Trudeau Civil Case Document 723 Attachment 6 of 9-07-22 13 Transcript of 05-21-13 Hearing

Case: 1:03-cv-03904 Document #: 723-6 Filed: 07/22/13 Page 13 of 142 PageID #:12204
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1 2 3 4 5 6 7 8 9 10 11 APPEARANCES:
IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION FEDERAL TRADE COMMISSION, Plaintiff, vs. KEVIN TRUDEAU, Defendant. ) ) ) ) ) ) ) ) )
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(Proceedings in open court.) THE CLERK: 03 C 3904, FTC versus Kevin Trudeau; for
3 hearing. 4 No. 03 C 3904 Chicago, Illinois May 21, 2013 10:00 a.m. 5 6 7 MR. ANDERSON: Good morning, Your Honor.
Kimball Anderson for Mr. Trudeau. MR. COHEN: Good morning, Your Honor. With
Jonathan Cohen for the Federal Trade Commission.
8 me as well are Michael Mora, Amanda Costner, and David O'Toole. TRANSCRIPT OF PROCEEDINGS - MOTION BEFORE THE HONORABLE ROBERT W. GETTLEMAN 9 MR. ANDERSON: And I would be remiss if I did not
10 mention Mr. Kirsch, my partner is here. 11 MR. KIRSCH: THE COURT: Good morning, Your Honor. Good morning. And our colleague, Katherine Croswell.
12 For the Plaintiff: 13 14 15 16 17 18 For Defendant Trudeau Law firm of 19 Marc J. Lane and Marc J. Lane: 20 21 22 23 Official Reporter: 24 25
FEDERAL TRADE COMMISSION 600 Pennsylvania Avenue, N.W. M-8102B Washington, DC 20580 BY: MR. JONATHAN COHEN MR. MICHAEL MORA MS. AMANDA COSTNER FEDERAL TRADE COMMISSION 55 West Monroe Street, Suite 1825 Chicago, Illinois 60603 BY: MR. DAVID A. O'TOOLE WINSTON & STRAWN LLP 35 West Wacker Drive Chicago, Illinois 60601 BY: MR. KIMBALL ANDERSON MR. THOMAS L. KIRSCH, II MS. KATHERINE CROSWELL
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MR. ANDERSON: THE COURT:
Good morning. Good morning. And our client, Kevin Trudeau, is here as
MS. CROSWELL: MR. ANDERSON:
17 well pursuant to Your Honor's request. 18 19 THE COURT: Good morning, everybody. Very good.
A couple of things I want to mention before we begin.
20 First of all, there is a lot of motions pending, including the 21 one we're here about, the motion to hold Mr. Trudeau in contempt. 22 That's document 481. There is a bunch of other motions that I
JENNIFER S. COSTALES, CRR, RMR 219 South Dearborn Street Room 1706 Chicago, Illinois 60604 (312) 427-5351
23 think are moot at this point that we can just withdraw I think 24 without prejudice to the extent that that means anything in this 25 context.
cosmicconnie.blogspot.com
3 4 1 The FTC's motion to compel Winston & Strawn and Marc 1 that aside for now then. 2 motion pending. 3 We won't deal with -- we'll leave that
2 Lane, I think we're beyond that, aren't we? 3 4 MR. COHEN: THE COURT: Yes, we are. Okay. I mean, if you need to renew it, if
We have other things to deal with today.
The other thing I wanted to mention to you is the
4 proceedings that we had in chambers yesterday, we went into 5 chambers because it was my understanding from what Mr. Anderson 6 said that we might be talking about some type of privileged or
5 anything comes up -- I just want to get these off the books. 6 That's 538. 7 8 Somebody got a phone on? Please turn your phones off. The FTC's That's 590
7 potentially privileged information or communications that we're 8 going to deal with on a document by document or a question by 9 question basis. 10 And actually just briefly looking at the rough
Mr. Sant's motion to quash his subpoena.
9 motion to compel Sant to comply with the subpoena. 10 and 593. 11 12 MR. COHEN: THE COURT: All mooted, Your Honor. Right.
11 transcript, and it was just yesterday afternoon, I think we all 12 have a pretty good memory of it, I don't remember any such 13 communications being disclosed at that in chambers conference. 14 So I would unseal that record, unless there is an objection. 15 you object to unsealing the record, I'll let you order a 16 transcript, and then you can tell me what part, if any, of the 17 transcript you would care to ask me to continue to seal. 18 MR. ANDERSON: Your recollection is probably correct. If
And the FTC's motion to hold Marc
13 Lane, GIN, WSU, and KTRN in contempt. 14 MR. COHEN: Your Honor, with respect to that one, it is
15 mooted with respect to Mr. Lane as a result of an agreement 16 between Mr. Lane and the FTC that resolved that motion. I'm not
17 certain, the FTC is uncertain that it's mooted with respect to 18 the entities in light of the fact that the FTC's position is that 19 the entities have not produced an adequate 30(b)(6) designee to 20 date. 21 22 23 THE COURT: MR. COHEN: Because Mr. Trudeau took the Fifth? That's correct. But they selected him knowing that he was They made that election. I'll tell you what, let's put
19 But I would like the opportunity to look at at least the rough 20 transcript if I could. 21 THE COURT: All right. I won't unseal it now, but, you
22 know, let me know within the week, a week from now whether or not 23 you agree or not, because I think, as you know, our circuit, and 24 certainly I join that, prefers to have as much as possible in the 25 public record. And I don't think there is anything in there that
MR. ANDERSON:
24 going to take the Fifth. 25 THE COURT:
All right.
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1 shouldn't be in the public record. 2 3 MR. ANDERSON: THE COURT: I will do that. All right. Now, I've got
1 perhaps comment on a few of them that we've agreed that are in 2 evidence. I don't think we ought to be arguing about stuff that We've agreed on some stuff that's in
Okay, thank you.
3 is not in evidence yet. 4 evidence.
4 two -- I've got a lot of documents here. 5 binders from Mr. Trudeau.
In fact, I've got two
So I was going to address some of that as to what the So I think
I was a little surprised to see
5 evidence would show in our opening statements today.
6 Mr. Trudeau submitting exhibits when you told me he intends to 7 assert his Fifth Amendment rights. 8 MR. ANDERSON: Oh, but a lot of the exhibits have been And they have been testified to by,
6 both sides just submitted to you the documentary evidence that we 7 expect -8 9 10 THE COURT: Okay. -- will be -So you don't have to do it
9 produced by the entities.
10 for example, Michael Dow, who is a CPA, the accountant. 11 THE COURT: But, I mean, for purposes of today's
That's fine.
11 again during the briefing. 12 you are saying. So, 13 MR. COHEN:
I have them here is basically what
12 proceeding as I understood it from yesterday, you told me 13 Mr. Trudeau was going to assert his Fifth Amendment rights.
Your Honor, if I may, it is their burden of
14 therefore, I wouldn't have anticipated you offering any exhibits 15 into evidence today. 16 Now, as we also discussed, you're going to be
14 production today.
So they need to -- I think we disagree as to
15 whether those exhibits satisfy their burden of production. 16 THE COURT: Well, that's what the disagreement is all I think you're
17 designating depositions and setting, we'll be setting a briefing 18 schedule on the entire matter, at which time, of course, you 19 would have the opportunity to do just that as part of your 20 submissions, but I didn't see that as happening today. 21 MR. ANDERSON: Well, then we may have miscommunicated.
17 about, and that's what I'll have to decide. 18 right.
Just to put this all in context, I've already found that
19 the government, that the FTC has made a prima facie showing of 20 contempt. And then it's up to Mr. Trudeau to meet his burden of
21 showing that he is unable to comply with the order to pay the $37 22 million. And that's what this is all about. And the burden is
22 But what the parties did is we exchanged exhibit lists last week, 23 and we're in the process of exchanging deposition designations. 24 And we reached agreement on a lot of the exhibits, so we thought 25 we would put those before the Court, at least I'm going to
23 on Mr. Trudeau to do that.
So that's what these proceedings are
24 part of, not conclusive, but they are part of. 25 And one other thing I wanted to mention to you, and that
7 8 1 is giving more thought to our conversation with respect to 2 Mr. Lane, I just want to tell you that having given that matter 3 more thought, I think it's likely that he will probably have to 4 testify. And I just wanted to put you on notice, Mr. Anderson, And 1 contempt on the basis that those exhibits do not meet the 2 governing legal standard, which is that he clearly and 3 unmistakably, categorically, and in detail established his 4 inability to pay. 5 first. So we'd ask the Court to rule on that motion
5 because I know you have some decisions to make about that. 6 the more I thought about it, even looking over some of the
And then in the event that that motion is taken under
6 advisement, we would at that point proceed with our case. 7 THE COURT: Well, it will be taken under advisement,
7 exhibits, I obviously haven't had a chance to look them over, 8 look over all of them, and looking over my notes on the case, I 9 just wanted to give you a heads-up that if you're planning, you 10 know, whatever planning you're doing, I think you have to just, 11 if you made that assumption, it would be the safest thing to do. 12 So that's just more of a comment. 13 MR. ANDERSON: All right. Back to the exhibits then, so
8 because you just dropped about thousands of documents on me, and 9 I'm not a speed reader. 10 I'm not that speedy, that's for sure.
I anticipated you putting Mr. Trudeau -- Mr. Trudeau has
11 attempted to meet his burden by submitting the sworn financial 12 statement. And that's the last thing that Mr. Trudeau has And I think that his position has been that And then it's your position I
13 basically submitted.
14 we just consider both sides' exhibits submitted as of today? 15 16 17 THE COURT: That's fine, that's fine. Thank you.
14 that's enough to meet his burden.
15 think, I don't know if the burden shifts, but you're testing that 16 position I think. 17 So I would have expected you to put him on. I mean, do
You know, I wish you had the electronics
Mr. Anderson, do you have anything to say?
18 here, because it would be a lot easier to look at them that way. 19 But there is a lot of binders here. 20 through them today. 21 22 But how do you propose to proceed, Mr. Cohen, today? MR. COHEN: Your Honor, it's their burden of production. In the event that You'll have to help me sort
18 you disagree with that proposition? 19 MR. ANDERSON: I don't. I'll just add a footnote that
20 we've now in the boxes that you have before you submitted 21 additional evidence that's probative of the inability to pay in 22 both deposition testimony and documentary evidence. 23 evidence in addition to the financial statement. 24 I don't really feel too strongly about who goes first But this is the FTC's, So you have
23 As such we'd propose that they proceed first.
24 all Trudeau intends to do is put forth those exhibits, then at 25 that point in time we would ask Your Honor to find Mr. Trudeau in
25 with their opening statement.
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1 fundamentally it's their motion.
Whether the burden has shifted
1 them because Mr. Cohen hadn't had a chance to do his 2 designations, so we agreed yesterday we would do that on the 29th 3 or something like that. 4 MR. COHEN: I think it may have been the 30th, but
2 here or there or back, they have the burden, ultimate burden at 3 the end of the day. 4 that's okay. 5 6 7 8 And so if Mr. Cohen would like to go first,
If you'd like to hear from me, I'll go. Your Honor, I'm happy to go first. Okay. We have settled that part of it.
MR. COHEN: THE COURT: MR. COHEN: THE COURT:
5 regardless we've reached an agreement with respect -6 7 8 9 we start. 10 THE COURT: You said the 30th yesterday. Yes.
Thank you, Your Honor. Mr. Mora, I think, wants to say something.
So we'll talk about schedules after, after
9 Did you want to say something, Mr. Mora? 10 11 12 MR. ANDERSON: THE COURT: Mr. Kirsch is whispering in my ear --
All right then. MR. ANDERSON: I think both parties anticipate in about
There is a lot of whispering going on. Yeah. Well, I know we talked about the And I don't know whether we
11 a week submitting designations and cross-designations, because I 12 don't believe Mr. Cohen had that opportunity to do that as of 13 yesterday. 14 THE COURT: All right. Let's use the time today to hear
MR. ANDERSON:
13 formal submission of the exhibits. 14 need to make a formal motion.
But on behalf of Trudeau,
15 Mr. Trudeau, I'm moving to admit the exhibits that we put in the 16 boxes before you. And the FTC, by the way, has stipulated to the So that's my formal motion for the
15 some brief opening statements, and then we'll hear from 16 Mr. Trudeau, and then we'll take it from there. 17 MR. COHEN: Two other just brief issues. The FTC has
17 admissibility of those. 18 record. 19 THE COURT:
18 proposed and offers approximately 300 exhibits, many of those Well, I literally just got those before I 19 exhibits are contested. And we want to make clear for the record
20 came on the bench. 21 22 MR. ANDERSON: THE COURT: I understand. Are there
20 that I think the procedure that we're going to undertake is that 21 the Court may make rulings on certain of those exhibits today. 22 Perhaps that will give guidance that will enable the parties to 23 reach stipulations over the next few days with respect to the 24 remainder of those exhibits. We want to clarify that that's the
There are documentary exhibits.
23 also deposition excerpts in there? 24 MR. ANDERSON: We have not yet submitted the deposition But you don't have
25 excerpts, although we have designated them.
25 Court's understanding as to that.
11 12 1 THE COURT: Well, yeah, that's fine. But let's put this 1 more than $37 million. As the Court is well aware, this is the
2 in context too.
I mean, this is tried to the bench, and we don't
2 amount that Trudeau owes more than 800,000 consumers that he 3 misled through contemptuous infomercials that he aired more than 4 I believe 30,000 times. 5 The Court has already held as the Court just mentioned
3 have to get into arguments about relevance and that sort of 4 thing. Authenticity for sure, you know, if there is some But other than
5 privilege issues, for sure, that sort of thing.
6 that, you know, when you're trying a case to the bench of any 7 kind, the rules are a lot more flexible. 8 MR. COHEN: Finally, Your Honor, in addition to the
6 that the FTC has established a prima facie contempt case, 7 including that Trudeau failed to make reasonable and diligent 8 efforts to comply. 9 The only remaining matter is his defense, which is Put differently, the question is
9 binders that the FTC has provided to the Court, we also have a 10 selection of exhibits that we anticipate using today, and we'd be 11 happy to provide those to the Court if that would make it easier 12 for the Court to follow along. 13 14 15 16 that. 17 18 exhibits. 19 20 exhibits. 21 THE COURT: All right. Let's start, let's start with THE COURT: MR. COHEN: THE COURT: My chiropractor would agree with that. I'm sorry? I said my chiropractor would agree with
10 alleged inability to comply.
11 whether Trudeau's two payments last year totaling only $54,000 12 are all that he could have paid and that he can pay nothing more. 13 The law is very clear that he must produce evidence
14 establishing his inability to pay categorically and in detail. 15 His proof must be clear, plain, and unmistakable. And he must
Sure, fine, whatever makes it easier for everybody. MR. ANDERSON: Well, you're only going to use admitted
16 further show, this is significant, that the alleged inability to 17 pay was not self-induced. 18 In the event that Trudeau meets this difficult burden, a
You're not going to use stuff that's contested. MR. COHEN: Or we're going to move to admit those
19 burden which the courts have characterized as a difficult one, 20 the FTC will establish that Trudeau's ability to pay has been and 21 remains vastly greater than his $54,000 payment, and that any 22 purported inability to pay that remains is entirely self-induced. 23 The documents will show that over the past two, nearly
22 your opening, Mr. Cohen. 23 MR. COHEN: Your Honor, the issue is whether defendant
24 Kevin Trudeau is in contempt of this court for his failure to 25 comply with this Court's June 2010 order that he pay or repay
24 three years, since the Court entered the June order to pay, 25 Trudeau has spent more than $10 million, including $5 million to
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1 his corporate counsel, Marc Lane, more than $1.7 million to his 2 litigation counsel, and $3.2 million on personal expenses ranging 3 from everything from groceries to nights at the Four Seasons. 4 The documentary evidence will also show that Lane worked
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MR. ANDERSON:
Mr. Cohen, may it please the Court.
I thought I would talk about what the evidence will
3 show, and let me begin by what the most recent evidence will 4 show. That evidence will show that we have been asking the FTC
5 with Trudeau to coordinate a sophisticated asset protection plan 6 designed to render Trudeau the legal owner of limited assets, but 7 the beneficial owner of substantially more, including multiple 8 companies associated with the Global Information Network and a 9 trust that contains important significant assets. 10 Through testimony and deposition transcripts, we will Those are
5 on behalf of our client, Mr. Trudeau, what do you want from this 6 hearing? Mr. Trudeau had provided his accounting. The companies
7 have provided their financial statements, their bank records. 8 There is a lot of paper here. 9 And the response that we heard from the FTC and the
10 Court heard it in court last week was the FTC really didn't trust 11 Mr. Trudeau's accounting, so they wanted an independent 12 accountant. So we said, the evidence will show we said: Fine.
11 also present testimony from the four key players:
12 Trudeau; Ms. Babenko, Trudeau's wife; Neil Sant, whom Trudeau has 13 characterized as his right-hand man; and Marc Lane, who is 14 Trudeau's corporate counsel and asset protection planner. 15 Two of those four witnesses, that's Ms. Babenko and
13 Let's do that.
We're happy to agree to any reputable independent
14 accounting firm. 15 We also contacted Mr. Donnellon, who as the Court knows
16 Mr. Sant, have already asserted their Fifth Amendment rights. 17 Marc Lane, the corporate counsel and asset protection planner, 18 has offered nothing through his deposition testimony that in any 19 way contradicts the FTC's position. And it's anticipated that
16 represents Website Solutions, KT Radio Network, GIN USA, and 17 Ms. Babenko. 18 THE COURT: Can I just stop you for one second. I'm
19 sorry to interrupt. 20 today. 21 this? 22 23 24 25
But Mr. Donnellon I don't see as being here
20 Trudeau will not be answering our questions here today. 21 In short, the evidence will show that Trudeau has As such,
He knows that he was not going to be telephoned in to
22 control and continues to control significant assets.
That is my understanding, Your Honor.
23 Your Honor, his defense fails, and he should be held in contempt. 24 25 THE COURT: Thank you.
Okay. That is my understanding. I just want to make sure. All
Mr. Anderson.
All right.
15 16 1 right. 2 MR. ANDERSON: We contacted Mr. Donnellon, and we asked 1 Supreme Court decisions on coercive contempt. But in short, the
2 Supreme Court in the Bagwell decision that we've cited has 3 pointed out that the purpose of coercive contempt is not to 4 punish for past conduct. 5 It's not even to deter future conduct.
3 if his clients would agree to a full and independent accounting, 4 and he said yes. 5 So we said, the evidence will show, to the FTC that if
And the Seventh Circuit in the In Re:
Grand Jury
6 there are any assets that can be used to pay the judgment, you 7 know, let's find them. 8 the judgment. We'll immediately turn them over to pay
6 Proceedings that we've cited several times has said the same 7 thing, that civil contempt is coercive in nature, and there is no 8 justification for confining on a civil contempt hearing a person 9 who has already agreed to comply or lacks the ability to comply. 10 11 us here. Now let's briefly review the factual history that leads The Court as you know entered a final corrected And that was, the
And we told the FTC that we were ready to proceed And the FTC has not really been responsive.
9 with the accounting. 10
So the first thing I want to do today is just simply to
11 urge the Court to immediately order an accounting by an 12 independent accounting firm. 13 an order. We will stipulate to the entry of
12 judgment on June 2, 2010, against Mr. Trudeau.
And why, I ask, should the Court be consumed with
13 amount was a little over $37 million reflecting the amounts that 14 consumers paid to purchase this Weight Loss Cure book. And as
14 reading literally thousands of pages of documents and deposition 15 testimony, and why should the parties suffer the cost of briefing 16 the evidence and the law? 17 If there are assets, Mr. Trudeau and the FTC should be
15 the FTC has previously conceded both here and before the Seventh 16 Circuit, Mr. Trudeau did not receive that $37 million. The money
17 was collected by ITV Global, a company that is independent of 18 Mr. Trudeau. 19 37 million. And the FTC separately sued ITV Global for the same And, frankly, there is not record evidence of how We don't know on behalf of
18 put at ease, progress will be paid toward paying the judgment, 19 and if they're not, the litigation should end. 20 let's get started with the accounting. 21 Mr. Cohen talked a little bit about the law. But I And so I say
20 that collection action is going. 21 Mr. Trudeau. 22
22 frankly don't think that his discussion of the law was complete 23 or entirely fair. And I don't want to sound like a broken
But Mr. Trudeau, who didn't receive the 37 million, had And he could appeal the And
23 some choices to make after the judgment.
24 record, because we have, you know, briefed this issue before. 25 And I'm sure the Court is fairly well aware of the seminal
24 judgment or try to earn enough money to pay the judgment. 25 the evidence will show that he elected to do both.
He hired
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1 lawyers who appealed the judgment unsuccessfully, I regret to 2 say, all the way to the United States Supreme Court. And he
1 create a fund from future earnings sufficient to provide refunds 2 to any purchaser of the book who wanted one. 3 And to that end Mr. Trudeau borrowed $2 million, which
3 began working with companies who hired him to do what he does 4 best. He is a motivational speaker. He is a New York Times best
4 he placed on deposit with the Court so that he could resume the 5 infomercial business and generate funds for this consumer 6 remediation plan which we envisioned would be administered by 7 Rust Consulting. 8 The FTC vehemently opposed that motion and also rebuffed
5 selling author.
And he's hired to travel really around the world
6 and give speeches and workshops on how to live healthy and 7 successful lives. And the evidence will show that there are
8 thousands of people, probably tens of thousands of people who 9 attend these conferences and events to hear Mr. Trudeau and other 10 motivational speakers. 11 There are others, for example, just by way of example,
