Us VS Head2

Case 2:08-cr-00116-KJM Document 547 Filed 06/30/14 Page 1 of 30
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF CALIFORNIA
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BEFORE THE HONORABLE KIMBERLY J. MUELLER, JUDGE
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UNITED STATES OF AMERICA,
Plaintiff,
vs. No. 2:08-cr-00116
Volume 1
CHARLES HEAD, DOMONIC
McCARNS, BENJAMIN BUDOFF,
Defendants.
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REPORTER'S PARTIAL TRANSCRIPT
TRIAL PROCEEDINGS
(NO JURY SELECTION)
MONDAY, OCTOBER 21, 2013
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Reported by: DIANE J. SHEPARD, CSR #6331, RPR
DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460

Case 2:08-cr-00116-KJM Document 547 Filed 06/30/14 Page 2 of 30 2
1 APPEARANCES
3 For the Government:
4
BENJAMIN B. WAGNER
5 UNITED STATES ATTORNEY
501 I Street, Suite 10-100
6 Sacramento, California 95814
BY: MICHAEL D. ANDERSON
7 MATTHEW G. MORRIS
Assistant U.S. Attorneys
8
9 For the Defendant, Charles Head:
10 SCOTT L. TEDMON
LAW OFFICES OF SCOTT L. TEDMON
11 980 Ninth Street, 16th Floor
Sacramento, California 95814
12
13 For the Defendant, Benjamin Budoff:
14 DWIGHT M. SAMUEL
LAW OFFICES OF DWIGHT M. SAMUEL
15 117 J Street, Suite 202
16
17 For the Defendant, Domonic McCarns:
18 JAMES R. GREINER
LAW OFFICES OF JAMES R. Greiner
19 1024 Iron Point Road
Folsom, California 95630
20
21
22
23
24
25

1 SACRAMENTO, CALIFORNIA
2 MONDAY, OCTOBER 21, 2013
3 PARTIAL TRANSCRIPT
4 ---oOo---
5 THE CLERK: Calling criminal case 08-116, United
6 States versus Charles Head, Benjamin Budoff and Domonic
7 McCarns. This is on for jury trial.
8 THE COURT: Good morning. Appearances?
9 MR. ANDERSON: Good morning, Your Honor. Michael
10 Anderson and Matthew Morris, Sally Kenney, a paralegal in the
11 United States Attorney's Office, Special Agent Chris
12 Fitzpatrick from IRS Criminal Investigation and Peter Byrnes,
13 who is an FBI special agent.
14 THE COURT: Defense.
15 MR. TEDMON: Good morning, Your Honor. Scott Tedmon
16 representing Charles Head. Also assisting me during the trial
17 is investigator Lisa Gara.
18 MR. SAMUEL: Good morning, Your Honor. Dwight Samuel
19 appearing with Mr. Budoff.
20 THE COURT: Good morning.
21 MR. GREINER: Good morning, Your Honor. James
22 Greiner representing Domonic McCarns. Mr. McCarns is present
23 before the Court. Also assisted by the two investigators
24 Robert Storey and Victoria Corona.
25 THE COURT: Good morning to you both. Today we're

1 going to work on selecting a jury. Just a couple of questions
2 I think I covered before.
3 The Government had proposed a statement of case. Is
4 that acceptable to the defense, Mr. Tedmon?
5 MR. TEDMON: Your Honor, I gave an amended proposed
6 statement, and I don't know if we've had a meeting of the minds
7 as to that entirely.
8 MR. SAMUEL: As did I, Your Honor. Actually, I
9 reviewed Mr. Tedmon's amended complaint (sic) which
10 incorporated my objections as well, so I'm fine with
11 Mr. Tedmon's statement.
12 THE COURT: All right. And Mr. Greiner?
13 MR. GREINER: I reviewed Mr. Tedmon's, and I joined
14 in an e-mail to the Government with Mr. Tedmon's statement of
15 the case, and I don't recall having seen anything back from the
16 Government.
17 THE COURT: Any objection to the defendants' proposed
18 statement of the case, Mr. Anderson?
19 MR. ANDERSON: Your Honor, we'd ask that the Court
20 read the Government's. It's based on the Indictment, and I
21 think fairly and neutrally sets forth what the charges are.
22 Obviously, the defendants dispute the charges, but it also
23 makes that clear.
24 THE COURT: Ms. Schultz, I need help tracking down
25 the defense. I'm going to review that quickly.

1 Any objection to any of the proposed voir dire
2 questions of any other party? Mr. Anderson?
3 MR. ANDERSON: No, Your Honor.
4 THE COURT: Mr. Tedmon?
5 MR. TEDMON: Mr. Samuel?
6 MR. SAMUEL: No, Your Honor.
7 THE COURT: Mr. Greiner?
8 MR. GREINER: No, Your Honor.
9 THE COURT: I'll cover quite a few of those, not all
10 of them, and I would give each of you up to ten minutes each
11 for your own voir dire.
12 Is there any other housekeeping we need to cover
13 before we bring the jury pool on?
14 MR. SAMUEL: We had a question about -- I think we
15 understand we're getting a total of 13 each side, but I was
16 uncertain. I didn't see a court order to that effect.
17 THE COURT: I haven't severed.
18 MR. SAMUEL: Pardon?
19 THE COURT: Because I did not sever. You mean in
20 terms of strikes?
21 MR. SAMUEL: Correct.
22 THE COURT: Well, Ms. Schultz has prepared a strike
23 sheet. Your request was for 13 each defendant?
24 It's seven for the Government and thirteen for the
25 defense.

1 MR. SAMUEL: Exactly.
2 THE COURT: Have you seen the strike sheet?
3 MR. SAMUEL: I'm sorry.
4 THE COURT: The strike sheet is set up in that way
5 with one additional strike for alternates per side. Does that
6 conform with the party's expectations?
7 MR. ANDERSON: That's my recollection, Your Honor.
8 MR. TEDMON: Your Honor, on the statement of the
9 case, I sent as proposed because we were going to try to do a
10 joint statement. I don't know that I actually filed an
11 alternative statement with the Court.
12 I have, however, what I have given to the Government
13 here, if the Court can take a look at this.
14 THE COURT: Is it showing a docket number at the top?
15 MR. TEDMON: Yes. The Government's statement of the
16 case is docket number 387.
17 THE COURT: And that's what I have. So you've marked
18 that up?
19 MR. TEDMON: I have, and I would be happy to provide.
20 THE COURT: If you could.
21 MR. TEDMON: The other parties have gotten it.
22 THE COURT: All right.
23 MR. TEDMON: I hope you can read my writing.
24 THE COURT: You have a copy of this, Mr. Anderson?
25 MR. ANDERSON: I don't in front of me, Your Honor.

1 Actually, I unfortunately left it down in my office, but I have
2 seen it.
3 THE COURT: Maybe I can pass it down, you can look at
4 it and just tell me exactly what problem it would create given
5 it's just a statement of the case.
6 I know we addressed the issue of straw buyer. We'll
7 get to that before we begin with opening statements.
8 MR. ANDERSON: Your Honor, there is the issue also
9 that we will need to cover about Mr. Greiner's outstanding
10 discovery motion.
11 THE COURT: Do we need to cover that before the jury
12 is brought in?
13 MR. GREINER: No. And for the record, for the Ninth
14 Circuit, if it gets that far, it's not a discovery motion.
15 It's an in limine motion for Brady and Giglio material.
16 THE COURT: And there is no outstanding dispute that
17 needs to be addressed before opening?
18 MR. GREINER: I don't know if it's before opening.
19 MR. ANDERSON: Yes, Your Honor. From the
20 Government's perspective, it does. Because once the jury is
21 impanelled and jeopardy attaches, if the Court were to rule in
22 favor of Mr. Greiner, which obviously we hope the Court
23 doesn't, but if the Court were to rule in favor of
24 Mr. Greiner's position, it would present a problem in that the
25 Government would have to collect and turn over documents to

1 Mr. Greiner, or, alternatively, challenge the Court's order.
2 And to do so could take a significant period of time,
3 whether it's weeks or months. And then Mr. Greiner, if the
4 materials were produced, would need time to review them. Given
5 how broad the request was, that could be a significant amount
6 of time. It's something that would require us to hold a jury
7 potentially for months.
8 THE COURT: We will address it after we selected the
9 jury, before opening.
10 MR. GREINER: Just to refresh the Court's memory, I
11 narrowed it down to the two witnesses that the Government put
12 on their witness list.
13 THE COURT: Right. I understand. Before the jury is
14 sworn.
15 MR. ANDERSON: Yes.
16 THE COURT: I'm not going to delay the jury's coming
17 up to turn to that. Also there is the outstanding motion on
18 S.M., and we're going to take breaks. We're not going to
19 select this jury before noon. So as we take breaks, we'll work
20 on addressing some of these issues.
21 MR. ANDERSON: That's fine. As long as it's done
22 before the jury is impanelled. The Government is perfectly
23 happy with that.
24 THE COURT: So there's that motion, there's the S.M.
25 motion which the Court is prepared to address and file

1 something in writing probably later today.
2 Anything else that needs to be addressed before the
3 jury that will be seated is sworn?
4 MR. SAMUEL: The straw buyer issue. I'm not certain
5 whether the Court is prepared to compromise the --
6 THE COURT: What I decided was that the term can be
7 used but with explanation.
8 MR. SAMUEL: Right. And I think we need to
9 understand what that explanation is, so when we get started --
10 and even in opening statement, counsel should reflect what that
11 means if he's going use that word.
12 THE COURT: All right. We'll address that before
13 opening. Anything else? Mr. Greiner?
14 MR. GREINER: Yes, Judge. Is it possible from your
15 clerk to have the strike sheet?
16 MR. SAMUEL: We don't have strike sheets.
17 MR. GREINER: If I got one, I lost it.
18 THE COURT: The Clerk is --
19 MR. GREINER: We don't have to have it right now, but
20 some time before we get there so we know what's going on.
21 THE COURT: We'll provide that to you before we start
22 so you can look at it and tell me if you have any problems with
23 it.
24 MR. GREINER: I appreciate that, Judge. Thank you.
25 THE COURT: I'm assuming in this case it appears to

1 be the practice that's developed the parties are stipulating to
2 a pass not acting as a waiver?
3 MR. ANDERSON: Yes, Your Honor.
4 MR. SAMUEL: Yes.
5 MR. GREINER: Yes.
6 THE COURT: So if you're enforcing that, that's fine
7 with me. My jury selection process is different from that in
8 the case, but if you have a stipulation, I accept it.
9 Is there anything else on the list of housekeeping
10 that we will need to address at some point?
11 MR. ANDERSON: Your Honor, I would just like to put
12 on the record that an offer was conveyed to Mr. McCarns through
13 his counsel, Mr. Greiner, back several months ago. Mr. Greiner
14 took it, and came back to us, and indicated that Mr. McCarns
15 had rejected that offer.
16 THE COURT: All right. Anything to say in response?
17 MR. GREINER: Correct statement of the facts, Judge.
18 THE COURT: All right. Anything further?
19 MR. TEDMON: No, Your Honor.
20 THE COURT: So Ms. Schultz will make copy of the
21 strike sheet for you and give you a chance to look at that.
22 And then in a few minutes we'll call the jury up. So I'll take
23 a short break. If you have any concerns about the strike
24 sheet, you can let me know.
25 (Break taken.)

1 THE COURT: You may be seated. I'm going to ask
2 Ms. Schultz to retrieve the statement of the case as annotated.
3 Did you have anything else you wanted to say about
4 that, Mr. Anderson?
5 MR. ANDERSON: Your Honor, I spoke with defense
6 counsel, and we all agreed to Mr. Tedmon's version with two
7 corrections that have been made. He had crossed out the word
8 straw buyer and replaced them with another word, and we agreed
9 to put the word straw buyer back in. They are both on page
10 two.
11 THE COURT: So that's a stipulated statement of the
12 case at this point? Mr. Tedmon?
13 MR. TEDMON: Yes, Your Honor.
14 THE COURT: Mr. Samuel?
15 MR. SAMUEL: Yes.
17 MR. GREINER: Yes, Your Honor.
18 THE COURT: It doesn't moot the issue of the
19 explanation. We'll still talk more about that.
20 MR. TEDMON: Your Honor, would the Court like me to
21 file something with the language that's been interlineated, or
22 is it fine the way it is?
23 THE COURT: It's fine the way it is. I'll use it to
24 just familiarize the jury pool with the case, and then I'll
25 integrate that into my preliminary instructions. And I'll have

1 time to do that before I finalize them.
2 All right. Thank you for your work on that. Just
3 checking on the length of trial. Are we still thinking four to
4 six weeks is accurate, Mr. Anderson?
5 MR. ANDERSON: We're hoping for four, but it could go
6 longer depending how long the defense cases take. I know there
7 have been a lot of defense subpoenas that have gone out.
9 MR. TEDMON: I would concur with Mr. Anderson's
10 estimate. We're hoping four weeks. It could go longer.
12 MR. SAMUEL: Well, I'm hoping for four weeks, but I do
13 have some witnesses.
15 MR. GREINER: I guess I'm the only pessimist. Even
16 if the way we sit right now I think it's going to be closer to
17 six weeks. I don't want to misrepresent anything to the Court.
18 THE COURT: All right. I'll tell the jury four to
19 six weeks, but I will ride you all to keep the case moving
20 along. I have other trials waiting.
21 Just a couple of other issues. On the McCarns'
22 question, I'm not seeing the additional five pages of briefing
23 on the docket. Am I missing something?
24 MR. GREINER: You're not because it's on my computer.
25 THE COURT: When are you going to file that?

1 MR. GREINER: I can file it when I get to the office
2 after we pick the jury, Judge. It's not going to be five
3 pages. It's going to be very short. The Court wanted some
4 additional --
5 THE COURT: I gave you leave to file that. I mean,
6 if you're going to file that. At this point, I would say the
7 motion is denied without prejudice.
8 MR. GREINER: I don't have to file it. I can argue
9 it orally. It's not -- to me, I don't have to file something
10 to argue to.
11 THE COURT: Then I'll accept argument on it when we
12 get through some of the jury selection.
13 Just two comments. I note that there is someone who
14 appears to be identified as an administrative assistant or the
15 U.S. Attorney's office on the list.
16 MR. ANDERSON: That's correct, Your Honor.
17 THE COURT: Do we want to take that person's time?
18 MR. TEDMON: No.
19 MR. GREINER: No.
20 MR. SAMUEL: No.
21 THE COURT: Would you stipulate to excusing her for
22 cause?
24 THE COURT: All right. I'm going to do that at the
25 beginning then. That's juror number 11, Becky Conjulusa.

1 And then we do recognize some of the jurors because
2 they were in a jury pool for the Stamper case that I had
3 recently. In particular, just to let you know, Mr. Barrantes
4 at some point in the process let Ms. Schultz know -- he did not
5 disclose this. He responded to questions in English. But he
6 did express concern to her about his English capabilities. I'm
7 going to ask a more pointed question than I usually ask to see
8 how people respond, too. Again, he responded to questions in a
9 way that the Court had no concerns, but I'm just letting you
10 know that. It did not become an issue in the Stamper trial.
11 But we know that. So I'm letting you know that.
12 MR. SAMUEL: The name again?
13 THE COURT: Manual Barrantes. If the Court's
14 recollection is correct. Juror number 44. I'm going to ask a
15 general question of all jurors, and we'll see what he says.
16 I've had jurors express that concern before, but upon further
17 questioning it's clear to the Court they can follow the
18 proceedings sufficiently to not be excused for cause.
19 All right. Are we ready?
20 MR. TEDMON: I think so.
23 THE COURT: All right. Let's bring the jury pool in.
24 (Jury selection reported but not transcribed.)
25 (Jury pool out.)

1 (Break taken.)
2 THE COURT: You may be seated. Are these potential
3 jurors or what?
4 Just two questions. How long do you need to argue
5 your Brady/Giglio?
6 MR. GREINER: Short answer is as long as you'll give
7 me. Long answer is not very long. I mean, it's simple. You
8 can rule without prejudice. I can re-bring it up. But, I
9 mean, I can make my argument.
10 THE COURT: Are there any cases that you rely on?
11 MR. GREINER: None other than I gave you, Judge. I
12 mean, those are the controlling cases for the Brady/Giglio.
13 The Government wants to couch it as a discovery, and it's not a
14 discovery.
15 THE COURT: Let's come back at 12:45 and address that
16 issue. And at some point before the end of day can you let me
17 know if you have a stipulation about how to explain straw
18 buyer? Have you talked about that issue at all about what kind
19 of explanation could be given to the jury, or is that going to
20 be the Court's job?
21 MR. SAMUEL: I think it's going to be the Court's job
22 because I'm not going to enter into any stipulation about that.
23 I'm going to make a record.
24 MR. ANDERSON: I don't know that it will even need to
25 be the Court's job, Your Honor. We have witnesses who are

1 prepared to testify what they understand straw buyer to mean.
2 MR. SAMUEL: That's the problem. We don't know what
3 they are going to say, and we don't know how they are going to
4 define it. And I think the cases that the Court -- the case
5 that the Court is relying upon required the Government to
6 specifically enumerate what it was in advance.
7 And I think that without that it would be difficult
8 to even make an opening statement or discussion, have a
9 discussion with that.
10 THE COURT: All right. Any other defense counsel
11 want to say something on this question? Mr. Tedmon?
12 MR. TEDMON: No, Your Honor. Just join in
13 Mr. Samuel's comments.
15 MR. GREINER: Joining the argument that Mr. Samuel is
16 making, Your Honor.
17 THE COURT: All right. Also at 12:45, if there any
18 jurors at this point that you want to talk about for cause, I'm
19 willing to hear your initial comments. I'm not thinking of
20 excusing anyone yet. But if it would expedite the process and
21 you have serious concerns, feel free to let me know at this
22 time.
23 There are 14 jurors left from a jury that Judge
24 England has selected this morning. Should we ask them to
25 remain just in case? The Court's inclination is to, yes, ask

1 them to remain.
2 MR. TEDMON: I think we should.
4 MR. GREINER: Certainly, Judge.
5 THE COURT: All right. So yes, Ms. Schultz.
6 Anything further? See you at quarter of 1:00.
7 (Lunch break taken.)
8 THE COURT: All right. We're back on the record
9 with the counsel, all defense counsel. Mr. McCarns is not
10 present.
11 MR. GREINER: He's not here yet, Judge. He has a
12 waiver on file. He knows to be here at 1:00. I suggested to
13 him 12:45, but since he has a waiver and this is a motion, I
14 would request that his presence be waived for this.
15 THE COURT: The waiver doesn't extend to voir dire.
16 MR. GREINER: No. Not to voir dire.
17 THE COURT: I'll accept the waiver as to this motion.
18 Just a couple thoughts on jurors. I was looking at my notes,
19 and the three I do have questions about at this point given the
20 schedule.
21 I was looking at Mr. Skaggs, the child custody
22 hearing at 2:00 p.m. He did say that was in Yuba County. And
23 so I'm thinking of letting him go for cause. Debra -- was it
24 Fontes? I'm not sure I got the spelling correctly. She's the
25 one with the meeting that goes all day on the 13th. And

1 finally Ms. Yater is not available at all this coming Wednesday
2 when we're scheduled to be in court that afternoon. So my
3 thought is rather than detain them, excuse them. I don't think
4 any one of them is in the box yet. But rather than delay the
5 inevitable, would there be any objection to that? Again, I
6 don't think I have that name correct.
7 MR. GREINER: Those are the names I have down.
8 MR. ANDERSON: Your Honor, before a final decision is
9 made, it would be best if Mr. McCarns is here. But the
10 Government doesn't have any objection once he's here.
11 THE COURT: Anything to say about that, Mr. Tedmon?
12 MR. TEDMON: I'm fine with that, Your Honor. I do
13 have two other individuals I would like to discuss for cause.
14 THE COURT: All right. Why don't you run those names
15 by me before we hear from Mr. Greiner.
16 MR. TEDMON: It would be Mr. Grooms, Paul Grooms.
17 And the other one is Patrick Bupara. Those are the two.
18 MR. SAMUEL: I join in that as well.
20 MR. GREINER: Certainly regarding Patrick Bupara.
21 Paul Grooms is not coming to mind. But if defense counsel
22 believes that they should be excused, I'll join.
23 MR. TEDMON: He's the retired police captain.
24 MR. GREINER: Paul Grooms. Absolutely.
25 MR. SAMUEL: Captain.

1 MR. TEDMON: Captain, yes.
2 THE COURT: All right. Mr. Greiner, five minutes
3 max.
4 MR. GREINER: Do it in less than that, Judge.
5 The question is about Brady and Giglio material.
6 It's not a discovery motion. I actually even made a request
7 under Rule 16, although the Government has said they are not
8 calling any expert witnesses for any documents.
9 There is material out there, Judge. And the reason
10 that we know there is material out there is because on Friday
11 of last week the Government just settled with JPMorgan Chase a
12 13 billion dollar settlement. And JPMorgan Chase is not going
13 to cut a check to the United States Government for 13 billion
14 dollars unless the Government showed them some documents.
15 THE COURT: That's a civil settlement.
16 MR. GREINER: Civil settlement. But the criminal
17 investigation is still ongoing. That's what the Government
18 told JPMorgan Chase in the settlement.
19 And if they are going to cut a check for 13 billion,
20 there is a reason that they did it. The Government has to have
21 something.
22 And I've narrowed this, as I put in the brief that I
23 filed prior to the motion in limine hearing on the 16th of
24 October, to the two individuals that the Government has now
25 said that they are going to call, and that's Steve Newcomb from

1 Argent Mortgage and Brett Hellstrom from JPMorgan Chase.
2 So I'm looking for Brady/Giglio material. I have a
3 feeling there may be some transcripts out there from testimony
4 that they've done. So there is stuff out there someplace.
5 And the reason it's material -- I even went back to
6 look at the Government's trial brief, Document 386 -- and on
7 page five, paragraph two, lines 6 through 8, they cite one of
8 the Ninth Circuit cases where they talk about materiality,
9 omission statements, the natural tendency to influence or is
10 capable of influencing another's decision.
11 Well, none of these lenders in this timeframe had a
12 natural tendency to be influenced by anything other than give
13 me loans, I will bundle them, I will sell them upstream. That
14 is all they cared about. That is all any of them did.
15 JPMorgan Chase, Argent, Bank of America, Wells Fargo, Deutsch
16 Bank. The litigation that former Assistant United States
17 Attorney Matt Stegman is working on back in Washington D.C. in
18 this litigation group is --
19 So, to me, it's common sense there is Brady and
20 Giglio material out there. I'm asking for it on two witnesses
21 that the Government has.
22 THE COURT: Mr. Anderson, are you responding to this?
24 THE COURT: Anything further to say in response to
25 that argument?

1 MR. ANDERSON: I think we've covered all the things
2 in our brief except for one, which is Mr. Greiner keeps going
3 back to JPMorgan Chase and references that specific settlement
4 and there are news reports, of course, of an ongoing
5 investigation.
6 The witness, Brett Hellstrom, who is being called
7 from JPMorgan Chase, was actually a Long Beach Mortgage
8 employee, and we're talking about Long Beach Mortgage loans
9 that are at issue in this case, not JPMorgan Chase loans and I
10 want that to be clear to the Court and to Mr. Greiner, which I
11 think further suggests that, one, this is an overbroad request,
12 it's over burdensome, it's not material, and all the other
13 arguments the Government has made already.
14 THE COURT: Anything to clarify with respect to
15 Newcomb?
17 THE COURT: Did other defense counsel wish to add
18 anything?
19 MR. SAMUEL: I would just like to verbally join the
20 motion, Your Honor.
21 THE COURT: All right. You had in writing joined, I
22 believe.
23 MR. SAMUEL: Yes.
24 THE COURT: All right. Your joinder is noted.
25 MR. TEDMON: And if I hadn't joined before -- I think

1 I had -- but I would just join.
2 THE COURT: You would join to the extent it was
3 directed to exculpatory evidence?
4 MR. TEDMON: Correct.
5 MR. GREINER: Judge, if I may have two sentences.
6 THE COURT: You may.
7 MR. GREINER: The reason I say JPMorgan Chase is
8 because that is what the Government put on their witness list,
9 and, legally, JPMorgan Chase obtained possession, buyout, of
10 Long Beach Mortgage/Washington Mutual. That's number one.
11 Number two, it's the Brady and Giglio material that
12 involves Brett Hellstrom and Steve Newcomb. That's what I'm
13 looking for. Their parent companies, holding companies.
14 In the legal world, you've got to sift through where
15 they all are, and so that's why JPMorgan Chase, Argent
16 Mortgage, and whoever bought them all out. But that's what the
17 Brady and Giglio request is for. Those two witnesses.
18 THE COURT: Is that disputed, the acquisition?
19 Mr. Anderson?
20 MR. ANDERSON: No. Long Beach Mortgage was acquired
21 by JPMorgan Chase. It's just that the settlement was with
22 JPMorgan Chase, so I wanted that to be clear.
23 And, frankly, still I'm uncertain what Mr. Greiner is
24 actually asking for. It's almost impossible to decipher. And
25 as we put in our brief, it could be billions of pages of

1 documents if construed broadly enough.
2 THE COURT: All right. The matter is submitted.
3 I'll let you know on a break before the end of the day or at
4 the end of day what my ruling is before the jury is sworn.
5 So anything to say about the defense position that
6 Grooms and Bupara also should be excused for cause,
7 Mr. Anderson?
8 MR. ANDERSON: Your Honor, could we wait until
9 Mr. McCarns is here?
10 MR. GREINER: May I check, Judge?
12 MR. GREINDER: If the Court will allow me an
13 important phone call.
14 (Defendant, Domonic McCarns enters the courtroom.)
15 (Jury selection continued, reported, but not
16 transcribed.)
17 THE COURT: So Ms. Schultz has a handwritten jury
18 chart. She's going to line folks up.
19 Let me see if I can just address Mr. Greiner's motion
20 briefly at this point in time.
21 I have considered his arguments. I have re-checked
22 the cases of U.S. v. Price, Ninth Circuit case, 566 F.3d 900,
23 and also Youngblood v. West Virginia, Supreme Court 547 U.S.
24 867. That's a 2006 case.
25 And just reviewing my thinking in very summary

1 fashion, the defense here has the initial burden of producing
2 some evidence to support an inference that the Government
3 possessed or knew about material favorable to the defense and
4 failed to disclose it.
5 And while on the one hand the Government has no
6 obligation to produce information it does not possess or that
7 which it is unaware, it's also the case that the Government can
8 be found to have not honored its obligations if it turns over
9 only information that the prosecutor has in his or her
10 possession. The prosecution has an obligation to turn over
11 even evidence known to investigators.
12 But the case law that the Court has reviewed ties it
13 all to this case. And while Mr. Greiner, joined by the other
14 defendants, points to other cases in particular, the case
15 against JPMorgan Chase, in which there might be something
16 there, I don't see that he's met his initial burden to support
17 the inference that the Government here has information that
18 would be favorable to the defense and has failed to disclose
19 it. He clearly has made his record, however, and if something
20 comes forward at some point in time, that could be cause for
21 reconsideration or motions in this case.
22 So the motion is denied with reference to those two
23 cases in particular. It is without prejudice.
24 MR. ANDERSON: Your Honor, and the Court may not want
25 to do this, but the Government requests that the order be with

1 prejudice because once the jury is impanelled, obviously, it
2 changes the --
3 THE COURT: I understand that request. But I don't
4 need you to argue that. It's without prejudice.
5 All right. Are we ready for the jury to come in?
6 Ms. Schultz will seat the jury in the box, those that we are
7 not using in the audience. You may do that now, Ms. Schultz.
8 (Jury selection continued, reported but not
9 transcribed.)
10 (Jury out.)
11 THE COURT: All right. You may be seated if you
12 want. The Court is just going to stand.
13 Very briefly, any objection to the preliminary
14 instructions? I don't know if we discussed that. I have
15 modified them to incorporate the statement of the case used
16 during voir dire. So any objection to the preliminary
17 instructions?
21 MR. GREINER: No, Judge.
22 THE COURT: With respect to scheme and straw buyer, I
23 know the defense is not going to agree to anything, but just so
24 you know what the Court is thinking.
25 I'm not going to plan to give a preemptive

1 instruction, but if I hear something that raises concerns in my
2 mind, I may gave a curative instruction.
3 And this is some language and the cases I'm looking
4 at, just so you know. So there are copies here, Ms. Schultz.
5 You can hand those down once we are in recess.
6 Mr. McCarns had identified objections to two
7 exhibits. Can we just talk about those in the morning, if we
8 need to, before there is any attempt to admit them?
9 Is there anything else we need to discuss in the
10 morning besides those two exhibits?
11 MR. SAMUEL: S.M.
12 THE COURT: S.M. We're actually looking at what you
13 filed on the docket to make certain we've taken account of
14 that. I had not looked at that when I had drafted something,
15 so I think you'll see something by tomorrow morning, giving you
16 both my thoughts on the privilege and what that means. So I'll
17 either hand it to you, or you'll see it on the docket before we
18 start court.
19 In terms of time for opening, have we talked about
20 that? How much time does the Government believe it needs?
21 MR. ANDERSON: Under 20 minutes, I would like a
22 little bit of flexibility if it goes 25, but it should be under
23 20.
24 MR. TEDMON: Ten or less.

1 MR. SAMUEL: I would like -- I mean I'm putting on an
2 affirmative defense, so I think, 20, 25.
3 THE COURT: Mr. Greiner, can you live with 25?
4 MR. GREINER: Well, just last night I timed out at an
5 hour and seventeen minutes.
6 THE COURT: Can you practice?
7 MR. GREINER: I mean, I started at three and a half
8 hours, and now I got it down to an hour and seventeen. So I'm
9 moving in the right direction, at least.
10 You tell me. I'll abide by whatever you tell me,
11 Judge. I'm just letting you know what I pared it down from.
12 THE COURT: Does 30 minutes give you enough time to
13 make your points or not? Are you prejudiced by a 30-minute cap
14 for opening? This is opening.
15 MR. GREINER: I know. If I could request not to go
16 over 45.
18 MR. GREINER: Is that okay?
19 THE COURT: All right. But that means each side will
20 have up to 45. If you revise that downwards in the morning,
21 you can compare notes and think about it, but not everyone has
22 to use that.
23 MR. TEDMON: I won't use it. Maybe 15 if I go slow.
24 THE COURT: Up to 45 each. And then we'll move
25 straight to the Government's presentation of evidence. You

1 have your witnesses lined up for tomorrow?
2 MR. ANDERSON: Yes, Your Honor. We were just
3 discussing whether or not everybody arrived by plane on time,
4 but it should be ready to go.
5 I wanted to flag one thing for the Court, which is
6 that some -- at least one of the witnesses we anticipate having
7 testify tomorrow would be a witness from the other case, who is
8 being introduced as 404(b) evidence, so the Court may be want
9 to be ready with the proposed limiting instruction.
10 THE COURT: All right. And who is that witness?
11 MR. ANDERSON: Shannon Taylor.
12 THE COURT: What other witnesses do you plan for
13 tomorrow?
14 MR. ANDERSON: We have Kou Yang lined up, Sharolynn
15 Cardenas, possibly Korall Solares. I think that was -- I think
16 that should take us through the day, Your Honor. That should
17 do it.
18 THE COURT: All right. By the end of the week, I'll
19 start checking with you and see how we're doing. How much time
20 are you thinking the Government's case is going to take?
21 MR. ANDERSON: To put on the entire case, two and a
22 half to three weeks.
23 THE COURT: All right. Anything else, Mr. Tedmon?
24 MR. TEDMON: The only other thing we're working on
25 are redaction s to some of the e-mails, so we should have that

1 straightened out before we start.
2 MR. ANDERSON: My proposal is that counsel just meet
3 and talk right now, after the Court's gone, and then we can
4 bring up any issues in the morning if there is anything left.
6 MR. SAMUEL: I was thinking of redactions, but that
7 has to be based upon what you decide on S.M. Because we were
8 talking about possible redactions.
9 THE COURT: Is there significant redaction issues for
10 tomorrow?
11 MR. SAMUEL: No.
12 MR. ANDERSON: For us, it would be the Government
13 exhibits, in particular the e-mails. So I do need to know from
14 defense counsel. And Mr. Tedmon and Mr. Greiner have both told
15 us which ones. And if I could get from Mr. Samuel, we will
16 work on the specific redactions to those e-mails because that
17 will come up tomorrow.
18 THE COURT: If we need to defer them being shown to
19 the jury or admitted, we'll do that. Anything further,
20 Mr. Greiner?
21 MR. GREINER: Your Honor, at this time I'd renew both
22 the speedy trial motion on Mr. McCarns and the motion to sever.
23 THE COURT: All right. Anyone wish to argue?
24 MR. GREINER: Submit it.
25 MR. ANDERSON: Submitted, Your Honor.

2 MR. TEDMON: I would join and submit.
4 MR. SAMUEL: Join and submit.
5 THE COURT: Those motions are denied. Anything
6 further?
8 THE COURT: All right. See you tomorrow morning.
9 (End of partial transcript.)
10 (Court adjourned. 5:35 p.m.)
11
12 CERTIFICATION
13
14 I, Diane J. Shepard, certify that the foregoing is a
15 correct transcript from the record of proceedings in the
16 above-entitled matter.
17
18
19 /s/ DIANE J. SHEPARD

DIANE J. SHEPARD, CSR #6331, RPR
20 Official Court Reporter
United States District Court
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 2
Defendants.
---oOo---
REPORTER'S TRANSCRIPT
TRIAL PROCEEDINGS
TUESDAY, OCTOBER 22, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
Assistant U.S. Attorney
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
LAW OFFICES OF JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
2 GOVERNMENT WITNESSES PAGE
3 SHAROLYNN CARDENAS
DIRECT EXAMINATION BY MR. ANDERSON 106
4 CROSS-EXAMINATION BY MR. GREINER 135
6 GOVERNMENT EXHIBITS RECEIVED IN EVIDENCE

No. Description Page
7
10A1 Equity Purchase Agreement dated 6/14/2005 124
8 between Rufo Cardenas Jr., and Sharolynn
Noelani Cardenas (“Sellers”) and
9 FundingForeclosures.com (“Purchaser”)
10A2 Wire Instructions and Authorization re 125
10 property at 5666 Kei Place Kapaa, HI 96746,
10A3 Grant Deed for property in Kauai Hawaii, 129
11 10A4 Signature page reflecting “Date of Contract 131
Acceptance: 06/14/2005” and the signatures
12 of both Rufo Cardenas, Jr., and Sharolynn
Noelani Cardenas
13 10A5 Check-off list for Cardenas documents with 133
handwritten note in bottom right corner
14 10A6 Letter dated 4/6/2006 to Nations Property 133
Management from Cardenas’ re flood damage
15 to their home in Hawaii
16
DEFENSE EXHIBITS RECEIVED IN EVIDENCE
17 No. Description Page
18 DM-G1 November 28, 2003 e-mail from Sharolyn 138

Cardenas to Charles Head
19 DM-G2 Addendum to Equity Purchase Agreement 162
dated June 14, 2005
20 DM-G3 Exhibit “A” to Addendum to Equity 162
Purchase Agreement
21 DM-G4 Residential Lease After Sale Agreement 162
dated June 15, 2005
22 DM-G5 Acknowledgement By Seller dated June 14, 162
2005
23 DM-G6 Notice of Cancellation dated June 14, 162
2005
24 DM-G7 Invoice dated June 28, 2005 for Appraiser 162
DM-G8 "Affidavit of Deed" re: 5666 Kei Place,
25 Kapaa, HI

2 TUESDAY, OCTOBER 22, 2013
3 ---oOo---
6 McCarns. This is on for jury trial, and today is day two.
8 MR. ANDERSON: Good morning, Your Honor.
9 THE COURT: Mr. Anderson is here. Are we waiting for
10 Mr. Morris?
11 MR. ANDERSON: He's just outside. He's going to walk
12 in momentarily.
13 THE COURT: All defendants are present. All counsel
14 is present. Ms. Gara is present. I acknowledge receipt of
15 some amended lists.
16 On the calendar, just FYI, if it's not showing, if we
17 get to December 4th, that would be a dark day for the Court in
18 the afternoon. If the jury were already deliberating, I'd
19 allow them to deliberate in the morning, if they wish.
20 On the 404(b) instruction, I understand the pattern
21 instruction. I just didn't know if you had submitted a
22 tailored instruction.
23 So my question is, is the entire list of --
24 MR. ANDERSON: Mr. Morris is handling this issue,
25 Your Honor.

1 THE COURT: All right. The question is how to tailor
2 that. I didn't know if there was an agreement.
3 MR. MORRIS: I think the safest, Your Honor, would
4 be, as far as the first series of alternatives, to simply leave
5 it at prior acts rather than saying crimes or wrongs.
6 With respect to the second series of alternatives, I
7 think motive, intent, opportunity, absence of mistake are all
8 applicable.
9 THE COURT: Motive, intent, opportunity, absence of
10 mistake.
11 MR. MORRIS: I don't think identity necessarily is
12 appropriate, knowledge.
13 THE COURT: Plan, preparation.
14 MR. MORRIS: Plan and preparation probably are. And
15 then lack of accident I think is also applicable. So all other
16 than identity would seem appropriate.
17 THE COURT: And including the last bracketed
18 sentence?
19 MR. MORRIS: I think we -- one or the other. I do
20 think that if we're going to go there, it's appropriate I
21 think, and I do think, also, it should be phrased in a way to
22 clarify -- the pattern says defendant. I think probably the
23 defendants would want us to clarify that as each particular set
24 of 404(b) comes in, that it applies to one or more, but
25 specifically name the defendants we're talking about.

1 THE COURT: All right. And for Ms. Taylor today?
2 MR. MORRIS: That would be with respect to
3 Mr. Charles Head only.
4 THE COURT: So comments on that tailoring of the
5 pattern instruction?
6 Mr. Tedmon, would you agree with what the Government
7 has said should be included?
8 MR. TEDMON: Yes, I think that would be appropriate.
10 MR. SAMUEL: Yes. I believe they should specifically
11 define which defendant.
12 THE COURT: And Mr. Greiner?
13 MR. GREINER: My overall comment, Judge, is I object
14 to any 404(b) evidence, and I raise my severance motion again
15 based on that.
16 After that comment, I acknowledge what the Government
17 has done, and I take no position.
18 THE COURT: All right. So the renewed motion is
19 denied. I'll read the instruction as modified, as tailored.
20 On the S.M. motion, I am -- we're still finalizing an
21 order to file, but just so you know, my conclusions at this
22 point -- and if we need more argument on it, we can schedule
23 that during breaks -- the threshold question is, is there an
24 attorney/client privilege that Mr. Head himself can claim.
25 I can't find, at this point, based on the record

1 before me, that there is. And so I don't believe I even need
2 to reach the question of the crime fraud exception. All of the
3 correspondence appears to be -- it's directed in many instances
4 to other people. It's related to corporate business.
5 I can take judicial notice of the fact that Head
6 Financial Services is suspended as a corporation. I don't
7 think Mr. Head can invoke the privilege based on both his
8 status as someone who is subject to fraud charges but also the
9 fact that that corporation is suspended. I acknowledge there
10 are other business names referenced. That's my fundamental
11 initial threshold decision on whether or not there's even a
12 privilege.
13 I have looked at the test articulated in the case of
14 -- it's the Graf case, G-r-a-f. U.S. v. Graf, 610 F.3d 1148,
15 Ninth Circuit 2010. There are five elements. I don't think
16 you can satisfy the second and fifth.
17 Mr. Samuel in his filing of what appears to be notes
18 used at the hearing, there is one line saying -- asserting that
19 the documents are not being offered for the truth of the
20 matter. And so the Court reads that as not relying on the
21 co-conspirator statement even -- although Mr. Samuel argues a
22 lot about co-conspirator, to the extent that the documents
23 would ultimately be offered not for the truth of the matter but
24 for evidence of motive and intent, they might be able to come
25 in. A question I would ultimately resolve based on the

1 circumstances in which they are offered.
2 In terms of S.M. as a witness, I don't think there is
3 a basis for me, at this point in time, to order him to appear
4 as a witness.
5 MR. SAMUEL: You actually signed, once again, the
6 subpoena request for S.M.
7 THE COURT: Well, if the subpoena is signed, that's
8 one thing. And if he hasn't moved to -- in terms of an
9 additional order, I don't -- there is no basis for my making an
10 additional order.
11 MR. SAMUEL: That's fine.
12 THE COURT: So that's my resolution. To the extent
13 that affects any opening statements -- does it even affect
14 opening statements?
15 MR. SAMUEL: No.
16 THE COURT: So if you want to argue more about that,
17 the order will be on the docket later today, hopefully during
18 one of the breaks that we take, and then we can schedule
19 additional argument if you think I've got that wrong.
20 Ms. Schultz still needs to orient the jury, but her
21 suggestion is that she just let them know she will do that at
22 the first break, and we proceed with opening statements. Any
23 objection?
24 MR. ANDERSON: No, Your Honor. Do you plan to give
25 preliminary instructions before openings?

1 THE COURT: Yes.
2 MR. ANDERSON: There was one other issue which --
3 counsel met last night and conferred regarding redactions on
4 e-mail exhibits, and we were able to reach agreements on all of
5 them save one, and that e-mail is an e-mail that we expect
6 would be introduced today.
7 THE COURT: What exhibit number? Well, you can let
8 me know on the first break.
9 MR. ANDERSON: That's fine, Your Honor.
10 THE COURT: I acknowledge that you filed several
11 stipulations. Did those stipulations cover the redactions?
12 MR. ANDERSON: No, Your Honor. The stipulations are
13 to foundation of various exhibits. Then the redactions, we
14 just reached the agreement informally and made the redactions
15 ourselves.
16 There will be redacted versions of the exhibits
17 substituted in where the unredacted versions were, and then
18 it's just the one exhibit which Mr. Morris is -- found. It's
19 Exhibit 124.
20 THE COURT: All right. Do you have competing
21 versions of proposed redactions?
22 MR. MORRIS: The competing versions are --
23 THE COURT: To provide to me in a form I can review.
24 MR. MORRIS: The competing version is I think
25 Mr. Greiner doesn't want the exhibit coming in at all; whereas,

1 the Government has reached an agreement with the other
2 defendants, in particular with Mr. Tedmon, that a redacted
3 version is appropriate, and that the potential prejudice can be
4 taken care of through redaction.
5 THE COURT: All right. Do you have a proposed
6 redacted version for my review?
7 MR. MORRIS: I do.
8 THE COURT: If you could hand that to Ms. Schultz.
9 Anything else we need to discuss before we bring the
10 jury in first for preliminary instructions and then for
11 opening?
15 MR. ANDERSON: Your Honor, there is one thing. I am
16 going to use the word straw buyer and the word scheme in my
17 opening. Rather than getting a lot of objection during the
18 course of my opening statement to those words that defense
19 counsel have already expressed displeasure about, can we just
20 enter into a sort of ongoing objection to that?
21 THE COURT: Is that acceptable, a standing objection
22 to the Government's use at any time of scheme or straw buyer?
23 Mr. Tedmon?
24 MR. SAMUEL: Are you prepared to stipulate to that,
25 that that standing objection lasts throughout the whole trial?

1 MR. ANDERSON: Through the opening statement.
2 THE COURT: So for now for opening statement.
3 MR. SAMUEL: I'm just trying to preserve our
4 objection for appealable issues.
5 THE COURT: Agreed. You don't need to stand and
6 object, but you do have a standing objection to the use of
7 straw buyer and scheme in the opening statement.
8 MR. TEDMON: That's fine.
9 MR. SAMUEL: Yes, Your Honor.
11 THE COURT: All right. And I'll consider, based on
12 what I hear, whether or not I need to make a clarifying
13 statement.
14 MR. ANDERSON: Thank you, Your Honor.
15 THE COURT: All right. Let's bring the jury in.
16 We will be using the back door, by the way. We had
17 thought about using Judge Karlton's jury room, but rather than
18 have the jury navigate around counsel table they will just
19 always be coming in and out the back door. That was Ms.
20 Schultz's plan.
21 (Pause in proceedings.)
22 MR. ANDERSON: Your Honor, so the record is clear,
23 the way that the jury will be brought in and where Mr. Head is
24 situated, it will prevent them from ever seeing that he is
25 shackled.

1 THE COURT: Correct. That was a consideration.
2 (Jury in.)
3 THE COURT: You may be seated.
4 Welcome back to court, ladies and gentlemen of the
5 jury. It's good to see you this morning. There is often a
6 last-minute flurry of paperwork on the first morning of trial,
7 so we've taken a few extra minutes to do some housekeeping this
8 morning, but typically we will be ready to go at the time I
9 told you.
10 I understand Ms. Schultz may need to still spend some
11 time with you on orientation, but she can do that during a
12 break, and we will take a slightly longer break if needed.
13 It's my duty to read to you some preliminary
14 instructions. You will have copies with you when you retire to
15 deliberate, just so you know, but these will assist you as you
16 begin as the jury in this case.
17 At the end of the trial, I will give you more
18 detailed instructions, and it's those final detailed
19 instructions that will control your deliberations.
20 It will be your duty to decide from the evidence what
21 the facts are. You and you alone are the judges of the facts.
22 You will hear the evidence, decide what the facts are, and then
23 apply those facts to the law which I will give to you. That is
24 how you will reach your verdict.
25 In doing so, you must follow that law whether you

1 agree with it or not. The evidence will consist of the
2 testimony of witnesses, documents, and other things received
3 into evidence as exhibits, and any facts on which the lawyers
4 agree or which I may instruct you to accept.
5 You should not take anything I may say or do during
6 the trial as indicating what I think of the evidence or what
7 your verdict should be.
8 During trial, you may hear me use a few terms you may
9 not have heard before. Let me just cover a few of those. The
10 party who is charging an individual with committing a federal
11 offense is called the plaintiff. In this action, the plaintiff
12 is the United States.
13 A party being accused of committing a federal offense
14 is called a defendant. The defendants are Charles Head,
15 Benjamin Budoff and Domonic McCarns.
16 Plaintiff is represented by Assistant United States
17 Attorneys Michael Anderson and Matthew Morris, and you met all
18 these people yesterday.
19 Defendant Charles Head is represented by Scott
20 Tedmon. Defendant Benjamin Budoff is represented by Dwight
21 Samuel. And defendant Domonic McCarns is represented by James
22 Greiner.
23 The trial lawyers are not allowed to speak with you
24 during this case. When you see them during a recess and pass
25 them in the halls and they do not speak to you, they are not

1 being rude or unfriendly. They are simply following the law.
2 You will sometimes hear me refer to counsel. Counsel
3 is another way of saying lawyers or attorneys. I will
4 sometimes refer to myself as the Court.
5 There are rules of evidence that control what can be
6 received into evidence. From time to time during trial I may
7 make rulings on objections or motions made by the lawyers.
8 When I sustain an objection, I'm excluding that evidence from
9 the trial. If I sustain or uphold an objection to a question
10 that goes unanswered by the witness, you should not draw any
11 inferences or conclusions from the question. When I overrule
12 an objection, I am permitting that evidence to be admitted.
13 It is a lawyer's duty to object when the other side
14 offers testimony or other evidence that the lawyer believes is
15 not admissible. You should not be unfair or partial against a
16 lawyer or the lawyer's client because the lawyer has made
17 objections.
18 You should not infer or conclude from any ruling or
19 other comment I may make that I have any opinions on the merits
20 of the case favoring one side or the other. I do not favor one
21 side or the other.
22 To help you follow the evidence, I'll review that
23 brief summary of the charges against the defendants that I
24 shared with you yesterday. The defendants, Charles Head,
25 Benjamin Budoff, and Domonic McCarns, each are charged by the

1 Superseding Indictment with conspiracy to commit mail fraud.
2 Charles Head is also charged with three counts of
3 mail fraud. The Superseding Indictment alleges that between on
4 or about March 19th, 2005 and continuing to at least June 30th,
5 2006, the defendants conspired to target distressed homeowners
6 in order to obtain title to their homes and steal their equity.
7 As part of the conspiracy, it is alleged that the
8 defendants made false statements and omissions to homeowners,
9 including statements that the homeowner would remain on title
10 to the home with an investor or company, that little or no
11 equity would be removed from the home, and that their credit
12 would be repaired. However, the defendants intended to place
13 title into the names of paid straw buyers and remove the equity
14 from the homes.
15 It is further alleged that the defendants would use
16 false statements on loan applications, including statements
17 regarding the income, assets and employment history of the
18 straw buyers, in order to get loans against the value of the
19 homes. Money from these loans would then be diverted out of
20 escrow into accounts controlled by the defendants or their
21 conspirators. The defendants deny these allegations.
22 All persons stand equal before the law and are to be
23 treated as equals.
24 To review the evidence you are to consider in
25 deciding what the facts are, it consists of the following: The

1 sworn testimony of any witness, the exhibits which are received
2 into evidence, and any facts to which the lawyers have agreed.
3 The following things are not evidence, and you must
4 not consider them as evidence in deciding the facts of this
5 case: Statements and arguments of the attorneys, questions and
6 objections of the attorneys, any testimony I instruct you to
7 disregard and anything you may see or hear when court is not in
8 session, even if what you see or hear is done or said by one of
9 the parties or one of the witnesses.
10 Some evidence may be admitted for a limited purpose
11 only. When I instruct you that an item of evidence will be or
12 has been admitted for a limited purpose, you must consider it
13 only for that limited purpose and for no other.
14 Now evidence may be direct or circumstantial. Direct
15 evidence is direct proof of a fact such as testimony by a
16 witness about what that witness personally saw, or heard, or
17 did. Circumstantial evidence is proof of one or more facts
18 from which you could find another fact.
19 Inferences are deductions or conclusions which your
20 reason and common sense lead you to draw from facts which have
21 been established by the evidence in the case.
22 You should consider both kinds of evidence. The law
23 makes no distinction between the weight to be given to either
24 direct or circumstantial evidence. It is for you to decide how
25 much weight to give to any evidence.

1 In deciding the facts in this case, you may have to
2 decide which testimony to believe and which testimony not to
3 believe. You may believe everything a witness says, or part of
4 it, or none of it. In considering the testimony of any
5 witness, you may take into account the following: Number one,
6 the opportunity and ability of the witness to see, or hear, or
7 know the things testified to; number two, the witness' memory;
8 number three, the witness' manner while testifying; number
9 four, the witness' interest in the outcome of the case and any
10 bias or prejudice; number five, whether other evidence
11 contradicted the witness' testimony; number six, the
12 reasonableness of the witness' testimony in light of all the
13 evidence; and, number seven, any other factors that bear on
14 believability.
15 The weight of the evidence as to a fact does not
16 necessarily depend on the number of witnesses who testify. The
17 test is not which side brings the greater number of witnesses
18 or takes the most time to present its evidence, but which
19 witnesses and which evidence appeal to your minds as being most
20 accurate and otherwise trustworthy.
21 At the end of the trial, you will have to make your
22 decision based on what you recall of the evidence. You will
23 not have a transcript of the trial. I therefore urge you to
24 pay close attention to the testimony as it is given.
25 If at any time you cannot hear the testimony,

1 evidence, questions or arguments, or see the witnesses or
2 evidence, please let me know immediately so I can correct the
3 problem. Just speak out or raise a hand, and we'll fix that.
4 If you wish, you may take notes to help you remember
5 what witnesses said. If you do take notes, please keep them to
6 yourself until you and your fellow jurors go to the jury room
7 to decide the case. Do not let note taking distract you so
8 that you do not hear other answers by witnesses or observe
9 witnesses or evidence. When you leave, you can leave your
10 notes in the courtroom on your chair. They will be safe there
11 until the next time you appear.
12 Whether or not you take notes, you should rely on
13 your own memory of what was said. Notes are only to assist
14 your memory. You should not be overly influenced by the notes.
15 From time to time during trial it may become
16 necessary for me to talk with the attorneys out of your hearing
17 either by having a conference at the bench while you're present
18 in the courtroom, as you saw yesterday, or by calling a full
19 recess.
20 Please understand that while you are waiting we are
21 working. The purpose of any conference is not to keep relevant
22 information from you, but to decide how certain evidence is to
23 be treated under the rules of evidence and to avoid confusion
24 and error. We will, of course, do what we can to keep the
25 number and length of any conferences to a minimum. I may not

1 always grant a request for a conference. Do not consider my
2 granting or denying a request for a conference as any
3 indication of my opinion of the case or what your verdict
4 should be.
5 I'll now say just a few words about your conduct as
6 jurors. First, keep an open mind throughout the trial and do
7 not decide what the verdict should be until you and your fellow
8 jurors have completed your deliberations at the end of the
9 case.
10 Second, because you must decide this case based only
11 on the evidence received in the case and on my instructions as
12 to the law that applies, you must not be exposed to any other
13 information about the case, or to the issues it involves during
14 the course of your jury duty.
15 Therefore, until the end of the case or unless I tell
16 you otherwise, these are the essential ground rules that apply,
17 and they elaborate on what I told you yesterday. Do not
18 communicate with anyone in any way, and do not let anyone else
19 communicate with you in any way about the merits of the case or
20 anything to do with it. This includes discussing the case in
21 person, in writing, by phone, or electronic means via e-mail,
22 text messaging, or any internet chatroom, blog, website or
23 other feature.
24 This applies to communicating with your fellow jurors
25 until I give you the case for deliberation, and it applies to

1 communicating with everyone else including your family members,
2 your employer, and the people involved in the trial. Although
3 you may notify your family and your employer that you have been
4 selected as a juror in the case.
5 If you are asked or approached in any way about your
6 jury service or anything about this case, you must respond that
7 you have been ordered not to discuss the matter and then report
8 that contact to the Court.
9 Because you will receive all the evidence and legal
10 instruction you properly may consider to return a verdict,
11 again, do not read, watch or listen to any news or media
12 accounts or commentary about the case, or anything to do with
13 it. Do not do any research such as consulting dictionaries,
14 searching the internet, or using other reference materials.
15 And do not make any investigation or in any other way try to
16 learn about the case on your own.
17 It's the law that requires these restrictions to
18 ensure the parties have a fair trial based on the same evidence
19 that each party has had an opportunity to address. A juror who
20 violates these restrictions jeopardizes the fairness of these
21 proceedings. If you learn that any juror is exposed to any
22 outside information, please notify me immediately.
23 Third, if you need to communicate with me, you may
24 simply give a signed note to the clerk, Ms. Schultz, and she
25 will get that to me, and I'll address it promptly.

1 And, fourth, do not make up your mind about what the
2 verdict should be until after you have gone to the jury room to
3 decide the case, and you and your fellow jurors have discussed
4 the evidence. Keep an open mind until then.
5 The next phase of the trial is about to begin.
6 First, each side may make an opening statement. An opening
7 statement is not evidence. It is simply an outline to help you
8 understand what that party expects the evidence will show. A
9 party is not required to make an opening statement.
10 The party will then present evidence, and counsel for
11 the defendants may cross-examine. Then the defendants may
12 present evidence, and the counsel for the plaintiff may
13 cross-examine.
14 After the evidence has been presented, the attorneys
15 will make closing arguments, and I will instruct you on the law
16 that applies to the case. After that, you will go to the jury
17 room to deliberate on your verdict.
18 With that, ladies and gentlemen, those are your
19 preliminary instructions. I'm going to acknowledge the
20 Government, Mr. Anderson, to make the Government's opening
21 statement.
22 We will take a break, just so you know, around
23 10:30 or a little bit thereafter. Mr. Anderson.
24 MR. ANDERSON: Thank you, Your Honor. Good morning.
25 Charles Head ran a company where sales agents like

1 Domonic McCarns were encouraged to make false statements and
2 leave out key information in order to steal people's homes and
3 equity right out from underneath them. Other employees like
4 Benjamin Budoff helped make false statements to lenders in
5 order to get mortgages on those same homes.
6 It worked like this. First, get a homeowner to
7 unwittingly sign over title to his or her home, mislead them
8 about the documents they are signing, the deal they are
9 entering into. Second, transfer the ownership or the title of
10 that home to a person that you pay and you control. Third,
11 take out loans against the value of that home, mortgages on the
12 property. When doing that, use that process to skim the equity
13 out of the home into your own accounts. Fourth, continue to
14 collect payments from those homeowners. If you get an
15 opportunity, evict them from their own homes and re-sell their
16 house for a profit.
17 During this trial, you'll hear that this is what a
18 company -- really, a group of companies created and controlled
19 by Charles Head did. Companies by the names of Head Financial
20 Services, HFS, Creative Loans, Funding Foreclosures, 30K Per
21 Year, A1 Property Management. A number of company names but
22 all working together.
23 They would get sales leads from sources across the
24 United States. They would get leads from the internet. They
25 would get referrals from brokers that were in many different

1 states. What they were looking for was homeowners who were a
2 little bit behind on their mortgage payments but who had
3 substantial equity in their homes.
4 The sales agents would talk to the homeowners. They
5 would give them the sales pitch. Domonic McCarns made that
6 sales pitch to many homeowners, who you will hear from in this
7 trial. And the pitch was not always the same. He said what it
8 took in order to get those homeowners to do the deal.
9 But you'll hear in this trial about some common false
10 statements and omissions that were made to many of the
11 homeowners. Statements like, you'll remain on title to your
12 home, you'll be on title to your home with an investor or with
13 a company, all or most of the equity will remain in your home,
14 or, it will remain in a trust that we set up, your credit will
15 be repaired by this program.
16 But you'll also hear in this trial what really
17 happened. The homeowners were removed from title to their
18 homes. These so-called investors weren't actual investors at
19 all. The equity from the home was almost immediately taken
20 from the home and put into accounts controlled by the
21 conspirators. And people's credit was not repaired.
22 See, the real key in this scheme was to get the
23 homeowners to sign documents. These documents provided cover
24 for Head Financial Services to take the equity out of the
25 homes. The sales agents would say one thing to the homeowners,

1 and meanwhile have them sign documents that said something
2 else. In fact, you're going to hear from one Head Financial
3 Services employee as an example, Keith Brotemarkle.
4 Mr. Brotemarkle has pled guilty, and he admits to
5 making false statements himself. In the course of this
6 business, this conspiracy, Mr. Brotemarkle complained by e-mail
7 to Charles Head that Domonic McCarns' sales pitch was so
8 egregious that McCarns needed to be stopped. You'll see the
9 e-mail that was recovered by forensic computer analysis that
10 corroborates that statement from Mr. Brotemarkle.
11 As a result of that e-mail, nothing happened.
12 Homeowners continued to be deceived and many homeowners were
13 deceived. They would sign over title to their homes, or it
14 would look like they had, to one of the defendant's straw
15 buyers. You'll hear the term straw buyer used in and defined
16 in this trial. But in general it's somebody who purports to be
17 an owner of property but isn't actually taking an interest in
18 the property, not planning to make the payments or actually
19 control the property. Because it was Head Financial Services
20 that was really buying these properties.
21 The straw buyers are also where we get to Benjamin
22 Budoff's part in all of this. The evidence will show that
23 Budoff both worked to help recruit straw buyers into the
24 program, and that Benjamin Budoff also helped to make false
25 statements on loan applications in order to get the mortgages.

1 In this case, the straw buyers were recruited over
2 the internet by word of mouth. And in some cases, they were
3 even family members of people involved in the scheme such as
4 Kerry Budoff, Benjamin Budoff's brother.
5 What Budoff would do is use the straw buyer's
6 identity and credit in order to get a loan on the home. As
7 part of this process, these straw buyers would sign mortgage
8 documents, loan applications, that contained false information.
9 Sometimes they knew that there was false information, and
10 sometimes they didn't. And this information would be things
11 like income, assets, employment, and so on. Things that would
12 be important to the bank in deciding whether or not to approve
13 the loan.
14 Once the straw buyer qualified for the loan, then the
15 money would go into escrow. An example of the false statements
16 in order to get this money into escrow on the loan applications
17 were e-mails that you are going to see where Benjamin Budoff
18 discusses increasing a straw buyer's income level on an
19 application in order to make sure that the straw buyer
20 qualifies for the loan.
21 In another example, you'll hear how Head Financial
22 Services would take money, send it through wire into a straw
23 buyer's account, have the straw buyer then take the money out
24 of the account and get a cashier's check. Then that cashier's
25 check would be sent back so that it would look like the straw

1 buyer, and not Head Financial Services, was making the down
2 payment on the property.
3 So here we are, sales agents like McCarns make false
4 statements to homeowners in order to get them into the program.
5 Then other employees, like Budoff, make false statements to
6 lenders in order to get the mortgages.
7 And this is where the money comes into it. Because
8 once the mortgage is approved, the money goes into escrow
9 through an escrow company. You'll see escrow documents, and
10 you'll see summary charts from the transactions, and they'll
11 show that at this point tens of thousands of dollars were
12 diverted from each of these transactions, each of these loans,
13 not going to the seller of the home, the homeowner, the person
14 who would normally get the money from the sale of their home,
15 but instead being transferred directly into accounts controlled
16 by Charles Head.
17 Toward the end of the trial, Agent Fitzpatrick will
18 walk you through some charts and some examples to show you
19 exactly how this worked, and how the homeowners' equity was
20 sucked out of the home through this method.
21 So now the conspirators have the homeowner's
22 property, they have the mortgage, they've taken out the equity.
23 What they do now is they continue to collect monthly payments
24 from the homeowners. In some cases the homeowners think they
25 are still paying mortgages. In other cases, they've gotten the

1 homeowners to sign what look like lease documents.
2 Now, remember, one of the false statements to these
3 people is that they are going to stay on title or keep the
4 home. But when the homeowners miss a payment, they don't move
5 to evict the homes -- they don't move to foreclose the people
6 from the homes like you would for somebody who owns the home,
7 for somebody who still holds the mortgage, like these people
8 thought they did, what they do instead is they move to evict
9 them like they are leasing the house. This, of course, allowed
10 the defendants to then gain full control over the property.
11 So that's the charged scheme, which covers a period
12 in 2005 to 2006. But in this trial, you are also going to hear
13 additional evidence that's admitted for a limited purpose, and
14 the Judge will instruct you what those limited purposes are.
15 But they include the knowledge and intent of Charles Head.
16 You will learn that prior to 2005, Charles Head had
17 conducted essentially the same scheme with an overlapping group
18 of employees, where false statements were made to homeowners in
19 order to take their homes, their title, their equity. You'll
20 hear from one of those homeowners hopefully today, in fact, who
21 will tell you that Charles Head personally pitched this program
22 to her, personally told her false statements about what would
23 happen, and that her home was lost as a result of the program.
24 To summarize, in this trial you will hear from some
25 of the homeowners who lost their homes and their equity to the

1 defendants. You'll hear from straw buyers whose credit was
2 ruined by the scheme. You'll hear from lenders who will
3 explain how the statements made on the mortgage application
4 were false, agents who participated in the investigation.
5 You'll even hear from some of the co-defendants who
6 pled guilty, who will come in and testify in hopes of gaining
7 additional credit on their sentences. Those people, you will
8 probably not like what they themselves have done, but when they
9 come in and testify, you'll also see e-mails and other
10 documents that corroborate what they are going to tell you.
11 And there will be many documents involved in the case
12 for you to review including documents seized during search
13 warrants, mortgage files, things from the different companies
14 for you to review.
15 Finally, at the end of hearing all this evidence,
16 you'll receive instructions from the Judge about the law.
17 You'll learn about the elements of the offense and when a
18 person is held responsible in a conspiracy for what's done by
19 the other people in a conspiracy.
20 However, for now, just pay close attention to the
21 evidence. Because in the end, the evidence will show that
22 these defendants stole millions of dollars and many, many
23 people lost their homes and equity.
24 When Mr. Morris and I have a chance to address you
25 again at the end of the trial, we will ask you to please

1 carefully consider that evidence, consider the law that the
2 Judge gives you, take it carefully and look at it all together,
3 fitting the pieces together, and find that each of the
4 defendants, Charles Head, Domonic McCarns, and Benjamin Budoff
5 are guilty. Thank you.
6 THE COURT: All right. Mr. Tedmon, do you wish to
7 make an opening statement?
9 Good morning. Couple things I want to get straight
10 from the beginning here. Mr. Anderson gave you what he
11 believes is the road map to the case, what he believes the
12 evidence will show.
13 As the Court has instructed, everything we say this
14 morning in terms of the opening statement is not evidence. The
15 evidence comes through the witness stand. I want to make sure
16 we're clear about that. That's the first thing.
17 Secondly, as it relates to what Mr. Anderson says in
18 terms of the totality of the evidence, he is simply wrong. The
19 key to this case is the contract. That's what you need to
20 focus on.
21 Mr. Anderson skips over that in his opening
22 statement. Well, I'm going to focus in on that this morning
23 for you. Homeowners are going to come in, and they're going to
24 testify.
25 Shannon Taylor, for example, may come in this

1 morning. And she owned a home. And here's what happens.
2 She's in foreclosure. She's about ready to lose her home. My
3 client, Charles Head, who has a background in the mortgage
4 industry, did mortgage loans, had come up with a program to
5 allow people to do two things that they would not have been
6 able to do otherwise with a bank.
7 And those are as follows: One, they are able to stay
8 in their home. That's one. Not lose it. Which I suspect
9 every homeowner will say I was out, I was way behind, and they
10 were foreclosing. Mr. Head's program allowed them to stay
11 there, not have their family uprooted and have to move, kids
12 changing schools, those sorts of things. That's the first
13 point.
14 The second thing that Mr. Anderson doesn't tell you
15 is that they're given money -- 5,000, 10,000, 20,000 dollars,
16 whatever the agreed-upon amount is -- by Mr. Head. They didn't
17 get that otherwise. They were just going to lose their home.
18 Those are two things Mr. Anderson didn't tell you.
19 And within that context, look at the documents. You're going
20 to see a lot of documents in this case. But there is one
21 fundamental document called an equity purchase agreement. And
22 that is the beginning part of the transaction where the
23 homeowner isn't being lied to by my client. They are selling
24 their house. It's clear in the contract.
25 They also execute a lease agreement, which is the

1 rental agreement. Now let me ask you something. In your
2 common sense and knowledge and what you do in your lives, if
3 you own a home, do you pay rent? No. You pay the mortgage.
4 These people sold their home. They knew it. And then they
5 were allowed to rent it back so they could stay there. So
6 Mr. Anderson is simply wrong in what he says.
7 They sold their home, and they were able to stay
8 there. That's what the evidence is going to show. And they
9 rented it back. That's the reality. That's what the evidence
10 is going to show.
11 So in terms of the totality of the contracts, these
12 witnesses, these homeowners are going to say I signed a bunch
13 of documents. And you're going to see all those, or most of
14 them. Some of the particular homeowners don't -- we don't have
15 a full packet. But you're going to be able to tell over the
16 course of time, over the weeks that we're here, what's in those
17 contracts, what's in that packet, and what they signed off.
18 They had a one-week cancellation clause.
19 Mr. Anderson didn't tell you that. Nobody put a gun to their
20 head. Nobody forced them to do anything. They had a right to
21 go see a lawyer. Take a look at this. Is this a good deal?
22 There was no duress, coercion, or anything of the sort. It was
23 a straight-forward contractual approach, and the homeowners
24 engaged in it, and decided to do it because that was their one
25 opportunity to keep their home. And on the back end, if they

1 followed through and made their payments, maybe they could get
2 it back at the end.
3 So when you hear the evidence that I didn't know I
4 was selling my home, I didn't know my name was off title,
5 that's simply not true. That's adverse to the very contracts
6 they signed. So pay careful attention to that.
7 Now there is another thing that Mr. Anderson kind of
8 skips over, and I want to focus in on this in terms of what
9 you're going to hear. He talks about what certain people
10 coming in and testifying. Well most of those certain people
11 are convicted felons. They are cooperators. People like Kou
12 Yang, Keith Brotemarkle, who Mr. Anderson mentioned, John
13 Corcoran, and there is many more. They've all plead guilty,
14 and they are cooperating.
15 And the evidence is going to come out in this trial
16 they are looking for a benefit from the people at that table
17 right there.
18 Now their misdeeds are on them. Not on Mr. Head.
19 That's their problem. And what they're doing is they are using
20 their position to try to improve their only personal
21 circumstances. And their position is, I'll make a deal with
22 the Government, I'll cooperate, and let's just move on.
23 And so you'll hear from those people. But I would
24 submit to you what the evidence is going to show is that the
25 Government, as a back bone to their case, has to put the meat

1 of their case on the backs of these cooperators, who the Court
2 will instruct you, in terms of their testimony, has to be
3 viewed with greater caution than other witnesses.
4 And there is a reason for it. They have a motive to
5 lie, to save their own skin, and that's what's going to happen
6 here, and you'll see that in the next four to six weeks.
7 As it relates to these other companies that
8 Mr. Anderson talks about, let me give you the lineup. We have
9 got -- these are not all of them, but I think there's several
10 of them -- Premier Services, Benjamin Budoff; Matrix
11 Investments, Josh Coffman, he's a cooperator; Loan Foreclosure
12 Help, Leonard Bernot; Paragon Financial, Anh Nguyen; Dynamic
13 Partners, Akemi Botari; Statewide Financial Group, Omar
14 Sandoval, he's a cooperator; Mainline Investment, Justin Wiley,
15 he's a cooperator; Choice Financial Network or Choice One,
16 Andrew Vu; Bridge Capital Investment, Ely Assadi, cooperator;
17 Nations Property Management, John Corcoran, he's a cooperator;
18 and Financial Enterprises, Michael Head.
19 Now, these are all these companies that are owned by
20 other people. They are not operated by Charles Head. Did he
21 have interaction with them? Yes.
22 But here's the thing, and this is what you have to
23 pay attention to particularly as the trial goes forward, the
24 Government is going to try to contextualize these relationships
25 to somehow bleed it over into Charles Head, but they are not

1 going to be successful.
2 So keep in mind the various companies, who owns them,
3 what they did, and where they are today in terms of evaluating
4 their testimony and its credibility. That's very important to
5 do.
6 Now, there's two folks I want to talk about
7 particularly as it relates to the cooperators. There is Kou
8 Yang, who I suspect will testify earlier in this trial rather
9 than later. Kou Yang was an employee of Charles Head at Head
10 Financial Services. And you're going to find out that Kou Yang
11 was the one that was running the show.
12 She was the head of the loan department. She was a
13 loan processor. Mr. Head hired her. She was referred to
14 Mr. Head through his then girlfriend, Elizabeth Huerta Russell,
15 who will also testify, I would suspect.
16 And Kou Yang is the one that's really running the
17 show here. Now she's cooperating. So you got to keep that in
18 mind. There's some other baggage she has that will probably
19 come out. So pay attention to her.
20 The other one is Keith Brotemarkle. He's a
21 cooperator. Mr. Anderson mentioned him in his opening
22 statement. He's got all kinds of baggage, and you'll find out
23 about that.
24 So when you hear these things from the Government in
25 their opening statement, it's kind of shined up, but the

1 shine's coming off, folks, during the trial.
2 MR. ANDERSON: Your Honor, this is opening statement.
3 I'm going to objecting to the argument.
4 THE COURT: Overruled. But, again, this is opening
5 statement.
6 MR. TEDMON: I understand.
7 THE COURT: These are statements of the attorneys,
8 not evidence. This is what the defense believes the evidence
9 will show.
10 MR. TEDMON: That's right. And the shine's coming
11 off. That's what I believe the evidence will show.
12 At the end of the day, when you have all the
13 evidence, and the Court instructs you, the Government will have
14 failed to prove conspiracy in Count One, and the Government
15 will have failed to prove mail fraud in Counts Two, Three and
16 Four. And when we're done and I give my closing argument, I'm
17 going to ask you to come back with verdicts of not guilty on
18 all four counts. Thank you very much.
19 THE COURT: Mr. Samuel, do you wish to make an
20 opening statement?
21 MR. SAMUEL: We're going to switch it up.
22 THE COURT: All right. Mr. Greiner.
23 MR. GREINER: That would be great, Judge.
24 Judge, would you prefer -- could I use the handheld
25 mic? Is that ok?

1 THE COURT: You may. Is that available? We have the
2 --
3 MR. GREINER: I can try that. The last time did it,
4 the electricity --
5 THE COURT: Is the handheld available?
6 THE CLERK: Yes, Your Honor.
7 MR. GREINER: Judge Mueller, courtroom staff,
8 Mr. Morris, Mr. Anderson, Special Agent Fitzpatrick, Special
9 Agent Byrne, Mr. Samuel, Mr. Head, Mr. Tedmon, Mr. Budoff, my
10 client, Domonic McCarns.
11 Good morning, ladies and gentlemen. It's opening
12 statement. You've already heard two. This is my chance to
13 give an opening statement for Mr. McCarns.
14 Now you've already heard from the Judge, and from
15 Mr. Tedmon, and from Mr. Anderson that what we say is not the
16 evidence. That comes from the stand.
17 So in preparing for the opening, I started out
18 getting it down to three hours and seventeen minutes. So I
19 thought that was really great. Then I thought that might be a
20 little long. So then I pared it down to an hour and
21 seventeen minutes. And I thought, people are going to sleep on
22 that one. So this is about half of that. So we're going to
23 move through.
24 But what I want to do is the opening statement is
25 supposed to give you a roadmap of what's going on. I mean,

1 this was an opportunity for the Government to tell you -- you
2 know, we read off 75 witnesses to you when we were picking you
3 as a jury.
4 And so they had an opportunity to say, you know,
5 we're going to call this person, and this is what they're going
6 to say. This is what we believe.
7 Now Mr. Tedmon got up on behalf Mr. Head and said,
8 look, this is what the evidence is going to show as far as he
9 believes.
10 I want to give a little more substance. And I tried
11 to figure out the best approach of this. And I've thought
12 about, okay, I'm going to do a timeline, I'm going to do
13 witness by witness and stuff like that. I'm not going to cover
14 all the witnesses. That's ridiculous.
15 But I think I'm going to break it down into three
16 segments. I'm going to give you a preview of -- Mr. Tedmon
17 said the companies. Mr. Anderson said the companies. Mr. Head
18 operated companies at various time periods, and so I want to
19 give you those operations.
20 Now Mr. Anderson said that there may be evidence
21 coming in prior to the allegations in the Superseding
22 Indictment to show certain things. And that may well happen,
23 and so I want to give you an idea of what the company structure
24 was like, what was going on at that time period. And, my
25 client, Domonic McCarns, wasn't even involved at that time.

1 Wasn't even around.
2 And then the companies changed. They evolved into
3 the timeframe that the Government has the Superseding
4 Indictment. And I want to give you how the company now worked
5 in this timeframe. Then after I do the companies, I want to go
6 and I want to tell you what I believe what the evidence will
7 show.
8 That's kind of like the magic words. You know, we
9 always have to throw that in because we can't argue. This is
10 what the evidence shows. So if I forget to do that, I'm sure
11 somebody will remind me, and then I'll say the magic words,
12 okay, the evidence will show.
13 I want to go through some of the witnesses. The
14 witnesses I believe the Government's going to call to try to
15 prove their case against my client. But I want to go through
16 and tell you what the evidence will show, what they're going to
17 say. And then finally I want to cover a couple of things, some
18 highlights, some e-mails, and highlight some statements, so you
19 get kind of a broad overview.
20 Okay. So that's where we're going. Going to try to
21 compact it, keep your attention, so you stay with me.
22 All right. Okay. So let's start. We have to go
23 back to companies before my client even worked there. Now, to
24 give you something to grab on to, my client started working in
25 the Head companies right around January -- end of

1 January/February of 2005. Okay. So that can give you kind of
2 a road stop sign. All right. So we're going to talk now prior
3 to that.
4 And what I believe is that the Government's going to
5 call a witness from the stand, Shannon Taylor. And she's going
6 to testify what happened prior to that time period. Because
7 that's how the companies were operating.
8 All right. How were the companies operating? Well,
9 Mr. Head had devised companies where if you take a circle and
10 you divide it in half, on one side of the circle you heard
11 Mr. Tedmon talk about all these companies, these Matrix and all
12 like that, well those were LLCs, Limited Liability Companies.
13 And Mr. Head's idea was he wanted people, Omar Sandoval, Justin
14 Wiley, Joshua Coffman, to work for him and get these LLCs, so
15 that when they did their program, money could go into the LLCs,
16 and they would be split 50-50 with Mr. Head and these people
17 that were working at the time.
18 And so that's kind of like the 50-50 program. Okay.
19 And that's what they did. And so Shannon Taylor is going to
20 get on the stand, and she's going to say, look, I was down in
21 Fresno. And what happened was that Charles Head, and
22 Mr. Coffman, and Cindy Gastelum come to her house with these
23 documents, to sign the documents. And they were documents, and
24 I signed them. And she's going to testify to that. And the
25 purpose of that is to show how the company worked prior to the

1 time of the Superseding Indictment where my client is charged.
2 In that first form of the company, loan documents,
3 refinancing was all handled by Charles Head. The LLCs, these
4 people - Omar Sandoval, Joshua Coffman, Justin Wiley - they're
5 the people that went out and got various individuals. They
6 used postcards. Mailed postcards out to people by mass
7 mailers. They got lists to be able to mail these out.
8 People that were behind on their mortgage payments.
9 You can get lists for everything. And they would mail them
10 out. And these people would call in and then away they would
11 go.
12 So that's how the program was running in what I call
13 the 50-50 program, before my client was even working for the
14 Head program. So that's kind of like a broad stroke prior.
15 All right. Now, let's now jump ahead to where my
16 client started working and what's the construction of the
17 companies.
18 All right. As I said, the road sign, my client
19 started working about January/February 2005. At that time, the
20 company was in transformation. Mr. Head was changing. When he
21 had first started in the 50-50 was just home loans and
22 refinances, and then Mr. Head decided he wanted to move the
23 company from home loans and refinancings to foreclosures.
24 Okay. Now, Domonic McCarns, my client, not an owner
25 of a company, wasn't a limited liability corporation, didn't

1 have any LLC. He was an employee. Went to work. He was an
2 employee. You'll see that he's on telephone lists as being an
3 employee.
4 He didn't have any management authority. He didn't
5 have any supervision authority. He didn't make decisions. He
6 was told what to do in a business that was transforming and
7 being compartmentalized into various areas.
8 Now I don't want to get lost in the forest. All
9 right. So Mr. Head is deciding that he wants to change the way
10 his program is going to be working, so he wants to move from
11 home loans and refinancing, and he wants to go to foreclosures.
12 Now, still using postcards and sending them out to people as
13 leads, still trying to contact brokers and saying, hey, if you
14 have people that are in situations that they are in
15 foreclosure, they missed their house payments, they can't
16 refinance, maybe we have a program that can help out. And
17 referral fees were given to brokers that would send people to
18 Mr. Head's company.
19 Now Mr. McCarns, Domonic McCarns, was an employee, no
20 managerial authority. And the way the company was starting to
21 evolve and be broken up, you've heard the name of Kou Yang.
22 Okay. Now Kou Yang started working for Mr. Head way back in
23 2000/2002. Long before Domonic McCarns was ever in the
24 picture.
25 Okay. So her history with Charles Head goes back

1 years. So it's not surprising that she's, as Mr. Tedmon said,
2 she's running the operation. You will see e-mails where she's
3 telling people what to do. And on some of these e-mails my
4 client is cc'd saying "need appraisals, use these lists, here's
5 what we got going." Because she's running the show.
6 Now her position changes a little bit when the
7 programs change, when Mr. Head changes his program. Remember,
8 it was going from home loans and refinancing over to
9 foreclosures. And what Kou Yang was doing in the foreclosure
10 part of it was she was head of processing documents. Okay.
11 Processing the documents going to the banks.
12 All right. And so it was starting to break up and
13 become compartmentalized into different areas. So Kou Yang had
14 this area. And one of the people that worked under her, you'll
15 see e-mails and hear testimony, Sam Vu, a female. And you'll
16 see e-mails going and talking I need appraisals and what's
17 going on.
18 Okay. The other part of this foreclosure business
19 was Keith Brotemarkle. He was in charge, as the Government has
20 said, and which I will say, he was in charge of getting
21 investors or what the Government says straw buyers. He had
22 people working under him. They would have websites on the
23 internet to try to get people interested in being investors on
24 properties, or, as the Government says, straw buyers. They
25 would be paid $5,000 per property.

1 But that was Keith's part of the business. But Keith
2 wasn't satisfied with just that part. Keith wanted to run the
3 whole show. And so there was always a power struggle between
4 Keith and Kou, who was doing what, who was in control, what was
5 going on. But Keith was the one that was in charge of getting
6 all of the investors and filling out what you'll see in the
7 documents, the loan applications.
8 Now, when Keith arrived, the company had documents
9 everywhere. It was pretty much a mess. I apologize for doing
10 this, but you have to step back for a second into that 50-50
11 part of the company. Back in the olden days, in the 50-50, it
12 was Kou that was typing out all the documents, all the loan
13 applications, all the letters, all the equity property
14 agreements. She was doing it by hand, typing them out, right.
15 And you'll see on some of the documents there's mistakes.
16 Wrong names. Wrong dates. Okay. That's because they had to
17 be typed out.
18 When Keith arrived, and this is now 2005 and forward,
19 when Keith arrived, he brought a different vision. He and
20 Charles Head decided you know what we're going to computerize
21 this, and that's what they did. They made computer programs.
22 They had programs for seeing if people could qualify for their
23 program. What did they owe on the house? What was their
24 foreclosure? Could they make it work? That was all done by
25 Keith. And Keith's the one that filled out all the loan

1 applications.
2 You will not hear any evidence from the stand nor
3 will you see any document that has Domonic McCarns' name on a
4 loan application. Because that's not his job. That's not what
5 he did. His job on a day-to-day basis was on the telephone,
6 talking to people.
7 Now I'm going to stop for a half second. Because I'm
8 going to give you the theme that I'm going to try to have the
9 evidence show from the stand and the documents through the
10 case.
11 The theme is in two parts. No connection. Put it in
12 writing. The no connection is the Government has charged that
13 my client is involved in a conspiracy. Well, they have to
14 prove that he was in the conspiracy. They have to prove he had
15 intent to be in this conspiracy. Knowledge.
16 And the evidence from that stand, from the witnesses
17 that we're going to cover in just a second are going to show
18 that that didn't happen. So that's the no connection.
19 Put it in writing. Remember, Mr. Anderson stood up
20 here in opening and said, well, they made all these
21 representations. Domonic McCarns got on the phone and said,
22 well, you'll remain on title, and your equity won't be taken,
23 or you'll be put in a trust, or you won't have to lease your
24 house, and your credit will be repaired, and all that's false.
25 Well, number one, the evidence is not going to

1 support that. And just to try to hit right straight at the
2 bullseye for a half a second. You'll see in evidence a letter
3 from an attorney sending a bill to Domonic McCarns for doing
4 credit repair on an individual. Government didn't tell you
5 that. Government said there was no credit repair. That was a
6 false statement. Well, it's in writing. A letter, a bill, and
7 a payment. It's not going to be me saying it. It's going to
8 be the document.
9 All right. So we've got the company going on. We've
10 got Keith Brotemarkle. He's doing the loan applications. He's
11 finding the investors. We've got Kou doing the processing.
12 We've got my client, Domonic McCarns, he's the one on the phone
13 selling, and he's talking to people. And the Government says,
14 hey, he made misrepresentations, and he's part of the
15 conspiracy, and he should be found guilty.
16 Now trying to think if there is anything else about
17 the business part of it, how it works. Let me cover this.
18 What Domonic McCarns sends to individuals that he talks to on
19 the phone are some of the things you've already heard - equity
20 property (sic) agreement in writing, notice of cancellation
21 document in writing, addendum to the equity purchase agreement,
22 notice pursuant to California law in writing, grant deeds in
23 writing, warranty deeds in writing, lease agreements in
24 writing, option agreements to purchase and to lease in writing.
25 All in writing. Sent.

1 Now, one thing the evidence is going to show is a
2 difference between the 50-50 companies, remember the LLCs split
3 the 50-50, and when my client, Domonic McCarns, was working,
4 2005-after, is that in the 50-50 companies, those people would
5 meet person-to-person with the homeowners and sit down and have
6 them sign documents.
7 My client, what the evidence will be from the stand
8 and from the documents, my client talked to them on the phone,
9 sent them documents, never met with them and pressured them,
10 never met with them and had them hurry through and sign
11 documents, sent the documents to the people, read them, review
12 them, have people read them. So that's a difference. Okay.
13 Trying to think if there is anything else about the
14 business that I need to cover with you. I don't think so.
15 Probably halfway through I'll think of something.
16 But let me now talk about witnesses. And, again, I
17 don't know for certain who the Government's going to call. All
18 I know is that they listed 75 people. They don't have to call
19 them all. They can call several of them. But I think that
20 this is a pretty good list of who they are going to call.
21 Okay. So let's talk about them. All right. And
22 I've put them in time sequence, in a timeline, so that they
23 make a little bit of sense. Because as you remember, during
24 voir dire some of the attorneys stood up and said, hey, if the
25 evidence comes in piecemeal, and one over here to the piece,

1 and over here, can you follow it.
2 Well, here's a timeline to try to help you so as the
3 witnesses come on the stand, you know where they fit in. Okay.
4 I already talked about Shannon Taylor. That's back in 2004.
5 That's April 2004. She's from Fresno. She had a husband named
6 Ben. And Domonic McCarns wasn't involved, and that's in the
7 50-50.
8 But we're going to talk to her. Because through her
9 the evidence is going to show the difference in what happened
10 to her and when Domonic McCarns was working. That's going to
11 be the important part for my client.
12 All right. Then 2005, February 7th, Delma Romero.
13 Okay. Now, Delma Romero had a house in Modesto. That's where
14 she lived. And she's kind of interesting, in a sense. Delma
15 Romero on a prior occasion gave some testimony. And when she
16 testified, she said that she had spoke to Charles Head. She
17 had spoke to Charles Head about what was going on and about her
18 house, her situation.
19 And at this prior occasion she was asked some further
20 questions, and then said she, oh, no, wait --
21 MR. TEDMON: Your Honor, I'm going to object to
22 restating prior statements. I mean, he's supposed to be
23 stating what the evidence may show. Not reciting some other
24 past event.
25 THE COURT: Sustained.

1 MR. GREINER: So --
2 THE COURT: The Government computer appears to be
3 making -- can we just turn that off entirely?
4 MS. KENNEY: I just did.
6 MR. GREINER: So Delma Romero is down in Modesto, and
7 it is probably one of the earliest clients that Domonic McCarns
8 has any type of connection with at all, if he has any
9 connection. But she's sent documents. Equity purchase
10 agreement. Notice of cancellation. I mean, she sent those.
11 Now, at the time that she contacts Charles Head's
12 company, she's already in foreclosure. A notice of foreclosure
13 has already been filed in January of 2005. And so she's under
14 the gun. Okay. So that's Delma Romero. She has documents.
15 She signs them. We'll go through it with her, and we'll talk
16 about certain circumstances and what's happening.
17 Now, the next individual is April 14th, and her name
18 is Latasha Butts, and she lives in the State of Florida. And
19 here's what's interesting about Latasha Butts. Latasha Butts
20 is a loan officer. There is an e-mail correspondence between
21 Ms. Butts and my client, Domonic McCarns, and that clearly
22 shows that she's a loan officer. And as a loan officer, she
23 knows the mortgage business. She knows documents.
24 And my client sends those documents, purchase
25 agreement, notice of cancellation, addendums, notice pursuant

1 to California law. All of these documents are sent. She has
2 an opportunity to read them, have them reviewed. And she signs
3 and enters into the program.
4 Now, understand Domonic McCarns' position is to talk
5 to the people on the phone. Once in a while to set up to make
6 sure that they are available for signings because they have to
7 sign documents with notaries. Maybe to make sure the appraisal
8 gets done.
9 Because at the beginning, when you have the equity
10 purchase agreement, the evidence is going to show you've got
11 the equity purchase agreement, you have to find out the value
12 of the house to find out what's going on with the person, and
13 you have to find out the status of title, what's owed. Because
14 sometimes, maybe in the excitement of being involved in a
15 foreclosure, individuals don't exactly remember everything they
16 owe on the house or how serious it is.
17 And so at the beginning, Domonic McCarns has to find
18 this information out. But Domonic McCarns is not involved with
19 loan applications, processing the documents to the bank, the
20 funding conditions, the documents that have to be obtained.
21 That's Kou. The loan applications and finding the investor,
22 straw buyer, that's Keith. And Domonic McCarns, the evidence
23 is going to show, has no involvement whatsoever.
24 Now, jumping ahead a little bit, you will see e-mails
25 from Kou, from Keith, from an individual named Ed Shaffer --

1 and we'll get to Ed in just a moment -- that cc'd my client,
2 Domonic McCarns. But there isn't the return e-mail by my
3 client commenting, answering, making any statement to those
4 e-mails. Domonic McCarns has no control who cc's him on
5 e-mails. I mean, he can't block or stop that. But you don't
6 see the return acknowledgement.
7 April 27th. Now this is still in 2005. This is John
8 and Kelly DiSanto. They have a house down in Santa Clarita,
9 California. Here's what's interesting about them. Remember,
10 the Government said everybody lost their house, and they said
11 nobody got credit repaired. I already told you what the
12 evidence is going to show about that.
13 John and Kelly DiSanto entered into the program, had
14 documents sent to them, okay, like we talked about, entered
15 into the program, made their rent payments. And then what did
16 they do? They re-purchased their house. They got it back. It
17 wasn't taken from them. Domonic McCarns didn't steal their
18 house from them. They had a house at the beginning. They
19 entered the program. They had a house at the end.
20 Yolanda McKenzie. That's April 29th. She's up in
21 Minnesota. Yolanda McKenzie. You'll see some e-mails --
22 before I get to the e-mails -- Yolanda McKenzie, up in
23 Minnesota, she was going through a foreclosure. She had the
24 ability to have a family member help her out financially so she
25 didn't have to go through the foreclosure. But she didn't want

1 to do that because she was embarrassed.
2 She was talking with Domonic McCarns and at the same
3 time talking to other investors not connected with Domonic,
4 trying to figure out which program was the best. Now, she was
5 in foreclosure, so her options were limited. And you'll hear
6 that from the stand.
7 And so what happens is when she's talking to this
8 other investor, it doesn't work out because the other investor
9 doesn't think he can make -- or she can make enough money. And
10 so the bottom line, the end that happens to Ms. McKenzie is
11 when she contacted Domonic McCarns, she was already losing her
12 property. It was in foreclosure. But instead of losing her
13 property, Domonic McCarns was able to get her some money to
14 help pay her bills.
15 And you'll see an e-mail to that effect saying, hey,
16 look, you know what, I convinced her to take x-number of
17 dollars, and she's moving out, which she already had to any
18 way. So she got something more than she was going to have
19 prior to talking to Domonic McCarns. And, again, the documents
20 were sent.
21 Deborah Kovacs. May 2nd. She's in Illinois.
22 Deborah Kovacs is kind of an anomaly because documents are sent
23 to her. She looks them over. She signs them. And then it's
24 getting down, time close to the foreclosure. She's supposed to
25 go to a signing to sign the final documents. She misses that

1 signing by one day. I mean, Domonic McCarns is in California.
2 It's Deborah Kovacs that missed the signing by one day.
3 But you'll hear that Domonic McCarns was able to get
4 Deborah Kovacs into the program even after missing the
5 deadlines, getting her some money to pay bills.
6 And here's one piece of evidence that's going to be
7 what the evidence will show from all of the witnesses, the
8 homeowners. They are in foreclosure. They are going to lose
9 their house. And the Government says, well, there was
10 representations that their credit was going to be repaired, and
11 that didn't happen. I've already gone over one of the letters.
12 But their credit was repaired because the foreclosure
13 didn't go through and doesn't show up on their credit report.
14 And so instead of having a foreclosure on their credit report,
15 that foreclosure that they are facing imminently is not there.
16 All right. June 14th, Rufo and Sharolynn Cardenas.
17 And I suspect we're going to hear from her this morning.
18 Interesting. Here's kind of a timeline for them.
19 You'll see an e-mail where she sends an e-mail to Charles Head
20 back in 2003. 2003. Way before Domonic McCarns is working.
21 And then nothing happens. 2004, they file bankruptcy, the
22 Cardenases. And in 2005 they come back. Now Domonic McCarns
23 talks to her, sending her documents, talks to her about the
24 program.
25 Here's the interesting part about her -- and it will

1 also be with another individual later on, Korall Solares in
2 Florida. But she's May 19th in 2006.
3 What the Cardenas -- what Sharolynn Cardenas does is
4 when she goes to sign the documents at the title company with
5 the notary, she stops, and she says I'm not going to sign
6 these. I have some questions. And she doesn't sign them. She
7 goes and talks to her broker. She waits two days. And then
8 she signs them.
9 Domonic McCarns wasn't in Hawaii. Ms. Cardenas
10 stopped the process, asked questions, and then entered into the
11 program.
12 Deborah Brockway. July 5. Up in Washington. Same
13 situation. Documents sent, discussed on the telephone,
14 opportunity to review them, have them reviewed.
15 Now, there is a little twist to Deborah Brockway.
16 And I believe the evidence is going to show -- and the
17 Government rightfully will bring this out -- Deborah Brockway
18 will say, well, you know what, at the beginning I didn't talk
19 to Domonic McCarns. I talked to a gal named Beverly. And I
20 was asking questions of Beverly and trying to get some answers,
21 and I couldn't get answers.
22 And then Ms. Brockway says that she talks to Domonic.
23 Okay. Now, I'm going to ask her about it. See what the
24 evidence is going to be from that. But here's the interesting
25 part of that whole thing, and I want you to hear it right now.

1 When Deborah Brockway is on the stand, I believe the evidence
2 is going to show she's going to testify that she talked on the
3 phone to Domonic McCarns after Deborah Brockway received a
4 $108,000 check. Because this was the selling of the house and
5 the money.
6 Deborah Brockway will say that in that telephone call
7 with Domonic McCarns -- now understand it's all over, right,
8 everything is sold, done, documents are signed -- she's going
9 to say Domonic McCarns told me to send that $108,000 check down
10 to California. She's not going to say told. I believe the
11 evidence is going to say that he yelled at me, I was afraid.
12 Well, if in fact Domonic talked to her, if in fact
13 Domonic had that conversation, he's down in California. And
14 I'm going to ask Ms. Brockway, how would Domonic know about the
15 $108,000? Because, remember, Domonic only talked to them about
16 the program at the beginning. Who is involved in the loan
17 applications and the processing? That's Kou. That's not
18 Domonic.
19 All right. Well, that's Deborah Brockway. Hear it
20 first, and we'll see where the evidence goes.
21 Then you're going to hear about Thomas and Theresa
22 Daffron from Florida. And from my information, Thomas Daffron,
23 if he gets on the stand, is going to say Domonic told him about
24 the program, sent me the documents, told me exactly what was
25 going to happen, and it happened the way he said. Okay.

1 I'm going to skip a couple of people. There's Jorge
2 Toledo in 2006. That's in the beginning of 2006. He's in
3 Arizona. Jerome and Denise Pearlman. They are in Oceanside,
4 California. And I'm going to skip them. And basically because
5 it's all the same.
6 Now whether Domonic McCarns had any contact with any
7 of these people, we'll have to find out. I don't think so.
8 But we'll find out.
9 And then there's Wanda and Kenneth Shifflet from West
10 Virginia. And then Bertha Woods from Ohio. Bertha Woods
11 talked to Domonic McCarns. Domonic sent her the documents.
12 Had them signed. Had her go to the notary. Did the signing.
13 Equity purchase agreement, notice of cancellation, addendum.
14 Those are the documents he's been charged with. That's what's
15 sent. That's what she signed.
16 Then there's an Alfred Limas from Sacramento. That's
17 April 18th. And then on May 5 is a Sheila Jones in Sacramento.
18 Domonic McCarns talked to her. Same documents sent. Same
19 opportunity to review. Put it in writing.
20 I'm going to skip Korall Solares just for a second.
21 I want to do her last.
22 I want to go to Scott and Denise Nowlin on August 6,
23 2006. Now, that's past what's charged in the Superseding
24 Indictment because they said June 30th. But, the Government
25 may want to try to bring them in and bring it in for other

1 things, and so I'm going to talk about it in opening in case
2 the Government does, so you hear it from me first.
3 What's interesting about Scott and Denise Nowlin?
4 What type of individual is present when they do the signing of
5 the documents in Massachusetts? An attorney. If they have any
6 questions, they have anything they want to ask, there is an
7 attorney right there at the signing. Okay.
8 All right. Korall Solares from Florida. Interesting
9 individual for many reasons. But let me just give you what I
10 think is probably the highlight of why she's interesting.
11 Besides the fact that you'll see e-mails trying to get
12 confirmation of money, trying to get her to sign, get dates,
13 besides all of that stuff, besides documents being sent back to
14 her, having an opportunity to sign, she had issues about her
15 husband on the deed, and had to get her husband off and all
16 sorts of collateral stuff.
17 But you know what's the most important when she hits
18 that stand? And if she says, geez, I didn't understand
19 anything that was going on, and Domonic McCarns, he
20 misrepresented, he told me false things. Guess who she works
21 for at that time? An attorney. But not just any attorney.
22 It's an attorney in the State of Florida that works -- has as
23 clients banks. He's on the other side, trying to foreclosure
24 for banks. So she's working on the other side trying to
25 foreclose.

1 THE COURT: Mr. Greiner, you have five minutes.
2 MR. GREINER: Thank you, Judge.
3 But it's not just any attorney that has banks as
4 clients. This is a large operation. 250 employees.
5 But you know what's even more incredible, this
6 attorney that she was working for at the time she was talking
7 to Domonic McCarns, he, the attorney, his office, was
8 committing fraud against the banks. He got disbarred.
9 All right. Let me just give you five little points.
10 Okay. I'm done with the businesses. I'm done with witnesses.
11 I want points and some e-mails. Okay.
12 You already know that Domonic McCarns was hired about
13 January/February of 2005. Guess what the evidence is going to
14 show? He got fired by Ed Shaffer and Keith Brotemarkle. He
15 got fired. In December of 2005 or January 2006. He got fired.
16 And then he went back, and he got rehired, but he got put on
17 probation. And the only way he could be on probation, he was
18 told never to go in to Kou Yang's office, ever.
19 Because you'll see from e-mails, Domonic McCarns is
20 the person at that place of business that questions everyone
21 and everything. What's going on? Why do we have to do this?
22 Why don't you tell me what's happening? Rough exterior.
23 Nobody likes him. But he gets his job done. He works. But
24 nobody tells him things. And he asks questions all the time.
25 Then what's even more incredible is in a meeting with

1 Keith Brotemarkle and Ed Shaffer one day, Kou Yang's
2 significant other, boyfriend, comes barging into that meeting
3 and beats up Domonic McCarns because he made remarks about Kou
4 Yang's working. And what does Domonic do? He calls the cops
5 to the business. In a conspiracy you call the cops? You get
6 fired. That's what the evidence is going to show.
7 All right. I skipped over one individual when I was
8 talking about the businesses, but you've heard the name Ed
9 Shaffer. Ed Shaffer comes on a little bit after Keith
10 Brotemarkle. His part of the program was he wanted to look at
11 all the appraisals. He wanted all the appraisals of the
12 properties to go through him. Okay. And you'll see e-mails
13 like that. Okay.
14 Briefly talk about some e-mails you'll see. You'll
15 see e-mails about postcards. Do you remember I talked to you
16 about sending them out to people? You'll see Domonic McCarns
17 cc'd on e-mails, but no returns.
18 The Government talked to you about Keith Brotemarkle
19 sending an e-mail to Charles Head saying Domonic McCarns is out
20 of control. Do you remember that? The evidence is going to
21 show -- I can't wait to ask questions. I'm not going to tell
22 you what's going to happen, but I can't wait to go over that
23 e-mail with Keith Brotemarkle.
24 He's a cooperating witness. He's talked to the
25 Government many, many times. I can't wait. You're going to

1 see e-mails that say mo money, mo money, mo money from Domonic.
2 You'll see e-mails that say cha ching, we hit the jackpot.
3 He's an employee. He's working hard. He's probably one of the
4 best salesmen there.
5 THE COURT: You should be wrapping up, Mr. Greiner.
6 MR. GREINER: Thanks, Judge.
7 That's it. That's what I think the evidence is going
8 to show. Hopefully, I've given you an outline of what's coming
9 up, witnesses, dates, times, help you put everything together.
10 When everything is done, when the Government has
11 given everything they can, I get one more shot to talk to you.
12 And I will stand up then as I am now.
13 The Government will not be able to meet their burden
14 and prove beyond a reasonable doubt that Mr. McCarns is
15 involved in this conspiracy or any conspiracy. He is not
16 guilty. Thank you, Judge Mueller.
17 THE COURT: We have come to a time for our first
18 break of the day. Let's take a 15 minute break. How much time
19 do you need for orientation, Ms. Schultz?
20 THE CLERK: Ten minutes.
21 THE COURT: All right. Let's make it a 20-minute
22 break. During that break, please remember my admonitions.
23 You'll be able to recite them yourself before long. But don't
24 talk to each other about the case, don't talk to anyone else,
25 don't do any research of any kind including using an electronic

1 device. Don't begin to think about the case's conclusion.
2 There is a lot of ahead, as you can tell. If anyone does
3 attempt to contact you in any way, please let me know
4 immediately. Have a good break. We'll see you back here for
5 one more opening statement before the presentation of evidence
6 begins.
7 (Jury out.)
8 THE COURT: You may be seated if you'd like.
9 Just so I'm clear on the stipulations, there appear
10 to be some references to exhibits in the 500 series. Am I
11 supposed to have any of those?
12 MR. ANDERSON: No, Your Honor. What we did, because
13 they are supporting documents for some of the charts, we
14 designated them with a number, so that they would be easier to
15 refer to if we ever needed to.
16 THE COURT: All right. We'll take a break. See you
17 in 20 minutes.
18 (Break taken.)
19 THE COURT: All right. Just briefly on 124.
20 If I understand correctly, Mr. McCarns is objecting
21 to 124. The other defendants are satisfied by the redactions?
22 MR. TEDMON: That's correct, Your Honor.
24 THE COURT: The Court will allow it to come in. I'm
25 going to overrule the objections of Mr. McCarns. The exhibits

1 may come in as redacted.
2 (Jury in.)
3 THE COURT: You may be seated. Welcome back, ladies
4 and gentlemen. We are ready for the final opening statement.
5 Mr. Samuel is going to make an opening statement on
6 behalf of Mr. Budoff, and he informs me that will take no more
7 than 25 minutes.
8 MR. SAMUEL: Hopefully it won't take more than 25.
9 THE COURT: Well, I will let you know.
10 MR. SAMUEL: Ladies and gentlemen of the jury,
11 counsel, all parties in this courtroom, good morning.
12 First of all, I just want to make some observations.
13 And number one, I'm not going to repeat everything that my
14 counsel, co-counsel have stated. I think that would just be
15 ridiculous on my part. You've already heard it one time, so
16 even though I may not say it again, it doesn't mean it's not
17 important.
18 Number two, the stories that you hear about the loss
19 of one's home are heart-wrenching. There is no doubt about
20 that. They will draw out your compassion, but your obligation
21 is to remove that compassion and consider the evidence as
22 presented to you in a dispassionate fashion. That's really
23 what I wanted to say about that.
24 I have to agree with Mr. Greiner that placing these
25 events in context, particularly time context, is extremely

1 important. So I have a theme as well as Mr. Greiner does, and
2 it's location, timeframe, communication. All essential in
3 placing something into context.
4 You should know in advance that Mr. Budoff will take
5 the stand, and he will testify on his own behalf, and he will
6 provide to you another side or another interpretation, if
7 that's appropriate, of what the events meant to him. So wait
8 until the completion of this case before you render any kind of
9 decision, and wait, of course, as you've been instructed until
10 you have been instructed.
11 It's unique. We have like four different approaches
12 here. I mean every one of us has a different approach to how
13 to handle an opening statement. And I'm no different than the
14 rest of them.
15 Now, some additional thoughts relative to
16 introduction. And that's -- I appreciate, and unfortunately I
17 got lucky enough to be after the break, so I'm sure your
18 attention will be with me throughout this whole presentation,
19 and, obviously, throughout these proceedings, and, obviously,
20 your consideration will be for independent defendants alone
21 when rendering your decision.
22 The opening statement, as has been said by everybody,
23 and I'm going to repeat it, is not really a statement of facts.
24 It's a statement of what we believe. So what has been stated
25 by all parties, including myself, is only what we believe. So

1 don't hold it against us if we are erroneous in something.
2 Because my experience has been this always happens.
3 So we may think one thing's going to happen, something else may
4 happen. It's not our fault. Things are not necessarily in our
5 control. And it's predictable that testimony is not always
6 going to be what we think it is.
7 So let's talk first about the anticipated evidence.
8 And one of the first things that we're going to talk about is
9 Ben's reputation for honesty and truthfulness in the community
10 that he resided in. We know Ben is going to testify, so I
11 think this is important for you to understand who he is.
12 And we're going to call one witness, Michael
13 Tarufelli, who will testify about Ben's character. And Michael
14 has known Ben since 1997, and met Ben, actually, at a Bible
15 study at Ben's house.
16 He kept regular contact with Ben until 2008, which is
17 after the Indictment in this particular case. And he will
18 testify that Ben's reputation in the community was sterling,
19 meaning outstanding, for truthfulness and honesty. That's
20 where Ben is coming from.
21 Now Ben resides in Colorado Springs. That's why this
22 communication is an issue. Because he was only in the Head
23 offices, or whatever name they want to choose, one time. And
24 that included both while he was working -- and he's working in
25 two separate events. He's working, first of all, as a

1 solicitor to obtain buyers, and he has that portion of the
2 case, and then he also was working in the loan aspects of the
3 case.
4 So in all that time, he was living in Colorado
5 Springs. So we have no situation in which he's engaged in
6 daily conversations. There is no situation in which he's
7 around the water tank talking to everybody else while everybody
8 else is there. And you're going to find out about the
9 atmosphere in those offices and what was going on.
10 And the only thing that you're going to see is
11 occasionally he responds to an e-mail, and occasionally he gets
12 cc'd without responses. The same comment that Mr. Greiner
13 made. Doesn't reflect what his understanding is unless, of
14 course, he responds, and that still doesn't reflect it, and
15 you're going to hear Ben testify about it.
16 On occasion -- and this is where we're going to get
17 to Kou Yang. But right now I'm just going to put it out to
18 you. Mr. Budoff, while he was involved with the loaning
19 process, would only be sent the last page of the 1003 form or
20 the loan application form. And he would send it back and sign
21 it off.
22 Now, let's start with Ben as involved with buyers.
23 Ben will characterize that as a win/win situation. Because
24 what it did -- well, let's put it in context first though.
25 Before Ben came into this business at all, he didn't

1 have any experience whatsoever in the mortgage company
2 business, the loan processing. He had no knowledge whatsoever.
3 He would be characterized as a kind of blue collar kind of
4 worker. But he did have some experience with buying a house.
5 And he's going to explain to you what his experience was
6 because that involved, actually, somebody else putting money up
7 into an account, which the bank knew about, and getting a loan.
8 So there is a part of the context that you're going to get
9 involved with.
10 Now in 2005, Ben starts to work the leads for the
11 investigators (sic) which are provided by Mr. Brotemarkle.
12 Actually, it's about May or June of 2005. And this is an
13 important chronological situation. Before that time you really
14 can't saddle him with the knowledge of any other individual.
15 And contrary to what the Government is attempting to
16 do, which is blanketing everybody with a blanket of knowledge
17 that everyone is all knowledgeable about everything, this is
18 not true. The Government's going to have to prove
19 independently the communications and the knowledge of my
20 client, Mr. Budoff. And I don't think they're going to be able
21 to do that.
22 But what Ben does is he truthfully presents the plan
23 to the investors. But who is the guy who told Ben how to
24 present it? Well, that's Keith Brotemarkle. So Ben is relying
25 upon Keith to advise him on how to present this program. And

1 so there is the beginning of miscommunication,
2 misunderstanding, just to begin with.
3 Ben explains to the investors about the lease
4 buy-back program. You've already heard about that. I'm not
5 going to go into it any further, but I adopt all the comments.
6 Ben thinks he is doing good. Finding people that
7 will help others re-establish their credit and get back on
8 their own feet. His belief is that he is helping. It's a
9 win/win situation.
10 Ben recruits his own brother, Kerry, and also
11 Mr. Mizell from his own church group to go and get involved as
12 buyers in this particular event. And then Ben follows up by --
13 and, finally, one of the things that Ben does besides
14 soliciting buyers is to follow up and obtain information from
15 the buyers that would be relevant, such as income, et cetera,
16 et cetera. Now this is not while he's a loan person, but while
17 he's soliciting buyers, and then he would pass them on. That
18 was kind of what his job was. And he would pass them on to a
19 company called Creative Loans.
20 Now Creative Loans would be the processing agency
21 that was involved in this procedure for some time. But it will
22 change, and you'll see, as Mr. Greiner reflects, there is
23 actually a third change, and I'll give you those dates shortly.
24 And then, of course, Creative Loans pays Ben for his
25 work. I mean, that's logical. And I believe that you will not

1 hear a buyer which Ben solicited tell you that Ben misled them.
2 Now I may be wrong, but there's a lot of material
3 here, and I don't believe that's going to happen in this case.
4 Now, May of 2005 through August 21st of 2006, that's
5 the chronological period which is somewhat relevant. May of
6 2005 is when Ben was involved with buyers all the way up
7 through and, actually, past August 21st of 2006.
8 But what happens August 21st, 2006 is that the --
9 sorry -- Creative Loans was the party that was involved with
10 the processing of loans. And the Creative Loans was run by
11 Brotemarkle, and the primary employee was Kou Yang, or some
12 people interpreted that Kou Yang was running Creative Loans.
13 But either one. Both of those parties are involved.
14 Funding Foreclose was run by Brotemarkle as well.
15 I'm not too technical. Does this come out? Still have my
16 time, Your Honor.
17 And Nation's Property Management was run by Jack
18 Corcoran. All names which you've heard, and I'll mention some
19 of them later.
20 All of these companies were located at the same
21 address, and at least I believe they were all in the same
22 building. So there was a lot of conglomerate knowledge passed
23 around between parties. We don't know what it is. But, I
24 mean, one could infer that. But Ben, of course, was in
25 Colorado Springs. He wasn't there.

1 And you also see in the presentation by the
2 prosecution, as well as other parties, that the contracts that
3 are involved with the sellers are in flux. There is constant
4 change going on. And this will become apparent by the evidence
5 as we go through the process.
6 August 21st. That's the date in which Mr. Head
7 decides to sell everything that he had to a guy named Lavar
8 Fletcher. I believe you'll see a contract of sale.
9 You'll see Head sells all of his interest for an
10 amount of $15 million to a guy named Lavar Fletcher, of which
11 Lavar paid $200,000 up front to take over the business.
12 And at that point in time, that's the beginning of
13 the business changing or morphing into another third kind of
14 set of businesses, actually. And, of course, September is when
15 it becomes more crucial. And, of course, that's after the
16 Indictment date. But, of course, they're going to offer
17 additional evidence.
18 But that September is when Mr. Budoff becomes
19 involved in the loan processing business himself. Actually,
20 September Ben borrows $60,000 to take over Creative Loans. Why
21 would somebody do that if he knew it was all in vain and that
22 it was a criminal enterprise?
23 Ben has absolutely no experience at this point with
24 processing. None whatsoever. The closest that he has come to
25 it would be to forward materials of information to Kou Yang

1 and/or Keith Brotemarkle.
2 He's still in Colorado. That hasn't changed at all.
3 So the communication is primarily via e-mail. Ben sets up the
4 new business with a new address, new checking account, keeps
5 the same employees. That's probably one of his biggest
6 mistakes. And he makes them W-2 earners. All legitimate. All
7 consistent with a legal process.
8 But Ben, when he takes over this thing, hasn't had
9 any formal training. And the e-mails that you will see will
10 reflect that Ben is requesting training. And who is he
11 requesting training from? Keith. And he doesn't understand
12 the process.
13 Now, the important aspect about this is it's
14 September of '06, and November 16th is when the FBI came in.
15 Things stop. About two months.
16 Now, how many of us have ever been on OJT for two
17 months and been expected to know everything, with no training,
18 no background. So what happens is Ben relies upon Brotemarkle
19 and Yang to get the OJT, which obviously is a big mistake.
20 Because it's business as usual.
21 And what is business as usual? Well, let's talk
22 about Kou Yang. Kou Yang is kind of like the spider in the
23 middle of the web. Everything seems to go or flow around Kou
24 Yang and/or Mr. Brotemarkle. I mean, she's basically a black
25 widow. She'll take the stand. We know that. Everybody said

1 that. She is going to be a cooperating witness. We know that.
2 She's involved with Head from anywhere from 2000 on,
3 or 2004 on, whichever testimony you decide to take. She was
4 hired by Head even though he knew she had suffered a felony
5 conviction. Not just any normal felony conviction, but a
6 felony conviction for committing embezzlement in a bank. He
7 knew it. He completely vetted her. He knew about the
8 probation officer. Yet he hired her. She received additional
9 things on behalf of -- and she got paid well by Mr. Head.
10 She will testify that on the 1003 forms, which is the
11 loan application, that she forged signatures on documents,
12 inflated incomes without anyone knowing, omitted information,
13 signed various documents without authorization. I believe
14 she's going to testify to all of that.
15 With respect to the evidence about Colorado, it will
16 reflect that she sent the last page -- and we have the
17 documents and we'll offer those into evidence -- of the 1003
18 form for Mr. Budoff's final signature. And, of course, that
19 excluded all of the information that went before it, which
20 included assets, which included income, which actually included
21 the choice of whether or not this business -- this property was
22 purchased as a residence, primary residence, or as an
23 investment.
24 The interesting thing is -- and there may be
25 discussion about whether the investment was for investment -- I

1 mean, the purchase was for investment or whether it was in fact
2 primary residence -- when Mr. Budoff took over this business,
3 every, every 1003 form said it was investment. Every one of
4 them. So you might want to take a look at the forms. See what
5 they are. Make sure it's in the right timeframe.
6 And I think, we believe, that Ben's signature was
7 forged, and I think we will have that testimony as well.
8 Now who is -- by the way, one thing further -- I had
9 that on my other notes over here -- is that the big mistake is
10 that Ben trusted Kou Yang to do her job properly, and he also
11 trusted Mr. Brotemarkle to do his job properly while he got up
12 to speed on what his activities and things that were going on
13 for that two-month period of time.
14 So what's interesting is, what did Kou Yang tell him
15 was legal? And what did she tell Mr. Budoff was common in the
16 industry? And what did Keith Brotemarkle? So that's what we
17 talk about when we talk about putting things in place, in
18 context.
19 Now, Brotemarkle admits that early 2005 he was aware
20 of the equity stripping program. He had seen the contracts.
21 He was aware of the misrepresentations that that sellers (sic)
22 were making.
23 And that's an interesting point. The contracts
24 themselves, nobody argues that they are an illegal contract. I
25 don't think you'll ever hear that ever. So what you really are

1 talking about is how the contracts were presented and sold.
2 And that is an individual aspect by individual
3 people. Unless it's known all over a group of people. So keep
4 that in mind as well.
5 Before September '06, loan applications or the Form
6 1003 often reflected buyers were going to reside in their
7 property. After September, it reflected investment.
8 He will admit including false statements of income
9 and assets without checking for documentation and without
10 buyer's knowledge. And he will admit of omitting purchases of
11 various buyers. And, of course, this is the guy that Ben
12 Budoff is supposed to get trained from and relies upon and
13 trusts.
14 Other witnesses could be Omar Sandoval. You've
15 already heard some discussion about him. He will testify that
16 signatures were forged, and notarizations and documents were
17 incorrect. Alternative documents were filled out without
18 persons knowing of the changes. Most, if not all, of these
19 occurred at the direction of Kou Yang and Keith Brotemarkle.
20 And, of course, the forgeries and changes of
21 information with documents, they were hidden from other people.
22 I believe that's Ben Budoff as well.
23 Testimony will support Ben's contention that he was
24 acting in good faith, and, if anything, he was the victim of a
25 conspiracy as well. He was the victim of Brotemarkle and a

1 victim of Kou Yang, who were the puppets of Mr. Head.
2 Other witnesses, Justin Wiley. He will testify
3 similarly as to falsification of various items, and Kou Yang
4 using improper -- signing and improper documents.
5 And finally we have Ed Shaffer. And he's going to
6 testify he's worked at -- he worked there. He's worked at
7 mortgage for many, many years. And he will testify that
8 although he had been in the mortgage business for many years,
9 there was no way that he could determine whether or not the
10 loan applications were properly filled out.
11 How does that bear upon it? Well, if he has worked
12 for it for years, I don't know how Ben Budoff is going to
13 figure this out.
14 Shaffer will also testify that he sat in at least one
15 meeting with attorneys for Mr. Head in which the attorneys went
16 over the legality of the company and also explained the
17 contracts. That's where I got the comment that I don't think
18 anybody is arguing that the contracts are illegal. They may
19 have been presented illegally, but they are not illegal.
20 THE COURT: You have four minutes.
21 MR. SAMUEL: Okay. Well, I'll pass on a couple of
22 people here because they all reflect about the same thing that
23 I just emphasized to you. Each one will testify about the lies
24 and things that were going on between Kou Yang and
25 Mr. Brotemarkle.

1 Ben voluntarily met with the FBI and the
2 investigators in this case. And you're going to hear testimony
3 about that didn't sound very good for Ben, and you're going to
4 hear his explanation of what went on, and what he was thinking
5 when he made the statements that he did. So please wait and
6 listen for that. And he's obviously going to take the stand.
7 I think the evidence will show that the sellers may
8 very well have been misled, but by salespeople, not by the
9 contracts. The evidence will show that Ben was not involved in
10 dealing with the sellers. There is no way.
11 Evidence will show that Ben made accurate
12 representations to the buyers. Evidence will show that Ben ran
13 Premier Services for about two months. Evidence will show that
14 he did not have the expertise nor the training to run the loan
15 processing company. I'm almost done. And the evidence will
16 show that Ben was an unwitting pawn of Brotemarkle, Kou Yang
17 and his misunderstandings.
18 He didn't have the required intent. The evidence
19 will support that completely, and that is required -- and he
20 didn't even have the knowledge of what was going on. Both of
21 those things are required before you can render any decision.
22 And I believe at the completion of this case, ladies
23 and gentleman, after your full and complete consideration of
24 all the facts, that you will render and I'm asking you to
25 render a verdict of not guilty. Thank you.

1 THE COURT: All right. We'll let you unplug and sit
2 down.
3 Ladies and gentlemen, that does conclude the opening
4 statements of the attorneys. As I told you earlier, the
5 opening statements are not evidence.
6 Just another reminder, even though the charges here
7 have been joined for trial, you ultimately will be directed to
8 decide the case of each defendant of each crime charged against
9 that defendant separately.
10 And I want to cover a couple of terms you've already
11 heard. One is scheme. I want to make certain it's clear a
12 scheme is any plan or course of conduct. A scheme by itself
13 does not imply something unlawful.
14 You've also heard the term straw buyer. A straw
15 buyer is one who takes title to property for a short period of
16 time and also obtains a loan on that property, all for the
17 benefit of another. Being a "straw buyer" by itself is not a
18 violation of law.
19 Now I'm going to turn to the Government and ask if
20 it's ready to begin its presentation of evidence. Mr. Anderson?
21 MR. ANDERSON: Yes, Your Honor. The United States
22 calls Sharolynn Cardenas.
23 THE COURT: All right. At this point, we'll go until
24 about 12:30 and take a break and go to our 1:30 adjournment
25 time today.

1 (Photograph taken of the witness.)
2 THE CLERK: Please step into the witness stand and
3 remain standing.
4 Do you swear to tell the truth, the whole truth, and
5 nothing but the truth, so help you God?
6 THE WITNESS: I do.
7 THE CLERK: Thank you. You may be seated. Please
8 state your full name and spell your last name for the record.
9 THE WITNESS: Sharolynn Cardenas, Sharolynn spelled
10 S-h-a-r-o-l-y-n-n. Last name Cardenas, C-a-r-d-e-n-a-s.
11 THE COURT: You may proceed.
12 SHAROLYNN CARDENAS,
13 a witness called by the Government, having been first duly
14 sworn by the Clerk to tell the truth, the whole truth, and
15 nothing but the truth, testified as follows:
16 DIRECT EXAMINATION
17 BY MR. ANDERSON:
18 Q. Good morning, Ms. Cardenas.
19 A. Good morning.
20 Q. Where are you from?
21 A. Kauai, Hawaii.
22 Q. Back in 2004 and 2005 were you living in Hawaii?
23 A. Yes.
24 Q. Did you have a home there?
25 A. Yes.

1 Q. Where was that home?
2 A. 5666 Kei, K-e-i, Place, Kapaa, Hawaii.
3 Q. At some point did you fall behind on some of your
4 bills?
5 A. Yes.
6 Q. Did you declare bankruptcy or start the bankruptcy
7 process as a result?
8 A. We declared bankruptcy, yes.
9 Q. As you were in that process, did you become involved
10 with a group related to your home and the mortgage on your
11 home?
12 A. Yes.
13 Q. How did that happen?
14 A. As we filed for bankruptcy, our lawyer suggested that
15 these people could help us.
16 Q. Which people were those?
17 A. It was Twyus Peahu at first.
18 Q. First of all, how do you spell Twyus Peahu?
19 A. T-w-y-u-s. Peahu, P-e-a-h-u.
20 Q. Who is Twyus Peahu?
21 A. He was a mortgage broker.
22 Q. Was he located in Hawaii, too?
23 A. Yes, he was.
24 Q. You said at first. From your interactions with
25 Mr. Peahu, were you introduced to someone else?

1 A. No.
2 Q. Were you not introduced, but did you end up having
3 contact with someone else?
4 A. Yes.
5 Q. Who did you end up having contact with?
6 A. With Domonic McCarns.
7 Q. How did you have contact with Domonic McCarns?
8 A. With Twyus Peahu.
9 Q. Did you ever end up speaking with Domonic McCarns on
10 the phone?
11 A. Yes.
12 Q. Could you tell us about your first conversation?
13 A. First conversation was he introduced hisself to us
14 and told us that he would be able to help us to get out of our
15 bankruptcy situation.
16 Q. Did he give you any specifics about what he could do?
17 A. No.
18 Q. What did you do after that conversation?
19 A. I talked to my husband about the situation, and he
20 said, well, look into it. And the reason why we did that, it
21 was because our attorney, bankruptcy attorney, told us that
22 they would be able to help us.
23 Q. What did you do to look into it more?
24 A. I went back to Twyus Peahu and asked him more
25 information, and he said just do what they say to do.

1 Q. After that conversation, what's the next thing that
2 happened?
3 A. We received a packet in the mail to fill out some
4 paperwork about ourselves.
5 Q. Now, prior to receiving that packet, had you had one
6 or more than one conversation with Domonic McCarns?
7 A. Prior to that, we had just one more conversation.
8 Q. Could you tell me about that conversation?
9 A. That conversation was about when we received the
10 packet, go ahead and let our attorneys know to cancel the
11 bankruptcy.
12 Q. Was the bankruptcy preventing you from losing your
13 house at that time?
14 A. No.
15 Q. Did Domonic McCarns say anything about what entering
16 the program with him would do to your credit?
17 MR. GREINER: Objection. Leading.
19 Q. BY MR. ANDERSON: What did Mr. McCarns say, if
20 anything, about the specifics of that program in that second
21 conversation?
22 A. He said that going through this program would help us
23 make good on our credit, and that within a year they would be
24 able to help us get our home back.
25 Q. Did Mr. McCarns tell you what would happen to the

1 equity in your home?
4 Q. BY MR. ANDERSON: Was there any discussion of the
5 equity in your home?
6 A. The equity of our home was that $200,000 was going to
7 be put into an escrow account for us. That after we're done
8 paying the mortgage for one year, that the house -- that equity
9 would be coming back to us to use to buy back our home.
10 Q. Based on your conversation with Domonic McCarns, did
11 you decide whether or not to sign those documents?
12 A. We were still hesitant at that time.
13 Q. What did you do?
14 A. We went back to Twyus Peahu, asking him if this is
15 legit, and he said, yes, to go ahead. He's worked with the
16 company before.
17 Q. What did you do next?
18 A. We waited and received a phone call from the title
19 company to make an appointment to come in and sign the
20 paperwork.
21 Q. Did you end up going somewhere to sign the paperwork?
22 A. Yes, we did. We went to Security Title.
23 Q. When you got to Security Title, did you find out
24 anything you didn't know before?
25 A. Yes.

1 Q. What did you find out?
2 A. We found out that we would be selling our home, more
3 than what our home was worth, and there was some paperwork
4 without no writings on it, but they told us that's what we're
5 going to sign.
6 Q. How did you find out that your home was getting
7 signed over to someone else?
10 Q. BY MR. ANDERSON: So you're at the meeting and you --
11 you said that's the first time you find out about your home
12 getting signed over?
13 A. Yes.
14 Q. So was there some method at the meeting that caused
15 you to know that?
16 A. We asked about our home being sold, and they really
17 didn't have an answer for us, so we said we're not going to
18 sign, and we left.
19 Q. Where did you go?
20 A. We went to RBC Mortgage where Twyus Peahu worked at.
21 Q. Why did you go there?
22 A. We wanted to know more information about selling our
23 home.
24 Q. What did you find out?
25 A. He said that that was the process, and don't worry,

1 we're going to get it back.
2 Q. After this conversation, did you have a chance to
3 speak with Domonic McCarns again?
4 A. Yes. It was approximately 45 minutes after we left
5 Twyus Peahu's office. Domonic had called us and questioned why
6 we didn't sign.
7 Q. What was Domonic's tone of voice when he called you?
8 A. That he was angry with us that we didn't sign at all.
9 Q. What did you tell Domonic McCarns?
10 A. That we still had questions about selling our home,
11 and he said don't worry about it.
12 Q. Did he tell you anything else about it?
13 A. He told us that the person's -- the person's name
14 that was on the paperwork, she works for their office, and she
15 often does that for them. And that after two to three months
16 our name would be back on the deed for the home.
17 Q. Did he tell you whether or not he had been through
18 the process with that woman before?
19 A. He said she always does that for them.
20 Q. How did you react to that conversation?
21 A. I just felt like, wow, something different.
22 Q. Prior to that day when you went in to sign the
23 paperwork and spoke with -- on that same day you had that
24 conversation with Domonic McCarns, did you know that you were
25 going to be selling your house?

1 A. No. Not at all.
2 Q. How was it that you found out that you were going to
3 be selling your house, did you see it on the documents or talk
4 to somebody?
5 A. We read the documents more.
6 Q. What's the next thing that happened?
7 A. My husband and I discussed it, and then we were
8 wondering what else can we do. We called Twyus again, and then
9 he said don't worry about it. He and the title company looked
10 for the best interest for us.
11 Q. Did you end up going back and signing the documents?
12 A. Yes, we did.
13 Q. After you signed those documents, did you receive --
14 after you signed those documents, did you at a later point
15 receive additional documents?
16 A. Yes, we did.
17 Q. Okay. What were the documents you received at a
18 later point?
19 A. That we were leasing our home or renting our home.
20 Q. How long after you signed the first set of documents
21 did you get that second set?
22 A. It was a week after.
23 Q. Did that raise any concerns for you when you received
24 the lease?
25 A. Yes, it did.

1 Q. Why?
2 A. It said that we would be renting our home at 1,500 a
3 month, there was no pets, and a quick deed thing also was
4 included with that.
5 Q. What do you mean a quick deed thing?
6 A. It was some paperwork that we never saw in there.
7 Q. Did the paperwork that you received after you had
8 already signed the first set of documents, that second set of
9 paperwork, was that paperwork ever -- did you expect to receive
10 that paperwork before you got it?
11 A. No.
12 Q. Did it appear to reflect what you had understood the
13 transaction you were entering into was?
14 A. No.
15 Q. After receiving that second set of paperwork, did you
16 contact anybody?
17 A. Yes. I contacted Domonic again.
18 Q. What was said in that conversation?
19 A. In that conversation, he say just go ahead. Don't
20 worry because you still remain in the house. Nobody's ever
21 going to take it away from you. And within one year you're
22 going to get your money back, and you can buy back your home.
23 Q. Did he tell you whether or not you had an option to
24 back out?
25 A. No.

1 Q. What did he tell you?
2 A. He just told me that this is the fastest and easiest
3 way that we can get it and own our home still.
4 Q. Did he say anything about your equity in escrow or
5 your equity?
6 A. The equity was going to be in escrow for a whole
7 year.
8 Q. How much equity was that supposed to be?
9 A. 200,000.
10 Q. Were you also supposed to receive some money right
11 then?
12 A. Yes. We were supposed to receive a check for 20-plus
13 thousand to go ahead and pay our bills so that the credit would
14 be a lot better.
15 Q. Now did you actually receive that check for 20,000?
16 A. Yes.
17 Q. That's "yes"?
18 A. Yes.
19 Q. Did you ever get that $200,000 that was supposed to
20 be held for you?
21 A. No.
22 Q. What were you planning to do with that $200,000?
23 MR. GREINER: Objection. Speculation. Relevance.
25 Q. BY MR. ANDERSON: Had you had a discussion with

1 Mr. McCarns about what it was that you were going to do with
2 that --
3 MR. GREINER: Same objection.
4 THE COURT: Just answer the question yes or no.
5 Overruled. Just yes or no for now.
6 THE WITNESS: Yes.
7 Q. BY MR. ANDERSON: What had you told Mr. McCarns, and
8 what had Mr. McCarns told you about that money?
9 MR. GREINER: Compound. Speculation.
10 THE COURT: Sustained as to compound.
11 Q. BY MR. ANDERSON: What had Mr. McCarns told you about
12 that money?
13 A. That it would be sitting in escrow for us to buy back
14 our home.
15 Q. So based on that statement, were you planning on
16 using that $200,000 to get back full title to your home?
17 A. Yes.
18 MR. GREINER: Objection. Speculation.
19 THE COURT: Overruled.
20 Q. BY MR. ANDERSON: After that conversation, did you
21 have any further reason or desire to talk to Domonic McCarns
22 about the transaction?
23 A. Yes.
24 Q. Did you try and contact Domonic McCarns?
25 A. Yes. It was further down the line.

1 Q. Okay. Why was it you tried to contact Domonic
2 McCarns?
3 A. Because on our island there was 40-plus days of rain,
4 and I ran a child care out of my home. And the ceiling
5 collapsed, missing one of our children, and so we were trying
6 to get the insurance or someone to come and repair because we
7 had to close the business down.
8 Q. Were you able to get --
9 Well, first of all, did you call Mr. McCarns?
10 A. Yes.
11 Q. Did you leave him messages?
12 A. I left messages on the recording.
13 Q. Did you ever get him to call you back?
14 A. There was no response.
15 Q. What did you end up doing about the collapsed roof on
16 the insurance?
17 MR. GREINER: Objection. Relevance.
18 MR. ANDERSON: I'll tie it up, Your Honor. It's
19 going to be relevant.
20 THE COURT: All right. I'll allow it just this
21 question first. You may answer.
22 Q. BY MR. ANDERSON: What did you do about the collapsed
23 roof?
24 A. We also contacted Twyus Peahu, and he tried to
25 contact Charles Head.

1 MR. GREINER: Objection. Hearsay or relevance. How
2 do we know that?
3 THE COURT: Sustained. The jury shall disregard that
4 last answer.
5 Q. BY MR. ANDERSON: Okay. So you contacted Twyus Peahu
6 in --
7 Did you also try and contact the insurance company to
8 get money?
9 A. Yes, we did.
10 Q. Were you able to get money from the insurance company
11 to fix the roof?
12 A. No. They told us it had to go through the mortgage
13 company and then they disburse the monies to us.
14 Q. And who was the company that you needed to contact in
15 order to get the insurance money?
16 A. It was through --
17 Q. You don't need the name, but who were you trying to
18 contact to get that insurance money from?
19 A. Domonic McCarns.
20 Q. Did you also send a letter to Domonic McCarns and
21 Head Financial Services about this problem?
22 A. Yes.
23 Q. Did you ever get the insurance money for the roof
24 caving in?
25 A. No.

1 Q. At some point did you stop making payments to Domonic
2 McCarns and Head Financial Services?
3 MR. GREINER: Objection. Didn't make payments to
4 Domonic McCarns. There is no evidence.
6 Q. BY MR. ANDERSON: Who were you making rent payments
7 to?
8 A. Funding Foreclosures.
9 Q. And at some point did you stop making those payments?
10 A. Yes, I did.
11 Q. Why was that?
12 A. It was because there was no response from the company
13 as to the insurance part. There was no response about what we
14 should do. Because there was no income, we had to close the
15 business.
16 Q. So this was all after the roof caves in and you can't
17 get a response?
18 A. Yes.
19 Q. If you had known that your equity would be taken,
20 would you have entered into this deal?
22 It's not relevant what she would have done. It's at the time.
23 THE COURT: Just state the objection without
24 discussion. Sustained.
25 MR. ANDERSON: Your Honor, I would ask to be allowed

1 to ask it since it goes to materiality of the statements.
2 MR. GREINER: Same objection, Judge.
3 THE COURT: Try again.
4 Q. BY MR. ANDERSON: Had you known that your equity
5 would not be held for you in trust, would you have entered into
6 this transaction?
7 A. Not --
8 MR. GREINER: Same objection, Judge. Same question.
10 MR. GREINER: Motion to strike any answer given and
11 admonish the jury.
12 THE COURT: That motion is granted. The jury shall
13 disregard the last answer.
14 Q. BY MR. ANDERSON: Was Domonic McCarns' statement that
15 your money would be held in equity important to your decision
16 as to whether or not to get involved in this transaction?
17 A. Yes.
18 Q. Are you still in that home?
19 A. Yes.
20 Q. What did you do regarding the roof?
21 A. We went --
22 MR. GREINER: Objection, Judge. Relevance. What she
23 did with the roof.
25 Q. BY MR. ANDERSON: Is the home in a completely

1 repaired condition?
2 A. Yes.
3 Q. Are the cabinets in?
4 A. No.
5 MR. GREINER: Objection. Lack of evidence.
6 Cabinets.
8 Q. BY MR. ANDERSON: All right. Now you said you never
9 got the insurance money. Were you able to get a small amount
10 of money to make some repairs on the house?
11 A. Yes.
12 Q. From who?
13 A. FEMA.
14 MR. GREINER: Objection, relevance.
16 Q. BY MR. ANDERSON: I'm sorry. You said FEMA?
17 A. Yes.
18 Q. Was that amount much less than the insurance company
19 would have provided?
22 Q. BY MR. ANDERSON: Do you know how much money the
23 insurance company was supposed to provide?
24 MR. GREINER: Objection. Lack of personal knowledge.
25 MR. ANDERSON: It's yes or no.

1 THE COURT: Overruled. Answer the question yes or
2 no.
3 THE WITNESS: Yes.
4 Q. BY MR. ANDERSON: How much?
7 Q. BY MR. ANDERSON: How much was the insurance company
8 supposed to give you?
9 A. $12,000.
10 Q. How much did you get from FEMA?
11 A. $3,900.
12 Q. Have you been able to get the equity back that was
13 taken from your home?
14 A. No.
15 Q. I would like you to turn to that binder that's in
16 front of you.
17 MR. GREINER: Actually, Judge, on that last answer
18 and question there is lack of evidence that it was taken.
20 Q. BY MR. ANDERSON: I would like you to turn to what's
21 been marked as Government's Exhibit 10A for identification.
22 THE COURT: This is 10A1?
23 MR. ANDERSON: Yes, Your Honor. Excuse me.
24 Q. BY MR. ANDERSON: Do you have that in front of you?
25 A. Yes.

1 Q. And that's an 11-page exhibit. Do you see all
2 11 pages of it?
3 A. Yes.
4 Q. Okay. Do you recognize those documents?
5 A. Yes.
6 Q. What are they?
7 A. Equity Purchase Agreement.
8 Q. And do some of the pages in this document bear your
9 signature?
10 A. Yes.
11 MR. ANDERSON: Your Honor, I would ask that
12 Government's Exhibit 10A1 be admitted. It's also covered by
13 the stipulation of the parties that it is a document that was
14 found during the execution of search warrants on November 16th,
15 2006, during the execution of the search warrants at A-1
16 Property Management in Newport Beach, California, Creative
17 Loans, Premier Services in Irvine -- excuse me -- on Irvine
18 Boulevard in Tustin, California, and FCO on Nutmeg Place in
19 Costa Mesa, California.
20 THE COURT: Any objection, Mr. Tedmon?

1 THE COURT: All right. 10A1 is admitted.
2 (Government Exhibit 10A1, Equity Purchase Agreement
3 dated 6/14/2005 between Rufo Cardenas Jr., and Sharolynn
4 Noelani Cardenas (“Sellers”) and FundingForeclosures.com
5 (“Purchaser”), admitted into evidence.)
6 THE COURT: And it may be displayed to the jury. You
7 may proceed.
8 Q. BY MR. ANDERSON: Do you see the address on page one
9 of the Government's Exhibit 10A1, 5666 --
10 THE COURT: Hold on.
11 MR. GREINER: Judge, one screen is not working over
12 here on the defense side.
13 THE COURT: All right. We need everyone to be able
14 to see. We will give Ms. Schultz a moment --
15 MR. ANDERSON: Your Honor, it's not essential that we
16 go through every document in detail. I'll keep moving on.
17 MR. GREINER: But we don't have it on the screen.
18 MR. ANDERSON: We will take it down. That's fine.
19 Let's go to Government's Exhibit 10A2.
20 THE COURT: That was just the first page of 10A1
21 being displayed?
22 MR. ANDERSON: It was.
23 THE COURT: So we'll go back to those if we have the
24 screen working, if the Government wishes.
25 Q. BY MR. ANDERSON: So now we're looking at

1 Government's Exhibit 10A2. Do you recognize Government's
2 Exhibit 10A2?
3 A. Part of it.
4 MR. ANDERSON: Your Honor, I'm going to ask that
5 Government's Exhibit 10A2 be admitted pursuant to that
6 stipulation as a document found during the execution of search
7 warrants.
8 THE COURT: Any objection? Mr. Tedmon?
9 MR. TEDMON: No.
11 MR. SAMUEL: No.
14 THE COURT: All right. 10A2 is admitted. It's two
15 pages.
16 (Government Exhibit 10A2, Wire Instructions and
17 Authorization re property at 5666 Kei Place Kapaa, HI 96746,
18 admitted into evidence.)
19 MR. ANDERSON: Are the monitors working?
20 MR. SAMUEL: No monitors are working.
21 Q. BY MR. ANDERSON: Let's talk about 10A2. Does it say
22 wire instructions and authorization at the top?
23 A. Yes.
24 Q. You said that you recognized part of it but not
25 another part. Which part do you recognize?

1 A. The first part on the top.
2 MR. TEDMON: Your Honor, this is going to be
3 difficult if she's going to start segmenting the document
4 because the jury is not going to even know what she's referring
5 to and neither do we. I think we need to have the screens at
6 this point.
7 THE COURT: All right. I think that's fair enough.
8 You said IT is on the way. Can you elicit further testimony
9 without reviewing document?
10 MR. ANDERSON: No. The further testimony is based on
11 the document. Maybe this is a good time for a break.
12 THE COURT: We had checked this all out, but
13 Government equipment, being what it is at times, it appears not
14 to be functioning. So we're going to as quickly as possible
15 get the monitor for Mr. Greiner and Mr. McCarns working during
16 the break.
17 Please remember my admonitions. Don't talk about the
18 case. Don't think about conclusions. Don't do any research.
19 Let me know if anyone contacts you. We'll let you know as soon
20 as we're ready to go.
21 (Jury out.)
22 (Break taken.)
23 THE COURT: All right. All monitors are working. I
24 guess we always make certain they are on as a matter of course,
25 and we fixed the one monitor. The other one is slipping. But

1 we'll just charge ahead until 1:30 today.
2 You should have a copy of the order in the form in
3 which it will appear on the docket today, signed. If you want
4 to talk about that at the end of the day, we can.
5 My question is, I would unseal the documents I
6 conditionally sealed. They were sealed conditionally. So we
7 need to talk about that. Let's bring the jury back in.
8 (Jury in.)
10 and gentlemen. All our monitors are working, and we also
11 tightened the one monitor that was slipping. As we did that,
12 the other monitor started to slip. Just so you know, that one
13 is wedged in a way that it's staying up for now, but if you
14 touch it, it might slip. Or maybe it's the one on the other
15 end. It's this end.
16 All right. In any event, I think we're set to go
17 until 1:30, which is our adjournment time. So let's pick up
18 where we left off. Mr. Anderson.
20 Government's Exhibit 10A2 be admitted, if it hasn't already,
21 and ask to publish it.
22 THE COURT: It has been admitted so you may publish
23 it, show it to the jury.
24 Q. BY MR. ANDERSON: Now this is a two-page document,
25 and we're looking at the first page of it. You had said that

1 there were some things that you recognized and then there were
2 other things. What is it that you recognize on the document?
3 A. I recognize from the top to authorization, the bank
4 name down for the account was not filled in.
5 Q. And I'm going to highlight a portion of the document.
6 Is that the portion of the document that was not filled in?
7 A. Yes.
8 Q. Where it says Pacific Mercantile Bank, 949 South
9 Coast Drive, Number 300, and then gives account numbers, and
10 phone number, and for the account of Creative Loans?
11 A. Yes.
12 Q. Okay. And let's turn to page two of this exhibit.
13 Is the same thing the case here on page two of the exhibit?
14 A. Yes.
15 Q. Now if you look to Government's Exhibit 10A3, do you
16 recognize Government's Exhibit 10A3? And right now we're just
17 talking about the first page.
18 A. Yes.
19 Q. What do you recognize about that document?
20 A. Our signature.
21 MR. ANDERSON: Your Honor, I would ask that this
22 document also be admitted as a document recovered during the
23 search warrants pursuant to the stipulation.
24 THE COURT: 10A3, page one?
25 MR. ANDERSON: Yes, Your Honor. If there is no

1 objection, I'll have the whole thing admitted. What I would
2 like to focus on is 10A1 (sic).
4 MR. TEDMON: No objection to 10A3 all the way through
5 3-7, the entire exhibit.
6 THE COURT: Seven pages. Mr. Samuel, any objection?
7 MR. SAMUEL: No objection.
9 MR. GREINER: No objection for 1 through 7 of this
10 exhibit, Judge.
11 THE COURT: 10A3 is admitted. All seven pages.
12 (Government Exhibit 10A3, Grant Deed for property in
13 Kauai Hawaii, admitted into evidence.)
14 Q. BY MR. ANDERSON: And you said you recognized
15 signatures. If you touch the screen next to you, it will
16 create an arrow. Could you touch the screen near the
17 signatures that you recognize?
18 A. (Indicating.)
19 Q. Whose signatures are those?
20 A. My husband's and mine.
21 Q. Now, on this deed it lists Rufo Cardenas, Jr., and
22 Sharolynn Cardenas granting the property. Is that you and your
23 husband?
24 A. Yes.
25 Q. And it says it's granting it to

1 FundingForeclosures.com. Do you recognize
2 FundingForeclosures.com?
3 MR. TEDMON: Objection, Your Honor. Vague as to
4 time.
6 Q. BY MR. ANDERSON: That's fair.
7 Sitting here today, do you know what
8 FundingForeclosures.com was?
9 MR. GREINER: Objection. Relevance. Today.
10 Q. BY MR. ANDERSON: And then I'll work backward.
11 THE COURT: Overruled. You may answer yes or no.
12 Q. BY MR. ANDERSON: Do you recognize the name
14 A. Yes.
15 Q. When did you first hear the name
17 A. It was a while after we heard different names.
18 MR. GREINER: Objection. Non-responsive. Move to
19 strike.
21 answer.
22 Q. BY MR. ANDERSON: I'm going to ask the question
23 again, and if you could give an answer that's more specific to
24 time period or references other events we've already discussed.
25 When did you first hear about

2 A. A while after we signed the paperwork.
3 MR. ANDERSON: Let's go to Government's Exhibit 10A4.
4 Your Honor this is a one-page exhibit, and I would
5 ask that it be admitted pursuant to the stipulation.
12 THE COURT: All right. Exhibit 10A4 is admitted.
13 (Government Exhibit 10A4, Signature page reflecting
14 “Date of Contract Acceptance: 06/14/2005” and the signatures of
15 both Rufo Cardenas, Jr., and Sharolynn Noelani Cardenas
17 Q. BY MR. ANDERSON: Do you recognize Government's
18 Exhibit 10A4?
19 Let me ask you two questions. Do you recognize the
20 signatures on Government's Exhibit 10A4?
21 A. Yes.
22 Q. Do you know whose they are?
23 A. Yes.
24 Q. Whose?
25 A. My husband's and mine.

1 Q. Now if we zoom out, this appears to be a document
2 that's at the back of other pages. Is that right?
3 MR. GREINER: Objection. Relevance. And it's vague.
5 Q. BY MR. ANDERSON: Government's Exhibit 10A4, does
6 that appear to be the first page of a document that you signed?
7 MR. GREINER: Objection. Speculation. Lack of
8 personal knowledge.
9 THE COURT: Sustained. You can rephrase.
10 Q. BY MR. ANDERSON: Ask you this, do you recall ever
11 seeing any pages that went before this document, this page,
12 that were a part of the document?
13 MR. GREINER: Objection. Compound.
15 Q. BY MR. ANDERSON: You can answer the question.
16 A. Can you rephrase that?
17 Q. Sure. Do you know if you were ever given pages that
18 preceded this page?
19 MR. GREINER: Objection. Vague.
20 MR. ANDERSON: Yes or no, and then I'll follow up.
21 THE COURT: Overruled. You may answer if you're
22 able.
23 THE WITNESS: I can't remember that.
24 Q. BY MR. ANDERSON: Okay. You can't remember getting
25 additional pages before this page?

1 MR. GREINER: Objection. Asked and answered.
4 Your Honor, this is yet another document that's stipulated to
5 as having been recovered at the search warrant location, so I
6 would ask that it be admitted pursuant to that stipulation.
10 MR. SAMUEL: No, Your Honor?
13 THE COURT: 10A5 is admitted.
14 (Government Exhibit 10A5, Check-off list for Cardenas
15 documents with handwritten note in bottom right corner admitted
16 into evidence.)
17 Q. BY MR. ANDERSON: I just want to ask you a very small
18 amount of questions about this.
19 The name, Cardenas, that's your last name, is that
20 right?
21 A. Yes.
22 Q. And then where it lists city and state, is that the
23 city and state that you lived in?
24 A. Yes.
25 Q. Let's go to Government's Exhibit 10A6. Another

1 document found in the search warrant, and according to the
2 stipulation ask that it be admitted, Your Honor.
7 THE COURT: All right 10A6 is admitted, two pages.
8 (Government Exhibit 10A6, Letter dated 4/6/2006 to
9 Nations Property Management from Cardenas’ re flood damage to
10 their home in Hawaii admitted into evidence.)
11 Q. BY MR. ANDERSON: Do you recognize this document?
12 A. Yes.
13 Q. What is it?
14 A. It's a letter I wrote to the company.
15 Q. A letter about what?
16 A. About the situation about the rain and the flood and
17 the ceiling caving in.
18 Q. Were you asking for anything in this letter?
19 MR. GREINER: Objection. Speaks for itself. Best
20 evidence.
22 Q. BY MR. ANDERSON: The date that's on the letter,
23 April 6, 2006, is that approximately when you wrote the letter?
24 A. Yes.
25 MR. ANDERSON: Thank you. No further questions, Your

1 Honor.
2 THE COURT: All right. Cross-examination.
3 Mr. Greiner, you're going to go first?
4 MR. GREINER: Yes, Your Honor, if I could.
6 CROSS-EXAMINATION
7 BY MR. GREINER:
8 Q. Thank you, Judge. Good morning, Ms. Cardenas.
9 A. Good morning.
10 Q. Let me give you a brief overview. I want to talk to
11 you about the testimony you did today. I want to talk to you
12 then about statements you gave to the Government prior to
13 today. And then I want to talk to you about documents. So
14 we'll break it up into three areas. Okay?
15 A. Okay.
16 Q. And if you can do this for me, if you can speak into
17 that mic so I can hear and also so the court reporter can hear,
18 that would be helpful.
19 A. Okay.
20 Q. And if you don't understand anything I ask you, just
21 ask me to repeat it, and I'll be glad to do it. Okay?
22 A. Okay.
23 Q. All right. To get a timeframe, do you recall back on
24 November 28th of 2003 sending an e-mail to Charles Head?
25 MR. TEDMON: Objection. Relevance.

2 THE WITNESS: No.
3 Q. BY MR. GREINER: Do you remember filling out
4 information regarding who you were, your phone number -- or do
5 you recall -- strike that.
6 Do you recall filling out information on the internet
7 about your house in 2003?
10 THE WITNESS: Not that I remember.
11 Q. BY MR. GREINER: Okay. Then let's do this. I think
12 behind you, I think, there should be a red binder. Do you see
13 a red binder back there?
14 A. Yes.
15 Q. Okay. And in that binder, if you'd turn to the
16 letter G as in George. Do you have that in front of you?
17 A. Yes.
18 Q. And do you see the document that's labelled on the
19 lower right-hand corner where it says exhibit number DM-G1? Do
20 you see that document?
21 A. Yes.
22 Q. And on that document, do you see at the top it says,
23 "from Sharolynn Cardenas," do you see that?
24 A. Yes.
25 Q. And that's your name, correct?

1 A. Yes.
2 Q. All right. And you see the date sent, it says
3 Friday, November 28th, 2003, do you see that?
4 A. Yes.
5 Q. And do you see it says "to" and it says "Charles
6 Head," do you see that?
7 A. Yes.
8 Q. Okay.
9 MR. TEDMON: Your Honor, I'm going to object at this
10 point. Move to strike. Mr. Greiner hasn't laid a foundation
11 for admission of the document, and to start asking questions
12 about a document that is not admitted is inappropriate.
14 MR. TEDMON: Move to strike any question and answer.
15 THE COURT: The jury shall disregard the answer so
16 far.
17 MR. GREINER: I move admission of DM-G1 pursuant to
18 the stipulation that all counsel have signed.
20 MR. TEDMON: No objection.
23 THE COURT: Mr. Anderson?
24 MR. ANDERSON: No objection.
25 THE COURT: All right. Then 10G1 (sic) is admitted.

1 (Defendants' Exhibit DM-G1, November 28, 2003 e-mail
2 from Sharolynn Cardenas to Charles Head admitted into
3 evidence.)
4 Q. BY MR. GREINER: Ms. Cardenas, at the top of G-1 do
5 you see it says "from Sharolynn Cardenas"?
6 A. Yes.
7 Q. It says "sent Friday, November 28, 2003"?
8 A. Yes.
9 Q. It says "to Charles Head"?
10 A. Yes.
11 Q. And below do you see where its written -- it says,
12 "contact information," it says, "your new client Sharolynn
13 Cardenas"?
14 MR. TEDMON: Your Honor, can we publish the document?
15 MR. GREINER: Sure. Is that possible?
16 THE COURT: Is there cooperation in publication?
17 MR. ANDERSON: Yes, Your Honor. What we've done is
18 the Government has agreed to bring up defense exhibits provided
19 Mr. Greiner speaks slowly and clearly and not put too much of a
20 burden on Ms. Kenney. It's actually a harder job than it
21 looks.
22 THE COURT: So DM-G1 may be published.
23 MR. GREINER: I'll abide by those rules. Speaking
24 slowly. Enlarge that, please.
25 MR. TEDMON: I'm sorry?

1 THE COURT: Mr. Greiner, asked for a portion to be
2 enlarged. So this is a portion of DM-G1.
3 Q. BY MR. GREINER: Ms. Cardenas, do you see the
4 information that's been enlarged on the computer screen from
5 Exhibit DM-G1?
6 A. Yes.
7 Q. Does that information reflect the house that you and
8 your husband owned back in 2003?
9 A. Yes.
10 Q. And does that reflect your desired loan in the amount
11 of $130,000?
12 A. Yes.
13 MR. GREINER: Judge, can I ask your clerk one
14 question?
16 Q. BY MR. GREINER: And you also see that the
17 approximate property value you listed is $190,000, do you see
18 that?
19 A. Yes.
20 Q. Okay. And you also see that self credit rating you
21 put back in 2003 is bad, correct?
22 A. Yes.
23 Q. Okay. Were you having financial challenges back in
24 2003?
25 A. Yes.

1 Q. You owed money on bills you couldn't pay?
2 A. Yes.
3 Q. And in your testimony you said that you filed
4 bankruptcy, so is that the result of you being unable to pay
5 your bills?
6 A. Yes.
7 Q. We can take that exhibit down. Thank you.
8 All right. Prior to ever speaking even to your real
9 estate broker -- Mr. Peahu?
10 A. Peahu.
11 Q. -- Peahu, you had a bankruptcy lawyer, right?
12 A. Yes.
13 Q. And you had that lawyer in 2004, correct?
14 A. Yes.
15 Q. And you had that bankruptcy lawyer in 2005, correct?
16 A. Yes.
17 Q. And your bankruptcy lawyer is the one that suggested
18 talking to -- Mr. Peahu?
19 A. Peahu.
20 Q. -- Peahu, who was the real estate broker, right?
21 A. Yes.
22 Q. And the reason for that that you understood was what?
23 A. That he would be able to help us back on our feet.
24 Q. How?
25 A. By getting another mortgage company to help us.

1 Q. In what way?
2 A. I have no idea.
3 Q. Were you looking to sell your house?
4 A. No.
5 Q. Were you looking to refinance your house?
6 A. Yes.
7 Q. So you wanted to refinance to get money out, is that
8 right?
9 A. "Get money out" meaning?
10 Q. Okay. Why did you want to refinance your house?
11 A. To try to get our loan at a better rate and to get
12 our bills down.
13 Q. How were you going to get your bills down by getting
14 your house loan at a better rate?
15 A. By borrowing extra money to pay our bills.
16 Q. So you wanted to borrow more money to pay bills and
17 get that out of your house, correct?
18 A. Correct.
19 Q. And Mr. -- say his last name one more time?
20 A. Peahu.
21 Q. And Mr. Peahu did that for you, correct?
22 A. Yes.
23 Q. And what type of interest rate did he get on your
24 house?
25 A. There was no interest rate.

1 Q. Okay. Well, then share with me, Mr. Peahu, what did
2 he do for you? What did he do for you?
3 A. He connected us with Mr. McCarns.
4 Q. So Mr. Peahu didn't refinance your house?
5 A. No.
6 Q. Do you know why he didn't?
7 A. No.
8 Q. Did you ask him?
9 A. Yes.
10 Q. Did he respond?
11 A. He said this was the only way to go.
12 Q. Did you ask him why?
13 A. No.
14 Q. Why didn't you?
15 A. I'm not too sure.
16 Q. Did you ever ask your bankruptcy lawyer if you had
17 other options?
18 A. No.
19 Q. So Mr. Peahu said he couldn't help you, correct?
20 A. He did not use that words.
21 Q. He said he couldn't be of assistance to you?
22 A. He just told us this is the only way to go.
23 Q. Okay. And so then how did you get in contact, as you
24 say it, with Domonic McCarns?
25 A. Mr. Peahu asked for our permission to give our

1 numbers, our phone number to a company that can help us.
2 Q. Okay. And so can you tell the ladies and gentlemen
3 of the jury how many times did you personally meet with Domonic
4 McCarns?
5 A. I never did meet Domonic McCarns.
6 Q. Okay. So was it always by telephone?
7 A. Yes.
8 Q. So when you spoke on the phone, what you know is you
9 spoke to him -- a person that said the person's name was
10 Domonic McCarns?
11 A. Yes.
12 Q. And you don't know who that person actually was, do
13 you?
14 A. No.
15 Q. All right. If we could have Government's
16 Exhibit 10A1, please.
17 THE COURT: You can also look on the document on the
18 screen, ma'am, whichever is easiest for you.
19 MR. GREINER: Whichever you want to do, Ms. Cardenas.
20 Tell me when you're ready.
21 THE WITNESS: I'm ready.
22 Q. BY MR. GREINER: On your screen is Government's
23 Exhibit 10A1 entitled Equity Purchase Agreement. You received
24 that, correct?
25 A. Yes.

1 Q. And you received that in the mail?
2 A. Yes.
3 Q. If you would turn to page 10A1-2, which is the second
4 page?
5 A. Yes.
6 Q. If you go down the left-hand column, down toward the
7 bottom, do you see two Xs in two boxes?
8 A. Yes.
9 Q. And the words after those Xs say "seller agrees,"
10 correct?
11 A. Yes.
12 Q. Who put the Xs in the boxes?
13 A. That's not an X.
14 Q. I'm sorry?
15 A. That's not an X.
16 Q. What is it?
17 A. It's initials. My husband's initials.
18 Q. Okay. Did you see him initial it?
19 A. Yes.
20 Q. Okay. If you would turn to the fourth page, which is
21 Government's Exhibit 10A1-4, please. Do you have that in front
22 of you?
23 A. Yes.
24 Q. And you notice in the middle where it says
25 unconscionability, do you see that the word "seller" has a

1 bracket in black ink?
2 A. Yes.
3 Q. And do you see where it says "re-sale," it has a
4 bracket in black ink, do you see that?
5 A. Yes.
6 Q. And do you see the words, "black out-not
7 comfortable"?
8 A. Yes.
9 Q. Did you write that?
10 A. Yes, I did.
11 Q. Why did you write that?
12 A. Because at that time I was asking questions with
13 Mr. McCarns over the phone.
14 Q. Okay.
15 A. And I told him that I did not feel comfortable about
16 it being purchased for immediate re-sale, and he said -- he
17 told me that if I want to, I could write on the side of it how
18 I felt.
19 Q. And that's what you did?
20 A. Yes, I did.
21 Q. Did you ever take that document to your bankruptcy
22 attorney?
23 A. No.
24 Q. Did you ever take the document, which is Government's
25 Exhibit 10A1 through 10A1-4, to Peahu to have him read it?

1 A. Yes, I did.
2 Q. And at the bottom of page 10A1-4 you and your husband
3 signed it, correct?
4 A. Yes.
5 Q. If we could turn to page 10A1-5, please. Do you have
6 that in front of you, ma'am?
7 A. Yes.
8 Q. Okay. And you see your signature, correct?
9 A. Yes.
10 Q. And you see your husband's signature?
11 A. Yes.
12 Q. And you signed this page after reading it, right?
13 A. Yes.
14 Q. Okay. Did you take that page to your bankruptcy
15 lawyer?
16 A. No.
17 Q. Did you take that page to Peahu?
18 A. Yes.
19 Q. And did he read it?
20 A. Yes.
21 Q. Did he read it before you signed it?
22 A. Yes.
23 Q. And after he read it, you signed it, right?
24 A. Yes.
25 Q. Okay. If you turn to Government's Exhibit 10A1-6,

1 please. Do you see that document, ma'am? Or you can turn to
2 it in the binder.
3 A. Okay.
4 Q. And you see Government's Exhibit 10A1-6, correct?
5 A. Yes.
6 Q. And at the top do you see the date of June 14, 2005?
7 A. Yes.
8 Q. And it may be quicker to look at the documents
9 instead of going back on the computer and apologize to you and
10 to the jury.
11 But that date of June 14, 2005, that's the same date
12 that's on the equity purchase agreement, which is Government's
13 Exhibit 10A1, isn't that true?
14 If you look at page 10A1, Government's Exhibit 10A1,
15 the first page, and do you see right up there near Equity
16 Purchase Agreement, do you see the date of June 14, 2005?
17 A. Yes.
18 Q. Go back to 10A1-6, do you see that?
19 A. Yes.
20 Q. If we could enlarge that. And on 10A1-6, there is
21 handwritten it looks like it says "one-year lease," do you see
22 that?
23 A. Yes.
24 Q. And that's your handwriting?
25 A. Yes.

1 Q. And you put that on the document?
2 A. Yes.
3 Q. Okay. And then there's also some more brackets on
4 Government's Exhibit 10A1-6, paragraph D-5, in the last
5 sentence, do you see a bracket before the word "month"?
6 A. Yes.
7 Q. The word "month to month" do you see the other
8 bracket?
9 A. Yes.
10 Q. And those are brackets you put, correct?
11 A. Yes.
12 Q. And then if we go to the next page, please. Do you
13 see your signature, correct?
14 A. Yes.
15 Q. With the date of June 14, 2005, right?
16 A. Yes.
17 Q. And you see your husband's signature, right?
18 A. Yes.
19 Q. And you see the date of June -- it looks like 14,
20 2005, right?
21 A. Yes.
22 Q. Now, I thought I heard you say that the first time
23 you heard about FundingForeclosures.com was a while after you
24 signed the paperwork. Do you recall saying that?
25 A. Yes.

1 Q. Okay. Well, on Government's Exhibit 10A1-7, do you
2 see underneath your signature there appears to be somebody's
3 signature, do you see that?
4 A. Yes.
5 Q. Okay. If you would enlarge that, please.
6 And do you see under that signature it has words
7 under the line, do you see that?
8 A. Yes.
9 Q. What does that read?
10 A. FundingForeclosures.com.
11 Q. And the date to the left of that is June 15th, '05,
12 correct?
13 A. Yes.
14 Q. And that's the document that you signed on June 14th,
15 '05, correct?
16 A. I'm sorry. I cannot answer that.
17 Q. Well, let's enlarge the document. And let's then
18 magnify it.
19 Your signature with the date of June 14th, '05,
20 correct, ma'am?
21 A. That's my signature, but that's not my date.
22 Q. Okay. So when you told the ladies and gentlemen of
23 the jury a little bit earlier that you signed the document on
24 June 14th, '05, you were wrong?
25 A. Yes.

1 Q. If we could take that document off. If we could go
2 to Government's Exhibit 10A1-8, please. Do you see that
3 document, ma'am?
4 A. Yes.
5 Q. And that's acknowledgement by seller, correct?
6 A. Yes.
7 Q. And do you see your initials?
8 A. Yes.
9 Q. And do you see your husband's initials?
10 A. Yes.
11 Q. Did you take the document that's entitled
12 Acknowledgement By Seller, Government's Exhibit 10A1-8, to your
13 bankruptcy lawyer?
14 A. No.
15 Q. Did you take the document entitled Acknowledgement By
16 Seller to your real estate broker, Peahu?
17 A. Yes.
18 Q. And did you sign acknowledge -- or initial
19 acknowledgement by seller after you took the document to your
20 real estate broker, Peahu?
21 A. Yes.
22 Q. Did you ask Peahu any questions about the document
23 entitled Acknowledgement By Seller?
24 A. Yes.
25 Q. And if we could go to page two of Government's

1 Exhibit 10A1-9, please.
2 THE COURT: It's page 10A1-9, which is also shown as
3 page two.
4 Q. BY MR. GREINER: Thank you. If we could highlight
5 that, please.
6 Do you see the highlighted portion of page two of
7 Exhibit 10A1-9, ma'am?
8 A. Yes.
9 Q. And do you see the date?
10 A. Yes.
11 Q. And that's June 14th, '05, correct?
12 A. Yes.
13 Q. And just to the left of that date you see your
14 husband's initials?
15 A. Yes.
16 Q. And you see your initials, correct?
17 A. Yes.
18 Q. If we could take that document off the screen. If we
19 could put Government's Exhibit 10A1-10, please.
20 Do you have that document, ma'am?
21 A. Yes.
22 Q. That's entitled Notice of Cancellation?
23 A. Yes.
24 Q. And do you see the date or do you want me to enlarge
25 it? Do you see the date on it?

1 A. I can see the date.
2 Q. And what is the date?
3 A. June 14, 2010 -- oh, 2005.
4 Q. Let's enlarge it. What's the date again?
5 A. June 14th, 2005.
6 Q. All right. If we could enlarge, please.
7 And do you see the next sentence down says that you
8 have until midnight on a certain date to cancel, do you see
9 that?
10 A. Yes.
11 Q. And what is that date?
12 A. June 20th, 2005.
13 Q. Okay. And do you see your husband's signature on
14 that page?
15 A. Yes.
16 Q. And do you see your signature on that page?
17 A. Yes.
18 Q. Did you take that document to your bankruptcy
19 attorney?
20 A. No.
21 Q. Did you take that document to your real estate
22 broker, Peahu?
23 A. Yes.
24 Q. And did you ask questions about that document --
25 A. Yes.

1 Q. -- to Peahu?
2 A. Yes.
3 Q. And after asking questions, you signed the document,
4 correct?
5 A. Yes.
6 Q. And your husband signed the document, correct?
7 A. Yes.
8 Q. If we could take that document down and go to the
9 next exhibit which would be Government's Exhibit 10A1-11.
10 Do you have that document in front of you, ma'am?
11 A. Yes.
12 Q. It's entitled Affidavit of Deed, correct?
13 A. Yes.
14 Q. Okay. And if we could have that highlighted, please.
15 Do you see on Government's Exhibit 10A1-11, Affidavit
16 of Deed, paragraph 2-B, where it says "consideration in the
17 amount of" and then there is a figure, correct?
18 A. Yes.
19 Q. What's that figure?
20 A. $26,000.
21 Q. Okay. And that's what you ultimately received,
22 correct?
23 A. Yes.
24 Q. Okay. And if we could enlarge the document, please.
25 Do you see your husband's signature on Government's

1 Exhibit 10A1-11?
2 A. Yes.
3 Q. And on that same document do you see your signature?
4 A. Yes.
5 Q. Did you take the affidavit of deed to your bankruptcy
6 lawyer?
7 A. No.
8 Q. Did you take the affidavit of deed to your real
9 estate broker, Peahu?
10 A. Yes.
11 Q. Did you ask Peahu questions about your affidavit of
12 deed?
13 A. Yes.
14 Q. After asking questions of Peahu of the affidavit of
15 deed, did you see your husband sign it?
16 A. Yes.
17 Q. Did you sign the document entitled affidavit of deed?
18 A. Yes.
19 Q. If we could take that document down and go to
20 Government's Exhibit 10A2, please.
22 A. Yes.
23 Q. Okay. And you discussed with the Government this
24 document on direct examination, do you remember that?
25 A. Yes.

1 Q. And it's entitled Wire Instructions and
2 Authorization, correct?
3 A. Yes.
4 Q. And on that document, which is Government's
5 Exhibit 10A2, you see your husband's signature, correct?
6 A. Yes.
7 Q. And you see your signature, correct?
8 A. Yes.
9 Q. And you placed your signature on this document after
10 giving the notary proof of identification of who you were,
11 correct?
12 A. Yes.
13 Q. And you visually saw your husband sign this document,
14 Government's Exhibit 10A2, after he gave the notary proof of
15 identification, correct?
16 A. Yes.
17 Q. Before you signed the wire instructions and
18 authorization document, did you take that document to your
19 bankruptcy attorney?
20 A. No.
21 Q. Did you take the document to your real estate broker,
22 Peahu?
23 A. No.
24 Q. And if we could go to the next document, which is
25 Government's Exhibit 10A2-2, do you see that document, ma'am?

1 A. Yes.
2 Q. It's also entitled Wire Instructions and
3 Authorization, correct?
4 A. Yes.
5 Q. It also bears your husband's signature, correct?
6 A. Yes.
7 Q. And it also bears your signature, correct?
8 A. Yes.
9 Q. But it does not have the notary, correct?
10 A. Yes.
11 Q. You did not sign Government's Exhibit 10A2-2 at the
12 same time that you signed the same document that is
13 Government's Exhibit 10A2, did you?
14 A. No.
15 Q. You signed them on different dates, correct?
16 A. I can't answer that.
17 Q. All right. And you noticed that 10A2-2, where it
18 says -- if we could enlarge that, please -- where it says "for
19 the account of" on Government's Exhibit 10A2-2, that's blank,
20 correct?
21 A. Yes.
22 Q. Okay. If we could enlarge, please.
23 And also on Government's Exhibit 10A2-2 where it says
24 "escrow officer," that's blank, correct?
25 A. Yes.

1 Q. And those two items are different than on
2 Exhibit 10A2, correct?
3 A. Yes.
4 Q. Because on 10A2 it has the name of an escrow officer,
5 right?
6 A. Yes.
7 Q. And it has the name for "the account of," correct?
8 A. Yes.
9 Q. And that's the document that you notarized, correct?
10 A. I can't answer that. My reason? The bank --
11 Q. Not asking your reason.
12 A. Okay.
13 Q. Your answer in front of the ladies and gentlemen of
14 the jury will stand. Thank you.
15 If we go to Government's Exhibit 10A3, please. Do
16 you have that in front of you, ma'am?
17 A. Yes.
18 Q. Entitled Grant Deed, do you see that?
19 A. Yes.
20 Q. You see your husband's signature on that document,
21 correct?
22 A. Yes.
23 Q. You see your signature on that document, correct?
24 A. Yes.
25 Q. And it is not notarized, correct?

1 A. Yes.
2 Q. And it bears no indication that it was filed at any
3 county recorder's office, correct?
4 A. Yes.
5 Q. And in the enlarged portion, which you discussed with
6 the Government, it says "hereby grants to," and then it has a
7 name, correct?
8 A. Yes.
9 Q. And what's that name?
10 A. FundingForeclosures.com.
11 Q. If we can go to Government's Exhibit 10A3-4, please.
13 A. Yes.
14 Q. And down toward the bottom do you see in all capital
15 letters, underlined, it says "warranty deed," correct?
16 A. Yes.
17 Q. And in the middle of the page it says, "parties to
18 document," do you see that? I'll enlarge it.
19 A. Yes.
20 Q. Now it's easier to see. It says "parties to
21 document," correct?
22 A. Yes.
23 Q. And it says "grantor," and it lists your husband,
24 Rufo Cardenas, Jr., correct?
25 A. Yes.

1 Q. And it lists you, Sharolynn -- I don't want to
2 mispronounce your middle name -- Cardenas, correct?
3 A. Yes.
4 Q. And then "grantee" it has a name, correct?
5 A. Yes.
6 Q. And it says "Bunny Mattice Clevenger," correct?
7 A. Yes.
8 Q. And if you go to Government's Exhibit page 10A3-6.
9 Do you have that in front of you?
10 A. Yes.
11 Q. You see your husband's signature, correct?
12 A. Yes.
13 Q. And you see your signature, correct?
14 A. Yes.
15 Q. And you see that it's been notarized, correct?
16 A. Yes.
17 Q. And you see the date is September 20, 2005, correct?
18 A. Yes.
19 Q. If we can go to Government's Exhibit 10A4, please.
20 Do you have that in front of you, ma'am?
21 A. Yes.
22 Q. And on that page you see your husband's signature?
23 A. Yes.
24 Q. You see your signature?
25 A. Yes.

1 Q. And neither of you dated it, correct?
2 A. Yes.
3 Q. Why?
5 Q. Okay. If we can go to Government's Exhibit 10A6,
6 please. Do you have that in front of you, ma'am?
7 A. Yes.
8 Q. If you can enlarge that.
9 Now, at one point in time on your direct examination
10 with the Government you told the ladies and gentlemen of the
11 jury that you wrote a letter to Domonic McCarns. Do you
12 remember that?
13 A. Yes.
14 Q. All right. Government's Exhibit 10A6 is a letter
15 that you typed, correct?
16 A. Yes.
17 Q. It's dated April 6th, 2006, correct?
18 A. Yes.
19 Q. And the words underneath the date are what, ma'am?
20 A. Nations Property Management.
21 Q. And then there is an address, correct?
22 A. Yes.
23 Q. And the address is in Santa Ana, California, correct?
24 A. Yes.
25 Q. And then who did you address the letter to?

1 A. To whom it may concern.
2 Q. Okay. And nowhere -- we can enlarge.
3 And nowhere on the first page of Government's
4 Exhibit 10A6 do you use the name Domonic McCarns, correct?
5 A. Yes.
6 Q. And if you turn to page 10A6-2, you see your
7 signature, correct?
8 A. Yes.
9 Q. Nowhere on that page, 10A6-2, do you use the name
10 Domonic McCarns, correct?
11 A. Yes.
12 Q. But you cc your attorney, correct?
13 A. Yes.
14 Q. And you also cc TP, which is Peahu, right?
15 A. Yes.
16 Q. Now I want to talk to you about documents that are in
17 the red binder. So you can take the big binder. There you go.
18 Push it aside. And I want to talk to you about Domonic McCarns
19 Exhibit G. Okay. So you should have that tab.
20 Do you have that?
21 A. Yes.
22 Q. And I want to talk about DM-G2. If we could pull
23 that up.
24 MR. ANDERSON: Mr. Greiner, this is what we talked
25 about. You got to get it admitted so that Ms. Kenney doesn't

1 inadvertently --
2 THE COURT: G-2 is not yet admitted.
3 MR. GREINER: The G series of Domonic McCarns, G-1
4 through and including DM-G8, I would offer to be admitted into
5 evidence pursuant to the stipulation entered into between the
6 parties.
8 MR. TEDMON: No objection, Your Honor. Some of this
9 is duplicative of what the Government has already introduced,
10 and so my only concern is make sure the jury isn't confused.
11 THE COURT: Understood. Mr. Samuel?
14 MR. ANDERSON: The same concern as Mr. Tedmon. At
15 some point if we keep introducing the same document --
16 (Defendants' Exhibit DM-G1, DM-G2, DM-G3, DM-G4,
17 DM-G5, DM-G6, DM-G7, DM-G8, (See Index for descriptions)
19 THE COURT: My question is, Mr. Greiner is anything
20 here not duplicative of what's already been admitted as a
21 Government exhibit?
22 MR. GREINER: Yes. G-4.
23 THE COURT: Do you need the other copies in?
24 MR. GREINER: Well, I thought --
25 THE COURT: Let's at least not take time in front of

1 the jury.
2 MR. GREINER: I can let you know my thoughts.
3 THE COURT: We can address any duplication of
4 exhibits to clarify the jury's job as we move forward.
5 For now, the entire G series is admitted G-1 through
6 G-8. And your going to focus on G-4 now?
7 MR. GREINER: G-4 and G-7, which were not in the
8 Government's exhibit. So if we could have DM-G4, please.
9 Q. BY MR. GREINER: Do you have that in front of you
10 ma'am?
11 A. Yes.
12 Q. If we could enlarge that. This document is entitled
13 Residential Lease After Sale Agreement, do you see that, ma'am?
14 A. Yes.
15 Q. And the first paragraph has the date of June 14,
16 2005, correct?
17 A. Yes.
18 Q. And you see that it's entered into between Nations
19 Property Management, correct?
20 A. Yes.
21 Q. And that's referred to as the landlord, correct?
22 A. Yes.
23 Q. And it's entered with your husband, Rufo Cardenas,
24 Jr., correct?
25 A. Yes.

1 Q. And yourself, Sharolynn Cardenas, correct?
2 A. Yes.
3 Q. And you're listed as tenant, correct?
4 A. Yes.
5 Q. If we could take that off and go to the next page,
6 please.
7 Do you have the next page in front of you, ma'am?
8 A. Yes.
9 Q. And do you see paragraph 12?
10 A. Yes.
11 Q. It looks like there is a bracket in front of the word
12 "landlord," correct?
13 A. Yes.
14 Q. And then off to the side on the right, it appears to
15 say "quiet enjoyment," do you see that?
16 A. Yes.
17 Q. You wrote those two words "quiet enjoyment," correct?
18 A. Yes.
19 Q. And did you take this residential lease after sale
20 agreement to your attorney?
21 A. No.
22 Q. Did you take it to your real estate broker, Peahu?
23 A. Yes.
24 Q. Did you ask Peahu questions?
25 A. Yes.

1 Q. And after asking Peahu questions, if we could go to
2 the last page, please.
3 THE COURT: The last page of G-4, 1492.
4 MS. KENNEY: This is page three. Do you know how
5 many pages it is?
6 MR. GREINER: Four. Thank you.
7 Q. BY MR. GREINER: And after Peahu answered your
8 questions, you signed the residential lease after sale
9 agreement, correct?
10 A. Yes.
11 Q. And your husband signed it, correct?
12 A. Yes.
13 Q. And it's dated June 15th, 2005, correct?
14 A. Yes.
15 Q. If we could go to G-7, please.
17 A. Yes.
18 Q. Do you recall sometime in the early -- sometime in
19 the late part of June 2005, an appraiser coming out to your
20 property?
21 A. Yes.
22 Q. I want to talk to you now about your testimony on
23 direct examination with the Government.
24 Okay. I don't think I need to refer to any
25 documents. I think we're done with those. All right.

1 A. Okay.
2 Q. Do you remember talking with the Government, saying
3 that a person you understood to be Domonic McCarns sent you a
4 packet of documents, correct?
5 A. Yes.
6 Q. That was the equity purchase agreement document,
7 right?
9 Q. Do you have any recollection in your mind what the
10 first package of documents were that were sent to you?
11 A. Yes.
12 Q. So you know what they were?
13 A. It was for information.
14 Q. Okay. Anything else?
15 A. Not that I can recollect.
16 Q. All right. Then you testified on direct that prior
17 to receiving the second package of documents you talked to a
18 person that you -- that represented themselves to be Domonic
19 McCarns, do you remember that?
20 A. Yes.
21 Q. Okay. And do you recall what was in that second
22 package of documents?
23 A. Paperwork on our home. Paperwork on our home.
24 Q. What was the paperwork?
25 A. I can't recollect at this time.

1 Q. Okay. And you told the ladies and gentlemen of the
2 jury that in your second conversation with the person that
3 represented themselves as being Domonic McCarns, that person
4 said let your bankruptcy attorney know to cancel the
5 bankruptcy, do you remember that?
6 A. Yes.
7 Q. And so did you call your bankruptcy attorney?
8 A. Yes.
9 Q. Or did you go see him?
10 A. I called him.
11 Q. So you called him on the phone. And what did you
12 tell him?
13 A. I told him that Mr. McCarns told us to give him a
14 call to dismiss the bankruptcy.
15 Q. Okay. And did your attorney ask you any questions?
16 A. And he said, "are you sure?" And I said that's what
17 I was instructed to do.
18 Q. And what did your attorney say?
19 A. He said okay. He was not on the island at that time.
20 Q. Okay. Well, you talked to him by phone, right?
21 A. Yes.
22 Q. Okay. And there was no pressure on you when you made
23 the phone call, was there?
24 A. No.
25 Q. And you talked as long as you wanted to with your

1 attorney, right?
2 A. As long as I had because he was in between court
3 cases.
4 Q. Okay. Well, did you tell him to call you back?
5 A. No.
6 Q. Did you call him back?
7 A. No.
8 Q. All right. So you had the conversation with your
9 attorney. Did your attorney ask who is this person that says
10 their name is Mr. McCarns?
11 A. He did ask that part.
12 Q. Okay. And what did you tell him?
13 A. I said it's a person that Mr. Peahu got us hooked us
14 up with.
15 Q. And what else did you say about him, anything?
16 A. And he said okay.
17 Q. So that's all you told your attorney?
18 A. Yes.
19 Q. Your real estate broker hooked you up with this guy
20 named Mr. McCarns and he says dismiss my bankruptcy?
21 A. Yes.
22 Q. That's it?
23 A. Yes.
24 Q. And your bankruptcy attorney said done?
25 A. He didn't say "done." He just said okay.

1 Q. Okay. Did you sign any documents with your
2 bankruptcy attorney saying that you authorized him to dismiss
3 your bankruptcy?
4 A. Not that I can remember.
5 Q. Did you sign any bankruptcy documents that were filed
6 with the Court saying you authorized your bankruptcy to be
7 dismissed?
9 Q. Did your bankruptcy attorney ever mail to you any
10 documents that said that your bankruptcy was dismissed?
11 A. Yes.
12 Q. And do you remember the date?
13 A. No.
14 Q. You talked to the Government on direct examination
15 about a term and I'm -- I want to find out what you understand.
16 You used the term equity, do you remember that?
17 A. Yes.
18 Q. What is your understanding of the term equity?
19 A. The term equity that I understand is the amount that
20 our home is worth during that time.
21 Q. And that's your understanding of the term equity?
22 A. Yes.
23 Q. So using your term, when you said that Mr. McCarns
24 said that the $200,000 of equity in your house was going to go
25 into an escrow account, what was your understanding how that

1 was going to happen?
2 A. My understanding of the $200,000 was going into an
3 account that is going to be held for us. And at the end of the
4 one-year lease with them, it was going to come back to us, that
5 $200,000.
6 Q. I appreciate your answer, but directing you back to
7 what my question was.
8 What was your understanding of how -- where was that
9 $200,000 coming from?
10 A. From my understanding at that time, the $200,000 was
11 coming from another loan that was made towards our home. There
12 was a balance due on our home that was going to be paid off
13 during that time. And then there was a balance left over that
14 was going to an equity account or an escrow account.
15 Q. Well, I got to go back to the documents. If you
16 could turn in the red binder to DM-G1. We already talked about
17 that. If you could turn to that, please. And if we could put
18 that on the screen.
19 THE COURT: You have about three more minutes, just
20 so you know.
22 Q. BY MR. GREINER: Now, DM-G1 is an e-mail that you
23 wrote to Charles Head back on November 28, 2003, and in that
24 you said that your desired loan amount was 130,000, do you see
25 that?

1 A. Yes.
2 Q. And do you see your approximate property value was
3 190,000, do you see that?
4 A. Yes.
5 Q. So you just testified in front of the jury that you
6 believed this $200,000 in equity was going to come from another
7 loan on your house, right?
8 A. Yes.
9 Q. So that means you were going to get a loan for
10 somewhere in the amount of $390,000?
11 A. No.
12 Q. Now you also talked over with the Government that --
13 let me hold off on that for a second.
14 THE COURT: If you're opening up another line of
15 questioning, we can just break here.
16 MR. GREINER: That's fine.
17 THE COURT: That brings us to the end of the first
18 day of trial, ladies and gentlemen. I'm going to excuse you
19 for the rest of the day. Our schedule tomorrow is 1:30 to
20 4:30. So if you can be ready to go right at 1:30, we should be
21 ready now that we've gotten going.
22 Overnight, and during the afternoon and tomorrow
23 morning, please keep in mind all of my instructions. No
24 thinking about the ultimate conclusion of the case, no research
25 of any kind, electronic, or going to the library, or reading

1 any kind of book about what the case might be about. If you
2 happen to see any news reports, please divert your eyes, don't
3 listen to anything that may be reported about the case. If
4 anyone attempts to contact you in any way, let me know first
5 thing tomorrow.
6 Have a good afternoon, evening, and tomorrow morning,
7 and we'll see you 1:30 tomorrow. Thank you very much.
8 (Jury out.)
9 THE COURT: You may step down, ma'am. If you could
10 be back in your seat tomorrow at 1:30.
11 THE WITNESS: Thank you.
12 THE COURT: Thank you.
13 All right. Just briefly. You may be seated if you'd
14 like.
15 On the exhibits, because there is no joint exhibit
16 list, can you meet and confer and tell me how you propose to
17 simplify the question of possible duplication of exhibits for
18 the jury? I don't know if it's a cross-reference chart with
19 multiple columns. Meet and confer. So that even if multiple
20 sets go to them, they can easily know if something is a pure
21 duplicate.
22 I'll get a better sense as we go along, but to the
23 extent -- this is the first witness covering ground, I
24 understand taking time. But if there's way to speed up the
25 second witnesses, I might start prodding you. But I'm just

1 telling you what I'm thinking at this point.
2 In terms of unsealing of those documents, did you
3 have something you wanted to say about that?
4 I conditionally sealed the S.M. documents. Do you
5 want to think more about that?
6 MR. TEDMON: Could I do that, Your Honor? And either
7 send the Court and the counsel an e-mail later today. Would
8 that be all right? I want to go through the documents again
9 and see if there is any sanitation.
10 THE COURT: Fair enough.
11 MR. SAMUEL: That's fine with me, Your Honor. I'm
12 more than happy to unseal them all, but I did that out of an
13 abundance of care.
14 THE COURT: Does anyone else have a dog in this
15 fight?
16 MR. GREINER: No position, Judge.
18 THE COURT: So I'll wait to here from you. Is there
19 anything more today?
20 I assume tomorrow we will get to -- how much longer
21 do you have?
22 MR. GREINER: Just to finish up with her testimony
23 and to go over what she told the agents prior to today.
24 THE COURT: Time estimate?
25 MR. GREINER: I don't know, Judge. You've seen me in

1 trial. I'm doing the best I can. I'm trying not to duplicate.
2 It's a document case.
3 THE COURT: It's a document intensive case. I'm not
4 giving you a hard time yet. I'm giving you notice that I may
5 gave you a hard time in the future.
6 MR. GREINER: I anticipate that's going to happen at
7 some point.
8 THE COURT: Mr. Hansen is getting his virtual trip to
9 Hawaii by virtue of this case.
10 MR. GREINER: I hope he's enjoying it.
11 THE COURT: I'm going to let you know if you're up
12 against 20 minutes. How much time will you need, Mr. Tedmon,
13 of this witness?
14 MR. TEDMON: At this point, I don't think I'm going
15 to ask any questions.
17 MR. SAMUEL: Don't think I have a question.
18 MR. GREINER: I'll take his five and his eight.
19 THE COURT: I didn't offer that. I think we'll get
20 to other witnesses tomorrow. Either Kou Yang, or Ms. Taylor,
21 or Solares.
22 MR. ANDERSON: Hopefully, get to both Ms. Taylor and
23 Ms. Yang tomorrow. Obviously, we need to move faster than we
24 did today.
25 THE COURT: Anything further? Mr. Anderson?

1 MR. ANDERSON: No, Your Honor. Thank you.
4 MR. GREINER: I think there's one thing that's
5 outstanding. And I asked the Government.
6 I think you ruled pretrial my in limine motion about
7 Mr. McCarns' amount of money that he made.
8 THE COURT: I deferred.
9 MR. GREINER: And so you're expecting me to object
10 then during trial and to do it that way, correct?
11 I just wanted to make sure. That's why I didn't say
12 anything in opening.
13 THE COURT: I've taken a peek at the exhibits, so I'm
14 ready for objections based on whatever the status is with
15 respect to that document at the time it's offered. If it's
16 offered. Anything further?
19 THE COURT: We're in recess. I'll be available
20 starting 1:15 p.m. tomorrow. Otherwise, be ready to go at
21 1:30.
23
24
25

2 CERTIFICATION

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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-116
Volume 3
CHARLES HEAD, BENJAMIN
BUDOFF, DOMONIC MCCARNS,
Defendants.
/
---oOo---
TRIAL PROCEEDINGS
WEDNESDAY, OCTOBER 23, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 JAMES RALPH GREINER

Law Offices of James R. Greiner
Folsom, CA 95630
12
14 DWIGHT M. SAMUEL
Law Offices of Dwight M. Samuel
15 117 J Street
Suite 202
16 Sacramento, CA 95814
17
For the Defendant, Charles Head:
18
SCOTT L. TEDMON
19 Law Offices of Scott L. Tedmon
980 Ninth Street
20 16th Floor
Sacramento, CA 95814
21
22
23
24
25

1 I N D E X
3 SHAROLYNN CARDENAS
CROSS-EXAMINATION BY MR. GREINER (CONT'D) 184
4 REDIRECT EXAMINATION BY MR. ANDERSON 202
RECROSS-EXAMINATION BY MR. GREINER 207
5
SHANNON TAYLOR
6 DIRECT EXAMINATION BY MR. MORRIS 215
CROSS-EXAMINATION BY MR. TEDMON 226
REDIRECT EXAMINATION BY MR. MORRIS 237
8 RECROSS-EXAMINATION BY MR. TEDMON 239
9 KOU YANG
DIRECT EXAMINATION BY MR. MORRIS 241
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

1
GOVERNMENT EXHIBITS RECEIVED IN EVIDENCE
3 5A1 Foreclosure Closing Worksheet Seller: 222

Benjamin & Shannon Taylor Buyer: Adam
4 Coffman
5B1 U.S. Department of Housing and Urban 222
5 Development Settlement Statement for
property at 54 North Shelly Avenue Fresno CA
6 Borrower: Adam Coffman Seller: Benjamin &
Shannon Taylor Lender: Olympus Mortgage
7 Company
5B2 Uniform Residential Loan Application in the 222
8 name of Adam Coffman for property at 54
North Shelly Avenue Fresno CA with
9 attachments
5B3 Castlehead Inc., Escrows Receipt for Funds 222
10 and copy of check dated 5/12/2004 Received
from Adam Coffman Washington Mutual Bank
11 check payable to Castlehead Escrow in the
amount of $2,438.39
12 5B4 Power of Attorney – Special Adam Coffman 222
appoints Joshua Coffman as power of
13 attorney Signed, dated and notarized on
4/26/2004 With attachments
14 5C1 Grant Deed recorded in Fresno County 222
5/14/2004 for property at 54 North Shelly
15 Avenue, Fresno CA Grantor: Benjamin &
Shannon Taylor Grantee: Adam Coffman
16 5D1 Bank of America Business Checking Statement 222
for 4/29-2004-05/26 2004 Account for
17 Financial Enterprises LLC Copies of checks
61 Foreclosure Schedule April 2005 259
18 62 Foreclosure Schedule May 2005 260
63 Foreclosure Schedule (Undated) 260
19 64 Chart with headings: Property; Bank; Loan 260
Payment; Mortgage Payment; Bank Phone #;
20 Tenant; Buyer; Lease Payment (Undated)
65 Chart with headings: Property; Bank; Loan 260
21 Payment; Mortgage Payment; Bank Phone #;
Tenant; Buyer; Lease Payment Date: July
22 66 Foreclosure Schedule (Undated) 260
7B2 Uniform Residential Loan Application in the 261
23 name of Ashley Reynolds for property at 542
East 167th Street, San Juan Capistrano, CA
24 92675
104 Email dated 3/21/2005 From Charles Head 266
25 114 Email dated 4/15/2005 From Kou Yang To 268
Charles Head Subject: RE: Simone Bu deal

1
3
116 Email dated 4/21/2005 From Heather Worch To 274
4 Charles Head RE: SINGLETON
122 Email dated 5/3/2005 From Kou Yang To 276
5 Charles Head Subject: RE: Stuff
103 Email dated 8/31/2004 From Charles Head To 282
6 Kou Yang Subject: RE: Tracy
124 Email dated 5/12/2005 From 286
7 mhead@financial-enterprises.com To Charles
Head Subject: RE: File Number 07050423
8 (redacted)
125 Email dated 5/13/2005 From Kou Yang 287
9 kouyang@headmortgage.com To Josh’s
Blackberry, <jactor5@tmo.blackberry.net> CC
10 Charles Head charleshead@headmortgage.com
Subject: RE: TAYLORS
Charles Head Subject: RE: (Blank)
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2 WEDNESDAY, OCTOBER 23, 2013
3 ---oOo---
4 THE CLERK: Calling criminal case number 08-116,
5 United States v. Charles Head, Benjamin Budoff and Domonic
6 McCarns. This is on for jury trial, and today is day three.
7 THE COURT: Good afternoon. All counsel are present.
8 All defendants are present.
9 Ms. Schultz played for you a voicemail. The Court
10 hasn't heard it, but she played for you a voicemail from a
11 subpoenaed witness.
12 We have a juror note. We can talk about unsealing.
13 I don't think there is any hurry. We can do that on the first
14 break.
15 What about the juror note?
16 MR. TEDMON: Your Honor, I recall this juror. He was
17 the football official/assigner.
18 THE COURT: Correct.
19 MR. TEDMON: And my understanding is that the Ed
20 Shaffer in this case has never lived in Northern California.
21 Probably for the most part, if not all of it, lived in Southern
22 California.
23 So I don't know for sure, but there is nothing that
24 we would know of that would indicate, at least on behalf of
25 Mr. Head, that the Ed Shaffer that juror Larry Vaughn is

1 talking about is the Ed Shaffer in this case.
2 THE COURT: Anything else that anyone wishes to add?
3 Mr. Anderson?
4 MR. ANDERSON: We're not aware of any information
5 suggesting they are the same person. Of course, if he comes to
6 testify, we'll follow-up.
8 MR. GREINER: Nothing to add, Judge. Thank you.
10 MR. SAMUEL: I have no information.
11 THE COURT: Any objection to my simply informing
12 Mr. Vaughn that we've reviewed his note, and we don't believe
13 there is any issue?
14 MR. GREINER: That's fine, Judge.
16 MR. ANDERSON: That's fine.
17 THE COURT: Let's bring the jury back in. You have
18 about 15, 20 minutes, Mr. Greiner?
19 MR. GREINER: I organized it, Judge. I'm hoping just
20 to march straight through.
21 It may go over a little bit, but I really tried to
22 organize it. If you see me stray from organization, then you
23 can --
24 THE COURT: I'll let you know when you're bumping up
25 against 20 minutes.

1 MR. GREINER: I know.
2 (Jury in.)
3 THE COURT: You may be seated.
4 Welcome back to court, ladies and gentlemen of the
5 jury. We hope you had a good evening and morning. We're ready
6 to proceed this afternoon, going until 4:30.
7 I just wanted to begin briefly by acknowledging a
8 note from Mr. Vaughn, Juror Vaughn. I've reviewed that note
9 with counsel, expressing a concern about possibly knowing a
10 witness. We don't think there is an issue. If you have
11 further thoughts on that, let us know.
12 JUROR 7: I don't know if he's the same person.
13 THE COURT: Thank you for letting us know, but we
14 have thought about that and don't see any issue.
15 We're going to pick up with the cross-examination of
16 this witness. Ma'am, please remember you were sworn yesterday.
17 You continue to testify subject to the oath you were given.
18 THE WITNESS: Yes.
19 THE COURT: And Mr. Greiner has a brief additional
20 period of time for cross-examination. Then we'll turn to
21 Mr. Samuel. Mr. Greiner.
22 SHAROLYNN CARDENAS,
23 a witness called by the Government, having been previously

1 CROSS-EXAMINATION (CONT'D)
2 BY MR. GREINER:
3 Q. Thank you, Judge. Good afternoon, Ms. Cardenas.
4 A. Good afternoon.
5 Q. Make sure you move the mic close to you and speak up
6 so the court reporter can hear you. Okay?
7 A. Okay.
8 Q. I was just given information by the Government that I
9 didn't have any time to prepare for last night, so there's
10 going to be a couple of additional questions on that
11 information I just received.
12 But I'm not going to do that at the start. I'm going
13 to start with what I prepared for last night, and then we'll
14 get to what the Government just told me. Okay? So you know
15 where I'm going.
16 MR. ANDERSON: Your Honor, I object to that
17 characterization. Mr. Greiner --
19 MR. ANDERSON: -- is trying to prejudice the jury.
20 That's not a fair description.
21 THE COURT: No discussion. The objection is
22 sustained. The jury shall disregard Mr. Greiner's comments.
23 You may proceed.
24 Q. BY MR. GREINER: Between yesterday and today, did you
25 have any discussion about your testimony yesterday with

1 anybody?
2 A. No.
3 Q. Okay. So you didn't talk to the Government about it?
4 A. No.
5 Q. Okay. Did you relay any information to the
6 Government between yesterday's testimony and today?
7 A. Any information meaning?
8 Q. Did you tell them something about what you testified
9 to yesterday?
10 A. About my name.
11 Q. Okay. So you did have a conversation with the
12 Government, true?
13 A. Yes.
14 Q. About the testimony you gave yesterday, true?
15 A. About the testimony I gave yesterday?
16 Q. Yes.
17 A. About my name.
18 Q. Okay. I'll pick up with that line of questioning in
19 a moment. I want to now talk to you about what you discussed
20 with the Government on direct examination yesterday. That's
21 what I'm going to talk to you about. Do you have that in your
22 mine now?
23 A. Yes.
24 Q. The first thing I want to talk to you about is
25 remember the e-mail that you sent to Charles Head back in

1 November of 2003?
2 A. I remember that e-mail.
3 Q. You did not get a refinancing on your house because
4 of that e-mail, correct?
6 Q. Do you have any recollection of refinancing your
7 house before you filed bankruptcy?
8 A. Yes.
9 Q. And when did you refinance your house before you
10 filed bankruptcy?
11 A. I'm not sure of the date.
12 Q. And who refinanced your house before you filed
13 bankruptcy?
15 Q. How much did you refinance your house for?
16 A. I'm not sure of the amount.
17 Q. Do you remember the interest rate?
18 A. No.
19 Q. Do you remember the monthly payments?
20 A. No.
21 Q. You filed bankruptcy in what month of 2004?
22 A. I'm not sure.
23 Q. How many months were you behind on your mortgage
24 payment when you filed bankruptcy?

1 Q. Had you received a notice of foreclosure from the
2 bank before you filed bankruptcy?
3 A. Yes.
4 Q. And does that refresh your memory as to how many
5 months behind you were in payments before you filed bankruptcy?
6 A. No.
7 Q. You went to the bankruptcy lawyer --
8 Let me back up. Before going to the bankruptcy
9 lawyer, did you go to Peahu to try refinance your house?
10 A. No.
11 Q. Did you try to sell your house before you went to the
12 bankruptcy lawyer?
13 A. No.
14 Q. Did you try to borrow money from any family members
15 before you went to the bankruptcy lawyer?
16 A. No.
17 Q. Did you try to borrow money from any source before
18 you went to the bankruptcy lawyer?
19 A. Yes.
20 Q. And what source did you go to?
21 A. My church.
22 Q. And did they turn you down?
23 A. No.
24 Q. How much did they give you?
25 A. 7,000.

1 Q. And how long did that keep the bank from foreclosing
2 on your house?
3 A. It was the day before they auctioned off my house
4 that we flew in to Oahu and went to see the bankruptcy courts.
5 So everything was done before the auction of our house.
6 Q. Okay. So your house was so far into foreclosure that
7 you actually had a deeded sale date, a trustee sale date,
8 right?
9 A. Yes.
10 Q. And the day before that sale date was to occur, you
11 went to a bankruptcy lawyer, correct?
12 A. That day before.
13 Q. And that bankruptcy lawyer filed a Chapter 13 stay in
14 the bankruptcy court, correct?
15 A. Yes.
16 Q. And that stay prevented the bank from foreclosing on
17 your house, correct?
18 A. Yes.
19 Q. And in addition, that bankruptcy created two payments
20 that you had to make per month, correct?
21 A. Yes.
22 Q. One payment was the bankruptcy court took all of the
23 bills that you were behind plus the arrears in your house, put
24 them together, and that was one payment a month that had you to
25 make, correct?

1 A. Yes.
2 Q. And then you also had to make your mortgage payment
3 per month, correct?
4 A. Not that I remember.
5 Q. So you don't remember being in a Chapter 13 having to
6 make two monthly payments?
7 A. Not two monthly payments.
8 Q. Okay. And then you finally came to a point where you
9 failed to keep up with your mortgage payment and you got
10 another notice of foreclosure on your house while you were in
11 bankruptcy, right?
12 A. No.
13 Q. Okay. So you're in bankruptcy, and the stay is at
14 the bank, and it's at that time that you then went to Peahu to
15 try to refinance your house?
16 A. Yes.
17 Q. And Peahu could not refinance your house?
18 A. He did not say could not.
19 Q. Did he try?
20 MR. ANDERSON: Objection. Calls for speculation.
21 Q. BY MR. GREINER: To your knowledge, did he try?
22 THE COURT: Overruled. You may answer yes or no.
23 THE WITNESS: I'm not too sure.
24 Q. BY MR. GREINER: Did you ask Peahu to try to
25 refinance your house?

1 A. I just asked him for help.
2 Q. And he couldn't help you, correct?
3 A. No.
4 Q. No, being he did not help you, correct?
5 A. No. He just told us that he was sending us someone
6 else.
7 Q. Right. But Peahu could not do anything himself?
9 Q. BY MR. GREINER: To your knowledge?
11 Q. BY MR. GREINER: Peahu could not do anything himself
12 to help you, correct?
15 Q. BY MR. GREINER: To your knowledge --
16 THE COURT: Sustained. Move on to the next question.
17 Q. BY MR. GREINER: The only thing Peahu did was sent
18 you to another company, correct?
19 A. Yes.
20 Q. And that was Funding Foreclosures?
21 A. Not too sure.
22 Q. Did he send to you another company?
23 A. He did not say. He did not say Funding Foreclosures.
24 Q. He didn't say a name of a company?
25 A. No. He just gave me Domonic McCarns' name.

1 Q. And you didn't call him?
2 A. Excuse me?
3 Q. You didn't call a person named Domonic McCarns, did
4 you?
5 A. No.
6 Q. Somebody called you, correct?
7 A. Yes.
8 Q. Now, when you were talking to this company that Peahu
9 sent you, you were still in bankruptcy, correct?
10 A. Yes.
11 Q. You were still making your bankruptcy payments?
12 A. Yes.
13 Q. Okay. You didn't try to sell your house?
14 A. No.
15 Q. You didn't try to refinance your house with any other
16 company?
17 A. No.
18 Q. You didn't try to borrow any more money?
19 A. No.
20 Q. And you talked about with the Government that -- they
21 asked you, "well, how did you know that you were selling your
22 house," and you said you read more documents, do you remember
23 that?
24 A. Yes.
25 Q. Okay. Well, in the equity purchase agreement that

1 we've looked at, that specifically said that it was an
2 agreement to sell your house, and you read that, right?
3 A. Yes.
4 Q. And so you knew when you signed the equity purchase
5 agreement that you were selling your house, right?
6 A. No.
7 Q. Okay. So even though you read the words that you
8 were selling your house, you didn't know that?
9 A. You might say that.
10 Q. Okay. And when you read the words that you were
11 receiving the $26,000 because you were selling your house, you
12 understood that by selling your house that's why you were
13 getting the $26,000?
14 A. No.
15 Q. Even though you read those words, correct?
16 A. I read those words and I asked questions.
17 Q. Right. And you asked questions of Peahu, correct?
18 A. Yes.
19 Q. And then after asking those questions, you signed the
20 document, right?
21 A. After talking to Domonic McCarns again.
22 Q. And you signed the documents, right?
23 A. Yes.
24 Q. Now yesterday you said you talked to Peahu, he
25 answered your questions, and then you signed the documents, do

1 you remember that?
2 A. Yes.
3 MR. ANDERSON: Objection. Misstates the testimony.
5 Q. BY MR. GREINER: And when you signed the equity
6 purchase agreement, you read it so closely that you even
7 bracketed the part where it said that the person purchasing the
8 property may immediately re-sell it, do you remember that?
9 A. Yes.
10 Q. And so when you read that, you understood that
11 because you had a question about it, right?
12 A. Yes.
13 Q. So you knew you were selling your property?
14 A. No.
15 Q. And when you talked to the Government about reading
16 more documents, finding out that you were selling your house,
17 when you signed the addendum to the equity purchase agreement,
18 you knew the language in there that you had bracketed about a
19 one-year lease meant that you were selling your house and
20 renting your house back to yourself, right?
21 A. Can you rephrase that question again?
22 Q. Sure. When we look at Government's Exhibit 10A1-6,
23 the Addendum to Equity Purchase Agreement, you actually wrote
24 on the left-hand column that we saw yesterday "one-year lease,"
25 do you remember that?

1 A. Yes.
2 Q. And you actually bracketed in the sentence on
3 paragraph D5, the last sentence, where it said month-to-month
4 tenant, do you remember that?
5 A. Yes.
6 Q. Okay. So you read that and understood that you were
7 leasing back your property, correct?
8 A. For that one year.
9 Q. Right. Which meant that you were selling your
10 property to lease it back, right?
11 A. No.
12 Q. Okay. So you were owning your property but you were
13 renting your property, is that what you believe?
14 A. We were owning our property, but, yet, paying the
15 mortgage to this company. And after that, get back -- after
16 the one year, get back our home within two to three months,
17 with our name on the deed, and our home within one year with
18 the $200,000 to put back into that home.
19 Q. And why was your name off the deed in the first
20 place?
21 A. Because according to what we were told is that they
22 needed someone with stronger credit on the deed and to get the
23 mortgage.
24 Q. Well, you know by reading that you sold your
25 property, that's why your name was off the deed, right?

1 MR. ANDERSON: Objection. Vague as to when she knew
2 what.
3 Q. BY MR. GREINER: Well, when you read the documents
4 and questioned --
5 When you read the documents, specifically the grant
6 deed, you knew that you were selling your property, correct?
7 A. I had a feeling, yes.
8 Q. And that feeling was proved true because the grant
9 deed said you were coming off and somebody else was going on
10 the title of your house, right?
11 A. Yes.
12 Q. And you knew you were selling your house because you
13 knew that you were renting your house for a year, right?
14 A. In my understanding, no. We were always told that we
15 would get the $200,000 back at the end of one year to
16 re-purchase our home.
17 Q. Right. And we covered that yesterday, and I
18 appreciate your answer. Let me get to that in a second.
19 My question to you is, you knew you had sold your
20 house, that's why you entered into the lease agreement,
21 correct?
22 A. No.
23 Q. And we talked about the $200,000 yesterday, and you
24 told us that you had no expectation of getting a $390,000 loan
25 on your house, right?

1 A. Yes.
2 Q. And one of the documents that you read, and you had a
3 question about, and you asked Peahu about was the
4 acknowledgement by seller, right, that's one of the documents?
5 A. Yes.
6 Q. All right. And you remember on paragraph two it says
7 that the seller acknowledges that the seller's residence is
8 currently in foreclosure, and it was, right?
9 A. Yes.
10 Q. Okay. And that prior to entering into this
11 transaction with the purchaser, the seller has exhausted all
12 When the
means to try to resolve you read
foreclosure, and you had tried
the documents,
13 everything, right? specifically the
grant
14 A. Yes. deed, you knew
that you were
15 Q. Okay. Andselling
thenyour
paragraph three says that seller
property, correct?
16 understands that as A.
part
I hadof the foreclosure proceeding a
a feeling,
yes.
17 trustee sale has been scheduled, and it had been, right?
18 A. Yes.
19 Q. And, again, on the acknowledgement by seller
20 document, paragraph four, it says, seller understands that the
21 equity purchase agreement, which the seller has entered into,
22 is not a loan and is not a mortgage, and you knew that, right?
23 A. Yeah.
24 Q. And you also knew when you signed the acknowledgement
25 by seller that it said that the seller will forfeit title to

1 seller's residence and lose any claim that the seller may have
2 to the current equity in the seller's residence, and you read
3 that, right?
4 A. Yes.
5 THE COURT: Mr. Greiner, as we agreed, that's
6 20 minutes.
7 MR. GREINER: Okay. Then let me do two things very
8 short.
10 Q. BY MR. GREINER: Let's see. I'm not sure which one
11 will take longer.
12 Let me do it this way. Do you remember -- you
13 remember talking to the Government prior to testifying,
14 correct?
15 A. Yes.
16 Q. Okay. And on one occasion, around April of 2007, do
17 you remember telling the Government that you were referred to
18 FundingForeclosures.com by Peahu, do you remember telling them
19 that?
20 A. Yes.
21 Q. And that you also spoke to a person named John at
22 this company, do you remember that?
23 A. Yes.
24 Q. Okay. And do you remember telling the Government
25 that all documents were signed in the presence of a notary at

1 Security Title, do you remember that?
2 A. Yes.
3 Q. And do you remember telling the Government that your
4 monthly mortgage prior to entering into the contracts with this
5 company was 1,800, do you remember that?
6 A. Yes.
7 Q. And afterwards, your monthly payment was 1,500, do
9 A. Yes.
10 Q. And remember talking to the Government on or about
11 July of 2013, just a couple of months ago?
12 A. Yes.
13 Q. Okay. Do you remember telling the Government that
14 questions that you had about the program that you asked your
15 broker Peahu, right?
16 A. Yes.
17 Q. And that Peahu said that the program was okay, do you
18 remember telling the Government that?
19 A. Yes.
20 Q. Now, did you look at some documents between your
21 testimony yesterday and today?
22 A. Yes.
23 Q. All right. And do you remember the documents you
24 looked at?
25 A. Yes.

1 Q. Okay. Tell me what they are?
2 A. It was the 10-1-A (sic). It was all the similar
3 documents that you have asked me to look in this red book also.
4 Q. Say that last sentence again.
5 A. It was all the documents that you have asked me to
6 look at yesterday also.
7 Q. Okay. So I had you look at all the documents in the
8 white book and in the red book. I had you look at all of them.
9 A. Okay.
10 MR. ANDERSON: That's not actually true. They're
11 huge books.
12 THE COURT: Objection. No speaking. If there is an
13 objection --
14 MR. ANDERSON: Objection. Maybe Mr. Greiner can ask
15 a more specific question.
16 Q. BY MR. GREINER: All of the Government's exhibits
17 labeled 10A1 you looked at, right?
18 A. Yes. Yes.
19 Q. And all of the exhibits labeled DM-G through the end
20 of that series you looked at, right?
21 A. Yes.
22 Q. Now what did you find? What did you tell the
23 Government?
24 A. You want me to tell you what I told the Government?
25 Q. That's my question.

1 A. I told them the same thing what I said yesterday.
2 That parts of it was missing at the time of signing.
3 Q. What do you mean by parts?
4 A. Where there was a bank transaction number and so
5 forth.
6 Q. We talked about that. On the wire transaction?
7 A. Yes.
8 Q. We talked about that. One is dated June. One is
9 dated September. One wire transaction has no account and no
10 escrow agent. And the other one in September has an escrow
11 agent and an account. Right?
12 A. Yes.
13 Q. Okay. We talked about that. What else?
14 A. We talked about my signatures.
15 Q. On what documents?
16 A. On the 10-1-A (sic).
17 Q. So the Government's documents?
18 A. Yes.
19 Q. What about your signature on Government's
20 Exhibit 10A1-4?
21 A. Can I look at it?
22 Q. Absolutely. Look at it all you want.
23 A. Yes.
24 Q. All right. What about it?
25 A. That is my signature.

1 Q. Okay. I'm just trying to find out what you told the
2 Government. So what else did you tell them?
3 A. Nothing else. We just went through that part.
4 10A1-A (sic), -2, -3, -4, the reading, and the signatures.
5 That's about it.
6 Q. Now you're saying signatures. So there are other
7 documents that have your signature on them?
8 A. Yes.
9 Q. You talked to the Government about that?
10 A. Yes.
11 Q. All right. What did you say? Which document? I
12 wasn't there. I don't know. I'm just trying to find out.
13 A. Well, I told them that all of them is my signature.
14 Q. Okay. That's what you told them?
15 A. Yes.
16 Q. All right. We're good then.
17 A. Okay.
18 MR. GREINER: Just one second, Judge.
19 Judge, I appreciate the extra time. Thank you very
20 much.
21 THE COURT: Mr. Samuel, do you have any examination
22 of this witness?
23 MR. SAMUEL: No, I don't, Your Honor.

1 THE COURT: Any redirect?
3 THE COURT: How much time do you estimate you need?
4 MR. ANDERSON: Under ten minutes.
5 REDIRECT EXAMINATION
6 BY MR. ANDERSON:
7 Q. Let's clear up. This conversation you had with the
8 Government, did you talk to me or Mr. Morris today?
9 A. Who is Mr. Morris?
10 Q. That's him right there.
11 A. Not to him.
12 Q. Was it something where people came to you and asked
13 you questions, or did you mention something to someone this
14 morning or this afternoon?
15 A. I just mentioned something this morning -- I mean
16 this afternoon.
17 Q. While you were waiting to testify here?
18 A. Yes.
19 Q. Who did you talk to?
20 A. That gentleman right here.
21 Q. And what did you tell him?
22 A. That last night I was bothered, and I could not sleep
23 because there was something that I remembered in the documents
24 that was addressed to Mr. Charles Head. It was an e-mail that
25 was supposedly from me. What bothered me was my name was

1 spelled wrong. There is two Ns in my name, but in that
2 document there's only one N.
3 Q. Now, in that e-mail that was discussed yesterday, do
4 you recall specifically going to Head Financial Services or
5 e-mailing Charles Head personally?
6 A. No.
7 Q. Did you ever fill out forms at various websites
8 online about mortgages or related to getting a mortgage?
9 A. Yes.
10 Q. And so can you tell us where or when that e-mail came
11 to exist?
12 A. Are you speaking about the e-mail that came --
13 Q. Yes.
14 A. Only yesterday was the first time I ever seen the
15 e-mail.
16 Q. Okay. Some of the other information on it appears to
17 be information about you or about your property?
18 A. Yes.
19 Q. Okay. So it's fair to say that that at least appears
20 to be referring to your property?
21 A. Yes.
22 Q. All right. Do you have any legal or real estate
23 background?
24 A. No.
25 Q. Do you have any training in the law or in real

1 estate?
2 A. No.
3 Q. After you saw the documents, did you talk to Domonic
4 McCarns before signing them?
5 A. Yes.
6 Q. Was your conversation with Domonic McCarns and what
7 he told you part of the reason that you signed those documents?
8 A. Yes.
11 MR. GREINER: Move to strike. Admonish the jury,
12 please.
13 THE COURT: The jury shall disregard that answer.
14 You may start over.
15 Q. BY MR. ANDERSON: Let me ask it a little bit
16 different.
17 Was what Domonic McCarns said in that conversation
18 part of the reason that you signed the documents?
19 MR. GREINER: Objection. Vague as to time.
20 MR. ANDERSON: It's the same --
22 Q. BY MR. ANDERSON: And when I ask that question, I
23 mean the same conversation that we've been discussing between
24 when you first saw the documents and when you signed them?
25 A. Yes.

1 Q. And that's "yes"?
2 A. Yes, we signed it because of what was promised to us.
3 Q. All right. Did you ever intend to have -- in this
4 transaction to have $212,071.94 of your equity wired to a bank
5 account that was controlled by Charles Head and not returned to
6 you?
7 MR. TEDMON: Objection.
8 MR. GREINER: Objection.
9 THE COURT: One at a time.
10 MR. TEDMON: Lack of foundation as far as a bank
11 account being controlled by Charles Head.
12 MR. ANDERSON: I have a good faith basis, Your Honor,
13 and will link it up next question.
14 MR. GREINER: Objection. Relevance and speculation.
15 THE COURT: Mr. Tedmon's objection is sustained. So
16 you can -- don't answer that question.
17 Q. BY MR. ANDERSON: Let me do it in parts.
18 Did you ever give permission for $212,071.94 of your
19 equity to be taken from your home and kept by someone else?
20 MR. GREINER: Objection. Phrase "your equity." Lack
21 of foundation --
23 Q. BY MR. ANDERSON: Did you ever give permission for
24 $212,071.94 of the equity in your home to be taken and kept by
25 someone else?

1 MR. GREINER: Same objection. Lack of personal
2 knowledge and speculation as to "your equity."
5 A. No.
6 Q. Did you give permission for that money --
7 Did you intentionally give permission for that money
8 to be wired to a bank account held by the corporate entity
9 Creative Loans?
10 MR. GREINER: Same objection. Speculation. Lack of
11 personal knowledge as to "your equity."
12 Q. BY MR. ANDERSON: All right. The equity in your
13 home?
14 THE COURT: All right. You can answer that question.
15 The objection is overruled.
16 MR. GREINER: Same objection to this question, Judge.
18 A. No.
19 Q. And the same exact question, would your answer "no"
20 change if you knew that that bank account had as a signer
21 Charles Head on it?
22 MR. GREINER: Objection -- go ahead.
23 MR. TEDMON: First of all, it's speculation. The
24 question is confusing.

1 Q. BY MR. ANDERSON: Did you give permission for
2 $212,071.94 of equity from your home to be wired into a bank
3 account that had Charles Head as a signatory?
4 MR. TEDMON: Objection, Your Honor. Lack of
5 foundation.
7 MR. ANDERSON: Well, what's the missing --
8 THE COURT: The objection is sustained. Next
9 question.
10 Q. BY MR. ANDERSON: Did you trust the information
11 provided to you by your real estate broker, Peahu?
12 A. Yes.
13 Q. Did you trust the information given to you by the
14 person on the phone who said he was Domonic McCarns?
15 A. Yes.
16 MR. ANDERSON: No further questions.
17 THE COURT: All right. Any recross, Mr. Greiner?
18 MR. GREINER: Yes, on two areas, Judge.
19 RECROSS-EXAMINATION
20 BY MR. GREINER:
21 Q. If we could pull up DM-G-1, please.
22 Ma'am, what I'm going to talk about is an exhibit in
23 the red book, DM-G, as in George, 1, please.
24 Judge, I could speed it up. I could hand her this
25 document.

1 THE COURT: All right. You may approach.
3 Q. BY MR. GREINER: All right. Ma'am, this is the
4 e-mail that you told the Government had a misspelling of your
5 first name, correct?
6 A. Yes.
7 Q. No misspelling of your last name, correct?
8 A. Yes.
9 Q. Let's go over some of the information in there.
10 Where it says "your new client," the "Sharolynn" then
11 would be misspelled because it has one N, correct?
12 A. Yes.
13 Q. It's not working or I have to do something? Sorry.
14 My fault. Thank you.
15 And you can look on the screen if you want. Where it
16 says "your new client" and says "Sharolynn Cardenas," then the
17 "Sharolynn" is misspelled because it's not two Ns, correct?
18 A. Yes.
19 Q. Work phone number, that was your work phone number
20 back in 2003, correct?
21 A. Yes.
22 Q. And where it says home phone number, that was your
23 home phone number back in 2003, correct?
24 A. Yes.
25 Q. And that's your e-mail address, correct?

1 A. Yes.
2 Q. And that's your street address?
3 A. Yes.
4 Q. City?
5 A. Yes.
6 Q. State?
7 A. Yes.
8 Q. Zip code?
9 A. Yes.
10 Q. Where it says "special contact instructions,
11 morning," that would be the best time to contact you, wouldn't
12 it?
13 A. Yes.
14 Q. And then where it says "desired loan," where it says
15 "type, re-finance," that's what you were looking for in 2003,
16 correct?
17 A. Yes.
18 Q. When it says "desired loan amount, 130,000," that's
19 how much you were looking for in 2003, correct?
20 A. Yes.
21 Q. Loan to value, it says 68 percent. That was your
22 estimate, correct?
23 A. Yes.
24 Q. Where it says "loan category selected," you put
25 "sub-prime," correct?

1 A. Yes.
2 Q. When it says "approximate property value of 190,000"
3 that was your estimate of your property value at the time,
4 correct?
5 A. Yes.
6 Q. And, again, "State, Hawaii," that's the state, right?
7 A. Yes.
8 Q. Where it says "current loan amount of 130,000," that
9 was your current loan amount about in 2003, correct?
10 A. Approximate, yes.
11 Q. And where it says "self credit rating," it says
12 "bad," that was your analysis of your credit rating at the
13 time, correct?
14 A. Yes.
15 Q. All right. Just one second, Judge.
16 On redirect examination you were talking to the
17 Government about your equity, do you remember that?
18 A. Yes.
19 Q. Okay. We talked about that yesterday. Let's talk
20 about it again today.
21 Your understanding of what equity in your house was?
22 MR. ANDERSON: Objection. Beyond the scope of
23 redirect.
24 THE COURT: Overruled. You may answer.

1 Q. BY MR. GREINER: Actually, the question requires a
2 little bit more, I think.
3 What is your understanding of equity in your house
4 back in the time of 2005?
5 A. Back in 2005? You're asking about equity? I had no
6 knowledge of.
7 Q. Did you believe back in 2005 that you could take
8 equity and buy groceries?
9 A. I did not understand what equity was about at that
10 time.
11 Q. Okay. In 2006, did you have an understanding of what
12 equity in your house was?
13 A. No.
14 Q. Okay. Did you have an understanding back in 2005
15 that you could make a deposit in a bank of your equity in your
16 house?
17 A. No.
18 Q. Did you have an understanding in 2006 that you could
19 make a deposit of your equity in a bank account?
20 A. No.
21 Q. Did you understand in 2005 that equity is not a real
22 number?
23 A. Yes.
24 MR. ANDERSON: Object -- that's fine.
25 Q. BY MR. GREINER: Did you understand in 2006 that

1 equity is not a real number?
2 A. Yes.
3 Q. Did you understand that the only way anyone can ever
4 determine if they have equity in their house in 2005 would be
5 to actually sell their house and pay off their mortgage, and
6 any money left would be called equity?
7 A. No.
8 Q. Did you have an understanding in 2006 that the only
9 way you could determine if you had equity in your house was if
10 you sold your house, paid off your mortgage and liens and
11 taxes, and whatever else, and any money left over would be your
12 equity in your house?
13 A. At the year of 2006?
14 Q. Yes.
15 A. Yes.
16 Q. And you sold your house and you received $26,000,
17 right?
18 A. Yes.
19 Q. And that's after asking questions and signing
20 documents?
21 A. And getting promises.
22 Q. So the answer would be "yes," right?
23 A. Yes.
24 MR. GREINER: Thank you.

2 THE COURT: All right. Let me just ask so that the
3 record is clear. Ms. Cardenas identified someone.
4 MR. ANDERSON: Agent Peter Byrne.
5 THE COURT: It was Agent Peter Byrne. Is it the
6 gentleman sitting in the audience now who raised his hand?
7 THE WITNESS: Yes.
8 THE COURT: All right. So the record clear.
9 May this witness step down? Mr. Anderson?
12 MR. TEDMON: Yes.
14 MR. GREINER: Yes.
16 MR. SAMUEL: Yes.
17 THE COURT: Next witness.
18 MR. MORRIS: United States calls Shannon Taylor.
19 THE CLERK: Ms. Taylor, please come forward.
20 (Photograph taken of witness.)
21 THE CLERK: Please raise your right hand.
22 Do you swear to tell the truth, the whole truth, and
23 nothing but the truth, so help you God?
25 THE CLERK: Please state your full name and spell

1 your last name for the record.
2 THE WITNESS: Shannon Taylor, S-h-a-n-n-o-n,
3 T-a-y-l-o-r.
4 THE COURT: I understand I should give an
5 instruction.
6 MR. MORRIS: Yes, Your Honor.
7 THE COURT: So you understand, the reason we're
8 taking photographs, those will be available for you in your
9 binders to help you remember names and faces. That's why we're
10 engaging in that exercise with the parties' permission.
11 With respect to Ms. Taylor's testimony, I understand
12 that you may hear evidence that Charles Head committed other
13 acts not charged here. You may consider this evidence only for
14 its bearing, if any, on the question of Mr. Head's intent,
15 motive, opportunity, preparation, plan, absence of mistake or
16 absence of accident, and for no other purpose. You may
17 proceed.
18 MR. SAMUEL: If the Court could instruct this is only
19 to Mr. Head and no other defendant.
20 THE COURT: To further clarify, you may not consider
21 any such evidence as evidence of guilt of the charges for which
22 Mr. Budoff and Mr. McCarns are now on trial.
23 SHANNON TAYLOR,

3 BY MR. MORRIS:
4 Q. Ms. Taylor, where do you live?
5 A. In Clovis, California.
6 Q. I'd ask to you think back to the 2004 timeframe. Did
7 you live in Clovis, California then?
8 A. No.
9 Q. Where did you live?
10 A. Fresno, California.
11 Q. Do you recall your address in Fresno?
12 A. Yes, 54 North Shelly Avenue.
13 Q. And approximately how long had you lived at that
14 address?
15 A. I believe, from what I can remember, about four
16 years.
17 Q. Thinking again about early 2004, at the beginning of
18 2004 did you own or rent that house?
19 A. Own.
20 Q. And were you falling behind on your mortgage at that
21 time?
22 A. Yes.
23 Q. To the best of your recollection, about how far
24 behind were you on your mortgage?
25 A. We had received a letter about possibly foreclosure

1 proceedings if we didn't get caught up.
2 Q. In that timeframe, Spring of 2004, did you become
3 involved with a company to try to solve that?
4 A. Yes.
5 Q. And do you recall who it was that you became involved
6 with?
7 A. Head Financial.
8 Q. Do you recall any individual people with Head
9 Financial that you interacted with?
10 A. Yes. Josh Coffman and Cindy Gastelum.
11 Q. Anybody else?
12 A. And Charles Head.
13 Q. Do you recall how you first became aware of Head
14 Financial or of one of those three people?
15 A. I believe it was a postcard in the mail.
16 Q. Do you recall what that postcard said?
17 A. I believe it said something about if you're in
18 financial problems, re-financing, helping you out of
19 foreclosure, something to that effect, to help somebody who is
20 in that financial situation that we were in.
21 Q. Did you do anything in response to receiving that
22 postcard?
23 A. I made a phone call to the number that was on the
24 card.
25 Q. And do you recall who you spoke to?

1 A. I don't recall, but I believe it was a secretary or
2 someone.
3 Q. Okay. And to the best of your recollection, what did
4 you tell that person?
5 A. I explained the situation and asked them what options
6 or what could they do for us, or if that was the kind of stuff
7 that they took care of.
8 Q. And did you eventually speak to somebody other than
9 the secretary you just mentioned?
10 A. I believe it was Josh Coffman I spoke to.
11 Q. And to the best of your recollection, what did Josh
12 Coffman tell you?
13 A. He wanted to set up a meeting to meet us and go over
14 the different options for situations and how they could help
15 us.
16 Q. And do you recall whether you spoke to him once or
17 more than once?
18 A. I don't recall.
19 Q. Did you in fact meet with Josh Coffman?
20 A. Yes.
21 Q. Where did you meet with him?
22 A. At my property. At my house.
23 Q. Okay. Was anybody else present other than you and
24 Josh Coffman?
25 A. Yes, Charles Head and Cindy Gastelum.

1 Q. Was anybody else there?
2 A. No -- well, my ex-husband. Sorry.
3 Q. And to the best of your recollection, can you
4 describe this meeting time and/or location of this meeting at
5 your house?
6 A. We sat at the kitchen table. We talked about our
7 situation again. They offered a type of --
8 Q. Can I interrupt for a second here.
9 As we talk about this meeting here, I would like you
10 to be as specific as you can about who said what to the best of
11 your memory?
12 A. Okay.
13 Q. So if you can to the best of your memory -- let me do
14 this actually. You sat at the table with who?
15 A. With Cindy, Charles and Josh.
16 Q. What's your recollection of Cindy's role at that
17 meeting?
18 A. Cindy's role was one of notary.
19 Q. What do you recall about what Josh did or said at
20 that meeting?
21 A. Josh seemed to be the talker for the financial group,
22 seemed to be the one who set up the -- the salesman.
23 Q. What, if anything, do you recall about Charles Head's
24 role at that meeting at your table?
25 A. Charles seemed to be the one in charge.

1 Q. So going back to what Josh told you, the sales part
2 that you just talked about, what is your recollection of what
3 you were told by Josh the deal would be?
4 A. The deal would be that we would be on title with an
5 investor. The investor we did not know who that would be.
6 "We" meaning me and my ex-husband. And that would go on for a
7 year while we made small payments, which ended up being rent.
8 And then after that year, we would refinance, and the house
9 would be put back into our name alone.
10 Q. Do you recall any discussion about the equity in your
11 house?
12 A. There was no discussion about equity in our house.
13 Q. Did you have any understanding as to what would
14 happen to the equity in your house as part of this deal?
15 A. No.
16 Q. What was your recollection about how long this
17 process would be?
18 A. A year.
19 Q. And this conversation where these terms were
20 presented to you, were all the people that you previously
21 mentioned present at the table when those were said?
22 A. Yes.
23 Q. After this information was given to you, did you make
24 any decision about whether you wanted to proceed with this
25 program?

1 A. Yes.
2 Q. And what was the decision you made?
3 A. We decided to do it so that we could save the house.
4 Q. Did you sign any papers?
5 A. Yes.
6 Q. Could you describe the process of signing those
7 papers to the best of your recollection today?
8 A. It was rather hurried. And being that we had gone
9 through escrow when we originally bought the house, it wasn't
10 as long as that, and there wasn't as much paperwork. Other
11 than that, it was pretty, you know, here's this quick
12 explanation, if any, and sign or initial.
13 Q. And was it at this same meeting -- the one you just
14 told us about --
15 A. Yes.
16 Q. -- when you made the decision to sign the papers, was
17 your belief that you would be on title with an investor
18 important to you in making that decision?
19 A. Yes.
20 Q. When you made the decision to sign those papers, was
21 the fact that no discussion had occurred regarding equity
22 important to you in making that decision to sign the papers?
23 MR. TEDMON: Objection. Leading.
25 Q. BY MR. MORRIS: Did you have in your mind a belief

1 about the equity in your house?
2 A. Yes.
3 Q. Did your belief about the equity in your house have
4 any role in your decision to sign the papers?
5 A. Yes.
6 Q. What role or what impact did your belief about the
7 equity have in your decision to sign the papers?
8 A. Well, we believed that the equity would stay intact.
9 MR. MORRIS: Your Honor, I'm going to ask to move in
10 the five series of exhibits. These are all covered by the
11 stipulation. I'll read them out by list. 5A1 are documents
12 recovered in the search warrant. 5B1, 5B2, 5B3 and 5B4 are
13 escrow or lender records. 5C1 are county recorder records.
14 5D1 are bank records.
20 MR. GREINER: No. Since the limiting instruction, it
21 doesn't affect Mr. McCarns.
22 THE COURT: All right. 5A1 through 5D1 are admitted.
23 MR. SAMUEL: That would be as to Mr. Head only.
24 THE COURT: Agreed, Mr. Morris?
25 MR. MORRIS: That's correct, Your Honor.

1 THE COURT: All right. So those documents are
2 admitted with respect to the Government's case against
3 Mr. Head. The testimony is subject to the limiting instruction
4 the Court gave at the beginning.
5 (Government Exhibits 5A1, 5B1, 5B2, 5B3, 5B4, 5C1,
6 5D1, (See index for descriptions) admitted into evidence.)
7 Q. BY MR. MORRIS: Could you bring up 5C1, please. Can
8 you see, on the monitor in front of you, that page?
9 A. Yes.
10 Q. Do you recognize the signatures -- well, let me ask
11 you this. Is that your name?
12 A. Yes.
13 Q. Do you recognize the signature above your name?
14 A. Yes.
15 Q. As you sit here today, does that appear to be your
16 signature?
17 A. Yes.
18 Q. The person above you, the name above you, do you know
19 Benjamin D. Taylor, Jr.?
20 A. Yes.
21 Q. How do you know him?
22 A. I was married to him for 17 years.
23 Q. At the time of 2004 were you still married to him?
24 A. Yes.
25 Q. In the course of your 17 years of marriage, did you

1 become familiar with his signature?
2 A. Yes.
3 Q. As you sit here today, does that appear to be your
4 husband's signature above yours?
5 A. Yes.
6 Q. Zoom back out, please.
7 Again, thinking back to spring of 2004, did you know
8 somebody named Adam Coffman?
9 A. No.
10 Q. And I'll ask you at this point, based on your
11 understanding now, today, do you understand what this document
12 is?
13 A. Today, yes.
14 Q. What is this document?
15 A. This is a grant deed in which it gives Adam Coffman
16 our house.
17 Q. At the time that you signed the document, was your
18 intention to give Adam Coffman your house?
19 A. No. And I don't recall signing this document.
20 MR. TEDMON: Objection, Your Honor. Move to strike
21 the last part of the answer as non-responsive.
23 last answer.
24 Q. BY MR. MORRIS: And to clarify the signatures we just
25 looked at a second ago, your testimony is that you think those

1 are your signatures?
2 A. Yes.
3 Q. If you could bring up 5B4, page six, please. And
4 I'll ask you to look at the bottom of the page in front of you.
5 Above your name there appears to be a signature.
6 Does that appear to be your signature?
7 A. No.
8 Q. And above your husband's name, does that appear to be
9 his signature?
10 A. No.
11 Q. And the next page, please.
12 And above your name on this page, does that appear to
13 be your signature?
14 A. No.
15 Q. And above your husband's name, does that appear to be
16 his signature?
17 A. No.
18 Q. I think you said you live in Clovis now?
19 A. Uh-huh, yes.
20 Q. After you signed these documents, what, if anything,
21 do you recall about the next interactions you had with the
22 folks that were -- any of the people who were at that table?
23 A. I had called Head Financial or Castlehead Financial
24 -- I can't remember, can't recall -- that I had called to ask
25 about a copy of our documents that were signed because we had

1 only received a partial amount of them.
2 Q. And let's stop and talk about that for a second.
3 A. Oh, okay.
4 Q. So we go back to the date you are at the table and
5 sign the documents --
6 A. Uh-huh.
7 Q. -- did you receive copies of the documents there that
8 day?
9 A. No.
10 Q. Did you ever have another meeting where you signed
11 documents?
12 A. No.
13 Q. Did you ever receive any further documents from Head
14 Financial to sign?
15 A. No.
16 Q. Okay. So then the phone call you make to -- do you
17 recall who you called?
18 A. I don't recall. I'm sorry.
19 Q. What did you ask in that phone call?
20 A. For copies of the documents that were signed that
21 day.
22 Q. Do you recall who you were speaking to at whichever
23 organization you called?
24 A. Oh, gosh, no, I don't recall.
25 Q. But what happened next to the best of your

1 recollection?
2 A. To the best of my recollection, next we started
3 receiving threatening phone calls from Josh Coffman that he was
4 going to evict us from the house.
5 Q. Do you still live in that house?
6 A. No.
7 MR. MORRIS: Your Honor, could I have a moment with
8 Mr. Tedmon?
10 (Discussion between counsel.)
11 MR. MORRIS: No further questions, Your Honor.
12 THE COURT: All right. Mr. Tedmon,
13 cross-examination?
15 CROSS-EXAMINATION
16 BY MR. TEDMON:
17 Q. Ms. Taylor, good afternoon.
19 Q. I want to start with your relationship with Head
20 Financial. You indicated on direct examination that your
21 initial contact was with Josh Coffman, true?
22 A. I believe so.
23 Q. And just in the totality of your contacts with anyone
24 from Head Financial, the majority of those were with Josh
25 Coffman, true?

1 A. True.
2 Q. And in fact, the only time you ever talked to or met
3 with Charles Head was at your kitchen table, true?
4 A. True.
5 Q. Every other contact was with Josh Coffman, correct?
6 A. Correct.
7 Q. So from the time that you got the postcard in the
8 mail to the point where Mr. Coffman, Mr. Head and Ms. Gastelum
9 showed up at your house, all your contacts were with Josh
10 Coffman, correct?
11 A. To the best of my recollection, yes.
12 Q. All right. And when those three individuals -
13 Mr. Coffman, Mr. Head, and Ms. Gastelum - showed up, it was
14 Mr. Coffman that provided you the details of the program, true?
15 A. For the most part.
16 Q. Well, he was the one doing the talking, correct?
18 Q. All right. Well, Mr. Head didn't offer any details,
19 did he?
20 A. Not that I can recall.
21 Q. Okay.
22 A. Specifically.
23 Q. And prior to you meeting with them at your house, it
24 was your intention to enter into the -- you and your husband at
25 the time to enter into this program, correct?

1 A. Sure.
2 Q. Well, they brought the documents with them, correct?
3 A. Correct.
4 Q. All right. And after listening to Mr. Coffman, you
5 and your husband signed the documents, true?
6 A. True.
7 Q. Now part of the program was that you would get money
8 up front, correct?
9 A. Correct.
10 Q. All right. Mr. Morris didn't ask you about this. In
11 fact, the way the program worked was you signed these
12 documents, and in exchange for which you would get a check for
13 $20,000, correct?
14 A. Correct.
15 Q. And in fact, you got a check for $20,000, true?
16 A. True.
17 Q. All right. Now the documents that relate to your
18 transaction we don't have, but I want to ask you some questions
19 to the best of your recollection. Okay. I know it's been a
20 long time.
21 Do you recall a document called an Equity Purchase
22 Agreement?
23 A. No.
24 Q. Are you saying that that was not part of the package
25 or you don't recall?

1 A. That was not part of the package.
2 Q. You specifically remember that?
3 A. Yes.
4 Q. Okay. How do you remember that there was not an
5 equity purchase agreement?
6 A. Because I think I would recall us giving away our
7 equity.
8 Q. Well, if the document's entitled Equity Purchase
9 Agreement, is that something that you specifically don't recall
10 seeing?
11 A. True.
12 Q. You don't recall that?
13 A. No.
14 MR. TEDMON: Your Honor, if we could have -- one
15 moment -- well, let's wait on that for a second.
16 Q. BY MR. TEDMON: You knew as part of the program that
17 you were selling your house, correct?
18 A. No.
19 Q. Well, you paid rent to some organization after you
20 signed the documents, true?
21 A. Well, it wasn't called rent when we were told about
22 it.
23 Q. Okay. Well, you made payments to another company?
24 A. Yes.
25 Q. Correct?

1 A. Yes.
2 Q. All right. And those were -- those payments were in
3 the form of a lease option, do you recall that?
4 A. Yes.
5 Q. All right. Where somebody else was taking ownership
6 of your property, and you were leasing it back for a period of
7 time, correct?
8 A. Correct. But that's not how it was explained.
9 Q. Well, but that's what it was, true?
10 A. True.
11 Q. All right. And at some point you stopped making
12 payments on this lease option, correct, after you had signed
13 these documents?
14 A. No.
15 Q. That's not correct?
16 A. That's not correct.
17 Q. Do you recall making payments to a Matrix Investment
18 Group?
19 A. Yes.
20 Q. And that was associated with Josh Coffman, correct?
21 A. Yes.
22 Q. All right. And in September of 2005 you stopped
23 making payments to Matrix Investments, didn't you?
24 A. I believe that was part of my attorney and his
25 attorney's agreement so that they could sell the house

1 together.
2 Q. Okay. Well, keeping the attorneys out of it for a
3 moment, you stopped making payments in September of 2005?
4 A. But that was only because it was an attorney's
5 agreement. Not because we wanted to.
6 Q. Ms. Taylor, let me just ask you this, did you or did
7 you not stop making payments in September of 2005 on the
8 property?
9 A. Not to my recollection.
10 Q. All right. Do you recall giving a statement to Agent
11 Fitzpatrick?
12 A. Yes.
13 Q. You gave him a statement on April 5, 2007, do you
14 recall that?
15 A. Yes.
16 MR. TEDMON: Your Honor, may I approach?
18 Q. BY MR. TEDMON: This is Bates number 1337/1336. I
19 would like you to take a look at paragraph four, last sentence.
20 Just read that to yourself, please. Let me know when you're
21 finished.
22 A. (Witness reviewing document.) Okay.
23 Q. Are you done?
24 A. Yes.
25 Q. Now, does that refresh your recollection as to

1 whether you stopped making payments in September of 2000 --
2 A. No.
3 Q. It does not?
4 A. No.
5 Q. So if that's in Agent Fitzpatrick's report, are you
6 saying that could be wrong?
7 A. It could be.
8 Q. So he took the information down incorrectly, is that
9 your position?
10 A. That could be.
11 Q. All right. We will get to that with him then. Now
12 with regard to the eviction process --
13 A. Uh-huh.
14 Q. -- I want to focus on that. That's all Josh Coffman,
15 true?
16 A. Yes.
17 Q. And what did Mr. Coffman tell you when he called
18 about the eviction?
19 A. That he was kicking us out of the house.
20 Q. And it was because you were failing to pay rent, is
21 that why?
22 A. I believe that's what he said.
23 MR. TEDMON: Your Honor, if we could have -- this has
24 been previously admitted into evidence, 10A1, page one.
25 THE COURT: That may be displayed.

1 MR. TEDMON: Thank you.
2 Q. BY MR. TEDMON: Ms. Taylor, this has already been
3 moved into evidence, and I want to just go through a few
4 documents rather briefly here.
5 Do you see where it says Equity Purchase Agreement at
6 the top?
7 A. Yes.
8 Q. All right. Is it your testimony you do not recall
9 signing a document with that entitlement?
10 A. No.
11 Q. If we could have Government's Exhibit 10A1-6, please.
12 It states at the top, Addendum to Equity Purchase Agreement,
13 Potential For Equity Sharing, do you see that?
14 A. Yes.
15 Q. Do you recall seeing a document like that in the
16 packet that you signed?
17 A. No.
18 Q. Government's 10A1-8, please. Expand that. That says
19 Acknowledgement By Seller, do you see that?
20 A. Yes.
21 Q. Do you recall that being in the packet of documents?
22 A. No.
23 Q. All right. Government's 10A1-10, please. Do you see
24 this says Notice of Cancellation?
25 A. Yes.

1 Q. Do you recall that being in the packet of documents
2 that you signed?
4 Q. You don't recall?
5 A. No.
6 Q. All right. 10A1-11, please. And that says Affidavit
7 of Deed, do you see that?
8 A. Yes.
9 Q. Do you recall that being in the packet of documents
10 that you signed?
11 A. No.
12 Q. You do not. Okay. What is it that you recall about
13 being in the packet of documents that you signed, Ms. Taylor?
14 A. I recall the lease agreement. I recall something
15 about the investor being added to the title. There was very --
16 it wasn't like a packet.
17 Q. Well, how many individual documents do you recall
18 there being?
19 A. There may have been about 10.
20 Q. Ten individual documents?
21 A. Yeah.
22 Q. Entitled separately from each other?
23 A. No. The lease agreement had, like, four.
24 Q. Well, I want to make sure the jury is clear on this
25 as well as us. Okay.

1 How many total pages of documents do you recall
2 signing that day?
3 A. About 10.
4 Q. All right. And what was the total number of pages
5 within those documents, would you say?
6 A. About 10.
7 Q. Ten pages total?
8 A. Yeah, 10 pages total.
9 Q. Okay. And of those 10 pages total, were they divided
10 up into different individual documents, is that your
11 recollection or no?
12 A. You mean, like, the purchase agreement or the lease
13 agreement or whatever in -- divided into each thing, is that
14 what you're talking about?
15 Q. Well, yeah.
16 A. Yes.
17 Q. When we buy a house they are all together --
18 A. Right.
19 Q. -- but they are actually separate documents.
20 A. Uh-huh.
21 Q. You recall there were separate documents?
22 A. Yes.
23 Q. And it totalled about 10 pages?
24 A. Yes.
25 Q. All right. Now ultimately you were able to keep your

1 house, true?
2 A. No.
3 Q. No. What happened?
4 A. Well, I hired an attorney.
5 Q. Uh-huh.
6 A. And we agreed to sell the house together.
7 Q. Okay. So there was an agreement to do that?
8 A. Yes.
9 Q. All right. And when was that?
10 A. I don't know. It was 2005. I don't recollect the
11 exact year.
12 Q. All right. It was 2005?
13 A. I don't know.
14 Q. You don't recall?
15 A. Yeah.
16 MR. TEDMON: All right. Nothing further, Your Honor.
17 Thank you.
19 Well, let me ask. Any questions, Mr. Samuel? Just
20 so I'm perfectly clear. Mr. Greiner?
21 MR. SAMUEL: No.
22 MR. GREINER: I just have two, Judge, really quick.
24 BY MR. GREINER:
25 Q. Good afternoon, Ms. Taylor.

2 Q. That meeting that occurred at your house, that was in
3 2004?
4 A. Yes.
5 Q. And all of these activities that you were talking
6 about, that was also in 2004, right? Hold on?
7 MR. TEDMON: Objection. I don't know what activities
8 mean.
10 Q. BY MR. GREINER: Okay. When you were meeting at your
11 house, when you contacted the organization before the meeting,
12 that all occurred in 2004, correct?
13 A. Yes.
14 MR. GREINER: Thanks.
15 THE COURT: Mr. Morris, any redirect?
16 MR. MORRIS: Mr. Samuel?
17 THE COURT: He said he has no questions.
19 BY MR. MORRIS:
20 Q. Mr. Tedmon asked about contacts with Josh Coffman as
21 opposed to contacts with Charles Head, and so I would like to
22 clarify. Referring you to the meeting at your dining room
23 table --
24 A. Yes.
25 Q. -- that you previously talked about.

1 I think, correct me if I'm wrong, your testimony in
2 substance was that Josh was doing most of the sales pitch?
3 A. Yes.
4 Q. And at that meeting did Josh talk to you about
5 retaining yourself on title on the house?
6 A. Yes.
7 Q. When Josh said that to you, was Charles Head present?
8 A. Yes.
9 Q. Did Charles Head interrupt Josh?
10 A. No.
11 Q. Did Charles Head clarify that that wasn't true?
12 A. No.
13 Q. And when you previously said that there was no
14 discussion of losing the equity in the house, is it also true
15 that neither Josh nor Charles told you --
18 Q. BY MR. MORRIS: Did anybody present at the table tell
19 you that the equity would be taken out of your house?
20 A. No.
21 Q. Mr. Tedmon asked you about sort of how the -- where
22 the house goes at the end, and you said that you entered an
23 agreement jointly to sell the house, is that right?
24 A. Yes.
25 Q. Do you remember whether or not there was an agreement

1 about the proceeds of that sale?
2 A. Yes.
3 Q. What was the agreement with respect to the proceeds
4 of the sale?
5 A. There was -- any money from after the sale would be
6 split between Adam Coffman and us.
7 Q. And did you receive that half of the proceeds?
8 A. No.
10 THE COURT: Mr. Tedmon, any recross?
11 MR. TEDMON: Just briefly.
13 BY MR. TEDMON:
14 Q. Ms. Taylor, at the conclusion of the meeting with
15 Mr. Head, Mr. Coffman, and Ms. Gastelum, you knew you were
16 getting $20,000, true?
17 A. True.
18 Q. And you also knew that you were then from that point
19 forward going to be leasing your home, correct?
20 A. Correct.
21 Q. It was a contract that you've testified you signed
22 that indicated that, right?
23 A. Yes.
24 Q. And that changed the nature of your relationship with
25 your home, you were no longer making a mortgage payment, you

1 are leasing it, true?
2 A. True.
3 Q. All right. Now, with regard to the end of the story
4 that Mr. Morris was talking about, relative to the selling of
5 the home, that was an agreement, correct?
6 A. Yes.
7 Q. It was a settlement?
8 A. Yes.
9 Q. Right?
10 A. Yes.
11 Q. Okay. And that settlement was with Josh Coffman,
12 true?
13 A. Yes.
14 Q. All right. And your interests, correct?
15 A. Yes.
16 MR. TEDMON: Thank you. Nothing further.
17 THE COURT: Anything, Mr. Samuel?
18 MR. SAMUEL: No.
20 MR. GREINER: No, Judge. Thank you.
21 THE COURT: Mr. Morris?
22 MR. MORRIS: No, Your Honor.
23 THE COURT: This witness is excused, Mr. Morris?

1 MR. TEDMON: Yes.
3 MR. SAMUEL: Yes.
5 MR. GREINER: Yes.
6 THE COURT: Next witness.
7 MR. MORRIS: Your Honor, the Government calls Kou
8 Yang.
9 THE CLERK: Ms. Yang, please come forward.
11 THE CLERK: Do you swear to tell the truth, the whole
12 truth, and nothing but the truth, so help you God?
16 THE WITNESS: Kou Yang. It's K-o-u, Y-a-n-g.
17 THE COURT: You may proceed. We will go for about
18 10, 15 minutes and take our one break of the day.
19 KOU YANG
24 BY MR. MORRIS:
25 Q. Ms. Yang, I'll ask you to think back to the early

1 2000s. What line of work were you in then?
2 A. In the early 2000s, I was in mortgage loan
3 processing.
4 Q. To the best of your recollection, when did you start
5 being involved with mortgage, the mortgage industry?
6 A. I would say probably in 2001, 2002.
7 Q. Okay. Let's start with the very -- when you first
8 got involved in the mortgage industry, who did you work for?
9 A. Charles Head.
10 Q. And how long after 2001 did you continue working for
11 Charles Head?
12 A. I worked for Charles Head all the way until 2006.
13 Q. Okay. And did you work continuously for him through
14 that time?
15 A. I worked for him until about 2000 -- late 2005, early
16 2006, and then in 2006 we were transferred over to someone
17 else.
18 Q. Who was it that you started working for then in 2006?
19 A. Benjamin Budoff.
20 Q. Let's go back to the beginning. I want to be clear
21 on the time because it's kind of a long time scope there.
22 When you started, how would you describe what your
23 job duties were?
24 A. When I was trained to do my job, it was just
25 processing mortgage loans.

1 Q. Okay. Let's stop there for a second then. What does
2 processing mortgage loans entail?
3 A. That means that when the loan officers get their loan
4 together, they will bring it to us if the client has agreed to
5 go forward with the loan. They will then take the application
6 and then send that over to us with a form, telling us that --
7 MR. GREINER: Objection to the word "they." I don't
8 know who it is.
10 THE WITNESS: Oh, loan officers, when the loan
11 officers get the deal, they will -- the loan officers will then
12 bring it to us and tell us to go ahead and open escrow and open
13 title and order the appraisal.
14 Q. BY MR. MORRIS: I'm going to stop you for a second
15 then. Give you some terms I would like you to define.
16 And when you say open title, what do you mean by open
17 title?
18 A. What we do is we go to the title company, and we have
19 them open a title -- to pull the title report on the property,
20 to see if there is any liens or who is on title.
21 Q. And what did you mean when you said open escrow?
22 A. Every transaction has to have an escrow account where
23 all the money goes through, and that's the escrow account.
24 Q. Okay. Sorry I interrupted you. You were saying that
25 you receive the application, you open title, open escrow. And

1 what else do you do, if anything?
2 A. We ordered the appraisal.
3 MR. TEDMON: Your Honor, just to speed things along,
4 can Ms. Yang, when she identifies something not with "we" or
5 "us" or "them," but if it's "her," she should say it's "her."
6 With that understanding, I won't have to object.
7 Q. BY MR. MORRIS: Throughout your entire testimony,
8 please be as specific as you possibly can as to what you would
9 do, what other people would do. And if you're talking about
10 other people, be as specific as you can about who those people
11 are. Okay?
12 THE COURT: All right. That agreement of the parties
13 is accepted, and, Mr. Morris, if you could police that.
14 MR. MORRIS: I will do the best I can, Your Honor.
16 Q. BY MR. MORRIS: And so when you say ordering
17 appraisal, would you order the appraisal?
18 A. Yes.
19 Q. Was it something that other people could also do in
20 the office or just you?
21 A. At the beginning and the loans that we were doing, I
22 was opening -- I was ordering the appraisals.
23 Q. Was there anything else that you would do in the
24 course of your duties as a loan processor? Again, focusing at
25 the beginning when you started.

1 A. At the beginning, what I would do was once all of
2 those forms came in, when the title reports and the escrow
3 instructions and the appraisals come in, what I would do then
4 is I would print the application, which is the 1003, and I
5 would stack it according to how each bank wants it.
6 And then I would then Transbox it to the appropriate
7 banks that the loan officer has instructed them to go to.
8 Q. You used the term 1003. What is, in your experience,
9 a 1003?
10 A. A 1003 is a mortgage loan application.
11 Q. Okay. And I think you used the term Transbox. What
12 is a Transbox?
13 A. Transbox is kind of like a delivery service that --
14 the banks would provide us with an envelope, and there were
15 Transboxes everywhere, you know. And what we will do is we
16 would drop them off in the Transbox, and then the next day,
17 that night, they would collect them. The Transbox people, they
18 would collect them and then deliver it to the appropriate
19 places.
20 Q. From that point then, what would be the next part of
21 your role in mortgage processing, if any?
22 A. What we would do is I would wait for the approvals to
23 come back. It would take about three to four days. And then
24 when the approvals are faxed in or e-mailed in to us, they
25 would either tell us if the loan was either approved or denied.

1 Q. And when you say "us," who are you talking about?
2 A. The loan processors.
3 Q. Is there anything else within your job, again
4 focusing at the beginning of your time, anything else in your
5 job duties as a loan processor that you can recall?
6 A. That's pretty much it. And when the approvals came
7 through, we would just process it.
8 Q. Did you have any role or any involvement in the loan
9 application process after that? Again, focusing at the
10 beginning of your time.
11 A. With the loan applications, no.
12 Q. Okay. Then I would like you to -- going from the
13 time where you first started doing this, did your job duties
14 ever change?
15 A. Yes, they did.
16 Q. Okay. To the best of your recollection, when did you
17 have other job duties besides what you've already described?
18 A. When we first started, the office was pretty small,
19 so Charles had me doing a lot of, like, office manager, you
20 know, jobs like ordering supplies, paying for bills, all the
21 miscellaneous stuff.
22 Q. Did your job duties or did the loan processing task
23 change at all during your time employed there?
24 A. Yes.
25 Q. Okay. In what ways did your loan processing duties

1 change?
2 A. At the beginning, we were doing just straight
3 refinancing and sales, loans for purchasing.
4 Q. Clarify. "We"?
5 A. The loan officers in the office. When we first
6 started, the culture of the office was refinancing and, you
7 know, sales, loans.
8 And as we were doing loans for about two years in, I
9 would say, Charles started to do foreclosures.
10 Q. And so how did you become aware of what you just
11 testified to, that there was a change of what the focus was?
12 A. Charles had a meeting with all the loan officers, and
13 he informed everybody that we were going to be getting away
14 from doing refinancing, and, you know, the regular loans that
15 we were doing. That we were going to be doing other loans that
16 were still loans, but they were different, and they involved
17 foreclosures, and we would be making more money.
18 Q. Let me pause for a second and ask, where physically
19 did you work? The address you worked at?
20 A. We worked -- I don't remember.
21 Q. Let's start. When you first started, to the best of
22 your recollection where did you work?
23 A. When I first started, I worked in Long Beach at the
24 Long Beach office on Atlantic, I believe.
25 Q. Okay. And did you ever move from that office?

1 A. Yes, we did.
2 Q. Where did you move next?
3 A. We moved to Costa Mesa.
4 Q. Do you recall, to the best of your recollection, when
5 that move happened?
6 A. That move happened in 2006 or late 2005. Early --
7 earlier than that. It's got to be. Probably 2005 or -4.
8 Because I know we were there for at least two to three years.
9 Q. And did you ever work in a location other than Long
10 Beach on Atlantic and Costa Mesa?
11 A. Yes.
12 Q. Where did you work other than those two locations?
13 A. I worked in a location in Tustin.
14 Q. Was that then after Costa Mesa?
15 A. Yes. That was after Costa Mesa.
16 Q. Do you recall approximately when you moved from Costa
17 Mesa to Tustin?
18 A. I would say probably Spring of 2006.
19 Q. Focusing -- let's focus on the --
20 Well, let's start with Tustin and work our way back.
21 Did anybody else work with you at the Tustin location?
22 A. Yes.
23 Q. Who worked there with you?
24 A. Yes. At the location there were all the processors.
25 It was the processing office. So it was Sam Vu, Linda Nguyen,

1 Lisa Vang, Emily Yang and Pang Yang. Those were it.
2 Q. Okay. And then before that at Costa Mesa, can you
3 describe the Costa Mesa office?
4 A. At the Costa Mesa office, it was -- we had a
5 department that was all loan officers, and then we had another
6 department that was all processors. And all the loan officers
7 would be in the same office. Charles had an office there.
8 Q. Okay. And then prior to that Long Beach, can you
9 describe the location, the physical location at Long Beach?
10 A. We were all in, like, a big room, like -- and then we
11 would just have desks all over the room, and then we would all
12 be in one room, you know. Everybody had a different desk.
13 Q. And the fact that you describe it that way, is that
14 different from the other locations?
15 A. Yes. Yes.
16 Q. In what way was the physical layout different from
17 the other locations?
18 A. In Long Beach, it was one big room with a bunch of
19 different desks for the loan officers and for the processors,
20 and Charles had his own office. And then at the Costa Mesa
21 office, everybody pretty much had their own office except for a
22 few rooms. We had like two or three loan officers in there.
23 And then at the Tustin office, it was all just processors, and
24 we had different rooms for different positions.
25 Q. And I think we covered who worked with you physically

1 at Tustin.
2 Going then back earlier to that at Costa Mesa, who
3 did you work with, who physically was located there in Costa
4 Mesa?
5 A. In Costa Mesa, it was -- at the beginning it was Mike
6 Head, Domonic McCarns, Elizabeth Huerta, Keith Brotemarkle,
7 Brian -- I don't remember last names, but I remember Brian.
8 There was a few more, but I don't remember all the names. It's
9 been a while.
10 Q. And I think you said that was at the beginning. Did
11 anybody else come or go during the time that you were at Costa
12 Mesa, to the best of your recollection?
13 A. Yes. While we were at Costa Mesa, Mike Head left.
14 Oh, another person, Anh -- no, Anh wasn't there. But Andrew Vu
15 was there at the beginning, and then he left. And then Mike
16 Head was there at the beginning, and he left. And then they
17 brought on -- once Keith came on board, he hired more sales
18 people.
19 Q. Okay. And we'll talk about more people perhaps later
20 on in your testimony.
21 THE COURT: That brings us to a good time for a
22 break. Let's take our afternoon break. We'll have one
23 afternoon break. About 15 minutes.
24 During the break, please remember my admonitions. No
25 discussing the case, no thinking about its conclusions, no

1 research. If anyone reaches out to you, let me know. Have a
2 good break.
3 (Jury out.)
4 THE COURT: You may step down, Ms. Yang. If you can
5 be back in your seat in 15 minutes.
6 All right. Just briefly on the sealing/unsealing,
7 here's my proposal. You can think about it. The local rules
8 actually do provide for documents being returned to the parties
9 if the Court doesn't grant sealing. Now, here we did
10 conditionally seal on the docket.
11 I think all things considered, I could return the
12 documents. You can mark them as an exhibit next in order for
13 Budoff. And then if you're going to use some of them in trial,
14 we will address any objections at the time. But I'm not
15 relying on them in making any dispositive ruling, so I don't
16 feel the need to unseal them on the public docket in light of
17 the exchange of e-mails I've seen.
18 MR. SAMUEL: I think they've already been actually
19 enumerated in the exhibit list that we posted. But if not,
20 I'll certainly make --
21 THE COURT: Here's the packet. We did scan it, but
22 I'm going to hand it back to Mr. Samuel.
23 MR. TEDMON: That's fine, Your Honor. I'm in full
24 agreement with that.
25 MR. ANDERSON: That's fine, Your Honor. As long as

1 he retains it in case there is some issue down the road.
2 THE COURT: All right. So I'll probably issue some
3 order clarifying and likely striking that from the docket.
4 All right. So Ms. Schultz will provide that.
5 Anything else we need to discuss?
6 MR. TEDMON: Not at this time, Your Honor.
7 MR. SAMUEL: No.
9 (Break taken.)
11 (Jury in.)
12 THE COURT: Welcome back to court, ladies and
13 gentlemen. We will resume now with the examination of
14 Ms. Yang. You may be seated, Ms. Yang, as may the rest of you.
15 And we'll go until 4:30 today. Mr. Morris. How much longer do
16 you think you have?
17 MR. MORRIS: I would like to think I can get through
18 it in a half hour. I'm optimistic that we'll be done with
19 direct by the end of the day and into cross.
21 Q. BY MR. MORRIS: Ms. Yang, if we can focus in -- again
22 break this up by time periods based on where you were working
23 physically, starting with Tustin.
24 Do I understand correctly that it was processors only
25 working in Tustin?

1 A. Yes.
2 Q. So at that time did you have any awareness or
3 knowledge of what the salespeople were saying as part the sales
4 side that you described?
5 MR. TEDMON: Objection. Vague as to who the
6 salespeople are.
10 Q. BY MR. MORRIS: You previously talked about sales and
11 processing being two separate parts of the company?
12 A. Yes.
13 Q. At the time you were in Tustin, did you have any
14 involvement -- or were any of the salespeople in that location?
15 A. No.
16 Q. Did you have any opportunity to observe or see the
17 salespeople doing their jobs?
18 A. When I was at Tustin, no.
19 Q. Okay. Then let's back it up one earlier than that,
20 and let's go to Costa Mesa.
21 Were the salespeople also in the same office in Costa
22 Mesa?
23 A. Yes.
24 Q. Did you have on any occasion in Costa Mesa the
25 opportunity to see salespeople doing their part of the job?

1 A. Yes.
2 Q. What did you observe when you saw that?
3 MR. TEDMON: Vague as to time.
4 MR. GREINER: Objection. Vague as to people.
6 Q. BY MR. MORRIS: As to time, focusing on Costa Mesa,
7 and being as specific as you can about individuals, what did
8 you observe in that time period -- do you recall any
9 individuals that you observed doing a sales part of the job?
10 A. Yes. In Costa Mesa, there were loan officers that
11 we --
12 MR. GREINER: Objection. Non-responsive. Question
13 is sales. Response loan officers.
14 THE COURT: Sustained. You may answer the question.
15 THE WITNESS: Okay.
16 THE COURT: But the question is about sales.
17 THE WITNESS: The salespeople were, in a sense, they
18 were loan officers because the loan officers actually made the
19 sales, so they are one and the same.
20 But the salespeople, they would get leads from the
21 internet or from whatever that Keith and Ed Shaffer put
22 together. I guess people would go online.
24 THE WITNESS: The --

1 THE WITNESS: The homeowners.
2 THE COURT: Actually, to make this -- answer the
3 question and then wait for the next question. All right.
4 Q. BY MR. MORRIS: And confine your answers to what you
5 observed.
6 A. Okay.
7 Q. And so what did you observe about -- let me use the
8 term loan officers since that's what you're using.
9 What did you observe about the loan officers in their
10 interactions with customers?
11 MR. GREINER: Objection. Vague again, Judge. No way
12 to cross loan officers.
14 Q. BY MR. MORRIS: Using individual names, what did you
15 observe individual loan officers doing?
16 A. Well, one salesperson that I know is Domonic McCarns.
17 He was in the Costa Mesa office, and he would take the leads
18 that would come over the internet, and he would call the
19 homeowners, and he would pitch a sale to them.
20 Q. Did you have the opportunity to observe Domonic
21 McCarns' portion of those phone calls?
22 A. Yes, I have heard phone calls that he has made
23 before.
24 Q. What did you hear?
25 A. I would hear him calling the homeowners, and, you

1 know, asking them, you know, did you inquire about saving your
2 home, and whatever that they said. Then he would go on to say,
3 well, we have a program that you -- that you may qualify for,
4 and, you know, we can go over all the things, and then he went
5 into his pitch.
6 Q. To the best of your recollection, what was that
7 pitch?
8 A. To the best of my knowledge, the pitch was that we
9 would take the home and put it in an investor's --
10 Q. Let me interrupt you. Careful with the word "we."
11 So, again, without using terms like "we" and "they," to the
12 best of your recollection what was Mr. McCarns' pitch?
13 MR. SAMUEL: Your Honor, I'm going to object as
14 hearsay as to my client only. This is 802(d) --
16 MR. SAMUEL: It only goes to Mr. McCarns.
17 THE COURT: The objection is noted. You may proceed.
18 Q. BY MR. MORRIS: You can answer the question.
19 A. Okay. The loan officer, Domonic McCarns, I have
20 heard him say: We will take the loan, and we'll have an
21 investor purchase the property in their name. You remain in
22 the property for a duration of a year until your credit is
23 fixed. And then during that time, you pay rent to us. And
24 then after a year, you can purchase the property back.
25 Q. So we're talking still about Costa Mesa. Can you

1 describe physically the loan processing portion, the physical
2 location at Costa Mesa?
3 A. The location of where we --
4 Q. Yeah. Where you worked.
5 A. I had my own office. And it was right next to
6 Keith's office. But there was an office right in front of me
7 that was bigger, so we had all the processors in that room.
8 There was about four different processors.
9 Q. Did you have any methods whereby you tracked loans in
10 process?
11 A. Yes.
12 Q. What methods did have you in place to track loans in
13 process?
14 A. We had a white board, and on that white board I would
15 write all the names of the sellers, and the buyers, and the
16 location of the property, and then the amount or the loan
17 officer, the salesperson.
18 Q. Did you have any filing system there?
19 A. Yes.
20 Q. Can you describe your filing system?
21 A. Our filing system was while the loan was still being
22 worked on, it would be in the processing office. But once the
23 loan has funded and it's closed, they would be filed in the
24 filing room. There was a filing room that was right down the
25 hall, and it was where the kitchen-type was, and we would put

1 the files and file it in there.
2 Q. To your recollection, was the filing room open or
3 available to anybody who worked there?
4 A. Yes. It was in the kitchen, so it was open to
5 everybody.
6 Q. I'll ask you, on the cart behind you, to find the
7 binder that has Government's Exhibit 61. So it would be a blue
8 -spined binder, and we're looking for the one that says 61.
9 A. Is it volume five of eight?
10 Q. If it contains 61.
11 A. 28A through 90.
12 Q. If you can open it up to tab 61.
13 A. Okay.
14 Q. Do you recognize that document?
15 A. Yes.
16 Q. How do you recognize it?
17 A. Because I've -- I made it.
18 Q. Do you recognize the handwriting on the document?
19 A. Yes.
20 Q. How do you recognize the handwriting?
21 A. It's my handwriting.
22 MR. MORRIS: Your Honor, the Government will move to
23 admit Exhibit 61.

2 MR. SAMUEL: No.
5 THE COURT: All right. 61 is admitted.
6 (Government Exhibit 61, Foreclosure Schedule April
7 2005 admitted into evidence.)
8 Q. BY MR. MORRIS: Could you describe what we're looking
9 at on the screen there?
10 A. We're looking at a schedule of foreclosures that we
11 currently own, which is the company currently owns.
12 Q. And the column that says LO, what is your
13 recollection of what you meant by that column?
14 A. Loan officer.
15 Q. Okay. And the column there that says client -- let
16 me just use one example -- what is your understanding or
17 recollection of that name in the column that's not in
18 parentheses?
19 A. That is the seller.
20 Q. And the name in the parentheses, what's your
21 recollection of that name?
22 A. That is the buyer.
23 Q. And over here, what's your recollection of the
24 significance of what would be written in that part of the
25 chart?

1 A. What I wrote down was "paid," and what that means was
2 that I had made the mortgage payment on that loan.
3 Q. And if you could -- it may be hard to see. Can you
4 see what's typed underneath where it says paid?
5 A. Yes.
6 Q. What's the significance of the information underneath
7 where you wrote paid?
8 A. Well, the 448.85, that was the difference, and then
9 the 224.42 was half of what the loan officer would pay and what
10 Charles would pay.
11 Q. So when you say in this example 448.85 is the
12 difference, what do you mean by "the difference"?
13 A. The difference between the rent that was sent in and
14 the actual mortgage.
15 MR. MORRIS: Your Honor, I'll also move to admit
16 Exhibits 62, 63, 64, 66. All of those are subject to the
17 stipulations as items found during the search warrant.
18 THE COURT: 62 through 66. Any objection, Mr. Tedmon?
21 MR. SAMUEL: No.
24 THE COURT: All right. 62 through 66 are admitted.
25 (Government Exhibits 62, 63, 64, 65, 66, (See Index

1 for descriptions) admitted into evidence.)
2 Q. BY MR. MORRIS: Can I ask you to switch binders to
3 find Exhibit 7B1, please -- sorry -- 7B2.
4 A. 72?
5 Q. 7B, as in Bravo, 2. It will be in a different
6 binder.
7 A. Okay.
8 Q. Do you recognize that type of document?
9 A. Yes.
11 A. This is the 1003 or the mortgage loan application.
12 Q. I think you previously had talked about a 1003. Is
13 this the form that you had talked about prior?
14 A. Yes.
15 MR. MORRIS: Your Honor, I would ask to admit 7B2.
16 It is covered by the stipulation also.
17 THE COURT: Any objection?
18 MR. TEDMON: No.
19 MR. SAMUEL: No.
22 THE COURT: 7B2 is admitted, and it may be displayed.
23 (Government Exhibit 7B2, Uniform Residential Loan
24 Application in the name of Ashley Reynolds for property at 542
25 East 167th Street, San Juan Capistrano, CA 92675 admitted into

1 evidence.)
2 Q. BY MR. MORRIS: I'm going to ask you -- we're going
3 to go through the document, and I'm going to ask you, based on
4 your recollection and your memory of your job duties, if you
5 could explain the various parts of this document as you used
6 it.
7 So if we could start at the top, what are -- this
8 portion that I've kind of put a really bad squiggly line next
9 to, what is that part of the document telling you in your
10 recollection?
11 A. It pretty much just tells me what the loan amount is
12 going to be, what type of loan it is, what the interest rate,
13 the property address that this loan application is for, whether
14 it's purchase loan or refinance, and just the typical
15 information about a particular loan and property.
16 Q. And just to make sure I'm clear. When you talked
17 about whether it's purchase or refinance, is that the area that
18 we're talking about?
19 A. Yes, that is correct.
20 Q. And the purpose over here, what's your understanding
21 of that section of the document?
22 A. That is whether it's going to be the primary
23 residence in which the buyer is going to live in, or if it's
24 going to be a second home, or if it's going to be an investment
25 property.

1 Q. And if you could zoom out. Try go to the bottom half
2 of the page here.
3 Moving our way down, what's your understanding of
4 this section of the document?
5 A. That is the borrower's information.
6 Q. And this part that appears to be blank, what, in your
7 recollection or experience, would go there?
8 A. If there's a co-borrower, then you would put that
9 person's information there.
10 Q. And this bottom section here, what's that part of the
11 form for?
12 A. That is their employment information so that they can
13 verify that they are employed.
14 Q. Zoom out. Go to the next page, please.
15 Looking at this top portion here, what's that section
16 of the document doing?
17 A. This is pretty much the income that the borrower, you
18 know, has. So whatever that they have in terms of income would
19 go there.
20 Q. If we could zoom out and cover this portion.
21 And what is this portion of the document describing?
22 A. This portion of the document is all their assets and
23 all their liabilities. For instance, any properties that they
24 currently already have, and then the liabilities are their
25 bills in terms of credit cards, loans that they have

1 outstanding.
2 Q. And if we can zoom out and go to the next page,
3 please. And looking at this top part here, what is this
4 portion of the application involving?
5 A. This portion of the application is they are supposed
6 to list any properties that the buyer currently already owns,
7 and their mortgages, and, you know, how much they owe.
8 Q. Okay. And what does this portion of the form deal
9 with?
10 A. To the left, it's pretty much just the, you know, the
11 sales price, and then any fees that, you know, that occurred
12 during the sale or during the loan. And then if there's a
13 second loan, that goes to the bottom, and then it just tells
14 you how much the borrower has to come in with to close the
15 loan.
16 Q. And what does the right side tell you?
17 A. The right side is just information asking about the
18 buyer, like, if they have any current judgments, bankruptcies,
19 you know, personal information.
20 Q. Okay. And this bottom portion here, what does that
21 portion of the document tell you?
22 A. Well, the first signature is the borrower's
23 signature. The person that's taking out the loan would sign
24 that part. And then we would list, you know, what ethnicity
25 they are and how the application was taken. And then the loan

1 officer that took the loan would sign it.
2 Q. You can bring it down.
3 In the course of your employment there, did you deal
4 with these types of documents?
5 A. Yes. Every single loan had to have one of these
6 forms.
7 Q. Did you enter the information into the forms?
8 A. No.
9 Q. Who did?
10 A. The loan officer.
11 Q. And I think your testimony was at some point you then
12 dealt with that form, was that right?
13 A. Yes.
14 Q. How would you then get the information that has been
15 entered by the loan officer to the point where the form is in
16 your possession?
17 A. There is a system that they put the loan into, and so
18 when they are done, they will just e-mail us and tell us the
19 file is ready. They will also make a -- print it and then turn
20 it into us with a form which asks us to order the title and
21 open the escrow and order the appraisal. So that's all turned
22 in at the same time.
23 Q. During the time that you worked at Costa Mesa, who
24 did you consider to be your boss?
25 A. In Costa Mesa, my boss was Charles Head.

1 Q. Okay. I'll ask you to change binders again. I'm
2 looking for Exhibit 104.
3 Actually, you know what, Your Honor, it's covered by
4 the stipulation, so maybe than rather having her shuffle
5 through binders --
6 THE COURT: Any objection to 104 being displayed,
7 Mr. Tedmon?
8 MR. TEDMON: 104? That's fine. No objection.
12 MR. GREINER: No objection.
13 THE COURT: All right. 104 is admitted and may be
14 displayed.
15 (Government Exhibit 104, Email dated 3/21/2005
16 From Charles Head admitted into evidence.)
17 Q. BY MR. MORRIS: If you could review what's on the
18 screen in front of you, and when you've had a chance to, if you
19 could tell us what it is that, to your recollection, is being
20 discussed in that e-mail?
22 Q. What is that e-mail discussing?
23 A. This is an e-mail that was sent from Charles to me
24 telling me that he's going on a trip, and that he will be back
25 on Monday. And that he had hired somebody, an assistant, so

1 for me to help get her set up and train her. And to get Liz,
2 which was previously an assistant, to help train her in
3 whatever that she was doing. And then he pretty much was
4 telling me what to do with her, and to make sure that she feeds
5 his shark.
6 THE COURT: Do you have an objection?
7 MR. GREINER: Yes, Judge. I make an objection under
8 801(d)(2)(E) as to my client.
9 MR. SAMUEL: Join.
10 THE COURT: All right. That objection is noted. Do
11 you have a response to that, Mr. Morris?
12 MR. MORRIS: I think it's consistent with the motion
13 in limine. To the extent that it's covered by 801(d)(2)(E),
14 that will be resolved prior to the conclusion of the
15 Government's case-in-chief. And if not, by the end of the day
16 today. You can bring that down.
17 And Exhibit 114 I will be asking to admit pursuant to
18 the record stipulation.
19 THE COURT: 114?
20 MR. MORRIS: 114.
24 MR. SAMUEL: Not as to foundation.

2 THE COURT: Did you have another objection,
3 Mr. Samuel?
4 MR. SAMUEL: I'm waiting to see the document. I know
5 it's within the stipulation. It may be an 801(d)(2)(E).
6 MR. MORRIS: Is that admitted, Your Honor?
7 MR. SAMUEL: That would be the objection.
8 THE COURT: An 801(d)(2) objection?
9 MR. SAMUEL: Yes.
10 MR. GREINER: I would join. 801(d)(2)(E), Judge.
11 THE COURT: All right. That objection is overruled.
12 You may go ahead and display.
13 (Government Exhibit 114, Email dated 4/15/2005 From
14 Kou Yang To Charles Head Subject: RE: Simone Bu deal admitted
15 into evidence.)
16 Q. BY MR. MORRIS: If you can bring it up and go to the
17 second page, please.
18 Actually, I apologize. Go one page to the front.
19 Just to clarify, I'll have you look at this. I'm
20 going to start on the previous page and work backwards, given
21 what it is that we're looking at. So second page. And if we
22 can focus in on the bottom half, please.
23 Do you recall or what's your recollection, if you
24 have one, of this portion of the e-mail that I've highlighted
25 on the screen for you?

