NEVILLE: Thank you, your Honor. 21 The defense calls Ms. Sandra Barnes. 22 THE CLERK: Please raise your right hand. 23 24 25 HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8364 1 S A N D R A S. B A R N E S , 2 called as a witness, having been first 3 duly sworn, was examined and testified 4 as follows: 5 6 THE CLERK: Please state your name and spell your 7 last name slowly for the record. 8 THE WITNESS: Sandra S. Barnes, B A R N E S. 9 THE COURT: Have a seat, Ms. Barnes. 10 MR. NEVILLE: May I proceed, your Honor? 11 THE COURT: Yes.
12 13 DIRECT EXAMINATION 14 BY MR. NEVILLE: 15 Q Good afternoon, Ms. Barnes. 16 A Good afternoon. 17 Q My name is Jim Neville. I represent Scott 18 Michaelson. 19 Do you know Scott? 20 A No. 21 Q Ms. Barnes, what is your occupation? 22 A I am vice president of fulfillment for LEXIS NEXIS. 23 Q Does LEXIS NEXIS have anything to do with the Reed 24 Publishing company? 25 A It is owned by the Reed Publishing company. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8365 Barnes-direct/Neville
1 Q Marquis -- how do you pronounce it? 2 A Marquis. 3 Q Is Marquis Who's Who owned by Reed Publishing also? 4 A Yes. 5 Q Have you ever worked for Marquis Who's Who? 6 A Yes. 7 Q Can you chronologically, but briefly, go through the 8 employment history at Marquis Who's Who. 9 A Fr
om inception? 10 Q Yes. 11 A The beginning? 12 Q Yes. 13 A 1972 to approximately 1980 I was responsible for the 14 customer service section of Marquis Who's Who and the 15 order entry. Actually that went through about 1984. 16 From 1984 through 1987 I was in the marketing 17 area. 18 1987 to 1988 I was marketing for two companies, 19 Marquis and National Registry. 20 1989 I was appointed president of Marquis 21 Who's Who. I served in that capacity until 1991, when I 22 became publisher of Marquis Who's Who and vice president 23 of fulfillment for Reed Reference Publishing, and stayed 24 in that capacity until July of 1997 when I became vice 25 president of fulfillment for LEXIS NEXIS. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8366 Barnes-direct/Neville
1 Q Fulfillment, what is that? 2 A Responsibility
for the distribution, the customer 3 service, the credit collection, all the back end functions 4 of a business, billing. 5 Q You have a prominent role in revenue, in money? 6 A No, no. 7 Q When you bill, that is to be paid, right? 8 A I bill, but I don't -- I am responsible for billing 9 what sales sells. 10 Q Now, focussing your attention on the years, let's 11 say, between 1988 and '95, in that time span, what was 12 your job or jobs at Reed Elsevier or at Marquis Who's Who, 13 I am sorry? 14 A Well, as president I was responsible for all 15 functions that reported up to me. 16 As publisher I was responsible for getting books 17 out the door, the scheduling. I also had the 18 responsibility to make sure everything was billed, 19 shipped, not only for Marquis, but the other divisions. 20 Q Did you have some responsibility as either president 21 and/or publisher for marketing strategies? 22 A Yes. 23 Q Can you explain to the jury in lay people terms what 24 marketing strategy is? 25 A Typically when we did marketing we would try to sell HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8367 Barnes-direct/Neville
1 the books. 2 Q You would look for ways to expand the sales of the 3 Marquis Who's Who books? 4 A That's correct. 5 Q Is that fair? 6 A Yes. 7 Q As far as you know is Marquis Who's Who a non-profit 8 organization? 9 A No. 10 Q Ms. Barnes, I am approaching you and asking you if 11 you would take a look at Defendant's Exhibit FA, Friend's 12 Academy, and ask you to take a look at that. 13 (Handed to the witness.) 14 Q Do you recognize that? 15 THE COURT: Is that for identification? 16 MR. NEVILLE: For identification, you
r Honor. 17 A This was produced before I started with the company. 18 Q Does looking at Defendant's Exhibit FA, refresh your 19 recollection that at least at one time your company put 20 out publications or notices which stated that Marquis 21 Who's Who was incorporated, comma, not for profit? 22 A It may have been before I started. 23 Q Now, I realize that presently your duties are 24 elsewhere, but, again, focussing your attention between 25 the years of 1988 to 1995, when you were president and/or HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8368 Barnes-direct/Neville
1 publisher of Marquis Who's Who, can you name the different 2 titles of books, Who's Who books, that Marquis Who's Who 3 published in that time period? 4 A I believe I can. 5 Q Well, let me throw out a few names and tell me if I 6 am accurate. 7 There was
a publication, Who's Who in America? 8 A Yes. 9 Q A publication Who's Who in Finance and Industry? 10 A Yes. 11 Q Who's Who in the World? 12 A Yes. 13 Q Who's Who in American Women, our of American Women? 14 A Yes. 15 Q Who's Who in the East? 16 A Yes. 17 Q Who's Who in the West? 18 A Yes. 19 Q Who's Who in the Midwest? 20 A Yes. 21 Q Who's Who in the South-Southwest? 22 A Yes. 23 Q Many different publications? 24 A Yes. 25 Q Do you know if Marquis Who's Who puts out a HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8369 Barnes-direct/Neville
1 publication Who's Who in Uniondale, New York? 2 A No. 3 Q Now, as publisher and vice president -- president, 4 excuse me -- you stated you had to do with the duties of 5 marketing for Marquis Who's Who; is that right?
6 A Yes. 7 Q And that had to do with targeting or focussing or 8 concentrating on ways to try to enhance or generate 9 revenue or money for the company? 10 A Yes. 11 Q Nothing wrong with that, right? 12 THE COURT: Did you answer that? 13 THE WITNESS: No. 14 No, there is nothing wrong with that. 15 Q Now, you are familiar with Who's Who Worldwide 16 Registry? 17 A Yes. 18 Q In fact, you are very familiar with Who's Who 19 Worldwide Registry? 20 A Yes. 21 Q In fact, your company sued Who's Who Worldwide 22 Registry in a civil trademark action? 23 A Yes, we did. 24 Q And you prevailed in that action? 25 A We were awarded a judgment that we didn't get. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8370 Barnes-direct/Neville
1 Q Okay. 2 Focussing your attention now on Who's Who i
n 3 America only, that was, was it not, the original 4 publication of Marquis Who's Who? 5 A Yes, it was. 6 Q And after that original publication someone smart, 7 creative and wonderful in the company came up with other 8 ideas, ways to disseminate or create other publications to 9 expand the market? 10 A I am assuming so, yes. 11 Q For example, if -- withdrawn. 12 Isn't it fair for me to say that the company 13 could have left Who's Who in America well enough alone 14 because Who's Who in America theoretically would cover 15 anybody who was up to grade, so to speak, to make it into 16 the publication? There was no need to subdivide 17 necessarily? 18 A I have no idea. I think that they probably just 19 started with the one, because of -- it was of national 20 interest. 21 Q Right. 22 Is it fair for me to say that by creating these
23 other titles, which are legitimate titles, legitimate 24 endeavors, one of the results possibly would be to make 25 more money? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8371 Barnes-direct/Neville
1 A I am assuming so. 2 Q Now, Who's Who in America you can say is the most 3 highly respected biographical reference available; is that 4 correct? 5 A I believe so. 6 Q Can you tell us, if you remember, from your time as 7 president and publisher of Marquis Who's Who, what the 8 advertising and promotion budget of Who's Who in America 9 was in the years that I have said, '88 to '95? 10 A I don't recall. 11 Q Ballpark? 12 A For Who's Who in America. 13 Q Yes. 14 A For the five years? 15 Q Yes. 16 A Probably eight to 12 million dollars. I don't know. 17 Q You were privy to those numbers at
the time? 18 A Yes. 19 Q As president and publisher? 20 A Yes, I was. 21 Q And those numbers were important for you as president 22 and publisher? 23 A Right. 24 Q Is it fair for me to use the word "promotion"? That 25 the publication was promoted to attempt to produce sales? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8372 Barnes-direct/Neville
1 A Yes. 2 Q And make money? 3 A Yes. 4 Q All right. 5 Do you have any recollection -- let me ask you 6 this: Do you recall testifying at a proceeding in this 7 court on February 14th, 1994 about some of these same 8 issues? 9 A I did testify, yes. 10 Q Now, asking you to recollect, to 1994, if you can, 11 can you tell this jury now what approximately the 12 advertising budget was for Who's Who in America, for the 13 ten years, startin
g in '94, when you were testifying, back 14 to it would be '84? 15 A I have a good memory, but I can't recall four or five 16 years ago. 17 Q No recollection? 18 A No. 19 Q Would it be fair for me to say that annually Who's 20 Who in America spent in advertising and promotion anywhere 21 from 300 to 400 thousands dollars annually? 22 A No, that's not a fair statement. Just for Who's Who 23 in America? 24 Q Yes. 25 A To the reference market, yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8373 Barnes-direct/Neville
1 Q For the ten-year period I am referring to ten times 2 that, therefore, approximately three million dollars? 3 A Three million. 4 Q That's for advertising and promotion? 5 A Yes. 6 Q That's seed money to try to make more money, right? 7 A Right. 8 Q Where do you think this
not for profit thing came 9 from? 10 A I have no idea. That was before my time, seriously. 11 Q I am sure you are serious. 12 Now, Who's Who in the World, which is another 13 publication of Marquis Who's Who, right? 14 A Yes. 15 Q Is that regarded as the same of Who's Who in America, 16 that being touted as a highly reputable highly regarded 17 reference directory? 18 A I believe it is. 19 Q Do you recall what the profit, the profit of the last 20 five editions of Who's Who in the World was? 21 A No, no. 22 Q Would a million five ring a bell? 23 A I don't know. 24 Q Possible? 25 A I have no idea. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8374 Barnes-direct/Neville
1 Q No idea? 2 A No idea. I would have to review it. 3 Q Now, you have another public -- well, you had as 4 pres
ident and publisher of Marquis Who's Who, another 5 publication called Who's Who of American Women? 6 A That's correct. 7 Q Can you -- can you testify as to how much revenue, 8 how much money, by grouping all of these publications for 9 Reed Elsevier -- I will withdraw that. 10 Before I have the answer to that question, Reed 11 Publishing, is that a publication? 12 A It is a name they are using. There is no Reed 13 Publishing. 14 Q Is there a man or a woman by the name of Reed? 15 A I don't know. 16 Q Is Reed a company that is based in New York? 17 A Reed has offices in New York, Reed Elsevier. 18 Q Is that a corporation, Reed Elsevier? 19 A It is a corporation. 20 Q Is it a big corporation? 21 A Compared to what? 22 Q Compared to McDonald's? 23 A It is a large public concern. I don't know how it 24 compares to McDonald's.