9 Mr. Trudeau's attempts through his lawyers to work out a payment 10 plan. The FTC refused to disclose whether it had a plan, let
11 alone the details of it. 12 And so within a month after Mr. Trudeau approaching the
12 Mr. Trudeau once traveled to Australia with General Norman 13 Schwartzkopf and Former President Gorbachev to give motivational 14 speaking before thousands of paying customers. 15 So that was 2010.
13 FTC about a remediation plan, about an installment payment plan, 14 the FTC filed its motion to hold Mr. Trudeau in contempt of court 15 for failing to pay the judgment, and this motion asked to 16 incarcerate Mr. Trudeau. 17 Attendant to the FTC's motion, they launched a blizzard They served over 20 subpoenas on everyone
And then the FTC did nothing for two years to collect It did not initiate any citation to discover It did not put liens on It did not garnish
16 the judgment.
17 assets under federal or Illinois law. 18 any assets. 19 any wages. 20
It did not garnish any accounts.
18 of discovery requests.
19 who does business with or associates with Mr. Trudeau, his law 20 firms, his banks, credit card companies, his wife, various 21 companies. Curiously the FTC meanwhile never asked Mr. Trudeau
The FTC was not spurred, did not awaken until
21 Mr. Trudeau on the advice of counsel filed a motion with this 22 Court on June 11, 2012 to modify the final judgment judgment 23 order so that he with our assistance could hire a reputable class 24 action administration firm that the FTC had used in the past, 25 namely, Rust Consulting. And the concept was that he would
22 directly for a deposition or any discovery. 23 He did try to make payments to the FTC. Mr. Cohen
24 mentioned them. 25 of the judgment.
He sent the FTC a few checks in partial payment The FTC, however, refused to cash the checks.
19 20 1 They remain uncashed today. 2 fruitless, and he stopped. 3 The subpoenas as I mentioned went out to everybody who And so Mr. Trudeau decided that was 1 operational support for the companies that hired Mr. Trudeau as a 2 motivational speaker. These were not sham companies set up to They were real operating
3 hide assets as Mr. Cohen keeps arguing.
4 has done business with Mr. Trudeau, and they had some results. 5 Documents were produced, but the respondents were intimidated. 6 Banks closed accounts. Customers were scared away. Employees
4 companies with revenues, expenses, and real creditors. 5 Third, the evidence will show that all of these You will
6 companies unfortunately as of today have no net assets. 7 see the bank statements.
7 quit, others had to be laid off.
And Mr. Trudeau's future
You will see the financial statements. Expenses have exceeded
8 earning power dried up, and then he filed for bankruptcy. 9 If you choose to look through all the paper and
8 The companies unfortunately are broke. 9 revenues. 10
10 deposition testimony, which as I said at the outset I think is 11 unnecessary, because Mr. Trudeau has agreed to an accounting, but 12 if you choose to do that, I think the evidence is going to 13 clearly show several things. 14 First, Mr. Trudeau never transferred any money or any of
Website Solutions, for example, has millions of dollars
11 in revenues for fees that it earned for services provided to GIN 12 USA, which is the host of these motivational speaking events. 13 But it also as the financial statements will show has incurred 14 many million dollars more in expenses for renting hotels, cruise 15 ships, marketing for these events. 16 The financial statements show that the companies are And
15 his own money or any of his assets to these corporate entities. 16 This is not a situation where he had 37 million or 10 million or 17 $5 million, and he parked it in some company to avoid paying the 18 judgment. 19 transfers. 20 Second, the businesses at issue, they were actual You will see from the testimony and the It just didn't happen. There are no fraudulent
17 broke, and the FTC has really no evidence to the contrary. 18 some of the companies are simply defunct.
They have been that
19 way for a long, long time, some well before the judgment. 20 The fourth thing that the evidence will show is that the
21 operating entities.
21 FTC's compilations, they have had one of their office paralegals 22 submit some compilations of revenues. 23 revenues are not assets. But to state the obvious,
22 exhibits that Website Solutions USA employs over 30 people, a CFO 23 and a CEO, none of these people, by the way, Mr. Trudeau. 24 Mr. Trudeau was the talent. 25 He's the motivational speaker.
To state the obvious, revenues minus
24 expenses equals net income. 25 And the FTC's compilations have ignored the expenses,
Website Solutions provided marketing, accounting, and
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1 and they ignore the losses.
And we will when we have an
1 FTC repeatedly characterizes as Mr. Trudeau's lavish house. 2 Well, it's owned by Website Solutions -- no, it's not. 3 it. They currently rent it, and they use it for company Currently residing there is the acting They rent
2 opportunity to brief the evidence, if the Court affords us that, 3 we'll show where the money went and how it was spent on 4 legitimate business operating expenses. 5 Fifth, the evidence is also going to show that the
4 executives and speakers.
5 CEO of Website Solutions, who is not Mr. Trudeau or his wife. 6 Sixth, and finally, I think the evidence will show that
6 companies reimbursed Mr. Trudeau for substantial expenses 7 associated with his international travel and motivational 8 speaking. The FTC points to allegedly extravagant expenses for And you've already seen in prior papers Well, And
7 Mr. Trudeau did exercise some influence, although not legal 8 control, over the finances of these companies. He exercised some
9 which he was reimbursed.
9 influence over his wife, for example, who owns some of the 10 companies. And sometimes she bailed him out on legal expenses
10 arguments about the purchase of a Bentley automobile. 11 Website Solutions did purchase a Bentley automobile.
11 and other expenses, and sometimes she did not. 12 But it was in the company's best interest to keep
12 Mr. Dow, Michael Dow, who is the CPA for the company, testified 13 at deposition. 14 15 16 He was asked by FTC counsel question:
13 Mr. Trudeau on the speaker circuit and generating revenues for 14 the companies. 15 insolvent. They were 16 And there are some cases out there that have dealt with In the end, however, the companies became
"What were those Bentleys used for if you know?" Mr. Dow's answer was as follows: "They were taken to some of the major events. For example, we had a dream weekend.
17 shipped there.
And the car
17 the issue, this issue of present or past alleged ability to pay a 18 judgment. And one case I wanted to call the Court's attention to
18 would be there so people could sit in it.
And if you build your
19 life, you can afford a nice life like this." 20 That's at page 84, line 12, of Mr. Dow's testimony that
19 that I have not previously cited it, it's a U.S. Supreme Court 20 decision. It's called Maggio, M-a-g-g-i-o, versus Zite, Z-i-t-e,
21 will be before the Court. 22 Of course, Website Solutions later had to sell the
21 and the cite is 333 US 56. 22 I think it's worth looking at, because it's a civil
23 Bentley to pay for operating expenses. 24 Similarly the FTC has argued about a home in Oak Brook,
23 contempt case, and the Supreme Court there acknowledged that 24 there was some record evidence that the defendant at one time may 25 have had the ability to comply with a turnover order.
25 I think it's in Oak Brook, it's in the western suburbs, that the
23 24 1 And based on this record evidence, the appellate court 1 creates a lien on the debtor's assets. After that you can't move
2 below had applied a presumption of a continuing ability to pay 3 that could, quote, "be overcome by the accused only when he 4 affirmatively showed some disposition of the property to him," 5 end quote. 6 Well, the Supreme Court held that was error, and the
2 things around if I understand the state law of property. 3 Well, so the remedy for the spending that allegedly
4 occurred, whether it was business or some of it personal, lies in 5 these state and federal citation procedures. The FTC as the
6 Court knows however, you know, deliberately, they made a choice, 7 they avoided these procedures even though we pointed them out to 8 them. They instead went ahead with a civil contempt motion,
7 Supreme Court held as follows, quote, "The sole question is 8 whether the bankrupt is presently able to comply with the 9 turn-over order previously made and accordingly whether he is 10 disobeying the order," end of quote. 11 word "presently." 12 I think that the Supreme Court precedent renders much of It does not matter I suggest as a And I want to emphasize the
9 which as the United States Supreme Court has repeatedly said and 10 I keep repeating myself, is not a remedy for past conduct. 11 The FTC pursued the wrong procedure. They had remedies And instead
12 available a couple years ago.
They avoided them.
13 the FTC's evidence irrelevant.
13 they embarked on the wrong remedy.
They embarked on this And now they
14 matter of law that Mr. Trudeau spent money on legal fees and 15 travel expenses and living expenses two or three or four years 16 ago. The money is gone. If the FTC had wanted to take control
14 scorched-earth discovery on their contempt motion. 15 have come up empty-handed.
Nothing in Mr. Cohen's remarks or in
16 any of his papers has identified any assets that could be used to 17 satisfy this judgment. 18 So having found no assets, all they want to do is argue And I suggest respectfully that the past is not
17 of his earnings and expenses at the time, it had remedies 18 available to it. Specifically, the FTC could have garnished It could have
19 Mr. Trudeau's wages as a motivational speaker.
19 about the past.
20 filed citations to discover assets under Rule 69 of the Federal 21 Rules of Civil Procedure and under the State of Illinois Code of 22 Civil Procedure 5/2-1402. 23 These procedures require a citation notice that among
20 relevant to this contempt motion. 21 And the proof I think that the FTC came up empty lies
22 not only in the financial statements before the Court and the 23 bank records, but also in the obvious fact that if the FTC had 24 discovered any substantial assets available to pay the judgment, 25 it immediately would have seized them. They haven't, because
24 other things recognizes the debtor's state and federal statutory 25 exemptions of certain assets. And the service of the citation
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25 26
1 there is nothing to seize. 2 Furthermore, common sense teaches us if Mr. Trudeau had
1 Mr. Trudeau ordered the stay, he really should have had chicken, 2 and he should have turned the savings over to the FTC. And if
3 the money to pay the judgment, he would have done so rather than 4 suffer months of discovery, threats of incarceration, and 5 ruination of his business as a motivational speaker. 6 And I suggest that no responsible regulatory agency
3 the companies for which he was doing a motivational speaking 4 event had a Bentley for people attending the dream convention to 5 sit in, they should have had a Ugo. But there is no legal
6 authority whatsoever for these extreme legal propositions by the 7 FTC. 8 So here we are. The FTC points to past conduct but The FTC points to millions of
7 sincerely interested in consumer remediation would have foregone 8 the opportunity to seize assets if they existed. I think all of
9 this teaches us that there are not presently assets to pay the 10 judgment. 11 And the FTC continues to argue that Mr. Trudeau in the But he didn't. He has
9 ignores the present reality.
10 dollars of revenues of various companies but ignores expenses and 11 losses. The FTC points to what it calls Mr. Trudeau's lavish
12 past could have spent his money differently.
12 lifestyles, but ignores that you have to spend money to make 13 money in the motivational speaking business. 14 The FTC wants a turn-over of Mr. Trudeau's assets but
13 He's not an indentured servant for life to the FTC.
14 federal and state law protections against garnishing all of his 15 income. To be specific, federal and state law allow a creditor And
15 ignores that the Bankruptcy Act prevents such a turn-over to any 16 particular creditor. The FTC wants an accounting, a complete
16 to garnish only up to 15 percent of his earnings.
17 Mr. Trudeau through his lawyers offered that to the FTC long ago, 18 and they refused. 19 I don't fully understand their legal position, but I
17 accounting for Mr. Trudeau but ignores the fact that he's 18 provided one and has agreed to an independent accounting. 19 Mr. Trudeau has also implored the various entities that
20 think their position is that federal and state laws affording 21 rights to debtors do not apply to the FTC. And although we've
20 he is not open -- to open their books for a full accounting, and 21 Mr. Donnellon advises that they have consented. 22 So as I said at the outset today, this Court should The Court I believe should not wait for If it's the FTC's view
22 pressed them for authority on that proposition, we have seen 23 none. 24 And, you know, just to use an analogy, what the FTC has
23 order the accounting.
24 weeks of briefing and further evidence.
25 really done here is that they have taken the position that if
25 it does not trust Mr. Trudeau, despite all the documentary
27 28 1 corroboration, then let's hire that independent accounting firm 2 that the FTC and the Court can trust. The firm could begin the 1 protect the innocent. And Mr. Trudeau has a constitutional right
2 not to expose himself to unfair government prosecution or in the 3 FTC's case unfair persecution. 4 He wants to testify, but I believe there is ample
3 work this week and probably finish it before the briefing is even 4 completed on this motion. And I again ask why put the Court and
5 parties to the expense of wading through and briefing thousands 6 of pages of documents. 7 If there are assets that can be used to pay the Mr. Trudeau will be
5 evidence supporting his inability to pay defense without his 6 testimony. And moreover the FTC as I've said before has really It seems to
7 not expressed any interest in consumer remediation. 8 be focused like a laser on incarceration.
8 judgment, that's a win win for everyone. 9 pleased. The FTC will be pleased.
So under these
And if there are not assets
9 circumstances we advised him not to testify, not because he's 10 guilty of anything, because he is not, but because he wants to 11 stay out of jail, earn a living for himself and his family, and 12 to generate revenues for a consumer remediation plan. And that
10 presently available, we are prepared as we have been for some 11 time to implement a consumer remediation plan. Mr. Trudeau has
12 one thing, and that is he has substantial future earnings power 13 as an author and a motivational speaker. We can put those
13 is why today you'll hear Mr. Trudeau exercise his Fifth Amendment 14 right. 15 In conclusion let me say also that Mr. Trudeau has done He provided a sworn He's here
14 earnings potential to work and use it to distribute it to 15 consumers who want a refund. 16 And there is $2 million sitting in the Court escrow that So
16 everything the Court has ordered him to do. 17 financial statement. 18 today in court.
17 would probably satisfy refunds for everyone who wants one. 18 I'm urging the Court and the parties here today to look for 19 practical solutions and to discontinue this destructive and
He appeared for deposition.
He's agreed to any and all forms of accounting.
19 He agrees to turn over any assets that the independent accounting 20 firm concludes is available to pay the judgment. 21 he's surrendering. And basically
20 wasteful contempt litigation, because this is not creating one 21 dime for any consumer remediation. 22 I'm about done, but before I sit down I want to talk We at Winston & Strawn have
There is nothing more he can do that has not
22 been already requested by the FTC. 23 So that completes my opening remarks, Your Honor. Thank
23 about Mr. Trudeau's testimony.
24 advised him to assert his Fifth Amendment right not to testify. 25 The Fifth Amendment to the United States Constitution exists to
24 you very much. 25 THE COURT: Thank you, Mr. Anderson.
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Trudeau - direct 29 Trudeau - direct 30
1 2 3 4 5 6
All right. MR. COHEN: THE COURT:
Mr. Cohen. The FTC calls Mr. Kevin Trudeau. Please raise your right hand.
1 Q. 2 A. 3 Q. 4 5
And you've resided there since last summer, isn't that true? Correct. You control assets, isn't that true? MR. ANDERSON: Object to the form of the question.
(Witness duly sworn.) THE COURT: MR. COHEN: Have a seat, please. Your Honor, as I mentioned earlier, we have
And I advise you, Mr. Trudeau, to assert your Fifth
6 Amendment right. 7 BY THE WITNESS: 8 A. On the advice of counsel, I assert my Fifth Amendment
7 a subset of documents that we're happy to provide to the Court 8 for the Court's convenience. 9 10 THE COURT: MR. COHEN: And to the witness? To the witness as well, yes. May we go
9 privilege. 10 BY MR. COHEN: 11 Q. You control assets worth more than $1 million, isn't that
11 ahead and do that? 12 13 14 15 16 17 18 Honor? 19 20 21 22 BY MR. COHEN: 23 Q. Mr. Trudeau, you currently reside in Zurich, Switzerland, THE COURT: Sure. THE COURT: MR. COHEN: THE COURT: MR. COHEN: THE COURT: MR. COHEN: And to counsel as well? I believe yes, to counsel as well. All right. Good.
12 true? 13 MR. ANDERSON: I object to the form of the question.
14 And my advice to Mr. Trudeau is the same. 15 BY THE WITNESS: 16 A. On the advice of counsel, I invoke my Fifth Amendment
If I may approach? Sure. Just give it to my clerk, please.
If I may approach the witness as well, Your
17 privilege. 18 MR. COHEN: Your Honor, just to move things along, the
19 FTC is willing to accept a shorter version of that and just have 20 the witness state "I assert my Fifth Amendment rights." 21 THE COURT: Is that agreeable, Mr. Anderson, to save
KEVIN TRUDEAU, DEFENDANT HEREIN, SWORN DIRECT EXAMINATION
22 some time? 23 MR. ANDERSON: Yeah, I'm in favor of saving time.
24 isn't that true? 25 A. Correct.
24 BY MR. COHEN: 25 Q. And Mr. Trudeau --
Trudeau - direct 31 Trudeau - direct 32 1 THE COURT: Can we have a standing objection to form 1 Q. At times since June 2nd, 2010 you have controlled assets that
2 then so we don't have to keep objecting to form? 3 MR. ANDERSON: Okay. If the FTC stipulates that I'm not
2 you could have used to satisfy the Court's order to pay, isn't 3 that true? 4 A. 5 Q. I assert my Fifth Amendment privilege. Mr. Trudeau, at this time I'd like to direct your attention
4 waiving any objection to the form of the question, many of which 5 I think are overly broad and just argumentative. 6 7 MR. COHEN: THE COURT: We so stipulate. All right. It is adverse examination, and I But he's taking the Fifth
6 and the Court's attention to what's been premarked for 7 identification as FTC Exhibit 12-L, which is a set of e-mails 8 from Mr. Lane, Marc Lane, to you on December 19th, 2008. 9 see that? 10 A. 11 Q. Say that again. It's a set of e-mails. And we're particularly interested in Do you
8 would probably overrule the objection. 9 anyway, so it seems to be a moot point. 10 11 MR. ANDERSON: THE COURT: Okay.
Then I will --
We'll assume, just for the record, I will
12 regard Mr. Anderson and Mr. Trudeau as having a standing 13 objection as to form. If there is any particular question that
12 the second e-mail on the page, which is an e-mail from you to 13 Mr. Lane on December 19th, 2008. 14 A. 15 Q. I have the file that you gave me. Are you looking at what is FTC, marked for identification as
14 you feel you have to add something to, please let me know. 15 BY MR. COHEN: 16 Q. Mr. Trudeau, you control assets worth more than $1 million
16 FTC Exhibit 12-L? 17 A. 18 Q. 19 20 21 Do you have a set of reading glasses? I don't. But perhaps counsel does. What power do you need? I don't know. These are from my
17 that you could have used to satisfy the order to pay, isn't that 18 true? 19 A. 20 Q. I assert my Fifth Amendment privilege. At times since June 2nd, 2010 you have controlled assets,
THE COURT:
THE WITNESS: THE COURT:
21 isn't that true? 22 A. 23 Q. I assert my Fifth Amendment privilege. At times since June 2nd, 2010 you have controlled assets
I think I have one.
22 younger days, Mr. Trudeau.
So if they're not powerful enough, But they're also
23 let me know if that's what you need to read. 24 kind of dirty. 25 Here. Thank you.
24 worth more than $1 million, isn't that true? 25 A. I assert my Fifth Amendment privilege.
THE WITNESS:
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THE COURT:
Give it a try.
Otherwise my law clerk says
1 is no foundation for it. 2 entered.
It's 2008, before the judgment is
2 he has got a drawer full of them. 3 4 5 6 THE WITNESS: THE COURT: Okay.
And as I indicated in my opening remarks, the law is
3 quite clear that this kind of past conduct, whatever it is, is 4 not probative of any present ability to pay. 5 it's just not an admissible document. 6 THE COURT: So it's just not,
Do they help you? Perfect.
It's 2008.
Good.
Well, are you contesting the authenticity of
7 BY THE WITNESS: 8 A. Your question, Jonathan?
7 the document? 8 9 10 MR. ANDERSON: THE COURT: No, we are not.
9 BY MR. COHEN: 10 Q. Do you see in what has been marked for identification as FTC And I direct your
You are contesting -No, we're not contesting the
MR. ANDERSON:
11 Exhibit 12-L there are several e-mails.
11 authenticity. 12 13
I'm contesting the admissibility of it. Are you contesting the relevance of it? I'm contesting relevance, also appears to
12 attention to the e-mail, the second e-mail on the page which is 13 an e-mail from Mr. Marc Lane to you on December 19th, 2008. 14 A. 15 Q. 16 A. 17 Q. 18 A. 19 Q. I see that. Kevintrudeau@aol.com, that's your e-mail address, is it not? I assert my Fifth Amendment privilege. And Marc Lane is your attorney, is he not? I assert my Fifth Amendment privilege. And he was your attorney at the time this e-mail was sent,
THE COURT:
MR. ANDERSON:
14 be hearsay. 15
So yes, those are the grounds, Your Honor. Well, that objection will be overruled.
THE COURT:
16 You'll have an opportunity to argue your point or brief your 17 point if that's necessary with respect to the relevance of the 18 past on the present. Obviously I'm sure there is a good quote
19 from somebody a lot smarter than I am about how we get to the 20 present through the past. 21 to the present. 22 23 MR. ANDERSON: THE COURT: There are -But I think that's the only way to get
20 isn't that true? 21 A. 22 I assert my Fifth Amendment privilege. MR. COHEN: Your Honor, at this time the FTC moves
23 Exhibit 12-L into evidence. 24 25 THE COURT: Any objection? Well, I object to it, Your Honor. There
Whether it is relevant, excuse me, whether
24 it is relevant or not, whether it is so far out of the time 25 period that you claim is relevant here or that I need to examine
MR. ANDERSON:
Trudeau - direct 35 Trudeau - direct 36 1 really goes to weight more than it does relevance or 2 admissibility. 3 objection. So for those reasons I'm overruling the 1 A. 2 Q. I invoke my Fifth Amendment privilege. And looking at this December 19, 2008 e-mail, you wrote to
And I will overrule the objection, and I'll consider
3 Lane, "We'll give you potential owners next week for Radio and 4 GIN." 5 A. 6 Q. 7 A. 8 Q. Do you see that?
4 you having a standing objection for similar documents just to 5 move this along that counsel -6 MR. ANDERSON: To be clear, my objection is on relevancy
I invoke my Fifth Amendment privilege. "Radio" refers to KT Radio Network, isn't that true? I invoke my Fifth Amendment privilege. And "GIN" refers to Global Information Network, isn't that
7 and on hearsay.
And I will accept the Court's invitation to
8 submit a brief on the admissibility of these and similar 9 exhibits. 10 issue. There is authority, other judicial authority on this
9 true? 10 A. 11 Q. I invoke my Fifth Amendment privilege. You chose who would own the Global Information Network, isn't
I don't know whether it's written by anyone smarter than
11 Your Honor, but there is judicial authority on this issue. 12 THE COURT: I wasn't considering judicial authority
12 that true? 13 A. But 14 Q. I invoke my Fifth Amendment privilege. And you chose who would own KT Radio Network, isn't that
13 necessarily.
But I will just say as far as hearsay goes, you
14 may, I'll give you an opportunity to convince me about that.
15 obviously Mr. Trudeau's state of mind is quite relevant to this 16 inquiry. And a lot of this goes to his state of mind. And a lot
15 true? 16 A. 17 Q. I invoke my Fifth Amendment privilege. And then your e-mail continues, "No need to tell FTC about
17 of this is written by him and to him. 18 rule wouldn't apply.
So ordinarily the hearsay
Also, Mr. Lane is acting as his agent.
18 GIN," isn't that correct? 19 A. 20 Q. I invoke my Fifth Amendment privilege. You gave Marc Lane that instruction, because you intended to
19 There is probably all kinds of exceptions I can think of for now. 20 21 22 But for now I'm overruling the objections. (FTC Exhibit 12-L was received in evidence.) THE COURT: All right. Please proceed.
21 control the Global Information Network, isn't that true? 22 A. 23 Q. I invoke my Fifth Amendment privilege. And you understood that your control over the Global
23 BY MR. COHEN: 24 Q. Mr. Trudeau, you instructed Marc Lane to create the Global
24 Information Network would render its assets exposed to the 25 Federal Trade Commission, isn't that true?
25 Information Network, isn't that true?
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1 A. 2
I invoke my Fifth Amendment privilege. MR. COHEN: Your Honor, we'd like to point you and the
1 Exhibit 12-D into evidence. 2 3 admit it. 4 (FTC Exhibit 12-D was received in evidence.) THE COURT: All right. With that understanding I'll
3 witness to what has been premarked for identification as FTC 4 Exhibit 12-D, which is an e-mail from Mr. Trudeau to Mr. Lane on 5 January 7th, 2009. 6 BY MR. COHEN: 7 Q. Mr. Trudeau, do you see that e-mail? We're going to focus on
5 BY MR. COHEN: 6 Q. In this e-mail you wrote to Marc Lane that he needs to,
7 quote, "Pull the trigger on Global Information Network," isn't 8 that true? 9 A. 10 Q. I invoke my Fifth Amendment privilege. And that's because founding the Global Information Network
8 the second e-mail on the page. 9 A. 10 Q. I invoke my Fifth Amendment privilege. That is your e-mail address on the second e-mail on the page,
11 is it not? 12 A. 13 Q. 14 not? 15 MR. ANDERSON: Less there be any waiver, the government They just seem to be I invoke my Fifth Amendment privilege. To your knowledge that's Mr. Lane's e-mail address, is it
11 was your idea, isn't that true? 12 A. 13 Q. I invoke my Fifth Amendment privilege. Let's turn to what's been premarked as FTC Exhibit 31, which
14 is a May 4th, 2009 e-mail from the witness to Mr. Lane and 15 Mr. Neil Sant. 16 A. 17 Do you see that?
16 hasn't offered the exhibit into evidence. 17 launching right into the content of it.
I invoke my Fifth Amendment privilege. MR. COHEN: Your Honor, we move to admit this exhibit
So I object to that.
18 And I object to the admissibility of the exhibits on grounds of 19 hearsay and relevancy. 20 21 MR. COHEN: THE COURT: Your Honor, the FTC -Again, I'm overruling those, I'm overruling
18 into evidence as FTC Exhibit 31. 19 MR. ANDERSON: Your Honor, we object. It's hearsay.
20 It's also irrelevant. 21 22 THE COURT: Same ruling. It will be admitted.
22 those objections on the exhibits, the two I've seen based on 23 that. 24 25 Are you offering this into evidence at this point? MR. COHEN: Your Honor, at this point the FTC moves FTC
(FTC Exhibit 31 was received in evidence.)
23 BY MR. COHEN: 24 Q. In the first sentence "Neil," that refers to Neil Sant, isn't
25 that true?
Trudeau - direct 39 Trudeau - direct 40 1 A. 2 Q. 3 A. 4 Q. I invoke my Fifth Amendment privilege. And you sent this e-mail, isn't that true? I invoke my Fifth Amendment privilege. And this is Neil Sant's e-mail address at the top of the 1 Q. You instructed that its bank account be set up, isn't that
2 true? 3 A. 4 Q. I invoke my Fifth Amendment privilege. In fact, the Global Information Network was part of your
5 page, isn't that true? 6 A. 7 Q. I invoke my Fifth Amendment privilege. And he's a close business associate of yours, isn't that
5 vision, isn't that true? 6 A. 7 Q. 8 A. 9 Q. I invoke my Fifth Amendment privilege. You shared that vision with Mr. Lane, isn't that true? I invoke my Fifth Amendment privilege. And when you shared that vision with Mr. Lane, you never told
8 true? 9 A. 10 Q. I invoke my Fifth Amendment privilege. In fact, you've referred to him as your right-hand man, isn't
10 anyone at Mr. Lane's firm that what you characterized as your 11 vision was actually your wife's vision, isn't that true? 12 A. 13 Q. I invoke my Fifth Amendment privilege. That vision expressed in 2009 included a GIN headquartered in
11 that true? 12 A. 13 Q. I invoke my Fifth Amendment privilege. You wrote in this e-mail, "Neil, it is very urgent that Marc
14 Lane set up GIN entity and set up the bank account ASAP," isn't 15 that true? 16 A. 17 Q. I invoke my Fifth Amendment privilege. And "GIN" refers to the Global Information Network, isn't
14 Nevis, isn't that true? 15 A. 16 Q. I invoke my Fifth Amendment privilege. Global Information Network FDN is now based in Nevis, isn't
17 that true? 18 A. 19 Q. I invoke my Fifth Amendment privilege. And your vision included a GIN that would contract with a new
18 that true? 19 A. 20 Q. I invoke my Fifth Amendment privilege. You instructed that the GIN entity be set up, isn't that
20 Swiss company called Website Solutions Switzerland, isn't that 21 true? 22 A. 23 Q. I invoke my Fifth Amendment privilege. And a new Swiss company called Website Solutions Switzerland
21 true? 22 A. 23 Q. I invoke my Fifth Amendment privilege. And the e-mail continues, "Set up the bank account ASAP,"
24 isn't that true? 25 A. I invoke my Fifth Amendment privilege.
24 was, in fact, formed, isn't that true? 25 A. I invoke my Fifth Amendment privilege.
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1 Q.
I'll refer for convenience to Website Solutions Switzerland
1 2 3 4 5 from -6
THE COURT: MR. COHEN: MR. KIRSCH: MR. COHEN:
I have it. I just don't have it. What number? 12, FTC Exhibit 12-I, which is an e-mail
2 as WSS, is that understood? 3 A. 4 Q. 5 A. 6 Q. I invoke my Fifth Amendment privilege. And your vision included WSS employing you, isn't that true? I invoke my Fifth Amendment privilege. And your vision also included a contract between WSS and a
MR. ANDERSON:
Excuse me, Mr. Cohen.
Is that in the
7 company called Website Solutions USA, isn't that true? 8 A. 9 Q. I invoke my Fifth Amendment privilege. And there is now a contract between Website Solutions
7 batch you just gave us? 8 MR. COHEN: It may have been omitted in the batch, but
9 it's in the binders marked for identification as 12-I. 10 11 gave me. MR. ANDERSON: Okay. I didn't see it in the batch you
10 Switzerland and Website Solutions USA, isn't that true? 11 A. 12 Q. I invoke my Fifth Amendment privilege. I'll refer to Website Solutions USA as WSU. Do you
Could I have a moment? MR. COHEN: THE COURT: MR. COHEN: Yes. October 20th? That's correct, October 20th, 2009.
12 13 14 15
13 understand? 14 A. 15 Q. I invoke my Fifth Amendment privilege. Your vision expressed in 2009 also included that Website
Mr. Anderson, just let me know when you've had an
16 Solutions USA would employ Neil Sant, isn't that true? 17 A. 18 Q. I invoke my Fifth Amendment privilege. And until last month, Website Solutions USA did, in fact,
16 opportunity to catch up. 17 MR. ANDERSON: 12-I. I've located it. Thank you.
18 BY MR. COHEN: 19 Q. Mr. Trudeau, do you also have a copy of what's been premarked
19 employ Neil Sant, isn't that true? 20 A. 21 I invoke my Fifth Amendment privilege. MR. COHEN: Your Honor, I direct the Court's attention
20 as 12-I? 21 A. 22 Q. I invoke my Fifth Amendment privilege. 12-I is an e-mail from Mr. John Lipinsky to various persons
22 and the witness's attention to what's been premarked as FTC 23 Exhibit 12-I. And that may be one that is omitted from what we
23 including Mr. Trudeau dated October 20th, 2009. 24 MR. COHEN: Your Honor, the FTC moves to admit this as
24 provided to the Court, so we'll provide the Court with another 25 copy.
25 FTC Exhibit 12-I.
Trudeau - direct 43 Trudeau - direct 44 1 2 3 4 5 THE COURT: Who is Mr. Lipinsky? I object to the exhibit, Your Honor. 1 THE COURT: Well, it may be a business record as well. You go ahead and ask questions to We can talk about that later.
2 I'll admit it conditionally. 3 try to establish a foundation. 4 BY MR. COHEN: 5 Q.
I was asking a question, Mr. Anderson. I'm sorry.
I'm sorry, you may not have heard, but I was
Mr. Trudeau, John Lipinsky was an attorney at Marc Lane's law
6 going to ask the question, who is Mr. Lipinsky? 7 MR. COHEN: Mr. Lipinsky is an attorney at the Law And if it would be helpful, I can
6 firm, isn't that true? 7 A. 8 Q. I invoke my Fifth Amendment privilege. And Marc Lane's law firm was representing you as of October
8 Offices of Marc J. Lane.
9 inquire of the witness to that effect. 10 11 12 MR. ANDERSON: THE COURT: Well, may I be heard, Your Honor?
9 20th, 2009, isn't that true? 10 A. 11 Q. I invoke my Fifth Amendment privilege. This document contains a subheading toward the top entitled
You may. Mr. Trudeau doesn't even appear to be on He doesn't
MR. ANDERSON:
12 "Mr. Trudeau's Vision," isn't that true? 13 A. 14 I invoke my Fifth Amendment privilege. MR. ANDERSON: I object to the form of the question.
13 this document.
He doesn't appear to be an author.
14 appear to be a recipient.
It wouldn't be proper to ask So I object to
15 Mr. Trudeau about this under any circumstances. 16 the form of the question.
15 There is no basis to ask Mr. Trudeau about a document he didn't 16 author, receive, send. 17 THE COURT: I object to the form of the question.
I object to the lack of foundation.
17 And I object to hearsay and to relevancy. 18 MR. COHEN: Your Honor, if I may? The Law Offices of
You can ask him if he's ever seen it before.
18 BY MR. COHEN: 19 Q. 20 A. Mr. Trudeau, have you ever seen this document before? I invoke my Fifth Amendment privilege. Mr. Trudeau, this document accurately recounts what your
19 Marc J. Lane are the agents of Mr. Trudeau, and this is a 20 communication between two agents of Mr. Trudeau. 21 MR. ANDERSON: Your Honor, I disagree with that. It's
21 Q.
22 just blatant hearsay. 23 exception here. 24 MR. COHEN:
There is no hearsay, there is no hearsay
22 vision was, isn't that true? 23 A. I invoke my Fifth Amendment privilege. Mr. Trudeau, you had a conversation with attorneys at Marc
There certainly is a hearsay exception for
24 Q.
25 agents of a party opponent.
25 Lane's law firm in which you expressed to them what your vision
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1 was, isn't that true? 2 A. 3 Q. I invoke my Fifth Amendment privilege. And this is a document that reflects the substance of that
1 that true? 2 A. 3 Q. I invoke my Fifth Amendment privilege. It was created by Mr. Lane -- strike that. It was created by
4 conversation with your agents at Marc J. Lane Law Firm, isn't 5 that true? 6 A. 7 Q. I invoke my Fifth Amendment privilege. And this document accurately recounts what your vision was,
4 Marc Lane's law firm at your instruction, isn't that true? 5 A. 6 Q. I invoke my Fifth Amendment privilege. And you instructed Lane to create GIN USA as an entity that
7 your wife, Babenko, would nominally own, isn't that true? 8 A. 9 Q. 10 A. 11 Q. 12 A. 13 Q. I invoke my Fifth Amendment privilege. That entity was recently dissolved isn't that true? I invoke my Fifth Amendment privilege. And it was dissolved on your instruction, isn't that true? I invoke my Fifth Amendment privilege. Before it was dissolved, you decided who its directors would
8 isn't that true? 9 A. 10 Q. I invoke my Fifth Amendment privilege. You're a member of the Global Information Network, isn't that
11 true? 12 A. 13 Q. I invoke my Fifth Amendment privilege. And in that capacity you have received commissions, isn't
14 that true? 15 A. 16 Q. I invoke my Fifth Amendment privilege. In fact, you're the highest ranking member in the Global
14 be, isn't that true? 15 A. 16 Q. I invoke my Fifth Amendment privilege. Before it was dissolved, you made the financial decisions for
17 Information Network, isn't that true? 18 A. 19 Q. I invoke my Fifth Amendment privilege. And you've received hundreds of thousands of dollars in
17 GIN USA, isn't that true? 18 A. 19 Q. I invoke my Fifth Amendment privilege. And you made the banking decisions for GIN USA, isn't that
20 commissions from the Global Information Network, isn't that true? 21 A. 22 Q. I invoke my Fifth Amendment privilege. And you haven't used any of that to comply with this Court's
20 true? 21 A. 22 Q. I invoke my Fifth Amendment privilege. And you made the decisions for GIN USA regarding its business
23 order to pay, isn't that true? 24 A. 25 Q. I invoke my Fifth Amendment privilege. You're familiar with an entity known as GIN USA, Inc, isn't
23 strategy, isn't that true? 24 A. 25 Q. I invoke my Fifth Amendment privilege. And you decided where GIN USA would be located, isn't that
Trudeau - direct 47 Trudeau - direct 48 1 true? 2 A. 3 Q. I invoke my Fifth Amendment privilege. You decided that it would be located at 130 Quail Ridge Drive 1 isn't that true? 2 A. 3 Q. I invoke my Fifth Amendment privilege. And "We need lawyers," you write, "We need lawyers to
4 in Westmont, Illinois, isn't that true? 5 A. 6 Q. I invoke my Fifth Amendment privilege. And that's where other companies you own are also located,
4 represent Natashya and all of her companies," isn't that true? 5 A. 6 Q. I invoke my Fifth Amendment privilege. And you write, "We need lawyers to represent the trust,"
7 isn't that true? 8 A. 9 Q. I invoke my Fifth Amendment privilege. And you made decisions regarding GIN USA's intellectual
7 isn't that true? 8 A. 9 Q. 10 A. 11 Q. I invoke my Fifth Amendment privilege. And that trust is KMT Fiduciary Trust, isn't that true? I invoke my Fifth Amendment privilege. Legal decisions you made for GIN USA include GIN USA's legal
10 property, isn't that true? 11 A. 12 Q. 13 A. 14 Q. I invoke my Fifth Amendment privilege. And you made legal decisions for GIN USA, isn't that true? I invoke my Fifth Amendment privilege. Mr. Trudeau, I draw your attention and the Court's attention
12 strategy in these proceedings, isn't that true? 13 A. 14 Q. 15 A. 16 Q. Can you rephrase that question? You made legal decisions for GIN USA, isn't that true? I invoke my Fifth Amendment privilege. And some of those legal decisions included GIN USA's legal
15 to what's been premarked as FTC Exhibit 11-Q, which is an e-mail 16 from the witness to Neil Sant on September 4th, 2012. 17 MR. COHEN: Your Honor, the FTC moves to admit this
17 strategy in these proceedings, isn't that true? 18 A. I invoke my Fifth Amendment privilege. The Lane firm represented GIN USA sometime after June 2010,
18 document into evidence. 19 MR. ANDERSON: And I object, Your Honor, on previously
19 Q.
20 stated grounds. 21 22 admitted. 23 (FTC Exhibit 11-Q was received in evidence.) THE COURT: All right. Same ruling then. It will be
20 isn't that true? 21 A. 22 Q. I invoke my Fifth Amendment privilege. And the Lane firm provided advice to GIN USA, isn't that
23 true? 24 A. 25 Q. I invoke my Fifth Amendment privilege. When the Lane firm provided advice to GIN USA, it sometimes
24 BY MR. COHEN: 25 Q. Mr. Trudeau, you write, "We need lawyers to represent GIN,"
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1 provided that advice to you, isn't that true? 2 A. 3 Q. I invoke my Fifth Amendment privilege. But no one authorized you to receive legal advice on behalf
1 A. 2 Q.
I invoke my Fifth Amendment privilege. It was your decision to locate GIN FDN there, isn't that
3 true? 4 A. 5 Q. Where? It was your decision to locate GIN FDN in St. Kitts and
4 of GIN USA, isn't that true? 5 A. 6 Q. I invoke my Fifth Amendment privilege. And sometimes you requested legal advice from the Lane firm
6 Nevis, isn't that true? 7 A. 8 Q. 9 A. 10 Q. 11 A. 12 Q. I invoke my Fifth Amendment privilege. You decided GIN FDN's business plan, isn't that true? I invoke my Fifth Amendment privilege. You make GIN FDN's financial decisions, isn't that true? I invoke my Fifth Amendment privilege. And you make the banking decisions for GIN FDN, isn't that
7 on behalf of GIN USA, isn't that true? 8 A. 9 Q. I invoke my Fifth Amendment privilege. But no one ever authorized you to request legal advice on
10 behalf of GIN USA, isn't that true? 11 A. 12 Q. I invoke my Fifth Amendment privilege. At times since June 2nd, 2010, GIN USA possessed assets,
13 isn't that true? 14 A. 15 Q. I invoke my Fifth Amendment privilege. At times since June 2nd, 2010, GIN USA has possessed assets
13 true? 14 A. 15 Q. I invoke my Fifth Amendment privilege. Those decisions included opening a bank account in
16 that you could have used to satisfy the Court's order to pay, 17 isn't that true? 18 A. 19 Q. I invoke my Fifth Amendment privilege. Let's turn to Global Information Network FDN. You're
16 Lichtenstein, isn't that true? 17 A. 18 Q. I invoke my Fifth Amendment privilege. And Mr. Lane helped GIN FDN set up that bank account in
19 Lichtenstein, isn't that true? 20 A. 21 Q. I invoke my Fifth Amendment privilege. And Mr. Sant also traveled to Lichtenstein to help GIN FDN
20 familiar with an entity known as GIN FDN, are you not? 21 A. 22 Q. I invoke my Fifth Amendment privilege. You instructed that GIN FDN be created as a foundation that
22 set up an account there, isn't that true? 23 A. 24 Q. I invoke my Fifth Amendment privilege. Just to be clear, Mr. Lane traveled to Lichtenstein to help
23 your wife would nominally own, isn't that true? 24 A. 25 Q. I invoke my Fifth Amendment privilege. It's based offshore in St. Kitts, is it not?
25 GIN FDN set up a bank account there on behalf of GIN FDN?
Trudeau - direct 51 Trudeau - direct 52 1 A. 2 Q. I invoke my Fifth Amendment privilege. You told Sant what to tell bank officers in Lichtenstein, 1 A. 2 Q. I invoke my Fifth Amendment privilege. The e-mail continues, "She has turned it all over to you.
3 isn't that true? 4 A. 5 I invoke my Fifth Amendment privilege. MR. COHEN: Your Honor, we direct the Court's attention
3 You had GIN hire Web Solutions in Zurich and America to handle 4 everything and CPI and Jeff's company. 5 everything. Natalie knows nothing." You pretty much know
You gave Neil that
6 and the witness's attention to what has been previously marked as 7 FTC Exhibit 11-F, which is a series of e-mails between Trudeau 8 and Sant dated July 21st, 2010. 9 this proposed exhibit. 10 MR. ANDERSON: I object on previously stated grounds, Your Honor, we move to admit
6 instruction, isn't that true? 7 A. 8 Q. I invoke my Fifth Amendment privilege. And the e-mail continues, "Most of her answers should be 'I
9 do not know, Neil handles it.'" 10 Natalie, your wife, has nothing to do with running GIN
11 Your Honor. 12 THE COURT: All right. Same ruling. Go ahead. It will
11 FDN, isn't that true? 12 A. 13 Q. I invoke my Fifth Amendment privilege. A bank account was, in fact, set up in Lichtenstein, isn't
13 be admitted. 14 (FTC Exhibit 11-F was received in evidence.)
14 that true? 15 A. 16 Q. I invoke my Fifth Amendment privilege. And that bank account was set up on behalf of GIN FDN, isn't
15 BY MR. COHEN: 16 Q. Mr. Trudeau, I direct your attention to the third e-mail down
17 from the top of the page, which is an e-mail from you to 18 Mr. Sant. 19 A. 20 Q. Do you see that?
17 that true? 18 A. 19 Q. We will I invoke my Fifth Amendment privilege. And that bank account in Lichtenstein holds cash, isn't that
I invoke my Fifth Amendment privilege. You write to Sant, "I need the address of the bank.
20 true? 21 A. 22 Q. I invoke my Fifth Amendment privilege. In fact, in accordance with the court order, you paid $2
21 drive there and meet you someplace close to the bank. 22 should be that Natalie does not run GIN." 23 e-mail says? 24 A. 25 Q. I invoke my Fifth Amendment privilege.
The deal
Isn't that what the
23 million into an escrow account, isn't that true? 24 A. 25 Q. I invoke my Fifth Amendment privilege. You said that that money was a loan from a GIN affiliate,
And "Natalie" is a reference to your wife, isn't that true?
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1 isn't that true? 2 A. 3 Q. 4 A. 5 Q. 6 A. 7 Q. 8 A. 9 Q. I invoke my Fifth Amendment privilege. And that loan was never documented, isn't that true? What does "documented" mean? That loan was never recorded in writing, isn't that true? I invoke my Fifth Amendment privilege. And that loan was never repaid, isn't that true? I invoke my Fifth Amendment privilege. And the $2 million paid into escrow on your behalf came from
1 Q.
Mr. Trudeau, we direct your attention to that earlier e-mail
2 which begins in the bottom of the first page, dated December 1st, 3 2011 and continues on to the second page. 4 A. 5 Q. I invoke my Fifth Amendment privilege. You wrote, "Neil, you need to work out the details of having Do you see that?
6 another company like GIN buy a $2 million bond so we can start 7 producing and airing infomercials ASAP." 8 A. 9 Q. Isn't that true?
I invoke my Fifth Amendment privilege. And if you look at the first e-mail on the first page, Lane
10 GIN FDN, isn't that true? 11 A. 12 Q. I invoke my Fifth Amendment privilege. Before you paid the $2 million into escrow, you considered
10 wrote back to you the next day and said, "KT, I think this is an 11 excellent idea and, in fact, raised this very possibility with 12 Neil yesterday." 13 A. 14 Q. That's what the e-mail says, isn't that true?
13 posting a bond instead, isn't that true? 14 A. 15 I invoke my Fifth Amendment privilege. MR. COHEN: Your Honor, we turn the Court's attention
I invoke my Fifth Amendment privilege. Lane continued writing to you, "As you've recognized,
15 securing a bond and keeping it beyond the FTC's reach will 16 require careful planning." 17 A. 18 Q. Lane wrote that, isn't that true?
