Professional Documents
Culture Documents
EXHIBIT 1
By Aram Roston
Page 1 of 10
Jan./Feb. 2010
By Aram Roston
The weeks before Christmas brought no hint of terror. But by the afternoon of December 21, 2003,
police stood guard in heavy assault gear on the streets of Manhattan. Fighter jets patrolled the skies.
When a gift box was left on Fifth Avenue, it was labeled a suspicious package and 5,000 people in the
Metropolitan Museum of Art were herded into the cold.
It was Code Orange. Americans first heard of it at a Sunday press conference in Washington, D.C.
Weekend assignment editors sent their crews up Nebraska Avenue to the new Homeland Security
offices, where DHS secretary Tom Ridge announced the terror alert. Theres continued discussion,
he told reporters, these are from credible sourcesabout near-term attacks that could either rival or
exceed what we experienced on September 11. The New York Times reported that intelligence
sources warned about some unspecified but spectacular attack.
The financial markets trembled. By Tuesday the panic had ratcheted up as the Associated Press
reported threats to power plants, dams and even oil facilities in Alaska. The feds forced the
cancellation of dozens of French, British and Mexican commercial flights of interest and pushed
foreign governments to put armed air marshals on certain flights. Air France flight 68 was canceled,
as was Air France flight 70. By Christmas the headline in the Los Angeles Times was "Six Flights
Canceled as Signs of Terror Plot Point to L.A." Journalists speculated over the basis for these terror
alerts. Credible sources, Ridge said. Intelligence chatter, said CNN.
But there were no real intercepts, no new informants, no increase in chatter. And the suspicious
package turned out to contain a stuffed snowman. This was, instead, the beginning of a bizarre scam.
Behind that terror alert, and a string of contracts and intrigue that continues to this date, there is one
unlikely character.
The mans name is Dennis Montgomery, a self-proclaimed scientist who said he could predict
terrorist attacks. Operating with a small software development company, he apparently convinced the
Bush White House, the CIA, the Air Force and other agencies that Al Jazeerathe Qatari-owned TV
networkwas unwittingly transmitting target data to Al Qaeda sleepers.
An unusual team arrived in Reno, Nevada in 2003 from the Central Intelligence Agency. They drove
up Trademark Drive, well south of the casinos, past new desert warehouses. Then they turned into an
almost empty parking lot, where a sign read "eTreppid Technologies." It was an attractively designed
building of stone tile and mirrored windows that had once been a sprinklerhead factory.
ETreppid Technologies was a four-year-old firm trying to find its way. Some of its employees had
been hired to design video games. One game under construction was Roadhouse, based on the 1989
movie in which Patrick Swayze plays a bouncer in a dive bar. Other programmers worked on
streaming video for security cameras.
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When the liaison team stepped into eTreppids office, the CIA man in charge introduced himself as
Sid but didnt give his last name. He was tall and in his 50s, with a well-ironed shirt, a paunch and a
mildly robotic politeness. We called him Sid Vicious, one eTreppid technician explained, because
he was anything but.
Sids team set up on the first floor in an unused office and had special cipher locks installed. Workers
carted in a heavy-duty paper shredder that could transform classified documents to dust in seconds.
They set up impenetrable safes with combination locks protected by privacy screens so bystanders
couldnt steal the code.
The CIA team was there to work with Dennis Montgomery, at the time eTreppids chief technology
officer and part owner. Then 50 years old, with a full head of gray hair, the street-smart Montgomery
stood at about five feet eight inches. Other eTreppid workers, hearing the buzz about the spooks in
town, peered through their blinds and watched as Montgomery worked at his desk at the north end of
the building. He wore his usual jeans and Tommy Bahama shirt.
He could be seen handing off reams of paper to Sid and the CIA. They would sit in the room and
review these numbers or whatever the heck Dennis was printing out, one former eTreppid employee,
Sloan Venables, told me. We called them Sids guys, and no one knew what the hell they did.
Montgomery called the work he was doing noise filtering. He was churning out reams of data he
called output. It consisted of latitudes and longitudes and flight numbers. After it went to Sid, it went
to Washington, D.C. Then it found its way to the CIAs seventh floor, to Director George Tenet.
Eventually it ended up in the White House. Montgomerys output was to have an extraordinary effect.
Ridges announcement, the canceled flights and the holiday disruptions were all the results of
Montgomerys mysterious doings.
He is an unusual man. In court papers filed in Los Angeles, a former lawyer for Montgomery calls the
software designer a habitual liar engaged in fraud. Last June Montgomery was charged in Las
Vegas with bouncing nine checks (totaling $1 million) in September 2008 and was arrested on a
felony warrant in Rancho Mirage, California. That million is only a portion of what he lost to five
casinos in Nevada and California in just one year. Thats according to his federal bankruptcy filing,
where he reported personal debts of $12 million. The FBI has investigated him, and some of his own
co-workers say he staged phony demonstrations of military technology for the U.S. government.
Montgomery has no formal scientific education, but over the past six years he seems to have
convinced top people in the national security establishment that he had developed secret tools to save
the world from terror and had decoded Al Qaeda transmissions. But the communications Montgomery
said he was decrypting apparently didnt exist.
He claimed he provided Cheneys office with new output data on terror that would
validate his work. He said the data, which had been encrypted in Al Jazeera, were the
keys
that allowed investigators to crack the liquid-bomb plot in London.
Since 1996 the Al Jazeera news network had been operating in the nation of Qatar, a U.S. ally in the
war on terror. Montgomery claimed he had found something sinister disguised in Al Jazeeras
broadcast signal that had nothing to do with what was being said on the air: Hidden in the signal were
secret bar codes that told terrorists the terms of their next mission, laying out the latitudes and
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The reason the whole thing worked was because Montgomerys CIA contact was with the agencys
Directorate of Science and Technology. Thats the whiz-bang branch of the intelligence service,
where employees make and break codes, design disguises and figure out the latest gadgets. S&T was
eventually ordered by CIA brass to reveal its source to small groups from other parts of the agency.
And when some experienced officers heard about it, they couldnt believe it. One former
counterterrorism official remembers the briefing: They found encoded location data for previous and
future threat locations on these Al Jazeera tapes, he says. It got so emotional. We were fucking
livid. I was told to shut up. I was saying, This is crazy. This is embarrassing. They claimed they
were breaking the code, getting latitude and longitude, and Al Qaeda operatives were decoding it.
They were coming up with airports and everything, and we were just saying, You know, this is
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Montgomery convinced Trepp he had invented a remarkable technology. He could compress data, he
said, a whole movie to just a fraction of the space it took up on a drive. He impressed his patron with
his demonstration, using software to highlight images from the 1939 film Gunga Din. It was enough
for them to launch their operation. Montgomery contributed his technological breakthrough, and
Trepp invested $1.3 million to start. Montgomery soon hired Sloan Venables, a video-game designer,
as one of his first employees. Venables had helped design the Ted Nugent Wild Hunting Adventure
video game. From the beginning, Venables realized things were odd and doubted Montgomery knew
much about software programming. One day at a Chinese restaurant at the same Eldorado Hotel
Casino, Montgomery told him about the time hed been abducted by a UFO. He told me about his
encounter with aliens, Venables says. He went to his uncles or grandfathers or great uncles barn
in the middle of the night, and a spaceship descended on him. They wanted him to go with them, and
he was abducted. Then he came back with extra knowledge. Venables started laughing at the story,
he says.
Montgomery was prone to temper tantrums, according to Venables. Once he hurled a steak at a
waitress. As volatile as he was at times, Venables says, he was at other times warm and confiding.
When Venables threatened to quit after Montgomery threw a can of grape soda at him, Montgomery
took Venabless dying mother to dinner. Every Friday he would take all his employees skeet and
trapshooting at a desert range.
Venables brought in a childhood friend to work at eTreppid. Jim Bauder, who was in his 20s, was
soon working on the video games eTreppid was trying to design. Bauder and Venables say
Montgomery ran the place, and they saw little of Trepp but were aware of his background. They also
say they saw Milken at eTreppid. I saw him come in once, and he had this entourage of five or six
people with him, says Bauder. They came walking down the hallway, and he looked at me and
smiled, introduced himself and then went on down the hall.
ETreppid landed its first big contract from General Electric in 2002 for use of its video compression
technology in gaming surveillance. The company eventually got a contract with the Air Force dealing
with aspects of video shot by unmanned Predator drones. Montgomery claimed his software could
automatically recognize weapons and faces. In 2004 the U.S. Special Operations Command gave
eTreppid a $30 million no-bid contract for compression and automatic target recognition.
Venables and Bauder acknowledge they cant be certain that no anomaly detection or pattern
recognition software existed, but they doubt it did. In fact, eTreppid workers later told the FBI they
thought Montgomery had developed little if any original software.
Montgomery and eTreppid did, over time, receive five patents for various inventions and theoretical
methods related to video and data. These included a method and apparatus for storing digital video
content provided from a plurality of cameras and a method and apparatus for detecting and reacting
to occurrence of an event. But Montgomery said these patents had nothing to do with his government
work, and they never seemed to lead to business or profit.
FBI reports indicate Montgomery rigged tests to make government officials think his software could
detect weapons in video streams. Apparently it was all part of Montgomerys claim to have developed
automatic target recognition software. Imagine how useful it would be if a computer could pick out
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Bauder says he helped once, unwittingly. He told his story to the FBI, and he told it to me. In his
demonstrations Montgomery often used a plastic toy bazooka that he said a computer could recognize
as a weapon. He would do the demonstration in scrubland behind eTreppids offices. Some military
guys were walking around the office, says Bauder. Montgomery suddenly came to him, he says,
and takes me back to his office. He closes the door and closes the blinds and was like, Need you to
do something for me. Dont worry; we are just doing a demo. Its all good. Bauder was concerned
about the secrecy. I was like, But whats with the doors and blinds? Montgomery looked up at
Bauder and told him it was okay. They would communicate via an open cell phone line. He told
Bauder to listen to the phone. When you hear the tone, I want you to hit the space bar on the
keyboard. Bauder, in other words, would be secretly communicating with Montgomery while the
military guys watched the supposed software demo on another computer.
Montgomery ran off to do his demonstration outside. Bauder watched the computer screen, seeing
what the camera saw. Montgomery held the toy bazooka in one hand while his other hand was hidden.
When Bauder heard the tone, he says, I hit the space bar. A little square encircled his image through
the camera on the screen. He was running around with the fake plastic bazooka. Bauder figured
Montgomery had rigged the computer screen so it seemed as if the square was tracking the bazooka.
In reality, the square was brought up on the screen when Bauder hit the space bar.
ETreppid needed security clearances to get classified contracts. In 2004 Venables was selected as the
firms facilities security officer. He flew to Baltimore for Department of Defense training. It was an
arduous process, with the Defense Security Service probing everyones background.
Montgomery received an interim secret clearance in May 2003, according to records later released
in a federal case. In February 2004 he got a top-secret clearance from the Defense Industrial Security
Clearance Office. At eTreppid, Montgomery appears to have taken a curious approach to secrecy.
Venables and Bauder say Montgomery had his own way of classifying items at the company. He had
rolls of 'classified' stickers, Bauder says, and he would just put them on random garbage.
The CIA was an eTreppid customer, as was SOCOM and the Air Force. Soon the Navy started
coming by. Montgomery said he had another filter to identify underwater submarines by scanning a
giant satellite photo of the ocean. Although Montgomery claimed he was using his software, Bauder
and Venables say he appeared to be doing it by eye.
The pattern recognition, anomaly detection and compression work were nice, but it was the Al Jazeera
stuffthe noise filteringthat had cash potential. Even though the CIA had abandoned
Montgomery in 2004 after determining the bar codes didnt exist, he and eTreppid continued to try to
sell it.
Trepp later told a judge in a federal lawsuit that hed asked the government for $100 million.
Montgomery has also cited that figure in sworn declarationsthough he also claimed Trepp wanted
$500 million for the decoding technology. He would tell his lawyers and investors that the money
was appropriated as part of the black budget. ETreppid did have powerful friends and lobbyists
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EXHIBIT 2
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been shutting off scrutiny of Mr. Montgomerys business for fear of revealing
that the government has been duped.
The Justice Department is trying to cover this up, Mr. Flynn said. If this
unravels, all of the evidence, all of the phony terror alerts and all the
embarrassment comes up publicly, too. The government knew this technology
was bogus, but these guys got paid millions for it.
Justice Department officials declined to discuss the governments dealings with
Mr. Montgomery, 57, who is in bankruptcy and living outside Palm Springs,
Calif. Mr. Montgomery is about to go on trial in Las Vegas on unrelated charges
of trying to pass $1.8 million in bad checks at casinos, but he has not been
charged with wrongdoing in the federal contracts, nor has the government tried
to get back any of the money it paid. He and his current lawyer declined to
comment.
The software he patented which he claimed, among other things, could find
terrorist plots hidden in broadcasts of the Arab network Al Jazeera; identify
terrorists from Predator drone videos; and detect noise from hostile
submarines prompted an international false alarm that led President George
W. Bush to order airliners to turn around over the Atlantic Ocean in 2003.
The software led to dead ends in connection with a 2006 terrorism plot in
Britain. And they were used by counterterrorism officials to respond to a bogus
Somali terrorism plot on the day of President Obamas inauguration, according
to previously undisclosed documents.
It Wasnt Real
Dennis would always say, My technology is real, and its worth a fortune,
recounted Steve Crisman, a filmmaker who oversaw business operations for
Mr. Montgomery and a partner until a few years ago. In the end, Im convinced
it wasnt real.
Government officials, with billions of dollars in new counterterrorism financing
after Sept. 11, eagerly embraced the promise of new tools against militants.
C.I.A. officials, though, came to believe that Mr. Montgomerys technology was
fake in 2003, but their conclusions apparently were not relayed to the militarys
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Special Operations Command, which had contracted with his firm. In 2006,
F.B.I. investigators were told by co-workers of Mr. Montgomery that he had
repeatedly doctored test results at presentations for government officials. But
Mr. Montgomery still landed more business.
In 2009, the Air Force approved a $3 million deal for his technology, even
though a contracting officer acknowledged that other agencies were skeptical
about the software, according to e-mails obtained by The New York Times.
Hints of fraud by Mr. Montgomery, previously raised by Bloomberg Markets
and Playboy, provide a cautionary tale about the pitfalls of government
contracting. A Pentagon study in January found that it had paid $285 billion in
three years to more than 120 contractors accused of fraud or wrongdoing.
Weve seen so many folks with a really great idea, who truly believe their
technology is a breakthrough, but it turns out not to be, said Gen. Victor E.
Renuart Jr. of the Air Force, who retired last year as the commander of the
militarys Northern Command. Mr. Montgomery described himself a few years
ago in a sworn court statement as a patriotic scientist who gave the government
his software to stop terrorist attacks and save American lives. His alliance
with the government, at least, would prove a boon to a small company,
eTreppidTechnologies, that he helped found in 1998.
