12-2297 Karron CoA Appendix v07

12-2297pr
To be argued by:
D. B. KARRON
Uu|Icd 'IaIco <oa|I o| Jppca|o
FOR THE SECOND CIRCUIT
Docket No. 12-2297

DANIEL B. KARRON,
Petitioner - Appellant,
v.
UNITED STATES OF AMERICA,
Respondent - Appellee.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

APPENDIX Volume 7 FOR THE PETITIONER - APPELLANT
7

D. B. KARRON
pro se
348 East Fulton Street
Long Beach, New York 11561
(516) 515- 1474
drdbkarron@gmail.com

Table of Contents

NOTE: Page Numbers are not correct and need to be hand entered because
of hand insertion of PDF. Contents for ordering, not for reference. Citations into
page numbers are being checked.
Contents
Table of Contents ............................................................................................. 2
APPENDIX VOLUME COVERS .................................................................. 6
APPENDIX Volume 1 FOR THE PETITIONER APPELLANT ................ 7
APPENDIX Volume 2 FOR THE PETITIONER APPELLANT ................ 9
APPENDIX Volume 3 FOR THE PETITIONER APPELLANT ..............11
APPENDIX Volume 10 FOR THE PETITIONER APPELLANT ............25
APPENDIX Volume 11 FOR THE PETITIONER APPELLANT ............27
APPENDIX TABS ........................................................................................29
Case Docket ..................................................................................................... 1
District Court Amended Opinion and Order ................................................... 2
Docketed Briefs ............................................................................................... 3
Originating 2255 Form Motion ....................................................................... 4
Originating Brief Memorandum of Facts and Law ......................................... 5
Reply Brief Corrected Sur Reply Memo of Facts and Law ............................ 6
Audit and Accounting Forensics (short) .......................................................... 7
GX114 .............................................................................................................. 8
GX114 in Focus ............................................................................................... 9
GX110 Year 1 ................................................................................................10
KARRON PERSONAL ACCOUNTS ..........................................................11
GX112 Year 1 ................................................................................................12
Year 1 SF269A ..............................................................................................13
Year 1 Source of Funds .................................................................................14
Karron Co-Funding Year 1 Schedule .....................................................15
Karron Co-Funding Check 1166 .........................................................16
Karron 75K Payroll Advance and Repayment......................................26
Salary Advance and Repayment Schedule .........................................27
Year 2 Source of Funds .................................................................................28
GX113 Year 2 Source of Funds ....................................................................29
Year 2 Karron Checks Source of Funds ........................................................30
Karron Co-Funding Year 2 Schedule .....................................................31
Karron Check 1142 for $5000 ..............................................................32
Karron Check 1152 for $2,500 .............................................................33
Karron Check 1153 for $2,500 .............................................................34
Karron Check 1154 for $2,500 .............................................................35
Karron Check 1166 for $2,000 .............................................................36
Karron Check 5339 for $2,000 .............................................................37
Karron Check 5341 for $1,000 .............................................................38
Karron check 1222 for $1000. ..............................................................39
Karron check 1228 for $20,000 ............................................................40
Karron Check 1243 for $25,000 ...........................................................41
Program Purchases during Program on Karron Personal ...............42
KARRON PERSONAL MASTERCARD ....................................................43
STATUTES ...................................................................................................44
15 USC 278n(2001) .....................................................................................45
Rules and Regulations ...................................................................................46
15 CFR 24.30 Changes ................................................................................47
15 CFR 14 DoC Uniform Administrative Rules ........................................48
OMB Cost Principles 2001 ............................................................................49
48 CFR Ch. 99 9903.2015 Waiver (2001) ................................................50
Government Exhibits .....................................................................................51
Government Exhibit Contracts ......................................................................52
GX1 Proposal Preparation Kit .......................................................................53
GX2 ATP General Terms and Conditions 2001............................................54
GX3 DoC Financial Assistance Standard Terms and Conditions .................55
GX4 Grants and Agreements Management Division GAMA ......................56
GX12 Co Operative Agreement ....................................................................58
GX13 Special Conditions ..............................................................................59
GX14 Special Conditions ..............................................................................60
POPA Newsletter 1 ........................................................................................61
POPA Newsletter 2 ........................................................................................62
Case Law........................................................................................................63
Institute for Technology Development v. Brown, 63 F.3d 445 (C.A.5
(Miss.), 1995) ...........................................................................................................64
Scholarly Writing ...........................................................................................65
Legal Scholarly Writing ................................................................................66
Say What You Mean J Levine .......................................................................67
Financial Assistance And The Bona Fide Need Rule ...................................68
The Use of Sentencing Findings ............................................................69
THESE PAGES INTENTIONALLY BLANK .............................................70
TRIAL and Sentencing TRASCRIPT (Long) ...............................................77
DUNLEVY FORENSIC RECONSTRUCTION (Long) ..............................77

APPENDIX VOLUME PAGES

Volume V1 KA-1 KA-300
Volume V7 KA-1800 KA-2200a (oversize)
Volume V11 KA-3100 KA-3332 END
Table 1 Appendix Volume Pages

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CASI ENTITIES

1I&f3
1fW
07/20/10
Transaction Detail By Account
Accrual Basis
October 2001 through September 2002
Type Date Num Name Memo Class Debit Credit Balance
General Journal 8/31/2002 OOP 83102 OOPGYM IN... NISTATP 20.00 1,143.46
Total 6064 . Gym Membership
1,143.46 0.00 1,143.46
6065 Horizon
Check 5/13/2002 NCO 527 E. Gurfein (vendor) 6065 NISTATP 444.27 444.27
Check 7130/2002 10351 E. Gurfein (vendor) 6065 NISTATP 444.27 888.54
Total 6065 . Horizon
888.54 0.00 888.54
6066 Medical Reimbursed
General Journal 5131/2002 MCOBK MC EB-DOC... NISTATP 3,877.50 3,877.50
General Journal 513112002 MCOBK MC EBOPTI... NISTATP 335.00 4,212.50
General Journal 813112002 MCOBK MC EBOOC... NISTATP 9,067.00 13,279.50
General Journal 8/31/2002 MCOBK MC EBOPTI... NISTATP 405.00 13,684.50
General Journal 12131/2001 MCOBK MCPATRICI... NISTATP 2,344.50 16,029.00
General Journal 12/3112001 MCOBK MC KIPS BA... NISTATP 5.00 16,034.00
General Journal 1111/2001 OBK 1017 PATRICIA D... NISTATP 1,065.00 17,099.00
General Journal 10131/2001 OBK 1023 KRACKOW NISTATP 577.00 17,676.00
General Journal 11/812001 OBK 1029 KRACKOW NISTATP 1,590.00 19,266.00
General Journal 1211112001 OBK 1038 KRACKOW NISTATP 560.00 19.826.00
General Journal 4/112002 OBK 1069 ORAL PATH... NISTATP 118.00 19,944.00
General Journal 1/10/2002 OBK 5191 DRCHRISTI. .. NISTATP 350.00 20,294.00
General Journal 1/1812002 OBK 5194 REWHITE ... NISTATP 600.00 20,894.00
General Journal 31412002 OBK 5202 JOEL MITTL... NISTATP 35.00 20,929.00
General Journal 311512002 OBK 5205 DRTODOB... NISTATP 360.00 21.289.00
General Journal 312912002 OBK 5206 PATRICIA D... NISTATP 20.00
(,D
21,309.00
General Journal 61712002 OBK 5225 REWHITE ... NISTATP 600.00 21,909.00
General Journal 6/1712002 OBK 5228 JOEL MITTL. .. NISTATP 35.00
320' elk,
21,944.00
Check 21712002 10063 E. Gurfein (vendor) 6066 NISTATP 2,469.60 24,413.60
Check 9/30/2002 10485 Todd J Berman M.D. 6066 NISTATP 375.00 24,788.60
Check 9130/2002 10506 E. Gurfein (vendor) 6066 NISTATP 357.00
:vc. ,.
25,145.60
General Journal 5/31/2002 OBK 053102 DR CHRISTI. .. NISTATP 2,550.00 27,695.60
General Journal 513112002 OBK053102 KRACKOW NISTATP 5,170.00 32,865.60
General Journal 513112002 OOP 53102
OOP DENTIST' NISTATP 10.00 32,875.60
General Journal 813112002 OBK 083102 DR CHRISTI ... NISTATP 1,500.00

34,375.60
General Journal 8124/2002 OBK 083102 KRACKOW NISTATP 1,580.00 35,955.60
Total 6066 . Medical Reimbursed
35,955.60 35,955.60
6067 Oxford Health
Check 1/512002 NCO 101 Oxford Health Plans 6067 NISTATP 1,442.34 1,442.34
Check 2/112002 NCO 204 Oxford Health Plans 6067 NIST ATP 480.78 1,923.12
Check 3/1/2002 NCO 302 Oxford Health Plans 6067 NISTATP 1,037.47 2,960.59
Check 51112002 NCO 504 Oxford Health Plans 6067 NISTATP 1,543.55 5,541.61
Check 811812002 NCO 802 Oxford Health Plans 6067 NISTATP 1,771.29 8,603.41
Check 9/1912002 NCO 903 Oxford Health Plans 6067 NISTATP 101.22 8,704.63
Check 512812002 NCD 5302 Oxford Health Plans 6067 NISTATP 1,290.51 11,209.74

KA-1800 KA-1800 KA-1800
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Total 6067 Oxford Health
Total 6060 . Employee Benefits
TOTAL
Class Debit Credit Balance
11,2')9.74 0.00 11,209.74
57,373.57 0.00 57,373.57
57,373.57 0.00 57,373.57
Memo
CASI ENTITIES
Transaction Deta"1
October 2001 throu hI By Account
9 September 2002
Name Num Date Type
2:58 PM
07/20/10
Accrual Basis
KA-1801 KA-1801 KA-1801
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2:56 PM

CASI ENTITIES
07/20/10
Accrual Basis
6350 Payroll Taxes
6351 FICA
General Joumal 10/3112001 PR 103101 fica NISTATP 572.01 572.01
General Joumal 11/3012001 PR 11/30/... fica NISTATP 234.73 806.74
General Joumal 1213112001 pr 123101 03 NISTATP 73.93 880.67
General Joumal 11312002 pr010302 04 NISTATP 516.67 1,397.34
General Joumal 112512002 pr 012502 05 NIST ATP 128.34 1,918.34
General Joumal 112512002 pr 012502 06 NISTATP 218.24 2,136.58
General Joumal 1/3112002 pr 013102 07 NISTATP 516.67 2,653.25
General Joumal 211/2002 pr 020102 08 NISTATP 516.67 3,169.92
General Joumal 3/1/2002 pr 030102 09 NISTATP 103.70 3,273.62
General Journal 411/2002 pr 040102 10 NISTATP 101.37 3,374.99
General Journal 5/1/2002 pr 050102 11 NISTATP 83.70 3,458.69
General Joumal 513112002 seer
NISTATP 2,066.66 6,042.02
General Journal 613/2002 PR060302 Charles Da Salla 14 NISTATP 92.07 6,134.09
General Journal 613012002 PR063OO2 15 NISTATP 398.04 6,532.13
General Journal 7/512002 PR070502 DB Karron 16 NISTATP 7,502.52 14,034.65
General Journal 713112002 PR 073102 Elisha Gulfein 17 NISTATP 516.66 14,551.31
General Journal 81212002 PR080202 18 NISTATP 2,910.54 17,461.85
General Journal 8/1812002 pr081802 19 NISTATP 163.68 17,625.53
General Journal 9/1312002 pr 091302 21 NISTATP 568.28 18,454.90
General Journal 912012002 pr092oo2 22 NISTATP 38.59 18,493.49
General Joumal 9/2012002 pr092002 22 NIST ATP 9.03 18,502.52
General Journal 913012002 pr093002 23 NISTATP 985.76 19,488.28
Total 6351 . FICA
19,488.28 0.00 19,488.28
6352 Medicare
General Journal 10/3112001 PR 103101 medicare NISTATP 133.77 133.77
General Journal 1113012001 PR 11/30/... medicare NISTATP ".90
188.67
General Journal 1213112001 pr123101 03 NISTATP 17.30 205.97
General Journal 11312002 pr010302 04 NISTATP 120.83 326.80
General Journal 1/3/2002 pr 010302 04 NISTATP 91.84 418.64
General Journal 1/2512002 pr 012502 05 NISTATP 30.02 448.66
General Journal 1/3112002 pr013102 07 NISTATP 120.83 620.53
General Journal 311/2002 pr 030102 09 24.25 765.61
General Journal 5/3112002 secr
NISTATP 483.34 1,413.06
General Journal 6/3/2002 PR060302 Charles Da Salla 14 NISTATP 21.53 1,434.59
General Journal 6/3012002 PR063002 15 NISTATP 93.10 1,527.69
General Journal 7/5/2002 PR070502 DB Karron 16 NISTATP 1,399.61 2,927.30
General Journal 7/3112002 PR 073102 Elisha Gulfein 17 NISTATP 120.84 3,048.14
General Journal 812/2002 PR 080202 18 NISTATP 654.33 3,702.47

Page 1
KA-1802 KA-1802 KA-1802
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CASI ENTITIES
07/20/10
Accrual Basis
..
General Journal 8/1812002 pr081802 19 NISTATP 38.28
3,740.75
General Journal 9/6/2002 pr090602 20 NISTATP 61.07
3,801.82
3,934.72
4,234.38
General Journal 9/3012002 dbk pr 1.45 % 61918. NISTATP 897.81
5,132.19
General Journal 911012002 dbk pr
NISTATP 0.00
5,132.19
Total 6352 . Medicare
5,132.19 0.00 5,132.19
6353' FUTA
General Journal 12/3012001 FUTA INC 10,870 ... NISTATP 86.96
86.96
General Journal 3/3012002 FUTA
NISTATP 114.10
201.06
General Journal 6/29/2002 FUTA
NISTATP 117.10
318.16
General Journal 8/3012002 FUTA INC 34,270 ... NISTATP 42.96
361.12
General Journal 9/29/2002 FUTA
NISTATP 255.99
617.11
Total 6353 . FUTA
617.11 0.00 617.11
6354 NYSUI
General Journal 12130/2001 NYSUI
NISTATP 150.93
150.93
NISTATP 2.90
153.83
General Journal 3/30/2002 NYSUI
NISTATP 290.50
444.33
NISTATP 5.45
449.78
NISTATP 705.50
1,155.28
General Joumal 6/2912002 NYSUI
NISTATP 13.23
1,168.51
General Journal 813012002 NYSUI
NISTATP 214.80
1,383.31
NISTATP 4.03
1,387.34
NISTATP 544.70
1,932.04
General Journal 912912002 NYSUI
NISTATP 10.21
1,942.25
Total 6354 . NYSUI
1,942.25 0.00 1,942.25
6356 . NJ Disability
Check 4/30/2002 10158 New Jersey Divisio... 6356 6357 NISTATP 117.50 117.50
Check 7/29/2002 10346 State of New Jersey 6356 6357 NISTATP 103.34
220.84
Check 7/29/2002 10347 State of New Jersey 6356 6357 NISTATP 183.86
404.70
Total 6356 . NJ Disability
404.70 0.00 404.70
6357 NJ UI
Check 4/3012002 10158 New Jersey Divisio... 6356 6357 NIST ATP 99.88
99.88
Check 7/29'2002 10346 State of New Jersey 6356 6357 NISTATP 333.28
433.16
Check 7/2912002 10347 State of New Jersey 6356 6357 NISTATP 591.64
1,024.80
Total 6357 . NJ UI
1,024.80 0.00 1,024.80
6359 Penalties and Late Fees
Check 9'30'2002
10418 State of New Jersey 6359 NISTATP 29.01
29.01
Total 6359 . Penalties and Late Fees
29.01 0.00 29.01
Total 6350 . Payroll Taxes
28,638.34 0.00 28,638.34
TOTAL
28,638.34 0.00 28,638.34

Page 2
KA-1803 KA-1803 KA-1803
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07/26110
Accrual Basis
CASI ENTITIES
Profit &Loss by Class
N LLC N NISTATP NN CO FUNDING TOTAL
Ordinary Income/Expense
Income
4000 . Income
4010 Reimbursed Expense Income 0.00 207.51 0.00 207.51
4013 . Co-Funding via Out of Pocket 94.10 0.00 1,371.72 1,465.82
4014 . Co-Funding via Mastercard 0.00 0.00 25,735.95 25,735.95
4015 . In-Kind Equipment Contribution 0.00 0.00 30,000.00 30,000.00
4020 NIST ATP Income 0.00 800,000.00 0.00 800,000.00
4712 FROM DBKTO NIST AlC 1010 0.00 3,000.00 0.00 3,000.00
4912 DBK For NIST ATP 0.00 0.00 17,795.00 17,795.00
Total 4000 Income
NwN
94.10
NJ5r
803,207.51 NN 74,902.67 :J01f'b's.204.28
Total Income 94.10
------mr
803,207.51 ~ I t ~ 74,902.67 878,204.28
Expense
5000 . AE-Accounting
5001 . AE.JIII Feldman CPA 0.00 1,000.00 0.00 1,000.00
Total 5000 AE-Accounting 0.00 1,000.00 0.00 1,000.00
5002 . AE-Airfare
5004 . AE-American West 0.00 316.00 0.00 316.00
5005 . AE-Expedia 0.00 956.50 0.00 956.50
5006 . AE.Jetblue 0.00 280.00 0.00 280.00
Total 5002 . AE-Alrfare 0.00 1,552.50 0.00 1,552.50
5007 . AE-Auto
5009 . AE-Central Parking 0.00 25.00 0.00 25.00
5010 AE-Edison Parking 0.00 68.00 0.00 68.00
5011 . AE-Gas 0.00 182.49 0.00 182.49
Total S007 . AE-Auto 0.00 275.49 0.00 275.49
5123 AE-Books
5125' AE-Bames & Noble 0.00 18.40 0.00 18.40
5126 . AE-Borders Books 0.00 48.66 0.00 48.66
5128 . AE-IEEE Books 0.00 193.48 0.00 193.48
Total 5123 . AEBooks 0.00 260.54 0.00 260.54
5138' AE-Duesand SUbscriptions 0.00 1,026.48 0.00 1,026.48
5139 . AE-Finance Charge 0.00 4.37 0.00 4.37
5140' AE-Hardware
5141 AE-3D.FX Cool 0.00 86.30 0.00 86.30
5143 . AE-ADOBE.Com 0.00 767.39 0.00 767.39
5145' AEBlkBox 0.00 1,014.43 0.00 1,014.43
5157 . AEDatavision 0.00 4,316.84 0.00 4,316.84
5158' AE-Digital River 0.00 180.82 0.00 180.82
5161 . AE-Electrlcal Supply 0.00 571.70 0.00 571.70
5165 AE-GL Video 0.00 335.00 0.00 335.00
N1Sf'
~
I ct1lfr"'fltt. S ~
Page 1
KA-1804 KA-1804 KA-1804
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11:39 PM CASI ENTITIES
07125110 Profit & Loss by Class
Accrual Basis October 2001 through September 2002
5168 AE-IBM Direct 0.00 1,111.73 0.00 1,111.73
5169' AE-J&R Sound 0.00 243.53 0.00 243.53
5171 AE-Lumberland 0.00 9.90 0.00 9.90
5173 AEProjector People 0.00 199.00 0.00 199.00
5174 AE-Racklt Technology 0.00 1,366.00 0.00 1,366.00
5176 AE-8ub Zero Technology 0.00 89.35 0.00 89.35
5178 AE-Wacom Technology 0.00 171.29 0.00 171.29
5180' AE-Winzip 0.00 29.00 0.00 29.00
5140' AE-Hardware - Other 0.00 310.57 0.00 310.57
Total 5140 AE-Hardware 0.00 10,802.85 0.00 10,802.85
5189 AE-Hotel 0.00 2,282.80 0.00 2,282.80
5190 AE-Installatlon
5192 AE-Homefront Hardware 0.00 2,672.03 0.00 2,672.03
5193' AE-Jensen Tools 0.00 1,161.01 0.00 1,161.01
5190' AE-Installation - Other 0.00 111.87 0.00 111.87
Total 5190 AE-Installation 0.00 3,944.91 0.00 3,944.91
5200 . AE-Intemet
5203 AE-Expedla 0.00 331.25 0.00 331.25
5200 AE-Intemet - Other 0.00 0.00 0.00 0.00
--
Total 5200 AE-Internet 0.00 331.25 0.00 331.25
5210 AE-Meals 0.00 1,433.23 0.00 1,433.23
5220 . AE..()ffjce
5222 AE-Coffee Distributing 0.00 407.93 0.00 407.93
5226 . AE.Qfflce Depot 0.00 2,939.06 0.00 2,939.06
5227 AE.Qffice Max 0.00 28.20 0.00 28.20
5229 . AE-Radlo Shack 0.00 185.60 0.00 185.60
5231 . AE-8taples 0.00 1,029.35 0.00 1,029.35
5220 . AE.Qffice Other 0.00 201.25 0.00 201.25
Total 5220 AE.Qffice 0.00 4,791.39 0.00 4,791.39
5260 AE-Phone
5265 . AE-8print 0.00 -310.00 0.00 -310.00
5266 . AE-Telephone 0.00 234.30 0.00 234.30
5260 AE-Phone - Other 0.00 127.00 0.00 127.00
Total 6260 AE-Phone 0.00 51.30 0.00 51.30
5270 AE-Postage
5275 . AE-USPS 0.00 279.43 0.00 279.43
Total 5270 AE-Postage 0.00 279.43 0.00 279.43
5280 AE-Repalrs 0.00 46.16 0.00 46.16
5290 AE-8emlnar
5292 . AE-8IAM Math Society 0.00 500.00 0.00 500.00
fJJ5r
~
2-
Sal'
Page 2
KA-1805 KA-1805 KA-1805
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07/25/10 Profit & Loss by Class
Total 5290 AE-Semlnar 0.00 500.00 0.00 500.00
5299 . AE-5oftware
5300 . AEBuy Up Time 0.00 799.49 0.00 799.49
5303 . AE-Eacceleratlon 0.00 36.00 0.00 36.00
5306 . AE-Getlnfo.Com 0.00 15.63 0.00 15.63
5307 . AElrls Inc. 0.00 68.94 0.00 68.94
530B . AE-Jasc Software 0.00 19.00 0.00 19.00
5310, AE-McAfee 0.00 72.69 0.00 72.69
5312 AE-Quickbooks 0.00 1.227.90 0.00 1.227.90
5314' AERegsoft 0.00 97.89 0.00 97.89
5316' AERoxio 0.00 105.90 0.00 105.90
5317' AE-Runtlme 0.00 159.00 0.00 159.00
5319' AE-Tehalchemy 0.00 34.95 0.00 34.95
5320 . AE-Visioneer 0.00 44.94 0.00 44.94
5321 . AE-WNT.Reg.Net 0.00 57.90 0.00 57.90
5299 . AE-5oftware Other 0.00 554.31 0.00 554.31
Total 5299 AE-5oftware 0.00 3,294.54 0.00 3.294.54
5350 AETech
5351 AE-Time Motion Tools 0.00 104.55 0.00 104.55
5352 . Microsoft 0.00 245.00 0.00 245.00
Total 5350 AE-Tech 0.00 349.55 0.00 349.55
5360 AETools
5361 . AE-Mlcro Mark 0.00 139.95 0.00 139.95
5362 AE-Tecra Tools 0.00 247.30 0.00 247.30
Total 5360 AE-Tools 0.00 387.25 0.00 387.25
5369 AETravel
5371 . AE-Luggage Carts 0.00 4.00 0.00 4.00
5372 . AE-Metrocard 0.00 90.00 0.00 90.00
5373 . AETaxi and Limousine 0.00 50.00 0.00 50.00
5374' AE-Train 0.00 1.589.00 0.00 1,589.00
Total 5369 . AETravel 0.00 1,733.00 0.00 1,733.00
6000 . Accounting
6003 . Jill Feldman CPA 0.00 3,000.00 500.00 3,500.00
6004 . Joan Hayes CPA 0.00 2,090.00 0.00 2,090.00
6005 . Ken Jackson 0.00 3.280.00 0.00 3.280.00
----_.
Total 6000 . Accounting 0.00 8,370.00 500.00 8,870.00
6010 Auto
6011 . Auto Rental 0.00 1.552.65 0.00 1.552.65
6012 Exxon 0.00 49.30 0.00 49.30
6013' Gas 0.00 56.64 0.00 56.64
6015 . Parking 2.00 993.50

0.00 995.50
/V/SI
O h J ~
3 ~ 7 ~
S112
Page 3
KA-1806 KA-1806 KA-1806
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11:39PM CASI ENTITIES
07125110 Profit & Loss by Class
N LLC N NIST ATP NN CO FUNDING TOTAL
8016 Sunoco 0.00 43.40 0.00 43.40
6017' Tolls 0.00 507.15 0.00 507.15
Total 6010 . Auto
fttI#
2.00 3,202.64 0.00 3,204.64
6019 Books 0.00 464.80 0.00 464.80
6020 . Communications
6021' ATT 0.00 122.33 0.00 122.33
6022 Cable 0.00 798.06 0.00 798.06
6025' MCI 0.00 410.75 0.00 410.75
6026' RCN 0.00 524.01 0.00 524.01
6027 . Reimbursed Telephone 0.00 344.00 0.00 344.00
6028 . Skytel 0.00 486.60 0.00 486.60
8030 Thorn 0.00 854.55 0.00 854.55
6032 . Verizon 0.00 836.12 0.00 836.12
8034 . Volcestream Wireless 0.00 229.43 0.00 229.43
8035 . Vz Wireless 0.00 272.93 0.00 272.93
6036 . Webworqs 0.00 4,000.00 0.00 4,000.00
Total 6020 Communications 0.00 8,878.78 0.00 8,878.78
6040 . Computer Installation
6041 . Columbia 0.00 589.96 0.00 589.96
8043 . Flglia & Sons 0.00 1,995.00 0.00 1,995,00
6044 . Homefront Hardware 0.00 29.00 0.00 29.00
6045 . Kips Bay Hardware 0.00 70.27 0.00 70.27
6046 . Metro Solar 0.00 1,000.00 0.00 1,000.00
Total 6040 . Computer Installation 0.00 3,684.23 0.00 3,684.23
6050 . Conference 0.00 600.00 0.00 600.00
6053 . Dues and Subscriptions 0.00 141.06 0.00 141.06
6060 Employee Benefits
6061 . Arlsta 0.00 3,104.35 0.00 3,104.35
6062 . Childcare Services - Rosalie Me 0.00 1,835.00 0.00 1,835.00
6063' Drugs 0.00 3,236.88 0.00 3,236.88
6064' Gym Membership 0.00 1,143.46 0.00 1,143.46
6065 . Horizon 0.00 888.54 0.00 888.54
6066 . Medical Reimbursed 0.00 19,245.60 17,295.00 36,540.60
6067 . Oxford Health 0,00 11,209.74 0.00 11,209.74
Total 6060 . Employee Benefits 0.00 40,663.57 17,295.00 57,958.57
6090 . Equipment Repairs 0.00 107.17 0,00 107.17
6092 . Honorarium 0.00 569.80 0.00 569.80
6093 . Insurance 0.00 925.37 0.00 925.37
6100 Legal
6102 . Frederica Miller ESQ 0.00 6,000.00 0.00 6,000.00
Total 6100 . Legal 0.00 6,000.00 0.00 6,000.00
6120 . Miscellaneous 0.00 147,01 0.00 147.01
N J ~ OnJ'1
1J 7 ~ S " ' 3
Page 4
if
KA-1807 KA-1807 KA-1807
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11:39 PM
07/25/10
Accrual Basis
CASI ENTITIES
Profit & Loss by Class
6122' NG Check 0.00 0.00 0.00 0.00
6130 . Office 0.00 433.27 0.00 433.27
6150' Outside Service
6151' Abe Karron 0.00 1,000.00 0.00 1.000.00
6152' Advanced Technology Group 0.00 1,000.00 0.00 1,000.00
6155' D. Ferrand 0.00 1,300.00 0.00 1,300.00
6157' George Wolberg PhD 0.00 38,898.99 0.00 38,898.99
6158 James Cox oIs 0.00 33,930.00 0.00 33,930.00
6161 Radio Logic 0.00 100.00 0.00 100.00
6162' Scott Albin 0.00 2,000.00 0.00 2,000.00
Total 6150 . Outside Service 0.00 78,228.99 0.00 78,228.99
6170 Paypal Payments 0.00 329.75 0.00 329.75
6175 . Postage & Delivery 0.00 641.10 0.00 641.10
6178 . Repairs
6180 . General 0.00 173.10 0.00 173.10
6178 . Repairs Other 0.00 75.00 0.00 75.00
Total 6178 . Repairs 0.00 248.10 0.00 248.10
6189 Rent
6192 Rentfor 2002 0.00 2,000.00 0.00 2,000.00
Total 6189 Rent 0.00 2,000.00 0.00 2,000.00
6300 . Payroll Expenses
6301 . Scott Albin emp 0.00 4,950.00 0.00 4,950.00
6304 . James L. Cox emp 0.00 5,200.00 0.00 5.200.00
6305 . Elisha Gurfeln 0.00 100,000.95 0.00 100,000.95
6306 . D.B. Karron 0.00 184,252.72 0.00 184.252.72
6307 . Charles La Salla 0.00 19,800.00 0.00 19,800.00
6308 . Regner M. Peralta 0.00 1,312.50 0.00 1,312.50
6310' Matthew Rothman 0.00 3,405.00 0.00 3,405.00
6311 . Robert G. Wine 0.00 3,520.00 0.00 3.520.00
6314' Nlcholee A. Wynter 0.00 9,348.75 0.00 9,348.75
Total 6300 . Payroll Expenses 0.00 331,789.92 0.00 331,789.92
6330 Research and Development
6331 . American Advanced Power 0.00 215.00 0.00 215.00
6332 . American Media Systems 0.00 1,180.09 0.00 1,180.09
6334 EMAG 0.00 2,850.00 0.00 2,850.00
6335 . frozencpu.com 0.00 845.83 0.00 845.83
6337 . General Computer 0.00 97,997.14 0.00 97,997.14
6338 . Pacific Data Storage 0.00 1,429.00 0.00 1,429.00
6339 Ricoh 0.00 8,019.57 0.00 8,019.57
6341 . SGI Developers 0.00 295.00 0.00 295.00
6342 . Silicon City 0.00 93,064.55 0.00 93,064.55
6343 . Silicon Graphics 0.00 45,265.35 0.00 45,265.35
6344 . Vision Shape 0.00 6,643.25 0.00 6,643.25
o"J9
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Page 5
N/5/
KA-1808 KA-1808 KA-1808
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11:39 PM
07/25110
Accrual Basis
CASI ENTITIES
0.00 128,118.29
___0:..-.0_0 -137,377.91
0.00 -9,259.62
0.00 -20,600.00
0.00 94,376.00
0.00 -60,000.00
-----
0.00 13,776.00
-------
0.00
128,118.29
-137,377.91
-9,259.62 0.00
0.00
0.00
0.00 -20,600.00
0.00 94,376.00
0.00 -60,000.00
-----
0.00 13,776.00
-------
HA .

NISTATP NN CO FUNDING TOTAL
210.00 0.00 210.00
0.00 30,000.00 30,000.00
2,128.51 0.00 2,128.51
260,143.29 30,000.00 290,143.29
195.77 0.00 195.77
19,488.28 0.00 19,488.28
5,132.19 0.00 5,132.19
617.11 0.00 617.11
1,942.25 0.00 1,942.25
404.70 0.00 404.70
1,024.80 0.00 1,024.80
29.01 0.00 29.01
28,638.34 0.00 28,638.34
100.00 0.00 100.00
160.21 0.00 160.21
2,923.31 0.00 2,952.91
224.93 0.00 224.93
627.25 0.00 689.75
14.75 0.00 14.75
599.60 0.00 599.60
431.40 0.00 431.40
5,081.45 0.00 5,173.55
1,330.35 0.00 1,330.35
1,568.00 0.00 1,568.00
tffYfaJSl!5 818,729.80 47,795.00 866,618.90
-15,522.29 27,107.67 W11.585.38
0.00
0.00
0.00
92.10
0.00
0.00
94.10
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
29.60
0.00
62.50
0.00
0.00

N LLC N
6345 . YC Cable
6346 . In Kind Computer Equipment
6330 . Research and Development - Other
Total 6330 ' Research and Development
6349 . Stationery
6350 . Payroll Taxes
6351 FICA
6352 . Medicare
6353 FUTA
6354 NYSUI
6356 . NJ Disability
6357 NJ UI
6359 . Penalties and Late Fees
6370 . Travel
6371 . Airfare
6372 Hotel
6373 Meals
6374 Mlsc Travel
6375 Taxi
6376 Train
6377 . Transit Check
6370 . Travel Other
Total 6370 . Travel
6379 . Tuition Reimbursement
6380 . Utilities
Total Expense
Net Ordinary Income
Other Income/Expense
Other Expense
6500 . Payroll Clearing Account
6504 . Debits Net Payroll Clearing Acc
6516 Credits Net Payroll Clearing Ac
Total 6500 . Payroll Clearing Account
7000 . Bank Transfer
7001 . CASI Co-funding Rec'd by NIST
7006 . From 8735 TO INC OUT
7009 FROM INC TO 8735 IN
Total 7000 . Bank Transfer
KA-1809 KA-1809 KA-1809
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07/25/10
Accrual Basis
CASI ENTITIES
Total Other Expense
Net Other Income
Net Income
N LLC N
0.00
0.00
0.00
NISTATP
4,516.38
-4,516.38
-20,038.67
NN CO FUNDING
0.00
0.00
27,107.67
TOTAL
4,516.38
-4,516.38
7,069.00
Page 7
KA-1810 KA-1810 KA-1810
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07/25/10
AJE INC RENT TOTAL
Ordinary Income/Expense
Expense
5220 . AE.QffIce 0.00 165.25 0.00 165.25
6000 . Accounting
6003 . Jill Feldman CPA 0.00 2,000.00 0.00 2,000.00
Total 6000 . Accounting 0.00 2,000.00 0.00 2,000.00
6010 Auto
8011 . Auto Rental 0.00 295.57 0.00 295.57
6014' Mobil 0.00 63.91 0.00 63.91
8015 Parking 0.00 100.00 0.00 100.00
Total 6010 . Auto 0.00 459.48 0.00 459.48
6018 . Bank Charges 0.00 45.54 0.00 45.54
6020 . Communications
6021 ATT 0.00 139.61 0.00 139.61
6022' Cable 0.00 87.60 0.00 87.60
6025 MCI 0.00 135.99 0.00 135.99
6028 . Skytel 0.00 369.32 0.00 369.32
6030 Thorn 0.00 522.22 0.00 522.22
6032 . Verizon 0.00 1,299.23 0.00 1,299.23
Total 6020 . Communications 0.00 2,553.97 0.00 2,553.97
6050 . Conference 0.00 970.00 0.00 970.00
6051 . Depreciation 0.00 10,489.00 0.00 10,489.00
6052 . Domain Name 0.00 70.00 0.00 70.00
6053 . Dues and Subscriptions 0.00 50.00 0.00 50.00
6060 . Employee Benefits
6063 Drugs 0.00 477.92 0.00 477.92
6066 . Medical Reimbursed 0.00 774.00 0.00 774.00
6067 . Oxford Health 0.00 1,996.96 0.00 1,996.96
Total 6060 . Employee Benefits 0.00 3,248.88 0.00 3,248.88
6090 . Equipment Repairs 0.00 317.17 0.00 317.17
6091 . Finance Charge 0.00 8.75 0.00 8.75
6092 . Honorarium 0.00 472.25 0.00 472.25
6100 Legal
6102 Frederica Miller ESQ 10,000.00 0.00 0.00 10,000.00
6106 . Pennie & Edmonds 0.00 9,404.13 0.00 9,404.13
6109 . Solomon & Bernstein 10,000.00 1,800.00 0.00 11,800.00
Total 6100 . Legal 20,000.00 11,204.13 0.00 31,204.13
6120 Miscellaneous 0.00 20.28 0.00 20.28
6150 Outside Service
6152' Advanced Technology Group 0.00 68,000.00 0.00 68,000.00
6155 D. Ferrand 0.00 3,319.00 0.00 3,319.00

11;.3
Page 1
KA-1811 KA-1811 KA-1811
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11:40 PM
07/25110
Accrual Basis
Total 6150 . Outside Service
6175 . Postage & Delivery
6189 Rent
6191 . Rent for 2001
6192 . Rent for 2002
Total 6189 . Rent
6330 . Research and Development
6342 . Silicon City
Total 6330 . Research and Development
6349 . Stationery
6350 . Payroll Taxes
6351 FICA
6352 . Medicare
6360 Taxes
6361 . NY Corporation Tax
Total 6360 . Taxes
6370 . Travel
6375 Taxi
Total 6370 . Travel
6380 . Utilities
Total Expense
Net Ordinary Income
Other Income/Expense
Other Expense
6500 . Payroll Clearing Account
6504 . Debits Net Payroll Clearing Ace
Total 6500 . Payroll Clearing Account
7000 . Bank Transfer
7002 . CASI Co-Funding to NIST ATP
7005 . From 8735 to INC IN
7010 FROM INC TO 8735 OUT
Total 7000 . Bank Transfer
Total Other Expense
Net Other Income
CASI ENTITIES
AJE INC RENT TOTAL
0.00 71,319.00 0.00 71,319.00
0.00 189.35 0.00 189.35
0.00 0.00 33,000.00 33,000.00
0.00 0.00 16,000.00 16,000.00
0.00 0.00 49,000.00 49,000.00
0.00 1,000.00 0.00 1,000.00
0.00 1,000.00 0.00 1,000.00
0.00 320.47 0.00 320.47
-1,229.23 0.00 0.00 -1,229.23
-330.24 0.00 0.00 -330.24
-1,559.47 0.00 0.00 -1,559.47
0.00 800.00 0.00 800.00
0.00 800.00 0.00 800.00
0.00 100.00 0.00 100.00
----_._-
0.00 100.00 0.00 100.00
0.00 7,639.04 0.00 7,639.04
18,440.53 113,442.56 49,000.00 180,883.09
-18,440.53 -113,442.56 -49,000.00 -180,883.09
0.00 9,259.62 0.00 9,259.62
0.00 9,259.62 0.00 9,259.62
0.00 20,600.00 0.00 20,600.00
0.00 -94,376.00 0.00 -94,376.00
0.00 60,000.00 0.00 60,000.00
0.00 -13,776.00 0.00 -13,776.00
0.00 -4,516.38 0.00 -4,516.38
0.00 4,516.38 0.00 4,516.38
!'Jot ,JJSt'
'Q ~ y ~ ~ I ' ' ' '
KA-1812 KA-1812 KA-1812
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11:40 PM
07/25110
Accrual Basis
CASI ENTITIES
Net Income
AJE
18,440.53
INC
-108,926.18
RENT
49,000.00
TOTAL
-176,366.71
KA-1813 KA-1813 KA-1813
Case 1:08-cv-10223-NRB Document 32-18 Filed 08/23/10 Page 26 of 40
N. Y. S DEPARTMENT OF STATE
DIVISION OF CORPORATIONS AND STATE RECORDS ALBANY. NY 12231-0001
.............. .._ _. =.__
ENTITY NAME l CASI LLC f '"I
..
DOCUMENT TYPE: MERGER (DOM LLC) COUNTY: NEWY
PROCESS
SERVICE COMPANY: DELANEY CORPORATE SERVICES LTD. SERVICE CODE: 30 I
CONSTITUENT NAME: COMPUTER AIDED SURGERY, INCORPORATED I
t

ADDRESS FOR PROCESS EFFECT DATE I
___________________ _ --_---- I
THE.LLC 08/30/2002 'I
C/O SOLOMON BERNSTBIN 1178 BROADWAY 5TH FL I
NEW YORK, NY 10001-5404
REGISTERED AGENT I
---------------- I
I
=za _=======
FILER FEES 95.00 PAYMENTS 95.00
--------
FILING 60.00 CASH 0.00
JOEL BERNSTEIN ESQ TAX 0.00 CHECK 0.00
C/O SOLOMON & BERNSTEIN CERT 0.00 CHARGE 0.00
1178 BROADWAY STH FL COPIES 10.00 DRAWDOWN 95.00
NEW YORK. NY 10001 HANDLING 25.00 BILLED 0.00
REFUND 0.00
------
ooS-1025 (11/89)
---------------------- - - --
KA-1814 KA-1814 KA-1814
State ofNew York } .\'S:
Department ofState J
I Iv"", tItat 'M tullWudcopy Ittu WOI wi,,, 'Iv "";';11II1 __III {.uti ", ,Itt' DqxImrtmr fI{
IWI ,11m ,Iv ItIIftI is II Irw 1:Df'Y oj mid ori,ilUll.
ofS,a,,.
--
\R

-
. I
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KA-1815 KA-1815 KA-1815
--_.- ...
FJkST: 'I1wname aDdjgriadietian offomwioD 01" orgmization ofeach domwtlc; limited
liabilitycompanyor other domestic bIIIiDeIs adity that is to merge are:
FOtJR..TJf: n. asreememo'-S- hat N.uapp.covecl and uocuted by CKh
domatic limiteclliabilitycompauies or cbDestic other buiDcISeatitia thai is a puty thereto.
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CAS! u.c
CASI u.c
iJUo
C2R.TJFICATE OP MERGER
of
1. Computer Aided S\IfICrY. IDe
Certificate ofIncorporation: December 12, 199'
2.CASI u.c
Articles of ara",ization: 1uly31. 2002
1lDRD: The name oftbe iUMving domestic limited lilbiHty companyiI: CASI LLC.
2.CASI u.c
1. ComputtzAided Surpry, yarlt State
SIXTH: lbc SecrlUry ofStale i. dosipated -cent ol1hc aurrivina Iimi.tcd liability
ampanyllpODwhamPfOC*I apiut it may be Icrved. The po&t ofBce address withiDor without
FIFTH: 1he mtlft declive date oEth. ID_. Wto be \IpoD tho date orlbe fi.lin&
Certificate ofMCI'ICI'.
SECOND: For each d.omcstic limited liability CODlPlDY aMdomestic odH:r business
entity. diedate when i1s initial Articles ofOrpniZltioD01" foJmaIion clocumeDt was filed with
Deparunmt ofStare is: .
Under Section 1003 ofthe Limited LiabilityCompmyLaw
.'
f
KA-1816 KA-1816 KA-1816
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..
tbia SlalC10 which the Secretlry ofState shaJJ. mail a copy ofIII)' JJIO"U against the hmited
liability company stn'ed upon himor 1=is: CASl u.c c/o Solomon ~ Bematein. 1178
Broadway. S floor, New York. New YOIIe 10001-5404.
SEVENTH; The agreement ormerpr is OIl file. the followiDa place ofbusineu ofthc
nrvivirtadomeac limil8d liability COJDINIIly: 300 at 33- StI'CCt, Suite 4N, New YOlk, New
York 10016.
ElGH1H: A copyo,the asre-n- ofmeracr win be uwiahcd. by tho AUYiviDa QomClltic
limited Hability complYOIl request mdwithout COld to lIlYJIlCIDber orlin)' dDmcstic limited
liabilityoompaDy Of to any person boldinean imerest in myocbIlr buIiDeu eatity that ia to m.
panuaDl Ie such ~
NIN11t: There are DO cbaaps to the Arbc1el ofOrpaizatioDneeesmyby reuon ofthe
mc:rzer.
..= ;
.....
."
.. ~ . . : ..: . . -
KA-1817 KA-1817 KA-1817
.. ..
((020830000 1olf6
CERTIfICATEOFMERGER \1\
of
Uncla- Scdion 1003 oCtbc 1.im;bId Liability CompanyLaw
DRAWDOWN
.')ELANEY- 30
CASI ILC
CASt LLC
I
I
I
I
I
i
I
I
I
I
I
I
j,...
Filed by: Joel BemsIeiD. Esq.
c/o SokaoDA Bemaein
1178 Broadway. ,. tka:
New York. New York 1001
ltt-
STATE OF NEW YORK
DEPARTMENT OF STATE
{} ';;:12
FLED 302002
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KA-1818 KA-1818 KA-1818
KA-1819 KA-1819 KA-1819
FormCl1 under the laws of the State of N\:;V! York
MEl\1BERSH1P
-9(1- NUll:ber ()f units

rrTiis' Certificat-e certifies tliat
CASI;. .LLC
Ccni1ic.:atL.
.r
of:Ninety (90)fu.[[y paiaunits oj"the
LLC transftra6w only on tIre oftlie LLC 6y die holder
lierefifill person or 6)' autflOnzed-..'ilttorney Up011 surrem{er of
tliis Certtficatc properly cuconcd.
'11ie total num6er units issuetf is 100.
()lS1 LLC is the ,i-urcrren1l9 entity after the merat.'T of
C{J1Iqnaer S urge'l) Itlcorpomtea(f)/CI1!'4 C7f5/witli Cl1.S' f
LLC'.
{Dated: 'N"ovem6er 1.9, 2002
,.i; ..'
'\.>Yt' Iiw.,,..I\.
J
.In 'Witness ((If/hereof tlie LLC has cause;,{ this to be
slnlled6_'1 its mallaniuB tnem5cl:
KA-1820 KA-1820 KA-1820
Forme.d under the l,hvs of tile State of New York
l\lEIVI8ERSHI P LER'I'IFI(.AT-E
CA_SI-LLC
NUlllber of units 4
.-...:.-_-
2
qJiis Certificate certifies tfiat
A6ra/ial1t 7(p.rron
No.
Is the o'wner ofOne (l)fufIy paid"units ofthe abo've LLC
transftTa5k onfy lm tJie 6oof< of tlie LLC 6y tfie I;ouler hereo.fin
penon or 6)1 dil.{y t1uthon2ed-j1ttoYnI'Y upon sur-rend,?/, o.l this
C!rtificate elldorsccf.
7he totarlw.1t16er of units issuedis 100.
CAS] Ll Cis tlie su:nJivitl8 entity after the merger oj'
Computer)11({ed"Su1fJe.1Y l11COrpOlllUd' (D/(jJ/./f. C)lSI wiL./i c..JtlSJ
LEe
In '('f,1'tlless 'W!iereof; the LEe h.a.5 caused this certiJi'cate to 6e
s(qncJby its I/WILaH;UH mem{ju:
,
-.. - it('A)/
(Dr. -D, (Il :M.allllfJin,q !J\1.em6er
KA-1821 KA-1821 KA-1821
Formed under the laws of the State of New York
VlElVIHF:RSHIP CERTIFlf:ATF
C.AST '. LLC
Number of units 2

'This Certificate celtij':e.\ tfiat
:JUt:. Joe{(jJernstein
No.
Is the o'(t'1U!r (l)fu.[fy paidunits of the abtyfJc LC
tran.sferal;fe ()llfy OIl tlie 6ook, oftrw LLC 6-y tue fiofd"er liereof ,:n
- -
person or 6y dial UPOIl sZln-endl!l' ofth.1S
Certificate propt.>rfy endorsed.
11ie totafnumber LUi. its is JOO.
CJJSI LLCis tfie sU'rvi.piu8 entit)1 after tftc mer8e'r 0:/
C(,mputer.Ait{e,fSuFgt'l) lnL:orpo"lted-<Vj<B/.Jl. C/f.SI 'witli CjtS'J
LLC.
Itl rtJl!itlless tl1e LLC lias causet/iis certificate to be
sinneJby its
KA-1822 KA-1822 KA-1822
tFredica :Mi{fer
NU1:lber of units 2
--=---
4
Formed under the laws of the Stve of New York
CAST .LLC
'71iis Certificate certifies tflat
Is tfie o'wner ofOne (lXfufEy paidu.nits o..f aDO'f)l! L1:('
transfera5(e on(y on tlie oftfie LL.C 6y the fiot:erer hereofin
piJrsofl 01 b.y cfufy L1utiionzea..?l ttomeyupon surrender n...f this
("ertificate properfy endorsed.
77ie totafnum6er of units issuedis 100.
CY1Si Lfe is tile su:rvivi-nO entity after tlie mcraer
Co.".rpulerj'4id"e,rSufyely 11lC0'1'0rc.ltea(j)/IJ/fl C./1.S1 witl;' ...S1
CLC.
In i{t1Iil:'tll-ssftVfie'reoj: t:flf LLC lias caused'this cCltiji:ate t;o 6e
6) its mallaf/illB
{J)ate,{ J9, 2002

KA-1823 KA-1823 KA-1823
FlllTIleJ undtr the laws of the State of Ni:w Y('fk
iVIEl\lDERSILlP CERTlFICATF:
1Jiis Certificate certifies tJiat
NUl11her of units._..::::::J _ 5
CAST LLC
Certificate No.
l{isha gurj'ein
Is Oie o'U.Jner of'I1iree ('Jfu[[y paidU1lits oftlie a6o-1.;e LLC
oufy on trw 6oof< ofthe LLC by trw fio{der hereofin
pnx()1f 01 6) {fury authurizea.Attonzey upon sun-I!m[e-r of tJiis
Cert!ficate proper{y endorsea.
rrfie total"llum6er unit.r: issued" 100.
C:4S1 .(' is the sUl'l.lidllB entity after the mCl;qer of
Computerjllidcd-Suracry fnClJrl'0ratu[(j)fll/J1 'wtll efts]
[f.C'.
In l1ht,WJS tfie LLC lias Ctwsed this certificate t.o 6e
.sig11l-'d- 6y its 11lllTUlBing
llJatea: 19, 2002

(Dr. (8, 1(p.rmll, <j"Wanagit1!J 'Mem.6er
KA-1824 KA-1824 KA-1824
Certificate [\0. ,-2__ Number or units_..:..--__
Punned under the laws of the State of New York
iVlEl\lIJFRSHfP CERTIF1CATE
(I1i.is Certificate certifies tliat
Jv1r. Lee gold6ers
l.s tlie (I'wner ofOne (l)_fu[ry paU{1/.nits ,1tJie '16ovc LLC
transjera6[e onfy on tlie 6ook, ofthe LLe 6ytlie Norder fiereof in
penon or 6y tfufy ,ultlinnzed./4tto'rney upon surrender o}- tJiis
Celtific:ate pr0l'erfy endorsed:
7Tre tota{number of u.nits issuedis .100.
C;;fS.l LLC z's tlie survh.'ing entity ,!fter the mel;qer
Computel InCOlporatcd'DljJ/;1. C/1SJ-u)idi C;t51
LLe.
In iWfiertwj; tl1e LLC Ilas caused- tliis certificate to he
by its manilHirlf{ 11le1ll6ef:
(J)r. (D. rl(armn... 'frlani1gil1B :w.em6er
KA-1825 KA-1825 KA-1825
h)m-icJ Imder the laws cf the State of New Ynrk
'llzis Certificate tli-at
JVIEMRERSHIP C:ERTIFIC.t\'fE
LLC
CASI
Lerl t!lC(Hc Ne. ,_1_'_ 01" units
-...:.-_-
:Mrs. :Marian 'KflrrOfl.
is the owner ofOne (1)fll[[y paidunits qfti,e ablY(Je LLC
trans./cla6{e 01l(Y on t1ie liook of tlU! LLC 6y tlie horder fiereo..f in
pt.lson or 6y did) il1lt!ion'zed";Hf:l
l
nury 1I1"l1/ surrmu(el' of tliis
Cert!fi.cate proper(v endorsed.
'11ic t,ot.alnumber of i.\sucais 100.
C)1S1 LEe is die surr;i'fJ;tl8 lmt-ity after the merger C),I
CompuUrj4id"ed-...\'urtJery InC01poratea(])/{J3!YI C;4.51
LLC
111C-lJit.ness fit/liereof, till' LLe has Cd used- tfiis cert!ficate to be
si.qIH.doijJI its
KA-1826 KA-1826 KA-1826
Formed LlllJer the laws of the St,lle of York
iVI 'El\tlIJERSHI peERTI ,Fl(' ArE
CA"ST' LLC
Number of units,_-:-.__ Certific<Hc No.
, 'T'h.t:s Cert!ficate certifies tfiat
9Y1.r. 5Wattfie'w (Barton 'RptJiman
Is tile C1XR.Q(VISIO:NjfL O'(.Vl1C-r ofOne (1)fully paiaunits of
tlie a.60'fit LLC trausfera6Ce O'llfy on the ofthe LLC 6y the
horae" fwreo.f person or 6y dufy autliorized)l ttorne_y UpOil
surrender oftliis Cert{{icatc proper(y endorsed.
The totllf llum6er of u.nits issued" is 100.
(:;151 LLC is tlie survivIIB entity after tlie merger of
Im:orporalet{iD}R/)1 (j151 'with C;151
LLC
In '1 Jlitness tne LC lia.J' caused" tliis certificate to be
sinned- 6J its managing mem6er.
KA-1827 KA-1827 KA-1827
Certificate No. _i.)_ Number of umts

j7
0nne
d wlder the laws of the Sutc of New York
Cf\SJ,"LLC
1\'1lVlli E.RSHIP C'ERTIFICArrE
'Ifiis CertifUate certifies t(tat
(Professor James Lee CoX
h' t lie pro'(JisioJlaf Q'f.')Tler ofOne (1)fully paiaunts tift lie

a6m'c LLC transjcra6fe 01lY on tile 6ook oftfi.e LLC 6y tlie Iiofder
(wreC!.fin persan or 6y dury authorized)lttorlll!)' upon surrcndCrof
(erttficate propcr{y endorsed.
7/1 tota[number ofunits issuelis 100,
C')4SJ LLC is tJie SUrfJiH:1l0 entity L!f"tcr the merger
Compul.er_:4.ideSU1:qcry IncOIpom.te,{(D!Bj/J Cft.Sf witn. CJl5.l
LLC.
In ''(i1!itrzess 'fIt/tiereof: tfie LLC has causeatfiis certificate to 6e
its IIllUla,qiflY mem6er:
(Dated: 19, 2002
KA-1828 KA-1828 KA-1828

12-2207 Karron v USA Certificate of Appealability Brief Appendix
78
Trial TRASCRIPT (Long)

