Timothy McGinn Testimony 1103

1
McGINN - DIRECT - COOMBE
1 TIMOTHY McGINN,
2 having been duly sworn by the Clerk of the Court, was
3 examined and testified as follows:
4 THE CLERK: Just take a seat up there and
5 just ask that you speak into the microphone.
6 THE COURT: You can adjust that to make it as
7 comfortable as you wish.
8 THE WITNESS: Thank you.
9 DIRECT EXAMINATION BY MS. COOMBE:
10 Q. Good morning, Mr. McGinn.
11 A. Good morning.
12 Q. Could you please introduce yourself to the ladies
13 and gentlemen of the jury.
14 A. Yes. My name is Timothy McGinn. I live in
15 Niskayuna, New York, and I'm chairman of the board of McGinn
16 Smith & Company, which is an investing banking and merchant
17 banking firm headquartered in Albany.
18 Q. Thank you. Can you please tell us about your
19 educational background?
20 A. I have a Bachelors of Science in mechanical
21 engineering from the Rochester Institute of Technology. I
22 also studied statistical analysis and operations research at
23 the masters level at Union College.
24 Q. Now, you mentioned already that you are the CEO,
25 is that correct?
BONNIE J. BUCKLEY, RPR, CRR
UNITED STATES COURT REPORTER - NDNY
2
1 A. Chairman of the board.
2 Q. Chairman of the board of McGinn Smith. Tell us
3 again, what kind of company is McGinn Smith?
4 A. McGinn Smith is an investment banking slash
5 merchant banking slash stock brokerage firm which was
6 founded in Albany in 1980.
7 Q. Do you have any partners?
8 A. Yes.
9 Q. Who is your partner?
10 A. I have two partners, David Smith and Tom
11 Livingston.
12 Q. Do you -- how long has Mr. Livingston been one of
13 your partners?
14 A. Since January of 19 -- of 2004.
15 Q. Before that time, how did you and Mr. Smith divide
16 up the responsibilities of running McGinn Smith & Company?
17 A. I basically ran the banking practice and David ran
18 the brokerage side of the business.
19 Q. And has that changed since Mr. Livingston has
20 joined you?
21 A. Well, it's changed a couple of times since then.
22 Q. Can you tell us, do you still generally run the
23 investment banking?
24 A. I do.
25 Q. And Mr. Smith still generally runs the brokerage

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1 business?
2 A. Correct.
3 Q. What does Mr. Livingston do then?
4 A. Mr. Livingston is no longer affiliated with the
5 firm.
6 Q. What did Mr. Livingston do?
7 A. He ran the syndicate desk for the firm.
8 Q. Now, as the broker, what does McGinn Smith do?
9 A. McGinn Smith trades on all of the securities
10 exchanges in the United States with the exception of
11 commodities.
12 Q. As an investment banker, what does McGinn Smith
13 do?
14 A. McGinn Smith raises capital for various businesses
15 and non-profits, health care related, security alarm
16 related, cable TV related, various other industries, and has
17 done so for 30 years.
18 Q. Does McGinn Smith do anything else in connection
19 with its investment banking work?
20 A. We write fairness opinions. We offer valuations.
21 We give advice relative to mergers and acquisitions.
22 That's, that's pretty -- a pretty broad category.
23 Q. Do you know Senator Joseph Bruno?
24 A. I do.
25 Q. Did McGinn Smith ever employ Senator Bruno?

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1 A. Yes.
2 MS. COOMBE: Your Honor, may I approach?
3 THE COURT: Please.
4 BY MS. COOMBE:
5 Q. Mr. McGinn, I'm showing you what's Government's
6 Exhibit G A 1. Do you recognize it?
7 A. I do.
8 Q. What is it?
9 A. This is a letter which was written by me to
10 Senator Bruno. The date of the letter is December 17, 1992.
11 Q. Could we please look at the second page of the
12 letter. Is that your signature there, Mr. McGinn?
13 A. It is.
14 Q. All right. If we could go back and look at the
15 first page of the letter please. At the top, it's the
16 McGinn Smith Incorporated letterhead. And you see there's
17 two terms there, investment bankers and investment brokers,
18 and they're separated with a bullet in between them. Why
19 were the terms separated like that?
20 A. Well, their different functions.
21 Q. Now, the letter is addressed to Senator Bruno.
22 And let's look at the first sentence. It reads: The
23 following will describe the relationship between yourself
24 and the firm, as is currently envisioned. And then you see
25 it says job description. And if you keep going farther

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1 down, under number three, do you see that there's a part
2 that says money management relationships with labor unions?
3 Do you see where I am, Mr. McGinn?
4 A. I do.
5 Q. And it says assist in the development of money
6 management relationships with labor unions, pension plans.
7 Why did you focus on those categories of relationships in
8 this letter that you wrote to Senator Bruno?
9 A. Well, these are large accounts. The Taft-Hartley
10 was large and growing. It was a part of the investment
11 universe that McGinn Smith did not have deep penetration in.
12 We were looking to expand that penetration, and we believed
13 that Senator Bruno would be a significant ally in that
14 attempt.
15 Q. And just to make sure that I understand, what did
16 labor unions have that made targetting relationships with
17 unions attractive?
18 A. Well, labor unions had a vast amount of capital
19 invested in their pension plans. They typically had a board
20 of trustees who determined who would manage those funds.
21 That board of trustees was made up of both union people and
22 management people. We felt that it was a good target market
23 for us if we could have someone spearhead it. And we chose
24 Senator Bruno to do so.
25 Q. Could you look back at the exhibit again, G A 1,

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1 and do you see where it says compensation?
2 A. I do.
3 Q. And it says there, monthly draw of $2,000 versus
4 fees generated. And then there are some percentages below
5 that. Do you see where I am?
6 A. I do.
7 Q. Can you explain what a draw versus fees generated
8 compensation agreement means?
9 A. Basically what it means is that we live in what I
10 would characterize an eat what you kill environment. So to
11 the extent that this became a very profitable business, that
12 draw would increase. To the extent that it was not a
13 profitable business, at some point that draw would cease.
14 Q. Did Senator Bruno, in fact, generate fees for
15 McGinn Smith related to the job description, assist in the
16 development of money management relationships with labor
17 unions?
18 A. Yes.
19 Q. From which labor unions were fees generated for
20 McGinn Smith & Company?
21 A. Well, there were a couple. There was the
22 Hospitality Workers Union, as well as the Teamsters.
23 Q. Was that business from labor unions in the nature
24 of investment banking or investment brokerage business?
25 A. That was on the brokerage side.

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1 Q. Other than from labor unions, did McGinn Smith
2 obtain any business as a result of Senator Bruno's
3 relationship with McGinn Smith?
4 A. I don't believe so.
5 Q. All right. Now, if you could continue on in the
6 letter and look at the next page, please. Underneath
7 anticipated grant up at the bottom there, if you look a
8 little below that, you see it says, as we discussed ... we
9 would provide office space at McGinn Smith offices to be
10 furnished by us or with your furniture, your choice. Did
11 that ever occur? Did Senator Bruno report to an office at
12 McGinn Smith?
13 A. We provided an office for Senator Bruno.
14 Q. Okay. Did he use that office?
15 A. On occasion.
16 Q. How often did he use it?
17 A. Oh, I don't recall how often. It wasn't terribly
18 frequent.
19 Q. Can you give us some idea of how many times a year
20 he used it?
21 A. Half a dozen.
22 Q. And can you give us an idea for how many years he
23 used it about a half a dozen times a year?
24 A. I, I would be guessing.
25 Q. When was -- I'm sorry, go ahead.