25 Q In terms of size. McDonald's is much better, I am HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8375 Barnes-direct/Neville
1 sure. 2 A It is a large publishing company. 3 Q Is it a corporation based in the Netherlands? 4 A They have offices in London and in Amsterdam. 5 Q Is there a home office? 6 A I am not sure. I think it is in London. 7 Q You think it is in London? 8 A Yes, London and Amsterdam. 9 Q Both of those are home offices? 10 A I believe that it is a -- it is two corporations that 11 merged and I believe they have home offices in both 12 countries. 13 Q Is there any man or woman who is the head person who 14 sits in an office somewhere? Presumably that person 15 couldn't sit in Amsterdam and London at the same time? 16 A They have multiple -- 17 MR. WHITE: Objection. Relevance. 18 THE COUR
T: Strike it out. The jury is 19 instructed to disregard it. 20 Q It is a multinational corporation? 21 A Yes. 22 Q Do you have any idea how many employees Reed Elsevier 23 has? 24 A No. 25 MR. WHITE: Objection. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8376 Barnes-direct/Neville
1 THE COURT: Overruled. 2 A No. 3 Q No idea. 4 Now, during the time that you were president and 5 publisher of Marquis Who's Who, did you -- when I say did 6 you, I mean the collective "you" in your business mail 7 data forms to collect data? 8 A Yes. 9 Q And when I ask you that, what I am asking you is did 10 you mail forms to individuals whose names and addresses 11 you have acquired, to then have those people send the 12 forms back and filled out with information? 13 A Yes. 14 Q And that was one o
f the ways, one of the ways that 15 Marquis Who's Who acquired names of people to potentially 16 place in one of your books? 17 A That's correct. 18 Q Are you familiar with the term in your business of 19 "response rates"? 20 A Yes. 21 Q Does that refer simply to the number of responses you 22 get compared to the number of mailings that you send out? 23 A Yes. 24 Q Is it fair for me to say that as a general rule you 25 get -- that the percentage of responses is quite low HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8377 Barnes-direct/Neville
1 compared to the number of mailings you send out? 2 A It depends on the source that you use. 3 Q Ms. Barnes, did you as publisher and president of 4 Marquis Who's Who, "you" again collectively, use as a 5 source of a name or names, a source -- I didn't say the 6 source, I say
a source of names -- for publications other 7 than Who's Who in America? For example, Who's Who in 8 American Women, Who's Who in the Southwest, those I 9 mentioned earlier, did you as publisher and president, in 10 order to acquire names possible listees in those books, 11 ever use mailing lists? 12 A Yes. 13 Q Are you familiar with the term "list broker"? 14 A Yes. 15 Q Did you as president and publisher of Marquis 16 Who's Who ever have familiarity with the use of list 17 brokers by Marquis Who's Who? 18 A I didn't use them, but my marketing people did. 19 Q People who worked -- when you say my marketing 20 people, that's people who worked for you? 21 A Yes. 22 Q They were under your supervision? 23 A Yes. 24 Q Can you explain to the jury what a list broker is? 25 A A list broker is someone who has a list of lists that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8378 Barnes-direct/Neville
1 are available, and with demographics assigned to the list, 2 and they advertise them for rent. 3 Q You pay for them? 4 A You rent them, yes. 5 Q You pay money to the broker, and the broker then 6 lends you the list? 7 A Yes. 8 Q And you take the names from the list, and you use 9 some of them or all of them in your mailings? 10 A You mail them. 11 Q You mail them through the U.S. mail? 12 A Yes. 13 Q And the response rate -- let's go back to the 14 response rate -- depending upon the publication or the 15 list -- I am sorry, that is unclear. Depending on the 16 list, depending on the source, the response rate will 17 have -- will be -- will have different forms or will be of 18 varying degrees. In other words, some lists would get a 19 bette
r response than others? 20 A Yes. 21 Q And you as president and publisher, did you not, you 22 were concerned with the response rate for specific lists? 23 A Yes. 24 Q For example, did your company ever use female 25 subscribers to the Wall Street Journal as a list, either a HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8379 Barnes-direct/Neville
1 test list, or a list to try to get new listees? 2 A I don't know about the female. I know that we did 3 test Wall Street Journal. 4 Q Well, do you recall having a -- having an endeavor 5 while you were president and publisher where you were 6 concerned with the marketing and targeting of upscale 7 professional women? 8 A Yes. 9 Q And, therefore, the Wall Street Journal female 10 subscribers could be a source of names for upscale 11 professional women? 12 A Could
have been. I don't recall. 13 Q Now, as publisher as Marquis Who's Who, you had many 14 duties, but some of your duties had to do with project 15 managers and what they did? 16 A Product managers. 17 Q Can you tell the jury what a product manager was? 18 A A product manager is responsible for marketing and 19 developing the publication, the editorial work, and 20 insuring that it was published. 21 Q Did you ever worry as publisher about competitors? 22 Withdrawn. 23 Did you ever concern yourself with competitors? 24 A One always concerns themselves with competitors. 25 Q Yes or no, ma'am? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8380 Barnes-direct/Neville
1 A Yes. 2 Q Now, can you tell the jury, when you testified in 3 1994 -- again, I am asking you if you recall at that 4 time -- you were the publisher at th
at time? 5 A Yes. 6 Q 1994? 7 A Yes. 8 Q Do you know who the three competitors of Who's Who in 9 Finance and Industry were? 10 A In 1994? 11 Q When you last testified. 12 A We had a couple of telemarketing firms that were 13 competing in the listee market. 14 Q Can you name the companies? 15 A Bruce Gordon had one. They kept changing names 16 several times. I had a hard time following that. 17 Q Ma'am, was Standard & Poor's one of your competitors? 18 A They were. 19 Q Dun & Bradstreet? 20 A Dun & Bradstreet. 21 Q Who's Who in American Business Leaders, which was 22 Mr. Gordon's company? 23 A Okay. 24 Q Yes? 25 A I don't remember all the names he had, but, yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8381 Barnes-direct/Neville
1 Q I am asking you if those were the
three competitors 2 you had in 1994? 3 A Right. 4 Q Now, Standard and Poor's and Dunn & Bradstreet didn't 5 have biographies for the listees, did they? 6 A They had information on people in their publications. 7 Q They didn't have biographies, did they? 8 A What do you mean by biographies. 9 Q How long have you worked for Reed Elsevier? 10 A They had information on people in their books. 11 Q Was there a difference between the information on 12 people in those books and the information on people that 13 was in Who's Who in Finance and Industry? 14 A Yes, somewhat. 15 Q In your business, in any one of these publications, 16 using the example now of Who's Who in Finance and 17 Industry, was it not, was it not a specific term in your 18 business, or a term of art, the word "biography"? 19 A Biographical directory. 20 Q And instead of a Y at the
end, the word "biography" 21 with two Es at the end? Have you ever seen the word 22 biography spelled with two Es at the end? 23 A That's a term that Marquis Who's Who used. 24 Q Ma'am, I am asking you if you have ever seen the word 25 "biography" used with two Es at the end and instead of a HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8382 Barnes-direct/Neville
1 Y? 2 A Yes. 3 Q In your company? 4 A Yes, that's what I just said. 5 Q Isn't it a fact -- withdrawn. 6 What was the reason for that special spelling? 7 A That spelling was there before I ever came to the 8 company. 9 Q Now, Bruce Gordon was going after the same type of 10 corporate people you went after in Who's Who in Finance 11 and Industry? 12 A Bruce Gordon -- 13 Q Yes or no? 14 A I don't know. 15 Q Do you remember testify