2 Q. Let me start with this. Do you remember somebody
3 named Steve Cangro?
4 A. Yes.
5 Q. And in this e-mail to you, do you have in your mind
6 what the word "an overstated problem," what that phrase means?
7 A. Yes.
8 Q. What does that phrase mean to you?
9 A. The overstated problem means that we have overstated
10 the loan because the loan is a stated loan, and so you can
11 state their income, and there's a problem with the overstating
12 how much someone makes.
13 Q. And this other term here, "DTI issues," do you have
14 in your mind what the term DTI issue would have meant in this
15 e-mail?
16 A. Yes.
17 Q. What does that term mean to you?
18 A. DTI is debt-to-income, and what he's saying is that
19 the borrower has too much debt-to-income so they don't qualify
20 for the loan.
21 Q. Looking at the next level or next up of this e-mail,
22 how do you reply to Steve Cangro?
23 A. I pretty much tell him that the borrower, Simone Bu,
24 has money in her 401k that would offset her seasoning, you
25 know, and she has a verification of a deposit on file that

1 shows that she has $35,000.
2 Q. You just used a term "seasoning." I don't think I've
3 heard you use that.
4 Can you explain to the jury what you mean by
5 seasoning?
6 A. Yes. Seasoning means that you have to have a certain
7 amount in your account for at least, you know, a set amount of
8 time that the bank tells you, you know, that you have to have
9 to show that you've had the money in your account.
10 Q. I'm going to have to go back and forth on pages. If
11 you can go to the first page for a second so that we can focus
12 in down here.
13 The top of this next section of the e-mail. Who did
14 you then e-mail about this?
15 A. I e-mailed Charles Head.
16 Q. And go back to the second page, please, and we'll
17 focus in on the top.
18 And what did you say to Charles Head?
19 A. I pretty much just told him what deal this is for,
20 which we refer them to cities. So I told him, you know, it was
21 the San Jose deal. And that we need a co-borrower because the
22 income that we stated is too high for the borrower, and so now
23 we're going to need someone else on the loan to get more
24 income.
25 Q. Can you clarify what you mean by "the income that we

1 stated on the loan is too high for the borrower," what do you
2 mean by that?
3 A. Like, for instance, for example, if you're a school
4 teacher, you -- probably in one month you make about 4,500.
5 You can't state on your loan application that you make $9,000
6 because that would be overstating. Because it's public
7 knowledge that a teacher does not make that type of money.
8 Q. Why would you have overstated someone's income on the
9 loan application?
10 A. They would have probably overstated it on the loan
11 application to get the loan --
12 MR. GREINER: Objection. Non-responsive.
14 Q. BY MR. MORRIS: Why would have you overstated income
15 on a loan application?
16 A. To make the loan work.
17 Q. What do you mean by "make the loan work"?
18 A. So that they had enough income to take out the loan
19 because the loan was probably like 500,000, and they needed the
20 income to qualify.
21 Q. So let me focus in on this section. In response to
22 your e-mail to Charles, what does he say to you?
23 A. He says, yeah, why not add somebody else to the loan.
24 Q. And then can you explain your response back to him,
25 please?

1 A. My response back to him was, who do you want me to
2 add? And I said Amber because she was the next person in line
3 to go on a loan. And then I asked him what address do I use
4 for her? You know, I'm going to use the same address as
5 Simone, where Simone lives now, and say that they live
6 together, and then I'm asking him how does that sound.
7 Q. Why are you saying in this e-mail: I need an address
8 out here, I'll use the same address?
9 A. Because Amber, I know that she lives in Florida
10 somewhere. And so this property is out here in San Jose in
11 California. So the bank is not going to believe that someone
12 that lives in Florida is going to buy a house in San Jose.
13 It's more believable if she lived in the state.
14 Q. And how does Charles Head respond to that?
15 A. Sounds good, and that Amber didn't care, and her fee
16 is 2,000.
17 MR. MORRIS: I'm going to ask to move in, Your Honor,
18 Government's Exhibit 116 pursuant to the stipulation.
22 MR. SAMUEL: As to the stipulation, no objection.
23 THE COURT: All right. No objection whatsoever?
24 MR. SAMUEL: Still looking for it, Your Honor.
25 THE COURT: All right. Mr. Greiner?

1 MR. GREINER: No objection as to the stipulation.
2 There will be an 801(d)(2)(E) objection.
3 MR. SAMUEL: I'll join in that.
4 MR. MORRIS: Same response, Your Honor.
5 THE COURT: I just want to remind the jurors, given
6 the objections, so you know what the Court is thinking in
7 response to those.
8 Two things. First of all, you've already heard, and
9 I'm certain you're remembering, but just to refresh your
10 memory, a separate crime is charged against each defendant.
11 There are separate counts, separate defendants. They are
12 joined for trial. But ultimately your job will be to decide
13 the case against each defendant.
14 You've heard that there is a conspiracy charge in the
15 case, and, ultimately, I will give you more detailed
16 instructions regarding that conspiracy charge. But for now, to
17 give you some guidance and thinking about that, to the extent
18 you're hearing statements, evidence is coming in, you should
19 not consider that with respect to the conspiracy charge as
20 against any defendant unless you ultimately find beyond a
21 reasonable doubt that there was a conspiracy, that that
22 defendant was a member of that conspiracy, and that the act or
23 statement testified to was in furtherance of that conspiracy.
24 That's just some guidance. Again I'll remind you of
25 that and give you further clarifying instructions at the end of

1 trial. Mr. Morris.
3 From Heather Worch To Charles Head RE: SINGLETON admitted into
4 evidence.)
5 Q. BY MR. MORRIS: If we could bring up then 116. And
6 I'll ask you to look at the bottom third of that page. If you
7 could review it, and when you've had a chance to, if you have a
8 recollection of what's being discussed in that e-mail, if you
9 could share that with the jury?
11 Q. What's your recollection of what's going on in that
12 part of the e-mail?
13 A. This is an e-mail that Heather sent to me asking me
14 how she should, you know, respond to the sellers, Diane
15 Singleton, and what she stated was what is on the contract.
16 Q. Do you recognize that language that's in the all
17 capitals?
18 A. Yes.
19 Q. How do you recognize that language?
20 A. That is what was on the contract that the seller
21 signed. It's come through my desk. Once they sign it, they
22 will send it in.
23 Q. And we will zoom in here, and I'll ask you how did
24 you reply about that guidance that she was asking you to give
25 her?

1 A. I pretty much told her Charles has to be the person
2 to answer these types of questions because I'm -- I'm not
3 equipped. It's not my job.
4 Q. And how does Charles respond to her?
5 A. He pretty much says that this comes from our legal
6 department, and to just initial it, and it's not that
7 important. Nonchalant.
8 MR. GREINER: Objection to the nonchalant as being
9 non-responsive, Judge.
11 Q. BY MR. MORRIS: I'm going to ask to bring in
12 Exhibit 122 pursuant to the stipulation.
16 MR. SAMUEL: Rather that making this all the time, I
17 would just repeat my objection.
18 THE COURT: Is that a standing objection?
19 MR. SAMUEL: Yes.
20 THE COURT: We'll clarify that in a housekeeping
21 session to a series.
22 MR. SAMUEL: Thank you.
23 THE COURT: But for now the same objection,
24 Mr. Greiner?
25 MR. GREINER: Yes. No objection to bringing the

1 document in, but 801(d)(2)(E) as to the contents, Judge.
2 THE COURT: All right. 122 may be displayed.
4 Kou Yang To Charles Head Subject: RE: Stuff admitted into
5 evidence.)
6 Q. BY MR. MORRIS: Can you look at the bottom quarter
7 there.
8 In this e-mail, can you explain what it is that
9 you're saying in this e-mail?
10 A. I'm sending an e-mail to Heather and to Charles
11 telling them that instead of using Creative Loans, that we need
12 to use Nations Property Management, which is the management
13 company.
14 Q. What do you mean by the term VOR?
15 A. The term VOR is verification of rent.
16 Q. What is a verification of rent?
17 A. Like if you're going to take out a loan to buy a
18 house, the bank wants to know that you have been paying on your
19 rent for a minimum of the last two years. So that's a
20 verification of rental for the last -- the previous two years.
21 Q. And this discussion you're having about we're using
22 Dynasty now but they know that Dynasty is with HFS, what do you
23 mean when you say that?
24 A. Dynasty is the realty part of the company, of Head
25 Financial. And HFS is Head Financial Services, and that is the

1 loans part of the company.
2 Q. And why was it that you felt the need to write an
3 e-mail about they know that Dynasty is with HFS or they can
4 find out?
5 A. The reason why is because they can link it together
6 and find out that Dynasty and Head Financial are one and the
7 same company by simply just looking it up.
8 Q. And why did that concern you?
9 A. Because it's kind of like a conflict of interest.
10 They would -- you know, if we're verifying but we're doing the
11 loan, it's a conflict.
12 Q. And how does Charles respond to you when you suggest
13 getting this loan?
14 A. They say that Nations Property Management is a DBA,
15 doing business as, Creative Loans, and that they could not find
16 out, and that I needed to get a new phone line to answer
17 Nations Property Management when it rings.
18 Q. Do you recall, as you sit here, why you were
19 discussing having separates phone lines?
20 A. So that we can do verifications.
21 MR. TEDMON: Objection as to "we."
22 THE WITNESS: So that the -- so --
23 THE COURT: Wait for Mr. Morris to clarify.
24 The objection is sustained. The jury shall disregard
25 that answer.

1 Q. BY MR. MORRIS: Do you recall why you and Charles
2 were having a conversation about wanting to get a separate
3 phone line?
4 MR. TEDMON: Objection. It's not a conversation.
5 It's an e-mail string.
7 Q. BY MR. MORRIS: Do you recall why you and Charles
8 were trading e-mails about getting a separate phone line?
9 A. Yes. That was so that when the bank will call in to
10 verify, we will verify it for the bank.
11 MR. TEDMON: Objection as to "we."
13 THE WITNESS: The office, the processors, I mean --
14 Q. BY MR. MORRIS: Let me ask you this, did you
15 personally verify rent when the phone rang at the office?
16 A. I have verified before.
17 Q. Were you verifying rent for people who actually
18 rented properties through you?
19 A. No.
20 Q. So can you explain how it is that you would be
21 verifying rent payments for somebody who is not actually
22 renting a property through Dynasty?
23 A. We were told --
24 MR. TEDMON: Objection as to "we." The question is
25 may verify.

1 THE COURT: Listen carefully to the question and
2 answer that question.
3 Q. BY MR. MORRIS: Can you explain why it is that you
4 would be verifying rent payment for somebody who is not
5 actually renting a property through the company you work for?
6 A. I was verifying rental for people that weren't really
7 renting because that's what I was told to do.
8 Q. To your knowledge, was there a purpose for why you
9 were doing that?
10 A. Yes. That is so that the loan can fund. Without the
11 verification, we cannot fund the loan.
12 Q. Given that answer, this might be -- let me change
13 course for a second.
14 Were you arrested for your role in what you did at
15 Head Financial Services?
16 A. Yes.
17 Q. Were you charged with a crime?
18 A. Yes.
19 Q. Did you plead guilty to a crime for what you did at
21 A. Yes.
22 Q. Are you testifying here as part of an agreement with
23 the Government to testify against the others?
24 A. Yes.
25 Q. While we're on the topic, was this arrest your first

1 brush with the law?
2 A. No.
3 Q. What other legal problems have you had prior to this?
4 A. In 1998 roughly -- '97, '98 -- I was arrested for
5 grand theft.
6 Q. What was it that you did that caused you to be
7 arrested for grand theft?
8 A. I was working at a bank, and I was skimming from an
9 account.
10 Q. Do you recall approximately how much money you
11 skimmed at the bank?
12 A. About 44,000.
13 Q. Was that before or after you started working for Head
14 Financial?
15 A. Before.
16 Q. This is a yes or no, so just confine it to that.
17 Do you have any reason to know whether or not Charles
18 Head knew of your prior conviction for embezzlement when he
19 hired you?
20 A. Yes.
21 Q. What's the basis on which you know that Charles Head
22 knew about your prior conviction?
23 A. One of my best friends is his children's mother.
24 Q. And if you could -- and how is it that that leads you
25 to believe that he knows about your prior conviction?

1 A. Yes. Because she knew and --
2 MR. GREINER: Objection. Hearsay.
4 Q. BY MR. MORRIS: Had you informed his prior girlfriend
5 about your conviction?
6 A. Yes.
7 Q. Had you informed Charles Head about your prior
8 conviction?
9 A. I did not tell him personally.
10 Q. Are you aware of how it is that he may have come to
11 know about it?
12 A. Yes.
13 Q. How did you become aware of how it is that he came to
14 know about your conviction?
15 A. He's talked to me about it. She, my friend, has also
16 told me that she --
19 Q. BY MR. MORRIS: Did you have any conversations with
20 somebody associated with your prior conviction with regard to
21 Mr. Head?
22 MR. TEDMON: Objection. Vague.
24 Q. BY MR. MORRIS: Did you serve time for that prior
25 conviction?

1 A. Yes, I did.
2 Q. When you got out, did you have a probation officer?
3 A. Yes.
4 Q. Did you have any conversations with your probation
5 officer about Charles Head?
6 A. Yes.
7 Q. What conversations did you have with your probation
8 officer with Charles Head?
9 A. That he was my boss, and that I was working. Because
10 they wanted to know who I was working for, and I told her. And
11 Charles Head also had a conversation with her, with my
12 probation officer, telling him -- telling her my job duties.
13 Q. If we can go to Exhibit 103, please. That also is
14 covered by the stipulation.
16 MR. TEDMON: One moment, Your Honor. That's fine,
17 Your Honor. No objection.
19 MR. SAMUEL: Still looking, Your Honor.
21 MR. GREINER: No objection to it coming in, Judge.
22 It will be an 801(d)(2)(E) objection.
23 MR. SAMUEL: Same objection, Your Honor.
24 THE COURT: Overruled. The exhibit is admitted.

1 Charles Head To Kou Yang Subject: RE: Tracy admitted into
2 evidence.)
3 MR. MORRIS: Your Honor, given the time period in
4 this one in particular, it may be worth reiterating this is
5 404(b) material as to Charles Head only, given the time and the
6 participants.
7 THE COURT: All right. Ladies and gentlemen, based
8 on what Mr. Morris just said, the Court understands that you
9 are about to hear evidence regarding acts that are not charged
10 in this case. You should consider this evidence only for its
11 bearing, if any, on the question of intent. And this is
12 Mr. Head's intent, Mr. Morris?
14 THE COURT: Mr. Head's intent, motive, opportunity,
15 preparation, plan, absence of mistake, or absence of accident,
16 and for no other purpose.
17 If I understand correctly, this would not be evidence
18 you should consider as evidence of guilt of any crime for which
19 Mr. Budoff and Mr. McCarns are now on trial.
20 MR. MORRIS: Correct, Your Honor.
22 Q. BY MR. MORRIS: Ms. Yang, have you had a chance to
23 review what's on the screen in front of you?
24 A. Yes.
25 Q. Do you recall what this e-mail is discussing?

1 A. Yes.
2 Q. And what is it discussing?
3 A. It is a verification of employment that Charles Head
4 had asked Tracy to do for us.
5 Q. Stop you for a moment. Who is Tracy if you can
6 recall?
7 A. Tracy was an associate of Charles.
8 Q. I'm sorry. So you were saying?
9 A. And she didn't want to do it. And so we needed that
10 verification in order to fund the loan. Doing the verification
11 of employment was typically one of the very last things that
12 they did to -- right before they fund the loan.
13 And when they tried to do it, she didn't want to do
14 it. And so there was a lot of going back and forth. And
15 pretty much I was sending him an e-mail saying that I took care
16 of it.
17 Q. And when you say "took care of it," if you could
18 summarize what did you do to take care of it?
19 A. When they called and left a number, I called back and
20 I verified the employment and said that I was Tracy.
21 Q. But your name is not Tracy, right?
22 A. No.
23 Q. And the person who you were verifying employment for,
24 do you recall who that person was?
25 A. I don't even remember. It was probably the Parker

1 file --
2 Q. Don't speculate if you don't recall.
3 A. Well, the Parker file, that is for Josh and Justin's
4 house that they bought for themselves.
5 Q. So based on your memory of that, whose employment
6 were you verifying?
7 A. I don't remember his first name, but Parker is Josh's
8 girlfriend's brother. That's what I remember.
9 Q. And after telling Charles that you had claimed to be
10 Tracy and verified employment, what is his response?
11 A. He congratulated me. Told me that I did a good job.
12 Q. If we can go to 124, please. This is covered by the
13 stipulation.
14 THE COURT: 124. Any objection, Mr. Tedmon?
17 MR. SAMUEL: Same.
19 MR. GREINER: Actually, I object to it coming in,
20 Judge.
21 THE COURT: Grounds?
22 MR. GREINER: This is one that was objected to
23 previously and then was --
24 THE COURT: Just the objection. Can you state the
25 objection?

1 MR. GREINER: Relevance.
2 THE COURT: That objection is overruled. This is
3 coming in as redacted.
4 MR. MORRIS: As redacted.
5 MR. SAMUEL: The number?
6 THE COURT: 124. It's one-page. This document is
7 redacted, but it will be shown as redacted.
8 MR. GREINER: And then the 801(d)(2)(E) objection
9 also, Judge.
12 mhead@financial-enterprises.com To Charles Head Subject: RE:
13 File Number 07050423 admitted into evidence.)
14 Q. BY MR. MORRIS: And I'd ask you to focus in up here.
15 Do you know who J. Michael Head is?
16 A. Yes.
17 Q. Who was he?
18 A. Jeremy Michael Head.
19 Q. And how do you know him?
20 A. I knew him because he's Charles Head's brother.
21 Q. When you had previously testified about folks that
22 worked with you in various phases of your employment, was this
23 one of the people who you had mentioned?
24 A. Yes. Mike Head.
25 MR. MORRIS: I would like to go to 125, Your Honor.

1 It's also covered by the stipulation.
5 MR. SAMUEL: Same objections.
7 MR. GREINER: No objection to it coming in, but
8 801(d)(2)(E) objection.
9 THE COURT: All right. The exhibit will come in.
11 Kou Yang kouyang@headmortgage.com To Josh’s Blackberry,
12 <jactor5@tmo.blackberry.net> CC Charles Head
13 charleshead@headmortgage.com Subject: RE: TAYLORS admitted into
14 evidence.)
15 Q. BY MR. MORRIS: On this e-mail, I'm going to do the
16 same. I'm going to work from the bottom up, if I could.
17 So this bottom section, what's the subject of this
18 e-mail series of e-mails?
19 A. It's about the Taylors, which is the last name of one
20 of the sellers.
21 Q. Do you have a recollection of who Josh is?
22 A. Yes. Josh Coffman.
23 Q. And his question to you was what?
24 A. He's asking me what's up with the court date for the
25 Taylors.

1 Q. And then your reply up here. If you could explain to
2 the jury your reply?
3 A. I'm pretty much telling him that we need -- all we
4 need is a writ, which is a form that comes from the sheriff's
5 department in order to evict someone that's living in a
6 property. I'm telling him that I've already called them
7 yesterday.
8 Q. Who is "them", I called "them" yesterday?
9 A. I already called the sheriff's office to, you know,
10 to confirm the writ.
11 Q. Okay.
12 A. And that -- and then I went on to explain to him that
13 the Taylors have called Nora.
14 Q. Can I interrupt you. Who is Nora?
15 A. Nora is the escrow officer at the escrow company, and
16 she informed me that the Taylors had asked for all of their
17 documents that they signed at escrow. And Nora informed me
18 that it is rightfully theirs, and that she would have no choice
19 but to release it to them.
20 Q. What does that last sentence mean when you wrote
21 that?
22 A. (Reading): I know that you had Cindy sign the escrow
23 instructions, et cetera, for the sellers.
24 That meant that in escrow there's escrow instructions
25 that the sellers sign, and they don't have to be notarized. So

1 in those escrow instructions Charles had Cindy, who was an
2 assistant at that time, sign them for the Taylors.
3 Q. Who is Cindy?
4 A. Cindy was an assistant to the office, an office
5 assistant at that time.
6 Q. So Cindy is not one of the Taylors?
7 A. No.
8 Q. And your intent of that sentence to say -- what was
9 it that Cindy did? What exactly are you saying Cindy did here?
10 A. She forged the Taylor's signatures.
11 THE COURT: Are you on track to finish in ten
12 minutes?
13 MR. MORRIS: I'm not, Your Honor, but I'm making
14 relatively good progress, I think.
16 Q. BY MR. MORRIS: We're going to bring in 158, if we
17 could, Your Honor, subject to the stipulation also.
19 MR. TEDMON: Which one is it?
20 MR. MORRIS: Sorry. 148.
21 MR. SAMUEL: 148 or 140?
23 MR. GREINER: Mr. Morris, what's the number one more
24 time?
25 THE COURT: 148. Mr. Tedmon, any objection?

1 MR. TEDMON: This is a five-page exhibit, correct?
2 MR. MORRIS: Yes, it is.
5 MR. SAMUEL: 801(d)(2)(E).
7 MR. GREINER: No objection pursuant to the
8 stipulation. Objection 801(d)(2)(E).
9 THE COURT: All right. The exhibit will come in.
10 You're probably understanding at this point. When
11 you hear 801(d)(2)(E), you can be reminded of my clarifying
12 instruction with respect to the conspiracy charge and the way
13 in which you should think about the evidence as to each
14 defendant.
15 And I'll remind you of that periodically but assume
16 that you retain a recollection of what I told your earlier
17 today.
18 All right. Mr. Morris. 148.
20 Kou Yang To Charles Head Subject: RE: (Blank) admitted into
21 evidence.)
22 Q. BY MR. MORRIS: If we could go to the second page.
23 If you want to take a second to read through this and see if
24 you recall the topic that's being discussed in these e-mails.

1 Q. Do you recall what's being discussed here? That's
2 yes or no?
3 A. Yes.
4 Q. What is it that this e-mail was discussing?
5 A. It is discussing the fact that we have a property
6 that we had made payment on. Because the Dillers were in
7 foreclosure, and in order for their property not to go up for
8 sale, we had to pay the loan current. And so we did that for
9 her. But then she at some point was like, well, I don't want
10 to do this anymore. At that time, we had already got a deed
11 from her signing it over to Lenny's name.
12 Q. And --
13 MR. TEDMON: Your Honor, I'm sorry. I'm going to
14 object to the use of the word "we." Move to strike that
15 portion of the previous answer.
16 THE COURT: Well, at this point, I'm going to
17 overrule. But please ask follow-up questions to clarify --
19 THE COURT: -- the use of the word "we" there.
20 Q. BY MR. MORRIS: What did you mean when you said "we"
21 had paid on the Diller's property, who did you mean?
22 A. Charles Head.
23 Q. Were you involved in making payments on properties?
24 A. Not for this type of deal.
25 Q. Okay. Were there other types of stuff that you made

1 payments for?
2 A. Yes.
3 Q. This portion at the bottom, do you have a
4 recollection of who Eddie is?
5 A. Yes.
6 Q. Who is that?
7 A. Eddie Vanegas.
8 Q. And as you sit here, do you have an understanding of
9 what straw buyer means?
10 A. Yes.
11 Q. What does that mean to you?
12 A. The term straw buyer is used when we have somebody
13 put the loan in their name.
14 MR. GREINER: Objection. "We." Non-responsive.
16 THE WITNESS: When the office --
17 MR. GREINER: Objection. Office. Non-responsive.
18 THE COURT: Can you tee this up, Mr. Morris?
19 Q. BY MR. MORRIS: Yes. Let me see if I can rephrase
20 this.
21 Did you use the term straw buyer in your work at Head
22 Financial?
23 A. Yes.
24 Q. And did you have knowledge of how a straw buyer, to
25 use your term, fit into these transactions?

1 A. Yes.
2 Q. Were you involved in processing paperwork that
3 involved straw buyers?
4 A. Yes.
5 Q. In the context of what you did with straw buyer
6 paperwork, what do you mean by a straw buyer?
7 A. What I mean by a straw buyer is someone that we are
8 putting the -- someone that is buying the property in their
9 name but they don't actually own it. They are actually buying
10 for the company or --
11 Q. Okay. In this part about where Charles says to you,
12 tell Eddie that we can find a new straw buyer if he's willing
13 to pay the fee we gave to him, what does that mean to you?
14 A. Charles pays all his straw buyers a fee. Everybody
15 has a different price, but the normal rate is about $5,000.
16 And so at that time Charles had already given Eddie his money
17 for this particular loan, and so now that he's not -- no longer
18 going to be on this loan, Charles wanted to get his money for
19 the fee back.
20 MR. MORRIS: Take it down. If I could just clarify
21 for the record, Your Honor. When I've been mentioning the
22 stipulation so far in the 100-series e-mails, if I could read
23 that portion of the stipulation language so it's in the record.

1 MR. SAMUEL: Fine.
3 THE COURT: All right. You may read the stipulation.
4 MR. MORRIS: The stipulation of the parties with
5 respect to these e-mails are that: The e-mails admitted
6 pursuant to the stipulation from the e-mail address or
7 addresses or containing the following names in the "to" or
8 "from" line, those names being charleshead@headmortgage.com,
9 charleschead@headmortgage.com, Charles Head, Charles C. Head,
10 and Charles C. Head belong to and were used by the defendant
11 Charles Head, and they stipulate that the e-mails in
12 Government's Exhibits 100 through 154 were either sent to or
13 from defendant Charles Head.
14 I would like to move to Exhibit 201. Although, Your
15 Honor, I'm moving on to -- even though it's involving a
16 different defendant. I know it's two minutes early but maybe
17 break at this point.
18 THE COURT: All right. We'll start with 201
19 tomorrow. I'll review the schedule with counsel once the jury
20 is excused.
21 I am going to excuse you at this point in time. Our
22 schedule tomorrow, as you'll recall, is 8:30 to 1:30 with two
23 short breaks. So please be ready to go at 8:30.
24 Overnight, please keep in mind, as always, my
25 instructions. You will receive all the information that you

1 need to decide this case in this courtroom. So please do not
2 discuss the case with anyone. Do not do any research of any
3 kind. Do not go online, go to the library. Don't begin to
4 think about its ultimate conclusion. Continue to keep an open
5 mind until you've heard all the evidence, you receive my final
6 instructions, and you have deliberated with your fellow jurors.
7 Have a good evening. We will see you tomorrow
8 morning at 8:30. Thank you.
9 (Jury out.)
10 THE COURT: You may step down, Ms. Yang. Please be
11 back and ready to go at 8:30. Please avoid any contact with
12 the jurors.
13 All right. You may be seated if you'd like. Just so
14 I'm clear, how much longer do you think you need, Mr. Morris?
15 Can you wrap it up in 15 minutes?
16 MR. MORRIS: Your Honor, I've got maybe 10 to 15 more
17 e-mails that I would like to go through and then some wrap-up
18 questions. I would expect 15 to a half hour. The working
19 through the e-mails is going a little slower than I expected
20 with her. I'm going to try to keep it going faster.
21 THE COURT: All right. If you can look at your
22 schedule, refine it.
23 And after Ms. Yang, are we still expecting
24 Ms. Solares? I gather that's the person who left us a message.
25 I haven't listened to it.

1 MR. ANDERSON: Exactly. Ms. Solares has indicated
2 her intention not to voluntarily comply with the subpoena and
3 has entered a complaint about having been subpoenaed and also
4 about the way that we've dealt with her.
5 Although, of course, we have a different view of it,
6 and I have e-mails and things if the Court wants to see them.
7 So that may be an issue we need to address.
8 We are considering seeking -- which I was hoping that
9 we wouldn't have to -- but seeking a material witness warrant.
10 It's something that we don't do lightly. Particularly when
11 someone is a victim in a case rather than just another witness.
12 So we've been trying every means we have not to have to do
13 that.
14 THE COURT: Is she essential to your case?
15 MR. ANDERSON: Well, she may be very important. So
16 what we've been trying to do is hopefully there would be some
17 way that we wouldn't need to, or there would be some
18 alternative, or that we could work with her and work something
19 out where she would be more cooperative.
20 And that's why we haven't brought it to the Court's
21 attention yet. But probably within the next few days if this
22 continues to be an issue and we think we can't get around it
23 some other way, we're going to be presenting something to the
24 Court on that matter.
25 THE COURT: All that said, who is next after

1 Ms. Yang?
2 MR. ANDERSON: Ms. Yang will testify. Mike Mattice
3 is also on the schedule for tomorrow. Justin Wiley is on the
4 schedule for tomorrow. Alfred Limas is a possibility for
5 tomorrow. Howard Peter. Daniel Castillo.
6 Given the way that this has gone so far, I think that
7 we won't get through probably not even half of those people,
8 but we're not so far off track yet that I'm concerned.
9 THE COURT: All right. I think we need to think
10 about picking up the pace a little bit, if we can. Any
11 critiques of my --
12 MR. SAMUEL: As it relates to Kou Yang, Your Honor,
13 she, I think for many of us, is very central. I think that we
14 should be permitted some leeway in the amount of time that we
15 utilize to examine her because she has a lot of things to say.
16 She's probably the most critical witness in this case.
17 We may be able to pick up time elsewhere, but I think
18 that the Court should consider giving us leeway.
19 THE COURT: I understand she's a critical witness.
20 To the extent you can be prepared to move it along.
21 I'm just thinking about the big picture here.
22 MR. ANDERSON: One thing that may put the Court's
23 concerns at least at ease for now, is that we have front-loaded
24 witnesses who we thought would take longer.
25 And it does seem in most trials, including this one,

1 that as we go, the witnesses will take less and less time.
2 THE COURT: I'm just putting you on notice that at
3 some point I'll start whining significantly. Ms. Schultz?
4 (Discussion between the Court and clerk.)
5 THE COURT: Mr. Miller has indicated he's in between
6 prescriptions. And although he doesn't think he has missed
7 anything material, he would feel more comfortable if he were
8 moved into the front row, closer to a monitor. So Ms. Schultz
9 will see if there is another juror willing to switch with him.
11 MR. GREINER: No objection, Judge.
13 MR. SAMUEL: That's fine.
14 THE COURT: Any comment on 801(d)(2)(E)?
15 Occasionally, I'm going to give the reminder. Is there any
16 critique of that general instruction?
17 MR. TEDMON: No. It was my understanding from the in
18 limine hearing that it was a standing objection.
19 At some point, if we felt that they didn't tie it up
20 with evidence independent of the co-conspirator's statements,
21 we would move at that time or do a Rule 29. So that's why I'm
22 not objecting to all this because that's what my understanding
23 was.
24 MR. SAMUEL: My understanding was slightly different.
25 I understood them to say as it relates to certain things.

1 However, at this particular point, I mean, we haven't entered
2 into, verbally on the record anyway, a stipulation that there
3 is a standing order that can be used as an objection in any
4 appealable issue. And I think that's critical.
5 Once we can do that, I think then that would possibly
6 speed things up. But we don't have that agreement on the
7 record anywhere.
8 MR. SAMUEL: I don't think it's contained within the
9 stipulation.
10 THE COURT: Can you meet and confer?
11 MR. SAMUEL: Absolutely.
12 THE COURT: Identifying witnesses and exhibits?
13 MR. SAMUEL: Yeah.
14 MR. GREINER: Judge, if I might. This issue, this
15 801(d)(2)(E) issue I've dealt with historically all the way
16 back into the old courthouse. And the case up in the Ninth
17 Circuit -- at one point in time, I think that I mentioned in
18 limine, I got stung by the Ninth Circuit because I was good on
19 Monday and bad on Tuesday and good on Wednesday. So from my
20 perspective, based on that history, if it goes up to the Ninth
21 Circuit, I don't want to get stung again.
22 THE COURT: Is there no way to anticipate at least
23 with certain things and put in writing? While you can always
24 then supplement that with statements on the record. If there's
25 not, there's not. But if there is.

1 MR. ANDERSON: I think there might be, Your Honor.
2 If defense counsel wants to provide us with a stipulation with
3 exhibit numbers and witness testimony, I would definitely
4 consider it. That's a very reasonable thing.
5 MR. GREINER: That's what I don't want to do. I
6 don't want to hamstring myself. I don't know what the
7 Government's case is.
8 MR. ANDERSON: Well, the stipulation would be to the
9 items in the stipulation, and if there were other items that
10 weren't stipulated to, Mr. Greiner is more than capable,
11 obviously, of standing up and making objections to those
12 things.
13 THE COURT: If you can't, you can't. But if you can
14 anticipate in some respects. I understand Mr. Tedmon is saying
15 there is a standing objection whenever it applies.
16 MR. TEDMON: Right. And that was exactly what we
17 discussed, and Mr. Greiner said I got stung by the Ninth
18 Circuit. We said, well, we don't want to be jumping up like
19 jumping jacks every other question. That was my --
20 THE COURT: But still, it doesn't apply to every
21 single witness. Every single exhibit.
22 MR. TEDMON: Exactly.
23 THE COURT: So if there's a way to anticipate, inform
24 the Court, preserve in writing, when you know it's going to be
25 an issue. Exhibits, you're looking at them, and then you're

1 making the call. So I don't know if the Government can provide
2 a list of exhibits it's going to deal with on a certain day.
3 MR. SAMUEL: That would be helpful.
4 MR. ANDERSON: Well, if we're going to do a
5 stipulation, it would be helpful if we did one for all the
6 exhibits because then we would have it all set and done.
7 There's also the companion issue of the 404(b)
8 evidence. And to the extent that there is anything that
9 Mr. Greiner or Mr. Samuel want a 404(b) instruction on, that
10 would be a good -- and even Mr. Tedmon if he wants the 404(b)
11 instruction on some things. If they want to bring that to our
12 attention, too, I know the Court's been very accommodating
13 about giving that instruction and will give one at the end, but
14 if we want one throughout the trial, we can work that out, too.
15 THE COURT: To the extent that you can meet and
16 confer and identify these issues in a way that I can anticipate
17 them, I will. I have the instructions at the ready. I'll try
18 to be alert.
19 I think there might be a way you could identify when
20 you know it's going to be an issue without precluding your
21 saying something else, if needed. Anything else?
22 MR. TEDMON: I don't think so.
23 THE COURT: All right. See you in the morning at
24 8:30.

2 CERTIFICATION
9 /S/ DIANE J. SHEPARD

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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 4
Defendants.
---oOo---
TRIAL PROCEEDINGS
THURSDAY, OCTOBER 24, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
3 KOU YANG
DIRECT EXAMINATION BY MR. MORRIS (cont'd) 324
4 CROSS-EXAMINATION BY MR. TEDMON 387
CROSS-EXAMINATION BY MR. GREINER 435
5 CROSS-EXAMINATION BY MR. SAMUEL 490
10
11
12
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15
16
17
18
19
20
21
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25

1

Charles Head CC Domonic McCarns Subject:
4 UPDATES
204 Email dated 4/18/2005 From Kou Yang 330
5 212 Email dated 6/10/2005 From Domonic McCarns 335
To Kou Yang; Charles Head;
6 eds@fundingforeclosures.com; Keith
Brotemarkle Subject: Reynolds/pointer –
7 Everette, WA
224 Email dated 7/11/2005 From Domonic McCarns 339
8 To Ed Shaffer; Keith Brotemarkle; Kou Yang;
Sam Vu; Charles Head Subject: Thompson
9 (redacted)
228 Email dated 6/8/2006 From Domonic McCarns To 343
10 Kou Yang Subject: RE: Updated payoff Lien #
1 on title
11 251 Email dated 10/19/2006 10/19/2006 To Keith 345
at Foreclosure Options; Kou Yang; Lisa Vang;
12 domonicm@nfcoptions.com;
toddh@nfcoptions.com Subject: RE:
13 BUDOFF/Eggleton Appraisal Inquiry
310 Email dated 5/18/2006 From Andrea Manriquez 349
14 331 Email dated 10/3/2006 From Keith at 354
Foreclosure Options To Kou Yang Subject: RE:
15 Please Submit: FERREYRA/TRAINOR
333 Email dated 10/3/2006 From Keith at 355
16 Foreclosure Options To Kou Yang; Lisa Vang;
benb@psloans.net Subject: RE: VOE MCELVEEN,
17 TROY
18 Foreclosure Options To Kou Yang;
benb@psloans.net
19 Subject: RE: 06-d75291
20 Foreclosure Options To benb@psloans.net
CC Sam Vu Subject: RE: Morgan at Peoples
21 349 Email dated 10/20/2006 From Benjamin Budoff 364
To Kou Yang; Sam Vu Subject: RE: (Blank)
22 354 Email dated 10/26/2006 From Kou Yang To Lisa 365
Vang; Keith at Foreclosure Options
23 CC benb@psloans.net Subject: RE:
WILLIFORD/Dreyer Funding inquiry
24
25

1

Charles Head; Jack Corcoran Subject: CHARLES
4 MORTGAGES
5 To Pang Yang; Kou Yang; Heather Worch
CC Charles Head Subject: Disanto, John &
6 Kelly
214 Email dated 6/15/2005 From Kou Yang To 467
7 Charles Head
215 Email dated 6/15/2005 From Kou Yang; Keith 468
8 Brotemarkle; Ed Shaffer; Charles
Head Subject: FW: Mckenzie (ff.com)
9
10
11 DEFENSE EXHIBITS RECEIVED IN EVIDENCE

12
CH-R Business Records re: FCO, Inc. Asset 405
13 Purchase Agreements with Head Financial
Services, Inc. and Creative Loans, LLC
14 CH-T Email dated 5/19/2005 From Kou Yang To Pang 421
Yang CC Keith Brotemarkle, Velda Palm
15 DM-S1 Terms of employment Domonic McCarns 447
DM-S2 Terms of Employment Creative Loans, LLC. 447
16 BB-E1 Uniform Residential Loan Application for 22 492
Noyes Street, Duxbury, MA 02332
17 BB-F1 Month-to-Month Agreement, Dated 12/1/03 495
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25

2 THURSDAY, OCTOBER 24, 2013
3 ---oOo---
5 States versus Charles Head, Benjamin Budoff, and Domonic
6 McCarns. This is on for jury trial, and today is day four.
7 THE COURT: Good morning. All counsel are present.
8 MR. GREINER: Good morning, Your Honor.
9 THE COURT: All parties are present. Mr. Miller and
10 Ms. McKenzie are going to switch, if you haven't heard.
11 Ms. McKenzie remains an alternate, but she will be in the back
12 row to facilitate Mr. Miller's viewing of the monitor. Let's
13 bring the jury in.
14 MR. TEDMON: Your Honor, one issue I want to raise.
16 MR. TEDMON: I want some clarification on this
17 801(d)(2)(E) issue. I know it's important because we're still
18 fairly early in the trial.
19 This is my recollection of what the record should
20 show. I filed a motion in limine, number one, on the 26th of
21 September raising the 801(d)(2)(E) issue. Both counsel --
22 counsel for Mr. McCarns, counsel for Mr. Budoff -- joined.
23 We had a hearing on the motion in limine, and at that
24 time, after listening to the various positions, the Court
25 indicated it would take the Ninth's model, which was that the

1 Government is going to be allowed to bring in the
2 co-conspirator statements prior to having to prove it up. And
3 if later on that wasn't the case, then, obviously, the defense
4 is free to argue for Rule 29.
5 My understanding, additionally, and what has been
6 done in every other trial I've participated in where I filed
7 this motion, which I do routinely, is that there is a standing
8 objection or a continuing objection to the 801(d)(2)(E)
9 statements so we don't have to jump up and down all the time
10 objecting. That's the whole point of the in limine motion that
11 I filed.
12 Now if I'm incorrect in that assessment or
13 recollection, I would like to know. Because yesterday I did
14 not enter any objections because of the in limine motion
15 hearing.
16 It's different than 404(b). I would certainly agree
17 with everyone that if it's 404(b), each counsel for each
18 defendant must at the time that the 404(b) item is provided or
19 at least presented they need to file an objection
20 contemporaneous to that event.
21 But in terms of 801(d)(2)(E), I would like the
22 Court's guidance on this because I want to make sure the record
23 is clear for my client.
24 THE COURT: Well, I'm prepared to accept the standing
25 objection. I don't know that I can muzzle counsel. I don't

1 know which cases or case Mr. Greiner is referring to, but I'm
2 prepared to accept a standing objection. I encouraged the
3 parties yesterday to meet and confer to see if they could
4 stipulate the Government would acknowledge a standing
5 objection. I understand the Government does acknowledge a
6 standing objection.
7 MR. ANDERSON: Right, Your Honor. Mr. Tedmon and I
8 actually discussed this last night at some length. And I think
9 the way that he just described it is accurate. There are a lot
10 of statements which everyone agrees are statements that at
11 least in the Government's view are co-conspirator admissions,
12 801(d)(2)(E). But there are also other statements which are
13 404(b).
14 And I think as far as the 801(d)(2)(E), the things
15 that happened clearly within the timeframe that the Government
16 has alleged is part of the conspiracy, the motion in limine is
17 clear that defense counsel is challenging that these were not
18 necessarily in furtherance of the conspiracy. The Government's
19 going to have to tie that up or there's going to be a motion
20 under Rule 29 later.
21 As far as these other statements that are 404(b), if
22 defense counsel is satisfied with an instruction at the end of
23 the case regarding it, that's fine with the Government. But if
24 the defense counsel wants instructions as we go along, then
25 that's going to be on each counsel to bring that up.

1 MR. SAMUEL: I have a comment or observation, Your
2 Honor. And that is that, obviously, as to the 802(d)(2)(E)
3 material, most, if not all, of the e-mails are subject to that
4 objection. I brought that up today. I think that somehow the
5 Court could maybe advise the jurors that all the e-mails that
6 have been admitted or are being admitted are subject to that
7 objection.
8 I had thought about that last night, but I didn't
9 have the opportunity to speak with counsel about that until
10 this morning. I don't know if that's a compromise, but I think
11 that that at least would perfect the record at least in my
12 mind.
13 THE COURT: So all e-mails?
14 MR. SAMUEL: Yes.
15 MR. ANDERSON: Your Honor, I think that's not
16 entirely accurate because there are some e-mails that aren't
17 being admitted under that theory. They are being admitted
18 under the theory that there are other acts, evidence admissible
19 against Charles Head.
20 THE COURT: That's why I asked you to meet and
21 confer. We cannot take time for me to go through the exhibit
22 list one-by-one. You know your cases better than I do. I have
23 some sense of this case based on what I've sat through, and I
24 can anticipate who might be subject to the 801 objections -- I
25 mean 802 objections. It's early in the morning. But unless

1 you can meet and confer and give me lists.
2 Mr. Tedmon, so it's clear, the Court accepts your
3 standing objection. I don't think the Government would argue
4 on appeal you that didn't preserve your record.
6 THE COURT: If Mr. Samuel and Mr. Greiner can enter
7 into standing stipulations with the Government, it would
8 probably allow to us move a little more quickly. But at this
9 point, I don't hear that you've reached a focused stipulation
10 in a way that allows me to do anything more than play along as
11 we go.
12 MR. GREINER: Good morning, Judge. James Greiner
13 representing Mr. McCarns.
14 Correct. As of this morning, I have not been able to
15 reach any type of an agreement. I may be able to in the next
16 couple days when we're not in trial.
17 As far as today goes, as far as my record, I want to
18 make sure that I preserve my record. The Government has
19 already said that the e-mails are coming in for dual purposes
20 or different purposes, and I just don't want to miss something
21 in case this goes to the Ninth Circuit.
22 So as far as today is concerned, I'm going to
23 continue to do what I think I have to do to represent my
24 client, but I will certainly take the Court's direction and see
25 if there is a way we can work it out with the Government.

2 MR. SAMUEL: One further issue, Your Honor.
3 Yesterday, the Court was asking for objections. It doesn't
4 quite work that way because --
5 THE COURT: I was asking for objections?
6 MR. SAMUEL: Yeah. As it relates to each item.
7 Either we have to find the paper document because if they are
8 not published on the screen, and they can't be published on the
9 screen because they're going to be published to everybody. So
10 that's kind of a mechanical problem.
11 THE COURT: I understand. I was presuming some
12 familiarity with the record such that you could look at the
13 list and know, but I gather that's unrealistic.
14 MR. SAMUEL: I don't think so. Sorry, Your Honor.
15 THE COURT: I understood what was going on.
16 So Mr. Tedmon, do you want me to make some general
17 statement to the jury that even though you aren't objecting
18 you've --
19 MR. TEDMON: Yes.
20 THE COURT: -- you have made a standing objection,
21 and so even they aren't hearing from you, you are making the
22 same objection.
23 MR. TEDMON: Yes. I think Mr. Samuel's suggestion,
24 which I would agree with, makes a lot of sense. And that way
25 at least the jury knows that I'm not disinterested, falling

1 asleep or don't care. I would appreciate that.
2 One other comment. I don't know if this will help or
3 not, and it's the last thing I'll say. The Indictment period
4 is March 19th, 2005 to at least June 30th, 2006. It seems to
5 me, based on what we did at the in limine hearing, that nobody
6 is losing any traction in terms of preserving the record on the
7 801(d)(2)(E) issue if there's a standing objection as to all
8 three defendants. That eliminates that concern.
9 The only other issue that I think presents itself is
10 404(b), and I don't think we need an exhibit list or to compare
11 notes. Each counsel should just object at the time that that
12 e-mail is coming in that it's 404(b) and should come in only as
13 to Charles Head.
14 That would streamline the process. The record would
15 be very clear. And then the Government can argue, if they
16 don't think it is, why it's not. You know, if it's somewhat of
17 an extended dialog, we can do it outside the presence of the
18 jury or at sidebar. I don't know why we can't do it that way.
19 MR. SAMUEL: My comment is that the 404(b) material,
20 I think, works well when the Government specifically states
21 this is 404(b) material as it relates to this specific
22 defendant. We don't know where they are coming from. Rather
23 than us having to object, guessing whether it's 404(b)
24 material. It's offered specifically under that theory.
25 Otherwise, it would be objectionable. And, consequently, I

1 think that as they have done, they should continue to announce
2 the material, and who it relates to, and the Court should
3 continue to give the admonition.
4 THE COURT: Is the Government able to do that? In
5 the last Head trial the Court was always alerted in advance.
7 THE COURT: Yesterday, I had to anticipate at least
8 once a 404(b) instruction maybe.
9 MR. ANDERSON: I think it was more that you were so
10 quick, Your Honor, that you were able to anticipate it before
11 we were able to ask for the Court's instruction. Obviously,
12 having done the other trial, you're very aware of the outlines
13 of this case.
14 We can do that. The question is, that in some cases
15 there may be things that some of the counsel think -- that
16 could be admitted for multiple purposes as 404(b) -- under a
17 404(b) theory or as intrinsically intertwined with the offense,
18 or as substantive evidence against all three defendants. And
19 in those cases, the Government would be introducing under all
20 those theories and would not ask for a 404(b) instruction.
21 If the defense counsel thinks that those other
22 theories of admissibility do not apply, then they need to
23 object on those other grounds and ask for a limiting
24 instruction that it be only for 404(b). At which point, the
25 Government can respond and say, well, Your Honor, in addition

1 to the other acts evidence reason that this could be admitted,
2 it could be admitted under these other theories as well. And
3 that's what we're concerned about.
4 Because there are certain things that, obviously, to
5 everyone it's very clear that 404(b) is the only ground for
6 admission, and in those cases it's easy for us to say, Judge,
7 this is 404(b) evidence.
8 THE COURT: And can you compare notes every evening,
9 identifying the witnesses that are coming and alert me to those
10 issues in advance?
11 MR. ANDERSON: We can try, Your Honor. I don't know
12 that we will be 100 percent. We can try for 90 or 95 percent.
13 THE COURT: The more you do that the better.
14 MR. ANDERSON: So to let the Court know, Justin Wiley
15 will testify most likely today, and there will be 404(b)
16 evidence presented from him.
17 And the second issue is whether or not defense
18 counsel wants an instruction at every single point where 404(b)
19 evidence is presented, or if they want it on a daily basis, or
20 periodically for certain pieces of evidence, or a final
21 instruction at the end of the trial. And I can't make that
22 decision for them.
23 THE COURT: What is the defense response to that
24 suggestion?
25 MR. SAMUEL: I think it needs to be the jury needs to

1 be instructed each time that 404(b) material is presented.
3 MR. TEDMON: Yes. As much as I don't like the fact
4 that typically rings the bell of my client's name, I have to
5 agree with Mr. Samuel that the only way to know how the record
6 is moving forward is to know it at that time. So I think we're
7 stuck with having to identify the 404(b) item and who it
8 relates to, and that it doesn't relate to the other defendants
9 as to that particular piece of evidence.
10 Otherwise, if it's an omnibus, sort of end-of-the-day
11 sort of thing, they are not going to be able to sort out what
12 was related to who or who it wasn't related to, which I know is
13 Mr. Samuel's and Mr. Greiner's concern.
15 MR. GREINER: I'm going to make the objection and ask
16 for the instruction. I'm going to try to monitor my client's
17 case the best I can. That's who I represent.
18 THE COURT: And that's on 404(b)? You're talking
19 about 404(b)?
20 MR. GREINER: 404(b).
21 THE COURT: Mr. Samuel, you wanted to say something
22 else?
23 MR. SAMUEL: Well, the only other thought I had was,
24 you know, it's a little misleading if the Court says -- I
25 understand it's only related to a specific defendant. But the

1 witness itself sometimes can bring up issues that may be
2 utilized for their consideration as to the credibility of the
3 witness. For example, witness may admit that they lied. Now
4 under the 404(b) theory, the jurors might think that the aspect
5 of lying doesn't affect the credibility as it relates to that
6 witness as it relates to another defendant. So, for example,
7 we have a situation in which -- I think it was yesterday -- in
8 which one of the witnesses said -- I'm sorry -- I can't recall
9 the specifics.
10 But it came to me when I was thinking, well, yeah,
11 the 404(b) only applies to Mr. Head, but on the other hand this
12 witness has admitted something which is detrimental to their
13 credibility, and, consequently, am I entitled to argue that
14 even though the evidence wasn't brought in against my client.
15 And I think I am entitled to that.
16 And if that's the case, then the jurors should be
17 aware that although it only applies to innocence or guilt as to
18 a specific defendant, doesn't necessarily preclude them from
19 considering for other purposes.
20 THE COURT: Well, I have the feeling we could spend
21 all day talking about these issues, and we have a jury waiting.
22 Again, you know your cases better than I do despite
23 my general familiarity. And so I'm going to start with a
24 general comment following up on what the jury was hearing about
25 801(d)(2)(E) yesterday, advising that Mr. Tedmon has a standing

1 objection, advising them that whenever they hear from
2 Mr. Samuel and Mr. Greiner -- and/or Mr. Greiner that there is
3 an 801(d)(2)(E) objection, that the parties are reminding us
4 that they should not consider the evidence unless the
5 Government proves beyond a reasonable doubt dot-dot-dot.
6 MR. SAMUEL: I basically would just say join, so I
7 mean, obviously, you can just say to the jurors that when you
8 hear Mr. Greiner make the objection, which he intends on doing,
9 it's joined by all parties.
10 THE COURT: Any objection to that phrasing?
12 THE COURT: All right. Then 404(b), if the
13 Government alerts me to its position that that instruction
14 should be read, or if a party requests it, I will read that
15 instruction.
16 MR. ANDERSON: That makes sense, Your Honor.
17 I want to flag one issue that will come up
18 immediately with this witness. Mr. Morris is going to ask
19 questions --
20 THE COURT: With Ms. Yang?
21 MR. ANDERSON: With Ms. Yang.
22 -- regarding e-mails sent by Benjamin Budoff that
23 fall after June 30th, 2006. The Indictment charges until at
24 least June 30th, 2006. And in any event, the Government's
25 argument would be that the conspiracy, the plan, or scheme

1 extends to at least through November 2006, and that, therefore,
2 those statements are co-conspirator admissions as well.
3 But I wanted the Court to be aware of that and
4 defense counsel to be aware that that's coming next.
5 MR. SAMUEL: And obviously that raises the issue of
6 variance and my argument with variance, and I need the Court,
7 obviously, to be aware of that. Because I think that there is
8 a definite change in the fashion in which the business was run.
9 Totally different.
10 THE COURT: I've been alerted to this through the
11 motions in limine. I don't know how much I fully understand
12 that argument. So I assume you'll make objections and the
13 record will be preserved.
14 MR. ANDERSON: Your Honor, I know we're getting short
15 on time, but there is one final thing.
16 The Court had said "the Government proved beyond a
17 reasonable doubt that the conspiracy existed." But the
18 threshold question which goes to the Court for the
19 admissibility of these co-conspirator statements is by a
20 preponderance of the evidence that a conspiracy exists and when
21 the statement was made the defendant had knowledge of and
22 participated in the conspiracy and statement was made in
23 furtherance of the conspiracy. And that's citing United States
24 v. Larson, 460 F.3d 1200, at pin cite 1211.
25 THE COURT: That's the Court's determination.

1 MR. ANDERSON: Right. And that's for the
2 admissibility.
3 THE COURT: Hopefully, the jury will still be
4 applying the beyond-a-reasonable-doubt standard.
5 MR. ANDERSON: To determine the guilt of the
6 defendants, but whether or not that evidence comes in.
7 THE COURT: So are you suggesting different wording?
8 MR. ANDERSON: What I'm suggesting is that the Court
9 say that there's an objection to the admissibility of the
10 statements as far as whether or not they can apply to other
11 defendants who are alleged to be in the conspiracy.
12 I'm conditionally admitting this provided that the
13 Government meet the threshold it needs for the admissibility of
14 these statements. However --
15 To a certain extent, this is the Court's decision not
16 the jury's. Because if we reach the point where the Government
17 hasn't met the standard, this case is not going to go to the
18 jury. It will never get to them.
19 THE COURT: I understand that, but how do you frame
20 the jury's thinking about it in the meantime, or do you concede
21 it's a dismissal?
22 MR. ANDERSON: Well, I'm not going to concede it, but
23 it seems likely. And if we reach that point, then we'll have
24 to talk about whether remedial instructions saying disregard
25 all this testimony are sufficient to cure the problem that

1 we've created.
2 But I think in the meantime something along the lines
3 of: Throughout trial defense counsel raised various objections
4 to the admissibility of evidence. In some cases the Court
5 allows it provisional on other things occurring later, and
6 you're simply to focus on the evidence that's admitted and
7 follow the Court's instructions. I'll give you instructions at
8 the end of the case.
9 THE COURT: Do you have the instructions that were
10 actually used in Knight?
11 MR. ANDERSON: No, I don't have those.
12 THE COURT: It appeared the Court there was reminding
13 the jury of its ultimate obligation. That's why I've been
14 using the language I have. I mean I didn't go to the record
15 and --
16 MR. ANDERSON: That may make sense to say at the end
17 ultimately you're going to have to determine beyond a
18 reasonable doubt whether each of these individuals individually
19 was participating in the conspiracy and was guilty of the
20 crime.
21 That makes a lot of sense to remind the jury you will
22 receive instructions later on. You're going to have to find
23 beyond a reasonable doubt.
24 THE COURT: That was the tack I was taking, but I had
25 not researched, you know, every other court's --

1 MR. TEDMON: Your Honor, if I could. I agree with
2 the Court's initial thought. I certainly don't want the jury
3 to ever be given a different standard like preponderance of the
4 evidence because that's a mistrial. There is no way -- there
5 is a lot of new jurors on this jury panel. But even if they
6 weren't, this Court cannot give them another standard.
7 THE COURT: Mr. Anderson was just suggesting
8 conditional admission. I can throw that in.
9 But I was trying to remind them of their ultimate
10 responsibility when the case goes them.
11 MR. ANDERSON: I absolutely agree with Mr. Tedmon.
12 The Court should not say preponderance or anything along those
13 lines to the jury. That's absolutely true.
14 THE COURT: Final words. And then we're going to
15 bring the jury in. Mr. Greiner?
16 MR. GREINER: Yes, Judge. I would object to the
17 Court saying anything to the jury along the lines the
18 Government has argued this morning. I think the way the Court
19 handled it yesterday was fine.
20 But I think if the Court tries to say conditionally
21 admitted or anything of that nature, it's just going to add to
22 confusion, lead to a mistrial, lead to error. And I would
23 strongly urge the Court not to go into that area because I
24 think that's just fraught with problems.
25 THE COURT: All right. Mr. Samuel?

1 MR. SAMUEL: Nothing further.
3 (Jury in.)
4 THE COURT: You may be seated. Welcome back to the
5 courtroom, ladies and gentlemen. I know you've been here for
6 some time this morning. One of these days we're going to get
7 our momentum going and be able to start promptly when you
8 arrive. That was my hope yesterday when I excused you. We did
9 take some time to do housekeeping. As I told you at the
10 beginning, when you are waiting, we are working.
11 And I just wanted to share with you the upshot of
12 that. Again, you've heard this but to just set the stage for
13 more of what you'll hear today. You may again hear counsel
14 referencing 801(d)(2)(E), and that is simply a way of reminding
15 you -- and, by the way, when that happens it may be that one
16 attorney makes that objection, but the others are joining.
17 Even though you didn't hear Mr. Tedmon saying that yesterday,
18 just so it's clear for you and for the record, he joins in
19 those objections.
20 And, really, it's a reminder to you that ultimately
21 your job when you retire to deliberate, which will be several
22 weeks, hopefully sooner rather than later, several weeks from
23 now, it will be to not consider the evidence against any given
24 defendant unless the Government proves beyond a reasonable
25 doubt -- and this is with respect to the conspiracy charge --

1 that there was a conspiracy, that that defendant was a member
2 of that conspiracy, and the act or statement testified to was
3 in furtherance of the conspiracy.
4 So I'm not going to repeat that every time. I will
5 give you final instructions reminding you of that and
6 clarifying it. But that's what's going on when you hear that
7 statement from counsel again.
8 So thank you again for your patience with us. We are
9 now ready to go. Ms. Yang is back on the stand.
10 Ms. Yang, you were sworn yesterday. You continue to
11 testify subject to that oath. Understood?
13 THE COURT: All right. Mr. Morris.
14 KOU YANG,
18 DIRECT EXAMINATION (cont'd)
19 BY MR. MORRIS:
20 Q. Good morning again, Ms. Yang.
21 A. Good morning.
22 MR. MORRIS: Your Honor, I'm going to ask to admit
23 Government's Exhibit 201. It is covered by the stipulation.

2 MR. SAMUEL: Just a moment, Your Honor.
4 MR. GREINER: Yes, objection. 801(d)(2)(E), Judge.
5 THE COURT: All right. Overruled. It will come in.
7 From Kou Yang To Charles Head CC Domonic McCarns
8 Subject: UPDATES admitted into evidence.)
9 THE COURT: All right. You may display 201, it's
10 admitted.
11 Q. BY MR. MORRIS: Ms. Yang, if you would take a moment
12 and review the e-mail on the screen in front of you, and when
13 you've had a chance to review it, I'll ask you some questions
14 about it.
16 Q. Do you have an understanding of what it is that you
17 are saying in this e-mail?
18 A. Yes.
19 Q. What is that that you're talking about?
20 A. I was talking about two loans that we have at a
21 lender.
22 MR. GREINER: Objection to "we."
23 THE WITNESS: Two loans --
24 THE COURT: Overruled. But can you get a general
25 definition of "we." I don't think we can prevent Ms. Yang from

1 using that so why don't you do some definition work right now.
2 Q. BY MR. MORRIS: You've been using the word "we" a
3 lot, and so I wonder if you could explain -- let's focus it
4 right now on this timeframe, April of 2005. When you say "we
5 had at a lender," who do you mean "we"?
6 A. In this particular case, when I say "we" I mean the
7 company, Head Financial, Charles Head, Domonic McCarns, me.
8 You know, we all processed this loan. And they brought it to
9 me. I processed it. So we were all involved.
10 Q. You were explaining the e-mail.
11 A. We had two loans at the bank, and the property in
12 Tucson, Arizona was reduced down to 90 percent, and then the
13 one in Riverside we had at 100 percent, and the reason why we
14 did it that way was because we can prove that -- or we can try
15 to prove to the bank that they were going to live in the --
16 that the buyer was going to live in the Riverside property
17 because it's more believable that way.
18 Q. Okay. So then if we can then -- if you could explain
19 then. How does that question of the believability of owner
20 occupancy, how does that relate to this 90 percent and this
21 100 percent that's in the first sentence?
22 A. Because the lender will --
23 MR. GREINER: Objection. Speculation. Lack of

1 MR. GREINER: Move to strike.
2 THE COURT: The jury shall disregard the beginning of
3 that answer. You may lay a foundation if you're able.
4 Q. BY MR. MORRIS: In the course of your employment in
5 the mortgage industry, did you become familiar with the loan
6 and the loans that you processed when a lender would or
7 wouldn't fund a loan?
8 A. Yes.
9 Q. And in your experience in your processing of loans
10 during that time period, were there certain criteria that would
11 affect them, would affect the funding of loans?
12 A. Yes.
13 MR. SAMUEL: Vague as to time.
14 MR. GREINER: Objection. Lack of personal knowledge
15 and speculation to the lender.
17 Q. BY MR. MORRIS: You can answer.
18 A. There were guidelines from the bank on which they
19 will approve a loan, and they would give a particular loan
20 100 percent financing if it was an owner-occupied property.
21 So as long as we can prove that it is an
22 owner-occupied property, we can obtain 100 percent financing.
23 Q. Okay. And so when you say Tucson had to be reduced
24 to 90 percent, what are you saying there?
25 A. What I was saying is because we cannot prove that

1 they're going to live in the Tucson property, so because the
2 guidelines say that if it's not an owner occupied, then they
3 will only lend 90 percent, and we would have to come in with 10
4 percent down.
5 Q. And why did you use the term "more believable"?
6 A. Because the borrowers reside in California. And so
7 to buy a property and live in Riverside, California is much
8 more believable than to buy a property and live in Tucson
9 because they worked in California.
10 Q. Are you aware of who this person is, Vu?
11 A. Yes.
12 Q. Who is that?
13 A. I believe that was Simone Vu.
14 Q. And based on your involvement in this transaction,
15 was Ms. Vu planning to live in Tucson?
16 A. No.
17 Q. And based on your understanding of your involvement
18 in this transaction was Ms. Vu planning to live in Riverside?
19 A. No.
20 Q. So you previously said that somebody would live owner
21 occupied?
22 A. Yes.
23 Q. Was Ms. Vu going to be living in either of those
24 properties?
25 A. No.

1 MR. GREINER: Objection. Speculation, lack of
4 MR. GREINER: Move to strike. Admonish the jury.
5 THE COURT: The jury shall disregard that answer.
6 Again, you can lay the foundation.
7 Q. BY MR. MORRIS: Back to the two previous questions.
8 Maybe I misunderstood you.
9 I think you said that based on your involvement in
10 this transaction and your knowledge of who Ms. Vu is, is that
11 how you knew that Ms. Vu was not going to be living in the
12 Tucson house?
13 A. Yes.
14 MR. GREINER: Same objection. Lack of personal
15 knowledge and speculation.
17 MR. SAMUEL: It assumes something not in evidence.
18 The 1003 document and what was stated on the 1003 document.
20 MR. MORRIS: I think your answer was "yes"?
22 Q. BY MR. MORRIS: And the same question with respect to
23 Ms. Vu and the Riverside house?

2 A. Yes.
3 Q. And so more believable, more believable for who?
4 A. For the bank.
5 MR. MORRIS: I'll be asking to bring in Exhibit 204,
6 Your Honor.
7 THE COURT: Mr. Tedmon, any objection?
10 MR. GREINER: 801(d)(2)(E), Judge.
12 MR. SAMUEL: Other than that, no objection.
14 MR. MORRIS: That's 204.
16 From Kou Yang admitted into evidence.)
17 Q. BY MR. MORRIS: If you would take a moment to review
18 the e-mail on the screen in front of you.
20 Q. Asking you to focus on the time period of this e-mail
21 April 18, 2005. I would like to go with you through the --
22 first go through who it's being sent to, and ask you if you
23 could help identify these people. So if we could start with
24 Xochitl Sandoval?
25 A. Yes, she was someone that worked at the office.

1 Q. The office being?
3 Q. Who is Brian Singleton, if you recall?
4 A. He also worked there.
5 Q. I think you've already discussed Charles Head, but
6 who, in your impression, was Charles Head at that time?
7 A. Charles Head is our boss.
8 Q. And what, if anything, was Domonic McCarns' role in
9 the office at that time?
10 A. He was someone that also worked there. He was an LO,
11 loan officer.
12 Q. Do you recall who Jeff is?
13 A. He -- I'm thinking Charles' cousin. Is it?
14 MR. TEDMON: Objection. She's speculating.
15 THE COURT: Sustained. The jury shall disregard.
16 THE WITNESS: I don't remember.
17 Q. BY MR. MORRIS: You don't recall, Jeff?
18 A. Yeah.
19 Q. Who is Josh Coffman?
20 A. He was also someone that worked there.
21 Q. What was his role at the office?
22 A. He was also another salesperson.
23 Q. And I think salesperson -- I think yesterday we --
24 A. Loan officer and salesperson are one and the same.
25 Q. Who was Justin Wiley?

1 A. He was also a loan officer.
2 Q. And looking at this April 2005 timeframe, who, if you
3 recall, was Keith Brotemarkle?
4 A. Keith was the manager for the loan officers.
5 Q. And was there anybody else named Kou Yang there?
6 A. No. Just me.
7 Q. Who is your recollection of Leonard Bernot?
9 Q. And who, if you recall, was Levender Parker?
10 A. He was also a loan officer there.
11 Q. Looks like there's two Liz Gonzalezes. Do you recall
12 who Liz Gonzalez was?
13 A. I don't remember who Liz Gonzalez is.
14 Q. Do you recall Liz Huerta?
15 A. Yes.
16 Q. Who is Liz Huerta?
17 A. She was also a loan officer.
18 Q. Do you have any other knowledge of Liz Huerta outside
19 of being a loan officer?
20 A. Yes, she was my friend.
21 Q. Do you recall who Pang Yang was?
22 A. Yes.
23 Q. Who was Pang Yang?
24 A. She was a junior processor.
25 Q. A processor. And so who would she have worked for in

1 the organization?
2 A. She would work for me. She would process loans.
3 Q. And Sandoval, do you recall who Sandoval would be?
4 A. Yes. That would be Omar Sandoval.
5 Q. What was his role in the organization?
7 Q. Do you recall who Scott might have been?
8 A. Yes.
9 Q. Who is Scott?
11 Q. And who, if you recall, was Velda Palm?
13 Q. And what is it that you're telling all these people
14 on this e-mail?
15 A. I sent them an e-mail letting them know that for all
16 the foreclosures that we are going to do from now on the equity
17 would have to be $50,000 or more in order for them to submit
18 the file, and that they would have to check their comps for the
19 properties up front and do all of their calculations so that we
20 all don't waste our time.
21 Q. Why, if you recall, did you send this e-mail?
22 A. I was informed by Mr. Charles Head to --
23 MR. GREINER: Objection. Hearsay as to Mr. McCarns.
24 MR. SAMUEL: Join.

1 THE WITNESS: Charles Head told me to send out an
2 e-mail informing everybody because he didn't want anymore loans
3 to come through that he wasn't making enough money on.
4 Q. BY MR. MORRIS: If we could go to the next page.
5 Same date. Now it looks about 10:38. Can you
6 explain to the jury what this e-mail is saying?
7 MR. GREINER: Judge, is that the second page of the
8 same exhibit or a different exhibit?
9 MR. MORRIS: Same exhibit.
10 THE COURT: Still in 204.
11 MR. GREINER: Okay.
12 Q. BY MR. MORRIS: What does that e-mail say?
13 A. I am telling everybody that all the loans that we
14 have in the system, that we currently have that we're
15 processing that have 50,000 or less in equity, we will go ahead
16 and finish those out. For all new files, we will not process
17 them.
18 MR. MORRIS: We can go to 212. And I will be asking
19 to admit that per the stipulation.
20 MR. TEDMON: 202?
21 MR. MORRIS: 212.

5 Domonic McCarns To Kou Yang; Charles Head;
6 eds@fundingforeclosures.com; Keith Brotemarkle Subject:
7 Reynolds/pointer – Everette, WA admitted into evidence.)
8 Q. BY MR. MORRIS: I would like to start at the bottom
9 of this June 10th e-mail. We've covered some of the people in
10 the "to" line, but I wonder if you can tell me if you recall
11 who is eds@fundingforeclosures.com?
12 A. That was Ed Shaffer.
13 Q. What was his role in the organization?
14 A. He was in charge of marketing.
15 Q. Are you familiar with a business by the name of
16 fundingforeclosures.com?
17 A. Yes.
18 Q. What was fundingforeclosures.com?
19 A. Fundingforeclosures.com was the business in which the
20 sellers or the homeowners will go and put in their information
21 if they are interested in the program, and that's where the
22 leads would come through.
23 Q. And so you used the word "funded" in this e-mail.
24 What does that word mean to you?
25 A. That word means that the loan is now closed.

1 Q. Okay. And what do you mean by closed? What is it
2 that -- what do you mean by closed?
3 A. It's finished. The bank has funded, and they are
4 going to be recording the deed at the county recorder's office,
5 and that the property now belongs to Reynolds.
6 Q. And do you recall or do you have an idea of why you
7 would have told Domonic McCarns that this loan had funded?
8 A. I told Domonic McCarns because he was the loan
9 officer on the loan.
10 Q. And why would you have told Charles Head that this
11 loan had funded?
12 A. Because I usually tell him on every file that the
13 funds --
14 Q. Why would have you told Ed that the loan had funded?
15 A. Because he was also one of the managers.
16 Q. And the same question for Keith Brotemarkle?
17 A. Because Keith was the loan officers' manager.
18 Q. And this reply from Domonic, I wonder if you could
19 try to circle that. Did you know Domonic -- you don't need to
20 zoom it out.
21 Did you know Domonic by a nickname?
22 A. Yes.
23 Q. What nickname did he go by?
24 A. Q.
25 Q. Did you know of anybody else in the Head organization

1 that went by that nickname?
2 A. No, just him.
3 Q. You can bring it down. I'm going to ask to bring up
4 10A5, which was admitted yesterday or the day before, Your
5 Honor, I believe.
6 THE COURT: It is in evidence.
7 Q. BY MR. MORRIS: I'm going to zoom it in a bit for
8 you. Do you recognize this type of document?
9 A. Yes.
10 Q. What is this document?
11 A. This is the form that they -- we check off --
12 Q. By "we"?
13 A. Of the processors would check off making sure that we
14 had each one of those items.
15 Q. Okay. And file name at the top, what does that
16 indicate to you?
17 MR. GREINER: Objection. Hearsay, lack of
18 foundation, lack of personal knowledge.
19 THE COURT: Sustained. Just start with the
20 foundation.
21 Q. BY MR. MORRIS: When you said that we, the
22 processors, would check this off, you're familiar with these
23 forms?
24 A. Yes.
25 Q. And you used these forms in the course of your job

1 duties at Head?
2 A. Yes.
3 Q. Did you fill these forms out?
4 A. Yes.
5 Q. And I think your prior testimony was that at some
6 point you became the head of processing?
7 A. Yes.
8 Q. The people that worked for you as processors, did
9 they fill these forms out?
10 A. Yes.
11 Q. Did you review these forms ever?
12 A. Yes.
13 Q. In all of that experience with these forms, what does
14 file name mean?
15 MR. GREINER: Same objection as to this specific
16 file.
18 THE WITNESS: The file name is the seller's name.
19 Q. BY MR. MORRIS: I think city and state might be
20 self-explanatory, so let me move to the last column. What does
21 "UW" mean?
22 A. That's underwriter.
23 Q. And what goes in that column?
24 A. That is the name of the loan officer.
25 Q. Looking at the entire page in front of you, do you

1 recognize any of the handwriting on the page?
2 A. Yes.
3 Q. Which handwriting do you recognize?
4 A. The one that's in the box at the bottom.
5 Q. When you wrote --
6 You say you recognize this as being your handwriting?
7 A. Yes, it is.
8 Q. Did you write this?
9 A. Yes, I did.
10 Q. When you wrote "wire $212,071.94," what did you mean
11 when you wrote that?
12 A. That is the total wire that the escrow company sent
13 to the sellers.
14 Q. Why are you keeping track of that number?
15 A. Because that is money that needs to come back to
16 Head.
17 BY MR. MORRIS: I'll be asking to bring in
18 Government's 224, Your Honor.
19 MR. TEDMON: No objection, Your Honor.
21 MR. GREINER: Just one moment, Judge. No objection.

1 Domonic McCarns To Ed Shaffer; Keith Brotemarkle; Kou Yang; Sam
2 Vu; Charles Head Subject: Thompson admitted into evidence.)
3 Q. BY MR. MORRIS: You can take a moment to review this
4 e-mail.
6 Q. What is it, based on your recollection, being
7 discussed in this e-mail?
8 A. Domonic McCarns is sending all of us an e-mail
9 informing us that the client who is the sellers went down to
10 the notary office and they have signed all of the documents
11 selling their property. He's pretty much telling us that in
12 the future if there's any issues with his loans, for us to let
13 him know and he will handle it himself unless he tells us
14 otherwise.
15 He's pretty much telling us that he has, you know,
16 gained a relationship with his clients, and that he knows how
17 to handle the problems, and he knows what to do to close the
18 deal within the company guidelines.
19 And then he went on to say that his client is
20 straight now and that the docs are signed and notarized.
21 Q. Stop you there. If you come back up, we were just
22 talking about this portion here. The sentence I've poorly
23 underlined.
24 What did that sentence mean to you when you read it?
25 MR. GREINER: Objection. Relevance. Her state of

1 mind is not relevant.
3 Q. BY MR. MORRIS: Okay. If you can cover this section
4 here. What's being discussed in that part of the e-mail?
5 MR. GREINER: Document speaks for itself, Judge.
6 Objection.
8 Q. BY MR. MORRIS: Okay. In your experience, what's
9 Ed's role in a transaction at Head Financial?
10 A. Ed's role was bring -- he was the marketing part of
11 it, so he brought in the lead.
12 Q. And what is Sam's role at Head Financial?
13 A. Sam was the person that processed the loan.
14 Q. And do you recall what role Sam played at the
15 company? I don't think we've discussed Sam yet.
16 A. Sam is the processor at the company.
17 Q. Does Sam -- we previously spoke about Simone Vu. Is
18 there a relationship between Sam Vu and Simone Vu?
19 A. No.
20 Q. And based on your recollection of this transaction,
21 what's Keith's role?
22 A. Keith is the manager of the loan officers, so he
23 would help them find a bank to send the loan to.
24 MR. GREINER: Objection. Lack of personal knowledge
25 and speculation.

2 Q. BY MR. MORRIS: And this part where it says "thanks
3 for managing the flow, Kou," what does that mean?
4 A. Um --
5 MR. GREINER: Objection, speculation.
6 Q. BY MR. MORRIS: Do you know what "managing the flow"
7 means?
8 A. Yes.
9 Q. What does managing the flow mean?
10 A. Pretty much making sure that everything was done
11 properly.
12 Q. So if Simone Vu and Sam Vu were not related, who is
13 Simone Vu?
14 A. Simone Vu is Domonic McCarns -- the mother of his
15 daughter.
16 Q. And did Simone Vu work in the office?
17 A. No.
18 Q. So what was her role in the documents we previously
19 looked at?
20 A. She was a straw buyer, a buyer.
21 MR. MORRIS: I'm going to ask to bring in 228.
24 MR. GREINER: Sorry, what number was it?
25 THE COURT: 228.

1 MR. GREINER: Just one second, Judge. No objection.
3 MR. SAMUEL: 801(d)(2)(E), Your Honor.
6 Domonic McCarns To Kou Yang Subject: RE: Updated payoff Lien #
7 1 on title admitted into evidence.)
8 Q. BY MR. MORRIS: If you would take a moment to review
9 the portion of the e-mail that I've zoomed in on.
10 A. (Witness reviewing document.) Yes.
11 Q. Do you recall what this e-mail was discussing?
12 A. Yes.
13 Q. What is it that this e-mail involved?
14 A. It was Domonic McCarns telling Emily, who was the
15 girl that would order all the payoffs, he's telling her, you
16 know, look at how fast I got the payoff with the stuff -- with
17 his charm, I guess, he was able to get it.
18 Q. What is a payoff?
19 A. A payoff is a letter from the lender telling Head --
20 or telling the company that's ordering it how much --
21 MR. TEDMON: Your Honor, I'm going to move to strike
22 the last answer because it's either the company or it's Head.
23 She needs to enumerate specifically.
24 THE WITNESS: The company, Head Financial.
25 THE COURT: All right. With that clarification.

2 THE COURT: The objection is acknowledged.
3 THE WITNESS: Okay. Telling Head Financial how much
4 it will be to pay off that loan.
5 Q. BY MR. MORRIS: And if you could take a moment to
6 review that and explain your response to Domonic?
7 A. Okay.
8 Q. What's your response?
9 A. I told Domonic -- I e-mailed him back and said that
10 Emily did not try to get the payoff for the loan that he's
11 referring to, and that I already had that payoff in the file.
12 And that the one that I was concerned about was the one that
13 was in bankruptcy, in the bankruptcy, and that was it. So I'm
14 asking him what -- why did he even send that e-mail.
15 Q. And what was his reply to your e-mail?
16 A. He pretty much asked me what am I talking about, and
17 that earlier this morning he had asked her to obtain the payoff
18 and -- because supposedly we had misplaced it the first time
19 that he got it for us. But he's saying that I -- I did it
20 myself and I was able to get it faster.
21 MR. MORRIS: I'll ask to bring in Government's 251,
22 Your Honor.
23 MR. SAMUEL: 251?
24 MR. MORRIS: 251.

4 MR. SAMUEL: Join.
5 MR. GREINER: And also, Judge, it's not relevant as
6 to Mr. McCarns due to the date.
7 THE COURT: All right. The objection is overruled.
8 The document may come in. The Court will provide instructions
9 that clarify date ranges.
11 10/19/2006 To Keith at Foreclosure Options; Kou Yang; Lisa
12 Vang; domonicm@nfcoptions.com; toddh@nfcoptions.com Subject:
13 RE: BUDOFF/Eggleton Appraisal Inquiry admitted into evidence.)
14 Q. BY MR. MORRIS: And if we could start on the second
15 page. If you would take a moment to review what's in front of
16 you.
18 Q. This e-mail, kouy@psloans.net, who is that?
19 A. That is me.
20 Q. What is psloans.net?
21 A. That is the new company that we were transferred over
22 to for the processing. It's -- I forgot what it was called
23 like Premier Services Loans or something to that effect.
24 Q. Do you recall approximately when you were transferred
25 to that company?

1 A. I believe it was in the Spring sometime.
2 Q. Spring of?
3 A. Or the Summer of 2006. Probably the Summer of 2006.
4 Q. Do you recall that transfer happening, the process of
5 transferring to the company?
6 A. Yes.
7 Q. Could you describe that transfer, please?
8 A. Charles Head came to us, the managers, and told us
9 that we were going to be moving to a different location. He
10 told us that the loan officers would be going to another
11 location in Costa Mesa, and that the processors would be going
12 to another location in Tustin. He informed us that we needed
13 to be separated, and he pretty much just told us there's an
14 office you guys just have to move there, and your new boss is
15 going to be Benjamin Budoff.
16 MR. GREINER: Judge, objection to that testimony
17 under 801(d)(2)(E) and relevance as to time.
18 THE COURT: All right. Those objections are noted
19 but overruled.
20 Q. BY MR. MORRIS: Did Charles Head say why he was
21 telling you this?
22 A. He said that he was selling the company.
23 Q. Did he say why?
24 A. Yes. He said that -- he was getting too much heat
25 from the FBI, and that he was going to sell off the company but

1 only in terms of ownership. He would still be our boss.
2 MR. GREINER: Judge, same objections to those two
3 last answers, this conversation has those same two objections.
4 THE COURT: All right. Noted for the record.
5 Overruled.
6 Q. BY MR. MORRIS: Did he say anything about whether
7 this was a permanent change or a temporary change?
10 THE WITNESS: He said that this would be a permanent
11 change.
12 Q. BY MR. MORRIS: Did he say whether -- this is just a
13 yes or no. Did he say whether he was leaving the industry
14 completely?
16 MR. MORRIS: Foundation. Yes-or-no question, Your
17 Honor.
19 THE COURT: Sustained. We've been going for a little
20 bit more than a half an hour. How much longer do you think you
21 need?
22 MR. MORRIS: I do have seven or so e-mails -- eight
23 e-mails, and then a series of wrap-up questions with
24 procedures.
25 THE COURT: All right. Just keep moving along.

1 Q. BY MR. MORRIS: Who is Kerry Budoff, if you recall?
2 A. Kerry Budoff was one of our straw buyers.
3 Q. And --
4 MR. GREINER: Objection to "our."
5 THE WITNESS: Well --
7 Q. BY MR. MORRIS: Right there. Do you recall who
8 domonicm@nfcoptions.com is?
9 A. Yes.
10 Q. Who is that?
12 Q. And if you could zoom out and go to the first page.
13 And if you could just review this sentence. Do you
14 understand what the expression "buyer is full" means?
15 A. Yes.
16 Q. What does that mean?
17 A. That means that this particular buyer -- we can no
18 longer put that buyer on anymore loans because they have too
19 many loans on their credit report already.
20 Q. What do you mean by too many loans on their credit
21 report?
22 A. Because the bank will not lend to a buyer --
23 MR. GREINER: Objection. Speculation, lack of
25 Q. BY MR. MORRIS: Let me tee this up. Again, the same

1 old questions about your experience throughout the years that
2 you worked in the mortgage industry at this company, what do
3 you mean by the "buyer is full" and "too many loans on their
4 credit"?
5 A. From my experience, when a buyer has too many loans
6 on their credit report, the bank will not lend to that buyer.
7 Q. And the time period of October 2006, who did you
8 consider your boss to be?
10 MR. MORRIS: Going to go to go 310.
11 THE COURT: Objection, Mr. Tedmon?
14 MR. GREINER: 801(d)(2)(E) and then relevance.
16 MR. SAMUEL: Same objection, Your Honor. What was
17 the exhibit number?
18 THE COURT: 310. The exhibit will come in over those
19 objections.
21 From Andrea Manriquez admitted into evidence.)
22 Q. BY MR. MORRIS: If I could ask you to think back to
23 the timeframe of May 2006. I'll see if we can skip folks we
24 have already talked about but ask you who these people are.
25 Do you recall who Beverly Rocheleau was?

1 A. Yes.
2 Q. Who was Beverly Rocheleau?
3 A. A loan officer.
4 Q. Do you recall Beverly Smith?
5 A. Yes.
6 Q. Who was Beverly Smith?
7 A. Another loan officer.
8 Q. Do you recall Brian Gatlin?
9 A. Yes.
10 Q. Who was Brian Gatlin?
11 A. Another loan officer.
12 Q. How about David Gabran?
13 A. I don't remember that name.
14 Q. How about David Parks?
15 A. Yes. He was another loan officer.
16 Q. And as of May 18th, 2006, what was your understanding
17 of Domonic McCarns' role in the organization?
18 A. At that time, he was a loan officer, but I think at
19 that time they had already moved him over to overseeing a few
20 loan officers.
24 THE COURT: The jury is instructed to disregard the
25 answer given the use of the word "I think."

1 Q. BY MR. MORRIS: Do you have recollection of whether
2 that move had happened?
3 A. Yes.
4 Q. And based on your recollection, what was Domonic's
5 role in May 2006?
6 A. He was in charge of a few of the newer loan officers.
7 He was supposed to guide them through the process.
8 Q. Do you recall who Donna Guerrero was?
9 A. She was a processor.
10 Q. And we have talked about Ed Shaffer. I think we've
11 talked about Emily Yang. Heather Blood. Do you recall Heather
12 Blood?
13 A. Yes.
14 Q. Who was Heather Blood's role?
16 Q. How about Heydi Yanez?
17 A. I don't remember her.
18 Q. Do you recall Jack Corcoran?
19 A. Yes.
20 Q. What's Jack Corcoran's role?
21 A. He was our CFO, our accountant.
22 Q. Joseph Palmquist?
23 A. Yes. He was one of our receptionists.
24 Q. Between the last time and this e-mail, had there been
25 any change in Keith Brotemarkle's role in the organization?

1 A. He was still the loan officers' manager. Everybody
2 -- all the loans went through him to come to final.
3 Q. Who was Ken White?
5 Q. Who was Olga Wilson?
6 A. Olga Wilson was the wife -- well, he worked with Jack
7 Corcoran.
8 Q. The wife of somebody who worked with Jack Corcoran?
9 A. No. Actually, he actually worked with Jack Corcoran.
10 She was his assistant. But how she came to the company was
11 she's the wife of the person that created the system. The IT
12 person.
13 Q. And then I'll ask to go to the fourth page of this
14 exhibit. Zoom in on the top half.
15 And just to the extent we haven't covered, let me hit
16 a few of these. What's your understanding of what
17 headmortgage.com was?
18 A. Head Mortgage was the loans part of it. We did all
19 the mortgages.
20 Q. And I think we have talked about
21 fundingforeclosures.com?
22 A. Yes.
23 Q. What is nationspm?
24 A. That is the property management part of the company.
25 They created a company that manages the properties.

1 MR. TEDMON: Objection, Your Honor. Move to strike
2 anything after "it's a property management company" as
3 non-responsive.
4 Q. BY MR. MORRIS: Who ran Nations Property Management?
5 THE COURT: Overruled. You can tie it up.
6 Q. BY MR. MORRIS: Who ran Nations Property Management?
7 A. Charles Head.
8 Q. Do you recall any other people who worked at Nations
9 Property Management?
10 A. Yes. Jack Corcoran.
11 Q. Do you recall what 50kperyear.com was?
12 A. Yes.
13 Q. What was that?
14 A. That was the initial e-mail that -- from
15 marketing that was the initial e-mail that they sent out to the
16 prospective sellers letting them -- I mean -- not sellers --
17 buyers letting them know that they could make up to 50K per
18 year.
19 Q. And what was 30kperyear?
20 A. The same thing. Just a different number.
21 Q. Do you recall who worked at 50kperyear or 30kperyear?
22 A. For 30kperyear it was Benjamin Budoff, and a few
23 other guys worked at 50kperyear.
24 MR. MORRIS: I would like to bring in 331, please,
25 Your Honor. Covered by the stipulation.

1 THE COURT: 331?
2 MR. MORRIS: 331.
8 MR. SAMUEL: Same objection.
9 THE COURT: All right. 331 is admitted over those
10 objections.
12 From Keith at Foreclosure Options To Kou Yang
13 Subject: RE: Please Submit: FERREYRA/TRAINOR admitted into
14 evidence.)
15 MR. GREINER: Judge, I would also make an objection
16 as to relevance as to time.
19 Q. BY MR. MORRIS: What are you saying in that e-mail?
20 A. What I'm telling Ben is that this particular file
21 that we have filed that there is a notice of default on their
22 title. And because of that the bank will only lend 90 percent.
23 We would have to come in with 10 percent down. And I'm telling
24 him that the guidelines for the bank says we can only -- the
25 only time that we can go 90 with 5 percent -- 90 percent from

1 the bank, 5 percent second, and a 5 percent down is if when
2 there is no notice of default.
3 Q. And if we could look at this reply from Keith. What
4 is Keith's reply?
5 A. Maybe they won't catch it.
6 Q. Do you have an understanding as you sit here as who
7 Keith would mean by "they" based on your involvement in this
8 e-mail?
9 A. The bank.
10 MR. MORRIS: Going to go to 333, Your Honor. Also
11 covered by the stipulation.
13 MR. TEDMON: Your Honor, just subject to the variance
14 issue as to all these e-mails that were past the date the
15 Government has established, no.
17 MR. GREINER: 801(d)(2)(E) and relevance as to the
18 time.
20 MR. SAMUEL: Same objections as to relevance because
21 that's a variance issue.
22 THE COURT: All right. The exhibit is admitted over
23 those objections.
25 From Keith at Foreclosure Options To Kou Yang; Lisa Vang;

1 benb@psloans.net Subject: RE: VOE MCELVEEN, TROY admitted into
2 evidence.)
3 Q. BY MR. MORRIS: If we could go to the second page,
4 please. If you could review the e-mail, and when you've had a
5 chance to review it, I'll ask you some questions.
6 A. Okay.
7 Q. On this e-mail, if we haven't covered it, who is Lisa
8 Vang?
10 Q. And at the time of October 2nd, 2006, what's your
11 understanding of Ben's role?
12 A. He was our boss.
13 Q. What's Keith's role?
14 A. He was our boss on the foreclosure side.
15 Q. And what was your role, as you understood it, at this
16 time?
17 A. I was the processing manager.
18 Q. What's a VOE?
19 A. That's a verification of employment.
20 Q. Do you understand or do you have a recollection of
21 what's being discussed in this e-mail?
22 A. Yes.
23 Q. What is it that's going on here, that is being
24 discussed in the e-mail?
25 A. Lisa sent an e-mail to everybody letting us know that

1 we -- this particular buyer works for the postal office, and
2 there is no way of us bypassing verification of employment
3 because with U.S.P.S. there is a system, a phone number that
4 you call to verify employment, and you put in the code, and
5 then the system will then tell you how much this person makes,
6 and --
7 Q. Okay --
8 A. -- because we have --
9 Q. That's all right. If you can zoom out and go to the
10 first page.
11 And do you understand what Keith was saying, what he
12 said in this in reply?
13 A. Yes.
14 Q. What was he saying?
15 A. He is telling us to either blackout or whiteout that
16 information and then to e-mail him the point file to redo.
17 Q. Based on your experience in this organization, why
18 would you want to blackout or whiteout information?
19 A. Because we do not want the bank to know that
20 information.
21 Q. Why not?
22 A. That would pretty much kill the deal.
23 Q. Why would it kill the deal?
24 MR. SAMUEL: Objection. Speculative, Your Honor, and
25 vague as to who.

2 MR. SAMUEL: Request it be stricken.
3 THE COURT: There's no answer yet.
4 Q. BY MR. MORRIS: Subject to the same questions I've
5 asked before. Based on your experience processing these loans
6 in this organization for the years that you processed it, why
7 would this kill the deal?
8 A. Because they stated or the loan officer stated how
9 much this buyer made. And in actuality, that particular
10 borrower does not make that amount.
11 Q. Zoom out, please. What are you saying here when you
12 discussed this with Keith, Lisa and Ben?
13 A. I'm telling them that there is no way that we can
14 bypass that phone verification.
15 MR. MORRIS: Bring it down. If we can go to 341. If
16 I could ask to admit 341 subject to the stipulation.
18 MR. TEDMON: Your Honor, subject to the variance
19 issue, no objection.
21 MR. GREINER: 801(d)(2)(E), relevance because of
22 time.
24 MR. SAMUEL: Join both.

1 objections.
3 Keith at Foreclosure Options To Kou Yang; benb@psloans.net
4 Subject: RE: 06-d75291 admitted into evidence.)
5 Q. BY MR. MORRIS: If we could go to page four, please.
6 If you can review this for a moment?
8 Q. Do you recall what Nova Star Mortgage was?
9 A. That was a lender.
10 Q. Was it a lender that you used as part of this
11 organization?
12 A. Yes.
13 MR. TEDMON: Objection. When he says "this
14 organization," there's several companies here that we're
15 talking about.
16 THE COURT: Sustained. The jury shall disregard the
17 answer.
18 Q. BY MR. MORRIS: Was it one of the lenders that you
19 used during the time period that we have been talking about so
20 far today?
21 A. Yes.
22 MR. TEDMON: Your Honor, same objection.
23 THE COURT: Can you use more precision in asking your
24 questions, Mr. Morris.
25 Q. BY MR. MORRIS: The lender that you, singular, you

1 personally used in the course of your employment?
2 A. Yes.
3 MR. TEDMON: Employment with who?
4 THE COURT: That's the point, Mr. Morris.
5 Q. BY MR. MORRIS: If you recall, when did you start
6 using Nova Star?
7 A. We started using Nova Star probably in late 2005,
8 2006.
9 Q. And when you started using Nova Star, who did you
10 work for?
11 A. I worked for Charles when we started, and then I
12 worked for Benjamin Budoff.
13 Q. So Nova Star was a lender during the time that you
14 worked for both of those companies?
17 Q. BY MR. MORRIS: What is DTI?
18 A. Debt-to-income ratio.
19 Q. And based on your experience processing loans through
20 the years that you've testified about, what does "reasonable
21 based on position and credit profile" mean?
22 A. That means that the income that we have stated for
23 the borrower is not reasonable for the position that they hold.
24 Q. And if you could then come to page one of this
25 exhibit. I'm going to ask you to look at this first, and then

1 I gotta go to the next page and come back.
2 In this e-mail from Pang to you, what does she ask
3 you?
4 A. To please advise.
5 Q. Zoom out, go to the next page.
6 And are we looking now at the same text we just
7 talked about?
8 A. Yes.
9 Q. Zoom out, please, and go back to the first page.
10 And how did you respond when she asked you to please
11 advise?
12 A. I then sent an e-mail to Ben and Keith letting them
13 know that we can't use this particular lender anymore on these
14 deals.
15 Q. Why not?
16 A. Because they are very particular, and we're not going
17 to be able to get approvals.
18 Q. Zoom out. Take it down.
19 MR. MORRIS: I'm going to ask to go to 345, Your
20 Honor. And there's only a couple more e-mails at this point.
22 MR. TEDMON: Subject to the variance issue, no.
24 MR. GREINER: 801(d)(2)(E) and relevance as to time,
25 Judge.

2 MR. SAMUEL: Join as to both.
4 objections.
6 Keith at Foreclosure Options To benb@psloans.net
7 CC Sam Vu Subject: RE: Morgan at Peoples admitted into
8 evidence.)
9 Q. BY MR. MORRIS: If we can go to page two. In this
10 e-mail from Ben, if you could review it and tell me what it is
11 that you and he are discussing.
13 Q. What are you discussing in this part of the e-mail?
14 A. Ben is sending us an e-mail that he received a phone
15 call from the bank telling us that they do not think that a
16 certified nurse's assistant has an income of 4700.
17 Q. And I'm going to ask to continue on the next page for
18 the rest of it. And what's the next sentence discussing?
19 A. (Witness reviewing document.)
20 Okay. He's saying that they are curious about the
21 down payment. They don't think that the buyer has that money
22 in her account. And then also the appraisal has a different,
23 you know, sales price.
24 Q. Zoom out. Previous page, please. And if you can go
25 to the first at the bottom. I'm going to have to ask you to

1 look across the page again.
2 So the bottom of the first page, this is a reply from
3 you to Ben?
4 A. Yes.
5 Q. And if we can go to the second page. What are you
6 telling Ben in this e-mail?
7 A. I'm telling him that when I put in the numbers, it
8 looks like 3500 will work.
9 Q. What do you mean by work?
10 A. Meaning that if we put that he makes $3,500, that his
11 debt-to-income ratio will still be okay.
12 Q. Zoom out. Go back to the next page prior.
13 And how does Ben respond to you?
14 A. He's telling me that it's too high, and now we're
15 asking Keith what he thinks.
16 MR. MORRIS: Take it down. I'm going to ask to admit
17 Government's 349.
19 MR. TEDMON: Just subject to the variance issue, no.
21 MR. GREINER: 801(d)(2)(E) and relevance as to time.
23 MR. SAMUEL: Join as to both.
24 THE COURT: All right. 349 comes in over those
25 objections.

2 From Benjamin Budoff To Kou Yang; Sam Vu Subject: RE: (Blank)
4 Q. BY MR. MORRIS: If you could take a moment and then
5 I'll ask you what this e-mail is talking about.
7 Q. What is it that's being discussed in this e-mail?
8 A. Sam, the processor, is sending myself and sending Ben
9 an e-mail letting us know that these particular checks will be
10 sent to him in the mail and he should be getting it.
11 Q. Based on your knowledge and your involvement, what
12 are these checks for?
13 A. These are the checks from the loans. Dana Capital is
14 the broker that we were going through, and they would send the
15 checks to us, and we would then forward them over to Ben
16 because he was the loan officer on file.
17 Q. And so, to your knowledge, where did this money come
18 from?
19 A. This money came from the loans that we funded.
20 MR. MORRIS: And last e-mail, 354, ask that that be
21 admitted subject to the stipulation.
22 MR. TEDMON: Your Honor, subject to the variance, no
23 objection.
24 MR. GREINER: 801(d)(2)(E) and relevance as to time.
25 MR. SAMUEL: Same.

1 THE COURT: All right. 354 comes in over the
2 objections.
4 Kou Yang To Lisa Vang; Keith at Foreclosure Options
5 CC benb@psloans.net Subject: RE: WILLIFORD/Dreyer Funding
6 inquiry admitted into evidence.)
7 Q. BY MR. MORRIS: In this e-mail, if you could review
8 it briefly and then I'll ask you some questions.
10 Q. What is a VOD?
11 A. That is a verification of deposit.
13 A. That means how much money does one have at the bank.
14 Q. And this section where Lisa is telling you it was the
15 company's money which sat there for Pinet to close, can you
16 explain what that meant?
17 A. That means that that was the company's money that we
18 sent over to the buyer to have in their account, so that when
19 the bank verifies it, they will have enough money in the
20 account to close the deal.
21 Q. Why do you need to have enough money in an account to
22 close a deal?
23 A. Because you need to have reserves. You have to have
24 a certain amount of money based on the loan amount in your
25 account liquid so that should -- you can pay your mortgage.

1 They want to know that you have money in the bank.
2 Q. Based on your experience processing loans over the
3 years you processed them at Head, what happens if those
4 reserves aren't in someone's account?
5 A. The loan will be denied.
6 Q. Now, I'm going to ask you to think back to yesterday
7 when you testified about somebody named Cindy forging
8 signatures, do you recall that testimony?
9 A. Yes.
10 Q. Is that the only instance that you can recall while
11 working at Head Financial where somebody forged signatures?
12 A. That is not the only time.
13 Q. Okay. In your experience, was forging of signatures
14 a common or uncommon experience there?
15 MR. GREINER: Objection as to time, people, company.
16 Vague.
17 MR. TEDMON: Join.
20 Q. BY MR. MORRIS: Let's start when you began at the
21 Long Beach location. In your experience, was forging
22 signatures common or uncommon at that point?
23 MR. GREINER: Same objection as to what people, what
24 time, what documents.

2 MR. MORRIS: I think her testimony about who was
3 there is established, and in light of that I think the
4 testimony will have whatever weight the jury wants to give it,
5 Your Honor.
6 THE COURT: So the question is construed as for the
7 entire period of time?
8 MR. MORRIS: Construed at Long Beach and the people
9 she testified working at Long Beach at that time.
10 THE COURT: With that clarification, objection
11 overruled.
12 THE WITNESS: When we started at Long Beach, we did
13 not forge. At the beginning we did not forge any signatures.
14 Q. BY MR. MORRIS: So when did you start forging
15 signatures?
16 A. Once we started doing the foreclosures.
17 Q. Who forged signatures other than Cindy, if anybody?
18 MR. TEDMON: Objection, Your Honor. If this is from
19 personal knowledge, that's one thing. I don't want her to
20 speculating.
21 MR. MORRIS: Limited to your personal knowledge.
22 THE COURT: That's understood, Ms. Yang?
25 THE WITNESS: To my personal knowledge, it did not

1 happen all the time because the sellers were sent a set of
2 escrow instructions and they signed them. There were only a
3 few select customers that were on the fence. Those were the
4 ones that they would sign for.
5 MR. TEDMON: Objection. Non-responsive. Move to
6 strike.
7 MR. GREINER: Join.
8 MR. SAMUEL: Join.
9 MR. GREINER: Also objection as to "they."
11 answer.
12 Q. BY MR. MORRIS: The question was, who in your
13 experience and personal knowledge forged signatures?
14 A. I don't recall particular people.
15 Q. Did you forge signatures when you worked there?
16 A. When I was asked to, yes.
17 MR. TEDMON: Objection. The question was: Did she
18 forge them or not?
20 MR. GREINER: Non-responsive.
23 Q. BY MR. MORRIS: Whose signature did you forge?
24 A. I do not remember.
25 Q. Who asked you to forge signatures?

1 A. Charles.
2 Q. Was that a common or uncommon experience?
3 MR. TEDMON: Objection. Vague as to time.
5 Q. BY MR. MORRIS: Still focusing on the time at Costa
6 Mesa?
7 MR. TEDMON: Wait. I thought we were in Long Beach.
9 Q. BY MR. MORRIS: Let me re-clarify. I think your
10 testimony was at Long Beach there wasn't forging going on.
11 A. No, there wasn't.
12 Q. And then once you moved on to Costa Mesa?
13 A. Uh-huh.
14 Q. So focusing on your time at Costa Mesa.
15 A. Okay. Well, at Long Beach there was a period of time
16 when everything was not like that. And then towards the end of
17 Long Beach was when it started to get a little crazy.
18 Q. Okay. So --
19 MR. TEDMON: Objection. Move to strike.
20 Non-responsive.
21 THE COURT: Overruled. You'll have your chance to
22 cross-examine.
23 Q. BY MR. MORRIS: So in your recollection, when did the
24 forgeries begin?
25 A. At the end of our stay at Long Beach.

1 Q. And did that correspond to any other changes that
2 were going on in the company at that time?
3 A. Yes.
4 Q. What was going on in the company when the forgery
5 started?
6 A. When we started doing foreclosures.
7 Q. Did the forgeries continue at the Costa Mesa office?
8 A. Only for a little bit of time, and then it did stop.
9 Q. Okay. You recall yesterday we talked about the
10 installation of a phone line to do verifications of rent. Do
11 you recall that testimony?
12 A. Yes.
13 Q. And do you recall testifying that you were verifying
14 rent for people that did not in fact rent through the company?
15 A. Yes.
16 Q. Let's go time-by-time here. During your time at Long
17 Beach, do you recall false verifications of rent happening in
18 instances other than the one we talked about yesterday?
19 A. There were a few times.
20 Q. After you started at Long Beach, did there come a
21 time where false verifications of rent became more common than
22 a few times?
23 A. Yes.
24 Q. Approximately when did that happen?
25 A. When we started doing foreclosures and the buyers

1 didn't have, you know, a way to verify their --
2 MR. GREINER: Objection. Non-responsive to the
3 question. This part.
5 MR. GREINER: Move to strike that.
6 THE COURT: Well, just --
7 Q. BY MR. MORRIS: The testimony was when you started
8 doing foreclosures?
9 A. Yes.
10 Q. Do you have any understanding --
11 Were you involved in false verifications of rent at
12 that time?
13 A. No.
14 Q. When did you become involved in false verifications
15 of rent?
16 A. At the end of Long Beach.
17 Q. Did you continue being involved with false
18 verifications of rent after the move to Costa Mesa?
19 A. Only in the beginning until Keith came on board.
20 Q. And focusing on instances that you were personally
21 involved with, do you have an understanding of why it is you
22 were falsely verifying people's rent? That's a yes or no.
23 A. Yes.
24 Q. Okay. What is your understanding of why it was that
25 you were falsely verifying people's rent?

1 A. We were falsely verifying their rent because if they
2 did not have a rental history for the last two years, then we
3 would have to make up verification for those last two years.
4 Q. Do you know if anybody else was involved in false
5 verification of rent? That's yes or no.
6 A. Yes.
7 Q. From your own personal knowledge, who else was
8 involved in falsely verifying rent?
9 A. The loan officers.
10 Q. Do you know whether or not -- and this is a yes or
11 no.
12 Do you know whether or not anybody other than you and
13 the loan officers knew about the false verifications of rent?
14 MR. SAMUEL: Objection, Your Honor. I don't believe
15 that -- I think that's leading.
16 THE COURT: Just state the objection.
17 MR. SAMUEL: It assumes something not in evidence,
18 and it's broad as to all loan officers. Unless she has
19 personal knowledge, there is no foundation for it.
20 THE COURT: Sustained. You may rephrase.
21 Q. BY MR. MORRIS: Which loan officers -- going back a
22 question -- of loan -- your testimony being loan officers did
23 the false verifications?
24 Do you recall any particular loan officers who were
25 involved in falsely verifying rent?

1 A. You mean -- okay, when you say falsely verifying the
2 rent, you mean somebody will call and they would verify it, or
3 they would -- because when you have a verification of rent,
4 most of the time the paperwork is good enough for the bank.
5 It's only in a -- so it's the -- the employment is what they
6 call for.
7 But the rental -- the verification of, you know, rent
8 will be fine. So they don't actually call in nobody for the
9 rent. Nobody actually got on the phone and say they live here.
10 So it was a document that was filled out.
11 Q. Who filled out those documents?
13 MR. SAMUEL: Objection. Vague.
16 THE COURT: The objections are overruled. It's
17 overruled given the answer that's been given, but Mr. Morris
18 may follow up.
19 Q. BY MR. MORRIS: If you can clarify with particular
20 names or if you can't?
21 A. All the loan officers were like the Mike Heads, the,
22 you know, Domonic McCarns. Because you have to submit a full
23 file.
24 Q. All right. And to the question I was getting at
25 then.

1 Other than you, and other than the people that you've
2 testified about, the loan officers who were involved in these
3 false verifications, do you have have knowledge of whether
4 anybody else in the organization, in the company, in Head
5 Financial, knew about the false verifications of rent?
6 MR. SAMUEL: Objection. Speculative.
7 THE COURT: Just answer that question yes or no.
8 THE WITNESS: Yes.
9 Q. BY MR. MORRIS: How do you know that other people
10 knew about the false verification of rent?
11 A. Because they were the ones that told us to do it.
12 Q. And who was it that told you to do it?
13 A. Keith Brotemarkle and Charles Head.
14 Q. I would like you to think back to yesterday, talked
15 about verification of employment. Do you recall that?
16 A. Yes.
17 Q. And you recall talking about having falsely verified
18 employment?
19 A. Uh-huh. Yes.
20 Q. False verification of employment, was there more than
21 one instance of false verification of employment in your
22 experience?
23 A. Yes.
24 Q. Then going to the beginning at Long Beach, was false
25 verification of employment a common practice when you were at

1 Long Beach, when you started at Long Beach?
2 A. When I started, no.
3 Q. Did it become more common over time?
4 A. Yes.
5 Q. When did it become more common?
7 Q. To your knowledge, were you the only person doing
8 false verification of employment?
9 A. No.
10 Q. Okay. Do you recall any other people specifically
11 who were engaged in falsely verifying employment?
12 A. Yes.
13 Q. Who were those people?
14 A. I remembered Mike Head, Omar Sandoval. Those are the
15 only names that I can remember.
16 Q. Other than you and Mike and Omar, do you have
17 personal knowledge of anybody else who knew that false
18 verification of employment was being done?
19 A. Yes.
20 MR. SAMUEL: Speculative.
21 THE COURT: Well, the "yes" answer is accepted.
22 Q. BY MR. MORRIS: So you have personal knowledge of
23 other people who knew about it?
24 A. Yes.
25 Q. Who knew about it based on your personal knowledge?

1 A. Charles Head.
2 Q. We've spoken, I think, several times about
3 overstating income on loan applications.
4 Other than the instances that we've talked about over
5 the last two days, are there any other times that you were
6 involved in loan applications that overstated income?
7 A. Yes.
8 Q. Going back to the beginning at Long Beach, was
9 overstating income a common practice at that time?
10 A. No.
11 Q. Did it eventually become more common?
12 A. Yes.
15 Q. Other than you, do you have personal knowledge of
16 other people who were involved in overstating income on loan
17 applications? And that's just a yes or no.
18 A. Yes.
19 Q. Based on your personal knowledge, who do you know of
20 who was involved in overstating income on loan applications?
21 A. All the loan officers.
22 MR. SAMUEL: Object, Your Honor. Once again, "all
23 the loan officers" is vague as to who she's referring to.
25 Q. BY MR. MORRIS: Can you name some specific loan

1 officers who you knew from personal experience were involved in
2 overstating income on loan applications?
3 A. Mike Head, Omar Sandoval, Domonic McCarns, Keith
4 Brotemarkle, Benjamin Budoff.
5 Q. Other than the people that you've talked about, are
6 you aware of anybody else who knew about the false -- or is it
7 the overstatement of income?
8 A. Yes.
9 Q. Who else, other than the folks you knew about or
10 talked about already, who else knew about the overstatement of
11 income?
12 A. Well, Keith and Charles Head.
13 Q. You talked a couple of times about owner occupancy,
14 and that you were trying to figure out who to claim owner
15 occupancy to make it more believable for the bank. Do you
16 recall that?
17 A. Yes.
18 Q. Other than those instances that we've specifically
19 spoken about here, were you involved in other instances where a
20 loan application falsely claimed owner occupancy?
21 A. Yes.
22 Q. Going back to when you started at Long Beach, when
23 you started at Long Beach was it a common or uncommon
24 experience for you to be involved in falsely claiming owner
25 occupancy on a loan application?

1 A. No.
2 Q. Did it become more common later?
3 A. Yes.
6 Q. From your personal knowledge, are you aware of any
7 people who were involved in those applications where you
8 falsely claimed owner occupancy?
9 A. Yes.
10 Q. Who was involved in transactions where those
11 representations were made?
12 A. Leonard Bernot, Omar Sandoval, Domonic McCarns, Mike
13 Head, everybody -- and then Benjamin Budoff, Keith Brotemarkle.
14 Q. Other than the people that you just listed, was there
15 anybody there who was aware of the fact that false
16 representations of owner occupancy were on loan applications?
17 A. Yes.
18 Q. Who was that?
19 A. Charles Head.
20 MR. MORRIS: May I have a moment, Your Honor?
23 Q. BY MR. MORRIS: We have now, I think, talked through
24 a lot of the process, and I would like you to focus at the end
25 of the process after what we talked about, which is the funding

1 you mentioned earlier.
2 You talked about a wire. There is a handwritten
3 notes about a wire. Can you tell the jury what would happen
4 when money was wired into the company at the conclusion of
5 these transactions funding?
6 MR. GREINER: Objection. Vague as to time. Vague as
7 to person. Vague as to file.
9 Q. BY MR. MORRIS: Focus on the time when you're doing
10 foreclosure transactions. If you could answer the question?
11 A. The amount that I wrote down, the wire amount, that
12 is the amount that the escrow company sent over to the sellers,
13 and then what the sellers were supposed to do was to then send
14 that back to the company minus what they were supposed to get
15 from the deal.
16 Q. What happened --
17 If you know, do you know what happened to the money
18 once it was sent back to Head Financial?
19 A. Yes.
20 Q. What would happen to that money once it was sent back
21 to Head Financial?
22 MR. TEDMON: Objection, Your Honor. There is a
23 multitude of transactions, so it's vague. If he wants to
24 identify a specific transaction, that's fine.
25 THE COURT: Sustained. Or a clear category of

1 transactions.
2 Q. BY MR. MORRIS: I'll ask you to focus on when --
3 focus the time when we're doing foreclosures, focus the time
4 when the company was at Costa Mesa, focus in on the 2005
5 timeframe.
6 In fact, I'll bring up 10A5, if we could. Let's
7 focus on this particular transaction. So using this as an
8 example where you talked about where you know where the money
9 came from, where would the money go -- in using this as an
10 example transaction -- after the money came into Head
11 Financial?
12 A. The money will then -- we will then disburse it
13 amongst the loan officers. The consideration usually -- the
14 sellers keep that part and only send the difference to us. And
15 then the loan officers will then be paid on their portion. And
16 then majority of the time Charles Head will take his --
17 MR. TEDMON: Objection, Your Honor. This is
18 non-responsive. It's not the majority of the time.
20 MR. GREINER: Move to strike that answer.
22 disregard the answer.
23 We have five more minutes until our break. I assume
24 you can get through your direct in that time?
25 MR. MORRIS: If I can get through the objections, we

1 can.
2 Q. BY MR. MORRIS: I'm going to bring up 5A1 for you.
3 Are you familiar with the Taylor transaction?
4 A. Yes.
5 Q. Are you familiar with this document?
6 A. Yes.
7 MR. GREINER: Judge, I would object as to the
8 timeframe as to Mr. McCarns. Request a limiting instruction.
9 MR. SAMUEL: Join.
10 THE COURT: As to timeframe?
11 Q. BY MR. MORRIS: This is the Taylor transaction. It's
12 404(b) as to Mr. Head. I'm going to use this and then go from
13 there to see if I can get testimony to talk about it.
14 THE COURT: This is 5A1?
16 THE COURT: All right. This exhibit was previously
17 admitted as to the Government's case against Charles Head. You
18 may recall that if you have a really good memory, or your notes
19 may reflect that.
20 So just to remind you of the instruction I gave then
21 that: This is evidence that Mr. Head committed other acts not
22 charged here. You may consider this evidence only for its
23 bearing, if any, on the question of Mr. Head's intent, motive,
24 opportunity, preparation, plan, absence of mistake, or absence
25 of accident, and for no other purpose. You may not consider it

1 as evidence of guilt of the crimes for which Mr. Budoff and
2 Mr. McCarns are now on trial.
3 Q. BY MR. MORRIS: Do you recognize this document?
4 A. Yes.
5 Q. Did you use this document?
6 A. Yes.
8 A. Yes.
9 Q. Whose handwriting is it?
10 A. Mine.
11 Q. Can you explain what the document shows?
12 A. This is a document that pretty much, you know, notes
13 all the money that was involved in this particular transaction,
14 the total amount that was wired to the sellers, the proceeds
15 that the sellers kept, and then the proceeds that go to the
16 buyer and what the balance is. And then on the net profit on
17 purchase is the 50 percent split between the loan officer and
18 Charles.
19 Q. You can bring that down.
20 During the time that you were processing loans after
21 that transaction, did the process for disbursing funds
22 afterwards change?
23 A. Yes.
24 Q. In what way did the process change --
25 When did the process change?

1 A. When we moved to Costa Mesa.
2 Q. In what ways did the process change from what you
3 just described on that transaction?
4 A. The loan officers were no longer getting 50 percent.
5 Q. Were they getting less than or more than 50 percent?
6 A. Less than.
7 Q. Were there any other changes in the process after you
8 had made the move to Costa Mesa?
9 A. Yes. In obtaining documents, yes.
10 Q. And what was the -- I should have been more clear.
11 Regarding the disbursing of funds, other than the
12 percentages was there any change in the disbursal of funds
13 after you moved to Costa Mesa?
14 A. Yes.
15 Q. What other changes were made in the disbursal of
16 funds after moving to Costa Mesa?
17 A. The loan officers were not paid right away. I
18 remember that. They were -- they were given a set amount,
19 like, if you fund one loan, you get a certain amount instead of
20 50 percent of the profit. So it was, like, for instance, for
21 example, if you fund one loan, you get $5,000.
22 Q. So other than the amount, were there any other
23 changes in the way funds were disbursed after a transaction
24 closed?
25 A. I'm not really familiar with that because now that

1 became an accounting issue. Once we moved to Costa Mesa, I was
2 kind of moved away from all of that and I concentrated on just
3 processing.
4 MR. MORRIS: I just have one or two more questions,
5 Your Honor, and then I'll be wrapping up.
6 Q. BY MR. MORRIS: Did you, in the time that you worked
7 at Costa Mesa, did you have access to the company bank
8 accounts?
9 A. Yes.
10 Q. Were you a signatory on the account?
11 A. Yes, I was.
12 Q. Are you aware of any company bank accounts that you
13 didn't have access to?
14 A. I'm -- I don't -- I'm not aware.
15 Q. In the course of the time that you were involved in
16 having access to those accounts, are you aware of wires coming
17 in and then going into a trust account?
18 A. No.
19 Q. Did you ever hear of any of the accounts at the
20 company being called a trust account?
21 A. No.
23 Your Honor, the only thing left is I would like, as
24 yesterday, for housekeeping purposes to read the stipulation
25 with respect to the 200 and 300 series of the e-mails into the

1 record, if the Court doesn't object or counsel doesn't.
2 THE COURT: These are stipulations. The Court has
3 reviewed them. Any objection to them being read into the
4 record?
5 MR. TEDMON: No.
6 MR. GREINER: No.
7 MR. SAMUEL: No.
8 THE COURT: All right. Those may be read.
9 MR. MORRIS: With respect to the e-mails in this
10 series of 200 to 258, it's stipulated between the parties that
11 the e-mails admitted pursuant to the stipulation from the
12 e-mail address or addresses or containing the following names
13 in the "to" or "from" line, those names being
14 domonicm@ngcoptions.com, Domonic McCarns and Domonic Q. McCarns
15 belonged to and were used by defendant Domonic McCarns.
16 The parties stipulate that all e-mails in the
17 Government's Exhibits 200 through 258 were sent to or from
18 defendant Domonic McCarns.
19 With respect to the 300 to 371 series, it's
20 stipulated between the parties that e-mails admitted pursuant
21 to the stipulation from the following names or e-mail addresses
22 or containing the following names in the "to" or "from" line,
23 those being bbudoff@30kperyear.com, benb@psloans.net, Ben
24 Budoff and Benjamin Budoff belonged to and were used by
25 defendant Benjamin Budoff.

1 The parties stipulate that the e-mails in series 300
2 through 371 were either sent to or from defendant Benjamin
3 Budoff.
4 No further questions, Your Honor.
5 THE COURT: All right. That brings us to the time
6 for our first break of the morning given when we started in
7 court. So let's take a 15-minute break.
8 During that break, please remember all of my prior
9 admonitions, no thinking about the case's ultimate conclusion,
10 no discussing it amongst yourselves, no research of any kind.
11 Have a good break. We will see you in 15 minutes.
12 (Jury out.)
13 THE COURT: You may step down, Ms. Yang. Please be
14 back in 15 minutes. Again, avoid any contact with jurors.
15 15-minute break. Recognizing that Mr. Morris took an
16 hour and a half for what he thought would be half an hour, just
17 for everyone's planning purposes do you have any estimate of
18 your time, Mr. Tedmon? Is this witness likely to take the rest
19 of the day?
20 MR. TEDMON: It's likely.
21 MR. SAMUEL: Yes.
22 THE COURT: That's the Court's assumption at this
23 point given the amount of time and the critical nature of this
24 witness.
25 Once we adjourn today with the jury, I do want to

1 review the witness list with you and at least know for now who
2 we know is not going to be called on the list, so we can start
3 to whittle down.
4 This is a critical witness. But after this week, a
5 lot of foundation is going to be laid, and I'm assuming the
6 scripts can tighten up to focus. So I'll see you in
7 15 minutes.
8 (Break taken.)
9 (Jury in.)
10 THE COURT: Welcome back, once again, ladies and
11 gentlemen. We are now going to turn to the cross-examination
12 of Ms. Yang beginning with Mr. Tedmon.
13 MR. TEDMON: That's correct, Your Honor.
15 BY MR. TEDMON:
16 Q. Ms. Yang, good morning.
17 A. Good morning.
18 Q. I want to start basically where you left off.
19 Mr. Morris was asking you questions about these wires
20 and where the money went. Do you recall those questions?
21 A. Yes.
22 Q. Okay. Now, during the period of time that you worked
23 for Head Financial, you are aware that Charles Head was
24 responsible for paying all of the overhead for the business,
25 correct?

1 A. Yes.
2 Q. All right. And that would include the time he was in
3 Long Beach, correct?
4 A. Yes.
5 Q. During the time the company was in Costa Mesa,
6 correct?
7 A. Yes.
8 Q. And then you testified that the company was
9 effectively sold off, and then it was moved to Tustin, I
10 believe, is that right?
11 A. Yes.
12 Q. And Mr. Head was not involved in that operation, was
13 he, as an owner?
14 A. As an owner, no.
15 Q. No. So somebody else would be responsible for the
16 financial overhead payments when it went to Tustin, true?
17 A. Yes.
18 Q. So when you indicate to the jury that Mr. Head
19 received, for example, 50 percent of the funds -- do you
20 remember that?
21 A. Yes.
22 Q. -- he had to pay for the office overhead, correct,
23 the rent, the electricity, correct?
24 A. Yes.
25 Q. Employee salaries, correct?

1 A. Yes.
2 Q. Withholding, correct?
3 A. I don't know what you mean.
4 Q. Well, taxes, he had to pay those, right?
5 A. Yes.
6 Q. Supplies, correct?
7 A. Yes.
8 Q. All of that, correct?
9 A. Yes.
10 Q. Nobody else did, the loan officers didn't, did they?
11 A. No.
12 Q. You didn't, did you?
13 A. No.
14 Q. Mr. Head did, correct?
15 A. Yes.
16 Q. Yes. So he had a much larger financial obligation as
17 compared to anybody else in Head Financial Services, correct?
18 A. Yes.
19 Q. Now, going back to when you started working, and I
20 want to focus your attention on when the office was in Long
21 Beach. This was earlier testimony yesterday, so I want to make
22 sure the jury is clear on the timeframe.
23 All right. When did you start working for Head
24 Financial Services? Month and year, if you know.
25 A. I don't remember the month, but it was in, I would

1 say, 2001, 2002. It's been a long time.
2 Q. Okay. Well, let me ask you this, you were out of
3 employment prior to coming in to work for Head Financial
4 Services, true?
5 A. Yes.
6 Q. All right. And you had a friend -- and have a friend
7 -- but had a friend at that time known as Elizabeth Huerta,
8 correct?
9 A. Yes.
10 Q. Her married name is now Russell?
11 A. Yes.
12 Q. And back at the time you started working for Head
13 Financial Services you were looking for employment, true?
14 A. Yes.
15 Q. And Charles Head's girlfriend and also the mother of
16 his child was Elizabeth Huerta, correct?
17 A. Yes.
18 Q. And you were very good friends with Liz, is how you
19 knew her, correct?
20 A. Yes.
21 Q. And so the way that you got referred over to Head
22 Financial Services was through your very good friend Liz
23 Huerta, correct?
24 A. Yes.
25 Q. And she was with Charles Head at the time, true?

1 A. At that time I do not think they were together
2 anymore.
3 Q. They had been together in the past?
4 A. Yes.
5 Q. And they had a significant relationship?
6 A. Yes.
7 Q. Okay. So that was the way that you were introduced
8 to Charles Head and the opportunity to work at Head Financial
9 Services was through Liz Huerta?
10 A. Yes.
11 Q. And you were hired, correct?
12 A. Yes.
13 Q. Now, Mr. Morris asked you about your prior
14 conviction, your state court conviction?
15 A. Yes.
16 Q. Do you recall that?
17 A. Yes.
18 Q. All right. And that was in 1998, true?
19 A. Yes.
20 Q. That was a state court conviction?
21 A. Yes.
22 Q. All right. For which you were sentenced?
23 A. Yes.
24 Q. It was a felony?
25 A. Yes.

1 Q. All right. You've completed your sentence and were
2 placed on -- was it probation or parole?
3 A. Parole.
4 Q. Parole. Okay. I want to clarify that because
5 Mr. Morris said probation. So you're on parole, correct?
6 A. Yes.
7 Q. Now, Mr. Head knew that, correct?
8 A. Yes.
9 Q. At the time you were hired?
10 A. Yes.
11 Q. In fact, he participated and cooperated with your
12 parole officer and yourself in terms of allowing you to have a
13 job, true?
14 A. Yes.
15 Q. He gave you an opportunity, correct?
16 A. Yes.
17 Q. All right. And you were thankful for that, correct?
18 A. Yes.
19 Q. All right. Now when you first started working there,
20 I think you testified it was primarily conventional loans, is
21 that right?
22 A. Yes.
23 Q. So can you explain to the jury, just so we're clear,
24 what you mean by conventional loans? And I'm restricting it to
25 what you did at Head Financial. Okay.

1 A. Conventional loans were just regular loans. Like,
2 for instance, if you needed to refinance your home, you would
3 come to Head Financial, and we would then refinance your home
4 for you, or, if you needed to purchase a home, you would come
5 to Head Financial, and we would obtain the loan for you, a
6 straight loan.
7 Q. All right. And that's what you did at the outset of
8 your employment with Head Financial Services, correct?
9 A. Yes.
10 Q. Now, also during that time you had other -- other
11 duties, would that be correct to say?
12 A. Yes. Yes.
13 Q. All right. For example -- and this is why you're --
14 while you're in Long Beach. I want to restrict it to that so
15 we don't get confused about the timeframe.
16 You handled payroll, is that right?
17 A. For a very short period of time because I don't
18 really know how to do it.
19 Q. But you did some of that?
20 A. Yes.
21 Q. You were also involved in doing the Quickbooks, the
22 accounting part of it?
23 A. For a very -- whatever he showed me was what I
24 learned how to do.
25 Q. Right. But you did that?

1 A. Yes.
2 Q. You processed loan files, which you've testified to?
3 A. Yes.
4 Q. All right. You interacted with lenders, correct?
5 A. Yes.
6 Q. You paid the mortgages?
7 A. Yes.
8 Q. Correct?
9 A. Yes.
10 Q. And as time went along, you became a supervisor of
11 the loan officers, true?
12 A. No.
13 Q. You did not. You were head of the loan processing,
14 were you not?
15 A. Of processing.
16 Q. Okay. So the loan processing is different from the
17 loan officers?
18 A. Yes.
19 Q. Let's stay with that for a second. Loan processing
20 is actually processing the documents?
21 A. Yes.
22 Q. And it's the interaction between you, on behalf of
23 Head Financial Services, and the lender?
24 A. Yes.
25 Q. From a document-exchange standpoint?

1 A. Yes.
2 Q. That would be fair to say?
3 A. Yes.
4 Q. Okay. The loan officers, would it be fair to say,
5 are more like salespeople?
6 A. Yes.
7 Q. Okay. And their job is to follow leads, correct?
8 A. Yes.
9 Q. All right. Did you have mortgage brokers come into
10 Head Financial Services while you were in Long Beach, as far as
11 you know?
12 A. No.
13 Q. Did you have people coming in from other companies
14 trying to sell loan programs?
15 A. Yes.
16 Q. All right. And they would talk to you, correct?
17 A. Yes. Because I would need to know the guidelines.
18 Q. Right. And that was true during your time at Long
19 Beach?
20 A. Yes.
21 Q. As well as Costa Mesa? Or not?
22 A. Yes.
23 Q. So both?
24 A. Partially. But once we moved to Costa Mesa, all of
25 that stopped.

1 Q. Because you went the direction of foreclosure?
2 A. Yes.
3 Q. How about Tustin? When you were at Tustin?
4 A. No. We did not have any representatives from
5 lenders.
6 Q. You did not. Okay.
7 Now with regard to the 1003s, these Uniform
8 Residential Loan Applications which we have seen?
9 A. Yes.
10 Q. You were involved with those, correct?
11 A. Yes.
12 Q. How were you involved with those?
13 A. I would -- once the loan officers were done filling
14 them out with the proper information, they would forward them
15 over, or they would tell me that, you know, this particular
16 file is ready, and then they would turn in a form for us to
17 order title, open escrow, and order appraisal.
18 Q. Okay. And the reason for the 1003s was to establish
19 what the financial picture was of the potential purchaser,
20 true?
21 A. Yes.
22 Q. All right. And during your time at Head Financial
23 Services, you forged those documents, did you not?
24 A. What do you mean?
25 Q. Well, the 1003 is supposed to be signed by the

1 potential purchaser, correct?
2 A. Uh-huh. Yes.
3 Q. All right. And then it's also supposed to be signed
4 by the interviewer, correct?
5 A. Yes.
6 Q. And the information contained on the 1003 is supposed
7 to be supplied or received from the potential purchaser, right?
8 A. Yes.
9 Q. All right. And you were involved in falsifying some
10 1003s during your time there, correct?
11 A. Most of it --
12 Q. Yes or no?
13 A. Yes.
14 Q. Now, you were charged in this case, true?
15 A. Yes.
16 Q. All right. And you pled guilty?
17 A. Yes.
18 Q. And you are pending sentencing, correct?
19 A. Yes.
20 Q. All right. So as part of your deal with the
21 Government, you are seeking a cooperation reduction in your
22 sentence, true?
23 A. Yes.
24 Q. All right. And that's fundamentally why you're here
25 today, correct?

1 A. Yes.
2 Q. All right. You know that your sentencing guidelines
3 are 108 to 135 months, correct?
4 A. Yes.
5 Q. And the Government, as part of your agreement, would
6 seek a reduction of up to 50 percent of what your sentence
7 would ordinarily be, correct?
8 A. Yes.
9 Q. And that's because of your cooperation, true?
10 A. Yes.
11 Q. All right. It's the Court that ultimately decides
12 your sentence, you know that, correct?
13 A. Yes.
14 Q. But you certainly are relying on the Government to
15 pitch a much lower sentence than you would otherwise get
16 because of your cooperation, true?
17 A. Yes.
18 Q. All right. Now, let's look at the timeframe of this.
19 You were charged in this case March -- I'm sorry -- February of
20 -- one moment, Your Honor -- I'm sorry, March 13th of 2008,
21 does that sound about right?
22 A. Yes.
23 Q. That was over five years ago, right?
24 A. Yes.
25 Q. Okay. And your attorney was a guy by the name of

1 Joseph Lowe, correct?
2 A. Yes.
3 Q. Is he still your attorney?
4 A. Yes.
5 Q. Is he here today?
6 A. No.
7 Q. He's not here. All right.
8 So you were charged and the case proceeded, correct?
9 A. Yes.
10 Q. All right. And in your interactions with your
11 attorney, Mr. Lowe, you reviewed all the discovery, correct?
12 A. Yes.
13 Q. And it was hundreds of thousands of pages of
14 documents, true?
15 A. Yes.
16 Q. A lot?
17 A. Yes.
18 Q. You had an opportunity to look at all that and review
19 a lot of witness statements, did you not?
20 A. Not everything. But for the most part, yes.
21 Q. And you persisted in your not guilty plea through
22 2009, correct?
23 A. Uh-huh.
24 Q. Is that "yes"?
25 A. Yes.

1 Q. Okay. And you persisted in your not guilty plea
2 through 2010, correct?
3 A. Yes.
5 2011, correct?
6 A. Yes.
8 2012, correct?
9 A. Yes.
10 Q. And in March of 2013, this year, you decided to plead
11 guilty, correct?
12 A. Yes.
13 Q. After had you a chance to look at all the evidence
14 and read all the witness statements, correct?
15 A. Yes.
16 Q. All right. Then you go to the Government and say,
17 "hey, I want a deal, I'll cooperate," through your lawyer,
18 true? Well, that's what you did, correct?
19 A. Yes.
20 Q. All right. And in fact, you entered a plea before
21 Judge Mueller on March 13th of 2013, do you recall that?
22 A. Yes.
23 Q. And that was your cooperation deal, right?
24 A. Yes.
25 Q. And now you're pending sentencing?

1 A. Yes.
2 Q. When is your sentencing date, if you know?
3 A. Right now it's been pushed out to January.
4 Q. Of next year?
5 A. Yes.
6 Q. January 2014?
7 A. Yes.
8 Q. All right. So you can continue to engage in your
9 cooperation before you're sentenced, right?
10 A. I don't know why it's been pushed out, but I'm sure
11 that's the reason why.
12 Q. You know you have to complete your cooperation before
13 you're going to get sentenced, you know that, correct?
14 A. I was told that I was coming back. They just told me
15 what date to come back on.
16 Q. All right. And keeping the March 13th date in mind,
17 that's the date you pled guilty, the first time you talked to
18 the Government about all of your observations and information
19 and so forth was March 12th, correct?
20 A. Yes.
21 Q. The day before you pled guilty, correct?
22 A. Yes.
23 Q. That was the first time you ever wanted to tell the
24 Government the truth, right?
25 A. Yes.

1 Q. And then you gave another statement on April 18th,
2 2013, do you recall that?
3 A. Yes.
4 Q. Now, going back to your March 12th statement, the
5 first one, about how long was that interview in terms of time?
6 A. Probably like two hours, maybe.
7 Q. Okay. And during that interview, Mr. Anderson was
8 present, correct?
9 A. Yes.
10 Q. And Mr. Morris was present, correct?
11 A. Yes.
12 Q. And an agent by the name of John Sommercamp was
13 there?
14 A. Yes.
15 Q. Was Special Agent Chris Fitzpatrick there, do you
16 recall?
17 A. I'm not sure.
18 Q. Okay.
19 A. I remember those three.
20 Q. And it lasted about two hours, is that right?
21 A. Yes.
22 Q. And your attorney, Mr. Lowe, was there as well,
23 correct?
24 A. Yes.
25 Q. And they covered a wide variety of topics, correct?

1 A. Yes.
2 Q. All right. And you told them everything you knew
3 about what they were asking, true?
4 A. Yes.
5 Q. You were given no limitations on what you could tell
6 them during that interview, correct?
7 A. Yes.
8 Q. That's correct?
9 A. Yes.
10 Q. All right. And then, likewise, on April 18th, your
11 second interview, how long did that interview last?
12 A. Maybe another two hours. An hour and a half, two
13 hours.
14 Q. Okay. And at that interview Mr. Anderson was there,
15 correct?
16 A. Yes.
17 Q. Mr. Morris was there?
18 A. Yes.
19 Q. Do you recall Agent Sommercamp being there?
21 Q. Okay. Was there a law enforcement agent there,
22 though?
23 A. I think so. I don't remember.
24 Q. Okay. Do you recall whether Special Agent
25 Fitzpatrick was there?

1 A. I think Sommercamp was there.
2 Q. You do?
3 A. Yes.
4 Q. Okay. And how about your attorney, was he there,
5 Mr. Lowe?
6 A. Yes.
7 Q. And for another two hours you went through these
8 various questions and you provided information, true?
9 A. Yes.
10 Q. And there was no limitation on what you could tell
11 them, right, they wanted to know all that you knew, correct?
12 A. On the first one. But on the second one, no.
13 Q. Okay. So between the two interviews, which lasted
14 approximately four hours --
15 A. Uh-huh.
16 Q. -- you had an opportunity to tell them everything you
17 knew, right, between those two interviews?
18 A. Yes. What I can remember, yes.
19 Q. Without limitation, correct?
20 A. Yes.
21 Q. Now, keeping that in mind, you testified this morning
22 that Mr. Head sold his companies, do you recall that?
23 A. Yes.
24 Q. All right. And do you recall when that was that he
25 sold his companies?

1 A. In 2006. I'm thinking like early Summer of 2006.
2 MR. TEDMON: All right. Your Honor, at this time I
3 would move Defendant's CH-R into evidence as covered by the
4 stipulation.
5 THE COURT: Any objection, Mr. Morris?
6 MR. MORRIS: No objection, Your Honor.
10 MR. GREINER: No objection, Your Honor.
11 THE COURT: All right. CH-R is admitted.
12 (Defendants' Exhibit CH-R, Business Records re: FCO,
13 Inc. Asset Purchase Agreements with Head Financial Services,
14 Inc. and Creative Loans, LLC admitted into evidence.)
15 Q. BY MR. TEDMON: Thank you. If we could have just
16 page one of CH-R on the screen, please.
18 MR. TEDMON: Your Honor, I'll use the ELMO. That's
19 fine.
20 THE COURT: All right. ELMO is a fancy word for
21 overhead projector, if you didn't know that already.
22 Q. BY MR. TEDMON: All right. This is a copy of the
23 original CH-R. Can you see that, Ms. Yang?
24 A. Yes.
25 Q. Okay. Now, I'm going to focus in, now that you've

1 seen the first page of a multiple-page document, into this
2 upper section, and that arrow -- well, strike that. That says
3 Charles Head, Director, correct?
4 A. Yes.
5 Q. All right. And you worked with Mr. Head for several
6 years, correct?
7 A. Yes.
8 Q. Okay. That is his signature, you would know that,
9 correct?
10 A. Yes.
11 Q. Now, this talks about a meeting, correct?
12 A. Yes.
13 Q. All right. And this portion here says "considering
14 an offer of sale of the corporation to FCO, Inc.," do you see
15 that?
16 A. Yes.
17 Q. "And the transaction thereat of all such other
18 business and so forth," correct?
19 A. Yes.
20 Q. Now, what this document represents is the sale of
21 Charles Head's businesses, Head Financial Services, Creative
22 Loans to other individuals, true?
23 MR. MORRIS: Objection. Calls for legal conclusion.
24 MR. TEDMON: If she knows.
25 THE COURT: Ask the foundational question.

1 Q. BY MR. TEDMON: Do you know who Mr. Head sold Head
2 Financial Services to?
3 A. Yes.
4 Q. Who was that?
5 A. Benjamin Budoff -- well, it depends -- sorry.
6 Q. Let me focus it, Your Honor.
7 Do you know who Lavar Fletcher is?
8 A. Yeah.
9 Q. Let me just ask the questions. All right. Do you
10 know who Lavar Fletcher is?
11 A. Yes.
12 Q. Lavar Fletcher was the owner of FCO, Incorporated,
13 correct?
14 A. Yes.
15 Q. And Head Financial Services was sold to FCO, Inc.,
16 who was owned by Lavar Fletcher?
17 A. Yes.
18 Q. And that's what this is talking about, this first
19 page of CH-R, correct?
20 A. Yes.
21 Q. All right. Now the date of the meeting is
22 August 11th, 2006, correct?
23 A. Yes.
24 Q. Does that sound correct to you in terms of your
25 recollection now of the timeframe that Mr. Head sold Head

1 Financial Services?
2 A. Yes.
3 Q. Then we're going to go to page two of the exhibit.
4 And this is a similar document to what we looked at on page
5 one, would you agree with that?
6 A. Yes.
7 Q. All right. And this talks about a special notice or
8 waiver of notice of special meeting of Creative Loans, correct?
9 A. Yes.
10 Q. And it also talks about the fact they're considering
11 an offer of sale of the company, Creative Loans in this
12 instance, to FCO, Inc., true?
13 A. Yes.
14 Q. And, again, you recognize that as being Charles
15 Head's signature?
16 A. Yes.
17 Q. And the date of the meeting is August 11, 2006,
18 correct?
19 A. Yes.
20 Q. Then later on in the document it has some specific
21 information, but I want to draw your attention to this portion
22 here. It says, "buyer's principal Freddie Lavar Fletcher,"
23 correct?
24 A. Yes.
25 Q. Now that buyer's principal is the owner of FCO who is

1 purchasing both Head Financial Services and Creative Loans,
2 correct?
3 A. Yes.
4 Q. And then I'm moving to the signature page of the
5 document. And it says, "in witness whereof the parties hereto
6 have executed this agreement as of the date first above
7 written." Now the date of the meeting was August 11th,
8 correct?
9 A. Yes.
10 Q. 2006?
11 A. Yes.
12 Q. Right. We have gone through that.
13 Now the date of the signature -- again, this is
14 Charles Head's signature, you know that, correct?
15 A. Yes.
16 Q. And the date is 8-22-06, correct, August 22nd?
17 A. Yes.
18 Q. And Freddie Lavar Fletcher's name is typed in there,
19 correct?
20 A. Yes.
21 Q. Under that it says FCO, Inc., true?
22 A. Yes.
23 Q. With the signature above it, true?
24 A. Yes.
25 Q. Now, do you know if that's Mr. Fletcher's signature

1 or not?
2 A. I don't know.
3 Q. All right. You have no reason to think it is not,
4 though, do you?
5 A. No.
6 Q. And he signed it on August 21st, 2006, correct?
7 A. Yes.
8 Q. All right.
9 THE COURT: Mr. Tedmon, is the highlighting on the
10 original?
11 MR. TEDMON: No, Your Honor. That's just for -- that
12 was for my reference purposes since we can't find the original.
13 But I will clear that with the jury.
14 All the highlighting that I've just shown is not in
15 the original document. That was for my purpose to find it, so
16 ignore the highlighting and look at the content. Thank you,
17 Your Honor.
19 Q. BY MR. TEDMON: So based on what we've seen in CH-R,
20 Mr. Head had sold the companies sometime between August 11th,
21 which was the meeting, and August 22nd, which was the last date
22 of the signature blocks, would you agree with that?
23 A. Yes.
24 Q. And that sounds correct as far as your recollection
25 goes?

1 A. Yes.
2 Q. All right. Now, you testified this morning that
3 Mr. Head told you he sold the companies off because he was
4 getting heat from the FBI?
5 A. Yes.
6 Q. That's what you testified to?
7 A. Yes.
8 Q. Okay. And you also testified that he told you he
9 would still be your boss, right?
10 A. Yes.
11 Q. And you testified that this change in ownership
12 Mr. Head told you would be a permanent change, correct?
13 A. Yes.
14 Q. All right. So by permanent change, was it your
15 understanding that he was no longer going to be an owner of
16 either company, is that what that meant?
17 A. No. When I said permanent, which meant the sale was
18 permanently like they were -- they made a sale.
19 Q. Right. The companies had been sold?
20 A. But I still talked to him about my --
21 MR. TEDMON: That's not my question. I move to
22 strike that as non-responsive.
24 disregard.
25 Q. BY MR. TEDMON: So you were clear in your own mind

1 the companies had been sold?
2 A. Yes.
3 Q. Mr. Head was no longer the owner?
4 A. Yes.
5 Q. And Lavar Fletcher had now taken over?
6 A. Yes.
7 Q. Okay. So let me ask you this, the comment that
8 you've testified to this morning about Mr. Head selling it
9 because he was feeling heat from the FBI?
10 A. Yes.
11 Q. During these four hours of interviews with the agents
12 you never said that, did you, you never told them that?
13 A. I did tell them that he sold the property -- I mean,
14 he sold the company. But I was never asked those specific
15 questions, and I did not --
16 Q. Well, Ms. Yang, I just asked you earlier, you were
17 able to give the Government statements without limitations, do
19 A. Yes.
20 Q. From like ten minutes ago?
21 A. Yes.
22 Q. All right. You had an opportunity and an obligation,
23 as a matter of fact, as a cooperator, to tell them everything
24 that you knew, correct?
25 A. Yes.

1 Q. And you did not tell them that Mr. Head sold the
2 companies because he was feeling heat from the FBI, did you?
3 A. No.
4 Q. And furthermore, you didn't tell the agents during
5 these four hours of interviews that Mr. Head told you that he
6 was still going to be your boss, did you?
7 A. No.
8 Q. First time you said that was this morning, right?
9 A. I have said it before.
10 Q. I'm talking about to the Government?
11 A. I have said it before.
12 Q. Well, did you have any other interviews other than
13 these two that I've spoken about?
14 A. No.
15 Q. So there wouldn't be a record of it then, would there
16 be?
17 A. There should have been because I did --
18 Q. Ms. Yang, there wouldn't be a record of it if you
19 didn't speak to them other than these two times, right?
20 A. I know that I did say that he sold the company.
21 Q. I didn't ask you if you told them he sold the
22 company. I've already covered it. You've already given your
23 answers.
24 Now, the fact of the matter is that -- well, strike
25 that.

1 Let's go back to the timeframe and make sure we clean
2 that up. As far as your recollection is concerned, when did
3 the Head Financial Services company move from conventional
4 loans to foreclosures, when did that happen?
5 A. Probably, say, in 2003 or -4 -- -4 -- I don't
6 remember exact dates because it's been a long time. But about
7 2004.
8 Q. Okay.
9 A. -5
10 Q. So is your best approximation 2004?
11 A. 2004. At the end of 2004, early 2005 maybe.
12 Q. Okay. Well, when did the company move to Costa Mesa?
13 A. Probably in 2005.
14 Q. So was the change to the foreclosure approach while
15 you were in Long Beach or not?
16 A. At the end of our stay in Long Beach was when the
17 foreclosures started.
18 Q. And about how long, it was a matter of months, weeks?
19 A. Probably a few months.
20 Q. All right. And then it was moved to Costa Mesa?
21 A. Yes.
22 Q. So would it sound right that you moved to Costa Mesa
23 maybe in 2005?
24 A. Yes.
25 Q. Okay. Now you started working for Charles Head

1 2001/2002?
2 A. Yes.
3 Q. Okay. And do you recall when, was it early, middle
4 or late that you started working as far as the time of year?
5 A. Probably early 2001.
6 Q. Okay. And as I've already asked you, you were
7 entrusted with several responsibilities with Head Financial
8 Services, correct?
9 A. Yes.
10 Q. All right. So in 2004, I want to fix your attention
11 on that, you were still in Long Beach, correct?
12 A. Yes.
13 Q. All right. And by that time, some three years after
14 your employment with Mr. Head, you were running the office,
15 correct?
16 A. I was running the processing, yes.
17 Q. You were running the operation?
18 A. The processing department.
19 Q. Well, okay. Did you oversee anything else in terms
20 of daily operations?
21 A. Making sure that supplies were ordered.
22 Q. What else?
23 A. Making sure that things were paid.
24 Q. Okay. What else?
25 A. Whatever that Charles asked me to do, I did.

1 Q. Well, but as part of your job duties -- let's stay
2 with the loan side of it --
3 A. Okay.
4 Q. -- you were responsible for running all of that,
5 correct?
6 A. No, I was not.
7 Q. You were not?
8 A. No.
9 Q. Well, you were a loan processor?
10 A. I was a loan processor.
11 Q. And I think you testified while in Long Beach you
12 indicated that you all worked in a big room on different desks,
13 do you recall that?
14 A. Yes.
15 Q. But Mr. Head had his own office?
16 A. Yes.
17 Q. He was separated from where you were?
18 A. Yes.
19 Q. Okay. How many people were working with or under you
20 while in Long Beach in the loan processing department?
21 A. At the beginning, it was just me, and then we hired
22 another processor like a year in, so that was two. And then
23 towards the end, we had about three other processors and I.
24 Q. Okay. And you say "by the end," you mean before you
25 moved to Costa Mesa?

1 A. Yes.
2 Q. And you were in charge of those folks?
3 A. I was in charge of the processing girls, yes.
4 Q. All right. And in fact, as far as the loan
5 processing goes, Mr. Head relied on you to make sure that ran
6 smoothly and appropriately, correct?
7 A. Yes.
8 Q. Now, moving on to 2005, we have established that the
9 office was moved to Costa Mesa, correct?
10 A. Yes.
11 Q. Okay. Was that early in the year?
12 A. I would say maybe Spring.
13 Q. Okay. March, April?
14 A. Something like that.
15 Q. All right. And explain to the jury after the move to
16 Costa Mesa how your department changed in terms of its size, if
17 at all?
18 A. We hired a few more girls.
19 Q. And that was at the outset of the move?
20 A. That was after the move, yes.
21 Q. Right. Okay. And so how many people were in your
22 loan processing division?
23 A. I think we were now at about, including myself, six.
24 Q. Six?
25 A. Five or six, yeah.

1 Q. Okay. And you were in charge of that loan processing
2 division?
3 A. Yes.
4 Q. Okay. And in fact, you were the one that was really
5 making all the decisions and calling the shots as it related to
6 loan processing, true?
7 A. When it came to loan processing, yes.
8 Q. Okay. And that ran the gamut from all these various
9 forms and documents that you've testified to regarding loans?
10 A. No.
11 Q. No?
12 A. No. Those forms were provided to us.
13 Q. Well, I know, but you were in charge of making sure
14 that they were processed, correct?
15 A. Yes. Processing is -- what they provide to us is
16 what we process. We can only process what is provided to us.
17 Q. And provided to you by whom?
19 Q. Okay. And so once you get that information, it's
20 your responsibility and you oversaw this to make sure all that
21 information was correct?
22 A. Yes.
23 Q. All right. And to follow up on VORs, for example,
24 verifications of rent?
25 A. I don't follow up on those. What happens is all the

1 files are supposed to be turned in with all of that information
2 already in it.
3 Q. Okay. But as a loan processor, and you're the head
4 of this division, before it's sent over to the bank or
5 interacting with the bank, that's part of your responsibility?
6 A. We had to make sure that the form was there in the
7 file.
8 Q. Right. Correct. And that was your responsibility or
9 at least the people that worked under you?
10 A. To make sure that the form was in the file.
11 Q. Right. So we're talking about verification of rent
12 forms, if appropriate?
13 A. Yes.
14 Q. Right. Verification of deposits, if appropriate,
15 correct?
16 A. Yes, uh-huh.
17 Q. Verification of employment, if appropriate?
18 A. Yes.
19 Q. The 1003 --
20 A. Yes.
21 Q. -- correct? The appraisal?
22 A. Yes.
23 Q. All right. Any --
24 A. Escrow instructions and the title.
25 Q. Exactly. Okay. And escrow instructions can include

1 anything from how the money is to be disbursed?
2 A. Yes.
3 Q. To pest reports? I mean, there can be all kinds of
4 stuff that goes through escrow?
5 A. Yes. Yes.
6 Q. So all of that is under your umbrella of authority?
7 A. Yes. Once the file is provided to me, yes.
8 Q. And in point of fact, Mr. Head was rarely, if ever,
9 involved in those day-to-day operations, that was your
10 responsibility, correct?
11 A. In terms of processing, yes, I was in charge of the
12 processing department.
13 Q. Right. In fact, you wanted to leave Mr. Head out of
14 that loop, didn't you?
15 A. No.
16 Q. You didn't. All right.
17 Well, Your Honor, I would ask to have admitted
18 pursuant to the stipulation defendant's CH-T. It's an e-mail
19 that's covered by the stipulation.
21 MR. TEDMON: Previously marked and provided to all
22 counsel.
24 MR. TEDMON: Your Honor, so the record is clear, the
25 parties have an agreement to stipulate the document into

1 evidence. We're going to have to do an amended stipulation to
2 include some of these other documents that are now coming in,
3 but it's covered within the context of the stipulation.
4 THE COURT: No objection?
5 MR. MORRIS: We will agree that we will stipulate to
6 this document, and we will be updating the stipulation with
7 this and others throughout the trial, I think.
9 MR. SAMUEL: I'll agree.
12 THE COURT: All right. CH-T is admitted.
13 (Government Exhibit CH-T, Email dated 5/19/2005
14 From Kou Yang To Pang Yang CC Keith Brotemarkle, Velda Palm
16 Q. BY MR. TEDMON: All right. Now, Ms. Yang, this has
17 been introduced in evidence as CH-T, do you see that? Do you
18 see that on the screen?
19 A. Yeah. But it's really small.
20 Q. We can't kind of cut and paste here, but I'll make it
21 bigger. I just wanted to give you the first page.
22 A. Okay.
23 Q. So let's zoom in. Can you read that a little better?
24 A. Yes.
25 Q. All right. Now at the top it's an e-mail from you,

1 Kou Yang, to Charles Head, do you see that?
2 A. Yes.
3 Q. And the date is May 19th, 2005, do you see that?
4 A. Yes.
5 Q. And then if we go further down the document -- and
6 let me do one other thing -- this was May 19th, 2005, and the
7 time is 6:35 p.m., do you see that?
8 A. Yes.
9 Q. All right. And then we go to the middle of page one,
10 and it's a string of e-mails. This is from you, Kou Yang, to
11 Velda Palm, do you see that?
12 A. Yes.
13 Q. Okay. And that's May 19th, 2005, 3:30 p.m., right?
14 A. Yes.
15 Q. Now who is Velda Palm?
16 A. She was a loan officer.
17 Q. She worked for you?
18 A. No. She -- well, she is a loan officer, so she
19 wouldn't work for me. She worked for Head Financial.
20 Q. Okay. So she was -- to use my terms, to keep it a
21 little more understandable -- she would be more on the sales
22 side?
23 A. Yes.
24 Q. As opposed to the loan processing side?
25 A. Yes.

1 Q. Okay. And then there's some other names here. Keith
2 Brotemarkle, do you see that?
3 A. Yes.
4 Q. Now I know you testified a little bit about
5 Mr. Brotemarkle, but who is Keith Brotemarkle?
6 A. Keith Brotemarkle was the manager for the loan
7 officers.
8 Q. That would be on the sales side?
9 A. On the sales side, yes.
10 Q. And you were in charge of the loan processing side?
11 A. Yes.
12 Q. In May of 2005, correct?
13 A. Yes.
14 Q. And then we've got Pang Yang, do you see that?
15 A. Yes.
16 Q. Who is Pang Yang?
18 Q. In your division?
19 A. Yes.
20 Q. Okay. So she was under your supervision?
21 A. Yes.
22 Q. And then also cc'd is Charles Head, correct?
23 A. Yes.
24 Q. Okay. Now, going to the bottom of the document, we
25 have the same date of May 19th, 2005, at 3:15 p.m., do you see

1 that?
2 A. Yes.
3 Q. And this is from you, correct?
4 A. Yes.
5 Q. To Pang Yang, correct?
6 A. Yes.
7 Q. And the cc is to Keith Brotemarkle and Velda Palm?
8 A. Yes.
9 Q. True?
10 A. Yes.
11 Q. On this particular string of e-mails Mr. Head is not
12 cc'd is he?
13 A. No.
14 Q. Now this comes from you, correct?
15 A. Yes.
16 Q. And says "subject voicemails," right?
17 A. Yes.
18 Q. And you indicate in here, (reading): I know it was
19 taken care of because I made sure myself. I don't know why
20 they don't have it. They are slow with mail over there. It
21 took three weeks for George to get disclosures after we called
22 for a whole week straight.
23 What are you talking about there, if you recall?
24 A. I don't remember.
25 Q. All right. And then it says, "Velda," and then it

1 continues on the next page. Starting here. See that there?
2 A. Yes.
3 Q. "Can you leave Charles out of the day-to-day
4 operation." You're telling Velda this, right?
5 A. Yes.
6 Q. Leave Mr. Head out of this day-to-day?
7 A. Yes.
8 Q. Now, this is in May of 2005, shortly after the
9 company was moved to Costa Mesa, right?
10 A. Yes.
11 Q. And you are instructing Velda Palm to keep Charles
12 Head out of the day-to-day operations, that's your directive,
13 correct?
14 A. When it comes to loan processing.
15 Q. That's what you're telling her, leave him out,
16 correct?
17 A. Because he doesn't process. That's why.
18 Q. Ms. Yang, you're telling her to leave Charles Head
19 out of the day-to-day operation, that's what it says, correct?
20 A. Yes.
21 Q. And then you go on, "I think I told you more than
22 once, talk to Keith and I."
23 Now Keith is Keith Brotemarkle, right?
24 A. Yes.
25 Q. Now, Keith Brotemarkle is the head of the sales side,

1 correct?
2 A. Yes.
3 Q. You're part -- you're head of the loan processing
4 side?
5 A. Yes.
6 Q. And this e-mail is telling Velda Palm, you have an
7 issue you come to Keith or me, right?
8 A. Yes.
9 Q. And keep Charles Head out of it, correct?
10 A. Yes.
11 Q. Because you and Keith were running the show, that's
12 why this is stated the way it is, correct?
13 A. No.
14 Q. It's not correct?
15 A. That is not correct.
16 Q. Does it say in here -- let's read on, (reading): I
17 believe that we have been trying to resolve this. You did not
18 have to e-mail him to let him know or tell him we are not going
19 to do our jobs. We did ours. And if Dana cannot find it, it
20 is out of our hands. We can resend it and hope that they get
21 to them.
22 Do you see that? Now you're scolding her for
23 contacting Mr. Head, correct?
24 A. Yes.
25 Q. Because you're keeping Mr. Head out of the loop,

1 that's why you're scolding her, correct?
2 A. This was one file out of a lot of files, and it was
3 pretty much just if they had a document. And in terms of tier
4 in the company, you go to one person, and then if we can't
5 handle it, then you go to the next person. We were the people
6 that she was supposed to speak to first. And if we couldn't
7 handle it, then we took it to Charles.
8 Q. I see. Well, Charles Head wasn't cc'd on this
9 e-mail, was he?
10 A. We cc'd him on it afterwards.
11 Q. He wasn't cc'd on it when you wrote it to her?
12 A. Yes.
13 Q. Yes or no?
14 A. Yes, he was not.
15 Q. So you're making decisions without the opportunity to
16 allow Mr. Head to know what you're doing along the way,
17 correct?
18 A. To find a copy of a file?
19 Q. Well, I'm asking about this e-mail. This is what
20 this e-mail shows, does it not?
21 A. About finding a copy of a file. That's not really
22 making a decision. That was a part of my job.
23 Q. Well, the e-mail speaks for itself.
24 Now, you were in Costa Mesa from approximately the
25 Spring of 2005 through August or so of 2006, does that sound

1 about right?
2 A. That sounds correct.
3 Q. Okay. And during the period of time that you were in
4 Costa Mesa, you were responsible for making sure the mortgages
5 were paid, correct?
6 A. Not -- no. Not at Costa Mesa. I only did it for a
7 short period of time and then somebody else was hired on to do
8 that job.
9 Q. Okay. That was Jack Corcoran?
10 A. Yes.
11 Q. So let me ask you this, if you moved to Costa Mesa
12 the Spring of 2005, let's say, February, March, something like
13 that, does that sound about right?
14 A. Probably.
15 Q. Approximately?
16 A. Yeah. Approximately.
17 Q. You were responsible for making sure the mortgages
18 were paid for a short period of time?
19 A. Yes.
20 Q. Few months?
21 A. Probably.
22 Q. And, in fact, they were all paid, correct?
23 A. Yes.
24 Q. All right. And it was ultimately handed over to Jack
25 Corcoran to make sure that the mortgages were paid, correct?

1 A. Yes.
2 Q. All right. Your Honor, pursuant to the stipulation,
3 can I have Government's Exhibit 127 entered into evidence,
4 please.
5 THE COURT: Any objection, just so it's clear,
6 Mr. Morris?
7 MR. MORRIS: No objection.
10 THE COURT: Mr. Greiner, do you know your position?
12 MR. TEDMON: It's a six-page document by the way,
13 Your Honor.
14 MR. GREINER: Judge for Mr. McCarns, it would be
15 801(d)(2)(E).
16 MR. SAMUEL: Also for Mr. Budoff, Your Honor.
17 THE COURT: All right. 127 comes in over objections.
19 From Kou Yang To Charles Head; Jack Corcoran Subject: CHARLES
20 MORTGAGES admitted into evidence.)
21 Q. BY MR. TEDMON: All right. If we can have page one
22 of that exhibit, please. All right. This is Government's 127.
23 I'm going to ask to expand the top portion.
24 This is an e-mail from you to Charles Head and Jack
25 Corcoran, correct?

1 A. Yes.
2 Q. And dated May 31st, 2005, correct?
3 A. Yes.
4 Q. All right. Now, looking at this e-mail, does that
5 give you a little better idea about when the files -- I'm sorry
6 -- strike that -- when the mortgages or responsibility for
7 paying the mortgages were handed off to Mr. Corcoran?
8 A. Yes.
9 Q. And that would basically be through the end of May,
10 and then it was handed off to him in June, would that sound
11 about right?
12 A. Yes.
13 Q. And you indicated here that this is an updated list
14 of all mortgages Charles is responsible for, correct?
15 A. Yes.
16 Q. Now, that's actually Head Financial Services,
17 correct, or the company's responsible for them?
18 A. Charles is Head Financial Services.
19 Q. Okay. You worked for Head Financial Services,
20 correct?
21 A. Yes.
22 Q. So the company is the one responsible for them?
23 Mr. Head is the owner?
24 A. Yes.
25 Q. But what I want to clarify is he's not personally

1 responsible, the company is responsible for paying them?
2 A. Yes.
3 Q. Okay. All right. And then it indicates "I paid all
4 of May so June is due," correct?
5 A. Yes.
6 Q. "Please make sure that all mortgages are paid monthly
7 before the last day of the month."
8 A. Yes.
9 Q. Correct? And it talks about "we never want our
10 investors to get a 30-day late on their mortgages," correct?
11 A. Yes.
12 Q. And just take that down. Thank you.
13 So what you're telling Mr. Corcoran is that it's
14 important to make sure these things are paid on time?
15 A. Yes.
16 Q. And you did that as part of your responsibilities for
17 a few months?
18 A. Yes.
19 Q. Right?
20 A. Yes.
21 Q. On behalf of Head Financial Services?
22 A. Yes.
23 Q. And after that, it was Mr. Corcoran's responsibility
24 to make sure they were paid on time?
25 A. Yes.

1 Q. Now that was May 31st of 2005. Later on, ultimately
2 in August of 2006 the companies were sold, correct?
3 A. Yes.
4 Q. All right. Now, I want to talk a little bit about
5 that. Once the companies were sold, you indicated, I believe,
6 that they were moved to Tustin, correct?
7 A. Yes.
8 Q. All right. When were the companies, as best you can
9 specifically recall, physically moved to Tustin?
10 A. In the Summer of 2006.
11 Q. So the company was sold on or about August 2006?
12 A. Uh-huh.
13 Q. And the companies were physically moved six months
14 later?
15 A. No. No.
16 Q. When did they get moved to Tustin?
17 A. 2006. And I said that we moved to Tustin in 2006, so
18 it's not the summer, and August is part of the summer.
19 Q. So they moved shortly thereafter?
20 A. Yes.
21 Q. And when you say the companies moved, you're talking
22 about Head Financial Services?
23 A. Yes.
24 Q. All right. Which was owned by Lavar Fletcher at that
25 point?

1 A. Yes.
2 Q. Which is also FCO, Inc., correct?
3 A. Yes.
4 Q. Creative Loans was moved?
5 A. Yes.
6 Q. Which was also owned by Lavar Fletcher, correct?
7 A. Yes.
8 Q. FCO, Inc., correct?
9 A. Yes.
10 Q. Any other companies that were moved to the Tustin
11 location?
12 A. No. Tustin did not come to -- Lavar did not come to
13 Tustin. Lavar's part of the company went to another location
14 in Costa Mesa.
15 Q. Okay. But a place separate and distinct from the
16 Head Financial Services Costa Mesa location?
17 A. Yes. A different one.
18 Q. All right. So when you testified about Tustin, what
19 was moved to Tustin?
20 A. Only the processing department.
21 Q. The processing department of what company?
22 A. Of Premier Services.
23 Q. Premier Services, you're certain about that?
24 A. Yes.
25 Q. Okay. And Premier Services was owned by Benjamin

1 Budoff?
2 A. Yes.
3 Q. All right. Was Benjamin Budoff there physically
4 present running Premier Services in Tustin, California?
5 A. No. Because he lived in Colorado.
6 Q. So he wasn't even there?
7 A. He was not there.
8 Q. Okay. Physically?
9 A. Physically he was not there.
10 Q. All right. Any other companies moved to Tustin other
11 than Premier Services?
12 A. No. Only the processing.
13 Q. Which was under the umbrella of Premier Services?
14 A. Yes.
15 Q. Now, you've spoken about an Ed Shaffer, do you recall
16 that?
17 A. Yes.
18 Q. Who is Ed Shaffer?
19 A. He was in charge of marketing.
20 Q. Marketing for what?
21 A. To get the leads in. He had -- he put up a website,
22 I guess. I wasn't really involved in that so -- but from what
23 I remember, he was in charge of getting the leads.
24 So once the leads came in on people that were
25 interested in the program, that his job was to do the leads.

1 Q. Okay. And Ed Shaffer worked with Keith Brotemarkle
2 pretty closely?
3 A. Yes.
4 Q. And that's while the office was in Costa Mesa,
5 actually even, correct?
6 A. Yes.
7 Q. Before it was sold and moved?
8 A. Yes.
9 Q. All right. One moment, Your Honor.
10 Now you testified yesterday, correct?
11 A. Yes.
12 Q. All right. And obviously you came here this morning,
13 correct?
14 A. Yes.
15 Q. Have you given any other statements to the Government
16 between your testimony yesterday and this morning?
17 A. No.
18 MR. TEDMON: Okay. I have nothing further, Your
19 Honor. Thank you.
20 THE COURT: All right. Mr. Samuel, are you next?
21 Mr. Greiner. All right. We will go for about
22 15 minutes and then take our second break, just so you know.
24 BY MR. GREINER:
25 Q. Good morning, Ms. Yang.

1 A. Good morning.
2 Q. I'm going to change how I was going to start talking
3 with you, so changing up a little bit. Pick up a little bit
4 where Mr. Tedmon talked to you.
5 And that was you talking to the Government prior to
6 you testifying. Okay?
7 A. Yes.
8 Q. And I don't want to repeat a lot. I'm going to try
9 to get right in and get right out with a lot of stuff.
10 But you told Mr. Tedmon that you talked to the
11 Government on or about March 15th of 2013, do you remember
12 that?
13 A. Yes.
14 Q. Okay. And you also told Mr. Tedmon that you talked
15 to the Government on or about April 30, 2013, do you remember
16 that?
17 A. Not the dates. Probably like April 18th or something
18 like that.
19 Q. April 18th. All right. We will go with April 18th.
20 Have you talked to the Government at any other time
21 prior to testifying?
22 A. Not yesterday but the day before I just looked at
23 some documents.
24 Q. What documents did you look at?
25 A. Some documents that Mr. Morris talked about earlier.

1 Q. So you looked at e-mails?
2 A. Yes.
3 Q. And did you talk to Mr. Morris about the e-mails?
4 A. Yes.
5 Q. And was your memory refreshed about the e-mails in
6 this discussion and conversation?
7 A. Yes.
8 Q. Agent Fitzpatrick, was he there?
9 A. No.
10 Q. Agent Sommercamp?
11 A. No.
12 Q. Was Mr. Anderson there?
13 A. Yes -- no, wait, Mr. Anderson was not there.
14 Q. Okay.
15 A. Like two days ago, Mr. Anderson was not there.
16 Q. So just you and Mr. Morris?
17 A. Mr. Morris and Peter, the Agent Peter. He's a new
18 agent.
19 Q. So a couple days ago you saw some e-mails and you had
20 conversation to refresh your recollection?
21 A. Uh-huh. Yes.
22 Q. Yes. Okay. And were you shown any other documents?
23 A. No. That was it. Everything that he showed me
24 today. That was it.
25 Q. Did you see anybody take any notes at that meeting?

1 A. No.
2 Q. Did you take any notes?
3 A. No.
4 Q. All right. Did you see any other documents at that
5 meeting?
6 A. No. Not that I recall, no.
7 Q. And the subject matter of the meeting that you had a
8 couple days ago was limited solely to the documents that
9 Mr. Morris showed you, correct?
10 A. Yes.
11 Q. Did you tell the Government, Mr. Morris and the FBI
12 agents, did you tell them anything else?
13 A. No.
14 Q. Now, when you spoke to the Government in March of
15 2013, you never told the Government that Domonic McCarns forged
16 any document, correct?
17 A. Yes.
18 Q. Yes, that's correct?
20 Q. And when you spoke to the Government in April of
21 2013, you never told the Government that Domonic McCarns forged
22 any documents, that's correct?
24 Q. And when you talked to the Government just two days
25 ago, you never told the Government that Domonic McCarns forged

1 any document, correct?
2 A. Correct.
3 Q. And when I talk about any document, I'm not talking
4 about verifications of rent, or verifications of employment, or
5 verifications or anything, or 1003s or anything, I'm talking
6 about you never said anything about Domonic McCarns ever
7 forging any document, ever, correct?
8 A. I was not asked, so, no, I --
9 Q. And you never volunteered that, did you?
10 A. There is a lot of information. So, I mean, if I'm
11 asked, then I can elaborate on it. But if I'm not asked, there
12 is a lot of information, and I -- I probably didn't. But, I
13 mean, I know that this was a common practice.
14 Q. Okay. You never told the Government a specific
15 document that you could point to, after reviewing the hundreds
16 of thousands of documents in this case before you pled guilty,
17 that Domonic McCarns forged, correct?
18 A. No. Correct.
19 Q. You never gave the Government a single piece of paper
20 from the discovery of hundreds of thousands of pages in this
21 case that you said Domonic McCarns forged that document right
22 there, did you?
23 A. No.
24 Q. And your plea agreement says that you're to be
25 truthful about everything, right?

1 A. Yes.
2 Q. And you are to be forthcoming and tell the
3 Government, right?
4 A. Yes.
5 Q. And your plea agreement is not limited to just
6 questions that the Government asks you, it doesn't say all we
7 want you to do is answer our questions truthfully, it doesn't
8 say that, does it?
9 A. No.
10 Q. It says you are to be truthful, right?
11 A. Right. But do you remember everything?
12 Q. I appreciate your question. But I'm not on the stand
13 and sworn as a witness, so I'll just get to ask questions.
14 Okay. I appreciate that.
15 All right. And even today you could not point
16 Mr. Morris to any specific document that Domonic McCarns
17 forged?
18 A. Mr. Morris? No. There were no documents that I was
19 shown today, no.
20 Q. And you didn't point him to any, did you?
21 A. Not to any specific document, no.
22 Q. When you were talking to Mr. Morris on direct
23 examination, you didn't say, oh, by the way, turn to page
24 426,822 in discovery, and that document I know Domonic McCarns
25 forged, you didn't do that, did you?

1 A. No.
2 Q. Okay. Now I'm going to -- let me talk to you about
3 something else really quick so I don't forget this.
4 In your direct examination and your testimony, you
5 keep saying loan officer and sales, and so I want to try to see
6 if we can get a good handle on this. Okay.
7 So what I'm going to try to do is, back in 2004 --
8 2003/2004, you were working for Head Financial Services,
9 correct?
10 A. Yes.
11 Q. And at that time, the way Head Financial Services was
12 being run was different than when it went through the
13 transformation stage to do the foreclosures, correct?
14 A. Yes.
15 Q. All right. So now let's talk about how it was run
16 before the foreclosure stage. And how it was run then was that
17 it was made up of Charles Head, correct?
18 A. Yes.
19 Q. You were there, correct?
20 A. Yes.
21 Q. And then there were, you've said, loan officers slash
22 sales agents, there, correct?
23 A. Yes.
24 Q. And those people, those sales agents were Omar
25 Sandoval?

1 A. Yes.
2 Q. Justin Wiley?
3 A. Yes.
4 Q. Justin Coffman?
5 A. Josh Coffman.
6 Q. Josh Coffman?
7 A. Yes.
8 Q. And Michael Head?
9 A. Yes.
10 Q. And Domonic McCarns wasn't there?
11 A. No. Not in Long Beach.
12 Q. He was not there, right?
13 A. Yes, you are correct.
14 Q. Okay. And how the Head Financial Services was
15 operating in Long Beach was that the sales agents, the people
16 that would go out and talk people into the financing of their
17 house or refinancing, they would actually go out and meet these
18 people one-on-one, right?
19 A. To sign the documents.
20 Q. To sign the documents?
21 A. Yes.
22 Q. Right. And they also then would bring the documents
23 back, and they would give the documents that were signed to
24 you, correct?
25 A. Yes. Once they were signed, they would bring them to

1 me. Yes, that's correct.
2 Q. Because there was nobody else in the office but
3 Charles Head, correct?
4 A. Yes.
5 Q. You, correct?
6 A. Yes.
7 Q. And then the sales agents, correct?
8 A. Yes.
9 Q. And how the payment was split in Long Beach was it
10 was split 50-50, correct?
11 A. Yes.
12 Q. It was split 50-50 with the sales agents and with
13 Charles Head, fair statement?
14 A. Yes.
15 Q. Okay. And it was the sales agents that also, in
16 conjunction with yourself, on occasion had to find banks to
17 make the loans, right?
18 A. Yes.
19 Q. Because there wasn't lines of demarcation at Long
20 Beach, you were all in a big office, right?
21 A. Yes.
22 Q. And so the sales agents and you have to find banks to
23 make the loans?
24 A. Yes.
25 Q. And have the loan documents filled out, correct?

1 A. Yes.
2 Q. And you have to submit those to the banks, correct?
3 A. Yes.
4 Q. And you have to get the title company going, right?
5 A. Yes.
6 Q. And all of this on a day-to-day basis, you're knee
7 deep in doing all of this work and helping people get it all
8 done, right?
9 A. When it comes to processing, yes.
10 Q. Well, not just processing --
11 A. Uh-huh.
12 Q. -- because there wasn't a line of demarcation. If
13 something needed to be done in Long Beach, you were the person
14 that was going to get it done, there wasn't anybody else,
15 right?
16 A. When it came to the paperwork, yes.
17 Q. Paperwork and we covered all the different areas of
18 the paperwork, right?
19 A. Right.
20 Q. Then the company changed. You talked to Mr. Tedmon
21 about it changed from doing the loans and the refinancing, it
22 changed over to doing foreclosures, right?
23 A. Yes.
24 Q. And in your mind, this is when the office moved from
25 Costa Mesa to Long Beach, right?

1 A. No. It went from Long Beach to Costa Mesa.
2 Q. I'm sorry. Did that three times last night. Went
3 from Long Beach to Costa Mesa, right?
4 A. Yes.
5 Q. Okay. And then in Long Beach several things
6 happened. The sales agents or the individuals that were
7 working, Michael Head, he was no longer in Costa Mesa, right,
8 he went to Arizona?
9 A. He actually worked in Costa Mesa for a few months.
10 Q. But then he left and went to Arizona?
11 A. Yes.
12 Q. And Omar Sandoval wasn't in the Costa Mesa office?
13 A. No.
14 Q. And Justin Wiley wasn't in the Costa Mesa office?
15 A. No.
16 Q. And Josh Coffman wasn't in the Costa Mesa office?
17 A. No.
18 Q. All right. And before I forget a fact, in Long Beach
19 the sales agents, the loan officers, they also had set up what
20 were called LLCs, right, you knew that?
21 A. Yes.
22 Q. And that's how the money came to the sales agents was
23 in through their LLCs, their limited liability corporations,
24 right?
25 A. Yes.

1 Q. Now as it moves from Long Beach to Costa Mesa, we've
2 already talked about the individuals that aren't there in Costa
3 Mesa, right?
4 A. Uh-huh.
5 Q. Correct?
6 A. Yes.
7 Q. You have to answer "yes" because the court reporter
8 has to get it down.
9 A. I said "yes."
10 Q. All right. Now, Domonic McCarns didn't start working
11 in Costa Mesa until February 1st of 2005, right?
12 A. I don't remember exactly when. But he came over
13 shortly after we came over to Costa Mesa.
14 Q. Okay. Well, he didn't come over from working for a
15 Head company, right, he came to work for Head on about
16 February 1st, 2005, fair?
17 A. Yes.
18 MR. GREINER: Judge, pursuant to the stipulation, I'd
19 ask to be admitted DM-S1 and DM-S2?
25 MR. SAMUEL: No.

1 THE COURT: All right. DM-S1 and -2 are admitted.
2 (Defendants' Exhibit DM-S1, Terms of employment
3 Domonic McCarns and DM-S2, Terms of Employment Creative Loans,
4 LLC admitted into evidence.)
5 MR. GREINER: Thank you. Could we have DM-S1 up on
6 the screen, please.
7 THE COURT: How much time do you need with this
8 exhibit?
9 MR. GREINER: Very short.
10 THE COURT: Why don't we cover this exhibit, and then
11 we'll take our break.
12 Q. BY MR. GREINER: Do you have it on your screen,
13 Ms. Yang?
14 A. Yes.
15 Q. And if we could enlarge that area. And on DM-S1 you
16 see the name of Domonic McCarns, right?
17 A. Yes.
18 Q. And you see the date February 1, 2005, correct?
19 A. Yes.
20 Q. And then "at will employment, 60-day trial period,"
21 do you see that?
22 A. Yes.
23 Q. And if we could enlarge it. And then do you
24 recognize Mr. McCarns' signature?
25 A. Yes.

1 Q. And that's his signature on the document, right?
2 A. Yes.
3 MR. GREINER: Judge, do you want to take a break now?
4 THE COURT: Let's do that. Let's take our second
5 break of the morning. Another 15-minute break.
6 As always, please remember my admonitions. I'll see
7 you back here in 15 minutes, and then we will adjourn at 1:30
8 today.
9 (Jury out.)
10 THE COURT: How much longer do you believe you need
11 Mr. Greiner? Just a reasonable estimate?
12 My question is, can we get through with this witness
13 today? If we could, that would be ideal.
14 MR. GREINER: I'm going to try everything I can,
15 Judge. I've got it marked out. I've got it done. The
16 Government took three-and-a-half hours with this witness.
17 Mr. Tedmon took some time. I'm going to do everything I can.
18 MR. SAMUEL: I still --
19 THE COURT: I understand that.
20 MR. SAMUEL: I would say no to be fair.
21 THE COURT: All right. Just looking at the schedule,
22 I think Ms. Schultz has posted this schedule, it was showing
23 next Tuesday dark. I definitely have conflicts later in the
24 day, but I could go for two hours Tuesday morning if you wanted
25 to do that. If the jury is available.

1 Now, if they've seen the calendar, they might have
2 made other arrangements.
3 MR. TEDMON: Your Honor, because I have been married
4 to the calendar the Court's giving us, I have clients coming in
5 on Tuesday. I could do it, but it would be really tough.
6 THE COURT: All right. We'll stick with the schedule
7 then. But we'll still talk about how to pick up after Ms. Yang
8 and start moving this along while giving the people enough
9 time. You get your fair share of the Court's time, but you
10 don't get the rest of the year.
11 (Break taken.)
12 THE COURT: All right. Let's bring the jury back in.
13 (Jury in.)
15 and gentlemen. This is our last leg for the day and for the
16 week. Mr. Greiner still has some more cross-examination. You
17 may proceed.
19 Q. BY MR. GREINER: Good afternoon, Ms. Yang.
21 Q. In the break, did you talk to anybody about your
22 testimony?
23 A. No.
24 Q. Did you see any documents?
25 A. No.

1 Q. All right. I apologize to you, apologize to
2 everybody in the courtroom. I thought this was covered. It
3 wasn't covered, so I've got to go back for a half second to
4 Long Beach.
5 A. Okay.
6 Q. Do you have it on your mind?
7 A. Yeah.
8 Q. Just a few points, and then we'll move ahead.
9 Long Beach, when I talk about Mr. Coffman, Mr. Wiley,
10 Mr. Sandoval, Michael Head, loan officers slash sales agents,
11 okay, that's what I want to talk about here. All right? Do
12 you have that in mind?
13 A. Yes.
14 Q. Okay. Now, they found investors, correct?
15 A. Yes.
16 Q. Okay. And they actually -- those individuals, when
17 they were in Long Beach in 2004, they actually did fill out
18 loan applications, right?
19 A. Yes.
20 Q. And those individuals, Mr. Wiley, Coffman, Sandoval
21 and Michael Head, they actually collected rent from people that
22 sold their property and the program to the company, correct?
23 A. Yes.
24 Q. And they also, if the situation presented itself,
25 Mr. Coffman, Mr. Wiley, Mr. Sandoval, Michael Head, they would

1 also either sell the property back to the people that were
2 renting, correct?
3 A. Yes.
4 Q. Or do eviction process if that was in order, correct?
5 A. Yes.
6 Q. And part of the reason in Long Beach in 2004 that
7 there was this 50-50 split was because half of the mortgage had
8 to be paid by the loan officer/sales agent, right?
9 A. Yes.
10 Q. And half to be paid by Charles Head?
11 A. Yes.
12 Q. If I could have Government's Exhibit 61, please. And
13 if we could just enlarge the top part, please.
14 And you talked to the Government about this exhibit,
15 right?
16 A. Yes.
17 Q. And on the second line where it lists the name of
18 Karie Joest, and if you go over four columns it has those two
19 figures, one in the 400s and one in the 200s, correct?
20 A. Yes.
21 Q. And that was because in 2004 the investor or the loan
22 officer/sales agents, having their limited liability
23 corporations, had to pay half of whatever the mortgage was on
24 the property, correct?
25 A. Yes.

1 Q. And Charles Head had to pay half, that was the
2 agreement, right?
3 A. Yes.
4 Q. And that's one of the reasons why it was this 50-50
5 split back in 2004 in Long Beach as far as paying the loan
6 officer/sales agents, correct?
7 A. Yes.
8 Q. Thank you very much.
9 All right. Now, Costa Mesa, 2005, showed you a
10 document, beginning of February 2005, Domonic McCarns. We
11 offered that, right?
12 A. Yes.
13 Q. Now, at that time in the office at Costa Mesa there
14 was yourself, right?
15 A. Yes.
16 Q. And Domonic McCarns?
17 A. Yes.
18 Q. And Brian Singleton?
19 A. Yes.
20 Q. And Charles Head?
21 A. Yes.
22 Q. And that was just about it, right?
23 A. Not at the beginning. Mike Head was there.
24 Q. Well, he might have been there, but he was going to
25 Arizona, right?

1 A. Yeah. I mean --
2 Q. And that's where he went, right?
3 A. Yes. He moved to Arizona.
4 Q. Okay. And Keith Brotemarkle, he came on a little bit
5 later after February of 2005, correct?
6 A. Yes. After we moved to Costa Mesa, they hired Keith,
7 yes.
8 Q. Okay. Now before they hired Keith, okay, things
9 still had to get processed, things still had to get done,
10 correct?
11 A. Yes.
12 Q. And Domonic McCarns' job was to talk to people on the
13 phone, right?
14 A. Yes. The sales part of it, yes.
15 Q. That was his job?
16 A. Yes.
17 Q. He wasn't to go out and meet people in the field,
18 right?
19 A. No. I don't recall, no.
20 Q. In fact, whatever leads he got at the beginning he
21 got because Charles Head gave it to him, right?
22 A. Yes.
23 Q. Okay. And then as the months started to go by, when
24 you're at Costa Mesa, then Keith came on board, would that be
25 fair?

1 A. Yes.
2 Q. Because Keith Brotemarkle came on board before Ed
3 Shaffer, true?
4 A. Yes.
5 Q. And when Keith came on board, some changes happened
6 in the company, right?
7 A. Yes.
8 Q. One of the changes was that Keith took over finding
9 investors, right?
10 A. Yes. The buyers? You mean investors?
11 Q. Buyers, investors. If we could have Government's
12 Exhibit 127.
13 MR. SAMUEL: Object. 801(d)(2)(E).
14 THE COURT: That objection is already recorded.
15 Correct?
16 Q. BY MR. GREINER: When you talked to the Government
17 about Document 127, you actually used the term "investors"
18 because at the time period in 2005 that's what they were to
19 you, you understood them to be investors, right?
20 A. Yes.
21 Q. In fact, from what you knew, people in the company
22 knew them as investors, right?
23 A. Yes.
24 Q. And as far as you knew, that's what Domonic McCarns
25 knew of people as investors, right?

1 A. Yes.
2 Q. Okay. Thank you.
3 Now in 2005 when Keith Brotemarkle comes on, he's the
4 one that's in charge with now finding the investors, correct?
5 A. Yes.
6 Q. Domonic McCarns was never in charge of finding any
7 investors when he worked for any of the Head Financial
8 companies, correct?
9 A. Correct.
10 Q. The other thing that -- I think you know this. If
11 you don't, then you can say you don't.
12 But the other thing that Keith took over was he hired
13 a couple people below him, Tua Vang was one, correct?
14 A. Yes.
15 Q. All right. And they would actually screen investors
16 and give information to Keith, correct?
17 A. Yes.
18 Q. And Keith was actually the one that would put an
19 investor to a certain property, isn't that right?
20 A. Yes.
22 A. Yes.
23 Q. And that wasn't Domonic McCarns' job, was it?
24 A. At that time, no. But he did do a few loans where he
25 was responsible for that part of it.

1 Q. Okay. Now, you tell the ladies and gentlemen of the
2 jury that he did a few loans. Tell them what loans he did?
3 A. Well, he did the loans for Simone Vu where he was the
4 one who took the application, and he was the one who brought
5 her to the table.
6 Q. Okay. Well, in reality, what happened was Simone Vu
7 met Charles Head --
8 MR. TEDMON: Objection. Your Honor. Counsel is
9 testifying.
11 Q. BY MR. GREINER: Simone Vu met Charles Head at a fund
12 raising event --
13 MR. TEDMON: Objection, Your Honor. No testimony to
14 that effect.
16 Q. BY MR. GREINER: You understand that Charles Head met
17 Simone Vu at some point in time, correct?
18 A. I did not know that Charles Head knew Simone Vu in
19 any sort of way.
20 Q. At all?
21 A. From my understanding and from what I knew was Simone
22 Vu is the mother of Domonic McCarns's child, and that's how I
23 knew her. But I don't have any information as to how Simone Vu
24 and Charles Head know each other.
25 Q. On the application that you're talking about, that

1 property never went through, correct, it never was approved?
2 A. I'm not sure. But I do know that Simone Vu did have
3 loans.
4 Q. But on the property you're talking about with Domonic
5 McCarns, that one never went through, isn't that correct?
6 A. I don't know which loan. There's so many loans.
7 Q. But you're the one that's testifying to the jury that
8 Domonic McCarns put Simone Vu on a piece of property, right?
9 A. He was the one who took the application.
10 Q. Tell the ladies and gentlemen of the jury if that
11 application actually went through?
12 A. What happens -- okay, so what happens in an
13 application is --
14 Q. I apologize. I don't mean to interrupt. But my
15 question is simple. Can you tell the ladies and gentlemen of
16 the jury if the application that Domonic McCarns did, that
17 you're testifying to was Simone Vu, went through? Yes or no?
19 Q. Now, at Costa Mesa, were Domonic McCarns' duties the
20 same as Scott Wagner's?
21 A. At the beginning, yes.
22 Q. Were they the same as -- I'm not sure how to
23 pronounce her name -- but Beverly Rocheleau?
24 A. At the beginning, yes.
25 Q. Beverly Smith?

1 A. Yes.
2 Q. Shayna Fischler?
3 A. Yes.
4 Q. David Parks?
5 A. Yes.
6 Q. Nick Cevant?
7 A. Yes.
8 Q. And none of those individuals had anything to do with
9 loan applications, did they?
10 A. No.
11 Q. Now when Ed Shaffer came on board at Costa Mesa, he
12 was involved in the marketing, that's what you told the jury,
13 right?
14 A. Yes.
15 Q. And one of the marketing techniques was the internet
16 50K, correct?
17 A. Yes.
18 Q. And Domonic McCarns wasn't involved in that, was he?
19 A. No.
20 Q. And another marketing technique was the 30K. Right?
21 A. Yes.
22 Q. And Domonic McCarns wasn't involved in that either,
23 was he?
24 A. No.
25 Q. Now processing is what you were in charge of, right?

1 A. Yes.
2 Q. Domonic McCarns had nothing to do with processing,
3 did he?
4 A. Not in the processing, no.
5 Q. He didn't report to you, did he?
6 A. No.
7 Q. And you didn't give him any job assignments as a
8 processor, did you?
9 A. No.
10 Q. And Domonic McCarns had no job duties to cut any
11 checks on behalf of the company, did he?
12 A. No.
13 Q. He didn't have any job duties to pay any bills,
14 correct?
15 A. No.
16 Q. During all the time that you worked at Costa Mesa and
17 in all of the loan applications -- which shorthand for loan
18 applications you've said many times is 1003, correct?
19 A. Yes.
20 Q. I just don't want the jury to get confused on that.
21 In all the time at Costa Mesa and all of the loan
22 applications that you saw, you never saw Domonic McCarns'
23 signature on any loan application, correct?
24 A. No.
25 Q. "No" being correct, right?

1 A. Yes.
2 Q. All right. Would you say that you -- in all of the
3 time that you worked for the companies that were owned by
4 Charles Head, that would cover a year of six, seven,
5 eight years?
6 A. From 2001 or -2 to -6. About five years.
7 Q. And you understood Charles Head trusted you?
8 A. Yes.
9 Q. And trusted your ability to make decisions on a
10 day-to-day basis?
11 A. When it came to processing, yes.
12 Q. Well, there were times when you made decisions in
13 other areas, right, because you were the only one there?
14 A. No. Because if there was something that needed an
15 answer on that -- that was not within my department, I would
16 ask for his opinion or I would ask him, and then he would then
17 direct me.
18 Q. Well, let's take, for example, you actually let the
19 employees go a half a day around the July 4th holiday in 2005,
21 A. Sure, yeah. I don't remember. But --
22 Q. Do you remember doing that? That you let the
23 employees go because the banks were closed, there wasn't
24 anything to do, and there is no sense in keeping people around,
25 right, and that's what you wrote and told Charles, I'm letting

1 them go?
2 A. I don't remember but if -- I mean, that's one date in
3 a long period of time. And if I did that, then, yes.
4 Q. All right. Let me have -- if we could put up
5 Government's Exhibit 201, please.
6 THE COURT: This is already in over objections. It
7 may be displayed.
8 MR. GREINER: Right. The objections have been made
9 so I'm just going to go for it.
10 Q. BY MR. GREINER: Now you talked to the Government
11 about this on direct, do you remember that?
12 A. Yes.
13 Q. And this e-mail is simply cc'd to Domonic McCarns,
14 right?
15 A. Yes.
16 Q. And this e-mail has no response attached to it from
18 A. Yes.
19 Q. If we could have Government's Exhibit 205, please.
20 -- I'm sorry, can we have Government's Exhibit 204.
21 All right. Government's Exhibit 204 you talked about
22 on direct, correct?
23 A. Yes.
24 Q. And dated April 18th of 2005, right?
25 A. Yes.

1 Q. That's when you're in Costa Mesa, right?
2 A. Yes.
3 Q. Okay. And when you went through this, you kept
4 saying loan officers about the people that were in the -- that
5 it was addressed to, do you remember that?
6 A. Yes.
7 Q. Okay. Those loan officers are actually telephone
8 sales agents, right, they are on the phone selling the product,
9 right?
10 A. Yes.
11 Q. And so when you use the term loan officer, you're not
12 using the term loan officer as a bank like Chase or Wells Fargo
13 would use it, right?
14 A. I don't know how they use it because I don't work for
15 them, but I know we referred to them as loan officers.
16 Q. But they weren't in the traditional sense of loan
17 officers -- let me back up.
18 You've already talked to the Government that you've
19 worked for years with banks and lending institutions, right? I
20 mean, you had daily contact with them?
21 A. Yes.
22 Q. And so daily contact with banks and lending
23 institutions, you know that they use different titles for
24 people that work there, right?
25 A. Yes.

1 Q. Funders?
2 A. Yes.
3 Q. Underwriters?
4 A. Yes.
5 Q. Closers?
6 A. Yes.
7 Q. Okay. You know that the people that were working in
8 Costa Mesa that were on the telephones, Domonic McCarns, that
9 was a sales agent selling the product, correct?
10 A. Yes. That is why I said loan officer slash sales.
11 Q. Right. But the loan officer part could be a little
12 bit misleading because they were on the phone selling, Domonic
13 McCarns was on the phone selling, right?
14 A. Yes. That was their job.
16 A. The loan officers' jobs, yes.
17 MR. GREINER: If we could have Government's
18 Exhibit 205, please.
19 THE COURT: I don't believe 205 is in yet.
20 MR. GREINER: It's not?
21 THE COURT: No. Are you seeking to admit it?
22 MR. GREINER: Well, if it's not in I won't talk about
23 it.
24 THE COURT: Does anyone else have a different record?
25 MR. TEDMON: It's not in --

1 MR. MORRIS: We agree, Your Honor.
3 Q. BY MR. GREINER: All right. Let's go to Government's
4 Exhibit 212.
5 THE COURT: This is in.
6 Q. BY MR. GREINER: This is an e-mail dated June 10th,
7 correct?
8 A. Yes.
9 Q. And it's from Domonic, correct?
10 A. Yes.
11 Q. To you and other people, right?
12 A. Well, no. I sent it. If you look at the bottom, I
13 sent it.
14 Q. Let's look at the very top. Doesn't the very top say
15 "from Domonic"?
16 A. Yes. He was responding to my e-mail.
17 Q. Okay. Then let me get it correct. You first sent an
18 e-mail out, correct?
19 A. Yes.
20 Q. And then Domonic responded, right?
21 A. Yes.
22 Q. And when Domonic responded, he responded to all of
23 the upper management in the company, correct?
24 A. Yes.
25 Q. All right. And Domonic is saying "mo money in,

1 that's what I'm talking about," right?
2 A. Yes.
3 Q. Because the only way he could make a living as a
4 sales agent was if he sold the product and the person bought
5 the product, right?
6 A. Yes.
7 Q. I mean, you've worked for Charles Head for years.
8 Charles Head wasn't going to give free money to anybody, right?
9 A. Yes.
10 Q. So Domonic McCarns had to earn his money, right?
11 A. Yes.
13 I don't think this has been admitted, but I would
14 admit it. It's Government's Exhibit 209. If there is no
15 objection.
21 MR. SAMUEL: No.
24 From Domonic McCarns To Pang Yang; Kou Yang; Heather Worch
25 CC Charles Head Subject: Disanto, John & Kelly admitted into

1 evidence.)
2 Q. BY MR. GREINER: All right. Now that's an e-mail
3 from Domonic McCarns, correct?
4 A. Yes.
5 Q. To you and two other people that worked under you,
6 correct?
7 A. Yes.
8 Q. All right. And they are -- or he's talking about the
9 DiSanto file, correct?
10 A. Yes.
11 Q. And he's telling you that there is a date and put
12 that date on the file, right?
13 A. Yes.
14 Q. Now, do you recall the DiSanto file?
15 A. Yes.
16 Q. All right. And you know that the DiSanto file, John
17 and Kelly, they actually bought their property back, didn't
18 they?
19 A. I'm not exactly sure. But if they did, then, yes.
20 Q. Okay. All right. Thank you.
21 I'm not sure this has been admitted, Judge, but it's
22 Government Exhibit 214.
23 THE COURT: It is not admitted.
24 MR. GREINER: So I would move for its admission.

8 From Kou Yang To Charles Head admitted into evidence.)
9 Q. BY MR. GREINER: And if we could go to the third page
10 of this exhibit, please.
11 Now this is a whole string of e-mails, okay, and if
12 you get confused, or you need to see all of it, we can, but I
13 just want to highlight a couple things if we can go through it
14 quickly.
15 What I've enlarged on the screen is part of the
16 e-mail that's from a Latasha Butts that's back in April of
17 2005, do you see that?
18 A. Yes.
19 Q. And this was connected to, at the very beginning of
20 the e-mail -- and we can go back if you want to see it -- but
21 your final e-mail to Charles Head, do you want to see that on
22 page one?
23 A. Yes.
24 Q. Okay. If we go back to page one.

1 Q. Okay. So it's a string of e-mails, and it ends with
2 you sending something to Charles, fair?
3 A. Yes.
4 Q. Now let's go to page three. In this portion of
5 Government's Exhibit 214 it shows an e-mail from Latasha Butts
6 on April 12th, 2005, do you see that?
7 A. Yes.
8 Q. Do you recall the Latasha Butts file by any chance?
9 A. Yes.
10 Q. She's in Florida, right?
11 A. Yes.
12 Q. And Latasha Butts was a loan officer for Option One
13 Mortgage, wasn't she?
14 A. Yes.
15 Q. All right. Thank you.
16 I don't think this one has been admitted either,
17 Judge. It's Exhibit 215, Government's exhibit.
21 MR. TEDMON: No.
23 MR. SAMUEL: No.

1 From Kou Yang; Keith Brotemarkle; Ed Shaffer; Charles
2 Head Subject: FW: Mckenzie (ff.com) admitted into evidence.)
3 Q. BY MR. GREINER: And I've highlighted the top portion
4 of that exhibit. Do you see that, Ms. Yang?
5 A. Yes.
6 Q. It's from Domonic McCarns, correct?
7 A. Yes.
8 Q. And to you and Keith and Ed and Charles, correct?
9 A. Yes.
10 Q. Again, all of the upper management at the company,
11 correct?
12 A. Yes.
13 Q. And it's talking about the McKenzie file. Do you
14 recall the McKenzie file?
15 A. Yes.
16 Q. McKenzie, that was Yolanda McKenzie, and that was in
17 Minnesota, do you remember that?
18 A. Yes.
19 Q. And you also remember that Yolanda McKenzie didn't
20 really want to come in the program because she wanted to try
21 another investor and see if that investor could help out,
22 right?
23 A. Yes.
24 Q. And she had a family member that could actually give
25 her money, but she was embarrassed to ask, do you remember

1 that?
2 A. Yes.
3 Q. And then finally she was getting up to the sale and
4 the foreclosure, and she was just going to lose her house,
5 right?
6 A. Yes.
7 Q. But instead of just walking away and losing her house
8 and getting a foreclosure on her credit report -- which would
9 happen, right?
10 A. Yes.
11 Q. I mean, you know, based upon all of your experience
12 that Mr. Morris has demonstrated to the ladies and gentlemen of
13 the jury, that if the house actually gets sold and put in
14 foreclosure that detrimentally affects a person's credit
15 rating, right?
16 A. Yes.
17 Q. So if an individual, based upon all of your
18 experience that Mr. Morris has demonstrated, if an individual
19 can keep from having a foreclosure on their credit rating, I
20 mean that's a benefit, isn't it?
21 A. Yes.
22 Q. Okay. And so in this situation, Ms. McKenzie, at the
23 final hour, she decided she was going to do the program, get a
24 little money out of it, and she wouldn't have a foreclosure on
25 her credit, isn't that right?

1 A. Yes.
3 Now, do you recall a file -- and it may be a
4 different first name so hold on for a second.
5 Do you remember a file or a client named Korall
6 Solares?
7 A. The Solares file rings a bell, yes.
8 Q. Would you know the first name as Kory Solares, would
9 that help?
10 A. I don't remember. What city is the property in?
11 Q. I'm going to be say either Clearwater, Florida or
12 just outside of Miami, Florida. Does that help?
13 A. Yeah. It's one of his initial orders. I remember.
14 MR. TEDMON: Objection. Can we clarify?
15 THE COURT: Mr. Greiner, a follow up question to
16 clarify.
17 Q. BY MR. GREINER: When you said "one of his," you were
18 talking about Domonic McCarns?
19 A. Yes.
20 Q. Correct. And by talking about it, is it refreshing
21 your memory to some degree?
22 A. Yes.
23 Q. Let me ask you this question, do you have any
24 recollection of who -- and I'll say Kory because that's on a
25 lot of the e-mails -- Kory Solares, who she had worked for when

1 she was just going through the foreclosure process?
2 A. I don't remember who she worked for. No.
3 Q. Let me try to refresh your memory without using any
4 names. Do you recall if her employment was at a law office?
5 A. She could have been. I don't -- I don't remember.
6 Q. If you don't remember, guessing doesn't help anybody.
7 You don't remember?
9 Q. All right. Then we won't talk about her.
10 When you were working at Long Beach -- not Long
11 Beach --
12 A. Costa Mesa?
13 Q. Yeah. When you were working at Costa Mesa and
14 Domonic McCarns was there. A series of questions regarding
15 that time period. Okay?
16 You knew, dealing with the various mortgage lenders
17 and the banks, that lending policies varied from institution to
18 institution, correct?
19 A. Yes.
20 Q. In fact, there was some banks that had very loose
21 requirements in that time period, correct?
22 A. Yes.
23 Q. And there were some that would almost on a daily
24 basis change whatever policies they had regarding how they
25 would accept loans, fair statement?

1 A. Yes.
2 Q. And you saw that in your day-to-day operation,
3 working in Costa Mesa, right?
4 A. I don't know about daily, but I do know that it does
5 happen.
6 Q. All right. Let's broaden it out. We'll go weekly,
7 monthly. You knew in that time period at Costa Mesa, before
8 you moved to Tustin, that the banks and the lending
9 institutions had lending policies that changed quite
10 frequently?
11 A. Yes.
12 Q. And those policies, when they changed, weren't to
13 tighten up the policies, but they were to loosen the policies,
14 correct?
15 A. Yes.
16 Q. Because from your vantage point, being the processor,
17 the banks and the lending institutions in that timeframe, 2005,
18 Costa Mesa, before you went to Tustin, the lending institutions
19 and the mortgage companies wanted as many loans as they could
20 get, right?
21 MR. MORRIS: Objection. Calls for speculation.
23 Q. BY MR. GREINER: Based upon all of your experience
24 that Mr. Morris has given to the ladies and gentlemen of the
25 jury, when you worked in Costa Mesa, from what you saw, you saw

1 lending institutions that wanted loans, as many as they could
2 get, fair?
3 A. I don't work for those lending institutions, so I
4 don't know what their -- what they were trying to do.
5 Q. And I appreciate your answer. But directing you back
6 to my question.
7 My question was, based upon all of your experience,
8 working in Costa Mesa 2005 through 2006, until you moved to
9 Tustin, from everything you saw working in the process
10 department, you saw lending institutions that wanted to have as
11 many loans as they could get, fair?
12 A. Yes. I guess. I can't be sure.
13 Q. Well --
14 A. I don't work for them, so I don't know what they -- I
15 was just -- I had a job, and I just did my job. I don't know
16 what the lenders want.
17 Q. And I didn't ask what the lenders want, did I?
18 A. You said from what I know, what did I think the
19 lenders wanted, and I don't know what they wanted.
20 Q. Then let me ask a better question.
21 From 2005 -- let's take February 1st, from when
22 Domonic McCarns started there.
23 From February 2005 until you moved to Tustin, about
24 the end of August 2006, based upon all the experience that
25 Mr. Morris has demonstrated to the jury, when you were in

1 processing, lenders would take as many files as they could from
2 your organization, is that fair?
3 A. No. Within guidelines.
4 Q. And those guidelines changed, we've covered that,
5 right?
6 A. Yeah. They would change from time to time. Yes,
7 they would.
8 Q. And they became looser as they changed, correct?
9 A. No. There were banks that were also making them
10 tighter. I mean, these were just what their guidelines are. I
11 can't answer for them. I don't know. I don't know.
12 Q. So your answer is you don't know?
13 A. I don't know.
14 Q. Okay. And you had mortgage brokers come to the
15 company and pitch for loans, right?
16 A. Not mortgage brokers.
17 Q. Lending brokers?
18 A. They were sales people that worked for lenders.
19 Q. And they would come to the company and pitch to send
20 us loan, correct?
21 A. Yes.
22 Q. And that would happen on a regular basis, right?
23 A. Not in Costa Mesa.
24 Q. Did it ever happen in Costa Mesa?
25 A. No.

1 Q. Not one time?
2 A. I do not recall. Only in Long Beach.
3 Q. All right. You are familiar with the program called
4 Catalyx?
5 A. No.
6 Q. You don't know what that is?
7 A. Is it the loan program?
8 Q. Did you use a program on a daily basis?
9 A. Yes.
10 Q. Was it named Catalyx?
11 A. I don't remember the name of the program.
12 Q. In February of 2005 to August -- the end of
13 August 2006 in Costa Mesa, who did you understand to be your
14 quality control person?
15 A. The quality control person?
16 Q. Yes.
17 A. We didn't have a quality. I don't understand.
18 Q. Weren't you the quality control person for the loan
19 processing?
20 A. For the loan processing, yes.
21 Q. Wasn't Keith the control person for investors?
22 A. Yes.
23 Q. And for loan applications?
24 A. Yes.
25 Q. And for finding banks?

1 A. Yes.
2 Q. And wasn't Ed Shaffer the quality control person for
3 doing the marketing to find the investors?
4 A. Yes.
5 Q. To give the investors to Keith?
6 A. Yes.
7 Q. I want to make sure that I've covered --
8 All right. Now, did you ever have any contact with a
9 Mike Mattice?
10 A. I'm sure that I did. He was a seller, was he?
11 Q. No --
12 A. I'm not --
13 Q. Do you have a recollection of who Mike Mattice is?
14 A. I don't remember, no.
15 Q. Do you have a recollection who Mark Wilson was?
16 A. Yes. Wilson. I remember Wilson. He was the IT guy.
17 Q. Okay. Do you have a recollection of who Amber
18 Ferrantello was?
19 A. Yes, she was a straw buyer.
20 Q. Well, she was an investor, that's how you know her,
21 right?
22 A. There's different names that you can use for them.
23 Q. And where these different names came from -- let's go
24 back.
25 When you talked to the Government back in March --

1 A. Yes.
2 Q. -- you never used the term straw buyer, did you?
4 Q. When you talked to the Government in April of this
5 year, you never used the term straw buyer, did you?
7 Q. The first time that you've used the term straw buyer
8 was testifying in front of the jury, correct?
9 A. Yeah. I've said --
10 Q. Because that's the term that you've heard the
11 Government in conversations with you?
12 A. No, sir. In our business, the business that we were
13 in, the loan business, straw buyer was commonly used.
14 Everybody that was in the loan business understood a
15 straw buyer to be someone that was purchasing a property that
16 they were not going to live in, that was not for them. It was
17 a terminology that you use commonly. So straw buyer is not the
18 first time I've heard it from them.
19 Q. And yet you never used the term when you talked to
20 the Government when you were under a plea agreement to tell
21 them the truth, correct?
22 A. Because the word "investor" --
23 Q. Just my question is simple. You never did that, did
24 you?
25 A. Yes.

1 Q. Did you ever talk to an Abraham Urena?
3 Q. Did you ever talk to a Michael Scanlon (sic)?
4 A. Yes.
5 Q. Okay. Who is Michael Scanlon?
6 A. I have not spoken to him, but I remember that file.
7 Q. Okay. And what file is that?
8 A. It's one of our files that we worked on. I cannot
9 give you date or time, but it is a file that we had in our
10 system.
11 Q. Other than knowing it's a file, you don't have any
12 recollection at all of who it is?
13 A. Because I don't talk to them.
14 Q. You don't --
15 A. No.
16 Q. -- have a recollection of who the file is?
17 A. No.
18 Q. Okay. How about Brett Cavillo?
19 A. No.
20 Q. How about Howard Peters?
21 A. No.
22 Q. How about Marjorie Sly?
23 A. I remember that name.
24 Q. What do you remember about it?
25 A. It was one of our files.

1 Q. And do you remember what file?
2 A. No.
3 Q. How about Kenneth Sly?
4 A. It's a name that sounds familiar, but I don't
5 remember.
6 Q. How about a Charmaine Ratcliff?
7 A. It's a name that I remember.
8 Q. But you can't connect anything to it, can you?
9 A. It's been eight, nine -- it's been eight years. I
10 don't remember.
11 Q. I understand. So can you connect it to anything?
12 A. It's a loan that we had in our system.
13 Q. Do you know which one?
14 A. No.
15 Q. Okay. How about Daniel Castillo?
16 A. It is one of our loans also.
17 Q. Do you know what file or what it goes to?
18 A. No.
19 Q. And how about Armil Rucker?
20 A. It is also one of our loans.
21 Q. But you can't connect it to a file?
23 Q. So the answer would be you can't connect it, correct?
24 A. Yes.
25 Q. Now to your personal knowledge, can you tell the

1 ladies and gentlemen of the jury if you ever heard Domonic
2 McCarns talk to a Mark Wilson?
3 A. No.
4 Q. Can you tell the ladies and gentlemen of the jury if
5 you ever heard Domonic McCarns talk to a Mike Mattice?
6 A. No.
8 you ever heard Domonic McCarns talk to Amber Ferrantello?
9 A. No.
11 you ever heard Domonic McCarns talk to Abraham Urena?
12 A. No.
14 you heard Domonic McCarns talk to Bunny Clevenger?
15 A. No.
17 you ever heard Domonic McCarns talk to a Michael Scanlon (sic)?
18 A. No.
20 you ever heard Domonic McCarns talk to a Brett Cavillo?
21 A. No.
23 you ever heard Domonic McCarns talk to a Howard Peters?
24 A. No.

1 you ever heard Domonic McCarns talk to a gentlemen named Kerry
2 Budoff?
3 A. No.
5 you ever heard Domonic McCarns talk it a Marjorie Sly?
6 A. No.
8 you ever heard Domonic McCarns talk to a Kenneth Sly?
9 A. No.
11 you ever heard a Domonic McCarns talk to a Charmayne Ratcliff?
12 A. No.
14 you ever heard Domonic McCarns talk to a Daniel Castillo?
15 A. No.
17 you ever heard Domonic McCarns talk to Armil Rucker?
18 A. No.
19 Q. If I could have just one moment, Judge. Okay. I
20 have two final areas then I'm going to be complete.
21 One area has two segments. Okay. I want to talk to
22 you about loan officers at the company and sales agents.
23 All right. Loan officer, from your knowledge they
24 sold the loan program, correct?
25 A. Yes.

1 Q. Structured the loans?
2 A. Yes.
3 Q. Selected loan programs with the banks?
4 A. Yes.
5 Q. Priced the loans on the rate sheets?
6 A. Yes.
7 Q. Filled out the loan applications with the investor?
8 A. Yes.
9 Q. And spoke to the person getting the loan?
10 A. Yes.
11 Q. And that was what we've talked about Mr. Sandoval,
12 Mr. Wiley, Mr. Coffman and Michael Head, correct?
13 A. Yes.
14 Q. The sales agents, they spoke on the phone about the
15 program?
16 A. Yes.
17 Q. Correct? They mailed the equity purchase agreement
18 to the people?
19 A. Yes.
20 Q. Correct. They ordered the appraisals?
21 A. Yes.
22 Q. And they requested the demand payoff, correct?
23 A. Yes.
24 Q. And just so we know, the demand payoff is what they
25 get from the bank as to what actually needs to be paid off on

1 the property, correct?
2 A. Yes.
3 Q. And at some point in time you know that Domonic
4 McCarns actually got properties that were, like, going to be
5 redeemed, I mean he talked to properties that were like on the
6 doorstep of being sold, right?
7 A. Mostly everybody did, yes.
8 Q. And stopped them from being sold and got extensions,
9 correct?
10 A. Yes.
11 Q. All right. And that's sales agents, that's what
12 Domonic McCarns was, right?
13 A. I mean, like I said, we referred to them as loan
14 officers slash sales. That's how we referred to them.
15 Q. Just a moment, Judge.
16 It's a question. If you refer to the person on the
17 phone selling, like Domonic McCarns, how can you refer to
18 Domonic McCarns as a loan officer, he doesn't fill out the
19 loans?
20 A. Right. But that's -- in our office that was what we
21 called them.
22 Q. Okay. Just so I make sure I got the answer, Domonic
23 McCarns didn't fill out the loan documents, but he was talking
24 on the phone, and you called him a loan officer?
25 A. Yes. That's what we called them.

1 Q. A better term might have been just to call them a
2 sales agent?
3 A. I didn't make up the term. Sorry.
4 Q. All right. Last area I want to talk with you about.
5 Domonic McCarns questioned everything, didn't he?
6 A. I mean a lot of people questioned a lot of stuff.
7 Q. But Domonic was the one that questioned things that
8 you did, right?
9 A. Yes.
10 Q. Questioned you why you were so slow at times, right?
11 A. Yes.
12 Q. Why things couldn't get done faster?
13 A. Yes.
14 Q. Questioned what Keith was doing?
15 A. He didn't question me about what Keith was doing, so.
16 Q. Do you know when Domonic got fired from the company?
17 A. I didn't know he got fired. I don't remember that he
18 got fired.
19 Q. Do you remember a period of time when Domonic wasn't
20 there at the Costa Mesa office?
21 A. There was a period -- I mean, he didn't come to work
22 for a lot of the times, but those were probably personal
23 reasons.
24 Q. Do you have a recollection around December of 2005,
25 January of 2006 that Domonic wasn't there?

2 Q. Do you remember that Domonic would question other
3 employees as to what they were doing?
4 A. I don't know why he would question somebody. I don't
5 remember.
6 Q. Okay. But you do know that you and Domonic just
7 didn't get along?
8 A. Domonic was just another loan officer, and that's
9 just how they were. They want their loan to fund so that they
10 can make money. So because we weren't moving fast enough for
11 him, he would, you know, try to tell us, you know, why are you
12 not moving fast enough or why isn't my file funded. But it's
13 normal. Most loan officers are like that.
14 Q. Okay. Well, who's the person that got beat up at the
15 company, physically beat up?
16 MR. MORRIS: Objection. Assumes facts not in
17 evidence.
19 Q. BY MR. GREINER: Well, you had a disagreement with
20 Domonic at one time, correct?
21 A. Yes.
22 Q. And because of that disagreement, your significant
23 other came to the office, isn't that correct?
24 A. Yes.
25 Q. And your significant other physically beat up

1 Domonic, correct?
2 A. Yes.
3 Q. And Domonic called the cops, correct?
4 A. I don't know if he did. I didn't see any police.
5 Q. You didn't see any police come to the office?
6 A. No.
7 Q. Okay. All right. So --
8 A. Do you have the police report because I never saw
9 one?
10 Q. You know, you asked me a question again.
11 A. I don't know.
12 Q. We did that before the break. You're under oath.
13 I'm not. So I get to ask the questions. Thank you, though.
15 Q. Did you ever see Domonic call the police after that
16 physical altercation?
17 A. No.
18 Q. Did you see him get beat up?
19 A. No.
20 Q. But you knew he did?
21 A. I heard about it, but.
22 Q. It was your significant other, right?
23 A. I was not there.
24 Q. Okay. Let me check one more time, Judge.
25 Let me go back one, two subjects ago. When you were

1 working at Costa Mesa --
2 A. Yes.
3 Q. -- before you moved to Tustin --
4 A. Yes.
5 Q. -- you never saw Domonic talk to anyone that was
6 getting a loan, correct?
7 A. If I walked into his office, then I would hear him
8 talking to customers on the phone. But I don't know who they
9 were. But I do know that he was speaking to customers on the
10 phone because that was his job. But because of the location of
11 my office, that's why I didn't hear him. Because I'm all the
12 way down the hall, and he's all the way down the other hall, I
13 could not have heard him.
14 Q. Okay. And I appreciate your answer, but directing
15 you back to my question. In the time period you worked in
16 Costa Mesa --
17 A. Uh-huh.
18 Q. -- you never saw Domonic McCarns meet with any person
19 that was getting a loan?
20 A. No.
21 Q. Fair?
22 A. Yes.
23 Q. And you never heard Domonic McCarns talk to anybody
24 that was getting a loan, fair statement?
25 A. I have heard him talk on the phone before to

1 customers.
2 Q. Okay. To customers. I'm not talking about people
3 he's selling the product to. I'm talking about people that got
4 loans.
5 A. You mean the borrowers?
6 Q. The loan applications? Borrowers?
7 A. No. Not to the borrowers.
8 Q. And you never saw Domonic McCarns meet with any
9 borrowers in the timeframe we're talking about, February 2005
10 in Costa Mesa to the end of August 2006, correct?
11 A. No.
12 Q. "No" being that's correct?
13 A. Yes. No. He did not meet with anybody.
14 Q. And then just to finish up. When you moved to
15 Tustin, you were not in the office that Domonic McCarns was at?
16 A. No.
17 Q. So you never saw him when you moved to Tustin?
18 A. No.
19 Q. You never worked with him in an office when you moved
20 to Tustin?
21 A. No.
22 Q. You never saw if he met with anybody at all when you
23 moved to Tustin, correct?
24 A. No.
25 Q. Just one second, Judge.

1 When you worked in Costa Mesa 2005 to 2006, before
2 moving to Tustin, it was Keith that talked to the borrowers,
3 correct?
4 A. Yes.
5 Q. And Keith is the one that would talk to the borrowers
6 to fill out the loan applications?
7 A. Yes.
8 Q. Not Domonic McCarns, correct?
9 A. Correct.
11 THE COURT: All right. Mr. Samuel.
12 Mr. Samuel will now begin his cross-examination. We
13 may not get through it today, but he'll at least begin.
15 BY MR. SAMUEL:
16 Q. I just need a minute to shuffle my papers, Your
17 Honor. Could we have 5A1.
18 THE COURT: 5A1?
19 Q. BY MR. SAMUEL: That's correct. Already in evidence.
20 And the next one will be 10A5.
21 You've got that in front of you, 5A1?
22 A. Yes.
23 Q. You've already testified that 5A1 is in your
24 handwriting, correct?
25 A. Yes.

1 Q. And you are the person that actually wrote the word
2 "Benjamin" there?
3 A. Yes.
4 Q. And so that would be your handwriting, correct?
5 A. Yes.
6 Q. All right. Let's go on to the next one, 10A5. You
7 see that as well?
8 A. Yes.
9 Q. And you also testified that this is in your
10 handwriting as well?
11 A. Only the part in the box.
12 Q. The "Cardenas"?
13 A. Not the "Cardenas," no.
14 Q. No?
15 A. No. Only the bottom where it says "lease."
16 Q. Okay. So we don't know who put the name on the top?
17 A. It's probably the processor.
18 Q. All right. But the bottom portion of the document is
19 in your handwriting?
20 A. Yes.
21 Q. And did you, on occasion, write on various documents
22 when communicating with others in the office?
23 A. Yes.
24 Q. All right. Now, what I'd like to do is have you
25 bring up BB-E1, and that has not been offered into evidence as

1 of yet, so don't come up yet. However, it is part of the
2 stipulation, Your Honor, that we previously entered into.
3 THE COURT: It's BB-1?
4 MR. SAMUEL: BB-E1.
5 THE COURT: I didn't get the entire --
6 MR. SAMUEL: BB-E1, and it has multiple pages
7 therefrom.
8 THE COURT: So BB-E1. Any objection, Mr. Morris?
11 MR. TEDMON: No.
14 THE COURT: All right. BB-E1 is admitted.
15 (Defendants' Exhibit BB-E1, Uniform Residential Loan
16 Application for 22 Noyes Street, Duxbury, MA 02332 admitted
17 into evidence.)
18 Q. BY MR. SAMUEL: And before we get started, you
19 already testified that you had forged various signatures on
20 various documents, correct?
21 A. Yes.
22 Q. All right. And this is a 1003, commonly known as a
23 1003 document, correct?
24 A. Well, I don't see it.
25 Q. Sorry.

1 A. Okay. It's here.
2 Q. So if we look at the top, is that your handwriting?
3 A. No.
4 THE COURT: Mr. Anderson or Mr. Morris, would you
5 assist by just showing Mr. Samuel.
6 Q. BY MR. SAMUEL: What I would like you to do, however,
7 is now go to the fifth page of the document.
8 THE COURT: Mr. Samuel, you need to speak up. You're
9 still in BB-E1?
10 Q. BY MR. SAMUEL: Yes. Same document, fifth page. And
11 you see the handwriting at the bottom?
12 A. Yes.
13 Q. Notice how "Benjamin" is penned?
14 A. Yes.
15 Q. Looks very similar to your handwriting of "Benjamin";
16 is that correct?
17 A. Yes.
18 Q. Did you sign Benjamin Budoff's name for this
19 document?
20 A. I probably did. Yes.
21 Q. Did you often sign the name for Benjamin Budoff
22 without his knowledge?
23 A. No.
24 Q. How many times would you say you did sign Benjamin
25 Budoff's --

2 Q. You never had an authorization to do so from
3 Mr. Budoff, did you?
4 A. No.
5 Q. All right. So you're taking actions that Mr. Budoff
6 was not aware of, is that correct?
7 A. Yes.
8 Q. All right. Finally -- and I apologize to everybody.
9 I just obtained this document this morning. And it's entitled
10 BB-F and BB-F1.
11 THE COURT: Do you have copies?
12 MR. SAMUEL: You know, I didn't have time to make
13 copies, Your Honor. I apologize. But counsel has seen it
14 because they provided it to me.
15 MR. ANDERSON: Your Honor, just to be clear, this is
16 a document that was provided several years ago, but Mr. Samuel
17 asked for another copy, so we've given it to him today.
18 THE COURT: Any objection to BB-F1?
20 MR. SAMUEL: It was not enumerated.
21 THE COURT: We don't need to talk about it. Any
22 objection, Mr. Tedmon?
23 MR. TEDMON: No.

1 THE COURT: All right. BB-F1 is admitted.
2 (Defendants' Exhibit BB-F1, Month-to-Month Agreement,
3 Dated 12/1/03 admitted into evidence.)
4 Q. BY MR. SAMUEL: At the top of that do you see the
5 title of the document?
6 A. Yes.
7 Q. And it's a Month-to-Month Agreement?
8 A. Yes.
9 Q. And do you see who the document is for?
10 A. Yes.
11 Q. And who is it for?
12 A. Elizabeth Huerta and Leonard Bernot.
13 Q. And Elizabeth Huerta is who?
14 A. She used to work at the company also, and she was my
15 friend.
16 Q. She was your friend?
17 A. Uh-huh.
18 Q. Did she go by a different name as well?
19 A. Liz.
20 Q. Do you know her last name now?
21 A. Russell.
22 Q. All right. So she was your friend. This document
23 purports to be a month-to-month agreement.
24 And if you would look at the bottom of the second
25 page, can you see the signature on the bottom of the second

1 page, right side?
2 A. Yes.
3 Q. And that's not Elizabeth Huerta's signature, is it?
4 A. I don't know how her signature looks like. I don't
5 remember.
6 Q. Didn't you sign this document as well?
7 A. I don't remember. I don't remember. There's so many
8 documents, but it could have been my signature.
9 Q. Looks like your signature? Looks like your
10 handwriting?
11 A. It could have been.
12 Q. All right. Now one of the things you that said in
13 testimony yesterday or today was that Ben Budoff --
14 Well, let me go back for a second. We've talked
15 about the various locations and timeframes, and we've talked
16 about everything but really Tustin, okay.
17 Now, Tustin is where the business changed, and you
18 were separated from everyone else, correct?
19 A. Yes.
20 Q. And Tustin -- actually, you really were there after
21 the contract of sale for Lavar Fletcher, correct?
22 A. I don't know dates exactly, but I know that we moved
23 once it was sold.
24 Q. All right. And if the date were August 22nd, you
25 would have moved after that date, correct?

1 A. Yes.
2 Q. Right. And one of the things that you were told by
3 Mr. Head was that he had to sell so that he could avoid
4 potential problems with prosecution, right?
5 A. Yes.
6 MR. GREINER: Objection. Hearsay. 801(d)(2)(E).
7 MR. TEDMON: Join.
9 question and answer.
10 MR. SAMUEL: I thought it had already been testified
11 to, Your Honor, but I apologize.
12 Q. BY MR. SAMUEL: So when the office moved to Tustin,
13 there was a whole change in the approach of loan processing,
14 correct?
15 A. Everything was pretty much still the same. We just
16 were in a different location.
17 Q. Were the 1003s and the way they were answered were
18 changed, correct?
19 A. Yes -- well, there is a new person taking the 1003s.
20 Q. All right. And the 1003s, from the time that you
21 moved to Tustin, as it relates to whether one was going to
22 reside in a home or whether it was an investment had changed to
23 all were stated investment instead of residency, isn't that
24 correct?
25 A. I don't recall, but I know that there was a change

1 where -- because of issues and potential issues, we were
2 informed that most of our loans would now be non-owner
3 occupied.
4 Q. And who informed you of that?
5 A. Keith.
6 Q. And it was only when you moved to Tustin that Ben
7 Budoff became your boss?
8 A. Yes.
9 Q. And when I say your boss, I don't mean necessarily
10 the person you answered to totally, but simply the person who
11 was the titular head of the business, correct?
12 A. Yes.
13 Q. As far as the processing is concerned, the paperwork
14 and how it was imagined, that remained the same, right?
15 A. Yes.
16 Q. Business as usual, same process as before with some
17 exception as to what were answers on the 1003s?
18 A. Yes.
19 Q. All right. And those 1003s --
20 Let me ask you this. Now, you had mentioned that in
21 at least one of your answers, and I think it was even an
22 e-mail, a concept of point sheet or a point program?
23 A. Yes. The program that we worked on.
24 Q. All right. That's an electronic program?
25 A. It's on -- yes, it's on the system.

1 Q. And who created that, if you know?
2 A. It's a software that you purchase.
3 Q. And part of that software includes the 1003 form
4 itself?
5 A. Yes.
6 Q. All right. And you actually had access to that
7 program, correct?
8 A. Yes.
9 Q. And actually, you were the person who did the final
10 completion of the 1003s on that program electronically, is that
11 correct?
12 A. No.
13 Q. Who was the last person to touch the 1003 on an
14 electronic program?
15 A. Well, to touch it -- because we have to print it to
16 submit it to the bank -- but the person that initially once we
17 were in the Tustin office, Ben would take the 1003, and then it
18 would go over to Keith to review.
19 Q. Okay. You say Ben. You're talking about Mr. Budoff?
20 A. Yes.
21 Q. And he was never in that -- was he ever in that
22 office?
23 A. No. He lived in Colorado.
24 Q. And so how did you provide Mr. Budoff this 1003?
25 A. He has the system on his computer at home.

1 Q. Did you ultimately send Mr. Budoff documents for
2 signature?
3 A. He would sign them and then fax it or e-mail it.
4 Q. And, actually, what happened was you would just send
5 him the last page, is that not correct, of the 1003 -- or the
6 page for his signature?
7 A. He filled out the application.
8 Q. So you never, ever had an opportunity to change the
9 application once Mr. Budoff filled out the application?
10 A. If there was something that needed to be changed, we
11 would inform Keith and Ben, and then they would make the
12 changes and then tell us that it was okay again.
13 Q. So when you say Keith and Ben, primarily you went to
14 Keith as it relates to changing of anything in the 1003, isn't
15 that correct?
16 A. Yes.
17 Q. You seldom, if ever, went to Mr. Budoff and asked him
18 to change anything on the 1003, isn't that correct?
19 A. We did ask him. Yes, we did ask him.
20 Q. Are you aware of what kind of training and expertise
21 Mr. Budoff had in order to run this kind of a business?
22 A. I'm not aware.
23 Q. Did you ever train Mr. Budoff in how to run this
24 processing business?
25 A. No.

1 Q. And during this period of time, would it be fair to
2 say that Mr. Budoff was trying to learn the business as he went
3 along?
4 A. I don't know where Mr. Budoff came from. All I know
5 is that we were just told that he was now our new boss.
6 Q. And did he on occasion reflect a misunderstanding of
7 what was going on in the business?
8 A. I'm sure he had some questions.
9 Q. Right. And he actually asked those questions via
10 e-mail on occasion, did he not?
11 A. I'm sure that he did, yes.
12 Q. Now, I just want to clarify one thing.
13 Well, let me back up. First, you worked for Mr. Head
14 for a substantial period of time, correct?
15 A. Yes.
16 Q. And during that period of time, what was the highest
17 monthly rate that you ever received pay from Mr. Head?
20 Q. BY MR. SAMUEL: Were you paid by Mr. Head, let's say,
21 in October, November, did you ever receive a check from him
22 October/November 2006?
23 MR. TEDMON: Relevance.
25 THE WITNESS: Was I paid? Yes. I was employed, so,

1 yes, I was paid.
2 Q. BY MR. SAMUEL: You were employed. And was it
3 Mr. Head who paid you?
4 A. In October of 2000 --
5 Q. -6?
6 A. -6?
7 Q. Yes.
8 A. No. Ben would be the person to pay me.
9 Q. He would write the checks?
10 A. He had -- I think at that time we were getting direct
11 deposit if it was in October.
12 Q. So when Mr. Budoff took over this business, he
13 actually created a new business, a new location, he actually
14 asked you to give him W-2 information, correct?
15 A. Yes.
16 Q. And did he all things that a legitimate -- at least
17 that you would be aware of -- a legitimate business would do,
18 correct?
19 A. Yeah.
20 Q. Well, as far as you know, he withheld payroll taxes?
21 A. Yeah, I don't know all that.
22 THE COURT: That brings us to 1:30, Mr. Samuel, so we
23 will take our break.
24 Ladies and gentlemen, that concludes our day and
25 trial week. We are dark tomorrow. We will have a full day of

1 trial on Monday. Tuesday I told you there were a few days when
2 we would have to take off, so Tuesday -- I believe Ms. Schultz
3 posted the calendar. Tuesday is also a dark day. But Monday,
4 8:30 to 1:30, and then Wednesday 1:30 to 4:30, Thursday 8:30 to
5 1:30.
6 I'm talking with counsel. My understanding is that
7 once we complete this witness' testimony, things should start
8 to pick up. Not every witness is going to take this amount of
9 time. I'm informed that we're essentially on track.
10 I will keep you up to date as we move along. That is
11 a big part of my discussion with counsel when you are not
12 present.
13 So as you adjourn for this long break now, the rest
14 of today, the weekend, please remember all of my admonitions.
15 No discussing the case with anyone, no research of any kind,
16 electronic or otherwise, don't begin to think about the case's
17 conclusion, if anyone does attempt to reach you in any way,
18 please let me know.
19 Again, you will receive all the information that you
20 need to do your job as jurors once you retire to deliberate.
21 Thank you for your service this week. Have a good
22 long weekend, and we will see you on Monday morning. Thank
23 you.
24 (Jury out.)
25 THE COURT: You may be seated. You may go for the

1 day, Ms. Yang. Please be back Monday morning at 8:30.
2 Particularly if you're leaving the building at the
3 same time as the jurors, please avoid any contact.
4 All right. Let's talk briefly about the witness
5 list.
6 MR. ANDERSON: I'm sorry, Your Honor. You asked
7 about the witness list for Monday?
8 THE COURT: Here's my question. Is there any
9 custodian of record that still needs to testify?
11 THE COURT: So all of those we can cross off of the
12 Government's list.
13 Is there any special agent who you now know will not
14 testify? There's quite a list of special agents.
15 MR. ANDERSON: I think that almost all of them will
16 not testify, and I can give the names, start at the top.
17 Let me say, it will be easier to say which special
18 agents I reasonably anticipate will testify. Paul Howard,
19 Chris Fitzpatrick, John Sommercamp. It's unlikely but maybe
20 Peter Byrne. And then always a small possibility on some of
21 these others, but I think almost certainly we won't need to.
22 THE COURT: Is there anyone else the Government knows
23 as of now it will not be calling?
24 MR. ANDERSON: No, Your Honor. But we'll look at the
25 list. And I think we can -- I think we'll narrow it down as we

1 go next week. So there won't be all these people.
2 Latasha Kaiser or Latasha Butts, she has a high-risk
3 pregnancy and cannot travel, so we may not call her.
4 THE COURT: All right. You're directed to meet and
5 confer with defense counsel -- all defense counsel before
6 Monday morning and give them any updates you're aware of by
7 then.
9 THE COURT: And then we will -- I'm assuming we will
10 get through Ms. Yang before midmorning -- before midday on
11 Monday. Fair enough. How much longer do you think you need
12 Mr. Samuel?
13 MR. SAMUEL: Hour. Guessing.
14 THE COURT: All right. And then we'll go back
15 around. How much redirect are you expecting?
16 MR. MORRIS: Based on my notes, very short. I don't
17 think more than 15 minutes, Your Honor, but I blew that
18 estimate last time, so it may be more than fifteen.
19 THE COURT: I mean, I know you know how to do your
20 jobs at least as well as I know how to do my job. But the more
21 preparation you can put in and be ready just to move through
22 this. I'm assuming we are still on track, and that we'll make
23 adjustments as we go along.
24 We've laid a lot of foundation. The jury is getting
25 comfortable with the lingo. But we definitely need to pick up

1 the pace.
2 In terms of Mr. McCarns, I just want to check. I'm
3 not trying to get in the way of any attorney/client privilege,
4 but is there a way for Mr. McCarns to make certain you have,
5 Mr. Greiner, as many of his questions when you start.
6 I realize questions may come up based on the
7 testimony. And again I'm not --
8 MR. GREINER: We've met and conferred, and I've told
9 him during the trial to make bullet points, and he's done that.
10 And I've taken his answers. We're going to meet after court
11 today. So we're trying to make sure that it's a smooth
12 process, but I have asked him to make bullet points during the
13 presentation.
14 THE COURT: That's understandable. I'm just looking
15 for every way that we can shave time and keep moving.
16 And also with respect to exhibits. If there are
17 exhibits that can come in without your taking a lot of time
18 with the witness, you're directed to meet and confer and see if
19 you agree on those. Because you have enough else to tell your
20 story by the time you get to closing.
21 So other housekeeping, Mr. Anderson, Mr. Morris?
22 MR. ANDERSON: Your Honor, I would appreciate if
23 defense counsel would stop trying to imply to the jury that
24 we're not in compliance with our discovery obligations. I will
25 take what Mr. Samuel said as an inadvertent misstatement today.

1 But we were trying to be accommodating by printing an
2 additional copy of a document that all defense counsel have had
3 for years. To imply to the jury that somehow we just handed
4 over this document I think is very unfair.
5 THE COURT: Well, I think you cleaned that up. But
6 generally, no editorializing, no speaking objections. We've
7 gotten better overall.
8 But just do your job. And if you need to say
9 something to me during a housekeeping session, you can.
10 Anything else, Mr. Anderson, Mr. Morris?
13 MR. TEDMON: I wanted to know if we have any update
14 on the Korall Solares matter?
15 MR. ANDERSON: We do. Ms. Solares contacted us --
16 well, two thing. First, I asked defense counsel if they would
17 be willing to allow her appearance by video teleconference.
18 Mr. Tedmon said that he could. And Mr. -- I'm not criticizing
19 -- but I don't believe that Mr. Greiner or Mr. Samuel are
20 prepared to agree to that.
21 But Ms. Solares has agreed to voluntarily appear. I
22 know it's inconvenient to her, but she's agreed to do it. So
23 that's where we're at. If that changes, I'll let everyone
24 know.

1 MR. SAMUEL: First of all, because I hadn't made
2 copies of this most recent exhibit, I would like the Court to
3 allow me to remove it from the courtroom, provide copies to all
4 parties.
7 THE COURT: So copies available by Monday morning.
8 MR. SAMUEL: I'll e-mail everybody.
9 Second thing, Your Honor, I just want to put this on
10 the record because it's beem quite difficult for my client.
11 He's an indigent from Colorado. He's expected to stay and live
12 here during the period of this trial without any subsistence
13 whatsoever, and we've looked into various avenues of trying to
14 be able to aid him. Because he still has to support a family
15 and a disabled wife at home.
16 And we originally had made a request for subsistence,
17 but it was denied by the magistrate saying specifically that
18 the marshal's policy and the marshal's budget would only allow
19 one day subsistence, and thereafter he's on his own.
20 So we have a man here without a job, having to
21 sustain a wife on whatever money he has already made or saved
22 up, which is minimal or none. He's indigent. And we're trying
23 to put him up in a hotel.
24 Now right now, frankly, I've been paying for his
25 subsistence, and I'm not going to be reimbursed for that, and I

1 don't care. But this is getting burdensome on him. I don't
2 think that if it were a private counsel, and private
3 individuals that we would even be talking about this.
4 But he is indigent. I would like the Court to try to
5 make an order that he be at least provided federal subsistence
6 during the period of time that he's remains here.
7 THE COURT: The Court would entertain a written
8 request with citation to authority.
9 MR. SAMUEL: That's the problem.
10 THE COURT: Are you moving to reconsider?
11 MR. SAMUEL: Pardon?
12 THE COURT: Are you moving to reconsider the
13 magistrate judge's order?
14 I'll entertain something, but I need to see something
15 in writing.
16 MR. SAMUEL: That's fine. But I don't think there is
17 any law that actually provides for it with citations. That's
18 the problem. And I think Mr. Greiner's gone through the same
19 issue as well.
20 THE COURT: Again, submit something in writing. I'll
21 review it. I don't know that the Government has a stake in
22 this.
24 THE COURT: So I'll look at whatever you submit. You
25 can e-mail it to Ms. Schultz.

2 MR. GREINER: I don't want to be critical of any
3 agency. I think the magistrate gave the order, but I think the
4 marshals responded that their policy is that they can only
5 provide for one air flight, and, you know, just one day of
6 subsistence, and that's it.
7 And Mr. Samuel and I have talked about this. I mean,
8 we're in the same position. My client, Mr. McCarns, is in the
9 same position. And so I don't know if we're asking to
10 reconsider the magistrate's order because I think the order
11 says to have it, so I'm not --
12 THE COURT: All right. I won't construe it as a
13 motion for reconsideration, but I still need something in
14 writing for me to consider. Anything further, Mr. Greiner?
15 MR. GREINER: Yes, renew my motion to dismiss under
16 speedy trial and renew my motion to sever. And submit it.
17 THE COURT: Well, this is so far not a speedy trial.
18 The motions are denied.
19 MR. GREINER: That's why it should be dismissed.
20 THE COURT: I might be tempted to grant that next
21 week if we aren't further along than I hope. All right. See
22 you on Monday.
24
25

2 CERTIFICATION

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 5
Defendants.
---oOo---
TRIAL PROCEEDINGS
MONDAY, OCTOBER 28, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
3 KOU YANG
CROSS-EXAMINATION BY MR. SAMUEL 517
4 REDIRECT EXAMINATION BY MR. MORRIS 547
RECROSS-EXAMINATION BY MR. TEDMON 563
5 RECROSS-EXAMINATION BY MR. GREINER 568
RECROSS-EXAMINATION BY MR. SAMUEL 600
6 FURTHER REDIRECT EXAMINATION BY MR. MORRIS 601
FURTHER RECROSS EXAMINATION BY MR. TEDMON 602
7 FURTHER RECROSS EXAMINATION BY MR. GREINER 603
8 ASHLEY ROTELLINI
10 JUSTIN WILEY
12 RECROSS-EXAMINATION BY MR. SAMUEL 673
REDIRECT EXAMINATION BY MR. ANDERSON 673
13
SHEILA JONES
14 DIRECT EXAMINATION BY MR. ANDERSON 675
15
16
17
18
19
20
21
22
23
24
25


2
211 Email dated 5/22/2005 From Keith with DCG 554
3 To Charles Head CC Keith Brotemarkle
Subject: FFCBROKER.com
Charles Head Subject: RE: Franklin
5 APPRAISAL
90 Pacific Mercantile Bank signature card for 558
6 account of Creative Loans, LLC listing
authorized signors Dated 5/27/2005
Domonics Blackberry; Domonic McCarns CC
8 Emily Yang; Keith Brotemarkle;
eds@fundingforeclosures.com Subject: RE:
9 Updated payoff Lien # 1 on title
10 To Kou Yang; Keith Brotemarkle; Donna
Guerrero; Ed Shaffer; Sam Vu
To Kou Yang; Keith Brotemarkle; Olga
12 Wilson; Jack Corcoran; Emily Yang; Sam Vu;
Lisa Vang; Emily Yang; Pang Yang; Ed
13 Shaffer
Subject: FW: Proof of payment
Domonic McCarns
15 Subject: RE: Solares
17A1 U.S. Department of Housing and Urban 614
16 Development for property at 896
Yellowstone Road, Cleveland Heights, OH
17 44121
17A10 Wire Instructions and Authorization for 622
18 property at 896 Yellowstone Road,
Cleveland, OH
19 13B1 U.S. Department of Housing and Urban 628
Development Settlement Statement Borrower:
20 Kerry L. Budoff Seller: Jerome & Denise
Pearlman Property: 1447 Westmore Place,
21 Oceanside CA Dated: 6/5/2006
22 Development Settlement Statement Borrower:
Charmayne Q. Ratliff Seller: Alfred N.
23 Limas
24 property at 3509 38th Street, Sacramento,
CA
25


2
3 19A1 U.S. Department of Housing and Urban 632

Development for property at 3390 Foxcroft
4 Road, #C-308, Miramar, FL
5 property at 3390 Foxcroft Road, #C-308,
Miramar Florida
6 60 Foreclosure Transaction Procedure 651
7 between Sheila A. Jones “Seller” and
Funding Foreclosures.com “Purchaser” for
8 property at 3920 44th Avenue, Sacramento,
CA
9 16A5 3920 44th Avenue Property Holding Trust 685
Agreement dated 5/5/2006 between Purchaser
10 to be Determined “Transferor”, FFC
Investments, LLC and Sheila A. Jones
11 “Tenant” and Nations Property Management,
LLC “Trustee”
12 16A6 Wire Instructions and Authorization for 687
property at 3920 44th Avenue, Sacramento,
13 CA
16A7 Grant Deed for property in Sacramento 688
14 County Grantor: Sheila A. Jones Grantee:
Daniel Castillo Dated, signed and
15 notarized on 6/16/2006
Affidavit of Deed dated, signed and
16 notarized on 6/16/2006
16A8 Check off list for Jones’ documents 689
17 16A9 Post It note “Castillo / Jones Escrow # 706
15189680
18
19
21 DM-U4 Email Dated March 30, 2006 589

DM-U6 Email Dated April 6, 2006 591
22 DM-U9 Email Dated April 18, 2006 592
DM-U12 Email Dated May 5, 2005 593
23
24
25

2 MONDAY, OCTOBER 28, 2013
3 ---oOo---
5 United States versus Charles Head, Benjamin Budoff and Domonic
6 McCarns. This is on for jury trial, and today is day five.
8 All parties are present.
9 Are we ready for the jury?
13 THE COURT: Mr. Samuel, are you ready?
14 MR. SAMUEL: Yes.
16 (Jury in.)
17 THE COURT: You may be seated. Welcome back to
18 court, ladies and gentlemen. We hope you had a good weekend.
19 We are ready to go, so we're going to pick up with
20 the cross-examination by Mr. Samuel.
21 MR. SAMUEL: Thank you, Your Honor. Morning all.
22 KOU YANG,

1 CROSS-EXAMINATION
2 BY MR. SAMUEL:
3 Q. Ms. Yang, I just want to ask you. You recall being
4 interviewed by the Government on 3-15-2013?
5 A. Is that -- that might be the first time.
6 Q. Yes.
7 A. Yes.
8 Q. All right. And during that interview, you basically
9 told the Government that as far as your real estate background,
10 you had none before you started this process, is that correct?
11 A. Yes.
12 Q. And you also told them that you had not been trained
13 until you were trained by Mr. Head on how to do the loan
14 processing, is that correct?
15 A. Yes.
16 Q. And you also said that the documents that you were
17 working on contained inaccuracies, isn't that correct?
18 A. Not at the beginning but --
19 Q. Later on?
20 A. Later on, yes.
21 Q. And you were aware of those inaccuracies and
22 processed them anyway, is that correct?
23 A. Yes.
24 Q. And actually some of those inaccuracies were created
25 by you because there had been blank spots in locations of the

1 forms, so you would fill them in, wouldn't you?
2 A. No. That's not true.
3 Q. No? You never filled out any forms at all?
4 A. I did not set up the loans, so I don't have the
5 information to fill it up.
6 Q. But you did fill out locations which were left blank?
7 A. If I was told to do it, yes.
8 Q. Well, you did fill out Mr. Budoff's name, you've
9 testified to that previously, is that correct, when you forged
10 his name?
11 A. Not on the loan application. Just on the bottom
12 part.
13 Q. 1003 --
14 A. Yes.
15 Q. -- isn't that a loan application?
16 A. That's -- he's a loan officer.
17 Q. That's a loan application, is that correct?
18 A. Yes.
19 Q. And you forged his name, correct?
20 A. Yes.
21 Q. All right. Now, you also were talking about
22 Mr. Brotemarkle in that interview, is that correct?
23 A. Yes.
24 Q. And you said that Mr. Brotemarkle found sellers and
25 buyers on the internet, and you've testified to that, correct?

1 A. Yes.
2 Q. And you also said that Mr. Brotemarkle reviewed all
3 loan applications?
4 A. Yes.
5 Q. And those loan applications once again are the 1003s,
6 correct?
7 A. Yes.
8 Q. Every loan application that ever was made went
9 through Mr. Brotemarkle, right?
10 A. It went through him, but it was initially came from
11 someone who filled out the application.
12 Q. I understand that. And you don't know whether or not
13 Mr. Brotemarkle may have changed any of the information on that
14 1003, do you?
15 A. I don't know. It just comes to me the way that it
16 does.
17 Q. Right. And actually he computerized the process,
18 isn't that right?
19 A. You mean he made it up?
20 Q. Yes.
21 A. Yes.
22 Q. All right. And --
23 MR. TEDMON: Your Honor, just to clarify, when
24 Mr. Samuel says "he," is that Mr. Brotemarkle?
25 MR. SAMUEL: We're still talking about

1 Mr. Brotemarkle. I'm sorry.
2 Q. BY MR. SAMUEL: So Mr. Brotemarkle, do you recall
3 that he would simply change addresses on loan applications, is
4 that correct?
5 A. Yes.
6 Q. And that actually is involved with one of these
7 e-mails in which you were talking about changing an address to
8 be more acceptable for the underwriters at a bank, it was more
9 believable?
10 A. Yes. That was my -- that was my opinion of the loan.
11 Q. Right. And you actually in that e-mail suggested
12 doing that on one occasion, did you not?
13 A. Yes.
14 Q. All right. So you did that.
15 Would it be fair to say that Mr. Brotemarkle kind of
16 wanted to control everything both in the loan applications, in
17 the marketing process and so on?
18 A. He was pretty much in control of everything.
19 Q. All right. Now, at some point in time you became
20 aware of an investigation, did you not?
21 A. Yes.
22 Q. And when did you become aware of an investigation by
23 the Government?
24 A. When I was told -- when I received a phone call from
25 Agent Sommercamp.

1 Q. Do you recall when that was?
2 A. I would say probably early 2006.
3 Q. When you say early 2006, what are you referring to?
4 A. Like probably February.
5 Q. Okay. And you didn't tell Mr. Budoff about any
6 investigation, did you?
7 A. Because I was not working with him yet.
8 Q. So the answer is, no, you did not tell him?
9 A. No.
10 Q. All right. And at that point in time, early 2006,
11 Mr. Head was still your boss, is that correct?
12 A. Yes.
13 Q. And you at some point in time testified -- sorry --
14 last week you testified that Mr. Budoff was your boss, correct?
15 A. Yes.
16 Q. All right. And I started asking whether or not
17 really Mr. Head was your boss even though Mr. Budoff was the
18 head of the processing business, do you recall that?
19 A. Yes.
20 Q. And isn't it true that Mr. Head at the end was still
21 your boss?
23 Q. BY MR. SAMUEL: At the end being, let's say, November
24 2006?
25 A. We -- I still answered to Mr. Head, but my direct

1 boss --
4 THE WITNESS: But my boss that I spoke to about the
5 loan applications was Benjamin Budoff.
6 Q. BY MR. SAMUEL: Well, weren't you in fact told that
7 even though Mr. Budoff was your boss, Mr. Head was still your
8 boss?
9 A. Yes. And I just said that Mr. Head was my boss, but
10 I also spoke to Mr. --
11 Q. Budoff?
12 A. Yes. I spoke to Mr. Head and Mr. Budoff.
13 Q. Well, how did you effect the communication with
14 Mr. Budoff?
15 A. Via e-mail.
16 Q. So you never called him on the phone?
17 A. Sometimes I did, yes.
18 Q. You did. Okay.
19 So let me ask you this, November 16th, 2006, that's
20 when the Government came in and effected a search warrant,
21 correct?
22 A. Yes.
23 Q. You remember that?
24 A. Yes.
25 Q. Where were you when that occurred?

1 A. I wasn't at work that day because I had something for
2 my daughter's school, so I wasn't even at work that day.
3 Q. Did you ever find out about this --
4 A. I did.
5 Q. And how did you find out about that?
6 A. I received a phone call from an agent.
7 Q. Okay. Do you remember who that was?
8 A. I don't. I think it might have been Sommercamp.
9 Q. You did?
10 A. Yeah. I did receive a phone call, yes.
11 Q. And did you notify Mr. Head of the search by call?
12 A. No.
13 Q. Never called him?
14 A. No.
15 Q. Never called him at all about the search?
16 A. No.
17 Q. Did you notify Mr. Brotemarkle about the search?
18 A. No.
19 Q. Never called him either?
20 A. No.
21 Q. Never called Ben Budoff about the search either, did
22 you?
23 A. No.
24 Q. And, of course, Ben was supposed to be your boss at
25 that location at that time, right?

1 A. Right. But I didn't call anybody.
2 Q. All right. Now, I believe you've testified that you
3 changed the address on the 1003 of at least Amber's last week,
4 you said that, correct?
5 A. Yes.
6 Q. How many other 1003s did you change the address to
7 besides that one?
8 A. Whenever I was told to change it, I would just go in
9 and change it.
10 Q. And who told you to change it?
11 A. It would either be Charles at one time, Keith at
12 another time, and I have asked Benjamin Budoff about certain
13 things, and he would also instruct me to change it, too.
14 Q. Did he specifically tell you to change addresses? Do
15 you have an independent recollection of that comment?
16 A. Well, that was a daily procedure in the office.
17 MR. SAMUEL: Objection Your Honor. Non-responsive.
18 Ask it be stricken.
20 Q. BY MR. SAMUEL: All right. Do you have an
21 independent recollection, as you sit here today, of a
22 conversation with Ben Budoff in which he says change the
23 address?
24 A. Yeah. I mean, that -- he was the person that we
25 would go to. So, yes, there would be times when I would ask

1 him things about how to structure a loan.
2 Q. Do you have an independent recollection of a
3 conversation with Ben Budoff in which Ben Budoff instructed you
4 to change an address, yes or no?
5 A. Yes.
6 Q. When was that?
7 A. I don't have exact dates. I don't have exact times.
8 But I do know that that is a part of the job that we had to do.
9 We had to ask him about structures of loans. And if he told us
10 to change it, that's when we would change it.
11 Q. In that period of time you're talking about asking
12 Mr. Budoff about structures of loans, would that have been in
13 2006?
14 A. Yes.
15 Q. That would have been after Creative Loans was changed
16 to Premier Services, correct?
17 A. Yes.
18 Q. And that date would have been September of 2006, is
19 that not correct?
20 A. Roughly, yes.
21 Q. Well, you know it was after the sale to Lavar
22 Fletcher, correct?
23 A. Yes.
24 Q. And you know that there was a contract shown here as
25 an exhibit in which the sale was August 22nd, do you not?

1 A. Yes.
2 Q. So it had to be probably the first of September?
3 A. Yes.
4 Q. All right. So you're talking about September, and
5 October, and half of November, right?
6 A. Yes.
7 Q. All right. And is there ever an e-mail that you can
8 point to that said that Mr. Budoff instructed you to change
9 addresses?
10 A. I don't have a particular e-mail here.
11 Q. All right. So you also indicated that you were --
12 would change names on appraisals, isn't that correct?
13 A. Yes.
15 And although -- according to you, anyway, although
16 you didn't really fill out the 1003s, you were the gatekeeper,
17 were you not, you were the last person to pile that 1003 onto
18 the stack of materials which went to the loan agency, correct?
19 A. Yes.
20 Q. And the person before you was Mr. Brotemarkle, right,
21 he had to see everything, after he said it was okay, you were
22 the gatekeeper, you printed out the 1003 and it then went
23 forward, correct?
24 A. Yes.
25 Q. Now I just have a couple questions about the e-mails.

1 Let me just check my notes for a second.
2 Exhibit 114. It will come up on the screen to you.
3 Actually, I'd like to start at page two.
4 Actually, these e-mails, you work backwards to
5 forwards, right, you understand that?
6 A. Yes.
7 Q. So on page two, this communication was from Steve
8 Cangro, correct?
9 A. Yes.
10 Q. And who is Steve Cangro?
11 A. He was a representative at a bank.
12 Q. All right. So he was a person that you were working
13 with to try to develop a loan?
14 A. Yes.
15 Q. All right. And Mr. Budoff is not involved -- let's
16 go back again -- just open it up -- he was not involved in the
17 communication between you and Steve, is that correct?
18 A. He would not be involved because that was in 2005.
19 Q. Okay. That was 2005. I'm going to try to do this
20 chronologically.
21 A. Okay.
22 Q. So then we have the next section which says they talk
23 about overstatement of loans, correct?
24 A. Yes.
25 Q. And that's you sending it back to Mr. Cangro, is that

1 correct?
2 A. Yes.
3 Q. And then finally on page one, this is your response,
4 but you're sending it now to Mr. Head, but in that response
5 aren't you suggesting that you lie about Amber's location, we
6 just talked about that?
7 A. Yes. I never denied that I did that. I always said
8 that I did do that.
10 Actually, I'm going to skip the next. 122. Thank
11 you.
12 Once again this date is reflective of Mr. Budoff not
13 being involved in this communication at all, correct?
14 A. Yes.
15 Q. Okay. Now when I say Budoff, right now I'm referring
16 to Benjamin Budoff, right?
17 A. Yes.
18 Q. Are you aware of another Budoff involved in this --
19 in the fact process that's going on here?
20 A. Yes.
21 Q. And that would be Kerry Budoff?
22 A. Yes.
23 Q. And that would be Ben Budoff's brother?
24 A. Yes.
25 Q. And 125. And when you look at that, this is

1 reflective of basically Cindy signing the escrow documents,
2 right?
3 A. Yes.
4 Q. And you were aware of that, correct?
5 A. I've always said yes.
6 Q. All right. And you were aware that Cindy forged the
7 documents, right?
8 A. Yes.
9 Q. All right. And the date once again is May of '05, so
10 Mr. Budoff was not involved in that transaction, is that
11 correct?
12 A. That is correct.
13 Q. All right. Next one is 331. And we're just using
14 page one.
15 In the very bottom there is a communication that
16 starts with Ben Budoff, is that correct?
17 A. I think there might be more before that.
18 Q. Do you want to look? I just have a header on one
19 prior to that. Do you want to go back to page two. Do you see
20 that? Right?
21 A. Okay.
22 Q. All right. So let's go back to page one. The
23 bottom, at least on this communication anyway, this e-mail, is
24 dated -- it's dated October 3rd, correct?
25 A. Yes.

1 Q. And it's the subject box Ferreyra and Trainor. Are
2 you familiar with that transaction?
3 A. Yes.
4 Q. And then all it says is NCEN/90/5/5. Can you tell us
5 what that means?
6 A. That means he's telling me to submit the loan to New
7 Century Mortgage, and they are going to give us a 90 percent
8 loan with a 5 percent second and a 5 percent down.
9 Q. All right. And you had been working with New
10 Century, is that correct?
11 A. Yes.
12 Q. And there was a program, 90-5-5?
13 A. Yes.
14 Q. And then it's you who respond back to Ben of the fact
15 that the words NOD, which is notice of default, correct? Does
16 NOD mean notice of default?
17 A. Yes.
18 Q. And then it says that "I will change the Point file"?
19 A. Yes.
20 Q. What's the Point file?
21 A. That is the application.
22 Q. When you say the application, are you just talking
23 about the 1003?
24 A. Yes.
25 Q. When you said "I will change the Point file," what

1 did you mean?
2 A. In that e-mail it meant that to reflect NOD. Because
3 if it's on title, then you're going to have note it.
4 Q. Okay. And you actually you caught that NOD, isn't
5 that correct?
6 A. Because I read the title.
7 Q. All right. So somehow Ben missed that one, right?
8 A. I suppose so. I mean, it's easy to miss because it's
9 just like one line.
10 Q. And, of course, you never trained Ben on loan
11 processing according to your last testimony last week, right?
12 A. I didn't train him. He was already a loan officer
13 when he came.
14 Q. You didn't train him? That's the question.
15 A. No.
16 Q. So you said you're going to change it, and then it's
17 not Mr. Budoff that responds "maybe they won't catch it," it is
18 Mr. Keith Brotemarkle, correct?
19 A. I don't see --
20 Q. I'm sorry. Let's look at the top. I apologize to
21 you. I'm sorry. Yes. Keep going because you have to get the
22 header.
23 That's Keith, right?
24 A. Yes. That looks like it's from him.
25 Q. So is he suggesting that you submit it under 9-5-5 or

1 do you know?
2 A. I don't know exactly what he's suggesting. He just
3 made a comment.
4 Q. Okay. Did you on occasion submit loans that may not
5 meet the standard of the loaning agency?
6 A. If we know ahead of time, we would not send it. But
7 if we missed it, then, yes, we would send them and then it
8 would get rejected.
9 Q. Has there ever been a moment in which you realized
10 afterwards that you sent something incorrectly that was missed?
11 A. Yes.
12 Q. Thank you. 333. And we're going to start at page
13 two.
14 Now this is a communication, if you look at the
15 bottom talks about -- there had been a communication from Lisa
16 Vang -- is that Lisa Vang?
17 A. Yes.
18 Q. And that was to you about the VOE McElveen Troy?
19 A. Yes.
20 Q. And it's actually she's -- Lisa is addressing this to
21 Keith, correct? It says "to Keith, Foreclosure Options"?
22 A. To Keith and Ben.
23 Q. But the salutation is "hey Keith"?
24 A. Yes.
25 Q. Right. So it was something directed to Keith, not to

1 Ben? In reality, Ben was cc'd just so he was made aware of
2 what was going on, right?
3 A. Yes.
4 Q. And just so we go on, it appears if you go on to the
5 next page, ma'am -- I'm sorry -- to the first page -- that
6 nowhere in that e-mail does Ben respond to any comments being
7 made, correct?
8 A. I don't see him responding, no.
9 Q. Okay. So now let's go back to the -- well, the
10 content of this was trying to establish verification of
11 employment but not establish automatically, as they did, the
12 amount of money that this gentleman made, correct?
13 A. Yes.
14 Q. And it was Keith Brotemarkle who suggested a
15 resolution which was to try to bypass the individual and get a
16 phone verification?
17 A. Yes.
18 Q. Correct? And is that something that's commonly done?
19 A. The phone verification?
20 Q. Right.
21 A. Yes.
22 Q. And so this was something that could have been
23 achieved in the normal course of business, right?
24 A. Yes.
25 Q. And also it has happened in the past, has it not,

1 with other individuals about their incomes that, that their
2 income that's reported is not necessarily their total income,
3 correct?
4 A. Yes.
5 Q. And on occasion, and I think in this particular
6 event, it was the fact that they only reported his base income
7 and not the additional income for overtime, etcetera, etcetera,
8 correct?
9 A. I don't know what they report.
10 Q. Okay. Thank you. Once again, 341. And just to put
11 it in context, we're going to start, I think, all the way back
12 to page five.
13 And, first of all, the date that you see on there is
14 10-17-06, approximately, is that correct?
15 A. Yes.
16 Q. And there is a cc to Mr. Budoff, is that correct, but
17 it's directed to you?
18 A. Okay.
19 Q. All right?
20 A. Yes.
21 Q. Correct. Now, actually if you look right above that
22 it says "attachment," and then it shows an image attachment,
23 correct?
24 A. Yes.
25 Q. Do you know what that was?

2 Q. That's fine. So then what happens is this
3 communication is from Pang Yang, correct?
4 A. Yes.
5 Q. Now who is Pang Yang?
7 Q. So she was actually working with you?
8 A. Yes.
9 Q. And so she is directing this communication to you
10 with a cc to Mr. Budoff?
11 A. Um --
12 Q. Or was she not?
13 A. Yeah, I guess she did cc Mr. Budoff.
14 Q. Let's go to page four. On the top of page four is a
15 communication back to Pang from a guy named David Wheeler. Who
16 is David Wheeler, if you know?
17 A. He was also a representative of a lender.
18 Q. So he's another bank person that you were working
19 with?
20 A. Yes.
21 Q. And had you worked with David Wheeler in the past?
22 A. With Nova Star. We worked with them a few times,
23 yes.
24 Q. And according to this he worked for Nova Star?
25 A. Yes.

1 Q. And there was some communication at some other point
2 in time about not using Nova Star anymore, correct?
3 A. Yes.
4 Q. And so this is David telling Pang that the
5 debt-to-income ratio is over 55 percent, right?
6 A. Yes.
7 Q. And their terms was a maximum of 50 percent, right?
8 A. Yes.
9 Q. Now there were other companies and other loan
10 agencies that may have a different DTI, is that correct?
11 A. Yes. Everybody's rules are different.
12 Q. Everybody has a different plan, right?
13 A. Yes.
14 Q. And actually even Nova Star had multiple plans within
15 their quiver of plans that would be offered based upon various
16 issues, right? They had more than one plan?
17 A. Yes.
18 Q. They had multiple plans?
19 A. Yes.
20 Q. And this plan, do you remember whether this was a
21 plan for the homeowner's purchase or was this a plan -- if you
22 know -- if you don't, that's fine -- for an investor purchase?
23 A. I don't -- I'd have to see what file it is.
24 Q. Okay. Well, let's just go back for a second. So
25 when Mr. Budoff started the processing in Premier Services in

1 November -- sorry -- in --
2 A. September.
3 Q. -- September, right, all the loans that you're
4 familiar with were done by way of the checkmark 1003 of
5 "investor," isn't that true?
6 A. Yes, we started doing that, yes.
7 Q. And so from the time processing was done under
8 Mr. Budoff's business, everything was checked "investor,"
9 correct?
10 A. Yes.
11 Q. All right. So when we look at this e-mail, which is
12 10-17, would it be your best estimate that this was an investor
13 1003 question?
14 A. Most likely it would be an investor.
15 Q. And actually, if you look at the first page, this is
16 the e-mail that talks about no more -- I'm sorry -- go to the
17 first page. That would be 341, first page.
18 And this is the document that says that you say that
19 we don't want to use Nova Star anymore, right?
20 A. Yes.
21 Q. And actually if we just go up slightly, it's Keith,
22 once again, and he's saying what is this deal, right, so Keith
23 is involved, I assume, in making decisions about which banks
24 and programs are going to be used, is that right?
25 A. He was ultimately the person, yes.

1 Q. Right. And it's Keith that responds to you and not
2 Mr. Budoff, correct?
3 A. Most of the time because he was in the office or in
4 an office, so he was able to respond right away, I'm thinking,
5 but Mr. Budoff is who we have to also always include.
6 Q. Right. But nowhere in this 341 is there any input by
8 A. Yes. I don't see it.
9 Q. Thank you. 345.
10 Now, this is an e-mail dated 10-18, correct?
11 A. Yes.
12 Q. And it's about Morgan at Peoples, who is that?
13 A. She is also another representative at a lender.
14 Q. Okay. And let's go back to the page three. This is
15 a communication started by Ben Budoff, correct?
16 A. Yes.
17 Q. And he is asking a question to Keith about -- well,
18 he's actually telling Keith that the information he'd gotten
19 from an agent was that they were asking questions about income,
20 and then he also was stating corrections on the 1003, is that
21 correct?
22 A. Yes.
23 Q. All right --
24 A. On the appraisal.
25 Q. Then he asks Keith, "please advise about the

1 income/DTI issue," correct?
2 A. Yes.
3 Q. Next page. Right there. "Keith, please advise about
4 the income/DTI issue," right?
5 A. Yes.
6 Q. So, actually, Mr. Budoff is asking a question, that's
7 something that he should know, right?
8 A. Yeah.
9 Q. Okay. Now let's go back to page two. And there is a
10 communication to Mr. Budoff again in that string. But let's go
11 up to the top.
12 If you look at the top, and it's you responding to
13 Ben. We have to actually go two pages here. If you go to the
14 top and the bottom of page one, which is 345, you'll see the
15 response right here, okay, and then we go back to page two, and
16 we see what your response is, right?
17 I'm sorry, now you see the flow of the exhibit,
18 correct?
19 A. Yes.
20 Q. All right. Now, at that point you're saying that you
21 must have looked at something because $3,500 appears to work?
22 A. Yes.
23 Q. All right. What was it that you looked at?
24 A. I probably did a calculation. Because on the system
25 you can put in different amounts, and then it will calculate it

1 for you and tell you whether your DTI is good or not.
2 Q. Uh-huh. And so this system, is that -- can you tell
3 us the name of that system?
4 A. Point.
5 Q. Point. And was Point a system that was created by
6 Mr. Brotemarkle, or was Point a system that was used by more
7 than just you guys, if you know?
8 A. Point is used by everybody in the mortgage industry
9 because that is the 1003.
10 Q. All right. And so it has a lot of variables that you
11 can plug things in, it comes up and it tells you, well, this
12 amount of money will work under these circumstances?
13 A. Yes.
14 Q. And that's what you did, right?
15 A. Yes.
16 Q. So there's nothing that you thought was wrong about
17 suggesting $3,500, is there?
18 A. It was stated income.
19 Q. Right. It was stated income. Would you tell the
20 jurors what stated income is?
21 A. Stated income is when you state someone's income.
22 You don't have to say -- you don't have to say what they made
23 on their W-2. You just say, you know, this person had a job at
24 this store, and they made $25,000 a year. You just state their
25 income.

1 Q. All right. And that was something that you -- that
2 was a part of the various plans that you were involved with,
3 they were all stated income, at least in September on?
4 A. As long as they didn't have an actual job that we can
5 verify, then we would go stated income.
6 Q. And these banking agencies were aware that this was a
7 stated-income loan, isn't that correct?
8 A. This was the program that they provided for us, yes.
9 Q. And did you always, at least from September of '06
10 on, did you always submit stated-income loans?
11 A. For those borrowers that met the criteria.
12 Q. Okay. And what was the criteria?
13 A. That there was a job that we can verify, but we would
14 state their income.
15 Q. All right. So we're back to the e-mail, 345, and Ben
16 responds and tells -- this is on page one, sorry.
17 Now it's Mr. Budoff responding, right? And he's
18 still telling you that the $3,500 put the DTI too high, and he
19 says please wait for Keith's recommendations on this, is that
20 correct?
21 A. Yes.
22 Q. Now this is dated 10-18-06? If you want to look at
23 the top.
24 A. Yes.
25 Q. And this is only a month and a half before the agents

1 come in and do the search warrant, right?
2 A. Yes.
3 Q. And Ben is still saying wait for Keith, right?
4 A. Yes.
5 Q. All right. And then finally Keith says -- that's at
6 the top -- he says, "3500 works as well as I get 47 percent at
7 75 percent rent income." What's he mean by that, if you know?
8 A. I think this particular person that was on the loan
9 has a rental, like, property, and so they're including the
10 rental income as part of the consideration for his DTI.
11 Q. Finally it says, "but whatever A.M. says." Who is
12 A.M.?
13 A. I think it might be account manager. I'm not exactly
14 sure.
15 Q. Not sure?
16 A. Yeah.
17 Q. All right. But you knew at the time, right?
18 A. Yes. I think that might be account manager because
19 the people at the lenders they were named account managers.
20 Q. But the bottom line is Mr. Budoff is still looking to
21 Keith Brotemarkle, correct?
22 A. Yes.
23 Q. Yeah. And, of course, you never saw Mr. Budoff in
24 that office after September, did you?
25 A. No.

1 Q. Okay. 349. Just one page. Can you see it at all?
2 A. Yes.
3 Q. The date is October 20th, right?
4 A. Yes.
5 Q. Actually, starts back on October 19th at the bottom,
6 correct?
7 A. Yes.
8 Q. And at the bottom it says it's communication to
9 Mr. Budoff, right?
10 A. Yes.
11 Q. And it says that "these are the checks that you're
12 going to get tomorrow," right?
13 A. Yes.
14 Q. And it enumerates -- one, two, three, four, five --
15 six items, right?
16 A. Yes.
17 Q. Now, that money, total of $10,118, is that -- do you
18 know why that was paid to -- was it paid to Mr. Budoff or was
19 it paid to Premier Services?
20 A. I believe it was paid to Mr. Budoff because Dana
21 Capital would have paid the loan officer on file.
22 Q. All right. But this is from Sam Vu, the loan
23 processor, and it's to you, actually --
24 A. Uh-huh.
25 Q. -- and cc to Ben Budoff, but it's psloans, right?

1 A. Yes.
2 Q. And then you respond, and then you forward it, and
3 you say "great, let us know tomorrow," and then finally on the
4 top it says, "huge thanks," and it says "Ben Budoff, Dana
5 Capital," right?
6 A. Yes.
7 Q. Now, is that what makes you believe that this was
8 payments by Dana Capital?
9 A. Yes.
10 Q. And who is Dana Capital?
11 A. Dana Capital is the broker that Benjamin was putting
12 all of his loans through.
13 Q. Okay. So is Benjamin an agent or a broker as far as
14 you were aware of?
15 A. He was an agent.
16 Q. For the brokerage company?
17 A. For the broker.
18 Q. And that would have been Dana Capital, right, and you
19 believe that to be true, right?
20 A. That's what all the documentation -- that's what I
21 knew.
22 Q. Keith Brotemarkle was also working with Dana, was he
23 not?
24 A. Yes.
25 Q. All right. And so this would be for these specific

1 loans because it would have specific names, correct?
2 A. Yes.
3 Q. And so it appears that -- all right. So that's fine.
4 354.
5 THE COURT: This will be your last e-mail in this
6 series, Mr. Samuel?
7 Q. BY MR. SAMUEL: Actually, it is.
8 The date on that is 10-26-06, correct?
9 A. Yes.
10 Q. And this is actually from Lisa Vang and it's to you,
11 correct?
12 A. Yes.
13 Q. And there is a cc to Mr. Budoff, but if you start and
14 just look at -- go back to page three, if you would, please --
15 you don't see -- on page two, if you take a look at that, and
16 back to page one, you don't see Mr. Budoff engaged in any
17 conversation or any responses to these comments, is that
18 correct?
19 A. No. Not in this e-mail, no.
20 Q. Right. But this e-mail on page one talks about
21 seasoning, right?
22 A. Yes.
23 Q. What is seasoning?
24 A. Seasoning is enough money in your account that has
25 been there for a set amount of time.

1 Q. And some banks don't require seasoning?
2 A. Yes.
3 Q. Some banks do?
4 A. Yes.
5 Q. And in this particular case, originally during this
6 conversation there was a bank that needed seasoning, correct?
7 A. Yes.
8 Q. And the suggestion was that you just take it to
9 another bank that doesn't need seasoning, correct?
10 A. Yes.
11 Q. Now, you never said a word to Mr. Budoff -- this is
12 just a yes or no -- about seasoning, did you?
13 A. No.
14 Q. All right. So you're not aware -- well, no further
15 questions on that. Just a moment. Check my notes.
17 MR. SAMUEL: Thank you. No further questions.
18 THE COURT: All right. Any redirect, Mr. Morris?
20 THE COURT: How much time do you realistically
21 estimate you will need?
22 MR. MORRIS: Hoping 15 minutes, Your Honor. Just
23 checking to see if we have an exhibit loaded up, or if I need
24 to use the ELMO, Your Honor.

2 BY MR. MORRIS:
3 Q. Ms. Yang, do you recall last week Mr. Tedmon
4 directing your attention to an exhibit called CH-T, which was
5 an e-mail involving Velda, do you recall that discussion with
6 him?
7 A. Yes.
8 Q. Can you see in front of you CH-T?
9 A. Yes.
10 Q. And Mr. Tedmon had directed your attention to this
11 passage where you had stated "leave Charles out of this," do
13 A. Yes.
14 Q. And was it your testimony, or did I understand your
15 testimony that that comment you made was in response to this
16 e-mail down below where Velda had added him into the e-mail
17 train?
18 A. Yes.
19 Q. And so what was it that you were saying when you said
20 "leave Charles out of this"?
21 A. I told her to leave Charles out of it because the
22 e-mail only referred to finding a file, and so that was
23 something that he wouldn't be involved in trying to locate was
24 a file.
25 Q. Looking at this portion of the e-mail, it looks like

1 it's an e-mail from you to Pang cc Keith and Velda and not
2 Charles?
3 A. Yes.
4 Q. Okay. And then it appears that Velda replies to you,
5 is that correct?
6 A. Yes.
7 Q. And then in response to that e-mail from Velda, who
8 did you add back into the conversation?
9 A. I added Charles into the conversation.
10 Q. And why did do you that?
11 A. Because I wanted him to know -- because Velda was not
12 very happy, so I wanted him to know what was going on.
13 Q. And then who replies to you after you've done that?
14 A. Charles.
15 Q. And what does he say?
16 A. (Reading): Give the copy of the documents to Velda
17 so that she can personally deliver it to the court.
18 Q. And what was your reply to Charles?
19 A. "Okay."
20 Q. Do you also recall last week talking with Mr. Tedmon
21 about whether or not you had previously mentioned that you had
22 a conversation with Charles where he linked the FBI
23 investigation to splitting up the company?
24 A. Yes.
25 Q. And do you recall that Mr. Tedmon asked you if you

1 ever remembered having told anybody that prior to your
2 testimony here in court?
3 A. Yes.
4 Q. And do you recall whether you spoke to anybody about
5 that prior to that testimony?
6 A. Yes.
7 Q. When, if you can recall, did you tell somebody about
8 that conversation prior to your testimony here?
9 A. The first meeting that I had with the U.S. Attorney's
10 Office with my attorney.
11 Q. Do you recall any details about that beyond what you
12 just stated?
13 A. I recalled saying something to the effect that I
14 received -- I mean, there were a few conversations, but I do
15 know one time I told him that I received a phone call from an
16 agent about everything that was going on in the office, and he
17 told me that -- to not worry about it, and that he would take
18 care of it.
19 And then another situation where he also told me that
20 he was going to be splitting up the company, and that that
21 should resolve or eliminate a lot of the issues.
22 Q. I want to try to make sure -- there's been a lot of
23 testimony over a long week. I want to try to see if I can make
24 sure that we understand the timeline of how things have
25 developed.

1 Was it your testimony that you started at the Long
2 Beach location because that was the first place you worked?
3 A. Yes.
4 Q. And it was your testimony then that at some point the
5 company moved to Costa Mesa?
6 A. Yes.
7 Q. Now, I think when you were talking with Mr. Tedmon, I
8 think you were thinking that perhaps the move was in early 2004
9 or early 2005, is that correct?
10 A. Yes.
11 Q. Okay. Do you recall which of those it was, whether
12 it was 2004 or 2005?
13 A. I'm thinking maybe in 2005.
14 MR. MORRIS: Okay. May I approach, Your Honor?
15 THE COURT: All right. Does counsel know what you're
16 handing up?
17 MR. MORRIS: May I approach, Your Honor?
18 Q. BY MR. MORRIS: I'm showing you an item that's been
19 marked for identification purposes only as Government's 199.
20 If you could take a moment to review that.
21 A. Okay.
22 Q. Do you see a date on that document?
23 A. Yes.
24 Q. And reviewing that document, does that refresh your
25 recollection as to whether or not the company had moved to

1 Costa Mesa by early 2004?
2 A. Yes.
3 Q. And is it the fact that you had moved to the -- you
4 had moved to Costa Mesa by 2004?
5 A. Yes.
6 MR. MORRIS: May I approach to retrieve, Your Honor?
8 Q. BY MR. MORRIS: Okay. So we've gotten now to early
9 2004.
10 A. Yes.
11 Q. To the best of your recollection, who is working at
12 the Costa Mesa office when you start there in -- when the
13 company first moves there in 2004?
14 A. When we first moved there, it was Charles, myself,
15 Sam, Vanessa, Andrew, Mike, Sarah Mattson. Pretty much the
16 original crew.
17 Q. Okay. And then I think Mr. Greiner had -- when he
18 spoke to you last week -- had said that Mr. McCarns started
19 working there later and you agreed with that, right?
20 A. The dates are so off I -- I mean --
21 Q. Okay. To the best of your recollection -- well,
22 okay.
23 Was Mr. McCarns working there by the time that you
24 left to move to Tustin?
25 A. Yes, definitely.