8
1 A. (No response.)
2 Q. When was the last time that Senator Bruno used the
3 offers space at McGinn Smith?
4 A. 2000.
5 Q. All right. Do you see in the next paragraph it
6 says, our intent would be to issue simultaneous press
7 releases announcing the affiliation. Did you ever issue
8 press releases announcing Senator Bruno's affiliation with
9 McGinn Smith & Company?
10 A. No.
11 Q. Why not?
12 A. I believe that the Senator deferred from making
13 those public announcements.
14 Q. What do you mean the Senator deferred from public
15 making the public announcements?
16 A. We never got it done. We didn't press it.
17 Senator Bruno didn't press it. And we, we never did any of
18 those things.
19 Q. Did Senator Bruno indicate that he had some
20 reservations about doing that?
21 A. I don't know if he specifically said he had
22 reservations, but we didn't do it, and we didn't do it
23 largely because Senator Bruno was, was not interested in
24 doing that.
25 Q. You also -- the letter goes on to say, appropriate

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1 tombstone ads would be placed in public occasions jointly
2 selected. What's a tombstone ad?
3 A. A tombstone ad is typically something that occurs
4 after a transaction has been completed or a significant hire
5 has been announced, and it merely states the facts.
6 Q. Did Senator Bruno agree to the placement of
7 tombstone ads?
8 A. We didn't do any placements of tombstone ads.
9 Q. Was that for the same reasons that the press
10 releases were not done?
11 A. I believe so.
12 Q. The letter goes on to say further, engraved
13 announcements will be sent to a list jointly generated. Did
14 Senator Bruno ever agree to sending engraved announcements?
15 A. We never did that either.
16 Q. Was that for the same reason?
17 A. I think so.
18 Q. The letter states, additionally, we would wish to
19 host a dinner with our larger clients welcoming you to the
20 firm. Did Senator Bruno ever agree to such a dinner?
21 A. We never had that dinner.
22 Q. Was that for the same reason?
23 A. Yes.
24 Q. Did you meet with Senator Bruno to discuss his
25 possible employment by McGinn Smith?

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1 A. Yes.
2 Q. Who arranged the meeting?
3 A. James Featherstonhaugh.
4 Q. Who was present at that meeting?
5 A. Senator Bruno, myself, and Mr. Featherstonhaugh.
6 Q. Where did that meeting take place?
7 A. I recall it taking place at the University Club.
8 Q. Please tell us what you recall saying to Senator
9 Bruno and what he said to you during that meeting.
10 A. Well, the meeting was in 1992. Seventeen years
11 ago. My recollection is that we described the opportunity.
12 Senator Bruno was familiar with the firm. He had hired the
13 firm to do some work for his company Coradian. We went on
14 to describe the types of things that we had done and were
15 doing where we thought there were business opportunity,
16 where we thought he could provide strategic input and
17 assistance, talked in general about compensation levels, and
18 further elaborated to that point in this letter dated
19 December 17th, and told Senator Bruno we would be
20 delighted to have him join the firm.
21 Q. What was Senator Bruno's reaction at this meeting?
22 A. Oh, I think he was flattered. He indicated that
23 this was something he would have to run by his, his ethics
24 people and his counsel, but he would get back to us; he
25 would think about it and get back to us.

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1 Q. Did Senator Bruno ever bring any lawyers from the
2 New York State Senate to any meetings with you?
3 A. No.
4 Q. You mentioned earlier that McGinn Smith & Company
5 obtained business from two accounts. How did you refer to
6 the first one? One was the Teamsters account, and the other
7 one was the hospitality?
8 A. That's correct.
9 Q. And that was as a result of Senator Bruno's
10 efforts?
11 A. Correct.
12 Q. Was that business directly with the unions?
13 A. No. The way the business worked was that the
14 unions would employ an investment adviser. In this case
15 Wright Investors Services. And Wright Investors Services
16 would execute trades through McGinn Smith & Company. And
17 that's how McGinn Smith & Company would be compensated.
18 Q. Did McGinn Smith have any arrangement with Wright
19 Investors Services?
20 A. Well, the arrangement we had was that, to the
21 extent that our efforts delivered accounts to Wright
22 Investors Services, that we would be the beneficiary of the
23 commissioned business.
24 Q. Did McGinn Smith have a written agreement with
25 Wright Investors Services to that effect?

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1 A. No.
2 Q. Was there some meeting or discussion with
3 representatives of Wright Investors at which this
4 arrangement was agreed to?
5 A. Yes.
6 Q. When did that meeting occur?
7 A. I don't know. I don't know exactly when that
8 meeting occurred. I believe that the meeting was attended
9 by my partner Mr. Smith, who, as I said earlier, runs the
10 brokerage side of the business.
11 Q. Did you attend that meeting?
13 Q. Was each account on when Wright agreed that McGinn
14 Smith would get commissions a labor union?
15 A. Well, that's the way it turned out.
16 Q. You remember that there were two unions that were
17 involved in generating commissions for McGinn Smith, the --
18 A. True.
19 Q. -- Hospitality and the Teamsters?
20 A. Correct.
21 Q. Why was it that Wright Investors agreed that
22 McGinn Smith would get commission business on trades
23 involving the Teamsters account?
24 A. Well, that's a normal and customary practice in
25 the industry.
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1 Q. Why was it a normal and customary practice in the
2 industry? What did McGinn Smith do to convince Wright to
3 give McGinn Smith that brokerage business?
4 A. Well, McGinn Smith was instrumental in delivering
5 that business to Wright.
6 Q. How was it instrumental in delivering that
7 business to Wright?
8 A. The door was opened by Senator Bruno.
9 Q. Who was the person at the Teamsters who Senator
10 Bruno contacted to open the door for Wright?
11 A. The fellow's name was Whitey. I can't recall his
12 last name.
13 Q. What was his role at the Teamsters?
14 A. He was a trustee.
15 Q. Did he have any role within the union itself other
16 than being a Teamster?
17 A. Well, he was a trustee of the pension plan, and I
18 believe he may have been the executive director of that
19 particular Local.
20 Q. Regardless of what the title was, do you remember
21 that he was the head of that particular Local?
22 A. Yes. He was very influential.
23 Q. Now, you also mentioned the Hospitality as one of
24 the unions from which McGinn Smith obtained commissioned
25 business.
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1 A. Correct.
2 Q. Was it that Wright agreed that McGinn would get
3 commissioned business on trades involving the Hospitality
4 union?
5 A. Again, that was a piece of business that McGinn
6 Smith delivered to Wright Investors Services.
7 Q. Who was the person at the Hospitality union who
8 Senator Bruno contacted?
9 A. I believe that was Mr. Wolfgang Hammer.
10 Q. What was his role at the union?
11 A. I believe he too was a trustee of the pension plan
12 and may have been -- his title may have been executive
13 director of that particular Local.
14 Q. How long did that agreement between McGinn Smith
15 and Wright Investors Services regarding brokerage trade
16 executions for clients referred by Senator Bruno, how long
17 did that last?
18 A. Well, it was supposed to last indefinitely. It,
19 it, it lasted for, perhaps, eight years, seven years, six
20 years. I, I, I don't have the date in front of me.
21 Q. What happened during the course of that
22 relationship?
23 A. Well, during the course of the relationship, we
24 had some very good years with Wright, and then their
25 business began to tail off. We went back to Wright and said

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1 hey, why aren't we getting some more business? And they
2 gave us lots of reasons, some of which we believed. And at
3 some point in time, it just, it just tailed off to a point
4 where it became -- the relationship became quite
5 unprofitable and we terminated the relationship.
6 Q. When did that occur?
7 A. I would think somewhere in the 2003, 2004 time
8 frame.
9 Q. Now, when you say you terminated the relationship,
10 was that McGinn Smith & Company's relationship with Wright
12 A. Well, actually, Wright Investors Services had de
13 facto terminated that relationship. What I was referring to
14 was our relationship with Senator Bruno.
15 Q. When you say that Wright Investors Services had de
16 facto terminated the relationship, what do you mean by that?
17 A. The business flow stopped.
18 Q. In other words, you didn't get brokerage
19 commission -- I'm sorry -- you didn't get trades to execute
20 any more for those accounts?
22 Q. Did you ever have a discussion with Senator Bruno
23 in which the topic of the ethics of his working for McGinn
24 Smith was raised?
25 A. Well, I can recall two such conversations.

