Willis Carto archive

Including information about his associates

Legion v Carto, Trial transcript, Volume 3

page 208


 1           COURT OF APPEAL OF THE STATE OF CALIFORNIA

 2                    FOURTH APPELLATE DISTRICT

 3                          DIVISION ONE

 4  ______________________________
                                  )
 5  LEGION FOR THE SURVIVAL OF    )
    FREEDOM, INC.,                )    DCA. NO. DO27959
 6                                )
                   PLAINTIFF AND  )    FROM SAN DIEGO COUNTY
 7                 RESPONDENT,    )
                                  )    HON. RUNSTON G. MAINO
 8       VS.                      )
                                  )    TRIAL PROCEEDINGS
 9  WILLIS CARTO, HENRY FISCHER,  )
    VIBET, INC., LIBERTY LOBBY,   )
10  INC., ET. AL.,                )
                                  )
11                 DEFENDANTS AND )
                   APPELLANTS.    )
12  ______________________________)

13
                     REPORTER’s APPEAL TRANSCRIPT
14
                          NOVEMBER 4, 1996
15
                              VOLUME 3
16
                            PAGES 208-385
17

18
    APPEARANCES:
19
         FOR THE PLAINTIFF AND    JACQUES BEUGELMANS AND
20       RESPONDENT:              THOMAS MUSSELMAN
                                  1901 AVENUE OF THE STARS
21                                CENTURY CITY, CA 90067

22       FOR THE DEFENDANTS AND   PETER J. PFUND
         APPELLANTS:              2382 S.E. BRISTOL
23                                SUITE A
                                  NEWPORT BEACH, CA 92660
24

25

26
                                  BARBARA J. SCHULTZ, CSR, RPR
27                                CSR NO. 8021
                                  OFFICIAL REPORTER
28                                VISTA, CALIFORNIA
			
			

page209



 1        IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA

 2                IN AND FOR THE COUNTY OF SAN DIEGO

 3  DEPARTMENT 11                    HON. RUNSTON G. MAINO

 4
    _____________________________
 5                               )
    LEGION FOR THE SURVIVAL OF   )
 6  FREEDOM, INC.,               )
                                 )
 7                  PLAINTIFF,   )           NO. N64584
                                 )
 8           VS.                 )
                                 )
 9  WILLIS CARTO, HENRY FISCHER, )
    VIBET, INC., LIBERTY LOBBY   )
10  INC., ET. AL.,               )
                                 )
11              DEFENDANTS.      )
    _____________________________)
12

13                       REPORTER’s TRANSCRIPT

14                        NOVEMBER, 4, 1996

15
    APPEARANCES:
16
        FOR THE PLAINTIFF:       JACQUES BEUGELMANS AND
17                               THOMAS MUSSELMAN
                                 1901 AVENUE OF THE STARS
18                               CENTURY CITY, CA 90067

19

20      FOR THE DEFENDANTS:      WAIER AND URTNOWSKI
                                 BY:  RANDALL S. WAIER
21                               1301 DOVE STREET
                                 NEWPORT BEACH, CA 92660
22

23
        FOR THE DEFENDANT        MARK LANE
24      LIBERTY LOBBY, INC.:     300 INDEPENDENCE AVENUE, S.E.
                                 WASHINGTON, D.C. 20003
25

26
                                 BARBARA J. SCHULTZ, CSR, RPR
27                               CSR NO. 8021
                                 OFFICIAL REPORTER
28                               VISTA, CALIFORNIA
			
			

page210



 1  VISTA, CALIFORNIA, NOVEMBER 4, 1996, DEPARTMENT 11:

 2

 3       THE COURT:  BACK ON THE RECORD.

 4            MR. LANE IS HERE FROM WASHINGTON, D.C.,

 5  REPRESENTING LIBERTY LOBBY.

 6       MR. WAIER:  FOR THE RECORD, LET ME INTRODUCE HIM.  WE

 7  INTRODUCED HIM INFORMALLY.  THIS IS MARK LANE FROM

 8  WASHINGTON, D.C., REPRESENTING LIBERTY LOBBY IN THE ACTION.

 9       THE COURT:  GLAD TO HAVE YOU HERE.

10       MR. LANE:  THANK YOU.

11

12                        CROSS-EXAMINATION (CONTINUED)

13  BY MR. WAIER:

14       Q    GOOD MORNING, MR. MARCELLUS.

15       A    GOOD MORNING.

16       Q    WHEN WE LAST LEFT OFF, WE WERE TALKING ABOUT THE

17  ASSETS OF THE LEGION BEING ENCUMBERED.  DO YOU RECALL THAT,

18  THAT TOPIC AREA?

19       A    YES.

20       Q    IN YOUR DIRECT TESTIMONY, YOU INDICATED THAT --

21  AND YOU WERE SHOWN SOME BYLAWS.  DO YOU RECALL THAT?

22       A    YES.

23       Q    AND IN FACT — I'M NOT SURE WHAT THE EXHIBIT

24  NUMBER WAS.

25       MR. BEUGELMANS:  EXHIBIT 3.

26

27  BY MR. WAIER:

28       Q    EXHIBIT 3.  DO YOU HAVE THAT IN FRONT OF YOU?
			
			

page211



 1            YOU IDENTIFIED THOSE AS THE BYLAWS?

 2       A    I IDENTIFIED THESE AS SOME BYLAWS OF THE

 3  CORPORATION.

 4       Q    IN FACT, PRIOR TO SEPTEMBER 1993, YOU HAD NO

 5  OCCASION TO ACTUALLY LOOK FOR ANY BYLAWS; ISN'T THAT TRUE?

 6       A    THAT’s NOT TRUE.

 7       Q    WHEN IS THE FIRST TIME YOU LOOKED FOR BYLAWS

 8  RELATING TO THE LEGION?

 9       A    I BELIEVE IT WAS IN 1990, PERHAPS '91.

10       Q    WHAT WAS THE PURPOSE OF LOOKING FOR THE BYLAWS AT

11  THIS TIME?

12       A    THEY WERE REQUESTED BY THE LEGION’s ATTORNEY, AS I

13  RECALL, IN CONNECTION WITH THE MERMELSTEIN LITIGATION.

14       Q    YOU HELPED IN PREPARING DOCUMENTS FOR THE

15  MERMELSTEIN LITIGATION; IS THAT CORRECT?

16       A    YES.

17       Q    AND YOU WERE REPORTING TO THE LEGION’s ATTORNEY AT

18  THAT TIME?

19       A    NO.  I WAS REPORTING TO MR. CARTO AT THE TIME.

20       Q    WAS MR. — WHY WERE YOU REPORTING TO MR. CARTO

21  WITH RESPECT TO THE MERMELSTEIN LITIGATION?

22       A    BECAUSE MY CONTRACT WITH THE LEGION SPECIFIED

23  THAT’s WHAT I WAS TO DO.

24       Q    DID YOU SEE ANY — STRIKE THAT.

25            DID YOU REQUEST FROM ANYONE AT THE LEGION FOR ANY

26  WRITTEN DOCUMENTATION AUTHORIZING YOUR REPORTING TO

27  WILLIS CARTO WITH REQUEST TO THE MERMELSTEIN LITIGATION?

28       A    THE QUESTION IS CONFUSING TO ME.  I DON'T
			
			

page212



 1  UNDERSTAND.  I WAS UNDER A CONTRACT WITH THE LEGION.  MY

 2  UNDERSTANDING WAS LAVONNE FURR WAS THE SECRETARY AND THE

 3  DIRECTOR AND TREASURER OF THE LEGION; THAT SHE HAD ACCESS TO

 4  THE BOARD MEMBERS; THAT WHEN SHE TOLD ME TO REPORT TO

 5  MR. CARTO, THAT WAS WHAT THE BOARD WANTED AND SO THAT’s WHO

 6  I REPORTED TO.

 7       Q    AND AT ANY POINT IN TIME, DID YOU EVER REVOKE IN

 8  WRITING THE TERMS OF THAT CONTRACT WHILE YOU WERE WITH THE

 9  LEGION?

10       A    I DID NOT, NO.

11       Q    AND SO WHEN DID YOU LEAVE THE LEGION?

12       A    IN FEBRUARY OF '94.

13       Q    UP UNTIL FEBRUARY 1994, YOU WERE STILL WORKING

14  UNDER THAT CONTRACT WITH THE LEGION; ISN'T THAT CORRECT?

15       MR. MUSSELMAN:  CALLS FOR LEGAL CONCLUSION.

16       THE COURT:  OVERRULED.

17       THE WITNESS:  YES.

18

19  BY MR. WAIER:

20       Q    AND THAT CONTRACT CALLED FOR YOU TO REPORT TO

21  WILLIS CARTO AS A REPRESENTATIVE OF THE LEGION; ISN'T THAT

22  CORRECT?

23       A    THAT CONTRACT DID, YES.

24       Q    TAKE A LOOK AT EXHIBIT 2.  YOU WERE SHOWN

25  EXHIBIT 2, WHICH, FOR PURPOSES OF THE RECORD, IS BYLAWS OF

26  THE LEGION FOR THE SURVIVAL OF FREEDOM.  DO YOU SEE THAT?

27       A    YES.

28       Q    YOU HAVE SEEN THIS DOCUMENT BEFORE, HAVEN'T YOU?
			
			

page213



 1       A    YES.

 2       Q    AND YOU SAW THESE IN LEGION FILES?

 3       A    NO.

 4       Q    WHERE DID YOU SEE THESE?

 5       A    THESE WERE — I BELIEVE THIS IS — THESE ARE THE

 6  BYLAWS THAT WERE HANDED TO ME BY MR. CARTO IN 1990 OR 1991.

 7       Q    WHEN YOU SAY THESE WERE THE BYLAWS HANDED TO YOU

 8  IN 1990, 1991, ARE YOU SAYING WHEN YOU WERE REQUESTED FOR

 9  THE MERMELSTEIN CASE TO PRODUCE BYLAWS, THAT YOU ASKED

10  MR. CARTO FOR THE BYLAWS?

11       A    YES.

12       Q    HE PROVIDED YOU WITH THE BYLAWS?

13       A    AS I RECALL, THESE ARE THE BYLAWS — THERE WAS

14  ANOTHER SET OF BYLAWS, AND I AM A LITTLE CONFUSED TO WHICH

15  SET HE PROVIDED ME WITH.  I BELIEVE IT WAS THESE.

16       Q    AT THE POINT IN TIME IN 1990, 1991, YOUR POSITION

17  WITH THE LEGION WAS ONE OF MANAGER; IS THAT CORRECT?

18       A    MANAGING DIRECTOR.  MANAGER, YES.

19       Q    WHEN YOU SAY “MANAGING DIRECTOR,” YOU WERE NOT ON

20  THE BOARD OF DIRECTORS?

21       A    THAT’s CORRECT.

22       Q    THERE WAS A SEPARATE BOARD OF DIRECTORS?

23       A    YES.

24       Q    YOU UNDERSTOOD THAT YOU WERE — THAT THE BOARD OF

25  DIRECTORS OF THE LEGION AT THIS POINT IN TIME RAN THE

26  DAY-TO-DAY AFFAIRS OF THE CORPORATION; ISN'T THAT TRUE?

27       A    NO.

28       Q    WELL, DID YOU READ THE BYLAWS?
			
			

page214



 1       A    I DID NOT AT THAT TIME.

 2       Q    WELL, ARE — WELL, TURN TO PAGE 2, ARTICLE 4 ON

 3  EXHIBIT 2.  DO YOU HAVE THAT IN FRONT OF YOU?

 4       A    YES.

 5       Q    DO YOU SEE SECTION 1?

 6       A    YES.

 7       Q    COULD YOU READ THAT FOR ME, PLEASE.

 8       A    “THE BUSINESS AND PROPERTY OF THE CORPORATION

 9  SHALL BE MANAGED BY A BOARD OF THREE DIRECTORS AND/OR

10  TRUSTEES TO BE ELECTED BY THE INCORPORATORS PROVIDED THE

11  NUMBER OF DIRECTORS AND/OR TRUSTEES MAY BE INCREASED AT” --

12                 (THE REPORTER ASKED TO REPEAT.)