He and his partner a Nevada investor, Warren Trepp, who had been a top
trader for the junk-bond king Michael Milken hoped to colorize movies by
using a technology Mr. Montgomery claimed he had invented that identified
patterns and isolated images. Hollywood had little interest, but in 2002, the
company found other customers.
With the help of Representative Jim Gibbons, a Republican who would become
Nevadas governor and was a longtime friend of Mr. Trepps, the company won
the attention of intelligence officials in Washington. It did so with a remarkable
claim: Mr. Montgomery had found coded messages hidden in broadcasts by Al
Jazeera, and his technology could decipher them to identify specific threats.
The software so excited C.I.A. officials that, for a few months at least, it was
considered the most important, most sensitive intelligence tool the agency
had, according to a former agency official, who like several others would speak
only on the condition of anonymity because the technology was classified.
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ETreppid was soon awarded almost $10 million in contracts with the militarys
Special Operations Command and the Air Force, which were interested in
software that Mr. Montgomery promised could identify human and other
targets from videos on Predator drones.
In December 2003, Mr. Montgomery reported alarming news: hidden in the
crawl bars broadcast by Al Jazeera, someone had planted information about
specific American-bound flights from Britain, France and Mexico that were
hijacking targets.
C.I.A. officials rushed the information to Mr. Bush, who ordered those flights to
be turned around or grounded before they could enter American airspace.
The intelligence people were telling us this was real and credible, and we had
to do something to act on it, recalled Asa Hutchinson, who oversaw federal
aviation safety at the time. Senior administration officials even talked about
shooting down planes identified as targets because they feared that supposed
hijackers would use the planes to attack the United States, according to a
former senior intelligence official who was at a meeting where the idea was
discussed. The official later called the idea of firing on the planes crazy.
French officials, upset that their planes were being grounded, commissioned a
secret study concluding that the technology was a fabrication. Presented with
the findings soon after the 2003 episode, Bush administration officials began to
suspect that we got played, a former counterterrorism official said.
The C.I.A. never did an assessment to determine how a ruse had turned into a
full-blown international incident, officials said, nor was anyone held
accountable. In fact, agency officials who oversaw the technology directorate
including Donald Kerr, who helped persuade George J. Tenet, then the director
of central intelligence, that the software was credible were promoted, former
officials said. Nobody was blamed, a former C.I.A. official said. They acted
like it never happened.
After a bitter falling out between Mr. Montgomery and Mr. Trepp in 2006 led
to a series of lawsuits, the F.B.I. and the Air Force sent investigators to
eTreppid to look into accusations that Mr. Montgomery had stolen digital data
from the companys systems. In interviews, several employees claimed that Mr.
Montgomery had manipulated tests in demonstrations with military officials to
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make it appear that his video recognition software had worked, according to
government memorandums. The investigation collapsed, though, when a judge
ruled that the F.B.I. had conducted an improper search of his home.
Software and Secrets
The litigation worried intelligence officials. The Bush administration declared
that some classified details about the use of Mr. Montgomerys software were a
state secret that could cause grave harm if disclosed in court. In 2008, the
government spent three days scrubbing the home computers of Mr.
Montgomerys lawyer of all references to the technology. And this past fall,
federal judges in Montana and Nevada who are overseeing several of the
lawsuits issued protective orders shielding certain classified material.
The secrecy was so great that at a deposition Mr. Montgomery gave in
November, two government officials showed up to monitor the questioning but
refused to give their full names or the agencies they worked for.
Years of legal wrangling did not deter Mr. Montgomery from passing supposed
intelligence to the government, according to intelligence officials, including an
assertion in 2006 that his software was able to identify some of the men
suspected of trying to plant liquid bombs on planes in Britain a claim
immediately disputed by United States intelligence officials. And he soon found
a new backer: Edra Blixseth, a onetime billionaire who with her former
husband had run the Yellowstone Club in Montana.
Hoping to win more government money, Ms. Blixseth turned to some
influential friends, like Jack Kemp, the former New York congressman and
Republican vice-presidential nominee, and Conrad Burns, then a Republican
senator from Montana. They became minority stakeholders in the venture,
called Blxware.
New Pitches
In an interview, Mr. Burns recalled how impressed he was by a video
presentation that Mr. Montgomery gave to a cable company. He talked a hell
of a game, the former senator said.
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Mr. Kemp, meanwhile, used his friendship with Vice President Dick Cheney to
set up a meeting in 2006 at which Mr. Kemp, Mr. Montgomery and Ms.
Blixseth met with a top Cheney adviser, Samantha Ravich, to talk about
expanding the governments use of the Blxware software, officials said. She was
noncommittal.
Mr. Flynn, who was still Mr. Montgomerys lawyer, sent an angry letter to Mr.
Cheney in May 2007. He accused the White House of abandoning a tool shown
to save lives. (After a falling out with Mr. Montgomery, Mr. Flynn represents
another party in one of the lawsuits.)
But Mr. Montgomerys company still had an ally at the Air Force, which in late
2008 began negotiating a $3 million contract with Blxware.
In e-mails to Mr. Montgomery and other company officials, an Air Force
contracting officer, Joseph Liberatore, described himself as one of the
believers, despite skepticism from the C.I.A. and problems with the no-bid
contract.
If other agencies examined the deal, he said in a December 2008 e-mail, we
are all toast.
Honestly I do not care about being fired, Mr. Liberatore wrote, but he said he
did care about moving the effort forward we are too close. (The Air Force
declined to make Mr. Liberatore available for comment.)
The day after Mr. Obamas inauguration, Mr. Liberatore wrote that government
officials were thanking Mr. Montgomerys company for its support. The Air
Force appears to have used his technology to try to identify the Somalis it
believed were plotting to disrupt the inauguration, but within days, intelligence
officials publicly stated that the threat had never existed. In May 2009, the Air
Force canceled the companys contract because it had failed to meet its
expectations.
Mr. Montgomery is not saying much these days. At his deposition in November,
when he was asked if his software was a complete fraud, he answered, Im
going to assert my right under the Fifth Amendment.
Barclay Walsh contributed research.
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EXHIBIT 5
EXHIBIT 15
)
)
)
Michael J. Flynn,
)
)
Plaintiff,
)
)
vs.
)
)
Defendants.
~~~~~--~~~~~~--)
800.669.1866
California.
APPEARANCES:
10
11
Attorneys at Law
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BY:
13
14
suite 200
15
Denver, Colorado
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(303) 298-1800
17
80202
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19
Attorneys at Law
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BY:
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suite 100
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(818) 883-4400
91367-6667
Page 2
YATES COURT REPORTERS
800.669.1866
CIVIL DIVISION
BY:
20 Massachusetts Avenue, NW
Room 7150
Washington,
(202) 514-4522
10
DC
20530
Also Present:
11
12
13
14
15
Government
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videographer:
17
18
services
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Page 3
YATES COURT REPORTERS
800.669.1866
2006.
BY
4
10:10:34
MR. CONANT:
Q.
MR. CROCKETT:
counsel?
BY
10
Q.
13
14
10:11:03
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10:11:30
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10:11:41
in evidence.
MR. CONANT:
Q.
Fifth Amendment.
Q.
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MR. CROCKETT:
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MR. CONANT:
10:10:44
"decoding programs."
A.
Fifth Amendment.
Q.
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800.669.1866
3
4
10:11:56
Q.
10
11
BY MR. CONANT:
13
Q.
Go back to what?
15
Q.
Exhibit
Stephanie, what Plaintiff's exhibit are we
17
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on right now?
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THE REPORTER:
3.
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MR. CROCKETT:
21
declaration?
MR. CONANT:
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24
10:13:02
All right.
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10:12:55
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10:12:43
Fifth Amendment.
9
10:12:21
25
things.
Let me go -- can we go off the record here
for a second so
800.669.1866
BY MR. CONANT:
Q.
10:15:23
10
MR. FLYNN:
13
BY MR. CONANT:
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Q.
Fifth Amendment.
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MR. FLYNN:
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MR. CONANT:
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10:16:16
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10:15:49
home.
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10:15:37
10:15:07
Q.
All right.
All right.
I'm going to keep going.
Mr. Montgomery, turn with me
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YATES COURT REPORTERS
800.669.1866
10:41:49
10:41:57
10:42:13
Q.
A.
just --
Q.
A.
Q.
protective order --
MR. FLYNN:
MR. CONANT:
10
MR. FLYNN:
11
MR. CONANT:
12
MR. FLYNN:
All right.
Ask him if he gave -Let me
-- very specific intelligence
14
15
BY
17
MR. CONANT:
Q.
19
20
18
10:42:35
Don't go there.
13
16
10:42:23
BY
MR. CONANT:
Q.
21
22
23
decoding software, as
24
25
without compensation."
Page 80
YATES COURT REPORTERS
1
2
10:42:46
10
A.
--
Fifth Amendment.
Q.
11
MR. CROCKETT:
12
Go ahead.
13
THE WITNESS:
14
Hold it.
15
16
MR. CONANT:
17
THE WITNESS:
18
19
10:43:39
Q.
10:43:22
BY MR. CONANT:
Government this
10:43:14
10:42:58
MR. FLYNN:
That's fine.
okay.
BY MR. CONANT:
Q.
20
21
22
23
24
25
800.669.1866
13:38:52
questions.
Q.
Mr. Montgomery
A.
I'm listening.
Q.
--
I don't recall.
Q.
10
A.
No.
11
Q.
12
strike that.
were you trying -- I'm sorry.
13
14
13:39:25
16
17
19
13:39:43
Let me
strike that.
15
18
13:39:36
9
13:39:05
20
A.
Fifth Amendment.
Q.
21
22
23
A.
24
Amendment.
25
Q.
800.669.1866
Mr. Montgomery?
A.
3
4
13:39:52
Q.
software?
A.
Fifth Amendment.
10
Q.
11
12
13
Government?
A.
15
Fifth Amendment.
MR. CONANT:
16
13:40:35
14
13:40:18
Fifth Amendment.
13:40:04
All right.
17
18
Exhibit 15.
19
20
MR. CONANT:
21
MR. CROCKElT:
22
MR. CONANT:
23
email?
MR. FLYNN:
24
25
Try to get me to --
Ill
Page 189
YATES COURT REPORTERS
800.669.1866
1
2
13:41:40
BY
MR. CONANT:
Q.
A.
BY MR.
Q.
13:42:05
was Edra.
CONANT:
11
Q.
have no idea.
12
13
Blxware software?
14
A.
15
Q.
17
A.
Yes.
18
Q.
19
20
21
13:42:27
FLYNN:
10
16
13:42:18
13:41:50
referring to?
22
Q.
Any software.
23
A.
24
Q.
25
must have.
800.669.1866
2
3
13 :42: 38
Fifth Amendment.
Q.
terrorist attacks?
A.
Q.
A.
10
11
getting old.
MR. FLYNN:
13
Fifth.
14
BY MR. CONANT:
15
Q.
It's really
16
17
Mr. Flynn?
18
BY MR. CONANT:
19
Q.
20
A.
Yeah, it does.
21
22
23
24
13:43:13
Fifth Amendment.
12
13:43:01
13:42:54
13:42:47
A.
25
Q.
800.669.1866
13:51:16
A.
Q.
MR. FLYNN:
THE WITNESS:
MR. CROCKETT:
Q.
A.
Yeah.
10
Q.
11
12
13
15
17
A.
MR. CROCKETT:
BY
I don't either.
MR. CONANT:
Q.
19
A.
okay.
sorry.
Got it.
20
22
I don't know
18
21
13:51 : 55
Dennis.
16
13:51:47
14
13:51:42
BY MR. CONANT:
13:51:23
Q.
23
A.
Yeah.
24
Q.
25
800.669.1866
13:52:14
13:52:28
13:52:40
11
technology.
12
13
14
15
16
i den ti fi ed."
17
18
20
that.
21
BY MR. CONANT:
22
23
24
13:52:56
I interacted on a
10
19
13:52:51
25
Q.
Is that a true
that?
A.
800.669.1866
4
13:53:07
Q.
A.
13:53:42
13:54:29
read it.
Fifth.
I'm going to assert my right, Mr. Flynn,
under the Fifth.
10
MR. FLYNN:
11
MR. CONANT:
12
All right.
what~s
okay.
All right.
All right.
13
the reporter,
14
hand
going to be marked as
15
THE REPORTER:
16
MR. CONANT:
17
18
THE WITNESS:
19
13:54:11
8
9
okay.
to 20 again?
13:53:16
20
17.
17.
Thank you.
BY MR. CONANT:
Q.
All right.
21
This
22
23
24
25
agreement.
800.669.1866
14:29:29
THE WITNESS:
MR. FLYNN:
Blixseth to an extent.
THE WITNESS:
14:30:20
MR. FLYNN:
13
okay.
Yeah.
No, it isn't.
on the table.
MR. CROCKETT:
15
17
this.
THE WITNESS:
16
MR. CROCKETT:
12
14
You're outrageous.
10
11
14:30:07
conned the
14:29:48
14:29:37
There isn't.
BY MR. CONANT:
Q.
Mr. Montgomery,
18
19
second.
You recall signing a confession of judgment
20
21
22
23
A.
24
Fifth.
25
Q.
Do
Page 230
800.669.1866
15:15:10
A.
Q.
software?
A.
Q.
10
A.
I don't recall.
11
Q.
12
A.
That's correct.
14
MR. CROCKETT:
15
Q.
so in front of -- okay.
MR. FLYNN:
17
18
BY MR. CONANT:
19
20
BY MR. CONANT:
16
15:15:54
was it encoding --
BY MR. CONANT:
13
15:15:37
I don't recall.
MR. FLYNN:
15:15:27
don't recall.
15:15:22
Q.
21
A.
And
22
Q.
23
24
MR. CROCKETT:
25
conclusion.
800.669.1866
CERTIFICATE
OF
hereby certify:
That the foregoing deposition was taken
9
10
11
12
by me;
13
14
15
16
17
18
19
20
21
22
23
24
25
800.669.1866
EXHIBIT 15
)
)
)
Michael J. Flynn,
)
)
Plaintiff,
)
)
vs.
)
)
Defendants.
~~~~~--~~~~~~--)
800.669.1866
California.
APPEARANCES:
10
11
Attorneys at Law
12
BY:
13
14
suite 200
15
Denver, Colorado
16
(303) 298-1800
17
80202
18
19
Attorneys at Law
20
BY:
21
22
23
suite 100
24
25
(818) 883-4400
91367-6667
Page 2
YATES COURT REPORTERS
800.669.1866
CIVIL DIVISION
BY:
20 Massachusetts Avenue, NW
Room 7150
Washington,
(202) 514-4522
10
DC
20530
Also Present:
11
12
13
14
15
Government
16
videographer:
17
18
services
19
20
21
22
23
24
25
Page 3
YATES COURT REPORTERS
800.669.1866
2006.