Trial
Transcript

KA-1829 KA-1829 KA-1829
1
862ZKAR1
1 UNI TED STATES DI STRI CT COURT
1 SOUTHERN DI STRI CT OF NEWYORK
2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
2
3 UNI TED STATES OF AMERI CA, New Yor k, N. Y.
3
4 v. S2 07 CR 541 ( RPP)
4
5 DANI EL B. KARRON,
5
6 Def endant .
6
7 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
7
8
8 J une 2, 2008
9 9: 30 a. m.
9
10
10 Bef or e:
11
11 HON. ROBERT P. PATTERSON, J R. ,
12
12 Di st r i ct J udge
13
13
14 APPEARANCES
14
15 MI CHAEL J . GARCI A
15 Uni t ed St at es At t or ney f or t he
16 Sout her n Di st r i ct of New Yor k
16 BY: STEVEN KWOK
17 CHRI STI AN EVERDELL
17 Assi st ant Uni t ed St at es At t or neys
18
18 RUBI NSTEI N & COROZZO, LLP
19 At t or neys f or Def endant
19 BY: RONALD RUBI NSTEI N
20
20 Al so Pr esent : Rachel Ondr i k, U. S. Dept . of Commer ce
21 Ki r k Yamat ani , U. S. Dept . of Commer ce
22
23
24
25
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
KA-1830 KA-1830 KA-1830
2
862ZKAR1
1 THE DEPUTY CLERK: Al l r i se.
2 THE COURT: Pl ease be seat ed.
3 ( Case cal l ed)
4 THE DEPUTY CLERK: I s t he gover nment r eady i n t hi s
5 mat t er ?
6 MR. KWOK: Yes, we ar e, your Honor . St eve Kwok f or
7 t he gover nment . Wi t h me at counsel t abl e i s Chr i st i an
8 Ever del l - -
9 MR. EVERDELL: Good mor ni ng, your Honor .
10 MR. KWOK: - - our par al egal and t he speci al agent s.
11 THE COURT: Good mor ni ng.
12 THE DEPUTY CLERK: Def endant r eady i n t hi s mat t er ?
13 MR. RUBI NSTEI N: Def endant i s r eady, good mor ni ng,
14 your Honor .
15 THE COURT: Good mor ni ng.
16 MR. RUBI NSTEI N: Def endant i s al so r epr esent ed by Ron
17 Rubi nst ei n.
18 THE COURT: Good mor ni ng, Mr . Rubi nst ei n, and Mr .
19 Kar r on.
20 What i s t he Gover nment ' s pr oj ect i on of t he l engt h of
21 t hi s t r i al ?
22 MR. KWOK: The Gover nment expect s t o concl ude i t s case
23 wi t hi n a week.
24 THE COURT: What about t he def ense?
25 MR. RUBI NSTEI N: Your Honor , I woul d hope t hat t he
( 212) 805- 0300
KA-1831 KA-1831 KA-1831
3
862ZKAR1
1 def ense wi l l t ake mor e t han t hr ee days, but I don' t t hi nk t hat
2 t he gover nment has f act or ed i n t he pot ent i al cr oss- exami nat i on
3 of t hei r wi t nesses i n t hei r one week.
4 THE COURT: I don' t know how many wi t nesses you have,
5 Mr . Kwok.
6 MR. KWOK: Ri ght now we have seven wi t nesses, your
7 Honor .
8 THE COURT: The nat ur e of t hem?
9 MR. KWOK: We have t wo wi t nesses who wi l l be
10 t est i f yi ng about t he pr ogr amand t he r ul es gover ni ng t hat
11 pr ogr am. We have a gover nment wi t ness, an audi t or , who wi l l
12 demonst r at e t hat t he r ul es wer e br oken and demonst r at e how t he
13 money was i n f act spent . We have anot her wi t ness, anot her
14 audi t or account ant t hat t he def endant hi r ed t o conduct a audi t
15 of t he company' s books. And t he r emai ni ng wi t nesses wer e al l ,
16 at one t i me or anot her , t he def endant ' s company' s empl oyees who
17 woul d t est i f y as t o what happened and t he consi der at i ons t hey
18 had wi t h t he def endant about t hese var i ous t hi ngs t hat ar e i n
19 di sput e.
20 THE COURT: I see. Those wi l l be shor t wi t nesses, I
21 pr esume. And t he - -
22 MR. KWOK: I bel i eve t hey woul d be shor t .
23 THE COURT: The account i ng may be l ong.
24 MR. KWOK: Maybe sl i ght l y l onger . But we have t r i ed
25 our best , and we wi l l cont i nue t o t r y t o st r eaml i ne t he
( 212) 805- 0300
KA-1832 KA-1832 KA-1832
4
862ZKAR1
1 pr esent at i on of evi dence.
2 THE COURT: Wel l , f r omt he - - I was wonder i ng af t er
3 Fr i day when I got not i ce of t he exper t wi t nesses, whet her some
4 of t he f act s coul dn' t be st i pul at ed. Mr . Rubi nst ei n.
5 MR. RUBI NSTEI N: I was t hi nki ng of t hat mysel f af t er I
6 r ecei ved t he Gover nment ' s l et t er of May 13t h. I t seemed t o me
7 t hat i t may wel l be t hat we can st i pul at e, because i t doesn' t
8 sound l i ke t he i ssue as f r amed by t he Gover nment ' s r esponse on
9 May 30t h i s, basi cal l y, we' r e not cont est i ng t hat t hi s can be
10 done. We' r e sayi ng t hat because i t wasn' t agr eed by t he
11 pr ogr am, NI ST or ATP t hat , t her ef or e, i t ' s not al l owabl e.
12 THE COURT: Ther e ar e t wo pr ongs, as I under st ood i t ,
13 and I haven' t r ead t he 3500 mat er i al - - I see i t ' s f our
14 vol umes, whi ch i s a l i t t l e daunt i ng.
15 But t he t wo i ssues t hat I ' mr asi ng; one, t hey' r e
16 mai nt ai ni ng t hat t her e has t o be a wr i t t en benef i t pr ogr am,
17 and, as I under st and i t , t hey' r e unawar e of any wr i t t en benef i t
18 pr ogr am.
19 Now, secondl y t hey' r e sayi ng t hat t he gr ant di d not
20 pr ovi de f or i t s f unds t o be expended i n t hi s way. Of cour se
21 t hat woul d i nvol ve t hei r pr ovi ng t hat gr ant f unds wer e used as
22 opposed t o CASI ' s f unds, whi ch r ai ses t he quest i on about how I
23 char ge t hi s mat t er .
24 MR. RUBI NSTEI N: Wel l , your Honor , our posi t i on i s
25 t hat al t hough t he quest i on i sn' t - -
( 212) 805- 0300
KA-1833 KA-1833 KA-1833
5
862ZKAR1
1 THE COURT: Appar ent l y t her e' s no quest i on t hat t he
2 f unds wer e expended i n cer t ai n, i n a cer t ai n f ashi on. Some of
3 t he f unds wer e. I n ot her wor ds, I gat her t hat f r omt he nat ur e
4 of t he def ense, t hat t he exper t s who t est i f y, t hat you' r e
5 pr of f er i ng, woul d t est i f y t hat , I guess, but t hese f unds wer e
6 expended i n t hi s way, but i t ' s per f ect l y appr opr i at e f or t hem
7 t o be expended i n t hi s way i n vi ew of t he, t he l aw per t ai ni ng
8 t o caf et er i a pl ans. That ' s sor t of what I t hought t he def ense
9 was.
10 MR. RUBI NSTEI N: Yes, your Honor . The def ense i s ver y
11 si mpl y t hat Dr . Kar r on had no i nt ent t o do anyt hi ng - - t o do
12 anyt hi ng t hat r i ses t o t he l evel of cr i mi nal r esponsi bi l i t y.
13 And t hat t he f act t hat t her e wasn' t a, quot e, wr i t t en pl an i n
14 pl ace i s not r eal l y r el evant on t he i ssue of i nt ent . I t goes
15 t o t he i ssue of i nt ent , al l r i ght , and t he quest i on i s t hat , as
16 t he gover nment seems t o concede, t hat t hese ki nd of f r i nge
17 benef i t s under ot her ci r cumst ances mi ght be bona f i de i f we
18 coul d wor k out a st i pul at i on on t hat , t hen t her e' s no need f or
19 t he exper t wi t nesses. The quest i on t hen comes whet her or not
20 spendi ng t hat money f or t hese f r i nge benef i t s wi t hout a wr i t t en
21 pl an i s a quest i on f or t he j ur y, whet her i t r i ses t o t he l evel
22 of cr i mi nal act i vi t y.
23 So t he r eason I was goi ng t o cal l Mr . Sapi n and Mi ss
24 LeCl ai r , was t o est abl i sh t he bona f i de of t he expense i t sel f
25 because t her e ar e peopl e who may not t hi nk t hat cer t ai n medi cal
( 212) 805- 0300
KA-1834 KA-1834 KA-1834
6
862ZKAR1
1 expenses shoul d be r ei mbur sed by t he empl oyer , but i n f act
2 t hese ki nd of medi cal expenses ar e r ei mbur sed by empl oyer s i n
3 cer t ai n f i el ds, and my exper t s i nf or mme Mi cr osof t per mi t s
4 t hese ki nd of expenses, and so t hat ' s t he i ssue - - t hat ' s our
5 i ssue. I f t hey' r e not - -
6 THE COURT: That t hen r ai ses a quest i on - - t her e ar e
7 t wo quest i ons i nvol ved. One, as I see i t , one was whet her or
8 not t he - - i t i nvol ves, i n par t , what f unds wer e used; wer e
9 t hey gr ant f unds or wer e t hey t he cor por at e cr edi t f or t hese
10 expenses. I f t he cor por at i on coul d af f or d t hese expenses wi t h,
11 or bor r owed f or t hese expenses, t hen t hat ' s - - your def ense i s
12 t hat , okay, maybe t her e wasn' t a wr i t t en pl an. But t hat goes
13 t o hi s i nt ent .
14 The second i ssue i s whet her or not gr ant f unds wer e
15 used, and i f t he gover nment can pr ove t hat gr ant f unds wer e
16 used f or t hese expenses, and t hat i t vi ol at ed t he t er ms of t he
17 gr ant , t hen t he quest i on of t he def endant ' s i nt ent wi t h r espect
18 t o t he gr ant f unds i s t he i ssue, whet her i t was r easonabl e f or
19 hi munder t he ci r cumst ances t o bel i eve he coul d expend gr ant
20 f r omt he moni es f or t hi s pur pose. That ' s a separ at e i ssue f r om
21 whet her or not t he def endant t hought t hat compani es of t en
22 cover ed peopl e f or ext r aor di nar y expenses of t hi s sor t under a
23 caf et er i a under t hei r pl ans and, t her ef or e, what I ' mdoi ng i s
24 per f ect l y al l r i ght as f ar as i t goes as a company expendi t ur e.
25 Now, maybe I ' m- - maybe my anal ysi s i s wr ong, but i t
( 212) 805- 0300
KA-1835 KA-1835 KA-1835
7
862ZKAR1
1 seems t o me t hat t hat ' s t he way i t br eaks down; whet her t hat
2 was a r easonabl e bel i ef on hi s par t t hat he coul d go ahead and
3 do i t because he hear d t hat ot her compani es di d t hat . That ' s a
4 separ at e i ssue f r omgoi ng t o hi s i nt ent and t he i ssue of t he
5 gr ant moni es bei ng r easonabl e, a r easonabl e bel i ef t hat t he
6 gr ant moni es coul d be spent f or t he pur pose. I don' t know how
7 t he pr oof s go, but t hose ar e t he t wo i ssues t hat ar e bei ng
8 r ai sed and shoul d be separ at el y addr essed.
9 Mr . Kwok woul d l i ke t o t al k?
10 MR. KWOK: No, I t hi nk your Honor i s exact l y r i ght .
11 We poi nt ed out i n our l et t er of May 30t h, we don' t r eal l y
12 concede anyt hi ng. We j ust t hi nk t hat i t ' s besi de t he poi nt . I
13 don' t know what caf et er i a pl ans adopt ed by ot her compani es say.
14 We si mpl y t ake t he posi t i on t hat i t ' s i r r el evant i n t hi s case,
15 because t he gover nment wi l l pr ove t hat t he medi cal expenses
16 wer e expended usi ng gr ant f unds. And what ot her compani es
17 mi ght have done i n cor por at e Amer i ca si mpl y has no bear i ng on
18 t he f act s at i ssue i n t hi s case.
19 THE COURT: Wel l , t hat ' s what t he - - i f t hat ' s what
20 t he Gover nment ' s pr oof wi l l be, and t hat ' s what t he
21 Gover nment ' s goi ng t o pr oceed i n t he case, t hen we go back t o
22 t he or i gi nal ar r ai gnment , or i gi nal i ndi ct ment and whet her we
23 have t o - - t hi s mor ni ng we' ve got t o ar r ai gn t he def endant on
24 t he second - - t he pr oposed super sedi ng i ndi ct ment .
25 But i t seems t o me t he pr oposed super sedi ng i ndi ct ment
( 212) 805- 0300
KA-1836 KA-1836 KA-1836
8
862ZKAR1
1 means t hat t he Cour t shoul d onl y r equi r e t hat CASI f unds wer e
2 used; wher eas as I r ead t he or i gi nal i ndi ct ment , and a mor e
3 r est r i ct i ve r eadi ng was i nvol ved and t her e t he gover nment had
4 t o pr ove t hat gr ant f unds wer e used f or i mpr oper pur poses.
5 MR. KWOK: I see.
6 THE COURT: You see my di st i nct i on.
7 MR. KWOK: I see your di st i nct i on, your Honor , and
8 t hat ' s why we went t o super sede t he i ndi ct ment because we want
9 t o pr eser ve t he l egal - -
10 THE COURT: You want t o have i t bot h ways. But now - -
11 MR. KWOK: And I t hi nk we ar e ent i t l ed t o ar gue i t
12 bot h ways t o t he j ur y. Not onl y i s t her e no - -
13 THE COURT: I f you' r e goi ng t o ar gue i t bot h ways t o
14 t he j ur y, t hen I t hi nk Mr . Rubi nst ei n may be - - maybe, I ' mnot
15 sur e, but may be ent i t l ed t hen t o r ai se t he i ssue of t hi s
16 i nt ent i ssue t hr ough t hese exper t wi t nesses by pr oof , t hat
17 ot her compani es i n f act do t hi s and t hat t her e ar e - - i t ' s a
18 r easonabl e bel i ef on hi s par t t hat company f unds coul d be spent
19 f or t hi s way.
20 MR. KWOK: I mean, your Honor , t he gover nment ' s
21 concer n i s t hat even what ever t her e may be any sl i ght
22 evi dent i ar y val ue t o t hat t ype of t est i mony, we bel i eve t hat
23 under Rul e 403 i t shoul d not be admi t t ed si mpl y because t he
24 r i sk of unf ai r pr ej udi ce t o t he gover nment , and conf usi on of
25 t he i ssues i s so gr eat . As Mr . Rubi nst ei n j ust pr of f er ed now,
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1 t hat wi t ness wi l l be t est i f yi ng most l y about , you know, i ssues
2 concer ni ng t r ansgender peopl e, whi ch we do not i nt end t o f ocus
3 on at t hi s t r i al . And our f ear i s t hat shoul d t hose t est i mony,
4 whi ch i s on i t s f ace i s i r r el evant , come i n, t hat i s what t hi s
5 t r i al may be i nvol vi ng t o, and we si mpl y have no i nt er est i n
6 pr ol ongi ng t hi s t r i al t o t al k about al l t hese ot her t hi ngs.
7 THE COURT: As l ong as t he - - I ' ve got t o be - - you
8 sai d pr ej udi ce t o t he gover nment , but I ' ve got t o t hi nk about
9 pr ej udi ce t o t he def ense. I f you' r e goi ng t o have t he br oader
10 case wi t h t wo pr ongs, t hen I may f eel t hat i n f ai r ness t o t he
11 def ense, t hey have t o be ent i t l ed t o pr esent t hei r def ense t o
12 t hat second pr ong. And so t hat ' s t he hor ns of t he di l emma you
13 put t he Cour t i n.
14 ( Pause)
15 MR. KWOK: Your Honor , j ust so we' r e cl ear about our
16 opt i ons t hat we ar e l ooki ng at , i s your Honor st i l l goi ng t o be
17 i ncl i ned t o char ge t he j ur y about t he absence of a t r aci ng
18 r equi r ement i f we now t el l you t hat we ar e not - - we' r e si mpl y
19 goi ng t o ar gue t hat CASI f unds ar e al l f eder al f unds, but ,
20 nonet hel ess, when i t comes t i me f or t he j ur y char ge, woul d t hat
21 l egal i nst r uct i on st i l l be i ncl uded i n t he char ge t o t he j ur y?
22 THE COURT: J ust t he CASI f unds?
23 MR. KWOK: That somet hi ng t o t he ef f ect of , t o sat i sf y
24 t he el ement of pr ovi ng $5, 000 or mor e of mi sspent money, t he
25 gover nment does not need t o t r ace t he amount t hat i t ' s - -
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1 THE COURT: I t hi nk you do have t o pr ove t he t r ace - -
2 I don' t t hi nk you have t o t r ace t he amount , but I t hi nk you
3 have t o show t hat t he expendi t ur e was made by usi ng t hose
4 f unds.
5 MR. KWOK: Can I have a moment your Honor ?
6 ( Pause)
7 MR. KWOK: Your Honor , we don' t want t o gi ve up on our
8 l egal poi nt . So i f t he def ense i s i ncl i ned because of t he way
9 r equest t o char ge i s wor ded now t o br i ng i n t hese exper t s, we
10 st i l l st and on our obj ect i ons, but we ar e under st and your
11 Honor ' s posi t i on.
12 THE COURT: Then we bet t er ar r ai gn t he def endant on
13 t he super sedi ng i ndi ct ment . Do we have a copy of i t , Rober t ?
14 He st epped out . Maybe I have i t , S2?
15 MR. RUBI NSTEI N: I have a copy.
16 THE COURT: Al l r i ght .
17 MR. RUBI NSTEI N: Does t he Cour t need one, your Honor ?
18 THE COURT: I ' l l ar r ai gn t he def endant at t hi s t i me.
19 I s t hat conveni ent ? I have a copy.
20 MR. RUBI NSTEI N: Oh, f i ne.
21 THE COURT: Dani el B. Kar r on - - Mr . Rubi nst ei n, have
22 you seen a copy of t he super sedi ng i ndi ct ment char gi ng t he
23 def endant wi t h st eal i ng $5, 000 of pr oper t y of CASI , whi l e CASI
24 was a r eci pi ent of f eder al gr ant of mor e t han $10, 000 i n a
25 si ngl e year ?
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1 MR. RUBI NSTEI N: Yes, your Honor .
2 THE COURT: And have you di scussed t he super sedi ng
3 i ndi ct ment wi t h your cl i ent ?
4 MR. RUBI NSTEI N: I have, your Honor .
5 THE COURT: You wi sh t o have t he super sedi ng
6 i ndi ct ment r ead t o t he def endant ?
7 MR. RUBI NSTEI N: No, your Honor . We wai ve f or mal
8 r eadi ng of t he super sedi ng i ndi ct ment S2, and def endant ent er s
9 a pl ea of not gui l t y, your Honor .
10 THE COURT: Mr . Kar r on, have you seen a copy of t he
11 super sedi ng i ndi ct ment char gi ng you wi t h st eal i ng $5, 000 or
12 mor e of pr oper t y f r omCASI dur i ng t he per i od t hat i t was
13 r ecei vi ng a $10, 000 gr ant or gr ant i n excess of $10, 000 f r om
14 t he f eder al gover nment ?
15 THE DEFENDANT: Yes, I have, your Honor .
16 THE COURT: And have you di scussed t he super sedi ng
17 i ndi ct ment wi t h Mr . Rubi nst ei n?
18 THE DEFENDANT: Yes, I have, your Honor .
19 THE COURT: Do you wi sh t o have t he super sedi ng
20 i ndi ct ment r ead t o you at t hi s t i me?
21 THE DEFENDANT: No, your Honor .
22 THE COURT: And woul d you l i ke a pl ea of not gui l t y
23 ent er ed i n your behal f at t hi s t i me?
24 THE DEFENDANT: Yes, your Honor .
25 THE COURT: Pl ea of not gui l t y wi l l be ent er ed on
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1 behal f of t he def endant , Dani el B. Kar r on. Al l r i ght .
2 Now, t he next t hi ng I t hi nk I shoul d br i ng up i s t hat
3 wi t h r espect t o t he voi r di r e, I have - - I t hi nk I ' ve i ncl uded
4 i n t he voi r di r e al l t he quest i ons t he gover nment r equest ed,
5 and I have al l t he quest i ons t hat t he def ense has r equest ed,
6 except I ' ve had a l i t t l e t r oubl e wi t h t he phr aseol ogy of one of
7 Mr . Rubi nst ei n' s r equest s, whi ch was a r equest t hat , as
8 f ol l ows: Can you r espect an i ndi vi dual ' s bel i ef t hat he or she
9 was bor n t he wr ong gender ?
10 I have t r oubl e wi t h r espect as wor di ng t hat quest i on.
11 I r ephr ased i t t o say. Can you t r eat , wi t hout bi as or
12 pr ej udi ce, any wi t ness or def endant who st at es t hat he or she
13 bel i eves he or she was bor n of t he wr ong gender .
14 MR. RUBI NSTEI N: That ' s accept abl e, your Honor .
16 MR. RUBI NSTEI N: That ' s f i ne.
18 MR. RUBI NSTEI N: I di d have one addi t i onal - -
19 THE COURT: I t seemed t o me r espect was not r eal l y a
20 t he pr oper quest i on.
21 MR. RUBI NSTEI N: I agr ee.
22 THE COURT: Whet her t her e woul d be any bi as or
23 pr ej udi ce - -
24 MR. RUBI NSTEI N: Yes.
25 THE COURT: - - wi t h r espect t o a per son of t hat sor t .
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1 MR. RUBI NSTEI N: I was wonder i ng i f we shoul dn' t , i n
2 vi ew of t he f act t her e' s appar ent l y goi ng t o be vol umi nous
3 f i nanci al r ecor ds or at l east f i nanci al r ecor ds submi t t ed t o
4 t he j ur y i n t hi s case, whet her or not you shoul d i nqui r e as t o
5 t he j ur or s i f t he case i nvol ves a l ot of number s or somet hi ng,
6 i s t hat goi ng t o pr esent a pr obl em.
7 THE COURT: Wel l , t hat ' s a good quest i on. Ar e t her e
8 goi ng t o be si gni f i cant f i nanci al r ecor ds?
9 MR. KWOK: Ther e ar e a l ot of r ecor ds, a l ot of
10 f i nanci al r ecor ds i n t he under l yi ng case, but our wi t nesses
11 wi l l t est i f y t o summar y char t s and r ecor ds t hat t hey' ve
12 pr epar ed i n t he cour se of anal yzi ng t hose r ecor ds. So our hope
13 i s t hat when t hese wi t nesses t est i f y, i t wi l l come acr oss i n a
14 ver y ver y si mpl e st r ai ght f or war d manner about what t hey
15 exact l y di d.
16 THE COURT: What about t he j ur y wi l l have a quest i on
17 of whet her t he summar y char t s, et cet er a, accur at el y r ef l ect
18 t he under l yi ng r ecor ds.
19 MR. KWOK: I guess t hat coul d be a subj ect f or Mr .
20 Rubi nst ei n' s cr oss- exami nat i on. But our posi t i on i s t hat i t i s
21 ver y si mpl e. I t ' s essent i al l y not hi ng mor e t han dat a ent r y and
22 t hen addi ng up t he number s and cr eat i ng some char t s t o see
23 wher e t he money went . I don' t bel i eve t hat f i nanci al
24 sophi st i cat i on of any ki nd i s r eal l y necessar y t o be qual i f i ed
25 as a j ur or i n t hi s case.
( 212) 805- 0300
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1 THE COURT: Wel l , t hat ' s why I asked t he quest i on
2 about st i pul at i on, because i t seemed t o me t hat a st i pul at i on
3 t hat t he par t i es know what t he r ecor ds ar e, and i f we coul d
4 get - - t he i ssue i s whet her t hey wer e pr oper expendi t ur es or
5 not .
6 MR. KWOK: I bel i eve we - -
7 THE COURT: But coul dn' t t he par t i es ent er i nt o a
8 st i pul at i on wi t h r espect t o t he f act t hat t hese expendi t ur es
9 wer e made?
10 That woul d el i mi nat e t he f i nanci al , a l ot of f i nanci al
11 r ecor ds bei ng put i nt o bef or e t he j ur y, who coul d - - t o
12 det er mi ne whet her or not t he summar i es accur at el y r ef l ect t he
13 under l yi ng r ecor ds.
14 MR. KWOK: Your Honor , we have sent over a pr oposed
15 st i pul at i on t o - -
16 THE COURT: Why don' t you t al k t o Mr . Rubi nst ei n now.
17 I don' t want t o get i nt o t hat . I was j ust t r yi ng t o see i f - -
18 MR. RUBI NSTEI N: Ther e' s - - we have cer t ai n pr obl ems
19 wi t h t hei r ver si on of f i nanci al r ecor ds. That ' s why we
20 haven' t - - t her e' s one st i pul at i on out st andi ng t hat we ar e
21 st i l l t r yi ng t o wor k out . Because, f r ankl y, J udge, i t ' s a ver y
22 unusual si t uat i on t hat t he gover nment does not have a gener al
23 l edger , and so - -
24 THE COURT: Who has t he gener al l edger , no one?
25 MR. RUBI NSTEI N: We' ve cr eat ed one r ecent l y of f
( 212) 805- 0300
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1 document s t hat we have, but - - i n ot her wor ds, t hey' r e goi ng t o
2 have wi t nesses t est i f yi ng as t o what t hey cal l summar i es, but
3 t he quest i on i s goi ng t o be, what i s t he basi s f or t he summar y
4 and wher e i s - - wher e ar e t he r ecor ds t hat t hese summar i es wer e
5 based upon, so t hat a - - and t hat , dependi ng on t hose
6 wi t nesses' t est i mony, wi l l det er mi ne what t he def ense - -
7 THE COURT: I woul d' ve t hought t hat t hose quest i ons
8 coul d be l i ned up pr et r i al .
9 MR. RUBI NSTEI N: We t r i ed t o, J udge, but we kept
10 aski ng f or - -
11 THE COURT: Because you have t he si t uat i on wher e t he
12 comput er s wer e - - r ecor ds wer e. So I don' t know how t o
13 descr i be i t , unusual .
14 MR. RUBI NSTEI N: That ' s a ki nd way t o descr i be i t ,
15 your Honor . 19 t er abyt es of i nf or mat i on i s ki nd of
16 ext r aor di nar y, but appar ent l y t hese comput er s t hat account ant s
17 have have t hei r own pr ogr ams t hat t hey i nser t and what have
18 you. But t her e ar e i ssues as t o t hese r ecor ds. So f ar we
19 haven' t been abl e t o r esol ve i t . We' r e st i l l wor ki ng on i t .
20 THE COURT: Wel l , i s t her e any di sput e t hat t he
21 cer t ai n f unds wer e expended f or cer t ai n pur poses? I t seems t o
22 me t hat t hat ought t o be abl e t o be, t o be st i pul at ed. I f
23 t her e wer e t hese cost s, t hey have t o be pai d f or by somebody,
24 and t her e ought t o be ent r i es showi ng t hat t hose expenses wer e
25 made and t hat woul d put an end t o i t . I t doesn' t mat t er - - I
( 212) 805- 0300
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1 don' t under st and why t hat can' t be st i pul at ed t o and get
2 t hr ough t hi s t r i al .
3 MR. KWOK: We woul d def i ni t el y wel come t hat
4 st i pul at i on. I woul d di r ect - -
5 THE COURT: I f get i nt o a mount ai n, t hat ' s possi bl e,
6 of f i nanci al r ecor ds, t her e i s a possi bl e j ur y det er mi nat i on
7 t hat t hey' l l make t he deci si on based on t he mount ai n of
8 f i nanci al r ecor ds and not based on any par t i cul ar anal ysi s of
9 i t . So i t seems t o me t hat i t ' s - - i f moni es wer e expended f or
10 a cer t ai n pur pose, t hat i t t o be cl ear t hat t hey wer e t o bot h
11 par t i es t hat t hey wer e expended f or t hose pur poses.
12 MR. RUBI NSTEI N: J udge, I know a l ot of peopl e t hi nk,
13 and I guess a l ot of my col l eagues on t he def ense si de t hi nk
14 t hat conf usi on i s good f or t he def ense.
15 THE COURT: Okay.
16 MR. RUBI NSTEI N: But I don' t . I ' mnot - - I ' mnot an
17 advocat e of t hat .
18 THE COURT: Wel l - -
19 MR. RUBI NSTEI N: Al l r i ght . I f t he gover nment gi ves
20 me - -
21 THE COURT: I t hi nk i t somet i mes pr ej udi ces t he
22 def ense.
23 MR. RUBI NSTEI N: Par don?
24 THE COURT: I t hi nk i t somet i mes pr ej udi ces t he
25 def ense, but - -
( 212) 805- 0300
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1 MR. RUBI NSTEI N: I f t he gover nment gi ves me what
2 checks and what have you, t hat t hey' r e cl ai mi ng wer e aut hor ed
3 and t hat ar e i mpr oper , and t hey squar e wi t h my r ecor ds of what
4 has been aut hor ed at t hi s poi nt , I assur e you we wi l l do
5 ever yt hi ng we can t o wor k i t out .
6 THE COURT: Okay.
7 MR. KWOK: I woul d - -
8 THE COURT: How l ong i s t he t r i al goi ng t o t ake?
10 MR. KWOK: I t hi nk t he gover nment has al r eady pr ovi ded
11 t hese mat er i al s. I di r ect t he def ense' s at t ent i on t o
12 gover nment exhi bi t s 110 t o 115. Those ar e, essent i al l y, t he
13 summar i es and spr ead sheet s and char t s t hat we cont i nued t o
14 el i ci t f r omt he wi t ness. I f t he def ense i s wi l l i ng t o
15 st i pul at e t o t hat , we wel come t hat ver y much, and I t hi nk i t
16 woul d shor t en t he t r i al dr ast i cal l y.
17 THE COURT: Wer e t he payment s made, Mr . Kwok, by
18 check?
19 MR. KWOK: They wer e.
20 THE COURT: Or wer e t hey made by el ect r oni c payment s?
21 MR. KWOK: They wer e made by var i et y of means,
22 i ncl udi ng wr i t t en checks, i ncl udi ng el ect r oni c t r ansmi t t al s,
23 i ncl udi ng an Amer i can Expr ess car ds. We have pr ovi ded al l
24 t hose under l yi ng r ecor ds. And t he exhi bi t s t hat I j ust
25 ment i oned ar e summar i es of ever y l i ne i t emof t hose ent r i es.
( 212) 805- 0300
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1 And i t al so shows wher e t he money came f r om, how t he
2 out st andi ng bal ances wer e pai d. And i f t he def ense woul d l ook
3 at t hat and compar e t hose and do a spot check of t he under l yi ng
4 r ecor ds, and so t hat t hey have conf i dence t hat we f ai r l y and
5 accur at el y capt ur ed t he r aw dat a, agai n, we woul d ver y much
6 wel come t hat st i pul at i on.
7 MR. RUBI NSTEI N: I ' l l l ook at i t , J udge. But I t hi nk
8 what t hey' r e mi ssi ng i s t hat t hey t hey' r e goi ng on t he
9 assumpt i on t hat ever y penny t hat CASI spent was money t hat t hey
10 r ecei ved f r omt he f eder al gover nment pur suant t o t hi s ATP
11 gr ant , and t hat ' s j ust not accur at e. So I ' l l l ook at t hose
12 r ecor ds, J udge, dur i ng t he br eak bet ween now and when t he j ur y
13 get s up, i f we have a br eak. And I have t hemi n t he back. I
14 have bi g books.
15 THE COURT: Wel l , t hen, Mr . Rubi nst ei n i s aski ng f or
16 t hr ee al t er nat es, because he t hi nks i t ' s goi ng t o go t hr ee
17 weeks.
18 MR. KWOK: We have no obj ect i on t o t hat . I don' t - - I
19 hope i t doesn' t t ake t hr ee weeks, but we have no obj ect i on.
20 THE COURT: I don' t want t o t el l t he j ur y i t ' s goi ng
21 t o t ake t hr ee weeks, but I f eel t hat I ' l l have t o t el l t hemi t
22 mi ght . We' r e i n J une, t hat ' s gr aduat i on per i od, and we' r e
23 goi ng t o l ose j ur or s f or t hat r eason.
24 MR. RUBI NSTEI N: Lot s of weddi ngs, your Honor .
25 THE COURT: What ?
( 212) 805- 0300
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1 MR. RUBI NSTEI N: Lot s of weddi ngs.
2 THE COURT: Lot s of weddi ngs and l ot s of gr aduat i ons.
3 Do we have a j ur y?
4 THE DEPUTY CLERK: Not yet . They' r e st i l l downst ai r s.
5 MR. RUBI NSTEI N: Your Honor , t her e' s t wo ot her mat t er s
6 I ' d l i ke t o addr ess wi t h t he Cour t .
7 THE COURT: Yes.
8 MR. RUBI NSTEI N: Fi r st , t he manner i n whi ch t o r ef er
9 t o Dr . Kar r on dur i ng t he cour se of t he t r i al . He has been
10 i ndi ct ed as Dani el B. Kar r on, and act ual l y t hat was - - he
11 doesn' t r eal l y go by t hat name any l onger . I was t hi nki ng t hat
12 possi bl y cal l hi mDr . D. B. Kar r on, because I j ust i nt end t o
13 r ef er t o hi mas Dr . Kar r on, per sonal l y.
14 THE COURT: He' s a Ph. D. , i s t hat r i ght ?
16 MR. KWOK: We have no obj ect i on. We' l l t r y t o r ef er
17 t o hi mas Dr . Kar r on as wel l .
19 MR. RUBI NSTEI N: Your Honor , t he l ast mat t er r ef er s t o
20 a subpoena t hat t he gover nment has ser ved on def ense, and I
21 woul d ask your Honor t o quash t hi s subpoena, 17C subpoena.
22 THE COURT: And t he gr ounds?
23 MR. RUBI NSTEI N: Yes, your Honor ; t hat t he gover nment
24 must est abl i sh under Rul e 16C t hat t he mat er i al t hey ar e
25 seeki ng ar e r el evant , admi ssi bl e and speci f i cal l y i dent i f i ed.
( 212) 805- 0300
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1 By t hi s def i ni t i on, t hey can not use t hi s subpoena as an end
2 r un ar ound Rul e 16.
3 Mor eover , i t i s evi dent f r omt he nat ur e of t he
4 subpoena, whi ch i s condi t i onal t he def endant t est i f yi ng.
5 THE COURT: I ' msor r y?
6 MR. RUBI NSTEI N: Whi ch i s condi t i onal i f t he def endant
7 t est i f i es, t hat t he gover nment i s seeki ng i mpeachment mat er i al .
8 And I submi t t hat t hi s i s absol ut el y pr ohi bi t ed on t he use of
9 Rul e 17C subpoena f or i mpeachment pur poses. And I ci t e U. S.
10 ver sus Wei ssman, 2002 West l aw, 31857510 - - 31857510, Sout her n
11 Di st r i ct of New Yor k case.
12 THE COURT: 318?
13 MR. RUBI NSTEI N: 575.
14 THE COURT: Feder al Suppl ement , 575?
15 MR. RUBI NSTEI N: I t ' s West l aw, your Honor .
16 THE COURT: Oh, I ' m- - W- e- i - s- m- a- n?
17 MR. RUBI NSTEI N: I t ' s W- e- i - s- s- m- a- n.
18 THE COURT: I bet t er get t he ci t e agai n because I ' m
19 used t o Feder al - -
20 MR. RUBI NSTEI N: I ' l l gi ve i t t o you. The J udge
21 was - -
22 THE COURT: 1990?
23 MR. RUBI NSTEI N: BSJ , December 26, 2002. I ' l l gi ve
24 you - -
25 THE COURT: BSJ , Bar bar a J ones.
( 212) 805- 0300
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1 MR. RUBI NSTEI N: Rober t .
2 THE DEPUTY CLERK: Thank you.
3 THE COURT: You got a copy?
4 Wel l , as I r ead t he case, you' r e r el yi ng on Mr . , t he
5 J ones, Bar bar a J ones case. She was deal i ng wi t h a si t uat i on
6 wher e t he def endant sought t o obt ai n t he r ecor ds of a t hi r d
7 par t y pr i or t o t r i al , t hi r d par t y bei ng not - - not t he
8 def endant ' s r ecor ds. So why i s i t r el evant t o t hi s case, Mr .
9 Rubi nst ei n?
10 MR. RUBI NSTEI N: Wel l , i t shows t hat t hey' r e j ust not
11 ent i t l ed t o r ecor ds f or cr oss- exami nat i on pur poses. You know,
12 we al so have t he pot ent i al of a f i f t h amendment i ssue. I never
13 saw a def endant bei ng subpoenaed t o get t he def endant ' s
14 per sonal r ecor ds and t ax r et ur ns. I mean, t hey have t he
15 abi l i t y t o get t ax r et ur ns.
16 THE COURT: Wel l , t hi s subpoena i s onl y t o t ake pl ace
17 i n t he event t hat t he def endant t akes t he st and. Now, I don' t
18 know whet her - - I don' t see t he - - I ' l l t ake f ur t her br i ef i ng
19 on i t , but I don' t t he Bar bar a J ones deci si on her e deal s wi t h
20 t hi s si t uat i on. Thi s was t o use i n cr oss- exami nat i on, as I
21 under st ood i t , subpoena i n t he event . So I need some, I need
22 some memor andumsuppor t i ng your mot i on t o quash, Mr .
23 Rubi nst ei n, and t he gover nment can r epl y. You can gi ve t hat t o
24 me i n t he next day or so.
25 MR. RUBI NSTEI N: Fi ne, your Honor .
( 212) 805- 0300
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1 THE COURT: Okay, anyt hi ng el se t o t ake up?
2 MR. RUBI NSTEI N: Yes, your Honor . I j ust want t o
3 submi t t o your Honor - - I hope i t ' s l egi bl e enough, and some of
4 t hese ar e dupl i cat e names what t he gover nment has i ndi cat ed
5 mi ght be r el evant names t hat wi l l come up.
6 THE COURT: Oh, yeah, we bet t er have t he names of
7 peopl e who wi l l t est i f y.
8 MR. RUBI NSTEI N: Let me check t he t wo so I coul d cr oss
9 out my l i st so you don' t have t o - -
10 THE COURT: I don' t have t he Gover nment ' s l i st .
11 MR. KWOK: I have an ext r a copy. I bel i eve I handed
12 one t o your Deput y.
13 THE COURT: My cl er k? He' s not her e.
14 MR. KWOK: I can hand you my copy.
15 THE COURT: How woul d I know who t hese peopl e ar e? I n
16 ot her wor ds, some of t hese names ar e pr et t y pr et t y common, Mr .
17 Kwok. I need some i dent i f i cat i on f or t he j ur or s.
18 MR. KWOK: Whi ch names ar e you r ef er r i ng t o, your
19 Honor ?
20 THE COURT: Wel l , t her e' s a name - - number f i ve i s t he
21 per son named Far nswor t h, who i s a - - I don' t know wher e t hey
22 come f r omor wher e t hey' r e l ocat ed or anyt hi ng of t hi s sor t .
23 Ther e' s a pi t cher f or t he Yankees by t hat name and - - ki nd of
24 wi l d - - but I suppose he mi ght have a wi f e or somet hi ng, but
25 i t ' s not an uncommon name. Fel dman i s a pr et t y common name.
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1 MR. KWOK: I under st and, your Honor . I f we coul d
2 pr opose maki ng f ur t her i nqui r i es i f t hey answer af f i r mat i vel y
3 t o t hose, because I under st and - -
4 THE COURT: J ust wher e t hey l i ve. I mean, t hese
5 peopl e, t he j ur or s come f r omt he Sout her n Di st r i ct . I f t hese
6 peopl e l i ve i n Washi ngt on or somet hi ng l i ke t hat , t hen t hei r
7 concer ns wi l l be al l evi at ed. I f t hat per son i s a member of
8 such and such f ami l y t hat l i ves down t he st r eet , you know.
9 MR. KWOK: Sur e, we' l l t r y t o r ef i ne t he l i st f or your
10 Honor .
11 THE COURT: The j ur y shoul d be i n i n about f i ve
12 mi nut es, t en mi nut es. So l et ' s - - and I have t o go get a and
13 so l et ' s - - t r y and get t hemup her e ear l y. Somebody - - I need
14 some i dent i f i cat i on. We have some addr ess or somet hi ng of t hat
15 sor t , Mr - -
16 MR. RUBI NSTEI N: Yes, I ' l l gi ve you t he out - of - st at e
17 ones, your Honor .
18 THE COURT: Thi s l i st - - my Lor d, t hi s i s a l ong l i st .
19 MR. RUBI NSTEI N: The names ar e goi ng t o come up dur i ng
20 t he t r i al . They' r e not necessar i l y - - t hey' r e not al l
21 wi t nesses, J udge, but t hey' r e j ust names t hat ar e goi ng t o be
22 ment i oned, we bel i eve, dur i ng t he cour se of t he t est i mony. I
23 t hought t hat ' s one of t he t hi ngs t hat t he Cour t want ed.
24 THE COURT: Wel l , I see one i s a pl umbi ng company so.
25 The Fi nanci al I nst i t ut e of St andar ds and Technol ogy i n
( 212) 805- 0300
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1 Washi ngt on?
2 MR. KWOK: Gat er sbur g, Mar yl and.
3 THE COURT: Ti a Lor r ai ne.
4 MR. KWOK: That we don' t know. We got t hat name f r om
5 one of t he e- mai l s t he def ense pr oduced.
6 THE COURT: Okay. What amI goi ng t o do about your
7 l i st , Mr . Rubi nst ei n?
8 MR. RUBI NSTEI N: Wel l f or out - of - st at er s, your
9 Honor - -
10 THE COURT: I mean Dunn Levy i s a ver y common name.
12 THE COURT: Dunn Levy and Levi n Mason, ver y common
13 names.
14 MR. RUBI NSTEI N: Dunn Levy i s a bookkeeper f r omNew
15 Yor k.
16 THE COURT: Mur phy i s a common name, but t hat ' s got
17 some i dent i f i cat i on her e. J ohn Mason, Mi l l er , Ross.
18 MR. RUBI NSTEI N: Mi l l er i s an at t or ney, your Honor .
19 THE COURT: I n New Yor k?
21 THE COURT: Maybe I ought t o gi ve you t he l i st and put
22 some addr ess on i t .
23 MR. RUBI NSTEI N: Okay. Mur phy i s a pr of essor .
24 THE COURT: I ' l l gi ve you back t he l i st so you can - -
25 MR. RUBI NSTEI N: Okay.
( 212) 805- 0300
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1 THE COURT: The j ur y' s her e.
2 Why don' t I gi ve t hi s t o you, Mr . Rubi nst ei n. You can
3 f i l l i t i n. We' l l get t he j ur y i n and send t hemt o - - i t ' s my
4 pr act i ce t o get t hemt o go t o t he men' s and l adi es' r oombef or e
5 we st ar t .
6 Maybe you ought t o do t he same.
7 THE COURT: Al l r i ght ? Br i ng t hemi n.
8 THE DEPUTY CLERK: J udge, i f t hey' r e goi ng t o use - -
9 i f counsel ar e goi ng use t he r est r oom, t hey' l l have t o use t he
10 r est r oomout si de because t he j ur or s ar e goi ng t o be usi ng t he
11 one i n her e.
12 MR. RUBI NSTEI N: You want us t o do t hat bef or e t hey
13 come i n?
14 THE DEPUTY CLERK: I don' t know.
15 THE COURT: What do you want t o do? You want t o use
16 t he r est r oomnow?
17 MR. RUBI NSTEI N: Yeah, but I guess I ' l l wai t t i l l t hey
18 al l wal k i n r at her t han col l i de wi t h t hem.
19 THE COURT: Al l r i ght . Okay. They' l l do i t af t er
20 t hey' ve st ar t ed usi ng t he r est r ooms, t hey' l l use t he one
21 out si de.
22 Don' t f or get t he bi ogr aphi cal mat er i al f or t hose
23 wi t nesses, Mr . Rubi nst ei n.
25 ( Recess)
( 212) 805- 0300
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1 ( A j ur y of 12 and 4 al t er nat es was chosen and swor n)
2 THE COURT: Mr . Mont eguedo has t o gi ve t hose j ur or s
3 sl i ps.
4 So, I wi l l gi ve you t hese st ar t i ng i nst r uct i ons,
5 because some of you may never have ser ved as j ur or s bef or e and
6 not know exact l y what t o expect , and al so some peopl e may not
7 have ser ved f or some t i me and coul d use a br ush- up on what j ur y
8 ser vi ce wi l l be l i ke i n t hi s case.
9 So, as I t ol d you t hi s mor ni ng, i n t he Amer i can syst em
10 of j ust i ce t he j udge and t he j ur y have separ at e r ol es. My j ob
11 i s t o i nst r uct you as t o t he l aw t hat gover ns or cont r ol s t he
12 case, and I wi l l gi ve you t hose i nst r uct i ons at t he end of t he
13 t r i al . Your j ob as j ur or s i s t o det er mi ne t he f act s based on
14 t he evi dence pr esent ed at t he t r i al .
15 You ar e t he onl y t r i er s of f act , and your deci si ons on
16 t he f act ual i ssues wi l l det er mi ne t he out come of t hi s l awsui t .
17 I want t o caut i on t hose of you t hat have wat ched TV
18 ver si ons of t r i al s not t o be di st r act ed i nt o at t empt i ng t o
19 eval uat e t he per f or mance of t he l awyer s i n t he cour t . I t i s
20 t he par t i es whose i nt er est wi l l be af f ect ed by t he out come of
21 t hi s t r i al , and your det er mi nat i on shoul d be based sol el y on
22 t he evi dence i n t hi s case.
23 You must pay cl ose at t ent i on t o al l t he evi dence
24 pr esent ed. Evi dence consi st s onl y of t he t est i mony of
25 wi t nesses, document s and ot her t hi ngs admi t t ed as evi dence or
( 212) 805- 0300
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1 agr eed t o by t he at t or neys.
2 Cer t ai n t hi ngs ar e not evi dence and must not be
3 consi der ed by you. I wi l l l i st t hemf or you now:
4 One, st at ement s, ar gument s and quest i ons by l awyer s
5 ar e not evi dence, nor ar e my own st at ement s t o you.
6 Two, obj ect i ons t o quest i ons ar e not evi dence.
7 Lawyer s have an obl i gat i on t o t hei r cl i ent t o make an obj ect i on
8 when t hey bel i eve evi dence bei ng of f er ed i s i mpr oper under t he
9 l aws of evi dence. You shoul d not be i nf l uenced by t he
10 obj ect i on or by t he cour t ' s r ul i ng on t hat .
11 I f t he obj ect i on i s sust ai ned, i gnor e t he quest i on and
12 any answer t hat has been gi ven. I f i t i s over r ul ed, t r eat t he
13 answer l i ke any ot her . I f you ar e i nst r uct ed t hat some i t emof
14 evi dence i s r ecei ved f or a l i mi t ed pur pose onl y, you must
15 f ol l ow t hat i nst r uct i on.
16 Thi r d, t est i mony of t he cour t i s excl uded. I t ol d you
17 t o di sr egar d t hat t est i mony, and i t must not be consi der ed.
18 Four t h, anyt hi ng you may have seen or hear d out si de of
19 t he cour t r oomi s not evi dence and must be di sr egar ded.
20 You ar e t o deci de t he case sol el y on t he evi dence
21 pr esent ed her e i n t he cour t r oom. I n deci di ng t he f act s of t he
22 case, you wi l l have t o deci de t he cr edi bi l i t y of t he wi t nesses,
23 t hat i s, how t r ut hf ul and bel i evabl e t hey ar e.
24 Now, how do you deci de what t o bel i eve and what not t o
25 bel i eve? Wel l , you ar e goi ng t o l i st en t o t he wi t nesses, wat ch
( 212) 805- 0300
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1 t hemand obser ve t hemand t hen deci de as you woul d deci de such
2 quest i ons i n your or di nar y l i f e. Di d t hey know what t hey wer e
3 t al ki ng about ? Wer e t hey candi d, honest , open and t r ut hf ul , or
4 di d t hey have a r eason t o f al si f y, exagger at e or di st or t t hei r
5 t est i mony? Somet i mes i t ' s not what a wi t ness says but how he
6 or she says i t t hat may gi ve you a cl ue as t o whet her or not t o
7 accept t hat wi t ness' s ver si on of an event or an i nci dent as
8 cr edi bl e and bel i evabl e. I n shor t , t he way a wi t ness t est i f i es
9 may pl ay an i mpor t ant par t i n your r eachi ng a j udgment as t o
10 whet her or not you can accept t he wi t ness' s t est i mony as
11 r el i abl e.
12 As t he t r i al pr oceeds, you may have i mpr essi ons of a
13 wi t ness, but you may not al l ow t hese i mpr essi ons t o become
14 f i xed or har dened, because i f you do, i n a sense you f or ecl ose
15 consi der at i on of t he t est i mony of ot her wi t nesses or ot her
16 evi dence t hat may be pr esent ed af t er t he wi t ness you hear d, and
17 t hat woul d be unf ai r t o one si de or t he ot her .
18 A case can be pr esent ed onl y st ep by st ep, wi t ness by
19 wi t ness, bef or e al l t he evi dence i s bef or e you.
20 We know f r omexper i ence t hat f r equent l y we wi l l hear a
21 per son gi ve hi s ver si on of an event whi ch sounds most
22 i mpr essi ve and even compel l i ng, and yet when we hear anot her
23 per son' s ver si on of t he same event , or even t he same wi t ness
24 cr oss exami ned wi t h r espect t o i t , what seemed t o be ver y
25 compel l i ng and i mpr essi ve may be compl et el y di ssi pat ed or
( 212) 805- 0300
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1 weakened. I amsi mpl y sayi ng or t r yi ng t o say t o you i n ver y
2 si mpl e t er ms: Remember t hat t her e may be anot her si de t o any
3 wi t ness' s t est i mony.
4 You wi l l use your common sense and good j udgment t o
5 eval uat e each wi t ness' s t est i mony based on al l of t he
6 ci r cumst ances.
7 I cannot emphasi ze t oo st r ongl y t hat you must keep an
8 open mi nd unt i l t he t r i al i s over . You shoul d not r each any
9 concl usi ons unt i l you have al l t he evi dence bef or e you. I n
10 or der t o ensur e t hat you deci de t he case onl y on t he evi dence
11 and ar e not i nf l uenced by anyt hi ng t hat mi ght occur out si de t he
12 cour t r oom, I must gi ve you a set of speci f i c i nst r uct i ons.
13 Fi r st , do not di scuss t hi s case amongst your sel ves or
14 wi t h any ot her per son. You wi l l have t he oppor t uni t y and
15 i ndeed t he dut y t o di scuss t he case amongst your sel ves af t er
16 al l t he evi dence i s i n and t he case i s gi ven t o you t o di scuss
17 and deci de i n t he j ur y r oom. Now l et me expl ai n t he r easons
18 f or t hat .
19 The r eason f or t hat r ul e i s, f i r st , i f you st ar t
20 di scussi ng i t bef or ehand, bef or e you have al l t he evi dence
21 bef or e you, you won' t have al l t he evi dence bef or e you, and you
22 ar e apt t o r each a pr ej udgment i nst ead of r eachi ng a bal anced
23 j udgment based on al l of t he evi dence. J ur y del i ber at i ons
24 cont empl at e t hat t hose conf er ences wi l l t ake pl ace af t er t r i al
25 when al l of you ar e assembl ed i n t he j ur y r oomsi t t i ng ar ound
( 212) 805- 0300
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1 t he t abl e, each of you exchangi ng vi ews and what have you, and
2 each of you l i st ens t o t he ot her s, and t hat ' s t he way t he j ur y
3 del i ber at i on i s supposed t o be conduct ed.
4 I f you st ar t havi ng conf er ences bef or e al l t he
5 evi dence i s i n, t he chances ar e you won' t have ever yone ar ound
6 t he r oomor si t t i ng ar ound t he t abl e di scussi ng t hat i ssue but ,
7 r at her , you onl y have a f ew of you. Fur t her mor e, t her ef or e t he
8 ot her peopl e woul d be excl uded f r omt he del i ber at i on and
9 woul dn' t be abl e t o exchange t hei r vi ews. Fur t her mor e, you
10 woul dn' t have al l of t he evi dence bef or e you. So, t he r ul e i s
11 you shoul d not di scuss t he case unt i l t he case has been
12 compl et ed.
13 Next , you ar e not t o r ead anyt hi ng i n t he newspaper s
14 or el sewher e about t hi s case i f t hat shoul d occur . Now, I
15 don' t t hi nk t hat t hat ' s goi ng t o occur , but what somet i mes
16 occur s i s t hat t her e ar e ar t i cl es i n t he newspaper t hat bear on
17 a case and t hat ar e not di r ect l y r el evant but t hey have some
18 r el evance. The t r oubl e wi t h vi ewi ng t hat or r eadi ng t hose
19 ar t i cl es i f t hey seemt o bear on t he case, i s t hat you ar e
20 obl i ged t o t el l me t hat you have r ead somet hi ng t hat bear s on
21 i t , and t hen I have t o conduct what i s cal l ed a t ai nt i ng
22 hear i ng, and what I have t o do i s make sur e t hat t hi s out si de
23 bi t of newspaper or what you saw on t el evi si on di dn' t t ai nt
24 you, i n ot her wor ds, cause you t o be l ess t han f ai r and
25 i mpar t i al i n t he case, and t hat you by r ecount i ng what you saw
( 212) 805- 0300
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1 on t el evi si on or r ead on t he r adi o di dn' t t ai nt t he ot her
2 j ur or s. So, I have been t hr ough a case i n whi ch i t t ook al most
3 hal f a mor ni ng t o conduct a t ai nt hear i ng, and no j ur y needs
4 t hat . That ' s an ext r a day of ser vi ce, and you have bet t er
5 t hi ngs t o do. You ar e al l gi vi ng up your t i me. So, don' t r ead
6 anyt hi ng t hat bear s on t he case. J ust don' t do i t . I t j ust
7 means t hat we wi l l have t o have a t ai nt hear i ng, and t hat ' s
8 t i me.
9 Next , you ar e not t o al l ow anyone t o speak t o you
10 about t hi s case. I f you ar e appr oached by anyone t o speak
11 about t he case, pol i t el y t el l t hemt hat t he j udge has di r ect ed
12 you not t o do so. I f any per son seeks t o cont act you about t he
13 case, you ar e r equi r ed t o r epor t t he i nci dent pr ompt l y t o me.
14 Al so, be sur e t hat I ami nf or med i f any per son t hat
15 you know comes i nt o t he cour t r oom. Now t hi s i s a publ i c t r i al ,
16 and i t ' s per f ect l y appr opr i at e t hat t hey come i nt o t he
17 cour t r oom, but i t i s i mpor t ant t hat you do not hear f r omyour
18 f r i end what may have happened i n t he cour t whi l e t he j ur y was
19 not pr esent . I f you shoul d see a f r i end or r el at i ve come i nt o
20 t he cour t , pl ease send a not e t o me t hr ough t he cl er k at your
21 f i r st oppor t uni t y, and t hen I can t ake st eps t o make sur e t hat
22 t hey don' t hear somet hi ng t hat coul d possi bl y be r el at ed t o you
23 and t ai nt t he j ur y.
24 The at t or neys, t he par t i es and t he wi t nesses ar e not
25 supposed t o t al k t o t he j ur y out si de t he cour t r oom, even t o
( 212) 805- 0300
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1 of f er a f r i endl y gr eet i ng, and t he j ur y i s not supposed t o t al k
2 t o t hem. So, i f you happen t o see any of t hemout si de t he
3 cour t r oom, t hey wi l l not and shoul d not speak t o you. Pl ease
4 t ake no of f ense at t hi s; t hey wi l l onl y be act i ng pr oper l y and
5 pr of essi onal l y by not doi ng so.
6 Fi nal l y, l et me say a f ew wor ds about t r i al pr ocedur e.
7 Fi r st , t he l awyer s have t he oppor t uni t y t o make openi ng
8 st at ement s t o you, and t hey wi l l do t hat shor t l y. These
9 st at ement s ar e not evi dence. They ser ve no pur pose ot her t han
10 t o gi ve you an i dea i n advance of t he evi dence what t he l awyer s
11 expect you t o hear f r omt he wi t nesses. These st at ement s al l ow
12 t he l awyer s t o gi ve you a pr evi ew of what t hi s case i s al l
13 about , but t he onl y evi dence wi l l come f r omt he wi t nesses and
14 t he exhi bi t s.
15 Now, af t er t he openi ng st at ement s you wi l l hear t he
16 t est i mony of t he wi t nesses. The gover nment ' s wi t nesses go
17 f i r st . Each wi t ness wi l l f i r st gi ve di r ect t est i mony. Then he
18 may be cr oss- exami ned by t he ot her si de. Somet i mes t her e i s
19 r edi r ect t est i mony and r ecr oss exami nat i on. Al so, exhi bi t s and
20 st i pul at i ons of f act may be r ecei ved i nt o evi dence.
21 Fol l owi ng t he gover nment ' s case, t he def endant may i f
22 he wi shes pr esent wi t nesses and ot her evi dence. Those
23 wi t nesses, i f t he def endant chooses t o pr esent wi t nesses, wi l l
24 be exami ned and cr oss- exami ned j ust as t he gover nment ' s
25 wi t nesses wer e. I f t he def endant chooses t o pr esent evi dence,
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1 i t ' s possi bl e t hat t he gover nment woul d t hen pr esent some
2 r ebut t al t o t hat evi dence.
3 And af t er al l t he evi dence has been r ecei ved, t he
4 l awyer s t hen have an oppor t uni t y t o sumup. They may r evi ew
5 t he evi dence and make ar gument s t o you as t o what concl usi ons
6 t hey t hi nk you shoul d or shoul d not dr aw f r omt he evi dence.
7 These ar gument s al so ar e not t hemsel ves evi dence, but t hey may
8 be hel pf ul t o you i n r evi ewi ng t he evi dence dur i ng your
9 del i ber at i ons.
10 Af t er t hese ar gument s, or summat i ons as t hey ar e
11 cal l ed, I wi l l gi ve you det ai l ed i nst r uct i ons as t o t he l aw
12 t hat appl i es and cont r ol s i n t hi s case, and you must f ol l ow my
13 i nst r uct i on. Then you wi l l go t o t he j ur y r oomt o del i ber at e
14 and di scuss t he evi dence i n or der t o deci de t he f act s and
15 r ender a ver di ct .
16 Al l r i ght . We wi l l now begi n wi t h t he gover nment ' s
17 openi ng st at ement . Mr . Ever del l .
18 MR. EVERDELL: Thank you, your Honor .
19 Ladi es and gent l emen, t he def endant , Dr . D. B. Kar r on
20 cheat ed t he gover nment out of hundr eds of t housands of dol l ar s.
21 I n 2001 t he def endant got what many sci ent i st s can onl y hope t o
22 get . He was gi ven a $2 mi l l i on gr ant f r omt he f eder al
23 gover nment t o conduct hi s sci ent i f i c r esear ch, $2 mi l l i on of
24 t axpayer money, and t he onl y t hi ng t hat t he gover nment r equi r ed
25 i n r et ur n f or t hi s money was t hat t he def endant spend i t on one
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8627KAR2 Openi ng - Mr . Ever del l
1 t hi ng and one t hi ng onl y: Hi s r esear ch, not hi ng el se.
2 But t he evi dence wi l l show t hat i nst ead of put t i ng
3 t hat money t owar ds hi s r esear ch, t he def endant chose t o spend
4 much of t hat money on hi msel f . For over a year and a hal f t he
5 def endant used t he gr ant money as hi s own per sonal pi ggy bank
6 t o pay f or per sonal expenses l i ke meal s at r est aur ant s,
7 el ect r oni c gadget s l i ke a GPS t r acki ng devi ce and a di gi t al
8 camer a, even a bl ender and shoe r ack f or hi s apar t ment , and he
9 bought al l t hese t hi ngs even t hough he was al r eady payi ng
10 hi msel f $175, 000 i n sal ar y out of t he gr ant f unds. And when
11 sever al di f f er ent peopl e t ol d t he def endant on mul t i pl e
12 occasi ons t hat he coul d not use t he gr ant money t o pay f or
13 t hese sor t s of t hi ngs t hat he want ed t o pay f or , t he def endant
14 i gnor ed t hemand di d i t anyway and i n t he end mi sspent r oughl y
15 hal f a mi l l i on dol l ar s.
16 Ladi es and gent l emen, my name i s Chr i st i an Ever del l ,
17 and t oget her wi t h my col l eague St eve Kwok and case agent s
18 Rachel Ondr i k and Ki r k Yamat ani f r omt he Depar t ment of Commer ce
19 and par al egal Noha Moussa, we r epr esent t he gover nment i n t hi s
20 t r i al .
21 Now, i n t he cour se of t he next f ew days you wi l l hear
22 f r omsever al wi t nesses, and you wi l l see t he evi dence i n t hi s
23 case, and i f you have ever t aken par t i n a r eal l i f e t r i al , you
24 wi l l qui ckl y see t hat i t ' s not l i ke i t i s on TV. I t ' s not
25 goi ng t o be l i ke a TV show l i ke Law and Or der wher e t he
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1 wi t nesses come i n and t hey t el l t hei r st or y i n chr onol ogi cal
2 or der and i t ' s al l wr apped up neat l y i n an hour . I nst ead, t he
3 pr oof i s goi ng t o come t o you i n bi t s and pi eces, because each
4 wi t ness knows hi s or her own smal l por t i on of t he l ar ger
5 pi ct ur e of t hi s case. So, t hi s openi ng st at ement i s my chance
6 t o gi ve you an over vi ew, a r oad map, t hat I hope wi l l hel p you
7 under st and t he evi dence t hat ' s t o come.
8 So, what wi l l t he evi dence i n t hi s case show? You
9 wi l l l ear n t hat i n 2001 t he def endant and hi s company, Comput er
10 Ai ded Sur ger y, I ncor por at ed, or CASI , appl i ed f or and r ecei ved
11 a $2 mi l l i on gr ant f r omt he f eder al gover nment t o pay f or hi s
12 r esear ch i n comput er i magi ng. Now, t hi s par t i cul ar gr ant was
13 supposed t o l ast f or t hr ee year s, wi t h t he $2 mi l l i on bei ng
14 di sbur sed i n i nst al l ment s over t hat t hr ee- year t i me per i od.
15 As you mi ght expect , wi t h such a l ar ge amount of
16 t axpayer money i nvol ved i n t hi s ki nd of gr ant , t he f eder al
17 gover nment has cer t ai n r ul es t hat t he r eci pi ent must f ol l ow
18 when he r ecei ves t hi s ki nd of money and what he can spend t he
19 money on. You wi l l hear what t hose r ul es ar e, but t he mai n
20 r ul e i s si mpl e and st r ai ght f or war d and i t ' s t hi s: You must
21 spent gr ant f unds on your r esear ch. That means t hat t he gr ant
22 money must be spent on t hi ngs t hat di r ect l y i mpact and f ur t her
23 t he r esear ch. The f unds cannot be used t o pay f or t hi ngs such
24 as r ent and ut i l i t i es f or your of f i ce space. Those cost s ar e
25 j ust t he cost of doi ng busi ness. Ever y company has t hose, and
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1 t hey ar e not cover ed under t he gr ant . And i t means t hat t he
2 f unds cannot be used t o pay f or per sonal expenses l i ke meal s or
3 per sonal debt s. Those ar e not r esear ch cost s, and t hey ar e not
4 cover ed ei t her . And you wi l l al so hear t hat i n or der t o keep
5 t r ack of t he gr ant money t he gover nment r equi r es t he gr ant
6 r eci pi ent t o submi t a budget t hat out l i nes what you ar e
7 spendi ng your gr ant money on. Al l t he cat egor i es of expenses
8 ar e l ai d out - - sal ar y, t r avel cost s, equi pment cost s - - and
9 agai n t he r ul e i s si mpl e, you must st i ck t o your budget . That
10 means i f you t el l t he gover nment you ar e goi ng t o spend t he
11 gr ant money f or cer t ai n t hi ngs, t hen you must spend t he gr ant
12 money f or t hose t hi ngs; and i f you want t o make any si gni f i cant
13 changes t o your budget , you must get appr oval i n wr i t i ng.
14 Now, t hose ar e t he r ul es i n a nut shel l , and t hey ar e
15 basi c, si mpl e and easy t o under st and, and you wi l l hear t hat
16 t hese r ul es wer e r epeat ed f or t he def endant on sever al
17 di f f er ent occasi ons by gr ant of f i ci al s. You wi l l al so hear
18 t hat t he def endant was gi ven t hese r ul es when he r ecei ved t he
19 gr ant and si gned a f or macknowl edgi ng t hat he under st ood t hose
20 r ul es, and you wi l l al so hear t hat t he def endant was t ol d t i me
21 and t i me agai n by gr ant of f i ci al s and by hi s own empl oyees t hat
22 he coul d not use t he gr ant f unds t o pay f or t he t hi ngs he
23 want ed t o pay f or . But t he evi dence wi l l show t hat t he
24 def endant r ef used t o l i st en t o t hemand went ahead and used t he
25 gr ant money as he want ed.
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1 And how di d he mi sspend t hi s money? Wel l , t o gi ve you
2 j ust one exampl e, l adi es and gent l emen, you wi l l hear t he
3 def endant set up hi s company, CASI , i n t he l i vi ng r oomof hi s
4 own apar t ment i n Mi dt own Manhat t an, and t he evi dence wi l l show
5 t hat when CASI r ecei ved i t s f i r st i nst al l ment of $150, 000 i n
6 gr ant f unds, t he f i r st t hi ng t he def endant di d was t r ansf er
7 $75, 000 of i t , hal f of i t , t o hi msel f and used i t t o pay f or
8 per sonal debt s l i ke hi s cr edi t car d bi l l s. And t hen he used
9 t hose same f unds t o pay hi msel f sever al t housand dol l ar s i n
10 r ent payment s f or CASI ' s use of hi s l i vi ng r oom, despi t e t he
11 f act t hat he was st i l l l i vi ng i n hi s apar t ment and despi t e t he
12 f act t hat he had been t ol d speci f i cal l y on mul t i pl e occasi ons
13 t hat r ent was not an al l owabl e expense under any ci r cumst ances.
14 The def endant ' s mi suse of t he gr ant f unds does not end
15 t her e. You wi l l al so hear t hat he used gr ant f unds t o pay f or
16 so- cal l ed equi pment , el ect r oni c gadget s l i ke a GPS t r acki ng
17 devi ce and a di gi t al camer a and househol d i t ems l i ke a bl ender
18 and shoe r ack, i t ems t hat had not hi ng what soever t o do wi t h hi s
19 r esear ch. And you wi l l hear t hat t he def endant used gr ant
20 f unds t o pay f or t housands of dol l ar s wor t h of dent al and ot her
21 cosmet i c medi cal pr ocedur es. And you wi l l al so hear about how
22 t he def endant adamant l y r esi st ed ef f or t s of ever yone ar ound hi m
23 t o convi nce hi mt hat he was spendi ng money on t hi ngs t hat
24 wer en' t al l owed and t o f i x what he had done bef or e.
25 For exampl e, you wi l l l ear n t hat t he def endant hi r ed a
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1 bookkeeper t o go t hr ough t he company' s books and r ecor ds i n
2 connect i on wi t h t he f i r st year audi t of hi s company, and when
3 t hat bookkeeper r ecl assi f i ed cer t ai n expenses and changed t hem
4 f r omgr ant expenses t o nongr ant expenses accor di ng t o t he
5 r ul es, t he def endant went back i nt o t he books and changed t hem
6 r i ght back agai n so t hat he coul d be sur e t hat gr ant f unds
7 coul d be used t o pay f or t hem.
8 The end r esul t of al l t hi s, l adi es and gent l emen, i s
9 t hat t he def endant has been char ged i n a one count i ndi ct ment
10 wi t h cr i me of mi sappl yi ng gover nment gr ant f unds.
11 So, how i s t he gover nment goi ng t o pr ove i t s case t o
12 you? Her e i s how:
13 You wi l l hear t est i mony f r omt wo of t he gover nment
14 of f i ci al s t hat wer e assi gned t o admi ni st er t he def endant ' s
15 gr ant , and t hey wi l l expl ai n t o you what t he r ul es of t he gr ant
16 ar e and whi ch expenses you can and cannot use gr ant f unds t o
17 pay f or . And t hey wi l l t el l you how t hey spoke t o t he
18 def endant on numer ous occasi ons bot h i n per son and on t he phone
19 and t ol d hi mover and over agai n t hat he coul d not use gr ant
20 f unds t o pay f or t hi ngs such as r ent and ut i l i t i es and ot her
21 nonal l owabl e expenses. And you wi l l hear f r omt wo audi t or s who
22 l ooked at t he company' s books, and t hey wi l l t el l you t hat when
23 t hey l ooked at t he company' s expenses and separ at ed out t he
24 expenses t hat wer e al l owabl e under t he gr ant f r omt he expenses
25 t hat wer e not al l owabl e under t he gr ant , t hey f ound t hat
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1 hundr eds of t housands of dol l ar s of gover nment money had been
2 spent on expenses t hat wer e ei t her not i n t he budget or wer e
3 unr el at ed t o t he r esear ch t hat t he gr ant was supposed t o f und.
4 And you wi l l al so hear f r omt hr ee peopl e who wor ked
5 f or t he def endant at CASI , hi s company. They wi l l t el l you
6 what i t was l i ke t o wor k wi t h t he def endant , how he r ef used t o
7 l i st en t o t hei r advi ce about what he coul d spend t he gr ant
8 money on, how he changed t he bookkeepi ng ent r i es i n t he CASI
9 books and r ecor ds t o make sur e t hat cer t ai n expenses wer e
10 cl assi f i ed as r esear ch- r el at ed expenses so t hat t hey coul d be
11 pai d f or wi t h gr ant f unds, and how he t ol d t hemhe t hought he
12 coul d do what he pl eased wi t h t he gr ant money.
13 Fi nal l y, you wi l l be seei ng a number of document s t hat
14 wi l l show you t he f r aud i n cl ear bl ack and whi t e. I n
15 par t i cul ar you wi l l see an anal ysi s of t he def endant ' s per sonal
16 bank account and t he bank account s of CASI , and you wi l l see
17 how vi r t ual l y 100 per cent of CASI ' s i ncome was f r omt he gr ant
18 f unds and how t hose f unds went t o pay f or al l of t he
19 nonal l owabl e expenses t hat I ment i oned bef or e.
20 Now, bef or e I si t down, l adi es and gent l emen, I woul d
21 l i ke you t o do t hr ee t hi ngs dur i ng t he cour se of t hi s t r i al :
22 Fi r st , pay cl ose at t ent i on t o what t he wi t nesses have
23 t o say, and pay cl ose at t ent i on t o t he exhi bi t s t hat ar e
24 i nt r oduced i nt o evi dence.
25 Second, l i st en ver y car ef ul l y t o J udge Pat t er son' s
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1 i nst r uct i ons on t he l aw and f ol l ow t hemcl osel y.
2 Thi r d, and most i mpor t ant l y, use your common sense,
3 t he same common sense t hat you use ever y day t o assess
4 si t uat i ons and eval uat e what peopl e t el l you. Your common
5 sense ser ves you ver y wel l i n t he out si de wor l d, and i t wi l l
6 al so hel p you do j ust i ce i n t hi s case.
7 The gover nment submi t s t hat i f you do t hose t hr ee
8 t hi ngs - - you pay cl ose at t ent i on t o t he evi dence, you l i st en
9 t o t he j udge and you use your common sense - - you wi l l make t he
10 onl y f i ndi ng t hat wi l l be consi st ent wi t h t he evi dence and t he
11 l aw: That t he def endant Dani el Kar r on i s gui l t y as char ged.
12 Thank you.
13 THE COURT: Thank you, Mr . Ever del l .
14 Mr . Rubi nst ei n?
15 MR. RUBI NSTEI N: Yes, your Honor . Thank you, J udge
16 Pat t er son. Ladi es and gent l emen of t he j ur y, l et me
17 r ei nt r oduce mysel f . My name i s Ron Rubi nst ei n. I r epr esent
18 t he def endant her e Dr . D. B. Kar r on.
19 You may ask your sel f why i s Ron Rubi nst ei n get t i ng up
20 her e t o gi ve an openi ng when J udge Pat t er son has t ol d us on a
21 number of occasi ons t hat t he def ense doesn' t have t o pr ove
22 anyt hi ng i n a cr i mi nal case, and t hat as Dr . Kar r on si t s over
23 t her e he i s pr esumed t o be i nnocent . And we cal l upon t he
24 gover nment t o pr ove t he al l egat i ons t hat t hey made i n t hei r
25 openi ng r emar ks. We cal l upon t hemt o pr ove beyond a
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8627KAR2 Openi ng - Mr . Rubi nst ei n
1 r easonabl e doubt . But I ' mgoi ng t o t el l you t hat t hey' r e not
2 goi ng t o even come cl ose t o beyond a r easonabl e doubt , because
3 you ar e goi ng t o f i nd what Dr . Kar r on i s and what he di d, and
4 you ar e goi ng t o ask your sel f at t he end of t he case why i s
5 t hi s per son si t t i ng her e i n t he f eder al cour t house bei ng
6 char ged wi t h t hi s ser i ous cr i me.
7 Dr . Kar r on r ecei ved hi s Ph. D i n 1992 f r omNew Yor k
8 Uni ver si t y. He was a vi si t i ng sci ent i st at New Yor k Uni ver si t y
9 af t er he gr aduat ed. He r ecei ved a f el l owshi p i n car di ac
10 sur ger y at New Yor k Uni ver si t y, i nvol ved i n car di ac i magi ng.
11 He r ecei ved a gr ant - - not a gr ant - - a cont r act f r oma f eder al
12 agency. You ar e goi ng t o hear a l ot of acr onyms. The f eder al
13 peopl e, ever yt hi ng i s l et t er s t hat t hey put t oget her , and he
14 r ecei ved a cont r act f r oma gover nment agency cal l ed BABR, and
15 t hat was i n 1999. Bef or e t hat he t aught at t he ci t y
16 uni ver si t i es. And when he r ecei ved hi s cont r act , he f or med a
17 cor por at i on cal l ed CASI , Comput er Ai ded Sur ger y, because t hat ' s
18 hi s speci al t y, usi ng comput er s t o ai d peopl e i n sur ger y.
19 He had t hi s company. He was an empl oyee of t hi s
20 company. Ever y penny he made he put i nt o CASI , and CASI woul d
21 pay hi ma sal ar y. What happened over t i me, af t er t hi s BABR
22 cont r act ended - - and t hat was f or a f ew hundr ed t housand
23 dol l ar s over t hr ee year s - - t hey ext ended i t . They have
24 di f f er ent phases, and t hey gave hi ma phase 1, and he pr oduced,
25 t hen t hey gave hi mphase 2 and t hen phase 3. What happened i s
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1 t hat CASI t he cor por at i on had l ean year s, and Dr . Kar r on l oaned
2 t he cor por at i on t hat he was a st ockhol der i n moni es over t he
3 per i od of t i me.
4 So, l o and behol d what happens i s he get s t hi s f eder al
5 gr ant . At t he t i me he get s t hi s f eder al gr ant f r omt he
6 Nat i onal I nst i t ut e of St andar ds and Technol ogy, under t he
7 advanced t echnol ogy pr ogr am, CASI , hi s cor por at i on t hat he i s
8 an empl oyee of , owes hi mi n excess of $100, 000. Now, you ar e
9 goi ng t o f i nd t hat he mi ght be a ver y good sci ent i st but he i s
10 not t he gr eat est manager i n t he wor l d. So, he get s t hi s money,
11 and he st ar t s payi ng back t he moni es t hat wer e owed t o hi mby
12 CASI cor por at i on f or t he per i od of t i me pr i or t o get t i ng t he
13 gr ant st ar t ed. He got hi s f i r st check on t he gr ant i n Oct ober
14 1, 2001, and i n or der t o get t hi s gr ant , he had t o submi t a
15 budget . He dr ew t he budget . He submi t t ed t he budget . The
16 budget cal l ed f or hi mi n t he f i r st year t o get $800, 000. The
17 budget cal l ed f or hi mt o get $175, 000 i n sal ar y. The budget
18 cal l ed f or f r i nge benef i t s of $110, 000 and ot her t hi ngs.
19 And what happened i s - - why di d NI ST gi ve hi mt hi s
20 money? NI ST you ar e goi ng t o l ear n i s a pr ogr amt hat gi ves out
21 $60 mi l l i on a year i n r ewar ds, i n gr ant s. They ar e f or
22 br oad- based economi c benef i t s. The concept s t hat t he
23 sci ent i st s pr esent t o NI ST, t o appl y and get t hese f unds, i s
24 t hat t he end r esul t of your r esear ch, even i f t hat ' s f i ve, t en
25 or 20 year s l at er , wi l l be commer ci al i zed i n t he mar ket pl ace
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1 and t her ef or e benef i t t he Uni t ed St at es by t hi s r esear ch. As a
2 mat t er of f act , t he way t he pr ogr amwor ks i s t hat even af t er
3 t he t hr ee year s and he devel ops a pr oduct , t hat 40 per cent of
4 t he t i me you ar e goi ng t o f i nd t hat t hese compani es t hat get
5 t hi s gr ant money devel op pr oduct s t hat ar e gr eat f or t hi s
6 count r y and gr eat f or man ki nd and 60 per cent f ai l . But t hat ' s
7 OK. That ' s OK. The end pr oduct , what ever Dr . Kar r on devel ops,
8 he i s ent i t l ed t o keep. The gover nment has no f i nanci al
9 i nt er est i n i t . They ar e i nt er est ed i n sci ent i st s doi ng t hi ngs
10 t hat ar e goi ng t o benef i t man ki nd f or t he next hundr ed year s.
11 That ' s t he gover nment pr ogr ami n t hi s ar ea.
12 So, one of t he mai n t hi ngs t o get t hese gr ant s - - and
13 t wo t hi r ds of t he gr ant s ar e gi ven t o smal l compani es, and Dr .
14 Kar r on' s company was a ver y, ver y smal l company - - t he gr ant
15 has t o be t he pr i or i t y of your company. You have t o be
16 devot i ng t he maj or i t y of your t i me t o t hi s pr ogr am. Thi s i s
17 i nnovat i ve and hi gh- r i sk t echnol ogy we ar e t al ki ng about , and
18 t he pr oj ect her e i s of nat i onal medi cal i mpor t ance, sci ent i f i c
19 and t echnol ogi cal mer i t of a di gi t al mor se t heor y based on - -
20 di gi t al mor se i s some mat hemat i cal t heor y t hat Dr . Kar r on wor ks
21 wi t h, and i t i s f or i magi ng based on ant i l ogi cal segment at i on
22 r egi st r at i on, r ever se engi neer i ng i n model i ng phenomenon f or
23 i mages. The concept i s i n t he end r esul t t hat t hr ough t he use
24 of comput er s i t ' s goi ng t o bet t er ai d i n di agnost i c t r eat ment
25 and pl anni ng so t hat i t wi l l be easi er f or doct or s t o oper at e
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1 and r emove - - one of t he i l l ust r at i ons i s cancer t umor s.
2 That ' s what t hi s pr oj ect i s cal l about . I wi l l t r y and say i t
3 i n a bet t er way. To devel op and demonst r at e novel comput er and
4 engi neer i ng t echnol ogy based on t he di gi t al mor se t heor y, t o
5 enhance t he qual i t y and usabi l i t y of comput er i zed anat omi c
6 model s f or pr eci se and accur at e cancer t r eat ment t her api es.
7 J ust t hi nk about i t , i t makes l i ke a map of an egg, wher e al l
8 t he whi t e i s i n one pl ace, t he yel l ow i s anot her pl ace, t he
9 yel l ow bei ng t he t umor i n a 3D f ashi on, and t hi s i s t he concept
10 t hat NI ST t hr ough t he ATP pr ogr amgave Dr . Kar r on a gr ant f or
11 $2 mi l l i on over t hr ee year s.
12 Now, t hi s i s hi gh t ech. I t ' s al so hi gh r i sk. And t he
13 gover nment gave Dr . Kar r on money t o make mi st akes, because
14 t hat ' s what sci ence i s. Sci ence i s exper i ment i ng. You make a
15 mi st ake, you t r y somet hi ng el se. And he, Dr . Kar r on, submi t s a
16 budget . They don' t di sappr ove hi s budget . They' r e gi vi ng
17 hi m- - t hey, NI ST, APD, ar e gi vi ng Mr . Kar r on' s company
18 $800, 000. He submi t s a budget . He has equi pment 300, 000, he
19 has empl oyees 300, 000. He has f r i nge benef i t s. And t hose ar e
20 r ound number s I ' musi ng r i ght now. But f r i nge benef i t s he has
21 $110, 000.
22 Thi s budget i s appr oved, and t he pr osecut i on her e
23 want s t o say t hat t hi s budget , anyt hi ng he spends di f f er ent
24 t han t hi s budget i s st eal i ng. And I submi t t o you t hat t hi s
25 budget i s a l i vi ng, br eat hi ng t hi ng, t hat t hi s budget i s
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1 amendabl e at any t i me, because as you ar e goi ng t hr ough sci ence
2 you f i nd out t hat , gee, I don' t need al l of t hese empl oyees, I
3 don' t have t o spend $100, 000 on t hi s f el l ow, I ' ma t eacher , I
4 wi l l get i nt er ns f or not hi ng, or $100 a week, and t hey wi l l
5 come and wor k, and I amgoi ng t o spend my money on equi pment .
6 Nobody i s goi ng t o come and t est i f y t hat Dr . Kar r on
7 di dn' t wor k si x, seven days a week, pr obabl y 80 t o 100 hour s a
8 week on t hi s pr oj ect . He wasn' t goi ng t o t he Bahamas or Ar uba
9 or anypl ace el se. He was l i vi ng t hi s pr oj ect , and he expect ed
10 t o get addi t i onal f undi ng f or t hi s concept . He was i n
11 negot i at i on wi t h t he St at e of New Yor k. Tr agi cal l y, as we al l
12 r emember , j ust pr i or t o Oct ober 1, 2001 when t hi s gr ant