ing in 1994? 16 A Yes, I do. 17 MR. WHITE: May I make an application at this 18 point with regard to Mr. Neville's questioning at the 19 sidebar? 20 THE COURT: Come up. 21 22 (Whereupon, at this time the following took place 23 at the sidebar.) 24 MR. WHITE: Your Honor, I thought the purpose of 25 your Honor permitting them to call Ms. Barnes was to HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8383 Barnes-direct/Neville
1 establish the custom and usage of using mailing lists. 2 Where their headquarters are, how much money they 3 are making and all this other stuff doesn't seem to have 4 anything to do with that issue. They want to paint a 5 picture for their own purposes about Reed, it is a big 6 company, out to get Mr. Gordon and all this other stuff. 7 But as I understood it your Honor let them call her for a
8 specific purpose. They are going far afield. 9 THE COURT: I thought these were preliminary 10 questions. I will not let him go far afield. I will ask 11 him to get to the point. 12 MR. WHITE: I don't know if it is coming soon. 13 MR. NEVILLE: I asked about lists already. 14 MR. WHITE: There was one question there. 15 THE COURT: We are not going to retry the 16 copyright infringement case. 17 MR. NEVILLE: Right. 18 THE COURT: Nor are you going to show that they 19 have major competitors that don't like each other or 20 anything else. 21 You will go to the issue of knowledge of the 22 defendants in this case that what they did, they thought 23 was right, or they were innocent, or they were -- they had 24 no intent to defraud; that what they said they felt was 25 proper, etcetera, etcetera. That's why we are allowing HARRY RAPAPORT, C
SR, CP, CM OFFICIAL COURT REPORTER 8384 Barnes-direct/Neville
1 this. 2 It is not to show that Marquis Who's Who is a 3 major competitor and that Bruce Gordon is not a nice guy. 4 That is not what this is about. 5 MR. NEVILLE: Yes, your Honor. 6 7 (Whereupon, at this time the following takes 8 place in open court.) -- 9 MR. NEVILLE: Your Honor, may I continue? 10 THE COURT: Yes. 11 MR. NEVILLE: My impeachment as we were going, as 12 I was going? 13 THE COURT: Get to the point that we discussed. 14 were you asked the following question and did you give the 15 following answer -- -- 16 MR. WHITE: Page? 17 MR. NEVILLE: Page 24. 18 MR. WHITE: Okay. 19 MR. NEVILLE: February 14th, 1994. 20 Q Question: Describe the competition of Who's Who 21 in Finance and Industry? 22 Answer: I have listed three comp
etitors. 23 Standard & Poor's, Dunn & Bradstreet. They have 24 information in their publication about the listees. 25 Gordon's Who's Who in American Business Leaders. The HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8385 Barnes-direct/Neville
1 reason I listed him is because he is going right after the 2 Who's Who in Finance and Industry, the corporate type of 3 people that we go after. And his is in the listing 4 market. 5 Were you asked that question and did you give 6 that answer? 7 A I probably did if it is written there. Can I see 8 it? 9 THE COURT: We don't want to waste a lot of 10 time -- 11 THE WITNESS: If he took it out of the documents, 12 yes, I did. 13 THE COURT: Assume what he is reading is out of 14 the transcript. 15 THE WITNESS: Then, yes. 16 THE COURT: Because, there are a lot o
f lawyers 17 looking at the same transcript. 18 THE WITNESS: Yes. 19 THE COURT: Anyway, Mr. Neville would not read 20 anything that was not there. 21 THE WITNESS: Okay. 22 Q At Marquis Who's Who, did you ever sell plaques? 23 A Yes. 24 Q Paper weights? 25 A Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8386 Barnes-direct/Neville
1 Q Announcements? 2 A Yes. 3 Q You as publisher and president, were you concerned 4 with the progress of sales and was the progress of sales 5 circulated weekly to the management at Marquis Who's Who? 6 A Yes. 7 Q Let's go to the mailing lists shall we. 8 Ms. Barnes, did you ever during any time during 9 1994 while you were president and publisher of Marquis 10 Who's Who receive any Marquis Who's Who internal memos 11 from Debbie Krom. 12 THE COURT:
Spell it? 13 MR. NEVILLE: K R O M, as in Mary. 14 A Yes. 15 Q Do you recall in that memo there was information 16 about test lists? 17 A Debbie was the list manager. Probably. 18 Q Do you recall information about these test lists 19 where you were identified -- identifying, or Debbie as the 20 list manager was identifying upscale direct response 21 lists. 22 Do you recall that? 23 A I don't recall the specific memo, but I am sure I did 24 get it. 25 Q Let me show it to you and see if it refreshes your HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8387 Barnes-direct/Neville
1 recollection that on June 29, 1994, there was an internal 2 memo at Marquis Who's Who about upscale lists. 3 (Handed to the witness.) 4 MR. WHITE: Do you have a copy for me? 5 MR. NEVILLE: I don't, I am sorry. 6 A Yes, I reca
ll it. 7 MR. WHITE: Tell me the number so I can look at 8 it. 9 MR. NEVILLE: R00505. 10 Q Now, was it a regular practice of Marquis Who's Who 11 to generate these memos and distribute them among 12 management? 13 A Yes. 14 Q And was this particular memo prepared in the regular 15 course of business and practice at Marquis Who's Who? 16 A Yes. 17 MR. NEVILLE: I offer it in evidence. 18 THE COURT: What letter is it? 19 MR. NEVILLE: I am sorry, I didn't identify it. 20 It would be Defendant's Exhibit for 21 Identification FB, Frank Boy. 22 THE COURT: Show it to counsel. 23 (Document handed to Mr. White.) 24 MR. WHITE: The government has no objection. 25 THE COURT: Defendant's Exhibit FB, Fox Baker in HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8388 Barnes-direct/Neville
1 evidence.
2 (Defendant's Exhibit FB received in evidence.) 3 Q Ms. Barnes, I am going to ask you to will be at FB in 4 evidence, and I will stand here if you don't mind and we 5 will read it together. 6 It is an internal memo dated June 29, 1994? 7 A Yes. 8 Q And it is to distribution. 9 Does that mean that it was distributed to various 10 people at the company? 11 A Yes. 12 Q And it was from Debbie Krom, K R O M? 13 A Yes. 14 Q And someone, presumably Debbie Krom wrote in her 15 first name Debbie next to the typewritten name, Debbie 16 Krom? 17 A Yes. 18 Q She did it to endorse what is said and to prove that 19 it was she who adopts what is said here? 20 A Yes. 21 Q This is in reference to West 25, West as in Steve 22 West, West 25 data roll out mail plan. Explain that, 23 please. 24 A There was a mail plan, a data mailin
g plan for Who's 25 Who in the West, 25th edition. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8389 Barnes-direct/Neville
1 Q I will read it with you and you can explain what it 2 means. 3 The text says: Attached for your review is the 4 mail plan for the West 25 data roll out. Total mail 5 volume will be approximately 200,000. 6 What does that number 200,000 mean? 7 A 200,000 pieces of mail. 8 Q Would be sent out? 9 A Would be sent out. 10 Q Jumping to the next paragraph, gross response, gross 11 response for the West data test is 3.46 percent as of June 12 24, 1994. 13 What does that mean? 14 A That means that the number of pieces, which we don't 15 use all of them that we get back, are 3.46. 16 Q So, you are saying out of 200,000 pieces mailed, 3.46 17 percent of those are returned? 18 A Corr
ect. 19 Q Meaning they are returned filled out by -- 20 MR. NEVILLE: Mr. Reffsin, you have the 21 calculator? 22 THE DEFENDANT REFFSIN: No, I don't. 23 THE WITNESS: 6,000. 24 Q 6,000 returns out of the 200 now mailed; is that 25 correct? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8390 Barnes-direct/Neville
1 A Yes. 2 Q And that then goes on to say under test lists, do you 3 see where it says that? 4 A Yes. 5 Q Approximately 122,000 or 58 percent of total records 6 mailed will come from test lists. The mix of test lists 7 includes association members, upscale direct response 8 lists, compiled lists and controlled and paid circulation 9 records from -- would you pronounce that word for me? 10 A Cahners. 11 Q C A H N R S? 12 A Cahners Publishing. 13 Q Is that part of Reed Publishing also?