16 and the witness's attention to what has been premarked for 17 identification as FTC Exhibit 12-K, which is e-mails between 18 Mr. Lane sent to the witness and copied to Mr. Sant. The first
I invoke my Fifth Amendment privilege. Your goal was to get $2 million that you controlled into the
19 e-mail at the bottom of the page is dated December 1st, 2011. 20 Your Honor, we move to offer this exhibit into evidence. 21 22 23 24 THE COURT: Same objection? Same ruling.
19 escrow account while keeping it beyond the FTC's reach, isn't 20 that true? 21 22 question. MR. ANDERSON: Your Honor, I object to the form of the
Yes, Your Honor. Thanks.
Under the rule of completeness, he ought to read the
All right.
23 next sentence, which states the obvious and says the sales 24 proceeds can then be applied to the FTC's judgment. So I think
(FTC Exhibit 12-K was received in evidence.)
25 BY MR. COHEN:
25 Mr. Cohen has now gone beyond having a good-faith basis for
Trudeau - direct 55 Trudeau - direct 56 1 asking a question about this document. 2 the question. 3 4 MR. COHEN: THE COURT: Your Honor -Your objection is for completeness, not for I object to the form of 1 you understood -- excuse me -- because Mr. Lane understood that 2 you controlled GIN, isn't that true? 3 A. 4 Q. Can you say that again, please? The reason that Mr. Lane believed that sale proceeds from GIN
5 the form of the question. 6 MR. ANDERSON: Yes. I mean, he is just, Mr. Cohen is
5 memberships could be applied to the FTC judgment is because he 6 understood that you controlled GIN, isn't that true? 7 A. On the advice of counsel, I am invoking my Fifth Amendment
7 just picking and choosing and then misstating the document. 8 9 10 MR. COHEN: Your Honor -This is some kind of theater here.
8 privilege. 9 Q. You did succeed in getting $2 million paid into escrow, isn't
MR. ANDERSON: MR. COHEN:
Your Honor, I actually would be happy to
10 that true? 11 A. 12 Q. I invoke my Fifth Amendment privilege. And the FTC was not able to seize that money, isn't that
11 read the rest of the next sentence that Mr. Anderson refers to. 12 THE COURT: Go ahead.
13 BY MR. COHEN: 14 Q. Mr. Lane continued, "As I proceed, could you please fill me Do you plan to produce and air infomercials
13 true? 14 A. 15 Q. I invoke my Fifth Amendment privilege. But more recently, you tried to get that money back also
15 in on your intent.
16 for non-health related products, perhaps GIN memberships or a new 17 book that makes no representations regarding health benefits?" 18 Isn't that true? 19 A. 20 Q. I invoke my Fifth Amendment privilege. "Either way the sale proceeds can then be applied to the FTC
16 while keeping it from the FTC's reach, isn't that true? 17 A. On the advice of counsel I invoke my Fifth Amendment
18 privilege. 19 Q. For the record, more recently you tried to get that money
20 back, isn't that true? 21 A. 22 Q. I invoke my Fifth Amendment privilege. And you tried to get that money back while keeping it from
21 judgment," isn't that what he wrote? 22 A. On the advice of counsel, I invoke my Fifth Amendment
23 privilege. 24 Q. And the reason that Mr. Lane thought that sale proceeds from
23 the FTC's reach, isn't that true? 24 A. 25 I invoke my Fifth Amendment privilege. MR. COHEN: Your Honor, we direct the Court's attention
25 GIN memberships could be applied to the FTC judgment is because
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1 and the witness's attention to what has been premarked as FTC 2 Exhibit 37, which is a series of e-mails between the witness and 3 Lane. The FTC moves that this document be admitted into
1 Q.
And the Lane firm provided you with legal advice directed to
2 GIN FDN, isn't that true? 3 A. 4 Q. I invoke my Fifth Amendment privilege. And this advice included advice regarding GIN FDN's finances,
4 evidence. 5 6 Honor. 7 8 THE COURT: Same ruling. MR. ANDERSON: Objection on the same grounds, Your
5 isn't that true? 6 A. 7 Q. I invoke my Fifth Amendment privilege. And this advice also included advice regarding GIN FDN's
8 intellectual property issues, isn't that true? 9 A. 10 Q. I invoke my Fifth Amendment privilege. No one ever authorized you to receive legal advice on behalf
9 BY MR. COHEN: 10 Q. Mr. Trudeau, do you see in the middle of the second page an
11 e-mail from you on October 10th, 2012 at 4:29 p.m.? 12 A. 13 Q. I invoke my Fifth Amendment privilege. And you write to Mr. Lane, "I am shocked GIN can't get the This is unreal. We need that money urgently." You
11 of GIN FDN, isn't that true? 12 A. On the advice of counsel I invoke my Fifth Amendment
13 privilege. 14 Q. Sometimes you requested legal advice from the Lane firm on
14 money back.
15 wrote that, isn't that true? 16 A. 17 Q. I invoke my Fifth Amendment privilege. And if you look at the first page, Mr. Lane responded to you
15 behalf of GIN FDN, isn't that true? 16 A. 17 Q. I invoke my Fifth Amendment privilege. No one ever authorized you to receive legal advice -- strike
18 the next day, "The FTC simply did not have an opportunity to 19 seize the money before it was deposited into the account. 20 shouldn't give them a second chance." 21 you, isn't that true? 22 A. 23 Q. I invoke my Fifth Amendment privilege. Returning to GIN FDN, the Lane firm has provided legal advice We
18 that. 19 No one ever authorized you to request legal advice on
That was Lane's advice to
20 behalf of GIN FDN, isn't that true? 21 A. 22 Q. 23 A. I invoke my Fifth Amendment privilege. Mr. Trudeau, you control GIN FDN, isn't that true? On the advice of counsel, I invoke my Fifth Amendment
24 to GIN FDN, isn't that true? 25 A. I invoke my Fifth Amendment privilege.
24 privilege. 25 Q. At times since June 2nd, 2010, GIN FDN possessed assets,
Trudeau - direct 59 Trudeau - direct 60 1 isn't that true? 2 A. 3 Q. I invoke my Fifth Amendment privilege. At times since June 2nd, 2010, GIN FDN has possessed assets 1 A. 2 Q. I invoke my Fifth Amendment privilege. Mr. Lane wrote to you, "I've developed a strategy to help
3 protect your intellectual property rights in the event of a 4 separation from Natashya while preserving GIN's tax and asset 5 protection advantages," correct? 6 A. 7 Q. I invoke my Fifth Amendment privilege. And Lane recommended to you that you enter into an employment
4 that you could have used to satisfy the Court's order to pay, 5 isn't that true? 6 A. 7 Q. I invoke my Fifth Amendment privilege. Marc Lane also represents your wife, Nataliya Babenko, isn't
8 that true? 9 A. On the advice of counsel, I invoke my Fifth Amendment
8 agreement with GIN which provides that all intellectual property 9 that you create or have created for the company will belong to 10 GIN but only during your employment." 11 says, isn't that true? 12 A. 13 Q. I invoke my Fifth Amendment privilege. And it continues in the next paragraph, "If you or GIN That's what this e-mail
10 privilege. 11 Q. You asked Lane for advice regarding how you could maintain
12 control over GIN in the event that you were separated from your 13 wife, isn't that true? 14 A. 15 I invoke my Fifth Amendment privilege. MR. COHEN: Your Honor, we direct the Court's attention
14 terminates your employment, the intellectual property that you 15 created would be transferred to you or your designee. If GIN
16 and the witness's attention to FTC exhibit, what's been marked 17 for identification as FTC Exhibit 12-J, which is an e-mail from 18 Lane to the witness on March 22nd, 2011. 19 that exhibit into evidence. 20 MR. ANDERSON: And I object to the admission of that The FTC moves to offer
16 licensed any of those rights to third parties during your 17 employment, it would be required either to terminate those 18 licenses or assign them to you at your direction. In addition,
19 GIN's right to use your name, image, and likeness would 20 automatically terminate." 21 22 A. That's what this e-mail says, isn't that true? On the advice of counsel, I invoke my Fifth Amendment
21 document, Your Honor, on the same grounds. 22 23 THE COURT: All right. It will be admitted.
(FTC Exhibit 12-J was received in evidence.)
23 privilege. 24 Q. The idea was to make sure that GIN's intellectual property
24 BY MR. COHEN: 25 Q. Mr. Trudeau, you see the first paragraph, do you not?
25 rights would go to you in the event of a separation from your
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1 wife, isn't that true? 2 A. 3 Q. 4 A. 5 Q. I invoke my Fifth Amendment privilege. But Mr. Lane also represents your wife, isn't that true? I invoke my Fifth Amendment privilege. But there was no problem discussing this issue with Mr. Lane,
1 Q. 2 A. 3 Q. 4 A. 5 Q.
But you would have control over KTRN, isn't that true? I invoke my Fifth Amendment privilege. You make the financial decisions for KTRN, isn't that true? Now or sometime in the past? Right now you make the financial decisions for KTRN, isn't
6 because the Global Information Network belongs to you, not your 7 wife, isn't that true? 8 A. On the advice of counsel, I invoke my Fifth Amendment
6 that true? 7 A. 8 Q. I invoke my Fifth Amendment privilege. At times since June 2nd, 2010, you have made the financial
9 privilege. 10 Q. Let's turn for a moment to KT Radio Network. Mr. Trudeau,
9 decisions for KTRN, isn't that true? 10 A. 11 Q. I invoke my Fifth Amendment privilege. At times since June 2nd, 2010, you have made the banking
11 you're familiar with an entity known as KT Radio Network, isn't 12 that true? 13 A. On the advice of counsel, I invoke my Fifth Amendment
12 decisions for KTRN, isn't that true? 13 A. 14 Q. I invoke my Fifth Amendment privilege. You make the banking decisions for KTRN right now, isn't that
14 privilege. 15 Q. 16 A. 17 Q. It's sometimes called KTRN, isn't that true? I invoke my Fifth Amendment privilege. It was created by Marc Lane's law firm at your instruction,
15 true? 16 A. 17 Q. I invoke my Fifth Amendment privilege. At times since June 2nd, 2010, you've made decisions for KTRN
18 isn't that true? 19 A. 20 Q. I invoke my Fifth Amendment privilege. And you instructed Lane to create KTRN as an entity that
18 regarding its business strategy, isn't that true? 19 A. 20 Q. I invoke my Fifth Amendment privilege. And you decide KTRN's business strategy right now, isn't that
21 Babenko, your wife, would nominally own, isn't that true? 22 A. 23 Q. What does "nominally own" mean? You instructed Lane to create KTRN as an entity that Babenko
21 true? 22 A. 23 Q. I invoke my Fifth Amendment privilege. At times since June 2nd, 2010, you've made KTRN's employment
24 would be the legal owner of, isn't that true? 25 A. I invoke my Fifth Amendment privilege.
24 decisions, isn't that true? 25 A. I invoke my Fifth Amendment privilege.
Trudeau - direct 63 Trudeau - direct 64 1 Q. You currently make KTRN's employment decisions, isn't that 1 2 true? 3 A. 4 Q. 5 A. 6 Q. I invoke my Fifth Amendment privilege. And you decided where KTRN would be located, isn't that true? I invoke my Fifth Amendment privilege. You decided that KTRN would be located at 130 Quail Ridge You have decided when KTRN would pay you, isn't that
2 true? 3 A. 4 Q. 5 A. 6 Q. Does it currently have employees? I asked you a question. Can you repeat it, please? You currently make KTRN's employment decisions, isn't that
7 true? 8 A. 9 Q. 10 A. 11 What is an employment decision? You currently decide who will work at KTRN, isn't that true? And does it have employees now? MR. COHEN: Your Honor, if you could direct the witness
7 drive in Westmont, Illinois, isn't that true? 8 A. 9 Q. I invoke my Fifth Amendment privilege. You've made decisions regarding KTRN's intellectual property,
10 isn't that true? 11 A. 12 Q. 13 A. 14 Q. I invoke my Fifth Amendment privilege. You've made legal decisions for KTRN, isn't that true? I invoke my Fifth Amendment privilege. And those decisions include KTRN's legal strategy in these
12 to answer the question. 13 THE COURT: Can you answer it "yes" or "no,"
14 Mr. Trudeau? 15 BY THE WITNESS: 16 A. On the advice of counsel, I invoke my Fifth Amendment
15 proceedings, isn't that true? 16 A. 17 Q. I invoke my Fifth Amendment privilege. The Lane firm represented KTRN sometime after June 2010,
17 privilege. 18 BY MR. COHEN: 19 Q. You currently decided that at the moment KTRN will not have
18 isn't that true? 19 A. 20 Q. I invoke my Fifth Amendment privilege. And the Lane firm provided legal advice to KTRN, isn't that
20 any employees, isn't that true? 21 A. On the advice of counsel, I invoke my Fifth Amendment
21 true? 22 A. 23 Q. I invoke my Fifth Amendment privilege. When the Lane firm provided legal advice to KTRN, it
22 privilege. 23 Q. 24 A. 25 Q. You decided how much KTRN would pay you, isn't that true? I invoke my Fifth Amendment privilege. And you decide when -- strike that.
24 sometimes provided that advice to you, isn't that true? 25 A. I invoke my Fifth Amendment privilege.
PXA:1
1 Q.
No one ever authorized you to receive legal advice on KTRN's
1 this photograph. 2 3 MR. ANDERSON: THE COURT: Objection, no foundation, relevancy.
2 behalf, isn't that true? 3 A. 4 Q. I invoke my Fifth Amendment privilege. Sometimes you requested legal advice from the Lane firm on
Well, I think you have to ask a few
4 questions of the witness. 5 MR. COHEN: Your Honor, I'm happy to do so.
5 behalf of KTRN, isn't that true? 6 A. 7 Q. I invoke my Fifth Amendment privilege. But no one ever authorized you to receive legal advice on
6 BY MR. COHEN: 7 Q. Mr. Trudeau, this is a photograph of 3108 White Oak Lane, Oak
8 behalf of KTRN, isn't that true? 9 A. 10 Q. 11 A. 12 Q. 13 A. 14 Q. I invoke my Fifth Amendment privilege. Mr. Trudeau, you controlled KTRN, isn't that true? I invoke my Fifth Amendment privilege. And you do control KTRN, isn't that true? I invoke my Fifth Amendment privilege. In fact, KTRN rented a home at 3108 White Oak Lane, Oak
8 Brook, Illinois, isn't that true? 9 A. 10 11 12 I invoke my Fifth Amendment privilege. MR. COHEN: THE COURT: Based on the adverse inference, Your Honor. I'll admit it.
13 BY MR. COHEN: 14 Q. Let's also turn to what has been premarked for identification The top one
15 Brook, Illinois, isn't that true? 16 A. 17 Q. I invoke my Fifth Amendment privilege. And you resided at that home for about two years, isn't that
15 as FTC Exhibit 12-N, which is a series of e-mails. 16 is from Mr. Sant to Lane, copying the witness. 17 mentioned Exhibit 12-N. 18 19 20 21 22 ahead. 23 (FTC Exhibit 12-N was received in evidence.) MR. COHEN: THE COURT:
This is as I
18 true? 19 A. 20 Q. I invoke my Fifth Amendment privilege. And when you resided there, that home was your personal
Your Honor, we move to admit this exhibit. Same objection? Yes. Same ruling.
I object, Your Honor. It will be admitted. Go
21 residence, isn't that true? 22 A. 23 I invoke my Fifth Amendment privilege. MR. COHEN: Your Honor, we direct the Court's attention
All right, okay.
24 to what has been premarked as FTC Exhibit 9, which is a photo of 25 3108 White Oak Lane, Oak Brook, Illinois, and we move to admit
24 BY MR. COHEN: 25 Q. Mr. Trudeau, you've argued that this home is actually a
Trudeau - direct 67 Trudeau - direct 68 1 business expense, isn't that true? 2 A. 3 Q. I invoke my Fifth Amendment privilege. If you would look at the third page of this exhibit, and 1 2 3 4 5 Your lawyer, Mr. Lane, writes, "We could argue that KTRN THE COURT: All right. It will be admitted.
(FTC Exhibit 11-J was received in evidence.) THE COURT: I want to see counsel at sidebar, please.
4 that's 12-N, the second paragraph is an e-mail from Mr. Lane to 5 Mr. Sant. 6
(Discussion at sidebar on the record.) THE COURT: Nothing but surprises. I just want you to
6 read what my courtroom deputy gave to me just now. 7 8 9 MR. COHEN: THE COURT: MR. COHEN: May I also take a look, please? Yes, all of you. Your Honor, if I understand this correctly,
7 thought it was necessary for Kevin to reside in the Oak Brook 8 home for him to perform his duties, but it's a stretch." 9 see that? 10 A. 11 Q. I invoke my Fifth Amendment privilege. The rental of the Oak Brook home wasn't a business expense, Do you
10 the FTC's position is that to the extent this is open to the 11 public, people would be entitled to do that. 12 THE COURT: No. There is no broadcasting from our
12 isn't that true? 13 A. On the advice of counsel, I invoke my Fifth Amendment
13 courtrooms. 14 MR. ANDERSON: No. This is a clear violation of Your
14 privilege. 15 MR. COHEN: The FTC directs the Court's attention and
15 Honor's order. 16 THE COURT: Absolutely, it's a clear violation of the Do any of you know who is doing
16 the witness's attention to what's been premarked as FTC Exhibit 17 11-J, which is a text message from the witness to Mr. Sant dated 18 January 17th, 2011. 19 20 21 Your Honor, the FTC moves to admit this document. THE COURT: MR. COHEN: I'm sorry, what document is that? This is FTC Exhibit 11-J, which is a text So it's a statement of
17 court rules in this district. 18 this? 19 20 21 22 23 MS. CROSWELL: MR. COHEN: Yes.
We do not. I suspect.
MS. CROSWELL: THE COURT:
22 message from Mr. Trudeau to Mr. Sant. 23 Mr. Trudeau. 24 MR. ANDERSON:
Okay. I suspect the gentleman in the red shirt
MS. CROSWELL:
And I object on the previous grounds
24 in the back row.
He often updates his Facebook page regarding It would not surprise me if it
25 stated, Your Honor.
25 what is going on in this case.
PXA:1
1 was him. 2 3
His name is Abe Husein, Your Honor. THE COURT: And who is he? He is an affiant that the FTC has
1 that.
So if there is anybody connected with either party that is
2 doing this, I would look very dimly on this. 3 4 MR. ANDERSON: THE COURT: It's certainly not us.
MR. ANDERSON:
4 previously used. 5 6 7 8 9 now. 10 11 MS. CROSWELL: MR. KIRSCH: He's a previous GIN member, Your Honor. Your Honor, he's a person that we asked the MR. COHEN: MR. MORA: MR. COHEN: THE COURT: That's not correct. That's not true. That's actually not correct. Listen, I don't want to argue about this
If it's somebody who is adverse to one of
5 you or the other, who is not connected to you, that's a different 6 situation. 7 courtroom. 8 MR. COHEN: Your Honor, if you could make it just clear, But I'm going to ask that person to leave the
9 because I'm not certain of this, because I don't recognize him, 10 but it may be the case that Mr. Wink is here. 11 Mr. Wink is here, we have no control over him. In the event that And we would
12 Court to hold in contempt for sending the e-mails saying the 13 circumstances that the Court held Mr. Trudeau in contempt. I
12 appreciate just that Your Honor make it clear that it's not just 13 Mr. Husein, but that no one is permitted to do this. 14 THE COURT: Well, first I have to see who is doing it.
14 think the Court just took it under advisement and said not at 15 this time. 16 But I think just so the record is clear, I think there
15 I mean, this is nothing I wanted to do during this proceeding. 16 All right. But I'm going to have to do that now. I just wanted
17 are orders posted right outside the courtroom that says you 18 cannot do exactly what he's doing. 19 THE COURT: All right. I guess I have to ask the people
17 to give you notice as to why I'm doing it. 18 19 20 21 22 MR. ANDERSON: THE COURT: Thank you.
All right.
20 in the courtroom if anybody is posting anything on Facebook from 21 the courtroom. They can go outside and say whatever they want to
(End of discussion at sidebar.) THE COURT: All right. Mr. Trudeau, stay where you are, please. Ladies and gentlemen, I got or my clerk got
22 whoever they want, but we're not supposed to be broadcasting 23 anything from the courtroom. And I don't know whether he's doing
23 an e-mail that somebody is posting a live commentary of the 24 proceedings on Facebook. 25 here doing that? Is anybody here doing that? Is anybody
24 this through an audio feed or whether he's just typing on -25 either one of them is not permitted. I just have to tell you
Because nobody is leaving this courtroom until
Trudeau - direct 71 Trudeau - direct 72 1 I find out this answer. 2 will. 3 4 5 MR. HUSEIN: THE COURT: MR. HUSEIN: Your Honor -Yes, sir. I was going outside posting on Facebook. If I have to get marshals up here, I 1 your own language. 2 courtroom. 3 4 outside. MR. HUSEIN: Yeah, I understand. That's why I went But nothing is to be done while you're in
I stepped outside for like a minute and made a quick
5 post on Facebook. 6 THE COURT: All right. I don't see anything wrong with
6 Is that not allowed? 7 THE COURT: Can you step forward, sir, please? And your
7 that.
I just wanted to make sure, because the e-mail was And whoever it was who got this, probably somebody
8 name is, sir? 9 10 MR. HUSEIN: THE COURT: It's Abe Husein. And, Mr. Husein, what connection do you have
8 inconclusive.
9 you sent it to, and I don't see any need -- let me just finish -10 I don't see any need to mention the name, believed that they 11 were, quote, watching a live commentary feed from Judge
11 with the case? 12 MR. HUSEIN: Well, I was a member of Global Information
12 Gettleman's session on Facebook. 13 14 saw me. MR. HUSEIN: Sir, I went outside. I don't know if you It wasn't
13 Network for a long time. 14 15 16 court. 17 18 THE COURT: MR. HUSEIN: All right. Because people didn't think he was going to THE COURT: MR. HUSEIN: And what are you posting on Facebook? I'm just telling people that Kevin is at
But it was when I was out in the hallway.
15 inside the courtroom. 16 THE COURT: All right. Well, as long as you're doing it
17 outside the courtroom, in a public place outside the courtroom, I 18 don't think there is anything wrong with it. 19 Please, anybody who is here, do not broadcast or Twitter
19 show up, and there was huge speculation. 20 THE COURT: Let me just tell you what the rules are,
20 or tweet or Facebook or e-mail or anything from the courtroom. 21 That is prohibited. 22 23 MR. HUSEIN: THE COURT: I understand. All right. You've explained yourself.
21 nothing is to be broadcast from the courtroom. 22 23 Honor. 24 MR. HUSEIN: I'm sorry, I didn't understand that, Your
I didn't know the rules. THE COURT: You can go outside and say whatever you want
24 That's fine. 25
Thank you. Thank you.
25 or do whatever you want or broadcast whatever you want if it's
MR. HUSEIN:
PXA:1
Trudeau - direct 73 74
1 2 morning.
THE COURT:
I'll tell you what, it's been a long
1 2 3 4 5
And we're going to have to take a lunch break anyway.
IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION FEDERAL TRADE COMMISSION, Plaintiff, vs. KEVIN TRUDEAU, Defendant. ) ) ) ) ) ) ) ) )
3 Why don't we abbreviate it, because I would like to get this 4 finished in reasonable time. 5 till 1:00. 6 7 MR. COHEN: THE COURT: Thank you, Your Honor. All right. Mr. Trudeau, well, this is a You are under adverse Why don't we break until a quarter
6 7 8 9 10
No. 03 C 3904 Chicago, Illinois May 21, 2013 12:45 p.m.
8 civil case. 9 examination.
You are under oath.
So the rules are that you're not supposed to talk
TRANSCRIPT OF PROCEEDINGS - MOTION BEFORE THE HONORABLE ROBERT W. GETTLEMAN
10 to anybody about your testimony between now and the time you 11 return to the stand, except you may talk with your lawyer about 12 invoking the Fifth Amendment. 13 14 15 16 17 18 19 20 21 22 23 24 25 Okay. I'll see you after lunch then.