BY
4
10:10:34
MR. CONANT:
Q.
MR. CROCKETT:
counsel?
BY
10
Q.
13
14
10:11:03
15
16
17
10:11:30
20
21
22
10:11:41
in evidence.
MR. CONANT:
Q.
Fifth Amendment.
Q.
18
19
MR. CROCKETT:
11
12
MR. CONANT:
10:10:44
"decoding programs."
A.
Fifth Amendment.
Q.
23
24
25
800.669.1866
3
4
10:11:56
Q.
10
11
BY MR. CONANT:
13
Q.
Go back to what?
15
Q.
Exhibit
Stephanie, what Plaintiff's exhibit are we
17
18
on right now?
19
THE REPORTER:
3.
20
MR. CROCKETT:
21
declaration?
MR. CONANT:
22
23
24
10:13:02
All right.
14
16
10:12:55
12
10:12:43
Fifth Amendment.
9
10:12:21
25
things.
Let me go -- can we go off the record here
for a second so
800.669.1866
BY MR. CONANT:
Q.
10:15:23
10
MR. FLYNN:
13
BY MR. CONANT:
15
16
17
Q.
Fifth Amendment.
18
MR. FLYNN:
19
MR. CONANT:
20
21
22
10:16:16
12
14
10:15:49
home.
11
10:15:37
10:15:07
Q.
All right.
All right.
I'm going to keep going.
Mr. Montgomery, turn with me
23
24
25
Page 60
YATES COURT REPORTERS
800.669.1866
10:41:49
10:41:57
10:42:13
Q.
A.
just --
Q.
A.
Q.
protective order --
MR. FLYNN:
MR. CONANT:
10
MR. FLYNN:
11
MR. CONANT:
12
MR. FLYNN:
All right.
Ask him if he gave -Let me
-- very specific intelligence
14
15
BY
17
MR. CONANT:
Q.
19
20
18
10:42:35
Don't go there.
13
16
10:42:23
BY
MR. CONANT:
Q.
21
22
23
decoding software, as
24
25
without compensation."
Page 80
YATES COURT REPORTERS
1
2
10:42:46
10
A.
--
Fifth Amendment.
Q.
11
MR. CROCKETT:
12
Go ahead.
13
THE WITNESS:
14
Hold it.
15
16
MR. CONANT:
17
THE WITNESS:
18
19
10:43:39
Q.
10:43:22
BY MR. CONANT:
Government this
10:43:14
10:42:58
MR. FLYNN:
That's fine.
okay.
BY MR. CONANT:
Q.
20
21
22
23
24
25
800.669.1866
13:38:52
questions.
Q.
Mr. Montgomery
A.
I'm listening.
Q.
--
I don't recall.
Q.
10
A.
No.
11
Q.
12
strike that.
were you trying -- I'm sorry.
13
14
13:39:25
16
17
19
13:39:43
Let me
strike that.
15
18
13:39:36
9
13:39:05
20
A.
Fifth Amendment.
Q.
21
22
23
A.
24
Amendment.
25
Q.
800.669.1866
Mr. Montgomery?
A.
3
4
13:39:52
Q.
software?
A.
Fifth Amendment.
10
Q.
11
12
13
Government?
A.
15
Fifth Amendment.
MR. CONANT:
16
13:40:35
14
13:40:18
Fifth Amendment.
13:40:04
All right.
17
18
Exhibit 15.
19
20
MR. CONANT:
21
MR. CROCKElT:
22
MR. CONANT:
23
email?
MR. FLYNN:
24
25
Try to get me to --
Ill
Page 189
YATES COURT REPORTERS
800.669.1866
1
2
13:41:40
BY
MR. CONANT:
Q.
A.
BY MR.
Q.
13:42:05
was Edra.
CONANT:
11
Q.
have no idea.
12
13
Blxware software?
14
A.
15
Q.
17
A.
Yes.
18
Q.
19
20
21
13:42:27
FLYNN:
10
16
13:42:18
13:41:50
referring to?
22
Q.
Any software.
23
A.
24
Q.
25
must have.
800.669.1866
2
3
13 :42: 38
Fifth Amendment.
Q.
terrorist attacks?
A.
Q.
A.
10
11
getting old.
MR. FLYNN:
13
Fifth.
14
BY MR. CONANT:
15
Q.
It's really
16
17
Mr. Flynn?
18
BY MR. CONANT:
19
Q.
20
A.
Yeah, it does.
21
22
23
24
13:43:13
Fifth Amendment.
12
13:43:01
13:42:54
13:42:47
A.
25
Q.
800.669.1866
13:51:16
A.
Q.
MR. FLYNN:
THE WITNESS:
MR. CROCKETT:
Q.
A.
Yeah.
10
Q.
11
12
13
15
17
A.
MR. CROCKETT:
BY
I don't either.
MR. CONANT:
Q.
19
A.
okay.
sorry.
Got it.
20
22
I don't know
18
21
13:51 : 55
Dennis.
16
13:51:47
14
13:51:42
BY MR. CONANT:
13:51:23
Q.
23
A.
Yeah.
24
Q.
25
800.669.1866
13:52:14
13:52:28
13:52:40
11
technology.
12
13
14
15
16
i den ti fi ed."
17
18
20
that.
21
BY MR. CONANT:
22
23
24
13:52:56
I interacted on a
10
19
13:52:51
25
Q.
Is that a true
that?
A.
800.669.1866
4
13:53:07
Q.
A.
13:53:42
13:54:29
read it.
Fifth.
I'm going to assert my right, Mr. Flynn,
under the Fifth.
10
MR. FLYNN:
11
MR. CONANT:
12
All right.
what~s
okay.
All right.
All right.
13
the reporter,
14
hand
going to be marked as
15
THE REPORTER:
16
MR. CONANT:
17
18
THE WITNESS:
19
13:54:11
8
9
okay.
to 20 again?
13:53:16
20
17.
17.
Thank you.
BY MR. CONANT:
Q.
All right.
21
This
22
23
24
25
agreement.
800.669.1866
14:29:29
THE WITNESS:
MR. FLYNN:
Blixseth to an extent.
THE WITNESS:
14:30:20
MR. FLYNN:
13
okay.
Yeah.
No, it isn't.
on the table.
MR. CROCKETT:
15
17
this.
THE WITNESS:
16
MR. CROCKETT:
12
14
You're outrageous.
10
11
14:30:07
conned the
14:29:48
14:29:37
There isn't.
BY MR. CONANT:
Q.
Mr. Montgomery,
18
19
second.
You recall signing a confession of judgment
20
21
22
23
A.
24
Fifth.
25
Q.
Do
Page 230
800.669.1866
15:15:10
A.
Q.
software?
A.
Q.
10
A.
I don't recall.
11
Q.
12
A.
That's correct.
14
MR. CROCKETT:
15
Q.
so in front of -- okay.
MR. FLYNN:
17
18
BY MR. CONANT:
19
20
BY MR. CONANT:
16
15:15:54
was it encoding --
BY MR. CONANT:
13
15:15:37
I don't recall.
MR. FLYNN:
15:15:27
don't recall.
15:15:22
Q.
21
A.
And
22
Q.
23
24
MR. CROCKETT:
25
conclusion.
800.669.1866
CERTIFICATE
OF
hereby certify:
That the foregoing deposition was taken
9
10
11
12
by me;
13
14
15
16
17
18
19
20
21
22
23
24
25
800.669.1866
EXHIBIT 16
Bogus analysis led to alert in 2003 - NBC Nightly News with Brian Willia... Page 1 of 2
Case 1:15-cv-20782-JEM Document 52-18 Entered on FLSD Docket 05/15/2015 Page 2 of 47
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By
Lisa Myers, Aram Roston and the NBC Investigative Unit
NBC News Investigative Unit
updated 6/27/2005 8:10:57 PM ET
WASHINGTON Christmas 2003 became a season of terror after the federal government raised the terror alert level from yellow to orange,
grimly citing credible intelligence of another assault on the United States.
"These credible sources," announced then-Secretary of Homeland Security Tom Ridge, "suggest the possibility of attacks against the homeland
around the holiday season and beyond."
For weeks, America was on edge as security operations went into high gear. Almost 30 international flights were canceled, inconveniencing
passengers flying Air France, British Air, Continental and Aero Mexico.
But senior U.S. officials now tell NBC News that the key piece of information that triggered the holiday alert was a bizarre CIA analysis, which
turned out to be all wrong.
CIA analysts mistakenly thought they'd discovered a mother lode of secret al-Qaida messages. They thought they had found secret messages on AlJazeera, the Arabic-language television news channel, hidden in the moving text at the bottom of the screen, known as the "crawl," where news
headlines are summarized.
Steganography suspected
U.S. officials tell NBC News that CIA experts technicians working for the Directorate of Science and Technology thought they had found
numbers embedded in the crawl signaling upcoming attacks; dates and flight numbers, and geographic coordinates for targets, including the White
House, Seattle's Space Needle, even the tiny town of Tappahanock, Va. What the analysts thought they had found was something called
"steganography" messages hidden inside a video image.
President Bush and Ridge were briefed on the Al-Jazeera analysis, U.S. intelligence sources say.
In an exclusive interview with NBC News, Ridge defended the government's actions, although he called the intelligence analysis "bizarre, unique,
unorthodox, unprecedented."
"Maybe that's very much the reason that you'd be worried about it, because you hadn't seen it before," recalls Ridge.
He says the administration had to take the suspected terror messages seriously, although "speaking for myself I've got to admit to wondering
whether or not it was credible."
Was he himself skeptical?
"Yeah, we weren't certain," says Ridge. "Still, in the context of everything else (intelligence chatter and a terror attack in Saudi Arabia), we could
not set it aside and dismiss it as not credible."
So the United States raised the alert level and canceled flights.
Critics question evaluation of the evidence
"I'm astonished," says author and intelligence expert Jim Bamford, "that they would put so much credibility in such a weak source of intelligence."
Bamford says the CIA shouldn't be criticized for considering the theory, but that analysts should have weighed how implausible it was.
"What you have to do is judge the intelligence versus what your actions are going to be. And this is the equivalent, basically, of looking at tea
leaves," Bamford says.
http://www.nbcnews.com/id/8380365/ns/nbc_nightly_news_with_brian_wil... 5/15/2015
Bogus analysis led to alert in 2003 - NBC Nightly News with Brian Willia... Page 2 of 2
Case 1:15-cv-20782-JEM Document 52-18 Entered on FLSD Docket 05/15/2015 Page 3 of 47
Intelligence sources say that even within the CIA, the analysis was a closely guarded secret. Still, they say, some top CIA officials who learned about
it were skeptical. Top officials at the Directorate of Operations, which conducts clandestine operations, and others who worked at the CIA
Counterterrorism Center, felt that the whole theory was implausible and was being taken far too seriously.
As discredited as the CIA's interpretation now is, experts say steganography is a valid subject for CIA analysis, and could be used by terrorists to
hide data in files on the Web, in still photographs or in broadcast television images.
"Steganography," says professor Nasir Memon of Polytechnic University in Brooklyn, N.Y., "is the art, if you will, of secret writing. And when two
parties want to talk to each other and not let anybody know they are indeed communicating, they would use steganography."
Memon is an expert in "steganalysis" using sophisticated software to locate hidden messages. He says such analysis is valuable but not always
reliable, because there are many "false positives." In general, he says, "it's not something I would bet the farm on because there is a significant
chance that it could be wrong."
TV networks commonly hide digital "watermarks" in their video broadcasts, a legitimate use of video encoding to pass along innocuous digital
information. The CIA's Al-Jazeera analysis is classified, and it is still unclear exactly what the CIA technicians were looking for in the network's
"crawl."
Ridge stands by alert
Regardless, Ridge told NBC News that the CIA analysis certainly did turn out to be wrong. He confirms there were no secret terror messages. He
also says there was no evidence that terrorists were actively plotting against aviation at the time.
But Ridge insisted it was not a mistake to raise the alert level or to cancel the flights.
"I think it was the right thing to do," he said.
Even if raising the alert level frightened a lot of people?
"We acted accordingly based on our best information and best conclusions and the information that we had at the time," Ridge said.
Ridge added that the faulty CIA analysis was a significant factor in raising the alert level, but not the only factor.
As for the CIA, a spokeswoman would not confirm or deny this report, but said it's the "agency's job to run all plausible theories to the ground,
especially when American lives could be at risk."
Lisa Myers is NBCs senior investigative correspondent and Aram Roston is an NBC investigative producer.
http://www.nbcnews.com/id/8380365/ns/nbc_nightly_news_with_brian_wil... 5/15/2015
Page 1 of 5
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers
visit http://www.djreprints.com.
http://www.wsj.com/articles/SB117521830609454045
http://www.wsj.com/articles/SB117521830609454045
3/11/2015
Page 2 of 5
Nevada Gov. Jim Gibbons and his wife, Dawn, celebrate after the governor's inaugural oath of office at the state
capital in January.
Mr. Gibbons and Mr. Trepp have denied the claims or have said that the gifts weren't
improper because of their long personal friendship. Mr. Gibbons has said that he will
cooperate with any inquiry.
A spokeswoman for the governor said that his work in Congress to help Sierra Nevada
and eTreppid was part of a broader effort to back Nevada companies that were
contributing to national defense. She said these efforts had the support of other members
of the Nevada congressional delegation, including Sen. Harry Reid, a Democrat who is
now Senate Majority Leader.
"The funding requests for Sierra Nevada were in no way connected to the first lady's
small contract with them," said Melissa Subbotin, the governor's spokeswoman.
An executive with Sierra Nevada, Renee Velasco, said the contract with Mrs. Gibbons was
for a market survey and demonstration of a hand-held emergency-communications
device for sale to casinos and state and local governments; the effort was ended in
December 2004. She said the contract didn't present a conflict of interest. "Everything
was done by the book," she said.
http://www.wsj.com/articles/SB117521830609454045
3/11/2015
Page 3 of 5
DEFENSE CONTRACT
What's News: The wife of Nevada Gov. Jim
Gibbons was a consultant for Sierra Nevada, a
defense contractor that got federal work with the
help of her husband.
The History: Before becoming governor this year,
Mr. Gibbons was a member of Congress, on the
House armed services and intelligence
committees.
What's Ahead: Federal investigators, already
examining ties between Gov. Gibbons and
another Nevada defense contractor, eTreppid
Technologies, may study the Sierra Nevada
situation.
statement.
Still, the payments are likely to draw critics in Washington and Carson City, the state
capital. "Having a family member on the payroll of a company that benefits from a
congressman's actions is a poster-child conflict," said Ryan Alexander, president of
Taxpayers for Common Sense, a Washington nonprofit that studies special-interest
spending. She said that Mr. Gibbons "obviously should have recused himself" from
seeking federal appropriations for any of his wife's clients.
One of the military contracts that Sierra Nevada got in 2004 was $2 million for research
on a "helicopter autonomous landing system," to help pilots land in "brownouts" of
blowing sand, a technology several firms were seeking to develop for the Pentagon.