14 A Yes, it is. 15 Q What is an upscale direct response list? 16 A I am not the list expert, but to me an upscale direct 17 response list is high profile names that respond. 18 Q High profile names, can you give an example? 19 A Well -- 20 Q Like the type of upscale lists that might be included 21 in this? 22 A Typically executives that perhaps read certain 23 publications that Cahners publishes. 24 Q Such as? 25 A CFOs, CEOs, finance people. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8391 Barnes-direct/Neville
1 Q So, the names of these CFOs, the big shots, right? 2 That's a fair way to describe it? 3 A Not necessarily. 4 Q CFOs, would come from lists of publications that they 5 read? 6 A Possibly. 7 Q Could I also describe that as a mailing list? 8 A Some people do offer them as ma
iling lists. 9 MR. NEVILLE: May I publish this to the jury, 10 your Honor? 11 THE COURT: Yes. 12 Q Have you ever heard of National Demographics and 13 Lifestyles? 14 A Yes. 15 Q That's an organization, right? 16 A It is a business. 17 Q It is a money making proposition, right? 18 A It is a database that does demographic overlays. 19 Q We have to speak English here. 20 Demographic overlays, what is that? 21 A What was the name of that one again? 22 Q National Demographics and Lifestyles? 23 A I believe that that organization is one that takes 24 all of the response cards you send back, and you buy -- 25 when you buy something, your income level, your likes and HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8392 Barnes-direct/Neville
1 dislikes. They take that information and put it in a 2 database a
nd then overlay it on lists. 3 Q Overlay it, what do you mean by that? 4 A Put it on top of another list to see if the 5 characteristics that you are looking for are in that list. 6 Q I think I understand. 7 Now, would one of the possible selections be 8 female age 25 to 64, $30,000 of income? 9 A They have hundreds of different selections. Yes, 10 that's possible. 11 Q That's possible? 12 A Yes. 13 Q And how about female, unmarried, age 30 to 45, 40,000 14 plus, travel, gourmet cooking, wines, cultural, art 15 events, community and civic activities. Does that ring a 16 bell? 17 A I am sure those are selections. 18 Q I am going to ask you to look at what has been marked 19 as Defendant's Exhibit F as in Frank, C, as in Charley, 20 for Identification. 21 (Whereupon, at this time there was a pause in the 22 proceedings.) 23 Q
While Mr. White is reading that, let me ask you a 24 question. Have you ever heard of Cahners List Brokers? 25 A Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8393 Barnes-direct/Neville
1 Q Is Cahners List Brokers owned by Reed? 2 A I am sorry, Cahners List Brokers -- Cahners is owned 3 by Reed. Cahners List Brokers, do you mean -- 4 Q Do they sell mailing lists, Cahners? 5 A Yes. 6 Q And Cahners is owned by Reed? 7 A Yes. 8 Q So that's another way that Reed pulls in revenue? 9 A I assume so, yes. 10 Q I will show you what is marked as 11 Defendant's Exhibit FC, Frank Charley, and ask you if that 12 refreshes your recollection as to the organization or the 13 company called National Demographics and Lifestyles. 14 (Handed to the witness.) 15 A Yes. 16 Q Can you tell me what this is, Defendant's Exhib
it FC? 17 A It appears to be the number of names available in the 18 various categories furnished by the National Demographics 19 and Lifestyles to our list manager. 20 Q Would Marquis Who's Who possibly pay money to 21 National Demographics and Lifestyles to -- 22 A To rent this list. 23 Q To use this list? 24 A Yes. 25 Q And is this a memo to Debbie Krom? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8394 Barnes-direct/Neville
1 A It says to Debbie Krom. 2 Q And does it have something to do with the topic, 3 American Woman Counts? 4 A The title is Who's Who of American Women. 5 Q What did you call that overlay? 6 A Yes. 7 Q I forgot the word you used. 8 But the list, the group of people you would look 9 to tap into to let listees, could possibly be given to you 10 in part by National Demographic
s and Lifestyles? 11 A Yes. 12 Q Do you know how they get the listing of female, 13 unmarried 30 to 35, 40,000 plus, who like to travel, how 14 did they get that? 15 A I answered that. From cards when you buy things. 16 Q From mailing lists? 17 A No. 18 Q When unmarried females ages 30 to 35, who make 40,000 19 or more and like to travel and who are gourmet cooks, when 20 they send back those cards, where do those cards come 21 from? 22 A I have no idea. It is cards that you get -- haven't 23 you ever get a bounce back card. 24 Q You mean the kind of card that I read in a magazine 25 when I go like this (indicate)? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8395 Barnes-direct/Neville
1 A Yes. 2 Q To get rid of it? 3 A When you buy a product. In that product you have a 4 card asking for informat
ion. 5 Q So, if a female, unmarried, 30 to 35, went into Crate 6 and Barrel and bought some gourmet cooking with a credit 7 card, her name may end up on his list? 8 A Possibly. 9 Q Have you ever heard of list brokers called Concept 10 One? 11 A Yes. 12 Q In Katonah, New York? 13 A I don't know where they are. I heard of them. 14 Q Let me show you what I am marking as 15 Defendant's Exhibit FD, Frank David, for Identification, 16 and ask you if you can identify those. 17 (Handed to the witness.) 18 MR. NEVILLE: I am sorry, Mr. White. 19 MR. WHITE: Tell me the number. 20 MR. NEVILLE: 1073 -- they are all mixed up. 21 (Mr. Neville confers with Mr. White.) 22 Q While Mr. White is looking at that, can I ask you 23 what the term "kill rate" means? 24 A When we get the data back, it goes through a 25 screening process with editors
. They review the data. If HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8396 Barnes-direct/Neville
1 it doesn't meet the standards that have been set, they are 2 not written for publication. 3 Q Now, the source of bulk names, and that's just bulk 4 listing of names, for example, with these mailing lists; 5 is that right? 6 A Yes. 7 Q These are names not researched by the editorial 8 research department? 9 A That's not true. 10 Q Bulk names comprise approximately 80 percent of 11 listees in regionals and topicals? 12 A They are not researched but they are screened. 13 Q I am asking you if bulk names come from list rentals? 14 A And associations, and on and on. 15 Q Now, some of Marquis Who's Who data mailings would 16 include people who live in upscale life -- live an upscale 17 lifestyle? 18 A Yes. 19 Q Frequents fliers? 20 A Possible. 21 Q Foreign travelers? 22 A Possibly. 23 Q People attending cultural event? 24 A Possibly. 25 Q People interested in arts and antiques? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8397 Barnes-direct/Neville
1 A Possibly. 2 Q High income? 3 A Probably. 4 Q College educated? 5 A Yes. 6 Q Marquis Who's Who for data mailings used consumer 7 lists, right? 8 A Can you give me an example of a consumer list? 9 Q I don't know. You were the president. 10 Wilson Quarterly? 11 A Yes. 12 Q Foreign Affairs? 13 A Yes. 14 Q Ever gets names of people out of Official Museum 15 Directory? 16 A Yes. 17 Q And wasn't it a fact that while you were president 18 and publisher, response lists were the best? 19 A Yes.