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1 Q. Is there -- there's some event that had occurred
2 that enables you to remember one of those conversations?
3 A. Well, the first event was the initial meeting at
4 the University Club with Mr. Featherstonhaugh. And there
5 was a subsequent meeting a luncheon meeting that was
6 attended by myself, Senator Bruno, and my partner Dave
7 Smith, and that occurred shortly after Senator Bruno had
8 been elected or had been -- had risen to the level of Senate
9 Majority Leader.
10 Q. Please tell us what Senator Bruno said to you at
11 this meeting and what you said to him on the topic of the
12 ethics of Senator Bruno working for McGinn Smith.
13 A. Well, when Senator Bruno became the majority
14 leader, he became more concerned about the ethics issue. He
15 indicated to us at that time that his new responsibilities
16 would take on a greater purview, cover more of the
17 landscape, and he wanted to go back to his ethics people and
18 make sure that, as the Senate Majority Leader, he would, he
19 would be okay to continue in the same vein that he had
20 previously.
21 Q. Did he ever get back to you on that?
22 A. He did not.
23 Q. Do you remember that at some point he came back to
24 you on that issue?
25 A. Well, at some point he came back to us and said

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1 yeah, we're clear to go ahead, because we did go ahead.
2 Q. Did he tell you who had cleared it to go ahead?
3 A. Not specifically, no.
4 Q. Did he tell you generally?
5 A. No.
6 Q. During this discussion, did Senator Bruno tell you
7 what he had disclosed about soliciting labor unions?
8 A. No.
9 Q. Now, you mentioned there had been an earlier
10 conversation, the one that you've already testified about
11 earlier today. What did Senator Bruno tell you then about
12 the ethics issues or the ethics issues involved in him
13 working for McGinn Smith?
14 A. Well, as I said earlier, he had indicated that any
15 such arrangement would be subject to the review of his
16 various counsel and ethics committee people and came back to
17 us when we decided to go forward jointly and indicated that
18 whatever they said was, was a tacit approval of such an
19 arrangement.
20 Q. And that occurred at the time that you first met
21 with him?
22 A. It clearly occurred sometime prior to
23 December 17th, 1992.
24 MS. COOMBE: May I approach, your Honor?

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1 BY MS. COOMBE:
2 Q. Mr. McGinn, I'm showing you what's been marked as
3 Government's Exhibit G A 3. Can you tell us what this is?
4 A. This is an IRS Form W-4.
5 Q. Do you see a handwritten note at the bottom of the
6 exhibit where it says per TMM... Does that look like an M
7 to you, Mr. McGinn?
8 A. It does.
9 Q. DLS... Does that say start?
10 A. Yes.
11 Q. 1/15/93, pay $2,000 per pay period. Whose
12 initials are TMM and DLS?
13 A. TMM are my initials and DLS are David Smith's
14 initials.
15 Q. I mentioned a date there as well, January 15th of
16 1993. Is that consistent with your memory of when Senator
17 Bruno began to work for McGinn Smith & Company?
18 A. Yes.
21 BY MS. COOMBE:
22 Q. Mr. McGinn, I'm showing you what has been marked
23 as Government's Exhibit G A 4. Do you recognize that?
24 A. I do.
25 Q. What is it?
19
1 A. This is a W-2 form for tax purposes. It's an
2 earning summary.
3 Q. Does that indicate who the employer is?
4 A. It does.
5 Q. Who does it indicate that the employee is?
6 A. Joseph L. Bruno.
7 Q. Does it indicate how much money McGinn Smith paid
8 Senator Bruno in 1994?
9 A. Yes.
10 Q. How much?
11 A. $24,500.
14 BY MS. COOMBE:
15 Q. Mr. McGinn, I'm showing you now what's been marked
16 as Government's Exhibit G A 5. Do you recognize that?
17 A. I do.
18 Q. What is it?
19 A. G A 5 is a series of three checks, front and back,
20 dated 12/16/98, 12/20/98 and 2/10/99.
21 Q. Who are the checks made payable to?
22 A. Each of these checks is made payable to Business
23 Consultants Inc.
24 Q. Do you recognize the address on the checks?
25 A. I do.
20
1 Q. And that's 345 Bulson Road in Troy, New York. Do
2 you know whose address that is?
3 A. That's the address for Senator Bruno's consulting
4 business.
5 Q. Do you know who lives at 345 Bulson Road?
6 A. I have no idea.
7 Q. Do you know where Senator Bruno's lives?
8 A. I do.
9 Q. Have you been to his house?
10 A. Yes.
11 Q. Do you know where it is?
12 A. It's in Bulson Road, but I don't know the exact
13 address.
14 Q. I'm going to show you now...
17 BY MS. COOMBE:
18 Q. Mr. McGinn, this is Government's Exhibit G A 14.
19 Can you tell us what that is?
20 A. G A 14 is a spreadsheet which is a vendor history
21 indicating the payments made by McGinn Smith & Company Inc.
22 to Business Consultants Inc. for various fiscal years.
23 Q. Now, this exhibit appears to be in chronological
24 order of fiscal year with the most recent first. Let's turn
25 to the last page of the exhibit and look at the earliest

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1 entry. What fiscal year is that entry for?
2 A. Well, there --
3 Q. Let's focus first on the vendor history, not the
4 last page of the exhibit, Mr. McGinn, but the last page of
5 the vendor history.
6 A. 1995.
7 Q. The far left column is a title Vendor.
8 A. Yes.
9 Q. All the way over to the left.
10 A. Correct.
11 Q. What is the vendor listed?
12 A. Bruno J.
13 Q. Is that a reference to Senator Bruno?
14 A. I assume so.
15 Q. And the next column, if we could just look at the
16 beginning of it there. The next column reads Name. Do you
17 see that?
18 A. I do.
19 Q. Do each of these entries show the same name in
20 that column?
21 A. Yes.
22 Q. What is it?
23 A. Business Consultants Inc.
24 Q. All right. Can we look at this last page of the
25 exhibit now?
22
1 A. Sure.
2 Q. Do you see that that is a different spreadsheet?
3 A. I do.
4 Q. And this last page, do you see that it includes
5 1993 and 1994, which were not on the vendor history that we
6 just looked at?
7 A. Yes.
8 Q. Do you also see that there's an overlap between
9 the two spreadsheets for 1995 through 2002?
10 A. Yes.
11 Q. Do the figures for the overlapping years on each
12 spreadsheet roughly correspond to one another?
13 A. Yes.
14 Q. Are there some variations?
15 A. There are timing variations.
16 Q. Could you explain what you mean by that?
17 A. Timing variations, for instance, if you look at
18 '95 and '96, the total amount would have been 144,000, yet
19 the schedule, as shown on page four, does not show it broken
20 out as the same amount per year, but the total is the same.
21 Which is to say that there was more paid in '96 in one
22 column than the other by $6,000.
23 Q. Okay. If we could look at the last page of this
24 exhibit again, do you see where it says net commission, rev,
25 R-E-V?
23
1 A. Yes.
2 Q. Is that an abbreviation, rev?
3 A. Net commission revenue.
4 Q. Is that the revenue generated by accounts which
5 Senator Bruno introduced?
6 A. Yes.
7 Q. Okay. If we could go back to look at G A 4. That
8 was the 1994 W-2. Do you have it, Mr. McGinn?
9 A. I do.
10 Q. Other than that W-2 for 1994, did McGinn Smith
11 ever issue any other W-2s to Senator Bruno?
12 A. I don't think so.
13 Q. Could we go back and look at Exhibit G A 14.
14 A. Okay.
15 Q. Did McGinn Smith issue to Business Consultants
16 Incorporated any W-2s, 1099s, or any other tax documents?
17 A. I doubt it.
18 Q. Why do you doubt it?
19 A. Well, we have lots of vendors and we don't issue
20 109s to vendors or office supplies or coffee or whatever
21 else that we buy in the normal course of business, or Coke
22 machine, Bloomberg services, and so forth. It's just a
23 vendor kind of relationship, and we keep track on a general
24 ledger, which is shown here. But we probably would not have
25 issued 1099s.
24
1 Q. Does it have anything to do with the fact that
2 Business Consultants is a corporation, does that affect
3 whether a W-2 or 1099 has to be issued?
4 MR. LOWELL: Objection, your Honor. I
5 suppose she's calling on some form of tax expertise. I
6 don't know that she's laid the foundation to know if a
7 corporation's existence has anything to do with whether a
8 W-2 or W-4 --
9 THE COURT: I don't need a speech. You've
10 objected. The objection is overruled. You may answer the
11 question.
12 A. Would you repeat the question please?
13 Q. Of course. Did the fact that Business Consultants
14 Incorporated, that it appeared to be a corporation, did that
15 have any affect on whether McGinn had to issue a W-2, 1099,
16 or any other form of tax document?
17 A. No, I don't think so.
18 MS. COOMBE: Your Honor, may I have a moment?
19 THE COURT: You may.
20 MS. COOMBE: Your Honor, at this time the
21 Government would like to offer Exhibit G B 1, which has been
22 admitted by stipulation. And I would like to read it to the
23 jury.
24 THE COURT: The defense concurs that G B 1,
25 by stipulation -- well, it's already been offered and