House records indicate that Mr. Gibbons asked for $4 million, and got $2 million in the
final bill. In a June 22, 2004, news release, he hailed the project and a separate $3
million for eTreppid as "cutting-edge technology being developed in Nevada to improve
our defense systems."
In the next fiscal year, the helicopter program gained the support of Sen. Reid as well,
and funding rose to $7 million, House records show. Sierra Nevada also was a
contributor to Sen. Reid. In a statement, a spokesman for Mr. Reid said that Sierra
Nevada is a large employer in his state and he is "proud to have supported" its work.
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November 3, 2008
Gov. Jim Gibbons of Nevada has been cleared by the Justice Department of any wrongdoing
in connection with an inquiry into whether he helped a friend win military contracts in
exchange for gifts, Mr. Gibbonss lawyer said.
The lawyer, Abbe D. Lowell, said the lead prosecutor in the case informed him on Friday
that no charges would be filed and that the investigation, related to Mr. Gibbonss work as a
congressman before he was elected governor in 2006, had been closed.
A Justice Department spokeswoman, Laura Sweeney, said the department would not
comment.
Mr. Lowell said that Mr. Gibbons, a Republican whose first term as governor has been
dogged by legal, political and personal troubles, would make a statement on Monday.
The investigation spanned 18 months, Mr. Lowell said, and began when a former staff
member of a technology company run by a friend of the governor made accusations of
influence peddling.
The former staff member, Dennis Montgomery, told news media outlets that his boss,
Warren Trepp, the owner of eTreppid Technologies, had given Mr. Gibbons money, casino
chips and a Caribbean cruise to help eTreppid win military contracts.
Mr. Lowell called the accusations ridiculous and hogwash and said, The governor does
not even gamble.
Neither the governor nor I, Mr. Lowell added, have any problem with the Justice
Department having to investigate allegations, even if they are crazy, because he is a highranking public official and he knows the world he lives in.
They handled it in a way and a speed that was up to them. Though we wish it were sooner,
they came to the right conclusion.
Mr. Lowell said Mr. Gibbons had cooperated in the investigation and in recent months had
been interviewed by Federal Bureau of Investigation agents.
http://www.nytimes.com/2008/11/03/us/03nevada.html?pagewanted=print
3/11/2015
Page 2 of 2
The investigation, Mr. Lowell said, might have been slowed by a civil lawsuit between Mr.
Montgomery and eTreppid, which was settled last month.
Blxware LLC, the company where Mr. Montgomery now works, said the terms of the
settlement were confidential, but the company, based in Bellevue, Wash., disclosed that the
agreement included a payment to Mr. Trepp as compensation for certain allegations made
against him in the news media. Blxware was a party in the lawsuit.
The closing of the investigation provides welcome news to Mr. Gibbons in a trying period.
A former cocktail waitress filed a lawsuit against him last month, alleging that he pushed her
and threatened to rape her after a night of drinking in Las Vegas just before the November
2006 election. Mr. Gibbons denied the accusation, and criminal charges were not filed.
Mr. Gibbons, 63, and his wife, Dawn, 54, began divorce proceedings this year after 22 years
of marriage. The news media in Nevada have made much of her accusation of adultery and
the disclosure of hundreds of text messages he sent to a woman he has said was a friend but
who Ms. Gibbonss lawyers suggest was a mistress.
A state employee filed a lawsuit last month claiming that she was removed from her post on
the belief that she had leaked the messages.
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The allegations proved to be "baseless, and there's not a shred of evidence that I did anything wrong," Gibbons
said at a news conference.
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"This certainly took a lot longer than I wanted to be resolved. I wish it would have been resolved a year ago, two
years ago," he said. "But this is good news, and it doesn't matter to me when the good news comes, even a day
before an election."
His attorney, Abbe Lowell, of Washington, said Sunday that the Justice Department told him Gibbons wouldn't be
charged. A law enforcement official close to the case, who spoke anonymously because authorities never officially
acknowledged the probe, confirmed the substance of Lowell's statement.
Gibbons, who was elected governor in 2006 after five terms in Congress, had steadfastly denied any wrongdoing
despite claims by Dennis Montgomery that eTreppid Technologies LLC founder Warren Trepp lavished Gibbons
with money and a Caribbean cruise in exchange for help winning contracts for his company.
Montgomery's credibility was put in doubt after a computer expert questioned the authenticity of e-mails
Montgomery claimed proved Gibbons was accepting gifts.
Gibbons said defending himself against the allegations cost about $200,000 in legal fees. He had to solicit
contributions to help cover those costs.
Asked if he would consider suing Montgomery now that the Justice Department and FBI have ended the
investigation, Gibbons said: "You know, some days you're harmed and the doors to the courthouse should remain
open. And let me say that my thoughts remain open."
An attorney for Montgomery, Mark Gunderson in Reno, didn't return a call seeking comment Monday.
The governor said he had been the target of "bogus charges trumped up by certain biased individuals," mentioning
the eTreppid case as well as a claim by a state Democratic Party official that he pressured a county assessor to
get an unwarranted property tax break.
A state Ethics Commission panel concluded in September that there was no evidence to support the tax break
claim.
Along with the federal investigation, Gibbons has seen his approval ratings drop following a budget crunch, a
messy divorce that is still pending and lawsuits involving his private and public activities.
Gibbons still faces a lawsuit from a woman claiming he threatened to rape her. He's also being sued by a
government staffer who claimed she was forced from her job because he thought she was leaking information
about his personal use of a state cell phone.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten
or redistributed.
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The Nevada gambler, al-Qaida, the CIA and the mother of all cons | US ne... Page 1 of 3
Case 1:15-cv-20782-JEM Document 52-18 Entered on FLSD Docket 05/15/2015 Page 13 of
47
The intelligence reports fitted the suspicions of the time: al-Qaida sleeper
agents were scattered across the US awaiting orders that were broadcast in
secret codes over the al-Jazeera television network.
Flights from Britain and France were cancelled. Officials warned of a
looming "spectacular attack" to rival 9/11. In 2003 President Bush's
homeland security tsar, Tom Ridge, spoke of a "credible source" whose
information had US military bracing for a new terrorist onslaught.
Then suddenly no more was said.
Six years later, Playboy magazine has revealed that the CIA fell victim to an
elaborate con by a compulsive gambler who claimed to have developed
software that discovered al-Jazeera broadcasts were being used to transmit
messages to terrorists buried deep in America.
Dennis Montgomery, 56, the co-owner of a software gaming company in
Nevada, who has since been arrested for bouncing $1m worth of cheques,
claims his program read messages hidden in barcodes listing international
flights to the US, their positions and airports to be targeted.
The CIA took the information seriously, working with Montgomery at his
offices and paying him an undisclosed amount of money. The "intelligence"
Montgomery claimed to have found was passed on to the White House and
homeland security where it kickstarted an alert that bordered on panic.
According to Playboy, Montgomery's claims caused the cancellation of
British Airways and other flights supposedly mentioned in the codes.
http://www.theguardian.com/world/2009/dec/23/dennis-montgomery-cia-al-j... 3/8/2015
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Case 1:15-cv-20782-JEM Document 52-18 Entered on FLSD Docket 05/15/2015 Page 14 of
47
Some officials were not at all surprised to hear the allegation that al-Jazeera
was involved. The then defence secretary, Donald Rumsfeld, later vilified
the station for "vicious, inaccurate and inexcusable" reporting of the US
invasion of Iraq.
For months, the source of the information was kept under wraps within the
CIA but once it became more widely known in the agency it immediately
came under question. Playboy quotes one former counterterrorism official
who attended a briefing on the source as being furious. He said: "I was
saying: 'This is crazy. This is embarrassing.' They claimed they were
breaking the code, getting latitude and longitude, and al-Qaida operatives
were decoding it. They were coming up with airports and everything, and
we were just saying: 'You know, this is horseshit!' "
Frances Townsend, a homeland security adviser to Bush, defended the
decision to work with Montgomery. "It didn't seem beyond the realm of
possibility. We were relying on technical people to tell us whether or not it
was feasible. I don't regret having acted on it," she told Playboy.
But the doubts began to prevail as Montgomery refused to reveal how he
was finding the barcodes, when no one else could, and he demanded
$100m for the software. The CIA also began to wonder why al-Qaida didn't
use emails and web pages to communicate with its agents.
More news
Topics
CIA
Al-Qaida
Air transport
Middle East and North Africa
Nevada
Al-Jazeera
http://www.theguardian.com/world/2009/dec/23/dennis-montgomery-cia-al-j... 3/8/2015
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http://www.theguardian.com/world/2009/dec/23/dennis-montgomery-cia-al-j... 3/8/2015
Man that accused Governor Gibbons arrested - Henderson Clark County Li... Page 1 of 3
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Dennis Montgomery
http://www.examiner.com/article/man-that-accused-governor-gibbons-arrested 3/8/2015
Man that accused Governor Gibbons arrested - Henderson Clark County Li... Page 2 of 3
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He is on the docket to be arraigned in a Las Vegas court on August 17th. He has not
responded to e-mails or phone calls seeking a comment. Montgomery is a former chief
technical officer for the Reno-based software company e Treppid. E Treppid is a company
who has won military contracts for video compression and target recognition software.
During Gibbons reelection bid back in 2006, Montgomery accused the governor of
accepting bribes from e Treppid, to help them secure the military contracts they were then
awarded. Court papers showed that he alleged the governor took $100,000 worth of
casino chips and cash during a week long cruise in the Caribbean.
Later in 2007, the FBI opened an investigation into the bribe allegations. The Department of
Justice also investigated the allegations and subsequently cleared the governor of any
wrong doing. Reports of Montgomery having a gambling problem first surfaced back in
2006, after the federal government and the United States Air Force began investigating him
as part of an investigation they were doing into economic espionage and intellectual
property claims.
Warren Trepp, who is Montgomery's former business partner, told authorities back in 2006
that Montgomery borrowed somewhere north of $1.3 million. The money was in part to pay
off casino debts Montgomery had incurred in the amount of $300,000. This is according to
OSI, the Air Force's Office of Special Investigations. When Tripp made the allegations
against Montgomery, the two were locked in a dispute over the ownership of e Treppid
software that was being used by the military.
E Treppid was awarded a no-contract bid for a maximum value of $30 million dollars for
http://www.examiner.com/article/man-that-accused-governor-gibbons-arrested 3/8/2015
Man that accused Governor Gibbons arrested - Henderson Clark County Li... Page 3 of 3
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47
Ruben Sarmiento
http://www.examiner.com/article/man-that-accused-governor-gibbons-arrested 3/8/2015
Playboy undercover with Dennis Montgomery, who 'fooled CIA over Al-J... Page 1 of 2
Case 1:15-cv-20782-JEM Document 52-18 Entered on FLSD Docket 05/15/2015 Page 19 of
47
news.com.au
Technology
http://www.news.com.au/technology/playboy-goes-undercover-with-dennis-... 3/8/2015
Playboy undercover with Dennis Montgomery, who 'fooled CIA over Al-J... Page 2 of 2
Case 1:15-cv-20782-JEM Document 52-18 Entered on FLSD Docket 05/15/2015 Page 20 of
47
Playboy.
"We were testing some of the software. We were just looking at it to see if there was anything there," Joseph
Liberatore, an Air Force program manager, told the magazine.
Mr Montgomery has faced a number of lawsuits and last year was charged with bouncing nine checks worth a
total of one million dollars in Las Vegas.
Playboy ran the story online with a gallery of "military-themed nude pictorials".
- with AFP
http://www.news.com.au/technology/playboy-goes-undercover-with-dennis-... 3/8/2015
Page 1 of 3
Security
Related topics
98
63
A con man fooled US spooks into grounding international flights by selling them "technology" to decode
al-Qaeda messages hidden in TV broadcasts, it's claimed.
A long and highly entertaining Playboy article explains that in 2003, 50-year-old Dennis Montgomery was
chief technology officer at Reno, Nevada-based eTreppid Technologies. The firm began as a video
compression developer, but Montgomery took it in new and bizarre directions.
He reportedly convinced the CIA that he had software that could detect and decrypt "barcodes" in
broadcasts by Al Jazeera, the Qatari news station.
The Company was apparently impressed enough to set up its own secure room at the firm to do what
Montgomery called "noise filtering". He somehow produced "reams of data" consisting of geographic
coordinates and flight numbers.
In December 2003, it's claimed CIA director George Tenet was sufficiently sold on Montgomery's data to
ground transatlantic flights, deploy heavily armed police on the streets of Manhattan and evacuate 5,000
people from the Metropolitan Museum of Art.
Homeland Security secretary Tom Ridge told the press the terror alert was the result of "credible sources
- about near-term attacks that could either rival or exceed what we experienced on September 11".
In fact, according to evidence from his former lawyer, Montgomery, the "credible source", was a "habitual
liar engaged in fraud".
Montgomery worked with the CIA's Directorate of Science and Technology - its Q Branch - engaged in
exotic research and intelligence gathering. According to Playboy, one counter-intelligence official briefed
on the programme said: "We were fucking livid. I was told to shut up. I was saying, 'This is crazy. This is
embarrassing.'"
Eventually a branch of French intelligence helped the CIA prove that the Al Jazeera "messages" never
existed. Files were handed over to counter-intelligence to investigate the scam.
The FBI uncovered a series of frauds by Montgomery, who was a compulsive gambler. As well as his
"noise filtering" technology, he had rigged video software to convince officials it could detect weapons.
Following a dispute with eTreppid's financial backer, Montgomery took off with his "technology" and tried
to win more government contracts alone. By now though, the officials he was trying to sell to were part of
the FBI investigation. It reportedly "went nowhere", however.
By 2008, the financial dispute had come to court. Montgomery said he was still doing classified
government work, for $3m. In June this year however, his gambling led to personal bankruptcy, listing his
still-classified "technology" as a $10m asset.
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Frances Townsend, a homeland security adviser to Bush, said she did not regret having relied on
Montgomery's mysterious intelligence. "It didn't seem beyond the realm of possibility. We were relying on
technical people to tell us whether or not it was feasible," she said.
Spotlight
http://www.theregister.co.uk/2009/12/24/cia_montgomery/
3/8/2015
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Page 1 of 11
AP Photo/Matt York
Sheriff Joe Arpaio, during a 2012 press conference about his ludicrous birther investigation
The most
revealing part
of Phoenix
filmmaker
Randy
Murray's
recent
documentary
The Joe Show
was a strategy
meeting during
Sheriff Joe
Arpaio's 2012
re-election
campaign that
included
Arpaio, his top
flack, Lisa
Allen, Chief
Deputy Jerry
Sheridan, and
campaign
manager Chad
Willems.
The group huddled in the back of a Fountain Hills restaurant to discuss how to spin
Joe's negatives -- the misspending of more than $100 million, the deaths in the jails,
the scores of millions in lawsuit payouts -- for the public.