11 APPEARANCES: 12 For the Plaintiff: 13 14 15 16 17 18 For Defendant Trudeau 19 Law firm of Marc J. Lane and 20 Marc J. Lane: 21 22 23 Official Reporter: 24 25 JENNIFER S. COSTALES, CRR, RMR 219 South Dearborn Street Room 1706 Chicago, Illinois 60604 (312) 427-5351 WINSTON & STRAWN LLP 35 West Wacker Drive Chicago, Illinois 60601 BY: MR. KIMBALL ANDERSON MR. THOMAS L. KIRSCH, II MS. KATHERINE CROSWELL FEDERAL TRADE COMMISSION 55 West Monroe Street, Suite 1825 Chicago, Illinois 60603 BY: MR. DAVID A. O'TOOLE FEDERAL TRADE COMMISSION 600 Pennsylvania Avenue, N.W. M-8102B Washington, DC 20580 BY: MR. JONATHAN COHEN MR. MICHAEL MORA MS. AMANDA COSTNER
(Recess at 11:50 a.m. until 12:45 a.m.)
75 76 1 2 3 (Proceedings in open court.) THE COURT: Mr. Trudeau, please take the stand. Your Honor, may we see the Court for a 1 that obviously. But I have enough trouble keeping my own All I'm going to do is this, I will repeat I want to get this
2 courtroom in control.
MR. ANDERSON:
3 this to I guess the Chief in due course. 4 thing finished today.
4 sidebar briefly. 5 6 7 THE COURT: Sure.
I'm going to admonish everybody, particularly him, that
(discussion at sidebar on the record.) MR. ANDERSON: Well, before we took a lunch break, you This
6 there is no videotaping in this building at all, unless it is 7 authorized as we do, for instance, in naturalization proceedings 8 and presentations of pro bono awards and that sort of thing, 9 okay. 10 11 12 MR. KIRSCH: THE COURT: MR. KIRSCH: Your Honor, could you -I will admonish him that. Could you also order that to the extent
8 admonished Mr. Husein about the rules about recording.
9 building, it's posted in the hallway and down on the second floor 10 with many, many signs saying that recording and broadcasting is 11 absolutely prohibited. 12 And over the lunch hour Mr. Husein followed us around,
13 videotaping us on his phone, uploading it, apparently, even 14 though we told him and pointed to the sign that says this is not 15 allowed in this building. 16 Under the circumstances, it seems to me he wasn't paying
13 there is videotape, that it not be distributed? 14 THE COURT: I guess I'll try. I mean, that's the rule. There is enough
15 It's disturbing that nobody down there saw it. 16 security people around. 17 MR. KIRSCH:
17 attention to the Court's order, and if this was the AP, I am sure 18 that his phone would be -- his videocamera would be seized, and 19 he would be admonished. 20 21 are. 22 MR. ANDERSON: It seems to be popular these days, In any event, I wanted -THE COURT: Speaking like the true civil libertarian you
Well, there weren't many people down there.
18 But, you know, in the cafeteria, there is two signs right -19 THE COURT: I'm quite familiar with our rules, although
20 I'm not as familiar with the cafeteria. 21 22 23 All right. I'll say something.
(End of discussion at sidebar.) THE COURT: All right. I don't want this to be a
23 subpoenaing the press. 24 25 press. THE COURT:
Well, you know I have a soft spot for the And he's not supposed to be doing
24 sideshow here, but there is no videotaping allowed in this 25 building unless it's authorized by court order. We do allow
He's not the press.
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77 Trudeau - direct 78
1 videotaping of naturalization proceedings, certain ceremonial 2 proceedings, and that sort of thing. 3 Mr. Husein, it's been reported to me that you're I am going to order you to erase If you did
1 into evidence. 2 3 4 BY MR. COHEN: 5 Q. Mr. Trudeau, do you recall we were discussing KTRN prior to KEVIN TRUDEAU, DEFENDANT HEREIN, PREVIOUSLY SWORN DIRECT EXAMINATION
4 videotaping from your phone.
5 that videotape, because it should not have been done.
6 that, it should not have been recorded on your phone in this 7 building. That's the rule of this court and all federal courts
6 the lunch break? 7 A. 8 Q. Yes. And if you'll take a look at the text message at the top of
8 as far as I know. 9 So don't go videotaping people. You can blog if you That's
9 the first page of this exhibit, you write, "By the way, hired two 10 chefs, 80K each, starting in February, reporting to Matthew." 11 That's what it says, isn't that true? 12 MR. ANDERSON: Your Honor, I don't know that this has
10 want to, go outside the courtroom and blog all you want. 11 your First Amendment right.
But we do have rules about, it's for
12 security purposes and for the integrity of the proceedings in 13 this court, and until the federal judiciary changes its mind, 14 that's the rules that have to apply to everybody. 15 So maybe you and I should have a conversation when we So please stick around for that,
13 been order into evidence, but if the FTC is ordering it, I object 14 to it. It's irrelevant. It's hearsay. There has been no
15 foundation. 16 17 18 MR. COHEN: THE COURT: MR. COHEN: First of all, Your Honor, I understood -This is 11-J we're talking about? 11-J. To the extent that I neglected to
16 take our next break, all right. 17 Mr. Husein.
I just want to make sure, I'm not saying you did it
18 purposefully wrong, but there are signs all over the place, and I 19 want to make sure we follow the rules. 20 21 22 23 All right. MR. COHEN: THE COURT: MR. COHEN: Mr. Cohen. Thank you, Your Honor. I think we were on FTC Exhibit 11-J. That is correct, Your Honor, which is a text
19 offer it into evidence -20 THE COURT: I think you did. There was no objection.
21 But we'll admit it on the same basis that we've admitted the 22 others. 23 (FTC Exhibit 11-J was received in evidence.)
24 message from Mr. Trudeau to Mr. Sant dated September -- excuse 25 me -- January 17th, 2011. I believe that exhibit had been moved
24 BY MR. COHEN: 25 Q. It is true, Mr. Trudeau, that that's what this says?
Trudeau - direct 79 Trudeau - direct 80 1 A. 2 Q. Fifth Amendment. And the Matthew that's referenced in this text message is 1 that true? 2 A. 3 Q. Fifth Amendment. By the way, KTRN is also a member of the Global Information
3 Matthew Green, isn't that true? 4 A. 5 Q. Fifth Amendment. You decided to hire a butler to work at the Oak Brook home,
4 Network, isn't that true? 5 A. 6 Q. Fifth Amendment. And as a member of the Global Information Network, KTRN also
6 isn't that true? 7 A. 8 Q. 9 A. 10 Q. Fifth Amendment. And that butler was Mr. Green, isn't that true? Fifth Amendment. And that butler's salary wasn't a business expense, isn't
7 earns Global Information Network commissions, isn't that true? 8 A. 9 Q. Fifth Amendment. Turning to WSU, you're familiar with an entity known as WSU,
10 isn't that true? 11 A. 12 Q. Fifth Amendment. WSU was created by Marc Lane's firm at your instruction,
11 that true? 12 A. 13 Q. Fifth Amendment. And then you decided to hire two personal chefs to work at
13 isn't that true? 14 A. 15 Q. Fifth Amendment. And you instructed Lane to create WSU as an entity that your
14 the Oak Brook home, isn't that true? 15 A. 16 Q. Fifth Amendment. And their two $80,000 salaries weren't business expenses
16 wife, Babenko, would nominally own, isn't that true? 17 A. 18 Q. 19 A. 20 Q. Fifth amendment. And you decided where WSU would be located, isn't that true? Fifth Amendment. You decided that it would be located at 130 Quail Ridge Drive
17 either, isn't that true? 18 A. 19 Q. 20 A. 21 Q. Fifth Amendment. KTRN possesses assets, isn't that true? Fifth Amendment. At times since June 2nd, 2010, KTRN possessed assets, isn't
21 in Westmont, Illinois, isn't that true? 22 A. 23 Q. 24 25 property? Fifth Amendment. You made the decisions -- strike that. You made decisions regarding WSU's intellectual
22 that true? 23 A. 24 Q. Fifth Amendment. At times since June 2nd, 2010, KTRN has possessed assets that
25 you could have used to satisfy the Court's order to pay, isn't
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1 A. 2 Q. 3 A. 4 Q.
Fifth Amendment. You made financial decisions for WSU, isn't that true? Fifth Amendment. You authorized WSU to spend $480,000 to buy an apartment in
1 Q.
Mr. Trudeau, it says in the first paragraph, "if you take the
2 gross rev received for Go 5 Star, all tick sales less all costs, 3 that is what I should get as a speaking fee. Would like Hybrid
4 to wire that money to Website Solutions next week." 5 6 A. 7 Q. That is what it says, isn't that true, Mr. Trudeau? Fifth Amendment. So you decided what you would get as a speaking fee, isn't
5 Kiev, isn't that true? 6 A. 7 Q. 8 A. 9 Q. Fifth Amendment. You make WSU's banking decisions, isn't that true? Fifth Amendment. You make decisions for WSU regarding its business strategy,
10 isn't that true? 11 A. 12 Q. 13 A. 14 Q. Fifth Amendment. You make WSU's employment decisions, isn't that true? Fifth Amendment. You decided how much WSU would pay Neil Sant, isn't that
10 privilege. 11 MR. COHEN: Your Honor, we direct the Court's attention
12 to what has been premarked as FTC Exhibit 11-DD, which are 13 e-mails from Trudeau to Sant -- excuse me, an e-mail from Sant to 14 Trudeau and then Trudeau's response. Those are dated April 5th, We move to
15 true? 16 A. 17 Fifth Amendment. MR. COHEN: Your Honor, we direct the Court's attention
15 both dated April 5th, 2013, just a few weeks ago. 16 admit this exhibit. 17 18 hearsay. 19 20 THE COURT: It will be admitted. MR. ANDERSON:
Objection, no foundation, relevance, and
18 to FTC, what has been marked for identification as FTC Exhibit 19 11-O, which is an e-mail from Trudeau to Sant on June 22nd, 2012. 20 And we move to admit this exhibit. 21 22 MR. ANDERSON: THE COURT: Same objection, same grounds, Your Honor. Same ruling. All right. It
(FTC Exhibit 11-DD was received in evidence.)
21 BY MR. COHEN: 22 Q. In the first e-mail, Mr. Trudeau, the second one on the page,
All right.
23 will be admitted. 24 (FTC Exhibit 11-O was received in evidence.)
23 Mr. Sant asks, "KT, have you decided who will be the officers of 24 Website, TAP, Alliance, and KTRN?" 25 A. Fifth Amendment. It says that, does it not?
25 BY MR. COHEN:
Trudeau - direct 83 Trudeau - direct 84 1 Q. And you understood that TAP is a company called Trudeau 1 Q. And the Lane firm provided legal advice to WSU, isn't that
2 Approved Products, isn't that true? 3 A. 4 Q. 5 A. 6 Q. Fifth Amendment. You understood that Website is WSU, isn't that true? Fifth Amendment. And that Alliance is a company known as Alliance Publishing
2 true? 3 A. 4 Q. Fifth Amendment. And that advice included legal advice regarding WSU's
5 management, isn't that true? 6 A. 7 Q. Fifth Amendment, Fifth Amendment. When the Lane firmed provided legal advice to WSU, it
7 Group, isn't that true? 8 A. 9 Q. Fifth Amendment. And you responded, "Talk with Marc about the officers, Options are Tina, me, Dr. Tom, Gransin." You decided who the options were for an officer to
8 sometimes provided that advice to you, isn't that true? 9 A. 10 Q. Fifth Amendment. But no one ever authorized you to receive legal advice on
10 please. 11
11 WSU's behalf, isn't that true? 12 A. 13 Fifth Amendment. THE COURT: Wait until he finishes the question, please,
12 replace Mr. Sant, isn't that true? 13 A. On the advice of counsel, I invoke my Fifth Amendment
14 privilege. 15 Q. In fact, you decided who would replace Neil Sant as WSU's
14 so the record is clear. 15 BY MR. COHEN: 16 Q. Sometimes you requested legal advice from the Lane firm on
16 nominee president, isn't that true? 17 A. 18 Q. 19 A. 20 Q. Fifth Amendment. And you made the legal decisions for WSU, isn't that true? Fifth Amendment. And that includes WSU's legal strategy in these proceedings,
17 behalf of WSU, isn't that true? 18 MR. ANDERSON: Your Honor, I'm going to have to object. These were all asked
19 This is just repetition of this morning. 20 and answered. 21 MR. COHEN:
21 isn't that true? 22 A. 23 Q. Fifth Amendment. The Lane firm represented WSU sometime after June 2, 2010,
Not with respect, if I may, Your Honor, not
22 with respect to WSU. 23 THE COURT: There were similar questions about other I know the
24 isn't that true? 25 A. Fifth Amendment.
24 corporations.
I'm not sure whether it is repetitive.
25 questions are the same, but --
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MR. ANDERSON:
Mr. Cohen, with all due respect, you
1 A. 2 Q.
Fifth Amendment. Turning to Website Solutions Switzerland, you're familiar
2 started with WSU this morning. 3 MR. COHEN: It could be the case. And if that's the I
3 with an entity that is known as Website Solutions Switzerland, 4 isn't that true? 5 A. 6 Q. Fifth Amendment. You decided that WSS would be based in Zurich, isn't that
4 case, I apologize, and we'll move on.
But I don't believe so.
5 believe we did Global Information Network, GIN USA, GIN FDN. 6 THE COURT: I believe Mr. Cohen is right. So I'm going
7 to let him go ahead and just make his record.
According to my
7 true? 8 A. 9 Q. Fifth Amendment. And you instructed that Website Solutions Switzerland would
8 notes Mr. Cohen is correct, but I'm not the court reporter. 9 All right. Go ahead, Mr. Cohen.
10 BY MR. COHEN: 11 Q. Sometimes you requested legal advice from the Lane firm on
10 be created as an entity that Babenko, your wife, would nominally 11 own, isn't that true? 12 A. 13 Q. Fifth Amendment. You make the financial decisions with respect to WSS, isn't
12 behalf of WSU, isn't that true? 13 A. 14 Q. Fifth Amendment. But no one ever authorized you to receive legal advice on
14 that true? 15 A. 16 Q. Fifth Amendment. You make the banking decisions with respect to WSS, isn't
15 behalf of WSU, isn't that true? 16 A. 17 Q. 18 A. 19 Q. 20 A. 21 Q. Fifth Amendment. Mr. Trudeau, you controlled WSU, isn't that true? Fifth Amendment. And you control WSU, isn't that true? Fifth Amendment. Since June 2nd, 2010, WSU has possessed assets, isn't that
17 that true? 18 A. 19 Q. Fifth Amendment. You make the decisions for WSS regarding its business
20 strategy, isn't that true? 21 A. 22 Q. 23 A. 24 Q. 25 A. Fifth Amendment. You make WSS's employment decisions, isn't that true? Fifth Amendment. You decided to hire yourself at WSS, isn't that true? Fifth Amendment.
22 true? 23 A. 24 Q. Fifth Amendment. Since June 10, 2010, WSU has possessed assets you could have
25 used to satisfy the Court's order to pay?
Trudeau - direct 87 Trudeau - direct 88 1 Q. You make decisions regarding WSS's intellectual property, 1 money due for commissions and royalties to Christian's account on 2 behalf of WSS Swiss. Please confirm with Christian and me.
2 isn't that true? 3 A. 4 Q. 5 A. 6 Q. Fifth Amendment. You make legal decisions for WSS, isn't that true? Fifth Amendment. Last year you made two payments totaling $54,000 to the FTC,
3 Also, GIN FDN from Leich, L-e-i-c-h, account, needs to send half 4 that there is to him as well for payments due WSS Swiss. All of
5 this will be papered next week, but wires need to go out now so 6 that I can get my salary and make payments to the FTC." 7 8 A. 9 Q. Do you see that? Fifth Amendment. The phrase "Leich, L-e-i-c-h, account" means the Lichtenstein
7 isn't that true? 8 A. 9 Q. Fifth Amendment. And you instructed Marc Lane to inform the FTC that that
10 $54,000 came from your salary at WSS, isn't that true? 11 A. 12 Fifth Amendment. MR. COHEN: Your Honor, the FTC directs the Court's
10 account, isn't that true? 11 A. 12 Q. Fifth Amendment. So the money you paid to the FTC came from GIN FDN's
13 attention and the witness's attention to exhibit, what has been 14 marked for identification as Exhibit 11-R, which is an e-mail 15 from Trudeau to Sant dated September 6th, 2012. 16 admit this document. 17 18 19 MR. ANDERSON: THE COURT: Same objection, Your Honor. And we move to
13 Lichtenstein account, isn't that true? 14 A. 15 Q. Fifth Amendment. And you had authority to order the movement of money from GIN
16 FDN's Lichtenstein account, isn't that true? 17 A. 18 Q. Fifth Amendment. And you were managing WSS's financial affairs as well, isn't
Same ruling.
(FTC Exhibit 11-R was received in evidence.)
19 that true? 20 A. 21 Q. 22 A. 23 Q. Fifth Amendment. Mr. Trudeau, you control WSS? Fifth Amendment. At times since June 2nd, 2010, WSS has possessed assets,
20 BY MR. COHEN: 21 Q. Mr. Trudeau, we direct your attention to the sentence
22 beginning "This is important," beginning about midway down the 23 e-mail. 24 A. 25 Q. Do you see that?
Fifth Amendment. You write, "This is important. Have Neotative wire today the
24 isn't that true? 25 A. Fifth Amendment.
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1 Q. 2
At times since June 2nd, 2010, WSS -- strike that. At sometimes since June 2nd, 2010, WSS has possessed
1 ASAP.
Website Solutions Swiss needs to be up and running with
2 bank account and KT needs to have an employment agreement in on 3 sal. And I need a personal bank account there with debit card in Talk with Marc about this. Make
3 assets, isn't that true? 4 A. 5 Q. Fifth Amendment. At times since June 2nd, 2010, WSS has possessed assets that
4 Swiss francs and apartment. 5 this happen." 6 7 A. 8 Q.
6 you could have used to satisfy the Court's order to pay? 7 A. 8 Q. Fifth Amendment. Let's go to what's previously been marked as FTC Exhibit 11-M
That's what this says, isn't that true, Mr. Trudeau? Fifth Amendment. And that was on November 30th, 2011, isn't that correct,
9 for identification, which is an e-mail from Trudeau to Sant dated 10 November 30th, 2011. 11 12 MR. COHEN: The FTC moves to admit this document. On behalf of Mr. Trudeau, we object on
9 Mr. Trudeau? 10 A. 11 Q. Fifth Amendment. And on November 29th, 2011, the Seventh Circuit issued an
MR. ANDERSON:
12 opinion denying your appeal in this case, isn't that correct, 13 Mr. Trudeau?
13 the same grounds, Your Honor. 14 15 admitted. 16 (FTC Exhibit 11-M was received in evidence.) THE COURT: All right. Same ruling. It will be
14 A. 15 Q.
Fifth Amendment. So after you lost your appeal, you instructed Sant to move
16 your assets offshore, isn't that true? 17 A. On the advice of counsel, I decline to answer and invoke my
17 BY MR. COHEN: 18 Q. Mr. Trudeau, in this e-mail you wrote, "Super A priorities,
18 Fifth Amendment privilege. 19 Q. And you did move off -- you did move assets offshore, isn't
19 GIN must," in all capital letters, "get money out of the USA and 20 into banks overseas. 21 needed. Never keep more money in the USA than
20 that true? 21 A. 22 Q. Fifth Amendment. But you still control the assets you moved offshore, isn't
TAP, NCINC, KTRN, NCHI, WSS, and every company needs,"
22 in all capital letters, "accounts offshore," all capital letters. 23 Then we have maybe ten exclamation points. 24 "Very little money should be held in U.S. accounts. KT
23 that true? 24 A. 25 Q. Fifth Amendment. The reason that you instructed Sant to move assets offshore
25 Australia account needs to be activated and debit cards sent
Trudeau - direct 91 Trudeau - direct 92 1 was to protect those assets from the FTC, isn't that true? 2 A. 3 Q. Fifth Amendment. In fact, you've worked with the Lane firm to hide your assets 1 2 THE COURT: All right. It will be admitted.
(FTC Exhibit 12-G was received in evidence.)
3 BY MR. COHEN: 4 Q. Mr. Trudeau, do you see that Lane's e-mail says in the first
4 from the FTC, isn't that true? 5 A. On the advice of counsel, I invoke my Fifth Amendment
5 sentence, "KT, the domain name for www.KTRadioNetwork.com was 6 originally registered to Steve and Lee." 7 says, isn't that correct? 8 A. 9 Q. Fifth Amendment. And the e-mail continues with Lane stating that he previously That's what the e-mail
6 privilege. 7 Q. Marc Lane developed for you a plan to protect your assets
8 from creditors, isn't that true? 9 A. 10 Q. Fifth Amendment. And that meant keeping assets protected from creditors like
10 recommended transferring the registration along with all other 11 related intellectual property to TrueStar Marketing Corporation, 12 isn't that correct? 13 A. 14 Q. Fifth Amendment. But the domain name register had been changed to Trudeau
11 the FTC, isn't that true? 12 A. 13 Q. Fifth Amendment. And that meant keeping assets out of your name but within
14 your beneficial ownership, isn't that true? 15 A. 16 Q. Fifth Amendment. In fact, Lane advised you how to do exactly that, isn't that
15 Management, Incorporated, isn't that correct? 16 A. 17 Q. Fifth Amendment. And Lane reminded you that you own Trudeau Management, isn't
17 true? 18 A. 19 Q. Fifth Amendment. Let's turn to what has been marked for identification as FTC
18 that true? 19 A. 20 Q. Fifth Amendment. And Lane further reminded you that because you own Trudeau
20 Exhibit 12-G, which is an e-mail from Lane to you, copied to 21 Sant, dated April 27th, 2009. 22 MR. COHEN: The FTC moves to admit this into evidence,
21 management, its assets are subject to the FTC's claim, isn't that 22 correct? 23 A. Fifth Amendment. And Lane's e-mail continues, "Consequently, although ITV
23 Your Honor. 24 MR. ANDERSON: Mr. Trudeau objects on the previously
24 Q.
25 stated grounds, Your Honor.
25 Global continues to own 2.3 percent of TrueStar Marketing, I
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1 would recommend that TrueStar Marketing and not Trudeau 2 Management own the domain name registration and other 3 intellectual property relating to the radio show." 4 he advised you, isn't that correct? 5 A. 6 Q. Fifth Amendment. And he gave you that advice to help you keep assets protected That's what
1 A. 2 Q.
Fifth Amendment. And you've made business strategy decisions for Natural Cures
3 in the past, isn't that true? 4 A. 5 Q. Fifth Amendment. You make management decisions for Natural Cures, isn't that
6 true? 7 A. 8 Q. Fifth Amendment. You've made management decisions for Natural Cures in the
7 from the FTC, isn't that true? 8 A. 9 Q. Fifth Amendment. You're familiar with an entity known as Natural Cures, Inc.,
9 past, isn't that true? 10 A. 11 Q. Fifth Amendment. And the Lane firm has provided legal advice to Natural Cures,
10 isn't that true? 11 A. 12 Q. Fifth Amendment. And you make financial decisions for Natural Cures, isn't
12 isn't that true? 13 A. 14 Q. Fifth Amendment. And this advice included advice about Natural Cures'
13 that true? 14 A. 15 Q. Fifth Amendment. And you make the banking decisions for Natural Cures, isn't
15 finances, isn't that true? 16 A. 17 Q. Fifth Amendment. And when the Lane firm provided that advice, they provided
16 that true? 17 A. 18 Q. Fifth Amendment. You make the decisions for Natural Cures regarding its
18 some of that advice to you, isn't that true? 19 A. 20 Q. Fifth Amendment. No one ever authorized you to receive legal advice on behalf
19 business strategy? 20 A. 21 Q. Fifth Amendment. And you've made banking decisions for Natural Cures in the
21 of Natural Cures, isn't that true? 22 A. 23 Q. Fifth Amendment. And sometimes you requested legal advice from the Lane firm
22 past, isn't that true? 23 A. 24 Q. Fifth Amendment. And you've made financial decisions for Natural Cures in the
24 on behalf of Natural Cures, isn't that true? 25 A. Fifth Amendment.
25 past, isn't that true?
Trudeau - direct 95 Trudeau - direct 96 1 Q. No one ever authorized you to receive legal advice on behalf 1 assets to the new Natural Cures, Natural Cures, Inc., tax free, 2 which will provide new Natural Cures with an auditable balance 3 sheet, which may then permit a public offering of its stock and 4 will allow Lee to handle his day-to-day operations while still 5 allowing you to maintain ultimate control." 6 We direct the Court's attention and the 7 A. 8 Q. That's what it says, isn't it? Fifth Amendment. As of December 16th, 2011, you had ultimate control over