13       THE WITNESS: — “THE NUMBER OF DIRECTORS AND/OR

14  TRUSTEES MAY BE INCREASED AT ANY REGULAR ANNUAL OR SPECIAL

15  MEETING OF THE INCORPORATORS."

16

17  BY MR. WAIER:

18       Q    YOU UNDERSTOOD — DOES THAT HELP REFRESH YOUR

19  RECOLLECTION THAT THE DAY-TO-DAY AFFAIRS OF THE CORPORATION

20  WERE MANAGED BY THE BOARD OF DIRECTORS OF THE LEGION?

21       A    IT DOES NOT.  IN FACT, I MANAGED THE DAY-TO-DAY

22  AFFAIRS OF THE LEGION.

23       Q    DO YOU SEE ANYWHERE IN THE ARTICLES THAT GAVE YOU

24  THAT AUTHORITY?

25       A    I DO NOT.

26       Q    AND YOU UNDERSTOOD THAT YOUR AUTHORITY CAME FROM

27  THE BOARD OF DIRECTORS?

28       A    YES.
			
			

page215



 1       Q    WHILE YOU WERE THERE; IS THAT CORRECT?

 2       A    YES.

 3       Q    AND YOU ALREADY TESTIFIED LAVONNE FURR AND

 4  LEWIS FURR WERE DIRECTORS IN 1985?

 5       A    YES.

 6       Q    AND THEY WERE ALSO DIRECTORS IN 1986?

 7       A    YES.

 8       Q    AND THEY WERE DIRECTORS IN 1987?

 9       A    YES.

10       Q    AND THEY WERE DIRECTORS IN 1988?

11       A    YES.

12       Q    AND 1989 AS WELL?

13       A    YES.

14       Q    1990?

15       A    YES.

16       Q    1991?

17       A    CORRECT.

18       Q    AND YOU UNDERSTOOD THAT AS DIRECTORS, THEY HAD

19  CERTAIN AUTHORITIES TO MANAGE THE BUSINESS AND PROPERTY OF

20  THE CORPORATION, DIDN'T YOU?

21       MR. MUSSELMAN:  CALLS FOR LEGAL CONCLUSION.

22       THE COURT:  OVERRULED.

23       THE WITNESS:  I UNDERSTOOD THAT THEY WERE THE BOARD AND

24  COULD DO WHAT THEY WANTED WITH THE CORPORATION WITH REGARD

25  TO ITS AFFAIRS, YES.

26

27  BY MR. WAIER:

28       Q    THANK YOU.  PRIOR TO SEPTEMBER OF 1993, YOU
			
			

page216



 1  WEREN'T THE PRESIDENT OF THE LEGION, WERE YOU?

 2       A    NO.

 3       Q    WHO WAS THE PRESIDENT OF THE LEGION, FOR EXAMPLE,

 4  JUST BEFORE?

 5       A    I THINK LEWIS FURR.

 6       Q    AND WHO WAS THE VICE-PRESIDENT?

 7       A    I'M NOT SURE THAT THERE WAS A VICE-PRESIDENT.

 8       Q    WHO WAS THE TREASURER?

 9       A    I BELIEVE LAVONNE FURR.

10       Q    AND WHO WAS THE SECRETARY?

11       A    I BELIEVE ALSO LAVONNE FURR.

12       Q    FOR WHAT PERIOD OF TIME, WHILE YOU WERE AT THE

13  LEGION, WAS LEWIS FURR THE PRESIDENT OF THE LEGION?

14       A    I DON'T RECALL HOW LONG HE WAS PRESENT.  I'M

15  FAIRLY SURE IT COULD HAVE BEEN FROM '85 OR '86 ONWARD.  I'M

16  NOT SURE PRIOR TO THAT PERIOD.

17       Q    WITH RESPECT TO LAVONNE FURR, ISN'T IT TRUE THAT

18  SHE WAS SECRETARY/TREASURER FROM AT LEAST 1985 THROUGH THE

19  MIDDLE OF 1993?

20       A    I BELIEVE THAT’s TRUE, YES.

21       Q    IN FACT, DURING THAT ENTIRE PERIOD OF TIME, SAY,

22  FOR THE PERIOD OF TIME THAT YOU LEFT — YOU ALREADY

23  TESTIFIED, EARLY 1986 THROUGH ABOUT MID 1987, YOU LEFT THE

24  LEGION; ISN'T THAT CORRECT?

25       A    THAT’s CORRECT.

26       Q    UP UNTIL JULY OF 1993, YOU NEVER HELD ANY OFFICE,

27  YOU WEREN'T AN OFFICER OF THE LEGION; ISN'T THAT TRUE?

28       A    I WAS THE — THE C.E.O. OR THE EXECUTIVE OFFICER.
			
			

page217



 1  I DON'T KNOW IF THAT’s TECHNICALLY AN OFFICER LIKE A

 2  TREASURER OR A SECRETARY OF THE CORPORATION.

 3       Q    YOU WEREN'T APPOINTED BY THE BOARD OF DIRECTORS,

 4  WERE YOU, TO THAT POSITION?

 5       A    WELL, I BELIEVE I WAS.  YES.

 6       Q    SIR, YOU REVIEWED VARIOUS MINUTES OF THE

 7  CORPORATION; ISN'T THAT CORRECT?

 8       A    YES.

 9       Q    HAVE YOU FOUND ANY ONE MINUTE THAT APPOINTED YOU

10  BY THE BOARD OF DIRECTORS TO MANAGING OFFICER OF THE LEGION?

11       A    I HAVEN'T SEEN SUCH A DOCUMENT.

12       Q    NONE EXISTS, DO THEY?

13       A    I DON'T KNOW.

14       Q    YOU GUYS — STRIKE THAT.

15            IN FACT, YOU, MR. TED O’Keefe, MR. GREG RAVEN,

16  SOMETIME IN BETWEEN MARCH AND JULY OF 1993, INVESTIGATED

17  MR. Carto’s AUTHORITY WITHIN THE LEGION; ISN'T THAT CORRECT?

18       A    YES.

19       Q    IN FACT, IN YOUR — IN DOING THAT, YOU REVIEWED

20  VARIOUS MINUTES OF MEETINGS, DID YOU NOT?

21       A    WE HAD ONLY A SCANT FEW AT THAT TIME.

22       Q    SIR, DID YOU EVER ATTEND ANY BOARD OF DIRECTORS

23  MEETINGS WHERE YOU WERE ELECTED AS THE MANAGING OFFICER OF

24  THE LEGION?

25       A    THAT WAS NOT MY INTEREST.  I HAD NO INTEREST IN

26  WHAT THE BOARD DID.  BASICALLY, I WAS THERE TO DO MY JOB.

27  AND DOING MY JOB, I TOOK DIRECTION FROM MR. CARTO.  WHAT THE

28  BOARD DID WAS WHAT THE BOARD DID.  I WAS NOT INVOLVED IN
			
			

page218



 1  WHAT THE BOARD DID.

 2       Q    YOU TOOK THE DIRECTION BASED ON YOUR CONTRACT THAT

 3  YOU ENTERED INTO THE LEGION WITH LAVONNE FURR; IS THAT

 4  CORRECT?

 5       A    I TOOK MY DIRECTION BASED ON WHAT MR. CARTO WANTED

 6  OR DIDN'T WANT.

 7       Q    WELL, YOU ALSO TOOK THAT DIRECTION BASED ON THE

 8  CONTRACT, I BELIEVE YOU TESTIFIED TO, THAT YOU ENTERED INTO

 9  EARLY ON WITH LAVONNE FURR; ISN'T THAT CORRECT?

10       A    THAT’s WHAT THE CONTRACT SAID, YES.

11       Q    BASED ON THAT, YOU TOOK DIRECTION FROM MR. CARTO;

12  ISN'T THAT CORRECT?

13       A    CORRECT.

14       Q    AND YOU ASSUMED THAT CONTRACT WAS VALID BECAUSE

15  LAVONNE FURR WAS A DIRECTOR AT THE TIME WHEN YOU ENTERED

16  INTO THAT CONTRACT; ISN'T THAT TRUE?

17       A    AND AN OFFICER, YES.

18       Q    SHE WAS ALSO SUBSTITUTE INCORPORATOR, WASN'T SHE?

19       A    I HAD NO SUCH KNOWLEDGE.

20       Q    DID YOU EVER COME TO ACKNOWLEDGE SHE WAS A

21  SUBSTITUTE INCORPORATOR OF THE LEGION?

22       A    I HEARD ALLEGATIONS THAT SHE WAS.  I HEARD AN

23  ARGUMENT THAT SHE WAS, BUT I DON'T BELIEVE IT.

24       MR. WAIER:  MOVE TO STRIKE.  “I DON'T BELIEVE IT” IS

25  NONRESPONSIVE.

26       THE COURT:  SUSTAINED.

27

28
			
			

page219



 1  BY MR. WAIER:

 2       Q    WITH RESPECT TO WILLIS CARTO, YOU UNDERSTOOD HE

 3  WAS SUBSTITUTE INCORPORATOR; ISN'T THAT TRUE?

 4       A    I HAD NO SUCH UNDERSTANDING.

 5       Q    IN FACT, YOU WOULDN'T HAVE HAD SUCH AN

 6  UNDERSTANDING.  YOU NEVER WERE A DIRECTOR ON THE BOARD OF

 7  DIRECTORS OF THE LEGION UP UNTIL SEPTEMBER 1993.  ISN'T THAT

 8  CORRECT?

 9       MR. MUSSELMAN:  CALLS FOR SPECULATION, YOU WOULD HAVE.

10       THE COURT:  SUSTAINED.

11

12  BY MR. WAIER:

13       Q    YOU HAVE NEVER — STRIKE THAT.

14            UP UNTIL SEPTEMBER 1993, YOU WERE NEVER ON THE

15  BOARD OF DIRECTORS OF THE LEGION; ISN'T THAT CORRECT?

16       A    CORRECT.

17       Q    AND YOU NEVER ATTENDED A BOARD OF DIRECTORS

18  MEETING; ISN'T THAT CORRECT?

19       A    CORRECT.

20       Q    AND YOU WERE NEVER ASKED TO VOTE ON ANY CORPORATE

21  MATTER INVOLVING THE LEGION UP THROUGH SEPTEMBER OF 1993;

22  ISN'T THAT CORRECT?

23       A    THAT’s CORRECT.

24       Q    NOW, IN 1985, SIR — STRIKE THAT.

25            WHAT WAS YOUR INVOLVEMENT WITH RESPECT TO

26  PREPARING FINANCIAL STATEMENTS IN 1985 FOR THE LEGION?

27       A    VERY LITTLE, ACTUALLY.

28       Q    IN FACT, ISN'T IT TRUE ELISABETH CARTO HANDLED
			
			

page220



 1  MOST OF THAT FOR THE LEGION AT THAT TIME, 1985?

 2       A    ELISABETH CARTO AND THE ACCOUNTANT THAT DID THE

 3  BOOKS FOR THE LEGION, YES.

 4       Q    THAT WAS STEVE RADNOVICH?

 5       A    ROBERT FENCHEL UNTIL PERHAPS '86 OR '87, AROUND IN

 6  THAT TIME.  AND MR. RADNOVICH BECAME THE ACCOUNTANT.

 7       Q    AND YOU WERE NOT INVOLVED IN THE PREPARATION OF

 8  THE ANNUAL FINANCIAL STATEMENTS AT THIS TIME; ISN'T THAT

 9  CORRECT?

10       A    ONLY TO THE EXTENT THAT MR. RADNOVICH OR

11  MRS. CARTO WOULD — WOULD CONSULT WITH ME OR ASK ME

12  QUESTIONS ABOUT CERTAIN THINGS IN THE PROCESS OF PREPARING

13  THOSE STATEMENTS.

14       Q    AND YOU WEREN'T INVOLVED IN THE PREPARATION OF TAX

15  RETURNS FROM 1985 THROUGH 1992; ISN'T THAT CORRECT?

16       A    THAT’s CORRECT, YES.

17       Q    THAT WAS ALL HANDLED BY ELISABETH CARTO; ISN'T

18  THAT CORRECT?

19       A    I DON'T KNOW THAT.

20       Q    WHO WAS HANDLING THE PREPARATION OF THE TAX

21  RETURNS?

22       A    THE ACCOUNTANT.

23       Q    EITHER MR. FENCIL (PHONETICS) --

24       A    FENCHEL.

25       Q    FENCHEL AND/OR MR. RADNOVICH; IS THAT CORRECT?

26       A    YES.

27       Q    WHO REPORTED DIRECTLY TO MR. RADNOVICH AND

28  MR. FENCHEL WITH RESPECT TO THE PREPARATION OF THE TAX
			
			