25
1 received. You may publish it.
2 MS. COOMBE: Thank you, your Honor.
3 THE COURT: Let me ask you before you do, do
4 I see you holding a single page?
5 MS. COOMBE: I have -- actually, I have
6 another page, I wasn't holding it, but I have two more pages
7 and then less than five questions, your Honor.
8 THE COURT: All right. Go ahead.
9 MS. COOMBE: Thank you.
10 THE COURT: Thank you. You anticipated where
11 I was at.
12 MS. COOMBE: I did, your Honor. I saw where
13 we were going.
14 THE COURT: I'm watching the clock. It's to
15 your back. Go ahead.
16 MS. COOMBE: Yes, your Honor. I'll try to
17 get there quickly.
18 THE COURT: You're fine.
19 MS. COOMBE: I'm going to read G B 1 to you,
20 ladies and gentlemen. It states that the State of New York,
21 Department of State, and it states as follows: I hereby
22 certify that a diligent examination has been made of the
23 index of the corporation -- of corporation limited
24 partnership and limited liability company certificates filed
25 by this Department for a certificate of incorporation or

26
1 limited partnership or articles of organization for Business
2 Consultants, and that upon such examination, no such
3 certificate of incorporation, certificate of limited
4 partnership, or articles of organization has been found on
5 file with this Department.
6 And it's signed by Special Deputy Secretary
7 of State, dated January 8 of 2009.
8 Now we're going to look at G B 2, ladies and
9 gentlemen, and I'm going to read that to you as well. It is
10 a certificate of individual doing business under an assumed
11 name, and it states:
12 It is hereby certified that: The undersigned
13 is transacting business at 89 Bulson Road, City of Troy,
14 County of Rensselaer, State of New York, under the name of
15 Business Consultants. Two, the full name of the undersigned
16 is Joseph L. Bruno, and his residence address is 89 Bulson
17 Road, City of Troy, County of Rensselaer, State of New York.
18 Three, the undersigned is of full age and no other person is
19 interested as a partner, part owner or otherwise in the
20 business or of the conduct of it. This certificate is
21 executed and filed pursuant to Section 130 of the General
22 Business Law. It's dated August 31 of 1992. And it has the
23 signature Joseph L. Bruno. And then at the bottom, you see
24 that there's a notary public's entry dated August 31 of
25 1992. If you turn the page, ladies and gentlemen, you will
27
1 a see that there's a certification that this is a true copy
2 of a record filed in the Office of the Rensselaer County
3 Clerk's Office.
4 BY MS. COOMBE:
5 Q. Mr. McGinn, was it your idea to make checks
6 payable to Business Consultants Incorporated for McGinn
7 Smith & Company?
8 A. No.
9 Q. Was it somebody's idea at McGinn Smith & Company?
11 Q. Whose idea was it?
12 A. Ah, I believe it was Senator Bruno's request.
13 Q. What explanation, if any, did Senator Bruno
14 provide to you as to his reason for making the checks
15 payable to Business Consultants Incorporated, rather than to
16 Senator Joseph L. Bruno?
17 A. I'm not sure he gave us any reasons. It didn't
18 matter to us.
19 Q. During the time period that McGinn Smith was
20 paying Senator Bruno to obtain labor union commission
21 business for McGinn Smith through Wright Investors Services,
22 did you believe Senator Bruno was also being paid by Wright
24 A. No.
25 Q. Did you know that while McGinn Smith was paying

28
1 Senator Bruno, Senator Bruno obtained labor union business
2 for Wright for which McGinn Smith did not get the
3 commissioned business?
4 A. No.
5 MS. COOMBE: Your Honor, I have no further
6 questions.
7 THE COURT: I presume there is cross?
8 MR. LOWELL: There will be some.
9 THE COURT: All right. Ladies and gentlemen,
10 it's 10 after 12. We're going to adjourn for the luncheon
11 recess until 10 after 1. When you come back, please return
12 to the jury room. As always, remember the rules of good
13 conduct. Have a nice lunch. Thank you.
14 (Jury excused at 12:10 PM.)
15 (Court reconvened at 1:10 PM.)
16 THE COURT: There's a request that's been
17 pending, and I don't know whether you've seen it or not.
18 The press is seeking access to exhibits that have been
19 received in evidence and are, therefore, Court documents.
20 That's a process that Judge McAvoy authorized in a recent
21 prosecution that he handled. I'm not sure when you look at
22 my decision in Strevel that there is any reason to deny them
23 that access. I wanted the defense to have an opportunity to
24 be heard on that issue before -- because that motion is
25 still pending before me. Defense have a position on that?

29
McGINN - CROSS - LOWELL
1 MR. LOWELL: Once an exhibit is admitted into
2 evidence and a public record, Judge, we don't have any
3 objection to it being a public record.
4 THE COURT: Then I'll issue that order, John.
5 Okay.
6 (Jury present at 1:10 PM.)
7 THE COURT: Cross-examination, please.
8 MR. LOWELL: Thank you, your Honor.
9 CROSS-EXAMINATION BY MR. LOWELL:
10 Q. Good afternoon, Mr. McGinn. My name is Abbe
11 Lowell, and I'm one of the lawyers who represents Joe Bruno.
12 Before the lunch, you were talking about the creation of the
13 business relationship that you had with Mr. Bruno and your
14 company McGinn Smith, and you were asked questions about a
15 lunch that occurred and then that lunch led to an agreement.
16 Do you remember those questions?
17 A. Yes.
18 Q. There was quite a bit more to the decision by you
19 to hire Mr. Bruno then simply having one lunch with him and
20 Mr. Featherstonhaugh, isn't that right?
22 Q. And you didn't just know Mr. Bruno at the time
23 that the lunch occurred close to the time of the employment;
24 you had known him earlier than that, isn't that right?
30
1 Q. Indeed, you had known him some years before that
2 in his business capacity in another entity all together
3 known as Coradian, isn't that true?
5 Q. And in that time you actually had some dealings
6 with his company Coradian. In fact, you and the company
7 Coradian, you hired McGinn Smith to do work for it; isn't
8 that right?
9 A. That's right.
10 Q. So by the time that you made the decision to
11 engage Mr. Bruno, you knew something about him to do so,
12 right?
13 A. Yes.
14 Q. And you decided it was valuable to your company to
15 have that relationship, is that fair?
16 A. Yes.
17 Q. What was it about Mr. Bruno's abilities and
18 experience that caused you to conclude that it would be good
19 for your business to hire him?
20 A. Well, there are a number of considerations. First
21 of all, Joe was a respected member of the community. He had
22 been a businessman running Coradian. He was a founder of
23 Coradian. He managed Coradian. He was elected to the New
24 York State Senate nine times. He was a man who was held in
25 high regard for his dedication, for his work ethic, for his
31
1 integrity, for his honesty.
2 Q. Was there anything in particular about his
3 background that caused you to think that he would add value
4 to the pitches, to the opening the doors that you talked
5 about during your direct?
6 A. McGinn Smith is a company that was formed by two
7 young guys in 1980. Neither of those two persons, myself or
8 Mr. Smith, were born to privilege. We worked hard. That's
9 a story that can be told of Senator Joseph Bruno. Growing
10 up in a large family, having a parent die at an early age,
11 putting himself through Skidmore nights, while delivering
12 ice, tremendous perseverance, tremendous work ethic,
13 tremendous ambition, and as I said earlier in my testimony,
14 we live in an eat what you kill world. We don't get Taft
15 fund, we don't get checks from the government, we eat what
16 we kill. And we felt that Joe Bruno and the characteristics
17 that I've just enumerated would be very beneficial in
18 pursuing our business goals.
19 Q. In addition to those traits that you just
20 described that went into your thinking before you decided
21 that this would be a fruitful business relationship, did you
22 take into account that after he was involved in Coradian and
23 did business, he was prepared to give back by running for
24 and then serving as a public official? Did that have
25 anything to do with it?