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
Page 2 of 11
At some point, Arpaio's "birther" investigation came up. You know, the one in which
President Barack Obama's birth certificate gets investigated by both the Maricopa
County Sheriff's Office's Cold Case Posse, a nonprofit organization, and MCSO Deputy
Brian Mackiewicz, whom Arpaio flew to Hawaii as part of this snipe hunt, at a cost of
nearly $10,000 to taxpayers.
Arpaio's March 2012 press conference -- in which the sheriff and the Cold Case Posse's
"lead investigator," ex-used-car salesman Mike Zullo, declared Obama's birth certificate
to be a forgery -- was in the planning stage when the scene was filmed.
At the mere mention of the birther investigation and the future press event, Allen and
Willems practically rolled their eyes.
Willems called the birther probe "nuts."
Allen said the sheriff might as well go the press conference "in big ol' clown shoes."
Arpaio shrugged, literally.
"There ain't gonna be no damage control," Arpaio promised Willems. "You'll get more
money [in campaign contributions] than you'll know what to do with."
Wilier than the cartoon coyote, Arpaio had tapped into a nationwide right-wing antigovernment, anti-Obama feeding frenzy with his birther probe and with his tirades
against the U.S. Department of Justice, which was investigating him for abuse of power
and other issues and is now suing him in federal court.
"The DOJ is a hot item everywhere," Joe told his flunkies.
See, whenever Arpaio's never-ending political campaign sends out an e-mail blast
begging for loot from Obama-haters, it reels in contributions from retired, far-right
ofays all over the country.
Willems essentially admitted as much in another scene from the film.
"Now, with Arpaio going to battle with Barack Obama," Willems said, "it's meant
literally millions of dollars for his campaign."
As everybody knows, Arpaio was re-elected in 2012, but the investigation into Obama's
birth certificate continues apace, according to both Arpaio and Cold Case Posse
"commander" Zullo.
At the beginning of May, Arpaio mentioned the birther probe during a speech before a
group of Silicon Valley conservatives.
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
Page 3 of 11
Around the same time, he appeared on The Right Side, a conservative cable-access
show in Mountain View, California. He told host Chris Pareja that the inquiry into
Obama's birth certificate was going strong.
"I'm not done with that yet," Arpaio insisted. "People think I surrendered. No . . . I'm
trying to find out who's behind it now. That's the key. You can always have a crime to
investigate, but I think you would like to know who did it."
The sheriff said he was after whoever created this "forged, fraudulent document,"
meaning a computer scan of the president's long-form birth certificate, released by the
White House in April 2011.
Arpaio's statements have paralleled assurances from Zullo during periodic interviews
with Florida pastor/radio host Carl Gallups that new revelations concerning the Obama
birth certificate are on the way.
Critics of birthers regularly mock Zullo's vague pronouncements on Gallups' show as
never resulting in any "new" finds.
Why, even the information disclosed during Arpaio's two birther-themed press
conferences in 2012 were a rehash of debunked conspiracy theories.
But during a February interview with Gallups, Zullo caused an Internet kerfuffle when
he told Gallups' audience that there were now two investigations: the original birther
one and an offshoot of the birther probe, this one a criminal investigation.
Moreover, the second investigation was using two MCSO detectives and, presumably,
county money.
"I don't know how this is all going to play out," Zullo said. "I know that [in] the criminal
investigation that we're working on now, Sheriff Arpaio has dedicated resources and
two full-time Maricopa County Sheriff's Office detectives."
He added, "These are seasoned pros [who] are working this. These are the guys that go
hunt down the really bad guys."
Zullo promised to release "universe-shattering" results of these investigations in March,
a deadline Zullo since has extended indefinitely.
Blogger Mitch Martinson of arizonaspolitics.com was the first to query the MCSO on
Zullo's claim, and the first to report that Sheriff's Office spokesman Brandon Jones
kinda-sorta had confirmed it.
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
Page 4 of 11
"We have two sheriff's detectives assigned to look into other issues surrounding the
birth certificate," Jones told Martinson, in a blog item posted February 10. "However,
they are not investigating the birth certificate issue itself."
Later, Jones walked back his comments to Martinson, sending the blogger an e-mail,
which Martinson used in a screen shot to a follow-up post.
"Mitch, I was misinformed," Jones stated. "The detectives are not working on anything
regarding the birth certificate. Not even surrounding. Mr. Zullo was incorrect: They are
working on other serious cases not even related."
Who were these two detectives, what were they up to, and why is Zullo, a mere posse
member, privy to it?
Based on information given to me by longtime sources, the two detectives mentioned
are Brian Mackiewicz, the same deputy who made a taxpayer-funded run to Hawaii in
May 2012, and Sergeant Travis Anglin, once a lieutenant with the notorious Maricopa
Anti-Corruption Effort who was demoted after an MCSO investigation into his private
security company and its use of MCSO detectives.
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
Page 5 of 11
My sources -- one of whom is a former detective with the MCSO's Special Investigations
Division and is well-acquainted with SID and those in it -- say Anglin and Mackiewicz
were involved in an odd investigation dating back to October 2013.
Moreover, they say, the deputies have used as a confidential informant a notorious
scammer in the Seattle area.
What have they been investigating? According to my sources, Mackiewicz, Anglin, and
the informant are focused on U.S. District Court Judge G. Murray Snow, the Justice
Department, and a bizarre conspiracy theory that the DOJ and Snow have conspired to
somehow "get" Joe Arpaio.
The person who purportedly convinced Arapio of this paranoid fantasy, the sources say,
is computer fraudster Dennis L. Montgomery, the subject of a 2010 Playboy expos
titled "The Man Who Conned the Pentagon."
In that article, investigative reporter Aram Roston detailed how, in the wake of the 9/11
attacks, Montgomery snookered the CIA, the White House, the Department of
Homeland Security, and the Air Force into believing he had software that could decode
secret messages to terrorists, supposedly embedded in broadcasts of the Al Jazeera
Media Network.
As crazy as this now sounds, Roston, using unsealed court documents, reported that
eTreppid Technologies, the Nevada software company Montgomery co-owned, scored
multimillion-dollar contracts for computer software touted by Montgomery.
In fact, Roston wrote, the United States went to Code Orange, the DHS' second-highest
terror alert, in 2003 based on data supplied to the CIA by Montgomery.
International flights were delayed, sometimes canceled, because of Montgomery's work.
Based on Montgomery's "intelligence gathering," Homeland Security Secretary Tom
Ridge told reporters at the time about the threat of "near-term attacks" that could "rival
or exceed" those of 9/11.
"Montgomery calls the work he was doing noise filtering," Roston wrote. "He was
churning out reams of data he called output. It consisted of latitudes and longitudes
and flight numbers."
This data was given to then-CIA Director George Tenet, according to Roston, and
"eventually ended up in the White House."
There was one big problem, Roston reported: "The communications Montgomery said
he was decrypting apparently didn't exist."
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
Page 6 of 11
Roston wrote that Montgomery's eTreppid colleagues questioned his computer skills.
Company employees also claimed that Montgomery had faked demonstrations of
weapons-recognition software for representatives of the U.S. military.
With the help of a "branch of the French intelligence services," the CIA finally got wise
to Montgomery, realizing that there were no secret messages to bad guys in the Al
Jazeera broadcasts.
Montgomery left eTreppid, wrote Roston, and went on to work for software companies
backed by a wealthy heiress; to accuse Nevada Governor Jim Gibbons of taking a bribe
(Gibbons later was cleared of wrongdoing); to lose big at a Rancho Mirage, California
casino ($422,000 in one day); and to declare bankruptcy.
Now, Montgomery lives in Yarrow Point, Washington, a short drive from downtown
Seattle.
My sources report that MCSO detectives Anglin and Mackiewicz have spent a lot of time
this year in Seattle with Montgomery, who, the sources say, has convinced the sheriff
that he has information suggesting an anti-Arpaio conspiracy between Judge Snow and
the DOJ.
These sources say there is no report number assigned to the case, that Arpaio himself is
running it, and that the investigation has been financed with funds for confidential
informants, RICO funds.
Montgomery has been assigned a "confidential informant number" or "control
number," the identity of which is known only to Arpaio, a few MCSO brass, and those in
Special Investigations, according to my sources, who claim Montgomery has been paid
about $100,000 to date by the MCSO.
The situation gives Arpaio and the MCSO a degree of deniability because the
department is allowed to keep the identities of confidential informants secret in most
instances.
Though there should be MCSO paperwork associated with such payments, it would
show a payment to a control number, not a name.
The MCSO's official policy on "informant management" states that control numbers
must be maintained in a confidential-informant log "monitored by the [Special
Investigations Division] commander or his designee."
It further states that all informant files be kept in a "secured area within the SID."
The policy notes that the MCSO "will protect these sources through all available and
reasonable legal means."
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
Page 7 of 11
Such "informant files" are retained as "permanent records" of SID, "unless the division
commander determines that the records may be purged."
My sources say Mackiewicz has received, to date, $50,000 in overtime pay and Zullo
has gotten about $5,000 in payments.
Zullo's role is unclear, though he currently is involved in the investigation, according to
these sources, as well as the perpetual birther probe.
Additionally, they say the MCSO made about a $50,000 purchase of computer
equipment for Montgomery sometime this year from a store in Washington state.
According to the MCSO's policy regarding "Undercover and Investigative Funds
Accountability," an expenditure of up to $6,000 for undercover and investigative work
can be approved by a division commander.
Anything over $6,000 must be approved by a bureau commander.
As for funds specifically paid to confidential informants, the reins are even tighter.
Payments to a CI of more than $300 must be approved by a division commander "prior
to the expenditure of the funds," according to the MCSO's informant-management
policy.
The amount of money involved in detectives Anglin and Mackeiwicz's Seattle quest has
raised red flags with MCSO accountants, I've been told.
These same MCSO accountants reportedly have expressed concern internally about the
procurement of the computer equipment, excessive CI payments, the amount of
overtime involved, and the money spent on airfare and stays in Seattle.
In several broadly worded public-records requests sent to the MCSO in February, I
asked for any and all e-mails traded among the players involved, as well as any and all
records regarding MCSO employees' trips to Seattle, payments of informant funds to
Dennis Montgomery, and Mackiewicz's overtime requests.
In each case, I was advised by MCSO spokesman Jones that "this is an ongoing
investigation . . . no records can be released at this time."
In March, I called Zullo at his home phone number. I asked him about the work he was
said to be doing with Montgomery.
He claimed not to know what I was talking about. When I pressed him, he said all such
inquiries should go through the MCSO.
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
Page 8 of 11
"I have no comment to make, especially to the New Times," he told me before hanging
up.
The opportunity to question Arpaio about the Montgomery caper came as he munched
on cheese at a recent fundraiser for embattled Arizona Attorney General Tom Horne at
the University Club in Phoenix.
I asked the sheriff about Montgomery and the work that my sources tell me he has done
for the MCSO.
At first, he played dumb, asking if I meant County Attorney Bill Montgomery.
"No, Dennis Montgomery," I replied. "The computer guy in Seattle who is helping you
investigate Judge Snow and the DOJ. You are investigating Snow and the DOJ, aren't
you?"
As he hit the cheese platter again, Arpaio looked over his shoulder at me with a grin.
But he said nothing.
I kept after him, asking why deputies Mackiewicz and Anglin had spent so much time in
Seattle.
"I dunno, maybe they like the weather up there," he said over his shoulder, "or the snow
crab."
True to form, the sheriff was cagey, but there was no denial.
The ex-Special Investigations source I know tells me that the joke around Arpaio's
office is that Montgomery's referred to as "Snowden," after Edward Snowden, the
American computer geek responsible for a massive 2013 leak of classified documents
from the National Security Agency that exposed Orwellian surveillance programs run
by the U.S. government.
"[Montgomery] says he worked for the CIA on a project called Hammer [and] collected
data similar to Snowden's," the source says. "[Montgomery] claims he can prove there
was a conspiracy between [U.S. Attorney General] Eric Holder and Judge Snow . . . a
conspiracy against Arpaio."
Montgomery, who is middle-aged and stocky with a shock of white hair, is no Snowden.
Whatever you think of Snowden, at least the information he released generally has been
confirmed as legitimate.
As with the gibberish Montgomery reportedly gave the CIA in the early 2000s, he has,
according to my sources, produced many printouts for the MCSO that seem off point,
with dates going back to 1999 and earlier.
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Obviously, that's long before Arpaio took up the cause of illegal immigration, long
before he was investigated or sued by the DOJ, and long before he became the subject
of the ACLU's big racial profiling lawsuit Melendres v. Arpaio.
One source informs me that at least one underling told Arpaio recently that what
Montgomery provided the MCSO is worthless, that Joe is getting played -- which
caused the sheriff to erupt into a fit of anger.
When Montgomery was approached by a freelance reporter on behalf of New Times in
April, he was nonplussed.
Montgomery came to the door of his Yarrow Point home, a cell phone at his ear, talking
to someone about computer equipment.
The reporter identified himself, and Montgomery asked for a card, which the reporter
presented.
"I really don't wanna talk to you," Montgomery said, ending his call.
"Okay, about Phoenix . . .," the reporter began.
"No comment," Montgomery shot back.
"Arizona . . .," the reporter started again.
"No comment," Montgomery repeated. "Who sent you up here?"
"Phoenix New Times," the reporter explained.
"Yeah," growled Montgomery.
"Have you done any work for Joe Arpaio?" the reporter asked.
"I, I, I have no comment," Montgomery said, moving away. "I'll call you later. I'll think
about it."
Montgomery went back into his house and shut the door, ending the conversation on a
mysterious note.As with Arpaio, there was no denial.
Is Dennis Montgomery Joe Arpaio's Snowden? I cannot say absolutely.
But it's not far-fetched to think that Arpaio would investigate any powerful public
official. He continues to investigate the president. He and now-disbarred former
County Attorney Andrew Thomas investigated Superior Court judges perceived to be
thwarting their anti-undocumented-immigrant policies.
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
Page 10 of 11
That is, it fits a pattern cultivated over his reign of more than 20 years.
Among Arpaio's bogus investigations have been:
One targeting former Arizona Attorney General Terry Goddard for alleged bribery.
The probe began in 2007 and didn't seem to end until Goddard left office.
One that brought the 2008 indictment of then-county Supervisor Don Stapley on 118
criminal counts related to his allegedly not properly disclosing sources of income. All
counts were dismissed ultimately.
An infamous December 2009 RICO suit brought by Arpaio and Thomas against the
entire Board of Supervisors, various county employees and certain Superior Court
judges. Supposedly, they all were part of a conspiracy involving the county's new court
tower. The suit was a disaster that finally got dismissed by Thomas himself.
A probe resulting in the filing of false bribery charges in 2009 against former Superior
Court Judge Gary Donahoe. Arpaio and Thomas ginned up these charges as retaliation
against Donahoe for adverse rulings and to make Donahoe vacate a hearing that Arpaio
and Thomas didn't want to take place.