1 Q. Okay. So sometime in that period of Costa Mesa
2 Mr. McCarns joins?
3 A. Yes.
4 Q. Okay. And then is it your testimony that the move to
5 -- from Costa Mesa -- for you from Costa Mesa to Tustin was in
6 2006?
7 A. Yes.
8 Q. Okay. Mr. Samuel was just asking you about using
9 owner-occupied and not owner-occupied on the 1003s?
10 A. Yes.
11 Q. Do you recall there being a point where there was a
12 distinct shift that that change happened?
13 A. Yes.
14 Q. Do you recall approximately when --
15 Well, do you recall why that change happened? Or do
16 you recall how you were informed of that change, is a better
17 question?
18 A. Yes, we were informed that we would have to change
19 the way that we submitted our loans because of all of the, you
20 know, heat that we were getting from the FBI. And so we were
21 informed that we would have to change the way we did our
22 mortgage loans.
23 MR. TEDMON: Your Honor, probably the same one. When
24 she uses the word "we," we need to define.
25 THE COURT: Sustained. Given that we're starting

1 again this week, to refresh recollections. And let me make
2 certain I understand Mr. Greiner's objection.
3 MR. GREINER: Same objection. Motion to strike and
4 admonish the jury to disregard the answer.
5 THE COURT: I'm not going to grant the motion to
6 strike. But can you clarify now the "we"?
7 MR. MORRIS: Let me find a better way to do this
8 actually.
9 THE COURT: But before you do that, you should
10 clarify her use of the word "we."
11 Q. BY MR. MORRIS: And just as a refresher, if we can be
12 as specific as we can when we talk about "we," "they,"
13 etcetera. And that's for all of your testimony.
14 THE COURT: Clarify with respect to the last answer.
15 I didn't grant the motion to strike on the condition that you
16 clarify her answer to the last question.
17 Q. BY MR. MORRIS: And then if you could, then, your
18 last answer when you were using the word "we," can you
19 re-clarify your understanding of when this shift happened and
20 what led you to understand that there would be a shift?
21 A. I was told by Keith Brotemarkle and Charles Head that
22 the office -- or when we submitted the loans -- when Anzoni --
23 I mean -- when Anzoni -- sorry -- when Head Financial would
24 submit a loan, that Head Financial would submit a loan
25 non-owner-occupied because the borrowers were not going to live

1 in the property to avoid further issues.
2 MR. MORRIS: I'm going to ask to admit Government's
3 211, if it's not already --
4 MR. GREINER: Number again?
5 THE COURT: 211 is not yet admitted.
6 MR. MORRIS: Covered by the stipulation, Your Honor.
10 MR. GREINER: Not covered by the stipulation, but it
11 is hearsay as to this witness.
14 THE COURT: Your response to the hearsay objection?
15 MR. MORRIS: The same as it's always been, Your
16 Honor. Co-conspirator's statements.
19 From Keith with DCG To Charles Head CC Keith Brotemarkle
20 Subject: FFCBROKER.com admitted into evidence.)
21 MR. GREINER: And the hearsay was the 801(d)(2)(E).
22 THE COURT: All right. Mr. Samuel, you join?
23 MR. SAMUEL: Yes.
24 MR. TEDMON: Your Honor, I have a standing objection
25 on 801(d)(2)(E).

1 THE COURT: Exactly.
2 MR. TEDMON: I'm not noting it for the record every
3 time.
4 THE COURT: That is noted.
5 Again, to refresh our memories, we're starting a new
6 week. You know that this is a case in which a separate crime
7 is charged against one or more of the defendants. The charges
8 are joined for trial. You must ultimately decide the case,
9 when it's given to you, of each defendant on each crime charged
10 against that defendant separately.
11 And then to remind you of an instruction I gave you
12 last week with respect to this evidence and other times when
13 you hear that objection, the 801(d)(2)(E) objection, you are
14 not to consider that evidence against the defendant unless the
15 Government ultimately proves beyond a reasonable doubt that
16 there was a conspiracy, that the defendant was a member of that
17 conspiracy, and the act or statement testified to was in
18 furtherance of that conspiracy.
19 All right. Mr. Morris. This is 211.
20 Q. BY MR. MORRIS: 211, please. And if we could first
21 just look up here. What's the date of the document?
22 A. May 25, 2005.
23 Q. Zoom out. And I'm going to try to point you to a
24 spot there. Do you see where that arrow went in where it
25 starts with your name?

1 A. Yes.
2 Q. So the sentence "Kou is allowing me to build the NOO
3 submissions," what does NOO mean to you?
4 A. No owner-occupied.
5 Q. So does this help to figure out when it was that a
6 shift to non-owner-occupied occurred within the business?
7 A. Yes.
8 Q. And do you recall that this is being about the time
9 that that shift happened?
10 A. Yes.
11 Q. Okay. You can take that down.
12 Do you recall last week Mr. Greiner having a
13 discussion with you about the term straw buyer?
14 A. Yes.
15 Q. And do you recall him asking you whether it was true
16 that you had never even used that term prior to talking to the
17 Government?
18 A. Yes.
19 Q. And was it your testimony that in fact straw buyer
20 was a term that you did use prior to talking to the Government?
21 A. Yes.
22 MR. MORRIS: Your Honor, I'll ask to admit
23 Government's 118. Covered by the stipulation.
25 MR. TEDMON: 118, counsel?

1 THE COURT: Yes. 118.
4 MR. GREINER: Objection 801(d)(2)(E), Judge.
5 MR. SAMUEL: Join.
6 THE COURT: All right. The exhibit comes in over
7 those objections. 118 is admitted.
9 Kou Yang To Charles Head Subject: RE: Franklin APPRAISAL
11 Q. BY MR. MORRIS: And what's the date of this e-mail?
12 A. April 26, 2005.
13 Q. Okay. And who wrote the e-mail?
14 A. I did.
15 Q. Who did you send it to?
16 A. I sent it to Charles Head.
17 Q. And what term are you using in that e-mail?
18 A. Straw buyers.
19 MR. MORRIS: Take it down. Your Honor, I'm going to
20 ask to admit Government's Exhibit 90. It's covered by the
21 stipulation.
22 THE COURT: You've been going for about 20 minutes.
23 Just so you know. Are you getting close?
24 MR. MORRIS: I am. Are we close to break time?
25 THE COURT: No. We have a another 20, 25 minutes.

1 Any objection, Mr. Tedmon, to 90?
6 MR. SAMUEL: No.
8 (Government Exhibit 90, Pacific Mercantile Bank
9 signature card for account of Creative Loans, LLC listing
10 authorized signors Dated 5/27/2005 admitted into evidence.)
11 Q. BY MR. MORRIS: Do you recall being a signatory on
12 the bank accounts for one or more of the companies involved in
13 this?
14 A. Yes.
15 Q. And is that your signature on that line two right
16 there?
17 A. Yes.
18 Q. Okay. If we could zoom back out.
19 And what's the account number for which you're a
20 signatory on that sheet?
21 A. Creative Loans.
22 Q. And if we could go to page two. And who were the
23 signatories listed on page two of this exhibit?
24 A. Charles Head, my signature, and Jack Corcoran.
25 Q. Zoom back out. Hold on a second.

1 And what's the date on this document?
2 A. On May 27th, 2005.
3 Q. Zoom back out. And now up here, what are companies
4 listed on this signature sheet?
5 A. Creative Loans, Nations Property Management and
6 FundingForeclosures.com.
7 Q. Based on your involvement with -- well, as a
8 signatory on this account, what's the relationship between
9 Creative Loans, Nations Property Management and
11 A. They are all owned by the same person.
12 Q. Who?
13 A. Charles Head.
14 Q. Was there a difference in when you would use those
15 names within the company?
16 A. Yes.
17 MR. TEDMON: Objection. That's fine. I'll withdraw
18 it.
19 Q. BY MR. MORRIS: Now you being you personally, did you
20 have an understanding of a difference between those three
21 names?
22 A. Yes.
23 Q. What was your understanding?
24 A. Creative Loans was the loans part of the business,
25 and then Nations Property Management is the property management

1 part of the business, and the FundingForeclosures.com is the
2 foreclosures part of the business.
3 Q. And if we could go to Exhibit 61. It's previously
4 been admitted.
5 Do you recall I think it was Mr. Greiner was asking
6 you to look at this document on cross-examination?
7 A. Yes.
8 Q. And had you previously -- you had previously
9 testified that this was your handwriting on this document?
10 A. Yes.
11 Q. If we could go to page five of that. Zoom in.
12 I think his discussion with you was about these
13 halves and parts that don't have halves, so I want to clarify.
14 If a box here has something that talks about, say, a
15 one-half, what does that mean in that box?
16 A. That means that that's Charles' half.
17 Q. If there's a box that doesn't have a half listed,
18 what does that mean?
19 A. That means that the rent covers the mortgage.
20 Q. Okay. So explain to me now, when you say the rent
21 and the mortgage, what are you talking about?
22 A. The sellers, when they were sold the program, the
23 sellers were sold it on the idea that they would pay a rent to
24 the company for the duration of at least 12 months, and that is
25 the amount that they take to pay the mortgage that has been

1 taken out on the loan.
2 Q. Was it one of your job duties to accept those
3 incoming rent payments?
4 A. For a period of time, yes.
5 Q. Do you recall, roughly, when that period of time was?
6 A. It was up until Jack Corcoran came on board.
7 Q. And then you talked about the rent and then the
8 mortgage. Were you involved in the paying of the mortgages?
9 A. At the beginning, yes, and then it was transferred
10 over.
11 Q. And was it the same time period when Jack Corcoran
12 took over?
13 A. Yes.
14 Q. And how did you pay those mortgages?
15 A. I would call on the phone and just make a payment
16 over the phone. I would do it online. Whatever was the
17 easiest. Send in payment.
18 Q. What bank account would you use to make those
19 payments?
20 A. The -- the -- I believe it's the Pacific Mercantile
21 account. There was only one account that I was allowed to use
22 to pay the bills.
23 Q. And was that the same account that you deposited the
24 rent checks into?
25 A. Yes -- no. I believe it was Funding Foreclosures

1 that it was -- I'm not exactly sure.
2 Q. Okay.
4 Q. But you had access to that Pacific Mercantile
5 account?
6 A. Yes.
7 Q. Do you recall any other income coming into that
8 account?
9 A. Yes.
10 Q. What do you recall as being income coming into that
11 account?
12 A. The money that the sellers would get, once they
13 received the wire from the escrow company, it would then be
14 transferred back into our account.
15 Q. And was that wired directly from the escrow company?
16 A. There was -- there was -- it got to the point where
17 there was this form that was filled out to where the sellers
18 agreed to --
19 MR. TEDMON: Objection, Your Honor. Non-responsive.
20 Move to strike.
22 Q. BY MR. MORRIS: Well, was there a time when the wires
23 came directly from the escrow company to the company's bank
24 accounts?
25 A. Yes.

1 Q. And that was during the time when you were involved
2 with the account and had access to the account?
3 A. Yes.
4 Q. Do you recall, other than mortgages, anything else
5 that was paid for out of the accounts that you had access to?
6 A. I'm not exactly sure.
7 MR. MORRIS: Just a moment, Your Honor. No further
8 questions, Your Honor.
9 THE COURT: All right. Mr. Tedmon, any further
10 cross?
11 MR. TEDMON: Yes, Your Honor. It will be brief.
13 BY MR. TEDMON:
14 Q. Good morning, Ms. Yang.
15 A. Good morning.
16 Q. If we could have Government's Exhibit 90 put back on
18 This is an exhibit you just testified about a few
19 minutes ago with Mr. Morris, correct?
20 A. Yes.
21 Q. Now, this is a document that was used to open a bank
22 account, Pacific Mercantile, correct?
23 A. Yes.
24 Q. And the signature here is your signature, correct?
25 A. Yes.

1 Q. All right. And the signature above that, that's
2 Charles Head's signature, correct?
3 A. Yes.
4 Q. And you're familiar with his signature, true?
5 A. Yes.
6 Q. And that's his true and correct signature, correct?
7 A. Yes.
8 Q. And, likewise, the signature with no name underneath
9 it, that's Charles Head's true and correct signature, correct?
10 A. Yes.
11 Q. Now if we can go to page two of that document,
12 please, and then there is a series of signatures on the
13 right-hand side. That is Charles Head's true and correct
14 signature, true?
15 A. Yes.
16 Q. And then the signature below that, that is your true
17 and correct signature, true?
18 A. Yes. Yes.
19 Q. All right. And then the signature below yours,
20 underneath it it says John J. Corcoran, do you see that?
21 A. Yes.
22 Q. And there is a signature above that name?
23 A. Yes.
24 Q. And that is John Corcoran's true and correct
25 signature, true?

1 A. Yes.
2 Q. And then finally there is a signature at the bottom
3 left-hand side, that is Charles Head's true and correct
5 A. Yes.
6 Q. All right. Thank you. Take that down.
7 Now you testified that you were aware of this
8 investigation some time in, I think you said, January of 2006,
9 is that right?
10 A. Probably. The dates are I mean --
11 Q. I know it's been a long time.
12 A. Yeah.
13 Q. And you testified that you received a phone call from
14 an agent?
15 A. Yes.
16 Q. And that was possibly Special Agent Sommercamp?
17 A. Yes.
18 Q. From the FBI?
19 A. Yes.
20 Q. And you were aware before that, the month before,
21 actually, in December, that Special Agent Sommercamp had
22 actually contacted Charles Head and talked to him by phone,
23 correct?
25 Q. Do you recall Mr. Head telling you he received a

1 phone call from the FBI?
2 A. I know that there had been some talk, but he was very
3 quiet about everything.
4 Q. Well, I understand that. But in terms of talk,
5 before you received the phone call, you were aware Mr. Head had
6 been contacted by the FBI, true?
7 A. I may have been.
8 Q. Okay. You don't have any specific recollection of
9 that?
10 A. I don't.
11 Q. Okay. But you're not saying you didn't know?
12 A. I mean, I know that there's always been talk of an
13 investigation.
14 Q. But I'm trying to pin down the timeframe. Your
15 testimony was you were contacted in early 2006?
16 A. Yes. Yes.
17 Q. And that was by telephone?
18 A. Yes.
19 Q. And then Mr. Head was contacted prior to you being
20 contacted also by telephone, correct?
21 A. Yes.
22 Q. And you knew that?
23 A. Well, I --
24 Q. Generally?
25 A. Generally, yes, I was told, yeah.

1 Q. Now Exhibit CH-R -- I won't put it up on the screen
2 -- but that was the contract for sale of Head Financial
3 Services and Creative Loans, both of those companies, to FCO?
4 MR. SAMUEL: Objection. That misstates the facts.
5 MR. TEDMON: I can pull it up and show it, but it
6 does.
7 THE COURT: Well, overruled.
8 Q. BY MR. TEDMON: All right. Let me do it this way.
9 You looked at an exhibit that I showed you, CH-R, it
10 was a sales contract, correct?
11 A. Yes.
12 Q. And the companies were being sold to FCO, Inc., true?
13 A. Yes.
14 Q. And that was owned by Lavar Fletcher?
15 A. Yes.
16 Q. Okay. And that was on or about August 22, 2006,
17 correct?
18 A. Yes.
19 Q. Okay. Now, that was about ten months or so after
20 Mr. Head had first been contacted by the FBI, correct?
21 A. Yes.
22 Q. All right. And you're also aware that Mr. Head
23 utilized attorneys from time to time, correct?
24 A. Yes.
25 Q. And he used an attorney to facilitate that contract

1 of sale, correct?
2 A. I don't know if he did. I was not a part of it.
3 Q. Okay. You weren't aware of that at all one way or
4 the other?
5 A. I don't know who was involved. All I know is that it
6 was sold. I was not a part of it
7 Q. And you knew Mr. Head utilized attorneys in his
8 business?
9 A. Yes.
10 MR. TEDMON: Nothing further.
11 THE COURT: Mr. Greiner? How much time do you
12 estimate you need?
13 MR. GREINER: I have four areas. Three short. One
14 is bogged down in the e-mails. So three areas will go quickly,
15 Judge. The e-mails will take a little bit of time.
16 I watched the Government. It's going to be around
17 the 20-minute mark. Where the bog down is going to be is the
18 e-mails, so it's not by preparation.
19 THE COURT: All right. Let's get the three short
20 areas out of the way first, and then we will a likely take our
21 break.
24 BY MR. GREINER:
25 Q. Ms. Yang, I want to talk to you about testimony you

1 gave to the Government on direct and on cross-examination
2 someplace.
3 You talked about a file room being unlocked at Costa
4 Mesa, do you remember that?
5 A. Yes.
6 Q. Okay. And in that testimony you said that the file
7 room was unlocked, and it was available to anyone, do you
8 remember that?
9 A. Yes.
10 Q. Okay. You never told the Government when you talked
11 to them in March of this year, 2013, that you ever saw Domonic
12 McCarns in that file room, correct?
13 A. Yes.
14 Q. "Yes" being correct?
15 A. Correct.
16 Q. And you never told the Government in that March 2013
17 interview that you ever saw Domonic McCarns in the file room
18 reading a file, correct?
19 A. Correct.
20 Q. And you never told the Government in the March 2013
21 interview that you ever saw Domonic McCarns take a file out of
22 the file room, correct?
23 A. Correct.
24 Q. And in the April 2013 interview with the Government,
25 you never told the Government you saw Domonic McCarns in that

1 file room, correct?
2 A. Correct.
3 Q. And in the April 2013 interview you never told the
4 Government you saw Dominic McCarns reading a file in the file
5 room, correct?
6 A. Correct.
7 Q. And in the April 2013 interview with the Government,
8 you never told the Government that you saw Domonic McCarns take
9 any file out of the file room, correct?
10 A. Correct.
11 Q. And in that file room you know that there were two
12 distinct separate types of files, correct?
13 A. Correct.
14 Q. There were the Foreclosure Funding files (sic),
15 correct?
16 A. Yes.
17 Q. And there were the loan documents, correct?
18 A. Not correct.
19 Q. Okay. You remember testifying at a prior proceeding,
20 correct?
21 A. Yes.
22 Q. And in that prior proceeding you were asked if Head
23 Financial Services had any kind of filing system for those
24 documents, do you remember that question?
25 A. Yes.

1 Q. And your answer was that there were two sets of
2 papers, one was the foreclosure set, do you remember that?
3 A. Yes.
4 Q. And one was the loan set, do you remember that?
5 A. Yes.
6 Q. And you were under oath when you gave that testimony,
7 correct?
8 A. Yes.
9 Q. Skip the e-mails.
10 All right. I want to talk briefly again about this
11 incident where you had your husband beat up Domonic McCarns, do
13 A. I didn't have anybody do anything.
14 Q. Okay. So your testimony today is that your husband
15 did not beat up Domonic McCarns?
16 A. If he did, that was on his own. I did not tell him
17 to do it.
18 Q. So your husband knew to come to the office one day on
19 his own, correct?
20 A. No. What happened was --
21 Q. I apologize, Ms. Yang, but my question is simply,
22 directing you back, is that your husband knew to come to the
23 office one day on his own, correct? Is that what you're
24 telling the ladies and gentlemen of the jury?
25 A. No, I called him.

1 Q. Okay. And he came to the office, correct?
2 A. But I did not know he was going to do that.
3 Q. Ms. Yang, my question is he came to the office,
4 correct?
5 A. Yes. Yes, he did.
6 Q. And he beat up Domonic McCarns, correct?
7 A. Yes.
8 Q. You were not fired because your husband beat up
9 Domonic McCarns, were you?
10 A. No.
11 Q. You were not terminated because your husband beat up
12 Domonic McCarns, were you?
13 A. No.
14 Q. You were not put on leave of absence because your
15 husband beat up Domonic McCarns, were you?
16 A. No.
17 Q. In fact, you weren't even put on probation because
18 your husband beat up Domonic McCarns, were you?
19 A. No.
20 Q. Domonic McCarns always questioned the work that you
21 did, correct?
22 A. Yes.
23 Q. And he always wanted you to work more efficiently,
24 correct?
25 A. Yes.

1 Q. And he couldn't understand why it took so long for
2 you to do your job, correct?
3 A. Yes.
4 Q. And he always wanted things to go better in the
5 office, correct?
6 A. Yes.
7 Q. And your husband never beat up anybody else in the
8 office, correct?
9 A. No.
10 Q. All right. Third area I want to cover is -- and it
11 was covered a little bit by the Government both in direct and
12 on redirect and by the other attorneys.
13 I want to see if I can get -- paint a word picture of
14 how the job site was running when Domonic McCarns was there in
15 2005, 2006, while you were there. Do you have that in your
16 mind?
17 A. Yes.
18 Q. Is that "yes"?
19 A. Yes.
20 Q. Okay. If you could speak into the microphone so the
21 court reporter can hear. We've got to get it down. Okay?
22 A. Okay.
23 Q. And I don't want you to talk about when you moved to
24 Tustin. Do you have that in your mind?
25 A. Yes.

1 Q. Okay. So you're sitting at your desk as the
2 processor, true?
3 A. Yes.
4 Q. All right. Now, just clear your total desk off,
5 there's nothing on your desk, right, have that picture in your
6 mind?
7 A. Okay.
8 Q. So you have no papers on your desk and you're waiting
9 for someone to give you a document, correct?
10 A. Yes.
11 Q. Okay. Now, Keith Brotemarkle was in charge of
12 getting investors, correct?
13 A. Yes.
14 Q. Filling out the loan applications, the 1003s,
15 correct?
16 A. Yes.
17 Q. Finding the banks, correct?
18 A. Yes.
19 Q. Okay. Now his desk is totally clear, have that
20 picture in your mind?
21 A. Yes.
22 Q. Okay. So Keith -- at this point in time, Keith
23 Brotemarkle's desk is cleared, doesn't have anything to hand to
24 you, correct?
25 A. Yes.

1 Q. All right. Now, Domonic McCarns is sitting at his
2 desk, and he's got the phone waiting to make a phone call,
3 correct?
4 A. Yes.
5 Q. Because he's selling the Funding Foreclosure contract
6 program to sellers, correct?
7 A. Yes.
8 Q. He's selling it to homeowners, correct?
9 A. Yes.
10 Q. All right. And he's waiting until he gets a lead of
11 a person that's interested in the program, correct?
12 A. Yes.
13 Q. Once Domonic McCarns gets a lead, then he makes a
14 phone call to the homeowner to sell the Funding Foreclosure
15 contract to enter into the program, correct?
16 A. Yes.
17 Q. Domonic McCarns is not calling the homeowner to sell
18 them a loan, correct?
19 A. Yes.
20 Q. "Yes" being correct, right?
21 A. Yes.
22 Q. All right. Once Domonic McCarns has a homeowner sign
23 the Funding Foreclosure agreement to enter into the program,
24 then Domonic McCarns gets an appraisal of the home, correct?
25 A. Yes.

1 Q. And gets a payoff of the home, correct?
2 A. Yes.
3 Q. Now, Domonic McCarns gives that information to Keith
4 Brotemarkle, correct?
5 A. Yes.
6 Q. And now Keith has somebody that's joined the Funding
7 Foreclosure agreement program, correct?
8 A. Yes.
9 Q. And now Keith Brotemarkle can find a borrower to fill
10 out the 1003 loan application, correct?
11 A. Yes.
12 Q. And find the bank for the rate, correct?
13 A. Yes.
14 Q. And then Keith takes those documents, the loan
15 documents, and puts them on your desk, correct?
16 A. Yes.
17 Q. And then you take those documents and you interact
18 with the bank, correct?
19 A. Yes.
20 Q. All right. And Domonic McCarns isn't at Keith
21 Brotemarkle's desk, correct?
22 A. No.
23 Q. "No" being correct?
24 A. Correct.
25 Q. And Domonic McCarns is not at your desk as the

1 processor, correct?
2 A. He was, but correct.
3 Q. Okay. And it's the -- the loan documents that you've
4 been talking about with the Government and with the other
5 attorneys, the loan documents are for the investor, that's
6 what's filled out, correct?
7 A. The investor, yes, the borrower.
8 Q. Because the homeowner, seller isn't getting a loan,
9 and so there is no loan document to fill out for the homeowner
10 seller, correct?
11 A. Correct.
12 Q. And the homeowner seller is the person that Domonic
13 McCarns is talking to on the phone, correct?
14 A. Yes.
15 MR. GREINER: Just looking for direction. Now it's
16 the e-mails.
17 THE COURT: No. Let's take our break. We've reached
18 the time for our first break of the morning.
19 During that break, please, as always, remember my
20 admonitions not to talk amongst yourselves, think about the
21 case's ultimate conclusion, or do any homework. If anyone does
22 attempt to contact you at any time, or any other juror that you
23 know of, let me know. Have a good 15-minute break.
24 (Jury out.)
25 THE COURT: You may step down. Please be back in

1 your seat in 15 minutes. You may be seated.
2 Are there any students with the class still here? If
3 you have questions -- we have had some students observing from
4 McGeorge Global Lawyering class -- I'm willing to take
5 questions in my chambers. I have about ten minutes. So if
6 anyone is interested, let Ms. Schultz know. Anything to
7 discuss?
8 MR. ANDERSON: Your Honor, we would like to revisit
9 the 801(d)(2)(E) instruction the Court's given. Although I
10 believe the first part is a good idea and warranted, I think
11 the second part is a misstatement of the law for the reasons
12 put out in the Government's motions in limine, which is
13 essentially it's not -- although the jury must decide beyond a
14 reasonable doubt if the participants were members of the
15 conspiracy, it's up to the Court to decide by a preponderance
16 of the evidence whether or not these e-mails come in.
17 Once the Court finds by a preponderance of the
18 evidence, then the jury can consider them as evidence of guilt.
19 They don't need to make the finding of beyond a reasonable
20 doubt. They are evidence that is then used to determine
21 whether or not the defendants are guilty beyond a reasonable
22 doubt.
23 So I see what the Court is trying to do, and I
24 appreciate it, but I think, ultimately, it's a misstatement of
25 the law --

2 MR. ANDERSON: -- that increases the burden on the
3 Government.
5 MR. TEDMON: Your Honor, I think the issue is that
6 the jury, obviously, has to find proof beyond a reasonable
7 doubt to convict any defendant.
8 In terms of the 801(d)(2)(E) issue, the Government
9 has the obligation to prove by independent evidence, that would
10 be evidence independent of co-conspirator statements, that a
11 conspiracy existed. That's for the Court to determine.
12 And then if the Court determines it doesn't, that's a
13 Rule 29. If the Court determines that there is sufficient
14 evidence outside of the statements that are being proposed and
15 admitted provisionally at this point, then the case simply goes
16 forward, and it's a piece of evidence that the jury can
17 consider or disregard. That's 801(d)(2)(E).
18 So I think the Court's admonition to the jury or
19 instruction that they have to find beyond a reasonable doubt is
20 correct in terms of their ultimate decision, but it's not the
21 jury's decision to determine whether there's been a conspiracy
22 proven up independent of the 801(d)(2)(E) co-conspirator
23 statements. I think that's what the Court's --
24 THE COURT: Right. There is a threshold decision I
25 make applying the preponderance of evidence standard. I'm

1 clear on that. I'm just looking at your proposed final jury
2 instructions on conspiracy. I'll look at those over the break.
3 Anything to say, Mr. Greiner?
4 MR. GREINER: Yes, Judge. I think what the Court has
5 instructed is absolutely correct. The Court hasn't lessened
6 the Government's burden because the Court's going to give an
7 instruction that the evidence that the jury is to consider in
8 deliberation are going to be all the exhibits.
9 And if the Court finds that all of these exhibits
10 come in, then the jury is going to have all of the e-mails, all
11 of the documents.
12 If the Court finds an e-mail or a string of e-mails
13 or all of the e-mails don't come in, that's where the Court,
14 you, have been the gatekeeper. You keep them out. And the
15 jury still has to find by a preponderance of the evidence the
16 guilt of my client.
17 THE COURT: Jury finds beyond a reasonable doubt.
18 You just said preponderance of the evidence, which is why we
19 have to be very careful here.
20 Mr. Samuel, anything further to say?
21 MR. SAMUEL: No. Just join that. And I think it
22 would be extremely dangerous for the Court to make any comments
23 to the jurors other than what it's already said.
24 THE COURT: Well, if you want to put in writing
25 exactly what you think the Court should say to record your

1 position, you can do that.
2 MR. ANDERSON: That would be fine, Your Honor.
3 Is there any way that we could get a copy of the
4 instruction that the Court's been using so that we could
5 comment directly on --
6 THE COURT: You can ask the court reporter for a copy
7 of the record.
8 MR. ANDERSON: We can do that.
10 (Break taken.)
11 THE COURT: All right. Let's bring the jury in. How
12 much time now do you think you need, Mr. Greiner?
13 MR. GREINER: It's the e-mails, Judge, and put them
14 up, talk, take them down. And I've got them all listed so I
15 know where I'm going. So I'm going to say 15. One I don't
16 have to talk about because everybody has talked about it, so I
17 don't have to talk about that one. But I take you to heart.
18 THE COURT: I would think that we would move on to
19 the next witness then before the next break. That's the
20 Court's observation.
21 MR. TEDMON: I think so.
22 MR. ANDERSON: Rotellini. Or maybe Wiley.
23 (Jury in.)
25 and gentlemen. We are going to pick up with another

1 cross-examination of Ms. Yang.
2 I am informed that we'll move on to the next witness
3 before the next break, just so you know. We're moving forward
4 and appreciate all of your close attention. It's clear that
5 you're engaged, and the Court, and the counsel, and the parties
6 appreciate that. Mr. Greiner, you have the e-mails yet to
7 cover.
8 MR. GREINER: Yes, Your Honor. Thank you.
9 Q. BY MR. GREINER: Ms. Yang, I didn't ask you before I
10 started, but I'm going to ask you now.
11 Between your testimony on Thursday and today, did you
12 talk to anyone about your testimony?
13 A. No.
14 Q. Did you meet with the Government or the Government
15 agents?
16 A. No.
17 Q. And did you talk to the Government or Government
18 agents at all?
19 A. No.
20 Q. All right. I want to talk about some e-mails. But
21 before I have one put up, I want to see if your memory recalls
22 this e-mail.
23 It was about August 27, 2004, e-mail between you and
24 Charles Head, and it was talking about you wearing the hat, do
25 you remember that e-mail, string of e-mails?

2 Q. Remember it was talking about you having meetings on
3 a weekly basis and Omar Sandoval wasn't informed, does that
4 refresh your memory?
5 A. No. Do you have the e-mail?
6 Q. Well, I have it, but I don't have it, which is an
7 interesting answer.
8 Do you recall that in that e-mail that you said to
9 Charles, look, if you think somebody else can run the business
10 better, then have somebody else do it, do you recall that?
12 point. It's almost testimonial in nature. I would ask that if
13 Mr. Greiner is going to ask questions, put the exhibit up.
14 It's confusing.
16 MR. GREINER: If we can have -- wait a minute, I'm
17 not sure 229 has been admitted. If it has not, I would offer
18 it under the stipulation.
19 THE COURT: 229 is not yet admitted. Any objection,
20 Mr. Morris?
25 MR. SAMUEL: 801(d)(2)(E).

3 Kou Yang To Domonics Blackberry; Domonic McCarns CC Emily Yang;
4 Keith Brotemarkle; eds@fundingforeclosures.com Subject: RE:
5 Updated payoff Lien # 1 on title admitted into evidence.)
6 Q. BY MR. GREINER: If we can have 229 up, please. And
7 can you see that that's an e-mail between you and Domonic
8 McCarns?
9 A. Yes. I can't really see all of it. Hold on. Yes.
10 Q. Okay. And you see from the tone of the e-mail what
11 I've highlighted from June 8, 2006. Domonic says, hey, you
12 need to stop smoking, Kou, and then your reply is, you get the
13 lien P.O., stop e-mailing me because if you're so smart, then
14 you do all this blank yourself, do you see that?
15 A. Yes.
16 Q. Okay. If we could have that taken down. I don't
17 know if 231 Government's had been admitted, Judge. If not, I
18 would admit it.
19 THE COURT: Not yet admitted. Any objection
20 Mr. Morris?

3 Domonic McCarns To Kou Yang; Keith Brotemarkle; Donna Guerrero;
4 Ed Shaffer; Sam Vu admitted into evidence.)
5 Q. BY MR. GREINER: If we could have that up, please.
6 First of all, on Government's Exhibit 231, do you
7 notice that it says Domonic Q. McCarns, and then it says
8 underwriter, do you see that?
9 A. Yes.
10 Q. And it says Funding Foreclosure, do you see that?
11 A. Yes.
12 Q. You never saw any e-mail in the entire time that
13 Domonic McCarns worked at the same time you did that ever said
14 loan officer, correct?
15 A. Correct.
16 Q. And then do you recall the Solares file?
17 A. Yes.
18 Q. Korell Solares from Florida?
19 A. Yes.
20 Q. She didn't pay some money or she withheld some money,
22 A. No.
23 Q. You don't recall that at all?
24 A. No.
25 Q. Okay. If we can take that down.

1 If we could have Government's Exhibit 235 admitted,
2 if it has not been admitted.
3 THE COURT: It has not been. Any objection,
4 Mr. Morris?
9 MR. SAMUEL: 801(d)(2)(E).
12 Domonic McCarns To Kou Yang; Keith Brotemarkle; Olga Wilson;
13 Jack Corcoran; Emily Yang; Sam Vu; Lisa Vang; Emily Yang; Pang
14 Yang; Ed Shaffer Subject: FW: Proof of payment admitted into
15 evidence.)
16 Q. BY MR. GREINER: And, again, it's still talking about
17 the Solares file, and Domonic is saying this check should be in
18 the office somewhere; does that refresh your memory about some
19 payment that Solares had to make, and it took a long time to
20 get it?
21 A. Yes.
22 Q. That was because escrow had cut money to Ms. Solares
23 that she wasn't owed, correct?
24 A. Yes.
25 Q. And it took -- I mean, there was e-mails all the way

1 in October of 2006 of you still trying to get Ms. Solares to
2 pay, do you remember that?
3 A. Yes.
4 Q. And you knew that she actually worked for an
5 attorney's office, correct?
6 A. Yes.
7 Q. And you knew that the attorney's name was David J.
8 Stern in Florida?
9 A. I don't know the attorney's office. I mean, I don't
10 know the attorney's name.
11 Q. And do you know what that law office did that
12 Ms. Solares worked for?
13 A. No.
14 Q. Okay. If we could take that down. If we could have
15 Government's Exhibit 250, if that's not been admitted, Judge.
16 THE COURT: That's not in evidence. Any objection,
17 Mr. Morris?
23 MR. SAMUEL: Join in that and 801(d)(2)(E).
24 MR. GREINER: And, Judge, I'm admitting it simply
25 because of the state of the evidence and what the attorneys

1 know and so --
2 THE COURT: Over your own objection?
3 MR. GREINER: Correct.
4 THE COURT: All right. Those objections are noted
5 but the exhibit is admitted. 250.
7 Kou Yang To Domonic McCarns Subject: RE: Solares admitted into
8 evidence.)
9 Q. BY MR. GREINER: If we could have 250 up, please.
10 First off, again, Domonic McCarns, underwriter -- and this is
11 for National Foreclosure Options, do you see that on the
12 screen? Ms. Yang, do you see that on the screen?
13 A. Yes.
14 Q. If we could enlarge, please. And the date of this
15 e-mail is October 20, 2006, do you see that?
16 A. Yes.
17 Q. And that's when you had moved to Tustin, correct?
18 A. Yes.
19 Q. And that's when the company had split, you talked
20 about that with Mr. Tedmon, and Mr. Samuel, and Mr. Morris, do
22 A. Yes.
23 Q. Okay. And this is still the Solares file and still
24 haven't seen a penny from her, correct, do you remember that?
25 A. Yes.

1 Q. Okay. All right. If we can take that down.
2 If we could admit from Domonic McCarns. It would be
3 DM-U4.
7 MR. SAMUEL: 801(d)(2)(E), Your Honor.
10 THE COURT: All right. DM-U4 is admitted. The
11 objection is noted.
12 (Defendants' Exhibit DM-U4, Email Dated March 30,
14 Q. BY MR. GREINER: You see on the screen DM-U4,
15 Ms. Yang?
16 A. Yes.
17 Q. And you know Q as being Domonic McCarns, correct?
18 A. Yes.
19 Q. And the date is March 30, 2006, correct?
20 A. Yes.
21 Q. And the e-mail was sent to you and to Sam, who is Sam
22 Vu, correct?
23 A. Yes.
24 Q. And she worked under you in processing, correct?
25 A. Yes.

1 Q. And then Keith Brotemarkle, correct?
2 A. Yes.
3 Q. All right. And the file was -- I don't know how to
4 pronounce that -- Padua, do you see that?
5 A. Yes.
6 Q. And you see that Domonic McCarns is saying that the
7 client is extremely grateful for you and the rest of the team,
8 do you see that?
9 A. Yes.
10 Q. And each home that we save gives people a chance to
11 continue their life, do you see that?
12 A. Yes.
13 Q. And if you'll notice down below that message where it
14 says cc, do you see the cc below that?
15 A. Yes.
16 Q. It has Keith Brotemarkle, do you see that?
17 A. Yes.
18 Q. And then it has Domonic McCarns, do you see that?
19 A. Yes.
20 Q. And that e-mail address is for Funding Foreclosures,
21 correct?
22 A. Yes.
23 MR. GREINER: If we could take that down.
24 If we could have DM-U6 admitted, Judge, pursuant to
25 the stipulation?

6 MR. SAMUEL: Same.
7 THE COURT: All right. DM-U6 is admitted.
8 (Defendants' Exhibit DM-U6, Email Dated April 6, 2006
10 Q. BY MR. GREINER: Do you see that e-mail in front of
11 you, Ms. Yang?
12 A. Yes.
13 Q. Do you need it enlarged or can I leave it full?
14 A. That's fine.
15 Q. Okay. You can see that Domonic McCarns is replying
16 to Lisa and cc'ing you and Sam, correct?
17 A. Yes.
18 Q. And he's saying go ahead and kill the file, correct?
19 A. Yes.
20 Q. Because obviously this one just didn't work out,
21 right?
22 A. Yes.
23 Q. Okay. If we could take that down.
24 If we could have DM-U9 admitted pursuant to the
25 stipulation.

8 (Defendants' Exhibit DM-U9, Email Dated April 18,
10 Q. BY MR. GREINER: And this is an e-mail again from
12 A. Yes.
13 Q. And signature again is underwriter, correct?
14 A. Yes.
15 Q. Funding Foreclosures, right?
16 A. Yes.
17 Q. Doesn't say loan officer, does it?
18 A. No.
19 Q. All right. And he's sending to you and cc'ing to Sam
20 the appraisal with changes, right?
21 A. Yes.
22 Q. We could take that down. If we could admit, pursuant
23 to the stipulation, DM-U12?

6 (Defendants' Exhibit DM-U12, Email Dated May 5, 2005
8 Q. BY MR. GREINER: This is an e-mail to you, cc'd to a
9 David Massey, do you see that?
10 A. Yes.
11 Q. From Domonic McCarns, correct?
12 A. Yes.
13 Q. Underneath that it says consultant, correct?
14 A. Yes.
15 Q. Head Financial Services, right?
16 A. Yes.
17 Q. Doesn't say loan officer, does it?
18 A. Yes.
19 Q. Bad question. Terrible answer.
20 There is no wording underneath Domonic McCarns that
21 says loan officer, correct?
22 A. The consultant at that time was considered the loan
23 officer.
24 Q. That's not what the word says, though, is it, it says
25 consultant, correct?

1 A. Right. We had different names for the positions, but
2 it all meant the same thing.
3 Q. Okay. And we've already gone through this. Domonic
4 McCarns wasn't selling loans, was he?
5 A. At one -- when he first came on board, he was doing
6 loan officer work, and then because of everything that we --
7 with the FBI, that's when they started changing things around.
8 MR. TEDMON: Objection to "they," Your Honor. Move
9 to strike that part of the answer.
11 disregard that part the answer.
12 Q. BY MR. GREINER: Ms. Yang, before the break we
13 already talked about how the operation ran in 2005 and 2006
14 when Domonic McCarns was there, correct?
15 A. That was only towards the end.
16 Q. Well, Keith Brotemarkle got there in April of 2005?
17 A. Yes. And it only started changing after Keith got
18 there.
19 Q. Well, April 2005 to August 2006, that's like 17,
20 18 months, isn't it?
21 A. It wasn't that long. I don't remember it being that
22 long, but I do know that we have different names for the same
23 thing.
24 Q. And when you keep using the word "we" have different
25 names, you actually believed that you were part of the

1 ownership, don't you?
2 A. No. "We" as a company.
3 Q. Right. But you keep saying "we." You actually
4 believed that you were on the same plane as Charles Head, don't
5 you?
6 A. No.
7 Q. You believed that you had the same amount of power
8 except for if there was a real big decision to make as Charles
9 Head did, right?
10 A. No.
11 Q. Because you did everything in the office that Charles
12 Head did, correct?
13 A. No.
15 MR. GREINER: I'll rephrase.
17 Q. BY MR. GREINER: You did everything that Charles Head
18 could do in the office from the time Domonic McCarns worked
19 until the business was sold in August of 2006, correct?
20 A. No.
21 Q. You made decisions on a daily basis in that timeframe
22 without Charles Head's knowledge, correct?
23 A. Only when it came to processing.
24 Q. Not just processing. You filled out loan
25 applications, right?

1 A. No. I wasn't allowed to fill out loan applications.
2 Q. In fact, you filled out a loan application to Ames,
3 correct?
4 A. To Ames?
5 Q. Right. You filled out a broker loan submission sheet
6 to Ames, correct?
7 A. Because I was asked to fill out -- because you have
8 to be approved, and all I have to do is just put general
9 information.
10 Q. Well, it's not just general information, this is
11 information that you get from a buyer, a borrower, right; the
12 loan application is for the investor, right?
13 A. No. The loan application is the 1003.
14 Q. Which is for the investor, correct?
15 A. Right. But that is filled out by the loan officer.
16 Q. You filled out the loan application to Ames? You
17 filled out the broker loan assumption sheet regarding Ashley
18 Reynolds, correct?
19 A. Assumption sheet?
20 Q. Broker loan submission sheet to Ames, you filled that
21 out, correct?
22 A. The processors always fill out the submission form.
23 Q. And you filled that out, right?
24 A. I am the processor, so I would be filling it out.
25 Q. And you put on the rate of interest, correct?

1 A. Because that is the rate that's currently listed.
2 Q. And you put out the requested loan terms on that
3 document?
4 A. Because that is the loan term that was on the 1003.
5 Q. And you put out the type of loan, 80-20, correct?
6 A. Because that was the type of loan that was on the
7 1003.
8 Q. On the 1003 which was for the borrower, the investor,
9 correct?
10 A. Yes.
11 Q. Not for seller, the homeowner, correct?
12 A. Right. But we're talking about a loan, so it has to
13 do with just the person that's taking out the loan.
14 Q. Correct. And Domonic McCarns never signed any loan
15 application, correct?
16 A. He wouldn't be able to, no.
17 Q. And Domonic McCarns never filled out any loan
18 application for the investor, correct?
19 A. Towards the end, no.
20 Q. Well, not toward the end, there was no time that
21 Domonic McCarns did that because he didn't know how to do that,
22 correct?
23 A. He did do it at the beginning when he first came on
24 board.
25 Q. Well, he didn't do it because there is no document

1 that you showed the Government that he did, you didn't show the
2 Government -- withdraw the question.
3 You didn't show the Government in your March 2013
4 meeting any document of a loan application that Domonic McCarns
5 filled out, correct?
6 A. I know for sure that he filled out Simone Vu's
7 because he knew her personally, and he brought her, and he was
8 the one that brought her to the company.
9 Q. Right. Directing you back to my question, and then
10 we'll talk about Simone Vu.
11 Directing you back to my question, you never showed
12 the Government in your March 2013 interview any loan
13 application that Domonic McCarns filled out, correct?
14 A. No.
15 Q. "No" being correct, correct?
16 A. Correct.
17 Q. And you never showed the Government in your
18 April 2013 conversation with the Government any loan
19 application that Domonic McCarns ever filled out, correct?
20 A. Correct.
21 Q. All right. Let's talk about Simone Vu. Simone Vu
22 actually bought her own house through Charles Head, correct?
23 A. I believe so. That might have been.
24 Q. She and her husband bought a house, correct?
25 A. I don't remember, but I just remember Simone Vu.

1 Q. Well, you know Simone Vu was married, correct?
2 A. No.
3 Q. You have no knowledge of that whatsoever?
4 A. I don't remember her being married.
5 Q. Okay. But you do remember that she actually bought a
6 house that she lived in, correct?
7 A. Yes.
8 Q. Through the company, correct?
9 A. Yes.
10 Q. All right. We can take that down.
11 And you know, Ms. Yang, that when Domonic McCarns
12 worked at the company from February 2005 until August of 2006,
13 when you left, and moved to Tustin, you know that Domonic
14 McCarns was only on the phone, selling the Funding Foreclosure
15 contract product to homeowners, correct?
16 A. Yes.
17 Q. And the homeowner is not the person that needs a loan
18 application filled out, correct?
19 A. No.
20 Q. "No" being --
21 A. I mean correct.
22 Q. -- correct?
23 The investor is the one that needs the loan
24 application filled out, correct?
25 A. Yes.

1 MR. GREINER: No further questions, Your Honor.
2 THE COURT: All right. Mr. Samuel, do you have any
3 cross?
4 MR. SAMUEL: Two. Proverbial attorney two.
6 BY MR. SAMUEL:
7 Q. First question as it relates to when you found out or
8 at least you got a call from the FBI. Why didn't you stop
9 working then?
10 A. Because Charles had told me that there was nothing to
11 worry about, and that it was just, you know, nothing, and that
12 I should just continue doing my job.
13 Q. So you thought at that point in time that you were
14 still doing a legal job?
15 A. He told me that everything that we were doing --
17 strike.
19 Q. BY MR. SAMUEL: My question was, at the time that you
20 continued on working did you think that you were working
21 legally?
22 A. From what I was told, yes.
23 MR. SAMUEL: I think that's the only question, Your
24 Honor.
25 THE COURT: All right. Mr. Morris?

1 FURTHER REDIRECT EXAMINATION
2 BY MR. MORRIS:
3 Q. I think you just answered this one with Mr. Greiner,
4 but I want to make sure I understand.
5 I'm going to ask you to think about three -- actually
6 now four terms - loan officer, underwriter, sales agent and
7 consultant. Is there any difference between those four titles?
8 A. To the best of my knowledge, no.
9 Q. Okay. And the same question, I would like you to
10 think about the terms investor, buyer, and straw buyer that we
11 have used throughout your testimony. Is there any difference
12 between those three?
13 A. No.
14 Q. And just to quickly follow-up. Mr. Greiner just
15 asked you if you showed the Government documents involving
16 Mr. McCarns at the meetings that you had with the Government.
17 To be clear, when you had those meetings, who was
18 showing documents to whom?
19 A. The Government was showing me documents.
20 Q. You didn't bring a large truck full of documents to
21 sort through?
22 A. No.
23 Q. You responded to the questions that were asked of you
24 by Government agents?
25 A. Yes.

3 MR. TEDMON: Your Honor, if I could just ask two
4 clarifying questions on the CH-R, which Mr. Greiner referenced.
5 THE COURT: You may pose the questions.
6 FURTHER RECROSS EXAMINATION
7 BY MR. TEDMON:
8 Q. Ms. Yang, I asked you about a contract for sale, and
9 Mr. Greiner mentioned selling the companies, correct?
10 A. Yes.
11 Q. If we could have CH-R on the screen, please?
12 All right. So this has been previously introduced as
13 CH-R, and this is page one, and you see here it says "Special
14 Meeting of Head Financial Services"?
15 A. Yes.
16 Q. Okay. And it says here, "offer of sale of the
17 corporation to FCO, Inc.," do you see that?
18 A. Yes.
19 Q. So that confirms that Head Financial Services was
20 being sold to FCO, Inc., correct?
21 A. Yes.
22 Q. And that FCO, Inc. was owned by Lavar Fletcher, true?
23 A. Yes.
24 Q. And then page two of CH-R talks about a Notice of
25 Special Meeting of Creative Loans, do you see that?

1 A. Yes.
2 Q. And it says, "for the purpose of considering offer of
3 sale of company to FCO, Inc.," correct?
4 A. Yes.
5 Q. So page two would confirm that Creative Loans was
6 also being sold to FCO, Inc., correct?
7 A. Yes.
8 Q. And that was owned by Lavar Fletcher, "that" being
9 FCO?
10 A. Yes.
13 (Interruption in proceedings.)
14 THE COURT: That cell phone needs to be turned off,
15 and the security officers are authorized to seize that. Could
16 you hand that to Ms. Schultz, please.
18 THE COURT: I indulged a juror earlier. Is it turned
19 off now?
22 MR. GREINER: Two areas, Judge.
24 BY MR. GREINER:
25 Q. Mr. Morris asked you who was showing you documents

1 when you went to the interview in March, do you remember that?
2 A. Yes.
3 Q. First of all, it was pursuant to a plea agreement,
4 correct?
5 A. Yes.
6 Q. Where you were to be truthful about all information,
7 correct?
8 A. Yes.
9 Q. All right. And there was no limitation for you to
10 bring documents or not to bring documents to talk to the
11 Government, right?
12 A. Yes.
13 Q. In other words, the Government didn't tell you please
14 don't bring any documents, right?
15 A. Correct.
16 Q. And you went there with your attorney, correct?
17 A. Correct.
18 Q. All right. And in the April conversation with the
19 Government, again, it was pursuant to your plea agreement,
20 correct?
21 A. Correct.
22 Q. And there was no limitation on you bringing documents
23 to that meeting, was there?
24 A. Correct.
25 Q. And your attorney was with you at that meeting,

1 correct?
2 A. Correct.
3 Q. All right. Then the second point that Mr. Morris
4 talked to you about was loan officer, consultant, underwriter,
6 A. Yes.
7 Q. And you said oh, geez, you know what, they all mean
8 the same thing, right?
9 A. Yes.
10 Q. Well, Justin Wiley worked in 2004, and you were there
11 when he worked, correct?
12 A. Yes.
13 Q. Justin Wiley went out and saw people in their homes,
14 correct?
15 A. Yes.
16 Q. Justin --
17 MR. TEDMON: Objection, Your Honor. This is before
18 the period of the Indictment, and I'm going to move to strike.
20 last two questions and answers. Can you move on, Mr. Greiner?
21 Q. BY MR. GREINER: When Mr. Morris asked you questions
22 about loan officer, consultant, underwriter, loan officer and
23 underwriter, those are banking terms, correct?
24 A. Yes.
25 Q. And you know that from working with banks, right?

1 A. Yes.
2 Q. And you also know from your experience that a loan
3 officer is an individual that attains loans for a borrower,
4 correct?
5 A. Yes.
6 Q. And an underwriter is a person at the bank that
7 either denies or approves loans, correct?
8 A. Yes.
9 Q. All right. Domonic McCarns never denied or approved
10 any loan at any time, correct?
11 A. No.
12 Q. "No" being correct, right?
13 A. Correct.
14 Q. And Domonic McCarns was not a loan officer because he
15 didn't deal with investors, borrowers, correct?
16 A. Correct.
17 MR. GREINER: No further questions.
19 MR. SAMUEL: No questions.
22 THE COURT: All right. This witness is excused?
23 Mr. Morris?

5 MR. SAMUEL: Subject to my subpoena, Your Honor, yes.
6 THE COURT: All right. Ms. Yang, you may step down
7 at this point. You are not needed today yet or until you hear
8 otherwise. The Government's next witness.
9 MR. MORRIS: United States calls Ashley Rotellini.
16 THE WITNESS: It's Ashley Rotellini, A-s-h-l-e-y,
17 Rotellini, R-o-t as in Tom, e-l-l-i-n-i.
19 ASHLEY ROTELLINI,
24 BY MR. MORRIS:
25 Q. Ms. Rotellini, what line of work are you in?

1 A. Currently I'm a Mortgage Specialist II.
2 Q. Where do you work?
3 A. It's called CoreLogic.
4 Q. I would like you to think back to the 2005/2006
5 timeframe. Were you doing that same line of work at that time?
6 A. No. At that time I was actually an escrow officer.
7 Q. And where were you working at that time?
8 A. Alliance Title.
9 Q. Let's start with this, what is Alliance Title?
10 A. It was an escrow and title company. We provided
11 title insurance and escrow services to people closing
12 mortgages.
13 Q. Okay. And refresh my recollection, what was your
14 title, your job title there?
15 A. I was an escrow officer.
16 Q. What does an escrow officer do?
17 A. We're an unbiased third party that maneuvers between
18 the mortgage broker and the mortgage companies.
19 Q. Can you explain a bit more about what you mean by an
20 unbiased third party who maneuvers between these two?
21 A. We actually will review the loan docs. We draw up
22 escrows instructions between the buyer and seller, or escrow
23 instructions between the borrower if it's just a refinance.
24 And then we would prepare any documents that were
25 needed, provide them to the lender to get qualifications for

1 the loans, and then work with and get the loan docs from the
2 lender and provide them to the buyer or the borrower.
3 Q. Okay. And one term in there that I think we might
4 need to define is escrow instructions. What are escrow
5 instructions?
6 A. That is basically it's a standard California escrow
7 instruction, and it's mainly used for sellers and buyers where
8 we would disclose any additional information, purchase price,
9 commissions, and, like, condition of the home if there were --
10 if it was being sold "as is," that would be disclosed in the
11 escrow instructions.
12 Q. Okay. And then when you say you review loan
13 documents, what is it that you review them for?
14 A. We would just be prepping them to go to the buyer or
15 the borrower for execution.
16 Q. And then explain at the very end there you said you'd
17 get documents from the lender that you would send. What do you
18 get back from the lender then?
19 A. We would get the loan documents. Then we would send
20 them out to be notarized and reviewed with the borrower or the
21 buyer, and then we would forward them back to the lender for
22 them to process the loans.
23 Q. Okay. And then is there anything after that in --
24 looking at a transaction that you were working on, is there
25 anything that happens after that point?

1 A. Once we would send them back, they would fund the
2 loan. We would get the money in to do any of the payoffs of
3 the existing liens against the property.
4 And then at that time, we would close the escrow,
5 distribute any funds to the buyer or the seller, or the
6 borrower, and then our escrow would be closed at that time.
7 Q. Okay. So let me go through that maybe a little bit
8 slower. What loan funds, who is it that is funding the loan?
9 A. The mortgage company.
10 Q. And so the money that's being sent by the mortgage
11 company as part of that funding process, who would that get
12 sent to?
13 A. That would be sent to the title company.
14 Q. And then once you had it, I think you said you would
15 disburse it. Can you explain the process you would follow for
16 disbursing the loan?
17 A. Once the mortgage or the deed of trust was recorded
18 with the county recorder's, then the payoff would be processed,
19 so for any existing mortgages on the property. So those would
20 be payoffs through title. And then title would send escrow any
21 additional finds. And most of the time it would be a refund
22 either to the seller for their selling -- the selling costs,
23 for their proceeds, or, if it was a loan that the borrower was
24 doing for a refinance, any additional funds from that loan
25 would be sent to them.

1 Q. And how did you know where to send all these various
2 pieces of money?
3 A. We would have instructions. Sometimes the lenders
4 would require additional payoffs of credit cards depending on
5 the credit status at the time. So we would either pay the
6 credit card companies directly, or, if there was any additional
7 payoffs, the monies would go directly to the buyer or the
8 seller.
9 Q. And let me make sure I understand. When you're doing
10 this disbursing of money, you're following the instructions
11 that you were given?
12 A. Yes.
13 Q. And so to be clear, it's not -- Alliance Title
14 doesn't kind of come up with their own idea of where to send
15 this money?
16 A. No.
17 Q. And does that tie back to when you're saying you're
18 supposed to be an unbiased and neutral third party?
19 A. Correct.
20 Q. In the course of your time working at Alliance Title,
21 did you have any interaction with a company called Head
22 Financial?
23 A. Yes. They were one of my customers.
24 Q. Do you recall how they became your customer?
25 A. It was -- I was actually an escrow assistant at the

1 time, looking to be promoted to an escrow officer. The account
2 was brought to our manager at our office, at the location I was
3 at. And they asked me, this would be a good stepping stone for
4 me, and they asked if I would like to take on the account.
5 Q. And then just to be clear then. What's the
6 difference between an escrow assistant and an escrow officer?
7 A. More liability pretty much. The escrow assistant
8 didn't have as much authority to draw loan documents or to prep
9 -- to prep the loan documents once they were received from the
10 mortgage company.
11 MR. SAMUEL: Your Honor, it's unclear as to the
12 timeframe that we're dealing with.
13 THE COURT: Can you clarify that with a follow-up
14 question?
15 Q. BY MR. MORRIS: Sure. To the best of your
16 recollection, do you recall when Head Financial became your
17 client?
18 A. It was sometime during my term with Alliance Title.
19 It was around the 2005, 2006.
20 Q. Did there ever come a point where you stopped working
21 with Head Financial?
22 A. We were -- there was a situation that happened,
23 obviously, and we had stopped at that point as soon as we got
24 notification.
25 Q. So up to the end?

1 A. Yes.
2 Q. Were you still working at Alliance up until that
3 time?
4 A. Yes.
5 Q. Do you recall any names of individuals at Head
6 Financial that you interacted with?
7 A. The main two that I dealt with the most were the
8 processors, Kou and Lisa.
9 Q. Do you remember either of their last names?
10 A. I do not.
11 Q. Did you ever interact with anybody else at Head
12 Financial to the best of your recollection?
13 A. No.
14 MR. MORRIS: I want to ask to admit Government's
15 17A1, which is covered by the stipulation.
16 THE COURT: Any objection, Mr. Tedmon? 17A1.
18 issue.
22 MR. GREINER: Same objection regarding variance,
23 Judge.
25 THE COURT: All right. The objection is overruled.

1 17A1 is admitted.
2 (Government Exhibit 17A1, U.S. Department of Housing
3 and Urban Development for property at 896 Yellowstone Road,
4 Cleveland Heights, OH 44121 admitted into evidence.)
5 Q. BY MR. MORRIS: Are you able to see a document on the
6 screen in front of you?
7 A. Yes.
8 Q. Let me zoom into the top part here and start asking
9 you some questions.
10 A. Okay.
11 Q. Do you recognize this type of document generally?
12 A. Yes.
13 Q. What type of document is it?
14 A. It's either a HUD-1 -- known as a HUD-1 or settlement
15 closing statement.
16 Q. Is this a document that you would work with in the
17 course of your duties at Alliance Title?
18 A. Yes.
19 Q. In what way? How did you work with this document?
20 A. Every loan that we processed would have to have a
21 closing statement. It was a requirement for the lender.
22 Q. Who prepares these documents?
23 A. We would, based on information provided by the lender
24 in their closing instructions and by the mortgage broker with
25 their fees.

1 Q. And so it's the escrow officer that does these?
2 A. Yes.
3 Q. Physically how do you do that? How do you fill the
4 forms out?
5 A. We had a system that we worked with at Alliance
6 Title, and you would basically go in and put in any of the
7 lender's fees for the loan, any mortgage broker fees, and then
8 title and escrow fees, and then it would automatically generate
9 the form.
10 Q. And to be clear, you've been testifying about your
11 time at Alliance Title, is that the company that you worked
12 for?
13 A. Yes.
14 Q. What I'm going to ask you to do is we're going to
15 talk through the entire form so you can explain to the jury so
16 they understand the parts of the form. Okay?
17 A. Okay.
18 Q. Up here, where it says "escrow file number," what's
19 that?
20 A. That was the escrow and title number that we used to
21 reference the loan that we were working on.
22 Q. So is that number internal to your organization?
23 A. Yes.
24 Q. How about "loan number"?
25 A. That would have been the loan number provided by the

1 mortgage company.
2 Q. And I see a spot here where the word "final" appears,
4 A. That was the final closing statement that was done
5 after -- that's what we would process once everything had been
6 closed and finalized, all fees, title, and escrow fees.
7 Q. Okay. And then the section here, name of borrower,
8 where do you get that information from?
9 A. That would have either been from -- well, from the
10 purchase contract, since this looks like this was a purchase at
11 the time, or the borrower if it was a single transaction,
12 single-person transaction.
13 Q. And how do you know which information to put in
14 there, where does that come from?
15 A. Comes from the mortgage broker.
16 Q. And how about where it says "name of seller," where
17 do you get that information from?
18 A. That would have also been from the mortgage broker
19 and on the purchase contract.
20 Q. Okay. What's in this line F, "name of lender,"
21 what's going in there?
22 A. That's the mortgage company that's doing the loan.
23 Q. And line G, "property location," what's that?
24 A. That is the address of the property that's being sold
25 or the transaction is being done for.

1 Q. And then line H and I, are you able to see those on
2 the screen?
3 A. Yes.
4 Q. What's listed in the section that's line H and line
5 I?
6 A. That is the title company that was handling the title
7 side of the property.
8 Q. Okay. And the dates that are in there, what do those
9 mean?
10 A. The settlement date is the date that we actually
11 closed, and the funding date is the actual date that we
12 received the funds from the mortgage company.
13 THE COURT: I think you got an answer that merged H
14 and I. Can you clean that up?
15 MR. MORRIS: I will make sure.
16 THE COURT: You asked about "I."
17 Q. BY MR. MORRIS: So to be clear then, when we're
18 talking about the company and location, that was in line H
19 there, and your testimony about the settlement date and the
20 funding date, that's in line I?
21 A. Yes.
22 Q. Moving down to the next -- at least the remainder of
23 this page it appears to be split in columns left and right.
24 Can you explain what's the difference between what's
25 on the left and what's on the right?

1 A. The one side, J, is the borrower's transaction. That
2 is for the buyer of the transaction, the buyer of the property.
3 And in section K, that is the seller's transaction. That would
4 be any fees associated to the seller.
5 Q. Okay. And is the information in these sections also
6 done automatically by the program that you used?
7 A. Correct.
8 Q. Then if you could -- let's focus in -- do it in
9 chunks here, if we could.
10 A. Okay.
11 Q. The section where it says "summary of the borrower's
12 transaction," what type of information is included in that part
13 of the form?
14 A. It's usually the loan amount, and if there's
15 anything that's showing here it would show any proration of
16 property taxes for that, if there were any amounts due from the
17 seller in order to close.
18 Q. Then continuing down below "amounts paid by or on
19 behalf of borrower," what goes in there?
20 A. That's if there was any monies received by the
21 borrower, the principal amount for the new loan amount that
22 they are acquiring, if there's any closing funds, and then if
23 there's any fees that are going to the borrower or the seller.
24 Q. And then just focusing in on this bottom three or
25 four lines, what's that little last part they're telling you?

1 A. "Cash at settlement"?
2 Q. Right.
3 A. That's the combination of all of the proceeds from
4 the loan, the loan amount to pay off amounts, and then whatever
5 is extra is going to the buyer or the seller.
6 Q. And I'll try to briefly go through the same thing on
7 the other side. We're now on the right side, the column K. Can
8 you explain this first section of column K?
9 A. That's the sales price of the property, and then we
10 have the prorated of the property taxes, of what's being
11 charged to them, and then we have the gross that's being due to
12 them of both of those items together.
13 Q. And then what kind of items go into the section
14 that's entitled "reductions in amount due to seller"?
15 A. Those are any of the fees that are being charged to
16 the seller. It may have been in the purchase contract of
17 additional -- any termite inspections. So those are any of the
18 settlement charges.
19 And then we have the two payoffs that were listed of
20 any of the existing liens against the property. So in this
21 case, they had a first and a second mortgage.
22 Q. When you say in this case -- what you are talking
23 about the first and second?
24 A. Yes. 504 and 505.
25 Q. Okay. And then in this section down here at the

1 bottom, how does that section get calculated?
2 A. That is the gross amount which was in sections 402
3 and was in the total from 420, less their reductions of any of
4 their payoffs or any of their fees that they were being
5 charged, and then that was showing -- 503 is actually showing
6 the cash that would have been given to the seller at the close
7 of the transaction.
8 Q. So in this particular transaction, the amount of cash
9 due to the seller would have been how much?
10 A. $51,647.24.
11 Q. And if you can zoom out, and we will go to page two.
12 Is this a subsequent page of the same document?
13 A. Yes.
14 Q. If we can zoom to the top, maybe the top half or so.
15 What types of items is the jury seeing on this part
16 of this page?
17 A. On this one is anything that was mortgage broker fees
18 or lender fees. And these would have come from -- the lender's
19 fees would have come from the closing instructions from the
20 lender's documents.
21 Q. And I notice there is, again, two columns, smaller
22 this time. What's the reason for there being two columns on
23 this page?
24 A. Usually, in this case, there really aren't any lender
25 fees going to the seller because the seller really doesn't --

1 they're not getting the new loan. We're paying everything off.
2 So most of the items are being paid by the borrower or the
3 buyer the property.
4 Q. Can you explain which parts -- the portions of the
5 form that are in front of the jury now?
6 A. These are the title and escrow fees that would have
7 been charged to both the buyer and the seller.
8 Q. And when you say "buyer and seller" is that broken up
9 by column also?
10 A. Yes. So the first column is anything that was
11 charged to the buyer for recorder fees and doc prep fees. And
12 then the second column is what was charged to the seller for
13 their title and recording fees.
14 Q. I think the last two here. If you can cover the
15 items, the remaining items on the screen in front of you?
16 A. It's the continuation of title and escrow fees. We
17 have a courier fee, a wire fee, and an e-mail fee, and we also
18 had the recording fee, which was split up between -- the
19 recording fee is always paid by the buyer, and then the seller
20 always pays the county transfer tax.
21 Q. And this looks like page three. Can you explain
22 what's in front of the jury on this part of it?
23 A. This is basically the total amount that the buyer was
24 acquiring from the lender at the time.
25 Q. I want to make sure that I understand. Your

1 testimony was that when the money has now come in and funded,
2 that your duty is to disburse the funds according to the
3 instructions that you received?
4 A. Yes.
5 Q. I'm going to ask you to look at --
6 Actually, I'm going to ask to admit Government's
7 Exhibit 17A10. That is covered by the stipulation.
9 MR. TEDMON: A10. Your Honor, subject to the
10 variance issue, no objection.
12 MR. GREINER: Same. The variance issue, Judge,
13 objection.
15 THE COURT: All right. Those objections are
16 overruled. 17A10 is admitted.
18 Authorization for property at 896 Yellowstone Road, Cleveland,
19 OH admitted into evidence.)
20 Q. BY MR. MORRIS: Do you recognize the document in
21 front of you?
22 A. I do recognize it.
23 Q. And what do you recognize it to be?
24 A. It was wiring instructions that was provided by Head
25 Financial for us to send in with the documents.

1 Q. Okay.
2 A. For the borrower to sign.
3 Q. Did you encounter this form with clients other than
4 Head Financial?
5 A. We had -- at Alliance Title we had our own form that
6 we would provide.
8 MR. SAMUEL: Join.
11 THE COURT: That motion is granted. All the
12 objections are sustained. The jury shall disregard that last
13 Q and A.
14 Q. BY MR. MORRIS: I think the question was -- actually,
15 I forgot what the question was.
16 I think my question was, did you see this type of
17 form with other clients other than Head Financial?
18 A. No.
19 Q. Okay. But you recall receiving this as part of the
20 packages from Head Financial?
21 A. Yes.
22 Q. Why do you recall that if you --
23 Well, what is it about this form that you recall?
24 A. It wasn't our standard form that we used at Alliance
25 Title.

1 Q. What was your understanding of the purpose of this
2 form?
3 A. Just the distribution of the seller's proceeds at the
4 close of escrow.
5 Q. Okay. And if it's not a form that you would normally
6 use with other clients, did you have any understanding of why
7 it is that this form was necessary?
8 A. No. There were certain clients that would require a
9 different form, or the lenders would require a different form.
10 But this wasn't a standard form that we had in our documents
11 with Alliance.
12 Q. And on the basis of this form, did that affect the
13 way that you disbursed funds after a loan was funded?
14 A. No. It would have been processed the same way per
15 the instructions that were provided to us.
16 Q. Did this form tell you anything about where to
17 disburse those funds?
18 A. Yes. It tells us exactly the accounting number of
19 where to wire the funds and the account name to wire the funds.
20 Q. And so in this case, the instruction is telling you
21 to send money to where?
22 A. Wells Fargo Bank.
23 Q. Okay. And it's asking you to send money to an
24 account in the name of?
25 A. Creative Loans LLC.

1 Q. Okay. Now, in this case we just previously looked --
2 previously looked at the HUD-1 for this transaction, and I saw
3 names that weren't Creative Loans LLC.
4 If you hadn't had this form, what would your
5 procedures tell you to do about where to send funds?
6 MR. GREINER: Objection. Speculation and relevance.
7 MR. SAMUEL: Join.
8 MR. TEDMON: Join.
10 Q. BY MR. MORRIS: Well, let's go back then to your
11 testimony because I think you already testified to this.
12 Where is it that you send money when a loan funds?
13 A. We would send --
14 MR. SAMUEL: Objection, vague, Your Honor.
16 Q. BY MR. MORRIS: Can you answer?
17 A. We would per the instructions from the seller or the
18 borrower at the time of the loan.
19 Q. Okay. So this document, does this then count as part
20 of the instructions from one of those parties?
21 A. We would accept that, yes.
22 Q. Is there anything that you would need to have to be
23 assured that this was a legitimate document?
24 MR. GREINER: Objection. Legitimate calls for a
25 legal conclusion.

1 MR. TEDMON: Join.
2 MR. SAMUEL: Join.
3 THE COURT: Sustained. You can try to lay a
4 foundation.
5 Q. BY MR. MORRIS: Sure. Is there anything that you
6 would look for on this document before you would take action on
7 it?
8 A. As long as the seller's --
10 It's a yes or no answer.
11 THE WITNESS: Sorry?
12 THE COURT: Let's start there. Answer the question
13 with yes or no first and then wait for the next answer.
15 Q. BY MR. MORRIS: What is it that you would look for on
16 this before you would take action?
17 A. The signature of the seller or the buyer authorizing
18 us to do this transaction.
19 Q. Anything else that would be important to you to
20 decide whether to take the action asked for in this
21 instruction?
22 A. No.
23 MR. MORRIS: Can I have a moment, Your Honor?
25 MR. MORRIS: I'm just going to look at a couple of

1 documents, Your Honor, and then we'll be done.
3 Q. BY MR. MORRIS: If I could have you look at
4 Exhibit 13B1.
5 Actually, move to admit 13B1, Your Honor, pursuant to
6 the stipulation.
7 THE COURT: Objection, Mr. Tedmon?
8 MR. TEDMON: 13B, as in boy?
9 THE COURT: B, as in boy. I don't have a B as in
10 boy. I have a D, as in dog.
11 MR. TEDMON: Your Honor, I have a 13B1.
12 THE COURT: It's not on the list. It's in the
13 binder. Does each defense attorney have a copy of 13B1?
14 MR. TEDMON: I do, Your Honor.
15 THE COURT: All right. It's 1 through 10. It was
16 added after the list was prepared.
17 MR. MORRIS: It was, Your Honor.
19 MR. TEDMON: Your Honor, are we looking just at 13B1?
20 Because it's a multiple-page document which actually
21 includes --
22 THE COURT: Well, 13B1 is a one-page. So are we just
23 looking at that one page? It goes through 13B10, the set. Are
24 we looking at the whole thing?
25 MR. MORRIS: I'm going to be asking her to look at

1 the first two pages.
2 THE COURT: So 13B1 and 13B1-2. All right.
6 THE COURT: All right. Those two pages are admitted.
7 (Government Exhibit 13B1, U.S. Department of Housing
8 and Urban Development Settlement Statement Borrower: Kerry L.
9 Budoff Seller: Jerome & Denise Pearlman Property: 1447 Westmore
10 Place, Oceanside CA Dated: 6/5/2006 admitted into evidence.)
11 Q. BY MR. MORRIS: If we could publish the first page.
12 I'll ask you to look at the top of this document.
13 This is also a document that you would have used in
14 your employment at Alliance Title?
15 A. Yes.
16 THE COURT: And the only copy available is cut off.
17 The left margin is cut off.
18 MR. MORRIS: My copy also.
19 Q. BY MR. MORRIS: And to clarify then, if we could, the
20 settlement date on this transaction is what?
21 A. 6-5 of 2006.
22 Q. And the funding date was?
23 A. 6-1 of 2006.
24 MR. MORRIS: Okay. And if I could -- I'll ask to
25 admit Government's 14A1, Your Honor. I think everyone should

1 have that one.
3 MR. MORRIS: All three pages.
8 THE COURT: All right, 14A1, 3 pages, is admitted.
10 and Urban Development Settlement Statement Borrower: Charmayne
11 Q. Ratliff Seller: Alfred N. Limas admitted into evidence.)
12 Q. BY MR. MORRIS: Is this also a HUD-1 that would have
13 been used in your duties at Alliance Title?
14 A. Yes.
15 Q. And the date on this document for settlement date?
16 A. Was 6-12 of 2006.
17 Q. And funding date?
18 A. 6-8 of 2006.
19 MR. MORRIS: I would ask to admit Government's 14A4,
20 Your Honor. It's a two-page document.

1 MR. SAMUEL: No.
3 MR. TEDMON: 14A4.
4 THE COURT: Two pages, 14A4, 14A4-2.
6 Authorization for property at 3509 38th Street, Sacramento, CA
8 Q. BY MR. MORRIS: If we can go to the second page
9 please, and if I could have you look at this document.
10 Is this the same document we looked at before for the
11 other transaction?
12 A. Yes.
13 Q. And, in fact, is that you?
14 A. Yes.
15 Q. And the date on this document?
16 A. Was 5-26 of '06.
17 Q. And any differences between a HUD-1 from one
18 transaction to another other than the numbers that are in them?
19 A. No.
20 Q. And these wire instructions that we've looked at
21 multiple versions of, would you have processed those the same
22 way on each of those transactions?
23 A. Yes.
24 Q. Did you process the HUD-1s the same way on each
25 transaction?

1 A. Yes. I mean the only difference would be the numbers
2 that we were putting in there.
3 Q. And so those differences from one to the other, make
4 sure I understand, that reflects the differences of the
5 instructions that you've been given by the parties to the
6 transaction?
7 A. Correct.
10 MR. TEDMON: No questions.
14 BY MR. GREINER:
15 Q. Good morning.
16 A. Good morning.
17 Q. Let's start where Mr. Morris left off with you
18 looking at Government's Exhibit 14A4. If we could enlarge
19 that, please.
20 14A4 at the top, it doesn't have an escrow officer's
21 name, correct?
22 A. Correct.
23 Q. So there is no way for anyone to take any action,
24 correct?
25 A. Correct.

1 Q. So no action would be taken on a document like this,
2 correct?
3 A. Correct.
4 Q. And if we could have 14A4-2, up, please.
5 Now, your name appears where it says "escrow
6 officer," correct?
7 A. Correct.
8 Q. And so now this is directing you to take certain
9 action regarding this document, correct?
10 A. Correct.
11 MR. GREINER: Pursuant to the stipulation, Judge, I
12 would like to admit Government's Exhibit 19A1, understanding
13 the variance argument is still there.
14 MR. SAMUEL: Join in the variance comment.
15 THE COURT: All right. Noted.
16 MR. TEDMON: Likewise, Your Honor.
17 THE COURT: But otherwise no objection?
19 MR. SAMUEL: No.
23 and Urban Development for property at 3390 Foxcroft Road,
24 #C-308, Miramar, FL admitted into evidence.)
25 Q. BY MR. GREINER: And this is a HUD-1 settlement

1 statement similar to the ones that you talked about with the
2 Government, correct?
3 A. Correct.
4 Q. And the name of the seller on this HUD-1 is Korall
5 Solares, do you remember that?
6 A. Yes.
7 Q. Do you remember that file?
8 A. I do not.
9 MR. GREINER: If we could admit, pursuant to the
10 stipulation, Government's 19A6, and that would be one and two.
11 THE COURT: Any objection? Mr. Morris?
14 MR. TEDMON: Subject to the variance issue, Your
15 Honor, no objection.
17 MR. GREINER: Same objections, Judge.
20 Authorization for property at 3390 Foxcroft Road, #C-308,
21 Miramar Florida admitted into evidence.)
22 Q. BY MR. GREINER: And then without zooming it up, you
23 see that there is no escrow officer name after the escrow
24 office?
25 A. Correct.

1 MR. TEDMON: Your Honor, just for the record, that's
2 19A6, page one.
3 Q. BY MR. GREINER: I'm going to get to number two right
4 now. And also on Government's Exhibit 19A6 you notice the name
5 Korall Solares, correct?
6 A. Correct.
7 Q. But no action would be taken regarding this document,
8 correct?
9 A. Correct.
10 Q. All right. Let's go to Government's Exhibit 19A6-2,
11 please. Your name shows up as the escrow officer, correct?
12 A. Yes.
13 Q. Does that refresh your recollection of you working on
14 the Korall Solares file?
15 A. No.
16 Q. You have no recollection of disbursements of funds in
17 this file at all?
18 A. No.
19 Q. We could take that down, please. Thank you.
20 Now, you indicated on direct examination with
21 Mr. Morris that escrow officers would go over documents with
22 the signer of the documents, do you remember that?
23 A. We would go over the documents once the lender sent
24 them to us. And if they were available to come into our
25 office, we would review the documents with a notary with them.

1 In most cases, we would send them out to the notary for the
2 notary to meet with the buyer or the seller directly at their
3 convenience.
4 Q. So you wouldn't -- generally speaking, the escrow
5 officer wouldn't sit with the notary and the client in signing
6 the documents?
7 A. Correct.
8 MR. GREINER: Just one moment, Judge. Thank you.
14 Mr. Morris?
21 MR. SAMUEL: Yes.
22 THE COURT: All right. Ms. Rotellini, you may step
23 down. Next witness.
24 MR. ANDERSON: The United States calls Justin Wiley.

6 THE WITNESS: First name is Justin, J-u-s-t-i-n.
7 Last name, Wiley, W-i-l-e-y.
8 THE COURT: Am I giving an instruction?
9 MR. ANDERSON: If defense counsel wants it.
10 THE COURT: Are you requesting an instruction?
11 MR. GREINER: I'll request it.
12 MR. TEDMON: Yes.
13 THE COURT: All right. Ladies and gentlemen, I'm
14 giving you an instruction you've heard before, but it applies
15 with respect to this witness as well.
16 I understand that you are about to hear evidence that
17 Mr. Charles Head committed other acts not charged here. You
18 may consider this evidence only for its bearing, if any, on the
19 question of Mr. Head's intent, motive, opportunity,
20 preparation, plan, absence of mistake, absence of accident, and
21 for no other purpose.
22 You may not consider this evidence as evidence of
23 guilt of the crime for which Mr. Budoff and Mr. McCarns are now
24 on trial.
25 All right. Mr. Anderson.

1 JUSTIN WILEY,
6 BY MR. ANDERSON:
7 Q. Good morning, Mr. Wiley.
8 A. Good morning. How are you?
9 Q. Do you know Charles Head?
10 A. I do.
12 A. Through his brother Mike Head or Jeremy Head.
13 Q. How do you Jeremy Michael Head?
14 A. I went to college with him and ran track with him at
15 University of Pittsburgh.
16 Q. Approximately when was that?
17 A. That was 2001 until -- I'm sorry -- '97 until 2001
18 when we graduated.
19 Q. At what point did you meet Charles Head?
20 A. It was September -- Fall of 2003. I was asked just
21 to come out. I was living in New York at the time, and Jeremy
22 invited me out just to visit and just hang out.
23 Q. Invited you out to where?
24 A. La Habra, to Charles' home.
25 Q. At some point did you decide to move to Southern

1 California?
2 A. In January 2004.
3 Q. Why was that?
4 A. I was asked by Jeremy Head to come out and do loans
5 with him and his brother at the time.
6 Q. Did you end up moving out and beginning to work for
8 A. I did, yes.
9 Q. When you started working for Head Financial Services,
10 what type of work were you doing?
11 A. Just loans, typical refinances and purchases.
12 Q. At some point did that change?
13 A. Yes.
14 Q. What did it change to?
15 A. Just doing foreclosures.
16 Q. How did it come about that that changed?
17 A. I was asked maybe -- trying to think of -- like
18 March, April time. I was in the office just doing loans, and
19 then Charles was never around, and then suddenly he started to
20 reappear in the office and started coming around more, and then
21 was asked by him if I would like to get involved in
22 foreclosures where I can make a lot more money.
23 Q. Approximately how much were you making for each
24 refinance you did?

3 Q. BY MR. ANDERSON: During the time period prior to the
4 foreclosures, when you were just doing refinancing, so early
5 2004, approximately how much did you make for each refinance?
8 THE COURT: That also is sustained.
9 Q. BY MR. ANDERSON: All right. How did you learn about
10 the foreclosure program?
11 A. If you want to call -- basically we were just given a
12 four-page script to read to, I guess, the victims.
13 MR. TEDMON: Objection as to characterization, Your
14 Honor.
16 answer. You can start over, Mr. Anderson.
17 Q. BY MR. ANDERSON: All right. Who explained to you,
18 if anyone, how this foreclosure program would work?
19 A. Charles Head.
20 Q. And were there individuals who you were supposed to
21 be contacting as part of the foreclosure program?
22 A. Yes. People who were in the process of losing their
23 homes.
24 Q. Let's call them homeowners.
25 A. Homeowners.

1 Q. Okay. Were you given any materials to assist you in
2 your interactions with those homeowners?
3 A. I was given a four-page script.
4 Q. Who gave that to you?
5 A. Charles Head.
6 Q. When Charles gave you that script, in that timeframe
7 when you were just learning about the foreclosure program, did
8 you have any meetings to learn about how to do the program?
9 A. We just met twice at his home over the weekends.
10 Q. And when you say "we," who do you mean?
11 A. There was two others. Josh Coffman and Akemi Botari.
12 Q. Who is Josh Coffman?
13 A. He's actually one of my best friends from
14 Philadelphia. We grew up together, and he met -- he met Mike
15 and Charles because of me.
16 Q. And who is Akemi Botari?
17 A. Charles' ex-girlfriend.
18 Q. Did you actually begin doing foreclosure transactions
19 and trying to pitch the program to people?
20 A. I did, yes.
21 Q. In the course of pitching the foreclosure program,
22 did you make any false statements to individuals?
23 A. I did, yes.
24 Q. As a result of those false statements have you
25 entered a guilty plea?

1 A. I have, yes.
2 Q. And are you testifying here under a cooperation
3 agreement?
4 A. Yes.
5 Q. I'd like to start with a transaction with someone by
6 the name of Karie Joest.
7 Do you remember the Joest transaction?
8 A. I do.
9 Q. When in the process of doing the foreclosures did the
10 Joest transaction happen - beginning, middle, end?
11 A. I'm sorry?
12 Q. Was the Joest transaction a transaction you did close
13 to when you started the foreclosure program?
14 A. That was my first deal.
15 Q. How did it come about that you got involved in a deal
16 with Karie Joest?
17 A. I received a phone call from her because she had
18 received postcards from us.
19 Q. And did you have a discussion with Ms. Joest?
20 A. A brief one over the phone to set up a meeting to go
21 up to her home and see her in person.
22 Q. Did you end up going up to see Ms. Joest?
23 A. I did.
24 Q. Did you go alone or with other people?
25 A. I went with Charles Head and Cindy Gastelum.

1 Q. When you got to Ms. Joest's house, was the program
2 explained to her?
3 A. Charles wanted to come along because he --
4 MR. TEDMON: Objection. Non-responsive.
5 MR. ANDERSON: All right.
7 Q. BY MR. ANDERSON: Do you know why you didn't go alone
8 to Ms. Joest's house?
9 A. Charles wanted to pitch the first deals for everybody
10 and wanted us to watch.
11 Q. When you went up to Ms. Joest's house, could you
12 describe where you met?
13 A. In her living room.
14 Q. Who was there at that meeting?
15 A. It was myself, Cindy Gastelum, who is the notary,
16 Charles Head, Karie Joest, and then her husband/boyfriend would
17 just pop in and out, but it was more Karie.
18 Q. During that meeting, were you close enough where you
19 could hear everything that Charles Head said?
20 A. I could, yes.
21 Q. And was he in a position where he could hear what
22 other people were saying?

1 Q. BY MR. ANDERSON: Based on Charles Head's location
2 and his interaction in the conversation, did it appear as
3 though he were able to hear and understand what was going on in
4 the conversation?
5 MR. GREINER: Objection, speculation, Your Honor.
7 THE WITNESS: Charles --
8 THE COURT: When I sustain an objection, then you
9 shouldn't answer. Give me a moment to rule on objections.
10 That objection is sustained. Any answer is stricken.
11 Q. BY MR. ANDERSON: How far from Ms. Joest was Charles
12 Head, approximately?
13 A. A couple feet.
14 Q. How far were you from Charles Head?
15 A. Ten.
16 Q. How far were you from Ms. Joest?
17 A. About ten.
18 Q. Where was Cindy Gastelum?
19 A. Back with me, about ten feet away.
20 Q. Was there one person who did more of the talking than
21 the other people?
22 A. Charles. Charles did all the taking with Karie
23 Joest.
24 Q. Did you hear what Charles Head said to Ms. Joest?
25 A. I could hear, but I couldn't -- I mean, back then I

1 was still trying to get a grasp of it. So I heard what was
2 said but didn't fully understand everything that was being
3 said. But the main thing that was always being preached --
4 MR. TEDMON: Objection, Your Honor. I would move to
5 strike that last portion as non-responsive.
7 last partial sentence. Once you answer a question, sir, if you
8 could wait for the next question. Mr. Anderson.
9 Q. BY MR. ANDERSON: What do you recall of what Charles
10 Head told Karie Joest?
11 A. That it was set up like a refinance, think of it like
12 that.
13 Q. Did you later consider whether or not that was
14 accurate information?
15 MR. TEDMON: Objection, Your Honor. That may call
16 for a legal conclusion.
18 Q. BY MR. ANDERSON: Do you know if that was accurate
19 information?
20 MR. TEDMON: Same objection.
21 THE COURT: Just answer the question. Objection
22 overruled. Yes or no?
24 Q. BY MR. ANDERSON: Do you know whether or not that was
25 accurate information?

1 A. It was not, no.
2 MR. TEDMON: Your Honor, we're going to have a
3 problem here because the witness won't answer the question.
4 I'm asking the witness to simply answer the question posed.
5 I'm moving to strike.
6 THE COURT: I understand that. That motion is denied
7 given the series of questions.
8 But generally, Mr. Anderson, if you can focus your
9 questions.
10 MR. ANDERSON: I'll try and do better.
11 Q. BY MR. ANDERSON: Do you know what the transaction
12 really was that Ms. Joest was entering into?
13 A. She was selling her home, purchase.
14 Q. Based on what Charles Head was saying to Ms. Joest,
15 was he informing her that she was selling her home?
16 A. No.
17 Q. Did you go on to engage in other transactions --
18 well, I'm sorry. Let me finish with that one first.
19 As part of that transaction, was Ms. Joest given
20 documents to sign?
21 A. Yes.
22 Q. And what types of documents was she given to sign?
23 A. There was an option agreement. There was a lease
24 agreement. She signed a grant deed.
25 Q. Did you go on to conduct other foreclosure

1 transactions?
2 A. Yes.
3 Q. How many other transactions did you do?
4 A. Three others.
5 Q. In doing those transactions, did you say things to
6 the homeowners that were not true about the transactions?
7 A. Yes.
8 Q. Did you ever have discussions with Charles Head about
9 what it was you were supposed to tell the homeowners?
11 THE COURT: You can clarify the time.
12 Q. BY MR. ANDERSON: Okay. During the time period that
13 you're engaging in these foreclosure transactions, did Charles
14 Head ever give you --
15 MR. SAMUEL: Still vague, Your Honor.
16 THE COURT: Sustained. Clarify the exact timeframe
17 with reference to a year, year or month.
18 Q. BY MR. ANDERSON: Now you said you had had two
19 meetings with Charles Head where he provided training to you?
20 A. Yes.
21 Q. During the course of those meetings, what did Charles
22 Head tell you about the program?
23 MR. SAMUEL: Same objection. Vague as to time.
25 Q. BY MR. ANDERSON: Do you know when those meetings

1 happened?
2 A. That was before my first deal was done, so that was,
3 I would say, roughly March, April.
4 THE COURT: Of?
5 MR. SAMUEL: Vague.
6 THE WITNESS: Of 2004.
7 Q. BY MR. ANDERSON: All right. So when you were
8 talking to Charles Head in March, approximately, of 2004, what
9 did Charles Head tell to you tell homeowners?
10 A. He said just to follow the script.
11 Q. And did you have any subsequent conversations after
12 those meetings where you talked to Charles Head about what you
13 were supposed to say?
14 A. I did, yes.
15 Q. All right. When, approximately, did those
16 conversations take place?
17 A. June 2004.
18 Q. What did Charles Head tell you?
19 A. Say whatever it takes to get them to sign because it
20 doesn't matter.
21 Q. Did he explain why it didn't matter?
22 A. Because as soon as they were late on their payments,
23 they've broken the contract, so then we could get them out of
24 the house immediately.
25 Q. How did Charles Head refer to these homeowners?

2 MR. GREINER: Prejudicial.
3 Q. BY MR. ANDERSON: In this conversation you had with
4 Charles Head, what was was his attitude toward the homeowners?
5 MR. TEDMON: Objection. That's speculative and
6 relevance.
8 Q. BY MR. ANDERSON: Based on what he told you, what did
9 he say was his attitude toward these homeowners?
10 A. That they were irresponsible, and that it didn't
11 matter.
12 THE COURT: We've actually reached a good time for
13 our second break. Another 15-minute break.
14 As always, remember my admonitions. We'll be ready
15 to go promptly in 15 minutes. Thank you.
16 (Jury out.)
17 THE COURT: You may be seated. You may step down.
18 Please avoid contact with any jurors during the break, but be
19 back in your seat in 15 minutes.
20 All right. How much longer do you think you need,
21 Mr. Anderson?
22 MR. ANDERSON: Less than five minutes.
23 THE COURT: All right. See you in 15 minutes.
24 MR. GREINER: Judge, before you step down, I want to
25 issue an apology to you, the Court, and counsel, for my cell

1 phone going off. I've had trials in front of you. That was
2 totally an accident. I apologize.
3 THE COURT: We can talk about whether or not you get
4 it back at the end of the day. That's my rule for the first
5 infraction.
6 MR. GREINER: It may be a blessing if I don't get it
7 back.
8 (Break taken.)
10 MR. ANDERSON: Judge, we have a scheduling question.
11 We have Mr. Wiley here. We have another witness ready to go on
12 after Mr. Wiley. We could call in a third witness in case we
13 finish 15 minutes early. Would you like us to do that?
14 THE COURT: Let's use every minute we have.
15 MR. ANDERSON: All right. We will do that.
17 (Jury in.)
18 THE COURT: You may be seated. Welcome back once
19 again, ladies and gentlemen. We'll go into our final stretch
20 for the day and continue with the direct exam of Mr. Wiley.
21 Mr. Anderson informs me he has about five minutes,
22 and we'll see if there is any cross-exam. Mr. Anderson.
23 Q. BY MR. ANDERSON: In the Joest transaction, did any
24 money come out of the property?
25 A. Yes.

1 Q. How did it come out of the property, what was the
2 mechanism?
3 A. She would sign a wire transfer that would allow the
4 proceeds of the home to go into my account.
5 Q. Was there also a new -- as part of that, was a new
6 loan obtained on the property?
7 A. Yes.
8 Q. In that case, do you know who the person obtaining
9 the loan was?
10 A. My brother.
11 Q. Is that Ryan Wiley?
12 A. Ryan Wiley, yes.
13 Q. Is there any term that you refer to that person by?
14 A. Straw buyers.
15 Q. Was that similar process used in the other
16 transactions that you conducted?
17 A. Yes.
18 Q. Who taught you how to do that?
19 A. Charles Head.
20 Q. You had said that you had seen a script before. I'd
21 ask you to reach into the binders behind you and find
22 Exhibit 60, 6-0.
23 THE COURT: In volume two of three. I believe it's
24 just a white spine.
25 MR. ANDERSON: Your Honor, may I approach?

1 THE COURT: Where are the other Government binders?
2 You may approach to find the other binder.
4 MR. ANDERSON: If there is no objection, Your Honor,
5 we can pull it up on the screen.
13 (Government Exhibit 60, Foreclosure Transaction
14 Procedure admitted into evidence.)
15 Q. BY MR. ANDERSON: All right we're going to pull it up
16 on the screen. Do you recognize Government's Exhibit 60?
17 A. Yes.
18 Q. And if we flip through each page, just one at a time
19 for a moment -- go to page three, page four, page five -- do
20 you recognize each page of this document?
21 A. I do.
22 Q. What is it?
23 A. That was the script that was given to us when we went
24 on the weekends twice --
25 MR. GREINER: Objection to the word "us."

1 THE WITNESS: Josh Coffman, and Akemi Botari, and
2 myself went for those two weekends in March 2004.
3 Q. BY MR. ANDERSON: Let me clear up one more pronoun.
4 Who gave it to you?
5 A. Charles Head.
6 Q. Is this the script that you used in order to
7 understand how to do these programs, this program?
8 A. Yes.
9 Q. In addition, if you had questions, was there somebody
10 you would go ask?
11 A. Charles.
12 MR. ANDERSON: That's it, Your Honor. No further
13 questions.
14 THE COURT: All right. Mr. Tedmon?
15 MR. TEDMON: Thank you, Your Honor.
17 BY MR. TEDMON:
18 Q. Mr. Wiley, good afternoon.
19 A. How are you?
20 Q. Fine. I want to start by asking you about your
21 cooperation deal with the Government. All right?
22 A. All right.
23 Q. You entered into an agreement with the Government,
24 you pled guilty in this case, correct?
25 A. Yes.

1 Q. And as part of that agreement, you know that you're
2 looking at five years in federal prison, correct?
3 A. Yes.
4 Q. All right. And the Government as part of the
5 agreement is going to make a recommendation to the Court in all
6 likelihood, true, you know that?
7 A. Yes.
8 Q. And, in fact, you're hoping and expecting that the
9 Government would ask for 50 percent off whatever your sentence
10 otherwise would be, correct?
11 A. Yes.
12 Q. And that's contingent on your testimony, correct?
13 A. Yes.
14 Q. All right. And the testimony is to benefit the folks
15 at this table right here to my left, correct?
16 A. Yes.
17 Q. Now, can you again state when you started working for
18 Head Financial?
19 A. January 2004.
20 Q. And you worked there for, what, two to three months,
21 is that it?
22 A. Yes.
23 Q. All right. So you were done with your employment May
24 or June of 2004, correct?
25 A. No.

1 Q. About right?
2 A. No.
3 Q. No?
4 A. With Head Financial?
5 Q. Yes.
6 A. November of -- November of 2004.
7 Q. November. You started when again?
8 A. January of '04.
9 Q. And I just asked you, you worked there about two to
10 three months, right, and you said "yes"?
11 A. I'm sorry. I didn't understand the question. I
12 thought before foreclosures started.
13 Q. Let's back up. You started your employment with Head
14 Financial when?
15 A. January 2004.
16 Q. All right.
17 A. Just doing loans and refinances.
18 Q. All right. And your initial contact with Head
19 Financial was through Mike Head, your friend from Pitt, right?
20 A. Yes. Yes.
21 Q. And the period of time that you did loans was two to
22 three months, is that what you're saying?
23 A. Yes.
24 Q. And Mr. Head was hardly around, was he?
25 A. No, he wasn't.

1 Q. He wasn't around at all much?
2 A. No.
3 Q. You know a person by the Kou Yang?
4 A. I do.
5 Q. Who is Kou Yang?
6 A. She was the head processor.
7 Q. At Head Financial?
8 A. Yes.
9 Q. And as far as your understanding was, what was her
10 job as the head processor?
11 A. To make sure that loans got funded.
12 Q. All right. And in fact, as far as on the loan side,
13 she was the go-to person, true?
14 A. No. I wouldn't say that.
15 Q. Well, she was in charge, right, of the loans?
16 A. For us -- she did what she was told.
17 Q. Well, okay, but you don't know what she was told, you
18 weren't present at all of her conversations, correct?
19 A. Right.
20 Q. As part of your job responsibilities, you knew that
21 you were to deal with Kou Yang on the loan side, true?
22 A. Yes.
23 Q. Now, with regard to Ms. Yang -- well, strike that.
24 During the period of time that you were with Head
25 Financial, what was the totality of the months that you worked

1 there, from beginning to end?
2 A. Ten months.
3 Q. Ten months. And so you were done with your
4 employment with Head Financial around November of 2004,
5 approximately?
6 A. Yes.
7 Q. All right. Now during the period of time that you
8 worked at Head Financial, you worked with a gentleman by the
9 name of Andrew Vu, correct?
10 A. Yes.
11 Q. Who was Andrew Vu?
13 Q. All right. And you also worked with your friend,
14 Josh Coffman, correct?
15 A. Yes.
16 Q. All right. Who was he? What did he do?
17 A. Loan officer at first and then foreclosures.
18 Q. All right. And then Liz Huerta, does that name sound
19 familiar?
20 A. Yes.
21 Q. You worked with her?
22 A. I saw her in the office, early stages, very early.
23 Q. You had limited contact with her?
24 A. Yes.
25 Q. Now, with regard to Ms. Yang -- we'll go back to her

1 for a moment -- your understanding was that she was responsible
2 for processing the loans for Head Financial Services, correct?
3 A. Yes.
4 Q. All right. And you're also personally aware that she
5 signed uniform residential loan applications or 1003s, correct?
6 A. She signed -- what do you mean by "signed"?
7 Q. Well, she signed them for other people, you know
8 that?
9 A. She signed for myself on a few.
10 Q. Okay. Well, that would mean she signed your
12 A. Yes. I can only speak for me.
13 Q. I'm sorry?
14 A. I can only speak for me.
15 Q. So she forged your signature, correct?
16 A. My brother's.
17 Q. Your brother's signature, Ryan?
18 A. On one or two documents. I signed most of those
19 myself.
20 Q. Okay. Let's stick with Ms. Yang for a moment.
21 Ms. Yang forged your brother's signature, correct --
22 A. Yes.
23 Q. -- on loan documents, correct -- well, let me strike
24 that -- let me make it more specific -- on the uniform
25 residential loan application, correct?

1 A. I signed on those.
2 Q. Okay. What did Ms. Yang forge her signature on?
3 A. The only one that I know of is Brendan Parker. That
4 was my, I think, third or fourth deal.
5 Q. All right. You're also aware that Ms. Yang would
6 forge Mr. Charles Head's signature on uniform residential loan
7 applications, correct?
8 A. Yes.
9 Q. And, in fact, the truth of the matter is that
10 Ms. Yang was running the office, correct?
11 A. No.
12 Q. Well, Charles Head wasn't there much, correct? You
13 just testified to that.
14 A. I did.
15 Q. All right. Ms. Yang was there every day, correct?
16 A. Every question I had --
17 Q. Excuse me, Mr. Wiley, just answer the question.
18 Ms. Yang was there every day?
19 A. Yes.
20 Q. So the person that you talked to physically,
21 personally when it came to loans was Ms. Yang, correct?
22 A. Yes.
23 Q. All right. In fact, that was true with the other
24 people in the office that were loan officers, they would
25 talk --

1 A. I can't speak for anyone else.
2 Q. I'm asking if you know. They would talk to Ms. Yang,
3 correct?
4 A. Yes.
5 Q. All right. Now, you've talked about this Karie Joest
6 transaction, do you recall that?
7 A. Yes.
8 Q. And I believe your testimony was that yourself,
9 Charles Head, and was it Cindy went with you?
10 A. Yes.
11 Q. All right. That's Cindy Gastelum?
12 A. Yes.
13 Q. Now, you testified on direct that there were several
14 documents that were taken to that meeting, do you recall that?
15 A. Yes, I do.
16 Q. One was called an equity purchase agreement, do you
17 remember that?
18 A. Yes.
19 Q. Then there was a lease agreement, do you recall that?
20 A. Yes.
21 Q. Do you also recall that there was a document called
22 an equity sharing document?
23 A. Yes.
24 Q. And do you also recall there was a document called
25 acknowledgement by seller?

1 A. Yes.
2 Q. And you also recall there was a document called
3 notice of cancellation?
4 A. Yes.
5 Q. And you also recall that there was a document called
6 affidavit of deed?
7 A. Yes.
8 Q. And then there was the grant deed?
9 A. Yes.
10 Q. All right. So how long did this meeting last with
11 Ms. Joest?
12 A. 30 to 45 minutes.
13 Q. From the time you got there to the time you left?
14 A. Yes.
15 Q. And I think you indicated that her husband was there,
16 kind of in and out?
17 A. Yes.
18 Q. And where was the meeting held specifically?
19 A. Her living room.
20 Q. All right. Now, with regard to the equity purchase
21 agreement, I'm going to ask that we put Government's -- this
22 has also been admitted, Your Honor -- 10A1 on the screen
23 please.
24 Mr. Wiley, this is a document that's already been
25 admitted into evidence. Okay?

1 A. Okay.
2 Q. I'm going to ask you some questions about it.
3 This relates to a Sharolynn and Rufo Cardenas, do you
4 see that?
5 A. Yes.
6 Q. At the top it says "Equity Purchase Agreement," true?
7 A. True.
8 Q. That's the same or similar document to what was shown
9 to Ms. Joest, right?
10 A. Yes.
11 Q. Okay. And on this document, which would be the same
12 as what Ms. Joest received, it says here, "seller agrees to
13 sell and convey to purchaser, and purchaser agrees to purchase
14 from seller, the real property which is commonly described as,"
15 in this case it's a property in Hawaii, do you see that?
16 A. Yes.
17 Q. That's the same language that Ms. Joest reviewed
18 before she signed her equity purchase agreement, correct?
19 A. Yes.
20 Q. All right. And that clearly states it's an agreement
21 to sell her home, correct?
22 A. Yes.
23 Q. All right. Now, this lease -- can you take that off.
24 Thank you.
25 This lease agreement that you spoke of both on direct

1 and just a moment ago was a document that allowed the
2 homeowner, the current homeowner, in this case Ms. Joest, to
3 stay in the property, correct?
4 A. Yes.
5 Q. And Mr. Anderson didn't ask you about this, but I'm
6 going to.
7 Ms. Joest was given a certain amount of money as part
8 of this transaction, correct?
9 A. Yes.
10 Q. How much was Ms. Joest given?
11 A. $3,000.
12 Q. $3,000 total?
13 A. Yes.
14 Q. And she signed a lease agreement or rental agreement
15 so she could stay there, correct?
16 A. Yes.
17 Q. All right. Now you also knew at the time that
18 Ms. Joest was on the verge of foreclosure, correct?
19 A. Yes.
20 Q. She was going to lose her home to the bank, right?
21 A. Yes.
22 Q. All right. And this was a program that allowed her
23 to stay there and not be displaced from her home, true?
24 A. Yes.
25 Q. All right. So if we can call up Government's 10A1-6,

1 please. And I want to just expand that section for a moment.
2 Thank you.
3 Now this is the addendum. And it speaks of, in
4 paragraph number five, "during this time period, seller" --
5 that would be Ms. Joest, correct?
6 A. Yes.
7 Q. -- "shall continue to pay monthly rent under the
8 lease agreement as a month-to-month tenant."
9 Now that's the same language that Ms. Joest signed,
10 correct?
11 A. Yes.
12 Q. Right. So she was renting her property, correct?
13 A. Yes.
14 Q. And the reason is because she was selling her
15 interest in that property, correct?
16 A. Yes.
17 Q. If we could go to Government's 10A1-8, please.
18 Now, this is the form Acknowledgement By Seller, do
19 you recognize that?
20 A. Yes.
21 Q. All right. And paragraph four it says, "seller" --
22 that would be Ms. Joest, true?
23 A. No. Because this document was added later on.
24 Q. So your testimony is Ms. Joest didn't sign this, is
25 that what you're saying?

1 A. Yes.
2 Q. Okay. All right. Then we will skip over that.
3 We'll get to that with somebody else. Now, you did testify
4 that -- well, strike that.
5 You did testify earlier that there was a document
6 called an acknowledgement by seller, and that was part of the
7 packet that Ms. Joest reviewed, you just testified to that like
8 five minutes ago. Are you saying now that this is not part of
9 the packet?
10 A. There was a lot of paperwork, and it was ten years
11 ago, so I'm trying to still recollect. But I do remember this
12 was added in later on.
13 Q. So your testimony is Ms. Joest would not have signed
14 this particular document?
15 A. Yes.
16 Q. Or form of it?
17 A. Yes.
18 Q. All right. Can we go to 10A1-10, please. Do you see
19 this document, Mr. Wiley?
20 A. Yes.
21 Q. Notice of cancellation, correct?
22 A. Yes.
23 Q. All right. Ms. Joest got this document, correct?
24 A. She did, but it was back-dated.
25 MR. TEDMON: Well, Your Honor, I move to strike, and

1 instruct the witness to simply answer the questions.
2 THE COURT: Motion is granted. The jury shall
3 disregard the last part of the answer.
4 And if you could answer the question and wait for the
5 next question.
6 Q. BY MR. TEDMON: Mr. Wiley, you're cooperating with
7 the Government, right?
8 A. Yes.
9 Q. And I know you're trying really hard, but can you
10 just answer the question that's asked?
11 A. Yes.
12 Q. All right. Now, notice of cancellation, that's a
13 documents that was in the packet that was presented to
14 Ms. Joest, right?
15 A. Yes.
16 Q. And it indicates that in this particular example --
17 if we could have that expanded, please -- the seller signed the
18 equity purchase agreement on this document on June 14th, do you
19 see that, 2005?
20 A. Yes.
21 Q. And then they can cancel the contract without any
22 penalty or obligation any time before June 20th, 2005, do you
23 see that?
24 A. Yes.
25 Q. All right. Now, that's fine. I don't need that any

1 longer.
2 Ms. Joest was given a similar document to review,
3 when you were there, you've just testified to that, correct?
4 A. Yes.
5 Q. And she was given a week to decide whether she wanted
6 to continue or not?
7 A. She was not.
8 Q. She was not. Well, that's what the document says?
9 A. Yes.
10 Q. So you say she was not, but the document says
11 otherwise, true?
12 A. Yes.
13 Q. And you are cooperating, right?
14 A. Yes.
15 Q. Now, when is your sentencing, Mr. Wiley?
16 A. I couldn't tell you. I've been told a thousand
17 dates, and it keeps getting pushed back.
18 Q. Right. It keeps getting pushed back so you can come
19 in here and help the Government, right?
20 A. Yes.
21 Q. And that's what you're doing?
22 A. Yes.
23 Q. Let me go to another transaction. Do you recall a
24 client by the name of Mota?
25 A. Yes.

1 Q. All right. And you worked with this person, the Mota
2 family, do you recall that?
3 A. Yes.
4 Q. And part of your efforts in that regard was to, one,
5 lower the payments for the Mota family, correct, through this
6 program?
7 A. Yes.
8 Q. And also to fix their credit, do you remember that?
9 A. Yes.
10 Q. And in fact, you did make efforts during your time at
11 Head Financial for the Motas to fix their credit, correct?
12 A. Yes.
13 Q. All right. In fact, do you recall working with a
14 company called Second Chance Financial on behalf of the Motas?
15 A. Yes.
16 Q. And that was in an effort to not only reduce their
17 debt but to fix their credit, and did you that, right?
18 A. Yes.
19 Q. One moment, Your Honor.
20 Ryan Wiley is your brother, is that correct?
21 A. Right.
22 Q. Is he older or younger?
23 A. Younger.
24 Q. How much younger sir?
25 A. Two years.

1 Q. How old are you now?
2 A. 34.
3 Q. So at the time that you were working at Head
4 Financial, how old were you?
5 A. 24.
6 Q. 24?
7 A. 23.
8 MR. TEDMON: I have nothing further.
9 THE COURT: Who is going next?
10 MR. GREINER: I will.
11 THE COURT: Mr. Greiner. All right.
13 BY MR. GREINER:
14 Q. Mr. Wiley, I'm going to ask you just a couple of
15 questions.
16 You recall when you were working from January 2004 to
17 November 2004 that the person that would organize the office
18 and to meetings was Kou Yang, right?
19 A. No.
20 Q. Okay. So you deny that totally?
21 A. The meetings that we had, they were called when
22 Charles was in the office.
23 Q. And so there was never a meeting called when Charles
24 wasn't in the office, is that your testimony?
25 A. Never -- I mean that's --

1 Never a meeting called? What do you mean by
2 "meeting"?
3 Q. All right. Well, let's, first of all, get rid of the
4 vague "never" that you thought was -- the time period is
5 January 2004 to November 2004. That's the time period. Do you
6 have that in your mind?
7 A. Do you mean structured meetings?
8 Q. Mr. Wiley, do you have the time period in your mind?
9 A. Yes.
10 Q. When I talk about meetings, I'm talking about
11 meetings in the office. Do you remember them being on Friday?
12 A. No.
13 Q. Not at all?
14 A. I don't remember there being scheduled meetings every
15 Friday, no.
16 Q. And so you don't remember that it was Kou Yang's
17 responsibility, during the time you worked there, to have
18 meetings on Fridays, is that your testimony?
19 A. No. Yes. Yes.
20 Q. Okay. All right. Now when you were working between
21 January of 2004 and November of 2004, your job duties
22 included -- and I'm going to list them and ask you if this is
23 true, okay?
24 A. Uh-huh.
25 Q. Your job duties including -- you were selling a

1 program in-person to people, correct?
2 A. Yes.
3 Q. And you would have the documents signed in-person
4 with the seller of the house, correct?
5 A. Yes.
6 Q. You would -- you, personally, would find investors,
7 correct?
8 A. Yes.
9 Q. You, personally, would find a bank or a lender,
10 correct?
11 A. No.
12 Q. Never did that in that time period?
13 A. Me find the bank? We already had banks lined up at
14 the company that we used.
15 Q. And that's what Kou did, correct?
16 A. Yes.
17 Q. She actually went and found the banks, correct, and
18 let you know about them, right?
19 A. I don't know if she found them, but -- I mean, I
20 don't know to be honest.
21 Q. Well, to be honest, the banks just didn't appear at
22 your company, did they?
23 A. I don't know if Kou found the banks.
24 Q. Your testimony to the ladies and gentlemen of the
25 jury is you, during your time period that you worked there, you

1 didn't go out and find banks, is that your testimony?
2 A. There was a list of banks that we could use.
3 Q. I appreciate your answer. Directing you back to my
4 question.
5 During the time period you worked there between
6 January and November of 2004, you, personally, did not go out
7 and find lenders?
8 A. No.
9 Q. That's correct?
10 A. Correct.
11 Q. During the time period you worked there, you filled
12 out the loan applications, the 1003s, correct?
13 A. Yes.
14 Q. During the time period you worked there, you were
15 able to structure the loan using the interest rate and the
16 investor that you found, correct?
17 A. Yes.
18 Q. During the time period that you were there, you
19 requested Kou to open title and escrow, correct?
20 A. Yes.
21 Q. And then you knew from working there that Kou
22 processed the documents with the bank, right?
23 A. Yes.
24 Q. And that the documents -- if I understand, you did
25 four total loans, is that how many you did total?

1 A. Yes.
2 Q. In the four loans that you did in the period that you
3 worked there, Kou set up the signings, the final signings for
4 escrow, correct?
5 A. Yes.
6 Q. And then the file closed, correct?
7 A. Yes.
8 Q. And then the proceeds were wired to -- for your four
9 files -- into your limited liability corporation bank account,
10 correct?
11 A. Yes.
12 Q. And it's at that time in this time period where you
13 then split those funds 50-50 with Charles Head, correct?
14 A. Yes.
15 Q. And you then managed the property for whatever period
16 of time the people were in there leasing or renting it back,
17 correct?
18 A. Yes.
19 Q. And if the people had to be evicted, that was your
20 job, correct?
21 A. Yes.
22 Q. And if they were evicted, then the resale of the
23 property that would also be your job, right?
24 A. Along with Charles. Yes.
25 Q. All right. And since you left in November 2004, you

1 left prior to Domonic McCarns ever showing up and working,
2 true?
3 A. Yes.
7 BY MR. SAMUEL:
8 Q. Never met Ben Budoff, did you?
9 A. No.
10 Q. Never heard of his name, did you?
11 A. No.
12 MR. SAMUEL: Nothing further.
13 THE COURT: Mr. Anderson.
15 BY MR. ANDERSON:
16 Q. At the time you were doing transactions, what state
17 were you primarily targeting?
18 MR. TEDMON: Objection. Lack of foundation.
20 Q. BY MR. ANDERSON: Was there a particular geographic
21 area that you were targeting when you were doing foreclosure
22 transactions?
23 A. California outskirts - Riverside, Ontario, Lake
24 Elsinore. So about anywhere from an hour to an hour-and-a-half
25 outside of L.A.

1 Q. In addition to meeting with people, did you also
2 speak with them on the phone before meeting with them?
3 A. Yes.
4 Q. And I think it was clear you never worked with
5 Domonic McCarns, is that right?
6 A. Yes, I never did.
7 Q. Did you know Domonic McCarns?
8 A. Yes.
9 Q. How did you know him?
12 THE WITNESS: Just through Charles. Going out a few
13 times at night.
14 Q. BY MR. ANDERSON: Are you aware if Domonic ever went
15 to work for Charles?
16 A. Yes, I was aware.
17 MR. ANDERSON: Thank you. No further questions.
18 THE COURT: Anything further, Mr. Tedmon?
24 THE COURT: Is this witness excused?

2 MR. GREINER: Yes.
3 THE COURT: You may step down, sir. You are excused.
4 Next witness.
5 MR. ANDERSON: The United States calls Sheila Jones.
6 THE COURT: During these changes of witnesses, if you
7 want to stand and stretch, feel free. Up to you.
11 THE WITNESS: Yes, I do.
14 THE WITNESS: Sheila Jones, S-h-ei-l-a, J-o-n-e-s.
16 SHEILA JONES,
21 BY MR. ANDERSON:
22 Q. Good afternoon, Ms. Jones. Where do you live?
23 A. I live at 1655 69th Avenue. That's in Sacramento,
24 California.
25 Q. I would like to take you back to 2005/2006. Did you

1 also live in Sacramento then?
2 A. Yes.
3 Q. Where did you live then?
4 A. I lived at 3920 44th Avenue, Sacramento, California
5 95824.
6 Q. Did there come a time when you got involved with a
7 company called Head Financial Services?
8 A. Yes.
9 Q. How did it come about that you got involved with Head
11 A. I was in the process of going through a foreclosure,
12 and I was looking for some resources. And I received a little
13 flyer in the mail that said Funding For Foreclosures.
14 Q. Did you make a phone call based on that flyer?
15 A. Yes, I did.
16 Q. Who did you call and talk to?
17 A. At the time, I spoke with Domonic from Funding For
18 Foreclosures, and we discussed different options for me and my
19 home.
20 Q. What did Domonic tell you were -- what did Domonic
21 suggest to you were your options?
22 A. What he said was that at that point that we could not
23 refinance, but that he had an angel investor that could help me
24 out, that would be a person that would help me, invest in my
25 home, they would put it in a trust, I would be able to make

1 payments for a year, then the house would be returned to me,
2 and we would split the equity that I had in the house at that
3 time.
4 Q. Based on your conversation with Domonic, did you
5 believe that your equity would stay in the house for that year?
6 A. Absolutely, yes. It would be put in a trust, and,
7 yeah, be put in a trust, and no one would touch it.
8 Q. All right. Did Domonic tell you anything else about
9 the proposed deal?
10 A. Yeah, absolutely. That I would have to make my
11 payments on time each month for one year, and my payments would
12 be $1,100 a month.
13 Q. How did that compare to what your previous payments
14 were?
15 A. My previous payments were $830. So it jumped up like
16 $300.
17 Q. Based on your conversation with Domonic over the
18 phone, did you decide to enter into the transaction?
19 A. Yes. And I needed some cash at the time. My son was
20 away in college, and he said that he could provide that cash
21 that I needed to pay his tuition.
22 Q. Did he offer to provide you money as part of the
23 transaction?
24 A. Absolutely.
25 Q. How much money?

1 A. He offered me $5,000.
2 Q. Now, how did it go that you entered into the
3 transaction, were there documents that you needed to sign?
4 A. Absolutely. Just like when I purchased my house. It
5 was a packet that was faxed to me at my job. I was to complete
6 the package and fax it back. And then that's how we
7 corresponded with all our paperwork.
8 Q. Did you do that?
9 A. Yes.
10 Q. Now, during this time, as you were doing that, were
11 you talking to anybody at Head Financial Services?
12 A. Yes, I was corresponding with two people. I would
13 speak to Domonic on the phone, and then Lisa and I would do all
14 the transactions as far as documents that I needed, documents
15 that needed to be signed, and what she would fax to me, and
16 what I would fax back, and the deadlines.
17 Q. Okay. Now after you had signed the papers, what's
18 the next thing that happened?
19 A. Then after I signed the papers, we went over and the
20 agreement was explained, and he told me that someone would come
21 out and we would do the notary, the agreement would be signed,
22 and then we would enter into our contract.
23 Q. And when you say "he," who is he?
24 A. That was Domonic. I'm sorry.
25 Q. What did you do next? Did you actually go through

1 with that process?
2 A. Absolutely, yes, we did.
3 Q. And after you had signed the documents with the
4 notary, what happened?
5 A. Well, during the document signing I had noticed when
6 it came to the page where it said wire transfer, it said do not
7 transfer any funds to the seller. I had questioned that at
8 that time. And that's when I was reassured that the equity in
9 my home would be put in a trust, and that's why no money would
10 be transferred to me and no one else because it would be put in
11 that trust for the one year.
12 Q. Who reassured you?
13 A. At the time, it was Nicholas, who was the guy that
14 came out and did the notary. And then I also called to make
15 sure within that three-day period. Because you have a
16 three-day period in order to rescind once you sign that
17 contract. And I spoke with Domonic, and he reassured me as
18 well.
19 Q. Now, was the fact that Domonic had told you that your
20 home would remain in a trust, was that important to your
21 decision to enter into this transaction?
22 A. That was the most important.
23 THE COURT: Hold on. Give me a moment to hear what
24 they are saying and to rule.
25 MR. GREINER: Objection. Relevance. Her state of

1 mind now is not relevant.
2 THE COURT: Were there other objections?
4 THE COURT: All right. Overruled.
5 Q. BY MR. ANDERSON: You can answer the question if you
6 still remember it. I'll ask it again.
7 At the time, was the fact that Domonic had told you
8 that your home would go into a trust, was that important to
9 your decision or your evaluation of whether or not to enter
10 into this deal?
11 A. Absolutely. That was the deciding factor. Because
12 he was the one that can help me save my home as opposed to
13 anyone else who was not able to.
14 Q. And was the fact that your equity would remain in
15 that home for a year and then be split at the end, according to
16 Domonic, was that an important factor in your decision to enter
17 into this transaction?
18 A. That was the other deciding factor because I had a
19 son 3,000 miles away in college. I wanted to make sure that we
20 had something secure for him.
21 Q. So after you received the reassurance from Domonic,
22 what's the next thing that happened?
23 A. Then he said I still had the 48 hours, which was the
24 next day to rescind, which I did not. And then three days
25 after our three-day period, then I did receive a check for

1 $5,000.
2 And then the maybe within 30 days I received my
3 packet which also included my coupons for my mortgage payment
4 and who I should send my mortgage payments to each month.
5 Q. And did you begin making payments?
6 A. Absolutely.
7 Q. Did you make your payments?
8 A. Yes, I did.
9 Q. Was there a time when something caused you to
10 question this deal?
11 A. Well, no, not until the FBI showed up. I had every
12 confidence that everything had went okay.
13 Q. And during that time, did you continue to make your
14 payments?
15 A. Absolutely. Because I wanted to keep my house.
16 Q. And during that time period, did you believe that
17 your home was in a trust?
18 A. Absolutely.
19 Q. Did you believe that your equity was still in your
20 home?
21 A. Absolutely.
23 Government's Exhibit 16A4 be admitted pursuant to the
24 stipulation as a document found during the search warrants.

1 MR. TEDMON: No.
5 MR. SAMUEL: No, Judge.
8 dated 5/5/2006 between Sheila A. Jones “Seller” and Funding
9 Foreclosures.com “Purchaser” for property at 3920 44th Avenue,
10 Sacramento, CA admitted into evidence.)
11 Q. BY MR. ANDERSON: That's going to pop up on the
12 screen right next to you. There it is.
13 Do you recognize this document?
14 A. Yes, I do.
15 Q. How are you able to recognize it?
16 A. Because it was my equity purchase agreement. It has
17 my name on it and look like the form that I received as part of
18 my packet.
19 Q. Okay. And let's go to page four of this exhibit. Do
20 you recognize the signature on that page?
21 A. Yes, I do.
22 Q. Whose signature is it?
23 A. That is mine.
24 Q. Let's go to page five of this exhibit. Do you
25 recognize this document?

1 A. Yes, I do.
2 Q. What is it?
3 A. That was a part of the package that Nicholas brought
4 over when we did the signatures.
5 Q. And there's also a signature on it, do you recognize
6 that signature?
7 A. Yes, I do.
8 Q. Whose is it?
9 A. Mine.
10 Q. Going to page six. Do you recognize this document?
11 A. Yes, I do.
13 A. It was a document that I signed with the signing with
14 the notary public.
15 Q. And we'll go to page seven. Do you recognize this
16 page?
17 A. Yes, I do.
18 Q. What is it?
19 A. It was also a part of the package that I signed when
20 the notary public came.
21 Q. And page eight, do you recognize this one?
22 A. Yes, I do.
23 Q. Same thing, you signed it?
24 A. Yes.
25 Q. And let's go to page nine. Do you recognize this

1 page?
2 A. Yes, I do.
3 Q. What is it?
4 A. It's also part of the document that was brought over.
5 Q. And sorry?
6 A. That was also part of the document brought over in
7 the packet.
8 Q. Okay. And let's look at page ten. That's the second
9 page of the same document. Do you recognize the signature
10 there?
11 A. Yes, I do.
12 Q. And there's two signatures. Do you recognize one or
13 both?
14 A. The first one, which is mine.
15 Q. All right. Let's go to page eleven. There is some
16 initials on this document. Do you recognize the document?
17 A. I recognize the document.
18 Q. Do you recognize the initials?
19 A. Yes, I do.
20 Q. Whose are they?
21 A. They are mine.
22 Q. Let's look to the next page, same question, do you
23 recognize the document?
24 A. Yes.

1 Your Honor, I would ask that this document also be admitted as
2 a document found during the search warrants, pursuant to the
3 stipulation.
7 MR. GREINER: What was the document?
8 THE COURT: 16A5.
13 (Government Exhibit 16A5, 3920 44th Avenue Property
14 Holding Trust Agreement dated 5/5/2006 between Purchaser to be
15 Determined “Transferor”, FFC Investments, LLC and Sheila A.
16 Jones “Tenant” and Nations Property Management, LLC “Trustee”
19 A. Yes, I do.
20 Q. What is it?
21 A. That's the agreement which says that my property
22 would be held in trust as per the agreement that Domonic and I
23 had made over the phone.
24 Q. Let's go to page seven of this exhibit. Do you see
25 your signature on that page?

1 A. Yes, I do.
2 Q. Where is it?
3 A. Down at the bottom, the last signature.
4 Q. The third one on the page?
5 A. Yes.
6 MR. ANDERSON: Going to go to Government's
7 Exhibit 16A6. Your Honor, I would ask that this also be
8 admitted as a document found during the search warrant.
10 MR. TEDMON: Your Honor, is counsel anticipating both
11 pages one and two?
12 MR. ANDERSON: No. I only have one page in my
13 binder.
14 MR. TEDMON: 16A6.
15 MR. ANDERSON: 16A6, page two.
16 THE COURT: You're only seeking to admit 16A6-2?
17 There is also a page 16A6.
18 MR. ANDERSON: Let's have the whole exhibit admitted,
19 Your Honor.
21 MR. TEDMON: No.
25 MR. SAMUEL: No.

1 THE COURT: All right. 16A6 and 16A6-2 are admitted.
3 Authorization for property at 3920 44th Avenue, Sacramento, CA
6 A. Yes, I do.
7 Q. Do you know what this document does?
8 A. Yeah. It does the wire transfer.
9 Q. At the time you signed this document, what did you
10 think it was a wire transfer for?
11 A. I wasn't sure. That's why I asked the question about
12 the wire transfer, and that's why I called Domonic the next day
13 to see why that was entered into my packet.
14 Q. And is that your signature on this page?
15 A. Yes, it is.
16 Q. I guess about halfway down?
17 A. Yes.
18 Q. Can we go to the next page of this document. Same
19 question. Does this appear to be a wire transfer?
20 A. Yes.
21 Q. Does that also appear to be your signature?
22 A. Yes.
24 Government's Exhibit 16A7 be admitted as a document found
25 during the search warrants, pursuant to the stipulation.

2 MR. TEDMON: No. Except for clarification, I have
3 three pages to this exhibit.
4 MR. ANDERSON: Yes. It's a three-page exhibit.
11 (Government Exhibit 16A7, Grant Deed for property in
12 Sacramento County Grantor: Sheila A. Jones Grantee: Daniel
13 Castillo Dated, signed and notarized on 6/16/2006
14 Affidavit of Deed dated, signed and notarized on 6/16/2006
16 Q. BY MR. ANDERSON: Do you know what this document is?
17 A. Yes.
18 Q. What is it?
19 A. It's a grant deed.
20 Q. Is this your signature on the document?
21 A. Yes.
22 Q. At the time you signed it, what did you think was
23 happening with your property?
24 A. That the grant deed would be put in a trust, and that
25 in one year my house would be returned to me if I made my

1 payments on time for 12 months consecutively.
2 MR. ANDERSON: And then I'd like to go to 16A8, Your
3 Honor. I would ask that this also be admitted as a document
4 recovered during the search warrants, pursuant to the
5 stipulation.
13 (Government Exhibit 16A8, Check off list for Jones’
14 documents admitted into evidence.)
15 Q. BY MR. ANDERSON: Have you seen this document? Or
16 did you see this document back when you were signing the other
17 documents we talked about?
18 A. Yes.
19 Q. Are you sure?
20 A. Yes.
21 Q. What do you recognize on this document?
22 A. I recognize the lease amount, and the $5,000, what
23 was promised to me.
24 Q. Okay. And there are some phone numbers there. Were
25 those your phone numbers at the time?

1 A. Yes. And also I recognize the buy-back price, which
2 Domonic and I had agreed on as well.
3 Q. So that would be the portion of the equity that Head
4 Financial services would keep?
7 Q. BY MR. ANDERSON: Could you explain to me what the
8 buy-back amount was supposed to be?
9 A. The buy-back amount was the price that when I got
10 ready to buy my house back, that would be the selling price I
11 could purchase my house back was $195,000.
12 Q. What ended up happening with your home?
13 A. It ended up going into foreclosure and being taken
14 away.
15 Can I have some water, please?
16 THE COURT: There's water and a tissue.
17 THE WITNESS: Excuse me. Sorry.
18 THE COURT: All right. Next question.
19 Q. BY MR. ANDERSON: If you had known -- are you okay?
20 A. Uh-huh.
21 Q. If you had known at the time that your home would not
22 go into a trust, and that your equity would be wired out into
23 an account controlled by others and spent, would you have
24 entered into this transaction?
25 MR. GREINER: Objection. Relevance, speculation.

1 THE COURT: Sustained as to speculation.
2 Q. BY MR. ANDERSON: Do you know how you felt about the
3 transaction at the time?
4 A. Yes.
6 Q. BY MR. ANDERSON: At the time that you entered into
7 the transaction.
8 A. Yes.
9 Q. Based on your knowledge of how you felt at the time,
10 if you had known that your home would not be held in a trust,
11 and that your equity would be wired out into bank accounts
12 controlled by others and spent, would you entered into this
13 transaction?
14 MR. GREINER: Objection. Speculation, facts not in
15 evidence.
17 THE COURT: Sustained as to speculation --
18 MR. ANDERSON: Your Honor --
19 THE COURT: -- and facts not in evidence.
20 MR. ANDERSON: -- I'm asking her own opinion.
21 THE COURT: I know. But you're including an
22 objectionable phrase in you question. You may attempt to
23 rephrase.
24 MR. ANDERSON: Which phrase is drawing the objection,
25 Your Honor? I'm sorry.

1 THE COURT: Well, there is a piece you have not
2 covered. I'm not here to give legal advice. You can try again
3 or you can move on.
4 Q. BY MR. ANDERSON: All right. Where was the equity
5 supposed to remain based on your understanding from your
6 conversations with Domonic?
7 A. In a trust.
9 THE COURT: All right. Mr. Tedmon.
10 MR. TEDMON: Your Honor, I think I'm going to defer
11 to Mr. Greiner.
12 MR. GREINER: I think I'm going to start, Judge.
15 BY MR. GREINER:
16 Q. All right. You tell me when you're ready. Good
17 afternoon.
19 Q. If you need, there's more tissue behind you and some
20 water. And if you need a break --
21 A. Okay.
22 Q. If you don't understand any of any questions, let me
23 know. Okay?
24 A. Okay.
25 Q. And if you need me to repeat. Okay?

1 A. Okay.
2 Q. And what might help the court reporter, can you pull
3 that microphone closer to you?
4 A. Is that better?
5 Q. That's perfect. Thank you so much.
6 All right. Now, correct me if I'm wrong, but in 2006
7 you were facing foreclosure on your residence, is that fair to
8 say?
9 A. Yes.
10 Q. Okay. You had gotten a notice from the bank, true?
11 A. Yes.
12 Q. And was a date of sale given to you for your
13 foreclosure?
14 A. No.
15 Q. All right. How many months in arrears were you, how
16 many months had you not paid your mortgage?
17 A. Not paying the mortgage wasn't actually the case. So
18 it was maybe not full payments but not really missed payments.
19 If I can say it like that.
20 Q. Okay. You're going to have to help me out.
21 A. Okay. So if your mortgage is $800, I may have
22 sometimes paid 700 or 600 because we were in financial. So
23 missed payments, not so as to say partial payments.
24 Q. So instead of making the full payment, you would make
25 whatever payment you could for the month, correct?

1 A. Right. Absolutely.
2 Q. And the bank looked at that as you just couldn't keep
3 up with your contract because they sent you a notice of
4 foreclosure, right?
5 A. Yes.
6 Q. How many months did you attempt to do that before the
7 bank sent you the notice of foreclosure?
8 A. If I remember correctly, maybe six months. Because
9 we were going through a real rough time.
10 Q. And focusing on that six-month period, did you try to
11 refinance your property?
12 A. Yes. That's what we were doing within the six
13 months.
14 Q. Okay. But you couldn't refinance it, could you?
15 A. Correct.
16 Q. What was the reason given to you that you couldn't
17 refinance?
18 A. Debt to ratio.
19 Q. So your debt-to-income ratio was just not qualifying
20 you, right?
21 A. That's correct.
22 Q. Did you consider the option of bankruptcy to stop the
23 foreclosure?
24 A. Yes.
25 Q. And why didn't you choose -- or did you choose that

1 option?
2 A. No.
3 Q. And why not?
4 A. Because I received a notice in the mail from Funding
5 For Foreclosures.
6 Q. Okay. And so were you considering bankruptcy when
7 you got the notice in the mail?
8 A. I was considering every option. I was doing a lot of
9 -- I was doing a lot of looking around, investing -- you know,
10 looking around for any options that I could. So I was looking
11 at every avenue open at that time.
12 Q. So you looked at trying to sell your property?
13 A. Yes.
14 Q. And did you look to see if family or friends could
15 loan you the money?
16 A. No. I never thought about it.
17 Q. All right. And you thought about bankruptcy, right?
18 A. Yes, I did.
19 Q. Okay. And then you get a notice in the mail from
20 Funding Foreclosure, and you decided to call them, right?
21 A. Absolutely.
22 Q. And then when you called them, you said that you
23 talked to a person on the end of the phone, right?
24 A. Yes.
25 Q. You never met in-person Domonic McCarns, did you?

1 A. No.
2 Q. And so you have no idea what Domonic McCarns looks
3 like, do you?
4 A. No.
5 Q. All right. And so what you know is that the person
6 on the end of the phone said "this is Domonic McCarns," right?
7 A. Yes.
8 Q. Then you called, and you talked to this individual on
9 the phone, correct?
10 A. Yes, I did.
11 Q. And the person on the phone said, well, you know --
12 again this person, if I understood your testimony, said we
13 can't refinance you, is that what they said?
14 A. Absolutely.
15 Q. And so there was an attempt to look at your income,
16 your debt, to see if a refinance could happen, right?
17 A. No.
18 Q. Well, as far as you know, the person on the other end
19 of the phone looked at refinancing your property and said,
20 look, we just can't do it, right?
21 A. Yes.
22 Q. And that was consistent information that you had
23 received in the past, that you couldn't refinance, right?
24 A. Yes.
25 Q. Okay. And so that wasn't a surprise to you, was it?

1 A. No.
2 Q. All right. And when you were talking to the person
3 on the phone from Funding Foreclosure, what date of sale or how
4 much time did you tell them you had?
5 A. The date of sale or my house going up for auction was
6 not the issue Domonic and I discussed. We discussed about me
7 needing the money for my son's tuition, which was the major
8 driving factor at that point because he was 3,000 miles away.
9 And he asked me what dollar amount I needed. I told him the
10 dollar amount I needed. And he told me he can give me that
11 dollar amount with a little more, which was the $5,000.
12 Q. Okay. And I appreciate your answer, but let me
13 direct you back to my question.
14 My question was, when you talked to the person on the
15 phone, what date did you give them that there was a trustee's
16 date of sale?
17 A. There was no date given.
18 Q. So you didn't have a trustee's date of sale yet, you
19 were still going through the foreclosure process with the bank?
20 A. Right.
21 Q. Okay. And at that point in time then the person on
22 the phone said, well, we might be able to help you, so we're
23 going to send you some documents and have you look at them,
24 right?
25 A. Yes.

1 Q. And you got documents -- they were sent in the mail
2 or they were sent -- or I'm going to say like Express Mail?
3 A. Neither.
4 Q. Okay. Help me out.
5 A. I received them via fax at my job.
6 Q. By fax machine?
7 A. Uh-huh.
8 Q. Is that a "yes"?
9 A. Yes. I'm sorry.
10 Q. Don't worry about it. That's my job.
11 So you got it by fax. And where were you working at
12 the time, if I can ask, just generally?
13 A. Turning Point Community Programs.
14 Q. Had you ever worked in the real estate industry
15 before?
16 A. No.
17 Q. I had to ask that. So at Turning Point you got a fax
18 of documents to you, correct?
19 A. Yes.
20 Q. And you read them and looked them over, right?
21 A. Yes.
22 Q. Okay. Did you ask anybody to look at them also?
23 A. My husband and I. We both looked at them.
24 Q. Okay. And did you have anybody else help you out in
25 the neighborhood?

1 A. No.
2 Q. All right. So your husband and you looked them over,
3 and then did you call or did you fax the documents back?
4 A. I faxed the documents back.
5 Q. Okay. So let's take a look, and we'll use, as best
6 we can, the Government's exhibits, and then we'll go over to my
7 exhibits.
8 Okay. So let's first look at the Government's
9 exhibits again. Let's look, if we could bring up, please,
10 16A4. And you've already discussed this with the Government.
11 That's the equity purchase agreement, correct?
12 A. Yes.
13 Q. All right. And what I've enlarged is it says that
14 this is an agreement made the 5th day of May, 2006, do you see
15 that?
16 A. Yes.
17 Q. All right. Between you individually and Funding
18 Foreclosures, correct?
19 A. Yes.
20 Q. So I have to stop, and I got to ask you a question.
21 You just told me a few seconds ago that you and your husband
22 looked over all the documents, right? Yes?
23 A. Yes.
24 Q. So your husband didn't enter into the agreement, did
25 he?

1 A. No.
2 Q. Why not?
3 A. Because the home was not in his name.
4 Q. It was only in your name?
5 A. Absolutely.
6 Q. All right. And then it says, the next paragraph, in
7 bold print, capital letters, it says, "agreement to sell
8 property and description," right?
9 A. Yes.
10 Q. And you saw that and you read it, right?
11 A. Yes.
12 Q. Okay. And so now you're selling your property to a
13 purchaser, correct, somebody is buying your property, you're
14 selling it, right?
15 A. No, that's not what I understood.
16 Q. Okay. What the document says, what you read, it
17 says, "agreement to sell and property description," right?
18 A. That's what the document says.
19 Q. Okay. If we could enlarge. And then what I've
20 enlarged it says "consideration," right?
21 A. Yes.
22 Q. Okay. And it says, "in consideration of said
23 property, the purchaser agrees to pay to the seller as
24 consideration for seller's equity interest in the property the
25 total of zero," do you see that?

1 A. Yes.
2 Q. But that's not what happened, is it?
3 A. No, that's not what happened.
4 Q. What actually happened was the consideration you
5 received was $5,000, right?
6 A. Yes.
7 Q. Toward the bottom of the payment, all in capital
8 letters, it said, "in no event shall any money or other
9 consideration be transferred to seller by purchaser at any time
10 prior to expiration of seller's right to cancel this contract,"
11 do you see that?
12 A. I see that.
13 Q. And it's still talking about you selling your home,
14 correct?
15 A. Correct.
16 Q. And that's what you read, right?
17 A. Yes.
18 Q. Okay.
19 A. But can I say that this document was not the
20 documents that they faxed. This was the documents that was
21 brought to my home, personally, by Nicholas. The document that
22 we are viewing was not part of the faxed package.
23 Q. Okay.
24 A. So I just want to make that clear. So when you said
25 my husband and I went over that, that's not the package that my

1 husband and I went over. The package that my husband and I
2 went over was the package that Lisa faxed to me to my job.
3 The document here on the screen was the package that
4 Nicholas brought when we were to do the signing and affidavit,
5 which was why I called Domonic the next day due to the
6 discrepancies of what was told and what was in this package and
7 in the first package I had.
8 Because I had two packages. The package they had
9 faxed with our original agreement, and the package that
10 Nicholas brought, which was slightly different than the
11 original package and agreement that we had. Why I got the
12 first red flag and I called Domonic back on it, and then he
13 assured me again that our original agreement was what was going
14 to take place.
15 Q. All right. So we got a lot to talk about. So let's
16 talk all about this. All right. If we can enlarge this
17 document, this page.
18 All right. You know that this equity purchase
19 agreement is dated May 5 of 2006, correct?
20 A. Yes.
21 Q. All right. And, Ms. Jones, you've already told the
22 Government that on page four of this document is your
24 A. Yes.
25 Q. Okay. And what you're telling the ladies and

1 gentlemen of the jury is that this document, this equity
2 purchase agreement, this is not a document you received at the
3 beginning?
4 A. Exactly.
5 Q. All right. Did you give the Government the document
6 that got faxed to you?
7 A. I gave them the first packet I got and I gave them
8 the second packet.
9 Q. So the Government's got everything that you had,
10 right?
11 A. Yes, they do.
12 Q. All right. If we can take a look at page 16A4-2,
13 please. If we could enlarge that, please.
14 All right. Ms. Jones, you see "mediation of
15 disputes," and you see a check where it says "seller agrees,"
16 right?
17 A. Yes.
18 Q. If we could expand. Thank you.
19 And you see on the side there there is an X and a
20 line and your initials, don't you?
21 A. Yes.
22 Q. That means that you actually saw that mediation of
23 disputes paragraph and you initialed that also, correct?
24 A. Yes.
25 Q. If we could go to page three, please. Do you see in

1 bold capital letters it says "entire agreement," correct?
2 A. Yes.
3 Q. And it says on line three -- you can read the
4 sentence -- or the three lines before it -- I don't want to
5 misrepresent anything to you -- but starting at line three it
6 says that "this agreement is the result of an arm's-length
7 negotiation between the parties, and supersedes and replaces
8 all prior and contemporaneous oral and written agreements,
9 negotiations and discussions," do you see that?
10 A. Yes.
11 Q. Okay. And that's also something that you read,
12 correct?
13 A. Probably.
14 Q. All right. If we could expand out, please. If we
15 could go to page four. Thank you.
16 Then on page four of Government's Exhibit 16A4, right
17 above your signature, we have the paragraph that says
18 "lease-back by seller," do you see that?
19 A. Yes.
20 Q. And it says, "following the transfer of title to the
21 property" -- so transfer of title because you're selling the
22 property -- "the purchaser and seller have entered into an
23 agreement whereby seller will be leasing the property from the
24 purchaser for 12 months at a monthly rental rate of $1,100
25 pursuant to the terms of the lease agreement, a copy of which

1 is attached hereto as Exhibit B," do you see that?
2 A. Yes.
3 Q. And that's also something that you read, correct?
4 A. Yes.
5 Q. All right. If we could expand out, please.
6 And then there is your signature, correct?
7 A. Yes.
8 Q. All right.
9 THE COURT: How much longer will you need,
10 Mr. Greiner? I'm trying to figure --
11 MR. GREINER: We're not going to get done with her
12 today because we've got all the documents to go through. So I
13 can just forge ahead, and you can stop me whenever it's ready.
14 THE COURT: Okay.
15 Q. BY MR. GREINER: Thank you, Judge.
16 All right. What I would like to do pursuant to the
17 stipulation and -- what I'm going to have to do, Ms. Jones, I'm
18 going to give you a heads up. I need to go to some other
19 exhibits instead of the Government's exhibits because it's
20 referencing something that the Government doesn't have. I want
21 to try to keep some consistency. Okay?
22 A. Okay.
23 MR. GREINER: So pursuant to the stipulation, Judge,
24 if I can admit into evidence Exhibit DM-M2.

3 MR. ANDERSON: Your Honor, I believe that's identical
4 to one of the Government exhibits.
5 MR. GREINER: Is it?
6 THE COURT: Well, is there any objection to the form
7 of DM-M2? We've already talked about the need to clarify
8 ultimately, when exhibits go to the jury, exact duplication,
9 but unless you have the corresponding exhibit number.
10 MR. GREINER: That's fine. I'll use the
11 Government's. That's fine, Judge. I don't want to try to
12 confuse the jury.
13 THE COURT: Do you know the number?
14 MR. GREINER: For the Government, yes, I do. It's
15 16A4-9.
16 MR. TEDMON: Through 10.
17 MR. GREINER: And 10, correct. I don't want to
18 confuse anybody.
20 (Government Exhibit 16A9, Post It note “Castillo /
21 Jones Escrow # 15189680 admitted into evidence.)
22 Q. BY MR. GREINER: So if we could bring up 16A4-9.
23 Now, Ms. Jones --
24 A. Yes.
25 Q. On this Exhibit 16A4-9 of the Government's, it says

1 "addendum to equity purchase agreement, potential for equity
2 sharing," do you see that?
3 A. Uh-huh.
4 Q. Yes?
5 A. Yes.
6 Q. Don't worry about it. That's my job.
7 And you see they're dated the same date as the equity
8 purchase agreement, May 5 of 2006, correct?
9 A. Yes.
10 Q. And it says the purchaser is FundingForeclosures.com,
11 do you see that?
12 A. Yes.
13 Q. And then paragraph A says, "concurrently herewith the
14 seller and purchaser have entered into an equity purchase
15 agreement and a lease agreement," do you see that?
16 A. Yes.
17 Q. So this is a document that you read prior to signing,
18 correct?
19 A. Yes.
20 Q. All right. Paragraph B says, "this addendum is
21 intended to supplement the terms of the equity purchase
22 agreement," correct?
23 A. Yes.
24 Q. And it continues, "and to provide seller with an
25 opportunity to share in the equity of the property upon full

1 and completed performance of each and every term and condition
2 of the lease agreement," do you see that?
3 A. Yes.
4 Q. And that's what you read, correct?
5 A. Yes.
7 Paragraph D of that same document says, "pursuant to
8 this addendum, the purchaser is granting the seller" -- which
9 is you -- "the potential right to share in the equity of the
10 property at the expiration of the term of the lease under the
11 following terms and conditions," you see that, right?
12 A. Yes.
13 Q. And you read that prior to signing, correct?
14 A. Yes.
15 Q. If we could expand out, please. If we could go to
16 page two of Government's Exhibit 16A4-10. That didn't make
17 sense, please. If we can go to 10, the next page. I'll get it
18 sooner or later.
19 All right. This is the second page of the addendum.
20 It's paragraph F. Do you see that Ms. Jones?
21 A. Yes.
22 Q. All right. And it says that, "the seller
23 acknowledges" -- that being you -- "that in connection with the
24 equity purchase agreement" -- that we talked about -- "the
25 purchaser intends to purchase the subject property by way of

1 acquiring a new mortgage financing in order to cure the
2 foreclosure," do you see that?
3 A. Yes, I see that.
4 Q. And you read that prior to signing the document,
5 right?
6 A. Yes.
7 Q. And your house was in foreclosure, right?
8 A. Yes, it was.
9 Q. Okay. And paragraph F continues saying, "and if
10 possible to obtain a mortgage loan with more favorable interest
11 rates and terms," correct?
12 A. Yes.
13 Q. Okay. All right. If we could go to Government's
15 You see your signature there, correct?
16 A. Yes.
17 Q. Okay. And this says it's Exhibit A to addendum to
18 equity purchase agreement, correct?
19 A. Yes.
20 Q. And this says, "the purchase price to be paid by the
21 seller to purchaser for the property, if the seller exercises
22 its potential right to share in the equity of the property at
23 the expiration of the term of the lease, shall be the $195,249
24 price," do you see that?
25 A. Yes.

1 Q. And that's exactly what you agreed to, right?
2 A. Yes.
3 Q. And you signed this, correct?
4 A. Yes.
5 Q. And you read Exhibit A prior to signing it, right?
6 A. Yes.
7 Q. All right. If we could take that down. If we could
8 have Government's 16A4-11.
9 And this is entitled Acknowledgement By Seller, do
10 you see that?
11 A. Yes.
12 Q. And you received this document, didn't you?
13 A. Yes.
14 Q. And you read it before you signed it, correct?
15 A. Yes.
16 Q. And the first paragraph, if we can take a look at
17 that, it starts out by saying "seller" -- which is you --
18 A. Uh-huh. Yes.
19 Q. -- "acknowledges that the purchaser has not made any
20 representations, promises, or verbal agreements regarding the
21 purchase of seller's residence that are not contained within
22 the equity purchase agreement or the other documents executed
23 concurrently herewith," and you read that prior to signing,
24 didn't you?
25 A. Yes.

2 Paragraph two, if we could highlight that.
3 Paragraph two says that the "seller acknowledges that
4 seller's residence is currently in foreclosure," and that was
5 correct, right?
6 A. Yes.
7 Q. And that was accurately stated in the document that
8 you read, right?
9 A. Yes.
10 Q. Okay. If we could expand out, please.
11 Now, we talked -- and I want to make sure that we
12 have an understanding -- as far as you knew, you didn't have a
13 sales date going on, right?
14 A. No.
15 Q. So there wasn't a date where the bank said, look, you
16 got to pay up or move out?
17 A. No.
18 Q. Had you gotten any other further notice from your
19 bank other than the notice of foreclosure?
21 Q. Okay. You don't recall. You could have, correct?
22 A. I just don't recall.
23 Q. All right. Because we're six months out now, aren't
24 we?
25 A. Right.

1 Q. Which is a long time for a bank, right?
2 A. Yes.
3 Q. All right. So let's go to paragraph four and
4 highlight that.
5 Paragraph four says, "seller understands that the
6 equity purchase agreement, which seller has entered into with
7 the purchaser" -- and we talked about that, correct?
8 A. Yes.
9 Q. -- "is not a loan and is not a mortgage, pursuant to
10 the terms of the equity purchase agreement, the seller is
11 selling his or her entire interest in the property to the
12 purchaser," you read that prior to signing, correct?
13 A. Yes.
14 Q. If we could expand out, please. If we could go to
15 the second page of this document.
16 THE COURT: Should be 12.
17 Q. BY MR. GREINER: My mistake. Could we go to
18 Government's Exhibit 16A4-12, please.
19 Paragraph eight on the screen in front of you,
20 Ms. Jones, says, "seller represents that she is voluntarily
21 entering into the equity purchase agreement" -- which you did,
22 correct?
23 A. Yes.
24 Q. -- "and that the purchaser has offered seller with an
25 opportunity to review each and every term of the equity

1 purchase agreement" -- which you did, you read before signing,
2 right?
3 A. Yes.
4 Q. -- "and all other documents executed concurrently
5 herewith" -- and you read all the documents, right?
6 A. Yes.
7 Q. -- "and that the purchaser has allowed seller with
8 the opportunity to have an attorney review each and every term
9 of the equity purchase agreement" -- you could have taken it to
10 an attorney but you just chose not to, right?
11 A. Yes.
12 Q. -- "and all other documents executed concurrently on
13 seller's behalf."
14 So you read everything before you signed it, that's
15 basically what that's saying, and you read that, right?
16 A. Yes, I read that.
17 Q. All right. If we could go to Government's
19 And that's entitled Addendum Number One, correct?
20 A. Yes.
21 Q. And you see the date is May 5, 2006, right?
22 A. Yes.
23 Q. And this is a document that was faxed to you, right?
24 A. This is a document that was brought at the time that
25 I signed.

1 Q. And when you say brought at the time that you signed,
2 you're talking about when a notary physically came to your
3 house?
4 A. Yes.
5 Q. All right. Then let me stop for a second because
6 this document that's in front of us, that's not notarized, is
7 it?
8 A. That's just part of the packet. He brought a whole
9 packet. He brought a packet as if we were buying a home, and
10 you go in, and you sit down, or you're doing a refinance, which
11 I've done both. And you sign a packet. He brought a packet
12 this thick of papers.
13 Q. And directing you back to my question, this addendum
14 number one is not notarized, is it?
15 A. No. It's not notarized. But it was part of the
16 notarized package.
17 Q. And, actually, if we go to the next page, which is
18 -8, that document is not notarized, is it?
19 A. No.
20 Q. And, actually, go to the next page which is -9, and
21 then go to the signature page, and that document not notarized,
22 is it?
23 A. No.
24 Q. And then go to the next page, which is the
25 acknowledgement by seller and the signature page, and you see

1 that the date of the acknowledgement by seller is May 5, 2006,
2 do you see that?
3 A. Yes.
4 Q. Sorry about that. Do you see that?
5 A. I see the bottom, yes.
6 Q. And that document is not notarized, is it?
7 A. No.
8 Q. Okay. All right. Now, okay, let's go to
9 Government's Exhibit 16A5. This document is entitled 3920 44th
10 Avenue Property Holding Trust Agreement, correct?
11 A. Yes.
12 Q. And it's dated May 5, 2006, correct?
13 A. Yes.
14 Q. And it's entered into between you, who is referred to
15 as the tenant, correct?
16 A. Yes.
17 Q. And Nations Property Management LLC, who is referred
18 to as the trustee, correct?
19 A. Could you repeat that? I'm not sure I understood the
20 question.
21 Q. Sure. No problem. I'm looking at the same
22 highlighted portion that you are.
23 A. Okay.
24 Q. And if you look at the third line, it says Sheila A.
25 Jones, do you see that?

1 A. Yes.
2 Q. And it says "tenant" in parentheses, correct?
3 A. Yes.
4 Q. And it says "and Nations Property Management LLC"?
5 A. Yes.
6 Q. And you see parentheses, "trustee," do you see that?
7 A. Yes.
8 Q. And then if we can expand out, please.
9 Under the recital part of this agreement, the holding
10 trust agreement, paragraph C, it says, "whereas tenant" -- and
11 we've already established that that's you, correct?
12 A. Yes.
13 Q. You're the tenant.
14 -- "has entered into a lease agreement dated May 5,
15 2006, under which tenant will continue to occupy the property,
16 and an equity purchase agreement also dated May 5, 2006,
17 setting forth certain terms and conditions upon which tenant
18 may share in the equity of the property provided certain
19 conditions are met," you read that before signing, correct?
20 A. Yes.
21 Q. And then if we turn to 16A5-3, please.
22 Under what was called "article three trustees" of
23 this document that you signed, under paragraph 3.01 it says,
24 "the parties hereto hereby designate Nations Property
25 Management LLC as the initial trustee of the trust created

1 under this declaration of trust," do you see that?
2 A. Yes.
3 Q. And you read that before you signed it, right?
4 A. Yes.
5 Q. All right. And if we can go to Government's Exhibit
6 page 16A5-7, please.
7 And this is the signature page to this property
8 holding trust agreement, do you see that, Ms. Jones?
9 A. Yes.
10 Q. And you recognize your signature, correct?
11 A. Yes.
12 Q. And there is a signature above, directly above your
13 signature, where it says Nations Property Management LLC, do
14 you see that?
15 A. Yes.
16 Q. And I'm going to ask you, but I don't know what your
17 answer's going to be. Do you recognize that signature?
18 A. No.
19 Q. But you see the print name just below it, right?
20 A. Yes.
21 Q. And the print name says Jack Corcoran, do you see
22 that?
23 A. Yes.
24 Q. And if you go above that, you see another signature
25 under the FFC Investments-LLC, do you see that?

1 A. Yes.
2 Q. Do you recognize that signature?
3 A. No.
4 Q. But you see under print name it says Charles Head,
5 correct?
6 A. Yes.
7 Q. On the signature page nothing says Domonic McCarns,
8 does it?
9 A. No.
10 Q. And nothing on the signature page is notarized, is
11 it?
12 A. No.
13 Q. Now, if you turn to page 16A5-8, which is the next
14 page. All right. Now on this page do you see a notarization?
15 A. Yes.
16 Q. And you see a date there of May 8th, correct?
17 A. Yes.
18 Q. Okay. And it says that you demonstrated to the
19 notary by identification who you were, correct?
20 That you demonstrated you're Sheila Jones by
21 identification, right?
22 A. That's what that document says.
23 Q. You see a notary on that page, correct?
24 A. Yes.
25 Q. All right. If we can go to Government's

2 All right. Now this is a grant deed, right?
3 A. Yes.
4 Q. And this grant deed says that "for valuable
5 consideration you, Ms. Jones, hereby grant to Daniel Castillo
6 the following property," correct?
7 A. Yes.
8 Q. Which means you're selling it to that individual,
9 correct?
10 A. No.
11 Q. Well, that's what the grant deed says, right?
12 A. No. We were entering into -- he was my angel
13 investor, and he was going to hold my property in a trust. And
14 in one year, when I paid my mortgage for 12 years (sic) at
15 $1,100, it would be returned to me. It was not to be sold to
16 him or anyone else. It was to be held in trust.
17 Q. And I certainly appreciate your answer. My question
18 is, the grant deed says that you, Sheila Jones, hereby grant to
19 Daniel Castillo your property, you sell it, correct?
20 A. Yes.
21 Q. And you read that before you signed it, right?
22 A. Yes.
23 Q. And if we could enlarge that.
24 You notice the date here has two dates. It has a
25 June 14th date, correct?

1 A. Yes.
2 Q. But then it has a notary date of a Nicholas Surjohn,
3 as the notary, of June 16th, do you see that?
4 A. Yes.
5 Q. Now that notary date of June 16th is different than
6 the notary date that we just saw on the other document, isn't
7 it?
8 A. Yes, it is.
9 Q. So did you have notaries come out to your house
10 twice?
11 A. Yes, I did.
12 Q. Okay. And they had two separate packages?
14 Q. And before you signed any of the documents with
15 either notary, you read them all, didn't you?
16 A. Yes.
17 Q. Okay.
18 A. Well, no, I take that back. The first one -- I take
19 that back. The first packet I had read because it was faxed to
20 me.
21 When Bob came out, the packet he brought, I had not
22 had an opportunity to read. He brought out the papers to come
23 and so that it could be transferred into trust. I did not have
24 a chance to read the full packet at the time.
25 Q. Okay. But you told the ladies and gentlemen of the

1 jury certain paragraphs that you did read.
2 A. Right. Yes. During the signing, we went over
3 various packages, various parts of the thing as they flip it
4 over, and we read and sign that, do you understand that.
5 And then afterwards you're provided the whole
6 package, which then I had an opportunity to go through.
7 Q. So afterwards you had an opportunity to read it all,
8 right?
9 A. Yes.
10 THE COURT: That brings us to time for our break for
11 today. It is just after 1:30.
12 Ladies and gentlemen, thank you for your service
13 today. As Ms. Schultz let you know, tomorrow is another dark
14 day. The Court has conflicts. I try not to pull rank, but
15 occasionally I have to do that.
16 So we will reconvene on Wednesday afternoon at 1:30.
17 1:30 to 4:30 on that day, and a full day again on Thursday,
18 8:30 to 1:30.
19 During this break until Wednesday, please remember
20 all of my admonitions, no research of any kind, electronic or
21 otherwise, no talking with anyone about the case, no beginning
22 to think about its ultimate conclusion.
23 If anyone does attempt to contact you in any way,
24 please let me know first thing when you come back. You will
25 receive all the information you need to make a decision once

1 you retire to deliberate.
2 Thank you again. We will see you again on Wednesday
3 afternoon.
4 (Jury out.)
5 THE COURT: Now you may step down. If you can be
6 back Wednesday at 1:30.
7 THE WITNESS: I had a subpoena only for a week. I
8 need to check with my job. I need another subpoena.
9 THE COURT: Speak with the attorneys. And also as
10 you're leaving the building, please avoid any contact with the
11 jurors.
12 THE WITNESS: So Wednesday at 1:30?
13 THE COURT: Wednesday at 1:30, right.
14 (Witness exits the courtroom.)
15 THE COURT: All right. You may be seated if you
16 wish.
17 My only question at this point, I'm wondering if the
18 Government has any further information on its witness lists?
19 Are there additional names we can cross off the list at this
20 point?
21 MR. ANDERSON: Your Honor, I don't want to cross any
22 of them off at this point other than what we've discussed
23 already. Because of the travel arrangements and things like
24 that, we would like to keep some options open. It's just very
25 difficult to bring people from all over, and it's also very

1 difficult to predict how long testimony will take each day. So
2 it's created some serious scheduling issues for us.
3 THE COURT: But it's fair to say that we're looking
4 at a subset of the names remaining on the list?
5 MR. ANDERSON: Yes, I have no more interest than the
6 Court in being here over the Christmas holiday.
7 THE COURT: Well, the Court's hope remains that we
8 conclude with evidence before Thanksgiving. So that is the
9 Court's goal. And that's what we led the jury to believe that
10 that is likely.
11 MR. ANDERSON: That's our hope, too, Your Honor. I
12 was just giving you a hard time.
13 THE COURT: Well, you're not allowed to do that no
14 matter how hard a time I give you. Anything further?
15 MR. SAMUEL: I just want to let the Court know
16 Mr. Wiley was on my witness list. I allowed him and released
17 him from my subpoena. So that's one less thing if the Court's
18 concerned about it.
19 THE COURT: Well, if I have said he's excused, I'm
20 assuming that means excused for all purposes. I note Ms. Yang
21 is subject to recall.
22 MR. SAMUEL: Yes.
23 THE COURT: All right. Anything further on
24 witnesses, Mr. Tedmon?
25 MR. TEDMON: No. Just I think we've got Limas and

1 Peter coming up after Ms. Jones.
2 THE COURT: My notes show Mattice, Limas, Peter,
3 Castillo and Solares.
4 MR. ANDERSON: Your Honor, because of the way the
5 scheduling is, what's happening is that each day we're having
6 to almost start from square one with new witnesses.
7 Because what we're trying to do is bring in a core of
8 people from out of state every morning, and then have on
9 stand-by in the afternoon people from Sacramento, so that we
10 can fill time if it becomes available.
11 So what I'll do is either this afternoon or more
12 likely tomorrow morning I would be happy to e-mail counsel with
13 the names of people that we anticipate testifying on Wednesday.
14 MR. TEDMON: That would be very helpful. And
15 Mr. Anderson has been very good about communicating.
16 THE COURT: I assume you're meeting and conferring to
17 move things along and assure prep.
18 How much more time do you need with Ms. Jones?
19 MR. GREINER: Judge, you see what I'm doing, and you
20 see where I'm going, and I have to do it that way because the
21 Government only has to hit a homerun once.
22 THE COURT: All I'm asking you is how much more time,
23 given that?
24 MR. GREINER: I've got -- it looks like I have maybe
25 seven other documents to go through. So, yeah, I think there's

1 seven other documents. Some have multi pages. But it looks
2 like there's just seven documents left.
3 THE COURT: And then are you looking at cross,
4 Mr. Tedmon?
5 MR. TEDMON: Your Honor, maybe five minutes.
7 MR. SAMUEL: About that.
8 THE COURT: All right. Anything else?
9 MR. TEDMON: One other thing, if we could, can we
10 get, at least for this location, a new monitor? This
11 resolution, it's useless. You can't see anything unless it's
12 really blown up. If there's a chance to get us a different
13 monitor.
14 THE COURT: Can you catch Ms. Schultz when she's
15 back?
16 MR. TEDMON: I'm working off the hard copy. It's
17 okay. But my client and Ms. Gara can't read it.
18 THE COURT: She's the one to work that out if it can
19 be worked out. Otherwise, we'll rotate the monitors so that
20 everyone gets a fair-share access to a crappy monitor.
21 Anything further?
22 MR. TEDMON: That's all as far as I know.
24 MR. GREINER: Just my cell phone.
25 THE COURT: Oh, that.

1 Given your apology and given I do believe this is a
2 first offense -- I keep a list, but I've never had someone be
3 more than a first-time offender.
4 But when Ms. Schultz returns -- Mr. Greiner may
5 retrieve his cell phone. Next time it's until the end of the
6 day. I've never even had to get there.
7 MR. GREINER: And, Judge, again, I totally apologize
8 to the Court.
10 MR. GREINER: Everybody else. First time. I'm not
11 even going to bring my cell phone in the court anymore.
12 THE COURT: Anything further?
13 MR. ANDERSON: We'd all like to get to lunch, but
14 there is one thing, Your Honor.
15 There was a question that I asked the witness, which
16 the Court sustained on speculation grounds. I think that there
17 is a foundation in her personal knowledge for it. It's not
18 speculation if a witness is testifying herself about her own
19 position, her own viewpoint.
20 THE COURT: You kept including where the money went.
21 Why did you include that portion of the question?
22 MR. ANDERSON: Because we're seeking to establish
23 that because we'll come back later with other witnesses and tie
24 up.
25 THE COURT: Well, there is no foundation for her

1 knowing. There was none at the time.
2 In the future, if you ask the question without that
3 portion in it, for the future witnesses.
4 MR. ANDERSON: I see, Your Honor. I guess the
5 Government's position is that it's not speculation because I'm
6 asking: If you had known this at the time, would you have
7 entered into it? And she knows whether or not if she had known
8 that, she would have entered into the transaction.
9 And then we will then establish through other
10 witnesses that that is in fact what happened, therefore making
11 her statement relevant.
12 THE COURT: Well, I understand your thinking. You
13 understand my thinking.
14 MR. ANDERSON: All right.
15 THE COURT: And we can proceed. I just received a
16 jury note. Ms. Schultz can make copies for you, and we can
17 discuss it, if we need to, on Wednesday. I'll be available by
18 1:20 on Wednesday.
19 Some witness, looks like Ms. McKenzie. Is that the
20 name? Ms. McKenzie says she saw Kou Yang and Justin Wiley
21 discussing the case. Again, Ms. Schultz will make copies for
22 you. Anything further?
25 THE COURT: I will see you Wednesday. Again, 1:20 if

1 you want to talk about the note or anything else.
4 CERTIFICATION
10

13
14
15
16
17
18
19
20
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 6
Defendants.
---oOo---
TRIAL PROCEEDINGS
WEDNESDAY, OCTOBER 30, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
LAW OFFICES OF JAMES R. Greiner
20
21
22
23
24
25

1 I N D E X
3 SHEILA JONES
5 FURTHER REDIRECT EXAMINATION BY MR. ANDERSON 800
FURTHER RECROSS-EXAMINATION BY MR. GREINER 801
6
ARMIL RUCKER
9 KERRY BUDOFF
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25


2
18A2 Uniform Residential Loan Application in the 810
3 name of Armil Rucker for property at 116
(sic) Bedford Street, West Bridgewater, MA
4 18B Uniform Residential Loan Application in the 815
name of Armil Rucker for property at 115
5 Bedford Street, West Bridgewater, MA
property at 336 Henry Avenue, Pueblo, CO
7 dated 4/19/2006
property at 4841 66th Avenue, Landover
9 Hills, MD 5/10/2006
25C1 U.S. Department of Housing and Urban 859
property at 170 Doyle Road, Matawan, NJ
11 13A5 Grant Deed Grantor: Jerome A. Pearlman, Jr. 863
And Denise L. Pearlman Grantee: Kerry L.
12 Budoff Signed and notarized on 5/19/2006
13A7 Letter dated 4/17/2006 from Kerry Budoff to 864
13 Global Mortgage
13A8 Letter dated 5/9/2006 from Kerry Budoff to 865
14 Head Financial Services
25D1 2006 W-2 Wage and Tax Statement for Kerry 907
15 L. Budoff; Oracle screen print re W-2
(redacted)
16
17
18
19
20
21
22
23
24
25


2
DM-M9 Residential Lease After Sale Agreement 759
3 dated May 8, 2006
DM-M10 Notice Required by California Law dated 762
4 May 8, 2006 (crossed out May 5, 2006)
DM-M11 Date of Contract Acceptance May 5, 2006 765
5 signed May 8, 2006
DM-M12 Sales and Purchase Agreement-Contract of 766
6 Sale dated May 8, 2006
DM-M15 Demand for Payment from Sheila Jones dated 769
7 June 6, 2006
DM-M19 Pay off from Specialized Loan Servicing 771
8 dated June 16, 2006
DM-M24 U.S. Department of Housing and Urban 785
9 Development Settlement Statement dated
August 3, 2006 5 pages
10 DM-X Application – Addendum Borrower 842
Certificate
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

2 WEDNESDAY, OCTOBER 30, 2013
3 ---oOo---
6 McCarns. This is on for jury trial, and today is day six.
8 The parties are present. This is on for a working session
9 before we begin with the jury at 1:30 p.m.
10 Ms. McKenzie is here. My plan is to call her in to
11 ask her a few questions myself -- have her sit in her regular
12 seat in the jury box -- to get some clarification on exactly
13 what she saw and heard. She is nervous. She's conveyed to
14 Ms. Schultz she's worried that she did something wrong. I'm
15 going to clarify that she absolutely did nothing wrong. She
16 did exactly what she was supposed to do under these
17 circumstances.
18 Unless you feel you need to question her directly, I
19 would then ask you if you have any other questions you want me
20 to ask her. Any objection to that approach?
21 MR. ANDERSON: No, Your Honor. I think that's
22 actually better, and we can meet at sidebar or something to
23 tell the Court our questions.
24 MR. TEDMON: I agree.
25 MR. SAMUEL: Yes.

2 THE COURT: Once we're done with that, then I would
3 plan to call in Ms. Yang and Mr. Wiley. They are on call in
4 the hall.
5 MR. ANDERSON: Yes, Your Honor. Mr. Wiley is on this
6 floor, and Ms. Yang is on a different floor.
7 THE COURT: All right. Let's bring Ms. McKenzie in.
8 (Whereupon Ms. McKenzie, alternate juror, enters the
9 courtroom.)
10 THE COURT: You may be seated. Good afternoon,
11 Ms. McKenzie. Welcome back to court. Thank you for coming a
12 little bit early here today. Based on your note, we had
13 questions for you. The Court wants to ask you some questions
14 in particular.
15 ALTERNATE JUROR: Okay.
16 THE COURT: And I first want to assure you. I
17 understand you may be a bit concerned about being called in on
18 your own, but you've done exactly the right thing in writing a
19 note to the Court. So you should have no concern. We just
20 want to make certain -- the Court, having discussed the matter
21 with counsel, we want to make certain we understand what it is
22 you are communicating to us. So that's the sole purpose of
23 this session with you.
24 So could you just tell the Court a bit more about
25 what you saw and what you heard? Your note says that you

1 witnessed Ms. Yang and Mr. Wiley discussing the case, and then
2 you go on to say that Justin was asking Kou what went on inside
3 the courtroom.
4 ALTERNATE JUROR: Yes.
5 THE COURT: Can you describe in a bit more detail
6 what you saw and what you heard?
7 ALTERNATE JUROR: We had gone out for our first
8 break. And when I saw them talking, I'm thinking that
9 Mr. Wiley was Ms. Yang's boyfriend, and I didn't really take it
10 serious until he was called in to testify.
11 And when I walked out, I heard him say, "well, what's
12 going on, how's it going?" And she said, "not good." But then
13 I kept walking. Until he came in, and it's like is this
14 something they should have been doing, and that's why I wrote
15 the letter.
16 She was facing one way. He was facing the other.
17 And she had her head down like she was reading a book, but they
18 were having a conversation. And I'm just thinking that they
19 were a couple, and I heard that much. And that's why I was
20 concerned when he came in.
21 THE COURT: All right. And again, we appreciate your
22 sharing that information. Did you hear anything more of their
23 conversation?
24 ALTERNATE JUROR: That was basically all I heard
25 because of the fact that I didn't know that -- I just thought

1 they were a couple, and I just kept walking.
2 THE COURT: It's only when Mr. Wiley appeared in
3 court that you realized he was a witness in the case? You had
4 heard the name, but you had never seen him before?
5 ALTERNATE JUROR: It didn't even register the name
6 and until he walked in, and I knew that was the person that she
7 was talking to.
8 THE COURT: All right. Well, thank you.
9 Let me ask, does any attorney have additional
10 questions that they want me to ask of Ms. McKenzie?
12 THE COURT: All right. I'm going to do a brief
13 sidebar so I can consider their questions. So just hold on
14 while I do that.
15 (Begin sidebar conference.)
16 THE COURT: All right. Mr. Anderson.
17 MR. ANDERSON: If the Court can inquire whether or
18 not she discussed or mentioned this to any of the other jurors.
19 THE COURT: Any objection to my asking that question?
20 MR. TEDMON: No.
21 MR. GREINER: No.
22 MR. SAMUEL: No.
23 THE COURT: I'll ask that question. Any other
24 question?

1 MR. TEDMON: The only clarifying question is I want
2 to be certain, in terms of what she observed: Did Mr. Wiley
3 approach Ms. Yang and start the conversation or the other way
4 around? I'm little confused how the conversation, as far as
5 she knows, got started.
6 THE COURT: All right. Any objection to my asking
7 that question?
9 MR. SAMUEL: No.
10 MR. ANDERSON: No.
11 THE COURT: Any other questions?
13 MR. TEDMON: During the first break, did she have any
14 observations as to how long Mr. Wiley and Ms. Yang were within
15 speaking distance or together? What period of time? And then
16 how close together were they?
17 MR. GREINER: How long or --
18 THE COURT: Any objection to that question?
20 MR. SAMUEL: No.
22 MR. GREINER: No.
23 MR. SAMUEL: No.
24 MR. TEDMON: I don't have any other.
25 THE COURT: All right. I'll ask those questions.

1 (End sidebar conference.)
2 THE COURT: All right. Ms. McKenzie, just briefly
3 for further clarification, can you tell us: Did one person
4 approach the other? Did either Mr. Wiley approach Ms. Yang or
5 vice versa?
6 ALTERNATE JUROR: No. When I walked out, they were
7 both sitting. She was facing in one direction, and he was
8 facing in the other.
9 He was facing the window, and she was facing away
10 from the window, and that's how I caught the conversation.
11 But, like I said, it didn't dawn on me.
12 THE COURT: And approximately how close were they if
13 you had to estimate?
14 ALTERNATE JUROR: The pillar separated them. The way
15 the seating is out there, the pillar separated them, and he was
16 leaning back, talking to her, and she had her head down as if
17 she was reading the book but she was talking.
18 THE COURT: And for approximately how long would you
19 estimate you saw and heard them?
20 ALTERNATE JUROR: I'd say a good two minutes. And
21 then I walked off because I was trying to call my son on my
22 phone, and I just walked away, and I went on the 13th floor,
23 and then I came back up, and they were still sitting there.
24 THE COURT: And were they talking even when you could
25 not hear what they were saying? Did they continue to talk?

1 ALTERNATE JUROR: Yes. As I was walking away, yes, I
2 heard them, but I couldn't understand what they were saying as
3 I was walking away.
4 THE COURT: All right. And then finally, have you
5 mentioned this to any other juror?
6 ALTERNATE JUROR: No.
7 THE COURT: All right. Any further questions?
12 THE COURT: All right. Thank you very much. Ma'am,
13 again, you are not in trouble. You're doing your job. Thank
14 you very much. You may now return to the jury room, and we're
15 still hoping to start at 1:30 p.m. with the full jury. Do not
16 discuss this matter with your fellow jurors.
17 ALTERNATE JUROR: I was just going to ask you that.
18 THE COURT: I'll just explain to them that we were
19 responding to a note that you had without going into the
20 details.
21 ALTERNATE JUROR: Thank you.
22 THE COURT: All right. Thank you.
23 (Ms. McKenzie exits the courtroom.)
24 THE COURT: You may be seated once again. So any
25 comments, proposals? I don't know if we can do everything we

1 need to do before 1:30 p.m., but I would ask the closest
2 witness to come in to have them respond to the Court's
3 questions.
4 MR. ANDERSON: Yes, Your Honor. Mr. Wiley is just
5 outside the courtroom in the waiting room.
6 THE COURT: All right. So I'll start. And then,
7 again, I'll do a sidebar if you have additional questions.
10 THE COURT: He is right outside? Here he comes.
11 (Justin Wiley enters courtroom.)
12 THE COURT: Mr. Wiley, please come forward.
13 You may be seated. I don't plan to re-swear the
14 witness. Is that acceptable?
15 MR. ANDERSON: That's fine with the Government, Your
16 Honor -- well, except he was excused.
17 MR. TEDMON: Yes. I think he needs to be because he
18 was excused.
19 THE COURT: All right. Because you were excused, I'm
20 going to have you sworn again. Ms. Schultz.
23 MR. WILEY: I do.
24 THE COURT: Mr. Wiley, I have several questions for
25 you, and then I'll ask the counsel if they have additional

1 questions they want me to ask.
2 If they do, we'll take a sidebar. I don't think this
3 will take very long, but the Court needs to understand some
4 things.
5 It has received information suggesting that you had a
6 conversation with Ms. Yang before you testified in this
7 proceeding. Is that correct?
8 MR. WILEY: Yes.
9 THE COURT: All right. And how long do you estimate
10 that conversation went on?
11 MR. WILEY: Just a few moments, here and there.
12 THE COURT: All right. And who initiated the
13 conversation?
14 MR. WILEY: I would say both of us. We were both
15 just trying -- because we were both brought together in the
16 morning by Agent Byrne, and I was told that he might be able to
17 give both of us a ride to the airport after we were done, so it
18 was just us. I just asked her how much longer do you think,
19 and that was it.
20 THE COURT: So you were brought to the courthouse
21 together?
22 MR. WILEY: Yes. We stayed at the same hotel.
23 THE COURT: All right. So were you brought together
24 in a car?
25 MR. WILEY: Yes.

1 THE COURT: All right. So let's just focus first.
2 There was a conversation outside the courtroom here in the
3 hall. That's the first conversation I'm focusing on. So did
4 you talk when you were in the hall outside the courtroom here?
5 MR. WILEY: Small talk. Because I haven't seen her
6 in eight years, and, that, she -- she initiated that. That was
7 just how are you, how have you been, and just kind of just
8 catching up. I have a son. She has two kids. Asking about
9 each other's children. That was it.
10 THE COURT: Was there anything that could be
11 construed as referencing what was happening inside the
12 courtroom?
13 MR. WILEY: Not at all. No.
14 THE COURT: And you said you were brought together in
15 a car?
16 MR. WILEY: We stayed at the same hotel, so we were
17 picked up at 7:45 by agent Peter Byrne.
18 THE COURT: During that car ride, was there any
19 discussion, did you and Ms. Yang talk about the case?
20 MR. WILEY: No. Not at all. He asked her -- he just
21 asked her -- I remember him asking how did that thing turn out
22 for you, so that was something that they knew about that I had
23 no idea. And then he asked her about her kids. And then we
24 got out of the car -- I'm sorry -- then he asked me if I was
25 still in Philadelphia, which was some misinformation because

1 I'm in Los Angeles. So just clarified that. We got out of the
2 car. He asked me how Josh Coffman was doing. He's my best
3 friend. And Josh and I are allowed to speak. And just told
4 him, you know, Josh is in Philadelphia, managing a restaurant.
5 That was it.
6 THE COURT: And between you and Ms. Yang, any
7 conversation?
8 MR. WILEY: No. No.
9 THE COURT: And then what about when you were staying
10 at the hotel, did you interact with her?
11 MR. WILEY: Didn't see her. No. I didn't even know.
12 I was actually surprised to see her that morning.
13 THE COURT: All right. So how long do you estimate
14 the conversation?
15 MR. WILEY: In total maybe a minute, or two.
16 THE COURT: If someone thought they heard you say
17 something like "how are things going in there," would that be
18 consistent with your recollection of that conversation with
19 Ms. Yang?
20 MR. WILEY: Yes. Time-wise. Again because both of
21 us -- I had lessons. I had a flight scheduled for 2:00
22 already. She had -- I guess they weren't sure how soon she was
23 going to get out. I had -- I teach tennis, so I had lessons
24 scheduled at 5:00. So I wanted to make sure I could make it
25 back in time for that. So it was just "how are things going?"

1 "Are they going to end soon?"
2 THE COURT: All right. Is there anything else --
3 even if I haven't asked you directly a question -- based on
4 this discussion and the type of questions I'm asking you, is
5 there anything else I should know, that you think I should know
6 based on your communications with Ms. Yang?
7 MR. WILEY: The first time I came up to testify, when
8 I didn't go on, I was sent back home. Again, I saw her in the
9 hallway. She came over -- because I wasn't sure if we could
10 talk or not. So the first time she came over to me, I was a
11 less hesitant. But, again, it was just small talk. How are
12 you? Because, again, it's been eight years since I've seen
13 her. So how-are-you kind of thing. That was it.
14 THE COURT: Let me ask the attorneys if they have
15 other questions they would like me consider asking Mr. Wiley.
16 Mr. Anderson?
21 MR. SAMUEL: I'm okay with what's going on.
22 THE COURT: Well, let's come forward and do a
23 sidebar. Just cool your heels.

1 MR. TEDMON: I would ask the Court to inquire of
2 Mr. Wiley where he was -- where he was at physically and where
3 Ms. Yang was at physically when the conversation took place.
4 That would be one. Two, I would like to know how long they
5 were within speaking distance during the first break. And then
6 thirdly, I would ask the Court to inquire of Mr. Wiley
7 directly, did he ask Ms. Yang what went on inside the courtroom
8 as is noted by Ms. McKenzie and then any response Ms. Yang gave
9 in return.
10 THE COURT: All right. Any objection to that?
11 MR. ANDERSON: Your Honor, I would ask that the Court
12 be specific on the breaks and timing that it's asking about
13 just so that Mr. Wiley doesn't get confused by the question,
14 but other than that, those questions are fine.
15 THE COURT: Those question are directed to the
16 communications during the first break.
20 MR. GREINER: Yes, Your Honor. I would like the
21 Court to ask him when he testified the first time, was he told
22 by the Government not to talk to anybody prior to testifying.
23 That would be the trial in May that he testified.
24 And then I would like the Court to ask him, did the
25 Government tell him before he testified here that he wasn't

1 supposed to talk to anybody about his testimony, about what was
2 going on in the courtroom.
3 THE COURT: Today?
4 MR. GREINER: No. Before he testified. Before he
5 testified in this trial, did the Government tell him he is not
6 to talk to any other witness in the case.
7 THE COURT: What's the first question as distinct
8 from that?
9 MR. GREINER: Back in May was he told that by the
10 Government that he's not to talk to any witness in the case.
12 MR. TEDMON: No.
13 MR. ANDERSON: Your Honor, could you specify not to
14 talk to any witness regarding the facts of the case?
15 MR. GREINER: That's fine. But I think the directive
16 is to witnesses aren't supposed to talk to any other witnesses,
17 period.
18 THE COURT: Well, we're going to get to that. Right
19 now we're creating a record. All right. I'll ask those
20 questions.
21 (End sidebar conference.)
22 THE COURT: All right. Mr. Wiley, just to clarify a
23 few things. Could you -- I'm focusing on the time during that
24 first break during trial, when you and Ms. Yang were outside
25 the courtroom.

1 MR. WILEY: My break or her break?
2 THE COURT: You used the terms first break, and you
3 talked about in reference to small talk. It was before you
4 testified.
5 MR. WILEY: Okay.
6 THE COURT: Are you clear on the timeframe?
7 MR. WILEY: Yes.
8 THE COURT: And can you describe exactly where you
9 and Ms. Yang were for that conversation?
10 MR. WILEY: Directly right out here. There is that
11 first set of chairs right there to the left.
12 THE COURT: And how were you positioned, and how was
13 she positioned for that interaction?
14 MR. WILEY: I mean, we were both -- you know, I'm
15 sorry. Just give me one minute. Because there was one time
16 where I was standing up and kind of walked by, and we spoke,
17 and then there was a moment where we were both sitting down.
18 So I'm just trying to --
19 But just to answer your question, it was once in
20 passing when I was -- when I was -- I believe once I came out
21 after I testified.
22 THE COURT: I'm talking --
23 MR. WILEY: For the break.
24 THE COURT: I'm talking about before you testified.
25 MR. WILEY: Both sitting down on the bench out there.

1 THE COURT: All right. And how were you positioned?
2 MR. WILEY: Facing the skyline, the city.
3 THE COURT: And were you both facing that direction?
4 MR. WILEY: Yes.
5 THE COURT: All right. And what was the total amount
6 of time that you were sitting on the bench with Ms. Yang there?
7 MR. WILEY: I'd say a few minutes, but it wasn't --
8 there wasn't much conversation. I think she was just kind of
9 sitting there waiting to go back in.
10 THE COURT: All right. And, again, just clarifying,
11 do you recall asking a question along the lines of what went on
12 inside the courtroom?
13 MR. WILEY: I just asked how are things going.
14 THE COURT: And do you recall what Ms. Yang said in
15 response to that question?
16 MR. WILEY: She just kind of made a face just
17 implying that she didn't know, and, you know, things were just
18 --- I guess she had already been on the stand for 11 hours, so
19 she just made a face like I don't know. I could be an hour an
20 hour and a half. I'm not even sure yet.
21 THE COURT: Do you recall her saying anything in
22 response to your question? You said she made a face.
23 MR. WILEY: Made a face. I don't know. I mean, she
24 said an hour, hour and a half. She was just guessing.
25 THE COURT: All right. And just to clarify, I think

1 you said before that exchange you did pass by her, you walked
2 past?
3 MR. WILEY: That was after my testimony where -- my
4 first break.
5 THE COURT: All right. And then you've testified
6 twice in this court in proceedings?
7 MR. WILEY: Yes.
8 THE COURT: In terms of the proceeding here, were you
9 instructed not to talk to any other witness by the Government?
10 MR. WILEY: Yes.
11 THE COURT: And was that that you were not to talk to
12 any other witness?
13 MR. WILEY: That was a long time, you know, when this
14 case first started they said, you know, don't talk to anyone,
15 but I was allowed to talk to Josh Coffman. He was the only one
16 that I was allowed to talk to.
17 THE COURT: All right. So when you say a long time
18 ago, the other proceeding was in May.
19 MR. WILEY: I mean long time ago meaning, you know,
20 when this case first started, and I was charged seven years ago
21 almost.
22 THE COURT: All right. And were you given any
23 specific instructions related to the trial proceedings, but
24 before -- the first proceeding, before the proceeding in May,
25 were you told or reminded not to talk to any other witnesses?

1 MR. WILEY: No. No.
2 THE COURT: Were you given any instructions with
3 respect to communicating with other witnesses prior to this
4 trial starting?
5 MR. WILEY: Well, I just understood that, obviously,
6 I couldn't talk to anyone about the case. When I saw Kou out
7 there and she approached me the first time, you know, I --
8 again, I wasn't sure if we could or couldn't talk. But, you
9 know, it was just very just, you know, surface kind of
10 conversation about family and that sort of thing. That's my
11 fault. So I wasn't clear.
12 THE COURT: So when you say you understood you
13 weren't supposed to talk about the facts of the case, was that
14 based on instructions that you were given?
15 MR. WILEY: Yes.
16 THE COURT: And when were you given those
17 instructions?
18 MR. WILEY: Again, five, seven years ago. I mean, I
19 always knew that I couldn't talk about the case, period, to
20 anyone. Even Josh.
21 THE COURT: All right. Any other questions,
22 Mr. Anderson?

1 THE COURT: At this point, we're getting close to
2 1:30. If it's one or two questions.
3 MR. TEDMON: Just a couple. It's a new topic.
4 THE COURT: All right. Hold on one second.
5 (Begin sidebar conversation.)
7 MR. TEDMON: Mr. Wiley testified that during the
8 second break, which he called "my break," he also had a
9 conversation with Ms. Yang, and I want to find out from him if
10 during this second break -- what he calls "my break" -- had his
11 testimony completed, or was it a break where we came back to
12 continue with the testimony.
13 THE COURT: Any objection to that question?
14 MR. SAMUEL: No.
15 MR. GREINER: No.
17 MR. SAMUEL: I have one question, follow-up. He
18 testified that she had said -- somebody related that she
19 testified for 11 hours. That reflects that a little bit more
20 conversation about what's going on, I mean, than he's been
21 alluding to. So I would like to ask him how that came up.
22 THE COURT: Well, I heard him say that she -- all
23 right.
24 MR. TEDMON: Maybe to clarify that.
25 THE COURT: I'll clarify that.

1 MR. GREINER: No problem.
3 MR. SAMUEL: No.
4 MR. GREINER: No.
5 THE COURT: I'm going to leave this and excuse him,
6 and we'll go back to the trial, and we'll address other issues
7 on the break.
8 MR. SAMUEL: Subject to?
9 MR. TEDMON: So --
10 THE COURT: Well, if it's subject to Mr. Greiner's
11 motion, I'm not going to let you call him yet because I've just
12 received a massive brief.
13 MR. ANDERSON: On the stand, we have two lender reps,
14 we have another gentleman, Mr. Pepper, who is available, and we
15 potentially have someone who we didn't even notice to defense
16 counsel because we didn't think Kerry Budoff, who isn't even
17 here yet, but his flight will arrive, assume that it's not
18 delayed, but, you know, to file a brief at 8:30 a.m. in the
19 morning when those are the witnesses the Government's calling,
20 that's completely --
21 THE COURT: Well, there is enough to proceed to our
22 first break at least, and so we're going to bring the jury in,
23 and we will go, and we'll discuss this more on the break.
24 MR. TEDMON: The Government's filed their in limine
25 motion on the 801(d)(2)(E). Does the Court have a position?

1 THE COURT: I also want to discuss that with counsel.
2 We'll do that on the first break.
3 (End sidebar discussion.)
4 THE COURT: Mr. Wiley, again clarifying. You
5 mentioned your break. You talked about a second break that was
6 your break after you began testifying.
7 MR. WILEY: I mean, during each break, it was just
8 again just how -- I mean, very brief. How much longer? I
9 think she had two breaks. I had one break.
10 THE COURT: My question, you talked about your
11 break --
12 MR. WILEY: Uh-huh.
13 THE COURT: -- had you completed --
14 MR. WILEY: First break.
15 THE COURT: -- testifying?
16 MR. WILEY: No. First break.
17 THE COURT: So when you referenced your break, it was
18 your first break in your testimony before you completed your
19 testimony?
20 MR. WILEY: Sorry. My only break.
21 THE COURT: It was your only break.
22 MR WILEY: Because it was done, I came out, and she
23 was gone. So then it was clear to me that we weren't going to
24 be going back together.
25 THE COURT: And then you mentioned something about

1 11 hours. She had been testifying for 11 hours. Did she tell
2 you that?
3 MR. WILEY: No. Cynta. Cynta has been the one
4 coordinating all the travel. So I just kind of asked her as
5 well, you know, like, do you think, and how much longer do you
6 think, and, you know, I just mentioned, Kou, it's been a while,
7 and she said, yeah, I think it's been 11 hours, something like
8 that.
9 THE COURT: So Cynta told you it had been about
10 11 hours?
11 MR. WILEY: Yes.
12 THE COURT: Did Ms. Yang ever give you an estimate of
13 how much time she had been on the stand?
14 MR. WILEY: No.
15 THE COURT: All right. That's all we have time for
16 right now. If you can please remain on call. We'll take a
17 break in about an hour and a half, and there may be further
18 direction for you. Thank you.
19 MR. WILEY: Yes.
20 (Mr. Wiley exits the courtroom.)
22 (Jury in.)
24 court, ladies and gentlemen of the jury. We hope you had a
25 good break since our last meeting.

1 I just want to make certain you know. Some of you
2 may be aware. I did have a short interaction with Ms.
3 McKenzie, one of your fellow jurors. It was based on a note
4 she had sent me, and so we just had a short discussion to
5 address that note.
6 We are now ready to go with the afternoon
7 proceedings. Mr. Greiner has seven more documents that he
8 believes he can finish up quickly on cross-examination, so
9 we're going to let him do that.
10 SHEILA JONES,
15 BY MR. GREINER:
16 Q. Thank you, Judge.
17 Good afternoon, Ms. Jones.
19 Q. Between the time that you testified on Monday and
20 today, have you spoken with the Government about your
21 testimony?
22 A. No.
23 Q. Have you spoken with the Government about the case?
24 A. No.
25 Q. Have you been shown any documents about the case?

1 A. No.
2 Q. Have you talked to anybody about your testimony?
3 A. No.
4 Q. Okay. If we could have Government's Exhibit 16A7,
5 please.
6 THE COURT: That's admitted and may be displayed. Do
7 we need to push another button for it it come up? I think,
8 Mr. Greiner, you need to push a button. Can the jury see the
9 exhibit on the monitors? All right.
10 Q. BY MR. GREINER: Ms. Jones, just for reference, we
11 talked about this grant deed on Monday, do you recall that?
12 A. Yes.
13 Q. And the grant deed says that you, Sheila Jones,
14 hereby grant to Daniel Castillo your property, do you remember
15 that?
16 A. Yes.
17 Q. And it's dated June 16, 2006, do you see that?
18 A. Could you blow it up? I'm sorry. I forgot my
19 glasses in my rush to get here.
20 Q. No problem.
21 A. Thank you.
22 Q. See the date of June 16, 2006?
23 A. Yes.
24 Q. That's when the notary -- it was notarized. Do you
25 see that?

1 A. Yes.
2 Q. And you also see your signature, correct?
3 A. No. Oh, on that side I do. On the right-hand side.
4 Not on the left-hand side. On the right-hand side is my
5 signature. On the left-hand side, underneath Nicholas Surjohn,
6 Notary Public, that is not my signature.
7 Q. Correct. But your signature is on the right-hand
8 side?
9 A. Yes.
10 Q. If we could take that down, please. I believe we
11 have spoken about it, but I want to make sure, and I want to
12 make sure it's been admitted first. 16A7-3.
13 THE COURT: All of 16A7 is admitted.
14 Q. BY MR. GREINER: If we could put that up quickly. I
15 think we talked about it, but I want to make sure Ms. Jones.
16 This document is entitled Affidavit of Deed, do you
17 see it at the top?
18 A. Yes.
19 Q. And do you see your initials next to the two capital
20 letter Bs?
21 A. Yes.
22 Q. And that says "consideration in the amount of $0," do
23 you see that?
24 A. Yes.
25 Q. But you actually received $5,000, correct?

1 A. Correct.
2 Q. Okay. And if we could enlarge, please. And you see
3 your signature on the left-hand side above your printed name,
4 Sheila Jones, correct?
5 A. Correct.
6 Q. And you see the date of June 16, 2006, correct?
7 A. Correct.
8 Q. And it's been notarized, correct?
9 A. Correct.
10 Q. And you recall that happening with Nicholas, correct?
11 A. Yes.
12 Q. If we could take that down, please. If I could just
13 have a moment with the Government's attorney.
15 MR. GREINER: Judge, pursuant to the amended
16 stipulation, I'd like to introduce from Mr. McCarns' exhibits
17 DM-M9.
18 THE COURT: Any objection, Mr. Anderson?
20 THE COURT: DM-M9.
24 THE COURT: All right. DM-M9 is admitted.
25 (Defendant's Exhibit DM-M9, Residential Lease After

1 Sale Agreement dated May 8, 2006 admitted into evidence.)
2 Q. BY MR. GREINER: If we could have the first page of
3 that exhibit, please.
4 Ms. Jones, Defendants' Exhibit DM-M9 on the screen is
5 entitled Residential Lease After Sale Agreement, do you see
6 that?
7 A. Yes.
8 Q. And right below that it says that "this lease
9 agreement is made and entered into this 5th day of May 2006,"
10 do you see that?
11 A. Yes.
12 Q. "By and between Nations Property Management,
13 hereinafter referred to as landlord, and Sheila A. Jones,
14 hereinafter referred to as tenant," do you see that?
15 A. Yes.
16 Q. And then in the first paragraph that's on the screen
17 in front of you it talks about "landlord leases to tenant," do
18 you see that?
19 A. Yes.
20 Q. And "tenant leases from landlord," do you see that?
21 A. Yes.
22 Q. And the property is 3920 44th Avenue in Sacramento,
23 do you see that?
24 A. Yes.
25 Q. And do you see the term is commencing on the 1st day

1 of August 2006, until the 31st day of July 2007?
2 A. Yes.
3 Q. And then if you go down to the second paragraph,
4 number two, do you see it says "tenant," which is you, "Sheila
5 Jones shall pay as rent the sum of $1,100 per month due and
6 payable monthly," do you see that?
7 A. Yes.
8 Q. And you read what I've read to you, you've read that
9 before you signed the document, right?
10 A. Yes.
11 Q. And then if we could go to page three of this
12 exhibit. Then on page three do you see all in capital letters
13 the sentence: "You should read and understand this lease. It
14 is a legal and binding contract." Do you see that?
15 A. Yes.
16 Q. And then just below that it says, "signing below
17 means you have read the lease and are in full agreement with it
18 and have received a copy of the contract," do you see that?
19 A. Yes.
20 Q. And then it's dated May 8th of 2006, do you see that?
21 A. Yes.
22 Q. And you see that your signature is above your typed
23 name, correct?
24 A. Yes.
25 Q. And then to the right you also see another signature,

1 correct?
2 A. Yes.
3 Q. And you don't recognize that signature, do you?
4 A. No.
5 Q. But that signature is above the typing that says
6 "Nations Property Management, property manager or agent,"
7 that's what that reads, correct?
8 A. Correct.
9 Q. Okay. And what I've read to you, you read prior to
10 signing this document, correct?
11 A. Yes.
12 MR. GREINER: Pursuant to the amended stipulation,
13 Judge, I would like to introduce DM-M10, please.
14 THE COURT: Any objection? Mr. Anderson?
19 MR. SAMUEL: No.
20 THE COURT: DM-M10 is admitted.
21 (Defendants' Exhibit DM-M10, Notice Required by
22 California Law dated May 8, 2006 (crossed out May 5, 2006)
24 MR. GREINER: If I could have that on the screen
25 please.

1 Q. BY MR. GREINER: Do you see at the top, Ms. Jones,
2 Exhibit DM-M10 says "Notice Required by California Law"?
3 A. No, sir. I'm unable to see it.
4 Q. I apologize. You told me, and I blew right by it.
5 How is that?
6 A. Yes.
7 Q. Better?
8 A. Yes.
9 Q. See in all capital letters it says "Notice Required
10 By California Law," do you see that at the top?
11 A. Yes. Yes.
12 Q. All right. Then it says under that, it says, "until
13 your right to cancel this contract has ended, which right ends
14 on May 11, 2006, purchaser or anyone working for
15 FundingForeclosures.com, purchaser, cannot ask you to sign or
16 have you sign any deed or any other document," do you see that?
17 A. Yes.
18 Q. Okay. Then if we could enlarge, please.
19 And then I've enlarged just above your signature. In
20 bold type it says, "seller is advised to carefully review the
21 attached notice of cancellation form for an explanation of this
22 right," do you see that sentence?
23 A. Yes, I do.
24 Q. You recall we talked about the notice of cancellation
25 form, do you recall that? Or do you want me to pull that up on

1 the screen?
2 A. No. I recall that.
3 Q. And then the date, you actually scratched out the "5"
4 and put the "8" and initialed it, correct?
5 A. Yes, I did.
6 Q. Because that's how carefully you read these
7 documents?
8 A. Yes.
9 Q. Okay. And then you signed it over on the right side
10 side, correct?
12 Q. And then underneath your signature on the right-hand
13 side there is another signature, do you see that?
14 A. Yes.
15 Q. And you don't recognize that signature, do you?
16 A. No.
17 Q. Okay. And below the signature it reads
18 FundingForeclosures.com with an address and telephone number,
19 correct?
20 A. Yes, it does.
21 MR. GREINER: Okay. We could take that down, please.
22 Pursuant to the amended stipulation, Judge, I would
23 like to introduce DM-M11, please.

4 MR. SAMUEL: No.
6 (Defendants' Exhibit DM-M11, Date of Contract
7 Acceptance May 5, 2006 signed May 8, 2006 admitted into
8 evidence.)
9 Q. BY MR. GREINER: If we could have that on the screen,
10 please.
11 Where it reads "seller's signature" just above that
12 you see your signature, correct?
13 A. Yes.
14 Q. And to the right it has the date of May 8th, 2006,
15 correct?
16 A. Yes.
17 Q. And below your signature, do you see the typed words
18 in capital letters where it says "date of contract acceptance"?
19 A. Yes.
20 Q. And then the date is May 5, 2006, do you see that?
21 A. I see that.
22 Q. Okay. And again, as we've established, you read this
23 document before you signed it, right?
24 A. Yes. Yes.
25 MR. GREINER: Thank you. We can take that down,

1 please.
3 like to introduce DM-M12, please.
11 (Defendants' Exhibit DM-M12, Sales and Purchase
12 Agreement-Contract of Sale dated May 8, 2006 admitted into
13 evidence.)
14 Q. BY MR. GREINER: If I could have the first page on
16 Ms. Jones, I've enlarged DM-M12. And you see on the
17 screen it says, at the top, "Sales and Purchase Agreement
18 Contract of Sale," do you see that?
19 A. Yes.
20 Q. And then below that a few lines it says "date of
21 offer," do you see that?
22 A. Yes.
23 Q. Okay. If you want me to enlarge it, just tell me.
24 A. I can see it.
25 Q. And the date of the offer is May 5, 2006, do you see

1 that?
2 A. Yes.
3 Q. And actually just above that, do you see where it
4 says "time is of the essence"?
5 A. Yes.
6 Q. Okay. And it says, "time is of the essence of this
7 sale and purchase agreement," do you see that?
8 A. Yes.
9 Q. And that's because you were facing foreclosure on
10 your house, right?
11 A. Yes. But I had not had a sale date. So the time was
12 not of the essence. I had not had a date.
13 And, actually, the house didn't actually foreclose
14 until well after 2007. So I had -- if I had looked for more
15 options, had I known they wouldn't have stuck to their
16 agreement, or they had no intentions on, then bankruptcy would
17 have been the option that I would have chose. Because I still
18 had time because my house was not coming up for auction. I had
19 just received my first notice of foreclosure.
20 Q. And we're going to get to all of that.
21 A. Okay.
22 Q. We're going to get to all that with some documents,
23 so hold on a half second. I appreciate your answer. All
24 right.
25 Then under the date of offer it says "seller," do you

1 see that?
2 A. Yes.
3 Q. And it's your name, Sheila A. Jones, correct?
4 A. Yes.
5 Q. And it has your address, 3920 44th Avenue, do you see
6 that?
8 Q. Then it has "buyer," do you see that?
9 A. Yes.
10 Q. And it has Daniel Castillo, do you see that?
11 A. Yes.
12 Q. And it has his address as 1313 Riverette Circle in
13 Modesto, do you see that?
14 A. No.
15 Q. You don't?
16 A. I see Riverette Drive.
17 Q. Did I say Circle? I'm sorry. Do you see where it
18 says Riverette Drive?
19 A. Yes.
20 Q. And then if we could enlarge, please. The purchase
21 price is $230,000, do you see that?
22 A. Yes.
23 Q. Okay. If we could go to page five of this exhibit,
24 please. And now on page five of Exhibit DM-M12, you see your
25 signature on the left-hand side correct?

1 A. Yes.
2 Q. Where it says "seller's signature," right?
3 A. Yes.
4 Q. And you see your date of May 8, 2006, correct?
5 A. Yes.
6 Q. Now above "seller's signature" where it says "buyer's
7 signature," you don't recognize that signature, do you?
8 A. No.
9 MR. GREINER: We can take that down, please.
11 like to enter DM-M15, please.
18 THE COURT: All right. DM-M15 is admitted.
19 (Defendants' Exhibit DM-M15, Demand for Payment from
20 Sheila Jones dated June 6, 2006 admitted into evidence.)
22 please.
23 Ms. Jones, do you see that this says demand for
24 payment?
25 A. Yes.

1 Q. And it's dated June 6th 2006, do you see that?
2 A. Yes.
3 Q. And it says an alarm permit, and it has the permit
4 number 87179, do you see that?
5 A. Yes.
6 Q. You had an alarm at the residence, correct?
7 A. Yes.
8 Q. And you owed and had not paid $488, correct?
10 Q. Well, do you recall the small claims case?
11 A. No. We didn't have a small claims case.
12 Q. Okay. So you have no recollection of having a small
13 claims judgment for $488 by the Sheriff of Sacramento County
14 for past alarm fees due?
15 A. No.
16 MR. GREINER: Okay. We can take that down, please.
18 like to enter DM-M19, please?
20 MR. ANDERSON: That was 19?
21 THE COURT: 19, 1-9.
23 MR. ANDERSON: Yes, Your Honor. That's covered in
24 the stipulation as a search warrant document.
25 THE COURT: No objection? Mr. Tedmon?

5 (Defendants' Exhibit DM-M19, Pay off from Specialized
6 Loan Servicing dated June 16, 2006 admitted into evidence.)
7 Q. BY MR. GREINER: If we could have the first page up,
8 please.
9 All right. Now I want to see if this information on
10 this document refreshes your memory of some things. Okay,
11 Ms. Jones?
12 A. Okay.
13 Q. The original date that you purchased the residence of
14 3920 44th Avenue was about February 2, 2004, does that sound
15 right?
16 A. No, that's not correct.
17 Q. Do you recall taking out a loan on February 2, 2004,
18 on that residence of 3920 44th Avenue in the amount of
19 $136,000?
20 A. I would have to look in my other documents for my
21 home to see if that's one of the times we refinanced, but at
22 this time honestly I don't recall. That may have been a time
23 when I refinanced.
24 Q. Well, did you refinance the house?
25 A. Yes, I did. But I purchased the home on

1 November 18th, 1997, to be exact. That's the date of the
2 actual purchase of my home.
3 Q. So you actually purchased the home back in 1997?
5 Q. That had a grant deed, correct?
6 A. Yes.
7 Q. Had other closing documents, correct?
8 A. Yes.
9 Q. Escrow instructions?
10 A. Correct.
11 Q. Title documents?
12 A. Yes.
13 Q. Disbursement instructions from escrow, correct?
14 A. Yes.
15 Q. And then in 2004 sometime you refinanced the house,
16 correct?
17 A. That's probably what happened in 2004 if I had
18 another loan. It probably was a refinance.
19 Q. Okay. If we can enlarge the document, please.
20 Now, see where it says "interest paid to date," and
21 it has April 1st, 2005, do you see that?
22 A. Yes.
23 Q. And then it says "daily per diem interest amount
24 $33.1607," do you see that?
25 A. Yes.

1 Q. And it says total interest to be charged, and it has
2 the figure of $13,709.50, correct?
3 A. Yes.
4 Q. And you recall that you owed your bank, the lending
5 institution when you refinanced the money, you recall that you
6 owed them that much money as you were going through the process
7 with Funding Foreclosures, right?
8 A. No.
9 Q. If we could enlarge, please. Here we've got where it
10 says payoff amounts, do you see that?
11 A. Yes. Yes.
12 Q. And it says the principal balance is $134,634.75, do
13 you see that?
14 A. Yes.
15 Q. Now you hadn't paid off your house before you started
16 making these partial payments, had you?
17 A. No.
18 Q. Okay. And these partial payments were less than the
19 total mortgage payment on your house, correct?
20 A. Correct.
21 Q. Okay. And you knew, because you had bought the house
22 before and you refinanced, you knew that partial payments, the
23 bank looked at that as being no payment at all, correct?
24 A. Correct.
25 Q. And so you knew that when you started making these

1 partial payments, you were breaching the contract with the bank
2 when had you refinanced, correct?
3 A. Yes.
4 Q. And this document says that interest calculated to
5 July 14, 2006 is that 13,709 figure, do you see that?
6 A. Yes.
7 Q. Okay. If we take the $33 daily interest rate, just
8 rounding it off, that we've established up here, that's right
9 above, and we divide that into that $13,709 figure, just
10 roughly, it's about 415 days, give or take. My math is fairly
11 close, okay. Got to trust me on that. Close to that.
12 A. Okay.
13 Q. And then if you divide 30 days in a month into that
14 415, you get just about ten months, which means if go back ten
15 months from this June date --
16 MR. ANDERSON: Objection, Your Honor. This isn't a
17 question. It's argument.
19 Q. BY MR. GREINER: Ten months from the June 2006 would
20 take it back to August of 2005, would you agree with me on
21 that?
22 A. Repeat that again, please?
23 Q. Sure. Ten months from June of 2006 would be August
24 of 2005, because a year would be June of 2005?
25 A. Right.

1 Q. So do you agree with me with that?
2 A. I agree.
3 Q. And it's about August of 2005 when you started making
4 the partial payments, correct?
5 A. I'd have to look and see. I don't remember.
6 Probably somewhere around in there.
7 Q. Okay. So let me now cover what you told the
8 Government on direct examination.
9 A. Okay.
10 Q. Somewhere around August 2005 -- August, September --
11 you start making partial payments to your bank which don't
12 cover your full mortgage, correct?
14 Q. And so as you're moving along, you don't file any
15 bankruptcy, true?
16 A. True.
17 Q. And you don't call the bank to ask for any
18 forbearance, correct?
19 A. Wrong.
20 Q. Did you call the bank?
21 A. Yes, I did.
22 Q. And did ask you for a forbearance?
23 A. Yes, I did.
24 Q. What is a forbearance?
25 A. Forbearance is where you put your loan on the back

1 half, some of your payments on the back half, and then they
2 will put it into sort of a limbo, and then you receive with
3 your next starting payments, and then you'll pay the back half
4 -- you'll pay the portion that you missed on the back half of
5 your loan.
6 Q. And the bank denied you a forbearance, correct?
7 A. Correct.
8 Q. And then did you ask the bank to reinstate your loan?
9 A. No. I don't recall doing that.
10 Q. Okay. And a reinstatement would have required that
11 you paid all of your arrears and then you started your mortgage
12 payments again, do you understand that?
13 A. No, I understand. But I don't recall whether or not
14 I asked them for that.
15 Q. Okay. And you didn't put your house up for sale on
16 the market, did you?
17 A. Yes.
18 Q. You did?
19 A. Yes, I did, and I had a couple people come by, and
20 their offer wasn't -- I had people come and look. At that time
21 I said I was looking into all options. I was talking with the
22 bankruptcy lawyer. We had listed our house with a realtor, who
23 people were coming by. We had did some things to upgrade so
24 they can come in and look. So I was looking at all options.
25 Not just one.

1 Q. And what did you upgrade on your house?
2 A. We put in new carpet, new cabinets, redid the rec
3 room, put in all new appliances, stuff like that.
4 Q. And all of this time you're upgrading, you're only
5 making partial payments on your mortgage, correct?
6 A. I had done it prior to that because we were already
7 looking. We could see trouble coming, so we were already
8 starting to do that. So some of the refinance money, probably
9 from there, we had went and upgraded so that we can start
10 looking to sell.
11 Q. So part of refinancing money that you got back in
12 2004 --
13 A. Right. I did upgrades.
14 Q. -- you started upgrading?
15 A. Right.
16 Q. Because back in 2004 you could see trouble coming?
17 A. Absolutely.
18 Q. So that's two years before you ever contacted Funding
19 Foreclosure or ever had any contact with them, right?
20 A. Right. Because we had an adjustable loan, and we
21 could see that the rates were rising. So with an adjustable
22 loan and with the rates rising in interest, you could see
23 trouble coming down the road.
24 And so that's why I knew, and that's why we were
25 looking at different options. But, unfortunately, the mortgage

1 market wasn't doing well. So when we went to sell, we couldn't
2 get what we wanted to put in it. So, like I said, I was
3 looking at all kind of options at that time.
4 Q. Because none of the buyers were willing to pay the
5 full price that you were asking for, correct?
7 Q. And so you didn't sell the house, correct?
8 A. Correct.
9 Q. And as the months kept rolling by and you moved into
10 2006, you still didn't file bankruptcy, did you?
11 A. No.
12 Q. And did you ask the bank again for a forbearance?
13 A. I'm not sure. I don't think I did, though.
14 Q. When did you take your house off the market?
15 A. Probably when I started talking to Funding for
16 Foreclosures.
17 Q. That's all the way into May of 2000 --
18 A. Right. We had people coming. Like I said, the
19 market was slow. We had people coming in and out. They had
20 the box out there. They would come. The neighborhood wasn't
21 the best. So were you going to get a lot of people? Not. I
22 was hoping we would get some investors more so than private
23 owners, which didn't happen.
24 Q. Did you try to get investors?
25 A. Yes, I did.

1 Q. Did you have an investor come to you and say, you
2 know, I'm an investor and I want to buy your house?
3 A. Well, they came and looked. They never really
4 offered or purchased. They came around and looked. Like I
5 said, the neighborhood wasn't the best, and so, you know.
6 Q. Okay. So no investor ever made an offer on your
7 house?
8 A. Right. They didn't make an offer.
9 Q. Okay. And then by the time -- and now by the time
10 May of 2006 rolls around, you're, like, seven, eight months of
11 partial payments to the bank, right?
12 A. Probably six months.
13 Q. And you've gotten at least one notice of foreclosure,
14 right?
15 A. Yes.
16 Q. And you've probably gotten phone calls from the bank,
17 correct?
18 A. Yes.
19 Q. And you've gotten documents in the mail that says,
20 you know, you're behind in your payments, you got to make them
21 up?
22 A. Yes.
23 Q. Okay. And you don't recall at all getting a notice
24 of trustee's sale date at all?
25 A. No. There was never a notice of trustee sale.

1 Q. And then what happened is you contacted Funding
2 Foreclosures, and you told the Government you talked to an
3 individual on the phone, who you never met, that says Domonic
4 McCarns, correct?
6 Q. And then this individual faxed you documents, right?
8 Q. And what you did is you signed that equity purchase
10 A. Yes.
11 Q. And you signed a lease agreement because you were
12 going to rent your house, correct?
13 A. Yes.
14 Q. And you saw the notice of cancellation document,
15 correct?
16 A. Yes.
17 Q. And you also signed that acknowledgement of seller,
18 correct?
19 A. Yes.
20 Q. And you also signed that holding trust agreement, do
22 A. Yes.
23 Q. And if we could have the first page of Government's
24 Exhibit 16A5 on the screen, please.
25 THE COURT: Is this the last exhibit you're

1 reviewing?
2 MR. GREINER: I believe it is, Judge.
3 Q. BY MR. GREINER: And this at the top of the document
4 it says "3920 44th Avenue Property Holding Trust Agreement,"
5 you read that, right?
6 A. Yes.
7 Q. And through that paragraph it says that "the trustee
8 is Nations Property Management LLC," do you see that?
9 A. Yes.
10 Q. And it says that Sheila Jones is the tenant, do you
11 see that?
12 A. Yes.
13 Q. If we can enlarge, please. And then paragraph E
14 says, "whereas in order to protect the rights of each party to
15 this agreement, and in order to enforce the rights of each
16 party to the property, the parties have agreed that title to
17 the property will be held in trust by the trustee subject to
18 the provisions of this agreement," do you see that?
19 A. Yes.
20 Q. And so the trust agreement that you entered into told
21 you that the property was going to be held in trust, right?
22 A. Yes.
23 Q. Okay. We can take that off the screen. And so then
24 after you get the initial documents, the equity purchase
25 agreement, notice of cancellation, acknowledgement of seller,

1 then you have Nicholas come out to you, and you're signing
2 grant deeds, correct?
3 A. Yes.
4 Q. And you knew that you were selling the property and
5 renting it back, correct?
6 A. No. I thought the property would be put in trust,
7 and that I would be -- well, I would be leasing for a year at
8 $1,100, and then at the end of the year I would be able to buy
9 my house back at 195,000, and we would split the equity, which
10 was why when I signed all of these agreements that was a
11 stipulation, that it would be held in trust. And what I read
12 and understood was that that was what would happen. That I was
13 not really selling my property.
14 Q. Well you knew you were selling your property because
15 all of the documents said equity purchase agreement, leasing
16 the property, you were renting it, you had to pay $1,100 in
17 rent, you knew that you were not going to own the property, you
18 were selling it, you knew that, right?
19 A. Right. For one year I knew that it would be held in
20 trust.
21 Q. Understand.
22 A. Okay.
23 Q. But you knew when you signed the documents that you
24 were selling your property, it was gone, it was out of your
25 name, right?

1 A. Right.
2 Q. All right. And you knew you were renting your
3 property for $1,100, correct?
4 A. Correct. Leasing.
5 Q. Okay. Well, leasing doesn't mean you own it, does
6 it?
7 A. Right. But I just wanted to -- yeah, that was a
8 lease agreement for the year.
9 Q. And that lease agreement means that you're in there
10 and you have to pay monthly, correct?
12 Q. And it's not your property, correct?
14 Q. All right. And what you told the Government on
15 direct examination is that at the end of the year you believed
16 that you were going to have equity to help purchase your
17 property back, right?
18 A. Not to help purchase the property back. My equity
19 would be held in trust. We would split that. And I would be
20 allowed to purchase my house back in a year, which would give
21 me enough time, as we talked about, to -- well, a lot of the
22 stuff was paid off on my credit during -- was supposed to as
23 before -- during the sale, and then that my credit would be
24 able to build up. And with me having a year of good rental
25 history and all of that, that I would be able to purchase my

1 house. And we agreed on a set price.
2 Q. Right.
3 A. Already pre-determined.
4 Q. And the set price was 195,000 and some odd dollars,
5 correct?
7 Q. We saw that exhibit, right?
8 A. Yes.
9 MR. GREINER: Judge, I have to introduce one other
10 document because of what the witness said.
11 THE COURT: How much more time do you need, total?
12 MR. GREINER: Probably ten minutes, Judge. Pursuant
13 to the amended stipulation if we could introduce DM-M24,
14 please.
16 MR. ANDERSON: Yes. No objection, although I believe
17 that's identical to Government's Exhibit 16A1. So maybe
18 Mr. Greiner would prefer to use that.
19 MR. GREINER: Actually, Judge, I thought it was
20 identical, too, until I looked. And Government's 16A1 didn't
21 have the last page.
22 THE COURT: If you think it's not identical, the
23 focus is on DM-M24. So no objection?
24 MR. ANDERSON: No objection. That's fine, Your
25 Honor, if Mr. Greiner wants that page.

2 MR. TEDMON: No.
5 (Defendants' Exhibit DM-M24, U.S. Department of
6 Housing and Urban Development Settlement Statement dated August
7 3, 2006 5 pages admitted into evidence.)
8 Q. BY MR. GREINER: If we could have the first page of
9 that document on the screen, please.
10 This is the HUD-1 settlement statement that shows
11 that your house was bought for $230,000, do you see that,
12 Ms. Jones?
13 A. Enlarge it a little bit.
14 Q. Enlarge it a little bit more.
15 A. That has a lot of small writing.
16 Q. It does. See if that helps. Do you see that?
17 A. Yes, that's better. Thank you.
18 Q. Okay. And do you see the selling price was $230,000?
19 A. Yes.
20 Q. Okay. If you need it bigger, tell me.
21 A. No. I can see that. Thank you.
22 Q. If we could go -- actually, if we could enlarge this.
23 And on the first page of that settlement document it
24 says -- number 504, it says payoff of first mortgage loan,
25 $152,418.53, do you see that?

1 A. Yes.
2 Q. And do you see payoff of second mortgage loan
3 $6,274.01, do you see that?
4 A. Yes.
5 Q. If we could go to the last page of DM-M24, please.
6 And if you need me to enlarge it, I will. But what this
7 demonstrates, this total of the 6,374, this is where that
8 payoff of the second mortgage came from because they had to pay
9 off the Sacramento County Sheriff's Office $488 small claim
10 judgment, do you see that at the top, or do you want me to
11 enlarge it?
12 A. I can see that.
13 Q. Do you see that, that they paid that off?
14 A. Yes.
15 Q. And do you see that they also had to pay off another
16 delinquent account for $5,000?
17 A. I see what it says, but I don't know what account
18 that is. That probably was my $5,000 that they paid me.
19 Q. Exactly. And then do you see the Sacramento County
20 utility bill of $786, do you see that?
21 A. Yes.
22 Q. And that was all paid off in that $230,000, right,
23 because you didn't owe any money, right?
24 A. You're asking me a question? I have no idea.
25 Q. Well, when you sold your house, you didn't owe any

1 mortgage payment, did you?
2 A. Yeah, I'm not sure --
3 Q. When you sold your house and then started renting
4 it -- when you sold your house, you had no mortgage payment
5 that you had to pay to the bank, correct?
6 A. No. Right. Correct.
7 Q. And you didn't have a foreclosure on your credit, did
8 you? Your credit report did not show a foreclosure of your
9 house, did it?
10 A. No.
11 Q. And you had $5,000 in your pocket from the selling of
13 A. Correct.
14 Q. And that was more -- that right there, that
15 situation, was more than you had in all of the options that you
16 looked for prior to talking to Funding Foreclosure, correct?
17 A. No.
18 Q. Well, nobody offered you $5,000 before Funding
19 Foreclosure, correct?
20 A. Correct.
21 Q. Nobody offered to pay off your mortgage, correct?
22 A. That's not correct.
23 Q. Well, did you --
24 A. Because I could have chose bankruptcy, which would
25 have held my house. May not have got the $5,000. I probably

1 would have looked for a personal loan from my family, which in
2 that kind of situation it's embarrassing, and nobody wants your
3 family members to actually know what you're going through. But
4 that would have been my option.
5 I would have saved my house and filed for bankruptcy
6 and wiped off all my bills. I wouldn't have owed anyone. And
7 I would have got to keep my house, and my son and my
8 grandchild's legacy.
9 Q. And we're going to get there for a half second.
10 A. Okay.
11 Q. But you didn't choose bankruptcy, did you?
12 A. No.
13 Q. And you didn't choose to go to any family member for
14 funds, did you?
15 A. No.
16 Q. And you didn't choose to go to anybody outside your
17 family for funds, did you?
18 A. No.
19 Q. And you couldn't qualify for a refinancing loan,
20 could you?
21 A. No.
22 Q. And then after your house is paid off, and you're in
23 your house -- you stay in your house, correct?
24 A. Correct.
25 Q. And you make lease payments, correct?

1 A. Correct.
2 Q. Except you missed you first lease payment, do you
3 remember that?
4 A. No. I never missed a payment.
5 Q. Okay. So you don't remember missing the first lease
6 payment?
7 A. No. As a matter of fact, they got a payment in
8 advance because the paperwork that I received, when it came in,
9 the thing said I paid July 1st, not August 1st. So we started
10 our first payment July 1st.
11 We signed the documents on June 16th. On the 1st of
12 July was the monthly mortgage payments to start. The August --
13 I don't know where that come from -- but the pad that we
14 received with our -- where we send it to Nations said that we
15 start July 1st.
16 Q. Okay. And the payments were not mortgage payments?
17 A. No. They were the rental payments, but, yeah, but we
18 did start July.
19 Q. They were the rental payments?
20 A. Right. They were the rental payments.
21 Q. And remember you were late on one of the rental
22 payments, do you remember that?
23 A. No.
24 Q. So you're telling the ladies and gentlemen of the
25 jury you weren't late on the rental payments?

1 A. I don't recall being late on any rental payments
2 because that was the key to keeping my house, 12 months of
3 on-time payments.
4 Q. Exactly. And you didn't pay for 12 months to keep
5 your house, did you?
6 A. Well, I wasn't afforded an opportunity because the
7 FBI came and said that we were not to do so.
8 Q. Right. The FBI came, and they told you to stop the
9 payments?
10 A. Plus Daniel Castillo had started to call me,
11 screaming and yelling saying that the payments were $1,700 a
12 month not $1,100 a month. That I was ruining his credit and
13 ruining his life, and I had never met him. And so even if I
14 made the $1,100, I was $600 short coming out of the gate.
15 MR. SAMUEL: Objection as to what Mr. Castillo said.
16 Ask it be stricken.
18 THE COURT: That belated objection is overruled.
19 Q. BY MR. GREINER: And so what happened, Ms. Jones, to
20 the jury, is that you made payments until the FBI agents told
21 you to stop, correct?
22 A. Well, actually, they didn't say stop. They came and
23 said that they were investigating at that time, which I had
24 already had --
25 MR. TEDMON: Objection, Your Honor. Objection. This

1 is hearsay. Move to strike. Non-responsive.
2 THE COURT: At this point, Ms. Jones, answer the
3 question and then wait for the next question. All right.
4 THE WITNESS: All right.
5 Q. BY MR. GREINER: So Ms. Jones, you made payments
6 until the FBI came and talked to you, correct?
8 Q. And when the FBI came and talked to you, then you
9 stopped making payments, correct?
11 Q. And it's only after the FBI came and talked to you,
12 when you stopped making payments, that then the house that
13 wasn't yours, that you were making rental payments on, that
14 house got foreclosed on, correct?
16 MR. GREINER: If I could have just one moment, Judge.
18 Q. BY MR. GREINER: And you never spoke -- or let's put
19 it this way, the coupons that you got for your payments, that
20 wasn't -- that was from Nations Property, right?
21 A. Yes, correct.
22 Q. That wasn't from Domonic McCarns or anybody saying
23 they were Domonic McCarns, correct?
24 A. No.

1 A. Correct.
3 THE COURT: All right. Additional cross-examination?
4 Mr. Tedmon?
11 BY MR. ANDERSON:
12 Q. Did you become aware of problems with the program
13 before the FBI spoke with you?
14 A. I had warning bells.
15 Q. What were some of the warning bells?
16 A. When you try to call the property manager for things
17 that need to be fixed, or problems, or complaints, no one ever
18 answered. You could never get any response. It was a machine,
19 and no one ever responded or called back.
20 Q. Did you hear from Mr. Castillo before the FBI called?
21 A. Yes, I heard from him, but I didn't really know who
22 he was.
23 Q. All right. Do you know now that he's the person who
24 the property was transferred to?
25 A. Yes.

1 Q. Why didn't you choose the other options like
2 bankruptcy or a loan from your family instead of entering into
3 the Funding Foreclosures program?
7 Q. BY MR. ANDERSON: Well, do you know why you didn't
8 choose the other options?
10 MR. ANDERSON: Just yes or no.
11 THE COURT: You may answer that question yes or no.
13 Q. BY MR. ANDERSON: And is that knowledge based on your
14 own understanding of what the program was at the time?
18 Q. BY MR. ANDERSON: What is your understanding of why
19 you didn't choose the other option based upon?
21 MR. GREINER: And speculation.
23 THE COURT: Sustained. You may answer that question.
24 Answer that question.
25 MR. ANDERSON: Did the Court mean overruled then,

1 Your Honor?
2 THE COURT: Yes. You may answer the question. But
3 what I'm suggesting to you is you only answer that question.
4 THE WITNESS: Would you repeat the question so I know
5 which one to answer?
6 THE COURT: Do you want it read back?
7 MR. ANDERSON: Yeah. That would be great if we could
8 get a read-back.
9 (Record read.)
10 THE WITNESS: The reason why I didn't choose the
11 other option is because the option that I was offered on the
12 phone was that I would be able to keep my house as well as
13 receive the money that I needed for my son's tuition 3,000
14 miles away. And that is what I needed overall. It answered
15 everything that I needed and what I wanted, and so that's why I
16 chose that.
17 Q. BY MR. ANDERSON: At the time of this transaction,
18 whose interest did you think Domonic was working for?
19 A. I thought he was --
21 MR. GREINER: Speculation.
23 Q. BY MR. ANDERSON: Okay. I'm going to ask you just
24 about what you personally believed at the time.
25 Did you have a personal belief about who Domonic was

1 working for?
2 MR. GREINER: Objection. Relevance to her belief.
3 MR. TEDMON: Also speculation. If she knows.
5 Q. BY MR. ANDERSON: Did you rely on Domonic's
6 representations about the deal when you signed the documents
7 that Mr. Greiner has just been showing you?
8 A. Yes.
9 MR. GREINER: Objection. I've shown her a lot of
10 documents that had nothing to do, so it's relevance and
11 speculation.
12 THE COURT: Overruled. But follow up just to clarify
13 "the documents."
14 Q. BY MR. ANDERSON: And when I specify documents, I
15 mean the exhibits that you've been shown that contain your
16 signature related to this Funding Foreclosures transaction with
17 your home?
21 A. Yes.
23 THE COURT: All right. Any recross, Mr. Greiner?
25 THE COURT: I assume just a few minutes.

3 BY MR. GREINER:
4 Q. The Government asked you on redirect why you chose to
5 go into the program that a person on the phone talked to you
6 about. Do you remember that question just a few seconds ago?
7 A. Yes.
8 Q. And your answer was because it provided you
9 everything that you wanted, right?
10 A. Yes.
11 Q. And what it provided you was that you could stay in
12 your home, correct?
13 A. Yes.
14 Q. That could you have your mortgage paid off, correct?
15 A. Yes.
16 Q. That you wouldn't have a foreclosure on your credit
17 report, correct?
18 A. Yes.
19 Q. That you would get $5,000 with no interest, no loan
20 payments, no repayment, correct?
21 A. Yes.
22 Q. And that you would have an opportunity, if you
23 complied with the agreements that you signed, if you made the
24 12-month payments, you would have an opportunity to purchase
25 back your -- purchase back the property that you were leasing,

1 correct?
2 A. Yes.
3 Q. And you would be able to purchase back the property
4 you were leasing at a pre-agreed price of $195,000 and change,
5 correct?
6 A. Correct.
7 Q. And in order to do that, out of the $230,000 that
8 your house sold for, $35,000 of equity in your house was going
9 to have to be used to buy down to the $195,000 price?
10 A. Actually, the equity that I had in my home was 77,000
11 and some odd change.
12 Q. Well, you didn't have any equity in your home because
13 you didn't sell it, correct?
14 A. Well --
15 Q. Correct?
16 A. Well, I have a lease/purchase agreement that says I
17 did have equity with Daniel Castillo. Did I sell my house to
18 Daniel Castillo?
19 Q. You did because you signed the grant deed, correct?
20 A. So if I sold my home, I had equity in it paid to the
21 seller of 77,000.
22 Q. And you had no equity in that house before you sold
23 it, correct?
24 A. Yes, I did. I had $77,000 in equity in my home.
25 Q. Well, you couldn't take the equity down to Bel Air

1 and buy groceries, right?
2 MR. ANDERSON: Objection. Argumentative.
4 Q. BY MR. GREINER: The only way you were going to get
5 equity out of your house is by selling it, correct?
6 A. Yes.
7 Q. And you couldn't sell it before you came to Funding
8 Foreclosures, correct?
9 A. I wouldn't say that was correct. I was having
10 difficulties selling it for the price I wanted, but I probably
11 could have sold it and settle for a lesser price.
12 Q. But you didn't?
13 A. I did not choose that way.
14 Q. And you had a lot of options, and you didn't take any
15 of the options that they were offering to buy your property,
16 correct?
17 A. Correct.
18 Q. And when your house sold for 230,000 and you agreed
19 to have it -- for you -- if you followed the terms and
20 conditions of the contract to pay for 12 months, you would have
21 an opportunity to buy your house back for $195,000 and change,
22 correct?
24 Q. And that figure is about $35,000 less than what your
25 house sold for, correct?

1 A. Yes.
2 Q. And that $35,000 had to come from somewhere to allow
3 you to buy a house for less than the market value that you sold
4 your house for, correct?
5 A. I guess.
6 Q. Well, you didn't agree to buy back your house for
7 $235,000, did you?
8 A. Well --
9 Q. Just yes or no, Ms. Jones. You didn't agree to buy
10 your house back for 235,000, did you?
11 A. No.
12 Q. And you didn't agree to buy your house back for
13 230,000, did you?
14 A. No.
15 Q. And you didn't agree to buy your house back for
16 200,000, did you?
17 A. No.
18 Q. So you agreed on a price that was less than what your
19 house sold for?
20 A. Well, it was 60,000 more than the existing loan that
21 was on it. So if it was 134, and I buy it back at 95, that's
22 $60,000 more than what I already had an existing loan on.
23 Now, I did not know my house sold at 230,000 until
24 the last packet, which was the final packet. As I said, each
25 documents came with different packages. So that's why I tried

1 to save all of them. You have to go through. But each time
2 they can slip documents in --
3 MR. SAMUEL: Objection, narrative, Your Honor.
5 Q. BY MR. GREINER: And you also know that the payoff
6 was not 134,000 on your loan. It was 159,000 that we saw on
7 the loan payoff document. Do you remember that that we
8 covered?
9 A. Correct. But that wasn't in my documents. Like I
10 said, the loan amount I had was 134.
11 THE COURT: Wait for the next question. Mr. Greiner,
12 how many more questions?
13 MR. GREINER: Just a few real quick.
14 Q. BY MR. GREINER: You know that $159,000 figure was on
15 the HUD-1 settlement statement, we covered that, correct?
16 A. Yes, I did see that.
18 THE COURT: All right. Mr. Anderson?
21 BY MR. ANDERSON:
22 Q. If we could bring up 16A1.
23 Is this a document that was in the packet of
24 documents that came to you, or is this something that you've
25 seen later in preparation for trial?

1 A. This is something that I've seen later. I've not
2 seen this document.
3 Q. We're going to highlight the bottom.
4 Do you see where it says "cash to seller $66,530.81,"
5 do you see that line?
6 A. Yes, I do.
7 Q. Did you get $66,530.81 from this transaction with
8 your property?
9 A. No.
10 MR. ANDERSON: No questions.
11 THE COURT: All right. Is this witness excused?
12 MR. GREINER: Can you leave that up?
13 THE COURT: One to two questions.
14 MR. GREINER: One to two questions, Judge.
15 FURTHER RECROSS-EXAMINATION
16 BY MR. GREINER:
17 Q. Ms. Jones, remember when I started my questioning
18 today, I asked you if you had reviewed any documents for your
19 testimony?
20 A. Yes. You said today if I talked to the Government
21 since my testimony, and if I reviewed any documents since my
22 testimony since Monday, and my answer was no.
23 Q. So when did you review document 16A1?
24 A. I reviewed all of the documents prior to my testimony
25 on Monday.

1 Q. Okay. If we could enlarge that, please.
2 Mr. Anderson asked you about the cash to seller, it
3 says $66,500, do you see that?
4 A. Correct.
5 Q. Did you expect that Funding Foreclosure was not going
6 to make any money for the service that they were providing?
7 Yes or no?
8 A. Of course.
9 Q. Of course they were going to make some money,
10 correct?
11 A. Of course.
12 MR. GREINER: Thank you. You can take that down.
13 THE COURT: Now is this witness excused?
19 THE COURT: Ma'am, you are excused. You may step
20 down. Thank you. Government's next witness.
21 MR. MORRIS: United States calls Armil Rucker.
22 THE COURT: We will go until about 3:00 and then take
23 our break. If you want to stand and stretch, you may.
24 (Photograph taken of witness.)

5 THE WITNESS: First name is Armil. My last name is
6 Rucker. First name is actually spelled A-r-m-i-l. Last name,
7 R-u-c-k-e-r.
9 ARMIL RUCKER,
14 BY MR. MORRIS:
15 Q. Mr. Rucker, what's your occupation?
16 A. I'm in the Air Force Reserve. Air Reserve
17 technician, civilian and military. Dual status.
18 Q. Where do you live?
19 A. I live 4708 Royal Oak Drive, and that's in Oklahoma
20 City, Oklahoma.
21 Q. I would like you to think back to 2006. Were you
22 living in Oklahoma at that time?
23 A. I was. I was living in Moore, Oklahoma.
24 Q. And what was your occupation in 2006?
25 A. I was active duty military, active duty Air Force.

1 Q. In the 2006 timeframe, were you familiar -- did you
2 become familiar with somebody by the name of Keith Brotemarkle?
3 A. Yes, I was. Actually, his brother-in-law at the time
4 was my supervisor.
5 Q. Supervisor with the Air Force?
6 A. With the Air Force, yes.
7 Q. And in 2006, through that contact, did you enter into
8 a business arrangement through Mr. Brotemarkle?
9 A. I did.
10 Q. What was the nature of the business arrangement you
11 entered?
12 A. Well, I was actually approached earlier by his, like
13 I said, his brother-in-law at the time. I was wanting to kind
14 of get into real estate when I got out and had spoke about it
15 at the office plenty of times.
16 So his brother-in-law at the time -- kind of told me,
17 hey, my brother-in-law is a broker, and they have this deal
18 where they purchase houses, and they would like to kind of
19 expand and have other people doing it as well.
20 Q. On the basis of that conversation, did you contact
21 Mr. Brotemarkle?
22 A. I did. I contacted him. I can't remember what month
23 it was probably in, or if I spoke with him on that day, or if
24 he called me back, but I did have a conversation with him.
25 Q. And what's your recollection of what you were told

1 the deal would be?
2 A. Well, what they had was --
3 MR. GREINER: Objection. To "we."
4 THE COURT: Sustained. Can you clarify?
5 Q. BY MR. MORRIS: So this conversation, let me focus
6 you in first. Are we talking to Mr. Brotemarkle at this point?
7 A. I'm talking to Mr. Brotemarkle at this time.
8 Q. What did Mr. Brotemarkle tell you about the deal?
9 A. Okay. He told me what it was is that they were going
10 out buying --
11 MR. GREINER: I'm going to object. 801(d)(2)(E).
15 Q. BY MR. MORRIS: Continue.
16 A. Okay. The deal was they were basically going out
17 finding distressed properties. They would purchase the
18 property from the individuals who actually owned it at a
19 discount rate, have a deal with them that at the end of a year
20 period they would then turn around and sell the property back
21 to them or have another buyer.
22 And at that timeframe, or at the beginning, I guess,
23 I would be the loan carrier. And that at the end of the year,
24 like I said, it would go back to another buyer which they
25 arranged, and then at that time I would be compensated.

1 Q. And what was your understanding of what the
2 compensation would be?
3 A. It was actually $5,000 per home that I was able to
4 purchase.
5 Q. Okay. Were there any other terms of the deal that
6 you can recall?
7 A. Not necessarily from their -- his standpoint. I had
8 some questions.
9 Q. What questions did you have?
10 A. Well, I had started actually going to real estate
11 school at the time, so I had kind of learned about some of the
12 aspects of it, and doing finder fees and stuff like that.
13 And because I didn't really -- didn't really know,
14 you know, about being a property manager or anything like that,
15 my concerns was and my questions were were the properties going
16 to be local and what happens if the tenants that they had in it
17 decided to leave.
18 Q. And when you say local, what do you mean by property
19 being local?
20 A. Local, Oklahoma, Oklahoma City, metro area.
21 Somewhere where I could physically go in reason and check on
22 the property or kind of have some control over it, if need be.
23 Q. And what, if anything, were you told in response to
24 those questions?
25 MR. GREINER: Objection. Vague. By who?

2 THE WITNESS: At this time --
3 THE COURT: When I say sustained, wait for the next
4 question. That means I've sustained the objection and you
5 should not answer the question.
6 Q. BY MR. MORRIS: Were you told anything in response to
7 those questions?
8 A. Yes.
9 Q. By whom were you told?
10 A. First by Mr. Brotemarkle. He said that not
11 necessarily "yes" at the time --
12 MR. GREINER: 801(d)(2)(E).
15 Q. BY MR. MORRIS: You can continue.
16 A. Not necessarily "yes" at the time. He kind of
17 referred me and told me that I would be speaking with somebody
18 else.
19 But that I could actually go out, once I was a real
20 estate agent, which was going to be in a very short time period
21 from our first conversation -- I actually had probably been to
22 the class three days, and I was actually taking the State test
23 at the end of that week. I could actually go out and look on
24 the BLMS or the --
25 MR. GREINER: Objection. Non-responsive, Judge.

1 THE COURT: Sustained. Just move on to the next
2 question. Can you make certain that the narrative is
3 controlled?
4 MR. MORRIS: I will, Your Honor.
5 Q. BY MR. MORRIS: So were there any other terms of the
6 deal that you can recall?
7 A. No. Not really.
8 Q. Okay. Based on what you had learned, did you decide
9 to get involved in this program?
10 A. I did.
11 Q. Okay. And what, if anything, do you recall then
12 about what the next step was?
13 A. The next step was to do income verification. He was
14 going to send me out some paperwork.
15 MR. GREINER: Objection. "He"?
16 THE WITNESS: Mr. Brotemarkle was going to send me
17 out paperwork to kind of sign and return so that he could
18 verify my credit score and stuff like that.
19 Q. BY MR. MORRIS: And did you sign that paperwork?
20 A. I did.
21 Q. Did you interact with anybody else other than
22 Mr. Brotemarkle in this process?
23 A. Yes, I did. The second call that I got was from a
24 Tua Vang, and I kind of dealt with him for the most part. That
25 paperwork that I had received, I actually sent it back to

1 Mr. Vang.
2 Q. Okay. Do you recall any other paperwork?
3 A. I remember -- I was about to deploy. This was
4 probably in August. I received some other paperwork.
5 MR. GREINER: Objection. August. Vague. Of what
6 year?
7 THE WITNESS: August of 2006. And, actually,
8 August 8, 2006.
9 Q. BY MR. MORRIS: And is it your recollection that you
10 signed that paperwork?
11 A. Yes.
12 MR. MORRIS: Your Honor, I'm going to ask to move in
13 Government's Exhibit 18A2 pursuant to the stipulation as
14 documents recovered as part of the search warrant.
20 MR. SAMUEL: Maybe a variance objection, Your Honor.
21 THE COURT: Maybe?
22 MR. SAMUEL: It is.
23 THE COURT: All right. Overruled. The objection is
24 noted.
25 MR. GREINER: I would join on the variance, Judge.

1 MR. TEDMON: Join as well on that.
2 THE COURT: All right. Overruled. 18A2 is admitted.
3 (Government Exhibit 18A2, Uniform Residential Loan
4 Application in the name of Armil Rucker for property at 116
5 (sic) Bedford Street, West Bridgewater, MA admitted into
6 evidence.)
7 Q. BY MR. MORRIS: Do you recognize this document on the
8 screen in front of you?
9 A. I recognize it from seeing it recently. Not
10 necessarily from seeing it in 2006 or in August of 2006.
11 Q. Does that appear to be your signature?
12 A. Yes.
13 Q. And do you recognize the address 115 Bedford Street,
14 West Bridgewater, Massachusetts?
15 A. I do.
16 Q. How do you recognize that address?
17 A. I recognize that as being one of the properties that
18 I kind of got notification that I owned.
19 Q. Now, what do you mean by "got notification that I
20 owned"?
21 A. Well, I never actually knew that I was purchasing any
22 properties before I actually deployed in 2006. I actually
23 deployed in August 2006.
24 Q. And so when is it that you got notification that you
25 owned this property?

1 A. About three months into my deployment.
2 Q. So would that be approximately November 2006?
3 A. Approximately. Approximately.
4 Q. Clarify this. Some items are blocked out. But this
5 is you, correct?
7 Q. And is that address in 2006, was that a correct
8 address for you?
9 A. That is correct. And also I notice on there the
10 years of school as being 12. I had actually had finished my
11 associate's and was finishing by bachelor's in 2006.
12 Q. So talking about that item there?
13 A. Yeah.
14 Q. Going to the next page.
15 And where it says "employment information for
16 borrower," was that your employer at the time in 2006?
17 A. Yes.
18 Q. Okay. And is that an accurate description of your
19 position?
20 A. I was a Staff Sergeant. I wouldn't have filled it
21 out that way.
22 Q. How would you have filled it out?
23 A. Non-commissioned officer in charge of the security
24 forces armory.
25 Q. Do you recall approximately how much money you were

1 making in the summer of 2006?
2 A. Yes. Just under -- my W2 reports just under $25,000.
3 Q. Is that per month or per year?
4 A. Year.
5 Q. So what's your best approximation of your monthly
6 income in the Summer of 2006?
7 A. About two grand or so. I had BHA and BSA as well.
8 Not necessarily reported.
9 Q. How much, if you recall, was -- let's clarify. BAH
10 stands for?
11 A. Basic housing allowance and basic subsistence
12 allowance.
13 Q. And if you added in those to your base pay,
14 approximately how much was your monthly income?
15 A. About $2,800.
16 Q. Were you making approximately $6,800 through some
17 other source of income at the time?
18 A. No.
19 Q. Did you have any other sources of income?
20 A. Zero.
21 Q. Do you recall approximately how much your -- well,
22 were you renting or did you own your home at the time?
23 A. We owned a home.
24 Q. Do you recall approximately how much your mortgage
25 was?

1 A. 856 at the time.
2 Q. In the summer of 2006 did you have an account at
3 South Bank?
4 A. We did.
5 Q. Was the balance in that account approximately
6 $53,250?
7 A. Not even close.
8 Q. Approximately how much money did have you in South
9 Bank in that time period?
10 A. To be honest with you, depending on what day it was
11 of the month, we got paid on the 1st and 15th, couple hundred
12 bucks.
13 Q. When you say we?
14 A. At the time I was married.
15 Q. And to clarify, that was the home you were living in?
16 A. Yes.
17 Q. And does that signature appear to be your signature?
18 A. It does.
19 Q. Does that signature appear to be your signature?
20 A. It does.
21 Q. And I'm going to ask you a question to clarify
22 something for the typed record that may not be clear from what
23 we've already said so far.
24 What would you describe your race to be?
25 A. Black or African American.

1 Q. In 2006, where this checkmark says white, would that
2 have been accurate at that time?
3 A. No.
4 Q. Do you recall ever interacting with somebody named
5 Benjamin Budoff?
6 A. No.
7 Q. Do you recall having a telephone interview with
8 somebody named Benjamin Budoff?
9 A. No.
10 Q. And does that appear to be your signature on this
11 page?
12 A. Yes.
13 MR. MORRIS: Your Honor, I'm going to move to admit
14 Government's Exhibit 18B pursuant to the stipulation as having
15 been part of the lender file.
17 MR. TEDMON: Just for clarification, is this B --
18 like through B7?
19 MR. SAMUEL: I'm unclear as to what exhibit we're
20 talking about.
21 THE COURT: 18B. I believe it was added after the
22 initial list was prepared.
23 MR. TEDMON: I have the document, Your Honor. It's
24 just there's seven pages to it. If it's all seven pages --
25 THE COURT: Is it all pages, Mr. Morris?

1 MR. MORRIS: Let me double check. It would be all
2 pages, Your Honor.
3 THE COURT: All right. 18-B1 through 7.
7 MR. GREINER: The objection is the variance. Subject
8 to that, no objection.
11 THE COURT: All right. Overruled. The exhibit is
12 admitted. You may display.
13 (Government Exhibit 18B, Uniform Residential Loan
14 Application in the name of Armil Rucker for property at 115
15 Bedford Street, West Bridgewater, MA admitted into evidence.)
16 Q. BY MR. MORRIS: Same question. Does that appear to
18 A. Yes.
19 Q. And to be clear, we're still discussing the same
20 address --
21 A. Yes.
22 Q. -- is that correct?
23 Did you have any significant change in your income
24 between May and August of 2006?
25 A. No.

1 Q. Still accurate to say that you are not making $6,800
2 in August of '06?
4 Q. Do you recall having an account at Bank of Oklahoma,
5 a checking or savings account at Bank of Oklahoma?
6 A. No.
7 Q. Do you recall having $43,000 in an account at Bank of
8 Oklahoma?
9 A. No.
10 Q. And would it be accurate to say that your prior
11 testimony about your general account balance in May of '06, had
12 that changed significantly by August of '06?
13 A. No.
14 Q. Now, we've spoken about 920 Northwest 19th Street. I
15 would ask if you recognize this address 106 Chapman Street,
16 Willimantic, Connecticut?
17 A. I do.
19 A. It's another address in which I kind of found out
20 that I owned.
21 Q. When did find out that you owned that property?
22 A. This one probably after I came home in March of 2007.
23 Q. So in 2006 it was not your knowledge -- in August of
24 2006 it was not your knowledge you that owned that house?
25 A. No.

2 A. Yes.
3 Q. Do you recall having a telephone interview related to
4 a loan application in August of '06?
5 A. No.
6 Q. And to be clear -- I won't belabor the point.
7 You've mentioned two properties, Massachusetts
8 property and Connecticut property. Did you become aware of any
9 other properties that you owned?
10 A. Yes.
11 Q. How many?
12 A. Just one additional.
13 Q. Where was that located?
14 A. I believe in Illinois.
15 Q. Do you recall receiving your $5,000 payment for
16 owning the houses?
17 A. No.
18 Q. And do you have any awareness of where these -- of
19 what has happened, if anything, to these properties since 2007?
20 A. Yes. Two of them were foreclosed on. The third
21 property was in foreclosure status. But because the bank at
22 the time had a military service group, they basically waived
23 the foreclosure because they weren't able to get ahold of me to
24 sign a waiver statement. So that one's still lingering.
25 Q. Is that still in your name?

1 A. Yes.
3 THE COURT: All right. Cross-examination?
4 Mr. Tedmon?
7 MR. SAMUEL: Just a couple.
8 CROSS-EXAMINATION
9 BY MR. SAMUEL:
10 Q. Let's start with 18A2. Bring that up, please. First
11 page. I'm having a hard time seeing it too.
12 Do you see right to the left of that arrow, this form
13 on A2, does that reflect that this is an investment property?
14 A. Yes, it does.
15 Q. And you indicated that although you would not have
16 listed it in this fashion, you were in fact a staff sergeant?
17 A. I was.
18 Q. E5?
19 A. Yes, sir.
20 Q. Supervisor?
21 A. Yes, sir.
22 Q. All right. And page five.
23 And you see the name of the interviewer is
24 Mr. Benjamin Budoff, and I believe you testified that you did
25 not get interviewed by anybody by the name of Benjamin Budoff,

1 is that correct?
3 Q. Actually, there is a signature location below and a
4 date below that, is that correct?
6 Q. And that's unsigned, is that correct?
8 Q. All right. Thank you. 18B, page one.
9 Once again, this document, if you look to the bottom
10 right -- the arrow is in the wrong spot. Let me just move
11 that.
12 Right there. That was a loan for investment, is that
13 correct?
15 Q. All right. And if you would go to page four, please.
16 And, actually, I'd like to go to this section right here.
17 And this is a set of questions dealing with,
18 actually, your declaration correct? Can you see that?
19 A. Yes, sir. I can see.
20 Q. And in a portion of that, number H, "is any part of
21 the down payment borrowed," do you see that?
22 A. I do.
23 Q. And there is an indication of that no part of it's
24 borrowed, correct?
25 A. It looks that way. I can't see the top, but I

1 believe that's the note.
2 Q. Did you receive any money in advance of purchasing
3 these properties from any agency whatsoever?
4 A. No.
5 Q. And just one more question. I'm going to go down if
6 you would. Expand it out. And go down to the signature
7 section again.
8 And in that section it reflects that you or somebody
9 claimed they interviewed you, and there is a signature, and did
10 you ever get interviewed by Charles Head?
11 A. No.
12 Q. The only people that you dealt with was either Tua
13 Vang, correct?
15 Q. And Tua Vang was simply working with you regarding
16 the paperwork, is that correct?
18 Q. You also dealt with Lisa Vang, did you not?
19 A. I did one time speak with Lisa Vang.
20 Q. But the representations as to what was involved with
21 the buyer's position, as you were, was made by Mr. Brotemarkle?
23 Q. And was it Mr. Brotemarkle who provided you with the
24 documents you needed to sign for verification of employment,
25 etcetera, etcetera?

1 A. I'm not actually sure who provided the documents. I
2 just know that he set up for the documents to be sent, and then
3 I spoke with Tua Vang from there on.
4 Q. In terms of the information that was supplied on this
5 document, let's just say your personal address, that was given
6 to Mr. Brotemarkle?
7 A. It was actually provided on the paperwork that they
8 sent to me.
9 Q. So there is some paperwork that you completed?
10 A. Uh-huh.
11 Q. Provided them with various items including your
12 Social Security number?
14 Q. Did you ever provide Mr. Brotemarkle with any
15 information that appeared on these -- what they characterize as
16 1003s, these are the loan forms?
17 A. Not that I can remember. Not over the phone.
18 Q. But at any rate, you never met nor did you know
19 Benjamin Budoff, is that correct?
22 THE COURT: Mr. Greiner.
24 BY MR. GREINER:
25 Q. Thank you, Judge. Good afternoon, sir.

1 A. Good afternoon, sir.
2 Q. I want to make sure I understand. When you received
3 -- did you receive documents from either Keith or Tua or Lisa
4 Vang?
5 A. Yes, sir, I did.
6 Q. And was that the uniform residential loan application
7 that you received?
8 A. Not to my recollection. Not sure if it was or not.
9 Q. Let me try to help you. Could we have 18B? Is that
10 in? 18B.
11 18B. This is a uniform residential loan application,
12 and you see your signature on the left-hand side, correct?
13 A. Yes.
14 Q. All right. Did you receive a document like this from
15 Keith or Tua or Lisa?
16 A. The documents I had did not state a loan like in
17 progress, no amount for a loan, no interest rate.
18 Q. Not asking that. You're way too far ahead of me.
19 All I'm asking is, did you receive a document
20 entitled Uniform Loan Application, did you receive this
21 document?
22 A. Not that I can remember. As far as what it was
23 titled, I can't remember what it was titled.
24 Q. But your signature is on this document, right?

1 Q. Do you remember receiving that document at some point
2 in time?
3 A. No.
4 Q. Because the question is, if you didn't receive it,
5 then -- and that's your signature --
6 So my question is, if that's your signature and you
7 didn't receive it, how did you sign it?
8 A. It could be signed in many ways, but I can honestly
9 tell you that I received documentation that I did sign, and I
10 sent back.
11 Q. Okay. The documentation that you -- let's take it
12 that way.
13 The documentation that you received and signed, was
14 there any information on the document?
15 A. There was information on the document.
16 Q. All right. Because the Government has gone over and
17 talked to you about bank accounts, and money in bank accounts,
18 and housing addresses, and those things, do you remember that?
19 A. I do.
20 Q. Was that information on the documents that you
21 received?
22 A. No.
23 Q. Okay. So other than basic information, where you
24 lived, your phone number, Social Security number, date of
25 birth, is that the type of information that was on the

1 documents you that received?
2 A. No. I filled out where I lived. I filled out my
3 bank account information, my social, my duty position.
4 Q. That was more of an information sheet that you got
5 from either Keith, or Lisa, or Tua, correct?
7 Q. Do you ever remember receiving a uniform residential
8 loan application?
9 A. No.
10 Q. So you don't have any explanation how your signature
11 got on this document?
12 A. No. Not as -- not as it is.
13 Q. But that is your signature?
15 THE COURT: Can you finish up in a few minutes?
16 MR. GREINER: I can.
17 THE COURT: Let's do that. Then we'll take our
18 break.
19 Q. BY MR. GREINER: Did you ever see a completed uniform
20 loan application with your name on it?
21 A. No.
22 Q. Do you know that Keith filled out your loan
23 application, Keith Brotemarkle?
24 A. No.
25 Q. Do you know that Tua Vang filled out your uniform

1 loan application?
2 A. No.
3 Q. All right. Let me change subjects. You've never
4 spoken to an individual named Domonic, correct?
6 Q. You've never ever met a person named Domonic,
7 correct?
9 Q. You've never made any type of business arrangements
10 with an individual named Domonic, correct?
12 Q. And you've never e-mailed a person named Domonic,
13 correct?
15 Q. And you don't have any -- back in 2005 and '06, you
16 never had any type of business relationship at all with anybody
17 named Domonic, correct?
18 A. As far as I know, that is correct.
19 Q. All right. And you indicated to the ladies and
20 gentlemen of the jury that you bought three properties, did I
21 hear that correct?
22 A. I stated that I found out that three properties had
23 been bought in my name, that's correct.
24 Q. And those three properties you found out you were the
25 owner of, correct?

2 Q. And you understood that at the end of 12 months that
3 you were going to get rid of those properties, some way,
4 somehow, correct?
5 A. It was my understanding that once I had purchased
6 some properties, that at the end of 12 months that those
7 properties would be sold back to the individuals living in the
8 property at the time or to another buyer that was pre setup
9 prior to me actually purchasing.
10 Q. And that was your understanding of the contract that
11 you entered into with Keith Brotemarkle, correct?
12 A. That is my understanding of the contract that I would
13 have entered into with any of the three. That is correct.
14 Q. But that's the understanding that you had with Keith
15 Brotemarkle, correct?
16 A. Not necessarily.
17 Q. Well, he's the one that told you about the program,
18 correct?
19 A. That is correct. He did -- we did speak about the
20 program. I honestly cannot tell you how far we went before I
21 was basically handed off to Tua Vang.
22 Q. So between Keith Brotemarkle and Tua Vang, that's
23 what you understood about getting rid of the property at the
24 end of 12 months, true?
25 A. That is true.

1 Q. And at the end of 12 months, you wouldn't have any
2 hesitation getting rid of the property because you didn't want
3 it, right?
5 MR. GREINER: That's good. Thank you, Judge.
6 THE COURT: All right. Let's go ahead and take our
7 break for the afternoon. During that break, which would be a
8 15-minute break, please remember all my admonitions. Don't
9 discuss the case. Don't think about its conclusion. If anyone
10 attempts to contact you, let me know. Don't do any research of
11 any kind. Have a good break. We will see you in 15 minutes.
12 (Jury out.)
13 THE COURT: You may be seated. You may step down.
14 Please be back in 15 minutes in your chair.
15 Let's talk briefly about where we are. I just want
16 to address two things now. I think we can push the others off
17 until 4:30 p.m. and also ask the jury to come in at 9:00
18 tomorrow morning so we have time to address some of the
19 outstanding issues.
20 But I don't think we need Mr. Wiley today yet. My
21 suggestion is that we let him go, tell him to be available for
22 any phone call instructions from the Government this evening.
23 My suggestion is that I ask questions of Ms. Yang at 4:30.
24 MR. ANDERSON: Your Honor, Mr. Wiley lives not in the
25 area. Would the Court want him to spend the night in

1 Sacramento, or fly home with the understanding that it might
2 take a day or two to get him back up here.
3 THE COURT: I'm not going to micro manage. Does the
4 defense have a position? We're not close to this yet, but
5 either the Court can give an instruction or there is a chance
6 -- I don't know yet -- that I would let defense recall him and
7 cross-examine him.
8 Is there any reason we need him to be available
9 tomorrow at this point based on what you've heard?
10 MR. TEDMON: Well, we haven't heard from Ms. Yang
11 yet. That's my concern. And it may be necessary to have him
12 available depending on what she says.
13 THE COURT: But tomorrow?
14 MR. ANDERSON: Your Honor, one thing we could do. If
15 we're planning to put Ms. Yang on this evening, we can hold
16 Mr. Wiley for another hour and a half, two hours. It's an
17 inconvenience to him, but we should know by the time Ms. Yang
18 has come into court after we finish with the jury today.
19 THE COURT: At least have more information. All
20 right. If he can wait until 5:00 then we'll have more
21 information.
22 On the Helstrom/Newcomb, I have had a chance to
23 review. You're objecting to them being called as experts. Do
24 I have that right?
25 MR. GREINER: Well, I'm objecting to them being

1 called at all, first of all.
2 THE COURT: Isn't the gist of your argument that the
3 Government really wants them on as experts?
4 MR. GREINER: Well, Newcomb can't be on the stand for
5 any purpose. He can't be an expert. He can't be a lay
6 witness.
7 THE COURT: He's on the witness list.
8 MR. GREINER: It doesn't matter if he's on the
9 witness list. He has to legally be a witness. He's not a lay
10 witness. He didn't perceive anything. He didn't work on any
11 of the files. He was a paralegal at the time this all came
12 down. And so he has no information regarding anything that's
13 relevant in this case.
14 THE COURT: One statement says he reviewed loan files
15 of Kevin George, Daniel Castillo and Kerry Budoff.
16 MR. GREINER: Fine. He can review them all he wants,
17 but at the time he was working he was a paralegal, and he
18 didn't have any underwriting authority, or wasn't working as an
19 underwriter.
20 People can review anything they want. That doesn't
21 make them be a witness, Judge. He's a lay witness. He can't
22 review documents and come in and say, look, I reviewed these
23 documents, and, gosh, I think these are terrible things going
24 on in these documents.
25 THE COURT: There is no potential for percipient

1 testimony?
2 MR. GREINER: Percipient of what? He reviewed
3 documents. He wasn't around at the time.
4 THE COURT: To cut to the chase, the Government is
5 not calling these witnesses as experts.
6 MR. ANDERSON: Right. They are not going to opine
7 that there was fraud or anything like that. Not offering a
8 final opinion. Not experts.
9 THE COURT: Not going to respond to hypothetical
10 questions. They would be called for -- to the extent they have
11 any percipient witness testimony.
12 MR. ANDERSON: Exactly. Mr. Newcomb worked for
13 Argent at the time. He was a paralegal, it's true, but he was
14 familiar with the underwriting guidelines through his job
15 duties at Argent. He also knew the basic structure of the
16 organization and how the loan process worked.
17 He's one of the very few employees of Argent that
18 remains, but he's familiar enough to testify as a lay witness
19 about the basics. He obviously cannot opine that these loan
20 applications were fraudulent. He can only say what the
21 underwriting guidelines thought was important.
22 THE COURT: Well, I'm not going to keep them off the
23 stand based on the information in the statements that they
24 actually did look at files that have some connection to this
25 case. But I will consider objections.

1 MR. GREINER: Well, I'm just trying to understand,
2 Judge.
3 If a person off of the street, that wasn't an
4 underwriter, happened to work for a company, and the Government
5 pulls them off, and says I want you to take a look at these
6 documents, and then I want you to come in and testify --
7 THE COURT: The Government can lay a foundation, and
8 then we can go from there. They are not be called as experts.
9 So that is clear. They will not be allowed to opine or provide
10 anything that can be construed as expert testimony. They can
11 lay a foundation. And maybe that's all the further they will
12 get.
13 MR. GREINER: The problem is these witnesses have
14 testified all across the country, Judge, from Ohio, to Arizona,
15 to California, and they've testified as experts without the
16 Government being challenged and having an objection made that
17 they are experts.
18 THE COURT: Well, you've made the objection. I would
19 sustain that objection. They are not going to be allowed to
20 testify as experts. And I'm construing that broadly.
21 I mean, some of what's in their statements they will
22 not be allowed to testify to. There is no question about that.
23 But the statements also say they looked at files in this case.
24 They had some role. And so if there's a foundation that allows
25 them to talk about what happened with those files, there's

1 something they might testify to.
2 MR. SAMUEL: At least with Hellstrom I've reviewed at
3 least one transcript, and the Government spent about the better
4 part of eight or nine pages qualifying this guy as an expert,
5 never asked to have him qualified as an expert. This is a
6 local case.
7 That, in fact, they did start to propound and they
8 did ask hypothetical questions there. They did ask for
9 opinions based upon information that was reviewed that required
10 them to have some expertise in order to render that opinion.
11 THE COURT: I can understand the concern based on the
12 information in the statements. But again, the objection as to
13 expert testimony is sustained, and I will police that.
14 You may make objections if you think they are going
15 there. It's because there's reference to actual files that may
16 have some relevance to this case that I'm not going to keep
17 them off the stand. But I'm not going to allow the laying of
18 the foundation for expert testimony either.
19 MR. GREINER: Here's the other issue that's going to
20 come up, Judge -- at least it's come in all the transcripts
21 that I reviewed of both Hellstrom and of Newcomb. They refer
22 to guidelines. And I don't have any -- I made a motion in
23 limine. Government attacked me. And the Court ruled against
24 me. I sent a request prior to trial. Give me any documents if
25 they are experts.

1 And they are going to testify as to guidelines, and I
2 have nothing to cross them on about guidelines. And so I'm
3 going to ask, if the Court allows them to say things like
4 there's guidelines, I'm going to ask the Court to have them
5 produce those guidelines so I can effectively cross-examine
6 them.
7 MR. SAMUEL: And I think they need to be guidelines
8 as it relates to the specific loan documents they are looking
9 at, and I don't think they can do that.
10 THE COURT: Okay. I'm alerted to issues that may be
11 behind objections.
12 MR. TEDMON: I join in the objections and the
13 comments of defense counsel, for the record.
14 THE COURT: It may be that there is very little
15 testimony the Government can elicit from those witnesses, but I
16 have a sense of what you're all thinking.
17 MR. ANDERSON: Just to give the Court an idea of
18 where we're going. These witnesses will get up, and they will
19 testify about their job, their experience with the underwriting
20 guidelines, and the loan applications generally, what those
21 different boxes mean, and whether those were important factors
22 under the underwriting guidelines.
23 We do not intend to ask whether or not --
24 THE COURT: Why do you need to elicit information
25 about the guidelines?

1 MR. ANDERSON: Because the guidelines show whether or
2 not -- those show what factors were important to the banks to
3 consider, which would then go to materiality, whether or not
4 the false statements were material.
5 MR. SAMUEL: And that's all an opinion. It has to
6 have a foundation. And it's requesting an opinion, which they
7 don't have the adequate foundation unless they've got the
8 actual guidelines, and, number two, they are percipient to
9 that. They weren't present when the decisions were even being
10 made.
11 THE COURT: What do they have to say about their
12 review of the files? When did they review the files?
13 MR. ANDERSON: We had them review them again today,
14 but they've also previously reviewed the files.
15 THE COURT: Maybe I misunderstood. Did they review
16 them only after the Government sought their review?
17 MR. ANDERSON: That's correct.
18 THE COURT: So they were not involved at the time.
19 MR. ANDERSON: Right. They worked for the lender at
20 the time, so they were familiar with the guidelines at the
21 time. But they didn't specifically handle these particular
22 files. Those employees are long gone.
23 THE COURT: Then I have misunderstood. Maybe, at
24 most, I let the Government make a proffer or create a record
25 with them. I need to hear more arguments on this. There may

1 be more to it than I had realized.
2 Just based on a very quick reviewing of the
3 statements, I saw references to the files relevant in this
4 case. So I had understood that they actually were reviewing
5 those files at the time relevant to this case.
6 MR. ANDERSON: No. The reason we have them look at
7 the files is because, obviously, one, we need to show them
8 mortgage applications as a way of leading the jury through the
9 different types of entries on it and the underwriting
10 guidelines, but, also, two, because to put them up there and
11 not show them the files actually in this case would subject
12 them to a cross-examination of you don't know anything about
13 this case, you haven't seen the files.
14 THE COURT: I'll entertain more argument as to why
15 this isn't a back-door attempt to get expert testimony in. I
16 think that's the issue. So now I understand that. They won't
17 testify before we fully resolve that question.
18 MR. ANDERSON: Okay. Your Honor, the issue then with
19 that is that those are the two witnesses we have available for
20 after the break. We don't have anybody else available at this
21 time.
22 THE COURT: I thought I heard some other names.
23 MR. ANDERSON: You heard Mr. Rucker, who just
24 testified. And then you heard that Mr. Budoff, who we have not
25 had an opportunity to sit down with, who was in transit here,

1 was on his way. I don't know if he has arrived at the airport
2 yet. I don't know.
3 THE COURT: You had said he would be here by a time
4 certain. You had a time in mind. What time?
5 MR. ANDERSON: We did. I think his flight arrived at
6 I think it was 1:15, or at least that was the plan.
7 Our witness coordinator is here, Your Honor, and she
8 informs us that she has not heard that he has arrived yet.
9 MR. SAMUEL: One additional thing, too, Your Honor.
10 THE COURT: Was he subpoenaed for today?
11 MR. ANDERSON: He was subpoenaed earlier. He was
12 subpoenaed for the first day of trial. Put on call by the
13 Government. He's voluntarily -- or he's very compliant with
14 the subpoena. It's just a matter he can't control the flight
15 arrangements. Most of these people are coming from far away.
16 THE COURT: Well, 1:15, that was two hours ago. See
17 if you can round him up.
18 MR. ANDERSON: We're going to try.
19 MR. SAMUEL: One other thing, Your Honor. You asked
20 us to meet and confer about what witnesses were going to be
21 called. Mr. Budoff, who is the witness that they are talking
22 about, Kerry Budoff, was never enumerated in any of the notices
23 to any party.
24 I didn't -- frankly, I mean, lugging all this stuff
25 over, I didn't bring his materials based upon that reliance.

1 THE COURT: Well --
2 MR. ANDERSON: That's true.
3 THE COURT: The parties are directed to meet and
4 confer. They are directed to be able to fill any gap. This is
5 obviously a -- it's a juggling act, but the jury is expecting
6 to be here until 4:30, and we're trying not to waste their
7 time. This is a problem you have to solve hopefully in the
8 next five minutes.
9 (Break taken.)
10 THE COURT: All right. Are we ready for the jury?
11 MR. ANDERSON: Your Honor, with respect to the lender
12 representatives, what we propose is that we put them on subject
13 to a motion to strike. We're confident that their testimony is
14 proper, and that upon reflection the Court will find that it's
15 appropriately taken.
16 THE COURT: So far I have not heard -- what's the
17 proffer, what are they going to say that is not expert
18 testimony, however it's framed?
19 MR. ANDERSON: They are going to come in and say that
20 they worked at the relevant lender at the time period. During
21 that time period, they had job responsibilities through which
22 they were familiar with the structure of the loan approval
23 process, which they will testify about and how that worked at
24 the relevant lender, that they were familiar with the
25 underwriting guidelines and the factors that were considered

1 important under the underwriting guidelines, and they are
2 familiar with the 1003 forms and the information contained on
3 the 1003 forms.
4 We'll walk through the form, and they will talk about
5 the different sections, and whether or not the information
6 contained in those sections was material to whether or not
7 loans were approved.
8 THE COURT: And which documents are we talking about?
9 MR. ANDERSON: It would be 1003s, and I can give
10 specific exhibit numbers for each witness, if you'd like.
11 MR. SAMUEL: It's the opinion about it being material
12 that's the problem.
13 THE COURT: So where is Mr. Budoff?
14 MR. MORRIS: He's not here yet, Your Honor. He's on
15 his way. We're not sure when he's going to be here.
16 THE COURT: All right. And does anyone else -- we
17 finished the cross-exam of Mr. Rucker, correct?
18 MR. GREINER: I actually have two short questions for
19 him.
20 THE COURT: All right. And were you cross-examining?
22 THE COURT: All right. Well, let's hope he gets here
23 by the time we finish with Mr. Greiner and there is any
24 redirect.
25 I'm going to have the jury come in at 9:00 tomorrow,

1 and if you want to have these gentlemen here we might do a
2 trial run. I'm going to think about what you're saying. But,
3 again, I've just -- you know, it may have been belated, but it
4 appears Mr. Greiner got some documents, granted, last Thursday,
5 but I have not had a chance to fully consider the arguments.
6 And I'm not going to put these folks on subject to a motion to
7 strike.
8 So I'll read Mr. Greiner's brief more closely this
9 evening. I'll consider the Government's arguments. I'll at
10 least allow the Government to make a proffer.
11 MR. ANDERSON: Your Honor, could I give a brief
12 statement regarding those things that Mr. Greiner got?
13 THE COURT: You can at 4:30. We're not going to
14 further delay the jury right now. So let's get Mr. Rucker back
15 on the stand.
16 MR. TEDMON: Your Honor, could I ask a procedural
17 question? If Kerry Budoff gets here and by some chance that
18 witness finishes before 4:30, but we're going to be closer to
19 4:30 than now, certainly, then would the Court have any problem
20 dismissing the jury a little early today and then we can get
21 Kou Yang on the stand?
22 THE COURT: Not if it's a little bit early.
23 MR. TEDMON: I was just asking because I don't think
24 there are any other witnesses.
25 THE COURT: I understand that.

1 (Jury in.)
3 again, ladies and gentlemen. We've been doing a bit of
4 housekeeping.
5 We're going to finish with Mr. Rucker, and then I
6 believe we'll have one more witness today. We may finish a
7 little bit early so we may let you go.
8 I'm going to ask you at the end of the day -- but I'm
9 going to give you a heads up right now -- if we needed a little
10 more time in the morning and started at 9:00 with you,
11 ultimately let me know when I ask you again is there anyone who
12 could not stay until 2:00 tomorrow? The same number of hours
13 but staying until 2:00.
14 If there is anyone who can't, we won't. But I just
15 wanted to ask. Think about that, and I'll ask you again before
16 we are excused because we're needing a little more housekeeping
17 than I had hoped at this point.
18 So let's continue with Mr. Rucker. Mr. Greiner does
19 have a couple of questions, and then there will be some brief
20 redirect.
22 Good afternoon, sir. In between the time we broke
23 and now, have you talked to anybody about your testimony?
24 A. No, I haven't.
25 Q. Have you seen any documents?

1 A. No.
2 Q. And did you talk to the Government at all?
3 A. No.
4 Q. Do you have any independent recollection of
5 initialing a document entitled Application Addendum that talks
6 about your monthly income?
7 A. No.
8 Q. Let me hold that for a second. Different subject.
9 You were under contract with Funding Foreclosures,
10 Keith Brotemarkle, correct?
11 A. I wouldn't necessarily say I was under contract.
12 Q. Well, you had an agreement with Keith Brotemarkle
13 that if you were going to be a buyer of property, you were to
14 receive $5,000, fair?
16 Q. Okay. So that was the agreement, correct?
17 A. Correct.
18 Q. Okay. And part of that agreement is that you
19 wouldn't hesitate to re-sell your properties back to the
20 tenants of the property at the end of that 12 months, correct?
22 Q. Because you didn't want to get stuck with the
23 property, fair?
24 A. Correct.
25 Q. All right. Now, it is not on my exhibit list, but it

1 can be made part of the amended stipulation. If the Court will
2 give me a half second with the Government to see if that can be
3 worked out?
6 MR. ANDERSON: Your Honor, we'll stipulate that this
7 is a document that came from J.P. Morgan Chase in response to a
8 subpoena.
10 MR. TEDMON: Can I see it?
11 MR. GREINER: And, Judge, I'm going to apologize. I
12 don't know what Domonic McCarns' last exhibit is, but this
13 would then be the next in order, and I'll file the correct
14 document with the Court.
15 THE COURT: I'm showing DM-W.
16 MR. GREINER: DM-W.
17 THE COURT: So it would be X.
18 MR. GREINER: DM-X. Thank you, Judge.
19 MR. TEDMON: That's fine, Your Honor.
21 THE COURT: Then DM-X is admitted as stipulated.
22 (Defendants' Exhibit DM-X, Application – Addendum
23 Borrower Certificate admitted into evidence.)
24 Q. BY MR. GREINER: Do you see a document on the screen,
25 sir?

1 A. I do.
2 Q. And --
3 MR. ANDERSON: That's highlighted.
4 (Mr. Greiner takes document off screen.)
5 MR. ANDERSON: Your Honor, let's amend the
6 stipulation to say we agree that that's a document from J.P.
7 Morgan Chase, but the highlighting to appears to be
8 Mr. Greiner's.
9 THE COURT: Agreed?
10 MR. GREINER: Agreed. And what I can do, I can put
11 in a non-highlighted document so the record will be clear. And
12 so I apologize.
13 THE COURT: Any problem with the highlighting?
14 MR. ANDERSON: No, Your Honor. I just want to make
15 it clear that that's not from the file.
16 THE COURT: Agreed? Mr. Tedmon?
17 MR. TEDMON: Yes.
19 MR. SAMUEL: Yes.
20 THE COURT: You heard all that, that the highlighting
21 is Mr. Greiner's, not part of the document. What you will
22 ultimately have will be an unhighlighted copy.
23 Q. BY MR. GREINER: Thank you, Judge. Thank the
24 Government.
25 Sir, do you see the document that's in front of you

1 that's now DM-X?
2 A. I do.
3 Q. Okay. And do you recognize in the middle of the
4 document where it says "initials," is that your initial there?
5 A. That would be.
6 Q. Below that do you see that being your initial?
7 A. Yes.
8 Q. Is that your signature where it says "borrower's
9 signature"?
10 A. Looks like my signature.
11 Q. And the date July 12, '06, would that be written by
12 you?
13 A. Military date.
14 Q. Correct. And where your first set of initials are it
15 says "my monthly income is $6,800," and you initialed that,
16 correct?
17 A. I'm going to say it's my initial, but I don't know if
18 I would have initialed to $6,800.
19 Q. Let me ask you this, do you have a recollection of
20 ever seeing this document?
21 A. No.
22 Q. Okay. Do you have a -- can you explain to the ladies
23 and gentlemen of the jury how your initials and signature and
24 date would have gotten on this document if you had never seen
25 it?