32
1 A. As I said, he was elected to the New York State
2 Senate nine times. I don't think you could fool people nine
3 times in a row, although some have, and live to tell about
4 it. So we were impressed with that standard of service and
5 commitment, and remain so.
6 Q. After you made that decision, you had the lunch,
7 you made the decision that you wanted to hire him. I think
8 you were shown a copy of the letter that you sent that you
9 identified as the terms of the agreement. And that was done
10 before lunch. I think that should still be before you. I
11 think that letter is marked as Government's Exhibit G A 1,
12 is it?
13 A. Yes.
14 Q. Do you still have it there?
15 A. I do.
16 MR. LOWELL: Would you please put G A 1
17 initially on the screen again, please. And paragraph 3.
18 Would you highlight paragraph three, as the
19 Government did, please.
20 BY MR. LOWELL:
21 Q. Do you remember, when you were shown this
22 document, Miss Coombe zoomed in on paragraph three and asked
23 you questions about it. Do you remember that?
24 A. I do.
25 Q. And do you remember that when she did that, she

33
1 asked you about whether or not the labor unions had
2 something to do with the arrangement? Do you remember she
3 asked you that?
4 A. I do.
5 Q. But that's not all the story of this letter, is
6 it?
7 A. No. That's one sentence. One part of one
8 sentence.
9 Q. Would you please open up the whole letter? Now
10 let's go through the entirety. Isn't it true that the
11 description of the work that Mr. Bruno was supposed to do
12 and your intent that he did do was a great deal more than
13 targetting unions and their pension funds?
14 A. Yes.
15 Q. And doesn't paragraph one say that he was supposed
16 to assist in areas of investment banking? Do you see that?
17 A. I do.
18 Q. Doesn't paragraph two talk about a consultant
19 practice? Do you see that?
20 A. Yes.
21 Q. Paragraph three isn't just about unions, is it?
22 A. No.
23 Q. Paragraph three talks about pension plans,
24 corporate accounts, and wealthy individuals as potential
25 clients; doesn't it do that as well?

34
1 A. It does.
2 Q. Paragraph four says, provide advice and counsel to
3 the senior officers of the firm; is that right?
4 A. Yes.
5 Q. So if you focused on the word "unions" in
6 paragraph three of this letter that set up your letter
7 agreement, that wouldn't tell the whole engagement that you
8 intended Mr. Bruno to have with you, would it?
9 A. No.
10 Q. I would like to go to the top of that letter
11 please, and I would like you to highlight McGinn Smith's
12 title, and as Miss Coombe did, point out investment bankers
13 and investment brokers with the dot in between. Do you see
14 that?
15 A. Yes.
16 Q. Describing what McGinn Smith said, it was a
17 merchant banker, you talked about various of the things the
18 company did, right?
19 A. Yes.
20 Q. But they're not all listed on your stationary, is
21 it?
22 A. No.
23 Q. And it wasn't an attempt by you to mislead people
24 in the public that you weren't doing those other functions,
25 was it?
35
1 A. Not at all.
2 MR. LOWELL: You can take that off the
3 screen, please, Frank.
4 BY MR. LOWELL:
5 Q. Now, when you decided that it was a good idea to
6 hire Mr. Bruno, you were aware that state legislators did
7 business outside of being public officials, correct?
8 A. Correct.
9 Q. And in the beginning of the arrangement, you were
10 aware that there were attorneys involved in coming up with
11 the agreement that occurred between you and Mr. Bruno and
12 Mr. Bruno's arrangement? You were aware of that, right?
13 A. I was aware that Mr. Bruno had -- Senator Bruno
14 had indicated to us that he would consult with his, excuse
15 me, his ethics people and his counsel regarding the
16 proprietariness -- the proprietary nature of this
17 relationship.
18 Q. So your understanding was not that he was getting
19 somebody involved to make sure he cut a good deal from a
20 business point of view, but to get somebody involved to make
21 sure he was doing it right under the rules and under the
22 ethics law, is that right?
24 Q. Now, you said to Miss Coombe before lunch that you
25 didn't remember any meeting with lawyers for Mr. Bruno; and
36
1 that's your memory?
3 Q. I would like to show you, with the Government's
4 permission, a Government Exhibit, G A 2.
5 MR. LOWELL: And if you would put that on the
6 screen.
7 And may I approach the witness, please?
9 MR. LOWELL: Thank you.
10 BY MR. LOWELL:
11 Q. I will proffer to you --
12 MR. LOWELL: By the way, your Honor, pursuant
13 to our agreement with the Government, we're asking this be
14 admitted into evidence.
15 THE COURT: Any objections?
16 MS. COOMBE: No objection, your Honor.
17 THE COURT: Admitted.
18 BY MR. LOWELL
19 Q. I'll offer to you, Mr. McGinn, that this is an
20 entry from a calendar kept in Senator Bruno's office, and if
21 you'll look at the date December 23.
22 MR. LOWELL: And if you highlight the day and
23 year on the top please, John, and the year, please.
24 A. December 23, 1992.
25 Q Yes, sir. So that's prior to the fact that the

37
1 date of the contract that you saw, Government Exhibit Number
2 1, is that right?
3 A No, it's not. It's afterwards.
4 Q No, no, let me look at Government's Exhibit Number
5 1. I'm sorry. It's right after the date. Now, it's in the
6 same week that this agreement is sent, is that right?
7 A That's correct.
8 Q And if you'll turn to the left column and if
9 you'll look at the entry.
10 MR. LOWELL: And if you would please
11 highlight that. And you can take the letter off. Just the
12 calendar please. That's good.
13 Q. You see it says 11:00, and the initials say
14 JLB, --
15 A Yes.
16 Q -- TC, Tim McGinn, Ken Riddett, Dave Smith, 99
17 Pine Street, top floor, is I think what that says. First
18 let me ask you, where is 99 Pine Street?
19 A 99 Pine Street is about 350 yards from here. It's
20 where my headquarters are located.
21 Q And that would be an address of your office?
22 A That's correct.
23 Q And in it there's an indication on that date of a
24 meeting, do you see that?
25 A. I do.
38
1 Q And it says -- one of the names is Tim McGinn, do
2 you see that?
3 A Yes.
4 Q And one is Ken Riddett?
5 A Yes.
6 Q And you see initials JLB?
7 A Yes.
8 Q Probably recognize that as Joseph L. Bruno?
9 A I do.
10 Q Do you know a man by the name of Tim Collins? His
11 initials would be TC.
12 A I do not.
13 Q Do you know who he is?
14 A I have no idea.
15 Q Have you heard of a man named Ken Riddett?
16 A Yes.
17 Q Do you know Mr. Riddett to be a lawyer --
18 A I do.
19 Q -- that worked in the Senate on behalf of
20 Mr. Bruno and others?
21 A Yes.
22 Q And do you -- David Smith, that was the partner
23 that you referred to?
24 A Correct.
25 Q So does this calendar entry serve to refresh your

39
1 recollection that a meeting was set up in which you,
2 Mr. Bruno, and at least one ethics lawyer would be involved?
3 A I don't recall that meeting. I, I just don't
4 recall that meeting.
5 Q Okay. If this meeting was set up and if your
6 testimony was, as you said it, you understood that Mr. Bruno
7 sought the advice of people on the ethics side, what was
8 your understanding as why ethics lawyers would be involved?
9 What was your understanding as why ethics lawyers would be
10 involved?
11 MS. COOMBE: Objection.
12 THE COURT: Sustained.
13 BY MR. LOWELL:
14 Q Now, when you talked about the conversation that
15 you had with Mr. Bruno about it being run by people and he
16 got the go-ahead to do, you were not involved in the process
17 of how any such letter, how any such request was put
18 together to the State Senate, is that right?
19 A That's correct.
20 Q But you were aware that somebody was?
21 A Yes.
22 Q And at the time that you first engaged Mr. Bruno,
23 it was your understanding that you, McGinn Smith, had no
24 business that could be called in front of the State
25 Legislature, is that right?

40
1 A That's correct. And we were very specific and
2 very explicit about that.
3 Q Because at the time both and you he were sensitive
4 to make sure that that did not happen, right?
5 A That's right.
6 Q It was a concern of yours?
7 A We didn't want to do business with the state.
8 Every time we had done business with the state in the past,
9 we regretted it. We wanted nothing to do with the State of
10 New York.
11 Q And it was a concern that was articulated that
12 that would not be part of the engagement, is that right?
13 A That is correct.
14 Q I take it that you would agree that in addition to
15 that, there was never a single time that you directed
16 Mr. Bruno to go after any client that did business in front
17 of the New York State government, is that right?
19 Q And that was not part of your engagement with him
20 at all?
22 Q In addition to which, in addition to going after
23 the union pension funds, that was one part of the contract,
24 that letter agreement, it was your intent and he made
25 efforts to try to get clients other than such funds, is that

41
1 right?
3 Q That was your intention in the beginning to do
4 that?
5 A Yes.
6 Q Now, it turns out over time that those kinds of
7 relationships did not come about; that's what you testified
8 to?
9 A That's right.
10 Q But it was your intent that they would?
11 A Correct.
12 Q And he made efforts in that regard, correct?
13 A Yes.
14 Q And that included companies, is that right?
15 A Yes.
16 Q And one was, I think, a company called -- I may
17 not say it right -- Golub, G-O-L-U-B?
18 A Yes.
19 Q And one was Price Chopper?
20 A Well, Price Chopper is --
21 Q Same one?
22 A -- is an operating subsidiary of Golub.
23 Q So there was an attempt? There was an effort to
24 do that? Am I right about that?
25 A Yes, you are.