And now Judge Snow, who in 2013 found the MCSO guilty of racial profiling and
assigned a monitor to make certain that Arpaio was obeying court orders on reforming
and re-educating deputies so that the agency does not profile Latinos or any other
minority again?
As for Holder, the DOJ remains engaged in a lawsuit accusing Arpaio of abuse of power
and prejudiced policing.
At age 82, the sheriff faces the ignominy of ending his law enforcement career as a
disgraced political colossus.
All -- in his mind -- because of Snow and the DOJ.
Why not attempt an investigation aimed at discrediting his perceived nemeses?
Though there never will be any pink handcuffs in Snow's or Holder's future, Arpaio's
racist, wing-nut supporters would consider it an act of bravery that their hero is
investigating federal officials getting in the way of keeping despised Latinos in their
place.
Meaning more money in the sheriff's perpetual re-election kitty and proving that bogus
investigations continue to pay off.
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
Page 11 of 11
My dream, of course, is that Snow blows a gasket and perp-walks the aged autocrat.
We'll see.
Rick Anderson in Seattle contributed to this story.
http://blogs.phoenixnewtimes.com/valleyfever/2014/06/joe-arpaio-investiga... 3/12/2015
3/12/2015
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Report:ProgrammerConnedCIA,PentagonIntoBuyingBogusAntiTerrorCode|WIRED
1:15-cv-20782-JEM
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SUBSCRIBE
KIM ZETTER
SECURITY
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REPORT:PROGRAMMERCONNEDCIA,PENTAGON
INTOBUYINGBOGUSANTITERRORCODE
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47
A PROGRAMMER WHO
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47
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47
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47
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47
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bb v 47
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POINT OF VIEW
ROBERT MCMILLAN
Hillary Clinton Says Her Email Was Secure; She Can't Know
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Hillary1:15-cv-20782-JEM
Clinton Says Her
Email Was
Secure;
Sheon
Can't
Know
3/12/2015
Case
1 DAY
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Report: CIA Has Tried for Years to Break Into Apple Gear
2 DAYS
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CYBERSECURITY
GETTHE
MAGAZINE
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SUBSCRIBE
FOLLOWUS
ONTWITTER
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Nast.
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EXHIBIT 19
EXHIBIT 20
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)
)
Debtors.
)
_________________________________________________________________
AFFIDAVIT OF MICHAEL J. FLYNN
__________________________________________________________________
I, Michael J. Flynn depose and state that I have personal knowledge of the facts
contained in this affidavit, unless stated to be based upon information and belief. Where facts
are stated to be based on information and belief, I believe them to be true and accurate to the best
of my knowledge.
1. I am an attorney licensed in Massachusetts appearing in this matter pro hac vice on
behalf of Timothy Blixseth.
2. Attached hereto as Exhibit 1 is a true and correct copy of a financial statement of
Edra Blixseth dated August 15, 2008, two days after CIP Yellowstone Lending, LLC, (CIP
YC) loaned Edra Blixseth $35 Million Dollars (the Predatory Loan) on August 13, 2008
represented by two 48 day promissory notes secured by Community assets she received from
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the Blixseth Marital Settlement Agreement (MSA) on August 13, 2008. The secured
Community assets are Porcupine Creek, (PC), and the Family Compound at the
Yellowstone Club, (YC). I first received Exhibit 1 from Gary Peters shortly before the
commencement of phase 1 of the AP 14 trial. I am informed and believe that this document
was subsequently recovered from the Edra Blixseth computers in the possession of Jory Russell,
(hereinafter the Russell computers). On said financial statement, Edra Blixseth (EB) records
the current market value of PC to be $207 M; the Family Compound at $40 M; Farcheville
at $63 M; and the YC to be $500 M, for a total of $ 810 M.
Family Compound these assets are owned by BGI. EB states her Net Worth, based on her
sole ownership of BGI, on Exhibit 1 as $849.5 M, and her projected net cash flow for 12
months at $40. 4 M, derived from PC, YC, Big Springs Realty, Blixware and BFI
revenues. As hereinafter recited, I believe that Exhibit 1 may be based, in part, both on the
control exercised by SB and his entities based on the Predatory Loan; and the lending
advisory control exercised by SB in the planning and implementation of the Predatory Loan.
3. Attached hereto as Exhibit 2 is a true and correct copy of a Post -Settlement
financial statement dated July 15, 2008. I am informed and believe that Exhibit 2 was recovered
from the Russell computers and that the Post-Settlement reference relates to EBs financial
status after the scheduled closing on the MSA based on the division of marital Community assets
based on the executed MSA on June 26, 2008, which closing was originally scheduled for July
3. 2008; and which closed on August 13, 2008. I am informed and believe based upon emails
recovered from the Russell computers that Exhibit 2 or a similar financial statement was given to
Samuel Byrne (SB), and or Cross Harbor Capital Partners, (CHC), and / or CIP YC, before,
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on, or after July 15, 2008. I believe based on recovered documents from the Russell computers,
and inferences derived from said documents that there are deleted or destroyed documents from
the Russell computers that may be in the possession of SB or his entities, CIP YC and CHC; and
that said deleted documents may relate to Exhibit 2, or a similar version thereof, as part of the
Deal between EB and SB to use the $35 M Predatory Loan to plan, implement and transfer
control of the YC to SB and CHC. Exhibit 2 states an EB Net Worth of $1.3 B based on a
YC value of $900 M. I believe that the $900 M Post- Settlement value on the YC may be
based on the Total Net Value Credit Suisse appraisal method, previously condemned by the
court in its Interim Order.
4.
Cross Harbor Capital Partners dated August 1, 2008, approximately two weeks before the MSA
and Predatory Loan closing. Exhibit 3 states on p. 3 that CHC has RECEIVED All divorce
settlement related documents; required Detailed, updated financial statements for EB (the
inference is that EB had previously provided financial statements and updates were needed);
required All underwriting materials provided to PEM, Archer and other Potential Sources of
Capital establishing that CHC required complete and thorough knowledge and possession of
All documents relating to EBs financial status based on her submissions to other lenders (the inference, coupled with several emails, is that Exhibit 2 had been submitted to other lenders
and was also possessed by CHC before the closing). Significantly, CHC required full
recognition of its existing rights through the execution of the previously agreed upon Letter
Agreement. I am informed and believe that said Letter Agreement has not been recovered
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from the Russell computers and remains concealed or destroyed. Exhibit 3 states on p. 4 that
CH Will control distributions of YC working capital. This establishes SB control over
the YC as a component of the Predatory Loan. Exhibit 3 also establishes SB and his entities
assumption of a position as a Lending Advisor to EB as contained in numerous statements in
their Discussion including: (i) who, why, the amount, and how to Secure additional financing
from Archer Capital Management ($55.1MM,net) and how it gets paid; (ii) the sale of
Farcheville and to whom and how to distribute the proceeds and make Additional EB
Investment directly into YC with the CH estimates to cover current accounts payable and
projected operations through 10/31/2008"; and the planning of a YC Preferred Equity Offering
and YC Governance based on a detailed joint venture essentially controlled by SB and his
entities with detailed provisions subsequently contained in the Agreement to Form. Exhibit 3
states that based upon the SB and CHC analysis, planning, and implementation control
mechanisms, early stage analysis indicates future net cash flow to EB of $600 + MM.
The compelling inference, particularly based upon the last representations of CHC is that SB /
CHC were using their insider Predatory Loan position as of August 1, 2008 to take
complete control of YC with full knowledge of EBs financial position, and representing a $600
M net cash flow to EB in order to obtain control. I am informed and believe that based upon
existing case law, and related facts inferred from existing emails and documents recovered from
the Russell computers, that documents remain concealed or destroyed relating to said
representations by CHC; and that SB and CHC made said representations, specifically the $600
M net cash flow to EB, based upon concealed and / or destroyed documents with knowledge
of EBs financial status based upon her liabilities disclosed in Exhibits 1 and 2; and contained in
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Attached as Exhibit 4 is an email chain between EBs consultant Jim Goldfarb, Jory
Russell and EB lawyers from the Liner law firm handling the Predatory Loan transaction,
stating that as of July 21, 2008, ten days before the creation of Exhibit 3, CHC was able to
exercise control over EBs lending status with PEM through the CHC mortgage on the
Family Compound, which is not reflected on the July 15, 2008 financial statement prepared with
Goldfarb and Liner just six days before. The only lien listed is LeMond. According to Exhibit
1, after the closing on August 13, 2008, CHC owned a first mortgage ($13 M), LeMond a second
($13.5 M) and CHC a third ($22 M) for a total of $48.5 M on the Family Compound then valued
at $40 M. The inferences are that there exist emails between either the Liner lawyers and / or
Goldfarb on the one hand, and the SB lawyers on the other, during the period between June,
2007 - the date of the LOI to sell the YC to SB and the present, particularly in the summer of
2008, which emails have not been recovered - or produced before phase 1 of the trial.
6. Attached as Exhibit 5 is a internal MEMORANDUM dated September 5, 2008,
by and among SB and CHC principals and lawyers, circulated just weeks after the CHC
Predatory Loan, based on an analysis of the Credit Suisse Predatory Loan, and inferring that
said analysis predated the CHC Predatory Loan, based upon other emails and documents.
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Significantly, the MEMORANDUM is dated just 4 days after EB had already defaulted on
September 1, 2008 on an interest payment inserted into the Predatory Loan thereby causing an
almost contemporaneous event of default on the promissory note and deed of trust. Exhibit 5
contains graphs planning and implementing total control over the YC and EB based on her
already defaulted loan status; but more importantly its control is based on their pre-planned
default" of YC under the Credit Suisse loan by making their Predatory Loan to transfer control
and ownership from Tim Blixseth to EB.
Restrictions on Change of Control (Sections 5.19) That Section refers to the Credit Suisse
Predatory Loan requiring that BGI or Tim Blixseth must at all times directly or indirectly
control the YC; and own, directly or indirectly, 51 % of the YC , and then references a
proposed Executive Committee controlled by CHC as being a breach of the Credit Suisse loan.
Exhibit 5 then states: Note that while the 51% ownership test will be met as to YC and YD,
this is not the case now with respect to Big Sky Ridge, LLC. I believe that the effect of CHCs
own analysis is an admission that CHC knew when it made its Predatory Loan to EB it was
creating a default on the Credit Suisse loan permitting it to put the YC into bankruptcy; and
CHC knew that EBs financial status was such based on Exhibits 1-3 and subsequent Exhibits
herein that she would default as of September 1, 2008 thereby obtaining complete control over
the YC. Mr. Blixseth requires the production pursuant to his subpoena to CHC and SB of all
emails and documents relating to Exhibit 5.
7. Attached as Exhibit 6 is the loan closing document reflecting complete control by
CHC of the use of virtually all of the Predatory Loan proceeds.
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8.
Attached as Exhibit 7 is an email chain between EB, and SB and others, starting on
March 11, 2008, just two weeks before SB terminated the YC sale on March 26, 2008, and
while EB had her agent Gary Peters were negotiating with SB to make their own deal with SB.
EB writes: Thanks so much for the follow-up. I will wait to hear from you what you come up
with both in regard to your (and group) interest in moving forward on something and/or
CrossHarbor/Sam. The March 25, 2008 email between TB and SB references SBs bankruptcy
plan. The Harris, Arenson, Kidd email dated October 15, 2008, a month before the YC
bankruptcy filing demonstrates CHC control with its agent, DLC, based on DLCs plan. Two
days later, SB tells his agent, Joseph Harris that SB is going to write the plan tonight to solve
the entire YC debacle. It could be brilliant. Harris then says it is possibly evil and it could be
worth over a billion dollars....I hope it includes the dip and filing by Friday. There are no
emails and documents in which Byrne sent the evil plan. Just 4 days before said emails, on
October 21, Chris Wright, a present member of the ad hoc Committee, having votes on the
Liquidating Trust, emailed EB stating But right now we arent even mentioning bankruptcy or
a DIP loan. Upon information and belief, I believe said not mentioning refers to a plan
between CHC and SB not to disclose to the members the planned bankruptcy reflecting control
over all aspects of the planned filing by CHC; and the complete relinquishment by EB who
states: thats a good point....i dont care you all decide the when of this. Based on this email
chain and other emails referencing emails that have been destroyed or concealed, including the
unproduced Letter Agreement referenced in Exhibit 3 hereto, I believe that both SB and CHC
are in possession of emails and documents relating to a separate deal between EB and SB and
CHC which occurred between March 11, 2008 and the CHC Predatory Loan. The compelling
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inference is that EB gave up control and ultimately ownership to SB and CHC of over $700 M in
assets based on the values in Exhibit 1 of the YC and PC for a Predatory Loan of $35 Million
Dollars. In addition to the $600M net cash flow to EB representations made in Exhibit 3, the
compelling inference is that Samuel T. Byrne made undisclosed promises to EB for her to
forfeit over $650 Million Dollars of Blixseth marital Community assets.
9. Attached as Exhibits 8 through 11 are true copies of emails representing just a
sampling of numerous emails containing evidence that: (a) EB planned to falsely accuse Tim
Blixseth, and hit him from all sides and obtain control of the YC in violation of Los Angeles
Superior Court Orders now merged into the final judgment of divorce; (b) EB and SB
misleading the B shareholders; (c) an email with an unrecovered attachment with EB stating
never tell that I am sending you all this as part of EBs interference with Los Angeles Superior
Court orders now merged into the final judgment of divorce. To my knowledge we have not
recovered the missing attachment. These issues relating to bad faith collusion between EB and
SB are now on appeal.
10.
Attached as Exhibit 12 is an email whereby Byrne and DLC are agreeing that EB
committed perjury before this court regarding issues relating to CHC and DLC control of the
YC.
As seen above in Exhibits 1 - 3, SB and CHC did in fact obtain control over the YC
through the SB Predatory Loan; and thus, SB and DLC knew she was committing perjury in
order to have this Court approve their bankruptcy plan including the Liquidating Trust to sue
Tim Blixseth.
bad faith and exculpation, and Tim Blixseths rights to cross-claim against SB, CHC and
Credit Suisse, al of which issues are now on appeal.
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11.
and make a separate deal with SB on March 21, 2008, five days before SB terminated the YC
sale, and in violation of Los Angeles Superior Court Orders and in contradiction of her sworn
testimony to said Court on that same date that she was not interfering with the sale. These issues
are now on appeal relating to SB exculpation and bad faith.
12.
Attached as Exhibits 14 and 15 are two fabricated Grand Jury Target Letters.
Upon information and belief, these letters were fabricated by Dennis Montgomery acting in
collusion with his partner, EB; and used by EB with the media and SB after January 15, 2008,
the date the YC sales contract was signed. They were used by EB to interfere with and
ultimately to kill the YC sale in violation of Los Angeles Superior Court Orders, now merged
into the Final Judgment.
13.