1 A. Someone else could have put it on there.
2 Q. But that's your signature you said?
3 A. Looks like my signature. Also my first name is
4 missing under borrower's name.
5 Q. Where the signature is?
6 A. At the top. Somebody wrote that in as well.
7 Q. You're talking way up here, right?
8 A. Correct.
9 Q. Okay. That's not your handwriting at the top where
10 it says "borrower's name," correct?
12 Q. But I'm talking about the signature down at the
13 bottom, that is, that you're telling the ladies and gentlemen
14 of the jury, your signature, true?
15 A. It looks like my signature.
16 MR. GREINER: Okay. Thank you, Judge.
17 THE COURT: All right. Any redirect?
22 MR. SAMUEL: Yes.
23 THE COURT: All right. You may step down, sir. You
24 are excused. All right. Is the Government ready with its next
25 witness?

1 MR. MORRIS: The United States calls Kerry Budoff.
9 THE WITNESS: Kerry Budoff, K-e-r-r-y, B-u-d-o-f-f.
11 KERRY BUDOFF,
16 BY MR. MORRIS:
17 Q. Mr. Budoff, where do you live?
18 A. Oceanside, California.
19 Q. And what line of work are you in?
20 A. I do maintenance repair for Carl's Jr. restaurants.
21 Q. How long have you been doing that?
22 A. 23 years, 24 years.
23 Q. Are you familiar with the person named Benjamin
24 Budoff?
25 A. Yes.

1 Q. How are you familiar with him?
2 A. My brother.
3 THE COURT: Wait for him for finish the question
4 before you answer so that we can follow along.
5 Q. BY MR. MORRIS: And just to clarify, how is that
6 you're familiar with Benjamin Budoff?
7 A. He's my brother.
8 Q. I'm going to ask you to think back to the 2006
9 timeframe. In that year did you become involved in some real
10 estate transactions?
11 A. Yes.
12 Q. How did you get involved in those transactions?
13 A. Working with my brother. Not exactly sure what
14 you're asking, but yeah.
15 Q. Okay. So did you approach your brother about this or
16 did he approach you about it?
17 A. It was a matter of I had asked him what he was doing
18 because he tends to go from job to job, and he introduced me to
19 it, and eventually I got involved.
20 Q. And so did have you conversations with your brother
21 about this?
22 A. Yes.
23 Q. Okay. What did your brother tell you this program or
24 these transactions were, what did you learn from your brother
25 prior to getting involved with it?

1 A. This was an opportunity --
2 MR. GREINER: Objection, Judge, 801(d)(2)(E).
5 A. This was an opportunity to help out people that were
6 in a similar situation that I was in where they were probably
7 going to lose their houses.
8 Q. I take it then from your answer that at that time
9 period you had some concerns about losing your house?
11 Q. Why is that?
12 A. I had just gone through a divorce, and the new
13 mortgage payments were above what I could pay, and then I
14 couldn't resell the house because that was when the market
15 crashed.
16 Q. Okay. And did you have any conversations about your
17 involvement in the program?
18 A. Yes.
19 Q. Okay. And what was your understanding of what your
20 involvement in the program would be?
21 A. My involvement was to take title of the properties.
22 Q. And would you have received a benefit for that?
23 A. Yes.
24 Q. What was your understanding of the benefit that you
25 would receive?

1 A. $5,000.
2 Q. Did you have any questions for your brother about the
3 program?
4 A. Yes, I did.
5 Q. And what were the questions that you asked your
6 brother?
7 A. One of them was --
8 MR. SAMUEL: It's compound, Your Honor. Ask it be
9 asked separately.
11 Q. BY MR. MORRIS: If we can start with one. If you can
12 think one of the questions that you asked your brother?
13 A. Like my concerns?
14 My first concern was that the people's who houses we
15 were taking title for were not going to be put further into
16 debt.
17 Q. And why was that a concern for you?
18 A. Because that was the situation I was in.
19 Q. And what, if anything, other concerns did you have?
20 A. That -- oh, I would not become the property manager.
21 Q. And why was that a concern?
22 A. I wouldn't feel comfortable evicting anybody.
23 Q. Did you have any other concerns other than those two?
24 A. Just the legitimacy of the program.
25 Q. And what did you ask about the legitimacy of the

1 program?
2 A. I wanted to know how it worked.
3 Q. Any other concerns that you had?
5 Q. Let's go one at a time then.
6 In response to your question or concern that the
7 homeowners would not go any further into debt, did your brother
8 respond?
9 A. Yes, but -- yes.
10 Q. Do you recall what his response was?
11 A. Whatever it was, it was satisfying to me. It wasn't
12 a significant amount of debt. It was just enough to get the
13 title transferred.
14 Q. And in response to your concern about not becoming a
15 property manager, did your --
16 A. The organization --
17 Q. Let's me finish -- - did your brother have a response
18 to that?
19 A. Yes.
20 Q. And what was your brother's response to that concern?
21 A. That there were people in the organization that would
22 handle that.
23 Q. And in response to your third concern about the
24 legitimacy of the program, did your brother respond to that
25 concern?

1 A. Yes.
2 Q. And what was his response?
3 A. That this program had been ongoing and had been
4 successful in several cases -- or at least one case.
5 Q. Are there any other details of your understanding of
6 the program that we haven't covered in your testimony today?
7 A. Not right off the top of my head.
8 Q. Do you recall approximately how much money you were
9 making in 2006?
10 MR. TEDMON: Objection. Vague as to time. Can we
11 get a month or a more specific date?
13 MR. MORRIS: Withdraw that.
14 Q. BY MR. MORRIS: Let's go to --
15 If it makes a difference, can we start in early 2006
16 -- beginning of 2006 do you have any recollection?
17 A. Not exactly.
18 Q. What's your best estimate?
19 A. I would say around 23 an hour, so 4,600 a month.
20 Q. 23 an hour, you said?
21 A. Maybe more, yeah. Just based on what I'm making now.
22 Q. And then throughout the course of 2006 did you make
23 more?
24 A. At the most another 70 cents an hour.
25 Q. So throughout all of 2006, 23 to 24 dollars an

1 hour is about --
2 A. Correct.
3 Q. Did you have any sources of income -- beginning of
4 2006 did you have any other sources of income other than your
5 work for Carl's Jr.?
6 A. No.
7 Q. And leaving aside these transactions, by the end of
8 2006 did you have any other sources of income?
9 A. No.
10 Q. Having asked your questions and your concerns being
11 addressed, did you agree to take part in the transactions?
12 A. Yes.
13 Q. To the best of your recollection, what happened next?
14 A. Just the process of doing home loans.
15 Q. Okay. If could you describe that process then for
16 the jury?
17 A. I was contacted that to expect --
18 Q. If could I stop you. If you can recall, who
19 contacted you?
20 A. No.
21 Q. Sorry to interrupt. So you were contacted?
22 A. To expect the loan papers and to expect a notary.
23 Q. Okay. And did a notary arrive?
24 A. Yes.
25 Q. And did the notary bring loan papers?

1 A. Yeah, the notary brought the loan papers.
2 Q. Okay. And were those loan papers blank or were they
3 filled out?
4 A. They were filled out.
5 Q. And were you expected to do anything with the papers?
6 A. Sign and initial.
7 Q. And can you describe the signing and initialling
8 process?
9 A. Everything was, you know, marked out "sign here,"
10 "initial here."
11 Q. And was it marked on the papers where to initial or
12 was the notary telling you where to initial?
13 A. That, I don't remember.
14 Q. Do you recall approximately how long the process took
15 to sign and initial those papers?
16 A. Half an hour.
17 Q. All right. And then after that process of signing
18 the papers, what's your next recollection of what happened?
19 MR. TEDMON: Your Honor, could we get a timeframe
20 here? I mean, there may be multiple transactions. I think we
21 need to know exactly what we're talking about.
22 THE COURT: The answer shall stand, but, Mr. Morris,
23 with follow-up questions can you clarify? And of course,
24 you'll have a chance to cross-examine, Mr. Tedmon.
25 Q. BY MR. MORRIS: Was there more than one transaction

1 that you were involved with?
2 A. Yes.
3 Q. And the description that you just gave, was it
4 different for the later transactions?
5 A. As far as I remember, they were all the same.
6 Q. And then after that signing process, what's your next
7 memory of what would happen?
8 A. It's receiving the check.
9 Q. Okay. And that was a check for how much?
10 A. 5,000.
11 MR. MORRIS: Your Honor, I'm going to ask to admit
12 Government's Exhibit 25A1 pursuant to the stipulation. I'll
13 clarify that that is a document recovered during the search
14 warrant in 2006.
15 THE COURT: Any objection? Mr. Tedmon? 25A1.
18 MR. GREINER: The variance objection, Judge. Other
19 than that, no.
21 THE COURT: All right. 25A1 is admitted over that
22 objection.
24 and Urban Development Settlement Statement for property at 336
25 Henry Avenue, Pueblo, CO dated 4/19/2006 admitted into

1 evidence.)
2 Q. BY MR. MORRIS: Do you recognize the address 306
3 (sic) Henry Avenue, Pueblo, Colorado?
4 A. No.
5 Q. Do you recognize the address 600 Monica Drive,
6 Oceanside, California?
7 A. Yes. It's incorrect, but yes.
8 Q. How is that incorrect?
9 A. It should be Monica Circle.
10 Q. Monica Circle. How do you recognize that address?
11 A. That was my former residence.
12 MR. MORRIS: Take that down.
13 Your Honor, the Government's going to move to admit
14 Exhibit 25B1 pursuant to stipulation as a document found in
15 execution of the search warrant.
22 THE COURT: 25B1 is admitted.
25 66th Avenue, Landover Hills, MD 5/10/2006 admitted into

1 evidence.)
2 Q. BY MR. MORRIS: Do you recognize the address 4841
3 66th Avenue, Landover Hills, Maryland?
4 A. No.
5 Q. Do you recognize the name Ralph C. Blunt?
6 A. No.
7 Q. Going to focus you into the timeframe about May of
8 2006, if we could.
9 A. Okay.
10 Q. And was there any significant change in your income
11 between May of 2006 and what you previously testified about the
12 beginning of 2006?
13 A. Apart from the 5,000?
14 Q. Right.
16 Q. If we could go to Exhibit 25B1, page 12, please.
17 On the screen in front of you does that appear to be
18 your signature?
19 A. Yes.
20 Q. And recognizing that some information has been
21 blacked out here, is that your name?
23 Q. And is that an accurate phone number in the 2006
24 timeframe?
25 A. Yes, it is.

1 Q. And did you have 16 years of schooling in 2006?
2 A. Yes.
3 Q. And is that an accurate name of your employer in
4 2006?
5 A. Yes, it is.
6 Q. If we can go to the next page, please. Were you
7 making $9,100 a month in 2006?
8 A. No.
9 Q. Did you own or rent the house on Monica Circle?
10 A. Owned.
11 Q. Do you recall approximately what your mortgage was?
12 A. After the divorce, no. Before the divorce -- at this
13 time it would have been -- I don't remember exactly.
14 Q. Fair enough. Zoom out.
15 Did you have, to the best of your recollection, an
16 account, a checking or savings account at Wells Fargo Bank in
17 early 2006?
18 A. Yes.
19 Q. Was the balance in that account $12,500?
20 A. No.
21 Q. Do you recall what your bank balance would have been
22 in the first half of 2006?
23 A. Maybe 1,000.
24 Q. Did you have a 401k at Merrill Lynch in early 2006?
25 A. Yes.

1 Q. And do you recall approximately what the balance in
2 that 401k would have been?
3 A. That looks correct.
4 Q. That being $4,000?
5 A. Yes.
7 A. Yes.
8 Q. And can you make out approximately what date was that
9 signature?
10 A. 2-13-06.
11 Q. And does that appear to be your signature?
12 A. Yes.
14 Government's Exhibit 25C1 as being a document recovered in the
15 course of the search warrants pursuant to the stipulation.
16 THE COURT: Is 25C1 a single page?
17 MR. MORRIS: No, Your Honor. It's a multiple-page
18 document, and it's in the stipulation.
19 THE COURT: With that clarification, Mr. Tedmon, any
20 objection?
25 MR. SAMUEL: No.

1 THE COURT: All right. 25C1 is admitted.
2 (Government Exhibit 25C1, U.S. Department of Housing
4 Doyle Road, Matawan, NJ admitted into evidence.)
5 Q. BY MR. MORRIS: And Mr. Budoff, do you recognize the
6 name Rita Gaigano?
7 A. No.
8 Q. Do you recognize the address of 170 Doyle Road,
9 Matawan, New Jersey?
10 A. Yes.
11 Q. How do you recognize this address?
12 A. This address was the one property where someone tried
13 -- where a lawyer representing the owner of the house actually
14 tried to help me fix this problem.
15 Q. What timeframe are you talking about with that
16 testimony?
17 A. Within a year of everything coming apart.
18 Q. We will get back to that then.
19 A. Okay.
20 Q. And so I'm going to ask you to think about the
21 June 2006 timeframe -- actually, the May 2006 timeframe. If we
22 can go forward to 25C1-4.
24 A. Yes.
25 Q. I'm going to ask to you go forward to page seven of

1 the document. Does that appear to be your signature?
2 A. Yes.
3 Q. And what date does it appear to have been signed?
4 A. 5-4-06.
5 Q. So in the May of 2006 timeframe, if we can go back to
6 page -5 in this exhibit.
7 In May of 2006, were you still employed at the same
8 location?
9 A. Yes.
10 Q. In May of 2006 were you making $9,000 a month?
11 A. No.
12 Q. Approximately how much were you making in May of
13 2006?
14 A. Same as before, 23.
15 Q. $23 an hour?
16 A. Yeah.
17 Q. Between February and May of 2006 did you still have
18 the Wells Fargo Bank account?
19 A. Yes.
20 Q. Had the balance increased to $72,500?
21 A. No.
22 Q. Approximately how much money was in the bank in May
23 of 2006?
24 A. That depends -- well, if I had received one of those
25 checks or not. Still the same, about $1,000, otherwise.

1 Q. Even if you had received a $5,000 check, would that
2 have been in that account?
3 A. Yes.
4 Q. Between February and May of 2000, did your 401k
5 increase by $36,000 value?
6 A. No.
7 Q. Do you recall approximately how much was in your 401k
8 in May --
9 A. Around 4,000.
10 Q. Do you recognize the address 7030 Green Street in
11 Philadelphia?
12 A. No.
13 Q. Two pages forward to page -8. Does that the appear
14 to be your signature?
15 A. Yes.
16 Q. Do you recall signing these documents?
17 A. Specifically, no. I recall signing documents.
18 Q. Did the documents that you signed, did they look like
19 these?
20 A. Yes.
21 Q. Do you have any reason to doubt that it's your
22 signature on the pages?
23 A. No, I have no reason to doubt.
24 Q. But to be clear, you just don't have any specific
25 recollection of these documents?

2 MR. MORRIS: Ask to go to Exhibit 13B1?
3 MR. SAMUEL: Sorry? What document?
4 THE COURT: 13B1.
5 MR. MORRIS: I think it is already admitted by our
6 exhibits.
7 THE COURT: It is. How much longer do you think you
8 need?
9 MR. MORRIS: About six more documents and then some
10 wrap-up questions.
11 THE COURT: Just wondering.
12 MR. MORRIS: I'll be through direct before the end of
13 the day, Your Honor.
14 Q. BY MR. MORRIS: Do you recognize the name Jerome
15 Pearlman or Denise Pearlman?
16 A. No.
17 Q. Do you recognize the address 1447 Westmore Place
18 Oceanside, California?
19 A. No.
20 MR. MORRIS: And I'm going to ask to go to 13A5,
21 which I don't think is admitted.
22 THE COURT: That is not yet admitted. Any objection
23 Mr. Tedmon, 13A5?

1 MR. TEDMON: Or Your Honor -- no, no, I don't. Thank
2 you.
4 MR. GREINER: Just one second, Judge. No Judge.
6 MR. SAMUEL: No.
8 (Government Exhibit 13A5, Grant Deed Grantor: Jerome
9 A. Pearlman, Jr. And Denise L. Pearlman Grantee: Kerry L.
10 Budoff Signed and notarized on 5/19/2006 admitted into
11 evidence.)
12 Q. BY MR. MORRIS: Do you recall Jerome Pearlman or
13 Denise Pearlman deeding a house to you around May of 2006?
14 A. No.
15 Q. I'll ask to go back to 13B1, page six, please.
16 And still staying in the May 2006 timeframe, that was
17 still accurate information describing you in May of 2006?
18 A. Yes.
19 Q. Had you had any changes in your employment?
20 A. No.
21 Q. Was your base employment $9,100 in May of 2006?
22 A. No.
23 Q. And to page eight of the exhibit, please. Does that
24 appear to be your signature?
25 A. Yes.

1 Q. And what appears to be the date for the signature?
2 A. 5-16-06.
3 MR. MORRIS: Ask to admit Government's Exhibit 13A7,
4 Your Honor, subject to the stipulation as having been recovered
5 at the site of the search warrant.
6 THE COURT: 13A7. Any objection, Mr. Tedmon?
10 THE COURT: Mr. Samuel or Mr. Budoff?
13 (Government Exhibit 13A7, Letter dated 4/17/2006 from
14 Kerry Budoff to Global Mortgage admitted into evidence.)
16 front of you?
17 A. No.
18 Q. To your recollection have you seen it before?
19 A. No.
20 Q. Does it appear to be your signature?
21 A. No.
22 Q. As in "no, it does not"?
23 A. No, it doesn't.
24 Q. Do you recall having in April of 2006 any kind of a
25 problem with Walmart bills?

1 A. No, I don't remember.
2 MR. MORRIS: I'd ask to admit Government's
3 Exhibit 13A8, which was recovered during the search warrant and
4 is subject to the stipulation.
9 (Government Exhibit 13A8, Letter dated 5/9/2006 from
10 Kerry Budoff to Head Financial Services admitted into
11 evidence.)
12 Q. BY MR. MORRIS: If you could take a moment to review
13 the screen in front of you. Do you recognize this document?
14 A. No.
16 A. No.
17 Q. Do you recall writing a letter about having something
18 late on your credit report on May 9, 2006?
20 MR. MORRIS: May I have another moment, Your Honor?
22 Q. BY MR. MORRIS: I'm going to ask you if you can look
23 behind you, and there's binders of documents. I'm looking for
24 an exhibit marked as Government's exhibit -- blue binder --
25 Government's Exhibit 25D1. Should be a number of binders back

1 there.
2 A. 25?
3 Q. D, as in Delta, 1.
4 A. Okay.
5 Q. Do you recognize that document?
6 A. It's my W-2s.
7 Q. Have you seen that before?
8 A. My -- yeah, I've seen my W-2s.
9 MR. MORRIS: Your Honor, I'd ask to admit
10 Government's Exhibit 25D1 based on that response. Only the
11 first page.
12 THE COURT: Does it need to be displayed to the jury
13 at this point in time even if there is no objection?
14 MR. MORRIS: It doesn't have to. I could do without.
15 THE COURT: Well, I would like to review with you the
16 details of that. Do you have further questions about the
17 exhibit?
18 Q. BY MR. MORRIS: Does that document accurately
19 describe your income in 2006?
20 A. Yes.
21 Q. Other than your employment with that employer and
22 your income from this program, did you have any other income in
23 2006?
24 A. No.
25 Q. Do you recall having any conversations with your

1 brother about these loan applications?
2 A. Yes.
3 Q. Okay. What do you recall about conversations with
4 your brother about these loan applications?
6 THE COURT: Sustained. You may rephrase.
7 Q. BY MR. MORRIS: When is it that you recall -- what do
8 you recall the time period being when you had conversations
9 with your brother about these loan applications?
10 A. Probably the first loan -- first loan.
11 Q. And so based on the ones we looked at today, is that
12 the January to February 2006 timeframe?
13 A. Okay. Yes.
14 Q. And in that timeframe, what's your recollection of
15 the conversation you had with your brother about these loan
16 applications?
17 MR. GREINER: Objection. 801(d)(2)(E).
19 THE WITNESS: The amount of income and I think the
20 first loan had me as married.
21 Q. BY MR. MORRIS: Income and what?
22 A. I think the first loan had me as married.
23 Q. And what do you recall about your discussion with
24 your brother about the amount of income on the loan
25 application?

1 A. It wasn't accurate to my job.
4 Q. BY MR. MORRIS: And did you bring that information to
5 your brother's attention or did he bring it to your attention?
6 A. No, I would have brought it to his attention.
7 Q. And did your brother respond when you brought that
8 inaccuracy to his attention?
9 A. Yes.
10 Q. What did he say?
14 A. Thank you. The amount, the $5,000 can be factored in
15 and I -- the rest I don't remember exactly.
16 Q. Did you have any subsequent conversations with him
17 about the accuracy of these loan applications?
18 A. No.
19 Q. Do you recall -- again in 2006, do you recall having
20 conversations with your brother about your financial situation?
21 A. Yes.
22 Q. And what do you recall about --
23 A. It was all in general between brothers. It was bad.
24 Q. In other words, you had told him your financial
25 situation was bad?

1 A. Yes.
2 Q. Do you recall what response, if any, he had to that
3 information?
4 A. No, I don't.
5 MR. MORRIS: Can I have a moment, Your Honor? No
6 further questions, Your Honor.
7 THE COURT: All right. Mr. Tedmon, any cross?
9 CROSS-EXAMINATION
10 BY MR. TEDMON:
11 Q. Mr. Budoff, good afternoon.
13 Q. I just want to cover just a couple of documents
14 Mr. Morris went through.
15 If we could have, Your Honor, Exhibit 25B14 on the
16 screen, which has been previously admitted.
17 THE COURT: All right. That may be displayed.
18 MS. KENNEY: There is no 25B.
19 THE COURT: There is a 25B1 series.
20 MR. TEDMON: 25B1-14. Try that. And if we could
21 just expand that bottom section, please.
22 Q. BY MR. TEDMON: Now, Mr. Morris asked you about your
23 signature here, correct?
24 A. Yes.
25 Q. And that is your signature, true?

1 A. It doesn't look like it now.
2 Q. It doesn't look like it now?
3 A. No.
4 Q. Earlier you indicated it did look like it?
5 A. The first name looks correct. The last name doesn't.
6 Q. All right. So that's your recollection right now,
7 that it may not be your signature?
9 Q. All right. And then let's go to interviewer's name,
10 do you see that?
11 A. Yes.
12 Q. Charles Head?
13 A. Yes.
14 Q. There is no signature there underneath his name
15 that's typed in, is there?
17 Q. All right. In fact there is no date, correct?
18 A. Correct.
19 Q. It says "telephone by interview," correct? See that,
20 "completed by interviewer, telephone"?
21 A. Yes, correct.
22 Q. You never had a telephone interview with Charles
23 Head, did you?
24 A. No.
25 Q. You never talked to Charles Head, correct?

1 A. No.
2 Q. Don't even know who Charles Head is, correct?
3 A. No.
4 Q. Let's go to 25C1-7. And if we can expand that bottom
5 section again, please. It's typed in "Charles Head," correct?
6 A. Correct.
7 Q. And there is no signature or date underneath Charles
8 Head's typed-in name, is there?
10 Q. Now, if we can go back up to the signature area,
11 maybe we can expand that just slightly. Thank you.
12 Okay. Now you testified when Mr. Morris asked you
13 that that was your signature, correct?
15 Q. Is that your signature?
16 A. That's definitely my signature.
17 Q. All right. And is this your handwriting 5-4-0-6?
18 A. Yes, it is.
19 Q. And then if we go to Government's 13B1-8. And I'm
20 going to ask you the same basic questions.
21 The name of Charles Head is typed in there, correct?
22 A. Correct.
23 Q. But underneath it there is no signature and no date,
24 correct?
25 A. Correct.

1 Q. And it says "to be completed by interviewer," do you
2 see that, as with the other two?
4 Q. Says "telephone"?
5 A. Correct.
6 Q. That didn't happen, did it, not with Charles Head?
7 A. Right.
8 Q. And then there is a signature "Kerry Budoff"?
9 A. Kerry L. Budoff.
11 A. Yes.
12 Q. And how about the handwriting, 5-16-06, is that your
13 handwriting?
14 A. Yes.
15 MR. TEDMON: Nothing further, Your Honor. Thank you.
18 BY MR. SAMUEL:
19 Q. Afternoon.
21 Q. I represent your brother. Just a couple questions.
22 You were inquisitive about what was going on in Ben's
23 life, and that's what brought up the conversation about
24 properties?

1 Q. So something that you wanted to find out about, is
2 that correct?
3 A. I'm sorry? About his life or about --
4 Q. No. About what he was doing?
5 A. Yes.
6 Q. And he explained to you what he was doing, isn't that
7 right?
9 Q. All right. Did he ever express to you that it was
10 illegal in any fashion?
11 A. No.
12 Q. Have you ever known your brother to do anything
13 illegal?
14 A. No.
15 Q. And do you remember where you were when you had this
16 conversation about what Mr. Budoff was doing in his business?
17 A. No.
18 Q. Did he tell you what position he was working at that
19 time?
20 A. Yes.
21 Q. All right. What did he tell you about what he was
22 doing, what position he was in?
23 A. He was a type of sales position. He was looking for
24 buyers.
25 Q. All right. And was it Mr. Budoff that recruited you

1 to be a buyer?
2 A. No. Not directly.
3 Q. All right. Somebody else did, right?
4 A. It was him, but he didn't say you should do this. He
5 says this is a good idea. If you're interested get back to me.
6 Q. So what happened?
7 A. So I thought about it, and had some more questions,
8 and then I got involved.
9 Q. So you asked more questions to who?
10 A. To Ben.
11 Q. And those are the questions we've talked about?
12 A. Correct.
13 Q. All right. And so when -- let's look at these.
14 Did you know these documents are called 1003s, the
16 A. No, I didn't.
17 Q. You didn't know that. So let's start if you would,
18 then. I'm sorry it's taking a while, Your Honor. I'm normally
19 more organized. Is it 25 -- I'm sorry -- 13B1 page six --
20 well, let's just start with 13B1, and I think we need to go to
21 page six.
22 This is a loan application, can you see that?
23 A. No.
24 Q. Can we expand it? See if we can enlarge it a little
25 bit from the top primarily.

1 All right, this is the application created -- was
2 this created by you?
3 A. No.
4 Q. Who was it created by, if you know?
5 A. I don't know.
6 Q. All right. Was it created for you?
7 A. Yes.
8 Q. All right. And one thing that it reflects is this is
9 a loan application for what? Can you see that, where my blue
10 line is?
11 A. Investment.
12 Q. All right. Were you aware that you were making
13 investments?
14 A. No.
15 Q. All right. What did you think you were doing when
16 you made this loan application?
17 A. Just buying a house.
18 Q. You thought you were buying a house? But you already
19 owned the house, right?
20 A. Correct.
21 Q. So, theoretically, this would have to be an
22 investment until you sold the house, right?
23 A. Okay.
24 Q. All right. You don't understand that?
25 A. No.

1 Q. Let me ask you this. How many houses have you ever
2 bought other than the ones that we're talking about here?
3 A. One.
4 Q. One house in your whole life?
5 A. Yes.
6 Q. How long ago was that?
7 A. Fifteen years ago.
8 Q. So that is sometime before you even got involved with
9 this transaction, correct?
11 Q. All right. And so now let's go down to the next
12 section. If you would, please, just expand that.
13 This information, the home phone, that's accurate,
14 correct?
15 A. It's my cell phone.
16 Q. It's your cell phone. Okay. And the years of
17 school, that was accurate, is that correct?
19 Q. All right. And do you remember who you gave this
20 information to or how that information was obtained?
22 Q. Pardon?
24 Q. You didn't give it to Ben Budoff, did you?
25 A. No.

1 Q. I didn't think so. All right. So now would you go
2 down to the next section.
3 And the location where you were employed, that's
4 accurate, is that correct?
5 A. Correct.
6 Q. And the number of years that you were employed, is
7 that correct? Do you see it up here?
8 A. What year is this document?
9 Q. 16 --
10 A. I started there in '89.
11 Q. Okay. At that point in time, was the position, which
12 is over here, is that correct?
14 Q. And that's a lead tech, region four?
15 A. Correct.
16 Q. And the business phone number, is that correct?
17 A. It's probably one of the many numbers there, yes.
18 Q. Once again, this information you didn't supply to
20 A. No.
21 Q. All right. Let's go on to page two, and let's look
22 at this section here.
23 Now, this reflects a Wells Fargo account, and it
24 reflects a location and an account number, correct?
25 A. Correct.

1 Q. And that account number is correct, is that right?
3 Q. And Mr. Budoff didn't know that account number, did
4 he?
5 A. No.
6 Q. All right. And he didn't know what kind of money
7 specifically that you had in that account, did he?
8 A. No.
9 Q. Did he even know that you had a Wells Fargo account?
11 Q. Did you ever tell him before this application that
12 had you a Wells Fargo account?
14 Q. All right. So let's go on down to the next section.
15 Let me see if I can find this for you.
16 All right. So let's go on to the last page of that
17 document.
18 THE COURT: So you're trying to get 13B1-8? Or
19 what's the last page? Can you use the ELMO? 13B1-10.
20 MR. SAMUEL: I think it's four. I'm a little screwed
21 up here. We were on B1. It was page 8. 13B1-8 is what I was
22 looking for.
23 THE COURT: Well, we can use the ELMO or have
24 Mr. Budoff look at the exhibit in the binder.
25 MR. SAMUEL: It might be quicker to use the LMO.

1 Q. BY MR. SAMUEL: You got that on your screen?
2 A. Yes.
3 Q. And so, actually, I want to go down to the bottom
4 section here. That has your signature?
5 A. Correct.
6 Q. And that is is your signature, is that correct?
8 Q. And that's your handwriting on the 5-16, correct?
10 Q. And this reflects interviewer's name was Charles
11 Head, correct?
12 A. Correct.
13 Q. And you've already testified that you were not
14 phone-interviewed by Charles Head?
16 Q. Were you phone-interviewed by anyone, if you can
17 recall?
18 A. I can't recall.
19 Q. Do you ever recall getting on the phone and talking
20 to anybody about the accuracy of this loan application?
21 A. No.
22 Q. All right. You didn't talk to Ben about it,
23 obviously?
24 A. No.
25 Q. All right. And actually -- all right. Thank you.

1 25B -- are you up and working again? 25B14.
2 MR. TEDMON: B1-14?
3 MR. SAMUEL: I've got it, but I've marked on mine.
4 MR. TEDMON: Here you go.
5 Q. BY MR. SAMUEL: Looking at the bottom, can you see
6 that?
7 A. Yes.
8 Q. And that's the document that you said is not your
9 signature?
11 Q. Correct?
12 And as you view it again, are you satisfied that that
13 is a correct statement, that is not your signature?
15 Q. And you see the date, 2-13-06?
16 A. Yes.
17 Q. Were you even involved with any activity with any
18 loan agencies on 2-13-06?
20 Q. You don't remember.
21 Once again, Mr. Head, you said, did not interview
22 you, right?
24 Q. Once again, Mr. Budoff, your brother, did not
25 interview you, is that correct?

1 A. Correct.
2 Q. Did you know anybody or did you deal with anyone
3 else --
4 Well, let me ask you. What agency were you dealing
5 with when you made these loan applications, if you know?
6 A. I don't know.
7 Q. Do you recall any agency called Creative Loans?
8 A. No.
9 Q. So you don't even know what agency you were involved
10 with?
11 A. I don't recall what agency.
12 Q. That's fine. Do you recall talking to anybody over
13 the phone?
14 A. I remember having a conversation with a woman.
15 Q. With a woman?
16 A. Okay.
17 Q. And do you have any recollection as to her name?
18 A. No.
19 Q. If I were to mention Kou Yang, would that be a
20 familiar name?
21 A. No.
22 Q. Lisa Vang, would that be a familiar name?
23 A. No.
24 Q. Tua Vang, would that be familiar?
25 A. No.

1 Q. All right.
2 THE COURT: Do you have more questions, Mr. Samuel?
3 MR. SAMUEL: I do.
4 THE COURT: How much longer do you have?
5 MR. SAMUEL: I'm uncertain, Your Honor, to be quite
6 honest with you.
7 THE COURT: I think we should break for the evening.
8 You're at a breaking point. Thank goodness for old fashioned
9 technology, and we can run to almost to 4:30 p.m.
10 There is no pressure here. I'm trying to understand
11 if we can use the same amount of time tomorrow even if we have
12 you show up at 9:00. Is there anyone who could not go until
13 2:00 tomorrow? Any one of you?
14 All right. So you'd be willing to go until 2:00.
15 Let's plan on that, if we can fill that time. We'll start at
16 9:00, and I'll tell the parties to assume that we'll go until
17 2:00, and we'll have the equivalent of the full day, still take
18 the two breaks, and be done by 2:00 for, again, a long weekend.
19 Thank you for your patience and participation today.
20 As we adjourn for the evening, please remember all my
21 admonitions. No research. No thinking about the results. If
22 anyone contacts you, let me know. We will see you tomorrow
23 morning, ready to go at 9:00. Thank you.
24 (Jury out.)
25 THE COURT: You may be seated. You may step down but

1 please be back at 9:00 a.m. tomorrow morning. Thank you.
2 Can we go straight to asking Ms. Yang some questions?
3 I assume she's in the hall.
5 THE COURT: Let's do that now.
6 MR. ANDERSON: Your Honor, while we wait for Ms. Yang
7 to come in, we have a simple one that the Court can address.
8 The Government filed an amended stipulation of the
9 parties, document number 431.
10 THE COURT: I was going to ask you exactly how that's
11 different.
12 MR. ANDERSON: It adds exhibits for -- I think every
13 party added a couple of exhibits. The Government added a few
14 and each of the defense counsel added a few exhibits.
15 Mr. Greiner's also were reorganized a little bit to make it
16 more clear what the source of some of those documents was.
17 THE COURT: Here is Ms. Yang. We will come back to
18 that. Ms. Yang, please come forward.
19 Ms. Yang was subject to recall. Any objection to
20 proceeding without swearing her?
25 THE COURT: Ms. Yang, thank you for being here today.

1 The Court has a few questions for you.
3 THE COURT: Let me organize my thoughts. The Court
4 understands at this point that you have had some conversations
5 with Justin Wiley?
6 MS. YANG: Yes.
7 THE COURT: During breaks in the testimony in court?
8 MS. YANG: Yes.
9 THE COURT: All right. Do you recall a conversation
10 with Mr. Wiley when you were sitting in chairs just outside the
11 courtroom here?
12 MS. YANG: Yes.
13 THE COURT: Do you know was that a conversation
14 before Mr. Wiley was called to testify?
15 MS. YANG: Yes.
16 THE COURT: Can you describe that conversation? Who
17 initiated the conversation?
18 MS. YANG: I just sat down and then he -- I'm not
19 sure, but he looked at me. And then he said, why is it taking
20 so long? And then I said, oh, because there's three attorneys.
21 And then he said, oh, and then he just asked me how my daughter
22 was because he knows who my daughter is, and I just told him
23 she's 10 now.
24 And so the conversation just went on to him telling
25 me that he lives in L.A. He asked me where I lived, and I told

1 him where I lived. And then he -- and then I asked him if he
2 had any children, and he said, yes, he had a son. And then I
3 told him that I also, you know, after my daughter I had a son
4 also.
5 And then he was telling me that he's teaching tennis,
6 and that he was writing a book, and then he asked me where I
7 was working at, and I told him. And then it was pretty much
8 him just telling me how he's been.
9 THE COURT: How long would you estimate the
10 conversation went on, that conversation?
11 MS. YANG: Probably like ten minutes because it was
12 during a break.
13 THE COURT: And could you describe how you were
14 positioned?
15 MS. YANG: That couch that's sitting out there, I was
16 sitting facing the courthouse, and then he was looking out. So
17 he was on a different couch, and I was looking this way, like
18 towards this way.
19 THE COURT: And how close were you to him, if you had
20 to estimate?
21 MS. YANG: Like from here to like the wall. Yeah.
22 THE COURT: All right. And was anyone else involved
23 in that conversation?
24 MS. YANG: No.
25 THE COURT: Was there any other -- you've referenced

1 some discussions -- some reference to the time. Was there any
2 discussion at all of any other as aspect of this case?
3 MS. YANG: No. Because he was just wondering why it
4 was taking so long, and why he was waiting so long, and it was,
5 like, I don't know. I'm just waiting for it to be over. Just
6 going back and forth. That's it.
7 THE COURT: So apart from that conversation, have you
8 had other conversations with Mr. Wiley since this case began?
9 MS. YANG: No. I haven't talked to him since the day
10 that I left.
11 THE COURT: The day that you left. But other than
12 that ten minutes or so, that one instance --
13 MS. YANG: Uh-huh.
14 THE COURT: -- did you travel together to the
15 courthouse?
16 MS. YANG: We did.
17 THE COURT: And did you have a conversation during
18 that time?
19 MS. YANG: The only conversations that we had was
20 Agent Peter was there, and it was just getting in the car,
21 getting out of car, and we all walked up together, and that was
22 really it.
23 THE COURT: And how long was that when you were all
24 together?
25 MS. YANG: From the hotel, from when we got in the

1 car and the hotel ride to here is probably, like, five minutes,
2 and then we parked and walked in, probably like another five
3 minutes, and then we went through the metal detector, and then
4 we got -- all three of us got in the elevator together and then
5 came upstairs.
6 THE COURT: Did you and Mr. Wiley have any discussion
7 about any aspect of this case during that time?
8 MS. YANG: No, because when we came, he sat right
9 over here, and I sat on the other side.
10 THE COURT: Was there additional time during a break
11 where you interacted with him?
12 MS. YANG: The day before he just said hi to me, and
13 then I said hi to him. And he asked me how I was doing, and I
14 told him that, you know, I was fine. I'm hanging in there.
15 And just casual, like, okay. And then I was called in. So I
16 didn't even see him after that.
17 THE COURT: During that discussion, how long do you
18 think that happened?
19 MS. YANG: It was really quick.
20 THE COURT: Was there any discussion of this case?
21 MS. YANG: No. No.
22 THE COURT: Were you ever instructed to not talk with
23 other witnesses at any point in time with respect to this case?
24 MS. YANG: To talk to them? No, not like -- to not
25 talk about the case. But I didn't know that I wasn't supposed

1 to say hi.
2 THE COURT: I'm just trying to understand what you
3 understood. You were never told before this case. Were you
4 ever given instructions regarding not taking to witnesses prior
5 to the case that was heard in May?
6 MS. YANG: Yes -- no, I don't remember. I don't
7 remember speaking to anybody about -- because I normally don't
8 talk to any of the other people.
9 THE COURT: Have you had, at any point, an
10 understanding about whether or not you should be communicating
11 with other witnesses at any point in time since the case
12 started?
13 MS. YANG: No. I haven't spoken to anybody.
14 THE COURT: You had an understanding about whether
15 you should or should not?
16 MS. YANG: I didn't have an understanding.
17 THE COURT: All right. Let me ask if the attorneys
18 want me to ask you more questions.
19 Do any attorneys wish me to consider asking more
20 questions of Ms. Yang? Mr. Anderson?
24 THE COURT: All right. Let me confer with them.

2 MR. TEDMON: Yes, Your Honor. I would ask the Court
3 -- request the Court to ask Ms. Yang: Did Justin Wiley ask
4 her, "how's it going," and to that did she respond "not good"?
5 THE COURT: Any objection to that, Mr. Anderson?
7 MR. SAMUEL: No.
9 MR. TEDMON: And then the second thing I would ask
10 is, at this conversation I want to clarify that it took place
11 at the first break. If she can clarify that for the timeframe.
12 And then I would like the Court to ask her if she had concluded
13 her testimony prior to her talking to Justin Wiley.
14 THE COURT: So this is the first break before he
15 testified?
16 MR. TEDMON: Correct. Had you concluded your
17 testimony, Ms. Yang?
19 MR. ANDERSON: No. But the Court may need to follow
20 up to specify which.
21 MR. TEDMON: Taking about the first.
22 THE COURT: Talking about the ten-minute
23 conversation. Clarify when the ten-minute conversation
24 occurred with respect to her testimony. Any further questions?
25 MR. TEDMON: And then I would ask the Court to ask

1 her, again, the proximity between she and Mr. Wiley. She
2 indicated it's between where she's at and the wall. That's
3 about 15 feet. So I would like to know precisely where she was
4 sitting versus where Mr. Wiley was sitting during this
5 conversation that lasted ten minutes.
7 MR. ANDERSON: No, Your Honor. I think it may be
8 less than 15 feet.
12 MR. TEDMON: And the last thing, Your Honor, would be
13 she said she had contact with Mr. Wiley the day before. I
14 would like to clarify that's the day before the date we're
15 speaking of, which was Monday. That would mean they had
16 contact on Sunday where she indicated Wiley said "hi, how are
17 you doing," or something to that effect, and she said "hanging
18 in there." I would like to know where that conversation took
19 place, what time, and who else was present, and how long it
20 lasted.
22 MR. ANDERSON: No, Your Honor. I think we should
23 clarify that.

1 THE COURT: All right. And is it agreed that
2 previous day's testimony would have been on Thursday?
5 MR. TEDMON: As it stands right now, it says -- she
6 said the previous day. That would be a Sunday.
7 THE COURT: Any other questions? Mr. Samuel?
8 Mr. Greiner?
9 MR. SAMUEL: No.
11 THE COURT: All right. I'll ask those.
12 (End sidebar discussion.)
13 THE COURT: Ms. Yang, just a few follow-up questions.
14 First with respect to the conversation you
15 characterize as lasting about ten minutes.
16 MS. YANG: Yeah. Because I was on the phone. I was
17 answering e-mails, too. So that took a little bit of time,
18 too.
19 THE COURT: So that was during a break?
20 MS. YANG: Uh-huh.
21 THE COURT: Had you concluded your testimony by the
22 time that conversation occurred?
23 MS. YANG: No.
24 THE COURT: You were still subject to returning to
25 the courtroom and testifying?

1 MS. YANG: Because it was on a break, yes.
2 THE COURT: And then you mentioned a brief contact,
3 you said, the day before.
4 MS. YANG: Yes.
5 THE COURT: When you say the day before, where were
6 you during that contact?
7 MS. YANG: I was sitting right out here, and he
8 walked up, and then I think he was with his attorney. And he
9 sat down, and then I looked to the left and he looked back.
10 And he looked at me like he didn't really recognize me because
11 it's been like ten years. And so he was just, like, is that
12 you. And I was, like -- I'm, like, it's Kou. And then he was
13 just like, oh, how are you. And that was just asked me how I
14 was.
15 THE COURT: So who else was there besides his
16 attorney?
17 MS. YANG: Well, I think his attorney had already
18 gone in the courtroom because his attorney had told him to sit
19 down while he went in the courtroom. So it was just --
20 THE COURT: So was anyone else there besides you and
21 him?
22 MS. YANG: I don't believe so, no.
23 THE COURT: So when you say the day before, do you
24 mean the trial day before?
25 MS. YANG: Yes. Yeah the day before I saw him, yeah.

1 THE COURT: All right. Because if we're correct, we
2 think the ten-minute conversation occurred on a Monday.
3 MS. YANG: This Monday. It occurred this --
4 THE COURT: This past Monday?
5 MS. YANG: Yes.
6 THE COURT: So the day before --
7 MS. YANG: Was the Thursday.
8 THE COURT: The Thursday. All right.
9 During the ten-minute conversation, do you recall
10 Mr. Wiley saying to you "how's it going" or something like
11 that?
12 MS. YANG: Yeah. You know, just asking me, like, how
13 I was.
14 THE COURT: And do you recall saying in response "not
15 good" or something like that.
16 MS. YANG: Yeah. Like, you know, like, I mean --
17 yeah, like, you know, I'm doing the best that I can taking the
18 situation.
19 THE COURT: And so what did -- did you say anything
20 more about that?
21 MS. YANG: Just like, you know, I just want this
22 whole thing over with. And then he was just telling me, yeah,
23 because, you know, I can't move on with my life because of all
24 of this. And then he went on to say something, like, you know,
25 like girls, like, you know -- like he can't really get serious

1 with a girl knowing his future. And I said, yeah, that's true.
2 It's hard for me to plan things with my children. And, you
3 know, just -- and that was really it. And then he said -- then
4 he started talking about tennis.
5 THE COURT: All right. So again, at any point in any
6 of your interactions with Mr. Wiley have you talked about the
7 facts of this case or any other aspect of this case?
8 MS. YANG: No.
9 THE COURT: All right. Any further questions,
10 Mr. Anderson, for the Court to consider?
13 MR. TEDMON: Just the question about the proximity.
14 THE COURT: Thank you for reminding me.
15 You had mentioned at one point, I asked you again
16 with reference to the ten-minute conversation as you recounted
17 it. You said had between where you're sitting and the wall.
18 Do you think that's the distance? So he would have
19 been sitting in, say, that top juror chair against the wall and
20 you were sitting where you are?
21 MS. YANG: Yeah. Like, it was like this bench and
22 then there was like that --
23 THE COURT: The column?
24 MS. YANG: Yeah. The column. And then the other
25 chair that's over there.

1 THE COURT: And were you each in the chair closest to
2 the column on either side of the column?
3 MS. YANG: Well, there is a chair that's right there
4 that's facing the courtroom. I was sitting right there, and I
5 was on my phone. And then there is a column, and then there's
6 his chair, and he was sitting on the far end of the chair.
7 THE COURT: So like a bench seat, and he was on far
8 end of that bench?
9 MS. YANG: Yes.
10 THE COURT: All right. Anything further now,
11 Mr. Tedmon?
12 MR. TEDMON: No, Your Honor. I think that covers
13 everything.
18 THE COURT: Ms. Yang is excused. You may step down.
19 Thank you.
20 If you can just wait in the hall. The Government
21 will let you know if we have anything further.
22 (Ms. Yang exits the courtroom.)
23 THE COURT: Let me just ask, is there any defense
24 attorney who believes that the Court's exclusion order was
25 violated? Mr. Tedmon?

1 MR. TEDMON: Yes.
2 THE COURT: Mr. Samuel? Just so I'm clear on the
3 defense positions.
4 MR. SAMUEL: Yes.
7 THE COURT: All right. Well, I consider that first.
8 Your position, Mr. Anderson, is?
9 MR. ANDERSON: Mr. Morris is going to argue this.
11 MR. MORRIS: Would be that it is not, Your Honor.
12 THE COURT: All right. We don't have the transcript
13 in front of us. I recall a very general discussion, a motion
14 to exclude, the Court granting that, putting nothing in
15 writing.
16 While I think it could be implicit that that meant
17 any kind of communication with respect to the trial, I didn't
18 expressly say that witnesses should not talk to each other.
19 The best practice is to instruct witnesses not to talk to each
20 other at all to avoid the need for this kind of inquiry.
21 Just so it's clear from now on, my order means that,
22 regardless of how we resolve this. So the parties should
23 instruct witnesses not to talk with each other at all.
24 So Mr. Tedmon, first, how was the order violated
25 given that it was at most implicit, and, secondly, what's the

1 cure if it was?
2 MR. TEDMON: Well, I think, first of all, the Court
3 gave an order that witnesses aren't to communicate with each
4 other.
5 THE COURT: Did I say that expressly?
6 MR. TEDMON: Well, I think there was an understanding
7 of that at the beginning, that there is to be no contact. The
8 Court already explained that. That's the first thing.
9 Secondly, we're dealing with two witnesses that
10 testified in a previous trial. I don't have the transcript in
11 front of me either. We could get that. We could check to see
12 what they were advised there. That carries some weight.
13 Thirdly, I think if we go to their release
14 conditions, they are not to speak or discuss the case with any
15 other witness. That's been violated. That's a court order.
16 So those are three right there.
17 THE COURT: Help me understand how they are talking
18 about the case? I think at most what the Court heard was that
19 they were talking about how long the case is taking, the impact
20 on their lives.
21 MR. TEDMON: I think it's more than that. When Juror
22 McKenzie, who, in my view, is the only credible witness of the
23 three, says that they were -- first of all, her set-up is
24 different than what Mr. Wiley and Ms. Yang had testified to.
25 THE COURT: I think it's consistent with Ms. Yang.

1 Mr. Wiley said they were both facing the same --
2 MR. TEDMON: I don't agree completely because what
3 the juror indicated was that Mr. Wiley was leaning back, and
4 Ms. Yang looked like she was reading a book. Now that is not
5 consistent with Ms. Yang and Mr. Wiley being some 8 to 10 feet
6 apart. I mean, it doesn't add up. So that's the first
7 problem.
8 THE COURT: But Ms. McKenzie said they were on
9 opposite sides the column.
10 MR. TEDMON: I understand that. The distance,
11 doesn't -- I don't think squares up.
12 But getting to the meat of the matter is this, Juror
13 McKenzie specifically recalled Justin Wiley saying "how's it
14 going," and Kou Yang said "not good." Now, it is clear right
15 there that they are introducing between themselves
16 conversations about how things are going inside the courtroom,
17 and that is implicitly or explicitly a violation of every
18 standard and ethic and what the courts will typically tell the
19 counsel in terms of managing their witnesses, or the court
20 telling the witnesses themselves not to do. Now that's the
21 first problem.
22 The second problem that's different here than a lot
23 of the cases where you have witnesses talking before they
24 testify, both of these witnesses were still in the course and
25 scope of their testimony or before Mr. Wiley even testified.

1 Ms. Yang's testimony is she was still on the stand. Mr. Wiley
2 had yet to testify.
3 What we have here are two people talking to each
4 other inappropriately, and now a juror is being brought into
5 the circumstance. And it's clear that jurors are only to
6 consider what happens through the witness stand, or testimony
7 that's stipulated to, or exhibits that are presented. This
8 juror has now been introduced to statements between two
9 witnesses both of whom are still currently in the case, either
10 currently testifying or shortly there afterwards were going to
11 testify, as Mr. Wiley. And that is information the juror now
12 has, and that pollutes the entire process. Thankfully, the
13 juror didn't talk to any other jurors. But it doesn't matter.
14 She's part of a jury. It's a corporate body.
15 And so the misdeeds of Ms. Yang and Mr. Wiley, as
16 much as they try to minimize it, have now been laid onto Juror
17 McKenzie. And I think when that happens, there is a mistrial.
18 You cannot have jurors be subject to information, however
19 slight, that's coming outside of the courtroom, and that's
20 exactly what's happened here. And unfortunately that requires
21 a mistrial, and that's what I'm moving for at this time.
22 THE COURT: So it doesn't matter. Your argument is
23 that it doesn't matter if the witnesses, Ms. Yang and
24 Mr. Wiley, have clarified that they were just referencing the
25 amount of time it was taking?

1 MR. TEDMON: No. I don't think it matters. And,
2 frankly, I don't necessarily agree with what they're saying as
3 being truthful. When Juror McKenzie recites it, she heard them
4 talking repeatedly. What she could only specifically recall
5 was Wiley asking "how's it going," and Ms. Yang saying "not
6 good."
7 Now that is not a statement of how long is it taking.
8 That's a characterization of how she's doing, and that's what
9 concerns me. And now a juror has that subjective thought in
10 her mind about what Ms. Yang's doing on the witness stand, and
11 Mr. Wiley is now being given information from Ms. Yang about
12 how things are going in the courtroom, which he has no right or
13 entitlement to before he testifies.
14 And all of those are violations of the code of ethics
15 as far as how witnesses behave themselves. It's a violation of
16 the Court's implicit or explicit order, and it demands a
17 mistrial.
18 THE COURT: And that's the only remedy?
19 MR. TEDMON: That's the only remedy.
21 MR. SAMUEL: I adopt everything that has been said.
22 However, I would like to add something to that. And that is my
23 recollection is that Mr. Wiley, when asked the question about
24 Kou Yang specifically -- and this was after he had the
25 conversation, apparently, the way you interpret it -- after he

1 had the conversation with Kou Yang, he testified that she was
2 just doing what she was told to do. And that just sounds so
3 disingenuous when I heard that. And I think that, in fact,
4 this also makes the juror a potential impeachment witness
5 against Mr. Wiley.
6 Now if in fact that is true, then the problem is
7 she's on the jury. Now she's going to be called as a witness
8 in front of this jury, and I think that generates a mistrial as
9 well.
11 MR. GREINER: Thank you, Judge. I join in the
12 comments by Mr. Tedmon, Mr. Samuel.
13 Request the Court to recall that both Ms. Yang and
14 Mr. Wiley are cooperating Government witnesses. Also recall
15 that they did testify in the May trial, and so they are not
16 novices. It's not their first time that they've been around.
17 They know what the rules are. And thirdly, I think that
18 Mr. Samuel makes a very good point as to Mr. Wiley's testimony,
19 especially the way Mr. Tedmon characterized the conversation
20 that the juror heard.
21 When Ms. Yang says "not good" to another cooperating
22 witness who knows he's going to be on the stand, and then his
23 testimony comes out that, geez, Kou Yang is just doing her job,
24 and she only had to pick up pencils, and that was it. I mean,
25 so disingenuous as to what Kou Yang's responsibilities were

1 through this whole program that it was tainted by the
2 conversation prior to Mr. Wiley testifying. And so the only
3 remedy that is available to the Court is for a mistrial.
4 THE COURT: Mr. Morris, just briefly.
5 MR. MORRIS: I think all three people that the Court
6 heard from today tell a substantially similar, consistent
7 story, which is an exchange of pleasantries.
8 THE COURT: What about the juror specifically hearing
9 "how's it going/not good"? If the Court were to allow
10 recalling of Mr. Wiley and Ms. Yang for some questioning, the
11 questioning would undoubtedly rely on the juror's reporting
12 that conversation.
13 MR. MORRIS: I'm not sure I'm following, Your Honor.
14 THE COURT: To the extent the Court concludes there
15 might have been some prejudice, one way to cure the prejudice
16 would be to have Mr. Wiley and Ms. Yang recalled for some brief
17 cross-examination, and at this point the cross-examination
18 could draw on the juror's reporting what she heard. And
19 Ms. Yang appears to have essentially confirmed that that was at
20 least a part of what they said. Now Ms. Yang and Mr. Wiley
21 couched it as about length of time, but Ms. McKenzie doesn't
22 know that.
23 MR. MORRIS: Right. But I think their version of it
24 is consistent with the small part that she heard, which is
25 "how's it going." Even if what she heard is "how's it

1 going/not good," it's consistent with what they're saying which
2 is how's it progressing when we have two of them who have both
3 been here at this point for multiple days, both of whom I think
4 are hoping to get on a plane that afternoon and get out of
5 here.
6 THE COURT: If there is any issue whatsoever, does
7 the Court do nothing in the Government's view?
8 MR. MORRIS: I don't think there's anything the Court
9 needs to do, Your Honor. I think Ms. McKenzie heard something.
10 We've now inquired of the two people that she heard of it. And
11 having now heard both of their versions of it, there's nothing
12 untoward going on.
13 I think nobody would have preferred that they had
14 exchanged these pleasantries, but there is no indication that
15 they discussed testimony, there is no indication that they
16 discussed facts that are relevant to this case, there is no
17 indication that they discussed anything that happened while the
18 two of them worked for Mr. Head or worked together eight or
19 nine years ago.
20 THE COURT: So Ms. McKenzie is just left to wonder
21 whatever happened with her report, is that --
22 MR. MORRIS: I think if the Court wanted, the Court
23 could call Ms. McKenzie in, as it did today, and when it told
24 her that she had done nothing wrong, could reassure her that
25 the Court has inquired, but I don't think there is any need to

1 tell her anything more than that.
2 THE COURT: All right. Well, if you have any case
3 law you think I should think about, e-mail it to me tonight.
4 Let's meet at 8:30. We'll talk about this, talk about the
5 801(d)(2) issue, and the Court will have thought a little bit
6 more about Hellstrom and Newcomb, and we can talk more about
7 that. Mr. Morris?
8 MR. MORRIS: Your Honor, I did just get some
9 well-placed advice. I think it would be appropriate to call
10 Alternate Juror McKenzie in and instruct her to disregard what
11 she heard. As the Court has already instructed all the jurors,
12 they are not to consider anything that happens outside of the
13 presentation of evidence including attorney questions. In
14 fact, the Court's instructions I think specifically instructed
15 the jurors and the alternates not to consider things that they
16 see around the courthouse. It would probably be worthy of a
17 prophylactic reminder to her to not consider anything she heard
18 between of two of them.
19 THE COURT: Again, if you have cases. No briefing.
20 Just case cites.
21 MR. SAMUEL: One more comment, Your Honor, I'm
22 sorry, for you to think about. Although you may not be going
23 to do anything, or the Government encourages you not to do
24 anything, we, as counsel, will be obligated to attempt to put
25 witnesses on to impeach Mr. Wiley at least, and that means

1 we're now talking about calling this juror as a witness. And I
2 just think that unless the Court is telling us specifically we
3 can't do this and making that specific ruling, then we have a
4 problem.
5 THE COURT: Understood. Again, any authority I
6 should be thinking about. I assume no more than five cases
7 could help me focus my thinking. I will be doing my own
8 research, but let me know tonight in an e-mail. Ms. Schultz
9 goes above and beyond duty often. I don't know if she's
10 available tonight, but if she can access her e-mail remotely,
11 she'll forward those.
12 MR. TEDMON: Your Honor, if I might, I tried to do
13 some research between then and now, and I do have Federal Rule
14 of Evidence 615 talks about excluding witnesses, and there is
15 the United States Supreme Court case of Holder, 150 U.S. 91.
16 It's 1893. But it's still regularly cited for a witness
17 obeying a court order. That's one. And then the Ninth Circuit
18 case I was able to find is U.S. v. Hobbs, H-o-b-b-s, 31 F.3d
19 918, 1994. And at page 921 it recites the Supreme Court's
20 three sanctions for violation of a sequestration order. So at
21 least some help there as far as what I found.
22 THE COURT: There's also the Pretrial Services
23 violation question, which I'm going to check on their Pretrial
24 Services release conditions.
25 On 25D1, my question is, isn't there a presumption of

1 confidentiality with respect to tax-related documents? Can't
2 you get in what you need with a stipulation? I mean, he was --
3 I don't know that Mr. Budoff had an attorney here.
4 MR. MORRIS: To be clear, that document did not come
5 from the IRS, so it's not covered by the normal IRS
6 confidentiality guidelines. That was given by his employer.
7 THE COURT: And the second document, that's also from
8 his employer?
9 MR. MORRIS: That was from his employer. I don't
10 think he can authenticate that, so I will not ask to move in
11 the second page of that at this time. I suspect we won't ask
12 to move it in.
13 But given that he has stated that he recognized the
14 document as being his 2006 W-2, I think it can come in.
15 THE COURT: Can more information be redacted? Do you
16 need -- it has his address.
17 MR. MORRIS: We can. If that would allay the Court's
18 concern, I think we can -- I think all we're really concerned
19 about is it's his, and he said that it's his, and the total
20 amount that he earned that year would be relevant.
21 THE COURT: With the redaction of his Oceanside,
22 California address, anything else to say? Mr. Tedmon?
23 MR. TEDMON: Maybe the Federal Tax ID number should
24 be redacted from the employer.
25 THE COURT: That's the employer's.

1 MR. MORRIS: We could do that, Your Honor. His
2 address is in because it was on a number of those HUD-1s, but
3 we can -- in an abundance of caution, we can overly redact this
4 one, if we need to.
5 THE COURT: If it's his current address. And the
6 local rule provides for that. It seems a courtesy, at least.
7 Anything else?
8 MR. SAMUEL: That also includes bank account
9 numbers. There is a lot of that that's floating around, so I
10 think redaction is important when, ultimately, the exhibits --
11 well, I guess the exhibits are going to be returned to every
12 party.
13 THE COURT: They are. I think the question is what
14 should be redacted going to the jury. Perhaps I'm being overly
15 concerned.
16 MR. ANDERSON: It's fine, Your Honor. We're happy to
17 do it.
18 THE COURT: Well, 25D-1, the first page will come in
19 with any redactions the parties deem appropriate. We'll see
20 you in the morning.
21 (Government Exhibit 25D1, 2006 W-2 Wage and Tax
22 Statement for Kerry L. Budoff; Oracle screen print re W-2
23 (redacted) admitted into evidence.)
24 MR. ANDERSON: Your Honor, there was something that
25 we were in the midst --

1 THE COURT: On the amended --
2 MR. ANDERSON: Yes. It was just that there is an
3 agreement between counsel that starting today and going
4 forward, whenever counsel refers to stipulation of the parties
5 or amended stipulations, what they are referring to is
6 Document 431, which was filed yesterday. And that's the
7 amended stipulation.
8 So that's clear. Because I don't think everybody is
9 going to remember to say amended stipulation every time.
10 MR. TEDMON: Agreed.
11 MR. SAMUEL: Agreed.
12 MR. GREINER: Agreed.
13 THE COURT: So understood it supersedes.
14 MR. ANDERSON: Your Honor, we still wanted make a
15 record related to Mr. Greiner's motion.
16 THE COURT: I understand that. I really --
17 MR. ANDERSON: We can do it tomorrow morning.
18 THE COURT: Believe it or not, there is a high school
19 student who wants to learn about opening statements, and I'm
20 five minutes late to meet with him. So I'm going to go do
21 that, but I will hear all of you out on that issue before I
22 make a final decision.
23 MR. TEDMON: 8:30, Your Honor?
24 THE COURT: 8:30.

1 CERTIFICATION

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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 7
Defendants.
---oOo---
TRIAL PROCEEDINGS
THURSDAY, OCTOBER 31, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
3 KERRY BUDOFF
5 DANIEL CASTILLO
FURTHER REDIRECT EXAMINATION BY MR. MORRIS 982
9 FURTHER RECROSS-EXAMINATION BY MR. GREINER 984
10 BRETT HELLSTROM
11 VOIR DIRE EXAMINATION BY MR. GREINER 989
VOIR DIRE EXAMINATION BY MR. SAMUEL 991
12 VOIR DIRE EXAMINATION BY MR. TEDMON 992
VOIR DIRE EXAMINATION BY MR. ANDERSON 993
13 DIRECT EXAMINATION BY MR. ANDERSON (CONT'D) 1002
17 DEBRA KOVACS
19
20
21
22
23
24
25

1

Development for property at 3920 44th
4 Avenue, Sacramento County
16A2 Uniform Residential Loan Application in 948
5 the name of Daniel Castillo for property
at 3920 44th Avenue, Sacramento, CA with
6 attachments
7 the name of Daniel Castillo for property
at 3390 Foxcroft Road, #C-308, Miramar, FL
8 19B Uniform Residential Loan Application in 953
the name of Daniel Castillo for property
9 at 3390 Foxcroft Road C#-308, Miramar, FL
17B Uniform Residential Loan Application in 1031
10 the name of Marjorie Sly for property at
896 Yellowstone Road, Cleveland, OH; HUD
11 Settlement Statement
12 the name of Charmayne Q. Ratliff for
property at 3509 38th Street, Sacramento,
13 CA 95817
9B Uniform Residential Loan Application in 1038
14 the name of Amber Dawn Farantello for
property at 911 Fox Chapel Lane,
15 Jacksonville, FL
8B1 Uniform Residential Loan Application in 1040
16 the name of Mark Wilson for property at
28925 Via Adelina, Valencia, CA
17 7B6 Grant Deed dated June 21, 2005 for 1110
property in Illinois Grantor: Debra Kovacs
18 Grantee: Ashley Reynolds
7C1 Grant Deed filed 01/23/2006 for property 1111
19 in Cook County, Illinois
7C2 Judicial Sale Deed filed 01/16/2008 1112
20 Property at 543 E. 167th Street, South
Holland, IL 60473 Signed and notarized
21 January 2008
7A1 Check stub from Creative Loans, LLC to 1113
22 Debra Kovacs dated 7/21/2005 in the amount
of $1,000.00 re Pacific Mercantile Bank
23 Consolidation South Holland III
24
25

1
3 DM-F2 Equity Purchase Agreement dated May 2, 1121

2005
4 DM-F10 Option Agreement dated June 1, 2005 1126
DM-F6 Acknowledgement By Seller dated May 2, 1128
5 2005
DM-F3 Exhibit “A” to Addendum to Equity 1132
6 Purchase Agreement
DM-F7 Notice of Cancellation dated May 2, 2005 1134
7 DM-F4 Notice Required by California Law dated 1135
May 2, 2005
8 DM-F5 Residential Lease After Sale Agreement 1137
dated May 2, 2005
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

2 THURSDAY, OCTOBER 31, 2013
3 ---oOo---
5 United States versus Charles Head, Benjamin Budoff, and Domonic
6 McCarns. This is on for jury trial, and today is day seven.
8 MR. ANDERSON: Good morning.
9 MR. TEDMON: Good morning.
10 MR. GREINER: Good morning, Your Honor.
11 THE COURT: Counsel are present. All parties are
12 present. There are three matters we should discuss, and I'm
13 prepared to tell the parties what the Court's plan is.
14 The first is the Kou Yang/Justin Wiley issue, the
15 second is the motion to preclude Messrs. Newcomb and Hellstrom,
16 and the third is the 801(d)(2)(E) question.
17 First, on the Kou Yang/Justin Wiley communications,
18 I'm going to grant -- I'm going to deny the motion for
19 mistrial, but I'm prepared to give the defense a brief period
20 of time to examine those witnesses. I would ask that the
21 defense identify a lead examiner on the question. It's
22 Mr. Tedmon's arguments that persuaded the Court that this would
23 be the cure to any issue that's been created.
24 Let me just clarify with respect to denying the
25 motion for a mistrial. There is no evidence that there is any

1 intentional violation of the Court's order. That said, as the
2 Court clarified yesterday, the exclusion order does extend to
3 witnesses communicating with each other. I mean, I think it's
4 clear that that can be an end run and a way for a witness to
5 find out what's happening in the courtroom in terms of
6 substance.
7 That said, not only is there no evidence of
8 intentional violation, the testimony provided by Ms. Yang and
9 Mr. Wiley yesterday did not disclose that they discussed
10 anything of substance. I don't think they have been handled in
11 a way that was the most careful. They were brought together by
12 an agent in the same car. Their Pretrial Services orders do
13 require that they not have contact with other witnesses.
14 I checked with Pretrial Services just so I would
15 understand how Pretrial would respond to those conditions. I
16 don't think this needs to come into the record, but so you know
17 what the Court has considered. Pretrial has said based on what
18 the Court has shared, just a summary of what's occurred, they,
19 at this point, don't think there is a violation of conditions.
20 That said, they did not know that these were cooperating
21 witnesses. They modify their procedures when there is a
22 cooperating witness.
23 The Government should take steps to make certain
24 Pretrial Services understands what's happening with any
25 cooperating witness because it does affect Pretrial Services.

1 Mr. Tedmon's argument yesterday, though, I thought
2 pointed to an issue that should be clarified in front of the
3 jury. And that is, Ms. Yang essentially confirmed what
4 Ms. McKenzie reported she heard, which is that Mr. Wiley asked
5 how it was going, and Ms. Yang responded with words to the
6 effect of "not good." Everything Ms. Yang and Mr. Wiley said
7 suggests that the rest of their discussion was just about time.
8 Mr. Wiley wanted to get back to his job, his home. They were
9 both concerned about the length of time it was taking.
10 I think maybe five minutes, with the defense going
11 first, clarifying that that exchange occurred, that it was --
12 you know, what it was about, what that meant, "not good," and
13 just briefly eliciting information about the other small talk.
14 Ms. Yang would be called first. Are they available this
15 morning? Are Ms. Yang and Mr. Wiley still in the building?
16 MR. ANDERSON: No, Your Honor. We sent them back
17 last night, but we can get them --
18 THE COURT: So this will be at a time to be arranged.
19 Mr. Wiley then could be called.
20 Mr. Tedmon's argument was that it could have affected
21 Mr. Wiley's testimony with respect to Ms. Yang. He was asked
22 about Ms. Yang repeatedly.
23 So that's the Court's plan. If those witness are not
24 in the building, we can schedule them some time next week and
25 work them into the schedule. The parties are directed to meet

1 and confer. And given that we have time, we can talk more
2 about that.
3 MR. TEDMON: Your Honor, could I make one other just
4 observation?
5 THE COURT: You may. I did review Mr. Greiner's
6 e-mail this morning. I did consider that as well. Yes,
7 Mr. Tedmon.
8 MR. TEDMON: On the mistrial issue. My only concern
9 -- I understand the Court's procedure, and that's fine. But my
10 concern is while Kou Yang essentially mirrored what Juror
11 McKenzie heard, those two match up fairly well, Justin Wiley's
12 testimony does not. He didn't concede that there was any
13 conversation about how's it going in the courtroom/not good.
14 He didn't say that.
15 THE COURT: He can be examined on that.
16 MR. TEDMON: I understand that. But here's my
17 concern. He's going to testify, and if he testifies consistent
18 with what he did yesterday, it's going to be different in
19 substance from what Juror McKenzie heard. And then we've got a
20 situation where we have Justin Wiley's testimony being
21 different from what the juror who testified observed. That
22 puts that juror in almost an impossible situation to assess it
23 because she's going to know that's not what I heard.
24 THE COURT: Well, she's been instructed, and she will
25 be reminded -- I mean, the whole jury will be reminded that

1 they are to base their deliberations only on what happens in
2 the courtroom. I'm not going to -- I'm not going to allow her
3 to be called as a witness.
4 MR. TEDMON: Well, I'm stating that observationally,
5 for the record, I think there is a conflict there, and if we
6 had the need to call her, then we're being precluded from that,
7 and I think that raises another problem as far as the mistrial
8 issue.
9 THE COURT: I thought hard about that, about that
10 juror. At this point, that's my resolution of it.
11 MR. TEDMON: Okay.
12 THE COURT: If they aren't in the building -- again,
13 we can continue discussing this on our breaks, but that is
14 still the Court's plan. If there is additional authority you
15 want to bring to my attention, you may do that. Mr. Morris?
16 MR. MORRIS: Your Honor, could we make our record on
17 this briefly?
18 THE COURT: Can you do it briefly in one or
19 two minutes?
20 MR. MORRIS: I think I can.
22 MR. MORRIS: The Government disagrees, Your Honor.
23 With respect to the balancing between 401 and 403, there is
24 nothing to be gained by this testimony and a lot to be lost.
25 It specifically raises problems with confusion of the jury,

1 bringing issues in that are not relevant to the determination
2 of the facts at trial. Even if it's going to try to be kept
3 into a short time, it runs the risk of delay and the waste of
4 time.
5 THE COURT: Well, there will be strict time limits.
6 MR. MORRIS: Understood. I think with respect to the
7 juror issue, I think it's more significant than simply -- given
8 that this juror has witnessed the items or the facts and the
9 events to which witnesses will now be testifying, although the
10 Government does not want to strike any jurors, I don't think
11 there is any way we can continue with this alternate juror on
12 the panel if she has been a witness to events to which other
13 witnesses are now going to testify.
14 THE COURT: I've considered that. If you have
15 authority for me to consider. I'm not going to punish a juror
16 who is doing her job for sloppiness in the Government's
17 handling of its witnesses.
18 MR. MORRIS: We completely agree that we don't want
19 to punish her, we don't want to lose her, Your Honor. But I
20 don't think there is any way you can put witnesses on the stand
21 who are then going to testify about events that occurred in the
22 hall to which that particular alternate juror was a witness of
23 those events.
24 THE COURT: I understand that position. I'll let you
25 know if I reconsider. If you have authority to back your

1 argument, let me know.
2 MR. MORRIS: We will do that, Your Honor, and we'll
3 file something. If the Court -- again, the Government does not
4 support a mistrial. I think that's the road we're going down
5 if we now put witnesses on the stand and keep a potential juror
6 who has their own independent fact knowledge of evidence which
7 those witnesses are putting on, I think we're going to find
8 ourselves a week from now in a position where mistrial may be
9 required. The Government does not support a mistrial, and I
10 think this is taking us down that road by putting those
11 witnesses on the stand to talk about these facts.
12 THE COURT: If you have authority given these
13 facts --
14 MR. MORRIS: We will.
15 THE COURT: I think we could have avoided getting
16 here in the first place.
17 MR. MORRIS: Understood, Your Honor.
18 THE COURT: And that's also a factor in the Court's
19 mind.
20 On the issue of precluding Hellstrom and Newcomb,
21 having more carefully reviewed the statements in particular
22 attached to the defense motion to preclude, at this point I'm
23 persuaded that Mr. Hellstrom, who actually was an underwriter,
24 during the relevant time period, who worked for Long Beach
25 Mortgage Company, he should be allowed testify. Not as an

1 expert. And again, the Court would be alert to any back-door
2 effort to introduce expert testimony. I acknowledge Rule 701.
3 But Mr. Newcomb, a paralegal, who, according to one
4 statement, had a, quote, unquote, possibly post hoc, quote,
5 unquote, working knowledge of the guidelines, I'm not seeing
6 any basis for allowing Mr. Newcomb to testify.
7 And so I would deny the motion as to Hellstrom but
8 grant it as to Newcomb. I acknowledge an opposition filed late
9 last night. I reviewed that. I acknowledge a reply filed
10 early this morning. I have not had a chance to review that in
11 substance.
12 If there is anything more you want to say in response
13 to that determination, you may. We could proceed with
14 Hellstrom going on the stand. I can continue to hear argument
15 with respect to Mr. Newcomb.
16 Anything more on Hellstrom for the defense?
17 Mr. Greiner? Mr. Samuel? Mr. Tedmon?
18 MR. TEDMON: Not on my behalf.
19 MR. GREINER: Briefly, Judge, simply because I filed
20 a response to the Government's opposition. I attached an
21 exhibit to my response, and it's a transcript of a Government
22 witness in a case that was in this courthouse, in front of
23 Judge Shubb.
24 And the witness was Lisa Menapace. Lisa Menapace
25 worked for Long Beach Mortgage. She was a set-up team manager.

1 She was then a fulfillment team manager. She was then a senior
2 team manager. And, ultimately, she was a loan fulfillment
3 center manager.
4 But the important part of her testimony, that the
5 Government called in that case, was that she answered a
6 question about assigning loan files, how Long Beach did that.
7 And the pertinent part is on the last page of my exhibit.
8 And it says: Ultimately, in 2005, underwriting was
9 assigned regionally. So the underwriter worked on a specific
10 team with a certain -- with a certain sales rep with the same
11 processors.
12 And what that means is that in 2005, Long Beach
13 Mortgage made an intentional, conscious management decision to
14 regionally divide up Long Beach Mortgage.
15 The reason that that's critical is Mr. Hellstrom
16 never was in California. He always was in Illinois. And the
17 loans that the Government wants Mr. Hellstrom to speak about
18 were either done at the Dublin home office of Long Beach
19 Mortgage or in the Orange County office down in Southern
20 California. And if Long Beach Mortgage --
21 THE COURT: Is your proffer that there were
22 inconsistent policies?
23 MR. GREINER: Absolutely. That the policies were
24 different in California and Illinois. And they were different
25 all around the United States. Once, 2005, they made that

1 managerial decision.
2 And so I just wanted to bring that to the Court's
3 attention that I think that's critical in the reason why
4 Mr. Hellstrom doesn't have anything relevant to talk about.
5 Because he's in Illinois. These loans are in California. And
6 in 2005, Long Beach made the decision that they were going to
7 regionally do the underwriting.
8 THE COURT: I don't know if that's so clear from the
9 Menapace testimony. Again, I'm reviewing it now. Your
10 response?
11 MR. GREINER: If you look at the last page. It's
12 page 132, and it starts at line 3 to 7 is the critical part of
13 her testimony.
14 THE COURT: Page 112, you mean?
15 MR. GREINER: Or 112, yes.
16 THE COURT: Mr. Morris, you're handling this?
17 MR. MORRIS: Sounds like an interesting area for
18 cross-examination. Sounds like an area that would go to the
19 weight of the evidence not to its admissibility.
20 THE COURT: Mr. Samuel, Mr. Tedmon, anything further
21 to say on this?
22 MR. TEDMON: No. Join on the motion and comments of
23 Mr. Greiner.
25 THE COURT: Well, at this point, I would ask the

1 Government to lay a foundation to establish critical facts
2 initially, and then we'll consider whether or not Mr. Hellstrom
3 will be able to go any further.
4 MR. MORRIS: Very well.
5 THE COURT: All right. On the Knight question,
6 here's the Court's plan given the Government's objection filed
7 on October 29th.
8 Here's the Court's recollection. It may not be
9 crystal clear. There were motions in limine on this question.
10 The defense sought to preclude introduction of evidence until
11 the Court made its preponderance of the evidence finding. The
12 Court denied that request subject to a potential later motion.
13 I said at the conclusion of the motion in limine
14 hearing prior to trial that I would basically follow Knight,
15 416 F.2d 1181. I clarified that towards the beginning of trial
16 during some housekeeping session. I believe in response to Mr.
17 Tedmon's questions.
18 At some point in a discussion with the Government,
19 the Government seemed to be asking the Court to reconsider
20 maybe letting the jury know I was admitting information
21 conditionally. After a brief exchange with Mr. Tedmon, I think
22 the Government withdrew that position, acknowledging it wasn't
23 the best way to proceed.
24 The Court then proceeded with an instruction,
25 occasionally, not every time 801(d)(2)(E) was asserted. But

1 occasionally based on the language of Knight. And in that
2 decision, the Ninth Circuit reviewed whether or not the Court
3 improperly instructed the jury and said it did not agree. It
4 did, towards the end of the decision, say that the instructions
5 unnecessarily signalled to the jury an opportunity to second
6 guess, and then there was a string cite of cases.
7 The Court, I think, had invited a proposed specific
8 instruction. I did not receive one until the October 29th
9 filing, which is simply a request to review model instruction
10 1.6.
11 But in light of the Government's objection, which I
12 believe was lodged for the first time on the 29th in a pointed
13 way that the Court could respond to, given that the Court had
14 previously, essentially, sided with the Government on this
15 question, I've reviewed the cases cited at the end of Knight,
16 and I think the Government has a point.
17 But I don't think -- I think the objection was waived
18 until Monday. So I don't plan to repeat the instruction that
19 the Ninth Circuit ultimately did not disapprove in Knight. But
20 I'm not going to give a pointed curative instruction either.
21 If it seems appropriate, I may, when 801(d)(2)(E) is
22 asserted again, remind the jury that the Government has to
23 prove its case against each defendant, and that I will provide
24 full instructions at the end of the trial.
25 So that's my resolution of that issue pending any

1 further thoughts from you. Mr. Anderson? Mr. Morris?
2 MR. ANDERSON: That's fine, Your Honor.
4 MR. TEDMON: That's fine. The only other comment I
5 would make is I think, because we've been in trial for almost
6 two weeks, and this has come up earlier in the trial, I
7 certainly would not be in favor of the Court starting to change
8 the litany to the jury because I think that creates more
9 confusion than what we have now. I think that's what the Court
10 is saying.
11 I would certainly agree with keeping it consistent,
12 and they've been instructed several times already. So it seems
13 to me it's kind of where we are, and I don't think we should
14 change the tact at this point because --
15 THE COURT: I'm not going to signal a change. I'm
16 going to -- because I've previously provided some instruction.
17 Again, with full notice and not having heard any focused
18 objection until this week.
19 That said, it will be only the defense who will be
20 heard to complain about this question if it gets that far.
21 Anything further? Mr. Samuel? Mr. Greiner?
22 MR. SAMUEL: I think it's a good compromise, Your
23 Honor.
25 MR. GREINER: Join in Mr. Tedmon's comments and join

1 in the Court's analysis.
3 MR. TEDMON: Your Honor, on this 801(d)(2)(E) there
4 is one other corollary matter from my perspective. The Court
5 has already told the jury this, and it goes on for several days
6 and I sit and don't make an 801(d)(2)(E) speaking objection
7 like Mr. Greiner does, followed by Mr. Samuel. I just don't
8 want it to be lost on the jury that I have a standing
9 objection, and that every time they object, you know, my
10 position is similar.
11 The Court's done this a few times. But it's been
12 several days, and I just don't want to lose sight of the fact
13 that I filed a motion pretrial. It was decided in limine that
14 there would be a standing objection. Other counsel decided to
15 make it on every single 801(d)(2)(E) issue. I don't think it's
16 necessary, and I don't want to be jumping up and down making
17 objections from my perspective in front of this jury, but I do
18 want them to understand -- at least not forget or maybe be
19 reminded that my objection has been noted.
20 THE COURT: The Government does suggest, in this
21 case, helpfully, that I accept a standing objection. I don't
22 know of authority that I can -- I mean, I suppose I could
23 muzzle the defense, but given Mr. Greiner's and Mr. Samuel's
24 position that they do need to assert that every time, I'm not
25 going to prevent them from proceeding as they have been in the

1 last several days of noting that for the record. And the Court
2 has not repeated instructions every time they do that.
3 I am prepared to accept a standing objection, but I'm
4 not hearing that Mr. Greiner and Mr. Samuel believe they can
5 proceed on those grounds. Am I right about that, Mr. Greiner?
6 MR. GREINER: For today, correct, Judge. I will take
7 a look at it over our extended break. We come back on Tuesday.
8 I will certainly do some research, contact some appellate
9 lawyers, look at also what's out there in the Ninth Circuit.
10 But as of today, I'm going to continue and be
11 consistent so if it does go to the Ninth Circuit, I'm at least
12 being consistent today. If something changes on Tuesday,
13 obviously the record will reflect that.
15 MR. SAMUEL: My position has always been that if we
16 can cobble a stipulation, even a verbal stipulation, that our
17 objections are preserved. I think that in the past for
18 appellate purposes was adequate. I may be wrong, but I think
19 that's correct. If we can do that, that's fine.
20 THE COURT: All right. So who do we have today?
21 MR. SAMUEL: The Government didn't agree to that, so
22 that's why we are where we are.
23 MR. ANDERSON: Your Honor, we've offered a continuing
24 stipulation. And I think this brings us around to a
25 reoccurring problem in this trial. That Mr. Greiner, in

1 particular, is using every opportunity to create a show for the
2 jury on issues that are not properly before them or that they
3 are not supposed to consider.
4 And that's part of why the Government recommended the
5 Court re-instruct on the preliminary instruction of what the
6 jury is and is not to consider.
7 THE COURT: Simply by asserting 801(d)(2)(E)?
8 MR. ANDERSON: Right. And if they want to make just
9 a simple objection, relevance or 801(d)(2)(E), that's fine.
10 But the jury doesn't need to understand what that is.
11 They don't need to know. It's not part of what the jury has to
12 determine. The jury hears the evidence. If the evidence comes
13 in, then they consider it. This whole idea that somehow
14 defense counsel needs it make a show for the jury I think is
15 consuming a lot of time.
16 THE COURT: What I've heard is they believe they have
17 a duty to do that. I haven't heard authority.
18 But at this point, we've settled into a rhythm on
19 that question. And it's not unduly distracting. I'm not going
20 to give 1.6 at the beginning of today, for example.
21 So after Mr. Budoff, who do we have today?
22 MR. SAMUEL: Your Honor, may my client just be
23 excused for a second. He doesn't need to be here. But he
24 needs to get back before the jury is called. He needs a break.
25 THE COURT: Well, we're going to take a five-minute

1 break before we bring the jury in. So after Mr. Budoff?
3 THE COURT: Kerry Budoff, that is.
4 MR. ANDERSON: Either Daniel Castillo or Debra
5 Kovacs.
6 THE COURT: And then after that?
7 MR. MORRIS: Possibly Mr. Hellstrom and then
8 Mr. Brotemarkle.
9 THE COURT: All right. Five-minute break and then
10 we'll bring the jury in.
11 (Break taken.)
13 (Jury in.)
15 Court, ladies and gentlemen the jury. Happy Halloween. We can
16 put on our costumes later. We're back for another day of
17 trial, going until 2:00 today, given that you've given us
18 permission to go until then.
19 So we're going to continue with the cross-examination
20 of Mr. Kerry Budoff. Mr. Samuel, you have a few more
21 questions?
22 MR. SAMUEL: Yes, Your Honor. About four documents.
23 And I coordinated it.
24 KERRY BUDOFF,

3 CROSS-EXAMINATION
4 BY MR. SAMUEL:
5 Q. So 25C1, page four.
6 All right. Can you read that? You're looking at it
7 pretty closely. You identified this as your signature up here?
9 Q. So this is an application, a 1003, and if you'll just
10 expand out for a second, we want to go over here.
11 You see that? This is an application for an
12 investment, correct?
13 A. Right.
14 Q. And that's what you understood you were doing,
15 correct? You owned your own home, so if you buy another home,
16 are you making an investment, is that your understanding?
17 A. I suppose so, yes.
18 Q. Thank you. And let's go to page six of that doc. I
19 had a question about this, the location that's going to be
20 brought up.
21 The 7030 Green Street, Philabelphia, PA, I think you
22 indicated you didn't know what that was?
23 A. No.
24 Q. Did you ever become aware of what that address
25 represented?

1 A. No.
2 Q. All right. Did you ever tell Mr. Budoff, your
3 brother, that you had this residence?
4 A. No.
5 Q. All right. And he would have had no information
6 whatsoever to put that particular piece of information down,
7 would he?
8 A. Not from me.
9 Q. Not from you. Thank you. Oh, let's go to the bottom
10 -- wait. It was there already.
11 Is that your -- is that your initials?
12 A. Yes, it is.
13 Q. All right. And so those are your initials, but that
14 information about Green Street is not correct information?
16 Q. All right. Did you talk to -- you said you talked to
17 a female, right?
18 A. Yes.
19 Q. Did you discuss with a female -- would it be Creative
20 Loans or do you know?
21 A. Whoever was representing.
22 Q. All right.
23 A. Yes.
24 Q. But you talked to a female?
25 A. Yes.

1 Q. And did you ever give that female any information
2 about 7030 Green Street --
3 A. No.
4 Q. Thank you. Next, page seven.
5 And I think this has already been asked, but is that
6 your signature?
7 A. Correct.
8 Q. All right. That one is the correct signature?
10 Q. And that's 5-4-06?
12 Q. Now just going back to when you first discussed
13 anything with your brother about what was going on, do you
14 recall approximately when that discussion occurred, the very
15 first discussion?
16 A. No.
17 Q. Did you wait a long period of time before you
18 actually entered into any transactions?
19 A. Yes.
20 Q. All right. So would you say roughly four,
21 six months?
22 A. I would say that, yes.
23 Q. About six months. So then after that -- so from this
24 first initial conversation, it was four to six months before
25 you started to act on this program?

1 A. Correct.
2 Q. Thank you. And once again, we see the name Charles
3 Head down there. And do you know who Charles Head is?
4 A. No.
5 Q. All right. Never spoke to Charles Head?
6 A. No.
7 Q. But did you speak to a female about this loan
8 application?
9 A. Specifically?
10 Q. Yes.
12 Q. Thank you.
13 The next document is 13A7. And I believe this
14 document, 13A7, was the document that you've reflected was not
15 your signature?
17 Q. All right. You see it's addressed to Global
18 Mortgage, correct?
19 A. Correct.
20 Q. And it talks about payments to Walmart, right?
21 A. Correct.
22 Q. Did you have an account at Walmart?
24 Q. So I guess the next question, you wouldn't have a
25 recollection either.

1 Did you have late payments to Walmart? You don't
2 know that either?
3 A. No.
4 Q. All right. Could you have as far as you know?
5 A. Yes.
6 Q. But you don't remember telling anybody -- when you
7 look at the content of this document, do you recall telling
8 anybody this kind of information?
10 Q. But whoever it was, if you did talk to them, it would
11 be a female?
12 A. Yes.
13 Q. Thank you. Next document, which is, I think, 13A8.
14 Once again, is that your signature?
15 A. No.
16 Q. Okay. And you see that this is a document which is
17 directed to Head Financial Services, right?
18 A. Yes.
19 Q. Did you ever write this document?
20 A. No.
21 Q. All right. Did you ever say to Head Financial that
22 you were a computer tech?
23 A. No.
24 Q. All right. Were you a computer tech?
25 A. No.

1 Q. Did you trouble-shoot computers?
2 A. Yes.
3 Q. Pardon?
4 A. Yes.
5 Q. You did do that. And were you lead field tech?
6 A. Yes.
7 Q. All right. And did you supervise and train other
8 individuals?
9 A. Yes.
10 Q. So part of that information may be correct, right?
12 Q. And it also talks about a credit report. Did you
13 ever see a credit report?
14 A. Not that I recall.
15 Q. All right. Did you ever order your own credit
16 report?
17 A. No.
18 Q. Were you ever made aware that your credit report
19 reflected late payments?
21 Q. Did you ever discuss this document or the contents of
22 this document with a female?
23 A. That I don't recall.
24 Q. Did you ever discuss the contents of this document
25 with your brother, Ben Budoff?

1 A. Only in general conversation.
2 Q. Only in general conversation?
3 A. As far as our life was going.
4 Q. As far as your life was going but not a specific
5 comment about Head Financial?
6 A. No.
7 Q. All right. Thank you. I think the last document is
8 13B1-6 through -8.
9 Once again, you see the presentation. It appears to
10 be a loan application, right?
11 A. Correct.
12 Q. All right. And we'll look again at the top just to
13 identify it.
14 And it, once again, reflects an investment?
15 A. Correct.
16 Q. And let me just go on down, if you would. Yes. And
17 this is for --
18 Is this information that you now see on the screen
19 correct information?
20 A. Yes.
21 Q. All right. And if would you go to I think the
22 signature page, which would be eight, page eight. All right.
23 And let's start with this.
24 In this particular document, if you look on the right
25 side, H -- right in here -- do you see where it says "is any

1 part of the loan down payment borrowed"?
2 A. Yes.
3 Q. And it says "no," it that correct?
5 Q. All right. Thank you. And then finally go to the
6 bottom.
7 Once again, is that your signature?
9 Q. All right. And once again, it reflects Head
10 Financial. Would your answers be the same as to those that
11 I've already asked you about Mr. Head?
12 A. Yes.
13 MR. SAMUEL: Just a moment, Your Honor, please. No
14 further questions.
15 THE COURT: Mr. Greiner, any cross-examination?
16 MR. GREINER: Yes, Judge.
17 THE COURT: How long do you estimate?
18 MR. GREINER: Short. Five minutes.
20 BY MR. GREINER:
21 Q. Morning, Mr. Budoff.
22 A. Morning.
23 Q. You do not know an individual named Domonic McCarns,
24 correct?
25 A. No.

1 Q. You've never spoken to an individual named Domonic
2 McCarns, correct?
3 A. Correct.
4 Q. You've never written an e-mail to an individual named
7 Q. In fact, you've never had any type of communication
8 whatsoever in your life with an individual named Domonic
9 McCarns, correct?
10 A. Correct.
11 Q. When you found out that you owned properties -- which
12 at some point in time you did, correct?
13 A. Correct.
14 Q. You didn't want to keep those properties, you wanted
15 to get rid of them, correct?
16 A. Correct.
17 Q. And you wanted to sell them back to the tenants,
18 whatever the contract said?
19 A. Correct.
20 Q. To get it back to the tenants, correct?
21 A. Right.
22 Q. And just to be very specific, in the years 2005 and
23 2006, you never had any type of business relationship
24 whatsoever with a Domonic McCarns, correct?
25 A. Correct.

9 THE COURT: You may step down. You are excused.
10 THE COURT: Government's next witness.
11 MR. MORRIS: The United States calls Daniel Castillo.
12 THE CLERK: Mr. Castillo, please come forward.
19 THE WITNESS: Daniel Castillo, D-a-n-i-e-l,
20 C-a-s-t-i-l-l-o.
22 DANIEL CASTILLO,

2 BY MR. MORRIS:
3 Q. Mr. Castillo, where do you live?
4 A. Ceres, California.
5 Q. And what's your occupation?
6 A. I'm a van loader or E&J Gallo Winery.
7 Q. I'd ask you to think back to the 2006 timeframe, what
8 was your occupation then?
9 A. Same.
10 Q. And did you also live in the Ceres area then?
11 A. Yes.
12 Q. Thinking back again to 2006, in that year did you
13 become involved in some real estate transactions?
14 A. Yes, I did.
15 Q. How is it that you got involved in that?
16 A. I was in the Lake Forest area down south, visiting a
17 friend of mine, and we were just talking about our financial
18 situations, and he told me about the program.
19 Q. What friend was that?
20 A. Donald Tario.
21 Q. And when you say talking about our financial
22 situation, what do you mean?
23 A. Just our incomes. Basically, I was telling him about
24 my home financial situation, going paycheck to paycheck type
25 deal.

1 Q. And what was it about that conversation that led you
2 to get involved with some real estate transactions?
3 A. He showed me the program, and he told me if I had a
4 good enough credit score I could get into this program where I
5 would be helping people refinance their homes, and I would be
6 compensated for it.
7 Q. Okay. Did you have any other conversations with
8 Mr. Tario about the program other than what you've just talked
9 to us?
10 A. He told me that he was in it, him and his wife had
11 done it, and everything had been working fine for them.
12 Q. Did he refer you to somebody else then to join the
13 program?
14 A. Yes.
15 Q. And who did he refer you to?
16 A. Lisa Vang.
17 Q. Did you contact Lisa Vang?
18 A. Yes, I did.
20 describe that initial contact with Lisa Vang?
21 A. She just took some basic information and then she put
22 me on to -- passed me onto her brother, Tua.
23 Q. And do you recall what that basic information was
24 that she took?
25 A. My annual income, occupation, basically.

1 Q. Okay. And in 2006 what was your annual income?
2 A. I believe it was about 45,000.
3 Q. Okay. Then after that contact with Lisa, did you
4 then have contact with Tua Vang?
5 A. Yes.
6 Q. Can you describe your contact with Tua Vang?
7 A. He took some more information, my time at my
8 occupation, my income, all my pertinent information, date of
9 birth, Social Security number, so he could check my credit
10 score.
11 Q. And what, if anything, do you recall the next thing
12 that happened?
13 A. He told me how the program would work.
15 A. That they would use my --
16 MR. GREINER: Objection. 801(d)(2)(E).
18 THE COURT: Overruled. And just so it's clear, the
19 Court has accepted Mr. Tedmon's standing objection in this
20 respect, but those objections are overruled.
21 Q. BY MR. MORRIS: What did Mr. Vang tell you?
22 A. That they would use my credit to refinance their
23 homes, help people get a loan to refinance their home.
24 Q. Did he explain how that would happen or how that
25 would work?

1 A. No, not really. Just basically that they would run
2 my credit, and I would be helping them.
3 Q. And I think your testimony was that you would be
4 somehow compensated for your involvement?
5 A. Yes.
6 Q. What was your understanding about your compensation?
7 A. That once all the paperwork had gone through and the
8 home was refinanced, that I would be compensated for it.
9 Q. Do you remember how much that compensation was
10 supposed to be?
11 A. $5,000.
12 Q. Was that a one-time 5,000 or was that per home?
13 A. Per home.
14 Q. Did you have any conversations about the number of
15 homes that you might be involved with?
16 A. The program allowed you up to ten homes, I believe it
17 was.
18 Q. Prior to the transactions, do you recall any other
19 conversations that you had with Lisa or Tua Vang?
20 A. None.
21 Q. Did you have any contact with anybody else at that
22 organization?
23 A. No.
24 Q. Do you happen to know or do you recall the name of
25 the corporation or organization that they were working for?

1 A. I can't remember.
2 Q. Okay. And now based on what you had -- these
3 conversations that you had had, did you decide to take part in
4 the program?
5 A. Yes, I did.
6 Q. What then is your next recollection of what happened?
7 A. They set up everything. They set the notary --
8 MR. TEDMON: Objection, Your Honor, as to "they."
11 Q. BY MR. MORRIS: When you say "they," who are you
12 referring to?
13 A. Tua.
14 Q. So you were saying that Tua --
15 A. He set up everything as far as the document, sign all
16 the documents, the notary coming to my home, taking all the
17 information.
18 Q. Okay. And can you describe that process of the
19 documents coming to your home?
20 A. The notary showed up. I filled out all the loan
21 applications -- or signed all the loan applications for the
22 home in question.
23 Q. Do you recall approximately how long that process
24 took?
25 A. Probably about an hour.

1 Q. And I just want to make sure I understand. First you
2 said "I filled out" and then you said "I signed." You signed
3 the documents?
4 A. Yes.
5 Q. And were there spots where you had to initial the
6 documents?
7 A. Yes.
8 Q. Did you put any information into the documents other
9 than your signature and initials?
10 A. No.
11 Q. Then kind of going in order then, after you signed
12 these documents what do you recall next about being the
13 process?
14 A. The notary left my home, obviously, and then I
15 waited. Waited to see if I would be compensated as I was told.
16 Q. And were you compensated?
17 A. Yes.
18 MR. MORRIS: Your Honor, I'm going to ask to go to
19 16A1, which I believe is in.
20 THE COURT: 16A1. I'm not showing that as admitted.
21 MR. MORRIS: Then I would ask to move to admit it
22 pursuant to the stipulation as an item recovered during the
23 search warrant.
25 MR. TEDMON: No, Your Honor. It's a three-page

1 document, is that what we're going to be looking at?
2 MR. MORRIS: Yes.
5 MR. GREINER: No objection, Your Honor.
10 and Urban Development for property at 3920 44th Avenue,
11 Sacramento County admitted into evidence.)
12 Q. BY MR. MORRIS: Mr. Castillo, do you recognize the
13 address 3920 44th Avenue in Sacramento?
14 A. Yes.
16 A. That was one of the homes.
17 Q. Do you recognize the name Sheila Jones?
18 A. Yes.
19 Q. How do you recognize that name?
20 A. She was the resident of the home. The owner of the
21 home.
22 MR. MORRIS: All right. And so I'll ask you to focus
23 in here on the June to -- the May to June timeframe in 2006.
24 If we can go to --
25 I'd ask to admit 16A2 if it's not admitted, Your

1 Honor, pursuant to the stipulation as a bank lender record.
2 THE COURT: It is not yet admitted. Mr. Tedmon, any
3 objection?
11 Application in the name of Daniel Castillo for property at 3920
12 44th Avenue, Sacramento, CA with attachments admitted into
13 evidence.)
14 Q. BY MR. MORRIS: Mr. Castillo, do you recognize that
15 signature?
16 A. Yes.
18 A. Looks like it, yes.
19 Q. If we can go to page five of this exhibit. And same
20 question. Does that appear to be your signature?
21 A. Sort of, yes. The last name looks like it's spelled
22 a little differently.
23 Q. Do you believe that it is your signature?
24 A. No.
25 Q. Okay. Asking you then to focus on around May 22nd of

1 2006, your previous testimony was you made about $45,000 a year
2 in 2006. Was that consistent throughout the entire year?
3 A. Yes.
4 Q. If we can go back to page one of this document. This
5 information under "borrower," is that your name?
6 A. Yes.
7 Q. Does that information, a phone number, appear to be
8 correct?
9 A. Yes.
10 Q. And this address of Riverette Drive in Modesto, do
11 you recognize that address?
12 A. Yes.
13 Q. How do you recognize the address?
14 A. My home.
15 Q. Is it still your home?
16 A. Yes.
17 Q. Next page. And this Enji Gallo Wineries, is that an
18 accurate name for your employer?
19 A. E&J.
20 Q. E&J?
21 A. But other than that, yes,
22 Q. Is your position accurate?
23 A. Yes.
24 Q. In 2006, May 22, 2006, were you earning $6,250 per
25 month?

1 A. No.
2 Q. Taking your 45,000 a year and asking to you do math
3 in public, for which I apologize, approximately what would your
4 monthly income have been in May of 2006?
5 A. Probably about 45.
6 Q. Next page, please. In May 2006 did you have a 401k?
7 A. Yes.
8 Q. Do you recall approximately what the balance in the
9 401k would have been?
10 A. At that time?
11 Q. Yes.
12 A. No. I don't remember exactly at that time.
13 Q. Next page, please. Does that appear to be your
14 signature?
15 A. That looks more like my signature, yes.
16 Q. Around May 22, 2006, do you recall doing a telephone
17 interview with respect to a home loan?
18 A. No.
19 Q. Do you recall doing an interview with somebody named
20 Charles Head?
21 A. No. Never.
22 Q. I don't think we hit this page yet, but just double
23 check on the signature. Does that look like your signature?
24 A. Kind of, yes.
25 MR. MORRIS: Your Honor, I would ask to admit

1 Government's Exhibit 19A2, covered by the stipulation.
2 THE COURT: All right. Mr. Tedmon, any objection?
5 MR. GREINER: Just a moment, Judge. No, Judge.
7 MR. SAMUEL: No, Your Honor. Multi-page document?
8 THE COURT: Yes. 276 to 281.
9 MR. MORRIS: Yes.
10 THE COURT: Yes. Those pages, 19A2, are admitted.
13 Foxcroft Road, #C-308, Miramar, FL admitted into evidence.)
14 Q. BY MR. MORRIS: If we can bring up the first page
15 first.
16 Looking at this document, does that appear to be your
17 signature?
18 A. Yes.
19 Q. Do you recognize the address, 3390 Foxcroft Road in
20 Hollywood, Florida?
21 A. Yes.
23 A. It was one of the other properties.
24 Q. And when you say "one of the other properties"?
25 A. One of my properties that I helped refinance.

1 Q. Was that through the same program that Tua and
2 Lisa --
3 A. Yes.
4 Q. And if we could go to page three of this.
5 So still on May 22nd of 2006. $6,000 monthly income
6 is still inaccurate?
7 A. Yes.
8 Q. And the next page, please. And does that appear to
10 A. Yes.
11 Q. Next page, please. And how about that signature?
12 A. Yes.
13 Q. Do you recall again on the same date, May 22, 2006,
14 doing a telephone interview with somebody named Benjamin
15 Budoff?
16 A. No.
17 Q. Next page, please. How about that signature, does
18 that appear to be correct?
19 A. Yes.
20 MR. MORRIS: Your Honor, I would ask to admit
21 Government's Exhibit 19B pursuant to the stipulation as a
22 lender record.
23 THE COURT: 19B. Any objection, Mr. Tedmon?

4 MR. SAMUEL: Same.
5 THE COURT: All right. Overruled. 19B is admitted.
8 Foxcroft Road C#-308, Miramar, FL admitted into evidence.)
9 Q. BY MR. MORRIS: How about that signature, does it
10 appear to be yours?
11 A. Yes.
12 Q. If we could go to page four of this exhibit, 19B-4.
13 Does that signature appear to be yours?
14 A. Yes.
15 Q. Do you recall signing any documents in August of
16 2006?
17 A. No, I don't believe so.
18 Q. To the best of your recollection, what was the period
19 in which you signed documents?
20 A. I really can't recall.
21 Q. Okay. In August of 2006 do you recall having a
22 telephone interview?
23 A. No.
24 Q. Do you recall having an interview with Charles Head?
25 A. No.

1 Q. If we could go back to the previous page, page three.
2 In August 2006 were you still living at that same address?
3 A. Yes.
4 Q. Prior page, please. Between May and August of 2006
5 had you received a raise to $6,000?
6 A. No.
7 Q. Were you still employed at -- leaving aside spelling
8 errors -- were you still employed at E&J Gallo?
9 A. Yes.
10 Q. I think you testified that you did receive your
11 $5,000 compensation?
12 A. Yes.
13 Q. Other than that, or those transactions, do you recall
14 sending or receiving money as part of these transactions?
15 A. Yes. Yes.
16 Q. What do you recall about that?
17 A. They would wire money into my account.
18 MR. TEDMON: Objection as to vague.
19 Q. BY MR. MORRIS: Careful when you say "they." Who do
20 you remember specifically working with?
21 A. Basically, I just worked with Tua or Lisa. And most
22 of the time it was Tua.
23 Q. So --
24 A. He would contact me, tell me that they were going to
25 wire money into my account, and I would then get a cashier's

1 check and mail it back to them.
2 Q. Did he say why?
3 A. That that was used as a down payment for the home or
4 something along that line.
5 Q. Do you recall approximately how much that money would
6 have been, what those wires were?
7 A. It varied. I think at one point I might have had
8 like $45,000 that they wired to me.
11 last answer.
12 Q. BY MR. MORRIS: So to clarify, the money would be
13 wired to your account?
14 A. Yes.
15 Q. And then what were you supposed to do?
16 A. I would then go to my bank, get a cashier's check,
17 and send it FedEx.
18 Q. To whom?
19 A. Back to Tua.
20 Q. Where did that fit in the process we've talked about?
21 So we have talked about signing loan papers, talked
22 about getting your 5,000, where, with relation to those events,
23 did that fall?
24 A. I believe it fell in when the -- before the notary
25 came.

1 Q. Okay.
2 A. That would show I guess -- I believe it would show
3 that I had money in my account to finance the home, I believe.
4 Q. And did you have conversations with Tua or Lisa about
5 that fact?
6 A. Yes.
7 Q. And I think your prior testimony, when you talked
8 about getting involved in this, that you had talked to
9 Mr. Tario about living paycheck to paycheck?
10 A. Yes.
11 Q. So the money -- what was your -- what were your
12 account balances on an average day in May of 2006?
13 A. Probably no more than $2,000.
14 MR. MORRIS: Moment, Your Honor. Nothing further,
15 Your Honor.
17 Mr. Tedmon?
20 BY MR. TEDMON:
21 Q. Mr. Castillo, good morning.
22 A. Good morning.
23 Q. I just want to cover a few things with you. You
24 indicated on direct that your initial contact was with Lisa
25 Vang, correct?

1 A. Yes.
2 Q. All right. And was that in person or by telephone?
3 A. By telephone.
4 Q. Did you ever meet her in person?
5 A. No.
6 Q. And then, ultimately, you were handed off to Tua
7 Vang, correct?
8 A. Yes.
9 Q. All right. And most of your dealings were with Tua
10 Vang, correct?
11 A. Yes.
12 Q. Did you have any personal meetings with Tua Vang?
13 A. Never.
14 Q. So everything you dealt with was over the telephone?
15 A. Yes.
16 Q. And it was your understanding that Lisa Vang and Tua
17 Vang were brother and sister, isn't that correct?
18 A. Yes.
19 Q. And let me ask you this. During the time that you
20 dealt with Tua Vang or Lisa Vang, what was the totality of the
21 timeframe?
22 A. I don't know. Maybe six months.
23 Q. Six months. Go ahead.
24 A. Maybe six months.
25 Q. And that was all in 2006?

1 A. Yes.
2 Q. Now, Mr. Morris has shown you some documents. I want
3 to just review a few of those with you.
4 If we could have Government's Exhibit 16A-5 put on
5 the screen, please. I'm sorry.
6 THE COURT: You want 16A1?
7 MR. TEDMON: Yes. I'll get this right eventually.
8 16A1, page five.
9 THE COURT: That's a three-page exhibit.
10 MR. TEDMON: Hold on, Judge. Let me get the binder.
11 Save everybody a lot of time.
12 MR. TEDMON: All right. Mr. Castillo --
13 THE COURT: One second. Does a juror need a new pen?
15 Q. BY MR. TEDMON: Okay. Let's try it again here.
16 If I could have Government's Exhibit 16A2 put on the
17 screen, please.
18 All right. This is what I want to talk to you about.
19 Mr. Morris asked you questions about this uniform residential
20 loan application just a few moments ago. Do you recall that?
21 A. Yes.
22 Q. All right. And if we could go to page five of that
23 exhibit, please. And if we could expand this bottom portion,
24 please. Thank you.
25 All right. Now, it indicates "borrower's signature"

1 where the arrow is pointed, correct?
2 A. Yes.
3 Q. And it appears to say Daniel Castillo, correct?
4 A. Yes.
6 A. It looks like my signature, but I don't think it is
7 because the Daniel is more pronounced where mine is more of
8 like a scribble. The first page you showed is my signature.
9 The second page you're showing doesn't look like my signature.
10 Q. So is it your testimony that that would be a forgery?
11 A. I'm not an expert so I can't say.
12 Q. Well, it's your signature?
13 A. I didn't sign it.
14 Q. You didn't sign it. Okay. How about the May 22,
15 2006 or 5-22-06, is that your writing?
16 A. Yes.
17 Q. Okay. Do you have any independent recollection of
18 putting that date on that form?
19 A. No.
20 Q. But you're not disputing that's your writing, the
21 date portion, correct?
22 A. It looks like my writing, yes.
23 Q. Now, it says down here "interviewer's name," do you
24 see that, Charles Head?
25 A. Yes.

1 Q. Now you already testified you never dealt with a
3 A. No.
4 Q. Never talked to Charles Head?
5 A. Never spoke to him, no.
6 Q. Never met a Charles Head?
7 A. Never.
8 Q. And it indicates a telephone interview, do you see
9 that there?
10 A. Yes.
11 Q. But that didn't take place with Charles Head, did it?
12 A. I never spoke to him, no.
13 Q. And on this form there is no signature below Charles
14 Head's name, is there?
15 A. No.
16 Q. Nor is there a date, is there?
17 A. No.
18 Q. And on this document you're questioning the validity
19 of your own signature, correct?
20 A. Yes.
21 Q. Did you ever deal with a person named Kou Yang, do
22 you recall that name?
23 A. No.
24 Q. Not at all?
25 A. Not at all.

1 Q. The only female you dealt with was Lisa Vang?
2 A. Yes.
3 Q. Did Lisa Vang indicate to you what her job duties
4 were?
5 A. Not really, no.
6 Q. No?
7 A. No.
8 Q. How many times did you speak to Lisa Vang?
9 A. I'm not sure. Maybe about five, maybe. I couldn't
10 say.
11 Q. All by the telephone?
12 A. Yes.
13 Q. And were the duration of the calls long, short?
14 A. Short.
15 Q. Can you give me an idea of how long they would be?
16 A. Ten to fifteen minutes max.
17 Q. But about Tua Vang?
18 A. About the same.
19 Q. How many times did you talk to Tua Vang?
20 A. Him a little more. Ten tops.
21 Q. Total. Okay. Just one moment, Your Honor.
22 Now, if we could have Government's 19B on the screen,
23 please.
24 This is another application entitled Uniform
25 Residential Loan Application, correct?

1 A. Yes.
2 Q. And if we could just expand that for a moment. Thank
3 you. Now this is your signature, is that right?
4 A. Yes.
5 Q. And that's your true signature?
6 A. Yes.
7 Q. If we could go to page four of that document, please,
8 and expand that portion.
9 Now, there is another signature where it says
10 "borrower's signature," do you see that?
11 A. Yes.
12 Q. And it apparently reads Daniel Castillo, is that
13 correct?
14 A. Yes.
16 A. It appears to be yes.
17 Q. And dated 8-4-06, correct?
18 A. Yes.
19 Q. Is that your writing?
20 A. Looks like it, yes.
21 Q. And then down below says "to be completed by
22 interviewer," do you see that?
23 A. Yes.
24 Q. And it says "telephone"?
25 A. Yes.

1 Q. Now, you've already testified that you've never
2 spoken to, met, or conferred with Charles Head, correct?
3 A. Never.
4 Q. But yet here it says interviewer's name is Charles
5 Head, true?
6 A. Yes, true.
7 Q. And then there is a purported signature of some sort,
8 that kind of goes all the way through the section, that
9 intersects with "interviewer's signature," do you see that?
10 A. Yes.
11 Q. Okay. You don't know what Charles Head's signature
12 looks like, do you?
13 A. Never.
14 Q. And 8-4-06, do you see that?
15 A. Yes.
16 Q. Do you know whose writing that is?
17 A. No.
18 Q. And again, I just want to clarify. What was the last
19 date, as you can recall as you sit here today, that you dealt
20 with either Lisa Vang or Tua Vang?
21 A. I couldn't say. I don't remember.
22 Q. It's been a long time?
23 A. Yes.
24 MR. TEDMON: Nothing further, Your Honor. Thank you.

1 CROSS-EXAMINATION
2 BY MR. SAMUEL:
3 Q. You were asked about how long it took you to go
4 through the papers with the notary, and you said about an hour?
5 A. Yes.
6 Q. All right. Do you recall how many documents were
7 involved?
8 A. Not exactly. It was quite a few.
9 Q. And did you take the opportunity to review the
10 documents?
11 A. No.
12 Q. No. You didn't read them thoroughly?
13 A. No.
14 Q. Didn't know what you were signing?
15 A. I basically knew it was a home loan.
16 Q. A home loan?
17 A. Yes.
18 Q. Would that be for as you as the investor?
19 A. Yes.
20 Q. All right. And you understood yourself to be an
21 investor?
22 A. Yes.
23 Q. All right. And the applications that you made, did
24 you review those and see that it always said "investor"?
25 A. No.

1 Q. All right. We'll go through that in a second then.
2 Just education-wise, have you had any experience at
3 all in real estate?
4 A. No.
5 Q. Or banking or brokerage?
6 A. No.
7 Q. So you came into this, and the representations were
8 made to you by Lisa and Tua Vang only?
9 A. Yes.
10 Q. Besides telephone, did you ever communicate via
11 e-mail?
12 A. Yes.
13 Q. All right. And did you recall Tua Vang's e-mail
14 address as being 50K?
15 A. No.
16 Q. Do you have any recollection?
17 A. I believe I've seen that before, yes.
18 Q. Okay. We'll just go back on a couple things then.
19 If we could go to Exhibit 16A2. And that's the 1003. What I
20 would like to do is just blow up this part.
21 And as you've just testified, this application --
22 this is your signature, is that correct?
23 A. Yes.
24 Q. And this application was for investment, is that
25 right?

1 A. Yes.
2 Q. And let's go on to page four of that document. At
3 the bottom.
4 Do I understand you correctly, this is your
5 signature?
6 A. Yes.
7 Q. All right. And that's why you later on compared your
8 signature, which would be this one, with other signatures, and
9 that's why you feel the others -- or at least one is forged?
10 A. Yes.
11 Q. All right. Thank you. Did you authorize anybody to
12 sign your name?
13 A. No.
14 Q. To any of these documents?
15 A. No.
16 Q. Thank you.
17 19A2. Once again, at the top -- a little bit further
18 down so we can pull it all together. I'm sorry.
19 Once again, this was an investment, correct?
20 A. Yes.
21 Q. And that's your signature again?
22 A. Yes.
23 Q. All right. Then we can go to page 19A2-4. And just
24 to clarify, is that your signature?
25 A. Yes.

1 Q. Once again, it looks the same as the one you told us?
2 A. Yes.
3 Q. Let's go to 19A2-5, if you would. And I want to
4 start at the top. Keep on going.
5 All right. And this portion of the document, it
6 indicates right here that none of the down payment was
7 borrowed, is that right?
8 A. Yes.
9 Q. Did you put that in with that application?
10 A. Not that -- not to my knowledge.
11 Q. Do you know whether or not that is correct, that it
12 was not borrowed, the down payment?
13 A. I don't know.
14 Q. All right. So at this particular point, you don't
15 know anything about down payments or anything else that
16 transpired in this --
17 A. No.
18 Q. -- action? Thank you.
19 Just down to the bottom portion of it. If you could
20 just once again --
21 All right. Now this document is the document that
22 you think was a forgery?
23 A. No.
24 Q. That one is correct still?
25 A. Yes.

1 Q. And the date is yours as well?
2 A. Yes.
3 Q. And you indicated -- or you haven't. Do you know a
4 Ben Budoff?
5 A. No.
6 Q. Never met him?
7 A. No.
8 Q. Never talked to him on the phone?
9 A. I don't believe so.
10 Q. Never heard of his name until --
11 A. No. Until today.
12 Q. And so would it be fair to say that you weren't
13 interviewed telephonically by Ben Budoff?
14 A. No, I was not.
15 Q. And I think you said you don't recall being
16 interviewed by anyone?
17 A. By anyone.
18 Q. Thank you. Let's go onto 16A2-5. And just to the
19 bottom section here.
20 On this document, is this the document you say is
21 forged?
22 A. Yes.
23 Q. All right. So that's the one that's forged. But
24 you're saying that date as contained therein is your
25 handwriting?

1 A. Yes.
2 Q. Thank you. And 19B-4. Once again, I want to make it
3 clear. Is that your signature?
4 A. Yes.
5 Q. So there's only one document that appears to be
6 forged?
7 A. Yes.
8 Q. Okay. And is that your handwriting regarding
9 August 4th, '06?
10 A. Yes.
11 Q. But is this the one that you said that you didn't --
12 weren't making purchases in August?
13 A. I wasn't sure.
14 Q. You weren't sure?
15 A. I don't remember the timeframe.
16 Q. So your original answer, I believe, was that you
17 weren't, but now have you no recollection, is that correct?
18 A. Yes.
19 MR. SAMUEL: All right. Just a moment, Your Honor.
20 No further questions. Thank you.
21 THE COURT: All right. Mr. Greiner. How much time
22 do you estimate?
23 MR. GREINER: A little bit more than the last one.
24 I'm going to say about fifteen.

1 CROSS-EXAMINATION
2 BY MR. GREINER:
3 Q. Good morning, sir.
4 A. Good morning.
5 Q. Ever speak to an individual named Keith Brotemarkle?
6 A. Not that I recall, no.
7 Q. Ever exchange e-mails with Keith Brotemarkle?
8 A. No.
9 Q. Ever meet a person named Keith Brotemarkle?
10 A. No.
11 Q. How about an individual named Ed Shaffer?
12 A. I don't recall that name either.
13 Q. Ever exchange e-mails with an individual named Ed
14 Shaffer?
15 A. No.
16 Q. Phone calls with Ed Shaffer?
17 A. No.
18 Q. Never met an individual named Domonic McCarns,
19 correct?
20 A. No.
21 Q. Never talked to an individual named Domonic McCarns?
22 A. Never.
23 Q. Never exchanged e-mails with an individual named
24 Domonic McCarns?
25 A. Never.

1 Q. In fact, in your entire life you've never had any
2 communication whatsoever with a Domonic McCarns?
3 A. Never.
4 Q. And in the 2006 timeframe, where you were with this
5 company for about six months, you had absolutely no business
6 relationship at all with a Domonic McCarns, correct?
7 A. None.
8 Q. Correct?
9 A. Correct.
10 Q. All right. Now I want to talk to you -- we can pull
11 up Government's Exhibit 16A2, please. Thank you.
12 Now you've already indicated that this is an address
13 that you filled out a loan application for for an investment,
14 correct?
15 A. Yes.
16 Q. Do you recognize the name Sheila Jones?
17 A. Yes.
18 Q. And Sheila Jones actually lived at 3920 44th Avenue
19 at one time, correct?
20 A. Yes.
21 Q. And that's the property that you purchased from her,
22 correct?
23 A. Yes.
24 Q. And you actually had conversations with Sheila Jones
25 after you purchased the property, correct?

1 A. Yes.
2 Q. She was -- Sheila Jones was renting the property from
3 you, correct?
4 A. Yes.
5 Q. Sheila Jones would actually send you checks, correct?
6 A. No.
7 Q. She never did?
8 A. No.
9 Q. The mortgage on the loan that you got for 3920 44th
10 Avenue was approximately 1700 a month, is that fair?
11 A. I'm not sure.
12 Q. Do you have any recollection of that whatsoever?
13 A. No.
14 Q. Do you have a recollection of calling Sheila Jones
15 and indicating to her that the mortgage was 1700 a month and
16 what she was paying was less than that?
17 A. No.
18 Q. Do you have any recollection of having any
19 conversations with Sheila Jones?
20 A. Yes, I did have conversations with her.
21 Q. All right. And about what period of time did this
22 occur?
24 Q. Do you recall the substance of the conversations?
25 That's a yes or no.

1 A. Yes.
2 Q. Did they deal with evicting her?
3 A. Yes.
4 Q. And that's because she did not live up to the terms
5 of the contract as you understood them, correct?
6 A. Yes.
7 Q. And since she didn't live up to the terms of the
8 contract, then you had the obligation to evict her from your
9 property which was 3920 44th Avenue, correct?
10 A. Yes.
11 Q. And as an investment at that piece of property, you
12 weren't interested in necessarily keeping it?
13 A. No.
14 Q. You were interested in carrying out the terms of the
15 contract, as you understood, had Sheila Jones abided by the
16 terms, correct?
17 A. Exactly.
18 Q. And it's only because Sheila Jones didn't abide by
19 the terms that you took the action of evicting her, correct?
20 A. Yes.
21 Q. If we could have Government's Exhibit 19B up, please.
22 Government's Exhibit 19B is a document that reflects
23 a loan application for 3390 Foxcroft Road, Number C-308 in
24 Miramar, Florida, correct?
25 A. Yes.

1 Q. And that was an investment property of yours,
2 correct?
3 A. Yes.
4 Q. And you remember the person that sold you the
5 property was named Korall Solares, correct?
6 A. Yes.
7 Q. And when she sold you the property, she then rented
8 the property back, correct?
9 A. Yes.
10 Q. And did you have conversations with Ms. Solares?
11 A. Yes.
12 Q. And did there come a time when Ms. Solares did not
13 abide by the terms of the contract as you understood?
14 A. Yes.
15 Q. And because Ms. Solares did not abide by the terms of
16 the contract as you understood, you took the action to evict
17 her from your property, correct?
18 A. No. Never. I never tried to evict her.
19 Q. Did you try to work it out with her?
20 A. Yes.
21 Q. Did that eventually happen?
22 A. No. She stopped -- she broke contact.
23 Q. So she just broke contact with you?
24 A. Yes.
25 Q. And did that property then go into foreclosure?

1 A. As far as I know, yes.
2 Q. So you abided by the terms of the contract, as you
3 understood it, regarding the investment property in Miramar,
4 Florida, true?
5 A. Yes.
6 Q. And it was Ms. Solares that, according to your
7 understanding, broke the terms of the contract regarding your
8 investment property in Miramar, Florida?
9 A. Yes.
10 Q. And you intended to abide by the terms of the
11 contract if Ms. Solares had abided by the terms because it was
12 an investment property to you?
13 A. Yes.
14 Q. And you would have sold it back to her, correct?
15 A. Yes.
16 Q. And that same question for Sheila Jones. You would
17 have sold it back to Sheila Jones?
18 A. Yes. Definitely.
19 Q. We can take the document down from the screen.
20 On direct examination with the Government, you said
21 that way back in the beginning, when you talked to Tua Vang,
22 that took basic information, and you listed employment, date of
23 birth, Social Security number. Did you give any other
24 information that you can recall?
25 A. Time of employment, length of employment, and my

1 current job, previous job.
2 Q. Now, if I understood correctly, but correct me if I'm
3 wrong, when documents came to you to be signed, a notary came
4 with those documents?
5 A. Yes.
6 Q. And did the notary go over what the documents were
7 that you were signing?
8 A. Yes.
9 Q. Okay. So did you understand what you were signing?
10 A. Basically, yes.
11 Q. Now my question is, when you signed these documents,
12 were they filled out, did they have -- bad question. Don't
13 answer.
14 When you signed these documents, was there
15 information on them pertaining to you?
16 A. Yes.
17 Q. Okay. Did you review that information?
18 A. Just quickly, yes.
19 Q. Why just quickly?
20 A. I didn't have any reason to believe that anything was
21 done wrong.
22 Q. Okay. So you reviewed it quickly and then you signed
23 the documents, correct?
24 A. Yes.
25 Q. And was it only the residential uniform loan

1 application, those documents, that you signed?
2 A. I believe so, yes.
3 Q. Did you sign a grant deed also?
4 A. Correct.
5 Q. That was notarized, correct?
6 A. Yes.
7 MR. GREINER: Just one second, Judge. Thank you,
8 Judge.
10 MR. MORRIS: Briefly, Your Honor.
12 BY MR. MORRIS:
13 Q. Let me start with the Jones property. Did you pay
14 the mortgage on that property?
15 A. I believe I made one payment.
16 Q. And when was that?
17 A. I don't recall the exact date.
18 Q. Did you receive monthly payments from Ms. Jones?
19 A. No.
20 Q. Did you pay utilities on that house?
21 A. No.
22 Q. Did you make repairs on that house?
23 A. No.
24 Q. With respect to Ms. Solares' property, did you pay
25 bills related to that house?

1 A. I believe I made one payment on that one also.
2 Q. And what was that payment?
4 Q. Did you receive monthly payments from Ms. Solares?
5 A. No.
6 Q. Did you make repairs on that property?
7 A. No.
8 Q. In talking with Mr. Greiner about the terms of your
9 agreement with Ms. Jones, when you signed the loan
10 applications, what was your understanding of your agreement
11 with Ms. Jones?
12 A. That they would be making the monthly payment on
13 those.
14 MR. SAMUEL: Objection as to "they."
15 THE WITNESS: She would be making the monthly payment
16 on that loan.
17 Q. BY MR. MORRIS: Ms. Jones?
18 A. Yes.
19 Q. But it wasn't your belief that she was going to send
20 a check to you?
21 A. No.
22 Q. Did you have any understanding with her as to where
23 she would send those checks?
24 A. No.
25 Q. How did you become aware that Ms. Jones had stopped

1 paying monthly payments?
2 A. When the mortgage company called me.
3 Q. Do you recall approximately when that was?
4 A. No, I don't.
5 Q. Do you recall whether it was just immediately
6 afterwards or was it later?
7 A. It was a couple of months, I believe.
8 Q. Okay. With respect to Ms. Solares, did you at some
9 point become aware that she wasn't paying?
10 A. Yes.
11 Q. How did you become aware of that?
12 A. Same way. The mortgage company contacted me.
13 Q. Prior to the mortgage company contacting you with,
14 say, with Ms. Jones first, had you been speaking with
15 her?
16 A. No.
17 Q. How about Ms. Solares? Prior to receiving notice
18 from the mortgage company, had you had contact with
19 Ms. Solares?
20 A. No.
21 Q. Now you mentioned that you had signed a grant deed as
22 part of this process?
23 A. Yes.
24 Q. Do you recall any details about that grant deed?
25 A. No, I don't.

1 Q. Do you have any understanding of what it was that
2 that grant deed -- which property that grant deed was to?
3 A. No.
4 Q. Do you have any recollection as to whether -- who you
5 were deeding the property to?
6 A. No.
7 Q. Do you recall approximately how many properties you
8 purchased? And let's start --
9 The Jones property, the Solares property, other than
10 that two, do you recall --
11 A. There was two more.
12 Q. Do you have any knowledge about what happened to
13 those four properties?
14 A. As far as I know, they were all foreclosed on.
15 Q. And when you say "as far as I know," do you have any
16 recollection or what's the last point of where you had any
17 knowledge of what was going on with these properties?
18 A. It's been years. Several years.
20 THE COURT: All right. Any recross, Mr. Tedmon?
25 MR. GREINER: Briefly, Judge.

2 BY MR. GREINER:
3 Q. The Government asked you -- first cover the Jones
4 property -- if you made any repairs. Do you remember that?
5 A. Yes.
6 Q. They also asked you if you paid any utility bills, do
8 A. Yes.
9 Q. Your understanding is the rental agreement with
10 Ms. Jones had her paying for repairs to the property, correct?
11 A. Yes.
12 Q. Had her paying utilities, correct?
13 A. Yes.
14 Q. Move to the Solares property. Your understanding of
15 the rental agreement with Ms. Solares was that she was to make
16 payments for repairs, correct?
17 A. Yes.
18 Q. Your understanding she was to pay for the utilities,
19 correct?
20 A. Yes.
21 MR. GREINER: Thank you. No further questions.
22 THE COURT: Redirect?
23 MR. GREINER: Wait. Sorry. I do have one other
24 question.
25 Q. BY MR. GREINER: The foreclosure that happened on the

1 Solares property, that didn't happen to Ms. Solares, did it?
2 A. I don't know.
3 Q. Okay. Well, she didn't own the property, you did,
4 correct?
5 A. Yes.
6 Q. You hadn't sold it back to her, correct?
7 A. No.
8 Q. Is a foreclosure on your credit report, do you know?
9 A. I'm not sure.
10 Q. Okay. You haven't checked?
11 A. No. I've checked recently, and it doesn't say
12 anything under the foreclosures, no.
13 Q. And the Jones property, you never sold the Jones
14 property back to Ms. Jones, correct?
15 A. Correct.
16 Q. Did the foreclosure happen to you on that property?
17 A. I believe so.
18 MR. GREINER: No further questions, Judge.
19 THE COURT: Brief redirect?
20 MR. MORRIS: Brief.
22 BY MR. MORRIS:
23 Q. All those understandings Mr. Greiner just asked you
24 about, your prior testimony was you didn't have any contact
25 with Ms. Jones or Ms. Solares until the end, is that correct?

1 A. Yes.
2 Q. So where did you get that understanding about what
3 the terms of the agreement were?
4 A. I believe it was Tua Vang in the process explained
5 that to me. That they would be handling everything.
6 Q. So you never had any direct interaction with
7 Ms. Jones or Ms. Solares when these agreements were being made?
8 A. Not until I was contacted by the mortgage company
9 saying they were behind on payments.
10 Q. And your testimony, I think, was that you recall
11 signing loan applications and perhaps a deed?
12 A. Yes.
13 Q. And nothing else?
14 A. Yes.
15 Q. So you never signed a rental agreement with anybody?
17 Q. You never signed any kind of a trust agreement with
18 somebody?
20 Q. To your knowledge, other than perhaps a deed, were
21 there any documents that reflected an agreement between you and
22 Ms. Jones?
23 A. Not that I know of, no.
24 Q. How about the same question for Ms. Solares?
25 A. The same.

1 MR. MORRIS: Nothing further, Your Honor.
2 THE COURT: May this witness be excused?
3 MR. GREINER: One question for each property.
5 BY MR. GREINER:
6 Q. Jones property. You signed a contract with a
7 property management company to manage that property, correct?
9 Q. Solares property. You signed a property management
10 contract to manage that property also, correct?
11 A. I believe so.
15 THE COURT: All right. Mr. Tedmon, Mr. Samuel, may
16 this witness be excused?
17 MR. TEDMON: Yes.
18 MR. SAMUEL: Yes.
21 THE COURT: All right. You are excused, sir. You
22 may step down.
23 All right. Government's next witness? We have about
24 15 minutes to our first break, if we can fill that.
25 MR. ANDERSON: The United States calls Brett

1 Hellstrom.
8 THE WITNESS: Brett Hellstrom, B-r-e-t-t,
9 H-e-l-l-s-t-r-o-m, as in Mary.
11 BRETT HELLSTROM,
16 BY MR. ANDERSON:
17 Q. Good morning, Mr. Hellstrom.
18 A. Morning.
19 Q. Who do you work for?
20 A. JPMorgan Chase.
21 Q. What's your job there?
22 A. Loan quality review analyst.
23 Q. What is a loan quality review analyst?
24 A. Another word for an underwriter. I audit
25 underwriters for JPMorgan Chase.

1 Q. How long have you worked in the mortgage industry?
2 A. Approximately 14 years.
4 MR. SAMUEL: Join.
6 Q. BY MR. ANDERSON: At some point did you work for Long
7 Beach Mortgage?
8 A. Yes.
9 Q. When was that?
10 A. Started January 3rd, 2005.
11 Q. How did it come about that you eventually ended up
12 working for JPMorgan Chase?
13 A. Back in September of 2008, Chase acquired Washington
14 Mutual, and I kept my job.
15 Q. And you said you worked for Long Beach Mortgage, and
16 Washington Mutual was acquired by JPMorgan Chase. What's the
17 relationship between Washington Mutual and Long Beach Mortgage?
18 A. Long Beach Mortgage was our subprime division in
19 Washington Mutual.
20 Q. And I think you started explaining what Long Beach
21 Mortgage did, but could you explain to the jury what type of
22 business Long Beach Mortgage was?
23 A. We made residential mortgages.
24 Q. What's a residential mortgage?
25 A. It's a loan on a home.

1 Q. What areas of the country did you make loans in?
2 A. As a company?
3 Q. Yes.
4 A. All over the U.S.
7 Q. BY MR. ANDERSON: What office were you working out
8 of?
9 A. I worked in Schaumburg, Illinois.
10 Q. What was your job title at Long Beach Mortgage in
11 2005/2006?
12 A. Senior mortgage underwriter.
13 Q. What was your responsibilities as a senior mortgage
14 underwriter?
15 A. Made loan decisions on residential mortgages.
16 Q. Are you familiar with the underwriting practices of
17 Long Beach Mortgage during 2005 and 2006 when you worked there?
18 A. Yes.
20 THE COURT: Overruled. This is foundational. The
21 Court understands it to be foundational.
22 Q. BY MR. ANDERSON: What types of loans was Long Beach
23 Mortgage offering at the time?
24 A. We made mortgages on residential, or primary
25 residence, or investment properties.

1 Q. Were you a wholesale lender or retail lender?
2 A. We did both.
3 Q. What's a wholesale lender?
4 A. A wholesale lender is where the customer would go to
5 what we consider a broker shop, so, meaning, they would go to
6 them, and we would have a representative that would go into
7 that broker shop and solicit mortgages from them. They would
8 be signed up with Washington Mutual to do mortgages.
9 Q. And in contrast, what's a retail?
10 A. Retail is where the customer comes directly to us.
11 So they go to the bank or to an office that we had.
12 Q. All right. So the distinction is whether or not a
13 person goes through a broker or goes directly to your company?
15 Q. Are you familiar with the loan process at Long Beach
16 Mortgage during 2005 and 2006 from your personal experience
17 working there?
18 A. Yes.
19 Q. Could you describe, generally, how that process
20 worked at Long Beach Mortgage in that timeframe?
24 THE COURT: The Court at this point would allow some
25 brief voir dire from the defense --

1 MR. ANDERSON: Okay.
2 THE COURT: -- before you go any further.
3 Does the defense wish to voir dire as to the
4 foundational issues?
5 MR. GREINER: Yes.
7 VOIR DIRE EXAMINATION
8 BY MR. GREINER:
9 Q. Morning, sir.
10 A. Morning.
11 Q. You never worked in any office in California,
12 correct?
14 Q. And the home office of Long Beach Mortgage used to be
15 in Dublin, correct?
16 A. We had several loan fulfillment centers. We were
17 part of Washington Mutual, so Washington Mutual was out of
18 Seattle.
19 Q. Directing you back to my question. Long Beach's home
20 office used to be in Dublin, correct?
21 A. I don't know where they considered home office. Like
22 I said, I worked for Washington Mutual, and I worked for a loan
23 fulfillment center in Schaumburg, Illinois.
24 Q. You never had any interaction at all with the
25 California offices, did you?

1 A. What do you mean interactions?
2 Q. Well, you were never out here at any of the
3 California offices in 2005/2006, correct?
5 Q. You never gave any seminars out here in 2005/2006,
6 correct?
8 Q. All right. So all of your professional workings were
9 solely in Illinois in 2005/2006, correct?
11 Q. Does the name -- well, let's see -- you know that in
12 2005 Long Beach Mortgage made a business decision to have
13 underwriting done in regional offices, correct?
14 A. We had loan fulfillment centers, correct.
15 Q. But you understand specifically in 2005 that Long
16 Beach Mortgage made a business decision to have underwriting
17 done in regional offices, correct?
18 A. We did them in separate offices, correct, depending
19 on where the loan was originated.
20 Q. Correct. And you understand in 2005 Long Beach
21 Mortgage made a business decision that underwriting was to be
22 assigned regionally, correct?
23 A. I don't know when the decision was made, but we --
24 like I said, we had loan fulfillment centers throughout the
25 U.S. And depending on what region the loans were coming from,

1 that's what LLC they went to.
2 Q. Okay. Well, you knew in 2005 that that's how Long
3 Beach Mortgage operated is that underwriting was done on a
4 regional basis only, correct?
5 A. Correct.
6 THE COURT: Are you concluded, Mr. Greiner?
7 MR. GREINER: I am.
8 THE COURT: Any other voir dire? Mr. Samuel?
9 MR. SAMUEL: Yes.
11 BY MR. SAMUEL:
12 Q. Now the reason why underwriting was assigned
13 regionally was because there was various products available in
14 certain regions but not other regions, is that correct?
15 A. Not to my knowledge.
16 Q. Not to your knowledge. They were all the same
17 product?
18 A. We offered products throughout the country, and we
19 followed guidelines throughout the country. So it was just --
20 regional was easier to bring stuff to the areas that they were,
21 like underwriting.
22 Q. You did not work on any underwriting projects from
23 the State of California, did you?
24 A. Did I underwrite loans in California?
25 Q. In 2005/2006 you were residing in Illinois, correct?

2 Q. And you were working in Illinois, working on their
3 regional programs, correct?
4 A. Correct.
5 Q. You were not working the regional programs in
6 California, correct?
7 A. Correct.
8 Q. You were not working them. Thank you.
12 BY MR. TEDMON:
13 Q. Mr. Hellstrom, in 2005/2006, your work with Long
14 Beach Mortgage was restricted to the region in Illinois,
15 correct?
16 A. I handled the midwest region, which could include
17 Illinois, Wisconsin, Indiana, Ohio, Michigan.
18 Q. It didn't include California, correct?
19 A. Correct.
20 Q. So you had no personal knowledge of what was done in
21 the region in which California was in at that time, correct?
22 A. Can you --
23 Q. Yes. You've already testified that you were in this
24 midwest region, correct?
25 A. Correct.

1 Q. Which would not include California, correct?
2 A. Correct.
3 Q. So you had no personal knowledge of what went on in
4 the California region because you weren't in that region during
5 that time, correct?
6 A. Correct.
8 THE COURT: Mr. Anderson, any redirect on this
9 foundation?
10 MR. ANDERSON: Yes, Your Honor. I'll focus it on
11 this issue before the break.
13 BY MR. ANDERSON:
14 Q. Mr. Hellstrom, was there a uniform set of guidelines
15 at Long Beach Mortgage that applied across the regions?
16 A. Yes.
18 Q. BY MR. ANDERSON: During 2005 and 2006?
19 A. Yes.
20 Q. And in 2005 and 2006 were there consistent policies
21 in place across the regions regarding loan applications and the
22 underwriting process?
23 A. Yes.
24 Q. And in 2005 and 2006 did you handle loans that
25 originated from other regions than your own?

1 A. Yes.
2 Q. Could you explain how that happened?
3 MR. TEDMON: Your Honor, I'm going to object on
4 relevance. Unless it has to do with these files in this case
5 or this region, it's not relevant.
6 THE COURT: Overruled. You may answer that question.
7 THE WITNESS: Depending how busy the LLCs were, if we
8 had the capacity to help out other LLCs throughout the country,
9 they would ship their files to us overnight, and we would
10 underwrite those files for them.
11 Q. BY MR. ANDERSON: When you did underwriting from
12 other regions, did you apply a different set of underwriting
13 guidelines?
14 A. No.
15 Q. Was there a different set of underwriting guidelines
16 that came along with loans depending on the region they were
17 from?
18 A. No.
19 MR. GREINER: Objection. Relevance, Judge.
21 Q. BY MR. ANDERSON: And based on your personal
22 interaction with those loans, was there a consistent method
23 that you were applying?
25 MR. SAMUEL: Also calls for speculation because it

1 calls for all parties, not just him.
2 THE COURT: That's sustained. Can you zero in on
3 California.
4 Q. BY MR. ANDERSON: Did you handle any loans that
5 originated from California?
7 Q. BY MR. ANDERSON: In 2005 and 2006?
8 A. Yes.
9 Q. Let's focus in. I'm not going to ask you a question
10 about any other time period than 2005 and 2006 unless I
11 specify. Okay?
12 A. Yes.
13 Q. In 2005/2006, did you deal with loans that originated
14 in California?
16 Q. And were the underwriting guidelines applied to loans
17 from California the same as the underwriting guidelines that
18 applied from other parts of the country including the midwest
19 region?
20 A. Yes.
21 MR. GREINER: Objection. Lack of foundation.
23 MR. ANDERSON: This is probably a good breaking
24 point.
25 THE COURT: This is a good time for our break. So

1 let's take a 15-minute break. During the break, please
2 remember all of my admonitions. Remember that you will receive
3 everything you need to ultimately fulfill your role as jurors
4 in this courtroom. Don't do any research. If there is
5 anything I need to know, let me know in a note. Have a good
6 break.
7 (Jury out.)
8 THE COURT: You may be seated. You may step down,
9 sir. Please be back in your seated in 15 minutes.
10 Briefly, given what we have just heard from the
11 defense, why should Mr. Hellstrom not be allowed to testify in
12 a focused manner based on what he knew about the underwriting
13 guidelines and their application without straying into expert
14 testimony. Mr. Greiner?
15 MR. GREINER: Well, he does not have the foundation,
16 Judge. First, he says he didn't do any loans in California.
17 He didn't know anything about the guidelines. That was on
18 Mr. Tedmon's voir dire.
19 And then when the Government gets up there and then
20 he says, well, did you underwrite loans in California? Then he
21 says, oh, yes, I did.
22 So, first of all, his credibility is at issue because
23 he has two different answers. Second of all, he never did any
24 loans in California. He's not familiar with the loans in
25 California. And so he doesn't have that foundation for 701.

1 He doesn't have that personal knowledge.
2 What he's using is he's using his specialized
3 knowledge at Long Beach, which is a 702 use, to try to get into
4 a 701, and that's just not appropriate.
5 THE COURT: How do you explain the potential
6 inconsistencies in his testimony, Mr. Anderson?
7 MR. ANDERSON: Defense counsel is very skilled, and
8 those were very narrowly focused questions. And you could see
9 Mr. Hellstrom thinking about the way that the question was
10 phrased and answering it very carefully to give a truthful
11 answer only to the question that was asked.
12 And when the question was asked as narrowly as
13 defense counsel put it, you were in California, he had to
14 answer truthfully "no." But when I asked him a broader
15 question about whether or not he had handled loans from
16 California and talked about how they would transfer loans from
17 other areas, then he was able to answer "yes" to that question.
18 So I think it was very conscientious witness who was
19 trying to answer the question asked. No more.
20 THE COURT: I do think the phrasing of the questions
21 was slightly different. I think there's grist for the
22 cross-examination mill there.
23 But what's the proffer about where you're going with
24 this? I think it has to be brief and very focused.
25 MR. ANDERSON: It will be a lot like the cases cited

1 in the Government' filing last night, Your Honor, where we're
2 going to talk about, first of all, the process at Long Beach
3 Mortgage, where there are underwriters and account executives,
4 and what the different positions do, how a loan travels through
5 the process.
6 But then also what the underwriting guidelines were,
7 what a 1003 looks like, and what factors on the 1003 are
8 important to the underwriter in determining whether or not to
9 approve a loan.
10 I'm not going to ask him to opine that a loan was
11 fraudulent, and I don't plan to ask him to opine that a loan
12 should not have been approved if other certain facts were the
13 case; in other words, I'm not going to ask him hypotheticals
14 like you would an expert.
15 I'm simply asking, are these important factors on a
16 loan, what are the definitions of various terms that were in
17 general use at the time in the industry. So it's not expert
18 testimony. It's, at most, this lay testimony that was
19 discussed in the Government's brief.
20 THE COURT: Anything else that the defense wants to
21 say? I'm inclined to allow that but police the matter. It has
22 to be limited to the timeframe at issue. That needs to be
23 clarified in the questions that are asked.
24 MR. SAMUEL: Let me just understand what the
25 Government's intending on doing.

1 Is it my understanding that the Government is not
2 going to specifically ask the question that if this information
3 was known to the lending agency, that it would be material, and
4 that it would not have made that loan? That's my
5 understanding, is that correct?
6 MR. ANDERSON: The way I'm planning to phrase the
7 questions, Your Honor, is, is a person's income important to --
8 I'm not going to use exactly these words -- but essentially is
9 it important -- income listed on this important to an
10 underwriter's decision under the underwriting guidelines as to
11 whether or not to approve a loan at that time.
12 THE COURT: In 2005?
13 MR. ANDERSON: Right. Well, what I want to do is
14 specify all the questions will be 2005/2006.
15 MR. SAMUEL: Those should be yes or no answers with
16 nothing further?
17 MR. ANDERSON: There should be some explanation of
18 why income is important. We look at income because that shows
19 ability to repay the loan. Those sorts of things will be also
20 added to explain why a particular thing is important.
21 But as far as if his income was really 4,500 instead
22 of 9,000, would this loan have been approved? No. We're not
23 going to ask that.
24 THE COURT: All right. Because in fact many of the
25 loans were approved.

1 MR. ANDERSON: Well, they didn't know that -- what
2 I'm suggesting is I won't give a hypothetical that says the
3 real information.
4 THE COURT: All right. I'm going to allow some
5 questioning, but please clarify the timeframe, please ask the
6 witness to answer yes or no initially.
8 THE COURT: And then only, depending on the answer,
9 will there be brief follow-up focused in the way Mr. Anderson
10 has described.
11 Any objections may be made, and I'll consider them
12 based on the exact circumstances at the time. Mr. Greiner?
13 MR. GREINER: Three quick points, Judge.
14 Number one, for the record, I'm objecting to
15 Mr. Hellstrom testifying at all, so that I will only object
16 during his testimony if something I think needs specific
17 objection.
18 But, number two, Mr. Hellstrom testified about
19 California, gets him into California law versus Illinois law,
20 Wisconsin law, and so he doesn't have that knowledge, and
21 that's --
22 THE COURT: Well, that can be an objection. We'll
23 see if we need to get there.
24 MR. ANDERSON: I don't think we're going to hear a
25 lot about Mr. Hellstrom opining on the law. I think it's the

1 underwriting guidelines he will be talking about.
2 MR. GREINER: Third point is, if Mr. Hellstrom is
3 going to start talking about underwriting guidelines, I'm going
4 to ask that those guidelines be produced by the witness to
5 allow effective cross-examination. That's what I asked for in
6 my motion in limine. That's what I asked the Government for
7 before trial. That's what I'm asking now.
8 Because what happened in the first trial is that the
9 witness got up on the stand and started talking about
10 guidelines, and defense counsel could not cross-examine whether
11 that was true, false, or indifferent.
12 THE COURT: Are the guidelines in the record on the
13 exhibit list?
14 MR. ANDERSON: No, Your Honor, they are not, and it
15 was not at all clear to the Government that that's what
16 Mr. Greiner has been asking for in his motion in limine.
17 As the Government repeatedly said, we did not
18 understand what he was asking for. They are not marked as an
19 exhibit. Mr. Greiner could obtain them, I'm sure, through a
20 17(c) subpoena if he thought it was important to his defense.
21 THE COURT: Well, at this point, subject to
22 cross-examination and possibly of a jury instruction. We're
23 going to take our break. Ten more minutes.
24 (Break taken.)

1 MR. TEDMON: Your Honor, before the jury comes in, I
2 just want to make sure the record is clear. I'm objecting to
3 the witness testifying based on lack of foundation.
4 THE COURT: Objection noted. I assume that's for all
5 the defendants?
7 MR. SAMUEL: Yes.
8 THE COURT: Overruled, subject to the clarification
9 and the narrowing of the testimony as discussed before the
10 break. Ms. Schultz.
11 (Jury in.)
13 courtroom, ladies and gentlemen. We will pick up again with
14 the examination of this witness by the Government.
15 Mr. Anderson.
18 MR. ANDERSON: This will take a while to get through
19 the background and the documents. We'll at least go through
20 the next break, if not with the Government's part with the
21 defense cross. I'm sure.
23 DIRECT EXAMINATION (CONT'D)
24 BY MR. ANDERSON:
25 Q. I think where we left off back a ways was, if you

1 would describe the way that the loan process worked at Long
2 Beach Mortgage generally? And remember that we're talking
3 2005/2006 for all these questions?
4 A. You want to know how they were submitted to Long
5 Beach Mortgage?
6 Q. Right. What was the process that wholesale loans
7 went through?
8 A. Well, the customer would go to a broker, and we would
9 have a representative from Long Beach Mortgage who would
10 solicit business from that broker.
11 Q. What was that representative called?
12 A. A loan officer, account executive.
13 Q. Okay. And then if you'd continue. What was the next
14 step in the process?
15 A. Then if they had a customer who was looking for a
16 mortgage, and we had a product that we could put them in, we
17 would take an application from the broker, and the loan officer
18 would submit it to our loan fulfillment center, where we would
19 actually board the loan into our system.
20 And then after the loan would be boarded, it would be
21 assigned to a processor, an account executive, who would handle
22 the loan between the loan officer and the broker. And once
23 there was enough information in the loan file, they would ship
24 that loan off to underwriting. The loan would be underwritten
25 to a set of conditions. Once the conditions were met, the loan

1 would be set up for a closing, and then a closing, and then a
2 funding.
3 Q. When you mention underwriting, who does the
5 A. An underwriter.
6 Q. What are the job duties of an underwriter?
7 A. Underwriter makes loan decisions based on income,
8 assets, credit, and collateral.
9 Q. Is there such a thing as underwriting guidelines?
10 A. Yes.
11 Q. What role did those guidelines play in the decision
12 making of underwriters at Long Beach Mortgage in 2005/2006?
13 A. We'd apply guidelines to actual loan scenarios either
14 with income, credit, credit history, things of that nature.
15 Q. Were all applications for mortgage loans at Long
16 Beach Mortgage reviewed by an underwriter?
17 A. Yes.
18 Q. Did an underwriter have to approve every loan
19 application before the loan could be funded?
20 A. If a loan would be funded, yes, it would be approved.
21 Q. In other words, without an approval from an
22 underwriter, a loan could not be funded?
24 Q. Were underwriters at Long Beach Mortgage paid a
25 commission for approving a loan?

1 A. No. Not for approving a loan.
2 Q. Why not?
3 A. We were paid a salary, and then we were paid a bonus
4 based upon how many decisions we made a month. That could be
5 an approval, a decline, a suspense.
6 Q. Were underwriters at Long Beach Mortgage given any
7 kind of financial incentive to approve loans that they
8 reviewed?
9 A. No.
10 Q. Were loan applications reviewed for evidence of
11 fraud?
12 A. Yes.
13 Q. Did you ever find evidence of fraud in loan
14 applications you reviewed?
15 A. Yes.
19 THE COURT: The jury shall disregard that exchange.
20 Sustained.
21 Q. BY MR. ANDERSON: Do you have knowledge of what the
22 process would be if fraud was discovered in a loan application?
25 Q. BY MR. ANDERSON: Were there procedures in place to

1 address loan applications where evidence of fraud was
2 discovered?
5 Q. BY MR. ANDERSON: Did Long Beach Mortgage require
6 potential borrowers to complete a loan application in every
7 case?
8 A. Yes.
9 Q. What was that loan application called?
10 A. Residential loan application, an application, 1003,
11 all interchangeable.
12 Q. So all those terms mean the same thing?
13 A. Correct.
14 Q. Was that form completed by an employee of Long Beach
15 Mortgage or by someone else?
16 A. Depending on the loan application itself. If it was
17 done at a broker shop, it would have been done by broker shop
18 by the broker or his associate. And if it was retail, then it
19 would be a representative of Long Beach Mortgage.
20 Q. This 1003 form, is it an industry-wide form?
21 A. Yes.
22 Q. Once the form was completed, did it become part of
23 Long Beach Mortgage's permanent loan file?
24 A. Yes.
25 Q. Did Long Beach Mortgage typically keep a copy of its

1 loan files in the regular course of business?
2 A. Yes.
3 Q. Are you familiar with the 1003 form from your work at
4 Long Beach Mortgage?
5 A. Yes.
6 Q. Does the 1003 form give notice that Long Beach
7 Mortgage is going to rely on the information in the form?
8 A. Yes.
9 Q. Does the 1003 form give notice -- and, again, we're
10 still in 2005/2006 -- give notice that it's a crime to
11 deliberately put false information on the form?
12 A. Yes.
15 Q. BY MR. ANDERSON: You can answer that.
16 A. Yes.
17 Q. Would Long Beach Mortgage choose not to provide a
18 loan to some borrowers?
19 A. Yes.
20 Q. What were some of the circumstances under which Long
21 Beach Mortgage would not provide a loan?
24 MR. ANDERSON: Under the underwriting guidelines?

1 THE COURT: Overruled. And this is 2005/2006.
2 Q. BY MR. ANDERSON: Yes. All my questions, unless I
3 specify otherwise, are 2005/2006.
4 A. A loan could be denied for income, assets, credit,
5 collateral, misrepresentation.
6 Q. Why would income or collateral be a factor that would
7 be considered under the underwriting guidelines?
10 THE WITNESS: Well, income determines if you can
11 afford to pay for the loan.
12 Q. BY MR. ANDERSON: Is employment a factor that's
13 considered under the underwriting guidelines?
14 A. Yes.
15 Q. Why is that?
16 A. Look at employment for stability. Meaning, do you
17 have job stability? Do you have the ability to repay a loan
18 over a period of time? So if you have strong job history,
19 that's a plus in the underwriting world.
20 Q. Are assets also considered?
21 A. Yes.
22 MR. GREINER: Objection to the "underwriting world."
23 Strike "world." Not relevant.
25 disregard that answer. These answers are based on --

1 Q. BY MR. ANDERSON: Let me focus that question back.
2 With respect just to Long Beach Mortgage, was that an
3 important factor under the underwriting guidelines?
4 A. Yes.
6 MR. TEDMON: Well --
7 THE COURT: At this point --
8 MR. TEDMON: I don't know what Mr. Anderson is
9 referring to.
10 THE COURT: For clarity, just start over completely.
11 Q. BY MR. ANDERSON: All right. Let's start back.
12 Well, we've got income. Let's talk about employment.
13 Was employment an important factor under the
14 underwriting guidelines at Long Beach Mortgage in 2005/2006?
15 A. Yes.
16 Q. Why was that?
17 A. Show job stability. Show they had the capacity to
18 repay the loan over time.
19 Q. Was it also looked at in conjunction with income?
20 A. Yes.
21 Q. Could you explain how that worked?
22 A. Well, income levels need to be in line with the
23 actual job that customer had. So you would look at what they
24 do and their income level depending on what type of loan it
25 was.

1 Q. What about other assets owned by the borrower, was
2 that a factor that was looked at at Long Beach Mortgage in that
3 time period?
4 A. Yes.
5 Q. What is the importance of other assets like other
6 properties?
7 A. Other properties are -- could be a debt to the
8 customer, so we would need to know do they own other
9 properties, are they liable for any other debts.
10 Q. What about whether or not a down payment was
11 borrowed?
12 A. Repeat the question?
13 Q. Well, let's come back to it when we look at the loan
14 applications.
15 Now, after underwriting, there is some steps that you
16 described and it goes to closing. Could you describe what
17 happens from the perspective of Long Beach Mortgage at that
18 stage in the process?
21 THE WITNESS: If a loan is set to close, that means
22 we're ready to fund the loan. So at that particular point in
23 time, the transaction is going to become final, so we are going
24 to, at that point, be giving a loan for a property.
25 Q. BY MR. ANDERSON: And is that done through an escrow

1 company or title company?
3 Q. Why is it done through an escrow or title company?
5 THE COURT: Well, sustained. But lay a foundation.
6 Q. BY MR. ANDERSON: At some point is there such a thing
7 as a prior loan payoff in the mortgage process?
8 A. A prior mortgage payoff?
9 Q. Yes.
10 MR. GREINER: Objection. Relevance. Mortgage
11 process? Underwriting.
12 THE COURT: You can rephrase.
13 Q. BY MR. ANDERSON: All right. Are you familiar with
14 the term -- just yes or no -- of prior loan payoff or prior
15 mortgage payoff?
16 A. Yes.
18 A. Well, if there happens to be a lien or mortgage on
19 the existing property that needs to be paid off at closing to
20 complete the transaction.
21 Q. And when is that accomplished?
22 A. I'm sorry?
23 Q. Is that accomplished through escrow?
24 A. Correct.
25 Q. And why does the prior loan or prior mortgage need to

1 be paid off when the transaction closes?
2 A. Because we're doing a first mortgage on the property,
3 so we would need to be in first position. So any liens that
4 are on the property need to be paid in order to ensure that
5 we're in first position.
6 Q. So that you'd have first claim on the property if
7 there was a default?
8 A. Correct.
12 THE COURT: The jury shall disregard that exchange.
13 Q. BY MR. ANDERSON: Why do you need to be in first
14 position?
15 A. Well, we're doing a first mortgage on a property so
16 we want to be in first position to secure -- our loan secures
17 the property. Our failsafe is the property itself. So if
18 we're not in first position, that puts us at a risk of not
19 being able to recoup some of our money or all of our money.
20 Q. Are you familiar with the term straw buyer --
21 A. Yes.
22 Q. -- from your work at Long Beach Mortgage in
23 2005/2006?
24 A. Yes.
25 Q. Was that a term in use in the company at that time?

1 A. Yes.
2 Q. What is a straw buyer in your understanding?
3 A. Straw buyer is somebody who is --
4 MR. SAMUEL: Objection. Irrelevant.
6 THE WITNESS: Straw buyer is somebody who is
7 purchasing a property for someone else with no intent of either
8 occupying the property or actually paying the loan back.
9 Q. BY MR. ANDERSON: Under the underwriting guidelines,
10 was that an important factor to look at?
11 A. Yes.
12 Q. Why?
13 A. Well, if it's a straw buyer, they don't have any
14 intention to pay the company back. It's not their transaction.
15 MR. TEDMON: Objection, Your Honor. Getting into
16 speculation, and I think getting close to rendering an opinion.
17 I would move to strike.
20 THE COURT: The jury shall disregard. At this point,
21 move to another set of questions.
22 MR. ANDERSON: Your Honor, could I rephrase and ask
23 the question?
24 THE COURT: You may attempt to.
25 Q. BY MR. ANDERSON: What, from the position of Long

1 Beach Mortgage, is the danger of approving a loan that relies
2 on a straw buyer?
3 MR. TEDMON: Objection, Your Honor.
5 MR. TEDMON: This is clear opinion.
7 Q. BY MR. ANDERSON: All right. Let's turn to some of
8 the 1003 forms.
9 Did you review any Long Beach Mortgage loan file
10 documents in preparation for testifying today?
11 A. Yes.
12 Q. Do you recall how many you reviewed?
13 A. I don't know the number. I'm sorry.
14 Q. If we talk about them, will you remember the specific
15 ones?
16 A. Yes.
17 Q. Were you personally involved in underwriting any of
18 those specific loans?
19 A. No.
20 Q. Were you familiar with the guidelines and practices
21 in place at the time those loans were underwritten?
22 MR. TEDMON: Objection. We don't know what the loans
23 are yet. Vague.
24 THE COURT: Sustained. Lay a foundation.
25 Q. BY MR. ANDERSON: For the loans that you reviewed in

1 preparation for your testimony, were you familiar with the
2 guidelines and practices in place at the time those loans were
3 underwritten?
4 MR. TEDMON: Objection, Your Honor. If he wants to
5 produce the documents, we can go through them. But that is
6 general, vague, and I don't know what he looked at.
7 THE COURT: Can you identify with specificity?
8 MR. ANDERSON: That was the next question.
9 THE COURT: Well, let's do that now. Overruled,
10 subject to that follow-up.
11 Q. BY MR. ANDERSON: All right. Did you look at a loan
12 for a property 28925 Via Adelena, A-d-e-l-e-n-a, in Valencia,
13 California?
14 A. Yes.
15 Q. And 911 Fox Chapel Lane in Jacksonville, Florida?
16 A. Yes.
17 Q. 3509 38th Street, Sacramento, California?
18 A. Yes.
19 Q. 896 Yellowstone Road, Cleveland Heights, Ohio?
20 A. Yes.
21 Q. And I can also give you purchaser names if that would
22 help. 115 Bedford Street, West Bridgewater, Massachusetts?
23 A. Yes.
24 Q. 3390 Foxcroft Road, Number C-308, Miramar, Florida?
25 A. Yes.

1 Q. For all of those loans that we just talked about,
2 were you familiar with the guidelines and practices in place at
3 the time those loans were underwritten?
4 A. Yes.
6 Government's Exhibit 18B be admitted pursuant to the
7 stipulation as a document produced by JPMorgan and kept in the
8 regular course of business.
10 MR. TEDMON: Just for clarification, 18B is a
11 seven-page document. Is it counsel's intent --
12 MR. ANDERSON: It is, Your Honor. And we're
13 intending to introduce the entire document.
14 THE COURT: 18B, as in boy, seven pages. Mr. Tedmon,
15 any objection? Well, 18B has already been admitted.
16 MR. ANDERSON: Let's pull that up.
17 THE COURT: That may be displayed.
19 A. Yes.
20 Q. What is it?
21 A. It's a 1003 or application.
22 Q. And this is a loan application like we have been
23 talking about?
25 Q. We will highlight the top of page one. I would like

1 to walk you through the information that's contained on this
2 loan.
3 Now, it references "borrower" at the top left, and
4 there is a signature. In the process at Long Beach Mortgage,
5 who is the borrower? Not who they are, specifically, but what
6 position is the borrower in?
7 A. They are the one seeking a loan.
8 Q. And does this explain -- is there a place on this to
9 identify whether or not this is going to be a purchase or a
10 refinance or other type of loan?
11 A. Yes.
12 Q. Is that located right there?
14 Q. Does this application also identify whether or not
15 the property will be a primary residence or investment
16 property?
17 A. Yes, it does.
18 Q. In this particular case, what's checked?
19 A. Investment property.
20 Q. And is the address of the property also listed?
21 A. Yes.
22 Q. If you touch the screen, you can highlight where that
23 is.
24 A. (Indicating.)
25 Q. So that would be 115 Bedford Street, is that correct?

1 A. Correct.
2 MR. TEDMON: Your Honor, the document speaks for
3 itself. If there are questions about what's on it, that's
4 fine. But it seems a little cumulative from what we already
5 have. It's in evidence.
6 MR. ANDERSON: Preliminary questions. We're not
7 going to go through this with everybody.
8 THE COURT: Move straight to the substance.
9 Q. BY MR. ANDERSON: All right. Is there a place that
10 specifies the amount of the requested loan?
11 A. Yes.
12 Q. Where is that?
13 A. (Indicating.)
14 Q. So in this amount column where it says $310,500?
16 Q. Let's look at the bottom of the page. Does the
17 bottom of the page contain information regarding the borrower?
18 A. Yes.
19 Q. Including present address?
20 A. Yes.
21 Q. Is present address ever an important factor under the
22 underwriting guidelines at Long Beach Mortgage in 2005/2006?
23 A. Yes.
24 Q. Under what circumstances?
25 A. We look for a two-year residence history. Do they

1 rent. Do they own.
2 Q. Why is that important?
3 A. Shows their ability to either to pay rent or to pay a
4 mortgage.
5 Q. Let's look to the next page of this document. Does
6 this page under section four "employment information" list
7 borrower employment information?
8 A. Yes.
9 Q. Is the name and address of the employer an important
10 factor of the underwriting guidelines?
11 A. This section is pertinent to underwriting, correct.
12 Q. And looking at "position, title, type of business,"
13 here where it says "staff sergeant, E5, supervisor" is that
14 important?
15 A. Yes.
16 Q. Why is that important?
17 A. We look at what they do in relationship --
18 MR. GREINER: Objection to "we."
19 MR. ANDERSON: Well, I can ask him what he means.
20 THE COURT: Just clarify.
21 Q. BY MR. ANDERSON: What do you mean by "we"?
22 A. As an underwriter, I look at that time in
23 relationship to the income that is put on the application.
24 Q. When you say "I look at that," do you do that because
25 that's your personal view of what you should look at, or is

1 that part of the policies and procedures of Long Beach Mortgage
2 in 2005/2006?
3 A. Part of underwriting is looking at the application
4 and the information provided.
5 Q. What about years on this job, is that a factor under
6 the underwriting guidelines?
7 A. Yes.
8 Q. Why is that?
9 A. Job stability.
10 Q. What about years employed in this line of work or
11 profession?
12 A. Depending on if there are several jobs listed, it can
13 play a factor.
14 Q. Let's go to the bottom of this page and highlight
15 section five.
16 Is there information contained in section five that's
17 important to the consideration of the loan under the
18 underwriting guidelines?
19 A. Yes.
20 Q. What information is important to that consideration?
21 A. The income.
22 Q. And this would be monthly income is listed?
24 Q. And then in this particular circumstance, the monthly
25 income is listed as $6,800 as well as $30 in net rental income?

1 A. Correct.
2 Q. Why is income an important factor under the
4 A. It's used to determine if they can qualify for a
5 loan, meaning can they pay back the loan.
6 Q. So a person with -- maybe this is obvious -- but a
7 person with more income is considered more able to pay back a
8 loan than a person with less income?
9 MR. GREINER: Objection. Hypothetical.
10 MR. TEDMON: Hypothetical.
12 Q. BY MR. ANDERSON: Let's go to page three. Do you see
13 the section marked "assets" in the assets and liabilities
14 portion?
15 A. Yes.
16 Q. Is the asset section a factor that's considered under
17 the underwriting guidelines?
18 A. Yes.
19 Q. Why is that?
20 A. We use that to determine if they can pay their down
21 payment, and if they have any reserves, and it shows their
22 capacity to save.
23 Q. What do you mean capacity to save?
24 A. Meaning if something were to go wrong, do they have
25 savings to continue to pay for the property. Let's say, if

1 they lost their job, or if they had something happen to them,
2 or they were unable to work for a time, that's why that would
3 be important.
4 Q. Let's look at the bottom of the page. Do you see
5 this section "schedule real estate owned"?
6 A. Yes.
7 Q. What is that section for?
8 A. Shows properties owned by the borrower.
9 Q. Is that section important to a determination of a
10 person's ability to qualify for a loan under the underwriting
11 guidelines?
12 A. Yes.
13 Q. Why is that?
14 A. Well, also shows do they have any additional debts or
15 additional income.
16 Q. So back to the ability to repay?
17 A. Correct.
18 Q. Let's turn to page four. Do you see section seven,
19 "details of transaction"?
20 A. Yes.
21 Q. What information is contained in that section on
22 these loan applications?
23 A. A little summary of the transaction, being the
24 purchase price, any type of cost incurred to the borrower, the
25 amount of the loan, and what type of money they would need to

1 bring to closing to complete the transaction.
2 Q. Now if we turn to the right-hand side of the page,
3 section eight, which is "declarations," is that right?
4 A. Yes.
5 Q. In section eight, I'd like to turn your attention to
6 subsection H. Do you see this area?
7 A. Yes.
8 Q. And there is a question: "Is any part of the down
9 payment borrowed?" What does that question asking?
10 A. Did the borrower borrow any money to put -- did the
11 borrower borrow any money for the down payment of the property.
12 Q. Is that something that's looked at under the
13 underwriting guidelines at Long Beach Mortgage 2005/2006?
14 A. Yes.
15 Q. Why is that something that's considered under those
16 guidelines?
17 A. First of all, if it was borrowed, that means they --
18 it's not their money, and they would have an additional payment
19 that we'd have to look at in consideration of the loan, first
20 of all.
21 It could affect their actual loan itself because if
22 they are borrowing their money, then is there going to be a
23 first and a second on the property, meaning for our
24 loan-to-value purposes will it exceed that guideline and will
25 this loan still meet the parameters set forth.

1 Q. You've used the term loan-to-value, is that also
2 called LTV?
3 A. Yes.
4 Q. What is loan-to-value?
5 A. Loan-to-value is the amount of money we're loaning in
6 relationship to the value of the property.
7 Q. Is that a factor that's considered under the
9 A. Yes.
10 Q. How is that factor used?
11 A. Well, depending on what type of transaction we have,
12 if it's a primary residence, we lend more on a primary
13 residence because the risk is not as great as an investment
14 property. So an investment property we will not lend as much
15 because it's a greater risk to the bank.
16 Q. And do you calculate loan-to-value in both primary
17 residence and in investment property transactions?
20 THE WITNESS: Yes, we do.
21 Q. BY MR. ANDERSON: What is the significance of
22 loan-to-value in those types of transactions?
23 A. Again, depending on what type of property it is.
24 Again, if it's primary residence or investment property, we
25 have guidelines set to how much money we would lend on said

1 property. And depending on their credit profile, how much
2 money they could borrow in relationship to the value of the
3 property.
4 Q. And were there set thresholds for different loan
5 products beyond which you couldn't have certain loan-to-value
6 ratios?
8 Q. And then if we look at the bottom of this page, there
9 is also signature areas for the borrower's signature, is that
10 correct?
11 A. Correct.
12 Q. And that's also where the acknowledgements regarding
13 how the statements will be used that were discussed about 15,
14 20 minutes ago are contained, correct?
15 A. Correct.
16 Q. Now on this particular loan application I would like
17 to turn to page five. Do you see that document?
18 A. Yes.
19 Q. What does that reference to?
20 A. Appears to be a missing page.
21 Q. Is that included by JPMorgan when there is a missing
22 page?
23 A. It could have been done at the time the file was
24 copied into records.
25 Q. Okay. So it could have been done prior to JPMorgan

1 at Long Beach Mortgage?
2 A. Correct.
7 disregard that exchange.
8 Q. BY MR. ANDERSON: I guess the question is, you don't
9 have personal knowledge of when, whether it was Long Beach
10 Mortgage or later, that that page got added?
11 A. Correct.
12 Q. Do you know what generally is the fifth page of a
13 loan application?
14 A. I don't know what page is missing here.
15 Q. Let's go to page six. Do you recognize this
16 document?
17 A. Yes.
18 Q. What is it?
19 A. It's a HUD-1 or settlement statement.
20 Q. What's a HUD-1?
21 A. It's a summary of the transaction.
22 Q. Is there a way to determine which property
23 transaction this loan is for?
24 A. Yes.
25 Q. Where is that?

1 A. Property location.
2 Q. Is the loan number also included on this document?
3 A. Yes.
4 Q. Does that reference a Long Beach Mortgage loan
5 number?
6 A. Yes.
7 Q. I'm sorry. I just highlighted that and I deleted it.
8 Right up there?
9 A. Correct.
10 Q. Now, is there also something called debt-to-income
11 ratio that's looked at in loan applications?
12 A. Yes.
13 Q. What is that?
14 A. That's the relationship of your debts to your income.
15 Q. How is that used by the underwriting process?
16 A. Well, in order to determine if somebody can qualify
17 for a loan, we look at their debt-to-income ratio. Usually set
18 at 50 percent. So they need to have a debt-to-income ratio of
19 50 percent or less in order to do a loan.
20 Q. Now, in the course of a transaction, is it also a
21 factor whether or not it's an arm's length transaction being
22 conducted by a broker that would be important to the
24 MR. TEDMON: Objection. Arm's length needs a
25 definition. I think it's outside the scope of what this

1 witness can testify to.
3 MR. SAMUEL: Join.
5 Q. BY MR. ANDERSON: Let me lay some foundation.
6 In the underwriting process, is the relationship of
7 the broker to the purported sale potentially an important
8 factor under the underwriting guidelines?
11 THE COURT: Overruled. Just answer that question yes
12 or no.
13 MR. ANDERSON: Can you repeat the question?
15 can the relationship of the broker to the purported purchaser
16 of a property be an important factor for consideration?
17 A. Yes.
18 Q. Under what circumstances?
22 THE WITNESS: It can impact the deal depending on
23 what the actual relationship is, meaning are they a family
24 member, are they a business associate. There's several
25 different factors that can factor into that type of

1 transaction.
2 Q. BY MR. ANDERSON: Can where the proceeds of a loan
3 from the sale -- can where the proceeds are going impact a loan
4 under the underwriting guidelines?
6 MR. ANDERSON: Well, yes or no.
9 THE WITNESS: Yes.
10 THE COURT: When I sustain an objection, don't
11 answer.
12 MR. GREINER: Move to strike that.
13 THE WITNESS: Sorry.
14 THE COURT: The jury shall disregard that answer. I
15 think it understands that at this point.
16 Q. BY MR. ANDERSON: That's okay.
17 So does it matter under the underwriting guidelines
18 where the proceeds of the loan that Long Beach Mortgage is
19 funding are going in the transaction?
20 MR. TEDMON: Objection. It's vague, Your Honor.
22 Q. BY MR. ANDERSON: Does it matter under the
23 underwriting guidelines if the proceeds of the loan are not
24 actually going to the seller of the home?

2 MR. TEDMON: That is a hypothetical.
4 Q. BY MR. ANDERSON: All right. Under the underwriting
5 guidelines, would it be a factor that would be considered by
6 the underwriter --
7 Well, just made my own objection, Your Honor. I'm
8 going to withdraw the first part of that question.
9 Are certain disclosures made to Long Beach Mortgage
10 about where money is going in a transaction?
11 MR. GREINER: Objection. Relevance. Certain
12 disclosures.
13 THE COURT: Overruled. You may answer that yes or
14 no, if you're able.
15 THE WITNESS: I'm not able to. Sorry.
16 Q. BY MR. ANDERSON: Okay. All right. Let's go to
17 Government's Exhibit 17B.
18 And if that hasn't been admitted, Your Honor, I will
19 ask that be admitted pursuant to the stipulation as another
20 JPMorgan business record.
21 THE COURT: That has not been admitted.
22 MR. TEDMON: I'm sorry, Your Honor?
23 THE COURT: 17B, as in boy. Any objection?
24 Mr. Tedmon?
25 MR. TEDMON: I just want to check the date, Your

1 Honor, is all.
2 THE COURT: There appears to be ten pages.
3 MR. SAMUEL: Is it B or C?
4 MR. ANDERSON: B, as in boy.
5 THE COURT: 17B.
6 MR. TEDMON: Subject to the variance issue, no
7 objection.
9 MR. GREINER: Same objection, the variance.
12 THE COURT: All right. Exhibit 17B comes in over
13 that objection. 17B may be displayed.
15 Application in the name of Marjorie Sly for property at 896
16 Yellowstone Road, Cleveland, OH; HUD Settlement Statement
19 A. Yes.
20 Q. What is it?
21 A. It's an application.
22 Q. Is this another application that you reviewed in
23 preparation for your testimony here today?
24 A. Yes.
25 Q. And this is the one for Yellowstone Road in Cleveland

1 Heights?
2 A. Correct.
3 Q. Now going from pages one to five, does that
4 constitute the application portion of this exhibit? We'll
5 scroll through them so the witness can see them.
6 A. Yes.
7 Q. With respect to this application, do the answers you
8 gave regarding what's important in the underwriting process
9 apply also to the time period that this loan application was
10 originated under?
11 A. Yes.
12 Q. And the same factors would also be important under
13 the underwriting guidelines with respect to this application?
14 A. Correct.
15 Q. Let's look at page five on this document. What is
16 page five here on this document?
17 A. It's a continuation sheet of the application for the
18 assets and liabilities.
19 Q. Well, let's go to page six. Do you recognize this
20 document?
21 A. Yes.
22 Q. What is it?
23 A. A HUD-1 or settlement statement.
24 Q. And let's scroll through to page ten on this
25 document. Does this also constitute a HUD-1 like the one we

1 saw before with Government's Exhibit 18?
2 A. Correct.
3 Q. Do you know at what point in the loan approval
4 process a HUD-1 like this would be sent to Long Beach Mortgage?
5 MR. SAMUEL: That assumes something not in evidence,
6 Your Honor.
8 MR. SAMUEL: That it was sent to --
9 MR. ANDERSON: Well, it was --
10 THE COURT: Sustained. Next question.
11 Q. BY MR. ANDERSON: Do you know if this document came
12 out of files held by JPMorgan that had previously been Long
13 Beach Mortgage files?
14 A. Yes.
15 Q. And is the answer that they were?
16 A. Yes.
17 Q. Do you know at what point in the loan process this
18 HUD-1, approximately, would have been sent to Long Beach
19 Mortgage?
20 MR. SAMUEL: Speculation.
21 MR. ANDERSON: We could go back to page six, which
22 has the first page of this.
23 THE COURT: Overruled. You may answer that question
24 yes or no, if you're able.
25 THE WITNESS: Can you repeat the question?

1 Q. BY MR. ANDERSON: Do you know at what point in the
2 loan process this HUD-1 would have been either sent to or made
3 available to Long Beach Mortgage?
4 MR. GREINER: Objection. Compound. Sent?
5 Available?
6 Q. BY MR. ANDERSON: Sent or available?
7 THE COURT: Overruled. Again, answer yes or no, if
8 you're able.
9 THE WITNESS: Yes.
10 Q. BY MR. ANDERSON: At what point in the process?
11 A. Your HUD-1 is the ending stage of the transaction.
12 So when the loan is funded, this is the final document showing
13 the transaction history and funds, and where they go to, and
14 fees and stuff to the loan.
15 Q. So on this particular HUD-1, is there a funding date
16 listed?
17 MR. GREINER: Document's not relevant to
18 underwriting. Objection. Relevancy.
21 Q. BY MR. ANDERSON: Okay. And in this particular
22 document what's that funding date listed as?
23 A. 7-28-2006.
24 Q. Let's go to Government's Exhibit 14 -- no, let's go
25 to 19B first, so you can stay in the same binder.

1 THE COURT: That's in evidence.
2 Q. BY MR. ANDERSON: Looking from pages one through
3 four, was this one of the loan applications that you read in
4 preparation for your testimony?
5 A. Yes.
6 Q. And your answers to the previous questions about loan
7 applications and underwriting guidelines also apply to this
8 loan application?
9 A. Yes.
10 Q. Looking to pages five through nine, do you recognize
11 that document?
12 A. Yes.
13 Q. What is it?
14 A. HUD-1 or settlement statement.
15 Q. Is that also a document you reviewed in preparation
16 for your testimony?
17 A. Yes.
18 Q. Okay. Now let's go to Government's Exhibit 14B.
20 MR. TEDMON: I don't --
21 MR. ANDERSON: This one is a little different. It's
22 14A2. And, Your Honor, pursuant to the stipulation this was a
23 document recovered in the search warrants.
24 THE COURT: All right. 14A2. Any objection?
25 Mr. Tedmon?

5 MR. SAMUEL: No.
8 Application in the name of Charmayne Q. Ratliff for property at
9 3509 38th Street, Sacramento, CA 95817 admitted into evidence.)
10 Q. BY MR. ANDERSON: Have you reviewed a document
11 similar to this document in preparation for your testimony?
12 A. Yes.
13 Q. What did you review that was similar to this?
14 A. I'm sorry?
15 Q. What did you review that was similar to this?
16 A. You mean a loan application?
17 Q. Yes.
18 A. Yes.
19 Q. Did you review a loan application for this property,
20 for a loan for Charmayne Ratcliff?
21 A. Yes.
22 Q. And where did that come from?
23 A. I'm sorry?
24 Q. The document that you reviewed, where did that come
25 from? Was that a JPMorgan document?

1 A. I'm sorry?
2 Q. All right. In preparation for your testimony here
3 today, did you review the JPMorgan loan application or copy of
4 the JPMorgan file for the loan application made to Long Beach
5 Mortgage for 911 Fox Chapel Lane in Jacksonville, Florida --
6 I'm sorry -- 3509 38th Street in Sacramento, California?
7 A. Yes.
8 Q. And the information that you have told us about other
9 loan applications, does that apply equally to the loan
10 application for this property?
11 A. Correct.
12 Q. And the information that you talked about for HUD-1s,
13 would that also apply to any HUD-1 for this property?
14 A. Correct.
15 MR. ANDERSON: Let's go to Government Exhibit 9B.
16 MR. SAMUEL: Your Honor, belated, but there is no
17 foundation for a HUD-1 existing in this document, and we're
18 going on to another document. I'll object to the question and
19 answer as without foundation.
20 MR. ANDERSON: I'll just withdraw the HUD-1 part.
21 We'll get it with a different one and move on.
22 THE COURT: So the jury should not consider any
23 reference to a HUD-1 with respect to 19B -- I'm sorry -- 14A2?
25 THE COURT: All right. The HUD-1 issue does not

1 relate to Exhibit 14A2.
2 MR. ANDERSON: Looking at Government Exhibit 9B.
3 And, Your Honor, I would ask that that be admitted
4 pursuant to the stipulation as a record from JPMorgan?
5 THE COURT: This is 9B?
6 MR. ANDERSON: Correct.
8 MR. TEDMON: Your Honor, I can't find that exhibit.
9 THE COURT: It's not on the original list. It
10 appears to have been added.
11 MR. ANDERSON: It was on the amended list, Your
12 Honor.
13 MR. TEDMON: Your Honor, to speed the process up,
14 could I take a look at Mr. Anderson's exhibit? I want to just
15 check the date.
20 THE COURT: Mr. Samuel.
22 THE COURT: All right. 9B is admitted.
24 Application in the name of Amber Dawn Farantello for property
25 at 911 Fox Chapel Lane, Jacksonville, FL admitted into

1 evidence.)
3 A. Yes.
5 A. I reviewed this document.
6 Q. Another one of the documents you reviewed in
7 preparation for your testimony?
8 A. Yes.
9 Q. Do your answers regarding the underwriting process
10 apply equally to the time period when this loan application was
11 submitted and approved?
12 A. Yes.
13 MR. ANDERSON: And one more. Let's look at
14 Government's Exhibit 8B1.
15 Your Honor, this is another document that we'd ask be
16 admitted pursuant to the stipulation as a certified business
17 record from JPMorgan Chase.
18 THE COURT: Also on the amended list.
19 MR. ANDERSON: B, as in boy.
20 THE COURT: B, as in boy. Any objection, Mr. Tedmon?
21 MR. TEDMON: If I can look at the date, Your Honor.
22 No objection.

2 THE COURT: All right. 8B1 is admitted.
3 (Government Exhibit 8B1, Uniform Residential Loan
4 Application in the name of Mark Wilson for property at 28925
5 Via Adelina, Valencia, CA admitted into evidence.)
6 Q. BY MR. ANDERSON: Do you recognize Exhibit 8B1?
7 A. Yes.
8 Q. What is it?
9 A. Loan application.
10 Q. Is it one of the loan applications that you reviewed?
11 A. Yes.
12 Q. And your answers would also apply equally to this
13 loan application?
14 A. Yes.
15 Q. Now, I want to highlight something on this loan
16 application. If we go to this section, we're still on the
17 first page, the top half, is there an indication of how this
18 property will be used?
19 A. Yes.
20 Q. How does it indicate on this application?
21 A. Primary residence.
22 Q. Is whether or not a property would be a primary
23 residence an important factor under the underwriting
24 guidelines?
25 A. Yes.

1 Q. What is the significance of it being a primary
2 residence or not?
3 A. Again, the loan parameters are based upon that.
4 Q. Under the underwriting guidelines, is it considered
5 to have a different risk of default if something is listed as a
6 primary residence?
8 MR. SAMUEL: Join.
9 MR. TEDMON: Join.
11 Q. BY MR. ANDERSON: Do you know why there is a
12 different treatment of primary residence from investment
13 properties?
14 A. Primary residence is a lower risk to the bank as
15 opposed to investment property due to the fact that somebody
16 purchasing a primary residence as opposed to investment
17 property --
18 MR. SAMUEL: Objection. He has already answered the
19 question. Now it's narrative.
20 THE COURT: All right. That is sustained.
21 MR. ANDERSON: Sustained. But the answer still
22 stands, Your Honor?
23 THE COURT: The answer stands.
24 Q. BY MR. ANDERSON: And if we turn to page four of this
25 -- actually three of this application, page three, is there

1 another check box that indicates whether or not the property
2 will be used as a primary residence?
3 A. Yes.
4 Q. Where is that box? Section L?
5 A. Under "declarations."
6 Q. So is that also an important factor in the
8 A. Yes.
9 Q. Let's go to page six of this exhibit. This appears
10 to be the beginning of another loan application for the same
11 property, is that right?
12 A. Correct.
13 Q. Can you explain why there are two loan applications
14 for this property?
17 THE COURT: Overruled. Answer yes or no.
19 Q. BY MR. ANDERSON: And is your explanation based on
20 your knowledge of the loan process at Long Beach Mortgage in
21 2005/2006?
23 Q. What is the reason that there are two loan
24 applications?

2 THE WITNESS: A loan application changes throughout
3 the process of the loan; therefore, there can be multiple
4 applications in a file.
5 Q. BY MR. ANDERSON: Are you familiar with the term
6 80/20 loan?
7 A. Yes.
8 Q. What's an 80/20 loan?
9 A. 80/20 is a loan where we lend 80 percent of the value
10 on a first and 20 percent of the value on a second loan.
11 Q. Are 80/20 loans available for investment properties?
12 A. No.
13 Q. What types of properties --
14 MR. GREINER: Objection. That last question calls
15 for specialized knowledge.
18 THE COURT: The jury shall disregard that exchange
19 about the 80/20 loans.
20 Q. BY MR. ANDERSON: Were you aware of the loan products
21 available at Long Beach Mortgage in 2005/2006?
22 A. Yes.
23 Q. Were there loan products available that offered 80/20
24 loans for investment properties?
25 A. No.

1 MR. GREINER: Same objection. Relevance.
3 MR. ANDERSON: Sorry. The answer was?
4 THE WITNESS: No.
5 THE COURT: The answer was "no," and that's part of
6 the record.
7 Q. BY MR. ANDERSON: What types of properties had 80/20
8 loans available for them in Long Beach Mortgage in 2005/2006?
9 A. A primary residence program.
10 Q. Now, if we look back at page one of this exhibit, and
11 then highlight the loan amount, what is the loan amount?
12 A. $448,000.
13 Q. If we go to page six, what is the loan amount?
14 A. $112,000.
15 Q. Based on those numbers, are you able to tell if this
16 fits the parameters of what an 80/20 loan would look like?
17 MR. TEDMON: Objection. Speculation.
18 MR. GREINER: Hypothetical.
20 THE COURT: Overruled. Answer the question but only
21 yes or no.
23 Q. BY MR. ANDERSON: Does this appear to be an 80/20
24 loan?

1 THE COURT: Sustained. Rephrase.
2 Q. BY MR. ANDERSON: Just yes or no, do you know whether
3 or not this is an 80/20 loan?
4 A. Yes.
5 Q. How do you know that?
6 A. Through looking at the documents, the purchase price,
7 and the combination of the two loans.
8 Q. And is it an 80/20 loan?
9 A. Yes.
10 MR. ANDERSON: No further questions, Your Honor.
12 MR. TEDMON: I think Mr. Greiner is going to start.
13 THE COURT: Mr. Greiner, how long do you estimate?
14 MR. GREINER: Maybe up to 30, Judge. Maybe not quite
15 that long, but somewhere in there.
16 THE COURT: All right. You may proceed.
17 MR. GREINER: Actually, Judge, before I begin, could
18 I just have a second.
19 Judge, could I ask for a very quick sidebar?
20 MR. SAMUEL: It's our first.
21 MR. GREINER: Or, in the alternative, can the record
22 reflect that I asked for a sidebar so that I preserve what the
23 sidebar is at this point?
24 THE COURT: Yes. The record shall so reflect.
25 Sidebar denied.

3 CROSS-EXAMINATION
4 BY MR. GREINER:
5 Q. Good afternoon, sir.
6 A. Hello.
7 Q. It appears that you reviewed six files for your
8 testimony here today, is that correct?
9 A. Correct.
10 Q. And did you also review the 2005/2006 guidelines that
11 were in existence in California?
12 A. No.
13 Q. And did you review, for your preparation of testimony
14 today, any of Long Beach Mortgage 2005/2006 guidelines that
15 existed in California?
16 A. No.
17 MR. ANDERSON: Your Honor, objection. Vague as to
18 what type of guidelines.
20 Q. BY MR. GREINER: And I didn't get all of the
21 addresses, so if you need some help, we'll figure it out
22 somehow.
23 A. Okay.
24 Q. The first property that I have you looked at had a
25 numerical address of 28925 Via something. Do you recall that?

1 A. I'd have to see the 1003, but I'll take your word on
2 the numbers.
3 Q. No trick questions here yet. I'll let you know when
4 the trick questions come.
5 All right. For the 28925 property, that was not a
6 property that was sent to you in Illinois to review in
7 2005/2006, correct?
8 A. Correct.
9 Q. Then the next property I have is 911 Fox Chapel.
10 It's going to be the same question. That file in 2005/2006 was
11 not sent to you to review when you were in Illinois in
12 2005/2006, correct?
13 A. Correct.
14 Q. And then 3509 38th Street in Sacramento, that file
15 was not sent to you for you to review in 2005/2006 back in
16 Illinois, correct?
17 A. Correct.
18 Q. And the next is 896 Yellowstone. That's in Cleveland
19 Heights, Ohio. That file was not sent to you to review back in
20 2005/2006, correct?
21 A. Correct.
22 Q. Even though that address is in the midwest region,
23 isn't it?
24 A. Correct.
25 Q. And 115 Bedford Street, that file was not sent to you

1 to review in 2005 or 2006 back in Illinois, correct?
2 A. Correct.
3 Q. And then the Miramar, Florida address -- if you need
4 more specifics I can get it -- but Miramar, Florida address,
5 that file was not sent to you to review back in 2005/2006, when
6 you were in Illinois, correct?
7 A. Correct.
8 Q. And you talked to the Government -- this is kind of a
9 -- I want to isolate this question, so I want to do it now.
10 You talked to the Government about loan applications,
11 and we went through all of those exhibits. I don't need to
12 bring them up.
13 Those loan applications dealt with the borrower, the
14 person that's purchasing a piece of property, correct
15 statement?
16 A. If that was the transaction, a purchase, correct.
17 Q. Those loan applications don't have anything to do
18 with the seller of the property, correct?
19 A. Correct.
20 Q. So any information about the seller of the property,
21 number one, doesn't show up on the loan applications, true?
22 A. Correct.
23 Q. And any information about the seller of the property
24 doesn't carry any weight as to an underwriter at Long Beach
25 Mortgage in 2005/2006, reviewing a loan application, correct?

1 A. No.
2 Q. Okay. We just covered that it doesn't have -- that
3 it's the borrower that's on the loan application, right?
4 A. Correct.
5 Q. Not the seller?
6 A. Correct.
7 Q. There is no seller information on the loan
8 application?
9 A. Correct.
10 Q. And so the seller doesn't carry any weight as to
11 whether you're going to approve or deny the borrower, correct?
12 A. We're talking a different part of a loan stage.
13 You're talking application. You're talking seller, buyer.
14 So in a purchase transaction, there is a purchase
15 contract. So we would review that as an underwriter, and we
16 look at that, let's say, did they have similar names, so what
17 type of transaction do I have. So there can be an impact
18 between a seller and a buyer.
19 Q. Right. And you covered that with the Government
20 where you said were they related, family, that type of thing
21 correct?
22 A. Correct.
23 Q. But that's where the red flag would come in when you
24 review the purchase contract is if there is something about
25 family, close relatives, something of that nature?

1 A. Correct.
2 Q. Other than that, the seller's information doesn't
3 carry any weight in you looking at the borrower's loan
4 application, correct?
5 A. Correct.
6 Q. Okay. Now, you talked about -- on direct examination
7 you were asked questions about bonuses and incentives. Do you
8 remember that?
9 A. Yes.
10 Q. Now, in 2005 and 2006, Long Beach Mortgage
11 underwriters did receive bonuses, correct?
13 Q. And they received the bonuses based upon certain
14 business factors that they met in their underwriting
15 performance of duties, correct?
16 A. Correct.
17 Q. And that bonus system was based upon -- one of the
18 reasons for the bonus system was based upon the amount of loans
19 that they approved, correct?
20 A. Loan decisions which could be approvals, declines,
21 counteroffers, so not strictly approvals.
22 Q. Well, okay. Long Beach Mortgage went under, didn't
23 it?
24 A. That division was shut down, correct.
25 Q. And in 2005 and in 2006, Long Beach Mortgage

1 underwriting guidelines were loosened, correct?
2 A. Compared to today, yes.
3 Q. Well, compared to other lenders in the same time
4 period, correct?
5 A. I can't comment on other lenders.
6 Q. Do you know an individual that worked for Long Beach
7 Mortgage in this timeframe, 2005/2006, Diane Koch?
8 A. Does not ring a bell.
9 Q. Are you familiar with in 2005/2006, in your region,
10 midwest region, are you familiar with the foreclosure rate of
11 Long Beach Mortgage loans?
12 A. No.
13 Q. Would the figure of --
14 MR. ANDERSON: Objection, Your Honor. This is going
15 to call for speculation.
16 THE COURT: Well, let's let the question be fully
17 articulated.
18 Q. BY MR. GREINER: Would you disagree that more than
19 half the Long Beach Mortgage loans for home purchases in the
20 2005/2006 timeframe in your region went into foreclosure?
21 A. I don't know that figure, sir.
22 Q. Would that information come back to you as an
23 underwriter?
24 A. No.
25 Q. So as an underwriter, you wouldn't get a memo from

1 management regarding loans in the 2005/2006 timeframe in the
2 midwest region that went into foreclosure?
3 A. That I was aware of, no.
4 Q. In the 2005/2006 timeframe in the midwest region, as
5 an underwriter, were you familiar with underwriters at Long
6 Beach Mutual (sic) putting in fake, fraudulent numbers on
7 loans?
8 A. No.
9 Q. Not at all?
10 A. Not at all.
11 Q. Would you disagree with the statement that management
12 in the midwest division of Long Beach Mutual (sic) encouraged
13 the sales force to turn out as many loans as possible?
14 A. Can you repeat the question, please?
15 Q. Would you disagree with the statement that in the
16 midwest division -- or midwest region where you worked in
17 2005/2006, that Long Beach Mutual (sic) encouraged the sales
18 force to turn out as many loans as possible?
19 A. I assume that's an objective of theirs, yes.
20 Q. Well, did you receive a memo to that effect?
21 A. No.
22 Q. Did you receive a directive from management to that
23 effect?
24 A. No.
25 Q. Do you recognize the name of Troy Gotchel?

1 A. No.
2 Q. So if I said Troy Gotchel was the former president of
3 Long Beach Mortgage, that wouldn't ring a bell?
4 A. No.
5 Q. In 2005/2006, in the midwest region, did Long Beach
6 Mortgage have a practice of lending to individuals that they
7 knew could not repay the loan?
8 A. No.
9 Q. In the midwest region in 2005/2006, as an underwriter
10 were you aware that Long Beach Mortgage started offering no
11 money down mortgages?
12 A. Yes.
13 Q. And that's really what you talked to the Government
14 about being the 80/20 loan, correct?
15 A. Correct.
16 Q. And the 80/20 loan in the midwest region in
17 2005/2006, were being used for people with a history of bad or
18 no credit, correct?
19 A. Not necessarily.
20 Q. But as an underwriter in 2005/2006 in the midwest
21 region, you knew that occurred, correct?
22 A. Did we do loans to people with less than stellar
23 credit or limited credit? Yes.
24 Q. That's because you're a subprime mortgage lender,
25 correct?

1 A. Correct.
2 Q. And that was the whole focus of Long Beach Mortgage,
3 correct?
4 A. Correct.
5 Q. Long Beach Mortgage wanted to have a business that
6 targeted in 2005/2006, in the midwest region where you were,
7 people that had subprime bad credit and give them loans,
8 correct?
9 A. They qualified.
10 Q. Well, they qualified pursuant to your guidelines,
11 correct?
12 A. Correct.
13 Q. But you understood in 2005 and 2006 that Long Beach
14 Mortgage lending guidelines were below the banking industry
15 guidelines, correct?
16 A. Below prime, correct.
17 Q. Well, they were below -- the Long Beach Mortgage
18 guidelines in 2005 and 2006, in the midwest region where you
19 were, those guidelines were below the banking industry
20 standard, not just prime but subprime also, correct?
21 A. That I do not know.
22 Q. As an underwriter in 2005 and 2006 in the midwest
23 region, were you involved in the selling of mortgages to Wall
24 Street?
25 A. No.

1 Q. Did you ever receive a memo from management regarding
2 the selling of loans to Wall Street in 2005/2006 in the midwest
3 region?
5 Q. In 2005 and 2006, do you have a recollection of how
6 many loan files from California you personally reviewed?
7 A. No.
8 Q. Was it more than five?
9 A. I would say it would be safe to say more than five.
10 Q. Would it be more than ten?
11 A. Again, you're asking me to -- something from 2005. I
12 couldn't tell you the exact number, no.
13 Q. So it's not a number that stands out in your mind,
14 correct?
15 A. No.
16 Q. No --
17 A. I mean correct. Yes. Yes.
18 Q. Did you ever have any interaction with an individual
19 named Joel Blanford of Long Beach Mortgage?
21 Q. In 2005, were you familiar with the chief risk
22 officer for Long Beach Mortgage being James G. Vanasek?
23 A. It doesn't ring a bell, sir. No.
24 Q. Not at all?
25 In 2005/2006 in the midwest region of Long Beach

1 Mortgage, were you familiar with the practice that borrowers
2 were coached to fill out applications with overstated incomes?
3 A. No.
4 Q. In 2005 and 2006, were you familiar with the Long
5 Beach Mortgage practice in the midwest region, where you were,
6 that borrowers were coached to fill out applications with
7 overstated net worth?
8 A. No.
9 Q. In 2005 and 2006, at Long Beach Mutual (sic), as an
10 underwriter in the midwest region, you did have incentives from
11 the company to perform to certain levels, true?
12 A. Yes.
13 Q. And those weren't in the guidelines to reviewing loan
14 applications, were they?
15 A. No.
16 Q. Those were incentives that were sent to you in
17 2005/2006 from management, correct?
18 A. Correct.
19 Q. And those incentives could increase your income by
20 tens of thousands of dollars, correct?
21 A. Annually, yes.
22 Q. And it's safe to say, is it not, that in 2005/2006 in
23 the midwest region, working for Long Beach Mutual (sic), your
24 approval rate was significantly greater than your decline rate
25 on loans, fair?

1 A. I couldn't comment on the percentages.
2 Q. Well, do you have in your mind's eye, if you looked
3 at stacks on your desk, that in 2005/2006, in the midwest
4 region, working for Long Beach Mutual (sic), that your approval
5 stack was significantly higher than your decline stack?
6 A. The approval rate was higher than the decline rate.
7 Q. All right. Now, you've mentioned throughout your
8 entire direct examination about guidelines, and you were in
9 Illinois, as we've already established, right?
10 A. Correct.
11 Q. Now these guidelines in Illinois didn't match the
12 guidelines that were in California during the 2005/2006 time
13 period, fair to say?
14 A. We had one set of guidelines that was universal
15 throughout Long Beach Mortgage.
16 Q. Well, in California they had -- if you know -- to
17 your knowledge -- in 2005/2006, underwriters had different
18 regulations that they had to follow in California than you had
19 to follow in Illinois, fair?
20 A. I don't know exactly the regulations. I could not
21 comment on that.
22 Q. Well, in your guidelines -- weren't regulations
23 written into the guidelines pursuant to the state that you sat
24 in for Long Beach Mutual (sic) in 2005/2006?
25 A. Correct. There were state guidelines that were

1 applied along with the actual guidelines.
2 Q. And the state guidelines in 2005/2006 in Illinois
3 didn't contain the California guidelines, true?
4 A. If I were underwriting in Illinois, a property in
5 Illinois, I would not apply guidelines from California to an
6 Illinois loan.
7 Q. Right. And you were sitting in Illinois, and you've
8 said to the ladies and gentlemen of the jury that you reviewed
9 files from California?
10 A. Correct.
11 Q. So sitting in Illinois in 2005/2006, the guidelines
12 you had in front of you didn't contain the California
13 regulations, true?
14 A. I would look under the guidelines in California,
15 meaning there would be a subsection under our guidelines if
16 there were any caveats in that particular state.
17 Q. Okay. So there were differences at Long Beach
18 Mortgage in 2005 and 2006 regarding the guidelines depending
19 upon what state you were sitting -- what state you were
20 reviewing a loan application?
21 A. Correct.
22 Q. And these guidelines were written, correct?
23 A. Yes.
24 Q. And they were in a manual or a book, correct?
25 A. We had access to them online through Washington

1 Mutual.
2 Q. Okay. Well, they were also in a manual or book form,
3 too, correct?
4 A. Everything that I did was strictly -- the guidelines
5 were via the internet, and if I wanted to print the guidelines,
6 keep a hard copy at my desk, I could, but that was accessible
7 to all underwriters.
8 Q. And in 2005/2006 did you actually print California
9 guidelines and regulations since you were reviewing California
10 loans?
12 Q. Did you keep a file at your desk that you printed off
13 of the guidelines in 2005/2006?
14 A. Yes.
15 Q. Do you still have that file?
16 A. No.
17 Q. Now, if I understand what your duties were in
18 Illinois, you actually were reviewing loans that had been
19 underwritten and approved, correct?
20 A. At that time I was an underwriter, so I actually
21 underwrote loans.
22 Q. So in 2005/2006, you were just underwriting loans?
24 Q. So if you were underwriting loans in 2005/2006, and
25 you were in Illinois, why would you be underwriting a

1 California loan?
2 A. Because we had loan fulfillment centers, and if we
3 had capacity to take their loans because they were overburdened
4 with loans, they would ship their loans to us to underwrite.
5 Q. Okay. Different subject. Remember talking about the
6 HUD-1 with the Government? Yes?
7 A. Yes.
8 Q. She has to have a "yes."
9 The HUD-1 document. Does the final HUD-1 document
10 that you were talking about with the Government, that doesn't
11 come into play in underwriting a loan unless there is a
12 definite red flag on that document, correct?
13 A. Correct.
14 Q. Because by the time the final HUD-1 comes out,
15 underwriting has already approved the loan, correct?
17 Q. It's already been funded, correct?
18 A. Correct.
19 Q. That's the settlement, right?
20 A. Correct.
21 Q. So the HUD-1 document has no bearing upon your -- in
22 2005/2006, in Illinois, has no bearing on your underwriting of
23 a loan application, fair?
24 A. Fair.
25 Q. In 2005/2006, being an underwriter -- it's going to

1 be an inartful question -- but were you in management,
2 supervision, how were you on the chain of command?
3 A. I was considered a senior mortgage underwriter. That
4 means a seasoned underwriter. And so I had a manager,
5 supervisor. So not management.
6 Q. Did you know an underwriter by the name of Lisa
7 Menapace?
8 A. No.
9 THE COURT: We're at about 30 minutes, Mr. Greiner.
10 MR. GREINER: I figured I was pretty close.
11 Q. BY MR. GREINER: And you wouldn't -- or would you
12 disagree with the statement of that the collapse of WaMu,
13 Washington Mutual, and Long Beach Mortgage based upon their
14 activities in 2005 and 2006 in the home loan arena was one of
15 the largest banking collapses in American history?
16 MR. ANDERSON: Objection. Lack of foundation.
17 Personal knowledge.
19 Q. BY MR. GREINER: Did you have anything to do with --
20 in 2005/2006 with trying to rescue Long Beach Mutual (sic) from
21 failing, from going under?
22 A. No.
24 THE COURT: All right. Mr. Tedmon, do you have any
25 cross?

1 MR. TEDMON: Yes. Some.
2 THE COURT: We have five more minutes until a break.
3 Can you use that?
4 MR. TEDMON: Yes.
5 THE COURT: All right. Let's do, and then we'll take
6 our second break.
7 MR. TEDMON: Okay.
8 CROSS-EXAMINATION
9 BY MR. TEDMON:
10 Q. Mr. Hellstrom, I want to just clarify a couple
11 things.
12 All right. You worked in 2005 and 2006 for Long
13 Beach Mortgage, correct?
14 A. Correct.
15 Q. That was your direct employer, is that right?
16 A. That was our subprime division for Washington Mutual.
17 Q. That's what I wanted to clarify. Mr. Greiner has
18 been saying Long Beach Mutual. I want to be clear what we're
19 talking about here, the umbrella corporation or company was
20 Washington Mutual, correct?
21 A. Correct.
22 Q. And that was a bank, correct?
23 A. Correct.
24 Q. Right? And then underneath that there was Long Beach
25 Mortgage, correct?

1 A. Correct.
2 Q. So you worked for Long Beach Mortgage as an
3 underwriter in 2005/2006?
5 Q. All right. And Mr. Greiner -- well, strike that.
6 When did you start working for Long Beach Mortgage
7 again?
8 A. January 3rd, 2005.
9 Q. That was your first day at work there?
10 A. Correct.
11 Q. And what position did you start at?
12 A. Senior mortgage underwriter.
13 Q. Had you come from the mortgage industry prior to
14 that?
15 A. Yes.
16 Q. Where was that from?
17 A. Household Finance.
18 Q. All right. Was that a free-standing company or was
19 that a subsidiary of a larger organization?
20 A. At the time, we were owned by HSBC.
21 Q. That's a bank?
22 A. Correct.
23 Q. All right. How long were you there?
24 A. For eight years.
25 Q. Eight years?

1 A. About eight years, yes.
2 Q. And so then you moved on to Long Beach Mortgage,
3 correct?
4 A. Correct.
5 Q. And the home office that you worked at was where
6 again?
7 A. Schaumburg, Illinois. And then we moved to Itasca,
8 Illinois during that time period.
9 Q. That's both in the Chicago area?
10 A. Correct.
11 Q. Now, during -- well, let me keep going so I
12 understand the parameters of this.
13 How long did your employment with Long Beach Mortgage
14 last?
15 A. Until July of 2007.
16 Q. Okay. So about two and a half years?
17 A. Correct.
18 Q. Now, were you terminated in July of 2007?
19 A. No.
20 Q. All right. Long Beach Mortgage ceased to exist in
21 July of 2007, correct?
22 A. Correct.
23 Q. They went under?
24 A. It was shut down by Washington Mutual.
25 Q. Correct. And you know, because you worked there for

1 two and a half years, that the primary reason was there were so
2 many bad loans you couldn't support it, correct?
3 A. That's a contributing factor.
4 Q. And the larger corporate entity, Washington Mutual,
5 also went under, correct?
6 A. Correct.
7 Q. And you know, because you worked as a subsidiary of
8 Washington Mutual, that they went under because of the number
9 of bad loans that they wrote, correct, that was a contributing
10 factor?
11 A. Correct.
12 Q. And a significant one, correct?
13 A. Correct.
14 Q. All right. And neither Washington Mutual nor Long
15 Beach Mortgage are in business any longer, correct?
16 A. Correct.
17 Q. Now in July of 2007, when both of those entities
18 ceased to exist, were you terminated from Washington Mutual's
19 employment, for example?
20 A. No.
21 Q. And you weren't terminated from Long Beach Mortgage,
22 correct?
23 A. Correct.
24 Q. You were subsumed by JPMorgan Chase, correct?
25 A. Correct.

1 Q. And that's who you currently work for now?
2 A. Correct.
3 MR. TEDMON: Your Honor, that's my foundational
4 background. Do you want me to stop?
5 THE COURT: We can do that. Let's take our second
6 break for the day. Again, this will be a 15-minute break.
7 Remember my admonitions during that break. See you
8 at 12:30, and then we will go for our final stretch until 2:00.
9 Thank you. Have a good break.
10 (Jury out.)
11 THE COURT: I just wanted to check on the schedule,
12 generally, because I would like to give the jury an update
13 before I excuse them at the end of the day.
14 Is it safe to say that the Government anticipates
15 being able to concludes its case by the end of next week?
16 MR. ANDERSON: I don't think so, Your Honor.
17 THE COURT: There are still 40 possible witnesses on
18 the list. Can you tell me who is definitely not coming at this
19 point? Is there an update on that front?
20 MR. ANDERSON: No, Your Honor. We are keeping a lot
21 of people as options. But like I've said before, we're not
22 going to call 40 more people. It's just we've only been
23 getting about two witnesses a day.
24 THE COURT: How many more witnesses do you estimate
25 you need?

1 MR. ANDERSON: Probably 15 to 20.
2 THE COURT: All right. And then at this point I know
3 Mr. Samuel said he anticipates a case in defense. At this
4 point, if you had to estimate, how long do you expect that?
5 MR. SAMUEL: I think it's being pared down with the
6 number of individuals already called by at least two or three.
7 So I suspect -- I originally think I had ten on my list, so we
8 may be down to five at this point.
9 THE COURT: Total time?
10 MR. SAMUEL: My witnesses should be relatively quick.
11 THE COURT: So a day?
12 MR. SAMUEL: Yeah or even less. Other than my
13 client, Your Honor. And that might take some time. I have no
14 idea how much time that's going to take.
15 THE COURT: All right. And at this point,
16 Mr. Greiner, Mr. Tedmon, do you know? Do you plan to put on a
17 case in defense, Mr. Tedmon?
18 MR. TEDMON: We're still assessing that, Your Honor.
20 MR. GREINER: We're assessing, but it looks like we
21 will have probably two witnesses, and that would not take a
22 day.
23 THE COURT: All right. Well, it appears that we're
24 still on track to have the evidence in within four weeks. And
25 I'm going to keep leaning on you. But we'll start next week

1 really looking closely. I realize we're having some short
2 weeks, and the Court's schedule does not allow that additional
3 day, and we have a court holiday. I think we're on track, now
4 that we've worked out some kinks, that we should be able to
5 keep moving along and have the evidence concluded within four
6 weeks. I'm going to tell them I think that's where we are.
7 All right. Be back in ten minutes now.
8 (Break taken.)
9 THE COURT: Just two notes. Ms. Shepard has reminded
10 me that if you all three speak at once, and only one of you is
11 speaking loudly, that's the only objection she's getting down.
12 MR. TEDMON: Am I getting it down?
13 THE COURT: She knows. She does her job to let you
14 know, but just a reminder. I don't know if there's a way to do
15 sequential objections, but you can think about that.
16 Mr. Greiner, did you want to supplement the record on
17 your sidebar request, or is it based on what you have said
18 earlier and in your briefing?
19 MR. GREINER: Totally different, Judge. Do you want
20 me to do it now in front of the witness?
21 THE COURT: Do it at the end of day. All right.
22 Let's bring the jury in.
23 (Jury in.)
25 and gentlemen. We're going to continue with Mr. Tedmon's

1 cross-examination of Mr. Hellstrom. We believe we can get
2 through this witness and one more today yet before we adjourn
3 at 2:00. Mr. Tedmon.
4 Q. BY MR. TEDMON: Thank you, Your Honor.
5 Mr. Hellstrom, when we finished, we kind of talked
6 about the history of the companies and where you're at now.
7 I want to follow-up on something Mr. Anderson started
8 to ask you about but I don't think it was completed. He asked
9 you about the various positions in Long Beach's loan offices in
10 2005/2006. Do you recall that? Well, never mind if you don't.
11 I'll ask it.
12 A. Okay.
13 Q. You were an underwriter, you came in as an
14 underwriter, correct?
15 A. Correct.
16 Q. Explain to the jury what the various positions were
17 at Long Beach Mortgage during that time period in terms of the
18 loan office, how did that work?
19 A. As far as our loan fulfillment center?
20 Q. Where you worked. Yes.
21 A. Several different positions.
22 Q. Explain what they were?
23 A. From a boarder who would board a loan, meaning they
24 would input into our computer system. We had a loan processor,
25 which would process the loan between our loan officer and a

1 broker. We had underwriters. We had closers. We had funders.
2 We had admin staff. We had managers that managed underwriters,
3 managers that managed processors. All different levels in our
4 office.
5 Q. And these eight or nine positions, or whatever, that
6 you mentioned, all of those were part and parcel of the loan
7 fulfillment process, true?
8 A. Correct.
9 Q. And each of those positions would effectively touch
10 the paper, so to speak, in terms of having the loan go through
11 the process, true?
12 A. Part of the file, correct.
13 Q. Right. Okay. Now, you were at the underwriting
14 position when you started at Long Beach Mortgage, correct?
15 A. Correct.
16 Q. And you had a supervisor you testified about,
17 correct?
18 A. Correct.
19 Q. All right. So when the file went off of your desk,
20 did you see it again or was it gone?
21 A. Depending on if I had to see it again based upon
22 conditions I set, I would have to see the loan again.
23 Q. Okay. But if you set conditions and you didn't get
24 it back, you wouldn't know whether they were fulfilled or not,
25 would you? I mean you personally wouldn't know.

1 A. Correct.
2 Q. Now, these policies and procedures that Mr. Anderson
3 asked you about, you recall all those questions right?
4 A. Yes.
5 Q. Okay. You would agree that policies and procedures
6 are only as good as those that are followed, correct?
7 A. Correct.
8 Q. And you have personal knowledge that the policies and
9 procedures at Long Beach Mortgage during this period of time,
10 2005/2006, corporately were not always followed, correct?
11 A. Personal knowledge?
12 Q. You know that they were not always followed, correct?
13 You know that?
14 A. I don't have personal knowledge that they were not
15 followed.
16 Q. Do you know whether they were followed or not
17 corporately?
18 A. Our guidelines were followed as far as underwriting
19 goes?
20 Q. In the company.
21 MR. ANDERSON: Objection. Vague as to what
22 Mr. Tedmon is asking about.
24 able.
25 THE WITNESS: Not that I was aware of.

1 Q. BY MR. ANDERSON: Well, you testified that Long Beach
2 Mortgage is out of business, right?
3 A. Correct.
4 Q. And Washington Mutual is out of business, correct?
5 A. Correct.
6 Q. And you testified that a significant factor in that
7 was bad loans, correct?
8 A. Correct.
9 Q. And in point of fact, Long Beach Mortgage, their
10 primary job while they were in business was to write loans,
11 right, that was it?
12 A. Correct.
13 Q. All right. And they are now defunct?
14 A. Correct.
15 Q. And Washington Mutual was a bank, correct?
16 A. Correct.
17 Q. And they had banking retail outlets, correct?
18 A. Correct.
19 Q. But the lion's share of what they did back in
20 2005/2006 business-wise was writing residential loans, correct?
21 A. I don't know what percentage of their business that
22 was.
23 Q. It was significant, you know that, correct?
24 A. As a whole for Washington Mutual? I don't know what
25 percentage it was.

1 Q. All right. Well, it was enough to where they went
2 out of business, too, right?
3 A. We went out of business, correct.
4 Q. Yeah. Okay. Now, let me ask you this, you testified
5 -- well, let's strike that. Let's start over and get a fresh
6 run at this.
7 You were located in the Chicago area during your
8 employment with Long Beach Mortgage, correct?
9 A. Correct.
10 Q. I think you were asked as to whether the corporate
11 headquarters of Long Beach Mortgage was in Dublin, California,
13 A. Correct.
14 Q. Is that where the headquarters of Long Beach Mortgage
15 was during the time you worked there or do you know?
16 A. I do not know.
17 Q. All right. Do you know whether there was an office
18 in Dublin, California?
19 A. As I recall, I think there was an office, a loan
20 fulfillment center like the one I worked at.
21 Q. Okay. And do you know where the corporate
22 headquarters were at that time for Long Beach Mortgage or
23 national corporate headquarters?
24 A. I do not.
25 Q. You're aware that they had a loan fulfillment center

1 in Orange County, California, correct?
2 A. I don't recall exactly where all the fulfillment
3 centers were, but I know we had some in California.
4 Q. But there were certainly some in Southern California,
5 correct?
6 A. As I recall, yes.
7 Q. All right. Now, you never worked in any of the
8 offices in California, true?
9 A. Correct.
10 Q. You were never an underwriter in the offices in
12 A. Correct.
13 Q. So you don't know what went on with the underwriters
14 or in those offices in California, do you?
15 A. Correct.
16 Q. And let me ask you this. You were talking about the
17 applications, these 1003s. Mr. Anderson and Mr. Greiner have
18 covered those. Do you recall that?
19 A. Yes.
20 Q. And Mr. Anderson talked to you about the down payment
21 portion on the form, do you recall that?
22 A. Yes.
23 Q. All right. There is also another way of generating
24 money for down payment called a gift, are you familiar with
25 that?

1 A. I've heard of it, yes.
2 Q. Now, on the forms we've looked at, there is no place
3 in that form to indicate it's a gift, is there?
4 A. You can list an asset as a gift.
5 Q. But on the form there is nothing you check a box that
6 says "gift," is that right?
7 A. Correct.
8 Q. And if there's a gift, that would be from a parent to
9 a child, for example, that would not be unusual, correct?
10 A. Correct.
11 Q. Okay. Or from any other person for that matter,
12 true? I mean, you can make a gift, right?
13 A. Sure.
14 Q. All right. And the gift -- the gift funds -- I'll
15 call them that -- sometimes require a letter, correct?
16 A. Correct.
17 Q. And it identifies who the person that's giving the
18 gift, and who is receiving it, and that sort of thing?
19 A. Correct.
20 Q. Now there is a missing page in one of the files, do
21 you recall that?
22 A. Yes.
23 Q. All right. You don't know what that would represent,
24 do you?
25 A. No, sir.

1 Q. And it's true that that file is incomplete because it
2 has a missing page, right?
3 A. The file is incomplete?
4 Q. Yeah.
5 A. I don't know if the whole file is incomplete based
6 upon one page missing.
7 Q. Well, if a file is supposed to have ten pages and it
8 has nine, you would agree that's an incomplete file?
9 A. Correct.
10 Q. And there is a missing page in that exhibit, correct?
11 A. Correct.
12 Q. So that's an incomplete file as to that property,
13 correct?
14 A. Again, you're basing the whole file on one document.
15 Q. No. Let me ask it again then. If the exhibit is
16 seven pages -- okay --
17 A. Yes.
18 Q. -- and there are six pages in the exhibit, okay --
19 A. Correct.
20 Q. -- one page is missing, correct?
21 A. Correct.
22 Q. That exhibit is incomplete within itself, it's
23 missing something, true?
24 A. Correct.

1 THE COURT: All right. Mr. Samuel, how long do you
2 need?
3 MR. SAMUEL: Maybe 5, 10 minutes max.
4 THE COURT: Well, often that's overstating the time
5 they need.
6 CROSS-EXAMINATION
7 BY MR. SAMUEL:
8 Q. I actually have a couple questions, as I've indicated
9 to the Court.
10 First question was, when did you become aware that
11 you were going to testify in this case?
12 A. I believe last month.
13 Q. When did you first become aware that you were going
14 to testify about underwriting in '05 and '06?
15 A. I've been testifying for a few years now.
16 Q. But as it relates to this case, when did you become
17 aware that the timeframe that you would be testifying to would
18 be the '05/'06 timeframe?
19 A. A couple weeks ago, sir.
20 Q. And when did you become aware that it would be
21 underwriting guidelines of the -- sorry -- the guidelines for
22 the California agency that we have been talking about?
23 A. Can you repeat the question?
24 Q. Sure. When did you become aware that you would be
25 testifying about the guidelines for -- it is LMC, is that

1 correct?
2 A. Long Beach Mortgage Corporation?
3 Q. Yes.
4 A. A few weeks ago, sir.
5 Q. And if I understand you correctly, at least one point
6 in time you had access to those guidelines online, correct?
7 A. Correct.
8 Q. Did you ever make an attempt to obtain those
9 guidelines in preparation for your testimony in this case?
10 A. No.
11 Q. Do you know if those guidelines are available?
12 A. I believe they are, yes.
13 Q. And do you know how to find them?
14 A. To access through our subpoena department.
15 Q. So you actually have the ability to go into a
16 department today and get that material, right?
17 A. Correct.
18 Q. We don't have to subpoena you, if you went to do it,
19 you could do that, right?
20 A. Correct.
21 Q. Why didn't you produce that, when you first became
22 aware, to the Government?
23 A. I wasn't asked for it.
24 Q. Did you think it was going to become important that
25 you should be producing guidelines?

1 A. Not if it wasn't a document requested.
2 Q. You were talking about the comparison of income to
3 employment, do you remember that testimony?
4 A. Correct.
5 Q. And you said it was important to determine whether or
6 not the income stated was consistent with the employment
7 category, right?
8 A. Correct.
9 Q. And is there -- or did you use in '05 and '06 some
10 accessed, online program that would kind of give you a
11 guideline as to the income to be expected from various
12 categories of employment?
13 A. Yes.
14 Q. And what's the name of that program?
15 A. It's a website called salary.com.
16 Q. And in order for you to double check, you would look
17 at that employment definition, whatever was on the 1003, and
18 then you would go online and check that to see if it was
19 consistent?
20 A. Correct.
21 Q. And sometimes they were inconsistent?
22 A. Correct.
23 Q. All right. And were there explanations that would
24 clarify the inconsistencies between the online documentation
25 and that which you saw in your 1003s?

1 A. Again, depending what loan program, yes.
2 Q. All right. That's another area. In '05/'06 as it
3 relates to Long Beach -- I'll get that right -- were there
4 multiple loan programs?
5 A. Yes.
6 Q. And how many programs were there?
7 A. Several. I couldn't tell you how many.
8 Q. And so in '05 and '06, the programs vary from fact to
9 fact, right, facts in 1003s, one might be different. And a
10 program might be different for another borrower, correct?
11 A. Correct.
12 Q. And so you don't know which programs were applied to
13 the loans that you've reviewed, do you?
14 A. No, I do not.
15 Q. Okay. And each one of these programs had different
16 underwriting requirements, is that correct?
18 Q. Once again, you didn't know when you reviewed these
19 documents what those individualized underwriting requirements
20 were, correct?
21 A. Correct.
22 Q. Right. You didn't know the program, so you didn't
23 know how to apply the underwriting standards, correct?
24 A. Correct.
25 Q. And do you know what a stated income loan is?

1 A. Yes.
2 Q. That's a known term in the industry in '05 and '06?
3 A. Yes.
4 Q. Do you know if there was another name for stated
5 income loans?
6 A. Low doc, l-o-w.
7 Q. Have you ever heard of liar loans?
8 A. I've heard the term, yes.
9 Q. Isn't that applied to stated income loans?
10 A. Is it applied to stated income?
11 Q. Yes.
12 A. No.
13 Q. And isn't it -- well, you've heard the term, but do
14 you know what it means?
15 A. What? Liar loan?
16 Q. Yes.
17 A. Jargon that we referred as underwriters or the
18 industry referred to as certain types of loan.
19 Q. And those were loans that the underwriting really
20 didn't care as long as there were certain facts specifically
21 stated, for example, your ability to borrow money, credit
22 rating?
23 A. No. There were more factors than just a credit
24 rating.
25 Q. But credit rating was an extremely important part of

1 the underwriting process, wasn't it not, in '05 and '06?
2 A. It's a piece of it.
3 Q. All right. And LMC targeted subprime loans, correct?
4 A. We offered subprime mortgages, correct.
5 Q. And would you just define what, as of '05 and '06,
6 what subprime loan meant?
7 A. We offered loans to people with either no credit,
8 limited credit, or credit that was less than stellar.
9 Q. Now, in '05 and '06, were there revisions made that
10 you're aware of to the underwriting guidelines?
11 A. Were there changes to the guidelines?
12 Q. Yes.
13 A. Yes.
14 Q. And how many changes would you say had been made
15 between '05 and '06 that you're aware of to the underwriting
16 guidelines?
17 A. I couldn't give you a figure, sir.
18 Q. Well, would there be more than two?
19 A. I'd say that's safe to say.
20 Q. Would it be more like that the changes were in
21 constant flux, going up and down, all depending on, for
22 example, the availability of money?
23 A. I don't know what the factors were when they changed
24 guidelines, but they were changing as time went on.
25 Q. Would you say that they were changing on a weekly

1 basis or monthly basis?
2 A. At times it could be weekly. At times it could be
3 monthly. Depending on the time.
4 Q. And how were these changes related to you?
5 A. Just a different way that I would have to apply
6 guidelines to loans.
7 Q. I mean communicated. How were the changes
8 communicated to you?
9 A. We would get a memo about it.
10 Q. A memo?
11 A. Correct.
12 Q. Would that be a memo via e-mail?
13 A. Be an online issuance of changes to guidelines. We
14 access our guidelines online.
15 Q. Right.
16 A. And there would be an alert saying something has
17 changed and please review the alert. And we would go into the
18 guideline and see what changed.
19 Q. In '05 and '06, did you have any computer problems
20 that you're aware of that stopped communication for a while?
21 A. That stopped communication?
22 Q. Well, affected your ability to communicate between
23 parties?
24 A. Every company has computer problems. But as applying
25 it to this, I couldn't tell you.

1 THE COURT: That's nine minutes.
2 MR. GREINER: I'm checking my notes now, Your Honor.
4 MR. SAMUEL: No further questions.
7 THE COURT: How long do you need for that?
8 MR. ANDERSON: Fifteen.
10 BY MR. ANDERSON:
11 Q. Did underwriters deal directly with brokers at Long
12 Beach Mortgage in 2005 and 2006?
13 A. We'd have occasion to speak with them directly, but
14 it wasn't generally practiced.
15 Q. Who at Long Beach Mortgage had the more direct
16 contact with brokers?
19 Q. BY MR. ANDERSON: Which position was responsible for
20 contact with brokers?
21 MR. TEDMON: Your Honor, relevance. We're talking
22 about California. He's from Illinois.
23 THE COURT: Overruled. You may answer, if you're
24 able.
25 THE WITNESS: Be the loan officer and the processor.

1 Q. BY MR. ANDERSON: The incentives program that
2 Mr. Greiner asked you about, were any of the incentives based
3 on approvals of loans?
4 A. No.
5 Q. What were they based upon?
6 A. Based upon quality and how many loans you completed.
7 Q. And completion means?
8 A. Approvals, denials, counteroffers.
9 Q. You were also asked about guidelines and different
10 states. You said there was one set of guidelines. How could
11 there be one set of guidelines but multiple states?
12 A. Well, each state might have laws that apply to those
13 states, so you have to apply those on top of the guidelines
14 that are present with the company.
15 Q. And would those be applied based on the state that
16 you personally work in or that the property you're underwriting
17 is located in?
18 A. Where we would be doing the loan.
19 Q. So where the property is located?
20 A. Correct.
21 Q. Were there commonalities between the states?
23 Q. BY MR. ANDERSON: Let me ask this way --
25 Q. BY MR. ANDERSON: The factors that we went through

1 and talked about on the loan application like income,
2 debt-to-income ratio, assets, were those factors that were
3 looked at by underwriters under the guidelines in every state
4 that you were writing loans in?
5 A. Yes.
6 MR. GREINER: Objection to "every state." We're
7 talking about California.
8 MR. SAMUEL: We're talking about his personal
9 knowledge, Your Honor.
10 THE COURT: That's sustained. The jury shall
11 disregard that answer. You may rephrase.
12 Q. BY MR. ANDERSON: In every state for the loans that
13 we discussed -- we went through loans from Florida, from
14 Illinois, from Ohio, from a number of states -- for all of
15 those states was income, debt-to-income ratio, assets, those
16 other factors we talked about, important to the underwriting
17 guidelines?
18 A. Yes.
21 Q. BY MR. ANDERSON: You were also asked about the HUD-1
22 by defense counsel. At what stage you received the HUD-1.
23 Is there such a thing as a final HUD-1 and an
24 estimated HUD-1?
25 A. Yes.

1 Q. When is the final HUD-1 received?
2 A. After the loan has funded.
3 Q. Is the estimated HUD-1 ever received by the
4 underwriters?
5 A. It's not a document that the underwriter relies on,
6 no.
7 Q. And you were asked by Mr. Tedmon about a gift for a
8 down payment. Under the underwriting guidelines, was whether
9 that down payment money came from the mortgage broker a factor
10 that would have been important?
11 A. Where an asset comes from, yes.
12 Q. Why would money coming from the mortgage broker be
13 important?
14 A. Well, why are they in the transaction itself? You
15 would have to ask that question pertaining to each separate
16 deal.
17 Q. Would it be important in the process under the
18 underwriting guidelines, if the money for the down payment was
19 expected to be repaid out of the proceeds of the loan that Long
20 Beach Mortgage was --
21 MR. GREINER: Objection, Your Honor.
22 MR. SAMUEL: Hypothetical.
24 Q. BY MR. ANDERSON: Under the Long Beach Mortgage
25 underwriting guidelines, was whether or not the down payment

1 was going to be repaid out of money from the loan itself an
2 important underwriting factor?
4 MR. SAMUEL: Hypothetical.
6 Q. BY MR. ANDERSON: You said that there are
7 underwriting guidelines that are available through the subpoena
8 department, is that right?
9 A. Correct.
10 Q. Does that subpoena department also respond to
11 subpoena requests from defense counsel for --
15 Q. BY MR. ANDERSON: You were asked about stated income
16 loans, do you recall that?
17 A. Yes.
18 Q. In stated income loans, does the underwriter expect
19 that the information that's stated in that loan application be
20 accurate?
21 MR. GREINER: Objection. Hypothetical. Relevance.
25 is the information provided in a stated income loan expected to

1 be accurate?
3 THE COURT: First answer that question yes or no.
4 THE WITNESS: Yes.
5 THE COURT: Next question.
6 Q. BY MR. ANDERSON: Is it the case that in a stated
7 income loan, it's ok to put false information?
8 MR. SAMUEL: Objection. Hypothetical.
10 Q. BY MR. ANDERSON: What's a stated income loan?
11 A. Stated income loan is where you actually state your
12 income on an application, and we rely on that information to be
13 accurate to --
14 MR. SAMUEL: Objection. Narrative now. He has
15 answered the question.
17 Q. BY MR. ANDERSON: What do you rely on the income
18 information stated on the loan application to do?
19 A. Substantiate that they can afford to pay for the
20 loan.
21 Q. You also talked about underwriting guidelines
22 changing in 2005 and 2006, changes being made. Do any of those
23 changes affect the factors that you've testified about being
24 important here today, meaning that they weren't important for
25 some period of time?

1 MR. SAMUEL: Objection. Speculative and
2 hypothetical.
4 Q. BY MR. ANDERSON: Let's sum it up. For 2005/2006,
5 you testified that certain factors were important on each of
6 the loans that we discussed, is that right?
7 A. Correct.
8 Q. Was there anything about any of the changes made to
9 the underwriting guidelines in 2005 and 2006 that would change
10 that testimony?
11 A. No.
13 THE COURT: All right. Any further recross,
14 Mr. Tedmon?
15 MR. TEDMON: I'm going to go in the same order.
17 MR. GREINER: Brief.
19 BY MR. GREINER:
20 Q. Sir, I want to see if I can get some clarity. You
21 were asked about incentives based on loan approvals. So in
22 2005/2006 at Long Beach Mortgage, were incentives based on
23 approval of loans in the underwriting department?
24 A. For myself?
25 Q. Correct.

1 A. No.
2 Q. You said that the incentives were based on quality of
3 loans?
4 A. Correct.
5 Q. What do you mean by "quality of loan," the amount of
6 the loan?
7 A. No. Meaning we would be audited by somebody else in
8 our department, a loan quality review person. And if they
9 found an error on the loan, if you had too many errors, you
10 wouldn't qualify for your bonus.
11 Q. In 2005/2006, in Illinois, you didn't get any loans
12 kicked back from the loan quality control person, did you?
13 A. Myself?
14 Q. Right.
15 A. I believe I had one error.
16 Q. One error in two years. And then you said completing
17 loans, correct?
18 A. Correct.
19 Q. What do you mean by that? We're talking about
20 incentives, right? What do you mean by completing loans?
21 A. Well, when you underwrite a loan, you either will
22 approve a loan, decline a loan, counteroffer a loan, or suspend
23 a loan. Those are decisions.
24 Q. Where is completing?
25 A. That's what we refer to as completing it. Once I am

1 through with the file, I have completed the file. I've
2 underwritten the file.
3 Q. So completing has, as a subset, approval, right?
4 A. Or a decline, or counteroffer, or suspend.
5 Q. Directing you back to my question. Completing has a
6 subset of approval, correct?
7 A. Yes.
8 Q. Which means incentives were based in 2005/2006, Long
9 Beach Mutual (sic), on approvals, correct?
10 A. Partially.
11 Q. And that's a correct answer, correct?
12 A. Correct.
13 Q. All right. You indicated that you would get -- I
14 think you used the term overflow from other fulfillment
15 centers, do you remember that?
16 A. Yes.
17 Q. Sitting in Illinois in 2005/2006, how many overflow
18 from a fulfillment office in California did you get?
19 A. Couldn't tell you the number, sir.
20 Q. Very rare, true?
21 A. Again, it was a very busy time, and we helped out
22 centers all over the country, so I couldn't give you a figure.
23 Q. I appreciate that. But something coming from
24 California, it's a big state, do you have any type of estimate?
25 A. I do not.

1 Q. Did it happen on a weekly basis?
3 Q. Did it happen on a monthly basis?
4 A. Depending on the time of year, it could.
5 Q. But it was not something that occurred with great
6 frequency, was it?
7 A. Not on a daily basis.
8 Q. And just for clarity, when you sit in Illinois, it's
9 the regulations and law in California that you have to apply
10 for a loan on a piece of property in California, correct?
11 A. Correct.
12 Q. And your testimony is Long Beach Mutual (sic) had
13 guidelines that were uniform throughout the nation in
14 2005/2006, at least as far as you knew, correct?
15 A. Correct.
16 MR. GREINER: Thank you, Judge. Thank you. But I
17 still have that notation.
21 BY MR. TEDMON:
22 Q. Mr. Hellstrom, Mr. Anderson asked you about loan
23 officers, and he mentioned AE, do you recall that? AE?
24 A. Yes.
25 Q. AE is account executive, right?

1 A. Correct.
2 Q. And can you briefly tell the jury what an account
3 executive was for Long Beach Mortgage in '05 and '06?
4 A. Account executive was a loan officer.
5 Q. Okay. But they also -- account executives would go
6 into these loan broker establishments, correct?
7 A. Correct.
8 Q. In fact, that was really their job to a large extent,
9 true?
10 A. Correct.
11 Q. They were sales people, right?
12 A. Correct.
13 Q. All right. And so they could go into a place like
14 Head Financial Services, let's say, and meet with the loan
15 processor, right?
16 A. Meet with?
17 Q. Well, let's say there is a company called Head
18 Financial Services, okay, and the AE's job, if they were in
19 that territory, would be to go to that loan broker's office and
20 deal with the loan processors, true?
21 A. Correct.
22 Q. And, in fact, they would try to attempt to sell their
23 products to the person running the loan processing division of
24 that company, true?
25 A. They were signed up with Long Beach Mortgage,

1 correct.
2 Q. Right. And they would establish these leads with
3 that's various mortgage brokers, right?
4 A. Correct.
5 Q. And that was a form of generating business for the
6 account executive, correct?
7 A. Right.
8 Q. And the account executive would get paid on a
9 percentage basis, correct?
10 A. I believe so.
11 Q. All right. And, in fact, they would get paid on the
12 percentage of loans that closed, correct?
13 A. Correct.
14 Q. So if the loans didn't fund, they didn't get paid,
15 the account executive, right?
16 A. To my knowledge, correct.
17 Q. Now you, on the other hand, as an underwriter, you
18 were on a different set of a commission basis, true?
19 A. I was not on commission.
20 Q. You were not?
21 A. No.
22 Q. Okay. Well, so you were straight salary?
23 A. Salary plus bonus.
24 Q. Plus bonus. And the bonus, explain that again? I
25 just want to make sure we're clear on what your bonus program

1 was there at Long Beach Mortgage in 2005/2006.
2 A. Based on decisions that I made per month.
3 Q. Whether they were approved, denied, or suspended?
4 A. Counteroffer, correct.
5 Q. Counteroffer. All right.
6 Now, you know that as far as these account executives
7 are concerned, they would also assist these loan officers --
8 I'm sorry -- loan processors in filling out the 1003s, right?
9 A. What they -- that's outside my scope.
10 Q. You don't know whether they did or didn't? Account
11 executives I'm talking about.
12 A. Our account executives, they would go to the broker.
13 That application comes from the broker shop.
14 Q. But the account executive's in the broker shop,
15 physically, right?
16 A. Position there?
17 Q. Well, no, they physically go to the broker shop and
18 meet with the loan processor, correct?
19 A. Correct.
20 Q. All right. And the initiation or the kick-off of
21 this entire loan process is the filling out of a uniform
22 residential loan application, correct?
23 A. Should have been done prior to us seeking a loan.
24 Q. Okay. Well, the account executive would go to the
25 loan processor's location, correct?

1 A. Correct.
2 Q. And they would only leave successfully if they had a
3 completed loan application, true, to send to Long Beach
4 Mortgage?
5 A. Correct.
6 Q. And that's this 1003 we're taking about?
7 A. Correct.
8 Q. And you know that these account executives at times
9 would assist the loan processor from these various broker
10 houses in filling out the 1003s?
11 A. Do I know that personally? No.
12 Q. You don't?
13 A. No.
14 Q. Now, Mr. Anderson asked you about the stated income
15 loan. Is that the same thing as stated income/stated asset
16 loans?
17 A. No.
18 Q. Well, how is that different?
19 A. Stated income loan is you'll state your income, but
20 you'll provide asset documentation.
21 Q. Okay. A pure stated income loan is what?
22 A. You said stated income/stated asset. That's a NINA
23 loan. That's a program for refinances.
24 Q. Let me focus my questions. I don't want to confuse
25 anybody. Mr. Anderson asked you about stated income loans,

1 correct?
2 A. Correct.
3 Q. And you've given testimony about a tool called
4 salary.com, do you recall that?
5 A. Yes.
6 Q. Now, with regard to that process, using salary.com,
7 the reason for that is you're trying to get an estimate of
8 their income, correct?
9 A. We're trying to establish if that income is
10 reasonable.
11 Q. Okay. Reasonable as compared to what?
12 A. For the position that's held.
13 Q. Okay. So if on a 1003 there is information about
14 income, all right, that can sometimes be taken from salary.com
15 in terms of filling out the 1003, correct?
16 A. It should come from the customer and what they
17 actually make.
18 Q. Well, but it can come from salary.com during that
19 time period, correct?
20 A. That information was provided by the customer, so
21 that should be information that they -- that's theirs.
22 Q. "That's theirs" meaning what?
23 A. That's their income.
24 Q. Well let me ask you this, these loan brokers that
25 we've talked about, ok, it was not their job to confirm the

1 income, correct?
2 A. To confirm the income?
3 Q. Yes.
4 A. Well, they took the application.
5 Q. Well, it's one thing to take the information. It's
6 another thing to confirm it. You would agree with that?
7 A. Correct.
8 Q. So it wasn't the broker's job to confirm anything, it
9 was to take the information, correct?
10 A. Correct.
11 Q. That's why you're there ostensibly to check this, to
12 make sure it's right, or at least accurate or reasonable,
13 correct?
14 A. Correct.
15 Q. Now, you had a lot of business in 2005 and 2006 at
16 Long Beach Mortgage, didn't you?
17 A. Yes.
18 Q. All right. And based on these bonuses, those bonuses
19 outstripped your base pay, didn't they?
20 A. No.
21 Q. The percentage of money that the account executives
22 got, that was on a commission, though, correct?
23 A. From what I know, yes.
24 Q. As you've testified. And if the loans didn't close,
25 they didn't get paid, correct?

1 A. Correct.
2 Q. Now, as an underwriter, you had relationships with
3 account executives, true?
4 A. Correct.
5 Q. And the account executives wanted to make sure those
6 loans went through or they didn't get paid, correct?
7 A. Correct.
8 Q. All right. And, in fact, the account executives put
9 a lot of pressure on underwriters to make sure the loans were
10 pushed through, correct?
11 A. Put pressure, but I have a job to do, and that's
12 underwrite a loan.
13 Q. You have a job to do.
14 A. Correct.
15 Q. How many underwriters were there in Long Beach
16 Mortgage in 2005/2006 nationally?
17 A. I couldn't tell you.
18 Q. Hundreds, if not thousands, true?
19 A. Hundreds. Correct.
20 Q. You didn't work in California, correct?
21 A. Correct.
22 Q. Physically?
23 A. No.
24 Q. And so you could only speak to what you did and your
25 practices were in terms of being an underwriter, correct?

1 A. Correct.
2 Q. You can't say as to what any other underwriter in
3 Long Beach Mortgage did, or behaved, or acted, correct?
4 A. Correct.
5 Q. And Long Beach Mortgage is out of business for bad
6 loans as we sit here today, correct?
7 A. Correct.
15 MR. TEDMON: Yes.
16 MR. GREINER: No.
17 MR. SAMUEL: Oh, yeah. We had one other issue.
18 THE COURT: Well, may he step down? You may step
19 down now. You are potentially subject to recall.
20 All right. Government's next witness.
21 MR. ANDERSON: The United States calls Debra Kovacs.

3 THE WITNESS: Debra Kovacs, D-e-b-r-a, K-o-v-a-c-s.
5 DEBRA KOVACS,
10 BY MR. ANDERSON:
11 Q. Good afternoon, Ms. Kovacs. I'm going to take you
12 back to 2005. In 2005, did you have a house?
13 A. Yes.
14 Q. Where was that house?
15 A. In South Holland.
16 Q. Is that in Illinois?
17 A. Yes.
18 Q. What was the address of the house?
19 A. 543 East 167th Street.
20 Q. How long had you had that home?
21 A. A few years.
22 Q. And prior to you owning it, who owned the home?
23 A. Pardon?
24 Q. Before you owned the house, who owned it?
25 A. My grandmother.

1 Q. At some point in 2005 were you trying to refinance
2 that house?
3 A. Yes.
4 Q. In the process of trying to deal with the mortgage on
5 that house, did you come into contact with somebody by the name
6 of Domonic McCarns?
7 A. Yes.
8 Q. How did you come into contact with the person calling
9 himself Domonic McCarns?
10 A. He called me. He called me at my house. That's how
11 I came in contact with him. He called me.
12 Q. Prior to that phone call, had you been filling out
13 forms online?
14 A. Yes.
15 Q. What types of forms had you been filling out?
16 A. Refinance your mortgage forms.
17 Q. When you received that call from Domonic McCarns, did
18 you have a conversation with him?
19 A. Yes.
20 Q. What was the conversation you had?
21 A. He had asked me if I was filling out forms to
22 refinance the house, and I said, yes, and he basically asked me
23 if I was looking to refinance the house.
24 Q. What, if anything, did you tell Domonic McCarns?
25 A. I just told him, yeah, I was. I was looking for

1 smaller payments to refinance it.
2 Q. Did he respond to that?
3 A. Yes, he did.
5 A. He told me he could do that for me, and I told him,
6 well, they told me it wasn't possible. So I basically gave up
7 on trying to refinance it.
8 Q. Did he respond to that comment?
9 A. Yeah.
11 A. He said he -- he said he -- he said he could do it,
12 and basically he kept talking and talking to me and telling me
13 that he could -- he could refinance it for me.
14 Q. Did you end up deciding to try and refinance the
15 property with Domonic McCarns?
16 A. Yeah.
17 Q. What was the -- after that conversation, what's the
18 next thing that happened?
19 A. The next thing that happened is he had sent me to --
20 he called me at the very last minute, and he sent me to a
21 place, to, I think, a title company, to refinance the house and
22 sign the papers, and I never -- I never -- I never made it
23 there.
24 Q. All right. After that incident where you didn't make
25 it there --

1 A. Uh-huh.
2 Q. -- were there any further contacts between you and
3 Domonic McCarns?
4 A. Yes.
5 Q. What's the next contact you had with Domonic McCarns?
6 A. He -- he called me again and said he was going to try
7 again to refinance the house. And that's when I guess he
8 decided it would be easier that he just have them come to the
9 house and set it up.
10 Q. Did someone end up coming to your house?
11 A. Yes.
12 Q. Who came to your house, if you remember?
13 A. I don't remember the person's name. I just remember
14 it was a lady that came to the house.
15 Q. Do you know what kind of job she had?
16 A. A -- yeah, I remember. I can't think of the word.
17 MR. ANDERSON: Your Honor, may I use a leading
18 question?
20 MR. TEDMON: No.
22 Q. BY MR. ANDERSON: Are you thinking of the word
23 "notary"?
24 A. Yeah.
25 Q. When that lady came to your house, what happened?

1 A. She had -- she came to my house, and she had all the
2 paperwork, and she had went over every -- all the papers and
3 every page with me, and she had me -- that's when she had me
4 sign the papers and notarize the papers.
5 Q. Had you had conversations with Domonic McCarns about
6 the type of deal you were entering into?
7 A. Yeah.
8 Q. Based on those conversations with Domonic McCarns,
9 what type of deal did you think you were getting into?
10 A. I thought -- I thought he was setting up a deal where
11 someone was going to go -- he was refinancing the house, but
12 someone was going to go on the title with me. That's what I
13 thought he was setting up.
14 Q. So you thought that there would be you and someone
15 else on the title?
16 A. Right.
17 Q. Was that for a certain period of time?
18 A. It was supposed to be for one year.
19 Q. And did you have an understanding of what was
20 supposed to happen at the end of that year?
21 A. Yes.
23 A. At the end of one year, I would call him up, and we
24 was going to refinance the house, take the other person off,
25 and it was going to be just me alone on the title.

1 Q. Did you have an understanding about whether you'd
2 have to make payments?
3 A. Yes.
4 Q. What was your understanding about payments?
5 A. They were going -- there was going to be monthly
6 payments every month.
7 Q. And who did you know -- did you have an understanding
8 of who you were going make those payments to?
9 A. Yes.
10 Q. Who was that?
11 A. I can't remember their names exactly, but it was --
12 he had -- it was in the paperwork who to send the payments to.
13 Q. And did you have an understanding about the property
14 taxes on the house?
15 A. Yes.
16 Q. What was that understanding?
17 A. That they were -- they were supposed to pay --
18 MR. TEDMON: Objection as to "they," Your Honor.
19 THE COURT: Sustained. Wait for the next question.
20 Q. BY MR. ANDERSON: You were starting to answer, but
21 you were saying "they." Instead of using "they," could you use
22 the specific names of the people, if you know who.
23 A. Okay. Ashley Reynolds was supposed to pay the
24 property taxes out of the -- out of the money that was supposed
25 to come -- out of the money that -- it was all like one lump

1 sum, property taxes and the monthly payment.
2 Q. Did you believe, based on your conversations with
3 Domonic McCarns, that you would remain on title to your home?
4 A. Did I believe? Yes.
5 Q. And based on your conversations with Domonic McCarns,
6 did you have any understanding of what was going to happen to
7 the equity in your home over that year?
8 A. I'm not saying -- I'm not sure. I don't understand
9 your question.
10 Q. Okay. Did you discuss the equity in your home with
11 Domonic McCarns?
12 A. Yeah, I believe we did.
13 Q. What was that discussion?
14 A. I believe the equity was -- the equity was -- I think
15 the equity was supposed to stay in the home.
16 Q. Now, did you end up signing the documents and
17 completing the transaction?
18 A. Yes.
19 Q. Did you make payments?
20 A. Yes.
21 Q. Do you recall who you sent -- where you sent your
22 payments to?
23 A. To Costa -- I believe it was Costa Rica, California.
24 MR. ANDERSON: Your Honor, I'd like to use another
25 leading question, if that's ok?

1 MR. TEDMON: I have no objection.
3 THE COURT: All right. You may.
4 Q. BY MR. ANDERSON: Does the location Costa Mesa,
5 California, sound correct?
6 A. Yes.
7 Q. Now at some point did you have additional
8 conversations with Domonic McCarns about the transaction?
9 A. You mean after the papers were signed?
10 Q. Yes.
11 A. Yeah.
12 Q. What conversations did have you with Domonic McCarns?
13 A. I didn't have too many conversations, but it was
14 mainly I -- it was just about how everything was -- I asked
15 him -- well, actually, before the papers were signed, I asked
16 him what was I going to get out of this. And he said what do
17 you want. That's when -- that was the further conversation I
18 had with him.
19 Q. And did you receive something monetary out of the
20 transaction? Did you get money?
21 A. Yes.
22 Q. How much did you get?
23 A. A thousand dollars.
25 Government's Exhibit 7B6 be admitted as a business record

1 pursuant to the stipulation.
3 MR. TEDMON: Just one moment, Your Honor. No, Your
4 Honor.
8 MR. SAMUEL: No.
10 (Government Exhibit 7B6, Grant Deed dated June 21,
11 2005 for property in Illinois Grantor: Debra Kovacs
12 Grantee: Ashley Reynolds admitted into evidence.)
13 Q. BY MR. ANDERSON: Do you see the signature that I've
14 underlined on that page?
15 A. Yes.
17 A. Yes.
19 A. Mine.
20 Q. Did you sign this document?
21 A. Yes.
22 Q. At the time you signed it, did you know that you were
23 selling your house?
24 A. No.

1 Government's Exhibit 7C1 be admitted as a title document
2 obtained from a county recorder's office.
4 MR. ANDERSON: And that's also pursuant to the
5 stipulation.
6 MR. TEDMON: It's a four-page document.
7 THE COURT: 7C1, 4 pages?
15 (Government Exhibit 7C1, Grant Deed filed 01/23/2006
16 for property in Cook County, Illinois admitted into evidence.)
17 Q. BY MR. ANDERSON: On this document, is that your
18 signature?
19 A. Yes.
20 MR. ANDERSON: Your Honor, I would also ask that
21 Government's Exhibit 7C2 be admitted as another county recorder
22 document pursuant to the stipulation.
23 THE COURT: And this is four pages?

6 THE COURT: 7C2 is admitted.
7 (Government Exhibit 7C2, Judicial Sale Deed filed
8 01/16/2008 Property at 543 E. 167th Street, South Holland, IL
9 60473 Signed and notarized January 2008 admitted into
10 evidence.)
11 THE COURT: Can the jury see these documents?
12 MR. ANDERSON: That one we pulled down, Your Honor.
13 We just need it in the record. It will go back to the jury at
14 deliberations.
16 Q. BY MR. ANDERSON: What ended up happening with your
17 home, Ms. Kovacs?
18 A. I ended up losing it.
19 Q. Do you remember approximately when that was?
20 A. Eight years ago. Approximately eight years ago.
21 MR. ANDERSON: No further questions. Thank you.
22 THE COURT: All right. Mr. Greiner, you're going to
23 take the lead?
25 THE COURT: Let me ask, does the jury need a stretch

1 break? Let's just do a stretch break because we're at our
2 usual break time even though we started later.
5 MR. GREINER: Thank you, Judge. Good afternoon,
6 ma'am. Pursuant to the amended stipulation, I would like to
7 admit Government's Exhibit 7A1 if we could, please.
8 THE COURT: Objection?
9 MR. ANDERSON: No objection, Your Honor.
12 MR. SAMUEL: No.
14 (Government Exhibit 7A1, Check stub from Creative
15 Loans, LLC to Debra Kovacs dated 7/21/2005 in the amount of
16 $1,000.00 re Pacific Mercantile Bank Consolidation South
17 Holland III admitted into evidence.)
19 BY MR. GREINER:
20 Q. If we could have that up on the screen, please.
21 Ms. Kovacs, up on the screen you can see your name on
22 the far left-hand side?
23 A. Yes.
24 Q. You've already told the ladies and gentlemen of the
25 jury that you received $1,000 when you got into this program,

2 A. Right.
3 Q. Okay. And your house was located in South Holland,
4 correct?
5 A. Correct.
6 Q. And do you recall that you received the money
7 sometime in July of 2005, would that be about right?
8 A. About right.
9 Q. Okay. All right. Now you told the Government that
10 you were trying to refinance -- you can take that down -- thank
11 you -- that you were trying to refinance your house, correct?
12 A. Right.
13 Q. Why were you trying to refinance your house?
14 A. Because the mortgage payment was too big.
15 Q. Okay. And was the interest rate pretty high?
16 A. A little bit.
17 Q. Okay. Do you recall how your credit rating was at
18 that time?
19 A. No.
20 Q. Did you have any outstanding bills that you needed to
21 pay?
22 A. No.
23 Q. And when you were going -- I think you told the
24 Government you were going online and filling out forms, do you
25 remember that?

1 A. Yes.
2 Q. Explain to me a little bit what you were doing?
3 A. I was looking for companies that would refinance.
4 Q. Refinance?
5 A. Right.
6 Q. So you would give them information, correct?
7 A. Correct.
8 Q. All right. And some of the information would be how
9 much do you owe on the house, what you're looking for, how much
10 money you want out, that type of thing, does that sound about
11 right?
12 A. Yeah.
13 Q. And did you know how much your house was worth at the
14 time?
15 A. Yes, I did.
16 Q. And about how much was it?
17 A. About 160.
18 Q. About 160,000?
19 A. Yes.
20 Q. And was that what your mortgage was or was that what
21 you believed that the full value of your house was at the time?
22 A. That was the full value.
23 Q. And how much -- did you owe anything at the time on
24 the house?
25 A. I'm not sure I understand your question.

1 Q. Right. You were trying to refinance?
2 A. Right.
3 Q. So you had a loan on the house, didn't you?
4 A. Right.
5 Q. And do you know how much the loan was, just
6 approximately?
7 A. Approximately? I'm -- let's see --
8 Q. What's your best estimate?
9 A. 140,000.
10 Q. About 140,000?
11 A. That's my best estimate.
12 Q. That's fine. We will take that.
13 A. Okay.
14 Q. And when did you start the process to try to
15 refinance, do you recall when that was?
16 A. Probably a couple months before that.
17 Q. Okay. So couple months before you're trying to
18 refinance?
19 A. Uh-huh.
20 Q. You have $140,000 loan, and the house is worth about
21 160, do I have that pretty much in line? Yes?
22 A. Yes.
23 Q. And so then you fill out an online document, and you
24 get a call then from an individual that you say represented
25 themselves to be Domonic McCarns, correct?

1 A. Correct.
2 Q. Now, you never met anybody named Domonic McCarns, did
3 you?
4 A. No.
5 Q. And nobody named Domonic McCarns ever came to your
6 house, right?
7 A. Right.
8 Q. Okay. So the only contact you had was over the
9 phone, true?
10 A. True.
11 Q. All right. So then when you talked to this
12 individual on the phone, did they say what company or
13 organization they were from?
14 A. No.
15 Q. Does it refresh your memory that they said that they
16 were from Funding Foreclosures?
17 A. No.
18 Q. How about Head Financial Services?
19 A. Yes.
20 Q. Okay. Does that ring a bell?
21 A. Uh-huh.
22 Q. Yes?
23 A. Yes.
24 Q. Okay. And you talked to this individual on the phone
25 about refinancing and they said that they could, true?

1 A. True.
2 Q. All right. Did they send you any documents in the
3 mail?
4 A. No.
5 Q. Did they FedEx any documents to you?
6 A. No.
7 Q. What they did, if I understood correctly on direct
8 examination, is that they set up an appointment for you to go
9 to a notary or a title company?
10 A. Title company.
11 Q. Okay. To sign some documents, correct?
12 A. Correct.
13 Q. And that was for the refinancing, right?
14 A. Right.
15 Q. And so you had an appointment to go to the title
16 company, and unfortunately you didn't make it, right?
17 A. Right.
18 Q. Okay. So you couldn't sign the documents. And so
19 after that, then you received another phone call from this
20 company, correct?
21 A. Correct.
22 Q. And the individual that talked to you still said I
23 think I can still refinance this, right?
24 A. Right.
25 Q. Now were documents sent to you at that time?

1 A. No.
2 Q. Okay. Was another appointment set up for you to go
3 someplace?
4 A. Not to go somewhere.
5 Q. An appointment was set up for somebody to come to
6 your house?
7 A. Right.
8 Q. Okay. Before the individual came to your house, did
9 you ever receive any documents in the mail?
10 A. No.
11 Q. Did you receive any documents by Federal Express or
12 something similar?
13 A. No.
14 Q. Okay. Do you have an estimate as to how long after
15 you missed the appointment at the title company to when this --
16 I think you said a lady came over to your house, correct?
17 A. Correct.
18 Q. Do you know how much time elapsed between those two
19 time periods, just your best estimate?
20 A. A week or two.
21 Q. Okay. A week or two. All right. And then you knew
22 the lady was coming, correct?
23 A. Correct.
24 Q. It wasn't a surprise to you?
25 A. Right.

1 Q. So the lady showed up, and did she say that she was a
2 notary?
3 A. Yes.
4 Q. Okay. And so then she came in your house, right?
5 A. Right.
6 Q. Was there anyone else there with you at your house?
7 A. No.
8 Q. Okay. So you and the lady were in your house, and
9 you sit at the kitchen table, I'm assuming, fair?
10 A. Fair.
11 Q. And she has documents for you to sign?
12 A. Right.
13 Q. All right. And if I understood, correct me if I'm
14 wrong, but if I understood correctly, you said that the lady
15 went over each and every document with you, did I understand
16 that?
17 A. Yes.
18 MR. GREINER: Okay. Pursuant to the amended
19 stipulation, Judge, I would like to introduce DM-F2.
21 MR. ANDERSON: No, Your Honor. Stipulate as a search
22 warrant document.

2 THE COURT: DM-F2 is admitted.
3 (Defendants' Exhibit DM-F2, Equity Purchase Agreement
4 dated May 2, 2005 admitted into evidence.)
5 Q. BY MR. GREINER: If we could have the first page up
6 on the computer screen, please.
7 This document at the top in capital letters says
8 Equity Purchase Agreement, do you see that, Ms. Kovacs?
9 A. Yes.
10 Q. And you recall seeing that document, correct?
11 A. Correct.
12 Q. And this is one of the documents that the notary lady
13 went over with you, correct?
14 A. Correct.
15 Q. All right. And when she went over it with you, it
16 said that the agreement was made on the 2nd day of May, 2005,
17 do you see that in the first line?
18 A. Yes.
19 Q. And the second line it's got a name of Frank Pacheco,
20 do you see that?
21 A. Yes.
22 Q. That's not you, is it? You're not Frank?
23 A. No.
24 Q. All right. And then below that it says "and Creative
25 Loans LLC," do you see that?

1 A. Yes.
2 Q. All right. So there was an agreement that was being
3 entered into, and do you see then below that first paragraph it
4 says "agreement to sell and property description"? It's right
5 below that first paragraph. Do you see the next line, all in
6 capital letters?
7 A. Yes. Yes.
8 Q. And that says "agreement to sell and property
9 description," correct?
10 A. Correct.
11 Q. And the notary lady, she went over this document with
12 you, right?
13 A. Correct.
14 Q. And when you went over this document, you understood
15 that you were selling your residence, true?
16 A. Not true.
17 Q. Okay. Even though it was talking about agreement to
18 sell, correct, true?
19 A. True.
20 Q. Did you ask the notary lady there any questions when
21 she went over this document with you?
22 A. I probably asked her one question.
23 Q. Do you recall what that question was?
24 A. I asked if it was normal for two people to go on a
25 title.

1 Q. Okay. And just yes or no, did she respond?
2 A. Yes.
3 Q. If we can enlarge the document, please. Now this is
4 still the front page of the same document, that equity purchase
5 agreement. Do you understand that? Yes?
6 A. Yes.
7 Q. And do you see in capital letters it says
8 "consideration," correct?
9 A. Yes.
10 Q. And then it reads: "In consideration for said
11 property, purchaser agrees to pay to seller, as consideration
12 for seller's equity interest in the property, the total sum of
13 $1,000." Do you see that?
14 A. Yes.
15 Q. And you actually did receive $1,000, right?
16 A. Right.
17 Q. Okay. We can enlarge this. And then in all capital
18 letters and in bold print on the first page of that same equity
19 purchase agreement document, you remember going over with the
20 lady notary that the document read, "in no event shall any
21 money or other consideration be transferred to seller by
22 purchaser at any time prior to expiration of seller's right to
23 cancel this contract," do you see that?
24 A. Yes.
25 Q. And the terms "seller" and "purchaser" were being

1 used, correct?
2 A. Correct.
3 THE COURT: How much more time do you need,
4 Mr. Greiner? We can't go past 2:00 today.
5 MR. GREINER: You can stop me whenever, but I've got
6 the documents to go through, so it's just like the other
7 witnesses, Judge.
9 MR. GREINER: I'll just march forward.
10 Q. BY MR. GREINER: If we could go to the third page of
11 this exhibit, please.
12 Now Ms. Kovacs, this is the third page of that same
13 first document, remember?
14 A. Uh-huh.
15 Q. Yes?
16 A. Yes.
17 Q. The only reason I do that is because the court
18 reporter has to take down your answer. I'm not trying to be
19 disrespectful. Okay?
20 A. Okay.
21 Q. Do you see where it says "entire agreement" in bold
22 print?
23 A. Yes.
24 Q. And then it says, "this agreement constitutes the
25 entire agreement and understanding concerning the subject

1 matter hereof between purchaser and seller," do you see that?
2 A. Yes.
3 Q. And then it says that, "this agreement is the result
4 of an arm's length negotiations between the parties" -- do you
5 see that?
6 A. Yes.
7 Q. -- "and supersedes and replaces all prior and
8 contemporaneous oral and written agreements, negotiations and
9 discussions," do you see that?
10 A. Yes.
11 Q. And this is part of the document that you went over
12 with the notary lady in your house, correct?
13 A. Correct.
14 Q. If we can go to the last page, please. Is that your
15 signature?
16 A. Yes.
17 Q. And just below that it has your name, Debra Kovacs,
18 correct?
19 A. Correct.
20 MR. GREINER: We can take that down.
22 like to introduce DM-F10, please.
24 MR. ANDERSON: No, Your Honor. Another search

2 MR. TEDMON: No. A two-page document. Is counsel
3 planning on asking about both pages?
6 MR. SAMUEL: No objection, Your Honor.
7 THE COURT: All right. DM-F10 is admitted.
8 (Defendants' Exhibit DM-F10, Option Agreement dated
9 June 1, 2005 admitted into evidence.)
10 Q. BY MR. GREINER: If we could have that up on the
11 screen.
12 Now, the title of this document is called Option
13 Agreement, do you see that, Ms. Kovacs?
14 A. Yes.
15 Q. And this is another document that you and the notary
16 lady went over in your house, correct?
17 A. Correct.
18 Q. And this says that "this agreement made by and
19 between Creative Loans LLC, hereinafter called the optionor,
20 and Debra Kovacs" -- which is you, correct?
21 A. Correct.
22 Q. -- "hereinafter called the optionee."
23 If we could enlarge, please. Paragraph two of that
24 same document says, "term, the term of this agreement shall be
25 12 months," do you see that?

1 A. Yes.
2 Q. "Beginning on the first day of June 1st, 2005 and
3 ending the last day June 1st, 2006," do you see that?
4 A. Yes.
5 Q. So this was a contract that was going to last for
6 12 months, you knew that, correct?
7 A. Yes.
8 Q. And then it says "option price" -- if we could
9 enlarge please.
10 And then paragraph three says "option price," and it
11 has "the base price shall be," and then it doesn't have a
12 figure, does it?
14 Q. Okay. And then if we could go to the second page,
15 please. And this is the second page of that same document.
16 You see your signature, correct?
17 A. Correct.
18 Q. That's on the right-hand side, above the line that
19 has your name typed underneath it, right?
20 A. Correct.
21 Q. And then do you see paragraph nine where it says
22 "applicable law"?
23 A. Yes.
24 Q. And it says, "this agreement shall be interpreted
25 according to the laws of the State of Illinois," correct?

1 A. Correct.
2 Q. Is that your printing for "Illinois"?
3 A. No.
4 Q. Okay. But you see that Illinois was put in there,
5 and that's the state that you lived in, correct?
6 A. Correct.
7 MR. GREINER: We can take that document down.
8 Pursuant to the amended stipulation, I would like to
9 introduce DM-F6, please.
11 MR. ANDERSON: No, Your Honor. It's another search
14 MR. TEDMON: No objection, Your Honor. It's a
15 two-page document. Is counsel planning to ask about both
16 pages?
17 MR. GREINER: Two pages. And yes.
19 THE COURT: All right. DM-F6 is admitted.
20 (Defendants' Exhibit DM-F6, Acknowledgement By Seller
22 Q. BY MR. GREINER: If we could have the first page.
23 Ms. Kovacs, I'll enlarge this again. But this is,
24 again, another document that you and the lady notary went over
25 in your house, correct?

1 A. Correct.
2 Q. And the top of this document is entitled
3 Acknowledgement By Seller, correct?
4 A. Correct.
5 Q. And this first paragraph you see your initials down
6 on the bottom right, correct?
7 A. Correct.
8 Q. And below your initials it says "seller's initials,"
9 correct?
10 A. Correct.
11 Q. And the entitlement of the document says
12 Acknowledgement By Seller, correct?
13 A. Correct.
14 Q. And then the first paragraph briefly states that,
15 "the seller acknowledges that the purchase (sic) has not made
16 any representations, promises, or verbal agreements regarding
17 the purchase of seller's residence that are not contained
18 within the Equity Purchase Agreement or the other documents
19 executed concurrently herewith," do you see that?
20 A. Yes.
21 Q. And you went over that with the lady notary, correct?
22 A. Correct.
23 Q. And when it says Equity Purchase Agreement, we have
24 already talked about that document, do you remember that
25 document?

1 A. Yes.
2 Q. Okay. If we could enlarge, please. Now paragraph
3 two, you see your initials again, correct?
4 A. Correct.
5 Q. They are over on the right-hand side, above where it
6 says "seller's initials," and they are "DK," correct?
7 A. Correct.
8 Q. And then paragraph two says, "seller" -- which is
9 you -- "acknowledges that the seller's residence is currently
10 in foreclosure," do you see that?
11 A. Yes.
12 Q. So you had received a notice from the bank that you
13 hadn't quite made all the payments, do you remember that?
14 A. No.
15 Q. You don't remember that?
16 A. That didn't happen.
17 Q. That didn't happen?
18 A. No.
19 Q. So when you went over this with the lady notary, did
20 you stop and ask her a question about that?
21 A. No.
22 Q. And do you know why that -- why you didn't?
23 A. Probably because I didn't read the page word for
24 word.
25 Q. Okay. But you understood from what the lady and you

1 had talked about that you were signing the documents, right?
2 A. Correct.
3 Q. Okay. And we could enlarge that, please.
4 You see paragraph four on the screen, Ms. Kovacs?
5 A. Yes.
6 Q. And, again, you see your initials on the right-hand
7 side at the bottom, "DK," correct?
8 A. Correct.
9 Q. All right. Paragraph four says, "seller understands
10 that the Equity Purchase Agreement" -- and we've talked about
11 that already, right?
12 A. Right.
13 Q. -- "which seller has entered into with the purchaser,
14 is not a loan" -- and you know what a loan is, correct?
15 A. Correct.
16 Q. -- "and is not a mortgage" -- and you know what a
17 mortgage is, correct?
18 A. Correct.
19 Q. -- "and pursuant to the terms of the Equity Purchase
20 Agreement, seller is selling her entire interest in the
21 property to purchaser," do you see that?
22 A. Yes.
23 Q. Okay. So you know, by having a home, that when you
24 sell your home, you come off of title, correct?
25 A. Correct.

1 Q. And somebody else goes on title, correct?
2 A. Correct.
3 Q. Okay. We can then enlarge that and actually move to
4 the second page.
5 All right. At the bottom of the second page you can
6 see your signature, correct?
7 A. Correct.
8 Q. And it is above the word "seller," correct?
9 A. Correct.
10 Q. And then to the left of that is the date of May 2nd,
11 2005, right?
12 A. Right.
13 MR. GREINER: We can take that down. Pursuant to the
14 amended stipulation, Judge, if we could enter DM-F3, please.
16 MR. ANDERSON: No objection, Your Honor. I just have
17 one page, and it's a search warrant document.
18 MR. GREINER: Correct. It's a one-page document.
21 THE COURT: Mr. Greiner -- Mr. Samuel?
23 MR. GREINER: And I have no objection either.
25 (Defendants' Exhibit DM-F3, Exhibit “A” to Addendum

1 to Equity Purchase Agreement admitted into evidence.)
2 Q. BY MR. GREINER: If we could have that up, please.
3 At the top of this page it says, "exhibit to addendum
4 to equity purchase agreement," do you see that?
5 A. Yes.
6 Q. And you recall we already talked about the equity
7 purchase agreement, right?
8 A. Right.
9 Q. Okay. If we could enlarge.
10 Paragraph three says, "the appraised value shall be
11 determined by an independent NAI appraiser selected by
12 landlord, not less than ten years of experience in evaluating
13 detached residential homes in the county in which the premises
14 is located," do you see that?
15 A. Yes.
16 Q. And you see your signature down at the bottom left of
17 the document, correct?
18 A. Correct,
19 MR. GREINER: Pursuant to the amended stipulation, if
20 we could enter DM-F7, which is a one-page document?
21 THE COURT: F7. Any objection, Mr. Anderson?

1 (Defendants' Exhibit DM-F7, Notice of Cancellation
3 Q. BY MR. GREINER: If we can have that up on the
4 computer screen.
5 And do you see at the top of the page, Ms. Kovacs,
6 you see it says notice of cancellation, right?
7 A. Right.
8 Q. And, again, this is another document that you went
9 over with the lady notary in your home, correct?
10 A. Correct.
11 Q. And the first sentence says, "seller signed the
12 equity purchase agreement on May 2nd, 2005," and that's what
13 you did; do you remember we saw your signature and the date,
14 correct?
15 A. Correct.
16 Q. And then it says, "you may cancel this contract for
17 the sale of your house without any penalty or obligation at any
18 time before midnight on May 7, 2005," do you see that?
19 A. Yes.
20 Q. And if we could enlarge. And you see your signature
21 down at the bottom left-hand, one-third of the document,
22 correct?
23 A. Correct.
24 Q. Now, you didn't send any letters -- or you didn't
25 send any letters cancelling any contracts, correct?

1 A. Correct.
2 Q. And you didn't make any phone calls cancelling any
3 contracts, true?
4 A. True.
5 MR. GREINER: Pursuant to the amended stipulation,
6 Judge, if we could enter DM-F4, please.
14 (Defendants' Exhibit DM-F4, Notice Required by
15 California Law dated May 2, 2005 admitted into evidence.)
17 This document says "notice required by California
18 law," do you see that?
19 A. Yes.
20 Q. And, again, another document that you went over with
21 the lady notary in your house, correct?
22 A. Correct.
23 Q. And this notice says that "until your right to cancel
24 this contract has ended, which right ends on May 2, 2005."
25 Now, you know from the prior notice of cancellation that that

1 wasn't true, right?
2 A. Right.
3 Q. That it actually ended on May 7th, right?
4 A. Right.
5 Q. Did you stop and ask any questions of the notary when
6 you saw that?
7 A. No. Because we didn't go over every page.
8 Q. Okay. Well, do you recall seeing this page when the
9 lady notary came to your house?
10 A. No.
11 Q. You don't recall seeing this one at all?
12 Okay, well, let's enlarge. Do you see your signature
13 on -- about in the middle of the page on the right-hand side?
14 A. Yeah.
15 Q. So we know that at least you saw the document to sign
16 it, correct?
17 A. Correct.
18 Q. Okay. Now, you didn't try to scoot the lady notary
19 out of your house when she came, did you?
20 A. No.
21 MR. GREINER: All right. Pursuant to the amended
22 stipulation, Judge, if we could enter DM-F5, please.
24 MR. ANDERSON: No objection, Your Honor. Five-page
25 search warrant document.

6 (Defendants' Exhibit DM-F5, Residential Lease After
7 Sale Agreement dated May 2, 2005 admitted into evidence.)
8 Q. BY MR. GREINER: Okay. If we could have the first
9 page.
10 Now, this document says "residential lease after sale
11 agreement," do you see that, Ms. Kovacs?
12 A. Yes.
13 Q. Now, this was one of the documents that the lady
14 notary had with her when she came to your house, correct?
15 A. Correct.
16 Q. And it's one of the documents that you looked at,
17 correct?
18 A. Correct.
19 Q. It's one of the documents that the lady notary talked
20 about with you prior to you signing, correct?
21 A. Correct.
22 Q. Okay. And right underneath the heading where it says
23 "residential lease after sale agreement," it says, "this lease
24 agreement is made and entered into this first day of May 2005,
25 by and between Creative Loans LLC, hereinafter referred to a

1 landlord" --
2 A. Uh-huh.
3 Q. -- "and Debra Kovacs, hereinafter referred to as
4 tenant," do you see that?
5 A. Yes.
6 Q. Now, you understand when the term landlord is used,
7 that's the owner of property, correct?
8 A. Correct.
9 Q. And when the term tenant is used, that's the person
10 that's renting the property from the landlord, correct?
11 A. Correct.
12 Q. Okay. And if we could enlarge, please.
13 And then the first paragraph underneath that
14 introduction, it starts, "landlord leases to tenant and tenant
15 leases from landlord," do you see that?
16 A. Yes.
17 Q. Okay. And then in the second sentence it says that
18 the house that's being leased is 543 East 167th Street, South
19 Holland, Illinois, do you see that?
20 A. Yes.
21 Q. And that's the piece of property that all these
22 documents are talking about, correct?
23 A. Correct.
24 Q. And that's where you met the lady notary, correct?
25 A. Correct.

1 Q. And then it says that "the lease for the period
2 commencing on the 1st day of June, 2005, and thereafter until
3 the 1st day of June 2006," do you see that?
4 A. Yes.
5 Q. Okay. So that meant that it was a year lease,
6 correct?
7 A. Correct.
8 Q. Okay. If we could enlarge, please.
9 And then the second paragraph of that document says
10 that "the tenant" -- which we found out from reading this
11 document that's you, correct?
12 A. Correct.
13 Q. -- "shall pay as rent the sum of $1,358 per month,"
14 do you see that?
15 A. Yes.
16 Q. So that was the amount that you had to pay each
17 month, correct?
18 A. Correct.
19 Q. If we could enlarge and go to the last page. Well,
20 actually let's do this. My mistake. If we could go to the
21 second page, please.
22 Ms. Kovacs, do you see at the very bottom of the page
23 on the right-hand corner, do you see your initials?
24 A. Yes.
25 Q. That's because you saw this document, correct?