20 Q And what is a response list? 21 A A list of where people respond on a high rate. 22 Q Compiled lists, what were those? 23 A Those are lists that are generally put together. We 24 put them together in-house, or lists put together as 25 opposed to responding. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8398 Barnes-direct/Neville
1 Q While you were president and publisher of Marquis 2 Who's Who did you ever concern yourself with the order 3 conversion rates? 4 A Yes. 5 Q And that would be the total sales as opposed to the 6 number of returns? 7 A Yes. 8 Q You would be interested in what the final order rate 9 was? 10 A Yes. 11 Q And that would have to do with the total sales and 12 the number of pieces -- based on the number of pieces 13 mailed? 14 A Yes. 15 Q And the higher percentag
e the better? 16 A Absolutely. 17 Q You get a better return on your money, right? 18 A Right. 19 Q And you were concerned with breakeven numbers in 20 terms of the cost of sending the mailings out and then how 21 much money you would get back by people buying them? 22 A Yes. 23 Q Very important, right? 24 A It is important. 25 Q You had formulas that you look at? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8399 Barnes-direct/Neville
1 A It is important to make money or you don't stay in 2 business. 3 Q You also selected test lists, yes? 4 A I didn't, but, yes. 5 Q When I say "you" collectively, Marquis Who's Who. 6 A Yes. 7 Q What was important for you as publisher and president 8 were the sources of new names, right? 9 A Yes. 10 Q And new names were very important, weren't they? 11 A Yes. 12 Q Because new names meant more money, right? 13 A Yes. 14 Q Because if you had the same people in the Who's Who 15 every year, you don't necessarily sell more books, do you? 16 A Not to the listees, but the other markets you do. 17 Q To the libraries and things? 18 A Yes. 19 Q And unless, suddenly this country had a total change 20 of heart and started to build millions of libraries, you 21 wouldn't sell as many books, would you? 22 A No. 23 Q So, the listees were an important aspect of the 24 revenue, the money of the company? 25 A Absolutely. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8400 Barnes-direct/Neville
1 Q So, what the company would do is to think about how 2 it could enhance sales? 3 A Yes. 4 Q Concerning lists covering similar occupation areas, 5 did you? 6
A I am sorry, would you repeat that? 7 Q What is list -- what is a list covering similar 8 occupational area? What does that mean? 9 A You took it out of context. Can I see it, please? 10 Q Sure. 11 (Mr. Neville confers with Mr. White.) 12 (Handed to the witness.) 13 Q Let me ask you this before I show it to you. 14 Did you ever go to any strategy sessions while 15 you were president and publisher at Marquis Who's Who? 16 A Yes, I did. 17 Q Did you ever conduct any? 18 A Yes. 19 Q By strategy sessions I mean sessions where you sit 20 down with your staff and underlings and you talk about how 21 to increase revenue for the company? 22 A Yes. 23 Q And in that particular company it meant in part 24 trying to promote and enhance the sales? 25 A Yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8401 Barne
s-direct/Neville
1 Q Because more sales means more money? 2 A Yes. 3 Q And that's what the company was trying to do, make 4 money, right? 5 A That's what all companies try to do. 6 Q Do you know where that non-profit thing came from? 7 A I really don't. At one time it was a privately held 8 company. I don't know. 9 (Handed to the witness.) 10 Q Does that document refresh your recollection that at 11 strategy sessions there would be an agenda to follow of 12 topics to discuss regarding ways to enhance sales? Take a 13 look at the different pages there. 14 A This is not a strategy memo. 15 Q What is that? 16 A I believe it is a memo describing the process that 17 was put together by the editorial people. This didn't 18 come from my -- 19 Q Let's look at this: Have you ever heard of anything 20 called a listee buyer occupational a
nalysis? 21 A Yes. 22 Q For regional publications? 23 A Yes. 24 Q Where there would be a breakdown of the occupations 25 of people who are listees in your books? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8402 Barnes-direct/Neville
1 A Yes. 2 Q For example, a weed scientist, W E E D. 3 A Yes. 4 Q That's an example? 5 A Yes, one. 6 Q Children's entertainer? 7 A Yes. 8 Q School librarian? 9 A Yes. 10 Q Performance artist, a mime? 11 A Yes. 12 Q Real estate manager or property manager? 13 A Yes. 14 Q A legal assistant, or a paralegal? 15 A Yes. 16 Q A chiropractor? 17 A Yes. 18 Q A tax specialist? 19 A Yes. 20 Q An air traffic controller? 21 A Where? 22 Q Here. 23 A Yes. 24 Q Primary school teacher or educato
r? 25 A Uh-huh, yes. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8403 Barnes-direct/Neville
1 Q A horse breeder? 2 A Horse breeder, animal breeder, yes. 3 Q Geriatrics nurse? 4 A Yes. 5 Q An adult education educator? 6 A Yes. 7 (Counsel confer.) 8 Q I will hand you now what is marked as 9 Defendant's Exhibit FD, Frank David, for Identification, 10 and ask you if you recognize it. 11 A I know what it is. 12 Q What is it? 13 A Rate cards describing list that are available, 14 concept one, various professional women from the AMA. 15 That could be the American Medical Association. It could 16 be American Marketing, it could be any number of things. 17 Q Did your company ever consider renting or renting a 18 list of subscribers to the magazine the New Republic? 19 A I don't know. These are s
uggestions. As they placed 20 the order, I do not know. 21 MR. WHITE: Objection, it is the fourth time 22 Mr. Neville is reading from a document not in evidence. 23 THE COURT: You have laid the foundation, if you 24 haven't, try it now, but don't read from it. 25 Q As publisher and president of Marquis Who's Who, did HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8404 Barnes-direct/Neville
1 you in the regular course of your business, did you 2 consider you or your underlings consider these kind of 3 documents that would come in from a list broker? 4 A They would be reviewed. 5 Q And was it a regular practice in your business to 6 retain these documents as part of your business records? 7 A We keep them in the files, yes. 8 MR. NEVILLE: I offer it, your Honor. 9 THE COURT: Any objection? 10 MR. WHITE: Yes, I can't respond, y
our Honor, 11 because Mr. Neville has taken a page from a dozen of 12 different documents. It will take me a half an hour to go 13 through it right now. 14 MR. NEVILLE: I will never make it into Who's 15 Who. 16 THE COURT: Mr. Neville don't like those kind of 17 remarks, please. 18 MR. NEVILLE: I am sorry. 19 THE COURT: We will allow you to do that 20 afterwards. 21 MR. NEVILLE: It is in evidence, your Honor? 22 THE COURT: No. We will give Mr. White an 23 opportunity to go through it. We will not sit here and 24 watch him do it. 25 Q Does it ring a bell that Marquis Who's Who considered HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8405 Barnes-direct/Neville
1 renting a list of Scientific American subscribers? 2 A Whether they considered, I don't know. They were 3 provided the list, the names from a list b
roker. 4 Q That's a magazine? 5 A Yes, I believe it is. 6 Q How about the Economist, ever rent a list from the 7 magazine Economists? 8 A Probably. 9 Q American Association of University Women? 10 A Yes. 11 Q American Artist magazine? 12 A I don't know. 13 Q The Wall Street Journal? 14 A We tested it, I know. 15 Q You tested it? 16 A I believe so. 17 Q When you say you tested it, you take us -- take us 18 through that. You got a list of people, right? 19 A Right. 20 Q That you rented, you paid money for this list of 21 people? 22 A Right. 23 Q And the distinguishing characteristic when you first 24 got that list was that they were merely subscribers to the 25 Wall Street Journal or some other magazine? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8406 Barnes-direct/Neville 1 A I don't recall if they had the demographics along 2 with that. Sometimes they did. 3 Q If Concept 1, or -- did your company ever list other 4 list brokers? 5 A I am not the list person. I am sure they did. 6 Q Did the list person answer to you? 7 A Yes. 8 Q Debbie, right? 9 A Yes. 10 Q Did Debbie work for you? 11 A Yes, but as president and publisher you are not 12 involved in every detail of the business. 13 Q If Debbie -- pardon the expression -- screwed up, 14 would the buck stop with you as the publisher? 15 A We would discuss it, yes. 16 Q Mailings was very expensive, weren't they? 17 A You paid postage, plus, yes. 18 Q You pay for production and materials? 19 A Yes. 20 Q You pay for postage? 21 A Yes. 22 Q You pay the mail house? 23 A Yes. 24 Q What is the mail house? 25 A I
think the mail house is the person who stuffs it in HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8407 Barnes-direct/Neville
1 the envelope and affixes the name on the piece. 2 Q Doesn't someone at Marquis Who's Who stuff the 3 envelope and put it in the mail box? 4 A No. 5 Q How does it work then? 6 A They do it for internal mailings, nominations, for 7 research names. But the bulk lists are sent to a place 8 where that is what they do for a living. They insert 9 information in the envelopes and mail it out. 10 Q So Marquis Who's Who would contract with a mail house 11 to put together these mass mailings? 12 A Marquis Who's Who would contact the mail house to put 13 the pieces in the envelopes and mail them out, yes. 14 Q Now, a mass mailing -- what is a mass mailing? 15 A 100,000 pieces. 16 Q List costs were part of the
overhead, too; is that 17 right? 18 A Yes. 19 Q Do you know if there was ever a quantity of 3,342 20 names of subscribers to Aviation Week sent out by Marquis 21 Who's Who? 22 A I don't know. 23 Q 4,678 subscribers to the magazine LA Style? 24 A I don't know. 25 Q 18,045 subscribers to Conde Nast's subscriber, HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8408 Barnes-direct/Neville