2 of Natural Cures, isn't that true? 3 A. 4 Q. Fifth Amendment. In fact, at one point you requested that the Lane firm advise
5 you about taking Natural Cures public, isn't that true? 6 A. 7 Fifth Amendment. MR. COHEN:
8 witness's attention to what has been previously marked as FTC 9 Exhibit 22, which is a December 16th e-mail, 2011 e-mail from 10 Mr. Lane to the witness. 11 MR. ANDERSON: And we offer this into evidence. Mr. Trudeau objects, Your Honor, on It's not relevant.
9 Natural Cures, isn't that true? 10 A. 11 Q. Fifth Amendment. At times since June 2nd, 2010, Natural Cures has possessed
12 previously stated grounds, hearsay. 13 14 THE COURT: Same ruling.
12 assets, isn't that true? 13 A. 14 Q. Fifth Amendment. At times since June 2nd, 2010, Natural Cures has possessed
15 BY MR. COHEN: 16 Q. Mr. Trudeau, I direct your attention and the Court's
15 assets that you could have used to satisfy this Court's order to 16 pay, isn't that true? 17 A. On the advice of counsel, I invoke my Fifth Amendment
17 attention to the final bullet on the first page that begins 18 "developing a strategy." 19 A. 20 Q. 21 Fifth Amendment. Mr. Lane says there -- let me back up for a moment. This is under a heading entitled "The major projects Do you see that? Do you see that?
18 privilege. 19 Q. Let's move to KMT Fiduciary Trust. Are you familiar with a
20 trust known as KMT Fiduciary Trust, Mr. Trudeau? 21 A. 22 Q. Fifth Amendment. And "KMT," that stands for Kevin Mark Trudeau, isn't that
22 we've recently tackled include." 23 A. 24 Q. Fifth Amendment.
23 true? 24 A. 25 Fifth Amendment. MR. COHEN: Let's turn the Court's attention and the
"One of those projects is developing a strategy that will
25 allow Natural Cures, now Natural Cures Holdings, to transfer its
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1 witness's attention to what's been marked for identification as 2 FTC Exhibit 12-E. 3 4 Mr. Mora, do you have a copy of 12-E? Mr. Anderson, let me know when you've had an opportunity
1 Mr. Trudeau? 2 A. 3 Q. Fifth Amendment. KMT Fiduciary Trust is an indispensable component of your
4 asset protection plan, isn't that true, Mr. Trudeau? 5 A. Fifth Amendment. Please look at the last sentence on the first page beginning Mr. Lane writes, "The involvement of an Isle
5 to locate that one. 6 7 8 9 MR. ANDERSON: MR. COHEN: We have it. 12-E?
6 Q.
12-E. We have it. Thank you.
7 "The involvement."
MR. ANDERSON: MR. COHEN:
8 of Man attorney will be required to sort out the title issues and 9 to protect Kevin's ultimate beneficial ownership of the trust 10 assets." 11 It's not You are the ultimate beneficial owner of the trust
This is an e-mail from Mr. Lane to Mr. Sant The FTC
10 entitled "KMT Fiduciary Trust" dated March 17th, 2008. 11 moves to admit this exhibit into evidence. 12 13 relevant. 14 15 MR. ANDERSON: We object, Your Honor.
12 assets, isn't that true? 13 A. On the advice of counsel, I invoke my Fifth Amendment
It's also hearsay. THE COURT: Same ruling. It will be admitted.
14 privilege. 15 Q. The assets of the trust include a company called KT Corp.,
(FTC Exhibit 12-E was received in evidence.)
16 BY MR. COHEN: 17 Q. Mr. Lane writes in the first paragraph, "As I've indicated,
16 isn't that true? 17 A. 18 Q. Fifth Amendment. And the assets of the trust also include Alliance Publishing
18 one of the more critical items on our priority list is restoring 19 KMT Fiduciary Trust to good standing with the Mauritius 20 authorities. This is an indispensable component of Kevin's That's what it says, isn't that
19 Group, isn't that true? 20 A. 21 Q. Fifth Amendment. And those trust assets have never been transferred from the
21 current asset protection plan." 22 correct, Mr. Trudeau? 23 A. 24 Q. Fifth Amendment.
22 trust, isn't that true? 23 A. 24 Q. 25 A. Fifth Amendment. So they remain there to this day, isn't that true? Fifth Amendment.
And the priority list that Mr. Lane is referring to here is a
25 priority list that you provided him, isn't that true,
Trudeau - direct 99 Trudeau - direct 100 1 MR. COHEN: Let's go to what's been marked for 1 true? 2 A. 3 Fifth Amendment. MR. COHEN: Your Honor, we're entitled to the adverse
2 identification as FTC Exhibit 26, which is an e-mail from Lane to 3 Sant in April of 2012. 4 5 evidence. 6 MR. ANDERSON: Your Honor, we object. First of all, it I believe it's April 10th, 2012.
Your Honor, the FTC moves to admit this exhibit into
4 inference on the basis of the Fifth Amendment assertion, and we 5 again request that this document be moved into evidence. 6 MR. ANDERSON: I disagree. I don't think any adverse
7 is not relevant.
Second, it's rank hearsay.
Mr. Trudeau is not
7 inference from asserting a constitutional right lays a foundation 8 for a document. I object. This document is not one that It's just rank hearsay. We
8 an author or even a recipient.
I don't think there is any
9 foundation or basis to be examining Mr. Trudeau on this letter or 10 asking him to confirm what a document he didn't send or receive 11 says. 12 THE COURT: Well, you can ask him some questions perhaps
9 Mr. Trudeau authored or received. 10 maintain our objection. 11 THE COURT:
Did you ask him whether he had ever seen it?
12 BY MR. COHEN: 13 Q. 14 A. Mr. Trudeau, have you ever seen this document? On the advice of counsel, I invoke my Fifth Amendment
13 to lay a foundation since it doesn't appear he's copied on this. 14 BY MR. COHEN: 15 Q. Mr. Trudeau, do you see the first paragraph says, "We've Do
15 privilege. 16 17 THE COURT: Fine. It will be admitted.
16 provided a status update for each item on Kevin's agenda." 17 you see that, Mr. Trudeau? 18 A. 19 20 Fifth Amendment. MR. ANDERSON: THE COURT:
18 BY MR. COHEN: I object to the form of that question. 19 Q. On the second page, paragraph 3, Mr. Lane wrote, "The house Well, "Ojai" refers to Ojai,
Overruled.
20 in Ojai" -- let me stop there.
21 BY MR. COHEN: 22 Q. You instructed Mr. Sant to communicate with Mr. Lane
21 California in this paragraph, isn't that true? 22 A. 23 Q. Fifth Amendment. "The house in Ojai is owned by KT Corporation Limited, which Do you see
23 regarding certain items on your agenda, isn't that true? 24 A. 25 Q. Fifth Amendment. And this document reflects those communications, isn't that
24 is in turn owned 100 percent by KMT Fiduciary Trust." 25 that?
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1 A. 2 Q.
Fifth Amendment. There is a house in Ojai that is owned by KT Corporation
1 29.
The first e-mail, which actually begins on the last page,
2 second-to-last page and then the last page, is an e-mail from 3 Lane to Trudeau, copy to Sant, dated February 4th, 2009 at 12:39 4 p.m. 5 6 evidence. 7 8 9 MR. ANDERSON: THE COURT: Same objection, Your Honor. Same ruling. MR. COHEN: The FTC moves to admit this document into
3 Limited, isn't that true? 4 A. 5 Q. Fifth Amendment. And KT Corporation Limited is owned 100 percent by KMT
6 Fiduciary Trust, isn't that true? 7 A. 8 Q. Fifth Amendment. In the next sentence, Lane continues, "We prepared and Kevin
All right.
9 signed a bill of sale transferring ownership of the furnishings 10 to TrueStar Productions in partial satisfaction of a preexisting 11 debt owed by Kevin to the company." 12 "Kevin" referred to in this sentence, that's you, isn't
10 BY MR. COHEN: 11 Q. 12 13 Mr. Trudeau, Lane wrote to you, "KT, are you concerned?" THE COURT: MR. COHEN: I'm sorry, what page are you on? I apologize, Your Honor. It's the last page
13 that true, Mr. Trudeau? 14 A. 15 Q. Fifth Amendment. And you signed the bill of sale that this paragraph refers
14 in the exhibit.
The e-mail begins with "KT," but the header of
15 the e-mail is on the preceding page. 16 17 THE COURT: MR. COHEN: Okay. The Bates number at the very bottom of the
16 to, isn't that true? 17 A. 18 Q. Fifth Amendment. The next sentence says, "TrueStar Productions is
18 page that I'm going to refer to is WSU 18578. 19 THE COURT: I see it.
19 ultimately" -- strike that. 20 21 trust." 22 A. 23 Q. 24 A. 25 Q. "TrueStar Productions is also ultimately owned by the I've read that correctly, have I not, Mr. Trudeau?
20 BY MR. COHEN: 21 Q. "KT, are you concerned that the trust-owned company to
Fifth Amendment. And "the trust" is KMT Fiduciary Trust, isn't that true? Fifth Amendment. Let's go to what has previously been marked as FTC Exhibit
22 receive payments from the publishers may be deemed an entity in 23 active concert or participating with Trudeau within the meaning 24 of paragraph 4-A of the November 4th, 2008 order? 25 president of Trustar Productions, Inc." You are the
Do you see that?
Trudeau - direct 103 Trudeau - direct 104 1 A. 2 Q. Fifth Amendment. If you look forward on the preceding page, you responded on 1 October 22nd, 2009. 2 3 MR. COHEN: The FTC moves to admit this document. Objection, Your Honor. It's got hearsay.
3 February 4th of 2009, "No, because that entity has no interest in 4 the product. 5 order." 6 A. 7 Q. It is only getting a fee as carved out by the
MR. ANDERSON:
4 It's irrelevant. 5 6 THE COURT: Same ruling. It will be admitted.
That was your response, isn't that true?
Fifth Amendment. And then Lane wrote back. We're now on the first e-mail on My concern is that the FTC
(FTC Exhibit 12-O was received in evidence.)
7 BY MR. COHEN: 8 Q. Mr. Trudeau, Lane wrote to you, "I see that NT Trading SA Presumably the
8 the second page.
"Understood, Kevin.
9 may later ask Judge Gettleman to rule that you engineered the 10 transaction to defraud the FTC. To mitigate that risk, may I
9 executed a power of attorney in your favor.
10 intent was to give you de facto control over the company, an 11 objective I can certainly appreciate. However, such a power May I have the power
11 include a disclosure in the letter that Trustar Productions, Inc. 12 Will receive a payment from the publishers solely in exchange for 13 your appearance as a spokesman for the books without identifying 14 the company's ownership and thus side-stepping the trust issues." 15 16 A. 17 Q. That's what Lane wrote back to you, isn't it? Fifth Amendment. And you responded in the preceding e-mail, "Yes. That was your response, was it not? That is
12 would defeat the asset protection strategy. 13 revoked?" 14 15 A. 16 Q. 17 A. 18 Q.
Lane wrote that to you, isn't that true? Fifth Amendment. But you didn't follow that advice, isn't that true? Fifth Amendment. While we're talking about powers of attorney, Babenko
18 fine." 19 A. 20 Q.
Fifth Amendment. Ms. Babenko, your wife, owns an entity known as NT Trading
19 provided Lane with a power of attorney, isn't that true? 20 A. 21 Q. 22 A. 23 Q. Fifth Amendment. And that was your idea, isn't that true? Fifth Amendment. You arranged for Lane to have a power of attorney so that you
21 SA, isn't that true? 22 A. 23 Q. Fifth Amendment. Let's move to what has been marked for identification as FTC At the bottom of the first page and the beginning
24 Exhibit 12-O.
24 could give Lane instructions regarding entities Babenko nominally 25 owns without Lane having to involve her at all, isn't that true?
25 of the second page, there is an e-mail from Lane to Trudeau dated
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1 A. 2 Q.
Fifth Amendment. Babenko is the settler of a trust known as Sovereign Trust,
1 that there is no privilege here because of the crime fraud 2 exception. The more I see these documents, the more convinced I I am removing the seal from
3 isn't that true? 4 A. 5 Q. Fifth Amendment. It was your idea that she would be the settler of a trust
3 am of the propriety of that ruling. 4 all these documents. 5 6 7 MR. COHEN: THE COURT:
Thank you, Your Honor. And I'm admitting this one.
6 known as Sovereign Trust, isn't that true? 7 A. 8 Q. Fifth Amendment. And that trust was set up in a country Seychelles, isn't that
(FTC Exhibit 12-H was received in evidence.)
8 BY MR. COHEN: 9 Q. Mr. Trudeau, direct your attention to the e-mail that's at Mr. Lane
9 true? 10 A. 11 Q. Fifth Amendment. And you decided that the trust would be set up in Seychelles,
10 the top of the first page and the second paragraph.
11 advises you, "In any event, I would stay away from Asia Trust 12 Limited. That's the very firm that caved in and turned over the
12 isn't that true? 13 A. 14 Q. Fifth Amendment. And Lane gave you some advice with respect to setting up a
13 Anderson's assets and Andre Pukke's assets and Debt Works' Assets 14 to the FTC." 15 16 A. Let's turn to what's been marked for 17 Q. 18 A. 19 Q. Lane gave you that advice, isn't that true? Fifth Amendment. And you followed that advice, isn't that true? Fifth Amendment. You own a company called International Pool Tour, isn't that
15 trust for which Babenko would be the settler, isn't that true? 16 A. 17 Fifth Amendment. MR. COHEN:
18 identification as FTC Exhibit 12-H, which is an e-mail from 19 Mr. Lane to Mr. Trudeau on February 12, 2009. 20 21 The FTC moves to admit that document. MR. ANDERSON: And Mr. Trudeau objects. It's a
20 true? 21 A. 22 Q. 23 A. 24 Q. Fifth Amendment. I'm going to refer to it as IPT, is that understood? Fifth Amendment. Let's refer back to what's previously been admitted as FTC
22 privileged document.
It's of no relevance because of the date.
23 It's filled with hearsay. 24 THE COURT: Let me address that objection, because it's I've already ruled
25 the first time you've mentioned privilege.
25 Exhibit 12-D, which is a January 7, 2009 e-mail from Lane to you.
Trudeau - direct 107 Trudeau - direct 108 1 2 3 admitted. 4 5 6 7 8 9 10 11 12 13 14 THE COURT: MR. COHEN: 12-D? Yes. I believe FTC 12-D was previously 1 That's what it says, isn't that correct, Mr. Trudeau? 2 A. 3 Q. Fifth Amendment. And IPT there stands for International Pool Tour, isn't that
Mr. Trudeau and Your Honor -THE COURT: MR. COHEN: THE COURT: MR. MORA: THE COURT: MR. MORA: THE COURT: MR. MORA: THE COURT: MR. MORA: THE COURT: Give me a moment to find it. Sure. No, no. Take your time.
4 correct, Mr. Trudeau? 5 A. 6 Q. Fifth Amendment. It continues, Lane's advice continues, "As an asset of yours,
Mr. Anderson may need a moment as well. Your Honor, it was the second document. It's the what? It was the second one. Second document admitted? Yes. Earlier this morning, you mean? It would be the second one. I'm trying to keep these in order, but it's All right. I've got it. Go ahead.
7 the company itself is subject to the claims of your creditors, 8 including the FTC. For that reason you should maintain only
9 minimal cash or other assets in IPT or any company you own." 10 Lane wrote that to you, did he not? 11 A. 12 Q. Fifth Amendment. Lane continues in the next paragraph, "It may make sense for
13 me," Lane, "to assume a greater role in cash management both to 14 maximize such asset protection opportunities and to minimize 15 income and other taxes." 16 not? 17 A. 18 Q. Fifth Amendment. At the time of this e-mail, there was cash available to you, Lane advised you to that effect, did he
15 not as easy as it looks. 16 MR. COHEN:
Your Honor, if you look at the second page
17 of that document, the e-mail actually begins with the first page, 18 but the substance runs on the second page. 19 Mr. Lane to Trudeau copying Sant. 20 BY MR. COHEN: 21 Q. And Lane is reminding you -- I'll read the first paragraph, The first paragraph states, does it not, that "Your It's an e-mail from
It's dated January of 2009.
19 isn't that true? 20 A. 21 Q. Fifth Amendment. And you've since followed his advice and kept only minimal
22 Mr. Trudeau.
22 cash in IPT, because -- isn't that true? 23 A. 24 Q. Fifth Amendment. And you've done so because IPT is exposed to the FTC, isn't
23 observation that Wallace Ward's company has entered into a 24 sponsorship relationship with IPT prompts me to remind you that 25 IPT is owned by you and not ultimately by KMT Fiduciary Trust."
25 that true?
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1 A. 2 Q.
Fifth Amendment. Let's turn to what has been marked for identification as FTC I think it actually contains
1 A. 2 Q.
Fifth Amendment. This document lists payments the Lane firm received from
3 12-C, which is a composite exhibit. 4 the original order to pay.
3 companies you controlled during that period, isn't that true? 4 A. 5 Q. 6 A. 7 Q. Fifth Amendment. You own International Pool Tour, isn't that true? Fifth Amendment. Looking at the third page, there are a number of payments
But the FTC is going to focus on at
5 the end a set of information produced by the Lane firm pursuant 6 to a stipulation between the Lane firm and the FTC whereby he 7 would produce a chart of payments received. 8 9 THE COURT: MR. COHEN: Is there a Bates number on that? Actually, there is not. If you go to, if
8 from International Pool Tour to the Lane firm listed here, isn't 9 that true? 10 A. 11 Q. 12 13 14 15 16 17 Fifth Amendment. So IPT -THE COURT: MR. COHEN: THE COURT: MR. COHEN: THE COURT: MR. COHEN: Wait. Which page are you looking at? I'm looking at --
10 you flip through the document, you'll see there is a stamp from I 11 believe Mr. Lane's deposition that identifies it as Lane 33-B. 12 And in the upper left-hand corner you'll see "Customer Balance 13 Detail June 2nd, 2010 through March 7th, 2013." And as I
I'm sorry, Your Honor. Page 3? Page 3. All right. I see it.
14 mentioned, this is a document that was produced by and in 15 accordance with a stipulation between the FTC and the Lane firm. 16 17 18 THE COURT: MR. COHEN: Okay. I see it.
We move to admit this document. Mr. Trudeau objects on the previously
You'll see that there are a series of
MR. ANDERSON:
18 payments from International Pool Tour that the Lane firm 19 acknowledges receiving. And the dates fall between the range of We could go through more, but
19 stated grounds, Your Honor. 20 21 THE COURT: All right. It will be admitted.
20 June 2, 2010 and March 7th, 2013.
(FTC Exhibit 12-C was received in evidence.)
21 I'll just focus on International Pool Tour. 22 BY MR. COHEN: 23 Q. International Pool Tour made these payments to Mr. Lane's
22 BY MR. COHEN: 23 Q. Mr. Trudeau, in the upper right-hand corner, as I mentioned,
24 you see a date range, June 2nd, 2010 through March 7th, 2013, 25 correct?
24 firm during that period, isn't that true? 25 A. Fifth Amendment.
Trudeau - direct 111 Trudeau - direct 112 1 Q. So after June 2nd, 2010, International Pool Tour had assets, 1 Q. At least since June 2nd, 2010, companies you control have
2 isn't that true? 3 A. 4 Q. 5 A. 6 Q. Fifth Amendment. You visited the Rivers Casino, isn't that true? Fifth Amendment. In fact, you've visited the Rivers Casino several times,
2 paid your American Express bills, isn't that true? 3 A. 4 Q. Fifth Amendment. And those expenses are personal expenses, not business
5 expenses, isn't that true? 6 A. On the advice of counsel, I invoke my Fifth Amendment
7 isn't that true? 8 A. 9 Q. Fifth Amendment. You instructed Marc Lane to tell the FTC that your visits to
7 privilege. 8 Q. And since the order to pay was entered on June 2nd, 2010,
9 companies you control have paid your Diner's Club bills, isn't 10 that true? 11 A. 12 Q. 13 A. 14 Fifth Amendment. And those expenses are personal expenses, isn't that true? Fifth Amendment. MR. COHEN: Let's mark what's been -- well, let's turn
10 the Rivers Casino had to do with a book that you're writing about 11 baccarat, isn't that true? 12 A. On the advice of counsel, I invoke my Fifth Amendment
13 privilege. 14 Q. You're not really writing a book about baccarat, isn't that
15 true? 16 A. On the advice of counsel, I invoke my Fifth Amendment
15 to what has been marked for identification as FTC Exhibit 6-E, 16 which is a Diner's club statement covering May 14 through June 17 14th, 2010. 18 19 Honor. 20 BY MR. COHEN: 21 Q. 22 Mr. Trudeau -THE COURT: Hold on. Just want to make sure I'm looking The FTC moves to admit this document. Objection on the same grounds, Your
17 privilege. 18 Q. And you never have been writing a book about baccarat, isn't
MR. ANDERSON:
21 privilege. 22 Q. You used financial transactions at Rivers Casino to hide
23 money from the FTC, isn't that true? 24 A. On the advice of counsel, I invoke my Fifth Amendment
23 at the right thing. 24 25 All right. That will be overruled.
25 privilege.
(FTC Exhibit 6-E was received in evidence.)
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1 BY MR. COHEN: 2 Q. Mr. Trudeau, on the third page of this document -- let me On the last page of this document, on June 6th,
1 case, isn't that true? 2 A. 3 Q. 4 A. 5 Q. 6 A. Wait a minute. Where are you now, the last 7 Fifth Amendment. And that's a charge for around $4300, isn't that true? Fifth Amendment. And that's a personal charge, isn't that true? Fifth Amendment. MR. COHEN: Let's look at what has been previously
3 make it easier.
4 2010, do you see two charges from Whole Foods, one for, the first 5 one for $55.63? 6 A. 7 8 page? 9 MR. COHEN: The last page. Your Honor, if you go up Fifth Amendment. THE COURT:
8 marked as FTC Exhibit 6-H, which is a Diner's Club statement 9 covering December 14 through January 14, 2011. 10 admit this document. 11 MR. ANDERSON: Mr. Trudeau objects on the same grounds, The FTC moves to
10 from the bottom approximately 15 or so entries, you'll see some 11 charges two in a row from Whole Foods. 12 13 14 THE COURT: MR. COHEN: THE COURT: Right. Willowbrook?
12 Your Honor. 13 14 15 THE COURT: All right. It will be admitted.
You got it, Your Honor, yes. Okay.
(FTC Exhibit 6-H was received in evidence.) MR. COHEN: Your Honor, if you and, Mr. Trudeau, if you
15 BY MR. COHEN: 16 Q. Just so the record is clear, that's a personal expense, isn't
16 look at the third page about six or seven lines from the top, you 17 will see a charge for $185 for something that appears to be 18 called Anastasia International. 19 BY MR. COHEN: 20 Q. 21 A. 22 Q. Do you see that, Mr. Trudeau? Fifth Amendment. Anatasia International is a company that makes arrangements
17 that true? 18 A. 19 Q. Fifth Amendment. And the one below also at Whole Foods, that's a personal
20 expense, isn't that true? 21 A. 22 Q. Fifth Amendment. Looking six from the bottom, you'll see a charge from Roberts Do you see that, Mr. Trudeau?
23 Drapery Center on June 9th, 2010. 24 A. 25 Q. Fifth Amendment.
23 for men in the United States to meet Ukrainian woman, isn't that 24 true, Mr. Trudeau? 25 THE COURT: Where are you referring now, page 3?
That's just a week after the order to pay was entered in this
Trudeau - direct 115 Trudeau - direct 116 1 2 correct. 3 30th. 4 5 6 charge. 7 BY MR. COHEN: 8 Q. That Anatasia charge, that's not a business expense, is it, THE COURT: MR. COHEN: I see it. Okay. There is a $185 MR. COHEN: It is the third page of the exhibit, that's 1 12th through September 14th, 2011. 2 document. 3 4 hearsay. 5 THE COURT: If this isn't a business record, I don't MR. ANDERSON: And Mr. Trudeau objects on relevancy, The FTC moves to admit this
Five or six lines from the top, the date is December
Anatasia International.
6 know what is. 7
But it's overruled anyway.
(FTC Exhibit 6-J was received in evidence.)
8 BY MR. COHEN: 9 Q. Mr. Trudeau, do you see on the second page there is a list of
9 Mr. Trudeau? 10 A. On the advice of counsel, I invoke my Fifth Amendment
10 charges incurred by your wife, Nataliya Babenko? 11 A. 12 Q. Fifth Amendment. All of these charges that she incurred were paid for by