page221



 1  RETURNS?

 2       A    I DID TO A LIMITED EXTENT, MORE SO MRS. CARTO.

 3       Q    DID YOU — FOR WHAT PERIOD OF TIME DID YOU

 4  ACTUALLY REPORT TO THE TWO ACCOUNTANTS IN THE PREPARATION OF

 5  THE TAX RETURNS?

 6       A    I DIDN'T ACTUALLY REPORT TO THEM.  I PERHAPS

 7  ANSWERED QUESTIONS WHEN THEY CALLED.

 8       Q    WITH RESPECT TO THE TAX RETURNS FOR 1985, FISCAL

 9  YEAR 1985, DID EITHER MR. FENCHEL OR MR. RADNOVICH PROVIDE

10  YOU A COPY OF THE TAX RETURN BEFORE IT WAS FILED?

11       A    NO.

12       Q    IN FACT, YOU NEVER SAW THAT TAX RETURN UNTIL

13  SOMETIME IN 1993; ISN'T THAT CORRECT?

14       A    THAT’s NOT CORRECT.

15       Q    WHEN WAS THE FIRST TIME YOU SAW THE 1985 TAX

16  RETURN FOR THE LEGION?

17       A    I SAW THE TAX RETURN AT SOME POINT PROBABLY AFTER

18  I CAME BACK FROM MY 18-MONTH ABSENCE.  THE TAX RETURNS WERE

19  ON FILE IN THE OFFICES, AND I DO RECALL HAVING LOOKED AT

20  THEM, NOT IN ANY DETAIL, BUT JUST LOOKED AT THEM.

21       Q    SO THE TAX RETURNS FROM 1985 THROUGH 1993 WERE ON

22  FILE WITH THE CORPORATION AT ITS CORPORATE OFFICES?

23       A    YES.

24       Q    AND YOU ARE AWARE OF THAT BECAUSE THEY WERE KEPT

25  IN A CERTAIN AREA WITHIN THE OFFICES OF THE CORPORATION?

26       A    THAT’s CORRECT.

27       Q    AND YOU UNDERSTOOD WHEN I TALK ABOUT THE

28  CORPORATION, I'M TALKING ABOUT THE LEGION FOR THE SURVIVAL
			
			

page222



 1  OF THE FREEDOM, INC.?

 2       A    THAT’s THE ONLY CORPORATION WE'RE TALKING ABOUT.

 3       Q    YOU INDICATED THAT THERE WAS SCANT MINUTES THAT

 4  YOU REVIEWED SOMETIME IN MARCH '93 THROUGH JULY 1993 WHEN

 5  YOU WERE CONDUCTING THE INVESTIGATION.  DO YOU RECALL THAT?

 6       A    YES.

 7       Q    WHERE DID YOU LOCATE THE MINUTES?

 8       A    I DON'T RECALL WHERE THEY WERE.

 9       Q    DO YOU RECALL HOW YOU CAME ACROSS THOSE MINUTES?

10       A    I DON'T BELIEVE I CAME ACROSS THEM.  I BELIEVE

11  MR. O’Keefe FOUND THEM.  IN LOOKING THROUGH VARIOUS

12  CORPORATE FILES, THERE WERE COPIES OF THE MINUTES OF, I

13  DON'T KNOW, PERHAPS ONE OR TWO OR THREE MEETINGS.

14       Q    NOW, DO YOU HAPPEN TO RECALL WHERE MR. O’Keefe

15  FOUND THOSE?

16       A    NO, I DON'T.

17       Q    DID YOU ASK HIM?

18       A    PROBABLY.

19       Q    WHAT DID YOU DO TO INVESTIGATE WHAT MATERIALS YOU

20  NEEDED TO FIND OUT CONCERNING MR. Carto’s AUTHORITY BACK IN

21  MARCH 1993 THROUGH JULY 1993?

22       A    VIRTUALLY NOTHING.

23       Q    WHAT WAS — BETWEEN MARCH 1993 THROUGH JUNE OF

24  1993, WHAT WAS MR. O’Keefe’s ROLE IN THE — AT THE LEGION?

25       A    HE WAS — HE WAS AN EDITOR.

26       Q    HE WAS NOT AN OFFICER; ISN'T THAT TRUE?

27       A    HE WAS NOT.

28       Q    AND HE WAS NOT A DIRECTOR?
			
			

page223



 1       A    CORRECT.

 2       Q    AND HE WAS NOT AN INCORPORATOR?

 3       A    TRUE.

 4       Q    WHAT AUTHORITY DID YOU HAVE, SIR, TO REQUEST

 5  MR. O’Keefe TO LOOK AT THE CORPORATE RECORDS BACK IN MARCH

 6  1993?

 7       A    I HAD WHAT I THOUGHT WAS A KIND OF MORAL

 8  AUTHORITY.

 9       Q    SIR, THAT’s THE ONLY AUTHORITY; ISN'T THAT

10  CORRECT?  YOU FELT A MORAL AUTHORITY?

11       A    THAT’s THE AUTHORITY I OPERATED ON.

12       Q    THAT MORAL AUTHORITY WAS GENERATED BECAUSE OF YOUR

13  FEAR MR. WEBER WOULD BE FIRED BY MR. CARTO; ISN'T THAT TRUE?

14       A    IT WAS GREATER THAN THAT, EVEN.  I HAD WITNESSED

15  WHAT I THOUGHT WAS A PHENOMENAL ABERRATION ON THE PART OF

16  MR. CARTO AND IT GOT ME WORRIED.

17       Q    WHAT ABERRATION WAS THAT?

18       A    THAT ABERRATION WAS HIS SUDDEN AND INEXPLICABLE

19  DECISION TO CHANGE THE EDITORIAL COURSE OF THE LEGION'S

20  PUBLISHED MATERIALS AND TO FORCE THE EDITORIAL STAFF TO --

21  TO SWITCH GEARS AND SWITCH RAILS AND SWITCH TRACK AND TAKE

22  OFF ON A NEW COURSE.

23       Q    YOU FELT, AS AN EMPLOYEE, YOU HAD A RIGHT TO

24  CHANGE THAT; IS THAT RIGHT?

25       A    I FELT, AS AN EMPLOYEE, I HAD THE RIGHT TO

26  DETERMINE WHETHER OR NOT MR. CARTO TRULY HAD THE AUTHORITY

27  TO CHANGE THE CORPORATION’s DIRECTION.

28       Q    IN FACT, YOU WEREN'T, AT THAT POINT IN TIME,
			
			

page224



 1  CONCERNED ABOUT THE FARREL ESTATE, WERE YOU?

 2       A    I WAS NOT.

 3       Q    IN FACT, THE REASON WHY YOU WEREN'T CONCERNED

 4  ABOUT THE FARREL ESTATE BACK IN 1991, YOU RECEIVED A CHECK

 5  FROM THE BANQUE CONTRADE FROM SWITZERLAND, YOURSELF, DIDN'T

 6  YOU?

 7       A    I RECEIVED SEVERAL OF THOSE.

 8       Q    FROM THE BANQUE CONTRADE?

 9       A    YES, I BELIEVE THAT WAS THE BANK.

10       Q    AND THAT WAS FROM APPROXIMATELY EARLY 1991 THROUGH

11  1992; ISN'T THAT CORRECT?

12       A    YES.

13       Q    AND IN FACT YOU UNDERSTAND THAT THAT WAS MONEY

14  COMING FROM THE FARREL ESTATE, DIDN'T YOU?

15       A    I DIDN'T KNOW FOR SURE IT WAS COMING FROM THE

16  FARREL ESTATE.

17       Q    SIR, WHERE DID YOU THINK THAT MONEY WAS COMING

18  FROM?

19       A    I THOUGHT IT MAY — IT MIGHT HAVE EVEN BEEN COMING

20  FROM SOME KIND OF A LOAN SOMEBODY HAD MADE TO — TO SOME

21  GROUP, BASED ON THE PROCEEDS COMING FROM THE FARREL ESTATE

22  AT SOME POINT.  I DIDN'T KNOW WHERE THE MONEY REALLY WAS

23  COMING FROM.

24       Q    SIR, YOU KNEW, AT THAT TIME, MONEY COMING FROM THE

25  FARREL ESTATE HAD BEEN DEPOSITED INTO THE BANQUE CONTRADE,

26  DIDN'T YOU?

27       A    I ASSUMED THAT WAS THE CASE.

28       Q    IN FACT, MR. CARTO TOLD YOU THAT, DIDN'T HE?
			
			

page225



 1       A    I WAS ONLY TOLD THAT SOME FUNDS HAD BEEN

 2  RELEASED.  IT WAS ALL I WAS TOLD.  AND THAT SOME

 3  EXPENDITURES COULD BE MADE.  AND MR. CARTO SAID OKAY, TOM,

 4  WE'RE GOING TO PAY YOU YOUR SALARY OUT OF THIS ACCOUNT.  AND

 5  IT WAS A LITTLE BIT TOUGH ON ME.  I HAD TO INVOICE THE

 6  COMPANY EVERY THREE MONTHS FOR MY SALARY.  I WAS WILLING TO

 7  DO IT.  MR. CARTO WANTED IT DONE THAT WAY.

 8       Q    YOU DIDN'T OBJECT TO RECEIVING THE CHECKS BACK IN

 9  EARLY 1991 FROM THE BANQUE CONTRADE?

10       A    I DIDN'T OBJECT TO RECEIVING MY PAY, NO.

11       Q    WELL, YOU DIDN'T OBJECT TO THE SOURCE OF THE PAY,

12  DID YOU?

13       A    NO.

14       Q    IN FACT, HOW MUCH MONEY DID YOU RECEIVE FROM THE

15  BANQUE CONTRADE?

16       A    I RECEIVED MY SALARY PROBABLY FOR A YEAR AND A

17  HALF TO TWO YEARS AND — AT $3,000 A MONTH, PLUS I THINK I

18  GOT A 2- OR $3,000 BONUS AT THE END OF ONE OF THOSE YEARS.

19  YOU DO THE MATH.

20       Q    A LITTLE OVER $70,000?

21       A    THAT MIGHT BE ABOUT RIGHT.  MAYBE NOT QUITE 70-.

22  COULD HAVE BEEN BETWEEN 50- AND 70-, YES.

23       Q    AND DURING THE PERIOD OF TIME YOU WERE RECEIVING

24  THE MONEY FROM EARLY 1991 THROUGH 1992, IS THAT EARLY 1991

25  YOU STARTED RECEIVING THE MONEY?

26       A    SOMETIME IN 1991.

27       Q    IN FACT, AT NO TIME DID YOU GO TO MR. WEBER, DID

28  YOU, AND TELL HIM HEY, THE FARREL ESTATE IS FUNDED AND I'M
			
			

page226



 1  GETTING MONEY FROM THE ESTATE?  YOU NEVER DID THAT, DID YOU?

 2       A    I DON'T RECALL ANY SPECIFIC INSTANCE OF LETTING

 3  THE REST OF THE SENIOR STAFF KNOW WHERE THE PAY WAS COMING

 4  FROM, BUT IT WASN'T A SECRET.  I HAD NO DESIRE TO MAKE IT A

 5  SECRET.

 6       Q    SIR, BACK IN 1991, NOT ONLY DID THE BANQUE

 7  CONTRADE — DID YOU RECEIVE MONEY FROM YOUR SALARY FROM THE

 8  BANQUE CONTRADE, DIDN'T YOU ALSO RECEIVE MONEY TO ONE OF THE

 9  CAUSES THAT YOU REPRESENTED FROM THE BANQUE CONTRADE?

10       MR. MUSSELMAN:  OBJECTION.  INCOMPREHENSIBLE.

11       MR. WAIER:  REPHRASE THE QUESTION.

12

13  BY MR. WAIER:

14       Q    ISN'T IT TRUE, MR. MARCELLUS, BESIDES THE SALARY

15  YOU RECEIVED FROM THE BANQUE CONTRADE FUNDS, THAT YOU ALSO

16  ASKED MR. CARTO TO DIRECT SOME OF THAT MONEY TO ONE OF THE

17  CAUSES THAT YOU FOLLOWED; ISN'T THAT TRUE?

18       A    INDEED.  ON TWO OCCASIONS, I ASKED HIM TO, INSTEAD

19  OF MAKING THE CHECK OUT TO ME, HAVE THE CHECK MADE OUT TO

20  F.S.O., FLAG SERVICE ORGANIZATION.

21       Q    THAT IS SCIENTOLOGY, ISN'T IT?

22       A    THAT’s CORRECT.

23       Q    YOU ASKED HIM TO GIVE SOME OF THE FARREL ESTATE

24  MONEY TO SCIENTOLOGY; ISN'T THAT CORRECT?

25       A    NO, SIR.  I ASKED HIM TO GIVE SOME OF MY SALARY

26  COMING OUT OF THE LEGION ACCOUNT TO AN ORGANIZATION THAT I

27  WANTED TO BENEFIT.

28       Q    YOU DIDN'T THINK THAT WAS WRONG, DID YOU?
			
			