1 C O N D E, Nast, N A S T, apostrophe S Traveler? 2 A I don't know. 3 If you are still looking at rate cards, it 4 doesn't mean it was mailed. 5 Q 13,762 Diner's Club executives? 6 A I don't know. 7 Q Possible? 8 A Possible. 9 Q Did you ever hear of Marquis Who's Who sending out 10 invitations or solicitations for possible new business to 11 TWA Ambassador Club members? 12 A Did they change out solici
tations? 13 Q Was it considered? 14 A It could have been. I don't recall offhand. 15 Q A possible source of business, right? 16 A Uh-huh, possible. 17 Q The idea was to look for upscale lists and to look 18 for as many names as possible and send out mass mailings 19 to try to make money? 20 A Yes. 21 Q Is there such a publication at Marquis Who's Who 22 called Who Was Who in America? 23 A Yes. 24 Q Did you ever concern yourself with databases of 25 deceased Who's Who people? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8409 Barnes-direct/Neville
1 A That's a reference publication to the school market. 2 Q Are you in a Who's Who publication? 3 A Yes. 4 Q Which one or ones? 5 A Who's Who in America. 6 Q That's the big one, right? 7 A Uh-huh. 8 Q Have you ever heard, Ms. Barnes of
a distribution 9 list roll out? 10 A What? 11 Q Distribution list roll out? 12 A No. 13 Q No? 14 A Maybe if you show me what it is that you are looking 15 at. 16 Q Is there a publication at Marquis Who's Who called 17 Who's Who in American Education? 18 A Yes. 19 Q And would the fourth edition have been around July 20 16th, of 1993? 21 A Probably, yes. 22 Q And at 9:0209 a.m.? 23 A I have no idea of the date or time. 24 Q Now, would it be possible that 14,562 pieces were 25 mailed to individuals who had something to do with the HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8410 Barnes-direct/Neville
1 National Council for the Social Studies member tape? 2 A Those were generally teachers, yes. 3 Q Teachers? 4 A Yes. 5 Q Like high school teachers? 6 A I don't know
if they are high school or university. 7 Q Now, Who's Who in Finance and Industry is another 8 publication of yours? 9 A Yes. 10 Q One of the sources of listees or potential listees is 11 Crain's Business and Insurance law? INS law, insurance? 12 A I don't know. 13 Q How about the Journal of Commerce? 14 A Perhaps. 15 Q The Economists sent to a home address? 16 A Perhaps. 17 Q Do you ever recall that on July 15th, 1993 or 18 thereabouts there were mailed 21,866 pieces? 19 A I don't recall. I am sure it happened. 20 MR. WHITE: Objection to Mr. Neville's 21 questioning here. He is standing here reading documents 22 to us. 23 THE COURT: As I said previously in this trial, 24 you can read documents, too, and ask questions. Many 25 lawyers read questions directly from a pad, as a matter of HARRY RAPAPORT, CSR, CP, CM OFFICIAL
COURT REPORTER 8411 Barnes-direct/Neville
1 fact. The jury knows that what he is reading from is not 2 in evidence. And he is using it to question the witness. 3 There is nothing wrong with it. 4 Q Do you recall if there was ever mailed, a number of 5 pieces mailed out to the members of the National 6 Association of Female Realtors? 7 A I don't recall. It probably did. 8 Q Remember I asked you earlier if I asked you if female 9 subscribers of the Wall Street Journal were ever targeted 10 of potential -- 11 A I didn't recall. But possibly. 12 Q Let me ask you if what I am about to show you 13 refreshes your recollection that indeed Marquis Who's Who 14 targeted female subscribers to the Wall Street Journal? 15 A For Who's Who of American Women. I am hoping that we 16 wouldn't have chosen mails. 17 Q Touche. 18 Who's Who in American
Law, is that a publication? 19 A Yes, it is. 20 Q Did you ever use the list of the Association of Trial 21 Lawyers of America? 22 A Yes. 23 Q Subscribers to the National Law Journal? 24 A Yes. 25 Q Now, was it possible in 1993, or before, or even up HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8412 Barnes-direct/Neville
1 to the present that one could nominate oneself? 2 A Yes. 3 Q Who's Who in the Midwest is a publication; is that 4 right? 5 A Yes. 6 Q What is a galley mail? 7 A A galley mailing is a mailing that goes out at the 8 end of the cycle of a publication showing the biographical 9 sketch. 10 Q We spoke earlier of the way they spelled the word 11 "biography" at Marquis Who's Who with two Es at the end; 12 is that right? 13 A Yes. 14 Q Is that a kind of a special way t
o spell it? 15 A I don't know. It was there when I joined the 16 company. 17 Q We need to establish that Marquis Who's Who for the 18 many, vast majority of its publications use mailing lists 19 to seek out new business? 20 A They use mailing list as one source of many sources. 21 Q We have established, have we not that bulk mailings 22 went out, mass mailings went out; is that right? 23 A Yes. 24 Q And mass mailings went out with the goal of trying to 25 gain more business; is that right? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8413 Barnes-direct/Neville
1 A To again more names to put in, yes. 2 Q Well, if you put more names in the book, that means 3 that you might sell more books and you might make more 4 money? 5 A Perhaps. 6 Q Did your company ever use the term "nominate"? 7 A Yes. 8 Q A
nd these galleys that I referred to, the galley 9 proofs, did they have to do with letters sent out to 10 people where they were told they were either selected or 11 nominated? 12 A By a galley proof, they were already in. 13 Q It means they were a finished product, and it was 14 indeed sent out? 15 A Yes. 16 Q So, correct me if I am wrong. 17 If I am a female subscriber to the Wall Street 18 Journal, and if I am on the mailing list, I get a letter 19 from you, it might say that I am nominated? 20 A Generally we would say -- 21 Q Not generally. 22 A It could be, but not generally. 23 Q So it could be. 24 I could read at home, reading the Wall Street 25 Journals the mail carrier comes, and I could get a letter HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8414 Barnes-direct/Neville
1 from Marquis Who's Who,
saying I was nominated simply 2 because I am on that mailing list? 3 A You are nominated for consideration. 4 Q Okay. 5 So, the galley mailing is the finished product of 6 what was going to go out to the nominees; is that right? 7 A To the people who are in the books. 8 Q I see. 9 A They are no longer nominees. 10 Q Did you ever sell a hand finished mahogany plaque? 11 A Yes. 12 Q For $75? 13 A I assume so, yes. 14 Q $10 shipping and handling? 15 A Yes. 16 Q What was the reason for selling the plaque? 17 A They started selling plaques before I became involved 18 in that area. People liked them, wanted them. 19 Q Did you ever do any memo when you were publisher, 20 when you were discussing how it is important to cater to 21 one's ego and the vanity portion of this whole Who's Who 22 stuff? 23 A I think there is a d
ifference between vanity and ego 24 gratification. And, yes, I probably did do a memo. 25 Q That vanity is -- withdrawn. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8415 Barnes-direct/Neville
1 If I am a subscriber to the Wall Street Journal, 2 and I get one of your letters, one of your mass mailing 3 letters, would that maybe make me feel important and 4 gratify my ego? 5 A It might, but you may not go in. 6 Q Right. I certainly wouldn't. 7 So part of the motive, part of the reason, part 8 of why this business works is people's egos are gratified? 9 A For the listee portion, yes, parts of it. 10 Q In other words, if a person has made it into a 11 Marquis Who's Who, it feels good, right? 12 A To some people it does and to other, it doesn't. 13 Q And I could walk around being very vain, saying I am 14 listed in Marquis Who
's Who? 15 A I don't think people did that. 16 Q No? 17 But vanity is a word you have seen on some of 18 your memos, isn't it? 19 A I don't refer to it as vanity. 20 Q Ego gratification? 21 A We first strive for reference quality. 22 Q Anything to do with making money? 23 A We are all in business to make money. 24 Q I am just trying to keep Scott Michaelson out of 25 jail. That's what I am trying to do? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8416 Barnes-direct/Neville
1 THE COURT: Sustained. 2 Do you have any questions relative to the issues, 3 which I said you can question on? 4 MR. NEVILLE: Yes. 5 THE COURT: Which is to prove certain things -- 6 not to prove anything, but to show certain things? 7 MR. NEVILLE: Yes, your Honor. 8 THE COURT: That bears on the intent of the 9 defend
ants. That's what this is being offered, to bear on 10 the intent of the defendants, not to show a competitor or 11 anything, or how they work, or whether they make money or 12 not. 13 Q What was the position of the company in 1989? 14 A I believe I was president in 1989. It depends on 15 what time of the year in 1989. 16 Q Did Marquis Who's Who ever send out a nominee letter 17 in 1989 to somebody that had been selected? 18 A Would you repeat that? 19 Q Somebody might have received a letter saying dear 20 Marquis Who's Who -- how do you say it again? 21 A Marquis. 22 Q Dear Marquis nominee? Did somebody ever send a 23 letter like that out? 24 A What else does it say? Probably. 25 Q Where you talk about how much money it costs to buy HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8417 Barnes-direct/Neville
1 one of
the books? 2 A Yes. We did send out letters to people after they 3 had been selected. 4 Q Let me ask you this: If Reed put out a book with all 5 of these with all of these listees, and nobody bought the 6 book, what would that be to Reed? 7 A I guess they would become non-profit. 8 Q You still don't know where that came from? 9 A No. Seriously, that's before my time. 10 Q And so, when you started to work -- how do you say it 11 again? 12 A Marquis. 13 Q Marquis Who's Who, it became for-profit? 14 A I didn't say that. Marquis Who's Who was a profit 15 company. When I came to work for them they were owned by 16 IT&T. 17 Q Was Marquis Who's Who ever owned by Robert Maxwell? 18 A That was like the third, yes. Robert Maxwell bought 19 McMillan Publishing. 20 Q Is that the same guy they found on his yacht in the 21 Mediterranean?
