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GINGRAS LAW OFFICE, PLLC 3941 E. CHANDLER BLVD., #106-243 PHOENIX, ARIZONA 85048

David S. Gingras, #021097 Gingras Law Office, PLLC 3941 E. Chandler Blvd., #106-243 Phoenix, AZ 85048 Tel.: (480) 668-3623 Fax: (480) 248-3196 David@GingrasLaw.com Attorney for Plaintiff Xcentric Ventures, LLC

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA XCENTRIC VENTURES, LLC, an Arizona limited liability company, Plaintiff, v. LISA JEAN BORODKIN et al., Defendants. I, David S. Gingras declare as follows: 1. My name is David Gingras. I am a United States citizen, a resident of the Case No.: 11-CV-1426-GMS DECLARATION OF DAVID S. GINGRAS IN SUPPORT OF PLAINTIFFS RESPONSE TO DEFENDANT LISA BORODKINS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

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State of Arizona, am over the age of 18 years, and if called to testify in court or other proceeding I could and would give the following testimony which is based upon my own personal knowledge unless otherwise stated. 2. I am an attorney licensed to practice law in the States of Arizona and

California, I am an active member in good standing with the State Bars of Arizona and California and I am admitted to practice and in good standing with the United States District Court for the District of Arizona and the United States District Court for the Northern, Central, and Eastern Districts of California. 3. I represent Plaintiff XCENTRIC VENTURES, LLC (Xcentric) in this

matter and I have possession of Xcentrics files relating to this matter which I have personally reviewed and with which I am personally familiar.
DECLARATION OF DAVID S. GINGRAS

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GINGRAS LAW OFFICE, PLLC 3941 E. CHANDLER BLVD., #106-243 PHOENIX, ARIZONA 85048

4.

Attached hereto as Exhibit A is a true and correct highlighted copy of a

transcript from a hearing held on July 12, 2010 in the California Central District Court action which gives rise to this case.

Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. EXECUTED ON: August 13, 2012. GINGRAS LAW OFFICE, PLLC /S/ David S. Gingras David S. Gingras Attorney for Plaintiff

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DECLARATION OF DAVID S. GINGRAS

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GINGRAS LAW OFFICE, PLLC 3941 E. CHANDLER BLVD., #106-243 PHOENIX, ARIZONA 85048

CERTIFICATE OF SERVICE

I hereby certify that on August 13, 2012 I electronically transmitted the attached document to the Clerks Office using the CM/ECF System for filing, and for transmittal of a Notice of Electronic Filing to the following: John S. Craiger, Esq. David E. Funkhouser III, Esq. Krystal M. Aspey, Esq. Quarles & Brady LLP One Renaissance Square Two North Central Avenue Phoenix, Arizona 85004-2391 Attorney for Defendant Lisa J. Borodkin Raymond Mobrez Iliana Llaneras PO BOX 3663 Santa Monica, CA 90408 Defendants Pro Se And a courtesy copy of the foregoing delivered to: HONORABLE G. MURRAY SNOW United States District Court Sandra Day OConnor U.S. Courthouse, Suite 622 401 West Washington Street, SPC 80 Phoenix, AZ 85003-215

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/s/David S. Gingras

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DECLARATION OF DAVID S. GINGRAS

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Exhibit A

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UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ---

THE HONORABLE STEPHEN V. WILSON, U.S. DISTRICT JUDGE PRESIDING

) ) ) Plaintiffs, ) ) vs. ) ) ) XCENTRIC VENTURES, LLC, et al. ) ) Defendants. ) _______________________________)

ASIA ECONOMIC INSTITUTE, LLC, et al.,

No.

CV 10-1360-SVW

REPORTER'S TRANSCRIPT OF PROCEEDINGS LOS ANGELES, CALIFORNIA MONDAY, JULY 12, 2010

_____________________________________________________________ DEBORAH K. GACKLE, CSR, RPR United States Courthouse 312 North Spring Street, Room 402A Los Angeles, California 90012 (213) 620-1149

UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA COURT REPORTER DEBORAH K. GACKLE

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APPEARANCES OF COUNSEL:

For the Plaintiff:

ASIA ECONOMIC INSTITUTE BY: LISA J. BORODKIN BY: DANIEL F. BLACKERT 11766 Wilshire Boulevard, Suite 260 Los Angeles, California 90025

For the Defendants:

LAW OFFICES OF DAVID S. GINGRAS BY: DAVID S. GINGRAS 4072 E. Mountain Vista Drive Phoenix, Arizona 85048 JABURG & WILK BY: MARIA CRIMI SPETH 3200 North Central Avenue, Suite 2000 Phoenix, Arizona 85012 602-248-1000 Fax: 602-248-0522 Email: mcs@jaburgwilk.com

- - - - -

UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA COURT REPORTER DEBORAH K. GACKLE

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LOS ANGELES, CALIFORNIA; MONDAY, APRIL 19, 2010; 2:15 P.M. - - - - -

THE CLERK:

Item 11, CV 10-1360-SVW, Asia Economic

Institute, et al. versus Xcentric Ventures, LLC, et al. Counsel, please state your appearances. MS. BORODKIN: Good afternoon, Your Honor. Lisa

Borodkin for the plaintiffs. MR. BLACKERT: Good afternoon, Your Honor. Daniel

Blackert for the plaintiffs. MR. GINGRAS: Good afternoon, Your Honor. David

Gingras on behalf of defendants Xcentric Ventures, LLC, and Ed Magedson. MS. SPETH: Good afternoon, Your Honor. Maria Speth

on behalf of the defendants, as well. THE COURT: Let me ask first the plaintiff: The two

predicate acts that are in the complaint -- extortion and mail fraud -- the focus of this motion has been the extortion predicate act. The mail fraud -- strike that -- wire fraud has

been hardly referenced and certainly not described in any detail at all. Are you pursuing the wire fraud as a predicate act also? MS. BORODKIN: Your Honor, we are, and that was one

of the things we were hoping to request from you today due to

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recently discovered evidence, yes. THE COURT: correct? MS. BORODKIN: THE COURT: Correct. Answer my question. The answer is yes,

And so can you give me a description of

what the wire fraud allegation is, because obviously the complaint, if there had been a 9B -(Interruption in the proceedings.) THE COURT: Now, if there had been a Rule 9B motion

filed in this case, the Rule 9B motion would undoubtedly have been granted because wire fraud is the type of allegation that falls within Rule 9B, and there is no description. Can you tell me, at least orally, how you would deal with that if you were allowed to replead it, and I'll have to give you that opportunity, but I'm interested in your overview now. Tell me how you would replead, if given the opportunity. MS. BORODKIN: Your Honor, we would replead it by

stating with particularity specific times, places and speakers and recipients of representations to people that Ripoff reports are never taken down, that the statement was false, it was made with the intent to defraud the recipients of the statements into pursuing applications into the corporate advocacy program. THE COURT: Even if that were pled, how would that

constitute a fraud on the plaintiff? MS. BORODKIN: Because it's false that reports are

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never taken down, and -THE COURT: Let's say there was a false statement. How would that

There has to be causation, injury and so forth. all develop under your theory?

In other words, it seems that

the more likely type of allegation would be that these reports are taken down and then they weren't. Someone would say, Well,

look, I joined the corporate program or I paid the fee or whatever because of the representation that these defamatory allegations would be removed. Now you're saying -- you're not

saying that, you're saying that the fraud was -- that defendant said they would be never taken down. Where is the injury? MS. BORODKIN: Your Honor, I apologize. This is all

very recent that we discovered contradictory evidence in the record. Generally, the injury is that subjects of the Ripoff

reports may have declined to pursue certain avenues of relief that may been available to them had they known the true facts which are there are limited circumstances in which reports may be taken down, but they simply don't get that far because their representations on the websites and the correspondence. Defendants stated copiously there is only one way to address these reports. THE COURT: You're saying that the defendant says

these allegedly defamatory comments by third parties will never be removed, and you're saying that that is false because there

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is an instance that you allege in which arguably it was removed. So if you establish that that statement is false, how does that constitute wire fraud as to your client? In other

words, what would your client have done differently had that reputation been set forth truthfully? MS. BORODKIN: Your Honor, we appreciate what the The truth is there are a

court's trying to do and narrow this. whole host of -THE COURT:

Ma'am, here's what you have to do, and I Along the way

say that kindly, no indictment of you intended:

here between you and the defendant, you've created a horrible record to the point that the magistrate has been so upset that he called both of you uncivil and he's considering sanctions against both of you, and that can't persist. I can see where

some of the problem is because you're not listening to my question. You want to get your point across. You have to

listen to my question.

This is not a deposition office where You have to focus.

you can scream at each other as you have.