page227



 1       A    I'M SURE IT’s NOT WRONG.

 2       Q    YOU DIDN'T THINK IT WAS WRONG TO TAKE YOUR SALARY

 3  FROM THE FARREL ESTATE; ISN'T THAT CORRECT?

 4       A    I DIDN'T THINK IT WAS WRONG FOR ME TO TAKE MY

 5  SALARY FROM THE LEGION’s ACCOUNT, COMPANY’s ACCOUNT.  WHAT

 6  COULD BE WRONG WITH THAT?

 7       Q    WELL, DID YOU QUESTION MR. CARTO AT THE TIME WHEN

 8  YOU FIRST GOT YOUR CHECK HOW MUCH MONEY WAS IN THAT ACCOUNT?

 9       A    I DID NOT.

10       Q    DID YOU ASK HIM ANYTHING ABOUT THE FARREL ESTATE

11  AT THIS POINT IN TIME?

12       A    HE MADE SOME REPRESENTATION TO ME ABOUT IT AND I

13  FELT THOSE ANSWERED MY QUESTIONS.

14       Q    ISN'T IT TRUE THAT IN PRIOR DEPOSITION TESTIMONY,

15  NOT ONLY THIS CASE, BUT IN OTHER CASES, YOU TESTIFIED YOU

16  KNEW NOTHING ABOUT MONIES COMING FROM THE FARREL ESTATE

17  UNTIL SOMETIME IN 1993?

18       A    I WASN'T SURE UNTIL 1993 WHAT THE SOURCE OF THAT

19  MONEY WAS, WHERE IT HAD ORIGINALLY COME FROM.

20       Q    ISN'T IT TRUE MR. CARTO TOLD YOU THOSE WERE MONIES

21  RELEASED FROM THE FARREL ESTATE?  ISN'T THAT WHAT YOU JUST

22  TOLD US?

23       MR. MUSSELMAN:  OBJECTION.  ASKING HIM TO REPEAT THE

24  TESTIMONY.

25       THE COURT:  SUSTAINED.

26

27  BY MR. WAIER:

28       Q    WELL, DIDN'T MR. CARTO TELL YOU IN 1991 THAT THESE
			
			

page228



 1  WERE MONIES RELEASED FROM THE FARREL ESTATE THAT WENT INTO

 2  THE BANQUE CONTRADE?

 3       A    I DON'T THINK HE SAID THAT, NO.

 4       Q    AND YOU NEVER ASKED HIM, DID YOU?

 5       A    NO.

 6       Q    DID YOU THINK MR. CARTO HAD A RIGHT AT THAT POINT

 7  IN TIME TO AUTHORIZE PAYMENT OUT OF BANQUE CONTRADE TO YOU?

 8       A    I DIDN'T CONCERN MYSELF WITH THAT QUESTION.

 9       Q    NOW, IF YOU RECALL THE LAST TIME WE SPOKE, WHICH

10  WAS LAST FRIDAY, I ASKED YOU ABOUT A LETTER THAT MR. HULSY

11  HAD SENT TO YOU ON MAY 29, 1991.  DO YOU RECALL THAT?

12       A    YES.

13       Q    I THINK WE ALREADY HAD THEM MARKED FOR

14  IDENTIFICATION AS 174.  YES.  DO YOU HAVE THAT IN FRONT OF

15  YOU?

16       A    TELL ME WHICH EXHIBIT THAT WOULD BE.

17       Q    EXHIBIT 174.  I'M NOT SURE IT’s IN THE BOOK.

18       A    I DON'T THINK IT GOES THAT HIGH.

19       Q    LET ME HELP YOU OUT.

20       A    MAYBE IT’s IN THAT PILE.  WATCH OUT FOR THE WATER.

21       Q    TRUST ME, I WON'T DRINK IT.

22       A    I THOUGHT YOU — YOU MIGHT KNOCK IT OVER.

23       Q    HERE, DO YOU SEE THAT?  I BELIEVE IN YOUR

24  TESTIMONY TOWARD THE END OF FRIDAY, YOU DO RECALL RECEIVING

25  THE LETTER?

26       A    YES.

27       Q    AND THIS WAS IN RESPONSE TO A CONVERSATION YOU HAD

28  WITH MR. HULSY; ISN'T THAT CORRECT?
			
			

page229



 1       A    YES.

 2       Q    AND WHERE YOU WANTED TO FIND OUT IF THERE WAS TO

 3  BE SOME WAY THAT YOU COULD PREVENT A JUDGMENT CREDITOR FROM

 4  ATTACHING OR ATTACKING THE ASSETS OF THE LEGION; ISN'T THAT

 5  CORRECT?

 6       A    YES.

 7       Q    AND YOU DID THAT BECAUSE YOU WERE CONCERNED ABOUT

 8  THE MERMELSTEIN CASE?

 9       A    I DID THAT BECAUSE MR. CARTO WAS OVERLY CONCERNED

10  ABOUT THE MERMELSTEIN.

11       Q    YOU WERE CONCERNED, TOO; ISN'T THAT CORRECT?

12       A    YES.

13       Q    IN FACT, YOU SENT HIM A LETTER TO THAT EFFECT;

14  ISN'T THAT CORRECT?

15       A    I DON'T KNOW THAT I SENT HIM A LETTER.  I MAY

16  HAVE.  I SEEM TO RECALL IT WAS A PHONE CONVERSATION.

17       Q    WELL, IF YOU TAKE A LOOK AT THE VERY FIRST

18  SENTENCE OF THE LETTER --

19       A    OKAY.  I DID SEND A LETTER.

20       Q    DOES THAT HELP REFRESH YOUR RECOLLECTION?

21       A    YES.

22       Q    I UNDERSTAND IT’s BEEN SOME TIME SINCE ALL OF

23  THESE EVENTS TRANSPIRED.  I UNDERSTAND MEMORIES SOMETIMES

24  WANE.  IT SAYS “I AM IN RECEIPT OF YOUR LETTER OF MAY 20,

25  1991” — THIS IS FROM MR. HULSY — “REGARDING PRESERVATION

26  OF ASSETS IN THE EVENT OF AN ADVERSE RULING AT THE TRIAL

27  COURT LEVEL."

28            YOU UNDERSTOOD THAT AT THE TIME, THAT WAS THE
			
			

page230



 1  MERMELSTEIN CASE?

 2       A    IS THAT A QUESTION?

 3       Q    YES.

 4       A    YES.

 5       Q    AND YOU WERE CONCERNED ALSO ABOUT THE PRESERVATION

 6  OF ASSETS BECAUSE IF MERMELSTEIN WAS SUCCESSFUL AT TRIAL AND

 7  WAS ABLE TO ATTACH ALL THE ASSETS OF THE LEGION, THE LEGION

 8  WOULD BE OUT OF BUSINESS; ISN'T THAT CORRECT?

 9       A    YES.

10       Q    SO YOU WANTED TO FIND — YOU ALSO WANTED — YOU

11  HAD AN INTEREST IN FINDING A WAY OF HIDING THE ASSETS IN

12  CASE OF A JUDGMENT CREDITOR ATTACKING THE ASSETS?

13       A    YES.

14       Q    AND IN FACT, HE WRITES YOU IN THE VERY FOURTH

15  PARAGRAPH, “I'M ADVISED THAT THE INVENTORY IS PRESENTLY

16  UNENCUMBERED, BUT YOU OWE A COUPLE OF HUNDRED THOUSAND

17  DOLLARS TO A VARIETY OF PEOPLE.  THAT INVENTORY CAN BE

18  ENCUMBERED, EVEN THOUGH IT’s PRESENTLY NOT SECURITY FOR

19  EXISTING INDEBTEDNESS.  YOU SHOULD DO THAT AS SOON AS

20  POSSIBLE.  I CAN ASSIST YOU IN THAT.”  DO YOU SEE THAT?

21       A    YES.

22       Q    YOU FOLLOWED THROUGH ON THE ADVICE, DIDN'T YOU?

23       MR. MUSSELMAN:  OBJECTION.  RELEVANCE.

24       THE COURT:  PARDON?

25       MR. MUSSELMAN:  RELEVANCE.

26       THE COURT:  WHAT’s THE RELEVANCE?

27       MR. WAIER:  HE TALKED ABOUT — YOUR HONOR, ON DIRECT

28  EXAMINATION, HE TALKED ABOUT THAT ALL OF THESE ASSETS WERE
			
			

page231



 1  FROM — AND MY UNDERSTANDING IS THEIR OFFER OF PROOF

 2  WITH — WERE THAT THE ASSETS WERE MADE AVAILABLE FOR THE

 3  PURPOSE OF FUNDING LITIGATION OVERSEAS, MAKING SURE THIS WAS

 4  DONE, AND THAT’s THE RELEVANCE.  IT ALSO GOES TO

 5  IMPEACHMENT.  HE STATED IT CAME FROM MR. CARTO, WHEN IT

 6  DIDN'T.  IT CAME FROM ATTORNEYS.

 7       THE COURT:  OVERRULED.

 8

 9  BY MR. WAIER:

10       Q    YOU FOLLOWED THROUGH ON THAT ADVICE, DIDN'T YOU?

11       A    I BELIEVE I DID TAKE SOME ACTIONS AFTER CONSULTING

12  WITH MR. CARTO ON IT THAT — THAT WOULD QUALIFY AS HAVING

13  FOLLOWED THROUGH WITH THAT, YES.

14       Q    YOU FILED THE UCC-1 IN JULY OF THAT YEAR; ISN'T

15  THAT CORRECT?

16       A    NO, I WAS ASKED TO SIGN THE UCC-1 AND I DID SO.  I

17  DID NOT FILE IT.

18       Q    BUT YOU SIGNED THE UCC-1 AND YOU UNDERSTOOD THAT

19  ENCUMBERED EVERYTHING TO THE LEGION; ISN'T THAT CORRECT?

20       A    AT THAT TIME, I DID, YES.

21       Q    AND YOU UNDERSTOOD AT THE TIME THAT YOU SIGNED

22  THAT, THAT PREVENTED THE USE OF THOSE ASSETS BY THE LEGION;

23  ISN'T THAT CORRECT?

24       A    I DIDN'T KNOW REALLY WHAT SIGNING THAT UCC DID OR

25  DID NOT DO WITH RESPECT TO THE ASSETS OF THE CORPORATION.  I

26  WAS TOLD BY MR. CARTO THAT IT WOULD PROTECT THE ASSETS, BUT

27  THAT WAS ALL I UNDERSTOOD.

28       Q    IN FACT, ISN'T IT TRUE THAT MR. HULSY ALSO ADVISED
			
			

page232



 1  YOU THAT ANOTHER WAY OF PRESERVING THE ASSETS WAS TO SET UP

 2  A SEPARATE CHARITABLE CORPORATION TO HOLD THE ASSETS; ISN'T

 3  THAT CORRECT?

 4       A    COULD I LOOK AT THE LETTER TO REFRESH MY MEMORY?

 5  I DON'T RECALL THAT SPECIFICALLY.

 6       Q    TAKE A LOOK AT THE SECOND PAGE OF THE LETTER.

 7       A    OKAY.

 8       Q    DOES IT HELP REFRESH YOUR RECOLLECTION THAT HE

 9  TOLD YOU OR ADVISED YOU, MR. MARCELLUS, TO SET UP A SEPARATE

10  CORPORATION TO TAKE THE ASSETS?

11       A    YES.

12       Q    AND INCLUDING ALL FUTURE ACCOUNTS RECEIVABLE, DO

13  YOU RECALL THAT AS BEING PART OF THE UCC-1 THAT YOU DID

14  PREPARE?

15       A    YES.

16       Q    AND YOU DIDN'T THINK THERE WAS ANYTHING WRONG WITH

17  THAT, DID YOU?

18       A    AT THE TIME, NO.  I JUST ASSUMED SINCE MR. CARTO

19  WAS ASKING ME TO DO IT, IT WAS LEGAL AND VALID.

20       Q    DID YOU THINK WHEN MR. HULSY TOLD YOU TO DO THIS,

21  THAT WAS LEGAL AND VALID?

22       MR. MUSSELMAN:  OBJECTION.  HEARSAY.  MR. HULSY --

23  WHAT MR. HULSY TOLD HIM OUTSIDE OF COURT IS HEARSAY.

24       THE COURT:  OVERRULED.  IT’s NOT FOR THE TRUTH OF THE

25  MATTER, BUT TO SHOW THE STATE OF MIND WHY YOU DO OR DID.

26       THE WITNESS:  MR. HULSY ACTUALLY TOLD ME NOTHING.  HE

27  TOLD ME TO DO NOTHING.  MR. CARTO REQUESTED THAT I CONTACT

28  HULSY AND ASK HIM ABOUT THE MATTER.  HULSY REPLIED IN THIS
			
			