22 A I believe it was. 23 Q Ms. Barnes, I will ask you if you recognize something 24 and tell the jury what it is. 25 MR. NEVILLE: I will mark it as Exhibit FE, I am HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8418 Barnes-direct/Neville
1 up to, Frank Edward. 2 (Document handed to Mr. White.) 3 Q Let me ask you this: Did you ever send a memo to 4 anyone in your company there while you were publisher, 5 talking about Mr. Gordon's company as being a -- not a 6 competitor, but, rather, a thorn? Yes or no? 7 A Yes. 8 Q And you were concerned with companies like Dunn & 9 Bradstreet, Standard & Poor's, which could be potential 10 competitors with your market, right? 11 A I was concerned about scam people -- 12 Q Yes or no? 13 A No. 14 Q You weren't concerned with Standard and Poor's? 15 A In the reference mar
ket, they competed for the 16 reference dollar, yes, which is different than -- 17 Q You weren't concerned with Dunn & Bradstreet? 18 A Yes. In the reference market for the reference 19 dollar which is different than a telemarketing operation. 20 Q So, you don't use people on the telephone at Reed 21 Elsevier at all? Yes or no? Do you ever use 22 telemarketers at Reed Elsevier? Yes or no, ma'am? 23 A I don't use telemarketers for the listee market. 24 Q You collectively, do you employ at Reed Elsevier, you 25 meaning Mr. or Mrs. Reed, whoever runs Reed, do they pay HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8419 Barnes-direct/Neville
1 people to speak on the phone to customers? 2 A I am sure they do. 3 Q Those would be telemarketers, wouldn't they? 4 A Yes. 5 Q So, at least up to today it is not a crime to be a 6 telemar
keter, is it? 7 A No. 8 MR. WHITE: Objection. 9 THE COURT: Sustained. 10 Mr. Neville, I will curtail your examination if 11 you do not get to the point now. I will prohibit it. If 12 the government doesn't object I am going to stop it 13 myself. 14 MR. NEVILLE: Yes, your Honor. 15 THE COURT: So, you proceed to the discussion or 16 to the questions that we have talked about before. On 17 this issue, which is the issue of the defendants' intent 18 to deceive or lack of intent to deceive; on the issue of 19 the defendants' good faith, which is the reason I am 20 allowing this testimony, and only for that reason. 21 MR. NEVILLE: I will, your Honor. I intend to 22 show good faith. 23 THE COURT: Not to go into in depth analysis of 24 Reed Elsevier. 25 Q Did your company in brochures ever make it crystal HARRY RAPAPORT, CSR, CP,
CM OFFICIAL COURT REPORTER 8420 Barnes-direct/Neville
1 clear that you used mailing lists? 2 A Crystal clear, I am not sure. 3 Q Well, for example, would it be crystal clear that 4 they used mailing lists if in your brochures you actually 5 said when you were discussing the sources of names, that 6 one of the sources was mailing lists? 7 A We said association lists, alumni lists -- 8 Q Did you ever use the term "lists"? 9 A Lists, yes. 10 Q Mailing lists? 11 A I don't think it is in the brochure. 12 Q But you did use mailing lists? 13 A We do use mailing lists. 14 Q You still do, right? 15 A We still do. 16 Q Now, the list -- the word "list" that you say was in 17 the brochures was disseminated to whoever would want to 18 read it in the public; is that right? 19 A It was sent to the people who were being asked to
20 provide their biographical data. 21 Q Well, if someone came over to my house, and I had one 22 of these brochures because was a subscriber to the Wall 23 Street Journal, and I could show it to that person and 24 they could read it? 25 A If you wanted to do that, I am sure, yeah. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8421 Barnes-direct/Neville
1 Q In other words, it was known by the public that you 2 used lists; is that what you are saying? 3 A I am saying that the people we sent mailings to were 4 sent brochures that indicated we did use association 5 lists, alumni lists, journals and other sources. 6 Q But never mailing lists per se? 7 A Never the words "mailing lists." 8 Q You did use mailing lists in fact? 9 A One source of getting names, yes. 10 Q From the list brokers we discussed? 11 A One source, yes.
12 Q The source for those mass mailings, yes? 13 A One source, yes. 14 Q Where you would spend hundreds of thousands of 15 dollars over the years to try to get more business? 16 A Right. 17 Q In your opinion, ma'am, is it illegal to start up a 18 Who's Who publication and try to compete with your 19 company? 20 MR. WHITE: Objection. 21 THE COURT: Sustained. 22 Q You were concerned with competitors at your company? 23 A I am concerned with -- 24 Q Yes or no? 25 THE COURT: Sustained. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8422 Barnes-direct/Neville
1 MR. WHITE: Objection. 2 THE COURT: How much more do you have, 3 Mr. Neville? 4 MR. NEVILLE: I don't know, Judge. What do you 5 think? 6 THE COURT: I would have to say that's a good 7 question. 8 Come up, counsel.
9 10 (Whereupon, at this time the following took place 11 at the sidebar.) 12 THE COURT: Mr. Neville, between now and tomorrow 13 morning, I want you to sharpen up your direct examination 14 to the areas that I am permitting you to go into. This is 15 not a retrial of the Reed case. This is not showing that 16 they are vindictive or anything else. It is only for the 17 purpose of showing that this company used mailing lists, 18 and advertised it, so that it was knowledge and that these 19 defendants could find it out. That's the purpose. 20 MR. NEVILLE: Yes. 21 THE COURT: Please don't go beyond that. 22 MR. NEVILLE: Okay. 23 MR. TRABULUS: Your Honor, since this has 24 happened already, I would ask that the witness be directed 25 to bring with her all the documents that were subpoenaed, HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8
423 Barnes-direct/Neville
1 at least those for the time frame, I agreed with 2 Mr. Bailey, her attorney -- 3 THE COURT: Why? 4 MR. TRABULUS: She has now testified that there 5 were brochures that disclosed association lists and so 6 forth. I didn't see any such brochures. 7 THE COURT: I can ask her to bring the 8 brochures. I will not ask her to bring six boxes of 9 documents. 10 MR. TRABULUS: It would be fair enough to bring 11 any of these brochures or documents that she says 12 disclosed it. 13 THE COURT: All right. 14 MR. TRABULUS: I don't think there are such. 15 THE COURT: Why would you want to disagree with 16 her? But you go ahead and do it. 17 MR. TRABULUS: That disclosed it? 18 THE COURT: Prove she doesn't have the 19 brochures. 20 MR. WHITE: The problem is that the defendants' 21 claims are contradictory
, if it shows it wasn't disclosed 22 in those brochures they can't show custom and usage. 23 Because otherwise it defeats their purpose and there was 24 no fraud. 25 THE COURT: That's their business. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8424 Barnes-direct/Neville
1 MR. TRABULUS: Maybe I didn't say it properly. 2 THE COURT: You want me to ask the witness to 3 bring the brochures? 4 MR. TRABULUS: Yes, and any other documents she 5 referred to that was given to prospective customers are 6 listees that disclosed to them that mailing lists were 7 used. 8 THE COURT: Yes. 9 MR. WHITE: If she has them. They could be not 10 within the scope of the subpoena. 11 THE COURT: Whether they are within the scope of 12 the subpoena or not, if she has them, she will be directed 13 to bring them. 14 We are obviously
going over to tomorrow. That 15 means our whole schedule is pushed back. What else do you 16 have with Mrs. Barnes? 17 MR. TRABULUS: I am done. 18 MR. JENKS: That's it. 19 MR. NELSON: I am done. 20 THE COURT: Probably the last witness for the 21 direct -- for the defense? 22 MR. JENKS: Yes. 23 THE COURT: You have a rebuttal tomorrow? 24 MR. WHITE: In addition to Magistrate Jordan's 25 order? HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8425 Barnes-direct/Neville
1 THE COURT: Yes. 2 MR. WHITE: We might have a witness. I have to 3 make the decision today. 4 MR. WALLENSTEIN: Can we know who it is? 5 MR. WHITE: I am going to make a decision today. 6 MR. GEDULDIG: Have you decided, yes or no? 7 THE COURT: Do you know who that witness will be 8 if you are going to use that witness? 9 MR. WHITE