The question again is if the defendant had, in your view, said the truth that these defamatory statements will be taken down as opposed to never been taken down, how would that have defrauded your client? MS. BORODKIN: THE COURT: I'm sorry --

For argument's sake, I'm acknowledging or

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accepting for the moment that the statement wasn't true.

other words, I'm agreeing with you, just for argument's sake. How would that lead to a wire fraud against your client? What would your client have done differently? MS. BORODKIN: client. THE COURT: See, that's the problem, ma'am. This is, Your Honor, perhaps I'd have to ask my

in my view, pretty -- I'm looking for a word that is not pejorative that still makes the point -- pretty unacceptable lawyering because under Rule 11 you've now admitted to a Rule 11 violation. You filed a wire fraud allegation as a As you stand at the lectern, you

predicate act for your RICO.

can't even, in a best-world sense, articulate a wire fraud. You now say you have to speak to your client. The rules

clearly say that you have to have a good-faith basis for alleging something in a complaint, and how could you have had a good-faith basis without speaking to your client and now being totally unable to articulate a basis? MS. BORODKIN: Your Honor, with all do respect, I was Would you

not counsel of record when the complaint was filed.

like to inquire as to the attorney who did prepare and file those papers? THE COURT: May be. I mean it may very well be that On

that person is the person that has to be called to answer. the other hand, I'm not so sure that the reach of Rule 11

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doesn't extend to someone who takes over a case, especially when the case has reached motion practice, but I'll leave that aside for the moment. Okay. matters. Let's leave that aside for the moment.

Now, I just want to review with you certain

The magistrate judge gave you an hour and a half of

additional time to take the deposition of defendant Magedson. MR. GINGRAS: THE COURT: Magedson. And forgetting for the moment

Magedson.

that there's been some inability -- for lack of a better word -- for the parties to find a time and place, one of the matters that you want to -- the three matters that I can see that you want to inquire further of Magedson are the number of persons enrolled in the category program, correct? of them? MS. BORODKIN: THE COURT: Correct, Your Honor. Is that one

One of the three.

Then you want information about Magedson's cell phone and whether he uses his cell phone to conduct business. the second matter. MS. BORODKIN: Your Honor, to be more specific, we That's

would like to continue the line of questioning that was commenced when we started to discuss the cell phones. state that he uses his cell phone for business. THE COURT: I see. He did

And then you want to question him about whether any

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positive material is ever posted on the Ripoff Report website, correct? MS. BORODKIN: Again, to be perfectly clear, he did We

testify that positive reports are permitted to be posted.

wanted to inquire further as to the nature of those reports, if there was anything other than a rebuttal. THE COURT: I see. Those are the three matters that

you want to inquire further of in the hour-and-a-half deposition. MS. BORODKIN: There are those and also, in

particular, we wanted to understand further steps such as the second questionnaire that Mr. Magedson testified to and the cap agreement that he testified to. THE COURT: the matters. I see. With regard to this -- those are

Thank you for summarizing them.

Now, with regard to this questionnaire, aside from the deposition, the plaintiff also wants to see that questionnaire. You've described the questionnaire, but I've

never seen the questionnaire. Do you have the questionnaire with you? MR. GINGRAS: THE COURT: plaintiff? MR. GINGRAS: Well, we'd be happy to, Your Honor, if I do not, Your Honor.

Well, why haven't you shown it to the

it was relevant to any of the --

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THE COURT:

I didn't ask you.

I want you to -- now,

the questionnaire, was the questionnaire given to the plaintiff? MR. GINGRAS: THE COURT: plaintiff? MS. BORODKIN: THE COURT: No, Your Honor. In any event, I want the No.

Was the questionnaire given to the

I see.

questionnaire submitted.

Thank you.

Now, actually two documents, something called a second questionnaire and a cap agreement, were either of those given to the plaintiff? MR. GINGRAS: THE COURT: They were not, Your Honor.

Then I wanted to give the plaintiff an In your papers, you, the plaintiff,

opportunity to -- yes.

cited, and seemed to rely heavily on, a case captioned Monex v. Gilliam reported at 680 F.Supp. 2nd 1148. I have considered that case. case that you cited. That was the principal

Interestingly, your opponent didn't cite

any extortion cases so, the only case that has been brought to my attention in these pleadings is the case that you have relied on. Is there anything that you want to tell me beyond what you've already described as to the significance of that case? I have considered the case. I'm just asking whether

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there is something about that case beyond what you prescribed and what I've read. considered it. Clearly it's an extortion case, and I've

You don't have to respond; I'm just giving you

the opportunity. MS. BORODKIN: the -THE COURT: The only case that either side -It's not. Flatley was cited and Your Honor, you're correct. That is

MS. BORODKIN:

discussed in our opposition to the motion to strike. THE COURT: you. Let me ask you this -- all right. Anything else? Just the five things we were asking Thank

You may be seated. MS. BORODKIN:

for today in the terms of relief -THE COURT: Thank you very much. You may be seated.