page233



 1  LETTER, AND I THEN SIMPLY PASSED THE LETTER TO MR. CARTO.

 2

 3  BY MR. WAIER:

 4       Q    I NOTICED YOU DIDN'T ASK MR. HULSY TO RESPOND TO

 5  MR. CARTO IN THIS LETTER, DID YOU?

 6       A    THAT’s CORRECT.

 7       Q    AND IN FACT, MR. CARTO IS NOT EVEN CC'D ON THE

 8  LETTER, IS HE?

 9       A    AS SO OFTEN THE CASE IN SUCH MATTERS, NO.

10       Q    AND IN FACT, YOU DIDN'T THINK THERE WAS ANYTHING

11  WRONG OR ILLEGAL WITH MR. HULSY’s OPINION THAT THE MONIES

12  AND ASSETS OF THE LEGION SHOULD GO INTO ANOTHER CORPORATION,

13  DID YOU?

14       MR. MUSSELMAN:  OBJECTION.  WITHOUT FOUNDATION.  THAT

15  WAS MR. HULSY’s OPINION.

16       THE COURT:  SUSTAINED.

17

18  BY MR. WAIER:

19       Q    WELL, WITH RESPECT TO THE SECOND PARAGRAPH ON

20  PAGE 2 OF THIS EXHIBIT 174, DO YOU RECALL HAVING A TELEPHONE

21  CONVERSATION WITH HIM WHERE HE EXPRESSED AN OPINION ABOUT

22  SETTING UP A CHARITABLE CORPORATION IN CALIFORNIA?

23       A    I'M SORRY, I DON'T RECALL THAT CONVERSATION.

24       Q    DOES THAT HELP REFRESH YOUR RECOLLECTION AS TO

25  THAT CONVERSATION?

26       A    ALL I CAN RECALL IS THAT THERE WAS SOME DISCUSSION

27  OF SETTING UP A CHARITABLE CORPORATION.

28       Q    AND WITH RESPECT TO THE OPINION MR. HULSY HAS
			
			

page234



 1  EXPRESSED IN THE LETTER, YOU DIDN'T THINK ANYTHING WAS

 2  ILLEGAL OR UNETHICAL ABOUT THAT, DID YOU?

 3       A    NO.

 4       Q    YOU DIDN'T THINK THERE WAS ANYTHING, AT THIS POINT

 5  IN TIME, ILLEGAL OR UNETHICAL ABOUT SETTING UP A SEPARATE

 6  CORPORATION TO PUT ALL OF THE ASSETS, INCLUDING FUTURE

 7  ACCOUNT RECEIVABLES, OF THE LEGION INTO, DID YOU?

 8       A    NO.

 9       Q    IN FACT, YOU BELIEVED THAT IT WAS OKAY BECAUSE THE

10  ATTORNEY FOR THE LEGION WAS TELLING YOU IT WAS OKAY; ISN'T

11  THAT RIGHT?

12       A    AND BECAUSE MR. CARTO APPEARED TO THINK IT WAS

13  OKAY.

14       Q    AND YOU UNDERSTOOD THAT MR. CARTO, AT THIS TIME,

15  WAS TAKING THE ADVICE OF MR. HULSY IN TAKING ANY ACTIONS HE

16  TOOK AT THIS TIME?

17       A    IF THE UCC WERE FILED SUBSEQUENT TO THE LETTER,

18  THEN I WOULD SAY YES.

19       Q    YOU TESTIFIED YESTERDAY THERE WAS ONE FILED IN

20  JULY '91 AFTER THE LETTER.  DOES THAT HELP REFRESH YOUR

21  RECOLLECTION THAT MR. CARTO WAS ALSO FOLLOWING THE ADVICE OF

22  MR. HULSY?

23       A    THAT WOULD SEEM THE CASE.

24       Q    NOW, FROM 1985 TO 1993, YOU WEREN'T RESPONSIBLE

25  FOR MAINTAINING THE MINUTES OF THE LEGION, WERE YOU?

26       A    MINUTES OF THE LEGION BOARD?

27       Q    LEGION BOARD, YES.

28       A    NO.
			
			

page235



 1       Q    THAT WAS THE FUNCTION OF LAVONNE FURR; ISN'T THAT

 2  TRUE?

 3       A    I DON'T KNOW WHO PREPARED THE MINUTES.

 4       Q    WELL, YOU TESTIFIED THAT YOU KNEW SHE, LAVONNE

 5  FURR, WAS SECRETARY/TREASURER OF THE LEGION FROM A PERIOD OF

 6  TIME OF APPROXIMATELY 1985 THROUGH — OR THROUGH THE MIDDLE

 7  OF 1993; ISN'T THAT CORRECT?

 8       A    CORRECT.

 9       Q    AND YOU UNDERSTOOD THAT, BY YOUR READING OF THE

10  BYLAWS, THAT THE SECRETARY/TREASURER IS RESPONSIBLE FOR

11  MAINTAINING AND KEEPING THE MINUTES OF THE CORPORATION;

12  ISN'T THAT TRUE?

13       A    I UNDERSTOOD THAT TO BE TRUE, YES.

14       Q    YOU UNDERSTOOD THAT PURELY FROM YOUR EXPERIENCE IN

15  THE PAST WITH THE CORPORATIONS, TOO; ISN'T THAT RIGHT?

16       A    NO.  I HAD LITTLE EXPERIENCE WITH CORPORATIONS IN

17  THE PAST.

18       Q    WHO DID YOU BELIEVE IN 1983 WAS RESPONSIBLE FOR

19  TAKING DOWN THE MINUTES OF THE BOARD OF DIRECTORS?

20       A    WELL, JUST BY ASSUMPTION, I WOULD HAVE SURELY

21  ASSUMED IT WAS THE SECRETARY OF THE CORPORATION.

22       Q    AND THAT WAS LAVONNE FURR?

23       A    YES.

24       Q    NOW, ISN'T IT TRUE THAT SOMETIME IN 1991, YOU WERE

25  AWARE OF A WIRE TRANSFER OF MONEY FROM BANQUE CONTRADE TO

26  ANOTHER ENTITY?

27       A    I THINK — YES, I THINK THERE WAS A WIRE TRANSFER

28  OF — AT ABOUT THAT TIME.
			
			

page236



 1       Q    YOU WERE AWARE OF IT, TOO; ISN'T THAT CORRECT?

 2       A    YES.

 3       Q    BECAUSE YOU ACTUALLY SAW THE WIRE TRANSFER?

 4       A    NO.  I'M SORRY.  I WAS AWARE OF THE MONEY COMING

 5  INTO THE CORPORATION, BUT I DON'T BELIEVE AT THAT TIME I SAW

 6  ANY DOCUMENT THAT — THAT DETAILED WHERE THAT MONEY CAME

 7  FROM.  TYPICALLY, THESE KIND OF DOCUMENTS WOULD NOT BE SHOWN

 8  TO ME.

 9       Q    WELL YOU WERE AWARE IN SEPTEMBER OF 1991 THAT THE

10  LEGION HAD RECEIVED $100,000, ISN'T THAT CORRECT, FROM THE

11  BANQUE CONTRADE?

12       A    I'M NOT SURE OF THE AMOUNT.  IF I COULD SEE A

13  DOCUMENT OR SOMETHING, IT MIGHT REFRESH MY MEMORY.

14       Q    DO YOU RECALL THE TRIAL, HISTORICAL EDUCATION

15  FOUNDATION VERSUS THE INSTITUTE FOR HISTORICAL REVIEW IN

16  FRONT OF JUDGE ROSS?

17       A    YES.

18       Q    DO YOU RECALL YOU TESTIFIED?

19       A    I TESTIFIED IN THAT CASE, YES.

20       Q    AND DO YOU RECALL MY QUESTIONING YOU ABOUT THAT?

21       A    YES, VAGUELY.

22       Q    LET ME HAND YOU A COPY OF THE TRANSCRIPT OF THAT

23  CASE.  REFER YOU TO PAGE 74, 75 AND 76, ASK YOU TO READ THAT

24  AND TELL ME IF THAT DOESN'T REFRESH YOUR RECOLLECTION TO

25  WHAT YOU TESTIFIED TO UNDER PENALTY OF PERJURY, STARTING --

26  ACTUALLY, THIS STARTS FROM PAGE 71.  IF YOU WOULD READ THAT

27  TO YOURSELF, STARTING WITH — I'M SORRY, LET ME GO BACK.

28  STARTING WITH LINE 26 ON PAGE 70, AND READ THAT TO PAGE --
			
			

page237



 1  THE TOP OF LINE 1 PAGE 75, SEE IF THAT DOESN'T REFRESH YOUR

 2  RECOLLECTION SEPTEMBER OF 1991, YOU WERE AWARE OF A $100,000

 3  BANK TRANSFER OF FUNDS TO THE LEGION.

 4       A    I THINK I UNDERSTAND WHAT THIS IS NOW, YES.

 5       Q    AND YOU UNDERSTOOD, SEPTEMBER 1991, THE LEGION,

 6  THROUGH H.E.F., HAD RECEIVED A BANK TRANSFER OF $100,000;

 7  ISN'T THAT CORRECT?

 8       A    NO.  I BELIEVE AS I TESTIFIED HERE, IT WAS MY

 9  UNDERSTANDING THAT THAT MONEY WAS COMING FROM SOMETHING

10  HAVING TO DO WITH THE FARREL TRUST.

11       Q    YOU UNDERSTOOD THAT MONEY WAS COMING FROM THE

12  FARREL ESTATE; ISN'T THAT CORRECT?

13       A    THAT WAS MY UNDERSTANDING.

14       Q    YOU GOT THAT UNDERSTANDING FROM MR. CARTO; ISN'T

15  THAT CORRECT?

16       A    OR MRS. CARTO.

17       Q    AND THEY HAD TOLD YOU THAT AS EARLY AS JANUARY OF

18  1991, THAT YOU WOULD BE RECEIVING THAT MONEY; ISN'T THAT

19  CORRECT?

20       A    I DON'T RECALL THAT.

21       Q    DID YOU ASK THEM AT THE POINT IN TIME THAT YOU SAW

22  THIS MONEY TRANSFER WHY IT WAS BEING TRANSFERRED?

23       A    I DON'T RECALL THAT, NO.

24       Q    YOU JUST TOOK THE MONEY?

25       A    PROBABLY.

26       Q    DID YOU BELIEVE THAT IT WAS WITHIN YOUR FUNCTION

27  AS THE MANAGING OFFICER TO FIND OUT ABOUT THE MONEY OF THE

28  FARREL ESTATE BACK IN 1991?
			
			

page238



 1       A    NO.

 2       Q    YOU DIDN'T BELIEVE THAT IN WHAT YOU ALREADY

 3  PROFESSED AS RUNNING THE DAY-TO-DAY AFFAIRS OF THE LEGION IN

 4  1990 AND 1991, YOU HAD NO DUTY ON BEHALF OF THE CORPORATION

 5  TO FIND OUT WHAT MONIES HAD COME FROM THE FARREL ESTATE?

 6       A    NOT WHEN ELISABETH AND WILLIS WERE HANDLING IT.

 7       Q    I UNDERSTAND LAVONNE FURR WAS HANDLING IT, TOO?

 8       A    NO.

 9       Q    DID YOU EVER BOTHER — YOU UNDERSTOOD — STRIKE

10  THAT.

11            YOU UNDERSTOOD THAT LAVONNE FURR AND LEWIS FURR

12  WERE DIRECTORS IN 1990 AND 1991; ISN'T THAT TRUE?

13       A    YES.

14       Q    DID YOU EVER BOTHER, AS MANAGING OFFICER, TO

15  CONTACT THE LEGION, CONTACT LEWIS OR LAVONNE FURR TO FIND

16  OUT IF IN FACT MR. CARTO HAD ANY AUTHORITY WHATSOEVER TO

17  DISPENSE WITH THE FARREL ESTATE AS HE SAW FIT?

18       A    NO.

19       Q    BUT YOU KNEW AT THAT TIME HE HAD THAT AUTHORITY;

20  ISN'T THAT CORRECT?

21       A    CERTAINLY APPEARED TO HAVE THAT AUTHORITY.

22       Q    AND YOU UNDERSTOOD THAT?

23       A    UNDERSTOOD IT?

24       Q    YES.

25       A    WHAT DO YOU MEAN?  IT LOOKED TO ME AS THOUGH HE

26  HAD THAT AUTHORITY.  IT WAS FINE WITH ME.

27       Q    YOU UNDERSTOOD HE GOT THAT AUTHORITY FROM LEWIS

28  AND LAVONNE FURR; ISN'T THAT CORRECT?
			
			

page239



 1       A    I ASSUMED THAT.

 2       Q    AND DID YOU EVER BOTHER TO CALL LEWIS AND LAVONNE

 3  FURR UP OR COMMUNICATE WITH THEM IN ANY FASHION TO MAKE SURE

 4  THAT WAS CORRECT?

 5       A    YES.

 6       MR. MUSSELMAN:  VAGUE TO TIME.

 7

 8  BY MR. WAIER:

 9       Q    1990, 1991.

10       A    NO.

11       Q    YOU KNEW IN 1990 THAT THE FARREL ESTATE WAS GOING

12  TO BE SETTLED; ISN'T THAT CORRECT?

13       A    I DID, PROBABLY AS EARLY AS 1990, THAT — THAT

14  THERE WAS ENCOURAGING SIGNS OF A SETTLEMENT.  YES, PROBABLY

15  NO EARLIER THAN 1990.

16       Q    BUT AT LEAST AS TO JANUARY OF 1991, YOU KNEW THE

17  ESTATE WAS SETTLED?

18       A    NO, I DID NOT KNOW THAT.

19       Q    YOU KNEW IT WAS SETTLED WHEN YOU FIRST STARTED

20  RECEIVING MONEY FROM THE BANQUE CONTRADE, DIDN'T YOU?

21       A    I DON'T KNOW HOW THE LAW WORKS, PARTICULARLY IT

22  BEING TAKING PLACE IN — IN THE FOREIGN COUNTRIES.  I

23  THOUGHT MAYBE THERE WAS SOME PARTIAL RELEASE OR PARTIAL

24  SETTLEMENT OR WHAT.  I DIDN'T KNOW WHAT THE SETTLEMENT WAS.

25  I DIDN'T SEE ANY SETTLEMENT DOCUMENTS UNTIL 1993.

26       Q    AND YOU WEREN'T CONCERNED ABOUT IT IN 1990, WERE

27  YOU?

28       A    IT WAS IN THE HANDS OF MR. CARTO.  I HAD NO REASON
			
			