11 privilege. 12 Q. If you go down another one, two, three, four, five, six
13 lines, you'll see another charge from Anatasia International for 14 $185. 15 A. 16 Q. 17 A. 18 Q. Do you see that, Mr. Trudeau?
13 companies that you control, isn't that true? 14 15 THE COURT: MR. COHEN: Wait. Where are you looking at now?
Fifth Amendment. That's not a business expense, is it, Mr. Trudeau? Fifth Amendment. If you go down another 10 lines to January 9th, you see Do you see
Your Honor, if you'll go to the third page
16 of the exhibit, the first portion is charges by Mr. Trudeau. 17 18 THE COURT: MR. COHEN: I see. But then there is a second category of
19 another charge from Anatasia International for $185. 20 that, Mr. Trudeau? 21 A. 22 Q. 23 A. 24 Fifth Amendment.
19 charges by Ms. Babenko. 20 THE COURT: I see. Okay.
21 BY MR. COHEN: 22 Q. 23 A. Let's go to what has been marked as FTC 24 Q. These charges are her personal expenses, isn't that true? Fifth Amendment. We'll spare the Court and you, Mr. Trudeau, of going through On August 22nd, if you
That's a personal expense, isn't that, Mr. Trudeau? Fifth Amendment. MR. COHEN:
25 Exhibit 6-J, which is a Diner's Club statement covering August
25 all of them, but we'll just point to one.
PXA:1
1 look about two-thirds of the way down on the page, you'll see a 2 charge for King Spa Sauna. 3 A. 4 Q. 5 A. 6 Q. Fifth Amendment. That sauna charge is a personal charge, isn't that correct? Fifth Amendment. In fact, the total amount of money that you and your wife Do you see that, Mr. Trudeau?
1 A. 2 Q.
Fifth Amendment. After the order to pay was entered, companies you control
3 paid Marc Lane's firm more than $5 million in legal fees, isn't 4 that true? 5 A. 6 Q. Fifth Amendment. To be precise, after the order to pay was entered, companies
7 spent on personal expenses after the order to pay was entered is 8 more than $3.2 million, isn't that true? 9 A. On the advice of counsel, I invoke my Fifth Amendment
7 you control paid Marc Lane's firm more than $5 million in total 8 fees, isn't that true? 9 A. 10 Q. Fifth Amendment. And after the order to pay was entered, companies you control
10 privilege. 11 Q. You've also bought at least $100,000 in gold bars from Golden
11 paid your litigation counsel here over $1.7 million, isn't that 12 true? 13 A. 14 Q. Fifth Amendment. So let's put aside for a moment the casino and the bars and
12 Lion Mint, isn't that true? 13 A. 14 Q. Fifth Amendment. Those bars were paid for with money from an account in your
15 name, isn't that true? 16 A. 17 Q. Fifth Amendment. And in 2011 you sent Neil Sant to Ashville, North Carolina
15 the Oak Brook house and Ojai and GIN commissions and money, you 16 know, the $2 million that you borrowed from Global Information, 17 put that aside, after the order to pay was entered, companies you 18 control still spent more than $6.7 million in expenses paid to 19 law firms, isn't that true? 20 A. 21 Q. Fifth Amendment. And after the order to pay was entered, you still spent more
18 personally to swap those Golden Lion Mint bars for Scotia Bank 19 bars, isn't that true? 20 A. 21 Q. Fifth Amendment. And the reason that you instructed him to do that was because
22 Scotia Bank bars are more readily transferable, isn't that true? 23 A. 24 Q. Fifth Amendment. And you still control those Scotia Bank bars, isn't that
22 than $3.2 million on credit and charge card expenses, isn't that 23 true? 24 A. 25 Q. Fifth Amendment. So looking only at credit and charge card expenses and legal
25 true?
Trudeau - direct 119 Trudeau - direct 120 1 expenses, you've spent nearly $10 million since the order to pay 2 was entered, isn't that true? 3 A. 4 Q. Fifth Amendment. And isn't it true, Mr. Trudeau, that not a penny of that 1 to interrupt you, Your Honor. 2 THE COURT: No. If you want to talk to your client
3 privately you can when I ask him these questions, because I don't 4 -5 MR. ANDERSON: Okay. I was having a little trouble
5 money went to the 800,000 consumers you misled? 6 MR. ANDERSON: Objection to the form of the question.
6 hearing you. 7 8 9 THE WITNESS: THE COURT: MR. KIRSCH: THE COURT: Come over here. The mic isn't close.
7 It's just argument. 8 BY MR. COHEN: 9 Q. 10 Isn't that true, Mr. Trudeau? THE COURT: I'll sustain the objection. I think it is
I'm sorry.
Can we stand over by him? Sure, you may. Why don't you go over by him. Can I just talk with him for one second? Sure.
10 11
11 argumentative. 12 13 14 15 16 MR. COHEN: THE COURT: No further questions, Your Honor. Thank you.
MR. ANDERSON: MR. KIRSCH: THE COURT:
12 13 14 15 16 17
I assume that you have no questions, Mr. Anderson? MR. ANDERSON: THE COURT: We have no questions, Your Honor.
(Discussion off the record between Mr. Kirsch and Mr. Trudeau.) THE WITNESS: MR. KIRSCH: Okay. Your Honor, in response to your question,
I just have one question that you didn't
17 touch on that goes to assets, and I appreciate that you'd 18 probably also take the Fifth Amendment, but I do have a right to 19 ask a few questions, and that is, when you married Ms. Babenko, 20 was there a prenuptial agreement? 21 THE WITNESS: On the advice of counsel, I invoke my
18 was there a prenuptial agreement, Mr. Trudeau will answer the 19 question. 20 21 22 THE COURT: He will answer the question? No, no, there was not. Was there any kind of Okay.
22 Fifth Amendment privilege. 23 THE COURT: Was there any type of marital agreement
There was not.
23 ante-nuptial agreement. 24 THE WITNESS: THE COURT: No. Those are the only questions I have.
24 either pre or post-nuptial? 25 MR. ANDERSON: He can answer that question. I'm sorry
25
Okay.
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121 122
1 2 3
MR. ANDERSON: MR. COHEN: THE COURT:
Okay.
1 you want to think about that.
But the sooner I get those
Thank you, Your Honor. And there is no questions from Mr. Trudeau's
2 designations, the sooner I'll be able to determine whether I want 3 him here for an evidentiary proceeding. 4 MR. COHEN: Your Honor, my commitment and the agreement Certainly we stand by that. But
4 counsel, I take it? 5 6 MR. ANDERSON: THE COURT: No questions. For the moment then you are
5 with Mr. Anderson was the 30th.
All right.
6 we are prepared to be ready to go with those designations on the 7 30th. And we are prepared also to, in the event that the Court
7 excused, Mr. Trudeau. 8 9 10 11 12 13 THE WITNESS: THE COURT:
You can take a seat. Thank you.
8 would like to hear from Mr. Lane live, to conduct that proceeding 9 as expeditiously as the Court is able and willing to conduct it. 10 Thank you. MR. ANDERSON: Well, Your Honor, in response to your
My glasses though. Yes.
Not that I can use them anymore.
11 question, Where do we go from here? as I said earlier today I 12 believe in my first or second sentence, we urge the Court to
(Witness excused.) THE COURT: All right. Counsel, where do you suggest we
13 order the accounting that we've agreed to.
That is the most
14 go from here? 15 MR. COHEN: Your Honor, this matter has been pending for And the longer that we wait to
14 expeditious path to any consumer remediation, any finish line 15 here. Mr. Trudeau has consented to it. The companies have. We
16 a considerable period of time.
16 urge you to order the accounting. 17 MR. COHEN: Your Honor, if I may? In very brief, the
17 get to an ultimate resolution, the more injury consumers suffer. 18 We understand that there is a need for post-trial briefing to 19 sort out the admission of certain of the FTC's exhibits. 20 THE COURT: Well, let me take you a step back. There is
18 FTC's position is that no accounting will ever be effective with 19 Mr. Trudeau unless Mr. Trudeau is coerced to cooperate. 20 MR. ANDERSON: Well, he has fully agreed to cooperate. I mean, this is
21 also the matter of Mr. Lane and the designations for Mr. Lane's 22 deposition to determine whether I'm going to want to hear from 23 him. As I said before, chances are I will, particularly after
21 You can't put him in jail and waterboard him. 22 silly. 23 MR. KIRSCH:
Your Honor, can I add one thing?
This is
24 reading some of these exhibits, and so that may involve the 25 representational issues we discussed yesterday. I don't know if
24 exactly the thing we addressed last Thursday when you said, 25 "Mr. Kirsch, this is closing argument" when I said "What they're
123 124 1 trying to do is deter future misconduct." All they're saying, 1 three years ago now almost, the question is what can I do to 2 coerce such actions by Mr. Trudeau? 3 course, is part of that mix. 4 To coerce him to do an accounting which he at least says To coerce him to And the bankruptcy, of
2 put him in jail so he doesn't engage in misconduct in the future. 3 But if the accounting was ordered, he would cooperate with the 4 accounting, and this would be over. 5 MR. COHEN: Your Honor, he's had years to produce
5 he's willing to do at this point is one thing.
6 accurate financials. 7 THE COURT: Yes, I'm not buying that one. I'm sorry.
6 actually turn over assets that I might find he controls may 7 interfere with the bankruptcy until that's resolved. So until
8 There is a lot of material to digest here, and I want to think 9 about it. But I can tell you that I've seen enough in these
8 the bankruptcy is dismissed or relief from the automatic stay is 9 granted, complete relief on a contempt finding should I make that 10 conclusion is or may be at least unavailable. 11 And so it would be best to know whether the bankruptcy
10 documents to support any adverse inference that might be drawn 11 from at least some of this testimony. 12 It's clear to me that Mr. Lane and Mr. Trudeau were
12 is going to proceed, how long it's going to proceed, or if it's 13 going to be terminated, and I could think about the complete 14 relief, because when you brief this thing, I would like you to be 15 able to address the type of relief available to the Court to 16 protect the integrity of its order. 17 civil contempt is all about. 18 Mr. Anderson is absolutely right in his analysis of the It's not to And that's what contempt,
13 engaged in a rather elaborate scheme to try to put his assets 14 beyond the reach of the FTC in collection of its claim and then 15 its judgment, both before and after that judgment was entered. 16 They knew about the claim, of course, long before June of 2010. 17 So as far as reaching that threshold, I think these My job at this point is to digest
18 documents clearly prove that.
19 some of that, to think about what other arguments you want to 20 present to me in briefing, to look at Mr. Lane's testimony to see 21 what he had to say about it in his deposition and to see whether 22 I want to speak with him; and if I do that, I want to do that in 23 early June or the middle of June, as soon as my schedule permits; 24 and then talk about if I decide that Mr. Trudeau can be coerced 25 to do something to achieve the remedial judgment that I entered
19 law as I think you recognize in civil contempt. 20 punish him.
There are other agencies of the government who may
21 seek to do that. 22 But I'm also very concerned about Mr. Lane's, some of
23 Mr. Lane's conduct in this case, particularly as it involves 24 various clients that he represents simultaneously and some of the 25 advice he has given to one client to the at least ostensible
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125 126
1 detriment to another client.
That doesn't mean to say that it's
1 greatest concern to me.
And that's what I'm doing now, I'm You may be wanting to think about
2 necessarily improper if proper disclosures and releases were 3 given. I don't know that. But I can tell you this, that it There could be a Himmel problem
2 giving you a heads-up on that. 3 that. 4 5 MR. ANDERSON: THE COURT:
4 certainly raises a flag with me. 5 here with respect to Mr. Lane. 6 MR. ANDERSON:
All right.
But in the meantime, I guess we can't do And I would like to know, there is
Your Honor, I heard you not to judge the
6 anything until I get those.
7 situation until you've had a chance to look at all the documents. 8 9 THE COURT: I'm sharing thoughts with you. I understand. There is a lot more There is
7 something happening in the Bankruptcy Court this week, is there 8 not? 9 10 MR. COHEN: THE COURT: Yes, Your Honor. A motion to substitute. And then Judge
MR. ANDERSON:
10 evidence that we presented in our documentary exhibits.
11 a lot more evidence in the testimony, which you haven't had a 12 chance to see. 13 THE COURT: I appreciate that. What I am saying to you
11 Wedoff is going to have to decide whether or not he's going to 12 allow more time to file the schedules or stick by his order. 13 14 Mr. Mora? MR. MORA: Yes, Your Honor. May I be heard? I'm
14 is that when we -- and maybe I'm going to wait and see Mr. Lane's 15 designations, because they're not in here. 16 box, are they? 17 MR. ANDERSON: No. They haven't been submitted yet by They're not in that
15 bankruptcy counsel for the FTC. 16 17 18 THE COURT: MR. MORA: THE COURT: You are bankruptcy counsel? Yes. Well, at least we have one bankruptcy lawyer
18 agreement of the parties. 19 THE COURT: I understand. But it's very important. I
19 here. 20 MR. MORA: What occurred, what has occurred in the last
20 mean, he's in the middle of this thing.
And it's very important
21 to me to get a full picture before I make a judgment. 22 I'm sharing, and this is what I like to do when cases
21 few weeks in Mr. Trudeau's bankruptcy case is he sought an 22 extension to file his schedules of assets and liabilities and 23 statement of financial affairs, which are necessary to complete 24 his bankruptcy petition, because all he filed initially was a 25 bare-bones petition. The FTC filed an objection.
23 are tried to the bench, I'm sharing my concerns with you, because 24 when I do get those, I'm going to want some input from both 25 sides, and I'm going to try to identify the issues that are of
127 128 1 2 3 THE COURT: MR. MORA: THE COURT: We've been kept up to date. Okay. One, we can get the docket. Two, we can get 1 didn't recall exactly when it was up for hearing. And
2 Mr. Anderson said that Winston & Strawn was getting out or at 3 least had moved to withdraw and another lawyer had moved to 4 substitute and was going to ask for more time. 5 Judge Wedoff. 6 But it seems to me that before I can make any final That's up to
4 the -- we've had information through non-bankruptcy lawyers. 5 MR. MORA: Your Honor, he was granted an extension until
6 last Friday at 4:30. 7 8 9 10 THE COURT: MR. MORA: THE COURT: MR. MORA: I know, I know. And he did not meet that deadline. I know. That extension was with prejudice. So this
7 decision about whether or not a contempt order is even 8 appropriate here, I have to decide whether there is a remedy that 9 is, you know, coercive rather than punitive. And that's one of
10 the big issues and big arguments that Mr. Trudeau's lawyers have 11 been making, and that will depend in some part on the course of 12 the bankruptcy. 13 So I'm just telling you that I'm concerned about that, Today is the
11 Monday, yesterday, the Office of the United States Trustee, which 12 is the agency that has the, the only agency that has standing to 13 file this type of motion to dismiss, moved to dismiss his case on 14 an expedited basis. 15 May 28th. 16 17 report. 18 19 20 21 here. 22 23 MR. MORA: THE COURT: Sure. As I said before, Mr. Cohen and Mr. Anderson THE COURT: Right. We did. MR. ANDERSON: We already had this exact same status And the hearing is noticed for next Tuesday,
14 and I would like to be kept up to date on that. 15 21st of May. 16 designations.
And nine days from now I'll get the Lane Perhaps I should get you back here before that
17 just to give me a report on what's going on in the bankruptcy. 18 And then maybe we could even set a date, when my calendar clears 19 a bit, we can set a date -- well, I'm not sure about that. 20 guess I shouldn't do that until I see the Lane excerpts. 21 suspect I'm going to want to hear from him. I But I
It's like dj vu a day ago. Mr. Mora wasn't
Well, all right, all right.
So I'm going to have
22 to carve out some time in my schedule to do that. 23 24 MR. COHEN: THE COURT: Your Honor, this may be -I don't expect him to take the Fifth
24 and our own review of the bankruptcy docket has informed us of 25 this. I've seen the motion. I know what the schedule is. I
25 Amendment, because he hasn't, so, therefore, he's waived it.
PXA:1
129 130
MR. COHEN:
Your Honor, this may be premature, but in
1 were going to submit Mr. Lane's testimony by deposition. 2 what our understanding was. 3 designations. 4 THE COURT:
That's
2 the event that there are further live proceedings and testimonies 3 taken from Mr. Lane, the FTC would request that Mr. Trudeau be 4 ordered to appear personally for such proceedings. 5 THE COURT: I think Mr. Lane -- Mr. Trudeau will be
That's why we were doing deposition
We had a conversation yesterday about the So, you know, that's
5 possibility of going a different route.
6 ordered to appear for any evidentiary proceedings. 7 8 MR. COHEN: THE COURT: Thank you, Your Honor. He doesn't have to be here for statuses and But for the evidentiary proceedings, for
6 where I don't really know which direction. 7 Well, let's just ask Mr. Cohen. What do you prefer,
8 Mr. Cohen? 9 10 MR. COHEN: THE COURT: We strongly prefer to have Mr. Lane live. That will save you some trouble. I think So why
9 that sort of thing. 10 sure. 11
MR. ANDERSON:
All right.
Well, on the subject of the The
11 from what I've seen today I would prefer him live too. 12 don't we just go ahead and do it. 13 hold on a second.
12 Lane testimony, I mean, the FTC has to make an election. 13 Lane deposition is not admissible. 14 declaration. It's an out-of-court
But right now I have to --
I'll tell you what, let's take a short break.
And unless we stipulate to it, he's not available,
14 Let me just take a short break, because I want to consult my 15 calendar. 16 And, Mr. Husein, please don't leave, because I do want So why don't we take
15 I think they have to make an election, do they want to use the 16 deposition, or do they want to call a live witness, but they 17 can't do both. 18 And they have already -Well, then why are you designating --
17 to talk to you about that other matter. 18 about a ten-minute break. 19 20 21 You MR. COHEN: (Recess.) THE COURT:
THE COURT:
19 actually, Mr. Anderson, you are absolutely right about that I 20 think. It occurred to me earlier when I was just thinking about
Thank you, Your Honor.
21 what we were going to be doing why we need to designate 22 deposition excerpts at all if Mr. Lane is going to testify.
I'm sorry for the delay.
It turns out there
22 is actually a procedure to be followed when somebody videotapes 23 in the building. And we have put that procedure in place. It
23 could always use his deposition to impeach, to refresh, and all 24 the rest of it. 25 MR. ANDERSON: Well, because we had stipulated that we
24 has nothing to do with this proceeding at all. 25 MR. ANDERSON: Okay.
131 132 1 THE COURT: All right. I think what we should do then 1 have these rather than plowing through that. 2 going to delay things. I know this is just
2 is set a date, I was looking over my schedule, for Mr. Lane's 3 testimony. 4 5 the 18th. And the best date for me would be June 18th. I have an all day settlement mediation on I'm sorry, I'm
But even if you had submitted it on
3 depositions, chances are I wouldn't have a chance to have 4 digested everything by then anyway. 5 MR. ANDERSON: I have an administrative question about
MR. ANDERSON:
Would the 17th be open, Your Honor?
6 pretty much out that week. 7 THE COURT: That whole week? Well, I want to make this
6 our exhibits, Your Honor. 7 8 THE COURT: Yes. Go ahead.
8 as convenient -- how about the 26th then of June? 9 10 11 12 13 MR. ANDERSON: THE COURT: MR. KIRSCH: MR. COHEN: THE COURT: The 26th would work for me.
MR. ANDERSON:
Some of our exhibits, well, they're
9 totally unredacted, and some of them have personal identification 10 numbers, bank account numbers. 11 THE COURT: We'll redact those before they reach the
Mr. Cohen? Me too. Yes, Your Honor. Okay. I have a judges' meeting in the
12 public record. 13 14 MR. ANDERSON: THE COURT: Okay. You have them in your box. If you want them
14 middle of the day. 15
Other than that, I'm free. Your Honor, does that mean we just start in
I'm not filing anything.
MR. KIRSCH:
15 back now, you can take them back and redact them. 16 MR. ANDERSON: No. I don't need them. But I'm just
16 the morning and then break for the judges' meeting? 17 18 19 thing. 20 21 22 23 24 THE COURT: Well, it will have to be after my call. 10:00 o'clock? THE COURT: MR. KIRSCH: Yes. It's a little over an hour.
17 saying before -18 19 THE COURT: You have more room than I do probably. I'm just saying before somebody puts them
Maybe we'll be finished if we start first
MR. ANDERSON:
20 in the public record, we would like to redact the account numbers 21 and other personal identifiers. 22 23 24 THE COURT: Okay. That's perfectly fine.
We'll say 10:00 o'clock. Okay.
Are there any in your documents? MR. COHEN: Your Honor, we'll take a look. I believe But
And if you want to give me -- well, I guess
25 you'll be using a lot of these exhibits, but it was helpful to
25 that from the credit card records, everything was redacted.
PXA:1
133 134
1 we would want to look again just to be sure. 2 3 4 THE COURT: MR. COHEN: THE COURT: I can look real quick at that. I think they may have been. They were redacted, the account numbers were I mean, just remind
1 2 3 4
Okay.
But let's just leave it at that. Okay. Good.
There may not be, you know, there may be We'll
5 redacted, except for the last four digits.
5 something unclear that I may want to talk to you about. 6 take a look on the 28th and 29th. All right.
6 me before you put anything -- in other words, you are going to be 7 filing some sort of briefs most likely, when we set that up, just 8 remind me that the exhibits that you are going to attach to your 9 briefs will have the redactions of personal identifiers. 10 11 MR. ANDERSON: THE COURT: Okay. Thank you. I would like a report on the You say
Otherwise our next
7 date is the 26th of June at 10:00 o'clock. 8 9 10 11 12 13 14 15 I, Jennifer S. Costales, do hereby certify that the C E R T I F I C A T E MR. ANDERSON: MR. COHEN: THE COURT: Very well. Thank you, Your Honor.
Thank you, Your Honor. Thank you.
All right.
(Proceedings concluded.)
12 bankruptcy proceeding, because that is important to me.
13 next Tuesday, the 28th, is when it is up in the Bankruptcy Court? 14 15 16 17 18 MR. MORA: Yes, Your Honor. The 29th.
THE PLAINTIFF: THE COURT: THE CLERK: THE COURT:
29th, that's a Wednesday. They were noticed for the 28th. My clerk is telling me they were noticed for
16 foregoing is a complete, true, and accurate transcript of the 17 proceedings had in the above-entitled case before the Honorable 18 ROBERT W. GETTLEMAN, one of the judges of said Court, at Chicago, 19 Illinois, on May 21, 2013. 20 21 22 23 24 25
19 the 28th according to the docket. 20 MR. ANDERSON: Can we just give you a written report
21 rather than trooping over here, Your Honor, not that we dislike 22 coming over here. 23 But there is an expense attendant to it. I understand. I'll tell you what, we will If there is a need to talk
/s/ Jennifer Costales, CRR, RMR