42
1 Q Earlier today, when you testified before lunch,
2 you were asked questions about the forms of payments, the
3 amounts, the way they took place, and the documents that
4 describe them; do you remember that?
5 A Yes.
6 Q So to begin with, the decision as to how to pay
7 Mr. Bruno and what to pay him and how much, that was a
8 decision of McGinn Smith, right? That was not him dictating
9 it to you? You made that decision?
10 A That was, that was our decision.
11 Q He didn't pressure you to make that decision? He
12 didn't threaten you to make that decision? That was a
13 business judgment on your part?
14 A Correct.
15 Q Now, in the material that you were shown today --
16 MR. LOWELL: And if you would, would you put
17 up G A 3, please.
18 Q. This was one of the documents that should be in
19 front of you. This was a form, a W-4 form you were asked
20 about. A W-4 form is a document that's generated by the
21 United States government, is that right?
22 A By the Internal Revenue Service.
23 Q And it's what you file or somebody files to show
24 what is going to become a withholding provision under a
25 salary arrangement, is that your understanding?

43
1 A Yes.
2 Q Is it put into your files and locked away or is it
3 actually filed somewhere?
4 A Well, it's put into our files for certain. And,
5 as well, we would send a copy of this to the payroll
6 processing people who in our case would be ADV.
7 Q. And, as well, it would go to the IRS?
8 A That may be the case. I don't know.
9 Q And on this form that would not be locked away and
10 would be given to your payroll people and presumably sent to
11 the IRS, who does it indicate is your employee?
12 A Joseph Bruno.
13 Q Right there in black and white?
14 A Black and white.
15 Q And if you would turn please to the exhibit that
16 was marked as G A 4, please. And these were W-2 earning
17 summaries, and it indicates again the employer is, your
18 company McGinn Smith, correct?
19 A Correct.
20 Q And there in black and white as the person who has
21 the relationship with McGinn is listed Joseph L. Bruno,
22 correct?
23 A Correct.
24 Q And, again, this is a document that -- it's a W-2,
25 it's created by the IRS, it's not something that McGinn

44
1 Smith created, is that right?
2 A Well, it's actually created by the payroll
3 processing people.
4 Q The actual W-2 is a requirement?
5 A And it's then filed with the IRS with one's tax
6 return.
7 Q Got it. So it is something that gets filed, in
8 your understanding?
9 A Yes.
10 Q Now, if you'll look at G A 5 please. And that
11 would be the next document. It indicates that the payroll
12 checks that were created were then sent to Business
13 Consultants. Do you see that?
14 A I do, but it's a different, it's a different
15 period, different time period.
16 Q I was going to ask you if that was the same time
17 period and you jumped ahead.
18 Now, there was no question in your mind that
19 Joseph Bruno had a consulting company, right, or --
20 A Correct.
21 Q -- an entity?
22 A That's right.
23 Q And you knew its name?
24 A I did.
25 Q And you knew its name to be Business Consultants?

45
1 A Correct.
2 Q And the form you were showed earlier today, a form
3 that had columns in it, it had vendor and it had name and it
4 had a map; do you remember that?
5 A Right.
6 Q Government's Exhibit 14?
7 A I do.
8 Q Do you have that in front of you?
9 A I do.
10 Q. Would you please go to G A 14 and if you'll go to
11 the vendor side. Do you see where it says Bruno?
12 A Yes.
13 Q And the name Business Consultants, do you see
14 that?
15 A Correct.
16 Q In the books and records of McGinn Smith, it was
17 absolutely clear that Business Consultants was Joe Bruno?
18 A There was no doubt in anyone's mind that Business
19 Consultants was the entity through which Mr. Bruno wanted to
20 be paid. And we did so.
21 Q Now, the idea that people will get paid through a
22 company or a doing business as or a partnership or a
23 venture, that is not an unusual event in business, is it?
24 A Not at all.
25 Q Your company, by the way, is not yourself doing

46
1 business? You have a company?
2 A Correct.
3 Q Now, you have a company so that you can deal with
4 taxes, deal with liability, other legal issues; it's the way
5 people do business, isn't that right?
6 A That's correct.
7 Q By the way, as to this exhibit, Government's
8 Exhibit 14, this document, Mr. Bruno had nothing to do with
9 its being created, did it -- did he? Sorry.
10 A No.
11 Q This was your internal document?
12 A Yes.
13 Q So how it says it, what it says, what it lists and
14 how it says it, those are not issues that Mr. Bruno had any
15 input on at all?
16 A Correct.
17 Q I would like you then to pull up, please, G B 2.
18 I have -- I'm sorry. Yes. Government B 2. Now, a moment
19 ago we talked about the issue of doing business as. This is
20 a form that Miss Coombe showed you and a document that's
21 called a certificate of an individual doing business under
22 an assumed name. Do you see that?
23 A Yes.
24 Q That's what it's called?
25 A That's what it says.

47
1 Q You understand this is a form that got filed,
2 right?
3 A Correct.
4 Q Now, if you look in the upper right.
5 MR. LOWELL: The part that talks about the
6 clerk's office, please, John. And highlight that.
7 Q. Do you see where it got filed? Do you see it says
8 Rensselaer County Clerk?
9 A Yes.
10 Q Okay. And if you look down at the rest of the
11 document and see what does it say, as I think Miss Coombe
12 read it into the record, I won't repeat it, but I want to
13 point out one part of it, and that's where it says: The
14 undersigned is transacting business under the name Business
15 Consultants. Do you see that? And who's the undersigned?
16 A Joseph L. Bruno.
17 Q And where was it filed?
18 A I'm sorry?
19 Q Where was it filed?
20 A Rensselaer County.
21 Q At the clerk's office?
22 A Yup.
23 Q A public place?
24 A Yes.
25 Q Darn way to hide your existence as Business

48
1 Consultants, isn't it?
2 MS. COOMBE: Objection. Argumentative.
3 THE COURT: Sustained. Save it for summation
4 please.
5 MR. LOWELL: You can take it off.
6 BY MR. LOWELL:
7 Q. Mr. McGinn, you were asked a series of questions
8 before lunch, and one of them had to do with the office that
9 you put aside for Mr. Bruno. Do you remember that question?
10 A. I do.
11 Q. Was it part of his arrangement with you that he
12 had to do the job that you wanted him to do by being in an
13 office?
14 A. Not at all.
15 Q. Indeed, he could do that job by being on the phone
16 or making connections or being at luncheons or dinners or
17 receptions or out and about; in fact, that's where he should
18 have been, isn't that right?
19 A. Correct.
20 Q. If he had stayed in his office chained to his
21 desk, not gone outside to the outside world, he would have
22 no chance to succeed in what you wanted him to do; isn't
23 that right?
25 Q. He didn't have to produce any written reports to

49
1 McGinn, did he?
2 A. No.
3 Q. He didn't have to punch a time clock, did he?
4 A. No.
5 Q. Now, I think you were asked a question or two
6 about the announcement letter that said we will do a
7 tombstone ad, we will send out engraved cards. Those
8 weren't done, you pointed out.
9 A. They were not done.
10 Q. But nevertheless, Mr. Bruno started making
11 connections on behalf of your company.
12 A. Yes, he did.
13 Q. And in doing so, he was telling people hi, I would
14 like you to consider using McGinn Smith, right?
15 A. Well, that's true.
16 Q. So it wasn't like he got the job, you sent the
17 agreement, you started paying him and he didn't do anything,
18 right?
19 A. He did enough business so that the firm received
20 through 2002, $419,000 of revenues.
21 Q. And even though you decided not to do the ads or
22 send out the engraved cards, he was out there telling people
23 that he was doing business for McGinn Smith, isn't that
24 right?
25 A. To the tune of $419,000.