13 st ar t ed, t hi s CASI gr ant st ar t ed, 9/ 11 happened, and t he st at e
14 of New Yor k cut back on t hei r f undi ng. They cut back on t hei r
15 f undi ng.
16 So, he get s t he money. And, by t he way, he i s
17 ent i t l ed - - you ar e goi ng t o f i nd out f r omt hese wi t nesses he
18 i s ent i t l ed t o t ake expenses t hat happened bef or e Oct ober 1.
19 He i s al l owed t o get st ar t - up pr egr ant money f or he st ar t s. He
20 i s al so al l owed t o cont r i but e hi s own equi pment , because t he
21 gr ant cal l s f or about a 5 per cent cof undi ng. I n ot her wor ds,
22 t he r eci pi ent has t o come up wi t h about f i ve per cent , whi ch i n
23 t hi s case i s i n t he nei ghbor hood of 35 or $36, 000.
24 And I st and her e and I t el l you t hat Dr . Kar r on i s
25 gui l t y of maki ng mi st akes, he i s gui l t y of not dot t i ng ever y I
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1 and cr ossi ng ever y T, he i s gui l t y of not f ol l owi ng t he
2 gui del i nes, and he i s gui l t y of not havi ng a manual i n pl ace.
3 But t hey ar e accusi ng hi mof i nt ent i onal l y mi susi ng f unds. He
4 di dn' t spend mor e t han t he money t hey gave hi m, and I submi t t o
5 you t hat t echni cal l y he may have mi sused t he f unds by
6 r edi r ect i ng moni es al l ocat ed t o per sonnel t o equi pment , but
7 t hi s benef i t ed t he pr oj ect . The concept I submi t t o you i s
8 what i s al l owed and what i s al l owabl e, and I say t o you
9 equi pment , pur chasi ng equi pment at a number hi gher t han what
10 you or i gi nal l y wer e budget ed f or , t hat you used i n t hi s
11 pr oj ect , i s al l owabl e, and t he def endant bel i eved t hat as l ong
12 as he gave r easonabl e use, t hat i t was OK because you coul d
13 amend t he budget .
14 So, her e i s Dr . Kar r on. CASI i s si t uat ed i n hi s
15 apar t ment . Hi s apar t ment becomes t he equi val ent of a comput er
16 l ab. Thei r agent s - - I amt aki ng i t out of t hei r agent ' s own
17 t est i mony, who came t o t hat apar t ment , and you woul d not cal l
18 i t an apar t ment . You woul d cal l i t a comput er l ab wher e he
19 l i ves. And he made r enovat i ons, because he had - - r emember ,
20 you ar e goi ng back t o 2001. The comput er s ar en' t as smal l as
21 t hey ar e t oday; t hey gener at e a l ot of heat ; t hey need t o be a
22 dust - f r ee at mospher e. Ther e i s al l ki nds of r enovat i ons t hat
23 go i n, and t he pur pose of t hose r enovat i ons ar e f or t he
24 sci ence, f or t he equi pment .
25 The gover nment i s sel ect i ve i n what expenses he made
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1 t hat t hey' r e compl ai ni ng about . And when t hey say t hat he i s
2 not al l owed t o spend money on r ent , wel l , t hat ' s i n t he
3 or di nar y cour se, t hat ' s i n t he r ul es, we concede t hat . But
4 t hey al so, t he gr ant admi ni st r at or s, coul d adj ust t he r ul es.
5 Because t he concept of r ent , as t he gover nment suggest ed i n
6 t hei r openi ng, i s t hat most compani es, t hey' r e doi ng di f f er ent
7 t hi ngs, so t he r ent , i t ' s har d t o at t r i but e r ent t o one
8 speci f i c t hi ng i f t hey ar e wor ki ng on t hr ee or f our pr oj ect s.
9 Her e CASI was wor ki ng on one pr oj ect . The el ect r i c ut i l i t i es
10 went up doubl e, we ar e goi ng t o show you, i n t he t i me t hat t he
11 gr ant was i n oper at i on.
12 And what di d Dr . Kar r on do? He di d ever yt hi ng he
13 coul d i n hi s power t o make t hi s pr oj ect wor k. And he hi r ed
14 account ant s. He hi r ed bookkeeper s, he hi r ed account ant s, and
15 he hi r ed an account ant who was pai d, Ms. Hayes. She i s t he
16 st ar gover nment wi t ness, hi s account ant , hi s account ant who
17 i mpr oper l y wor e t wo hat s because she al so became t he audi t or
18 f or t he pr oj ect , and she i s supposed t o be submi t t i ng t he audi t
19 budget , t he audi t , af t er t he f i r st year . Wel l , t he f i r st year
20 ended Sept ember 30, 2002. You know when Ms. Hayes got t hat
21 budget i n? I n J une of 2003. She got some ext ensi ons.
22 So, i n t he end Ms. Hayes, who was pai d by Dr . Kar r on,
23 was r eal l y not wor ki ng f or hi m, she was wor ki ng f or t he
24 gover nment .
25 And I submi t t o you you ar e goi ng t o f i nd out t hat bad
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1 audi t s ar e not cr i mi nal . Ther e ar e speci f i c l egi t i mat e
2 pat hways out l i ned i n t he r ul es t o r esol ve audi t pr obl ems
3 wi t hout maki ng i t cr i mi nal , and a gr ant r eci pi ent who i s
4 at t empt i ng t o r esol ve a di f f er ence of opi ni on may have
5 di f f er ent pr ocedur es. Dr . Kar r on says I ' ment i t l ed t o t hese
6 f r i nge benef i t s because al l of my empl oyees ar e ent i t l ed t o
7 t hese f r i nge benef i t s.
8 They want t o say he i s not ent i t l ed. They t al ked
9 about medi cal . Yes, t her e wer e speci f i c medi cal expenses, but
10 he has a r i ght t o negot i at e t hese t hi ngs ci vi l l y. And even i f
11 t hey don' t agr ee wi t h hi mci vi l l y, i t doesn' t mean t hat i t was
12 cr i mi nal . Because t he j udge i s goi ng t o t el l you what t he l aw
13 i s, and I amnot goi ng t o t r espass on hi s pr ovi nce, but you ar e
14 goi ng t o f i nd t hat Dr . Kar r on never i nt ended t o commi t a cr i me.
15 And what I ' mgoi ng t o show, what he di d i n hi s own convol ut ed
16 way i s goi ng t o pr ove t o you beyond a r easonabl e doubt t hat he
17 never i nt ended t o commi t a cr i me.
18 He had f our di f f er ent col or checks f or each di f f er ent
19 company t hat he had t hat was r el at ed t o t hi s. He t hen scanned
20 ever y si ngl e document , ever y si ngl e document he ever came i n
21 t ouch wi t h. He di dn' t hi de anyt hi ng. I cal l upon t hemt o
22 pr ove. They sai d i t , t hat he changed r ecor ds. He scanned
23 ever y si ngl e document he had, and t hey wer e i n t he comput er ,
24 and he hi d not hi ng, not hi ng. How do you st eal when you keep
25 r ecor ds? Thi s i s a ma and pa sci ence oper at i on st or e. I t ' s a
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1 ma and pa st or e. Thi s i s not I BM. Thi s i s not Xer ox,
2 Mi cr osof t . Thi s i s a smal l company t hat sel f i nsur es peopl e
3 f r omt he f i r st dol l ar , and t hey say - - and t hi s gr ant was
4 suspended. They di dn' t t er mi nat e t he gr ant . They suspended
5 i t . He bel i eves t hat t he gr ant i s goi ng t o get r est ar t ed,
6 because ever ybody knows t hat he i s maki ng pr ogr ess
7 sci ent i f i cal l y on t hi s gr ant . Al l t hei r wi t nesses ar e goi ng t o
8 say t hat , t hat he i s goi ng ahead and doi ng t hi ngs. So, when
9 t hey suspend t he gr ant , t hey t el l hi mt hat he i s $54, 000 shor t
10 on cof undi ng, hi s money t hat shoul d have been put i n by J une
11 27, 2003, a year and ni ne mont hs af t er t he gr ant i s gi ven,
12 cof unded. Dr . Kar r on says I di d cof und, I gave t he equi pment ,
13 I ' ment i t l ed t o an of f set f or t he equi pment t hat CASI had f r om
14 t he BARBR pr ogr amt hat we donat ed t o t hi s pr oj ect . But t he
15 gr ant i s suspended. And what does a per son i n busi ness do? He
16 goes and t akes a l oan on t he apar t ment , on a l i ne of cr edi t ,
17 and he put s $60, 000 i nt o CASI t o pay bi l l s and keep t he pr oj ect
18 goi ng, $60, 000 of hi s own money t hat he bor r owed f r omhi msel f .
19 And i t ' s not t he onl y t i me he bor r owed money f r omhi msel f t o
20 put i n t he CASI dur i ng t hi s gr ant per i od. And of cour se t he
21 gr ant peopl e say you wer en' t supposed t o do t hat , you wer e
22 supposed t o gi ve us t he 60, 000, so we ar e st i l l keepi ng you
23 suspended even t hough you ar e spendi ng t hi s 60, 000 on
24 gr ant - r el at ed i t ems, even t hough you ar e payi ng back bi l l s t hat
25 you i ncur r ed bef or e t he gr ant was suspended. He keeps goi ng
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1 wi t h t he pr oj ect because he bel i eves, hey, t hey' ve got t o keep
2 t he budget goi ng because I ' mwor ki ng har d and I ' mdoi ng
3 ever yt hi ng r i ght her e, and I have al l t he r ecor ds, and l et t he
4 account ant s deci de what i s r i ght or wr ong and t el l me.
5 Ms. Hayes act ual l y di d hi s per sonal t ax r et ur ns. I
6 mean t hey gave t hi s money t o Dr . Kar r on, a per son who hadn' t
7 pai d hi s t axes i n t hr ee year s. That ' s t he ki nd of manager he
8 i s, but he i s not a cr ook. He i s not a cr ook. And t hey t al k
9 about t he f r i nge benef i t s, and I submi t t o you t hat one of t he
10 mai n r easons t hey say t hat he t ook money t hat he wasn' t
11 ent i t l ed t o i s t hat he di dn' t have a manual t hat sai d what t he
12 f r i nge benef i t s ar e. Do you know who cr eat es t he manual ? Dr .
13 Kar r on does. Ther e i s not even a r evi ew syst emt o say we don' t
14 l i ke your manual , Dr . Kar r on, you can' t be havi ng dent al bi l l s
15 and per sonal sur ger y and what have you. No, i f we had i t
16 wr i t t en, i t woul d be OK. So, because i t wasn' t wr i t t en, he i s
17 a cr ook.
18 ( Cont i nued on next page)
19
20
21
22
23
24
25
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862ZKAR3 Openi ng - Mr . Rubi nst ei n
1 MR. RUBI NSTEI N: So t hat t el l s you how si gni f i cant t he
2 manual i s. And I submi t t o you t hat t her e came a t i me t hat he
3 di d st ar t . They di d pr epar e a manual . I t was af t er t he gr ant
4 was suspended, but t hey di d pr epar e a manual . And al l t he
5 i t ems, whi ch t he f r i nge benef i t s, t hey wer e budget ed f or
6 110, 000 a year , t hey spent l ess t han $110, 000 a year . Most of
7 t he empl oyees t hat Dr . Kar r on had, who wer e f ul l - t i me
8 empl oyees, wer e col l ege pr of essor s and peopl e at academi a who
9 had t hei r own heal t h i nsur ance. So t hey di dn' t need t he
10 benef i t . But i f someone needed t he benef i t , he gave chi l d car e
11 t o a bookkeeper .
12 They t al k about t he r ent . I submi t t o you t hat
13 doesn' t pr ove any cr i mi nal i t y. Most of t he r ent t hat was pai d
14 t o Dr . Kar r on was r ent t hat was due hi mpr i or t o t he gr ant .
15 They j ust di dn' t have t he money so t hey di dn' t , t hey di dn' t pay
16 i t .
17 And al so t her e' s l i t t l e quest i on t hat he coul d' ve
18 got t en per mi ssi on t o have t he r ent , because i t wasn' t what t hey
19 cal l an i ndi r ect expense any mor e, because i t was t he onl y
20 expense f or t hat pr oj ect . And t her e was no at t empt t o hi de
21 t hat t hese checks wer e wr i t t en f or r ent . I t ' s on t he memo of
22 t he checks. Does he i nt end t o commi t a cr i me i f he does t hat ?
23 Par t of t hi s $500, 000 t hey' r e t al ki ng about ar e on
24 sal ar i es, sal ar i es of ot her peopl e t hat t hey di sal l owed. The
25 gover nment or der , di sal l owed. Why? He had a manager , an
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1 oper at i ons manager . Fi r st year submi t t i ng a budget , Gur f ei n' s
2 maki ng $100, 000. He f i r es Gur f ei n. He hi r es somebody f or
3 30, 000, but t hey never appr oved t hi s per son. They di dn' t
4 di sappr ove t he per son. The per son has cr edent i al s. I t hi nk
5 he' s goi ng t o be a gover nment wi t ness. Bob Benedi ct has
6 cr edent i al s t hat you' r e goi ng t o say, t hi s i s t he ki nd of
7 per son you woul d want i nvol ved i n a gr ant l i ke t hi s f r omt he
8 busi ness st andpoi nt , but we di sal l ow i t ; t her ef or e, you st ol e
9 i t ' cause you gave i t t o Benedi ct t o be your manager .
10 They di sal l owed t hese sal ar i es r et r oact i vel y.
11 They t al k about t he l oan, $75, 000 l oan. As I sai d, he
12 had account ant s. Thi s was put on t he books as a l oan.
13 $75, 000. What happened? That was i n November , Oct ober or
14 November of 2001.
15 Bef or e t he year was out , i n August of 2002, t hey made
16 account i ng adj ust ment s wher e t hey char ged hi mand made t he l oan
17 and t he i ncome. So i t became par t of hi s sal ar y. The
18 account ant s sai d, t hi s i s your sal ar y. He t ook i t as sal ar y.
19 And you' r e goi ng t o f i nd t hat dur i ng t he cour se of t hi s gr ant
20 i n t he f i r st year he wasn' t t aki ng money. He di dn' t t ake hi s
21 f i r st paycheck - - st ar t ed Oct ober 1st , unt i l May, I t hi nk i t ' s
22 May 11t h, 2002. And t he account ant s had t o beg hi mt o t ake
23 mor e paychecks because he want ed t o make sur e t hat t her e was
24 money i n t he t i l l .
25 You' r e goi ng t o f i nd out f r omt he bookkeeper s, he
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1 woul d ask, how much money do we have i n t he bank. And he
2 di dn' t bounce any checks. When he got an account i ng ser vi ce,
3 bookkeepi ng ser vi ce, out si de payr ol l ser vi ce, al l ki nds of
4 checks st ar t ed t o bounce. He made sur e t hat t he t axes wer e
5 pai d. That ' s what he under st ood, t axes have t o be pai d. And
6 I ' mgoi ng t o pr ove t o you peopl e t hat he shoul dn' t have pai d
7 any t axes, because he had what ' s cal l ed a net oper at i ng l oss i n
8 CASI t hat he coul d wr i t e of f when he made a pr of i t . So now he
9 was goi ng t o make a pr of i t . What happened? The l awyer s and
10 t he account ant s t hat he has wi t h hi m, t hey deci de t o change t he
11 company f r omCASI , I nc. , I ncor por at ed, t o a CASI LLC. Wel l ,
12 unf or t unat el y, t echni cal l y, t echni cal l y when you do t hat , i t ' s
13 a new ent i t y. So because i t ' s a new ent i t y, he l oses t he
14 benef i t of t he car r yover l oss. So now he has t o pay i ncome t ax
15 on t he 175, 000 t hat he pr obabl y woul dn' t have t o pay a di me i f
16 t hey knew what t hey wer e doi ng.
17 But t hey' r e not cr i mi nal s ei t her . So j ust because you
18 make mi st akes, does not make you a cr i mi nal . And you' r e goi ng
19 t o f i nd at t he end of t hi s case, when I come back t o you af t er
20 t he gover nment pr esent s al l i t s wi t nesses, and we pr esent our
21 wi t nesses, you' r e goi ng t o say t o your sel f - - you mi ght not
22 even have t o l eave t he j ur y box t o say t hat t hi s man i s not
23 gui l t y. J ust keep an open mi nd, and I t hank you ver y much f or
24 your t i me.
25 THE COURT: Al l r i ght . Your f i r st wi t ness.
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1 Gover nment ' s f i r st wi t ness?
2 MR. KWOK: Gover nment cal l s Bet t i J oyce Li de. Wi t h
3 your Honor ' s per mi ssi on, we woul d l i ke t o hand out j ur y
4 bi nder s.
5 THE COURT: These ar e exhi bi t s t hat wi l l be admi t t ed
6 i n evi dence, you bel i eve?
7 MR. KWOK: That ' s cor r ect , your Honor .
8 THE COURT: Member s of t he j ur y, t he gover nment has
9 pr epar ed i ndi vi dual j ur y f ol der s whi ch cont ai n exhi bi t s t hey
10 expect t o have admi t t ed i n evi dence. I woul d al l ow t hemt o
11 di st r i but e t he i ndi vi dual books t o each of you, but you' r e not
12 t o l ook at any of t he exhi bi t s unt i l t hey' ve been admi t t ed i n
13 evi dence. So when t he t i me comes t hat I admi t somet hi ng i n
14 evi dence, t hen you ar e ent i t l ed t o l ook at t hat exhi bi t and
15 onl y t hat exhi bi t unt i l i t ' s admi t t ed, t i l l t he ot her exhi bi t s
16 ar e admi t t ed i n evi dence.
17 So wi t h t hat i nst r uct i on, I ' l l al l ow t he books t o be
18 di st r i but ed t o t he j ur y and t hey' l l be kept at your - - t hey' l l
19 be r eady f or you i n t he mor ni ng so you can check your book.
20 I don' t want t o t ake up t he t i me i n t he mor ni ng.
21 Whi l e t hey' r e di st r i but i ng t he book, I shoul d gi ve you
22 some i nst r uct i ons about t he t r i al day whi l e we' r e wai t i ng f or
23 t hi s wi t ness. I ' d l i ke t o begi n at 9: 30 i n t he mor ni ng and r un
24 unt i l 1: 00 o' cl ock wi t h a si ngl e br eak somet i me bet ween 11: 00
25 and 11: 30, 10 mi nut es. Then come back at 2: 00 af t er l unch and
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1 r un f r om2: 00 t i l l 4: 00 wi t hout a br eak. That way you had
2 chance t o get home bef or e t he eveni ng r ush. I f a j ur or - - i f a
3 wi t ness i s i n t he mi ddl e of somet hi ng or has t o get - - has
4 t r avel pl ans or somet hi ng of t hat sor t and i s near t he end of
5 t he t est i mony, I may l et t hemgo a l i t t l e l onger so t hey' r e
6 t hr ough f or t he day and don' t have t o spend an ext r a day i n a
7 ci t y t hat t hey' r e not r esi dent i n.
8 But t hose ar e t he gener al r ul es. Now, at t he end of
9 ever y day you' l l see peopl e come i nt o t he cour t r oom. They' r e
10 her e on ot her cases. I have ot her cases t hat go on af t er 4: 00
11 o' cl ock per i od. Don' t l et t hem- - don' t l et t hemi nt er f er e
12 wi t h your at t ent i on t o t he wi t nesses.
13 I bel i eve t hat t he gover nment has t hose books.
14 They' l l al so pr obabl y use t he scr een up her e, i sol at ed passages
15 f r omt he document s t hat ar e admi t t ed i n evi dence t o hi ghl i ght
16 t hemf or you.
17 Al l r i ght . Wi l l you swear i n t he wi t ness, pl ease.
18 THE DEPUTY CLERK: Pl ease st and and r ai se your r i ght
19 hand.
20 BETTI J OYCE LI DE,
21 cal l ed as a wi t ness by t he gover nment ,
22 havi ng been dul y swor n, t est i f i ed as f ol l ows:
23 DI RECT EXAMI NATI ON
24 BY MR. KWOK:
25 THE COURT: Al l r i ght , pl ease pr oceed, Mr . Kwok.
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862ZKAR3 Li de - di r ect
1 MR. KWOK: Thank you, your Honor .
2 Q. Good af t er noon, Ms. Li de.
3 A. Hi .
4 Q. How ar e you empl oyed?
5 A. I amwi t h t he Nat i onal I nst i t ut e of St andar ds and
6 Technol ogy, par t of t he U. S. Depar t ment of Commer ce.
7 Q. What i s your posi t i on now i n t hat ?
8 A. I amnow a physi cal sci ent i st i n t he i nf or mat i on t echnol ogy
9 l abor at or y.
10 Q. What was your posi t i on bef or e t hen?
11 A. I was wi t h t he advanced t echnol ogy pr ogr amser vi ng as
12 pr ogr ammanager and t he compet i t i ons manager .
13 Q. What i s t he advance t echnol ogy pr ogr am?
14 A. The advanced t echnol ogy pr ogr ami s a f undi ng agency, a
15 f undi ng par t of t he Nat i onal I nst i t ut e of St andar ds and
16 Technol ogy whi ch hel ps U. S. i ndust r y per f or mr esear ch t hat i s
17 t oo hi gh r i sk f or t he i ndust r y t o per f or mal one.
18 Q. You ment i oned you wer e a compet i t i ons manager ; what do you
19 do i n t hat capaci t y?
20 A. As compet i t i ons manager , I over saw t he r ecei pt of al l of
21 t he pr oposal s t o t hat pr ogr am, and t he eval uat i on of t hose
22 pr oposal s l eadi ng t o whi ch ones woul d r ecei ve f undi ng.
23 Q. Pr ogr ammanager , what di d you do i n t hat capaci t y?
24 A. As a pr ogr ammanager , I over saw t he t echni cal
25 commer ci al i zat i on pr ogr ess of each of t he pr oj ect s t hat I
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1 managed.
2 THE COURT: What year ar e we t al ki ng about ?
3 THE WI TNESS: We - - I st ar t ed wi t h t he advanced
4 t echnol ogy pr ogr amwhen i t began i n 1990, and I l ef t i t i n
5 2005.
6 Q. Ms. Li de, who ar e t he t ypi cal r eci pi ent s of t hi s advanced
7 t echnol ogy pr ogr amor ATP gr ant ?
8 A. The r eci pi ent s ar e U. S. i ndust r i es, and t hey can par t ner or
9 subcont r act t o uni ver si t i es and nonpr of i t s.
10 Q. How compet i t i ve i s t he sel ect i on pr ocess?
11 A. I t i s a ver y compet i t i ve pr ocess.
12 Q. Can you gi ve us a sense of how compet i t i ve i t i s?
13 A. Cer t ai nl y. Most compet i t i ons see onl y about one i n t en
14 pr oposal s bei ng gi ven an awar d.
15 Q. And what i s t he amount of t he gr ant awar ded t o each
16 successf ul appl i cant ?
17 A. A si ngl e appl i cant can r ecei ve a t ot al of $2 mi l l i on, and
18 t hat coul d be spr ead over anywher e f r omone t o t hr ee year s.
19 Q. And wher e does t hat money come f r om?
20 A. The money comes f r omt he f unds t hat t he U. S. Congr ess gi ves
21 t o t he Nat i onal I nst i t ut e of St andar ds and Technol ogy.
22 Q. How does t hat money get i nt o t he hands of t he successf ul
23 appl i cant ?
24 A. When t he appl i cant i s successf ul , t hat money i s put i nt o a
25 f und, basi cal l y, l i ke a bank account , agai nst whi ch t hat
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1 appl i cant can dr aw.
2 Q. Now what , i f anyt hi ng, does t he gr ant - -
3 THE COURT: I n whose i s name i s t he bank account ?
4 THE WI TNESS: I ' msor r y?
5 THE COURT: I n whose name i s t he bank account ?
6 THE WI TNESS: The bank account i s i n t he name of t he
7 f or pr of i t company. Thank you.
8 THE COURT: The f or pr of i t company.
9 THE WI TNESS: Cor r ect . The money must f l ow t o a
10 company t hat i s f or pr of i t . I t cannot f l ow, f or exampl e, t o a
11 uni ver si t y.
12 Q. And what , i f anyt hi ng, does t he gr ant r eci pi ent have t o
13 cont r i but e t o t he cost s of t he r esear ch?
14 A. A si ngl e appl i cant must pay al l of t he i ndi r ect cost s and
15 can cont r i but e t o t he di r ect cost s.
16 Q. What ar e t hese di r ect ver sus i ndi r ect cost s?
17 A. Di r ect cost s ar e t hose f unds t hat go di r ect l y t o t he
18 r esear ch, such as i ndi vi dual sal ar i es or equi pment needed t o
19 per f or mt hat r esear ch.
20 Q. How about i ndi r ect cost s?
21 A. I ndi r ect cost s ar e t hi ngs t hat woul d be spr ead over al l of
22 t he act i vi t i es of t hat company, such as f aci l i t i es, r ent ,
23 el ect r i ci t y, l egal f ees, secr et ar i al suppor t , admi ni st r at i ve
24 suppor t , l ooki ng f or ot her f undi ng, t hat sor t of t hi ng.
25 Q. So i f a gr ant has t he cost shar ed r equi r ement , wher e does
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1 t he cost r eci pi ent pay t he cost s shar e amount t o?
2 A. The r eci pi ent must pay hi s or her par t of t hat cost shar e
3 di r ect l y t o t he expenses of t he pr oj ect . So i f a bi g pi ece of
4 equi pment was bought - - was pur chased, t he gover nment woul d pay
5 i t s per cent age and t he r eci pi ent woul d pay i t s per cent age.
6 Q. And what i s t he t ypi cal per cent age of what t he cost shar e
7 i s?
8 A. I n addi t i on t o t he i ndi r ect cost s, t her e i s no t ypi cal
9 cost s, but what ever per cent age i s put i n t he or i gi nal pr oposal
10 must be adher ed t o f or t he l i f e of t he pr oj ect .
11 Q. Now, what , i f anyt hi ng, gover ns how gr ant ees can spend
12 awar d money t hat t hey get ?
13 A. Ther e ar e many document s out l i ni ng how awar dees can spend
14 t he money begi nni ng wi t h a ki t i t t hat t he pr oposer get s when
15 he - -
16 MR. RUBI NSTEI N: Obj ect i on, your Honor . Thi s i s
17 hear say.
18 THE COURT: Do we have t he document s t hat - -
19 MR. KWOK: Yes, I do.
20 THE COURT: Obj ect i on sust ai ned. But t hi s i s
21 i nt r oduct or y, and t he j ur y i s i nst r uct ed t hat t hey wi l l be
22 gui ded by t he document s t hemsel ves t hat deal wi t h t hi s
23 par t i cul ar gr ant . Thi s i s mor e of a - - what ever you' ve been
24 hear i ng i s not di r ect l y r el evant t o t hi s gr ant .
25 BY MR. KWOK:
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1 Q. Let me j ust ask a gener al i nt r oduct or y quest i on, i f I may.
2 What i s t he gener al r ul e t hat gover ns how gr ant ees can spend
3 t hei r money?
4 A. They can spend money on t he di r ect cost s of t he r esear ch.
5 Q. You ment i oned ear l i er t her e' s a budget . What obl i gat i ons
6 do t hey have under t he budget ?
7 A. They must adher e t o t he budget under whi ch t hey appl i ed.
8 Q. Ar e t her e ci r cumst ances under whi ch t hey can devi at e f r om
9 t hat budget ?
10 A. Yes. Ther e ar e cer t ai n ci r cumst ances. 10 per cent of t he
11 annual amount t hat t hey ar e goi ng t o spend can be moved wi t hi n
12 exi st i ng cat egor i es.
13 THE COURT: I s t her e any document at i on t o suppor t
14 t hi s?
15 MR. KWOK: Yes, I can i nt r oduce t hemnow.
16 THE COURT: Ot her wi se, I don' t t hi nk t hat ' s admi ssi bl e
17 t est i mony.
18 MR. KWOK: Okay. May I appr oach?
19 THE COURT: Yes.
20 Q. Mi ss Li de, I ' mhandi ng you what ' s on t op mar ked f or
21 i dent i f i cat i on gover nment Exhi bi t 1. And i f you coul d al so
22 l ook at act ual l y gover nment exhi bi t s t wo, t hr ee and f our as
23 wel l . Do you r ecogni ze t hese document s?
24 A. Yes, I do.
25 Q. How ar e you abl e t o r ecogni ze t hem?
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1 A. I hel ped pr epar e t hem, I used t hem, and t hey wer e gi ven t o
2 me as pr oj ect manager .
3 Q. Wer e al l of t hese document s pr epar ed by someone wi t h
4 knowl edge of or made f r omi nf or mat i on t r ansmi t t ed by per sons
5 wi t h knowl edge of t he i nf or mat i on appear i ng on t hem?
6 A. Yes.
7 Q. And wer e t hese document s made at or near t he t i me t he
8 i nf or mat i on cont ai ned i n t hembecame avai l abl e?
9 A. Yes.
10 Q. I s i t t he r egul ar pr act i ce of NI ST or t he ATP pr ogr amt o
11 pr epar e such document s?
12 A. Yes.
13 Q. And ar e t hese document s kept i n t he cour se of a r egul ar l y
14 conduct ed busi ness act i vi t y?
15 A. Yes.
16 MR. KWOK: Gover nment of f er s Exhi bi t one, t wo, t hr ee
17 and f our .
18 THE COURT: Any obj ect i on, Mr . Rubi nst ei n?
19 MR. RUBI NSTEI N: Yes, your Honor . These ar e
20 mul t i - page document s t hat t hey j ust have a coupl e of pages on.
21 MR. KWOK: No. Can we appr oach, your Honor ?
22 THE COURT: Let ' s t ake - - l et ' s l et t he j ur y go, and
23 we' l l deal wi t h i t because t hat wi l l t ake t i me. I t ' s af t er
24 4: 00 o' cl ock. So I ' l l excuse t he j ur y. Why don' t you go t o
25 t he j ur y r oomwi t h Mr . Mont eagudo so he can gi ve you t he pr oper
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1 i nst r uct i ons about how t o get back her e f or 9: 30 i n t he
2 mor ni ng. So t he j ur y i s excused unt i l 9: 30 i n t he mor ni ng.
3 ( J ur y exi t s t he cour t r oom)
4 THE COURT: Wat ch your st ep.
5 ( I n open cour t ; j ur y not pr esent )
6 THE COURT: You want t he wi t ness t o st ep out or - -
7 MR. RUBI NSTEI N: I don' t have a pr obl embecause she
8 mi ght be abl e t o hel p us.
9 THE COURT: What ?
10 MR. RUBI NSTEI N: She mi ght be hel pf ul , J udge. My
11 concer n i s t hat i t was my under st andi ng t hese document s ar e
12 mul t i pages, and I ' mt aki ng a l ook at what t he gover nment has
13 gi ven me, and i t seems l i ke t hey' ve ext r act ed cer t ai n por t i ons.
14 MR. KWOK: No, I t hi nk t hat ' s a mi sunder st andi ng. I
15 t hi nk Mr . Rubi nst ei n' s associ at e r ecei ved t he f ul l set of t he
16 gover nment exhi bi t s. What we handed out t o t he j ur y j ust now,
17 t he j ur y bi nder s onl y cont ai n t he set t hat we i nt end t o publ i sh
18 t o t hem. So t hey do have a f ul l set of t he document s i n t hei r
19 ent i r et y.
20 THE COURT: What i s t hi s? Thi s f i r st document i s
21 cal l ed - - i t ' s t i t l ed Advanced Technol ogy pr ogr ampr oposal
22 pr epar at i on ki t .
24 THE COURT: I s t hat compl et e?
25 MR. RUBI NSTEI N: No, i t ' s not compl et e, your Honor .
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1 I t mi sr epr esent s what t he document i s.
2 THE COURT: That ' s what I ' maski ng.
3 MR. KWOK: No, t he j ur y bi nder s cont ai n - - t he j ur y
4 bi nder s cont ai n sel ect ed pages t hat we i nt ends t o publ i sh on
5 t he scr een so t hey can f ol l ow al ong, but t he exhi bi t s t hat
6 woul d act ual l y be i nt r oduced i nt o evi dence, t hat copy i s t he
7 compl et e copy. And we have al so pr oduced f ul l set s of al l t he
8 document s t hat t he gover nment i nt ends t o i nt r oduce.
9 THE COURT: Thi s i s t hi s document t hat you' ve j ust
10 handed me, whi ch you sai d i s not compl et e.
11 MR. KWOK: No, t hat i s - -
12 THE WI TNESS: That i s compl et e, si r .
13 MR. KWOK: That i s a compl et e copy.
14 THE COURT: Thi s i s compl et e.
15 MR. KWOK: Exact l y.
16 THE COURT: What you handed t he j ur y i s onl y sel ect ed
17 par t s of t hat ?
18 MR. KWOK: Onl y par t s t hat we i nt end t o put on t he
19 scr een and publ i sh t o t hemwhi l e t hey can f ol l ow al ong, t hat ' s
20 cor r ect .
21 THE COURT: So, but gover nment Exhi bi t 1 wi l l be t hi s
22 f ol der .
24 THE COURT: Thi s par t wi l l onl y cont ai n t hose por t i ons
25 of t he f ol der , of t he f ol der you bel i eve ar e r el evant t o t hei r
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1 consi der at i on.
2 MR. KWOK: That ' s cor r ect .
3 MR. RUBI NSTEI N: J udge, I obj ect t o t hat . And I t hi nk
4 t hey coul d j ust as easi l y - - t hey want t o publ i sh cer t ai n pages
5 t o t he j ur y, I t hi nk t hat ' s f i ne. But I t hi nk i t i s mi sl eadi ng
6 t o have i n a bi nder t wo pi eces of - - t wo pages of somet hi ng
7 t hat i s - - has si gni f i cant l y mor e pages. And I , t hat - - so I
8 don' t have a pr obl emi f t hey gi ve t hat document t o t he j ur y and
9 say we' r e r ef er r i ng t o page so and so. But t hey' r e goi ng t o
10 of f er one i n evi dence, I assume, not , not t he ext r act ed ver si on
11 t hat t hey have i n t hei r bi nder s.
12 THE COURT: Wel l , ext r act ed i s no di f f er ent i n pages,
13 as I under st and i t . I t ' s - - t hey' ve mer el y got t hose sect i ons
14 t hat t hey f eel ar e r el evant t o - - f or t he j ur y' s consi der at i on
15 t o demonst r at e t hat t her e' s cer t ai n, I suppose, agr eement s t hat
16 wer e made bet ween t he gr ant or and t he gr ant ee. But , so I ' m
17 i ncl i ned t o l et t hemi n evi dence, but wi t h i nst r uct i on t o t he
18 j ur y t hat Exhi bi t 1, what t hey have i s mer el y excer pt s, what
19 t hey have i n t hei r books i s mer el y an excer pt of gover nment
20 exhi bi t one, i f we' r e deal i ng wi t h gover nment Exhi bi t 1. I
21 pr esume t her e' s a gover nment Exhi bi t 2, and t hat i s - -
22 THE WI TNESS: Woul d you l i ke - -
23 THE COURT: Gover nment Exhi bi t 2 doesn' t seemt o have
24 t he f ol der . What i s i t ?
25 THE WI TNESS: I t i s t he gener al t er ms and condi t i ons
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1 t hat , t hat t he pr ogr amused f or al l awar dees.
2 THE COURT: And who r ecei ves a copy of t hi s?
3 THE WI TNESS: I t ' s al ways avai l abl e and i t ' s wi t h t he
4 awar d document when i t ' s gi ven t o t he company.
5 THE COURT: What ' s t he gover nment Exhi bi t 3?
6 THE WI TNESS: I t ' s t he f i nanci al assi st ance st andar ds
7 t er ms and condi t i ons. Her e, agai n, i t ' s al ways avai l abl e.
8 I t ' s on t he websi t e, but i t ' s a par t of each awar d t hat i s
9 gi ven t o each r eci pi ent .
10 THE COURT: I t ' s del i ver ed t o each gr ant ee?
11 THE WI TNESS: Yes, si r . Yes, si r . I t ' s par t of t he
12 awar d document .
13 THE COURT: What ' s gover nment exhi bi t 4?
14 THE WI TNESS: Those ar e power poi nt pr esent at i ons t hat
15 we pr ovi de at what we cal l a ki ck of f meet i ng. We meet wi t h
16 each awar dee r i ght af t er t he pr oj ect st ar t s. And exhi bi t 4 ar e
17 t he sl i des t hat we used whi ch go over once agai n r ul es,
18 r egul at i ons, r epor t i ng r equi r ement s, et cet er a.
19 THE COURT: That ar e pr esent ed at t hat meet i ng?
20 THE WI TNESS: Yes, si r .
21 THE COURT: Seems t o me, as l ong as t her e' s an
22 adequat e and a cl ear st at ement made as r egar ds each of t hese
23 mat t er s t hat t hey - - each of t he mat t er s i nt r oduced i n evi dence
24 and t hei r r el at i onshi p t o t he mar ked document and t hei r
25 exhi bi t , t hat i t ' s admi ssi bl e.
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1 MR. RUBI NSTEI N: Your Honor , I have no obj ect i on t o
2 t he exhi bi t . I have an obj ect i on t o what t he gover nment i s
3 gi vi ng t o t he j ur y. Because I submi t t hat i t ' s mi sl eadi ng t o
4 t he j ur y because a pi ct ur e' s wor t h a t housand wor ds. I f
5 t hey' r e goi ng t o t ake and t hey t ake t hese bi nder s i nt o t he j ur y
6 r oom, when t hey go t o del i ber at e t hey' r e goi ng t o see t wo
7 pages, and I submi t t hat t hat ' s not t he evi dence. The evi dence
8 i s t he ent i r e - -
10 MR. RUBI NSTEI N: - - t he ent i r e exhi bi t .
11 THE COURT: That may be a good poi nt i n t er ms of what
12 goes i nt o t he j ur y r oomwi t h t hem. But why ar en' t t hey al l owed
13 t o - - why i sn' t i t f ai r f or t hemt o l ook at i t , excer pt s t hat
14 t he gover nment f eel s ar e r equi r ed f r omeach of t he exhi bi t s?
15 Act ual l y t he ot her s ar e not excer pt s. The ot her s ar e - - t he
16 ot her mat er i al s ar e not excer pt s. I t ' s onl y t hi s f i r st
17 exhi bi t , exhi bi t one.
18 MR. RUBI NSTEI N: J udge, i t ' s mi sl eadi ng. Somebody
19 l ooki ng at t hi s t hi ng woul d t hi nk t hat some - - someone pi cki ng
20 up t hi s exhi bi t , we t ur n t o t hi s page, wi t h t hi s i nf or mat i on i s
21 post ed and wher e - - i f a r easonabl e per son - - as a mat t er of
22 f act , i t st ar t s at page si x.
23 THE COURT: I have i t .
24 MR. RUBI NSTEI N: I mean t hat ' s t he f i r st page i s page
25 si x.
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1 THE COURT: Wel l , I got - - t hat ' s not what I have. I
2 have t he f or war d comes f i r st .
3 MR. RUBI NSTEI N: No, on Exhi bi t 1, your Honor .
4 MR. KWOK: I t hi nk your Honor has t he f ul l set of t he
5 bi nder s. Wi t h what t he j ur y - -
6 THE COURT: I don' t have t he bi nder s. Ar e t he bi nder s
7 di f f er ent t han my - - t he bi nder s ar e di f f er ent t han what I
8 have? Al l r i ght .
9 ( Handi ng t o t he cour t )
10 THE COURT: I guess you bet t er get - - I guess I di dn' t
11 get one of t hose. My gover nment exhi bi t s, I see wher e you' r e
12 sayi ng, Mr . Rubi nst ei n.
13 Wel l , what about t hat , Mr . Kwok? Thi s doesn' t seem- -
14 MR. KWOK: No, your Honor .
15 THE COURT: How woul d you - -
16 MR. KWOK: The r eason we di d i t t hat way i s because of
17 t he bul ki ness of some of t he document s.
18 THE COURT: That i sn' t t he i ssue, t hough. The i ssue
19 i s whet her t her e can be j ur y conf usi on.
20 MR. KWOK: No, because I bel i eve when t he j ur y r et ur ns
21 t o t he j ur y r oom, what i s i nt r oduced i nt o evi dence wi l l be, i f
22 t hey r equest i t or i f t he Cour t agr ees, wi l l be t he document s
23 t hat t hey br i ng back t o t he j ur y r oom.
24 We have no pr obl emwi t h keepi ng t he bi nder s j ust her e
25 i n cour t so t hey can f ol l ow al ong whi l e t he par al egal shows t he
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1 pages on t he scr een and t hey can l ook down, wi t hout havi ng t o
2 f l i p t hr ough 100 pages of t hi s book, 99 of whi ch we do not
3 i nt end t o show.
4 Si mi l ar l y, f or t he bank r ecor ds we di d i t f or , t o
5 conser ve - - t o, f r ankl y, make i t r eadabl e, i nst ead of f l i ppi ng
6 t hr ough 3, 000 pages of bank r ecor ds.
8 MR. KWOK: They can - -
9 THE COURT: Then my i nst r uct i on t o t he j ur y, as I
10 under st and i t , t he r eason f or t he Gover nment ' s pr oceedi ng i n
11 t hi s way, Mr . Rubi nst ei n, i s t hat because t he scr een i s t he
12 ot her si de of t he cour t r oom, and somet i mes i t ' s har d t o r ead
13 f r omt he pr oj ect or t o t he scr een, t hat t hey' r e pr ovi di ng t he - -
14 want s t o pr ovi de t he j ur y wi t h t hose pages t hat wi l l be
15 pr oj ect ed on t he scr een. And i f t hat ' s t he case, t hen i f I
16 i nst r uct t hemt hat t hey ar e onl y t o l ook at t hose exhi bi t s when
17 t hey' r e pr oj ect ed on t he scr een; i n ot her wor ds, l ook at t he
18 page of t he exhi bi t t hat i s i n t hei r books, whi ch i s bei ng
19 pr oj ect ed on t he scr een, and t hat ' s al l t hey' r e t o l ook at ,
20 t hat seems t o me t o be f ai r .
21 MR. RUBI NSTEI N: I suggest , your Honor , i f t hat ' s - -
22 THE COURT: They woul d not go i nt o t he j ur y r oomand
23 need onl y be used because of t he di st ance bet ween t he si ze of
24 t hi s cour t r oomand t he quest i on about eyesi ght of peopl e bei ng
25 abl e t o see i t , wher eas t hey can r ead r i ght al ong and check i t ,
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1 check t he wor ds i f t hey ar e havi ng di f f i cul t y r eadi ng what ' s up
2 on t he scr een.
3 MR. RUBI NSTEI N: Wel l , why do t hey need t he scr een?
4 Why do t hey need t he scr een i f t hey' r e gi vi ng, i f t hey - -
5 THE COURT: Wel l , some j ur or s woul d see i t on t he
6 scr een and some j ur or s woul dn' t .
7 MR. RUBI NSTEI N: J udge, I t hi nk i t j ust as easy i f
8 t hey gi ve t hemt he whol e document , as t hey appar ent l y gave your
9 Honor and t hey sai d t ur n t o page si x, and t hey publ i sh page si x
10 on t he scr een. I mean, I don' t see why - - peopl e who ar e used
11 t o handl i ng document s, t hey see i t i n t hei r mi nd a t wo page
12 i t em, and i t ' s a t en page or 20 page i t em, t her e i s a huge
13 di f f er ence. Al l r i ght . And I t hi nk t he j ur y has - - t hat i t ' s
14 mi sl eadi ng t o t he j ur y t o pr esent i t i n t hi s f ashi on. They
15 have t he bi nder mar ked as gover nment exhi bi t s. They' r e not
16 gover nment exhi bi t s. They' r e ext r act s of gover nment exhi bi t s,
17 and t hey - -
18 THE COURT: Wel l , maybe t hey shoul d be mar ked
19 ext r act s.
20 MR. KWOK: We' r e happy t o do t hat i nst ead of sayi ng
21 exhi bi t s, we can put t hat wor d ext r act on t op of ever y si ngl e
22 page. But t he r eason why we have t he scr een i s so t hat t hey
23 can see whi ch page we' r e t al ki ng about , and l ook at t he
24 appr opr i at e page i n t hei r bi nder s.
25 THE COURT: Be sur e t hey have t he r i ght page.
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1 MR. KWOK: Exact l y. And t hat ' s exact l y r i ght , your
2 Honor .
3 And wi t h r espect t o Mr . Rubi nst ei n, i t ' s t he
4 gover nment ' s case and wi t hi n r eason I t hi nk we ar e al l owed t o
5 t r y t he case t he way we t hi nk t hat i t woul d be most make sense
6 t o t he j ur y.
7 THE COURT: Al l I ' mt r yi ng t o do i s be sur e t hat what
8 you do i s f ai r and t hat i t ' s not - - I don' t gi ve a wr ong
9 i nst r uct i on t o t he j ur y, whi ch I al r eady have because I t hought
10 t hey wer e t he exhi bi t s, and I ' l l cl ar i f y t hat i n t he mor ni ng.
11 I ' l l make i t cl ear t hat t hey' r e ext r act s, and you bet t er have
12 some mar k t hat i t ' s an ext r act . And I ' l l make t he cl ear t hat
13 t hey' r e ent i t l ed t o f ul l exhi bi t s i n t hei r del i ber at i ons, and
14 t he j ur y bi nder s won' t go back wi t h t hem. I t hi nk t hat seems
15 t o me t o be f ai r .
16 I don' t see how t hat hur t s you, Mr . Rubi nst ei n. We' l l
17 have t o make t hose changes.
18 Al l r i ght , i s t her e anyt hi ng el se t o t ake up?
19 MR. RUBI NSTEI N: No, your Honor .
20 THE COURT: At l east we cl ear ed up one t hi ng, we don' t
21 have t o do i t t omor r ow. I t pays t o go t i l l 4: 00 o' cl ock.
22 Okay.
23 MR. RUBI NSTEI N: You went past 4: 00, J udge.
25 MR. RUBI NSTEI N: We' r e on over t i me.
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1 THE COURT: Wel l , I know, but t he j ur y - - i t al ways
2 pays t o get t hese t hi ngs cl ear ed up. At l east we cl ear ed i t up
3 and woul dn' t have a del ay i n t he pr oceedi ngs t omor r ow.
4 Al l r i ght , I have t o go t o ot her busi ness, unl ess you
5 al l need me f or somet hi ng.
6 MR. KWOK: Thank you, your Honor . Not hi ng f ur t her
7 f r omt he gover nment .
8 MR. EVERDELL: Thank you.
9 ( Adj our ned t o J une 3, 2008 at 9: 30 a. m. )
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1 I NDEX OF EXAMI NATI ON
2 Exami nat i on of : Page
3 BETTI J OYCE LI DE
4 Di r ect By Mr . Kwok . . . . . . . . . . . . . 55
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2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
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4 v. S2 07 CR 541 ( RPP)
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6 Def endant .
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8 J une 3, 2008
9 9: 20 a. m.
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10
10 Bef or e:
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14 APPEARANCES
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KA-1902 KA-1902 KA-1902
16 BY: STEVEN KWOK
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1 ( Tr i al r esumed; j ur y not pr esent )
2 THE COURT: Al l r i ght . Thank you f or bei ng on t i me
3 t hi s mor ni ng. Let ' s make a pr act i ce of get t i ng her e at l east
4 at 9: 15 so t hat we don' t hol d t he j ur y up i f t hey' r e her e at
5 9: 30. I s t her e anyt hi ng t o t ake up t hi s mor ni ng?
6 MR. KWOK: Yes, your Honor . Ther e ar e j ust t hr ee
7 i ssues about whi ch I want t o br i ef l y addr ess t he cour t . Fi r st ,
8 I submi t t ed a l et t er l ast ni ght . I don' t t hi nk we necessar i l y
9 need t o t ake t hat up now.
10 THE COURT: We haven' t got i t . I haven' t got i t .
11 MR. KWOK: I have an ext r a copy, act ual l y my onl y
12 copy. Do you want me t o hand i t up?
13 THE COURT: Wel l , I bet t er r ead i t .
14 I have r ead t he gover nment ' s l et t er . I s t her e any
15 comment ?
16 MR. RUBI NSTEI N: Yes, J udge. They ar e t r yi ng t o
17 backdoor t he f act t hat t hey don' t have r ecor ds. They br ought a
18 case based upon r ecor ds and i nappr opr i at e spendi ng, and t hey
19 can' t back i t up wi t h any evi dence t hat i s admi ssi bl e i n cour t ,
20 so now t hey want t o get i n ot her t est i mony t o suggest what
21 r ecor ds t hey ar e t al ki ng about . They don' t speci f y a
22 par t i cul ar document , and t hey don' t have any document s, f r om
23 what I under st and, f r omt hi s submi ssi on t o suppor t i t , so I
24 t hi nk t hat i t ' s i nappr opr i at e.
25 THE COURT: Wel l , I don' t know what t he si t uat i on i s
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1 wi t h r espect t o t he document s. Thi s l et t er r eal l y onl y deal s
2 wi t h t he st at ement s and act i ons of t he def endant .
3 MR. RUBI NSTEI N: Wel l , hi s st at ement s ar e admi ssi ons
4 t hat he made i f t hey' r e r el evant . Thei r al l eged obser vat i ons
5 of hi m, t hat ' s what t hey' r e l ooki ng t o - -
6 THE COURT: Act i ons ar e admi ssi bl e.
7 MR. RUBI NSTEI N: Yes, as l ong as t hey don' t t al k about
8 t he document . I mean t her e i s no document t hat I know of t hat
9 t hey' r e r ef er r i ng t o, so we don' t r eal l y know. Act ual l y I
10 t hi nk i t shoul d be kept out on t he pr obat i ve val ue on 403, your
11 Honor , because i t i s so conf usi ng t o t he j ur y. Unf or t unat el y
12 i t won' t be conf usi ng t o t he j ur y, i t wi l l be mi sl eadi ng t o t he
13 j ur y f or t hese wi t nesses t o t al k about unknown document s t hat
14 we don' t know i f t her e wer e pr oper changes t hat he was maki ng,
15 i mpr oper changes. Thi s i s al l specul at i on on t hei r par t . Can
16 t hey i dent i f y what speci f i c document t hey ar e t al ki ng about ?
17 THE COURT: Wel l , ar en' t t hey goi ng t o have ent r i es
18 t hat t hey ar e t al ki ng about ?
19 MR. RUBI NSTEI N: That ' s t he pr obl em, I don' t bel i eve
20 t hey do. I f t hey do, l et t he gover nment t el l you.
21 THE COURT: I t may not be a document , but i t may be
22 ent r i es.
23 MR. RUBI NSTEI N: That ' s f i ne. That ' s f i ne. Let t hem
24 addr ess and l et us know what ent r i es t hey ar e t al ki ng about .
25 THE COURT: Wel l , I don' t t hi nk t hey have t o t el l you
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1 what ent r i es i n advance t hat t hey ar e t al ki ng about , but t he
2 t est i mony wi l l have t o r el at e t o ent r i es and showi ng
3 expendi t ur es of some sor t i n or der t o pr ove t hat t hey wer e
4 i mpr oper expendi t ur es. Ther e has t o be a document somepl ace, I
5 don' t mean t hat i t i sn' t on comput er as opposed t o a l edger ,
6 but i f t hat ' s t he way t he def ense kept i t s books.
7 Mr . Kwok? Ar e you not goi ng t o of f er any evi dence
8 f r omcomput er r ecor ds or - -
9 MR. KWOK: Act ual l y, t o gi ve your Honor backgr ound t o
10 why t hi s i ssue even ar ose, we do have a snapshot of t hi s Qui ck
11 Books l edger t hat we have been t al ki ng about , but i t ' s j ust
12 t hat , a snapshot .
13 THE COURT: What do you mean by a snapshot ?
14 MR. KWOK: I t i s what t he l edger l ooks l i ke at a
15 par t i cul ar poi nt i n t i me, j ust l i ke i f you wer e wor ki ng on a
16 document , you save i t , you pr i nt i t out , t hat ' s what we have,
17 what we bel i eve t o be t he f i nal or cl ose t o f i nal ver si on t hat
18 one of t he audi t or s l ooked at .
19 THE COURT: But don' t you have anyt hi ng t o pr ove
20 expendi t ur es?
21 MR. KWOK: On t hat l edger i t shows a number of
22 expenses t hat wer e pai d f or usi ng gr ant money t hat shoul d not
23 have. But what we ar e r eal l y t al ki ng about - -
24 THE COURT: Ar en' t you goi ng t o go beyond t hat at some
25 poi nt i n t he t r i al and show t hat X, Y and Z suppl i er r ecei ved
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1 payment of t hat ?
2 MR. KWOK: Yes, your Honor . And t he pr i mar y way we
3 ar e goi ng t o pr ove t hat i s not act ual l y t hr ough t he l edger s, as
4 I ' ve t ol d Mr . Rubi nst ei n numer ous t i mes. The way we ar e t r yi ng
5 t o pr ove t hat i s t hr ough t he bank r ecor ds, t hr ough i ndependent
6 r ecor ds t hat we got f r omt hi r d par t i es. So t her e can be no
7 di sput e t hat t her e i s some conf usi on about t he books and i t ' s
8 uncl ear what ' s goi ng on, we ar e l ooki ng out si de t he company, t o
9 l ook at vendor s, t o l ook at cr edi t car d st at ement s, t o l ook at
10 bank r ecor ds. That ' s how we' r e goi ng t o est abl i sh t hat f unds
11 wer e mi sappl i ed.
12 Now, I have been t r yi ng t o wor k wi t h Mr . Rubi nst ei n t o
13 get what he consi der s t he accur at e set of l edger s. We haven' t
14 been abl e t o come t o any agr eement , because he consi der s my
15 l edger t hat I pr ovi ded t o hi mt o be i ncompl et e or i naccur at e or
16 coul d possi bl y be t amper ed wi t h.
17 So, now t hat we ar e unl i kel y t o come t o an agr eement
18 on what t hat l edger i s goi ng t o l ook l i ke, I submi t t ed t he
19 l et t er t o t hi s cour t because I bel i eve t hat our wi t nesses can
20 t est i f y j ust l i ke any per ci pi ent wi t ness can as t o what t hey
21 obser ved. Si mpl y because t he t opi c of t hei r t est i mony r el at es
22 t o a document doesn' t make t hei r t est i mony hear say.
23 THE COURT: That ' s r i ght .
25 MR. RUBI NSTEI N: Your Honor , I t hi nk you have t o l ay a
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1 f oundat i on. Let ' s assume t hat what t he wi t ness i s r ef er r i ng t o
2 i s an expense f or l unch at a r est aur ant and t hi s i s what t he
3 wi t ness put i n or suggest s i s a non- NI ST expense. Ri ght ? I f
4 t hey i dent i f y t hi s expense, t hen I i nt end on cr oss- exami nat i on
5 t o show t hemt he backup t o show t hat i t was a NI ST expense.
6 THE COURT: That i t was a?
7 MR. RUBI NSTEI N: That i t was an appr opr i at e expense.
8 J ust because t hey say i t wasn' t appr opr i at e, l et ' s see t he
9 expense. And t hen you wi l l know whet her he i s changi ng
10 somet hi ng because he i s t r yi ng t o cook t he books.
11 THE COURT: Wel l , whi ch way i s t he gover nment t o
12 pr oceed? I s i t goi ng t o st ar t wi t h t he snapshot s of t he
13 l edger , or i s i t goi ng t o st ar t wi t h t he expendi t ur es t hat wer e
14 made and t hen el i ci t t he t est i mony about t he l edger ?
15 MR. KWOK: I t hi nk i t ' s t he l at t er . We ar e goi ng t o
16 i nt r oduce t he gover nment audi t or ver y soon who i s goi ng t o t al k
17 about t he bank r ecor ds, basi cal l y t he r ecor ds I r ef er r ed t o
18 out si de of t he company, t o show t hat f unds wer e mi sappl i ed.
19 Then we ar e goi ng t o have anot her set of wi t nesses who
20 wor ked wi t h t he def endant i n hi s company, who ar e goi ng t o t el l
21 us t hat when t hey wor ked wi t h hi mt hey woul d make cer t ai n
22 bookkeepi ng ent r i es onl y t o have t hemchanged back t i me and
23 agai n i nt o a gr ant expense when t hey have t ol d hi mr epeat edl y
24 t o st op doi ng t hat . We ar e not goi ng t o el i ci t any - -
25 THE COURT: But ar en' t you goi ng t o el i ci t t he
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1 expendi t ur es f i r st t hat you cont end wer e i mpr oper ?
2 MR. KWOK: Not pr eci sel y, your Honor . I don' t i nt end
3 t o el i ci t - -
4 THE COURT: I t ' s goi ng t o be har d f or t he j ur y t o
5 under st and t he r el evance of t he t est i mony unl ess you do i t t hat
6 way.
7 MR. KWOK: Wel l , we wi l l t al k about some of t he
8 backgr ound as t o what t hei r under st andi ng about t he r ul es wer e
9 and t he conver sat i ons t hey had on t hat subj ect wi t h t he
10 def endant , and t hen i t wi l l become r el evant or i t wi l l be
11 become obvi ous why i t ' s r el evant t hat t he def endant t hen went
12 agai nst t hei r r epeat ed war ni ngs t o go back i nt o t he books t o
13 change t hem. That ' s al l we ar e t r yi ng t o el i ci t .
14 THE COURT: You say t hat ' s al l you' r e t r yi ng t o
15 el i ci t . You' r e goi ng t o el i ci t t he expendi t ur es, ar e you not ?
16 I mean t he j ur y i s goi ng t o have a har d t i me. Not al l of t hese
17 j ur or s have a l aw degr ee or what have you. I f t hey don' t know
18 what t he expendi t ur es ar e, how ar e t hey goi ng t o be abl e t o
19 eval uat e t he t est i mony about changi ng t he books, et c. ?
20 MR. KWOK: Wel l , I mean t hey ar e goi ng t o t al k about
21 some exampl es as t o t he t ype of t hi ngs t hat got changed, so
22 t hey ar e goi ng t o t al k about some of t he exampl es wher e you
23 make bookkeepi ng ent r i es t hat t he def endant t hen changed, and
24 t hen t hey ar e goi ng t o t al k about , f or exampl e - -
25 THE COURT: Wel l , t hose exampl es ar e goi ng t o have t o
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1 r el at e t o expendi t ur es - -
2 MR. KWOK: They wi l l .
3 THE COURT: - - whi ch wer e act ual l y made.
4 MR. KWOK: They wi l l . By t hat poi nt i n t i me when t hey
5 wi l l t est i f y, a r ecor d wi l l al r eady I bel i eve have been made by
6 t he gover nment audi t or t hat t hose wer e t he t ypes of t hi ngs t hat
7 gr ant f unds wer e mi sspent on, such as ut i l i t i es, meal s and so
8 f or t h, and t hey ar e goi ng t o r el at e back t o t hose t opi cs wi t h
9 quest i ons and answer s.
10 THE COURT: You say t he t ypes of t hi ngs. Don' t t hey
11 have t o be t he exact t hi ngs?
12 MR. KWOK: I don' t bel i eve t hey do, because t he way we
13 est abl i sh t hat t hose exact t hi ngs wer e mi sspent usi ng gr ant
14 money i s t hr ough our gover nment audi t or .
15 The ot her wi t nesses ar e goi ng t o show not so much t hat
16 t hose moni es wer e i n f act spent - - because we wi l l have al r eady
17 est abl i shed t hat - - but t o show t he def endant ' s cr i mi nal i nt ent
18 i n maki ng t hose t ypes of expenses, t hat he knew t hat he wasn' t
19 supposed t o spend money t hat way, and because he t r i ed t o hi de
20 i t , t hat ' s how we' r e t r yi ng t o est abl i sh cr i mi nal i nt ent . We
21 don' t have t o est abl i sh l i ne by l i ne.
22 THE COURT: I know how you' r e t r yi ng t o est abl i sh
23 cr i mi nal i nt ent , but what I ' mconcer ned about i s whet her i t ' s
24 possi bl e under t he r ul es of evi dence t o pr esent t o t he j ur y i n
25 a manner i n whi ch t hey can under st and t he si gni f i cance of t he
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1 t est i mony of t hese i nsi de empl oyees at t he t i me t hat t hi s was
2 pr esent ed t o t hem. I t ' s j ust a mat t er of sequence.
3 MR. KWOK: I under st and t hat , and i t wi l l be t he
4 gover nment ' s bur den at summat i on t o t i e al l t he l oose ends
5 t oget her .
6 THE COURT: Wel l , I under st and t he summat i on, but
7 t her e i s some benef i t somet i mes t o havi ng t he j ur y not be
8 compl et el y sur pr i sed i n summat i on as t o t he way ever yt hi ng f i t s
9 t oget her .
10 MR. KWOK: I under st and, and I appr eci at e your Honor ' s
11 poi nt , but we wi l l do our best . I t hi nk when t he t est i mony
12 comes out , i t wi l l be cl ear why we ar e el i ci t i ng t hat t ype of
13 t est i mony.
14 THE COURT: Wel l , I ' mnot goi ng t o i nt er f er e wi t h your
15 manner of pr esent at i on. That ' s your manner of pr esent at i on.
16 But I amgoi ng t o make r ul i ngs on evi dence as t he quest i ons ar e
17 asked, and whet her t her e i s a f oundat i on. Foundat i on, I have
18 f ound t hat f or some r eason at t or neys i n t he U. S. at t or ney' s
19 of f i ce don' t al ways r ecogni ze t he si gni f i cance of , and I of t en
20 have t o sust ai n f or l ack of pr oper f oundat i on, and t hen you
21 have a pr obl em. I t ' s an obj ect i on t hat appar ent l y has f al l en
22 out of f avor i n some cour t r ooms, but i t ' s one whi ch i s
23 per f ect l y val i d.
24 MR. KWOK: Cer t ai nl y, your Honor .
25 THE COURT: And t hat ' s what Mr . Rubi nst ei n i s
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1 basi cal l y sayi ng, t hat t he way you ar e appr oachi ng i t , you need
2 t o est abl i sh t he pr oper f oundat i on wi t h t est i mony.
3 MR. KWOK: We wi l l cer t ai nl y t r y t o est abl i sh t he
4 pr oper f oundat i on, but I want t o make t he ar gument t hat t o t he
5 ext ent - -
6 THE COURT: Foundat i on shows r el evance, and t hat ' s why
7 I have pr oceeded t he ot her way mysel f . But you do what ever you
8 want . I want t hi s case t o go f or war d pr ompt l y and ef f i ci ent l y,
9 and you deal wi t h t he expendi t ur es f i r st and t hen you have a
10 f oundat i on f or t hose quest i ons. When you don' t , I don' t know
11 how you' r e goi ng t o est abl i sh t he f oundat i on. You may be abl e
12 t o.
14 I f I may j ust r ai se one qui ck ot her poi nt . Wi t h
15 r espect t o t he f i r st wi t ness, bef or e we paused yest er day I
16 bel i eve def ense counsel obj ect ed on hear say gr ounds. I j ust
17 want t o make cl ear t he scope of your Honor ' s r ul i ng.
18 I mi ght have negl ect ed t o ask a wi t ness cer t ai n
19 f oundat i onal quest i ons about whet her she was per sonal l y
20 f ami l i ar wi t h t he r ul es and r egul at i ons of t he pr ogr am. I f I
21 have asked t hat , I don' t bel i eve I ' mbound by si mpl y
22 i nt r oduci ng document s and have her r ead f r omt hose document s,
23 i f she i s goi ng t o expl ai n t he r ul es of t he pr ogr amt hat she
24 per sonal l y knows about .
25 THE COURT: Wel l , t he bet t er t hi ng t o do i s t o l ay t he
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1 f oundat i on by havi ng t he r ul es of t he pr ogr amof f er ed i n
2 evi dence, and t hen she can t est i f y about t hem.
3 MR. KWOK: Ver y wel l , your Honor .
4 MR. RUBI NSTEI N: Your Honor , we l ef t act ual l y wi t h t he
5 i ssue of what t he bi nder s cont ai n, and t hat your Honor was
6 goi ng t o gi ve an i nst r uct i on t o t he j ur y.
7 THE COURT: I ' mgoi ng t o gi ve t hemt he i nst r uct i on.
8 MR. RUBI NSTEI N: Coul d I st ep out f or a per sonal
9 mat t er , your Honor ?
10 THE COURT: Sur e. Maybe we al l ought t o. The j ur y - -
11 appar ent l y t her e i s a hol d- up on one of t he subway l i nes. Si x
12 j ur or s wer e not her e at 9: 30.
13 ( Recess)
14 THE COURT: Counsel , J ur or 8 i s mi ssi ng, Mr . Naveen.
15 I t hi nk we have t o go ahead wi t hout hi mi f he i sn' t her e by 10
16 o' cl ock. I have about t wo mi nut es t o t en. Or Naveen J ohn I
17 guess hi s name i s.
18 DEPUTY COURT CLERK: He' s her e.
19 THE COURT: OK.
21
22
23
24
25
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1 ( J ur y pr esent )
2 THE COURT: Pl ease be seat ed. Good mor ni ng, l adi es
3 and gent l emen. I ' msor r y. I under st and t he subway, one of t he
4 subway l i nes had a pr obl emt hi s mor ni ng. I f i t woul d do any
5 good, I woul d speak t o t he mayor about i t , but I r ecogni ze i t
6 wasn' t your f aul t , but l et ' s pl ease be on t i me. I get t he
7 l awyer s her e 15 mi nut es ear l y so we can t ake up any mat t er s
8 t hat need t o be t aken up bef or e you get i nt o t he j ur y box.
9 Yest er day, I gave you some i nst r uct i on, and I wi l l
10 have t o r evi se t hose i nst r uct i ons because I di d not f ul l y
11 compr ehend how t he gover nment was goi ng t o pr oceed her e.
12 The books you have i n f r ont of you cont ai n excer pt s of
13 t he exhi bi t s t hat t hey i nt end t o of f er at t he t i me of t r i al ,
14 and t he excer pt s ar e what t hey ar e goi ng t o show on t he boar d
15 up her e. However , f or your conveni ence, because some peopl e
16 may have di f f i cul t y i n r eadi ng what ' s up on t he scr een, t her e
17 i s an ext r a copy i n t he books. So, i f you don' t have any
18 di f f i cul t y r eadi ng what ' s up on t he boar d, you don' t have t o
19 use t he books. I f on t he ot her hand you f i nd i t di f f i cul t
20 r eadi ng what ' s up on t he boar d because of t he di st ance, t hen
21 you have f r eedomt o l ook at t he books and wi t h r espect t o t hat
22 par t i cul ar exhi bi t . So, don' t l ook at ot her exhi bi t s or
23 excer pt s of exhi bi t s unl ess t hey have been admi t t ed i nt o
24 evi dence al r eady.
25 Al l r i ght . Wi t h t hat i nst r uct i on, I t hi nk we' r e r eady
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1 t o go ahead.
3 BETTI J OYCE LI DE, r esumed.
4 THE COURT: Ms. Li de, you ar e r emi nded ar e you st i l l
5 under oat h, and t he j ur y i s i nst r uct ed t hat any t i me a wi t ness
6 t akes t he st and on a succeedi ng t he day, t he cour t as a mat t er
7 of cour t pr ocedur e must r emi nd t hemt hat t hey ar e st i l l under
8 oat h. You ar e not t o dr aw any i nf er ence f r omt he f act t hat t he
9 cour t r emi nded t hemt hey ar e st i l l under oat h. Al l r i ght .
11 Bef or e we br oke yest er day, t he gover nment of f er ed
12 Gover nment ' s Exhi bi t s 1, 2, 3 and 4.
13 THE COURT: Let ' s i dent i f y what Gover nment Exhi bi t 1
14 i s.
15 MR. KWOK: Gover nment Exhi bi t 1 i s a pr oposal
16 pr epar at i on ki t . Exhi bi t 2 mar ked f or i dent i f i cat i on i s - -
17 THE COURT: Wai t a mi nut e. I t ' s t he pr oposal
18 pr epar at i on ki t f or t he Advanced Technol ogy Pr ogr am.
20 THE COURT: That ' s Exhi bi t 1. That ' s admi t t ed i n
21 evi dence, t he f ul l exhi bi t .
22 ( Gover nment ' s Exhi bi t 1 r ecei ved i n evi dence)
23 MR. RUBI NSTEI N: Wi t hout obj ect i on.
24 THE COURT: Wi t hout obj ect i on.
25 MR. KWOK: And Gover nment Exhi bi t 2 i s t he gener al
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8637KAR1
1 t er ms and condi t i ons, Advanced Technol ogy Pr ogr am.
2 THE COURT: Al l r i ght . That i s admi t t ed i n evi dence
3 wi t hout obj ect i on.
5 MR. RUBI NSTEI N: That ' s cor r ect .
6 MR. KWOK: Gover nment Exhi bi t 3 i s Depar t ment of
7 Commer ce, f i nanci al assi st ance, st andar d t er ms and condi t i ons.
8 THE COURT: That ' s admi t t ed i n evi dence wi t hout
9 obj ect i on.
11 MR. KWOK: Gover nment Exhi bi t 4 i s a sl i de
12 pr esent at i on. The f i r st page i s gr ant s and agr eement s,
13 management di vi si on.
14 THE COURT: Of t he Advanced Technol ogy Pr ogr am.
15 MR. KWOK: That ' s cor r ect .
16 THE COURT: Exhi bi t 4 i s admi t t ed wi t hout obj ect i on.
18 THE COURT: Go r i ght ahead.
19 DI RECT EXAMI NATI ON ( Cont i nued)
20 BY MR. KWOK:
21 Q. Ms. Li de, ar e you per sonal l y f ami l i ar wi t h t he r ul es and
22 r egul at i ons of t he Advanced Technol ogy Pr ogr am?
23 A. Yes, I am.
24 Q. How i s i t t hat you ar e f ami l i ar wi t h t he r ul es and
25 r egul at i ons of t hat pr ogr am?
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8637KAR1 Li de - di r ect
1 A. I hel ped devel op some of t he r ul es and r egul at i ons, and I
2 have f ol l owed t hemi n al l of t he pr oj ect s t hat I manage.
3 Q. What ar e a gr ant ee' s obl i gat i on under t hat pr ogr amwi t h
4 r espect t o t hei r budget ?
5 A. Thei r obl i gat i on i s t hat t hey adher e t o t he budget and al l
6 of t he r ul es and r egul at i ons i n t hese document s.
7 Q. Ar e t her e ci r cumst ances under whi ch t hey can devi at e f r om
8 t he budget ?
9 A. Yes, t her e ar e. For any gi ven budget year , f or t he amount
10 of money al l ocat ed t o t hat year , t hey can move up t o 10 per cent
11 f r omone cat egor y t o anot her as l ong as t hose cat egor i es exi st
12 i n t he budget .
13 Q. What i f t hey want t o move money t hat exceeds t he 10 per cent
14 annual budget amount ?
15 A. They must ask f or per mi ssi on and get wr i t t en pr i or appr oval
16 bef or e t he new budget i s aut hor i zed.
17 Q. What i f t hey want t o add a new cat egor y al t oget her ?
18 A. They must ask f or per mi ssi on and get wr i t t en pr i or appr oval
19 bef or e t hey add t hat cat egor y.
20 Q. Ms. Li de, ar e or al appr oval s ever gi ven?
21 A. No.
22 Q. Ar e t her e si t uat i ons wher e gr ant ees can spend t he money
23 f i r st and seek appr oval af t er t he f act ?
24 A. I t i s t he except i on t o t he r ul e. That happens
25 occasi onal l y, but when t hat happens, any of t he money spent
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1 bef or e t he wr i t t en appr oval i s gi ven i s at t he gr ant ee' s r i sk.
2 Q. Now, ar e t her e cer t ai n pr i nci pl es t hat di ct at e whet her ATP
3 wi l l pay f or cer t ai n expenses or not ?
4 A. Yes, t her e ar e, and t hose ar e al l i n t hese document s.
5 Q. What ar e some of t hose basi c r ul es?
6 A. Basi cal l y ATP wi l l not pay i ndi r ect cost s f or si ngl e
7 appl i cant s, such as r ent , f aci l i t y r enovat i ons, l egal f ees,
8 admi ni st r at i ve cost s f or secr et ar i es and t hat sor t of t hi ng,
9 whi ch i s spr ead over t he whol e company' s act i vi t i es.
10 Q. And do you pay f or expenses i ncur r ed bef or e t he st ar t of
11 t he gr ant pr ogr am?
12 A. No, we cal l t hemsunk cost s, and not hi ng i ncur r ed bef or e
13 t he act ual st ar t dat e of t he pr oj ect can be char ged t o t he U. S.
14 gover nment .
15 Q. How do gr ant ees know about al l of t hese r ul es t hat you j ust
16 descr i bed t o us?
17 A. They know about t hese r ul es i n t hese document s t hat ar e
18 exhi bi t s 1 t hr ough 4 t hr ough conf er ences t hat we gi ve, t hr ough
19 t el ephone advi ce t hat we al ways have avai l abl e, and t hr ough a
20 ki ckof f meet i ng whi ch i s what i s pr esent ed i n Exhi bi t 4.
21 Q. What i s a ki ckof f meet i ng?
22 A. A ki ckof f meet i ng i s a meet i ng bet ween t he gr ant ee and t he
23 pr oj ect management t eamat NI ST wher e we go t hr ough al l of t he
24 r ul es and r egul at i ons, ask i f t her e ar e any quest i ons, and make
25 sur e t hat t he gr ant ee under st ands t he r esponsi bi l i t i es of bei ng
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1 good st ewar ds of t he gover nment ' s money.
2 Q. When does t hi s ki ckof f meet i ng t ypi cal l y happen?
3 A. Shor t l y af t er t he st ar t of t he pr oj ect , as soon as
4 possi bl e, dependi ng on ci r cumst ances. And bef or e i t occur s, we
5 ar e al ways avai l abl e by t el ephone.
6 Q. How do you know t hat t hat ' s what happened at t hese
7 meet i ngs?
8 A. I was t her e, I was par t of t he pr oj ect management t eam, and
9 I par t i ci pat ed i n t hese meet i ngs.
10 Q. Now, l et ' s t ake a l ook at t he exhi bi t s I have i nt r oduced
11 i nt o evi dence j ust a moment ago one at a t i me. Let ' s t ake a
12 l ook at Gover nment Exhi bi t 1.
13 Your Honor , may we publ i sh t hat t o t he j ur y?
14 THE COURT: The excer pt s?
15 MR. KWOK: Yes, t o page 6.
16 THE COURT: Al l r i ght . Gover nment Exhi bi t 1 can be
17 publ i shed t o t he j ur y on t he scr een, and i f you have di f f i cul t y
18 i n r eadi ng t hat - - and I can under st and why you woul d - - I
19 t hi nk you bet t er t ake out your books and l ook at t he excer pt s.
20 Can i t be bl own up anymor e, counsel ? The par al egal
21 can' t bl ow t hat up mor e?
22 MR. KWOK: I t hi nk we need t he bot t ompar t of t he
23 page. I ' mj ust di r ect i ng Ms. Moussa t o t he bot t ompar t of t he
24 page.
25 THE COURT: The whol e t hi ng can' t be bl own up so t hey
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1 can r ead t he whol e t hi ng on t he boar d? You ar e usi ng l ess t han
2 hal f of t he scr een. You' r e st i l l usi ng l ess t han one hal f of
3 t he scr een. You bet t er get someone t her e who knows how t o use
4 i t .
5 Can' t you do t he whol e t hi ng?
6 MR. EVERDELL: Your Honor , I t hi nk t hi s i s as bi g as
7 i t get s on t he scr een. I t hi nk t hi s i s as bi g as i t get s on
8 t he scr een.
9 THE COURT: Why not show t he whol e page?
10 MR. EVERDELL: I t hi nk when you show t he whol e page,
11 i t shr i nks on t he page. We can' t show i t any bi gger t han t hat .
12 THE COURT: You can do mor e.
13 MR. EVERDELL: I don' t t hi nk so. That i s why we have
14 t he j ur y bi nder s as wel l .
15 THE COURT: You need t he j ur y bi nder s. I have f ai r
16 eyesi ght , but t he j ur y - - can al l t he j ur y r ead t hat , or does
17 ever yone have my pr obl em? I can' t r ead i t .
18 Al l r i ght . I see some shaki ng t hei r head sayi ng t hey
19 can' t r ead i t . Al l r i ght .
20 MR. EVERDELL: I bel i eve Mr . Kwok was aski ng f or a
21 speci f i c par t of t he document , whi ch can be bl own up.
22 THE COURT: Somet i mes we have smal l er boxes f or t he
23 j ur y t o wat ch. Ar e we goi ng t o have much mor e of t hese
24 document s i n t hi s case?
25 MR. EVERDELL: Yes, your Honor , we wi l l .
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1 THE COURT: Why don' t we cal l t he peopl e downst ai r s,
2 J oel , and he can set up i ndi vi dual scr eens - - not i ndi vi dual ,
3 but one f or ever y t hr ee or f our j ur or s.
4 MR. EVERDELL: We can t r y t hat , your Honor , but we
5 al so have t he j ur y bi nder s t her e so t hey can l ook at t he paper
6 copy i f t hey can' t see t he copy on t he scr een. The document s
7 ar e i n t he bi nder s.
8 THE COURT: But t he ot her di f f i cul t y i s t hat usual l y
9 when you show t hese t hi ngs on t he boar d you have a l aser or
10 somet hi ng l i ke t hat t o poi nt t o t he exact l anguage t hat you ar e
11 t r yi ng t o i sol at e. But , al l r i ght , al l r i ght . Pr oceed.
13 BY MR. KWOK:
14 Q. Ms. Li de, di r ect i ng your at t ent i on t o page 6, par agr aph 5,
15 can you j ust descr i be t o us what t hat says?
16 A. Yes. That i s descr i bi ng some of t he cost s t hat ar e
17 unal l owabl e under t he Advanced Technol ogy Pr ogr am.
18 Q. What ar e some of t hose exampl es?
19 A. Some of t hemar e t he const r uct i on of new bui l di ngs or
20 r enovat i ons of exi st i ng l abor at or i es, i ndi r ect cost s, as we
21 have al r eady di scussed, pr of i t management f ees, i nt er est ,
22 f aci l i t i es capi t al cost , i f money, and t hat goes on t o page 7
23 i f you want mor e exampl es.
24 Q. What ar e t hose?
25 A. Such as bi d and pr oposal cost s - - whi ch ar e exampl es of
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1 sunk cost s whi ch we di scussed - - t ui t i on, sur veys,
2 commer ci al i zat i on st udi es and t he l i ke.
3 Q. I amshowi ng you t he next page. I t ' s mar ked as - -
4 THE COURT: Page 7?
5 THE WI TNESS: 7, sor r y.
6 MR. KWOK: Ms. Moussa, can we have t he next page up?
7 THE COURT: Page 7 i s up.
8 MR. KWOK: The next page i n t he j ur y bi nder .
9 THE COURT: Page 7 i s t he next page, I bel i eve af t er
10 page 6.
11 MR. KWOK: I amr ef er r i ng t o t he next page i n t he j ur y
12 bi nder , your Honor . I t ' s t he i nst r uct i ons f or f or mNI ST 1262,
13 i t emK.
14 THE COURT: Sor r y. I ' munabl e t o f ol l ow you.
15 Page 6, and t hen t her e i s page 7. You use t he t er m
16 page 6, I pr esume you mean page 7 when you say t he next page.
17 Thi s does not seemt o have a number ed page.
18 MR. KWOK: I t does not have a number ed page, but i t i s
19 t he next page i n t he j ur y bi nder s.
20 MR. RUBI NSTEI N: The ext r act , your Honor .
21 THE COURT: Af t er 7?
22 MR. RUBI NSTEI N: I t ' s not t he next page i n Exhi bi t 1,
23 your Honor . I t ' s t he next page i n what has been gi ven t o t he
24 j ur y, t he ext r act s of Exhi bi t 1.
25 MR. KWOK: I f we coul d zoomi n t o i t emK.
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1 THE COURT: These ar e t he i nst r uct i ons f or f or mNI ST.
2 MR. KWOK: 1262.
3 THE COURT: I see. Al l r i ght .
4 Q. Mi ss Li de, can you t el l us what t hat says.
5 A. Yes. I t emK says t hat al l of t he i ndi r ect cost s must be
6 absor bed by t he pr oposer .
7 Q. And once agai n, what ar e i ndi r ect cost s?
8 A. I ndi r ect cost s ar e t hose t hat you cannot cl ear l y i dent i f y
9 wi t h onl y t hi s ATP pr oj ect but r at her ar e i ncur r ed by al l of
10 t he act i vi t i es of t hat company.
11 Q. And when do you t ypi cal l y hand out t hi s bookl et t hat we ar e
12 j ust l ooki ng at ?
13 A. Thi s bookl et i s avai l abl e t he mi nut e we announce a
14 compet i t i on. I t i s sent t o t housands of peopl e on our mai l i ng
15 l i st . We hol d conf er ences and we gi ve i t out t her e, and i t i s
16 el ect r oni cal l y avai l abl e on our websi t e.
17 Q. Let ' s go t o t he next Gover nment Exhi bi t , Gover nment Exhi bi t
18 2.
19 THE COURT: J ust so I under st and, ever yt hi ng i n
20 Exhi bi t 1 i s sent t o a pr oposed gr ant ee, i s t hat cor r ect ?
21 THE WI TNESS: That i s cor r ect , si r , yes.
22 Q. Mi ss Li de, what i s Gover nment Exhi bi t 2?
23 A. Thi s i s t he gener al t er ms and condi t i ons of t he Advanced
24 Technol ogy Pr ogr am.
25 Q. And when i s t hi s document gi ven out ?
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1 A. Once agai n i t ' s avai l abl e on t he web. I t ' s avai l abl e by
2 anyone who r equest s i t . I t ' s di scussed at t he pr oposer ' s
3 conf er ence, and i t i s par t of t he awar d t hat i s made when t he
4 company r ecei ves an awar d.
5 Q. Di r ect i ng your at t ent i on t o page 3 of t hat document - -
6 THE COURT: When t he company get s t he awar d?
7 THE WI TNESS: When t he company get s t he awar d, when
8 t hey get t he document t hat says you ar e now a r eci pi ent , t hi s
9 goes al ong wi t h t hat .
10 THE COURT: Thank you.