1 A. Correct.
2 Q. If we could go to page three, please.
3 And you see at the very bottom of the document, on
4 the right-hand side, you see your initials also?
5 A. Yes.
6 Q. That's because you saw this document, right?
7 A. Right.
8 Q. And the next page. And again at the bottom
9 right-hand corner are your initials "DK," correct?
10 A. Correct.
11 Q. Because you saw this document, right?
12 A. Right.
13 Q. Okay. And then just above your signature in the
14 document you see all in capital letters "you should read and
15 understand this lease, it's a legal and binding contract," and
16 you understood that, correct?
17 A. Correct.
18 Q. And if we could go to the last page. Actually, my
19 fault. Go back one more time.
20 And then the sentence right underneath that says,
21 "signing below means you have read the lease and are in full
22 agreement with it and have received a copy of the contract," do
23 you see that?
24 A. Yes.
25 Q. Okay. Now go to the last page. And you see your

2 A. Correct.
3 Q. And you dated it May 2, 2005, right?
4 A. Right.
5 Q. Now is that your handwriting putting in the date and
6 everything?
7 A. No.
8 Q. No. It's just your signature?
9 A. Right.
10 THE COURT: You have time for one more question.
11 MR. GREINER: Question or document?
12 THE COURT: Question.
13 MR. GREINER: Then let's stop now.
14 THE COURT: If you can do a document in one minute.
15 MR. GREINER: Probably not.
16 THE COURT: Let's do stop then. That brings us to
17 the end of our trial week. And, again, we have a fairly long
18 weekend. Just given the way this trial is falling, we're
19 having short weeks.
20 I have compared notes with counsel, and I understand
21 that we're on track, essentially, to get the evidence in within
22 four weeks. So I think we're fundamentally on track. And I
23 will keep you up to date on that. I'm certain you are paying
24 attention to the calendar.
25 As we take this long break, please remember all my

1 admonitions. No homework of any kind, no research of any kind,
2 no discussing the case with anyone else, including your fellow
3 jurors, family members, your friends. No thinking about its
4 ultimate conclusion. Continue to keep an open mind until you
5 receive the case and deliberate with your fellow jurors. If
6 anyone attempts to contact you in any way, please let me know.
7 Remember that I will give you final instructions that guide
8 your deliberations once the evidence is in, and you will
9 receive all the information you need to make the decision you
10 are required to make as jurors in this case.
11 Have a good weekend. Happy Halloween again. We will
12 see you Tuesday morning at 8:30.
13 (Jury out.)
14 THE COURT: All right. You may be seated. You may
15 now step down.
16 Unless you hear otherwise, you should be back in your
17 seat at 8:30 a.m. on Tuesday morning. Thank you. You are
18 excused for the day.
19 Briefly. The Court needs to break because I have a
20 2:30 I need to finish getting ready for. And so I'll take
21 Mr. Greiner's additional comments for the record on
22 Mr. Hellstrom at 8:15 on Tuesday morning, and I'll also hear
23 from you then what your plan is for Ms. Yang and Mr. Wiley, if
24 you have a date.
25 And generally, at this point, there are two weekdays

1 before we meet again. I'm directing you to meet and confer.
2 My question is, I have been asking about objections even with
3 the stipulation because the stipulation doesn't have full
4 admissibility. Meet and confer and tell me if we can now go to
5 the point where either you have a further stipulation
6 preserving any objections so I don't need to ask, or can I just
7 -- even if there is no stipulation, can it just come in if it's
8 covered by a pre-existing stipulation. That's taking some time
9 and is fairly distracting in a way, I think. Unless I'm
10 missing something, we can avoid that.
11 If I'm right, we've had three homeowners, three straw
12 buyers or investors so far. There is a clear pattern. My
13 other direction to you is when you meet and confer, if the
14 documents are identical as had been admitted with other
15 witness, can the set of documents come in as a group, and then
16 the attorney focus on what's only material with respect to the
17 witness.
18 MR. TEDMON: Your Honor, I would agree with that. I
19 think also, getting back to the stipulation issue, I don't know
20 why we can't right now agree that anything that's in the
21 amended stipulation foundationally is in. Instead of having to
22 do this diatribe every time. We can just say please pull up
23 document number DM-F3 for admission.
24 THE COURT: Meet and confer. I would like to hear
25 that. If there's a further stipulation where additional

1 objections are preserved, then enter into that. And then,
2 generally, are there exhibits that can come in without any
3 witness appearing?
4 So meet and confer, report to me on those three
5 things, and we'll hear Mr. Greiner's record with respect to
6 Mr. Hellstrom at 8:15 on Tuesday. See you then.
9 CERTIFICATION
10
14
15

18
19
20
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 8
Defendants.
---oOo---
TRIAL PROCEEDINGS
TUESDAY, NOVEMBER 5, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
3 DEBRA KOVACS
CROSS-EXAMINATION BY MR. GREINER (cont'd) 1165
6 FURTHER REDIRECT EXAMINATION BY MR. ANDERSON 1227
FURTHER RECROSS-EXAMINATION BY MR. GREINER 1228
7 FURTHER RECROSS-EXAMINATION BY MR. TEDMON 1233
8 BERTHA WOODS
11 DENISE AHEARN
13 THOMAS ROBERT DAFFRON

VOIR DIRE EXAMINATION BY MR. ANDERSON 1351
14 VOIR DIRE EXAMINATION BY MR. TEDMON 1353
VOIR DIRE EXAMINATION BY MR. SAMUEL 1358
15 VOIR DIRE EXAMINATION BY MR. GREINER 1359
16
17
18
19
20
21
22
23
24
25


3
17A2 Uniform Residential Loan Application in the 1247
4 name of Marjorie Sly for property at 896
Yellowstone Road, in Cleveland, OH
5 17A3 Copy of check and stub from First City 1247
Credit Union account of Marjorie Sly dated
6 7/20/2006
17A4 Check off list for Woods documents 1247
7 17A5 Equity Purchase Agreement dated 4/8/2006 1247
between Bertha L. Woods “Seller” and
8 Funding Foreclosures.com “Purchaser”
17A6 Acknowledgment by Seller Bertha L. Woods 1247
9 initialed and dated 4/8/2006
17A7 896 Yellowstone Road Property Holding Trust 1247
10 Agreement dated 4/8/2006
17A8 Affidavit of Deed signed by Bertha L. Woods 1247
11 17A9 Grant Deed Grantor: Bertha L. Woods 1247
Grantee: Funding Foreclosures.com
12 17A11 Signature page 4/8/2006” signed by Bertha 1247
L. Woods
13 17A12 Letter dated 5/31/2006 from Bertha Woods to 1247
Dominic McCarns Funding Foreclosures
14 17C Warranty Deed recorded on 8/21/2006 in 1255
Cuyahoga County, Ohio for property at 896
15 Yellowstone Road, Cleveland, OH
17E FundingForeclosures.com generic letter 1259
16 from Domonic McCarns regarding signing
documents and returning them.
Development for property at 115 Bedford
18 Street, West Bridgewater, MA 02379
18C1 Warranty Deed recorded in Plymouth County 1325
19 10/23/2006 for property at 116 Bedford
Street, West Bridgewater, MA
20
21
22
23
24
25

1
3 DM-F11 Sales and Purchase Agreement-Contract of 1166

Sale dated May 2, 2005
4 DM-F13 Addendum to Purchase Agreement dated May 1168
9, 2005
5 DM-F15 Grant Deed dated July 1, 2005 1169
DM-F14 Wire Instructions and Authorization dated 1170
6 July 1, 2005
DM-K3 Notice of Cancellation dated April 8, 1298
7 2006
DM-O1 Equity Purchase Agreement re: 115 Bedford 1335
8 Street, West Bridgewater, MA
DM-O2 Notice of Cancellation dated March 7, 1335
9 2006
DM-O3 Acknowledgement By Seller dated March 7, 1335
10 2006
DM-O4 Property Holding Trust Agreement dated 1335
11 March 7, 2006
DM-O5 Residential Lease After Sale Agreement 1335
12 dated March 7, 2006
DM-O6 Addendum to Equity Purchase Agreement 1335
DM-O7 Exhibit “A” to Addendum to Equity 1335
14 Purchase Agreement
DM-O8 Addendum #1 to Equity Purchase Agreement 1335
DM-O9 Affidavit of Deed dated March 8, 2006 1335
16 DM-O10 Wire Instructions and Authorization dated 1335
March 8, 2006
17 DM-O11 Grant Deed dated March 8, 2006 1335
DM-O12 Date of Contract Acceptance March 17, 1335
18 2006
DM-O13 Wire Instructions and Authorization dated 1335
19 August 8, 2006
20
21
22
23
24
25

2 TUESDAY, NOVEMBER 5, 2013
3 ---oOo---
5 United States versus Charles Head, Benjamin Budoff and Domonic
6 McCarns. This is on for jury trial, and today is day eight.
7 THE COURT: Good morning. Counsel are present. The
8 parties are present. Just a couple of things.
9 Mr. Greiner, you want to make a record with respect
10 to Mr. Hellstrom?
11 MR. GREINER: Actually, Judge, after the weekend
12 conferring with counsel, doing some research on my own, I'm
13 fine.
15 MR. GREINER: No record need to be made, and I was
16 the last one or the only one that had not released him from
17 this trial. And so now, for the record, I am releasing him,
18 and so that issue is now taken care of.
19 THE COURT: All right. So Mr. Hellstrom is excused.
20 The Government can let him know that that is his status.
21 Ms. Kovacs was on the stand. We'll continue with her
22 first thing this morning. How much longer do you think you
23 need, Mr. Greiner?
24 MR. GREINER: Judge, I'm not sure. I've taken the
25 Court to heart. I have a binder. I have outlined what I need

1 to do. I have documents I have to go over with the testimony
2 that she gave to the Government and testimony that she gave to
3 the Government prior, along with my investigator, and so that's
4 what I'll cover.
5 I have no intention of rehashing old ground at all.
6 I've got things lined up, ready to roll. So I'm not going to
7 waste the Court's time, the jury's time, or counsel's time.
8 THE COURT: All right. Do you have a time estimate?
9 MR. GREINER: And that was a long way of saying I
10 don't.
11 THE COURT: All right. Well, I'll let you know once
12 you've gone about 20 minutes, and then there will be other
13 cross of Ms. Kovacs?
14 MR. SAMUEL: I'll give Mr. Greiner my cross.
15 MR. TEDMON: At this point, I don't have anything.
16 MR. GREINER: And I will take their time, too.
17 MR. ANDERSON: Your Honor, on that subject, just to
18 give the Court a heads up. We're planning on calling a number
19 of homeowner victims today like Ms. Kovacs, and we keep getting
20 through about two witnesses a day.
21 And I'm not asking the Court to pre-rule or
22 pre-judge, but so the Court knows you may be hearing more 403
23 objections from the Government today on some of the
24 cross-examination of those witnesses. In particular with
25 respect to these documents where questions are asked like where

1 counsel reads from the document and then says, isn't that what
2 the document says. Since the document speaks for itself, and
3 since the jury has seen these documents before in previous
4 cross-examination, the Government will be objecting on a more
5 regular basis to that.
6 I just want the Court to be aware of that so the
7 Court understands where the Government's coming from with those
8 objections.
9 THE COURT: And the defense acknowledges. I'm not
10 here to try your cases for you, but it would appear to the
11 Court that if the jury has seen the exact same document before,
12 there is a way to get what you need with each witness without
13 belaboring the point.
14 MR. GREINER: Here's the problem, Judge, as I stated
15 earlier on, the Government only has to hit a home run one time.
16 I have to hit a home run on each one of these homeowners
17 because the Government's going to stand up in their closing,
18 and they are going to pick the homeowner that they believe is
19 the strongest and say, look, Domonic McCarns made
20 misrepresentations to this homeowner.
21 If I don't cover these documents, what they find, if
22 I don't cover them with each homeowner, I'm doing a disservice
23 to my client and a disservice to the jury.
24 I didn't bring the Superseding Indictment. I didn't
25 make the representations to the Daffrons, to the Woods, to

1 Kovacs, to Solares, to Pearlman that misrepresentations were
2 made. These documents are critical. The knowledge that these
3 witnesses have of these documents is critical to the defense.
4 THE COURT: I understand that. Does the document
5 have to be read each time?
6 MR. GREINER: I think it does because I can't
7 supersede what Cardenas said when she's in Hawaii. I can't put
8 what Sheila Jones said in Sacramento on to the Nowlins in
9 Massachusetts, or to Brockway in Washington, or to Woods in
10 Illinois or Ohio. I can't do that.
11 I have to know what did those witnesses understand
12 those documents when they signed them. Because the Government
13 is saying that my client made misrepresentations and these
14 documents belie that theory. And I don't know of any way that
15 I can present an effective defense without going through these
16 documents.
17 THE COURT: All right. Understood. I'll keep that
18 in mind. What about the 801(d)(2)(E) issue?
19 MR. TEDMON: Your Honor --
20 THE COURT: Can we have a standing objection and just
21 have exhibits come in?
22 MR. TEDMON: I think we've got some agreements
23 because you told to us meet and confer, and we have.
24 On the 801(d)(2)(E) matter, I've spoken to all
25 counsel. And I think the approach that we will agree to -- or

1 can agree to is this: That because there was a motion in
2 limine filed from the beginning of the trial all the way
3 through, each defendant has a standing, continuing objection
4 under 801(d)(2)(E), and does not have to raise it each time a
5 statement or a document relating to a possible co-conspirator
6 statement is made. We have that. That's in the record. And
7 the Court has already indicated that for me, and other counsel
8 would accept that.
9 What the Government's position is, is that if we at
10 some point decide to file a Rule 29, then we need to lay out to
11 the Court specifically what we think in the record -- we have
12 to lay out for the record that the Government has failed to
13 prove by independent evidence that a conspiracy existed, and
14 that the 801(d)(2)(E) statements should not be considered under
15 a Rule 29, which is typically what happens. I think under that
16 -- and then the Government would have a right to respond, of
17 course, either orally or in writing.
18 With that understanding, I want to make sure
19 everybody is clear on this and agrees. I think that obviates
20 the need to do any more 801(d)(2)(E) objections as to each
21 individual piece of evidence or statement.
22 THE COURT: All right. Does that accurately state
23 the parties' agreement? Mr. Anderson?

1 MR. GREINER: Yes. As long as the Government's
2 willing not to raise an objection that it's been waived from
3 the beginning through the end of the trial, either here or if
4 it goes to the Ninth Circuit up to the appellate court. That's
5 fine.
6 THE COURT: That's what they just --
7 MR. ANDERSON: I think that's what we're doing with
8 the provision that if counsel feels that we haven't proven it
9 up by the time of the Rule 29 motion at the conclusion of the
10 Government's case, then it needs to explain why so the
11 Government has an opportunity to respond, so the Court has full
12 information with which to make its decision.
13 THE COURT: We'll cross that bridge when we get to
14 it. Mr. Samuel?
15 MR. SAMUEL: I agree, Your Honor.
16 MR. TEDMON: And in that regard, could the Court give
17 the jury one final advisement? Because there's been these
18 contemporaneous objections. I don't want them thinking
19 Mr. Greiner, or Mr. Samuel, or I have given up that issue.
20 THE COURT: My thought, generally, would be to say
21 the parties have met and conferred and agreed to have their
22 objections be standing objections without the need to
23 articulate them in court. Even though the jury won't continue
24 to hear those, they remain as objections.
25 MR. TEDMON: Right. I think also in any event that's

1 for the Court's consideration, not for them. Maybe that would
2 be a good thing to tell them.
3 THE COURT: Any problem with my making that general
4 advisement?
5 MR. ANDERSON: No. I think that makes sense with
6 Mr. Tedmon's additional advisement that the objections are for
7 the Court anyway, and it's not for the jury to be concerned
8 about objections and whether they are sustained or not. They
9 are just to consider the evidence according to the Court's
10 instructions at the end of the trial.
11 THE COURT: All right. That's the Court's plan.
12 MR. TEDMON: Then, Your Honor, there is one other
13 thing you asked us to do, and I think we have an answer for
14 that.
15 And that is on this continual reference to "pursuant
16 to the amended stipulation" when we start introducing
17 documents. I think we all have a uniform agreement that
18 because we have a stipulation, amended, or second amended, or
19 whatever we end up with, we all agree that for foundational
20 purposes they come in. So there is no need to do that. We all
21 agree with that.
22 And we can simply -- if Mr. Greiner, for example,
23 says I move DM-N4 into evidence, all we're asking for is the
24 Court to pause so we can check that document and see if there's
25 a variance or some other non-foundational objection.

1 If there isn't, say no objection, no objection, no
2 objection. It comes in. And we don't have to go through that
3 again. I think that would help speed things along, and it just
4 would be less cumbersome.
5 THE COURT: That practice is agreed?
6 So the 801(d)(2)(E) wouldn't be articulated at that
7 point, but other non-foundational objections could be, but then
8 the Government could display those?
10 THE COURT: Without reference to the stipulation.
11 MR. ANDERSON: Our plan would be just to pause long
12 enough for -- briefly, enough time for somebody to make an
13 objection if they need it.
14 And then the Government's preference would be if
15 counsel reference, based on the stipulation, where the document
16 came from. You know, ask that Exhibit 18A, search warrant
17 document be admitted, pause, no objections, then admitted.
18 THE COURT: Any objection to that?
19 MR. GREINER: Yeah.
20 THE COURT: My question is, if that's in the
21 stipulation, why?
22 MR. ANDERSON: Well, because the source of the
23 document would need to be in the record for the jury. So the
24 stipulation contains the source of the various documents so
25 that they can evaluate this came from the lender or this came

1 from the search warrant.
2 MR. GREINER: I don't see the relevance of that at
3 all.
4 MR. SAMUEL: Me neither, Your Honor.
5 THE COURT: Can the jury receive a copy of the
6 stipulations or the amended stipulation that could go in their
7 binders?
8 MR. ANDERSON: Well, we could discuss that. Maybe
9 that's something that we should discuss. Maybe there is a
10 modified version of the stipulation.
11 THE COURT: I think that would represent reciprocity
12 in the issue of easing the admission of exhibits.
13 MR. TEDMON: Your Honor, if it's in, we've got a
14 reason for why it's coming in. The jury should just consider
15 the fact that it's there. I think that would be good enough.
16 MR. SAMUEL: Well, the stipulation is broader than
17 what may in fact be exhibits admitted, so we need to be careful
18 about that.
19 THE COURT: Well, ultimately it's a question for what
20 goes to the jury at the end of the case.
21 MR. ANDERSON: We could figure that out. There are
22 some documents, Your Honor, where the location is important to
23 the Government. For example, items found at Charles Head's
24 house. So we may do something a little different with those
25 documents, so the Court is aware.

1 THE COURT: All right. I approve all of those plans.
2 It looks like you used your time constructively. The Court
3 appreciates that. So after Ms. Kovacs, who then today?
4 MR. ANDERSON: Your Honor, I believe that Ms. Woods
5 will be next witness after Ms. Kovacs.
6 THE COURT: And then?
7 MR. ANDERSON: Probably Nowlin.
8 THE COURT: And then let's be optimistic that we're
9 going to get through three or four folks.
10 MR. ANDERSON: My hope, Your Honor, is we could get
11 through four people. We've got six witnesses including,
12 Ms. Kovacs available today. And if we're able to speed up the
13 consideration of these documents -- and I understand that
14 Mr. Greiner sees it differently -- but if we're able to go
15 faster through those, we should be able to get a good day's
16 work done.
17 THE COURT: So after Woods and Nowlin?
18 MR. ANDERSON: Pearlman, Brockway and Daffron. And
19 we just ask for flexibility on the specific order that they are
20 called in. We're dealing with medical issues and traveling.
21 THE COURT: Is just one Daffron being called?
22 MR. ANDERSON: I don't know, Your Honor. Thomas
23 Daffron had a lot of the early interactions with Mr. McCarns,
24 and, unfortunately, he suffered a stroke recently, and it's
25 very difficult for him to communicate. So we'll have to see

1 today how well he's doing physically, and if he's able to
2 communicate. It's hard for him to find words. You can see him
3 struggling to come up with the word to respond to a question,
4 things like that. So it really depends on what our situation
5 is as the day progresses.
6 MR. SAMUEL: If he does take the stand, possibly the
7 Court would permit us to voir dire him. I realize there is no
8 ruling on competency.
9 But it makes a significant difference, I think, his
10 state of mind at the time the documents were signed versus the
11 present state of mind. I think Mr. Greiner would like to
12 elicit that.
13 THE COURT: Does that need to be in front of the
14 jury?
15 MR. GREINER: No.
16 THE COURT: If Mr. Daffron is going to be called,
17 let's have him outside the presence of the jury during a break.
19 THE COURT: There is a traffic accident on at least
20 one of the freeways, and so we're missing one juror at present,
21 so we're going to need to wait a little bit until she gets
22 here.
23 What's the current thinking about Ms. Yang and
24 Mr. Wiley?
25 MR. TEDMON: I'll defer to Mr. Anderson on that.

1 MR. ANDERSON: Your Honor, our plan is to bring them
2 up Tuesday. We're also planning to file something with the
3 Court possibly today asking the Court to reconsider its
4 decision.
5 THE COURT: Next Tuesday?
6 MR. ANDERSON: Yes. A week from today.
7 THE COURT: All right. So we'll address that on
8 further breaks.
9 MR. TEDMON: Can I make a comment on that since we
10 have a little bit of time. We've talked about this issue as
11 well, all of us.
12 And if the Court determines that they are going to be
13 called and testify in front of the jury in a very limited
14 capacity, my suggestion is that we come up with particularized
15 questions for both Mr. Wiley and Ms. Yang that the parties and
16 the Court sign off on, effectively.
17 And my reason for saying that is, particularly as it
18 relates to Mr. Wiley, he likes to volunteer information. He
19 made that comment about, well, we met and we talked about how
20 we're going to steal money from the victims, and we all jump up
21 and object.
22 My concern is that either of those individuals in
23 their testimony says something to the effect -- by accident or
24 otherwise -- well, I didn't think a juror would be able to hear
25 me, or anything like that, this trial is over.

1 So I really think we need to be very careful about
2 how those questions are put together, the manner in which they
3 are asked to elicit a response that's appropriate and
4 respectful to the jury, and particularly Ms. McKenzie.
5 So if we're going to go that route -- and I expressed
6 to the Court why I felt it may not be appropriate. But if
7 that's what we do, then I would really urge us to consider that
8 approach.
9 THE COURT: You're not proposing any alternative
10 cure?
11 MR. TEDMON: No. I moved for the mistrial, and I
12 think that's what needs to happen. But if that's not granted,
13 we're going to go to this next step, then I think we need to be
14 very particularized in our questioning.
15 THE COURT: All right. Well, again, we have time. I
16 would ask that the parties meet and confer and propose a list
17 of proposed questions.
18 MR. TEDMON: Will do.
19 THE COURT: All right. Is there any other
20 housekeeping?
21 I just have a note. It's more for the end of
22 evidence. But to the extent there are any duplicate exhibits,
23 I'm assuming that will be clarified somehow to the jury.
24 MR. ANDERSON: I think we've tried to avoid admitting
25 duplicate exhibits. And so far I think we've done pretty well.

1 There may be one or two that made it in, but it's a fairly
2 small group so far.
3 THE COURT: All right. Well, let's take a short
4 break then until the juror shows up.
5 (Break taken.)
6 THE COURT: All right. The jury is ready so let's
7 bring it in.
8 (Jury in.)
10 court, ladies and gentlemen. We hope you had a good long
11 weekend. I trust everyone remembered the time change and
12 didn't show up extra early this morning. I know at least one
13 of you was stuck in some traffic, so thank you for making your
14 way through the traffic jams.
15 We're ready to continue again with some
16 cross-examination of Ms. Kovacs. Before I acknowledge
17 Mr. Greiner to continue with that, I want to make certain you
18 know the parties met and conferred over the break, and made
19 some agreements that we hope will move things along a little
20 bit more quickly.
21 We need to take time, of course, there is a lot of
22 evidence in this case to review, but in terms of some of those
23 objections you were hearing during trial for the last two
24 weeks, the Court has accepted an agreement of the parties that
25 certain of those objections will be standing objections without

1 the need for the party to articulate it out loud, and so you
2 won't be hearing those objections from Mr. Tedmon, Mr. Samuel,
3 Mr. Greiner. Mr. Tedmon had joined in a standing objection
4 previously.
5 So just so you know, those are still there. That's
6 an issue that the Court has to resolve. It doesn't change
7 anything in terms of the way for you to view the evidence.
8 Ultimately, you will have the evidence. You will decide the
9 facts of the case. And you will apply the law to the facts of
10 the case.
11 And I'll give you detailed instructions at the end
12 before you retire to deliberate. So that's just a brief update
13 on where we are. I'll continue to keep you updated on the
14 schedule of the case. I'm hopeful we're on track to get the
15 evidence in within four weeks.
16 So with that, Mr. Greiner.
17 And Ms. Kovacs, you were sworn last week. You
18 continue to testify subject to that oath. Do you understand
19 that?
22 DEBRA KOVACS,

2 BY MR. GREINER:
3 Q. Thank you very much, Your Honor. Good morning,
4 Ms. Kovacs.
5 A. Good morning.
6 Q. Again, if I ask you a question that you do not
7 understand, please ask me to rephrase it.
8 A. Okay.
9 Q. And just as a reminder, make sure you keep your voice
10 up or you have to move the mic closer so the court reporter can
11 take it down. Okay?
12 A. Okay.
13 Q. So the first question between Thursday, when you
14 testified last, and this morning, have you reviewed any
15 documents?
16 A. No.
17 Q. Have you talked to anyone regarding your testimony?
18 A. No.
19 Q. Have you talked to anyone regarding the case?
20 A. No.
21 Q. Have you been prepped as to any type of procedures or
22 testimony here prior to you taking the stand?
23 A. No.
24 Q. Okay. I'm going to continue going on with some
25 documents as I was doing on Thursday. Then I'm going to go

1 over the testimony that you gave to the Government and some
2 other statements. Okay?
3 A. Okay.
4 Q. I wanted you to have a roadmap to know where we're
5 going. All right?
6 A. All right.
7 MR. GREINER: I would like to admit DM-F11, Judge.
12 THE COURT: All right. That may come in.
13 (Defendants' Exhibit DM-F11, Sales and Purchase
14 Agreement-Contract of Sale dated May 2, 2005 admitted into
15 evidence.)
16 Q. BY MR. GREINER: If could I have the first page up,
17 please.
18 This document is entitled Sales and Purchase
19 Agreement - Contract of Sale. This is one of the documents
20 that you went over with the notary that was in your house at
21 your kitchen table, do you remember that?
22 A. Yeah.
23 Q. Okay. And it's telling you that -- all in capital
24 letters under that it's saying that "due to the substantial
25 financial risks and legal consequences involved in any real

1 estate transaction, both parties are advised to seek legal and
2 tax counsel," do you see that?
3 A. Yes.
4 Q. Okay. Then underneath that it says "time is of the
5 essence," correct?
6 A. Correct.
7 Q. Now, just as historical, the reason time is of the
8 essence is because you've lost your job at this point in time,
9 correct?
10 A. What time period are you talking about?
11 Q. Well, you tried to refinance your property, you
12 needed to refinance because you had lost your job, and you
13 couldn't make your house payments, do you remember that?
14 A. No. I didn't lose my job at this time when I was
15 doing this.
16 Q. Okay. So your testimony is you had not lost your
17 job?
18 A. I lost my job a year later.
19 Q. Okay. Do you remember talking to the Government
20 about April 9th of 2013 on the telephone?
21 A. Yes.
22 Q. Okay. Do you remember telling the Government at that
23 time that had you lost your job, and you could not keep up with
24 your house payments, do you remember telling the Government
25 that?

1 A. Yes.
2 Q. Okay. And if we could enlarge this document, please.
3 And the purchase price here is listed as $205,600, do
4 you see that?
5 A. Yes.
6 Q. If we could go to the last page of this document,
7 please. You see your signature, correct?
8 A. Correct.
9 Q. And do you recognize the signature above your
10 signature?
11 A. Yes.
12 Q. And that's the person that actually bought your home
13 correct, Ashley Reynolds?
14 A. Yes.
15 Q. And you see the date May 2, 2005, correct?
16 A. Right.
17 MR. GREINER: I would like to admit DM-F13, please.
21 THE COURT: All right. That shall come in.
22 (Defendants' Exhibit DM-F13, Addendum to Purchase
23 Agreement dated May 9, 2005 admitted into evidence.)
24 Q. BY MR. GREINER: If we could have the document on the
25 screen. This document is an agreement between you and Ashley

1 Reynolds, the person that's buying your property, and it's
2 agreeing to extend the date of settlement until July 16, 2005,
3 do you see that?
4 A. Yes.
5 Q. And if we could enlarge. And you see your signature
6 down at the bottom on the right-hand corner, correct?
7 A. Correct.
8 Q. With the date, true?
9 A. True.
10 Q. And you recognize Ashley Reynolds' signature just to
11 the left of that, correct?
12 A. True.
13 Q. And that's the purchaser of your property, correct?
14 A. Correct.
15 MR. GREINER: I would like to admit DM-F15, please.
19 THE COURT: All right. That comes in.
20 (Defendants' Exhibit DM-F15, Grant Deed dated July 1,
22 Q. BY MR. GREINER: If we could have that document up.
23 And this document says it's a grant deed, correct?
24 A. Yes.
25 Q. And you went over this document with the notary in

1 your house at the kitchen table, correct?
2 A. Correct.
3 Q. And it's indicating that you are selling to Ashley
4 Reynolds your house, correct?
5 A. Correct.
6 Q. If we could enlarge, please. And you see your
7 signature about in the middle of the page on the right-hand
8 side, correct?
9 A. Correct.
10 Q. And you see the date that it was notarized as
11 July 1st, 2005, correct?
12 A. Correct.
13 MR. GREINER: If we could take that down. I would
14 like to admit DM-F14, please?
18 THE COURT: All right. F14 comes in.
19 (Defendants' Exhibit DM-F14, Wire Instructions and
20 Authorization dated July 1, 2005 admitted into evidence.)
21 Q. BY MR. GREINER: If we could have that on the screen.
22 And this document is the wire instructions and
23 authorization, do you see that?
24 A. Yes.
25 Q. And this is again another document that you had

1 notarized in your house, correct?
2 A. Correct.
3 Q. And you see the date July 1st, 2005, true?
4 A. True.
5 Q. And it has an escrow number, do you see that,
6 correct?
7 A. Yes.
8 Q. And it has an escrow officer, right?
9 A. Yes.
10 Q. Now, where it says authorization to wire with bank
11 name and the account number, that is not the account of Domonic
12 McCarns, pursuant to this document, true?
13 MR. TEDMON: Objection. Lack of foundation.
15 Q. BY MR. GREINER: Well, this wire instruction is for
16 the account of Creative Loans LLC, correct?
17 MR. ANDERSON: Objection. Document speaks for
18 itself.
21 Q. BY MR. GREINER: If we could enlarge. That's your
23 A. Yes.
24 Q. And it was notarized on July 1st, 2005, correct?
25 A. Correct.

1 MR. GREINER: All right. We can take that down. If
2 we could admit DM-F17, please.
4 MR. ANDERSON: Your Honor, we don't have a copy of
5 that.
6 MR. SAMUEL: I don't either.
7 THE COURT: I'm showing it as reserved on my list.
8 MR. GREINER: You did get a copy. It's right in
9 front of you.
10 THE COURT: It was provided this morning.
11 MR. GREINER: It was, Judge, to all counsel, and I
12 hope to the Court.
13 THE COURT: All right. I'm informed I do have a
14 copy. Have you looked at yours, Mr. Tedmon?
15 MR. TEDMON: I have, Your Honor. I received several
16 new exhibits from Mr. Greiner this morning. I reviewed them
17 all.
19 THE COURT: Did the Government indicate no objection?
20 MR. ANDERSON: Your Honor, this isn't covered by the
21 stipulation since we just got it this morning. I don't think
22 we have an objection to it. Maybe we ought to take it up at
23 the break with Mr. Greiner.
24 THE COURT: Do you have a paper copy you can cover
25 with the witness?

1 MR. GREINER: I do.
2 THE COURT: For starters, it's a one-page exhibit.
3 MR. GREINER: It is.
5 MR. GREINER: May I approach?
7 Q. BY MR. GREINER: Ms. Kovacs, I placed in front you
8 DM-F17, do you see that?
9 A. Yes.
10 Q. And on that document it shows your name in one of the
11 boxes, correct?
12 A. Correct.
13 Q. And over to the far right on the same line of where
14 your name is --
15 A. Uh-huh.
16 Q. -- it shows the monthly payment that you were to be
17 making to rent back your property, do you see that?
18 A. Yes.
19 Q. And that's $1,358 per month, do you see that?
20 A. Yes.
21 Q. And that was the rent that you were to pay monthly
22 pursuant to the contract that you entered into with the
24 A. Not correct.
25 Q. Okay. So that wasn't the amount you were to pay?

1 A. No.
2 MR. GREINER: Okay. Move to enter Exhibit DM-F19 and
3 DM-F19-1. They were provided today to counsel and to the
4 Court, I believe.
5 MR. ANDERSON: Your Honor, these also were not part
6 of the stipulation. I would be happy to talk to Mr. Greiner at
7 the break about them.
8 THE COURT: 19 and 19-1. So one page each.
9 MR. GREINER: One page each.
10 THE COURT: You may also show them to the witness but
11 without displaying them to the jury.
12 MR. GREINER: Understood. May I approach?
13 THE COURT: Yes.
14 MR. GREINER: I'm only going to be showing the
15 witness DM-F19-1.
18 Judge, with the Court' permission may I stand at the
19 side of the witness stand because I don't have an extra copy of
20 that document?
21 THE COURT: That's fine. Just for as long as needed.
22 Q. BY MR. GREINER: Now Ms. Kovacs, I placed in front of
23 you DM-F19-1, do you see that?
24 A. Yes.
25 Q. Now, this is showing your name up in the left-hand,

1 about middle of the page, do you see that?
2 A. Uh-huh.
3 Q. Yes?
4 A. Yes.
5 Q. And it says "Debra Kovacs rent," correct?
6 A. Correct.
7 Q. And then it shows payments that had been received?
8 MR. ANDERSON: Objection, Your Honor. Lack of
9 foundation.
11 Q. BY MR. GREINER: You made rent payments to the
12 company during the period of -- during the portion of the
13 period of time you were under contract, correct?
14 A. Correct.
15 Q. And there was a portion of the period of time when
16 you made payments that were in the amount of $1,000, you paid
17 ahead of time, do you remember that?
18 A. No.
19 Q. Okay. And do you also recall that the last payment
20 that you made would have been in April of 2006, pursuant to the
21 contract?
23 Q. Okay. Do you remember that you did not make a
24 payment in May of 2006?
25 A. No.

1 Q. Do you remember that you did not make a payment in
2 June of 2006?
3 A. That may have been possible.
4 Q. Okay. Do you remember that you didn't make a payment
5 in July of 2006?
6 A. Yes, I remember.
7 Q. And do you remember that you didn't make a payment in
8 August of 2006?
9 A. Yes.
10 Q. Now, pursuant to the terms of the contract that you
11 entered into with the company to rent your property for a year,
12 you were to make the monthly payments, you knew that, correct?
13 A. Correct.
14 Q. And when you didn't make the monthly payments, you
15 knew that you were not following the terms of the contract,
16 correct?
17 A. Correct.
18 Q. In other words, you breached the contract that was in
19 place to have you rent your house, correct?
20 A. Correct.
21 Q. And that contract that was in place, to have you rent
22 your house, was also giving you an opportunity at the end of
23 the 12 months, provided you had made 12 months' of payment, to
24 try to purchase your property back, right?
25 A. Right.

1 Q. And since you didn't make all of the 12 month
2 payments under the contract, you didn't have a right to attempt
3 to get your property back that you were renting, correct?
4 A. Correct.
5 MR. GREINER: All right. Judge, may I retrieve the
6 document?
8 Q. BY MR. GREINER: Now, I want to talk to you a little
9 bit about what you said on direct examination with the
10 Government. Okay. That's where we're going now.
11 A. Okay.
12 Q. What you told the Government is, I believe, correct
13 me if I'm wrong, is that you needed to refinance your house,
14 right?
15 A. Yes.
16 Q. Okay. Because you couldn't make the payments,
17 correct?
18 A. Wrong.
19 Q. You were still making the payments?
20 A. Yes.
21 Q. Okay. And your testimony is that you had not lost
22 your job?
23 A. I didn't lose my job until at the -- towards the end
24 of the contract.
25 Q. So you lost your job in 2006 as opposed to in 2005?

1 A. I lost my job at the -- towards the end of 2005.
2 Q. Toward the end of 2005?
3 A. Yes.
4 Q. All right. So when you were trying to refinance your
5 house, did you go to a broker to try to refinance it?
6 A. No.
7 Q. Did you go to a bank to see if the bank would
8 refinance it, where you had your loan taken out?
9 A. No.
10 Q. Did you call the bank up and see if you could
11 reinstate or have a forbearance on your loan at the institution
12 where your loan was at?
13 A. No.
14 Q. And did you ever consider bankruptcy to protect your
15 house?
16 A. No.
17 Q. And did you ever consider selling your house on the
18 open market?
19 A. No.
20 Q. Did you ever consider trying to find yourself --
21 trying to find an investor to purchase your house?
22 A. No.
23 Q. So when you spoke to this person on the phone from
24 the company, that person was selling you a contract for the
25 company to enter into with you to purchase your property,

1 correct?
2 A. You lost me.
3 MR. ANDERSON: Objection. Vague as to person on the
4 phone.
5 Q. BY MR. GREINER: Well, you spoke to a person on the
6 phone from a company, correct?
7 A. Correct.
8 Q. And that person was selling you a contract so that
9 the company could purchase your home with an investor, correct?
10 A. Are you talking about the -- you still lost me.
11 Q. That's fine. Then I'll rephrase it. That's all you
12 have to do is tell me you're lost, and we'll go back.
13 Okay. When you were speaking to the person on the
14 phone, remember doing that, about this program that had an
15 investor that would purchase your home so you could stay in it?
16 MR. ANDERSON: Objection. Vague as to when and who
17 we're talking about.
19 MR. GREINER: Okay. If we could have -- just one
20 moment, Judge. If we could have DM-F2, first page on the
21 screen, please.
22 THE COURT: That's already in.
24 Q. BY MR. GREINER: This is the equity purchase
25 agreement that you entered into, do you remember that,

1 Ms. Kovacs?
2 A. Yes.
3 Q. Before you entered into this contract for the company
4 to purchase your property, you spoke to an individual on the
5 phone, correct?
6 A. What company are you -- I don't know what you're
7 talking about.
8 MR. ANDERSON: Objection. Assumes facts not in
9 evidence.
11 Q. BY MR. GREINER: Do you remember telling the
12 Government that you talked to an individual on the phone?
13 A. Yes.
14 Q. Okay. That's the person I'm talking about. You
15 never met that person, correct?
16 A. Correct.
17 Q. All right. So that person that you told the
18 Government you spoke to on the phone was selling you this
20 A. Not at first, no.
21 Q. Well, eventually that's the document that was sent to
22 you, correct?
23 A. Eventually.
24 Q. All right. And that's the program that you entered
25 into, correct?

1 A. Correct.
2 Q. At first, the person on the phone was trying to
3 refinance your property, right?
4 A. Correct.
5 Q. And that person sent you to a title company and
6 escrow company for you to sign documents, correct?
7 A. Correct.
8 Q. And that's when you missed the time appointment to
9 sign those documents, right?
10 A. Right.
11 Q. Okay. Once you missed that time appointment, now
12 things became very critical in your life regarding your house,
13 correct?
14 A. Not exactly.
15 Q. Well, you had missed some payments of your house,
16 correct?
17 A. Yes.
18 Q. Okay. And so now since you weren't able to make the
19 signing of the documents like you told the Government, now you
20 had to look for other options, right, because you couldn't
21 refinance?
22 A. At that time, we were still trying to refinance.
23 Q. Okay. But the refinancing was something that wasn't
24 available to you because you had to enter into the equity
25 purchase agreement, fair?

1 A. I don't understand your question.
2 Q. That's fine. I'll rephrase. After you missed the
3 signing appointment --
4 A. Uh-huh.
5 Q. -- to refinance your property, refinancing was no
6 longer an option that could be offered to you that was going to
7 work?
8 MR. ANDERSON: Objection. Lack of personal
9 knowledge. Foundation.
10 THE COURT: Overruled. You may answer if you can.
11 Q. BY MR. GREINER: Correct?
12 A. Can you say that one more time?
13 Q. Sure. When you missed -- when you missed the time
14 appointment to sign the documents to refinance, you never did
15 refinance your property, correct?
16 A. No.
18 A. No, I did not. I did not make it to the appointment.
19 Q. Right. You did not make it to the appointment. And
20 when you missed that appointment, you never again tried to --
21 you never did refinance your property after missing that
22 appointment, fair statement?
23 A. No.
24 Q. So are you saying to the ladies and gentlemen of the
25 jury that you did refinance your property?

1 A. No.
2 Q. So you didn't, correct?
3 A. That -- we were going to try again to refinance the
4 property.
5 Q. But it didn't work out, did it?
6 A. No.
7 Q. Okay. And so refinancing didn't turn out to be an
8 option, fair?
9 A. Fair.
10 Q. All right. And that's when you entered into this
12 A. Correct.
13 Q. And that was an agreement that you signed up and
14 talked to the notary about in your living room, right?
15 A. Right.
16 Q. Okay. Now, the equity purchase agreement is the
17 contract that the person on the phone talked to you about for
18 you to see if you wanted to sign, correct?
19 A. Who is the person on the phone?
20 Q. Remember when you told the Government that you talked
21 to a person on the phone?
22 MR. ANDERSON: Your Honor, I believe she used a
23 specific name that might help.
24 THE COURT: Overruled. You may answer the question,
25 if you're able.

1 THE WITNESS: What's the question?
2 Q. BY MR. GREINER: The question is, remember telling
3 the Government that you spoke to a person on the phone about
4 refinancing?
5 A. Right.
6 Q. You spoke to a person on the phone after you couldn't
7 refinance, correct?
8 A. Right.
9 Q. You spoke to a person on the phone about the equity
10 purchase agreement, correct?
11 A. Right.
12 Q. That equity purchase agreement was a contract you
13 entered into to have the company purchase your home to allow
14 you to stay in it and rent it, correct?
15 A. Correct.
16 Q. Now, Domonic McCarns didn't have anything to do with
17 you losing your job, correct?
18 A. Correct.
19 Q. And Domonic McCarns didn't have anything to do with
20 you missing payments, correct?
21 A. Correct.
22 Q. I'm going to change subjects. Now we're going to
23 talk about something different. Do you have a recollection --
24 MR. TEDMON: Excuse me. If we're not going to have a
25 a question on the screen, could we have it taken down, please.

1 MR. GREINER: All right.
2 THE COURT: We can take it down. How much longer do
3 you need, Mr. Greiner?
4 MR. GREINER: I'm getting toward the end, Judge.
5 Q. BY MR. GREINER: Do you have a recollection of
6 speaking to my investigator at the end of September, about
7 September 22nd of this year, do you recall that?
8 A. Yes.
9 Q. Do you recall a lady with dark hair coming to your
10 house?
11 A. Yes.
12 Q. And you remember that she indicated to you that she
13 was working on behalf of Domonic McCarns, do you remember that?
14 A. Yes.
15 Q. And then after she told you that she was working on
16 behalf of Domonic McCarns, the lady said that she wanted to
17 know what, if any, information you had, do you remember that?
18 A. Right.
19 Q. Okay. And you remember telling her that you got a
20 call from a Charles Head?
21 A. No.
22 Q. Okay. Do you remember telling her that Charles Head
23 called you, told you to go to Villa Park Village in Illinois to
24 sign some documents to refinance your house?
25 A. No.

1 Q. Villa Park Village is where you were supposed to go
2 to sign documents, right?
3 A. Right.
4 Q. So that part of what you -- that part of what the
5 investigator says you told her is true, right?
6 A. That part, yes.
7 Q. Okay. Do you remember telling my investigator that
8 you talked to Charles on the phone all the time?
9 A. No.
10 Q. Do you remember telling my investigator that Charles
11 sent a notary?
12 A. Yes.
13 Q. Do you remember describing the notary to my
14 investigator?
15 A. The notary, no.
16 Q. Do you remember that she was a woman, right?
17 A. Right.
18 Q. In her mid-30s?
19 A. I have no idea what age she was.
20 Q. And that she was African American, do you remember
21 that?
22 A. Yes.
23 Q. So that part would have been true, telling my
24 investigator that the notary was African American, right?
25 A. Right.

2 you had to refinance because I lost my job, I couldn't make the
3 payments, do you remember telling her that?
4 A. No.
6 besides Charles, I never talked to anyone?
7 A. No.
8 Q. Do you remember telling my investigator that the man
9 I spoke to I never met in person?
10 A. Yes, I never met him in person.
11 Q. Okay. So that would be true, what my investigator
12 said you said, right?
13 A. Right.
14 Q. Do you remember telling my investigator that on the
15 phone he represented himself as Charles Head?
16 A. No.
17 Q. Do you remember telling my investigator that when you
18 got delinquent tax bills, you called Charles?
19 A. No.
20 Q. And that you talked to him for the entire year?
21 A. No.
22 Q. All right. Final subject, Ms. Kovacs, okay?
23 A. Okay.
24 Q. Done with that. When unfortunately you lost your
25 job --

1 A. Uh-huh.
2 Q. -- you could no longer make payments to rent your
3 residence, fair?
4 A. Fair.
5 Q. Okay. Now, when you couldn't make those payments,
6 that wasn't because Domonic McCarns made any misrepresentation
7 to you, true?
8 A. True.
9 Q. And your house eventually got foreclosed on, correct?
10 A. Eventually.
11 Q. Right. And the foreclosure wasn't because Domonic
12 McCarns didn't make any payments, correct?
13 A. I can't say.
14 Q. Well, at the end -- as you've told the ladies and
15 gentlemen of the jury, at the end of the contract, you,
16 unfortunately, were unable to make payments, correct?
17 A. I was.
18 Q. And you knew that pursuant to the contract, when that
19 occurred, you weren't going to have the option to buy back your
20 house, right?
21 A. I wasn't -- well, yeah, I wasn't able to buy back my
22 house.
23 Q. Right. And you knew that this wasn't a -- let me put
24 it in the positive -- you knew that this contract that you had
25 entered into with the company was a business arrangement,

1 correct?
2 A. Correct.
3 Q. It wasn't some sort of gift, true?
4 A. True.
5 Q. Wasn't some sort of charity, true?
6 A. True.
7 Q. The investor that had purchased your house was to
8 make money, that's what an investor was going to do, right?
9 A. Right.
10 Q. And the fact that when you couldn't make the rent
11 payments and the mortgage payment then couldn't be made, that
12 caused the foreclosure, fair?
13 MR. ANDERSON: Objection. Lack of personal
14 knowledge. Foundation.
16 THE WITNESS: I believe it went into foreclosure
17 because the payments weren't made.
18 Q. BY MR. GREINER: Right. And at least --
19 A. But not on my end.
20 Q. Well, at least part of the reason was because you had
21 missed payments at the end because, as you told the ladies and
22 gentlemen of the jury, you lost your job, right?
23 A. At the end, right.
24 Q. Okay. And you knew that when the investor purchased
25 the property, the investor was taking all of the risk of paying

1 the mortgage, you knew that, right?
2 A. That's what I thought.
3 Q. And you also knew that your rent payments went to
4 help pay the mortgage that the investor was paying, correct?
5 A. No.
6 Q. Okay. So the investor was just taking -- your
7 understanding then the investor was just taking money and
8 paying it on the investor's own accord?
9 A. No.
10 Q. So some of the money that you were paying was going
11 to the mortgage, your rent money was going to pay the mortgage
12 correct?
13 A. No.
14 Q. Okay. When the house got foreclosed on, that
15 foreclosure never showed up on your credit report, fair?
16 A. Fair.
17 Q. And had you not been able to enter into the equity
18 purchase agreement with the company to have an investor
19 purchase your house, your house would have gone into
20 foreclosure based on your unfortunate circumstances, right?
21 A. Right.
22 Q. And had your house gone into foreclosure, that
23 foreclosure would have ended up on your credit report, correct?
24 A. Correct.
25 Q. In addition, you would have had to move out

1 immediately from your house, correct?
2 A. Correct.
3 Q. Instead, by entering into that equity purchase
4 agreement with the company, you were able to stay in your house
5 for a period of time, correct?
6 A. Correct.
7 MR. GREINER: Just one second, Judge.
8 Q. BY MR. GREINER: So at the end of the day, when the
9 house that you were renting went into foreclosure, that had
10 nothing to do with Domonic McCarns, true?
11 A. Not true.
12 Q. Well, Domonic McCarns didn't miss any payments, true?
13 A. Not true.
14 Q. How?
15 A. He didn't make the payments.
16 Q. He wasn't on the contract, was he?
17 A. That's who I entered the contract with.
18 Q. Well, you entered the contract with an investor,
19 Ashley Reynolds, correct?
20 A. Her name was on the contract, but she was never a
21 part of it.
22 Q. Why do you say that?
23 A. Because if the payments would have been made, the
24 house wouldn't have went into foreclosure.
25 Q. Right. And you --

1 A. I was making payments, but they never got made
2 anywhere else.
3 Q. But you missed payments at the end, you told the
4 ladies and gentlemen of the jury you didn't have the ability to
5 make payments, right?
6 A. I didn't -- I made the payments all the way up until
7 -- until the last month.
8 Q. Well, I thought we covered that, that you --
9 A. Yeah, we did cover that.
10 Q. You didn't make any June payments, correct, of 2006?
11 A. I didn't lose my job until the end of August.
12 Q. Of 2006?
13 A. No. End of 2005.
14 Q. So in 2005 -- so when you lost your job at the end of
15 August of 2005, then you had no ability to make any payments,
16 correct?
17 A. I had some.
18 Q. Out of savings, fair?
19 A. Yes.
20 Q. But that quickly ran out, fair?
21 A. Fair.
22 Q. And then you were in desperate need of something,
23 true?
24 A. True.
25 Q. Because you were going to have to move out and lose

2 A. Right.
3 Q. And you couldn't refinance because no bank would
4 refinance your house, right?
5 A. I didn't try.
6 Q. Well, you tried going to that Villa Park, and you
7 missed that appointment, true?
8 A. True.
9 Q. And you didn't try after that because nobody was
10 going to give you a refinancing because you lost your job,
11 right?
12 A. Right.
13 Q. You didn't have the ability to refinance, you didn't
14 have any income, right?
15 A. Not true.
16 Q. You weren't making any money at a job, fair?
17 A. Fair.
18 Q. Okay. And as the months were going by, you were
19 getting desperate to stay in your house and not lose it, right?
20 A. Yeah.
21 Q. Okay. And so when you entered into the contract with
22 the company, that equity purchase agreement, to have an
23 investor buy your property, that allowed you to stay in the
24 house which nobody else allowed you to do, fair?
25 A. Fair.

1 Q. And by staying in the house, it also gave you an
2 opportunity, if you had made all twelve payments, to have an
3 opportunity to purchase back your property, fair?
4 A. Fair.
5 Q. Okay. And unfortunately you weren't able to live up
6 to the terms of that contract, were you?
7 A. No.
8 Q. And so when the house went into foreclosure, it
9 wasn't because Domonic McCarns did anything, true?
10 A. Not true.
11 Q. Well, what did he do?
12 A. I don't believe I'm at liberty to say.
13 Q. Well, try.
14 A. No. I can't say that. I can't say what I really
15 feel.
16 Q. Okay. Well, Domonic McCarns wasn't on the contract
17 to buy your house, fair?
18 A. Fair.
19 Q. Domonic McCarns didn't buy your house, correct?
20 A. Correct.
21 Q. Domonic McCarns wasn't the one that you were sending
22 the rental payments to, correct?
23 A. Correct.
24 Q. All right. And so when you stopped sending the
25 rental payments, that's when the foreclosure process started,

1 correct?
2 A. No.
3 Q. So you were able to stay in your house even though
4 you weren't making any payments?
5 A. I did.
6 Q. But the house got foreclosed on, didn't it?
7 A. Not until after I left.
8 Q. But you had to leave, right?
9 A. There was -- there was no date and time when I had to
10 leave.
11 Q. Well, you -- go ahead.
12 A. I made arrangements with Domonic over the phone about
13 how long I could stay in the house.
14 Q. After you had missed your payments?
15 A. Yes.
16 Q. So you're saying now that you talked to Domonic after
17 you missed payments of the rent in the contract?
18 A. Right.
19 Q. Okay. Well, do you remember talking to my
20 investigator saying that Charles is the only one you talked to?
21 A. No.
22 Q. Okay. And when you talked to the Government on
23 April 9, 2013, you never said anything about Domonic allowing
24 you to stay in the house, right?
25 A. It was never asked.

1 Q. Okay. So if I understand correctly then, what you're
2 telling the ladies and gentlemen of the jury is when you
3 couldn't -- unfortunately, when you couldn't make your
4 payments --
5 A. Uh-huh.
6 Q. -- because you lost your job -- do you have that in
7 your mind?
8 A. Right.
9 Q. And when the house went into foreclosure, that was
10 because Domonic failed to make payments, is that what you're
11 saying?
12 A. Yes.
13 Q. Okay. Even though Domonic wasn't on any of the
14 contracts, true?
15 A. True.
16 Q. Even though Domonic didn't buy your house, true?
17 A. True.
18 Q. Even though Domonic didn't have anything to do with
19 the grant deed, true?
20 A. He set it all up.
21 Q. Okay. When you say he set it all up, he sent you
22 documents so that if you wanted to enter a program -- a
23 contract agreement, you could sign into it, correct?
24 A. Correct.
25 Q. And it was your reading and understanding of those

1 contracts that you voluntarily signed, correct?
2 A. Correct.
3 Q. I mean, Domonic didn't force you to sign?
4 A. No.
5 Q. And Domonic wasn't even there when you signed, right?
6 A. No.
8 A. No being correct. He wasn't there when I signed.
9 Q. Okay. And you had every opportunity even after you
10 signed the documents to take any other option that you wanted,
11 fair?
12 A. Not fair.
13 Q. Well, you could have still put the house on the
14 market, true?
15 A. Yeah.
16 Q. But you didn't do that?
17 A. No.
18 Q. You could have still filed for bankruptcy, true?
19 A. True.
20 Q. But you didn't do that, true?
21 A. True.
22 Q. You could have still gone to a bank to see if they
23 wanted to lend you money to refinance your loan, true?
24 A. True.
25 Q. But you didn't do that?

1 A. Right.
2 Q. Right. And so even though you had signed a contract,
3 all up until the time that the grant deed was signed and
4 filed --
5 A. Uh-huh.
6 Q. -- you still had options, true?
7 A. True.
8 Q. And you didn't take advantage of any of them, did
9 you?
10 A. No.
11 Q. Now, Domonic didn't prevent you from taking advantage
12 of any option, did he?
13 A. No.
14 Q. Okay. And when the grant deed was signed, Domonic
15 didn't pressure you into signing the grant deed, fair?
16 A. Fair.
17 Q. And he wasn't there when you signed it, true?
18 A. True.
19 MR. GREINER: One second. Thank you, Judge, very
20 much. Thank you Ms. Kovacs.
21 THE COURT: Mr. Tedmon.
24 BY MR. TEDMON:
25 Q. Ms. Kovacs, good morning.

1 A. Good morning.
2 Q. I want to ask you some questions about the latter
3 part of Mr. Greiner's questioning of you.
4 And I want to start with this, when Mr. Greiner was
5 asking about this equity purchase agreement program, I'm going
6 to call it a program --
7 A. Okay.
8 Q. -- okay -- he asked you a question about the program
9 and your response was "he set it up," do you recall that?
10 A. Yes.
11 Q. Okay. "He" is Domonic McCarns, correct?
12 A. Correct.
13 Q. It's not Charles Head, is it?
14 A. No.
15 Q. In point of fact, when you were interviewed by FBI
16 Special Agent John Sommercamp on April 9th of this year, you
17 gave a statement to Special Agent Sommercamp, correct?
18 A. Correct.
19 Q. And you were honest with Special Agent Sommercamp,
20 correct?
21 A. Correct.
22 Q. And in that statement you told Special Agent
23 Sommercamp that you dealt with Domonic McCarns, correct?
24 A. Correct.
25 Q. You made no mention of Charles Head, correct?

1 A. Correct.
2 Q. Because you dealt with Domonic McCarns not Charles
3 Head, true?
4 A. Correct.
5 Q. So these various phone calls that you had, do you
6 recall testifying about those?
7 A. Yes.
8 Q. All right. And specifically phone calls relating to
9 this program is what I'm focusing on. Okay.
10 All right. In each instance, those telephone calls
11 were with a Domonic McCarns, true?
12 A. True.
13 Q. All right. Now, let me ask you this, you were
14 interviewed by Mr. Greiner's investigator, correct?
15 A. Yes.
16 Q. All right. And do you recall when that was?
17 A. No.
18 Q. Would September 22nd of this year sound about right,
19 about a month ago or so?
20 A. About right.
21 Q. Month and a half maybe? It was recently, correct?
22 A. Recently.
23 Q. It was after you had been interviewed by Special
24 Agent John Sommercamp, correct?
25 A. Right.

1 Q. All right. I just want to get the sequence right.
2 So this investigator, do you recall her name being
3 Victoria Corona, does that sound right?
5 Q. Did she identify herself to you?
6 A. Yes, she did.
7 Q. How did he identify herself to you?
8 A. She said she was an FBI agent. And I believe she
9 said she was an FBI agent working for the defense.
10 Q. Okay. Let me ask you this, do you recall her
11 specifically saying "I'm an FBI agent"?
12 A. Yes.
13 Q. Okay. But she said she was working for the defense,
14 is that also your recollection?
15 A. Yes.
16 Q. Did she identify which defendant she was working for?
17 A. No.
18 Q. Do you recall whether she did, or do you recall she
19 did not identify anyone?
20 A. She just said the defense.
21 Q. That was it?
22 A. That's it.
23 Q. Just generally?
24 A. Just general.
25 Q. So she didn't say, for example, to you, I'm Victoria

1 Corona, and I want to ask you questions on behalf of Domonic
2 McCarns, do you recall her saying that?
3 A. No.
4 Q. You specifically recall her not saying that?
5 A. I recall her not saying that.
6 Q. But you do recall her saying she was an FBI agent?
7 A. Yes.
8 Q. All right. How long did the interview take place?
9 I'm sorry. That's a bad question. That doesn't make sense.
10 How long did the interview last? Talking about
11 with --
12 A. Maybe 10, 15 minutes.
13 Q. Okay. And where did the interview take place?
14 A. In my living room.
15 Q. Was anybody else present?
16 A. Yes.
17 Q. Who else was present?
18 A. I believe my daughter was present after a while.
19 Q. Was she there -- was your daughter there during the
20 entire time?
21 A. I don't remember, but I do remember her being there.
22 Q. I'm sorry?
23 A. I do remember her being there.
24 Q. Did she participate in the interview?
25 A. A little bit, yes.

1 Q. How so?
2 A. When she -- I think when the interviewer brought up a
3 question, she popped up and answered something. I remember.
4 Q. Your daughter did?
5 A. Yes.
6 Q. What is your daughter's name?
7 A. Amanda.
8 Q. Do you recall what Amanda responded to?
9 A. Well, the interviewer brought up the name Domonic,
10 and she popped up and said she remembers the name Domonic.
11 Q. Okay. And based on your own personal knowledge, how
12 would your daughter know about Domonic?
13 A. She probably heard me talking on the phone to him.
14 MR. GREINER: Objection. Speculation and assumption.
18 disregard that last answer.
19 Q. BY MR. TEDMON: During these various phone calls you
20 had with Domonic over this program --
21 A. Uh-huh.
22 Q. Yes, do you recall that?
23 A. Yes. Yes.
24 Q. -- was your daughter present during the time you had
25 some conversations with Domonic?

1 A. No.
2 Q. Okay. Was your daughter within hearing distance of
3 times when you were speaking to Domonic on the phone?
4 A. No.
5 Q. Now let me ask you this, you were interviewed about a
6 month and a half ago or so by this female investigator,
7 correct?
8 A. Correct.
9 Q. And this is the one I'm speaking of at your home,
10 correct?
11 A. Correct.
12 Q. With your daughter present during periods of time,
13 correct?
14 A. Right.
15 Q. All right. Since the date of the interview, were you
16 re-contacted by this investigator?
17 A. Was I contacted?
18 Q. Have you been?
19 A. No.
20 Q. So if the investigator would have written a statement
21 of your interview -- okay --
22 A. Uh-huh.
23 Q. -- did the investigator ever send you a copy of the
24 statement and ask you to review it for its accuracy?
25 A. No.

1 Q. Did you ever have a chance to review the
2 investigator's report in any fashion to see if it's accurate
3 about what you actually said that day?
4 A. No.
5 Q. No. So you were given no opportunity to review what
6 your purported statement was to the investigator, correct?
7 A. Correct.
8 Q. And in point of fact, all your contacts were with
10 A. Pardon?
11 Q. All your contacts regarding this program were with
13 A. Correct.
14 Q. Now, you testified that Domonic McCarns is the one
15 that sent you the packet of materials, correct?
16 A. Yes.
17 Q. It wasn't Charles Head, correct?
18 A. No, it wasn't.
19 Q. You didn't even deal with Charles Head, correct?
20 A. Correct.
21 Q. It was just Domonic McCarns?
22 A. Correct.
23 Q. Right. And he's the one that sent you this packet of
24 materials, correct?
25 A. Correct.

1 Q. That he wanted you to review and, if agreeable, sign,
2 true?
3 A. True.
4 MR. TEDMON: Okay. Can we have DM-F2 on the screen,
5 please. This has already been admitted into evidence.
7 Q. BY MR. TEDMON: Now do you see here it says equity
8 purchase agreement on the screen?
9 A. Yes.
10 Q. All right. This is one of the documents that Domonic
11 McCarns sent to you, correct?
12 A. Correct.
13 Q. And can we have this expanded, please. It says the
14 date of the contract or the agreement is May 2nd, 2005, do you
15 see that there?
16 A. Yes.
17 Q. And it's between Frank Pacheco and Creative Loans,
18 that's what the document says, right?
19 A. Yes.
20 Q. Okay. This is a document that Domonic McCarns sent
21 you, right?
22 A. Right.
23 Q. You're not Frank Pacheco, obviously, true?
24 A. True.
25 Q. You're Debra Kovacs?

1 A. Right.
2 Q. If we can go to page four of that document, please.
3 Now that is your signature, correct?
4 A. Correct.
5 Q. All right. And you can take that off the screen now.
6 Thank you.
7 Any questions you had relative to the contracts or
8 this transaction at all were with Domonic McCarns, true?
9 A. True.
10 Q. And finally, if we could have DM-F6 on the screen,
11 please. This has already been admitted. This is a document
12 entitled Acknowledgement By Seller, correct?
13 A. Correct.
14 Q. And these are your initials on the document, true?
15 A. True.
16 Q. Now, let me just ask you this. If we can just expand
17 paragraph number four.
18 Now, this is one of a series of documents you
19 received, correct?
20 A. Correct.
21 Q. All right. And it says here that you understand the
22 equity purchase agreement which you've entered into is not a
23 loan, correct?
24 A. Correct.
25 Q. So it's not a refinance, true?

1 A. True.
2 Q. It's not a mortgage, correct?
3 A. Correct.
4 Q. All right. And in fact, you agree that you're
5 selling your entire interest in the property, correct?
6 A. Correct.
7 Q. All right. And that's what the document says and
8 that's what you agreed to, correct?
9 A. Correct.
10 Q. All right. Take that off, please.
11 And finally, I want to ask you this. If someone were
12 to come in here and tell you that you said Charles Head was the
13 person that you dealt with, would that be true?
14 MR. GREINER: Objection. Relevance. Speculation.
15 Lack of personal knowledge.
16 MR. TEDMON: It's her own personal knowledge about
17 her interviews, Your Honor.
18 THE COURT: Overruled. You may answer if able.
19 THE WITNESS: What was --
20 Q. BY MR. TEDMON: If someone came in and said that you
21 gave a statement that you dealt with Charles Head, that would
22 not be true, correct?
23 A. Correct.
24 MR. GREINER: Vague.

3 MR. ANDERSON: Does Mr. Samuel --
5 MR. SAMUEL: No questions, Your Honor.
6 THE COURT: Thinking about something you said
7 earlier. All right. So with that confirmed, Mr. Anderson, how
8 much time do you need?
9 MR. ANDERSON: I think 15 minutes will do it.
11 BY MR. ANDERSON:
12 Q. You went over a lot of documents with Mr. Greiner.
13 Do you remember those documents that had your signature on
14 them?
15 A. Yes.
16 Q. At the time that you signed those documents, what was
17 your understanding about the deal you were entering into?
18 A. My understanding was that two people were -- well,
19 two people were going on -- were going onto the title to
20 refinance the house. That was my understanding.
21 Q. And were you going to be on title to the house in
22 your understanding?
23 A. Yes, I was.
24 Q. From whom did you get that understanding?
25 A. Domonic.

1 Q. How long was the notary at your house for?
2 A. I don't know, maybe -- I would have to say no longer
3 than 30 minutes. I don't know.
4 Q. And how thick of a pile of documents did have you to
5 sign?
8 Q. BY MR. ANDERSON: You can answer the question. Can
9 you hold your hands up so every one can see?
10 A. I don't know. Thick.
11 Q. So you're indicating several inches thick?
12 A. Yeah.
13 Q. Were you able to read each document in detail before
14 you signed it?
15 A. No.
16 Q. Whose explanation of those documents were you relying
17 on when you signed it?
18 A. The notary's.
19 Q. And whose -- did the notary explain the program to
20 you the way Domonic had?
21 A. Not -- well, she didn't say very much. She just went
22 over the document in short detail before I signed it.
23 Q. And based on what the notary said, did you still have
24 the same understanding that Domonic had given you about you
25 remaining on title?

1 A. Yeah.
2 Q. Okay. Is that --
3 A. Well --
4 Q. When you signed the documents, did you think you were
5 still going to be on title to your --
6 A. Yes, I did.
7 Q. Did you get copies of the documents you signed?
8 A. Yes.
9 Q. When did you get those copies?
10 A. The same day.
11 Q. Now, you looked at DM-F2, page four, and I want to
12 pull that up. Just an example.
13 Mr. Greiner keeps talking about a contract you
14 entered into. In this document, you're the only one who has a
15 signature on it, is that right?
16 A. Right.
17 Q. Is that the same case for some of these other
18 documents as well?
19 A. Yes.
20 Q. What about Ashley Rotellini, do you know her?
21 A. Ashley who?
22 Q. All right. There was an Ashley who signed some of
23 the documents?
24 A. Right.
25 Q. Mr. Greiner walked you through that. Was she there

1 with you signing documents?
2 A. No.
3 Q. Had you ever met her before?
4 A. No.
5 Q. Do you know who she was?
6 A. All I know is she was the person that was going on
7 the title with me.
8 Q. Had you discussed that with her?
9 A. No.
10 Q. Who did you think you were entering into a contract
11 with?
12 A. Ashley Reynolds.
13 Q. And who set up that contract at the time?
14 A. Domonic did.
15 Q. Now, Mr. Greiner also showed you some documents.
16 Your Honor, I would ask permission to approach, and I
17 will show DM-F17 and DM-F19-1, in that order.
18 THE COURT: You may approach.
19 Q. BY MR. ANDERSON: It's going to be this document and
20 then this document.
21 All right. Looking at DM-F17, before Mr. Greiner --
22 that's the one on the left -- before Mr. Greiner had shown that
23 to you, had you ever seen that document before?
24 A. No.
25 Q. Do you know what it is?

1 A. No.
2 Q. Let's turn to DM-F19-1. That's the document on the
3 right. Before Mr. Greiner had shown that to you today, had you
4 ever seen it before?
5 A. No.
6 Q. Do you know what it is?
7 A. No.
8 Q. Now, you had started to say that --
9 Actually, let me not lead. Was the deal that
10 Mr. Greiner went over with you on the papers the same as what
11 you had understood the deal to be from your conversations with
12 Domonic?
13 A. No.
14 Q. How was it different?
15 A. It was not my understanding that I was selling my
16 house to Ashley or whoever. It was my understanding that --
17 that we were going -- there was refinancing. That was my
18 understanding.
19 Q. If you had known that that wasn't the case, that you
20 were not refinancing, would you have entered into this deal?
21 A. No.
24 Q. BY MR. ANDERSON: I'm sorry. What did you say?
25 A. No.

2 Your Honor, may I retrieve the documents?
4 Mr. Greiner, any recross?
7 BY MR. GREINER:
8 Q. Good morning again, Ms. Kovacs.
9 Do you remember talking to the Government about April
10 of this year?
11 A. Yes.
12 Q. Yes? Government give you a copy of that document
13 that they wrote up about your interview?
14 A. No.
15 Q. You mean the Government didn't give you a copy to see
16 if what you said to them is what they wrote down?
19 THE WITNESS: Did they give me a copy of what we
20 talked about in April?
21 Q. BY MR. GREINER: Right.
22 A. No.
23 Q. So you never reviewed the copy of the Government's
24 interview with you, right?
25 A. Not in April, no.

1 Q. Well, you've never reviewed it at all, have you?
2 A. I -- yeah, I have.
3 Q. When?
4 A. Not until I got here.
5 Q. When? Today?
6 A. No. Last week.
7 Q. Last week. Do you remember my question about
8 reviewing documents?
9 A. Yes.
10 Q. Okay. Is that a document you reviewed?
11 A. Which document?
12 Q. The interview you had with the Government, did they
13 show you a one-page document of your interview?
14 A. No.
15 Q. Okay. When you spoke to my investigator, Victoria
16 Corona, did you tell her the truth?
17 A. Yes.
18 Q. You didn't lie to her, did you?
19 A. No.
20 Q. If we could put up DM-F2, please. You've seen that
21 document several times, right?
22 A. Yes.
23 Q. And it says equity purchase agreement, right?
24 A. Right.
25 Q. Okay. If we could put up 7B6, please. This is a

1 grant deed, correct?
2 A. Correct.
3 Q. And the grant deed says that you are selling your
4 property to Ashley Reynolds, correct?
5 A. Correct.
6 Q. You know who Ashley Reynolds is, right?
7 A. Not personally.
8 Q. Not personally. But you know that she's the person
9 that bought your property, correct?
10 A. Correct.
11 Q. And in fact, you knew that you weren't on title to
12 your property because the agreement that you had made said that
13 you were renting your property, correct?
14 A. Correct.
15 Q. And so if you're renting your property, that means
16 you don't own your property, correct?
17 A. Correct.
18 Q. And you knew that by renting your property, you were
19 off your grant deed, and Ashley Reynolds owned your property,
20 fair?
21 MR. ANDERSON: Objection. Vague as to time. When
22 she knew.
24 Q. BY MR. GREINER: Well, you knew when you signed the
25 grant deed on July 1st, 2005, when it was notarized, correct?

1 A. No.
2 Q. Well, you see it -- you see your signature on 7B6,
3 correct?
4 A. Yes.
5 Q. And you see it was notarized, correct?
6 A. Yes.
7 Q. And that was July 1st, 2005, correct?
8 A. I don't see the date on it -- oh, yes.
9 Q. Do you see it now?
10 A. Yes.
11 Q. And you see above that, it says that you are selling
12 your property to Ashley Reynolds, correct?
13 A. Correct.
14 Q. And you knew that when you signed it, right?
15 A. Yeah.
16 Q. And when the Government asked you on redirect about
17 an Ashley Rotellini, you had no knowledge of that person, true?
18 A. True.
19 Q. But you knew who Ashley Reynolds was?
20 A. Yes.
21 Q. And when you signed this grant deed over to Ashley
22 Reynolds, you knew you weren't refinancing your property, true?
23 A. True.
24 Q. You knew you were selling it, true?
25 A. Not at the time, no.

1 Q. Well, that's what the grant deed says, right?
2 A. That's what it says, yes.
3 Q. And that's what you signed, correct?
4 A. Correct.
5 Q. And you knew you were paying rent payments, correct?
6 A. Correct.
7 Q. And so you knew you didn't own your house, correct?
8 A. Correct.
9 Q. And the Government on redirect asked you how thick
10 the documents were, and you held up your hands, do you remember
11 doing that?
12 A. Yes.
13 Q. Okay. So the documents that the notary had is what
14 you went over and you signed that day, true?
15 A. True.
16 Q. Okay. And had you copies of those, correct?
17 A. Correct.
18 Q. And when the notary left, you still had copies,
19 correct?
20 A. Correct.
21 Q. And you could take your time reviewing those
22 documents after the notary left, true?
23 A. True.
24 Q. And you could take them to anybody to have them look
25 at them, correct?

1 A. True.
2 Q. Did you take advantage of that, did you take them to
3 anybody?
4 A. To -- yes, well, some friends of mine.
5 Q. Okay. And you asked questions and they answered,
6 true?
7 A. True.
8 Q. All right. And at no time did you ever cancel the
9 agreement to sell your property to Ashley Reynolds, did you?
10 A. Didn't have the option.
11 Q. Well, nobody prevented you from doing it, right?
12 A. That page was missing after the notary left.
13 MR. GREINER: Just one moment, Judge.
14 Q. BY MR. GREINER: If we could take this down and put
15 up DM-F7, please.
16 THE COURT: And that is in evidence.
17 Q. BY MR. GREINER: Do you see your signature on the
18 left-hand side of DM-F7, correct?
19 A. Correct.
20 Q. And that's entitled Notice of Cancellation, right?
21 A. Right.
22 Q. And you saw that and read that document with the
23 notary, true?
24 A. True.
25 Q. And so you knew you had a right to cancel, true?

1 A. Yeah.
2 Q. And, in fact, you knew you could cancel at any time,
3 true?
4 A. True. I didn't have that paper in my possession when
5 she left.
6 Q. But you had signed this document?
7 A. Right.
8 Q. And you knew about it, correct?
9 A. Right.
10 Q. And you knew that you had a right to cancel, correct?
11 A. Right.
12 Q. And you never did, correct?
13 A. Well, how could I cancel if the document is not in my
14 possession?
15 Q. Well, did you ever try to pick up the phone and say
16 "hey, I cancel"?
17 A. No phone number.
18 Q. Did you ever write a letter and say, "hey, I cancel"?
19 A. No.
20 MR. GREINER: Okay. No further questions.
22 MR. TEDMON: Thank you, Your Honor.
24 BY MR. TEDMON:
25 Q. Ms. Kovacs, Mr. Greiner asked you if you had an

1 opportunity to review the report of your statement, do you
2 recall that?
3 A. Yes.
4 Q. Okay. And he was referring to the statement to FBI
5 Special Agent John Sommercamp, correct?
6 A. Correct.
7 Q. And that was the one that took place by telephone on
8 April 9th, 2013 or thereabouts, correct?
9 A. Correct.
10 MR. TEDMON: Well, let's do this. Your Honor, may I
11 approach?
12 THE COURT: You may. With a document counsel has
13 seen?
14 MR. TEDMON: It is Head 00393. It is a
15 four-paragraph report of FBI Special Agent John Sommercamp.
16 MR. ANDERSON: It's 3931.
17 MR. TEDMON: 3931 is the Bates number.
19 Q. BY MR. TEDMON: Thank you.
20 Now, Ms. Kovacs, what I would like you to do is there
21 is some writing down here, which doesn't pertain. I want you
22 to read this to yourself, those four paragraphs, and let me
23 know when you're done.
25 MR. GREINER: Objection, Your Honor, she hasn't

1 proved that she has a lack of memory, so this is not refreshing
2 her memory.
4 THE WITNESS: (Witness reviewing document.) Okay.
5 Q. BY MR. TEDMON: All right. So you've had a chance to
6 read those four typewritten paragraphs?
7 A. Yes.
8 Q. Now, after having a chance to review this, does that
9 refresh your recollection as to specifically what you told
10 Special Agent John Sommercamp in April?
11 A. Somewhat.
12 Q. Okay. And nowhere in that report does it mention the
13 name Charles Head, does it?
14 A. No.
15 Q. And in fact, it mentions Domonic McCarns several
16 times, correct?
17 A. Correct.
18 Q. Because that's who you dealt with, true?
19 A. True.
20 Q. And you were honest with Special Agent Sommercamp
21 when you gave your statement, correct?
22 A. Correct.
23 Q. And if you had dealt with Charles Head, you would
24 have said so, correct?
25 A. Correct.

1 Q. And you didn't with respect to Charles Head, correct?
2 A. Correct.
3 Q. Now, turning to your September interview with the
4 investigator for the defense, do you recall that?
5 A. Yes.
6 Q. All right. First of all, this was a female
7 investigator, correct?
8 A. Correct.
9 Q. Do you recall her name as being Victoria Corona?
10 A. No, I don't recall that.
11 Q. Did she show any identification?
12 A. Yes, she did.
13 Q. What did she show you?
14 A. She gave me her card.
15 Q. Her card. And your recollection is that she
16 identified herself as an FBI agent, is that right?
17 A. Right.
18 Q. Now, did she tell you, or do you recall her telling
19 you that she was a private investigator working for Jay
20 Greiner?
21 A. No.
22 Q. Do you recall her telling you that she was an
23 investigator working for Jay Greiner who represented Domonic
24 McCarns?
25 A. No.

1 Q. No. Do you recall her saying anything about her
2 having a relationship professionally or on behalf of Domonic
3 McCarns?
4 A. No.
5 Q. Now, you didn't tell this female investigator that
6 you got a call from Charles Head, did you?
7 A. No.
8 Q. Because you got a call from Domonic McCarns, correct?
9 A. Correct.
10 Q. And you didn't tell this female investigator that
11 Charles Head called you, did you?
12 A. No.
13 Q. And you didn't tell this female investigator that you
14 talked to Charles Head on the phone all the time, did you?
15 A. No.
16 Q. And you didn't tell her that Charles Head sent a
17 notary, did you?
18 A. No.
19 Q. And you didn't tell her that someone could go on the
20 house title with you because that's what Charles told you, did
21 you?
22 A. No.
23 Q. And you didn't tell her that at the end of the year
24 you could make payments and Charles Head was taking you to
25 court, did you?

1 A. Your question again?
2 Q. Yeah. You didn't tell her that Charles Head was
3 taking you to court, did you?
4 A. No.
5 Q. Did you talk to the investigator about your sister,
6 Janice, do you recall anything like that?
7 A. No.
8 Q. So if the investigator referenced your sister,
9 Janice, in a report, that wouldn't be true, would it?
10 A. No.
11 Q. Well, you didn't tell the investigator, this female
12 investigator, that your sister, Janice, didn't have anything to
13 do with you finding Charles Head, did you?
14 A. No.
15 Q. And you didn't tell the investigator that Janice
16 tried to calls Charles Head, did you?
17 A. No.
18 Q. And you didn't tell the investigator that besides
19 Charles you didn't talk to anyone, did you?
20 A. Did I tell --
21 Q. Let me ask it again. You didn't tell this female
22 investigator that other than Charles you didn't talk to anyone,
23 you didn't say that, did you?
24 A. No.
25 Q. And you didn't tell the investigator that you thought

1 Charles and Domonic were the same person, did you?
2 A. I did tell her that I thought they were the same
3 person.
4 Q. You did. Okay. But you dealt with Domonic, right?
5 A. Right.
6 Q. Okay. You haven't made any mention of Charles,
7 correct?
8 A. Correct.
9 Q. And you didn't tell the investigator, this female
10 investigator, that the person on the phone represented himself
11 as Charles Head, did you?
12 A. No.
13 Q. No. In fact, he represented himself as Domonic
14 McCarns, correct?
15 A. Well, he represented hisself (sic) as Domonic.
16 Q. Domonic, right, not Charles?
17 A. No.
18 Q. And that was true of every discussion you had on the
19 phone, correct?
20 A. Right.
21 Q. Right. And you didn't tell the investigator that
22 Charles explained the program to you, did you?
23 A. No, I didn't tell --
24 Q. Right. You told her Domonic did, correct?
25 A. Correct.

1 Q. And when you were having problems, you didn't tell
2 the investigator you called Charles, did you?
3 A. No.
4 Q. You tried to call Domonic, right?
5 A. Right.
6 Q. Because that's the person you dealt with?
7 A. Right.
8 Q. Strictly, correct?
9 A. Correct.
10 MR. TEDMON: Nothing further. Thank you.
14 MR. ANDERSON: Yes, Your Honor. Real quickly.
16 BY MR. ANDERSON:
17 Q. I got a name confused. It's something that I want to
18 clear up.
19 Now, Ashley Reynolds, did you ever meet Ms. Reynolds?
20 A. Did I ever meet Ms. Reynolds? No.
21 Q. Was she there when you signed any of the documents?
22 A. No.
23 Q. Did you have any interaction with her over the phone
24 or speak with her?
25 A. No.

1 Q. So you don't know her?
2 A. No.
3 MR. ANDERSON: No further questions, Judge.
4 MR. GREINER: Brief, Judge, based on Mr. Tedmon's
5 cross.
6 THE COURT: Five minutes.
7 MR. GREINER: Less than that.
9 BY MR. GREINER:
10 Q. Good morning again, Ms. Kovacs. So if I understood
11 you correctly, when you were answering Mr. Tedmon's questions
12 about my investigator Victoria Corona, what you're telling the
13 ladies and gentlemen of the jury is that, in your answers to
14 Mr. Tedmon's questions, my investigator lied in her report?
15 MR. TEDMON: Objection, Your Honor. She hasn't seen
16 the report.
18 MR. TEDMON: Completely inappropriate. Move to
19 strike the question.
21 MR. TEDMON: And disregard.
22 MR. ANDERSON: Join, Your Honor.
24 disregard.
25 Q. BY MR. GREINER: Mr. Tedmon asked you if you told my

1 investigator that you spoke to Charles Head, do you remember
2 that?
3 A. Asked me if I spoke to Charles Head?
4 Q. Right. Remember him asking you that question?
5 A. Yes.
6 Q. And your answer was that you never said that, right?
7 A. I never said -- yes, I never --
8 Q. And if any investigator wrote that in a report, then
9 she's lying right?
10 MR. ANDERSON: Objection.
13 Q. BY MR. GREINER: Mr. Tedmon asked you that the only
14 person that you dealt with was Domonic McCarns?
15 A. Correct.
16 Q. And you never dealt with Charles Head, correct?
17 A. Correct.
18 Q. So if my investigator wrote that you did say you
19 dealt with Charles Head, then she'd be lying?
20 MR. TEDMON: Objection, Your Honor. And I'm going to
21 move to strike. And I would ask the Court to admonish counsel
22 to not ask those type of questions.
23 THE COURT: Sustained. But move on to a different
24 line of questioning if you have any further questions.
25 Q. BY MR. GREINER: Now Ms. Reynolds (sic) you indicated

1 that you kept in contact with Domonic McCarns through this
2 whole process, right?
3 A. Right.
4 Q. In the report that you reviewed prior to testifying,
5 you indicated to the Government that the phone number had been
6 disconnected, do you remember that?
7 A. No.
8 Q. Do you remember Mr. Tedmon having had you review the
9 interview that you gave to the Government, right?
10 A. Yes.
11 Q. Do you want to see it again?
12 A. No.
13 Q. Are you sure because I'll bring it up there?
14 A. No.
15 Q. Do you remember telling the Government that you tried
16 to call McCarns, but the number was disconnected?
17 A. I never said it was disconnected.
19 Can you describe for the ladies and gentlemen of the
20 jury what the card looked like that Victoria Corona gave to
21 you?
22 A. Business card.
23 Q. Can you describe it any more?
24 A. No. It was a regular business card.
25 Q. Can you describe the writing on it?

1 A. Had her name on it.
2 Q. Can you describe any other writing on it?
3 A. No.
4 Q. Can you describe if it had any type of artwork?
5 A. No.
6 Q. Can you describe if it had any type of symbols?
7 A. No.
8 Q. Can you describe if it had any colors?
9 A. No.
10 Q. Can you describe if it had a gold-looking shield on
11 it?
12 A. Yes.
13 Q. Okay. And where was that gold-looking shield?
14 A. In the top -- top left-hand corner. Trying to
15 imagine the card in my mind, but.
16 Q. Did you receive a card from the Government when you
17 came here last week?
18 A. No.
19 Q. Not from Agent Sommercamp?
20 A. No.
21 Q. Not from Agent Fitzpatrick?
22 A. No.
23 Q. Okay. So nobody from the Government's given you a
24 card?
25 A. No.

1 Q. When you had your interview in April, did they send
2 you a card in the mail?
3 A. No.
4 Q. So your description is that up in the upper left-hand
5 corner there is a gold shield on the card that Victoria Corona
6 gave you?
7 A. Yes.
8 Q. Can you say anything else to the ladies and gentlemen
9 of the jury describing that business card?
10 A. No.
11 Q. Can you say -- you said that --
12 You told the ladies and gentlemen of the jury that
13 the card said FBI, right?
14 A. Right.
15 Q. Can you tell the ladies and gentlemen of the jury
16 what else it said about Victoria Corona and FBI?
17 A. No.
18 Q. Did it say Victoria Corona was an agent of the FBI?
19 A. Yes.
20 Q. Did it say what the agent's badge number was?
22 Q. Did it say that Victoria Corona was a special agent
23 of the FBI?
24 A. I don't remember that either.
25 Q. Okay. Do you remember if it had anything else on the

1 card that looked like it was from a Government agency?
2 A. No.
3 Q. Finally, what was the color of the card?
4 A. White.
7 MR. TEDMON: Just very briefly, Your Honor. Just a
8 couple questions.
10 BY MR. TEDMON:
11 Q. Ms. Kovacs, when you spoke to Special Agent John
12 Sommercamp of the FBI in April, that was by telephone, correct?
13 A. Correct.
14 Q. All right. The only interview -- well, strike that.
15 Then you had an interview with this female
16 investigator in September, correct?
17 A. Correct.
18 Q. And that was in person, correct?
19 A. Correct.
20 Q. All right. Other than that interview in person, you
21 haven't had any other interviews, correct?
22 A. Correct.
23 Q. All right. So focusing on the one in-person
24 interview you had with this female investigator in September.
25 Okay, I want you to focus on that.

1 Did the female investigator identify herself as an
2 FBI agent to you personally in your home?
3 A. Yes.
9 THE COURT: All right. Is Ms. Kovacs excused?
14 MR. TEDMON: Yes.
16 MR. SAMUEL: Yes.
17 THE COURT: All right. You're excused, ma'am. You
18 may step down. We're close to first break given when we
19 started. It will be a 15-minute break.
20 During that break, as always, remember my
21 admonitions. Don't talk about the case amongst yourselves,
22 don't do any research of any kind. If anyone attempts to
23 contact you, let me know. Have a good break. Fifteen minutes.
24 (Jury out.)
25 THE COURT: All right. You will meet and confer on

1 F17, F19, and 19-1. And who will the next witness be?
2 MR. MORRIS: Woods, Your Honor.
3 THE COURT: All right. Fifteen minutes.
4 (Break taken.)
6 (Jury in.)
7 THE COURT: All right. You may be seated. The
8 Government's next witness.
9 MR. MORRIS: Your Honor, the United States calls
10 Bertha Woods.
17 THE WITNESS: Bertha Woods, B-e-r-t-h-a, Woods,
18 W-o-o-d-s.
20 BERTHA WOODS,
25 BY MR. MORRIS:

1 Q. Ms. Woods, are you familiar with the address 896
2 Yellowstone Road in Cleveland Heights, Ohio?
3 A. Yes, I am.
4 Q. How are you familiar with that address?
5 A. That's my home.
6 Q. How long have you lived in that home?
7 A. Almost, say, maybe close to 30 years now.
8 Q. Okay. I'd like you to think back to -- well, do you
9 -- right now do you own or rent that home?
10 A. I still -- I'm still buying the home. Okay.
11 Q. Okay. I'd like you to think back to 2006, and were
12 you living in the home in 2006?
13 A. Yes.
14 Q. Okay. At the beginning of 2006, did you buy or rent
15 that home?
16 A. I was buying it.
17 Q. So had you a mortgage?
18 A. Yes.
19 Q. In 2006, did you fall behind on your payments on the
20 mortgage?
21 A. Yes.
22 Q. Do you recall about how far behind you got?
23 A. Maybe about two months.
24 Q. Were you far enough behind that you were becoming
25 concerned about foreclosure?

1 A. Yes.
2 Q. In that time period, when you were concerned about
3 foreclosure, did you come into contact with a company that
4 offered to help?
5 A. Yes.
6 Q. Okay. How did you come into contact with these
7 people?
8 A. I was looking for a way to save my home, so I was
9 kind a searching to see who -- where I could find help from.
10 And I called one guy. I called this one mortgage company, and
11 he told me where to look.
12 Q. Okay. The person that you called, this person that
13 you referred to, do you recall his name by any chance?
14 A. The only thing I can remember his name was Jeff.
15 Q. So you talked to Jeff, and Jeff referred to you
16 somebody else?
17 A. Yes.
18 Q. Do you recall who he referred you to?
19 A. I think it was -- I'm not 100 percent sure because of
20 the different names. I think it was foreclosure.com.
21 Q. Okay. Did you contact that group that you think
22 might have been foreclosure.com?
23 A. Yes, I did.
24 Q. Do you recall who, in particular, you spoke to at
25 that group?

1 A. The only person I remember that I really spoke to was
2 Domonic McCarns.
3 Q. And did you tell Domonic McCarns your situation with
4 your house?
5 A. Yes, I did.
6 Q. And did he say anything to you in response?
7 A. Well, I guess he explained to me the way it worked,
8 you know, some kind of way that it worked.
9 Q. And what did he explain to you?
10 A. At that time, he was telling me that they could help
11 me with the house, and I could rebuild my credit and all this
12 kind of stuff like this.
13 Q. Okay. And was this over the phone?
14 A. Yes.
15 Q. Do you recall -- did you have one conversation or
16 more than one conversation with Domonic McCarns?
17 A. More than one.
18 Q. Okay. Do you recall any other details about the
19 program as he explained it to you? Talking about over the
20 phone conversations here.
21 A. I don't recall exactly what happened.
22 Q. Okay. Do you recall whether or not -- and this is a
23 yes or no -- but do you recall whether or not you had any
24 discussion about the title to the home?
25 A. No.

1 Q. Do you recall whether you had any conversation about
2 the equity in the home?
3 A. No.
4 Q. And do you recall whether you had any discussions
5 about what would happen as part of the program other than that?
6 A. Yes, I would kind of say yes.
7 Q. What do you recall?
8 A. I remember he was telling me something about they
9 could help some kind of way that they would take over -- it
10 would give me some kind of way to rebuild my credit if I made
11 payments, and they will help me get out of -- some kind -- I
12 don't remember exactly how it was.
13 But the way he explained it to me, it was like their
14 kind of program where they could help you get the house back.
15 And then if I stay on my plan, my payment plan, that I could
16 get the house back, but it will be a little more for me to get
17 the house back.
18 Q. What do you mean by "it will be a little more for me
19 to get the house back"?
20 A. Say, for instance, the house was like at -- I owe
21 60,000 on the house. If I keep up my plan for a year, I could
22 get the house back for $76,000.
23 Q. Okay. And you said something about payments. Was
24 part of your understanding that you would be making monthly
25 payments?

1 A. Yes. Of $500 a month.
2 Q. Okay. And do you recall where you were -- how you
3 were supposed to make that payment?
4 A. I was supposed to make the payment to some kind of
5 management. And I supposed to be -- Jack Corcoran or somebody
6 like that. That where the payment went to.
7 Q. And did you make those payments?
8 A. Yes.
9 Q. Okay. So after the conversations on the phone, did
10 you decide to enter into this program?
11 A. Yes.
12 Q. Okay. And do you recall getting some papers to sign?
13 A. Yes.
14 Q. Okay. What do you recall about getting those papers?
15 A. Well, I was signing papers kind of like a little back
16 and forth. But what main papers came, and the notary came to
17 my home, I seen that it was a different -- that the name that
18 was on the papers when they was sitting there, and I got up out
19 of my -- I walked in the other room, and I called Domonic, and
20 I asked him who are these peoples.
21 Q. And what did Domonic tell you?
22 A. He told me that they were some of the peoples in the
23 firm, and this is the way they do it.
24 Q. Now, let's -- there was -- it sounds like, if I can
25 understand you, there was some papers you that signed at one

1 point and then there were more papers later with a notary?
2 A. Right.
3 Q. And it was when the notary came with papers, that's
4 when you called Domonic?
5 A. Right. When I saw the different names that were on
6 the paper.
7 Q. What do you mean by different name?
8 A. Well, the way I understood it, that the house would
9 still be my home. Okay. But to give it to them, they was
10 going to have -- they would have to put it like in, I guess you
11 could say, a trust or whatever. But it would have been under
12 somebody else's name. But he didn't tell me this before. Only
13 time I saw it was when the notary came, and I seen the name on
14 the papers. And that's when I inquired about it, and he
15 assured me that these was the peoples that was in the company,
16 so, therefore, everything would be okay.
17 Q. Did you sign the papers?
18 A. Yes.
19 Q. So when you signed the papers, was it still your
20 understanding that you would be the owner the house?
21 A. Yes.

1 disregard that exchange.
2 Q. BY MR. MORRIS: Prior to the papers --
3 A. Uh-huh.
4 Q. -- I think it was your testimony that you thought
5 this would still be your house?
6 A. Yes.
7 Q. And then you signed the papers?
8 A. Yes.
9 Q. Was there any change in your understanding about the
10 ownership of the house between before you signed the papers and
11 when you signed the papers? Is that a confusing question?
12 A. Yes.
13 Q. Let me rephrase that. Did your understanding about
14 the ownership of who would own the house, did that change
15 between your first conversations and the time that you signed
16 the papers?
17 A. No, I still thought I would be the owner of the home.
18 Q. Okay. And did you have any understanding when you
19 signed the papers about the equity in your home?
20 A. The only thing that I could say that I understood was
21 that if I didn't keep up this payment, or whatever the case may
22 be, and if I breach on the contract or anything like that, and
23 if I lost the home, I would get part of the equity and so would
24 they get part of the equity out of the home.
25 Q. And when you say "they," who do you mean "they"?

1 A. Foreclosure.com.
2 Q. And this part you just talked about, was part of the
3 equity for you and part for foreclosure.com -- make sure I
4 understand -- is it your testimony that that would apply only
5 if you didn't live up to your obligations?
6 A. Yes.
7 Q. All right. At some point, did your understanding of
8 deal change?
9 I take it after you signed the papers and going
10 forward, did your understanding of the deal change?
11 A. Yes. Later on. A month after.
12 Q. And what happened to make your understanding change?
13 A. Well, I seen where my mortgage was paid off, and
14 that's what made me question what was going on because I signed
15 the paper in July, the end of July, and they paid it off by the
16 first of August, somewhere right around August, and I got where
17 my house was paid off.
18 Q. And what do you mean you found out that my house --
19 A. Well, I got the mortgage statement saying that the
20 house was paid off in full.
21 Q. And so that changed your opinion of what had
22 happened?
23 A. Right.
24 Q. Did anything else happen that made you change your
25 understanding of what the deal was?

1 A. That was my main thing. When I found out that that
2 was -- that it was paid off, and I couldn't understand why, and
3 I think I was getting letters where the house was in
4 foreclosure, and stuff like this. And I was trying to find out
5 what was going on.
6 And that's when I called -- I think I called
7 foreclosure.com or whatever and was inquiring about what
8 happened.
9 Q. Let me stop you there. You say you were receiving
10 letters that the house was in foreclosure. Were those letters
11 addressed to you?
12 A. No.
13 Q. Who were the letters addressed to?
14 A. Kenny and Marjorie Sly.
15 Q. But they came to your house?
16 A. Yes.
17 Q. After you got those letters, is that when you called
18 foreclosure.com?
19 A. When I got a letter from Kenny and Marjorie Sly's
20 attorney saying that I had to move out of the house.
21 Q. And who did you try to contact at foreclosures.com
22 when you got that letter?
23 A. I called -- was calling for Domonic to see what
24 happened.
25 Q. Did you get through to him?

1 A. No, I did not.
2 Q. Why not?
3 A. The number was changed or disconnected.
4 MR. GREINER: Speculation.
6 Q. BY MR. MORRIS: Your answer was?
7 A. I end up talking to someone else, and they told me
8 that the house is still yours, and you need to call this
9 number, which one was the FBI and one was the IRS.
10 Q. Do you still live in the house?
11 A. Yes.
12 Q. What happened from the point you just talked about to
13 now?
14 A. The house went through a sheriff sale, and through
15 foreclosure, through everything. But by nobody buying the
16 house at the time I got an attorney, I had a chance to fight to
17 get the house back.
18 Q. Okay. And you're still in the house now?
19 A. Yes. If someone had bought the house when they put
20 it up for sheriff sale --
24 THE COURT: The jury shall disregard the last part.
25 Once you answer the question, ma'am, if you will wait for the

1 next question.
3 THE COURT: All right. Mr. Morris.
4 Q. BY MR. MORRIS: Before we look at some documents, if
5 I can have you go back in time, in your mind, to when you
6 signed these papers.
7 At the time you signed the papers, was your belief
8 that you still owned the house important to you in making the
9 decision to sign the papers?
12 MR. GREINER: Leading.
13 THE COURT: Well, that's sustained.
14 Q. BY MR. MORRIS: Okay. At the time that you signed
15 the papers, what things were important to you in making the
16 decision to sign the papers?
17 A. To save my home.
18 Q. And what do you mean by "to save my home"?
19 A. To keep from losing my home so -- and I'm thinking
20 that this was going to help me, and it didn't.
21 MR. MORRIS: Okay. Your Honor, I'm going to look
22 through some of the 17 series exhibits. It might be better if
23 I just move a bunch in.
24 Let me start with the 17 series, A1 and A10 are in.
25 I would move to admit all the other 17A series documents.

2 MR. SAMUEL: Just looking at a date, Your Honor.
3 That's all.
4 THE COURT: A2 through A9, A11, A12.
5 MR. SAMUEL: I think that's a variance objection,
6 Your Honor.
8 MR. TEDMON: I just want to check one document, Your
9 Honor. There are some documents that are subject to variance
10 -- subject to the variance objection or issue. No objection.
12 MR. GREINER: It's the same objection, Judge. If
13 that's good enough for the Court. There are variance
14 documents. So that's the objection.
15 THE COURT: All right. So that's overruled. Those
16 exhibits come in. 17A2 through 17A9 and 17A11 and A12.
17 (Government Exhibits 17A2, 17A3, 17A4, 17A5, 17A6,
18 17A7, 17A8, 17A9, 17A11, 17A12, (See index for descriptions)
20 Q. BY MR. MORRIS: May I have 17A5, please.
21 Is this the address that you testified about before?
22 A. Yes.
23 Q. And does this document help you recall who the
24 organization was that you were dealing with?
25 A. Yes.

1 Q. And what was that organization?
2 A. Foreclosure -- FundingForeclosures.com.
3 Q. Okay. And if we could go to the next page, please.
4 Take it up to page four. Do you recognize that signature?
5 A. Yes.
7 A. Yes.
8 Q. Do you remember signing this document?
9 A. Yes.
10 Q. Okay. Do you recall when you signed it?
11 A. No. Not exactly. I remember only that I did sign.
12 Q. When you signed it, what was your understanding of
13 what this document meant?
14 A. Well, a rental agreement like when I paid my rent
15 for, and this is what I supposed to be paying a month.
16 Q. And your understanding of the agreement, was that
17 based on the conversations that you had had or something else?
18 A. On the conversations we had.
19 Q. If you could go to the next page, page five. And
20 does that signature appear to be yours?
21 A. Yes.
22 Q. Okay. Do you recognize this document?
23 A. Yes.
24 Q. Was it among the documents that you signed?
25 A. Yes.

1 Q. Okay. And what was your understanding of this
2 document when you signed it?
3 A. That's the one that I was saying if I owe so much on
4 the house, and I would be kind of purchasing the house back for
5 that amount of money.
6 Q. Next page, please. Do you recognize this document
7 that's in front of you?
8 A. Yes.
9 Q. And how do you recognize it?
10 A. This is one that was in my contract.
11 Q. Second page, please. Sorry, I apologize, the
12 seventh. Next page, page seven.
13 And does that appear to be your signature?
14 A. Yes.
15 Q. Okay. Do you recall approximately when you signed
16 this document?
17 A. No.
18 Q. Okay. Next page, please. And how about this
19 signature?
20 A. Yes.
22 A. Yes.
23 Q. If you could zoom out. And try to get the top half
24 here.
25 Well, at the time you signed it, do you have a

1 recollection of what your understanding of this document was?
2 A. No.
3 Q. Do you have any understanding as you sit here today
4 of what this document means?
7 Q. BY MR. MORRIS: Zoom out. How about the next page?
9 A. Yes.
10 Q. Zoom out. Do you have any recollection of what this
11 document means?
12 MR. GREINER: Objection. Relevance as phrased.
13 Q. BY MR. MORRIS: Recollection. Do you recall when you
14 signed it? I'll rephrase it, Your Honor.
15 Do you recall when you signed the document?
16 A. Beg your pardon?
17 Q. Do you recall when you signed this document?
18 A. No.
19 Q. Do you think it was -- do you think it was among the
20 documents that you signed?
21 A. Yes.
22 Q. So looking back to 2006, did you have an
23 understanding of what this document meant when you signed it?
24 A. Not really.
25 Q. Zoom out, please. Next page, please.

2 A. Yes.
3 Q. You can zoom out. Thinking back to June of 2006, do
4 you have any recollection of whether you understood what this
5 document meant when you signed it?
6 A. My understanding was that if I moved out or anything
7 like that, that the property had to be clean or whatever, but I
8 wasn't planning on moving out or nothing like that.
9 Q. If we could go to 17A6, please. Are you able to see
10 the initials on the screen without me blowing it up?
11 A. Yes.
12 Q. Do those appear to be your initials?
13 A. Yes.
14 Q. Next page, please. And do you recall initialling
15 this paper on or about April 8th, 2006?
16 A. That looks like my signature.
17 Q. Okay. But do you recall initialling this page?
18 A. I may have. I'm not sure.
19 Q. Okay. So you don't have an independent memory of
20 that?
21 A. No.
22 Q. And if you can go to page -- or Exhibit 17A7, please.
24 A. Yes, I have seen it.
25 Q. Okay. And how do you recognize it?

1 A. It was in the papers that I had.
2 Q. If we can go to 17A7, page seven, please. And do you
3 recognize that writing?
4 A. Yes.
5 Q. Whose writing is that?
6 A. Mine.
7 Q. Zoom out. Do you recall signing this page of the
8 paper?
9 A. I recall, yes.
10 Q. Okay. And when is it that -- to the best of your
11 recollection, when did you sign this paper?
12 A. It was in with the rest of the papers.
13 Q. Okay. If we can go to 17A8, please. Does that
15 A. Yes.
16 Q. And if we could zoom out. And how about those
17 initials, do you recognize the initials?
18 A. Yes.
19 Q. Are they yours?
20 A. Look like it.
21 Q. Okay. And do you recall this document?
22 A. I think I do.
23 Q. Okay.
24 A. Yeah, I think -- it was in the papers also.
25 Q. Okay. And do you have a recollection at the time of

1 signing this of understanding what this document meant?
2 A. Not really.
3 Q. If we could go to 17A9, please. Zoom in, please.
4 Do you recognize the signature at the bottom of this
5 document?
6 A. Yes.
7 Q. Do you recall signing this document?
8 A. I don't recall signing. I wouldn't be signing it way
9 over there -- if it say signature here, I wouldn't sign way
10 over there, no.
11 Q. If you can zoom out. Do you recognize this document?
12 A. I think I have seen it. I think. I'm not
13 100 percent sure.
14 Q. Do you recall signing it?
16 Q. If we can go to 17A10, please. That signature, does
17 that appear to be your signature?
18 A. Yes.
20 A. Yes.
21 Q. And what do you recall about signing this document?
22 A. This is the one I think I asked -- I had the
23 questioning about, one of the -- when the notary came to the
24 house. And I think this is the one that I kind of questioned.
25 Q. Okay. And why did you question it?

1 A. Because it had -- at the time that I'm thinking of
2 had Ken and Marjorie Sly's name on it.
3 Q. So the document -- I'll -- there is no question.
4 Go to the next page, please. How about this
5 signature, does that appear to be yours?
6 A. Yes.
7 Q. And do you recognize this document?
8 A. I have seen it, yes.
10 A. With all the rest of the other papers.
11 Q. And at the time that you signed it, did you have --
12 can you recall what your understanding was of the purpose of
13 this document?
14 A. No.
15 Q. Go to 17A11, please. Does that appear to be your
16 signature?
17 A. Yes.
18 Q. Zoom back out. Do you recall signing this document?
19 A. With the rest of the papers.
20 Q. Okay. And at the time that you signed the papers, do
21 you have a recollection of what this document meant?
22 A. No.
23 Q. And go to 17A12, please. If you could take a moment
24 to review what's on the screen, and I'll ask if you recognize
25 this document?

1 A. Yes.
2 Q. And what's your recollection of this document?
3 A. I guess --
6 able.
7 THE WITNESS: It was some papers I guess he had sent
8 me, and he was telling me if I needed to know anything or had
9 any question to, contact him with the papers that I sign.
10 Q. BY MR. MORRIS: And when you say "him," who are you
11 talking about?
13 MR. MORRIS: If we could go to 17C, please. Wait a
14 second. That's not in yet.
15 Your Honor, move to admit Government 17C.
19 THE COURT: This is six pages.
20 MR. GREINER: Same objection, Judge. Variance.
21 MR. MORRIS: It is six pages, Your Honor.
22 THE COURT: All right. Objection is overruled. 17C
23 is admitted.
24 (Government Exhibit 17C, Warranty Deed recorded on
25 8/21/2006 in Cuyahoga County, Ohio for property at 896

1 Yellowstone Road, Cleveland, OH admitted into evidence.)
2 Q. BY MR. MORRIS: Let's see if we can get something out
3 on this.
4 Are you able to make anything out on the screen in
5 front of you?
6 A. Yeah, some.
7 Q. And down here do you see those initials?
8 A. Yes.
9 Q. Do those appear to be your initials?
10 A. Yes.
11 Q. And do you recall signing or initialling this
12 document?
13 A. No.
14 Q. Zoom back out. Please. Next page. Does that
15 signature appear to be yours?
16 A. Yes.
18 A. I think so.
19 Q. Okay. Do you have a recollection of what you thought
20 this document meant when you signed it?
21 A. This is -- I'm not sure, but I'm thinking this is the
22 one where I called him before I signed the paper.
23 Q. And when you say called "him"?
24 A. Domonic.
25 Q. And was that when you previously -- the part with the

1 call that you previously testified about that you called when
2 the signing was happening?
3 A. Right.
4 Q. Okay.
5 A. When I found out that somebody else's name was going
6 to be on the house, I think this is the one that I called him
7 on.
8 MR. MORRIS: Your Honor, may I approach? We have a
9 new exhibit that came in over the last 12 hours.
10 THE COURT: Is it marked?
11 MR. MORRIS: Marked as Government's Exhibit 17E, and
12 I did pass up a copy earlier, Your Honor.
13 THE COURT: You may approach. This is three pages.
14 MR. MORRIS: It is three pages.
15 Q. BY MR. MORRIS: Ms. Woods, if you look at those three
16 pages in front of you and take a moment to review them.
18 Q. Do you recognize those three pages?
19 A. Yes.
20 Q. How do you recognize them?
21 A. The first one, which say "hello, foreclosure.com," is
22 one that he sent to me, I think, about the house being
23 appraised and documents and stuff like that.
24 Q. And when you say "he" sent to me, who do you mean?

1 Q. How about the second one, how do you recognize that
2 second one?
3 A. This one -- I think this is the one I had questions
4 about, and I had called him about the questions, and he told --
5 he explained it to me and made me feel comfortable saying -- I
6 think this is also his cell phone number that I have on the
7 bottom because if I need to get in touch with him, he gave me
8 the cell phone number also.
9 Q. Is that your handwriting on the document, the number
10 that's written there?
11 A. Yes.
12 Q. And on that third page, how do you recognize that
13 document?
14 A. This is the one they sent me after, I guess, I signed
15 all the papers and stuff.
16 MR. TEDMON: Your Honor, objection as to "they." Can
17 we be more specific?
18 THE WITNESS: Domonic -- well, I can't say Domonic
19 sent me this paper, but it was one of the papers that was sent
20 to me for me to make the payments to Jack Corcoran.
21 Q. BY MR. MORRIS: So you received that paper?
22 A. Yes.
23 Q. Do you remember how you received it?
24 A. In the mail.

1 Government's 17E based on that authentication.
3 MR. TEDMON: Subject to the variance issue.
5 MR. SAMUEL: Variance.
7 MR. GREINER: Same variance objection, Judge.
8 THE COURT: All right. Overruled. 17E-1, -2 and -3
9 come in.
10 (Government Exhibit 17E, FundingForeclosures.com
11 generic letter from Domonic McCarns regarding signing documents
12 and returning them admitted into evidence.)
13 MR. MORRIS: Can I retrieve the documents, Your
14 Honor?
16 Q. BY MR. MORRIS: And if you can then explain your
17 memory of how it is that you received this document?
18 A. I think UPS.
19 Q. And this signature at the bottom, is that the person
20 that you had been dealing with prior to this?
21 A. Yes.
22 Q. Okay.
23 MR. GREINER: Objection. Lack of foundation about
24 the signature.
25 THE COURT: Belatedly that is sustained.

1 Q. BY MR. MORRIS: I'm not asking about the signature.
2 I'm asking about the name.
3 A. Right.
4 Q. And just to be clear, do you have any personal
5 knowledge of what Domonic McCarns' signature would look like?
6 A. No.
7 Q. To your knowledge? Okay.
8 And what's your memory of what led to you receiving
9 this document?
10 A. This is the one where he sent me the papers and told
11 me to sign them and send them back to him.
12 Q. Okay. And --
13 MR. TEDMON: Your Honor, can we clarify who "he" is.
14 THE WITNESS: Domonic McCarns.
16 Q. BY MR. MORRIS: Let me just to make sure we're all
17 clear. You've mentioned Domonic McCarns and you've mentioned
18 Jack Corcoran.
19 Did you have any interaction with anybody other than
20 those two people to your recollection?
21 A. I may have talked to a lady named Beverly, and that's
22 about it.
23 Q. Okay. And what was it that this letter instructed
24 you to do?
25 A. To mail the original documents of the papers that he

1 sent to me back.
2 Q. And this final page, can you explain how it is that
3 you came to be in possession of this document?
4 A. Once I signed the papers and had everything done,
5 then I was sent this paper to -- how to make the payments,
6 arrangement for my payments.
7 Q. So in the process that you've talked about, all the
8 stuff that happened, where did this document fall into that
9 timeline?
10 A. It came after -- I think after I sent all the papers
11 back and later on I got this paper.
12 MR. MORRIS: Just a moment, Your Honor. No further
13 questions, Your Honor.
14 THE COURT: All right. Mr. Greiner, are you going
15 first?
18 BY MR. GREINER:
19 Q. Thank you, Judge. Good morning, Ms. Woods.
20 A. Hi.
21 Q. Make sure you keep your voice up. Move the
22 microphone close to you, if you have to. That way the court
23 reporter can get everything that you say. Okay?
24 A. Okay.
25 Q. If you don't understand anything that I ask you, just

1 tell me, I'll rephrase it. Okay?
2 A. Yes.
3 Q. And make sure all of your answers are audible because
4 the court reporter can't take down shakes of the head. All
5 right?
6 A. Yes, sir.
7 Q. All right. Prior to you testifying here this
8 morning, did you review any documents?
9 A. What does you mean by that?
10 Q. That's a good question. Did you look at any
11 documents before you got on the stand?
12 MR. TEDMON: Objection. Vague as to time. She
13 already testified she looked at a bunch of documents.
15 Q. BY MR. GREINER: Well, prior to you getting on the
16 stand today, did you look at documents this morning?
17 A. No, I did not.
18 Q. Did you look at documents in the past week?
19 A. I had already had my papers, so I had documents
20 already.
21 Q. Okay. Did you meet with the Government in the past
22 week?
23 A. Yes.
24 Q. Okay. When did you meet with the Government?
25 A. Yesterday.

1 Q. All right. And in this building?
2 A. Yes.
3 Q. Okay. And were the two government attorneys present?
4 A. Yes.
5 Q. And was Agent Fitzpatrick present?
6 A. I don't know agent -- I don't know his -- I don't
7 know him.
8 Q. Was there anyone else besides the two government
9 attorneys?
10 A. No.
11 Q. Okay. When you had that meeting yesterday, how long
12 did it last?
13 A. Maybe ten, fifteen minutes.
14 Q. And in that meeting did you look at any documents?
15 A. No. The ones I had, I brought. I had some of my
16 own.
17 Q. Okay. And did you give some of your own documents to
18 the Government yesterday?
19 A. Yes.
20 Q. All right. Other than those documents, did you look
21 at anything else?
22 A. No.
23 Q. Have you ever had -- let me back up.
24 Do you recall talking to a government agent over the
25 telephone about January 12th of '07?

2 Q. Okay. Did the Government ever show you a typed-up
3 report of a telephone interview that you gave to the government
4 agent?
5 A. From 2007?
6 Q. Correct.
8 Q. All right. Yesterday, when you met with the
9 Government, did they have you look at any report that the
10 government agent typed up regarding your telephone interview
11 from 2007?
12 A. I can't say it was from 2007. I don't recall.
13 Q. Did you look at a report that a government agent
14 typed up of a telephone interview of you yesterday?
15 A. No. Not that I know of.
16 Q. And this morning you didn't look at any documents
17 prior to taking the stand?
19 Q. Okay. All right. So back in 2006, you were having
20 financial difficulties, unfortunately, fair statement?
21 A. Yes.
22 Q. Had you lost your job?
23 A. No.
24 Q. Just couldn't quite keep up with all the bills?
25 A. I had changed jobs.

1 Q. Okay. So you changed jobs. Making a little bit less
2 than you were before?
3 A. Yes.
4 Q. And that put you behind in your bills?
5 A. Yes.
6 Q. And when you changed jobs, how long was it until you
7 found yourself in some financial problems?
8 A. Maybe, two or three months after.
9 Q. All right. And at that time period, two,
10 three months, you were starting to look at options, right?
11 A. Yes.
12 Q. Now, you filed bankruptcy, right?
13 A. Yes.
14 Q. When did you file bankruptcy?
15 A. I don't recall the year.
16 Q. Was it prior to you changing jobs?
17 A. Yes.
18 Q. Okay. So you had been in bankruptcy for some period
19 of time then, true?
20 A. Maybe I want to say maybe five, six months.
21 Q. Okay. So five, six months before you changed jobs?
22 A. Yes.
23 Q. And the reason you went into bankruptcy is to help --
24 try to help yourself out financially, true?
25 A. Right.

1 Q. So about five or six months prior to you changing
2 jobs, you had already got yourself into some financial troubled
3 waters, shall we say?
4 A. Yes.
5 Q. Okay. And in the bankruptcy -- or -- bad question.
6 Let me start over.
7 Prior to filing bankruptcy, you had received a
8 foreclosure notice regarding your home, fair statement?
9 A. I don't recall that I got one or not, but I knew I
10 was headed that way.
11 Q. Okay. Part of the reason why you filed bankruptcy
12 was to try to stay any foreclosure proceeding, true?
13 A. I'm not sure.
14 Q. Well, let me ask you this. When you filed the
15 bankruptcy, the bank didn't do any foreclosure on your house,
16 did they?
17 A. No. I don't think so.
18 Q. You didn't go through any foreclosure proceeding,
19 right, after you filed bankruptcy?
20 A. I don't think so.
21 Q. All right. And while you're in bankruptcy, you were
22 making two bankruptcy payments, fair statement?
23 A. Yes.
24 Q. One payment was for your mortgage, true?
25 A. Yes.

1 Q. And one payment was for all of your other bills
2 consolidated, you made a payment, fair?
3 A. Yes.
4 Q. And so with that picture now, you're moving forward
5 for five or six months, and then you change jobs, true?
6 A. Yes.
7 Q. And in that new job you're making less than in your
8 previous job, fair?
9 A. Yes.
10 Q. You were still in bankruptcy, true?
11 A. Yes.
12 Q. All right. Did you fall out of bankruptcy at any
13 time?
14 A. Yes.
15 Q. When did that occur?
16 A. I can't really recall.
17 Q. Do you remember the year?
18 A. Had to be 2006.
19 Q. Okay. Using when you got your new job as a landmark,
20 okay?
21 A. Uh-huh.
22 Q. Yes?
23 A. Yes.
24 Q. Just trying to help the court reporter.
25 Using your new job as a landmark, how many months

1 passed until you fell out of bankruptcy?
3 Q. What would be your best estimate?
4 A. I can't tell you because I don't remember.
5 Q. All right. When you fell out of bankruptcy, you
6 hadn't contacted Funding Foreclosures, fair statement?
8 Q. Okay. Let's try it this way. When you contacted
9 Funding Foreclosures, foreclosure proceedings were going on in
10 your house, fair?
11 A. I'm not sure.
12 Q. Okay. All right. So at some point in time you fall
13 out of bankruptcy, and then you indicated to the Government
14 that you had talked to a Jeff, do I recall that correctly?
15 A. Yes.
16 Q. All right. Was Jeff in the real estate business?
17 A. Yes.
18 Q. All right. And had you dealt with Jeff prior?
19 A. No.
20 Q. Okay. And you went to Jeff because, why?
21 A. I was trying to get help to save my house.
22 Q. All right. And what kinds of help were you looking
23 for?
24 A. Refinance or anything like, you know, anything, you
25 know, what I could come up with to help save the house.

1 Q. All right. Was Jeff able to refinance you?
2 A. No. He referred me to someone else.
3 Q. I know he referred you, but he couldn't do any
4 refinancing for you, true?
5 A. I don't know.
6 Q. Well, he didn't, did he?
7 A. No.
8 Q. Okay. Did you call the bank and ask them if they
9 would enter into a forbearance with you?
10 A. No.
11 Q. Did you call the bank and ask them if they would go
12 into a reinstatement with you?
13 A. No. Because at the time I didn't know nothing about
14 that.
15 Q. Well, did you ever try to contact your bank and tell
16 them the situation that unfortunately I can't keep up?
17 A. No.
18 Q. Okay. Did you ever try to sell your house on the
19 open market?
20 A. No.
21 Q. Did you ever try to find an investor to buy your
22 house?
23 A. No.
24 Q. Did you ever ask any friends if they could help you
25 out financially to get you over this troubled-water period?

1 A. No.
2 Q. Did you ever ask any family members if they could
3 help you out financially to get you over the troubled waters?
4 A. No.
5 Q. Okay. So by the time Jeff then said you need to
6 contact this company, you'd exhausted all of your options, fair
7 statement?
8 A. I guess.
9 Q. Okay. All right. And he told you to contact a
10 company called Funding Foreclosures, right?
11 A. Yes.
12 Q. He gave you the phone number?
13 A. Yes.
14 Q. And you called?
15 A. Yes.
16 Q. And the receptionist answered?
17 A. I guess.
18 Q. And you said, here's my situation and she said hold
19 on a minute, right?
20 A. Right.
21 Q. And that's when you got on the phone with who you
22 represented on direct examination was a person that said
24 A. Right.
25 Q. You've never met Domonic McCarns?

1 A. No.
2 Q. Domonic McCarns has never been in your house?
3 A. No.
4 Q. Okay. All right. So when you talked to Domonic
5 McCarns, and he's telling you and asking you certain questions,
6 fair statement?
7 A. Yes.
8 Q. And he's asking you, look, you know, are you in
9 foreclosure, true?
10 A. I guess. I don't recall.
11 Q. Well, I don't want you to guess.
13 Q. Okay. Did he ask you if you filed bankruptcy?
14 A. Maybe. I'm not sure. It's been a while ago, so I
15 can't remember precise what happened.
16 Q. Totally understand. Does your mind tell you that
17 it's certainly possible that Domonic McCarns said: Have you
18 tried filing bankruptcy?
19 A. No.
20 Q. Did you tell Domonic McCarns, look, I fell out of
21 bankruptcy?
22 A. I don't recall because I requested to get out of
23 bankruptcy.
24 Q. Okay. Well, what -- in any event, you got out of
25 bankruptcy, right?

1 A. Right.
2 Q. And that's an important piece of information when
3 you're talking about your house, right?
4 A. Right.
5 Q. Because now you know once you're out of bankruptcy,
6 that the automatic stay is lifted, right?
7 A. Right.
8 Q. And so now the mortgage company, the bank, can
9 proceed with the foreclosure action on your house, right?
10 A. Right.
11 Q. And you understand foreclosure of your house, right?
12 A. Somewhat.
13 Q. Well, not pretty, is it?
14 A. I guess not.
15 Q. Well, you know that if the bank forecloses on your
16 house, you lose your house, right?
17 A. Possibility.
18 Q. Well, you know that if the bank forecloses, you got
19 to move someplace else, fair?
20 A. I guess.
21 Q. Well, it's not a guess. You know that that's a
22 reality?
23 A. I mean, I never went through it, so I don't fully
24 understand the concept of it.
25 Q. Well, one of the reasons why you filed bankruptcy was

1 to make sure you could stay in your house, right?
2 A. Right.
3 Q. Because you knew that if the bank foreclosed on it,
4 you would have to leave, right?
5 A. Eventually.
6 Q. Okay. All right. So when you're talking to Domonic
7 McCarns on the phone, you're trying to give him information
8 regarding your situation, true?
9 A. True.
10 Q. Because you're desperate for help, right?
11 A. Yes.
12 Q. You're trying to save your house?
13 A. Yes.
14 Q. And you don't have any other options, right?
15 A. Right.
16 Q. All right. And so you make sure that you gave him
17 the information that he's looking for, one of them was he had
18 to run your credit, right?
19 A. No, he didn't tell me he had to run my credit.
20 Q. Well, did he get information from you like your date
21 of birth?
22 A. I don't recall he had to. I guess if I went through
23 the paperwork, I guess so.
24 Q. Well, do you remember giving him your Social Security
25 number?

1 A. Yes. There is a possibility I do.
2 Q. Okay. And do you remember him then contacting you in
3 a short period of time, after receiving information from you,
4 and saying refinancing is just not going to be an option?
5 A. No.
6 Q. Okay. Did Domonic McCarns say we can refinance?
7 A. He told me he can help me.
8 Q. Right. I understand he said I can help you, but he
9 never said we can refinance, fair statement, right?
10 A. No.
11 Q. Well, he did say that you could refinance?
12 A. No, he did not.
13 Q. Okay. So once you gave the information and you
14 talked to Domonic McCarns, then documents came to you to sign,
15 fair statement?
16 A. I did get some documents.
17 Q. Okay. And those were sent to you in the mail, true?
18 A. FedEx or UPS. One of the two.
19 Q. My apologies. FedEx, UPS, we're on the same page,
20 right?
21 A. Yes.
22 Q. And so those documents came to you, right?
23 A. Right.
24 Q. If we could have Government's 17A5 on the screen,
25 please.

1 This is a document that the Government talked to you
2 about in direct examination, true?
3 A. Yes.
4 Q. It's entitled Equity Purchase Agreement, fair?
5 A. Right.
6 Q. Back when you got this document in 2006, you saw this
7 document, right?
8 A. I saw it, yes.
9 Q. And you read that it says equity purchase agreement,
10 true?
11 A. Not paying too much attention to it, really.
12 Q. Well, Ms. Woods, this is regarding your house and
13 saving it, correct?
14 A. Right.
15 Q. And so you're trying to save your house any way you
16 can, true?
17 A. True.
18 Q. And documents are coming to you to try to save your
19 house, correct?
20 A. Yes.
21 Q. And so this is something that's a high priority on
22 your attention screen, isn't it?
23 A. Yes.
24 Q. All right. And so this equity purchase agreement
25 document comes to you in the mail or by FedEx, correct?

1 A. Yes.
2 Q. And it says that this agreement, made the 8th day of
3 April is between you, correct?
4 A. Uh-huh.
5 Q. Yes?
6 A. Yes.
7 Q. And it says that you're referred to as seller,
8 correct?
9 A. Yes. That's what it says.
10 Q. And then it says and FundingForeclosures.com,
11 correct?
12 A. Yes.
13 Q. Referred to as purchaser, right?
14 A. Yes.
15 Q. Because you were selling your property, true?
16 A. No.
17 Q. Well, the document you signed said that, right?
18 A. But that's not what I understood.
19 Q. Well, you understood that you didn't have any options
20 other than just --
21 A. I still was not selling my property.
22 Q. You understood you didn't have any options, and if
23 you did nothing your property would be foreclosed on?
24 A. Evidently, when I talked to him it was explained to
25 me differently.

1 MR. TEDMON: Your Honor, can we clarify who "him" is,
2 please.
3 THE WITNESS: Domonic McCarns. It was explained to
4 me differently.
5 Q. BY MR. GREINER: All right. So you've had telephone
6 conversations and then documents come to you, correct?
7 A. Yes.
8 Q. And you've gone over with the Government. If we
9 could enlarge this, please.
10 This is one of the documents that came to you, right?
11 A. Yes.
12 Q. And one of the documents that you signed, right?
13 A. Yes.
14 Q. And the document in the second paragraph says
15 "agreement to sell and property description," right?
16 MR. MORRIS: Objection. Document speaks for itself,
17 Your Honor.
18 THE COURT: At this point --
19 MR. GREINER: Judge --
20 THE COURT: One more question. You may answer this
21 question.
22 Q. BY MR. GREINER: The document says "agreement to sell
23 and property description," correct?
24 A. Yes.
25 Q. If we can enlarge the document, please. And you know

1 on direct examination the Government asked you if your property
2 was described correctly in 17A5, correct?
3 A. Yes.
4 Q. And you said it was, correct?
5 A. Yes.
6 Q. If we could go to 17A5, page four, please. And just
7 above your signature, the paragraph says "lease back to
8 seller," correct?
9 A. Yes.
10 Q. And in that paragraph it talks about you having to
11 pay rent for a 12-month period, correct?
12 A. Yes.
13 Q. And you know that when you rent your house, you don't
14 own it, correct?
15 A. That was not my understanding.
16 Q. Well, you know if you're renting something, you don't
17 own it, fair?
18 A. It may be fair, but that's not my understanding.
19 Q. And so for you to enter into an agreement that said
20 your name, renting your house for 12 months, you understood
21 that you didn't own it?
22 A. Okay. So it was like if I'm leasing a car or
23 something like this. I'm thinking they holding the title until
24 I -- just 12 months, and then it's back mine.
25 Q. Well, somebody else is holding the title for

1 12 months, right?
2 A. Right.
3 Q. You're not, true?
4 A. But from what I gather --
5 Q. I understand. Just direct you back to my question.
6 You're not in these 12 months, correct?
7 A. That was not my understanding.
8 Q. Well, you knew somebody else was holding title, true?
9 A. Not really because I didn't know the title had
10 transferred.
11 Q. Okay. But you knew the document told you that you
12 had to pay a monthly rental payment, correct?
13 A. I see that.
14 Q. You knew that when you signed the document, correct?
15 A. Not really, no.
16 Q. And in the most important decision you're making
17 about your house, you didn't know that you were renting your
18 house for 12 months?
19 A. No.
20 Q. If we could go to -- take that down. If we could go
21 to 17A5-5, please. 17A-5, page five, I guess.
22 And this document says that you have a right, if you
23 qualify during the term, to buy back your property, correct?
24 A. Right.
25 Q. Okay. Meaning somebody else owned your property,

1 true?
2 A. Not that I knew of. I'm just thinking that this is
3 what the price was to -- if I stood up to my end of the deal.
4 Q. Of making the rental payments for 12 months, fair?
5 A. Right.
6 Q. Because somebody else was owning your property, fair?
7 A. No.
8 Q. You can take this down. Page 17A5-6, please.
9 This is another document that you signed when you
10 talked to the Government, and you recognized your signature,
11 correct?
12 A. Yes.
13 Q. And this is back in April of 2006, that's the date,
14 correct?
15 A. Yes.
16 Q. And it says seller, and it says Bertha Woods,
17 correct?
18 A. Yes.
19 Q. And it says purchaser, and it says
20 FundingForeclosures.com, correct?
21 A. Yes, I see that now, but I didn't pay attention then.
22 Q. So when you were trying everything you could to save
23 your house, when you got this document, you didn't read it?
24 A. Not all of it. No, I did not.
25 Q. And you didn't read it to see that the purchaser was

2 A. No.
3 Q. And in paragraph A it talks about a lease agreement,
4 do you see that?
5 A. Yes.
6 Q. And that meant that you were renting your house from
7 the owner of the house, correct?
8 A. Rephrase that again?
9 Q. Paragraph A is telling you what you knew, which is
10 that you were leasing your house, making payments to someone
11 else to lease it, correct?
12 A. I guess.
13 Q. Well, you don't have to guess. You knew that, right?
14 A. Not really.
15 Q. And so when you were making the most important
16 decision about saving your house, you didn't pay attention to
17 that paragraph?
18 A. Some of them I did not. I was --
19 Q. And just as a historical point, had you actually gone
20 through the purchasing of a house about 19 years prior,
21 correct?
22 A. Yes.
23 Q. And in that purchase, you saw and read and initialed
24 documents, correct?
25 A. I didn't purchase this house by myself.

1 Q. I understand.
2 A. I was the -- I was a secondary purchaser on the
3 house.
4 Q. You still had to sign documents, correct?
5 A. Right.
6 Q. You still had to read them when you signed them,
7 right, 19 years ago?
8 A. Yes.
9 Q. If we could enlarge the document, please.
10 That same addendum to equity purchase agreement, this
11 is telling you that you must fully and completely perform each
12 and every term of the lease agreement to be able to qualify to
13 purchase your house back, you knew that, correct?
14 A. I don't understand -- I didn't understand what was
15 being said.
16 Q. Well, you knew that this wasn't a charity
17 organization?
18 A. Right.
19 Q. Nobody was doing it for free, right?
20 A. Exactly.
21 Q. And nobody was just going to give you money, right?
22 A. Right.
23 Q. That this was a business transaction regarding your
24 house, correct?
25 A. Yes.

1 Q. And it was a business transaction regarding your
2 house to give you an opportunity to stay in your house when no
3 other option gave you that opportunity, correct?
4 A. I wasn't selling my house.
5 Q. Okay. I appreciate your answer. Directing you back
6 to my question. This business transaction was giving you an
7 opportunity to stay in your house when no other option of that
8 kind was available to you, correct?
9 A. I wouldn't say that.
10 Q. Well, you didn't have any other option, fair?
11 A. What I -- okay, the way I see it --
12 Q. I understand. Just if I could direct you back to my
13 question.
14 You didn't have any other options to save your house
15 other than trying to abide by the conditions of this contract,
16 fair?
17 A. No.
18 Q. Okay. So what other option did you have?
19 A. I could have sold it.
20 Q. But you didn't. You didn't put it on the market, did
21 you?
22 A. No, I did not. But I wasn't planning on nobody
23 taking it either. If that's the case, I have enough equity in
24 my house to put my house on the market because my house had
25 never been refinanced by anybody.

1 Q. Well, you never tried to re-sell your house, did you?
2 A. No, I did not.
3 Q. And when you went into bankruptcy months before, you
4 didn't even try to sell it prior to going into bankruptcy, did
5 you?
6 A. No, because I knew I was going to end up keeping my
7 home and which I have now.
8 Q. You knew you were going to keep your home as long as
9 you abided by the bankruptcy conditions, correct?
10 A. I knew I was going to keep my house one way or
11 another.
12 Q. And I appreciate your answer. Directing you back to
13 my question. You knew that when you entered bankruptcy to keep
14 your house, you had to abide by the bankruptcy conditions,
15 fair?
16 A. Yes.
17 Q. And the bankruptcy conditions were you had to make
18 payments?
19 A. Yes.
20 Q. Two of them, correct?
21 A. Yes.
22 Q. And you fell out of bankruptcy, you said to the jury
23 that you voluntarily came out, correct?
24 A. Say that again?
25 Q. You told the jury that you voluntarily came out of

1 bankruptcy?
2 A. Yes, I did.
3 Q. And when you did that, you didn't put your house up
4 for sale, did you?
5 A. No.
6 Q. And at no time did you ever try to put your house up
7 for sale, did you?
8 A. But I knew I was not going to lose my home.
9 Q. Right. Because you didn't have any other options
10 because you were in foreclosure, the bank was going to take
11 your home?
12 A. No. I was going to work and keep my home, which I
13 just did also.
14 Q. I understand that. At the time that this was going
15 on in 2006, you fell out of bankruptcy voluntarily, and you
16 didn't put your house up for sale, did you?
17 A. No.
18 Q. Okay. If we could enlarge this document, please. If
19 we could go to 17A5, page eight, please.
20 The Government on direct examination asked you about
21 this document, remember?
22 A. Uh-huh.
23 Q. Is that yes?
24 A. Yes.
25 Q. Okay. And this document is dated May 23, 2006, and

1 the first paragraph is talking about the purchase price that
2 you agree that you will try to purchase your house back at if
3 you follow all the terms and conditions of the contract?
4 MR. MORRIS: Objection. The document speaks for
5 itself, Your Honor.
6 THE COURT: Overruled. I'll allow this question.
7 Q. BY MR. GREINER: Correct?
8 A. I didn't get that.
9 Q. Well, you see the figure 76,498, correct?
10 A. Yes.
11 Q. And you knew earlier that you signed an agreement
12 that that was the price that you agreed to try to repurchase
13 your house back if you followed the terms and conditions of the
14 contract, correct?
15 A. Yes.
16 Q. That is saying that price is going up to 90,168,
17 correct?
18 A. Yes.
19 Q. In addition, the second paragraph is saying, look,
20 you were going to get $1,500 out of your house, but instead
21 we're going to have it as $1,000, that's what it says, correct?
22 A. Yes.
23 Q. If we could go to the next page, please.
24 Before you enlarge it, hold one second. Do you see
25 the date of this addendum is dated June 8, 2006, do you see

1 that?
2 A. Yes.
3 Q. And this document is saying that in May when you
4 agreed that you were only going to get $1,000 in June, now
5 you're agreeing you're going to get $2,000, do you see that?
6 A. Yes.
7 Q. If we could take that down and put on, please, page
8 ten.
9 This addendum dated later in June, June 29, 2006, is
10 saying that $2,000 is now going to go down to $1,300, do you
11 see that?
12 A. Yes.
13 Q. You knew that new shingles had to be put on your
14 house, right?
15 A. Eventually. No, I did not know until the appraiser
16 came out and told me.
17 Q. And new shingles were put on your house, correct?
18 A. Yes.
19 Q. We could take that document down. If we can go to
20 Government's Exhibit 17A6, please. This was one of the
21 documents that came to you, correct?
22 A. Yes.
23 Q. And those, as you told the Government, those are your
24 initials, correct?
25 A. Yes.

1 Q. Okay. The top of the document says acknowledgement
2 by seller, correct?
3 A. Yes.
4 Q. And if we can quickly go to page two. Down at the
5 bottom it's dated April 8, 2006, correct?
6 A. Yes.
7 Q. And above the word "seller" it has your initials,
8 correct?
9 A. I guess that's my initials, yes.
10 Q. Well, you don't guess. You recognize that those are
11 your initials, true?
12 A. I'm looking at it, yes, and I could say maybe. I'm
13 not sure because I'm looking at the "B" on there. I don't
14 know. But I would say yes. Somewhat, yes.
15 Q. Let's go back to page one of 17A6, please, this first
16 paragraph. And again, these are documents when you're trying
17 to do anything you can to save your house, correct?
18 A. Yes.
19 Q. Because you don't want to move out, do you?
20 A. No.
21 Q. This is saying that you acknowledge that "the
22 purchaser has not made any representations, promises, or verbal
23 agreements regarding the purchase of seller's residence that
24 are not contained within the equity purchase agreement or other
25 documents executed concurrently herewith."

1 MR. MORRIS: Same objection, Your Honor. The
2 document speaks for itself.
4 Q. BY MR. GREINER: You read that prior to signing,
5 correct?
6 A. Not really.
7 Q. Well, not really means that you did read it, true?
8 A. Probably glanced it.
9 Q. And the most important documents, trying to save your
10 house, you glanced at it, and you saw that you were selling
11 your house to a purchaser?
12 A. No, I didn't see I was selling my house. That's what
13 the problem is. You keep saying I knew and willingly sold my
14 house. No, I did not.
15 Q. All of these documents talk about --
16 A. I still did not know and willingly sell my house.
17 No, I did not.
18 Q. And all of these documents talk about you selling
20 A. Yeah.
21 Q. And you signed all of these documents, correct?
22 A. Yes, I did.
23 Q. In fact, sometimes the documents you signed there was
24 a notary present, correct?
25 A. Once.

1 Q. And there was also an attorney present, correct?
2 A. No.
3 Q. No attorney present --
4 A. No.
5 Q. -- in Ohio when you signed these documents in front
6 of a notary?
7 A. I signed the one. It was only the notary at my
8 house. I did not have no attorneys nowhere.
9 Q. If we can enlarge this please. And in paragraph two
10 you looked at that before you initialed it, correct?
11 A. No. Like I say, I really didn't pay too much
12 attention to -- I'm just listening to what Domonic explains to
13 me. And that's the way I took this. And that's the way I went
14 with this. Not knowing that I'm selling my house.
15 No. Under no circumstances I'm going to sit here and
16 say I was selling my house because had I known I was selling my
17 house --
18 MR. SAMUEL: Objection, Your Honor. Non-responsive.
19 THE COURT: Sustained. At this point, wait for the
20 next question.
22 Q. BY MR. GREINER: And you knew Domonic's conversation
23 was prior to you receiving these documents, correct?
24 A. Yes.
25 Q. And you knew Domonic's conversation was prior to you

1 sitting with the notary and signing documents, correct?
2 A. I only signed one document in front of the notary.
3 Q. Well, you told the jury that you asked the notary a
4 question, right?
5 A. No. I didn't tell you I asked the notary a question.
6 Q. Well, you told the jury that on direct examination
7 with the Government, do you remember that?
8 A. No. I said I called Domonic when the notary was
9 there to question him about the paper that I was about to sign.
10 Q. Okay. We will get there in a minute then.
11 And in paragraph three of Government's 17A6,
12 acknowledgement by seller, you read that before initialling it,
13 true?
14 A. Like I said, I basically didn't really read all the
15 paperwork. I was going by what Domonic had told me.
16 Q. Paragraph four, you read before initialling it, true?
17 A. I just gave you the answer.
18 Q. And paragraph five, you read before you initialed it,
19 true?
20 A. I told you I just basically was going by what Domonic
21 was telling me to do, and that's what I did.
22 Q. And paragraph six, seven, eight, nine, you read
23 before you initialed it, didn't you?
24 A. That's what you say. I didn't say I read it. I'm
25 telling you what happened.

1 Q. Did you read paragraph six, seven, eight, nine before
2 you initialed it?
3 A. No.
5 You talked about this document with the Government,
6 remember?
7 A. Yes.
8 Q. This talks about a holding trust agreement, do you
9 see that?
11 Q. Dated April 8, 2006, do you see that?
12 A. Right.
13 Q. And it says that this agreement is between you, the
14 tenant, do you see that?
15 A. Where is that? Okay. Yes, now I see it, yes.
16 Q. And Nations Property Management LLC, the trustee, do
17 you see that?
18 A. Yes.
19 Q. And you read that before you signed this document,
20 correct?
21 A. Yes.
23 You talked to the Government about this document, remember?
24 A. Yes.
25 Q. And you indicated that those initials look like your

1 initials, correct?
2 A. Yes.
3 Q. Are they your initials?
4 A. I would say yes.
6 This document is entitled Grant Deed, do you see that?
7 A. Yes.
8 Q. Do you see your name typed underneath a line?
9 A. Yes.
10 Q. Bertha A. Woods, correct?
11 A. Uh-huh.
12 Q. Yes?
13 A. Yes.
14 Q. What's above that in all capital letters? Can you
15 read that into the record?
16 A. "Sample document only. Do not sign."
17 Q. Okay. And if we could enlarge, please.
18 And you told the Government that that signature down
19 at the bottom you don't recognize, correct?
20 A. No, I didn't say I didn't recognize. I say it's
21 mines, but why would I sign to the side.
22 Q. If we could go to Government's Exhibit 17A10, please.
23 This document is entitled Wire Instructions and Authorization,
24 do you see that?
25 A. Yes.

1 Q. And do you see the date there as July 26, '06, do you
2 see that?
3 A. Yes.
4 Q. That's three months after you signed the equity
5 purchase agreement in April, correct?
6 A. I guess.
7 Q. Well, April, May, June, July - three months, correct?
8 A. Yes.
9 Q. Can we enlarge, please. And nowhere on that document
10 does it say Domonic McCarns, correct?
11 A. No.
13 A. No being correct.
14 Q. Thank you. If we could go to Government's
16 Do you remember on direct examination the Government
17 asked you if you knew what this document was?
18 A. I don't, no.
19 Q. Well, first of all, just -- I'm going to enlarge it.
20 You don't have to try to read it.
21 Remember on direct examination the Government asked
22 you: Do you recognize what this document is? Do you remember
23 that question?
24 A. I can't --
25 Q. This deals with lead-based paint disclosure, do you

1 see that?
2 A. I see it now, yes.
3 Q. Do you have any knowledge that the house that you
4 were selling had lead paint in it?
5 A. No.
6 Q. We can take that down. If we can go to Government's
8 Do you remember talking about this document with the
9 Government?
10 A. Yes.
11 Q. You didn't sign this document, did you?
12 A. No.
13 Q. Why?
14 A. I don't -- why would I sign this? I mean --
15 Q. I'm asking you why didn't you sign it? Do you have
16 an answer?
17 A. I don't see no reason for me to sign it.
18 Q. Do you see up top of the document?
19 A. Uh-huh.
20 Q. Dated June 5, 2006, do you see that?
21 A. Yes.
22 Q. And it's from the Ohio Awning and Manufacturing
23 Company, do you see that?
24 A. Yes.
25 Q. That's where you got your new job, correct?

1 A. Yes.
2 Q. If we could take that down. Go to Government's
3 Exhibit 17C, please.
4 Do you remember this document because it's kind of
5 faint? Do you remember talking to the Government about that?
6 A. Yes.
7 Q. Do you see on the screen it's talking about July 26,
8 2006?
9 A. Yes.
10 Q. That you -- residing at the address that you told the
11 Government you live at, right?
12 A. Yes.
13 Q. For valuable consideration of $119,000, correct?
14 A. I see that. Yes.
15 Q. If we could enlarge, please. And those are your
16 initials on the front page, correct?
17 A. Yes. But it was nothing wrote in that spot when I
18 signed that paper. All we had -- I had figured that we had --
19 I seen this before. And it was no price amount or anything
20 wrote in that area.
21 Q. If we could enlarge, please.
22 And you see this signature of an agent regarding your
23 property address on that document, correct?
25 Q. If we could take this document off and go to the next

1 page, please.
2 Do you see that this document was prepared by a P.
3 DiSantis, correct?
5 Q. From A Law's Specialty Group, Inc., do you see that?
6 A. Yes.
7 Q. If we could enlarge. And you've already indicated to
8 the Government that you signed this, correct?
9 A. Yes.
10 THE COURT: Can you finish in the next few minutes,
11 Mr. Greiner?
12 MR. GREINER: It's going to a little bit longer than
13 a few minutes. And if you want to take a break, then I can
14 finish up after the break.
15 THE COURT: If we took a break in five minutes? Why
16 don't you see what you can do in five minutes.
17 MR. GREINER: All right.
18 Q. BY MR. GREINER: If we could go to Government's
19 Exhibit 17C4, please. Do you see that document entitled
20 Sheriff's Deed?
21 A. Yes.
22 Q. Okay. That's because there was a sale on your
23 property because it was going through foreclosure, correct?
24 A. Yes.
25 Q. And the date was in September 5th of 2008, correct?

1 A. Yes. I guess.
2 MR. GREINER: Take that down. Move into evidence
3 DM-K3, Judge.
5 MR. TEDMON: No objection, Your Honor.
10 THE COURT: All right. DM-K3 comes in.
11 (Defendant's Exhibit DM-K3, Notice of Cancellation
12 dated April 8, 2006 admitted into evidence.)
14 please.
15 Now, this document you didn't talk to the Government
16 about, but it's entitled Notice of Cancellation at the top,
17 correct?
18 A. Yes.
19 Q. And that's a document that you received in the
20 documents that were sent to you, correct?
21 A. Yes.
22 Q. And this document says that it's entered into on
23 April 8th of 2006, do you see that?
24 A. Yes.
25 Q. And it says that you can cancel at any time before

1 midnight April 14, 2006, correct?
2 A. Yes.
3 Q. And you did not cancel in that time period, true?
4 A. No.
5 Q. In fact, you never cancelled in April of 2006 at all,
6 did you?
7 A. No.
8 Q. You didn't cancel in May 2006, did you?
9 A. No.
10 Q. You didn't cancel in June 2006, did you?
11 A. No.
12 Q. You didn't cancel in July of 2006, did you?
13 A. No.
14 MR. GREINER: If we could move into evidence DM-K11,
15 please.
20 MR. SAMUEL: I'll go along with the variance
21 objection.
22 THE COURT: Mr. Morris.
23 MR. MORRIS: Your Honor, I think it's actually
24 duplicative of Government's 17A1 unless there is something
25 we're not seeing.

1 MR. GREINER: That's fine. If it's duplicative, I'll
2 use 17A1.
3 THE COURT: 17A1.
4 Q. BY MR. GREINER: 17A1. My apologies to counsel. If
5 we could have 17A1 on the screen please.
6 Now this document, you received a copy of this
7 document which is entitled the Settlement Statement, correct?
8 A. No. I don't remember this paper.
9 Q. All right. Let me enlarge and let me see if you have
10 another recollection.
11 Does that refresh your recollection that you received
12 this document?
13 A. No.
14 Q. Take that down, please.
15 You recall that you had some bankruptcy costs that
16 still had to be paid when this agreement to sell the house to
17 the Slys went through, correct, you still owed some bankruptcy
18 costs, true?
19 A. I don't know.
20 Q. Okay. Do you recall that there was a -- do you
21 recall on your property that there was a first and a second
22 mortgage?
23 A. Never had a first and second mortgage. I only had
24 one mortgage.
25 Q. Okay.

1 THE COURT: Let's go ahead and take our break, and we
2 will give you a few minutes when we come back.
3 During the second break of the day, another 15-minute
4 break, please, as always, remember my admonitions. Have a good
5 break. We'll see you in fifteen.
6 (Jury out.)
7 THE COURT: You may be seated. You may now step
8 down. Please be back in your seat in 15 minutes.
9 Did you reach an agreement on DM-F17, 19 and 19-1?
10 All right. Will you have cross-examination, Mr. Tedmon?
11 MR. TEDMON: At this point, no.
13 MR. SAMUEL: No.
14 THE COURT: All right. Fifteen minutes.
15 MR. ANDERSON: Your Honor, for scheduling purposes,
16 when are we going to have the hearing outside the presence of
17 the jury with Mr. Daffron? Would that be at the end of today?
18 THE COURT: How quickly can we get that done?
19 MR. ANDERSON: That depends a lot on defense counsel
20 and how many questions they want to ask. I would think it's a
21 between 15 to 20 minutes, but I've been drastically wrong on
22 almost every time estimate I've had in this case.
23 THE COURT: Does 15 to 20 minutes sound sufficient
24 based on what you know about Mr. Daffron?
25 MR. SAMUEL: I don't know much. I was given verbal

1 statements. Sounds more than sufficient.
2 MR. TEDMON: Seems to me we can get it done in ten
3 minutes.
4 THE COURT: All right. Let's do that at the end of
5 today.
6 At this point, Mr. Greiner has used roughly the same
7 time the Government used. We'll talk this week about whether
8 we need to revisit the estimate of time for trial.
9 (Break taken.)
11 (Jury in.)
13 court, ladies and gentlemen of the jury. This is your courtesy
14 notice. Are your cell phones turned off?
15 Also, I know it's little chilly in here. I'm not
16 doing that intentionally to keep you all awake. Although, it
17 probably has that effect so we'll do what we can to adjust the
18 temperature. Probably as the week goes on it will get warmer.
19 Hopefully not too warm.
20 In any event, we're going to continue now with
21 cross-examination of Ms. Woods. You have a few more minutes,
22 Mr. Greiner.
23 MR. GREINER: I do, Judge.
24 Q. BY MR. GREINER: Good afternoon. Ms. Woods.
25 A. Hi.

1 Q. Okay. I want to cover some things that you talked
2 over with the Government on direct examination.
3 So that I'm clear, you had two separate signings of
4 documents, right? You had the documents that Domonic McCarns
5 FedEx'd, you do you remember that?
6 A. Right.
7 Q. You got those documents, took them home, you could
8 read them, show them to people, ask people questions about
9 them, you got that set of documents, true?
10 A. Right.
11 Q. That was the -- those were the documents that got you
12 into the program with Funding Foreclosures, correct?
13 A. I don't remember. But one set of documents.
14 Q. Well, the equity purchase agreement, that's what you
15 signed first, the acknowledgement of seller that's what you
16 signed first, those were the first set of documents you signed
17 because there was no notary at your house when you signed those
18 documents, true?
19 A. That's true.
20 Q. All right. Then after you signed those documents,
21 however long it took, however long you read them, then you sent
22 those back to Domonic, correct?
23 A. I guess. Like I say, I really don't remember because
24 that was a while back, and I've been through court and stuff
25 with this house and stuff, so it's all kind of confusing.

1 MR. SAMUEL: Objection, Your Honor. Ask it be
2 stricken.
3 THE COURT: Motion denied. But again, answer the
4 question and wait for the next question.
6 THE COURT: Next question.
8 Q. BY MR. GREINER: After you signed that first set of
9 documents, in April of 2006, equity purchase agreement, the
10 acknowledgement by seller, lease agreement, those are the
11 documents you sent back to Domonic, fair statement?
12 A. I'm not sure.
13 Q. It was a second set of documents that you had with
14 the notary, correct?
15 A. I want to say they all came together, but I'm not
16 sure. That's why I keep saying I'm not sure.
17 Q. Well, you know that there was no notary when you got
18 the first set of documents in April, fair statement?
19 A. No, I don't think so, no.
20 Q. Right. So no notary when you first got the documents
21 in April, that's true, correct?
22 A. Yes.
23 Q. And however long it took you to sign those documents
24 and get them back to Domonic, you could read them, review them,
25 ask people questions about them, that's the first set of

1 documents, fair?
2 A. I would say yes, I guess.
3 Q. And actually, the letter that you faxed to Domonic in
4 June -- which is Government's Exhibit 17A12, if we could have
5 that on the screen -- this letter is the letter that you faxed
6 back in June, that you faxed back that first set of documents,
7 the equity purchase agreement, the acknowledgement of seller,
8 notice of cancellation, and that's what you're doing in this
9 letter, correct?
10 A. I guess.
11 Q. All right. And then there was a notary that was set
12 up, independent of the company Funding Foreclosures,
13 independent of Domonic, a notary came out to your house with
14 documents to sign, you remember that, correct?
15 A. No.
16 Q. Well, what happened in July, right? We went over
17 those documents, do you remember that?
18 A. I only remember one notary.
19 Q. Right. In July of 2006, do you remember that?
20 A. Right.
21 Q. Okay. And that's the grant deed, that was the wire
22 instructions, that's what the notary notarized on that
23 occasion, correct?
24 A. I'm not sure.
25 Q. Well, Government's Exhibit 17A10, please.

1 Here, you see your signature above where the notary
2 on July 26th said that you proved to the notary that it was you
3 signing, do you see that?
4 A. Right.
5 Q. So July 26th is when you had the second signing of
6 documents, correct, that's with the notary, correct?
7 A. Right.
8 Q. All right. And so we can take that document down.
9 And so you had two separate sets of documents, fair
10 statement?
11 A. I guess.
12 Q. Okay. And the notary didn't work for you, right?
13 A. No.
14 Q. And the notary didn't work for Funding Foreclosures
15 as far as you knew, correct?
16 A. I --
17 Q. They were never based in Ohio, right?
18 A. I didn't know because I didn't have the notary come
19 here.
20 Q. When the notary came to your house with documents,
21 the notary went over the documents you were signing, correct?
22 A. Yes.
23 Q. Told you, look, this is wire instructions and
24 authorization, we saw that document, right?
25 A. Yes.

1 Q. Went over the grant deed, here's the document, you
2 remember that, correct?
3 A. I guess.
4 Q. Okay. Well, it was notarized in front of you, right?
5 A. Okay.
6 Q. All right. Now, you knew that when you first -- and
7 I want to go back to when you talked to Domonic about the
8 program that you were entering into. Not the notary documents,
9 but the program.
10 The first set of documents that were sent to you, you
11 understood that you would have an opportunity to buy your home
12 back, that's what Domonic told you, correct?
13 A. Yes.
15 I forget, so I'm going to ask. Let me -- this
16 document, Judge, has been admitted. It's Government's
17 Exhibit 17E.
19 MR. GREINER: And I'm going to use the overhead
20 projector.
22 Q. BY MR. GREINER: All right. Ms. Woods, you remember
23 talking to the Government about this document?
24 A. Yes.
25 Q. Okay. Now, it's not addressed to you, correct?

1 A. No.
2 Q. And the very first sentence says, "if my client" --
3 that's what it says, correct, "if my client"?
4 A. Right.
5 Q. So would your understanding be that this letter was
6 sent to someone other than yourself?
7 A. No.
8 Q. Even though it's not addressed to you?
9 A. Yes, it's not addressed to me.
10 Q. Okay. And even though it says "please instruct
11 client to sign/initial," you still think that document came to
12 you?
13 A. Yes.
14 Q. Okay.
15 MR. GREINER: I think that's all, Judge. Thank you.
16 THE COURT: All right. Any cross, Mr. Tedmon?
21 MR. MORRIS: Briefly, Your Honor.
23 BY MR. MORRIS:
24 Q. I'd like you to --
25 Mr. Greiner asked you some questions about a meeting

1 you had yesterday with the Government. Do you recall that I
2 was present with you at that meeting?
3 A. Yes.
4 Q. Do you recall Peter Byrne being present at that
5 meeting?
6 A. Yes.
7 Q. Do you recall whether my colleague, Mr. Anderson, was
8 in or out of that meeting at one point or not?
9 A. No.
10 Q. So your recollection is it was myself and Mr. Byrne?
11 A. Right.
12 Q. I asked that because I think the question from
13 Mr. Greiner was asking if you had met with two Government
14 attorneys yesterday, and I want to make sure we're clear that
15 when we're talking about the two people you met with, it was
16 myself and Special Agent Byrne. Is that your recollection?
17 A. Yes.
18 Q. If we could bring up 17C, page four, please.
19 This is the document that we've looked at that's kind
20 of hard to see because it's sort of not a good contrast.
21 Do you recall talking to Mr. Greiner about the date
22 on this document being in 2008? I can zoom in if we try.
23 A. Okay.
24 Q. Do you remember when he was asking about 2008?
25 A. Right.

1 Q. Now, I think your testimony on direct earlier you had
2 talked about a Sheriff's Sale after this process with Funding
3 Foreclosures?
4 A. Right.
5 Q. And I think your testimony in that one was that the
6 sheriff's sale happened, but you were able to stay in the house
7 afterwards, is that right?
8 A. Right.
9 Q. And why was that?
10 A. Because at the time, no one purchased the home when
11 they put the house up for sale, which I was still in the house.
12 Q. To your recollection, did that occur some time in
13 2008?
14 A. Yes.
15 Q. You can bring that down.
16 You had a conversation with Mr. Greiner about
17 somebody else holding title to your property, and I just want
18 to make sure that I understand your testimony.
19 Was it your understanding that you would still be the
20 owner of your property during this process?
21 A. Yes.
22 Q. And so when you say that you thought somebody else
23 would be holding title, what did you mean by that?
24 A. I thought maybe that they would keep the title or the
25 deeds to the house until the time was come up for me to -- for

1 us to you know renegotiate the deal, not knowing that it had
2 transferred to someone else.
3 Q. So when you say -- you used the term "keep the title"
4 or "keep the deed," you mean physically keep the piece of
5 paper?
6 You said keep the deed or keep the title, and I think
7 your testimony was you thought you would be the owner still.
8 So what do you mean by somebody keeping the deed?
9 A. What I'm saying for the year that I signed the paper,
10 I'm thinking that, okay, I signed this paper, but after the
11 year is up, we go back and everything be back like it was after
12 we do everything we need to do, after the year is up, if I keep
13 up with my part of the deal.
14 Q. Now, you were having a conversation with Mr. Greiner
15 about the time when the notary was present for signing some of
16 these papers. And Mr. Greiner asked you if you asked the
17 notary some questions, and you said, no, I was talking to
18 Domonic. Do you remember that part?
19 A. Yes.
20 Q. And Mr. Greiner said we will we'll get back to that
21 later, and I don't think he did. So if you could explain that
22 part about talking to Domonic while the notary was at your
23 house?
24 A. Okay. When the notary came, and he had the papers
25 that had Kenny and Marjorie Sly's name out it. I left out of

1 my dining room. I went to my living room and called Domonic
2 and questioned him about who was these people.
3 Q. What did Domonic say?
4 A. He said they was working for the company, and this is
5 the way they do it.
6 Q. Mr. Greiner was talking to you about the notary and
7 used the term the notary was going over the documents with you,
8 did the notary explain the documents to?
9 A. No, I don't think he really understood them hisself
10 (sic).
11 Q. So what was the notary doing with these documents
12 when you signed them, the ones that you signed with the notary?
13 A. What did he do with them?
14 Q. What did the notary do? If he wasn't explaining them
15 what was the notary doing?
16 A. He was just telling me what to sign.
17 Q. Okay.
18 A. Because I guess -- I'm assuming. I'm not sure.
19 Q. He was just telling you where to sign?
20 A. Right.
21 Q. But he didn't explain what the documents meant?
22 A. Right.
23 Q. If you can bring up 17A1, please. Mr. Greiner asked
24 you to look at this section of the document where it says "name
25 of seller is Bertha Woods." Do you recall him showing you

1 that?
2 A. Yes.
3 Q. And I'll ask you to think to about the August 2006
4 timeframe. Can you zoom out?
5 In August 2006, do you recall receiving $51,647.24?
6 A. No, I did not.
7 Q. Take that down. Just a moment, Your Honor.
8 Nothing further, Your Honor. Thank you?
9 THE COURT: Mr. Greiner, recross?
10 MR. GREINER: Just what the Government questioned
11 Ms. Woods on.
13 BY MR. GREINER:
14 Q. Ms. Woods, Government asked you about keeping title,
16 A. Yes.
17 Q. Okay. Do you remember talking to the Government in
18 January of 2007?
20 Q. You have no recollection of talking to the Government
21 in 2007 at all?
22 A. It's a possibility, but I don't remember.
23 Q. Okay. Do you remember telling the Government that
24 Domonic McCarns told you that you could keep your home for a
25 year with the opportunity to buy the home back at the end of

1 the year at a higher price?
2 A. Yes.
3 Q. And when you use the term repurchase the property,
4 you knew repurchasing the property meant you were buying your
5 property back, correct?
6 A. No.
7 Q. Okay. But that's the whole idea of repurchasing is
8 to re-buy, would you agree with me on that?
9 A. I guess.
10 Q. Okay. And so if you're going to repurchase something
11 or re-buy something, that means that you don't own it at the
12 time, do you agree with me with that?
13 A. That was not my understanding that I did not own it,
14 no.
15 Q. I understand your answer. Directing you back --
16 A. No.
17 Q. Directing you back to my question. When you don't
18 own something and you have to repurchase or re-buy it, that
19 means somebody else owns it, fair statement?
20 A. Yes.
21 Q. And so when you had to repurchase your property or
22 had an opportunity to buy it back, like you told the
23 Government, that means somebody else owned your property, fair
24 statement?
25 A. Looking at now, yes. But back then, no.

1 Q. Not looking at it now. Looking at it back in 2007,
2 when you talked to the Government that's what you told the
3 Government right?
4 A. Like I say back then, no, right now, yes.
5 Q. Would you agree with me, Ms. Woods, that putting
6 things in writing makes sure everybody knows what's going on,
7 do you agree with that statement?
8 A. Yes.
9 Q. Putting things in writing clears up any
10 misunderstanding that you may have, fair?
11 A. Yes.
12 Q. And you signed documents that were in writing both
13 when Domonic McCarns sent you the first set back in April,
14 true?
15 A. Yes.
16 Q. And the second set of documents that were notarized
17 at the end of July, correct?
18 A. The second set that was notarized?
19 Q. We've gone over that before. There is a set where
20 the notary came at the end of July - the grant deed, the wire
21 instructions - that was notarized at the end of July?
22 A. Okay.
23 Q. Correct?
24 A. Yes.
25 Q. And that was separate and apart from the documents

1 you got from Domonic in April, which was the equity purchase
2 agreement, acknowledgement by seller, cancellation, correct?
3 A. I don't remember everything. I'm being honest. I
4 don't remember everything. Happened in 2006.
8 THE COURT: All right. Is this witness is excused?
10 MR. SAMUEL: Yes.
12 THE COURT: All right. You may step down, ma'am.
13 You are excused.
14 All right. Government's next witness?
15 MR. ANDERSON: Government calls Denise Nowlin.
22 THE WITNESS: Denise E. Ahearn, D-e-n-i-s-e, middle
23 initial is E, last name is Ahearn, A-h-e-a-r-n.
24 THE COURT: All right. You may proceed. You're
25 going to clarify.

1 MR. ANDERSON: I'm going to ask the first question.
2 DENISE AHEARN,
7 BY MR. ANDERSON:
8 Q. Ms. Ahearn, did you previously go by a different last
9 name?
10 A. Yes. It was Nowlin, N-o-w-l-i-n.
11 Q. That was because you were married at the time?
12 A. I was married at the time of the incident, yes.
13 Q. Do you know of a property located at 115 Bedford
14 Street in West Bridgewater, Massachusetts?
15 A. Yes.
16 Q. Is that a house?
17 A. Yes, it is.
18 Q. How do you know about that house?
19 A. That was the house that I had purchased.
20 Q. When did you purchase that house?
21 A. May 2, 2002.
22 Q. Now, did you live there with anyone else?
23 A. My husband at the time, and my son. He was only two.
24 Q. Now at some point did you begin to fall behind on the
25 mortgage payments for that house?

1 A. Yes. My husband -- my ex-husband had a lot of back
2 trouble, so he was in and out of work all the time, couldn't
3 hold a job, so we got behind.
5 A. It was off and on. I'm not sure.
6 Q. Okay. We'll refer back to the date, and I'll ask you
7 another date question in a moment.
8 Now, as a result of being a little bit behind on your
9 mortgage, did you try and do anything about that?
10 A. Yes.
12 A. I went through my mortgage company, Gintas Garzas was
13 my mortgage broker. He helped me. He did everything he could
14 to help me keep up. And when he -- Mr. Garzas, he couldn't --
15 he couldn't do anything more for me because he tried everything
16 he could, Mr. Garzas, to keep me from losing my home, Mr. --
17 Q. It's okay if you're a little -- and there is some
18 water beside you, too, if you need any.
19 Did Mr. Garzas refer you to someone else?
20 A. Yes, Domonic McCarns. I couldn't remember his name.
21 Q. And did you speak with Domonic McCarns?
22 A. Well, at first Gintas told me to give him a call
23 because he said that he could help because Mr. McCarns
24 contacted Mr. Garzas, and then he gave me his number and so we
25 contacted via the telephone.

1 Q. Did you speak with Domonic McCarns over the
2 telephone?
3 A. Many times, yes.
4 Q. Now in those conversations, what did Domonic McCarns
5 tell you?
6 A. He told me that he could save my house, help me save
7 my house, by having a trustee or investors buy my home, and put
8 -- and I -- I specifically requested that he leaves my name on
9 the deed because I was afraid that I didn't want my house to
10 get taken from underneath me, so he said that, no, that
11 wouldn't happen.
12 Q. All right. And what did he say about getting -- was
13 there any discussion about getting the house back completely in
14 your name?
15 A. Yes, sir. He said that -- what happened was that
16 once the trustee was put on the deed, that I would -- I would
17 rent -- I would pay -- I would pay to A-1, and after a year's
18 time, I would be able to buy my house back for lower than what
19 I put into it.
20 Q. And what do you mean lower than what you put into it?
21 A. Lower mortgage payment or lower rent. But he would
22 sell me back my house.
23 Q. Now you're saying sell back. Did you believe that
24 you would still own a part of the house during this time
25 period?

1 A. Yes. I was under that impression, yes.
2 Q. Was your remaining on title an important factor in
3 your decision about what to do with the program that Domonic
4 McCarns was telling you about?
5 A. Yes, I wasn't willing to sign unless he could
6 guaranty me that he could not sell my house, or I wanted my
7 name on the deed because I wanted the protection so he couldn't
8 sell it from underneath me.
9 Q. Did Domonic McCarns give you any instructions about
10 what to do?
11 A. Yes. As a matter of fact, he was pretty -- when I
12 talked to him, he gave me step-by-step instructions. He told
13 me -- in the beginning he told me that I needed to file a --
14 I'm not sure which, Chapter 7 or Chapter 11, so that way he can
15 get the investors that he needed. So the Chapter 11 would put
16 everything on hold until he can find somebody to invest into
17 the property and be a trustee on my account, on my house.
18 Q. Did you go and file bankruptcy?
19 A. I did. In the Boston, Mass. court.
20 Q. Did Domonic McCarns give you any further instructions
21 about that bankruptcy later?
22 A. Yes, he said that as soon as he gets an investor, he
23 would call me, and he would let me know to go ahead and cancel
24 that, so that way he could have the property -- you know, get
25 the paperwork together, and then we'd sign, which I did.

1 Q. Did you end up getting a call from Domonic McCarns
2 telling you to cancel?
3 A. Yes, sir.
4 Q. And when you got that phone call, what did you do?
5 A. I called the Boston courthouse. I told him I didn't
6 want to go forward with the Chapter 11 or Chapter 7, and I told
7 them to cancel it. I did get a letter from the courthouse.
8 They did -- they asked me if I was sure, and I said, yes, and
9 they did send me a letter, which I don't have anymore.
10 Q. After you cancelled the bankruptcy, did you talk to
11 Domonic McCarns?
12 A. Yes. Because then we met with a broker.
13 Unfortunately, I do not know his name. We met at a McDonald's,
14 and he had the paperwork with him.
15 Q. Now, was it a man?
16 A. It was a man, yes.
17 Q. Who set up that meeting between you and the man at
18 the McDonalds?
19 A. Mr. McCarns.
20 Q. Did you go to meeting?
21 A. Yes, me and my ex-husband did.
22 Q. When you were there, what happened?
23 A. He had all the paperwork that was needed to go
24 forward with the rental agreement and all that. It was just
25 like you would sign any other mortgage papers. The man was a

1 little bit edgy. He seemed a little bit kind of nervous to me,
2 but he just said sign here, sign here, sign here, and blindly I
3 just did that because I was under the impression that my name
4 would be on the deed, and he couldn't sell that house.
5 Q. Now, once you had signed those papers, did you get a
6 copy of them?
7 A. I did not, and I asked the man. I said, do you have
8 an extra copy for me? And he said -- he got really, really
9 nervous. He goes oh, no, no, no, no. And I'm like, well, I
10 would like a copy. And he said, well, I will -- you know, I'll
11 mail you a copy. He had my address and everything. And he
12 promised he would send something. He never did.
13 Q. Did you talk to anyone else about getting a copy of
14 the documents?
15 A. I asked Mr. McCarns.
16 Q. What did Mr. McCarns tell you?
17 A. That I would get a copy.
18 Q. Did you ever get a copy of the documents?
19 A. I did not.
20 Q. Once you had signed the documents at the McDonald's,
21 what happened next?
22 A. I had a really bad feeling about it, but at that
23 point I was just desperate to keep my house. I mean, I worked
24 hard. It was my dream home. And I just said good-bye, and the
25 man promised -- the broker promised to send me the paperwork,

1 and we went on our merry way.
2 Q. Now, at some point did you inquire about making your
3 payments?
4 A. I did. Because I -- when I had the $2,000, which is
5 what my rental payment was, and I was, like, who do I send this
6 to? I called Mr. McCarns several times, and he wasn't
7 responding to my calls, which I found odd. And then finally I
8 got an e-mail from a woman, which I deleted that e-mail. And
9 she had -- it was A-1 and P.O. box something. I can't remember
10 the number. And it was in Irvine, California.
11 Q. Did you start making payments?
12 A. I only made one payment because then I got behind
13 again.
14 Q. All right. Was there anything unusual about when you
15 got behind that you noticed?
16 A. Yes. I found it really odd that normally when you
17 get behind, one or two months behind, usually you get a notice,
18 a phone call or something. And I hadn't received that. I was
19 thinking this is kind of cool, you know. But I just found it
20 odd. And then I just -- I just -- I just found it really odd.
21 Q. Did you try calling Domonic McCarns about it?
22 A. Yes, I did.
23 Q. Were you able to reach Mr. McCarns?
24 A. No, sir, I was not.
25 Q. What did do you at this point?

1 A. Well, at this point it was about -- I was three
2 months behind, and I noticed like two months after I was behind
3 I noticed I was getting mail for an Armil Rucker.
4 Q. Did you know an Armil Rucker?
5 A. I had no clue, and I kind of asked my ex, do you know
6 this man? And he was, like, no. Well, why am I getting this
7 man's mail? Why is it being sent here? All of a sudden I
8 found it odd again. Something is not right. That flag went
9 off in my head.
10 Q. Did you go anywhere because of that?
11 A. I did go speak to an attorney, and he basically told
12 me that he did --
15 Q. BY MR. ANDERSON: You can't say what somebody out of
16 court told you.
17 A. I apologize.
18 Q. It's okay. Did you go to the registrar of deeds?
19 A. Yes, I did. And that is how I found out that Armil
20 Rucker was now on the deed alone, and my name and my husband's
21 name was not on the deed.
22 Q. Before that point, did you know that you weren't on
23 title to that house?
24 A. I thought I was up until I went to the registry of
25 deeds in Plymouth, Mass. Yes.

2 Government's Exhibit 18A1, 18A2, 18B, and 18C be admitted.
3 THE COURT: 18A2 is already in, as is 18B1 through 7,
4 so I think you're down to 18A1.
5 MR. ANDERSON: And 18C.
6 THE COURT: And 18C1. Mr. Tedmon?
12 MR. GREINER: The objection is variance, Judge.
13 THE COURT: All right. Overruled. 18A1 -- and that
14 applies to C1 as well?
16 MR. TEDMON: Yes.
17 THE COURT: So objection overruled. Those two
18 exhibits are in.
19 (Government Exhibit 18A1 and 18C1, (see index for
20 descriptions) admitted into evidence.)
21 Q. BY MR. ANDERSON: So let's pull up 18A1. Is that the
22 address of your house?
23 A. Yes, sir, it is.
24 Q. And if we go to the bottom right of that first page
25 of that document.

1 In August 2006, did you receive $71,956.81?
2 A. No, sir.
3 Q. Did you knowingly give permission to anyone else to
4 take $71,956.81 from the equity into your home?
5 A. No, sir.
6 Q. Let's go to Government's Exhibit 18C, and the page we
7 want is page three. 18C1, page three.
8 There are two signatures. One above a line that says
9 Scott Nowlin, one above a line that says Denise Nowlin. Do you
10 recognize those signatures?
11 A. That is my signature and my ex-husband's signature.
13 A. I believe that was the one I signed at McDonald's.
14 Q. When you signed this document, did you know that it
15 would be used to transfer your house completely out of your's
16 and your husband's name?
17 A. No, sir.
18 Q. Was your understanding of the transaction based on
19 your conversations with Domonic McCarns?
20 A. Yes, I put my full trust in him.
24 BY MR. GREINER:
25 Q. Thank you, Judge. Good afternoon.

2 Q. Make sure you speak up so that the court reporter can
3 take everything down. Been doing a good job.
4 A. I'm sorry.
5 Q. If I ask you a question you don't understand, ask me
6 to repeat it, rephrase it, and I'll be glad to. Okay?
7 A. All right.
8 Q. If I understand correctly, before you ever went to
9 the first real estate individual -- Mr. Garzas, is that right?
10 What was his name?
11 A. Gintas Garzas. He was my original mortgage.
12 Q. Before you went to him, you were already in some
13 financial difficulties, fair statement?
14 A. No. When I first went to Gintas, he got my original
15 mortgage, and then I got behind. And then that's when
16 Mr. McCarns contacted Gintas, and Gintas got me in touch with
17 Mr. McCarns.
18 Q. So what I want to talk about is I want to talk about
19 after you first purchased your house.
20 A. Yes.
21 Q. You have that in your mind?
22 A. Uh-huh.
23 Q. Now you need so say "yes" instead of "uh-huh."
24 A. Yes.
25 Q. After you first purchased your house --

1 A. Yes.
2 Q. -- until the second time that you talk to your
3 realtor, that's where you ran into some financial difficulties,
4 fair statement?
5 A. That is fair.
6 Q. And you came behind on your mortgage payment, fair
7 statement?
8 A. Fair.
9 Q. And about how many months?
10 A. Oh, geez, about six months.
11 Q. Got a notice of foreclosure from the bank, fair?
12 A. Fair.
13 Q. Okay. And did you get a notice of sale of deed also
14 from the mortgage company?
16 Q. Okay. But you couldn't keep up with the mortgage
17 payment, right?
18 A. Correct.
19 Q. And during this time period, this six-month time
20 period, did you go and talk to a bankruptcy lawyer?
21 A. Only at Mr. McCarns' insistence.
22 Q. I understand. We're going --
23 A. Okay.
24 Q. What I want to try to do is move a timeline, okay?

1 Q. All right. Did you go and talk to your realtor? I
2 think you're saying Mr. Garzas?
3 A. Yes, Mr. Garzas.
4 Q. Did you go and talk to your realtor in this six-month
5 period where you got the notice of foreclosure to try to see if
6 you could sell your house?
7 A. Not sell it, no. I wanted to save it.
8 Q. Okay. And you said you went, and he tried everything
9 he could to save your house, if I heard you correctly, is that
10 right?
11 A. You are correct, yes.
12 Q. Did he try to refinance your house?
13 A. I don't know what he did. I spoke with Mr. Garzas by
14 the phone. I've never met him personally. And I did my
15 business with him over the phone.
16 Q. But in that six-month's period when you're falling
17 farther and farther behind, there wasn't anything that
18 Mr. Garzas could do to help you out, was there?
19 A. There was not. You are correct.
20 Q. Okay. And so now an unfortunate period in your life,
21 but what we have to deal with, here you are, you're falling
22 farther and farther behind, and you can see that the house is
23 slipping away, right?
24 A. Yes.
25 Q. Okay. And did you try to -- you didn't try to sell

1 it. Did you try to find an investor to buy your house?
2 A. No.
3 Q. Did you try to call the bank to see if they would
4 reinstate your loan?
5 A. I did not.
6 Q. Did you call your bank to see if they would try to do
7 some sort of forbearance?
8 A. I did not.
9 Q. Did you try to ask family friends if they could help
10 you out?
11 A. I did not.
12 Q. Difficult situation. I'm not denying it. But I need
13 to ask the question, okay?
14 A. Uh-huh. I understand.
15 Q. All right. So now we're moving toward the end of the
16 cliff basically, fair statement?
17 A. Yes.
18 Q. All right. So you go to Mr. Garzas and you say,
19 something's got to happen because I don't want to lose my
20 house, right?
21 A. Yes.
22 Q. Let me stop the picture right there for a second.
23 Your understanding of going through foreclosure would be that
24 you would lose your house, fair?
25 A. Fair.

1 Q. And that you and your family are going to have to
2 move out and go someplace else, right?
3 A. Right.
4 Q. So you knew by not doing anything, you were going to
5 lose your house?
6 A. Well, I relied on Gintas Garzas because he advised
7 that he would do what he could to help me.
8 Q. I understand, and it was a bad question on my part.
9 It was a better answer.
10 If you didn't do anything, if you just let time go
11 by, falling farther and farther behind, you were going to lose
13 A. Yes.
14 Q. And so by going to Mr. Garzas, you were trying, as a
15 last ditch effort, to find something so you weren't going to
16 lose your house, right?
17 A. Yes.
18 Q. Unfortunately, you didn't have the financial means to
19 pay the bank any money, fair?
20 A. Fair.
21 Q. You didn't have any financial means to try to get a
22 forbearance or reinstatement, fair statement?
23 A. Fair.
24 Q. So when you went to Mr. Garzas the second time now,
25 okay, you bought your house, and now you're on the edge of the

1 cliff, you indicated that he tried, but he couldn't do anything
2 for you, right?
3 A. Yes.
4 Q. But you don't know what he did, is that fair, my
5 understanding?
6 A. I don't know -- yes, I don't know what he did to find
7 the means.
8 Q. Okay. Did you ask him at all what he was going to
9 try to do?
10 A. You know, I don't recall. I don't know if I asked
11 him or not. I don't remember. It was a while ago, so I don't
12 know.
13 Q. Okay. Fair enough. So it's at that time that he
14 said I want to give you a phone number, I want you to call
15 somebody, am I understanding so far?
16 A. No. Mr. Garzas told me that Mr. McCarns contacted
17 him, and he said -- Mr. McCarns had said that he can help
18 clients to save their homes that could possibly be going into
19 foreclosure. Mr. McCarns approached Mr. Garzas, and Mr. Garzas
20 thought that would -- obviously put his trust into Mr. McCarns,
21 and he referred me to him.
22 Q. All right. Was it Mr. McCarns that called you or did
23 you call Mr. McCarns?
24 A. I called Mr. McCarns at Mr. Garzas's request.
25 Q. Okay. Now, you've never met Mr. McCarns, true?

2 Q. Only dealt with an individual on the phone named
3 Domonic McCarns, fair?
4 A. That is fair.
5 Q. Okay. And sounds silly, but I got to ask. When
6 you're at this McDonald's, Domonic McCarns was not there,
7 right?
8 A. No, he was not.
9 Q. Now, when you had the conversation with the
10 individual named Domonic McCarns, he said that he worked for a
11 company, fair statement?
12 A. You know what, I don't recall. I don't know -- I
13 don't remember if he ever told me what company he worked for.
14 I just knew him as Domonic McCarns, and that's all I --
15 Q. Do you remember the name of Funding Foreclosures?
16 A. Yes, I do.
17 Q. Okay. And does that refresh your memory that that's
18 the company that Domonic McCarns worked for?
19 A. Yes, sir. Sorry.
20 Q. You don't have to be sorry. All right. So in the
21 initial telephone conversation with Domonic McCarns, he takes
22 some basic information, tries to find out what your situation
23 is, correct?
24 A. Yes.
25 Q. You tell him, look, I'm six months behind,

1 foreclosure, I'm going to lose my house, right?
2 A. Yes.
3 Q. And it's at that point that he says, well, we might
4 be able to help you out, we might have a program that would be
5 good?
6 A. He didn't say might. He said he could help me out
7 and that he would.
8 Q. That he could help you out and that he would?
9 A. Uh-huh.
10 Q. Yes?
11 A. Yes.
12 Q. And at that point in time then, when you got done
13 with the conversation, Domonic McCarns sent you some documents
14 to sign, true?
15 A. He never sent me any documents. The only documents I
16 signed was at the McDonald's with the broker that he sent over.
17 Q. Okay. So what you're telling the ladies and
18 gentlemen of the jury is you only had one signing of one
19 document -- or bad question -- you only had one time when you
20 signed documents?
21 A. Yes.
22 Q. Okay. All right. Let's take a look. If we can have
23 -- I'm sorry. And I don't think these have been admitted,
24 Judge, but they would be DM zero -- or that would be "O" --
25 DM-O1, and they go -1, -2, -3, -4, -5, -6, -7, -8, -9, -10,

1 -11, -12, -13.
2 THE COURT: All right. DM-O1 through -13.
5 MR. TEDMON: Subject to the variance argument on
6 certain documents, no objection.
9 THE COURT: All right. Overruled DM-O1 through
10 DM-O13 are admitted.
11 (Defendants' Exhibit DM-O1 through DM-O13, (See index
13 Q. BY MR. GREINER: If we could have on the screen
14 DM-O1, please. All right. Ma'am, do you see that document on
15 the screen?
16 A. Yes, I do.
17 Q. Okay. Do you recognize that document? I'll enlarge
18 it if you need to.
19 A. Please, if you can enlarge it for me.
20 Q. No problem. Do you recognize that document?
21 A. It looks familiar.
22 Q. Okay. It's entitled Equity Purchase Agreement,
23 correct?
24 A. Yes.
25 Q. Okay. And it says that on March 7, 2006, your former

1 husband and yourself are entering into a contract, and you're
2 referred to as the seller, do you see that?
3 A. I do, yes.
4 Q. And Funding Foreclosures -- and we covered that that
5 was the company that Mr. McCarns worked for, do you remember
6 that?
7 A. Uh-huh.
8 Q. Yes?
9 A. Yes. I'm sorry, yes.
10 Q. -- is referred to as the purchaser, correct?
11 A. Yes.
12 Q. Okay. Now, you had purchased your home before, you
13 got into financial difficulty, right?
14 A. Yes.
15 Q. And so you know the process of signing documents when
16 you buy a home, fair statement?
17 A. Yes.
18 Q. You go to a title company or an escrow company, and
19 you sign the documents, grant deeds, and all sorts of
20 documents, fair?
21 A. Fair.
22 Q. Okay. When you saw this document, did you have any
23 questions about it?
24 A. When I signed the paperwork at the McDonald's, when I
25 signed this, I did not read it. I did not look it over because

1 I was just -- I was just trying to save the house. And Domonic
2 told me to sign the paperwork and everything would be okay. I
3 didn't read it. I didn't have a lawyer. I should have.
4 But I just signed. I didn't even look them over. I
5 just went on with what Domonic McCarns had told me. To sign
6 the papers and everything would be all right.
7 Q. And one of the things that Domonic McCarns told you
8 is that he could have someone purchase your home to save you
9 from foreclosure, correct?
10 A. As an investor or trustee.
11 Q. Okay. Well, you understood that Domonic McCarns told
12 you that someone was going to purchase your home to save it
13 from foreclosure, right?
14 A. Yes.
15 Q. Okay. And you understood that by purchasing your
16 home, that meant that you were going to be selling your home,
17 correct?
18 A. That was -- no.
19 Q. Well, when somebody purchases something, wouldn't you
20 agree with me that they buy something?
21 A. I would agree with that, yes.
22 Q. Okay. And if somebody buys something, that means
23 somebody has to sell something to them, would you agree with
24 that statement?
25 A. Yes.

1 Q. Okay. So when Domonic McCarns told you that he could
2 have someone purchase your home to save it from foreclosure,
3 you knew that that meant you were going to have to sell your
4 home, fair?
5 I mean as hard as that is, you knew that had to be a
6 reality that was going to have to happen?
7 A. I wouldn't have signed the paperwork had I known it
8 was going to be totally sold. No, I would not.
9 Q. Okay. Well, you knew that when you were talking to
10 Domonic McCarns that you didn't have any options, the house was
11 going to be lost, fair?
12 A. If I did not sign, yeah, I would have lost the house.
13 Q. I'm not asking about signing. My question is, when
14 you talked to Domonic McCarns, you knew you were going to lose
15 your house if you didn't do something, fair?
16 A. Fair.
17 Q. And you knew that you didn't have the ability to keep
18 up the payments when you talked to Domonic McCarns, fair?
19 A. Yes. But he did say that the rent would be lower,
20 and I could pay rent for a year, and then he would sell the
21 house back to me.
22 Q. Okay. Well, first of all, you understand the term
23 rent?
24 A. Uh-huh.
25 Q. Yes?

1 A. Yes, sir.
2 Q. Rent means that you don't own something, and you're
3 renting it, fair?
5 THE WITNESS: Fair.
6 MR. ANDERSON: Objection. Calls for a legal
7 conclusion.
8 THE COURT: Overruled. This testimony is not a legal
9 opinion. It's lay testimony given by a lay person.
10 Mr. Greiner.
11 Q. BY MR. GREINER: All right. So by renting you knew
12 that you weren't owning your house, that you were renting it,
13 fair statement?
14 A. I thought I was still on the deed, which means I
15 would still have the house.
16 Q. But you knew from when you purchased your house at
17 the beginning that you couldn't be on the deed if you were
18 going to rent, fair?
19 A. No. I thought I was going to be on the deed.
20 Q. Well --
21 A. That's what he said. And had I known that I would
22 have sold the house, I would never have signed the paperwork,
23 and I probably would have lost the house due to foreclosure by
24 a bank.
25 Q. Do you remember talking to the Government on about

1 March 2nd, 2007?
2 A. Can you repeat the question, please?
3 Q. Absolutely. Do you remember talking by telephone to
4 the Government on about March 2nd, 2007?
5 A. To the Government as in who?
6 Q. How about an agent from the FBI, John Sommercamp?
7 A. Yes, sir.
8 Q. Do you remember telling Agent Sommercamp that Domonic
9 McCarns informed you that he could have someone purchase your
10 home to save you from foreclosure?
11 A. Yes.
12 Q. Do you remember telling Mr. Sommercamp that?
13 A. Yes, I do.
14 Q. So by telling Agent Sommercamp that, you knew that
15 somebody purchasing your home meant somebody had to sell your
16 home, fair?
17 A. Yes.
18 Q. If we could go to page two of DM-O, please. On the
19 left-hand side do you recognize your initials?
20 A. I do.
21 Q. And do you recognize your ex-husband's initials?
22 A. I do.
23 Q. If we could go to DM-O4, please.
24 THE COURT: DM-O and DM-O1 are essentially the same,
25 do I have that correct?

1 MR. GREINER: Correct, Judge. I meant the fourth
2 page of DM-O.
3 MR. ANDERSON: You mean DM-O1?
4 MR. GREINER: DM-O1, but it's page four.
5 MR. TEDMON: DM-O1, page four.
6 Q. BY MR. GREINER: Do you see your ex-husband's
7 signature?
8 A. I do.
9 Q. And you see your signature?
10 A. I do.
11 Q. And above that do you see, in all capital letters, in
12 bold, "lease back by seller"?
13 A. I do.
14 Q. And it says that "the purchaser and seller have
15 entered into an agreement whereby the seller will be leasing
16 the property from the purchaser for a term of 12 months," do
17 you see that?
18 A. Yes.
19 Q. And a monthly rental payment of $1,900, do you see
20 that?
21 A. Yes.
22 Q. And was that the rental payment that you had to pay?
23 A. I paid him $2,000.
24 Q. Okay. So you paid him a little more, correct?
25 A. Correct.

1 Q. If we could go to DM-O2, please. This document is
2 entitled Notice of Cancellation. Do you recall that document?
3 A. It's been a while, but I -- I don't remember seeing
4 this notice of cancellation.
5 Q. Let me try this. Let me enlarge the document for a
6 second.
7 A. Okay.
8 Q. Actually enlarge this for you.
9 A. I see the signatures.
10 Q. Okay. Do you see your ex-husband's signatures?
11 A. Yes.
12 Q. And you see your signatures, true?
13 A. Yes.
14 Q. If we could enlarge the document. Now, by, seeing
15 your signatures, does that refresh your recollection that
16 you've seen this document before?
17 A. I believe that was one of the documents that I
18 quickly signed at McDonald's.
19 Q. This was with this gentlemen that you can't remember
20 the name of, correct?
21 A. You are correct, yes.
22 Q. And you probably told us, but I'm trying to make sure
23 I'm clear on this.
24 A. Uh-huh.
25 Q. Was the gentleman at McDonald's, was that a notary?

1 A. No. He was a broker, I believe. It's been a while.
2 I don't remember, but I believe he was a broker. Domonic had
3 sent him with the paperwork and said that we needed to sign the
4 papers for all this to go through.
5 Q. Okay. Let me try this. Let me skip ahead real quick
6 and go to -- let me go to DM-O4, the front page. I want to
7 show you the front page of the document. Okay?
8 A. Yes.
9 Q. I just want to highlight that. We'll come back and
10 talk about this.
11 But this document is entitled Property Holding Trust
12 Agreement, do you see that?
13 A. I see it.
14 Q. Now, enlarge that and go to the last page of DM-O4.
15 All right. This is the last page of that property
16 holding trust agreement?
17 A. Uh-huh.
18 Q. Yes?
19 A. Yes.
20 Q. All right. And do you see that it's notarized by a
21 gentleman named Robert Horn, Jr., do you see that?
22 A. I see it yes.
23 Q. And March 8, 2006, do you see that?
24 A. I do.
25 Q. Does that refresh your recollection that the person

1 at the McDonald's was actually a notary?
2 A. Honestly, I don't recall. I really don't.
3 Q. Okay. If we could go to DM-O3, please. This
4 document is entitled Acknowledgement By Seller, do you see
5 that?
6 A. I see it, yes.
7 Q. And do you recognize -- is that your signature or
8 your initials?
9 A. Those were my initials.
10 Q. And those then to the right would be your
11 ex-husband's initials, true?
12 A. Correct. Yes.
13 Q. And do you recognize this as being one of the
14 documents that you signed at the McDonald's?
15 A. Possibly could be, yes.
16 Q. Okay. Is it because that acknowledgement by seller
17 kind of jogs a memory in your mind?
18 A. No, sir. I just signed the papers. I didn't look
19 them over. I didn't have a lawyer. I just signed them because
20 I wanted to save the home.
21 Q. Okay. And did you read this acknowledgement by
22 seller?
23 A. I did not.
24 Q. Okay. If we could enlarge, please. And do you see
25 at the end of each paragraph - two, three, four - that they

1 have initials?
2 A. Yes.
3 Q. Are these your initials?
4 A. Yes, sir.
5 Q. And are the other set of initials your husband's
6 initials? And if you want me to enlarge, I can.
7 A. No. Those are his initials.
8 Q. Okay. If we can go to page two, please. And then do
9 you see at the top of the page it says "seller's initials," do
10 you see that?
11 A. Yes, sir.
12 Q. And you've initialed it above where it says "seller's
13 initials," correct?
14 A. They are next to the seller initials, yes.
15 Q. And your husband's off to the right, correct? Your
16 ex-husband's initials are off to the right?
17 A. He's the left. I'm the right. I'm D-E-N.
18 Q. I'm sorry. Your husband's initials are on the side
19 where it says "sellers"?
20 A. Correct.
21 Q. And you're to the right?
22 A. Correct.
23 Q. All the way down that document?
24 A. Yes, sir.
25 Q. And then at the end of that document you see your

1 ex-husband's signature?
2 A. Yes, sir.
4 A. Yes.
5 Q. And the date is March 7, 2006, correct?
6 A. That's what it says.
7 Q. All right. Does that comport with what your memory
8 is about when you were signing documents in that McDonald's?
9 A. I don't recall the date I signed. I just know we met
10 at McDonald's, and we signed paperwork.
11 Q. Okay. We can take this down for a second. Let me
12 stop there for a half a minute. Because prior to signing these
13 documents, I need to cover something.
14 A. Uh-huh.
15 Q. If I recall your testimony with the Government, you
16 said that when you had a conversation with Domonic McCarns, he
17 suggested to you to go file bankruptcy, correct?
18 A. Correct. So he can find an investor or trustee.
19 Q. Okay. And you did go file bankruptcy in what you
20 call the Boston court, correct?
21 A. Yes.
22 Q. And do you recall when you filed the bankruptcy?
23 A. The date's very -- I'm sorry. I don't know.
24 Q. All I'm trying to do is -- we know that one document
25 said March 7th.

1 A. Uh-huh.
2 Q. So I'm seeing if that refreshes your memory, like, if
3 you did it in February, January or the end of 2005?
4 A. I wish I could give you an answer. I don't know. I
5 really don't know. I don't remember.
6 Q. Okay. And when Domonic McCarns said he needed time
7 to go find an investor --
8 A. Uh-huh.
9 Q. -- did Domonic McCarns explain to you the reason for
10 filing bankruptcy was to stay or stop the foreclosure process?
11 A. Yes, sir.
12 Q. Okay. And so by filing bankruptcy, then the bank had
13 to stop the foreclosure that was going on in your property,
14 correct?
16 Q. Well, you didn't have to move out of your house,
17 right?
18 A. No.
19 Q. And your house wasn't foreclosed upon, right?
20 A. Correct.
21 Q. And that's after you filed the bankruptcy, right?
22 A. Yes.
23 Q. Okay. And then did Domonic McCarns indicate to you,
24 by investor, by what he needed to find, did he say what that
25 was, an investor?

1 A. An investor or trustee to invest in the home, so that
2 I can rent and pay rent, and then they would sell it back to
3 me.
4 Q. Okay. So what he was trying to do was stop the
5 foreclosure by you filing bankruptcy?
6 MR. ANDERSON: Objection, Your Honor. She can't
7 testify what he was trying to do. She can only testify to what
8 was said.
9 MR. GREINER: That's true. I'll withdraw.
11 Q. BY MR. GREINER: So you filed bankruptcy and stopped
12 the foreclosure, allowing Mr. McCarns, from your understanding,
13 to find an investor, so that then the process could go forward,
14 correct?
15 A. Correct. That was before we signed papers, yes.
16 Q. Okay. And the process that was going to go forward,
17 your understanding, which you just told the ladies and
18 gentlemen of the jury, was that there was going to be an
19 investor to purchase your property so that you could rent it
20 back, fair?
21 A. Fair.
22 Q. All right. If we could go to DM-O4, please.
23 THE COURT: If we're going to start with another
24 exhibit, we might as well take our break for the day.
25 MR. GREINER: Whatever you want, Judge.

1 THE COURT: We're at 1:29 and a half, or something
2 like that. With that, let's do take our break for the
3 afternoon and evening. We'll start again tomorrow at 1:30, go
4 1:30 to 4:30 tomorrow and then again Thursday morning.
5 During this break, fairly lengthy break, please
6 remember my instructions. As always, don't do any research of
7 any kind, electronic or otherwise, don't begin to think about
8 the ultimate conclusion of the case, don't talk with anyone
9 about the case, including your fellow jurors, family and
10 friends. If anyone attempts to contact you in any way, please
11 let me know. You will receive everything you need to properly
12 decide the case here in this courtroom, and I will instruct you
13 at the end of the case.
14 So have a good rest of the day and morning, and we'll
15 see you at 1:30 tomorrow.
16 (Jury out.)
17 THE COURT: Now, you may step down. Please be back
18 in your seat at 1:30 tomorrow, ready to go. Please avoid any
19 contact with jurors.
20 You may be seated. Can we go straight to
21 Mr. Daffron? Do you need a break?
22 MR. TEDMON: Why don't we go straight to him.
23 THE COURT: All right. Let's bring him in.
24 While we're doing that, is there an issue with any
25 other witnesses? The Mattices? There are three witnesses with

1 the name Mattice.
2 MR. ANDERSON: I think we're only going to call two
3 of them at most, and this particular issue is not an issue.
4 They are all in good health or at least appear to be.
5 THE COURT: Anyone else the Government knows it will
6 not be calling at this point?
7 MR. ANDERSON: I can tell you we have a list that
8 we've pared down in the office. I would be happy to bring a
9 more certain list tomorrow.
10 THE COURT: All right. That would help in figuring
11 out where we are.
12 MR. ANDERSON: Part of it, we're trying to think of
13 the most efficient way. If there are witnesses we can call
14 that can cover the ground of two or three witnesses, we're
15 going to try and do that.
17 (Mr. Daffron enters the courtroom.)
18 THE COURT: Should we swear Mr. Daffron?
19 MR. ANDERSON: I think we ought to, Your Honor.
20 THE COURT: Let's go ahead and swear.
22 truth, and nothing but the truth, so help you God.

1 THE WITNESS: Thomas Robert Daffron, D-a-f-f-r-o-n.
2 And last name is Daffron, D-a-f-f-r-o-n.
3 THE COURT: Thomas Robert?
4 THE WITNESS: Yes, ma'am.
5 THE COURT: All right. Are you going to go first,
6 Mr. Anderson, or do you just wish to give the defense a chance
7 to voir dire?
8 MR. ANDERSON: Your Honor, I could ask a couple of
9 questions to tee it up, but I think there is mostly the
10 defense's issue.
11 THE COURT: We're outside the presence of jury, and
12 we're just going to ask you a few questions at this time.
13 Mr. Anderson.
14 THOMAS ROBERT DAFFRON,
19 BY MR. ANDERSON:
20 Q. Mr. Daffron, I understand you suffered a stroke not
21 too long ago?
22 A. Yes, sir.
23 Q. When was that?
24 A. Oh, Lord, August. I think it was in August.
25 Q. Does that to some degree affect your memory?

1 A. It might have a little bit.
2 Q. Now, do you understand what the general issues are in
3 the case, the trial that's going on here?
4 A. I would like to think I do.
5 Q. All right. Do you know that it involves a property,
6 a house that you and your wife used to own?
7 A. Yes, I do.
8 Q. Where was that house?
9 A. In West Chapel, Florida.
10 Q. Do you recall having conversations with anyone
11 regarding that house and entering into a transaction involving
12 that house?
13 A. Yes.
14 Q. Do you recall who you had those conversations with?
15 A. Well, there was a Carmine, and there was a -- I
16 remember his name was Carmine. I'm trying to remember his last
17 name. And then I believe the second guy I talked to was
18 Domonic. I'm not sure of his last name right now at the
19 moment. And that's about it.
20 There was a female that I talked to and came to my
21 house about signing some documents, but I'm not sure if there
22 was another person or not.
23 Q. Do you remember your conversations with Domonic?
24 A. Now?
25 Q. Yes.

1 A. Generally. I mean had a house that needed some
2 repairs, and that they were going to be able to help me in a
3 financial way to fix up my house, make it look better. But
4 part of the thing was the fact that after fixing up my house,
5 the house was going to go to them, and after a short period of
6 time, I would be able to get my house back, but they were going
7 to do some financial dealings to --
8 Q. We don't need the details right now. We're just
9 testing your memory to see if you remember that incident.
10 Do you feel that you have a memory of what happened
11 then?
12 A. Generally, yeah.
13 MR. ANDERSON: Your Honor, I'll turn it to defense
14 counsel, and if they want to ask questions.
15 THE COURT: Mr. Tedmon, any questions?
16 MR. TEDMON: Just a couple.
18 BY MR. TEDMON:
19 Q. Mr. Daffron, I just want to clarify a couple things.
20 The stroke you suffered you said was in August?
22 Q. That was this year?
23 A. Yes.
24 Q. Okay. And were you hospitalized for any period of
25 time?

1 A. Yes.
2 Q. How long was that?
3 A. A week, a little over a week at the hospital, and
4 then they transferred me to a rehab facility to help, you know,
5 increase my memory and physical abilities.
6 Q. Okay. And are you still continuing with that
7 therapy?
8 A. No.
9 Q. When did you complete it?
10 A. I don't remember exact time the last time they came.
11 After I was -- left the facility and came home.
12 Q. Okay.
13 A. They sent me a couple of I guess -- can't think of
14 the right word -- specialists to come to my house to make sure
15 that I could still talk, and walk, and all that.
16 Q. Okay.
17 A. And they did that like twice and --
18 Q. That was it?
19 A. Yeah.
20 Q. Okay. So once you finished with the hospital and you
21 were done with the formal therapy, you returned to your house,
22 and it sounds like you had a couple of specialty therapists
23 come to your house a couple of times?
24 A. Yeah. They were there pretty quick, and then they
25 were gone.

1 Q. Do you recall approximately when the last therapy
2 session in home was?
3 A. Oh, Lord.
4 Q. Approximately?
5 A. Now you got me because I don't remember the exact
6 date.
7 Q. Okay. Well, today is November 5th. Was it a month
8 ago, would you say, or more?
9 A. Maybe it would be -- I guess it would be about a
10 little over a month ago.
11 Q. Okay. Now, are you currently on any medications?
12 A. Well, I had some medications that I was taking at the
13 time to help me with my memory, but there's -- that's over. I
14 didn't -- that was a very short period of time, so I'm not
15 taking anything for that at the moment.
16 Q. Okay. So do you know what the medication was that
17 you were taking to help improve your memory? Do you recall
18 what it was?
19 A. No.
20 Q. All right.
21 A. I'm sorry. I don't.
22 Q. How long did you take it for?
23 A. A little over a month.
24 Q. Over a month?
25 A. Yeah.

1 Q. And as best you can recall, when did you stop taking
2 the medication to help with your memory?
3 A. About the beginning of November.
4 Q. So just a few days ago?
5 A. Yeah.
6 Q. Okay. Did they give you any different medication, or
7 are you completely off all medication for memory purposes?
8 A. Yes. I'm off.
9 Q. Are you taking any other medications?
10 A. I'm taking medications primarily for my heart, and
11 that's about it.
12 Q. Okay. Do any of those medications, in your view,
13 affect your ability to recall events?
14 A. I can still forget some things, but, generally
15 speaking, I would say, yes, I can remember.
16 Q. Okay. My question is -- I just want to make sure I'm
17 clear on this -- the medication you're taking for your heart
18 condition, does that affect your ability to remember anything
19 as far as you can tell?
20 A. The only time that I have trouble with the memory is
21 when I'm supposed to do housework, and then that affects
22 because I don't want my wife to know, but, generally, I can
23 remember.
24 Q. Okay. You just don't want to do the housework?
25 A. Right.

1 Q. Okay. That's not a loss of memory, though, right?
2 A. Well, she says it is.
3 Q. Okay. Fair enough. As far as the events that --
4 this is Mr. Anderson over here -- - these events took place in
5 2005?
6 A. Uh-huh.
7 Q. Okay. What I'm interested in finding out is in light
8 of your stroke and your recovery, can you explain to the Court
9 how that may affect your ability to recall things that took
10 place in 2005, if at all?
11 A. Well, generally, I'd say I'm -- I can remember
12 general items, general information, but maybe I'm not real
13 clear on certain things.
14 Q. Like details?
15 A. Yeah. Possibly.
16 Q. All right. And, again, I'm just asking your
17 assessment of yourself. Is part of the reason you can't recall
18 the details a product of having the stroke?
19 A. I don't think so. I just think I'm getting old, and
20 I'm not as clear as I used to be.
21 Q. Okay. And if I could, how old are you now?
22 A. I'm little over 60.
23 Q. Over 60?
24 A. Yeah. December I will be 61.
25 MR. TEDMON: I think that's all I have, Your Honor,

1 in terms of Mr. Daffron's condition.
2 THE COURT: Thank you, Mr. Daffron.
3 THE WITNESS: You're welcome.
5 MR. SAMUEL: Very short.
7 BY MR. SAMUEL:
8 Q. Comparing your mental state now to the past in 2005,
9 how would you characterize it to the Court? Better? Worse?
10 A. In some areas it might be a little bit worse, but,
11 generally speaking, I think I've retained about 80 to
12 90 percent.
13 Q. Of what? Your memory?
14 A. Yeah.
15 Q. And that's where the details come in that you say you
16 may not recall about these transactions?
17 A. Some of it I might not be clear on.
18 Q. Kind of hard to estimate the amount of memory you
19 lost if you don't have memory, isn't it?
20 A. Yeah, I would probably say that's probably a good
21 idea. Except for the housework. I still don't remember doing
22 that.
23 Q. That's like my wife and my hearing problem. Very
24 simple question. I suspect it's an easy answer for you.
25 You're not saying that this stroke was caused in any

1 fashion by the events that took place in 2005 with your house,
2 are you?
3 A. No. No.
4 Q. Didn't think so.
5 A. I still have to do housework, though.
7 THE COURT: Mr. Greiner, any questions?
10 BY MR. GREINER:
11 Q. Mr. Daffron, good afternoon.
12 With all due respect -- and I don't know you, so I
13 have to ask this question -- from listening to you, it appears
14 that your speech may be somewhat slurred. Is that from the
15 stroke?
16 A. I didn't notice that I had slurred speech, but if you
17 say I do, I'll take your word for it.
18 Q. Okay. Did the medical providers, did they tell you
19 what effect the stroke had on you?
20 A. Yes. They said when they -- when I was first noticed
21 in the hospital, they said that part of my problem was they
22 give me some medication to help with the speech improvement,
23 and I had a couple of speech therapists at the nursing home
24 that helped -- helped me -- supposedly help my speech, speak
25 correctly or better. And that was about -- that's about it.

1 Q. You indicated in some of the answers to your
2 questions to you that you were taking medication to improve
3 your memory?
4 A. Yes.
5 Q. Why did the medical providers want you to take that
6 type of medication?
7 A. Well, I guess after the stroke they want to make sure
8 that I had not lost any of it, and so they had given me some
9 medication to check or to improve any of my medical abilities,
10 and that's why it was a very short outcome.
11 THE COURT: Is that your phone, Mr. Daffron?
12 THE WITNESS: I thought I turned it off.
14 THE WITNESS: Part of that. See, that's part of the
15 memory. I forgot to turn it off.
16 THE COURT: Mr. Greiner, any further questions?
18 Q. BY MR. GREINER: Did the medical providers take you
19 through any tests of your memory?
20 A. No.
21 Q. Did the medical providers take you through any
22 cognitive tests?
23 A. Not that I remember. I don't think they did.
24 Q. And you don't recall the name of the memory
25 medication that you took?

1 A. No. No. Not off the top of my head I don't.
2 Q. Do you know why the medical providers had you stop
3 taking that medication?
4 A. Well, it was -- I think it was medication to help
5 check my cognitive abilities and my memory. And after trying
6 it for a short period of time, I think they came to the
7 conclusion that I was retaining my mental abilities. I was
8 getting them back. And they felt I didn't need it. So it was
9 like almost like a testing to see if I was, you know, mental
10 ability was there.
11 And after checking me out, they decided what I had
12 was the best I was going to get, so they said you didn't need
13 it anymore.
14 Q. Did the medical providers tell you what part of your
15 body the stroke hit?
16 A. It was primarily the right side, right side of my
17 body.
18 Q. And also the right side of your brain?
19 A. I'm not sure, because the way the brain works,
20 whether it was the right side of the brain that was affecting
21 the -- I mean, the left side of my brain affecting the right
22 side of my body, or exactly how that was working. It might
23 have been the right side, but I'm not sure.
24 Q. And in any event, did the medical providers tell you
25 that the stroke did have an effect on your brain?

1 A. Yeah. I think they might have said that there had
2 been a part -- an effect on my brain.
3 Q. And did the medical providers tell you that,
4 unfortunately, because of your stroke, that you wouldn't regain
5 whatever part of brain the stroke hit?
6 A. They said that it would be 100 recovery as far as the
7 cognitive use of my brain. It's just slow. And that after a
8 certain period of time, I would regain the physical abilities.
9 It just was going to be a slow process.
11 THE COURT: All right. Mr. Anderson, anything
12 further?
14 THE COURT: All right. May we allow Mr. Daffron to
15 step down at this time? Mr. Tedmon?
16 MR. TEDMON: Yes.
18 MR. SAMUEL: Yes.
19 THE COURT: You may step down, sir. Ms. Schultz will
20 assist if you need.
21 THE WITNESS: So I'm done?
22 THE COURT: For today.
23 THE WITNESS: You're done with me?
24 THE COURT: For today?
25 (Mr. Daffron exits courtroom.)

1 THE COURT: All right. Any comments, Mr. Anderson?
2 MR. ANDERSON: For the record, Mr. Daffron does
3 appear to have slurred speech, moving around using a walker.
4 But he was able to make the two steps up into the witness box
5 unassisted and back down again. Although, Ms. Schultz was
6 standing nearby.
7 He appeared to respond properly to the questions that
8 were asked, had a good understanding of his condition and what
9 was going on, and appears to have suffered some memory loss
10 over these eight years, but so have pretty much all of the
11 witnesses, so I don't think that's anything unusual.
13 MR. TEDMON: Well, his physical ability is obviously
14 limited at this point, but mentally he seemed cognitive as far
15 as his ability to understand questions and answer them.
16 My only concern is that, as Mr. Anderson has kind of
17 alluded to, there are some memory lapses, and I don't know
18 where those are going to show up. And so that would be my only
19 concern with Mr. Daffron.
21 MR. SAMUEL: Assuming that we're entitled to at least
22 question him, somewhat limited, as to his physical
23 disabilities, so the jurors can place it in context, I have no
24 further comment.

1 MR. GREINER: Couple of points, Judge.
2 Number one, the Government could pick either Thomas
3 Daffron or Teresa Daffron because they both interacted in this.
4 Although the Government has said Thomas Daffron had more
5 interaction.
6 It seems that his stroke did affect his brain because
7 he was taking memory loss medication for a period of time.
8 That would seem to suggest that his cognitive features have
9 been impaired. And with his cognitive features impaired, that
10 prevents me, representing Domonic McCarns, to fully
11 cross-examine him.
12 The fear is that when we start to get into documents
13 or start to get into the statement that he gave to law
14 enforcement back in 2006, that he's not going to recall, he's
15 not going to remember anything.
16 And based upon his speech, based upon his demeanor,
17 based upon his presentation to the jury, the fear is that the
18 culmination of all that is going to weigh on the sympathy
19 factor more than it's going to weigh upon what he actually
20 testifies to.
21 Because what he testifies to may be somewhat limited
22 and/or very limited except his presentation, which is a slurred
23 speech, is going to weigh heavily on the fact that the jurors
24 are going to see a witness that is tremendously more
25 sympathetic than any witness that's come to the stand to date.

1 Ms. Cardenas wasn't that way. Ms. Jones certainly
2 wasn't that way. Ms. Woods certainly was not that way. All
3 three of those witnesses were very live, very in your face,
4 especially toward me and my questioning.
5 THE COURT: Are you arguing he should be precluded
6 entirely?
7 MR. GREINER: I'm suggesting that that is what the
8 remedy is in this situation. I don't know where the middle
9 ground is because to have him testify to certain activities
10 then presents a Sixth Amendment problem of full
11 cross-examination.
12 So I don't see where there can be a limitation and/or
13 a mutual agreement that he can only testify to A, B or C.
14 THE COURT: Right. Understood. Any final comments,
15 Mr. Anderson?
16 MR. ANDERSON: It's like any witness. They can
17 cross-examine on his ability to recall, and this is an
18 additional ground for cross-examination.
19 And, obviously, we'd call Mrs. Daffron if we could.
20 And if defense counsel is willing to waive hearsay objections
21 to some of her statements, we'd be happy to pursue that route
22 instead. But I don't think that that's forthcoming.
23 THE COURT: Well, at this point, based on what I've
24 heard, I'm not going to preclude Mr. Daffron from testimony. I
25 mean, he did spell his last name twice.

1 So that there is some things. But, generally, he
2 does seem to be tracking, and responding, and understanding.
3 But if the parties can reach an agreement on Teresa Daffron
4 such that the Government would withdraw him as a witness, the
5 Court would entertain that.
6 But I'll stay alert to the testimony as it comes in,
7 and if we need to short-circuit his testimony, we can do that.
8 So we'll finish up, I assume, before the first break
9 -- well, we have only one break tomorrow. Finish up with
10 Ms. Nowlin and move on to a next witness. We'll review the
11 Government's witness list tomorrow.
12 And your homework is to meet and confer about F17,
13 F19 and 19-1, DM exhibits. Let me know if you have any
14 agreement on those exhibits.
15 Anything further today?
19 THE COURT: See you tomorrow. Time to go at
20 1:30 p.m.
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1 CERTIFICATION

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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 9
Defendants.
---oOo---
TRIAL PROCEEDINGS
WEDNESDAY, NOVEMBER 6, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
3 DENISE AHEARN
5
JEROME PEARLMAN
8 FURTHER REDIRECT EXAMINATION BY MR. MORRIS 1479
9 DEBORAH BROCKWAY
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23
24
25


3
4 between Jerome A. Pearlman, Jr. And Denise
L. Pearlman “Sellers”
5 13A3 Property Holding Trust Agreement dated
3/25/2006 between Purchaser to be
6 Determined
13A4 Wire Instructions and Authorization for
7 property at 1447 Westmore Place, Oceanside,
CA
Development Settlement Statement
9 Borrower: Michael E. Scallin
Seller: Deborah G. Brockway
10 12A2 Uniform Residential Loan Application in the
name of Michael E. Scallin for property at
11 4708 46th Avenue, Seattle, WA 98118
12A3 Copy of Washington Mutual check dated
12 3/23/2006 made payable to Alliance Title in
the amount of $47,000.00
13 12A4 Equity Purchase Agreement dated 7/5/2005
between Deborah Brockway “Seller” and
14 Funding Foreclosures.com “Purchase”
12A5 Grant Deed - Grantor: Deborah Brockway
15 Grantee: Funding Foreclosures.com re
property in King County, Washington
16 Signed 7/12/2005
12A6 Wire Instructions and Authorization re
17 property at 4708 46th Avenue, S. Seattle,
WA
18 12A7 Signature page reflecting “Date of Contract
Acceptance 07/05/2005” signed and dated by
19 Deborah Brockway on 7/12/2005
12C Statutory Warranty Deed recorded in King
20 County on 4/7/2008
12D1 Wire Original Information Report
21 Originator: Creative Loans LLC
12D2 Copies of checks
22 12D3 Copies of checks
23
24
25

1
3 DM-J1 Residential Lease After Sale Agreement 1449

dated March 28, 2006
4 DM-J9 Note Secured by Deed of Trust dated May 2, 1459
2006
5 DM-J10 Deed of Trust and Request for Notice of 1466
Default dated May 10, 2006
6 DM-J12 U.S. Department of Housing and Urban 1467
Development Settlement Statement dated
7 June 6, 2006
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2 WEDNESDAY, NOVEMBER 6, 2013
3 ---oOo---
4 (In camera session reported. Transcript sealed by
5 order of the Court.)
8 McCarns. This is on for jury trial, and today is day nine.
10 All parties are present.
11 I acknowledge receipt of Charles Head's second
12 amended exhibit list, Government's supplemental record
13 regarding cross-exam, and then additional exhibits from
14 Mr. Samuel on behalf of Mr. Budoff.
15 So my suggestion is we proceed straight to continued
16 presentation of evidence. Bring the witness in.
17 MR. ANDERSON: Agreed.
18 MR. GREINER: Yes, Your Honor. Judge, I did also
19 send to your clerk additional exhibits for Mr. McCarns.
20 THE COURT: All right. We had a pretty heavy
21 morning. Was that by e-mail?
22 MR. GREINER: Yes, Your Honor, e-mail attachment.
23 But if I could approach?
24 THE COURT: All right. You may.

1 THE COURT: All right. We're going to bring the jury
2 in.
3 (Jury in.)
5 court, ladies and gentlemen. We have an afternoon session
6 today. I understand that at least one of you have just asked
7 for clarification. Please know that you are free to stand and
8 stretch certainly between every change of witnesses. The Court
9 may be doing that a little bit more today. I feel your pain.
10 Sitting is hard. So anything to ease that, please take
11 advantage of that opportunity.
12 We're prepared to continue with the cross-examination
13 of Ms. Ahearn, formerly Ms. Nowlin.
14 Just so the Court has a sense, how much longer do you
15 have?
16 MR. GREINER: Judge, I sent some further exhibits to
17 counsel. And if I could approach your Clerk, I also have some
18 for the Court to make sure that you have them.
20 MR. GREINER: And the answer to the Court's question,
21 I've been trying to do a timeline instead of breaking it up
22 into sections, like I did before. So I'm trying to maximize
23 efficiency. So I'm hoping to speed right through. But I'm
24 sure the Court will let me know when I'm close.
25 THE COURT: I'll give you periodic reminders.

1 DENISE AHEARN,
6 BY MR. GREINER:
7 Q. Good afternoon. I'm going to call you Ms. Nowlin,
8 and I apologize, but that's how I knew you coming in here.
9 A. That's fine.
10 Q. My first question. Between yesterday and when you
11 got done testifying and today, did you talk to anybody about
12 your testimony?
13 A. I did not.
14 Q. Between yesterday and today, did you take a look at
15 any documents?
16 A. I did not.
17 Q. Okay. All right. So what I want to talk to you
18 about, I need to go back in the timeline a little bit. And I
19 apologize to you, but I want to go back.
20 You talked to the Government on direct about filing
21 the bankruptcy, do you remember about that?
22 A. Yes, sir.
23 Q. Okay. I want to talk to you a little bit about that.
24 A. Okay.
25 Q. And do you remember filing the bankruptcy in the

1 District of Massachusetts, the federal court?
2 A. Yes.
3 Q. And you filed it by yourself, correct?
4 A. I did.
5 Q. And your husband did not join you, did he?
6 A. He did not.
7 Q. And you found an attorney to file that for you,
8 correct?
9 A. I think I did it on my own. I don't think I got an
10 attorney. I don't recall.
11 Give me a moment, if you don't mind. I did not have
12 an attorney. No, I did not.
13 Q. So who is Richard D. Smeloff of Smeloff and Bennett?
14 A. Okay, yeah, I apologize. Yes, I did.
15 Q. And that was the attorney who you got to file your
16 bankruptcy, correct?
17 A. Yes, sir.
18 Q. And when you filed your bankruptcy, you had to fill
19 out certain portions of the bankruptcy document, true?
20 A. Yes.
21 Q. And you had to list your monthly income and your
22 husband's monthly income, right?
23 A. Yes.
24 Q. And at the time that you filled out your bankruptcy,
25 you had a full-time job, true?

1 A. Yes.
2 Q. And in fact, you had a full-time job for 13 years,
3 right?
4 A. Yes. With Verizon.
5 Q. At Verizon, correct?
6 A. Yes.
7 Q. And you were making about $4,443.16 a month, right?
8 A. Probably, yes.
9 Q. And your husband's income at the time was somewhere
10 around 1,700 and change, correct?
11 A. Correct.
12 Q. And in the initial petition for bankruptcy, you had
13 to file an estimate of your house value, do you remember that?
14 A. I'm not sure of the exact paperwork and what actually
15 had to be filed or what I needed. I'm not sure. I'm unsure.
16 Q. Okay. Well, you know that had you to meet with your
17 attorney?
18 A. Yes.
19 Q. He asked you a bunch of questions, right?
20 A. Yes.
21 Q. Do you have a recollection that the approximation
22 that you gave for the value your house was about 320,000?
23 A. Yes.
24 Q. Do you have an approximation that you gave a $240,000
25 mortgage on that house?

1 A. Yes.
2 Q. And then do you recall -- well, let me back up.
3 The purpose of you filing bankruptcy, bottom line,
4 was just to buy time, right?
5 A. Yes, sir. It was just to buy time until he could get
6 a trustee.
7 Q. That's all you were doing was buying time?
8 A. Yes, sir.
9 Q. Because you were on the edge of a cliff, and you were
10 falling, and you had to do something, right?
11 A. Yes.
12 Q. You didn't want to be uprooted from hour house?
13 A. I did not.
14 MR. ANDERSON: Objection. Asked and answered. We
15 went over all this last time.
16 THE COURT: Overruled. But can you move on without
17 repeating what we covered yesterday?
18 Q. BY MR. GREINER: And do you remember that your
19 attorney said that the bankruptcy trustee needed some more
20 information in the bankruptcy, do you remember that?
21 A. I'm sorry. I don't recall that.
22 Q. Does it refresh your memory that you needed to
23 provide evidence of the property value?
24 A. Probably sure, yes.
25 Q. And that you needed to provide evidence of your

1 income?
2 A. Yes.
3 Q. And evidence of a homestead on your house?
4 A. Yes.
5 Q. And as you moved through the -- and do you recall it
6 was a Chapter 13 not a Chapter 7?
7 A. I wasn't sure which one it was.
8 Q. If I represent to you it was a Chapter 13, you don't
9 have any reason to disagree with that, do you?
10 A. No, I wouldn't disagree.
11 Q. Okay. And your attorney filed -- do you recall your
12 filing a response, just to buy you some more time, asking for
13 those documents?
14 A. I'm sorry. Can you repeat that question?
15 Q. Do you recall that your bankruptcy attorney filed a
16 document with the court buying you more time?
17 A. Yes.
18 Q. To provide those documents to the trustee, right?
19 A. Yes.
20 Q. And do you recall that the court finally set a
21 hearing at the end of August?
22 A. That might be about right. I don't remember. It's
23 been a while.
24 Q. Okay. And then yesterday you had indicated that you
25 had called the court, and that you had asked the court to

1 withdraw your bankruptcy, but what happened was your attorney
2 actually filed a document with the bankruptcy court, right?
3 A. Yes, I totally forgot about Attorney Smeloff.
4 Q. And, finally, your bankruptcy got dismissed on
5 August 16, 2006, does that sound about right?
6 A. It sounds about right.
7 Q. Now, what we were talking about yesterday was you
8 signing documents in this -- as you call McDonald's, do you
9 remember that?
10 A. Yes.
11 Q. And these documents were signed on March 8th of 2006,
13 A. Again, I'm not sure of the dates because it's been
14 awhile, but I did sign documents at a McDonald's, yes.
15 Q. And if I understand correctly, you told the
16 Government and the ladies and gentlemen of the jury that you
17 only signed one set of documents, right?
18 A. What do you mean the Government? Who are you
19 referring to?
20 Q. Well, I'm referring to the attorneys that are sitting
21 back there. You met them right?
22 A. Yes.
23 Q. And they talked to you on direct examination, right?
24 A. Yes.
25 Q. And so when they were asking you questions, you told

1 the ladies and gentlemen of the jury that you'd only signed one
2 set of documents, do you remember that?
3 A. That I recall, yes.
4 Q. Okay. If we could have up on the screen -- and I
5 think it's been admitted Judge -- DM-O11, please.
6 THE COURT: It is in evidence, yes.
8 Q. BY MR. GREINER: And you see that document's entitled
9 Grant Deed?
10 A. Yes, I do.
11 Q. And you see a date of March 8, 2006, right?
12 A. Yes.
13 Q. And you see it says "sample document only, do not
14 sign," right?
15 A. Yes.
16 Q. If we could enlarge. None of your signatures,
17 correct?
18 A. Correct.
19 Q. And you see down below it has a notary dated
20 March 8th, correct?
21 A. Yes.
22 Q. If we could enlarge, please. And you see that the
23 notary's name is Robert Horne, Jr., do you see that?
24 A. Yes.
25 Q. And then if we could have on the screen DM-O12,

1 please.
2 THE COURT: Is that in the system? It is in evidence.
3 Q. BY MR. GREINER: And you see on this document, you
4 see your signature and your ex-husband's signature, correct?
5 A. Yes, I do.
6 Q. And you see that date as being March 17th --
7 A. Uh-huh.
8 Q. -- 2006, correct?
9 A. Yes, sir.
10 Q. Which would be, if my math is correct, about nine
11 days after the last document, correct?
12 A. Yes.
13 Q. Okay. If we could take that down. If we could have
14 -- and I believe this is in evidence, Judge. If not, I move it
15 in evidence. DM-O14, please.
16 THE COURT: Not yet in evidence.
17 Q. BY MR. GREINER: Okay. I would move it to be in
18 evidence.
19 MR. ANDERSON: Based on what?
20 THE COURT: Any objections?
21 MR. ANDERSON: I don't think it's covered by the
22 stipulation, Your Honor.
23 THE COURT: It's been provided as of today. So
24 unless the stipulation has been updated?
25 MR. ANDERSON: It hasn't. We just got these today.

1 THE COURT: Is there an objection?
2 MR. ANDERSON: No foundation.
3 THE COURT: All right. Well, it won't be shown to
4 the jury yet. You can ask questions about it.
5 MR. GREINER: May I approach?
7 Q. BY MR. GREINER: Do you see the document that I've
8 put in front of you, ma'am?
9 A. I do.
10 Q. And that's called an addendum, correct?
11 A. Yes.
12 Q. And you see a date down there?
13 A. Yes.
15 A. Yes, I do.
16 Q. And you see your ex-husband's signature, correct?
17 A. I do.
18 Q. And the date by your signature is what?
19 A. July 15th, '06.
20 Q. And that addendum is to extend the time for the
21 purchase of the house, correct?
23 Q. Okay. Because you were still in bankruptcy in July,
24 right?
25 A. Again, the dates I'm -- I'm still -- I'm not sure

1 about dates. It's been awhile.
2 Q. I understand. But we just covered the bankruptcy
3 documents, yes?
4 A. Yes.
5 Q. And the bankruptcy documents said that you were in
6 bankruptcy until about the middle of August, correct?
8 Q. And you knew that you couldn't sell your house while
9 you were in bankruptcy because there was a stay on, correct?
10 A. Correct.
11 Q. And so you had to have an extension of time pursuant
12 to the agreement that you entered into with Funding
13 Foreclosures to sell your house?
14 A. Well, I didn't willingly sell my house, correct.
15 Q. But you knew you were selling the house because
16 that's what you told the Government when you met with them on
17 March 2, 2007, correct?
18 A. I didn't willingly sell my house.
19 Q. I know you didn't want to, nobody wants to sell their
20 house, but you didn't have any options, did you?
21 MR. ANDERSON: Object, Your Honor. We went through
22 this line of questioning at great length yesterday.
23 MR. GREINER: I appreciate that, but the witness has
24 now backtracked, Judge.

1 Q. BY MR. GREINER: You didn't have any options, ma'am,
2 either the bank was going to take your house in foreclosure,
3 true?
4 A. True.
5 Q. Which meant that you had to uproot your family, your
6 daughter, your son, your husband and you, right?
7 A. Yes.
8 Q. And you didn't want to uproot your house, right?
9 A. Correct.
10 Q. You wanted to do everything you could do to save
11 that, correct?
12 A. Yes.
13 Q. And the only company that came forward to give you a
14 second chance to stay in your house and to try to give you an
15 opportunity to repurchase your house was Funding Foreclosures,
16 correct?
17 A. Correct.
18 MR. GREINER: May I approach, Judge?
20 THE WITNESS: If I may say something --
21 THE COURT: Wait for the next question.
22 MR. GREINER: If I may approach, Judge. Even though
23 this is not in the amended stipulation, it's DM-O15, and page
24 15-1 and 15-2. It's been misnumbered. There is no 15-3. If I
25 may approach?

2 Q. BY MR. GREINER: Do you see the title of that
3 document, Warranty Deed, ma'am?
4 A. Yes.
5 Q. And if you go to the final page, which is DM-O15-3,
6 do you see that?
7 A. Yes.
8 Q. You see your signature, correct?
9 A. I do.
10 Q. You see your ex-husband's signature, correct?
11 A. I do.
12 Q. And you see a date, correct?
13 A. Yes.
14 Q. What is that date?
15 A. August 8, 2006.
16 Q. And then you see the name of a notary, correct?
17 A. David Mack.
18 Q. David Mack. That's not the same notary that you had
19 back in March, was it?
20 A. No.
21 Q. And you know, from having purchased your house, that
22 a notary has to have identification to show who you are when
23 you sign and date a document, correct?
24 A. Yes.
25 Q. And by that document, you know that you're within

1 about eight days of the bankruptcy being lifted, correct?
2 A. Yes.
5 Q. BY MR. GREINER: May I approach and show the witness
6 DM-016, Judge?
7 A. You may.
8 Q. My first question is, have you ever seen that
9 document before?
10 A. To my knowledge, it might have been part of the
11 mortgage, when I signed the papers at McDonald's. It could
12 have been one of those papers. But this individual paper
13 doesn't look familiar to me.
14 Q. Well, can you see the date of that document?
15 A. Statement date, August 10, 2006.
16 Q. Okay. August 10, 2006, and this lists a payoff of
17 the mortgage on your house, correct?
18 A. Again, this looks like Chinese to me, so I -- I'm
19 assuming, yes.
20 Q. Well, I don't want you to assume.
21 A. Well, I don't understand what this paper is.
22 Q. So my question is, do you recognize that document?
23 A. Today -- no, I don't. I don't.
24 Q. Does it refresh your recollection --
25 MR. ANDERSON: Objection, Your Honor. Mr. Greiner's

1 going to try to get in this document, which there is no
2 foundation for, through his question.
3 THE COURT: Overruled. The question isn't complete
4 yet.
5 Q. BY MR. GREINER: Does it refresh your recollection,
6 looking at that document, what your mortgage payment in August
7 to pay off your mortgage was?
8 MR. ANDERSON: Your Honor, objection. Same
9 objection.
10 THE COURT: Well, that objection is sustained.
11 MR. ANDERSON: Ask to have the question stricken and
12 the jury instructed.
13 THE COURT: Well, the jury has already been
14 instructed that questions aren't evidence. So just keep in
15 mind. And again, I will provide you more detailed instructions
16 as to how to ultimately determine the facts of the case.
17 Q. BY MR. GREINER: Does looking at that document
18 refresh your recollection at all about your mortgage?
20 Q. You know that when you're in a bankruptcy, you're
21 behind on your mortgage payments, fair?
22 A. Yes.
23 Q. And you had no ability to catch up with those
24 mortgage payments, fair statement?
25 A. That is fair.

1 Q. And you know that on your bankruptcy documents you
2 said that your mortgage was estimated to be about 240,000, do
4 A. Yes.
5 Q. Okay. And you know that when you got down to the
6 August 8th time period, as you saw in that warranty deed, the
7 document before, you know that you had to sign documents that
8 were escrow closing documents, correct?
9 MR. ANDERSON: Objection, Your Honor. Facts not in
10 evidence, and it references documents that have not been
11 admitted.
13 Q. BY MR. GREINER: Well, on August 8th, when you were
14 getting ready to sell your property, you were in front of a
15 different notary than you were in March, fair statement?
16 MR. ANDERSON: Objection. Facts not in evidence.
18 able.
19 THE WITNESS: Can you repeat the question, please?
20 Q. BY MR. GREINER: Yes. We know in March you were in
21 front of Richard Horne, Jr., we saw that on the March 8th
22 document, correct, the notary?
23 A. Yes.
24 Q. And we know that in August you were in front of David
25 Mack, the notary, when you saw the warranty deed dated

1 August 8th, correct?
2 A. I'm -- I mean, I see what the papers say, but, again,
3 I don't recall. No.
4 Q. Well, you know that to sell your house that you had
5 to sign closing documents, correct?
6 A. That's correct, yes.
7 Q. And you know that because when you bought your house,
8 you had to sign closing documents, correct?
9 A. Correct.
10 Q. When you bought your house, you had to sign escrow
12 A. Yes.
13 Q. To let the escrow company know where the money was
14 going to go, correct?
15 A. Correct.
16 Q. So when you sold your house at this time, in August
17 and September of 2006, you know that you signed escrow
19 A. Correct.
20 Q. You know you signed escrow documents telling the
21 escrow company where to send the money, correct?
22 A. Yes.
23 Q. And part of the documents that you sent -- if I may
24 approach, Judge? This is DM-O13.
25 THE COURT: You may approach. Actually, 13 is in

1 evidence.
2 MR. GREINER: It is. Before we do that, can I take
3 the document away from the witness?
4 THE COURT: Yes. You want O-13 displayed?
5 MR. GREINER: Yes, please.
7 Q. BY MR. GREINER: And this is the wire instructions
8 and authorization that you signed on August 8, 2006, correct?
9 A. Yes.
10 Q. Giving the escrow company the authorization to wire
11 funds, correct?
12 A. Yes.
13 Q. And so when the Government asked you the question on
14 direct examination "did you ever authorize anybody to wire
15 funds," you did on August 8th, correct?
16 A. That's what the paper says.
17 Q. And that's your signature down on the right-hand
18 side, correct?
19 A. Yes, it is.
20 Q. And that's your ex-husband's signature on the
21 left-hand side?
22 A. Yes, it is.
23 Q. And it's notarized August 8th by a notary, correct?
24 A. That's what it shows.
25 Q. And it shows the same notary, David Mack, that we saw

1 on the other document, correct?
2 A. Correct.
3 Q. All right. So you're signing the closing documents,
4 the escrow documents, because that's how you abided by the
5 terms and conditions of the contract you entered into with
6 Funding Foreclosures, fair statement?
7 A. Fair.
8 Q. And then you knew that had you to pay 12 months of
9 rent, right?
10 A. Yes.
11 Q. You didn't get uprooted, you stayed in your house,
12 and you now had to pay $2,000 a month rent, correct?
13 A. Yes.
14 Q. All right. And unfortunately, not because of anybody
15 else's fault, but just the way life dealt you the cards,
16 unfortunately you fell behind, right?
17 A. Yes.
18 Q. You couldn't even make the payments that were less
19 than your original mortgage payments, could you?
20 A. Yes.
21 Q. And when you fell behind and you didn't make the rent
22 payments, you knew this was not a good situation all the way
23 around, was it?
24 A. Because nobody contacted me, and I never got any
25 notices saying, hey, you're behind. That's when I became

1 alerted. And then I was notified by the FBI that I had been a
2 victim of a crime.
3 Q. Well, I understand that. I would ask the last part
4 to be stricken as non-responsive to my question.
5 THE COURT: Denied.
6 Q. BY MR. GREINER: You know that you fell behind
7 because you and your husband couldn't make the payments,
8 correct?
9 A. Yes.
10 Q. Did you just stop making payments?
11 A. Yes.
12 Q. Okay. And you stopped making payments because the
13 Government told you to, right?
14 A. No.
15 Q. Okay. You stopped making payments because you
16 couldn't make the payments, fair?
17 A. I could not make the payments. That's why I got
18 behind.
19 Q. And by not making the payments, you knew you weren't
20 going to have that opportunity to repurchase your home, fair
21 statement?
22 A. I couldn't get in touch with anybody, so, yes, that
23 is a fair statement.
24 Q. And so there was no opportunity for you to abide by
25 the contract to have that opportunity, and so you knew the

1 house was going to be lost, fair?
2 A. I wasn't sure what was going on at that point.
3 Q. Well, you knew you were renting your house?
4 A. Yes.
5 Q. Fair statement?
6 A. Yes.
7 Q. All right. Now, Domonic McCarns didn't cause to you
8 miss those payments, did he?
9 A. He did not. No.
10 Q. And Domonic McCarns didn't cause your husband not to
11 be employed, fair?
12 A. That's fair.
13 Q. In fact, Domonic McCarns put you into a program that
14 gave you the second chance to live in your house, to pay rent,
15 to try to buy your property back, isn't that fair?
16 A. It's fair.
17 Q. Okay. Just one second, Judge.
18 A. May I have permission to get a drink of water?
19 Q. Absolutely. Certainly.
20 THE COURT: Were you wrapping up?
21 MR. GREINER: Yes. Just checking my notes to make
22 sure.
23 THE COURT: Understood.
25 MR. GREINER: Absolutely.

1 Just one second, Judge. Judge, I appreciate the
2 time. Ma'am, I appreciate it. I don't have any further
3 questions.
4 THE COURT: All right. Any further
5 cross-examination, Mr. Tedmon?
11 THE COURT: How much time do you estimate?
12 MR. ANDERSON: 20 minutes.
14 BY MR. ANDERSON:
15 Q. Let's start with DM-O11. Are those your initials
16 down on the bottom right of this document?
17 A. Yes.
18 Q. And you see where it's been stamped by a notary?
19 A. Yes.
20 Q. Robert M. Horne, Jr., Commonwealth of Massachusetts,
21 do you see that?
22 A. Yes, I do.
23 Q. Did you write that date March 8, 2006, the one that's
24 right here or here?
25 A. I did not.

1 Q. Okay. Now, let's go to DM-O13. Do you see this wire
2 authorization document?
3 A. I do.
4 Q. Okay. Do you see a stamp from a notary on it?
5 A. Can you make that a little bit bigger for me?
6 Q. So there is no notary stamp here?
7 A. There is not.
8 Q. And did you write this date August 8, 2006 on this
9 document, is that your handwriting?
10 A. That is not my handwriting.
11 Q. Do you know whose handwriting that is?
12 A. I have no idea. It says David Mack, but --
13 Q. Do you recognize the signature here on the line
14 Denise Nowlin?
15 A. That is me.
16 Q. When you signed this document, did you know that you
17 were giving authorization for all of the equity in your
18 property to be wired to another bank account?
19 A. No.
20 Q. Why not?
21 A. I was not told. I was just told to sign the papers
22 and everything would be okay.
23 Q. All right. I want to show you DM-O15. And it looks
24 like it's a three-page document, which Mr. Greiner has labeled
25 I guess page zero, page one and page three?

1 MR. GREINER: Correct, counsel. I made a mistake.
4 Q. BY MR. ANDERSON: Okay. Got that?
5 A. Yes, I do.
6 Q. And for comparison, let's pull up Government's
7 Exhibit 18C1, and we'll go to page three of that document.
8 So we're on page three of 18C1, and we're on the
9 third page, the final page of the defense exhibit that's in
10 front of you. Okay?
11 A. Okay.
12 Q. Do you recognize -- I'm talking about the defense
13 exhibit -- do you recognize the signature on that page, that's
14 on the Denise Nowlin line?
16 Q. All right. And the date that's written above it, do
17 you recognize that handwriting, August 8th?
18 A. That is not mine.
19 Q. Okay. And then I want you to compare that page to
20 page three of Government's 18C1, page three. Does that look
21 similar?
22 A. Bear with me a moment.
23 Q. Sure.
24 A. The only thing missing from this page is the stamp
25 from the Registry of Deeds from Plymouth County.

1 Q. The stamp that's on 18C1, page three?
2 A. Yes.
3 MR. ANDERSON: Okay. Your Honor, I'm going to ask
4 that that defense exhibit be admitted. That's DM-O15.
5 THE COURT: Any objection, Mr. Greiner?
6 MR. GREINER: As long as the entire section, the
7 other two pages come in, I have no objection, Judge.
8 MR. ANDERSON: Absolutely.
9 THE COURT: It is a three-page exhibit. And
10 Mr. Greiner indicated earlier he had misnumbered the pages, but
11 it's three pages. Any objection?
12 MR. TEDMON: Yes. Lack of foundation as to DM-O15,
13 15-1 and 15-3 as stickered. There is no foundation laid as to
14 that document.
15 THE COURT: I'll allow you to lay a bit more
16 foundation.
17 MR. TEDMON: On the DM document.
18 THE COURT: And you are joining?
19 MR. SAMUEL: Variance as well.
21 THE COURT: But foundation, sustained without
22 prejudice.
23 Q. BY MR. ANDERSON: Sure. Let's look at page one of
24 both 18C1 and -- I shouldn't say page one -- it's the first
25 page of the defense exhibit.

1 A. Okay.
2 Q. Okay. Do they both say "warranty deed" on them?
3 A. Yes.
4 Q. Do they appear to be similar in some respects but a
5 little bit different?
6 A. Oh, it definitely is. There's things missing from
7 this page than from this page.
8 Q. And if you look at the second page of the document,
9 the defense document, look at the second page of 18C1?
10 A. Uh-huh.
11 Q. Do those pages look similar?
12 A. Bear with me a moment. I want to compare. Can you
13 blow that up just a little bit for me?
14 Q. Sure. Would you like the top half or bottom half?
15 A. The top half. Okay.
16 Q. Now, are those similar documents?
17 A. Yes.
18 MR. ANDERSON: All right. Your Honor, I would ask
19 that the defense exhibit be admitted and allowed to be
20 published to the jury.
22 MR. TEDMON: Same objection, Your Honor. The fact
23 that she can observe that they are similar does not lay the
24 foundation as to where it came from, who prepared it, or what
25 it stands for.

1 THE COURT: That objection is sustained.
2 MR. ANDERSON: Well, it does bear her signature, Your
3 Honor, and there are some differences.
4 THE COURT: Well, you may lay a further foundation,
5 if you're able.
6 MR. ANDERSON: Okay. Your Honor, could we do it by
7 asking the Court to compare the two documents and approaching
8 at sidebar, and I can explain the theory of relevance.
9 THE COURT: Not right now. If you have no further
10 evidence to elicit here.
11 Q. BY MR. ANDERSON: Okay. Let me ask it this way.
12 When you signed the documents regarding your
13 property, what did you believe was going to happen as far as
14 ownership of the property?
15 A. I would still have ownership. It's just there would
16 be a trustee who I would, again, pay rent to. But the
17 ownership would still be mine.
18 Q. Now, when you look at page one of that defense
19 document --
20 A. Uh-huh.
21 Q. -- and let's go to page one of 18C1, is there a sales
22 price listed on the defense document?
24 point. We're asking questions about the content of a document
25 without any foundation for really even admitting it.

2 MR. ANDERSON: Your Honor, may we take it up at the
3 break?
4 THE COURT: We may.
5 Q. BY MR. ANDERSON: Okay. All right. Well, at the
6 time that you entered into this transaction --
7 A. Uh-huh.
8 Q. -- what had Domonic McCarns told you about what was
9 happening with your home?
10 A. He told me that as long as I signed the papers, and I
11 do everything that he tells me to do, that I would be able to
12 keep my home, my name would stay on the deed, and I could keep
13 my house and everything would be fine.
14 Q. And did that turn out to be true?
15 A. No. Until I got the notice from the FBI, and they
16 informed me that I had been a victim of a crime.
17 MR. TEDMON: Objection. It's a yes or no answer.
18 Move to strike anything after "no."
21 THE COURT: Motion is denied. But when you get a
22 question, just answer the question. Otherwise it's not clear
23 from the record what's going on.
25 Q. BY MR. ANDERSON: And Mr. Greiner --

1 THE COURT: Can you help police that?
2 MR. ANDERSON: I will try.
3 Q. BY MR. ANDERSON: When Mr. Greiner asked you some
4 yes-or-no questions, or asked you a series of questions, and he
5 was asking questions about you know that you sold your house,
6 you know that your equity was gone, was that your understanding
7 back when you signed the documents?
8 A. No.
9 Q. Was that your understanding back when you talked to
10 Domonic McCarns?
11 A. No.
13 THE COURT: Mr. Greiner. Brief recross.
15 BY MR. GREINER:
16 Q. If we could put up 18C1, please. Talked about this
17 document with the Government, correct?
18 A. Yes.
19 Q. Warranty deed, correct?
20 A. Yes.
21 Q. If we could go to page three, please. That's your
22 signature on the right-hand side?
23 A. It is.
24 Q. That's your ex-husband's signature on the right-hand
25 side?

1 A. He's on the left, yes.
2 Q. Left-hand side?
3 A. Uh-huh.
4 Q. If you can enlarge that, please. Shows a Plymouth
5 Deeds, and it shows a date of 10-23-06, do you see that?
6 A. I see it.
7 Q. That would be after your bankruptcy stay was lifted,
8 correct?
9 A. Yes.
10 Q. It we could enlarge, please. We could take that
11 document off.
12 What you told the Government on March 2, 2007 is that
13 McCarns informed you someone was going to purchase your home to
14 save you from foreclosure, right?
15 A. I'm sorry. Can you repeat the question. And when
16 you say "Government," who are you referring to?
17 Q. I'm referring to the Government. Mr. Anderson is a
18 Government attorney. Do you understand that?
19 A. Yes. I spoke to several Government people so.
20 Q. You spoke to FBI Special Agent John Sommercamp, do
22 A. Yes, I do.
23 Q. On the telephone, correct?
24 A. Yes.
25 Q. That was on March 2, 2007, correct?

1 A. I'm not sure of the date, but I do remember speaking
2 with Mr. Sommercamp, yes.
3 Q. And what you told Mr. Sommercamp was that McCarns
4 informed you that he could have someone purchase your home to
5 save you from foreclosure?
6 A. Yes.
7 Q. That's what you told the Government, correct?
8 A. Yes.
9 Q. And when I asked you during my conversation with you
10 if you signed escrow closing documents, and you said yes, the
11 only reason for you to sign escrow closing documents, you know,
12 is because you're selling your house, right?
13 A. Yes.
14 Q. There is no other reason for you to sign escrow
15 closing documents, are there?
16 A. No.
17 Q. And you did sign, in that case you did sign escrow
18 closing documents, true?
19 A. True.
21 THE COURT: All right. Anything, Mr. Tedmon?
25 THE COURT: Anything further, Mr. Anderson?

1 MR. ANDERSON: Your Honor, may we have a moment? No,
2 Your Honor.
4 MR. ANDERSON: Yes, she is.
5 THE COURT: Mr. Greiner, excused?
7 MR. TEDMON: Yes.
8 MR. SAMUEL: Yes.
9 THE COURT: You may step down. Just leave the
10 documents. All right. Government's next witness.
11 MR. MORRIS: The United States calls Jerry Pearlman.
16 THE CLERK: Thank you. You may be seated.
17 Please state your full name and spell your last name
18 for the record.
19 THE WITNESS: First name is Jerome, J-e-r-o-m-e.
20 Last name is Pearlman, P-e-a-r-l-m-a-n.
22 JEROME PEARLMAN,

2 BY MR. MORRIS:
3 Q. Ms. Pearlman, do you go by Jerome or Jerry now?
4 A. Jerry.
5 Q. Is your legal name still Jerome?
6 A. Yes, it is.
7 Q. And in the 2005 to 2006 timeframe, was that the name
8 that you were using?
9 A. Yes.
10 Q. Are you familiar with the address of 1447 Westmore
11 Place in Oceanside?
12 A. I am.
14 A. That was a house that my wife and I owned.
15 Q. And did you own it in the 2006 timeframe?
16 A. Yes.
17 Q. If I could ask you to think back to early 2006, did
18 you own the house at that time?
19 A. Yes.
20 Q. Okay. And were you becoming late on your payments on
21 the house?
22 A. Yes.
23 Q. How far behind were you?
24 A. I believe we were four months.
25 Q. Were you far enough behind that you were concerned

1 about foreclosure?
2 A. Yes.
3 Q. In that timeframe, did you have any contact with
4 somebody about trying to avoid foreclosure?
5 A. Yes.
6 Q. Okay. Can you describe how it is that you came to
7 have that contact with somebody?
8 A. Best of my recollection, we received a phone call, an
9 unsolicited phone call concerning help with mortgage arrears,
10 and we set up an appointment to have someone come out and talk
11 to us about it.
12 Q. Do you recall the names of anybody who was involved
13 in setting up that appointment?
14 A. No, I do not.
15 Q. Did somebody come to your house?
16 A. Yes.
17 Q. Okay. Before someone came to your house, did you
18 have one phone call or more than one phone call with somebody?
19 A. Just one.
21 describe what you said in that phone call?
22 A. What I said was that, yes, we are behind in our
23 mortgage payments and that we would like to check on a
24 solution, on a refinance or something involving -- so that we
25 could stay in the house and not go through a foreclosure.

1 Q. And the person that you spoke to, did they say
2 anything in response to that?
3 A. They said that they have a program that they would be
4 able to help us with.
5 Q. Okay. Do you recall any other details of the phone
6 conversation?
7 A. No, I do not, other than setting up an appointment.
8 Q. So then let's move to the appointment. Do you recall
9 approximately how long it was between the phone call and the
10 appointment?
11 A. Approximately two weeks. Ten days to two weeks.
12 Q. And I think you said this was an appointment at your
13 house?
14 A. Correct.
15 Q. And do you recall who came to your house, or, to the
16 best of your recollection, was it one person or more than one
17 person?
18 A. It was just a single person, and he went through the
19 program that they had.
20 Q. Okay. Well, let's talk about that. What was the
21 program as it was described to you by this person?
22 MR. SAMUEL: Your Honor, I'm going to object as to
23 the identity of the party. We don't know.
24 THE COURT: Sustained. But can you clarify that?
25 Q. BY MR. MORRIS: Do you know who this person was? As

1 you sit here today, do you recall who this person was?
2 A. No, I do not.
3 THE COURT: Well, so next question. Is there any
4 further foundation you can lay for relevance?
5 Q. BY MR. MORRIS: Well, let me ask you this. Do you
6 recall -- do you recall in the process of this program becoming
7 involved with a group?
8 MR. GREINER: Objection. Relevance. Foundation.
9 MR. MORRIS: Simply yes or no, Your Honor.
10 THE WITNESS: Can you repeat --
11 THE COURT: Overruled. You can answer that question,
12 if you're able.
13 THE WITNESS: Can you repeat the question?
14 Q. BY MR. MORRIS: Do you recall -- in the course of
15 this program, do you recall getting involved with a group or an
16 organization?
17 A. Just what was on the documentation.
18 Q. Okay. And do you recall what that group was named?
19 A. I believe it was Funding Foreclosures. I believe
20 that was on the documentation.
21 MR. MORRIS: Can we continue, Your Honor?
22 THE COURT: Well, ask the next question. That's one
23 way to continue.
24 Q. BY MR. MORRIS: Okay. And so back to this meeting
25 with the person that got you involved with the program that

1 eventually led to you Funding Foreclosures, what were the
2 details of the program that were pitched to you?
3 MR. GREINER: Objection. Relevance. Foundation.
4 THE COURT: Here's the issue, can you at all identify
5 a timeframe and --
6 Q. BY MR. MORRIS: I think we already covered early 2006
7 that we're talking about. Is that your testimony?
8 A. Correct.
9 Q. And the organization that you were involved with was
10 Funding Foreclosures?
11 A. Correct.
12 MR. MORRIS: I think we established a foundation,
13 Your Honor.
14 THE COURT: Well, I will let you ask a few more
15 questions, see where this is going.
16 Q. BY MR. MORRIS: What's your memory of the details of
17 the program as it was pitched to you?
18 MR. GREINER: Objection. Hearsay. Relevance.
19 Foundation.
20 THE COURT: Sustained as to questions to try to
21 identify who was involved on the other end of the phone.
22 MR. MORRIS: I think this is actually present at the
23 signing of the documents, Your Honor. We're not discussing the
24 phone call. I'm talking about when you signed documents.
25 THE COURT: Okay. Again, sustained as to foundation.

1 You may try to lay a further foundation.
2 Q. BY MR. MORRIS: On the basis of your conversation,
3 did you sign documents?
5 Foundation.
6 THE COURT: Sustained as to further questions to
7 narrow down who the person is.
9 Q. BY MR. MORRIS: To clarify the person who is at your
10 house, did this person identify themselves as being part of
11 this program?
12 MR. GREINER: Leading.
14 MR. GREINER: Relevance. Hearsay. Foundation.
15 THE COURT: Just background. You may answer that
16 question if you're able to.
17 THE WITNESS: Yes, they did.
18 Q. BY MR. MORRIS: And is this meeting that you're
19 talking about, is that -- when you had said Funding
20 Foreclosures earlier, is this the meeting that led you to get
21 involved with Funding Foreclosures?
23 Foundation.
24 THE COURT: Overruled. You may answer that if you're
25 able to.

1 THE WITNESS: Yes, it is.
2 Q. BY MR. MORRIS: Okay. So this meeting with the
3 person who got you into the program FundingForeclosures.com,
4 can you tell the jury what you said to this person?
6 Foundation.
7 MR. MORRIS: It's her statement, Your Honor. It's
8 not hearsay. It's relevant because of who the organization is.
9 It's relevant because she's established that she was present at
10 the meeting.
11 THE COURT: Are you getting into some documents here
12 pretty soon?
13 MR. MORRIS: We can.
14 THE COURT: Can you tell me the series of documents?
15 MR. MORRIS: The 13 series, Your Honor.
16 THE COURT: Why don't you go there next and see if
17 you can --
18 MR. MORRIS: The Government moves to admit 13A1, A2,
19 A3, A4.
20 THE COURT: All right. These are covered by the
21 stipulation. Any objection, Mr. Tedmon?
23 MR. SAMUEL: No.
25 MR. GREINER: Well, I know it's pursuant to the

1 stipulation, but we didn't have the advance warning on this
2 witness' testimony, so I'm going to object - hearsay,
3 foundation and relevance.
4 THE COURT: All right. Well, you may show the
5 exhibits to the witness.
6 MR. MORRIS: Bring up 13A2, please.
7 THE COURT: Not on the screen. I'm saying show it to
8 the witness. They aren't yet admitted.
9 So there's some binders behind you, and the
10 Government's I believe they are actually a dark blue. Look for
11 the series that would include 13. And if you can pull that out
12 and set that in front of you.
13 MR. TEDMON: Your Honor, could I ask a clarifying
14 question, since there is a series of documents. If this is
15 pursuant to the stipulation, I don't understand the inquiry.
16 THE COURT: You don't understand what?
17 MR. TEDMON: The inquiry. The objection.
18 THE COURT: Well, I'm the Court, and I've not let the
19 document in yet given some of the preliminary questions that
20 were being answered. So I'm allowing the Government to ask the
21 witness about certain documents, and then we'll go from there.
22 MR. TEDMON: All right.
23 Q. BY MR. MORRIS: On the first page of 13A2, do you see
24 names in the top paragraph?
25 A. I do.

1 Q. Is the name in the top paragraph your name?
2 A. It is.
3 Q. And the second name after that, do you recognize that
4 name?
5 A. I do.
6 Q. Whose name is that?
7 A. That's my wife.
8 Q. Moving down. After the second paragraph, there is an
9 address that starts 1447, do you recognize the address?
10 A. I do.
11 Q. And how do you recognize it?
12 A. That was the house that we owned.
13 Q. If you could turn to the fourth page of that same
14 exhibit. Do you recognize the signature?
15 A. I do.
17 A. It appears to be mine.
18 Q. Do you recognize the signature below your signature?
19 A. I do.
20 Q. And how do you recognize that signature?
21 A. It appears to be my wife's.
22 Q. If you can turn to the next page, page five. Do you
23 recognize the signatures on that page?
24 A. I do.
25 Q. And how do you recognize those signatures?

1 A. They appear to be mine and my wife's.
2 Q. Okay. Do you recall seeing this document before?
3 A. Vaguely.
4 Q. Okay. Do you recall the circumstances that led to
5 you signing the document?
6 A. After our meeting and we decided to go ahead and go
7 with Funding Foreclosures, a notary came over to have us sign
8 documents. And the documents were already marked at the
9 signature page. And all the notary did was flip to the
10 signature page and we signed. The only thing that I did was to
11 check to see if the names were spelled correctly.
12 Q. And on that first page, again, 13A2, the first page
13 of it, after your name and your wife's name, what is the name
14 of the other party to that agreement?
15 A. Funding Foreclosures --
16 Q. Okay.
17 A. -- .com.
18 Q. And if we could move to 13A3, please. Do you
20 A. I do.
21 Q. Okay. And the address in the first paragraph, do you
22 recognize that address?
23 A. I do.
24 Q. Okay. How do you recognize the address?
25 A. Once again, it's the house that we owned.

1 Q. Okay. And if you could turn to the final -- or
2 second to the last page, 13A3, page seven. Do you recognize
3 any of the signatures on that page?
4 A. I do.
5 Q. Which one do you recognize?
6 A. Mine and my wife's.
7 Q. And what's the printed name on the other two
8 signatures on that page?
9 A. Charles Head and Jack Corcoran.
10 Q. And if we could turn to 13A4, please. Do you
11 recognize any names or signatures on that page?
12 A. I do.
13 Q. Which signatures and names do you recognize?
15 Q. And where are those on the page?
16 A. About middle of the page.
17 Q. Okay. And the property address on the third line, do
18 you recognize that property address?
19 A. I do.
20 Q. How do you recognize the property address?
21 A. The house that we owned.
22 Q. If you could turn to the next page, please. Do you
23 recognize the property address on that page?
24 A. I do.
25 Q. Is that the same property?

1 A. It is.
2 Q. Okay. Do you recognize any signatures on that page?
3 A. I do.
4 Q. Okay. Which ones?
6 Q. And if you could go to 13A1, which is toward the
7 beginning of the binder. Do you recognize the name at the top
8 of that page?
9 A. I do.
10 Q. And which name is it you recognize?
11 A. If I'm on the correct page, it just says Pearlman, my
12 last name.
13 Q. And the phone numbers on that page, do you recognize
14 those phone numbers?
15 A. Yes. I had to think about the home number. It's
16 changed.
17 MR. MORRIS: Your Honor, I'll move to admit 13A1,
18 13A2, 13A3, 13A4.
19 MR. GREINER: Hearsay. Relevance. Foundation.
20 THE COURT: Any other objections?
23 THE COURT: Those objections are overruled. Those
24 exhibits come in. A1 through A4. 13A1 through 13A4.
25 (Government Exhibits 13A2, 13A3, 13A4, (See index for

1 descriptions) admitted into evidence. Government Exhibit 13A1
2 - objection later sustained.)
3 Q. BY MR. MORRIS: You said you recognized some of the
4 signatures on those documents.
5 Do you recall signing documents with respect to your
6 house in that timeframe?
7 A. I do.
8 Q. Can you relate why you signed documents related to
9 your house in that timeframe?
10 A. It was my understanding that Funding Foreclosures --
13 Q. BY MR. MORRIS: You can continue.
14 A. Thank you.
15 My understanding is that by going into this program,
16 that Funding Foreclosures would be the intermediary between us
17 and the bank. And then after, what we were told, approximately
18 18 months, that then they would assist us in being able to
19 procure a standard mortgage through one of the banks.
20 Q. Okay.
21 A. If we qualified.
22 Q. And so approximately how long was it that you
23 understood the program would take?
24 A. Eighteen months.
25 Q. Okay. During those 18 months, when you signed the

1 documents, did you have an understanding of whether or not you
2 would still be on title to your home?
3 A. My understanding is we were still on title.
4 Q. Okay. Why did have you that understanding?
5 A. That's what we were told.
8 Q. BY MR. MORRIS: Based on your understanding when you
9 signed the documents, what was supposed to happen at the end of
10 18 months?
11 A. At the end of 18 months, with the assistance of
12 Funding Foreclosures, they would assist us in procuring a
13 mortgage through, you know, a mortgage company that showed that
14 we were steady with our payments and everything.
15 Q. Did you ever say to somebody or ask the question of
16 whether or not this involved you selling your house?
18 Q. Did you have any conversation that involved the
19 question of whether or not this involved the sale of your
20 house?
22 Q. Did you decide to get involved in the program?
23 A. Yes.
24 Q. Did you get involved in it that same day or was there
25 some time passage that passed?

1 A. There was some time passage.
2 Q. And approximately how long?
3 A. It was about a week.
4 Q. And so after that week, what happened next?
5 A. I called the gentleman -- once again I do not recall
6 his name -- and let him know that we had decided that we would
7 go with the program. And we were told that the documents would
8 be prepared and that a notary would bring them out for
9 signature.
10 Q. Okay. And did you sign documents?
11 A. I did.
12 Q. Can you describe the process of signing those
13 documents, please?
14 A. The notary came with the documents, and they were --
15 they were pre-tabbed where our signatures were, and we just --
16 she flipped over, we signed, and she just watched our -- you
17 know, where we signed. And she had checked our ID, had us sign
18 into her notary book. And after everything was done, she said
19 that we would receive copies in the mail.
20 Q. Did you receive copies in the mail?
21 A. We did.
22 Q. Did the notary explain the documents to you?
23 A. She did not.
24 Q. Did you ask the notary questions about what the
25 documents meant?

1 A. No, I did not.
2 Q. How closely did you read the documents?
3 A. Honestly, not very closely. I just checked to see
4 that the property name, the address was correct, and our names
5 were spelled correctly.
6 Q. After you signed the documents, what's your next
7 recollection of the process?
8 A. We received our copies in the mail along with a
9 letter stating where we were to send our payments.
10 Q. Okay. Do you recall what part of the country those
11 payments were sent to?
12 A. Anaheim.
13 Q. Did you make those monthly payments?
14 A. I did.
15 Q. Do you recall approximately how much the payments
16 were?
17 A. Right around 2,000. I don't remember the exact. I
18 know it was 2,000 and some change.
19 Q. After you received the documents, and after you've
20 started mailing your monthly payments, what's your next memory
21 of the process?
22 A. The next memory of the process was receiving a letter
23 from the FBI.
24 Q. Did you receive any notification that the house was
25 going into foreclosure?

1 A. Not till after the letter from the FBI stating that
2 we may have been the victim of fraud.
4 THE COURT: Wait. When there is an objection, wait
5 for me to rule. Next question.
6 THE WITNESS: Sorry.
7 Q. BY MR. MORRIS: So after the phone call from the
8 FBI --
9 A. Letter.
10 Q. A letter. Okay.
11 Leaving aside that, talking about this foreclosure
12 part, did you become aware that the house was going into
13 foreclosure?
14 A. Yes.
15 Q. How did you become aware of that?
16 A. Got a letter from the bank.
17 Q. And who was it addressed to?
18 A. It was addressed to Jerome and Denise Pearlman, and
19 it also had Kerry Budoff's name on it.
20 Q. Did you recognize the name Kerry Budoff?
21 A. Yes. We were told that was the point person if we
22 ever -- if we had issues.
23 Q. Okay. In response to receiving that letter, did you
24 do anything?
25 A. Tried to contact Kerry Budoff.

1 Q. And what was the result of that?
2 A. The number that we had was actually a number to an
3 elderly woman living in Encinitas, California.
4 Q. When you signed the documents, did you have any
5 understanding about the equity in your house as to how --
6 rephrase. Bad question.
7 When you signed the documents, did you have any
8 understanding about whether signing the documents would have
9 any effect on the equity in your house?
10 A. No.
11 Q. Was the equity in your house ever discussed in the
12 time leading up to the signing of the documents?
14 Q. When you signed the documents, was your belief that
15 you would remain on title to the house important to you?
16 MR. SAMUEL: Leading.
19 Q. BY MR. MORRIS: Okay. And when you signed the
20 documents, was the fact that there had been no discussion of
21 equity important to you in deciding whether to sign the
22 documents?
24 THE COURT: Well, that is sustained.
25 Q. BY MR. MORRIS: What were the things that were

1 important to you when you decided to sign the documents?
2 A. That we would, one, stay -- be able to stay in the
3 house, that we maintained title to the house. Those were two
4 important things.
6 THE COURT: I actually would like to propose that we
7 take our break a little early. I want to check with the
8 attorneys on something before we go any further.
9 So during our break, which will be the 15-minute
10 break for the afternoon, please remember, as always, my
11 admonitions. Don't discuss the case amongst yourselves, no
12 homework of any kind, don't start to think about the case's
13 conclusion. We'll let you know when we're ready to go in about
14 15 minutes. Have a good break. Thank you.
15 (Jury out.)
17 step down, ma'am, but please be back in your seat in
18 15 minutes. Thank you.
19 I just wanted to clarify on the exhibits. Although
20 you covered A2, A3, A4, Mr. Morris, you then moved in A1
21 through A4 as had you previously. You did not cover A1 with
22 this witness.
23 MR. MORRIS: I think I did, Your Honor. I asked her
24 to clarify that her name is Pearlman, which is in the top left
25 corner, and I asked her to clarify that the phone numbers, both

1 phone numbers that she recognized, including one that she said
2 it took her a second to remember which one it was.
3 THE COURT: But did you not otherwise ask her if she
4 recognized the document or have her describe it.
5 MR. GREINER: And there is no way she can, Judge.
6 That's an internal document.
7 THE COURT: So as to Mr. Tedmon's -- this is on the
8 stipulated list, but there was the potential for other
9 objections.
10 Having gone back and checked the record on 13A1, I'm
11 prepared to sustain the objection to 13A1, but leave in 13A2 to
12 13A4, and wanted to clarify that before cross-examination.
13 MR. MORRIS: It is subject to the stipulation. I
14 think that means we're going to re-add all the custodian of
15 records onto our witness list.
16 THE COURT: You all can keep playing this game for as
17 long as this Court is here, but I'm just trying to do my job in
18 response to focused issues and objections.
19 And I'm telling you, based on the record, that at
20 this point 13A1 is not in.
21 MR. MORRIS: And just to be clear, Your Honor, the
22 basis -- which of the many objections you're sustaining as to
23 the foundation?
24 THE COURT: I'm sustaining lack of foundation as to
25 13A1.

1 MR. ANDERSON: Your Honor, that puts defense counsel
2 in breach of the stipulation is the problem.
3 THE COURT: Well, I didn't hear that it was a
4 stipulation that things would automatically come in. I heard
5 brief pause to hear if there were any objections.
6 MR. ANDERSON: But the stipulation covers foundation.
7 There were other objections possible for hearsay or relevance,
8 any other number of grounds but foundation was the stipulated
9 ground.
10 THE COURT: Was that part of your stipulation?
11 MR. TEDMON: Yes, it was.
12 MR. GREINER: It's hearsay, Judge, to this witness,
13 because it's an internal document to the company, and this
14 witness has never seen this document.
15 THE COURT: I think that's also a valid objection.
16 MR. GREINER: I mean, I understand it's part of the
17 stipulation. I'm not disagreeing that there is foundation.
18 I'm disagreeing that this witness could have this document put
19 in front of the jury because this witness has never seen the
20 document.
21 And it's going to be prejudicial because what the
22 Government wants to get in -- because they can't get it in
23 through this witness -- is they want to get in underwriter and
24 the letter Q.
25 THE COURT: I understand that. The hearsay is

1 sustained.
2 MR. MORRIS: Your Honor, the Government's response
3 would be it's a co-conspirator's statement. These are
4 statements made by members of the endeavor that were recorded
5 on these documents as part of the ongoing joint endeavor.
6 THE COURT: What supports that representation?
7 MR. MORRIS: Where it was found and Kou Yang's
8 testimony about how these were filled out by the loan
9 processing department. That in some cases she filled them out,
10 but in other cases it was the people who worked under her who
11 filled them out as they processed loans as part of conducting
12 the business of Head Financial Services and all of its
13 affiliated businesses.
14 THE COURT: Is this one of the documents she
15 testified to?
16 MR. MORRIS: She did not.
17 THE COURT: I don't think that's good enough, looking
18 at this document. At this point, no cross-examination based on
19 this document. That's my point.
20 On the Government's renewed -- or the supplemental
21 record regarding recross-examination of Yang and Wiley, is
22 there going to be any defense filing in response to that or can
23 the parties argue that tomorrow?
24 I wanted to clarify a couple of things. I think
25 there is a slight misstatement, unless the Government has

1 talked to Pretrial Services. The Court did not understand
2 Pretrial Services to say it would have lifted the restriction
3 on contact. It would have -- it would have notified Pretrial
4 Services in L.A., which is providing courtesy supervision. And
5 if the supervision were in this district, Pretrial Services
6 would have suspended supervision.
7 MR. MORRIS: I must have caught the second half of
8 that and not the first.
9 Our understanding was the pretrial folks in this
10 building, given that they now understand that they are
11 cooperating co-defendants, would not have objected to them then
12 being able to contact.
13 THE COURT: Based on what the Court described -- I
14 think the real question is, given the testimony provided from
15 the first trial, you know, did Mr. Wiley testify any
16 differently based on his interaction with Ms. Yang. And so
17 that's what the Court is focusing on at this point. Just so
18 you're clear.
19 MR. TEDMON: Do you want to have that hearing before
20 or after court tomorrow?
21 THE COURT: Well --
22 MR. TEDMON: Can we do it after? I don't think the
23 argument will take that long.
24 THE COURT: If we can do a very focused argument. I
25 think focused on that issue. Because they would not be called

1 until Tuesday.
2 MR. SAMUEL: We've identified Mr. Tedmon as the lead
3 on that, so hopefully it won't be too bad.
4 MR. MORRIS: If it's not obvious in the filing, Your
5 Honor, the Government is really concerned about what happens
6 after that testimony is allowed. I think there is a really big
7 problem with how we handle alternate juror number three if that
8 testimony happens. I think that is a minefield that we're
9 about to walk into.
10 THE COURT: I understand that concern. But I think
11 the new information, the reminder at least for Mr. Tedmon and
12 the Court, and perhaps other attorneys were also listening at
13 that point in time, but Mr. Wiley did previously testify. That
14 and the fact that he is a 404(b) witness. I think the argument
15 is properly focused there.
16 Any update on DM-F17 and 19?
17 MR. ANDERSON: No, Your Honor. I informed
18 Mr. Greiner that he could send us over proposed language to add
19 to the stipulation, which has been the process followed by all
20 defense counsel as they've added documents, and he hasn't
21 gotten around to it yet, but I assume he's going to do that
22 later if he wants it. Maybe he doesn't care anymore. I don't
23 know.
24 THE COURT: I'll stop asking. I know that's hanging
25 out there. All right. So ten minutes now.

1 (Break taken.)
2 THE COURT: Let's bring the jury back in. I
3 understand Mr. Greiner wants to make a motion. You can do it
4 at the end of the day.
5 MR. GREINER: That's fine. Just so the Court's aware
6 of it.
7 (Jury in.)
9 and gentlemen of the jury.
10 Just so you know, I did clarify with counsel during
11 the break. 13A2 through 13A4 is admitted. I did not admit
12 13A1. I revisited that with them. So just in case you're
13 keeping notes. But it affects what's subject to
14 cross-examination or displayed to you at least.
15 So with that clarification, you are concluded,
16 Mr. Morris?
25 BY MR. GREINER:

1 Q. Good afternoon.
3 Q. If you would keep your voice up and/or move that mic
4 just so the court reporter can make sure she gets everything
5 that's said. Okay?
6 A. Okay.
7 Q. All right. If I ask you a question that you don't
8 understand, just ask me to repeat, and I'll be glad to do it.
9 Okay?
10 A. Uh-huh.
11 Q. And make sure that all of your answers are audible.
12 The uh-huhs and shaking of the head, the court reporter can't
13 take that down. Fair enough?
14 A. Fair enough.
15 Q. Let me ask you some preliminary questions.
16 This Westmore Place, you actually purchased that
17 originally, is that fair?
18 A. Correct.
19 Q. And when you purchased it originally, you remember
20 going through the escrow document signing process, true?
21 A. Yes.
22 Q. And at that escrow signing document process, you
23 remember signing escrow instructions, true?
24 A. True.
25 Q. And you remember signing grant deeds, true?

1 A. True.
2 Q. You remember signing termite inspections, roof
3 inspections, down in Southern California earthquake, who knows
4 what inspections, right?
5 A. Yes.
6 Q. And at that escrow document signing process, the
7 documents were there, and the escrow officer described the
8 documents and what they purported to do, correct?
9 A. Correct.
10 Q. And that process took some period of time because of
11 all the signatures you had to do, correct?
12 A. Correct.
13 Q. And all of that was in writing because it was an
14 important event, true?
15 A. True.
16 Q. It was the purchase of a house, right?
17 A. Yes.
18 Q. Okay. So you purchased the 1447 Westmore Place, and
19 how long had you had that before you started getting into some
20 financial troubled waters?
21 A. About nine years.
22 Q. All right. So about nine years go by, and all of a
23 sudden you're starting to become late on your mortgage
24 payments, fair statement?
25 A. Yes.

1 Q. And because you were late, was it that you lost a job
2 or just other financial bills?
3 A. Other financial difficulties came up.
4 Q. Okay. When you first noticed that you were getting
5 into financial difficulties, did you look at options?
6 A. Yes.
7 Q. And did you look at filing bankruptcy?
8 A. Yes.
9 Q. And did you go talk to a bankruptcy lawyer?
10 A. Yes.
11 Q. And you decided not to file bankruptcy?
12 A. Correct.
13 Q. And that was your choice, true?
14 A. True.
15 Q. All right. Did you look at seeing if you could
16 contact your lender to see if there was a potential to do a
17 forbearance?
18 A. Yes, we did.
19 Q. And you understand what a forbearance is, true?
20 A. True.
21 Q. Forbearance is where you're going to pay a percentage
22 of the arrears, correct?
23 A. Correct.
24 Q. And then that gives the lending institution an
25 opportunity to re-evaluate, to see if they can re-negotiate the

1 loan with you, fair?
2 A. Yes.
3 Q. But it would re-negotiate it with a higher payment
4 for a period of time because there's still arrears that have to
5 be paid, right?
6 A. Correct.
7 Q. And that wasn't available to you, was it?
8 A. No, it was not.
9 Q. Did you try to refinance?
10 A. Yes, we did.
11 Q. Could you refinance?
12 A. No, we could not.
13 Q. So refinance wasn't in the picture.
14 Did you have available cash that you could reinstate
15 the loan to its original payment plan?
16 A. No.
17 Q. And you understand reinstatement, true?
18 A. True.
19 Q. Reinstatement, just so we're all on the same page,
20 means that you were going to pay a chunk of money to the bank
21 for all the payments you were behind to bring you up-to-date,
22 fair?
23 A. Correct.
24 Q. And that option wasn't available, was it?
25 A. No, it was not.

1 Q. Did you think about putting your house up for sale on
2 the market?
3 A. No.
4 Q. And why not?
5 A. Honestly, it didn't occur to us.
6 Q. Okay. Did you think about trying to find an investor
7 to help you out?
8 A. No, we did not.
9 Q. Why not?
10 A. I didn't realize that that was an option on the
11 table.
12 Q. All right. Now when you were looking at all these
13 options, time is going by, would I understand that correctly?
14 A. Yes.
15 Q. And as time is going by, you're falling further and
16 further behind on your mortgage payments, fair?
17 A. Yes.
18 Q. And then at some point in time you ultimately get a
19 notice of foreclosure from your lender, true?
20 A. No.
21 Q. Never get a notice of foreclosure?
22 A. Not until after notification from the FBI that there
23 had been some crimes.
24 Q. So after the FBI -- that's way down the timeline?
25 A. Correct.

1 Q. I want to stay in the present timeline okay. So how
2 many months did you say you thought you were behind?
3 A. I believe we were about four at the time that we were
4 contacted.
5 Q. Okay. So four months down the line, and you hadn't
6 received a notice of foreclosure from the bank?
7 A. No. Because we had been talking to the bank.
8 Q. And you were talking about forbearance?
9 A. Forbearance, some type of reinstatement, some type of
10 refinance, anything to do. And because we were talking to
11 them, they had sent us over to their section that helps people
12 that are behind.
13 Q. And you learned from that section that there just
14 wasn't help available, fair?
15 A. At that time, yes.
16 Q. And if you know, was part of that based upon your
17 credit history?
18 A. Yes.
19 Q. Okay. Based upon late payments?
20 A. Late payments, over-extensions.
21 Q. Okay. And credit score not exactly what the bank
22 wanted?
23 A. Right. They wanted it --
24 Q. Higher?
25 A. -- higher, but we had over-extended.

1 Q. All right. So when you're talking to the bank, you
2 understood what the term foreclosure meant, right?
3 A. Yes.
4 Q. And just so we're on the same page, foreclosure meant
5 that the game's over, right?
6 A. Correct.
7 Q. House is gone, you got to move, you're out, right?
8 A. Correct.
9 Q. And that's something that you wanted to try to avoid,
10 true?
11 A. True.
12 Q. You wanted not to be uprooted from your house?
13 A. True.
14 Q. Fair?
15 A. Yes.
16 Q. Okay. All right. So then you said, with your
17 discussion on direct examination, is that you got a phone call
18 and set up an appointment, do I have that in timeline?
19 A. Yes, you do.
20 Q. And then the appointment was set about, I think you
21 said, about two weeks after the phone call, is that fair?
22 A. About that time.
23 Q. Okay. One, two weeks, a period of time goes by,
24 right?
25 A. Correct.