The motion for summary judgment as to the extortion claim is granted. The -- and I'll issue an order.

Will you be making a Rule 9B motion? MR. GINGRAS: Your Honor, I'd probably prefer to see When you

the court's order before I make that determination.

said "extortion," I'm not sure if you refer to the RICO claim or extortion as simply one of the predicate acts to that claim. I think that makes a difference in terms of whether there is a RICO claim -THE COURT: With all due expect, sir, what you just

said didn't come together because all it takes is, in RICO, is

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a pattern of racketeering activity which is described in terms of specific predicate acts. Wire fraud is a predicate act;

extortion is a predicate act. Now, by granting the extortion predicate claim, that means that the only basis for a RICO case would be wire fraud, and of course it would require more than just an act of wire fraud. It would require a pattern and all the other I note -- just one moment -- let me just turn

prerequisites.

to another case for a second. (Unrelated matter, not transcribed herein) THE COURT: That means that if the plaintiff can

prove a pattern of racketeering activity through wire fraud, then arguably if the other prerequisites of RICO are met, namely, enterprise, causation, injury, they have a claim. So what I am saying is that under RICO law, even though RICO itself doesn't have to be the subject of the heightened pleading requirement under Rule 9B, if a predicate act under RICO is subject to a heightened pleading requirement such as in this case, wire fraud, then it has to be done; and I'm just trying to be efficient about it. not withstand a Rule 9B motion. You don't have to make a Rule 9B motion, but if you did make one, it undoubtedly would be granted and it would compel the plaintiff to plead if they could with particularity. Then you could make a motion to dismiss, which would be ruled This complaint would

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upon.

If motion were denied, then we would proceed to

discovery. And so while in light of what I've said earlier, a further deposition of Magedson is not required. If the

plaintiff were able to sustain a pattern of racketeering activity as to wire fraud, I would allow Magedson to be deposed and for more than the hour and a half if they got into wire fraud because that would be a new ball game. So rather than have you make a motion and have it responded to, the complaint is so patently deficient, I would -- if you made a motion, give the plaintiff -- grant the motion, allow the plaintiff an opportunity to replead. Do you have such a motion? MR. GINGRAS: THE COURT: I would, Your Honor.

Then your motion is granted. Your Honor, if I could be heard on

MS. BORODKIN: that. THE COURT:

Yes.

What do you want to be heard about?

MS. BORODKIN: a RICO case statement -THE COURT:

On the motion to strike, you asked for

I'm not -- ma'am, I don't think you're This is very distressing. I think you're

listening to what is going on.

There was nothing about a RICO case statement. not following the colloquy.

We're focused on the pleading of I said nothing about a RICO

the wire fraud as a predicate act.

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case statement; I've not ordered a RICO case statement. MS. BORODKIN: THE COURT: I apologize.

Yes, please.

I'll grant the motion without prejudice, and how much time would you need to replead the RICO case? You could

replead it the same way except you would have to articulate within Rule 9B the wire fraud. How much time would you need, sir? MR. BLACKERT: appropriate? THE COURT: Two weeks. Thank you, Your Honor. About two weeks, Your Honor. Is that

MR. BLACKERT: THE COURT: until then.

The case remains in its bifurcated state

In other words, the RICO is bifurcated from the

other claims. And the other ruling I will make is this: That in Thank

light of the lack of jury demand, it is a court trial. you.

Then I'll set -- assuming that two weeks from now the

complaint is refiled, I'll give you 10 days thereafter to make a motion if you wish to dismiss, and if you don't make a motion to dismiss, notify us so you can begin your discovery. And then set up a hearing date, Paul, or schedule in light of that. We can do that in a minute order. minute order. We'll send you a

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MR. GINGRAS: THE COURT:

Your Honor --

I don't want to hear any more. I'm sorry. - - - - - -

MR. GINGRAS:

C E R T I F I C A T E

I hereby certify that the foregoing is a true and correct transcript from the stenographic record of the proceedings in the foregoing matter.

July 29, 2010 __________________________ Deborah K. Gackle Official Court Reporter CSR No. 7106 ___________________ Date

UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA COURT REPORTER DEBORAH K. GACKLE