50
1 Q. And one of the people he was doing it with you
2 said was the hospitality workers, I think you called them?
3 A. Yes.
4 Q. And another was one of the Teamsters?
5 A. Correct.
6 Q. And they knew that he was working on behalf of
7 your company?
8 A. Yes.
9 Q. Wasn't a secret?
10 A. No secret.
11 Q. He and you didn't say, look it, I want to get you
12 the business, but I don't want to tell anybody that I'm
13 doing it so let's figure a way to do that; that wasn't a
14 conversation you had with him, is it?
15 A. Of course not.
16 Q. Along the way, in addition to having done the work
17 he did for you, it turns out that you're the person who
18 introduced him to the people at Wright Investors Services,
19 isn't that a fact?
20 A. That's right.
21 Q. And it wasn't because you thought that was a waste
22 of time or a waste of money, but I assume you thought it was
23 a good idea.
24 A. That's right.
25 Q. For you?
51
1 A. Yes.
2 Q. And for them?
3 A. Yes.
4 Q. And, of course, Mr. Bruno too?
5 A. Yes.
6 Q. And you understood that when you made that
7 introduction, it was going to end up in an ability perhaps
8 for you and Mr. Bruno to do better?
9 A. Correct.
10 Q. And you would do better if Wright was able to
11 generate more business in the way of investment managing
12 that might create derivative business for your company?
13 A. Correct.
14 Q. That was clearly on the table?
15 A. Yes.
16 Q. No secret?
17 A. No secrets.
18 Q. And, indeed, I think you said that you understood
19 that any account that Mr. Bruno helped pull into Wright, you
20 would get the trades for and therefore get a benefit?
21 A. Correct.
22 Q. Now, you knew Wright before the time that you made
23 the introduction of Mr. Bruno to the Wright company, didn't
24 you?
25 A. Yes.
52
1 Q. They were a good company?
2 A. I'm sorry?
3 Q. A good company?
4 A. Yes.
5 Q. One that's experienced in the area of investment
6 managing?
7 A. Yes.
8 Q. Indeed, in some ways, you were trying to get into
9 their side of the business, right?
10 A. Well, we had shown other investment managers the
11 various potential clients and we would often compete against
12 Wright and they beat us like a rented mule. So we decided
13 that it would be better to join them than fight them. So we
14 established that relationship.
15 Q. And you were aware that various pension funds did
16 business with Wright prior to Mr. Bruno being introduced?
17 A. Yes. We knew that Wright had a very significant
18 Taft-Hartley practice.
19 Q. Now, when you say Taft-Hartley, that's referring
20 to a federal law, right?
21 A. Correct.
22 Q. Which regulates these kinds of funds, right?
23 A. That's right.
24 Q. That have as their membership in some ways unions,
25 pension funds, is that right?

53
1 A. Yes.
2 Q. And Wright had that kind of practice before you
3 introduced Mr. Bruno to them?
4 A. They did.
5 Q. And have that to this day?
6 A. As far as I know they do.
7 Q. And they had quite an extensive such practice
8 prior to the introduction, is that right?
9 A. Yes.
10 Q. You mentioned prior to lunch that the way that a
11 decision would be made for somebody to hire you or to hire
12 Wright for which you might get the derivative benefit of
13 trades was a process; you were aware there was a process
14 involved?
15 A. Yes.
16 Q. And that process had a few steps, correct?
17 A. It did.
18 Q. So it's not as if you or Mr. Bruno or me or
19 anybody would go to a union official and say, union
20 official, I want you to hire Wright to be your pension fund
21 manager? That's not the way it worked at all, is it?
22 A. No.
23 Q. Sometimes, the union official might be the same as
24 a trustee, correct?
54
1 Q. Sometimes not?
2 A. That's also correct.
3 Q. Indeed, these pension funds had a board of
4 trustees, that's right, isn't it?
5 A. Yes.
6 Q. And among them was more than one person, correct?
7 A. Yes.
8 Q. And there were union folks involved?
9 A. Union and management.
10 Q. And management, is that right?
11 A. Yes.
12 Q. Now, management means that their the employer
13 side, correct?
15 Q. And often what the union thinks is right in a job
16 situation, an investment situation, or any situation is
17 different than what management and employers think, isn't
18 that fair?
19 A. Yes.
20 Q. And that was the whole point of the law that
21 required these funds to be managed by both unions and
22 managers, isn't that right?
23 A. Correct.
24 Q. After that trustee group would get together, they
25 simply didn't always make the decision, even themselves;

55
1 they had others involved often, as you know it, correct?
2 A. There were often consultants involved in the
3 selection of investment managers.
4 Q. And these consultants were somewhat independent
5 financial advisers that would evaluate Wright Investors or
6 McGinn Smith as against anybody else?
7 A. Correct.
8 Q. And make a recommendation to the trustees as to
9 who was better and who was not?
11 Q. So after an introduction was made and a
12 presentation was made and managers were involved and
13 trustees were involved and an adviser was involved and other
14 consultants that you indicated were involved, then and only
15 then would an investment decision be made, as you understand
16 it?
18 Q. Miss Coombe showed you a chart that showed all the
19 payments that were made to Mr. Bruno while he was an
20 employee. Oh, I'm sorry, before I get there -- withdraw
21 that question.
22 As to Wright Investors Services and your
23 introduction and the decision-making process that you just
24 said, did you and Wright ever have discussions in which the
25 topic was, okay, let's not tell anybody that Joe Bruno is
56
1 working for us? Did that ever come up?
2 A. Of course not.
3 Q. Indeed, the opposite occurred; that people did
4 know that Joe Bruno was working for both Wright and McGinn,
5 and you knew that as a fact, didn't you?
6 A. I think it was well known in the community that
7 Joe Bruno had an affiliation with McGinn Smith. It was an
8 important affiliation, and we certainly made no effort to
9 conceal that. In fact, quite the opposite.
10 Q. Indeed, didn't you also know that as to the hotel
11 workers or the hospitality workers, that the individuals
12 involved a Mr. Bennett, I think you -- or Whitey I think you
13 called him?
14 A. Yes. The Teamsters.
15 Q. He was aware of Mr. Bruno's relationship with both
16 Wright and McGinn; did you say that?
17 A. I don't know if I said that, but it happens to be
18 true. I don't know if it was asked.
19 Q. I'm sorry, let me clarify that for the record.
20 You know of your own knowledge that at least one of these
21 individuals, and here we're talking about the man you called
22 Whitey, you identified as being Teamsters, you have your own
23 knowledge that he knew of Mr. Bruno's affiliation, you just
24 said?
25 MS. COOMBE: Objection. Foundation.

57
1 THE COURT: Yeah, I'll sustain it. Please
2 establish a foundation for that. Technically, it's beyond
3 the scope of direct. Ask him some foundational questions as
4 to how he knows this.
5 BY MR. LOWELL:
6 Q. How did you know this man Whitey?
7 A. I was introduced to him by Joe.
8 Q. And at that introduction, did you hear from your
9 own ears that Mr. Bruno made clear his relationship with the
10 individual that you were meeting with?
11 A. Absolutely.
12 THE COURT: I'm satisfied. Thank you.
13 BY MR. LOWELL:
14 Q. And if people understood, as they were being
15 introduced by you or Mr. Bruno or Wright and the company,
16 was it possible just from the setting to be able to connect
17 the dots that this was a financial relationship?
18 A. The dots weren't that far apart, so it would be
19 pretty easy to connect the dots.
20 Q. Now, I would like to go back to where I started.
21 You know that chart that you saw that showed the amount of
22 money that McGinn paid Mr. Bruno over those many, many
23 years?
24 A. Yes.
25 Q. At any time did you intend that money to be a

58
1 gift?
2 A. No.
3 Q. To be treated as a gift?
4 A. No.
5 Q. Did you think of it as a gift?
6 A. No.
7 Q. To this day?
8 A. No.
9 Q. Do you believe Mr. Bruno did all he could to
10 fulfill all his obligations under the agreement?
11 A. Yes.
12 Q. And did you do all you were supposed to try to do?
13 A. Yes.
14 Q. Some business arrangements work out better,
15 correct?
16 A. Correct.
17 Q. And some not quite as well as we wanted?
18 A. That's also correct.
19 Q. Doesn't mean at the beginning it wasn't supposed
20 to work out?
21 A. Correct.
22 Q. By the way, last question. You know that none of
23 the counts that the eight the Government has brought has
24 anything to do with any of the transactions of McGinn,
25 correct?
59
McGINN - REDIRECT - COOMBE
1 MS. COOMBE: Objection.
2 THE COURT: Yeah. I sustain that objection.
3 MR. LOWELL: Make this my last question then,
4 if I can.
5 BY MR. LOWELL:
6 Q. Did you and Mr. Bruno ever, to your knowledge,
7 join together to break any law?
8 A. Absolutely not.
9 MR. LOWELL: No other questions.
10 THE COURT: Redirect.
11 MS. COOMBE: Yes, thank you, your Honor.
12 REDIRECT EXAMINATION BY MS. COOMBE:
13 Q. Good afternoon, again. In response to
14 Mr. Lowell's questions, you indicated that Senator Bruno
15 told you that he was getting advice on the ethics issue at
16 the beginning of the engagement, and that would have been
17 back around the time of when? 1992?
18 A. Yes.
19 Q. Do you remember testifying in the grand jury?
20 A. Yes, I do.
21 Q. All right.
24 MR. LOWELL: Would counsel please give us a
25 page and line?