1 Q. In that time period, were you still looking at
2 options?
3 A. Yes.
4 Q. All right. So you're still working because you know
5 that that foreclosure cliff is looming out there, right?
6 A. Yes.
7 Q. And then when you have the meeting, you said that
8 there were documents there, correct?
9 A. No.
10 Q. No. No documents at all?
11 A. No documents there at all.
12 Q. All right. Documents were sent to you after the
13 meeting?
14 A. No. Documents were sent after we signed them with
15 the notary.
16 Q. Okay. Bad question. Good answer. Let me try the
17 question again.
18 When you had the meeting, there were no documents to
19 sign, you just had a meeting, correct?
20 A. Correct.
21 Q. And then they set up a meeting with a notary, true?
22 A. Once we -- once we called -- the program was
23 explained to us, and once the program was explained to us, we
24 were given some time to think about it because we said, well,
25 we want to think about it and see if there's any other options.

1 Q. Let's stop right there for a second. Let's talk
2 about that. So the program is explained to you, and then the
3 person leaves your home, correct?
4 A. Correct.
5 Q. And you're given a period of time to think, fair?
6 A. Yes.
7 Q. Talk it over?
8 A. Yes.
9 Q. Did you talk it over with friends?
10 A. No.
11 Q. Family members?
12 A. Just my wife.
13 Q. Okay. So you had an ability to discuss and bat it
14 around and think all about it, right?
15 A. Correct.
16 Q. And how long was that time period?
17 A. From the meeting to the time we called to say, okay,
18 let's do it, was approximately a week.
19 Q. Okay. So about seven days of thinking and going over
20 in your mind what was going on, right?
21 A. Yes.
22 Q. In that week period, did you still pursue other
23 options?
24 A. Yes.
25 Q. All right. So with the bank?

1 A. With the bank, with looking to see if we could do
2 something with other lenders, you know, besides for ours. We
3 just didn't stop at, you know, dissolution.
4 Q. And correct me if I'm wrong, the reason you didn't
5 stop was because this was, at the time, the most important
6 decisions you were making, fair?
7 A. Yes.
8 Q. It was your house, right?
9 A. Correct.
10 Q. And you didn't want to be uprooted, fair?
11 A. Fair.
12 Q. And so while you're thinking about the other proposal
13 that was given to you, you're still talking to lenders and to
14 your mortgage company, right?
15 A. Yes.
16 Q. And they are still saying no dice, no game, it's over
17 with, you can't do it, right?
18 A. Correct.
19 Q. Nobody's giving you any options, are they?
20 A. Correct.
21 Q. The only options you know of in this seven-day period
22 are two. Foreclosure is one, right?
23 A. Uh-huh.
24 Q. Yes?
25 A. Yes.

1 Q. And foreclosure is where game's over, you're out of
2 the house, right?
3 A. Correct.
4 Q. And the only other option you have is what this
5 company Funding Foreclosures is presenting to you, fair?
6 A. Fair.
7 Q. And what Funding Foreclosures is presenting to you is
8 basically they are giving you a second chance that nobody else
9 is willing to do, fair?
10 A. Fair.
11 Q. And that second chance that they're willing to give
12 you is they're saying, look, you know what, you can stay in the
13 home so you don't have to be uprooted, right?
14 A. Yes.
15 Q. And you're going to sell your property with the
16 condition of being able to buy it back in 18 months, true?
17 A. I don't recall them saying anything about selling.
18 Q. Well, you knew after you got the documents and you
19 had a chance to look at them that it talked about seller and
20 purchaser, fair?
21 A. Fair.
22 Q. And you saw that the seller was you, right?
23 A. Yes.
24 Q. And that the purchaser on some of the documents was
25 Funding Foreclosures, true?

1 A. True.
2 Q. And you knew that you were going to be paying rent,
3 fair?
4 A. Yes.
5 Q. Because you weren't paying your mortgage to your
6 lender, were you?
7 A. No.
8 Q. You weren't sending the check to the same place you
9 had been sending it, were you?
10 A. No.
11 Q. So you knew that you were making rental payments
12 under this second-chance program to stay, with the option,
13 18 months down the road, to be able to buy back that house that
14 you want to keep, right?
15 A. That wasn't the way it was explained to me and I
16 understood it.
17 Q. Well, you understood it after you saw the documents,
18 didn't you?
19 A. Once again, when we signed the documents, all I did
20 was check to see if the address and my name and my wife's name
21 were correct. I really didn't get into reading the documents.
22 Q. And I heard that on direct examination. And it
23 occurred to me, I said this is the most important decision
24 you're making about not falling off the cliff, and yet you
25 didn't take time to read the documents before you signed them.

1 Is that what you're telling the jury?
2 A. Yes.
3 Q. All right. But you had the documents after you
4 signed them, true statement?
5 A. True.
6 Q. And you read them after you signed them, true
7 statement?
8 A. Yes.
9 Q. All right. So let's go over some of the documents
10 that you signed and see what's going on. Okay.
11 Let's turn to Government's 13A2, if we could, please.
12 This document has a title of Equity Purchase Agreement,
13 correct?
14 A. It does.
15 Q. And you read that document at some point in time,
16 didn't you?
17 A. Yes.
18 Q. And you understood that this document was saying that
19 you are entering into an agreement with Funding Foreclosures,
20 the company, true statement?
21 A. True.
22 Q. And this is happening in March, about March 25, 2006,
23 fair?
24 A. Yes.
25 Q. All right. And then I didn't highlight the entire

1 second paragraph, but we have enough of it there in bold and
2 capital letters. You saw it. It said "agreement to sell and
3 property description," right?
4 A. Yes.
5 Q. Now, if we could enlarge.
6 You know below that it has your property description,
7 you talked about that in your discussion on direct, right?
8 A. Yes.
9 Q. And when you read that it's agreement to sell and
10 property description, did you pick up the phone and say, hey,
11 wait a minute, you know, I don't want to sell, I can't do that,
12 I would rather go through foreclosure?
14 Q. Did you write a letter saying that?
16 Q. Did you try to go to any office and say, hey, I don't
17 want to sell, I'll just go through foreclosure?
19 Q. Okay. Then in the paragraph below, where it says
20 "consideration," in the agreement with Funding Foreclosures,
21 you agreed that you were going to get $5,000 at the sale of
22 your house, true?
24 Q. Well, that's what occurred, true?
25 A. Upon review of documents, yes.

1 Q. Well, not only review of documents, but you got a
2 check for 5,000, right?
3 A. I didn't recall receiving the check. Because, like I
4 said, it's been seven years, and I didn't recall. And upon
5 review of the documents and seeing that there was a check
6 issued, I will agree.
7 Q. You will agree that you did get a $5,000 check, fair?
8 A. Yes.
9 Q. If we would could take that down and go to page two
10 of 13A2, please.
11 Down at the bottom of the page do you recognize the
12 two initials?
13 A. I do.
14 Q. Okay. So you knew enough to, at least when you got
15 the document, at one point in time when you signed them, to go
16 down and initial down below on page two, fair?
17 A. We were instructed to initial there.
18 Q. And that's what you did, right?
19 A. Correct.
20 Q. And then if we can go to 13A2-4, please. And in
21 capital letters and bold it says "lease back by seller." At
22 some point in time you read that, correct?
23 A. Yes.
24 Q. And at some point in time, it told you that you
25 entered into an agreement where you were going to pay rent of

1 $2,700 a month for 12 months, correct?
2 A. Correct.
3 Q. And you never picked up the phone and said, whoa, I
4 can't do that, did you?
5 A. No.
6 Q. You never sent a letter to anybody saying wait a
7 minute, I can't do that either, right?
8 A. Correct.
9 Q. And you never tried to go to any office and say, hey,
10 you know what, I just can't do this, you didn't do that either,
11 right?
12 A. No.
13 Q. Because you knew the only other option you had was
14 the game-over option, right, the foreclosure?
15 A. Well, I knew that it was foreclosure, but that's not
16 why.
17 Q. There were no other options presented to you, fair?
18 A. Fair.
19 Q. All right. We can take that down, please.
20 If we could go to 13A2-16, please. Now this
21 document, you recognize signatures, correct?
22 A. Yes, I do.
23 Q. And this document, it's talking about your ability to
24 buy back your house at a pre-determined price, fair statement?
25 A. Fair statement.

1 Q. And that pre-determined price is $416,210, fair?
2 A. Yes.
3 Q. And at some point in time you read that, right?
4 A. Yes.
5 Q. If we can go to 13A2-5, please. You see this
6 document, it's entitled Addendum Number One, true?
7 A. True.
8 Q. And it's dated March 25, 2006, right, up in the top
9 -- sorry -- I'll enlarge it.
10 A. Okay.
11 Q. There you go. March 25, 2006?
12 A. Yes.
13 Q. If we could enlarge, please. And these four lines
14 convey to you, again, the pre-determined amount that you are
15 going to have an opportunity to buy back your house, fair
16 statement?
18 Q. And it says assuming financing is extended to you so
19 that can you buy back your house, right?
20 A. Yes.
21 Q. And again the purchase price, $416,210, true?
22 A. True.
23 Q. If we could go to Government's Exhibit 13A2-6. This
24 document is entitled Addendum to Equity Purchase Agreement,
25 correct?

1 A. Correct.
2 Q. We already talked about the equity purchase
3 agreement, remember that?
4 A. Yes.
5 Q. Okay. And we have a date of March 25, 2006, true?
6 A. True.
7 Q. We have the seller, and you recognize who that is,
8 right?
9 A. Yes.
10 Q. Okay. And we have purchaser, and you recognize who
11 that is, right?
12 A. Yes.
13 Q. Now, when you read that document, you did not say,
14 stop, I'm not selling my house, did you?
15 A. No.
16 Q. And you didn't call anybody and say, stop, I'm not
17 selling my house?
18 A. No.
19 Q. True? You didn't write a letter and say, stop, I'm
20 not selling my house, right?
21 A. Right.
22 Q. If we could enlarge. And again, this document's
23 talking about the equity purchase agreement, correct?
24 A. Correct.
25 Q. And it's talking about a lease agreement, correct?

1 A. Correct.
2 Q. And you understand a lease agreement means that you
3 don't own what you're leasing, fair?
4 A. Fair.
5 Q. If we could enlarge, please. And this paragraph, the
6 D1 paragraph, says that you must fully and completely perform
7 each and every term of the lease agreement, do you see that?
8 A. Yes.
9 Q. And at some point in time you read that, correct?
10 A. I believe I did.
11 Q. You believe you did?
12 A. Uh-huh.
13 MR. GREINER: Okay. We can take that down, please.
14 Judge, if I could admit DM-J1, please.
15 THE COURT: How much longer do you think you need?
16 MR. GREINER: I'm going through the documents in the
17 timeline quickly, Judge. Looks like I've got about maybe ten,
18 twelve more documents.
19 THE COURT: All right. DM-J1? Any objection,
20 Mr. Morris?
25 MR. SAMUEL: No.

1 THE COURT: DM-J1 is admitted. Is there a series you
2 want to admit, if we can do that now?
3 MR. GREINER: I think pursuant to my review, Judge,
4 that they are just duplicates, and so I don't need to duplicate
5 the exhibits that are in. There may be a couple at the end,
6 but I want to do a timeline so I don't lose my place.
7 (Defendants' Exhibit DM-J1, Residential Lease After
8 Sale Agreement dated March 28, 2006 admitted into evidence.)
9 Q. BY MR. GREINER: All right. If we can have the first
10 page of DM-J1 up, please. The document's entitled Residential
11 Lease After Sale Agreement, do you see that?
12 A. I do.
13 Q. And this says that this lease agreement is entered
14 into between the landlord, which is Nations Property
15 Management, do you see that?
16 A. Yes.
17 Q. And then "Jerome and Denise Pearlman hereinafter as
18 tenant," correct?
19 A. Correct.
20 Q. And you knew when you read that, that that meant that
21 you were renting your property because you had sold it to an
22 investor with the condition of being able to buy it back in
23 18 months, true?
24 A. By that document, yes.
25 Q. And when you read that document, you didn't call

1 anybody and say, hey, look, I can't sell my place, true?
2 A. No.
3 Q. And when you read that document, you didn't pick up
4 the phone and say I'm not selling, I can't do this, I'll just
5 go off the cliff of foreclosure, right?
6 A. Correct.
7 Q. If we can go to the third page of document. All in
8 capital letters, in bold, above your signature, you see that
9 it's talking about it's a binding contract, and you should read
10 and understand this, right?
11 A. Yes.
12 Q. And it's dated March 28, 2006, right?
13 A. Yes.
14 Q. And you recognize the two signatures, correct?
15 A. Correct.
16 Q. And then above Nations Property Management there is a
17 signature, but you don't know whose that is, fair?
18 A. Fair.
19 Q. But what you do know is that Nation's Property
20 Management was the landlord, correct?
21 A. Correct.
22 Q. If we could go to Government's Exhibit 13A2-8,
23 please. I'm sorry. 13A2-8, please.
24 Before I talk to you about this document, are the
25 documents we've been talking about documents that you went to

1 sign at an appointment with a notary?
2 A. No.
3 Q. These were documents that you signed and returned,
4 correct?
5 A. These are documents that were brought to the house by
6 the notary.
7 Q. And signed when the notary was there?
8 A. Correct.
9 Q. And if I remember your conversation on direct, you
10 said that there was very little, if any, discussion about the
11 documents, did I understand that?
12 A. Correct.
13 Q. There was nothing to prevent you from asking the
14 notary any questions, was there?
16 Q. In other words, you didn't start to ask the notary a
17 question about a document and the notary said, no, don't ask me
18 a question, that didn't happen, did it?
19 A. I believe there was one page, one signature that that
20 did happen on.
21 Q. Do you remember which one it was?
22 A. No.
23 Q. Other than that one page, did you try to ask the
24 notary any questions?
25 A. No.

1 Q. Did the notary prevent you from asking any questions?
2 A. No.
3 Q. This document is talking about a property holding
4 trust agreement, do you see that?
5 A. Yes.
6 Q. And it says it's entered into between a purchaser to
7 be determined later, do you see that?
8 A. Yes.
9 Q. And it's entered into with FFC Investments, do you
10 see that?
11 A. Yes.
12 Q. The Pearlmans. Of course, that's both of you, right?
13 A. Yes.
14 Q. And National (sic) Property Management, correct, as
15 the trustee?
16 A. Correct.
17 Q. And we can enlarge. And when you read that document,
18 you didn't hold up your hands and say, stop, I can't, I don't
19 want to sell my place, right?
20 A. No.
21 Q. Paragraph C says that you entered into this agreement
22 on March 25th, setting forth certain terms and conditions "upon
23 which the tenant" -- and when you read that, you knew that was
24 you, right, you were the tenant?
25 A. Yes.

1 Q. -- "may share in the equity of the property provided
2 certain conditions are met," and you knew that was true because
3 of the equity purchase agreement that you signed and the
4 residential lease agreement, right?
5 A. Yes.
6 Q. And if we could go to 13A2-14, please. I need to go
7 to 14 before 15. I know you talked about 14 with the
8 Government.
9 14, you talked with the Government, you recognized
10 signatures, correct?
11 A. Yes.
12 Q. And then on 15 you see it's dated March 28th by a
13 notary, correct?
14 A. Correct.
15 Q. And do you have a recollection that the notary was a
16 female?
17 A. Yes, she was.
18 MR. GREINER: Then, Judge, I would like to -- and I
19 apologize. I thought this -- I don't find it in the
20 Government's -- wait, I do. Never mind. Never mind.
21 If we can go to Government's Exhibit 13A2-17, please.
22 Document entitled Acknowledgement By Seller, right?
23 A. Yes.
24 Q. Do you recognize the initials? Can we enlarge,
25 please. My fault.

1 Do you recognize the initials that are above
2 "seller's initials"?
3 A. Yes.
4 Q. And those are yours, correct?
5 A. Correct. But I do not recall signing -- initialling
6 this.
7 Q. All right. Well, let's examine that for a minute.
8 Those are your initials?
9 A. Yes.
10 Q. They are not forgeries?
11 A. As far as can I tell.
12 Q. And you didn't give anybody authorization to sign for
13 you?
14 A. No.
15 Q. All right. Let's enlarge for a minute. Do you see
16 the other initials on that page?
17 A. Yes.
18 Q. Your initials, true?
19 A. True.
20 Q. Your wife's initials, true?
21 A. True.
22 Q. Not forgeries, are they?
23 A. Not as far as I can tell, no.
24 Q. Go to page two, please. Go all the way down just
25 where the initials are, do you see those?

1 A. Yes.
2 Q. Do you see your initials?
3 A. Yes.
4 Q. And you see your wife's initials?
5 A. Yes.
6 Q. They are true and accurate initials of you and your
7 wife, correct?
8 A. As far as I can tell.
9 Q. Not forgeries, are they?
11 Q. Down at the bottom of that page, you see above the
12 word "seller," do you see a signature?
13 A. Yes.
14 Q. And then you see a signature below that, correct?
15 A. Yes.
16 Q. And in fact, you see the date March 25th scratched
17 out to March 28th, correct?
18 A. Correct.
19 Q. Do you recognize that "28"?
20 A. No.
21 Q. Okay. But you do recognize the two signatures over
22 on the right-hand side?
23 A. Yes.
24 Q. And those are true and accurate signatures?

1 Q. They are not forgeries, are they?
3 Q. If we can enlarge and go back to page one, please.
4 At some point in time you read this document, true?
5 A. True.
6 Q. And when you read it, you knew that it said that you
7 acknowledge -- "the seller acknowledges that the purchaser has
8 not made any representations, promises, or verbal agreements
9 regarding the purchase of seller's residence that are not
10 contained within the equity purchase agreement," right?
11 A. That's -- yes, I read that.
12 Q. And when you read that, you understood the seller to
13 be you, true?
14 A. True.
16 When you read this document, you knew what it meant
17 when it said "seller acknowledges that seller's residence is
18 currently in foreclosure," right?
19 A. Yes.
20 Q. And that you've "exhausted all means to try to
21 resolve the foreclosure," right?
22 A. Yes.
23 Q. And you've told the ladies and gentlemen of the jury
24 that you had, right?
25 A. Yes.

1 Q. Okay. If we can enlarge, please.
2 When you read this document, you understood that the
3 equity purchase agreement was not a loan, true?
4 A. True.
5 Q. And was not a mortgage, true?
6 A. True.
7 Q. And you understood both of those terms, you knew what
8 a loan was, right?
9 A. Yes.
10 Q. In fact, do I understand correctly that at some point
11 in time on your property you actually took out a second loan
12 from an individual?
13 A. Yes.
14 Q. So you knew what it meant to loan money from private
15 people, correct?
16 A. Correct.
17 Q. And you knew what a mortgage was, right?
18 A. Yes.
20 If we can go to 13A2-19, please. This document's
21 entitled Affidavit of Deed, correct?
22 A. Correct.
23 Q. And you see that it was notarized again by the female
24 notary, true?
25 A. True.

1 Q. And the female notary is who came to your house,
2 right?
3 A. Yes.
4 Q. And you see that this document says that this
5 consideration is in the amount of $5,000, right?
6 A. Yes.
7 Q. Okay. Now, this female notary, as far as you knew
8 she didn't work for Funding Foreclosures, true?
9 A. True.
10 Q. She just worked for an independent notary company
11 somewhere in Southern California?
12 A. True.
13 Q. Did she show you identification or a business card?
14 A. She showed identification.
15 Q. That showed she was on her own, wasn't connected with
16 Funding Foreclosures at all, right?
17 A. No. The identification was that she was a notary.
18 Q. But it didn't say notary from Funding Foreclosures,
19 did it?
20 A. No. It just said that she was a registered notary.
21 Q. Okay. And she never told you at any time that she
22 worked for Funding Foreclosures, true?
23 A. Not that I can recall.
24 MR. GREINER: All right. If we could admit into
25 evidence, Judge, DM-J9, please.

6 MR. SAMUEL: No.
7 THE COURT: All right. DM-J9 is admitted.
8 (Defendants' Exhibit DM-J9, Note Secured by Deed of
9 Trust dated May 2, 2006 admitted into evidence.)
10 Q. BY MR. GREINER: If we could have that up on the
11 screen, please.
12 Now, this document we have briefly touched upon.
13 This is the document that evidences a $90,000 loan that you
14 took from an individual named Terri Flagge?
15 A. Yes.
16 Q. And you took that against your property, correct?
17 A. Correct.
18 Q. So not only did you have a mortgage to a lender that
19 you were making payments, true?
20 A. True.
21 Q. But you also had a loan of $90,000 on the property,
22 true?
23 A. True.
24 Q. And did you have to make monthly payments on that
25 loan?

1 A. Yes.
2 Q. And were you behind on that also?
3 A. No.
4 Q. That one you were current?
5 A. Yes.
6 Q. But this also was a balloon payment loan, wasn't it,
7 that had you to pay a balloon payment at some point in time?
8 A. I do not believe so.
9 Q. Okay. And the date of this is May 2nd, 2006, isn't
10 it?
11 A. Yes.
12 Q. Okay. If we could go to Government's Exhibit 13A4,
13 please.
14 Now, this document says wire instructions and
15 authorization, right?
16 A. Yes.
17 Q. And it's dated March 25, 2006, correct?
18 A. Correct.
19 Q. Now, based upon your prior knowledge when you went
20 through the escrow signing documents to purchase your house,
21 you knew that these wire instructions didn't list any escrow
22 number, fair?
23 A. Fair.
24 Q. Didn't have any escrow agent, fair?
25 A. Fair.

1 Q. So they weren't giving instructions to any escrow
2 agent to do anything, fair?
3 A. Correct.
4 Q. And if we could enlarge, please.
5 Although, we see that the signatures of the Pearlmans
6 are on there, correct?
7 A. Correct.
8 Q. Dated March 28, 2006, right?
9 A. Correct.
10 Q. And we see again it's the female notary, fair?
11 A. Yes.
12 Q. Okay. Now, from March until May of that year, time
13 passed and you still hadn't signed final documents to sell your
14 house, true statement?
15 A. True statement.
16 Q. And in that block of time that passed, were you still
17 trying to search for any other option?
18 A. Yes.
19 Q. Talking to the bank?
20 A. Yes.
21 Q. Seeing if you could refinance?
22 A. Yes.
23 Q. Reinstate?
24 A. Yes.
25 Q. Forbearance?

1 A. Yes.
2 Q. All those doors were closed, weren't they?
3 A. Yes, they were.
4 Q. And in fact, every door you tried to open and knocked
5 on, nothing was available to you, was it?
6 A. Correct.
7 Q. And so the only option you had, as you're approaching
8 May to sign your final documents, was to stay in this program,
9 correct?
10 A. Correct.
11 Q. Because that was the only way you were going to
12 remain in your house and not be uprooted, correct?
13 A. Correct.
14 Q. And you didn't call Funding Foreclosures any time
15 between March and May and say, I don't want to be in the
16 program?
18 Q. And you didn't try to back out of the program at all,
19 did you?
20 A. No.
21 Q. Then if we could go to Government's Exhibit 16A4-2,
22 please. That's not right. My error. My fault. Can't see.
23 13A4-2. 13A4-2, correct.
24 Okay. Now, these wire instructions and
25 authorization, they are dated May 16, 2006, right?

1 A. Correct.
2 Q. Almost two months from the time you entered into the
3 contract with Funding Foreclosures, correct?
4 A. Correct.
5 Q. And these wire instructions now list an escrow
6 number, true?
7 A. True.
8 Q. And you know, based upon your prior experience, that
9 that escrow number means now an escrow has been opened to sell
11 A. In retrospect, yes.
12 Q. Well, you knew it when you read the document,
13 correct?
14 A. Correct.
15 Q. And you knew it because the escrow officer is listed
16 as Ashley Rotellini, correct?
17 A. Correct.
18 Q. And you knew that escrow officer was going to be
19 handling the sale of your property, correct?
20 A. Correct.
21 Q. If we could enlarge, please. Yes. Perfect.
22 And you recognize your signature and your wife's
24 A. Yes.
25 Q. And they are true and accurate, right?

2 Q. They are not forgeries?
4 Q. And you notice the date, May 19th, is when the notary
5 put it down, correct?
6 A. Correct.
7 Q. And the notary now is a different notary, Robin
8 Wilson, correct?
9 A. Correct.
10 Q. That's not the first lady that was at your house,
11 right?
12 A. No.
13 Q. That's a different lady?
14 A. Yes.
15 Q. And if we can go to 13A5, please. And then three
16 days after signing your escrow instructions, we see this
17 document entitled Grant Deed, correct?
18 A. Correct.
19 Q. And you had seen a grant deed before based upon your
20 experience in buying your house, true?
21 A. True.
22 Q. And this grant deed said that you were selling your
23 house to a Kerry Budoff, correct?
24 A. Correct.
25 Q. Enlarge, please. And the date here in type is

1 May 12, 2006, right?
2 A. Correct.
3 Q. But the date of the notary is May 19, 2006, correct?
4 A. Correct.
5 Q. And that's Robin Wilson, correct?
6 A. Correct.
7 Q. The same notary of the wire instructions, correct?
8 A. Correct.
9 Q. And the different notary than in March, correct?
10 A. Correct.
11 Q. And you recognize your signatures over on the
12 right-hand side, correct?
13 A. I recognize my wife's, but I don't recognize mine.
14 Q. You don't think that's your signature at all?
15 A. That's not the way I make my Js on junior.
16 Q. So, do you think that's not your signature?
17 A. It possibly could not be.
18 Q. Could it possibly be your signature?
19 A. Yes.
20 Q. Is that your wife's signature?
21 A. Yes.
22 Q. That's not a forgery of your wife's signature, is it?
23 A. As far as I can tell, no.
24 Q. And you know, based upon your experience of buying
25 the house, that when you sign a document, you've got to present

1 identification to the notary showing who you are before signing
2 it, right?
3 A. Yes.
4 MR. GREINER: You can take that document off. And if
5 I could admit DM-J10, please. It is a five-page document --
6 actually, it's a six-page document.
11 MR. SAMUEL: No.
12 THE COURT: All right. DM-J10 is admitted.
13 (Defendants' Exhibit DM-J10, Deed of Trust and
14 Request for Notice of Default dated May 10, 2006 admitted into
15 evidence.)
16 Q. BY MR. GREINER: Now this document says deed of trust
17 and request for notice of default, correct?
18 A. Yes.
19 Q. And this is a notice of default from the individual
20 you borrowed money from, Terri Flagge, correct?
21 A. Correct.
22 Q. And you know at some point in time that individual
23 did file a notice of default, correct?
24 A. By this document, yes.
25 Q. Well, you received notice of this, didn't you?

1 A. I believe we did. I'm not sure.
2 MR. GREINER: Okay. Judge, without wasting time, I'm
3 going to admit DM-J12. If it's duplicate, we can take care of
4 that at a later time, but I'm going to admit DM-J12, a
5 five-page document.
11 MR. SAMUEL: No.
12 THE COURT: DM-J12 is admitted.
13 (Defendant's Exhibit DM-J12, U.S. Department of
14 Housing and Urban Development Settlement Statement dated June
15 6, 2006 admitted into evidence.)
16 Q. BY MR. GREINER: If we could have the first page up,
17 please.
18 Now this is a HUD closing document, and you've seen
19 that document before based upon your purchase of your house
20 earlier, correct?
21 A. Correct.
22 Q. All right. If we could enlarge, please. And you're
23 familiar that on the borrower's transaction side where it says
24 closing funds, $64,268, you knew that that's how much money the
25 borrower had to pay to get this sale to go through, correct?

1 A. Correct.
2 Q. And the borrower was not you, you were the seller,
3 correct?
4 A. Correct.
5 Q. If we could go to the fifth page of this document,
6 please. The fifth page. I think you just have to go page by
7 page. Thank you.
8 And you can see in that HUD-1, the closing -- I
9 apologize if it's Flagge or Flag, I apologize. But Terri
10 Flagge, he had to get paid off also, didn't he?
11 A. Yes.
12 Q. And his payment was 91,252, right?
13 A. Yes.
14 Q. And then if I heard you correctly in your discussion
15 on direct, you indicated then, after all the documents were
16 signed, the first set with the first notary that was the
17 contract with Funding Foreclosures to get you to the program,
18 with the first notary, signed those documents, correct?
19 A. Yes.
20 Q. The second set of documents, the escrow closing
21 documents that you signed selling your house with the condition
22 to be able to buy it back within 18 months with the second
23 notary, correct?
24 A. Correct.
25 Q. You started then to make rent payments, true?

1 A. True.
2 Q. And you made rent payments on a monthly basis, did I
3 understand that?
4 A. Yes.
5 Q. And at some point in time you stopped making the rent
6 payments, fair?
7 A. Fair.
8 Q. Okay. And you stopped making the rent payments not
9 because of anything that Funding Foreclosures did, fair, they
10 didn't tell you to stop, right?
11 A. Right.
12 Q. And nobody that -- nobody that had come to your house
13 told you to stop making the payments, true?
14 A. True.
15 Q. And nobody that you talked to on the phone told you
16 to stop making the payments, true?
17 A. True.
18 Q. You stopped making the payments because the FBI told
19 you to stop making the payments, right?
20 A. No.
21 Q. Well, isn't that what you told the ladies and
22 gentlemen of the jury?
23 A. We got a letter from the FBI, but they never said to
24 stop making payments.
25 Q. After you got the letter from the FBI, you stopped

1 making payments, true?
2 A. True.
3 Q. And once you stopped making payments, you knew that
4 you weren't fulfilling your obligation to have an opportunity
5 to buy back your house at the end of 18 months pursuant to the
6 contract you had entered into, fair?
7 A. Fair.
8 Q. And when you said on direct examination with
9 discussion that your house went into foreclosure, that's really
10 not what happened, because you were renting your house, true?
11 A. True.
12 Q. You never got a foreclosure on your credit rating,
13 true?
15 Q. Right. Because the house was in the investor's name,
16 true?
17 A. True.
18 Q. And if any foreclosure happened, it happened to the
19 investor, not to you, true?
20 A. True.
21 MR. GREINER: If I could have just one moment, Judge.
23 Q. BY MR. GREINER: All right. Let me just -- totally
24 change subjects.
25 I want to go back to when you're talking to your

1 lender and your understanding of foreclosure. That's where my
2 question is going to be. Okay?
3 A. Okay.
4 Q. All right. You knew that if the lender foreclosed on
5 your property -- okay, this is way before all this happens.
6 You're trying to work something out because you see the cliff
7 coming?
8 A. Yes.
9 Q. Do you have that in your mind? Okay.
10 When you're talking to your lender, you knew that if
11 foreclosure was to happen that whatever, quote, equity, quote,
12 was in your house, you were going to totally lose all that if
13 they foreclosed on it, correct?
14 A. Correct.
15 Q. All right. Now, you also knew the only way you could
16 ever determine if you ever had any equity in your property was
17 by selling it, true?
18 A. True.
20 THE COURT: All right. Any other cross-exam?
22 MR. SAMUEL: No.
25 THE COURT: How much time do you estimate you need?

1 MR. MORRIS: I would hope five to ten minutes, Your
2 Honor.
4 BY MR. MORRIS:
5 Q. All those documents you looked at, when you signed
6 those documents, did you think you were selling your home?
7 MR. SAMUEL: Compound.
9 THE WITNESS: No.
10 Q. BY MR. MORRIS: What did you think you were doing
11 when you signed those documents?
12 A. Entering into an agreement to go through an
13 intermediary, give them the payments, and they would send them
14 on to the bank.
15 Q. When did you learn that you had sold your house?
16 A. Upon receipt of a letter from the FBI.
17 Q. The payments that you were making, where were you
18 sending those payments?
19 A. To Anaheim, best of my recollection. I don't have --
20 I don't recall the actual address.
21 Q. Do you recall who it was that you were sending the
22 payments to?
23 A. No, I do not.
24 Q. Can you bring up 13A5, please.
25 This is a document that you talked about with

1 Mr. Greiner. What's the date of this document?
2 A. May 12, 2006.
3 Q. You can zoom back out. And this is the document,
4 which you were talking with Mr. Greiner, that this is the grant
5 deed?
6 A. Yes.
7 Q. Okay. Go to 13A2, page 19, please. And do you
8 recall talking with Mr. Greiner about this document entitled
9 Affidavit of Deed?
10 A. Yes.
11 Q. What's the date on this document?
12 A. 28, March, 2006.
13 Q. Take it down. Bring me up DM-J9, please. And this
14 is a document you were talking about with Mr. Greiner. What's
15 the date on this document?
16 A. May 2, 2006, I believe.
17 Q. And this is the private loan that you had taken out
18 on your property?
19 A. Yes.
20 Q. And so when Mr. Greiner was asking you about whether
21 or not you had options to take out private lenders in that
22 March timeframe, how was it that you got this loan taken out
23 two months later?
24 A. I was able to -- we were able to find someone that we
25 were able to get this loan with.

1 Q. Take that down. Just a moment, Your Honor. If we
2 could bring up DM-J12, please.
3 This is a document you were discussing with
4 Mr. Greiner?
5 A. Yes.
6 Q. Do you see here where it says "name of seller"?
7 A. Yes.
8 Q. And is that you and your wife?
9 A. Yes.
10 Q. And name of lender, Argent Mortgage Company, have you
11 ever heard of them before?
12 A. No.
13 Q. Did you ever send a monthly payment to Argent
14 Mortgage Company?
16 Q. Now, I want you to think back to this date of around
17 June 5th, 2006.
18 On June 5th, 2006, did you receive $203,076.95?
19 A. No.
21 THE COURT: Any further recross, Mr. Greiner?
22 MR. GREINER: Just on what the Government asked,
23 Judge.
25 BY MR. GREINER:

1 Q. If we can put up DM-J9, please.
2 Do you see below, "note secured by deed of trust," do
3 you see that?
4 A. Yes.
5 Q. Read that into the record?
6 A. (Reading:) Notice to borrower, the terms of this
7 note may contain provisions that allow for a balloon payment at
8 maturity.
9 Q. What's your understanding of a balloon payment?
10 A. It's a large payment at the end of a contract.
11 Q. Okay. So let's go to DM-J12, please.
12 And if we could go to the last page, which is page
13 five. This is last page of the HUD-1, do you remember that?
14 A. Yes.
15 Q. And you know what a HUD-1 is because you bought your
16 house previously, right?
17 A. Yes.
18 Q. And you see that Terri Flagge is being paid off in
19 your HUD-1, correct?
20 A. Yes.
21 Q. And he's not being paid off $50,000, is he?
22 A. No.
23 Q. Or $60,000?
24 A. No.
25 Q. Or even $85,000, is he?

1 A. No.
2 Q. He's being paid off $91,252.74, correct?
3 A. Correct.
4 Q. Which is more than the loan amount that you took out
5 with him, correct?
6 A. Correct.
7 Q. So when you took out the loan of $90,000 from Terri
8 Flagge, you didn't make any payments to him, did you?
9 A. That's not true. I did make payments.
10 Q. Well, the HUD-1 said you paid him $91,000, right?
11 A. I see that.
12 Q. And it says principal balance of $90,000, do you see
13 that?
14 A. Yes.
15 Q. And are you saying that the HUD-1 is incorrect?
16 A. Yes.
17 Q. And so when you saw that, did you say to HUD, hey,
18 look, that's incorrect, don't send that money to him?
19 A. No.
20 Q. Did you write a letter to HUD or write a letter to
21 the escrow officer and say don't do that, you can't do that?
22 A. No.
23 Q. Did you pick up the phone to the escrow company and
24 say you can't send that money because that's wrong?
25 A. No.

1 Q. Did you tell anybody that you can't give Terri Flagge
2 $91,252.74?
3 A. No.
4 Q. You can take that down, please.
5 Now in your discussion on redirect, you just told the
6 ladies and gentlemen of the jury that you believed when you
7 were signing the documents that you were entering into an
8 agreement with an intermediary to send on payments to the bank,
10 A. Yes.
11 Q. Your payments that you were making, your rent
12 payments were less than your original payments, correct?
13 A. No.
14 Q. So you're saying that your rent payments were greater
15 than your original mortgage payment?
16 A. Yes.
17 Q. By how much?
18 A. Best of recollection about 500.
19 Q. So you were renting now your property at $500 more?
20 A. Yes.
21 Q. And what you expected is over the 18-month period by
22 paying $500, you were going to be paying 8,000 more to your
23 bank, correct?
24 A. Yes.
25 Q. And you thought that was going to bring you up to

1 speed?
2 A. Yes.
3 Q. If we could look at -- just one second -- if we could
4 look at DM-J12, page five again, please.
5 Home Q Servicing Corporation, do you recognize that?
6 A. Yes.
7 Q. That's your mortgage company that prior to selling
8 your house you were making payments to, correct?
9 A. Correct.
10 Q. And it says here that Home Q Servicing Corporation
11 was paid $261,874 to pay off your mortgage, correct?
12 A. Correct.
13 Q. And you knew based upon the HUD-1 statement that once
14 that money was paid to the bank, you didn't owe them anything,
15 right?
16 A. Correct.
17 Q. So none of the money that you were paying to in rent
18 was going to any mortgage, you knew that, correct?
19 A. In retrospect, yes.
20 Q. Well, not in retrospect, you knew it when you got the
21 HUD-1 settlement statement, right?
22 A. Yes.
23 Q. Because you understood what a HUD-1 was because you
24 had bought your house previously, right?
25 A. Yes.

1 Q. And so your entire mortgage was paid off, and you
2 didn't owe the bank a dime, right?
3 A. Right.
4 Q. And so you didn't have a foreclosure on your credit,
5 did you?
6 A. No.
7 Q. And you were still in your house, right?
8 A. Yes.
10 THE COURT: Anything, Mr. Tedmon, Mr. Samuel?
14 BY MR. MORRIS:
15 Q. That HUD-1 you were just looking at, when did you
16 receive that document?
17 A. I'm not sure.
18 Q. Do you recall when the first time was you saw that
19 document?
20 A. I believe it was in the packet when we signed the
21 final documents.
22 Q. Was that before or after you had met at your house?
23 A. That was after.
24 Q. Was it before or after you had signed your deed?
25 A. It was after.

4 MR. GREINER: As far as I'm concerned.
5 MR. TEDMON: Yes.
7 THE COURT: All right. You may step down. You are
8 excused. All right. Let's start with the Government's next
9 witness. We have 20 minutes.
10 MR. MORRIS: The United States calls Debra Brockway.
13 truth, and nothing but the truth so help you God.
15 THE CLERK: Thank you. May be seated. Please state
16 your full name and spell your last name for the record.
17 THE WITNESS: Deborah, D-e-b-o-r-a-h, Brockway,
18 B-r-o-c-k-w-a-y.
20 DEBORAH BROCKWAY,
25 BY MR. MORRIS:

1 Q. Ms. Brockway, are you familiar with the address 4708
2 48th Street South in Seattle, Washington?
3 A. I am.
5 A. I lived there for about 13 years.
6 Q. Do you recall when you first moved in there?
7 A. It was in 1995, if I'm not mistaken.
8 Q. I thought you said -- just a second --
9 A. No. I said if I'm not mistaken.
10 Q. Okay. I'd ask you to think back to early 2006. Did
11 you own or rent the house at the beginning of 2006?
12 A. At the beginning of 2006 I owned the house.
13 Q. Okay. And in the spring of 2006 were you getting
14 behind on your mortgage?
15 A. I was.
16 Q. Okay. Were you far enough behind that you were
17 concerned about foreclosure?
18 A. I was.
19 Q. Did you have any contact with anybody about trying to
20 prevent foreclosure?
21 A. I did.
22 Q. Who did you have contact with?
23 A. The gentleman that helped me originally look at
24 houses and find houses. His name was Jonathan Bench. And I
25 was looking for someone to be able to help me relative to

1 keeping the house.
2 Q. And was Jonathan Bench able to help you?
3 A. Yes, he did. Initially, I mean.
4 Q. What did he do?
5 A. He referred me to a company at that time, and I want
6 to say -- I'll say Creative Loans. But there was many names
7 along the way. And I began the process of talking with --
8 Q. Do you recall who you spoke to initially at this
9 company that was Creative Loans?
10 A. I think it was Beverly Roshea or Rochelle. I think
11 was how you pronounced her last name.
12 Q. Did you explain to Beverly Rochelle your situation?
13 A. Yes. And she turned me over to I think -- I can't
14 think of his name. I think it was the head of the company.
15 Somebody that took me through what it was that I was going to
16 need to do, what was going to be expected of me, and all the
17 details of the plan.
18 Q. And was it -- so did she give you any of the details?
19 A. Yes. To a certain degree. And then I had questions,
20 and some of those questions she couldn't -- you know, she had
21 to turn me over to him.
22 Q. And what were the details that she was able to give
23 you about the program?
24 A. That it would be a situation where I would be selling
25 my house to someone who I would be making payments to for over

1 a year's period of time.
2 At the end of that period of time, I could get my
3 house back. I would have to pay them for that whole thing,
4 $25,000. I, in turn, would get $10,000.
5 And at that point, it was one of those kinds of
6 things where I wanted to keep my house.
7 Q. Okay. In your discussions with Beverly, did you have
8 any discussion of the equity in your house?
9 A. No. Not at that point.
10 Q. And then based on that understanding, did you decide
11 to engage in a transaction with this group?
12 A. I did. I figured the point that they made to me was,
13 if I was consistent in making the payments and I was on time,
14 that there would be no problem, which in the end, I was. Also,
15 there was a process of they had to do appraisals and all these
16 kinds of things to determine --
17 Q. Let's try to figure out the time on this.
18 These conversations you're having with Beverly at the
19 company, that's early 2005?
20 A. Right.
21 Q. And then the appraisal process, what's your
22 recollection of how long the appraisal process took?
23 A. Three months.
24 Q. Okay.
25 A. Three months to make a determination. And finally I

1 think it was around, I want to say, December, maybe January,
2 she said, you know, the appraisal had gone through.
3 Q. Okay. So what's your next recollection after the
4 appraisal had gone through of what happened?
5 A. My next recollection was they got a buyer, and that
6 buyer was a Michael Scallin -- Scalion -- Scallon -- who I
7 began, I think it was in February of the following year,
8 writing checks -- writing $1,800 checks to them.
9 MR. GREINER: Objection to "them."
11 Q. BY MR. MORRIS: Let's back up. So they've lined up a
12 buyer?
13 A. Right.
14 Q. And what's your next recollection of the next step
15 before you start writing checks?
16 A. What I got to -- let me back up here for a minute. I
17 began writing checks, and then along the way they got the
18 buyer. So I had already begun writing checks to them, I think
19 that's how it was, and they sent -- they called me and said
20 that they had found a buyer for the house.
21 MR. SAMUEL: Objection as to "they," Your Honor.
23 THE COURT: That is sustained. Follow-up questions
24 to see if you can clarify that question.
25 Q. BY MR. MORRIS: You've mentioned Beverly, was it

1 Beverly that told you or somebody else?
2 A. I think it was, again, one of the head guys. Yeah,
3 it might have been Domonic who told me that.
4 Q. So --
5 A. Possibly.
6 Q. So we've now talked about Beverly as part of this
7 transaction. Do you recall interacting with somebody named
8 Domonic?
9 A. Yes.
10 Q. Up until the point -- up until the point we've
11 already talked about where they have found a buyer, what's your
12 recollection of any interactions you had with Domonic?
13 A. Just, again, it was explanations, more clarity coming
14 from him. And the other guy -- was it Corcoran, I think? It's
15 all in my information.
16 But it was like the head guy. Beverly referred me to
17 him. Whenever I had any heavy-duty questions as it related to,
18 you know, the approach and what I was supposed to do, I was
19 talking to this gentleman.
20 Q. So at this point, then, did you decide to engage in
21 the program?
22 A. I did.
23 Q. Do you recall signing any documents in regards to
24 that process?
25 A. I did.

1 Q. And then after signing the documents, did you begin
2 making payments?
3 A. I made -- I started making payments right away. I
4 mean, and as I began to make those payments along the way, the
5 names changed.
6 Q. What do you mean by the names changed?
7 A. The name of the company changed. It was Nations
8 Property, I think, and then it was Creative Loans, and it had a
9 variety of different names that went with it, and then I began
10 -- and then the sale happened to Michael.
11 Q. And before we discuss your interactions with Michael,
12 the payments to Michael, do you recall any other details of the
13 transaction on the house?
14 A. No. It was just a matter of explanations about what
15 I needed to do, and the payments had to be on time, and I never
16 missed one.
17 Q. Do you recall receiving a check?
18 A. I do.
19 Q. What do you recall about receiving a check?
20 A. The check was relative to the sale of the house to
21 Michael. It was my equity in the house. It was for $108,000.
22 That check came from Stewart Title.
23 Q. And that check came to you?
24 A. It came directly to me.
25 Q. And what, if anything, did you do when you received

1 that check?
2 A. Well, at first I thought, okay, you know, that seemed
3 natural that I sold my house to this gentleman, and that check
4 should be mine. So I called them, and I said, you know, I
5 received this equity check.
6 MR. TEDMON: Objection as to "they," called "them."
7 THE COURT: Again --
8 Q. BY MR. MORRIS: As best as can you, if can you give
9 specific names who you speak to.
10 A. I think, again, it was -- at that time it was
11 Domonic.
12 Q. And what, if anything, did Domonic say to you when
13 you called him about that check?
14 A. He said I needed to send that check immediately to
15 them. That that check was not mine. That that check needed to
16 come directly to them. And I said, I don't think that's right.
17 I said that is what I got out of the house, and you just sold
18 my house.
19 Q. Did Domonic have any response to you?
20 A. Oh, yeah.
21 Q. And what was Domonic's response?
22 A. Very aggressive, very -- if you don't do this, you
23 know, you're going to be in big trouble. You are -- you need
24 to send this -- that check right away.
25 And I'm thinking to myself, well, maybe this is what

1 I need to do, which I did. I sent it UPS and went through the
2 bank to get a cashier's check for it.
3 Q. So you sent the check to who?
4 A. I sent it to Domonic.
5 Q. All right. So you've talked about making your
6 payments to Nations Property and other companies, and then you
7 started talking about Michael Scallin.
8 At some point did you have contact with Michael
9 Scallin?
10 A. I did.
11 Q. How did you come in contact with Mr. Scallin?
12 A. I was in the Portland airport. I thought I had come
13 to visit my cousin, but it wasn't, it was my girl friend and
14 husband who lived in Placerville. And I was on my way back
15 home, and I was sitting in the airport when my cell phone rang,
16 and he introduced himself and said that he was the buyer of my
17 house. And he -- this was like -- I think it was like maybe
18 November, I want to say.
19 MR. SAMUEL: Your Honor, I'm going to object to the
20 narrative.
21 THE COURT: Sustained. Once you answer a question,
22 wait for the next question. All right?
24 Q. BY MR. MORRIS: So in this conversation in
25 November --

1 MR. GREINER: Can we have a year, too?
2 Q. BY MR. MORRIS: Was this November 2006?
3 A. I think, yes.
4 Q. Did you have -- so just before we -- did you have
5 other conversations other than this conversation with
6 Mr. Scallin?
7 A. No. That was the first time that I talked to him.
8 Q. Did you have any conversations with him later after
9 this one?
10 A. I did.
11 Q. Okay. So let's start with just the first one where
12 you're talking about you're coming back from this area.
13 A. Okay.
14 Q. What was it -- what did you say to Mr. Scallin?
15 A. Well, when he called me, he introduced himself, and
16 he said that I had been making payments -- that he had bought
17 my house. That he was the gentleman who had bought my house.
18 He said I have some bad news. He said the FBI are
19 investigating this company, and I think it would be best if you
20 did not make any more payments to me. He said I'm getting
21 ready to go into bankruptcy.
22 Q. Is that the first conversation or later?
23 A. First.
24 Q. And then your later conversations, what was the
25 context of that later conversation?

1 MR. SAMUEL: Your Honor, I'm going to object to these
2 being brought in. It's not really been enumerated about the
3 801(d)(2)(E), but I think that should be addressed.
4 THE COURT: Well, sustained. Why don't you start
5 over to clarify.
6 Q. BY MR. MORRIS: In response to speaking with
7 Mr. Scallin, did you change where you were sending your
8 payments?
9 A. No, I didn't. I don't think I changed where I was
10 sending them. I just didn't send them anymore. He said there
11 was no need for me to send any more checks.
12 MR. SAMUEL: Objection. Hearsay.
13 MR. GREINER: Hearsay. Join.
15 Q. BY MR. MORRIS: Prior to that conversation with him,
16 who had you been sending your checks to?
17 A. Nations Property, Creative Loans, and there was one
18 other company that I cannot remember what it was right off the
19 top.
20 Q. Did you ever send your checks directly to
21 Mr. Scallin?
22 A. I sent, I think, two or three -- maybe two or three
23 of them. Possibly.
24 Q. And then to make sure I understand then, after this
25 conversation with him, you stopped sending checks to him?

1 A. Right.
2 Q. Do you still live in that house?
3 A. No.
4 Q. What happened?
5 A. That house went into a --
8 Q. BY MR. MORRIS: Let's go back to when you signed the
9 documents.
10 Your previous testimony I think was that your belief
11 was you were paying $25,000?
12 A. Yes.
13 Q. Was your belief that that was what you were paying,
14 was that important to you in making your decision to sign the
15 documents?
16 A. In a lot of ways, yes, because I couldn't -- I just
17 needed to get to a place where I could, you know, keep my home.
18 I wanted to do that really strongly.
19 Q. And you've testified before that you believed you
20 would get your home back at the end of this time period. Was
21 that belief important to you when you signed the documents?
22 A. Very much so.
23 MR. MORRIS: Your Honor, I'll move to admit the 12
24 series exhibits, 12A1 through 12A7, 12C and 12D1 through D3,
25 and they are all covered by the stipulation.

1 THE COURT: So through 12D3?
8 THE COURT: All right. 12A1 through 12D3 are
9 admitted.
10 (Government Exhibits 12A1, 12A2, 12A3, 12A4, 12A5,
11 12A6, 12A7, 12C, and 12D1, 12D2, 12D3, (See index for
14 THE COURT: All right. We're actually at 4:27, so
15 rather than start cross-exam for two to three minutes, we will
16 take our break for the day.
17 At this point in time, tomorrow our schedule is
18 8:30 to 1:30 with two short breaks. We will see you then.
19 As always, as we break for the evening, let me just
20 remind you of your obligations as jurors. You will get
21 everything you need to decide the case properly in this
22 courtroom. You should not do any research of any kind,
23 electronic or otherwise, don't begin to think about the outcome
24 of the case, don't discuss the case with anyone whatsoever. I
25 will give you complete instructions at the end that will guide

1 your deliberations. If anyone tries to contact you in any way,
2 please let me know first thing in the morning. We will see you
3 tomorrow at 8:30. Have a good evening.
4 (Jury out.)
6 step down, ma'am. Please be back in your seat, ready to go at
7 8:30 tomorrow morning. Thank you.
8 MR. SAMUEL: I have a comment.
9 THE COURT: I was waiting for the witness.
10 MR. SAMUEL: Sorry.
11 THE COURT: Yesterday, the Government had indicated
12 it might have some paring down of the list, so I wanted to hear
13 about that. Anything else we need to discuss now? Mr. Samuel?
14 MR. SAMUEL: Actually, my objection
15 about Mr. Scallin's statements, they are absolutely rank
16 hearsay, and they are not admissible under 801(d)(2)(E) simply
17 because nobody who was in the course and scope of a conspiracy
18 would be telling somebody else that the FBI is investigating
19 them, and that she should stop her payments.
20 So I think that that's why I specifically addressed
21 that as I did. Because I think that's kind of outside the
22 scope of what our normal understanding is. So that's my
23 comment, and that was the content of my objection.
24 THE COURT: All right. So your record is completed.
25 Anything you want to say in response, Mr. Morris?

1 MR. MORRIS: Your Honor, I think it goes to the
2 effect it had on the listener, so I think it's proper given the
3 context of how it came up, and what she was doing, and what she
4 did in response to it.
5 MR. SAMUEL: Well, if it's not offered for hearsay,
6 then the jury should be instructed to that.
7 THE COURT: All right. I'll do that first thing in
8 the morning.
9 MR. GREINER: For my record, I would join Mr. Samuel
10 in that.
11 MR. TEDMON: I think we all joined.
12 THE COURT: That was the reason I overruled the
13 objection. But I think if you can also help clarify that as we
14 go along. So Mr. Greiner, you had a motion?
15 MR. GREINER: Yes, Your Honor. I would make a motion
16 for mistrial based upon the statement that Ms. Nowlin made on
17 the stand about criminal activity.
18 It was not in response to a question. Although she
19 said it after a question was asked. And so I would make a
20 motion for mistrial because that puts in front of the jury
21 prejudicial statements the prejudice my client.
24 THE COURT: All right. Who is going to argue this?
25 MR. ANDERSON: I'll take it, Your Honor.

2 MR. ANDERSON: Your Honor, I'm not saying this for
3 effect, but I'm not entirely sure I even remember that
4 statement. I think it came out so quickly. Perhaps
5 Mr. Greiner could explain it a little better.
6 THE COURT: Let's ask our court reporter if she can
7 find that section of the transcript.
8 Is that something madam court reporter, you could
9 e-mail to Ms. Schultz, and she can share that with us this
10 evening? We'll have her read it to us, but then also get a
11 copy and perhaps think on it overnight.
12 (Record read.)
13 MR. ANDERSON: Your Honor, my first reaction to that
14 is, one, those answers don't rise to the level of a mistrial,
15 even if they were improper. The questions were fairly broadly
16 worded, and those weren't non-responsive to the question.
17 And even if they had been non-responsive to the
18 question, the appropriate remedy would have been for counsel to
19 object at that time and ask for a motion to strike that
20 testimony. But it was just a very small piece in a lot of
21 testimony.
22 I don't think it had any big impact on the jury.
23 They are aware that the FBI is involved in the investigation of
24 this case, and that the defendant has been charged with a
25 crime. They've been advised by the Court that the fact

1 somebody is charged does not make them guilty.
2 I don't think that changed in any way the position of
3 this case. Implicitly, the FBI and the Government thinks that
4 Ms. Nowlin is a victim of a crime. That's why we have the jury
5 instructions telling the jury to carefully consider the
6 evidence on their own. And the fact that somebody's charged
7 does not make them guilty. Presumption of innocence. I don't
8 think this changes anything.
9 THE COURT: I think there was an objection at least
10 in one instance. So an objection was recorded, and the issue
11 is preserved. Anything more to say?
12 MR. GREINER: Do you want to take it up tomorrow?
13 THE COURT: I'll think about it overnight. I don't
14 think it rises to the level of a mistrial. I think the
15 question is would I say anything on that issue, as well, to the
16 jury.
17 I think Mr. Anderson is correct that the framing
18 preliminary instructions provide a context for this.
19 MR. SAMUEL: I think a resolution might be simply to
20 address the jurors direct and to that location, and then
21 specifically advise them that what was said to her is not
22 evidence, and that the burden remains with the Government at
23 all time, and reiterates to some form the burden.
24 THE COURT: That's my inclination at most. Any
25 further thoughts on that?

1 MR. TEDMON: No, I would agree with Mr. Samuel. Just
2 some sort of curative instruction.
3 MR. GREINER: That's fine. What I'm concerned about
4 is the way that she phrased it. Because she phrased like the
5 FBI, the Government, said I'm victim of a crime, which kind of
6 puts the stamp of approval on the statement, and that's not a
7 good thing.
8 MR. ANDERSON: I didn't really get it that way, Your
9 Honor. And I think to place it in context, too, Mr. Greiner
10 did a long and fairly hectoring cross-examination of a woman
11 who, at a number of points, not as much today, but especially
12 yesterday looked like that she was going to cry at any moment
13 under this cross-examination.
14 For her to respond and say, hey, I'm a victim of a
15 crime is really not unreasonable under those circumstances.
16 Mr. Greiner to a certain extent brought this upon himself, and
17 if there needs to be a reiteration of a preliminary --
18 THE COURT: This is going to go into the gutter
19 pretty quickly if we continue on this.
20 I'm not adopting any of that. I think the
21 Government's earlier arguments made some sense. So I'll draft
22 in my mind some sort of curative instructions on both issues,
23 the Scallin statements and Ms. Nowlin's testimony. That's my
24 current thought. Anything else?
25 MR. ANDERSON: Your Honor, we had defense Exhibit

1 DM-O15.
2 THE COURT: My question is why should anything
3 besides page three come in?
4 MR. ANDERSON: Because the import of the exhibit is
5 that there is another copy of this signed warranty deed, this
6 three-page document, in which the information contained on the
7 front of the document that was filed doesn't exist.
8 THE COURT: She wasn't able to say she recognized
9 anything other than her signature.
10 MR. ANDERSON: But it supports her contention that
11 she was wasn't aware what happened. She was cross-examined
12 extensively on you knew you were selling the property, you knew
13 that you were granting it. But the fact that the -- and also
14 on the dates, a lot on the dates. As far as when things were
15 signed and what was going on.
16 The fact that there is a version of this document,
17 which has been notarized -- or purportedly notarized -- but
18 doesn't contain that information on the front page is a piece
19 of circumstantial evidence which supports what she was saying
20 all along from the witness stand.
21 THE COURT: Well, Mr. Tedmon, did you have a position
22 on this? Just so I'm clear.
23 MR. TEDMON: Yeah, I think I objected based on lack
24 of foundation through this witness at least. And I don't
25 think, at this point, the document should come in as the

1 Government's requesting.
2 THE COURT: And Mr. Samuel?
3 MR. SAMUEL: I'll adopt Mr. Tedmon's position. I
4 have no dog in this fight really.
6 MR. GREINER: I'll adopt Mr. Tedmon's and let him
7 fight.
8 THE COURT: All right. I'm not persuaded foundation
9 is met.
10 MR. ANDERSON: If I understand, that's the only
11 objection the defense counsel is raising? So if we were to
12 bring in a foundational witness or a stipulation as to where
13 this document came from, then that would answer those
14 questions?
15 THE COURT: Well, I guess my point is, in other
16 cases, for example, you've had witnesses who look at a
17 document, say that's the document I signed, yes, those blanks
18 were not filled in.
19 That is not what you have here. All you had was
20 someone saying I'm comparing this page to that page, and they
21 look the same. That's very different. And it just doesn't
22 provide the -- it doesn't satisfy some basic reliability
23 issues.
25 THE COURT: She said that was her signature, but she

1 didn't say anything else.
2 MR. ANDERSON: I see where the Court's coming from.
3 Our point is, that that is the point. That these documents
4 aren't reliable because there are so many changes and versions
5 of them.
6 But what I would propose to do is we bring in a
7 finder from the search warrant who found this particular
8 document, and then authenticate it as a document found at a
9 business location associated with these defendants.
10 And I don't know that the Court wants to necessarily
11 rule on that right now. But that's the way we would address
12 it.
13 THE COURT: All right. And then 13A1 is still
14 hanging out there. If you can point me to Kou Yang's testimony
15 that would support the Government's position on that, I'll
16 reconsider.
18 THE COURT: Anything else?
19 MR. SAMUEL: I think you brought up and we've never
20 addressed it, the witness issues.
21 THE COURT: The Government said it had a list.
22 MR. ANDERSON: What I would like to do is put a
23 caveat before this, which is, obviously, we may change or add
24 or subtract witnesses based on what happens over the next few
25 days with these various witnesses.

1 But at least, tentatively -- would it be better if I
2 read witnesses who have already been called, or who will not be
3 called, or read witnesses who may be called?
4 THE COURT: Who will not be called.
5 MR. ANDERSON: Okay. Latasha Kaiser Butts, Janice
6 Hasenbank, all the county recorders, Steve Newcomb from Argent
7 Mortgage.
8 THE COURT: We already took them.
9 MR. ANDERSON: The Daffrons. Because we figured we
10 wouldn't be able to get through everybody today, and given the
11 medical condition and some other factors, we sent them home.
12 So I don't think we'll bring them back.
13 The special agents. Except that we may need to call
14 a finding agent for the document that we were just discussing
15 the defense exhibit, and agent --
16 THE COURT: Previously you had suggested possibly
17 only Special Agents Howard, Fitzpatrick and Sommercamp.
18 MR. ANDERSON: Right. And I think there may be one
19 additional agent for this particular document. I'll see if we
20 can reach a stipulation with defense counsel. But if we can't,
21 then we will call in one additional agent. That should be
22 really short testimony, though. Only a few minutes, I would
23 think.
24 I think it's unlikely that we'll call Elizabeth
25 Russell, Sam Vu. Unlikely that we would call Beverly

1 Rocheleau. We're not planning to call Josh Coffman. We're not
2 planning to call Akemi Botari. Unlikely that we'll call Eli
3 Assadi. We're not planning to call Andrew Vu. We're not
4 planning to call Omar Sandoval. We have a list of custodians
5 that we won't call as well.
6 So those people are off the list. We also have a few
7 others that we have identified as witnesses that we hope not to
8 have to call, and we'll be able to narrow that down over the
9 next day or two as we call some of the additional witnesses.
10 THE COURT: Have you let the defense know after
11 Ms. Brockway who would be called tomorrow?
12 MR. ANDERSON: I spoke with Mr. Tedmon, and I think I
13 spoke with Mr. Samuel as well. But we'll provide an additional
14 updated list. If defense counsel want to get ahold of me after
15 court, I'm happy to do that.
16 THE COURT: Can you provide that for the Court now?
17 MR. ANDERSON: For the Court. I know Marjorie Sly is
18 one of the witnesses we have lined up. Michael Scallin.
19 Alfred Limas and Peter Howard -- Howard Peter, excuse me.
21 MR. TEDMON: That will be tomorrow.
22 MR. ANDERSON: That should finish up the day. We've
23 been lining up less witnesses as we have gone along, risking
24 that we wouldn't have enough. But it seems like we're able to
25 fill every day.

1 THE COURT: With that list, then the defense can be
2 prepared for focused exams. All right. See you tomorrow
3 morning.
6 CERTIFICATION
10

13
14
15
16
17
18
19
20
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 10
Defendants.
---oOo---
TRIAL PROCEEDINGS
THURSDAY, NOVEMBER 7, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
3 DEBORAH BROCKWAY
5
MARJORIE SLY
9
ALFRED LIMAS
12
MICHAEL SCALLIN
14
15
16
17
18
19
20
21
22
23
24
25

1

Development Settlement Statement for
4 property at 913 White School Road,
Honeybrook, PA
6 property at 2937 Stonecreek Drive,
Sacramento, CA
7 14A3 Equity Purchase Agreement dated 4/18/2006 1632
between Alfred N. Limas “Seller” and
8 FundingForeclosures.com “Purchaser” for
property at 3509 38th Street, Sacramento,
9 CA 95817
14A5 Grant Deed / Grantor: Alfred N. Limas 1642
10 Grantee: FundingForeclosures.com
14A6 Signature page reflecting “Date of Contract
11 Acceptance: 04/18/2006” signed and dated by
Alfred N. Limas on 4/20/2006
12 14C1 Grant Deed recorded in Sacramento County on 1643
6/8/2006 Grantor: Alfred N. Limas
13 Grantee: Charmayne Q. Ratliff
Signed and notarized on 5/26/2006
14 14C2 Notice of Default and Election to Sell 1643
Under Deed of Trust re property at 3509
15 38th Street, Sacramento, CA
14C3 Notice of Trustee’s Sale recorded in 1643
16 Sacramento County on 10/1/2007 re property
at 3509 38th Street, Sacramento, CA
17 14C4 Assignment of Deed of Trust recorded in 1643
Sacramento County on 1/15/2008 re property
18 at 3509 38th Avenue, Sacramento, CA
14C5 Trustee’s Deed Upon Sale recorded in 1643
19 Sacramento County on 2/22/2008 re property
at 3509 38th Street, Sacramento, CA
20 14D1 Wire Original Information Report 1644
Amount: $88,202.66
21 14D2 Copies of checks 1644
14D3 Copies of checks 1644
23 property at 965 Slocum Street NW, Palm Bay,
Florida
25 property at 4141 Rockwood Drive, Lago
Vista, TX


3
DM-H12 Addendum to affidavit of deed and equity 1543
4 purchase agreement and lease agreement
after purchase dated January
5 DM-H13 Addendum to Purchase Agreement dated 1543
March 7, 2006
6
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

2 THURSDAY, NOVEMBER 7, 2013
3 ---oOo---
6 McCarns. This is on for jury trial, and today is day 10.
7 THE COURT: All right. Good morning. Counsel are
8 present. The parties are present. Just a couple of
9 housekeeping matters. I had the court reporter provide me with
10 not only the portions of Ms. Nowlin's testimony that we
11 discussed, which confirmed the Court's plan to give a general
12 curative instruction this morning both with respect to
13 Ms. Nowlin's testimony and Ms. Brockway's testimony in response
14 to the questions about Mr. Scallin's comments.
15 I also had her printout the transcript of the
16 stipulation. Just so I'm clear. I had not remembered the
17 exact wording of the stipulation on the exhibits and the
18 foundational purposes. So I have that in front of me for
19 reference going forward, just so you know.
20 The one thing I wanted to talk about before we begin
21 with cross of Ms. Brockway -- you're done with Ms. Brockway?
23 THE COURT: Here is my question. I tried to say it
24 in different ways, but I've just consulted the case law for
25 guidance to make certain I'm not straying in an improper

1 direction. But I'm looking, in particular, at language from
2 U.S. v. Deluca, D-e-l-u-c-a. It's dicta, but I think it
3 provides some guidance to the Court. It's 692 F.2d 1277. I'm
4 looking at an electronic copy. I don't have a page cite.
5 But there is a statement there that I think makes
6 some sense in the context of this trial. And that is, once
7 cross-examination reveals sufficient information with which to
8 appraise the witness' possible bias and motives, confrontation
9 demands are satisfied.
10 It's not just about bias and motives here. There are
11 issues of memory. But my question, in particular to you,
12 Mr. Greiner, I don't know what you've thought about overnight,
13 but are you going to wish to cross-examine Ms. Brockway?
14 MR. GREINER: Yes, Your Honor. It won't be as
15 detailed as the others, but I am going to cross-examine her.
16 Correct.
17 THE COURT: The jury at this point -- I don't think
18 anyone can disagree -- the jury has a clear template before it
19 of the transactions and essentially the same sets of documents.
20 Again, you know the case better than I. I haven't sat down and
21 analyzed the exhibits. But the documents are essentially
22 identical.
23 And so it would seem to me that either the parties
24 could enter into a stipulation to be read to the jury - the
25 documents for this witness are the same as. Or the Court with

1 allow a statement. You know, the jury will be able to review
2 the documents. They are in evidence.
3 I mean, the point is the documents are in evidence.
4 This is not like an ad campaign where sound bites need to be
5 repeated multiple times for it to stick. The jury will have
6 time to deliberate and to review.
7 And so with those documents in evidence, with the
8 template, there has to be a way to briefly establish that there
9 is the same kind of transaction here and then zero in on the
10 critical questions. Didn't you sign a grant deed? Didn't you
11 sign an agreement to rent? Didn't you sign an equity purchase
12 agreement agreeing to sell? Without going through every
13 paragraph of each critical document. Knowing that you can
14 argue that in closing argument.
15 Why isn't that sufficient? And why for Ms. Brockway
16 in particular would 30-minutes not be sufficient to get what
17 you need?
18 MR. GREINER: I will take Court's first question, and
19 then I'll address Ms. Brockway second.
20 The first question. Each witness on the stand has
21 presented him or herself in a different fashion, Judge. The
22 Government has not been consistent all the time in what they
23 are asking. They have asked, you know, was it material? What
24 was material when you signed these documents? Their theory is
25 the representations made by Domonic McCarns. Their theory is

1 that he made misrepresentations that weren't true.
2 THE COURT: Understood.
3 MR. GREINER: And the documents, and their
4 understanding of the documents, and what they knew during
5 cross-examinations belie that theory. There is not one witness
6 that has come to the stand, after cross-examination, that the
7 Government is going to be able to counter my closing argument
8 in that either they didn't go to some independent source, a
9 real estate person or an attorney and understand the documents.
10 They knew what they were signing.
11 On direct examination, the impression to the jury is
12 that, oh, woe as me, I didn't have any place to go. I totally
13 relied on Domonic McCarns. And I didn't know where the equity
14 was going. And I thought I was going to remain on title.
15 And during cross-examination, that is just proved
16 false.
17 THE COURT: Understood. But can't the
18 cross-examination be much more focused and achieve the same
19 thing?
20 This is a public space. You know, I don't try
21 parties' cases for them. But I have a responsibility to manage
22 this space while allowing you to present your case. And I'll
23 hear from other attorneys as well. I realize these witnesses
24 have been primarily Mr. Greiner's to cross-examine.
25 There is an issue of what's sufficient given the

1 evidence that's in the record, and, you know, going beyond what
2 is sufficient.
3 MR. GREINER: Here's my concern. We've had Cardenas,
4 and Nowlin, and Solares, Pearlman on the stand. And so the
5 jury now understands through direct examination and
6 cross-examination these witnesses. But when you come up to the
7 new witnesses like Brockway and whoever else that they are
8 going to put on the stand -- Limas, they told us that Mr. Limas
9 is going to be on the stand today -- from my standpoint,
10 representing Mr. McCarns, I can't take a chance that the jury
11 is going to extrapolate that what Pearlman said, what Nowlin
12 said, what Cardenas said, what happened in those cases --
13 THE COURT: I'm not asking you to do that.
15 THE COURT: My question is, isn't there a more
16 efficient way to get what's sufficient given that the documents
17 are in evidence?
18 MR. GREINER: Judge --
19 THE COURT: And isn't 30 minutes sufficient for
20 Ms. Brockway?
21 MR. GREINER: Taking your lead -- let me talk about
22 Brockway in a second -- taking your lead, I will do everything
23 I can to expedite my cross-examination, understanding what the
24 Government asked in direct, understanding what their theory is.
25 I will try to present a timeline, and I've done that in the

1 last couple of witnesses. I hope the Court has noticed.
2 Instead of breaking it out in segments, I've just done a
3 timeline, incorporating the documents into my timeline, which I
4 thought was saving some time instead of breaking it up into
5 documents, direct examination, and then statements that they've
6 given to the Government.
7 I will endeavor to do everything I can to streamline
8 it. I will follow the Court's encouragement and direction and
9 the dicta from Deluca to try to carve into what is important.
10 But understand what my concern is as I stand there
11 cross-examining that I want the jury -- if, on
12 cross-examination, the evidence comes out, I want the jury to
13 understand what this witness actually knew when this witness
14 was signing these documents, when this transaction was going
15 forth.
16 Because at the end -- at the end of the direct
17 examination, if there was no cross-examination, what the jury
18 would hear is, oh, I just relied upon Domonic McCarns, and I
19 didn't know I wasn't --
20 THE COURT: I'm not saying no cross-examination. My
21 question is what's sufficient during trial to lay the
22 foundation for your closing argument and the full defense.
23 MR. GREINER: I understand that. As the Court has
24 noticed, Mr. Tedmon and Mr. Samuel have not done
25 cross-examination because either they don't feel it's necessary

1 because of my cross-examination, or, my cross-examination has
2 been complete enough that they can make their argument. So we
3 haven't been duplicative in our cross-examination. There's
4 only been one person doing it.
5 And I think as the Court noted at one point in time,
6 the Government took an hour and a half on one witness, and I
7 took the same amount of time on cross-examination. I now see
8 the Government is now being very, very short in their
9 examination. They are not even going over the documents at
10 all. And I think that's a misinterpretation of what's going on
11 in these transactions. I think I have to show them what these
12 documents are. So that's my comment to the Court's first
13 question.
14 The comment to the second question about
15 Ms. Brockway. Certainly, she did not deal with Domonic McCarns
16 until totally at the end, after all the documents are signed.
17 There does need to be some clarification as to how she got into
18 the predicament she did. That is why I sent out the e-mail to
19 counsel.
20 I went up online to the Western District of
21 Washington, got the bankruptcy documents, pulled out from the
22 search warrant discovery documents the Stewart Title showing
23 that she filed the bankruptcy on the date that she was to have
24 a trustee sale. And that's not what has come out on the stand.
25 And I think I need to paint that picture, so the jury knows she

1 was like one finger from falling off the cliff without filing
2 bankruptcy.
3 THE COURT: So how much time do you need for that?
4 MR. GREINER: I do not need as much time as I've
5 taken with the other witnesses. I can represent that to the
6 Court. I've taken also the Court's request -- and at the
7 beginning I'm going to ask for whatever documents I'm going to
8 use out of Mr. McCarns' exhibits. I have those so that I can
9 just list those for the Court so we don't have to be going back
10 and forth with those.
11 Does that mean that I'm going to talk extensively
12 about each document? No. But I'm going to mention there was
13 an equity purchase agreement, there was a lease agreement, you
14 understood all those documents. I don't have to go into the
15 detail of those.
16 THE COURT: Okay. I'm satisfied you have the
17 message. I'm going to let you know when you hit 30 minutes.
18 Again, the Government had 20.
19 MR. GREINER: That's fine. As long as the Court
20 understands my concern and what --
21 THE COURT: I absolutely understand the concern. I'm
22 looking at our total calendar. By our second break, I would
23 like to talk about where we are, so I can give the jury some
24 sense of where we are in terms of the next two weeks in
25 particular.

1 MR. GREINER: I don't know if Mr. Tedmon or
2 Mr. Samuel have anything to add.
3 THE COURT: Anything further, Mr. Tedmon?
4 MR. TEDMON: No.
6 MR. SAMUEL: My only observation is that Mr. Greiner
7 has been doing a great job on cross-examination in bringing out
8 the fact that they in fact did understand what was going on,
9 and that he did need to use those documents in order to force
10 them to come out with their comments.
11 THE COURT: All right. And that is precluding the
12 need for your cross-exam?
13 MR. SAMUEL: I'm not going to have a cross-exam at
14 this point.
15 THE COURT: I haven't heard that. But I understand
16 that that's also potentially a factor.
17 I'm not trying to deprive the defense. I'm
18 remembering the promise that we made. I don't tell the jury
19 what an estimate is until I've consulted with everyone in good
20 faith. And they are public servants at this point. I'm trying
21 to make certain we stay on track, everyone gets to do their
22 job, and we're making the best use of our time.
23 MR. TEDMON: Your Honor, I do have one other question
24 because the Court mentioned this in the first comments. I
25 would not be in favor of having the Court or the parties agree

1 that all the documents are the same because they are not. The
2 names are different. That changes it. The dates are different
3 and the circumstances, which Mr. Greiner has gone into in great
4 detail. I think that would preclude us from being able to take
5 that path.
6 MR. SAMUEL: And I think the documents morphed over
7 time.
8 THE COURT: Like I said, you know your case better.
9 I'm assuming that you've done an analysis and you know the
10 differences.
11 I think the approach is constructive. You signed an
12 equity purchase agreement. I think there is a way to, you
13 know, it's also a matter of respecting the jurors'
14 intelligence. They've been paying attention. They've been
15 taking good notes.
16 MR. GREINER: I understand, Judge, and I take all of
17 your comments to heart. And I know that when the Court says
18 30 minutes, that does not mean I get another hour and a half.
19 As long as the Court understands. I understand the Court's
20 position. And I will do everything I can.
21 MR. MORRIS: Your Honor, if I can make one point of
22 clarification briefly. We've been trying to tailor the way
23 that we approach our direct. So after the first several times
24 that we all had this discussion, we did then go to a witness
25 where we then went through the documents in the good faith hope

1 that that would help streamline the cross. That cross ended up
2 still being an hour and a half.
3 So, yes, we've now gone back to trying to be the most
4 focused and tailored direct that we can. Our efforts to
5 front-load the discussion of the documents didn't bear fruit,
6 and that's why we are now going to shorter directs and still
7 dealing with hour to two-hour cross-examinations.
8 THE COURT: All right. Enough said. Good to have
9 this discussion at this stage of trial.
10 Do we have all our jurors?
11 THE CLERK: I don't know, but I assume they probably
12 are all here.
13 THE COURT: All right. Let's see if we're ready to
14 go, and we can bring the jury in.
15 (Jury in.)
17 court, ladies and gentlemen of the jury. Thank you for your
18 patience. We were doing some housekeeping this morning. And
19 in particular, I was reviewing the schedule with the parties.
20 I'm going to try to provide you with an update by our
21 second break. Certainly before you leave today. So you have a
22 sense of where we are with the presentation of evidence and the
23 case schedule, generally.
24 I wanted to just follow up on a couple of things from
25 yesterday as well, having consulted with the attorneys. In

1 particular, I just want to give you a brief advisement with
2 respect to some of the testimony you heard.
3 You heard Ms. Nowlin volunteer a couple of times that
4 she heard from the FBI, and that she used words to the effect
5 of that she had been the victim of a crime. I wanted to make
6 certain -- ultimately you're going to get detailed instructions
7 from me as to how to evaluate testimony. But ultimately, of
8 course, it is your job to determine whether or not the
9 Government has proven its case, whether or not there has been a
10 crime. So that was not legal evidence that pre-judges that
11 decision for you. Ultimately, that is your decision and your
12 decision alone.
13 Also, you heard Ms. Brockway, who is back on the
14 stand this morning, talk about a conversation with a
15 Mr. Scallin, or you may hear that pronounced Mr. Scallin at
16 some point, with respect to payments. And that testimony did
17 not come in for the truth of the matter of what Mr. Scallin
18 said but, rather, for the effect on Ms. Brockway, the listener.
19 So that's just some advisement as to how to think about that
20 testimony.
21 Again, at the close of trial, I will give you
22 detailed instructions to channel and guide your deliberations
23 as you find the facts and then decide how to apply the law to
24 the facts of this case.
25 All right. We're ready for cross-examination of

1 Ms. Brockway. I'm going to acknowledge Mr. Greiner. And I'm
2 going to check with him after 30 minutes to see if that's
3 sufficient time for him to complete the cross.
4 MR. GREINER: I appreciate that, Judge.
6 DEBORAH BROCKWAY,
11 BY MR. GREINER:
12 Q. Good morning, Ms. Brockway.
13 A. Good morning.
14 Q. Before I begin, between yesterday's testimony and
15 today did you review any documents whatsoever?
16 A. No.
17 Q. Between yesterday's testimony and today, did you
18 discuss your testimony with any person?
19 A. No. No one.
20 Q. All right. I want to take a timeline. I don't want
21 to deal a lot in detail because you got into the program,
22 correct?
23 A. Got into the program meaning?
24 Q. Okay. Let me go back. Let's start back at the
25 beginning as to where you got into some financial troubled

1 waters. Okay?
2 The reality is, unfortunately, you were going through
3 a divorce at some point in time, true?
4 A. Uh-huh.
5 Q. Yes?
6 A. Yes.
7 Q. Make sure you keep your voice up, move that
8 microphone, answer audibly so our court reporter can take
9 everything down. Okay?
10 A. Yes.
11 Q. If I remind you, it's because we need to have her
12 take it down. And, again, if I ask you a question you don't
13 understand, let me know, and I'll be glad to rephrase. All
14 right?
15 A. Yes.
16 Q. Okay. And then going through this divorce,
17 unfortunately, you run into some financial difficulties, true?
18 A. Yes.
19 Q. And that's where you started to become behind on your
20 mortgage payments, correct?
21 A. Basically, yes.
22 Q. Now you were working full time, correct?
23 A. Yes.
24 Q. And your job was again?
25 A. At that particular time, I was head of marketing for

1 the Department of Natural Resources for King County Government.
2 Q. So you were the head of marketing?
3 A. Yes.
4 Q. For King County. That's up in Washington?
5 A. Yes, it is.
6 Q. How long had you been in that position?
7 A. I was there for eight years, and then I changed.
8 Q. All right. Okay. So you're working full time, but,
9 unfortunately, the bills got to the point where you were behind
10 in your mortgage, fair?
11 A. Right.
12 Q. And it got to the point so drastically that you knew
13 that you had a notice of sale, correct, trustee sale?
14 A. I don't know if I had gotten that far. I didn't -- I
15 don't know whether I had gotten to that point yet.
16 Q. Okay. Well, I have some documents that maybe will
17 help refresh your memory. We can look at the bankruptcy
18 documents or the Stewart Title documents.
19 I'm not admitting these, Judge, but I want to use
20 them to refresh her memory. I've given copies by e-mail to all
21 counsel.
22 Ms. Brockway, if you would turn around and grab that
23 red binder, please. And I think the easiest way, go to the
24 section that's labelled H. And the easiest way to do this is
25 go to the very back of that section.

1 A. Okay.
2 Q. And now I'm going to have you come forward. It's
3 going to be easier to do that.
4 So if you come forward, you'll find at the very
5 bottom, probably about 30, 32 pages in it will say DM-H21. So
6 you're going to turn -- no, the other way. The other way.
7 There you go. Keep going. It's about 30 pages in.
8 You know what, Judge, maybe this will be quicker.
9 Approach?
10 THE COURT: You may approach.
11 MR. GREINER: This is going to be quicker. And
12 again, not admitting. Refreshing recollection. Ms. Brockway,
13 I'm going to approach you for a half second.
14 THE WITNESS: Fine.
15 Q. BY MR. GREINER: There is a front page that's
16 entitled Stewart Title, but the page I want you to look at, in
17 the middle of the page I want to you read what it says to
18 yourself -- the other page --
19 A. This one?
20 Q. Single page, correct.
22 Q. All right. Does that refresh your memory that there
23 was a trustee sale?
24 A. Sort of. Kind of. But I didn't remember that. I
25 mean, I just -- there was -- because there was so much going on

1 at that time. So, yeah. And if that's -- I mean, if this is
2 correct, then it was happening.
3 Q. And the trustee sale was set for June 3rd, 2005?
4 A. You're probably right on that one, yes.
5 Q. And that date actually sticks out in your mind for
6 another reason, doesn't it?
7 A. No.
8 Q. Well, that was the date that you filed bankruptcy,
9 right?
10 A. Probably.
11 Q. Okay. Well, let's see if we can help you on that.
12 May I approach, Judge?
14 Q. BY MR. GREINER: I want you to just look at those two
15 pages and see if that refreshes your recollection.
16 A. Yeah. I mean, I know I did. I know I filed
17 bankruptcy. I have no doubts about that.
18 Q. All right. And the date was June 3rd, the same date
19 as the sale, correct?
20 A. That correlation I don't remember. I don't remember
21 if -- that date for the sale.
22 Q. You knew by filing bankruptcy that you stayed any
23 foreclosure proceeding that the lender was taking on you,
24 correct?
25 A. I don't remember that. I don't remember that, but

1 that could be. I mean, I don't -- okay, I do remember the
2 bankruptcy. I don't remember all that was entailed at that
3 time with the trustee -- with the trustee sale or that.
4 There's been so much that has gone on. And I say
5 that, all of these pieces coming together it's like -- I just
6 don't remember the connection with the trustee sale. And it
7 could very well had been there. And maybe I filed the
8 bankruptcy for that reason because my lawyer said, you know, do
9 that. I don't remember that.
10 Q. Well, you do remember that once you filed the notice
11 of bankruptcy, that you didn't have to deal with the bank
12 foreclosing on your property, true?
13 A. I think that was stated to me. I don't -- I don't
14 recall that being said to me. I just don't recall it. It
15 probably was, and it held me up from having to -- you know
16 foreclosure. But I don't remember the tie in. I don't
17 remember the tie in in terms of that.
18 Q. At this time frame in the May and June era of 2005,
19 your entire focus was not to be uprooted from your house,
20 right?
21 A. Exactly.
22 Q. You didn't want to lose your house, right?
23 A. Exactly.
24 Q. And so you looked for any option you could so that
25 you weren't uprooted, right?

1 A. Exactly.
2 Q. And you couldn't refinance, could you?
3 A. No. At that time.
4 Q. And you couldn't reinstate your loan because you
5 didn't have enough cash to do that, right?
6 A. Right.
7 Q. You understood what a reinstatement was, right?
8 A. Right.
9 Q. You couldn't do a forbearance because you didn't have
10 enough money to pay a percentage of the arrears on your
11 mortgage, true, you didn't have the cash?
12 A. Right.
13 Q. Okay. And you didn't put your house up for sale,
14 true?
15 A. True.
16 Q. Because you didn't want to be uprooted?
17 A. Right.
18 Q. You didn't try to find a private investor, true?
19 A. I think I tried to look for -- I think I went through
20 a whole different array of different things to look for
21 something.
22 Q. Absolutely. And all the doors were shut, right?
23 A. For the greater extent, yes.
24 Q. Well, the only option that you had was to file
25 bankruptcy, fair?

1 A. Yes. But what I didn't -- what I don't remember -- I
2 will state this again -- I don't remember the correlation
3 between the bankruptcy and keeping my house. I just -- I just
4 don't remember that.
5 Q. Well, you know that when you filed the bankruptcy you
6 stayed in your house, right?
7 A. I did. But I can't remember if the filing of the
8 bankruptcy had that type of effect on my house. I don't
9 remember that with my lawyer. I just don't remember it.
10 Q. All right. And you were able to stay in your house
11 after filing bankruptcy for many months, correct?
12 A. Yes. I couldn't --
13 Q. Okay. All right. So when you talked to Beverly
14 Rocheleau and finally entered into the contracts, that was in
15 July of 2005, correct?
16 A. Yes.
17 Q. All right. And what you did is that you -- you
18 totally understood the program, fair?
19 A. To the greater extent, yes.
20 Q. Well, you understood that you were entering -- at the
21 beginning, the first set of documents that you signed, you were
22 entering into a contract with a company to find you an investor
23 that would allow you to sell your home, and then after a period
24 of 12 months, a condition to have you buy the home back,
25 correct?

1 A. Yes, but no.
2 Q. Well --
3 A. If I had known --
4 Q. That's fine. You've answered my question.
5 A. Okay.
6 Q. You knew that the first documents that Beverly
7 Rocheleau sent you were a contract with the company so that
8 that company could then begin to find an investor, true?
9 A. True.
10 Q. That's what you told the Government when they
11 interviewed you, true?
12 A. True.
13 Q. That you understood the program, you knew you were
14 going off title, you told the Government that?
15 A. I understood what had been told to me. That's all I
16 knew.
17 Q. And you remember talking to the Government on
18 July 18, 2013?
19 A. Talking to the Government? I'm not clear on that.
20 Q. Well, do you remember having an interview with the
21 Government, telephonically?
22 A. No.
23 Q. Not at all?
24 A. No.
25 Q. You don't remember talking to Brandon Kutts, Special

1 Agent IRS?
2 A. On July -- say it again? July?
3 Q. July 18th, 2013.
4 A. Yes. I'm sorry. I thought you were talking about
5 earlier. Yes, I do remember that.
6 Q. And you remember telling the Government in that
7 conversation that you entered into a contract with Creative
8 Loans, true?
9 A. Yes.
10 Q. And that they would locate someone to purchase your
11 house from you, correct?
12 A. Yes.
13 Q. And that you would rent your property back for one
14 year, that's what you told the Government, correct?
15 A. Basically that's what I was told, yes.
16 Q. Well, that's what you told the Government, you didn't
17 say basically --
18 A. Yes. Yes. That's -- you're right. For one year.
19 Q. And then you told the Government that the contract
20 that you entered into, that at the conclusion of the program
21 you could re-purchase your house back, right?
22 A. Yes.
23 Q. And that you told the Government that you understood
24 that you would not be on title to the property, correct?
25 A. Repeat that again, please?

1 Q. You told the Government on July 18, 2013 that you
2 understood you would not be on title to the property, correct?
3 A. That I would not be on title to the property?
4 Q. That's what you told the Government, correct?
5 A. I don't remember that. I just remembered kind of
6 explaining what I understood at that time, and I don't remember
7 saying that.
8 Q. And you told the Government that you would be placed
9 back on title when you re-purchased the home at the end of that
10 one-year period, do you remember telling the Government that?
11 A. I do.
12 Q. And the only way you could be put back on title is
13 because you weren't on title in that year period, correct?
14 A. I wasn't on title in that year period because
15 somebody else bought the house.
16 Q. Is that a true statement?
17 A. Yes.
18 Q. Okay. All right. So you -- so Beverly Rocheleau
19 sent to you in July the equity purchase agreement, the lease
20 agreement, the beginning documents with the company, correct?
21 A. Yes. I --
22 Q. And you signed those, correct?
23 A. I signed what she sent to me, yes.
24 Q. And you returned a copy back to the company, correct?
25 A. Yes.

1 Q. And you kept a copy, correct?
2 A. Oh, yeah.
3 Q. And you had time to review those documents, correct?
4 A. Yes, of course.
5 Q. Right. And if you had any questions, did you take
6 them to your bankruptcy lawyer?
7 A. At that time, no.
8 Q. Did you take them to any friends and go over it with
9 any friends?
10 A. Yes.
11 Q. And you talked about the documents?
12 A. There was questions raised.
13 Q. Right. And you talked about them, correct?
14 A. Yeah. And they seemed okay.
15 Q. All right. Okay. So then as the timeline continued,
16 the company was doing various things after you entered into the
17 agreement, and that's what you discussed on direct examination
18 about the appraisal, right, you had a question about why the
19 appraisal took so long, right?
20 A. Took three months, basically -- roughly.
21 Q. And you had questions about that, right?
22 A. Of course.
23 Q. And you called Beverly asking what's going on, how
24 long did it take, right?
25 A. It took a long time along the way to get to her and

1 talk to her, yes.
2 Q. Right. But you called her and asked her questions,
3 correct?
4 A. Yes.
5 Q. And that was the person that you talked to during the
6 entire timeline of the program and --
7 A. No.
8 Q. Let me finish my question, please.
9 That was the person you talked to during the entire
10 timeline of the program until your house sold, correct?
11 A. No.
12 Q. Because that's what you told the Government on
13 July 18, 2013 that the only person you talked to prior to your
14 house selling was Beverly Rocheleau?
15 A. That is wrong.
16 Q. Do you remember writing the Government a letter on
17 about May 26, 2013?
18 A. I've written them a couple of letters, yes.
19 Q. And in that letter on May 26, 2013, nowhere in that
20 letter do you say you talked to anybody through that timeline
21 up until the closing, your house sold, to anyone other than
22 Beverly Rocheleau, correct?
23 A. I told them that verbally. I talked to them. When I
24 talked to that gentleman who called me in July of 2013, I told
25 him who I talked to. It wasn't just Beverly. No.

1 Q. During that whole time period, the only thing you
2 told the Government in the letter you wrote on May 26, 2013,
3 was Beverly Rocheleau, all up until the time the house closed,
4 correct?
5 A. If I did that, it was by mistake. Because I talked
6 to -- she passed me over to a couple of people during that
7 period of time.
8 Q. Well, the letter that you wrote on May 26, 2013, you
9 wrote in your home, right?
10 A. It was a chronology, yes.
11 Q. And you had all the time in the world to write it,
12 correct? I mean, nobody rushed you?
13 A. No. It's not even about that. What it's about is
14 the fact if I left out the name of John Corcoran or left out
15 the name of Domonic McCranes (sic), or whatever, it was not
16 because I did not do that. Maybe I just did not add it. These
17 are people that I talked to when I was going through this.
18 Q. I understand. And you told the ladies and gentlemen
19 of the jury that. But the reality is, what you've told the
20 Government is that through the entire timeline up until the
21 time that the house was sold, the only person you told the
22 Government you talked to was Beverly Rocheleau?
23 A. I said that the key person --
24 Q. Isn't that correct?
25 A. -- who dealt with me on this paperwork and all the

1 things that I needed explanation about, she talked to me.
2 There were times when she passed me over to other people to get
3 clarity.
4 Q. And the only time that she passed you to other
5 people, that you told the Government, was after your house
6 sold, correct?
7 A. No. Initially, before I even started this process I
8 talked to the head guy. She turned me over to him. I wanted
9 to find out more about the program.
10 Q. Well, you say you talked to the head guy. There is
11 nobody that came on the phone and said, hi, Ms. Brockway, I'm
12 the head guy of the company, fair?
13 A. There was a guy that came on the phone that said --
14 you know, when she turned me over, I think his name was John --
15 I'm going to say -- I just don't remember his name. It's in
16 the letters that I received from different people from the
17 company.
18 If you go through the file, you'll see his name on
19 there. These are people that answered questions that I had.
20 Because she couldn't give me all the answers sometimes. And so
21 she would refer me to somebody else on the phone.
22 Q. And when she referred you was after your house had
23 sold, correct?
24 A. No. This was prior to me, you know, understanding
25 what I was going to be going through with this company. When I

1 was finding out what did it mean that I had to rent the house
2 to someone. They went through that whole litany of you're
3 going to be writing -- you're going to -- somebody is going to
4 own your house for a year. They went through all that.
5 Beverly did not do that. Beverly was like a
6 secretary. She was like somebody who just sent me forms and
7 those kinds of things. I had talked to different people along
8 the way. If I didn't have their names in that information that
9 I sent, I talked to them.
10 Q. Well, you didn't tell the Government that?
11 A. Well, okay, I might have forgotten that. But she
12 would pass me over to someone to give me more clarity on
13 something.
14 Q. And what you're saying is that in the most important
15 thing in your life, keeping your home, and talking to people,
16 when you talked to Government, you just forgot?
17 A. It's not about just forgetting. It's about -- that
18 was a myriad of things -- all of these things that took place
19 -- because, you know, when I said that I just talked to
20 Beverly, in that period of time when she passed me over to get
21 the clarity, sometimes, you know, you just forget that you talk
22 to somebody else. Because she was a key person that I talked
23 to basically on the phone for paperwork, for the appraisal, for
24 those kinds of things.
25 But to get a clear, conceptual understanding of what

1 I was getting ready to go through, I needed to know that. I
2 even said to her once on the phone, I need to talk to the
3 person that can give me some real solid information on this --
4 you know, I'm going to be selling my house to somebody else.
5 What does that mean at the end? So she said, well, let me pass
6 you over to so and so.
7 MR. SAMUEL: Objection.
10 THE COURT: Again, if you can provide a short answer
11 to a question and then wait for the next question. Thank you.
12 Mr. Greiner.
13 Q. BY MR. GREINER: And through this whole process, you
14 totally understood, that's why you entered into it, correct?
15 A. I thought I knew. I guess I didn't.
16 Q. Well, you did understand. You understood you were
17 selling your house, right?
18 A. I knew I was selling my house.
19 Q. And you knew you were paying rent, correct?
20 A. And I knew I was paying rent.
21 Q. Now, you actually bought that house years before,
22 correct?
23 A. I did.
24 Q. And so you knew about signing documents at closing?
25 A. I did.

1 Q. Escrow instructions, HUD-1 statements, termite
2 inspections, roof inspections, all of that, correct?
3 A. I did.
4 Q. And you're familiar with that, correct?
5 A. Yes. To the greater extent.
6 Q. Okay. So let's turn to Government's Exhibit 12A1,
7 please.
8 A. Okay --
9 Q. Not you. It's going to show up on the screen.
10 Judge, may I retrieve the documents?
12 Q. BY MR. GREINER: This is a final HUD settlement
13 statement, and you've seen those before, correct?
14 A. I have.
16 And you understand that you sold your house for
17 $470,000, correct?
18 A. I understood that because --
19 Q. You understood that, correct?
20 A. Yes, I saw that on there.
21 Q. All right. And you also understood that on the
22 borrower side, which is the left-hand side, where it says
23 "deposit to close," the borrower brought $47,000 to make sure
24 that this deal closed, correct?
25 A. That was my assumption.

1 Q. Well, it's not an assumption. You knew that because
2 you didn't pay $47,000, correct?
3 A. No, but I did not understand that.
4 Q. Did you not pay $47,000 --
5 A. No, no, I didn't. I didn't pay 47,000. No.
6 Q. You knew the borrower had to pay $47,000 at close,
7 that's what that means, correct? Because you were a borrower
8 at one time, right?
9 A. I don't -- I did not know that. I did not know that.
10 Because everything on this sheet right here, as a lay person I
11 did not know, necessarily, that. I just knew, in terms of the
12 numbers, what they sold my house for. All the other things I
13 did not know specifically.
14 Q. But you knew that the borrower had to pay $47,000?
15 A. No.
16 Q. All right.
17 A. I did not.
18 Q. Let me ask you a question, let me go back to your job
19 at King County. What you were your job duties and
20 responsibilities?
21 A. In King County I was head of marketing.
22 Q. What does that entail?
23 A. That means looking at ways and opportunities to deal
24 with environmental issues, environmental products, and get them
25 out to the public so that they understood what it was about.

1 Q. And would that entail reviewing technical documents?
2 A. No.
3 Q. Would that review environmental documents?
4 A. The county's environmental plan, but that was all.
5 Q. Okay. But had you to review environmental documents,
6 correct?
7 A. To a certain degree, but not to a larger degree.
8 Q. But reviewing those, you had to pare that down so
9 that you could make it understandable to the public, correct?
10 A. To a certain degree.
11 Q. Okay.
12 A. Not to this degree.
13 Q. Okay. My question is, your job duties required you
14 to read Environmental Protection Agency documents --
15 A. No.
16 Q. Not at all?
17 A. Not in what I was doing. I read the county's policy
18 on keeping King County green, and what they wanted to do. The
19 EPA side of things was beyond what my level of work was with
20 respect to the job that I had.
21 Q. Okay. So reading the county's documents, you had to
22 then digest that and put it into a document that you could give
23 out to the public, is that a fair statement?
24 A. The fair statement is I had to let the public know
25 that King County had a green policy.

1 Q. Okay. Just one moment, Judge. I'm trying to find a
2 document.
3 While I'm looking for that document, Ms. Brockway,
4 you received $10,000 cash when your house sold, correct?
5 A. When my house sold, I received a check for $108,000.
6 Q. But you received $10,000 in this program, correct?
7 A. Not that I've received.
8 Q. Okay. Well, let's go to 12A4-12, please.
9 A. I don't remember receiving a check for -- where?
10 Q. It will show up on the screen. It will be easier for
11 you. Do you see your initials next to the letter "B"?
12 A. I did.
13 Q. "Consideration in the amount of $10,000 was paid
14 therefore," do you see that?
15 A. Yes.
16 Q. And do you see your signature down at the bottom?
17 A. I do.
18 Q. All right. So you received $10,000, correct?
19 A. No.
20 Q. Never?
21 A. No. Not that I remember.
22 I said not that I remember because I would have had
23 that in my factual documentation that I gave to the FBI. And I
24 don't think I ever gave them --
25 MR. TEDMON: Objection, Your Honor, to anything after

1 "no." Strike and --
3 MR. TEDMON: -- advise the jury.
4 THE COURT: After the first sentence, the answer is
5 stricken. Next question.
6 Q. BY MR. GREINER: All right. And then you knew that
7 you had signed a document that allowed you, if you qualified,
8 to repurchase your property, correct? Do you recall that?
9 A. At this particular juncture, I just remember signing
10 many pieces of paper, putting my initials on many things.
11 Q. All right. Let's put up Government's 12A4-7, please.
12 Do you see your signature on the left-hand side?
13 A. Yes.
14 Q. Do you see that this addendum to the equity purchase
15 agreement that you had entered into says that you're going to
16 have the opportunity at the end of 12 months to buy back your
17 property for $401,115, do you see that?
18 A. Yes.
19 Q. Okay. And you knew that you had agreed to a certain
20 price to be able to buy your property back, correct?
21 A. Yes.
22 Q. Can we go to DM --
23 Judge, series of documents, but I don't think I need
24 a series. Let me just put in DM-H12 at this point. While
25 we're doing it, DM-H12 and -13?

7 THE COURT: All right. DM-H12 and -13 are admitted.
8 (Defendants' Exhibit DM-H12, DM-H13, (See description
9 in index) admitted into evidence.)
10 Q. BY MR. GREINER: If we could have DM-H12 on the
11 screen, please.
12 Now, the first document you saw gave you a purchase
13 price of about 401,000. Then you entered into an addendum that
14 raised that price up to $414,500, that was what you were going
15 to be able to purchase your property back at at the end of
16 12 months if you met all the conditions, correct?
17 A. Yes.
18 Q. And it says "consideration $10,000," because that's
19 what you received, correct?
20 A. I did not receive $10,000.
21 Q. And you see that the monthly lease payment was
22 $1,850, correct?
23 A. Yes.
24 Q. If we could enlarge, please. And that document is
25 dated January 14, 2006, true? At the top?

1 A. Yes, sir. I can't remember how we got to that point,
2 but I remember going through that when that got raised.
3 Q. And that's your signature at the bottom dated
4 January 13, 2006, correct?
5 A. Yes.
6 Q. All right. Now, you've already seen the final HUD
7 statement where it says that your house sold for $470,000, and
8 you understood that, true?
9 A. 400 and what?
10 Q. $70,000. You already saw that, we already talked
11 about that, remember?
12 A. Right.
13 Q. And this document says now, at the end of twelve
14 months you're going to have an opportunity to repurchase your
15 property for $414 (sic), rounding the numbers off, correct?
16 A. Yes.
17 Q. So if you purchase -- if you sold your property for
18 470, and you were going to have an opportunity to buy it back
19 for 414, that's a difference of $56,000, correct?
20 A. Yes. That is the difference, yes.
21 Q. Okay. Now, you've already told the ladies and
22 gentlemen of the jury about $108,000 check, correct?
23 A. That was the equity in my home when it was sold.
24 Q. And you understand the term "equity," correct?
25 A. I understand what? I'm sorry?

1 Q. You understand the term "equity," correct?
2 A. Yes.
3 Q. Equity means the only way you know how much equity
4 you have in your house is if you sell it, correct?
5 A. Yes.
6 Q. Okay. And you could not sell your house on your own,
7 true?
8 A. True -- well, no, I don't know that.
9 Q. Well, it was an option that you didn't exercise prior
10 to filing bankruptcy, true?
11 A. I understand that, but I didn't know I couldn't,
12 though.
13 Q. Well, and it was an option that you didn't exercise
14 while you were in bankruptcy, true?
15 A. True.
16 Q. And it was an option that you didn't exercise through
17 the entire timeline dealing with this company, isn't that
18 correct? You didn't personally sell your property?
19 A. True.
20 Q. All right. So, we have a difference of $56,000. Now
21 you've told the ladies and gentlemen of the jury that you got a
22 $108,000 check, correct?
23 A. Yes.
24 Q. All right. To be able to buy back your property at
25 414,000, somebody has to pay that difference between the 470

1 and the 414 because no bank -- you know this because you
2 purchased your house before -- no bank's going to lend you
3 money for 414,000 for a house that's sold for 470, true, that's
4 just bad business?
5 A. Yes.
6 Q. All right.
7 A. Can I ask you a question?
8 Q. You can only answer my questions. That's how we're
9 going to do this. Okay?
10 THE COURT: Hold on a second. You're just over
11 30 minutes at this point.
12 MR. GREINER: Just a few more minutes, Judge.
14 Q. BY MR. GREINER: So if we take the $108,000, and we
15 subtract to 56, that leaves $52,000, okay? Yes?
16 A. Yes.
17 Q. And you told the ladies and gentlemen of the jury on
18 direct examination that the company was going to take $25,000
19 out of that, correct?
20 A. They were going to take $25,000 out of what? I'm
21 sorry?
22 Q. The cost to you was going to be $25,000?
23 A. Right. Right. Right.
24 Q. So that takes it down to 27. And then $10,000
25 consideration to you takes it down to 17,000, right?

1 A. Yes. I never got that.
2 Q. And there was nobody during this entire process that
3 ever told you that you were going to have $17,000 in your
4 pocket, correct? Nobody ever said that?
5 A. No. Not directly.
6 Q. Nobody said it indirectly? Nobody said, hey, you
7 know what, at the end of this, you're going to have cash money
8 in your pocket, true?
9 A. True.
10 Q. All right. So when you told the ladies and gentlemen
11 of the jury that you had $108,000 check and that you talked to
12 an individual named Domonic McCarns, and he said to send the
13 money to the company, that's because it wasn't your money, it
14 was the company's money that you entered into the agreements
15 for, true?
16 A. Wrong.
17 Q. And let's take a look at Government's Exhibit 12D2,
18 please. And I don't know if it's in evidence. If it's not, I
19 would move it in.
20 THE COURT: I believe that came in yesterday.
21 Agreed?
22 MR. GREINER: I think it did.
23 THE COURT: It's on the --
24 Q. BY MR. GREINER: All right. And this is the check
25 that you went to Washington Mutual Bank to get $108,000 to send

1 to the company, correct?
2 A. Yes.
3 Q. And it's not made out to Domonic McCarns, as you told
4 the ladies and gentlemen of the jury, that you sent a check of
5 108,000 to Domonic McCarns?
6 A. I never said that.
7 Q. It's made out to Creative Loans, isn't it?
8 A. I never said that.
9 Q. The check is made out to Creative Loans, isn't it?
10 A. Because he told me to make it out to Creative Loans.
11 Q. The check is made out to Creative Loans, true?
12 MR. TEDMON: Objection. Asked and answered.
14 Q. BY MR. GREINER: That check is not made out to
15 Domonic McCarns, true?
16 A. It's made out to Creative Loans via Domonic McCarns.
17 Q. Okay. And Domonic McCarns said, look, the money
18 wasn't yours, and we've already gone through why the money
19 wasn't yours?
20 A. Domonic McCarns -- if I can answer this question.
21 Let me answer the question.
22 THE COURT: Wait for the next question at this point.
23 Q. BY MR. GREINER: Domonic McCarns told you to return
24 the $108,000 because it didn't belong to you, correct?
25 A. Not quite.

1 Q. Domonic McCarns told you to please return that check
2 because you understood you were never going to have cash in
3 your pocket, true?
4 A. No. That's not what he said.
5 Q. Well, maybe just one or two documents, Judge. I
6 apologize, Judge. If we could have --
7 MR. TEDMON: If we could take this off the screen if
8 it's not being utilized.
10 THE COURT: You've identified the document,
11 Mr. Greiner?
12 MR. GREINER: I think I did, Judge.
13 Q. BY MR. GREINER: If I could have on the screen, front
14 page of 12A4, first.
15 THE COURT: All right. That's already in.
16 Q. BY MR. GREINER: This was the equity purchase
17 agreement that you signed way back at the beginning, correct,
18 Ms. Brockway?
19 A. I think it is. I don't remember what -- you know,
20 it's been years since I remember what I signed.
21 Q. And you understood by just the words of it that you
22 were selling the equity in your house because you were entering
23 the equity purchase agreement, correct?
24 A. No.
25 Q. But you didn't stop the process, did you?

1 A. I didn't stop the process --
2 Q. You didn't stop the process, correct?
3 A. -- but that's when I talked to some of the other
4 people in the company to try to get explanations.
5 Q. And when you got the explanations, you didn't stop
6 the process, correct?
7 A. They made it sound right.
8 Q. You didn't stop the process, correct?
9 A. No.
10 Q. You never stopped the process, correct? Correct?
11 A. Put it this way, I'm in court right now. I guess I
12 did.
13 Q. Well, you never stopped the process up until -- you
14 never stopped the process at all when you were making the
15 payments? You never stopped the process when you were in the
16 contract? You never called anybody up and said, I don't want
17 to sell my house, right?
18 A. When I was told the FBI was investigating it, I did.
19 MR. TEDMON: Objection, Your Honor. Move to strike.
21 answer.
22 Q. BY MR. GREINER: You never told the company -- by the
23 time your house sold, you had never told the company that you
24 wanted out of the program, correct?
25 A. No -- yes, I mean I never told them that. You're

1 right.
2 Q. If we could have 12A4-5 on the screen, please. It's
3 labelled 12A4-5. Thank you.
4 And this addendum to equity purchase agreement dated
5 July 5, 2005 shows you as the seller, correct?
6 A. Yes.
7 Q. And shows the purchaser as Funding Foreclosures,
8 correct?
9 A. I thought it was Creative Loans.
10 Q. Shows the purchaser as Funding Foreclosures, correct?
11 A. Yes.
12 Q. And D1, as you read at some point in time, and said:
13 Seller must have fully and completely performed each and every
14 term of the (sic) condition of the lease agreement for the
15 entire term of the lease agreement, correct?
16 A. It did say that, yes.
17 Q. Let me just review my notes real quick, Judge. Thank
18 you, Judge.
19 THE COURT: All right. Any other cross-examination?
20 Mr. Tedmon?

2 BY MR. MORRIS:
3 Q. Ms. Brockway, I would like to first talk to you about
4 the aspects of your testimony that discuss being taken off
5 title. All right.
6 So just to make sure I understand. When you talked
7 to Beverly, she told you you were selling your house?
8 A. She told me I was selling my house, but I wasn't sure
9 of the process in doing that.
10 Q. Okay.
11 A. That's when she referred me to somebody else to talk
12 to.
13 Q. But Beverly -- as far as coming off title, Beverly
14 told you the truth, that you were coming off title?
15 A. Yes.
16 Q. And when you spoke to the FBI in the discussion that
17 Mr. Greiner was asking you about, that's what you told the FBI?
18 A. Yes. Yes.
19 Q. Do you recall writing up in around the 2010 timeframe
20 a sort of chronology of what happened?
21 A. Yes, I do.
22 Q. And in that chronology -- you also said in that
23 chronology that Beverly told you that you'd come off title?
24 A. Yes.
25 Q. And that was your testimony yesterday was that

1 Beverly told you that you'd come off of title?
2 A. Yes.
3 Q. And that's been your consistent version all along?
4 A. Yes.
5 Q. Okay.
6 A. But, again, I got clarification on that.
7 MR. GREINER: Non-responsive. No question.
8 THE COURT: Wait for the question. Just to make the
9 record clear.
10 Q. BY MR. MORRIS: Just talking about the title at this
11 point and the representations made by Beverly about being on
12 title.
13 A. Right.
14 Q. Let's then talk about the equity in your home.
15 When you signed all these documents you've been
16 looking at today, did you know that the equity was going to
17 come out of your house and go to somebody else?
18 A. No.
19 Q. When did you learn that?
20 A. I knew that when Stewart Title sent me the check.
21 Q. Okay.
22 A. And I had the check, and I thought I sold my home,
23 and I was getting -- this was some money that I was getting for
24 my home.
25 Q. And so that was after the transaction had closed?

1 A. After the transaction had closed for the sale of my
2 house.
3 Q. In 2006?
4 A. In 2006.
5 Q. And so that was after you signed the documents that
6 had been sent to you from the company?
7 A. Right.
8 Q. And that was after you had talked to Beverly?
9 A. Right. I talked to the Stewart Title person --
13 Q. BY MR. MORRIS: And when you received the $108,000
14 check, I think your testimony was it wasn't Beverly you talked
15 to, but it was somebody else?
16 A. Right.
17 Q. Who was the person that told you to send that check
18 to them?
19 A. Domonic.
20 Q. Can we have 12A1, please. And this is a document you
21 were discussing with Mr. Greiner. Do you recall looking at
22 this?
23 A. Yes.
24 Q. Okay. And so we're looking here in that April 2006
25 timeframe. If you could zoom out.

1 And in this section here, do you see this line 202
2 that says principal amount of new loans?
3 A. Which line was that? I'm sorry.
4 Q. 202, principal amount of loans?
5 A. Yes.
6 Q. And what's the amount that's listed there?
7 A. 329,000.
8 Q. And in line 204, principal amount of second loan,
9 what's listed there?
10 A. 94,000.
11 Q. And just to clarify, that document -- when did you
12 first see that document that we were just looking at?
13 A. I don't remember. You mean from what I just saw on
14 the screen or --
15 Q. Yeah. The one you saw on the screen, when was the
16 first time you saw that document?
18 MR. MORRIS: Thank you, Your Honor.
19 THE COURT: All right. Any further recross?
20 Mr. Greiner?
21 MR. GREINER: Based on their examination, Judge.
24 BY MR. GREINER:
25 Q. Okay. The Government talked to you about equity, so

1 let's get some terms clarified. You knew what the reality of
2 foreclosure was, right?
3 A. Basically.
4 Q. The reality of foreclosure was you were going to lose
5 your property, true?
6 A. Uh-huh.
7 Q. True?
8 A. True.
9 Q. Lose 100 percent of your equity, correct?
10 A. I didn't know that.
11 Q. For foreclosure?
12 A. I didn't know that.
13 Q. So if a bank foreclosed on your property, you did not
14 know that you would lose all of your equity?
15 A. I did not know that.
16 Q. And that you would -- in foreclosure that you would
17 have a foreclosure on your credit rating, correct?
18 A. I knew -- I think I knew that.
19 Q. Okay. Well, as you sit here today, you don't have a
20 foreclosure on your credit rating, true?
21 A. No.
22 Q. All right. With the Funding Foreclosures program
23 that you had entered into, that was sold to you by Beverly
24 Rocheleau, correct?
25 A. I don't know. I don't know who sold me, who had told

1 to me.
2 Q. You told the ladies and gentlemen of the jury that
3 she was your point person, right?
4 A. She was a --
5 Q. Is that correct?
6 A. Not point person. I did not view her -- I viewed her
7 as a secretary, as a clerk, as somebody who wrote up the
8 paperwork and mailed it to me. That's the only way I saw her.
9 She never identified herself in any formal manner as
10 anybody high up in that company. She referred me to people to
11 talk to. She was no more to me than an administrative
12 assistant.
13 Q. Well, she's the one you talked to about the program
14 at the beginning, right?
15 A. Not totally. I talked to a guy named John -- I think
16 it was Corcoran or somebody -- in the very beginning. She
17 referred me to him.
18 Q. Okay. So your testimony in front of jury is that in
19 the very beginning you talked to John Corcoran, is that right?
20 A. Initially. From her.
21 Q. That's your testimony, correct? I just want to get
22 it straight.
23 A. I think that's what his name was. Yes.
24 Q. All right. This program, this Funding Foreclosures
25 program, it gave you a second chance when nothing else would,

1 to be able to stay in your property and then repurchase it at
2 the end, correct?
3 A. That's what I was hoping.
4 Q. Okay. That's what the program was, correct?
5 A. That's what I was told.
6 Q. And that was going to save a foreclosure from being
7 on your credit, true?
8 A. I don't remember them saying that, but it wasn't on
9 my credit.
10 Q. And it's still not on your credit, right?
11 A. Yeah.
12 Q. So it's not there. All right.
13 So by entering the program, you were losing the deed
14 to your house with an opportunity in the program to buy it back
15 in 12 months, fair?
16 A. It sounded right.
17 Q. That's what the program was that you understood,
18 correct?
19 A. That's the program that I was told was going to
20 happen.
21 Q. And that's what you understood, correct?
22 A. Yes. Initially.
23 Q. And all you had to do to have that opportunity for
24 buying back your deed was to stay in the program for 12 months
25 and making the payments, correct?

1 A. Yes.
2 Q. All right. And for whatever reason, you did not stay
3 in the program for the 12 months, fair statement?
4 A. How do I answer that?
5 Q. You answer it by my question. Let me try it again,
6 please.
7 A. Yes.
8 Q. Thank you. And even at the end, you still did not
9 have a foreclosure on your credit, did you?
10 A. No.
11 Q. And finally, what this second chance program did was
12 it allowed you to sell your house, sell your equity, with a
13 chance of getting your house back by using the equity to
14 purchase your house, by staying it in for 12 months, fair
15 statement?
16 A. No. No.
17 Q. Okay. Because that was -- those were the documents
18 that you signed, true?
19 A. I signed the documents but --
20 Q. True?
21 A. -- no, to the last question you asked me.
22 Q. Well, that's what you documents you signed told you,
23 true?
24 A. That's what I may have signed. But, no, to your
25 question.

1 Q. Okay. My question is simple. That's what the
2 documents you signed told you, true?
3 A. That's the documents I signed. But, true? No.
5 THE COURT: Any further cross, Mr. Tedmon?
13 THE COURT: You are excused and you may step down.
14 Thank you. Government's next witness.
15 MR. ANDERSON: The United States calls Marjorie Sly.
20 THE CLERK: Thank you. You may be seated.
21 Please state your full name and spell your last name
22 for the record.
23 THE WITNESS: My name is Marjorie Sly,
24 M-a-r-j-o-r-i-e, S, as in Sam, l-y.

1 MARJORIE SLY,
6 BY MR. ANDERSON:
7 Q. Good morning, Ms. Sly.
8 A. Good morning.
9 Q. What general area are you from?
10 A. I'm from Duvall, Washington state.
11 Q. And prior to that, what general area did you live in?
12 A. I lived in Lancaster, California, or Quartz Hill,
13 California, the high desert.
14 Q. At some point back around 2006 did you become
15 involved with a company calling Funding Foreclosures?
16 A. Yes.
17 Q. How did you get involved with Funding Foreclosures?
18 A. I had, at that time, a gentleman, Jeff Ball, who was
19 engaged to my sister-in-law. And he had talked to me about an
20 investment opportunity.
21 Q. Did you follow up on that potential investment
22 opportunity?
23 A. Through Jeff, yes, I did. Are you asking if I --
24 Q. That's okay. I can ask the next question. Did you
25 end up speaking with anyone who worked for Funding

1 Foreclosures?
2 A. Yes, I spoke with Ben Budoff.
3 Q. What did you speak with Mr. Budoff about?
4 A. Exactly what Jeff had talked about, investment
5 opportunity. I believe -- I want -- the name that you're
6 saying is also, I think, Creative Loans as well.
7 Q. Did you also know this company as Creative Loans?
8 A. Uh-huh. Yes.
9 Q. Maybe you should pull the microphone a little bit
10 closer to you.
11 A. Better?
12 Q. When you spoke with Benjamin Budoff, did Mr. Budoff
13 explain the program to you or offer you an explanation of what
14 it was?
15 A. Yes.
16 Q. What did Mr. Budoff tell you the investment program
17 was?
18 A. He stated that the opportunity was to be able to help
19 people save their homes who were losing them. And that I
20 didn't need to put in any money. My contribution, if you will,
21 was to let them use my Social Security number to purchase these
22 homes with the investor's money. That would allow those people
23 to stay in their homes for a year, and they would buy the home.
24 Allow them to rent that home for a year, and then sell it back
25 to them once they got on their feet.

1 Q. Were you supposed to get anything out of the
2 transaction?
3 A. Yes. I was to get $5,000 per transaction, per home.
4 Q. And did you understand yourself to be the only
5 investor in each home or there would be other investors in the
6 home?
7 A. That there would be multiple investors.
8 Q. Did you provide information to Mr. Budoff in order to
9 participate in this program?
10 A. Yes, I did.
11 Q. What information did you provide to him?
12 A. Provided my work history, my earnings, my husband's
13 earnings and work history as well.
14 Q. Did you provide your Social Security number?
15 A. Yes, I did.
16 Q. What's the next thing that happened with your
17 involvement in this investment?
18 A. Well, after the discussion was made and the attempt
19 -- they let me know what the intention was of the group, they
20 called and said that they had a couple --
23 Q. BY MR. ANDERSON: To the extent you can use actual
24 names of the people you spoke with.
25 THE COURT: Why don't you tee up the question to

1 focus it that way. Wait for the next question.
2 Q. BY MR. ANDERSON: Did you speak with anybody about
3 following up on that investment or what they represented to you
4 as an investment?
5 A. Ben Budoff told me that -- he called me and said that
6 he had a couple houses that we -- that they found, that we
7 needed to do the paperwork on. And that he was going to be
8 sending a notary public over to my home. And that I would just
9 sign those papers, and that we would get started.
10 Q. Did a notary come to your home?
11 A. Yes, she did.
12 Q. And did you see, generally, what type of papers the
13 notary brought?
14 A. They looked like escrow papers, kind of the same
15 thing that I had seen with purchasing a home.
16 And she sat down with me. She took our information,
17 looked at our identifications, took our fingerprints, and said
18 you need to sign here, sign here, sign here, and sign here.
19 Q. Did those documents raise any concerns with you?
20 A. Yes, they did. I was a little confused as to how
21 both of them, I believe, were from Washington Mutual bank, and
22 I couldn't quite figure out how I was going to be able to buy
23 two homes because I currently was paying on a home.
24 So I wasn't quite sure how that was working, and I --
25 so I signed. And I called Ben after that and I said, how does

1 this work? I don't understand how the banks -- because I don't
2 know -- in my lifetime, when a bank says you don't qualify, you
3 don't qualify. I couldn't understand how I was qualifying with
4 just my signature to buy these homes.
5 Q. What did Ben say to you, if anything?
6 A. He said it was all part of the investment, and that
7 it was covered, and it was okay to go ahead and sign it.
8 Q. Did you end up signing the documents?
9 A. Yes, I did.
10 Q. About how long was the notary there for?
11 A. Maybe 25 minutes.
12 Q. Let's bring up Government's Exhibit 17A2, which has
13 previously been admitted.
14 Looking at the top half of the first page of the
15 exhibit, do you see a signature there on the borrower line?
16 A. Yes, sir.
18 A. Yes, that's mine.
19 Q. And do you recognize the address and the subject
20 property address line that's 896 Yellowstone Road, Cleveland,
21 Ohio?
22 A. Yes.
23 Q. How are you able to recognize that address?
24 A. Because that was the paperwork that I sign -- that
25 was one of the homes that the investment company was

1 purchasing.
2 Q. And let's go to the bottom portion of that document.
3 Do you see under the borrower section there is a home
4 phone number listed, was that your number at the time?
5 A. Yes, it was.
6 Q. Do you also see the line where it says "present
7 address," was that your address at the time?
8 A. Yes, it was.
9 Q. And "own" is checked and then "three years," was that
10 correct information at the time?
11 A. Yes. We've been living there three years, uh-huh.
12 Q. And there are initials at the bottom next to a line
13 that says "borrower," do you see those initials?
14 A. Yes.
15 Q. Are you able to recognize them?
16 A. Yes. Those are mine.
17 Q. Let's go to page two of this document.
18 Do you see the borrower section, the first name and
19 address of employer?
20 A. Yes.
21 Q. All right. What's listed in that first box?
22 A. Yoh Healthcare.
23 Q. Do you know what Yoh Healthcare is?
24 A. Yes. It's a registry program for RNs, which I am. I
25 worked for them once or twice a month.

1 Q. And how long had you been working for them in June of
2 2006?
3 A. Just about a little over a year.
4 Q. And then below that do you see Antelope Valley
5 College listed?
6 A. Yes.
7 Q. Do you know what Antelope Valley College was?
8 A. Yes. It's a community college for an RN program.
9 Q. Did you work there at the time?
10 A. Yes, I was a clinical nurse instructor.
11 Q. Approximately how much money per month were you
12 making working for Antelope Valley College?
13 A. Well, it kind of depended but between 2 and 25 a
14 month.
15 Q. 2,000 and $2,500?
16 A. 2,000 to 2,500, yes, depending on the semester.
17 Q. And then there is a line for Marjorie and Co.
18 Wellness Center, and dates from 10-2003 to 10-2005, do you see
19 that?
20 A. Yes.
21 Q. Do you know what employer that is?
22 A. That was my own business.
23 Q. And you had been running that until October 2005?
24 A. Yes.
25 Q. Had you been making $5,000 a month at that position?

1 A. No. That was the gross of the business. We had
2 other therapists. I had two therapists, an acupuncturist, and
3 so it was the gross of the business. It wasn't what I would
4 take home.
5 Q. What, approximately, were you making?
6 A. I was making about $1,000 a month.
7 Q. Let's go to the bottom of this page.
8 How much, approximately, in total, between both
9 Antelope Valley College and Yoh Healthcare, were you making in
10 June 2006?
11 A. Are you asking me what I was earning?
12 Q. What you were actually earning?
13 A. I was probably making about 3,000 a month, roughly.
14 It depended. Because I was registry, I would be assigned to
15 the position to work that night. But I was always the first
16 one -- if I was called off, if there was not enough patients, I
17 was the first one that was called off. So it was not a
18 consistent thing with Yoh.
19 Q. So approximately --
20 A. It would average, uh-huh.
21 Q. Approximately $3,000 a month?
22 A. Uh-huh.
23 Q. Is that yes?
24 A. Yes. Sorry.
25 Q. So where it says "base employment income of $7,500,"

1 is that correct?
2 A. No.
3 MR. SAMUEL: Objection. Leading. Assumes something
4 in evidence. That she knows what that term means.
6 Q. BY MR. ANDERSON: Were you making employment income,
7 wages of $7,500 a month in 2006?
8 A. No, I was not.
9 Q. Now, did you have, to your knowledge, $2,500 in
10 income from other sources?
11 A. No.
12 Q. Did you have any other sources of income other than
13 your employment?
14 A. Just what my spouse made.
15 Q. And if we look to the other side, combined monthly
16 housing expenses, do you recall approximately how much you were
17 paying for your mortgage on your house at the time?
18 A. Well, we had a 15-year fixed, so it was about 2200 a
19 month.
20 Q. Let's go to page three. Did you have a savings
21 account with First City Savings in June 2006?
22 A. Yes, I did.
23 Q. Approximately what was the balance of that savings
24 account at that time?
25 A. Well, I was -- we were an average family with three

1 daughters. I'm thinking that's a little high. I would say
2 about 3,000.
3 Q. And then let's go to the bottom of the page. Do you
4 see the schedule of real estate owned, and then it lists
5 42635 40th West Street in Lancaster?
7 Q. And that was with your personal residence at the
8 time?
9 A. My personal residence.
10 Q. Do you know whether or not it was worth $340,000?
11 A. No.
12 Q. What was it worth, approximately?
13 A. Around 2006, property values were not going up. We
14 bought the house for 248, I believe. I don't know. I hadn't
15 had my house appraised.
16 Q. And do you see where it says "amount of mortgages and
17 liens $238,000," right here?
18 A. Yes.
19 Q. Did you have $240,000 -- approximately $240,000 in
20 mortgages and liens on the property, or was it a different
21 amount?
22 A. I believe that's close, yes.
23 Q. Let's go to the next page, page four of the exhibit.
24 Were you able to make a down payment on the
25 properties that you were buying?

1 A. No. I was not asked to.
2 Q. And let's look at -- and when I say down payment, I
3 mean out of your personal funds did you have money available
4 for a down payment?
5 A. No.
6 Q. Then on this borrower signature line, do you
7 recognize that signature?
8 A. Yes. That's mine.
9 Q. And then there is a date written next to it,
10 June 7th, 2006, do you see that?
11 A. Yes.
12 Q. Do you know whose handwriting that is?
13 A. It looks like mine.
14 Q. And let's zoom out.
15 Did you provide employment information to Charles
16 Head over the telephone?
17 A. No.
18 Q. Did you provide information about your personal
19 finances, your house, or anything like that over the telephone
20 to Charles Head?
21 A. No.
22 Q. Who did you provide that information to?
23 A. Ben Budoff.
24 Q. Did you provide information that was correct or not
25 correct to Benjamin Budoff?

1 A. Information that was correct.
2 Q. Let's go to Government's Exhibit 17A3, which has
3 already been admitted into evidence.
4 Now, there is an "authorized by" line, do you see
5 that line?
6 A. Yes, sir.
7 Q. And there is a signature on it?
8 A. Uh-huh. Yes.
10 A. Yes, I do.
11 Q. How are you able to recognize that signature?
12 A. Been married to that guy for 37 years.
13 Q. Whose signature is that?
14 A. My husband's.
15 Q. You see that it's a cashier's check for $14,690?
17 Q. Did you, as a couple, have $14,690 of your own money
18 at that time?
20 Q. And that check is made out to Alliance Title, is that
21 correct?
23 Q. Let's go to Government's Exhibit 17A5.
24 When you signed the documents with the notary, did
25 you see a document like this?

1 MR. TEDMON: Objection, Your Honor, as to "like
2 this." I mean, he needs to ask: Did you see this document?
4 Q. BY MR. ANDERSON: Did you see this document?
5 A. No. I don't know what that is.
6 Q. Did you sign documents once or more than once?
7 A. More than once.
8 Q. In any of the times you signed documents, did you see
9 this document?
10 A. No.
11 Q. Did you ever see a document where you entered into a
12 contract with the person who owned the house?
13 A. No. It was only with the investment company.
14 Q. Let's go to Government's Exhibit 17A7.
15 What about a holding trust agreement, did you sign a
16 document -- did you sign this document?
17 A. No.
18 Q. Prior to your preparation for your testimony
19 yesterday, had you seen this document before?
20 A. No.
21 Q. Had you seen any documents like this before?
22 A. No. The only documents I saw were the purchasing
23 paperwork. I didn't know who Bertha was until after. But I've
24 not seen this document, no.
25 Q. When you signed the documents, did you know that it

1 was purported you were entering into some sort of holding trust
2 with that property?
3 MR. SAMUEL: Objection. No foundation.
5 Q. BY MR. ANDERSON: Let's go to Government's
6 Exhibit 17B.
7 Do you recognize the two signatures at the top of
8 this page?
9 A. Yes, I do.
10 Q. Whose signatures are they?
11 A. Those are mine and my husband's.
12 Q. And this is for that same Yellowstone Road in
13 Cleveland, Ohio property?
15 Q. We will go to the bottom quickly. And there is
16 information about you and your husband placed there, is that
17 right?
18 A. Yes.
19 Q. Same personal residence and same phone number?
20 A. Yes.
21 Q. Let's go to page two. In 2006, do you know where
22 your husband was working?
23 A. Yes. He was working for the California Department of
24 Corrections.
25 Q. Do you know approximately how much money he made at

1 that time?
2 A. He would make gross 45 to 5,000 depending on
3 overtime.
4 Q. Let's go to the bottom of this page. In 2006, was
5 your husband ever making $7,000 per month?
6 A. No.
7 Q. Did you and your husband have a combined income of
8 salary -- combined salary of $14,500?
9 A. No.
10 Q. Did you have even close to that?
11 MR. GREINER: Objection. Vague. Close?
12 MR. ANDERSON: I'll withdraw.
13 Q. BY MR. ANDERSON: Let's go to page three.
14 At any point in 2006 did you have $75,000 in your
15 First City savings?
17 Q. What was your average during that year in that
18 account?
19 A. About 3,000.
20 Q. Let's go to the fourth page. Do you see the
21 borrower's signature line and the co-borrower's signature line?
22 A. Yes, I do.
23 Q. Whose signatures are on those lines?
24 A. That is mine and my spouse's.
25 Q. Do you recognize the writing for the dates?

1 A. Yes.
2 Q. Whose writing is that?
3 A. That's ours.
4 Q. Okay. Did you ever receive a deed to Yellowstone, to
5 this address on Yellowstone Road in Cleveland, Ohio?
6 A. No, I did not.
7 Q. Let's look at Government's Exhibit 17C.
8 Do you recall if you ever received this warranty deed
9 to the property?
10 A. No, I don't.
11 Q. Let's go to page four. It does contain your names,
12 right, Marjorie Sly and Kenneth Sly?
13 A. Yes. Yes.
14 MR. ANDERSON: Let's go to Government's Exhibit 24A1,
15 Your Honor, I would ask that that be admitted pursuant to the
16 stipulation.
19 THE COURT: That was Mr. Samuel?
20 MR. SAMUEL: Yes.
24 MR. GREINER: Join in the objection, Judge.
25 THE COURT: All right. The objection is recorded.

1 The exhibit will come in.
4 White School Road, Honeybrook, PA admitted into evidence.)
5 Q. BY MR. ANDERSON: Let's go to 24A1, page five. Do
6 you recognize the signatures on the borrower and co-borrower
7 line of this document?
8 A. Yes.
9 Q. Whose signatures are they?
10 A. Those are mine and my husband's.
11 Q. And do you see the address for the subject property?
12 A. Yes, sir.
13 Q. 913 White School Road, Honeybrook, Pennsylvania?
14 A. Yes.
15 Q. Are you familiar with that address?
16 A. Yes.
18 A. It was one of the properties that was purchased by
19 the company.
20 Q. All right. Let's go to page two. In July 2006, was
21 the information provided in the income section still incorrect?
22 A. Yes.
23 Q. And incorrect in that it overstated your income?
24 A. Yes.
25 Q. Let's go to the top of the page. You see that there

1 is an additional employer listed in this section from the
2 previous document we looked at?
3 A. Yes.
4 Q. Which employer is that?
5 A. That's the top line, Antelope Valley Med College on
6 Temp Street West.
7 Q. Are you familiar with that employer?
8 A. No.
9 Q. Have you ever worked for a business by that name?
10 A. No.
11 Q. Let's go to page seven.
12 In July 2006 was it still not true that you had
13 $75,000 in your First City savings account?
14 A. That's true.
15 Q. And we'll go to page nine. Almost cut off by the
16 screen, but can you see the signature on the borrower and the
17 co-borrower's signature line?
18 A. Yes.
19 Q. Are those yours and your husband's?
20 A. Yes, sir.
21 Q. And you see the interviewer's signature line,
22 Benjamin Budoff, and "telephone" is checked, do you see where
23 that is written?
24 A. Yes.
25 Q. Had you actually spoken with Benjamin Budoff and

1 provided him information regarding your income?
2 A. I spoke with Ben, and I spoke with his secretary. I
3 just do not recall her name.
4 Q. And when you spoke with Ben and his secretary, did
5 you provide truthful and accurate information regarding your
6 employment and income?
7 A. Yes, I did.
8 Q. Let's go to page 11.
9 THE COURT: Could you finish up with your direct in
10 the next five minutes?
11 MR. ANDERSON: No. I don't think so, Your Honor.
12 We're close, but not that close.
13 THE COURT: All right. Let's get through this
14 exhibit, and then we'll take a break.
15 Q. BY MR. ANDERSON: Do you see this cashier's check
16 drawn on First City account?
17 A. Yes.
18 Q. And you did actually have a First City account, is
19 that correct?
20 A. Yes, we did.
21 Q. Did you have $32,490 of your own money to make for a
22 down payment?
23 A. No, sir.
24 Q. And if we go to page one of this exhibit. And we'll
25 highlight. Do you see the line 206, "closing funds $32,490"?

1 A. Yes.
2 Q. And the same amount as the check, is that right?
4 MR. ANDERSON: Your Honor, this is a good breaking
5 point.
6 THE COURT: All right. Let's take our first break of
7 the morning then. That will be a 15-minute break.
8 During the break, please remember all my admonitions.
9 I have no doubt you can recite them yourselves at this point.
10 Have a good break. See you in 15.
11 (Jury out.)
12 THE COURT: All right. You may step down. Be back
13 in your seat in 15 minutes. 15-minute break. About five more
14 minutes and you'll be done?
15 MR. ANDERSON: I think so, Your Honor. We're real
16 close. Maybe ten at most.
17 THE COURT: And then is there someone taking the lead
18 on the cross?
19 MR. SAMUEL: That would probably be me.
20 THE COURT: Thought that might be the case.
21 (Break taken.)
23 (Jury in.)
25 and gentlemen. We will continue with the direct examination of

1 Ms. Sly. Mr. Anderson informs me that he has maybe five more
2 minutes or so, and then we'll go to cross. Mr. Anderson.
3 MR. ANDERSON: Let's go to Government's Exhibit 24B1,
4 which, Your Honor, I would ask to have admitted pursuant to the
5 stipulation.
9 MR. SAMUEL: Join.
11 MR. GREINER: Join in the variance objection.
12 THE COURT: That objection is noted. The exhibit
13 will come in.
16 Stonecreek Drive, Sacramento, CA admitted into evidence.)
17 Q. BY MR. ANDERSON: We've talked about two properties
18 so far. Were there other properties that you also --
19 A. Yes.
20 Q. -- were involved with?
21 A. Two more.
22 Q. Was 2937 Stonecreek Drive in Sacramento, California,
23 one of those properties?
24 A. Yes, it was.
25 Q. Let's go to page five of this exhibit. And if we

1 could rotate it. Again, is this another cashier's check?
2 A. Yes.
3 Q. To Alliance Title company from First City?
4 A. Yes.
5 Q. And at the time of this cashier's check, did you and
6 your husband have $43,490 available for a down payment?
7 A. No.
8 Q. Of your own money?
9 A. My own money, no.
10 Q. Let's take that down.
11 Earlier you said that you were promised $5,000 per
12 transaction?
14 Q. Did you end up receiving that $5,000 per transaction?
16 Q. Did you do anything to follow up and try and get that
17 money?
18 A. Yes, I made a phone call once the properties had been
19 -- we had received information from the banks that the
20 properties -- the escrow information. We also received escrow
21 checks.
22 And I had called the investment company and asked
23 them what to do with those, and they said just to send them to
24 them. That was part of the investment group's money, and that
25 was how they were going to pay the mortgages. So I said, okay,

1 so these are done. So when can we expect our pay? And he
2 said, well, that takes time, and it's going to take some time.
3 MR. TEDMON: Objection, Your Honor, as to "he."
4 THE WITNESS: I'm sorry. Ben Budoff said it was
5 going to take time, and that they would get us our money as
6 soon as they could.
7 Q. BY MR. ANDERSON: Did you ever end up getting the
8 money?
9 A. No.
10 Q. Do you remember approximately when that was that you
11 made that phone call?
12 A. Well, we signed the properties July and August, so I
13 would probably say, I don't know, late September, October,
14 about that.
15 Q. Did you ever learn whether or not these mortgages
16 were being paid on the properties?
17 A. Yes.
18 Q. How did you learn?
19 A. I got a statement from Washington Mutual stating that
20 I was behind in my payment.
21 Q. When approximately was that?
22 A. I would say probably October.
23 Q. And that's 2006?
24 A. Yes. It was a couple months right after all the
25 properties had closed. And I had also received a call from

1 Melissa Miller.
2 Q. Who is Melissa Miller?
3 A. She was the owner of the home in Pennsylvania, and
4 she called to ask why I hadn't made the payment.
8 THE COURT: The jury shall disregard the bit after
9 the owner of the home in Pennsylvania. Wait for the next
10 question once you've answered the question. All right?
12 Q. BY MR. ANDERSON: Do you know what eventually
13 happened to these properties?
14 A. It was --
15 MR. TEDMON: Objection. Vague. I mean, there's
16 several.
17 THE COURT: Sustained. Break it down.
18 Q. BY MR. ANDERSON: Okay. So we talked about several
19 properties. Let's just start back at the Ohio property,
20 Yellowstone. Do you know what happened to that property?
21 A. No.
22 Q. Okay.
23 A. My understanding was that --
24 MR. TEDMON: Objection. If she doesn't know, she
25 doesn't know.

1 THE COURT: Just answer yes or no first and then wait
2 for the question.
3 Q. BY MR. ANDERSON: Do you know what happened to
4 Melissa Miller's property?
5 A. Yes.
6 Q. What happened to it?
7 A. She lost it.
10 Q. BY MR. ANDERSON: Were you and your husband in
11 financial condition to make payments on these properties?
12 A. No, we were not.
13 Q. As a result of your involvement with this
14 organization, what happened to you financially?
15 MR. SAMUEL: Objection. Irrelevant.
19 Q. BY MR. ANDERSON: Did you end up financially unable
20 to meet your obligations?
22 MR. SAMUEL: Relevance.
24 Q. BY MR. ANDERSON: When entering into these
25 transactions with the people you knew at Creative Loans and

1 Funding Foreclosures, did you have the financial wherewithal to
2 make mortgage payments on four properties?
4 MR. TEDMON: Your Honor, mostly going to object to
5 people you knew. We need to be specific about who we're
6 talking about.
8 Q. BY MR. ANDERSON: The four transactions that you
9 entered into with Creative Loans and Funding Foreclosures --
10 are you familiar with which properties those are?
11 A. Yes.
12 Q. -- did you have the financial wherewithal to
13 personally make those mortgage payments?
14 A. No.
17 Q. BY MR. ANDERSON: To your knowledge, had you entered
18 into a trust agreement with any of the individuals who had been
19 the former owners of those properties?
20 A. No.
24 BY MR. SAMUEL:
25 Q. Morning.

1 A. Good morning, sir.
2 Q. My name is Mr. Samuel. I represent Mr. Budoff. All
3 right.
4 I'd like to talk to you a little about how you
5 initially got involved in this program. You said you talked to
6 Jeff Ball?
7 A. Yes, sir.
8 Q. All right. And did Jeff Ball provide you with Ben
9 Budoff's name?
10 A. Yes, sir.
11 Q. And when he provided you with Ben Budoff's name, did
12 he give you a phone number?
13 A. Yes, he did.
14 Q. All right. And then was it you that contacted
15 Mr. Budoff?
16 A. No.
17 Q. All right. What happened next?
18 A. Mr. Budoff contacted me.
19 Q. And did Jeff say that Mr. Budoff would contact you?
20 A. Yes.
21 Q. And how did he contact you, by phone, by e-mail, by
22 what?
23 A. By phone.
24 Q. All right. So this first contact by phone, do you
25 remember how long that lasted?

2 Q. Would you say five minutes, ten minutes?
3 A. Twenty minutes.
4 Q. Twenty minutes.
5 All right. Did he ever forward to you any documents
6 via e-mail or any information regarding the plan via e-mail?
7 A. No.
8 Q. Never did?
9 A. No.
10 Q. All right. So in this first telephone call, let me
11 ask you this, how many total telephone calls would you say you
12 had with Mr. Budoff? Now this is just with Mr. Budoff. Not
13 with anybody else.
14 A. Maybe five.
15 Q. All right.
17 Q. And during this process, did you also talk to other
18 individuals that were at Funding Foreclosures or Creative Loans
19 or whatever the name was?
20 A. Yes.
21 Q. And did you talk to a female?
22 A. Yes, we did.
23 Q. And do you remember the name of the female?
24 A. I do not.
25 Q. Would the name Kou Yang ring a bell?

1 A. No.
2 Q. Lisa Vang?
3 A. I can't be for certain.
4 Q. But you're certain it was a female?
5 A. Yes, sir.
6 Q. All right. How many times did you speak with this
7 female?
8 A. I can't be sure. It was several times. Whenever I
9 had a question about the paperwork.
10 Q. So when you had questions about paperwork, you called
11 the female?
12 A. Yes. That was what I was directed to do.
13 Q. And that phone number was located in where, Southern
14 California, if you recall?
15 A. I believe -- I believe it was Costa Mesa.
16 Q. Costa Mesa. And when you called Mr. Budoff, that
17 phone was located where, if you know?
18 A. I believe it was Costa Mesa because if there was a
19 question she couldn't answer, she would transfer me to Ben.
20 Q. Okay. And so you were transferred while making a
21 phone call to Costa Mesa to a gentleman who she represented as
22 Ben, is that correct?
23 A. Yes.
24 Q. Did you ever meet Ben Budoff in person?
25 A. No, ma'am -- no, sir.

1 Q. So you actually don't know who you were speaking to
2 other than the name Ben Budoff?
4 Q. Okay. And at all times and places did you always,
5 when you were talking to this person who was supposed to be Ben
6 Budoff, did you call the Costa Mesa location?
7 A. I called the same number every time.
8 Q. Every time. Okay.
9 Now, when you were speaking to this person the very
10 first time, with a gentleman by the name of Ben -- or person
11 identified as Ben Budoff, you said it was about 20 minutes.
12 And during that 20 minutes, did he explain to you at least an
13 approach that the company was trying to work with you? That's
14 a bad question.
15 So in this first telephone call, what did Mr. Budoff
16 tell you, if you can recall? If you can't. That's fine, too.
17 A. What I recall is that he wanted to explain the
18 program, the investment opportunity and the program to me.
19 Q. So he characterized it as an investment opportunity?
20 A. Yes.
21 Q. And actually, when you look at all these uniform
22 residential loan applications that you've been shown, in each
23 one of those the box "investment" is being checked, did you
24 notice that?

1 Q. All right. So when you looked -- all right. We'll
2 go there in a moment.
3 So, when he started out, he said it was an investment
4 opportunity, right?
5 A. Uh-huh. Yes.
6 Q. So first of all --
7 MR. TEDMON: Your Honor, for clarification, I mean
8 "he," unless otherwise stated, is Benjamin Budoff?
9 MR. SAMUEL: Yes.
10 THE COURT: That's clear to you, ma'am?
12 MR. SAMUEL: The person identified as Ben Budoff.
13 Let's put it that way.
15 Q. BY MR. SAMUEL: So in this first conversation -- I'm
16 sorry to back up slightly -- there was a discussion about an
17 investment opportunity, correct?
18 A. Yes.
19 Q. There was also a discussion that you would be helping
20 people save their homes, is that right?
22 Q. And would you describe the enthusiasm, if there was
23 any, in this first conversation with this person named Ben
24 Budoff, was he enthusiastic?

1 Q. Did he say it was a win/win situation for you and the
2 person who you were going to be an investor for?
3 A. Yes.
4 Q. And he told you that you were actually going to be on
5 title for a year while these individuals could -- while these
6 people actually were able to pay off their loans and get back
7 to a normal credit rating or something like that, right?
8 A. Yes. He said that it would give them time to
9 re-group.
10 Q. Uh-huh.
11 A. For whatever reason that their houses were being --
12 that they were losing their homes. And it would give them a
13 time to re-group. They would be able to stay in their home.
14 Q. All right. So you knew that you were helping these
15 people save homes?
16 A. Yes.
17 Q. Right. And you thought that was a pretty good deal,
18 didn't you?
19 A. I did.
20 Q. Yeah. And you also knew that in order to effect that
21 deal you had to become on the title, correct?
22 A. The term was that he would use my Social Security
23 number.
24 Q. Did he ever tell you that you were going to be the
25 property owner?

1 A. No.
2 Q. Never told you that?
3 A. No. The property owners were to be the investment
4 people who were investing.
5 Q. Okay. So your understanding was that they would use
6 your Social Security number?
8 Q. Did that mean your credit rating?
9 A. Yes.
10 Q. Okay. And that somebody else would be the investor,
11 but you would actually be the person that they used for the
12 investment, is that correct?
13 A. Yes, sir.
14 Q. You understood that?
15 A. Yes.
16 Q. Okay.
17 A. Used, yes.
18 Q. Correct. And did you understand that the only reason
19 they needed your credit information was so that they could put
20 you on title?
21 A. Did I understand that?
22 Q. Yeah.
23 A. I assumed I was going to be a part of a group that
24 was buying these homes. I didn't think I would be the
25 standalone.

1 Q. So on the first conversation, Mr. Budoff laid out a
2 program. You understood -- at least you thought you understood
3 what he said. And was that the end of it or what happened
4 next?
5 A. Then I had several conversations with Jeff Ball.
6 Q. All right. So after you had a conversation with
7 Mr. Budoff, you got information from Mr. Ball?
8 A. Yes.
9 Q. All right. And that information, did that help you
10 understand the program that you were entering into?
11 A. It helped me to understand Jeff had been a part of
12 the program for two years.
13 Q. All right. So he had actually had some experiences,
14 and he related them to you?
15 A. Yes. He had purchased homes.
16 Q. Did he tell you -- I'm sorry --
17 A. I'm sorry. He had purchased homes. He had received
18 the $5,000 stipend over a couple of years, and he had done that
19 several times.
20 Q. So he had indicated that he purchased the homes,
21 correct?
22 A. That he was part of the purchase, yes.
23 Q. Did that lead you to believe that you would be a
24 person who would be purchasing loans?
25 A. I believed I would be a part of the purchasing of

1 those homes.
2 Q. And actually, the uniform residential loan
3 application designates you as the person who will be the
4 purchaser, right?
5 A. Absolutely.
6 Q. So at some point in time you realized you were going
7 to be on title?
8 A. Yes.
9 Q. And did you talk about being on title with
10 Mr. Budoff?
11 A. Yes.
12 Q. And what did he tell you?
13 A. He told me that the investors had a trust fund, and
14 that trust fund would then help to make the payments on those
15 homes, and I would not be responsible for those payments.
16 Q. Sure. And you never did make a payment on any of the
17 homes, did you?
18 A. No, sir.
19 Q. All right. And I understand that this was -- when
20 you finally started asking questions and you got the
21 foreclosure notices, or notices from the bank, that this was in
22 September or October?
23 A. October.
24 Q. Right. And you were advised that the investors would
25 make payments, for example, the mortgage payment, right?

1 A. Yes, sir.
2 Q. And that they would also make any insurance payments,
3 right?
4 A. Yes.
5 Q. And they would also make tax payments, correct?
6 A. Yes. Some of the properties were in arrears, yes.
7 Q. And you're not aware of whether or not they made
8 these payments or didn't make these payments when they first
9 began this process with you, are you?
10 A. My only evidence that they didn't was from the bank.
11 Q. All right. You got some HUD statements, and actually
12 some HUD statements reflected that they paid off the
13 properties, correct?
14 A. No.
15 Q. No?
16 A. No. I got a notice from the bank that said where is
17 your payment.
18 Q. Okay. I understand that.
19 A. I guess I don't understand your question.
20 Q. Earlier you were shown some HUD documents, and it
21 reflected that there was a disbursal of funds, correct? Did
22 you remember seeing those?
23 A. I guess I'm not clear on what you mean by HUD
24 documents.
25 Q. All right. I'm sorry. Well, let me -- we'll just go

1 there right now. One of those documents is 24A1. If would you
2 bring that up.
3 First of all, just so you can orient yourself, this
4 is you, the named borrower, and the named seller is Melissa
5 Miller, correct?
6 A. Yes.
7 Q. And the location is the White School Road?
9 Q. In Chester.
10 Now what happens is that this is -- this shows a
11 final distribution of funds, correct? Do you understand this
12 document?
13 A. Yes.
14 Q. So it has summary of borrower's transactions on the
15 left side and summary of the seller's transactions on the right
16 side, right?
17 THE REPORTER: I'm sorry, Mr. Samuel, was there an
18 answer? She's not answering.
19 Q. BY MR. SAMUEL: Do you see those two sides? I'll
20 rephrase.
21 So you see the document we're looking at right now,
22 right?
23 A. Yes.
24 Q. And it shows various distributions of funds, correct?

1 Q. Right. And does it show, for example, payment of
2 county taxes? Do you see where I kind of put that little arrow
3 there?
4 A. Oh, yes.
5 Q. Okay. So at least that was paid as a part of this
7 A. Yes.
8 Q. Okay. And so let me go on.
9 And when you talked with Mr. Budoff on this first
10 occasion, you hadn't gotten any documents yet, is that correct?
12 Q. All right. But he advised you that there would be
13 multiple properties that you would be involved with?
14 A. Yes.
15 Q. All right. And did you question him about the
16 ability to handle multiple properties?
17 A. He said that that would be -- the monies for those
18 properties would be coming from the trust.
19 Q. And did he say that the monies would be coming from
20 the investment company?
21 A. I'm assuming that's what he said, yes. He had
22 investors. It was an investment opportunity.
23 Q. And now when you spoke to him for the first time, did
24 you give him any of your personal information?
25 A. Not the first time.

1 Q. All right. So it was just a general conversation,
2 inquisitive, finding out what was going on in the program?
4 Q. All right. Then you talked with Mr. Ball, right?
5 A. Yes.
6 Q. And then thereafter did you talk with the person
7 named Mr. Budoff?
8 A. Yes.
9 Q. All right. So there is a second phone call down to
10 Costa Mesa, right?
11 A. Uh-huh. Yes.
12 Q. And so there is a call to Costa Mesa, correct?
13 A. Yes.
14 Q. And you spoke to a person who identified as Benjamin
15 Budoff, correct?
16 A. No. Ben had called me.
17 Q. Oh, okay, so this second call --
18 A. First I talked with Jeff. We had -- he had shared
19 with me his experience with the investment company. And then
20 he says, well, I'll have Ben get back in contact with you. And
21 Ben did. And he said, well, are you ready to go? Are you
22 interested? And I said yes. I trusted Jeff's word, and he
23 trusted Ben, so I said yes.
24 Q. And Jeff did not indicate to you that there was
25 anything wrong with the program, did he? Just yes or no.

1 A. No.
2 Q. And based upon your conversation with Jeff as well,
3 that was one of the factors in which you joined into this
4 program?
6 Q. So you had Mr. Budoff -- so you have a second
7 conversation with Mr. Budoff, right?
8 A. Yes.
9 Q. And at that time, did you provide him any information
10 about your personal background?
11 A. I don't recall if my background information was given
12 to Mr. Budoff or to his secretary. I don't recall.
13 Q. Okay. That was going to be the next question. You
14 don't have a recollection where you gave this information,
15 correct?
16 A. Correct.
17 Q. And it could have been to his secretary, correct?
18 A. Yes.
19 Q. And that could have been a female, right?
20 A. It was a female.
21 Q. Was a female. Okay. You don't know the name?
22 A. I don't recall the name.
23 Q. So let's look at 17A2.
24 All right. So, once again, just so you can identify
25 it, this is your signature, correct?

1 A. Yes.
2 Q. And it also reflects "investment," do you see that?
3 A. Yes, I see it.
4 Q. All right. And when you signed this document, did
5 you even notice that it said investment?
6 A. No, I did not.
7 Q. All right. Thank you. Expand it. Go to the bottom,
8 "borrower."
9 The borrower's information is you, and that's
10 correct, right?
11 A. Yes.
12 Q. And the Social Security -- or date of birth and
13 Social Security numbers are blanked out for obvious reasons --
14 but you gave them the correct Social Security number and date
15 of birth, did you not?
16 A. Yes, I did.
17 Q. All right. And on the bottom is your signature,
18 correct?
19 A. Yes.
20 Q. All right. So that was information that you may have
21 given to Mr. Budoff's secretary?
22 A. Yes.
23 Q. Okay. By the way, besides Mr. Budoff, and the
24 secretary, female secretary, did you speak to anybody else, if
25 you can just recall names, while involved with these

1 transactions?
2 A. I don't recall any names. I know there were two
3 females that I spoke with. One appeared to be a secretary.
4 The other one appeared to be more of, you know, the person who
5 took this information. And then Ben. Those are the only three
6 people I recall.
7 Q. So let's expand on that a little bit. The two
8 females. You identified one as appearing to be a secretary,
9 and --
10 A. Yes.
11 Q. -- and the second one you identified as being the one
12 you gave this information to?
13 A. Yes.
14 Q. So now that refreshes your recollection you gave this
15 information to this female, is that correct?
16 A. If I recall, yes.
17 Q. All right. So the information that is contained --
18 or at least partially contained in this 1003, that information
19 was provided to a female at Costa Mesa?
20 A. That's a number that I called in Costa Mesa, yes.
21 Q. Thank you. And in this -- second page. And let's
22 just make this quick.
23 The information on top, this is correct?
24 A. Yes.
25 Q. And the employment here, that was correct?

1 A. Yes.
2 Q. All right. And this is correct?
3 A. Yes.
4 Q. All right. So the income, you indicated you didn't
5 -- you put a monthly income of $2,500 here, do you see that?
6 A. Yes.
7 Q. That's with Antelope Valley. And I believe your
8 testimony was 2 to 2,500 dollars income, all depending on the
9 work you did, right?
10 A. That was on the top line.
11 Q. All right?
12 A. Yoh Healthcare was registry work, so sometimes I
13 would be called off. The Antelope College was based on the
14 semester and how many weeks were in that semester. So it would
15 vary.
16 Q. So the 2,500 may be -- is on the top end of that
17 income, but that could have been something that was correct?
19 Q. Then the next number, 5,000, you indicated that that
20 was gross, is that correct?
21 A. That wasn't within the year of 2006. That ended on
22 2005.
23 Q. Well, the date says 2003 to 2005, monthly income
24 $5,000, correct?
25 A. Yes. That was a previous employment, uh-huh.

1 Q. That was previous employment. And that's accurate,
2 10-03 to 10-2005?
3 A. That was the monthly income that my business
4 generated. That was not my take-home pay.
5 Q. I understand that. But it says Marjorie and Co.
6 Wellness Center, correct?
7 A. Yes.
8 Q. So that was the income of the wellness center?
9 A. Yes.
10 Q. All right. And that would be accurate then?
11 A. Yes.
12 Q. The gross income anyway. All right. Thank you. Go
13 down to the next page. I mean down to the bottom.
14 So when we get to the $7,500, if you add those things
15 up, that is about correct, isn't that true?
16 A. Are we talking current income, or are we talking
17 previous?
18 Q. No. Just adding the three different documents --
19 three different incomes together -- or the two?
20 MR. ANDERSON: Objection, Your Honor. Relevance.
21 Since one is former income.
22 MR. SAMUEL: All right. I'll go on. Don't worry
23 about that.
25 Q. BY MR. SAMUEL: This $2,500, that's other income,

1 correct? Right?
2 When you gave this information to this female in
3 Costa Mesa, did you talk to the female about your husband's
4 employment even though he's not named on this loan form?
5 A. I may have, yeah.
6 Q. And, of course, at that time, he was making more than
7 $2,500 a month?
8 A. Yes.
9 Q. All right. Thank you. Next page, please. Just a
10 couple questions.
11 When you were asked about the 15,000 in that account,
12 you sounded as if you were guessing as to the amount of money
13 that was in that account, weren't you? At that time?
14 A. Because I don't have my accounts in front of me, so I
15 don't -- yes.
16 Q. And what you're saying is you had three girls, and
17 you didn't think that was the amount of money in the account,
18 but, actually, you don't know at that point in time whether
19 that was an accurate figure or not, do you?
20 A. The 3,000 or the 4,000?
21 Q. No. The 15,000?
22 A. No, I know I did not have $15,000 in my account.
23 Q. So that's clear. We know you don't have 15,000. And
24 just expand again one more time. Actually I'm going to go on
25 to page four.

1 We know this is your signature? Right?
2 A. Yes.
3 Q. Could you go down just a little bit more. To the
4 interviews. Thank you.
5 We know that's your signature. We see in the
6 interviewer's name of Charles Head. And your recollection is
7 you never were interviewed by Charles Head?
8 A. No, I was not.
9 Q. Never even heard that guy's name?
10 A. I heard his name. I've never spoken to him.
11 Q. But you don't know if you spoke to him or not?
12 MR. TEDMON: Objection. Asked and answered.
13 MR. SAMUEL: All right. I'll withdraw.
15 Q. BY MR. SAMUEL: And the phone number on the bottom,
16 is that the number that you always called when calling Costa
17 Mesa?
18 A. I can't recall, sir.
20 And of course, when we get to -- when we get to the
21 other 1003s -- and I'm just going to kind of lump these
22 together if I could -- the changes in the information, did you
23 ever provide any additional information to this female about
24 changes in your income?
25 A. No.

1 Q. All right. But it was, as far as you are -- you can
2 recall, it was the female who you gave all the information
3 about your income, and your assets, and everything else, is
4 that correct?
5 A. I can't recall which pieces of information I gave to
6 whom. I know I spoke with those people. So I -- I cannot be
7 sure and say I gave this to this individual, and I gave this to
8 Ben. I cannot tell you that.
9 Q. It's been a long time. But just in a general sense,
10 the information you gave about your personal information and
11 about your incomes was given to, at least, a female, whether it
12 was one female or the other female, right?
13 A. Yes.
14 Q. And it wasn't given to Ben Budoff -- a person named
15 Ben Budoff?
16 A. I don't recall if I gave Ben information.
17 Q. All right. So without recalling, the answer would be
18 no, you don't know, right?
19 A. I don't recall, sir. I can't be definite.
20 Q. Now, you did call the person named Mr. Budoff and
21 inquired about where the $5,000 was for each one of these
22 transactions, is that right?
23 A. Yes.
24 Q. And do you recall what you were told?
25 A. I was told that the money needed to come from the

1 trust, and that since it had been such a short time since the
2 properties had closed, that it would take some time to get that
3 money to me.
4 Q. Okay. And that seemed like a logical explanation?
5 A. It was what I was told, sir.
6 Q. All right. So just one last question.
7 Because you signed these loans, uniform loan
8 applications, you were aware that you, in fact, were going to
9 be on title, correct? Whether or not somebody else was taking
10 care of the rest of it, you were aware that you were on title?
11 A. I'm aware, yes, based on these.
12 Q. And you were aware that even though there was another
13 company that was supposed to take care of it all, you
14 ultimately may become responsible for the payment of these
15 debts if things didn't go through the way you were told?
16 A. No. I was told that the trust would take care of
17 those payments, and/or if the current owner or person that was
18 losing their home would be able to stay there and pay rent.
19 That that the income would either come from the current
20 homeowner or from the trust. There was at no time told to me
21 that I would be responsible for these payments. The trust was
22 to do that.
23 Q. But you knew you were on title?
24 A. Yes, sir.
25 Q. And you've bought a house before, have you not?

1 A. Yes, I have. I never bought four.
2 Q. Never four. I understand that.
3 But when you purchased these houses in the past, you
4 made a loan application, correct?
6 Q. And when you made that loan application, you knew you
7 were purchasing and you were going to be on the deed, correct?
9 Q. And when you made that, you also knew that,
10 ultimately, you would be responsible for the payments if nobody
11 else made those payments, right?
12 A. However I never had the backing of a company, which
13 kind of led me to believe that Washington Mutual or these banks
14 were allowing me to do this because I had backing. Looking at
15 what I earned, I could not afford four homes and --
16 Q. That's not the question. You knew, did you not, that
17 if you actually were on title, that, ultimately, if everything
18 else fell through, that you would be subject to the obligation
19 of making the payments?
21 Q. You didn't know that?
23 Q. Even though you made other purchases?
24 A. No. I was told and promised and trusted that the
25 trust company would handle all of the payments on those

1 properties. That the only obligation I had was to help procure
2 those properties to help save those homes for the individuals
3 who were losing them. That is specifically what I was told.
4 Q. Okay. Right. And I think we've gone through this
5 before.
6 You didn't pay taxes, you didn't pay the mortgage,
7 you didn't pay insurance, you didn't pay anything else which
8 was a part of the purchase of the property, right?
9 A. That is correct. That was to be done by the trust.
12 Q. BY MR. SAMUEL: When you called about your $5,000
13 payments, you called the Costa Mesa phone number, correct?
14 A. The same number I'd been calling the entire time,
15 yes.
16 MR. SAMUEL: Thank you. Nothing further.
17 THE COURT: Any other cross? Mr. Tedmon?
18 MR. TEDMON: A little bit.
20 BY MR. TEDMON:
21 Q. Morning.
23 Q. I just want to ask you a few things here this
24 morning. If we could have Government's Exhibit 17A2 on the
25 screen, please.

1 Now this is the uniform residential loan application
2 you've been asked questions about this morning, correct?
3 A. On Yellowstone, yes.
4 Q. Okay. Now, your testimony is that you gave your
5 personal financial information to a female in Costa Mesa,
6 correct?
7 A. Yes.
8 Q. All right. And this person identified herself as a
9 loan processor, do you recall that?
10 A. No, she did not.
11 Q. She did not. Did she identify herself with any
12 position?
13 A. No.
14 Q. She didn't give you her name?
15 A. No. She indicated she worked with Ben.
16 Q. She worked with Ben?
17 A. Yes.
18 Q. Okay. She didn't indicate she worked for Charles
19 Head, did she?
20 A. Charles Head was mentioned by Ben --
21 Q. Excuse me. Just answer the question. She didn't
22 indicate she worked for Charles Head, correct, she worked for
23 Ben?
24 A. I knew they worked for Charles Head. That was part
25 of the explanation Ben gave me.

1 MR. TEDMON: Move to strike as non-responsive, Your
2 Honor.
4 disregard that answer.
5 Q. BY MR. TEDMON: Here's my question. Okay?
6 A. Okay.
7 Q. The woman you spoke to said she worked for Ben
8 Budoff, correct?
10 Q. She didn't say "I work for Charles Head," correct?
11 A. Correct.
13 Now, can we go to page four of this document, please.
14 And if we can expand this section here.
15 Okay. The date of this document is June 7, 2006,
16 correct?
18 Q. And is that your writing of the date on that
19 document?
20 A. That appears so, yes.
21 Q. Now it says here "interviewer's name Charles Head,"
22 correct?
24 Q. No signature below the name, is there?
25 A. No, sir.

1 Q. No date below the signature, is there?
2 A. No, sir.
3 Q. And you never spoke with or met Charles Head, did
4 you?
6 Q. All right. And one other thing, the name, address of
7 the interviewer's employer says Dana Capital Group, do you see
8 that?
9 A. Yes, sir.
10 Q. And that's in Irvine, California, correct?
11 A. Correct.
12 Q. Not Costa Mesa?
14 Q. If we can go to Government's 17B, please.
15 Now, again, this is the another document you were
16 asked to look at this morning, true?
17 A. Yes, sir.
18 Q. And this relates to the Yellowstone property as well,
19 correct?
20 A. Yes, sir.
21 Q. If we can go to page four. And if we can expand this
22 here.
23 Now, again, this is your correct signature, true?
24 A. Yes.
25 Q. And the date here is 7-28-06, do you see that?

1 A. Yes, sir.
2 Q. Is that your handwriting?
3 A. Yes, it is.
4 Q. And then down below it says telephone interview,
5 correct?
6 A. Yes.
7 Q. And the interviewer's name at least on the form says
10 Q. You didn't talk to Charles Head, did you?
12 Q. And there is a purported signature there, do you see
13 that?
14 A. Yes.
15 Q. Okay. You don't know what Charles Head's signature
16 looks like, do you?
17 A. No, I do not.
18 Q. All right. And then the 7-28-06, do you see that,
19 where the arrow is?
20 A. Yes.
21 Q. Is that your writing or someone else's?
22 A. That is not mine.
23 Q. And, again, the interviewer's employer says Dana
24 Capital in Irvine, correct?

1 Q. Not Costa Mesa, true?
2 A. True.
3 Q. And you were referred to Mr. Budoff, as I understand
4 your testimony, from a Jeff Ball, correct?
6 Q. All right. How do you know Jeff Ball?
7 A. He was a part of our family. He was engaged to my
8 sister-in-law at the time.
9 Q. Okay. And you testified this morning that when you
10 talked to Mr. Ball, he indicated that he didn't see anything
11 wrong with the program in terms of his experience, true?
12 A. Correct.
13 Q. All right. And you started this process in June of
14 2006, is that right?
18 MR. GREINER: Briefly.
20 BY MR. GREINER:
21 Q. Good morning.
23 Q. I don't think I have to show you any documents.
24 A. Thank you.
25 Q. That's a good part of the whole thing. Okay.

1 All right. As the buyer of properties, you've never
2 spoken with Domonic McCarns, fair statement?
3 A. Yes, I don't know who that is.
4 Q. Okay. As a buyer of properties, you've never met
5 Domonic McCarns, true?
6 A. True.
7 Q. As a buyer of properties, you've never provided any
8 information about yourself to Domonic McCarns, true?
9 A. True.
10 Q. As a buyer of properties, you've never provided any
11 information about your husband to Domonic McCarns, true?
12 A. True.
13 Q. As a buyer of properties, you've never e-mailed
14 correspondence back and forth between you and Domonic McCarns,
15 true?
16 A. True.
17 Q. So as the buyer of properties, and I'm not putting
18 them up there, but all of those loan applications and all the
19 information that you've gone over with all the other three
20 attorneys, none of that information you provided Domonic
21 McCarns at any time, true statement?
22 A. True.
23 Q. And as far as you know, Domonic McCarns never filled
24 out any loan application on your behalf, fair?
25 A. True. I don't know who he is.

1 Q. All right. Did you ever receive from Funding
2 Foreclosures a 1099?
3 A. No.
4 Q. Did you ever receive from Creative Loans a 1099?
5 A. No.
6 Q. Do you have any knowledge that your husband received
7 a 1099 from Funding Foreclosures? Answer that yes or no.
8 A. No.
9 Q. Do you have any knowledge if your husband received a
10 1099 from Creative Loans?
11 A. No.
12 Q. All right. You understood that you were going to be
13 buying properties, for lack of a longer explanation, fair?
14 A. No. I understood that the trust would be buying
15 those properties.
16 Q. All right. You understood that what you were going
17 to be doing was you were going to be in an agreement for a
18 12-month period regarding a piece of property, fair?
19 A. For a 12-month period.
20 Q. And at the end of that 12-month period, your
21 understanding was it was going to be able to be sold back to
22 the original homeowner, true?
24 Q. And you weren't going to hesitate to sell it back to
25 the original homeowner at the end of 12 months, fair statement?

1 A. Part of the agreement.
2 Q. Part of the agreement that you entered into, right?
3 Correct?
4 A. That was what they told me.
5 Q. Right. And the only reason I was doing that, the
6 court reporter has to hear you verbally. She didn't see your
7 face like I did. So you have to answer out loud.
8 A. So what am I answering to? I'm sorry.
9 Q. That's a good question. You expect me to remember
10 that.
11 A. That's good the way you put it, but I need to hear it
12 again.
13 Q. Don't say that because it's not going to be the same
14 good.
15 THE COURT: Do you want it read back?
16 MR. GREINER: Yes. That would be good.
17 (Record read.)
18 Q. BY MR. GREINER: So at the end of the 12-month
19 period, you were not going to hesitate to sell the property
20 back to the original homeowner because that was part of the
21 original agreement, true?
22 A. Yes. That was part of what I was told. My
23 understanding was that I didn't own those properties. My
24 understanding was that the group owned those companies, and
25 they were going to, in turn, sell them back to them. They were

1 using my Social Security number. So I really don't quite
2 understand that.
3 Q. The only issue is you know you filled out the loan
4 application?
5 A. Absolutely.
6 Q. And so with that knowledge that you filled out the
7 loan application, you knew that you were applying for a loan in
8 some fashion to purchase a piece of property, fair?
9 A. Right. And that it would be sold back to them.
10 Q. And it would be sold back to the original homeowner
11 after the 12-month period, fair?
12 A. Yes.
13 Q. All right. And that's because that was the contract
14 as you understood it, fair?
15 A. Yes.
16 Q. Okay. And at the end of the 12 months, you didn't
17 want to get stuck with those properties in any way, I mean,
18 that's a true statement, right?
19 A. Absolutely.
20 Q. All right. Now, I'll say your understanding is that
21 it was the company that was to cover all of the mortgage
22 payments, fair?
24 Q. All right. And it was the company that was to cover
25 all of the tax payments, fair?

2 Q. All right. Now, were you clear -- and you're going
3 to have to help me with this -- were you clear if the company
4 was Funding Foreclosures or Creative Loans? What was your
5 understanding?
6 A. My understanding it was Creative Loans.
7 Q. All right. So let's focus in on that. So your
8 understanding was that part of the agreement was that Creative
9 Loans was going to pay like all the hazard insurance if that
10 was needed, fair? Wasn't coming out of your pocket?
11 A. That's correct. The trust was to pay for any
12 outstanding --
13 Q. And Creative Loans was to manage the property,
14 correct?
16 Q. Not you, right?
18 Q. Okay. And Creative Loans was to collect the rent on
19 the property?
20 MR. TEDMON: Your Honor, I'm going to object. This
21 misstates her testimony. She's referencing a trust. Not
22 Creative Loans.
24 Q. BY MR. GREINER: Your understanding was Creative
25 Loans was who you had the agreement with, right?

1 A. That was -- that was name of the company that I was
2 doing business with.
3 Q. So the company you were doing business -- I'm sorry.
4 A. I mean, that's what I -- on some of my paperwork they
5 called themselves Creative Loans.
6 Q. All right. So your understanding is you're doing
7 business with Creative Loans, fair?
8 A. Yes.
9 Q. All right. So Creative Loans was going to be
10 collecting the rent and not you, true?
12 Q. All right. And Creative Loans was going to be the
13 one handling the re-sale of the property at the end of the
14 12 months back to the original homeowner, true?
15 A. Correct.
16 Q. If, unfortunately, the renters in the property had to
17 be evicted, your understanding was that was to be handled by
18 Creative Loans, true?
19 A. Yes.
20 Q. That wasn't going to be handled by you, correct?
21 A. Correct.
22 Q. Now, if I understood -- I'm moving to a different
23 subject real quick. Okay.
24 If I understood correctly, up until October of 2006,
25 as far as you knew, everything is going great, swimming along,

1 no problems, fair statement?
2 A. Correct.
3 Q. All right. And then it's in -- around about October
4 of 2006 that you first got something that indicated maybe
5 things aren't as swimmingly as it's supposed to be, true?
6 A. Yes.
7 Q. Because you got a letter in the mail, true?
8 A. Letter from Washington Mutual stating that I was in
9 arrears for my payment for my home.
10 Q. Which did a couple of things, number one it surprised
11 you, fair statement?
12 A. Yes.
13 Q. Number two, it surprised you because, as we've talked
14 about, Creative Loans was supposed to be making these payments,
15 right?
16 A. Yes.
17 Q. Not you, right?
18 A. Correct.
19 Q. Okay. And then if you recall the month and year --
20 if you don't, then that's fine -- but if you recall the month
21 and the year, when were you contacted by the FBI?
22 A. As close as I can recall, I believe it was in -- I
23 want to say maybe late March or April.
24 Q. Of 2007?
25 A. Yes.

1 Q. Okay. All right. I think I have one, maybe two
2 questions left.
3 All right. At the beginning, when you were talking
4 with Jeff Ball, you trusted what he told you, true?
5 A. Absolutely.
6 Q. And at the beginning, when you talked to Ben Budoff,
7 you trusted what he told you, true?
8 A. Absolutely.
9 Q. No documents shown to you. Thank you very much.
10 THE COURT: All right. Redirect?
12 THE COURT: How much time do you think you need for
13 that?
14 MR. ANDERSON: Three minutes.
16 BY MR. ANDERSON:
17 Q. What was it that Ben Budoff told you about Charles
18 Head?
19 MR. TEDMON: Objection, Your Honor. I would ask the
20 Court to inquire, set a timeframe. If it's after the alleged
21 period --
23 MR. TEDMON: --it's not admissible as to my client.
24 Q. BY MR. ANDERSON: Now it's going to take four
25 minutes, though.

1 When Benjamin Budoff spoke with you, pitching this
2 program, did he speak about Charles Head at that time?
3 A. Yes, he did.
4 Q. All right. In those conversations in that timeframe,
5 what, if anything, did Benjamin Budoff say about Charles Head?
6 A. He basically referred to him as a brilliant man who
7 was taking on this company, and it was going to be a great
8 opportunity for investment.
9 Q. From your conversations with Benjamin Budoff, did you
10 understand Charles Head to have a role within this company?
11 MR. TEDMON: Objection. Calls for speculation.
13 Q. BY MR. ANDERSON: Did Benjamin Budoff represent
14 Charles Head as having a role within Creative Loans?
15 A. Yes.
16 Q. What was that role?
17 A. That he was the CEO and founder of this company.
20 MR. SAMUEL: No further questions.
22 MR. TEDMON: Just a couple.
24 BY MR. TEDMON:
25 Q. Ms. Sly, Mr. Anderson asked you about your

1 conversation with Ben Budoff just a minute ago, right?
2 A. Yes, sir.
3 Q. And anything that Mr. Budoff said to you was from his
4 mouth only, not Charles Head, correct?
5 A. As far as I know.
6 Q. And you didn't ever talk to Charles Head to follow up
7 any of that, did you?
9 Q. To know whether what Mr. Budoff was saying was true
10 or not, true?
13 MR. GREINER: No questions.
14 THE COURT: Further redirect?
17 MR. TEDMON: Yes.
20 MR. SAMUEL: Yes.
21 THE COURT: You may step down. Government's next
22 witness.
23 MR. MORRIS: United States calls Alfred Limas.
24 (Photograph taken of this witness.)

1 truth and nothing but the truth, so help you God?
5 THE WITNESS: My name is Alfred Limas, A-l-f-r-e-d.
6 Last name, L-i-m-a-s.
8 ALFRED LIMAS,
13 BY MR. MORRIS:
14 Q. Mr. Limas, are you familiar with the address of 3509
15 38th Street in Sacramento?
16 A. Correct.
17 Q. How are you familiar with that address? How are you
18 familiar with the address?
19 A. Oh, about since '02, '03, somewhere around there.
20 Q. And how was it that you knew what that address was?
21 How are you familiar with that address?
22 A. Yes. Oh, I mean I live there.
23 Q. And I think you said since 2002?
24 A. Yes.
25 Q. Do you still live there?

1 A. Yes, I do.
2 Q. Okay. I'd ask you to think back to 2006. In 2006,
3 were you behind on your payments at the house?
4 A. Yes.
5 Q. How far behind were you?
6 A. I don't know. Far enough for them to want to
7 foreclose on it.
8 Q. And did you have any contact with a company about
9 trying to avoid the foreclosure?
10 A. I called almost everyone in the phone book, you know.
11 Q. Okay. Did you eventually end up working with a
12 company to try to prevent the foreclosure?
13 A. Actually, it was Alliance Title that was going to
14 foreclose on it. And some gal there -- I don't remember her
15 name -- told her what I was trying to do, and I couldn't
16 anybody to help out. So she said she might know somebody that
17 could do that. That's how I got the number.
18 Q. So she referred you to somebody? She referred you to
19 somebody?
20 A. Yes.
21 Q. And who did she refer you to?
22 A. I don't remember names. I can't recall a name.
23 Q. Okay. Did you call the number that she gave you?
24 A. Oh, yes, I did.
25 Q. And what did you tell them?

1 A. I explained to them the situation and that there was
2 equity in it.
3 Q. And when you say explained the situation, what did
4 you explain to her?
5 A. That I was behind in the payments, and they were
6 going to foreclose on it. And I just didn't want to lose all
7 the equity in the house. And I wanted to try to use that to
8 save the house.
9 Q. Okay. And did the person that you spoke to, did they
10 respond to you saying that?
11 A. They said they could probably help me out.
12 MR. TEDMON: Objection. Hearsay.
13 THE WITNESS: I don't know the person's name.
15 MR. GREINER: Move to strike that answer.
17 disregard that answer. Now wait for the next question. Are
18 you hearing well enough?
19 THE WITNESS: Not really.
20 THE COURT: Is there a booster, Ms. Schultz, that we
21 could provide Mr. Limas?
22 THE CLERK: Yes, Your Honor.
23 THE COURT: We have a system that might help, and so
24 let's get you that and see if that ensures that you are hearing
25 everything clearly.

2 THE COURT: Ask a question, Mr. Morris.
3 Q. BY MR. MORRIS: Can you hear me?
4 A. I can't hear.
5 Q. How about this? Is that better?
6 THE COURT: If you can't hear, let me know. If you
7 cannot hear -- if you see lips moving -- can you hear me now?
8 THE WITNESS: Barely.
9 THE COURT: Just barely. Let's try another headset
10 because it should be working better than that.
12 Q. BY MR. MORRIS: Can you hear me?
13 A. Yeah.
14 Q. Okay. I'm not sure where we were.
15 Let me do this. Let's bring up Exhibit 14A1. It's
16 already been admitted, Your Honor.
18 Q. BY MR. MORRIS: Can you see on the screen in front of
19 you this document? And the arrow, is that the property that we
20 were just talking about?
21 A. Correct.
22 Q. Your property?
23 A. Yes.
24 Q. Okay. And to be clear, that's you?
25 A. That's me.

1 Q. And I'm going to ask you to look at a document that's
2 behind you in a binder. Or I could approach, Your Honor, if
3 that would make it easy or less time consuming.
4 THE COURT: Why don't you approach. Identify the
5 document.
6 MR. MORRIS: 14A3.
8 front of you?
9 A. Yes, I do.
10 Q. And the name at the top of that document, that's your
11 name?
12 A. Yes, it is.
13 Q. Okay. And does that document have a name of another
14 organization named after you?
15 A. No. Nothing to my knowledge.
16 Q. Can I approach to point it out, Your Honor?
18 THE WITNESS: Oh, okay.
19 Q. BY MR. MORRIS: And having pointed that out, is there
20 a name of an organization that's after your name on the
21 document?
22 A. I want to say it was Nations Property or something
23 like that, yeah, to my knowledge.
24 Q. Okay. So you recall Nations Property?
25 A. Yes.

1 Q. Okay. Do you recall interacting with
3 A. No. I can't say that I do.
4 Q. Do you recognize the document in front of you?
5 A. Yeah.
7 A. Well, I read it about a couple hours ago.
8 Q. Had you ever seen it before that day?
9 A. Kind of hard to tell. It was a long time ago.
10 Q. If you could turn to page four. Do you recognize a
11 signature on that page?
12 A. Yes, I do.
14 A. It is mine.
16 A. Well, I guess loosely I do, but there was a lot of
17 signing that day so.
18 Q. So does this refresh your recollection about the
19 transaction that you entered into?
20 A. Yes.
21 Q. And to your knowledge, is this a document that you
22 signed as part of that transaction?
23 A. Yes.
24 MR. MORRIS: Your Honor, I'll move to admit
25 Government's 14A3.

1 THE COURT: How many pages is that?
2 MR. MORRIS: That is 15 pages, Your Honor.
3 THE COURT: All right. This is covered by the
4 stipulation?
5 MR. TEDMON: Yes, it is.
6 MR. MORRIS: It is, Your Honor.
7 THE COURT: Mr. Greiner? Mr. Samuel?
12 dated 4/18/2006 between Alfred N. Limas “Seller” and Funding
13 Foreclosures.com “Purchaser” for property at 3509 38th Street,
14 Sacramento, CA 95817 admitted into evidence.)
15 MR. MORRIS: May I approach to retrieve the document?
17 Q. BY MR. MORRIS: So I think your testimony was you
18 remember a company called Nations Property Management that you
19 got involved with as part of this transaction, is that correct?
20 A. Correct.
21 Q. Okay. And you called them after Alliance Title
22 referred you to them?
23 A. Correct.
24 Q. Do you recall the names of anybody that you worked
25 with there?

1 A. Honestly, I couldn't. I don't know.
2 Q. When you spoke to them and talked about the
3 transaction, was it after that conversation that you ended up
4 signing documents?
5 MR. GREINER: Objection. "Them?"
6 MR. SAMUEL: Join.
7 MR. TEDMON: Join.
9 Q. BY MR. MORRIS: When you spoke to the person at
10 Nations Property Management, was it after that conversation
11 that you ended up signing documents?
12 MR. SAMUEL: Can we have a further definition of
13 "person"?
14 THE COURT: Sustained. Subject to rephrasing.
15 Q. BY MR. MORRIS: Okay. You spoke to a person at
16 Nations Property Management?
17 A. Correct.
18 Q. Okay. But you don't recall a name?
19 A. No, I don't.
20 Q. After you spoke to that person, did you end up
21 signing documents pertaining to your house?
22 MR. SAMUEL: Same objection. At least he could ask
23 male or female.
24 THE COURT: Are you willing to do that? Rather than
25 waiting until cross-examination.

1 Q. BY MR. MORRIS: Do you recall if it was a male or
2 female that you spoke to?
3 A. It was male.
4 Q. But you don't recall a name?
5 A. No.
6 Q. After you had that conversation, did you end up
7 signing documents?
8 A. It was a while later after that that I signed the
9 documents.
10 Q. Okay. But the documents -- the documents that you
11 just looked at and said you that recognized, were those
12 documents that you signed after having that conversation?
13 A. Yes, I believe so.
14 Q. Okay. If we could bring up 13A4 -- or 14A3, page
15 four. And just to get everybody caught up, this is what you
16 were looking at a second ago? That's you?
17 A. Yes, it is.
18 Q. And do you recognize that address?
19 A. That is my address of my house.
20 Q. If you could zoom out and go to page four, please.
23 Q. Okay. You can take it down. When you signed that
24 document, what was your understanding of what you were signing?
25 A. I was selling the home for -- I believe it was to pay

1 off -- well, it was to pay off the loan on it already. It was
2 143. And I was going to receive 5,000 in cash. And then after
3 12 months, split the equity and possibly re-buy my home back.
4 Q. Okay. Let me make sure I understand. You were
5 selling your house?
6 A. Yes.
7 Q. You were getting 5,000 in cash?
8 A. Correct.
9 Q. And for 12 months -- or after 12 months, you would be
10 able to buy the house back?
11 A. Correct.
12 MR. GREINER: Objection. Misstates. Possibly buy
13 the house back.
14 Q. BY MR. MORRIS: Possibly buy the house back?
15 A. Possibly buy back.
16 Q. And did you have any understanding of any obligations
17 that you had during that 12 months?
18 A. Just make the payments on it.
19 Q. And where were you making those payments?
20 A. I was making the payments to Nations Property
21 Management.
22 Q. Okay. Not to your prior bank?
23 A. Correct.
24 Q. And you mentioned equity, what was your understanding
25 about equity when you signed this document?

1 A. That we were going to split that 50-50 down the road,
2 12 months afterwards.
3 Q. Okay. So what was your understanding about the
4 equity in your house during the 12 months?
5 A. I didn't know that it was going to be used or
6 anything. You know, I assumed it was going to stay there.
7 Q. Did you have any discussions about the equity in your
8 house other than what you said, which was to split it at the
9 end of the 12 months?
10 A. No. No.
11 Q. Did you get the $5,000 up front?
12 A. Yes, I did.
13 Q. Okay. And did you begin making your monthly
14 payments?
15 A. Yes, I did.
16 Q. How did you make those payments?
17 A. I made them with a check.
18 Q. Okay. And did you mail the checks?
19 A. I mailed the checks.
20 Q. Do you recall where you mailed them?
21 A. I can't remember the -- it was Southern California
22 some place, you know. I do know that much.
23 Q. Do you recall -- well, before we go down the
24 payments.
25 The documents that you were -- the first documents

1 you were looking at, do you recall receiving those documents, a
2 copy of those documents?
3 A. The ones we just looked at?
4 Q. Yes.
5 A. Yes.
6 Q. And how did you receive those?
7 A. Well, there was a notary that came over with those --
8 with those papers.
9 Q. Okay. And was that at the time that you signed the
10 documents?
11 A. That was the time I signed them, yes.
12 Q. Did you receive any paperwork later?
13 A. I'm sure I did. You know, I did have -- because I
14 did have copies of them, but I couldn't tell you when, you
15 know, but obviously it was after that point.
16 Q. Okay. So after the first set of signings, you
17 received more papers, is that what you're saying?
18 A. No. Just those papers.
19 Q. Those papers. Okay. You received those papers after
20 signing?
21 A. Right. Yeah.
22 Q. You said you were making your monthly payments?
23 A. Correct.
24 Q. At some point, did anything unusual happen on the
25 payments that you were sending?

1 A. Yeah. I got returned to sender on three of the
2 payments.
3 Q. Do you recall approximately which payments those were
4 that you got return to sender?
5 A. I think they were October, November and December.
6 Q. Of which year?
7 A. That year of '06, I believe.
8 Q. Did you do anything when you received those checks
9 back marked return to sender?
10 A. No. There was nothing I could do. I kept them.
11 Q. Okay. Did you try to contact anybody about that?
12 A. I tried to call that phone number that I had for
13 there and never got a response.
14 Q. Okay. After those checks got returned to sender,
15 what was your next recollection, if any, of the transaction?
16 A. Well, that's when I first had contact with
17 Mr. Fitzpatrick.
18 Q. If you can bring up 14A3, page eight, please.
19 Do you recognize that signature?
20 A. That's my signature.
21 Q. Okay. Zoom out.
22 Do you recall signing this document?
23 A. Not off the top of my head right now.
24 Q. Okay.
25 A. I did not read everything when I signed it.

1 Q. Why didn't you read everything when you signed it?
2 A. Because there was just so much of it.
3 Q. Can you describe the process that was followed when
4 you were signing the documents?
5 A. I mean, he was sitting there watching me, telling me
6 where to sign, sign here, here, here, you know, initial that
7 and do that.
8 Q. Let me clarify. When you say "he," you're talking
9 about the notary?
10 A. The notary, correct.
11 Q. Did you ask any questions of the notary about the
12 documents?
13 A. Well, I asked him if everybody always read those
14 things, and, you know, not too many do, I guess. I didn't.
15 Q. If we can go to page nine, the next page, please.
16 How about that signature, do you recognize that one?
17 A. That was my signature.
18 Q. And zoom back out. Do you recognize this document?
19 A. Again, it's been a while so, you know --
20 Q. You don't recall it independently?
21 A. No.
22 Q. If we can go forward to page twelve, please. Was
23 that your signature?
24 A. Yes, it is.

1 A. Yeah. Yeah, I do, as a matter of fact.
2 Q. And this section here where the date has a change
3 with initials, do you recognize those initials?
4 A. Those initials are mine.
5 Q. And the next page, please.
6 And that signature, do you recognize that signature?
7 A. The signature is mine.
8 Q. Okay. And those initials, do you recognize those
9 initials?
10 A. Pardon me?
11 Q. The initials at the top?
12 A. Yes, they are mine.
13 Q. Those are yours. Okay. Do you recall signing this
14 document?
15 A. Yes, I do.
16 Q. And you said -- you were talking about "he" was
17 helping you sign documents, he was the notary that presented
18 documents to you, is that right?
19 A. Notary public.
20 Q. It was a man?
21 A. Yes.
22 Q. Did you meet a second time with a second notary?
23 A. He was only there one time.
24 Q. Only one meeting?
25 A. Yeah.

1 Q. Okay. Go forward to page 15 of this exhibit, please.
3 A. Yeah.
5 A. Yes, I do.
6 Q. Okay. And is that your signature?
7 A. Yes.
8 Q. Okay. If we could zoom back out. And go back one
9 page. Are those your initials?
10 A. No.
11 Q. Zoom out. Does that appear to be your signature?
13 Q. Okay. Do you recall meeting with a female notary
14 named Susan Wilson?
15 A. There was no female there.
16 Q. Zoom back out, please. If we can go to page ten of
17 this exhibit, 14A3, page ten.
18 I would like you to look at the initials on this
19 page. Do you recognize those initials?
20 A. No, I don't.
21 Q. Is that how you make your initials?
22 A. No, it isn't.
23 Q. Go to the next page. Do you recognize those
24 initials?
25 A. No.

1 Q. Is that how you make your initials?
2 A. That is not how I write my initials, no.
3 Q. What I would like to do is 14A3, page eleven, this
4 page, with 14A3, page 14. So comparing, again, these initials
5 with those, do any of those look like the way you sign your
6 initials -- do any of those appear to be the way you sign your
7 initials?
8 A. No.
9 Q. If we can take those down and go to page 14A3-15.
10 Those are the correct initials, or are those the wrong
11 initials?
12 A. Those are my initials.
13 MR. MORRIS: Take them down.
14 Your Honor, I'll move to admit 14A5 and A6 pursuant
15 to the stipulation. But I'm not going to go over them at this
16 point.
23 THE COURT: All right. 14A5 and 14A6 are admitted.
24 (Government Exhibits 14A5 and 14A6, (See index for

1 MR. MORRIS: And then I would like to admit 14C1, C2,
2 C3, C4, and C5 pursuant to the stipulation.
3 THE COURT: Mr. Tedmon? 14C1 through C5.
4 MR. TEDMON: No objection as to C1. C2, subject to
5 the variance issue, no objection. C3, subject to the variance
6 issue, No objection. Subject to the variance issue on C4, no
7 objection. And likewise as to C5, subject to the variance
10 MR. SAMUEL: Same comments, Your Honor.
12 MR. GREINER: Same comments except also relevance as
13 to C2, -3, -4, -5.
14 THE COURT: All right. Those objections are noted.
15 The exhibits come in over those objections.
16 (Government Exhibits 14C1, 14C2, 14C3, 14C4, and
17 14C5, (See index for descriptions) admitted into evidence.)
18 MR. MORRIS: And finally, Your Honor, I would like to
19 admit Government's 14D1, D2 and D3 pursuant to the stipulation
20 as bank records.
21 THE COURT: D1, -2, -3, Mr. Tedmon?
22 MR. TEDMON: -1, -2 and -3, Your Honor?
23 THE COURT: Yes.
24 MR. TEDMON: May have I just one moment?

1 MR. TEDMON: No objection. Thank you.
6 THE COURT: All right 14D1 through D3 are admitted.
7 (Government Exhibits 14D1, 14D2, 14D3, (See index for
9 Q. BY MR. MORRIS: I would like to bring up 14D3,
10 please. Zoom in on that item.
11 Mr. Limas, can you see that item on the screen in
12 front of you?
13 A. Yes.
14 Q. Do you recall receiving a check from Creative Loans?
15 A. Yes.
16 Q. Okay. In the amount of $5,000?
17 A. Correct.
18 Q. It may be hard to see there, but can you make out a
19 rough date of when that check was written? Hard to see?
20 A. I really couldn't. No.
21 Q. If we could zoom back out. Does that signature
22 appear to be yours?
23 A. That signature is mine.
24 Q. So do you recall either cashing or depositing that
25 check?

1 A. I deposited the check, yes.
2 Q. And if we could go to 14A1, please. And just to
3 orient ourselves, let me show you a couple points. We've
4 already looked at this document. But talking about you and in
5 the timeframe of June 12, 2006 -- if we can zoom out -- did you
6 receive $88,202.66 in June of 2006?
7 A. I didn't receive any kind of money like that.
8 Q. In June of 2006 did you intend to give $88,202.66 to
9 anybody?
13 A. Would you repeat the question.
14 Q. In June of 2006, did you intend to give $88,202.66 to
15 anybody?
16 A. Well, I knew there was some equity in it, you
17 know, so --
18 Q. And what was your -- in your prior testimony about
19 your understanding of the equity in the house --
20 A. After 12 months, we were going to split the equity.
21 Q. Twelve months after the transaction?
22 A. Yes. Correct.
24 THE COURT: All right. We're close to the time for
25 our second break, so let's go ahead and take that now. During

1 that break remember all of my admonitions. We'll see you in
2 15 minutes.
3 (Jury out.)
4 THE COURT: You may now step down. If you can be
5 back in your seat in 15 minutes. Thank you.
6 You may be seated if you wish. My main question for
7 you all is where do you think we are with the schedule? I
8 would like to be able to tell the jury as I excuse them today
9 what our estimate is.
10 Does the Government anticipate it will be done with
11 its case next week?
12 MR. ANDERSON: Your Honor, we hope to finish next
13 week. I'm little concerned because we still have Keith
14 Brotemarkle and John Corcoran to call. And although the
15 Government direct examination should be two hours or less for
16 each of those individuals, I don't know what we're looking at
17 for cross-examination. If it's like Kou Yang, then it will
18 take three more weeks to finish, but if it's more directed, it
19 should be possible to get through or almost through the
20 Government's case next week.
21 THE COURT: Well, besides those two witnesses, how
22 many others do you plan to call? You identified Mr. Scallin
23 and Mr. Peter.
24 MR. ANDERSON: I think about ten or less witnesses.
25 That's a ballpark. But we're more than halfway. I felt like

1 we were definitely over halfway today as far as numbers and far
2 more than halfway as far as time.
3 THE COURT: All right. And any estimate with respect
4 to Brotemarkle and Corcoran cross-exam, Mr. Tedmon?
5 MR. TEDMON: Well, you know, it seems to me
6 Mr. Brotemarkle, in particular, probably will take -- let's say
7 he testifies on Tuesday just hypothetically, we have a full day
8 on Tuesday, correct?
9 THE COURT: Yes. 8:30 to 1:30.
10 MR. TEDMON: He should be on and off, I think, on
11 Tuesday even with any cross-examination and so forth. At least
12 from my perspective. Other counsel may see it differently. I
13 don't want to bind them to that. But I know what I want to do.
14 MR. SAMUEL: I think one full day is probably
15 appropriate. I know what I want to do as well, but I know that
16 we all have interests in examining him in detail.
18 MR. GREINER: I think Brotemarkle will take up a full
19 day, Judge. I think that's true.
20 THE COURT: All right. And then Corcoran for the
21 defense.
22 MR. TEDMON: Well, if the Government's direct is two
23 hours --
24 MR. ANDERSON: I would say between one and two hours.
25 MR. TEDMON: Okay. I would think Mr. Corcoran may be

1 a little less involved in terms of time than Mr. Brotemarkle,
2 so I would say a half a day though for Mr. Corcoran.
3 THE COURT: Mr. Samuel, any current thoughts?
4 MR. TEDMON: Or more.
5 MR. SAMUEL: Half a day being three hours?
6 MR. TEDMON: Three hours.
7 MR. SAMUEL: Three and a half hours.
8 MR. TEDMON: If the Government's goes two hours, it's
9 going to take longer than three. If they go an hour, it's
10 possible.
11 THE COURT: I'm going to encourage them to think
12 about going an hour. We have three hours. So why don't we say
13 we'll try to get through Corcoran on Wednesday.
14 MR. TEDMON: Right. We still have Agent Fitzpatrick.
15 How long is that going to take on direct?
16 MR. ANDERSON: Right. And there are some more straw
17 buyers to come in. Although, the straw buyers seem to be some
18 of the fastest witnesses.
19 THE COURT: All right. Well, I'm going to ask you to
20 meet and confer. I'm going to say to the jury we think we're
21 on track to have the Government's case concluded. We're
22 striving to have it concluded by the end of next week. It
23 might spill over to the beginning of the following week when we
24 do have four days of trial time.
25 And then at this point, just so I'm clear,

1 Mr. Samuel, you're still thinking a brief case in defense?
2 MR. SAMUEL: Yes. Although, as these witnesses get
3 called, it gets briefer and briefer. You still have my client
4 on the stand, so who knows how long that's going to take.
5 THE COURT: At this point, does any other defendant
6 plan on putting a case in defense on as far as he knows?
7 MR. TEDMON: Well, we're assessing it, of course, but
8 at this point it's probably less likely that we will than
9 likely that we will.
11 MR. GREINER: Yes, we are, Judge. And based upon
12 what's going on in the witnesses that the Government is not
13 going to call, our list has expanded. So it's probably going
14 to be five or six witnesses. Plus we have to -- we have to put
15 on our investigator, Victoria Corona, because of what --
16 MR. TEDMON: Can we know who Mr. Greiner's going to
17 call? Because we're halfway through the trial, and he has
18 three witnesses on his witness list. Two of them are
19 investigators. Ms. Corona's going to get up and testify to try
20 to defeat the testimony of Ms. Kovacs. Good luck with that.
21 But in terms of the other witnesses, we don't even
22 know what they're talking about, and that could affect what I'm
23 going to do unless we get a witness list.
24 THE COURT: I'm going to direct you again to meet and
25 confer tomorrow over the break.

1 I am going to tell the jury I think we're on track
2 for the Government's case to be completed if not by the end of
3 the week, the beginning of next week. We aren't meeting my
4 goals. Right now it doesn't sound as if the case is going to
5 go to them before the Thanksgiving week. I had said we would
6 take a break.
7 During that week I know Mr. Samuel has some family
8 obligations, and so I'm not planning on changing that decision.
9 I mean, all the evidence will be in before Thanksgiving. I
10 don't have a doubt about that.
11 But you are directed to meet and confer and share
12 information. I don't know that anything is gained by
13 holding --
14 MR. TEDMON: It's not.
15 THE COURT: -- cards close to the vest at this point
16 in time for anyone. I would ask the Government to think about
17 obviously focusing Brotemarkle and Corcoran and spending only
18 the time it needs.
19 But I think we have to tell the jury that the case
20 would likely go to them the first week in December, which is
21 the 6th week. If you figure out a way to get it done faster,
22 they would appreciate that. The Court would appreciate. I
23 have civil trials waiting. I already had to tell one civil
24 case they are not going to go when we had hoped. Civil cases
25 matter, too, but, you know, we can only do what we can do. So

1 about ten minutes now.
2 MR. TEDMON: Your Honor, could I, maybe just as a
3 suggestion, I mean, I don't want the jurors to get frustrated
4 if at the end of next week the Government's case isn't done. I
5 think, because we have a short week, Monday is a holiday, we
6 only have three days next week as opposed to the normal four,
7 so it's likely that with all examination of Government
8 witnesses, the case for the Government will spill over to the
9 following week.
10 The only reason I say that is I don't want assigning
11 blame to any party if we don't get done next week. Because
12 they are going to listen to the Court and take it as gospel,
13 which they should. And I just don't want to be a problem.
14 THE COURT: That's fair enough. I was already
15 allowing for that possibility. Partly, I hope, by saying this
16 out loud that --
17 MR. TEDMON: We're encouraged.
18 THE COURT: Deadlines help focus minds. And again,
19 it's the same standard applies to everyone that I was
20 discussing with Mr. Greiner. What is sufficient at this point?
21 But I recognize you know your cases better than I do. All
22 right. Ten minutes.
23 (Break taken.)
25 (Jury in.)

1 THE COURT: You may be seated. We're going to turn
2 now to cross-examination, ladies and gentlemen. And I'm going
3 to recognize Mr. Greiner for that purpose. And we'll go until
4 1:30 p.m. today, and then I'll give you a sense of where we're
5 going in terms of the schedule. Mr. Greiner.
7 CROSS-EXAMINATION
8 BY MR. GREINER:
9 Q. Good afternoon, Mr. Limas. I'm going to try to keep
10 my voice up. If I don't do a good job, you make sure you tell
11 me. Okay? And one thing you have to do, though, is you have
12 to answer out loud so the court reporter can take it down.
13 Okay?
14 A. Okay.
15 Q. Stay close to that mic. If I ask you a question you
16 don't understand, ask me to repeat it. Okay?
17 A. I will do that.
18 Q. First question I'm going to ask you is, prior to
19 testifying today, did you talk to anybody about your testimony?
20 In other words, did you meet with the Government
21 before you testified?
22 A. Yes.
23 Q. When did you meet with them?
24 A. Just this morning.
25 Q. All right. And did they show you any documents?

1 A. Yes.
2 Q. What documents did they show you?
3 A. The ones we just saw on the screen here.
4 Q. Did they show you any other documents like an
5 interview that you gave to the Government?
6 A. Not that I'm aware of.
7 Q. So you didn't read any of the two interviews that you
8 gave to the Government this morning?
9 A. Could you repeat that one more time?
10 Q. Absolutely. Do you remember talking to the
11 Government back in about July 18, 2007? Do you remember doing
12 that over the phone?
13 A. Vaguely.
14 Q. All right. Did you see that document this morning,
15 that typed-up document of that telephone interview with the
16 Government?
17 A. Could I see that document again?
18 THE COURT: It's a yes or no question. So let's
19 repeat the question. And then if you just answer yes or no.
20 Q. BY MR. GREINER: Do you recall seeing a one-page
21 document of the Government typing up the telephone interview
22 with you and the Government on about July 18, 2007?
23 A. I didn't see anything like that. I don't believe.
24 Q. All right. Did you see a document, a two-page
25 document, regarding a telephone interview that you gave on

1 February 29, 2008 with the Government?
2 A. I didn't see a document this morning like that, no.
3 Q. That's fine. I just wanted to know.
4 Okay. When we took a break, you didn't talk to
5 anybody about your testimony, did you?
6 A. I didn't talk -- I only talked to Mr. Fitzpatrick.
7 Q. About your testimony in here?
8 A. And that gentleman right there.
9 Q. Okay. Was that earlier this morning?
10 A. Earlier this morning.
11 Q. The break we just had, did you talk to any person?
12 A. No.
13 Q. About your testimony?
14 A. No.
15 Q. All right. And you didn't see any documents, true?
16 A. No.
17 Q. All right. Here we go.
18 I want to have you focus on when you first entered
19 into the program with Nations Property. Okay? Do you have
20 that in your mind?
21 A. Yes.
22 Q. You knew that you were selling your property when you
23 joined that program, fair statement, right?
24 A. Yes.
25 Q. Okay. And you knew that you were coming off title,

1 correct?
2 A. Correct.
3 Q. You didn't expect when you sold your property to get
4 $88,000 in your pocket, true statement?
5 A. That's a true statement, yeah.
6 Q. What you expected to get was $5,000 in your pocket to
7 help pay off your bills, true statement?
8 A. That's true.
9 Q. And you did get that $5,000, true?
10 A. Yes, I did.
11 Q. All right. Now, I want to take you just a tad
12 earlier than that. Just to lay the foundation, before you got
13 into the program, you got into some financial difficulty, fair
14 statement?
15 A. Correct.
16 Q. Did you look at filing bankruptcy?
17 A. I don't believe I did.
18 Q. Did you call your bank to see if you could work out a
19 forbearance?
20 A. That was Alliance Title.
21 Q. Okay. That was Alliance Title was your bank?
22 A. Yeah.
23 Q. And did you talk to them about doing a forbearance?
24 A. It was in foreclosure, so, I mean, they couldn't help
25 me.

1 Q. Okay. Your understanding of foreclosure was that the
2 bank was going to sell your property, fair?
3 A. Correct.
4 Q. And you were going to be uprooted, you were going to
5 be out of your house, game over, right?
6 A. Correct.
7 Q. And if the bank foreclosed, sold your property, game
8 over, you lose everything?
9 A. Correct.
10 Q. You lose your title to your house, true?
11 A. Correct.
12 Q. You have to go live someplace else, true?
13 A. Absolutely.
14 Q. And if you had any -- or whatever equity you had in
15 the house, you're going to lose that 100 percent, it's gone,
16 right?
17 A. Sure.
18 Q. Okay. And by getting into this program with Nations
19 Property, it gave you that second chance that nobody else did,
20 true?
21 A. Yes, it did, at the time.
22 Q. And your understanding was that if you were able to
23 make the 12 monthly payments, that at the end of that time you
24 were going to be able to -- your words -- split the equity,
25 true?

1 A. And possibly buy it back, yes.
2 Q. And I didn't want to combine the questions, but and
3 possibly buy back your house, right?
4 A. Correct.
5 Q. Now, let me -- just as foundation, you actually had
6 bought that house earlier, correct?
7 A. Yes.
8 Q. So you had gone through escrow document closing
9 signing?
10 A. Correct.
11 Q. Escrow instructions, termite inspection, insurance,
12 all of those documents, you're familiar with that, right?
13 A. Yes.
14 Q. And you're familiar with the final escrow
15 instructions that have to go to the escrow officer to tell the
16 escrow officer where to put the money, right?
17 A. That's been a long time, but --
18 Q. It's been a long time, but you remember that when you
19 bought your property?
20 A. Yeah.
21 Q. Somebody had to tell the escrow officer where to put
22 the money, right?
23 A. I suppose.
24 Q. Right. The escrow officer couldn't keep it him or
25 herself could they? No?

1 A. I wouldn't think so.
2 Q. And then at the end of that transaction, you remember
3 getting a final settlement statement that told you where all
4 the money went so you knew, right?
5 A. Repeat that one more time?
6 Q. Absolutely. When you bought your house the first
7 time, you remember getting what's called a HUD-1 settlement
8 statement that showed you where all the money was paid, where
9 you had borrowed money to buy the house to pay off the other
10 person's mortgage, the fees, the title costs, you saw that
11 document, right?
12 A. I'm sure I did.
13 Q. All right. And I believe they've already entered
14 this document, Judge. 14A1. If we could have that on the
15 screen?
16 THE COURT: That is in.
17 Q. BY MR. GREINER: This is the HUD-1 regarding your
18 property, and that's at 3509 38th Street, true statement? Yes?
19 A. Yes.
20 Q. All right. And this shows the contract price to sell
21 the property was 250,000, do you see that?
22 A. Correct.
23 Q. All right. And on the left-hand side it's talking
24 about what the borrower had to bring to the table to make sure
25 this deal went through, and you see down there where it says

1 "'06" -- there is a number in front of it -- but do you see the
2 "'06" where it says "closing funds" on the left-hand side? Let
3 me enlarge.
4 A. There you go.
5 Q. All you got to do is ask if you can't see. Do you
6 see that?
7 A. Okay. I see it.
8 Q. Do you see the "closing funds"?
9 A. I see that.
10 Q. All right. And that figure is $25,000, correct?
12 Q. Right. And based upon your understanding of
13 purchasing a home in the past and going through this
14 transaction, you understood that that 25,000 was cash money the
15 borrower had to bring to the table to make sure that this
16 purchase of your house went through for 250,000, fair
17 statement?
18 A. I don't recall seeing anything like $25,000 on
19 anything.
20 Q. You didn't get 25,000, right?
21 A. No.
22 Q. But to make sure that this property got sold, the
23 borrower had to pay 25,000 in funds?
24 A. Okay.
25 Q. Do you understand that?

1 A. I suppose.
2 Q. All right. We can take that off the screen, please.
3 Do you recall that your rental payment per month was
4 about $1,125?
5 A. It was about $1,100.
6 Q. 1,100, that rings a bell, right?
7 A. Yeah.
8 Q. Now let me pull up 14A3-10, please. You talked about
9 this with the Government.
10 And I believe you told the Government those aren't
11 your initials, fair?
12 A. Those are not my initials.
13 Q. If we could enlarge. Do you recall receiving this
14 document at any time?
15 A. I have a lot of documents there.
16 Q. I know that.
17 A. I don't recall this specific one or any specific one,
18 actually.
19 Q. Okay. Fair statement. Let me go to 14A3-9, please.
20 Now, when you entered into the contract with Nations
21 Property, you agreed that you were going to be able to buy back
22 your property for a certain price up front, do you remember
23 that?
24 A. I didn't know there was a price to it -- buying it
25 back.

1 Q. So you weren't -- nobody told you that, hey, we're
2 going to agree up front that if you enter into the program,
3 sell your property, rent it for 12 months, paying about 1,100
4 rent, and then at the end of 12 months you'll have an
5 opportunity to buy it back at a pre-determined price, nobody
6 told you that?
7 A. Not at a pre-determined price, no. Everything except
8 the pre-determined price.
9 Q. Take a look at this document. This is an exhibit --
10 what's called Exhibit A to that equity purchase agreement.
11 A. I see that.
12 Q. Did anybody say to you that, hey, look, you're going
13 to be able to buy it back, if everything works out at the end
14 of 12 months, for about 198,000?
15 A. There was no money amount involved.
17 A. Yes, it is.
18 Q. As you sit there, you just don't recall this
19 document?
20 A. I don't recall any kind of price like that was ever
21 talked about.
22 Q. Because, obviously -- but I'm going to ask you -- the
23 198,000 is less than the 250, right?
24 A. Yeah.
25 Q. Okay. We can take that down.

1 Now, before I put up I think the last two, maybe
2 three documents -- before I put that up -- when you met with
3 the notary, that was a notary that met you in your house,
4 correct?
5 A. Correct.
6 Q. And that notary showed you identification, correct?
7 A. Yeah.
8 Q. And the identification said that this person was a
9 notary?
10 A. Correct.
11 Q. Not working for Nations Property, fair statement?
12 A. I assume that he wasn't working for him.
13 Q. So that's a fair statement then, there wasn't
14 anything that he did to indicate to you that he was working for
15 Nations Property, fair?
16 A. Correct.
17 Q. And when you were going to sign documents that the
18 notary was going to notarize, you had to show them your
19 driver's license?
20 A. Yes, I did.
21 Q. Because, as you know, the notary has to know it's you
22 that's signing, right?
23 A. Correct.
24 Q. Now with that understanding, if we could put up
25 14A3-14, please. Now, this document says --

1 First of all, that's your signature, isn't it?
2 A. It appears to be.
3 Q. All right. And it's dated April 20, 2006, right?
4 A. It's what the date says.
5 Q. All right. Now this notary, it appears to be --
6 could be wrong -- but it appears it's a female, true?
7 A. By the name I would say it would be a female.
8 Q. Susan R. Wilson, right?
9 A. That's what the name says.
10 Q. Now, with your understanding that when you sign
11 documents in front of a notary you have to show identification,
12 to sign this document and have Susan R. Wilson notarize it, you
13 would have had to show her your California Driver's License,
14 right?
15 A. The notary was a male.
16 Q. I understand that. But for Susan R. Wilson to
17 notarize this, and if that's your signature, you're going to
18 have to show her your ID, that's a fair statement?
19 A. Correct.
20 Q. And then if we can take that down and go to 14A3-15,
21 please. And this document is dated May 26, 2006, right?
22 A. Says May 26th on it.
23 Q. And that's your signature, correct?
24 A. It appears to be.
25 Q. And now this notary is named Nicholas Surjan,

1 S-u-r-j-a-n, correct?
3 Q. For Nicholas Surjan to notarize this document, you're
4 going to have to show him your California Driver's License,
5 correct?
6 A. Correct.
8 So your understanding as you sign up for the program
9 with Nations Property and then going through it, the 12-month
10 period, is that at the end of the 12-month period, you're going
11 to be splitting your equity to help purchase back your
12 property, do I have that right?
13 A. Correct.
14 Q. Now, Nations Property didn't say that you would get
15 an additional amount of cash in your pocket, did they?
16 A. I just assumed it would be that way.
17 Q. I know you assumed it.
18 A. Half the equity, you know.
19 Q. I understand that. But that wasn't told to you,
20 correct? Nobody said that to you?
21 A. I can't recall the word-for-word conversation.
22 Q. Right. And how you answered me just a second was
23 that that was your assumption, right?
24 A. Correct.
25 Q. Because nobody from Nations Property told you that,

1 fair?
2 A. To the best of my knowledge.
3 Q. And when we looked at the figures, your house selling
4 for 250, and that document that said you could purchase it back
5 for 198, you would agree with me that the 198 figure is less
6 than the 250, would you agree with me on that?
7 A. Okay.
8 Q. If math --
9 A. Ballpark.
10 Q. If math stays the same, that's going to be about 50,
11 52,000 less, correct?
12 A. About ballpark.
13 Q. And you didn't have $52,000 to put up for any type of
14 loan, true?
15 A. No. Not myself at the time, no.
16 Q. Right. And you knew when you entered into the
17 program that the only way that you could ever find out if you
18 had any equity was that you were going to have to sell your
19 property, right? I mean equity wasn't something you carried
20 around in your pockets?
21 A. Everything was going up. I knew what the house -- I
22 just had it appraised before that.
23 Q. I understand that. I'm not asking about the
24 appraisal.
25 A. But you just asked me about the equity in it.

1 Q. But you knew to get equity out of the house, you had
2 to sell it, right?
3 A. You can usually -- I had to.
4 Q. Right. Because you couldn't borrow to get the equity
5 out, right?
6 A. Okay, correct.
7 Q. Because your house was in foreclosure?
8 A. Okay.
9 Q. Fair statement?
10 A. Yes. Yes.
11 Q. It's unfortunate, but I mean that was the reality you
12 were facing, right?
13 A. That's the reality I was facing.
14 Q. Okay. And then your understanding was that the
15 Nations Property was going to apply half of that equity to help
16 you purchase your property back, fair statement?
17 A. I don't know -- I wouldn't use the words "apply it."
18 Q. Well, somebody was going to have to buy the loan from
19 250 down to 198 because the bank's not going to loan --
20 A. I didn't know anything about 198, you know.
21 Q. Okay.
22 A. I didn't know anything about it.
23 Q. All right. Now, would you agree with me that back in
24 2008 things may be a little bit clearer to you than they are
25 today about what went on?

1 A. Just like anybody else, yes.
2 Q. All right. Fair statement, right?
3 Okay. So when you talked to the Government on the
4 telephone on about February 29, 2008, do you recall telling the
5 Government that you contacted Nations Property Management and
6 spoke to a female?
7 A. I spoke to a female at Alliance, and she gave me the
8 number of Nations Property Management, and I spoke to a male
9 person there.
10 Q. All right. I appreciate your answer. Directing you
11 back to my question.
12 On about February 29, 2008, over the telephone, when
13 you talked to Agent Sommercamp and Agent Fitzpatrick, do you
14 recall telling them that you contacted Nations Property
15 Management, speaking to a female?
16 A. I didn't talk to a female agent or female person at
17 Nations.
18 Q. And did you tell the agents on the telephone
19 interview that you could not remember her name?
20 A. Yeah, but I was talking about the one at Alliance
21 Title who gave me the phone number.
22 Q. I understand that. Do you remember talking to the
23 Government on July 18, 2007 by telephone?
24 A. I couldn't tell you the date.
25 Q. Do you recall talking to Agent Sommercamp on about

1 July 18, 2007?
2 A. I could have, maybe. I don't know.
3 Q. All right. Do you recall telling Agent Sommercamp
4 that Nations Property Management provided you with $5,000?
5 A. Yes, they did.
6 Q. All right. And do you recall telling Agent
7 Sommercamp that "Nations Property Management promised him that
8 he could buy back his house one year later"?
9 A. Sure.
10 Q. Fair. And you told Agent Sommercamp that you were
11 going to be removed from title, correct?
12 A. Correct.
13 Q. Now you don't know any person named Todd Hickman, do
14 you?
15 A. No.
16 Q. You don't know any person named Domonic McCarns, do
17 you?
18 A. I don't know him, no.
19 Q. Don't know any person named Scott Wagner, do you?
20 A. No.
21 Q. Never spoke to any of those three individuals I
22 listed, never spoke to them in your life?
23 A. I have no idea whether I spoke to them or not.
24 Q. You have no recollection as you sit here?
25 A. I don't recall the names.

1 Q. Okay. And you didn't tell the Government in the
2 July 2007 interview about speaking to any of those three
3 gentlemen, fair?
4 A. I wasn't able to put a name to it to begin with.
5 Q. Right. And the same thing about the 2008 interview,
6 couldn't put a name with it at all?
7 A. Couldn't put a name to it. They know that.
8 MR. GREINER: Just one second, Judge. Wait, I
9 haven't covered this.
10 Q. BY MR. GREINER: You also discussed on direct
11 examination that, if I recall correctly, you got -- in
12 October 2006 you got a return to sender, payment that you had
13 made?
14 A. Three of them, yes.
15 Q. First one was on October 2006?
16 A. I believe it was October, November and December.
17 Q. And all of that was in 2006, correct?
18 A. Yes. They were in sequence, right.
19 Q. And you had sent those payments to Nations Property,
20 correct?
21 A. Correct.
22 Q. And they had come back from Nations Property,
23 correct?
24 A. I'm assuming so.
25 Q. Because it said "return to sender"?

1 A. Yes. Return to sender.
2 Q. And when that happened, did you try to get in touch
3 with Nations Property?
4 A. Yes. And there was no answer.
5 Q. Couldn't get in touch with Nations Property?
6 A. Yeah. The number wasn't available anymore.
7 Q. And do you recall the first time that the FBI
8 contacted you?
9 A. Yes.
10 Q. And when was that?
11 A. I came home from work and there was the card.
12 Q. On your door?
13 A. On my door, yes.
14 Q. Do you remember what month and year?
15 A. I don't know.
16 Q. Do you remember the year, just approximately? Would
17 it have been 2007?
18 A. Well, it wasn't very long. It had to be in the
19 wintertime, you know.
20 Q. In the wintertime?
21 A. Maybe right after the first of the year.
22 Q. Okay.
23 A. You know. Because I got those payments back. And
24 that's about the time Mr. Fitzgerald got ahold of me.
25 Fitzpatrick, I'm sorry.

1 Q. Okay.
2 A. I'm guessing.
4 Q. BY MR. GREINER: Take you back real quick to one
5 subject for some clarity. I asked you about if anyone had
6 mentioned a purchase price to you for you to buy back. Do you
7 remember those lines of questions?
8 A. Okay.
9 Q. And your answers to me were that nobody had mentioned
10 any price at all, correct?
11 A. Correct.
12 Q. So if you didn't have a purchase price to buy it back
13 at, how did you know you were going to able to purchase it
14 back? Purchase it back meaning purchase your house back at the
15 end of 12 months.
16 A. We didn't talk about that price. About the purchase
17 price. The price of purchasing it back. The only price we
18 talked about was the 143 that remained on the loan.
19 Q. Right.
20 A. And the $5,000 on top of that.
21 Q. Okay.
22 A. And as far as any other price, there was nothing
23 talked about as far as buying it back or anything.
24 Q. All right.
25 A. That was never mentioned.

1 Q. So you entered into the contract and didn't have any
2 discussions with Nations Property about a buy-back price
3 during --
4 A. No. No. Absolutely not.
5 MR. GREINER: Okay. Thank you, Judge.
6 THE COURT: Any other cross, Mr. Tedmon?
13 MR. MORRIS: A couple minutes, Your Honor.
15 BY MR. MORRIS:
16 Q. Mr. Limas, when you signed the papers, what did you
17 think was going to happen to the equity in your house?
18 A. Well, I figured we were going to split it at the end
19 of that 12 months.
20 Q. You didn't think you were splitting it right there?
21 A. Pardon me?
22 Q. You didn't think you were splitting it right at that
23 moment?
24 A. No.
25 Q. If we could bring up 14A3, page nine. I think

1 Mr. Greiner was just talking to you about this page with this
2 $198,000 re-purchase price?
3 A. Yes.
4 Q. And you don't recall having any discussion --
5 A. No. I've never seen that number before.
6 Q. You can take that down. Go to 14A1, please. If you
7 can zoom out.
8 And just to clarify. We're talking about your house
9 on this document?
10 A. Correct.
11 Q. And you're listed as a seller. Do you see the name
12 listed as the borrower?
13 A. The top one?
14 Q. Yeah.
15 A. Charmayne Ratcliff.
16 Q. If we could zoom out. Do you recall Mr. Greiner
17 showing you this portion where there was this $25,000 closing
18 fee there, do you see that?
19 A. I see that.
20 Q. The line above that, the line ends with 02,
21 "principal amount of new loans," what the dollar value after
22 that line?
23 A. Of my home?
24 Q. The one on the line right there.
25 A. Repeat the question, please?

1 Q. What was the dollar value of the principal amount of
2 new loans on this sheet?
3 A. It was $143,000.
4 Q. That was your loan?
5 A. Yeah. That was my loan.
6 Q. On this sheet, what's the new loan on the house?
7 A. I don't know anything about that.
8 Q. You don't know anything about it at all?
9 A. No.
10 MR. MORRIS: Take that down. Nothing further, Your
11 Honor.
12 THE COURT: Any further cross? Mr. Greiner?
13 MR. GREINER: Only on what the Government did, yes,
14 Your Honor.
16 BY MR. GREINER:
17 Q. I think I have two areas, Mr. Limas, and I'll keep my
18 voice up. I apologize.
19 I have two areas. Your loan was past due? It was in
20 foreclosure, correct?
21 A. Yes.
22 Q. So not only did you owe principal, but you owed back
23 interest on it, too, right?
24 A. I would imagine.
25 Q. Right. I mean the bank's not just going to let you

1 skate for free, I mean, they are into it to make money?
2 A. I would assume so.
3 Q. So the figure that you were talking about with the
4 Government about, that was what you understood to be your
5 principal amount --
6 A. That was the loan.
7 Q. Right. That wasn't the loan with any arrears and
8 interests and fees and costs because of the foreclosure, right?
9 A. I don't know.
10 Q. Okay. And you understood that it was only after the
11 end of the 12 months that you were going to be -- if you
12 performed, paid the rent, that you were going to be splitting
13 your equity 50-50, right?
14 A. That's what I assumed. As I understood it.
15 Q. And when you got the October check back,
16 October 2006, when you got that check back, did you re-send
17 that check?
18 A. No.
19 Q. Why not?
20 A. Why would I? It said return to sender.
21 Q. I understand. But this is your house that you're
22 dealing with, and you knew that you had to go for 12 months.
23 And so I'm just asking, if it seemed that you would want to
24 make sure you made those twelve payments, right?
25 A. Absolutely.

1 Q. But you didn't try to send it back even though you
2 couldn't contact them?
3 A. I sent the November one.
4 Q. You sent the November?
5 A. Yeah.
6 Q. But that would have meant you were one month behind
7 because October got sent back to you, fair statement?
8 A. I suppose.
9 Q. And then when November came back, you sent December,
10 then you would have been October, November behind, fair?
11 A. If the company was there, I guess.
12 Q. Right. If it didn't get returned to sender. You
13 didn't try to send any of the checks back, though, fair?
14 A. No.
15 MR. GREINER: Okay. All right. Thank you.
16 THE COURT: Any other cross, Mr. Tedmon?
25 THE COURT: You may step down, sir, you are excused.

1 Ms. Schultz will take back the headset. Government's next
2 witness.
3 MR. ANDERSON: The United States calls Michael
4 Scallin.
5 THE COURT: Please come forward, sir.
9 THE WITNESS: Yes.
10 THE CLERK: Thank you, you may be seated. Please
12 THE WITNESS: Michael Scallin, M-i-c-h-a-e-l,
13 S-c-a-l-l-i-n.
15 MICHAEL SCALLIN,
20 BY MR. ANDERSON:
21 Q. Good afternoon. What general area are you from?
22 A. Elk Grove.
23 Q. I want to take you back to 2005/2006. In that
24 timeframe were you looking for investment opportunities?
25 A. Yes.

1 Q. Did you become involved with a company you knew by
2 the name Head Financial Services?
3 A. Yes.
4 Q. How did you become involved with Head Financial
5 Services?
6 A. I was searching the internet for opportunities,
7 financial opportunities, investments, and I received an e-mail,
8 and I answered the e-mail.
9 Q. Do you recall who the e-mail was from?
10 A. No, I don't.
11 Q. After you answered the e-mail, did you end up having
12 a phone conversation with anybody?
13 A. Yes, I did.
14 Q. Who did you have a phone conversation with first?
16 Q. When you spoke with Mr. Budoff, could you describe
17 what the conversation was about?
18 A. Just about how the program worked, and what it was
19 there for, what it was doing, what the return was going to be,
20 and basic investment stuff.
21 Q. What did Mr. Budoff tell you, specifically?
22 A. He said the program was there to help people who had
23 a problem with their homes at that time. They couldn't afford
24 to be in their homes. They were going to use my credit to help
25 them out. And had a bunch of people in the program that were

1 doing it. And in turn, we would receive a check for that.
2 Q. How much were you supposed to receive?
3 A. 5,000.
4 Q. Was that 5,000 per transaction?
5 A. Yes.
6 Q. Did you have any additional conversations before
7 deciding whether or not to get involved in this program?
8 A. Yes, I did.
9 Q. Who did you speak with?
10 A. I spoke with Benjamin first, and then I spoke with
11 Charles Head second.
12 Q. Why did you speak with Charles Head?
13 A. Because I had some reservations about doing it. I
14 wanted to make sure they had enough reserves to cover -- that
15 covered the loans on the properties, and I was assured that
16 they had investments that would take care of that reserves,
17 that would do that.
18 Q. What did Charles Head tell you about that?
19 A. I don't remember the full conversation.
20 Q. All right. So boil it down, what was the concern you
21 were expressing? What were you concerned might happen?
22 A. The concern that I had was if there was going to be
23 -- if it was a legal program, if it was an upfront and legal
24 program, if this is what -- if this was a good program. I was
25 told by Charles and Benjamin that the FBI had already been in

1 there, checked everything out. They were good front and back.
2 And not to worry about anything. That everything was good.
3 Q. Based on those conversations with Ben Budoff and
4 Charles Head, did you decide to participate in the program?
5 A. At that point, they had sold me, and I was closed on
6 going forward, yes.
7 Q. Did you --
8 MR. GREINER: Can we have a timeframe?
9 Q. BY MR. ANDERSON: We'll link it up with the documents
10 when he starts signing.
11 THE COURT: Initially '06/'07.
12 MR. ANDERSON: '05/'06 area, but we'll get specific
13 with the documents.
16 Q. BY MR. ANDERSON: All right. After deciding to
17 participate in the program, what's the first thing that you did
18 in order to accomplish that?
19 A. I had to give them documents, W2s, paycheck stubs,
20 stuff that you would ordinarily do to move forward to purchase
21 homes.
22 Q. Do you recall where you sent those to?
24 Q. Were you dealing with anybody as you were providing
25 information to Head Financial?

1 A. I was dealing with a woman that had an accent.
2 Q. Do you recall her name?
3 A. No, I do not.
4 Q. All right. After sending in that information, what's
5 the next thing that happened?
6 A. They would inform me that there was a property --
7 MR. GREINER: Objection. "They?"
9 Q. BY MR. ANDERSON: All right. When you say "they,"
10 who do you mean?
11 A. Head Financial. A representative of Head Financial
12 would inform me that there was a property available, and that
13 they were moving forward on it, and they would need me to sign
14 documents.
15 Q. Did you end up signing documents?
16 A. Yes, I did.
17 Q. Did someone come to your home or did you go somewhere
18 to meet someone?
19 A. Just go somewhere to meet somebody.
20 MR. ANDERSON: Your Honor, Government's Exhibit 12A2
21 has not been admitted. I would ask to have it admitted
22 pursuant to the stipulation.
23 THE COURT: It is in already.
24 MR. ANDERSON: All right. My list is a little
25 behind.

1 Q. BY MR. ANDERSON: We will look at the top of this
2 document. Did you end up signing documents for a property in
3 Seattle, Washington?
4 A. Yes, I did.
5 Q. And if we go down to -- do you see your name on this
6 document, "title will be held in the name of"?
7 A. Yes.
8 Q. And let's go to the bottom half, the borrower
9 information. In January 2006, was that home phone number
10 correct?
11 A. Yes, it was.
12 Q. And in January 2006, did you live at 4453 Townhome
13 Drive in Stockton, California?
14 A. No, I didn't.
15 Q. Do you know what that property is?
16 A. Yes. That was a rental property of mine.
17 Q. Have you ever lived at that address?
18 A. Absolutely not.
19 Q. Do you know what the address 2505 Condit Court is?
20 A. Yes. That's my parents' address.
21 Q. And then the address 4217 Peninsula Drive in Modesto,
22 are you familiar with that address?
23 A. That is a property that I sold.
24 Q. And if we look to the bottom on the borrower line, do
25 you recognize those initials?

1 A. Yes.
2 Q. Whose initials are those?
3 A. They're mine.
4 Q. Let's go to page two of this document. In
5 January 2006 what was your job?
6 A. I was a finance director at Toyota Town.
7 Q. Is that the same employer as listed here, Toyota
8 Town, East Hammer Lane, Stockton?
9 A. Yes, sir.
10 Q. How long had you been working at that job?
11 A. About seven years.
12 Q. What was your position?
13 A. I was a finance director.
14 Q. And looking down below, do you see where it says
15 Tracy Dodge Chrysler Jeep?
16 A. Yes, sir.
17 Q. Had you previously worked there?
18 A. Yes, sir.
19 Q. What was your average monthly income when you worked
20 at that employer?
21 A. About -- it was about 12,000 at Tracy.
22 Q. And looking down -- let's go to -- looking at this
23 area. Toyota Town. What was your average monthly income at
24 Toyota Town in 2002 to 2004?
25 A. Average monthly income there was roughly eight.

1 Q. $8,000 a month?
2 A. Yes.
3 Q. Let's go down to the bottom section. In
4 January 2006, approximately how much were you making each
5 month?
6 A. I don't understand the question.
7 Q. So you're in January 2006. If you looked back at the
8 prior year, what was your average monthly income?
9 A. Roughly 8,000.
10 Q. You said you had a rental property. Did you have
11 significant net rental income from that property?
12 A. No.
13 Q. Let's go to page three. Did you have a Washington
14 Mutual bank account?
15 A. Yes, I did.
16 Q. Did you keep a balance in the neighborhood of
17 $27,500?
18 A. No, I didn't.
19 Q. How did you typically use that bank account?
20 A. That bank account I believe was for bills and
21 incoming/outgoing money, lunches, dinners.
22 Q. What sort of balance would you typically keep in that
23 account?
24 A. Eight, ten thousand dollars.
25 Q. And let's go to the bottom of that page.

1 The 4453 Townhome Drive, that's the rental property
2 you owned, is that right?
3 A. Yes.
4 Q. Do you recall what the value of that property was in
5 January 2006?
6 A. Probably about 175.
7 Q. So not 200,000?
8 A. No.
9 Q. And then the Cedar Creek Drive in Modesto,
10 California, was that worth approximately 325,000?
11 A. Yes.
12 Q. Let's go to page four. Do you recognize that
13 signature?
14 A. Yes. It's mine.
15 Q. And the date written next to it, 1-9-06, is that your
16 handwriting?
17 A. I don't know. I can't tell you that.
18 Q. I would like to go to Government's Exhibit 12A3. Do
19 you recognize this document?
20 A. Yes.
21 Q. What is it? We can blow up a portion of it if that
22 helps.
23 A. It's a cashier's check from Washington Mutual.
24 Q. Do you know whose account that was drawn on?
25 A. It was drawn out of my account.

1 Q. Do you know for what purpose you had this check made
2 out?
3 A. These were given to me. I can't remember if they
4 were either for down payments on the properties or to send back
5 to Head Financial. I don't remember which.
6 Q. In order to make down payments on the properties,
7 were you putting out money in these transactions?
8 A. No.
9 Q. How did it happen that down payments were made?
10 A. I don't remember the particulars of the loans if
11 there was down payments on the loans.
12 Q. Did you personally put forward funds to make down
13 payments?
14 A. No.
15 Q. And were there times that money was sent to you from
16 Head Financial and then you were directed to do something with
17 that money?
18 A. Every time it was sent to me from Head Financial.
20 Your Honor, I would ask that that be admitted pursuant to the
21 stipulation.
22 MR. GREINER: Document again is 21A1?
23 MR. ANDERSON: Correct.
24 THE COURT: 21A1. Mr. Tedmon?

4 MR. GREINER: Objection on variance.
5 THE COURT: All right. So variance recorded. The
6 exhibit will come in.
9 Slocum Street NW, Palm Bay, Florida admitted into evidence.)
10 Q. BY MR. ANDERSON: Do you recognize this property
11 address, 965 Slocum Street Northwest, Palm Bay, Florida?
12 A. Yes.
14 A. It was one of the houses that they found.
15 Q. Let's go to page four for this document.
16 Do you see that this is another loan application like
17 the one we reviewed a moment ago?
18 A. Yes.
19 Q. Now, in April 2006, was the information that we
20 talked about in January still the case as far as your income,
21 your employment, and your assets?
22 A. Yes.
23 Q. Let's go to Government's Exhibit -- I'm sorry --
24 let's go to page 11 first -- page ten first.

1 A. Yes.
2 Q. What is it?
3 A. A Washington Mutual check for 25,000.
4 Q. Did you obtain this from your bank account?
5 A. Yes.
6 Q. Was this part of the transactions that you were
7 involved in?
8 A. Yes.
9 Q. Were you directed to do something with this?
10 A. Directed to, I believe, bring it with me when I went
11 to signing.
12 Q. Who directed you to do that?
13 A. A representative from Head Financial.
14 Q. Did you have $25,000 to put into closing escrow on a
15 home?
16 A. Not liquid assets, no.
17 Q. Let's go to page 11. Rotate, please.
18 Are you able to recognize this document at all?
19 A. Yes.
21 A. It's a Washington Mutual cashier's check.
22 Q. Is this another cashier's check that you obtained in
23 the course of doing this transaction?
24 A. Yes.
25 Q. Let's go to page 12. Do you know whether you've seen

1 this letter before?
2 A. I couldn't really tell you.
4 Your Honor. I would ask that that be admitted pursuant to the
5 stipulation.
6 THE COURT: 21B1.
7 MR. ANDERSON: Yes, Your Honor, as lender documents.
17 Rockwood Drive, Lago Vista, TX admitted into evidence.)
18 Q. BY MR. ANDERSON: Did you also sign for a property in
19 Texas, if you know?
21 Q. Was there another property that you signed for in
22 addition to the ones we've already discussed?
23 A. Yes. I think there was three or four -- possibly
24 four in total. I'm not sure if the fourth one went through or
25 not.

1 Q. Let's go to page three of this exhibit. Do you
2 recognize the signature on the borrower line at the top of page
3 three?
4 A. Yes.
6 A. That is mine.
7 Q. And if we go to page seven. Is that your signature
8 as well?
9 A. Yes, sir.
10 Q. And page six?
11 A. Yes.
13 A. Yes.
14 Q. And do you see the date next to it, 5-15-06?
15 A. Yes.
16 Q. In May '06 were your answers about income, assets,
17 properties owned still applicable?
19 Q. With the addition that you've now purchased other
20 properties in those other transactions, is that right?
21 A. Yes.
22 Q. And if we go to page five. Are any of those
23 additional properties listed in that scheduled real estate
24 owned?
25 A. No, they are not.

1 Q. Let's go to page nine. Do you see what this document
2 purports to be?
3 A. It's a verification of deposit.
4 Q. Do you recall what your account status was on
5 March 24, 2006?
6 A. How much I had in the account?
7 Q. Yes, sir?
8 A. Eight, ten, or twelve thousand dollars.
9 Q. Not 47,700?
10 A. No, sir.
11 Q. To the extent that you did have larger sums of money
12 in your account for short periods of time, where would that
13 money have come from?
14 A. It came from Head Financial.
15 Q. How long did it remain in your account?
16 A. A couple days.
17 Q. Let's go page ten. If we could rotate. And then
18 blow up the check. Do you recognize this document?
19 A. Yes, sir. It's a Washington Mutual cashier's check.
20 Q. Do you recall what it was for?
21 A. More than likely for a property.
22 Q. And did it come from your bank account?
23 A. Yes, it came from my bank account, but it's not my
24 money.
25 Q. All right. Did you end up getting your $5,000 per

1 property that you had been promised?
2 A. Yes.
3 Q. Did you ever obtain -- did you ever physically take
4 possession of a title document for any of these properties?
5 A. No.
6 Q. Do you know what ended up happening to each of those
7 three properties?
9 MR. TEDMON: Join.
10 THE COURT: Overruled. Just answer yes or no.
11 THE WITNESS: A couple of them, yes.
12 Q. BY MR. ANDERSON: As for the ones that you do know
13 what happened, what happened?
16 THE COURT: Sustained. And break it down.
17 Q. BY MR. ANDERSON: How did you expect mortgage
18 payments to be made on these properties?
19 Did you have an understanding as to who was going to
20 make mortgage payments on the properties?
21 A. Yes. Head Financial was supposed to make the
22 mortgage payments on the properties and supplemented, I
23 believe, by the rent that they were charging the people who
24 used to own the properties.
25 Q. Where did you get that understanding from?

1 A. From Benjamin Budoff.
2 Q. Did there come a point where you learned that
3 payments were not being made?
4 A. Yes. When --
5 MR. TEDMON: Objection, Your Honor. A yes-or-no
6 answer.
7 THE COURT: Sustained. Answer the question and then
8 wait for the next question.
9 THE WITNESS: Yes.
10 Q. BY MR. ANDERSON: When was that?
11 A. When I was at work and my company started receiving
12 phone calls from lenders.
13 MR. ANDERSON: No further questions. Thank you.
16 BY MR. TEDMON:
17 Q. Mr. Scallin, let me ask you this, these phone calls
18 you've just testified about from the lenders --
19 A. Yes, sir.
20 Q. -- those phone calls came to your company, is that
21 what you said?
22 A. They called where I work, and they also called my
23 cell phone.
24 Q. Okay. So you talked to some people about that, is
25 that correct?

1 A. Yes. I talked to lenders, yes.
2 Q. When was that time-wise, month and year?
3 A. I really couldn't put my foot on that.
4 Q. Was it late 2006 or late 2007, does that sound about
5 right?
6 A. I would say it's right around the time that
7 everything started falling apart, yes.
8 Q. Well, let's put a timeframe on it. Okay. Give us
9 your best recollection, month and year, as to when these phone
10 calls came in from the lenders? And I'm talking about the
11 mortgages, mortgage payments not being paid.
12 A. No, I understand. I would say it had to be in 2007,
13 early to late.
14 Q. Early to late 2007?
15 A. Yeah.
16 Q. Okay. But you're certain it was 2007, you're just
17 not sure when those phone calls came in, or is that right?
18 A. It's been seven years.
19 Q. I understand.
20 A. I can't say that I'm certain of that at all.
21 Q. But your recollection is 2007?
22 A. I remember getting phone calls to my employer, and
23 sitting there, and watching my boss turn to me, and go there is
24 a bank on the phone for you.
25 Q. And that was in 2007?

1 A. I guess, yeah.
2 Q. Well, don't guess. You've testified it's early to
3 late 2007.
4 A. Sure.
6 Now, you testified on direct that you initially spoke
7 with Ben Budoff, correct?
8 A. Yes.
9 Q. All right. And then you had a conversation with
11 A. Yes.
12 Q. All right. And that was one conversation you had
13 with Mr. Head, correct?
14 A. It was one phone call, yes.
15 Q. And that was it?
16 A. Yes.
17 Q. Okay. And you testified that Mr. Head represented to
18 you that the FBI went there, went to Head Financial, checked it
19 out, and it was good, that's what you testified to today,
20 correct?
21 A. I believe I testified that Benjamin Budoff said that
22 to me.
23 Q. Benjamin said that to you?
24 A. Yes.
25 Q. So it wasn't Charles Head that said that?

1 A. I talked to Charles Head on the phone, yes, I did,
2 and he told me that --
3 Q. Let's do questions and answers, okay, because the
4 narrative won't work.
5 You testified on direct --
6 Let's do it this way. Somebody that you spoke to
7 said the FBI had been there, and they checked it out, and
8 everything was okay, words to that effect, right?
9 A. Yes, sir.
10 Q. And that was during a phone call, correct?
11 A. Yes, sir.
12 Q. All right. And your best recollection is who told
13 you that?
14 A. That was Benjamin Budoff.
15 Q. Okay. Maybe I misheard. I thought you said Charles
16 Head had stated that to you. So that was Mr. Budoff that
17 stated that. All right.
18 And other than this one telephone conversation, as
19 you testified to, regarding Charles Head, you didn't have any
20 other contact with him, correct?
21 A. No. No other contact.
22 Q. So that would be correct?
23 A. Yes.
24 Q. All right. Now, let's go to, if we could,
25 Government's 12A2, please. Put that on the screen.

1 Now this document. Mr. Anderson asked you about a
2 uniform residential loan application, do you see that?
3 A. Could you blow it up a little?
4 Q. Sure. Let's just do the top section. Okay. This is
5 a uniform residential loan application, correct?
6 A. Yes.
7 Q. And your name is right here, Michael E. Scallin?
8 A. Yes.
9 Q. Now if we can just go to page four of that document,
10 please. And expand this bottom section.
11 This is your signature, correct?
12 A. Yes, sir.
13 Q. And then it says "interviewer's name Charles Head,"
14 do you see that?
15 A. Yes.
16 Q. And it says, by that second arrow, "telephone,"
17 correct?
18 A. Yes.
19 Q. But you never talked to Charles Head on the telephone
20 about any of this information, did you?
21 A. No. It was a woman who had an accent.
22 Q. Right. Did the woman who had an accent indicate that
23 she was with loan processing, do you recall that?
24 A. I would imagine that's what she would be with.
25 Q. That's what your understanding was at least, correct?

1 A. Yes.
2 Q. Okay. Very good. Now interviewer's signature, do
3 you see that block there? It's blank, right, no signature?
4 A. Yes.
5 Q. And, likewise, there is no date, correct?
6 A. Yes.
7 Q. All right. Now it says over here that the
8 interviewer's employer is Dana Capital located in Irvine,
10 A. Okay.
11 Q. Doesn't say Head Financial Services, true?
12 A. No.
13 Q. Okay. Can we go to Government's 21A1-12.
14 All right. This is a letter purportedly from Global
15 Mortgage to Michael E., do you see that?
16 A. Yes. Yes.
17 Q. Okay. Do you go by Michael E., is that something you
18 would typically go by?
19 A. No.
20 Q. All right. Can we have that whole document shown
21 again. Do you recall getting this letter at any time?
22 A. No.
23 Q. And in fact, there is no address to which the letter
24 is directed, correct?
25 A. No.

1 Q. All right. And then if we could have this expanded.
2 It's "sincerely, Charles Head." Now there is no
3 signature there, is there?
4 A. No.
5 Q. And if we can have the full document, please.
6 This letter is purportedly from Global Mortgage in
7 Clearwater, Florida, right?
8 A. Yes.
9 Q. Okay. If we can go to Government's 21B1, please.
10 I'm sorry. Take that down. That's the wrong exhibit. Can I
11 have one moment, Your Honor?
13 Q. BY MR. TEDMON: If we could have Government's 20B1,
14 please. Your Honor, I'm sorry. Just one moment. I want to
15 make sure I get the right document here.
16 Here we go. Sorry for the delay. 21A1-4. Let's
17 show you the top section here.
18 This is a uniform residential loan application,
19 correct?
20 A. Yes, sir.
21 Q. All right. And if we could have the full document.
22 Just for purposes of clarity.
23 The borrower indicates that it's Michael Scallin,
24 that's you, correct?
25 A. Yes, sir.

1 Q. And if we could go to page 21A1-9. On this document
2 there is no signature for you, is there?
3 A. No, sir.
4 Q. All right. And as with the other documents, it
5 indicates Charles Head is the interviewer, but that's not true,
6 correct? Correct?
7 A. He didn't interview me for that, no.
8 Q. No. And as you can see, there is no signature or
9 date under Charles Head's printed name, is there?
10 A. Yes, sir.
11 Q. Okay. And then finally, the interviewer's employer,
12 according to this document, is Global Mortgage in Clearwater,
13 Florida, right?
14 A. Yes.
15 Q. Okay. But there is no signatures anywhere found on
16 this page of the document, correct?
17 A. Correct.
18 Q. All right. And when you provided your information to
19 Head Financial Services -- I just want to make sure I'm clear
20 on this -- you gave the information to a female with an accent,
21 correct?
22 A. Yes, sir.
24 THE COURT: All right. Does anyone have a two-minute
25 cross-exam? Mr. Samuel?

1 MR. SAMUEL: I don't.
3 All right. I mean sometimes those happen. Believe
4 it or not. But given that we don't have one of those today,
5 I'm going to go ahead and excuse the jury now. You can sit
6 there for a moment, sir.
7 This is the last day of this week. So we'll meet
8 again -- because of the holiday on Monday, we'll meet on
9 Tuesday at 8:30 and have Tuesday morning, Thursday morning,
10 Wednesday afternoon.
11 And I have conferred with counsel. I assure you
12 whenever we aren't here, counsel is working to clarify the
13 schedule, to refine the schedule. Because we've had a number
14 of these three-day weeks, we're a little bit behind. Two of
15 those days because of the Court's own schedule. Next week is
16 because of the holiday.
17 So our best estimate at this point, although counsel
18 will continue to look at their witness lists and the
19 presentation of their case, that the Government's case will
20 continue through next week and actually spill over until the
21 following week.
22 And then there will be, at this point, we believe a
23 case in defense. Although that is somewhat of a moving target.
24 So at this point, our best guesstimate is all of the evidence
25 will be in the week of the 18th. And I'll give you a further

1 update next week.
2 It may be -- this is for your planning and
3 thinking-ahead purposes -- that we do need that week after
4 Thanksgiving for deliberations. Because it may be that we
5 don't get to closing arguments until either the end of the week
6 of the 18th or the very beginning of that week of the 2nd.
7 So that's where we are. If that changes, I'll let
8 you know. But I wanted to give you a realistic sense of where
9 we are based on my discussions with counsel. We do have a
10 four-day week next week -- the week after next week, and
11 another four-day week, if we need it, the week of December 2nd.
12 I'll ask Ms. Schultz to modify the calendar on
13 Wednesday. By then I do think deliberations would have
14 started. The Court is not available in the afternoon. But if
15 you have time, you discuss the matter, and you want to
16 deliberate in the morning, that would work for the Court. I'll
17 remind you of that as we get closer to that date, assuming
18 we're going to get to that date.
19 So that's an update on the schedule. Thank you so
20 much for your continuing diligence, your obvious paying
21 attention, the patience in sitting and waiting for us when we
22 occasionally are running a bit late.
23 Because we do have this long break, let me remind you
24 in a little more detail of all of my admonitions. Please don't
25 begin to think about the ultimate conclusion of the case, do

1 not do any research of any kind, electronic or otherwise, don't
2 discuss the case with anyone, family members, friends, fellow
3 jurors. Remember that you will receive all of the evidence
4 that you need in this courtroom. I'll give you closing
5 instructions to guide your deliberations. If anyone attempts
6 to contact you in any way, please let me know. Have a good,
7 long weekend. See you on Tuesday morning, ready to go at 8:30.
8 Thank you.
9 (Jury out.)
10 THE COURT: All right. Mr. Scallin, you may step
11 down. If you can be back in your chair Tuesday morning at
12 8:30. Thank you.
13 And then we have one matter to argue?
15 THE COURT: All right. You may be seated, if you
16 wish.
17 Mr. Tedmon's going to address the Government's
18 supplemental record on the issue of whether or not Kou Yang and
19 Mr. Wiley should be further examined.
20 MR. TEDMON: Yes.
22 MR. TEDMON: Thank you, Your Honor. I've reviewed
23 the Government's brief, and with the Court's directive from
24 last time that you want me to focus my thoughts on the
25 consistency of Mr. Wiley's testimony from the first trial to

1 this trial, and it being somewhat cohesive and consistent.
2 I wouldn't disagree with that characterization in
3 terms of Mr. Wiley's testimony. It was relatively consistent
4 as much as you could expect it to be, so I would agree with
5 that.
6 The problem that I have with having Ms. Yang and
7 Mr. Wiley come back into court and testify, however specific
8 and brief as it might be, is the concern I think the Government
9 shares, and that is we have a juror that has overheard
10 information, and whether it can be contextualized as being
11 related to Ms. Yang's testimony or not, it certainly is
12 something that was a function of what happened inside the
13 courtroom. Because the juror note specifically states from
14 Ms. McKenzie that she overheard these two individuals talking
15 about the case, and then she stated that Justin Wiley asked
16 "how's it going," and she responded "not good."
17 And I think it's dangerous to get into a dialogue in
18 front of all the jurors relative to what was said and what that
19 meant. And particularly so because Ms. McKenzie heard it, and
20 there is no way we can expect anyone in her position to listen
21 to that testimony and do anything other than filter it through
22 what she observed and heard. The other jurors weren't present.
23 So that's the first concern I have, and I think it puts us
24 further down the path to this concern of a mistrial than we are
25 right now.

1 I've already made my motion. The Court's denied the
2 mistrial motion. But I think to try to remedy it now in front
3 of the entire group makes it worse, not better. That's just
4 how I see it.
5 THE COURT: Anything to add, Mr. Samuel?
6 MR. SAMUEL: That's the way I've always felt.
8 MR. GREINER: I still make the motion for mistrial
9 and re-raise my motion to sever from Mr. Head and Mr. Budoff
10 based upon on that because I think that Mr. Wiley and Ms. Yang
11 did infect their testimony. It is prejudicial. And I think
12 that my client deserves a mistrial on that and/or a severance.
13 THE COURT: All right. Anything in reply,
14 Mr. Morris?
16 THE COURT: All right. I'm denying the mistrial
17 motion or renewed motion. I don't think this rises to the
18 level of mistrial. And having focused, been focused on the
19 issue of Mr. Wiley's testimony in the last trial, reviewed the
20 portion provided now by the Government, not going any further
21 than that, the defense hasn't pointed me to any other portion
22 but essentially agrees with the Government's characterization.
23 If it's not already clear, I'm prepared to grant
24 reconsideration, and having reconsidered, because it was that
25 portion of the defense argument that made me think a cure might

1 be allowing some further examination of Mr. Wiley, in
2 particular, in case his testimony was shaded by the reunion
3 with Ms. Yang, but given the comparison of his testimony in the
4 past trial and this trial, I'm persuaded that there would be
5 nothing materially gained through that exercise.
6 The Government clearly has gotten the message about
7 the full extent of the Court's exclusion ruling, and so I'm not
8 going to allow the recalling of Ms. Yang or Mr. Wiley at this
9 point in time.
10 With respect to Ms. McKenzie, she's the third
11 alternate, even though she switched chairs. If we get to the
12 point where we're faced with her joining the jury, then and
13 only then we can talk about whether or not we check in with her
14 and remind her of her duty to restrict her consideration to
15 only what she's seen and heard in this courtroom, but maybe
16 we'll never get there. If we do, we can talk about exactly how
17 to address that.
18 It seems very clear she's been following the Court's
19 orders. When we asked her at the time, she had not spoken to
20 anyone about what she had seen. So that's the Court's
21 decision.
22 Anything else pending deciding what the witnesses
23 will be next week and how we try to stay on schedule now given
24 the schedule I've shared with the jury?
25 MR. GREINER: Just ruling on my severance motion, my

1 renewed severance motion.
2 THE COURT: Is there anything further to say?
3 MR. GREINER: Just renewing it, Judge, based upon
4 this mistrial and stuff.
5 THE COURT: Based upon the record before the Court,
6 that motion is denied.
7 With respect to witnesses, just so the parties know
8 what I'm thinking, it appears that there are about 16 names out
9 there that the Government hasn't really signalled one way or
10 the other, at least in court, what its plans are.
11 So I do think the Government needs to convey to all
12 defense counsel what its current realistic plans are for who it
13 will actually be calling. Because that can affect who gets
14 called in any case in defense.
15 And then if the defense will share, each attorney
16 with every other attorney, what their current thinking is.
17 Recognizing, of course, the defense can make a last-minute
18 decision one way or another.
19 Then if you can give me a report, let's just be here
20 at 8:20 on Tuesday morning, and you can tell me where we are.
21 There are 16 names floating out there where I haven't
22 heard one way or the other. That's a long list. I'm assuming
23 it's being pared down.
24 MR. ANDERSON: It is, Your Honor. It's not that
25 we're trying to keep names secret. Sometimes we're making

1 decisions as we move along. We know we're going to pare it
2 more. We don't know specific names of who is going to be pared
3 off the list.
6 THE COURT: See you Tuesday at 8:20.
9 CERTIFICATION
10
14
15

18
19
20
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 11
Defendants.
---oOo---
TRIAL PROCEEDINGS
TUESDAY, NOVEMBER 12, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
2 WITNESSES PAGE
3 MICHAEL SCALLIN
RECROSS EXAMINATION BY MR. GREINER 1741
5
KEITH ALLAN BROTEMARKLE
8
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25


2
107 Email dated 4/12/2005 From Keith Brotemarkle 1758
3 To Charles Head Subject: FW: CAIN
112 Email dated 4/13/2005 From Ed with
4 FundingForeclosures.com To Charles Head;
Keith Brotemarkle Subject: Watson
5 115 Email dated 4/18/2005 From Kou Yang
To Keith Brotemarkle CC Charles Head
6 RE: MASSEY APPRAISAL
117 Email dated 4/21/2005 From Charles Head
7 To Mike Edmonds CC Keith Brotemarkle; Ed
with FundingForeclosures.com Subject: Massey
8 123 Email dated 5/4/2005 From Brian Singleton
To Charles Head; Charles Blackberry
9 CC Ed Shaffer; Keith Brotemarkle
Subject: FEEDBACK
10 128 Email dated 6/1/2005 From Charles Head To
Keith with Dana Capital Subject: RE: Buyers
11 136 Email dated 6/11/2005 From Domonic McCarns
To Kou Yang CC Keith Brotemarkle; Charles
12 Head; Ed Shaffer Subject: RE: Mckenzie
137 Email dated 6/13/2005 From Lauren Shaffer
13 Subject: Copy of HFS employee telephone list
138 Email dated 6/15/2005 From Shayna Fischler
14 To Charles Head Subject: Re: KIRWIN –
WORCHESTER, MA – SHAYNA
15 145 Email dated 6/29/2005 From Keith Brotemarkle
To Kou Yang; Shayna with Funding
16 Foreclosures CC Charles Head; Subject: RE:
Carrie Clay
17 149 Keith with Dana Capital To Charles Head
Subject: SINGLETON WILL WIRE 20K – IS THAT
18 FOOD ENOUGH TO CLOSE?
206 Email dated 4/29/2005 From Keith with Dana 1760
19 Capitol To Charles Head; David Parks;
Domonic McCarns; Ed Shaffer; Leonard Bernot;
20 Scott Wagner Subject: Funding FC Leads
207 Email dated 5/2/2005 From Keith Brotemarkle
21 To Charles Head Subject: HONEYWOOD – This
one is for you
To Kou Yang; Keith at Funding Foreclosures;
23 Charles Head CC Domonic McCarns Subject:
THOMPSON
24
25

1

To Charles Head Subject:
4 RE: Ferrantello/butts-jacksonville.fl.
221 Email dated 6/28/2005 From Kou Yang
5 Subject: FORECLOSURE TALE OF CONTENTS
222 Email dated 6/30/2005 From Lauren Shaffer
6 Subject: Copy of HFS employee telephone list
With attached list
Subject: CASTILLO/Minor Funding inquiry
Subject: FW: Option to Appraisals
Subject: FW: File Number 15192916
10 253 Email dated 10/20/2006
From Tua Subject: RE: My Properties
To Keith at Foreclosure Options
12 CC Kou Yang Subject: RE: SWENSON/Jackson
inquiry
13 300 Email dated 11/2/2005 From Ben with 30K Per 1761
Year Subject: 30K per year: Credentials
14 301 Email dated 12/1/2005 From Keith with Dana
Capital Subject: RE: FW: Mike Scallin
15 Questions
305 Email dated 2/10/2006 From Lisa Vang
16 Subject: FW: FROM Jeff Ball URGENT!!!!!
17 To Linda; benb@psloans.net; Keith at
Foreclosure Options
18 336 Email dated 10/13/2006 From Lisa Vang
Subject: RE: BUDOFF, KERRY
19 337 Email dated 10/13/2006 From Keith at
Foreclosure Optionskeith@nfcoptions.com
20 Subject: RE: BUDOFF, KERRY
339 Email dated 10/16/2006 From Keith at
Subject: RE: Mystery Property
22
23
24
25


2
Subject: RE: Please review: Morgan/Bryan
Foreclosure Options To benb@psloans.net
5 Subject: RE: Please review: Wardle/Booker
Subject: RE: Property source
8 Subject: RE: Morgan at Peoples
Subject: RE: Lantigua
11 Subject RE: Please review: Morgan/Adams
Subject: RE: Please Review: Morgan/Adams
13 (updated)
Subject: RE: Please Review: Morgan/Adams
15 (updated)
16 Foreclosure Options To Kou Yang;
benb@psloans.net Subject: RE: Please Submit:
17 Childress/Gray
18 Foreclosure Options To Kou Yang
Subject: RE: Please Submit: Childress/Gray
19 359 Email dated 11/6/2006 From Benjamin Budoff
<benb@psloans.net> To Keith at Foreclosure
20 Options; LaVar; jackc@aoneinvmgt.com
Subject: FW: Jeff Ball – concerns
To Keith at Foreclosure Options
22 Subject: N/O/D STATED – First Franklin
23 To benb@psloans.net; Lisa Vang; Keith at
Foreclosure
24
25


2
366 Email dated 11/13/2006 1761
3 From Kou Yang
Subject: RE: CHILDRES/GRAY Funding inquiry
Subject: RE: BASS/Elliot Funding inquiry
Foreclosure Options To Kou Yang
6 Subject: RE: Please review:
Campbell/Larrabee
Subject: RE: Late payment
8 370 Email dated 11/15/2006
From Lisa Vang Subject: RE: GIULANO, RYAN
To Lisa Vang; Kou Yang; Keith at Foreclosure
10 Options
312 Email dated 6/1/2006 From Ben with 30k per 1762
11 year Subject: George, Kevin – Previous
employment
12 313 Email dated 6/7/2006 From Ben with 30k per
year [budoff@30kperyear.com]
13 Subject: Sly, Margorie with attachment “CPA
Letter – Sly, Marjorie.pdf
14 317 Email dated 6/27/2006 From Ben with 30k per
year Subject: FW: Budoff, Kerry
15 318 Email dated 6/28/2006 From Lisa Vang
Subject: RE: Morgan, Everlene’s Letter
Subject: Felinquent Tax Bill
Foreclosure Options Subject: RE: (Blank)
18 325 Email dated 9/20/2006 From Sam Vu
Subject: FW: BUDOFF, KERRY
[benb@psloans.net] Subject: New Employees
20 327 Email dated 9/25/2006 From Sam Vu
Subject: RE: FERREYRA/Williams Underwriting
21 inquiry
22 Foreclosure Options Subject: RE: Files
329 Email dated 9/26/2006 From Kou Yang;
23 Subject: GIULIANO/BURLEY
24
25


2
334 From Sam Vu To Dominic McCarns 1762
3 Subject: RE: CASTILLO/Minor Funding inquiry
257 Flow Chart with individual names 1779
4 258 Head Financial Office Birthdays listing
names, month and dates
5 306 Email dated 3/9/2006 From Ben with 30k per 1877
year Subject: RE: Ben’s sales letter
6 309 Email dated 4/10/2006 From Keith with 1880
Global Subject: RE: Please advise
7
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25


2
CH-U 04-14-05 email to Charles Head, Sara Kop 1835
3 from Keith Brotemarkle
CH-V 04-14-05 email to Charles Head, Sara Kop
CH-W 04-14-05 email to Charles Head, Sara Kop
CH-X 04-14-05 email to Charles Head, Sara Kop
CH-Y 04-12-06 email to Keith Brotemarkle, Tua
7 Vang, Kou Yang, Donna Guerrero, Sam Vu,
Pang Yang from Lisa Vang
8 CH-Z 04-21-06 email to Pang Yang from Sam Vu
CH-AA 04-25-06 email to Beverly Rocheleau from
9 Kou Yang; cc: Keith Brotemarkle, Sam Vu
CH-BB 04-29-05 email to Charles Head from Keith
10 Brotemarkle
CH-CC 05-17-06 email to Sam Vu, Donna Guerrero
11 from Kou Yang; cc: Keith Brotemarkle
CH-DD 05-17-06 email to Kou Yang, Sam Vu, Donna
12 Guerrero from Keith Brotemarkle
CH-EE 06-01-06 email to Kou Yang from Sam Vu; cc:
13 Keith Brotemarkle
CH-FF 06-14-06 email to Sam Vu from Keith
14 Brotemarkle
CH-GG 06-20-06 email to Kou Yang, Sam Vu from
15 Keith Brotemarkle
CH-HH 06-28-06 email to Pang Yang from Sam Vu
16 CH-II 08-04-06 email to Keith Brotemarkle, Sam Vu
from Kou Yang
17 CH-JJ 08-08-06 email to Sam Vu from Kou Yang
CH-KK 08-25-06 email fax to Sam Vu from unknown
18 sender
CH-LL 08-25-06 email fax to Sam Vu from unknown
19 sender
CH-MM 08-07-06 email to Keith Brotemarkle, Ed
20 Shaffer from Sam Vu
CH-NN 08-18-06 email to
21 beverlys@fundingforeclosures.com from
Kou Yang; cc: Keith Brotemarkle, Sam Vu
22 CH-OO 08-24-06 email to Ashley Rotellini from
Valerie Rodriguez; cc: Keith Brotemarkle,
23 Sam Vu
24
25


2
CH-PP 08-24-06 email to Sam Vu from Kou Yang 1835
3 CH-QQ 08-25-06 email to Ashley Rotellini from
Valerie Rodriguez; cc: Keith Brotemarkle,
4 Sam Vu
CH-RR CH-RR 08-28-06 email to Sam Vu from Kou
5 Yang
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

2 TUESDAY, NOVEMBER 12, 2013
3 ---oOo---
4 THE CLERK: Calling criminal matter 08-00116 KJM,
5 United States versus Charles Head, Benjamin Budoff, and Domonic
6 McCarns. Jury trial, day eleven.
8 The parties are present.
9 We have a couple of juror issues to address. One is
10 Mr. Miller's note. Ms. Streeter shared with you his request.
11 I don't see how we can deny him that. My thought would be to
12 call him in by himself and let him know that we're honoring his
13 request and excusing him.
14 MR. TEDMON: I agree.
15 MR. SAMUEL: I agree.
16 MR. GREINER: Is he even here?
17 THE COURT: Did he come in? He did report.
18 MR. ANDERSON: Agreed, Your Honor.
19 THE COURT: All right. So we'll do that. Also, I
20 don't know if you had heard, but on Thursday, before leaving,
21 Ms. Whitehead reminded Ms. Schultz that she has a vacation she
22 let us know about starting December 2nd. So she's not
23 available the week of December 2nd. I do recall her mentioning
24 that. She ended up staying on the jury. I guess because we
25 all thought we wouldn't need that week.

1 My thought is by the end of the day -- think about
2 it, but I don't -- I mean, she is saying she's gone from the
3 2nd through the 9th, but we're not going to take a break then.
4 So the question is, do we excuse her now? Or do we plow ahead
5 in the hopes that we can get done before Thanksgiving? So
6 think about that. I let her know that I'm aware of her
7 reminding us of that. And I do think I would ask her to stay
8 at the end of the day for a few moments so we can give her any
9 update. We have three alternates. That would get us down to
10 Ms. McKenzie.
11 MR. TEDMON: Right.
12 THE COURT: So there you have it. Let's bring
13 Mr. Miller in, Ms. Streeter. Is there anything else we need to
14 discuss?
17 (Juror 6 enters the courtroom.)
18 THE COURT: You can take your seat in the jury box,
19 Mr. Miller. You may be seated.
20 Good morning. We just wanted to call you in and
21 thank you for reporting this morning under the circumstances.
22 We have reviewed your message with the attorneys, and we all
23 agree that we should excuse you at this time. We're sorry for
24 what you're going through. But thank you for your service. If
25 I had been fully prepared, I would have a certificate of thanks

1 for you. We'll mail it to you. It's the least we can do for
2 the time you've put in. So thank you again. You are excused.
3 The Court thanks you for the service that you've provided.
4 Counsel thanks you as well. And all the best to you and your
5 family. Take care.
6 (Juror 6 exits the courtroom.)
7 THE COURT: With this, I'm going to suggest that
8 Ms. McKenzie take her seat again. She and Mr. Miller had
9 changed so he could see the screen. Just so we're keeping
10 track, I'll ask them to fill in.
11 (Jury in.)
12 THE COURT: Actually, Ms. McKenzie, as you file in,
13 if you could take the first-row seat again. I'll explain.
14 I've excused Mr. Miller. So the two on the end in the first
15 row can scoot down and fill in, and Ms. McKenzie can take her
16 original seat. Thank you.
17 You may be seated. Welcome back to court, ladies and
18 gentlemen. We hope you were able to enjoy the nice long
19 weekend and have a good Veteran's Day. You will notice I have
20 excused Mr. Miller. He had a family emergency. I don't know
21 if he told you about that. But under those circumstances, we
22 all agreed that he should be excused. So we excused him with
23 great thanks for the service he has put in. He has been here
24 for some time.
25 We are ready to proceed. I'm going to acknowledge

1 Mr. Samuel to begin his cross-examination of Mr. Scallin. My
2 notes show that he was going to be next. Mr. Greiner, do you
3 want to go next?
4 MR. GREINER: Makes no difference, judge.
5 THE COURT: I showed that Mr. Tedmon had completed.
6 MR. TEDMON: I'm done.
7 MR. GREINER: Do you want me to go? I'll go, judge.
8 THE COURT: All right. Then Mr. Greiner will begin
9 his cross-examination of Mr. Scallin.
10 Mr. Scallin, you were sworn last week. Please
11 remember that you continue to testify subject to that oath.
12 THE WITNESS: Yes, Your Honor.
14 MICHAEL SCALLIN,
19 BY MR. GREINER:
20 Q. Make sure you keep your voice up so the court
21 reporter can take down everything you say, okay. And you have
22 to answer audibly. So you have to answer yes or no.
23 A. Yes.
24 Q. And if you don't understand a question that I ask,
25 please ask me to rephrase it or state it again. I'll be glad

1 to do that. Okay?
2 A. Yes, sir.
3 Q. Prior to you finishing your testimony on Thursday and
4 this morning, have you talked to anyone about your testimony?
5 A. No.
6 Q. Finishing your testimony on Thursday and prior to
7 taking the stand today, have you reviewed any documents?
8 A. No.
9 Q. All right. As a buyer of the properties in this
10 program, you've never spoken with Domonic McCarns, correct?
11 A. I don't recall that name.
12 Q. Appreciate your answer. But I need the answer to my
13 question.
14 A. No. Sorry.
15 Q. Let me rephrase it so we get a good record okay.
16 As a buyer of properties in this program, you never
17 spoke with a Domonic McCarns, correct?
18 A. Correct.
19 Q. As a buyer of properties in this program, you've
20 never met a Domonic McCarns, correct?
21 A. Correct.
23 never provided any information to Domonic McCarns, correct?
24 A. Correct.

1 never e-mailed a Domonic McCarns, correct?
2 A. I can't -- I don't -- I can't recall that.
3 Q. Well, you don't know who Domonic McCarns is, correct?
4 A. Sir, it's been seven years. I can't tell you who I
5 e-mailed two months ago. So could I have e-mailed Domonic?
6 Possibly. I don't really know. I can't recall that.
7 Q. You don't know a Domonic McCarns, correct?
8 A. No, I don't know him.
9 Q. And so there is no reason for you to send an e-mail
10 out to someone you don't know, is that a fair statement?
11 A. I would say that's a fair statement.
12 Q. Thank you. As far as you know, all of your loan
13 applications, the 1003s, they were not filled out by a Domonic
15 A. Sir, I don't know if I can answer that correct or
16 incorrect because I wasn't present at the time the loan
17 applications were filled out, so that would be --
18 Q. My question, though, is simply as far as your
19 knowledge, as far as you know, your loan applications, the
20 1003s, were not filled out by a Domonic McCarns?
21 A. With my knowledge, correct.
22 Q. That's all I can ask is your knowledge, sir.
23 A. I understand.
24 Q. You provided information for your loan applications
25 to a Tua Vang, is that correct? Does that name sound familiar?

1 A. I can't recall that name.
2 Q. How about a Lisa Vang?
3 A. I cannot recall that name either.
4 Q. Keith Brotemarkle?
5 A. Sir, I don't remember that name.
6 Q. Kou?
7 A. I don't remember that name either, sir.
8 Q. Okay. Did you receive -- being involved in this
9 program, did you receive a 1099?
10 A. I don't remember. I would have to go back here and
11 check things. I don't remember.
12 Q. Well, you did receive some money from the company,
13 correct?
14 A. Yes.
15 Q. All right. So based upon your knowledge, if you
16 received some money as income, you weren't an employee of that
17 company, fair?
18 A. Fair.
19 Q. So if did you receive some money, it would have been
20 on a 1099 form, is that fair?
23 Q. BY MR. GREINER: Based upon your knowledge, by
24 receiving money from this company, it would have been with a
25 1099 form, correct?

2 THE COURT: Can you break it down? Sustained.
3 Q. BY MR. GREINER: That's fine. You have knowledge of
4 what a 1099 is, correct, sir?
5 A. Yes, sir.
6 Q. You're involved in finances, right, sir?
7 A. I was at one time.
8 Q. In car companies, right?
9 A. Yes.
10 Q. And so based upon your knowledge just as an
11 individual, filing tax returns, based upon your knowledge of
12 working in finances at car companies, you know what 1099s are,
13 fair?
14 A. Yes.
15 Q. So if you receive money from the company during this
16 time period, it would have been pursuant to a 1099, fair?
17 MR. ANDERSON: Objection. Lack of foundation. Calls
18 for speculation.
19 THE COURT: Overruled. You may answer to the extent
20 you're able.
21 THE WITNESS: Okay. Sir, I don't remember if I had a
22 1099 from them or not. That was, like I said, seven years ago.
23 If they sent me one out, then they sent me one out.
24 Q. BY MR. GREINER: Well, you certainly would have
25 reported that income on your taxes, right?

1 A. I believe I would have, yes.
2 Q. And the agreement or the contract that you had in
3 this program was with the company, fair statement?
4 A. I imagine that's probably how it would be set up,
5 yes.
6 Q. Well, you didn't make an agreement with an
7 individual, true?
8 A. True.
9 Q. So you made an agreement with the company to be an
10 investor, true?
11 A. True.
12 Q. And part of that contract was that you were going to
13 hold a note of title to a piece of property with the condition
14 of at the end of 12 months the homeowner would have an option
15 to purchase it back, fair?
16 A. Yes.
17 Q. Because at the end of 12 months you had no business
18 purpose in holding onto the property, fair?
19 A. Fair.
20 Q. Your business purpose was to hold it for 12 months
21 and then get rid of it, fair statement?
22 A. Fair.
23 Q. And as the investor, you didn't have -- you didn't
24 have any business responsibility for collecting the rents,
25 true?

1 A. True.
2 Q. As an investor, you didn't have any business
3 responsibility for maintenance of the property, true?
4 A. True.
5 Q. You didn't have any business responsibility to pay
6 any of the taxes, true?
7 A. True.
8 Q. And in fact, at the end of the 12 months, you didn't
9 have any business responsibility of selling the property back
10 to the original homeowner, fair statement?
11 A. Fair.
12 Q. And at the end of 12 months, you didn't have any
13 business responsibility to sell it on the open market if that
14 was what had to occur, true?
15 A. True.
16 Q. And to complete the circle, if in that 12-month
17 period there was a business reason to evict the renter, that
18 wasn't your business responsibility, fair?
19 A. Fair.
20 Q. Your knowledge was collecting the rents was the
21 business responsibility of the company, true?
22 A. True.
23 Q. The business responsibility of maintenance was to the
24 company, true?
25 A. True.

1 Q. The business responsibility to pay the taxes was to
2 the company, true?
3 A. True.
4 Q. The business responsibility to sell the home back to
5 the original homeowner at the end of 12 months, that was the
6 company's responsibility, true?
7 A. True.
8 Q. If the business responsibility was to sell the home
9 on the open market, that was the company's responsibility,
10 true?
11 A. If that occurred, yes.
12 Q. If that occurred, correct. And if an eviction had to
13 occur, that was the company's responsibility, true?
14 A. True.
15 Q. Now, on direct examination you were shown and you
16 talked about various checks to Alliance Title and checks
17 deposited into your checking account, do you remember that?
18 A. Yes, sir.
19 Q. And I think the sums were -- some of them were like
20 40,000, 47,000, does that ring a bell?
21 A. Yes.
22 Q. Large sums of money, correct?
23 A. Yes, sir.
24 Q. You would agree with me, would you not, that the sum
25 of $108,000, that's a large sum of money, true?

1 A. Yes.
2 Q. During the entire time you were in this program, you
3 never had a conversation with any person regarding $108,000,
4 fair statement?
5 A. Regarding $108,000 or regarding the individual
6 multiples?
7 Q. Listen to my question. My question is, during the
8 entire time you were involved in this program, you never had a
9 conversation with any person regarding $108,000, true?
10 MR. ANDERSON: Objection. Vague.
12 THE WITNESS: Yes, ma'am. $108,000?
13 Q. BY MR. GREINER: That's the question, sir.
14 A. No. I had conversations I believe around the
15 individual multiples, but I don't believe $108,000.
16 Q. Right. So at no time in this program that you were
17 involved in did you ever talk to any individual about a total
18 sum of $108,000? I'm not talking about multiples. I'm talking
19 about a lump sum of $108,000. That's a true statement,
20 correct?
21 A. True statement.
22 MR. GREINER: Just one moment, judge. Thank you.