11 Q. Zoomi ng i n on par agr aph 9, up t o t he end of A.
12 Di r ect i ng your at t ent i on t o t hat par agr aph - -
13 MR. RUBI NSTEI N: Excuse me. What page ar e you on?
14 MR. KWOK: Page 3 of Gover nment Exhi bi t 2.
15 MR. RUBI NSTEI N: Thank you.
16 Q. What does t hat par agr aph say?
17 A. Thi s par agr aph i s r epeat i ng what we sai d ear l i er , t hat we
18 need pr i or wr i t t en appr oval f or any change i n t he budget over
19 10 per cent of t he annual amount .
20 Q. And what does i t say your obl i gat i ons ar e i f you cr eat e new
21 budget cat egor i es i n t he budget ?
22 A. One must al so get pr i or wr i t t en appr oval t o cr eat e a new
23 cat egor y.
24 Q. Let ' s go t o sect i on 12 of t he same page t i t l ed equi pment .
25 I t al so goes on t o t he next page, on page 4 of Gover nment
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1 Exhi bi t 2. Can you j ust summar i ze f or us what t hat par agr aph
2 says?
3 MR. RUBI NSTEI N: J udge, I ' mgoi ng t o obj ect t o t he
4 summar i zi ng. Thi s i s i n evi dence, and I submi t t hat
5 summar i zi ng i s not adequat e.
6 THE COURT: Wel l , coul d you r ead what t hat par agr aph
7 says, Ms. Li de.
8 THE WI TNESS: Cer t ai nl y. " Upon expi r at i on of t he
9 pr oj ect per i od, t he r eci pi ent shal l submi t t o t he NI ST gr ant s
10 of f i cer an i nvent or y of equi pment acqui r ed wi t h f eder al f unds,
11 as pr escr i bed i n 15 CFR 14. 34, al ong wi t h an equi pment
12 di sposi t i on cer t i f i cat i on. "
13 Q. I t goes on t o t he next page.
14 A. Ri ght . " Consi st ent wi t h t he r equi r ement s of t he gover nment
15 per f or mance" - -
16 Q. Sor r y, t hat ' s not t he next page.
17 A. No. Cont i nui ng t hen, " The cer t i f i cat i on pr ovi des t he
18 r eci pi ent an oppor t uni t y t o r equest aut hor i zat i on t o cont i nue
19 t o ut i l i ze t he equi pment f or t he pur poses of t he
20 commer ci al i zat i on i ni t i at i ve. I f appr oved by t he NI ST gr ant s
21 of f i cer , t he r eci pi ent shal l r epor t t o NI ST ever y t wo year s t he
22 condi t i on of t he equi pment as l ong as t he cur r ent mar ket val ue
23 i s mor e t han $5, 000. "
24 Q. What does t hat mean i n pl ai n Engl i sh?
25 A. I t basi cal l y means t hat t he equi pment i s pr oper t y of t he
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1 U. S. gover nment , and i f appr oval i s gi ven i n wr i t i ng, t he
2 r eci pi ent can cont i nue t o use i t f or t he pur poses of t hat
3 pr oj ect as l ong as t hey cont i nue t o r epor t ever y t wo year s t hat
4 i t ' s wor t h over $5, 000.
5 Q. What happens t o t he equi pment i f i t f al l s bel ow mar ket
6 val ue of $5, 000?
7 A. I t bel ongs t o t he company.
8 Q. That means t hey can keep i t .
9 A. Ri ght .
10 Q. Let ' s t ur n t o t he next exhi bi t , Gover nment Exhi bi t 3.
11 THE COURT: Gover nment Exhi bi t 3 i s?
12 MR. KWOK: Depar t ment of Commer ce, f i nanci al
13 assi st ance st andar d, t er ms and condi t i ons.
14 Q. Ms. Li de, what i s t hat document ?
15 A. I t i s a Depar t ment of Commer ce document wi t h r ul es and
16 r egul at i ons f or f i nanci al assi st ance, and agai n i t i s gi ven t o
17 ever y awar d t hat i s made.
18 Q. Di r ect i ng your at t ent i on t o page 2, par agr aph 4A and B, can
19 you expl ai n t o t he j ur y what t hat means?
20 MR. RUBI NSTEI N: I obj ect agai n, your Honor t o
21 expl ai ni ng somet hi ng wher e i t hasn' t been addr essed f i r st .
22 MR. KWOK: Your Honor , i t ' s i n evi dence. The wi t ness
23 has t est i f i ed t hat she has per sonal knowl edge of t hese r ul es
24 and r egul at i ons, and she r egul ar l y conduct s t hese meet i ngs as
25 par t of her j ob and r esponsi bi l i t y.
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1 THE COURT: Wel l , gi ve t he j ur y a chance t o r ead t he
2 document f i r st . Then I wi l l al l ow her t o expl ai n what i t
3 means. But f i r st t he j ur y i s i nst r uct ed t o r ead t he document .
5 May I pr oceed, your Honor ?
7 Q. Now, Ms. Li de, now t el l us what t hat means.
8 A. Par t A i s t he i nst r uct i on on how t o suggest a change one
9 want s t o make, and t hat i s put i n wr i t i ng t o t he pr ogr am
10 of f i cer , t he change i n budget one want s. The pr ogr amof f i cer
11 r evi ews i t and sends a r ecommendat i on t o t he gr ant s of f i ce.
12 The second par t , par t B, i s r epeat i ng t hat t hi s must be done
13 f or any per cent age over 10 per cent .
14 Q. Now, asi de f r omhandi ng out t hese document s t hat we j ust
15 l ooked at , what el se do you do t o make sur e t hat gr ant
16 r eci pi ent s under st and t he t er ms and condi t i ons of t he gr ant ?
17 A. Once agai n, we do go over t hemat any pr oposer ' s
18 conf er ence, whi ch i s an open meet i ng f or anybody who want s t o
19 appl y, and we ar e ver y cl ear at t hat . But agai n once t he gr ant
20 i s made, t hese document s become par t of t he awar d package, and
21 we have t hi s ki ckof f meet i ng I r ef er r ed t o, and we go over
22 t hese r ul es and r egul at i ons yet agai n.
23 Q. Let ' s now t ur n t o Gover nment Exhi bi t 4. What i s t hat
24 document ?
25 A. Thi s i s t he Power Poi nt pr esent at i on t hat was used f or t he
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1 ki ckof f meet i ng.
2 Q. Whi ch par t i cul ar pr ogr amgr ant di d you use t hi s par t i cul ar
3 sl i de show pr esent at i on?
4 A. The gr ant t o Comput er Ai ded Sur ger y, I ncor por at ed, CASI .
5 Q. Di r ect i ng your at t ent i on t o pages 6 and 7 of t hat sl i de
6 pr esent at i on. Let ' s go t o page 6 f i r st . I wi l l pause so
7 peopl e can r ead i t .
8 Ms. Li de, what ar e you t r yi ng t o convey by t hi s sl i de?
9 A. That i n t he cour se of t hi s pr oj ect al l of t he r ul es and
10 r egul at i ons l i st ed her e must be adher ed t o.
11 Q. Go t o t he next page.
12 THE COURT: Can you go back? So t he speci al awar d
13 condi t i ons ar e what ?
14 THE WI TNESS: They ar e par t of t he awar d document .
15 When t he awar d i s made, t her e can be speci al awar d condi t i ons
16 such as you must hi r e someone wi t h t hi s exper t i se, or you must
17 have a busi ness pl an i n 90 days, t hat sor t of t hi ng. They ar e
18 uni que t o each par t i cul ar awar d.
19 THE COURT: And t he ATP gener al t er ms and condi t i ons
20 ar e what exhi bi t ?
21 THE WI TNESS: That was Exhi bi t 2.
22 THE COURT: And t he Depar t ment of Commer ce st andar d
23 t er ms and condi t i ons, ar e t hey - -
24 THE WI TNESS: That was Exhi bi t 3.
25 THE COURT: And t hen what i s 15 Code of Feder al
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1 Regul at i ons ( CFR) par t 14? I s t hat r el evant her e?
2 MR. KWOK: I t may be at some poi nt , your Honor , but
3 not r i ght now.
4 THE COURT: And t hen t he cost pr i nci pl es f ound i n t he
5 f eder al acqui si t i on r egul at i on par t 31, i s t hat - -
6 MR. KWOK: Agai n, i t ' s not r el evant di r ect l y at t hi s
7 poi nt . I wi l l ask t he wi t ness t o expl ai n t he l ast i t em, ATP
8 audi t gui del i nes.
9 Q. Ms. Li de, what i s t hat ?
10 A. Each pr oj ect must under go audi t s at speci f i c i nt er val s, and
11 f or a t hr ee- year si ngl e company t her e i s an audi t af t er year
12 one and an audi t af t er t he pr oj ect ends, and t hese ar e t he
13 gui del i nes f or t he audi t or t o f ol l ow t o make sur e t hat t he
14 pr oj ect has f ol l owed t he above f eder al r ul es and r egul at i ons.
15 THE COURT: Ar e t hose i ncl uded i n t hi s Exhi bi t 4, t he
16 audi t gui del i nes, or does someone get t hemat t he t i me of t he
17 awar d?
18 MR. KWOK: I t i s par t of Gover nment Exhi bi t 4, t he
19 whol e set .
20 THE COURT: Par t of Gover nment Exhi bi t 4.
21 MR. RUBI NSTEI N: What i s t hat ? I mi ssed t hat , your
22 Honor .
23 THE COURT: I asked about t he ATP audi t gui del i nes,
24 and I don' t want Mr . Kwok t o t est i f y, I want Ms. Li de t o
25 t est i f y. You ar e not a wi t ness, Mr . Kwok.
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1 MR. KWOK: I under st and.
2 THE WI TNESS: These audi t gui del i nes ar e avai l abl e on
3 t he websi t e. They' r e gi ven t o each pr oj ect , and we al so have
4 a - -
5 THE COURT: I under st and on t he websi t e, but f or get
6 t he websi t e f or a second. They go t o t hem.
7 Ar e t hey gi ven t o t hemat t he t i me of t he meet i ng?
8 THE WI TNESS: No. I ' mnot sur e i f t hey ar e par t of
9 t he or i gi nal awar d package. I woul d have t o l ook t hat up.
10 THE COURT: Ar e t hey par t of t he ATP r eci pi ent
11 r egul at i ons package, r esponsi bi l i t i es?
12 THE WI TNESS: I woul d have t o l ook up t he cover page
13 of our awar d. I amnot sur e of t hat , si r .
14 MR. KWOK: We wi l l come back t o t hat .
15 THE COURT: I want t o know whet her i t ' s cl ear at t he
16 out set t hat t hey have t o adher e t o t he audi t gui del i nes.
17 MR. KWOK: Your Honor , I t hi nk we wi l l go i n sequence.
18 Ri ght now I j ust want t o est abl i sh t he t er ms and condi t i ons
19 t hat t hey have t o abi de by.
20 THE COURT: Wel l , t hat ' s one of t he t er ms and
21 condi t i ons. I t says r i ght up above. That ' s why I ' maski ng
22 about i t .
23 THE WI TNESS: Yes, si r , t hey ar e par t of t he or i gi nal
24 awar d package.
25 Q. And wher e ar e you l ooki ng, Ms. Li de?
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1 A. I aml ooki ng at t he cover page of t he awar d t hat ' s gi ven t o
2 t he r eci pi ent .
3 Q. Let ' s go t o t he next page of t hi s sl i de show pr esent at i on.
4 What message ar e you t r yi ng t o convey by t hat sl i de?
5 A. The sl i de i s t r yi ng t o convey t he message t hat any change
6 of any si gni f i cance t o t he r esear ch pr oj ect must r ecei ve pr i or
7 wr i t t en appr oval bef or e i t can be i n ef f ect .
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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1 Q. Now, Ms. Li de, ar e you f ami l i ar wi t h t he t er m, f r i nge
2 benef i t s?
3 A. Yes.
4 Q. What does t hat t er mmean?
5 A. That t er mencompasses such t hi ngs t hat we woul d nor mal l y
6 know as an empl oyee get t i ng - -
7 MR. RUBI NSTEI N: I obj ect t o t hat , your Honor .
9 MR. RUBI NSTEI N: I s she an exper t ? She' s - -
10 THE COURT: She' s t he manager of t he gr ant s.
11 MR. KWOK: Let me l ay some f oundat i on, your Honor .
13 BY MR. KWOK:
14 Q. Ms. Li de, do you deal wi t h r ul es and r egul at i ons deal i ng
15 how f r i nge benef i t s can be pai d f or usi ng gr ant money as par t
16 of your ar e day - - dut y as a gr ant speci al i st ?
17 A. As par t of t he pr oj ect management t eam, I amt asked wi t h
18 advi si ng compani es on what can and cannot be i ncl uded i n f r i nge
19 benef i t s.
20 Q. And so what does t hat t er m, as you under st and i t t o mean?
21 A. I t means t hi ngs beyond t he empl oyee' s sal ar y, such as
22 heal t h i nsur ance and vacat i on t i me.
23 THE COURT: What can or cannot be.
24 THE WI TNESS: I t depends on what wr i t t en pol i cy t he
25 company has, so.
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1 Q. What ar e some of t he basi c r ul es gover ni ng whet her f r i nge
2 benef i t s - -
3 A. Wel l - -
4 Q. - - can be pai d f or usi ng ATP gr ant money?
5 MR. RUBI NSTEI N: I obj ect , your Honor , unl ess t hey
6 coul d poi nt t o some r ul es.
7 THE COURT: That ' s what we' r e aski ng, I t hi nk t hat ' s
8 what he' s aski ng f or .
9 Q. Ms. Li de, coul d you - - ar e t her e r ul es and r egul at i ons i n
10 t he ATP pr ogr amgover ni ng whet her gr ant money can be spent
11 usi ng on f r i nge benef i t s, yes or no?
12 A. Yes t her e ar e. A company - -
13 Q. What ar e t hose r ul es?
14 A. A company must - -
15 MR. RUBI NSTEI N: I obj ect t o hear say. I f t her e ar e
16 r ul es, what exhi bi t ar e t hey i n?
17 MR. KWOK: Your Honor , t he wi t ness has j ust t est i f i ed
18 t hat she has per sonal knowl edge about t hese r ul es and
19 r egul at i ons gover ni ng f r i nge benef i t s.
20 THE COURT: I sust ai n t he obj ect i on.
21 Wher e ar e t he r ul es and r egul at i ons, Ms. Li de?
22 THE WI TNESS: I n t he f eder al acqui si t i on and
23 assi st ance t er ms and condi t i ons.
24 THE COURT: And t hey' r e exhi bi t what ?
25 THE WI TNESS: Thr ee.
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1 THE COURT: Thr ee?
3 THE COURT: Okay.
4 Q. So can you now t el l us what t hose r ul es ar e?
5 MR. RUBI NSTEI N: J udge, I ' mgoi ng t o obj ect . Can we
6 go t o Exhi bi t 3?
7 MR. KWOK: Exhi bi t 3 i s i n evi dence.
8 MR. RUBI NSTEI N: What page?
9 THE COURT: I t ' s not , i t ' s not i n t hi s excer pt s, i s
10 i t ? I s i t i n t he excer pt s, Mr . Kwok?
11 MR. KWOK: I do not bel i eve so.
12 THE COURT: You' l l have t o r ef er t o t he act ual
13 exhi bi t , Ms. Li de.
14 THE WI TNESS: I ' msor r y, I don' t t hi nk i t ' s i n t hi s
15 one. I t hi nk i t ' s i n t hat CFR number ed one. I t ' s not i n
16 Exhi bi t 3. I t ' s i n CFR - -
17 Q. Let ' s t ur n t o gover nment Exhi bi t 4.
18 THE COURT: Whi ch one?
19 MR. KWOK: Gover nment Exhi bi t 4, page si x.
20 THE COURT: I s t hat i n t he ext r act s or i s i t not ?
21 MR. KWOK: I t i s i n t he ext r act . I t ' s t he bul l et
22 poi nt f i ve.
23 Q. Ms. Li de - -
24 THE COURT: I ' msor r y.
25 MR. RUBI NSTEI N: Excuse me.
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1 THE COURT: Gi ve me a chance t o check t hi s.
2 MR. RUBI NSTEI N: My pages ar en' t number ed.
3 ( Pause)
4 THE COURT: She says i t ' s i n t he CFR, Mr . Kwok.
5 THE WI TNESS: Yes. I t ' s i n i t emone, t wo, t hr ee, f our
6 and f i ve on t hat char t .
7 MR. RUBI NSTEI N: I f Mr . Kwok woul d - -
8 THE COURT: What about - - wher e i n t hose i t ems i s i t ?
9 BY MR. KWOK:
10 Q. Wel l , Ms. Li de, do you - -
11 THE COURT: I ' msor r y, I ' maski ng t he quest i on, Mr .
12 Kwok. I want i t answer ed, al l r i ght .
13 THE WI TNESS: I ' m- -
14 THE COURT: Fr omt he wi t ness.
15 THE WI TNESS: Yes, si r . I amt he t echni cal per son on
16 t hi s pr oj ect , and I bel i eve my col l eague, who wi l l be her e
17 l at er , wi l l be abl e t o poi nt t o t he exact par t of t hat . She' s
18 f r omour gr ant s of f i ce and she knows t hose document s par t by
19 par t . So i f you woul d al l ow me t o def er t o her , I bel i eve I
20 woul d appr eci at e t hat .
21 THE COURT: Then I don' t want t o hear any t est i mony
22 about t he r egul at i ons on benef i t pl ans, at t hi s t i me.
23 MR. KWOK: That ' s f i ne. We' l l move on.
24 Q. Ms. Li de, di d t her e come a t i me when you became i nvol ved i n
25 a gr ant i nvol vi ng Dr . Dani el B. Kar r on?
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1 A. Yes.
2 Q. Do you see Dr . Kar r on i n t he cour t r oomher e t oday?
3 A. Yes.
4 Q. Coul d you poi nt hi mout and descr i be an ar t i cl e of cl ot hi ng
5 he' s wear i ng?
6 A. He' s at t he second t abl e wi t h t he dar k sui t and gl asses
7 and, l et ' s see, l ong - - l onger hai r .
8 MR. KWOK: Your Honor - -
9 MR. RUBI NSTEI N: J udge, t hat ' s not f ai r .
10 A. Okay, behi nd a bl ue box.
12 MR. KWOK: Your Honor , may t he r ecor d r ef l ect t hat t he
13 wi t ness has i dent i f i ed t he def endant ?
14 THE COURT: The r ecor d wi l l so i ndi cat e.
15 Q. Ms. Li de, how di d you f i r st meet t he def endant ?
16 A. I met t he def endant at a ki ckof f meet i ng f or a pr oj ect t hat
17 was awar ded t o hi s company by t he Advanced Technol ogy Pr ogr am.
18 Q. And what was t he name of t hi s company?
19 A. CASI , Comput er Ai ded Sur ger y I ncor por at ed.
20 Q. And, appr oxi mat el y, when di d t hi s meet i ng t ake pl ace?
21 A. Ear l y November of 2001.
22 Q. Wher e di d t hi s meet i ng t ake pl ace?
23 A. At t he Nat i onal I nst i t ut e of St andar ds and Technol ogy.
24 Q. And wher e i s t hat ?
25 A. I n Gai t her sbur g, Mar yl and.
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1 Q. Who at t ended t hi s meet i ng on behal f of CASI ?
2 A. Dr . Kar r on, Mr . Lee Gur f ei n, and Dr . Ri ck Sat ava.
3 Q. Now, what was your under st andi ng as t o t he def endant ' s r ol e
4 i n Comput er Ai ded Sur ger y, I nc. ?
5 THE COURT: How do you spel l t hat l ast name?
6 THE WI TNESS: S- a- t - a- v- a.
7 THE COURT: Thank you.
8 THE WI TNESS: Cer t ai nl y.
9 A. The def endant ' s posi t i on i n t he company was bot h chi ef
10 t echni cal of f i cer and pr esi dent .
11 Q. And you ment i oned Lee Gur f ei n. Who i s Lee Gur f ei n?
12 A. Lee Gur f ei n was par t i ci pat i ng as a busi ness cont act .
13 Q. How about Ri ck Sat ava, who was he?
14 A. Ri ck Sat ava was a cl i ni cal and t echni cal consul t ant .
15 Q. And who at t ended t he meet i ng on behal f of t he ATP pr ogr am,
16 on behal f of NI ST?
17 A. Mysel f and t wo col l eagues, Mi ss J ane Or t hwei n and Mi ss hope
18 Snowden.
19 Q. And who was Hope Snowden?
20 A. Hope Snowden r epr esent ed t he NI ST gr ant s of f i ce and was t he
21 gr ant s speci al i st f or t hi s awar d.
22 Q. How about J ane Or t hwei n?
23 A. J ane Or t hwei n was my par t ner i n managi ng t hi s f r oma
24 t echni cal per spect i ve. She was al so par t of t he Advanced
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1 Q. What happened at t hi s meet i ng?
2 A. As i n - - we used Exhi bi t 4 t hat pr esent at i on, t he sl i de
3 show. And as i n al l of our ki ckof f meet i ngs, we al l ow t he
4 r eci pi ent of t he awar d t i me t o gi ve us any updat es on t he awar d
5 t hat happened si nce i t was awar ded. And t hen we go over t hose
6 sl i des aski ng i f t her e ar e any quest i ons on r epor t i ng
7 r equi r ement s, r ul es and r egul at i ons and ot her gover nment
8 r esponse.
9 Q. What i f , any r ul es, about t he pr ogr amdi d you f ocus on i n
10 your pr esent at i on?
11 A. Wel l , as you saw i n t he pr esent at i on, we f ocus on maki ng i t
12 ver y cl ear t hat t he pr oposal i s - -
13 MR. RUBI NSTEI N: Obj ect i on, your Honor .
14 THE COURT: Obj ect i on sust ai ned. I t ' s a concl usor y
15 st at ement .
16 What was sai d at t he meet i ng wi t h r egar d t o t he r ul es
17 and r egul at i ons, not - - don' t char act er i ze i t . J ust say what
18 was sai d.
19 A. We r ei t er at ed t he need t o adher e t o gover nment r ul es and
20 r egul at i ons.
21 Q. And what ar e t hose r ul es t hat you ment i oned?
22 A. The r ul es t hat we ment i oned ar e par t of t he awar d document ,
23 some of t hemi n t he exhi bi t s, t he need f or pr i or appr oval among
24 t hem.
25 Q. And - -
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1 THE COURT: Pr i or appr oval .
2 THE WI TNESS: For any maj or change.
3 THE COURT: Over 10 per cent .
4 THE WI TNESS: Over 10 per cent of t he budget or i n key
5 per sonnel , and anyt hi ng t hat woul d af f ect t he t echni cal aspect
6 of t he pr oj ect .
7 Q. What , i f anyt hi ng, di d you di scuss about di r ect ver sus
8 i ndi r ect cost s?
9 THE COURT: About what , si r ?
10 Q. Di r ect ver sus i ndi r ect cost s?
11 A. We went over t he f act t hat di r ect cost s ar e pai d by t he
12 U. S. gover nment , and any cost shar e t hat t he pr oposer , pr oposed
13 i ndi r ect cost s must be pai d f or by t he pr oposer .
14 Q. What , i f anyt hi ng, was di scussed about how gr ant ee woul d
15 f i nd out whet her a r equest f or mor e occasi on, t he budget woul d
16 be gr ant ed or deni ed?
17 A. The onl y way t he r equest can be submi t t ed t o, whet her i t
18 was deni ed or appr oved i s submi t t ed i n wr i t i ng t o t he gr ant
19 r eci pi ent , f r omt he gr ant s of f i cer at NI ST.
20 THE COURT: What woul d be gi ven - - t he appr oval i n
21 wr i t i ng woul d be gi ven t o?
22 A. That i s cor r ect , t he appr oval i n wr i t i ng i s gi ven t o t he
23 awar ds r eci pi ent i n t he f or mof an amendment t o t he awar d. The
24 or i gi nal awar d i s an awar d document , and t hen t he f i r st
25 appr oved change i s amendment one, et cet er a. And t hat ' s an
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1 of f i ci al document si gned by t he gr ant s of f i cer at NI ST.
2 THE COURT: That woul d be Mi ss Snowden?
3 THE WI TNESS: No. Act ual l y i t ' s Mi ss Snowden' s boss
4 at t he t i me, i t was Mi ss Mar i l yn Gol dst ei n.
5 Q. At t he t i me t he pr oj ect was appr oved at CASI , di d you have
6 an under st andi ng as t o wher e Dr . Kar r on woul d be car r yi ng out
7 hi s r esear ch?
8 A. I t was our under st andi ng t hat of f i ce space was bei ng l ooked
9 f or i n l ower Manhat t an, and t hat t her e was a possi bi l i t y of
10 of f i ce space or l ab space at CUNY or at t he New Yor k Medi cal
11 Cent er .
12 Q. And how di d you l ear n t hi s?
13 A. I t was i n t he or i gi nal pr oposal and i t was di scussed.
14 Q. Ms. Li de, I ' mshowi ng you what has been mar ked f or
15 i dent i f i cat i on gover nment exhi bi t exhi bi t s 10, 10A, 10B, 11,
16 12, 13 and 14. Can you t ake a moment t o l ook at t hese?
17 THE COURT: These ar e not i n evi dence yet .
18 MR. KWOK: No t hey' r e not . I t ' s j ust f or
19 i dent i f i cat i on.
20 THE COURT: The j ur y shoul dn' t l ook at t hemunt i l such
21 t i me as t hey' ve been admi t t ed i n evi dence. J ust hol d on. Al l
22 r i ght . So we st ar t wi t h one document at a t i me Mr . Kwok.
23 THE WI TNESS: Okay.
24 MR. KWOK: Sur e, l et ' s l ook at gover nment exhi bi t 10.
25 THE COURT: Do you know what t hat i s, Ms. Li de?
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1 THE WI TNESS: Yes, I do.
2 THE COURT: And what i s i t ?
3 THE WI TNESS: I t i s t he f i r st par t of t he pr oposal
4 submi t t ed t o t he Advanced Technol ogy by CASI .
5 MR. KWOK: Gover nment of f er s gover nment exhi bi t 10?
6 THE COURT: No obj ect i on?
7 MR. RUBI NSTEI N: No obj ect i on, your Honor .
8 THE COURT: Gover nment ' s exhi bi t 10 i s admi t t ed i nt o
9 evi dence.
11 Q. Gover nment exhi bi t 10A.
12 THE COURT: The j ur y can l ook at 10 t hen.
13 Al l r i ght . 10A. ? Ms. Li de, do you know what t hat i s.
14 THE WI TNESS: Yes, I do. I t i s a - -
15 MR. RUBI NSTEI N: Your Honor , excuse me.
17 MR. RUBI NSTEI N: 10 i s a number of pages, your Honor .
18 I t ' s not j ust one page.
19 THE COURT: Yes, i t ' s a number of pages. You know
20 what i t i s?
21 THE WI TNESS: Wel l , t hi s i s, t hi s i s st i l l 10 on t he
22 boar d. Shal l I say what 10A i s? I ' msor r y, si r .
23 THE COURT: I ' maski ng about 10.
24 THE WI TNESS: 10A i s t he second par t of t he pr oposal
25 submi t t ed by CASI t o t he Advanced Technol ogy Pr ogr am. That
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1 year f or t he f i r st t i me, t o make i t easi er on pr oposer s, we l et
2 t hempr opose i n t wo par t s. So t hey submi t t ed t he t echni cal
3 pl an f i r st . I f t hat passed, t hen we asked t hemf or par t t wo,
4 whi ch i s t he commer ci al i zat i on pl an. So t hi s i s t he busi ness
5 pl an.
6 THE COURT: I s exhi bi t 10 t he t echni cal pl an?
7 THE WI TNESS: Yes, i t i s, si r .
8 THE COURT: And 10A i s what ?
9 THE WI TNESS: I s how t hey wi l l commer ci al i ze i f t he
10 t echnol ogy i s successf ul .
11 THE COURT: I see. What do you cal l t he second par t ?
12 THE WI TNESS: Wel l , we cal l i t gat e t wo pr oposal , but
13 t he cr i t er i a ar e t he commer ci al i zat i on cr i t er i a.
14 THE COURT: The commer ci al i zat i on cr i t er i a.
16 THE COURT: That ' s submi t t ed by t he pr oposed gr ant ee.
17 THE WI TNESS: Cor r ect .
19 MR. KWOK: Gover nment of f er s - -
20 THE COURT: Any obj ect i on, Mr - -
22 THE COURT: 10A i s t hen admi t t ed i n evi dence.
23 ( Gover nment ' s Exhi bi t 10A r ecei ved i n evi dence)
24 BY MR. KWOK:
25 Q. Ms. Li de, now t ake a l ook at gover nment exhi bi t of f er ed f or
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1 i dent i f i cat i on 10B. Do you know what t hat i s?
2 A. Yes. That ' s a det ai l ed budget , whi ch i s submi t t ed as par t
3 of gat e t wo, whi ch i s t he commer ci al i zat i on pl an.
4 Q. And who submi t t ed t hi s document ?
5 A. Thi s i s t he document submi t t ed as par t of pr oposal f r om
6 CASI .
7 MR. KWOK: Gover nment of f er s 10B.
8 THE COURT: 10B?
10 THE COURT: Any obj ect i on? No obj ect i on. 10B i s
11 admi t t ed i n evi dence.
12 ( Gover nment ' s Exhi bi t 10B r ecei ved i n evi dence)
13 THE COURT: Thi s i s, agai n, an appl i cat i on by CASI - -
14 par t of an appl i cat i on by CASI ?
17 BY MR. KWOK:
18 Q. Ms. Li de, now i f you coul d l ook at next exhi bi t , gover nment
19 exhi bi t 11 mar ked f or i dent i f i cat i on. Do you know what t hat
20 i s?
21 A. Yes. I t i s t he cover l et t er congr at ul at i ng Dr . Kar r on on
22 bei ng t he r eci pi ent of a ATP awar d, and i t ' s si gned by t he
23 act i ng di r ect or of t he advanced t echnol ogy pr ogr am, Mar k
24 St anl ey.
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1 THE COURT: What ' s t he dat e of t hat ?
2 THE WI TNESS: Dat e i s Oct ober - - I can' t r ead i t , but
3 I - - i t ' s pr obabl y ei t her one or f our . We al ways make awar ds
4 basi cal l y t he f i r st of t he gover nment f i scal year .
5 THE COURT: And what year ?
6 THE WI TNESS: 19 - - 2001.
7 THE COURT: Thi s i s not i ce of awar d?
8 THE WI TNESS: I ' msor r y, si r ?
9 THE COURT: I t ' s a not i ce of awar d, i s t hat - -
10 THE WI TNESS: Yes, t hat ' s cor r ect . I t ' s a cover
11 l et t er .
12 THE COURT: I t ' s a cover l et t er .
13 THE WI TNESS: Ri ght , whi ch - -
14 THE COURT: That CASI has r ecei ved an awar d?
19 THE COURT: Exhi bi t 11 i s admi t t ed i n evi dence.
21 Q. Now, l et ' s t ake a l ook at gover nment exhi bi t mar ked f or
22 i dent i f i cat i on 12. Do you know what i s t hat , Ms. Li de?
23 A. Yes, t hat i s t he cover f r omt he gr ant s of f i ce, of f i ce of
24 t he f i nanci al assi st ance awar d, and i t woul d be t he next page
25 of what Dr . Kar r on r ecei ved under t he pr evi ous l et t er f r omMar k
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1 St anl ey. Thi s i s t he act ual awar d document i t sel f .
2 MR. KWOK: Gover nment of f er s gover nment exhi bi t 12.
3 THE COURT: Any obj ect i on?
4 MR. RUBI NSTEI N: None, your Honor .
5 THE COURT: Gover nment exhi bi t 12 i s admi t t ed i n
6 evi dence.
8 Q. Now, l et ' s l ook at t he next document , Ms. Li de, gover nment
9 exhi bi t mar ked f or i dent i f i cat i on 13. Do you r ecogni ze t hat
10 i s?
11 A. Yes.
12 Q. What i s i t ?
13 A. I t pr ovi des det ai l s about t he awar d out l i ned i n gover nment
14 exhi bi t 12 gi vi ng cont act s t echni cal and admi ni st r at i ve, bot h
15 f or t he company and f r omNI ST and t hen descr i bi ng f undi ng
16 l i mi t at i ons f or t he t hr ee- year per i od, t he f i r st year
17 descr i bi ng how t o make changes and ot her r equi r ement s as
18 appr opr i at e t o t hi s awar d.
19 BY MR. KWOK:
20 Q. I s t hi s document par t of a package you r ef er r ed t o ear l i er
21 t hat was sent t o CASI ?
22 A. Yes. Thi s document woul d be t he next t wo pages af t er
23 gover nment exhi bi t 11 and 12, t hi s woul d f ol l ow.
25 MR. RUBI NSTEI N: Wi t hout obj ect i on, your Honor .
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1 THE COURT: No obj ect i on? Al l r i ght . 13 i s admi t t ed
2 i n evi dence.
4 Q. The next document , Ms. Li de, gover nment exhi bi t 14, mar ked
5 f or i dent i f i cat i on; do you r ecogni ze what t hat i s?
6 A. Yes.
7 Q. What i s i t ?
8 A. I t i s t he summar y budget t hat accompani ed t hi s pr oposal , so
9 i t woul d be t he budget of r ecor d when t he pr oj ect st ar t ed.
10 Q. And who submi t t ed t hi s pr oposal ?
11 A. CASI .
12 Q. And f or what gr ant s?
13 A. Comput er Ai ded Sur ger y I ncor por at ed.
14 Q. And what gr ant s, what t ype of pr ogr am?
15 A. I ' msor r y. I t was wi t h t he Advanced Technol ogy Pr ogr am.
17 THE COURT: Thi s accompani ed 11, 12 and 13?
18 THE WI TNESS: Yes, i t does, si r .
19 THE COURT: Al l r i ght , 14 i s admi t t ed i n evi dence.
21 Q. Now, l et ' s go back t o gover nment exhi bi t 12. Di r ect i ng
22 your at t ent i on t o t he mi ddl e of t he page, t he bl ock i n bol d,
23 can you r ead t he second sent ence i n t he bol ded par agr aph?
24 A. By si gni ng t he t hr ee document s, t he r eci pi ent agr ees t o
25 compl y wi t h t he awar d pr ovi si ons checked bel ow and at t ached.
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1 THE COURT: I ' msor r y, what - - i t ' s gover nment exhi bi t
2 12?
3 THE WI TNESS: Yes, si r . I t ' s name - - i t ' s f i nanci al
4 assi st ance awar d.
5 THE COURT: Yes.
6 THE WI TNESS: Okay. And I ' mr eadi ng - -
7 THE COURT: Wher e ar e you r eadi ng?
8 THE WI TNESS: The bol d - - t he second sent ence of bol d
9 i n t he l ar gest bl ock on t hat page. The sent ence st ar t s at t he
10 l ef t mar gi n, by si gni ng.
11 Q. And what ar e t hese i t ems checked bel ow and at t ached?
12 A. The i t ems checked bel ow and at t ached out l i ne al l of t he
13 r ul es and r egul at i ons whi ch t hi s gr ant must appl y.
14 Q. Ar e t hose t he same r ul es and condi t i ons t hat you out l i ned a
15 moment ago?
16 A. Yes, t hey' r e t he r ul es and condi t i ons t hat ar e i n pr evi ous
17 gover nment exhi bi t s and l i st ed i n exhi bi t wi t h t he power poi nt s
18 ki ckof f meet i ng sl i des.
19 THE COURT: The onl y ones t hat appl y ar e t he ones t hat
20 ar e mar ked wi t h an X?
21 THE WI TNESS: That i s cor r ect , si r .
22 THE COURT: I s t he speci al awar d condi t i ons, do you
23 know whet her t hat was mar ked wi t h an X or not . My copy has a
24 hol e i n i t .
25 THE WI TNESS: Yes, i t i s because t hi s awar d had t hem,
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1 as you saw, i n exhi bi t 13.
3 Q. I f we coul d go t o t he bot t omof t hat page. What si gnat ur e
4 appear s i n t he box l abel ed, aut hor i zed r eci pi ent of f i ci al ?
5 A. D. B. Kar r on.
6 Q. What i s t he t i t l e?
7 A. Pr esi dent .
8 Q. What i s t he dat e?
9 A. 5 Oct ober , ' 01.
10 Q. Let ' s t ur n t o gover nment exhi bi t 13. Ms. Li de, what i s
11 t hi s document agai n?
12 A. These ar e speci al awar d condi t i ons f or t hi s par t i cul ar
13 gr ant ee.
14 Q. I f we coul d zoomi n t o t he sect i on of t he f or mt i t l ed
15 f undi ng l i mi t at i ons? What does t hat say?
16 A. I t says t hat t hi s i s a t hr ee year pr oj ect f or $2, 000.
17 However , onl y $800, 000 ar e al l ocat ed.
18 Q. Ms. Li de, you sai d $2, 000?
19 A. Two mi l l i on - - I apol ogi ze - - $2 mi l l i on awar d f or t hr ee
20 year s, but onl y 800, 000 of t hat i s al l ocat ed t o t he f i r st year
21 budget per i od. And t hen i t ar t i cul at es t hat t he r eci pi ent
22 shal l submi t i n wr i t i ng a r evi sed budget and/ or budget
23 nar r at i ve t o t he gr ant s of f i ce f or appr oval i f ot her changes t o
24 t he budget ar e needed.
25 THE COURT: Wher e i s t hat ?
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1 THE WI TNESS: Under t he par t t hat ' s under l i ned sayi ng
2 Oct ober 1, 2001 t hr ough Sept ember 30, 2002. I t says t hat i f
3 t her e ar e r esul t s i n changes t o t he budget or budget nar r at i ve
4 t he r eci pi ent shal l submi t i n wr i t i ng a r evi sed budget and/ or
5 budget nar r at i ve t o t he gr ant s of f i cer f or appr oval .
6 THE COURT: I j ust don' t see wher e t hat i s, what you
7 r ead f r om.
8 THE WI TNESS: Okay, i t ' s under t he hi ghl i ght ed
9 Oct ober , under l i ned Oct ober 1, 2001, and i t st ar t s out , t he
10 gr ant s - -
11 THE COURT: I ' msor r y, j ust hol d up because I ' mnot
12 f ami l i ar wi t h t hese document s.
13 THE WI TNESS: I ' msor r y.
14 THE COURT: You ar e.
15 ( Pause)
16 THE COURT: You ar e r eadi ng t he gr ant s of f i cer may
17 r equi r e, i s t hat - -
19 THE COURT: Addi t i onal cl ar i f i cat i on t o suppor t
20 budget ?
22 THE COURT: I f t hat r esul t s i n changes t o t he budget s
23 or budget nar r at i ve, t he r eci pi ent shal l submi t i n wr i t i ng a
24 r evi sed budget f or appr oval . Al l r i ght .
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1 Q. I f we coul d go t o t he next page of t hi s exhi bi t under
2 par agr aph seven, cost shar e. Ms. Li de, what i s t he cost shar e
3 ar r angement at CASI ?
4 A. CASI , i n t he or i gi nal pr oposal pr oposed a cost shar e - - and
5 t hi s i s out l i ned i n i t emseven - - t hat NI ST - - f or di r ect cost s
6 NI ST woul d cont r i but e 96. 39 per cent or $800, 000 and CASI ' s
7 shar e woul d be 3. 61 per cent or 30 - - $30, 000, and t hat ' s f or
8 t he f i r st year .
9 Q. Do you know how much gr ant money awar ded t o CASI was
10 act ual l y wi t hdr awn?
11 A. Appr oxi mat el y $1. 3 mi l l i on.
12 THE COURT: I n t he f i r st year ?
13 THE WI TNESS: No, si r , over t wo year s. Onl y 800 coul d
14 be wi t hdr awn f or t he f i r st year .
15 Q. Now, l et ' s go t o gover nment exhi bi t 14. And what i s t hi s
16 document agai n, Ms. Li de?
17 A. Thi s i s t he summar y budget f or t he t hr ee year s of t he
18 pr oj ect .
19 Q. Now, Ms. Li de, af t er t he ki ckof f meet i ng, di d you have any
20 f ur t her i nt er act i ons wi t h t he def endant ?
21 A. Yes. We had phone cal l s, vi si t s, e- mai l s.
22 THE COURT: You, your sel f ?
24 Q. Coul d you descr i be your i nt er act i on wi t h t he def endant ?
25 A. Cer t ai nl y. As a member of t he pr oj ect management t eam, we
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1 ar e al ways avai l abl e f or consul t at i on, and t hat can be
2 f ace- t o- f ace, t hat can be vi a e- mai l , and t hat can be phone
3 cal l s. And i n t he case of t hi s gr ant , al l t hr ee occur r ed.
4 THE COURT: He asked f or what your r el at i onshi p was,
5 not what t he t eam' s r el at i onshi p was.
6 THE WI TNESS: I par t i ci pat ed i n al l t hr ee of t hose. I
7 exchanged e- mai l s wi t h Dr . Kar r on, I exchanged phone cal l s wi t h
8 Dr . Kar r on, and I had f ace- t o- f ace meet i ngs wi t h Dr . Kar r on.
9 Q. Who i ni t i at ed t hese phone cal l s t hat you' r e r ef er r i ng t o?
10 A. They can be i ni t i at ed on ei t her si de, but usual l y t he
11 r eci pi ent , Dr . Kar r on, i ni t i at ed t he cont act .
12 Q. Why was he r eachi ng out t o NI ST?
13 THE COURT: Obj ect i on sust ai ned. You don' t know why
14 he - -
15 Q. What di d he di scuss when he cal l ed you?
16 A. Di scussi ons had t o do wi t h per haps changes i n t he
17 pr oj ect - - not per haps - - wi t h changes i n t he pr oj ect t hat he
18 woul d l i ke t o pr opose. Per haps wi t h - - not per haps, sor r y - -
19 wi t h meet i ngs t o whi ch he woul d go and pr esent a paper , t he
20 possi bi l i t y of comi ng t o meet at NI ST or us t o go vi si t CASI ,
21 any sor t of act i vi t y i n t he day- t o- day pr ong management .
22 Q. What t ype budget changes was he r equest i ng?
23 A. Over t he l i f e of t he pr oj ect or ear l y i n t he l i f e, ear l y i n
24 t he pr oj ect ?
25 Q. Ear l y i n t he pr oj ect .
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1 A. Ear l y i n t he pr oj ect t her e wer e some mi nor changes t o
2 basi cal l y per sonnel and equi pment .
3 Q. And what , i f anyt hi ng, di d you di scuss wi t h t he def endant
4 about t he t opi c of r ent ?
5 A. Rent i s an unal l owabl e cost . He - -
6 THE COURT: No.
7 MR. RUBI NSTEI N: Obj ect i on, your Honor . I t ' s not
8 r esponsi ve.
9 THE COURT: What di d you say t o t he def endant about
10 r ent ?
11 THE WI TNESS: I t i s an unal l owabl e cost .
12 THE COURT: That came up i n t he conver sat i on?
13 THE WI TNESS: Yes, si r , i t di d.
15 Q. Now, Ms. Li de, what di f f er ence woul d i t have made i f t he
16 apar t ment was used, i n par t , as an of f i ce?
17 A. ATP does not pay r ent , so i t woul d make, make no
18 di f f er ence.
19 Q. Di d you expl ai n t hi s t o t he def endant ?
20 A. Yes.
21 Q. What , i f any, was hi s r esponse?
22 A. That i n - - f or t hi s gr ant s, t her e wer e uni que ci r cumst ances
23 and i t shoul d be consi der ed.
24 THE COURT: Can you t el l us, appr oxi mat el y, when t he
25 conver sat i on t ook pl ace?
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1 THE WI TNESS: Ver y cl ose t o t he begi nni ng of t he
2 pr oj ect , cer t ai nl y r i ght af t er t he begi nni ng of t he 2002.
3 That ' s t he best of my r ecol l ect i on.
5 Q. And what di d you say t o hi mi n r esponse t o t hat ?
6 A. That ATP does not pay r ent ; i t i s an unal l owabl e cost . He
7 coul d pr opose t hi s t o t he gr ant s of f i cer and see what woul d
8 happen, but t hat i t was - - i t has never been done.
9 Q. What , i f any, ot her cat egor i es di d you di scuss i n your
10 conver sat i ons wi t h t he def endant ?
11 A. One of t he ot her maj or cat egor i es was r enovat i ons t o t he
12 exi st i ng space, because t he comput er s wer e maki ng t he space
13 ext r emel y hot , and we di scussed i mpr ovi ng t hat space wi t h
14 addi t i onal el ect r i ci t y. And, once agai n, t hat i s a capi t al
15 i mpr ovement , whi ch ATP does not pay f or .
16 Q. Di d you t el l t hat t o t he def endant ?
17 A. Yes.
18 Q. What , i f anyt hi ng, di d you t al k about wi t h t he def endant
19 about t he equi pment ?
20 A. Equi pment must st ay wi t hi n t he amount on t hi s budget , and
21 any change i n t he amount of equi pment needed, any changes i n
22 maj or pur chases woul d have t o be appr oved i n wr i t i ng bef or e
23 t hat coul d occur .
24 Q. And what , i f anyt hi ng, di d you di scuss wi t h t he def endant
25 about f r i nge benef i t s?
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1 THE COURT: I ' msor r y, about what ?
2 Q. Fr i nge benef i t s?
4 THE COURT: Di d you di scuss anyt hi ng about f r i nge
5 benef i t s?
6 THE WI TNESS: Yes, we di d.
7 THE COURT: When was t hat , about ?
8 THE WI TNESS: Appr oxi mat el y t he same t i me.
10 Q. What di d you t el l t he def endant ?
11 A. That t her e must be a wr i t t en pol i cy f or f r i nge benef i t s
12 t hat i s adher ed t o f or al l pr oj ect s of t he company, and i s an
13 i ndust r y st andar d, and al l empl oyees of t he company must
14 r ecei ve t he same f r i nge benef i t s.
15 Q. Can you unpack some of t hose t er ms, what do you mean when
16 you say, has t o appl y t o al l empl oyees equal l y?
17 A. Wel l , once agai n, how we i nt er pr et f r i nge benef i t s,
18 accor di ng t o t he r egul at i ons t hat gover n us, t hey' r e ar e t hi ngs
19 l i ke heal t h i nsur ance and vacat i on t i me, and per haps t ui t i on
20 assi st ance what ever . And one must have a wr i t t en pl an f or what
21 one wi l l gi ve one' s empl oyees. Al l empl oyees must r ecei ve t he
22 same, and i t must be consi st ent wi t h what ot her compani es i n
23 your i ndust r y i s pr ovi di ng.
24 Q. So what happens i f t he company does not have a wr i t t en
25 pl an?
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1 A. Then t hey wi l l not be appr oved.
2 Q. What does t hat mean?
3 A. That ATP cannot accept t hose as an al l owabl e cost .
4 Q. Now, asi de f r omhavi ng t hese conver sat i ons wi t h Dr . Kar r on
5 over t he t el ephone, di d you t al k t o hi mi n per son?
6 A. Yes, we di d.
7 Q. How di d t hat come about ?
8 A. Si nce t he ki ckof f had been at t he Nat i onal I nst i t ut e of
9 St andar ds And t echnol ogy i n November , and t hat was at our
10 r equest , because t hat was r i ght af t er Sept ember 11t h and we - -
11 gover nment empl oyees wer e not al l owed t o t r avel . So af t er t he
12 f i r st of t he year we f el t i t i mpor t ant t o vi si t t he f aci l i t i es
13 of t hi s pr oj ect , and al so t o have a di scussi on wi t h Dr . Kar r on
14 about some of t hese changes and some of t hese conver sat i ons
15 t hat had occur r ed over t he phone. So we r equest ed a vi si t t o
16 hi s company' s f aci l i t i es.
17 Q. Di d you go, your sel f , t o t hi s meet i ng?
18 A. I went mysel f wi t h one ot her col l eague f r omNI ST, yes.
19 Q. And wher e di d you go?
20 A. We went t o Manhat t an t o CASI headquar t er s, whi ch was on
21 East 33r d St r eet .
22 THE COURT: About when was t hi s?
23 THE WI TNESS: Thi s was i n May of 2002.
24 Q. And what was t he bui l di ng or est abl i shment t hat you went
25 t o?
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1 A. The bui l di ng was an apar t ment bui l di ng.
2 Q. And whose apar t ment was t hat ?
3 A. I t was Dr . Kar r on' s apar t ment .
4 Q. What , i f anyt hi ng, di d Dr . Kar r on say about why he was
5 doi ng r esear ch out of hi s apar t ment ?
6 A. That at t empt s t o get l ab space i n Lower Manhat t an or at t he
7 uni ver si t y f aci l i t y had not yet come t o f r ui t i on.
8 Q. And what di d you obser ve when you went i nt o t hat apar t ment ?
9 A. I obser ved a r oomof l ar gel y comput er equi pment , and I
10 obser ved some i ndi vi dual s whose acquai nt ance I had not met
11 bef or e t hat .
12 Q. And what , i f anyt hi ng, di d Dr . Kar r on say about t hese
13 i ndi vi dual s t hat you had not met ?
14 A. Wel l , as usual wi t h si t e vi si t s - - we cal l t hese si t e
15 vi si t s - - and as usual wi t h si t e vi si t s we go ar ound and
16 i nt r oduce our sel ves. And Dr . Kar r on i nt r oduced t hese peopl e as
17 havi ng var i ous r esponsi bi l i t i es i n CASI .
18 Q. What , i f anyt hi ng, about t he budget di d you di scuss dur i ng
19 t hi s vi si t s?
20 A. We di scussed pr oposed changes i n equi pment cat egor i es.
21 Al so, si nce t her e wer e new peopl e t her e, we asked f or
22 j ust i f i cat i on of what t hose peopl e wer e doi ng, whet her t hey
23 wer e on ATP f unds or not . Because, as we sai d, f or t hemt o be
24 wor ki ng on our pr oj ect , t hey need pr i or appr oval . So we
25 expl ai ned t he need f or a r evi sed budget r equest and
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1 document at i on t o subst ant i at e i t .
2 Q. Di d you have t hi s conver sat i on wi t h Dr . Kar r on as wel l ?
3 A. Yes.
4 Q. Now, Ms. Li de, was t hi s t he onl y si t e vi si t s you made t o
5 CASI ?
6 A. No. That was i n May of 2002, and t he budget i ssues
7 cont i nued over t he summer , and so t he pr oj ect management t eam
8 f el t i t i mper at i ve t o have a voi ce- t o- voi ce conver sat i on agai n
9 wi t h Dr . Kar r on, and we pai d anot her si t e vi si t i n Oct ober of
10 2002.
11 Q. Now, f or t he ot her gr ant s t hat you over see, Ms. Li de, how
12 many si t e vi si t s do you t ypi cal l y do?
13 A. The t ypi cal - -
14 MR. RUBI NSTEI N: Obj ect i on, your Honor , not r el evant .
15 THE COURT: The obj ect i on' s sust ai ned.
16 Q. Ms. Li de, why di d you go t o t hi s si t e vi si t f or a second
17 t i me?
19 THE COURT: Was t her e a r eason?
20 THE WI TNESS: Yes si r . I t hought I ar t i cul at ed - -
21 THE COURT: I t hought she answer ed.
22 THE WI TNESS: I wi l l be happy t o r epeat i t you want .
23 THE COURT: No, i t ' s al l r i ght .
25 Q. What di d you hope t o accompl i sh goi ng back t he second t i me?
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1 A. What we hoped t o accompl i sh was t o have a di scussi on t o t r y
2 t o i r on out t he budget di f f er ences, because t hat had become a
3 maj or i ssue i n t hi s gr ant , was t o get a budget t hat t he awar dee
4 coul d l i ve wi t h, and yet met t he gover nment r ul es and
5 r egul at i ons.
6 By t hi s t i me, i f you r emember t he dat es cor r ect l y, t he
7 f i r st year of t he gr ant s was over . So what we hoped t o expl ai n
8 t o t he r eci pi ent was by t hen i t shoul d not be an est i mat ed
9 budget any mor e; he shoul d be abl e t o pr oduce act ual cost s f or
10 year one.
11 Q. Di d you di scuss t hi s wi t h Dr . Kar r on?
12 A. Yes. At t hat poi nt we st ar t ed r equest i ng t he act ual
13 f i gur es f or t he year one, what had act ual l y been spent .
14 Q. And what , i f anyt hi ng el se, di d you di scuss wi t h t he
15 def endant about t he budget dur i ng t hi s second si t e vi si t ?
16 A. Typi cal i ssues wer e equi pment and j ust i f i cat i on of who was
17 wor ki ng on t he pr oj ect , per sonnel who was wor ki ng as an
18 empl oyee ver sus subcont r act . We had t r oubl e get t i ng our hands
19 on t hat .
20 Q. And what di d you t el l Dr . Kar r on t hat he had t o do?
21 A. Submi t a r evi sed budget wi t h j ust i f i cat i on f or t he changes
22 i n equi pment and who was wor ki ng on t he pr oj ect under ATP money
23 and i n whi ch cat egor y, subcont r act or s or empl oyees.
24 Q. Now, asi de f r omt hese t wo si t e vi si t s, di d you have ot her
25 i n per son meet i ngs wi t h t he def endant ?
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1 A. Yes. Ther e was one, possi bl y t wo t i mes t hat t he def endant
2 came t o NI ST and we had di scussi ons wi t h hi mt her e.
3 Q. What di d t he def endant say about t he pur pose of t he
4 meet i ng?
5 A. Once agai n, t he budget was t he bi g deal , t o i r on out t he
6 budget was t he mai n i ssue.
7 Q. And what di d you di scuss when you met ?
8 THE COURT: When was t hi s meet i ng, when was t hi s
9 meet i ng?
10 THE WI TNESS: The one meet i ng I r emember di st i nct l y,
11 si r , was i n t he summer of 2002 bet ween my t wo si t e vi si t s, so I
12 bel i eve i t woul d be J ul y, i f I r emember cor r ect l y.
13 THE COURT: That was bef or e t he - -
14 THE WI TNESS: Bef or e t he second si t e vi si t .
15 THE COURT: Bef or e t he second si t e vi si t by your
16 st af f - -
17 THE WI TNESS: That i s cor r ect .
18 THE COURT: - - and your sel f .
20 Q. What , i f anyt hi ng, di d you di scuss?
21 A. The changes t hat wer e pr oposed and t he need t o document
22 t hem, j ust i f y t hemand get wr i t t en appr oval bef or e t he pr oj ect
23 coul d go f or t h wi t h t he new budget .
24 Q. And what , i f anyt hi ng, di d you di scuss r el at i ng t o t he
25 t echni cal aspect of your pr oj ect ?
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1 A. We al so t r i ed t o l ook ahead, because t he pr oj ect woul d need
2 some t echni cal i nput and changes i n year t hr ee because i t was
3 goi ng t o use some human and ani mal subj ect s, and we suggest ed
4 t hat we st ar t t hat pr ocess now because i t was t i me consumi ng.
5 Q. And what di d t he def endant say about t hat ?
6 THE COURT: Thi s i s i n J ul y?
7 THE WI TNESS: Yes, si r . That was i n J ul y; yes, si r .
9 A. I was act ual l y shocked, because i nst ead of sayi ng - -
10 MR. RUBI NSTEI N: Obj ect i on. I move t o st r i ke.
11 THE COURT: Obj ect i on sust ai ned.
12 Q. What di d t he def endant say?
13 A. That no appr oval woul d be needed i f he woul d j ust come and
14 schmooze and t ake us t o l unch.
15 Q. Let ' s t ur n t o gover nment exhi bi t mar ked f or i dent i f i cat i on
16 30. Ms. Li de, do you r ecogni ze t hi s document ?
17 A. Yes, I do.
18 Q. What i s t hi s document ?
19 A. Thi s i s a document t hat t he pr oj ect management t eamsent t o
20 t he gr ant s of f i cer r equest i ng a gover nment audi t of t hi s
21 pr oj ect .
22 Q. And whi ch gr ant s and company does t hi s l et t er r el at e t o?
23 A. The awar d t o CASI .
25 MR. RUBI NSTEI N: I ' mgoi ng t o obj ect , your Honor .
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1 THE COURT: You obj ect t o 30?
3 THE COURT: Seems t o me i t ' s obj ect i onabl e, Mr . Kwok.
4 BY MR. KWOK:
5 Q. Wel l , Ms. Li de, i s t hi s document kept i n t he cour se of a
6 r egul ar l y conduct ed busi ness act i vi t y?
7 A. Thi s woul d be t he way i n t he Advanced Technol ogy Pr ogr am
8 t hat we woul d r equest an audi t of a company.
9 Q. And was t hi s document pr epar ed by someone wi t h knowl edge
10 of - - t r ansmi t t ed by a per son wi t h knowl edge of t he i nf or mat i on
11 cont ai ni ng wi t hi n i t ?
12 A. Yes, t hi s document i s pr epar ed by t he ATP pr oj ect
13 management t eam, i ncl udi ng mysel f .
14 Q. And was t hi s document pr epar ed as soon as t he i nf or mat i on
15 cont ai ned wi t hi n i t became avai l abl e?
16 A. Yes, i t was.
17 MR. KWOK: Gover nment of f er s exhi bi t 30.
19 THE COURT: I s i t - - i s t he document l i ke t hi s
20 pr epar ed i n t he cour se of t he agency' s busi ness?
21 THE WI TNESS: Yes, si r , i t i s.
22 THE COURT: And i s i t t he r egul ar cour se of t he
23 agency' s busi ness t o keep t hese document s?
24 THE WI TNESS: Yes. The Advanced Technol ogy Pr ogr ami s
25 heavi l y audi t ed and i nspect ed, and we need document at i on of our
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1 act i ons.
2 THE COURT: That seems t o me i t ' s admi ssi bl e on t hose
3 gr ounds. But not i t ' s not - - t hi s has t o do wi t h an i nt er nal
4 communi cat i on i n t he agency, and i t woul d be admi ssi bl e on
5 t hose gr ounds, Mr . Rubi nst ei n.
6 MR. RUBI NSTEI N: I don' t bel i eve so, your Honor . I
7 st at ed my obj ect i on.
8 THE COURT: You want t o t el l me why not at si debar ?
9 I t hi nk t he smar t t hi ng t o do woul d be f or t he j ur y t o
10 get a br eak at t hi s poi nt and come back whi l e we have our
11 di scussi on and see i f we can ki l l t wo bi r ds wi t h one st one, as
12 t he expr essi on goes.
15 THE COURT: Can t he wi t ness can st ep down, Mr .
16 Rubi nst ei n?
18 THE COURT: You want t he wi t ness t o st ep down or not ?
19 MR. RUBI NSTEI N: Onl y i f she needs a br eak. I don' t
20 car e i f she' s her e.
21 THE COURT: You want a br eak?
22 THE WI TNESS: What ever i s good f or you.
23 THE COURT: Wel l , maybe you coul d expl ai n t o me why
24 you t hi nk I shoul dn' t admi t t hi s, i f i t ' s kept i n t he r egul ar
25 cour se of busi ness.
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1 MR. RUBI NSTEI N: Yes, your Honor . Because under
2 403 - -
3 THE COURT: What ?
4 MR. RUBI NSTEI N: I t hi nk when you bal ance i t , t hey' r e
5 maki ng al l ki nds of st at ement s and f i ndi ngs her e of f i ve
6 ver si ons of t he act ual - -
7 THE COURT: You want an i nst r uct i on t o t he j ur y of
8 some sor t ?
9 MR. RUBI NSTEI N: Wel l - - ar e t hey goi ng t o cal l anot her
10 wi t ness, J udge, i n r el at i on t o t hi s?
11 THE COURT: I don' t know.
12 MR. RUBI NSTEI N: Because i f t hey ar e, t hen maybe i t
13 may be academi c t o pr ess an obj ect i on.
14 THE COURT: Thi s i s a memor andumf r omMs. Li de, who i s
15 t he wi t ness.
16 MR. RUBI NSTEI N: I t ' s sel f - ser vi ng.
17 THE COURT: To t he NI ST gr ant s of f i cer t hr ough Mi ss
18 Sobol ewski and Mi ss Cut hi l l , her super vi sor , I gat her .
20 MR. RUBI NSTEI N: I t ' s sel f - ser vi ng, i t ' s but t r essi ng
21 what she' s t est i f yi ng t o.
22 THE COURT: She hadn' t t est i f i ed t o t hi s par t .
23 MR. RUBI NSTEI N: She want t o - - t hey' r e t r yi ng t o
24 i nt r oduce i t i nt o evi dence.
25 MR. KWOK: Your Honor , i f I may, i t ' s r eal l y a cl assi c
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1 busi ness r ecor d. I t i s made cont empor aneousl y wi t h t he event s
2 happeni ng at ar ound t he same t i me.
3 THE COURT: I t goes t hr ough a ser i es of event s. I t
4 goes t hr ough f i ve di f f er ent budget s. I t r el at es t o f i ve
5 di f f er ent budget s.
6 MR. KWOK: I t does, but t he - - I guess t he pr obl em
7 t hi s memo was t r yi ng t o r el at e t o was t hat t he number s i n t hose
8 f i ve di f f er ent budget s wer e al l di f f er ent , and t hi s memo was
9 pr epar ed t o not e t hat pr obl emwhen i t became obvi ous t o peopl e
10 at NI ST. And t hi s wi t ness i s on t he st and. She can be
11 cr oss- exami ned on i t i f def ense counsel seems t o t hi nk t hat
12 i t ' s sel f ser vi ng, but i t i s admi ssi bl e because t he aut hor of
13 t hi s memo was Ms. Li de, who i s t he wi t ness her e.
14 MR. RUBI NSTEI N: J udge t hat ' s why I f eel exact l y why
15 she shoul dn' t , because she' s her e t o t est i f y, and why but t r ess
16 her t est i mony wi t h a document ?
17 THE COURT: To show t hat she made a cont empor aneous
18 r epor t al ong t hose l i nes.
19 MR. KWOK: And i f Ms. Li de wasn' t t he aut hor of t hi s
20 document , Mr . Rubi nst ei n woul d obj ect t hat t he wi t ness woul d
21 have no per sonal knowl edge. So t hi s i s t he cl assi c t ype of
22 si t uat i on, i t seems t o me.
23 THE COURT: I t hi nk she shoul d t est i f y t o i t bef or e
24 i t ' s admi t t ed i n evi dence, t hough. I t hi nk she shoul d t est i f y
25 t o t he exhi bi t i n quest i on.
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1 MR. KWOK: Ver y wel l , your Honor .
3 MR. RUBI NSTEI N: Coul d we st ep out f or a moment ,
4 J udge?
5 THE COURT: Yeah.
7 THE COURT: Let ' s st ep out and come back as soon as
8 possi bl e.
9 MR. RUBI NSTEI N: I shal l , your Honor .
10 ( Recess)
11 ( J ur y ent er i ng)
12 THE COURT: Al l r i ght , pl ease be seat ed. Let ' s
13 pr oceed now, Mr . Kwok.
15 Q. Ms. Li de, i f you coul d t ake a l ook at gover nment exhi bi t
16 mar ked f or i dent i f i cat i on 31?
17 THE COURT: Let ' s - -
18 THE WI TNESS: 31?
19 THE COURT: We' r e not past 30 yet . I haven' t admi t t ed
20 30.
21 MR. KWOK: I under st and. I ' m- -
23 MR. KWOK: I t hi nk i t woul d l ay t he f oundat i on.
25 Q. Do you know what gover nment exhi bi t mar ked f or
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1 i dent i f i cat i on 31 i s?
2 A. I t ' s t he cover page of a r evi sed budget t hat was submi t t ed
3 by t he company CASI dat ed August 1, 2002.
6 MR. RUBI NSTEI N: None your Honor .
7 BY MR. KWOK:
8 Q. Let ' s t ur n - -
9 THE COURT: 31 i s admi t t ed i n evi dence.
11 Q. Ms. Li de, i f you coul d - -
12 MR. RUBI NSTEI N: Your Honor - -
13 THE COURT: I ' msor r y, Mr . Rubi nst ei n?
14 MR. RUBI NSTEI N: I ' mgoi ng t o obj ect , your Honor , t hat
15 i t ' s not a compl et e document .
17 MR. RUBI NSTEI N: I t ' s not a compl et e document .
18 THE COURT: I s i t - - i s t hi s t he budget t hat was
19 submi t t ed, Ms. Li de, or i s i t - -
20 THE WI TNESS: Yes, t hi s i s t he mul t i year budget and,
21 as such, i s a document - - i t does not cont ai n t he budget ,
22 budget nar r at i ve, i f - - but t hi s i s t he budget t hat woul d
23 gover n - - you know, i f i t wer e accept ed, i t woul d gover n t he
24 act i vi t i es of t he pr oj ect .
25 THE COURT: So what i s i t accompani ed by?
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1 THE WI TNESS: I n or der t o - -
2 THE COURT: I s i t a compl et e document or di d he submi t
3 ot her document s wi t h i t ?
4 THE WI TNESS: Al ong wi t h t hi s budget , we r equest t he
5 nar r at i ve, whi ch i s a expl anat i on of each of t hese l i ne i t ems
6 f or each year , whi ch i s not i n t hi s f ol der .
7 THE COURT: Al l r i ght . But t hat ' s, t hese - - t hese ar e
8 t wo document s, t hi s i s j ust t he budget ?
10 THE COURT: Al l r i ght , I ' l l al l ow 31.
12 Q. Now, l et ' s t ake a l ook at gover nment exhi bi t mar ked f or
13 i dent i f i cat i on 32. Do you r ecogni ze t hat document , Ms. Li de?
14 A. Yes.
15 Q. What i s t hat ?
16 A. I t i s anot her pr oposed budget submi t t ed by CASI on Oct ober
17 20t h.
19 MR. RUBI NSTEI N: Obj ect i on, your Honor . That - - i t ' s
20 mi ssi ng a nar r at i ve.
21 THE COURT: Same r ul i ng, I ' l l al l ow i t , t hese
22 document s exhi bi t , budget s, exhi bi t 32 i s admi t t ed i n evi dence.
24 Q. Next document , Ms. Li de, gover nment exhi bi t mar ked f or
25 i dent i f i cat i on 33, do you know what t hat i s?
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1 A. Yes. Ther e ar e act ual l y t wo document s i n her e. Ther e' s
2 t he est i mat ed mul t i year budget as submi t t ed on December 2nd,
3 al ong wi t h t he budget nar r at i ve expl ai ni ng al l of t he f i gur es
4 on t hat budget .
9 Q. The next document i s mar ked f or i dent i f i cat i on gover nment
10 exhi bi t 34; do you know what i t i s, Ms. Li de?
11 A. Yes. I t consi st s of t hr ee pi eces, t he f i r st of whi ch i s
12 t he e- mai l t r ansmi t t i ng anot her - - sor r y - - anot her pr oposed
13 budget ; t he second page i s t he est i mat ed budget s, and t hen t he
14 r est of t he page i s, agai n consi st s of t he budget nar r at i ve
15 descr i bi ng al l of t he l i nes on t he budget .
16 THE COURT: What dat e was t hi s?
17 THE WI TNESS: 12 - - t hi s one was 12/ 20.
18 THE COURT: That ' s exhi bi t 33?
19 THE WI TNESS: 34, si r .
20 THE COURT: What was t he exhi bi t 33, when was t hat ?
21 THE WI TNESS: 12/ 2.
22 THE COURT: I see. Sor r y.
23 THE WI TNESS: I t ' s conf usi ng.
24 THE COURT: 34.
25 MR. KWOK: Gover nment of f er s exhi bi t 34.
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2 THE COURT: No obj ect i on, t o 34? Al l r i ght .
4 Q. Next document i s mar ked f or i dent i f i cat i on gover nment
5 exhi bi t 35. Do you know - - do you r ecogni ze what t hat i s?
6 A. Yes. Once agai n i t consi st s of t he t r ansmi ssi on of anot her
7 budget , t he budget i t sel f and t he nar r at i ve descr i bi ng each
8 l i ne i t emon t he budget .
10 THE COURT: That ' s - -
11 THE WI TNESS: 12/ 24.
12 THE COURT: 24, yes? 35 i s admi t t ed i n evi dence.
14 Q. The l ast document i s gover nment exhi bi t 36. Do you
15 r ecogni ze what t hi s i s?
16 A. Yes, I do. I t ' s a budget submi ssi on dat ed Febr uar y 25t h
17 ' 03, agai n t wo par t s t o i t , t he budget i t sel f , and t he
18 nar r at i ve descr i bi ng each of t he l i ne i t ems.
20 MR. RUBI NSTEI N: Wi t hout obj ect i on, your Honor .
21 THE COURT: Al l r i ght , 36 i s admi t t ed i n evi dence.
23 Q. Ms. Li de, what , i f any, i ssues di d you not i ce i n r ecei vi ng
24 t hese budget s f r omCASI and t he def endant ?
25 A. I n anal yzi ng t hese budget s, t o r ecommend appr oval or not
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1 appr oval t o t he gr ant s of f i ce, we r ecogni zed t hat i n each of
2 t he l ast f our budget s, whi ch shoul d have r ef l ect ed year one
3 act ual cost s, t her e wer e di scr epanci es.
4 Q. When you r ef er t o year one act ual cost s, what exact l y ar e
5 you r ef er r i ng t o?
6 A. Wel l , dur i ng t he cour se of t he f i r st year , one can est i mat e
7 t hat one i s goi ng t o spend a cer t ai n amount of money. Af t er
8 t he year ' s over , one shoul d have r ecei pt s and know exact l y how
9 much one spent , so t hat ' s what we cal l act ual cost s.
10 THE COURT: When you say di scr epanci es, you mean one
11 f r omanot her ?
12 THE WI TNESS: Yes, si r . The l ast f our wher e year one
13 shoul d have been act ual , because year one ended Sept ember 30t h.
14 So af t er Sept ember 30t h, a company knows exact l y how much i t
15 has spent i n each cat egor y. And yet when we l ooked at t hese
16 budget s, t he year ones had di scr epanci es i n t hem.
17 THE COURT: You say t her e wer e di scr epanci es i n t he
18 l ast f our . You mean exhi bi t 33, 34, 35 and 36?
19 THE WI TNESS: Ther e mi ght be t he l ast f i ve. One,
20 t wo - - wai t a mi nut e, Oct ober 20, December 2nd, December 20t h
21 and Febr uar y 25t h, so 32 - - sor r y. 32 t hr ough 36, so t hat ' s
22 one, t wo, t hr ee, f our , f i ve, act ual l y.
23 THE COURT: When was 32 submi t t ed?
24 THE WI TNESS: The dat e on 32 i s Oct ober 20t h of 2002.
25 THE COURT: I see.
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1 Q. Ms. Li de, what , i f any, document di d you pr epar e t o
2 document t hi s i ssue?
3 A. Because we f ound i t di f f i cul t t o r econci l e t hese budget s,
4 especi al l y t he act ual s f or year one, we wer e concer ned t hat t he
5 company was not abl e t o account f or gover nment spendi ng, and we
6 pr epar ed a document f or our super vi sor t o send t o t he gr ant s
7 of f i ce r equest i ng an audi t .
8 Q. I ' mnow showi ng you gover nment exhi bi t mar ked f or
9 i dent i f i cat i on gover nment exhi bi t 30.
10 MR. RUBI NSTEI N: Your Honor , t hat ' s - - I don' t bel i eve
11 t hat ' s i n evi dence, your Honor .
12 THE COURT: I t ' s not . He j ust sai d I ' mshowi ng i t t o
13 you.
14 MR. RUBI NSTEI N: The j ur or s, your Honor - -
15 THE COURT: We haven' t - - i t ' s not i n evi dence yet .
16 30 i s not i n evi dence?
17 A. I ' msor r y. Pl ease go ahead. Your quest i on.
18 Q. Do you r ecogni ze what t hat document i s?
19 A. Yes, t hat ' s t he r equest t hat I wr ot e wi t h my par t ner
20 r equest i ng an audi t .
23 THE COURT: Obj ect i on over r ul ed. Exhi bi t 30 i s
24 admi t t ed i n evi dence.
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1 Q. Ms. Li de, what was your pur pose i n sendi ng t hi s document ?
3 THE COURT: I t hi nk she' s expl ai ned her pur pose.
4 Q. Ms. Li de, why di d t he f act t hat t he number s wer e
5 i nconsi st ent a concer n t o you?
7 THE COURT: I wi l l al l ow t hat quest i on.
8 A. At t hat t i me, t he company shoul d have been abl e t o gi ve us
9 exact l y what was spent f or year one, and when i t was unabl e t o
10 do t hat over t he cour se of f i ve budget s, we wer e concer ned, as
11 r esponsi bl e gover nment empl oyees f or t he account i ng of t he
12 gover nment f unds t o t hat pr oj ect .
13 Q. Let ' s t ur n t o page t wo of t hi s exhi bi t , i f you coul d zoom
14 i n on t he t op. Ms. Li de, what i s t hat t abl e?
15 A. That i s a t abl e t hat we pr epar ed summar i zi ng t he year one
16 cost s f r omt he f i ve budget s submi t t ed af t er year one, and t hey
17 ar e gover nment exhi bi t s 32 t hr ough 36.
18 Q. Can you j ust wal k us t hr ough an exampl e of how i t shows t he
19 what you j ust t est i f i ed t o?
20 A. Wel l , cer t ai nl y. I f you l ook at any one of t he l i nes, f or
21 exampl e, equi pment on 10/ 20, t he company sai d i t spent $303, 400
22 on equi pment dur i ng year one, and t hat number changed on
23 December 2nd, and t hen changed agai n on December 20t h. And
24 l ooki ng at any l i ne i t em, t her e ar e many such changes.
25 Q. Af t er you had not i ced t hat , t he i nconsi st ency, di d you
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1 speak t o Dr . Kar r on?
2 A. I bel i eve we spoke t o Dr . Kar r on t hr oughout t he pr ocess. I
3 don' t r ecal l whet her we spoke t o Dr . Kar r on af t er t he
4 Febr uar y 25t h budget or not on t hi s i ssue.
5 Q. When you di d speak t o t he def endant on t hi s i ssue, what di d
6 you t el l hi m?
7 MR. RUBI NSTEI N: Obj ect i on, your Honor . Coul d we f i x
8 a - -
9 THE COURT: Coul d we have a dat e, pl ease?
10 MR. RUBI NSTEI N: I t hi nk she sai d she doesn' t r ecal l
11 t al ki ng t o hi m?
12 A. I do r ecal l t al ki ng t o hi mabout year one act ual s f r omt he
13 per i od of Oct ober . I n f act , when we vi si t ed i n Oct ober , we
14 di scussed t hat . Thr ough t he cour se of t hi s submi ssi on of t he
15 l ast budget i n Febr uar y, I do not r ecal l i f I had any f ur t her
16 conver sat i ons wi t h hi mon t hi s or not .
17 THE COURT: But i t ' s your t est i mony t hat you di d
18 di scuss wi t h hi myear one.
19 THE WI TNESS: That we needed year one act ual s,
20 cor r ect .
21 THE COURT: And di d you di scuss wi t h hi mt he f act
22 t her e wer e di scr epanci es i n t hese budget s?
24 THE COURT: Af t er each budget was submi t t ed?
25 THE WI TNESS: Yes, whi ch i s one of t he r easons we
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1 r equest ed a new budget wi t h t he r equi si t e document at i on t hat
2 woul d descr i be t he act ual s.
3 THE COURT: Al l r i ght . Obj ect i on over r ul ed. Go
4 ahead.
5 Q. Ms. Li de, di d t he def endant submi t any amendment s t o t he
6 pl an t hat wer e appr oved?
7 A. Yes, he di d.
8 Q. I ' mshowi ng you mar ked f or i dent i f i cat i on gover nment
9 exhi bi t 21. Do you r ecogni ze t hat document ?
10 A. Yes, I do.
12 A. I t i s amendment number one, whi ch means a change was
13 r equest ed and appr oved, and t hi s i s wr i t t en appr oval .
14 Q. And whi ch gr ant s - - and what company does t hi s document
15 r el at e t o?
16 A. Thi s i s t he gr ant t o CASI comput er Ai ded Sur ger y
17 I ncor por at ed, and t hi s par t i cul ar amendment changes t he name of
18 t he admi ni st r at i ve cont act .
19 MR. KWOK: Gover nment of f er s exhi bi t 21?
20 THE COURT: What ' s t he dat e on t hi s?
21 THE WI TNESS: The dat e i s, i t was si gned by our gr ant s
22 of f i cer on Oct ober 24t h, ' 01.
23 THE COURT: Al l r i ght . Exhi bi t 21, t her e i s no
24 obj ect i on t o, 21 i s admi t t ed.
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1 BY MR. KWOK:
2 Q. Let ' s l ook at t he next document mar ked f or i dent i f i cat i on
3 Gover nment Exhi bi t 22. Do you r ecogni ze what t hat document i s?
4 A. Yes.
5 Q. What i s i t ?
6 A. That i s amendment 2, and t he r easons f or t hi s amendment ar e
7 t o r evi se t he admi ni st r at i ve cont act ' s name, t o cor r ect t ot al
8 est i mat ed cost s f or t he budget year , t o i ncor por at e a new
9 budget , t o r emove a speci al awar d condi t i on, and t o i ndi cat e
10 what i s af f ect ed by t hese act i ons.
11 Q. What i s t he dat e on t hat document ?
12 A. J anuar y 4t h of 2002.
13 MR. KWOK: Gover nment of f er s Gover nment Exhi bi t 22.
15 THE COURT: No obj ect i on?
16 MR. KWOK: J ust st ay wi t h t hat document f or a second.
17 THE COURT: Exhi bi t 22 i s admi t t ed i nt o evi dence.
19 Q. You ment i oned some changes t o t he budget . What was t he
20 nat ur e of t he changes t o t he budget ?
21 A. The nat ur e of t he changes ar e document ed act ual l y i n t hi s
22 amendment , as we al ways do. They wer e some mi nor changes i n
23 per sonnel sal ar i es and wages, mi nor changes i n f r i nge benef i t s,
24 i n t r avel and i n equi pment , and t hen i t added a new l i ne t o t he
25 budget as we di scussed ear l i er . To add a new l i ne one has t o
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1 get pr i or appr oval , and t hat l i ne i s mat er i al and suppl i es.
2 Q. Was t hat amendment appr oved?
3 A. Yes. When one get s a wr i t t en amendment l i ke t hi s si gned by
4 t he gr ant s of f i cer i t means t hat t he changes ar e appr oved.
5 Q. Let ' s t ur n t o t he next document mar ked f or i dent i f i cat i on,
6 Gover nment Exhi bi t 23.
7 THE COURT: Coul d we go back one second? I n t hi s
8 document i t says t hat t he admi ni st r at or i s El i sha Gur f ei n.
9 THE WI TNESS: Yes. Amendment number 1, si r , made Lee
10 Gur f ei n t he admi ni st r at i ve cont act , and t he company r equest ed
11 t hat t hat name be f or mal i zed t o i nst ead of Lee, El i sha f or t he
12 f i r st name.
14 Q. Looki ng at Gover nment Exhi bi t mar ked f or i dent i f i cat i on,
15 Gover nment Exhi bi t 23 now, do you r ecogni ze t hat document ?
16 A. Yes, I do.
18 A. I t i s amendment 3, and what i t does i s i t al l ocat es f undi ng
19 f or t he second year of t he pr oj ect . I f you r emember , f or t he
20 f i r st year I sai d t hat t he pr oj ect coul d expend $800, 000, and
21 what t hi s does i s i t aut hor i zes an addi t i onal expendi t ur e f or
22 t he second year of anot her $600, 000.
23 Q. What i s t he dat e on t hi s document ?
24 A. 7/ 16/ 02.
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2 THE COURT: 23 i s admi t t ed i n evi dence.
3 ( Gover nment ' s Exhi bi t 23 r ecei ved i n evi dence.
4 Q. The next document i s mar ked f or i dent i f i cat i on as
5 Gover nment Exhi bi t 24. Do you r ecogni ze t hi s document ?
6 A. Yes, I do.
7 Q. What i s i t ?
8 A. I t ' s amendment 4.
9 Q. What ' s t he dat e?
10 A. 7/ 23/ 302.
11 Q. And what i s t he nat ur e of t hi s amendment ?
12 A. The nat ur e i s t o al l ow t he r eci pi ent t o use what we cal l
13 ASAP, whi ch i s Aut omat ed St andar d Appl i cat i on f or Payment s,
14 whi ch means one can wi t hdr aw on t hat bank account
15 el ect r oni cal l y pr i or t o t he mont h i n whi ch t he money i s spent .
18 THE COURT: Gover nment Exhi bi t 24 i s admi t t ed i n
19 evi dence.
21 Q. The l ast document of t he bat ch i s Gover nment Exhi bi t 25.
22 Do you r ecogni ze t hat document ?
23 A. Yes, I do.
25 A. I t i s aski ng f or a 60- day ext ensi on t o when t he f i r st year
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148
1 audi t shoul d be compl et ed.
2 Q. And what i s t he dat e?
3 A. 12/ 17/ 02.
4 MR. KWOK: The gover nment of f er s Gover nment Exhi bi t
5 25.
6 MR. RUBI NSTEI N: No obj ect i on.
7 THE COURT: 25 i s admi t t ed.
9 Q. Asi de f r omamendment 2 whi ch cont ai ns t he budget changes
10 you t est i f i ed about , do t hese ot her amendment s t hat I j ust
11 showed you make any changes t o t he budget - -
12 A. No.
13 Q. - - i n t er ms of what t he gr ant r eci pi ent can spend gr ant
14 money on?
15 A. No, wi t h t he except i on t hat we di d add year t wo money. I t
16 was not a change i n t he r eci pi ent ' s budget , but we di d make a
17 change t hat year t wo money coul d be ext ended.
18 Q. Asi de f r omt hat , anyt hi ng el se?
19 A. No.
20 THE COURT: Year t wo money coul d be expended i n year
21 one.
22 THE WI TNESS: No, si r , st ar t i ng Oct ober 1 i n year t wo.
23 We woul d have t o put t he second year money i n t he syst emear l y
24 j ust because i t t akes t i me.
25 Q. I s t hat a r out i ne t ype of amendment ?
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1 A. Sor r y. Whi ch one? Put t i ng year t wo i n?
2 Q. Yes.
3 A. Yes, we usual l y put t hose second year moni es i n dur i ng t he
4 summer mont hs, even t hough i t cannot be expended unt i l af t er
5 t he f i r st year i s compl et ed.
6 Q. I amshowi ng you what has been mar ked f or i dent i f i cat i on
7 Gover nment Exhi bi t 26. Do you r ecogni ze what t hat document i s?
8 A. Yes, I do.
9 Q. What i s i t ?
10 A. I t i s amendment 6, suspendi ng ef f ect i ve i mmedi at el y t hi s
11 awar d.
12 Q. What i s t he dat e on t hat document ?
13 A. J une 27, 2003.
15 MR. RUBI NSTEI N: No obj ect i on.
16 THE COURT: 26 i s r ecei ved.
18 Q. What was t he r eason?
19 A. The r eason i s not - -
20 MR. RUBI NSTEI N: Obj ect i on. I obj ect t o t he quest i on
21 t he r eason f or t he suspensi on.
22 THE COURT: I haven' t hear d t he quest i on yet .
23 Q. What was t he r eason f or t he suspensi on of t he gr ant ?
24 A. The r eason - -
25 THE COURT: Wai t a mi nut e. The exhi bi t we' ve got
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150
1 her e - -
2 MR. KWOK: 26.
3 THE COURT: Wel l , I don' t want t hi s wi t ness t o gi ve
4 her summar y. I f t her e i s an of f i ci al r eason t hat ' s i n t he
5 document , she can r ead i t .
6 THE WI TNESS: Wi t h your per mi ssi on, I wi l l r ead i t .
8 THE WI TNESS: " Thi s cooper at i ve agr eement i s bei ng
9 amended t o suspend t hi s awar d ef f ect i ve i mmedi at el y f or
10 noncompl i ance of speci al awar d 7. "
11 BY MR. KWOK:
12 Q. I f we coul d zoomi n on t hat . And what i s speci al awar d
13 number 7?
14 A. I wi l l be happy t o r ead i t . " I t ' s based on pr el i mi nar y
15 audi t i nf or mat i on. You ar e i n noncompl i ance of speci al awar d
16 condi t i on 7, cost shar e. "