page240



 1  TO BE CONCERNED.

 2       Q    IT WAS IN THE HAND OF THE LEGION BOARD OF

 3  DIRECTORS AT THAT TIME; ISN'T THAT CORRECT?

 4       A    I ASSUMED IT WAS.  YES.

 5       Q    IN 1985 — YOU INDICATED YOU WERE MANAGING OFFICER

 6  IN 1985?

 7       A    DIRECTOR, MANAGING DIRECTOR.

 8       Q    SO WE DON'T GET CONFUSED, YOU WERE NEVER ON THE

 9  BOARD OF DIRECTORS; IT WAS MERELY A TITLE?

10       A    CORRECT.

11       Q    YOU DIDN'T VOTE ON CORPORATE MATTERS; ISN'T THAT

12  CORRECT?

13       A    I DID NOT.

14       Q    OKAY.  IN 1985, DID YOU — HAD YOU HEARD --

15  STRIKE THAT.

16            AFTER YOU LEARNED THAT JEAN FARREL-EDISON HAD DIED

17  IN 1985, DID YOU HAVE ANY CONVERSATIONS WITH MR. CARTO?

18       A    YES.

19       Q    IN THE CONVERSATIONS, DID THOSE CONVERSATIONS DEAL

20  WITH THE FARREL-EDISON ESTATE?

21       A    YES.

22       Q    AND IN FACT, DIDN'T HE TELL YOU THAT THE WILL OF

23  JEAN FARREL-EDISON DID NOT BEQUEATH ANY OF HER ASSETS TO THE

24  LEGION, BUT RATHER, HAD BEQUEATHED THEM TO AN INDIVIDUAL BY

25  THE NAME OF JOAN ALTHAUS?

26       A    NO, HE DID NOT MENTION THAT.

27       Q    WHAT DID HE TELL YOU ABOUT THE FARREL-EDISON

28  ESTATE?
			
			

page241



 1       A    AFTER HER DEATH, WE HAD ONE OR TWO CONVERSATIONS

 2  AND IT WAS MY UNDERSTANDING, FROM THE CONVERSATIONS WITH

 3  MR. CARTO AND MRS. CARTO, THAT THE ESTATE WAS FANTASTIC.

 4  THERE WERE PERHAPS, I WAS TOLD AT THIS TIME, SEVERAL

 5  MILLIONS OF DOLLARS.  AND THEN I THINK JUST ABOUT THE TIME

 6  WHEN I — UP UNTIL THE TIME I LEFT THE CORPORATION, I

 7  UNDERSTOOD FROM CONVERSATIONS WITH MR. AND MRS. CARTO THAT

 8  THERE WAS GOING TO BE SOME — IT WAS GOING TO BE

 9  CONTESTED.  SOMETHING WAS GOING TO BE CONTESTED ABOUT, AND

10  IT MIGHT TAKE A BIT OF A FIGHT BEFORE THE LEGION COULD GET

11  WHAT MRS. FARREL INTENDED IT TO RECEIVE.

12       Q    ISN'T IT TRUE MR. CARTO AND/OR MRS. CARTO TOLD YOU

13  AT THIS TIME THIS FIGHT WOULD HAVE TO BE WAGED OVERSEAS?

14       A    I UNDERSTOOD, YES, IT WOULD BE SWITZERLAND WHERE I

15  HAD THE IDEA IT WOULD BE.

16       Q    DIDN'T THEY TELL YOU THAT IT WAS GOING TO BE A

17  VERY RISKY TYPE OF LITIGATION, THAT IT WOULD BE DIFFICULT

18  BECAUSE IT WAS OVERSEAS?

19       A    I WASN'T UNDER THE IMPRESSION THAT IT WAS RISKY,

20  BUT ONLY THAT IT WOULD BE SOMEWHAT DIFFICULT LOGISTICALLY

21  BECAUSE IT WAS TAKING PLACE OVERSEAS.

22       Q    IN FACT, DIDN'T THEY TELL YOU IT WOULD BE

23  DIFFICULT BECAUSE HERE YOU HAVE A SWISS RESIDENT OR SOMEONE

24  EUROPEAN RESIDENT OVER IN EUROPE WHO WAS NAMED AS THE

25  BENEFICIARY AND YOU HAD TO GO UP AGAINST THOSE TYPE OF ODDS?

26       A    WELL, SURELY THAT WAS MY UNDERSTANDING AT THAT

27  TIME.

28       Q    AND IN FACT, MR. AND MRS. CARTO TOLD YOU THAT
			
			

page242



 1  THERE WAS NO GIVENS THAT ANYTHING WOULD BE RECEIVED FROM THE

 2  FARREL-EDISON ESTATE EVEN IF THEY CONTESTED IT; ISN'T THAT

 3  TRUE?

 4       A    NO, THAT, ACTUALLY, QUITE THE OPPOSITE OF THAT.  I

 5  THINK MR. AND MRS. CARTO WERE EXACERBATED ABOUT HAVING TO BE

 6  INVOLVED IN THE LITIGATION.  BUT AT THE SAME TIME, THEY

 7  ENCOURAGED ME THAT — THAT BECAUSE THE ESTATE WAS SO LARGE

 8  AND BECAUSE — THAT JEAN HAD SPECIFICALLY INTENDED FOR THE

 9  LEGION TO RECEIVE THE ASSETS, THAT WE WERE BOUND TO COME OUT

10  WITH SOMETHING QUITE SUBSTANTIAL, AS LONG AS WE GOT INVOLVED

11  IN THE LITIGATION AND FOUGHT FOR WHAT WAS RIGHT FOR THE

12  LEGION.

13       Q    DID YOU CONTACT ANY ATTORNEYS AT THIS TIME AS PART

14  OF YOUR MANAGING DIRECTOR DUTIES TO SEE IF ANY ATTORNEYS

15  WOULD HANDLE THAT MATTER FOR YOU FOR THE LEGION?

16       A    MR. CARTO HAD TAKEN THE ENTIRE THING OUT OF MY

17  HANDS.

18       MR. WAIER:  I'M GOING TO MOVE TO STRIKE AS

19  NONRESPONSIVE.

20       THE COURT:  SUSTAIN THE OBJECTION.  I THINK IT CAN BE

21  ANSWERED “YES” OR “NO,” AND ON REDIRECT, THEY CAN GO INTO

22  IT.

23       THE WITNESS:  THE ANSWER IS I DON'T RECALL CONTACTING

24  ANY ATTORNEYS, NO.

25

26  BY MR. WAIER:

27       Q    DID YOU ASK MR. CARTO AT THAT POINT IN TIME HOW

28  MUCH IT WOULD COST TO WAGE THAT FIGHT OVERSEAS WITH RESPECT
			
			

page243



 1  TO THE CONTEST ON THE FARREL-EDISON ESTATE?

 2       A    AT WHAT TIME PERIOD?

 3       Q    JUST BEFORE YOU LEFT, 1986.

 4       A    I DID HAVE A DISCUSSION WITH HIM ABOUT THE

 5  POSSIBILITY OF RAISING FUNDS TO HELP SECURE THE ESTATE.  BUT

 6  I DID NOT ASK HIM SPECIFICALLY HOW MUCH IT WAS GOING TO COST

 7  TO LITIGATE THE MATTER.  NO, I DON'T THINK I DID.

 8       Q    YOU LEFT THAT IN WHOSE HANDS?

 9       A    IN MR. Carto’s HANDS.

10       Q    THE REASON WHY YOU LEFT IT IN MR. Carto’s HANDS,

11  HE MADE AN AGREEMENT WITH THE CORPORATION, THE LEGION,

12  THROUGH THE BOARD OF DIRECTORS, CONCERNING HIS INVOLVEMENT

13  IN RECOVERY OF THAT ESTATE; ISN'T THAT TRUE?

14       A    IT’s NOT ACTUALLY THAT I LEFT — YOU HAVE CAUSE

15  AND EFFECT REVERSED.  I DIDN'T LEAVE IT IN MR. Carto’s

16  HANDS.  MR. CARTO DID NOT WANT TO PUT IT IN MY HANDS, IS THE

17  WAY IT WORKED.

18       Q    WELL, BECAUSE YOU WERE NOT AUTHORIZED; ISN'T THAT

19  CORRECT?

20       A    MR. CARTO HAD FAR MORE AUTHORITY IN THE

21  CORPORATION THAN I DID.

22       Q    HE GOT THAT AUTHORITY THROUGH THE BOARD OF

23  DIRECTORS; ISN'T THAT TRUE?

24       A    THAT WAS MY UNDERSTANDING, YES.

25       Q    THAT WAS LEWIS AND LAVONNE FURR?

26       A    IT WAS WHOEVER THE BOARD WAS.  AND LEWIS --

27  LAVONNE FURR WAS THE SPOKESPERSON FOR THE BOARD.

28       Q    GO BACK TO EXHIBIT 2.
			
			

page244



 1       A    ALL RIGHT.

 2       Q    YOU WILL RECALL THESE BYLAWS OF THE LEGION FOR

 3  SURVIVAL OF THE FREEDOM, INC.?

 4       A    YES.

 5       Q    DO YOU SEE “INCORPORATORS"?  WHEN YOU READ THESE

 6  BYLAWS, WHO — DID YOU UNDERSTAND WHAT WAS MEANT BY THE

 7  TERM “INCORPORATORS"?

 8       A    MR. WAIER, I DID NOT REVIEW OR READ THE BYLAWS

 9  PROBABLY UNTIL 1993.

10       Q    WELL, YOU UNDERSTOOD, DID YOU NOT, THAT THE BOARD

11  OF DIRECTORS WERE APPOINTED BY THE INCORPORATORS PRIOR TO

12  1993?

13       A    NO, I HAD NO SUCH UNDERSTANDING.

14       Q    YOU CERTAINLY BECAME AWARE OF THAT WHEN YOU READ

15  THE BYLAWS?

16       MR. BEUGELMANS:  WHICH BYLAWS?

17       MR. WAIER:  1993, EXHIBIT 2.

18       MR. MUSSELMAN:  IS THAT A QUESTION?

19

20  BY MR. WAIER:

21       Q    YES.  YOU UNDERSTOOD IN 1993 WHEN YOU READ THE

22  BYLAWS, EXHIBIT 2, THAT THE INCORPORATORS APPOINTED AND HAD

23  THE DUTY TO APPOINT DIRECTORS IN THE LEGION?

24       A    I UNDERSTOOD THAT’s WHAT IT SAID ON THE PAPER, BUT

25  I DIDN'T KNOW IF THESE WERE VALID BYLAWS OR SUPERCEDED

26  OR — OR NOT.  I KNOW THIS IS WHAT THIS PAPER SAID.

27       Q    YOU UNDERSTOOD THAT PRIOR TO THE MIDDLE OF 1993,

28  THAT MR. CARTO, WHILE YOU WERE AT THE LEGION, APPOINTED
			
			

page245



 1  DIRECTORS; ISN'T THAT CORRECT?

 2       A    PRIOR TO MR. Carto’s TERMINATION, I UNDERSTOOD

 3  THAT?

 4       Q    YEAH, MR. CARTO.

 5       A    I UNDERSTOOD THAT’s WHAT THE BYLAWS SAID.  I

 6  DIDN'T UNDERSTAND THOSE WERE THE CORRECT BYLAWS, BUT I

 7  UNDERSTOOD THAT’s WHAT THESE BYLAWS SAID.

 8       Q    YOU UNDERSTOOD MR. CARTO GOT HIS AUTHORITY FROM

 9  THE BYLAWS TO APPOINT DIRECTORS; ISN'T THAT CORRECT?

10       A    I'M NOT SURE IF THAT THOUGHT OCCURRED OR NOT.

11       MR. BEUGELMANS:  OBJECTION.

12

13  BY MR. WAIER:

14       Q    BUT YOU DID KNOW HE WAS APPOINTING DIRECTORS ON AN

15  ANNUAL BASIS; ISN'T THAT TRUE?

16       A    OH, TO THE CONTRARY.  AU CONTRAIRE.

17       Q    YOU DID NOT KNOW HE EVER APPOINTED A DIRECTOR?

18       A    NO.  BASED ON THE SCANT MINUTES I RECEIVED, IT

19  LOOKED AS THOUGH THEY WERE SELF-PERPETUATING.

20       Q    SO YOU ARE UNAWARE OF ANY DIRECTOR THAT

21  WILLIS CARTO APPOINTED TO THE BOARD?

22       A    AS I SIT HERE, I CAN'T THINK OF A DIRECTOR THAT

23  WILLIS CARTO APPOINTED TO THE BOARD.  I COULD BE SHOWN

24  WRONG, BUT I DON'T SEEM TO RECALL AT ANY TIME.

25       Q    SIR, DIDN'T TOM KERR TELL YOU WILLIS APPOINTED HIM

26  TO THE BOARD?

27       A    NO, HE NEVER SAID SUCH A THING.

28       Q    WELL, HOW DID YOU UNDERSTAND MR. KERR TO BE
			
			