Official Court Reporter United States District Court Northern District of Illinois Eastern Division
THE COURT:
24 take a look at the bankruptcy record. 25 to you, we'll let you know.
PXA:1

Trudeau Civil Case Document 723 Attachment 6 of 9-07-22 13 Transcript of 05-21-13 Hearing

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Trudeau Civil Case Document 723 Attachment 6 of 9-07-22 13 Transcript of 05-21-13 Hearing

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Case: 1:03-cv-03904 Document #: 723-6 Filed: 07/22/13 Page 13 of 142 PageID #:12204

Jonathan Cohen for the Federal Trade Commission.

MR. ANDERSON: THE COURT:

MS. CROSWELL: MR. ANDERSON:

A couple of things I want to mention before we begin.

We have other things to deal with today.

The other thing I wanted to mention to you is the

Mr. Sant's motion to quash his subpoena.

And the FTC's motion to hold Marc

24 going to take the Fifth. 25 THE COURT:

Okay, thank you.

3 is not in evidence yet. 4 evidence.

In fact, I've got two

So I was going to address some of that as to what the So I think

I was a little surprised to see

5 evidence would show in our opening statements today.

9 produced by the entities.

MR. ANDERSON: THE COURT:

I have them here is basically what

Your Honor, if I may, it is their burden of

So they need to -- I think we disagree as to

17 about, and that's what I'll have to decide. 18 right.

Just to put this all in context, I've already found that

23 on Mr. Trudeau to do that.

So that's what these proceedings are

And then in the event that that motion is taken under

I anticipated you putting Mr. Trudeau -- Mr. Trudeau has

14 that's enough to meet his burden.

MR. ANDERSON: THE COURT:

You know, I wish you had the electronics

Mr. Anderson, do you have anything to say?

23 As such we'd propose that they proceed first.

25 with their opening statement.

1 fundamentally it's their motion.

Whether the burden has shifted

MR. COHEN: THE COURT: MR. COHEN: THE COURT:

MR. ANDERSON: THE COURT:

So we'll talk about schedules after, after

13 formal submission of the exhibits. 14 need to make a formal motion.

But on behalf of Trudeau,

17 admissibility of those. 18 record. 19 THE COURT:

There are documentary exhibits.

25 excerpts, although we have designated them.

25 Court's understanding as to that.

I mean, this is tried to the bench, and we don't

5 privilege issues, for sure, that sort of thing.

10 alleged inability to comply.

Mr. Cohen, may it please the Court.

I thought I would talk about what the evidence will

11 also present testimony from the four key players:

We're happy to agree to any reputable independent

19 sorry to interrupt. 20 today. 21 this? 22 23 24 25

But Mr. Donnellon I don't see as being here

He knows that he was not going to be telephoned in to

22 control and continues to control significant assets.

MR. ANDERSON: THE COURT:

That is my understanding, Your Honor.

Okay. That is my understanding. I just want to make sure. All

MR. ANDERSON: THE COURT:

And the Seventh Circuit in the In Re:

9 with the accounting. 10

So the first thing I want to do today is just simply to

12 judgment on June 2, 2010, against Mr. Trudeau.

And why, I ask, should the Court be consumed with