Upon information and belief, the following facts and events contained in the
following chronology are true. This chronology relates to the Target Letters and how they
were used to interfere with the YC sale by TB to SB. The chronology also relates to the EB and
Dennis Montgomery relationship and how that relationship impacts the current case issues,
including the computer hacking by Montgomery into Tim Blixseths and Michael Flynns
computers throughout these proceedings thereby interfering with the attorney client relationship
warranting dismissal of all of the claims against Tim Blixseth. This Court previously denied said
motion but new evidence is emerging relating to said computer hacking. Finally, the
chronology relates to the pattern of fraudulent loans procured by Edra Blixseth to finance a plan
to obtain control of the YC, including the fraudulent Wachovia loan as it relates to
Montgomerys technology, now publicly exposed as involving a massive fraud on the U.S.
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government. The fraudulent technology is owned by EBs company, Blxware. The Blxware
valuation on EBs financial statements is approximately $22 M. This is fraudulent. Based upon
personal knowledge, and information and belief, Blxware possesses no marketable technology,
the technology as represented does not exist, it was subject to an injunction when EB pledged it
to Wachovia; and Ms. Blixseth knew throughout the period in which she submitted loan
applications and financial statements to the various lenders that the purported Blxware
technology did not exist, and that Montgomery was engaged in computer hacking for her benefit
. EB paid Montgomery almost $6 Million dollars between April, 2006 and February, 2009 for
non-existent technology, which raises the inference that it was paid to perform computer
hacking.
March 1, 2006:
The FBI raided Dennis Montgomerys house searching for certain noise
filtering and compression software and hard drives he took from
eTreppid Technologies, and alleged classified information, involved in
then pending litigation in Reno, NV. Later, in June, 2007, when
Montgomery was subpoenaed to produce certain bribery emails before
a Washington D.C Grand jury, which he claimed proved that Warren
Trepp bribed NV Governor Gibbons, Montgomery took the boxes of
software and hard drives to EBs residence, Porcupine Creek. The
compelling inference is that Montgomery took approximately 23 boxes
filled with hard drives from eTreppid to conceal his fraud on the U.S.
government over the previous several years, because the hard drives may
have proved Montgomerys lack of source codes with respect to
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EB attempted to get the U.S. Gov to buy the software using her purported
political contacts with Cheney and others in the Bush Administration in
order to obtain a government contract. EB isolated Tim Blixseth from the
deal. Cheney and the Bush Admin rejected EB and Montgomery. EB
then planned and implemented a media campaign against Gibbons and
the Republicans through her contacts at the Wall Street Journal and
NBC in order to pressure the Bush White House using Montgomerys
fabrication of two purported bribery emails allegedly evidencing
Warren Trepps bribery of Gibbons to get government contracts. These
are the same media contacts, EB and Montgomery contacted when she
used the fake Grand Jury Target Letters to kill YC sale in March, 2008.
The FBI in DC later concluded (in 2009) that Montgomery fabricated the
emails and dropped the investigation of Gibbons and Trepp. EB
employed the law firm of Skadden Arps to deal with the bribery email
Grand Jury and the required production of the bribery emails. The same
law firm represented Credit Suisse in the Montana bankruptcy
proceedings
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in early November 2006, the weekend before the elections. The WSJ
published a front page article on Nov. 1, 2006 just before November
elections in which Gibbons was running for Nevada governor. The WSJ
later published two more articles based on the alleged bribery using
Montgomery documents. Said evidence supports EBs use of the media to
get what she wants. In March - April, 2008 as supported by the emails
attached hereto, she used the media to attack Tim Blixseth resulting in
damages to the YC.
December, 2006:
April, 2007:
EB learned TB had made a tentative deal with Sam Byrne (SB) to sell
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July
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based on their sworn affidavits that the YC was appraised at 1.2 Billion.
This was based on the Total Net Value appraisal method. Klar admitted
dealing with LeMonds counsel, who was then suing Tim Blixseth and the
YC. Klar knew LeMonds interests were adverse to the marital
community.
August 14, 2007:
During this time frame, SB informed Robert Sumpter that he knew about,
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and /or had seen, and /or had possession of the fake Target Letters.
Sumpter called TB and told him of the SB conversation relative to the fake
target letters. TB immediately called SB and demanded an explanation and
source of the letters. SB initially refused to disclose, and upon being
pressed, stated that EB has read them over the phone to SB. SB told TB
that this was a big problem as he was obligated to advise his lenders which
could kill the deal. SB sought adjustments and reduction in price. SB
advanced plan to put the YC into bankruptcy.
March, 2008:
EB borrowed $5 Mil from Wachovia Bank; and $8 Mil from First Bank &
Trust. The Wachovia loan documents evidence extensive and intentional
fraud including affirmative falsehoods about her involvement in litigation
adversely impacting her financial status. EB also directly concealed the
fact that the collateral she pledged for the loan was in fact subject to a
preliminary injunction in the concealed litigation. EB and her lawyers and
bookkeeper, Jory Russell used financial statements claiming an $800 M
net worth based on the TNV appraisal method while negotiating with
Byrne to put YC into bankruptcy.
EB sent Gary Peters to meet with SB in his Boston office to make a separate
deal while she appeared in divorce court on that very day testifying that she
was not interfering with the sale; and was again ordered not to interfere with
the sale.
SB terminated the YC. Sale. Two days later EB planned a massive media
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March, 2009:
June 24 - July 8, 2009: EBs bookkeeper, Jory Russell was caught under oath destroying Edras
files on two computers. Later, some of the files are forensically
recovered and provide evidence of concealed or destroyed documents.
See below.
September October, 2009:
October, 2009:
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December, 2009:
TB and his technology expert continue to recover deleted emails from the
Russell computers, including Exhibit 3 to this Affidavit.
On May 14, 2009, on the motion of Western Capital Partners, this Court ordered
the 2004 exam of Jory Russell, Edra Blixseths primary financial assistant. Pursuant to said
Order, Russell was ordered to produce electronic and paper documents including complete
copies of computer hard drives and other electronic storage media relating to Edra Blixseth as
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On June 13, 2004 Russell was served with a subpoena requiring his attendance on
June 23, 2009 for examination under oath; and the production of all documents, emails,
financial records and statements, bank records relating to Edra Blixseth; and specifically
including complete copies of computer hard drives and other electronic storage media which
contain any and all accounting, email, and financial information relating to Edra Blixseth in
Russells possession as described in the subpoena and in the Order incorporating the Motion.
16.
Within a day or two after receiving the subpoena, Russell spoke to both Gary
Deschenes, Ms. Blixseths personal bankruptcy lawyer, and to Edra Blixseth. (Tr. 11.1.09, p.
30, L. 18-20. He informed them that he had received the subpoena, that he possessed documents
stored on computers responsive to the subpoena; and that I was printing off the documents.
(Id p. 30 L. 11 to p. 33, L. 11). Russell testified that during the week before his attendance I
would read the subpoena and then print out responsive documents including emails. (Id p. 35 L.
8-15). He printed out about a foot and a half of responsive documents before he ran out of
paper. (Id. P. 36 L. 12-16). He had possession of two computers containing materials responsive
to the subpoena, a lap top and a desktop, but only printed from his desktop before the June 24,
2009 exam. (Id. P. 38 L. 8-12)
17. Mr. Deschenes did not file a motion to quash or for a protective order.
18. Mr. Deschenes did not represent Russell at any time in these matters. He represented
Edra Blixseth at all times material herein. Thus, at no time did his instructions to Russell as
recited herein fall within the attorney client privilege.
19. Russell first testified on June 24, 2009. That volume was designated Vol. 1 in the
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Edra Blixseth bankruptcy proceedings. There are also two additional volumes of his testimony
in the Edra Blixseth bankruptcy dated July 8, 2009 and August 5, 2009; and designated Vol. II
through III. There is a fourth day of deposition taken on November 1, 2010 in AP 14. In this
Affidavit, each volume is designated by date. In the June 24, 2009 examination, as he later
admitted on July 8, 2008, neither he, nor Mr. Deschenes, nor Ms. Blixseth, disclosed his then
possession of either the lap top or the desk top, or the foot and a half of documents he had
printed out from the desktop, although he knew they were in his possession and responsive to
the Courts Order. (Tr. 8.8.09, p. 13 L. 7 to p. 14, L. 16). He also knew there was a scheme in
place to conceal the computers and the responsive documents orchestrated by Mr. Deschenes.
Id. P. 13 - 30. See specifically Tr. 8.8.09 at p. 15, L. 21 to p. 18 L. 18 for the possession and
non-production of the subpoenaed documents. As hereinafter recited, Russell only produced
about 4" of documents from his wifes computers which were virtually the entire subject of his
short 52 page deposition permeated with attorney client privilege assertions designed to conceal
the un-produced computers and documents.
20. On the night of June 23, 2009, in preparation for his deposition, Russell picked up
Mr. Deschenes at the airport and drove him to Ms. Blixseths estate, Porcupine Creek.
According to Russell, he informed Mr. Deschenes and Edra Blixseth that evening that he had in
his possession in the trunk of his car the lap top and a bankers box with about a foot and a
half of documents that he had printed out during the previous week from his desktop. In his
July, 8 2009 testimony, he swore that there were different documents on his desktop and lap top
that were subject to the subpoena; that he only printed from his desktop; and the lap top and
desktop were not synched. Tr. 7.8.09, p. 23, L 14 - 22.
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21.
On the night of June 23, 2009, Mr. Deschenes then requested Russell to give them
the lap top and the printed documents because I was told that was not my property. Tr. 7.8.09,
p. 35 L. 3 -22. The desktop was still at his home; (Tr. 11.1.09, p. 51 L. 24-25; from which he
had printed about a foot and a half of documents that he knew were responsive but he gave to
Mr. Deschenes and Edra Blixseth the evening before his deposition on June 24th; but now
wasnt sure if the computers were synched; or who told him not to produce the documents and
computers, Mr. Deschenes or Ms. Blixseth. Tr. 11.1.09 p. 38 L. 8-15; p. 52, L. 4 to p. 54 L. 24.
22.
testimony between July 8 and November 1. He admits that he was at Porcupine Creek, one or
two days before Mr. Deschenes arrived printing off documents off Edra Blixseths printers that
were also not produced on June 24th, but were supposedly part of the foot and a half. Tr.
11.1.09 p. 55, L. 14-25. But in his November 1 testimony, he said that he had told Blixseth and
Deschenes on the night of June 23, 2009 before his deposition that the stack of documents
representing the foot and a half in the bankers box from his trunk were from the lap top.
Tr. 11.1.09, p. 54, L. 7 to P. 55 L. 13. In his three days of testimony after June 24, 2009, July 8,
August 5 and November 1, 2009, Russell gives conflicting testimony on what he destroyed and
when. On August 5, 2009, he testified that he destroyed everything pertaining to Edra Blixseth
on the desktop; and I deleted copies of everything that were on Edras lap topor yeah,
Edras lap top, the lap top that I was using. Tr. 8.5.09 280:10 to 282: 1.
23.
The first mention of being accused of theft of the documents came up in Mr.
Deschenes presence. Tr. 11.1.09 , p. 56 L. 5-20. Russell testified he had no recollection of any
plan to shut down his deposition the following day being discussed but he remembers a John
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Roselli showing up at his deposition to put his deposition on hold.. Tr. 11.1.08 p. 57, L. 14 to
p. 59 L. 5. The next day he deleted documents off his desktop. Tr. P. 59, L. 6-11. Mr. Russell
then asked for a break. Id at p. 61, L. 18.
24.
Russell relied on Mr. Deschenes not to produce the documents or the computers
on June 24 at his deposition. Tr. 66 L. 3 to p. 67 L. 3. Neither Russell, nor EB, nor Mr.
Deschenes disclosed on June 24, 2009, that just a month before that, on May 19, 2009, five days
after the court order, EBs business partner, Montgomery, delivered a server at Porcupine
Creek, called the Blxware/Blixseth.com and related domain names containing thousands of
emails, and with what Russell now claims contains everything from both computers in his
possession. Tr. 11.1.09. That server has never been produced; and apparently, has
disappeared..
25.
Russell also destroyed two USB hubs by throwing them in the garbage
containing accounting software provide by Pat Yarborough, EBs bookkeeper, and also
documents responsive to the Western Capital subpoena that were on the lap top. Tr. 11.1.09 p.
70 L. 10 to p. 71, L. 13.
26.
In his July 8th testimony, Russell admitted destroying documents off both the lap
top and desktop and that they were not synched. Tr. 7.8.9, p. 38, L. 11 to p. 39, L. 18.
27.
He also stated that on the night of June 23, he then proceeded to print out more
documents from the lap top that evening while in the presence of Mr. Deschenes and Ms.
Blixseth, and after printing for some time, he stopped. At some time during this entire episode
of spoliation, he also put additional documents on a USB hub which he filled; and later threw in
the garbage.. Tr. 11.1.09 p.70, L. 10 top p. 81 L. 13. It is unknown what happened to the
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printed documents printed out the evening of June 23, 2009; and the chain of custody of the
foot and a half is unknown..
28.
At the June 24, 2009 exam, Mr. Deschenes engaged in what can only be called an
intentional charade using Russell as a dupe. Neither Russell or Mr. Deschenes ever mentioned
the two computers, or the foot and a half of documents given to him the night before by
Russell, or the 3' of documents printed out the night before from the lap top given to Blixseth /
Deschenes that evening. Instead, Mr. Deschenes had Russell produce about 4 inches of
emails mostly relating to attorneys, which he claimed were from his wifes computer, which
Deschenes then asserted the attorney client privilege on. (Tr, 6.24.09 pp. 1-51). The production
of the 4" of printed documents from the wifes computer constitutes an admission that Russell,
Mr. Deschenes and EB had a duty to produce the other computers and printed documents.
29.
Mr. Deschenes then carried on this Roselli charade in the context of the 4" of
produced documents, the attorney client privilege, and a privilege log in what is shocking
deception relating to the subpoenaed computers, the subpoenaed foot and a half of documents
that Russell actually possessed, all given to him the night before while using the 4" of
documents as a cover, and the subsequent destruction of the contents of the computers the
following day. Tr. 6.24.09 p. p. 4o to 50. Specifically, under the cover of the 4" of emails
relating to the attorney client privilege and not providing the non- privileged documents, with
Western Capitals lawyer who were demanding that they be given to the court reporter at the
June 24th deposition, Mr. Deschenes stated at p. 46 L. 10-12:
No. Were not going to give them to you today because of the other deal. We dont
want to have these things produced if were....