page246



 1  APPOINTED TO THE BOARD?  WHO APPOINTED TOM KERR TO THE

 2  BOARD?

 3       A    IT WAS MY UNDERSTANDING HE AGREED TO BE ON THE

 4  BOARD, AND THAT HE WAS — THEN, IN A BOARD MEETING, HE

 5  WAS — HOWEVER THEY DO IT.  THEY ELECT SOMEBODY TO BE ON

 6  THE BOARD AND NOMINATE.

 7       Q    WHO DO YOU THINK BROUGHT MR. KERR TO THE BOARD FOR

 8  THAT AGREEMENT?

 9       A    PROBABLY MR. CARTO.

10       Q    IN FACT, ISN'T IT TRUE THAT EVERY SINGLE DIRECTOR

11  PRIOR TO WHAT YOU TERM MR. Carto’s TERMINATION WAS BROUGHT

12  TO THE BOARD, FOR WANT OF A BETTER TERM, BY MR. CARTO?

13       A    THAT MAY VERY WELL BE TRUE.

14       Q    YOU UNDERSTOOD THAT; ISN'T THAT CORRECT?

15       A    NO.  I DIDN'T KNOW WHO ALL THE DIRECTORS WERE.  I

16  MEAN, THIS BOARD WAS SORT OF NEBULOUS.  I DIDN'T KNOW WHO

17  REALLY WAS ON IT, WHO WASN'T ON IT DURING THAT TIME PERIOD;

18  WHAT TIME PERIODS THEY WERE OFF.  I MEAN, PEOPLE WHO WERE

19  DEAD WERE ON THE BOARD.  MR. WEBER WAS ON THE BOARD BUT

20  DIDN'T KNOW IT UNTIL THREE YEARS LATER.  OTHER DIRECTORS

21  WERE ON THE BOARD.  WE FOUND OUT IN 1993 THAT THEY DIDN'T

22  REALIZE THEY WERE ON THE BOARD.  THEY HAD NEVER BEEN TOLD.

23       Q    YOU FOUND THAT OUT THROUGH YOUR REVIEW OF VARIOUS

24  MINUTES IN 1993?

25       A    NO.  WE FOUND OUT BY TALKING TO THESE — TO THE

26  PEOPLE.  YES, I'M SORRY, THAT IS CORRECT.  YES, WE REVIEWED

27  THE MINUTES AND SAW THEIR NAMES AND SPOKE WITH THEM.

28       Q    ISN'T IT TRUE THAT YOU WERE RESPONSIBLE FOR A
			
			

page247



 1  PERIOD, OF FILING WITH THE CALIFORNIA SECRETARY OF STATE, A

 2  STATEMENT FOR A NONPROFIT CORPORATION WHERE YOU LISTED THE

 3  DIRECTORS?

 4       A    YES.

 5       Q    FOR WHAT PERIOD OF TIME DID YOU DO THAT?

 6       A    I'M NOT SURE IF I DID THOSE FILINGS.  THEY WERE

 7  PREPARED BY MRS. CARTO.  I MAY HAVE SIGNED THEM.  AND TO MY

 8  KNOWLEDGE, THEY — I DID IT FROM PERHAPS '83, MAYBE AS

 9  EARLY AS '83, ON THROUGH THE — WHEN I FINALLY RESIGNED

10  FROM THE CORPORATION IN '94.  I HAD — I SAW THEM AT

11  LEAST — I SAW THESE FILINGS AT LEAST.

12       Q    YOU KNEW WHO THE DIRECTORS WERE?  YOU PUT YOUR

13  NAME TO IT, DIDN'T YOU?

14       A    I KNEW WHO MRS. CARTO AND MR. CARTO REPRESENTED TO

15  ME TO BE THE DIRECTORS.

16       Q    WELL, YOU PUT YOUR NAME AND YOU REPRESENTED TO THE

17  SECRETARY OF STATE BY PLACING YOUR NAME ON THAT DOCUMENT

18  THAT THOSE WERE THE DIRECTORS; ISN'T THAT TRUE?

19       A    IF I DID SIGN THE DOCUMENTS, THEN YES, THAT’s WHAT

20  I DID.

21       Q    AND YOU CERTAINLY WOULDN'T MISLEAD THE SECRETARY

22  OF STATE, WOULD YOU?

23       A    NOT INTENTIONALLY, SIR.

24       Q    YOU ARE AWARE THAT THERE IS AN AGREEMENT BETWEEN

25  THE LEGION AND WILLIS CARTO CONCERNING THE FARREL-EDISON

26  ESTATE; ISN'T THAT TRUE?

27       A    I HAVE SEEN SOME MINUTES OR OTHER DOCUMENT

28  THAT — THAT PURPORTS OR SHOWS SOME KIND OF A CONTRACT OR
			
			

page248



 1  RELATIONSHIP BETWEEN MR. CARTO AND THE LEGION WITH RESPECT

 2  TO THE FARREL ESTATE, YES.

 3       Q    IN FACT, YOU ARE AWARE THAT LAVONNE FURR HAS

 4  TESTIFIED UNDER OATH THAT SUCH AN AGREEMENT WAS IN

 5  EXISTENCE; ISN'T THAT TRUE?

 6       A    I'M SORRY, I HAVEN'T READ ANY OF OR SEEN ANY OF

 7  MRS. FURR’s TESTIMONY.

 8       Q    WEREN'T YOU TOLD THAT, THAT SHE STATED THAT THERE

 9  WAS SUCH AN AGREEMENT?

10       MR. MUSSELMAN:  OBJECTION.  RELEVANCE TO WHAT WAS TOLD

11  BY WHOM.  THE LAWYERS?

12       THE COURT:  SUSTAINED.

13

14  BY MR. WAIER:

15       Q    DID MRS. FURR TELL YOU THAT?

16       A    I'M SORRY.  TELL ME WHAT?

17       Q    DID MRS. FURR TELL YOU THAT THE LEGION HAD ENTERED

18  INTO AN AGREEMENT WITH MR. CARTO IN THE FIRST PART OF 1986

19  CONCERNING THE FARREL-EDISON ESTATE AND RECOVERY OF THE

20  FARREL-EDISON ESTATE?

21       A    THE ONLY CONVERSATION I HAD WITH MRS. FURR, SHE

22  EMPHATICALLY TOLD ME HE WAS NOT.

23       MR. WAIER:  MOVE TO STRIKE.  NONRESPONSIVE.

24       THE COURT:  OVERRULED.

25       THE WITNESS:  HE WAS NOT ENTITLED TO DO WHAT THEY

26  WANTED WITH THIS MONEY AND HE WAS NOT A GENERAL AGENT, THAT

27  HE WAS ONLY APPOINTED AGENT FOR SPECIFIC THINGS.

28       MR. WAIER:  I'M GOING TO MOVE TO STRIKE THE TESTIMONY
			
			

page249



 1  AS NONRESPONSIVE.

 2       THE COURT:  OVERRULED.

 3

 4  BY MR. WAIER:

 5       Q    NOW LET ME REFER YOU TO EXHIBIT 6 THAT YOU HAVE IN

 6  YOUR BOOK.

 7       A    MINUTES OF MARCH 5, 1985.

 8       Q    THAT’s CORRECT.

 9       A    OKAY.  I HAVE THEM HERE.

10       Q    THIS IS BEFORE JEAN FARREL-EDISON DIED; ISN'T THAT

11  CORRECT?

12       A    I THINK SO.  SHE DIED IN AUGUST, WASN'T IT?  I'M

13  NOT SURE EXACTLY.  I THINK THIS WAS BEFORE SHE DIED.

14       Q    YOU ORIGINALLY SAID 1994, AND YOU CORRECTED

15  YOURSELF TO — I MEAN 1984.  YOU CORRECTED YOURSELF TO

16  1985.  DO YOU RECALL THAT?

17       A    YES.

18       Q    THESE MINUTES REFER TO THE ARSON OF THE

19  CORPORATION’s OFFICE AND WAREHOUSE.  DO YOU SEE THAT THAT

20  OCCURRED JULY 4, 1984?

21       A    YES.

22       Q    THAT PRETTY WELL DEVASTATED THE LEGION, DID IT

23  NOT?

24       A    IT WAS A DEVASTATING BLOW.  IT DID NOT DEVASTATE

25  THE LEGION.

26       Q    NOT ONLY DID THE OFFICES BURN DOWN, THE INVENTORY

27  BURNED UP, TOO, DID IT NOT?

28       A    PART OF THE INVENTORY.
			
			

page250



 1       Q    SUBSTANTIAL PORTION OF THE INVENTORY; ISN'T THAT

 2  TRUE?

 3       A    I WOULD SAY TWO-THIRDS.

 4       Q    BUT THAT’s PRETTY SUBSTANTIAL, WOULDN'T YOU AGREE?

 5       A    THE INVENTORY THAT DID GET BURNED WAS NOT — WAS

 6  MORE EASILY REPLACEABLE THAN WHAT DID NOT GET BURNED.  IN

 7  THAT SENSE, THOUGH, IT WAS DEVASTATING THAT INVENTORY GOT

 8  BURNED AND THOUGH MANY WAS REPLACEABLE.

 9       Q    WHEN YOU SAY “REPLACEABLE,” IT WOULD COST MONEY TO

10  REPLACE THAT?

11       A    SURELY.

12       Q    AND IT WAS GOING TO COST MONEY TO FIND NEW

13  OFFICES; ISN'T THAT TRUE?

14       A    YES.

15       Q    IN FACT, IT DID COST A SUBSTANTIAL AMOUNT OF

16  MONEY; ISN'T THAT TRUE?

17       A    TO — TO — FINDING OFFICES, NO, COST

18  PRACTICALLY NOTHING.

19       Q    YOU WILL NOTICE HERE THAT THERE INDICATES A LOSS

20  ESTIMATED AT SOME $400,000.  DO YOU SEE THIS?  THIS IN

21  EXHIBIT 6.

22       A    YES.

23       Q    DO YOU HAVE ANY REASON TO DISBELIEVE THAT WAS THE

24  ESTIMATED LOSS?

25       A    WELL, I BELIEVE IT’s AT A RETAIL FIGURE.

26       Q    DO YOU BELIEVE THAT’s A CORRECT FIGURE?

27       A    AT RETAIL?  IT’s PROBABLY FAIRLY ACCURATE.

28       Q    AND IT SAYS ALSO — SAID THAT VIRTUALLY ALL
			
			

page251



 1  PROPERTY OWNED BY THE CORPORATION WAS DESTROYED.  DO YOU

 2  DISAGREE WITH THAT STATEMENT?

 3       A    “VIRTUALLY” MEANING “ALMOST ALL,” RIGHT?

 4       Q    YES.

 5       A    NO.  NO, I WOULDN'T SAY “VIRTUALLY.”  VIRTUALLY

 6  COULD BE SAID, BUT SITTING HERE TODAY, I WOULDN'T SAY

 7  “VIRTUALLY” IS A CORRECT TERM.  AND THERE’s A REASON FOR

 8  THAT, IF YOU WOULD LIKE ME TO EXPLAIN.

 9       Q    YOU WILL HAVE PLENTY OF OPPORTUNITY TO EXPLAIN

10  WHEN COUNSEL ASKS YOU THOSE QUESTIONS, MR. MARCELLUS.

11       A    VERY GOOD.

12       Q    NOW, WITH REGARDING THAT, THAT DID AFFECT THE

13  CORPORATION FINANCIALLY, DID IT NOT?

14       A    YES.

15       Q    AND ALSO THE MERMELSTEIN LITIGATION WAS COMMENCED

16  AT THIS TIME; ISN'T THAT TRUE?

17       A    I DIDN'T THINK IT WAS COMMENCED — MAYBE IT WAS.

18       Q    TAKE A LOOK AT THE MINUTES OF MARCH 5, 1985.  DOWN

19  ON THE FOURTH PARAGRAPH, “THE UPCOMING MERMELSTEIN TRIAL WAS

20  ALSO DISCUSSED WHICH IS NOW SCHEDULED FOR TRIAL THIS YEAR.

21  THE TRIAL WILL BE VERY EXPENSIVE AND TIME CONSUMING."

22       A    YES, YOU SAID “COMMENCED,” AND THAT THREW ME OFF.

23       Q    IT HAD ALREADY BEEN COMMENCED AT THIS TIME?

24       A    THAT’s CORRECT.

25       Q    YOU UNDERSTOOD THAT WAS GOING TO BE A VERY

26  EXPENSIVE AND TIME-CONSUMING TRIAL?

27       A    PERHAPS NOT TO THE DEGREE IT’s STATED HERE.

28       Q    THESE ARE THE BOARD — THESE ARE THE BOARD OF
			
			