1 BY MR. SAMUEL:
2 Q. Good morning.
4 Q. I represent Mr. Budoff. First of all, I would like
5 to start with your education and background in the area of
6 finance at the time that you were involved with these
7 transactions.
8 Can you explain to us what that education and
9 background was?
10 A. Well, I had no formal education in finance. I worked
11 in a car dealership in the finance department. That's not
12 dealing with -- that's just dealing with basic finance. A
13 banker comes in, and they take a contract from you, and you
14 sell it or you put it online into a system, and it sells. It
15 sells to whatever bank picks it up. And they send you a check.
16 Q. So somebody comes into the auto dealership, right?
17 A. Yes.
18 Q. They need to buy a car, and they need it financed,
19 right?
20 A. Yes, sir.
21 Q. Are you the guy they talk to about the finance?
22 A. No, sir.
23 Q. What is your position then in that line of
24 transactions?
25 A. I'm the guy that does all the DMV documents. I'm the

1 guy who takes the contracts and sends them to the bank, to
2 financing, and all that is completed by a sales manager.
3 Q. Okay. So are you involved with the collection of
4 information, documentation of the applicant's loan
5 requirements?
6 A. I can be, yes.
7 Q. And I recall that you had indicated that there was a
8 conversation about the ability of Head Financial to make
9 payments, do you recall that?
10 A. Yes, sir. Payments on the mortgages.
11 Q. Right. And you were concerned about that?
12 A. Yes, sir.
13 Q. And you had a conversation with Mr. Head about that,
14 did you not?
15 A. I had a conversation with your client, Mr. Budoff.
16 He then got Mr. Head on the phone later on, and I spoke to them
17 about that, yes.
18 Q. Was he on the phone as well as Mr. Head when talking
19 to you?
20 MR. TEDMON: Your Honor, can we clarify who "he" is.
21 Q. BY MR. SAMUEL: Was Mr. Budoff on the phone along
22 with Mr. Head and you at the same time, if you know?
23 A. I don't remember. I don't remember. I'm not going
24 to say so.
25 Q. Did you call a number in order to contact Mr. Budoff,

1 a phone number?
2 A. I believe that's how I would contact him. Yes, a
3 phone number.
4 Q. Do you recall whether that was a Southern California
5 phone number?
6 A. No, I don't, sir.
7 Q. You never met Mr. Budoff, had you, in person?
9 Q. You hadn't seen him maybe until today in terms of in
10 person, right?
11 A. I just became aware exactly who he was when you stood
12 up.
13 Q. Okay. So the person you spoke to anyway represented
14 themselves as being Mr. Budoff, right?
15 A. Yes, sir.
16 Q. Okay. And that was the first contact that you had
17 with the program at all was an individual contacting you?
18 A. The first contact with the program was an e-mail.
19 Q. Okay. And that came from whom, if you recall?
20 A. I don't remember, sir.
21 Q. All right. And then what did you do in response to
22 that e-mail?
23 A. I made the phone call or e-mailed back. I don't
24 remember which one it was. But I made contact back. And then
25 we started the process.

1 Q. And who was the first person that you actually --
2 human individual that you actually made contact with in that
3 process?
4 A. I don't know their internal structure, if they had a
5 secretary or not, but it was Mr. Budoff was my contact.
6 Q. Okay. And Mr. Budoff presented the program to you,
7 is that correct?
8 A. Yes, he did, sir.
9 Q. And he presented it as if it were a partnership
10 between you and the company, is that right?
11 He said basically these are your obligations, let us
12 use your credit line, let us put you on title, our obligation
13 is to do everything else, right?
14 A. Pretty much, yes.
15 Q. Pretty much. And part of that obligation was to make
16 down payments. You did make the down payments, right?
17 A. No, I did not, sir.
18 Q. So that obligation fell on Head Financial to make
19 down payments, correct? If you know?
21 Q. Okay. So now Mr. Budoff has made a presentation to
22 you and represented to you the program, right, did you see any
23 documents like, for example, lease buy-back document or
24 anything like that?
25 A. There could have been. It's been seven years. I

1 don't remember.
2 Q. All right. So you have no recollection, but there
3 could have been documents about lease buy-back, which would set
4 forth the terms and conditions that you would understand to
5 coincide with the seller of the property, right?
6 A. I believe so.
7 Q. All right. So as you understood it, the seller of
8 the property was to be allowed to repurchase after 12 months,
9 if capable?
10 A. Yes. That was the program.
11 Q. Did you ask about what would happen if in fact the
12 seller was unable to repurchase?
13 A. Yes, I did.
14 Q. And who did you ask?
15 A. I asked Mr. Budoff.
16 Q. And what was the response?
17 A. The response was they had plenty of reserves. They
18 had other investment money. They had money coming in that
19 would take care of that if something happened. And not to
20 worry.
21 The response was -- and then I kind of backed off
22 from the program. I got a call, I believe, saying they had a
23 house or something for me. And I told them I said look, you
24 know, I don't feel good about the program. And pretty much I
25 was re-closed after that point, which I'm extremely embarrassed

1 about. But I got sold.
2 Q. That's fine. You're not the only one. Okay. So
3 don't feel bad. Now --
4 MR. TEDMON: Objection, Your Honor. I'm going to
5 move to strike Mr. Samuel's last comment.
7 disregard that last comment.
8 Q. BY MR. SAMUEL: Prior to this contact with
9 Mr. Budoff, you had made other investments, had you not, had
10 prior property?
11 A. Yes, sir.
12 Q. How many pieces of property had you owned prior to
13 getting involved with the Budoff and Head situation?
14 A. Oh, I had a house in Pennsylvania that I had sold,
15 and I had boughten two other properties since then.
16 Q. So would it be fair to say that you were somewhat
17 familiar with real estate transactions?
18 A. Somewhat familiar. But I relied on two ladies very
19 heavily to handle everything for me. Because it's not
20 something that I go to -- I go to this -- like your client came
21 to you because you're the expert, and he would never show up
22 here by himself. I went to real estate agents because I
23 trusted them, and they were the experts.
24 Q. When you got involved with this program, with Head
25 Financial, did go to those two individuals and address your

1 concerns with them?
2 A. No. Because I was -- you know, I can't say no. I
3 don't remember if I did or didn't.
4 Q. My recollection of your testimony last week was that
5 as it relates to the information on the 1003 material, the 1003
6 form --
7 A. Which is the 1003 form, sir?
8 Q. That's the loan application.
9 A. Okay.
10 Q. All right. That you gave your personal information
11 to females, is that correct?
12 A. Yes, sir.
13 Q. Right. And your recollection was that one female or
14 at least a female had an accent, correct?
15 A. Yes, sir.
16 Q. Can you describe the kind of accent if you're
17 familiar with it at all?
18 A. It was kind of a heavy accent. And I mean, I don't
19 -- I don't remember her name. I don't remember anything other
20 than that.
21 Q. All right. But it was this female or females that
22 you provided all of the information that you ultimately saw on
23 the 1003 form, the loan application?
24 A. Yes, sir.
25 Q. You never gave any information to Mr. Budoff that

1 appeared on the 1003 form that you can recall, did you?
2 A. I can't recall, sir.
3 Q. So to the best of your recollection, you don't know
4 one way or the other?
5 A. That's a true statement.
6 Q. All right. But you know do that the majority, if not
7 all of the material that was on the 1003, the information, was
8 given to females?
9 A. Yes, sir.
10 Q. And you're certain of that?
11 A. I'm pretty certain of that, yes, sir.
12 Q. I mean, it's understandable seven years.
13 You had mentioned last week that Mr. Budoff had told
14 you that the FBI had been there, do you remember that?
15 A. Yes.
16 Q. All right. Are you sure that he used the words FBI,
17 or did he just simply say that they had been investigated?
18 A. He said the FBI had came in and investigated them,
19 and that they were given the all clear. Everything was on the
20 up and up. And not to worry about everything. That they had
21 been in there several times looking at documents and
22 everything, and everything was good.
23 Q. Do you remember the date that that conversation took
24 place?

1 Q. Do you recall whether it was in November of 2006?
2 A. All I remember is the phone call after that, that he
3 gave me when everything started going south, and he was beside
4 himself.
5 Q. All right. Would it have been that same conversation
6 that he told you about the FBI?
7 A. No. It was a different conversation. It was later,
8 much later.
9 Q. Would that have been after November of 2006, that
10 conversation, that last conversation?
11 A. Trying to do some math.
12 Q. Sure.
13 A. It could have been -- it could have been almost '07,
14 I believe.
15 Q. Okay. That would have been the last conversation
16 that you were referencing, correct?
17 Let me back up. If you use that as a starting point
18 and head backwards, about how much time had elapsed from the
19 FBI comment to the time in '07 that your last conversation with
20 Mr. Budoff occurred?
21 A. I would say a few months.
22 Q. All right. So that may very well have made it
23 November, could it have been?
24 A. It could have.
25 Q. Okay. You had testified that the -- last week that

1 the documents that you were reviewing had raised some concerns,
2 then you called Mr. Budoff, and he explained the documents to
3 you, do you recall that?
4 A. No, I don't, sir.
5 Q. So do you even recall seeing any documents?
6 A. Which documents are we talking about?
7 Q. Well, let's talk about the lease buy-back agreement.
8 Do you recall seeing that?
9 A. You know, it's a been seven years. I don't remember,
10 sir.
11 Q. Did Mr. Budoff ever tell you that the company was
12 supposed to make payments, however they didn't have money to
13 make those payments?
14 A. Yes, he did. That was the final phone call because I
15 had started getting phone calls from mortgage lenders and
16 people at work asking for the payments. And he was extremely,
17 extremely sorry about it, and he was trying to get me in touch
18 with the people who owned the properties to try to figure out
19 what we were going to do. And he was crying. And I was upset
20 and - was very upset.
21 Q. But he was attempting to help you?
22 A. Absolutely, sir.
23 Q. And he was extremely upset himself, correct?
24 A. Yes, sir.
25 Q. Was he angry because there was no money in the

1 accounts to make the payments?
2 MR. ANDERSON: Objection, Your Honor. Calls for
3 speculation to say what Mr. Budoff was saying to him.
5 MR. SAMUEL: That's fine. Nothing further.
11 MR. GREINER: Actually, Judge, can I ask one
12 follow-up question?
13 THE COURT: Based on Mr. Samuel's exam, yes.
14 RECROSS EXAMINATION
15 BY MR. GREINER:
16 Q. Mr. Samuel asked you a question about down payments,
17 and I want to make sure I understood you. You never made any
18 down payment to make a loan to go through, is that correct?
19 A. Sir, I don't remember if I made a down payment to
20 make a loan to go through or not. I believe if I did that
21 would be on the loan applications on contracts themselves. And
22 I have not looked them over for down payments.
23 Q. You don't have -- and I realize it's been seven
24 years, but you don't have any recollection of cutting a check
25 for 20, 30, 40,000 dollars on any of your properties to make

1 the loan go through, is that a fair statement?
2 A. That's not a fair statement.
3 Q. That's not a fair statement?
4 A. I have recollection of cutting a check. I don't
5 remember if that money went back to Head Financial or if that
6 money -- if that money was put down on the homes. I don't
7 remember which.
8 Q. Let me back up even farther. When you talked to the
9 Government, you indicated there was a certain amount of money
10 in your bank account, correct?
11 A. Yes, sir.
12 Q. And what was the maximum amount of money in your bank
13 account on an average basis, per month, in this time period
14 that you were involved in the company?
15 A. My personal money?
16 Q. Your personal money.
17 A. I believe about between seven to ten.
18 Q. Did you ever write a check out of your personal money
19 for 20, 30, 40,000 dollars to make sure a loan went through
20 when you were involved in this program?
21 A. For those homes, no.
22 MR. GREINER: Thank you. No further questions.
23 THE COURT: Any redirect now?
25 THE COURT: Now may this witness be excused,

1 Mr. Anderson?
4 MR. TEDMON: Yes.
6 MR. SAMUEL: Yes.
10 excused. Government's next witness.
11 MR. ANDERSON: The United States calls Keith
12 Brotemarkle.
14 THE CLERK: Do you solemnly swear that the testimony
15 you are about to give to the jury in the matter now pending
16 before this Court is the truth the whole truth, and nothing but
17 the truth, so help you God?
21 THE WITNESS: Keith Allan Brotemarkle, K-e-i-t-h,
22 A-l-l-a-n, B-r-o-t-e-m-a-r-k-l-e.
23 KEITH ALLAN BROTEMARKLE,

3 BY MR. ANDERSON:
4 Q. Good morning. Do you know somebody by the name of
5 Christopher Charles Head?
6 A. I do.
8 A. I met him originally in 1998. He was hired by a
9 company that I was working for called Center Point Mortgage.
10 Q. What did Center Point Mortgage do?
11 A. They were a mortgage brokerage company. They did
12 mortgages for individuals nationwide.
13 Q. What was your position there?
14 A. I was their director of marketing.
15 Q. What was Charles Head hired to do?
19 Q. BY MR. ANDERSON: Did there come a time when Charles
20 Head left that company?
21 A. Yes.
22 Q. Did you eventually go to work for Charles Head?
23 A. I did.
24 Q. What business did you go to work for for Charles
25 Head?

1 A. I'm sorry?
2 Q. Let's start with when. When did you go to work for
3 Charles Head?
4 A. It was January 2005.
5 Q. What company did you go to work for?
6 A. Head Financial Services.
7 Q. And who owned that company?
8 A. Charles Head.
9 Q. What job were you hired to do?
10 A. Director of marketing, marketing manager, and like a
11 loan manager.
12 Q. Who hired you specifically?
13 A. Charles Head.
14 Q. In that position, what were your job duties
15 initially?
16 A. To bring in mortgage leads, you know, sales leads,
17 for loan officers.
18 Q. Did your duties change over time?
20 Q. How did they change?
21 A. Well, we ran the mortgage office for several months,
22 January, February. And eventually they had changed to go more
23 towards Charles' other business at the time. He was running
24 like a foreclosure type of business.
25 Q. When you were initially hired, were you aware of the

1 foreclosure business?
2 A. No, I was not.
3 Q. Did you learn of it as you started working in the
4 office?
5 A. I did.
6 Q. Did you want to switch over to the foreclosure
7 program?
8 A. Yes.
9 Q. Why?
10 A. It was an easier business to market to.
11 Q. Did you end up doing marketing for the foreclosure
12 business?
13 A. I did.
14 Q. What did you do as far as marketing?
15 A. We solicited mortgage brokers to direct their -- that
16 is, you know, the mortgage brokers' foreclosure applications to
17 Charles' company.
18 Q. What was the name of the company? What was the name
19 of the company?
20 A. Head Financial Services. Also Creative Loans.
21 Q. So what was the plan for bringing in more business?
22 A. Well, it was to solicit mortgage brokers. Mortgage
23 brokers across the country have foreclosures that they are
24 working with people that are in foreclosure. They are trying
25 to get them refinanced. And the idea was to get them to take

1 those foreclosure applications and direct them towards Charles'
2 company, Creative Loans.
3 Q. As part of that marketing effort were there financial
4 incentives for those brokers to refer loans to Head Financial
5 Services?
6 A. Yeah.
7 Q. What were the financial incentives?
8 A. I believe it was $4,000 for every application that
9 Charles could convert into the program.
10 Q. Who did you report to while you were conducting this
11 marketing?
12 A. Charles Head.
13 Q. Was he aware of the marketing efforts that you were
14 undertaking?
15 A. Yes.
16 Q. Was the solicitation of brokers successful?
17 A. Yes.
20 Q. BY MR. ANDERSON: Are you aware of the number of
21 people who were successfully solicited before and after this
22 marketing plan was implemented?
23 A. Yes.
24 Q. And was there a difference in the number of people
25 that were able to be solicited before and after your marketing

1 plan?
2 A. Yes. It was greater.
3 Q. How much greater?
4 A. I'm not really sure quantitatively how much bigger,
5 but it was big.
6 Q. Did you also become involved in the creation of loan
7 documents for Head Financial Services?
8 A. Yes, I did.
9 Q. How did you become involved in that?
10 A. The solicitation of the mortgage brokers developed
11 these applications of foreclosure -- these foreclosure
12 applications from the brokers coming into the office. Charles
13 was handling those foreclosure applications from the brokers,
14 speaking directly to the persons --
15 MR. TEDMON: Objection, Your Honor. This is
16 non-responsive. The question was: Did he prepare loan
17 applications? Move to strike.
19 MR. ANDERSON: That wasn't the question.
20 THE COURT: Well, sustained. It's narrative and
21 straying beyond the scope. So I'm not going to strike the
22 answer. But once you answer a question, wait for the next
23 question. All right?
25 Q. BY MR. ANDERSON: So what was the next piece in the

1 puzzle of how you got involved with loan applications?
2 A. Charles' company Creative Loans/Head Financial
3 Services was struggling to convert those applications into the
4 program, and it was causing a backlog in closed transactions.
5 And the reason -- one of the reasons that it was causing that
6 backlog is because the loan applications --
9 Q. BY MR. ANDERSON: Was there a backlog in the loan
10 applications?
11 A. Yes.
12 Q. Did you see an opportunity to process loan
13 applications more quickly?
14 A. Yes.
15 Q. What was the method that you saw that could be used
16 to process them more quickly?
17 A. To change the way that the loan applications were
18 being structured.
19 Q. And what change was that?
20 A. To change them from -- to change them from
21 owner-occupied applications to non-owner-occupied applications.
22 Q. And what about the owner-occupied applications --
23 well, first of all, what's an owner-occupied application?
24 A. Where the person who fills out the application has
25 the intent of occupying the property as a primary residence.

1 Q. When you first got involved with the program, did you
2 -- were loan applications being submitted as owner occupied?
3 A. Yes.
4 Q. All right. And what did you see as causing a problem
5 of submitting them as owner occupied as far as creating a
6 backlog?
7 A. The title company that coordinates the closing, they
8 were not closing these transactions. That was causing the
9 backlog.
10 Q. Do you know why they weren't closing the
11 transactions?
12 A. They thought that the loan --
16 Q. BY MR. ANDERSON: Was there information provided to
17 the -- from the title company to you and the people at Head
18 Financial Services about why those loan applications --
19 MR. SAMUEL: Objection. Compound "and."
20 MR. GREINER: Lack of foundation.
21 THE COURT: Overruled. Just answer yes or no.
23 Q. BY MR. ANDERSON: Okay. What information was
24 provided to you about why those loan applications weren't being
25 closed?

1 A. Potentially fraudulent.
2 MR. GREINER: Objection. Legal conclusion.
3 MR. TEDMON: Join.
4 MR. SAMUEL: Join.
5 THE COURT: The jury shall understand that that is
6 lay testimony. It's not a legal opinion. Overruled.
7 Q. BY MR. ANDERSON: Did you see a way around this
8 problem with the title company?
9 A. Yes.
11 A. Submit the loan applications as non-owner occupied.
12 Q. In submitting the loan applications as non-owner
13 occupied, did that change the type of loans that were
14 available?
15 A. Yes.
16 Q. In what way?
17 A. Mainly, the amount that you could finance through the
18 mortgage company was limited.
19 Q. So as a result of changing to non-owner occupied were
20 down payments now required?
21 A. Yes.
22 Q. Now, for your role in this -- have you pled guilty in
23 this case?
24 A. Yes.
25 Q. And do you have a cooperation agreement that you're

1 testifying under here today?
2 A. Yes.
3 Q. Were you aware that false statements were being put
4 into loan applications?
5 A. Yes.
6 Q. Were false statements being put into loan
7 applications about income and assets?
8 A. Yes.
9 Q. I'm going to ask you some questions about
10 individuals.
11 During this time period, do you know what Charles
12 Head's role was with respect to the company?
13 MR. GREINER: Objection. Vague. "During this time
14 period." Could we have dates?
16 Q. BY MR. ANDERSON: During this time period when you're
17 getting involved in the foreclosure program, when is that?
18 A. March, April, May of 2005.
19 Q. During that time, what was Charles Head's role in the
20 organization?
21 A. He was running the organization. He worked with the
22 applications directly, with Kou Yang directly.
23 Q. During the time period that you worked for Head
24 Financial Services, did you know someone by the name of Domonic
25 McCarns?

1 A. Yes.
2 Q. How did you know Domonic McCarns?
3 A. He worked in the office where I worked.
4 Q. Do you know what Domonic McCarns' job in the office
5 was?
6 A. He was working with Charles on a foreclosure program.
7 Q. And what portion of the program, when you initially
8 became involved in the foreclosure program, was McCarns working
9 on?
10 A. I'm sorry?
11 Q. Initially, when you became involved in the
12 foreclosure program, what was McCarns' role with regard to the
13 program?
14 A. He worked with Charles. Charles had another program
15 that I was not involved in. And he worked with Charles on that
16 -- in that program.
17 Q. Did McCarns work in the foreclosure program?
18 A. Yes.
19 Q. With respect to the foreclosure program, what was
20 McCarns' doing?
21 A. He was working with persons in foreclosures directly.
22 Q. What was his job title, do you know?
23 A. Consultant, underwriter.
24 Q. Were there other people also performing that same
25 job?

1 A. Yes.
2 Q. Who are some of those people, if you recall?
3 A. Brian Singleton, I believe it was.
4 Q. Were there others?
5 A. Yes.
6 Q. Who was the top salesperson, if you know?
8 THE COURT: What was the objection?
11 Q. BY MR. ANDERSON: Did Domonic McCarns eventually take
12 on more responsibilities?
13 MR. GREINER: Objection. Vague. More
14 responsibilities? Job duties?
15 THE COURT: Overruled. Just answer yes or no, if you
16 can.
17 THE WITNESS: I don't know.
18 Q. BY MR. ANDERSON: Do you know if Domonic McCarns had
19 a relationship with Charles Head outside of work --
21 MR. TEDMON: Relevance.
23 Q. BY MR. ANDERSON: Did Domonic McCarns ever tell you
24 what his prior employment was?
25 A. Yes.

2 THE COURT: Overruled so far.
3 Q. BY MR. ANDERSON: What industry did Domonic McCarns
4 work in before coming to Head Financial Services?
7 MR. ANDERSON: It will go to knowledge, Your Honor.
9 THE COURT: Well, I'll allow an answer subject to a
10 motion to strike. You may answer, if you're able.
11 Q. BY MR. ANDERSON: What industry?
12 A. The mortgage industry.
15 Q. BY MR. ANDERSON: And what was his specific job
16 within that industry according to Mr. McCarns?
17 A. He was an account executive.
18 Q. Who does an account executive work for?
20 Lack of personal knowledge.
22 Q. BY MR. ANDERSON: Did Domonic McCarns tell you what
23 type of entity he worked for?
24 A. Yes.

1 A. A lender.
2 Q. Are you familiar with a person by the name of Kou
3 Yang?
4 A. Yes.
5 Q. Did she also work for Head Financial Services?
6 A. Yes.
7 Q. What was her job?
8 A. Loan processor.
9 Q. Are you familiar with someone by the name of Benjamin
10 Budoff?
11 A. Yes.
12 Q. When you first started working at Head Financial
13 Services, was Benjamin Budoff working there?
14 A. No.
15 Q. Did he eventually start working after you had begun
16 working?
17 A. Yes.
19 A. June 2005.
20 Q. So you started about January, and he -- you're
21 remembering about June?
22 A. Yeah, something like that.
23 Q. Do you know what Benjamin Budoff's initial role when
24 he was hired was?
25 A. He was working with persons we were soliciting to buy

1 these properties that were in foreclosures.
2 Q. Did Benjamin Budoff eventually become involved with
4 A. Yes.
5 Q. And did he eventually take over a portion the
6 business?
7 A. Yes.
8 Q. Are you familiar with the person by the name of Jack
9 Corcoran?
10 A. Yes.
11 Q. How do you know Mr. Corcoran?
12 A. He worked for Charles Head.
13 Q. Did he start before or after you started working
14 there?
15 A. After.
16 Q. Do you know what Mr. Corcoran's role was?
17 A. Chief financial officer, accountant.
18 MR. ANDERSON: Your Honor, I'm going to ask that a
19 group of e-mails be admitted into evidence. Go from the 100
20 series first. It will be Government's Exhibits 107, 112, 115,
21 117, 123, 128, 136, 137, 138, 145, 149.
22 THE COURT: That's the complete set?
23 MR. ANDERSON: Those are the e-mails I'm asking to
24 have admitted from the 100 set, and then I'll move on to the
25 200s.

1 THE COURT: All right. Any objection? Mr. Tedmon?
2 MR. TEDMON: Can I have just a moment, Your Honor?
3 THE COURT: You may. Mr. Greiner? Mr. Samuel? Do
4 you know your positions?
5 MR. TEDMON: I have no objection, Your Honor. I just
6 wanted to check some dates.
9 THE COURT: All right. Those exhibits 107, 112, 115,
10 117, 123, 128, 136, 137, 138, 145 and 149 are admitted.
11 (Government Exhibits 107, 112, 115, 117, 123, 128,
12 136, 137, 138, 145, 149, (See index for descriptions) admitted
13 into evidence.)
14 MR. ANDERSON: Your Honor, from the 200 series, the
15 Government would move in Government's Exhibits 206, 207, 213,
16 216, 221, 222, 243, 249, 252, 253, 256, 257 and 258.
17 THE COURT: All right. We'll give defense counsel a
18 moment to review those.
20 THE COURT: 257 and 258 do not look like e-mails, but
21 they are covered by a stip.
22 MR. TEDMON: I have no objection to 206, 207, 213,
23 216, 221 and 222. Subject to the variance issue, I would
24 object to 243, 249, 251, 253, 256. Subject to the variance
25 issue.

1 And then on 257 and 258, unless the Government can
2 lay a foundation as to this witness, I would object on a
3 foundation -- in terms of the witness' own personal information
4 on those two exhibits, 257 and 258.
5 THE COURT: That's despite the stip?
6 MR. TEDMON: Well, they're not e-mails. I'm not
7 quite sure what this witness has to do with that.
9 MR. SAMUEL: I have to join those objections, Your
10 Honor.
12 MR. GREINER: I will join those, but I thought there
13 was also 252. And I don't know if Mr. Tedmon -- I may have
14 missed it. He said 251, but I thought there was 252.
15 THE COURT: It's 243, 249, 252, 253 and 256.
16 MR. TEDMON: Let me just double check 252.
17 MR. GREINER: And I think 252 is going to have a
18 variance.
19 MR. ANDERSON: 251 is already admitted.
20 MR. TEDMON: 252, subject to the variance issue, no
21 objection.
22 MR. GREINER: So I will join in all those objections,
23 Judge.
24 THE COURT: All right. The first set 206 through 222
25 of the list enumerated by the Government are admitted without

1 the objection. 243, 249, 252, 253, 256 are admitted. The
2 objection is overruled but recorded. 257 and 258 --
3 MR. TEDMON: Can I look at those again for a moment,
4 Your Honor?
6 MR. SAMUEL: 257 definitely is a variance problem.
7 THE COURT: If you want to stand and stretch during
8 this break while we figure these exhibits out, feel free.
9 MR. ANDERSON: Your Honor, we'll go at least to the
10 break, so Mr. Tedmon and I will just talk about it at the
11 break.
12 THE COURT: All right. Then the Court defers ruling
13 on 257 and 258.
15 243, 249, 252, 253, 256, (See index for descriptions) admitted
16 into evidence.)
17 MR. ANDERSON: One more set. And then, believe it or
18 not, this actually saves time.
19 The Government moves to admit Exhibits 300, 301, 305,
20 335, 336, 337, 339, 342, 344, 346, 347, 348, 350, 351, 352,
21 355, 357, 359, 360, 362, 366, 367, 368, 369, 370 and 371.
23 MR. TEDMON: Your Honor, I'm ready. I have no
24 objection to Government's Exhibits 300, 301 and 305. Subject
25 to the variance issue, I would have no objection to 335, 336,

1 337, 339, 342, 344, 346, 347, 348, 350, 351, 352, 355, 357,
2 359, 360, 362, 366, 367, 368, 369, 370 and 371.
4 MR. SAMUEL: Join.
6 MR. GREINER: Join, Your Honor.
7 THE COURT: All right. 300, 301, 305 come in without
8 objection. The balance of the Government's list comes in over
9 the defense variance objection, which is recorded but
10 overruled. You may proceed, Mr. Anderson.
12 339, 342, 344, 346, 347, 348, 350, 351, 352, 355, 357, 359,
13 360, 362, 366, 367, 368, 369, 370 and 371, (See index for
15 MR. ANDERSON: Your Honor, I'm sorry. There are
16 actually a few more from the 300 series.
17 The Government moves to admit 312, 313, 317, 318,
18 320, 322, 325, 326, 327, 328, 329, 334.
19 THE COURT: So this will be the last set?
21 MR. TEDMON: Your Honor, on this set I would have no
22 objection to Government's Exhibits 312, 313, 317 and 318.
23 Subject to the variance issue, I have no objection to 320, 322,
24 325, 326, 327, 328, 329 and 334.
25 THE COURT: Was 318 on your list, Mr. Anderson?

2 MR. SAMUEL: Your Honor, I believe the variance
3 applies to 313, 317 and 318, and I join in the remainder.
4 THE COURT: I'm sorry. 313, 317 and 318?
7 MR. GREINER: I join in Mr. Samuel's objections.
8 THE COURT: All right. 313 comes in without
9 objection -- 312 comes in without objection. The balance come
10 in over the variance objection. That objection is overruled
11 but recorded.
12 MR. TEDMON: Your Honor, just for the record, I'll
13 join in Mr. Samuel's variance on 313, 317.
14 THE COURT: All right. That record is made.
15 Mr. Anderson, you may proceed.
16 (Government Exhibit 312, 313, 317, 318, 320, 322,
17 325, 326, 327, 328, 329, 334, (See index for descriptions)
19 Q. BY MR. ANDERSON: All right. We won't talk about all
20 of them, but let's start with Government's Exhibit 112.
21 MR. SAMUEL: Counsel, slow down slightly.
22 MR. ANDERSON: 112.
23 Q. BY MR. ANDERSON: While you were at Head Financial
24 Services, did you communicate with other people at Head
25 Financial Services via e-mail?

1 A. Yes.
2 Q. And if you look at Government's Exhibit 112 where it
3 says Keith Brotemarkle on the "to" line, was that you?
4 A. Yes.
5 Q. There is a "from," from Ed with
6 FundingForeclosures.com, do you know who that was?
7 A. Yes.
8 Q. Who was that?
9 A. Ed Shaffer.
10 Q. What was Ed Shaffer's role?
11 A. Ed Shaffer was hired to work with the brokers to
12 assist them in submitting their foreclosure applications to
13 Charles Head's company.
14 Q. Looking at this e-mail, do you know what this e-mail
15 is about?
16 A. Looks like the --
18 THE COURT: Sustained. First, answer yes or no and
19 then wait for the follow-up.
21 Q. BY MR. ANDERSON: What is this e-mail about?
22 MR. SAMUEL: Your Honor, the document speaks for
23 itself. I'm still objecting.

1 A. The broker is working with the person in foreclosure,
2 and they're concerned that the person in foreclosure is going
3 to be backing away from the transaction.
4 Q. And when you say "broker," who is the broker?
5 A. I don't know.
6 Q. You don't know specifically. Is the broker the
7 person who is being solicited in exchange for money to refer
8 people?
9 A. Yes.
10 Q. Let's go to Government's Exhibit 117. Now, do you
11 know who Mike Edmonds is?
12 A. No.
13 Q. Were notaries used in the process of closing these
14 foreclosure deals?
15 A. Yes.
16 Q. How were they used?
17 A. They were used to notarize some of the documentation
18 that was being sent to the persons in foreclosure.
19 Q. And if we look down on this document --
20 MR. GREINER: Well, I'm going make an objection. He
21 doesn't know who Mr. Edmonds is, so there is a lack of
22 foundation.
23 THE COURT: Overruled. Subject to some foundational
24 questions.
25 Q. BY MR. ANDERSON: Do you recall this e-mail now?

1 A. I do.
2 Q. How are you able to recall it?
3 A. It was unique.
4 Q. What was unique about this e-mail?
5 A. Charles was speaking directly to this person in
6 regards to notarizing documentation, and that was unique.
7 Q. And is this a situation where a notary had complained
8 that he was asked to notarize a blank document?
9 MR. TEDMON: Objection, Your Honor. Lack of
10 foundation.
11 MR. GREINER: And leading.
13 Q. BY MR. ANDERSON: Let's go to page two.
14 Had the notary written, complaining that he had been
15 asked to notarize a blank page of a document?
16 MR. GREINER: Objection. Lack of foundation and
17 personal knowledge as to this witness as to what's shown on the
18 screen.
20 Q. BY MR. ANDERSON: In the e-mail, was this person
21 complaining about being asked to notarize a blank document?
23 THE COURT: Why doesn't the document speak for
24 itself?
25 MR. ANDERSON: Well, I want to ask why.

1 THE COURT: Do that.
2 Q. BY MR. ANDERSON: Why were you looped in on that
3 e-mail?
4 MR. GREINER: Judge, can we have what's on the screen
5 taken down, please.
6 THE COURT: Yes.
8 Q. BY MR. ANDERSON: Did you see that initially on the
9 e-mail it involved Charles Head and another individual?
10 A. Yes.
11 Q. All right. Was it the case that Charles Head would
12 sometimes cc you on e-mails?
13 A. Yes.
14 Q. Is that the case in this particular e-mail?
15 A. Yes.
16 Q. Let's go to Government's Exhibit 128. You see this
17 e-mail is from Charles Head to Keith with Dana Capital?
18 A. Yes.
19 Q. Who is Keith with Dana Capital?
20 A. That's me.
21 Q. What was Dana Capital?
22 A. Dana Capital was a mortgage branching operation.
23 Q. Do you know what Head Financial Services'
24 relationship to Dana Capital was?
25 A. Yes.

1 Q. What was the relationship?
2 A. Dana Capital held licenses for mortgage brokering in
3 other states that Head Financial Services was not licensed in.
4 Q. And did Head Financial Services work with Dana
5 Capital so that they could perform transactions in other
6 states?
9 Q. BY MR. ANDERSON: Why would Head Financial Services
10 need to work with Dana Capital?
11 A. To have the licensing to close mortgage transactions
12 in other states.
13 Q. Was Dana Capital an independent business from Head
15 A. Yes.
16 Q. Did Head Financial Services pay some sort of fee to
17 Dana Capital?
18 A. Yes.
19 Q. How was that structured, if you know?
20 A. Per transaction.
21 Q. As part of that deal, did you get a danaloans.com
22 e-mail address?
23 A. No.
24 Q. How is it that you have this e-mail address "Keith
25 with Dana Capital"?

1 A. I've had it for a long time.
2 Q. Now let's go down to the bottom of this e-mail.
3 Do you see on the "to" line where it says Jack
4 Corcoran, jackcorcoran@headmortgage.com?
5 A. Yes.
6 Q. Is that the Jack Corcoran that you were discussing
7 earlier that was an accountant, CFO for Head Financial
8 Services?
9 A. Yes.
10 Q. What is being discussed by you in this e-mail?
11 MR. SAMUEL: Object. Document speaks for itself.
14 Q. BY MR. ANDERSON: What I'm asking you is to explain
15 in lay person's terms what you're saying here in this e-mail?
16 A. That Charles Head's company -- Head Financial
17 Services is not going -- that there is enough equity left in
18 the properties that we -- that the company does not have to
19 borrow 95 percent to make the transactions work. That
20 85 percent would work.
21 Q. All right. Well, that's still --
22 Let's break it down. What's NOO stand for?
23 A. Non-owner-occupied.
24 Q. So that's versus owner-occupied residences, correct?
25 A. Right.

1 Q. What is 85 percent LTV?
2 A. That means 85 percent loan-to-value. That's the
3 amount that the mortgage company is going to loan on that
4 property.
5 Q. So rather than loaning 100 percent of the purchase
6 price or value of the property --
7 MR. GREINER: Objection. Leading. Foundation.
8 MR. TEDMON: Join.
10 Q. BY MR. ANDERSON: Do it the long way.
11 Explain the difference between 100 percent LTV and
12 85 percent LTV?
13 A. 100 percent LTV means the mortgage company is going
14 to loan 100 percent of the value of the property as a mortgage.
15 85 percent is that they are going to loan 85 percent of the
16 value of the property on a mortgage.
17 Q. In order to get 100 percent of value of the property
18 on a mortgage, what type of property would it have to be?
19 A. Owner occupied.
20 MR. GREINER: Objection as to foundation to every
21 bank.
22 THE COURT: Overruled. Can you follow up and clear
23 that up.
24 Q. BY MR. ANDERSON: All right. So you said that it
25 would have to be owner occupied in order to get 100 percent

1 loan-to-value, what are you basing that on?
2 A. Lender guidelines.
3 Q. And were you familiar with the lender guidelines at
4 the time you worked for Head Financial Services?
5 A. Yes.
6 Q. How were you familiar with them?
7 A. They were provided to us by the lenders.
8 Q. And as part of your job did you review those
9 guidelines?
10 A. Yes.
11 Q. So when you went to non-owner-occupied properties,
12 could you any longer get 100 percent financing for the
13 properties?
14 A. No.
15 Q. When you say 5 percent down, what does that mean?
16 A. That means that the lender is only going to lend
17 95 percent of the value of the property, therefore, 5 percent
18 needs to be made up in a down payment.
19 Q. And what do you mean "on 66 percent of the properties
20 as non-owner-occupied"?
21 A. I don't know.
22 Q. Let's go up. In response to that e-mail, did Charles
23 Head respond to you?
24 A. Yes.
25 Q. Do you see where he says "this severely limits us

1 based on available funds and VOD issues"?
2 A. Yes.
3 Q. Do you know, based on what was happening in the
4 company at the time, what that means as far as available funds?
5 What did you understand that to mean?
6 A. That Charles had limited funds to provide down
7 payments to the buyers on these properties.
8 Q. What does VOD stand for?
9 A. Verification of deposit.
10 Q. Why would verification of deposit be an issue?
11 A. Because the lender wants to know that the money is
12 available in the buyer's account prior to closing the
13 transaction.
14 Q. Are you familiar with the financial status of the
15 straw buyers you were using at the time?
18 Q. BY MR. ANDERSON: As part of your job duties, were
19 you aware of the financial situation of straw buyers? Just yes
20 or no.
21 THE COURT: All right. Just answer yes or no.
22 THE WITNESS: No.
23 Q. BY MR. ANDERSON: Let's go up. Now the second
24 sentence in that same e-mail was "plus real cash equity is tied
25 up instead of paper equity." What did you understand that to

1 mean?
2 A. That he would have to provide -- Charles would have
3 to provide cash to the transaction as opposed to a second or a
4 what they call a hold-back. It's complicated.
5 Q. All right. What's a second?
6 A. Second mortgage. It's subordinate to the first
7 mortgage.
8 Q. And then if we go back up to the final response from
9 Charles Head, "yeah, the cash must be available to roll out on
10 deals and wait to come back." What did you understand that to
11 mean?
12 A. That he would provide -- that Charles would provide
13 the cash to the buyers, and then he'd have to wait -- Charles
14 would have to wait for that money to come back.
15 Q. How would money come back from these transactions?
16 A. When the transactions would close, there was a
17 document that was an authorization -- a wire transfer
18 authorization, and that's -- that the seller, the person in
19 foreclosure would sign, that would allow the cash -- the
20 proceeds from the transaction to go to wherever Charles had
21 that document direct it into an account.
22 Q. Let's go to Government's Exhibit 136.
23 Do you see the "from" line, Domonic McCarns on this
24 e-mail?
25 A. Yes.

1 Q. And then you're also on this e-mail, Charles Head,
2 and then Ed Shaffer, as well as Kou Yang?
3 A. Yes.
4 Q. Did you know Domonic to go by any nicknames?
5 A. Yes.
6 Q. What nickname did he use?
7 A. Q.
8 Q. Let's go to Government's Exhibit 137. I want to ask
9 you about some of the names on this document, whether or not
10 you know these people. Do you know who Lisa Vang was?
11 A. Yes.
12 Q. Who was Lisa Vang?
13 A. She was an assistant processor.
14 Q. Who did she work under?
15 A. Kou Yang.
16 Q. How about Pang Yang?
17 A. Also assistant processor.
18 Q. Sam Vu?
19 A. Also assistant processor.
20 Q. Scott Wagner?
21 A. Underwriter.
22 Q. When you say underwriter --
23 A. He was the person working directly with the persons
24 in foreclosure.
25 Q. Shayna Fischler?

1 A. Underwriter.
2 Q. Todd Hickman?
3 A. Account manager. He worked with the persons -- he
4 worked with the brokers.
5 Q. Steved@FundingForeclosures.com, do you know who that
6 is?
7 A. No.
8 Q. How about Stevef@FundingForeclosures.com?
10 Q. Lauren Shaffer?
11 A. Yes.
12 Q. Who is that?
13 A. She worked with the brokers.
14 Q. Karen Banks?
15 A. No.
16 Q. George Brent?
17 A. Yes.
18 Q. Who was George Brent?
19 A. He was an underwriter, worked with the person in
20 foreclosures.
21 Q. David Parks?
22 A. Underwriter.
23 Q. Beverly Smith?
24 A. Underwriter.
25 Q. Beverly Rocheleau?

1 A. Underwriter.
2 Q. Do you know Amber?
3 A. I know them -- I know her.
4 Q. Who is she?
5 A. She was a buyer.
6 Q. And by "buyer" what do you mean?
7 A. She would buy some of the properties.
8 Q. That's a person that would put title in their name?
9 A. Yes.
10 Q. And Austin Weeks?
11 A. I didn't know Austin.
12 Q. Go to Government's Exhibit 149. Who is this e-mail
13 from and to?
14 A. From me to Charles.
15 Q. And when you say in the subject line "Singleton will
16 wire 20K" -- excuse me.
17 When it says in the subject line "Singleton will wire
18 20K - is that good enough to close" what are you asking?
19 A. I'm not sure.
20 Q. Was money ever required in order to close
21 transactions?
22 A. Yes.
23 Q. In what way was money required to close transactions?
24 A. As down payments.
25 Q. How would the down payments work?

2 Q. How would Head Financial Services go about making
3 sure down payments were put onto the properties?
6 able.
7 THE WITNESS: Charles Head would -- Charles Head's
8 company would wire money into the account of the buyer, and
9 then that would be used for down payment. The buyer then would
10 wire the money to the title company or provide a check.
11 MR. GREINER: Judge, I know this is a belated
12 objection, but the witness keeps saying Charles Head's company,
13 and there are several companies.
14 THE COURT: Objection is noted.
15 Q. BY MR. ANDERSON: Let me follow up and clarify it.
16 When you say Charles Head's company would wire the
17 money, do you know specifically which sub-company or unit of
18 that company?
19 A. Not sure.
20 Q. Do you know who had responsibility for performing
21 those wires?
22 A. Yes.
23 Q. Who?
24 A. Jack Corcoran and Kou Yang.

1 Do you see the first line "for all foreclosures if
2 the equity is not 50K or more we will not be doing the file"?
3 A. Yes.
4 Q. Do you know why there were limits put on how much
5 equity needed to be in a property to do a transaction?
6 A. In order to cover the expenses to acquire the
7 property.
8 Q. If the equity was too low, would Head Financial
9 Services have been able to pull out money for its own use?
10 MR. TEDMON: Objection. Speculation. Lack of
11 foundation.
14 Q. BY MR. ANDERSON: Let's go to Government's Exhibit
15 206?
16 THE COURT: Actually, let's take our first break of
17 the morning. We have been going for an hour and a half.
18 During this break, 15-minute break, remember the
19 admonitions I've been giving you throughout trial. This will
20 be a 15-minute break. If anyone attempts to contact you during
21 the break, let me know. Have a good break.
22 (Jury out.)
23 THE COURT: You may be seated. Please step down,
24 sir. Please be back in 15-minutes. During that time, avoid
25 any contact with jurors.

1 All right. I just want to compare notes on
2 scheduling. Anything else we need to discuss?
4 THE COURT: So you will compare notes on 257 and 258.
5 I think those were the only two that weren't covered.
6 If you have any other lists like that -- you probably
7 don't given what we covered -- but if you can cover those on a
8 break in advance that would save us time in front of the jury.
9 So is the plan that Mr. Brotemarkle will take most of
10 today yet, but we think we will be done with him today?
11 MR. ANDERSON: That's what we have been discussing,
12 Your Honor. And we have another witness lined up to start if
13 necessary.
14 THE COURT: Very good. See you in 15 minutes.
15 (Break taken.)
16 THE COURT: Are we ready for the jury?
17 MR. TEDMON: Your Honor, the two exhibits, I have no
18 objection to those coming in.
20 MR. TEDMON: They are covered by the stipulation.
21 MR. SAMUEL: They are covered by the stipulation,
22 yes. I didn't know how that was going to be used with
23 Mr. Brotemarkle, but they are covered by the stipulation so I
24 have no objection.

1 MR. GREINER: Well, they are covered by the
2 stipulation, but, again, this witness doesn't have any
3 foundation or knowledge how they were created, when they were
4 created, who created them, what the purpose was.
5 So this witness is not going to be able to testify as
6 to those documents. I don't object to it coming in, but this
7 witness has no knowledge of those documents.
8 THE COURT: All right. Well, the exhibits are in,
9 257, 258, without objection except as to possible questioning
10 of Mr. Brotemarkle.
11 MR. TEDMON: Right.
12 THE COURT: All right. So let's bring the jury in
13 now.
14 (Government Exhibits 257 and 258, (See index for
16 (Jury in.)
17 THE COURT: All right. Welcome back, ladies and
18 gentlemen. All the ladies and gentlemen of the jury. The
19 parties did some business. Just so you know, 257 and 258 have
20 been admitted. There may be some objections to questions based
21 on that, but those exhibits are now in.
22 All right. Mr. Anderson you may continue.
23 Q. BY MR. ANDERSON: Okay. Let's go to Government's
24 Exhibit 206.
25 This is an e-mail from you, is that right?

1 A. Yes.
2 Q. What are you discussing in this e-mail?
3 A. I'm discussing that when we get -- when the company
4 receives these applications from the brokers, they are for the
5 Funding Foreclosures program only and are not to be sold as a
6 potential loan refinance.
8 Is this an e-mail from you as well?
9 A. Yes.
10 Q. And to Charles Head and then you've cc'd yourself?
11 A. Yes.
12 Q. Did there come a point when you became concerned
13 about the way the program was being sold?
14 A. Yes.
15 Q. What were you concerned about?
16 A. Just consistency. That the message that was being
17 delivered to the clients was consistent. The message was
18 consistent.
19 Q. And this is May 2005, is at that right?
20 A. Correct.
21 Q. So how long had you been involved with the
22 foreclosures at this point?
23 A. March, maybe, April, May.
24 Q. So you are fairly new to it?
25 A. Yes.

1 Q. Was there one salesperson in particular you were
2 concerned about?
3 A. Yes.
4 Q. Who?
5 A. Domonic.
6 Q. Let's go to lower down in this e-mail, part three.
7 Did you express those concerns to Charles Head?
8 A. Which concerns? I'm sorry?
9 Q. About Domonic McCarns?
10 A. Yes.
11 Q. And is that what you're doing with the part where you
12 say: "Domonic needs his spiel to be revised; he has got one
13 line of" -- expletive -- "running that is built to deceive and
14 give him the result he is looking for, but he worries me about
15 possible issues down the road"?
16 A. What was the question?
17 Q. Was that one of the places where you expressed this
18 concern to Charles Head?
19 A. Yes.
20 Q. Now, following you expressing this concern to Charles
21 Head, to your knowledge did the spiel change?
22 A. I don't know.
23 Q. And do you know if Domonic stopped giving the spiel
24 that was incorrect?
25 MR. GREINER: Objection. Assumes facts not in

1 evidence. That it's incorrect.
3 Q. BY MR. ANDERSON: Do you know if Domonic stopped
4 giving the spiel that you thought was not accurate?
5 A. I do not know.
6 Q. Had you ever discussed with Domonic your concerns
7 about the spiel that he was giving?
9 Q. Let's go to Government's Exhibit 224. Who is this an
10 e-mail from?
11 A. From Domonic.
12 Q. And you're one of the recipients of this e-mail?
13 A. Correct.
14 Q. In performing these transactions, did people have
15 different roles in the organization?
16 A. Yes.
17 Q. What were some of the roles that people had?
20 Q. BY MR. ANDERSON: In order to close a transaction,
21 what different things needed to happen?
22 A. We'd have to receive a foreclosure application. The
23 foreclosure applicant would have to be discussed with and
24 provided documentation. The documents would have to be signed
25 and returned. A buyer would have to be located. And a loan

1 application would have to be constructed. A lender would have
2 to be -- would be submitted -- loan application would be
3 submitted to a lender. And then the loan would go to closing,
4 where the person in foreclosure would sign selling documents,
5 and the person who is buying would sign buying documents.
6 Q. And was it at that point in closing where money would
7 come out of escrow to Head Financial Services or Creative
8 Loans?
9 A. "From" you said? Yes.
10 Q. From the property?
11 A. Yes.
12 Q. Let's look at this e-mail. Do you see the sentence,
13 "I get as creative as necessary to close the deal within
14 company guidelines of course, which demands client respect"?
15 A. Yes.
16 Q. And this is an e-mail from Domonic McCarns. What did
17 you understand his role in the transaction at the time of this
18 e-mail to be?
19 A. He worked -- he was the primary contact to the person
20 in foreclosure.
21 Q. And then there is a series of thank-yous below.
22 "Thanks for your help, Ed." Do you know who Ed was?
23 A. Yes.
24 Q. Who was Ed?
25 A. He was the person in charge of the underwriters as

1 well as the person -- the persons who worked with the brokers.
2 Q. And how would Ed have helped in closing a transaction
3 like this one?
4 A. I don't know.
5 Q. Who is Sam?
6 A. Processor. Loan processor.
7 Q. And what would Sam have done?
8 A. She processed the loan. She may have processed the
9 loan.
10 Q. And then it says "thanks for figuring out a fundable
11 program for the investor, Keith." Did you figure out fundable
12 programs?
13 A. That would be working with the lenders.
14 Q. And then "thanks for managing the flow, Kou." What
15 was Kou's role in these transactions?
16 A. She managed Sam, the loan processor, as well as
17 worked with the lenders and the title companies to close
18 transactions.
19 Q. Let's go to Government's Exhibit 229. Actually,
20 let's go to page two first.
21 Do you see this e-mail message from Domonic, which
22 you're cc'd on: "Emily, see how fast I get the payoffs with
23 that line of crap I give them; it works like a charm"?
24 A. Yes.
25 Q. Do you know what a payoff is in term of these

1 foreclosure transactions?
2 A. Yes.
3 Q. What's a payoff?
4 A. The lender that is in foreclosure on the person who
5 is in foreclosure has to provide a payoff for the company to
6 close a transaction.
7 Q. And by that do you mean a payoff of the prior
8 mortgage that had been on the property?
9 A. Correct.
10 Q. Was it important to get those done in order to finish
11 the transactions and get Head Financial Services --
12 A. Yes.
13 Q. Let's go back to the first page. And then does this
14 discussion regarding this continue?
15 A. Yes.
17 Now, again, this has "Keith at Foreclosure Options"
18 on it. Do you also see in the "to" line samv@psloans.net?
19 A. Yes.
20 Q. Who is "samv"?
21 A. Sam Vu.
22 Q. Do you know what psloans.net is?
23 A. Yes.
24 Q. What is that?
25 A. Ben Budoff's company.

1 Q. And next to "samv" there is benb@psloans.net. Do you
2 know who that is?
3 A. Yes.
4 Q. Who is that?
5 A. Ben Budoff.
6 Q. And next to that kouy@psloans.net, do you know who
7 that is?
8 A. Yes.
9 Q. Who?
10 A. Kou Yang.
11 Q. And then down below toddh@nfcoptions.com. Do you
12 know who that is?
13 A. Yes.
14 Q. Who is that?
15 A. Todd Hickman.
16 Q. What was nfcoptions.com?
17 A. This was Lavar -- his company. This was after --
18 Q. Fletcher?
19 A. Lavar Fletcher, yes.
20 Q. And looking at the date October 2nd, 2006, do you
21 recall what had happened prior to this to create nfcoptions and
22 psloans.net?
23 A. Yes.
24 Q. What happened?
25 A. Charles sold his company to Lavar.

1 Q. Which company was sold to Lavar?
2 A. Creative Loans, Funding Foreclosures.
3 Q. And was another portion of the company sold to Jack
4 Corcoran?
5 A. Yes.
6 Q. What did Jack Corcoran take?
7 A. He took the property management, Nations Property
8 Management.
9 Q. And did Ben Budoff take a portion?
10 A. Yes.
11 Q. What did he take?
12 A. He took the mortgage portion, the Head Financial
13 Services.
14 Q. I want to look at the subject line for a second. It
15 says Castillo/Minor Funding Inquiry. What does
16 "Castillo/Minor" mean?
17 A. Those are person's last name.
18 Q. One is in capitals, the Castillo, is there a reason
19 why that name is in all caps?
20 A. I don't know.
23 Q. BY MR. ANDERSON: You said you didn't know?
24 A. No.
25 Q. When names are written like this, two names together,

1 was that typically used to refer to anybody involved in these
2 foreclosure transactions?
3 A. Yes.
4 Q. Who was it used to refer to?
5 A. A seller and a buyer.
6 Q. So one name of the seller and one name of the buyer?
7 A. Yes.
8 Q. Do you see where Domonic McCarns has written: "Heads
9 up, no extensions on this file. Sales date is 10-23-06. Come
10 on team, let's make sure we close this file. I don't want to
11 lose another file and worse another broker."
12 What did you understand that to mean when you
13 received the e-mail?
16 THE WITNESS: That the property was going to go to
17 auction on the 23rd of October 2006. And at that point, the
18 application and our program would be dead.
19 Q. BY MR. ANDERSON: And you would no longer be able to
20 do this?
21 A. Correct.
22 Q. Let's go to Government's Exhibit 249. Were
23 commissions paid to sales agents in this program or to
24 underwriters?
25 A. Yes.

1 Q. Do you see the line "no huge cash outs, the less cash
2 out you sell the more commission for you"?
3 A. Yes.
4 Q. Do you have an understanding as to what that meant?
5 A. Yes.
6 Q. What did that mean at the time?
7 A. Cash to the seller. The person in foreclosure.
8 Q. Let's go to Government's Exhibit 251. Start on page
9 two: "Q, the buyer on this deal has changed to Kerry Budoff.
10 Please update the appraisal and comment with an ETA." Do you
11 see that?
12 A. Yes.
13 Q. When it says "the buyer on the deal has changed,"
15 A. That means that the buyer that was on the deal
16 previously no longer works so the buyer had to change.
17 Q. What do you mean by "work"?
18 A. Could be that the buyer --
21 THE WITNESS: Could be the buyer had already
22 purchased too many properties, was disqualified by the lender,
23 wanted out of the program.
24 Q. BY MR. ANDERSON: Well, let's look up on the e-mail.
25 The top of this page.

1 Kou Yang replies: "No more Kerry Budoff on deals,
2 too many properties already." Do you know what "too many
3 properties" refers to?
4 A. Yes.
5 Q. What does it refer to?
6 A. That the buyer has already acquired enough properties
7 that they may not qualify for any more.
8 Q. And if we go to the first page. Benjamin Budoff
9 indicates that he understands?
10 A. Yes.
11 Q. And you explained that buyers might have too many
12 properties to get more properties, was that sometimes referred
13 to as the buyer being full?
14 A. Yes.
15 Q. Let's go to 253. Do you know whether or not there
16 were times when payments were missed on mortgages by Head
18 A. Not specifically.
19 Q. And that's just you don't have any recollection now
20 of that?
21 MR. TEDMON: Objection, Your Honor. Asked and
22 answered.
24 Q. BY MR. ANDERSON: Were you a recipient on this
25 e-mail?

1 A. Yes.
2 Q. As well as Domonic McCarns?
3 A. Yes.
4 Q. If we go to the bottom of the e-mail. You know what
5 this e-mail will speak for itself.
6 Let's move on and go to Government Exhibit 300. Do
7 you see in the "from" line "Ben with 30K Per Year"?
8 A. Yes.
9 Q. Who is that?
10 A. That's Ben Budoff.
11 Q. What was 30K Per Year?
12 A. That was the website that was used to locate buyers
13 for the program.
14 Q. Did Budoff assist you with marketing for the program?
15 A. Yes.
16 Q. Was that marketing to people on the seller/homeowner
17 side or the people on the buyer side?
18 A. Buyer side.
19 Q. Let's go to Government's Exhibit 301. Do you know
20 who Mike Scallin is?
21 A. No. Not really.
22 Q. Let's go to Government's Exhibit 306. Is this an
23 example of a marketing letter written by Benjamin Budoff?
24 A. Yes.
25 Q. Let's go down to the final paragraph on this page.

1 Do you see the sentence "please read it as someone
2 who is afraid of getting taken advantage of and who is broke"?
3 Do you see that sentence?
4 A. Yes.
5 Q. Do you know what the financial status of the buyers
6 in many of these transactions was?
8 MR. GREINER: Objection. Lack of personal knowledge.
9 THE COURT: Overruled. Just answer this question yes
10 or no, if you can.
11 THE WITNESS: No.
12 Q. BY MR. ANDERSON: Now, based on this e-mail, what did
13 you understand Benjamin Budoff to be referring to?
16 THE COURT: Sustained. You can attempt to lay a
17 foundation.
18 Q. BY MR. ANDERSON: At the time of this e-mail, is
19 Benjamin Budoff referring to marketing to people on the buyer's
20 side of the transactions?
23 Q. BY MR. ANDERSON: Which side of the transactions is
24 Benjamin Budoff referring to marketing in?
25 A. Buyers.

1 Q. And when he's referring to "please read it as someone
2 who is afraid of getting taken advantage of and who is broke,"
3 who is he referring to as the person you're supposed to read it
4 as?
6 MR. GREINER: Lack of personal knowledge.
7 Q. BY MR. ANDERSON: In your understanding of the sales
8 pitch?
9 THE COURT: Sustained. Again, you can attempt to lay
10 a foundation.
11 Q. BY MR. ANDERSON: Let's look at pages 2, 3, and then
12 4. Can you take a look at those pages and see if you recognize
13 them, or we can get the binder out with the actual document for
14 you.
15 THE COURT: Are you able to read the screen?
16 THE WITNESS: I can.
18 Q. BY MR. ANDERSON: In looking at this e-mail, are you
19 familiar with it?
20 A. Yes.
21 Q. What is this e-mail about?
22 A. It's a marketing piece for a buyer.
23 Q. Who created this marketing piece?
24 A. Ben Budoff.
25 Q. And when he refers to "who will be reading this

1 marketing piece," do you have an understanding of who was
2 intended to be the recipient of this marketing piece?
3 A. Yes.
6 Q. BY MR. ANDERSON: Who was intended to be the
7 recipient of the marketing piece?
9 THE COURT: You may answer if you're able.
10 THE WITNESS: Buyer.
11 Q. BY MR. ANDERSON: How do you know that?
12 A. Ben worked with buyers, and this is directed at a
13 buyer.
15 Do you know whether or not Ben Budoff used any family
16 members as straw buyers?
17 A. Yes.
18 Q. Who, if any, did Ben Budoff use as a straw buyer that
19 was a family member?
20 A. Kerry.
21 Q. And did Ben personally get involved in that
22 transaction?
23 A. Yes.
25 Do you see the "from" line "Keith with Global"?

1 A. Yes.
2 Q. Who is that?
3 A. That's me.
4 Q. What was Global?
5 A. Global was also a net branching company similar to
6 Dana Capital.
7 Q. Did it become a company used by Head Financial
8 Services?
9 A. Yes.
10 Q. Did Ben Budoff interact with buyers in order to get
11 personal information about them, if you know?
12 THE COURT: Answer that question yes or no.
15 Exhibit 313. Is this an example of information collected by
16 Benjamin Budoff?
17 A. Yes.
18 Q. And Marjorie Sly, do you know who that was?
19 A. Buyer.
20 Q. Go to Exhibit 317, page three.
21 So if we look at page three and the signature block,
22 it's Benjamin Budoff, correct?
23 A. Yes.
24 Q. And then if we'll go back and look at this e-mail.
25 We should start on page two. What is this e-mail about?

1 A. It's about calculating the monies provided to Kerry
2 Budoff.
3 Q. Now, "10 May wire transfer, $50,000." Based on your
4 understanding of how the program worked and Kerry Budoff's
5 position in it, do you know what that $50,000 would have been
6 for?
7 A. Down payment.
8 Q. And in fact, where it says "money Kerry sent in to
9 complete real estate transactions 26 May bank check from Kerry,
10 $64,276," do you know what that is referring to?
11 A. The money for down payments.
12 Q. Let's go to Government's Exhibit 318, page three. I
13 think you said earlier VOD is a verification of deposit?
14 A. Correct.
15 Q. Could you explain the importance of getting VODs in
16 order to get some loans?
17 A. The lender required knowledge that the money was
18 available to close a transaction prior to generating loan
19 documents to close a transaction.
20 Q. Now let's go to page two. Do you see where it says
21 "after Grady gets the $$$ in his account, order a new one"?
22 A. Yes.
23 Q. What are you saying there?
24 A. That the verification of deposit should be generated
25 after the money is in Grady's account.

1 Q. Do you know where the money would come from that was
2 going into Grady's account?
3 A. Yes.
4 Q. From where?
5 A. Charles Head's company.
6 Q. Now looking at the date -- the date on this one, I
7 wanted to clarify something earlier. Now we're in June 28th,
8 2006, do you remember that?
9 A. Yes.
10 Q. Okay. When I had asked you previously about owner
11 occupancy and the switch over, when did that happen, which
12 year?
13 A. 2005.
14 Q. And was it at that time that you were having trouble
15 finding lenders -- I'm sorry -- was it at that time that you
16 were having difficulty getting loans through that were
17 owner-occupied?
18 A. Yes.
19 Q. And at that time, was that when in order to get 100
20 percent financing you needed owner occupancy as far as you
21 knew?
22 A. Yes.
23 Q. Let's go to Government's Exhibit 320. Do you know
24 who Jeff Ball was?
25 A. Yes.

1 Q. Who was Jeff Ball?
2 A. Buyer.
3 Q. Is this an e-mail about mortgages and bills that are
4 not being paid on the property?
5 MR. SAMUEL: Objection. Speaks for itself.
7 Q. BY MR. ANDERSON: Go to Government Exhibit 327.
8 Do you see this e-mail message at the bottom: "Okay,
9 FYI, this is an NCEN deal, so we need to do 60-day seasoning,
10 and buyer does not have, so therefore have to get her funds
11 seasoned first; it will be another 60 days before file can
12 close?
13 A. Yes.
14 Q. Do you know what NCEN is?
15 A. Yes.
16 Q. What is it?
17 A. It's a lender, New Century.
18 Q. And what is 60-day seasoning?
19 A. Means they need to know that the money is in the
20 account 60 days prior to closing.
21 Q. Let's go to Government Exhibit 339. Do you see this
22 message from Benjamin Budoff to you?
23 A. Yes.
24 Q. "If I get a file to submit that has three properties
25 on the schedule of real estate on page three, but only two

1 loans show up on the credit report, should I just delete
2 property three."
3 Do you know what type of document this is referring
4 to with "schedule of real estate on page three"?
5 A. Yes.
6 Q. What type of document?
7 A. It's the loan application, the 1003, page three,
8 schedule for real estate owned.
9 Q. Now, when submitting -- when purchasing houses, do
10 you know whether or not a new house immediately shows up on a
11 credit report when purchased?
12 A. It does not.
13 Q. Let's look at the top of this. How did you respond
14 to this e-mail?
15 A. Do you want me to read it?
16 Q. Yes.
17 A. "Probably but send me the point file so I can be
18 sure."
19 Q. What did you mean by that?
20 A. I guess that would mean delete it but send me the
21 point file so I can be sure.
22 Q. So that would be take the property off of the
23 schedule of real estate owned?
24 A. Correct.
25 Q. When a property was taken off the schedule of real

1 estate owned, could that affect a person's debt-to-income
2 ratio?
3 A. Yes.
4 Q. How would that affect someone's debt-to-income ratio?
5 A. It would potentially lower it.
6 Q. Let's look at Government's Exhibit 341. We will go
7 to page two: "I gave credit for rental income, but DTI is over
8 55 percent. Max is 50 percent. Also, the stated income for
9 the borrower's employment does not appear reasonable based on
10 position and credit profile." Do you see that message?
11 A. Yes.
12 Q. Let's talk first about "I gave credit for rental
13 income, but DTI is over 55 percent." What does "DTI over 55
14 percent" mean?
15 A. The debt-to-income, that's the amount of debt that
16 the borrower is carrying compared to their income is over
17 55 percent.
18 Q. Why would that be an issue for obtaining a loan?
19 A. The lender guideline might state 50 percent as a
20 maximum.
21 Q. And the second sentence "also, the stated income for
22 the borrower's employment does not appear reasonable based on
23 position and credit profile."
24 What does that mean by "reasonable based on position
25 and credit profile"?

1 A. That the income being stated matches up with the
2 employment status of the person that's applying for the loan.
3 Q. And by "stated" what do you mean?
4 A. That the income is just put into the file, made up.
5 Q. Do you know whether or not it was a practice at Head
6 Financial Services to put down income that was not accurate?
8 Q. BY MR. ANDERSON: In 2005/2006?
9 A. Yes.
10 Q. Was it a practice to do that?
11 A. Yes.
12 Q. Did you participate in that?
13 A. Yes.
14 Q. Did Benjamin Budoff participate in that?
15 A. Yes.
16 MR. SAMUEL: Objection. Sorry. I'll withdraw that
17 objection.
19 Q. BY MR. ANDERSON: You can answer the question. Did
20 Benjamin Budoff participate in adjusting income?
21 A. Yes.
22 Q. Did Charles Head, to your knowledge, know that that
23 was happening?
24 A. Yes.
25 Q. How do you know that?

1 A. I had a conversation with him.
2 Q. And how do you know that Benjamin Budoff knew that
3 that was going on?
4 A. We had a conversation about it.
5 Q. Let's look at Government's Exhibit 342. Do you see
6 the first message from Benjamin Budoff to you, "please review
7 Morgan/Bryan Peoples"?
8 A. Yes.
9 Q. What is Peoples?
10 A. That's a lender.
11 Q. And where it says Morgan/Bryan, what is that?
12 A. The seller/buyer.
13 Q. And you respond, "okay, looks good, you may want to
14 put money in her account." What does that mean?
15 A. I'm not sure what that means.
16 Q. Let's go to Government's Exhibit 344. So this is a
17 message from Benjamin Budoff to you, is that right?
18 A. Yes.
19 Q. It says "please review Wardle/Booker." What is
20 Wardle/Booker?
22 Q. And then below it says "LBMC 90." Do you know what
23 that means?
24 A. Yes.

1 A. Long Beach Mortgage, 90 percent.
2 Q. And then below it says "notes, challenge here is
3 income low, property value high, DTI is at 53 percent even
4 though he has good credit." Do you see that?
5 A. Yes.
7 A. That means that the borrower doesn't show enough
8 income to cover the debt.
9 Q. And then below that, "unless I am missing something,
10 we may need to either raise income or raise the rent to get him
11 under 53 percent." What does that mean?
12 A. That means we need to raise the income -- raise the
13 income to bring the debt-to-income under 50 percent.
14 Q. And when you say raise the income, you mean change
15 the numbers on the form?
16 A. Yes.
17 Q. Let's look at your response. How did you respond to
18 that?
19 A. "Change income to 8500, tell Kou you changed it,
20 always tell her you change anything you change."
21 Q. By doing that, are you agreeing with Ben Budoff that
22 you should increase the income?
23 A. Yes.
24 Q. Let's go to 346. Let's start on page two. Do you
25 see this initial message from Benjamin Budoff to you?

1 A. Yes.
2 Q. What is this e-mail in reference to?
3 A. A person in Oregon that has 20 properties that may
4 qualify for the foreclosure program.
5 Q. And how do you respond to that? Go up.
6 A. "Excellent, as you as the broker, right?"
7 Q. What do you mean by "as you as the broker"?
8 A. As -- in the system, as Ben would be the -- represent
9 the broker who would bring those foreclosures to the company.
10 Q. And would that affect the compensation that Benjamin
11 Budoff would receive?
12 A. Yes.
13 Q. Let's look at the first page. How does Budoff
14 respond?
15 A. Read it?
16 Q. Just read the first three sentences.
17 A. "He is the broker. I am the AE. He is speaking with
18 the homeowners, getting all the info for the form, and
19 submitting completed pre-screened deals directly via the
20 www.nationalforeclosures.com website."
21 Q. What is the www.nationalforeclosures.com website?
22 A. I'm not sure of the date on this, but that should be
23 Lavar's website.
24 Q. And this is -- if the date is October 18th, 2006, is
25 that the case?

1 A. Yeah.
2 Q. And what does AE mean?
3 A. Account executive. That would be the person who
4 works with the brokers.
5 Q. I want to look at your response really quickly. You
6 just responded saying that "sounds great"?
7 A. Yes.
8 Q. Go to Government's Exhibit 347, page four. Well, we
9 should start on page three.
10 This is an e-mail from Benjamin Budoff to Kou Yang
11 and yourself, is that right?
12 A. Yes.
13 Q. It says "Morgan at Peoples." Is Peoples still a
14 lender?
15 A. Yes.
16 Q. It says: "I got a call from Andrew Adams. He's
17 assistant to our regular person who was out today."
18 Do you know who Andrew Adams was based on the context
19 of this e-mail?
20 A. Yes.
21 Q. Who was Andrew?
22 A. He would be the assistant to the person that was our
23 contact at Peoples.
24 Q. And if we look down at the note section, "not buying
25 the income amount for a CNA, even an income of $4,700, which

1 still works, seem too high." Do you know what that is in
2 reference to?
3 A. Yes.
4 Q. What is that referring to?
5 A. That the employment for this individual was a CNA,
6 and the lender wasn't accepting 4,700 as an income for that
7 position.
8 Q. And then goes on "curious about down payment funds,
9 dubious that she really has $26,000" -- go to the next page,
10 sentence continues -- "in the bank but will accept it if we
11 affirm." Do you know what that is in reference to?
12 A. That -- yes. That they don't believe that she has
13 $26,000 in the bank.
14 Q. Do you know who the banks expect the down payment
15 funds to come from?
17 MR. GREINER: Lack of personal knowledge.
18 THE COURT: Overruled. Answer yes or no.
20 Q. BY MR. ANDERSON: Did Head Financial Services
21 Creative Loans, and its associated companies, take efforts to
22 make it appear that down payment funds came from a particular
23 source?
25 MR. SAMUEL: Compound also.

2 Q. BY MR. ANDERSON: Did Head Financial Services make
3 efforts to make it appear as though down payments came from the
4 buyers?
6 THE COURT: Clarify the timeframe.
7 Q. BY MR. ANDERSON: 2005/2006?
8 A. Yes.
9 Q. What did the employees at Head Financial Services do
10 in order to make it look like the down payments came from a
11 buyer?
12 MR. GREINER: Objection. Employees. That's vague.
15 Q. BY MR. ANDERSON: Do you know who helped make the
16 down payments for the properties?
17 A. Yes.
18 Q. Who made the down payments for the properties?
19 A. Charles Head's companies.
20 Q. Was anything done to disguise the source of those
21 funds?
23 THE COURT: Overruled. Answer first yes or no, if
24 you're able.
25 THE WITNESS: The question was?

1 Q. BY MR. ANDERSON: Was anything done so that those
2 funds wouldn't appear to be coming from Head Financial
3 Services?
4 A. Yes.
5 Q. What was done?
6 A. It was wired to the buyer's account.
7 Q. And then at the bottom of this message it asks you to
8 advise on the income DTI issue, is that right?
9 A. Yes.
10 Q. So let's go up to page two, and, here, we actually
11 see Kou Yang responding, is that right?
12 A. Yes.
13 Q. Go back to page three. First, she says that "$4,700
14 is pretty dang fair for a CNA," do you see that?
15 A. Yes.
16 Q. What do you understand that to be referring to?
19 THE WITNESS: She believes it's fair income to state
20 for a CNA.
21 Q. BY MR. ANDERSON: Does that have any reference to
22 what the income actually was for the CNA?
23 A. I don't know.
24 Q. And if we go to page two. Does Benjamin Budoff ask
25 you to call him about this?

1 A. Yes.
2 Q. Let's go to Government's Exhibit 350. Is this
3 another e-mail from Ben Budoff to you?
4 A. Yes.
5 Q. NCEN, is that still New Century?
6 A. Yes.
7 Q. "By the time all properties, his credit report, he
8 was way over the top on DTI. The only thing I could think to
9 do was adjust the" -- go to page three -- page two -- excuse me
10 -- "stated rents, but you may (sic) to take a closer look at
11 those."
12 Do you know what that's in reference to?
13 A. Yes.
14 Q. What's that in reference to?
15 A. That his DTI is going to be too high, and we need to
16 adjust some form of income to cover it.
17 Q. And what form of income is Benjamin Budoff
18 specifically recommending you adjust?
19 A. The amount of rents that come off the properties that
20 are on his credit report.
21 Q. Let's go back to the first page. This is your
22 response to Benjamin Budoff, is that right?
23 A. Yes.
24 Q. "Many problems with this one. NCEN doesn't use
25 90 percent." What does that mean, 90 percent?

1 A. Not sure what that means in this context.
2 Q. If we go down, "even after all the adjustments, I get
3 a high DTI," what does that mean?
4 A. That means even after all the adjustments can be made
5 to the income, it's still too high.
6 Q. Then, "I think we need to consider LBMC and get the
7 Morris point file and try to see if it works there." First,
8 what is LBMC?
9 A. Long Beach Mortgage.
10 Q. What is the Morris point file?
11 A. Morris is a buyer.
12 Q. And what are you suggesting when you say "get the
13 Morris point file and try to see if it works there"?
14 A. Switch it to Morris and Long Beach Mortgage.
15 Q. And by looking at the caption -- let's go up and look
16 at the subject line. Where it says "Morgan/Adams," is that
17 suggesting that you replace Adams with Morris?
18 MR. SAMUEL: Objection. Leading.
20 Q. BY MR. ANDERSON: Can you tell from that subject line
21 who the current buyer when you're looking at the file is in
22 switching the income?
23 A. It could be reversed. I don't know.
24 Q. So one of those two people?
25 A. Yes.

1 Q. Let's go to Government's Exhibit 355. Start at page
2 two. We have already talked about LBMC, NCEN. What is OO?
3 A. Option One.
4 Q. What is Option One?
5 A. Lender.
6 Q. And then there's Peoples, which we've discussed, and
7 then Nova Star. What is Nova Star?
8 A. Also a lender.
9 Q. Now, at the beginning of this message Benjamin Budoff
10 says "Childress/Gray," do you see that?
11 A. Yes.
12 Q. What does that refer to?
14 Q. And it says, "can't go to," and next to LBMC, "has
15 one there, not yet approved." Do you know what that means?
16 A. Yes.
18 A. That means that we already have -- the company
19 already has a loan application there at Long Beach Mortgage in
20 the buyer's name, therefore, you can't submit another property.
21 Q. And why couldn't you submit another property?
22 A. You would be buying two properties simultaneously
23 from the same lender.
24 Q. Why would that be an issue?
25 A. Only debt-to-income ratio.

1 MR. SAMUEL: Speculative as to the lender.
2 MR. GREINER: Lack the personal knowledge.
4 Q. BY MR. ANDERSON: From your perspective, could
5 submitting two applications to the same lender potentially
6 affect the debt-to-income ratio?
7 A. Yes.
8 Q. How is that?
9 A. It would be too high.
10 Q. And if you were to submit them to different lenders,
11 how would that change the debt-to-income ratio?
12 A. It would lower it.
13 Q. Would it lower it if you disclosed the other property
14 to each lender?
15 A. No.
16 Q. So what would you have to do in order for the lenders
17 not to see the higher debt-to-income ratio?
18 A. You would have to submit them simultaneously without
19 the other one knowing about it.
20 Q. And if you look at NCEN, it says "no assets." What's
21 the problem there?
22 A. New Century requires assets.
23 Q. And next to Peoples is a realtor. What's that issue?
24 A. No realtors are allowed to buy property -- I mean, I
25 don't know, actually.

1 Q. And then Nova Star, "had to submit
2 Childress/DeMorazio there."
3 A. Again, same problem as the Long Beach Mortgage one.
4 Q. So then the answer is: "That leaves AHL only.
5 You've told me it's difficult to work with AHL in wet states,
6 but I guess I don't know what other choice we have here."
7 First, what is AHL?
8 A. I'm not sure what the acronym stands for.
9 Q. Do you know what type of company it is?
10 A. A lender.
11 Q. What is a wet state?
12 A. A wet state is an attorney state.
13 Q. Let's go to page one. Do you see the e-mail response
14 from Kou Yang to you and to Ben Budoff?
15 A. Uh-huh, yes.
16 Q. And I'll just highlight "plus this is 85K seasoning,
17 too, best route is to go with OOMC and do 30 days, but how will
18 the 85K happen, I don't know." What is OOMC?
19 A. Option One Mortgage.
20 Q. And what is 85K seasoning, do you know what that
21 refers to?
22 A. Probably the assets for down payment.
23 Q. Why would that be an issue as far as "but how will
24 the 85K happen, I don't know"?
25 A. Wiring the 85K into the account to let it season for

1 30 days.
2 Q. And where would that money have to come from to do
3 that?
4 A. At this point, it would come from Lavar's company.
5 Q. Go to Government's Exhibit 360. So this is an e-mail
6 from Benjamin Budoff to you?
7 A. Yes.
8 Q. "Scratch First Franklin off the list." Do you know
9 what First Franklin is?
10 A. First Franklin is a lender.
11 Q. And it says "they don't do stated NOO at all except
12 for self-employed, and then only offer 85 percent LTV." Do you
13 know what "stated NOO at all except self-employed" means?
14 A. Yes.
16 A. It means they don't do a stated income
17 non-owner-occupied unless the borrower is self-employed.
18 Q. Would that have made it difficult for the company
19 that you were working for to use them?
20 A. Yes.
21 Q. Why?
22 A. It just limits the number of borrowers that are
23 self-employed.
24 Q. And when it says "12-month seasonings and all
25 investment properties have two-year prepayment," do you know

1 what that means?
2 A. Assets 12 months seasonings.
3 Q. Let's go to 367. Do you recall an Olga?
4 A. Yes.
5 Q. Who is Olga?
6 A. She worked with Jack Corcoran on the property
7 management.
8 Q. Let's go to Government Exhibit 371.
9 Do you see there is an e-mail from Benjamin Budoff to
10 you and some other people?
11 A. Yes.
12 Q. Do you see the date?
13 A. Yes.
14 Q. Do you remember that date?
15 A. Not specifically.
16 Q. Do you recall approximately when search warrants were
17 executed in this case?
18 A. Approximately.
19 Q. Was it about that time?
20 A. It was about that time.
25 BY MR. TEDMON:

1 Q. Mr. Brotemarkle, good morning.
2 A. Good morning.
3 Q. I want to start with your cooperation deal with the
4 Government. All right?
5 A. Okay.
6 Q. Now, it's true that you were indicted in March of
7 2008, correct?
8 A. Yes.
9 Q. And you entered a plea of not guilty, correct?
10 A. Yes.
11 Q. And you persisted in that plea of not guilty until
12 July 31st of this year, five years, correct?
13 A. Yes.
14 Q. All right. Now during this five-year period, you had
15 an attorney, correct?
16 A. Yes.
17 Q. Who is that, Mr. Brotemarkle?
18 A. Bob Gazeley.
19 Q. Bob Gazeley. He's from Southern California?
20 A. Yes.
21 Q. And during this five-year period, you reviewed the
22 discovery, which included statements of witnesses and documents
23 with Mr. Gazeley, did you not?
24 A. Yes.
25 Q. All right. In fact, the discovery was rather

1 voluminous, would you agree with that?
2 A. Yes.
3 Q. And in fact, there were a multitude of witness
4 statements -- hundreds, correct?
5 A. Yes.
6 Q. And you reviewed those with Mr. Gazeley, correct?
7 A. Yes.
8 Q. Now during this five-year period between March of
9 2008 and, let's say, June of 2013, your plea of not guilty
10 continued, correct?
11 A. Yes.
12 Q. But during this time, you had a chance to look at all
13 of the documents and all the statements, correct?
14 A. Yes.
15 Q. All right. In fact you did, didn't you, together
16 with your lawyer?
17 A. Not all of them.
18 Q. Well, a lot of them, correct?
19 A. Okay.
20 Q. And you certainly reviewed the statements of
21 witnesses, correct?
22 A. Yes.
23 Q. All right. And you knew very well before you entered
24 your plea what the totality of the evidence was, correct? Let
25 me strike that. Ask a better question.

1 You knew what people had said about the case,
2 correct, you read it?
3 A. Yes.
4 Q. Yeah. And then on July 31st of this year, a few
5 months ago, you entered a plea of guilty before Judge Mueller,
6 correct?
7 A. Yes.
8 Q. And in your plea agreement you agreed to cooperate,
9 right?
10 A. Yes.
11 Q. Right. And at that point, you decided to work with
12 the Government, the people at these tables right here, right?
13 A. Yes.
14 Q. Now, as part of your plea agreement, there are
15 certain stipulations regarding what your possible sentence
16 could be, correct?
17 A. Yes.
18 Q. And you're aware that you are looking at anywhere
19 from 108 to 135 months in prison, correct?
20 A. Yes.
21 Q. Absent your cooperation, right?
22 A. Yes.
23 Q. That's 9 to 12 years in prison, approximately,
24 correct?
25 A. Yes.

1 Q. Now your deal is, if you satisfy the Government and
2 they can convince Judge Mueller to give you some time off, you
3 could get up to half of your time off, correct? Up to
4 50 percent, that's what your cooperation deal states, right?
5 A. It's in the cooperation agreement, yes.
6 Q. That's what your hoping for, correct?
7 A. Sure.
8 Q. That's what you're working for today, aren't you?
9 A. I'm just telling the truth.
10 Q. Well, we'll get to that in a minute.
11 Your job is to testify for the Government, correct?
12 That's your job, that's what you're doing today, correct?
13 A. I am testifying. Correct.
14 Q. And your hope is that you will get half off of what
15 your sentence would otherwise be, correct?
16 A. My hope is to get a reduced sentence.
17 Q. Up to 50 percent off, correct?
18 A. That's what the agreement says.
19 Q. Exactly. And that's what you're working towards
20 today when you testify, that end result, correct?
21 A. I'm just testifying to tell the truth.
22 Q. Mr. Brotemarkle, I'm going to ask you to answer my
23 question. You're working to the end result of getting your
24 sentence reduced up to 50 percent, correct?
25 A. Correct.

1 Q. And you have to satisfy the Government before it will
2 even make a motion to this Court to have that possibly happen,
3 true?
4 A. I don't actually know that.
5 Q. Your lawyer didn't explain that to you?
6 A. I don't understand --
7 Q. All right. Let's just explore that for a minute.
8 You know that without the Government moving to reduce
9 your sentence, that can't happen, you know that, don't you?
10 A. Okay.
11 Q. Okay. Is that yes or no? Do you know that?
12 A. Repeat the question.
13 Q. Let me say it this way. You know that the Government
14 must move this Court for a reduced sentence for you to have a
15 chance at that, you know that, don't you?
16 MR. ANDERSON: Objection, Your Honor. Misstates the
17 law.
18 MR. TEDMON: I don't think it does.
19 MR. ANDERSON: Well, 3553.
21 able.
22 THE WITNESS: I don't understand.
23 Q. BY MR. TEDMON: You don't understand.
24 All right. Well, let's make it real simple. You're
25 cooperating with the Government, correct?

1 A. Yes.
2 Q. All right. And that started a couple of months ago,
3 right? July?
4 A. Yes.
5 Q. You were indicted in 2008, right?
6 A. Yes.
7 Q. So you just came to the party a few months ago for
8 the Government, right?
11 Q. BY MR. TEDMON: All right. You're testifying for the
12 Government, Mr. Brotemarkle, true?
13 A. Yes.
14 Q. All right. You know in your plea agreement there is
15 a cooperation clause, correct?
16 A. Yes.
17 Q. You know that the Government can move to reduce your
18 sentence, correct?
19 A. Yes.
20 Q. All right. And you also know that the Government has
21 to be satisfied before they'll do that for you, correct? You
22 know that?
23 A. I don't know that.
24 Q. You don't know that. Did you read the plea agreement
25 before you signed it?

1 A. Yes.
2 Q. All right. Do you remember before you signed the
3 plea agreement it stating: "The Government agrees to recommend
4 at the time of sentencing that the defendant's" -- that's
5 you -- "the defendant's sentence of imprisonment be reduced by
6 up to 50 percent of the applicable guideline sentence if he" --
7 that's you -- "provides substantial assistance to the
8 Government"? Do you recall read that, Mr. Brotemarkle?
9 A. Yes.
10 Q. And you signed the plea agreement, correct?
11 A. Yes.
12 Q. And so you know that the Government's the one that
13 has to move for that reduction, correct?
14 A. Okay. Yes.
15 Q. And you know the Government will determine if it's
16 substantial assistance, as stated, correct?
17 A. Yes.
18 Q. Thank you. Now you gave several statements to the
20 A. Yes.
21 Q. And you've testified to a lot of things here this
22 morning in response to Mr. Anderson's questions about these
23 various things you that testified were going on.
24 But do you recall giving a statement to FBI Agent
25 John Sommercamp and Special Agent Chris Fitzpatrick, who is at

1 the table here, who works for the IRS, back in November of
2 2006?
3 A. Yes.
4 Q. All right. And do you recall telling Special Agent
5 Sommercamp, and Special Agent Fitzpatrick, during that November
6 statement, that you never witnessed fraud at Charles Head's
7 businesses, do you recall that?
8 A. I don't recall saying it.
9 MR. TEDMON: All right. May I approach, Your Honor?
11 Q. BY MR. TEDMON: I'm going to show you a portion of
12 your statement. Read it to yourself, and then I will ask you a
13 question. Starting right there. It's redacted for certain
14 purposes. Just read that to yourself.
16 Q. And then let me know when you're done.
17 A. (Witness reviewing document.) I'm done.
18 MR. TEDMON: Okay. May I approach, Your Honor?
20 Q. BY MR. TEDMON: Now, Mr. Brotemarkle, you've had a
21 chance to read that.
22 Does that refresh your recollection as to what you
23 told Special Agent Sommercamp and Special Agent Fitzpatrick on
24 November 16th of 2006?
25 A. Yes. Yes.

1 Q. And you told the agents that you never witnessed
2 fraud at the businesses, correct?
3 A. That's what I said in that paper, correct.
4 Q. That's right. So that's very different than what
5 you're testifying to here today, isn't it?
6 A. Yes.
7 Q. So one of those two statements isn't true, today's
8 testimony or this, correct? Would you agree with that?
9 A. I'm not sure. It's perception.
10 Q. It's perception. Well, what does perception got to
11 do with you never witnessed fraud at the businesses? That's
12 what -- we just covered it. That's what you told the agents
13 right?
14 A. Yes.
15 Q. So we know you're a liar one way or the other,
16 correct? Yes or no?
17 A. Yes.
18 Q. And we know you're a fraud because you've committed
19 fraud and you've pled guilty, right?
20 A. Yes.
21 Q. So you're a liar and a fraud, we know that about you,
22 don't we, Mr. Brotemarkle?
23 A. Yes.
24 Q. Now I want to go to this whole issue of down
25 payments. You testified that there was some deception in

1 making sure the lenders didn't know about the down payment
2 source, correct? You've testified about that this morning?
3 A. Yes.
4 Q. Well, actually -- and you testified that you had a
5 conversation with Mr. Head about that issue. You've testified
6 to that this morning, correct?
7 A. Yes.
8 Q. All right. But you also had a conversation with
9 Mr. Head stating that when you were reviewing the loan
10 applications, you needed to make sure that the box was checked
11 that indicated that the down payment money was borrowed, that's
12 what Mr. Head told to you do, correct?
13 A. He did tell me to do that later on.
14 Q. Well, he told you to do that, correct?
15 A. Much later on.
16 Q. When did he tell to you do that, Mr. Brotemarkle?
17 A. It would have been middle of 2006.
18 Q. All right. And that was his directive, right?
19 A. Yes.
20 Q. That if it's to be borrowed, you need to put it on
21 the form, right?
22 A. Yes.
23 Q. Let's pull up Government's 17B4. It's already been
24 admitted into evidence.
25 THE COURT: This is 17B.

1 Q. BY MR. TEDMON: We'll start with that, Your Honor, so
2 the jury has a frame of reference.
3 Now, Mr. Brotemarkle, you're familiar with what a
4 uniform residential loan application is, correct?
5 A. Yes.
6 Q. And they are sometimes referred to as 1003s, correct?
7 A. Yes.
8 Q. So if we can go to page four of this exhibit. So
9 this is the middle of 2006 or so, right -- August, would you
10 agree with that?
11 A. Yes.
12 Q. And this is --
13 A. July actually.
14 Q. I'm sorry.
15 A. July.
16 Q. July. Is that what I said?
17 A. You said August.
18 Q. I'm sorry. July. You see that signature there?
19 A. Yes.
20 Q. That's not Charles Head's signature, is it?
21 A. I don't know.
22 Q. Well, let's go back out on this page, please. And
23 let's expand this section right here. And see here it says,
24 "is any part of the down payment borrowed?" Do you see that
25 there?

1 A. Yes, I do.
2 Q. All right. Now, Mr. Head had told you before this
3 that that was supposed to be checked "yes," if that was the
4 case, correct?
5 A. That's what he told me.
6 Q. All right. But here, whoever filled this form out,
7 checked "no," right?
9 Q. Right. Against what Mr. Head was asking you and his
10 company to do, true?
11 A. Yes.
12 Q. Let's go to Government's 13B1. And then go to page
13 eight of the exhibit, please.
14 All right. Now, this is the last page of a 1003 like
15 we just looked at a minute ago, correct?
16 A. Yes.
17 Q. And if we can expand that, please. Now this is
18 May 16th, 2006, do you see that?
19 A. Yes.
20 Q. That would have been around the time that Mr. Head
21 told you it needs to be checked "yes" if the funds are
22 borrowed, correct?
23 A. I'm not sure what day it was.
24 Q. Well, you said it was the middle of 2006, right?
25 A. Approximately.

1 Q. So this would be around the middle of 2006, would you
2 agree with that?
3 A. Okay. Yes.
4 Q. Well, do you know how to read a calendar?
5 A. Yes.
6 Q. Would the middle of 2006 include May, in your
7 opinion?
8 A. Pretty close.
9 Q. All right. Thanks. Now, see it says Charles Head
10 right here?
11 A. Yes.
12 Q. And there is no signature or date below that, is
13 there?
14 A. No, there is not.
15 Q. Can we have the full document, please.
16 "Question H. Is any part of the down payment
17 borrowed." Do you see that?
18 A. Yes.
19 Q. And the box is checked "no," correct?
20 A. It is checked "no."
21 Q. And that would be against what Mr. Head was asking
22 you and his company to do, correct? Correct?
23 A. It was a computer program. It could have been --
24 Q. Well, non-responsive. Move to strike. Yes or no?
25 A. What was the question again?

1 Q. That was against what Mr. Head had advised you and
2 his company to do relative to down payments, correct?
3 A. It was, yes.
4 Q. Thank you.
5 Now let me ask you questions on a few folks here. Do
6 you recall a gentleman by the name of Scott Wagner?
7 A. Yes.
8 Q. And you hired Scott Wagner, correct?
9 A. Yes.
10 Q. And you were his manager, correct?
11 A. Yes.
12 Q. He answered to you, is that right?
13 A. When I first hired him, yes.
14 Q. Okay. Well, how long did he work for -- which
15 company did he work for, do you recall?
16 A. He was hired for Head Financial Services originally.
17 Q. Did he work for Funding Foreclosures?
18 A. He switched.
19 Q. He switched. Okay. And how long did he work for
20 either Head Financial Services or Funding Foreclosures, if you
21 recall?
22 MR. GREINER: "He" is who?
23 MR. TEDMON: Mr. Wagner. Thank you.
24 THE WITNESS: Which one? Both?
25 Q. BY MR. TEDMON: Let me ask you this. We will break

1 it down.
2 How long did Mr. Wagner work for Head Financial
3 Services?
4 A. Approximately three months, maybe.
5 Q. All right. And how long did he work for Funding
6 Foreclosures? "He" being Mr. Wagner.
7 A. The remainder of his time.
8 Q. Which would have been how long, if you know?
9 A. I'm not sure. Like nine months, maybe ten months.
10 I'm not sure. I have to do the math.
11 Q. You hired him and you were the manager, though,
12 correct?
13 A. When he first started with Head Financial Services,
14 correct.
15 Q. Do you know a person by the name of Mark Wilson?
16 A. Yes.
17 Q. Who was Mark Wilson?
18 A. He was a computer programmer.
19 Q. What did he do?
20 A. He programmed a software program.
21 Q. You approached him, Mr. Wilson, to do that, didn't
22 you?
23 A. Yes.
24 Q. All right. And Mr. Wilson reported directly to you,
25 correct, on that issue?

1 A. As far as developing the computer program, yes.
2 Q. Do you know a person by the name of Joey Palmquist?
3 A. Yes.
4 Q. Who is Joey Palmquist?
5 A. He was a receptionist for the company.
6 Q. And you hired him, correct?
7 A. I don't recall that.
8 Q. Okay. Well, he reported to you, didn't he?
9 A. I don't recall that either.
10 Q. You don't recall. Do you recall when he worked for
12 A. No, I don't.
13 Q. You don't recall how long he worked there?
14 A. Not exactly.
15 Q. So you don't recall much about Joey Palmquist, is
16 that right?
17 A. Not much.
18 Q. You say he was a receptionist?
19 A. He was for a while.
20 Q. Well, how long approximately?
21 A. Again, I don't know.
22 Q. All right. Well, it was around 2006, right?
23 A. I would imagine.
24 Q. Well, is that right or not?
25 A. I don't know.

1 Q. Okay. And how much interaction did you have with
2 Mr. Palmquist on a daily basis?
3 A. Not much.
5 A. Minutes.
6 Q. Per day?
7 A. Yes.
8 Q. All right. Was he in the same office as you?
9 A. He sat at the front desk --
10 Q. Well, I know --
11 A. -- in the office complex that we worked together in.
12 Q. Were you in the same office unit, or were there
13 different offices in different portions of the building?
14 A. Yes, there were.
15 Q. Yes there were?
16 A. Different offices in different portions of the
17 building.
18 Q. Let's explore that for a moment. In April 2006,
19 where was the business located?
20 A. It was in the Costa Mesa, South Coast metro area.
21 Q. And where did you -- within that office complex,
22 where did you work? Who was in your unit?
23 A. The receptionist was there, the underwriters were
24 there, and the account executives, persons that worked with the
25 brokers.

1 Q. And were those the people you dealt with most
2 directly, the people you just identified by title at least?
3 A. Yeah.
4 Q. Now, there were other parts of the business that were
5 in other locations within the complex?
6 A. Yes.
7 Q. And what would those have been?
8 A. That was the mortgage division was there.
9 Q. And what would that include?
10 A. The processors and the buyers, the buyer agents, the
11 people that work with the buyers, and Jack Corcoran.
12 Q. And the loan processing, which was separate and apart
13 in terms of where you were located, physically, that was run by
14 Kou Yang, right?
15 A. Yes.
16 Q. And Jack Corcoran was also in the same area as Kou
17 Yang, correct?
18 A. Yes.
19 Q. And who else was in the same area with Kou Yang?
20 A. Processors, the buyer's agent.
21 Q. The buyer's agent?
22 A. Yes.
23 Q. Who would that have been?
24 A. That was Tua. I think his name was Tua.
25 Q. Tua Vang?

1 A. Yes.
2 Q. And they were all in the same unit, separate and
3 apart from where you were physically located, correct?
4 A. Yes.
5 MR. TEDMON: One moment, Your Honor.
6 Q. BY MR. TEDMON: Do you know about a company named
7 Just Seconds?
8 A. Yes.
9 Q. And Just Seconds was a company that loaned money for
10 second mortgages, right?
11 A. No.
12 Q. No. That's not your recollection of what it was?
13 A. No.
14 Q. Okay. Your Honor, at this time, I would ask to move
15 Defendants' Exhibits CH-U, as in uncle, through CH-RR, as in
16 Ron. I can enumerate each one individually, but they are all
17 sequential.
18 THE COURT: U through RR.
19 MR. TEDMON: CH-SU (sic) through CH-SRR (sic).
23 MR. SAMUEL: No.

1 THE COURT: All right CH-U through CH-RR may come in.
2 (Defendants' Exhibit CH-U, CH-V, CH-W, CH-X, CH-Y,
3 CH-Z, CH-AA, CH-BB, CH-CC, CH-DD, CH-EE, CH-FF, CH-GG, CH-HH,
4 CH-II, CH-JJ, CH-KK, CH-LL, CH-MM, CH-NN, CH-OO, CH-PP, CH-QQ,
5 CH-RR, (See index for descriptions) admitted into evidence.)
6 MR. TEDMON: Thank you. If those come in, I have no
7 further questions.
8 THE COURT: We're very close to our second break, so
9 let's take that now.
10 Another 15-minute break. During the break, as
11 always, remember my admonitions. Don't discuss the case.
12 Don't do any research of any kind. Have a good break. We'll
13 see you in 15 minutes.
14 (Jury out.)
15 THE COURT: You may be seated. You may step down
16 sir. Please be back in your seat in 15 minutes.
17 Is there an exhibit list that identifies that last
18 set of exhibits -- an amended exhibit list? I acknowledge that
19 I have copies of them, but there is no amended exhibit list
20 from Charles Head.
21 MR. TEDMON: I filed a second amended exhibit list
22 that includes all our exhibits.
23 THE COURT: All right. I must have that somewhere.
24 I'm shuffling a lot of paper here.
25 MR. TEDMON: Your Honor, if you need a copy, I'd be

1 happy to provide one.
2 THE COURT: I have it.
3 Just one question, is there any reason not to just
4 clarify for the jury with reference to Ninth Circuit
5 Instruction 7.4, given that we have had a couple of references
6 to punishment, that punishment ultimately is not going to be
7 their domain?
8 MR. TEDMON: I don't think we have to give it now.
9 Obviously, this goes to the credibility of the witness. I
10 think if you're going to give that, then you need to give the
11 credibility instruction in terms of they should look at his
12 testimony with greater caution than other witnesses. I think
13 we're kind of borrowing trouble at that point. I think you can
14 just instruct at the end of the case.
15 THE COURT: There has been no objection. I'm just
16 thinking of my sua sponte responsibilities.
17 MR. ANDERSON: I didn't object, Your Honor. In the
18 last trial, we did object. But the question that was asked
19 that I thought was objectionable was: You face a maximum
20 penalty of -- not that the question was objectionable -- but it
21 created an issue -- you face a maximum penalty of up to
22 20 years implicitly for the exact same conduct for which my
23 client is on trial.
24 That wasn't asked this time. So I don't have a
25 problem giving or not giving the instruction. So whatever

1 defense counsel wants at least as it stands right now. But if
2 things gets worse or we go too far down that road, we may raise
3 an objection.
4 MR. TEDMON: Your Honor, I've gone as far down the
5 road as I want to. I did stay away from the maximum statutory
6 penalty because I thought that was fair on the Government side.
7 I am interested in what this defendant/witness knows he's
8 facing pursuant to a contract or agreement. That's all.
9 THE COURT: All right. Obviously, the jury will hear
10 the final instruction.
11 Any thoughts on Ms. Whitehead, the juror who has
12 reminded us she has vacation plans starting December 2nd?
13 MR. TEDMON: Depends how fast we go. I think the
14 problem, from my perspective, even if we get through all the
15 testimony of the Government Monday of next week, let's say,
16 we've still got defense case, we've got the arguments, then
17 we've got jury deliberations.
18 Unfortunately, I don't know how we're going to avoid
19 having this case go over, at a minimum, for deliberations until
20 the 2nd of December. I just don't think that's realistic to
21 think it won't.
22 MR. SAMUEL: I have to agree with that assessment as
23 well. We still have to determine the jury instructions and --
24 THE COURT: Well, we'll start working that in fairly
25 soon now. I think the issue is when will closing arguments

1 realistically be made. Even if they start deliberating by the
2 21st, and the Court would allow them to deliberate on the 22nd,
3 we have previously said we won't be doing any business
4 Thanksgiving week. Mr. Samuel has family obligations that
5 week. I assume that's early in the week.
6 MR. SAMUEL: It's Monday, Your Honor.
7 THE COURT: So my question is -- my thought is to
8 have her stay for a few minutes afterwards.
9 One question. If she says she would just as soon be
10 excused now, do we honor that?
11 MR. TEDMON: I think we should. I think it's highly
12 unlikely this case is going to end before the 2nd of December.
13 THE COURT: Does anyone disagree with that?
14 MR. ANDERSON: I would like to wait another day, Your
15 Honor. I know that's an inconvenience to her. But I think a
16 lot of -- I'm not trying to encourage defense counsel to
17 filibuster here, but a lot of how fast we go today will tell us
18 where we're at.
19 So by tomorrow I would think that we would have a
20 good idea. So if we kept her through today, and had her come
21 back tomorrow, and got through tomorrow, I think we'd be able
22 to have a pretty good idea of whether or not we would get to
23 closing in time.
24 MR. SAMUEL: One thing further, Your Honor. I'm
25 probably going to be going first as far as defense is

1 concerned. And it's my understanding that the prosecution will
2 bleed over into that Monday, which means I anticipate the whole
3 day between my client's testimony and the remaining witnesses.
4 So that put us into Tuesday just in my case alone.
5 THE COURT: Well, if Mr. Anderson thinks we might
6 move along more quickly by tomorrow, I'm willing to wait one
7 more day. Let her know that we're considering what she's
8 reminded us of, but then have the discussion with her no later
9 than the close of trial tomorrow afternoon.
10 If you rethink that in the next five minutes, let me
11 know before we call the jury back in.
12 (Break taken.)
13 MR. ANDERSON: Your Honor, there is a jury question.
14 THE COURT: You're right. I don't have my copy, but
15 I remember it. I recall what it is.
16 Is there any reason not to simply explain that the
17 jury will have the exhibits when they retire, and we're
18 actually, to the extent the Court is not allowing questioning,
19 we're just saving time by not keeping it up?
21 THE COURT: And they will have the exhibits to review
22 when they retire to deliberate. A general advisement along
23 those lines.
24 MR. TEDMON: I think that's absolutely right.

1 MR. SAMUEL: Yes, Judge.
2 (Jury in.)
4 court, ladies and gentlemen.
5 One of you gave us a note, and I discussed it with
6 counsel. I just wanted to share the question with all of you
7 and the answer.
8 And the question is: When a document speaks for
9 itself, why do we, that is the jury, not get to read it?
10 If the document is admitted into evidence, and some
11 of those documents are being displayed, that's the only way
12 they are being displayed to you is if they've been admitted.
13 All of those documents, displayed or not, if admitted, will go
14 with you into the jury room during your deliberations. So at
15 that point in time, you'll be able to review each and every
16 document in full.
17 And when the Court is sustaining an objection or
18 saying that the document speaks for itself, we're saving time
19 with questioning. I'm saying that time will not be taken to
20 have further questioning about what the document says. So I
21 hope that clarifies that issue for you all. All right.
22 Mr. Samuel.
23 MR. SAMUEL: Thank you, Your Honor.
25 BY MR. SAMUEL:

1 Q. Good morning, Mr. Brotemarkle.
2 A. Good morning.
3 Q. I'm Mr. Budoff's attorney.
4 I would like to start a little bit -- off in the
5 beginning a little bit about your background and history in the
6 mortgage industry.
7 Prior to coming to work for Head, can you describe to
8 us what your experience was in the mortgage industry?
9 A. Well, I started in 1997 as a loan officer for a
10 company out of Pittsburgh. And in 1998 I went to California
11 and joined a company called Center Point Mortgage, where I was
12 a loan officer for a very short period of time, maybe two
13 months, and I was promoted to their director of marketing as
14 that was more in line with my background.
15 And I stayed in that field, the marketing field, for
16 a couple years. And then I worked again as a loan officer for
17 about a year in 2001 for a mortgage broker in Santa Ana,
18 California. And I left the business for a couple years and
19 then came back again in the marketing field.
20 Q. All right. Is that it, pretty much?
21 A. Pretty much.
22 Q. So loan officer/marketing --
23 A. Yes.
24 Q. -- experience?
25 Loan officer when you first started. Did you have to

1 be trained to perform the duties in that position?
2 A. Well, someone has to show what you to do.
3 Q. Yeah. And you listened to that person, it's like
4 OJT, right? On-the-job training?
5 A. Yeah.
6 Q. So somebody else tells you what is correct, and you
7 follow their directions, is that correct?
8 A. Yes.
9 Q. Okay. And when you went into marketing and then went
10 back to loan officer, there may have been a change of programs,
11 right?
12 A. Usually.
13 Q. Usually. And when you went back to that position
14 again as a loan officer, you once again went through the
15 process of getting trained by somebody else as well, isn't that
16 correct?
17 A. Yes.
18 Q. And you basically assumed that those people that were
19 giving you the training were giving you the accurate, correct
20 training, is that correct?
21 A. Yes.
22 Q. All right. And you relied upon them and trusted
23 them, right?
24 A. Yes.
25 Q. Okay. Because they've been in the field for some

1 time, much more than you have?
3 Q. All right. Now you were asked about a statement
4 which you gave in November of '06, do you remember that, by Mr.
5 Tedmon?
6 A. Uh-huh --
7 Q. Well, let me go back.
8 A. Okay.
9 Q. Did you give a statement to the agents, Fitzpatrick
10 and Sommercamp?
11 A. Oh, yeah, okay.
12 Q. In '06?
13 A. Yes.
14 Q. Do you remember the date that it was --
15 A. Not the exact date.
16 Q. Does 11-16-06 sound familiar?
17 A. Okay. Yes. Pretty close.
18 Q. Do you remember where that statement was given?
19 A. Yes.
20 Q. Where was it?
21 A. It was in Costa Mesa.
22 Q. Right. In your work facility?
23 A. Yes.
24 Q. And was that as a result of a search warrant being
25 issued on that facility?

1 A. Yes.
2 Q. So that was contemporaneous with what was going on in
3 the search warrant process?
4 A. Yes.
5 Q. All right. And when you sat down with the agents,
6 you voluntarily gave a statement?
7 A. Yes.
8 Q. All right. And were you a little bit frightened at
9 that time?
10 A. About as much as now.
11 Q. Okay. But it was somewhat stressful?
12 A. Yes.
13 Q. As it is right now, right?
14 A. Uh-huh.
15 Q. And during that period of time, were you attempting
16 to give them accurate information?
17 A. Yes.
18 Q. And do you recall during that first interview you
19 never mentioned Ben Budoff's name, did you?
20 A. I don't remember that.
21 Q. All right. Would you like a copy of your report,
22 take a look at that, or can you just take my word for it?
23 A. I'll take your word for it that it's not there.
24 Q. And when you were asked about who was doing the loan
25 processing on this first interview, you indicated that Kou Yang

1 was the person who did the loan processing, isn't that true?
2 A. She did loan processing, yes.
3 Q. Yes. Isn't that correct?
4 A. Yes.
5 Q. You didn't say Ben Budoff did the loan processing,
6 you said Kou Yang?
7 A. Right.
8 Q. All right. Now, you also told the agents that six
9 homes had been repurchased by the original owners, isn't that
10 correct?
11 A. Again, I don't remember the statement. So if it's
12 written there, I'm taking your word for it.
13 Q. Let me ask you this, to your recollection had six
14 homes been repurchased by former owners?
15 A. Yes. I think that was approximate.
16 Q. And did you spread that kind of information to the
17 employees at Head Financial?
19 Q. That would be something that would be important,
20 though, to be consistent with the program that you're
21 presenting, is that correct?
22 A. I would assume the employees knew that we were
23 working on their repurchases on some of these properties.
24 Q. Because that was the objective, was it not?
25 A. It was. And it was happening in the office with

1 everybody there.
2 Q. So from your recollection there had been some
3 repurchases, correct?
4 A. Yes.
5 Q. All right. Now at some point in time you indicated
6 that -- well, me just go back for a second.
7 So now we have Mr. Ben Budoff. Did you meet him
8 personally?
9 A. Once.
10 Q. One time. Do you remember when that was?
11 A. I don't remember the exact date.
12 Q. Do you remember under what circumstances you met
13 Mr. Budoff?
14 A. I think he came to visit.
15 Q. And do you remember from where?
16 A. From Colorado.
17 Q. Do you remember through this whole process from the
18 inception of Mr. Budoff's association with Head Financial
19 until, let's say, 11-16-06, which is the search warrant, was
20 Mr. Budoff residing in Colorado, to your knowledge?
21 A. Yeah. To my knowledge.
22 Q. And, basically, communication with Mr. Budoff was
23 primarily via e-mail?
24 A. Telephone.
25 Q. And telephone. Those two sources, correct?

1 A. Yes.
2 Q. Did you ever take any notes down when making phone
3 conversations with Mr. Budoff?
4 A. No.
5 Q. Do you recall how many occasions you called versus
6 the e-mail process?
8 Q. Would you say it was more e-mail than phoning?
10 Q. You don't know. Okay. You have no estimate then, is
11 that correct?
12 A. No.
13 Q. Now at some point in time you became aware that Kou
14 Yang was forging signatures, did you not?
15 A. Yeah. I was aware that she was forging signatures.
16 Q. And do you recall her forging --
17 What kind of signatures would she be forging, do you
18 remember?
19 A. I understood that she was signing Charles' name.
20 Q. Did you understand that she was signing Ben Budoff's
21 name?
22 A. I did not know that.
23 Q. If she admitted that in court under penalty of
24 perjury, would that refresh your recollection?
25 A. She signed Charles' name.

1 Q. Did she sign anybody else's name?
3 Q. Did she sign your name?
5 Q. In terms of the loan -- so let me go with Ben now.
6 Do you remember approximately when Ben first became
7 associated with Head Financial Services?
8 A. Did you say approximately?
9 Q. Yeah.
10 A. May, June, somewhere in there, of 2005.
11 Q. You've testified July of '05 earlier today, is that
12 about right?
13 A. Yeah. I don't recall the exact date.
14 Q. May, June, July of '05. And do you remember the
15 position that he was holding at that point in time?
16 A. I believe he was a buyer -- like he would work with
17 the buyers who would want to get into the program.
18 Q. And while he was working as a buyer, were you aware
19 of whether or not he had gotten any training for the program?
20 A. Prior to starting you mean?
21 Q. No. Once he started was he given any training about
22 the buyer program?
23 A. Yes, I'm sure.
24 Q. And by whom, if you know?
25 A. By me.

1 Q. All right. So you gave him some training, and you
2 gave him the information he needed to process the buyers
3 through the program, is that right?
4 A. Yes.
5 Q. Did you give him, for example, a script of some sort
6 in which to approach the buyers with?
7 A. Possibly, yes.
8 Q. All right. And in one of the e-mails, we saw it was
9 very important for you to make sure everything was consistent
10 and accurate, and did you attempt to make sure that Mr. Budoff
11 had a script that was consistent and accurate and truthful?
12 A. Yes.
13 Q. And so he provided you with that script, and did you
14 at some point in time change or modify that script in any
15 fashion?
16 A. I'm sure it did change.
17 Q. Did you always oversee the changes to make sure that
18 it comported with your thoughts that things should be accurate
19 and truthful?
21 Lack of foundation.
22 MR. SAMUEL: Well, I'm asking if it comports --
23 THE COURT: Overruled. Yes or no.
24 THE WITNESS: So the question was again?
25 Q. BY MR. SAMUEL: Did you review the changes in the

1 script to make sure that it comported with your desires to have
2 it accurate and truthful?
3 A. Any script that was provided to me I looked over.
4 Q. And on some occasions you even wrote over or answered
5 questions that Mr. Budoff would have that came from other
6 people, isn't that true?
7 A. Yes.
8 Q. Right. And do you know a gentleman by the name of
9 Scallin?
10 A. I don't know that person.
11 Q. Okay. Did you ever recall receiving an e-mail from
12 Mr. Budoff in which somebody else had directed to him questions
13 that they wanted Mr. Budoff to answer, and then you writing
14 over the questions and giving him the answers to those
15 questions?
16 A. I'm not sure I understand. Sorry.
17 Q. All right. Do you know how long Mr. Budoff held the
18 position working with the buyers?
19 A. Yeah. From the day he started until the day it
20 ended.
21 Q. He always worked with buyers, or did it change into
22 Premier Services processing company?
23 A. Well, he worked with buyers in that capacity as well.
24 Q. He did. All right.
25 And are you ever aware that Mr. Budoff made any

1 misrepresentations to buyers that were fraudulent?
3 Q. Okay. So did you talk to Mr. Budoff about getting
4 involved in loan processing at any point in time?
5 A. Yes.
6 Q. All right. And did you encourage him to get involved
7 with loan processing at some point?
8 A. Probably gave him information about getting involved
9 in loan processing, sure.
10 Q. All right. Now, do you recall meeting with attorneys
11 related to the accuracy and the legality of specific documents
12 that were used in the Head Financial Services program?
13 A. Yes.
14 Q. And do you remember the names of those attorneys?
15 A. Yes.
16 Q. All right. What were the names?
17 A. John Cavallero and -- just went blank --
18 Q. Steve Medoni?
19 A. Steve Medoni.
20 Q. So you met with those attorneys, and your efforts was
21 to do what with those attorneys?
22 A. I had no effort with them. They provided me
23 documentation.
24 Q. Did you employ them to -- or did Head Financial
25 Services employ them to draft up legal documents to be used in

1 the Head Financial process?
2 A. Yes.
3 Q. All right. And did you ever talk to the attorneys
4 about the legality of the documents that they actually prepared
5 themselves?
6 A. Yes.
7 Q. All right. And did they indicate to you that the
8 legality -- that the documents were legal, and the process was
9 legal to you, if you can recall?
10 MR. ANDERSON: Objection. Vague, Your Honor.
12 MR. ANDERSON: Which attorney? Which conversation?
13 THE COURT: Sustained. If you can clarify that.
14 Q. BY MR. SAMUEL: Did Mr. Medoni specifically relate to
15 you that he had undergone a survey of 40 states to determine
16 whether or not the process that Head Financial was engaged in
17 was lawful?
18 A. He did research on the foreclosure/seller documents,
19 and he felt that they were within compliance.
20 Q. Do you remember about what time that took place?
21 A. February, March of 2006 maybe. Something like that.
22 Q. All right. February or March.
23 All right. So that was in 2006. Early 2006. Do you
24 recall ever having a discussion with attorneys about -- or
25 Mr. Medoni about modifying the form of the Head Financial

1 business to encompass three different companies?
2 A. Medoni had a conversation with me regarding that.
3 Q. Yes.
4 A. Yes.
5 Q. All right. At some point in time, three companies
6 were created, is that right?
7 A. I guess it was three.
8 Q. Well, actually, what happened was -- do you remember
9 Head Financial being sold to Lavar Fletcher?
10 A. Yes.
11 Q. And all of Head Financial was sold to Lavar Fletcher,
12 isn't that correct?
13 A. I'm not sure how that transaction went.
14 Q. And a part of what Lavar Fletcher obtained was the
15 physical make-up of the processing unit; in other words, the
16 desks, the computers, and all that stuff, right?
17 A. Okay. Yes.
18 Q. Yeah, you remember that. And didn't you go to
19 Mr. Budoff and say, look, we need somebody else to take over
20 this business, and would you take over this business of loan
21 processing?
22 A. Yes.
23 Q. Actually, it was a separate business, isn't that
24 true? It wasn't a part of Head Financial any longer, it was
25 separate?

1 A. I don't understand that.
2 Q. Well, let me just back up for a second.
3 Did you go to Mr. Budoff and say, look, if you do
4 this, if you do the loan processing and employ my former
5 employees, we'll send you all the loan processing business?
6 A. I don't recall that it went exactly like that.
7 Q. Well, how do you recall it as being?
8 A. I know that we needed to separate -- Charles needed
9 to separate the business so --
10 MR. TEDMON: Objection, Your Honor. He says Charles
11 and "we." I move to strike and have the witness be more
12 specific about who he's talking about.
13 THE COURT: Sustained. Can you start with questions
14 that focus the issue.
15 MR. SAMUEL: I'll try to, Your Honor.
16 THE COURT: Motion to strike is granted. The jury
17 shall disregard that answer.
18 Q. BY MR. SAMUEL: So let's focus in then on when the
19 processing of loan applications changed hands. Is that a
20 better term? Do you remember that, when it changed hands from
21 Head Financial into Premier Services?
22 A. Yes.
23 Q. And do you remember approximately when that occurred?
24 A. I don't remember the exact date again.
25 Q. Would mid-September of 2006 be a fair estimate of the

1 time?
2 A. Yes.
3 Q. And so in mid-September 2006, there was a change in
4 who was the manager of Head -- the processing, is that correct?
5 A. Yes.
6 Q. And there was a change in the name of the company,
7 isn't that correct?
8 A. Yes.
9 Q. But there was no change in the employees, is that
10 correct?
11 A. Yes.
12 Q. Kou Yang was still there, right?
13 A. Yes.
14 Q. Pang Yang?
15 A. Yes.
16 Q. Lisa Vang?
17 A. Yes.
18 Q. And several other employees, right?
19 A. Right.
20 Q. And it physically moved to a new location, isn't that
21 correct?
22 A. Yes.
23 Q. And Mr. Budoff became the boss, right?
24 A. Yes.
25 Q. Kind of, let's put it that way. He actually paid the

1 salary of the employees, right?
2 MR. ANDERSON: Your Honor, objection. Mr. Samuel
3 modified the answer of the witness to say "kind of" when he
4 answered "yes." I would ask that Mr. Samuel's comment be
5 stricken, and that he start his new question.
6 THE COURT: That motion is granted. Generally the
7 jury understands attorney statements and questions are not
8 evidence. But just to clarify the record, the "kind of" is
9 stricken.
10 MR. SAMUEL: Sorry.
11 THE COURT: What's your question, just to clarify?
12 Q. BY MR. SAMUEL: Would you describe what Mr. Budoff's
13 position was when Premier Service began in mid-September 2006,
14 as you understood it?
15 A. He owned Premier Services, a mortgage brokerage shop.
16 Q. And would you tell us who the employees were at that
17 time?
18 A. I don't remember them all, but Kou Yang, and Pang
19 Yang, and Lisa Vang.
20 Q. Did you also get involved with aiding Mr. Budoff in
21 starting up this processing business?
22 A. He would ask me questions.
23 Q. All right. And what kind of questions would he ask
24 you?
25 A. In regards to loan programs.

1 Q. All right. Loan programs are pretty complex, are
2 they not?
3 A. I don't know.
4 Q. They can be? Is that a yes or no?
5 A. I don't know.
6 MR. ANDERSON: Objection, Your Honor. Asked and
7 answered.
8 MR. SAMUEL: Well, it hasn't been answered.
9 MR. ANDERSON: He said he didn't know.
11 Q. BY MR. SAMUEL: How many loan programs were in
12 existence, approximately? How many loan programs were in
13 existence, say, in September of 2006?
15 Q. There were a lot, wouldn't that be fair to say?
16 A. Sure.
17 Q. And each program may have multiple subprograms, all
18 depending on the needs of the borrower and the amount of cash,
19 et cetera, et cetera?
20 A. Yes.
21 Q. There was a lot of variables in each one of these
22 banks and each one of their programs within the bank, is that
23 correct?
24 A. They all fit on a page.
25 Q. They all fit on the page. And so how many -- did you

1 have a binder which had the materials?
2 A. No.
3 Q. No?
4 A. No binder.
5 Q. Did you have access to the internet that would have
6 that material?
7 A. Sure.
8 Q. And so you would be able to go to the internet and
9 find what were the requirements of a specific program?
10 A. Yes.
11 Q. All right. And as to banks, as you progressed, did
12 you learn that banks sometimes had looser requirements and then
13 later on tightened up their requirements for loans?
14 A. They would change frequently.
15 Q. Do you know the reason why?
16 A. No idea.
17 Q. Do you know whether or not it had to do with
18 availability of money that they had to loan?
20 foundation.
21 MR. SAMUEL: I'll withdraw the question.
23 Q. BY MR. SAMUEL: So we have these banks, we have the
24 programs, and would it be fair to say that these programs
25 within the banks changed constantly?

1 A. They changed frequently.
2 Q. All right. And so Mr. Budoff had come to you to get
3 some instruction on that kind of information?
4 A. Yes. He would come to me for that.
5 Q. And that would be after -- well, after mid-September
6 he would start asking you questions about that?
7 A. Maybe even before that. I'm not sure.
8 Q. But at least that would be an appropriate period of
9 time, right?
10 A. Yes.
11 Q. Because it dealt with the kind of loan that could be
12 obtained for the specific individual borrower and the property
13 involved?
14 A. Yes.
15 Q. They all had to be matched up together, right?
16 A. Yes.
17 Q. And there were plans that -- from one bank which
18 didn't comport or match with other plans from other banks, they
19 were all different?
20 A. Yes.
21 Q. Was one of your jobs to actually try to sort out
22 which plan would be the best plan for the individual package
23 that you were attempting to put a mortgage together on?
24 A. Yes.
25 Q. Okay. And that's why when we see these e-mails, we

1 see multiple different banking agencies, right?
2 A. Yes.
3 Q. And that's because they all had different plans and
4 different qualifications?
5 A. Correct.
6 Q. And sometimes what would happen is that maybe one
7 bank would not -- the situation or the borrowing -- I'm sorry.
8 Let me back up.
9 So, on occasion, one bank, you would take the loan to
10 that bank and the loan wouldn't qualify, correct?
11 A. Yes.
12 Q. But you could take it to another bank with different
13 requirements and the loan may qualify?
14 A. Yes.
15 Q. And did that happen on occasion?
16 A. Yes.
17 Q. All right. And that's why you see multiple banks
18 that you're dealing with, right?
19 A. Yes.
20 Q. And what was different was potentially the interest
21 on the loans, right, one bank would have a higher interest, but
22 it would be easier to get money from than another bank?
23 A. I'm not sure.
24 Q. You don't know?

1 Q. Okay. You don't remember. But that would be a fair
2 assessment of the situation, right?
3 MR. ANDERSON: Objection, Your Honor. He said he
4 doesn't know.
6 Q. BY MR. SAMUEL: All right. And actually, one of your
7 jobs throughout this process when you started, when they got to
8 being involving getting buyers -- let me back up. Let me start
9 again.
10 Now the buyers' program started when as relates to
11 your employment?
12 A. Approximately that May/June timeframe.
13 Q. Same time that you were starting?
14 A. No, I started in January, and I switched in March.
15 And probably by May or June, the buyer program was beginning to
16 start.
17 Q. Was that also the same period of time that Mr. Head
18 said we need to make these investment loans, and we need to put
19 out the fact that the money was borrowed for the down payment?
20 A. I'm not sure what you're asking there.
21 MR. ANDERSON: Objection. Compound. Maybe if it's
22 broken up.
23 THE COURT: Overruled. You have your answer. Next
24 question.
25 Q. BY MR. SAMUEL: So we're back to the buyers' program?

1 A. Okay.
2 Q. And my question then would be is, did you or were you
3 the primary party to be involved with the selection of buyers
4 to be a part of the package to go onto the processed as a loan?
5 A. Again, I don't understand that question.
6 Q. Well, you had -- let's go back then. The process of
7 obtaining buyers --
8 A. Okay.
9 Q. -- you understand that process, did you not?
10 A. Yeah.
11 Q. And it was, essentially, Mr. Budoff or somebody
12 else --
13 A. Yes.
14 Q. -- would make a presentation, that presentation
15 oftentimes was based upon your script, correct?
16 They would get that person into the process, and then
17 that process would become a buyer, but they didn't have
18 property yet to purchase?
19 A. Right.
20 Q. All right. So now you have buyers in this process,
21 and did you use the first-in/first-out process, where the first
22 buyer is the first buyer to get property out?
23 A. Yes, I believe so.
24 Q. And did you also -- you had a list of all these
25 available buyers?

1 A. Yes.
2 Q. All right. And actually, sometimes a buyer wouldn't
3 qualify for a specific bank program but another buyer would,
4 correct?
5 A. Correct, yes.
6 Q. And you were engaged in evaluating which buyers fit
7 the loan package that you wanted to sell to the banks, is that
8 correct?
10 Q. And so you actually selected these buyers, is that
11 correct?
12 A. I would assign a buyer to a specific property.
13 Q. All right. And when you assigned the buyers to the
14 specific property, did you even look to see what their income
15 was?
16 A. No, I had no idea.
17 Q. You didn't. And did you have access and availability
18 to that information?
20 Q. So you just made this a selection out of the blue?
21 A. It was probably -- it was probably reasons why I
22 selected that borrower. Maybe it was a credit score.
23 Q. So you didn't really coordinate the real information
24 with information that you might have gleaned from a credit
25 score? Do you understand the question?

1 A. It's a first-in/first-out type of situation. That's
2 how it worked.
3 Q. All right.
4 A. Just put them in like that, you know what I mean.
5 That's how it went.
6 Q. All right. Now, can you tell us your relationship
7 with Kou Yang, professional relationship?
8 A. She was a processor.
9 Q. She was a processor. Was she the head processor?
10 A. Yes.
11 Q. She actually was more than just a processor. She not
12 only collected information, she oversaw other individuals who
13 did that, correct?
14 A. Yes.
15 Q. Did Kou Yang speak with an accent that you're aware
16 of?
18 Q. Okay. And so we have this package of material coming
19 together. We got the seller, right. And we got the buyer now.
20 And they're actually on separate tracks. If you were to look,
21 they were parallel tracks, right?
22 A. I don't know.
23 Q. Well, the sellers and those people that were involved
24 with obtaining the sellers, to your knowledge, didn't
25 communicate with those people that were involved with obtaining

1 buyers; they were two separate entities, so to speak?
2 MR. ANDERSON: Objection. Vague. Communicate as to
3 what.
5 Q. BY MR. SAMUEL: In any fashion?
6 A. Did they communicate? I don't know.
7 Q. Well, they weren't housed together, right?
8 A. Tua was right there pretty close by.
9 Q. But Mr. Budoff was not?
10 A. He was in Colorado.
11 Q. Yes, he was in Colorado.
12 THE COURT: One at a time. Just for the record.
13 Wait until he finishes his question.
14 THE WITNESS: I'm sorry.
15 Q. BY MR. SAMUEL: Did you talk to Mr. Budoff about
16 using an industrial standard listing of income for various
17 services?
18 A. Yes.
19 Q. And can you describe to the jurors what that is?
20 A. That's -- I believe you're speaking of salary.com.
21 Q. Yes.
22 A. It's just a website you can go to, and you can type
23 in -- if you want to find out, you know, what a salary range
24 would be for a certain position in a certain place, you type in
25 the information into the website, and it will tell you what the

1 salary range would be for that given job.
2 Q. Why did you do that?
3 A. I was told along my time in the industry that that
4 was a way to calculate stated income that the underwriter would
5 accept.
6 Q. Okay. So you previously had knowledge that this was
7 a correct thing to do in order to give a stated-income loan
8 application?
10 Q. BY MR. SAMUEL: Isn't that correct?
11 MR. ANDERSON: Objection to the word "correct."
12 Misstates the testimony.
14 able.
15 THE WITNESS: I was provided information in order to
16 provide stated-income loans that underwriters would accept.
17 Q. BY MR. SAMUEL: And had you done that before coming
18 to Head Financial?
19 A. Yes.
20 Q. All right. You used that process before?
21 A. Yes.
22 Q. All right. And you explained that process to
23 Mr. Budoff, isn't that correct?
24 A. Yes.
25 Q. And you also told him that that was okay to do, is

1 that correct?
2 A. I told him that was the way it was done.
3 Q. It was done. All right. So that's a part of what
4 you were training Mr. Budoff on when he was involved with
5 processing aspects of Premier Services?
6 A. Yes.
7 Q. Okay. What about the -- sorry -- never mind.
8 Did you -- were you ever aware that Head Financial
9 Services -- before the search warrant -- ever aware that Head
10 Financial Services had been investigated by the FBI?
11 A. I understood that they were under investigation.
12 Q. And how much -- when did that occur?
13 A. I'm not sure. Early 2006.
14 Q. Okay. And did you relate that to anybody?
16 Q. You didn't tell Mr. Budoff that, did you?
17 A. I'm not sure.
18 THE COURT: How much longer do you think you have?
19 MR. SAMUEL: Well, I've still got some documents to
20 go through. Some of these. Not a lot. Half an hour.
21 THE COURT: As long as you're moving as quickly as
22 you can.
23 MR. SAMUEL: I am.
24 Q. BY MR. SAMUEL: There was a comment in one of the
25 e-mails about send me or show me the point file?

1 A. Uh-huh.
2 Q. Do you understand what that is?
3 A. Yes.
4 Q. Would you tell the jurors what the point file was and
5 how it came to be?
6 A. Well, the point file was the computer program that
7 generates the loan application, the 1003.
8 Q. And that was something that was -- did you hire
9 somebody to produce that point file software?
10 A. No.
11 Q. All right. Where did you get that point software?
12 A. Charles had already had it prior to my involvement.
13 Q. Okay. And did that auto-populate the documents, the
14 1003?
15 A. Yes.
16 Q. All right. And when you said "send me the point
17 file," did that mean that you actually were able -- were given
18 -- well, let me just back up.
19 What was the contents of a point file, what was it?
20 A. The information that would print out on the 1003.
21 Q. That's just it. No documentation of what was on the
22 1003 or anything else like that?
23 A. Just information that would print out on the 1003.
24 Q. I understand that. The 1003 has specific
25 information.

1 A. Yeah, whatever information you put into it, it prints
2 out on the 1003.
3 Q. I got you. What I'm asking is if there were
4 verifications or validations of the information that was found
5 on the 1003 in the point file?
6 A. No.
7 Q. All right. In other words, like verification of
8 deposits, you wouldn't find that in the point file?
9 A. Well, yes. That would be in there, but it wouldn't
10 be completed. That would be a blank form.
11 Q. That would be a blank form. And you would send that
12 out to the banks?
13 A. Processor would do it.
14 Q. Pardon?
15 A. The processors would do that.
16 Q. So that would be a part of point file then?
17 A. Correct.
18 Q. Verification of employment?
19 A. I can give you a list, if you'd like. I can tell you
20 them all if you want.
21 Q. Fine.
22 A. Not them all, but verification of employment,
23 verification of deposit. There would be a 1008 transmittal
24 statement in there. There is a lot of documents in there.
25 Q. Did you tell the agents that it was your job, once

1 this was created, to track the pipeline in the 1003 documents?
3 Q. Well, was it -- let me just back up.
4 Was it your job, once the documents were completed,
5 to take a look at the documents, make sure they were all
6 correct before they took the next step?
7 A. Yes, for the most part.
8 Q. All right. And then the next step was actually to
9 tell Kou Yang to print out the documents?
10 A. I didn't tell Kou Yang anything.
11 Q. Okay. I'm sorry. Why is that?
12 A. She knew what to do.
13 Q. All right. Did you refer to Kou Yang in one of these
14 e-mails as a "yes sponge"?
15 A. Not sure.
16 Q. Not sure. Have you used that term before?
17 A. No. I have not, actually.
18 Q. So you don't have any idea what that means if you
19 used it in an e-mail?
20 A. Not sure. I mean, I'm not sure. "Yes sponge" would
21 mean that someone says yes, I guess.
22 Q. All the time?
23 A. I guess.
24 Q. Okay. Exhibit 117. Government Exhibit 117 is just a
25 quicky. Just the top section of it.

1 Do you see it in front of you?
2 A. Yes.
3 Q. That's April 21, 2006. Nowhere on that document is
4 Mr. Ben Budoff's name, correct?
5 MR. ANDERSON: Objection, Your Honor. It misstates
6 the document. It says 2005.
7 MR. SAMUEL: I'm sorry.
9 MR. ANDERSON: And the document will speak for
10 itself.
12 Q. BY MR. SAMUEL: I'm interested in one of the e-mails,
13 Exhibit 128 -- you don't need to -- we don't need to put it up
14 -- but on 128 it reflects an address of Keith with Dana
15 Capital. Now I think you answered this question once before,
16 but I wanted to understand it.
17 How did you get this e-mail at Dana Capital?
18 A. I don't -- was it "Keith at Dana Capital"?
19 Q. Well, let's put it up, 128. At the very top, see it
20 says, Keith with Dana Capital, and then it says
21 keith@danaloans.com?
22 A. Right.
23 Q. Does that refresh your recollection?
24 A. Sure.
25 Q. How did you get that e-mail?

1 A. I created it.
2 Q. You created it. Were you aware that Dana Capital was
3 a company?
4 A. Yes, I had interactions with them previous to meeting
5 Charles.
6 Q. All right. And did you have interactions with them
7 after meeting Charles?
8 A. Not after. During the time I worked for Charles,
9 yes.
10 Q. Why did you create that @danacapital (sic)?
11 A. Why did I create that e-mail address?
12 Q. Yes.
13 A. This is before I met Charles. I was an agent for
14 Dana Capital.
15 Q. Okay. When you say you were an agent for Dana
16 Capital, what does that mean?
17 A. The net branching system is they treat us as a sales
18 agent for them. Like I was a sales agent for Dana Capital. So
19 at some point in the past -- at some point in the past, I was a
20 sales agent for Dana Capital, and I had that e-mail address
21 because of it.
22 Q. I'm sorry. What did you say you did for Dana
23 Capital?
24 A. I was a sales agent for Dana Capital.
25 Q. Sales agent. And agent meant that you could utilize

1 Dana Capital's mortgage --
2 A. Licensing.
3 Q. -- licensing throughout the United States?
4 A. Correct.
5 Q. In order to process a mortgage loan?
6 A. Correct.
7 Q. All right. That's how you understood it?
8 A. Yes.
9 Q. And actually, did you talk to Ben Budoff about
10 becoming an agent at Dana Capital?
11 A. Yes.
12 Q. And you gave him the information where to go, and you
13 told him that you could work for Dana Capital as an agent at
14 processing mortgage loans, correct?
15 A. Yes.
16 Q. All right. Some of the e-mails that you've discussed
17 you actually reflected that you were unsure what they were
18 about, right, at least one of them?
19 A. Okay.
20 Q. Right. That's your prior testimony.
21 Would you agree that communications via e-mail is not
22 necessarily the clearest communication of all?
23 MR. ANDERSON: Objection. Relevance. Argumentative.
25 Q. BY MR. SAMUEL: Well, on occasion did -- were there

1 misunderstandings that arose based upon e-mail communications
2 between you and another employee for Head Financial Services?
3 MR. ANDERSON: Objection. Vague. Employee and time.
5 Q. BY MR. SAMUEL: Well, were there disagreements
6 between or misunderstandings between you and Mr. Ben Budoff
7 based upon e-mail communications back and forth as far as you
8 know?
10 Q. Okay. Let's go to Exhibit 211. And what I actually
11 want you to do is just take a look at this section.
12 You see in about the fourth line down it refers to --
13 well, actually, it starts with "she is a great employee and
14 task master for sure, but she is a yes, sir sponge," do you see
15 that?
16 A. She is a great -- yeah.
17 Q. Got it?
18 A. Okay. Yes.
19 Q. I'm sorry. I should have done that. It would have
20 been easier.
21 Does that refresh your recollection as to your
22 comment about Kou Yang?
23 A. I see it here, yes.
24 Q. Pardon?
25 A. I see that, yes.

1 Q. Does that refresh your recollection about what you
2 meant when you said that?
3 A. Oh, I see. Yes, I understand what I meant by that.
4 Q. What did you mean?
5 A. Because she was in trouble. She was over her head.
6 I felt at the time she was taking on too much work, but she
7 wasn't letting anybody know. She was just saying, yes, I can
8 do it.
9 Q. Okay.
10 MR. TEDMON: Your Honor, can we have a clarification
11 as to who "she" is?
12 THE WITNESS: Kou Yang.
13 Q. BY MR. SAMUEL: Thank you. Expand that out if you
14 would please.
15 This is a May 22, '05, e-mail from you, correct?
16 A. Yes.
17 Q. All right. And it actually has -- it's a long e-mail
18 in which you set forth what is probably a new approach to Head
19 Financial's doing business, is that right?
20 A. Yes. I guess make some proposals.
21 Q. You made some proposals. And in the third one, you
22 talk about culture of the business, right?
23 A. Yes.
24 Q. And this is May 22, 2005. Are you aware of whether
25 or not Mr. Budoff was even associated with the company at this

1 point in time?
2 A. Not aware.
3 Q. All right. So you don't know one way or the other,
4 is that what you're saying?
5 A. That's right.
6 Q. But you did say earlier that it was June or July,
7 right?
8 A. Yes.
9 Q. Okay. So when you look at the culture, you're trying
10 to impress upon those who are in receipt of this e-mail that
11 it's important that we feel at ease with our actions, correct?
12 A. Yes.
13 Q. And that means that you feel comfortable about your
14 actions are lawful, isn't it?
15 A. Yes.
16 Q. And then finally -- that's what I wanted to ask about
17 that. Thank you.
18 And that was the kind of atmosphere that you put
19 forth to all the other employees, did you not?
20 A. Yes.
21 Q. Did you put that -- at one point in time, when you
22 finally did become associated with Mr. Budoff, did you tell him
23 that as well?
24 A. Yes.
25 Q. Yeah. It's important to be at ease, and that these

1 all be lawful for us to proceed forward, right?
2 A. Yes.
3 THE COURT: If you're looking for the next document,
4 let's do a stretch break.
6 MR. SAMUEL: We're going to go to 306. And there is
7 12 pages. 306.
8 THE COURT: 306 has not been admitted.
9 MR. SAMUEL: If it isn't, I'll offer it for
10 admission, Your Honor, as part of the stipulation.
11 THE COURT: All right. Any objection to 306?
17 THE COURT: All right. 306 is in.
20 From Ben with 30k per year to Keith with Dana Captial
21 Subject: RE: Ben’s sales letter admitted into evidence.)
22 Q. BY MR. SAMUEL: And if would you, I think we should
23 start with the last page and work forward.
24 All right. So that would be page twelve, 306-12. So
25 we can put this in context.

1 Just at the very top it reflects the sender as being
2 Ben, correct?
3 A. Yes.
4 Q. And the date as being 3-9-06, correct?
5 A. Yes.
6 Q. And it's sent to who, Keith at Dana Capital?
7 A. Yes.
8 Q. So this is directed to you. All right. And let's go
9 on to the next page, eleven. Moving backwards. Actually go to
10 page -- start at page seven.
11 Are you familiar with this e-mail at all?
12 A. Not particularly, no.
13 Q. All right. It might be a lot easier if you just had
14 it in front of you. Would you turn around and look at
15 Government exhibits and find 306. I'm sorry.
16 THE COURT: It may be on the bottom shelf. The
17 darker blue spine.
18 MR. SAMUEL: It's twelve pages.
21 Q. BY MR. SAMUEL: All right. So you have the
22 twelve pages of the e-mail, right?
23 A. Yes.
24 Q. All right. So we have already started page twelve.
25 What I would like you to do is take a look at this. Because it

1 appears that -- you tell me if I'm wrong once you review this
2 -- it appears that Mr. Budoff is providing you with a letter
3 which he's asking you to answer questions, and you're
4 completing those in blue form, is that correct?
5 A. What am I looking at?
6 Q. Let me start at the beginning 306. At the very top.
7 And this is the last response from Mr. Budoff to you.
8 And if you look at the very opening paragraph it
9 says, "I overwrote my previous letter when I saved your
10 changes, but I have to put together a new one with some
11 compromises for your concerns."
12 Does that refresh your recollection that you were
13 working with Ben about -- and this is in 3-9-06, so that would
14 have been working with Ben as a person working with the buyers?
15 A. Yes. That's correct.
16 Q. All right. And so this reflects, once again, your
17 training and developing information for Ben to provide to
18 buyers, is that correct?
19 A. Actually, I think this is Ben trying to modify it and
20 asking my permission to modify it.
21 Q. And did you ultimately give him permission or did you
22 tell him not to?
24 Q. Did you go back and forth?
25 A. We may have.

1 Q. And didn't it actually say Ben tried to modify it,
2 and that he got no responses, do you remember that?
3 A. No. I don't remember that.
4 Q. Well, it will speak for itself then. Thank you.
5 A. Should I read it?
6 Q. Pardon?
7 A. Should I read it?
8 Q. No. It speaks for itself. Thank you.
9 309. Page one. Just the first page. 309.
10 THE COURT: This also is not yet admitted. Moving to
11 admit?
19 From Keith with Global To bbudoff@30kperyear.com
20 Subject: RE: Please advise admitted into evidence.)
21 Q. BY MR. SAMUEL: And just to introduce it, it's from
22 you to Mr. Budoff, and that's 4-10-06, correct?
23 A. Yes.
24 Q. And that would have been while he's still working
25 with buyers, correct?

1 A. Yes.
2 Q. Let's expand that. And let's go down to the bottom.
3 And you see Global Mortgage?
4 A. Yes.
5 Q. And Head Mortgage/Creative Loans -- I'm sorry.
6 Should go up slightly. And yeah there we go.
7 So this is addressed to you, and it's expressing
8 concerns from Mr. Budoff about various company names? What is
9 it?
10 A. I guess -- what's your question again?
11 Q. Well, let me ask you this. It says, "it's getting
12 hard to keep up," then it goes "Creative Loans LLC, Head
13 Mortgage, Global Mortgage???," and it says, "sorry, I'm being
14 paranoid." And then he asks if there's a shake up.
15 Now does that refresh your recollection about that
16 event?
17 A. Yes. I remember the change to Global Mortgage.
18 Q. You changed to Global Mortgage?
19 A. When we changed from Dana Capital to Global.
20 Q. And did you indicate to Mr. Budoff that everything
21 was just fine at that particular point in time?
22 A. Yes.
23 Q. He says I'm paranoid, you say don't worry about it,
24 everything is fine?
25 A. Yes. The switch to Global Mortgage was seamless.

1 Q. So he just needed to know what was going on?
2 A. Yes.
3 Q. All right. And it wasn't because of some illegal
4 activity that he was paranoid as far as you know, right?
5 A. As far as I know, no.
6 Q. Just a moment more, Your Honor.
7 The point file that we've been talking about, you had
8 access to the point file, is that correct?
9 A. As long as it was in our system.
10 Q. So if you had a computer, you had access to that
11 point?
12 A. As long as it was in our system.
13 Q. I understand that. And the point -- the people who
14 had access to the point file were limited, weren't they? Not
15 everybody working at Head Financial or any other -- Creative
16 Loans -- had access to it? Just a few people had access to it?
17 A. I'm not really sure who had access. It could have
18 been everybody.
19 MR. GREINER: Objection. Speculation. Move to
20 strike that answer.
21 MR. SAMUEL: I join.
23 last part of that answer. After "I'm not really sure."
25 THE COURT: All right. That concludes your cross?

1 MR. SAMUEL: Yes.
3 CROSS-EXAMINATION
4 BY MR. GREINER:
5 Q. Thank you, Judge. Good afternoon, Mr. Brotemarkle.
6 A. Afternoon.
7 Q. If I ask you a question that you don't understand,
8 please tell me to rephrase it, and I'll be glad to do it.
9 A. Yes.
10 Q. Make sure all your answers are audible so the court
11 reporter can take everything down. Okay?
12 A. Yes.
13 Q. And if you could make sure you speak up or move the
14 microphone closer to you so the court reporter can hear your
15 answers. Okay?
16 A. Yes.
17 Q. Prior to your taking the stand this afternoon, have
18 you reviewed any documents for your testimony?
19 MR. ANDERSON: Objection. Vague as to time.
20 Q. BY MR. GREINER: Between March when you got indicted
21 and today when you hit the stand, did you review documents with
22 the Government?
23 A. Yes.
24 Q. Prior to your testimony here today, within the last
25 month, have you reviewed documents with the Government?

2 Q. In the last month, prior to taking the stand today,
3 have you reviewed documents with the Government?
4 A. I have reviewed documents, yes.
5 Q. What documents have you reviewed?
6 A. Some of the ones that we're looking at today.
7 Q. And some that we haven't seen, correct?
8 A. Yes.
9 Q. What are those?
10 A. Some that we haven't seen?
11 Q. That was my question, sir.
12 A. So you want me to tell what you documents I have seen
13 that we haven't seen here?
14 Q. That's my question, sir.
15 A. I wouldn't be able to recall that.
16 Q. All right. When is the last time you met with the
17 Government prior to taking the stand?
18 A. When I was here two weeks ago.
19 Q. All right. So you didn't meet with the Government
20 yesterday?
22 Q. Didn't meet with the Government last week?
24 Q. So two weeks ago is the last time you met with the

1 A. Yes.
2 Q. When you met with the Government, did they let you
3 review the interview that you gave to Agent Sommercamp back in
4 2006?
5 A. No, they did not.
6 Q. When you met with the Government two weeks ago, did
7 they let you review the interview that you gave in February of
8 2013 of this year?
9 A. No.
10 Q. When you met with the Government, was anyone taking
11 notes that you saw?
12 A. No.
13 Q. And was there any audio recording that you saw?
14 A. No.
15 Q. How long did that meeting last, sir?
16 A. Hour.
17 Q. And that's the last time prior to today that you met
18 with the Government?
19 A. Yes.
20 Q. Have you exchanged e-mails with the Government?
21 A. No.
22 Q. From that meeting until today?
23 A. No.
24 Q. Have you exchanged telephone calls with the
25 Government between that meeting and today?

1 A. Just in regards to travel.
2 Q. Other than that. I don't want to know that.
3 A. Yeah. Yeah. No.
4 Q. I want to pick up something that I believe Mr. Tedmon
5 covered on his cross-examination, and that was regarding your
6 plea agreement. Do you remember that?
7 A. Yes.
8 Q. One thing that Mr. Tedmon did not ask you and I want
9 to ask you: Did your plea agreement -- did you enter into your
10 plea agreement in any fashion so that your parents would not be
11 charged in this case?
12 A. My parents are dead.
13 Q. So the answer to that question is "no," correct?
14 A. Correct.
15 Q. All right. When Mr. Tedmon was asking you questions
16 about the plea agreement, had you reviewed that with the
17 Government two weeks ago?
18 A. No.
19 Q. Okay. I want to briefly review a little bit and then
20 move into your work at Head Financial and Funding Foreclosures.
21 You went to work for Head Financial Services in
22 January 2005, correct?
23 A. Yes. Correct.
24 Q. And you were hired by Charles Head, correct?
25 A. Yes.

1 Q. And when you were hired by Charles Head in
2 January 2005, Head Financial Services was doing loans and
3 refinances, correct?
4 A. When I got to Head Financial Services, there was
5 nothing there.
6 Q. Okay. So when you got there, there was nothing going
7 on at all?
8 A. There was offices with desks in it.
9 Q. And there was no refinancing of loans going on?
10 A. I don't think so. I don't know. I don't know,
11 actually.
12 Q. And when you got there, there was hardly anybody
13 there working, right?
14 A. Just a few people.
15 Q. Because there was no work to do, correct?
16 A. I don't know.
17 Q. Well, you didn't do any work, right?
18 A. What do you mean?
19 Q. When you first got there in January?
20 A. My job was to start a mortgage program for Charles
21 Head.
22 Q. Your job in January 2005 was to start a marketing
23 program, isn't that right?
24 A. Marketing for mortgages and mortgages, yes.
25 Q. Marketing for mortgages meaning marketing for

1 mortgage loans?
2 A. Yeah, refinance.
3 Q. I will try not to do this, but one of the things that
4 that's going to help the court reporter is that we don't talk
5 over each other. I'm going to try not to do that with you.
6 Okay.
7 So in January 2005, your job was to make a marketing
8 program regarding mortgages, home loans, true statement?
9 A. Yes.
10 Q. In addition, your job was to do marketing regarding
11 refinances of loans, correct?
12 A. Yes.
13 Q. All right. And when you got there, a person named
14 Scott Wagner was there, right?
15 A. No, he was not there.
16 Q. You had not hired him yet?
17 A. No.
18 Q. So in January 2005 you're now developing this
19 marketing program for Head Financial Services, correct?
20 A. Yes.
21 Q. And as January now turns into February, you approach
22 Charles Head because you've heard a rumor that there's some
23 sort of other business going on, true?
24 A. Yes.
25 Q. And that business that you've heard is foreclosure

1 business, correct?
2 A. Yes.
3 Q. Now that foreclosure business wasn't even in the
4 office suites where you were, true statement?
5 A. That's not a true statement.
6 Q. Well, there was nothing going on in foreclosures that
7 you could see where you were working, developing the marketing
8 program, fair?
10 MR. ANDERSON: And space. Maybe there's --
11 THE COURT: Sustained. Justify.
12 MR. GREINER: Time, space. I don't think there's
13 anything left, Judge. I don't know what to do.
14 THE COURT: We're on the continuum. That's for sure.
15 Rephrase.
16 Q. BY MR. GREINER: So in January 2005, you had heard
17 rumors about this foreclosure business, fair?
18 A. It was my understanding that Domonic was doing the
19 foreclosure business.
20 Q. Totally appreciate your answer. Directing you back
21 to my question. We're going to get to Domonic, believe me.
22 My question was, in January 2005 you had heard rumors
23 about the Funding Foreclosures business, correct?
24 A. Foreclosure business, yes.
25 Q. Now, when you heard that, you actually heard that

1 from Kou Yang, true?
2 A. I'm not sure where I first heard it.
3 Q. You remember that's what you told the agents in
4 February 2013, that Kou Yang told you about the foreclosure
5 business?
6 A. Okay.
7 Q. Not okay. That's what you told the agents, correct?
8 A. Yes.
9 Q. When you heard about the foreclosure business, you
10 approached Charles Head and said, I want to be involved in the
11 foreclosure business, correct?
12 A. Yes.
13 Q. And Charles Head at that time said no?
14 A. Correct.
15 Q. And you didn't take no for an answer, true?
16 A. Correct.
17 Q. You said, hey, wait a minute, I want to get involved
18 in that. So you said to Charles Head, what if I develop a
19 marketing for the foreclosure, can I try to do that to get
20 involved, true statement, right?
21 A. Yes.
22 Q. And Charles Head said, well, if you can, go ahead,
23 but no promises, right?
24 A. Yes.
25 Q. Now in this time period, what you told the agents --

1 this January 2005, February 2005, March 2005 -- is that Domonic
2 McCarns was not doing foreclosures; he was working for Head
3 Financial Services doing loans; that's what you told the agents
4 on February 13th of 2013, correct?
5 A. Yes.
6 Q. And then you also told the agents that Scott Wagner
7 was also doing loans, refinances, working solely for Head
8 Financial Services, correct?
9 A. Yes.
10 Q. Now, what you decided to do then, once you approached
11 Charles Head about this marketing program, is you said, okay,
12 I'm going to try to develop a marketing program to try to
13 generate business for the foreclosure business, correct?
14 A. Yes.
15 Q. All right. And what you did, you were the brain
16 child of the marketing program that wanted to market brokers
17 and lenders, right?
18 A. Yes.
19 Q. Because you knew that prior to you being hired, what
20 Charles Head was doing prior to January 2005 was sending out
21 postcards, right?
22 A. Yes.
23 Q. And you knew that by sending out the postcards and by
24 buying the lists that the postcards had to be generated with,
25 that was a very expensive procedure, correct?

1 A. I don't know how expensive it was.
2 Q. Well, you knew that what you were going to try to do
3 was develop a marketing program that made business sense, true?
4 A. Yes.
5 Q. Because marketing was your baby, right?
6 A. I enjoy it.
7 Q. You enjoy it a lot, right?
8 A. Yes.
9 Q. All right. So now you came up with the idea that you
10 were going to market to the brokers and the lenders, right?
11 A. Brokers, yes.
12 Q. Not the lenders?
13 A. Market to the lenders?
14 Q. Yes.
16 Q. I mean, eventually that's what happened, true, you
17 marketed to the lenders?
19 Q. Well, we'll get to that later with Ed Shaffer in May,
20 okay?
21 A. Okay.
22 Q. So in February and March of 2005, you developed this
23 marketing program where you're marketing brokers because you
24 know that when people hit foreclosure status, the first thing
25 they want to do is refinance, fair statement?

1 A. That's a fair statement.
2 Q. And so what you did then is you marketed to the
3 brokers and say, hey, look, if you've got clients that are in
4 foreclosure, send them to us, we think we can help, and you're
5 developing this foreclosure business, correct?
6 A. Yes.
7 Q. And you're developing this foreclosure business with
8 Kou Yang, true?
9 A. Kou Yang worked for Charles.
10 Q. I understand. She worked for the company --
11 A. Yes.
12 Q. -- that Charles Head owned?
13 A. Yes.
14 Q. So Kou Yang was there in this
15 January/February/March 2005 time period, correct?
16 A. Correct.
17 Q. And prior to you arriving, you knew she handled all
18 the loans, right?
19 A. Yes.
20 Q. All right. Then when you arrived, she was still
21 handling all of the loans because you weren't doing the loans
22 at that time, right?
23 A. You mean me personally?
24 Q. Right.
25 A. I was not personally doing loans.

1 Q. You were doing the marketing?
2 A. I was doing the marketing.
3 Q. That's in this brain child, this transformation over
4 to make this Funding Foreclosures business run, fair?
5 A. Yes.
6 Q. So as you start developing this marketing program,
7 and the brokers start calling in the leads, the only person
8 that talks to the people that are involved in the foreclosure
9 program in the February/March/April time period of 2005 is
10 Charles Head, true?
11 A. There was a period of time where Charles Head is the
12 only person speaking to the people in foreclosure, yes.
13 Q. And that was in the February/March/April 2000 (sic)
14 timeframe as you told the agents?
15 A. Somewhere in there. Right, yes.
16 Q. And that meant that in developing this Funding
17 Foreclosures program you were trying to work out the kinks,
18 fair?
19 A. Yes.
20 Q. And you were trying to work out the kinks not only in
21 the marketing part of it, but also trying to work out the kinks
22 as far as the program itself, true?
23 A. I was not at that period in time involved in that
24 part.
25 Q. But you knew about the program, right?

1 A. Charles explained it to me, yes.
2 Q. Right, because you eventually had to train people,
3 right?
4 A. I didn't train people.
5 Q. Well, of course you did because you hired Scott
6 Wagner, right?
7 A. Well, that was in -- I hired Scott Wagner under the
8 Head Financial Services.
9 Q. Well, Head Financial Services only lasted up until
10 May 2005, true?
11 A. Yes.
12 Q. And then it stopped completely, right?
13 A. Yes.
14 Q. Well, let's hold off on that for a minute because
15 we're not quite there in the timeframe.
16 So once you develop this marketing program, then all
17 of a sudden you see that there is this backlog, that Charles
18 Head's real estate transactions are stuck, right?
19 A. Yes.
20 Q. I mean, you see that, that's what you told the
21 agents, right?
22 A. Yes. Yes.
23 Q. And so when you saw that it was stuck, the real
24 estate company was stuck, you thought to yourself I got to
25 figure a way to get this unstuck because nobody is getting

1 paid, fair?
2 A. Correct. Nobody was getting paid, so it had to get
3 unstuck.
4 Q. Right. And so what you did is you developed a
5 computer software program, right?
6 A. I'm not sure what date that computer program software
7 started.
8 Q. Well, you told the agents that it was in the
9 beginning around March/April/May of 2005 because that's when
10 the program became unstuck, right?
11 A. Somewhere in there, yes.
12 Q. And that's the program that you created, right?
13 A. Yes. The program was already sort of existing. I
14 just modified it.
15 Q. Well, that's not what you told the agents. You
16 didn't tell them you modified it.
17 You said to the agents, I came up with the idea to
18 have this computer program that would auto-populate the
19 information, isn't that what you told the agents?
20 A. That's true, yes.
21 Q. All right. So you developed a computer software
22 program to get the company unstuck in the real estate business,
23 fair?
24 A. I don't agree that the computer program unstuck
25 business.

1 Q. Well, it certainly was stuck before the computer
2 program software developed, right?
3 A. Yes. But the computer program --
4 Q. And after had you developed the computer software
5 program, it wasn't stuck anymore, was it?
6 A. That computer program took a long time to develop.
7 Q. I understand, sir. My question, directing you back,
8 is that when you developed the computer software program, the
9 company wasn't stuck anymore, was it?
10 A. Again, the computer program did not unstick the
11 company at that moment. It didn't. It couldn't.
12 Q. Well, it didn't instantly because there were still
13 kinks that had to be worked out, right?
14 A. In the computer software program?
15 Q. In the computer software program there were still
16 kinks that had to be worked out with Mark Wilson, right?
17 A. Sure.
18 Q. And there was also kinks that had to be worked out
19 regarding this Funding Foreclosures business that was starting
20 to flourish, right?
21 A. Yes.
22 Q. Okay. And you were working these kinks out with Kou
23 Yang regarding Funding Foreclosures -- and we're taking about
24 the time period of March/April/May of 2005 -- so you're working
25 out the kinks in Funding Foreclosures with Kou Yang, true?

1 MR. ANDERSON: Objection. Vague as to what kinks are
2 we talking about.
3 Q. BY MR. GREINER: We're talking about the kinks that
4 are in the Funding Foreclosures program. You knew that you
5 still had to work out the marketing part of it, true?
6 A. Yes. It was constantly --
7 Q. Right. It was a constant. It's not just something
8 that you do one time and you leave, right?
9 A. Right. It's always modifying.
10 Q. It's always modifying, right. Okay. And you know
11 that Ed Shaffer got hired, right?
12 A. Yes.
13 Q. And Ed Shaffer got hired for what reason?
14 A. For what reason you asked?
15 Q. That's my question. Why did Ed Shaffer get hired in
16 this timeframe?
17 A. He was hired to work with the brokers to help them
18 understand how to submit their applications.
19 Q. In the Funding Foreclosures business that's trying to
20 start up, right?
21 A. Correct.
22 Q. And that's what you told the agents, right?
23 A. Yes.
24 Q. And so now you've got Kou Yang, you've got Ed
25 Shaffer, and you've already told the agents that Charles Head

1 is the only one that's talking to the people that are calling
2 in from the leads, true?
3 MR. TEDMON: Objection. That misstates the evidence.
4 There is no specification as to time.
6 MR. TEDMON: Or any circumstance.
8 Q. BY MR. GREINER: You told the agents that the only
9 person at the beginning that talked to people that called in
10 about Funding Foreclosures, after you started working in
11 January 2005, was who?
12 A. Charles Head.
13 MR. TEDMON: Objection. Your Honor, this is improper
14 impeachment. Ask a question.
15 MR. GREINER: It's not impeachment.
16 MR. TEDMON: Your Honor, it is improper. He can ask
17 a question --
18 THE COURT: Move on. Wait. Wait. Sustained. Move
19 on to the next question.
20 Q. BY MR. GREINER: All right. You knew that in the
21 beginning Scott Wagner wasn't responding to any of the Funding
22 Foreclosures phone calls, true statement?
23 A. Yes.
24 Q. And you knew at the beginning that Domonic McCarns
25 wasn't responding to any of the Funding Foreclosures telephone

1 calls, true statement?
2 A. Yes.
3 Q. And then in 2005, that's when Head Financial
4 Services, the home loans, the refinances, that's when that
5 company stopped, right?
6 A. At some point in 2005, yes.
7 Q. Not in some point in 2005. In May of 2005. That's
8 what you told the agents?
9 A. Yes.
10 Q. Right?
11 A. Yes.
12 Q. So in May 2005 Head Financial Services stops, and the
13 people working for Head Financial Services come over to work
14 for Funding Foreclosures, true?
15 A. Yes.
16 Q. And at least three of those people that come over are
17 Beverly Rocheleau, correct?
18 A. Yes.
19 Q. Scott Wagner, correct?
20 A. Yes.
21 Q. And Domonic McCarns, correct?
22 A. Yes.
23 Q. All right. Now we're up to about May of 2005, give
24 or take a week, a day, but that's about where we are, right?
25 A. Yes.

1 Q. All right. Now, in May, in the general area of 2005,
2 somebody has to train Beverly, Scott, Domonic, right?
3 A. Yes.
4 Q. All right. Kou's not going to train them, right?
5 A. Yes.
6 Q. And Ed's not going to train them, right?
7 A. Yes.
8 Q. That leaves you, right?
9 A. Charles.
10 Q. Well, Charles was never in the office, right?
11 A. Then he was.
12 Q. Okay. So you're saying that in May of 2005 Charles
13 is now in the office?
14 A. He was in the office.
15 Q. Okay. And so you're saying that you did not train
16 Scott Wagner on the Funding Foreclosures program?
17 A. I did not train Scott Wagner.
18 Q. And you're saying that you did not train Beverly
19 Rocheleau under the Funding Foreclosures program?
20 A. Did not.
21 Q. And you're saying that you did not train Domonic
22 McCarns in the Funding Foreclosures program? Yes or no, sir?
23 A. Please be specific. Because when you say the Funding
24 Foreclosures program, are you referring to how the brokers were
25 responding and --

1 Q. Okay. When I asked you about Scott Wagner --
2 A. Yeah.
3 Q. -- did you train Scott Wagner regarding the Funding
4 Foreclosures program?
5 A. Again --
6 MR. ANDERSON: Objection. Vague as to which aspect
7 of the program.
8 Q. BY MR. GREINER: Let's start with the whole thing.
9 A. I --
10 THE COURT: Answer that question to the extent you're
11 able.
12 THE WITNESS: I'm sure I informed them of the entire
13 program, how the brokers were responding, et cetera.
14 Q. BY MR. GREINER: I didn't want "them." I
15 specifically asked you about Scott Wagner.
16 A. Scott Wagner, yes.
17 Q. Did you train Scott Wagner about how to talk to the
18 homeowners?
20 Q. Okay. Beverly Rocheleau, did you train her regarding
21 how the brokers were responding?
22 A. Yes.
23 Q. Well, but she didn't talk to the brokers, did she,
24 that was Ed Shaffer's job?
25 A. I thought it was important for people to understand

1 what the origin of the application they were talking to was.
2 Q. I understand that. Ed Shaffer's job was to talk to
3 the brokers, correct?
4 A. Correct.
5 Q. Beverly Rocheleau's job was not to talk to the
6 broker's, correct?
7 A. Correct.
8 Q. Scott Wagner's job was not to talk to the brokers,
9 correct?
11 Q. Domonic McCarns' job was not to talk to the brokers,
12 correct?
13 A. Correct.
14 THE COURT: That brings us to 1:30. So we will take
15 our break for the day. Leaving you on the edge of your seats.
16 Tomorrow is a 1:30 to 4:30 schedule. So we will see you at
17 1:30. As we take our overnight break and also for the morning
18 tomorrow, while I have my other calendar, please, as always,
19 remember each and every one of my admonitions. You will
20 receive everything you need to make your decision properly in
21 this courtroom. Don't do any research of any kind. Don't talk
22 to anyone about the case. Don't begin to think about its
23 conclusion. If anyone attempts to contact you in any way,
24 please let me know first thing tomorrow. Have a good evening
25 and morning, and we will see you in time to go at 1:30.

1 (Jury out.)
2 THE COURT: Is there anything else to discuss at this
3 point?
5 THE COURT: All right. See you at 1:30 tomorrow.
6 MR. TEDMON: Well, we have a 1:15 on Mr. Heads
7 093-case.
8 THE COURT: Correct. That's a special set.
9 Continuation from the criminal calendar. So anyone who is due
10 here on that should be here at 1:15.
11 MR. ANDERSON: Your Honor, just real quickly. I
12 think Mr. Tedmon made an objection which I think was well-taken
13 about the way that impeachment has been conducted, and I
14 noticed Mr. Samuel doing some of the same thing.
15 I haven't been objecting. But the Court may see
16 objections on this because, really, the proper form is to ask a
17 question specific to the information, and then if the answer is
18 inconsistent, to impeach with the prior statement. And that
19 hasn't been happening, and it's confusing, I think, to the
20 witnesses and the jury.
21 THE COURT: Well, I sustained an objection.
23 THE COURT: I was trying to sustain an objection.
24 MR. TEDMON: I apologize for speaking over you.
25 THE COURT: Sustaining of the objections speak for

1 themselves.
4 CERTIFICATION
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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00116
Volume 12
Defendants.
---oOo---
TRIAL PROCEEDINGS
WEDNESDAY, NOVEMBER 13, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
3 KEITH ALLAN BROTEMARKLE

RECROSS-EXAMINATION BY MR. SAMUEL 1973
FURTHER RECROSS EXAMINATION BY MR. SAMUEL 1983
6 FURTHER RECROSS-EXAMINATION BY MR. GREINER 1984
7 HOWARD JAY PETER

9 AMBER EDINGER
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1
3 372 Email dated 11/2/05 from Ben to Keith, 1913

Subject: Re 30K per attorney’s concerns
4 13A1 Check off list for Pearlman documents
15A5 Check off list for McKenzie documents
5 19A8 Check off list for Solares documents
property at 15 Mapes Avenue, Springfield NJ
Development for property at 14032 East
8 Fairway Bluff Court, Vail, AZ
26A2 Wire Original Information Report
26A3 Wire Original Information Report
26B2 Letter dated 5/18/06 from Lisa Vang of 2003
11 Nations Property Management to Mr. Howard
Peter re: Signing and returning documents
12 9A1 Equity Purchase Agreement 911 Fox Chapel 2017
Lane, Jackson. FL 32221 dated 4/14/2005
13 9A2 Acknowledgement by Seller 4/14/2005 by
LaTasha S. Butts and John S. Butts
14 9A3 Wire Instructions and Authorization re
property at 911 Fox Chapel Lane,
15 Jacksonville, FL 32221
9A4 Multiple Grant Deeds
16 9A5 Grant Deed; Affidavit of Deed
Signed by John S. Butts and LaTasha S.
17 Butts notarized 4/14/2005
9A6 U.S. Department of Housing and Urban
18 Development Settlement Statement
9C1 Warranty Deed filed and recorded in Duval
19 County, Florida on 8/19/2005
9D Copies of checks; Wire Original Information 2020
20 135 Email dated 5/25/2005 From Amber 2026
146 Email dated 10/3/2013 Subject: Fwd: ?s 2042
21 From Amber Dawn adfpuravida@aol.com
147 (Redacted)
22 Email dated 10/3/2013 Subject: Fwd:
Purchasing property using OPTION contract
23 139 (Redacted)
From Amber Dawn adfpuravida@aol.com
24 Email dated 6/15/2005 From Jack Corcoran
To Charles Head (Redacted)
25


2
DM-O15 Warranty Deed 1913
3 DM-X Application – Addendum/Borrower Cert.
DM-X5 Email April 20, 2005
4 DM-X6 Email April 20, 2005 continuation
DM-X7 Email April 20, 2005 continuation
5 DM-X8 Email April 21, 2005
DM-X9 Email May 5, 2005 re offer John Corcoran
6 DM-X10 Email May 5, 2005 re to Charles and
Heather
7 DM-X11 Email May 20, 2005
DM-X21 Email June 4, 2005
8 DM-X23 Email June 15, 2005
DM-X24 Email June 20, 2005
9 DM-X50 Payment $26,614.36 to Keith Brotemarkle
DM-X52 Check $24,781.22 to Keith Brotemarkle
10 DM-X53 Check $51,238.29
DM-X54 Check $25,000.00 to Keith Brotemarkle
11 DM-X55 Check $47,333.70 to Keith Brotemarkle
BB-D14 From Benjamin Budoff To Keith at
12 Foreclosure Options “RE: FDIC is
investigating us and holding funds for 90
13 days? Did you say this?”
CH-S 08-26-04 email to Traci Thompson from
14 Charles Head; bcc: Kou Yang
15
16
17
18
19
20
21
22
23
24
25

2 WEDNESDAY, NOVEMBER 13, 2013
3 ---oOo---
4 THE COURT: All right. Shall we bring in
5 Mr. Brotemarkle?
6 MR. ANDERSON: Your Honor, it might be good to cover
7 a few issues quickly.
9 MR. ANDERSON: There is a stipulation that I believe
10 the parties have entered into regarding a variety of exhibits.
11 We'll reduce it to writing. But before we proceed, I think if
12 we get those exhibits admitted, it would be helpful.
13 THE COURT: What are those?
14 MR. ANDERSON: So it would be Government exhibits
15 372, 13A1, 15A5, 19A8 are all admitted.
16 THE COURT: 19A8?
17 MR. ANDERSON: Eight, yes.
18 THE CLERK: 19A8?
20 THE COURT: All right. That's agreed?
22 MR. SAMUEL: Yes.
23 MR. TEDMON: Yes.
25 MR. ANDERSON: And then in addition, Domonic McCarns

1 Exhibits DM-015, pages -- that's the exhibit that was numbered
2 a little bit strangely. It's DM-O15, DM-O15-1 and DM-O15-3.
3 That's admitted.
5 MR. ANDERSON: And then the following DM-X exhibits.
6 DM-X with no number following it.
7 So that would be I guess the equivalent of DM-X0,
8 DM-X5, 6, 7, 8, 9, 10, 11, 21, 23, 24, 50, 52, 53, 54, 55 are
9 all also admitted.
10 THE COURT: All right. That's agreed?
12 MR. SAMUEL: Yes.
13 MR. TEDMON: Yes.
14 THE COURT: All right. Anything else? We'll talk
15 about Ms. Whitehead on the break.
16 MR. ANDERSON: Your Honor, I skipped Mr. Budoff's
17 exhibits that he wanted admitted.
19 MR. ANDERSON: It's only fair if we include that.
20 That would be BB-D14, and that is a three-page exhibit.
21 THE COURT: All right. And that's also agreed?
22 Mr. Tedmon?
23 MR. TEDMON: Yes.

1 MR. TEDMON: Your Honor, there is one other exhibit I
2 forgot to move in when I did my bulk exhibits. It was CH-S.
3 It's an e-mail.
7 MR. SAMUEL: No.
10 THE COURT: So all of those exhibits just identified
11 are in. They can just be displayed.
12 (Government Exhibits 372, 13A1, 15A5, 19A8, (See
13 index for descriptions) admitted into evidence.)
14 (Defendants' Exhibit DM-O15, DM-X, DM-X5, DM-X6,
15 DM-X7, DM-X8, DM-X9, DM-X10, DM-X11, DM-X21, DM-X23, DM-X24,
16 DM-X50, DM-X52, DM-X53, DM-X54, DM-X55, BB-D14, CH-S, (See
17 index for descriptions) admitted into evidence.)
18 MR. ANDERSON: Yes, Your Honor, and we have a
19 gentlemen's agreement that counsel will provide me with written
20 versions of the stipulation we just entered into orally, which
21 I will then put into a written document and file with
22 everyone's approval.
23 MR. GREINER: That's correct.
24 MR. TEDMON: Yes.
25 THE COURT: All right. The Court approves that

1 gentlemen's agreement.
2 MR. ANDERSON: Or gentlewoman's, gentleman's.
3 MR. TEDMON: Gentle persons.
4 THE COURT: Gentlemen in this case. Ms. Gara isn't
5 involved. Anything else?
6 MR. TEDMON: The other thing quickly since we're
7 dealing with this other juror and her schedule. You know,
8 we're trying to figure out when we might finish.
9 Mr. Greiner indicated last week he had maybe five or
10 six witnesses as a result of the Government's witnesses. And I
11 don't know if he is still intending to do that. If we can get
12 some clarity on who those would be and if they are still
13 contemplated. That could make a difference in terms of the
14 timing.
15 MR. GREINER: I sent an e-mail out on that, Judge.
16 MR. TEDMON: I didn't receive it.
17 THE COURT: Well, are you prepared to rattle off a
18 list right now so people can think about it and talk about it
19 on the break?
20 MR. GREINER: Todd Hickman, Scott Wagner, Beverly
21 Rocheleau, Andrea Manriquez and then Victoria Corona.
22 So it's Scott Wagner, Beverly Rocheleau, Todd
23 Hickman, Andrea Manriquez and Victoria Corona.
24 MR. TEDMON: And if there is any statements --
25 MR. GREINER: None, other than what the Government

1 has provided up until now.
2 MR. TEDMON: In terms of Mr. Greiner's investigators
3 if there is any additional statements, I would like those.
4 MR. GREINER: If I have them, I'll turn them over. I
5 don't have any additional ones right now.
6 MR. SAMUEL: I was just outside the door calling my
7 investigator because we already had that conversation with the
8 Government. So I'll be prepared with my witnesses on Monday.
9 THE COURT: Does everyone know who your witnesses
10 are?
11 MR. SAMUEL: Yeah. Sent them out. But it's down to
12 three witnesses plus my client.
13 THE COURT: All right. We will talk more about this
14 on the break because I signalled to Ms. Whitehead that we'll
15 give her some update at the end of the day.
16 MR. ANDERSON: Your Honor, there were two quick
17 things regarding Mr. Brotemarkle before his cross-examination
18 is finished.
19 One is we turned over the copy of a text message that
20 Mr. Brotemarkle sent to an agent. I just want the record to
21 reflect that that happened prior to Mr. Brotemarkle's
22 concluding of his testimony.
23 The second is that I was contacted by
24 Mr. Brotemarkle's attorney, and he said that Mr. Brotemarkle
25 had called him and expressed concern that Mr. Tedmon had asked

1 questions that were phrased in such a way that Mr. Brotemarkle
2 could not give a complete answer, and, therefore, with respect
3 to the check boxes and when those boxes were checked, the jury
4 never learned when the boxes were checked on the statement as
5 to whether or not a down payment was made.
6 I told Mr. Gazeley that I did not want him to
7 communicate any message back from the Government to
8 Mr. Brotemarkle. That it's very common for defense attorneys
9 and for prosecutors to focus in on the portions of the case
10 that they think are relevant and not ask questions regarding
11 other irrelevancies. And I just wanted it to be clear to
12 everybody that that happened.
13 I don't think that -- if counsel wants to
14 cross-examine regarding that underlying fact, I think they can.
15 But I don't think they can get into the substance of
16 communications between Mr. Brotemarkle and his attorney. And
17 if they think differently, I would appreciate it if we heard
18 about that outside the presence of the jury.
19 THE COURT: Any initial reaction?
20 MR. TEDMON: Well, my only concern is, you know, I
21 don't want Mr. Brotemarkle being coached by anybody. He is a
22 witness who is currently on the stand.
23 MR. ANDERSON: Well, and obviously, Your Honor, we
24 instruct him not to talk to anybody, but he does have a right
25 to speak with his attorney. And I did express to his attorney

1 that I did not want his attorney providing any factual
2 information or anything like that.
3 The way his attorney presented it was that
4 Mr. Brotemarkle was concerned that he has an obligation to give
5 truthful testimony, but that the way some questions are phrased
6 he is unable to completely answer a question.
7 I think it's more indicative of him trying to be
8 truthful. But that's a normal part of the process. We don't
9 discuss every detail in the case. And Mr. Tedmon wasn't asking
10 for every detail in his question.
11 MR. TEDMON: Right. My initial reaction is I don't
12 think it's a real issue. I certainly don't want the witnesses
13 coached by anyone nor does the Government. They should be
14 testifying as they recall.
15 THE COURT: All right. Well, the record is made.
16 Anything else?
18 THE COURT: Put Mr. Brotemarkle on the stand and
19 bring the jury in.
20 (Jury in.)
22 court, ladies and gentlemen. We were doing some housekeeping
23 including getting some exhibits in so we don't need to take
24 time before you. So thank you for your patience. And we are
25 ready to go again. And Mr. Greiner, you are continuing.

1 KEITH ALLAN BROTEMARKLE,
6 BY MR. GREINER:
7 Q. Thank you, Judge.
8 Good afternoon, Mr. Brotemarkle.
9 A. Morning -- or afternoon.
10 Q. Make sure to keep your voice up so the court reporter
11 can take everything down. Okay?
12 A. Yes.
13 Q. And if I ask you a question that you don't
14 understand, just ask me to rephrase. I'll be glad to do it.
15 A. Yes.
16 Q. Have you spoken to anyone yesterday when you got off
17 the stand and today about your testimony, other than if you
18 have an attorney? I don't want to know anything about that.
19 A. Right. No.
20 Q. Have you seen any documents between yesterday when
21 you got off the stand and today when you took the stand?
22 A. No.
23 Q. Okay. All right. I'm going to be right upfront with
24 you. I made a mistake yesterday. Okay. And so some of my
25 questions -- after I went through what I asked you and the look

1 on your face and some of your answers, and I made an error. So
2 I'm going to try to correct that today so that you're not
3 confused. The jury is not confused. And I'm not confused. So
4 I just want to tell you that up front.
5 And I've streamlined everything so hopefully we can
6 get through this really quick, going through some documents.
7 And so that's what I want to do. Okay?
8 A. Yes.
9 Q. Just to re-set, to make sure everybody is on the same
10 page, you came into the system January 2005 working marketing?
11 A. Yes.
12 Q. And when I say came in, working for Head Financial
13 Services, true?
14 A. Yes.
15 Q. And you did your due diligence, your research, found
16 out about how Head Financial Services had worked prior to
17 arriving, fair statement?
18 A. Yes.
19 Q. Because what you wanted to do was you wanted to do a
20 good marketing program for Head Financial Services, that's why
21 you were hired, right?
22 A. Yes.
23 Q. And you wanted Head Financial Services to become
24 profitable, fair?
25 A. Yes.

1 Q. So as we talked yesterday, there was this transition
2 period, you were first working at Head Financial Services, and
3 then you found out about this foreclosure, true?
4 A. Yes.
5 Q. All right. You found out about that from Kou Yang
6 because she did the loan processes, and that's how you found
7 out, true?
8 A. Yes.
9 Q. You asked Charles, hey, can I get involved in this,
10 and at first he said no, fair statement?
11 A. Yes.
12 Q. And that's when you said, look, you know what -- in
13 essence -- I'm not quoting you -- but in essence you said,
14 look, how about I do a marketing, take a look at what's going
15 on, if I can do a good marketing I can get involved, fair?
16 A. Yes.
17 Q. Now, when you started to do your due diligence
18 marketing for the foreclosure part, the people at Head
19 Financial, as we talked about yesterday briefly, they were just
20 doing the loans and the refinances, fair?
21 A. Yes.
22 Q. And we talked about that's what Domonic McCarns is
23 doing because he worked at Head Financial Services in that time
24 period, fair?
25 A. Yes.

1 Q. All right. Now, where I got off track, and hopefully
2 I'm not going to get off track today, but I'm going to ask to
3 make sure it's okay.
4 I started talking about when things got stuck in the
5 pipeline, do you remember that?
6 A. Yes.
7 Q. Okay. Well, there is -- at least in my mine there's
8 two -- I'm going to call them programs, two software programs
9 that you created, came up with, did the blueprint with. That
10 was the doc generator and the auto-populate, fair statement?
11 A. I'm not sure what you mean by auto-populated.
12 Q. Well, let's first talk about the doc generator.
13 That's a program that you came up with, fair?
14 A. I don't know that I came up with it. I didn't
15 discover it. It was a program that was already existing. I
16 just saw a connection between two different things that could
17 come together.
18 Q. Which hadn't been connected prior to you getting
19 there, right?
20 A. Well, can you explain what you mean by "doc
21 generator"?
22 Q. Well, the doc generator -- what you were doing was
23 you took a look at the documents that were going out to the
24 homeowners?
25 A. To the foreclosure, people in foreclosure.

1 Q. To the foreclosure people?
2 A. Correct.
3 Q. And there were errors in the spelling, true?
4 A. There were errors a lot of places.
5 Q. And so you wanted to correct that because that would
6 streamline, computerize, make it smoother, fair statement?
7 A. That was a proposal I made to Charles to help
8 eliminate errors.
9 Q. Right. Which is going to computerize the foreclosure
10 company, right?
11 A. It's a very simple program. Not very complicated.
12 Simple.
13 Q. I understand. But it's going to computerize it,
14 true?
15 A. That little piece of it, yes.
16 Q. Because somebody is going to be able to push a button
17 on a computer, and documents are going to be printed, right?
18 A. Yes.
19 Q. And hopefully by this program they are not going to
20 have the spelling errors and the problems, fair?
21 A. Yes.
22 Q. Then the other problem that you saw, when we talk
23 about stuck in the pipeline, was on the loan, the 1003s, the
24 loan applications, right?
25 A. Yes.

1 Q. And that problem was because it had the owner
2 occupied on it, right?
3 A. Yes.
4 Q. And you knew by doing your due diligence that when
5 this Funding Foreclosures was getting -- and I used yesterday
6 the kinks out of it -- you had to start some place, and so when
7 it was getting the kinks out of it, you knew that the
8 homeowners were staying in the home, renting it back, fair?
9 A. Yes.
10 Q. And so you knew on the 1003 applications that when it
11 said owner occupied, that was one of the reasons why the
12 lenders were dragging their feet, fair?
13 A. I think -- yeah, that and the title company. The
14 title company was the big problem.
15 Q. But the title company came later, and, as you know,
16 Charles Head changed title companies, fair?
19 Q. BY MR. GREINER: So you understand that the loan
20 applications with the owner occupied, that needed to change,
21 right?
22 A. Yes.
23 Q. And you had a conversation with Charles Head, Kou
24 Yang, and yourself about that, right?
25 A. I remember the conversation between me and Charles

1 about that.
2 Q. You don't remember Kou Yang being involved?
3 A. She became involved maybe subsequent to our
4 conversation, but we had a conversation, just him and I, about
5 that.
6 Q. Do you recall in your February 2013 statement to the
7 agents that you told the agents that it was Kou Yang, Charles
8 Head, and yourself talked about this owner-occupied issue?
9 A. I'm sure we did, yes.
10 Q. Okay. And that didn't involve Beverly Rocheleau, did
11 it?
12 A. No.
13 Q. That conversation didn't involve Scott Wagner?
14 A. No.
15 Q. And didn't involve Domonic McCarns?
16 A. No.
17 Q. So you talked about this owner occupied, there was
18 conversation back and forth that if they weren't owner
19 occupied, we couldn't get 100 percent loan; that's what Charles
20 Head told you, right?
21 A. Yes.
22 Q. But you knew that it couldn't be owner occupied, that
23 it had to be investment property, fair?
24 A. Yes.
25 Q. And you convinced Charles Head that, look, I think we

1 need to say that it's investment property, true?
2 A. Yes.
3 Q. And that's in the April 2005 timeframe, give or take,
4 but in that timeframe?
5 A. Yes.
6 Q. And that's when Charles Head agreed, you know what
7 we're going to do investment properties, fair?
8 A. Yes.
9 Q. And he also agreed he would come up with the down
10 payment because there was a concern about down payment,
11 correct?
12 A. Yes.
13 Q. Okay. All right. Now, Ed Shaffer we talked about
14 yesterday. You had worked with Mr. Shaffer prior to him coming
15 on board to Head Financial Services, true?
16 A. Yes.
17 Q. And you had discussions with Ed prior to him being
18 hired at Head Financial Services, right?
19 A. Yes.
20 Q. And the conversation, without quoting, but the
21 conversation was, basically, Mr. Shaffer, I want you to come on
22 board because I want you to be the representative to the
23 brokers, fair?
24 A. Yes.
25 Q. And you told Ed Shaffer about the foreclosure

1 program, right?
2 A. Yes.
3 Q. Here's what the program is, and you told him that,
4 you know, we're targeting individuals that are in foreclosure,
5 and we want the brokers who have those people to refer them to
6 us, "us" being Head Financial Services, true?
7 A. Yes.
8 Q. And you told him that we have this equity purchase
9 agreement that they sign, the homeowners do, that puts them
10 into contract with the company, Head Financial Services, which
11 would be Funding Foreclosures, true?
12 A. Yes.
13 Q. And that what the contract said was that the
14 homeowners would be in a 12-month rental period, and at the end
15 of the 12 months they would have an opportunity to purchase
16 their house back, correct?
17 A. Yes.
18 Q. All right. And so that's what you told Ed Shaffer,
19 and he agreed eventually to come to work for Head Financial,
20 true?
21 A. Yes.
22 Q. And his specific job was to -- I'm going to say
23 target -- or market is probably a better word -- market the
24 brokers, fair?
25 A. He took the responses from the marketing.

1 Q. Right. He took the responses from the marketing?
2 A. He didn't market. He actually just took the
3 responses.
4 Q. He took the responses from the brokers calling in?
5 A. Correct.
6 Q. All right. You were the one that marketed the
7 brokers to get them to call in, fair?
8 A. Yeah. I was in charge of that, yes.
9 Q. All right. So April 2005 we've got Ed Shaffer
10 working on the phone calls coming in from the brokers, talking
11 about the homeowners that are in foreclosure, fair?
12 A. Yes.
13 Q. We have got you working on the marketing program to
14 get the phone calls to come in, fair?
15 A. Yes.
16 Q. We've got Kou Yang doing the loan processing, fair?
17 A. Yes.
18 Q. And we've got Charles Head that's contacting the
19 people that are calling in about the foreclosures, fair?
21 Q. BY MR. GREINER: April 2005 we've got Charles Head
22 that's contacting the people that call in about the foreclosure
23 homes?
24 A. He's contacting the people that are represented by
25 the brokers that came to us, yes.

1 Q. Correct.
2 A. They didn't call in, but yes.
3 Q. From the marketing from Ed Shaffer, right?
4 A. Yes.
5 Q. Okay. And then the buyers, the purchasers, that was
6 your responsibility to line up purchasers that Charles had a
7 group of, to line up purchasers with certain property, fair?
8 MR. TEDMON: Objection, Your Honor. That misstates
9 the evidence. It's a company. It's not Charles Head.
11 Q. BY MR. GREINER: Head Financial Services had a group
12 of investors that you then would put with a piece of property,
13 fair?
14 A. Not in April 2005.
15 Q. Was that Charles Head's job?
16 A. Somebody, I don't know who, did that. At that moment
17 in time, I was not involved in that depth of that operation.
18 Q. Well, you were involved in creating this entire
19 operation?
20 A. Just the marketing part of it.
21 Q. Well, not just the marketing part. I mean, you
22 actually hired and made an offer to Jack Corcoran, right?
23 A. There was me, and Kou, and Charles. I don't remember
24 that date.
25 Q. Well, you remember sending an e-mail to Jack Corcoran

1 in May of 2005 offering him to come to work for $72,000, right?
2 A. Okay. That was the date it was.
3 Q. But that was your e-mail you that sent to him?
4 A. So that was in May?
5 Q. Of 2005.
6 A. Okay.
7 Q. All right. So you're involved in creating this
8 foreclosure program at Head Financial Services, fair?
9 A. I was involved in bringing the marketing together, if
10 we're talking specific dates.
11 Q. Right. But it's just not the marketing because when
12 you got there the whole foreclosure program didn't exist as it
13 did in May, June and July of 2005, fair?
14 MR. ANDERSON: Objection. Vague as to the date and
15 the time.
17 Q. BY MR. GREINER: When you got there in January of
18 2005 and then learned about the foreclosure program in March of
19 2005, from March of 2005 until July/August of 2005, that
20 Funding Foreclosures program had dramatically changed how it
21 looked, fair?
22 A. Yes.
23 Q. Because what you had developed was compartmentalizing
24 various departments in the Funding Foreclosures, true?
25 A. Yes.

1 Q. And the various departments that you
2 compartmentalized, getting down to the nuts and bolts of it,
3 was that Ed Shaffer was the sales rep to the brokers, fair?
4 A. Yes.
5 Q. And he had people working for him, Lauren Shaffer,
6 his daughter, true?
7 A. What timeframe? Are we still talking April 2005?
8 Q. We're talking as this program developed from
9 March 2005 into August of 2005, this is the transformation of
10 the Funding Foreclosures program, and as it developed, when it
11 got into the August of 2005 time period --
12 MR. TEDMON: Your Honor, I'm going to object. This
13 is a narrative. Can he ask questions?
15 Q. BY MR. GREINER: In the August of 2005 timeframe, the
16 Funding Foreclosures program had been compartmentalized by your
17 marketing program, fair?
18 MR. TEDMON: Objection. It's vague as to
19 compartmentalized, and we don't have a timeframe.
20 THE COURT: Overruled. Answer if you can.
21 THE WITNESS: So we're talking August 2005?
22 Q. BY MR. GREINER: We're going to talk --
23 THE COURT: The question is pending. The objection
24 is overruled. Can you answer the question?
25 THE WITNESS: It became compartmentalized, yes.

1 Q. BY MR. GREINER: Okay. Timeframe we're going to talk
2 about now is from May 2005 to September 2005. That's the
3 timeframe. Okay?
4 A. Okay.
5 Q. And we're talking now about the Funding Foreclosures
6 program that's been now compartmentalized, okay?
7 A. It had not been compartmentalized to that point yet.
8 Q. Not in August of 2005?
9 A. Well, you said May so I'm incorporating.
10 Q. I understand because there is a transformation,
11 right, it's transforming? Like you said yesterday, it's always
12 evolving, right?
13 A. Yes.
14 Q. Okay. And I'm talking about this evolving process,
15 fair?
16 A. Yes.
17 Q. And from May of 2005 to August 2005, the Funding
18 Foreclosures program is evolving into compartmentalizing the
19 various departments, fair?
20 A. Yes.
21 Q. One of the departments is run by Ed Shaffer, true?
23 Q. BY MR. GREINER: In the May 2005 to August 2005
24 timeframe, one of the departments is run by Ed Shaffer, true?
25 MR. ANDERSON: Objection. Vague as to time. He has

1 already testified it changed over time.
3 able.
4 THE WITNESS: No. He ran two departments.
5 Q. BY MR. GREINER: What were the two departments he
6 ran?
7 A. He ran the brokers and also ran the underwriters.
8 Q. Now the underwriters, those are the people on the
9 telephone, the tele marketers, selling the foreclosure program
10 contract between Funding Foreclosures and the homeowners, true?
11 A. Yes.
12 Q. And they weren't underwriters in the traditional bank
13 sense, fair?
14 A. Yes.
15 Q. They didn't write loans, true statement?
16 A. Yes.
17 Q. What they did is they were on the phone, and they
18 sold the contract between Funding Foreclosures and the property
19 owner, fair?
20 A. Yes.
21 Q. And that was Scott Wagner, true?
22 A. Yes.
23 Q. Beverly Rocheleau, true?
24 A. Yes.
25 Q. Domonic McCarns?

1 A. Yes.
2 Q. All right. Now another compartment -- department, if
3 you want -- was the investors, and that was the department that
4 Tua and Lisa Vang worked at, correct?
5 A. Yes.
6 Q. They received the phone calls, and filled out
7 information, and put it on loan applications, fair?
8 MR. TEDMON: Objection, Your Honor. We need a
9 timeframe here.
10 THE COURT: Sustained. Can you just do that with
11 every question?
12 MR. GREINER: Sure. I'll do it with every question,
13 Judge.
14 THE COURT: If it's not an obvious follow-up.
15 Q. BY MR. GREINER: That's fine.
16 Still talking about this evolving process.
17 Understanding that in May 2005 all of the components are not
18 there, fair?
19 A. Yes.
20 Q. But as it evolves through August of 2005 the
21 components are there, true?
22 A. I don't know that all the components were there by
23 August 2005.
24 Q. October 2005?
25 A. Somewhere.

1 Q. Okay. Somewhere in there we've got the program up
2 and running, right?
3 A. Parts and pieces of it, yes.
4 Q. Because it's always evolving, right?
5 A. Yes.
6 Q. And part of the evolving is that Tua Vang and Lisa
7 Vang are taking information in from the investors, true?
8 A. Yes.
9 Q. And they are putting it down on 1003s, true?
10 A. Yes.
11 Q. And they are giving that information to you?
12 A. Yes.
13 Q. And part of your responsibility now, as it evolves,
14 not only just marketing, but you're not involved in the 1003s,
15 the loan applications, true?
16 A. Yes.
17 Q. And part of your responsibility also was to match up
18 an investor with a piece of property, true?
19 A. Yes.
20 Q. All right. You also had a receptionist there in the
21 office, right?
22 A. Yes.
23 Q. And after Jack Corcoran is hired, his position
24 evolved because he was in the property management position,
25 right?

2 Q. BY MR. GREINER: In the 2005 timeframe, you hired
3 Jack Corcoran to Head Financial Services, fair statement?
4 A. I don't know that I classified that I hired him to
5 Head Financial Services.
6 Q. Let take a step back. You sent the e-mail to Jack
7 Corcoran offering him a job, fair?
8 A. As a representative of Head Financial Services, sure,
9 maybe.
10 Q. We'll get to the e-mail to show you.
11 A. Okay.
12 Q. And then Jack Corcoran came on to work at the end of
13 May 2005, fair?
14 A. Yes.
15 Q. And his job responsibilities when he came on to work
16 for Head Financial Services, which actually closed and it was
17 now Funding Foreclosures, was he was the property management,
18 true?
19 MR. TEDMON: Objection. That misstates the evidence.
20 There is no evidence that Head Financial Services closed. In
21 fact, the evidence is just to the contrary. It was sold.
22 THE COURT: No speaking objections. Overruled. You
23 may answer to the extent you're able.
24 THE WITNESS: I don't know that Head Financial
25 Services closed and Jack Corcoran became a property manager at

1 that time.
2 Q. BY MR. GREINER: Well, what you do know is that Head
3 Financial Services stopped working on the loans and the
4 refinances, right?
5 A. On refinances.
6 Q. And the people that were in the Head Financial
7 Services when Head Financial Services stopped the refinances in
8 May of 2005, they were transferred to Funding Foreclosures,
9 correct?
10 A. Yes.
11 Q. And they were assigned a position, correct?
12 A. Yes.
13 Q. And that's when Scott Wagner was assigned the
14 position as underwriter as you've testified, right?
15 A. Yes.
16 MR. ANDERSON: Objection, Your Honor. Asked and
17 answered and 403. This is going a long time on something we
18 have already discussed.
19 THE COURT: Sustained. Also, the jury is reminded
20 the attorneys don't testify. What the attorneys say is not
21 evidence. I know you've heard that, but I just felt the need
22 to remind you of that at this point in time.
23 Q. BY MR. GREINER: All right. So Jack Corcoran is the
24 property manager come June 1st, 2005; Head Financial
25 Services/Funding Foreclosures, he's the property manager,

1 correct?
2 MR. TEDMON: Objection. Complex.
4 THE WITNESS: I don't know that.
5 Q. BY MR. GREINER: Well, when did Jack become the
6 property manager for Funding Foreclosures?
7 A. I don't know that date.
8 Q. You know it happened at some time?
9 A. It did happen at some time.
10 Q. Sometime in the year 2005?
11 A. Yes.
12 Q. He also became the accountant, correct?
13 A. Yes.
14 Q. Sometime in 2005?
15 A. Yes.
16 Q. And those were jobs, prior to Jack Corcoran being
17 hired, that Kou Yang used to do, you knew that, correct?
18 A. Yes.
19 Q. But now Kou Yang, when Jack Corcoran got hired, Kou
20 Yang was just the processor, correct?
21 A. Yes.
22 Q. Okay. The individual that helped create or created
23 the computer software program, that was Mark Wilson?
24 A. Yes.
25 Q. True statement?

1 A. Yes.
2 Q. And you worked with Mark in developing the
3 auto-populate program, correct?
4 A. You say auto-populate, are you talking about the doc
5 generator?
6 Q. That's where my confusion is. And my confusion comes
7 from reading your statement.
8 MR. ANDERSON: Objection, Your Honor. Mr. Greiner's
9 confusion is not the issue.
10 THE COURT: Single question, single answer.
11 Q. BY MR. GREINER: There is more than one computer
12 program going on at Funding Foreclosures in May 2005 to
13 December 2005, true?
14 A. Yes.
15 Q. One is the document generator program, correct?
16 A. Yes.
17 Q. And that's the program where an individual prints out
18 documents from the computer and sends them to the homeowner,
19 correct?
20 A. Yes.
21 MR. ANDERSON: Objection. Asked and answered. 403.
23 Q. BY MR. GREINER: And that's not the underwriter,
24 true?

2 Q. BY MR. GREINER: And the other program that's going
3 on is the auto-populating?
6 Q. BY MR. GREINER: The loan documents have this
7 auto-populated computer program set up, correct?
9 THE COURT: Mr. Greiner, can you move to a new area?
10 Q. BY MR. GREINER: Well, yes, Your Honor.
11 The auto-populate computer program, did it have a
12 default setting?
13 A. I don't know -- I don't know.
14 Q. Well, the auto-populate worked on the 1003s, correct?
15 A. I'm confused.
16 Q. The auto-populate program was designed --
17 A. Not by me. I don't know what you're talking about.
18 I'm sorry.
19 Q. Okay. Well, remember that you created a software
20 program to track the real estate?
21 A. Yes.
22 Q. Okay. And what was the name of that program? Was
23 that the point program?
24 A. No.
25 Q. What was the name of that program?

1 A. Funding Foreclosures.
2 Q. Okay. So that Funding Foreclosures program to track
3 the real estate, when that program was in place, that was your
4 responsibility to track, correct?
5 A. Yes.
6 Q. All right. So the document generator -- just so that
7 I'm not confused -- that was -- the document generator auto
8 populated those documents, correct?
9 A. The foreclosure documents, yes.
10 Q. Okay. And when you say the foreclosure documents,
11 those are the documents that went to the homeowner at the
12 beginning?
15 Q. BY MR. GREINER: That was like the equity purchase
16 agreement?
17 A. Yes.
18 Q. And the rental agreement?
19 A. Yes.
20 Q. And the trust agreement?
21 A. I'm not sure of all the agreements that were in that
22 doc generator at the time. I don't remember them all.
23 Q. And did you create a program that helped in the loan
24 applications?
25 A. No.

1 Q. All right. So back to my -- I was asking about the
2 default program on the auto-populate. Do you remember that?
3 A. I do remember.
4 Q. All right. So my question is, do you know if there
5 was a default setting on the auto-populate program that if
6 nothing was put in, it would just say Charles Head?
7 A. I'm confused by the word "auto-populate."
8 Q. Well, isn't that a word that you used with the
9 Government when you talked to them in February?
10 A. I don't know which program you're speaking of when
11 you say that.
12 Q. The doc generator.
13 A. The doc generator?
14 Q. Right.
15 A. I don't know if there was a default setting in that
16 program. I don't know. I don't know.
17 Q. Do you know if any of the programs that were used at
18 Head Financial, Funding Foreclosures had a default setting?
19 A. I think I'm confused by the word "default." If
20 you --
21 Q. Well, a default setting meaning --
22 A. Sorry --
23 Q. -- meaning if you don't put in a name, the program
24 will automatically put a name in for you?
25 A. The doc generator program, no.

1 Q. Any computer program that was running during the
2 2005/2006 time period for Funding Foreclosures?
3 MR. ANDERSON: Objection. Vague.
5 THE WITNESS: If you printed the documents without
6 entering anything into them, they would print with words that
7 were already placed on the documents that were not part of the
8 program that was to populate.
9 Q. BY MR. GREINER: And was one of those words "Charles
10 Head"?
11 A. I don't know.
12 Q. Was one of those words "investment property"?
13 A. I don't know.
14 Q. Who was in charge -- for Funding Foreclosures from
15 June 2005 to July -- to June of 2006, who was in charge of
16 collecting rents?
17 A. At some point in there, Jack Corcoran.
18 Q. Was there anybody else?
20 Q. Were you?
21 A. No.
22 Q. And while we're talking about Jack Corcoran, did you
23 know that he was a signator on the accounts of Funding
24 Foreclosures, Head Financial Services, Creative Loans?

2 Q. BY MR. GREINER: You weren't a signator on any of the
3 accounts, were you?
4 A. No.
7 Q. BY MR. GREINER: Was there anybody else that you know
8 of from June of 2005 to June of 2006 that collected the rents
9 for Funding Foreclosures, Head Financial Services, Creative
10 Loans?
11 A. I don't know anybody else.
12 Q. Okay. Who in that time period of June 2005 to
13 June 2006 for the company of Head Financial Services, Creative
14 Loans, Funding Foreclosures paid the mortgages?
15 A. Somewhere in there Jack Corcoran was doing that.
16 Q. To your knowledge, did anyone else in that time
17 period?
18 A. Maybe Kou Yang did.
19 Q. Did anyone else in that time period?
20 A. Not that I know of.
21 Q. All right. Who was responsible for carrying out the
22 terms of the contract between Head Financial, Funding
23 Foreclosures, Creative Loans and the original property owner in
24 the timeframe of June 2005 to June 2006?

1 conclusion. Relevance. Lack of foundation.
2 THE COURT: Overruled. You may answer. But the jury
3 is to understand this is not a lawyer providing a legal
4 conclusion. So just as you understand the question you may
5 answer.
6 THE WITNESS: I don't know.
7 Q. BY MR. GREINER: Well, who was responsible from
8 June 2005 to June 2006 if an eviction had to take place?
9 A. Jack Corcoran physically carried through that action.
10 Q. In the timeframe from June 2005 to June 2006, who was
11 responsible for selling the property back to the homeowner if
12 they complied with the contract, with the company?
13 A. I don't know.
14 Q. You have no idea whatsoever?
15 A. I don't think I'm supposed to guess, am I?
16 Q. I don't want you to guess. But you worked at the
17 company, true?
18 A. Yes, I did.
19 Q. And so from June 2005 to June 2006, you knew that at
20 least six homes had been resold to the homeowners, right?
21 A. I don't know. That was June 2006.
22 Q. Well, go from January 2005 to August of 2006, at
23 least six homes had been resold to the property owners,
24 correct?
25 A. By November of 2006 I think it was six.

1 Q. And who was responsible at the company for carrying
2 out that resale?
3 A. I'm not sure. I know Ken White was a person that was
4 an assistant for a while to do that. Towards the end in like
5 October/November I was the person --
6 Q. All right.
7 A. -- that was helping the previous homeowners.
8 Q. Who was Ken White an assistant to?
9 A. Charles Head.
10 Q. Okay. So Ken White and you, in the timeframe, helped
11 sell back the properties to the homeowners, fair statement?
12 A. Yes.
13 Q. Okay. During this timeframe of May 2005 to
14 June 2006, you learned that the lenders only allowed one person
15 to purchase up to five properties, true?
16 A. It varied from lender to lender.
17 Q. And what you learned was there were some lenders that
18 only let people buy up to five properties, true?
19 A. Yes.
20 Q. There were some lenders that let people buy up to ten
21 properties, true?
22 A. I don't know that exact number.
23 Q. Well, what's the highest number you learned?
24 A. If I remember, it's six.
25 Q. Okay. And you learned at some point in time between

1 May of 2005 and June of 2006 that the company, Head Financial
2 Services, Funding Foreclosures, Creative Loans didn't have
3 enough investors for the contracts that were being sold, fair?
4 A. Yes.
5 Q. And so that's why this website called 50K was
6 developed, true statement?
7 A. Yes.
8 Q. And it was -- it was changed to 30K, true?
9 A. Yes.
10 Q. And that was to attract additional investors, true?
11 A. The website was to attract additional investors, yes.
12 Q. And who was responsible for overseeing that website,
13 the 30K, to attract additional investors?
14 A. Myself.
15 Q. Okay. Anyone else?
16 A. No -- well, we did employ a search engine
17 optimization company. I don't know if that's --
18 Q. Was that the company that was out of the East Coast?
19 A. Yes.
20 Q. But you were still in charge, ultimately, at Head
21 Financial, Funding Foreclosures, Creative Loans, true?
22 A. Yes.
23 Q. And then at some point in time in this time period,
24 June 2005 to June 2006, you were the last person that would
25 look at the loan applications, the 1003s, fair?

1 A. No. What do you mean by "last person"?
2 Q. Well, you looked at the 1003s to see if they were
3 completely filled out, true statement?
4 A. Yes.
5 Q. And sometimes they didn't have any number in the bank
6 account --
7 A. Yes.
8 Q. -- block, correct?
9 A. Yes.
10 Q. And that number you made up and put in there,
11 correct?
12 A. Yes.
13 Q. And how you did that was you looked at the purchase
14 price and came up with ten percent of the purchase price and
15 put it in there, right?
16 A. Yes.
17 Q. And you were vague because you didn't put it in there
18 whether it was in the savings or checking account, true?
19 A. I don't know. I don't remember that. There is a box
20 you check, but I don't remember which box I checked.
21 Q. Or if you checked any box?
23 Q. And also, in addition, you would make up salaries if
24 salary wasn't filled out, correct?
25 A. Yes.

1 Q. And by using that salary.com computer program,
2 correct?
3 A. Yes.
4 Q. And Scott Wagner didn't have anything to do with
5 that, right?
6 A. No.
7 Q. Beverly Rocheleau didn't have anything to do with
8 that?
9 A. No.
10 Q. And Domonic McCarns didn't have anything to do with
11 that?
12 A. Correct.
13 Q. And then when you got done filling out the loan
14 application, you sent them to Kou Yang in her department to be
15 processed, true?
16 A. They were available for Kou Yang and her department
17 to process, yes.
18 Q. Well, that's where the loan documents would be
19 processed from, right?
20 A. Correct.
21 Q. Scott Wagner didn't process them?
22 A. Correct.
23 Q. Beverly Rocheleau didn't process them?
24 A. Correct.
25 Q. Domonic McCarns didn't process them?

1 A. Correct.
2 Q. You talked with the Government about some e-mails in
3 your conversation with them. If we could have Government's 112
4 up on the screen, please.
5 In this e-mail, it's addressed to Charles Head and
6 yourself, correct?
7 A. Yes.
8 Q. And it's from Ed, who is Ed Shaffer, correct?
9 A. Yes.
10 Q. No one else is on that e-mail, correct?
11 A. Correct.
12 Q. And this April timeframe of 2005, that's when Funding
13 Foreclosures is going through its transitional marketing
14 development phase, correct?
17 Q. BY MR. GREINER: If we could have Government's 128 up
18 on the board, please.
19 Now this e-mail is from Charles Head, correct?
20 A. Yes.
21 Q. And it's to you, and it says "with Dana Capital,"
22 correct?
23 A. Yes.
24 Q. Now, you didn't work at Dana Capital, right?
25 A. No.

1 Q. What you did is you paid a fee to Dana Capital to use
2 their license in various states, correct?
3 A. Sorry. Say that again?
4 Q. You paid a fee to Dana Capital to use their real
5 estate license in various states, correct?
6 A. Their fee was collected at transactions.
7 Q. Which allowed you to use Dana Capital's real estate
8 license in various states, correct?
9 A. Yes.
10 Q. And there is nobody else in this June 1, 2005 e-mail
11 regarding buyers other than you and Charles Head, correct?
12 MR. TEDMON: Objection. The document speaks for
13 itself.
15 Q. BY MR. GREINER: If we could enlarge, please.
16 Now this May 31, 2005 e-mail that's part of
17 Government's 128, that's from you, correct?
18 A. Yes.
19 Q. And it's to Jack and to Charles, correct?
20 A. Yes.
21 Q. It's not to Scott Wagner?
22 MR. TEDMON: Objection, Your Honor. The document
23 speaks for itself.
25 Q. BY MR. GREINER: Government's Exhibit 136, please.

1 Government's Exhibit 136 is an e-mail from Domonic
2 McCarns, correct?
3 A. Yes.
4 Q. To Kou Yang, you, Charles Head and Ed Shaffer,
5 correct?
6 A. Yes.
7 Q. And it's talk -- it's asking for help regarding a
8 file, correct?
9 MR. TEDMON: Objection. Contextualized the document.
10 It speaks for itself.
12 Q. BY MR. GREINER: Well, Domonic McCarns is reaching
13 out to management at the company in this e-mail, correct?
16 Q. BY MR. GREINER: If we could have Government's
17 Exhibit 149, please. 149, please.
18 Who is this e-mail from?
19 MR. TEDMON: Objection. Document speaks for itself.
21 THE WITNESS: Myself.
22 Q. BY MR. GREINER: And who is it to?
25 Q. BY MR. GREINER: And when it talks about "Singleton

1 will wire 20K for the close," what was that referencing -- what
2 were you referencing?
3 A. I'm not sure what that 20K is for.
4 Q. Was it for a down payment?
5 A. I'm not sure.
6 Q. If we could have Government's Exhibit 204, please.
7 Who is this e-mail from?
8 A. Kou Yang.
9 Q. And it's talking about foreclosure files, correct?
10 MR. TEDMON: Objection. Document speaks for itself.
12 Q. BY MR. GREINER: This e-mail is addressed to you,
13 correct?
14 MR. TEDMON: Objection. Same objection.
15 Q. BY MR. GREINER: If you go down to the second line of
16 the two, second name in?
17 THE COURT: Sustained. I think at this point there
18 is --
20 THE COURT: This clearly identifies this witness.
22 THE COURT: Some of the addresses do not.
23 Q. BY MR. GREINER: If we could go to Government's
24 Exhibit 209, please. This is an e-mail from you on April 29,
25 2005, correct?

1 A. Yes.
2 Q. And you're not asking for any input in this?
3 MR. TEDMON: Objection. The document speaks for
4 itself.
6 THE WITNESS: Yes. I ended it with "any questions"
7 with a question mark.
8 Q. BY MR. GREINER: And you didn't receive any back, did
9 you?
11 Q. You don't have any recollection of that, do you?
12 A. No, I don't.
13 Q. All right. Could we have the second page of
14 Government's Exhibit 211, please.
15 This starts out by an e-mail from you to Ed, cc'ing
17 A. Yes.
18 Q. If we could enlarge, please. And if we could go --
19 As it progresses, it's just you and Charles -- e-mail
20 from you to Charles Head, correct?
21 MR. ANDERSON: Objection Your Honor. This document
22 speaks for itself. 403.
23 MR. GREINER: Judge, this is a critical one that the
24 Government used.
25 THE COURT: What's the question?

1 Q. BY MR. GREINER: Saying that it now is from Keith
2 only to Charles Head, correct?
3 THE COURT: Well, the objection is sustained in that
4 respect.
5 Q. BY MR. GREINER: If we could go to page one of
6 Document 211, please.
7 In this document that you sent to Charles on
8 May 22nd, where it says "automated operational infrastructure,"
9 do you see that?
10 A. Yes.
11 Q. You used the word "we" where you say "I think we,"
12 correct?
13 A. Yes.
14 Q. And then on the second line it said, "what we are
15 doing," do you see that?
16 A. Yes.
17 Q. If we could enlarge, please -- wait -- sorry. Sorry.
18 Do you see the line that starts with the word "said"?
19 MR. TEDMON: Can Mr. Greiner put an arrow by the
20 word?
21 MR. GREINER: I don't know if I can. That's close
22 enough. Do you see the word "building"?
24 Q. BY MR. GREINER: Go all the way to the end of that
25 line.

1 A. Yes.
2 Q. Go up. Do you see where it says "the day-to-day
3 operation of what we are building," do you see that? Do you
4 see that, sir?
5 A. Oh, yeah. Back up. I see it.
6 Q. It says "the day-to-day operation of what we are
7 building"?
8 A. Yes. Yes.
10 In the second paragraph it talks about management
11 system and how that relates to processors. Your first sentence
12 goes into two lines. It says, "if I had a nickel for every
13 time Domonic mentioned more processors as the answer to all of
14 our problems, I would have made 20 cents this week," do you see
15 that?
16 A. Yes.
17 Q. Which means he said that four times, right?
18 A. I was probably using hyperbole.
19 Q. Well, the hyperbole means he said it four times,
20 correct?
21 A. If you did the math.
22 Q. And that's correct math?
23 A. It is.
24 Q. And it says: Domonic, by the way, creates his own
25 problems," do you see that?

1 A. Yes.
2 Q. But it doesn't say what the problems are, does it?
3 A. No.
4 Q. And then when it says -- it says, "he has everyone
5 thinking more processors is the answer," correct?
6 A. Yes.
7 Q. Now, you know that Domonic questioned things that
8 were going on at Head Financial, Creative Loans and Funding
9 Foreclosures, right? He would ask you questions?
10 A. Yes.
11 Q. He would ask you questions of why things are being
12 done a certain way, correct?
13 A. Yes.
14 Q. And he would ask you so many questions that you got
15 frustrated with him at times, right?
16 A. I don't know that's why I got frustrated with him.
17 Q. Well, you got frustrated with him because he kept
18 questioning you in front of employees, why are we doing
19 something like this, right?
20 A. I don't know that that's true.
21 Q. Well, you know that he did that, right?
22 A. He asked questions.
23 Q. In front of employees to you, correct?
24 A. Yes. Small office.
25 Q. And then see where it says, "the doc generator is

1 working out great"?
2 A. Yes.
3 Q. And the next line it says, "I believe Lisa will work
4 out great and Jack starts Monday," do you see that?
5 A. Yes.
7 Now this third paragraph deals with culture, do you
8 see that?
9 A. Yes.
10 Q. First word it starts out it says "we," correct?
11 A. Yes.
12 Q. And then in the second sentence -- or the second line
13 it says "we cannot," correct?
14 A. Yes.
15 MR. ANDERSON: Objection, Your Honor. The jury can
16 read the document.
17 THE COURT: Mr. Greiner, what is the question?
18 Without just having the witness confirm the content, is there a
19 question?
20 Q. BY MR. GREINER: I understand. Now, under culture,
21 on the fourth line down it says, "Domonic needs his spiel to be
22 revised," do you see that?
23 A. Yes.
24 Q. And you didn't say what his spiel was, did you?
25 A. No.

1 Q. You didn't write it out so that Charles Head could
2 see it, correct?
3 A. Right. I did not.
4 Q. And when you talked to the Government in November of
5 2006, you didn't say anything about Domonic's spiel needed to
6 be revised, did you?
7 A. No.
8 Q. And when you talked to the Government on February
9 13th -- or February 16th, 2013, you didn't say anything to the
10 Government about Domonic's spiel needed to be revised, did you?
11 A. I don't know. I don't have the document in front of
12 me. But if it's not there --
13 Q. Would you like a copy to review it?
14 A. If you say it's not there, it's not there. Correct.
15 MR. ANDERSON: Well, let's not -- if Mr. Greiner
16 wants to ask a question, Your Honor.
17 THE COURT: Is there a question?
18 Q. BY MR. GREINER: Well, you remember talking to the
19 Government on February 16th, 2013, correct?
20 A. Yes.
21 Q. And that conversation with the Government lasted a
22 few hours, didn't it?
23 A. Yes.
24 Q. And nowhere in that conversation did you tell the
25 Government anything about Domonic's spiel needed to be revised,

1 did you?
2 A. Like I said, no. If it's not there, I believe you.
3 Q. Okay. In your next part of it, it says, "he has got
4 one line of bull crap running that is built to deceive and give
5 him the result he is looking for, but he worries me about
6 possible issues down the road," do you see that?
7 MR. TEDMON: Your Honor, if Mr. Greiner is going to
8 read the document, he needs to read it correctly.
9 THE COURT: Sustained on both grounds. Again,
10 Mr. Greiner. No questions just confirming the content of
11 documents.
13 THE COURT: If there are questions about the content
14 without doing that, you may pose them.
16 Q. BY MR. GREINER: You didn't put in this e-mail what
17 the one line of bull crap that Domonic was saying, did you?
19 MR. TEDMON: Your Honor -- never mind.
20 MR. ANDERSON: Objection, Your Honor. It's equally
21 true that what is in the document can be seen by the jury and
22 what is not can be seen by the jury.
23 THE COURT: At this point, next question.
24 Q. BY MR. GREINER: You didn't tell the Government in
25 November 2006 what the one line of bull crap was that Domonic

1 -- that you put in this e-mail that Domonic was supposedly
2 saying, did you?
3 MR. ANDERSON: Objection, Your Honor. Improper
4 impeachment.
6 Q. BY MR. GREINER: Well, did you tell the Government in
7 November of 2006 --
8 MR. ANDERSON: Objection. Improper impeachment.
10 Q. BY MR. GREINER: When you talked to the Government at
11 any time, did you tell them the pitch that Domonic McCarns was
12 giving to the homeowners to sell the contract to Funding
13 Foreclosures -- you didn't, did you?
16 Working at the companies - at Creative Loans, Head
17 Financial, Funding Foreclosures - there was not a company
18 policy that said you couldn't thank people for helping them do
19 their job, was there?
20 A. No.
21 Q. The payoffs were needed to know what the loan amount
22 was going to be for the homeowners and the investors, correct?
23 A. The payoffs were needed in order to determine that
24 there was adequate equity remaining to make it a viable file.
25 Q. Well, you also needed that because you needed to know

1 how much of a loan you needed to get, correct?
2 A. Yeah.
3 Q. Well, you couldn't have a payoff of 100,000 and have
4 a loan for 90, correct?
5 A. Correct.
6 Q. So getting the payoffs was something that was
7 important, correct?
8 A. Yes.
9 Q. All right. And there was nothing wrong, there was no
10 company policy about trying to get a payoff quickly, was there?
11 A. No.
12 Q. In fact, that helped the company to make a decision
13 on what it was going to do on a certain file, correct?
14 A. Yes.
15 Q. And you have no knowledge as to what Domonic McCarns
16 said to any lender to get them to provide a payoff, correct?
17 A. No.
19 A. No. Correct.
20 Q. And there wasn't a company policy to make sure people
21 in the company knew certain deadlines were approaching, was
22 there?
23 A. Say that one more time?
24 Q. There was no company policy to prevent employees from
25 letting other employees know when certain deadlines were

1 approaching, correct?
2 A. Correct.
3 Q. In fact, that would be very helpful in the process to
4 know certain deadlines, correct?
5 A. Correct.
6 Q. And this Creative Loans, and Funding Foreclosures,
7 and Head Financial Services, this was a business, true?
8 A. Yes.
9 Q. This wasn't a charity organization, true?
10 A. Yes.
11 Q. And it wasn't there to give gifts out, correct?
12 A. Yes.
13 Q. It was there to make money, correct?
14 A. Yes.
15 Q. And there was nothing wrong -- there was no company
16 policy against advising people how to make money in the
18 A. Yes.
19 MR. TEDMON: Objection. That's vague.
21 Q. BY MR. GREINER: Correct? There was no --
22 THE COURT: It was answered.
23 MR. GREINER: It was. Thank you, Judge.
24 THE COURT: How much longer do you think you need?
25 MR. GREINER: I just have my documents, Judge. Which

1 I think I can give you a number on those. There are 13
2 documents, but I may be able to speed the last five. So there
3 is about eight or so.
4 Q. BY MR. GREINER: If we could have -- I have to do it
5 this way. Hold on a second.
6 DM-X5, do you see that e-mail on the screen?
7 A. Yes.
8 Q. And that e-mail is at least addressed to you,
9 correct?
10 A. Yes.
11 Q. About new quotes, correct?
12 A. Yes.
13 Q. And it's not addressed to Domonic McCarns, correct?
14 A. Correct.
15 Q. This is DM-X8. This is an e-mail from you on
16 April 21st, 2005, correct?
17 A. Yes.
18 Q. And it's addressed to Charles Head, correct?
19 A. Yes.
20 Q. And down below in this area, this e-mail is from an
21 individual to you, correct?
22 A. Yes.
23 Q. Regarding a title company in New York, true?
24 A. Looks like it's New York and/or National.
25 Q. National, correct?

1 A. Yes.
2 Q. This is DM-X9. That's an e-mail from you dated
3 Thursday, May 5, 2005, correct?
4 A. Yes.
5 Q. And this is the e-mail that you sent to John Corcoran
6 regarding employment at Head Financial, Funding Foreclosures,
7 Creative Loans, correct?
8 A. Yes.
9 Q. This is DM-X10. This is an e-mail from you on May 5,
10 2005, correct?
11 A. Yes.
12 Q. To Charles Head, correct?
13 A. Yes.
14 Q. And to Heather Worch?
15 A. Yes.
16 Q. Who is Heather?
17 A. I think she was the doc generator girl.
18 Q. And when you talk about the doc generator girl, so I
19 understand, that would be the person that would push the button
20 on the computer to generate the first set of documents that
21 went to the homeowners, the equity purchase agreement, trust
23 A. Yes.
24 Q. This is DM-X11. This is an e-mail from Mark Wilson
25 on May 10, 2005, to you, correct?

1 A. No. It's to Charles.
2 Q. I'm sorry. To Charles and cc'ing you, correct?
3 A. Yes.
4 Q. And this is about the doc generator computer program,
5 correct?
6 A. Yes.
7 Q. DM-X21. This is an e-mail from you on Saturday,
8 June 4, 2005, correct?
9 A. Yes.
10 Q. And to Jack and cc to Charles Head, correct?
11 A. Yes.
12 Q. And this is talking about setting up different
13 compartments, departments, within the accounting department,
14 correct?
15 A. Yes.
16 Q. This was your idea, correct?
17 A. I don't know that was my idea.
18 Q. Well, that's your name at the bottom of it, correct?
19 A. Yeah. Just the e-mail I sent. Correct.
20 Q. And this says, "I'm trying to build job
21 descriptions," correct?
22 A. I may have been requested to do that.
23 Q. But it doesn't say that, does it?
24 A. No.
25 Q. DM-X23. This is an e-mail from you to Charles Head

1 on Wednesday, June 15, 2005, correct?
2 A. Yes.
3 Q. Now, you were communicating with Charles Head by
4 e-mail, true?
5 A. I'm sure, yes.
6 Q. Why would you want to take him off on the day-to-day
7 activities?
8 A. There were probably a lot of e-mails, I guess.
9 Q. Wasn't he the owner?
10 A. Yes.
11 Q. Why would you want to take the owner off of
12 day-to-day activity e-mails?
13 A. He may have requested.
14 Q. It doesn't say he requested. This is you asking him,
15 right; it doesn't say in response to your question, does it?
16 A. No, it does not.
17 Q. So why would you want to take the owner of the
18 company off of day-to-day e-mails?
19 A. I don't know.
20 Q. Isn't it true that at a period of time you and Kou
21 Yang were basically running the office?
22 A. No.
23 Q. Were you running the office?
24 A. No.
25 Q. Well, Charles wasn't there all the time, right?

1 A. Correct.
2 Q. Somebody had to be running the office when Charles
3 wasn't there?
5 Q. Was it you?
6 A. No.
7 Q. Was it Kou?
8 A. No.
9 Q. Was it Domonic McCarns?
10 A. No.
11 Q. Was it Beverly Rocheleau?
12 A. No.
13 Q. Scott Wagner?
14 A. No.
15 Q. When you were working at Head Financial, Funding
16 Foreclosures, Creative Loans you got a commission off of every
17 file that closed, correct?
18 A. Yes.
19 Q. And that commission was $300, correct?
20 A. Yes.
21 Q. And it didn't matter if you did any work on that file
22 or not, correct?
23 A. Correct.
24 Q. DM-X53. And this is a payment to you in September of
25 2005 of $51,238.29, correct?

1 A. Yes.
2 Q. And that was from the company of Creative Loans,
3 correct?
4 A. Yes.
5 Q. And it says "commissions August 2005," correct?
6 A. Yes.
7 Q. Were you involved in commissions other than the $300
8 per file that closed?
9 A. My compensation plan changed.
10 Q. My first question is, were you involved in
11 commissions other than the $300?
13 Q. BY MR. GREINER: Well, in 2005, as this check is, was
14 your commission still $300 per file?
15 A. No.
16 Q. What was your commission?
17 A. It was a percent. I don't remember what the number
18 was. I don't remember what the percent number was.
19 Q. Of each file that closed?
20 A. Yes.
21 Q. Okay. DM-X54. This is an October 2005 check to you
22 from Creative Loans in the amount of 25,000, correct?
23 A. Yes.
24 Q. Now, this is signed by Kou Yang, right?
25 A. Yes.

1 Q. I thought Jack Corcoran was involved in the
2 accounting?
3 A. Yeah.
4 Q. So why would Kou Yang sign your check?
5 A. I don't know.
6 Q. Did you ask her to?
7 A. No.
8 Q. Did you question her why she was signing and not
9 Jack?
10 A. No.
11 Q. Here is another check in October of 2005, made out to
12 you from Creative Loans.
13 MR. TEDMON: Your Honor, could we have the
14 identifier?
15 Q. BY MR. GREINER: Sorry. DM-X55.
16 Another check in October of 2005, from Creative
17 Loans, made out to you in the amount of $47,333.70, correct?
18 A. Yes.
19 Q. And this says "commissions for September of 2005,"
20 correct?
21 A. Yes.
22 Q. And the previous check was also commissions for
23 September 2005, the DM-X54, correct?
24 A. Yes.
25 Q. So that's about $82,000 in commissions for September.

1 What was your percentage? What was your commission in
2 September of 2005?
3 A. It was a percentage.
4 Q. What was it?
6 Q. Well, you were making the money, isn't this something
7 that you're going to keep track of?
8 A. I don't remember what that percentage number was now.
9 Q. DM-X50. This is a payment stub from Creative Loans
10 to you for June 2005 for $26,614, do you see that?
11 A. Yes.
12 Q. And up above it has a figure at 7.5 percent. What
13 does the 7.5 percent mean?
14 A. That would be the commission amount.
15 MR. GREINER: If I could have one moment, Judge.
16 Thank you, Judge.
19 THE COURT: How long do you think you will be?
20 MR. ANDERSON: Significantly less than Mr. Greiner.
21 THE COURT: That's not my question.
22 MR. ANDERSON: I would say 25 minutes, but I'm going
23 to try and beat that.
24 THE COURT: All right. We'll start. Probably take
25 our break midway.

2 BY MR. ANDERSON:
3 Q. Those commissions that Mr. Greiner was asking you
4 about. What was that a percentage of that you were receiving
5 commission of?
6 A. The equity.
7 Q. The equity in what?
8 A. In the properties that the company was acquiring.
9 Q. Were the underwriters compensated also as a
10 percentage of equity from the properties?
11 A. Yes.
12 Q. That includes Domonic McCarns?
13 A. Yes.
14 Q. Now, Mr. Greiner had asked you about statements that
15 you made to the Government back in February of this year. Do
17 A. Yes.
18 Q. In those interviews, was it a free-for-all for you to
19 discuss whatever you wanted, or were you asked to discuss
20 specific areas and asked specific questions?
21 A. I think it was kind of both.
22 Q. And in that interview, do you recall talking about
23 Mr. McCarns and your concerns about his honesty?
24 A. Yes.
25 MR. GREINER: Objection, Your Honor. Improper

1 character.
2 MR. ANDERSON: Let me rephrase that.
3 THE COURT: The jury shall disregard that question
4 and answer.
5 Q. BY MR. ANDERSON: Did you discuss your concerns
6 regarding the way that Mr. McCarns was conducting himself with
7 respect to the business?
8 A. Yes.
9 Q. And that happened in your February interview, is that
10 right?
11 A. Yes.
12 Q. And then do you recall discussing in more detail in
13 your July 31st, 2013 interview the same topic?
14 A. Yes.
15 Q. And in specific, do you recall discussing the way
16 that McCarns was misrepresenting -- making misrepresentations
17 to homeowners when he was talking to them?
18 A. Yes.
19 Q. Who was running the office when Charles Head wasn't
20 there?
21 A. Really nobody particularly. Everybody had their
22 functions.
23 Q. Did different people have different responsibilities?
24 A. Yes.
25 Q. Did Charles Head answer questions of people in their

1 areas?
2 A. Yes.
3 Q. You heard also from Mr. Samuel. He asked you
4 questions about an attorney looking at documents related to the
5 transactions. Do you recall that testimony yesterday?
6 A. Yes.
7 Q. In your discussions with that attorney, did you tell
8 him that you were putting false information on the loan
9 applications?
10 A. No.
11 Q. Did you tell him that false statements were being
12 made to homeowners?
13 A. No.
14 MR. ANDERSON: Thank you. Well under 25 minutes.
15 Thank you, Your Honor.
16 THE COURT: Mr. Tedmon, anything further?
17 MR. TEDMON: Just one moment. No questions, Your
18 Honor.
20 MR. SAMUEL: Just two.
22 BY MR. SAMUEL:
23 Q. As it relates to Mr. Budoff when he was dealing with
24 the purchasers, right, he didn't get paid out of any equity
25 from the homes that were being purchased, is that correct; he

1 just got a $300 fee?
2 A. Sorry. Say that one more time.
3 Q. As it relates to Mr. Ben Budoff and his position as
4 it related to his job obtaining buyers, right, he didn't get
5 any money from the equity, he just got a $300 fee, isn't that
6 correct?
7 A. The $300 fee came from the equity.
8 Q. Well, okay, but he got a $300 fee each deal, right?
9 A. Per transaction, correct.
10 Q. So that's his amount of money in that position. And
11 when he went into the processing aspect of this company with
12 Premier Services, he was paid for the actual services of
13 processing the documents, correct? He wasn't paid a percentage
14 of the equity, correct?
15 A. Right. Correct.
16 Q. All right. And in terms of the 1003s, when you sat
17 down at your computer and you wanted to look at a 1003, what
18 was the name of the program -- or what was the program that you
19 used to access the 1003s?
20 A. Point.
21 Q. Point. Okay. And I recall you had already said that
22 you were unaware of who had access to it. But you had access
23 to it, correct?
24 A. Correct.
25 Q. And when you opened that document, and you looked at

1 that 1003, it had been completed for the most part?
2 A. Yes.
3 Q. There were parts which you actually filled in later
4 on because you've testified to that already, correct?
5 A. Yes. From time to time, correct.
6 Q. All right. Do you know what auto population is, the
7 concept?
8 A. Yes.
9 Q. And that simply means that if you were to put a name
10 into a box, every time that that box required a name, it would
11 be the same name, is that your understanding of what
12 auto-populating is?
13 A. No.
14 Q. What is your understanding of auto-populating?
15 A. That when you print the documents, the document is
16 populated with the information you put in the software program.
17 Q. So if, for example, the name was repeated over and
18 over again -- let's say the buyer -- it would appear in several
19 locations but with only one entry, correct?
21 Q. That's called auto-populating?
22 A. Okay.
23 Q. And so when you start with the document, are you
24 aware of -- let me just --
25 Did you ever work the document from the very

1 beginning; in other words, where there was nothing there on the
2 document and you worked your way through that 1003?
3 A. Yes.
4 Q. All right. And when you started with that document
5 and that 1003, were there any boxes already filled out for you,
6 or did you have to fill out each and every box?
7 A. Each and every box that needed to be filled out had
8 to be filled out.
9 Q. Well, the example was investment. Now you were told
10 that it was to be an investment, correct?
11 A. Yes.
12 Q. And once you completed that in the first 1003, did it
13 always show up "investment"?
14 A. Yes.
15 Q. All right. Once you completed the first --
16 Well, did you include Mr. Head's name in this
17 auto-population process as well?
18 A. No.
19 Q. Did you include Mr. Budoff's name in this
20 auto-population process with the 1003s?
21 A. I did not.
22 Q. All right. When you say "I did not," are you aware
23 of anybody else?
24 A. Not aware.
25 Q. Pardon?

1 A. I'm not aware.
2 MR. SAMUEL: That's it. Thank you.
3 THE COURT: All right. Do you need cross? How many
4 questions?
5 MR. GREINER: About five or six, Judge.
6 THE COURT: All right. I think we can get this done
7 before our break given we started a little bit late. Do this
8 quickly.
10 BY MR. GREINER:
11 Q. Now, Mr. Brotemarkle, you did not monitor the sales
12 calls of the sales agents, correct?
13 A. I did not.
14 Q. You didn't record them, correct?
15 A. I did not.
16 Q. And who created the commission structure for the
17 sales agents?
18 A. Charles.
19 Q. Charles Head?
20 A. Yes.
21 Q. Now, did you provide the sales agents with a script?
22 A. I did not.
23 Q. Do you know if they were provided a script?
24 A. I believe there was a script, yes.
25 Q. You never told the Government any information about

1 misrepresentations that you said Domonic McCarns made to
2 homeowners, correct?
3 A. I'm sorry? What was that again?
4 Q. The only thing you told the Government was Domonic
5 McCarns made misrepresentations to homeowners, right?
6 A. Yes.
7 Q. You didn't elaborate, correct?
8 A. Did not.
9 Q. You didn't tell them here's the misrepresentations,
10 correct?
11 A. Correct.
12 Q. Because you never heard them, correct?
13 A. I couldn't remember them.
14 Q. You never heard them, correct?
16 Q. You never heard them on the phone, correct?
18 Q. Okay. You never heard them on the phone, correct?
19 MR. ANDERSON: Objection. Asked and answered.
20 MR. GREINER: He hasn't answered the question, Judge.
22 Q. BY MR. GREINER: You never heard them on the phone?
23 A. I can't say I never heard them.
24 Q. Well, you have no memory of them, correct?
25 A. No, I can't remember them.

1 Q. And is it true that you created the software that
2 auto piloted (sic) the docs?
3 A. I did not create the software.
4 Q. But you did create the software of the doc generator
5 that generated the documents that went to the homeowner?
6 A. That software already existed. I didn't create it.
7 Q. You modified it, made it work better?
8 A. No. I didn't do anything personally. Mark Wilson
9 did that.
10 Q. And you worked with him on that?
11 A. He was instructed what the information was and where
12 it needed to be, and he took the software program and made it
13 do what it is that it did.
14 Q. Okay. So you did not create a software that auto
15 populated the docs/contracts, to send to the seller by the doc
16 generator department?
17 A. I personally did not create that software, no.
18 Q. That was Mark Wilson?
19 A. Yeah. I'm not a software programmer.
21 MR. SAMUEL: Your Honor, I have two questions. I'm
22 sorry I missed them. They are outside the scope of
23 Mr. Greiner's. I would ask to be permitted to reopen.
24 THE COURT: Based on Mr. Greiner's?
25 MR. SAMUEL: No. I said they were outside of

1 Mr. Greiner's statements. They were actually contained in the
2 other cross-examinations.
3 THE COURT: Well, let's take our break, and we'll
4 talk about what we're doing next.
5 During this break, it will be a 15-minute break. Our
6 single break for the afternoon. Remember, as always, my
7 admonitions. We'll see you back here in 15 minutes.
8 (Jury out.)
10 15 minutes.
11 So last time you said two questions, and it was more
12 like 20. So how many questions do you have?
13 MR. SAMUEL: It actually did come from Mr. Greiner's
14 examination. It deals with he learned that some lenders would
15 allow six loans. And the second question was, did you tell
16 Ben.
17 THE COURT: All right. So two questions.
18 MR. SAMUEL: That's it.
19 THE COURT: I'll allow that.
20 MR. GREINER: Judge, I actually missed one area
21 that's about five questions that I need to cover. I apologize.
22 THE COURT: And will there be redirect based on what
23 you've heard so far?
24 MR. ANDERSON: Not what we've heard so far, but I
25 don't know after Mr. Greiner.

1 THE COURT: Let's try to finish this witness up in
2 15 minutes. And do you have Mr. Corcoran on call?
3 MR. ANDERSON: Our next witness, Your Honor, would be
4 Howard Peter, who we would really like to finish today. He
5 missed work to be here. Mr. Greiner told me that he would only
6 be 45 minutes, and we went an hour and fifteen on his cross.
7 THE COURT: I know we're all tired. Now is the time
8 for greater focus than ever. On e-mail addresses, the e-mail
9 stips didn't cover things like Mr. Brotemarkle's e-mail. Is
10 there a way to stipulate that keith@danaloans is
11 Mr. Brotemarkle?
12 I think the record has made that clear, but there is
13 not a blanket stip that would completely eliminate the need for
14 some clarification. So if there are areas like that, where you
15 can reach stipulations, that might help move us along.
16 MR. GREINER: We've actually been in preliminary
17 discussions, and I think we can work something out, Judge.
18 MR. ANDERSON: The other thing is sometimes one
19 question will do instead of 20. A question, hey, did you use
20 this e-mail address would have covered all those e-mails.
21 THE COURT: Well, an offer of a stipulation once the
22 question is asked would also -- again, you know your cases
23 better than I do. You're eliciting the evidence that allows
24 you to tell a story.
25 But the more you meet and confer, the more you can

1 ease this process. I mean, the jury is tired. There is no
2 question about that.
3 So what are you thinking about Ms. Whitehead? We
4 need to have a discussion with her at the end of the day. My
5 question is do we -- we could of course give her the option of
6 sticking around to see where this is going.
7 Does anyone think it's going to go to the jury in
8 time for her to be a part of deliberations?
9 MR. TEDMON: No. I said yesterday I don't think
10 that's realistic. I think it's unfair to her at this point.
11 MR. SAMUEL: I don't either.
12 MR. TEDMON: I don't see it happening.
14 MR. ANDERSON: I think even if they start
15 deliberations, it's likely she would be pulled out in the
16 middle of those deliberations.
17 I know the Court's heard it. I mean, I can't express
18 my frustration enough with what I feel like we've been
19 effectively filibustered out of presenting our case in a timely
20 manner.
21 THE COURT: Well, we had identified that week after
22 Thanksgiving. She got left on the jury, and in retrospect, she
23 shouldn't have been.
24 MR. ANDERSON: It's not her fault.
25 THE COURT: Well, also, all of us could have

1 anticipated that problem. Because she did clearly say that she
2 had a family trip starting on the 3rd. So I'll ask her to stay
3 briefly. And, I mean, if she really wants to stay and see if
4 there's any possibility, I'm not going to tell her she has to
5 leave. But I will give her that option. And then we'll use
6 our second alternate. That's the plan. So ten minutes now.
7 (Break taken.)
8 THE COURT: All right. Let's bring Mr. Brotemarkle
9 in. And you can go ahead and get the jury, Ms. Streeter.
10 (Jury in.)
12 again for today, ladies and gentlemen. Thank you, as always,
13 for your attention and your diligence.
14 I think it's warm in here again today, and I have no
15 control in that so I apologize for that. I know it makes it
16 more difficult to pay attention later in the day. We have just
17 over an hour. We have about 15 more minutes, max, with
18 Mr. Brotemarkle, and we have another witness we're trying to
19 get through today.
20 Mr. Samuel has two more questions, and Mr. Greiner
21 has up to five more questions, and then Mr. Anderson may have a
22 few questions.
25 BY MR. SAMUEL:

1 Q. First question is, you were made aware from lenders
2 that they would permit up to six purchasers per property, you
3 testified to that, is that true?
4 A. Yes.
5 Q. All right. And you told Ben Budoff that it was okay
6 to have six purchasers per buyer, isn't that true?
7 A. Six properties purchased by per buyer.
8 Q. Yes. You told him that?
9 A. Yes.
10 Q. That was okay?
11 A. Yes.
12 Q. That was part of your training?
13 A. Yes.
16 MR. GREINER: I can do it in two and a half minutes,
17 Judge.
18 THE COURT: Do you want me to time you? I'm going to
19 time you.
20 MR. GREINER: You tell me when to go. I'm ready.
21 THE COURT: Go.
23 BY MR. GREINER:
24 Q. You remember Domonic McCarns calling the police to
25 the Head Financial/Funding Foreclosures, correct?

1 A. Yes, I guess there was a police there.
2 Q. And the police came because there was a fight in your
3 office, right?
4 A. Yes.
5 Q. It was between Domonic McCarns and Kou Yang's
6 husband, correct?
8 Q. Now, you didn't monitor Domonic McCarns' phone calls?
9 A. No.
10 Q. You didn't record them?
11 A. No.
12 Q. You didn't sit in his office when he made his sales
13 pitch?
16 Q. BY MR. GREINER: You didn't sit in Domonic McCarns'
17 office when he was on the telephone, correct?
18 A. I did from time to time.
19 Q. Well, not when he was talking to the homeowners,
20 correct?
21 A. Yeah.
22 Q. Well, you never mentioned that to the Government, did
23 you? Did you?
25 Q. And you wouldn't have -- you have no personal

1 recollection whatsoever what Domonic McCarns told the
2 homeowners, correct?
3 A. No.
4 Q. All right. You actually fired Domonic McCarns at one
5 time from this job, correct?
6 A. I didn't remember that.
7 Q. Well, you fired him either in December 2005 or
8 January 2006 with Ed Shaffer, correct? You and Ed Shaffer
9 fired Domonic McCarns, right?
10 A. Yeah, I guess -- I mean, I don't remember exactly,
11 but, yeah, maybe we did.
12 Q. And then you hired him back on probation, correct?
13 A. Ed Shaffer maybe, yes.
14 Q. And the probation was not to go into Kou Yang's
15 office, right?
16 A. Yes.
17 Q. And at some point in time in May/June of 2005,
18 Domonic McCarns called you a racist, right?
19 A. Yes, he did.
20 Q. And your relationship with Domonic McCarns was rocky
21 at best, correct?
22 A. I don't recall him calling me a racist to my face. I
23 think he told Charles, and Charles brought it to my attention.
24 Q. He called you a racist when you met with Jason
25 Marshal, Brian Singleton, Domonic McCarns in your office,

1 correct?
3 Q. Well, you knew who Brian Singleton was, right?
4 A. I do.
5 Q. And Jason Marshal?
6 A. I do.
7 Q. And both those individuals are black individuals,
8 correct?
9 A. Yes, they are.
10 Q. Do you remember Domonic McCarns called you a racist,
11 correct?
12 A. I don't remember him saying that to me directly,
13 though.
15 THE COURT: All right. That was exactly two and a
16 half minutes. Mr. Anderson?
21 MR. TEDMON: Yes.
22 MR. SAMUEL: Yes.
24 Next witness.
25 MR. MORRIS: The United States calls Howard Peter.

1 THE COURT: Let me ask, is there any agreement on
2 time constraints that you want me to hold you to on this
3 witness?
4 MR. MORRIS: It will be very quick. At least the
5 direct. There is a handful of exhibits coming in through
6 stipulation, and I don't anticipate a whole lot of cross.
9 you are about to give in the matter pending before this jury is
10 the truth, the whole truth, and nothing but the truth, so help
11 you God?
15 THE WITNESS: My name is Howard Jay Peter,
16 H-o-w-a-r-d. Middle name Jay, J-a-y. Last name Peter,
17 P-e-t-e-r.
19 HOWARD JAY PETER,
24 BY MR. MORRIS:
25 Q. Mr. Peter, where do you live?

1 A. I live in West Sacramento, California.
2 Q. Did you live in West Sacramento in 2006?
3 A. Yes, sir.
4 Q. And what line of work are you in?
5 A. I'm a machinist.
6 Q. Where do you work?
7 A. I work at -- on Duluth Street. It's in West
8 Sacramento. It's called Capitol Clutch and Brake.
9 Q. And did you work at Capitol Clutch and Brake in 2006?
10 A. Yes.
11 Q. How long have you worked there?
12 A. Fourteen years.
13 Q. Do you recall in 2006 approximately how much money
14 you were making at Capitol Clutch and Brake?
15 A. 40,000 a year.
16 Q. In 2006 did you become involved in real estate
17 transactions?
18 A. Yes, sir.
19 Q. How did you get involved in that?
20 A. I was looking for residual income, side work, and I
21 answered an e-mail ad claiming that I could make residual
22 income of 30,000 a year.
23 Q. Okay. And when you replied to that e-mail, did you
24 then have some interaction with people about making that
25 income?

1 A. Yes, sir.
2 Q. Do you recall who it was that you dealt with?
3 A. Initially it was a lady called Lisa Vang.
4 Q. Okay. And you say initially, did you then have -- or
5 have any contact with somebody other than Lisa Vang?
6 A. Her younger brother.
7 Q. Do you recall his name?
8 A. Tua.
9 Q. Okay. And did you speak by phone with them?
10 A. Yes, sir.
11 Q. Okay. What did you tell them when you spoke to them
12 on the phone?
13 A. First of all, they asked me my --
14 MR. TEDMON: Objection, Your Honor. Can we have the
15 specific person as opposed to "they."
17 Q. BY MR. MORRIS: One more clarification then -- or
18 some more clarification.
19 Did you ever have any contact with anybody other than
20 Lisa Vang and Tua Vang?
21 A. I had one brief conversation with a lady called Olga.
22 Q. And so then as I ask you these questions, if you
23 could be as specific as you can of remember -- rather than
24 saying "they," if you could say Lisa, or Tua, or Olga, to the
25 best can you recall that. Okay?

1 A. Yes.
2 Q. My question was, what did you tell them? And I think
3 you started by saying "they said to me."
4 So who was it that you were speaking to, and what did
5 that person say to you?
6 A. Lisa Vang asked me for my Social Security number and
7 checked my credit score.
8 Q. Okay.
9 A. I had to have a qualification of, I believe, like 760
10 or somewhere around there, and I had well above that.
11 Q. Okay. And what was your understanding of what the
12 real estate transaction would entail based on these
13 conversations?
14 A. I was informed that there was people in foreclosure
15 that was going -- they were trying to save their and keep their
16 houses, and they would do that by allowing them to -- or to use
17 my credit to buy the houses, and for them to stay in the
18 houses, paying rent for a year, and then they could buy the
19 houses back, and all the money would be -- the property value
20 would be used for rent, subsidized by them, and keep the houses
21 in condition, good condition.
22 Q. Okay. And were you expecting that you would receive
23 something for your participation in this?
24 A. Yes, sir.
25 Q. What did you think you would get?

1 A. I was told that for each house that the transaction
2 was completed I would get $5,000.
3 Q. And to the best of your recollection, that was Lisa
4 that told you those details?
5 A. Yes, sir.
6 Q. On the basis of what you were told, did you decide to
7 take part in the program?
8 A. Yes. With many questions.
9 Q. Okay. So I take it then, did you ask questions of
10 Lisa about the program?
11 A. Yes, sir.
12 Q. Did you ask questions of Tua Vang about the program?
13 A. Yes, sir.
14 Q. Okay. And other than what you've already told us as
15 far as what the details of the program were, were there any
16 other details that they gave you in response to those
17 questions?
18 A. Yes. They said that my credit rating --
19 MR. TEDMON: Your Honor, objection. If we could stay
20 away from "they" and focus on the speaker.
21 THE WITNESS: Tua and/or Lisa --
22 MR. MORRIS: Hang on a second.
23 THE COURT: The question was about Tua Vang, correct?
24 Q. BY MR. MORRIS: I thought it was Tua and Lisa?
25 THE COURT: Well, you started the line of questioning

1 with Tua, but you're talking about both of them?
2 Q. BY MR. MORRIS: I'll clarify. Because I think we
3 said that your original understanding was from Lisa Vang.
4 A. Yes, sir.
5 Q. Did you then have other discussions with Tua Vang?
6 A. I had many discussions with Lisa, and to the point
7 where she said that she was too busy to answer my questions and
8 referred me to her brother, Tua.
9 Q. And the remaining questions were answered by Tua?
10 A. Yes. To the best of his ability at that time.
11 Q. So other than items you've already explained, were
12 there any other details told to you by Tua Vang?
13 A. I asked him if he had family members in the program
14 that were invested and were collecting money, and he said, yes,
15 one of his sisters had, you know, been in the program for a
16 number of years.
17 Q. Were there any other details that either Lisa or Tua
18 gave you in response to your questions that you can recall?
19 A. They had other aspects of the program that money
20 could be made through the same program.
21 Q. And what other aspects were those other ways to make
22 money?
23 A. If I invested monies, it would be returned 60 percent
24 interest.
25 Q. Did you have money that you were -- available to

1 invest at that time?
2 A. No, sir.
3 Q. Okay. And were there any other details that you can
4 recall?
5 A. No, sir.
6 Q. So based on these conversations you had with Lisa and
7 Tua, did you decide to take part in the program?
8 A. Yes.
9 Q. What's your memory of what happened next?
10 A. There was packages of applications for loans for
11 different properties that I had to go over and sign.
12 Q. And how did you receive those?
13 A. By mail.
14 Q. And when you got those applications, were there empty
15 spots for you to fill in or were they already filled out?
16 A. They were mostly filled out, and I was asked, you
17 know, where my income come from. And when they were sent to
18 me, they were different than what I had acknowledged that I was
19 -- my net worth.
20 Q. So when you say you were asked, that was by Lisa or
21 Tua what your income was?
22 A. Yes, sir.
23 Q. And you answered them truthfully?
24 A. Yes, sir.
25 Q. And the applications you that received had different

1 information on them?
2 A. Yes, sir.
3 Q. You said they were mostly filled out. What were the
4 parts that weren't filled out?
5 A. Where my signature needed to be they highlighted and
6 where I needed to initial.
7 Q. So other than your signatures and initials, were
8 there any parts that you filled into these applications when
9 they came to you?
10 A. No, sir.
11 Q. Do you recall receiving -- not talking, now, about
12 the 5,000 per house -- but do you recall receiving money from
13 this organization as part of the transactions?
14 A. Sir, they added money to my bank account to qualify
15 for titles. And that money was to be paid to the title
16 company, and then the balance was to be paid back to them.
17 Q. Okay. So you would receive money into your account?
18 A. Yes, sir.
19 Q. And did you receive instructions about what to do
20 with that money?
21 A. Yes, sir.
22 Q. And to make sure I understand, it sounds like two
23 sets of instructions, some of that money you sent to a title
24 company?
25 A. Yes, sir.

1 Q. And some of that money you then sent back to them?
2 A. Yes, sir.
3 Q. And when you say you would send money back to them,
4 do you recall how it is that you would send that money back?
5 A. Cashier's check only.
6 Q. Not a wire?
7 A. No, sir.
8 Q. Okay. And so how would you get the cashier's check?
9 A. From the bank. I had to pay for it from the bank.
10 Q. How did you get the cashier's check to them?
11 A. Through the information they gave me. Whatever their
12 address was -- would be.
13 Q. That's what I'm getting at is you mailed it to them?
14 A. Yes, sir.
15 Q. Do you recall receiving other paperwork in the mail
16 after a transaction was completed?
17 A. No, sir. Other than other packages for more loan
18 applications. I'm sorry.
19 Q. And did you receive the $5,000 per home?
20 A. Yes, sir.
21 Q. How did you receive that?
22 A. It was -- I think one of the times was I got to keep
23 the extra -- the 5,000, and sent back the balance of what it
24 was that I needed to pay the title company. And the other time
25 was a check from them.

1 MR. MORRIS: I would like to move to admit
2 Government's Exhibit 26B1. It is covered by the stipulation.
3 MR. GREINER: B as in boy?
4 MR. MORRIS: B as in boy. It is a 20-page exhibit.
9 MR. SAMUEL: Join.
12 THE COURT: All right. The variance objection is
13 recorded. The exhibit comes in.
16 Mapes Avenue, Springfield, NJ admitted into evidence.)
17 Q. BY MR. MORRIS: If we could bring up 26B1, page six,
18 please.
19 Mr. Peter, do you recognize that signature on the
20 screen?
21 A. It's mine sir.
22 Q. And I'm going to ask you some questions. I'm going
23 to ask you to think back to the May of 2006 timeframe as we
24 discuss this. Okay. Zoom back out.
25 Do you recognize this address? I think it's 834C

1 California Street?
2 A. Yes, sir. That's where I was living at that
3 particular time.
4 Q. Okay. Actually, stay right there.
5 Do you recognize those initials?
6 A. Yes, sir. They are mine.
7 Q. Zoom back out and go to the next page, please.
8 Is that the employer you talked about previously in
9 your testimony?
10 A. Yes, sir.
11 Q. And was it true that you were a lead departmental
12 machinist at that time?
13 A. Yes, sir. I still am.
14 Q. Zoom back out. Were you making $8,500 a month in May
15 of 2006?
16 A. No, sir.
17 Q. Those initials appear to be yours?
18 A. Yes, sir.
19 Q. Zoom back out, please. And the next page.
20 In May of 2006 did you have $55,000 in a Bank of
21 America account?
22 A. I never had a Bank of America account, sir.
23 Q. Did you have $55,000 in any bank account in May of
24 2006?
25 A. No, sir.

1 Q. Zoom back out, please.
2 In May of 2006 did you have a $41,000 individual
3 retirement account?
4 A. No, sir.
5 Q. Had you had an individual retirement account prior to
6 this date?
7 A. I had one that probably had a few hundred dollars in
8 it. I cashed it in to bring my wife back from the Philippines.
9 Q. And that was prior to May of 2006?
10 A. Yes, sir.
11 Q. If we can go to the next page, please. Does that
13 A. That's my signature, sir.
14 Q. And down here where it says "telephone interview," do
15 you recall ever being interviewed by somebody named Charles
16 Head?
17 A. Never in my life.
18 Q. Does that appear to be the way that you write the
19 date on a document?
20 A. Yes, sir.
21 Q. Okay. Does it appear to be different than that date?
22 A. That's the same date but not anywhere the way I would
23 sign it.
24 Q. It was a much better answer than the question that I
25 asked. The same date but written differently?

1 A. Yes, sir.
2 Q. One last signature on this page. Does this appear to
4 A. Yes, sir.
5 MR. MORRIS: Okay. You can bring it down. And, Your
6 Honor, I'm going to move to admit 26A1, 26A2 and 26A3. They
7 are all covered by the stipulation.
15 THE COURT: Those objections are recorded. 26A1, 2
16 and 3 come in.
17 (Government Exhibit 26A1, 26A2 and 26A3, (See index
19 Q. BY MR. ANDERSON: Go to 26A1, page six, please.
20 And just to be clear, still talking about you at this
21 point. And I'll ask you to think to the June 2006 timeframe
22 for the following series of questions. If we can go to page
23 eight of this exhibit, please.
25 A. Yes, sir.

1 Q. Now in June 2006 or between May and June of 2006, had
2 there been any substantial change in your employment situation?
3 A. Not at all.
4 Q. Any substantial change in your income?
5 A. No, sir.
6 Q. Okay. If you can zoom out and go to the prior page,
7 please.
8 So in June of 2006 were you making $8,825 a month?
10 Q. If we can zoom out.
11 Between May and June of 2006 did you have a Golden
12 One Credit Union account with $45,054.82 in it?
13 A. No, sir.
14 Q. If we can zoom out. And did you have a retirement
15 fund funded to the level of $41,102 in June of 2006?
16 A. I had a profit-sharing plan that's in my company, and
17 at that time, I'm only guessing, it was around 16 grand.
18 Q. Okay. Take that down. Bring up 26A2, please.
19 In that time period do you recall receiving a wire
20 for the amount of $43,500 into a bank account?
21 A. Sir, I remember receiving money, but I don't know
22 what the numbers were.
23 Q. Okay. You don't remember the exact dollar?
24 A. No, sir.
25 MR. MORRIS: You can bring that down. And, Your

1 Honor, I would like to approach with one exhibit that's not in
2 our laptop, 26B2.
3 THE COURT: Counsel has copies?
4 MR. MORRIS: They do.
5 THE COURT: Is this covered by a stip?
6 MR. MORRIS: It is not, Your Honor. That's why I
7 would like to have him look at it.
9 Q. BY MR. MORRIS: If you could review the document I
10 just handed to you.
11 A. Sorry. I can't see it very well. Sorry.
12 I'm sorry. I recognize the document, but I can't
13 read it anymore with my eyes.
14 Q. Okay. If you recognize it, how do you recognize it?
15 A. National Property Management, the letterhead and the
16 logo.
17 Q. Is this a document that you've seen before?
18 A. Yes, sir.
19 Q. Is it a document that you've received before?
20 A. Yes, sir.
21 Q. Okay. Is this a document that you received in the
22 context of these transactions that you've been describing?
23 A. Yes, sir.
24 MR. MORRIS: Your Honor, I would move to admit
25 Government's Exhibit 26B2.

8 (Government Exhibit 26B2, Letter dated 5/18/06 from
9 Lisa Vang of Nations Property Management to Mr. Howard Peter
10 re: Signing and returning documents admitted into evidence.)
11 MR. MORRIS: Can I approach to retrieve that, Your
12 Honor?
14 MR. MORRIS: I'll bring it up on the screen. Maybe
15 it will be easier for you to see.
16 THE WITNESS: Much better.
17 Q. BY MR. MORRIS: And so your testimony was that you
18 recognize this as a document that you had received?
19 A. In every package that they sent it was basically the
20 same.
21 Q. Okay. And when they sent it, this was the package
22 that you previously testified had come to you by mail or some
23 similar --
24 A. Yes, sir.
25 Q. Do you recall if it was mail, or FedEx, or UPS?

1 A. No, sir.
2 Q. But it was one of those?
3 A. Yes, sir.
4 Q. And then I'll have you look at this section here
5 where it says "to date them," and then where it says, "I have a
6 return envelope enclosed, please call this number, have it
7 picked up," did you follow those instructions when you received
8 them?
9 A. Yes, sir.
10 Q. And do you recall doing that, actually filling out
11 documents and then calling the number and having them sent
12 back?
13 A. Yes. I don't remember them being actually at that
14 date, but that's -- the instructions were that, and that's how
15 I dated them.
16 Q. And it was in that time period that we just talked
17 about --
18 A. Yes, sir.
19 Q. -- the May to June 2006 time period?
20 And to be clear, Lisa Vang, whose is listed here, is
21 that the person you previously testifying that you had been
22 interacting with?
23 A. Yes, sir.
24 MR. MORRIS: Just a moment, Your Honor.
25 Q. BY MR. MORRIS: And maybe I should just clarify.

1 The items that you say you received by mail, you
2 received them at that address, the California address?
3 A. Yes, sir.
4 Q. And when you would send stuff back by mail, would you
5 send it from the Sacramento area?
6 A. Yes, sir.
7 Q. So it was stuff that you did here in Sacramento, West
8 Sac?
9 A. It was in a self-addressed stamped envelope that was
10 in part of the package, and I sealed it and sent it back by
11 mail.
12 Q. And that was, to the best of your recollection, from
13 your home here also?
14 A. Yes, sir.
21 MR. GREINER: Just brief.
23 BY MR. GREINER:
24 Q. Good afternoon, sir.
25 A. Hello, sir.

1 Q. You don't know a Domonic McCarns, correct?
2 A. The name is not familiar at all.
3 Q. Never communicated with a Domonic McCarns at all?
4 A. Last name, sir?
6 A. Never heard of the name before.
7 Q. Never communicated with him at all?
8 A. No, sir.
15 MR. SAMUEL: Yes.
17 THE COURT: All right. You are excused, sir. You
18 may step down.
20 MR. ANDERSON: The United States calls Amber Edinger,
21 previously known as Ferrantello.
24 you are about to give in the matter now pending before this
25 jury is the truth, the whole truth, and nothing but the truth,

1 so help you God?
5 THE WITNESS: Amber Edinger. A-m-b-e-r,
6 E-d-i-n-g-e-r.
8 AMBER EDINGER,
13 BY MR. ANDERSON:
14 Q. Thank you, Your Honor.
15 Good afternoon. Did you previously go by another
16 last name?
17 A. Yes, sir.
18 Q. What was that last name?
19 A. Ferrantello.
20 Q. And why did you change your name?
21 A. I got married.
23 A. In 2007 on October 31st.
24 Q. All right. Do you know somebody by the name of
25 Charles Head?

1 A. Yes, sir.
2 Q. When approximately did you meet Charles Head?
3 A. October of 2004.
4 Q. Where did you meet him?
5 A. At LAX airport.
6 Q. Where are you from?
7 A. Florida.
8 Q. Were you in L.A. visiting at the time?
9 A. Yes, sir.
10 Q. When you met Charles Head, did you talk to him?
11 A. Yes, sir.
12 Q. Did you make plans to be able to meet up later?
13 A. Yes, sir.
14 Q. Did you in fact meet up with Charles Head later?
15 A. Yes, sir.
16 Q. Did you know him socially for a time?
17 A. Yes, sir.
18 Q. During that time period, did you have an opportunity
19 to meet anybody else who was associated with Charles Head?
22 Q. BY MR. ANDERSON: Did you ever meet somebody by the
23 name of Domonic McCarns?
24 A. Yes, sir.
25 Q. Where did you meet Domonic McCarns?

1 A. Out at a social event, like a night club.
2 MR. GREINER: Objection. Relevance. Move to strike.
4 last answer.
5 Q. BY MR. ANDERSON: When you met Domonic McCarns, was
6 that through Charles Head?
7 A. Yes, sir.
8 Q. During this time that you knew Charles Head socially,
9 did you learn about his business?
10 A. Yes, sir.
11 Q. Did he talk about what he was doing for a living?
12 A. Yes, sir.
14 A. He owned a mortgage company.
15 Q. What was the name of the company, if you remember?
17 Q. Did Charles Head eventually ask you to participate in
18 that company in some way?
19 A. Yes, sir.
20 Q. What did Charles Head ask you?
21 A. He asked if I could be a buyer.
22 Q. Did he describe what a buyer was?
23 A. Yes, sir.
25 A. Basically that his company, Creative Loans, was

1 helping people that were going into or were already in
2 foreclosure with the bank. And that he would help them out to
3 get them out of the bind that they were in. And a person like
4 me, who had good credit at the time, could be a purchaser on
5 that home.
6 And after a certain period of time, once the people
7 made their payments and things like such, they would get their
8 home back, and it would be released off of my name, and then I
9 would increase my credit.
10 Q. Did Charles Head tell you what you were going to need
11 to do in order to carry this out?
12 A. Sign some loan documents.
13 Q. And in exchange were you supposed to get anything?
14 A. Yes.
15 Q. What were you supposed to get?
16 A. $5,000 per transaction.
17 Q. Now, did you decide to do this program?
18 A. Yes, sir.
19 Q. Were you in Florida at the time that you decided to
20 participate?
21 A. Yes, sir.
22 Q. Where were you living?
23 A. Miami.
24 Q. What were you doing for a living at the time?
25 A. I was freelance acting, and modeling, and bartending.

1 Q. Approximately when was this that Charles asked you to
2 get involved?
3 A. The purchases I did were between May of 2005 to
4 August of 2005.
5 Q. At the time, how old were you?
6 A. 23 or 24. I'm 32.
7 Q. Approximately how much were you making a year --
8 well, how much were you making a month?
9 A. 1,000 to 1500 a month.
10 Q. In interacting with Charles Head, was he in a
11 position where he could observe your financial state?
14 Q. BY MR. ANDERSON: Did Charles Head ever visit your
15 apartment?
16 A. Yes.
19 Q. BY MR. ANDERSON: Were you owning or renting at the
20 time?
21 A. I was renting.
22 Q. What size of place were you in?
25 Q. BY MR. ANDERSON: All right. Did you eventually

1 decide to sign some documents related to these -- related to
2 transactions with Charles Head?
3 A. Yes.
4 Q. All right. How did it come about that you -- back
5 up.
6 Did you provide information to anybody at Head
7 Financial Services about your financial situation?
8 A. Yes.
10 A. Kou Yang and Lisa Vang.
11 Q. What information did you provide to them?
12 A. My occupation, and my Social Security number, and
13 whatever questions, I guess, they were asking for the loan.
14 Q. Do you remember whether or not you provided
15 information about your monthly income?
16 A. I would assume so, yes.
17 Q. After you provided that information to Kou Yang and
18 Lisa Vang, what was the next step in this process with these
19 transactions?
20 A. Well, once they would find a home, or, you know, a
21 person who was going into the foreclosure process, they would
22 contact me, and then they would have --
23 MR. TEDMON: Objection, Your Honor. Can we just --
24 again we're into the "they" thing.

1 THE WITNESS: They -- I'm sorry -- Kou Yang would
2 contact me by phone and tell me that they had a purchase --
3 whatever -- the buying thing set up. So they would send a
4 traveling notary to my condo, and it would be a loan document,
5 and I would sign it, and the notary would, I assume, send it
6 back to Creative Loans.
7 MR. TEDMON: Objection as to any speculation. Move
8 to strike the last part of the answer.
10 THE COURT: Sustained. Wait for the next question.
11 Q. BY MR. ANDERSON: What's the last thing you knew as
12 far as the notary with the documents, would the notary take the
13 documents?
14 A. Yes, the notary would take the documents.
15 Q. Do you recall how many transactions you signed
16 documents for?
17 A. Three.
18 Q. Did you later learn of another property that had been
19 put in your name?
20 A. Yes.
21 Q. When did you learn about that?
22 A. When I started to receive foreclosure notices on the
23 properties.
24 Q. So after you signed for the properties, what was the
25 next thing that happened in the process that you recall?

1 A. I would receive a check.
2 Q. Did you ever plan to make any of the mortgage
3 payments on these properties?
4 A. No.
5 Q. Had anyone explained to you who was supposed to make
6 the mortgage payments on the properties?
7 A. Yes.
8 Q. Who had explained that to you?
9 A. Kou Yang.
10 Q. And did you ever have any intention to manage the
11 properties, or make repairs, or do any maintenance on the
12 properties?
13 A. No.
14 Q. Do you remember where the properties were located
15 that you signed documents for?
16 A. Yes, sir.
17 Q. Which cities or areas were they in?
18 A. Pennsylvania, Pennsylvania, and Maryland.
19 Q. After you had entered into these transactions, did
20 you receive money for them?
21 A. Yes.
22 Q. Do you recall how you got the money?
23 A. By a check.
24 Q. When you had completed doing those property
25 transactions, was there a point when you realized that

1 mortgages weren't being paid on those properties?
2 A. Yes, sir.
3 Q. When was that?
4 A. Approximately nine months after the fact of signing
5 those loan documents.
6 Q. Were the bills for the mortgages coming to you?
7 A. No, sir.
8 Q. How did you find out that the mortgages weren't being
9 paid?
10 A. I eventually got a notice to my condo, and then
11 following that I received a letter from someone from Charles
12 Head's business.
13 Q. Now, when were you signing documents related to the
14 three property transactions, what time period?
15 A. In between May and August of 2005.
17 Government's Exhibit 9B be admitted.
18 MR. GREINER: B as in boy?
20 THE COURT: 9B is already in.
21 MR. ANDERSON: Let's go ahead and pull that up.
22 Q. BY MR. ANDERSON: Do you see the address 911 Fox
23 Chapel Lane?
24 A. Yes, sir.
25 Q. Was that one of the properties that you recall

1 signing documents for?
2 A. No, sir.
3 Q. Did you ever live in Jacksonville, Florida?
4 A. Between the ages of 2 and 12, yes, sir.
5 Q. Did you ever live at that address?
6 A. No, sir.
7 Q. Did you ever intend to occupy that house as a primary
8 residence?
9 A. No, sir.
10 Q. Let's go to page two of this document. In 2005 were
11 you making $4,745 a month?
12 A. Absolutely not, sir.
13 Q. Let's go to page three. Do you see the borrower's
14 signature line?
15 A. Yes, sir.
17 A. No, sir.
18 Q. Let's go to page four. Do you see the borrower's
19 signature line on that page?
20 A. Yes, sir.
22 A. No, sir.
23 Q. Let's go to page five. Just to highlight, this is
24 also for 911 Fox Chapel Lane, is that right? Do you see that?
25 A. I see it, sir.

1 Q. And let's go to the bottom of this page. There are
2 initials on the borrower line. Are you able to tell whether or
3 not they are your initials?
4 A. I can tell whether or not they are mine.
5 Q. Are they yours?
6 A. No, sir.
7 Q. Let's go to page six. Are those your initials?
8 A. No, sir.
9 Q. Page seven. On the borrower's signature line, is
10 that your signature?
11 A. No, sir.
12 Q. Page eight. Same question. Is that your signature?
13 A. No, sir.
15 Your Honor, I would ask that Government's Exhibits 9A1 through
16 9A6 be admitted.
18 MR. TEDMON: One moment, Your Honor. No objection.
21 THE COURT: All right. Those exhibits are in 9A1
22 through 9A6.
23 (Government Exhibit 9A1, 9A2, 9A3, 9A4, 9A5, 9A6,
24 (See index for descriptions) admitted into evidence.)
25 Q. BY MR. ANDERSON: Did you ever receive this document?

1 A. No, sir.
2 Q. Do you recall ever seeing a document like this but
3 for a different property?
4 A. No, sir.
5 Q. Let's go to Government's Exhibit 9A1, page eight.
6 Did you ever receive a document like this?
7 A. No, sir.
8 Q. Let's do page six of the same document -- or same
9 exhibit, excuse me.
10 How about a document like this?
11 A. No, sir.
12 Q. Go to Government's Exhibit 9A2. Did you ever receive
13 a document like this document?
14 A. No, sir.
15 Q. 9A3. Did you ever receive a document like this one?
16 A. No, sir.
17 Q. And 9A4. Do you see this document entitled Grant
18 Deed?
19 A. Yes, sir.
20 Q. Did you ever receive a copy of a grant deed like
21 this?
22 A. No, sir.
23 Q. Do you know what a grant deed does?
24 A. No, sir.
25 Q. And we will go to page two. In April 2005 were you

1 going by the name Amber Dawn Ferrantello?
2 A. Yes, sir.
3 Q. Did you ever receive a document like this one?
4 A. No, sir.
5 Q. And if we go to the top of this document. Did you
6 have an address at 949 South Coast Drive, Number 450, Costa
7 Mesa, California?
8 A. No, sir.
9 Q. Have you ever had an address at that location?
10 A. No, sir.
11 MR. ANDERSON: Go to Government's Exhibit 9C1, which
12 I'd ask to have admitted, Your Honor. It's a title record.
18 (Government Exhibit 9C1, Warranty Deed filed and
19 recorded in Duval County, Florida on 8/19/2005 admitted into
20 evidence.)
21 Q. BY MR. ANDERSON: Did you ever receive a warranty
22 deed for 911 Fox Chapel Lane, Jacksonville, Florida?
23 A. No, sir.
24 Q. Do you know what a warranty deed does?
25 A. No, sir.

1 Q. Go to page two. Same question but with this
2 document, the warranty deed. Did you ever receive this?
3 A. No, sir.
4 Q. Do you know if this is your signature or not at the
5 bottom of the document?
6 A. No, sir.
7 Q. No, you don't know, or, no, it's not your signature?
8 A. No. It doesn't appear to be my signature.
9 Q. And if we go to the top left. Were you ever
10 represented by a Robin K. Roberts, Attorney at law?
11 A. No, sir.
12 Q. Do you know who that is?
13 A. No, sir.
15 Government's Exhibit 9D be admitted in its entirety.
22 THE COURT: All right. 9D is in.
23 (Government Exhibit 9D, Copies of checks;
24 Wire Original Information Report admitted into evidence.)
25 Q. BY MR. ANDERSON: Are you able to read that okay?

1 A. Yes, sir.
2 Q. Do you see a check with your name on the "pay to the
3 order of" line?
4 A. Yes, sir.
5 Q. And there is a signature on the back side of that
6 check, over here, do you see that?
7 A. Yes, sir.
8 Q. Do you know whether or not that's your signature, or
9 does it appear to be your signature?
10 A. It appears to be my signature.
11 Q. And if we go to -- back out and go to page two.
12 Do you see the signature right here?
13 A. Yes, sir.
14 Q. Does that appear to be your signature as well?
15 A. Yes, sir.
16 Q. And we'll go to page three. It's a wire form. At
17 the time you were interacting with Head Financial Services, did
18 you have a Bank of America account?
19 A. Yes, sir.
20 Q. And were you located on Collins Avenue in Florida?
21 A. Yes, sir.
22 Q. Miami Beach?
23 A. Yes, sir.
24 Q. Do you know if Charles Head was aware that you did
25 not have substantial income or assets at the time?

1 MR. TEDMON: Objection. Speculation.
2 THE COURT: Just answer the question yes or no for
3 now.
4 THE WITNESS: Can you say it one more time, please.
5 Q. BY MR. ANDERSON: Do you know if Charles Head was
6 aware that you didn't have substantial income or assets?
7 A. Yes, sir.
8 Q. How do you know that Charles Head was aware?
9 MR. TEDMON: Objection, Your Honor. Goes to my
10 client's information. She's speculating.
11 THE COURT: She answered "yes." Overruled. You can
12 answer that question. Just answer that question.
13 THE WITNESS: He saw where I lived, and what I drove.
14 And that is all.
15 Q. BY MR. ANDERSON: All right. Did Charles Head -- we
16 can take that exhibit down.
17 Did Charles Head also ask you to participate in
18 another aspect of the business?
19 A. Yes, sir.
20 Q. When was that? Approximate is fine, or if you can't
21 remember, let us know.
22 A. Around the same time of the purchases, so I'd say
23 around June of 2005.
24 Q. What did Charles Head ask you to participate in?
25 A. He wanted to expand his business to Florida, so

1 creating, I guess, Creative Loans in Florida.
2 Q. Did he explain to you what he envisioned your role
3 being?
4 A. I would be someone who took --
5 Can I explain how the process that I was told went?
6 THE COURT: Just answer the question and then wait
7 for the next question.
8 MR. TEDMON: Your Honor, I'm going to object on
9 relevance.
10 MR. ANDERSON: It's about the business.
11 THE COURT: Well, just very briefly. Overruled.
12 Very briefly answer that question.
13 MR. SAMUEL: Objection as variance.
15 THE COURT: That objection is recorded.
16 MR. GREINER: Join that.
17 THE COURT: Again, just very brief response to that
18 question.
19 THE WITNESS: Can you please ask it again?
20 Q. BY MR. ANDERSON: Let me start with, when you say
21 June, do you mean June 2005?
22 A. Correct.
23 Q. And in approximately June 2005 --
24 A. Uh-huh.
25 Q. -- what did Charles Head ask you to do for Creative

1 Loans in Florida?
2 A. Be a call center, if you will, and read over a
3 conversation log when people would call in to the number.
4 Q. And what were you supposed to do with people who
5 called into the number?
6 A. I would write down the answers to the questions on
7 the conversation log. And if it seemed to fit what Creative
8 Loans -- if they could help them out, then I would send it over
9 to Creative Loans.
10 Q. Is this on the same type of transaction that you had
11 been a buyer on?
12 A. Yes. So it was people who were going into
13 foreclosure.
14 Q. Did you work with anyone else on this?
15 A. Yes, sir.
16 Q. Who?
17 A. Austin Weeks.
18 Q. What did you do to implement this call center?
19 A. I bought a computer, and a fax machine, and they
20 created an e-mail for me.
21 Q. Did you end up following through on becoming this
22 call center?
23 A. For about a week and a half.
24 Q. Why didn't you continue?