17 Q. And what does t hat mean?
18 A. As we di scussed ear l i er , t hi s pr oposer pr oposed t o shar e
19 t he di r ect cost s of t he pr oj ect . The gover nment was goi ng t o
20 put i n a l i t t l e over 96 per cent , and t he pr oposer was goi ng t o
21 put i n bet ween 3 and 4 per cent , and at t hi s poi nt our
22 pr el i mi nar y i nf or mat i on showed t hat t he r eci pi ent had not gi ven
23 hi s shar e of t he di r ect cost s.
24 Q. Ms. Li de, what i f any i nvol vement di d you have wi t h t he
25 gr ant f or CASI af t er t he gr ant was suspended?
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151
1 A. We cont i nued t o have e- mai l and t el ephone exchanges because
2 CASI was eager t o get t he gr ant back i n oper at i on.
3 Q. What i f anyt hi ng di d you t el l t he def endant about what he
4 needed t o do t o r est ar t t he gr ant ?
5 A. Basi cal l y t hat he needed t o make hi s par t of t he cost shar e
6 and wor k wi t h t he gr ant s of f i cer and gr ant s of f i ce t o make sur e
7 t hat happened.
8 Q. What happened?
9 A. Not hi ng.
10 MR. KWOK: One moment , your Honor ?
12 MR. KWOK: One moment .
13 No f ur t her quest i ons.
14 THE COURT: Al l r i ght . Cr oss- exami nat i on,
15 Mr . Rubi nst ei n.
16 MR. RUBI NSTEI N: Thank you, your Honor .
17 CROSS EXAMI NATI ON
18 BY MR. RUBI NSTEI N:
19 Q. Good mor ni ng, Ms. Li de.
20 A. Good mor ni ng.
21 Q. Now, when i s t he l ast t i me t hat you saw Dr . Kar r on bef or e
22 comi ng t o cour t her e yest er day?
23 A. To t he best of my knowl edge, i t woul d be when we made t he
24 second si t e vi si t i n Oct ober of 2002.
25 Q. And when wer e you cont act ed by t he f eder al l aw enf or cement
( 212) 805- 0300
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152
8637KAR3 Li de - cr oss
1 aut hor i t i es on t hi s case?
2 A. That woul d have been spr i ng of 2005, i f I r emember
3 cor r ect l y.
4 Q. Wel l , l et me show you - -
5 A. Ei t her 2004 or 5.
6 Q. Di d you r evi ew any document at i on bef or e you came her e t o
7 t est i f y, Ms. Li de?
8 A. Yes, I di d.
9 Q. And di d you r evi ew not es of i nt er vi ews wi t h you?
10 A. An i nt er vi ew, no. I was r equest ed t o make some not es, but
11 i t was not an i nt er vi ew.
12 Q. And di d you pr epar e some not es?
13 A. Yes, I di d.
14 Q. And di d you submi t t hat - - di d you gi ve t hose not es t o
15 anybody?
16 A. Yes.
17 Q. And who di d you gi ve t he not es t o?
18 A. The speci al agent .
19 Q. And i s t hat somet i me shor t l y af t er you met t he speci al
20 agent f or t he f i r st t i me?
21 A. Yes.
22 Q. And i s t he speci al agent her e i n cour t ?
23 A. Yes.
24 Q. And who i s t hat speci al agent ?
25 A. Rachel Ondr i k.
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153
1 Q. And di d you t i t l e t hat r epor t " admi ni st r at i vel y
2 r est r i ct ed" ?
3 A. Absol ut el y.
4 Q. And l et me show you what ' s been mar ked as - -
5 Does she have any of t he 3500 mat er i al her e?
6 THE COURT: I woul d be sur pr i sed i f she does.
7 Q. Let me show you what has been mar ked as Gover nment Exhi bi t
8 351- A and ask you i f t hat i s t he r epor t t hat you submi t t ed t o
9 t he agent .
10 DEPUTY COURT CLERK: 3501- A?
11 MR. RUBI NSTEI N: 3501- A, as i n appl e.
12 THE COURT: I don' t know t hat she cal l ed i t t hat . She
13 sai d t hey wer e not es, i f I under st ood you.
14 THE WI TNESS: Ri ght . These wer e not es t hat I was
15 asked t o pr epar e based on my r ecol l ect i on of t hi s gr ant .
16 THE COURT: Who asked you t o pr epar e t hem?
17 THE WI TNESS: The speci al agent .
19 THE WI TNESS: And now t hat I see t he dat e on i t , i t
20 was not shor t l y af t er t he f i r st meet i ng.
21 Q. As a mat t er of f act , af t er you l ooked at t hi s document ,
22 does t hat r ef r esh your r ecol l ect i on as t o when you met t hi s
23 speci al agent f or t he f i r st t i me about t hi s case?
24 A. No. To t he best of my r ecol l ect i on, i t was spr i ng of ' 05.
25 Q. And when di d you pr epar e - - at t hat meet i ng, wer e you asked
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1 t o pr epar e not es of your r ecol l ect i on of your i nvol vement wi t h
2 Dr . Kar r on and CASI , I nc. ?
3 A. No.
4 Q. Di d t her e come a t i me t hat you wer e asked t o pr epar e not es?
5 A. Yes.
6 Q. And when was t hat ?
7 A. That was shor t l y bef or e t hose not es wer e pr epar ed.
8 Q. So, you met t he agent a second t i me?
9 A. The f i r st t i me, t he agent r equest ed t hat we have no mor e
10 cont act wi t h Dr . Kar r on.
11 Q. And di d t he agent di scuss t he case wi t h you on t he f i r st
12 occasi on?
13 A. No, i t was al l communi cat i on shoul d go t hr ough t he speci al
14 agent .
15 Q. Di d you pr epar e any not es af t er you met wi t h t he speci al
16 agent ?
17 A. The f i r st t i me?
18 Q. Yes.
19 A. No, si r .
20 Q. And you pr epar ed not es. Di d you use anyt hi ng t o r ef r esh
21 your r ecol l ect i on t o pr epar e t he not es t hat you subsequent l y
22 gave t o t he agent ?
23 A. We keep pr oj ect management f i l es whi ch ar e ext r emel y usef ul
24 as hi st or i cal document s.
25 THE COURT: And t hose wer e used t o pr epar e t hese
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155
1 not es?
2 THE WI TNESS: Yes, t hey ar e kept i n a secur e pl ace and
3 accessi bl e wi t h a need t o know.
4 Q. So, you have a whol e f i l e on CASI , cor r ect ?
5 A. I do not , no, si r ; t he Advanced Technol ogy Pr ogr amdoes.
6 Q. You ar e par t of NI ST t hough, ar e you not ?
7 A. I ampar t of NI ST, t hat i s cor r ect .
8 Q. And t he Advanced Technol ogy Pr ogr ami s a pr ogr amt hat i s
9 super vi sed by NI ST.
10 A. That i s cor r ect , but I ' mno l onger wi t h t hat pr ogr am.
11 Q. But t her e ar e a number of document s, ar e you t el l i ng us,
12 r el at ed t o t he CASI i nvol vement wi t h t he NI ST ATP pr oj ect
13 t hat - -
14 A. Ther e i s t he pr oj ect f i l e, cor r ect .
15 Q. And how vol umi nous woul d you say t hat pr oj ect f i l e i s?
16 A. I n t he Advanced Technol ogy Pr ogr amsecur e si t e wher e i t s
17 document s ar e hel d, i t ' s pr obabl y t wo f eet l ong. The of f i ci al
18 f i l e r esi des i n our gr ant s of f i ce t hough, and I don' t know how
19 l ar ge t hei r s i s.
20 Q. You have never seen t hat ?
21 A. I have seen i t . I have no cl ue how l ar ge i t i s.
22 Q. Have you seen i t i n pr epar at i on f or your t est i mony her e on
23 t hi s t r i al ?
24 A. Have I seen any pr epar at i on by whom?
25 Q. No. Have you seen t hat f i l e?
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156
1 A. The gr ant s f i l e?
2 Q. Ri ght .
3 A. No, si r . No, si r .
4 Q. Now you pr epar ed t hi s memor andumon J une 27, 2006, cor r ect ?
5 A. Cor r ect .
6 Q. And di d you go back t o your secur e f i l e t o r ef r esh your
7 r ecol l ect i on as t o event s t hat occur r ed?
8 MR. KWOK: Obj ect i on. Asked and answer ed.
9 THE COURT: Obj ect i on over r ul ed. I wi l l al l ow t he
10 quest i on. That ' s not r eal l y a pr oper obj ect i on. I t can be
11 i f - -
12 A. What ' s document ed i n t he document he has, I di d not need t o
13 go back t o t he compl et e f i l e. They wer e hi ghl i ght ed i n my
14 memor y.
15 Q. And di d you r evi ew t hi s document bef or e you came her e t o
16 t est i f y?
17 A. A whi l e ago, yes, si r .
18 Q. When you say a whi l e ago, how l ong ago was t hat ?
19 A. Two mont hs.
20 Q. And was t hat when you met - - wi t hdr awn.
21 Di d you meet t he member s of t he pr osecut i on t eami n
22 t hi s - - when di d you meet t he member s of t he pr osecut i on t eam
23 f or t he f i r st t i me i n t hi s case?
24 A. About t wo mont hs ago, i f I r emember cor r ect l y.
25 Q. And t hat was back i n Apr i l 21, 2008?
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157
1 A. Appr oxi mat el y.
2 Q. And bet ween t he t i me t hat you submi t t ed t he memor andumt o
3 t he agent i n 2006 unt i l 2008, di d you have any cont act wi t h
4 anybody i n l aw enf or cement r el at ed t o t hi s case?
5 A. Not t hat I can r emember .
6 Q. Do you make not es of your meet i ngs wi t h Dr . Kar r on? Di d
7 you make any not es at t he t i me t hat you met wi t h Dr . Kar r on?
8 A. For mal meet i ngs such as si t e vi si t s, t her e ar e some not es.
9 I nf or mal meet i ngs i n t he NI ST caf et er i a or phone cal l s ar e
10 document ed basi cal l y j ust by e- mai l s.
11 Q. And do you have wi t h you t he not at i ons of any not es of t he
12 f or mal meet i ngs t hat you had? Ar e you t al ki ng about t he t wo
13 si t e vi si t s?
14 A. Cor r ect .
15 Q. And you ar e al so t al ki ng about t he or i gi nal meet i ng wi t h
16 t he sl i de pr esent at i on?
17 A. Ri ght . But t he sl i de pr esent at i on i s our not es f or t hat .
18 Q. Al l r i ght . So your sl i de pr esent at i on and t he not es f or
19 t he f i r st meet i ng wi t h Dr . Kar r on, cor r ect ?
20 A. Cor r ect .
21 Q. You ar e f ami l i ar wi t h Mar k St anl ey, ar e you not ?
22 A. Yes, I am.
23 Q. And who i s Mar k St anl ey?
24 A. He i s cur r ent l y t he di r ect or of t he Advanced Technol ogy
25 Pr ogr am.
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158
1 Q. And back i n 2001 was he i n f act t he di r ect or of t he
2 Advanced Technol ogy Pr ogr am, ATP?
3 A. He was t he act i ng di r ect or .
4 Q. Al l r i ght . And you woul d have semi nar s, woul d you not ,
5 wi t h r espect t o gr ant appl i cant s?
6 A. We had what we cal l pr oposer s conf er ences f or peopl e who
7 want ed t o appl y.
8 Q. And do you know a Li nda Bet h Shel l i ng?
9 A. Yes.
10 Q. Who i s she?
11 A. She i s cur r ent l y - - wel l , t hey j ust r eor gani zed. She i s a
12 di vi si on di r ect or i n t he Advanced Technol ogy Pr ogr am.
13 Q. And back i n 2000, 2001, what was her t i t l e?
14 A. To t he best of my knowl edge, she was a di vi si on di r ect or
15 t hen of what was cal l ed t he bi ol ogy and chemi st r y di vi si on. I
16 f or get t he exact t i t l e of i t .
17 Q. And do you know a per son by t he name of St ephani e Shi p?
18 A. Yes, I do.
19 Q. And who i s St ephani e shi p?
20 A. She i s on a l eave of absence. Her posi t i on of r ecor d i s
21 t he di r ect or of t he economi c assessment of f i ce i n t he Advanced
23 Q. And what was her posi t i on back i n 2000/ 2001?
24 A. That ' s what i t was t hen.
25 Q. And what about Bar bar a Landi s?
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159
1 A. Bar bar a Lambi s?
2 Q. Lambi s, cor r ect . Thank you.
3 A. She i s l i ke a speci al assi st ant t o t he di r ect or and a
4 l i ai son t o t he gr ant s of f i ce.
5 Q. And i s i t f ai r t o say t hat t hese peopl e, Mar k St anl ey and
6 t he t hr ee l adi es t hat I ment i oned, t hey woul d make
7 pr esent at i ons t o pot ent i al gr ant appl i cat i ons?
8 A. Cer t ai nl y. They wor k as ar e our pr of essi onal st af f di d.
9 We want ed t o get t he wor d out as br oadl y as possi bl e, so al l
10 pr of essi onal st af f wer e encour aged t o make such pr esent at i ons.
11 Q. And di d you ever par t i ci pat e i n such a pr esent at i on?
12 A. I di d.
13 Q. Do you know whet her or not Dr . Kar r on at t ended a
14 par t i ci pat i on of t hat ki nd?
15 THE COURT: What dat e? At t ended what ? I ' mnot qui t e
16 sur e.
17 Q. A conf er ence wi t h Mar k St anl ey and ot her di r ect or s of t he
18 ATP pr ogr ami n 2001.
19 A. We keep at t endance - - we ask f or r egi st r at i on onl y t o see
20 t he si ze r oomwe need, and we don' t keep at t endance l i st s, so I
21 coul d not be sur e of t hat .
22 Q. I s i t f ai r t o say t hat i n 2001 your agency di st r i but ed
23 about $60 mi l l i on i n new awar ds?
24 A. That ' s t he - - I don' t know exact l y, but t hat i s t he usual
25 amount t hat we di st r i but ed, so, yes, si r , I t hi nk t hat ' s a f ai r
( 212) 805- 0300
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160
1 assessment .
2 Q. And what i s t he maxi mumawar d t hat i s per mi t t ed by ATP?
3 A. For a si ngl e company, i t i s $2 mi l l i on over t hr ee year s,
4 and t hus many compani es di vi de i t equal l y, you know, r oughl y 6
5 or $700, 000 a year , but t hey coul d j ust as wel l appl y f or one
6 mi l l i on a year f or t wo year s.
7 Q. And i t ' s f ai r t o say t hat a number of t he compani es t hat
8 appl y ar e smal l compani es?
9 A. Al l si zed compani es appl y. A good per cent age of awar ds do
10 go t o smal l compani es.
11 Q. Now, i s CASI consi der ed a smal l company?
12 A. Yes.
13 Q. And what woul d be - - how woul d you cl assi f y a smal l company
14 f r oma l ar ger company?
15 A. Wel l , we act ual l y use t he gener al pr act i ce of 500 empl oyees
16 or l ess.
17 Q. And you do gi ve gr ant s t o l ar ge compani es, cor r ect ?
18 A. Yes. I ' d l i ke t o cl ar i f y t hat t he Advanced Technol ogy
19 Pr ogr amdoes not t oday exi st , so t o be act ual l y accur at e i t
20 woul d be i t di d gi ve gr ant s t o l ar ge compani es.
21 Q. Does i t exi st wi t h a di f f er ent name?
22 A. No. Ther e i s a new pr ogr amt her e, but i t i s not t he same
23 as t he Advanced Technol ogy Pr ogr amj ust wi t h a di f f er ent name.
24 Q. The admi ni st r at i on, t he pr esent admi ni st r at i on i s t aki ng
25 away sci ent i f i c r esear ch i n di f f er ent ar eas, cor r ect ?
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161
1 A. Who i s, si r ?
2 Q. The cur r ent admi ni st r at i on of t he gover nment .
3 A. Oh.
4 MR. KWOK: Obj ect i on. Rel evance.
6 Q. What per cent age of peopl e who r ecei ve gr ant s ar e successf ul
7 i n devel opi ng t echnol ogy?
8 A. A ver y l ar ge per cent age. I woul d gi ve an est i mat e of - - do
9 I need t o gi ve an est i mat e? I f you woul d l i ke one, I woul d say
10 80 t o 90 per cent .
11 Q. Woul d you agr ee or di sagr ee wi t h Mar k St anl ey i f he sai d
12 t her e wer e 40 per cent ?
13 A. I t hi nk i t ' s a def i ni t i on of what i s a successf ul
14 t echnol ogy. My answer was i f t he t echnol ogy r esear ch i s
15 successf ul . Mar k i s speaki ng f or t he pr ogr am. The pr ogr am
16 does not t hi nk of t he pr oj ect as a success unl ess not onl y t he
17 t echnol ogy i s devel oped but i t al so r eaches pr oduct i n t he
18 mar ket pl ace. I t hi nk t hat ' s t he di scr epancy i n our
19 per cent ages.
20 Q. And i s t hi s al l gover nment money t hat goes i nt o t hese
21 gr ant s?
22 A. Except f or t he cost shar e r equi r ement s.
23 Q. Wel l , i sn' t i t a f act t hat pr i vat e i ndust r y cont r i but es t o
24 t he f und?
25 A. And t hat ' s why I sai d except f or cost shar e, yes, si r .
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1 Q. Cost shar e i s a f i gur e gi ven by a r eci pi ent l i ke Dr .
2 Kar r on. He had a cost shar e por t i on, cor r ect ?
3 A. Um- hum.
4 Q. Of about 5 per cent .
5 A. Cor r ect .
6 Q. Ri ght ?
7 A. Yes.
8 Q. But i sn' t i t a f act t hat i ndust r y i t sel f donat es t o t hi s
9 ATP pr oj ect ?
10 A. I ndust r y must cont r i but e t o t he pr oj ect , as Dr . Kar r on
11 cont r i but ed i ndependent cost s and cost shar e. But t he pot of
12 money, t he 60 mi l l i on t hat we gi ve away, i s t ot al l y gover nment
13 f unds.
14 Q. And t he money t hat you gi ve away, wher e do you put t he
15 $800, 000 t hat Dr . Kar r on was ent i t l ed t o t he f i r st year of t he
16 gr ant ?
17 A. I n a bank account agai nst whi ch Dr . Kar r on can dr aw t hr ough
18 t hi s pr ogr amdescr i bed as ASAP.
19 Q. So t hat once t he gr ant i s appr oved, $800, 000 i s deposi t ed
20 i nt o an account , cor r ect ?
21 A. Cor r ect .
22 Q. And t hi s gr ant was appr oved Oct ober 1, 2001, cor r ect ?
23 A. Cor r ect .
24 Q. Bet ween Oct ober 1, 2001, when was money act ual l y avai l abl e
25 t o CASI ?
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1 A. I don' t r ecal l . I t hought t he f i r st dr awdown was wi t hi n
2 t he f i r st mont h or t wo.
3 Q. And t he cost s t hat ar e acqui r ed by i n t hi s case CASI bef or e
4 t he money i s avai l abl e i s bor ne by who?
5 A. I t depends on whet her t he st ar t dat e of t he pr oj ect had
6 occur r ed or not . I f t he st ar t dat e of t he pr oj ect was Oct ober
7 4, what ever t he dat e on t hat f i nanci al awar d assi st ance, t hen
8 no money of t he gover nment coul d be spent bef or e t hat dat e.
9 Q. I n t hi s case t he st ar t dat e i n f act was Oct ober 1, was i t
10 not ?
11 THE COURT: Do you have t o l ook at an exhi bi t ? The
12 awar d i s exhi bi t number - -
13 THE WI TNESS: I t was si gned by Dr . CASI on Oct ober 5.
14 THE COURT: By doct or who?
15 THE WI TNESS: Sor r y, by Dr . Kar r on. I ' msor r y. I t ' s
16 Exhi bi t 12.
17 THE COURT: Exhi bi t 12. And t hat ' s t he st ar t dat e?
18 THE WI TNESS: Act ual l y, no. I guess i f you l ook at
19 t he awar d per i od near t he t op i t says t he awar d per i od i s
20 Oct ober 1st .
21 Q. I t ' s f ai r t o say t hat as soon as t he money became
22 avai l abl e, wi t hi n a mont h or t wo mont hs, Dr . Kar r on coul d have
23 wi t hdr awn $800, 000.
24 A. As l ong as i t was - - wel l , one must account f or t he budget
25 mont h by mont h.
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1 Q. Wel l , but i n t he f i r st mont h i f he t ook down $800, 000, at
2 t he end of t he mont h he woul d account t hat he t ook $800, 000,
3 cor r ect ?
4 A. He woul d have t o account how he spent t hat $800 i n t hat
5 mont h.
6 THE COURT: 800, 000.
7 THE WI TNESS: I ' msor r y. Yes, 800, 000. My checkbook
8 i s a l i t t l e di f f er ent .
9 Q. But t he bot t oml i ne i s t hat under t hi s, he di dn' t need any
10 cosi gnat ur e f r omanybody at ATP, cor r ect ? Nobody had t o
11 appr ove any moni es bef or e what you cal l dr aw- downs, i s t hat
12 r i ght ? I s t hat t he t er mi nol ogy you use?
13 A. My gr ant s par t ner woul d know t hat bet t er t han I , but t hat ' s
14 a f ai r t er m.
15 THE COURT: What ' s t he answer t o t he quest i on?
16 MR. RUBI NSTEI N: Par don.
17 THE COURT: What was t he quest i on?
18 MR. RUBI NSTEI N: The quest i on i s t hat t her e ar e no
19 r est r i ct i ons on how much of t he $800, 000.
20 THE COURT: That was your st at ement , but I di dn' t
21 under st and t hat t o be your quest i on.
22 Q. Ar e t her e any - - at t he t i me a per son, f or i nst ance Dr .
23 Kar r on or somebody wor ki ng at CASI - - once t he f unds ar e
24 avai l abl e, t he $800, 000 f or year one, Oct ober 1, 2001 t o
25 Sept ember 30, 2002, i s avai l abl e on day one t hat t he money i s
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1 deposi t ed. I t ' s not deposi t ed i n i ncr ement s, cor r ect ?
2 A. That i s cor r ect .
3 Q. And i s t her e any r est r i ct i on on who wor ki ng f or CASI has
4 t he aut hor i t y t o have moni es t r ansf er r ed f r omt hi s account t o
5 t he CASI cor por at i on?
6 A. I t has t o be a dul y r ecogni zed of f i cer of t hat cor por at i on.
7 THE COURT: Can t hey t ake t he whol e $800, 000 i n t he
8 f i r st mont h? That ' s what he i s aski ng.
9 THE WI TNESS: I t ' s hi ghl y unusual . I f t hey t ake i t i n
10 t he f i r st mont h, at t he end of t he f i r st mont h t hey have t o
11 j ust i f y how much of t hat was spent on ATP, and anyt hi ng t hat
12 was not spent on ATP r ever t s - - has t o be r et ur ned t o t hat bank
13 account .
14 So, I f i nd i t har d t o bel i eve - - you know, i f you l ook
15 at a year wher e X peopl e ar e get t i ng sal ar i es mont h by mont h, I
16 f i nd i t har d t o bel i eve t hat t hey coul d get t hei r whol e year l y
17 sal ar y i n t he f i r st mont h.
18 Q. Now, i sn' t i t a f act t hat Dr . Kar r on was advi sed t hat t hi s
19 gr ant was appr oved pr i or t o t he Oct ober dat e t hat you t ol d us
20 i n Exhi bi t 12?
21 A. I woul d have no knowl edge of t hat . I n f act , i t ' s agai nst
22 ATP pol i cy t o advi se t hat bef or e t he act ual awar d announcement
23 i s made t o t he publ i c.
24 Q. So you have no knowl edge whet her or not Dr . Kar r on was
25 awar e t hat he r ecei ved a gr ant pr i or t o Oct ober of 2001. I s
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1 t hat your t est i mony?
2 A. Wel l , Mar i l yn Gol dst ei n' s document - - whi ch agai n i s
3 Exhi bi t 12, i f I r emember cor r ect l y - - i s dat ed 9/ 29/ 01, and
4 once she si gns i t , t hey' r e Fed Exed out . So i t coul d be t hat
5 he r ecei ved i t on 9/ 30. But as a pr oj ect manager , t hat ' s not
6 i n my ar ea or was not i n my ar ea of r esponsi bi l i t y.
7 Q. I sn' t i t a f act , ma' am, t hat pr e- cont r act cost s ar e
8 per mi t t ed under t he gr ant ?
9 A. No.
10 Q. Ar e you f ami l i ar wi t h 48 CFR? Ar e you f ami l i ar wi t h t hat ?
11 A. No, I ' mnot .
12 Q. You' r e f ami l i ar , ar e you not , wi t h 15 - -
13 THE COURT: CFR - -
14 MR. RUBI NSTEI N: Sor r y, J udge. CFR 31. 205/ 32.
15 A. Wel l , I ' mcer t ai nl y f ami l i ar wi t h CFR. I have no cl ue what
16 t hat par t i cul ar r ef er ence i s. I do know t hough t hat ATP does
17 not al l ow any pr oj ect cost s bef or e t he st ar t of t he pr oj ect .
18 Q. Do you know whet her or not t he CFR, 48 CFR 31. 205/ 32, i s
19 r ef er enced i n any of t he exhi bi t s t hat you have t est i f i ed t o
20 her e t oday?
21 A. Coul d you r ead t hat number agai n, pl ease.
22 Q. 48 CFR 31.
23 THE COURT: 205/ 32.
24 MR. RUBI NSTEI N: 205/ 32.
25 A. 48 CFR i s par t of - - you know, i t ' s r ef er enced i n Exhi bi t
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1 12.
2 Q. And t he gr ant r eci pi ent i s supposed t o be r esponsi bl e f or
3 knowi ng what ' s i n 48 CFR 31. 205/ 32, i s t hat cor r ect ?
4 THE COURT: She di dn' t say t hat sect i on. I t was onl y
5 t hat 48 CFR sect i on 31 i s r ef er enced i n t he f i nanci al
6 assi st ance awar d Exhi bi t 12, Gover nment Exhi bi t 12.
7 THE WI TNESS: Ri ght . And t hese ar e document s t hat t he
8 r eci pi ent has as r ef er ence dur i ng t he cour se of t he awar d.
9 Q. And do you physi cal l y gi ve t he r eci pi ent - - you sai d you
10 gi ve t hema packet . Do you i ncl ude i n t hat packet somet hi ng
11 l i ke - - you showed us bef or e I t hi nk on Exhi bi t 3, 15 CFR 14. 4.
12 THE COURT: I don' t know what you' r e r ef er r i ng t o,
14 MR. RUBI NSTEI N: Wel l , I want t o know i f t hey gi ve t he
15 r eci pi ent - -
16 THE COURT: 15 CFR 24 i s not one of t he i t ems t hat i s
17 mar ked on Gover nment Exhi bi t 12.
18 MR. RUBI NSTEI N: I di dn' t say i t was, J udge. I sai d
19 t hat i t ' s ment i oned. I t may not be i n t he Power Poi nt . You
20 gi ve t hema sl i de.
21 THE COURT: Thi s i sn' t a Power Poi nt . Thi s i s t he
22 f i nanci al assi st ance awar d.
23 MR. RUBI NSTEI N: Your Honor - -
24 Q. What document ar e you l ooki ng at ?
25 A. I have Gover nment Exhi bi t 12, and i t l i st s 48 CFR par t 31,
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1 and, yes, t hat document i s par t of t he awar d package whi ch t he
2 r eci pi ent r ecei ves. I t says her e, " The r eci pi ent agr ees t o
3 compl y wi t h t he awar d pr ovi si ons checked bel ow and at t ached. "
4 THE COURT: Ther e i s al so anot her CFR sect i on, i sn' t
5 t her e? CFR - -
6 THE WI TNESS: Ther e ar e sever al CFRs.
7 THE COURT: 514?
9 THE COURT: That ' s al so at t ached?
10 THE WI TNESS: No, i t j ust says 48 CFR par t 31.
11 THE COURT: But I ' mon t he f our t h i t emdown.
12 THE WI TNESS: That ' s 15 CFR. Wai t , one, t wo - - yeah.
13 THE COURT: 14?
14 THE WI TNESS: Yes.
15 THE COURT: And t hat ' s al so sent .
16 THE WI TNESS: Yes, ever yt hi ng checked her e i s par t of
17 t hat awar d package.
18 Q. I n ot her wor ds, on Exhi bi t 12, you have 15 CFR par t 14,
19 cor r ect ?
20 A. Cor r ect .
21 Q. And t hat i s a document t hat has about 80 pages, cor r ect ?
22 A. Pr obabl y, yes.
23 Q. And you have CFR - - 48 CFR par t 31, cont r act cost
24 pr i nci pl es and pr ocedur es, and t hat ' s a document t hat ' s about
25 200 pages l ong.
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1 THE COURT: I t ' s t he Code of Feder al Regul at i ons.
2 Q. I s t hat cor r ect , ma' am?
3 A. Yes, si r .
4 Q. And you al so pr ovi de ot her mat er i al s t o a r eci pi ent ,
5 cor r ect ?
6 A. Al l of t he i t ems checked on Exhi bi t 12 ar e par t of t he
7 awar d package.
8 Q. And t hat i s pr ovi ded t o t he r eci pi ent at t hi s f i r st meet i ng
9 you t ol d us about ?
10 A. No, si r , t hat ' s Fed Exed t o t he r eci pi ent wi t h t he act ual
11 awar d t hat t he r eci pi ent si gns sever al copi es of and sends some
12 back t o t he gover nment .
13 Q. And coul d you descr i be t o t he j ur y i n vol ume how l ar ge t hi s
14 package woul d be t hat t he r eci pi ent woul d r ecei ve?
15 A. I t ' s not sent f r ommy of f i ce, so I don' t know. Ther e ar e
16 r ef er ence document s t o be r ead as needed.
17 Q. And i s i t f ai r t o say t hat t he concept of ATP i s t hat no
18 good pr oj ect shoul d go unf unded? That ' s your mant r a?
19 A. No, sadl y we di dn' t have enough money t o f ol l ow t hat
20 mant r a.
21 Q. Wel l , shoul d a pr oj ect t hat you f unded, shoul d i t go
22 unf i ni shed?
23 THE COURT: Sor r y, I don' t under st and t he quest i on.
24 MR. RUBI NSTEI N: I wi l l wi t hdr aw i t , J udge.
25 Q. Now, i f t he gr ant ee i s successf ul and devel ops a pr oduct
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1 t hat ' s used i n t he mar ket pl ace, i s i t f ai r t o say t hat t he
2 gr ant ee i s t he one who der i ves t he f i nanci al benef i t of t hat
3 pr oduct ?
4 A. One hopes t hat t he gr ant ee does and al so t he Uni t ed St at es
5 as a nat i on. We hope t hat t hey ar e al so an economi c benef i t t o
6 our nat i on.
7 Q. Ri ght . But not hi ng t o r epl ace t he $800, 000 or t he $2
8 mi l l i on t hat t hey got as st ar t - up money, cor r ect ?
9 A. The gover nment does not get any money back, no.
10 THE COURT: They' r e not a par t ner .
11 THE WI TNESS: Wel l , we' r e a par t ner i n t hat we gi ve
12 t hemt hi s f undi ng and we ar e ver y pl eased when t hey ar e
13 successf ul . That i s our goal , t o have successf ul - -
14 THE COURT: But t her e i s no f i nanci al benef i t .
15 THE WI TNESS: That ' s cor r ect , si r , r i ght , j ust
16 br aggi ng r i ght s.
17 Q. Now, t he speci al condi t i on t hat was i nvol ved i n t hi s
18 gr ant - - I t hi nk you sai d i t was i n - - was t hat i n Exhi bi t 12
19 t hat t hey r ef er r ed t o a speci al condi t i on?
20 A. I t mi ght have been 13, I bel i eve. Yeah, speci al awar d
21 condi t i ons ar e Gover nment Exhi bi t 13.
22 Q. Now, you wer e a gr ant admi ni st r at or ?
23 A. No, I ' mnot , si r . I ama t echni cal per son.
24 Q. So, your j ob i s t o advi se t he gr ant ee on what ?
25 A. Our j ob i s t o f ol l ow t he t echni cal pr ogr ess and t he
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1 commer ci al i zat i on pr ogr ess, t o advi se as needed, and t o br i ng
2 i n t he gr ant s speci al i st al so as needed. We ar e l i ai sons t o
3 t he gr ant s of f i ce.
4 Q. And her e t her e was - - ar e you i nvol ved i n det er mi ni ng who
5 i s t he r eci pi ent of t he gr ant ?
6 A. Yes, I act ual l y r an t he compet i t i on. But I obvi ousl y di d
7 not r evi ew ever y pr oposal mysel f .
8 Q. But i n t hi s i nst ance - - CASI was t he gr ant r eci pi ent ,
9 cor r ect ?
10 A. CASI i s a gr ant r eci pi ent i n t he 2001 compet i t i on, cor r ect .
11 Q. And t hat i s CASI , I nc. , I - N- C.
12 A. Yes.
13 Q. And Dr . Kar r on i s a pr i nci pal of t hat cor por at i on, cor r ect ?
14 A. He act ual l y si gned t he pr oposal I bel i eve as chi ef
15 t echni cal of f i cer , and ot her t i mes he si gned i t as pr esi dent .
16 Q. And t he onl y speci al condi t i on was t hat CASI cof und f or t he
17 5 per cent , cor r ect ?
18 THE COURT: Thr ee. I s i t 5 per cent ?
19 THE WI TNESS: I t ' s 3. 61 i n t he speci al awar d
20 condi t i on.
21 MR. RUBI NSTEI N: OK. I was r oundi ng i t of f , J udge,
22 but 3. 61 i s f i ne wi t h me.
23 Q. And t he number t hat you gave bef or e of 50 some odd t housand
24 dol l ar s, t hat was f or t he f i r st 21 mont hs of t he gr ant when t he
25 gr ant was suspended, cor r ect ?
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1 A. I don' t r emember sayi ng 50 some odd t housand dol l ar s.
2 THE COURT: I don' t t hi nk t her e was any such
3 t est i mony, Mr . Rubi nst ei n.
4 MR. RUBI NSTEI N: I ' msor r y.
5 Q. I n f act - -
6 THE COURT: The j ur y' s r ecol l ect i on wi l l gover n, but
7 t hat ' s my r ecol l ect i on.
8 Q. And i n Exhi bi t 26 i t gi ves a r eci pi ent shar e of t he cost i n
9 t hat Exhi bi t of $67, 000 even.
10 THE COURT: You ar e r ef er r i ng t o t he - -
11 MR. RUBI NSTEI N: Gover nment Exhi bi t 26, your Honor .
12 THE COURT: Al l r i ght . Thi s i s t he pr oposal f or t he
13 second year ?
14 MR. RUBI NSTEI N: No, your Honor . Thi s i s t he - - I ' m
15 sor r y. I must have gi ven you t he wr ong number .
16 THE WI TNESS: Thi s shows t he f i r st and second year
17 t oget her .
18 MR. RUBI NSTEI N: I ' msor r y, your Honor .
19 Q. I s i t f ai r t o say, Ms. Li de, t hat t he gr ant was suspended
20 f or not cont r i but i ng t he cof undi ng 3. 61?
21 A. That i s t he r eason f or t he suspensi on.
22 Q. And ar e you awar e t hat af t er t he suspensi on on J une 27,
23 2003, t hat Dr . Kar r on deposi t ed $60, 000 i n t he CASI account ?
24 A. I saw document at i on of t hat onl y i n t he ATP f i l e. I was
25 not awar e of i t at t he t i me. At t hat poi nt t he negot i at i on was
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1 bet ween CASI and our gr ant s of f i ce.
2 Q. So you wer e out of t he l oop basi cal l y?
3 A. I was a t echni cal pr oj ect manager , and Dr . Kar r on had t o
4 sat i sf y t he r equi r ement s f r omour gr ant s of f i ce, because al l
5 of f i ci al document at i on comes f r omt hem.
6 Q. Now, t her e ar e ot her speci al condi t i ons t hat can be pl aced
7 on a gr ant ee, i s t hat cor r ect ?
8 A. Yes.
9 Q. As a mat t er of f act , t her e ar e condi t i ons. Somet i mes you
10 have compani es t hat ar en' t f i nanci al l y sound or f i nanci al l y
11 st abl e t o qual i f y f or gr ant s, cor r ect ?
12 A. Coul d you pl ease def i ne f i nanci al l y sound.
13 Q. I n t he CASI gr ant t her e was t o be an audi t at t he end of
14 t he f i r st year .
15 A. That ' s t r ue of al l t hr ee- year si ngl e appl i cant s.
16 Q. I sn' t i t a f act t hat under t he r ul es of ATP, t hat you coul d
17 have wi t h a si ngl e appl i cant gr ant mor e - - you coul d have an
18 ear l i er audi t t han at t he end of t he year ?
19 THE COURT: The f i r st year .
20 MR. RUBI NSTEI N: Fi r st year .
21 A. I f you r equest ed i t .
22 Q. I s t he f i nanci al r esponsi bi l i t y of t he pr ospect i ve gr ant ee
23 somet hi ng t hat ' s l ooked at i n det er mi ni ng whet her or not t o
24 gr ant an awar d?
25 A. The or gani zat i onal st r uct ur e and t he abi l i t y t o sust ai n t he
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1 awar d i s l ooked at , yes.
2 Q. How about t he i ndi vi dual , t he i ndi vi dual s i nvol ved i n t he
3 gr ant ees, as t o t hei r f i nanci al management capabi l i t i es?
4 A. No, we l ook at t he cor por at i on. We do not l ook at t he
5 i ndi vi dual s. We do cl ear t he i ndi vi dual s f or ot her t hi ngs l i ke
6 cr i mi nal of f enses and di sbar ment , t hi ngs l i ke t hat , but we do
7 not , t o t he best of my knowl edge - - I have never l ooked at an
8 i ndi vi dual ' s r ecor ds.
9 Q. How about whet her or not t hey pay t hei r i ncome t ax, do you
10 check t hat ?
11 A. No, unl ess i t shows up on one of t he gover nment cl ear ances
12 t hat ar e done r out i nel y.
13 Q. That ar e done wi t h what ?
14 A. Ther e ar e cer t ai n r out i ne f or ms t hat pr i nci pal s of a
15 company f i l l out , and t hen t hey go t hr ough r out i ne cl ear ances
16 downt own at Depar t ment of Commer ce, Depar t ment of J ust i ce, so
17 unl ess t hey l ook at i ncome t ax. But ATP cer t ai nl y does not
18 l ook at an i ndi vi dual ' s i ncome t ax.
19 Q. So, i n ot her wor ds, bef or e a per son get s a gr ant t her e ar e
20 ot her or gani zat i ons i n gover nment t hat check t he per son or t he
21 company i n some way t o f i nd out i f t hey' r e f el ons or what ever .
22 A. Ther e ar e cl ear ances, t hat i s cor r ect .
23 Q. So CASI r ecei ved a cl ear ance, cor r ect ?
24 A. CASI r ecei ved a gr ant , so cl ear l y t he cl ear ance went
25 t hr ough.
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1 Q. And what agent - - do agenci es have t o submi t a document
2 wi t h ATP t hat t hey have cl ear ed CASI t o r ecei ve $800, 000 i n one
3 year ?
4 A. Do agenci es - -
5 THE COURT: Obj ect i on t o t he f or mof t he quest i on,
6 because t her e i s mor e t han one concl usi on.
7 Q. Let me ask you t hi s. You ar e f ami l i ar wi t h t he of f i ce of
8 t he i nspect or gener al of t he Depar t ment of Commer ce, cor r ect ?
9 A. Yes.
10 Q. And, as a mat t er of f act , t he speci al agent t hat you
11 poi nt ed out who was her e bef or e, she i s wi t h t hat or gani zat i on,
12 cor r ect ?
13 A. Yes.
14 Q. And does t he i nspect or gener al , do t hey i nvest i gat e on
15 behal f of ATP t he qual i f i cat i ons of a gr ant r eci pi ent ?
16 A. To t he best - -
17 THE COURT: I f you know.
18 A. Someone you ment i oned ear l i er handl ed t hat par t of t he
19 pr ocess, Ms. Bar t a Lambi s, and t hat was not par t of my
20 r esponsi bi l i t y. I do know t hat t her e ar e cl ear ances.
21 Q. And i t ' s f ai r t o say t hat t hese f unds, t hi s $800, 000, i s
22 not put i n escr ow, cor r ect ?
23 THE COURT: Asked and answer ed. She t ol d you wher e i t
24 was put .
25 Q. And when you wi t hdr aw t he f unds, i s t her e any r equi r ement
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1 t o segr egat e t hese ATP f unds f r omany ot her f unds t hat t he
2 company mi ght have?
3 A. Yes, one has t o have an account i ng syst emt hat account s f or
4 what goes t o t he ATP pr oj ect .
5 Q. A syst em, cor r ect ?
6 A. An account i ng syst em.
7 Q. But not a separ at e bank account f or t hese f eder al f unds,
8 cor r ect ?
9 A. As l ong as one can account f or t he spendi ng of t he f unds
10 f r omt hat account t o t he CASI pr oj ect .
11 Q. Now, di d t her e come a t i me t hat you had - -
12 By t he way, i s t he gr ant ee, i n t hi s case CASI , ar e
13 t hey per mi t t ed t o get addi t i onal f undi ng sour ces out si de of ATP
14 t o devel op t hei r pr oj ect ?
15 A. That ' s encour aged.
16 Q. And i n f act i n t hi s case wi t h CASI t hey wer e expl or i ng,
17 wer e t hey not , get t i ng f unds f r omNew Yor k st at e?
18 A. Cor r ect .
19 Q. And i n f act you l ear ned t hey wer e unabl e t o get f unds
20 because t hi s gr ant st ar t ed Oct ober 1, 2001 and 9/ 11 happened
21 2001.
22 A. I t was not my under st andi ng t hat t hat was t he r eason. I n
23 f act , i t was my under st andi ng t hat t hey wer e pur sui ng ot her
24 sour ces of f unds. Lat er i n t he cour se of t he pr oj ect , some of
25 t he quar t er l y r epor t s act ual l y had what t hey submi t t ed t o ot her
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1 f undi ng agenci es.
2 THE COURT: I t ' s your under st andi ng i n t hi s ar ea,
3 based on r epor t s f r omCASI .
4 THE WI TNESS: And conver sat i ons, yes, si r .
5 THE COURT: But not hi ng el se.
6 THE WI TNESS: No, si r .
7 THE COURT: So, you don' t have any i ndependent
8 knowl edge.
9 THE WI TNESS: No, si r .
10 THE COURT: You ar e j ust r epeat i ng what t hey t ol d you.
11 THE WI TNESS: What t hey t ol d me ver bal l y and what we
12 got i n t he quar t er l y r epor t s.
13 THE COURT: Fr omt hem.
15 Q. Do you r ecal l bei ng a r eci pi ent of an e- mai l , Gover nment
16 Exhi bi t 3501- DDDDD?
17 THE COURT: 3501 what ?
18 MR. RUBI NSTEI N: DDDDD.
19 THE COURT: D, as i n dog?
21 THE WI TNESS: Do I have t hat ?
22 THE COURT: Do you want t o show i t t o t he wi t ness.
23 Q. I show you t hi s e- mai l , i t ' s act ual l y f r omyou. Do you
24 want t o r evi ew i t and see i f i t r ef r eshes your r ecol l ect i on?
25 A. Sur e.
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1 THE COURT: I s t hat DDD?
2 MR. RUBI NSTEI N: Fi ve Ds, your Honor .
3 THE COURT: Fi ve Ds, as i n dog.
4 MR. RUBI NSTEI N: 3501 f i ve Ds.
5 Your Honor , t he gover nment hasn' t pr ovi ded t hese
6 document s t o t he j ur y, your Honor .
7 THE COURT: I under st and.
8 MR. RUBI NSTEI N: I know, but t he j ur y i s l ooki ng.
9 THE COURT: You won' t have i t t her e i n your books.
10 What ' s your quest i on on t he document ?
11 Q. Yes. Does t hat r ef r esh your r ecol l ect i on of di scussi ons
12 about New Yor k st at e, at t empt i ng t o get New Yor k st at e f undi ng?
13 A. Even wi t hout t hat e- mai l , I acknowl edge t hat CASI was
14 t r yi ng t o get ot her f undi ng.
15 Q. And you sai d somet hi ng about t hat t hey had i ndi cat ed t hey
16 want ed t o open an of f i ce i n downt own Manhat t an, cor r ect ?
17 A. That ' s what I r ecal l Dr . Kar r on t el l i ng us, yes.
18 Q. And i n f act you ar e awar e t hat i t was vi r t ual l y i mpossi bl e
19 t o f i nd of f i ces i n downt own Manhat t an af t er 9/ 11/ 01, cor r ect ?
20 A. I honest l y t hought - - I r ecal l some di scussi on on per haps
21 r ent woul d be cheaper and i t woul d be easi er , and t her e wer e
22 al so ot her of f i ces bei ng consi der ed.
23 Q. And one of t hemwas at CUNY.
24 A. Cor r ect .
25 Q. And i n f act di d you l ear n t hat CUNY want ed $1 mi l l i on i n
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1 r ent t o r un t he CASI pr oj ect out of t hei r f aci l i t y?
2 A. I di d not know t hat .
3 Q. Di d you i nqui r e of Dr . Kar r on at any t i me what happened t o
4 t he f aci l i t y at CUNY?
5 A. Act ual l y t he quar t er l y r epor t s r epor t ed t hat t hey wer e
6 st i l l l ooki ng f or space, and al t hough i t hadn' t come t hr ough
7 yet i t was st i l l a possi bi l i t y, and t hat document at i on
8 i ndi cat ed t o us t hat he was st i l l pur sui ng ot her l ab space.
9 Q. And you came i n cont act wi t h t hi s Mr . Or t hwei n, cor r ect ?
10 A. Cor r ect .
11 Q. You met hi mper sonal l y?
12 A. Cor r ect .
13 Q. And you had a number of t el ephone cal l s wi t h hi m, cor r ect ?
14 A. Cor r ect .
16
17
18
19
20
21
22
23
24
25
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863ZKAR4 Li de - cr oss
1 Q. And coul d you est i mat e how of t en he woul d cal l you on
2 behal f of CASI ?
3 A. I coul d not est i mat e. Many of t he communi cat i ons wer e f r om
4 Dr . Kar r on, hi msel f .
5 Q. Now, you say you went t o t he 300 East 33r d St r eet wher e
6 CASI was l ocat ed, cor r ect ?
7 A. Cor r ect .
8 Q. Coul d you, when you went t her e, on your - - you went t her e
9 on your f i r st si t e vi si t , r i ght ?
10 A. We went t her e t wo si t e vi si t s, cor r ect .
11 Q. And your f i r st si t e vi si t was i n 2001?
12 A. The f i r st - - bot h si t e vi si t s wer e i n 2002, May and
13 Oct ober .
14 Q. And when you went on t hi s si t e vi si t , coul d you descr i be t o
15 t he j ur y what t hi s f aci l i t y l ooked l i ke?
16 A. I t l ooked l i ke someone' s per sonal abode wi t h a l i vi ng r oom
17 wi t h a l ar ge number of comput er s.
18 Q. Was t her e anyt hi ng ot her t han comput er s i n t he l i vi ng r oom?
19 A. I r emember , you know, f aci l i t y l i ke a scr een t o show a
20 power poi nt pr esent at i on. The over whel mi ng i mpr essi on was a
21 l ot of comput er s.
22 Q. And, i n f act , you t ol d us t hat i t was ver y hot i n t her e?
23 A. No, I di dn' t t hi nk i t was hot at al l . I t was br ought t o
24 our at t ent i on t hat because of t he comput er s, Dr . Kar r on f el t
25 ATP shoul d pay f or addi t i onal el ect r i ci t y f or ai r condi t i oni ng.
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1 Q. And t hat was somet hi ng t hat was goi ng t o be negot i at ed,
2 cor r ect ?
3 A. No. We sai d t hat i t ' s nor mal l y not cover ed. We di dn' t
4 t hi nk i t woul d be cover ed. He coul d appl y and see what t he
5 gr ant s of f i ce sai d, but i t was not an i t emt hat we expect ed t o
6 negot i at e, because we' ve never seen i t done bef or e.
7 Q. Wel l , ar e you awar e t hat CASI was asked t o submi t t hei r
8 pr i or year bi l l s on el ect r i ci t y t o t hei r cur r ent year ' s usage?
9 A. No, I was not awar e. But any appr oval f or t hat woul d have
10 come f r omt he gr ant s of f i ce. I was not par t of t hat .
11 Q. You' r e not par t - -
12 THE COURT: I t hi nk I shoul d i nst r uct t he j ur y t hat
13 i t ' s t he wi t ness' answer s t hat ar e t he evi dence bef or e you.
14 I t ' s not t he l awyer s' quest i ons. So you' r e not t o dr aw any
15 concl usi ons f r omt he f act t hat t he l awyer asked t he quest i on.
16 I t ' s what t he wi t ness answer s t hat i s t he evi dence bef or e you.
17 Q. Wel l , t her e wer e - - di d you ever hear of t he t er m, si t e
18 pr epar at i on?
19 A. I ' ve not hear d t hat t er m. I can i magi ne what t he
20 def i ni t i on woul d be.
21 Q. I sn' t i t a f act t hat a gr ant ee i s per mi t t ed t o t o pr epar e
22 t he f aci l i t y wher e t he pr oj ect i s goi ng t o be r un t o
23 accommodat e t he equi pment , i f you need equi pment i n t he gr ant s;
24 i s t hat so?
25 A. The gr ant ee cer t ai nl y has aut hor i t y t o do what ever he or
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1 she want s wi t h t he space at t he l abor at or y. I t ' s a quest i on of
2 who pays f or t hat , and ATP does not pay f or maj or r enovat i ons.
3 Q. Wel l , Exhi bi t 1 t hat ' s act ual l y i n t he bi nder s, and page
4 si x of t hat exhi bi t , do you r ecal l t est i f yi ng about t hat on
5 di r ect exami nat i on?
6 A. Cor r ect .
7 Q. And you t est i f i ed t hat t he pr oj ect doesn' t pay f or
8 const r uct i on cost s, cor r ect ?
9 A. Cor r ect . I t says her e, t hose ar e unal l owabl e cost s t o ATP.
10 Q. Wel l , how about t he next l i ne, does i t say, r eadi ng f r om
11 Gover nment ' s one i n evi dence; however , const r uct i on of
12 exper i ment al r esear ch and devel opment f aci l i t i es t o be l ocat ed
13 wi t hi n a new or exi st i ng bui l di ng ar e al l owabl e, pr ovi ded t he
14 equi pment or f aci l i t i es ar e essent i al f or car r yi ng out t he
15 pr oposed sci ent i f i c and t echni cal pr oj ect and ar e appr oved by
16 NI ST gr ant s of f i ces?
17 THE COURT: You asked her i f i t says t hat ?
18 Q. I s t hat what t hat document says, i n whol e?
19 A. Yes, i t does. However , t hat was not pr oposed i n t he
20 pr oposal . I have managed over 50 ATP pr oj ect s over 15 year s
21 and we have never pai d f or t hat .
22 MR. RUBI NSTEI N: I move t hat be st r i cken as not
23 r esponsi ve.
24 THE COURT: Wel l , t he l at er t he par t of i t , t he l ast
25 t he j ur y i s i nst r uct ed t o di sr egar d t he par t about t he 15
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1 year s. But t he wi t ness t est i f yi ng t hat not t hi s l anguage i s
2 not i n t he gr ant pr oposal i s al l owed.
3 Q. The pr oposal , i t sel f , i n ot her wor ds when you met wi t h Dr .
4 Kar r on, di d you t el l hi mt hat , you know, i n 15 year s we' ve
5 never once al l owed any ki nd of si t e pr epar at i on cost s; di d you
6 ever say t hat , yes or no?
7 A. We sai d i t was hi ghl y unl i kel y t hat i t woul d be appr oved.
8 Q. Your depar t ment i s not t he one t hat appr oves or
9 di sappr oves, cor r ect ?
10 A. My depar t ment r ecommends appr oval or di sappr oval .
11 Q. And t her e i s an appeal pr ocess?
12 A. I t ' s no appeal pr ocess. The deci si on i s made i n our gr ant s
13 of f i ce, so we can r ecommend, but t hey make t he deci si on.
14 Q. And, i n f act , coul d you descr i be t he si ze of t hese
15 comput er s t hat wer e i n t hi s of f i ce of CASI ?
16 A. Ther e wer e sever al si l i con gr aphi c ser ver s and some wor k
17 st at i ons. Technol ogy has changed.
18 The ot her poi nt I ' d l i ke t o make i s t he r equest f or
19 t hese wer e not i n t he or i gi nal budget , so he woul d' ve needed an
20 appr oval of a di f f er ent budget anyway t o use t he money f or
21 t hese i t ems.
22 Q. Fi ne. But you can get budget r evi si ons, r i ght ?
23 A. You can get budget r evi si ons.
24 Q. And i t ' s a quest i on of whet her or not somebody says t hat
25 t hi s i s an appr opr i at e expense or not an appr opr i at e expense,
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1 cor r ect ?
2 A. He was advi sed t hat i f he want ed t o suggest i t , we woul d
3 cer t ai nl y see what t he gr ant s of f i ce sai d.
4 THE COURT: What t hey sai d or wr i t e?
5 THE WI TNESS: I ' msor r y, what t hey wr ot e, yes, si r ,
6 had t o be i n wr i t i ng - - sor r y. The deci si on t he gr ant s of f i ce
7 made woul d be appr opr i at e way t o say t hat .
8 Q. I sn' t i t a f act t hat i n November of 2001, t her e wer e
9 r equest s, or al r equest s f or budget r evi si ons by Dr . Kar r on?
10 A. And, i ndeed, a budget r evi si on was appr oved i n December of
11 ' 01. That ' s one of t he gover nment exhi bi t s, and not hi ng f or
12 t hose expenses occur r ed i n t hat budget r evi si on.
13 THE COURT: Submi t t ed by?
14 THE WI TNESS: CASI submi t t ed a new budget t hat was
15 appr oved i n December of 2001, and t her e wer e no changes i n t he
16 budget t hat woul d r ef l ect t he desi r e f or t hese r enovat i ons.
17 Q. What ki nd of r enovat i ons wer e t hey?
18 A. I woul d assume we ar e t al ki ng about t he ai r condi t i oni ng.
19 Q. And t he ai r condi t i oni ng, Dr . Kar r on advi sed you, was
20 necessar y because t he comput er s whi ch wer e r unni ng, cor r ect ?
21 A. Yes, si r .
22 Q. And i n f act t hese, you l ear ned t hat t hese comput er s wer e
23 r unni ng vi r t ual l y 24 hour s a day?
24 A. But my poi nt i s i f he want ed t hat r enovat i on, i t shoul d
25 have been r equest ed i n a r evi sed budget , i f he want ed t o spend
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1 t he Gover nment ' s money f or i t .
2 Q. Shoul d have been, cor r ect ?
3 A. Cor r ect .
4 Q. Now, t hey di d ask f or a r evi sed budget as t o empl oyees, di d
5 t hey not , i n November of 2001?
6 THE COURT: What ' s t he quest i on?
7 Q. To r educe par t of t he r evi si on r equest was t o r educe t he
8 sal ar i es f or empl oyees?
9 A. One of t he - - t her e was a mi nor r educt i on i n - - I ' d have t o
10 l ook up t hat budget i f we' r e goi ng t o do t hat , pl ease.
11 THE COURT: Exhi bi t what ?
12 THE WI TNESS: I t ' s one of t he amendment s, si r .
13 THE COURT: What dat e ar e we t al ki ng about ?
14 THE WI TNESS: Yeah, whi ch exhi bi t i s - -
15 THE COURT: Mr . Rubi nst ei n, what dat e ar e you t al ki ng
16 about ?
17 THE WI TNESS: I t ' s, i t ' s amendment s one or t wo, I
18 t hi nk.
19 THE COURT: What exhi bi t ar e you t al ki ng about , Mr .
20 Rubi nst ei n, so we can get al ong wi t h t hi s?
21 MR. RUBI NSTEI N: I bel i eve i t i s - -
22 THE WI TNESS: Let ' s see, i t ' s goi ng t o be 22.
24 THE WI TNESS: Cer t ai nl y.
25 THE COURT: 22?
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1 THE WI TNESS: Yes, si r . Exhi bi t 22. And t he sal ar i es
2 wer e r educed f r om375 t o 325. However , t hat was of f set by t he
3 i ncr ease i n subcont r act or s f r om200 t o 250.
4 Q. When t hey r educed t he sal ar i es, t hey al so r educed t he
5 f r i nge benef i t s, di d t hey not , i n t he r evi sed budget ?
6 A. Cor r ect , and t hey upped t he t r avel and t he mat er i al s. The
7 net change i n t he budget was zer o.
8 Q. The concept of ATP i s, don' t spend mor e t han t he 800, 000,
9 cor r ect ?
10 A. You cannot spend mor e t han 800, 000 dur i ng t he f i r st year of
11 t he pr oj ect or however much you' ve budget ed, cor r ect .
12 Q. And when CASI submi t t ed t hei r budget , di d anybody f r omATP
13 quest i on any l i ne i n t he budget ?
14 A. Ther e was - - t her e i s a sour ce of val uat i on boar d whi ch
15 consi st s of appr oxi mat el y 15 hi gh l evel i ndi vi dual s who l ook at
16 t hat pr oposal , i ncl udi ng t he budget . And, i ndeed, i f t her e ar e
17 any quest i ons, t hose ar e ei t her answer ed at what ' s cal l ed an
18 or al r evi ew, or t her e ar e document s t hat go back and f or t h wi t h
19 quest i ons and answer s. But t he f i nal document i s t he one t hat
20 i s appr oved i n t he awar d i t sel f .
21 THE COURT: Wel l , l ooki ng at exhi bi t 26, Ms. Li de.
22 THE WI TNESS: Yes, si r . 26?
23 THE COURT: Ar e t he expl anat i ons of t he changes i n t he
24 budget i ncl uded i n t he second page of t he budget r equest ?
25 THE WI TNESS: I ' maf r ai d I mi spl aced 26.
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1 THE COURT: I ' msor r y, di d I say 26? 22.
2 THE WI TNESS: 22? Ther e i s - -
3 THE COURT: I s t he one you say i s t he - -
4 THE WI TNESS: Yes, si r . And i n my exhi bi t I - - t her e
5 i s an e- mai l wher e t he changes - -
6 THE COURT: No, I don' t want somet hi ng - - oh, i t ' s a
7 par t of exhi bi t - -
8 THE WI TNESS: Yes, yes.
9 THE COURT: The second page?
10 THE WI TNESS: Oh, i t ' s t he one, t wo, t hr ee, t he f our t h
11 page of exhi bi t 22 i s t he expl anat i on and r at i onal f or t he
12 changes.
13 THE COURT: And t hen t her e' s one i t emt hat ' s cal l ed
14 cont r act i ng cost s.
15 THE WI TNESS: Cor r ect , so - -
16 THE COURT: What i s t hat f or ?
17 THE WI TNESS: Basi cal l y, t hey wer e changi ng t he st at us
18 of at l east one empl oyee t o a consul t ant i nst ead of an
19 empl oyee.
20 THE COURT: But who i s t hat consul t ant ?
21 THE WI TNESS: The one I ' mr eadi ng her e now i s
22 Pr of essor Geor ge Wol ber g.
23 THE COURT: That ' s not ai r condi t i oni ng, i s t hat
24 r i ght ?
25 THE WI TNESS: That i s cor r ect , i t i s not . Ther e' s no
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1 change i n t hi s budget t hat woul d anyway r ef l ect t he r equest f or
2 payi ng f or ai r condi t i oni ng.
4 Q. By t he way, i n Exhi bi t 1, t he pr oposal ki t ?
5 A. Yes, si r .
6 Q. Do t hey amend t hese ki t s f r omt i me t o t i me?
7 A. Absol ut el y.
8 Q. The pr oposal ki t we have i n evi dence says 2000?
9 A. That i s cor r ect , and i t was pr epar ed f or t he 2001
10 compet i t i on. That i s t he ki t under whi ch CASI appl i ed.
11 Q. And when you made t hat si t e vi si t , you saw a number of
12 i ndi vi dual s t her e who wer e not l i st ed i n t he budget t hat was
13 submi t t ed t o ATP, cor r ect ?
14 THE COURT: Whi ch si t e vi si t , Mr - -
15 Q. The f i r st si t e vi si t ?
16 A. Ther e was some conf usi on on our par t as t o who was i n t he
17 r oomver sus who was i n t he pr oposal , and we r emi nded Dr . Kar r on
18 t o f or mal l y submi t any changes i n per sonnel wi t h j ust i f i cat i on.
19 Q. And di d you di scuss who t hose peopl e wer e i n t he apar t ment ?
20 A. We go ar ound and we make i nt r oduct i ons and we di scuss - -
21 yes, who t hose peopl e wer e.
22 Q. And di d you l ear n t hat t hey wer e st udent s, gr aduat e
23 st udent s t hat wer e t her e?
24 A. Uh- huh. Some of t hem, r i ght .
25 Q. And wer e wor ki ng on t hi s pr oj ect , r i ght ?
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1 A. And what we wer e aski ng was f or of f i ci al document at i on so
2 t hat t hey coul d become par t of t he of f i ci al gr ant s.
3 Q. Di d you under st and t hat some of t hese peopl e wer e wor ki ng
4 wi t hout compensat i on?
5 A. And t hat i s per f ect l y accept abl e, and t hen we don' t need
6 t he of f i ci al appr oval as l ong as t hey' r e not get t i ng gover nment
7 f unds.
8 Q. You f ound t hat - - by t he way, when you woul d get e- mai l s
9 f r omDr . Kar r on, what hour s of t he day or ni ght woul d you say
10 you woul d get e- mai l s f r omhi m?
11 A. I assume you mean when t hey' r e wr i t t en?
12 Q. Yes.
13 A. I t hi nk i t ' s acr oss t he boar d, as most of us r ead e- mai l
14 and wr i t e e- mai l , basi cal l y, 24 hour s a day.
15 Q. And ar e you awar e of any ot her pr oj ect t hat CASI was
16 i nvol ved i n?
17 A. At t hat t i me, t her e wer e some l i st ed i n t he or i gi nal
18 pr oposal . We al ways ask what ot her pr oj ect s ar e you doi ng or
19 have you done, and t her e wer e sever al i n t he or i gi nal pr oposal .
20 Q. Of pr oj ect s t hat had been done, cor r ect ?
21 A. Cor r ect .
22 Q. And, i n f act , you knew t hat t hi s was t he onl y pr oj ect t hat
23 CASI was wor ki ng on was t hi s ATP gr ant s, cor r ect ?
24 A. That was our under st andi ng. At t he same t i me, i t was our
25 under st andi ng t hat t hey wer e l ooki ng f or ot her f undi ng t o do
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1 compl i ment ar y r esear ch.
2 Q. Now, i t ' s f ai r t o say t hat you, i n your capaci t y of wer e
3 wat chi ng over t hese var i ous pr oj ect s, cor r ect ?
4 A. Uh- huh.
5 Q. To assi st t hemi n devel opi ng, r i ght ?
6 A. Assi st t hemi n devel opi ng?
7 Q. Yeah, so t hat t hey coul d event ual l y meet what ever
8 sci ent i f i c end wer e capabl e bei ng; t hat ' s t he hope, r i ght ?
9 A. The r esear ch i s t hei r s t o per f or m.
10 Q. And you you eval uat e, do you not , how t hey' r e per f or mi ng,
11 cor r ect ?
12 A. We get quar t er l y r epor t s whi ch we r ead, and over see
13 pr ogr ess.
14 Q. I sn' t i t a f act t hat you f ound t hat CASI ' s pr oj ect was
15 t echni cal l y exci t i ng?
16 A. Yes. I t woul d not have r ecei ved an ATP awar d i f i t wer e
17 not .
18 Q. And i s i t a f act t hat whi l e t he CASI per f or mwas suspended,
19 i t seemed t o be maki ng t echni cal pr ogr ess?
20 A. Techni cal l y i t seemed t o be maki ng pr ogr ess, yes. I f i t ' s
21 not meet i ng t he goal s i n t he pr oposal , t hen cl ear l y i t ' s
22 suspended f or ot her r easons.
23 Q. Now, i n t he budget you' r e al l owed t o move any i t em- -
24 i ncr ease i t by 10 per cent , i s t hat cor r ect ?
25 A. I f you decr ease somet hi ng el se by t he equi val ent amount ,
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1 and i f i t ' s wi t hi n 10 per cent of t hat year ' s budget . So
2 cumut at i vel y over year one, onl y $80, 000 coul d have been moved
3 wi t hout pr i or appr oval .
4 Q. Can you - - i n ot her wor ds, t hey doesn' t ut i l i ze t he
5 10 per cent , t he t en mi l l i on - - t he t wo mi l l i on r at her ?
6 A. No. I t ' s on a year - t o- year basi s.
7 Q. And i s t hat speci f i ed i n some of t hi s mat er i al ?
8 A. Yes. I bel i eve i t ' s act ual l y i n t he speci al awar d
9 condi t i on, whi ch I can t r y t o f i nd, but t hat ' s ar t i cul at ed ver y
10 cl ear l y i n - - at al l t hese meet i ngs and ki ckof f s and pr oposer s
11 conf er ences, et cet er a. I t coul d al so be i n Exhi bi t 4 i n t hose
12 sl i des.
13 Q. I sn' t i t a f act t hat - - you' ve t est i f i ed about r ecei vi ng
14 pr i or appr oval , cor r ect , i n wr i t i ng bef or e you do somet hi ng?
15 A. Yes, si r .
16 Q. I sn' t i t a f act , ma' am, t hat you - -
18 Q. - - r ecei ved appr oval f or t he f i r st t i me at t he end of t he
19 t he year t hat you coul d seek budget r evi si ons?
20 MR. KWOK: Obj ect i on.
21 THE COURT: I don' t under st and t he quest i on, Mr - -
22 Q. Ar e you pr epar ed - -
23 THE COURT: You wi l l have t o st ar t over agai n because
24 I coul dn' t f ol l ow your quest i on.
25 THE WI TNESS: Thank you.
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1 Q. Ar e you per mi t t ed, at t he end of t he f i r st year , t o r evi ew
2 t he cost , your cost and submi t a r evi sed budget and a nar r at i ve
3 i f changes have occur r ed?
4 A. No. You ar e per mi t t ed t o r equest changes and get appr oval
5 i n wr i t i ng at any poi nt . But as I sai d ear l i er i n t est i mony,
6 af t er t he f act i t i s at your own r i sk.
7 Q. Let - - t he Exhi bi t 4 i s - - t he gover nment Exhi bi t 4 ar e t he
8 sl i des, cor r ect ?
9 A. Yes, si r .
10 Q. Now, I show you t hi s document . You have t he or i gi nal of
11 Exhi bi t 4, do you not ?
12 A. I have t he gover nment Exhi bi t 4. I assume i t ' s t he
13 or i gi nal , i f i t has a yel l ow st i cker .
14 THE COURT: You have t he excer pt s or t he whol e t hi ng?
15 THE WI TNESS: I bel i eve I have t he whol e t hi ng,
16 Exhi bi t 4.
17 Q. Why don' t you t ur n t o page 11. Unf or t unat el y, t he j ur or s
18 don' t have t hi s page.
19 THE COURT: I t ' s not i n your books, l adi es and
20 gent l emen, I don' t bel i eve.
21 MR. RUBI NSTEI N: I s t her e a way t o put t hat up on t he
22 boar d; do t hey have t he whol e document i n t her e?
23 THE COURT: Exhi bi t 11? Have we got exhi bi t 11?
24 MR. RUBI NSTEI N: Exhi bi t 4, page 11, your Honor .
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1 THE DEPUTY CLERK: Exhi bi t f our , page 11?
2 MR. RUBI NSTEI N: That ' s cor r ect .
4 THE DEPUTY CLERK: Exhi bi t 4, page 11.
5 THE COURT: Al l r i ght , i t ' s pl aced on t he - - i s t hi s
6 t he - - you' ve got t he cor r ect page you want ?
7 THE COURT: Leave i t up t her e, who i s put t i ng i t up?
8 MR. RUBI NSTEI N: I ' l l show you what i t i s. No, j ust a
9 second. Her e.
10 Q. That i s one of t he pages t hat you show at t he f i r st meet i ng
11 wi t h t he peopl e f r omCASI , cor r ect ?
12 A. Cor r ect .
13 Q. Now, on t hat page i t says, r eci pi ent r esponsi bi l i t y, does
14 i t not , ma' am?
15 A. Yes, i t does.
16 Q. And i t says i n t he second par agr aph, r evi ew cost s at t he
17 end of each year and submi t a r evi sed budget and a nar r at i ve i f
18 changes have occur r ed, cor r ect ?
19 A. That ' s what i t says, yes, si r .
20 Q. And t hat was shown t o Dr . Kar r on, r i ght ?
21 A. Cor r ect .
22 Q. Lee Gur f ei n was t her e?
23 A. He was at t he ki ckof f .
24 Q. And Dr . Sat ava was t her e, cor r ect ?
25 A. Cor r ect .
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1 MR. RUBI NSTEI N: Your Honor , t hi s i s a good spot t o
2 br eak f or l unch.
3 THE COURT: Let ' s f i ni sh t he l i ne of quest i oni ng. Ar e
4 you al most done wi t h t hi s?
5 MR. RUBI NSTEI N: No, but wi t h t hi s exhi bi t . I f you
6 want me t o cont i nue wi t h t he exhi bi t , I have no - -
7 THE COURT: No, what ever your poi nt i s.
8 MR. RUBI NSTEI N: No, t hi s poi nt I ' mf i ni shed wi t h,
9 J udge.
10 THE COURT: Oh, you' r e f i ni shed wi t h i t ? Okay.
11 MR. RUBI NSTEI N: Yeah. I ' l l - - j ust a second, J udge,
12 maybe I ' mnot f i ni shed.
14 Q. So, i n f act , accor di ng t o t hi s page, page 11, you don' t
15 have t o submi t t o get wr i t t en appr oval bef or e you spend t he
16 money, cor r ect ?
17 A. No, t hat ' s t aken out of cont ext .
18 Q. Okay.
19 MR. RUBI NSTEI N: No f ur t her quest i ons on t hi s t opi c at
20 t hi s t i me.
21 THE COURT: Al l r i ght , t hen we' l l - - t he j ur y i s
22 excused. Pl ease come back at 2: 00 o' cl ock and we' l l r esume.
24 THE COURT: Counsel .
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1 THE COURT: Ms. Li de, I guess you' r e excused.
2 THE WI TNESS: I ' msor r y, I ' msor r y.
3 THE COURT: I t ' s al l r i ght .
4 THE WI TNESS: I ' mt r yi ng t o get - -
5 THE COURT: You have t o wai t t i l l t he j ur y l eaves, and
6 t hen be back her e by 2: 00 o' cl ock.
7 THE WI TNESS: Thank you, si r .
8 THE COURT: Do you want an i nst r uct i on t o t he wi t ness,
10 MR. RUBI NSTEI N: No, your Honor . I have no pr obl em
11 wi t h Ms. Li de.
12 THE COURT: Anyt hi ng el se?
13 MR. KWOK: Not hi ng f r omt he gover nment at t hi s t i me.
14 THE COURT: Let ' s be back her e about t en mi nut es t o
15 t wo, so we' r e - - i f you t hi nk of anyt hi ng at t hat t i me we' l l be
16 abl e t o deal wi t h i t and not hol d up t he j ur y.
17 MR. Di CENZO: Your Honor , I j ust want - - I ' man
18 associ at e of Mr . Rubi nst ei n' s my name i s Wi l l i amDi Cenzo and I
19 j ust want t o i nf or myou t hat I may be si t t i ng at counsel t abl e.
20 THE COURT: What ' s your name?
21 MR. Di CENZO: Wi l l i amDi Cenzo.
23 MR. Di CENZO: J ust t o l et you know.
24 MR. EVERDELL: Your Honor , t her e i s one ot her t hi ng.
25 I t i s possi bl e f or t he next wi t ness we may be i nt r oduci ng a
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1 document t hat we hadn' t ant i ci pat ed needi ng t o do, but t he CFR
2 r egs, and I have copi es of i t , I have enough f or t he j ur y, i t ' s
3 not i n t he sanct i on pr ogr am, but we can use t he El mo f or i t .
4 I f and when we need t o do t hat , woul d i t be al l r i ght f or me t o
5 j ust pass out t he appl i cabl e r egs t o t he j ur y and - -
6 MR. EVERDELL: - - do i t t hat way.
7 THE COURT: The whol e CFR?
8 MR. EVERDELL: J ust t he par t i cul ar r egs t hat t he
9 wi t ness wi l l be t est i f yi ng t o and t hat - - I mean I coul d mar k
10 i t as a gover nment exhi bi t or t he Cour t coul d t ake j udi ci al
11 not i ce of t he f act t hat i t ' s t he CFR r eg, ei t her way i s f i ne
12 wi t h me.
13 THE COURT: Wel l , gi ve Mr . Rubi nst ei n not i ce t hat
14 you' r e doi ng i t .
15 MR. RUBI NSTEI N: I have my own copy of t he r egs. I
16 have an obj ect i on t o, i f t hey t hey want t o put t hi s i n
17 evi dence, and t hen want t o show t hat one page, okay. I
18 don' t - - I t hi nk t hat ' s an appr opr i at e t hi ng t o do. But t o
19 gi ve t he j ur y one page of a r eg, I t hi nk i s absol ut el y
20 mi sl eadi ng.
21 THE COURT: You can - -
22 MR. EVERDELL: I can' t gi ve hi mt he ent i r e CFR, t hat
23 seems a l i t t l e si l l y. I ' mgi vi ng t hemt he r eg t hat ' s
24 appl i cabl e t o her t est i mony, and I don' t even need t o put i t
25 i nt o evi dence because i t ' s t he CFR and you can t ake not i ce of
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1 i t . I t doesn' t even need t o be i n evi dence. I t ' s a l aw. I ' m
2 j ust doi ng t hi s f or t he pur poses so t he j ur y t o f ol l ow al ong
3 and so t hat we can make i t go smoot hl y.
4 MR. RUBI NSTEI N: That put s i t i n evi dence i f i t ' s l aw,
5 CFR.
6 The poi nt of t he mat t er i s, J udge, t hat , you know,
7 t hey' r e cher r y pi cki ng. Thi s i s a t er mf or 2001, cher r y
8 pi cki ng, I l ear ned i t . And t hey have a 100 page document and
9 t hey want t o - - i f somebody was gi vi ng me $2 mi l l i on, I woul d
10 say, wher e do I si gn and be out t he door .
11 MR. EVERDELL: I t seems l i ke counsel woul d l i ke me t o
12 gi ve t hemt he ent i r e book of t he Code of Feder al Regul at i on,
13 whi ch i s not - -
14 THE COURT: I ' mgoi ng t o al l ow t hemt o j ust pr oduce
15 t he CFR and put i t up on t he boar d.
16 MR. EVERDELL: Thank you, your Honor .
17 THE COURT: I t ' s Code of Feder al Regul at i on. Ther e
18 ar e mor e t han one sect i on of t he CFR t hat - -
19 MR. EVERDELL: Yes, your Honor . The onl y one t hat I
20 bel i eve t he wi t ness, I ' l l need t he wi t ness t o t est i f y about i s
21 a t wo page sect i on, we' l l j ust handl e i t wi t h t he el mo.
22 THE COURT: Of cour se you can put i n what ever r eg you
23 want t o.
24 MR. EVERDELL: We absol ut el y can.
25 ( Luncheon r ecess)
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863zkar 4 Li de - cr oss
1 A F T E R N O O N S E S S I O N
2 2: 00 p. m.
3 THE DEPUTY CLERK: Al l r i se.
4 THE COURT: Pl ease be seat ed.
5 ( J ur y not pr esent )
6 THE COURT: Ar e we r eady f or t he j ur y?
8 MR. KWOK: Yes, your Honor .
9 THE COURT: Al l r i ght , l et ' s get t he wi t ness; br i ng i n
10 t he j ur y. i f t hey' r e r eady.
12 THE COURT: Pl ease be seat ed, wi t ness t ake t he st and.
13 Pl ease be seat ed. Cont i nue, Mr . Rubi nst ei n.
16 Q. Mi ss Hayes, I ' msor r y, Ms. Li de, CASI was a uni que company,
17 was i t not , i n t he f act t hat i t onl y had t he ATP gr ant s t hat
18 t hey wer e wor ki ng on?
19 THE COURT: I t hi nk you' ve been t hr ough t hi s bef or e,
21 MR. RUBI NSTEI N: I ' mj ust l ayi ng - -
22 THE COURT: I t ' s get t i ng ver y dupl i cat i ve.
24 Q. I t ' s a f act t hat i ndi r ect cost s ar e not al l owed accor di ng
25 t o ATP gr ant s, cor r ect ?
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1 A. Yes.
2 Q. And i ndi r ect - - and t he r eason f or t hat i s t hat i f a
3 busi ness i s f unct i oni ng, t hey may have ot her cust omer s and
4 ot her wor k and t hey don' t appl y t o cost s, di vi de up t he cost s
5 of t he r ent bet ween a number of di f f er ent cust omer s?
6 A. I s t hat a quest i on, si r ?
7 Q. Yeah.
8 A. Or st at ement ?
9 Q. I t ' s a quest i on.
10 A. No. The r eason act ual l y f or a si ngl e company payi ng i t s
11 own i ndi r ect cost i s because t he U. S. Congr ess set up t he
12 Advanced Technol ogy Pr ogr amas a cost shar i ng pr ogr am, and t hey
13 want ed t he gover nment t o shar e t he r i sk. But t hey al so want ed
14 t o know t hat t he f or pr of i t company had somet hi ng at r i sk al so.
15 So i t ' s by st at ut e, t he ATP st at ut e, whi ch i s par t of t he
16 Omni bus Tr ade Bi l l of 1988 est abl i shed t hat , and t hat was t he
17 r eason f or i t .
18 Q. I n f act , t her e' s a 3. 61 co- pay, r i ght ? I s t hat so t hat t he
19 per son has t o put up a co- pay?
20 A. No si r . No, si r . The onl y r equi r ement , accor di ng t o t he
21 ATP st at ut e f or a si ngl e company, i s t hat t hey pay t hei r own
22 i ndi r ect cost s. They can al so pr opose t o pay some of t he
23 di r ect cost s, whi ch i n CASI ' s case was t he case.
24 Q. And t hey coul d r equest t hat ATP per mi t t hemt o pay some
25 i ndi r ect cost s and appr ove t hat , cor r ect ?
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1 A. They have t o pay al l t hei r own i ndi r ect cost s. They don' t
2 r equest t hat , i t ' s i n our l egi sl at i on.
3 Q. I sn' t i t a f act t hat CASI was negot i at i ng wi t h your agency
4 t o appr ove par t of t he el ect r i cal expenses as a di r ect cost t o
5 t he pr oj ect ?
6 A. I amnot awar e of t hat , si r .
7 Q. And how many - - do you have - - ar e you awar e of t he amount
8 of t i me t hat Dr . Kar r on spent on t he CASI pr oj ect ?
9 A. I t ' s my - -
10 THE COURT: Thi s - -
12 THE COURT: Thi s wi t ness was not pr esent dur i ng t he
13 t i me t hat doct or , al l t he t i me t hat Dr . Kar r on was wor ki ng on
14 t he pr oj ect . Let ' s, pl ease, l et ' s get t he quest i ons t hat t hi s
15 wi t ness can answer .
16 Q. Wel l , you quest i oned Dr . Kar r on as t o what he was doi ng,
17 di d you not ?
18 THE COURT: That - -
19 A. I don' t r emember quest i oni ng hi mas t o what he was doi ng.
20 Q. Now, t he Exhi bi t 4 you sai d wer e sl i des t hat you show - -
21 you showed CASI at t he i ni t i al ki ckof f meet i ng, cor r ect ?
22 A. Yes, t hat i s cor r ect .
23 Q. Now di d you - - when you cal l t hemsl i des, wer e t hey
24 act ual l y sl i des t hat you put on t he scr een or you j ust handed
25 t hem?
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1 A. I don' t r ecal l whet her t hey wer e on a scr een or not . I t
2 was i n a r oomt hat woul d have t hat capabi l i t y.
3 I know we al so gi ve har d copy, and we al so e- mai l t hem
4 so t hat we make sur e t he r eci pi ent has t hem. But whet her or
5 not we showed t hemon a scr een t hat day, i t was a smal l gr oup,
6 I ' mnot sur e.
7 Q. Wel l , di d you di scuss t her e wer e a number of pages, t he
8 act ual exhi bi t , cor r ect ?
9 A. Yes.
10 Q. Ther e ar e, f ai r t o say, t her e' s at l east 60 pages i n t he
11 or i gi nal exhi bi t ?
12 A. Uh- huh.
13 Q. Di d you di scuss each page wi t h Dr . Kar r on and Lee Gur f ei n,
14 and t he ot her doct or t hat was pr esent ?
15 THE COURT: Whi ch page of whi ch exhi bi t ?
16 MR. RUBI NSTEI N: Exhi bi t 4.
17 A. Ther e wer e t hr ee of us and, yes, we do go t hr ough page by
18 page hi ghl i ght i ng t he key event s on each page. Ther e ar e t hr ee
19 of us and we do go page by page, t hat i s cor r ect .
20 Q. You have no not es as t o whi ch you hi ghl i ght ed and whi ch you
21 di dn' t hi ghl i ght , cor r ect ?
22 A. Wel l , what we usual l y do i s al most r ead t he bul l et s and ask
23 t he r eci pi ent i f t her e ar e any quest i ons.
24 But each of t he t hr ee of us woul d have done i t
25 di f f er ent l y, and I cer t ai nl y cannot speak t o how t he ot her t wo
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1 i ndi vi dual s di d t hei r par t s t hi s much af t er t he f act .
2 I know I t end t o go bul l et by bul l et and make sur e
3 i t ' s under st ood by t he r eci pi ent .
4 Q. And wer e t her e, at t hi s ki ckof f meet i ng, wer e t her e
5 di scussi ons as t o t hese var i ous poi nt s?
6 A. We, we di scussed t hese var i ous poi nt s. Whet her or not
7 t her e wer e r espect quest i ons on CASI ' s par t , I do not r ecal l .
8 But we al ways ask, do you have any quest i ons about t hi s.
9 Q. Now, Exhi bi t 4, i s t hat t he act ual exhi bi t t hat was
10 pr esent ed t o CASI on t hi s ki ckof f vi si t ?
11 A. Yes.
12 Q. And t hat ki ckof f vi si t was what dat e?
13 A. I t was November of 2001. And i f I had t o come up wi t h a
14 day, I woul d say 8t h' i sh.
15 Q. Now, t ake a l ook at exhi bi t f our . You see t he f i r st page
16 of Exhi bi t 4?
17 A. Fi r st page, okay.
18 Q. Says CASI i nt r oduct i on t o ATP pr oj ect management ?
19 A. Wel l , act ual l y mi ne' s i n a di f f er ent or der , si r . My f i r st
20 page says gr ant s and agr eement s management di vi si on. I do see
21 t he page - - oh, and I was r i ght , i t ' s November 8t h. I do see
22 t he page t o whi ch you' r e r ef er r i ng.
23 THE COURT: What page i s i t , so t he r ecor d' s cl ear ?
24 MR. RUBI NSTEI N: The or i gi nal Exhi bi t 4 ar e 65 pages,
25 your Honor .
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1 THE COURT: Let ' s have t he page so we can put i t up on
2 t he boar d. I t i sn' t i n t he hi ghl i ght , t he ext r act s, r i ght ?
3 MR. KWOK: I don' t bel i eve so, your Honor , but we wi l l
4 at t empt t o show i t on t he scr een.
5 THE COURT: So t he j ur y won' t have i t i n t he ext r act s.
6 MR. RUBI NSTEI N: Coul d we put i t on t he el mo, your
7 Honor ?
8 THE COURT: Yes. Thi s i s a page f r omExhi bi t 4?
9 MR. RUBI NSTEI N: Even I know how t o do t hat one,
10 J udge.
11 Q. Now t hat ' s t he f i r st page, r i ght ?
12 A. I n my f ol der i t i s not . However , I do bel i eve t hat t hat i s
13 how we st ar t ed t he ki ckof f .
14 Q. Now, you see t he upper l ef t - hand por t i on of t hat scr een
15 wher e i t says, ATP?
16 A. I do, yes, si r .
17 Q. Ar e you t el l i ng us t hat t hi s i s t he same document t hat you
18 pr esent ed on November 8t h, 2001?
19 A. I woul d f i nd i t har d t o bel i eve t hat i t ' s not . I mean, t wo
20 pages l at er we have t he i nf or mat i on wi t h our names on i t ,
21 and - -
22 Q. Let me show you what ' s gover nment - - coul d we put t hi s