60
1 MS. COOMBE: I will when I get back to the
2 podium. I wanted to give the witness the grand jury
3 transcript.
4 There you are, Mr. McGinn.
5 It's page 34, line 13 to line 17.
6 BY MS. COOMBE:
7 Q. Mr. McGinn, if you would turn to page 34 and
8 you'll see some lines on the side of the page, numbers.
9 Line 13. Do you see where I am, sir?
10 A. I do.
11 Q. All right. Were you asked this question: You
12 want to go to 1994. First I would like to find out if
13 anything happened before that on this issue. Answer: I
14 don't recall specifically anything happening before that.
15 Were you asked that question and did you give that
16 answer?
17 A. Well, I -- it appears in the transcript, so I
18 wouldn't dispute that.
19 MS. COOMBE: Your Honor, the Government would
20 move the admission of that portion of Mr. McGinn's grand
21 jury transcript as substantive evidence.
22 THE COURT: Objections?
23 MR. LOWELL: Yes. It's not either a
24 contradictory or inconsistent statement. Of course I
25 object.
61
1 THE COURT: Overruled. Admitted.
2 MS. COOMBE: Thank you, your Honor.
3 BY MS. COOMBE:
4 Q. Mr. McGinn, I would like you to look at
5 Government's Exhibit G A 14, and that's that chart that
6 we've been looking at, the vendor history.
7 A. Yes.
8 MS. COOMBE: Just having a technical
9 difficulty.
10 THE CLERK: It's on.
11 BY MS. COOMBE:
12 Q. Could you look not at the last page of that
13 exhibit, but the second to last page which covers the fiscal
14 years 1995 and 1996.
15 A. Yes.
16 Q. Do you see the amount that was paid in 1995 and
17 then 1996?
18 A. I do.
19 Q. All right. And if you could look at the page
20 after that. There's -- do you see where it says paid
21 commissions, and for 1993 it says $43,000?
22 A. Yes.
23 Q. For 1994 it says $24,500?
24 A. Yes.
25 Q. And then in 1995, it's $72,000?

62
1 A. Correct.
2 Q. What happened between 1994 and 1995 that caused
3 McGinn Smith to increase the amount of money that Senator
4 Bruno was being paid? Is that when Senator Bruno became the
5 majority leader?
6 A. It is.
7 Q. What was there about Senator Bruno's becoming the
8 Senate Majority Leader that made him more valuable to McGinn
9 Smith?
10 A. Let me answer that with a sports metaphor. Tiger
11 Woods got more endorsement money from Nike after he won the
12 Masters for the first time.
13 When Senator Bruno became the Senate Majority
14 Leader, his notoriety increased substantially, his stature
15 in the community increased substantially, and we felt that
16 he was going to be more productive for the firm.
17 Q. I'm glad you picked a sports metaphor that I
18 understood. I was worried that you would pick something
19 that I might not follow. But Tiger Woods I understand.
20 Thank you.
21 Now, Mr. Lowell, if we could look at G A 1 again.
22 That was a letter from you to Senator Bruno about Senator
23 Bruno's anticipated job responsibilities at McGinn Smith?
24 THE COURT: Mr. Lowell is seated behind you.
25 You mean Mr. -- you mean the witness.

63
1 MS. COOMBE: I do. I'm sorry.
2 A. I've been called worse.
3 Q. I apologize. Just got a little confused.
4 Now, Mr. Lowell did spend sometime talking to you
5 about this letter and about other areas of the letter other
6 than the part about labor unions. Now, are you aware of any
7 business that Senator Bruno did that generated money for
8 McGinn Smith other than contacting labor unions? That
9 generated money for McGinn Smith.
10 A. No.
11 Q. Now, Mr. Lowell also asked you some questions
12 about labor union interests before the Legislature. Are you
13 aware of what business, if any, the hospitality and
14 Teamsters Locals had before the New York State Legislature?
16 Q. How about the Golub Corporation?
18 MS. COOMBE: May I have a moment, your Honor?
20 (Pause.)
21 MS. COOMBE: I have nothing further, your
22 Honor.
23 THE COURT: Recross?
24 MR. LOWELL: No.
25 THE COURT: You may step down. Thank you.


Timothy McGinn Testimony 1103

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Timothy McGinn Testimony 1103

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1

McGINN - DIRECT - COOMBE

2 having been duly sworn by the Clerk of the Court, was

3 examined and testified as follows:

4 THE CLERK: Just take a seat up there and

5 just ask that you speak into the microphone.

6 THE COURT: You can adjust that to make it as

7 comfortable as you wish.

8 THE WITNESS: Thank you.

9 DIRECT EXAMINATION BY MS. COOMBE:

10 Q. Good morning, Mr. McGinn.

12 Q. Could you please introduce yourself to the ladies

13 and gentlemen of the jury.

14 A. Yes. My name is Timothy McGinn. I live in

15 Niskayuna, New York, and I'm chairman of the board of McGinn

16 Smith & Company, which is an investing banking and merchant

17 banking firm headquartered in Albany.

18 Q. Thank you. Can you please tell us about your

20 A. I have a Bachelors of Science in mechanical

21 engineering from the Rochester Institute of Technology. I

22 also studied statistical analysis and operations research at

23 the masters level at Union College.

24 Q. Now, you mentioned already that you are the CEO,

1 A. Chairman of the board.

2 Q. Chairman of the board of McGinn Smith. Tell us

3 again, what kind of company is McGinn Smith?

4 A. McGinn Smith is an investment banking slash

5 merchant banking slash stock brokerage firm which was

6 founded in Albany in 1980.

7 Q. Do you have any partners?

9 Q. Who is your partner?

10 A. I have two partners, David Smith and Tom

12 Q. Do you -- how long has Mr. Livingston been one of

14 A. Since January of 19 -- of 2004.

16 up the responsibilities of running McGinn Smith & Company?

17 A. I basically ran the banking practice and David ran

18 the brokerage side of the business.

19 Q. And has that changed since Mr. Livingston has

21 A. Well, it's changed a couple of times since then.

22 Q. Can you tell us, do you still generally run the

25 Q. And Mr. Smith still generally runs the brokerage

3 Q. What does Mr. Livingston do then?

4 A. Mr. Livingston is no longer affiliated with the

6 Q. What did Mr. Livingston do?

7 A. He ran the syndicate desk for the firm.

8 Q. Now, as the broker, what does McGinn Smith do?

9 A. McGinn Smith trades on all of the securities

10 exchanges in the United States with the exception of

12 Q. As an investment banker, what does McGinn Smith

14 A. McGinn Smith raises capital for various businesses

15 and non-profits, health care related, security alarm

16 related, cable TV related, various other industries, and has

17 done so for 30 years.

18 Q. Does McGinn Smith do anything else in connection

19 with its investment banking work?

20 A. We write fairness opinions. We offer valuations.

21 We give advice relative to mergers and acquisitions.

22 That's, that's pretty -- a pretty broad category.

23 Q. Do you know Senator Joseph Bruno?

25 Q. Did McGinn Smith ever employ Senator Bruno?

2 MS. COOMBE: Your Honor, may I approach?

3 THE COURT: Please.

5 Q. Mr. McGinn, I'm showing you what's Government's

6 Exhibit G A 1. Do you recognize it?