: It might be Agent Jordan. 10 THE COURT: Okay. 11 MR. WHITE: Or others. That's the one I am 12 thinking about. 13 THE COURT: Okay. 14 MR. TRABULUS: With regard to the summary of 15 Magistrate Jordan's decision, aside from the fact that 16 again I object, and I will argue tomorrow that based upon 17 the record, if that's comes in, so should there be an 18 instruction to the jury that subsequently another judge 19 determined that this was the -- that the use of 20 "nomination" the mailing lists origin was not -- did not 21 make out mail fraud, and that that judge's decision was 22 subsequently vacated and sent back for reconsideration and 23 never happened. 24 THE COURT: Talking about my decision? 25 MR. TRABULUS: Yes. Obviously you don't have to HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8426 Barnes-direct/Neville 1 indicate it was you. 2 MR. WHITE: That's a stretch to say that is 3 relevant. 4 MR. TRABULUS: I will tell you the reasons why. 5 THE COURT: Not now. I will consider it, but I 6 doubt it. 7 MR. TRABULUS: There is a basis in the 8 government's theory on the money laundering. They have 9 evidence of things that happened during that time period. 10 THE COURT: We will see. 11 12 (Whereupon, at this time the following takes 13 place in open court.) 14 THE COURT: Members of the patient and dedicated 15 jury. 16 Obviously, we are not finishing the evidence 17 today. With reasonable certainty we may finish it 18 tomorrow. If we do, then I will have to go over the law 19 with the lawyers on Monday, and we will probably start the 20 summations on Tuesday. Although the law may take more 21 than one day, but we have to let you know about th
at. 22 It is possible that the summations may take two 23 days. Then I will instruct you on the law. I am trying 24 to give you an idea of what is going to happen. We will 25 know more about it tomorrow. And then we will give you HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8427 Barnes-direct/Neville
1 hopefully some more definite times and dates. 2 You have been very patient. You have been very 3 observant. Your interest never declined through all of 4 this, which is really commendable. 5 Again, I ask you not to discuss the case either 6 among yourselves or anyone else. Keep an open mind. Come 7 to no conclusions until you are in that jury room 8 deliberating. 9 We will recess until 9:30 tomorrow morning. 10 Have a nice evening. 11 (Whereupon, at this time the jury left the 12 courtroom.) 13 THE COURT: Ms. Barnes
, you will have to be back 14 here before 9:30 tomorrow morning. 15 Mrs. Barnes, do you have any of these 16 brochures -- have a seat, folks. 17 Do you have any of these brochures in which you 18 discussed that the association lists and alumni lists are 19 set forth. 20 THE WITNESS: They went through my files, I don't 21 know. 22 THE COURT: Do you have any of those, 23 Mr. Bailey? 24 MR. BAILEY: We produced one set for Mr. Trabulus 25 and one for the government. A number of documents were HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8428 Barnes-direct/Neville
1 produced pursuant to the subpoena last week. 2 MR. TRABULUS: Your Honor, I don't have any that 3 would meet that characterization. Therefore, I did not 4 copy any since they didn't meet that characterization. I 5 would ask if they have any that they be brou
ght here. 6 THE COURT: Are you Mr. Bailey? 7 MR. BAILEY: Yes, your Honor. 8 THE COURT: Mr. Bailey says he gave you these 9 brochures. 10 MR. TRABULUS: Yes. But among those that I had 11 there were none that talked about association lists. I 12 don't know if there are any others. 13 Again, perhaps they can bring those six boxes 14 tomorrow. It wasn't that voluminous. We went through 15 them. And they can show us if they are in there. 16 THE COURT: Any other brochures, such as the kind 17 that Ms. Barnes testified about? 18 MR. BAILEY: I thought the set they selected was 19 replete with them, your Honor. They selected a large 20 number of the mailers. 21 MR. TRABULUS: Three of the boxes had nothing to 22 do with that. They were from the litigation. So the 23 three documents that came from a search of Ms. Barnes' 24 files, those are the three.
They are under subpoena. 25 THE COURT: All right. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8429 Barnes-direct/Neville
1 Bring in the three boxes tomorrow. 2 MR. BAILEY: I am ready to do so. I am not sure 3 there are any in there. 4 THE COURT: Would you bring them in as early as 5 you can tomorrow morning so -- it will only mean that you 6 can get out earlier rather than later. So, it is to your 7 advantage to bring them in. 8 Any other documents, Ms. Barnes, that will show 9 the use of mailing lists that are sent out to the public 10 or anything like that, other than the brochure? 11 THE WITNESS: No. 12 THE COURT: Nothing, okay. 13 MR. TRABULUS: Your Honor, if in fact Mr. Bailey 14 thinks they are not in there and they are in the other 15 boxes, six boxes were produced. The reason not more were 16 produced is
because we agreed stuff from 1995, '96, '97 17 not to be produced, and stuff before 1998 is not to be 18 produced. The more recent stuff was regarded as sensitive 19 for trade secret reasons, and the earlier stuff because it 20 was remote in time. So supposedly everything produced was 21 from 1988 to 1994, with the exception, I think of -- I 22 think that's what it was. 23 MR. BAILEY: I think we produced several hundred 24 of the things. So I the wrong idea what you are looking 25 for. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8430 Barnes-direct/Neville
1 MR. TRABULUS: Unless I missed it, it didn't seem 2 to meet the characterization of the witness, maybe it was 3 produced and maybe the witness' characterization was -- 4 MR. BAILEY: Are we talking about the thing that 5 attorney Schoer was reading from today, those type 6 things
? 7 MR. TRABULUS: That type of a thing. 8 MR. SCHOER: I believe that's what we are talking 9 about. It did not come from your box. 10 MR. TRABULUS: In one of the boxes they had a 11 copy, and I don't know how they did it. There was a large 12 set of envelopes with stuffing and marking on it. 13 MR. TRABULUS: Some was copied from that, I 14 believe. 15 THE COURT: Mr. Bailey, I tell you what, you 16 better get all six boxes in. If you can get it in early 17 Mr. Trabulus can take a look at it. 18 Any other documents you know that any division of 19 your company that you know advertised the use of mailing 20 lists and sent it to people outside the company, other 21 than what you told us? 22 THE WITNESS: I am aware only in the brochure. 23 THE COURT: Thank you. 24 Bring in the six boxes and we will see. 25 MR. BAILEY: Yes, your Honor. HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8431 Barnes-direct/Neville
1 THE COURT: All right. 2 We will recess until 9:30 tomorrow morning. Try 3 to get in early tomorrow, Mr. Bailey, so he can go through 4 them. 5 I am offering you an inducement to get out 6 earlier, if you bring them in. 7 MR. BAILEY: I welcome the inducement. I will 8 try to get here with the boxes as soon as I can. 9 THE COURT: We will see you tomorrow morning. 10 Thank you. 11 (Case on trial adjourned until 9:30 o'clock a.m., 12 Thursday, March 19th, 1998.) 13 14 15 16 17 18 19 20 21 22 23 24 25 HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8432 1 I-N-D-E-X 2 W-I-T-N-E-S-S-E-S 3 PAGE LINE 4 M A R T I N
R E F F S I N.................... 8220 7 CROSS-EXAMINATION................................ 8220 15 5 REDIRECT EXAMINATION............................. 8253 20 RECROSS-EXAMINATION.............................. 8261 2 6 FURTHER RECROSS-EXAMINATION...................... 8290 8 7 S A N D R A S. B A R N E S............. 8301 14 (IN THE ABSENCE OF THE JURY) 8 VOIR DIRE EXAMINATION............................ 8302 1 VOIR DIRE EXAMINATION............................ 8326 9 9 VOIR DIRE EXAMINATION............................ 8333 9 VOIR DIRE EXAMINATION............................ 8335 8 10 VOIR DIRE EXAMINATION............................ 8339 16 VOIR DIRE EXAMINATION............................ 8340 15 11 M A R T I N R E F F S I N.................. 8345 5 12 RECROSS-EXAMINATION (Cont'd)..................... 8345 12 FURTHER REDIRECT EXAMINATION..................... 8350 4 13 FURTHER RECROSS-EXAMINATION...................... 8351 19 14
S A N D R A S. B A R N E S............ 8364 1 DIRECT EXAMINATION............................... 8364 13 15 16 E-X-H-I-B-I-T-S 17 Defendant's Exhibit EF received in evidence...... 8234 21 18 Defendant's Exhibit EG received in evidence...... 8248 3 Defendant's Exhibit EH received in evidence...... 8253 12 19 Defendant's Exhibit TA received in evidence...... 8355 25 Defendant's Exhibit FB received in evidence...... 8388 2 20 21 22 23 24 25 HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER Built by Text2Html