2 MR. ANDERSON: All right. Let's go to Government's
3 Exhibit 135. Your Honor, I would ask to have that admitted.
4 And while we're at it, 139, which we'll go to next.
5 THE COURT: 135 and 139. Mr. Tedmon?
6 MR. ANDERSON: And then there will be two final
7 e-mails, 146 and 147, which we'll get to after those.
8 MR. GREINER: Did you say 46?
9 MR. TEDMON: 135 and 139, Your Honor?
11 MR. TEDMON: Well, I'm going to object based on
12 relevance. Based on the Florida.
14 MR. TEDMON: I join in that as well.
15 MR. GREINER: I join in the objection for variance.
16 MR. ANDERSON: Your Honor, I think I can ask one more
17 question that will lay a foundation.
19 Q. BY MR. ANDERSON: When calls came into that center,
20 where were you supposed to forward people who looked like they
21 could fit into the program to?
22 A. To Kou and Creative Loans.
23 MR. ANDERSON: Your Honor, now I would ask to have
24 those exhibits admitted.
25 MR. TEDMON: Same objection, Your Honor, both on

1 relevance and variance.
2 THE COURT: All right. 135 can come in. Can you
3 start with that. Let me just look at 136.
5 From Amber admitted into evidence.)
6 Q. BY MR. ANDERSON: Let's pull up 135. We will start
7 with this "from." In the "from" line where it says "Amber," do
8 you know who that is?
9 A. Myself.
10 Q. And if we zoom out on this e-mail.
11 Was this e-mail in reference to setting up the
12 business in Florida?
13 A. Yes, sir.
14 Q. And if we go to the document attached to the e-mail,
15 page three. What is this letter?
16 A. It is a letter to a prospective homeowner that was
17 going into foreclosure.
18 Q. Did you write this letter?
19 A. No, sir.
20 Q. Do you recall who you got it from?
21 A. Charles.
22 MR. ANDERSON: Your Honor, now I would like to go to
23 Exhibit 139 and ask to have that admitted.
24 THE COURT: You can ask questions about it. I want
25 to ask you a question about it before it's shown to the jury.

1 But if you have questions to ask, you can show the
2 witness a paper copy.
5 MR. SAMUEL: Can we take the other document off the
6 screen? Thank you.
7 THE COURT: Do you have a question?
8 THE WITNESS: (Witness reviewing document.)
9 Q. BY MR. ANDERSON: Have you had a chance to look at
10 that?
11 A. Yes, sir.
12 Q. Let's first get the e-mail address. There is a cc to
13 Amber in this e-mail. Is that you?
14 A. Yes, sir.
15 Q. And then there is another e-mail address,
16 adfpuravida@aol.com?
17 A. Yes, sir.
18 Q. Do you recognize that e-mail address?
19 A. Yes, sir.
20 Q. Whose was that?
21 A. Mine.
22 Q. And this e-mail, the message at the bottom, is that
23 discussing purchasing items?
24 A. Yes, sir.
25 Q. What are those items being purchased for?

1 A. For the business.
2 Q. And then let's go to Government's Exhibit 146.
3 THE COURT: Is there any objection to 146?
4 MR. ANDERSON: Your Honor, I would ask to have that
5 admitted.
6 THE COURT: I'm asking if there were objections to
7 146 and 147. Mr. Tedmon?
8 MR. TEDMON: 146 and 147?
10 MR. TEDMON: Can I talk to Mr. Anderson for just a
11 moment, Your Honor?
14 THE COURT: Can we have a housekeeping session? If
15 you want to show the paper copy, you can.
16 MR. TEDMON: I think we need to discuss these two,
17 Your Honor. There is a little problem here. A little
18 problematic.
19 THE COURT: Well, I'll allow you to ask questions
20 about 146 and 147. Unless you have another area you can move
21 on to at this time.
22 MR. ANDERSON: No, we're almost done. Let's look at
23 these.
24 Q. BY MR. ANDERSON: Looking at Government's
25 Exhibit 146 --

1 A. Yes, sir.
2 Q. -- do you see an e-mail in there from you to
3 keith@danaloans.com?
4 A. Yes, sir.
5 Q. Was this an e-mail you preserved yourself?
6 A. Yes, sir.
7 Q. And then you provided it to the investigator in the
8 case?
9 A. Yes, sir.
10 Q. Could you describe what happened in order for this
11 e-mail to exist? Were you having a conversation? That's a bad
12 question.
13 Let me try that again. Did you write an e-mail with
14 some questions to Keith?
15 A. Yes, sir.
16 Q. And did Keith answer those questions in some way?
17 A. Yes, sir.
18 Q. How did he answer them? Did he interlineate into
19 your own e-mail?
20 A. Yes, sir.
21 Q. What were you concerned about when you sent this
22 e-mail?
23 A. My credit score.
24 Q. Why were you concerned about your credit score?
25 A. Because when I started as a buyer, I had a high

1 credit score. And when I had a credit check for whatever I was
2 doing at the time it had been lowered since my purchases of the
3 property.
4 Q. Why did that concern you in particular?
5 A. Because the whole reason I signed up for the program
6 is because I was told my credit would increase, not decrease.
7 Q. Who told you your credit would increase?
8 A. Charles.
10 Is this another e-mail that you had saved in your
11 e-mails?
12 A. Yes, sir.
13 Q. And where it says amberferrantello@headmortgage.com,
14 do you recognize that e-mail address?
15 A. Yes, sir.
16 Q. What e-mail address is that?
17 A. That's the one they issued for the business.
18 Q. And who is sending you this e-mail?
19 A. Charles.
20 Q. What's he discussing in the e-mail?
21 A. The way the purchase of the property works.
22 Q. Do you know what ended up happening with the
23 properties that had you purchased under the program -- or your
24 name had been used to purchase?
25 A. Yes, sir.

1 Q. What happened to them?
4 Q. BY MR. ANDERSON: You can answer?
5 A. They all went into foreclosure.
6 MR. ANDERSON: Your Honor, now all we have left is
7 the admission of those e-mails.
8 THE COURT: All right. We will discuss that on a
9 break. Let me just ask if there is any cross that we can start
10 with. We have five minutes. Mr. Tedmon?
11 MR. TEDMON: Yeah, I can start.
13 BY MR. TEDMON:
14 Q. Ms. Edinger, good afternoon.
16 Q. I want to ask you in the few minutes we have left
17 today just a couple things.
18 You started in May of 2005 with discussing this
19 program, correct?
20 A. Yes, sir.
21 Q. All right. And you were in the program for May of
22 '05 through approximately August of '05, is that right?
23 A. Yes, sir.
24 Q. And that was the three properties that you've
25 testified to, correct?

1 A. Yes, sir.
2 Q. And then the one property you said was a fourth one,
3 but that did not have your signatures on the those documents,
4 correct?
6 Q. So there's four total?
7 A. Yes, sir.
8 Q. Now you indicated on direct that approximately nine
9 months later -- I want to get the chronology right here -- you
10 were receiving notices indicating that mortgages weren't being
11 paid, is that right?
12 A. Yes, sir.
13 Q. Can you identify for the jury, as best you can, what
14 month or months those came in? Strike that. Let me ask a
15 better question.
16 When was the first month you received a notice saying
17 the mortgages weren't being paid, to the best of your
18 recollection?
19 A. August 2006.
20 Q. And do you recall what property that was on, if you
21 remember?
22 A. No.
23 Q. So the first notice was about August of 2006,
24 correct?
25 A. Yes, sir.

1 Q. All right. And then you received some after August
2 of 2006 on some other property or properties, correct?
3 A. Yes, sir.
4 Q. And how many months, can you estimate, from August to
5 when as an out date, that you received these notices that the
6 mortgages weren't being paid?
7 A. They continued from August of '06 to '07 or '08.
8 Q. For a while?
9 A. Yes, sir.
10 Q. So they started in August of '06, and they continued
11 in later '06, '07 and even into '08, correct?
12 A. Yes, sir.
13 Q. Now, you testified that Kou Yang explained the
14 program to you, is that right?
15 A. Yes, sir.
16 Q. And that was by telephone or in person?
17 A. By phone.
18 Q. Okay. You were in Florida?
19 A. Yes, sir.
20 Q. Okay. And Kou Yang was where, if you know?
21 A. In California.
22 Q. How long did that conversation last with Kou Yang?
23 A. I do not recall.
24 Q. Approximately? I mean she explained the program to
25 you, correct?

1 A. Yes, sir.
2 Q. All right. And just thinking back -- I know it's
3 been a long time -- do you know about how long that
4 conversation lasted? If you don't remember?
5 A. I don't.
6 Q. Did you have more than one conversation with
7 Ms. Yang?
8 A. Yes, sir.
9 Q. How many did you have, would you say?
10 A. I don't know.
11 Q. Just approximately?
12 A. I don't want to give an approximate and not be honest
13 with the Court if I don't remember at all.
14 Q. Was it more than five or less than --
15 A. Yes, sir.
16 Q. More than five?
17 A. Yes, sir.
18 Q. More than ten?
19 A. Yes, sir.
20 Q. More than 20?
21 A. No.
22 Q. Between 10 and 20?
23 A. Yes, sir.
24 Q. Now this week and a half venture that you spoke
25 about --

1 A. Uh-huh.
2 Q. -- this setting up the center in Florida lasted about
3 ten days?
4 A. Max, yes.
5 Q. More like a week really?
6 A. Probably so.
7 Q. So by the time you bought the computer and the fax
8 machine and swapped a few e-mails, it was over, right?
9 A. Yes, sir.
10 Q. Is it fair to say in never got off the ground?
11 A. On my end, no, sir.
12 MR. TEDMON: I can do one document, Your Honor, and
13 then we can be done. Can we pull up Government's 9C1-3.
14 Now this is a document -- if we could have page two
15 for reference.
16 THE CLERK: 9C1-3.
17 THE COURT: It's in. All of 9C1 is in. It's page
18 three of that exhibit.
19 Q. BY MR. TEDMON: Do you see that on the screen,
20 Ms. Edinger?
21 A. Yes, sir.
22 Q. And that's a warranty deed Mr. Anderson asked you
23 about. He talked to you about that earlier.
24 A. Yes, sir.
25 Q. Now that is purportedly your signature?

1 A. Uh-huh.
2 Q. Is that "yes"?
3 A. Yes, sir.
4 Q. And you indicated that based on your review of that
5 document, that does not look like your signature, correct?
6 A. Yes, sir.
7 Q. All right. Are you sure it's not your signature, or
8 are you just thinking it may not be?
9 A. I'm thinking it may not be, but it could be.
10 Q. Okay. Well, let's go to the next page. Now here, if
11 we can have this expanded.
12 According to this document, you signed in front of a
13 notary, right, that's what the document says?
14 MR. ANDERSON: Objection. Document speaks for
15 itself.
16 MR. TEDMON: I'm asking her.
17 THE COURT: Ask the question.
18 Q. BY MR. TEDMON: Well, did you sign documents in front
19 of a notary while you were in Florida?
20 A. Yes. I signed documents in front of the notary.
21 Q. Okay. And the notary here is Matilda Valdez, do you
22 see that?
23 A. Yes, sir.
24 Q. Does that name ring a bell at all as far as being a
25 notary?

1 A. Yes, sir.
2 Q. Okay. So that was the notary you signed a document
3 or documents in front of, correct?
4 A. Yes, sir.
5 THE COURT: All right. I think that's a good time
6 for our break.
7 MR. TEDMON: It is.
8 THE COURT: Let's take our evening break, and we will
9 continue tomorrow morning at 8:30. Tomorrow we go from 8:30 to
10 1:30 with two short breaks.
11 As always, overnight, please remember all my
12 admonitions. No research of any kind. No thinking about the
13 case or its ultimate conclusion. No discussing the case with
14 anyone. If anyone attempts to contact you, please let me know.
15 Ms. Whitehead, if you would please stay. I want to
16 consult with you briefly. So the rest of you can leave. Have
17 a good evening.
18 (Jury out.)
20 your seat, ready to go at 8:30 tomorrow morning. Please avoid
21 any contact with jurors, particularly as they may be leaving
22 the building at the same time you are. You may step down.
23 You may be seated. Ms. Whitehead, we did want to
24 talk with you. We appreciate you reminding us about your
25 schedule. I do have that in my notes. And we all knew that at

1 the time that we were selecting the jury.
2 I've had several conversations with counsel. We
3 thought about this since you first talked to Ms. Schultz about
4 the question. And as of today, I have to say that there is no
5 attorney that thinks that the case -- that the jury can
6 possibly complete deliberations by the time you have to leave
7 on the family trip, which I recall correctly you leave on the
8 3rd.
9 JUROR 3: Correct.
10 THE COURT: We think there is a chance the case would
11 go to the jury, but it would be unreasonable to restrict the
12 jury to any time limit. First, our apologies for being over
13 optimistic. I think we all thought -- even though we had
14 technically said we might need that week, we really thought in
15 good faith it wouldn't get to that point.
16 But at this point, we cannot say that the jury can
17 conclude deliberations. Even if it goes to the jury, and,
18 also, at this point, we have alternates, it wouldn't make sense
19 to take a break while you are gone for the rest of the jury.
20 Our inclination is to give you the chance to be
21 excused at this point. Again, with our apologies. If you are
22 dying to continue sitting on the jury until you have to leave,
23 I guess we would consider that request.
24 Having heard from you, what are your thoughts? Would
25 you take the chance to be excused at this time?

1 JUROR 3: If we're thinking -- because I can be here
2 that Monday if we're thinking it could go. And then I could
3 stay until then until Monday the 2nd.
4 THE COURT: One option would be to see. I mean, at
5 this point we're giving you our best guess. I think we would
6 want to revisit the question at the time it actually goes to
7 the jury to see how many days were left, to see if we think
8 there is a chance.
9 But if you're saying you don't wish to be excused,
10 and you're willing to keep coming in with that uncertainty?
11 JUROR 3: I am.
16 THE COURT: I don't want to kick you off prematurely.
17 I did want to have that conversation with you and remind you as
18 well that we aren't going to make you miss your trip.
19 With that understanding, we will see you tomorrow
20 morning then. All those admonitions apply. And thank you very
21 much for your service. We will see you tomorrow.
22 (Juror 3 exits the courtroom).
23 MR. ANDERSON: Your Honor, if we're going to take up
24 the exhibits, may I retrieve them?
25 THE COURT: Yes.

1 That may motivate you all. I don't know that we can
2 tell her that if she begins and has to leave, that we have to
3 start over again.
4 MR. ANDERSON: No, I think.
5 THE COURT: We'll see.
6 MR. ANDERSON: We may want to come up with some sort
7 of instruction that advises the jury not to rush, and take
8 their time, and that there is no time pressures.
9 THE COURT: All right. On the exhibits, just so
10 first I understand, is there an issue with 147 really?
11 MR. TEDMON: Well, Your Honor, my only concern on
12 that is this --
13 THE COURT: 146 and 147 were forwarded to Agent
14 Fitzpatrick. But 147 doesn't have the interlineation issue.
15 MR. ANDERSON: I think Mr. Tedmon's issue when we
16 were discussing it was that he doesn't want the heading where
17 it says "To Agent Fitzpatrick".
18 THE COURT: Is that the case, Mr. Tedmon?
19 MR. TEDMON: Yeah. It's the header. Because it's
20 really extraneous to the original e-mail.
21 THE COURT: Are you willing to redact?
23 MR. TEDMON: I'm concerned if it's got Agent
24 Fitzpatrick's name on it, it somehow lends more credibility to
25 the document.

1 MR. ANDERSON: Well, I won't argue that Agent
2 Fitzpatrick has a lot of credibility.
3 THE COURT: Carries great weight.
4 MR. TEDMON: I'm sure he will like that comment.
5 THE COURT: So 146 and 147, with that redaction. So
6 it would begin with "from Keith" date "June 29th."
9 MR. TEDMON: Likewise 147 would begin "from Charles
10 Head."
11 THE COURT: So are those the only issues?
12 MR. TEDMON: That's all.
13 THE COURT: Mr. Samuel, does that work for you?
14 MR. SAMUEL: Yes.
17 THE COURT: So 146 and 147 may be displayed to the
18 jury as redacted -- or may go to the jury as redacted.
19 And then the Court's question on 139, maybe this is a
20 nit, but what's the subject line?
21 MR. ANDERSON: That's perhaps not what the Court is
22 thinking. Bed is a night club in Miami Beach.
23 THE COURT: It appears to have nothing to do with the
24 content of the message, so is there any reason not to redact
25 that?

1 MR. TEDMON: I think we should. It shows up later on
2 -- well, each one of the subject lines.
3 THE COURT: Three places.
4 MR. TEDMON: We can redact that. I think that would
5 be appropriate.
6 MR. ANDERSON: I think it's relevant somewhat in that
7 it corroborates Ms. Edinger's testimony that Charles Head was
8 in Miami and that he had exposure to her lifestyle.
9 THE COURT: I mean, it would be a tangent to explain
10 what that is.
11 MR. ANDERSON: That's fine. We can redact.
12 THE COURT: So 139 may come in with that line "I'm @
13 bed w kayln" redacted as it appears in three different
14 locations.
15 MR. TEDMON: With that redaction, I'm fine with it.
18 (Government Exhibits 146, 147, 139, (See index for
20 THE COURT: All right. Is there anything further
21 tonight?
22 MR. TEDMON: Maybe we can -- if Mr. Anderson knows
23 the witnesses for tomorrow, or whether the Government could
24 possibly finish tomorrow? Not that I'm pressing at all.
25 MR. ANDERSON: I do. Hold on.

1 THE COURT: In addition to this witness is
2 Mr. Corcoran?
3 MR. ANDERSON: There's Mr. Corcoran. And I think in
4 addition to Mr. Corcoran there may be Ms. McKenzie tomorrow.
5 Jeff Ball is also here, available to testify. Chris
6 Fitzpatrick will testify. Although I expect that if we do get
7 to him, it will be primarily next week that he testifies. And
8 then Kelly DiSanto is another witness. That's probably it.
9 It may be the case that we call Paul Howard, but I'm
10 trying not to. It may be the case that we call John
11 Sommercamp, but we're trying to eliminate him from the witness
12 list. The same with the Mattices, Bunny and Mike.
13 THE COURT: Is there a chance of you getting through
14 tomorrow?
15 MR. ANDERSON: Not finishing. But getting very
16 close. And then I think finishing Monday.
17 THE COURT: All right. Anything further?
18 MR. ANDERSON: No, Your Honor. Thank you.
19 MR. GREINER: Thank the Government for that heads up.
20 THE COURT: All right. We will see you ready to go.
21 Any further stips on e-mail addresses, anything like that, if
22 the Government can anticipate, the parties can anticipate.
23 MR. SAMUEL: I have one request. Possibly the Court
24 can facilitate that. It's difficult at this moment to be able
25 to do all the administrative work and determine what has been

1 admitted and what has not. And I know the Court has been
2 keeping track of that. Is there a possibility at the end of
3 tomorrow, Friday, or Thursday, that we could get the Court's
4 updated notation as to what has been admitted?
5 THE COURT: Doesn't the court deputy have a current
6 list?
7 THE CLERK: I have Casey's current list that I have
8 added to this week.
9 THE COURT: So the end of every day you can be
10 checking.
11 MR. SAMUEL: I was trying to get a copy of that.
12 We're going to have the weekend, and I'm anticipating preparing
13 for closing arguments.
14 THE COURT: Ms. Streeter can provide you either today
15 or tomorrow.
16 MR. ANDERSON: Ms. Schultz has been updating the
17 minute orders as they come out.
18 THE COURT: I mean there are the multiple charts.
19 And if there are any questions, I have my own notes. So I can
20 resolve any questions if there's a dispute.
21 MR. SAMUEL: Okay.
22 THE COURT: See you tomorrow morning.
24
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24
25

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Plaintiff,
vs. No. 2:08-cr-00116
Volume 13
Defendants.
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TRIAL PROCEEDINGS
THURSDAY, NOVEMBER 14, 2013
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1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW G. MORRIS
8
10 SCOTT L. TEDMON
12
14 DWIGHT M. SAMUEL
16
18 JAMES R. GREINER
20
21
22
23
24
25

1 I N D E X
2 WITNESSES PAGE
3 AMBER EDINGER
5
JEFF BALL
8
JOHN CORCORAN
12 KELLY DISANTO
15 CHRIS FITZPATRICK
16
17
18
19
20
21
22
23
24
25


2
Borrower Mark E. Wilson for property at
4 28925 Vie Adelena, Santa Clarita, CA 91350
8A2 Uniform Residential Loan Application in the
5 name of Mark W. Wilson for property at
28925 Via Adelena, Valencia, CA 91354
6 8A3 Uniform Residential Loan Application in the
name of Mark W. Wilson for property at
7 28925 Via Adelena, Valencia, CA 91354
8A4 Wire Instructions and Authorization re
8 property at 28925 Via Adelena, Valencia, CA
8A5 Multiple Grant Deeds for same property with
9 APN No. 3244-159-118
8A6 Residential Lease After Sale Seller in
10 Possession After Close of Escrow Creative
Loans LLC “Buyer” John DiSanto and Kelly
11 DiSanto “Sellers”
91 Wells Fargo Business Account Application 2205
12 for Creative Loans, LLC of Costa Mesa, CA
68 Head Financial Services A Step Ahead Of The 2208
13 Rest FC Sales Pitch
69 HFS Work Flow Marketing
14 70 Handwritten Purchase Agreement
71 San Bernardino County Tax Bill for 2006 for
15 property at 949 S Coast Drive # 450 Costa
Mesa, CA
16 72 Handwritten notes
73 State of California Secretary of State
17 records re: Articles of Incorporation of
Head Financial Services
18 74 Pacific Mercantile Bank Signature Card for
account of Head Financial Services, Inc.,
19 dba Dynasty Realty in Costa Mesa, CA
75 State of California Secretary of State
20 records re: Limited Liability Company
Articles of Organization for Creative
21 Loans, LLC
76 Fictitious Business Name Statement Recorded
22 in Orange County, California on 5/25/2005
77 Fictitious Business Name Statement Recorded
23 in Orange County, California on 5/25/2005
78 Stock Certificate For Head Financial
24 Services, Inc.
1 Head II Properties Settlement Statements 2221
25 Summary Chart


2
3 2 Head II Bank Balance Creative Loans, LLC 2226

Summary Charts
4 3 Money Flow Summary Charts 2232
4 Payment charts 2235
5

8
DM-X37 Jack Corcoran Brockway/Scallin Payout 2127
9 DM-Y1 Loan Office Payments 2140
DM-D12 From Keith at Foreclosure 2183
10 Re: Did you pay any of the mortgages this
moth yet?
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

2 THURSDAY, NOVEMBER 14, 2013
3 ---oOo---
6 McCarns. On for jury trial, day 13, Your Honor.
8 All parties are present. I understand Mr. McCarns has a
9 question for me.
10 MR. GREINER: He does, Judge. So we probably need to
11 go ex parte.
12 THE COURT: All right. Let's just as quickly as
13 possible clear the courtroom. Can the marshals assist with
14 Mr. Head?
15 (Courtroom cleared.)
16 (In camera session reported. Transcript sealed by
17 order of the Court.)
18 THE COURT: We're ready for the jury. Let's get our
19 witness back on the stand. Thank you.
20 (Jury in.)
22 court, ladies and gentlemen of the jury. We did have a brief
23 housekeeping session this morning.
24 Also some of us think the courtroom feels like a
25 sauna this morning. If you are particularly warm, we're doing

1 what we can and hope that we won't have a temperature swing
2 completely the opposite direction. If you need a water break
3 or any kind of extra break today, let me know.
4 With that, we are ready to continue with the
5 examination of this witness.
6 MR. TEDMON: Your Honor, I didn't get a chance to do
7 this yesterday. I have no further questions of Ms. Edinger.
8 THE COURT: Mr. Samuel, are you going next?
9 MR. SAMUEL: No, I have no questions.
11 AMBER EDINGER,
16 BY MR. GREINER:
17 Q. Morning, ma'am.
18 A. Good morning.
20 reporter can take everything down.
21 A. Okay.
22 Q. If I ask you anything that you don't understand, ask
23 me to repeat.
24 Did you talk to anybody between yesterday and today
25 about your testimony?

1 A. No, sir.
2 Q. Between yesterday when you got off the stand and this
3 morning, did you review any documents?
4 A. No, sir.
5 Q. You did not discuss with Domonic McCarns anything
6 about the program, the company of Head Financial Services, did
7 you?
8 A. No, sir.
9 Q. And Domonic McCarns never discussed anything to you
10 regarding Head Financial Services, correct?
11 A. No, sir -- or yes, sir.
12 Q. Sorry.
13 A. That's okay.
14 Q. I wanted to change up on that one.
15 Let me ask the question again. Domonic McCarns never
16 discussed with you anything about Head Financial Services,
17 correct?
19 MR. GREINER: Thank you, Judge. No further
20 questions.
24 BY MR. ANDERSON:
25 Q. I just want to clear something up. Did you contact

1 Agent Fitzpatrick yesterday?
2 A. Yes, sir.
3 Q. And you asked if you would be able to see a document
4 again that had you seen here in court?
5 A. Yes, sir.
6 Q. Nobody has shown that to you yet?
7 A. No, sir.
8 Q. I would like to pull up Government's Exhibit 9C1,
9 please. Go to page three. And then back to page two on this
10 document.
11 Is this the document that you were talking about?
12 A. Yes, sir.
13 Q. All right. What did you want to see on this
14 document?
15 A. My name.
16 Q. Okay. Why did you want to see your name?
17 A. Because that looks like the way I signed my name back
18 in 2005 when my name was Amber Dawn Ferrantello. I always put
19 the "Dawn" in between.
20 Q. You wanted to make sure that was clear for everybody?
21 A. Yes, sir.
23 THE COURT: Any further recross? Mr. Tedmon?
24 MR. TEDMON: One question. If we can leave that
25 document up.

2 BY MR. TEDMON:
3 Q. I want to make sure I understand. If we can go back
4 to that document. If we can expand this section. And then I'm
5 sorry, go to the next page. Second page. Here we go.
6 I just want to clarify something. So the signature
7 that is above Amber Dawn Ferrantello, that's your signature,
8 correct?
9 A. Yes, sir.
14 MR. GREINER: No questions, Judge.
19 THE COURT: You are excused. You may step down.
20 Next witness.
21 MR. MORRIS: The United States calls Jeff Ball.

1 so help you God?
5 THE WITNESS: It's Jeff Ball, J-e-f-f, B-a-l-l.
7 JEFF BALL,
12 BY MR. MORRIS:
13 Q. Mr. Ball, where do you live?
14 A. I'm in San Diego, California.
15 Q. What line of work are you in?
16 A. Electrician.
17 Q. I'd ask you to think back to the end of 2005. Did
18 you get involved in real estate transactions in that timeframe?
19 A. Real estate -- as far as real estate transactions, I
20 did as far as the 30,000 program.
21 Q. Okay. So that 30,000 program, how did you become
22 aware of that?
23 A. I got an e-mail sent to me at that time in the spam
24 filters. They weren't quite up to par like today. And so you
25 received probably hundreds of e-mails at the time.

1 So, you know, I looked through, and I spotted that
2 one, and it caught my attention because it was pretty much
3 30,000 per year without having to do much. So you know, I read
4 that. You know, caught my attention. So I read through it,
5 and it sounded pretty interesting. All you had to do was --
6 MR. SAMUEL: Objection, Your Honor, to the narrative.
7 THE COURT: Sustained. Once you answer a question,
9 THE WITNESS: I'm sorry.
10 Q. BY MR. MORRIS: Did you do anything in response to
11 reading that e-mail?
12 A. Yes. I contacted the person that had sent the e-mail
13 to me.
14 Q. And that contact, was that also contact by e-mail or
15 was that contact by phone?
16 A. Originally, it was by e-mail.
17 Q. Okay. And who was person that you contacted?
18 A. It was Ben Budoff.
19 Q. And what, if anything, did you say to Ben Budoff in
20 your initial contact to him?
21 A. Well, obviously I was curious about the program. I
22 wanted to know more, so he kind of filled me in.
23 Q. Okay. And what did Mr. Budoff tell you about the
24 program?
25 A. Well, basically, that the company was expanding at

1 that time. They were just using friends and family. And so
2 they were reaching out to the public to become investors. And
3 basically all you had to do was have good credit, and, you
4 know, as far as possibly a decent income.
5 Q. Did you expect to receive -- or how did you expect to
6 be compensated?
7 Let me back that up. That's probably not in
8 evidence. 30,000 --
9 A. Um --
10 Q. Let me ask you a new question.
11 You said 30,000-a-year was the program you heard
12 about, was it your understanding that you had an opportunity to
13 make money through this program?
14 A. Yes.
15 Q. What was your understanding of how you would make
16 money?
17 A. Well, at that time, you were allowed six homes, which
18 would be 5,000 per home.
19 Q. And it was your understanding that you would then be
20 paid by this company?
21 A. Correct.
22 Q. Did you have any questions or concerns about the
23 program?
24 A. Yes. I had a lot of questions. I was very
25 skeptical.

1 Q. And who did you direct those questions or concerns
2 to?
3 A. Originally, it was Ben. And I guess he had filtered
4 the questions on to other people who could answer them.
5 Q. And did he then filter back the responses?
6 A. Yes.
7 Q. So your interaction, at least at first, was with Ben?
8 A. Yes.
9 Q. Can we bring up 372 and go to page two, please.
10 If you could look on the screen in front of you at
11 these questions to be answered - one, three, four, five - were
12 those consistent with the questions that you were asking Ben
13 prior to getting involved in the program?
14 A. Yes.
15 Q. And focusing specifically on this question five, was
16 one of your questions: How is it that you could qualify to buy
17 six to ten homes when it's hard to qualify for one?
18 A. Yes, exactly.
19 Q. And did you receive a response to that question from
20 Mr. Budoff?
21 A. It's hard for me to recall. I believe he had
22 answered all these questions for me.
23 Q. Okay. Can we go to page four of that exhibit,
24 please.
25 Do you recall receiving back a response where your

1 question was then followed by an answer?
2 A. I believe it was. I think all the questions were
3 answered.
4 Q. And if you could read the section here after what you
5 just identified as your question, where it says "rents always
6 offset debt down to" --
7 A. "Rents always offset" --
8 Q. Not out loud. If you would just read that.
9 A. I see. (Witness reviewing document.)
10 Q. Is that consistent with the answer that you recall
11 receiving from Ben Budoff?
12 A. It is the answer. But for a layman person, it's kind
13 of hard to understand.
14 Q. Okay. You can bring that down.
15 On the basis of the answer to those questions that
16 you received, did you decide to take part in the program?
17 A. I did. But I had also hired a lawyer personally to
18 investigate the legitimacy of the program.
19 MR. GREINER: Objection. Relevance. Move to strike.
21 MR. GREINER: That part about hiring the lawyer.
23 disregard that answer.
24 Q. BY MR. MORRIS: So then let me just -- without going
25 into that part of it -- after getting your questions answered,

1 you then -- it was after those answers were given to you that
2 you decided to take part?
3 A. Yes.
4 Q. What, to the best of your recollection, would then be
5 the next thing that happened in the process?
6 A. Next process was to actually become owners of the
7 homes. It was supposed to be for one year's time.
8 Q. Do you recall receiving paperwork to fill out?
9 A. I did fill out one paper that was very brief, and it
10 didn't even ask for an income.
11 Q. Do you recall what type of stuff it did ask for?
12 A. Just basically your address and where you worked, you
13 know. It was just very basic.
14 Q. At this point are you still communicating with Ben or
15 are you communicating with anybody else?
17 Q. No not somebody else? So in other words, yes, still
18 Ben?
19 A. No. Nobody at all.
20 Q. Did you receive loan applications in this process?
21 A. Oh, yes.
22 Q. Okay. And what can you describe about the process of
23 receiving loan applications?
24 A. Okay. Well, a notary would come to your home, and
25 you'd sit down and go through the paperwork. It was a pretty

1 fast process, you know, initial here, initial here, sign here.
2 So nothing was really described or went through in detail
3 exactly what -- and I'm not savvy on real estate, so I had a
4 lot of questions. But a lot of times they couldn't even answer
5 the questions.
6 Q. When the loan applications arrived, you mentioned
7 signatures and initials. Other than your signatures and
8 initials, were there any spots that you were supposed to fill
9 in?
10 A. No. Other than just signing and initialling.
11 Q. And then did you sign those applications?
12 A. Yes, I did.
13 Q. And then what did you do with them after you signed
14 them?
15 A. Well, the notary took them with them.
16 Q. What's your next recollection of the next step in the
17 process?
18 A. Well, you just wait a couple days, and then I guess
19 the paperwork got processed. And the next thing you know you
20 discover that you're now in debt for a large loan, that you own
21 a home.
22 MR. SAMUEL: Objection, Your Honor.
24 MR. SAMUEL: Ask the last portion be stricken.
25 THE COURT: Again, the jury shall disregard the last

1 part of that answer. If you can just answer the question and
4 Q. BY MR. MORRIS: Did you receive the 5,000 per home
5 you that expected?
6 A. Yes, I did.
7 Q. Asking you then to come forward from the end of 2005.
8 At some point did you become aware that the mortgages on these
9 houses were not being paid on time?
10 A. Yes.
11 Q. When did you become aware of that?
12 A. I think it was two or three months down the road
13 after the paperwork had been signed. I believe the rents were
14 supposed to be collected from the people living in the homes,
15 and that money was supposed to go towards paying the mortgage.
16 Well, I had received a notice that my mortgage was not being
17 paid.
18 Q. I'm going to ask to go to Government's 305. Would
19 you bring up Government's Exhibit 305, please. And I'll ask
20 you to look at the date of this e-mail.
21 February of 2006, is that your recollection of when
22 you might have started to learn that the mortgages weren't
23 being paid on time?
25 Q. You can zoom out. At the time was ata_@cox.net, was

1 that your address?
2 A. Yes.
3 Q. So when you learned that they were not being paid on
4 time, who did you contact?
5 A. Ben, who was my go-to guy.
6 Q. And you made Ben aware of your concerns from those
7 phone calls?
8 A. Yes.
9 Q. And if we can go to the next page, please. Do you
10 recall receiving phone calls from a company called Option One?
11 A. Yes, I do.
12 Q. And at the time that you were receiving those phone
13 calls, did you know anything about a loan in your name at
14 Option One?
15 A. Yes.
16 Q. And what was your understanding about the loan in
17 your name at Option One?
18 A. My understanding was there was supposed to be a trust
19 set up to cover all payments, taxes, mortgage, everything that
20 dealt with that home should have been paid.
21 Q. And your understanding that there was supposed to be
22 a trust, where did you get that understanding from?
23 A. Well, that was initially told to me in the very
24 beginning.
25 Q. By whom?

1 A. Well, there was actual documents that were supposed
2 to set that up that I had -- that were sent to me for me to
3 review.
4 Q. And who sent the documents to you?
5 A. It was Ben or someone in their company. I'm not sure
6 exactly.
7 Q. So at some point did you have contact with people
8 other then Ben?
9 A. Briefly. Sometimes with Keith or with their
10 processing -- processor, I guess you might call it.
11 Q. If you could bring that down. And I would like to go
12 to Exhibit 320, which I believe is in.
13 Did you eventually become aware that the taxes on the
14 property were not being paid on time?
15 A. Oh, yes.
16 Q. Can you bring up 320. And when you became aware of
17 that, did you contact anybody at the property?
18 A. Yeah. I called back to the actual tax departments
19 for those particular homes.
20 Q. I gotcha. And based on that, did you attempt to
21 contact anybody on the side of the transaction that you had
22 been dealing with prior?
23 A. Right. Well, at that time I was aware that
24 Mr. Corcoran was actually doing the payments for the homes, and
25 so I started dealing with him at that time.

1 Q. Were you able to get through to Mr. Corcoran?
2 A. Yes. A lot of times through his secretary, but he
3 would call me back.
4 Q. And did you contact Ben Budoff about the tax bill?
5 A. Yes, I believe I told just about everybody that I was
6 in contact with.
7 Q. And is it your recollection that this was going on in
8 about the September 2006 timeframe?
9 A. Yes.
10 Q. Bring that down. And so your understanding of the
11 program, if I could be clear, you mentioned the trust
12 agreement?
13 A. Yes.
14 Q. You've mentioned your $5,000 per transaction?
15 A. Right.
16 Q. Did you have any other understandings about how this
17 program was supposed to work?
18 A. Well, there was another program created that if you
19 could bring in people into the program, that you could get
20 additional monies.
21 Q. And did you refer people to the program?
22 A. Oh, yes.
23 Q. Do you recall approximately how many people you
24 referred?
25 A. I think it was three or four.

1 Q. Do you still own any of these properties?
2 A. I do not. I had to file bankruptcy.
3 MR. SAMUEL: Objection.
6 Q. BY MR. MORRIS: And so the answer is, no, you don't
7 own them?
8 A. No.
9 Q. Do you know what happened to them?
10 A. Well, I had to file bankruptcy to dispose of the
11 homes.
12 Q. When you got into the program, was it your
13 understanding that you would be responsible for collecting
14 rents on the properties?
15 A. No. There was supposed to be a property manager set
16 up.
17 Q. Was it supposed to be your obligation to pay property
18 taxes on the property?
19 A. No. Also property management.
20 Q. Okay. And how about the payment of the mortgages,
21 was --
22 A. Same. Same. There was supposed to be somebody to
23 take care of everything for you.
24 MR. MORRIS: Just a moment, Your Honor. Nothing
25 further, Your Honor.

2 CROSS-EXAMINATION
3 BY MR. TEDMON:
4 Q. Mr. Ball, good morning.
5 A. How are you doing?
6 Q. Good. Thank you.
7 Just a couple quick questions. The individuals that
8 you dealt with with regards to this program that Mr. Morris was
9 asking you about was Ben Budoff, correct?
10 A. Correct.
11 Q. And then you also indicated you dealt with a Jack
12 Corcoran?
13 A. Yes.
14 Q. Did he identify himself as to what his position was
15 to you?
16 A. Yes. He was the financial management, so to speak.
17 Took care of all the monies, you know, taxes, property taxes,
18 the rents, collecting of rents, payment of mortgage.
19 Q. All of that sort of financial --
20 A. All the financial was supposed to be taken care of.
21 Q. Okay. And when did you talk to Mr. Corcoran? I know
22 it's been a long time.
23 A. I think I started getting -- talking to him when the
24 tax problem occurred.
25 Q. And that was in September of 2006, approximately?

1 A. I believe.
2 Q. Now you also talked to a Keith Brotemarkle, correct?
3 A. Yes, I did.
4 Q. And did he identify himself as the marketer, do you
5 recall that?
6 A. I'm not sure what his title was. No. Ben was
7 actually the marketer at the time.
8 Q. Do you recall what Mr. Brotemarkle indicated he did?
9 A. What he did?
10 Q. If you remember.
11 A. All I know is he was -- he had a position somewhere
12 in the office that was like vice-president of something. I'm
13 not really sure what he did.
14 Q. Did he indicate to you he was in charge, effectively?
15 A. Yeah, kind of.
16 Q. Okay. And then also did you speak to a Lisa Vang, do
17 you recall that name?
18 A. Yes. She was the loan processor.
19 Q. And did she refer you or tell you about a person by
20 the name of Kou Yang?
21 A. It sounds familiar.
22 Q. Kou Yang does? In the finance processing department?
23 A. Yes. Yes.
24 Q. Okay. And those are all the people you spoke to or
25 dealt with, correct?

1 A. Yes.
2 MR. TEDMON: All right. Thank you. Nothing further.
4 MR. SAMUEL: Thank you. Sorry I have to pack up,
5 Your Honor.
6 THE COURT: Are you ready to go?
7 MR. SAMUEL: I'm ready.
8 CROSS-EXAMINATION
9 BY MR. SAMUEL:
10 Q. So I would like to start from the beginning again, if
11 I could. You responded to some spam, correct?
12 A. Yes. Correct.
13 Q. And, actually, did you save that material when you
14 first saw it?
15 A. I did. I actually printed out the website itself
16 exactly what, you know, what the website said, what my position
17 in the -- you know, in the investment would actually be, what I
18 had to do.
19 Q. You printed that out. Did you save that and provide
20 it to the Government?
21 A. Yes, I did.
22 Q. Now, in terms of your first contact, would that have
23 been via e-mail or phone?
24 A. It would be e-mail.
25 Q. All right. And do you recall who was that first

1 contact?
2 A. Ben Budoff.
3 Q. And do you recall a response via e-mail?
4 A. Yes.
5 Q. And what was that response, if you can recall?
6 A. Thank you for your interest. I don't exactly
7 remember, but --
8 Q. That's okay.
9 A. It was pretty cordial, you know. As long as I
10 responded, he was pretty happy at that.
11 Q. So the first one was a meet-and-greet, thank you for
12 your interest?
13 A. Exactly.
14 Q. Did he supply you with anything else over the e-mail?
15 A. Well, not in the first initial one.
16 Q. All right. Did he make any representations to you
17 about the program when he first made -- when you first made
18 contact with him?
19 A. Oh, yeah. He told me to go to the website and look
20 at that.
21 Q. Was that in late '05?
22 A. Yes.
23 Q. All right. So the initial contacts were in late
24 '05 - October, November, December - would that be about right?

1 Q. So you did some of your own investigation, however,
2 before you joined this program, is that right?
3 A. Yes.
4 Q. You had a lot of questions, right?
5 A. Oh, yeah.
6 Q. And you posed them to Ben Budoff?
7 A. Right.
8 Q. And according to what you had just said, Ben would
9 then get answers from other people and send them back to you,
10 right?
11 A. Well, if he didn't have the answer, yes, he would
12 research it for me.
13 Q. And do you know who he got the answers from?
14 A. Well, sometimes they would come from Keith.
15 Q. All right. So Ben, in his communications, in a
16 general sense to you, would be communicating what Keith had
17 told him, right?
18 A. Well, it would be through Ben. Ben would find out.
19 Q. Right. He got your questions, for example, the
20 document that we just saw up on the screen with the multiple
21 questions, he got that from you, he went to Keith as you
22 understand it, Keith gave him the information, and then he sent
23 it back to you, right?
24 A. Well, I'm not sure. He may have known some of the
25 answers to some of those questions himself. But I imagine he

1 would do research and find out the answers if he didn't know
2 them.
3 Q. All right. Well, how did you become aware that Ben
4 didn't know all the answers?
5 A. That he didn't or did?
6 Q. That he didn't know all the answers to your
7 questions?
8 A. I don't.
9 Q. Well, how did you become aware that Keith would
10 answer some of your questions?
11 A. Because I actually got e-mails with Keith's name on
12 them that had those --
13 Q. Had those answers?
14 A. It might have been one answer out of the five or two
15 or --
16 Q. Okay. But you're aware that you were asking
17 questions that Ben didn't necessarily have all the answers to?
18 A. I believe. I can't say for sure.
19 Q. Now, you were inquisitive, you were concerned about
20 the program, right?
21 A. Yes.
22 Q. And you retained an attorney to find out and evaluate
23 the program, right?
24 A. Exactly.
25 Q. Did you tell Mr. Budoff what your attorney's

1 evaluation was?
2 A. Yes.
3 Q. And what did you tell him?
4 A. I told him that my attorney had discovered that he --
5 legally he was not able to tell me I can proceed with this, but
6 he could tell me that there was nothing wrong that he could
7 find with the program.
8 Q. Okay. And that was done via an e-mail, was it not?
9 A. No. I went to his house.
10 Q. I'm talking about your communication with --
11 A. Oh, with Mr. Budoff, yes. Yes. E-mail.
12 Q. Right. So now you got -- and was this before you
13 decided to enter into the program?
14 A. Oh, yes.
15 Q. So you got your communications with Mr. Budoff, he's
16 answering your questions, or somebody else is answering your
17 questions, you're telling Mr. Budoff about what you found out,
18 and that it appeared to be lawful, is that right?
19 A. Yes.
20 Q. And that's what was the foundation for your decision
21 to enter into this program?
22 A. Exactly.
23 Q. And you also, while you were involved in this
24 program, received documents reflecting rental agreements, is
25 that correct?

1 A. Yes. That's true. That was through Jack Corcoran.
2 Q. Right. And you were aware when you entered into this
3 program that you would be on title, is that correct?
5 Q. And you were in fact on title on these properties,
6 were you not?
7 A. Yes, I was.
8 Q. And you were aware that you were partnering up with
9 an organization that was going to take care of the remaining
10 problems that may arise as a part of the property management,
11 right?
12 A. Exactly.
13 Q. And that was with Jack Corcoran?
14 A. Corcoran.
15 Q. Corcoran. I'm sorry. So you were satisfied that
16 this partnership would work well, right?
17 A. Well, yeah. Ben had told me the program had been
18 working for three, four years.
19 Q. Uh-huh.
20 A. And they were branching out.
21 Q. And he told you that he had family members involved
22 in it, right?
23 A. Exactly. He had mentioned something about his sister
24 or brother, he got involved himself.
25 Q. Right. And so he told you about the program, he told

1 you that there would be agreements that you would be entering
2 into. A lease buy-back agreement, did you see that as well?
3 A. I saw three documents, and they were written by
4 attorneys. So, obviously, I couldn't understand totally
5 exactly what they were saying.
6 But, yes, but one of them was supposed to be to
7 actually set up the trust.
8 Q. All right.
9 A. And it never got done.
10 Q. Well, you're not aware whether it got done or not,
11 are you?
12 A. Well, I am because I kept asking where is the
13 paperwork, where is the signed paperwork. It was never
14 returned to me signed, ever.
15 Q. But you did see a document that talked about a trust?
16 A. Yes.
17 Q. And when you communicated with Mr. Budoff, you asked
18 him about what's going on with the trust, right?
19 A. Exactly.
20 Q. And, in fact, he told you he thought everything was
21 fine, didn't he?
22 A. Well, he -- yes, he would tell me everything was fine
23 because I was getting angry at certain points in time. Because
24 it was falling apart, and it was -- I had my credit on the line
25 -- I mean, you know, at stake, and plus I had five homes in my

1 name.
2 Q. So you were upset?
3 A. Yes.
4 Q. Understandably so. You were communicating with
5 Mr. Budoff your concerns, right?
6 A. Right.
7 Q. And he's trying to respond to your concerns with
8 information either he provided or somebody else provided to
9 him, right?
10 A. Right. He tried to give me positive feedback, but,
11 of course, he's going to do that. I was mad.
12 Q. Well, let me ask you this, I mean, you started seeing
13 these notices in, what, early 2006?
14 A. I believe so.
15 Q. Right. And then you started talking with Jack
16 Corcoran about these problems?
17 A. Yes, I did.
18 Q. And you were talking to Jack about why aren't you
19 paying these bills?
20 A. Yes.
21 Q. And did Jack pay some of these bills and bring them
22 current?
23 A. Well, I had to keep monitoring and monitoring each
24 month, and sometimes, no, they would not get paid still.
25 Q. But sometimes yes?

1 A. Sometimes yes.
2 Q. Okay. So there appeared to be a sporadic compliance
3 with your understanding about what this other company, Jack
4 Corcoran was supposed to do?
5 A. Yes. Exactly.
6 Q. Okay. But sometimes it happened, sometimes it
7 didn't, right?
8 A. Right.
9 Q. Okay. Now you were asked if you worked with anyone
10 else, and you've already talked about Jack Corcoran. Did you
11 work with Keith Brotemarkle at all?
12 A. No. Just basic -- I think he answered a couple
13 questions, and that's the only interaction I had with him.
14 Q. And you received loan applications via what, mail?
15 A. Yes, through the mail. Overnight.
16 Q. Okay. And did you look at those loan applications?
17 A. I did.
18 Q. All right. And you actually asked questions about
19 income in those applications, did you not?
20 A. I did.
21 Q. And you were informed that they were using a
22 stated-income process, isn't that correct?
23 A. I was told that the loans were being processed
24 because of the high interest rates.
25 Q. But --

1 A. And you didn't have to do -- it was no income
2 qualifications.
3 Q. Did you ever hear the word "stated income"?
5 Q. Did you ever see an e-mail or receive an e-mail which
6 told you -- gave you the answer to your question?
7 And I think that's 372, number five. That would be
8 page one, two, three -- four, I think it is.
9 THE COURT: Do you want that displayed?
10 MR. SAMUEL: Yes. Thank you. I think it's one last
11 page.
12 THE COURT: Page four.
13 MR. SAMUEL: Yes, page four. Let me start here.
14 Q. BY MR. SAMUEL: And you see this document, this was a
15 response to you?
16 A. Yes.
17 Q. All right. And it explained to you how the program
18 was going to work, is that correct?
19 A. Well, yes, according to -- the rents were supposed to
20 offset the properties, but it didn't happen.
21 Q. I think I'm actually looking at -- you know, actually
22 my number says 372. What's the first page 372? Fourth page of
23 372. Once again. I'm sorry.
24 All right. So right here, if you take a look at it,
25 it says: "Additionally, the income we use is stated based on

1 incomes of a position and tenure stated on your application.
2 The position and tenure are the only things that are verified."
3 Right?
4 A. Correct.
5 Q. Did you understand that at all?
6 A. Well, basically, they're saying that they go by what
7 the income that I stated.
8 Q. Did you understand that as being the income that was
9 normal within the industry?
10 A. I have no idea what was normal.
11 Q. Thank you. You can take it down now.
12 So you received some documents. One of them was --
13 Did you ever receive an addendum to purchase
14 agreement, does that ring a bell to you?
15 A. To purchase agreement on what, the actual mortgage or
16 what?
17 Q. Yeah. On the purchases of the properties.
19 Q. You recall working with Kou Yang?
20 A. I have no idea. That's all part of that processing
21 program --
22 Q. All right.
23 A. -- department.
24 Q. Did you supply anyone with information about what
25 your income was, what your Social Security number was, anything

1 of that nature?
2 A. Well, at the time, I was making $50,000 a year. And
3 to qualify for six homes, it just didn't seem feasible. I
4 didn't understand how that was done.
5 Q. All right. My question wasn't actually that, but my
6 question was, did you supply information like income, your
7 income per year, your assets, your Social Security, to somebody
8 other --
9 A. Had to be just the income.
10 Q. And did you supply that to somebody other than Ben
11 Budoff?
12 A. It was probably Lisa Vang or someone in her
13 department.
14 Q. Okay. And that was in what you understood to be the
15 processing department?
16 A. Yes.
17 Q. All right. The taxes that were -- and this is
18 Exhibit 320. You don't need to bring it up, though.
19 You talked about the taxes not being paid. Now that
20 was early on.
21 Was your understanding at some point in time taxes
22 were paid on the properties?
23 A. That they were?
24 Q. Yeah.
25 A. Well, yeah, they were. Originally, in the beginning,

1 everything was running smooth. Until started getting hiccups,
2 and I started getting notices in the mail from the tax
3 departments for that individual county.
4 Q. Is your recollection that the time that there started
5 getting to be a hiccup and/or problem was in, let's say,
6 July/August of '06?
7 A. Sounds about right.
8 Q. And it continued on in a hiccup process through
9 October maybe?
10 A. Yes.
11 Q. And then thereafter it just stopped and there was --
12 A. Stopped, yes.
13 Q. And you were dealing with Mr. Budoff, trying to
14 understand what was going on there?
15 A. Exactly.
16 Q. And he was expressing to you what he thought was
17 going on at that time?
18 A. Right.
19 Q. Via e-mail?
20 A. He told me that monies -- I guess the monies from
21 sales from other homes, the money -- the transfers of monies
22 was very slow. So getting the homes paid or the mortgages paid
23 was -- I guess they were -- I don't know. I didn't quite
24 understand it totally.
25 Q. Well, did he tell you that there wasn't sufficient

1 funds anyway?
2 A. Yes.
3 Q. And did Mr. Corcoran tell you that, too?
4 A. I don't remember about Mr. Corcoran telling me that.
5 Q. Did Mr. Budoff, when he was speaking to you those
6 last times, did he -- did you talk to him in person as well?
7 A. I believe he was on vacation, and I kept sending him
8 e-mails and get no response. Then all of a sudden, I got a
9 final letter from him that told me exactly what was supposed to
10 happen in the program and what really happened.
11 Q. Did you provide that to the Government?
12 A. Yes.
13 Q. And it apparently -- it explained it to you
14 truthfully, correct, as far as you know?
15 A. As far as I know, yeah. It sounded pretty feasible,
16 what he was trying to tell me.
17 Q. And, basically, he said that the company's ran out of
18 money, right?
19 A. Well, it wasn't that the company ran out of money. I
20 believe that the money was misused.
21 Q. Okay.
22 A. I didn't know why at the time.
23 Q. Okay. That's fine.
24 And this last communication, was that -- do you have
25 a recollection as to the date on that last communication?

1 A. I don't remember exactly.
2 Q. Would it have been after November of '06?
3 A. It was November, December.
4 Q. November, December?
5 A. Somewhere in there.
6 Q. As a part of that communication, did he indicate that
7 the FBI had been there?
8 A. Yes.
9 Q. So would it have been after the FBI was there?
10 A. Well, you know what, now that I think about it, I
11 sent him an e-mail talking about that, that the Treasury
12 Department had come in and shut down the program. And he sent
13 me back an e-mail saying that I had started that rumor. I had
14 started that rumor. Which wasn't true because I had heard from
15 -- I forgot who my source was -- that the program was shut
16 down. And then he came back with another e-mail following
17 that. I guess it was the letter describing what happened.
18 Q. So was he surprised when he heard that the program
19 was shut --
20 A. I think he was on vacation or something.
21 MR. MORRIS: Your Honor, objection. Hearsay.
22 Speculation.
23 MR. SAMUEL: Well, it goes to the state of mind, Your
24 Honor. It would not be offered for the truth of the matter
25 asserted.

1 THE COURT: With that clarification, the answer
2 stands.
3 MR. SAMUEL: Thank you. Just let me check this.
4 Thank you.
7 CROSS-EXAMINATION
8 BY MR. GREINER:
9 Q. Thank you, Judge. Good morning, Mr. Ball.
10 A. How are you doing?
11 Q. If I ask you a question you don't understand, just
12 ask me to repeat it. Okay?
13 A. Okay.
14 Q. You've been doing a good job. Just keep your voice
15 up so the court reporter can take your answers. Okay?
16 A. That's fine.
17 Q. Prior to you testifying today, did you review any
18 documents?
19 A. As far as my own information, what I have.
20 Q. Did you review any documents that the Government
21 provided to you?
22 A. No.
23 Q. Okay. You don't know of a person named Domonic
25 A. Not at all.

1 Q. Never had any communication with Domonic McCarns
2 ever, correct?
3 A. Never. No.
4 Q. You were in a contract with this company, Head
5 Financial Services, correct?
6 MR. TEDMON: Objection. He didn't state that. He
7 said it's a company.
9 Q. BY MR. GREINER: You were in a contract with this
11 A. Contract? I can't really say contract.
12 Q. You were in an agreement with this company?
13 A. Agreement.
14 Q. And the agreement stated that you were going to be
15 the owner of a home for 12 months, correct?
16 A. Correct.
17 Q. And then you were going to sell it back, or the home
18 was going to be sold back to the original homeowner, correct?
19 A. Correct.
20 Q. And at the end of 12 months, your intention was to
21 sell it back?
22 A. Oh, yeah.
23 Q. There was no reason for you to keep the house,
24 correct?
25 A. No. I was there to try to help these people.

7 MR. SAMUEL: Yes.
11 MR. MORRIS: The United States calls John Corcoran.
15 so help you God?
19 THE WITNESS: John Corcoran, C-o-r-c-o-r-a-n.
21 JOHN CORCORAN,

1 BY MR. MORRIS:
2 Q. Mr. Corcoran, do you also go by Jack Corcoran?
3 A. Yes, I do.
4 Q. What line of work are you in?
5 A. Accounting.
6 Q. How long have you done accounting?
7 A. Since 1979.
8 Q. And so if we look back to the 2005 timeframe, were
9 you doing accounting then?
10 A. Yes, sir.
11 Q. Okay. Specifically looking to about the May of 2005
12 timeframe, did you get hired by a company to do some
13 accounting?
14 A. Yes, I did.
15 Q. Who did you get hired by?
16 A. Head Financial and Creative Loans.
17 Q. And your understanding was you worked for both of
18 those companies?
19 A. Yes, sir.
20 Q. Do you have any understanding about what the
21 distinction is between Head Financial and Creative Loans?
22 A. As far as I knew, they were the same.
23 Q. Do you recall who hired you?
24 A. Yes. Keith Brotemarkle.
25 Q. And, again, looking now to the beginning of your time

1 there, so May of 2005, who did you consider to be your
2 supervisor?
3 A. Keith.
4 Q. How long did you remain employed at Head Financial or
5 Creative Loans?
6 A. Until September 2006.
7 Q. Okay. So let's focus on the beginning of your time,
8 May 2005. What were your job duties at Head Financial or
9 Creative Loans?
10 A. I took care of the books, paid bills, et cetera.
11 Q. Okay. If you can give more detail, so in terms of
12 the "taking care of the books," what does that mean?
13 A. Did all the entries for whatever transactions came
14 in, paid all the bills, did payroll.
15 Q. Okay. So the entries for transactions coming in, can
16 you describe --
17 Well, based on your job duties -- and again focusing
18 at this point at the beginning the May/June/July timeframe of
19 '05 --
20 A. Uh-huh.
21 Q. -- were you aware of what sources of income the
22 company had?
23 A. I was only informed of wires coming in, different
24 types of payments that came into the account.
25 Q. Okay. So wires. Were there any other income sources

1 other than wires coming in?
2 A. Not that I remember at this time.
3 Q. Okay. Were you aware of where those wires were
4 coming from?
5 A. They just -- a wire came in. It was information
6 given to me that this wire came in so much money, to book it as
7 income from real estate transactions.
8 Q. And who would tell you how to book it -- or you said
9 to book it under real estate transactions?
10 A. Yes, sir.
11 Q. Can you explain what that means?
12 A. Yes. The money came in, and it was an income, a
13 category called real estate transactions. It was sale income.
14 Q. And who would tell you to book it under a particular
15 category?
16 A. When I was first hired, I asked where it went to.
17 And Keith told me to put it in sales transactions.
18 Q. And, again, still focusing on the beginning of your
19 time there. You said you were paying bills.
20 Can you describe in general categories what these
21 bills --
22 A. Sure. The rent --
23 THE REPORTER: Excuse me. I'm going to ask you to
24 let him finish his question before you start. I can't take two
25 people at one time. Continue, please.

1 Q. BY MR. MORRIS: And so the question was, can you
2 describe the general categories of bills?
3 A. Sure. Rent, utilities, payroll, commissions paid,
4 and other items that were bills that came in. Miscellaneous
5 stuff.
6 Q. Some of them might be self-explanatory, but I wonder
7 if you can explain the difference between what you describe as
8 payroll and what you describe as commissions?
9 A. Sure. I would get a notice from either Kou or Keith
10 that a commission on a deal was due to someone, to another
11 person that worked there.
12 Q. Okay. And that's distinct from payroll?
14 Q. So what was payroll?
15 A. Payroll would be regular hours there. Strictly
16 whatever the salary was paid to the people or timecards were
17 turned in for people.
18 Q. And based on your understanding -- again, focusing at
19 the beginning here -- were some people in the office paid based
20 on salary and some based on commission?
21 A. Some were paid on both. Some just salary and some on
22 both.
23 Q. So a mixture then?
24 A. Yes, sir.
25 Q. To your recollection, if you can recall, who was

1 being paid based on payroll?
2 A. Myself, the receptionist. That's about it.
3 Q. Can you describe your recollection of who and, I
4 would say, general categories of people working in the office
5 when you started?
6 A. Could you please rephrase that a little bit, please.
7 Q. You mentioned some names, but I'm wondering if you
8 could explain your understanding of who is working in the
9 office?
10 And if we can start with categories of people that
11 you worked with and then maybe talk about names from there.
12 A. Okay. Well, there was one -- someone that -- maybe
13 kind of the back room, which after a while down the road I knew
14 they were the underwriters.
15 Then there was another section that we had in the
16 conference room when I first came on board that were being paid
17 weekly. And I think they were making phone calls.
18 And there was another group up to my -- because that
19 was the middle of the -- up to my right that I understood was
20 an AEs.
21 Q. Were there any other groups of people?
22 A. There was the loan processors which were in the other
23 section.
24 Q. So to make sure I understand, you have the backroom,
25 who you understood to be people with the job title of

1 underwriters?
2 A. Correct.
3 Q. And you've got a conference room where people were
4 making phone calls?
5 A. Correct.
6 Q. And then at some point you then get a middle room
7 where there were people called AEs?
8 A. They were in the room to the right. When I was in
9 the one section, they were in the room to the right when I
10 first came on board.
11 Q. And the processors?
12 A. That's correct, sir.
13 Q. Any category of employees we haven't talked about?
14 A. We have Keith Brotemarkle, who was in charge. And
15 then Ed Shaffer, who I understood ran the backroom and the AEs.
16 Q. Okay. How did you know how much to pay commissions
17 to those people who were on commission?
18 A. Typically, I was given an e-mail or a note that these
19 people -- this is how much they got off each deal.
20 Q. And who would give you that e-mail or note?
21 A. At the beginning, it was done by Keith. And then
22 after the program was written, it was given to me via the
23 e-mail that -- after Mark Wilson wrote this program.
24 Q. Okay. Let's stop and talk about that for a second.
25 You said after the program was written. Do you recall when it

1 is that a program was written by Mark Wilson?
2 A. Somewhere -- began writing the program in November of
3 2005.
4 Q. And so sometime after that program is running, that
5 changed the way that you knew how to pay commissions?
7 Q. And in what way did it change it?
8 A. Well, everything came to me via an e-mail that said
9 who got what and how much.
10 Q. When you started working, was it also among your job
11 duties to pay mortgages?
12 A. Yes.
13 Q. Okay. Can you describe about what your understanding
14 of your duties were for paying mortgages?
15 A. I was to pay the mortgage the last day of the month.
16 Q. And how would you know how much to pay on a mortgage?
17 A. When I first started there, I was given a list of the
18 mortgages and who they were payable to.
19 Q. And you said "when I first started there." So did
20 that change after some time?
21 A. Every time a new deal came through, I would be given
22 what the new mortgage was and who it was payable to.
23 Q. And amongst your income, did you receive as the
24 income coming in, as in your accounting, rent checks?
25 A. Yes, I did.

1 Q. We'll talk about that in a second. I'll ask to bring
2 up Exhibit 62, which I believe came in. Exhibit 62, please.
3 Sorry. I meant 65. I apologize. Go to 65.
4 Looking at one page of an exhibit. Can you see it on
5 the screen there?
6 A. Yes, I can.
7 Q. Do you recognize this document?
8 A. Yes, I do.
10 A. This is a document that was given that I was to pay
11 the mortgage off -- pay the mortgage off of and to put
12 information on what I paid and the confirmation number.
14 A. Yes, I do.
15 Q. Whose is it?
16 A. It is mine.
17 Q. And so this was one of the documents you were then
18 using to do what you previously described as far as making
19 those mortgage payments?
20 A. Yes, sir.
21 Q. Can you try to zoom in on this top part here. Not
22 sure how much that will help us.
23 If we could just go across the headers here, and if
24 you can explain what the columns in the spreadsheet mean for
25 the jury?

1 A. Sure. It's the property address, the bank where the
2 mortgage is paid to, the mortgage amount, the mortgage payment,
3 bank phone number, the tenant's name, the buyer's name, and
4 what the tenant pays for monthly rent.
5 Q. If we could then go to -- let's go to page five of
6 this exhibit, please.
7 So if we can focus in on this as an example on the
8 spreadsheet again. Is this still your handwriting?
9 A. Yes, it is.
10 Q. So this column that I'm sort of circling here, is
11 that what you had previously testified was the loan payment
12 amount on the process?
13 A. Yes, sir.
14 Q. And so based on your understanding of the document,
15 that was the amount that you had to pay out in mortgages on the
16 property?
17 A. Yes, sir.
18 Q. And this column over here, that was the amount of
19 rent coming in on the property?
20 A. Yes, sir.
21 Q. Okay. Now in this case, it looks like there's two
22 lines for this example - one here and one here - what does that
23 mean on the spreadsheet?
24 A. From my recollection, it is two loans they have on
25 it, the first and the second.

1 Q. So on this property, the two mortgages -- I'm sorry
2 -- I'm blacking it out for you -- the two mortgages total up to
3 how much of a payment per month?
4 A. About 5400, 5500 a month, yes.
5 Q. And the incoming rent is 4,500?
6 A. That is correct, sir.
7 Q. If we could zoom out and just use one more example
8 here.
9 If the jury is looking at this, they would interpret
10 these columns and rows the same way as the other?
11 A. Yes, sir.
12 Q. Would that be consistent for all the other rows on
13 this spreadsheet?
14 A. Yes, sir.
15 Q. So in this case, the amount of the mortgage is
16 approximately how much -- sorry -- the amount of the mortgages?
17 A. About $2,000, a little over $2,000.
18 Q. And the incoming rent is?
19 A. $1,693.
20 Q. Focusing again at the beginning of this time period,
21 if your incoming rent is less than the mortgages that you owed
22 on the property, how is it that you were able to pay the
23 mortgages?
24 A. More money would keep coming in from different wires.
25 Q. Okay. In the course -- and, again, focusing the

1 summer of 2005 -- do you have a recollection whether if you
2 aggregated all of the incoming rent payments and all of the
3 outgoing mortgage payments, do you know whether or not the
4 incoming rent was greater than or less than the outgoing
5 mortgages?
6 A. It was less than.
7 Q. So the answer is you do know that -- you do know
8 whether it was greater or less than?
9 A. Oh, yeah.
10 Q. And the answer to the follow-up question, which is
11 which is it, greater than or less than, it would be less than?
12 A. Yes, sir.
13 MR. SAMUEL: I didn't hear the answer.
14 Q. BY MR. MORRIS: Were you working with the finances
15 for Head Financial Services and/or Creative Loans throughout
16 that time period that you've talked about, from 2005 to mid
17 2006?
18 A. Yes.
19 Q. And what you just testified to, that the incoming
20 rent was less than the outgoing mortgages, did that remain true
21 throughout the time that you worked there?
22 A. Yes.
23 Q. And throughout the time that you worked there, was it
24 also true that the way that you would be able to pay the
25 mortgages was only if incoming wires continued to come in?

3 Q. BY MR. MORRIS: Did anything change about how you
4 paid the mortgages given that the rent was less than the
5 mortgages throughout the time that you worked?
6 A. No, sir.
7 Q. At some point did you stop using this spreadsheet to
8 track these transactions?
9 A. Yes.
10 Q. Okay. What did you start using instead?
11 A. Originally, when I first came there, they were using
12 Nano Checks. When I started using Quickbooks completely and
13 writing checks permanently, I stopped using those sheets.
14 Q. And during the time that you then converted to
15 Quickbooks, did anything that -- other than that change, is
16 there any other change to the way that you handled the incoming
17 rent and outgoing mortgages?
18 A. No.
19 Q. At some point, did you become a signatory on the
20 accounts for the business?
21 A. Yes.
22 Q. To your knowledge, did you have access to all the
23 company's accounts?
24 MR. TEDMON: Your Honor, it's vague because there's
25 Head Financial, there's Creative Loans. If we could break it

1 down.
2 THE COURT: Can you do that?
3 Q. BY MR. MORRIS: Sure. To your knowledge --
4 I think your previous testimony was you thought Head
5 Financial and Creative Loans were one and the same?
6 A. Yes.
7 Q. But were you aware of accounts that were distinct
8 based on Creative Loans versus Head Financial?
9 A. Yes. There were two different bank accounts.
10 Q. Were you aware of any accounts other than those two
11 that you can recall?
12 A. Not that I know of.
13 Q. Were you aware of any kind of an account that would
14 be referred to as a reserve account?
15 A. I don't remember at this time, no.
16 Q. Were you aware of any account called a trust account?
17 A. No.
18 Q. Okay. Did you have any conversations with anybody
19 about setting up a reserve or trust account?
20 A. No, sir.
21 Q. Leaving aside now the financial side of your job
22 duties, did you ever acquire any additional job duties while
23 you were working at either of these companies?
24 A. Yes, I did.
25 Q. What were the additional job duties that you

1 acquired?
2 A. Property management.
3 Q. And when, if you recall, did you get involved in
4 property management?
5 A. November of 2005.
6 Q. And how did it come to be that you got involved in
7 property management at that time?
8 A. I was asked by Keith if I would mind -- because the
9 properties were getting bigger and larger, if I would mind
10 doing it if he got me someone to help.
11 Q. And did you agree to do that?
12 A. Yes, I did.
13 Q. And did he get somebody to help you?
14 A. Yes, he did.
15 Q. Who was that?
16 A. Olga Wilson.
17 Q. And when you were doing property management, were you
18 still doing it under the name of Creative Loans or Head
19 Financial?
20 A. There was a company called Nations Management.
21 Q. And what were your job duties with respect to
22 property management from the end of 2005?
23 Start with this. When you first took over property
24 management, what were your job duties?
25 A. To make sure the rents were collected. And if they

1 weren't collected, to let Keith know.
2 Q. And at that time, were you still paying the mortgages
3 also?
4 A. Yes, sir.
5 Q. And if you know, do you know what Keith would do when
6 you gave him the information about rents being paid? That's a
7 yes or no question.
8 A. I do not know.
9 MR. GREINER: I'm sorry. What was the answer?
10 THE WITNESS: No, I don't know.
11 THE COURT: The answer was "I do not know."
13 Q. BY MR. MORRIS: Did you have any other job duties
14 with respect to property management other than collecting rents
15 and paying mortgages?
16 A. I would be sent out at different times when there was
17 an eviction.
18 Q. Do you recall when, approximately, the first time was
19 that that happened?
20 A. I think the first time I went out was before I took
21 -- did property management. Like September 2005.
22 Q. Well, what was your understanding of why you were
23 going someplace for an eviction?
24 A. That they hadn't paid the rent, and they were
25 delinquent.

1 Q. And maybe I should ask a better question. Where were
2 you going when you got sent out?
3 A. To San Francisco.
4 Q. And where were you going within San Francisco?
5 A. Courthouse.
6 Q. And what was your understanding of the reason why you
7 were being sent to court in San Francisco?
8 A. To testify that they hadn't paid the rent.
9 Q. Okay. And did you do that?
10 A. I did.
11 Q. Who asked to you go and do that?
12 A. Keith.
13 Q. Did Keith give you any instructions about what to do
14 when you got there?
15 A. No, sir.
16 Q. And so the time of that, I think you testified at
17 that point you would not have considered that to have been
18 amongst your job duties prior to that point?
19 A. No, sir.
20 Q. Did it become part of your job duties later?
21 A. Yes, sir.
22 Q. And if you could describe then --
23 Let's start with that first one, this first eviction,
24 if could you describe what happened?
25 A. Well, I went to testify, and I was showed some

1 documents that I had no idea what they were and why I was being
2 shown them.
3 Q. Do you recall what those documents were?
4 A. Some documents about the dealings of sale of the
5 house. Or I had never seen these documents before in my life.
6 Q. So that hadn't been something that you had dealt with
7 prior to that?
8 A. No, sir.
9 Q. What, if anything, did you do after that eviction
10 process?
11 A. When I came back, I went to Keith and told him. I
12 think my comments were what is this all about, and what is
13 this. Because I've never seen this before in property
14 management.
15 Q. And what did Keith say?
16 A. Don't worry about it.
17 Q. And then after that did you get involved in other
18 evictions?
19 A. Yes.
20 Q. Was there anything different with respect to those
21 later evictions different from what you just described with
22 this first one?
23 A. For me, I never saw them -- those things again. It
24 was just that one time because I -- if you don't want me to say
25 anymore, I won't.

1 Q. Please.
2 A. Because when I came back, I told him that these
3 people you sent me about, the eviction company left me out to
4 dry. And I recommended someone else to them, and they did hire
5 that person.
6 Q. Okay. So was this somebody that you dealt with in
7 the past?
8 A. Yes.
9 Q. And you recommended that person to then -- what type
10 of person is it they were talking about?
11 A. A lawyer.
12 Q. And so you recommended this person to come and work
13 evictions specifically or law in general?
14 A. Evictions.
15 Q. Who was this person?
16 A. Betty Stroph.
17 Q. Do you happen to know the spelling of her name?
18 A. I think it's S-t-r-o-p-h.
19 Q. So we've covered finances, covered property
20 management, covered evictions.
21 Did you have any other job duties during that period
22 of when you started until the middle of 2006?
23 A. No.
24 Q. If you can focus in on your property management
25 duties --

1 A. Uh-huh.
2 Q. -- were you also responsible for sending checks to
3 people other than folks in the office?
4 A. Yes.
5 Q. Who were the people that you would send checks to?
6 A. Whenever a deal was closed, I had been given
7 instructions to send checks to certain people.
8 Q. Let's start with that. Who gave you those
9 instructions?
10 A. Again, it was either Keith or Kou. I don't remember
11 at this time, but it came from one of those two.
12 Q. And did that also change after that Mark Wilson
13 program starts or did that stay the same after the program?
14 A. No. Once the Mark Wilson program started, it all
15 came in the same e-mail.
16 Q. Okay. And the instructions then from Kou and Keith
17 to send the checks, did they tell you -- well, what was the
18 actual substance of the instruction that they gave you?
19 A. Where the check would go to and how much to the
20 person.
21 Q. Who, how much?
23 Q. Did they tell you what it was for?
24 A. One was for fees, finder's fee, or a fee.
25 Q. And how would you send those checks to the people?

1 A. Via the mail.
2 Q. Were you involved in mailing contracts to people or
3 forms for people as part of your property management process?
4 A. Yes, I sent a copy of the lease for the property, and
5 where to make the payments, and when payment was due each
6 month.
7 Q. And was that a normal part of the procedure for
8 transactions as they happened?
9 A. Yes, sir.
10 Q. And as part of these instructions, I think you said
11 one of the instructions was where to send the payments?
13 Q. Were you aware of any checks being sent to the former
14 property owners as part of that process?
15 A. Sometimes. But I don't remember how many times.
16 Q. So it would occasionally happen?
17 A. I think so.
18 Q. Can you describe where --
19 Well, you said to like, I think, the middle of 2006
20 you were with Head Financial or Creative Loans or Nations
21 Property?
22 A. Uh-huh.
23 Q. At some point did you then stop being associated with
24 those three organizations?
25 A. Yes.

1 Q. Can you describe when that happened, sir?
2 A. It started about August 2006, when I was approached
3 to go off on my own or to be --
4 Q. And who approached you about going off on your own?
5 A. First, Keith and Charles together.
6 Q. Okay. And what, if anything, did they tell you about
7 going off on your own?
8 A. They were splitting up the different entities of the
9 company.
10 Q. When you say different entities of the company, what
11 do you understand the entities of the company that were split
12 up?
13 A. Property management, the processing, and the company
14 itself.
15 Q. And so when you were split off, which portion of it
16 was it that you were splitting off?
17 A. Property management.
18 Q. So from that point on, did you have any role in the
19 finances of Head Financial?
20 A. None after I left, no.
21 Q. Did you have any role in the finances of Creative
22 Loans after that point?
23 A. No.
24 Q. Did Nations Property Management still exist, that you
25 know of, at that point?

1 A. It might have.
2 Q. But you didn't have any role in Nations Property?
3 A. No.
4 Q. What was the name of the new company that you were
5 splitting off?
6 A. A1 Investment Management.
7 Q. Did you physically move your offices at that point?
8 A. Yes.
9 Q. Do you recall where you moved to?
10 A. Newport Beach.
11 Q. Well, when you moved, who, if anybody, moved with
12 you?
13 A. Olga Wilson.
14 Q. So at this point then, from that mid 2006 on, it's
15 the two of you -- with respect to your understanding of your
16 job duties, it's you and Olga?
18 Q. So if we can focus between May of '05 and that split,
19 which I think you said is about August of '06 --
20 A. Yes.
21 Q. -- where physically were you located when you were
22 working? Let's start with the address.
23 A. In Costa Mesa.
24 Q. And were you in the same office the entire time?
25 A. Yes.

1 Q. And during that time, did you have your own office or
2 were you part of like a cubicle?
3 A. I started off sharing an office next to Keith's
4 office. And when I went to property management, they expanded
5 the offices to another space where I was -- Olga and I were put
6 over in two different offices.
7 Q. When you were next to Keith, who else was around you
8 office-wise there?
9 A. If I'm not mistaken, Kou was the next office over,
10 and across the hall was Ed Shaffer, and down the hall were the
11 underwriters.
12 Q. And did you say you were sharing an office with
13 Keith?
14 A. No. No. With some other person. I forget the name.
15 Q. So you're sharing an office with one person, Kou to
16 one side, Ed Shaffer across the hall?
17 A. And Keith the other side, yeah.
18 Q. And that was true up until, I think you said, then
19 you expanded when you took over property management?
20 A. Yeah.
21 Q. And who were you around when you took over property?
22 A. I had one office. The other side of the office was
23 all the records, was Olga. And the other side was Kou. And
24 outside Kou's office we're a bunch of cubicles with her people.
25 Q. "Her people" being Kou's people?

1 A. Yes.
2 Q. So in both of those locations within Costa Mesa you
3 were sharing a wall with Kou Yang?
4 A. Yes. I was closer to Kou Yang's office in the other
5 side.
6 Q. Were you able to overhear what goes on in her -- what
7 went on in her office?
8 A. Yes, sir.
9 Q. During the time that you were in the Costa Mesa
10 location, did you become aware that false statements were being
11 made as part of the business? And that's a yes or no.
12 A. Yes.
13 Q. How did you become aware that false statements were
14 being made?
15 A. Overheard conversations.
16 Q. Conversations involving who?
17 A. Mostly Kou and Keith.
18 Q. And what conversations did you overhear that led you
19 to understand that false statements were being made?
20 A. How do I make this deal work? What can we do to make
21 it work? How do we fix it?
22 Q. And did those conversations include discussions of
23 what they were going to do to fix it or make a deal work?
24 A. Sometimes and sometimes not.
25 Q. And when it did include discussions of what they

1 would do, what were they going to do to make a deal work?
2 A. Add income to the person's account, put money in
3 their account.
4 Q. Were there any other false statements that you were
5 aware of other than adding assets to people's accounts?
6 A. Doctoring it up to make it look good. And I don't
7 know how to put it in better words.
8 Q. Okay.
9 A. I wasn't trying to pay attention. I just overheard
10 things.
11 Q. What do you mean by doctoring it up to make it look
12 right?
13 A. Increasing -- whatever they had to do. You know, I
14 didn't hear everything. I was only -- I could hear it through
15 the wall. I wasn't really trying to be nosey. Just could
16 overhear it.
17 Q. Sure. When you say increasing, was there something
18 in particular that they were talking about increasing?
19 A. The income of the person.
20 Q. Make sure I understand. You overheard discussions
21 about putting assets in accounts?
22 A. Uh-huh.
23 Q. And you overheard discussions about increasing the
24 income?
25 A. Uh-huh.

1 THE REPORTER: You need to say yes or no.
2 MR. MORRIS: I apologize. Please make sure all your
3 answers are yes or no, not uh-huh or huh-uh.
4 THE WITNESS: Yes.
5 Q. BY MR. MORRIS: Just to make sure I understand then
6 and to get those on the record, the false statements that you
7 overheard being discussed were increasing income and placing
8 assets in accounts; were there any others?
9 A. No.
10 Q. And those were discussions involving who?
11 A. Keith and Kou mostly.
12 Q. And when you say "Keith and Kou mostly," were there
13 ever other people that were part of those conversations?
14 A. Charles. But very rarely.
15 Q. This might be, then, a point for me to bring up this.
16 You were arrested with respect to your involvement in
17 Head Financial and Creative Loans, is that correct?
18 A. Yes.
19 Q. And have you pled guilty in that case?
20 A. Yes.
21 Q. And is your testimony here pursuant to your agreement
22 in that plea agreement to cooperate with the Government?
23 A. Yes.
24 Q. Have you had any other criminal convictions?
25 A. Yes.

1 Q. What else have you been convicted of?
2 A. A deal with my former business partners.
3 MR. SAMUEL: I'm sorry. I missed that.
4 Q. BY MR. MORRIS: Can you say that again?
5 A. A deal with my former business partners.
6 Q. When was that conviction?
7 A. 2007.
8 Q. And when you say former business partners, were those
9 former business partners prior to, or after your time, or
10 during the time --
11 A. Prior to.
12 Q. And what specifically was it you were convicted of?
13 A. Grand theft.
14 Q. I'll ask you then to focus now in on this period
15 after you've split off. I think you said now it's A1
16 Investment Management?
17 A. Yes, sir.
18 Q. What, if anything, changed in your job duties, or
19 what you were doing when you split off with A1 Investment
20 Management?
21 MR. GREINER: Objection. Variance.
23 THE WITNESS: Well, all I was doing at that point was
24 property management.
25 Q. BY MR. MORRIS: Were you still paying the mortgages?

1 A. Yes.
2 Q. Were you still receiving the rent checks?
3 A. Yes.
4 Q. Was it still the case that the incoming rent was not
5 enough to pay the outgoing mortgages?
6 A. Yes, sir.
7 Q. Were you still receiving inbound wires to make up
8 that difference?
9 A. I was receiving money from the new company with Lavar
10 Fletcher and Keith Brotemarkle, so, yes, sir.
11 Q. So it wasn't coming to you, it was going to a
12 different company?
13 A. Yes, sir.
14 Q. And you were relying on them to give you the money?
15 A. Yes, sir.
16 Q. Did that stop at some point?
17 A. Yes, it did.
18 Q. When did that stop?
19 A. It stopped about 90 days after I had started up the
20 company.
21 THE COURT: This is a good time for our first break.
22 Why don't we go ahead and take that break. 15-minute break.
23 During that break, please remember, as always, my
24 admonitions. It may be that the cold air is leading to some
25 sneezing. I'll make sure there's tissue boxes on either side

1 of the jury box. Have a good break. See you in 15.
2 (Jury out.)
3 THE COURT: You may step down, but please be back in
4 your seat in 15 minutes.
5 You may be seated. I have one question. How much do
6 you need to get into A1?
7 MR. MORRIS: I think we may be, at this point, done
8 with direct. I'm just going to confer over the break, but I
9 think we're about done.
10 THE COURT: All right. Then we'll see you in 15.
11 (Break taken.)
12 THE COURT: All right. Let's bring the jury back in.
13 (Jury in.)
15 and gentlemen. We will continue with the examination of
16 Mr. Corcoran.
17 Mr. Morris, you are completed with your direct?
20 MR. TEDMON: Your Honor, I have no questions.
21 THE COURT: No questions. Mr. Samuel? And how long
22 do you believe you need?
23 MR. SAMUEL: Five minutes or less.

1 BY MR. SAMUEL:
2 Q. Actually, I wanted go back to Exhibit 65. And,
3 really, that's just to refresh your recollection.
4 Actually, what my question is, you were always asked
5 the question about whether or not the sum of the first and
6 second mortgage was greater than the lease payment, right?
7 A. Yes, sir.
8 Q. And you said essentially that is correct, and it is
9 true, right?
11 Q. But were you aware that the agreements that were
12 entered into were only for a year, and then after a year that
13 the property would either be sold back to the original seller
14 and/or sold and gotten out of the inventory?
15 A. That was my understanding.
16 Q. Right. Consequently then, when you got these large
17 wire checks, there was substantially more money available in
18 the account to cover one year's worth of discrepancies between
19 income and out-go, right?
20 A. From that wire, correct.
21 MR. SAMUEL: Yes. No further questions.
22 THE COURT: Mr. Greiner? And how long do you believe
23 you need?
24 MR. GREINER: I believe I can get it all done in 35
25 or less with the underline on the less. But I'm going to take

1 35. Just in case. Thank you, Judge.
3 CROSS-EXAMINATION
4 BY MR. GREINER:
5 Q. Good morning, Mr. Corcoran. Make sure you answer out
6 loud so the court reporter gets it.
7 A. Okay.
9 reporter gets it. Okay?
10 A. Yes, sir.
11 Q. There you go. And if I ask you a question you don't
12 understand, just ask me to rephrase, and I'll do so. Okay?
13 A. Yes, sir.
14 Q. All right. Prior to you taking the stand this
15 morning, did you talk to anybody about your testimony?
16 A. Yes, sir.
18 A. Mr. Morris.
19 Q. And, in general, what did you talk about?
20 A. Just about what I said on the stand here.
21 Q. Okay. So in other words, you reviewed basically what
22 the direct examination was going to be?
23 A. To a point, yes.
24 Q. Okay. Were you shown any documents prior to you
25 taking the stand this morning?

1 A. Just document 65.
2 Q. All right. In this break period did you talk to
3 anybody about your testimony?
4 A. No, sir.
5 Q. And did you see any documents?
6 A. No, sir.
7 Q. Okay. My questions are going to be from the point
8 that you were hired -- and you recall that that was in May of
9 2005, toward the end?
10 A. Toward the end of May, 2005, yes.
11 Q. And you recall the salary you got hired for was
12 72,000 per year?
13 A. I was hired at $6,000 a month.
14 Q. $6,000 a month?
15 A. With a bonus of 20 percent for the year.
16 Q. All right. So the questions I'm going to ask you
17 start at that time period, July 2005. And unless I say
18 otherwise, it's going to go to that. I'm going to take you to
19 June of 2006. The end of June 2006. Okay. Now if I say
20 something in a question that changes, then it modifies, but
21 that's the timeframe I'm looking at. Do we have that
22 understanding?
23 A. We do.
24 Q. All right. When you were working there, Ed Shaffer
25 was working there, right?

2 Q. What was your understanding of his title?
3 A. My understanding of his title was that he was in
4 charge of -- I never worked in mortgage before, so I'll have to
5 explain myself why -- that he was in charge of the backroom,
6 and AE's, and the phone room.
7 Q. You mentioned in your discussion with the Government
8 about commissions?
10 Q. To your understanding, who created the commission
11 structure at the business?
12 A. My understanding when I came there was that it was
13 already in place, and it was given to me by Keith.
14 Q. During the time period we're discussing, did that
15 commission structure change to your understanding?
16 A. There was a modification for him and Kou, but that's
17 the only thing that I remember changing.
18 Q. And what was the modification for Keith Brotemarkle
19 and Kou Yang, as you understood it?
20 A. They were going to get a piece of every deal closed.
21 Q. And when did that commission change take place, as
22 far as you knew?
23 A. I don't -- off the top of my head, I don't remember.
24 Sorry.
25 Q. Do you have an estimate at all? Not a guess but a

1 best estimate?
2 A. Two months after I got there.
3 Q. To your understanding, who created the titles of the
4 people in the company?
5 A. I don't really know that. All I know is what Keith
6 told me the titles were. I don't know.
7 Q. Now you discussed with the Government pay, and
8 payroll, and rents, and bills, okay.
9 So my first question is, who gave you the direction
10 to pay the bills?
11 A. Keith.
12 Q. And who gave you the direction to pay the payroll?
13 A. That was the direction given to me at the beginning.
14 That I would do it every two weeks and pay.
15 Q. Who gave you that --
16 A. Keith.
17 Q. And who told you how much to pay, not the payroll,
18 but, let's say, the commission?
19 A. That originally came from Keith or Kou after a deal
20 was closed. And then, again, it came always -- when Mark
21 Wilson wrote the program, it automatically came.
22 Q. And you mentioned that a couple times about this
23 automatic program, Mark Wilson.
24 Your understanding, someone had to input that
25 information into the program, correct?

1 A. Yes.
2 Q. Your understanding, who inputted the information that
3 came to you directing you to pay?
4 A. That information I'm almost -- I don't know who did
5 the final input, but it was all done as the deals were being
6 done. So I'm assuming Kou set everything up when she did the
7 deal, the processing.
8 Q. While you were there, you had an understanding that
9 employees were hired, correct?
10 A. Yes.
11 Q. What was your understanding of who hired the
12 employees?
13 A. I assume each department had their own. I did not
14 know. I was just given information when they were hired.
15 Q. You didn't have independent authority to hire people,
16 correct?
17 A. No, sir, I do not.
18 Q. When you were there at the company, you saw, you
19 observed, you understood Keith hired people, true?
20 A. Yes.
21 Q. You saw, you observed that Kou hired people?
22 A. Yes.
23 Q. You observed and you saw that Ed Shaffer hired
24 people?
25 A. I saw him have people there. I don't know if he

1 hired them. I assume he would have, yes.
2 Q. But you didn't see that from Ed Shaffer?
3 A. No, I did not.
4 Q. While you were there, you saw employees get fired,
5 correct?
6 A. Lots of people leave.
7 Q. You saw people asked to leave, correct?
8 A. Yes.
9 Q. And Keith did that, correct?
10 A. I can't -- don't know for sure.
11 Q. Did you see Kou do that?
12 A. All I know is they were gone. I never saw anybody do
13 anything personally.
14 Q. Your understanding, when the wires were coming in,
15 were they automatically deposited into an account?
16 A. Yes, sir.
17 Q. And your understanding, you had access to the
18 business accounts, correct?
19 A. I did, yes.
20 Q. Your understanding, Kou Yang had access to the
21 business accounts, correct?
22 A. Correct.
23 Q. Your understanding, did Keith have access to the
24 business accounts?

1 Q. You knew none of the employees working there had
2 access to the business accounts, correct?
4 Q. And you knew none of the employees had signatory
5 authority on any of the business accounts, correct?
7 Q. All right. And this may have changed during time, so
8 if so, we'll talk about that as transition.
9 What I want to ask you, when you were to pay the
10 mortgages on the properties --
11 A. Uh-huh.
12 Q. -- who told you to do that activity?
13 A. From my first day, it was told by Keith.
14 Q. All right. And who told you in what order to pay the
15 mortgages?
16 A. They were to be paid every month.
17 Q. Bad question. Good answer. You have multiple
18 mortgages to pay, fair?
19 A. Yes.
20 Q. All right. So how do you know which mortgage to take
21 first, to pay, did somebody tell you?
22 A. We were supposed to pay them all at once.
23 Q. Was there any point in time where Keith Brotemarkle
24 suggested to you to pay the properties that his family had
25 invested in first?

1 A. Yes.
2 Q. And you disagreed with that, correct?
3 A. Yes.
4 Q. I'm going to clarify because I think on your
5 discussion with the Government you talked about income that
6 came in -- came from wires, correct?
7 A. Uh-huh.
8 Q. Yes?
10 Q. She just has to take it down.
11 A. Sorry.
12 Q. No worries. There were occasions when actual checks
13 came into the company, fair statement?
14 A. Yes.
15 Q. And those checks would then be deposited into the
16 accounts, correct?
17 A. Yes.
18 Q. Now, do you recall at least one instance of a sum of
19 money going to a homeowner at the close of escrow by mistake?
20 A. I might have, but I don't remember. I really don't.
21 Q. Let me try to refresh your memory. Do you have a
22 recollection of a $108,000 check coming into the company?
23 A. So much came in, I -- I'll be honest with you, that's
24 too many years ago. No, I can't remember.
25 Q. I understand. And remember I'm trying to refresh

1 your memory by associating a physical check coming in versus
2 just the automatic deposits of the wires.
3 A. To be honest, I don't remember. I really don't.
4 Q. Does the name Deborah Brockway, does that refresh
5 your recollection?
7 Q. From your understanding, if monies at the close of
8 escrow mistakenly went to a property owner, whose
9 responsibility would it be to get that money back to the
10 company?
11 MR. MORRIS: Objection. Calls for speculation.
12 MR. GREINER: If he knows, Judge. And if he answers
13 yes to that, and then if he knows, I can follow up.
14 Q. BY MR. GREINER: Do you know?
15 A. No, I do not.
16 Q. All right. Was there any point in time where a file
17 or property -- I don't know which term you use -- but a file or
18 property closed, and then you got direction to pay commission,
19 was there any point in time where two sales agents were paid
20 commission on the same property?
21 A. I don't -- honestly, I don't know that answer either.
22 MR. GREINER: Judge, may I approach, to lay some
23 foundation?
24 THE COURT: Yes. Has counsel --
25 MR. TEDMON: May we see the document? Thank you,

1 Your Honor.
2 THE COURT: Is there an exhibit number?
3 MR. GREINER: It has an exhibit number on it. Does
4 the Court want that first, or do you want me to approach and
5 lay a foundation?
6 THE COURT: You can approach.
7 Q. BY MR. GREINER: Sir, I placed in front of you a
8 document, and at the top it has your name, do you see that?
9 A. Yes.
10 Q. This is a document that came out of that Mark
11 Wilson --
12 A. Program.
13 Q. -- program, correct?
14 A. Yes, sir. This is what I got.
15 Q. And you recognize that, correct?
16 A. I certainly do.
17 Q. And that's something that you saw in the business on
18 a regular course, correct?
19 A. Yes, sir.
20 Q. Regular course once the program got up and running,
21 correct?
23 Q. And that is the document that you would then cut
24 checks to make payments, correct?
25 A. 100 percent correct.

1 MR. GREINER: That document is DM-X37, Judge. And at
2 this time, I would move that into evidence.
6 MR. SAMUEL: No.
7 MR. GREINER: May I approach to retrieve it?
8 THE COURT: You may. DM-X37 is admitted.
9 (Defendants' Exhibit DM-X37, Jack Corcoran
10 Brockway/Scallin Payout admitted into evidence.)
11 Q. BY MR. GREINER: I have up on the screen the DM-X37
12 that I showed you, correct, sir?
13 A. You do, sir.
14 Q. And this is then how you would make payments on a
15 file that had closed once the Mark Wilson program got up and
16 running, correct?
17 A. Very much so. Correct, sir.
18 Q. And in this situation, it shows the underwriter as
19 being Beverly Rocheleau, correct?
21 Q. And the commission on that file was $2,964.54,
22 correct?
24 Q. It also shows Ed Shaffer, correct?
25 A. Yes.

1 Q. Keith Brotemarkle?
2 A. Yes.
3 Q. Kou Yang?
4 A. Yes.
5 Q. All right. And then it also shows "Deborah Brockway,
6 consideration, $10,000," correct?
7 A. Yes, sir.
8 Q. That's because you cut a check to Deborah Brockway
9 for $10,000, correct?
11 Q. And the obvious question -- probably shouldn't have
12 to ask it -- but obviously you don't see, like, Scott Wagner's
13 name on there, do you?
14 A. No, I do not.
15 Q. And you don't see Domonic McCarns' name on there, do
16 you?
17 A. No, I do not.
19 From you working at the company in this relevant time
20 period, do you have an understanding of how many people
21 actually worked in the sales department?
22 A. Off the top, not exactly how many but --
23 Q. Scott Wagner was one?
24 A. He was an underwriter.
25 Q. And Beverly Rocheleau was another one?

1 A. Underwriter.
3 A. Underwriter.
4 Q. Jason Marshal, at least for a period of time?
5 A. I don't know that name.
6 Q. Brian Singleton?
7 A. I don't know that name either.
8 Q. Beverly Smith?
9 A. Yes.
10 Q. Underwriter?
11 A. I think underwriter or AE. I'm not sure.
12 Q. George Brent?
13 A. Yes. He was an AE.
14 Q. And Nicholas Stuart?
15 A. The name doesn't sound familiar.
16 Q. The business that you were working for was run, as
17 far as you could tell from your observation, as a business,
18 right?
19 A. Yes, sir.
20 Q. What would be the number of employees?
21 Obviously, it fluctuated and changed, but what would
22 be the number of employees that you would say were there, given
23 an average or best estimate?
24 A. Ten to fifteen, maybe twenty when they had the room
25 going with the phones.

1 Q. When you were working there, what was your
2 understanding of who trained the sales agents, the
3 underwriters?
4 A. My understanding is that they were run by Ed Shaffer
5 and Keith.
6 Q. Okay. And your understanding, they had company
7 guidelines to follow, correct?
8 A. As far as I knew.
9 Q. I want to make sure that I have a clear picture.
10 When you were discussing with the Government you described
11 offices and locations, do you remember that?
12 A. Yes, I do.
13 Q. And I'm not talking about Costa Mesa. And I think
14 you said Newport Beach. That's not what I'm talking about.
15 What I'm talking about is there were actually two
16 separate office suites when you were working there, correct?
17 A. When I first came, there was only one. Then we
18 expanded to another one.
19 Q. Okay. And the division, when you expanded to two,
20 what was the division again?
21 A. Okay. Myself --
22 MR. TEDMON: Your Honor, I'm going to object as
23 vague. Can Mr. Greiner specify what office he's talking about?
24 Costa Mesa or Newport Beach?
25 Q. BY MR. GREINER: Again, I'm talking about Costa Mesa.

1 Time period is when you got hired at the end of May 2005 to the
2 end of June 2006.
3 At some point in time you said that the offices
4 expanded, but they went into two separate office suites,
5 correct?
6 A. One next door to each other.
7 Q. But two separate?
8 A. Yes.
9 Q. Two separate entrance doors?
10 A. Yes.
11 Q. And one office suite was whom?
12 A. The office I was in had me, Olga Wilson, Kou Yang,
13 and her processing staff.
14 Q. And the other office?
15 A. The other office had front office was Charles Head,
16 next office over was AE, a conference room that wasn't used
17 then, another office had a gentleman in there that was doing I
18 think buy-backs, whatever, I don't remember who he was, next
19 was Keith, across the hall was Ed Shaffer, next to that was a
20 couple, Beverly Rocheleau and someone else, underwriter, and
21 then Scott Wagner and Domonic McCarns in the other one.
22 Q. And you indicated they were what you'd call down the
23 hall?
24 A. That's correct. I call that -- I heard -- someone
25 told me when I came there backroom. So I don't know what that

1 was, but that's what I call it.
2 Q. That was the phrase you used?
3 A. Yes.
4 Q. I showed you the -- I'll call it the Mark Wilson
5 payment computer program document?
6 A. Correct.
7 Q. Which is a long title for one page.
8 Your understanding when you worked at the business
9 was that the underwriters only got paid if a file closed, fair
10 statement?
12 Q. Right. But the upper management people got paid
13 regardless of whether files got closed, fair?
14 A. Correct.
15 Q. Keith Brotemarkle got paid money regardless of
16 whether files were closed or not, correct?
18 Q. And you cut various checks to him, true?
19 A. Yes, sir.
20 Q. Large amounts of money to him, correct?
21 A. Yes, sir.
22 Q. Some $20,000 checks at times?
23 A. Something like that. I can't remember exactly, but,
24 yeah, yes, sir.
25 Q. And Kou Yang got paid regularly whether files got

1 closed or not, correct?
2 A. Yes, sir.
3 Q. And I believe her salary was, I think, 8,000 a month,
4 is that right -- or 6,000 a month?
5 A. I know it was more than mine so probably was.
6 Q. Okay. And once the file was closed, your
7 understanding is that you would then manage the property,
8 correct?
9 A. Yes, sir.
10 Q. And so as you discussed on direct -- I don't want to
11 go through all the litany -- but whatever entailed managing the
12 property, that was your responsibility once the file was
13 closed, fair?
14 A. Yes, sir.
15 Q. It wasn't -- and you never delegated that authority
16 to anyone, correct?
17 A. No, sir.
18 Q. "No, sir" being correct?
19 A. Correct.
20 Q. I have to watch my record. Who made the ultimate
21 decision of whether the original homeowner could buy back their
22 property?
23 A. I do not know that answer.
24 Q. You were managing the property, as we established?
25 A. Yes.

1 Q. Did you have to check with Keith and say, okay,
2 12-month period, we're there, we can sell it back to them?
3 A. I didn't have anything to do with that at all. They
4 did that -- everything on their own.
5 Q. When you say "they," that doesn't help us.
6 A. Keith.
7 Q. That would be Keith.
8 A. And whoever else was involved with that. I did not
9 have anything to do with that.
10 Q. But you know at least Keith was involved, right?
11 A. Yes, I do know that.
12 Q. And your understanding was that from the wires and --
13 I'm going to say money -- from the wires and money that came
14 into the company, there was supposed to be money that stayed in
15 the company so you could make the mortgage payments on the
16 property, fair?
17 A. Yes, sir.
18 Q. That was what you understood, right?
19 A. Yes, sir.
20 Q. All right. So let me stop there for a half second
21 and ask you this. On direct examination you were discussing
22 with the Government that the income was less than the mortgage
23 payments going out, do you remember that?
24 A. Yes, sir.
25 Q. So you must have immediately rang the bell and told

1 everybody what's going on, right?
2 A. The comments made to me were that money will always
3 keep coming, don't worry about it.
4 Q. And those comments came from Keith Brotemarkle, true?
6 Q. And I wasn't clear. That's why I'm going to ask
7 this.
8 I think you also discussed with the Government that
9 you made payments on what you called, quote, miscellaneous
10 items, do you remember that?
11 A. Yes, sir.
12 Q. Who gave you the authorization to make payments on
13 the miscellaneous items?
14 A. It depended on what the item was.
15 Q. Okay. Would it primarily have been Keith
16 Brotemarkle?
17 A. Keith or Charles. It had to do with some of his
18 personal stuff.
19 Q. Or Kou?
20 A. Or Kou, yes.
21 Q. Do you have any understanding that money that was in
22 the accounts that you were writing checks on was used as down
23 payment money on properties?
24 A. Yes.
25 Q. And your understanding is that it was?

1 A. Yes.
2 Q. And the authority to write those checks for the down
3 payments came from Keith Brotemarkle, true?
4 A. Or Kou.
5 Q. Or Kou Yang, true?
6 A. Yes.
7 Q. Who was the person that was to issue the 1099s for
8 the company?
9 A. I was.
10 Q. Your understanding, was there any set pay, salary
11 rate for Keith Brotemarkle?
12 A. When I first got there, there was. Then it
13 fluctuated.
14 Q. What would be your explanation, if you have one, why
15 Kou Yang would sign checks on the company business addressed to
16 Keith Brotemarkle?
17 A. I don't know.
18 Q. Okay. Because when you came, you were the one in
19 charge with making the -- I'm going to call it payroll, salary,
20 commission, whatever payment was for the people that worked at
21 the business, true?
23 Q. So your understanding, Kou Yang didn't have that job
24 responsibility once you were hired, true?
25 A. Correct.

1 Q. And you didn't delegate that authority to Kou Yang,
2 did you?
3 A. No. The only other person I gave it to was Olga
4 Wilson.
5 MR. GREINER: Judge, if I could just review. I think
6 I'm ahead of time schedule.
7 THE COURT: Six minutes.
8 MR. GREINER: Well, not that quite far ahead then, I
9 thought, but I am ahead.
10 THE COURT: You are ahead.
11 Q. BY MR. GREINER: Okay. Your understanding in this
12 business was that there were policies, regulations, procedures
13 that the employees had to follow, correct?
14 A. Yes.
15 Q. And management gave instructions to the employees,
16 correct?
17 A. Yes.
18 Q. So this was run like an organized business as far as
19 you could see, true?
20 A. Yes.
21 Q. Wasn't a free-for-all? I mean, there was structure
22 to it, correct?
23 A. Yes.
24 Q. Did you have an understanding if there were any
25 agents that worked outside of the office building themselves?

1 A. Just brokers that I had to pay. That's all that I
2 knew about.
3 Q. And you knew, when you were there, that Domonic
4 McCarns questioned upper management on what they were doing,
5 correct?
6 A. I don't know that for a fact.
7 Q. Well, you know for a fact that Domonic McCarns always
8 questioned what was going on to Keith, right?
9 A. I was never in those meetings.
10 Q. Well, did you ever hear Domonic McCarns question what
11 Kou was doing?
12 A. There were times that I heard Domonic McCarns yelling
13 and stuff, but that's about it.
14 Q. Yelling at Kou, right?
15 A. Yes.
16 Q. Yelling at Keith, right?
17 A. Yes. What it was about, I don't know.
18 Q. Did you ever see Keith and Domonic get into heated
19 discussions?
20 A. No.
21 Q. Did you ever see Kou and Domonic get into heated
22 discussions?
23 A. Yes.
24 Q. And your understanding, since you're cutting the
25 checks, if a draw was given out, that was a loan until

1 commissions came in, true?
2 A. Yes.
3 Q. And those employees in the company that were on
4 commission, they did not have a salary, correct?
5 A. Correct. Some had draws against commission.
6 Q. Some had draws, but none of them had salaries, true?
7 A. Yes.
8 Q. So it was dependent upon the files closing to get
9 paid, correct?
10 A. Yes, sir.
11 Q. And do you remember payments to Ed Shaffer when you
12 were there?
13 A. Yes.
14 Q. And do you recall the amounts of money that were paid
15 to him?
16 A. Off the top of my head, no.
17 Q. Was he salaried?
18 A. I do not remember. I just know he got paid a lot of
19 money.
20 Q. Let me try one document, Judge. May I approach?
21 Sir, I put in front of you a document. My first
22 question is yes or no. Do you recognize that document?
23 A. Yes, I do.
24 Q. Is that a document that you saw in the course of
25 business while working at the company in the relevant time

1 period?
2 A. Yes.
3 Q. Is that a document that reflects a bill that you
4 paid?
5 A. Yes.
6 Q. Does that document reflect a bill that you paid to Ed
7 Shaffer?
8 A. Yes. He was a loan officer, yes.
9 MR. GREINER: Judge, at this time, I would offer DM-Y
10 -- I believe it's -1 into evidence.
13 MR. TEDMON: No.
14 MR. SAMUEL: No.
15 THE COURT: DM-Y1 is admitted.
16 (Defendants' Exhibit DM-Y1, Loan Office Payments
20 Q. BY MR. GREINER: And this document, sir, that I
21 showed you, was a payment to Ed Shaffer in July of 2006 for
22 about $34,000?
23 A. Yes, sir.
24 Q. All right. Was that salary to him? Was it
25 commission? What was that all about?

1 A. It was his bill turned in. We got them a couple
2 times like that.
3 Q. Okay. And you do remember getting several bills like
4 that from him, correct?
5 A. Yes, sir.
6 Q. And on the top it said The Loan Office, Inc., that
7 was Ed Shaffer's business?
8 A. Yes, sir.
9 Q. And he also worked for the company, too, correct?
10 A. We only paid him through his company.
11 Q. Okay. One second, Judge. I think I'm done.
12 And just so we're clear, the document that's up on
13 the screen, this is the document you and I have been talking
14 about, correct?
15 A. Right.
16 Q. And the "total amount" is the total amount we were
17 talking about, correct?
18 A. Yes, sir.
19 Q. And this is one of the invoices that you received
20 from Ed Shaffer, correct?
21 A. Yes, sir.
22 Q. And on the top where it says The Loan Office Inc.,
23 that was the business that you sent the check to for Ed
24 Shaffer, correct?
25 A. Correct.

1 MR. GREINER: All right, Judge. Thank you. Thank
2 you, sir.
3 THE COURT: Redirect?
4 MR. MORRIS: Very short, Your Honor.
6 BY MR. MORRIS:
7 Q. I want to clear up one topic that both Mr. Samuel and
8 Mr. Greiner talked to you about, which is these wires come in,
9 and I think Mr. Samuel asked you, well, the wires are enough to
10 cover rent above and beyond what the rent's coming in.
11 So I want to be clear. A wire comes in, and that
12 wire is going to pay the payroll in the office?
13 A. Yes, sir.
14 Q. And that wire is going to pay the commissions?
15 A. Yes, sir.
16 Q. It's going to pay the bills to keep the office
17 running?
18 A. Yes, sir.
19 Q. Okay. Sounds like on at least some occasions it's
20 now being used to pay a down payment on a subsequent
21 transaction?
22 A. Yes, sir.
23 Q. If we could bring up DM-X37. When you spoke with
24 Mr. Greiner about this document --
25 A. Yes.

1 Q. -- and all of these various fees and commissions,
2 those were all being paid out of that wire that comes in?
3 A. Yes, sir.
4 Q. And this document DM-Y1 that Mr. Greiner showed you,
5 that's $61,000 at the top, that's being paid out of the wire
6 that comes in?
7 A. Yes, sir.
8 Q. Now I think when you were speaking with -- I think it
9 was with Mr. Greiner -- you were talking about you had a
10 conversation with Keith Brotemarkle. I think Mr. Greiner asked
11 you something must have rung a bell as being a problem.
12 Do you remember that conversation you just had with
13 Mr. Greiner, that you spoke to Mr. Brotemarkle about the fact
14 that the rents don't offset the mortgages?
15 A. Oh, yes.
16 Q. And I think your testimony was that Mr. Brotemarkle
17 says to you, the money will keep coming in, so don't worry
18 about it?
19 A. Yes, sir.
20 Q. Based on your understanding of the books of the
21 business, if the money hadn't kept on coming in from future
22 transactions, would you have been able to pay the bills?
23 A. No, sir.
24 MR. GREINER: Objection. Improper hypothetical.

1 Q. BY MR. MORRIS: Do you have knowledge of the books of
2 the business during the period of June '05 to '06?
3 A. Yes.
4 Q. Was there enough money in the bank account to pay all
5 the mortgages if no more money came in?
6 MR. SAMUEL: Your Honor, I'm going to object still
7 because the period of time in which this witness testified to
8 did not include the totality of the existence of the
9 businesses.
11 MR. MORRIS: Let me clarify.
12 Q. BY MR. MORRIS: June of '05 to June of '06, you were
13 aware of the business bank accounts during that period?
14 A. Yes, sir.
15 Q. During that period, was there enough money in the
16 business bank accounts to pay the mortgages if additional wires
17 didn't come in?
18 A. Without knowing what we had in the bank at the end --
19 but if no more wires came in, probably not.
21 MR. SAMUEL: Objection. Speculative. Ask that it be
22 stricken.
25 THE COURT: Well, I think the answer speaks for

1 itself.
2 Q. BY MR. MORRIS: I think it's based on his knowledge.
3 So to clarify, that's based on your knowledge of the books?
4 A. Yes, sir, it is.
5 THE COURT: All right. Overruled. Any recross?
6 Mr. Tedmon?
9 MR. SAMUEL: No.
13 BY MR. GREINER:
14 Q. I'm still talking about the relevant time period.
15 A. Yes, sir. I understand.
16 Q. And you've talked about the money coming in and that
17 type of thing.
18 Well, in this time period, you knew that Keith didn't
19 like Domonic McCarns, fair statement?
20 A. I don't know that for a fact.
21 Q. Well, you knew that Kou didn't like Domonic McCarns,
22 right?
23 MR. MORRIS: Objection. Outside the scope of
24 redirect.

1 Q. BY MR. GREINER: You were aware at some point in time
2 that Domonic McCarns had called the police --
3 MR. MORRIS: Outside the scope.
4 Q. BY MR. GREINER: -- because of the fight?
6 THE WITNESS: I know nothing about that.
7 THE COURT: Wait. When there is an objection, let me
8 rule. That objection is sustained.
9 Q. BY MR. GREINER: In this relevant time period, wasn't
10 the money supposed to stay in the account to allow the original
11 homeowner to purchase back their property?
12 A. Yes.
13 Q. And that was the purpose, correct?
14 A. Yes.
15 Q. And when you were sitting in your office, you didn't
16 ring a bell and go down to all the offices and say, hey, this
17 isn't working out, did you?
18 A. Not to all the offices, no.
19 MR. GREINER: Right. Okay. Thank you.

3 excused. Government's next witness.
4 MR. ANDERSON: The United States calls Kelly DiSanto.
9 so help you God?
13 THE WITNESS: Kelly DiSanto.
14 MR. ANDERSON: And if you would spell your name, too.
15 THE WITNESS: K-e-l-l-y, D-i-S-a-n-t-o.
17 KELLY DISANTO,
22 BY MR. ANDERSON:
23 Q. Good morning, Ms. DiSanto?
24 A. Good morning.
25 Q. Are you familiar with the address 28925 Via Adelena,

1 Valencia, California?
2 A. Yes.
3 Q. How are you familiar with that house?
4 A. I used to own that house.
5 Q. When did you own that house?
6 A. I think we were -- 2003 maybe.
7 Q. Up until when?
8 A. 2006 or '07.
9 Q. At some point did you --
10 Well, first of all, did you own that house alone or
11 with someone else?
12 A. I owned it with my husband, John.
13 Q. Does he have the same last name?
14 A. Yeah.
15 Q. At some point, did you and your husband encounter
16 financial difficulties?
17 A. Yes, we did.
19 A. Around early 2005, I believe.
20 Q. Did you end up dealing with a company with respect to
21 your property in order to get --
22 A. Yes.
23 Q. -- to take care of those?
24 A. Yes.
25 Q. Do you remember what company that was?

2 Q. Do you remember if you spoke with anybody at Creative
3 Loans?
4 A. Domonic.
5 Q. Do you recall how you first learned about Creative
6 Loans?
7 A. We got a postcard in the mail.
8 Q. After you got the postcard, what did you do to follow
9 up with the postcard?
10 A. I called the number and spoke with Domonic.
11 Q. When you spoke with Domonic, what did you speak
12 about?
13 A. How he would help us save the house.
14 Q. Did Domonic explain the program to you?
15 A. Yeah, he did.
16 Q. What did Domonic explain to you?
17 A. That we would take joint title on the house for a
18 year, and during that year we would pay them rent, less than
19 what our mortgage was. And then at the end of that year, they
20 would come off title, and we would have an equity share
21 agreement.
22 Q. Let's first start with title. During that year did
23 you expect to remain on title?
24 A. Yes.
25 Q. And at the end of the year, you said you had an

1 equity share agreement, according to Domonic?
2 A. Yeah.
3 Q. What did Domonic explain that equity share agreement
4 to be?
5 A. At the end of the year, we would split the equity in
6 the house when they came off title.
7 Q. As part of this interaction, did Domonic say anything
8 to you about entering into bankruptcy?
9 A. I'm sorry? Say that again?
10 Q. Bankruptcy. Did Domonic say anything to you about
11 entering into bankruptcy?
12 A. Yeah. It was taking them longer to do whatever their
13 process was. And because we were getting so close, we had to
14 file bankruptcy to avoid foreclosure.
15 Q. Did Domonic say anything to you about who would pay
16 for the bankruptcy?
17 A. He said they would reimburse us.
18 Q. Did they ever reimburse you for that?
19 A. No.
20 Q. I'm sorry. You have to wait until I finish the
21 question. Did they ever reimburse you for that?
22 A. No.
23 Q. Did you decide to enter into the transaction with
24 Domonic and Creative Loans?
25 A. Yes, we did.

1 Q. As part of entering into that transaction, were you
2 asked to sign documents?
3 A. Yes.
4 Q. Who asked you to sign documents?
5 A. Domonic.
6 Q. Where did you sign the documents?
7 A. At our house.
8 Q. Do you recall who brought the documents to your
9 house?
10 A. Notary.
11 Q. When the notary showed up, could you give the jury an
12 estimate of how many documents there were?
13 A. I'm sorry?
14 Q. How many documents were there? How thick was the
15 pack?
16 A. It was a stack like that (Indicating.)
17 Q. And you're holding your fingers a couple inches
18 apart?
19 A. Yeah.
20 Q. How long was the notary at your house?
21 A. Probably about an hour.
22 Q. During that time, did you and your husband sign those
23 documents?
24 A. Yes, sir, we did.
25 Q. Did you read every document before you signed it?

1 A. No. We skimmed through them.
2 Q. Did you trust Domonic's explanation of the deal you
3 were entering into?
4 A. Yes, completely.
5 Q. After you signed those documents, what's the next
6 thing that happened with Creative Loans?
7 A. We started the program. I'm not sure I understand
8 the question.
9 Q. Okay. Did you eventually receive a bill for payments
10 to Creative Loans or to a company associated with Creative
11 Loans?
12 A. Yes, we did. Like our rental bill.
13 Q. How long after you signed the documents approximately
14 was that?
15 A. It was a couple of months.
16 Q. And when you received the bill, did you pay it?
17 A. Yes.
18 Q. Did you continue making payments throughout that
19 year?
20 A. Yes.
21 Q. During that time period, did anyone indicate to you
22 that you had made the first payment late?
23 A. No -- well, the first invoice didn't come until about
24 two months after we started this, so.
25 Q. And when the invoice came, did you pay it when it

1 came?
2 A. Yes.
3 Q. Now at some point did you try to get title back to
4 your house in your name solely?
5 A. Yes.
6 Q. What did you do to try and make that happen?
7 A. I called Domonic back at the end of our year to find
8 out what the next step was.
9 Q. Were you able to speak with Domonic about that?
10 A. I did.
11 Q. What did Domonic tell you?
12 A. Basically that we weren't eligible. That we had
13 violated the contract.
14 Q. Did he explain how he claimed you violated the
15 contract?
16 A. Because we had made some of our payments late.
17 Q. And after your discussion with Domonic, did you have
18 any additional conversation about getting your house back?
19 A. I talked to him a few times about it, yeah.
20 Basically, we were told because we had violated the contract,
21 we'd have to buy it back at a higher price.
22 Q. What was that higher price?
23 A. 670,000.
24 Q. Was that price consistent with your understanding
25 when you had entered into the contract?

1 A. No, not at all.
2 Q. Did you end up purchasing it back at that price?
3 A. Yes, we did.
4 Q. Why did you buy it back at the higher price if that
5 wasn't consistent with your understanding of the contract?
6 A. We were just starting a family. We bought the house
7 while it was still under construction, and we didn't want to
8 lose it.
9 Q. Did you feel like you had a choice?
10 MR. SAMUEL: Objection. Relevance.
14 Government's Exhibit 8A1 through 8A6 be admitted.
15 MR. GREINER: A1 through A6?
16 MR. ANDERSON: Yes. And while we're at it, 8-B1 as
17 well.
18 THE COURT: 8-B1 is already admitted. 8A1 through
19 8A6. Mr. Tedmon?
24 THE COURT: All right. 8A1 through 8A6 are admitted.
25 (Government Exhibit 8A1, 8A2, 8A3, 8A4, 8A5, 8A6,

1 (See index for descriptions) admitted into evidence.)
2 Q. BY MR. ANDERSON: Let's look at 8A1, first. Did you
3 ever receive a document like this?
4 A. No.
5 MR. GREINER: I'm sorry. I didn't hear the answer.
6 MR. ANDERSON: Sorry. Looking toward the screen and
7 away from the microphone.
8 THE WITNESS: No.
9 Q. BY MR. ANDERSON: Let's go to page two of this
10 document.
11 Actually on page one first, let's highlight the
12 property. Do you see the property location listed, was that
13 your home?
14 A. Yes.
15 Q. And do you see the settlement date, June 23, 2005?
16 A. Yes.
17 Q. Was that approximately when you were dealing with
18 Domonic regarding this transaction?
19 A. Yes.
20 Q. Let's go to page two.
21 Did you knowingly give permission for $153,884.32 of
22 equity from that home to go to Creative Loans?
23 A. No.
24 Q. Let's go to Government's Exhibit 8A2. Do you see
25 this as your home address again, 28925?

1 A. Yes.
2 Q. Did you ever see this document in the course of the
3 transaction?
4 A. No.
5 Q. I want to go down to the borrower name. Do you know
6 a Mark E. Wilson?
7 A. No.
8 Q. We need to go up a little bit. In 2005 and 2006,
9 were you occupying that property in Valencia?
10 A. Yes.
11 Q. Who was living there?
12 A. Me, my husband, John, and our daughter Samantha.
13 Q. Did anyone else in that time period live there?
14 A. No.
15 Q. Including a Mark E. Wilson?
17 Q. Did you intend to move out of this house and allow
18 someone else to use it as their primary residence in 2005/2006?
19 A. I'm sorry? Did we intend to?
20 Q. Did you intend to move out of the house and leave it
21 for someone else to use as a primary residence?
22 A. No. No.
23 Q. Let's go to Government's Exhibit 8A3. Do you
25 A. Yes.

2 A. I believe it was one of the documents that we signed
3 in that stack.
4 Q. And you reviewed this document today, actually, is
5 that right?
6 A. I'm sorry?
7 Q. You reviewed this document today?
8 A. I reviewed it?
9 Q. Did you review it today?
10 A. Yes.
11 Q. Let's go to page three -- excuse me -- page four.
12 How long have you known John DiSanto for?
13 A. Twenty-five years.
14 Q. Are you familiar with his initials and signature?
15 A. Yeah, of course.
16 Q. Are you able to tell whether or not those appear to
17 be John DiSanto's initials on this page?
18 A. Yes, it is.
19 Q. And below that on the line Kelly DiSanto, are you
20 able to recognize those initials?
21 A. Yes.
22 Q. Whose initials are those?
23 A. Those are mine.
24 Q. Let's go to page six. Do you recognize the John
25 DiSanto signature?

1 A. Yes.
2 Q. Whose do you recognize it as?
3 A. That's John's signature.
4 Q. And below it, the Kelly DiSanto signature, is that
5 yours?
7 Q. Go to page seven. Same question regarding these two
8 signatures. Are you able to recognize them?
9 A. Yeah. That's John's signature and my signature.
10 Q. Page eight. Same question. Do you see the
11 signatures?
12 A. That's my signature, yes, and John's signature
13 underneath it.
14 Q. Go to page nine. If you look at the initials there
15 -- and we will go to page ten, and I'll ask you a question
16 about both pages.
17 Did you get an opportunity to look at the initials on
18 those pages?
19 A. Yes.
20 Q. Whose are they?
21 A. Those are mine and John's.
22 Q. And page eleven, whose signatures, if you know?
23 A. That's John's signature and my signature.
24 Q. Page twelve. Whose signatures, if you know, on the
25 John DiSanto and Kelly DiSanto line?

1 A. That's John's signature and my signature.
2 Q. And page 13. Whose signatures?
3 A. That's John's and mine again.
4 Q. Let's go to Government's Exhibit 8A4. And then again
5 on the John DiSanto and Kelly DiSanto line, are those your
6 signatures?
7 A. Yes.
8 Q. Do you know what this document was? We can zoom out
9 if you would like to see.
10 A. No.
11 Q. Do you know what this document did or was used for?
12 A. Well, it says wire instructions on the top of it.
13 Q. Go to 8A6. Do you recognize this document?
14 A. Yeah, that was our rental agreement.
15 Q. And there are initials at the bottom. Are you able
16 to recognize those initials?
17 A. Yeah. Those are my initials and John's initials.
18 Q. Let's go to the final page, page five. And the
19 signatures, are you able to recognize those? Are you able to
20 recognize those?
21 A. Yeah. That's John's signature and my signature.
22 Q. I'll trying to speak more clearly into the
23 microphone.
24 Was it important to you that you had been told you
25 would remain on title to your home when you agreed to enter

1 into the transaction with Domonic McCarns and Creative Loans?
2 A. Yes.
3 Q. And was it important to you that you believed your
4 equity would remain in the home for a year and then be split at
5 the end of the year?
6 A. Yes.
8 THE COURT: Any cross-examination, Mr. Tedmon?
9 MR. TEDMON: Mr. Greiner would probably go first.
11 MR. GREINER: I think about the same time that I did
12 with Mr. Corcoran.
13 THE COURT: All right. We'll go at least until a
14 break. We might need to spill over a little after a break.
16 BY MR. GREINER:
17 Q. Thank you, Judge. Good morning.
18 A. Good morning.
20 reporter can hear you.
21 A. Okay.
22 Q. Make sure you answer audibly because the court
23 reporter can't take down nods of the head. All right?
24 A. Okay.
25 Q. If I ask you a question you don't understand, just

1 ask me to rephrase it, and I'll be glad to do it. Okay?
2 A. Okay.
3 Q. Prior to you taking the stand this morning, did you
4 discuss with anyone your testimony that you just gave?
5 A. Yes.
6 Q. Who did you discuss that with? Mr. Anderson?
7 A. Yes.
8 Q. And did you discuss what you just testified to in
9 court?
10 A. Yes.
11 Q. Was there any other discussion other than what you
12 testified to?
13 A. Well, he asked me how my flight was.
14 Q. Okay. We don't need to know that. Anything else
15 about your testimony? Anything else --
16 A. No.
17 Q. Did you review any documents prior to taking the
18 stand this morning?
19 A. Yes.
20 Q. Were they the documents that Mr. Anderson showed you?
21 A. Yes.
22 Q. Any other documents?
23 A. I'm not sure exactly.
24 Q. Okay. So let's get a picture. My understanding is
25 that when you -- early 2005, is that when you were in financial

1 difficulties?
2 A. Yeah.
3 Q. Was it earlier than that? I mean you lost your job,
4 right?
5 A. I was out on a medical leave.
6 Q. On a medical leave. So income wasn't coming in,
7 correct?
8 A. Correct.
9 Q. And did that happen prior to January 2005?
10 A. It began -- well, I went and had my child in October.
11 Q. Of 2004?
12 A. '04, yeah.
13 Q. Now, was your husband working at the time?
14 A. Yes.
15 Q. His income, though, wasn't enough to meet all the
16 bills, fair statement?
17 A. Yes.
18 Q. Okay. And, unfortunately, you weren't able to get
19 back to work, true?
20 A. Correct.
21 Q. All right. And so on the horizon here comes this
22 cliff that you're going to fall off, right?
23 A. Right.
24 Q. Now, prior to getting this postcard in the mail, did
25 you try alternatives, did you seek options to try to help your

1 financial status out?
2 A. No. I was also suffering from postpartum depression.
3 Q. Did your husband try on your behalf?
4 A. No.
5 Q. So you didn't try to put your house up for sale?
6 A. We didn't want to sell the house.
7 Q. Did you talk to your bank?
8 A. Well, we had spoken to them many times because they
9 were calling us about the payments.
10 Q. Right. Because you weren't making the payments,
11 right?
12 A. Right.
13 Q. And so did you talk to them about refinancing?
14 A. No.
15 Q. Did you talk to them about reinstatement?
17 Q. Do you know what you talked to the bank about?
18 A. Our late payments.
19 Q. Okay. That you couldn't make them, right?
20 A. Correct.
21 Q. And the bank wasn't being sympathetic with you at
22 all, were they?
23 A. No.
24 Q. They said either make them or we're going to
25 foreclose you, right?

1 A. Yes.
2 Q. And did your husband try any other option other than
3 calling the bank?
5 Q. All right. And you weren't in a position to try to
6 help out the situation, correct?
7 A. Correct.
8 Q. All right. So by the time you got this postcard in
9 the mail, how many months had passed since you started talking
10 to the bank?
11 A. I believe it was about four months because we were
12 already in a position of default.
13 Q. Foreclosure? Foreclosure was coming?
14 A. Right.
15 Q. And getting a notice of default, right?
16 A. Right.
17 Q. You had a sale date coming up, right?
18 A. I believe so.
19 Q. All right. And so, I mean, you're going to lose the
20 house as far as you were concerned, correct?
21 A. Correct.
22 Q. And by losing the house, that meant game over, you're
23 going to have to move out, move some place else, you're going
24 to be uprooted, right?
25 A. Right.

1 Q. And if there was any equity in the house, you were
2 going to lose that totally, right?
3 A. I wasn't aware of the amount of equity in the house.
4 Q. Okay. But if there was any, if a foreclosure went
5 through, you knew that you weren't going to get anything,
6 right?
7 A. Correct.
8 Q. All right. So then you get a postcard in the mail,
9 and you talk to Domonic McCarns, right?
10 A. Correct.
11 Q. All right. And he presented to you this program that
12 offered you an opportunity for several things, correct?
13 A. Correct.
14 Q. One thing was to stay in your house, right?
15 A. Right.
16 Q. The other thing was you would enter into a contract
17 with the company for 12 months with an opportunity to buy your
18 house back at the end?
19 A. We weren't going to buy it back. We were supposed to
20 hold joint title to get the house back.
21 Q. On direct examination with the Government you said
22 that you had to make rent payments, right?
23 A. Right.
24 Q. And you understand when you make rent payments that
25 means that you're not -- you don't own what you're paying rent

1 on, correct?
2 MR. ANDERSON: Objection. Calls for legal
3 conclusion.
4 THE COURT: You may answer the question, but the jury
5 shall understand this is not a legal opinion. It's Ms.
6 DiSanto's lay response.
7 THE WITNESS: Would you repeat the question, please.
8 Q. BY MR. GREINER: I'm looking for you understanding.
9 You understood that if you made rent payments, you didn't own
10 the item that you were making a rent payment on, true? That's
11 just common sense.
12 A. Well, that wasn't my understanding of what the
13 contract was.
14 Q. Right. But you knew you were making rent payments,
15 right?
16 A. Correct.
17 Q. And you knew rent payments meant you didn't own what
18 you were renting, true?
19 A. No. That was not my understanding.
20 Q. Well, so you're just writing rent checks out month
21 after month, and you think you still own your property?
23 Q. BY MR. GREINER: I'll rephrase.
25 Q. BY MR. GREINER: Is it your understanding that as

1 each month went by when you were writing a rent check out, that
2 you still owned your property?
3 A. Well, no, we -- we had already -- after a few months,
4 we got a title in the mail. So we knew at that point that we
5 didn't own the house.
6 Q. You knew you sold it, right?
7 A. Well, yes. But, like I said, our understanding was
8 we were going to hold joint title.
9 Q. I understand that. The house -- when you're falling
10 off the cliff, this is the most important thing on the radar,
11 fair statement, in your life?
12 A. Yeah.
13 Q. And the most important thing in your life, you're
14 going to take extra caution to make sure what's going on, fair?
15 A. Yes.
16 Q. And you know that when you first bought your house
17 that you went through escrow closing, right?
18 A. Yes.
19 Q. And you had to sign documents that were notarized,
20 right?
21 A. Right.
22 Q. You had to sign wire instructions, right?
23 A. Right.
24 Q. And you had to sign termite inspections? I mean, you
25 went through all the stack of documents when you first bought

1 the house, right?
2 A. Right.
3 Q. And when that notary came over to your house with
4 that stack of documents that you had to notarize, you had
5 already been through that before, right?
6 A. Correct.
7 Q. So you knew when that notary went there, that was
8 because you were selling the house, that was the purpose of the
9 notary being there, right?
10 A. Yes.
11 Q. Because everything is in writing because it's a very
12 important decision that you're making, right?
13 A. Right.
14 Q. And so it's in writing for you to make sure
15 everything is the way it's supposed to be, right?
16 A. Right.
17 Q. All right. So when you were -- you entered into the
18 contract with the company for a 12-month period with the option
19 to repurchase your house back at the end, fair statement?
20 A. No. We weren't going to repurchase the house back.
21 Q. Well, you already knew that there was a repurchase
22 price that you agreed to, right?
23 A. No. There wasn't a repurchase price.
24 MR. GREINER: If we could have Government's
25 Exhibit 8A3-8 on the screen, please.

1 Q. BY MR. GREINER: You talked about this document with
2 the Government, remember?
3 A. Yes.
4 Q. It's entitled Addendum, correct?
5 A. Yes.
6 Q. And it clearly states that your right to repurchase
7 the property at the six months after expiration of the lease
8 term shall be a price of $612,750, right?
9 A. Yes.
10 Q. And you knew that there was a buy-back price for your
11 house, right?
12 A. Yes.
13 Q. Now, we can take that down, thank you.
14 When you're making your rent payments, most of them
15 were on time, right?
16 A. Right.
17 Q. But not all of them were on time, correct?
18 A. Correct.
19 Q. Some of them were late, correct?
20 A. Correct.
21 Q. And some of them -- actually, you didn't quite make
22 all twelve, right?
23 A. I believe we did.
24 Q. Okay. But not all on time, fair?
25 A. Fair.

1 Q. Now, at the end of the 12-month period then, when you
2 called -- what you told the Government -- you called Domonic
3 McCarns back up and you said, hey, I want to repurchase the
4 property, right?
5 A. Correct.
6 Q. You remember talking to the Government in an
7 interview, correct?
8 A. Yes.
9 Q. And you remember telling the Government in that
10 interview that you weren't sure if you talked to Domonic or if
11 you talked to Jack Corcoran, right?
12 A. I believe it was Domonic McCarns, but he mentioned
13 Jack. Jack's name came up.
14 Q. Right. And so when you were talking to the
15 Government about talking to the company about repurchasing the
16 property, you couldn't tell the Government for sure that it was
17 Domonic?
18 A. Correct.
19 Q. You said it was Domonic or it was Jack Corcoran?
20 A. Correct.
21 Q. Because you had conversations with Jack Corcoran in
22 this 12-month period when your payments were late, right?
24 Q. Do you remember receiving a letter from him saying,
25 hey, your payment's late, you got to get payment in here,

1 right?
3 Q. Okay. Now the Government asked you on direct whether
4 you gave permission to have funds wired, do you remember that?
5 A. Yes.
6 Q. Okay. And what they specifically were asking about
7 was equity, do you remember that?
8 A. At the time?
9 Q. The equity in your house, right?
11 Q. Okay. Let me step back. Let's first talk about
12 equity. All right. Let's lay a little foundation.
13 You know that the only way that you could ever find
14 out if you had any equity in your house was to sell your house,
15 true?
16 A. No. I would think there would be other ways.
17 Q. What would be another way?
18 A. I don't know. An appraisal.
19 Q. Why would an appraisal put money in your pocket?
20 A. I didn't say that it would.
21 Q. So equity, though, is not money that's in your
22 pocket, fair statement?
23 A. Yes.
24 Q. It's not something that's in your bank account, fair?
25 A. Correct.

1 Q. And the only way that equity can turn into money into
2 your pocket is by you selling, right?
3 A. Correct.
4 Q. Okay. So when the Government asked you if you had
5 given permission to wire transfer money -- I think the phrase
6 they actually used -- did you knowingly give permission, do you
7 remember that question?
8 A. Yeah, I did not do it knowingly.
9 Q. Well, let's put Government's Exhibit 8A4 up on the
10 computer screen, please.
11 And you talked to the Government about this, correct?
12 A. Correct.
13 Q. And you indicated to the Government that these are
14 your signatures, right?
15 A. Correct.
16 Q. And it was notarized, right?
17 A. Correct.
18 Q. Which meant that you had to prove to the notary by
19 identification who you were when you signed it, right?
20 A. Correct.
21 Q. And so did your husband, correct?
22 A. Correct.
23 Q. All right. And because you had already gone through
24 the purchase of your house before, you knew what wire
25 instructions were all about because you had done a closing

1 before, correct?
2 A. Correct.
3 Q. And so this wire instructions and authorization
4 wasn't a surprise to you, was it?
5 A. No. Like I said, it was a big stack of papers.
6 Q. I understand it was a big stack of papers, but so was
7 it when you first bought your house, correct? It was a big
8 stack of papers that you had to go through and notarize,
9 correct?
10 A. Correct.
11 Q. And so when the Government asked you, did you
12 knowingly give permission, well, you signed Government's
13 Exhibit 8A4 freely, correct?
14 A. Correct.
15 Q. And voluntarily, correct?
16 A. Correct.
17 Q. We can take that down, please.
18 A. Go ahead.
19 Q. Now, you did get your property back, right? You did
20 purchase it back?
21 A. Yes.
22 Q. All right. And you never had to move out of your
23 house, true?
24 A. True.
25 Q. And you never had on your credit report a

1 foreclosure, true?
2 A. Not at that time.
3 Q. Not at that time, but when you went through the
4 program and repurchased your house back, you did not have a
5 foreclosure on your credit report, true?
6 A. Correct.
7 Q. And when you first entered into the contract with the
8 company, that equity purchase agreement that the Government
9 showed you first -- do you remember that document?
10 A. Yes.
11 Q. Okay. When you first entered into that contract, at
12 no time during the process -- being the notary documents, the
13 closing, the 12-months -- at no time did you stop the process,
14 did you?
15 A. No.
16 Q. You didn't say, hey, I don't want to go through with
17 this, I want out; you didn't say that to the company, did you?
18 A. No.
19 Q. You didn't say that to anybody, did you?
20 A. No.
21 Q. And as far as you knew, your husband didn't say that
22 to anybody, correct?
24 Q. And that's all I can ask.
25 All right. And did you get copies of documents, did

1 the notary give you copies of documents?
2 A. I don't believe we ever got copies of the documents.
3 Q. Did you ever ask for copies?
6 Q. BY MR. GREINER: Oh, I think the Government asked you
7 a question. I may be mistaken, so I'll ask it a little bit
8 different.
9 When you were first talking to Domonic McCarns about
10 the program, there was absolutely no discussion whatsoever
11 about equity, fair statement?
12 A. About the equity in the house?
13 Q. Right.
14 A. Correct.
15 Q. And so when you were entering into this program and
16 this contract, there was no statement made whatsoever about
17 equity, fair?
18 A. Well, no. We signed an equity agreement.
19 Q. Right. That was the writing. I'm saying there was
20 just no discussion verbally, fair statement?
21 A. No, I -- when I originally spoke with Domonic, we
22 talked about the equity share agreement.
23 Q. Well, when you talked to the Government, you told the
24 Government that there was nothing ever discussed about equity,

1 A. No. I believe what I said was at the end of the
2 12-month period we would split the equity.
3 Q. Do you remember telling the Government on or about
4 July 29th, 2013 that you don't recall having any discussions
5 with Domonic about her existing equity that was in her house at
6 the time the program was pitched to you, do you remember saying
7 that?
8 A. No. I'm sure I did, but --
9 Q. You're not disagreeing with what the agents wrote
10 down, are you?
12 THE COURT: Let's go ahead and take our second break
13 of the morning. During this break, another 15-minute break,
14 please remember all the admonitions I've been giving you
15 throughout the trial. Have a good break. We'll see you back
16 here in 15 minutes.
17 (Jury out.)
18 THE COURT: You all may be seated. You may step
19 down. Just be back in your seat in 15 minutes and avoid any
20 contact with jurors.
21 There is water in the pitcher behind you, so you can
22 use that when you come back if you need it.
23 THE WITNESS: I'm sorry?
24 THE COURT: There's water in the pitcher, so when you
25 come back you can use that if you need it.

1 I just have one quick question based on
2 Mr. Corcoran's testimony. Maybe I missed it. Did you
3 deliberately not ask what AE means? There was a lot of
4 reference to AEs. I'm thinking the jury may be wondering.
5 MR. MORRIS: I thought that it was covered by a prior
6 witness, but then, again, a lot of this is blending together in
7 my mind. I think this was covered.
8 MR. GREINER: My understanding is that's been covered
9 by several witnesses.
10 MR. TEDMON: Actually, Your Honor, I covered that
11 with Mr. Hellstrom in some detail about the whole structure.
12 THE COURT: And he used that to summarize account
13 executive. All right. That's a long time ago. So another 15,
14 20 minutes.
15 MR. ANDERSON: Your Honor, there is one thing I think
16 may be beneficial to take up, if not now, maybe at the end of
17 the break. The Government wants to move in many of the
18 documents that have not been moved in yet but are in the
19 stipulation. The reason for that is we're nearing a point
20 where if we can get those documents in, I think we can get to
21 our last witness and finish up soon.
22 So I'm going to talk to defense counsel. I've
23 already mentioned it to them. But I'll talk to them at the
24 break about if there are any objections, and maybe we can have
25 a short session where they can make a record of any objections

1 they have. And we can get these documents moved in.
2 THE COURT: All right. It's the balance of
3 everything on the Government's list?
4 MR. ANDERSON: Not everything. But it's a lot of the
5 things that are left.
6 THE COURT: All right. Well, I'll be ready to
7 discuss that. Please meet and confer and have a report on
8 that. After this witness?
9 MR. ANDERSON: Agent Fitzpatrick. If we can get the
10 documents worked out.
11 THE COURT: And then that would be it?
12 MR. ANDERSON: That's the hope.
14 (Break taken.)
15 THE COURT: You may be seated. Is there an update on
16 the exhibits?
17 MR. TEDMON: Your Honor, I think this is where we're
18 at. There are exhibits the Government wants to move into
19 evidence that have not previously been admitted.
20 The problem with doing it now, if we can, is they are
21 fairly voluminous in nature, one. Two, we need to go through
22 them, from the defense side at least, and identify those
23 exhibits with specificity as to whether there is a variance
24 issue to that particular document, or 404(b) document, whether
25 that would be allowable, and then if there's any other general

1 objections of relevance or other things.
2 So my thought is -- and I talked to Mr. Morris about
3 this -- it sounds like we're going to be done with this current
4 witness in about 15 minutes, and the Government's going to call
5 Agent Fitzpatrick.
6 I don't know how long Mr. Anderson is going to have
7 with Mr. Fitzpatrick. But if by some chance his testimony is
8 done today, I would ask the Government to not close subject to
9 the parties being able to get together before Monday and
10 sorting out specific documents they want to admit, any
11 objections that can be noted and the Court can rule on.
12 And in addition, there may be some additional
13 documents the defense wants to have moved in that comes from
14 discovery. And we can share those with all parties, including
15 the Government, and come up with an omnibus approach that would
16 be very systematic.
17 THE COURT: Is that a joint defense proposal?
18 MR. SAMUEL: That's fine with me, Your Honor.
19 MR. GREINER: I'll adopt, Judge.
20 THE COURT: Does that work for you, Mr. Anderson,
21 Mr. Morris?
22 MR. MORRIS: I think so. That is an accurate
23 description of our conversation.
24 Really, our concern is if we get done with this
25 witness and Mr. Fitzpatrick, and now we're in an awkward

1 position of do we close or do we not. We certainly can't rest
2 without making sure the evidence comes in, and, for that
3 matter, calling potentially other witnesses.
4 But I think what we -- I'll be surprised if we get
5 through both today. And I think we will have over the weekend
6 to resolve it. If we get to the end of Mr. Fitzpatrick's
7 testimony today, there might be an awkward moment while we try
8 to figure out what we're doing.
9 THE COURT: At that point, the Court would be willing
10 to excuse the jury early. Just explaining that there is still
11 some exhibits, and you can rest then Monday morning.
12 We're close. We have an hour and a half left. I
13 would encourage you to try to finish with Agent Fitzpatrick if
14 you all can.
15 MR. MORRIS: We certainly won't stall intentionally.
16 If it gets done, it gets done. I guess at this point with the
17 understanding that --
18 THE COURT: Because there would be no other
19 Government witnesses then, assuming all the exhibits come in.
20 MR. MORRIS: I think that's the case, yes.
21 THE COURT: And there is a good faith representation
22 that the bulk of exhibits will come with the recording of
23 objections?
24 MR. TEDMON: Yes. Similar to what we have been doing
25 for the entire trial.

1 MR. ANDERSON: So we would be asking to reserve the
2 right to reopen direct examination of Mr. Fitzpatrick.
3 THE COURT: All right. Let's proceed with that being
4 the understanding. And there would be a meet and confer on
5 defense exhibits as well?
8 (Jury in.)
10 and gentlemen. We did a bit of housekeeping. Just checking in
11 on exhibits.
12 But we're now ready to continue with the examination
13 of Ms. DiSanto by Mr. Greiner. Approximately 15 more minutes.
14 MR. GREINER: It shouldn't be any longer than that
15 Judge. Thank you very much.
16 Q. BY MR. GREINER: Now good afternoon. Have to ask you
17 the same type of questions. In the break, did you talk to
18 anybody about your testimony?
19 A. No.
20 Q. Did you review any documents in the break?
21 A. No.
22 Q. All right. I think I have three to five separate
23 areas I want to talk to you about. Okay?
24 A. Okay.
25 Q. So I'm not going to try to run them together, not

1 quick questions, but they are just separate, individual items.
2 All right?
3 A. Okay.
4 Q. First of all, we talked before the break about your
5 monthly payments, do you remember that?
6 A. Yes.
7 Q. Okay. Do you remember receiving in the mail a letter
8 from a lawyer named Betty Stroph?
10 Q. Do you remember receiving a letter in the mail from a
11 lawyer saying that you were behind on your rent payments?
12 A. I don't remember. I don't.
13 Q. Now, we had talked about -- and I may need to have
14 this up but hold on a second. I think this will be the easiest
15 way to do it. Let's put Government's 8A3-8 up on the screen,
16 please.
17 Now we talked about this before the break. This was
18 the addendum document. Inside of there it said purchase price
19 of $612,750. We had already talked about that, correct?
20 A. Correct.
21 MR. GREINER: All right. Now, we can take that down.
22 What I would like to move into evidence now, Judge,
23 is DM-D12.
25 MR. SAMUEL: No.

4 THE COURT: All right. DM-D12 is in.
5 (Defendants' Exhibit DM-D12, Email From Keith at
6 Foreclosure Re did you pay any of the mortgages this month yet?
8 Q. BY MR. GREINER: If we could take -- there it is.
9 All right. Up on the screen is DM-D12.
10 And at the top you see buyer/borrower, your name, and
11 your husband's name, right?
12 A. Correct.
13 Q. And you see the close date. It's kind of
14 interesting, this document. Says the close date is July 27,
15 2006, right?
16 A. Correct.
17 Q. And it says the preparation date is in August of
18 2006. That's makes it interesting right off the bat, right?
19 MR. ANDERSON: Objection, Your Honor. Commentary.
20 There is a lack of foundation, and the document speaks for
21 itself.
23 Q. BY MR. GREINER: And the property address, that's
24 your property address, correct?
25 A. Correct.

1 Q. And there's also an escrow number attached to that,
2 correct? Do you see it on the right-hand side? Do you see
3 where it says "escrow number"?
4 A. Yes.
5 Q. There's actually an escrow number there, right?
6 A. Yes.
7 Q. All right. If we could enlarge, please.
8 And the amount of this estimated loan is for
9 $612,750, right?
10 A. Correct.
11 Q. If we can enlarge, please. And you know that the
12 bank -- from buying your house before you know the bank's got
13 fees and all sorts of stuff they add to it, right?
14 A. Correct.
15 Q. All right. So at the bottom, the total for the
16 estimated purchasing your property back is $624,722.28, right?
18 foundation. We don't even know if this witness has ever seen
19 this before.
21 Q. BY MR. GREINER: Well, you went through documents to
22 repurchase your house, right?
23 A. I'm sorry? Can you repeat that?
24 Q. You filled out a uniform loan application, a 1003, to
25 get a loan to buy your house back?

1 A. Yes.
2 Q. And you went through an estimated closing costs of
3 what it would take to buy your house back, right?
4 A. Right.
5 Q. And this document, DM-D12, you've seen that before,
6 right?
7 A. We never got copies of the loan documents.
8 Q. Okay. I'm not talking about the loan documents when
9 you sold your house to the company. I'm talking about when you
10 actually were getting a loan yourself to buy your property
11 back.
12 A. We did not get copies of those documents.
13 Q. Did you ever see those documents?
14 A. No. Not the completed ones.
15 Q. Well, you saw estimated ones, right?
17 Q. If we could enlarge, please. Do you remember filling
18 out a loan application to buy your house back?
19 A. Not specifically. I'm sure we did.
20 Q. Do you remember filling out a purchase agreement to
21 buy your house back?
22 A. I don't remember all the documents and what their
23 names were.
24 Q. Well, but what you do know is that you did purchase
25 your house back, correct?

1 A. Correct.
2 Q. And your testimony is it was for 670,000, right;
3 that's what you told the Government in direct, right?
4 A. Yes, but that --
5 Q. 670,000 is not correct, right?
6 A. Well, not according to this.
7 Q. Well, we can take the DM-12 down off the screen.
8 Well, you know, sitting there, that you didn't
9 repurchase your house for 670,000, that's a fair statement,
10 right?
11 A. Yes.
12 Q. Okay. All right. And in fact, because you were able
13 to go through this entire program and buy your house back, you
14 remember an individual named Kou Yang, right?
15 A. Named who?
16 Q. Kou Yang. Do you remember that person?
17 A. No.
18 Q. Well, do you remember a person from the company
19 asking you to provide a testimonial because you went through
20 the program, you remember that, right?
21 A. No, I don't.
22 Q. Not at all?
23 A. No.
24 Q. Don't remember an e-mail to you?
25 A. I don't recall. That was many years ago.

1 Q. You don't remember having something come in the mail
2 to you asking you to give a testimonial?
3 A. No.
4 MR. GREINER: All right. Judge, thank you.
5 THE COURT: All right. Any other cross? Mr. Tedmon?
12 BY MR. ANDERSON:
13 Q. What did you buy your house back for?
14 A. Pardon?
15 Q. What did you buy your house back for? How much?
16 A. You know, I remember 670,000, but --
17 Q. And that document you were just shown by Mr. Greiner,
18 did that have your signature on it?
19 A. No, it did not.
20 Q. Had a line for your signature, but it was blank,
21 right?
22 A. Correct.
23 Q. And it said "estimated" on it, is that true?
24 A. I believe --
25 Q. We can pull it up, DM-D12. And also said

1 "estimated," right?
2 A. Correct.
3 Q. Let's take that down. In any event, the price you
4 bought your house back for, was that the price that you
5 believed you'd have to pay when you entered the transaction?
6 A. No.
7 Q. When was the first time you found out that you were
8 off title to the property?
9 A. I don't know the exact date, but within the first
10 couple of months we got -- I don't know what they are called --
11 grant deed, or title, or something in the mail.
12 Q. And do you recall that $153,000 -- approximately,
13 $153,000 that we were talking about with regard to your equity?
14 A. Yeah.
15 Q. Did you receive that money?
16 A. No.
18 THE COURT: Any recross? Mr. Greiner?
19 MR. GREINER: Just briefly on what the Government
20 did.
23 BY MR. GREINER:
24 Q. If we could have DM-D12 back up, please.
25 I pointed out to you, when we talked about this

1 document, on the right-hand side at the top it says "escrow
2 number," and it actually has an escrow number, do you see that?
3 A. Yes.
4 Q. Okay. Your understanding that when escrow was
5 opened, there is an escrow number that's given to a loan,
6 correct?
7 A. I'm not familiar.
8 Q. But you know when you first purchased your house,
9 that an escrow was opened, correct?
10 A. Correct.
11 Q. And that had an escrow number on it, correct?
12 A. I don't remember that. I know we went through
13 escrow. I don't remember an escrow number.
14 Q. Well, you remember the documents when you first
15 purchased your house, and the documents were referring to an
16 escrow number?
18 Q. Okay. And if we could enlarge.
19 The total consideration, the $612,750 you discussed
20 with the Government on redirect, an estimated amount, you know
21 that that's the same amount that was in the addendum that you
22 signed, correct?
23 A. Correct.
24 Q. All right. We can take that down. Now, you
25 discussed about equity and did you ever receive equity.

1 And the situation that you were in, prior to entering
2 the contract with the company, was that you were never going to
3 receive any equity because your house was going to go to
4 foreclosure, right?
6 conclusion and speculation.
7 MR. GREINER: Well, I'll lay foundation, Judge. I'll
8 withdraw and lay a foundation.
10 Q. BY MR. GREINER: Your house was in foreclosure before
11 you entered the contract with the company, right?
12 A. We were in default. I don't know if that's the same
13 thing.
14 Q. Well, you not only were in foreclosure, you had a
15 notice of default, right?
16 A. Correct.
17 Q. Which meant you had a sale coming up for your house,
18 you knew that, right?
19 A. Correct.
20 Q. Which meant you were going to lose your house and
21 everything that attached to that house, correct?
23 conclusion and speculation.

1 MR. ANDERSON: It's not the law.
2 Q. BY MR. GREINER: Your understanding was that if that
3 house was sold at a notice of default sale, you lose the house,
4 right?
5 A. Correct.
6 Q. And not only do you lose the house, but you lose the
7 house and everything associated with the house including the
8 equity, if there is any in it, right?
9 MR. ANDERSON: Objection. Misstates the law.
10 MR. GREINER: I asked her understanding, Judge. I'll
11 rephrase it.
13 Q. BY MR. GREINER: Your understanding is that if your
14 house was sold at a notice of default sale, you lose the house
15 with any equity, if any, in the house, true?
16 A. Correct.
17 Q. And the situation here was that when you entered into
18 the contract with the company, you didn't even have discussions
19 about equity, you already testified to that, right?
20 A. No. I said that we had an equity share agreement or
21 something.
22 Q. Well, we already talked about when you talked to the
23 Government agents, and you told them that equity wasn't even
24 discussed with you and Domonic McCarns, do you remember I read
25 that to you?

1 A. I didn't know they were going to take all the equity
2 out of my house.
3 Q. I appreciate your answer. But when you talked to the
4 Government agents, you said you never had a conversation with
5 Domonic McCarns about equity, do you remember me reading that
6 to you?
7 THE COURT: Is there a question pending?
8 MR. GREINER: No. I'll withdraw.
9 Q. BY MR. GREINER: Here's the question -- or the
10 statement. You told the Government agents you don't recall
11 having discussions with Domonic about her existing equity that
12 was in her house at the time the program was pitched to her,
13 correct?
14 A. Correct.
15 Q. And just so I'm clear, is it your testimony that you
16 did not buy the house back for $612,750 plus costs and fees, is
17 it your testimony you did not do that?
18 A. We bought the house back. I thought it was for
19 670,000. But, like I said, I never got copies of the loan
20 documents. And it was many years ago.
21 Q. So you could be mistaken on that $670,000 figure,
22 fair?
23 A. Fair.
24 Q. And it could be lower, true?
25 A. True.

2 THE COURT: Any other cross?
10 MR. TEDMON: Yes.
11 MR. SAMUEL: Yes.
12 THE COURT: All right. You are excused. You may
13 step down. Government's next witness.
14 MR. ANDERSON: The United States calls Special Agent
15 Chris Fitzpatrick.
20 so help you God?
24 THE WITNESS: Chris Fitzpatrick. First name
25 C-h-r-i-s. Last name F-i-t-z-p-a-t-r-i-c-k.

2 CHRIS FITZPATRICK,
7 BY MR. ANDERSON:
8 Q. What do you do for a living?
9 A. I'm a special agent for the IRS Criminal
10 Investigation Division.
11 Q. How long have you been an IRS agent?
12 A. Since September 2001.
13 Q. As a special agent for the IRS Criminal Investigation
14 Division, what are your job duties?
15 A. We investigate the Internal Revenue Code and other
16 financial crimes such as mortgage fraud.
17 Q. And in particular with mortgage fraud, have you had
18 any assignment or focus on mortgage fraud?
19 A. Yes. For the past six years I've been assigned to
20 the ad hoc mortgage fraud task force here in this district.
21 Q. And in that capacity have you participated in
22 numerous mortgage fraud investigations?
23 A. Yes.
24 Q. Does that include this investigation?
25 A. Correct.

1 Q. Do you have any specialized background, training or
2 experience that assists you in performing your job duties?
3 A. Yes. To become a special agent, I attend the Federal
4 Law Enforcement Training Center in Glynco, Georgia, for
5 approximately six and a half months.
6 Q. And do you have any undergraduate education or
7 education that also assists you?
8 A. Yes. I have a degree in business administration with
9 a concentration in accounting and a second degree in economics.
10 Q. Where is that from?
11 A. California State University, Sacramento.
12 Q. At some point in your job did you become involved in
13 the investigation of Head Financial Services, Creative Loans
14 and related entities?
15 A. Yes.
17 A. I believe it was approximately in December 2005.
18 Q. How did you first learn of the investigation?
19 A. A homeowner here in Sacramento, California, contacted
20 the FBI.
21 Q. What was the name of that homeowner?
22 A. I believe it was Terri Turner.
23 Q. Was there an FBI agent who was also working on the
24 investigation?
25 A. Yes.

1 Q. Who was that?
2 A. Agent John Sommercamp.
3 Q. Did you and Agent Sommercamp proceed to investigate
4 the information that you had received from the homeowner?
5 A. Yes.
6 Q. And in the course of doing that investigation, did
7 you speak with people related to Head Financial Services and
8 Creative Loans?
9 A. Yes.
10 Q. I'm sorry?
11 A. Yes.
12 Q. Eventually were search warrants served related to
13 this investigation?
14 A. Yes.
15 Q. When was that?
16 A. I believe it was on November 16th, 2006.
17 Q. Where were the search warrants served?
18 A. There was four locations in California, which
19 consisted of A1 Property Management in Newport Beach; Creative
20 Loans processing center, I believe in Tustin; FCO, which was on
21 Nutmeg in Costa Mesa; Charles Head's residence in La Habra,
22 California; and we also served one search warrant in Phoenix,
23 Arizona, related to Financial Enterprise.
24 Q. And that's a separate company related to Jeremy
25 Michael Head?

2 Q. What was your role during the execution of those
3 search warrants?
4 A. I floated between the different sites in Southern
5 California.
6 Q. How were the search warrant sites organized as far as
7 the search?
8 A. Each search location had a team leader assigned to
9 that location who oversaw that specific site.
10 Q. And in addition to the team leader, were other people
11 also present?
12 A. Yes.
13 Q. Who else participated in the searches?
14 A. Additional special agents from the IRS and FBI.
15 Q. Did you see each of the locations on the day of the
16 search with the exception of the Arizona location?
17 A. I don't believe I went to A1 Property Management, but
18 I went to the other three locations.
19 Q. Were items seized during the course of those search
20 warrants?
21 A. Yes.
22 Q. What happened with the items that were seized?
23 A. They were transported from Southern California to my
24 office, and they are currently being stored at the FBI.
25 Q. In the course of the investigation, were other

1 records also obtained in addition to what was seized in the
2 search warrants?
3 A. Yes.
4 Q. What types of records were obtained?
5 A. Voluminous bank records, mortgage records, escrow
6 records, county recorder's office records.
7 Q. I would like to talk a little bit about the structure
8 of some of the exhibits.
9 Are you familiar with the exhibits that have been
10 introduced in the case?
11 A. Yes, I am.
12 Q. So for exhibit numbers 5 through 19 in the exhibits,
13 does the letter and the exhibit differentiate the location
14 where the item was obtained from or how that item was obtained?
15 A. Yes.
16 Q. What does each letter signify?
17 A. Letter "A" signifies that the evidence was obtained
18 from the search warrant location. Anything that begins with a
19 "B," as in boy, was obtained from a lender. Anything that
20 begins with a "C" was obtained from a county recorder's office.
21 Anything that begins with a "D," as in David, was obtained from
22 a bank.
23 Q. And that's just for those 5 to 19 exhibits, is that
24 right?

1 Q. In the course of executing the search warrants, were
2 some documents found at multiple locations -- or versions of
3 documents found at multiple locations?
4 A. Yes.
5 Q. In addition, were some documents found at the search
6 warrant also obtained -- or copies of similar documents
7 obtained from lenders, or county recorders, or other sources?
8 A. Yes.
9 Q. Did some of those documents have differences?
10 A. Yes.
11 Q. And in the course of the search warrants, were
12 documents recovered that were signed and notarized but had not
13 been completely filled out?
14 A. Yes.
15 Q. To take a look at an example, if we could go to
16 Government Exhibit 18C1.
17 Do you recognize Government Exhibit 18C1?
18 A. Yes, I do.
19 Q. What is that?
20 A. It's a warranty deed transferring ownership of the
21 property from the Nowlins to Rucker.
22 Q. And we heard Ms. Nowlin testify here in trial?
24 Q. Where was this document obtained from?
25 A. It was obtained from the Plymouth County Recorder's

1 Office.
2 MR. ANDERSON: Your Honor, I would like to show
3 DM-O15, all three pages, which were admitted outside the
4 presence of the jury. I believe it was yesterday.
5 THE COURT: All right. If it's in the record.
6 MR. GREINER: What is it again, Mr. Anderson?
7 THE COURT: DM-O15. That's in. Yes. Three pages.
8 MR. ANDERSON: Yes. It's a three-page exhibit.
10 Q. BY MR. ANDERSON: Do you know if this exhibit was
11 obtained during the search warrants?
12 A. Yes, it was.
13 Q. Does this appear to be a warranty deed transferring
14 that same property from the Nowlins to Rucker?
15 A. Yes.
16 Q. Looking at the last page, is this document signed and
17 notarized?
18 A. Yes, it is.
19 Q. And looking at the first page, is this document
20 completely filled out?
21 A. No, it is not.
22 Q. So is this an example of something that was seen in
23 examining the documents from the search warrants?
24 A. Yes.
25 Q. Let's go back to 18C1. So this document transfers

1 title, is that right?
3 Q. Are there other examples of similar documents, but
4 from different states, that look different in the exhibits?
5 A. Yes.
6 Q. If we could go to Government Exhibit 18 -- excuse me.
7 Your Honor, I would ask to have Government
8 Exhibit 8C1 admitted.
9 MR. TEDMON: 8C1.
10 MR. ANDERSON: C as in Charlie.
11 MR. TEDMON: 8 or 18?
12 MR. GREINER: 8.
14 MR. TEDMON: 8C1?
15 THE COURT: I believe it was added after the original
16 exhibit list was published.
17 MR. TEDMON: Can I just take a look real quick?
18 THE COURT: I don't believe the Court has a copy
19 either.
20 MR. ANDERSON: Let's just use 7C1. I think that's an
21 easier example. There is no objection to that.
22 Q. BY MR. ANDERSON: Is this another example of a title
23 document?
24 A. Yes, it is.
25 Q. Do you know what state this is for?

1 A. Illinois.
2 Q. This is entitled Grant Deed?
3 A. Correct.
4 MR. ANDERSON: Your Honor, at this time I would like
5 to read into the record the parties' stipulation regarding
6 grant deeds.
7 THE COURT: All right. You may do so.
8 MR. ANDERSON: It is stipulated between the parties
9 that a grant deed is recorded by a county recorder's office to
10 make a public record of the fact that there has been a transfer
11 of ownership in a particular property. When a grant deed is
12 received by a county recorder's office, the deed is reviewed to
13 see if it meets legal requirements, and then it is recorded.
14 It is given a stamp in the upper right-hand corner of the
15 document, which indicates, among other things, the county in
16 which the deed is recorded, the name of the county recorder,
17 the date of the recording, and a particular number for the
18 recording. The document is then scanned and indexed
19 electronically. The original paper version of the recorded
20 deed is then mailed shortly thereafter via the United States
21 Postal Service to the address designated by the party that
22 requested the recording.
23 Q. BY MR. ANDERSON: And if we look to the top right of
24 this document, is that an example of a county recorder's stamp?
25 A. Yes, it is.

1 Q. And if we were to go through all the "C" exhibits,
2 would we see county recorder stamps on those exhibits?
4 Q. Take that down. And you mentioned that documents
5 were also obtained from banks, is that right?
7 Q. Is there such a thing as a signature card?
8 A. Yes, there is.
9 Q. What is a signature card?
10 A. A signature card shows who has access to that
11 account, who is authorized to make withdrawals, transactions
12 against that account.
13 MR. ANDERSON: Your Honor, I'm going to show
14 Exhibit 90 and 91. I believe 90 has been admitted but 91 has
15 not.
16 Q. BY MR. ANDERSON: Let's look at 90. What is this
17 document?
18 A. This is a signature card from Pacific Mercantile Bank
19 for the account of Creative Loans LLC in Costa Mesa,
20 California.
21 Q. And does this document show us who the signatories
22 were on the account?
23 A. Yes.
24 Q. Who are the signatories on the account at this time
25 period for this page?

1 A. Charles Head and Kou Yang.
2 Q. Let's go to page two. Does that eventually change
3 and another signatory is added?
4 A. Yes.
5 Q. Who is added as a signatory to the account?
6 A. John J. Corcoran.
7 Q. If we look at the top right, what information is in
8 the box in the top right?
9 A. It is the account owner's name and address.
10 Q. And in this case Creative Loans DBA Nations Property
11 Management, FundingForeclosures.com?
14 Government's Exhibit 91 be admitted.
18 MR. SAMUEL: No.
21 MR. TEDMON: Your Honor, actually, I'm sorry.
22 Subject to the variance issue, no objection.
23 THE COURT: All right. Is that joined?
24 MR. SAMUEL: Yes.

1 THE COURT: All right. That objection is recorded,
2 but 91 is admitted.
3 (Government Exhibit 91, Wells Fargo Business Account
4 Application for Creative Loans, LLC of Costa Mesa, CA admitted
5 into evidence.)
6 Q. BY MR. ANDERSON: We'll just focus on the first few
7 pages. What is Government's Exhibit 91?
8 A. This is also a business account application. It's a
9 signature card for Creative Loans LLC held at Wells Fargo Bank.
10 Q. And does this indicate who the owner of that account
11 is?
12 A. Yes, it does.
13 Q. Who is listed as the owner of the account?
14 A. Charles C. Head.
15 Q. And is an address listed?
16 A. For the business, yes.
17 Q. What is that address?
18 A. 949 South Coast Drive, Suite 450, in Costa Mesa,
19 California.
20 Q. Are you familiar with that address?
21 A. Yes.
22 Q. What address is that?
23 A. That was an address where Head Financial Services and
24 Creative Loans was operating.
25 Q. Did you conduct surveillance at that location?

1 A. Yes, we did.
2 Q. Have you seen any individuals charged here in court
3 at that location?
4 A. Yes.
5 Q. Who did you see there?
6 A. Charles Head.
7 Q. When, approximately, did you conduct that
8 surveillance?
9 A. I believe we conducted in approximately March of
10 2006.
11 Q. Let's go to Government's Exhibit 17A5, page five. Do
12 you recognize this document?
13 A. I do.
15 A. Well, I recognize it based upon the investigation. I
16 believe we obtained it from search warrant evidence.
17 Q. And does this list a buy-back price of a property?
18 A. Yes, it does.
19 Q. What does it list as a buy-back price?
20 A. $76,498.
21 Q. And in the course of the investigation, did it appear
22 that some properties had been encumbered beyond the represented
23 buy-back price?
24 A. Yes.
25 Q. And by that I mean that a loan had been taken out, or

1 they were carrying a loan on the property that was in excess of
2 what the purported buy-back price was?
4 Q. Let's go to Government Exhibit 17A1. Is this an
5 example of that happening?
6 A. Yes, it is.
7 Q. Could you explain that?
8 A. The buy-back price was $76,498, however, they
9 obtained a new loan against that same property for $107,100.
10 Q. Just put an arrow. $107,100?
11 A. Correct.
12 Q. Now, you had indicated that search warrants were also
13 conducted at Charles Head's house, is that correct?
14 A. Yes.
15 Q. Where was Charles Head's house located?
16 A. 961 North Citrus Drive in La Habra, California.
17 MR. ANDERSON: Your Honor, pursuant to the
18 stipulation, I'm going to ask that Government Exhibits 68
19 through 78 be admitted as authentic copies of documents seized
20 by law enforcement at Charles Head's house.
21 THE COURT: 60A?
22 MR. ANDERSON: 68.
23 THE COURT: 68 through 78. Any objection?
24 Mr. Tedmon?
25 MR. TEDMON: I only have a question with regard to

1 exhibit number -- is 78 -- through 78?
2 THE COURT: 6-8 through 7-8. Total of eleven
3 exhibits.
4 MR. TEDMON: Can I just talk to Mr. Anderson for a
5 brief moment?
9 THE COURT: Mr. Samuel? Mr. Greiner?
11 MR. SAMUEL: No objection, Your Honor.
12 THE COURT: All right. Those come in without
13 objection.
14 (Government Exhibits 68, 69, 70, 71, 72, 73, 74, 75,
15 76, 77, 78, (See index for descriptions) admitted into
16 evidence.)
17 Q. BY MR. ANDERSON: During the search warrant of
18 Charles Head's personal residence, were documents recovered
19 that appeared to be connected to Funding Foreclosures, Head
20 Financial Services, Creative Loans, or the general scheme you
21 were investigating?
22 A. Yes.
23 Q. I guess they are all in, so let's bring up Government
24 Exhibit 68 first. Do you recognize this document?
25 A. Yes, I do.

1 Q. And is this one of the documents that was recovered
2 from that search warrant?
3 A. Yes.
4 Q. Does this appear to be a sales pitch for the program?
5 A. Yes.
6 MR. GREINER: Objection. Document speaks for itself.
8 Q. BY MR. ANDERSON: And let's just go to item five. I
9 think the jury can just read that for themselves real quickly.
10 Let's go to Government's Exhibit 69. Is this a
11 document that appears to discuss leads in marketing?
12 A. Yes, it does.
13 Q. Let's go to Exhibit 70. Are you familiar with the
14 original format of how this document looked?
15 A. Yes.
16 Q. How is it held together?
17 A. It was on a ream of paper, like a MEpad, I believe it
18 is, memo pad.
19 Q. Like a handwritten notebook?
20 A. Yes.
21 Q. And where it says "equity purchase agreement," does
22 it then describe things about an equity purchase agreement?
23 A. Yes, it does.
24 Q. Let's go to page three. It lists two e-mail
25 addresses associated with Charles Head?

1 A. Yes, it does.
2 Q. Go to page four. Does it discuss marketing efforts
3 and the cost of different marketing campaigns?
4 A. Yes.
5 Q. Including expected yields from various numbers of
6 calls?
7 A. Yes.
8 Q. You see it's referencing "50K cards." Were postcards
9 also recovered in this case?
11 Q. Let's go to Government Exhibit 70, page six. Were
12 items that appear to be a to-do list also in the binder?
13 A. Yes.
14 Q. Including "commit equity purchase agreement to
15 memory"?
16 MR. TEDMON: Objection Your Honor. Speaks for
17 itself.
19 Q. BY MR. ANDERSON: Let's go to two more. Let's go to
20 the next page. See where it references "beamer, benz and
21 Denali"?
22 A. Yes.
23 Q. Do you know what types of cars Charles Head had?

1 Q. BY MR. ANDERSON: Does that information about those
2 cars appear to be consistent with what Charles Head --
4 MR. ANDERSON: Goes to identity.
7 Q. BY MR. ANDERSON: Let's go to the next page. Do you
8 know if Charles Head had a sister?
9 A. Yes, he did.
10 Q. Let's go to page nine. Does this also appear to be a
11 page discussing sales techniques?
12 A. Yes, it does.
13 Q. Next page, page ten. Is that a continuation?
14 A. Yes.
15 Q. Go to page eleven. Is this again discussing
16 marketing efforts?
17 A. Yes, it does.
18 MR. TEDMON: Objection. I'm going to object, Your
19 Honor. Move to strike. That characterizes the document. It
20 speaks for itself.
22 exchange.
23 Q. BY MR. ANDERSON: Let's go to page twelve. Highlight
24 that page. Page 13. Page 14.
25 MR. TEDMON: Your Honor, if counsel is going to ask a

1 question about the document? Otherwise, it speaks for itself.
2 It's in evidence.
3 THE COURT: Isn't that the case here?
4 MR. ANDERSON: If the Court is willing, we can
5 publish it to the jury really quickly and do it without
6 questions. I'm happy to ask a few.
7 THE COURT: But the document speaks for itself.
8 MR. ANDERSON: No --
9 THE COURT: Just look at the pages where you have
10 questions to ask.
11 Q. BY MR. ANDERSON: Let's go to page 15. Were
12 properties identified in areas of the country, including
13 Florida, Pennsylvania, California, with high annual property
14 appreciation involved in the case?
15 A. Yes.
16 Q. And if we go to page 21. Are those listings of
17 geographic regions in the United States?
18 A. Yes, it is.
19 Q. Go to page 24. Do you see in the top right, where it
20 says "Head Financial declined loan" or "Head Financial is only
21 a broker"?
22 A. I do.
23 Q. Do you know whether or not Head Financial was a
24 broker?
25 A. It was.

1 Q. Go to page 25. Do you see where the breakdown is,
2 "100,000 debt, 100,000 equity, when the 100,000 equity is taken
3 out, acquisition costs, consideration to seller, loan
4 processing fee," and then it lists out as initial profit?
5 A. Yes.
6 Q. Now, did you review the HUD-1 escrow documents in
7 this case for the transactions that have been testified to here
8 in court?
9 A. I did, yes.
10 Q. Is that consistent in that money was being diverted
11 -- I don't want to use the word diverted -- was being taken
12 from the escrow to Creative Loans or Head Financial Services
13 accounts?
14 A. Yes, it was.
15 Q. Let's go to page 27. I'm sorry, page 26.
16 Were there also indications in this binder of things
17 related to debt-to-income ratio, loan-to-value?
18 A. Yes.
19 Q. Do we see that on this page with these abbreviations
20 "LTV, DTI, DI"?
21 A. Yes.
22 Q. Let's go to page 27. Do you see where it says "A"
23 and then across from it is "N," and there is an arrow down from
24 the "N," goes to "J, U-S, Y and Y"?
25 A. I do.

1 Q. Now in some of the initial transactions that we have
2 heard about, were properties being purchased as owner-occupied
3 properties?
5 Q. Do those letters match up with anything on a loan
6 application for a property being purchased as owner-occupied?
8 THE COURT: Ask a foundational question first.
9 Q. BY MR. ANDERSON: Sure. Is there a section on the
10 loan applications where a series of yes-and-no questions are
11 asked?
12 A. Yes, there are.
13 Q. And what do those -- do any of those questions have
14 to do with both owner occupancy of the house, whether a person
15 is a U.S. citizen, and other things like that?
16 A. Yes.
18 which I don't believe has been admitted, and I would ask to
19 have that admitted.
21 MR. TEDMON: Just one moment, Your Honor.
22 THE COURT: There is no other exhibit you can use
23 that's already in?
24 MR. ANDERSON: Well, I would like to use 7B2, which I
25 think is in. If we could use that.

1 THE COURT: 7B2 is in.
2 Q. BY MR. ANDERSON: Let's do it there. We'll have to
3 go to page three. We can highlight that portion, and then
4 let's see if we can bring up the prior exhibit and put them
5 side by side. If we blow up that portion and this portion.
6 So if we were to start at "A" on the declarations
7 page: "Are there any outstanding judgments against you?" We
8 checked "no". All the way down to question J, "are you a U.S.
9 citizen?" Checked "yes." "Are you a permanent resident alien?"
10 Checked "no." "Have you had an ownership interest in the
11 property in the last three years?" Which in this case is
12 checked "no." Do you see that -- I'm sorry. I skipped one.
13 "Do you intend to occupy the property as your primary
14 residence?" Which is checked "yes."
15 Do you see that?
16 A. I do.
17 Q. And do those checkmarks correspond with what was
18 found on the document in Charles Head's personal house?
19 A. Yes.
20 Q. Let's go back to 70, page 27. And then there are
21 additional pages to this exhibit as well, correct?
22 A. Yes.
23 Q. So let's go on to Government Exhibit 71. Do you
24 recognize this item?
25 A. I do.

1 Q. What is it?
2 A. That's a property tax statement.
3 Q. And who is it a property tax statement to?
4 A. Charles Head.
5 Q. And what address does it list?
6 A. 949 South Coast Drive, Suite 450, in Costa Mesa.
7 Q. And this was found at Charles Head's house?
9 Q. Was it found in proximity to the other documents
10 we've just been discussing?
11 A. Yes.
12 Q. Go to Government's Exhibit 72. Was this also found
13 in proximity to those other documents at Charles Head's house?
14 A. Yes.
15 Q. Does the name Mike Mattice bear any relationship to
16 any of the exhibits marked in this case?
17 A. Yes.
18 Q. What relationship does it bear?
19 A. He was also a straw buyer of properties.
20 Q. And if we go to the bottom of the page, there are
21 also references to Head Financial Services and Creative Loans?
22 A. Correct.
23 Q. And then we'll flip to the next page. Followed by
24 Mike Mattice's name again?
25 A. Correct.

1 Q. And Lisa Vang's name is also here, is that right?
2 Below on this document?
3 A. Yes.
4 Q. Go to Government's Exhibit 73. Was this document
5 also found in proximity to the other documents we've been
6 discussing?
7 A. Yes.
8 Q. Do you know what room of the house these were found
9 in?
10 A. In Charles' office.
11 Q. What type of document is this, if you know?
12 A. This is a document obtained from the California
13 Secretary of State.
14 Q. And do you know what company it's related to?
15 A. I believe it's on the next page.
16 Q. Go to page two.
17 A. It's Head Financial Services, Incorporated.
18 Q. And who is listed as the corporation's parent --
19 agent for process?
20 A. Charles Head.
21 Q. And in the course of the search warrants --
22 In the course of the search warrant at Charles Head's
23 house, were binders recovered that contained documents related
24 to the incorporation of Head Financial Services and Creative
25 Loans?

1 A. Yes.
2 Q. Go to page 74. Not page 74. Exhibit 74. That makes
3 a lot more sense.
4 Was this another document found with the ones we've
5 just been discussing?
6 A. Yes.
7 Q. What type of document does this appear to be?
8 A. This is another signature card for Pacific Mercantile
9 Bank held in the account number of Head Financial Services,
10 Incorporated, DBA Dynasty Realty.
11 Q. So with respect to the signature card that we saw
12 earlier in Exhibit 90, where did that signature card come from?
13 A. That came directly from the bank.
14 Q. Let's go to Government Exhibit 75. Do you recognize
15 this document?
16 A. I do.
17 Q. Was this another document found near the others that
18 we've been discussing?
19 A. Yes.
20 Q. And if we go to page two, what company is this for?
21 A. Creative Loans LLC.
22 Q. Exhibit 76. Do you recognize this document?
23 A. I do.
24 Q. What is it?
25 A. It's a Fictitious Business Name Statement for Orange

1 County Clerk Recorder.
2 Q. Where was it found?
3 A. At Charles Head's residence.
4 Q. Was this also in his office?
5 A. Yes.
6 Q. And were you personally the person who took these
7 items or was someone else the finder for these items?
8 A. Somebody else was the finder.
9 Q. Do you know who that was?
10 A. Yes.
11 Q. Who was that?
12 A. Special Agent Paul Howard of the IRS.
13 Q. And in addition to saying Nations Property
14 Management, this lists Creative Loans as the full name of the
15 registrant, is that right?
17 Q. Do you know what that means?
18 MR. TEDMON: Objection. Calls for legal conclusion.
21 Exhibit 77. What is this document?
22 A. It's another Fictitious Business Name Statement for
23 FundingForeclosures.com.
24 Q. Was this also found in Charles Head's office?
25 A. Yes.

1 Q. And that's the office at his personal residence?
3 Q. Let's go to Government's Exhibit 78. Do you
5 A. I do.
6 Q. What is it?
7 A. It's a stock certificate for Head Financial Services,
8 Incorporated issued to Charles C. Head.
9 Q. Again from his office?
10 A. Correct.
11 Q. Now, in the course of this investigation -- we can
12 take that exhibit down.
13 In the course of this investigation, you said that
14 you received bank records and other records related to the
15 case, is that right?
16 A. Yes.
17 Q. Did you make some charts in order to summarize some
18 of the information contained on the records?
19 A. I did.
20 Q. Are those records voluminous?
21 A. Yes.
22 Q. Approximately how many pages of records do you have
23 in the case?
24 A. Probably over a million.

1 Government's Exhibit 1 be admitted as a summary chart of
2 voluminous records which the parties have agreed is a true and
3 correct summary of those records.
6 MR. SAMUEL: No.
9 (Government Exhibit 1, Head II Properties Settlement
10 Statements Summary Chart admitted into evidence.)
11 Q. BY MR. ANDERSON: We will blow up portions of it. Do
12 you recognize Government's Exhibit 1?
13 A. I do.
14 Q. What is it?
15 A. It's a summary chart obtained from information from
16 various settlement statements related to the real estate
17 transactions.
18 Q. What documents did you use --
19 Well, did you create this chart?
20 A. I did.
21 Q. What documents did you use to create this chart?
22 A. Settlement statements, also known as HUD-1s.
23 Q. Where did you obtain the HUD-1s from?
24 A. We obtained them through search warrant evidence,
25 through lenders, and from banks.

1 Q. In this summary chart did you focus on a specific
2 time period?
3 A. Yes.
4 Q. What time period did you focus on?
5 A. The time period between the indictment.
6 Q. So March 2005?
7 A. Correct.
8 Q. In your review of records, was there evidence of
9 transactions that you did not include on the chart?
10 A. Yes.
11 Q. What sorts of evidence of transactions that you did
12 not include on the chart were there?
13 A. Well, we discovered in this investigation that there
14 was some documents that had been shredded.
15 Q. And in order to put the information on the chart, did
16 you look only to sets where you had complete information
17 necessary to fill in the information on the chart?
18 A. Correct.
19 Q. Was there anything else that you saw in looking at
20 bank records that suggested there were additional transactions?
22 Q. In looking at bank records, was there also evidence
23 from wire transactions of additional transactions not included
24 on this chart?
25 A. Yes.

1 Q. In creating the chart -- let's highlight a portion.
2 See if we can get it a little bit bigger.
3 All right. There are a number of columns on the
4 chart. The first is "property owner." What information did
5 you put in the column "property owner"?
6 A. That would have been the seller of the home. The
7 name.
8 Q. Where did you obtain that information from?
9 A. From the top page, page number one of the settlement
10 statement.
11 Q. So if we look -- rather than going to the document,
12 we've all seen the settlement statements.
13 Where on the settlement statement would that
14 information come from?
15 A. The top. On page number one.
16 Q. And then it says "closing date." Where is the
17 closing date on the HUD-1?
18 A. Also on page one, the top of the page.
19 Q. Let's go to Government 8A1. Where would you get the
20 information for the closing date?
21 A. Right there where the arrow is. Settlement date.
22 (Indicating.)
23 Q. And there's also a column "property address," where
24 did you get the property address from?
25 A. It's Section G where the arrow is. Property

1 location. (Indicating.)
2 Q. And there is a section for "listed purchaser," where
3 did that information come from?
4 A. Section D. Sorry. It's not working.
5 Q. Let me try.
6 A. There you go.
7 Q. Which is listed as "name of borrower" on this
8 document?
9 A. Correct.
10 Q. And then there is a column for "proceeds," where did
11 the proceeds information come from?
12 A. Typically it came from the page one, the bottom right
13 corner. But I believe on this form it was on page number two.
14 Q. So let's go to page number two of this document.
15 Where on this particular document would information
16 regarding proceeds come from?
17 A. Line 1306.
18 Q. So the line that on this document says, "Creative
19 Loans LLC, seller's proceeds"?
20 A. Correct.
21 Q. Does that vary somewhat depending on which HUD-1
22 you're looking at?
23 A. Yes.
24 Q. And you said that on some HUD-1s it's on the first
25 page?

1 A. First page, bottom right corner.
2 Q. Let's go back to the Government's Exhibit 1. There
3 are some rows on Government's Exhibit 1 where the proceeds
4 column is not filled in. Could you explain that?
5 A. The settlement statement that we received
6 unfortunately was not complete and did not list proceeds that
7 were due to the seller.
8 Q. And when you say a settlement statement is not
9 complete, what do you mean?
10 A. We didn't have final -- there was estimated
11 settlement statements, and then there is a final version. We
12 didn't have a final version that would reflect the proceeds.
13 Q. Are there also types of settlement statements where
14 only the buyer side or only the seller side is reflected on the
15 settlement statement?
16 A. Correct.
17 Q. Could you explain how that works?
18 A. So the lender gets both sides of the transaction that
19 reflect the buyer side and the seller side. The seller of the
20 home only gets the portion that relates to them, the seller
21 side. And the opposite of that would be the buyer would only
22 get the buyer's side of the transaction. It's broken down by
23 buyer and seller on the form.
24 Q. So some people would only get one-half of the
25 information?

2 Q. And in some cases was only a portion of the
3 information available?
4 A. Yes.
5 Q. And then if we flip to the next page. For the
6 transactions available for the time period that you were
7 calculating, and where there was enough information to
8 determine the proceeds, did you total up the amount of proceeds
9 that was wired out of those accounts?
10 A. Yes.
11 Q. How much was that?
12 A. $5,703,312.
14 THE COURT: You're moving to admit that?
16 THE COURT: Take it off the screen.
17 MR. ANDERSON: I move to admit Government Exhibit 2.
18 It's also within the stipulation.
19 THE COURT: I understand. Any objection? Just so
20 I'm clear.
21 MR. TEDMON: No.
24 THE COURT: So 2 may be displayed. It is admitted.
25 (Government Exhibit 2, Head II Bank Balance Creative

1 Loans, LLC Summary Charts admitted into evidence.)
2 Q. BY MR. ANDERSON: Do you recognize Government's
3 Exhibit 2?
4 A. I do.
5 Q. What is it?
6 A. It's a chart that I created that reflects the total
7 deposits into Creative Loans during a certain date range.
8 Q. How did you come up with the information for this
9 chart?
10 A. I used the information obtained from Pacific
11 Mercantile Bank, the bank statements for Creative Loans.
12 Q. Are those bank statements voluminous?
13 A. Yes, they are.
14 Q. With multiple entries on each statement?
15 A. Yes.
16 Q. In looking at those bank statements, were you able to
17 see if the account was carrying a large balance month to month?
18 A. Yes.
19 Q. Was it carrying a large balance month to month?
20 MR. TEDMON: Objection. Vague as to what a large
21 balance is.
23 Q. BY MR. ANDERSON: Did you look to see what kind of
24 balance was being carried in the Creative Loans account on a
25 month-to-month basis?

1 A. I did.
2 Q. What type balance was being carried on a
3 month-to-month basis in the Creative Loans account?
6 Q. BY MR. ANDERSON: How large a balance was being
7 carried in the Creative Loans account for the time period that
8 you looked at?
10 THE COURT: Answer to the extent you're able.
11 THE WITNESS: Not large. Very minimal.
12 Q. BY MR. ANDERSON: What do you mean by minimal?
13 A. Money would come into the account each month and
14 money would leave --
16 strike.
18 beginning of that answer.
19 Q. BY MR. ANDERSON: Let's look at an example of what
20 you looked at. So here you show "date range," what does that
21 mean?
22 A. The bank statements are broken down by a date range,
23 typically one month.
24 Q. And does your date range reflect the date range on
25 the statements?

1 A. Yes, it does.
2 Q. And then next to that you have deposits listed, what
3 does that mean?
4 A. That's the total deposits into that account during
5 that specific date range.
6 Q. And then in the following column you have
7 "withdrawals," what's in that column?
8 A. That's the total amount of withdrawals made from that
9 account during that date range.
10 Q. And so if we were to look at April 1st, 2005 through
11 April 29th, 2005, what were the amount of the deposits into
12 that account during that time period?
13 MR. TEDMON: Objection, Your Honor. Document speaks
14 for itself.
16 MR. ANDERSON: It's a summary chart.
17 MR. TEDMON: Well, it speaks for itself. It's been
18 admitted. Object.
19 THE COURT: You're asking about the numbers shown
20 here?
21 MR. ANDERSON: Well, I'm asking him to explain the
22 numbers so the jury understands how he got the numbers.
23 THE COURT: Ask that question.
24 Q. BY MR. ANDERSON: All right. So in that first --
25 As an example, in the April 1st, 2005 through

1 April 29th, 2005 where it shows deposits, how did you get that
2 number?
3 A. That was the total amount of deposits in the Creative
4 Loans during that date range.
5 Q. And then in the "withdrawal" column, what is that?
6 A. That was the total amount of withdrawals from that
7 account during that specific date range.
8 Q. And as you went through month-by-month, did the
9 withdrawals and the deposits in each month almost equal each
10 other?
11 A. Yes.
12 Q. Let's go to the next page of this exhibit. What is
13 this chart?
14 A. This is a similar chart but for a different bank
15 account in the name of Head Financial Services, Incorporated
16 DBA Dynasty Realty.
17 Q. Do you know who the signators were on this account
18 according to the bank records?
19 A. I believe initially it was Charles Head and Kou Yang.
20 Q. And did you do the same analysis for this bank
21 account that you did for the previous bank account?
22 A. I did.
23 Q. And does this chart work in the same way?
24 A. It does.
25 Q. And like the previous account, were the deposits and

1 withdrawals on a month-to-month basis roughly the same?
2 A. I would say this one is a little bit different. But
3 if you look at the totals there, they are very similar to what
4 went in and what went out.
5 Q. Now in the Creative Loans account, the total overall
6 was something a little bit over 14 million, is that right?
8 Q. And in this it's $1.4 million, is that correct as
9 well?
10 A. Correct.
11 Q. Is there any risk of double-counting if you were to
12 just add those two numbers together?
13 A. Yes. I believe there was some transfers from the
14 Creative Loans bank account into the Head Financial Services
15 bank account.
16 Q. When you looked at the Creative Loans bank account,
17 which is the previous page, were you able to see what the
18 source of the funds coming into the account was?
19 A. Yes.
20 Q. What was the source of the money coming into the
21 account?
24 THE WITNESS: They were coming from various real
25 estate transactions.

1 Q. BY MR. ANDERSON: How were you able to tell that they
2 were coming from real estate transactions?
3 A. They would list -- the wire form would indicate the
4 name of the title company or the attorney that handled the
5 closing.
9 MR. TEDMON: Your Honor, could I have just a moment?
11 MR. TEDMON: Thank you. No objection.
14 THE COURT: All right. Exhibit 3 may come in.
15 (Government Exhibit 3, Money Flow Summary Charts
17 Q. BY MR. ANDERSON: Did you also create charts to
18 provide illustrations of how money would be transferred into
19 straw buyer accounts in order to go to the title company?
20 A. I did.
21 Q. Is Government's Exhibit 3, page one, one of those
22 examples?
23 A. It is.
24 Q. Could you please explain first where you got the
25 information for Government's Exhibit 3?

1 A. I obtained it from bank records along with subpoenaed
2 records, bank records -- bank records and search warrant
3 records.
4 Q. And could you explain what you're showing with
5 Government's Exhibit 3, page one?
6 A. Sure. Creative Loans initiated a wire for $25,000 on
7 March 16, 2006, and then a separate wire on April 21, 2006 for
8 $1,941 to Michael Scallin.
9 Once the money was wired into his bank account, he
10 obtained two different cashier checks for similar amounts that
11 were issued to Alliance Title.
12 Once the transaction closed, the seller proceeds of
13 $88,439.06 was wired to Creative Loans.
14 Q. And then let's look at page two. Is this another
15 example of money being wired from Creative Loans?
16 A. Yes, it is.
17 Q. Could you explain what you're showing in this chart?
18 A. Sure. On March 24, 2006, Creative Loans wired
19 $47,020 to Michael Scallin. Then he obtained a cashier's check
20 for $47,000 made payable to Alliance Title.
21 After the transaction closed, a check was issued to
22 Deborah Brockway for $108,818.16. After she obtained the
23 money, she was directed by Domonic McCarns to obtain a
24 cashier's check for the same amount made payable to --
25 MR. GREINER: Objection. That misstates the

1 evidence.
4 THE COURT: The jury shall disregard that last bit of
5 testimony. Why don't you ask your next question.
6 Q. BY MR. ANDERSON: Sure.
7 Once the money arrived in Deborah Brockway's account,
8 were you able to track -- I'm sorry not arrived in Deborah
9 Brockway's account -- but once the check was cut to Deborah
10 Brockway, were you able to track what happened next to that
11 money?
12 A. Yes.
13 Q. What happened next to it?
14 A. The money was deposited into the Creative Loans bank
15 account held at Pacific Mercantile Bank.
18 THE COURT: This is three pages?
19 MR. ANDERSON: It is.
25 THE COURT: All right. Exhibit 4 is admitted.

1 (Government Exhibit 4, Payment charts admitted into
2 evidence.)
3 THE COURT: We have about seven minutes. Are you on
4 track to finish your direct?
5 MR. ANDERSON: No, Your Honor. We'll have some more
6 that we'll need to address next week. But we're very nearly
7 done. I think if I finish with this exhibit, that would be a
8 good breaking point.
9 THE COURT: All right. Let's see where we are at
10 that point. Next question.
11 Q. BY MR. ANDERSON: Did you also do anything to
12 summarize payments made out to Domonic McCarns and Charles
13 Head?
14 A. I did.
16 A. I've reviewed the bank accounts, and I traced the
17 checks that were written from those accounts to specifically
18 this chart to Domonic McCarns.
19 Q. And how were you able to trace the checks to Domonic
20 McCarns?
21 A. I obtained copies from the bank of the checks that
22 were written from the account to Domonic McCarns.
23 Q. Do you know what was done to cash these checks?
24 A. I'm sorry. I'm not following you.
25 Q. Do you know how the checks were cashed?

1 A. Some of the checks were cashed locally at Pacific
2 Mercantile Bank, and other times I believe they were deposited
3 into an account that Domonic held at Bank of America.
4 Q. And from the checks that you were able to identify
5 for the time period that you were looking at -- did you look at
6 a specific time period?
7 A. Yes.
8 Q. What time period did you look at?
9 A. Between April 2005 and June 2006.
10 Q. And in that specific time period, what was the total
11 that you came up with of the checks you were able to identify
12 as going to Domonic McCarns?
13 A. $136,703.85.
14 Q. Let's go to page two. What is shown on this chart?
15 A. This is a summary chart showing payments to Charles
16 Head.
17 Q. Did you do the same thing to create this chart as the
18 chart for Domonic McCarns?
19 A. I did.
20 Q. Was the method of payment different at all when you
21 looked at the bank records to create this chart?
22 A. Yes.
23 Q. What was different?
24 A. In addition to normal -- or in addition to checks,
25 Mr. Head also receives wire transfers into his personal bank

1 account.
2 Q. And in the "date" column, what are you listing there?
3 A. That is the date of the check or wire.
4 Q. Was that the same on the Domonic McCarns' chart?
5 A. Yes.
6 Q. And where you list "check number" or "wire," what are
7 you listing there?
8 A. That is the check number that is referenced on the
9 check. Or if it is a wire, it's just listed as wire.
10 Q. And where "amount" is referenced, what is that?
11 A. That is the amount of the check or wire.
12 Q. And "from," what's listed in the "from" column?
13 A. That is the source of funds. Either the money came
14 from Creative Loans LLC bank account or Head Financial Services
15 Incorporated, both held at Pacific Mercantile Bank.
16 Q. Does this chart continue on another page?
17 A. It does.
18 Q. Let's go to page three. Did you arrive at a total
19 for the time period that you were looking at for this account?
20 A. I did.
21 Q. Not for this account but for this individual?
22 A. Yes.
23 Q. What was that total?
24 A. It was $622,277.35.
25 Q. What time period were you looking at?

1 A. I believe that was -- I would have to see the first
2 page.
3 Q. Go to the first page. No. Second page.
4 A. It was March 2005 through, I believe, August 2006.
5 MR. ANDERSON: Your Honor, we're at a good breaking
6 point.
7 THE COURT: All right. We'll go ahead and break a
8 few minutes early today.
9 This is the end of our week. So we will convene
10 again on Monday morning at 8:30. We'll have a full day then, a
11 full day next Tuesday.
12 I'll be able to give you an update, but it appears
13 that the Government is getting close to resting its case.
14 We'll know for certain Monday morning. And the Court
15 understands there will be some defense cases put on. And so I
16 think we're looking at closing argument next week. I'll give
17 you a more complete update on Monday.
18 As we break for the long weekend, please remember
19 each and every one of my admonitions. You will receive
20 everything you need to decide the case properly in this
21 courtroom. Don't do any research of any kind, electronic or
22 otherwise. Don't discuss the case with anyone, family member
23 or friends, fellow jurors. Don't begin to think about its
24 ultimate conclusion. And if anyone does attempt to contact you
25 in any way, please let me know first thing Monday morning.

1 We'll see you Monday morning at 8:30. Have a good long
2 weekend.
3 (Jury out.)
4 THE COURT: You may step down.
5 You may be seated if you like. Just a few
6 housekeeping matters. How much longer do you think you need,
7 Mr. Anderson?
8 MR. ANDERSON: Less than half an hour.
9 THE COURT: All right. If the defense can compare
10 notes and give me estimates before we start on Monday as to how
11 much time you'll need. It would appear we'll be ready to move
12 on a defense case.
13 MR. SAMUEL: I'm ready on Monday, Your Honor. I have
14 my witnesses already being flown in.
15 THE COURT: All right. And you're still planning on
16 not putting on a case in defense, Mr. Tedmon?
17 MR. TEDMON: Well, at this point I'm going to meet
18 with my client tomorrow. But I think Mr. Samuel is going to go
19 first. I think Mr. Greiner has witnesses he definitely wants
20 to call, is that right?
21 MR. GREINER: Yes. And what I'm preparing for is
22 having them ready to go on Tuesday morning.
23 THE COURT: Let's talk about that. Have you
24 identified your witnesses, Mr. Samuel?
25 MR. SAMUEL: Yes. There is now only three plus my

1 client.
2 THE COURT: All right. So who are the three?
3 MR. SAMUEL: Mr. Tarufelli, and Pang Yang, and Emily
4 Yang. Let me get the list out.
5 THE COURT: Who is the last name?
6 MR. SAMUEL: Emily Yang. And, of course, my client.
7 THE COURT: Right. How much time total do you
8 believe you will need?
9 MR. SAMUEL: Well, it's going to be short with those
10 three witnesses. It's going to depend on the
11 cross-examination. I think it's going to be long. I think the
12 remainder of that day, because it's a long day, should suffice.
13 I would like to get them off at the end of the day.
14 THE COURT: All right. So you'll be ready to go
15 Tuesday?
16 MR. GREINER: I've instructed my investigators to
17 coordinate everything to get them here.
18 THE COURT: And you're still looking at five?
19 MR. GREINER: I will say them again. Todd Hickman,
20 Beverly Rocheleau, Scott Wagner, Andrea Manriquez and then
21 Victoria Corona.
22 THE COURT: How much time on direct do you estimate
23 you need?
24 MR. GREINER: I don't think it's going to be very
25 long, Judge. I'll say a total estimate of maybe, for all of

1 the witnesses, maybe about three hours, maybe. And that might
2 be stretching it somewhat. But that's what I would anticipate.
3 THE COURT: All right. What I'm going to do, I'm
4 going to e-mail to you by tomorrow at some point an initial
5 working set of jury instructions. And I would like to have
6 working sessions starting Monday afternoon, 2:00. Take a
7 break. Then have a working session. Reserve the same time the
8 next day. Hopefully we finalize the jury instructions then.
9 And so the parties should be ready. We will see
10 where we are. But be ready for closing to begin Wednesday
11 afternoon.
12 And then Monday tell me what you estimate the time
13 you need for closing, and we'll work out a schedule for
14 closing.
15 I will read the instructions after your closing
16 arguments. Once we finalize them, you may use them in closing.
17 Do we need, at this point, an immunity instruction?
18 MR. ANDERSON: Well, at this point, no. And I'm glad
19 the Court brought that up. Because there are witnesses that
20 both Mr. Greiner and Mr. Samuel are calling who, in a related
21 issue, may need to be advised of their rights. I don't know.
22 The Government has not done that because we don't
23 want to be in a position where it looks like we're encouraging
24 people to assert a Fifth Amendment privilege and not testify.
25 But there are some potential risks for some of these witnesses

1 who are sales agents and otherwise involved.
2 THE COURT: There is no one you're offering immunity
3 to, though?
4 MR. ANDERSON: No, we're not.
5 THE COURT: Are any of those witnesses represented?
6 MR. GREINER: Not that I'm aware of, Judge. At least
7 not mine.
8 MR. SAMUEL: None of mine are either. Although,
9 certainly two of them fit into that category. Both employees
10 present at the time and date of the search warrant.
11 THE COURT: What's your position on Fifth Amendment
12 advisement by the Court at this point in time?
13 MR. GREINER: Well, if I can address something maybe
14 even before that.
15 What might be appropriate is for me to contact and
16 maybe Mr. Samuel to contact the Federal Defender's Office and
17 let them know about the witnesses, and see if they want to
18 provisionally get attorneys to talk to them.
19 Because I'm of the same mind as Mr. Anderson. I
20 don't want to say anything. I haven't met any of these. But I
21 don't want to say anything to any of these witnesses. Either
22 that you do or you don't have Fifth Amendment rights because
23 that's interfering with the witness.
24 But I think, because it's been brought up, it may be
25 appropriate to contact the Federal Defender's Office to see if

1 they would conditionally or provisionally appoint an attorney
2 to discuss that matter. And I would certainly provide the
3 contact information I have about those witnesses with the
4 Federal Defender's Office.
5 THE COURT: And this would apply to your witnesses as
6 well?
7 MR. SAMUEL: Yes. However, there has previously been
8 an in limine motion relative to that issue. And the argument
9 that was raised was whether or not it's a five-year statute of
10 limitations or a ten-year statute of limitations. Five-year,
11 obviously, would preclude any problem that they have here
12 whatsoever. I mean, I don't know the answer to that.
13 THE COURT: Is there any reason not to contact the
14 Federal Defender Office -- for each of you to contact the
15 Federal Defender and --
16 MR. SAMUEL: We can do that.
17 THE COURT: -- provide the information.
18 MR. ANDERSON: And, Your Honor, I think everyone is
19 aware, but just so it's clear, they will need to talk to the
20 panel -- to the panel representative in the Federal Defender's
21 Office because the Federal Defender's Office, itself, will be
22 conflicted out since Mr. Bockman represents John Corcoran.
23 And I do think earlier is better. Because our
24 worst-case scenario is that we need six separate panel
25 attorneys all at once, and that's going to be hard to do on

1 short notice.
2 MR. SAMUEL: Only two for me.
3 MR. ANDERSON: But Mr. Greiner's.
4 MR. GREINER: I'll contact them this afternoon, and I
5 can let counsel know that I've done that.
6 THE COURT: All right. And Mr. Samuel you will do
7 the same?
8 MR. SAMUEL: Yes.
9 THE COURT: The Federal Defender is shorthand. Of
10 course they pick from the panel on conflicts.
11 So anything else besides you're going to meet and
12 confer on exhibits? If you can put at least in an e-mail
13 whatever the result is of your meet and confer, so the Court
14 knows before it comes into court. And that will be both the
15 balance of the Government exhibits and defense exhibits.
16 MR. TEDMON: Yes.
18 MR. SAMUEL: Not the balance of, Your Honor. I mean,
19 I'm still going to be going over materials with my client. I
20 may come up --
21 THE COURT: The balance of the Government exhibits
22 and whatever defense exhibits the defense wants to discuss and
23 try to get in by stip without taking time.
24 MR. TEDMON: And also, just on the exhibits, I spoke
25 to Mr. Anderson a little earlier today. We're going to do

1 everything we can to not have duplicate exhibits. So that, you
2 know, the same document doesn't show up three times. Like we
3 talked about earlier in the trial. So we will try to
4 accomplish that as well.
5 THE COURT: You are directed to all meet and confer
6 on that question. I had understood there wasn't much of that
7 going on, but to the extent there is. Either withdrawing an
8 exhibit or providing the jury with a list of corresponding
9 exhibits. Whatever the parties prefer. Given the way it's
10 been referenced to the jury as the evidence has come in.
11 The stips have been read only. That's the only way
12 in which they've been presented to the jury, and that's what
13 the parties wish, correct?
15 MR. GREINER: I don't think there is an evidentiary
16 problem.
17 MR. ANDERSON: No. No opinion one way or another.
18 THE COURT: All right. That's the Court's
19 assumption.
20 Is there anything else we need to discuss before
21 Monday?
22 MR. ANDERSON: Your Honor, there is. We have witness
23 statements for Mr. Samuel's -- for Mr. Samuel's prospective
24 witnesses. We don't for Mr. Greiner's.
25 And the reason I raise that is that it may be, in the

1 Government's view, that some of those witnesses are not
2 relevant or not able to be called for the purpose for which
3 Mr. Greiner is calling them.
4 I don't know yet. But I want to flag that issue for
5 the Court. Because that may be something we need to address.
6 And the earlier we can address that issue, the better, I think,
7 so we don't have a hold-up.
8 MR. GREINER: Some of these witnesses have not spoken
9 to my investigator, so I don't have any statements. I will ask
10 my investigators if they've had a chance to speak to any of
11 them today. And if they have any statements, I'll certainly
12 turn them over. I'll ask my investigators if they have any
13 statements. But that was the information I got last night.
14 MR. ANDERSON: I think it may go to an issue that's
15 raised very briefly by the Government in its trial brief. That
16 calling a witness to say that I did a transaction that wasn't
17 fraudulent isn't exculpatory evidence as to all these other
18 transactions that were carried out.
19 So if they are planning to come in and talk about
20 themselves and the way they pitched the program, that's not
21 going to be relevant evidence in the Government's view. So
22 that may be an issue that we need to address. Hopefully sooner
23 rather than later.
24 THE COURT: You've made your record. To the extent
25 you can meet and confer on that. That's up to Mr. Greiner.

1 MR. GREINER: I certainly will. I don't want to
2 waste the Court's time or the Government's time. I will
3 certainly be in contact with the Government. And I will make
4 sure that if there's any statements, that we provide them.
5 THE COURT: All right. Anything else? Mr. Tedmon?
9 THE COURT: All right. See you Monday morning then
10 just before 8:30.
12
13 CERTIFICATION
14
18
19

22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-00093

2:08-cr-00116
CHARLES HEAD,
Defendant.
---oOo---
JUDGMENT AND SENTENCE
WEDNESDAY, SEPTEMBER 3, 2014
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 Assistant U.S. Attorney
8
For the Defendant:
9
SCOTT L. TEDMON
10 LAW OFFICES OF SCOTT L. TEDMON
980 Ninth Street, 16th Floor
12
13
14
15
16
17
18
19
20
21
22
23
24
25

2 WEDNESDAY, SEPTEMBER 3, 2014
3 ---oOo---
4 (Victim witness statements were read into the record.
5 Victim witnesses made statements to the Court. Reported but
6 not transcribed.)
7 THE COURT: Before we move to the Court's process of
8 determining the appropriate sentence -- and that is a
9 deliberative process -- there are a number of steps I need to
10 go through.
11 Let me just ask the Government if it can respond to a
12 few of the questions we've just heard, and one that we didn't
13 hear but the Court did read in one of the letters.
14 The Court is going to, if not today, sometime soon,
15 order restitution. The recommended total amount of restitution
16 in the report I have before me is in excess of $13 million. I
17 do see some names of the persons who just spoke on the lists,
18 but I don't see other names.
19 Can you help me understand? Is it your position that
20 everyone who just spoke in person in court will receive
21 restitution if I use the addendum attached to the presentence
22 report?
23 MR. ANDERSON: Your Honor, we believe that they
24 should be ordered restitution, and clearly they are victims.
25 There are, as the Court knows, certain victims who

1 it's difficult to assign to one or the other conspiracy that
2 was charged. So we don't know which case to ask the Court to
3 order restitution in. It's a legal technicality that is,
4 essentially, depriving these people of restitution that they
5 would be owed.
6 THE COURT: One question the Court has to decide
7 today is, can I make a final decision on restitution? I do
8 believe there's information before me that would allow me to
9 make an order of restitution, again, combined total in excess
10 of $13 million.
11 But to the extent it doesn't include some of the
12 people I just heard from, I may wish to continue to get to the
13 bottom of that.
14 MR. ANDERSON: That may not be a bad idea, Your
15 Honor. The victims have submitted claims for restitution.
16 Many of those claims have been included in that $13 million
17 number, but it seems that some of the claims, based on the
18 timing of when they were submitted or this other issue that
19 I've raised about which case to assign them to, are not on that
20 restitution list.
21 THE COURT: All right. Even if I order
22 restitution -- and I'm speaking to the people I've just heard
23 from. That's an order. It would stay with Mr. Head until the
24 amount is paid off.
25 The Government in its briefing actually suggests that

1 it may be that victims receive pennies on the dollar, if they
2 receive anything. If Mr. Head goes away, as Probation is
3 recommending, for 30 years, there's payment in a very small
4 amount on a monthly basis towards the restitution.
5 So I think we just need to be clear about that. That
6 there may be some sense of closure to the victims if I order
7 restitution. Whether or not they see anything in their pockets
8 anytime soon, or ever, is very much in doubt.
9 Any disagreement with that, Mr. Anderson?
10 MR. ANDERSON: No, Your Honor. Regardless of the
11 sentence the Court imposes, the restitution amount is so great
12 and the willingness of the defendant or ability is so low to
13 pay the restitution that even to get one or two pennies on the
14 dollar is unlikely.
15 THE COURT: Is there any forfeiture here? At one
16 point there were assets.
17 MR. ANDERSON: There is forfeiture that will be
18 ordered in the 093 case based on a judgment that had happened
19 following the trial. But, again, that's a forfeiture for a
20 money judgment. It's not actual money.
21 And then there were some assets that were forfeited
22 early in the case, but those assets in comparison to the
23 restitution owed -- it was such a small amount. That money was
24 distributed, but it was, again, pennies on the dollar.
25 THE COURT: And just two more questions related to

1 this general theme.
2 At least two victims, I believe, did ask in their
3 letters -- and to the extent that's a question in anyone's mind
4 here, I wanted to have the Government respond to it -- and that
5 is, why, once the FBI was investigating, didn't that have the
6 effect of essentially staying foreclosure proceedings, or why
7 did that not prevent the loss of the homes?
8 Do you have anything to say about that? I realize
9 the investigation process was lengthy. There were two complex
10 cases here. The Government did obtain convictions. But,
11 again, to the extent that's a question any victims have, did
12 you have a response to that?
13 MR. ANDERSON: Your Honor, that's a question that's
14 so complicated that I can't give a short answer to. Some of
15 the answer is that it took a long time to investigate this
16 case. It took a long time to understand the full scope of
17 everybody involved.
18 And then on top of it, it's taken a long time to get
19 the convictions and the trial in this case, which can serve as
20 the proof that these people were actually defrauded.
21 One of the problems in this scheme -- problems from
22 the perspective of the victims and law enforcement -- is that
23 it was so spread out among all these different jurisdictions,
24 and they had papered it over with so many fraudulent documents,
25 that any individual victim going into court started out in a

1 very bad position because they are alone, and it's just their
2 word versus these documents that the conspirators have created,
3 and title that's often been shifted to a party who is, at least
4 arguably if not actually, an innocent third party, and lenders
5 who, at least arguably if not actually, are innocent
6 third-party lenders. There is no way to unwind this without
7 creating further victims. So that's another part of the
8 problem. But it's a very complicated answer.
9 THE COURT: So then my final question, again on this
10 theme, given there are now convictions and there are identified
11 victims, is there anything else the Court can order?
12 Ms. Merchant was just pointing out the collateral
13 consequences. Is there a document that the Court can order the
14 victims be provided that might provide an explanation to
15 employers, to future renters, to future lenders to mitigate the
16 effects they claim result.
17 MR. ANDERSON: I think the main document that we're
18 looking for, Your Honor, is the judgment of conviction. But a
19 statement either from the Court on the record at sentencing, or
20 a statement written by the Court and filed soon thereafter
21 sentencing regarding the status of these people and how this
22 fraud worked would be, I think, very helpful to the victims to
23 the extent that they are litigating. Some people still are
24 litigating this issue. Many people over the last few years
25 have lost the opportunity to get their homes back.

1 But to the extent that some people still are, I think
2 there is an opportunity, at least for this Court, to clarify
3 what has happened here, and, finally, to have something from a
4 court that says this was part of a large-scale fraud, these
5 organizations were fraudulent.
6 THE COURT: Is there precedent for that kind of
7 statement or order?
8 MR. ANDERSON: No, Your Honor. I'm not aware of one,
9 but it seems to me that in the course of conducting this
10 sentencing hearing, that the Court will inevitably have to make
11 comments along those lines anyway. And to the extent the Court
12 creates its record here today, and, if it wishes, on paper, it
13 would be doing a service for the sentencing here, but it would
14 also serve that collateral purpose for these victims.
15 THE COURT: All right. That may be the only
16 meaningful thing the Court could do.
17 Mr. Tedmon, anything to say on that last point? It
18 might be bundled with a continued restitution hearing just to
19 compare the names on the list in the addendum with the names of
20 people who have appeared.
21 MR. TEDMON: Your Honor, I think the suggested
22 approach makes sense. The only other suggestion I could make
23 on the victims' side of this is -- I don't know if the U.S.
24 Attorney has the ability to do this, but certainly they are
25 representing the people of the United States -- if something

1 from the U.S. Attorney's Office can be written to assist the
2 victims in terms of their own personal circumstances relative
3 to an explanation regarding credit damage and the other
4 collateral consequences. That might be another assist to the
5 victims.
6 THE COURT: All right. Well, I'm prepared to
7 consider what the Court can do or order. I hadn't anticipated
8 this, but just comparing names with names on the addendum I
9 think I'm going to continue a final decision about restitution.
10 There will be a restitution order. I think it will be at least
11 the $13-million-plus figure in the report.
12 I do want to acknowledge Officer Storey from
13 Probation, who did prepare the presentence report. He's
14 available to answer questions and make comments as we go
15 forward.
16 Here is the process the Court goes through. I have
17 received a detailed presentence report. It provides
18 information on the sentencing guidelines, on the sentencing
19 factors that Congress has adopted. It provides background
20 information on Mr. Head. There are several letters attached,
21 character reference letters provided by, primarily, family
22 members of Mr. Head. The Court does review those.
23 The statutory maximum per count -- there are nine
24 counts here, correct, Mr. Anderson?
25 MR. ANDERSON: Yes, Your Honor. Total.

1 THE COURT: Between the two cases together. I
2 understand the grouping objection.
3 There are total of nine counts, conspiracy and
4 conspiracy to commit mail fraud. The statutory maximum
5 determined by Congress is 20 years per count.
6 The Government calculates, therefore, the maximum
7 total is 180 years. The guideline range is up to life, but
8 because there is a statutory maximum, the statutory maximum
9 becomes the cap.
10 The recommended sentence from Probation is 180 months
11 per case, consecutive, so a total of 360 months. The
12 Government is requesting a total of 40 years. So what are the
13 months there?
14 MR. ANDERSON: 480 months, Your Honor. And we're
15 asking that it be imposed on each case, and it then be imposed
16 to run concurrently with each other.
17 THE COURT: That's a range of the options before the
18 Court. I need to make a guideline's calculation. The
19 guidelines are advisory at this point, but I need to make a
20 calculation. Mr. Head has lodged objections I need to consider
21 and rule on in running that calculation, and then I'm required
22 to consider the sentencing factors adopted by Congress.
23 So, first, to address the objections from Mr. Head.
24 And as a threshold matter, there is no objection to use of the
25 2013 manual here, no ex post facto issues, Mr. Tedmon?

2 THE COURT: Agreed, Mr. Anderson?
4 THE COURT: And in terms of the standard, in terms of
5 finding whether or not an enhancement applies, the standard
6 generally is preponderance of the evidence. But if something
7 is a significant enhancement, then I need to consider whether
8 or not clear and convincing evidence is the standard.
9 Does the Government have a position as to whether or
10 not I need to apply a clear and convincing evidence standard to
11 any enhancements?
12 MR. ANDERSON: No, Your Honor. The only enhancement
13 that would be large enough to require that would be loss, but
14 loss is excluded from the clear and convincing requirement, and
15 I believe it's Treadwell that establishes that preponderance is
16 sufficient.
17 THE COURT: Anything to say on that point,
18 Mr. Tedmon?
20 THE COURT: All right. I believe the Government is
21 correct. That's the approach I am going to follow.
22 Just a few background questions so I have some of the
23 facts straight. Mr. Head did obtain 60 hours of credit from a
24 community college. What was the course of study, Mr. Tedmon?
25 MR. TEDMON: It had to do with real estate.

1 THE COURT: All right. And the report indicates
2 Mr. Head was a licensed mortgage broker. Was he also a
3 licensed real estate broker?
4 MR. TEDMON: Yes, he was, Your Honor. And also as
5 far as the college credits go, it was real estate and then
6 business as well, or some business courses related thereto.
7 THE COURT: On the grouping, Mr. Tedmon, just so I
8 understand, the Government points to guideline 3D1.1 n.1(B),
9 which does address the issue of separate cases.
10 Is it your position that that application note
11 doesn't apply here? It appears to the Court that it does.
12 MR. TEDMON: Your Honor, in looking at the
13 Government's response, it appears that it does. My concern,
14 though, is two-fold. One, I think that given the fact that in
15 this case the Government chose to indict in two Indictments and
16 separate conduct essentially bifurcates the cases. And I think
17 because of that, the second point we get into is this whole
18 issue of double jeopardy at sentencing.
19 So as the Court has read in my brief -- and I have
20 much else to add to that -- I think they should be dealt with
21 separately. They should not be combined, irrespective of what
22 the Government has cited, because of the nature and form in
23 which the Government has decided to prosecute the two cases.
24 THE COURT: Have you said everything in the briefs
25 that you would say on that point with respect to the

1 Government's decision to charge separately, Mr. Anderson?
2 MR. ANDERSON: I don't think the Government's
3 decision to charge separately has anything to do with the
4 decision that's before the Court. It's just the guideline's
5 application just like the Government has laid out, so I'm not
6 going to add anything beyond that.
7 THE COURT: Having thought carefully about the
8 defense position, read the guideline's note, reviewed the
9 Government's briefing, I do think there is substantially the
10 same harm here, and, therefore, grouping is appropriate under
11 the guidelines, which are advisory. So that objection is
12 overruled. I understand it does apply to several of the
13 specific paragraphs in the report.
14 MR. TEDMON: It does.
15 THE COURT: Just thinking about that, even if I
16 adopted the defense position on all of the enhancements,
17 doesn't that still render an offense level of 43?
18 MR. TEDMON: No.
19 THE COURT: You say it's 39?
20 MR. TEDMON: Yes.
21 THE COURT: If I adopt all the grouping, which would
22 be paragraphs 31, 32, 34, 39 and 42, aren't those the
23 paragraphs implicated by the grouping objection?
24 MR. TEDMON: Yes, it would be, Your Honor. And I
25 think, given the Court's decision as relates to grouping for

1 loss, which would be $22,658,446.42, that's the aggregate loss
2 figure, that would add two points to my calculation of the
3 offense level in case 093. So that would be an offense level
4 of 39 in 093. In case 116, taking the same analysis, and
5 keeping that in mind, the offense level would be 41, if the
6 Court would accept my objections on the other issues.
7 THE COURT: All right. Still pretty high on the
8 table.
9 MR. TEDMON: It is. We also have the
10 criminal-history issue in terms of the downward departure for
11 overstating his criminal history.
12 THE COURT: I'm getting to that.
13 MR. TEDMON: That would have some impact,
14 potentially.
15 THE COURT: Anything else to say on the paragraphs
16 affected by the grouping objection? I'm going to get to some
17 of those paragraphs individually.
18 MR. ANDERSON: No, Your Honor. I understand that you
19 are overruling the defendant's objection to that.
20 THE COURT: I am.
21 With respect to dependents, Mr. Tedmon, response to
22 the Government's using a plain dictionary definition to define
23 dependents? Are the three otherwise identified in the report,
24 do they qualify as dependents legally?
25 MR. TEDMON: I think they do. My understanding is

1 that Mr. Head, as to at least two of the children, is under a
2 court order to make support payments. So whether the Black's
3 Law Dictionary is accurate or not in terms of a base
4 definition, I believe there's been a court order as to his
5 ongoing responsibility to make child support payments.
6 Now whether he can do that or not, ever, is a
7 different question, but I don't think that takes away from the
8 fact that those are two dependents.
9 And then as to the other child, who is younger, he is
10 still -- his family is still trying to care for that child, and
11 he certainly has an obligation to that child as well. So I
12 think the three dependents is accurate.
13 THE COURT: All right. I don't think it necessarily
14 changes anything, but I will make that correction as requested
15 on page 4. It is consistent with other information in the
16 report.
17 In terms of the summary recommendation on page 5, I
18 understand the objection. The objection is recorded and
19 preserved. Ultimately, the Court will articulate its reasons
20 for the sentence. It will not be reading verbatim from this
21 summary. So the objection is overruled. This is the probation
22 office's recommendation. Not the Court's ultimate decision.
23 With regard to the objections, pages 7 to 9,
24 paragraphs 11 through 22, Mr. Head's position is noted.
25 With respect to page 8, paragraph 13, the

1 Government's position on the second part of the first sentence,
2 "and straw buyers from online referrals"? Mr. Head's position
3 is that's factually incorrect.
4 MR. ANDERSON: No, Your Honor. I believe there was
5 testimony at trial that straw buyers -- and some of them
6 testified themselves -- found Funding Foreclosures or the Head
7 Financial Enterprises group of companies through websites
8 online, including 50Kperyear.com and 30Kperyear.com, and that
9 those websites were used to solicit straw buyers.
10 THE COURT: Mr. Tedmon, do you construe the trial
11 testimony differently than the Government? Does Mr. Head?
12 MR. TEDMON: Well, Your Honor, on that point, I don't
13 think that the way that it's stated is accurate. And the
14 reason I say that is that the specific sentence of:
15 Conspirators solicited homeowners who were in financial
16 distress primarily through referrals from loan brokers
17 throughout the United States and straw buyers from online
18 referrals, Funding Foreclosures, 50Kperyear and
19 30Kperyear.com -- my recollection of the testimony is that
20 those companies were not the origin of the solicitation or the
21 referral. And so, in that sense, I don't think that's
22 accurate.
23 THE COURT: Does it make a difference in the Court's
24 ultimate analysis?

1 THE COURT: Without going back and checking the
2 actual trial testimony. There was testimony about the
3 50kperyear, the 30Kperyear. I think it's the characterization
4 of whether or not solicitations came through referrals. Is it
5 "solicited straw buyers from online referrals"? How is that
6 sentence to be read?
7 MR. ANDERSON: It could be changed to: And straw
8 buyers solicited at least in part from online referrals
9 including from FundingForeclosure.com, 50kperyear.com and
10 30Kperyear.com. It changes it a little bit.
11 MR. TEDMON: Your Honor, I think that language would
12 be more reflective of the facts.
13 THE COURT: Straw buyers solicited from online
14 referrals?
15 MR. TEDMON: Yes.
16 THE COURT: So that modification is made. To
17 clarify, the objection is sustained in that respect.
18 Page 8, paragraph 14, second to last sentence.
19 Mr. Anderson, any reason to keep that sentence in?
20 MR. ANDERSON: I don't know that it matters much one
21 way or another. I think it's factually accurate and supported
22 by the testimony we heard at trial, but it doesn't change much.
23 The equity was placed on the seller's side of the statement.
24 Maybe it's the "hidden" part that's objectionable to
25 Mr. Tedmon, if he wants the word "hidden" stricken.

1 THE COURT: I'm going to sustain that objection and
2 have that sentence deleted.
3 And then looking specifically at paragraph 31.
4 First, let me ask Mr. Tedmon. Paragraph 17, you have not
5 objected to those numbers?
7 THE COURT: In terms of the objection to
8 paragraph 31, on the issue of credits, the Government addresses
9 the credit question in part in its briefing.
10 But, Mr. Anderson, can you clarify for the Court the
11 Government's position with respect to the monthly mortgage
12 payments, payments made between initial purchase and
13 foreclosure.
14 MR. ANDERSON: The Government's position is to the
15 extent that there might be credits for those payments, they are
16 offset by the rental payments that victims were making to the
17 conspirators. They are also much smaller than would have any
18 impact on the loss calculation, so they would not affect the
19 loss calculation.
20 And in any event, as the Government goes through and
21 establishes, there are numerous victims for whom the loss has
22 not been added into this loss calculation. Therefore, whatever
23 credits might be applied would be miniscule in comparison to
24 those losses. So it's a wash, at best, for the defense, and
25 that the 22-million-and-change that's cited by the Government

1 is a reasonable estimate of the loss figure on that basis.
2 THE COURT: And Mr. Tedmon, anything to say about the
3 Government's calculation? If there is credit for the lump
4 sums -- the $3,000, the $5,000 -- that would aggregate to
5 615,000 and not change the guidelines. Assuming that the Court
6 groups. I understand your grouping objection. I continue to
7 overrule that.
8 MR. TEDMON: I understand. Can I have a moment, Your
9 Honor?
10 THE COURT: Yes.
11 (Discussion between defendant and counsel.)
12 MR. TEDMON: Your Honor, I think it's maybe a
13 distinction without a difference. The Government has at least
14 endeavored to come up with an amount of credit against loss.
15 They come up with $615,000. It may be more than that. There
16 is this counterbalancing argument that there is additional
17 losses that have not been included.
18 But I think on behalf of Mr. Head, we've stated our
19 position as to why each of the cases in 093 and 116 should be a
20 20-level increase of more than 7 million but not more than 20
21 million rather than the 22-level increase for being over 20
22 million.
23 I think, in any event, given the loss amounts that
24 we're agreeable to, the credits would not reduce the level down
25 to a Level 18. The Court's already spoken on the grouping

1 issue. So we would just submit it on the briefs at this point
2 as far as credits go.
3 THE COURT: All right. The report notes that most,
4 if not all, of the lenders have failed. There are no offsets
5 from separate recovery from any lenders here that the Court
6 should take account of.
7 MR. ANDERSON: Recovery to the victims or -- recovery
8 to the homeowner victims or recovery to the lender victims?
9 THE COURT: The homeowner victims.
10 MR. ANDERSON: Right. We're not aware of any
11 recovery that the homeowner victims were able to obtain from
12 the lenders.
13 To the extent that the homeowner victims got the home
14 back, it was with the equity already stripped out, so it wasn't
15 a credit to them. They still sustained a loss.
16 THE COURT: Anything on that point, Mr. Tedmon?
17 MR. TEDMON: I think that's an accurate summation.
18 THE COURT: All right. Then looking at the objection
19 to paragraph 32, the number of victims, which is calculated in
20 the report as homeowners and lenders, are you arguing,
21 Mr. Tedmon, that the Court can't take account of relevant
22 conduct?
23 MR. TEDMON: Well, again, it's really the same
24 argument I've made before, Your Honor, on loss.
25 The Court can take into account relevant conduct.

1 However, the Government decided to indict two separate schemes,
2 and I think they should be handled that way. And then
3 Probation very diligently went through and identified, with the
4 Government's input, the number of homeowners as to each case.
5 And there are 48 identified homeowners in 093, according to the
6 probation report, and there are 75 homeowners in case 116.
7 And I think to start borrowing one case against the
8 other, given the way the Government laid the case out from the
9 date of the Indictment forward, is inappropriate. And I think
10 it's a way of grabbing an additional couple levels by simply
11 merging the two cases together.
12 I understand the concept of relevant conduct, but I
13 think the Court should also be mindful of the fact the
14 Government can choose to do what it wants in terms of charging
15 individuals, and, in this case, they decided to charge Charles
16 Head with one scheme in 093 with a defined timeframe, and a
17 separate scheme in 116.
18 I think to now put them together creates a real issue
19 here in terms of abusing the rules of relevant conduct beyond
20 what is intended. They should be dealt with separately.
21 And on these specific enhancements that we're
22 following -- this one and others the Court will get to -- I
23 think the cases have to stand on their own as it relates to the
24 relevant conduct as to that Indictment and not borrow one to
25 the other.

1 THE COURT: Help me understand your position on what
2 I think is being referred to as the third chart --
4 THE COURT: -- which has the 330. You haven't
5 objected or disputed the information on that chart. Do I have
6 that right, Mr. Tedmon?
7 MR. TEDMON: Yes, the third chart. I want to make
8 sure.
9 THE COURT: Based on the search warrant. Records
10 obtained through those search warrants.
11 MR. TEDMON: Yes. I've reviewed that, and I don't
12 think there's anything in error there. I don't think that the
13 information that's been relayed in that chart is inaccurate.
14 What I'm challenging and objecting to is taking the
15 information from one case and overlaying it onto the other for
16 purposes of enhancing -- in terms of increasing the
17 enhancements.
18 THE COURT: All right. Again, I understand that
19 argument. Anything else to say on the objection to
20 paragraph 32, Mr. Anderson?
21 MR. ANDERSON: Submitted on what we filed, Your
22 Honor.
23 THE COURT: All right. I'm overruling that
24 objection.
25 Paragraph 34. The objection also relies here on the

1 grouping objection, correct, Mr. Tedmon?
2 MR. TEDMON: That's correct.
3 THE COURT: Again, finding the grouping is
4 appropriate, I'm overruling that objection.
5 Paragraph 37 is not related to the grouping
6 objection. It's whether or not the Court should enhance for
7 abuse of a position of trust, assuming that the sophisticated
8 means enhancement is applied. Sophisticated means is applied
9 at paragraph 33. That's a two-level enhancement.
10 Here, we've clarified that Mr. Head was both a real
11 estate broker and a mortgage broker. The defense argues that,
12 essentially, both enhancements rely on the use of a special
13 skill, if I have that right, but the Court can also find the
14 enhancement for abuse of trust specifically.
15 I've reviewed all of the cases the parties have
16 provided to the Court. My tentative conclusion, having
17 reviewed the case law -- and I'll have you respond to this if
18 you think I'm not grasping what the law is saying.
19 Sophisticated means. I'm prepared to adopt the
20 probation officer's recommendation that sophisticated means
21 were used by Mr. Head as the leader of this effort through the
22 establishment of multiple companies, the attempt to insulate
23 himself by having those who worked with him create their own
24 companies, retaining attorneys to develop the documents he used
25 in the scheme, the use of power of attorney documents,

1 notaries -- valid notaries, but still notaries to formalize
2 matters, and also the targeting of the postcards to the likely
3 prospects. I think those all support sophisticated means.
4 I think even if the Court adopts the reasoning of the
5 Fuchs court, the Seventh Circuit -- and I am persuaded by much
6 of what the Court in Fuchs says, but the facts there are
7 distinguishable in looking at abuse of trust. There, it was
8 someone who was not licensed. There was a focus on lenders. I
9 do think that is an important distinction here.
10 While I understand the Government's position that
11 both borrowers and lenders were victims, the Court is most
12 persuaded by the need for the enhancement, in many respects,
13 based on the effect on the homeowners.
14 And I think, given his position, Mr. Head's position
15 as a mortgage broker, the homeowners having looked for the
16 right fit given their distressed situations -- as Ms. Flores'
17 statement said, I'm looking for a professional to assist in a
18 time of need -- I think there are separate reasons apart from
19 simply the use of a special skill to impose the abuse of trust
20 enhancement.
21 Mr. Tedmon, your response to that tentative
22 resolution of the defense argument?
23 MR. TEDMON: Well, Your Honor, first of all, the
24 defense has not objected to the sophisticated means
25 enhancement.

1 THE COURT: I understand that. But your point is
2 that if that is applied, then abuse of trust should not.
3 MR. TEDMON: I agree. That's exactly my position.
4 And beyond that, though, we haven't objected to the
5 four-level enhancement for aggravating role. That adjustment
6 under 3B1.3 limits the application of 2B1.1(b)10(C) if it's on
7 the use of a special skill. My position is that's exactly what
8 was contemplated by the guidelines.
9 And as far as the Court's tentative position that it
10 was an abuse of a public or private trust, I disagree. I think
11 the facts that came out in the case at trial was that Mr. Head
12 was a mortgage broker and a real estate broker, which is really
13 one in the same in terms of the way the licensing worked when
14 he was in business, and that was a skill that was utilized
15 within his office.
16 For example, I noted in my brief that the probation
17 reports indicates that Mr. Head trained Kou Yang to promote
18 these documents that were not accurate. That's using a skill
19 to perpetuate the fraud for which he was convicted, but I don't
20 think it raises itself to the level of abusing a position of
21 private or public trust, whether it's the homeowner or the
22 lender. I think the objection is appropriate, and the Court
23 should adopt it.
25 MR. ANDERSON: Your Honor, I think it's appropriate

1 based on the homeowner victims, as the Court has identified,
2 and also on the lender victims, as the Government has laid out
3 in its filing, and also based on what's in the PSR.
4 He used that special position as a broker, that
5 position of trust, in order to get things done with the lender
6 that he otherwise could not do, and to solicit homeowner
7 victims who otherwise would not have been brought in as
8 victims. I'll submit on that.
9 THE COURT: All right. I am sticking with my
10 tentative. I'm overruling the objection.
11 Just so it's clear, I do see the sophisticated means
12 as based on a separate set of activities than the abuse of
13 trust enhancement. Sophisticated means, Mr. Head did not have
14 to rely on that broker status. I don't think the cases or the
15 guidelines allow for the drawing of bright lines here, so it's
16 not whether or not he was a broker.
17 But in this Court's mind, given the facts of this
18 case, it's the status as a broker, given the way in which
19 Mr. Head held himself and his company out, that justifies the
20 abuse of a position of trust.
21 He did obtain authority over the victims' homes, and
22 they, through the paperwork he had them sign, they vested him
23 with significant discretion. And so that enhancement will
24 remain as set forth in the PSR.
25 The objections to paragraph 39 and 42 are just

1 objecting to the total numbers derived from the other
2 calculations we've just reviewed, so those objections are
3 overruled.
4 Regarding criminal history, Mr. Head does argue that
5 the criminal history is overstated. The Government's position
6 is that the criminal history computation -- does that also rely
7 on the rationale for grouping, Mr. Anderson?
8 MR. ANDERSON: Yes, Your Honor, and relevant conduct.
9 With respect to the probation part.
10 THE COURT: But with respect to the separate
11 calculation for each case, the defense argues that criminal
12 history should be calculated separately, looking at the point
13 in time of each case having been filed.
14 MR. ANDERSON: In a way that's right but reaches the
15 wrong destination. The Court should calculate offense level
16 and criminal-history separately for each case, but you do it
17 based on relevant conduct. So when you apply the rules of
18 relevant conduct in each case, you pick up the larger
19 timeframe, and then you end up with the criminal-history
20 category of III in both cases.
21 THE COURT: Mr. Tedmon, anything more to say on that
22 point?
23 MR. TEDMON: Well, just briefly. The guidelines
24 state that you have to be on probation while committing the
25 instant offense. And the instant offense in each of the

1 Indictments is prescribed by the Government in case 093 as
2 starting no later than January 1st, 2004 to at least
3 March 16th, 2006.
4 Mr. Head's probation, misdemeanor probation, in
5 docket number 06-NF-0855, which is reflected on page 13,
6 paragraph 49 of the presentence report, began on April 27,
7 2006. That is clearly after the timeframe enumerated by the
8 Government as to, in case 093, the, quote, instant offense.
9 And so relevant conduct doesn't come into play, from
10 my perspective, as far as it relates to that two-point
11 increase. I don't know how the Government can extend it past
12 March 16, 2006 for the instant offense. The Government itself
13 categorized the timeframe. And the probation is clearly
14 outside of that prescribed timeframe. So on that basis, the
15 two points for being on a sentence of probation does not apply
16 in case 093.
17 Now in case 116, that argument is not being made
18 because that calculation is different because the timeframe
19 that the Government alleged in case 116 does incorporate the
20 April 27, 2006 date.
21 That's why the criminal histories are different in
22 each of the cases, from my point of view.
23 THE COURT: Anything further on that, Mr. Anderson?
24 MR. ANDERSON: No, Your Honor. We cover it in our
25 brief where we talk about 4A1.1 n.4, and then United States v.

1 Smith, which is a Ninth Circuit case which addresses this issue
2 very clearly.
3 THE COURT: All right. The defense has made its
4 record. I am persuaded, having consulted the guidelines in the
5 parties' briefing, that the Government is correct. That
6 objection is overruled.
7 On that point, I've also looked carefully at the
8 arguments the defense makes with respect to the gun and the
9 registration. And the information in paragraph 60 doesn't mean
10 that the gun was registered. Even if the name is linked, that
11 doesn't mean registration. Do you agree, Mr. Tedmon?
12 Are you saying the only way the firearm could have
13 ended up in that Automated Firearms System is if it were
14 registered?
15 MR. TEDMON: Yes. That's exactly what I'm saying.
16 And, furthermore, I think that the facts as set forth in the
17 probation report by definition eliminate the Government's
18 argument factually.
19 Because when Mr. Head was arrested on this gun
20 charge, this misdemeanor gun charge, law enforcement seized the
21 weapon. Now, it was never returned to Mr. Head, but, yet, in
22 the Automated Firearms System that exact weapon was reported to
23 be in his name.
24 Now, the only way you can get it in your name is to
25 register it. You can't just go to Big5 Sporting Goods and just

1 say, hey, that's mine, let's put it in my name. You have to
2 register it.
3 So I think the reality is, on this particular issue,
4 the assertion on page 12, paragraph 46, which is the criminal
5 history section of it, runs counter to the information
6 contained on page 15, paragraph 60. And when you look at the
7 two in context, it was registered in Mr. Head.
8 And that being the case, this conviction is improper
9 factually, clearly. And, frankly, Mr. Head was given
10 inappropriate legal advice by entering the conviction. That's
11 nothing I can take care of now, but I think the Court can view
12 it in the context of the facts that have been set forth in the
13 probation report. And I think it's clear that the only way it
14 can get into that system is if Mr. Head had it registered in
15 his name, particularly given the fact he was never given the
16 weapon back. There was no other way to do it.
17 THE COURT: But you haven't challenged his admission
18 that he was the owner and had not registered the gun? Are you
19 also challenging that narrative?
20 MR. TEDMON: Yes.
22 MR. TEDMON: That's what I'm saying. I can't go back
23 and change the plea in that case, but it was not factually
24 supported. And my position is that if Mr. Head's counsel had
25 given him accurate information, then that conviction should not

1 have ever been entered because it doesn't have the factual
2 predicate necessary for the conviction.
3 So while he did plead to that, the Court can look at
4 this now to determine if it overstates his criminal history,
5 which I believe it does. It's not factually supported.
6 THE COURT: Officer Storey, help me understand
7 paragraph 60. What is your position about what shows up in
8 that system? When was that report run? And does that mean the
9 firearm was registered in Mr. Head's name? It's not obvious to
10 the Court looking at the language of paragraph 60.
11 MR. STOREY: If you'll give me a minute, I'll look
12 for that document. I'm not an expert on reading these reports.
13 I can't tell you with certainty what exactly it means.
14 But that gun is associated with this defendant. And
15 I tried to outline in the commentary on paragraph 46 what the
16 police report and the officer handling that case -- a summary
17 of what that incident was.
18 And I would just reflect that according to the
19 officer, the defendant did admit that he was the owner of the
20 assault weapon and did not register the gun.
21 THE COURT: Mr. Tedmon is challenging the
22 effectiveness of counsel.
23 Isn't this something that would need to be cleared
24 up, at this point, through a habeas petition, Mr. Tedmon, for
25 the Court to ultimately accept the argument?

1 MR. TEDMON: That's certainly a possible avenue, Your
2 Honor. Because I think at this point we're a little bit
3 hamstrung by the fact that Mr. Head plead guilty. There is
4 some dispute as to what he admitted to the police at the police
5 station, that he was the owner of the assault weapon and had
6 not registered the gun.
7 I think the objection that I made is clear in terms
8 of objecting to the factual predicate that he wasn't the
9 registered owner. He was. And I think the information on
10 page 15, paragraph 60, relative to the information obtained
11 from the Automated Firearms System supports that position, but
12 that's all the information we have.
13 THE COURT: All right. I think the Court can't get
14 to the bottom of this today, regardless of whatever Officer
15 Storey determines. I think, given the conviction, I'm not
16 prepared to find that the information in paragraph 60
17 essentially nullifies the conviction.
18 I do think it's a matter, if Mr. Head wishes to
19 pursue it, potentially for a habeas petition without commenting
20 on the ultimate merits of such a petition.
21 So to the extent the criminal-history analysis
22 objection is based on that issue, it is also overruled.
23 MR. TEDMON: Your Honor, could I make one other point
24 on that before the Court moves on?
25 I think there is another aspect to this, and it's as

1 follows, on this particular issue. I think the record is not
2 clear as it relates to the conflict between the conviction and
3 what may be referenced on paragraph 60 -- page 15,
4 paragraph 60.
5 And I think when the Court is confronted with that
6 sort of thing, that is a fair and reasonable basis to depart
7 downward, even if the Court can't resolve the conflict as it
8 relates to the conviction at the time it was entered and the
9 information we have now.
10 Because the facts are somewhat muddled on that issue,
11 and there is no clarity to it, rather than put it in Mr. Head's
12 lap to file a habeas petition, I think the Court can take that
13 lack of clarity on that issue and find that it's sufficient to
14 allow for the downward departure of one point, which is what
15 I'm asking for, in his criminal-history score. So that would
16 be the other argument I would ask the Court to consider.
17 THE COURT: All right. Anything to say on that,
18 Mr. Anderson?
19 MR. ANDERSON: Not if the Court's prepared to deny
20 that request.
21 THE COURT: Well, understood. I'm not prepared to
22 enter into a departure. I'll consider the argument in the
23 context of a possible variance argument.
24 MR. ANDERSON: Your Honor, I would just like to point
25 out on one hand we have a police report, we have a guilty plea,

1 and we have a conviction that, at least as it's before this
2 Court, is a lawful conviction from another court.
3 Against that, there's sort of a strange reading that
4 Mr. Tedmon has given to these paragraphs when there is a
5 perfectly consistent reading that the Government has explained
6 in its briefing.
7 Against that and the fact that there is no evidence
8 introduced by the defense that there is anything wrong with
9 this conviction, other than sort of the suppositions or
10 speculation of defense counsel, I'd ask the Court just not to
11 consider or vary on that basis.
12 THE COURT: All right. I'll ultimately make that
13 decision.
14 Just finally, in terms of my ruling on the
15 appropriate sentence, that will make clear my position as to
16 the final objections objecting to the sentencing recommendation
17 of the probation officer.
18 But there is an objection to special conditions 6, 7
19 and 8?
20 MR. TEDMON: Yes.
21 THE COURT: Officer Storey, I don't see that there is
22 any indication of any history of substance abuse. Do I have
23 that wrong?
24 MR. STOREY: On page 16, paragraph 64, there is a
25 history of marijuana use, and, furthermore, he declined to

1 discuss it, and so it's there as a treatment option should it
2 be an area that needs to be addressed. But primarily because
3 of the marijuana history.
4 THE COURT: It does say that he said he had not used
5 medical marijuana in over 20 months, and, of course, the
6 Federal Government doesn't acknowledge medical marijuana
7 exceptions.
8 Mr. Tedmon, on that point, given that information?
9 MR. TEDMON: I don't know that it's sufficient to
10 impose the conditions -- special conditions 6, 7 and 8.
11 Mr. Storey did not indicate to the Court just now -- I mean, he
12 interviewed the defendant's father. He wasn't aware of any
13 substance abuse history.
14 And I just think, to me, given the length of time
15 between the charges and now, and the information that
16 Mr. Storey was given from Mr. Head that he hasn't used medical
17 marijuana in over 20 months, pre-dating the date of the report,
18 it's not factually supported to impose those conditions, and I
19 think it's unnecessary.
20 Furthermore, without projecting what the sentence
21 might be, my position is Mr. Head should be given a sentence of
22 15 years. He's going to be in his 50s even if the Court were
23 to follow my thinking and my proposed sentence. I think it's
24 overreaching to impose those drug conditions at this point. I
25 would ask the Court not to impose them.

1 THE COURT: All right. We obviously have moved into
2 the noon hour. The Court is inclined to continue unless the
3 parties have extensive argument. I think we can finish this up
4 before 1:00.
5 Let me ask the court reporter. Do you need a break
6 at this point in time?
7 THE REPORTER: If we are going to finish by 1:00,
8 that's fine.
9 THE COURT: Can counsel go until 1:00 without a
10 break?
12 MR. TEDMON: Yes.
13 THE COURT: My final question -- I think I've dealt
14 with all the objections, Mr. Tedmon, correct?
16 THE COURT: I would like to have the Government
17 discuss briefly the methodology, particularly if I'm going to
18 rely on the information supporting the $22 million-plus figure.
19 If I just add up the numbers linked to the two cases, it's the
20 13-plus, which is the number that would provide the basis for a
21 minimum restitution award.
22 MR. ANDERSON: Are we talking exclusively restitution
23 or are you talking loss?
24 THE COURT: I'm talking loss now. So one remaining
25 question in the Court's mind is about the loss calculation. I

1 understand the relevant conduct argument. But if I understand
2 correctly at this stage of the hearing, the information
3 supporting the $22 million figure also draws on that third
4 chart.
6 So the $22 million figure is the sum of the
7 information, the loss from the first chart and the second
8 chart. It excludes the third chart.
9 THE COURT: All right. That's correct.
10 Is there anything in the record that explains the
11 method? There are columns here. Can you just summarize the
12 method?
13 MR. ANDERSON: I would be happy to, Your Honor.
14 The first column "proceeds to seller" -- I'm looking
15 at the first chart, but both charts are laid out in essentially
16 the same way.
17 The first chart, in the first column of loss,
18 "proceeds to seller" is the amount of equity that was stripped
19 from the homes. That was determined by looking primarily at
20 HUD-1 documents, which showed the amount of equity diverted to
21 shell companies controlled by Charles Head and his
22 co-conspirators.
23 The second column, second "proceeds to seller," are
24 from transactions that occurred during the course of the
25 conspiracy where the conspirators, including Charles Head,

1 re-sold or re-mortgaged the property to take out additional
2 equity. So that's a second attempt at taking out more equity.
3 And that, again, is calculated based on the amount of equity
4 removed from the homes, which generally is found on the HUD-1
5 forms. In fact, in almost all cases was from the HUD-1s.
6 The third column is the foreclosure column. That's a
7 loss to the lender. In cases where the property was foreclosed
8 on -- and certainly more of these properties were foreclosed
9 on, but this is where records -- reliable records were
10 available -- what was done was the IRS agent took the amounts
11 of the loan, so the base price of the loan without any addition
12 for accruing interest or penalties or anything of that nature,
13 and then subtracted from that the foreclosure sales price, and
14 the difference was the loss to the lender that we attributed
15 and placed on this chart. The same thing holds true for the
16 second chart, the loss amount in Head II.
17 And then, as we explained in our filings, these loss
18 amounts are only for the victims that we could readily identify
19 as belonging to one or the other of these conspiracies and also
20 had reliable documentation regarding the exact amount of the
21 loss so that we could calculate it.
22 There are victims that are contained on the third
23 chart for whom, because of either missing records or ambiguity
24 in the records, we can't determine the exact amount of their
25 loss or exactly which conspiracy they were a victim of. We

1 know they were a victim of one of the conspiracies. We know
2 they suffered a pecuniary loss, but we don't know exactly how
3 much or when.
4 THE COURT: All right. At least some of those
5 persons are the persons that I want to address in a follow-on
6 restitution hearing.
8 THE COURT: If I understand correctly, Mr. Tedmon,
9 you're not directly challenging the method used to come up with
10 the numbers shown in those first two tables. You're
11 challenging the grouping. And you haven't provided an
12 alternative number for the Court. Do I have that all correct?
13 MR. TEDMON: Yes. Could I have one moment, though?
15 MR. TEDMON: Your Honor, if I could make sure I
16 understand this before I give you my answer.
17 Column one, "proceeds to seller," that's fine.
18 Second "proceeds to seller," as I understand it from the
19 Government's explanation just now, is that that is money that
20 was obtained from lenders by taking additional loans out on the
21 property, is that correct, Mr. Anderson?
22 MR. ANDERSON: We calculate it, Your Honor, as loss
23 to the victims because it's additional equity taken from the
24 victims' homes, just in a second transaction.
25 In some cases, the conspirators only did one

1 transaction to remove equity. In other cases, they did a
2 second transaction to remove additional equity.
3 THE COURT: So a subsequent refinance, for example.
4 MR. ANDERSON: Exactly. Often in a different
5 straw-buyer's name or disguised as a sale to another straw
6 buyer.
7 MR. TEDMON: I guess the only question I have then
8 is, the Government's position is that the victim is the
9 homeowner, not the lender, is that what I understand?
10 THE COURT: The third column, the foreclosure column,
11 is the lender.
12 MR. TEDMON: I'm focusing on the second column. The
13 first and third columns we have no actual objection.
14 I'm just still trying to understand what the
15 Government's position is relative to who the victim is in the
16 second "proceeds to seller."
17 MR. ANDERSON: Our view, Your Honor, is that the
18 victim in the second "proceeds to seller" is the homeowner who
19 is paying rent and believes they own the home but has the
20 equity stripped through additional sale, or, in some cases,
21 through resale to a third party where the conspirators then get
22 the additional equity in that manner.
23 Only the third column is foreclosure loss. That's
24 the only column that relates to the lender.
25 THE COURT: That's the Government's explanation.

1 Mr. Tedmon, with that, did you have more to say?
2 MR. TEDMON: I submit it, Your Honor.
3 THE COURT: With those clarifications, I am prepared
4 to accept the probation officer's calculation of the guidelines
5 range.
6 As the Government points out, the total offense level
7 amounts to 47, which exceeds the maximum available under the
8 guidelines. So it becomes 43 by operation of the guidelines.
9 I'm using the criminal-history category of III.
10 And so then the ultimate question is, after thinking
11 through the sentencing factors, what is the appropriate
12 sentence. So I would allow the parties to make final
13 arguments.
14 And just so I'm clear, if it's needed, is Mr. Head
15 waiving any final pronouncement as to forfeiture?
16 MR. ANDERSON: Your Honor, we are going to ask that
17 the Court orally make this pronouncement as follows: The order
18 of forfeiture money judgment filed September 19th, 2013, is
19 hereby made final as to the defendant and shall be incorporated
20 into the judgment.
21 THE COURT: That language is in what's proposed.
22 MR. TEDMON: Right. That's accurate.
24 MR. TEDMON: We submitted the forfeiture matter last
25 year, and that would be a way of finalizing it.

1 THE COURT: So no outstanding issues there.
2 MR. TEDMON: Not on forfeiture, no.
3 THE COURT: Again, I have no further questions.
4 Mr. Anderson, I understand your position. Is there
5 any further argument you would like to make?
6 MR. ANDERSON: Your Honor, there is not much we can
7 add to what the victims have said in this case. This case was
8 devastating.
9 Mr. Head has shown no remorse. He has shown nothing
10 in mitigation for what he has done. He doesn't bring to the
11 Court any of the factors that other defendants in this case or
12 other cases bring to the Court regarding the way that they've
13 changed their life, the other good things that they've done,
14 the other things that balance out this bad.
15 All there is in this case is the fraud and his
16 argument that the guidelines create a very, very long sentence.
17 And they do. But as the Government points out in its
18 memorandum, the guidelines create a long sentence or suggest a
19 long sentence because that's what this case deserves.
20 Mr. Head has gone through and committed a crime
21 against so many people that hits every factor that these
22 guidelines look at almost in determining that a crime is very,
23 very serious and deserves a very, very long sentence.
24 In this case, even the Government's recommended
25 40-year sentence is a huge downward variance from what Mr. Head

1 is due under the guidelines. The reason the Government
2 recommends that 40-year sentence is because that puts Mr. Head
3 at an age when he is released from custody where it's much less
4 likely that he will commit another offense. Unfortunately,
5 fraud offenses are often committed by people at a much greater
6 or older age than crimes of violence.
7 In this case, we need a long sentence to keep
8 Mr. Head in custody, protect the public, and to give a just
9 punishment for what he has done in this case to each of the
10 people. Not only the people that were able to make it here
11 today, but the hundreds of people who were not able to make it
12 here today either because it was too emotionally difficult for
13 them, or they had no financial resources to get here and be
14 before this Court because, in large part, of what happened here
15 in this case. Thank you.
17 MR. TEDMON: Well, Your Honor, I think a sentence of
18 15 years in each case, to run concurrent, is appropriate.
19 We're not coming in here and asking the Court to slap Mr. Head
20 on the hand and send him on his way. Fifteen years is a long
21 time. He will be in his 50s before he gets out. He is
22 40 years old as he sits here today.
23 As far as a sentence of 40 years goes, I think that's
24 incredibly overreaching for the conduct, and it is out of line,
25 in my view, with the cases, certainly, that I've cited where

1 you have other defendants who went to trial.
2 In each of the four cases I've cited, their guideline
3 range was life, which is what Mr. Head's, based on the Court's
4 decisions, range is. And in those cases, Christian Milton got
5 48 months, Richard Adelson received 42 months, James Olis
6 received 72 months, Lester Parris and his brother, Lennox,
7 received 60 months.
8 And I'm not coming into this court offending the
9 process by saying Mr. Head should get 42 or 60 months. We're
10 asking for 15 years. That is a long time. And I think to
11 simply throw numbers around is not responsible. 180 months on
12 each case, concurrent, is appropriate. That is a lengthy
13 sentence by anybody's term. It's a lengthy sentence in federal
14 court. And I think it's appropriate taking all the factors
15 into account.
16 And then just as an additional comment, I think the
17 Court should take into account this overstatement of criminal
18 history for purposes of variance. I also ask the Court to
19 consider that.
20 I would ask the Court to consider two other factors.
21 One, Mr. Head served in the military. He was in the Army. I
22 think that's a characteristic of his history that the Court
23 should consider. He served his country. Now, he got convicted
24 in these cases, but I think that is a factor that ought to be
25 at least credited on his side and should mitigate, somewhat,

1 the totality of the sentence that he is receiving.
2 And the last thing is, several of these people that
3 either spoke today or had their letters read consistently said
4 they want their money, they want restitution. Under the
5 Government's matrix of 40 years, Mr. Head will be about
6 72 years old before he gets out. That gives them no chance to
7 receive any restitution, and I think that's not appropriate.
8 Fifteen years is appropriate, concurrent with each
9 other. That allows Mr. Head to get out at least at a point in
10 time where he can start to work back and get some of these
11 victims their money.
12 Now the Government may say, well, that's nominal. It
13 doesn't mean much. Well, it means a lot to each of these
14 victims. You heard them testify here today in court. Some
15 money is better than none.
16 And I think to marry the concept of appropriate
17 punishment, sufficient but not greater than necessary, 15 years
18 accomplishes that. It sends a message to the community. You
19 cannot commit these kinds of crimes. It deters future conduct.
20 But it also takes into account the victims, which are the
21 people that the Government is putting out before you to try to
22 get them some of their money back. And I don't think that's an
23 inconsistent or throw-away comment. I think it's important and
24 the Court should consider that.
25 I think you take all factors into account, 180 months

1 in case 093, concurrent with 180 months in case 116 addresses
2 the mission of the guidelines, the sentencing factors that are
3 laid out in 3553, and is appropriate taking all facts and
4 situations into account, and I would urge the Court to issue
5 that sentence.
6 As far as the rest of it goes, the only other
7 comments I would make would be to ask the Court to follow the
8 recommendation that Mr. Head be recommended to be incarcerated
9 in an institution in Morgantown, West Virginia, or as close to
10 Pittsburgh, Pennsylvania, as possible, subject to security
11 classification and space availability. I would submit it on
12 that basis.
13 THE COURT: Just one question. On the cases that you
14 cited to the Court, I did check those, as well as the cases
15 cited by the Government in terms of thinking about unwarranted
16 disparities. Which cases come closest in terms of total
17 restitution? It seemed to me Murray and Wilson were the two
18 closest, and in those cases the defendants pled, and they got
19 235 -- almost 20 years, each of them. Fewer counts and pleas.
20 MR. TEDMON: Are you asking about the cases I cited?
21 THE COURT: I'm looking at the total set of cases.
22 You rattled off some of the cases. In some cases there was no
23 -- in Olis there was no restitution.
24 MR. TEDMON: Well, in the Adelson case, which is U.S.
25 versus Saad, the Court ordered restitution of $50 million.

1 This is certainly less, what we have here. This is over, what,
2 around 13 million. And Mr. Adelson received a term of
3 imprisonment of 42 months. So he's got a significant amount of
4 restitution beyond what we have here, and he received
5 42 months.
6 THE COURT: Was that a plea?
7 MR. TEDMON: No. He was tried. He was convicted at
8 trial of conspiracy, securities fraud and filing false reports
9 with the SEC. His guideline loss amount was established
10 between 50 and 100 million dollars, and the Court ordered
11 restitution of $50 million.
12 THE COURT: So on that one case -- the Court can't
13 focus on any one case -- but what was going in Adelson? Remind
14 me of those facts.
15 MR. TEDMON: Well, it was a Southern District of New
16 York case, Your Honor, at about the same timeframe, 2006, is
17 when the trial happened. Obviously, the facts are before that.
18 And it had to do with conspiracy to commit securities fraud and
19 other related financial matters, filing of false reports.
20 So I think they are -- while the nature of the charge
21 is different, the conduct is similar. It's a fraud case.
22 There is false documents being provided. It's perpetuating a
23 fraud. And in that case, the restitution was $50 million.
24 And I do agree with the Court and, actually, the
25 Government to an extent. Mr. Anderson mentioned in his brief

1 that, you know, you can put any case you want out there. The
2 reality is what should happen in this case. And so to cherry
3 pick a case here and there -- which neither party is trying to
4 do -- we're just giving the Court information -- I think that
5 taking Mr. Head where he sits today and looking at all these
6 cases -- and we can find some that are more severe or less
7 severe -- but I think if you look at the totality of it,
8 15 years is appropriate.
9 I think given the loss that the Court has now imposed
10 under the guidelines, the restitution that we've discussed,
11 which in some cases was higher, in some cases lower than other
12 cases that have been provided to the Court, and I think
13 15 years as an aggregate sentence is appropriate taking all
14 those factors into account in terms of disparity.
15 THE COURT: Understood. Anything on that last issue,
16 the unwarranted the disparity and the cases the Court looks to?
17 MR. ANDERSON: Yes, Your Honor. The way to avoid an
18 unwarranted disparity in this case is what Treadwell points the
19 Court to, which is to follow the guidelines here.
20 The reason why we can't point to any other case that
21 really is analogous and would avoid an unwarranted disparity is
22 that there aren't cases like this out here.
23 What the defendant did in this particular case is so
24 much worse in so many ways than the cases that Mr. Tedmon cited
25 or even the cases the Government cited. He stole people's

1 homes out from under them.
2 The guidelines here are able to account for that
3 through a lot of different variables, but in some ways they
4 can't even account for that level of harm, the personal,
5 destructive nature of what he did to these people.
6 There is just no way to point to some securities law
7 violation and say that that's in any way analogous to what is
8 happening here. It's not. This is different. But at least in
9 this case, the guidelines are a way that the Court can look and
10 try to avoid a disparity with any other case.
11 As far as restitution, what the Government has said
12 before is the same. There is no way he's ever going to be able
13 to pay these people back even pennies on the dollar. Even if
14 he paid $100,0000 a year, which is completely unrealistic, it's
15 going to take a 130 years. It's going to take forever to pay
16 it back. There is no way it's going to happen.
17 And we know it's not going to happen also because of
18 Charles Head. He's been out for years. He was even out,
19 released temporarily, after he was convicted in the first case,
20 and we haven't seen a dime. There is no check here today.
21 There is no money to pay the victims back. If he had any
22 intention of paying the victims back, I think we would have
23 seen something of that by now.
24 There is just no way that restitution is a reason
25 that he should spend less time in prison. It's a false

1 promise. Submitted.
2 THE COURT: All right. Mr. Head does have the right
3 to allocute before I impose a sentence.
4 Mr. Head, is there anything that you would like to
5 say to the Court at this time?
6 THE DEFENDANT: No, Your Honor.
7 THE COURT: And I haven't received anything in
8 writing from Mr. Head either.
9 MR. TEDMON: No.
10 THE COURT: All right. The final way in which the
11 Court channels its discretion in determining the appropriate
12 sentence is to consider the sentencing factors that the U.S.
13 Congress has adopted.
14 I would like to review those for the record. I'd
15 also like to clarify that I am, clearly, only sentencing
16 Mr. Head today, Charles Head. I've heard references to other
17 names, other co-defendants. Their sentencings will occur, the
18 Court hopes, in the relatively near future. I have asked
19 Probation to do what it can to keep all of those sentencings on
20 track to occur this fall, because I do think it's important
21 that we bring the entirety of this case to closure. But I'm
22 only sentencing Mr. Head today. He is, in the Court's mind,
23 the lead defendant in both cases.
24 The sentencing factors first focus on the nature of
25 the offense, the circumstances, Mr. Head's history and

1 characteristics.
2 Just to note, it does appear that Mr. Head had a
3 fully-functional family upbringing. He still enjoys family
4 support. He is a citizen. I wanted to make that clear, given
5 one of the letters. I wasn't certain if there was some lack of
6 clarity about that. He is a citizen of this country. He did
7 serve in the Army for a period of time and was honorably
8 discharged.
9 There was some reference to his having made
10 contributions to certain charitable operations, but the Court
11 has received no meaningful detail in that respect.
12 He did obtain some post-secondary education, but it
13 does appear to the Court that he used what he learned in that
14 education in a way that led to the scheme that has him before
15 the Court this morning.
16 Mr. Head has not expressed any remorse. I understand
17 his position that he is innocent of the charges, but he does
18 stand convicted by two separate juries through trial
19 proceedings over which this Court presided. And so the Court
20 is, of course, accepting the jury's determination of that
21 question. Mr. Head has the right to retain his position, but
22 he does stand convicted of nine separate counts and for
23 activity that occurred over a two-year period at least,
24 two-plus years.
25 And the Court has to say that taking into account

1 both the testimony the Court heard during trial, but also the
2 statements of the victims -- both statements provided in
3 writing, which I have read carefully, and then I've heard them
4 again, at least some of them, in court here today -- there is a
5 remarkable consistency, and I have to assume that the many
6 different persons submitting those statements did not
7 coordinate in advance.
8 Even if others contributed to their loss and
9 stress -- and there has been reference to attorneys, lenders.
10 And the Court assumes there were others who contributed to
11 their loss and stress. Even if they found themselves in
12 financial situations that could not have worked its way out for
13 them, even if Mr. Head is being scapegoated in some manner for
14 many different issues, when the Court focuses on just what
15 Mr. Head did here, and focuses on that, it has to be said that
16 he did create -- and he did create and implement a very cynical
17 credit repair scheme.
18 Because of the nature of those he targeted through
19 targeted mailings, using an efficient postcard method, he
20 naturally identified people who were very vulnerable. The
21 Court has heard this morning and has read in the letters of the
22 victims the human dimension of that vulnerability. There are
23 many different reasons why folks found themselves to be so
24 vulnerable. Sometimes it was health. Sometimes it was family
25 member's health, loss of a job. Often those persons went

1 looking for the right fit for their particular distress
2 situation, and they found Mr. Head.
3 He not only took advantage of them, he took advantage
4 of gaping holes in the system. It's undeniable there were
5 holes in that system, the lending system, but Mr. Head found a
6 way to take advantage of those.
7 And then the result -- again, without pinning every
8 single effect that the Court has heard. I don't doubt that all
9 of these things have happened to all of the victims. But
10 looking at the direct effects of what Mr. Head did and had his
11 associates do, there are clearly domino effects. Persons
12 turned to attorneys, tried to find attorneys. They had
13 personal stress related to the seizure of their homes.
14 It's clear that even if the paperwork -- which the
15 jury had a chance to review -- even if the paperwork said in
16 the relatively fine print that homeowners were transferring the
17 title of their homes, that is not what homeowners heard. They
18 were not given the time to think through clearly what was going
19 on. There was damaged credit as a result. And ultimately, for
20 many, in fact most of the victims, there was loss of a home,
21 which was central to their personal and financial stability.
22 And so the nature of the offense is a very serious one and
23 argues for a very significant sentence.
24 In terms of the second sentencing factor reflecting
25 the seriousness, I've just indicated that there is a need for a

1 significant sentence to reflect the seriousness, to promote
2 respect for the law.
3 And although Mr. Head does get credit for having
4 served in the Army, for having been honorably discharged, his
5 life since then has shown some inability to fully respect the
6 law. Without further commenting on his current claim of
7 innocence, during his time on pretrial release it hasn't been
8 disputed by the defense that there were misrepresentations made
9 to the Court as to what he was doing during that period of
10 pretrial release.
11 This is not to put any blame on Mr. Tedmon.
12 Mr. Tedmon, the Court assumes, was relaying what Mr. Head was
13 telling him. And Mr. Head was giving him incorrect information
14 as to his activities.
15 There's been no claim here of any need for substance
16 abuse or mental health treatment. There have been times when
17 I've wondered if there's a mental health issue, but there is no
18 claim of that and nothing that would support the Court taking
19 account of that in the conditions that I impose on any term of
20 supervised release.
21 The sentencing factors also ask me to consider the
22 kinds of sentencing available. The effective range here, given
23 the parties' request, is 15 years to 40 years, total. That is
24 the range in which the Court is focusing its attention. I
25 think it's the appropriate range.

1 I have considered, as I've mentioned, the guidelines,
2 the guidelines policy statements. I have considered other
3 cases, including cases from this district, but cases throughout
4 the country, where there are similar types of charges. I've
5 looked at the restitution amounts awarded.
6 It is important that the Court attempt to avoid
7 unwarranted disparities, to make certain, all things
8 considered, that I'm treating Mr. Head equally and fairly under
9 the law.
10 With respect to restitution, I will be making a
11 restitution award. That's the final sentencing factor. We
12 will set a hearing date for final determination.
13 That restitution award will be at least in the amount
14 of $13,287,093.42. But I am concerned that certain names
15 aren't showing up on the list I've been provided, so I'm going
16 to ask for the Government's assistance, with review by the
17 defense, to finalize the exact dollar amount and the persons to
18 receive restitution, if it is ever forthcoming.
19 So all of that said, I am narrowing my focus to a
20 range of what Probation recommends. And Probation has intimate
21 familiarity with the types of sentences that avoid unwarranted
22 disparities and achieve the goals of the guidelines, even as
23 they are advisory.
24 So 180 months on each case is the minimum I would
25 impose. I have considered going to 210 months per case as the

1 maximum I would impose.
2 And all things considered, taking into account the
3 sentencing factors, taking into account the defense argument
4 for a variance and noting the defenses -- as Mr. Tedmon has
5 indicated, the Court does credit his statement that he's not
6 disrespecting the Court. Mr. Head is not disrespecting the
7 Court in arguing for a 15-year sentence, combined.
8 But that said, given the lack of expression of any
9 remorse and the very significant domino effects, I am going to
10 go to the 210 months per case.
11 So all of that said, it is the judgment of this
12 Court, Charles Head, that you are hereby committed to the
13 custody of the Bureau of Prisons to be imprisoned in docket
14 number 2:08-cr-093-1 for a term of 210 months on each of
15 Counts 1 through 3, 5 and 6, to run concurrently within that
16 case, and in docket number 2:08-cr-116-1 for a term of
17 210 months on each of Count 1 through 4, all to run
18 concurrently. Again, that's within that case, but
19 consecutively to the sentence imposed in 08-93. For a total
20 term of 420 months.
21 You shall pay a special assessment of $900. That's
22 the $100 per count mandatory assessment required by the
23 statute. That payment is due immediately.
24 I find at this point in time that you do not have the
25 ability to pay a fine. Imposition of a fine is waived.

1 As I indicated, I will be ordering restitution.
2 The order for forfeiture money judgment filed on
3 September 19th, 2013 is hereby made final as to Mr. Head and
4 shall be incorporated into the judgment in 08-93-1.
5 Upon release from imprisonment, Mr. Head shall be
6 placed on supervised release for a term of 36 months on each of
7 Counts 1 through 3, 5 and 6 in 08-93, and 36 months on each of
8 Counts 1 through 4 in 08-116. All to run concurrently to each
9 other. That's for a total term of 36 months of supervised
10 release.
11 Within 72 hours of release from custody, Mr. Head,
12 you shall report in person to the probation office in the
13 district to which you are released.
14 While on supervised release, you shall not commit
15 another federal, state, or local crime. You shall not possess
16 a firearm, ammunition, destructive device, or any other
17 dangerous weapon.
18 You shall not illegally possess controlled
19 substances. You shall cooperate in the collection of DNA as
20 directed by Probation. And you shall comply with the standard
21 conditions recommended by the United States Sentencing
22 Commission and adopted by this Court. Those are conditions 1
23 through 13. They are attached to your PSR. They are imposed
24 as written.
25 In light of Probation's clarification, I'm retaining

1 the language about substance abuse. You shall refrain from any
2 unlawful use of a controlled substance. You shall submit to
3 one drug test within 15 days of release and at least two tests
4 thereafter, not to exceed four per month.
5 I am also imposing the special conditions, conditions
6 1 through 8 as set forth on page 23. They are imposed as
7 written. If the probation officer ultimately determines that
8 you don't require substance abuse monitoring, then Probation
9 can come forward and recommend that those conditions be lifted.
10 I am prepared to recommend that you be incarcerated
11 at an institution in Morgantown, West Virginia, or as close as
12 possible to Pittsburgh, Pennsylvania, insofar as that
13 recommendation accords with security classification and space
14 availability.
15 What is the date we're setting for restitution,
16 Ms. Schultz? Is that 60 days out at this point?
17 THE CLERK: Sixty days out, Your Honor, would be
18 October 29th, 2014.
19 THE COURT: Is that acceptable?
20 MR. ANDERSON: Your Honor, can we go to the 22nd, if
21 available?
22 THE CLERK: That date is available, Your Honor.
23 THE COURT: Would Mr. Head waive appearance at the
24 restitution hearing, or would he want to be present?
25 MR. TEDMON: He will waive appearance, Your Honor.

1 The 22nd of October is fine. If we can come to some sort of
2 agreement, we'll try to reduce it to a stipulation, proposed
3 order, and provide it to Court, and then we can vacate that
4 hearing date.
6 MR. TEDMON: And we'll work with the Government in
7 that regard.
8 THE COURT: The restitution hearing is set for
9 October 22nd. That may be vacated if the parties reach an
10 acceptable stipulation, but it should address the persons who
11 the Government is confident are victims but not clearly
12 identified to either case, including persons who appeared here
13 today or submitted letters making a claim for restitution. So
14 if those can be itemized.
15 And then the parties should also, if they do submit a
16 stipulation, make a recommendation for the Court as to the kind
17 of statement the Court can make in a written order, or, if the
18 U.S. Attorney is prepared to provide the victim something in
19 writing that they can use with employers and future lenders,
20 you can let the Court know, or, if you appear, be prepared to
21 provide information on that score.
22 Mr. Head, it does appear that you retain the right to
23 appeal, and, therefore, so you are clear, if you wish to file a
24 notice of appeal of the sentence just imposed, you must file a
25 notice within 14 days of today's date. If you cannot afford

1 counsel on appeal, the Court will appoint counsel for you.
2 Is there anything else today, Mr. Tedmon?
3 MR. TEDMON: Yes, one other thing, Your Honor. On
4 the appellate matter, I would ask that the Court relieve me
5 today in both cases. I have spoken to Kurt Heiser from the
6 Federal Defender's Office. He either has somebody already
7 selected to represent Mr. Head on appeal in both cases, but,
8 for the sake of the record in the Ninth Circuit, if the Court
9 does not relieve me today, then I will be the attorney of
10 record, and I will not be doing the appeal. So if the Court
11 will do that, I will follow up and insure that a notice of
12 appeal gets filed timely.
13 THE COURT: That request is granted. Mr. Tedmon is
14 relieved as counsel in both cases.
15 Is there anything further today, Mr. Anderson?
16 MR. ANDERSON: Your Honor, I apologize if I missed
17 it, but the order regarding forfeiture, was that read into the
18 record?
19 MR. TEDMON: I believe it was.
20 MR. ANDERSON: I apologize.
21 THE COURT: I skipped the restitution paragraph
22 because we will amend the judgment once the final restitution
23 amount is determined.
25 THE COURT: Thank you very much. We are in recess.

1 MR. TEDMON: Your Honor --
2 THE COURT: We're not in recess.
3 MR. TEDMON: Your Honor, there is just one other
4 brief thing.
5 Mr. Head's been transferred from Colusa County to the
6 Sacramento County Jail, and we have had no problems. He needs
7 his contacts. He needs them to function. Colusa County has
8 been fine. He's now in Sacramento County. If he stays there,
9 they require an order allowing us to get him contacts from the
10 Court. We have visited this once before. Should I take that
11 up with the magistrate, or can the Court issue an order that he
12 be allowed to get his contacts?
13 THE COURT: Bring that up with the duty magistrate.
14 Can you do that even as you've been relieved?
15 MR. TEDMON: I'll do that pro bono, if necessary.
16 THE COURT: Why don't you submit a proposed order to
17 the magistrate judge, and if they have any question, they can
18 forward it to me. Thank you.
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Case 2:08-cr-00116-KJM Document 547 Filed 06/30/14 Page 1 of 30

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

BEFORE THE HONORABLE KIMBERLY J. MUELLER, JUDGE

UNITED STATES OF AMERICA,

vs. No. 2:08-cr-00116

REPORTER'S PARTIAL TRANSCRIPT

(NO JURY SELECTION)

MONDAY, OCTOBER 21, 2013

Reported by: DIANE J. SHEPARD, CSR #6331, RPR

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460

3 For the Government:

9 For the Defendant, Charles Head:

13 For the Defendant, Benjamin Budoff:

17 For the Defendant, Domonic McCarns:

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460

2 MONDAY, OCTOBER 21, 2013

5 THE CLERK: Calling criminal case 08-116, United

6 States versus Charles Head, Benjamin Budoff and Domonic

7 McCarns. This is on for jury trial.

8 THE COURT: Good morning. Appearances?

9 MR. ANDERSON: Good morning, Your Honor. Michael

10 Anderson and Matthew Morris, Sally Kenney, a paralegal in the

11 United States Attorney's Office, Special Agent Chris

12 Fitzpatrick from IRS Criminal Investigation and Peter Byrnes,

13 who is an FBI special agent.

14 THE COURT: Defense.

15 MR. TEDMON: Good morning, Your Honor. Scott Tedmon

16 representing Charles Head. Also assisting me during the trial

17 is investigator Lisa Gara.

18 MR. SAMUEL: Good morning, Your Honor. Dwight Samuel

19 appearing with Mr. Budoff.

20 THE COURT: Good morning.

21 MR. GREINER: Good morning, Your Honor. James

22 Greiner representing Domonic McCarns. Mr. McCarns is present

23 before the Court. Also assisted by the two investigators

24 Robert Storey and Victoria Corona.

25 THE COURT: Good morning to you both. Today we're

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460

1 going to work on selecting a jury. Just a couple of questions

2 I think I covered before.

3 The Government had proposed a statement of case. Is

4 that acceptable to the defense, Mr. Tedmon?

5 MR. TEDMON: Your Honor, I gave an amended proposed

6 statement, and I don't know if we've had a meeting of the minds

8 MR. SAMUEL: As did I, Your Honor. Actually, I

9 reviewed Mr. Tedmon's amended complaint (sic) which

10 incorporated my objections as well, so I'm fine with

11 Mr. Tedmon's statement.

12 THE COURT: All right. And Mr. Greiner?

13 MR. GREINER: I reviewed Mr. Tedmon's, and I joined

14 in an e-mail to the Government with Mr. Tedmon's statement of

17 THE COURT: Any objection to the defendants' proposed

18 statement of the case, Mr. Anderson?

19 MR. ANDERSON: Your Honor, we'd ask that the Court

20 read the Government's. It's based on the Indictment, and I

22 Obviously, the defendants dispute the charges, but it also

23 makes that clear.

24 THE COURT: Ms. Schultz, I need help tracking down

25 the defense. I'm going to review that quickly.

DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460

1 Any objection to any of the proposed voir dire