23 si de- by- si de, pl ease? I t ' s Gover nment ' s Exhi bi t 4. I s t her e
24 an exhi bi t page? I woul d l i ke t o put t hi s si de by si de.
25 A. That ' s t he f i r st page i n my exhi bi t , t hat i s cor r ect .
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1 Q. Okay. And coul d we put i t up, t he f i r st page?
2 A. Uh- huh.
3 Q. Now, do you see t hat t he ATP i s, you say t hat ' s f r omt he
4 same f i l e?
5 A. Absol ut el y.
6 Q. Di f f er ent f ont si zes of t he - -
7 A. Cor r ect . I can expl ai n t hat i f you l i ke.
8 Q. And wher e di d you r et r i eve t hi s Gover nment ' s Exhi bi t 4?
9 A. I n t he mast er f i l e, i n t he Advanced Technol ogy Pr ogr am, as
10 I ment i oned ear l i er , i t ' s a document ar y f i l e of al l of t he
11 i nf or mat i on f or t hat pr oj ect .
12 Q. Now, i ncl uded i n t hi s submi ssi on i s a page t hat I don' t
13 t hi nk i s i n t he bi nder s.
14 THE COURT: J ust ask t he quest i on, l et ' s not have a
15 speech.
16 Q. I show you t hi s page.
17 THE COURT: The j ur y i s i nst r uct ed you' r e not t o t ake
18 t he quest i ons as bei ng any evi dence what soever . Such f act s as
19 exi st s i n t he answer t hat mat t er s.
20 MR. RUBI NSTEI N: I ' l l wi t hdr aw t he quest i on, J udge.
21 Q. I n t he r eci pi ent r esponsi bi l i t y, di d your char t - - di d your
22 pr esent at i on advi se t he r eci pi ent t hat t hey wer e r equi r ed, i f
23 t her e was a change i n t he or gani zat i onal st r uct ur e, such as a
24 name change, t hat t hey had t o not i f y and get pr i or appr oval ?
25 THE COURT: Ar e you aski ng whet her on page t wo of
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1 gover nment exhi bi t - -
2 MR. RUBI NSTEI N: Thi s i s - -
3 THE COURT: Four .
4 MR. RUBI NSTEI N: Thi s has a number seven. Mi ne has a
5 number seven on t he r i ght - hand si de. I t ' s not up t her e, J udge.
6 Q. Thi s i s t he page t hat says pr i or appr oval s, not i f y t he
7 gr ant s speci al i st , r i ght ?
8 A. Okay. And t hose ar e t he ki nds of changes t hat we need t o
9 be appr i sed of i nst ant l y, and pr i or appr oval shoul d be r ecei ved
10 i n wr i t i ng.
11 Q. Di d you ever r ecei ve a r equest f or t he name change of CASI ?
12 A. I don' t r ecal l r ecei vi ng t hat .
13 Q. Ar e you - -
14 A. But - - I don' t r ecal l seei ng t hat .
15 Q. Ar e you awar e t hat t he pr i or appr oval , accor di ng t o t he, t o
16 exhi bi t f our , t hat somebody must have not i f i ed t he gr ant
17 speci al i st t he pr i or appr oval , i f t her e i s a name change?
18 A. That i s t he sor t of change t hat we l i ke t o r ecei ve as soon
19 as possi bl e, and pr i or appr oval t hen i s pr ovi ded as a wr i t t en
20 amendment .
21 Q. Now, when you came f or t he si t e, t he f i r st si t e vi si t and
22 you came - - you met wi t h Dr . Kar r on, di d you meet J oan Hayes at
23 t hat t i me?
24 A. I have met J oan Hayes. I woul d assume she was at t hat si t e
25 vi si t , but I cannot ver i f y t hat i n any cer t ai nt y.
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1 Q. Wel l , when you went t o t he si t e vi si t , i s i t a f act t hat
2 you went t o l unch wi t h Dr . Kar r on, wi t h your par t ner , J ane
3 Or t hwei n, you went t o a r est aur ant cal l ed Benj ami n' s f or l unch?
4 A. I bel i eve so.
5 Q. And you had gone t o l unch - - when Dr . Kar r on came t o
6 Washi ngt on, you had l unch t oget her wi t h hi mt her e t oo i n a
7 di ni ng r oom?
8 A. We met i n t he caf et er i a.
9 Q. And i t ' s par t of t he pr ot ocol , gover nment pr ot ocol t hat you
10 pay f or your own l unch when you go out wi t h somebody who i s a
11 r eci pi ent of t he gr ant s?
12 A. Yeah. We ar e onl y al l owed t o accept a cer t ai n l evel of any
13 f i nanci al r emuner at i on.
14 Q. So t her e never was a t i me t hat Dr . Kar r on t ook you out f or
15 some ki nd of a l avi sh meal somewher e and pi cked up t he check,
16 r i ght ?
17 A. We woul d not have per mi t t ed t hat , t hank you.
18 Q. And so di d you t hi nk t hat he was maki ng a j oke when you
19 t est i f i ed t hat he t ol d you i f he, i f he t ook you out f or a ni ce
20 meal , t hen he woul dn' t have t o make any budget r evi si ons?
23 Q. By t he way, do you r ecal l i f you ever went t o l unch wi t h
24 Dr . Kar r on and J oan Hayes, as you si t t her e now?
25 A. I cer t ai nl y do not r ecal l t hat .
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1 Q. Now, t he equi pment t hat was pur chased by Dr . Kar r on
2 pur suant t o t hi s gr ant s, coul d you descr i be what he pur chased?
3 A. I coul d descr i be what was i n t he pr oposal , whi ch wer e
4 sever al si l i con gr aphi cs ser ver s and some wor k st at i ons.
5 Q. I n f act , he woul d buy par t s and put t hemt oget her and
6 basi cal l y cr eat e hi s own comput er s, cor r ect ?
7 A. Um, t he di scussi on on t hat was not consi st ent .
8 Q. Wel l , i n ot her wor ds, i f I - - i f somebody want ed t o go buy
9 a comput er and t hey - -
10 THE COURT: Wel l , t he f or mof t he quest i on, Mr - -
11 Q. Wel l , was i t , t he comput er s t hat Dr . Kar r on had, di d t hey
12 have any br and name on t hem?
13 A. I t was my under st andi ng t hat t he ones he wi shed t o pur chase
14 wer e si l i con gr aphi cs. I n t he or i gi nal pr oposal , i t was sai d
15 t hat t he company had a st at e- of - t hear t comput er f aci l i t y.
16 Lat er i n t he quar t er l y r epor t s i t was sai d t hat t hi s was
17 pat ched t oget her . So I had some conf usi on as t o t he l evel of
18 sophi st i cat i on of t he equi pment and f r omwher e i t came. I do
19 know what was r equest ed i n t he budget , and as such, was
20 appr oved f or pur chase.
21 Q. Wel l , di d you di scuss wi t h Dr . Kar r on, when you met hi mor
22 on t el ephone or i n e- mai l , as t o t he equi pment t hat he was
23 ut i l i zi ng t o ef f ect hi s r esear ch on t hi s pr oj ect ?
24 THE COURT: At what poi nt of t i me?
25 Q. At any poi nt i n t i me bef or e t he gr ant was suspended, f r om
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1 Oct ober 2001 t hr ough J une of 2003?
2 A. As I ment i oned ear l i er , equi pment was al ways an i ssue, and
3 t hat ' s why we wer e r equest i ng modi f i ed budget s and
4 j ust i f i cat i on so t hat we coul d see exact l y what exi st ed, what
5 needed t o be pur chased.
6 Q. He had a budget t hat per mi t t ed hi mt o spend money on
7 equi pment , cor r ect ?
8 A. To a cer t ai n l evel , t hat i s cor r ect .
9 Q. And di d you ever check t he f i nanci al s t o see whet her or not
10 he had spent t he money on equi pment ?
11 A. The i nt er est i ng t hi ng i s t echni cal pr oj ect manager s - -
12 THE COURT: Obj ect i on - - answer yes or no.
13 A. I ' mnot pr i vy t o t hose f i nanci al s.
14 Q. Now, on di r ect exami nat i on you al l uded t o i n Exhi bi t 2,
15 page t hr ee r el at i ng t o t he di sposi t i on of equi pment , cor r ect ?
16 A. Yes, si r .
17 Q. And, i n f act , t he gover nment per mi t s t he gr ant ee, who
18 pur chases t he equi pment , t o r et ai n t he equi pment , r i ght ?
19 A. To r equest t o r et ai n t he equi pment .
20 Q. And, i n f act , t he r equest i s vi r t ual l y al ways gr ant ed,
21 cor r ect ?
22 A. I don' t know. I t i s usual l y gr ant ed.
23 Q. And, i n f act , t he gr ant ee i s not per mi t t ed t o depr eci at e
24 t hi s equi pment because r eal l y i t ' s t he Gover nment ' s equi pment ?
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1 Q. Ar e you awar e of t hat or not ?
3 THE COURT: I s t hat so, t hat t hey' r e not per mi t t ed t o
4 depr eci at e t he equi pment ?
5 THE WI TNESS: Um, I don' t know i n what sense.
6 I don' t under st and t hat quest i on, as our t er ms and
7 condi t i ons say t hat t hey have t o account f or i t ever y t wo year s
8 unt i l i t r eaches l ess t han 5, 000. So t hat i ndi cat es t o me t hat
9 i t ' s bei ng depr eci at ed.
10 But as a pr oj ect manager , I ' maf r ai d I don' t
11 under st and how you ar e usi ng t he t er mdepr eci at e, t he company
12 depr eci at i ng i t .
13 Q. Wel l , i n ot her wor ds, t hey have t o account , so i f t hey say
14 t hey st i l l have t he equi pment , t he gover nment doesn' t come and
15 t ake t he equi pment back, cor r ect ? I ' l l wi t hdr aw i t .
16 I s i t f ai r t o say i t ' s not t hei r s t o sel l , i t ' s t hei r s
17 t o use?
18 A. Yes.
19 Q. And i t ' s t hei r s t o use unt i l i t ' s not wor t h $5, 000 cor r ect ?
20 A. And as l ong as t hey' r e usi ng i t on t he goal s of t he pr oj ect
21 f or whi ch we gave t hemt he awar d.
22 Q. But af t er i t ' s not wor t h $5, 000, t hen t hey coul d keep i t
23 r i ght ?
24 A. Cor r ect .
25 Q. Now, CASI had equi pment when t hey r ecei ved t he gr ant s t hat
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1 t hey owned pr i or t o r ecei vi ng t he gr ant s, di d t hey not ?
2 A. Yes.
3 Q. And t her e i s a concept i n co- f undi ng t hat you coul d use
4 equi pment or i n ki nd, ot her t han cash, as your cont r i but i on f or
5 co- f undi ng, cor r ect ?
6 A. Onl y t o a cer t ai n l evel .
7 Q. But you can use i t . I n ot her wor ds, i f someone has
8 $100, 000 wor t h of equi pment when t he gr ant st ar t s, t hey coul d
9 ut i l i ze t hat hundr ed t housand dol l ar s t o a per cent age of t he
10 hundr ed t housand as t hei r cont r i but i on t o t he gr ant s i n l i eu of
11 money?
12 A. No. I t woul d not be a per cent age of t he hundr ed t housand.
13 I t woul d be a per cent age of t he depr eci at i on of t he equi pment ,
14 f or each year i t was used f or t hat pr oj ect .
15 Q. And t hat woul d appl y t owar ds your co- f undi ng as t he
16 gr ant ee, you woul d get cr edi t f or t hat ?
17 A. Wi t h appr oval , yes.
18 Q. Now, i n your pr esent at i on on November 8t h, 2001, you
19 al so - - t hi s mi ght be i n t he book.
20 MR. RUBI NSTEI N: Thi s i s i n Exhi bi t 4, not i n t he
21 bi nder s t hat t he j ur or s have.
22 THE COURT: I s t hat t he pr oper page t hat ' s been shown,
23 pr ocur ement st andar ds?
25 Q. Now, t her e has t o be a wr i t t en pol i ci es and pr ocedur es,
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1 cor r ect ?
2 A. Yes.
3 Q. Was t her e any wr i t t en - - di d CASI have any wr i t t en pol i ci es
4 and pr ocedur es?
5 A. I amnot awar e t hat t hey di d.
6 Q. And i n addi t i on t o t hat r el at i ng t o f r i nge benef i t s,
7 t her e' s supposed t o be a manual cr eat ed by t he company?
8 A. Ther e' s supposed t o be a document out l i ni ng t hem, yes, si r .
9 Q. And who cr eat es t hat document ?
10 A. The company.
11 Q. And who r evi ews t hat document ?
12 A. Not t he gover nment .
13 Q. I n ot her wor ds, i f an empl oyer - - i f CASI had a wr i t t en
14 manual f or f r i nge benef i t s i n pl ace, no one i n t he gover nment
15 woul d r evi ew t hat document ?
16 A. Not - -
17 Q. Cor r ect ?
18 A. - - bef or e t he gr ant was gi ven. I t cer t ai nl y coul d come
19 i nt o an audi t .
20 Q. Now, when was t he l ast r evi si on gr ant ed of t he budget ?
21 A. I can l ook up t he dat e. I t was t he ver y ver y end of
22 J anuar y, t he ear l y days - - end of December , ear l y J anuar y
23 bet ween 2001 and 2002, and - - I ' msor r y, and i t ' s - - l et ' s see.
24 Okay. I t i s si gned by our gr ant s of f i cer on J anuar y 4t h of
25 2002.
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1 Q. What exhi bi t number i s t hat , ma' am?
2 A. I t i s exhi bi t 22.
3 Q. Now, i n t hat exhi bi t t her e i s a r educt i on i n amount of
4 sal ar i es f or empl oyees, cor r ect ?
5 A. Yes, si r .
6 Q. And t her e i s al so a r educt i on i n t he t ot al amount t hat
7 coul d be spent on f r i nge benef i t s, i s t hat r i ght ?
8 A. Wel l , yes, and t hat makes sense because f r i nge benef i t s i s
9 a per cent age of sal ar i es.
10 Q. So, i s t hat anywher e i n any l i t er at ur e t hat f r i nge benef i t s
11 i s a per cent of sal ar y?
12 A. Wel l , i t ' s - - yeah. I even i t comes i n t he budget
13 nar r at i ve. I f you l ook at t he sal ar i es and t hen t he next bl ock
14 says what ar e t he f r i nge benef i t s and i t says, you know,
15 34 per cent or what ever .
16 Q. Can you pi ck your own per cent age?
17 A. As l ong as i t ' s - - wel l , can you pi ck your own per cent age?
18 I t cl ear l y goes wi t h t he wr i t t en document t hat you have t hat i s
19 i ndust r y pr act i ce. We don' t ask f or det ai l ed expl anat i on or
20 br eakdown i f i t ' s under 35 per cent .
21 THE COURT: I s i t a wr i t t en pol i cy of t he company t hat
22 t hey have t o pr esent t o you?
23 THE WI TNESS: I f t hey do not pr esent i t at awar d, i t ' s
24 t he honor syst em, but i t does come t o pl ay when t he company i s
25 audi t ed.
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1 THE COURT: But i t ' s t he company' s wr i t t en - - t he
2 company has t o have adopt ed wr i t t en pol i cy.
3 THE WI TNESS: Yes, si r , and t hat per cent age i s i n
4 t hei r budget document at i on.
5 THE COURT: As opposed t o t he i ndust r y pol i cy.
6 THE WI TNESS: The compani es shoul d be i n l i ne wi t h
7 ot her compani es i n t hat par t i cul ar i ndust r y.
8 THE COURT: I t has t o be i n wr i t i ng.
9 THE WI TNESS: The company' s pol i cy shoul d be i n
10 wr i t i ng, yes, si r - - has t o be, yes.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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2 Q. Now, i s i t f ai r t o say t hat f r omt he end of 2001 goi ng
3 t hr ough t he summer of 2002 t her e wer e a l ot of di scussi on about
4 budget r evi si on bet ween you and your agency and CASI ?
5 A. That woul d be ver y f ai r .
6 Q. And who was - - wer e you i nvol ved i n t hose di scussi ons and
7 budget r evi si on?
8 A. I was i nvol ved. I was cer t ai nl y not al one i n t he
9 di scussi ons.
10 Q. And who was i nvol ved? Was Lee Gur f ei n i nvol ved f r omt he
11 CASI si de?
12 A. Lee Gur f ei n was cer t ai nl y i nvol ved. Ther e wer e sever al
13 peopl e i nvol ved dur i ng t he cour se of event s, and I don' t r ecal l
14 exact l y t he t i me f r ame f or each of t hem, but Lee Gur f ei n was
15 one of t hem.
16 Q. And af t er Lee Gur f ei n, t her e was a f el l ow named Pet er Ross?
17 A. I r emember t hat name.
18 Q. And he was i nvol ved i n submi t t i ng budget r evi si on r equest s?
19 A. I bel i eve so, yes, si r .
20 Q. The budget r evi si on t hat i s submi t t ed, di d t hey r equi r e t he
21 si gnat ur e of Dr . Kar r on?
22 A. Let ' s see. They di d not - - t hey shoul d have had ei t her Dr .
23 Kar r on' s si gnat ur e or anot her r ecogni zed ent i t y f r omt he
24 company, whi ch woul d have been Lee Gur f ei n.
25 Q. Now, you wer e t r yi ng t o hel p CASI get t hese budget
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1 r evi si ons i n, cor r ect ?
2 A. Absol ut el y. I t i s our goal t o have ever y pr oj ect succeed
3 i f possi bl e.
4 Q. And i n f act you even sent - - i n f act t hey even sent you at
5 one t i me t he wr ong r epor t ?
6 A. Sor r y. They sent me what ?
7 Q. The wr ong r epor t i nvol ved wi t h t he budget r evi si on? You
8 had asked t hemf or di f f er ent document at i on, cor r ect ?
9 A. Ri ght .
10 Q. And do you know who woul d pr ovi de t he document at i on f r om
11 CASI ?
12 A. As I sai d, sever al i ndi vi dual s suppl i ed i t . Fr equent l y i t
13 was Dr . Kar r on hi msel f .
14 Q. And i s i t a f act t hat at t i mes when you asked f or
15 document s, t he wr ong document s wer e submi t t ed?
16 A. I woul d have no way of knowi ng t hat unl ess i nf or med by Dr .
17 Kar r on. As pr esi dent , one woul d assume t hat he woul d r evi ew
18 t he submi ssi ons.
19 Q. You know what t hey say when you assume.
20 THE COURT: J ust - -
22 THE COURT: Let ' s j ust ask a quest i on.
23 Q. Let me show you - -
24 THE COURT: The j ur y i s i nst r uct ed t o di sr egar d t he
25 l ast st at ement .
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1 Q. Let me show you what has been mar ked as Gover nment Exhi bi t
2 3501- FFFF and ask you i f you can l ook at t hat and see i f i t
3 r ef r eshes your r ecol l ect i on t hat you wer e suppl i ed wr ong
4 r epor t s af t er a r equest f or r epor t s wer e made.
5 THE COURT: Thi s i s f our F?
6 MR. RUBI NSTEI N: FFFF, yes, your Honor .
7 Q. Does t hat r ef r esh your r ecol l ect i on, ma' am?
8 A. Thi s i s an e- mai l t r ai l t o my col l eague t hat sai d some
9 r epor t , wr ong r epor t . J ane opened some e- mai l t hat sai d i t was
10 t he wr ong r epor t , and J ane and I i n t he subsequent e- mai l wer e
11 t r yi ng t o f i nd t i me t o meet . Fr omt hi s e- mai l I have no cl ue
12 whet her i t ' s a f i nanci al r epor t , a t echni cal r epor t . I ' m
13 sor r y, si r , but j ust " wr ong r epor t " doesn' t t el l me what ki nd
14 of r epor t i t was.
15 Q. Wel l , I onl y asked i f t hey sent t he wr ong r epor t . What ever
16 you wer e l ooki ng f or , t hei r r esponse was i ncor r ect , cor r ect ?
17 A. And i n most pr oj ect s I woul d expect t he r i ght r epor t t o
18 f ol l ow.
19 Q. Now, you al so, di d you not , you want ed t o get t he act ual s,
20 r i ght ?
21 A. Absol ut el y.
22 Q. The act ual expenses t hat CASI had, cor r ect ?
23 A. Af t er year one, act ual s shoul d have been avai l abl e,
24 cor r ect .
25 Q. And i n f act you i nf or med CASI i n Oct ober and November of
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1 2002 t hat you want ed t o get t he i nf or mat i on back so t hat you
2 coul d expedi t e t he appr oval .
3 A. I t was our under st andi ng t hat CASI want ed a r evi sed budget ,
4 and we wer e l ooki ng f or t he appr opr i at e document at i on t o al l ow
5 us t o r ecommend appr oval .
6 Q. And who di d you under st and was r esponsi bl e f or gi vi ng t he
7 act ual expenses of CASI ?
8 A. That ' s not i n my - -
10 THE COURT: Obj ect i on sust ai ned. Let ' s move t hi s on a
11 l i t t l e bi t , Mr . Rubi nst ei n.
12 Q. When you wer e i nt r oduced t o J oan Hayes, wer e you i nt r oduced
13 by Dr . Kar r on?
14 A. I don' t r ecal l . You don' t want t o hear t he wor d assume, so
15 I won' t assume anyt hi ng. I do not r ecal l .
16 Q. Do you r ecal l bei ng t ol d by Dr . Kar r on t hat J oan Hayes was
17 hi s busi ness mom?
18 A. Mom?
19 Q. Yeah, l i ke mot her .
20 A. No, I don' t r ecal l t hat , si r .
21 Q. Now, t he audi t i s supposed t o be submi t t ed, i s i t not ,
22 wi t hi n 90 days of t he end of t he f i scal year f or t he
23 gover nment ?
24 A. The end of t he f i r st year of t he pr oj ect . I t doesn' t have
25 t o do wi t h our f i scal year .
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1 Q. Wel l , t hi s pr oj ect ended Sept ember 30, 2002.
2 A. The f i r st year of i t di d, yes, si r .
3 Q. Fi r st year . And an audi t was due, r i ght ?
4 A. Cor r ect .
5 Q. Fr oman i ndependent audi t or , cor r ect ?
6 A. I f t hat ' s t he company' s choi ce, t hat i s cor r ect .
7 Q. And wer e you i nvol ved i n at t empt i ng t o get t he company t o
8 compl y and submi t an audi t ?
9 A. Act ual l y we have a separ at e depar t ment at NI ST i n t he
10 gr ant s of f i ce t hat ' s r esponsi bl e f or audi t s, and t hat ' s wi t h
11 whomt he company wor ks i f t hey need an ext ensi on or anyt hi ng
12 l i ke t hat .
13 Q. And di d Dr . Kar r on suggest t o you t hat you and J ane shoul d
14 speak have a t el econf er ence wi t h J oan hi s audi t or and
15 account ant about t he act ual s?
16 A. I don' t r ecal l , but we woul d need t hose act ual s i n wr i t i ng
17 f or any r evi si on t o t he budget .
18 Q. Let me show you what i s - - see i f t hi s r ef r eshes your
19 r ecol l ect i on. I show you what has been mar ked as Gover nment
20 Exhi bi t 3501- PPP.
21 THE COURT: Tr i pl e P?
22 MR. RUBI NSTEI N: PPP.
23 Q. And 3501- KKK and 3501- LLL. Take a l ook at t hese document s
24 and see i f i t r ef r eshes your r ecol l ect i on as t o whet her or not
25 Dr . Kar r on want ed you and your par t ner J ayne Or t hwei n t o speak
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1 t o Ms. Hayes hi s audi t or and account ant .
2 A. Yes, t hese e- mai l s do seemt hat a conf er ence cal l - - whi ch
3 hopef ul l y accor di ng t o t hese e- mai l s woul d i ncl ude Ms. Hayes - -
4 i s what ' s document ed i n t hese e- mai l s.
6 THE WI TNESS: I t sounds l i ke f r omt hi s l ar ge t r ai l of
7 e- mai l t hat Dr . Kar r on was suggest i ng a conf er ence cal l and by
8 hi s own wor ds i t says hopef ul l y J oan Hayes can j oi n us.
9 THE COURT: That ' s al l i t says. The r est of hi s
10 quest i on about empl oyi ng an account ant , i s t hat i n t her e?
12 THE WI TNESS: Wel l , I mean I wi l l be happy t o t ake t he
13 t i me - -
14 THE COURT: Show her t he document .
15 MR. RUBI NSTEI N: I wi l l show her exact l y wher e i t i s.
16 THE COURT: Let ' s move t hi s al ong.
17 THE WI TNESS: Thank you, because t hese ar e not i n
18 chr onol ogi cal or der .
19 MR. RUBI NSTEI N: They ar e. They ar e not i n l et t er
20 or der . I had t o put t hemi n chr onol ogi cal or der .
21 Q. Do you see wher e i t ' s under l i ned?
22 A. I cer t ai nl y do.
23 Q. Good.
24 A. So i t says, " I f appr opr i at e, can I br i ng J oan our audi t or
25 and account ant i n f or t he meet i ng?"
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1 THE COURT: What document i s t hat ?
2 MR. RUBI NSTEI N: Thi s i s 3501- PPP, your Honor .
3 MR. KWOK: Obj ect i on. I t ' s not i n evi dence.
4 MR. RUBI NSTEI N: The j udge asked me t o i dent i f y t he
5 document .
6 THE COURT: Do you r ecal l t hat ?
7 THE WI TNESS: I mean my name i s on t he e- mai l , so
8 t her ef or e i t ' s one of many e- mai l s. I do not r ecal l .
9 THE COURT: Does i t r ef r esh your r ecol l ect i on?
10 THE WI TNESS: No, si r , i t does not .
11 THE COURT: The j ur y i s i nst r uct ed t o di sr egar d t he
12 quest i on and answer . I t ' s not pr oper evi dence.
13 Q. Then I wi l l ask you, i s t hi s an e- mai l t hat you sent ,
14 3501- PPP, i s t hi s an e- mai l t hat you sent on December 3, 2002
15 at 11: 54? I ' msor r y. I s t hi s an e- mai l t hat you r ecei ved f r om
16 Dr . Kar r on on December 3, 2002, about 11: 54 i n t he mor ni ng?
18 THE COURT: I nst ead of r ef er r i ng - - i f you want t o put
19 t hose i n evi dence, move t hemi nt o evi dence.
20 MR. RUBI NSTEI N: I do. OK. I move - -
21 THE COURT: Don' t appr oach i t t hi s way. Let ' s get i t
22 over wi t h and get i t done.
23 MR. RUBI NSTEI N: I of f er i nt o evi dence Gover nment
24 Exhi bi t 3501- PPP.
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1 THE COURT: On what gr ound?
2 MR. KWOK: The wi t ness says she does not r ecal l .
3 THE COURT: I t doesn' t mat t er , does i t ? I sn' t t hi s a
4 document kept i n t he r egul ar cour se of busi ness, t hese e- mai l s?
5 THE WI TNESS: Yes, si r , we keep al l of t he e- mai l s.
6 MR. KWOK: Wi t hdr awn.
7 THE COURT: Put i t i n evi dence and t hen can you
8 di spl ay i t t o t he j ur y. But l et ' s move i t al ong.
9 MR. RUBI NSTEI N: I wi l l j ust r ead a por t i on of i t i n
10 t he mi ddl e of t he page, i t says, " Pl ease r el ay your concer ns t o
11 mysel f and Pet er . " Thi s i s f r omDr . Kar r on. " Once we have
12 NI ST' s appr oval , we wi l l f or mal l y br i ng hi monboar d. When you
13 and J ayne ar e r eady, we can have a t el econf er ence i f
14 appr opr i at e. I can br i ng J oan our audi t or and account ant i n
15 f or t he meet i ng, and we can per haps whack each audi t i ssue dead
16 wi t h al l onboar d one at a t i me l i ke ducks i n a r ow. "
17 THE COURT: Gi ve us a dat e.
18 MR. RUBI NSTEI N: Thi s i s on December 3, 2002.
19 Q. Now, as a mat t er of f act , Ms. Li de - -
20 THE COURT: So Def endant ' s A i n evi dence?
22 ( Def endant ' s Exhi bi t A r ecei ved i n evi dence)
23 Q. You had r equest ed t hat Dr . Kar r on speak on behal f of ATP at
24 conf er ences?
25 A. That i s cor r ect , we ask t hat of al l of our r eci pi ent s.
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1 Q. And Dr . Kar r on di d speak at conf er ences f or you?
2 A. I bel i eve at one he di d. One he was unavai l abl e, i f I
3 r emember cor r ect l y.
4 Q. And I t hi nk t hi s mor ni ng you sai d t hat i n f act t her e wer e
5 f i ve di f f er ent submi ssi ons f or r evi si ons t hat had di f f er ent
6 number s on t hem, cor r ect ?
7 A. I bel i eve t hat was t he number , yes.
8 Q. And i n f act Dr . Kar r on r equest ed - - wi t hdr awn.
9 You had cont act wi t h a man named Bob Benedi ct , di d you
10 not ?
11 A. I do not r ecal l cont act i ng Bob Benedi ct per sonal l y, no,
12 si r .
13 Q. Do you r ecal l bei ng i nf or med t hat he was t he new busi ness
14 manager f or CASI ?
15 A. I r ecal l bei ng i nf or med t hat he woul d be j oi ni ng t he
16 company, but t her e was no pr i or appr oval t hat he was named as
17 t he new busi ness manager . I have no amendment showi ng me t hat .
18 Q. Wel l , was he ever appr oved?
19 A. To t he best of my knowl edge, no. Ther e i s no amendment i n
20 my f ol der t hat says he was appr oved.
21 Q. But i t i s a f act t hat you had cont act wi t h Bob Benedi ct , he
22 on behal f of CASI and you on behal f of t he ATP pr oj ect .
23 THE COURT: I s t hat cor r ect ?
24 A. I know we had an e- mai l f r omBob Benedi ct . I ' mnot sur e i f
25 t her e wer e any phone conver sat i ons.
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1 Q. I n f act dur i ng t he t i me t hat t hese var i ous budget r evi si ons
2 wer e bei ng submi t t ed, you had Dr . Kar r on pr esent a paper at a
3 conf er ence Wher e Medi cal Meet s Vi r t ual Real i t y, on Mar ch 22 and
4 23r d of - -
5 THE COURT: What i s t he r el evance of t hi s,
7 MR. RUBI NSTEI N: The r el evance i s t hat up unt i l - -
8 THE COURT: No, I don' t want a speaki ng - - t hi nk about
9 i t bef or e you do i t , and we can have a si debar and al l ow i t
10 l at er , but l et ' s go ahead wi t h t he exami nat i on.
11 MR. RUBI NSTEI N: I ' mnot goi ng t o spend t he t i me t o do
12 t hat , your Honor .
13 THE COURT: Let ' s ask t he quest i on t hen. Let ' s keep
14 t o r el evant quest i ons.
15 Q. I n f act i n J une of 2003 di d you i nvi t e Dr . Kar r on t o come
16 t o NI ST f or a wor kshop?
17 THE COURT: I don' t see t he r el evance of t hat ei t her ,
18 so I ' mgoi ng t o r ul e t he obj ect i on sust ai ned. Let ' s go ahead
19 wi t h t hi s case.
20 Q. Wel l , you had sent a l et t er , Exhi bi t 30 - -
21 THE COURT: You can make an appl i cat i on l at er .
22 Q. Exhi bi t 30, you sent a l et t er i n on Apr i l 16 out l i ni ng
23 pr obl ems t hat you wer e havi ng wi t h Dr . Kar r on and CASI ,
24 cor r ect ?
25 A. I don' t know. To whomdi d I send t hi s l et t er ? Oh, you
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1 mean t he one t o t he gr ant s of f i ce?
2 Q. Ri ght .
3 A. OK. No, al l we sai d was we wer e havi ng t r oubl e r econci l i ng
4 t he year one act ual s, and we wer e aski ng f or an audi t or ' s hel p.
5 Many of our audi t s - - i n f act t he maj or i t y of our audi t s have
6 ver y sat i sf act or y endi ngs. So, we di d not say we wer e havi ng
7 t r oubl e wi t h t he company or Dr . Kar r on. We sai d we wer e havi ng
8 t r oubl e r econci l i ng year one act ual s. To me t hat ' s a bi g
9 di f f er ence.
10 Q. Wel l , on J une 27 t he gr ant was suspended, cor r ect ?
11 A. Cor r ect .
12 Q. And t hat was on your r ecommendat i on, cor r ect ?
13 A. We r ecommended t hat , yes, t hat i s cor r ect .
14 Q. And f our days ear l i er , bef or e you made t hat r ecommendat i on,
15 on J une 23, 2003 you i nvi t ed Dr . Kar r on t o a NI ST wor kshop t he
16 24t h and 25t h of J une.
17 MR. KWOK: Obj ect i on. Cor r ect ?
18 THE COURT: I wi l l al l ow t he quest i on.
19 A. Cer t ai nl y, but t hey' r e mut ual l y excl usi ve. At t he t i me we
20 i nvi t ed hi m, we di d not know - - we di d not have t he i nf or mat i on
21 t hat woul d cause us t o suspend t he awar d.
22 Q. What di d you acqui r e bet ween J une 25 and J une 27 t hat you
23 di dn' t have bef or e?
24 A. Some i nf or mat i on f r omt he gover nment audi t or t hat he had
25 not sat i sf i ed a r equi r ement of t he gr ant .
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1 Q. And you got t hat i n wr i t i ng?
2 A. I don' t r ecal l . I suspect - - I know t her e was a phone
3 cal l . Ther e i s pr obabl y an e- mai l t r ai l al so. I know our
4 r ecommendat i on t o t he gr ant s of f i ce t o suspend was i n wr i t i ng.
5 THE COURT: That was when?
6 THE WI TNESS: Ther e i s an e- mai l t hat I ' msur e someone
7 i n t hi s cour t house has. I t was l i ke maybe J une 26.
8 THE COURT: Wel l , you wr ot e a l et t er .
9 THE WI TNESS: No, I sent an e- mai l , si r . I t was about
10 J une 26t h. I t was l i ke t he day of t he suspensi on, per haps t he
11 day bef or e.
12 Q. And t he day bef or e t hat you i nvi t ed hi mt o speak on behal f
13 of NI ST, r i ght ?
14 A. Absol ut el y. We di dn' t have t he i nf or mat i on t hat woul d
15 cause us any r eason t o suspend.
16 Q. Now, ar e t hese gr ant s on a cash or an accr ual basi s?
17 A. Ar e t hey a cash - -
18 Q. I n ot her wor ds, ar e you f ami l i ar wi t h t he di f f er ence
19 bet ween cash and accr ual ?
20 A. I ' maf r ai d not . I ' ma t echni cal per son. Sor r y.
21 Q. OK. Now, at t he t i me t hat t he gr ant was suspended on J une
22 27, 2003, ar e you awar e whet her or not Dr . Kar r on had
23 out st andi ng debt s t hat he had i ncur r ed on behal f of t he ATP
24 pr oj ect ?
25 A. I woul d have no knowl edge of t hat , si r .
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1 Q. And i n f act Dr . Kar r on t hen communi cat ed wi t h Mar i l yn
2 Gol dst ei n?
3 A. OK. She was t he gr ant s - -
4 Q. Ar e you awar e of t hat ?
5 A. He shoul d. She i s our gr ant s of f i cer . She had si gnat ur e
6 aut hor i t y at t he t i me f or ever y amendment and hi s awar d, and
7 t hat woul d be ver y appr opr i at e f or hi mt o communi cat e wi t h her .
8 Q. And dur i ng al l t hi s t i me, i n August and Sept ember , he i s
9 at t empt i ng - -
10 THE COURT: What year ?
11 MR. RUBI NSTEI N: Sept ember of ' 03.
12 Q. August , Sept ember , Oct ober ' 03 he i s at t empt i ng t o get t he
13 gr ant r est ar t ed, cor r ect ?
14 A. That was hi s i nt ent , t o t he best of our knowl edge, cor r ect .
15 Q. And he at t empt ed t o get i n t ouch wi t h you, cor r ect ?
16 A. Yes.
17 Q. And t o have a meet i ng wi t h you, cor r ect ?
18 THE COURT: Wi t h you?
19 THE WI TNESS: I guess. I don' t r ecal l t hat . I f t her e
20 i s an e- mai l , t hen, yes, t hat ' s t r ue.
21 THE COURT: Wel l , di d you get a l et t er or an e- mai l
22 f r omhi mdur i ng t hat t i me, or ar e you answer i ng you as r egar ds
23 t o t he agency? I t ' s i mpor t ant t o make a di st i nct i on.
24 THE WI TNESS: You as an agency I can at t est got
25 communi cat i on. I got communi cat i on per sonal l y; I ' mnot sur e
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1 whet her i t was a phone cal l or an e- mai l .
2 THE COURT: A communi cat i on t o - -
3 THE WI TNESS: To wor k t oget her t o r est ar t t he gr ant ,
4 whi ch i s of cour se what we woul d l i ke t o do. Our goal i s t o
5 make t hese gr ant s successf ul , yes, si r .
6 Q. I n f act , ma' am, on August 11, ' 03 Dr . Kar r on sent you and
7 J ayne an e- mai l r equest i ng t o schedul e a phone conf er ence t o
8 r est ar t t he gr ant .
9 THE COURT: I s t hat t he quest i on?
11 A. I don' t r ecal l t he dat e, but , as I sai d, I had
12 communi cat i on wi t h Dr . Kar r on, as di d J ayne, on what t o do t o
13 r est ar t t he gr ant .
14 Q. I sn' t i t a f act t hat you r ecei ved a communi cat i on on
15 Sept ember 4, ' 03 f r omMar k St anl ey - - t he act i ng di r ect or at
16 t hat t i me, and now t he di r ect or of t he pr oj ect - - t o you sayi ng
17 t hat Dr . Kar r on want s a qui ck f i x on a ver y compl i cat ed
18 pr obl em? And you r esponded you wi l l br i ef hi m?
19 A. I don' t r emember t he wor ds qui ck f i x, but I do r emember an
20 e- mai l f r omMar k St anl ey and a subsequent meet i ng.
21 THE COURT: Subsequent meet i ng bet ween whom?
22 THE WI TNESS: Bet ween Mar k St anl ey and t he pr oj ect
23 t eam. Mysel f , J ayne Or t hwei n and ei t her Hope Snowden and/ or
24 Mar i l yn Gol dst ei n or bot h.
25 THE COURT: Was Dr . Kar r on pr esent ?
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1 THE WI TNESS: No, t hi s was an i nt er nal NI ST meet i ng.
3 Q. Di d Mar k St anl ey ask you f or advi ce whet her or not he
4 shoul d meet wi t h Dr . Kar r on on Sept ember 4, 2003?
5 A. I don' t r emember Mar k St anl ey aski ng me whet her he shoul d
6 meet or not . And we don' t make t hose deci si ons f or t he
7 di r ect or , we j ust br i ef t he di r ect or . So t hat woul d be hi s
8 deci si on af t er t he br i ef i ng.
9 Q. And i sn' t i t a f act t hat on Oct ober 14, 2003 Dr . Kar r on
10 sent you and J ayne Or t hwei n an e- mai l aski ng when can we t al k?
11 A. OK.
12 Q. I s t hat a f act ?
13 A. We di d have mul t i pl e communi cat i on. I ' msor r y, I don' t
14 r emember t he exact dat es.
15 Q. But i n f act t he mul t i pl e communi cat i ons wer e al l Dr . Kar r on
16 aski ng you i f he coul d si t down and t al k t o you about get t i ng
17 t he gr ant r est ar t ed, cor r ect ?
18 A. I do bel i eve t hose communi cat i ons wer e answer ed by us al so.
19 Q. But i s i t a f act , ma' am, t hat he kept - -
20 THE COURT: Wer e you st onewal l i ng hi m?
21 THE WI TNESS: No, we cer t ai nl y wer e not , si r . Our
22 goal i s t o hel p t hese pr oj ect s succeed, and t hat ' s why I am
23 sur e we answer ed t he communi cat i ons.
24 Q. Di d you ever meet hi m?
25 A. Di d we meet hi maf t er t hat ? No, we di d not meet hi m.
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1 THE COURT: Di d you have a t el ephone conf er ence.
2 THE WI TNESS: I amsur e we woul d have ei t her e- mai l
3 exchanges or t el ephone conf er ences or t el l hi mt o whomt o go,
4 whi ch at t hat poi nt woul d have been t he gr ant s of f i ce.
5 THE COURT: I t wasn' t i n your bai l i wi ck; i t was t he
6 gr ant s of f i ce?
7 THE WI TNESS: That i s cor r ect . At t hat poi nt i t was
8 out of my hands and J ayne' s hands, and i t woul d have been i n
9 t he gr ant s of f i ce t hat t hi s woul d have t o be r esol ved.
10 Q. I n f act , t he i nt er nal pr ocess of audi t r esol ut i on was
11 st opped on t hi s case.
12 A. That i s not my depar t ment .
13 Q. But t hat ' s what happened. Whoever ' s depar t ment i t was, t he
14 ci vi l audi t r esol ut i on was st opped.
16 THE COURT: Do you have per sonal knowl edge of t hat ?
17 THE WI TNESS: No, I don' t because I don' t do audi t
18 r esol ut i ons.
19 THE COURT: I ' mj ust aski ng - -
21 Q. I sn' t i t a f act - -
22 THE COURT: The j ur y i s t o di sr egar d t he quest i on
23 unt i l we get an answer . Thi s wi t ness i s appar ent l y not i n a
24 posi t i on t o answer t hat .
25 Q. Let me show you what ' s been mar ked f or i dent i f i cat i on as
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1 Gover nment Exhi bi t 3501- FF and ask you t o r evi ew t hi s document .
2 THE COURT: FF or SS?
3 MR. RUBI NSTEI N: FF.
4 Q. See i f t hat r ef r eshes your r ecol l ect i on as t o whet her or
5 not you had knowl edge t hat t he audi t i ng r esol ut i on was
6 suspended.
7 A. I was copi ed on t hi s e- mai l , so I guess I di d have
8 knowl edge. I t was not my r esponsi bi l i t y, so I di dn' t act on
9 i t .
10 THE COURT: What ' s t he dat e?
11 THE WI TNESS: Fr i day, Oct ober 1, 2004.
12 MR. RUBI NSTEI N: I of f er t hat i nt o evi dence, your
13 Honor , Def endant ' s Exhi bi t B.
14 THE COURT: Def endant ' s Exhi bi t B i s admi t t ed i n
15 evi dence.
16 MR. KWOK: No obj ect i on.
17 ( Def endant ' s Exhi bi t B r ecei ved i n evi dence)
18 THE COURT: Do you want t o publ i sh i t ?
19 MR. RUBI NSTEI N: I wi l l r ead a por t i on of i t , your
20 Honor . Thi s i s an e- mai l f r omRachel Gar r i son t o Angel a
21 McI nner ny, Mar i l yn Gol dst ei n, cc' d t o a number of peopl e,
22 i ncl udi ng Ms. Li de, and i t says, " Addi t i onal l y, pl ease do not
23 pr oceed wi t h audi t r esol ut i on f or CASI . I t ' s ext r emel y
24 i mpor t ant t hat a bi l l not be gener at ed f or t he f unds t hat CASI
25 mi sappr opr i at ed f r omt he awar d. "
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1 I have no f ur t her quest i ons, your Honor .
2 THE COURT: Al l r i ght . Redi r ect .
4 REDI RECT EXAMI NATI ON
5 BY MR. KWOK:
6 Q. Ms. Li de, Mr . Rubi nst ei n asked you a coupl e of quest i ons at
7 t he begi nni ng of hi s cr oss- exami nat i on about a l i st of names.
8 Do you r emember t hat l i ne of quest i oni ng?
9 A. Yes, I do.
10 Q. Wer e any of t hese peopl e i nvol ved i n t he day- t o- day r unni ng
11 of t he CASI gr ant , t he ATP gr ant awar ded t o CASI ?
12 THE COURT: As f ar as you know.
13 A. I don' t r emember t he whol e l i st , but t he t hr ee t hat wer e
14 i nvol ved i n t he day- t o- day woul d be J ayne Or t hwei n, mysel f and
15 Hope Snowden. I don' t bel i eve t hey wer e on your l i st .
16 Q. Ms. Li de, who had sol e si gnat or y aut hor i t y at CASI whi l e i t
17 was r ecei vi ng t he ATP gr ant ?
18 A. Dr . Kar r on.
19 Q. Di d any of hi s busi ness manager s or audi t or s or bookkeeper s
20 have si gnat or y aut hor i t y at any poi nt ?
21 A. No, we never got document at i on t o t hat , no.
22 Q. Ms. Li de, do you r emember Mr . Rubi nst ei n' s quest i ons about
23 t he t i t l e 48 of t he Code of Feder al Regul at i on, 48 CFR?
24 A. Um- hum.
25 Q. And he asked you about cer t ai n quest i ons about cont r act
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8637KAR5 Li de - r edi r ect
1 cost s bei ng abl e t o be pai d out of ATP f unds. Do you r emember
2 t hat ?
3 A. I t hi nk so.
4 MR. KWOK: I f we coul d publ i sh t o t he j ur y what ' s
5 al r eady i n evi dence as Gover nment Exhi bi t 4, page 6.
6 I ' msor r y. I gave t he wr ong number . I t ' s Gover nment
7 Exhi bi t 1, page 6.
8 THE COURT: I can' t r ead i t . I s t hi s i n t he j ur y
9 book?
10 MR. KWOK: I bel i eve so, your Honor .
12 MR. KWOK: I f we coul d zoomi nt o t he t op of par agr aph
13 5.
14 Q. Coul d you r ead us t he f i r st sent ence af t er j ust t he second
15 headi ng?
16 A. " Regar dl ess of whet her t hey ar e al l owabl e under t he f eder al
17 cost pr i nci pl es, t he f ol l owi ng ar e unal l owabl e under ATP: "
18 Q. What does t he f i r st of t hat phr ase mean, " Regar dl ess of
19 whet her t hey ar e al l owabl e under t he f eder al cost
20 pr i nci pl es. . . " ?
21 A. I t means what ' s st at ed her e over r ul es any ot her f eder al
22 cost pr i nci pl es.
23 Q. What i n f act ar e t he ATP r ul es r egar di ng pr egr ant cost s?
24 A. We do not pay any what we cal l sunk cost s, whi ch ar e cost s
25 i ncur r ed bef or e t he st ar t of t he gr ant .
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1 Q. And on what occasi ons di d you t el l gr ant r eci pi ent s t hat
2 r ul e, t hat you do not pay f or pr egr ant cost s?
3 A. That ' s t ol d at bi dder s' conf er ences, vi a phone cal l s, i n
4 t he ki ckof f meet i ng, on our websi t e. I t ' s r epeat ed.
5 Q. Ms. Li de, do you r emember Mr . Rubi nst ei n aski ng you about
6 t he $60, 000 some odd dol l ar s t hat Dr . Kar r on al l egedl y put i nt o
7 CASI af t er t he - -
8 A. Yes, cor r ect .
9 Q. Do you have any per sonal knowl edge about what happened
10 t her e?
11 A. I t i s my - - I know t hat t he gr ant s of f i ce sai d t hat was not
12 an accept abl e way t o do i t .
13 MR. RUBI NSTEI N: I ' mgoi ng t o obj ect . The quest i on i s
14 do you have any per sonal knowl edge.
16 Q. Do you have any per sonal knowl edge?
17 A. Yes, I do. The gr ant s of f i ce sai d i t was not accept abl e,
18 i t di d not meet - -
19 MR. RUBI NSTEI N: I obj ect t o t hat and move t o st r i ke
20 i t . I t ' s hear say.
21 THE COURT: Obj ect i on sust ai ned, what ever t he gr ant s
22 of f i ce sai d. The j ur y i s i nst r uct ed t o di sr egar d t he answer .
23 Q. Asi de f r omwhat you mi ght have hear d f r omot her peopl e, do
24 you have any ot her per sonal knowl edge about t he $60, 000
25 i nf usi on of cash i nt o CASI ?
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1 A. Accor di ng t o ATP r ul es - -
2 THE COURT: No, no.
3 A. I have per sonal knowl edge t hat i t woul d not be accept ed
4 because i t was not account ed f or f or t he ongoi ng r esear ch or
5 pr oj ect .
6 Q. Mi ss Li de, di d Dr . Kar r on or CASI ever get an appr oved
7 budget r evi si on t o al l ow so- cal l ed pr epar at i on cost s, si t e
8 pr epar at i on cost s?
9 A. No, no.
10 Q. How about any ot her r enovat i on cost s?
11 A. No. Ther e was onl y t he one appr oved budget t hat we have
12 di scussed sever al t i mes i n December of ' 01. That was t he onl y
13 r evi si on t o t he budget t hat was appr oved.
14 Q. And what i s t he nat ur e of t hose changes agai n t o t he
15 budget ?
16 A. Ther e wer e mi nor changes i n equi pment . I t added a new l i ne
17 t o mat er i al s and suppl i es. I t r educed sal ar i es and t her ef or e
18 f r i nge benef i t s but upped subcont r act s.
19 THE COURT: That exhi bi t i s what ?
20 THE WI TNESS: 22 I bel i eve, i f I r emember . Yes, i t ' s
21 22, si r .
22 MR. KWOK: I f we coul d put up Gover nment Exhi bi t 2,
23 page 3. I f we coul d zoomi nt o t he t op of par agr aph 9. I f you
24 coul d cut t hat i n hal f so we coul d bl ow i t up.
25 Q. Di r ect i ng your at t ent i on t o subpar agr aph A, what wor d i s
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1 under l i ned t her e?
2 THE COURT: Subpar agr aph A of par agr aph 9?
3 MR. KWOK: Yes, 9A.
5 Q. What wor d i s under l i ned i n t hat par agr aph?
6 A. Annual .
7 Q. What does t hat say t o you?
8 A. That t he 10 per cent r ef er s t o t he t ot al annual budget , not
9 t he over al l budget over t he t hr ee year s.
10 MR. KWOK: I f we coul d put up Gover nment Exhi bi t 4,
11 page 7. Sor r y, I have t he wr ong page agai n. I t ' s page 11
12 act ual l y.
13 THE COURT: Of what ?
14 MR. KWOK: I t ' s page 11 of Gover nment Exhi bi t 4.
15 THE COURT: I s t hat i n t he j ur y bi nder , or i s t hat - -
16 MR. KWOK: No, i t ' s not , but i t ' s now di spl ayed on t he
17 scr een.
19 Q. Ms. Li de, do you r emember Mr . Rubi nst ei n aski ng you about
20 t he second bul l et poi nt ?
21 A. Yes.
22 Q. And you sai d t hat i t was t aken out of cont ext - -
23 A. Yes.
24 Q. - - what he was t r yi ng t o say. What wer e you t r yi ng t o
25 expl ai n t o us?
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1 A. I was t r yi ng t o expl ai n t hat sever al sl i des ear l i er had
2 sai d t hat any change i n t he budget had t o be appr oved i n
3 advance. What t hat i s r ef er r i ng t o i s t he over al l pr oj ect .
4 At t he end of each year your t echni cal goal s mi ght
5 change sl i ght l y. You mi ght r eal i ze i n subsequent year s t hat
6 your est i mat ed budget f or year t wo and t hr ee wer e not cor r ect ,
7 and t hi s i s sayi ng t hi s i s a good t i me t o r evi ew t hat . I n
8 f act , bef or e we r enew t he pr oposal s - - bef or e we r enew t he
9 awar d and add year t wo, we ask i f t her e ar e any such changes,
10 and t hat ' s t o what t hat i s r ef er r i ng.
11 Q. J ust t o be cl ear , t he second bul l et poi nt t her e i s not
12 over r ul i ng t he pr i or appr oval r equi r ement .
13 A. No.
14 MR. RUBI NSTEI N: Obj ect i on t o t he l eadi ng.
15 THE COURT: What budget i s cont empl at ed by t hat second
16 bul l et poi nt ?
17 THE WI TNESS: I t means l ook at your t hr ee- year budget ,
18 and i f you ant i ci pat e changes i n year t wo or year t hr ee, t hi s
19 i s a good t i me t o ask f or appr oval of a new budget .
20 THE COURT: I s t hat gone i nt o i n t he or i gi nal meet i ng
21 wi t h t he gr ant ee?
22 THE WI TNESS: That ' s how - - t hi s i s not my sl i de. I
23 do not do t hi s par t of t he pr esent at i on, but t hat ' s as I
24 i nt er pr et t hat . Sever al sl i des pr i or t o t hi s - -
25 THE COURT: You have answer ed my quest i on.
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1 Q. Let ' s go back t o page 7 of t he same exhi bi t . How does t he
2 sl i de t hat we j ust l ooked at r el at e t o t hi s sl i de?
3 A. Wel l , t hi s sl i de cl ear l y st at es pr i or appr oval - -
4 MR. RUBI NSTEI N: I obj ect t o t hi s as i mpr oper
5 r edi r ect , your Honor .
6 THE COURT: Obj ect i on over r ul ed.
7 MR. RUBI NSTEI N: I di dn' t ask anyt hi ng about t hi s.
8 THE COURT: I wi l l al l ow i t . But i nst ead of doi ng
9 t hi s, poi nt t o t he sect i on you ar e t al ki ng about , and t hen you
10 can expl ai n.
11 Q. Di r ect i ng your at t ent i on t o t he second bul l et poi nt , how
12 does t hat poi nt r el at e t o t he poi nt t hat we j ust l ooked at i n
13 t he pr evi ous sl i de?
14 A. That any t i me dur i ng year one t hat a new budget i s
15 r equest ed, i t must be pr esent ed at t he t i me of t he r equest and
16 get pr i or wr i t t en appr oval .
17 Q. Now, Ms. Li de, do you r emember Mr . Rubi nst ei n al so aski ng
18 you about t he pur pose of not al l owi ng ATP gr ant f unds t o be
19 expended on i ndi r ect cost s? Do you r emember t hat quest i on?
20 A. I do.
21 Q. And he asked you whet her one of t he pur poses of t hat r ul e
22 was so t hat somet i mes a company mi ght spend t i me on di f f er ent
23 pr oj ect s? Do you r emember t hat ?
24 A. I do.
25 Q. Ar e t her e any ot her pur poses asi de f r omt hat t hat ATP does
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1 not pay f or i ndi r ect cost s? What was your under st andi ng as t o
2 why ATP does not pay f or i ndi r ect cost s?
3 A. Wel l , t he f i r st under st andi ng i s t hat t hat i s t he way t hat
4 a si ngl e company cost shar es wi t h t he U. S. gover nment .
5 The second under st andi ng i s t hat i f t he company has no
6 i ndi r ect cost s t o shar e, i t may not be a vi abl e company.
7 And t he t hi r d r eason woul d be t hat any company, no
8 mat t er how smal l , engages i n ot her act i vi t i es t han t he ATP
9 pr oj ect . For exampl e, i n CASI ' s case t hey wer e l ooki ng f or
10 f undi ng f r omot her ent i t i es, t hat woul d be act i vi t i es out si de
11 of t he ATP pr oj ect .
12 Q. Ms. Li de, l et ' s go back t o Gover nment Exhi bi t 4. You
13 r emember Mr . Rubi nst ei n showi ng you t he f ont at t he upper
14 l ef t - hand cor ner of t he sl i de and you wer e t r yi ng t o expl ai n?
15 A. I do.
16 Q. What i s t hat expl anat i on?
17 A. Yes. The expl anat i on i s t hat we wor k as a t eam. Two of us
18 ar e f r omAdvanced Technol ogy Pr ogr am, one of us i s f r omt he
19 gr ant s of f i ce; and because we have di f f er ent knowl edge of par t s
20 of t hi s gr ant s, we al l put t hese sl i des t oget her wi t h our
21 knowl edge. So, t he l ar ger f ont came f r omt he gr ant s per son.
22 She cr eat ed her own sl i des because she has t he i nt i mat e
23 knowl edge of t hat . Those of us i n t he Advanced Technol ogy
24 Pr ogr amcr eat ed our own sl i des usi ng a smal l er f ont . Our goal
25 i sn' t t o have t he pr et t i est sl i de set ; i t ' s t o gi ve t he
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1 i nf or mat i on t o t he company.
2 Q. You r emember bei ng asked a quest i on about t he " i n ki nd"
3 cont r i but i on and how i t r el at es t o t he cost shar e?
4 A. Yes, I do.
5 Q. You r emember hi maski ng you about t he l i mi t t hat can be
6 done?
7 A. Yes.
8 MR. KWOK: May I appr oach, your Honor ?
9 THE COURT: Yes, you may.
10 Q. I amshowi ng you a document t o see i f t hat r ef r eshes your
11 r ecol l ect i on.
12 MR. RUBI NSTEI N: I obj ect . She di dn' t i ndi cat e t hat
13 she needs i t .
14 THE COURT: I don' t know what t he document - - I
15 haven' t got t en anyt hi ng on t hi s.
16 ( Recor d r ead)
17 THE COURT: You can show a document t o see i f i t
18 r ef r eshes her r ecol l ect i on.
19 ( Recor d r ead)
20 THE COURT: You need anot her quest i on i n t her e,
21 Mr . Kwok.
22 Q. Do you know t he per cent age l i mi t wher e t hat can be done,
23 t he " i n ki nd" cont r i but i on can be consi der ed as par t of t he
24 cost shar e?
25 A. I bel i eve i t i s a t hi r d, but I woul d l i ke t o be r ef r eshed
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1 i f possi bl e.
2 MR. KWOK: Your Honor ?
4 MR. RUBI NSTEI N: I t hi nk i t ' s i nappr opr i at e, your
5 Honor . I t ' s absol ut el y i nappr opr i at e.
6 THE COURT: She says - -
7 MR. RUBI NSTEI N: They have a document t hat she never
8 saw bef or e. How can she be r ef r eshed?
9 THE COURT: I don' t know whet her i t ' s a document she
10 has seen bef or e or not .
11 MR. RUBI NSTEI N: Wel l , I t hi nk t hey have t o ask her .
12 THE COURT: You have t o ask her whet her she has seen
13 t hi s document bef or e.
14 MR. KWOK: Maybe a f ew quest i ons, your Honor .
15 THE COURT: You can show her t he document and ask her
16 i f she has seen i t bef or e. She can' t t el l unl ess she l ooks at
17 i t .
18 MR. RUBI NSTEI N: He shoul d show her t he f i r st page
19 onl y.
20 THE COURT: Al l r i ght , j ust t he f i r st page.
21 THE WI TNESS: Yes, I have seen t hat document .
22 THE COURT: Al l r i ght . Let her l ook t hr ough t he
23 document . Let her l ook t hr ough t he document .
24 THE WI TNESS: I shoul d have conf i dence i n mysel f . The
25 t ot al val ue of any " i n ki nd" cont r i but i ons used t o sat i sf y t he
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1 caut i onar y r equi r ement may not exceed 30 per cent of t he
2 nonf eder al shar e of t he t ot al pr oj ect cost s. And I had sai d a
3 t hi r d.
4 THE COURT: You r emember t hat of your own knowl edge,
5 not j ust r eadi ng i t .
6 THE WI TNESS: No, no, si r , I answer ed - - I bel i eve you
7 woul d f i nd i t - - I sai d I bel i eved i t was a t hi r d, so . . .
8 Q. Ms. Li de, you r emember Mr . Rubi nst ei n aski ng you quest i ons
9 about mul t i pl e communi cat i ons t o NI ST, i ncl udi ng your sel f , f r om
10 Dr . Kar r on?
11 A. I do.
12 Q. Af t er t he gr ant was suspended, what was t he r eason t hat you
13 your sel f st opped meet i ng wi t h hi m?
14 A. At t he begi nni ng - - we wer e i nst r uct ed by our gener al
15 counsel t o st op meet i ng wi t h hi maf t er t he suspensi on of t he
16 awar d.
17 MR. KWOK: May I appr oach, your Honor ?
19 Q. I amshowi ng you what ' s been mar ked as Def endant ' s Exhi bi t
20 I bel i eve 2, 3501- FF?
21 DEPUTY COURT CLERK: That ' s B.
22 THE COURT: B as i n boy.
23 Q. Ms. Li de, Mr . Rubi nst ei n asked you a moment ago t o r ead a
24 por t i on of t hat e- mai l . Can you r ead t he e- mai l i n i t s
25 ent i r et y?
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1 THE COURT: Act ual l y what he r ead - - he r ead a por t i on
2 of i t .
3 Q. He r ead a por t i on of i t . Can you r ead t he ent i r et y of t hat
4 e- mai l ?
5 A. Cer t ai nl y. The dat e i s Oct ober 1, 2004. " The Depar t ment
6 of J ust i ce has f or mal l y i ni t i at ed a gr and j ur y i nvest i gat i on
7 r egar di ng t he NI ST ATP awar d made t o Comput er Ai ded Sur ger y.
8 I n or der t o ensur e t hat DOJ and t he I nspect or Gener al ' s of f i ce
9 ar e abl e t o compl et e a t hor ough and t i mel y i nvest i gat i on, we
10 ar e r equest i ng t hat al l NI ST" - - " al l " i s al l i n caps - - " NI ST
11 per sonnel cease cont act wi t h Comput er Ai ded Sur ger y ( CASI ) , Dr .
12 Kar r on and al l CASI r epr esent at i ves. I nqui r i es f r omt hose
13 par t i es shoul d be di r ect ed t o mysel f or SA Ki r k Yamat ani .
14 Addi t i onal l y" - -
15 Shal l I cont i nue?
16 Q. Yes.
17 A. " Addi t i onal l y pl ease do not pr oceed wi t h t he audi t
18 r esol ut i on f or CASI . I t i s ext r emel y i mpor t ant t hat a bi l l not
19 be gener at ed f or t he f unds t hat CASI mi sappr opr i at ed f r omt he
20 awar d. Pl ease cont act me i f t her e ar e any f ur t her concer ns or
21 quest i ons. I l ook f or war d t o wor ki ng wi t h al l of you over t he
22 next f ew mont hs. Thank you. "
23 Q. And who wr ot e t hat e- mai l ?
24 A. Rachel A Gar r i son, speci al agent .
25 THE COURT: For t he Depar t ment of Commer ce?
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1 THE WI TNESS: Sor r y. Yes, Uni t ed St at es Depar t ment of
2 Commer ce.
3 Q. And do you see Rachel Gar r i son i n t hi s cour t r oom?
4 A. I do.
5 Q. Can you poi nt her out ?
6 A. She i s at t he f r ont t abl e wi t h a dar k sui t and a bl ue
7 bl ouse under i t .
8 MR. KWOK: No f ur t her quest i ons.
9 THE COURT: Recr oss.
11 RECROSS EXAMI NATI ON
13 Q. I s i t f ai r t o say t hat - -
15 THE COURT: Let ' s r ephr ase t he quest i on.
16 Q. Thank you, J udge.
17 Ar e you - - i s cof undi ng par t of your j ob? Ar e you
18 i nvol ved i n cof undi ng and advi se on cof undi ng?
19 THE COURT: I don' t - -
20 A. No, I don' t bel i eve i t i s.
21 THE COURT: I don' t see t he r el evance of t hi s.
22 MR. RUBI NSTEI N: He j ust asked her on cr oss. He
23 showed her a document .
24 Q. Di dn' t you say when you f i r st answer ed t hat quest i on t hat
25 i t was one t hi r d - - t hat one t hi r d?
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8637KAR5 Li de - r ecr oss
1 A. I t i s our r esponsi bi l i t y t o t he best of our knowl edge t o
2 under st and t he r ul es and cr i t er i a and t o advi se our r eci pi ent s,
3 and when i n doubt our exper t i s our gr ant speci al i st who wor ks
4 wi t h us on t he pr oj ect .
5 Q. I sn' t i t f ai r t o say t hat your answer was, bef or e you wer e
6 shown t he document , t hat i t ' s about a t hi r d of t he budget ?
7 A. No, def i ni t el y not of t he budget , absol ut el y not . Of t he
8 cost shar e.
9 Q. Now?
10 THE COURT: The cost shar e bei ng t he cost s put up by
11 t he gr ant ee?
12 THE WI TNESS: That i s cor r ect , si r . Yes.
13 Q. Now, sunk cost i s a t er myou used, cor r ect ?
14 A. Um- hum.
15 Q. I s t hat r i ght ?
16 A. Cor r ect .
17 Q. I s t hat what you sai d?
18 A. Cor r ect , we use t he t er msunk cost .
19 Q. And t hat i s cost s t hat a gr ant ee spends bef or e t hey
20 act ual l y get t he gr ant money.
21 A. Bef or e t he st ar t of t he gr ant .
22 Q. Bef or e. That t hey act ual l y spend t he money. They pai d f or
23 t he expense. They buy a comput er on Sept ember 29t h and t hey
24 pay f or t hat comput er t hat t hey' r e goi ng t o st ar t usi ng af t er
25 Oct ober 1st f or t he pur poses of t hat gr ant , t hat ' s a sunk cost ,
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1 r i ght ?
2 A. I f t hey pai d f or i t , yes, i t i s a sunk cost . Anyt hi ng t hey
3 pur chase, yes.
4 Q. You j ust sai d t hey pai d f or ?
5 A. Or , wel l , i f t hey or der i t . They can' t or der i t bef or e t he
6 st ar t of t he gr ant and t hen char ge ATP. They or der ed i t bef or e
7 t he gr ant .
8 Q. I sn' t i t a f act t hey can' t pay f or i t bef or e t he gr ant and
9 get r ei mbur sed, but i f t hey char ge i t and pay f or i t af t er t hey
10 get t he money, t hen t hat i s accept abl e?
11 A. I t cer t ai nl y woul dn' t be, i n my opi ni on, but t he gr ant s
12 of f i ce woul d have t o answer t hat quest i on mor e accur at el y.
13 I t ' s my under st andi ng t hat i t was ent er ed i nt o bef or e t he st ar t
14 of t he gr ant and t her ef or e r egar dl ess of when you pai d f or i t
15 i t woul d be a sunk cost .
16 Q. The gover nment showed you Gover nment Exhi bi t 4, page 11.
17 Coul d we have t hat up, pl ease?
18 MR. RUBI NSTEI N: I t ' s t he one t hat t he gover nment
19 showed t he wi t ness on r edi r ect .
20 THE COURT: That ' s what you want up, Mr . Rubi nst ei n?
23 Q. Anywher e i n t hat exhi bi t does i t addr ess a t hr ee- year
24 budget ?
25 A. That ' s what ' s meant by a r evi sed budget .
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1 THE COURT: But does i t st at e i t i n t he - -
2 THE WI TNESS: No, i t does not st at e a t hr ee- year
3 budget .
4 Q. Does i t speci f i cal l y say t he cost s of each year ?
5 A. Yes.
6 Q. Now you wer e aski ng f or t he act ual cost s of CASI i n or der
7 t o hel p CASI get a r evi sed budget , cor r ect ?
8 A. Yes.
9 Q. And anywher e i n your exhi bi t 4, t he sl i de pr esent at i on, i s
10 t her e anyt hi ng about cof undi ng and equi pment ?
11 A. I woul d be happy t o go t hr ough t hi s.
12 Wel l , cer t ai nl y t he page t hat says " adher e t o t er ms
13 and condi t i ons and r el at ed awar d document s, " l i st s t hi ngs t hat
14 woul d addr ess equi pment .
15 The pr i or appr oval says sol e sour ce cont r act s over
16 $100, 000. That woul d r el at e t o equi pment .
17 The next sl i de says r epor t changes and equi pment use.
18 That cer t ai nl y af f ect s equi pment .
19 The pr ocur ement st andar ds r el at es t o equi pment and how
20 one pur chases i t wi t h compet i ng pr ocur ement s and document i ng.
21 The budget sl i de, of cour se equi pment pl ays a bi g r ol e
22 i n t he budget , especi al l y i n a pr oj ect such as t hi s.
23 The audi t woul d have t o audi t t he equi pment .
24 An audi t pr obl emi s est i mat ed ver sus act ual cost s
25 r equest ed or f ai l ur e t o document cost shar e. Bot h of t hose
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1 coul d - - a pr i ce- based val ue of cont r i but i on, al l of t hose
2 coul d r el at e t o equi pment , i f t hat ' s what ' s i n quest i on.
3 And I suspect i t won' t be under t he t echni cal and
4 busi ness pr oj ect management , so - -
5 Q. So, i t ' s f ai r t o say t her e i s no pl ace i n your sl i de
6 pr esent at i on t hat says you can onl y use equi pment up t o 30
7 per cent as t o nonf eder al expenses, r i ght ? Ther e i s not hi ng
8 t hat says t hat .
9 A. Not i n t hat document , but i t occur s i n many ot her
10 document s.
11 Q. Not i n t he sl i de show t hough?
12 A. Not i n t he sl i de show di r ect l y.
13 Q. And t he gover nment asked you quest i ons about Def endant ' s
14 Exhi bi t B. You r ecei ved t hi s e- mai l on Oct ober 4, 2004. Di d
15 you ever t el l Dr . Kar r on i n al l t he t i mes he e- mai l ed you or
16 cal l ed you t hat you can' t speak t o hi mand t hat he shoul d be
17 di r ect ed t o ei t her Rachel Gar r i son her sel f or speci al agent
18 Ki r k Yamat ani ? Di d you ever t el l Dr . Kar r on t hat t hat ' s what
19 you wer e advi sed t o do?
20 A. Those wer e not my i nst r uct i ons. My i nst r uct i ons wer e
21 i nqui r i es f r omDr . Kar r on shoul d be r ef er r ed t o t hose speci al
22 agent s. My i nst r uct i ons wer e t o cease cont act . And I f ol l ow
23 i nst r uct i ons.
24 Q. Di d you t el l hi myou can' t t al k t o hi mmont h af t er mont h?
25 THE COURT: Di d you have any of t hese i nqui r i es t o
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1 t hose peopl e?
2 THE WI TNESS: Yes. My i nst r uct i ons wer e t o send
3 e- mai l - -
4 THE COURT: But di d you f ol l ow your i nst r uct i ons?
5 THE WI TNESS: Absol ut el y t o t he l et t er .
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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863ZKAR6 Li de - r ecr oss
2 Q. Di d you ever not i f y Dr . Kar r on t hat you had been i nst r uct ed
3 t o send al l hi s i nqui r i es t o Agent s Gar r i son and Yamat ani , i f
4 I ' mpr onounci ng hi s name cor r ect l y?
5 A. I ' ma gover nment empl oyee and I was f ol l owi ng my
6 i nst r uct i ons f r omt he U. S. Gover nment .
7 Q. So you had Dr . Kar r on keep cal l i ng you and beggi ng you t o
8 see i f he coul d get hi s gr ant s r est ar t ed; r i ght ?
10 A. No.
11 THE COURT: Obj ect i on sust ai ned. J ur y i s i nst r uct ed
12 t o di sr egar d t he quest i on.
13 You' r e excused. Next wi t ness, br i ng hi mon.
14 MR. EVERDELL: Your Honor , t he gover nment cal l s Hope
15 Snowden.
16 HOPE DENI SE SNOWDEN,
17 cal l ed as a wi t ness by t he gover nment ,
18 havi ng been dul y swor n, t est i f i ed as f ol l ows:
19 DI RECT EXAMI NATI ON
20 BY MR. EVERDELL:
21 MR. EVERDELL: May I pr oceed, your Honor ?
22 THE COURT: Yes.
23 Q. Good af t er noon, Ms. Snowden.
24 A. Good af t er noon.
25 Q. Wher e do you wor k?
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863ZKAR6 Snowden - di r ect
1 A. I wor k at t he Nat i onal I nst i t ut e of St andar ds and
2 Technol ogy i n Gai t her sbur g.
3 Q. I s t hat somet i mes cal l ed NI ST?
4 A. Yes.
5 Q. For shor t ? And i s NI ST par t of t he f eder al gover nment ?
6 A. Yes.
7 Q. And what par t ?
8 A. The Depar t ment of Commer ce.
9 Q. What i s your t i t l e at NI ST?
10 A. Gr ant s speci al i st .
11 Q. And how l ong have you been a gr ant s speci al i st ?
12 A. About ei ght - and- a- hal f year s.
13 Q. What do you do as a gr ant s speci al i st ?
14 A. I admi ni st er gr ant s.
15 Q. So can you descr i be a l i t t l e bi t what you do, your
16 r esponsi bi l i t i es?
17 A. I do l i ke budget r evi si ons. I admi ni st er - - I admi ni st er
18 t he gr ant s when - - per t ai ni ng t o t he r ul es and r egul at i ons. I
19 expl ai n t o t he gr ant ees what ar e al l owabl e and unal l owabl e
20 cost s.
21 Q. Do you have any r esponsi bi l i t i es concer ni ng budget s f or
22 gr ant s?
23 A. Yes. I r evi ew t he budget f or t he gr ant s, al t hough at t he
24 end of t he day my super vi sor , her si gnat ur e her - - wi t h an
25 amendment and her of f i ci al si gnat ur e, t hat ' s how our budget s
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1 ar e appr oved.
2 Q. Do you know B. J . Li de or Bet t i J o Li de?
3 A. Yes, I do.
4 Q. And who i s t hat ?
5 A. They' r e pr ogr ammanager s, and we par t ner up wi t h ATP
6 gr ant s.
7 Q. How does your j ob di f f er f r omMs. Li de' s j ob?
8 A. B. J . i s on a mor e t echni cal aspect s of t he gr ant s. I ' mon
9 mor e t han admi ni st r at i ve and l i ke budget anal ysi s, and my
10 of f i ce does al l t he appr oval s t hat have t o be aut hor i zed and
11 si gned f or by t he gr ant of f i cer .
12 Q. What di d you do bef or e becomi ng a gr ant speci al i st ?
13 A. I was a pr ocur ement anal yst f or Uni t ed St at es.
14 Q. And how l ong di d you do t hat f or ?
15 A. Ni ne year s.
16 Q. Ar e you f ami l i ar wi t h t he advanced t echnol ogy pr ogr am
17 gr ant ?
18 A. Yes.
19 Q. Or ATP gr ant s?
20 A. Yes.
21 Q. Have you been i nvol ved as a gr ant s speci al i st wi t h ATP
22 gr ant s i n t he past ?
23 A. Yes, I have.
24 Q. And about how many ATP gr ant s have you been a gr ant speci al
25 l i st f or ?
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1 A. Wel l , over 60.
2 Q. I n your capaci t y as a gr ant s speci al i st f or t he ATP gr ant s,
3 ar e you f ami l i ar wi t h t he r ul es gover ni ng t he ATP gr ant s?
4 A. Yes, I am.
5 Q. And ar e you f ami l i ar wi t h t he r ul es gover ni ng gover nment
6 gr ant s, i n gener al ?
7 A. Yes.
8 Q. How ar e you f ami l i ar wi t h t hose r ul es?
9 A. I ' ma gr ant s speci al i st and, t her ef or e, par t of my posi t i on
10 of my j ob i s t o be f ami l i ar wi t h t hose r ul es and r egul at i ons
11 t hat gover n t he gr ant s.
12 Q. And t hose r ul es i ncl ude spendi ng r ul es?
13 A. Spendi ng r ul es, unal l owabl e and al l owabl e cost s.
14 Q. Al l r i ght . Ms. Snowden, di d t her e come a t i me when you
15 wer e i nvol ved i n handl i ng, excuse me, i n handl i ng an ATP gr ant
16 awar ded t o Comput er Ai ded Sur ger y I ncor por at ed or CASI ?
17 A. Yes.
18 Q. And who i s t he head of CASI ?
20 Q. Do you see Dr . Kar r on her e i n t he cour t r oom?
21 A. Yes, I do.
22 Q. Woul d you pl ease poi nt hi mout and descr i be an ar t i cl e of
23 cl ot hi ng he' s wear i ng?
24 A. Wi t h t he gl asses on, t i e, and j acket .
25 MR. EVERDELL: May t he r ecor d r e - -
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1 MR. RUBI NSTEI N: I concede she' s i dent i f i ed - -
2 A. He has - -
3 MR. RUBI NSTEI N: - - Dr . Kar r on.
4 A. He has somet hi ng i n hi s hand - - t her e he i s, has a pony
5 t ai l . That ' s hi m, yes.
6 MR. EVERDELL: May t he r ecor d so r ef l ect t he wi t ness
7 has i dent i f i ed t he def endant ?
8 THE COURT: The r ecor d wi l l r ef l ect t he wi t ness has
9 i dent i f i ed t he def endant .
10 Q. Ms. Snowden - - excuse me, your Honor .
11 Ms. Snowden, what posi t i on di d t he def endant occupy
12 wi t hi n CASI ?
13 A. He' s t he pr esi dent .
14 Q. And when di d you f i r st meet t he def endant ?
15 A. I met hi mNovember 2001.
16 Q. And what was t he occasi on f or t hat meet i ng?
17 A. He came t o NI ST, hi mand hi s associ at es, t o what we cal l a
18 ki ckof f meet i ng. That ' s when you' r e awar ded a f eder al f unded
19 gr ant , you come t o our l ocat i on - - wel l , usual l y we go t o your
20 l ocat i on. But si nce 9/ 11 t hey came t o our l ocat i on. And we
21 have a - - gi ve a pr esent at i on, and we go t hr ough r ul es and
22 r egul at i ons t hat gover n t he gr ant s and go over what t hei r
23 r esponsi bi l i t i es ar e, our r esponsi bi l i t i es t o t hem, and t hen
24 t hey gi ve us l i ke a pr esent at i on of what t hey expect t o
25 accompl i sh t hr oughout t he pr oposal .
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1 Q. And you say t hat ' s a ki ckof f meet i ng?
2 A. I t ' s cal l ed a ki ckof f .
3 Q. And what gr ant s di d Dr . Kar r on and CASI r ecei ve at t hat
4 poi nt ?
5 A. A f eder al f unded gr ant wi t h f eder al f unds.
6 Q. Was i t an ATP gr ant ?
7 A. Thr ough ATP, yes, ATP pr ogr am.
8 Q. And when was t hat gr ant appr oved?
9 A. The gr ant was appr oved i n Oct ober 2001.
10 Q. How much f undi ng was aut hor i zed f or t hat gr ant ?
11 A. $2 mi l l i on.
12 Q. And how i s t he t wo mi l l i on goi ng t o be di sbur sed?
13 A. Over t hr ee year per i od, t he f i r st year bei ng 800, 000, and
14 second year 600, 000 and t hi r d year 600, 000.
15 Q. And wher e di d money come f r omt hat f unded t he gr ant ?
16 A. Feder al appr opr i at i ons, f eder al - - i t ' s a f eder al gr ant .
17 Q. Now, you ment i oned ki ckof f meet i ng bef or e. When, agai n,
18 di d t hat ki ckof f meet i ng occur ?
19 A. I t was i n November 2001.
20 Q. So how l ong af t er t he gr ant was appr oved di d t he ki ckof f
21 meet i ng happen?
22 A. Pr obabl y wi t hi n l i ke si x weeks.
23 Q. Now, pr i or t o t he ki ckof f meet i ng, di d you have any
24 conver sat i ons wi t h anyone f r omCASI ?
25 A. Yes, yes.
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1 Q. Who di d you have conver sat i ons wi t h?
2 A. Dr . Kar r on and hi s associ at e, Lee Gur f ei n.
3 Q. And who i s Lee Gur f ei n?
4 A. Lee Gur f ei n, under t hi s pr oposal , was an admi ni st r at or
5 under t hi s pr oposal .
6 Q. And what does an admi ni st r at or do?
7 A. Usual l y t hey do al l t he admi ni st r at i ve wor k. He woul d cal l
8 me t o ask me quest i ons f or about al l owabl e and unal l owabl e
9 cost s, j ust about any changes or changes t hat t hey pr opose;
10 j ust quest i ons.
11 Q. I s he t he poi nt of cont act ?
12 A. He was t he poi nt of cont act , yes.
13 Q. Al l r i ght . St ar t i ng f i r st wi t h your conver sat i ons wi t h Lee
14 Gur f ei n, di d he cont act you or di d you cont act hi m?
15 A. He cont act ed me.
16 Q. And why di d he cont act you?
17 A. He cont act ed me t o ask me about unal l owabl e and al l owabl e
18 cost s. He - - f or exampl e - -
19 MR. RUBI NSTEI N: Obj ect i on t o t he hear say, your Honor .
20 MR. KWOK: Your Honor , t hese ar e quest i ons, t hey' r e
21 not st at ement s.
22 THE COURT: Obj ect i on sust ai ned as t o why he cont act ed
23 her . She can st at e what he sai d i n t he conver sat i on and what
24 she sai d i n t he conver sat i on, but she can' t t est i f y as t o what
25 i s i n hi s mi nd.
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1 MR. EVERDELL: Yes, your Honor . Under st ood.
2 Q. Al l r i ght , Ms. Snowden, l et me ask you t hi s quest i on. You
3 sai d he cont act ed you, i s t hat r i ght ?
4 A. Yes.
5 Q. Di d you t wo have a di scussi on?
6 A. Yes.
7 Q. What quest i ons di d he ask you, i f any, dur i ng t hat , t hose
8 conver sat i ons?
9 A. Was he al l owed t o pay f or r ent and ut i l i t i es, wi t h t he ATP
10 f eder al f unded gr ant .
11 Q. And r ent f or what , r ent and ut i l i t i es f or what ?
12 A. For t he condo i n whi ch t he - - at t hi s poi nt I guess CASI ,
13 t he company, was bei ng housed.
14 Q. And whose condo was t hat ?
15 A. Dr . Kar r on' s condo.
16 Q. And what was your r esponse t o t he quest i on, can r ent and
17 ut i l i t i es be pai d f or wi t h ATP f unds?
18 A. No, t hey' r e unal l owabl e cost s.
19 Q. And why i s r ent not , and ut i l i t i es not al l owabl e cost ?
20 A. For one t hi ng, t hey' r e consi der ed i ndi r ect cost s, and
21 t hey' r e - - i ndi r ect cost s f or us i s gener al and admi ni st r at i ve
22 cost s l i ke wat er , el ect r i ci t y, heat , somet hi ng t hat ATP and
23 f eder al f unds we do not pay f or .
24 Q. Now, somet hi ng l i ke r ent s and ut i l i t i es be an al l owabl e
25 expense under t he gr ant r ul es i f t he onl y pr oj ect t hat t he
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1 gr ant was r eci pi ent was wor ki ng on was t he pr oj ect t hat was
2 f unded by t he ATP money?
3 A. No.
4 Q. I t woul dn' t make any di f f er ence?
5 A. I t makes no di f f er ence at al l .
6 Q. What i f t he def endant was l i vi ng i n t he apar t ment wher e t he
7 company was housed, woul d t hat make any di f f er ence whet her
8 gr ant money coul d be used f or r ent ?
9 A. No, not at al l .
10 Q. Al l r i ght . Now, t ur ni ng t o your conver sat i ons wi t h t he
11 def endant , di d he cont act you or di d you cont act hi m?
13 Q. And why - - oh, wi t hdr awn, your Honor . Di d you t wo have a
14 conver sat i on?
15 A. Yes.
16 Q. And what di d you t al k about ?
17 A. He had t he same conver sat i on - - quest i on as Lee Gur f ei n.
18 Q. Whi ch was what ?
19 MR. RUBI NSTEI N: Can we est abl i sh a t i me, your Honor ,
20 wi t h t hese conver sat i ons?
21 THE COURT: Yes. Appr oxi mat el y when di d t hese
22 conver sat i ons t ake pl ace, appr oxi mat el y?
23 THE WI TNESS: Oh, t hi s i s - - t hey f i r st st ar t ed t aki ng
24 pl ace bef or e t he ki ckof f . So t hat ' s i n Oct ober of 2001.
25 THE COURT: Thi s i s about t he r ent ?
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1 THE WI TNESS: Thi s i s about t he r ent and ut i l i t i es.
2 Thi s i s r i ght af t er he was t ol d t hat he - - he r ecei ved t he
3 document s t hat he woul d be r ecei vi ng t hi s f eder al f und, and
4 t hen i t cont i nued.
5 THE COURT: Al l r i ght . Then t he next conver sat i on you
6 sai d t hat was wi t h Gur f ei n. What about t he conver sat i on
7 wi t h - -
8 THE WI TNESS: They - -