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The other deal is the Roselli charade. The compelling inference is that Mr. Deschenes knew
that the entire June 24th charade with Roselli , and the 4" of documents produced after Russell
had produced everything the night before, was a cover for the violation of the subpoena and the
court order in order to give Blixseth and Russell time to destroy evidence, which he admittedly
did. The Western Capital lawyers heard Edra Blixseth state words to the effect that Sam is ok
with the deal inferring that Sam Byrne was the source of funding to buy out the Western
Capital note. Additionally, EBs partner, Dennis Montgomery, apparently then in conflict
with EB, on June 25, 2009, the day after the deposition, called Tim Blixseth and told him that
the Roselli intrusion into the deposition was a charade to destroy evidence off the computers,
which Mr. Blixseth immediately reported to her trustee, Mr. Samson. Montgomery also texted
TB during that time frame that they engaged in the foregoing conduct so they could buy time to
erase emails. Without this tip from Montgomery, it is unlikely that the concealment of the
computers and subsequent destruction would have been uncovered.
30. The evidence suggests that the Rosselli / Byrne charade of buying off Western
Capital Partners was a scheme to buy time to conceal and destroy evidence. According to
Russell in a conversation with the affiant, and according to Montgomery in a conversation with
TB, Byrnes Vice-president, Matthew Kidd was present at Porcupine Creek throughout the June
24, 2009 deposition and subsequent meetings. The inference and circumstantial evidence is that
there was no real intention to pay Western Capital Partners. Following the suspension of the
deposition, Russell admittedly spent the next day destroying documents on his desktop and
his lap top. (Tr. 7.8.08 p. 23 L. 14 - p. 24 L. 12; Tr. 8.5.09, supra). Contrary to his testimony on
November 1, 2009 that he only printed from his desktop, (see above), on July 8, 2009 he had
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Beginning on at least June 18, and continuing on June 22, and 23, 2009, at least
three days after informing Mr. Deschenes and Ms. Blixseth of what he was doing to respond to
the subpoena, Russell may have also began deleting, concealing or destroying electronically
stored files.
32.
Between the date of the Courts Order on May 14, 2009 and June 24, 2009, Russell
had possession, custody and control of at least the lap top computer and the desktop computer
containing hundreds of thousands of electronically stored documents relating to Edra Blixseth
and required to be produced pursuant to the subpoena. Neither he, nor Mr. Deschenes, nor
Ms. Blixseth complied with the courts order or the subpoena. At the time he only took
advice from Mr. Deschenes. And Ms. Blixseth.
33. According to his testimony, Mr. Russell was the Vice President of Business
Development for Ms. Blixseths software company, Blxware, and the Director of Business
Operations for Edra Blixseth personally, who took direction from Edra Blixseth on all
matters. (Tr. 11.1.09 p.25 L3-4). Russell had not worked for Ms. Blixseth for about 3 or 4
months before the deposition; but he still possessed the lap top computer and the desk top
computer containing materials sought in the subpoena. (Id p.32 L. 3-20).
34. . Russells testimony as to who owned, and /or had the right to possess the lap top
computer as of June 24, 2009, and the instructions he received from Mr. Deschenes and Ms.
Blixseth on these issues evidences concealment, destruction and obstruction; ( Id 37-57).
35 . The Russell testimony is very specific that one or both of them told him not to
produce either the foot and a half of documents or the lap top for his deposition the following
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day; (Id. 52 L. 9-25) ; and that the documents (Id 56 L. 9-12) was [sic] no longer my
property and I shouldnt have it. (Id. L. 19-21). Gary Deschenes specifically told him that the
lap top was not Russells property the night before he was obligated by Court order to produce
copies of its hard drive. Mr. Deschenes knew that the Order to produce copies made both
the actual ownership and possession of the lap top irrelevant because copies were required,
and regardless of who had the right to possess the laptop - Ms. Blixseth or Russell, he obstructed
the discovery process. The fact that the destruction of material on the computers occurred the
next day nails the coffin shut on their collective intent.
36.
Neither the desktop or lap top computers belonged to Ms. Blixseth. They
belonged to YCW and Blxware. No objection or motions to quash were filed by either entity.
Russell was properly in possession of both. They each contained material required to be
produced. . Russell printed out the entire foot and a half from the desktop which did not belong
to Ms. Blixseth. Russells conflicting testimony as to what computers from which he printed
unproduced documents evidences concealment and mens rea. Mr. Deschenes did not represent
either Blxware or YCW.
37. Prior to the night of June 23, 2009, neither Ms. Blixseth, nor Mr. Deschenes, nor
Blxware, nor YCW , or its Trustee, or anyone representing EB, had requested the turnover of the
computers, or any documents relating to Edra Blixseth, notwithstanding Russells direct, routine
and consistent assistance for the previous nine months in assisting Blixseth and her lawyers in
finding documents and providing them to her lawyers, including Mr. Deschenes, and also to Mr.
Byrne and his lawyers and to the lawyers in the YC bankruptcy. (Exhibits to Russell deposition
and emails sought to be destroyed by Russell which have been forensically retrieved from the lap
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Signed under the pains and penalties of perjury this 13th day of January, 2010 under the
laws of the United States.
28
EXHIBIT 27
Based upon information known to Defendants as of this date, the following individuals
are potential witnesses or are likely to have discoverable information that Defendants may use to
support their defenses:
1. Dennis Montgomery.
1
Subjects of Discoverable Information: the factual basis for his claims and asserted
damages in the Complaint, including, but not limited to: whether the software he
provided to the federal government was a hoax; whether he staged phony
demonstrations of his software to government officials; whether he was an
incorrigible gambler; Montgomerys residences in Nevada, California, Washington,
and Florida; Risens interview of Montgomery; employment or contractor positions
and opportunities from 2008 to the present; information about Montgomerys
interview with Lisa Myers from NBC News about Gibbons; Montgomerys health
claim of damages.
2. Brenda Montgomery.
Subjects of Discoverable Information: the Montgomery residences in Nevada,
California, Washington, and Florida; Montgomerys health claim of damages.
3. James Risen. Risen may be contacted through Defendants counsel, Davis Wright
Tremaine LLP.
Subjects of Discoverable Information: newsgathering regarding Chapter 2 of Pay Any
Price: Greed, Power, and the Endless War (Chapter 2); Risens reliance on court
records, reputable news reports, interviews with sources, including Montgomery, for
statements about Montgomery; Risens belief in the truth of the statements in Chapter
2 about Montgomery.
4. Bruce Nichols, Senior Vice President, Trade & Reference at HMH. Nichols may be
contacted through Defendants counsel, Davis Wright Tremaine LLP.
Subjects of Discoverable Information: information regarding HMHs editorial review
of Chapter 2 on Montgomery and information about Risens independent contractor
status.
5. John Brennan, Director of the CIA, former head of the Terrorist Threat Integration
Center, located in or near Washington, D.C.
Subjects of Discoverable Information: the Terrorist Threat Integration Centers use of
Montgomerys information and decision to pass Montgomerys information on to
senior government officials; senior government officials use of Montgomerys
information; and the basis for testimony in his confirmation hearings for Director of
the CIA that Montgomerys software was determined not to be a source of accurate
information. (Chapter 2 at 47.)
6. Jose Rodriguez, former head of the CIA Counterterrorism Center, located in or near
Washington, D.C.
Subjects of Discoverable Information: information showing that Montgomerys
software was revealed to be a hoax, and that the Counterterrorism Center very
skeptical of Montgomerys intelligence and viewed it as crazy.
2
7. Saxby Chambliss, former U.S. Senator and vice chairman of the Senate Intelligence
Committee, and relevant former staff members.
Subjects of Discoverable Information: information regarding written questions
Senator Chambliss sent Brennan in his confirmation hearings about Montgomerys
intelligence and documents the senator and staff reviewed showing that CIA
officials derided Montgomerys information and that Montgomerys intelligence was
bogus.
8. George Tenet, former Director of the CIA, located in or near Washington, D.C.
Subjects of Discoverable Information: information showing that Montgomerys
software was revealed to be a hoax; that senior government officials considered
shooting down passenger jets based on the software; and that Tenet allowed
[scientists] to circumvent the CIAs normal reporting and vetting channels, and
rushed the raw material fed to the agency by Montgomery directly to the president.
(Chapter 2 at 43-44, 46.)
9. Samantha Ravich, former advisor to Vice President Dick Cheney, located in or near
Washington, D.C.
Subjects of Discoverable Information: information about her meeting with
Montgomery about his software, and information showing that Risen interviewed her.
(Chapter 2 at 51.)
10. Frances Townsend, former counterterrorism official on the National Security Council.
Subjects of Discoverable Information: information showing that Townsend discussed
with a National Security Council lawyer that the president had authority to shoot
down airplanes believed to be terrorist threats and that Townsend considered whether
it might have been time to exercise that authority in late 2003 based on
Montgomerys intelligence. (Chapter 2 at 45.)
11. Current and former staff members, U.S. Senate Select Committee on Intelligence.
Subjects of Discoverable Information: information showing that committee staff
contacted the CIA about Montgomerys technology and the CIA was very skeptical
of it at the time.
12. Current and former CIA officials, located in or near Washington, D.C.
Subjects of Discoverable Information: information about working with Montgomery
regarding his purported software and the use of Montgomerys information;
information showing that that the purported software was fake; and that senior
government officials considered shooting down passenger jets based on the software.
13. Current and former U.S. Special Operations Command officials.
20. Aram Roston, former Playboy and Defense News reporter, located in Washington,
D.C.
Subjects of Discoverable Information: information regarding the Playboy and Defense
News articles about Montgomery and his software, including, but not limited to,
whether those articles were subject to retraction.
21. Michael Flynn, Montgomerys former lawyer, located in California.
Subjects of Discoverable Information: information showing that Montgomerys
software was revealed to be a hoax; that Montgomery staged phony demonstrations of
his software to government officials, that Montgomery was a fraud and conman; and that he provided information to Risen before publication. (Chapter 2 at
36.)
22. Tim Blixseth, located in Washington.
Subjects of Discoverable Information: his belief that Montgomerys software was not
real; his observation of a demonstration of Montgomerys software in Palm Springs,
California; and information showing that he provided information to Risen before
publication. (Chapter 2 at 50-52.)
23. Edra Blixseth, Montgomerys former business partner in Blxware, located in
California.
Subjects of Discoverable Information: Blixseths business dealings with Montgomery
and information showing that Montgomerys software was revealed to be a hoax.
(Chapter 2 at 50-52.)
24. Paul L. Haraldsen, Special Agent, Air Force Office of Special Investigations.
Subjects of Discoverable Information: information regarding the investigation by the
Air Force Office of Special Investigations into Montgomerys software at eTreppid.
25. Thomas A. Smith, Special Agent, Air Force Office of Special Investigations.
Subjects of Discoverable Information: information regarding the investigation by the
Air Force Office of Special Investigations into Montgomerys software at eTreppid.
26. Michael A. West, FBI Special Agent.
Subjects of Discoverable Information: information regarding the FBI investigation
into Montgomerys software at eTreppid
27. Warren Trepp, Montgomerys former partner in eTreppid.
Subjects of Discoverable Information: interviews with the FBI and Air Force Office
of Special Investigations discussing the phony demonstrations Montgomery staged
for government officials and his belief that Montgomerys software was not real.
28. Sloan Venables, former e-Treppid employee.
Subjects of Discoverable Information: interviews with the FBI and Air Force Office
of Special Investigations discussing the phony demonstrations Montgomery staged
for government officials and his belief that Montgomerys software was not real.
29. Patty Gray, former e-Treppid employee.
Subjects of Discoverable Information: interviews with the FBI and Air Force Office
of Special Investigations discussing the phony demonstrations Montgomery staged
for government officials and her belief that Montgomerys software was not real.
30. Jesse Anderson, former e-Treppid employee.
Subjects of Discoverable Information: interviews with the FBI and Air Force Office
of Special Investigations discussing the phony demonstrations Montgomery staged
for government officials and his belief that Montgomerys software was not real.
31. James Bauder, former e-Treppid employee.
Subjects of Discoverable Information: interviews with the FBI and Air Force Office
of Special Investigations discussing the phony demonstrations Montgomery staged
for government officials.
32. Joseph Liberatore, Air Force official, located in or near Washington, D.C.
Subjects of Discoverable Information: information about the government contracts
Montgomery received from the Air Force, and information regarding Montgomerys
purported software. (Chapter 2 at 52.)
33. Donald Kerr, former chief of the CIAs Science and Technology Directorate any
Deputy Director of National Intelligence, located in or near Washington, D.C.
Subjects of Discoverable Information: information regarding Montgomerys
purported software. (Chapter 2 at 42.)
34. Jim Gibbons, former member of the House Intelligence Committee and Governor of
Nevada.
Subjects of Discoverable Information: information regarding Gibbons early
advocacy for Montgomerys software; Montgomerys charges of bribery against
Gibbons in connection with the sale of Montgomerys software (from which Gibbons
was cleared); and the email Montgomery allegedly fabricated to support his
allegations against Gibbons. (Chapter 2 at 38-39, 49-50.)
6
35. Abbe Lowell, former Congressman Jim Gibbons attorney, located in Washington,
D.C.
Subjects of Discoverable Information: Montgomerys charges of bribery against
Gibbons in connection with the sale of Montgomerys software (from which Gibbons
was cleared); and the email Montgomery allegedly fabricated to support his
allegations against Gibbons. (Chapter 2 at 50.)
36. Porter Goss, former chairman of the House Intelligence Committee, former CIA
Director, located in or near Washington, D.C.
Subjects of Discoverable Information: meetings with Gibbons to discuss eTreppid and
Montgomerys technology. (Chapter 2 at 39.)
37. Letitia White, a lobbyist, located in Washington, D.C.
Subjects of Discoverable Information: information regarding her work for eTreppid to
obtain government contracts for Montgomerys software. (Chapter 2 at 38.)
38. Any individual disclosed by Plaintiff Dennis Montgomery as a potential witness or
person who may have discoverable information in this matter.
Defendants reserve the right to amend or supplement the foregoing response with the
names and addresses of additional individuals likely to possess discoverable information that
may be used to support Defendants defenses and whose identities may be revealed during the
course of discovery.
B.
Based upon information known to Defendants as of this date, the following categories of
documents or tangible things in Defendants possession, custody or control may be used to
support their defenses:
1. Exhibits attached to Defendants motion to dismiss or transfer for lack of personal
jurisdiction, motion to dismiss or transfer for improper venue, motion to transfer
under 28 U.S.C. 1404(a), motion to dismiss for failure to state a claim, and special
motion to dismiss. (ECF Nos. 25, 25-1 to 25-24, 26)
2. Documents Risen relied upon to write Chapter 2 and the 2011 article in the New York
Times about Montgomery, which include: court records; news reports; emails with
sources; emails among and between individuals mentioned in Chapter 2; emails with
Lichtblau; interview notes; and other documents obtained in newsgathering. These
documents are being retained by Risen and/or Davis Wright Tremaine LLP.
7
Computation of Damages
Insurance Agreement
HMH Companies insurance agreement relevant to this proceeding is attached hereto and
hereby produced under Fed. R. Civ. P. 34.
CERTIFICATE OF SERVICE
I certify that on April 24, 2015, I served this document on all counsel of record by email.
s/Micah J. Ratner
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