9 THE COURT: - - Dr . Kar r on?
10 THE WI TNESS: They bot h woul d cal l me, j ust - -
11 THE COURT: Same t i me?
12 THE WI TNESS: Yeah. No, l i ke a di f f er ent day. Li ke
13 Lee woul d cal l me one day, and t hen Dr . Kar r on woul d cal l me
14 anot her day and ask t he same exact quest i on.
15 THE COURT: They bot h wer e al l i n Oct ober ?
16 THE WI TNESS: No. Some wer e i n Oct ober , and t hen
17 l at er on af t er t he ki ckof f , t hey cont i nued t o cal l me and ask
18 me t he same exact quest i ons.
21 Q. Al l r i ght . Agai n, j ust t o cl ar i f y t he conver sat i ons wi t h
22 t he def endant , we di scussed your conver sat i ons wi t h Lee
23 Ger f ei n, but what di d you t wo di scuss, you and t he def endant ?
24 A. We di scussed r ent and ut i l i t i es.
25 Q. And what speci f i cal l y di d t he def endant ask you?
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1 A. He asked me wer e t her e al l owabl e cost , and I t ol d hi mover
2 and over agai n, no. He al so - - we had a conver sat i on about - -
3 dur i ng t hi s t i me was 9/ 11, and t he St at e of New Yor k had t ol d
4 t hemt hey woul d gi ve hi msome space. And I guess, I don' t know
5 what agr eement t hey had, but si nce 9/ 11 t hey r esci nded t he
6 of f er . So, t her ef or e, he was i nsi de of hi s apar t ment . I sai d
7 I under st and t hi s, but I ' msor r y; unf or t unat el y, f eder al
8 f undi ng gr ant s, we do not pay f or r ent and ut i l i t i es, so
9 t her ef or e, t he answer was no, t i me and t i me agai n.
10 Q. And about how many t i mes wer e you cont act ed about t hi s?
11 A. Numer ous t i mes. Bet ween Lee and Dr . Kar r on, t hey woul d t ag
12 t aki ng t eam. They woul d bot h cal l me and ask t he same
13 quest i ons l i ke a day apar t , and t hey woul d consi st ent l y get t he
14 same exact answer .
15 Q. What answer was t hat ?
16 A. They wer e unal l owabl e cost s and, no, you can not use
17 f eder al f unds.
18 Q. Di d you ever t el l t he def endant or Lee Ger f ei n t hat r ent
19 and ut i l i t i es wer e al l owabl e expenses under t he ATP f unds?
20 A. Never .
21 Q. Di d you ever appr ove any r ent or r ent payment r equest s f r om
22 t he def endant or anybody at CASI ?
23 A. No, never .
24 Q. Al l r i ght . Asi de f r omcal l i ng you wi t h quest i ons, wer e
25 t her e any r esour ces avai l abl e t o t he def endant t o i nst r uct hi m
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1 about t he r ul es gover ni ng t he expendi t ur e of gr ant s f unds?
2 A. Yes.
3 Q. And what ar e t hose?
4 A. You have, you have ATP r ul es. You have a management .
5 Under t he f eder al gover nment , you have r egul at i ons and t he
6 r egul at i ons you have - - you have t o you have t o have wr i t t en
7 pr oper management pr ocedur es i n pl ace. So, yes you have r ul es.
8 Q. Ar e t her e ways t hat t he def endant woul d be abl e t o access
9 t hese r ul es at any poi nt ?
10 A. Yes. Ther e i s mor e t han one way. When you r ecei ve a gr ant
11 f r omus when you r ecei ve a document , even bef or e you si gn i t
12 say you' r e goi ng t o accept i t , we send t hat document , al ong
13 wi t h al l t he r egul at i ons t hat gover n t he awar d, al so t her e ar e
14 i nt er net , on t he i nt er net you can al ways access t hemt hr ough
15 t he i nt er net .
16 Q. And di d you i n f act send t hese r egul at i ons t o t he def endant
17 when he was awar ded t he gr ant ?
18 A. Yes.
19 Q. I ' d l i ke t o show you what ' s al r eady i n evi dence as
20 gover nment exhi bi t 12, and i f we coul d di spl ay t hat on t he
21 scr een. I know t he f ol der s ar e j umbl ed, but i f you coul d f i nd
22 exhi bi t 12.
23 A. Okay.
24 Q. You see t hat document ?
25 A. Yes.
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1 Q. Do you know what t hat document i s?
2 A. Yes.
4 A. When a r eci pi ent i s goi ng t o r ecei ve a f eder al f und, t hey
5 wi l l r ecei ve t hi s document . Thi s document , i t - - basi cal l y, i t
6 t el l s you t o - - i t out l i nes t he per i od of per f or mance and how
7 much money you' r e goi ng t o r ecei ve, and i t al so has ever y
8 r egul at i on and r ul e checked t hat gover ns your awar d.
9 Q. And ar e t her e r egul at i ons and r ul es t hat ar e checked on
10 t hi s one?
11 A. Yes.
12 Q. And i s t hi s t he one t hat was sent t o Dr . Kar r on and CASI ?
13 A. Yes.
14 Q. And t hese checked i t ems, do you see t he ones t hat ar e
15 t her e?
16 A. Yes.
17 Q. Al l r i ght . And t hey i ncl ude - - whi ch ones do t hey i ncl ude?
18 A. They i ncl ude Depar t ment of Commer ce, f i nanci al assi st ance
19 st andar ds t er ms and condi t i ons. You have your speci al awar d
20 condi t i ons, l i ne i t embudget , 15 CFR par t 14, uni f or m
21 admi ni st r at i ve r equi r ement s f or gr ant s and agr eement s wi t h
22 hi gher - - i nst i t ut i ons of hi r e educat i on hospi t al s, ot her
23 nonpr of i t and commer ci al or gani zat i ons; 48 CFR par t 31,
24 cont r act cost pr i nci pl es and pr ocedur es. And t hen we have
25 ot her s. And ot her s ar e t he gener al t er ms, condi t i ons of
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1 Advanced Technol ogy Pr ogr am, and you have pr ogr ams speci f i c
2 gui del i nes f or t he ATP cooper at i ve agr eement s wi t h si ngl e
3 compani es.
4 Q. And wer e t hese document s sent al ong wi t h t he gr ant awar d?
5 A. Yes.
6 Q. And whose si gnat ur e appear s on t he bot t omof t hat ?
7 A. D. B. Kar r on.
8 Q. And i n si gni ng t hat , what i s t he si gnat or y agr eei ng t o do?
9 A. When you si gn t hi s, you' r e - - you' r e - - by si gni ng t hi s
10 document , you si mpl y agr ee t o compl y wi t h t he awar ds pr ovi si ons
11 checked bel ow. Upon accept ance of doubl e si gned copy, you' r e
12 sayi ng t hat you' r e not onl y si gni ng t hese, t hat you' r e
13 accept i ng t hem, but you under st and t hese r ul es and r egul at i ons
14 t hat gover n your awar d.
15 Q. Al l r i ght , l et ' s di scuss now t he ki ckof f meet i ng t hat you
16 ment i oned bef or e. What i s t he ki ckof f meet i ng?
17 A. A ki ckof f meet i ng i s when t he f eder al Gover nment and t he
18 pr ogr amsi de of t he house and t he r eci pi ent , t hat t he per son
19 r ecei vi ng t he gr ant s, we come t oget her and we gave a
20 pr esent at i on. The pr esent at i on out l i nes t he r ul es and
21 r egul at i ons of t he gr ant , what you expect t o r ecei ve f r omus,
22 and our r esponsi bi l i t i es and your r esponsi bi l i t i es t o us.
23 I t al so - - al so, t he gr ant ee i s abl e t o gi ve us a
24 pr esent at i on of what he expect s t o accompl i sh i n t he pr oposal .
25 So, basi cal l y, i t ' s a t i me wher e we come t oget her you can see
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1 each ot her f ace- t o- f ace and, basi cal l y, you coul d t al k and be
2 mor e f ami l i ar wi t h each ot her .
3 Q. And who at t ended t he ki ckof f meet i ng f r omCASI ?
4 A. I r ecal l Dr . Kar r on and Dr . Lee Ger f ei n - - and Lee Ger f ei n.
5 Q. And who on behal f of NI ST was t her e?
6 A. B. J . Li de, J ane Or t hwei n and mysel f , Hope Snowden.
7 Q. And what does t he NI ST gr ant of f i ce hope t o achi eve at t hi s
8 ki ckof f meet i ng?
9 A. We hope t o gi ve you a ni ce out l i ne and t el l you about t he
10 r ul es and r egul at i ons. I expl ai n t o t hemever y t i me t hat I ' m
11 t hei r l i ai son f or t he gr ant s of f i ce. I mean, you have t hese
12 r ul es and r egul at i on. I f you don' t under st and t hem, don' t t r y
13 t o i nt er pr et t hemyour sel f . That ' s what I ' mt her e f or . You
14 cal l me and I ' l l hel p you out , and i f I don' t know t he answer ,
15 I ' l l def i ni t el y go f i nd out what i t i s.
16 Q. What was your r ol e at t he ki ckof f meet i ng?
17 A. I r epr esent t he gr ant s of f i ce.
18 Q. Di d you gi ve a pr esent at i on t her e?
19 A. Yes, I di d.
20 Q. Al l r i ght . I ' d l i ke you t o l ook at Gover nment ' s exhi bi t 4
21 whi ch i s i n evi dence, i f you can f i nd t hat f ol der ?
22 THE COURT: You have t he f ul l exhi bi t , i s t hat i t ?
23 MR. EVERDELL: The wi t ness has t he f ul l exhi bi t and I
24 wi l l di r ect her .
25 THE COURT: The j ur y j ust has t he ext r act .
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1 MR. EVERDELL: J ur y j ust has t he ext r act s, t hat ' s
2 cor r ect , your Honor .
3 Q. Do you see t hat document i n f r ont of you?
4 A. Yes.
5 Q. And what i s t hat document t her e?
6 A. Thi s i s a copy of t he pr esent at i on t hat I , t hat I gave at
7 t he ki ckof f .
8 Q. I ' d l i ke you t o t ur n t o page si x of t hat document ?
9 A. Okay.
10 Q. Put t hat up on t he scr een. I ' mnot sur e t he j ur y has page
11 si x. You see t hat page?
12 A. Yes.
13 Q. I s t hat par t of t he pr esent at i on you gave?
14 A. Yes.
15 Q. And what i s, what i s t hi s sl i de desi gned t o i mpar t t o t he
16 peopl e pr esent ?
17 A. Thi s i s t o r ei t er at e t he r ul es and r egul at i ons and as i t
18 says, t er ms condi t i ons and r egul at i ons t hat gover n t hi s awar d.
19 So I usual l y go over t hi s sl i de and t el l t hemt hat t hese ar e
20 t he r ul es and r egul at i ons t hat not onl y gover n each one
21 super sedes, l i ke you have your speci al awar d condi t i ons, your
22 ATP gener al t er ms and condi t i ons and so f or t h.
23 Q. Di d you t el l t hemi f t hey have any quest i ons what t hey can
24 do?
25 A. I f t hey have any quest i ons, t hey have t o cal l me. I ' mt he
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1 gr ant l i ai son, cal l me.
2 Q. Can t hey quest i on you about any quest i ons about t he r ul es
3 and r egul at i ons t hat ar e out l i ned her e?
4 A. Yes, yes.
5 Q. I s i t your j ob t o r espond t o t hose quest i ons?
6 A. That i s my j ob t o r espond.
7 Q. What , i f anyt hi ng, do you t el l t he peopl e pr esent at t he,
8 or di d you t el l t he CASI peopl e pr esent at t hei r ki ckof f
9 meet i ng about t hei r r esponsi bi l i t i es concer ni ng t hei r pr oposal ?
10 A. I usual l y gi ve my spi el , and i t ' s l i ke - - and I t el l t hem,
11 I sai d your pr oposal ' s l i ke your Bi bl e; you don' t go out si de of
12 t he ot her gui dance of your pr oposal . Anyt hi ng out si de t her e,
13 you need t o have pr i or appr oval . So your pr oposal , you must
14 f ol l ow i t .
15 Q. And what speci f i cal l y di d you t el l t hem, i f anyt hi ng, about
16 t hei r r esponsi bi l i t i es concer ni ng t hei r budget ?
17 A. The budget t hat ' s appr oved wi t hi n your pr oposal , t hat ' s
18 your own appr oved budget . Anyt hi ng out si de t hat , you need,
19 pr i or appr oved - - you need pr i or appr oval . Par t of t hat pr i or
20 appr oval i s never ver bal . I t al ways comes i n a si gned document
21 si gned by my gr ant of f i cer .
22 Q. Al l r i ght . So j ust t o be cl ear , i f you want t o get pr i or
23 appr oval - - i f you want t o get pr i or appr oval f or a change i n
24 your budget , can you get i t or al l y?
25 A. No.
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1 Q. Have you ever gr ant ed somet hi ng, a change i n t he budget
2 or al l y?
3 A. No.
4 Q. So t hese ar e wr i t t en appr oval s, i s t hat r i ght ?
5 A. That ' s i t . That ' s t he onl y how you can get appr oval .
6 THE COURT: Thi s i s what you t ol d t hemat t he t i me of
7 t he meet i ng?
9 Q. I ' d l i ke you t o l ook at page 11 of t hat same exhi bi t t hat ' s
10 not i n t he j ur y bi nder s, but we have been di scussi ng i t . So
11 you have t o l ook up on t he scr een, Ms. Snowden even - - oh, I
12 suppose you have a f ul l exhi bi t . Yes, you can t ur n t o page 11.
13 A. Okay, I have i t .
14 Q. Al l r i ght . You see t hat page t hei r ?
15 A. Yes.
16 Q. I t says budget s?
17 A. Uh- huh.
18 Q. I s t hi s par t of t he pr esent at i on t hat you gave as wel l ?
19 A. Yes.
20 Q. And you see t hat second, I guess bul l et poi nt , r evi ew cost s
21 at t he end of each year and submi t a r evi sed budget and
22 nar r at i ve i f changes have occur r ed or has occur r ed?
23 A. Yes.
24 Q. Can you expl ai n what you mean what you mean by t hat bul l et ?
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1 THE COURT: Obj ect i on sust ai ned. I t ' s what she sai d
2 at t he meet i ng t hat ' s bi ndi ng.
3 Q. Di d you di scuss anyt hi ng at t he meet i ng about t hat bul l et ?
4 A. Yes.
5 Q. What di d you di scuss at t he meet i ng about t hat bul l et ?
6 A. Thi s bul l et r epr esent s - - ever y year , j ust l i ke I sai d, you
7 get over a t hr ee year per i od, you get al l ot ment of money. The
8 f i r st year was 800, 00, second year 600, 000, t hi r d year 600, 000.
9 So t hi s i s, t hi s i s a commer ci al - - t hi s i s a gr ant . We expect
10 t o make changes. So bef or e you al l ocat ed your next per i od of
11 f undi ng, we act ual l y l ook at your budget see i f t her e' s goi ng
12 t o be any changes. And i f you need changes, you have t o
13 r equest appr oval of a r evi sed budget . Ot her t han t hat , t he
14 budget t hat was appr oved i s t he budget t hat you have t o abi de
15 by. But i f you have changes, you can' t r equest changes.
16 THE COURT: Budget f or what per i od of t i me?
17 THE WI TNESS: Whenever your gr ant i s i nst at ed. Li ke
18 t hi s gr ant was l i ke Oct ober 1st , 2001 unt i l Sept ember , so i t ' s
19 a year . I t ' s one year . But wi t hi n, wi t hi n t hat year you coul d
20 l ook at i t and say t hat I see t hat I want t o make changes or I
21 need t o r eal l ocat e money, and you' r e al l owed t o r equest a
22 change but you have t o get appr oval and i t has t o be wr i t t en
23 and has t o be si gned of f by my gr ant s of f i cer , my super vi sor .
24 THE COURT: But you t al ked about maki ng - - you t ol d us
25 t hei r wer e t hr ee.
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1 THE WI TNESS: Yeah, t hr ee budget s per i od.
2 THE COURT: 800, 600 and 600. How does t hat r el at e t o
3 what ' s up on t he boar d?
4 THE WI TNESS: Wel l , your f i r st year i s goi ng t o - -
5 THE COURT: How does t hat r el at e t o what you t ol d
6 peopl e about t he t hr ee year per i od?
7 THE WI TNESS: Thi s i s at t he end of t he year . So,
8 basi cal l y, t he end of t he year woul d be Sept ember 30t h. So,
9 t her ef or e, you shoul d r evi ew your budget f or t he f ol l owi ng year
10 and see i f you need t o make changes so you can r equest an
11 appr oval . And your next year st ar t s Oct ober 1. That ' s when
12 you' r e goi ng get your al l ocat i on of your new f unds.
13 Q. So j ust t o be cl ear , Ms. Snowden, you' r e r ef er r i ng t o t he
14 next year ' s budget s al l ocat i on?
15 A. Yes.
16 Q. - - i n t hi s bul l et , i s t hat r i ght ?
17 A. Yes.
18 Q. Now, i f you' r e goi ng t o make pr i or changes t o t he exi st i ng
19 year ' s budget t hat you' r e oper at i ng i n, how ar e t hose appr oval s
20 goi ng t o come, i f at al l ?
21 A. I t woul d come st i l l - - you have t o r equest i t and i t ' s
22 goi ng t o come i n a wr i t t en f or m. My super vi sor has t o si gn of f
23 on i t . You' r e goi ng t o get an amendment t hat says t hat we
24 appr ove your r evi sed budget dat ed Oct ober 1st , 2004 and we' l l
25 send you a si gned document , wi t h my super vi sor ' s si gnat ur e on
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1 i t .
2 Q. Okay. Now I ' d l i ke you t o l ook at page seven of t he same
3 exhi bi t , whi ch I bel i eve i s i n t he bi nder s f or t he j ur y. Pul l
4 t hat up. See page seven? You see page seven, Ms. Snowden?
5 A. Yes.
6 Q. Al l r i ght . And you see t he bul l et t hat says, budget l i ne
7 i t emchanges gr eat er t han 10 per cent of t ot al number appr oved
8 budget f or each r eci pi ent f or each pr oj ect year ?
9 A. Yes.
10 Q. Di d you di scuss t hat i t emwi t h peopl e pr esent ?
11 A. Yes, I di d.
12 Q. And what di d you di scuss wi t h t hemabout t hat ?
13 A. That t hi s bul l et means t hat any l i ne i t emt hat i s
14 10 per cent or mor e, you have t o get pr i or appr oval and t hat
15 appr oval wi l l come i n a wr i t t en document si gned by t he gr ant s
16 of f i cer .
17 Q. And i s t hat i n t he exi st i ng year ' s budget t hat you' r e
18 oper at i ng under , you want t o make changes t o t hat budget ?
19 A. Yes.
20 Q. Al l r i ght . I ' d l i ke you t o t ur n t o page 17 of t hat exhi bi t
21 as wel l . See t hat sl i de?
22 A. Yes.
23 Q. I s t hat par t of your pr esent at i on as wel l ?
24 A. Yes, i t i s.
25 Q. And you see t he t i t l e r el at i onshi p bet ween cost shar e and
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1 ATP f unds?
2 A. Yes.
3 Q. Di d you di scuss t hi s i ssue of cost shar e wi t h t he peopl e
4 f r omCASI ?
5 A. Yes.
6 Q. What di d you t el l t hemabout cost shar i ng?
7 A. When we expl ai n t hi s sl i de, i t ' s expl ai ned t o t he ext ent
8 ATP f unds ar e t he f eder al f unds. Those ar e t he f unds t hat t he
9 f eder al gover nment i ncor por at es i nt o t he pr oj ect .
10 Cost shar e i s t he f unds t hat t he r eci pi ent t hat he
11 i ncor por at es i nt o t he, t o t he pr oj ect . The ATP and t he - -
12 whi ch i s t he f eder al f unds and t he non- f eder al f unds f r omt he
13 company, t oget her t hey t ot al ed t he ATP pr oj ect budget . So base
14 t hemt oget her , t hat ' s t he f ul l budget s.
15 Q. And di d CASI have a cost shar e i n t hei r gr ant ?
16 A. Yes, t hey di d.
17 Q. Do you know i f , wi t h r espect t o cost shar e, ar e i n ki nd
18 cont r i but i ons al l owed i n or der t o cover t he cost shar e
19 r equi r ement ?
20 A. I n ki nd i s al l owabl e i f i t was i ncor por at ed i nt o t he
21 or i gi nal pr oposal and appr oved i n t he begi nni ng of t he pr oj ect .
22 Q. And do you know what t he l i mi t i s on whet her i n ki nd
23 cont r i but i on can appl y, i f t hey' r e goi ng t o appl y?
24 A. 30 per cent .
25 Q. And how do you know t hat ?
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1 A. They' r e par t of - - t hey' r e par t of , t hey' r e par t of t he
2 r egul at i ons under t he gener al t er ms and condi t i ons of t hi s
3 awar d - - of gr ant of ATP awar ds acr oss t he boar d.
4 Q. So onl y 30 per cent i n ki nd?
5 A. That ' s i t .
6 Q. Cont r i but i on?
7 A. Yes.
8 Q. Al l r i ght . Ms. Snowden, appr oxi mat el y, how many pr i or
9 t i mes bef or e t he CASI ki ckof f meet i ng di d you gi ve t hi s sl i de
10 pr esent at i on?
11 A. Bef or e CASI , I had pr obabl y gi ven t hi s pr esent at i on
12 pr obabl y about si x or seven t i mes bef or e CASI .
13 Q. Di d you do anyt hi ng di f f er ent l y f or t he CASI gr oup when you
14 gave t hi s pr esent at i on?
15 A. No, not at al l .
16 MR. EVERDELL: Your Honor , I not i ce i t ' s al most f our .
17 Thi s i s pr obabl y a good br eaki ng poi nt i f you want t o br eak
18 her e or I can cont i nue i f you l i ke?
19 THE COURT: Wel l , l et ' s go a l i t t l e whi l e. I do have
20 a conf er ence t hat ' s i mpor t ant , but l et ' s go f or a l i t t l e whi l e
21 i f you can. We don' t - - al l t he peopl e don' t seemt o be her e
22 f or t hat conf er ence.
23 MR. EVERDELL: Okay, your Honor . I happen t o know I ' m
24 one of t hem, so.
25 Q. Al l r i ght .
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1 THE COURT: Oh, you' r e one of t hem?
2 MR. EVERDELL: I ' mone of t hem.
3 THE COURT: Al l r i ght . I f or got t hat .
4 Q. Al l r i ght . Ms. Snowden, I want t o t al k t o you a l i t t l e bi t
5 mor e about t he r ul es of t he ATP gr ant . Let ' s t al k f i r st about
6 t he r ul es concer ni ng f r i nge benef i t s, al l r i ght . Ar e you
7 f ami l i ar wi t h t he r ul es concer ni ng f r i nge benef i t s f or t he ATP
8 f und?
9 A. Yes.
10 Q. Al l r i ght . I ' d l i ke t o show you what ' s al r eady i n
11 evi dence - - oh, and what ar e f r i nge benef i t s?
12 A. Fr i nge benef i t s ar e i ndi r ect cost s.
15 MR. RUBI NSTEI N: I obj ect t o t he wi t ness t est i f yi ng as
16 t o what f r i nge benef i t s ar e.
17 THE COURT: Wel l , di d you, i n your di scussi on wi t h t he
18 par t i es, do you expl ai n what you mean by f r i nge benef i t s?
19 THE WI TNESS: They' r e det ai l ed i n ATP ki t t hat t he
20 company r ecei ved, t hey have an i t emi zed l i st of what we woul d
21 consi der f r i nge benef i t s.
22 THE COURT: I see. Wher eabout s i s t hat ?
23 THE WI TNESS: I t ' s i n t he pr ep ki t under t he budget
24 nar r at i ve and f r i nge benef i t s i n t he ATP ki t . 35 per cent or
25 mor e, t hey have t o i t emi ze t hemand under t hat t hey don' t , so
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1 i t was l i ke - - sor r y.
2 MR. EVERDELL: Your Honor , I ' mgoi ng t o di r ect t he
3 wi t ness' at t ent i on t o t he document s. I ' mspeci f i cal l y aski ng
4 her t o t est i f y about what ' s i n t he document s i n t he r egs now.
5 I ' mnot t al ki ng about t he ki ckof f meet i ng.
7 MR. EVERDELL: Okay.
8 THE COURT: Go ahead.
9 Q. Al l r i ght , Ms. Snowden, you sai d you' r e f ami l i ar wi t h t he
10 r ul es concer ni ng f r i nge benef i t s, r i ght ?
11 A. Yes.
12 Q. Al l r i ght . I f you coul d l ook, pl ease, at Gover nment ' s
13 Exhi bi t 2, i f we coul d have t hat up, and page t wo of t hat
14 exhi bi t .
15 Thi s i s t he gener al t er ms and condi t i ons Advanced
16 Technol ogy Aspect s Pr ogr ams, and i f we coul d hi ghl i ght on t he
17 l ef t - hand si de C( 1) . You see t hat l i ne t hei r , t hat par agr aph
18 excuse me, C( 1) ?
19 A. Yes.
20 Q. Al l r i ght . And you see wher e i t says, by si gni ng t hi s
21 awar d, t he r eci pi ent agr ees t o ensur e t hat onl y act ual cost s
22 i ncur r ed wi l l be char ged t o t he awar d and t hat al l cost s wi l l
23 be r easonabl e, al l ocabl e and al l owabl e i n accor dance wi t h t he
24 f eder al cost pr i nci pl es; i s t hat r i ght ?
25 A. Yes.
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1 Q. And t hen bel ow t he next l i ne says, r eci pi ent s shal l al so
2 ensur e t hat al l sal ar y wages, et cet er a, f r i nge benef i t s,
3 t r avel , et cet er a, et cet er a, t he r est of t hat I won' t r ead i t
4 al l , but do you see t hat whol e par agr aph?
5 A. Yes.
6 Q. What does t hat whol e par agr aph mean?
8 THE COURT: What do you t el l - - do you di scuss t hi s
9 par agr aph wi t h t he - - at t he ki ckof f meet i ng?
10 THE WI TNESS: No, we don' t - - not i n- dept h. Thi s i s
11 t hi s i s par t of t hei r r egul at i ons t hat t hey f ol l ow, t hi s i s
12 t hi s i s - -
13 THE COURT: I s t hi s di st r i but ed t o t hem?
14 THE WI TNESS: Yes, i t i s.
15 THE COURT: To t he - -
17 THE COURT: And i f t her e ar e quest i ons about , i s i t
18 appr opr i at e, you ask t hemi f t hey have any quest i ons about t he
19 mat er i al s?
20 THE WI TNESS: Exact l y. They can ask al l t he
21 quest i ons, yes.
22 MR. EVERDELL: Your Honor , t hi s i s t he per son who i s
23 t he r ul es per son so her i nt er pr et at i on of t he r ul es i s r el evant
24 about what i t means.
25 MR. RUBI NSTEI N: I move t o st r i ke t hat , your Honor ,
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1 t he comment .
2 THE COURT: Let ' s not have ar gument .
3 MR. EVERDELL: I apol ogi ze, your Honor .
4 Q. Al l r i ght . Ms. Snowden, I ' l l ask t he quest i on agai n t hi s
5 par agr aph whi ch ment i ons r easonabl e, al l ocabl e and al l owabl e
6 cost s, as wel l as f r i nge benef i t s, what does t hat mean, t hat
7 t er m?
8 MR. RUBI NSTEI N: Obj ect i on, your Honor . She' s al r eady
9 t est i f i ed t hat she di dn' t di scuss t hi s wi t h Dr . Kar r on.
10 THE COURT: I s t her e a pr ovi si on i n t he mat er i al s t hat
11 ar e di st r i but ed t o t he r eci pi ent s t hat expl ai ns what t hat
12 means?
13 THE WI TNESS: Wel l , j ust l i ke t he r est of t he
14 r egul at i ons, we gi ve t hema copy of i t . I f t hey don' t
15 under st and i t , t hey' r e t o cal l and ask.
16 THE COURT: Wher e do t hey - - wher e ar e t he, wher e i s
17 i t expl ai ned?
18 THE WI TNESS: Wel l , i t ' s not det ai l ed. I t ' s not , i t ' s
19 not expl ai ned i n det ai l .
20 THE COURT: Not ?
21 THE WI TNESS: You' r e - - t hey' r e j ust gi ven a
22 di st r i but i on and copy of t he t er ms and condi t i ons. And at t he
23 ki ckof f I j ust expl ai n, t hese ar e t he r egul at i ons t hat gover n
24 t he awar d. I f you don' t under st and t hemand need t hemt o be
25 expl ai ned, cal l me.
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1 So t hi s was par t of t he handout t hat was gi ven t o t he
2 r eci pi ent . So i f he di dn' t under st and, or she or whoever
3 di dn' t under st and what t hi s meant , i t was up t o t hemt o gi ve me
4 a cal l and ask me t o expl ai n i t f ur t her .
5 MR. EVERDELL: Your Honor , i f I coul d have a moment ,
6 pl ease?
7 THE COURT: Yes, si r . I see t he ot her - -
8 BY MR. EVERDELL:
9 Q. Al l r i ght . Ms. Snowden, i f I coul d f or a moment , i f we
10 coul d t ake down t hat and put up Gover nment ' s exhi bi t 10B, whi ch
11 i s al r eady i n evi dence i f you want t o r ef er t o t hat , and I
12 bel i eve t hi s i s t he l ast page of t hat document ?
13 THE COURT: What i s exhi bi t 10B?
14 BY MR. EVERDELL:
15 Q. Ms. Snowden, do you see 10B?
16 A. Yes, I have 10B. I t ' s your budget l et t er , l ooks l i ke t hi s.
17 THE COURT: I s t hat di st r i but ed t o t he r eci pi ent s?
19 THE COURT: What t i me?
20 THE WI TNESS: They get a copy of t hi s. Thi s i s f i l l ed
21 out by t hem, t he r eci pi ent f i l l s t hi s por t i on out . Thi s i s how
22 t hey out l i ne how - - t hi s cor r esponds wi t h t he budget t hat t hey
23 gi ve us. So l i ne by l i ne, al l t hi s t hese l i ne i t ems
24 ul t i mat el y, t he t ot al cor r esponds wi t h t he budget t hey gi ve us
25 f or per sonnel l , t r avel so on and so f or t h.
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1 THE COURT: Wi t h t hei r appl i cat i on f or t he gr ant s.
2 THE WI TNESS: Yes, t hey gi ve t hi s t o us. And t hen
3 when we send t hemt he document s t o si gn, t hi s i s at t ached. So
4 t hey si gn t he document , and t hi s i s at t ached and t hey' r e sayi ng
5 ever yt hi ng i s cor r ect .
6 Q. So j ust t o be cl ear , t hi s i s a document t hat was pr epar ed
7 by t he peopl e at CASI and submi t t ed t o NI ST t o you?
8 A. Yes.
9 Q. Al l r i ght . Seei ng t he same page now t hat I bel i eve i s t he
10 l ast page of t hat exhi bi t , you see t he t op por t i on t her e?
11 A. Yes.
12 Q. Fr i nge benef i t s, i t says?
13 A. Yes.
14 Q. And i t says makes up t he - -
15 THE COURT: She' s j ust , she' s j ust made i t so you
16 can' t r ead i t .
17 MR. EVERDELL: I f we coul d zoomj ust a t ouch mor e?
18 THE COURT: J ust t he t op sect i on.
19 MR. EVERDELL: Al l r i ght , I t hi nk t hat ' s pr obabl y - -
20 THE COURT: I guess you can r ead i t . Can ever yone
21 r ead i t ? Al l r i ght .
22 Q. Ms. Snowden, woul d you j ust r ead t hat af t er f r i nge
23 benef i t s?
24 A. I dent i f y per cent age r at e. I f gr eat er t han 35 per cent ,
25 pr ovi de a br eakdown of what makes up t he f r i nge benef i t s, i . e. ,
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1 vacat i on, si ck, mi l i t ar y l eave, heal t h and l i f e i nsur ance,
2 r et i r ement , Soci al Secur i t y, et cet er a. I f f r i nge benef i t s ar e
3 nor mal l y i ncl uded i n your or gani zat i on' s i ndi r ect cost r at e,
4 t hey shoul d be budget ed as such and check t he appr opr i at e l i ne
5 bel ow.
6 Q. And i s t hi s par t of t he budget t hat was submi t t ed by CASI ?
7 A. Yes.
8 Q. And t hi s i s t hei r al l ocat i on of f r i nge benef i t r at es?
9 A. Yes.
10 Q. Al l r i ght . So does t hi s document expl ai n what f r i nge
11 benef i t s ar e f or t he ATP gr ant s?
13 THE COURT: What t hey may i ncl ude.
14 MR. EVERDELL: Excuse me, your Honor .
15 Q. Ms. Snowden, does t hi s document expl ai n what f r i nge
16 benef i t s may i ncl ude i n a budget pr oposal - -
17 A. Yes.
18 Q. - - submi t t ed by a company who r ecei ves an ATP gr ant ?
20 Q. And do t hose f r i nge benef i t s i ncl ude heal t h i nsur ance,
21 accor di ng t o t hi s l i st ?
22 THE COURT: I t hi nk t hat t hey' ve been r ead t o t he j ur y
23 and I t hi nk t he j ur y knows whet her t hat ' s i ncl uded or not .
24 MR. EVERDELL: Al l r i ght . Thank you, your Honor .
25 Q. Can you expl ai n what t he l ast sent ence means, i f f r i nge
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1 benef i t s ar e nor mal l y i ncl uded i n your or gani zat i on' s i ndi r ect
2 cost r at e, t hey shoul d be budget ed as such and check t he
3 appr opr i at e l i ne bel ow?
4 A. Ri ght . Usual l y f r i nge benef i t s ar e i ndi r ect cost s. That ' s
5 t he cost of doi ng busi ness. I f t hey' r e nor mal l y put i n your
6 i ndi r ect cost s, j ust because you r ecei ve a f eder al gr ant
7 doesn' t mean al l of a sudden t hey' r e goi ng t o be a par t of your
8 di r ect cost s, and t he gover nment i s goi ng t o pay f or i t . I f
9 you, i n your nor mal , i n your nor mal busi ness day, your
10 pr ocedur es t hat you use i t , t hat you char ge t hese as an
11 i ndi r ect cost t o your company, you st i l l must f ol l ow t he same
12 account i ng pr i nci pl es when you r ecei ve t he gr ant s, or t he
13 f eder al f unds. That ' s what t hat means.
14 Q. Al l r i ght . Now, i s t her e anyt hi ng t hat ATP r equi r es of a
15 company t hat r ecei ves an ATP gr ant i f t hey' r e goi ng t o spend
16 ATP f unds on f r i nge benef i t s?
17 A. The r equi r ement i s i f i t ' s over 35 per cent , you have t o
18 i t emi ze. Under , you don' t have t o gi ve us det ai l .
19 Q. I s t her e any ot her r equi r ement as t o pr ocedur es t hat t he
20 ATP r equi r es of a r eci pi ent ?
21 A. You must have wr i t t en, wr i t t en pr ocedur es. So under , under
22 r egul at i ons, you must have management , and you must have
23 wr i t t en, wr i t t en pr ocedur es t hat gover n.
24 THE COURT: You say wr i t t en pr ocedur es, you mean
25 wr i t t en st andar ds?
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1 THE WI TNESS: Wr i t t en st andar ds, pr ocedur es f or your
2 company, t hat wi l l out l i ne.
3 THE COURT: As t o what const i t ut es.
4 THE WI TNESS: Yeah, what const i t ut es your cour se of
5 busi ness, yes.
6 THE COURT: Al l r i ght . I s t hi s a good pl ace t o br eak?
7 MR. EVERDELL: Ther e i s a good pl ace, your Honor .
8 THE COURT: Al l r i ght , l et ' s t ake a br eak and pl ease
9 come back at 9: 30. And I have a not e f r omone of t he j ur or s,
10 but I can' t t ake i t up unt i l I ' ve had a chance t o di scuss i t
11 wi t h counsel , al l r i ght . I ' l l do i t f i r st t hi ng i n t he
12 mor ni ng, t hough I ' l l t r y and do i t 9: 15.
15
16
17
18
19
20
21
22
23
24
25
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2 THE COURT: Al l r i ght , i s t her e anyt hi ng t o t ake up?
4 THE COURT: Al l r i ght , see you at 9: 15 i n t he mor ni ng.
6 MR. KWOK: Your Honor , I do have t wo i ssues. I don' t
7 know whet her t hi s i s a good t i me or whet her i t ' s bet t er t o
8 r ai se i t t omor r ow mor ni ng. Essent i al l y, I j ust - -
9 THE COURT: Maybe i t woul d be good t o gi ve Mr .
10 Rubi nst ei n and mysel f a head' s up about what t he t wo i ssues ar e
11 and maybe we' d be abl e t o t ake l ess t i me t omor r ow mor ni ng on
12 t hem.
13 MR. KWOK: The f i r st one i s j ust exper t wi t nesses. We
14 want t o once agai n advi ce t he Cour t and def ense counsel we may
15 soon be cal l i ng t he f i r st of our t wo exper t wi t nesses on
16 account i ng, and I j ust want t o know whet her t her e ar e goi ng t o
17 be any obj ect i ons so we don' t have an ar gument i n f r ont of
18 j ur y.
19 The second i s I pr epar ed some exhi bi t s t hat wi l l be
20 di scussed by t hat wi t ness and I al so want t o know whet her t hose
21 ar e accept abl e t o t he Cour t and def ense counsel .
22 THE COURT: Wel l , I haven' t had ei t her . I have no
23 knowl edge about ei t her appl i cat i on. I don' t even know t he
24 names of t he exper t wi t nesses.
25 MR. KWOK: The f i r st , t he wi t ness exper t I ' mr ef er r i ng
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1 t o i s Bel i nda Ri l ey and I can show t he Cour t and def ense
2 counsel t he bl owups i f - -
3 THE COURT: Who ar e t he t wo peopl e?
4 MR. KWOK: The t wo exper t wi t nesses ar e Bel i nda Ri l ey
5 and J oan Hayes. The f i r st one up woul d be Bel i nda Ri l ey.
6 THE COURT: Any obj ect i on, Mr . Rubi nst ei n?
7 MR. RUBI NSTEI N: None your Honor .
8 THE COURT: None, okay.
10 THE COURT: Next .
11 MR. KWOK: And t he char t s I have pr evi ousl y pr ovi ded
12 t hemt o def ense counsel , but t hese ar e t he bl owups. I don' t
13 know whet her t her e ar e any obj ect i ons t o expl ai ni ng t hese t o
14 t he j ur y.
15 THE COURT: Show t hemt o Mr . Rubi nst ei n.
16 MR. RUBI NSTEI N: Act ual l y he showed t hemt o me bef or e
17 and I t ol d hi masi de f r omt he col or , I had no pr obl em. Now
18 t hat I have a ni ght t o pr epar e f or t hat col or , I ' l l have no
19 pr obl emwi t h i t t omor r ow.
20 MR. KWOK: Thank you, your Honor . That ' s al l .
21 MR. EVERDELL: I s t he wi t ness excused, your Honor ?
22 THE COURT: Yes.
23 THE WI TNESS: Thank you.
25 ( Adj our ned t o J une 4, 2008, at 9: 30 a. m. )
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1 I NDEX OF EXAMI NATI ON
2 Exami nat i on of : Page
3 BETTI J OYCE LI DE
4 Di r ect By Mr . Kwok . . . . . . . . . . . . . 86
5 Cr oss By Mr . Rubi nst ei n . . . . . . . . . . 151
6 Redi r ect By Mr . Kwok . . . . . . . . . . . . 231
7 Recr oss By Mr . Rubi nst ei n . . . . . . . . . 243
8 HOPE DENI SE SNOWDEN
9 Di r ect By Mr . Ever del l . . . . . . . . . . . 249
10 GOVERNMENT EXHI BI TS
11 Exhi bi t No. Recei ved
12 1 . . . . . . . . . . . . . . . . . . . . 85
13 2 . . . . . . . . . . . . . . . . . . . . 86
14 3 . . . . . . . . . . . . . . . . . . . . 86
15 4 . . . . . . . . . . . . . . . . . . . . 86
16 10 . . . . . . . . . . . . . . . . . . . 111
17 10A . . . . . . . . . . . . . . . . . . . 112
18 10B . . . . . . . . . . . . . . . . . . . 113
19 11 . . . . . . . . . . . . . . . . . . . 114
20 12 . . . . . . . . . . . . . . . . . . . 115
21 13 . . . . . . . . . . . . . . . . . . . 116
22 14 . . . . . . . . . . . . . . . . . . . 116
23 41 . . . . . . . . . . . . . . . . . . . 136
24 31 . . . . . . . . . . . . . . . . . . . 137
25 32 . . . . . . . . . . . . . . . . . . . 137
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1 33 . . . . . . . . . . . . . . . . . . . 138
2 34 . . . . . . . . . . . . . . . . . . . 139
3 35 . . . . . . . . . . . . . . . . . . . 139
4 36 . . . . . . . . . . . . . . . . . . . 139
5 30 . . . . . . . . . . . . . . . . . . . 141
6 21 . . . . . . . . . . . . . . . . . . . 144
7 22 . . . . . . . . . . . . . . . . . . . 145
8 23 . . . . . . . . . . . . . . . . . . . 147
9 24 . . . . . . . . . . . . . . . . . . . 147
10 25 . . . . . . . . . . . . . . . . . . . 148
11 26 . . . . . . . . . . . . . . . . . . . 149
12 DEFENDANT EXHI BI TS
13 Exhi bi t No. Recei ved
14 A . . . . . . . . . . . . . . . . . . . . 221
15 B . . . . . . . . . . . . . . . . . . . . 230
16
17
18
19
20
21
22
23
24
25
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2 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
2
3
4 v. S2 07 CR 541 ( RPP)
4
5
6 Def endant .
6
7 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
7
8
8 J une 4, 2008
9 9: 20 a. m.
9
10
10 Bef or e:
11
12
13
13
14 APPEARANCES
14
KA-2115 KA-2115 KA-2115
16 BY: STEVEN KWOK
18
20
22
23
24
25
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1 ( Tr i al r esumed; j ur y not pr esent )
2 THE COURT: Good mor ni ng. We have t hi s l et t er f r om
3 Ms. McCaf f er t y, and t he e- mai l t o her onl y says how i mpor t ant
4 i t i s t hat you t r y t o get of f t he panel you' r e on, we need you
5 i n t he of f i ce t hi s week. Of cour se t hen she says she r ecei ved
6 t en cal l s, et c. What do t he at t or neys advi se me woul d be a
7 wi se way t o handl e t hi s?
8 MR. KWOK: Your Honor , I spoke wi t h Mr . Rubi nst ei n
9 ear l i er t hi s mor ni ng br i ef l y. I t hi nk t he par t i es agr ee we
10 shoul d i nqui r e br i ef l y of t he j ur or t o see whet her she can
11 r emai n f ai r and i mpar t i al i n l i ght of t he wor k pr essur e. The
12 onl y concer n t he gover nment has i s i t ' s j ust t he t hi r d day of
13 t r i al , and we woul d be r el uct ant .
14 THE COURT: Wel l , i sn' t t hi s conduct i n vi ol at i on of
15 l aw, t r yi ng t o put pr essur e on a j ur or t o get of f t he panel
16 t hat she i s al r eady on?
17 MR. EVERDELL: I l ooked br i ef l y i nt o t hat . I can' t
18 say I di d an exhaust i ve sear ch, but I di d see t her e i s a ci vi l
19 r emedy i f an empl oyer di schar ges, t hr eat ens t o di schar ge,
20 i nt i mi dat es or coer ces any per manent empl oyee by r eason of such
21 empl oyee' s j ur y ser vi ce. Usual l y t hat ' s t hr eat eni ng t o f i r e or
22 t hr eat eni ng some sor t of i mmedi at e empl oyment act i on.
23 THE COURT: Wel l , t her e i s an i mpl i ci t t hr eat t o f i r e
24 and t hen t hey' r e cal l i ng her . They shoul dn' t be i nt er f er i ng
25 wi t h her ser vi ce i n t hi s way.
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1 MR. EVERDELL: I t ' s cer t ai nl y t r ue t hat t hey shoul dn' t
2 be i nt er f er i ng wi t h her ser vi ce. Whet her or not i t r i ses t o
3 t he l evel of an i l l egal act t hat woul d cause ci vi l penal t i es,
4 t hat I can' t say. But obvi ousl y t her e i s a ci vi l pr ovi si on i n
5 t he U. S. Code i f i t r i ses t o t he l evel of t hr eat eni ng. I t ' s 28
6 U. S. C. 1875.
7 THE COURT: What does i t say?
8 MR. EVERDELL: I t says no empl oyer shal l di schar ge,
9 t hr eat en t o di schar ge, i nt i mi dat e or coer ce any per manent
10 empl oyee by r eason of such empl oyee' s j ur y ser vi ce i n any cour t
11 of t he Uni t ed St at es.
12 THE COURT: Coer ce.
13 MR. EVERDELL: I suppose. I don' t want t o make an
14 ar gument one way or t he ot her what t he empl oyer ' s act i ons ar e
15 l i ke, but obvi ousl y t her e i s r eason t o bel i eve t hat he
16 shoul dn' t be doi ng t hi s. Whet her or not i t ul t i mat el y r i ses t o
17 t he l evel of a vi ol at i on i s anot her mat t er .
18 THE COURT: Wel l , l et ' s cal l t he j ur or i n,
19 Ms. McCaf f er t y.
20 Good mor ni ng, Ms. McCaf f er t y.
21 Wel l , I got your not e yest er day and I r ead i t , but
22 empl oyer s ar e not supposed t o put empl oyees such as your sel f
23 under pr essur e. Ther e i s a pr ovi si on i n t he Code of Ci vi l
24 Pr ocedur e t hat st at es t hat t hey' r e not supposed t o do t hi s.
25 And I don' t know how best t o apr i se t hemof t hi s, but t hey
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1 shoul dn' t be cal l i ng you and t el l i ng you about al l of t hei r
2 pr obl ems and what have you. I f t he bosses chose t o go of f on
3 t r i ps and what have you, some of t hemcan come back. I t
4 shoul dn' t be i nt er f er i ng wi t h your ser vi ce.
5 What I ' mconcer ned about i s how t o best t el l your
6 empl oyer i n some way so t hat t hey don' t put you under t hi s
7 pr essur e anymor e. They shoul dn' t put you under t hi s pr essur e.
8 I don' t know how t o best t el l t hem.
9 J UROR: I ' mt he onl y one t hat does my j ob and has been
10 f or t he l ast t en year s.
11 THE COURT: I know, but ot her peopl e.
12 J UROR: I under st and what you' r e sayi ng. I t ' s j ust
13 l i ke I wor ked unt i l 1: 30 t hi s mor ni ng, and can I see t hi s case
14 i s goi ng t o t ake - -
15 THE COURT: I know. I got t hi s l et t er .
16 J UROR: That ' s f i ne.
17 THE COURT: What i s t he empl oyer ' s name? I ' msor r y.
18 I bet t er wr i t e i t down her e.
19 J UROR: The name of t he company?Savanna Real Est at e
20 Fund. Savanna wi t hout an H on t he end. S- A- V- A- N- N- A.
21 THE COURT: Savannah?
22 J UROR: Yes.
23 THE COURT: Li ke Savannah, Geor gi a?
24 J UROR: Li ke Savannah, Geor gi a wi t hout t he H on t he
25 end.
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1 THE COURT: And what ' s t he r est of t he name?
2 J UROR: Real Est at e Fund.
3 THE COURT: And t he addr ess?
4 J UROR: 10 East 53r d St r eet , and t he zi p code i s
5 10022.
6 THE COURT: Fax number ?
7 J UROR: ( 212) 229- 1113.
8 THE COURT: Al l r i ght . Wel l , I ' mgoi ng t o f ax t hema
9 l et t er t hi s mor ni ng and t el l t hemt o st op.
10 J UROR: They' r e not har assi ng me. I don' t want you t o
11 t ake i t l i ke t hat .
12 THE COURT: I t ' s j ust t hat - - I guess you can go back.
13 I wi l l t r y t o wr i t e somet hi ng t hat doesn' t say har ass or
14 anyt hi ng of t hat sor t .
15 J UROR: OK, t hank you.
16 THE COURT: I don' t want t o gi ve you t he i mpr essi on - -
17 I don' t want t o gi ve t hemt he i mpr essi on t hat you' ve compl ai ned
18 t hat t hey' r e har assi ng you.
19 J UROR: No, t hat ' s not t he case. I j ust f eel ver y
20 pr essur ed, t hat ' s al l .
21 THE COURT: Of cour se.
22 J UROR: You know, I ' mwor ki ng at ni ght now, and i t ' s
23 j ust t hat ' s al l .
24 THE COURT: Thank you ver y much.
25 J UROR: Thank you.
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1 ( J ur or not pr esent )
2 Thi s i s what I dr af t ed, so you mi ght be abl e t o
3 i mpr ove i t .
4 " Ki mMcCaf f er t y i s a member of t he j ur y panel i n a
5 cr i mi nal case whi ch wi l l l ast t wo weeks. She has at t empt ed t o
6 be excused f r omt he panel as you r equest ed i n your e- mai l of
7 J une 3. I have deni ed t hat r equest . The case i s somewhat
8 compl ex, and i t i s i mpor t ant t hat i t be compl et ed wi t hout a
9 mi st r i al based on t oo f ew j ur or s. I t i s i mpor t ant t hat she not
10 f eel pr essur ed ei t her by t el ephone cal l s dur i ng t he day or
11 oner ous dut i es at ni ght . "
12 MR. KWOK: I t hi nk t hat ' s per f ect .
13 THE COURT: Sound al l r i ght ?
14 MR. RUBI NSTEI N: No pr obl emat al l , J udge.
16 DEPUTY COURT CLERK: We' r e st i l l shor t one j ur or . A
17 coupl e of t he j ur or s have asked about t aki ng not es.
18 THE COURT: Anyt hi ng el se t o t ake up?
19 MR. KWOK: Yes, your Honor . J ust t wo qui ck t hi ngs.
20 The f i r st i s bef or e we br oke yest er day your Honor asked how
21 we' r e doi ng on t i me, and I r epl i ed t hat I t hi nk we' r e r unni ng a
22 l i t t l e behi nd.
23 THE COURT: What ' s t hat mean?
24 MR. KWOK: I don' t know what t hat means, but her e i s
25 t he punch l i ne. We went back l ast ni ght t o l ook at wher e we
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1 ar e, and we may be abl e t o t r i mour wi t ness l i st up t o and
2 i ncl udi ng cut t i ng out one of t he CPAs who mi ght be t est i f yi ng.
3 We' r e not commi t t ed t o t aki ng t hat cour se yet , but I want ed t o
4 advi se t he cour t and def ense counsel t hat ' s what we ar e
5 ser i ousl y consi der i ng so we can al l pl an accor di ngl y.
6 The second i ssue i s af t er Ms. Snowden' s t est i mony t hi s
7 mor ni ng or maybe t hi s af t er noon t he next wi t ness up i s Bel i nda
8 Ri l ey. I woul d r equest a sl i ght br eak, because t her e i s goi ng
9 t o be some set t i ng up t o do f or t hi s wi t ness, so I woul d j ust
10 put t hat r equest t o t he cour t now.
11 THE COURT: OK.
12 MR. KWOK: Thank you.
13 MR. RUBI NSTEI N: Excuse me, your Honor , we have a
14 sl i ght pr obl em.
15 THE COURT: Wher e i s your cl i ent ?
16 MR. RUBI NSTEI N: He i s not her e yet .
17 THE COURT: You shoul d have t ol d me ear l i er t hi s
18 mor ni ng.
19 MR. RUBI NSTEI N: I was hopi ng he woul d get her e by
20 9: 30. Yest er day I pi cked hi mup mysel f . And I spoke t o hi m
21 t hi s mor ni ng at 7: 30 when I was l eavi ng my house, and he sai d
22 t hat he woul d come hi msel f . I f I coul d use t he cour t phone, I
23 wi l l cal l hi s cel l phone.
24 THE COURT: Cal l hi s cel l phone.
25 MR. RUBI NSTEI N: Thank you. I know t hat he sent an
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1 e- mai l 3: 41 t hi s mor ni ng, so . . .
2 Your Honor , I j ust spoke t o my cl i ent who i nf or ms me
3 he has a cab wai t i ng downst ai r s. He i s i n t he pr ocess of
4 l eavi ng hi s home on East 33r d and Second Avenue.
5 THE COURT: At quar t er of t en?
6 MR. RUBI NSTEI N: At quar t er of t en, yes.
7 THE COURT: He i s supposed t o be her e at quar t er af t er
8 ni ne?
9 MR. RUBI NSTEI N: J udge, I wi l l pi ck hi mup f or t he
10 r est of t he t r i al .
11 THE COURT: Wel l , si nce i t ' s vol unt ar y, I suppose we
12 can go ahead. You bet t er cal l your of f i ce, Mr . Kwok and Mr .
13 Ever del l . That ' s what I pr opose t o do.
14 MR. EVERDELL: I f we coul d have a moment t o cal l j ust
15 t o make sur e t hat t hat ' s accept abl e.
16 THE COURT: Sur e.
17 MR. RUBI NSTEI N: Can I use t he cour t r oomphone t o cal l
18 my of f i ce t o see i f t hey have some gui dance?
19 THE COURT: OK. You can use our phone.
20 MR. RUBI NSTEI N: Thank you ver y much, your Honor .
21 ( Recess)
22 THE COURT: That ' s how I i nt end t o pr oceed.
23 MR. KWOK: I j ust conf er r ed wi t h our chi ef of appeal s.
24 Based on j ust t he qui ck conver sat i ons, she i s i ncl i ned t o wai t
25 because - -
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1 THE COURT: Oh, come on. Get an answer f r omhi m. Of
2 cour se he woul d. Get an answer f r omhi mone way or t he ot her
3 on t he l aw. We can' t have t hi s go on.
4 MR. KWOK: I guess t he onl y t hi ng I woul d ask, i f
5 def ense counsel woul d t el l us i s - -
6 THE COURT: No, t her e i s no excuse.
7 MR. RUBI NSTEI N: I know t hat , J udge, but - -
8 THE COURT: He has no excuse. I t i sn' t t hat he has
9 been i n t he hospi t al or anyt hi ng el se. He has no excuse.
10 MR. RUBI NSTEI N: I under st and t hat , your Honor , but
11 unf or t unat el y i t woul d send I t hi nk a t er r i bl e message - -
12 THE COURT: That ' s hi s choi ce.
13 MR. RUBI NSTEI N: - - t o t he j ur y, and he coul dn' t get a
14 f ai r t r i al .
15 THE COURT: Oh, come on, t hat ' s hi s choi ce. That was
16 hi s choi ce when he was l azy about get t i ng up or what ever he was
17 doi ng.
18 MR. RUBI NSTEI N: J udge, he was up at 3: 41 i n t he
19 mor ni ng because he sent me an e- mai l .
20 THE COURT: He di dn' t have t o. He coul d have gone t o
21 bed at a decent hour l i ke ever yone el se.
22 MR. RUBI NSTEI N: I woul d ask your Honor - - as we know
23 f r ommy conver sat i on wi t h hi m, he shoul d be her e.
24 THE COURT: You can' t t el l wi t h t r af f i c and possi bl e
25 r ai n and what have you.
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1 MR. RUBI NSTEI N: That i s accur at e, your Honor , but I
2 woul d ask i f your Honor - -
3 THE COURT: I mean i t , l et ' s get an answer on t he l aw
4 f r omt he assi st ant , whoever you ar e checki ng wi t h, t he
5 appel l at e gr oup.
6 MR. EVERDELL: We wi l l do t hat . May we be excused?
7 THE COURT: Ther e i s no excuse what soever f or t hi s.
8 Good mor ni ng, Ms. Koel evel d.
9 MS. KOELEVELD: As you can see, t her e was a consul t .
10 THE COURT: I can r emember J udge McMann put t i ng t he
11 j ur or s i n t he j ur y box and wai t i ng f or t he def endant t o come.
12 MS. KOELEVELD: I don' t see a pr obl emwi t h t hat .
13 MR. RUBI NSTEI N: J udge Ni cker son i n t he East er n
14 Di st r i ct used t o do t hat , and i f t he l awyer wasn' t t her e, t hey
15 woul d st ar t .
16 THE COURT: Do i t wi t h t he l awyer t oo. Of cour se t he
17 mar shal s woul d br i ng t he def endant i n t hose cases.
18 MR. KWOK: Your Honor , I t hi nk t he r el evant r ul e t hat
19 gover ns t hi s si t uat i on i s Rul e 43 of t he cr i mi nal pr ocedur e,
20 subsect i on ( c) ( 1) ( A) , whi ch r eads, " The def endant who was
21 i ni t i al l y pr esent at t r i al or who had pl eaded gui l t y or nol o
22 cont ender e wai ves t he r i ght t o be pr esent under t he f ol l owi ng
23 ci r cumst ances: A, when t he def endant i s vol unt ar y absent af t er
24 t he t r i al has begun, r egar dl ess of whet her t he cour t i nf or med
25 t he def endant of an obl i gat i on t o r emai n dur i ng t r i al . "
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1 Fr omwhat we have j ust hear d so f ar , I t hi nk t he onl y
2 excuse i s per haps t he def endant over sl ept . And I t hi nk as l ong
3 as your Honor makes a f i ndi ng on t he r ecor d t hat t he def endant
4 vol unt ar i l y absent ed hi msel f and t her e i s no l egi t i mat e excuse
5 f or an absence, I t hi nk we ar e f i ne goi ng f or war d.
6 THE COURT: Al l r i ght , l et ' s cal l i n t he j ur y.
7 MR. RUBI NSTEI N: I woul d have t o, wi t h al l due
8 r espect , ask f or a mi st r i al .
9 THE COURT: Your appl i cat i on i s deni ed.
10 MR. RUBI NSTEI N: I woul d ask f or a l i mi t i ng
11 i nst r uct i on t hat t he def endant i s absent and t hey shoul dn' t
12 specul at e as t o t he r eason t hat he i s not pr esent .
13 THE COURT: Al l r i ght . Pl ease cal l i n t he j ur y.
15
16
17
18
19
20
21
22
23
24
25
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1 ( J ur y pr esent )
2 THE COURT: Pl ease be seat ed. Ladi es and gent l emen,
3 you wi l l not e t hat t he def endant i s not her e. You ar e not t o
4 specul at e as t o why he i s not her e or not pr esent at t hi s t i me.
5 He i s expect ed at some poi nt .
6 I want t o t hank you f or bei ng on t i me, but obvi ousl y
7 we got del ayed a l i t t l e bi t .
8 Some of you have asked about t aki ng not es. I al l ow
9 t aki ng not es, but I do want t o gi ve you a war ni ng. The
10 di f f i cul t y t hat not et aki ng pr esent s somet i mes i s t hat peopl e
11 who t ake t he not es become wedded t o t he not es and t hi nk t hat
12 t hey have t aken ver bat i mnot es, and when you get i nt o j ur y
13 del i ber at i ons somet i mes t hat har dens t he j ur or ' s posi t i on, and
14 peopl e who wat ched and l i st ened f eel t hat t hei r r ecol l ect i on i s
15 cor r ect , and t he per son who t akes t he not es says I ' ve got i t
16 down her e i n bl ack and whi t e t hat ' s what he sai d.
17 Wel l , t he answer i s you can cal l f or a t r anscr i pt , and
18 t he t r anscr i pt wi l l t el l you exact l y what t he wi t ness sai d,
19 because t he cour t r epor t er has t he benef i t of l ong exper t i se i n
20 t aki ng not es and mechani cal assi st ance so t hat he or she can
21 get ever y wor d t hat i s sai d.
22 So, I al l ow t aki ng not es, but I want t o war n you t hat
23 i t does somet i mes cause di f f i cul t y i n t he j ur y r oombecause of
24 t he peopl e t aki ng not es havi ng a conf l i ct wi t h t he peopl e who
25 di dn' t t ake not es. Ther e i s a r esol ut i on t o i t . I f I expl ai n
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1 t he r esol ut i on i n advance, t hat somet i mes pr event s di sput es i n
2 t he j ur y r oom.
3 So, I t hi nk I ' ve answer ed t he onl y quest i ons I have
4 out st andi ng. We wi l l go ahead wi t h t he wi t ness Ms. Snowden.
5 HOPE SNOWDEN, r esumed.
6 THE COURT: Ms. Snowden, you ar e r emi nded you ar e
7 st i l l under oat h. The j ur y i s r emi nded t hat t hat i s an
8 obl i gat i on of t he cour t t o gi ve her such an i nst r uct i on when
9 t he wi t ness t akes t he st and on a subsequent day.
10 DI RECT EXAMI NATI ON ( Cont i nued)
11 BY MR. EVERDELL:
12 Q. Good mor ni ng, Ms. Snowden.
14 Q. Bef or e we st ar t , i f I coul d ask Ms. Moussa t o put up
15 Gover nment Exhi bi t 4, whi ch i s al r eady i n evi dence, page 7.
16 THE COURT: Thi s i s what ?
17 MR. EVERDELL: Gover nment Exhi bi t 4, page 7.
18 Act ual l y, i f I have a moment , I need t o r eposi t i on t he
19 exhi bi t s back on t he wi t ness st and.
20 Q. Ms. Snowden, i f you can r ef er t o t he scr een or t he exhi bi t
21 i n f r ont of you, Gover nment Exhi bi t 4.
22 A. I wi l l l ook at t he exhi bi t s. They ar e not i n or der , so. . .
23 Q. You r ecal l when we br oke yest er day we had some di scussi on
24 about t hat second bul l et poi nt t her e, t he budget l i ne i t em
25 changes t her e.
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8647KAR1 Snowden - di r ect
1 A. Yes.
2 Q. Gr eat er t han 10 per cent . What was t he f i r st year of CASI ' s
3 budget under t hei r ATP gr ant t hey r ecei ved?
4 A. $800, 000.
5 Q. What year di d t hat span?
6 A. Oct ober 1, 2001 unt i l Sept ember 30, 2002.
7 Q. So t he i ni t i al budget t hat was appr oved, what year di d t hat
8 cover , t hat budget ?
9 A. Oct ober 1, 2001 unt i l Sept ember 30, 2002.
10 Q. So, woul d t hat budget cover cost s t hat wer e i ncur r ed dur i ng
11 t hat year , dur i ng t hat Oct ober 1 t o Sept ember - -
12 A. That ' s t he onl y t i me t hey wer e cover ed. I t onl y cover s
13 expendi t ur es dur i ng t hat per i od of t i me onl y.
14 Q. Woul d i t cover any expendi t ur es t hat occur r ed bef or e t hat
15 t i me?
16 A. No.
17 Q. We t al ked a bi t al so about t he r egul at i ons gover ni ng t he
18 ATP gr ant s yest er day.
19 A. Yes.
20 Q. J ust a f ew mor e quest i ons about t hat . Ar e t her e
21 gover nment - wi de r egul at i ons t hat appl y t o t he ATP gr ant s t hat
22 ar e not ATP gr ant speci f i c?
23 A. Yes.
24 Q. And do t hese r egul at i ons appl y t o mor e t han one gover nment
25 gr ant ?
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1 A. Yes.
2 Q. Ar e t her e r ul es speci f i c t o t he ATP gr ant t hat j ust cover
3 t he ATP gr ant ?
4 A. Yes, t her e i s.
5 Q. And whi ch r ul es cont r ol i f t her e i s an ATP- speci f i c r ul e
6 ver sus a gover nment - wi de r ul e?
7 A. Your ATP speci al wor k condi t i ons and your gener al t er ms and
8 condi t i ons, t hey ar e speci f i ed wi t hi n t he awar d, so . . .
9 Q. So, i f t her e i s an ATP r ul e t hat appl i es t o t he ATP gr ant
10 and a gover nment - wi de r ul e - -
11 A. Your ATP r ul es super sede al l ot her r ul es, because t hey' r e
12 pr ogr amspeci f i c r ul es, so you have your ATP r ul es and t hen
13 ot her r ul es, but ATP super sedes ever yt hi ng.
14 Q. OK. Ms. Snowden, whi l e t he gr ant was i n ef f ect f or CASI ,
15 do you know who had t he aut hor i t y t o si gn checks f or CASI or
16 make ot her f i nanci al commi t ment s on behal f of t he company?
17 A. Yes.
18 Q. And who had t he si gnat or y aut hor i t y f or CASI ?
20 Q. And how do you know t hat ?
21 A. Because I r ecei ved - - I r ecei ved t he e- mai l . I act ual l y
22 r ecei ved a l et t er f r omhi mst at i ng t hat no ot her per son was
23 aut hor i zed t o cer t i f y anyt hi ng under t he company besi des
24 hi msel f .
25 Q. I woul d l i ke you t o l ook i f i t ' s i n your st ack t her e
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1 Gover nment Exhi bi t 21 al r eady i n evi dence, and i f we can
2 di spl ay t hat on t he scr een.
3 Do you have t hat i n f r ont of you, Ms. Snowden?
4 A. Yes, I do.
5 Q. Do you r ecogni ze t hat document ?
6 A. Yes.
8 A. Thi s i s an amendment t o t he or i gi nal pr oposal .
9 Q. And whi ch number ed amendment i s t hat ?
10 A. Number 1, t he f i r st one.
11 Q. Woul d you pl ease f l i p t o t he t hi r d page of t hat exhi bi t .
12 I f we coul d zoomi n on t he f i nal par agr aph or t he f i nal - - t he
13 l et t er subst ance i s f i ne. Ri ght t her e.
14 Al l r i ght . Ms. Snowden, what i s t hi s l et t er ?
15 Act ual l y i f you coul d j ust r ead f r omt he t wo par agr aphs t her e.
16 A. " Thi s l et t er aut hor i zes Mr . Lee Gur f ei n as admi ni st r at i ve
17 cont act on cooper at i ve agr eement number 70NANB1H3050 wi t h
18 Comput er Ai ded Sur ger y, I nc.
19 " Thi s aut hor i zat i on i s val i d f or t he per i od of one
20 year f r omt he st ar t of t he agr eement on Oct ober 1, 2001 t hr ough
21 Sept ember 30. Thi s aut hor i zat i on can be r evoked i n wr i t i ng t o
22 you and hi mby mysel f at any t i me t hi s aut hor i zat i on i s i n
23 ef f ect . Unt i l speci f i cal l y aut hor i zed t o do so, Mr . Gur f ei n i s
24 not an of f i cer of t he cor por at i on and i s not aut hor i zed t o si gn
25 f or t he cor por at i on. The aut hor i zat i on f or Mr . Gur f ei n t o
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1 commi t t he cor por at i on wi l l be made by separ at e l et t er
2 aut hor i zat i on i f t he need ar i ses. "
3 Q. Let ' s j ust t ake t hat one bi t at a t i me. That f i r st
4 par agr aph t her e, i t says i t aut hor i zes Mr . Gur f ei n as an
5 admi ni st r at i ve cont act . What i s t hat agai n?
6 A. The per son who cal l s me and asks quest i ons. I t coul d be
7 about what ' s al l owed i n t hi s gr ant .
8 Q. OK. Now t hi s l ast sent ence her e, " unt i l speci f i cal l y
9 aut hor i zed t o do so, Mr . Gur f ei n i s not an of f i cer of t he
10 cor por at i on and i s not aut hor i zed t o si gn f or t he cor por at i on, "
11 what does t hat mean?
12 A. That means he can' t si gn of f i ci al document s. So, he can
13 cont act me and t al k t o me ver bal l y, but when i t comes t o
14 of f i ci al document s and si gni ng t o commi t t he company, he i s not
15 aut hor i zed t o do so.
16 Q. Who di d have t hat aut hor i zat i on?
18 Q. And t hen i t says at t he end, " The aut hor i zat i on f or
19 Mr . Gur f ei n t o commi t t he cor por at i on wi l l be made by separ at e
20 l et t er aut hor i zat i on i f t he need ar i ses. "
21 Do you see t hat ?
22 A. Yes.
23 Q. Di d NI ST or ATP ever r ecei ve anot her l et t er gi vi ng Mr . Lee
24 Gur f ei n aut hor i zat i on t o commi t t he company i n any way?
25 A. No.
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1 Q. I f we can zoomout t o t he f ul l l et t er on page 3. When i s
2 t hat l et t er dat ed?
3 A. Oct ober 11, 2001.
4 Q. And about how l ong af t er t he gr ant was awar ded di d t hat
5 l et t er come i n?
6 A. Wi t hi n t wo weeks.
7 Q. Al l r i ght . Ms. Snowden, di d you hear f r omDr . Kar r on agai n
8 af t er t he ki ckof f meet i ng t hat we di scussed yest er day?
9 A. Yes, I di d.
10 Q. And how di d you hear f r omhi m?
12 Q. I n what ways di d he cont act you?
13 A. He cal l ed me on t he phone. I mean dur i ng t he cour se he
14 e- mai l ed me al so.
15 Q. And about how of t en di d he cont act you i n t hese ways?
16 A. Qui t e of t en, qui t e of t en.
17 Q. And do you know whet her he cont act ed anyone el se at NI ST?
18 A. Yes.
19 Q. Who el se di d he cont act ?
20 A. B. J . Li de, J ayne Or t hwei n, and my f or mer super vi sor Mar i l yn
21 Gol dst ei n.
22 Q. Di d t hese peopl e al l have some r esponsi bi l i t y wi t h t he ATP
23 gr ant ?
24 A. We wor ked as a t eamon t he ATP gr ant , and any i ssues and
25 pr obl ems, we di scuss i t ; and anyt hi ng t hat happens wi t hi n my
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1 of f i ce, of cour se I have t o di scuss i t wi t h my super vi sor
2 Mar i l yn Gol dst ei n.
3 Q. What sor t s of t hi ngs di d t he def endant di scuss wi t h you i n
4 t hese subsequent cont act s?
5 A. Subsequent cont act s wer e basi cal l y about coul d he use
6 f eder al f unds t o pay f or r ent and ut i l i t i es.
7 Q. So, i s t hi s a si mi l ar t opi c as bef or e?
8 A. Exact si mi l ar . I t ' s t he exact t opi c.
9 Q. And what was your r esponse t o hi mon t hose occasi ons t hat
10 he t al ked t o you?
11 A. I t was al ways no. No mat t er what he sai d, how he sai d i t
12 t o me, i t ' s no, t hese ar e t axpayer s money and we do not use
13 t hat t o pay f or r ent and ut i l i t i es.
14 Q. Di d you hear f r omanybody el se f r omCASI af t er t he ki ckof f
15 meet i ng?
16 A. Yes.
17 Q. Who di d you hear f r om?
18 A. Dr . Kar r on and Lee Gur f ei n.
19 Q. And how di d Lee Gur f ei n cont act you?
20 A. He cal l ed me.
21 ( Def endant pr esent )
22 Q. And what i f anyt hi ng di d you di scuss wi t h Lee Gur f ei n?
23 A. The same t hi ng, about cal l s, coul d he use t he f eder al f unds
24 t o pay f or r ent and ut i l i t i es.
25 Q. And what i f anyt hi ng was your r esponse t o Mr . Gur f ei n?
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1 A. No. Agai n and agai n, absol ut el y not .
2 Q. Al l r i ght , Ms. Snowden. Di d t her e come a t i me when t her e
3 wer e amendment s t o t hi s gr ant , t he CASI ATP gr ant ?
4 A. Yes.
5 Q. And i f you can pul l out i n f r ont of you t he f ol der s t hat
6 ar e i n evi dence, Gover nment ' s Exhi bi t s 22, 23, 24, 25 and 26.
7 A. OK.
8 Q. Have you had a chance t o l ook at t hose document s?
9 A. Yes.
10 Q. Do you r ecogni ze t hose document s?
11 A. Yes.
12 Q. What ar e t hose document s?
13 A. These ar e amendment s t o t he awar d.
14 Q. And over what cour se of t i me wer e t hese amendment s
15 submi t t ed and appr oved?
16 A. I ncl udi ng t he or i gi nal document t hat he si gned t o accept
17 t he gr ant , Oct ober 2001 t hr ough J une 2003.
18 Q. Wer e t hese amendment s act ual l y appr oved by NI ST?
19 A. Yes, t hese ar e al l appr oved amendment s, yes.
20 Q. I n gener al , what ki nds of changes wer e made t o t he gr ant as
21 a r esul t of t hese amendment s?
22 A. Admi ni st r at i ve changes and a budget change.
23 Q. Why don' t you t ake a l ook at Gover nment Exhi bi t 22. I f you
24 can di spl ay t hat as wel l . Do you see t hat document ,
25 Ms. Snowden?
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1 A. Yes, I do.
2 Q. Whi ch amendment i s t hat ?
3 A. Amendment 2.
4 Q. And what ki nd of changes wer e made wi t h amendment 2?
5 A. Admi ni st r at i ve changes and a budget change, r evi sed budget .
6 Q. Ther e was a r evi sed budget wi t h t hi s amendment ?
7 A. Yes, i t was appr oved, yes.
8 THE COURT: You say admi ni st r at i ve changes. What ar e
9 you cover i ng?
10 A. We r evi sed t he cont act ' s name. When I or i gi nal l y got t hi s,
11 I put t he admi ni st r at i ve cont act as Lee Gur f ei n, and t hen Dr .
12 Kar r on sent me somet hi ng sayi ng t hat he want ed hi s whol e name
13 put i n, so t hat was i ncor por at ed i nt o t hi s, so t hat was an
14 admi ni st r at i ve change.
15 THE COURT: Whose whol e name?
16 THE WI TNESS: Lee Gur f ei n' s name, and i t ' s El i sha
17 Gur f ei n. But i n t he or i gi nal document i t had Dr . Kar r on as a
18 t echni cal and Lee Gur f ei n, not El i sha.
19 Q. I f we coul d di spl ay page 3.
20 And, Ms. Snowden, i f you coul d l ook at page 3.
21 Bl ow t hat up as much as possi bl e. I bel i eve t hese ar e
22 al so i n t he j ur y bi nder s i f i t ' s t oo smal l t o r ead t her e.
23 Ms. Snowden, you ment i oned a r evi sed budget as par t of
24 amendment 2. I s t hi s t he r evi sed budget t hat ' s par t of t hat
25 amendment ?
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1 A. Yes.
2 Q. Now, i f you coul d l eave t hat on t he scr een and al so t ake a
3 l ook at Gover nment Exhi bi t 14 whi ch i s al r eady i n evi dence.
4 THE COURT: Leave what on t he scr een?
5 MR. EVERDELL: Gover nment Exhi bi t 22, page 3, whi ch i s
6 what Ms. Snowden was comment i ng on bef or e, t he budget
7 amendment s, and compar i ng t hat t o Gover nment Exhi bi t 14, whi ch
8 i s al r eady i n evi dence.
9 Q. Ms. Snowden, l ooki ng f i r st at Gover nment Exhi bi t 14, do you
10 know what t hat document i s?
11 A. Yes.
12 Q. What i s t hat document ?
13 A. Thi s i s t he or i gi nal budget t hat was appr oved wi t h t he
14 or i gi nal pr oposal .
15 Q. Was t hat t he l ast appr oved budget bef or e amendment 2?
16 A. Yes.
17 Q. Al l r i ght . What shi f t s i n budget i f any ar e r ef l ect ed
18 bet ween Gover nment Exhi bi t 14, t he l ast appr oved budget , and
19 gover nment ' s 22, t he f i r st amended budget ?
20 A. The per sonnel , f r i nge benef i t s, t r avel , equi pment .
21 Q. Can you j ust poi nt us t o an exampl e on t he scr een bet ween
22 t he t wo of t hose cat egor i es you ar e t al ki ng about and t he
23 number s t her e.
24 A. The f i r st one i s dat ed.
25 THE COURT: Can t he j ur y see t hi s? Because my
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1 eyesi ght used t o be excel l ent , but I can' t r ead i t now.
2 MR. EVERDELL: Wel l , I ' msor r y.
3 THE COURT: Can t he j ur y r ead i t ?
4 MR. EVERDELL: I f t he j ur y has t he bi nder s i n f r ont of
5 t hem, t hey can l ook at t he number s.
6 THE COURT: You have t he bi nder s so you can f ol l ow i t .
7 MR. EVERDELL: I wi l l not e wi t h t he poi nt er wher e
8 t hese ar e, so hopef ul l y t hat wi l l make i t a l i t t l e easi er .
9 THE COURT: Let ' s make sur e t hey have t he r i ght pages.
10 MR. EVERDELL: I t ' s Gover nment Exhi bi t ' s 14, whi ch I
11 bel i eve i s one page, and t hen t he t hi r d page of Gover nment
12 Exhi bi t 22.
13 Al l r i ght . Ms. Snowden, you ment i oned a f ew
14 cat egor i es.
15 THE COURT: J ust hol d i t a second unt i l t hey have a
16 chance t o get i t t oget her .
17 MR. EVERDELL: Yes, your Honor .
18 THE COURT: Because t hey wi l l have t o do a l i t t l e
19 f l i ppi ng back and f or t h.
20 MR. EVERDELL: Yes, your Honor .
21 THE COURT: What page of 22 i s t hi s?
22 MR. EVERDELL: I t ' s 3.
23 THE COURT: Page 3.
24 DEPUTY COURT CLERK: 22, page 3.
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1 BY MR. EVERDELL:
2 Q. Al l r i ght . Ms. Snowden, you ment i oned a f ew cat egor i es
3 wher e t her e wer e some shi f t s. Do you want t o j ust gi ve an
4 exampl e t hat we can hi ghl i ght her e?
5 A. On t he f i r st document dat ed 9/ 20/ 01.
6 Q. Gover nment ' s 14?
7 A. Yes, per sonnel sal ar i es was $375, 000.
8 Q. I s t hat t hi s one r i ght her e?
9 A. Yes. On t he r evi sed budget i t went t o $325, 000.
10 Q. Ri ght t her e? I f you l ook at t he scr een. I j ust want t o
11 make sur e I ' mmar ki ng t he r i ght t hi ng.
12 A. Yes.
13 Q. OK. Hol d on.
14 I f you can j ust bl ow up t he f i r st f our cat egor i es.
15 Q. So we di d per sonnel sal ar i es and wages. Can you gi ve us
16 anot her exampl e?
17 A. Tr avel or i gi nal l y was $4, 000.
18 Q. Ri ght her e?
19 A. Yes.
20 Q. OK.
21 A. Cat egor y C, on t he or i gi nal budget . And on t he r evi sed
22 budget i t i s now $20, 000 cat egor y C.
23 Q. Ri ght t her e?
24 A. Yes.
25 Q. OK, t hat ' s f i ne. Now, as you compar e t hese t wo budget s,
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1 t he appr oved budget wi t h t he f i r st amended budget - -
2 THE COURT: Now j ust one second. Al so you ski pped
3 over f r i nge benef i t s. Was t her e a change i n f r i nge benef i t s?
4 THE WI TNESS: Ther e' s qui t e a f ew changes. I onl y
5 gave you guys a coupl e. Ther e ar e a l ot of changes. I di dn' t
6 t hi nk you want ed ever y l ast one of t hem.
7 Q. Woul d you mi nd doi ng f r i nge benef i t s?
8 A. Sur e. Fr i nge benef i t s was or i gi nal l y $127, 500 on t he
9 or i gi nal appr oved budget . The r evi sed appr oved budget i t went
10 down t o $110, 500.
11 Q. Now, l ooki ng at t he r evi sed budget amendment 2 compar ed t o
12 t he l ast appr oved budget , ar e any of t he changes t hat wer e
13 af f ect ed by t he amended budget - - di d any of t hese changes
14 r el at e t o an i ncr ease f or ai r condi t i oni ng cost ?
15 A. No.
16 Q. Do any of t hese r el at e t o an i ncr ease f or const r uct i on
17 cost s or si t e i mpr ovement cost s?
18 A. No, we don' t pay f or const r uct i on cost s.
19 Q. And di d any of t hese shi f t s - - sor r y. Ar e any of t hese
20 shi f t s f or si t e i mpr ovement cost s?
21 A. No.
22 Q. Act ual l y, i f you coul d al so l ook at t he nar r at i ve whi ch i s
23 page 4 and 5 of Gover nment Exhi bi t 22. Do you see t hat
24 document ?
25 A. Yes.
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1 Q. And do you see - - i f you want t o hi ghl i ght t he bot t omhal f
2 of t hat f i r st page.
3 Do you see wher e i t says r easons f or r equest ed
4 budget ar y changes?
5 A. Yes.
6 Q. Do you see al l t hose r easons l i st ed t her e?
7 A. Yes.
8 Q. Do any of t hose r easons ment i on ai r condi t i oni ng?
9 A. No.
10 Q. Do any of t hose r easons ment i on const r uct i on cost s?
11 A. No.
12 Q. Do any of t hose r easons ment i on si t e i mpr ovement cost s?
13 A. No.
14 Q. Ms. Snowden, di d NI ST appr ove t hi s amendment ?
15 A. Yes, we di d.
16 Q. Of t he ot her amendment s I showed you i n t hat l i st , 21, 22,
17 23, 24, 25 and 26, ar e t her e any ot her changes t o t he budget
18 number s i n t hose amendment s besi des t he ones we deal t wi t h i n
19 amendment 2?
20 A. No, t hi s was t he onl y appr oved budget .
21 Q. To your knowl edge, wer e any ot her wr i t t en amendment s i n t he
22 CASI gr ant appr oved by NI ST ot her t han t hese document s I showed
23 you?
24 A. No, t hi s i s i t .
25 Q. Di d anyone f r omCASI make any or al r equest f or amendment s
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1 t o t he gr ant ?
2 A. Yes.
3 Q. And who made t hose r equest s?
4 A. Dr . Kar r on.
5 Q. What di d he want t o modi f y wi t h t hese r equest s?
6 A. He want ed t o modi f y t he equi pment cat egor y.
7 Q. And how so?
8 A. He want ed t o add money t o t he equi pment cat egor y t o buy a
9 pi ece of equi pment .
10 Q. And di d you have any conver sat i ons wi t h t he def endant about
11 t hi s?
12 A. Yes.
13 Q. About what t i me was t he f i r st conver sat i on you had wi t h t he
14 def endant about t hat ?
15 A. November 2002.
16 THE COURT: November 2002.
18 THE COURT: Af t er t he end of t he f i r st f i scal year ?
19 THE WI TNESS: The f i r st f i scal year ended Sept ember
20 30, r i ght . Thi s shoul d have been hi s si t e vi si t , yes.
21 Q. You r ef er enced t he si t e vi si t . Do you know about when t he
22 si t e vi si t occur r ed?
23 A. I t was November 2002.
24 Q. Wer e you per sonal l y at t he si t e vi si t ?
25 A. No, I wasn' t her e.
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1 Q. But i t t hi s ar ound t he t i me when you had t hese
2 conver sat i ons wi t h t he def endant about equi pment ?
3 A. Yes.
4 Q. On how many ot her occasi ons di d t hi s same t opi c of
5 equi pment come up?
6 A. Qui t e a f ew t i mes.
7 Q. What ar e t he ATP r ul es about equi pment af t er t he gr ant i s
8 done usi ng t he equi pment ?
9 A. The r ul es gover ni ng equi pment i s anyt hi ng t hat ' s val ued at
10 $5, 000 or mor e you have t o do what ' s cal l ed a di sposi t i on f or m,
11 so t hat ' s al l equi pment t hat you own. You have t o ask t he
12 f eder al gover nment can you ei t her keep i t and r euse i t f or
13 anot her f eder al gr ant or can you use i t f or commer ci al i zat i on.
14 And t he f eder al gover nment has a r i ght t o say yes or no. And
15 i f t hey say no, you have t o gi ve us back our equi pment .
16 Anyt hi ng under $5, 000 t hat depr eci at es you can keep i t , we
17 don' t want i t back.
18 THE COURT: You can keep i t , you mean t he gr ant ee.
19 THE WI TNESS: The gr ant ee can keep i t , and t he f eder al
20 gover nment , t hey don' t want i t back.
21 Q. Al l r i ght . Now when t he def endant t al ked t o you about
22 buyi ng mor e equi pment , what i f anyt hi ng di d you t el l hi m?
23 A. Af t er hi s si t e vi si t , si nce t her e was t al k about t hi s pi ece
24 of equi pment , I t ol d hi mt hat he had t o do a r evi sed budget
25 because he want ed t o add addi t i onal money t o t he cat egor y, t o
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1 t he equi pment cat egor y, so he needed t o r evi se t he budget , send
2 me a copy of t he budget and a nar r at i ve t hat cor r esponds wi t h
3 t he budget .
4 Q. And di d t he def endant i n f act submi t a pr oposed r evi sed
5 budget t o you?
6 A. Yes, he di d.
7 Q. I ' mshowi ng you, i f you coul d t ake a l ook at Gover nment ' s
8 Exhi bi t s 31, 32, 33, 34, 35 and 36 al r eady i n evi dence.
9 THE COURT: Sor r y. Gi ve me t hose number s agai n.
10 MR. EVERDELL: Sur e. 31, 32 - -
11 THE COURT: 31 t hr ough 36?
12 MR. EVERDELL: Yes.
13 THE COURT: Go ahead.
14 Q. Ms. Snowden, i f you woul d j ust t ake a mi nut e t o l ook
15 t hr ough t hose. Do you have t hose i n f r ont of you?
16 A. Yeah, I j ust want t o l ook at t wo mor e. I have t wo mor e I
17 want t o gl ance at r eal l y qui ckl y. Thanks.
18 Q. Al l set wi t h t hose?
19 A. Yes.
20 Q. Do you know what t hose document s ar e?
21 A. These ar e r evi sed budget s.
22 Q. Ar e t hese r evi sed budget s t hat wer e submi t t ed by CASI ?
23 A. Yes.
24 Q. And what i f anyt hi ng - - di d you r ecei ve t hese budget
25 r equest s?
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1 A. Yes, I di d.
2 Q. And di d you r evi ew t hemwhen t hey came i n?
3 A. Yes, I r evi ewed each and ever y one of t hem.
4 Q. And what i f anyt hi ng di d you not i ce when you began
5 r ecei vi ng t hese amendment s?
6 A. I not i ced t hat t he number s changed. Number one, t he dat es
7 wer e ver y, ver y cl ose wi t h t he r evi si ons, and on each r evi si on
8 t he monet ar y, t he cat egor y, t he number s changed.
9 Q. Let ' s j ust be cl ear . Do you know t he dat es of t hese
10 r evi si ons, t hese pr oposed r evi si ons, I shoul d say?
11 A. Yes, because I wr ot e t he dat es on t hemso t hat I coul d keep
12 up wi t h t he r evi si ons and t he day t hat t hey wer e dat ed, so I
13 wr ot e dat es on al l of t hese.
14 Q. And do you r ecal l when t hose r evi si ons wer e made or when
15 t hose pr oposed r evi si ons wer e submi t t ed?
16 A. One was August 1, 2002 and t hen - -
17 Q. You' r e r ef er r i ng t o whi ch one?
18 A. Exhi bi t 31.
19 Q. OK.
20 A. And t hen Oct ober 20, 2002, Exhi bi t 32. December 2, 2002,
21 Exhi bi t 33. Got an e- mai l f or December 20, 2002, t hat ' s
22 Exhi bi t 34. Exhi bi t 35 came i n f our days l at er . Exhi bi t 35
23 was dat ed December 24, 2002. And Febr uar y 25, 2003, t hat was
24 anot her r evi si on.
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, 864ZKAR2at i onu Snowden - di r ect
1 BY MR. EVERDELL:
2 Q. And t hese ar e pr oposed r evi si ons?
3 A. These ar e al l pr oposed r evi si ons. None of t hese wer e
4 appr oved.
5 Q. Why di d t hey come i n i n qui ck successi on l i ke t hi s?
8 MR. EVERDELL: Your Honor , l et me r ephr ase.
9 Q. What , i f any, di scussi ons di d you have wi t h t he def endant
10 about t hese budget r evi si ons comi ng i n?
11 A. Um, pol i cy - - what I do i s I t ake, I wi l l t ake t hi s
12 r evi si on and I wi l l cor r espond i t t o t he appr oved budget . So
13 t hen I have quest i ons because t her e ar e ot her changes i n t he
14 cat egor i es besi de t he cat egor y t hat he want ed t o change.
15 Q. Whi ch cat egor y was t hat ?
16 A. He want ed t o change t he equi pment cat egor y. That ' s wher e
17 he was addi ng money.
18 Q. And what di d you not i ce about t hese r evi sed budget s, asi de
19 f r omt he equi pment cat egor y?
20 A. That per sonnel changed, mat er i al s and suppl i es changed
21 acr oss, acr oss t he boar d. They came i n f r equent l y, and al l t he
22 number s wer e changi ng, and i n each of t he cat egor i es none of
23 t hemwer e consi st ent .
24 Q. And - -
25 THE COURT: These r el at e t o t he f i r st year ?
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1 THE WI TNESS: What happened was he asked f or - -
2 THE COURT: Whi ch, do t hey r el at e t o t he f i r st year or
3 not ?
4 THE WI TNESS: The f i r st budget was wi t hi n t he f i r st
5 year . That ' s - - so i t was, i t was i n t he per i od.
6 And t hen when I asked quest i ons and he sent anot her
7 budget i n, t hat came i n Oct ober 20t h, so i t cr ossed - - so i t
8 came wi t hi n year t wo.
9 THE COURT: But al l t hese changes r el at e t o f i r st year
10 expenses?
11 THE WI TNESS: Let me l ook. No. He changed some of
12 t he out year s t wo t oo, so i t wasn' t j ust f i r st year . He
13 changed - - i f you l ook at even August 1st , exhi bi t 31, and you
14 can l ook at t he second one, exhi bi t 32, l ook at year t wo, t wo
15 changed, and t he change was onl y r eal l y supposed t o be i n year
16 one, but some of t he number s i n year t wo al so changed.
19 Q. Al l r i ght . So j ust so we can cl ar i f y t hat , Ms. Snowden,
20 t hat f i r st r equest ed amendment t hat came i n, was t hat - - di d
21 t hat - - was t hat submi t t ed when t he gr ant was st i l l i n your
22 year one or was i n year t wo at t hat poi nt ?
23 A. Thi s i s year one.
24 Q. And i n t he subsequent r equest f or amendi ng t he budget , what
25 year of t he gr ant di d t hose get submi t t ed i n?
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1 A. Year t wo, ' cause year t wo st ar t ed Oct ober 1st , 2002.
2 Q. And what , i f anyt hi ng, di d you not i ce about t hese budget ,
3 r equest ed budget amendment s t hat came i n whi l e t he gr ant was i n
4 year t wo?
5 A. Not onl y wer e t he number s changi ng, but once you get i n
6 year t wo, you shoul d have act ual cost s f or year one.
7 Q. Why shoul d you have act ual cost s f or year one?
8 A. Because year one i s over and ever yt hi ng shoul d be act ual ,
9 because you' r e goi ng t o be r equi r ed t o get an audi t , and your
10 audi t ed agai nst act ual number s f or t hat f i r st year . So we' r e
11 wel l i nt o year t wo, so year one and year t wo i s changi ng,
12 f r equent l y.
13 Q. Al l r i ght . Wel l , l et ' s - - l et me ask you t hi s bef or e we
14 get t o t hat . Di d you appr ove any of t hese pr oposed budget
15 amendment s?
16 A. No.
17 Q. I f we coul d t ake a l ook at gover nment exhi bi t 33, page one,
18 and Gover nment ' s exhi bi t 34 page t wo, al l r i ght . So 33 i s up
19 on t he l ef t - hand si de of t he scr een, 34 i s on t he r i ght - hand
20 si de of t he scr een. You can use t he ones i n f r ont of you.
21 Whi ch - - t he Gover nment ' s 33 i s, was submi t t ed on what dat e?
22 A. 33, um, December 2nd, 2002.
23 Q. And i s t hat i n year one of t he gr ant or year t wo of t he
24 gr ant when t hat was submi t t ed?
25 A. Year t wo.
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1 Q. And Gover nment ' s exhi bi t 34 was submi t t ed on what dat e?
2 A. December 20t h, 2002.
3 Q. I s t hat year one of t he gr ant or year t wo of t he gr ant when
4 t hat was submi t t ed?
5 A. Year t wo.
6 Q. Bot h i n year t wo?
7 A. Yes.
8 Q. Okay. I want t o l ook at t he year one number s her e as a
9 exampl e of what you wer e t al ki ng about bef or e. You ment i oned
10 bef or e t he year one act ual s wer e changi ng, i s t hat r i ght ?
11 A. Yes.
12 Q. Can you show us on t hi s document an exampl e of what you
13 mean by t he year one number s changi ng?
14 A. Let ' s see. You can go - - we can j ust go r i ght ont o - - we
15 go t o f r i nge benef i t s. Fr i nge benef i t s on document one was
16 109, 700. On exhi bi t number 34 i t ' s 11 - - i t ' s 112, 565.
17 Q. So what ' s t he di f f er ence t hei r bet ween t he t wo?
18 A. That di f f er ence was l i ke a l i t t l e over $3, 000. I t wasn' t
19 ver y bi g. But keep on goi ng.
20 Q. What ot her cat egor i es do you not i ce her e?
21 A. You got t r avel changed, or i gi nal t r avel . The t r avel t hat
22 was pr oposed i n t he f i r st budget was 10, 800, and t hen wi t hi n a
23 coupl e weeks l at er t he number s changed t o 19, 920, wi t h a
24 di f f er ence of , wel l , $9, 000.
25 Q. Okay. Mat er i al ?
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1 A. Mat er i al and suppl y i s anot her budget .
2 Q. Okay. What l i ne i s t hat ?
3 A. Sor r y about t hat . That ' s E.
4 Q. Okay.
5 A. I t was $35, 000 i n t he f i r st pr oposed r evi sed budget .
6 Coupl e weeks l at er t he number changed t i l l 22, 449.
7 Q. What ' s t he di f f er ence t hei r , r oughl y?
8 A. Pr obabl y about a l i t t l e over $10, 000.
9 Q. And agai n ar e t hese year one number s or year t wo number s
10 t hat you' r e t al ki ng about t her e?
11 A. These ar e al l year one number s, and t hi s i s i n December of
12 t wo - - December of t he second year . So t hi s, t hese shoul d be
13 consi st ent . They shoul d never change. You shoul d have act ual
14 number s.
15 Q. And what , i f anyt hi ng, di d t hese shi f t i ng number s i n t he
16 year one number s i ndi cat e t o you?
17 A. That t her e i s some pr obl ems, t her e was a r ed f l ag t o me
18 t her e coul d be some i ssues of appr opr i at i ons of t hese f unds;
19 t her ef or e, I t al ked t o my t eamand my super vi sor about t hese
20 i ssues.
21 Q. And what di d you t al k about ?
23 THE COURT: I ' msor r y? We can' t get i nt o t he, what
24 t he super vi sor s t ol d her .
25 Q. Al l r i ght . Ms. Snowden, di d you have a di scussi on wi t h
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1 your super vi sor s?
2 THE COURT: For t he t r ut h of t he st at ement , you can' t
3 of f er i t f or t hat .
4 MR. EVERDELL: J ust si mpl y t o show t he f ur t her act i ons
5 t hat happened l at er .
7 Q. Ms. Snowden, di d you have conver sat i ons wi t h your
8 super vi sor s about t hi s?
9 A. Yes.
10 Q. And what , i f any, act i on l at er di d you t ake as a r esul t of
11 t hese conver sat i ons wi t h your super vi sor s?
12 A. We cal l ed t he Of f i ce of I nspect or Gener al and r equest ed
13 t hemt o go t o CASI and check out t hei r account i ng pr act i ces and
14 pr ocedur es.
15 Q. And how wer e t hey goi ng t o do t hat , how wer e you goi ng t o
16 do t hat or have t hat done?
17 A. We made a phone cal l , we sent t heman of f i ci al document and
18 t hey go out , t hey went out t o check on t he books.
19 Q. Who i s t hey?
20 A. The Of f i ce of I nspect or Gener al , whi ch we consi der t he OI G,
21 t he OI G went out t her e.
22 Q. And i f you coul d l ook now at gover nment ' s exhi bi t 30, whi ch
23 i s al r eady i n evi dence.
24 THE COURT: Exhi bi t what ?
25 THE DEPUTY CLERK: 30.
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1 MR. EVERDELL: 30.
2 A. Okay.
3 Q. Bl owup t he t ext of t hat l et t er . Ms. Snowden, do you see
4 t hat exhi bi t i n f r ont of you?
5 A. Yes, I do.
7 A. Yes, I do.
9 A. Thi s i s an or i gi nal r equest f or t he OI G, Of f i ce of
10 I nspect or Gener al , t o go t o t he company CASI and do an audi t
11 r evi ew.
12 Q. And what i s t he r eason f or t he audi t ?
13 A. Because t he number s wer e f l uct uat i ng and t hey wer e
14 f l uct uat i ng qui t e f r equent l y wi t hi n weeks of each ot her , as a
15 gr ant speci al i st and my anal ysi s t hat t her e, t her e coul d be
16 some mi sappr opr i at i ons and some somebody needed t o check i t
17 out .
18 Q. What , i f any, audi t i ng r equi r ement was i n pl ace f or
19 compani es r ecei vi ng ATP gr ant s al r eady?
20 A. ATP gr ant s, dependi ng on how many year s you have - - t hi s
21 gr ant was a t hr ee year gr ant , you' r e r equi r ed t o have an audi t
22 90 days af t er t he f i r st year and wi t hi n 90 days of t he f i nal
23 year .
24 Q. And what was your under st andi ng as t o whet her or not
25 CASI ' s, CASI was al r eady havi ng t hat audi t at t he t i me?
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1 A. My under st andi ng i s t hat t hey wer e al r eady - - t hey had
2 al r eady got t en an i ndependent CPA and t hey wer e al r eady - - t hey
3 had audi t i n pr ocess.
4 Q. So why was i t necessar y t o have t he I nspect or Gener al ' s
5 Of f i ce do an audi t when an i ndependent of f i cer , audi t or had
6 al r eady been hi r ed f or t hat pur pose?
7 MR. RUBI NSTEI N: Obj ect i on t o t he why quest i on, your
8 Honor .
10 Q. Do you know t he r esul t of t he I nspect or Gener al ' s audi t ?
11 A. Yes.
13 THE COURT: Obj ect i on sust ai ned. You can answer yes
14 or no, but you can' t go i nt o t he - -
15 THE WI TNESS: Okay, yes.
16 Q. Al l r i ght . Ms. Snowden, ar e you f ami l i ar wi t h someone
17 named Bob Benedi ct ?
18 A. Yes.
19 Q. Who i s he?
20 A. When Lee Gur f ei n l ef t t he company, Bob Benedi ct was
21 pr oposed t o be - - t her e was a pr oposal t hat he woul d ent er t he
22 company as an admi ni st r at i ve cont act f or CASI .
23 So I r ecei ved a l et t er f r omDr . Kar r on sayi ng t hat he
24 was goi ng t o be t he new admi ni st r at i ve cont act .
25 Q. Di d he, i n f act , become t he admi ni st r at i ve cont act at CASI ?
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1 A. He became t he admi ni st r at i ve cont act at CASI f or CASI , but
2 not under t hi s gr ant .
3 Q. The l et t er t hat you ment i oned wer e, what i s t hat l et t er
4 f r omDr . Kar r on aski ng?
5 A. The l et t er was - - t he l et t er was j ust sayi ng t hat t hey had
6 t hat I guess Lee Gur f ei n had l ef t t he company and t hat t hey
7 wer e - - t hey - - t hat he was goi ng t o - - he was hi r i ng somebody
8 el se t o do t he admi ni st r at i ve wor k.
9 Q. And you sai d t hat t hi s new per son, Bob Benedi ct , was not ,
10 i n f act , appr oved as - - by t he ATP peopl e as t he admi ni st r at i ve
11 cont act ; i s t hat r i ght ?
12 A. No.
13 Q. Why was he not appr oved?
14 THE COURT: I ' msor r y, whose appr oval was r equi r ed?
15 Q. Ms. Snowden, whose appr oval i s r equi r ed f or t hese sor t s of
16 changes?
17 A. For anybody t hat ' s goi ng t o be i nvol ved i n t he ATP gr ant s,
18 ATP, we have t o - - t he gr ant of f i cer has t o appr ove i t . He can
19 have anybody i n hi s company do any wor k wi t hi n hi s company, but
20 not on t he gr ant by t he f eder al gover nment , unl ess t he f eder al
21 gover nment appr oves i t .
23 THE WI TNESS: He' s a commer ci al company. He can do
24 what ever he want s.
25 Q. So why was, why was Mr . Benedi ct not appr oved as t he
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1 admi ni st r at i ve cont act ?
2 A. Because he was pr oposed i n one of t he budget s t hat we' ve
3 seen al l t hese exhi bi t s, but t he budget s wer e never appr oved,
4 so he was never appr oved.
5 Q. And why wer e t hese budget s never appr oved?
6 A. Because t he f r equent changes and - - because of t he f r equent
7 changes, and t hat I had t o send t he OI G out t o l ook at t he
8 books so we coul d - - I never appr oved hi mbecause t hey wer e
9 f l uct uat i ng t oo much.
10 Q. And ar e you abl e t o appr ove budget amendment s or r equest ed
11 budget amendment s t hat ar e submi t t ed by an unappr oved cont act ?
12 A. No.
13 Q. Al l r i ght . One moment .
14 Al l r i ght . Ms. Snowden, I ' ve handed up t o you a bunch
15 of document s. Fi r st I ' d l i ke you t o t ake a l ook at
16 Gover nment ' s, what ' s been mar ked as i dent i f i cat i on as
17 Gover nment ' s exhi bi t 47. Do you see t hat document Ms. Snowden?
18 A. Yes, I do.
20 A. Yes, I do.
21 Q. And how ar e you abl e t o r ecogni ze t he document ?
22 A. Because i t was sent t o me.
23 Q. And what i s t he document ?
24 A. The document i s an e- mai l t o mysel f .
25 Q. Fr omwho?
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1 A. Fr omDr . D. B. Kar r on.
2 MR. EVERDELL: Gover nment of f er s Gover nment ' s exhi bi t
3 47?
4 THE COURT: What i s t hi s document t hat ' s E- mai l ed t o
5 you?
6 THE WI TNESS: Thi s document i s t he e- mai l t o me wi t h
7 at t achment s, and at t achment s ar e r evi sed f i nanci al st at us
8 r epor t s. So i t ' s j ust expl ai ni ng t hat t hese ar e r evi sed.
9 THE COURT: When was i t e- mai l ed t o you?
10 THE WI TNESS: Sept ember 2nd, 2003.
12 MR. RUBI NSTEI N: None.
13 THE COURT: 47 i s admi t t ed i n evi dence t hen.
15 Q. I f we can di spl ay i t , pl ease. I f we can hi ghl i ght j ust t he
16 bot t ompor t i on of t he e- mai l .
17 Okay, Ms. Snowden, can you j ust t el l us what t hi s
18 e- mai l says?
19 A. I t says t hat at t ached ar e r evi sed, ar e r evi sed f i nanci al - -
20 i t says 269s, and t hat ' s j ust t he document - - t hat ' s t he number
21 t hat t he f eder al gover nment gi ves t he document . I t ' s a
22 f i nanci al st at us r epor t s.
23 Q. Thi s i s wher e i t says 269?
24 A. Yes, as r evi sed by our pr oj ect manager , Mr . Bob Benedi ct .
25 Q. And does e- mai l say why t hese ar e bei ng submi t t ed?
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1 A. They sai d t hese r evi si ons r ef l ect changes i n our books made
2 by our account ant and audi t or J oan Hayes, CPA. I t says - -
3 Q. And what ' s t he dat e of t hi s e- mai l agai n?
4 A. Sept ember 2nd, 2003.
5 Q. Now you sai d t hese 269s you r ef er r ed t o, t hey' r e r evi sed
6 f i nanci al st at us r epor t s, i s t hat r i ght ?
7 A. Yes.
8 Q. Okay. What i s a f i nanci al st at us r epor t ?
9 A. A f i nanci al st at us r epor t i s - - t hi s i s how we keep up wi t h
10 t he spendi ng of gr ant s. So t he r epor t i s on a quar t er l y basi s.
11 An exampl e, cal endar quar t er l i ke J anuar y t hr ough Mar ch, t hat
12 shows t he t ot al out l ays, t hat ' s t he t ot al amount t hat t hey
13 spent dur i ng t hat quar t er .
14 I t al so shows what t he f eder al gover nment i s goi ng
15 t o - - what t hei r por t i on of t he f unds i s and what t he
16 r eci pi ent ' s por t i on of t he f unds i s, so i t gi ves me a pi ct ur e.
17 And I amabl e t o l ook at t hat and l ook at a dr awdown, i t ' s
18 cal l ed l i ke - - i t ' s ASAP, so i t ' s anot her r epor t so I can see
19 t he money t hat was dr awn down by t he gr ant ee, t he r eci pi ent . I
20 cor r espond j ust t o make sur e t hat t hey' r e t aki ng money out at
21 t he appr opr i at e r at e, t hey' r e al so i ncor por at i ng t hei r cost
22 shar e and t hey' r e not t aki ng t oo much of t he f eder al
23 Gover nment ' s por t i on of t he f unds. So ever yt hi ng has t o
24 bal ance out . So t hi s i s why I do my budget anal ysi s.
25 Q. And why does NI ST r equi r e t hese r epor t s?
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1 A. To make sur e t hat t he f eder al f unds ar e bei ng appr opr i at ed
2 accor di ng t o t he appr oved r evi sed budget , or t he appr oved
3 budget , per i od; make sur e t hat i t ' s appr opr i at e.
4 Q. And at t he t i me t hese e- mai l r evi sed f i nanci al r epor t s wer e
5 sent , what was t he st at us of t he gr ant ?
6 A. The gr ant had been suspended.
7 Q. I f you coul d t ake a l ook now at gover nment what ' s been
8 mar ked f or i dent i f i cat i on as Gover nment ' s exhi bi t s 40A, 41A,
9 42A, 43A, 44, 45, and 46.
10 THE COURT: These ar en' t admi t t ed i n evi dence yet , Mr .
11 Ever del l .
12 MR. EVERDELL: No, t hey' r e not . I ' mj ust aski ng her
13 t o l ook at t hemf or t he pur poses of admi t t i ng t hem. I ' msor r y,
14 t he j ur y - -
15 THE COURT: The j ur y i s j ur i st not t o l ook at t hese.
16 I t st ar t ed wi t h 40A?
17 MR. EVERDELL: St ar t i ng at 40A, 41A, 42A, 43A, 44, 45,
18 and 46.
19 THE COURT: Don' t l ook at t hose document s unt i l
20 t hey' ve been admi t t ed i n evi dence.
21 Q. Do you see t hose document s, Ms. Snowden?
22 A. Yes. I want t o l ook at one mor e, one mor e I have t o get
23 t hr ough one mor e.
24 Q. Sur e.
25 A. Okay.
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2 A. Yes.
3 Q. What ar e t hose document s?
4 A. These ar e f i nanci al st at us r epor t s.
5 Q. Ar e t hose or i gi nal f i nanci al st at us r epor t s or ar e t hey
6 r evi sed st at us r epor t s?
7 A. They' r e bot h, t hey' r e bot h.
8 Q. Looki ng at t he A' S onl y?
9 A. Yes.
10 Q. 40A, 41A, 42A, 43A - - act ual l y, I ' l l t el l you what , l ook
11 al so at Gover nment ' s exhi bi t s mar ked f or i dent i f i cat i on as
12 Gover nment ' s exhi bi t s 40, 41, 42 and 43, i f you can add t hose
13 t o your st ack.
14 THE COURT: What number s ar e t hose?
15 MR. EVERDELL: 40, 41, 42, and 43.
16 A. Okay.
17 Q. Okay. Let ' s j ust do t hemi ndi vi dual l y, f i r st st ar t i ng
18 f i r st wi t h Gover nment ' s exhi bi t 40. Do you r ecogni ze t hat
19 document ?
20 A. Yes.
21 Q. Okay. What i s t hat document ?
22 A. Thi s i s a f i nanci al st at us r epor t .
23 Q. What quar t er does t hat cover , t hat f i nanci al st at us r epor t ?
24 A. Bl ock ni ne gi ves you t he per i od cover ed, and i t ' s cover ed
25 f r omOct ober 1st , 2001 t hr ough December 31st , 2001. So i t ' s
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1 t he f i r st quar t er of t he awar d.
2 Q. Okay. And t hen l ooki ng at 40A now?
3 A. Okay.
5 A. Yes.
6 Q. Okay. What i s t hat document ?
7 A. Thi s i s a r evi si on t o t hat f i r st - - t o t he or i gi nal
8 f i nanci al st at us r epor t .
9 Q. And - -
10 THE COURT: Gover nment 40?
11 A. For t he same exact same per i od Oct ober 1st , 2000 - - I ' m
12 l ooki ng at t he wr ong one. I shoul d be l ooki ng - - f or t he exact
13 per i od, Oct ober 1st , 2001 t hr ough December 31st , 2001.
14 Q. So j ust t o be cl ear , 40 i s t he or i gi nal of 40A i s t he
15 r evi si on?
16 A. Exact l y.
17 Q. And t hey cover t he same quar t er ?
18 A. Yes, t hey do.
19 Q. Okay. And l ooki ng now at 41 ver sus 41A?
20 A. Okay, I have i t .
21 Q. Okay. Do you r ecogni ze t hose document s?
22 A. Yes.
23 Q. Okay. And what ar e t hey?
24 A. These ar e - - i t ' s a r evi si on.
25 Q. Whi ch quar t er do t hose r epor t s cover ?
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1 A. I t cover s t he second.
2 THE COURT: Whi ch one ar e we l ooki ng at now?
3 MR. EVERDELL: 41A.
4 THE COURT: Whi ch ar e we l ooki ng at 41 or 41A?
5 MR. EVERDELL: Sor r y, your Honor - -
6 Q. Sor r y. Ms. Snowden, l ook at 41 f i r st .
7 A. Yes.
8 Q. Do you see t hat document ?
9 A. Yes.
10 Q. And do you r ecogni ze i t ?
11 A. Yes, I do.
12 Q. What quar t er does t hat document cover ?
13 A. I t ' s suppose - - i t cover s t he second quar t er , al t hough he
14 has t he per i od of per f or mance t he f i r st .
15 THE COURT: I s t hi s t he or i gi nal ?
16 THE WI TNESS: The second quar t er , yes, i t cover s t he
17 second quar t er because i t ends Mar ch 31st , 2002, so i t cover s
18 t he second quar t er of t he awar d.
19 Q. I s t hat t he or i gi nal r epor t or i s t hat t he r evi sed r epor t ?
20 A. 41 i s t he or i gi nal . 41A i s t he r evi sed r epor t .
21 Q. Does 41A cover t he same t i me per i od as 41?
23 Q. And i f you coul d l ook now at 42, and 42A. Do you see t hese
24 document s?
25 A. Yes.
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2 A. Yes.
3 Q. Looki ng f i r st at 42, what per i od does t hat f i nanci al r epor t
4 cover ?
5 A. I t cover s t he second quar t er .
6 THE COURT: Second quar t er of what year ?
7 THE WI TNESS: Of - -
8 THE COURT: Of what year ?
9 THE WI TNESS: Of 2002.
10 THE COURT: So i t cover s f r omf our - -
11 THE WI TNESS: Apr i l 1st , 2002 unt i l J une 30t h, 2002.
12 Q. So i s t hat t he next quar t er af t er t he ones you j ust l ooked
13 at bef or e?
15 Q. And i s 42 t he or i gi nal or t he r evi sed f i nanci al r epor t ?
16 A. Or i gi nal .
17 Q. And what about 42A?
18 A. Revi sed document .
19 Q. And 42A cover t he same per i od as 42?
20 A. Yes.
21 Q. Movi ng t o 43 and 43A.
22 A. Yes.
23 Q. Do you r ecogni ze t hem?
24 A. Yes.
25 Q. Looki ng at 43, what per i od does t hat cover f or t hi s
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1 f i nanci al r epor t ?
2 A. The t hi r d quar t er of 2002 bei ng J ul y 1st , 2002, t hr ough
3 Sept ember 30t h, 2002.
4 Q. I s t hat t he next quar t er af t er 40 - - t he exhi bi t s 42 and
5 42A t hat we l ooked at bef or e?
6 A. Yes.
7 Q. I s 43 t he or i gi nal or t he r evi sed?
8 A. 43 i s t he or i gi nal .
9 Q. And 43A, i s t hat t he or i gi nal or t he r evi sed?
10 A. Revi sed.
11 Q. Does 43A cover t he same per i od as 43?
12 A. Yes.
13 Q. Now, i f you coul d l ook si mul t aneousl y at 44, 45 and 46.
14 THE COURT: Have you of f er ed anyt hi ng i n evi dence?
15 MR. KWOK: I ' mt r yi ng t o do t hat i n a mi nut e.
16 Q. Thi s i s our l ast t hr ee, I bel i eve. Ms. Snowden, i f you
17 coul d l ook f i r st at 44?
18 A. Yes.
19 Q. What per i od does t hat cor r espond?
20 A. Oct ober 1st , 2002. So t hi s i s t he f our t h quar t er of 2002
21 t hr ough December 31st , 2002.
22 Q. And what about 45?
23 A. 45 cover s t he f i r st quar t er of 2003 J anuar y, J anuar y 1st
24 2003 t hr ough Mar ch 31st , 2003.
25 Q. And 46?
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1 A. 46 i s a second quar t er 2003 cover i ng Apr i l 1st , 2003
2 t hr ough J une 30t h, 2003.
3 Q. Do you r ecogni ze al l t hese document s?
4 A. Yes.
5 Q. And di d you r evi ew al l t hese document s when t hey came i n?
6 A. Yes, I di d.
7 MR. EVERDELL: Your Honor , t he gover nment moves
8 Gover nment ' s exhi bi t s 40, 40A, 41, 41A, 42, 42A, 43, 43A, 44,
9 45 and 46 i n evi dence.
10 THE COURT: Exhi bi t s 40 and 40A, 41, and 41A, 42, and
11 42A, 43, and 43A and exhi bi t s 44, 45, 46 ar e admi t t ed i n
12 evi dence.
13 ( Gover nment ' s Exhi bi t s 40, 40A, 41, 41A, 42, 42A, 43,
14 43A, 44, 45 and 46 r ecei ved i n evi dence)
15 Q. Okay. Let ' s l ook at , i f we can put si de by si de,
16 Gover nment ' s exhi bi t s 40 and 40A. Put t hose up on t he scr een.
17 THE COURT: What page or - -
18 MR. EVERDELL: They' r e one page.
19 THE COURT: One page document s? Al l r i ght .
20 Q. I t may i n f act be a l i t t l e di f f i cul t t o r ead t hemf r omt he
21 scr een so I wi l l do my best t o poi nt t hemt o t he r el evant
22 sect i ons.
23 But l et ' s l ook at t hese document s, Ms. Snowden.
24 Looki ng f i r st at Gover nment ' s exhi bi t 40, whi ch t i me per i od
25 does t hi s cover agai n?
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1 A. I t cover s t he f our t h quar t er of 2001, Oct ober 1st , 2001
2 t hr ough December 31st , 2001.
3 Q. I s t hat t he f i r st quar t er of t he awar d?
4 A. That ' s t he f i r st quar t er of t he awar d.
5 Q. And i s t hi s Gover nment ' s exhi bi t 40 t he or i gi nal or t he
6 r evi sed ver si on of t he pl an?
7 A. I t ' s t he or i gi nal .
8 Q. Looki ng at f i r st at t he l i ne I , see t hat , l i ne I ?
9 A. Yes.
10 Q. I t says, t ot al r eci pi ent shar e of net out l ays?
11 A. Yes.
12 Q. What does t hat col umn mean?
13 A. That ' s r eci pi ent , t hat ' s t he non- f eder al cost shar e of , f or
14 t hi s pr oj ect .
15 Q. So t hat ' s t he cost shar e?
16 A. Yes.
17 Q. And what i s t he cost shar e agai n?
18 A. The cost shar e i s t he por t i on of t he, of t he pr oj ect t hat
19 i s pai d by t he r eci pi ent . The r eci pi ent , i t ' s non- f eder al
20 f unds.
21 Q. Sor r y. And what number appear s t her e f or t he cost shar e
22 amount s i n t he or i gi nal r epor t ?
23 A. $12, 320.
24 Q. Now, i f you l ook at 40A i n t he same l i ne, of l i ne I ?
25 A. Uh- huh.
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1 Q. I s t hat al so t he cost shar e amount t her e?
2 A. Yes.
3 Q. And what number i s r ef l ect ed t her e?
4 A. Zer o.
5 Q. And what does t hat i ndi cat e?
6 A. That t he r eci pi ent di d not pay t he r equi r ed cost shar e.
7 Q. Whose si gnat ur e appear s at t he bot t omof Gover nment ' s 40?
8 A. D. B. Kar r on, Ph. D.
9 Q. And whose si gnat ur e appear s at t he bot t omof 40A?
10 A. D. B. Kar r on, Ph. D.
11 Q. Now, i f you - - we won' t put t hemup on t he scr een, but i f
12 you l ook at 40 ver sus 41A, whi ch you t est i f i ed t o i s t he next
13 quar t er , what , i f anyt hi ng, i s r ef l ect ed - -
14 THE COURT: You l ooked at exhi bi t 41 and 41A.
15 MR. KWOK: I apol ogi ze, your Honor .
16 Q. I f you l ook at exhi bi t 41 and 41A, you don' t need t o put
17 t hemup on t he scr een necessar i l y, but j ust t ake a l ook at
18 t hose.
19 A. Okay.
20 Q. And agai n at l i ne I , i s t hat cost shar e number t her e?
21 A. Yes.
22 Q. And i f you' r e l ooki ng at t he or i gi nal 41, ar e t her e amount s
23 r ef l ect ed i n t hat l i ne?
24 A. Yes.
25 Q. And i f you l ook at t he 41A, t he r evi sed, what number ' s
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1 r ef l ect ed i n t hose boxes on t hat same l i ne?
2 A. Zer o.
3 Q. Does t hat i ndi cat e t he same t hi ng you t est i f i ed bef or e?
4 A. Yes.
5 Q. And what i s t hat ?
6 A. I t i ndi cat es t hat t he or i gi nal showed t hat t he r eci pi ent
7 had i ncor por at ed and pai d i nt o t he pr oj ect hi s cost shar e, and
8 i n t he r evi sed t her e was no cost shar e, no r equi r ed cost shar e
9 pai d, whi ch means you' r e noncompl i ance.
10 Q. And i n t he r emai ni ng exhi bi t s t hat we l ooked at , does t he
11 same phenomenon appear ?
12 A. Consi st ent l y.
13 THE COURT: I ' msor r y, what ?
14 Q. I n t he r emai ni ng - - I ' mj ust t r yi ng t o summar i ze t he
15 r emai ni ng exhi bi t s wi t hout showi ng each of t hem.
16 THE COURT: I t hi nk you want got t o go t hr ough i t .
17 MR. EVERDELL: I ' msor r y, your Honor ?
18 THE COURT: I t hi nk you shoul d go t hr ough 42 and 43.
19 Q. Al l r i ght . I f you coul d t ake out 43 and 43A?
20 A. Okay.
21 Q. Sor r y. 42 and 42A. You have t hose di agr ams, Ms. Snowden?
22 A. Yes.
23 Q. Agai n l ooki ng at t he cost shar e amount i n t he or i gi nal
24 f i nanci al r epor t , i s t her e a cost shar e r epor t ed t her e?
25 A. Yes, i t i s.
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1 Q. I n t he r evi sed 42A, i s t her e a cost shar e r epor t ed?
2 A. No cost shar e r epor t ed.
3 Q. And what ' s t he number t her e?
4 A. Zer o.
5 Q. Fi nal l y l ooki ng at 43 and 43A. Do you have t hose
6 document s, Ms. Snowden?
7 A. Yes, I do.
8 Q. Agai n, l ooki ng at t he cost shar e bal ance i n t he or i gi nal
9 43, i s t her e a cost shar e number r epor t ed t her e?
10 A. Yes, t her e i s.
11 Q. And what does t he r evi sed r epor t r ef l ect ?
12 A. I t shows zer o cost shar e.
13 Q. Thank you. I f you can t ake a l ook at what ' s been mar ked as
14 gover nment exhi bi t 48 mar ked f or i dent i f i cat i on?
15 THE COURT: 48?
16 MR. EVERDELL: 48.
17 THE DEPUTY CLERK: 48.
18 THE COURT: Exhi bi t 48 f or i dent i f i cat i on.
19 MR. EVERDELL: Not have i t on t he scr een as of yet .
20 Q. Ms. Snowden, do you see t hat document ?
21 A. Yes.
23 A. Yes.
25 A. I t ' s a l et t er sent t o me on Oct ober - - August 13t h, 2003
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1 f r omRober t Benedi ct .
2 Q. And how do you r ecogni ze i t ?
3 A. ' Cause i t was sent t o mysel f , Hope Snowden.
4 MR. EVERDELL: Your Honor , t he gover nment moves t o
5 admi t Gover nment ' s 48.
6 MR. RUBI NSTEI N: I ' mobj ect i ng t o gover nment exhi bi t
7 48, your Honor .
9 MR. EVERDELL: Your Honor , i f I coul d l ay some
10 f oundat i onal quest i ons?
11 Q. Ms. Snowden, when you r ecei ved t hi s l et t er , what di d you do
12 wi t h t he l et t er ?
13 A. I r evi ewed t he l et t er .
14 Q. Do you keep t hi s l et t er ?
15 A. Yes.
16 Q. And wher e do you keep t he l et t er ?
17 A. Thi s l et t er , al ong wi t h al l ot her document s, ar e kept i n
18 t he or i gi nal awar d f i l e, t he or i gi nal awar d - - t he gr ant f i l e.
19 Q. And wher e i s t hat gr ant s f i l e l ocat ed?
20 A. I n t he gr ant s of f i ce.
21 Q. Now, i t t he r egul ar pr act i ce of your of f i ce t o keep al l
22 cor r espond t hat you r ecei ve, i n t he gr ant s f i l e?
23 A. Yes.
24 Q. And was t hi s document r ecei ved and mai nt ai ned i n t he
25 r egul ar l y conduct ed cour se of busi ness act i vi t y t o keep t hese
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1 r ecor ds?
2 A. Yes.
3 MR. EVERDELL: Your Honor , t he gover nment moves t o
4 admi t Gover nment ' s 48.
6 THE COURT: I s t hi s t he or i gi nal copy you r ecei ved?
7 THE WI TNESS: Yes, t hi s i s.
8 THE COURT: Di d you r ecei ve i t by e- mai l or somet hi ng?
9 THE WI TNESS: No, t hi s, I t hi nk t hi s - - I don' t t hi nk
10 t hi s was r ecei ved by e- mai l t he - - yeah, I t hi nk okay, i t came
11 f r omBob Benedi ct . I don' t r ecal l i f i t was r ecei ved by e- mai l
12 or my by mai l cor r espondence.
13 THE COURT: Wel l , t he i ssue i s whet her you' r e of f er i ng
14 t hi s f or t he t r ut h of t he cont ent s, Mr . Ever del l .
15 MR. EVERDELL: Your Honor , i f I coul d have a moment ?
16 THE COURT: Yes.
17 MR. EVERDELL: Your Honor , we' d l i ke t o of f er t hi s not
18 f or t he t r ut h of t he mat t er cont ai ned i n i t . I n f act , t her e i s
19 cer t ai n st at ement s - - per haps we shoul d have a si debar on t hi s.
20 MR. RUBI NSTEI N: Your Honor , I ' mwi t hdr awi ng, I ' m
21 wi t hdr awi ng my obj ect i on.
22 THE COURT: You' r e wi t hdr awi ng your obj ect i on. Then
23 I ' l l al l ow i t .
24 MR. EVERDELL: Al l r i ght .
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2 MR. EVERDELL: I f we can di spl ay i t on t he scr een.
4 Q. Ms. Snowden, you see t he second par agr aph t her e i t says, we
5 acknowl edge t hat t her e ar e di sal l owed expenses, and t hey do go
6 back t o year one, t hey pr i mar i l y come f r omt wo sour ces; i s t hat
7 r i ght ?
8 A. Yes.
9 Q. What , i f anyt hi ng, di d you do when you r ecei ved t hi s
10 l et t er ?
11 A. I r evi ewed t he l et t er , but I di dn' t r espond t o t hi s l et t er .
12 So i t was r evi ewed by mysel f and my pr oj ect t eam.
13 MR. EVERDELL: One moment .
14 Al l r i ght , your Honor , we' l l move ont o t he next .
15 THE COURT: Thi s l et t er was r ecei ved at or about t he
16 t i me t hat exhi bi t s 40A, 41A, 42A and 43A wer e r ecei ved by your
17 agency?
18 THE WI TNESS: I woul d have t o go back and l ook at t he
19 e- mai l .
20 THE COURT: The r evi sed f i nanci al st at us r epor t s wer e
21 r ecei ved?
22 THE WI TNESS: I t was pr obabl y r ecei ved dur i ng t hat
23 t i me, and t hi s awar d was suspended and Bob Benedi ct i s t he one
24 who sent me t hi s cor r espondence, and he wasn' t appr oved as a
25 cont act , so I coul dn' t cor r espond wi t h hi m. We coul d r evi ew,
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1 but not cor r espond wi t h hi m.
3 Q. Al l r i ght , we can t ake t hat down.
4 Ms. Snowden, ear l i er you r ef er r ed t o an audi t t hat was
5 al r eady bei ng conduct ed at CASI bef or e you cal l ed t he I nspect or
6 Gener al ' s audi t ?
7 A. Yes.
8 Q. I s t hat r i ght ? Do you know who t he i ndependent audi t or ' s
9 name was?
10 A. J oan Hayes.
11 Q. Di d you have any di scussi ons wi t h J oan Hayes?
12 A. Yes.
13 Q. And what di d you t wo di scuss?
16 Q. Di d J oan Hayes ask you any quest i ons?
17 A. Yes, she di d.
18 Q. What quest i ons di d she ask you?
21 MR. EVERDELL: Your Honor , quest i ons ar e not
22 st at ement s, t hey' r e not hear say. They' r e j ust aski ng
23 quest i ons.
24 THE COURT: Yes, t hat ' s t r ue, but I ' ve got t o put up
25 r ed l i ght s so t hat - - you know, I ' msur e t he wi t ness has been
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1 pr oper l y i nst r uct ed she can' t - -
2 MR. EVERDELL: Yes.
3 THE COURT: She can' t get i nt o st at ement s beyond j ust
4 t he quest i on.
5 MR. EVERDELL: I f I can make sur e we' r e cl ear on t hat .
6 Q. Ms. Snowden, j ust r ef er r i ng sol el y t o what quest i ons
7 Ms. Hayes asked you, what wer e t hose quest i ons?
8 A. She asked me a quest i on r egar di ng coul d r ent be pai d wi t h
9 f eder al f unds; she asked me a quest i on, coul d ut i l i t i es be pai d
10 wi t h f eder al f unds. I r esponded t o her no, nei t her one can be
11 pai d wi t h f eder al f unds.
12 THE COURT: When was t hi s conver sat i on?
13 THE WI TNESS: Excuse me?
14 THE COURT: When di d you have t hi s conver sat i on wi t h
15 Ms. Hayes?
16 THE WI TNESS: I n 2002, somet i me i n 2002. I t was wi t h
17 J oan Hayes. So she cal l ed me on t he phone somet i me i n 2002.
18 I t was - - once she was - - she was i ndependent CPA, so I guess
19 once he pi cked her t o, once she was - -
20 THE COURT: No, no you - - don' t specul at e.
22 THE COURT: The j ur y i s t o di sr egar d why, t he l at t er
23 par t of answer about why she, J oan Hayes, was hi r ed.
24 Q. Di d t her e come a t i me when you r ecei ved an audi t r epor t
25 f r omher ?
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1 A. Yes.
2 Q. And when was t hat ?
3 A. J une 2003.
4 Q. What i s t he st at us of t he gr ant t o CASI as of t oday?
5 A. I t ' s t er mi nat ed.
6 Q. And do you know t he t ot al amount of ATP gr ant money t hat
7 CASI had dr awn down bef or e t he gr ant was shut down?
8 A. Over a mi l l i on dol l ar s.
9 MR. EVERDELL: One moment , your Honor .
10 THE COURT: Can I j ust hear t hat quest i on and answer
11 back.
12 ( Recor d r ead)
13 THE COURT: What dat e was i t shut down?
14 THE WI TNESS: We suspends t hi s gr ant i n J une of 2003.
15 THE COURT: Okay, t hank you.
16 MR. EVERDELL: Your Honor , I have no f ur t her
17 quest i ons.
18 THE COURT: Shoul d we t ake t he br eak now or - - I guess
19 we bet t er t ake t he br eak now and be back at 1: 00 o' cl ock - - I
20 mean back i n t en mi nut es.
21 10 mi nut es.
23 THE COURT: 10 mi nut es. Al l r i ght .
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1 ( Recess)
2 THE COURT: Get t he j ur or s.
4 THE COURT: Al l r i ght , pl ease be seat ed.
7 CROSS EXAMI NATI ON
9 Q. Good mor ni ng, Ms. Snowden.
11 Q. You wor k i n - - wher e i s your of f i ce?
12 A. My of f i ce i s i n Gat hur sbur g, Mar yl and.
13 Q. Now, you ar e t he l i ai son t o t he r eci pi ent of t he gr ant s?
14 A. Yes.
15 Q. And i t ' s your j ob t o i nt er pr et t he r ul es and r egul at i on f or
16 t hem?
17 A. Yes.
18 Q. And t hat ' s i f t hey cal l and ask you a par t i cul ar quest i on
19 about a par t i cul ar r ul e or r egul at i on, cor r ect ?
20 A. Yes.
21 Q. Now, among t he t hi ngs t hat - - coul d we put up Exhi bi t 4,
22 page seven.
23 A number of t hi ngs t hat t he r eci pi ent r esponsi bi l i t y
24 t hat i s i n Exhi bi t 4 i s t hat a - - you wer e pr esent at t he what
25 you cal l ed t he sl i de show?
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1 A. The ki ckof f .
2 Q. The ki ckof f ?
3 A. Yes.
4 Q. The ki ckof f i s a t er mt hat ' s usual l y r ef er r ed t o f oot bal l .
5 The ki ckof f on November 8t h, I bel i eve 2001, you wer e pr esent
6 and you pr esent ed, cor r ect ?
7 A. Yes.
8 Q. And i s t hi s a f or mt hat you submi t t ed t hat you used or i s
9 i t a f or mt hat ei t her Ms. Li de or J ane Or t hwei n used?
10 A. No, I used t hi s - - t hi s i s par t of my pr esent at i on.
11 Q. Okay. Now, t hi s i s pr i or appr oval , you have t o not i f y a
12 gr ant s speci al i st , r i ght ?
13 A. For pr i or appr oval , not i f y t he gr ant s speci al i st , yes.
14 Q. And among t he t hi ngs you have t o not i f y t he gr ant s of f i cer
15 f or t o get pr i or appr oval i s i f you go bankr upt ?
16 THE COURT: I s what ?
17 Q. Go bankr upt ?
18 A. Yes, t hat ' s on t her e, yes.
19 Q. When you' r e bankr upt , you' r e br oke, r i ght ; do you need
20 pr i or appr oval t o go br oke?
21 A. Wel l , what we say i s we know t hese ar e commer ci al compani es
22 t hat we' r e deal i ng wi t h; t her ef or e, i f you see t hat you' ve - -
23 you' r e havi ng f i nanci al di f f i cul t i es and you' r e goi ng t hr ough a
24 bankr upt cy pr ocess, we' d l i ke t o be not i f i ed ahead of t i me.
25 Q. Okay. But you t el l us t hat t hi s, t hat ki ckof f pr esent at i on
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1 t hat you' r e pr esent i ng, t hat your pr oposal i s t he Bi bl e?
2 A. Yes.
3 Q. And t hat means t he pr oposal submi t t ed by t he gr ant ee,
4 cor r ect ?
5 A. The pr oposal , yes.
6 Q. But t hat - - and t hat i ncl udes t he pr oposal i s r eal l y t he
7 budget , r i ght ?
8 A. I t i ncl udes t he budget .
9 Q. And t he budget i s subj ect t o al l ki nds of r evi si ons, i s i t
10 not ?
11 A. You can pr opose r evi si ons, but t hey st i l l must be appr oved
12 i n wr i t i ng by t he gr ant of f i cer .
13 Q. And i f t hey' r e appr oved i n wr i t i ng by t he gr ant of f i cer - -
14 A. Uh- huh.
15 Q. - - t hen t hey become par t of your budget , r i ght ?
16 A. They become an amendment t o t he or i gi nal budget , yes.
17 Q. And you coul d r evi se t he budget at t he end of your f i r st
18 year , can you not ?
19 A. Yes.
20 Q. Because you' r e gi ven $800, 000 i n CASI ' s case, t o spend on
21 t he pr oj ect t hat was appr oved by ATP, r i ght ?
22 A. No, i t ' s appr oved - - i t ' s appr oved by t he gr ant of f i cer .
23 She' s t he one who has t he si gnat ur e aut hor i t y t o, t o aut hor i ze
24 f unds f or t he f eder al gover nment . So ATP i s t he pr oj ect , but
25 t he gr ant s of f i cer i s a cer t i f yi ng of f i ci al .
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1 Q. Okay. And t he pr oj ect gi ves t he per son, t he gr ant ee,
2 $800, 000, cor r ect ?
3 A. The - - t he gr ant of f i cer appr oves t he budget f or $8, 000.
4 THE COURT: $800, 000.
5 A. For $800, 000, appr oved budget , and i t gi ves t he gr ant ee t he
6 aut hor i t y t o spend what i s appr oved wi t hi n t he budget ed
7 cat egor i es.
8 Q. When you submi t a budget , you submi t a budget f or t he t ot al
9 of $800, 000 r i ght ?
10 A. When you pr opose a change, i t ' s f or t he t ot al amount of
11 $800, 000.
12 Q. But your or i gi nal budget - -
13 A. Uh- huh.
14 Q. - - t hat you submi t - -
15 A. Uh- huh.
16 Q. - - you submi t - - CASI submi t t ed a budget f or 800, 000 and
17 t he gover nment , whi chever agency i t was, deposi t ed $800, 000 i n
18 a bank account f or CASI t o use?
19 A. CASI submi t t ed a budget f or a t ot al of $2 mi l l i on, wi t h
20 money del egat ed each year . The f i r st year was $800, 000 f or
21 CASI t o use wi t hi n t he appr oved pr oposal and t he appr oved
22 budget cat egor i es. Anyt hi ng out si de of what i s appr oved i s
23 consi der ed a pr oposed r evi si on. And i f you r evi se i t i n any
24 way or manner , i t needs t o be appr oved i n wr i t i ng by t he gr ant
25 of f i cer .
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1 THE COURT: But t hat appl i es t o t he l i ne i t ems, i s
2 t hat r i ght ?
4 THE COURT: So $800, 000 compr i sed of so many l i ne
5 i t ems.
7 THE COURT: Changes i n t he l i ne i t ems r equi r e
8 appr oval .
9 THE WI TNESS: I f t hey' r e over 10 per cent , yes.
10 Q. So, we' l l get back t o t he 10 per cent .
11 A. Sur e.
12 Q. But l et ' s - - so i f t he gr ant ee, whi l e t hey have a budget
13 wi t h l i ne i t ems f or var i ous t hi ngs t hat adds up t o $800, 000,
14 r i ght ?
15 A. Yes.
16 Q. I f t he gr ant ee doesn' t spend t he 800, 000 i n t he f i r st year ,
17 what happens t o t he money?
18 A. I f he doesn' t spend al l of t he $800, 000, he can r equest a
19 r evi sed budget . Hi s f i r st year wi l l have t he act ual amount s,
20 and t he out year s whi ch wi l l be year t wo and t hr ee. He can
21 i ncor por at e t he money t hat was unspent i nt o year s t wo and
22 t hr ee. That budget has t o be r evi ewed by t he pr oj ect t eam, and
23 i t has t o be appr oved i n wr i t i ng by t he gr ant of f i cer .
24 Q. I s t her e - - have you ever had - - how l ong have you been
25 doi ng t hi s, Ms. Snowden?
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1 A. Ei ght - and- a- hal f year s.
2 Q. Have you ever had an occasi on wher e a gr ant ee r et ur ned
3 money t o t he gover nment t hat was unused pur suant t o t he gr ant s?
4 A. Yes.
5 Q. And on how many occasi ons?
6 A. Wel l , I ' ve been doi ng i t ei ght - and- a- hal f year s. Qui t e a
7 bi t . A l ot of t i mes t hat you st ar t a pr oj ect , and you say I
8 need t hi s much money, and t hen you may not use t he money, so
9 i t ' s r et ur ned t o t he gover nment , and we r eput i t back i nt o our
10 pr ogr amf or f ut ur e use.
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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8647KAR3 Snowden - cr oss
2 Q. And i f t he money i s spent , t he $800, 000, i n t he f i r st year ,
3 on what i s al l owabl e expendi t ur es, t hat ' s OK, cor r ect ?
4 A. I f i t ' s spent on al l owabl e appr oved budget , i t i s OK.
5 Q. Wel l , Dr . Kar r on submi t t ed a budget wher e he was t o r ecei ve
6 $175, 000 i n sal ar y, cor r ect ?
7 A. Yes.
8 Q. And t hat was appr oved.
9 A. Yes.
10 Q. I f he want ed t o i ncr ease hi s sal ar y by $80, 000, whi ch i s 10
11 per cent of t he appr oved budget , t o $255, 000, he woul dn' t need
12 any appr oval t o do t hat , cor r ect ?
13 A. He can move i t among budget cat egor i es wi t hout t he
14 appr oval , wi t hi n 10 per cent , but he must not i f y; we ask f or
15 not i f i cat i on t o t he f eder al gover nment .
16 THE COURT: I s i t 10 per cent of t he t ot al or i s i t 10
17 per cent of t he l i ne i t em?
18 THE WI TNESS: No, 10 per cent of t he annual budget ,
19 whi ch i s $80, 000. He can move t he l i ne i t ems wi t hi n 80, 000.
20 THE COURT: Each t i t l e?
21 THE WI TNESS: Tot al , so not each. So i t can be t ot al .
22 So, he can move money t o t he equi pment , money t o mat er i al s and
23 suppl i es, but i t coul dn' t go over $80, 000.
24 THE COURT: I n t ot al .
25 THE WI TNESS: I n t ot al .
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1 MR. RUBI NSTEI N: I n ot her wor ds he woul d have t o - -
2 THE COURT: $80, 000, coul d i t be al l ot t ed t o any
3 si ngl e l i ne i t emwhi ch woul d br i ng t he l i ne i t emup t o say a
4 hundr ed per cent of what t he l i ne i t emwas?
5 THE WI TNESS: I t ' s not usual l y done, but t he 10
6 per cent r ul e sai d he can move i t .
7 THE COURT: Does he need pr i or appr oval f or t hat ?
8 THE WI TNESS: No. We ask t hat we be not i f i ed, but he
9 does not need pr i or appr oval .
10 Q. I n t he or i gi nal budget t hat he submi t t ed, whi ch i s i n
11 evi dence as Exhi bi t 10B, do you have t hat t her e, ma' am?
12 A. I have a 10A. I don' t have a 10B.
13 Q. Let me see i f I can get somebody t o hel p you get t he 10B.
14 A. I f ound 10B. I have i t r i ght her e.
15 Q. Now, i n t hat document , whi ch i s i n t he exhi bi t book as
16 Gover nment Exhi bi t 10B, on t he second page i t says per sonnel ,
17 cor r ect ?
18 A. Yes.
19 Q. Now, i n f act i n t hat budget t he pr oj ect manager ,
20 Mr . Gur f ei n, was t o get $100, 000, cor r ect ?
21 A. Yes.
22 Q. And t hat was t o put 75 per cent of t hei r t i me, hi s t i me,
23 i nt o t he pr oj ect .
24 A. Wel l , hi s annual sal ar y was $100, 000.
25 Q. Tel l i ng you t hat he i s onl y goi ng t o spend 75 per cent of
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1 hi s t i me t o t he pr oj ect , cor r ect ?
2 A. That ' s t he per cent age of t i me t o t he pr oj ect , 75 per cent .
3 Q. And Dr . Kar r on i s t o spend a hundr ed per cent of hi s t i me.
4 A. Yes.
5 Q. And how many hour s a week does a hundr ed per cent wor ki ng,
6 how many hour s a week - -
7 THE COURT: I don' t see t he r el evance of t hat
8 quest i on.
9 MR. EVERDELL: Obj ect i on.
10 THE COURT: Obj ect i on sust ai ned. Let ' s go ahead.
11 I t ' s an annual amount . Pl ease go ahead.
12 Q. Wel l , di d you ever di scuss wi t h Dr . Kar r on as t o how many
13 hour s a week he was expect ed t o devot e t o t he pr oj ect ?
14 A. No.
15 Q. And al so on t hat page t hey have $100, 000 whi ch was appr oved
16 f or mat h and gr aphi c pr ogr ammer s, TBD. And t hat was appr oved,
17 r i ght ?
18 A. Yes, t o be det er mi ned.
19 Q. What does TBD mean?
20 A. To be det er mi ned.
21 Q. And t hat was appr oved.
22 A. Yes.
23 Q. Now, di d you l ear n t hat t her e wer e peopl e i n t he f i r st year
24 who wer e not l i st ed on t hi s budget t hat wer e wor ki ng at CASI ?
25 THE COURT: Wor ki ng at CASI or on t he pr ogr am?
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1 MR. RUBI NSTEI N: On t he pr ogr am.
2 A. Thi s nar r at i ve r ef l ect s t hat t her e i s goi ng t o be one, t wo,
3 t hr ee, f our peopl e t hat ' s goi ng t o be wor ki ng on t hi s pr oj ect .
4 Two peopl e ar e t o be det er mi ned. So you have t wo peopl e t hat
5 t hey don' t have a name. But onl y f our peopl e on t hi s pr oj ect .
6 Q. Wel l , i n f act i t has a syst ems admi ni st r at or , cor r ect ?
7 A. Yes.
8 Q. I t has Dr . Kar r on.
9 A. Um- hum.
10 Q. I t has Mr . Gur f ei n.
11 A. Yes.
12 Q. And i t has a mat h and gr aphi cs pr ogr ammer . Those ar e t he
13 t wo peopl e t her e, r i ght ? So t hat ' s a t ot al of f i ve?
14 A. No.
15 THE COURT: Syst ems admi ni st r at or .
16 A. The syst ems admi ni st r at or , i t ' s a syst ems admi ni st r at or
17 net wor k pr ogr ammer . I t ' s one t i t l e. Thi s budget onl y r ef l ect s
18 f our budget , f our sal ar i es, so t hat ' s one t i t l e. That ' s why i t
19 was i ndent ed.
20 Q. Ther e came a t i me t hat you l ear ned t hat t her e wer e ot her
21 peopl e wor ki ng on t he ATP pr oj ect . Di d you have any
22 conver sat i on wi t h Dr . Kar r on about t hese - - wel l , wi t hdr awn.
23 You l ear ned t hat ot her peopl e wer e wor ki ng on t he
24 pr oj ect , cor r ect , on t he ATP pr oj ect ?
25 THE COURT: Di d you l ear n t hat ?
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1 THE WI TNESS: He r equest ed a r evi sed budget t o add
2 peopl e t hat had t o be appr oved, and i t was l at er appr oved, but ,
3 no, he can' t j ust t el l me I ' maddi ng peopl e.
4 THE COURT: That i sn' t what you ar e bei ng asked. Di d
5 you l ear n t hat mor e t han f our peopl e wer e wor ki ng on t he ATP
6 pr oj ect at any t i me?
7 THE WI TNESS: No, I j ust assumed t hat t hese wer e t he
8 f our t hat wer e goi ng t o be wor ki ng on t he pr oj ect .
9 Q. Wel l , di dn' t you get t oget her wi t h your t eamMs. Li de and
10 Ms. Or t hwei n and di scuss what was goi ng on wi t h t he CASI ATP
11 gr ant and what was goi ng on at CASI ?
12 A. We had di scussi ons.
13 Q. And di d you l ear n i n t hose di scussi ons t hat t her e wer e
14 peopl e wor ki ng on t he ATP pr oj ect who wer e not appr oved by your
15 of f i ce?
16 A. No.
17 Q. Di d you ever hear of a man named J i mCox?
18 A. Yes.
19 Q. And was he appr oved t o wor k on t he pr oj ect ?
20 A. I don' t r ecal l . I woul d have t o l ook at t he ot her appr oved
21 document .
22 Q. Now, Gur f ei n was appr oved f or $100, 000 - -
23 A. Yes.
24 Q. - - as t he pr oj ect manager . Di d you ever appr ove someone
25 el se as a pr oj ect manager af t er Gur f ei n?
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1 A. No, not t hat I r ecal l .
2 Q. Do you know t he name Pet er Ross?
3 A. I ' mf ami l i ar wi t h t he name.
4 Q. And do you know who r epl aced Gur f ei n when he l ef t t he
5 pr oj ect ?
6 A. Ther e was - - no, I don' t know who r epl aced Gur f ei n. Ther e
7 was never an appr oved per son managi ng.
8 Q. Wel l , as t he per son who was i nvol ved wi t h hel pi ng CASI , di d
9 you i nqui r e as t o who woul d be t he pr oj ect manager af t er
10 Gur f ei n l ef t ?
11 A. Once Lee Gur f ei n l ef t - - and I ' mnot sur e on t he dat e t hat
12 he l ef t - - i t was up t o Dr . Kar r on - - t hi s i s a commer ci al
13 busi ness - - t o l et us know t hat he was sear chi ng f or somebody
14 t o r epl ace Lee Gur f ei n, and t hen i f he want s t hat per son t o
15 r epl ace t hem, of f i ci al l y he has t o r equest i t , put i n a r evi sed
16 budget t o add t hat per son' s name, and i t has t o be appr oved i n
17 wr i t i ng by t he gr ant of f i cer .
18 So, wi t hi n hi s commer ci al company he can add anyone
19 t hat he l i kes, but t o wor k on t hi s pr oj ect i t has t o be
20 appr oved by t he gr ant of f i cer . So, we don' t get i nt o hi s
21 per sonal , hi s commer ci al busi ness. He coul d have had a l ot of
22 peopl e wor ki ng wi t hi n hi s company but not necessar i l y on t hi s
23 ATP- appr oved pr oj ect .
24 Q. Di d you ever t el l Dr . Kar r on t hat you wer e not appr ovi ng
25 Bob Benedi ct as a r epl acement as t he pr oj ect manager ?
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1 A. What happened was - -
2 Q. No, no. Di d you hear t he quest i on?
3 A. Yeah, I hear d t he quest i on. No, I never t ol d hi mt hat he
4 was not goi ng t o be appr oved. The budget was not appr oved,
5 whi ch woul d have i ncor por at ed hi m. Ther ef or e, under l yi ng he i s
6 not appr oved.
7 THE COURT: Di d he ever ask f or hi mt o be appr oved?
8 THE WI TNESS: He sent cor r espondence, and i n t he
9 cor r espondence he sai d t hat Bob Benedi ct was goi ng t o be t he
10 new pr oj ect manager , so t hat ' s what he want ed. That i s who was
11 r epr esent i ng CASI as a company, and t hat ' s f i ne, he can
12 r epr esent hi s company, but unt i l he was appr oved i n our budget ,
13 he wasn' t an aut hor i zed of f i ci al .
14 THE COURT: Di d he ever ask you t o appr ove hi mi n t he
15 budget ?
16 THE WI TNESS: Yes, he di d t r y t o i ncor por at e hi mi nt o
17 t he budget .
19 THE WI TNESS: Yes, he di d t r y t o i ncor por at e hi mi nt o
20 t he budget .
21 THE COURT: OK.
22 Q. But he was never appr oved?
23 A. He was never appr oved because t he budget was never
24 appr oved.
25 Q. But he was never appr oved, cor r ect ?
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1 A. No, he was never appr oved.
2 THE COURT: And when di d he ask f or hi mt o be
3 appr oved?
4 THE WI TNESS: Ther e i s a l et t er , and I know i t ' s i n
5 one of t hese exhi bi t s, when he t ol d us he was get t i ng a new, I
6 guess, admi ni st r at or .
7 THE COURT: I j ust want t o know t he dat e.
8 THE WI TNESS: I have no i dea what t he dat e was.
9 THE COURT: Don' t you have t he r ecor ds t her e t hat show
10 i t ?
11 THE WI TNESS: OK, I don' t know wher e i t woul d be
12 l ocat ed.
13 THE COURT: Wel l , I can' t under st and whet her t he
14 quest i on and answer ar e r el evant t o t he j ur y' s det er mi nat i on.
15 Q. CASI was appr oved t o spend $100, 000 on t he pr oj ect manager ,
16 cor r ect ?
17 A. Yes, t hey wer e appr oved. The sal ar y was $100, 000, and i t
18 was a hundr ed per cent , so yes.
19 Q. I t was i n f act 75 per cent , r i ght ?
20 A. I t was 75 per cent of $100, 000 sal ar y.
21 Q. Dr . Kar r on was not supposed t o - - he wasn' t bei ng pai d as
22 t he pr oj ect manager , cor r ect ?
23 A. Cor r ect .
24 Q. You have a busi ness, so i s i t your t est i mony t hat $100, 000,
25 because you di dn' t appr ove Bob, a pr oj ect manager dur i ng a
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1 poi nt i n t i me, t hat t hat 100, 000 shoul dn' t be spent on t he
2 gr ant ?
5 A. Coul d you r epeat t he quest i on, pl ease?
6 Q. I f Lee Gur f ei n had cont i nued as t he pr oj ect manager af t er
7 t he f i r st year , t her e woul d be no pr obl emwi t h hi s bei ng
8 appr oved?
9 A. Lee Gur f ei n was appr oved t hr oughout t hi s budget , so Lee
10 Gur f ei n was appr oved.
11 Q. Do you know what Lee Gur f ei n' s cr edent i al s wer e t o be a
12 pr oj ect manager ?
13 A. Hi s r sum was par t of t he pr oposal package, yes.
14 Q. And was Bob Benedi ct ' s r sum submi t t ed t o pr opose hi mas a
15 pr oj ect manager ?
16 A. I don' t r ecal l .
17 Q. I sn' t i t a f act t hat Bob Benedi ct was f ar super i or ?
19 THE COURT: Obj ect i on sust ai ned. Go ahead.
20 Q. Do you r ecal l what sal ar y was r equest ed f or Bob Benedi ct ?
21 A. No.
22 Q. Now, wer e you awar e of Dr . Kar r on' s backgr ound as t o
23 f i nance when t he gr ant was awar ded?
24 A. No, I ' mt he gr ant speci al i st . When i t comes t o hi s
25 backgr ound, t hat ' s not f or me t o r evi ew. I ' mt he gr ant
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1 speci al i st , I do t he budget anal ysi s. I don' t l ook at peopl e' s
2 backgr ounds. I ' msur e i t was l ooked at by t he sci ent i st s and
3 t he pr oj ect t eamwho r evi ewed t hi s pr oposal and appr oved i t .
4 Q. As t he gr ant speci al i st , coul d you pr ovi de a speci al
5 condi t i on of t he awar d t hat a gr ant ee be audi t ed mor e t han once
6 a year ?
7 A. As a gr ant speci al i st you can i ncor por at e speci al wor kd
8 condi t i ons t hat have t o be appr oved by t he gr ant of f i cer , but
9 t he f eder al gover nment can aut hor i ze an audi t any t i me t hey
10 f eel t hat f unds ar e bei ng mi sappr opr i at ed. So, i t can be mor e
11 t han once, i t coul d be t wi ce, i t coul d be t hr ee t i mes.
12 Q. That wasn' t t he quest i on.
13 A. The quest i on i s yes.
14 Q. The quest i on i s: As a speci al condi t i on, when t he per son
15 get s t he money, as a speci al condi t i on t hey' r e advi sed t hat
16 t hey ar e goi ng t o be audi t ed mor e t han once a year , cor r ect ?
17 A. As a speci al awar d condi t i on you ar e audi t ed accor di ng t o
18 your pr oj ect .
20 THE COURT: Obj ect i on sust ai ned t o t he f or mof t he
21 quest i on. I don' t t hi nk i t was - -
22 Q. Most pr oj ect s l i ke i n t hi s case CASI wer e audi t ed at t he
23 end of t hei r f i r st year , cor r ect ?
24 A. They have t o get an i ndependent CPA, t hey' r e r equi r ed t o,
25 t he company, and, yes, t hey get audi t ed. Wi t hi n 90 days t hey
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1 have t o gi ve t he f eder al gover nment a copy of an audi t at t he
2 end of t he year , wi t hi n 90 days af t er t he end of t hei r year .
3 Q. And ar e t her e compani es t hat get ATP awar ds t hat as a
4 condi t i on of t he awar d t hey ar e t o be audi t ed mor e t han once a
5 year ?
6 A. Under f eder al r egul at i ons t he gr ant of f i ce has t he r i ght t o
7 or der an audi t by t he of f i ce of I nspect or Gener al whenever t hey
8 f eel t hat f unds ar e bei ng mi sappr opr i at ed, so, yes, acr oss t he
9 boar d wi t h any gr ant of f eder al f unds you can be audi t ed mor e
10 t han once a year .
11 Q. Do you under st and t he quest i on, ma' am, about t he speci al
12 condi t i ons - -
14 Q. - - when you get an awar d, t hat t her e ar e speci al condi t i ons
15 as par t of t he awar d?
16 THE COURT: You' r e not aski ng your quest i on
17 appr opr i at el y.
18 MR. RUBI NSTEI N: Then i t ' s my f aul t . I apol ogi ze t o
19 Ms. Snowden.
20 THE COURT: I t hi nk she i s answer i ng t he quest i on as
21 she i nt er pr et s i t , but you have t o ask t he quest i on pr oper l y.
22 Q. As par t of t he gr ant , gi vi ng a gr ant , can t her e be speci al
23 condi t i ons i mposed on t he gr ant ee?
24 THE COURT: Thi s woman does not make t he gr ant s; she
25 i s a per son who over sees a gr ant once i t ' s made. AmI cor r ect ?
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2 THE COURT: You don' t det er mi ne whet her or not t he
3 gr ant wi l l be i ssued, i s t hat r i ght ?
5 THE COURT: That ' s done by someone el se i n t he - -
6 THE WI TNESS: Anot her t eamr evi ews t he pr oposal and
7 deci des t o gi ve t he money, and t hen our of f i ce admi ni st er s i t .
8 THE COURT: I s t hat cl ear ? Di d you f ol l ow t hat ,
9 Mr . Rubi nst ei n? She does not make t he gr ant . Al l she does i s
10 admi ni st er a gr ant once i t i s made. Anot her t eamdeci des about
11 maki ng t he gr ant .
12 Q. But t her e ar e si t uat i ons, ar e t her e not , Ms. Snowden, wher e
13 you who admi ni st er s t he gr ant has - - t her e ar e i n pl ace speci al
14 condi t i ons t hat you have t o admi ni st er , r i ght ?
17 A. Coul d you r epeat t he quest i on, pl ease?
18 THE COURT: I n some gr ant s ar e t her e speci al
19 condi t i ons t hat you have t o admi ni st er ?
20 THE WI TNESS: I n some gr ant s you have speci al wor k
21 condi t i ons. I n al l gr ant s t her e ar e speci al wor k condi t i ons
22 i ncor por at ed i nt o t he gr ant .
23 Q. And f r omt i me t o t i me i s one of t he speci al condi t i ons t hat
24 t he gr ant ee, t he per son get t i ng t he money, wi l l be audi t ed mor e
25 t han once a year ?
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1 THE COURT: Do you know t he answer t o t hat ? Have you
2 ever had a gr ant t hat had a speci al condi t i on i n i t t hat
3 r equi r ed t he company t o pr ovi de an audi t mor e t han once a year ?
4 THE WI TNESS: No. You ar e pr ogr amspeci f i c, so up
5 f r ont you consi der t hat ever yt hi ng i s goi ng t o go smoot hl y, so,
6 no, t her e i s not - - you j ust f ol l ow t he audi t gui del i nes, so,
7 no, t her e i s not a speci al wor k condi t i on t hat i s usual l y put
8 i n pl ace t hat you have an audi t . We do have condi t i ons t hat we
9 can - - you can' t - - you can' t t ake any money wi t hout get t i ng
10 our appr oval , but when i t comes t o audi t s, no.
11 Q. You sai d t hat Ms. Hayes was an i ndependent audi t or ,
12 cor r ect ?
13 A. Yes.
14 Q. You had cont act wi t h Ms. Hayes?
15 A. Yes.
16 Q. Over what per i od of t i me di d you have cont act wi t h Ms.
17 Hayes?
18 A. The year 2002, over a per i od of t i me.
19 Q. Do you have any not es or memor andumt hat woul d enabl e you
20 t o be a l i t t l e mor e pr eci se as t o what per i od of t i me i n 2002?
21 A. No, I don' t .
22 Q. Now, coul d you est i mat e f or us how many t i mes you spoke t o
23 her dur i ng t hi s per i od i n 2002?
24 A. Pr obabl y a handf ul of t i mes, so guest i mat e f i ve.
25 Q. And among t he t i mes you spoke t o her , I t hi nk you sai d you
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1 spoke t o her about t he r ent and some ot her expense, cor r ect ,
2 whet her or not i t was al l owabl e?
3 A. She cal l ed and asked me a quest i on, yes.
4 Q. And when about was t hat , ma' am?
5 A. I n 2002.
6 Q. Was i t t he wi nt er ? Spr i ng? Summer or f al l ?
8 THE COURT: Do you know?
9 THE WI TNESS: No. I mean you have t o - - you can
10 assume t hat t he year ended Sept ember 30, 2002, so i t ' s anyt hi ng
11 af t er Sept ember 30, 2002, when t he gr ant ended and when you ar e
12 supposed t o get an i ndependent audi t or t o audi t your books.
13 THE COURT: She was an audi t or ?
15 THE COURT: So you assumed she came i n af t er t he end
16 of t he year .
18 Q. Wer e you awar e t hat she was t he account ant f or CASI ?
19 A. That she was t he i ndependent audi t or f or CASI , i ndependent
20 CPA. She was doi ng t he audi t .
21 Q. But you ar e supposed t o have an i ndependent audi t or ,
22 cor r ect ?
23 A. You have t o get an - - t he f eder al gr ant pays f or an
24 i ndependent audi t or t o audi t t he books, yes.
25 Q. And i s i t f ai r t o say t hat a per son who i s t he account ant
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1 f or t he company cannot be an i ndependent audi t or f or t he
2 company?
3 MR. KWOK: Obj ect i on, your Honor .
4 MR. EVERDELL: Obj ect i on, your Honor . I t ' s out si de of
5 t he - -
6 THE COURT: Do you know whet her she was an account ant ?
7 THE WI TNESS: I di dn' t know she was an account ant t o
8 t he company. Al l I know i s t hat she cal l ed me as an
9 i ndependent CPA f or t he company, and t hat ' s who she was
10 r epr esent i ng t he company as an i ndependent . Any ot her , I have
11 no i dea.
12 Q. And you ar e awar e of r equest s f or change i n cost s f or
13 equi pment t o be changed, i s t hat cor r ect ?
14 A. I amawar e t hat t her e was a r equest t o add a pi ece of
15 equi pment .
16 Q. And was t hat appr oved?
17 A. No.
18 Q. And was t he r eason i t wasn' t appr oved i s because t he
19 r equest wasn' t i n wr i t i ng?
20 A. The r eason why i t wasn' t appr oved - - he sent i n a r evi sed
21 budget . I had quest i ons f or t he budget t hat he sent i n. He
22 sent me anot her budget . So, he f r equent l y sent i n budget s, so
23 none of t hemever got appr oved.
24 Q. But he had a r i ght t o spend up t o $80, 000 i n addi t i onal
25 moni es f or equi pment wi t hout appr oval , cor r ect ?
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1 A. He had a r i ght t o move addi t i onal money wi t hi n 80 per cent
2 of t he annual budget wi t hout appr oval but wi t h not i f i cat i on,
3 but i t has t o - - you can spend i t wi t hi n t he budget , but you
4 can' t add i t ems t o t he budget .
5 When you come i n wi t h a pr oposal , you have an i t emi zed
6 budget down t o, f or exampl e, t he penci l s you want t o buy.
7 That ' s t he onl y t hi ng appr oved wi t hi n t hat budget , so you can' t
8 j ust ar bi t r ar i l y go out and say I want t o buy a comput er i f a
9 comput er wasn' t i ncor por at ed and appr oved wi t hi n your appr oved
10 budget . The cat egor i es have t o al r eady exi st . You can' t add
11 cat egor i es. I f i t ' s a zer oed out cat egor y, you can' t add t hat .
12 So, t hen he woul d al r eady have t o be appr oved.
13 Q. Di d t he CASI budget have a cat egor y cal l ed equi pment ?
14 A. Yes, t hey di d.
15 Q. Di d you t est i f y t hat t hey had or i gi nal l y $375, 000 appr oved
16 f or t he pur chase of equi pment ?
17 A. I woul d have t o l ook at i t t o know exact l y what i t says.
18 Q. But do you r ecal l t est i f yi ng t hat t hey submi t t ed a r evi si on
19 f or r educt i on i n t he equi pment when t he pr osecut or asked you
20 quest i ons?
21 A. He asked me quest i ons. But l i ke I sai d, what exhi bi t ? So
22 I can l ook. I want t o make sur e I ' mcor r ect . Tel l me t he
23 exhi bi t and we can t al k about i t .
24 Q. Wel l , bef or e you l ook at an exhi bi t , ar e you awar e as you
25 si t t her e now t hat t her e was i n t he budget a cat egor y f or
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1 equi pment ?
2 A. Yes.
4 THE COURT: Whi ch budget ar e you t al ki ng about ?
5 MR. RUBI NSTEI N: Al l of t he budget submi t t ed by CASI .
6 MR. EVERDELL: Obj ect i on, your Honor . The document s
7 ar e i n evi dence. We can l ook at t he document s.
8 THE COURT: Let ' s deal wi t h i t document by document so
9 t he j ur y can f ol l ow i t .
10 MR. RUBI NSTEI N: Can I pl ease do i t my way? I t mi ght
11 be a l i t t l e f ast er t han t aki ng out document s.
12 MR. EVERDELL: Your Honor , I t hi nk i t woul d be
13 conf usi ng.
14 MR. RUBI NSTEI N: Conf usi ng?
15 Q. Does ever y budget f or CASI have a l i ne f or equi pment ? Yes
16 or no?
17 THE COURT: Yes.
18 MR. RUBI NSTEI N: Thank you, J udge.
19 THE COURT: Ever y budget has an i t emf or equi pment and
20 a number i n i t .
21 MR. RUBI NSTEI N: Thank you, J udge.
23 MR. RUBI NSTEI N: So, do I have t o show each one of
24 t hose on t he scr een?
25 THE COURT: Whi ch one do you want ?
( 212) 805- 0300
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1 Q. So, t her e was al r eady est abl i shed an equi pment l i ne,
2 cor r ect ?
3 A. Accor di ng t o t est i mony, yes, t her e was, and t he j udge sai d
4 t her e was, and t her e i s.
5 Q. You don' t r ecal l t est i f yi ng t o t hat wi t h t he pr osecut i on
6 asked you quest i ons?
7 A. I t est i f i ed t o t he f l uct uat i on of t he monet ar y val ues i n
8 each cat egor y. I have t o l ook at a budget as I woul d do i n my
9 of f i ce, and I can t el l you speci f i cal l y. But t her e i s a l ot of
10 budget her e.
11 Q. So, now t hat we concede t hat equi pment i s i n t he budget ,
12 Dr . Kar r on di d not need your appr oval i f he was buyi ng a pi ece
13 of equi pment t hat cost l ess t han $80, 000 above what ever t he
14 number i s t hat he was budget ed f or equi pment , r i ght ?
15 A. He di d not need my appr oval , but t he equi pment t hat he
16 r equest ed was over 10 per cent . That ' s why he had t o put i n and
17 r equest a r evi sed budget . I f i t was j ust wi t hi n t he 80, 000, I
18 woul d never have t ol d hi myou have t o r evi se your budget .
19 Ther ef or e, i t was over $80, 000.
20 Q. What was t hat pi ece of equi pment t hat he was r equest i ng?
21 A. I don' t r ecal l .
22 Q. Do you have any not e about i t anywher e?
23 A. No.
24 Q. Do you have any e- mai l about t hat ?
25 A. No, I don' t .
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1 Q. You t ol d us about - -
2 THE COURT: Do you know what t ype of equi pment i t was?
3 THE WI TNESS: No, I j ust know i t was over t he 10
4 per cent . That ' s why I t ol d hi m, when we di scussed i t , t hat he
5 had t o do a r evi sed budget , because under t he 10 per cent I
6 woul d have sai d j ust gi ve us not i f i cat i on and we coul d have
7 moved on. I t was over 10 per cent .
8 Q. So, wi t h a si gni f i cant r evi sed budget di d you appr ove t hat
9 amount f or t he equi pment t hat he had r equest ed?
10 A. The f i r st ? No.
11 Q. Even t hough - - di d you make an eval uat i on as t o whet her or
12 not t hat equi pment woul d ai d and assi st t he pr oj ect t hat he was
13 wor ki ng on?
14 A. When you do a r evi sed budget you not onl y l ook at t hat one
15 l i ne, I l ook at al l t he l i ne i t ems, because I have t o make sur e
16 t hat none of t he number s change and t hat at t he end of t he day
17 t hat ever yt hi ng st i l l equal s t o t he amount of money f or t hat
18 annual year . The number s f l uct uat ed. I l ooked at t hem, and I
19 had t o l ook at what he had at t ached, so i t never got appr oved
20 because t her e wer e ot her changes i n t he budget t hat we di dn' t
21 know about .
22 Q. He never asked f or mor e t han $800, 000 t hough, cor r ect ?
23 A. I t doesn' t make a di f f er ence.
24 Q. Di d he ever ask f or mor e t han $800, 000, yes or no?
25 A. He never asked t o exceed t he annual appr oved amount f or
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1 t hat year .
2 THE COURT: Whi ch was 800, 000.
3 THE WI TNESS: Whi ch was 800, 000, yes.
4 Q. So you coul d not - - coul d you appr ove - - i f he submi t t ed
5 t en r equest s f or r evi si ons, coul d you appr ove one and r ej ect
6 ni ne, or do you have t o accept t hemal l t o get t he r evi si on?
8 THE COURT: The manner i n whi ch t hi s comes t o your
9 at t ent i on i s by way of a pr oposed r evi sed budget .
11 THE COURT: I s doesn' t come i n si ngl e i t ems.
12 THE WI TNESS: No, i t comes i n a budget , and ever y
13 cat egor y has a number i n i t , and t hey al l have t o equal .
14 THE COURT: But i n addi t i on you r ecei ved an or al
15 r equest , i s t hat r i ght , f r omDr . Kar r on f or equi pment ?
16 THE WI TNESS: No. What he di d - - af t er J ay and B. J .
17 di d t he si t e vi si t , he cal l ed me and sai d he want ed t o add
18 f unds f or equi pment , and so t hen I t ol d hi m, I sai d si nce you
19 want t o add money, I sai d - -
20 You ask how much i t i s, and I don' t r ecal l t he amount .
21 I sai d, wel l , t hat ' s over $80, 000, you must submi t a r evi sed
22 budget .
23 THE COURT: Appr oxi mat el y when was t hat conver sat i on?
24 THE WI TNESS: I n November of 2002, soon af t er t he si t e
25 vi si t .
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