page252



 1  DIRECTORS THAT ARE — THAT ARE MAKING THESE STATEMENTS;

 2  ISN'T THAT TRUE?

 3       A    NO.

 4       Q    WELL, IT SAYS — TAKE A LOOK AT THE SECOND PAGE,

 5  LAVONNE FURR --

 6       A    YES.

 7       Q    SHE WAS THE BOARD OF DIRECTOR AT THIS TIME?

 8       A    YES, MY UNDERSTANDING, SHE WAS.

 9       Q    DO YOU RECOGNIZE HER SIGNATURE?

10       A    YES.

11       Q    YOU ALREADY ACKNOWLEDGED SHE WAS THE

12  SECRETARY/TREASURER AT THIS POINT IN TIME, MARCH 1985?

13       A    YES.

14       Q    SO ARE YOU SAYING THAT HER UNDERSTANDING WAS

15  INCORRECT?

16       MR. MUSSELMAN:  OBJECTION.  WITHOUT FOUNDATION TO WHAT

17  HER UNDERSTANDING WAS.

18       MR. WAIER:  WELL, THAT THE TRIAL, MERMELSTEIN, WAS TO

19  BE EXPENSIVE.

20       THE COURT:  COUNSEL, YOU KNOW, WHEN THERE’s AN

21  OBJECTION, I GET TO RULE.

22       MR. WAIER:  I APOLOGIZE.

23       THE COURT:  OVERRULE THE OBJECTION.

24       THE WITNESS:  YES.  AS I SIT HERE, I CAN SEE HOW

25  LAVONNE FURR COULD HAVE THAT OPINION AND WRITE IT INTO THE

26  MINUTES, YES.

27

28
			
			

page253



 1  BY MR. WAIER:

 2       Q    NOW THAT THE ASSETS OF THE LEGION WERE VIRTUALLY

 3  DESTROYED, THE ONLY WAY THAT MONEY COULD COME TO FUND THAT

 4  LITIGATION, WHICH WAS GOING TO BE EXPENSIVE AND TIME

 5  CONSUMING, WOULD BE THROUGH DONATIONS; ISN'T THAT CORRECT?

 6       A    WE HAD ALREADY RAISED A BUNCH OF MONEY ON

 7  DONATIONS.

 8       Q    WHERE DID THAT MONEY GO TO?

 9       A    MOST — A LOT OF IT MYSTERIOUSLY DISAPPEARED ON

10  MR. Carto’s F.D.F.A. IN 1985, I BELIEVE.

11       Q    YOU SAY “MYSTERIOUSLY.”  SIR, DID YOU TELL

12  DONATORS, YOURSELF — I DON'T KNOW HOW MYSTERIOUS IT IS --

13  AS WE POINTED OUT THE OTHER DAY, DONATORS NOT TO PUT IT INTO

14  THE LEGION, TO PUT IT IN F.D.F.A.?

15       A    TRUE, THAT’s NOT THE MYSTERIOUS PART.  THAT WAS

16  THE — THE PART I KNEW ABOUT.

17       Q    IN FACT, JEAN FARREL-EDISON WASN'T THE ONLY

18  INDIVIDUAL YOU TOLD TO PUT MONEY INTO THE F.D.F.A.; ISN'T

19  THAT TRUE?

20       A    I MAY HAVE ASKED SEVERAL OTHERS TO MAKE CHECKS OUT

21  TO F.D.F.A., YES.

22       Q    IN FACT, YOU WERE TELLING EVERYONE NOT TO PUT

23  MONEY INTO THE LEGION BECAUSE OF THE MERMELSTEIN LITIGATION

24  IN 1985, BUT TO PUT IT INTO ORGANIZATIONS SUCH AS F.D.F.A.;

25  ISN'T THAT TRUE?

26       A    THERE MIGHT HAVE BEEN SOME POINT THERE IN WHICH I

27  WAS INSTRUCTED TO DO THAT AND DID DO IT, YES.

28       Q    WELL, MR. CARTO DIDN'T WRITE THESE LETTERS.  YOU
			
			

page254



 1  WROTE THEM.  ISN'T THAT TRUE?

 2       A    THAT’s RIGHT.

 3       Q    AND YOU SIGNED THEM?

 4       A    THAT’s RIGHT.

 5       Q    AND YOU WERE — AND YOU UNDERSTOOD THAT THE

 6  VARIOUS DONATORS WERE GOING TO ACT ON THE LETTERS FROM YOU;

 7  ISN'T THAT CORRECT?

 8       A    ABSOLUTELY.

 9       Q    SO THERE WAS NOTHING MYSTERIOUS ABOUT THAT?

10       A    AS I SAID, NO.

11       Q    IN FACT, IT WAS AT THIS POINT IN TIME THAT YOU

12  TESTIFIED THAT THERE WAS ANOTHER ACCOUNT OPENED UP CALLED

13  H.E.F., HISTORICAL EDUCATION FOUNDATION; ISN'T THAT TRUE,

14  1984?

15       A    YES.

16       Q    AND THAT WAS DONE BECAUSE OF THE MERMELSTEIN CASE?

17       A    YES, I BELIEVE IT WAS PART OF THAT.

18       Q    NOW, AS YOU SIT HERE TODAY, PRIOR TO THIS TIME,

19  HAVE YOU EVER SEEN A COPY OF JEAN FARREL-EDISON’s WILL?

20       A    I WAS ASKED THAT QUESTION FRIDAY.  I SAID IT WAS

21  IN FRENCH.  I COULDN'T READ IT.

22       Q    HAD YOU EVER SEEN IT PRIOR TO BEING ASKED ABOUT IT

23  ON FRIDAY?

24       A    I DON'T RECALL EVER HAVING SEEN IT BEFORE.

25  CERTAINLY IF I SAW IT, I COULDN'T READ IT.

26       Q    AS PART OF YOUR INVESTIGATION IN MARCH 1993

27  THROUGH JULY OF 1993, DID YOU TRY TO FIND OUT WHERE THIS

28  WILL WAS?
			
			

page255



 1       A    I BELIEVE WE DID TRY AND TRACK DOWN SOME OF THESE

 2  DOCUMENTS RELATED TO THE FARREL ESTATE.  BUT I DON'T RECALL

 3  TO WHAT EXTENT, AND I THINK WE ONLY HAD — WE HAD LIMITED

 4  OR NO SUCCESS AT ALL.

 5       Q    BY THE WAY, DO YOU HAPPEN TO KNOW HOW MUCH IT COST

 6  TO HANDLE ALL OF THE MERMELSTEIN LITIGATION ATTORNEY’s FEES

 7  AND COSTS?

 8       A    ALL THE MERMELSTEIN LITIGATION?

 9       Q    YES.

10       A    BOTH OF THE MERMELSTEIN LITIGATION?

11       Q    BOTH, YES, ONE THAT WE PREVIOUSLY TALKED ABOUT IN

12  1984-1985 ALL THE WAY THROUGH 1990.

13       A    IT WOULD BE IMPOSSIBLE TO SAY.  THEY WERE

14  CODEFENDANTS.  I WOULD HAVE NO IDEA.  I WILL — I THINK

15  LIBERTY LOBBY WAS NAMED, AND THEY HAD, I'M SURE, TO PAY

16  ATTORNEY’s FEES OR AT LEAST HAVE MR. LANE INVOLVED IN THE

17  THING.

18            I — I THINK I KNOW APPROXIMATELY WHAT THE LEGION

19  MIGHT HAVE PAID IN ATTORNEY’s FEES TO LITIGATE THE TWO

20  CASES.

21       Q    WHERE DID YOU GET THAT INFORMATION?

22       A    OH, THAT INFORMATION WOULD HAVE BEEN — AT LEAST

23  FOR PAYMENTS MADE TO ATTORNEYS BY THE LEGION, I WOULD BE

24  AWARE OF THOSE CHECKS, WOULD BE WRITTEN ON THE ACCOUNT.  AND

25  I SIGNED THE CHECKS AND I WOULD — I KNEW WHAT MONIES WERE

26  COMING TO AND OUT OF THE ACCOUNTS.

27       Q    YOU UNDERSTOOD THE MERMELSTEIN LITIGATION, THAT

28  MR. LANE REPRESENTED THE LIBERTY LOBBY THROUGH THE
			
			

page256



 1  LITIGATIONS?

 2       A    I RECALL THAT BEING THE SECOND MERMELSTEIN

 3  LITIGATION.  I'M NOT SURE ABOUT THE FIRST ONE.

 4       Q    WHO REPRESENTED THE LEGION IN THE FIRST

 5  LITIGATION?

 6       A    THERE WAS A GENTLEMAN NAMED BOWMAN.  THEN THERE

 7  WAS AN ATTORNEY CAME ON THE SCENE NAMED, I BELIEVE,

 8  VON ESCH.  I'M NOT SURE WHEN THE TRANSITION OCCURRED OR IF

 9  BOTH WERE INVOLVED IN THE CASE.

10       Q    ARE YOU AWARE THAT ANY OF THEIR PAYMENTS AND THEIR

11  REPRESENTATION OF THE LEGION CAME FROM OTHER SOURCES OTHER

12  THAN THE LEGION?

13       MR. MUSSELMAN:  OBJECTION.  RELEVANCE.

14       THE COURT:  SUSTAINED.

15       MR. WAIER:  YOUR HONOR, OFFER OF PROOF?

16       THE COURT:  GO AHEAD.

17       MR. WAIER:  WITH RESPECT TO THE OTHER SOURCES, WE'RE

18  GOING TO SHOW THEY WERE THE F.D.F.A., LIBERTY LOBBY, SO

19  FORTH.  THESE WERE FUNDS WHICH THEY HAD, WHICH THE LEGION

20  CONTINUED TO OWE THEM TO ANY AMOUNTS OF MONEY, ASSUMING

21  THAT’s THE CASE OVER AND ABOVE AGREEMENTS OR OTHERWISE THAT

22  CAME FROM FARREL, WERE OWED TO THE ENTITIES.  AND THERE WERE

23  PRIOR AGREEMENTS WITH RESPECT TO THE REPAYMENT OF THESE

24  FUNDS.

25       THE COURT:  AS AN OFFER OF PROOF, YOU WILL SHOW ME ALL

26  THE ORGANIZATIONS GAVE THIS MONEY TO THE LEGION AND HE USED

27  IT IN THE MERMELSTEIN LITIGATION?

28       MR. WAIER:  YES, WE WILL.
			
			

page257



 1       THE COURT:  OVERRULE THE OBJECTION.

 2

 3  BY MR. WAIER:

 4       Q    YOU ARE AWARE THAT THE SOURCE FOR THE ATTORNEY'S

 5  FEES AND COSTS CAME FROM OTHER THAN THE LEGION WITH RESPECT

 6  TO THE FIRST MERMELSTEIN LITIGATION?

 7       A    NO.

 8       Q    WERE YOU AWARE IN THE SECOND MERMELSTEIN

 9  LITIGATION — STRIKE THAT.

10            WHO WAS THE ATTORNEY REPRESENTING THE LEGION IN

11  THE SECOND MERMELSTEIN LITIGATION?

12       A    THAT WOULD BE MR. HULSY.

13       Q    ARE YOU AWARE MR. HULSY WAS PAID FROM SOURCES

14  OTHER THAN THE LEGION?

15       A    I DID HAVE AN UNDERSTANDING AT THE TIME THAT

16  HE — HE HAD RECEIVED SOME PAYMENTS OTHER THAN FROM THE

17  LEGION, YES.

18       Q    ARE YOU AWARE HE RECEIVED OVER $65,000 FROM THE

19  FOUNDATION TO DEFEND THE FIRST AMENDMENT?

20       A    NO.

21       Q    WERE YOU AWARE LIBERTY LOBBY HAD CONTRIBUTED TO

22  HIS ATTORNEY FEES AND COSTS?

23       A    NO.

24       Q    WERE YOU AWARE THAT THE FOUNDATION TO DEFEND THE

25  FIRST AMENDMENT HAD PAID HIS ATTORNEY SOME — SOME OF HIS

26  ATTORNEY’s FEES AND COSTS?

27       A    YOU ALREADY SAID F.D.F.A., LIBERTY LOBBY, AND YOU

28  SAID F.D.F.A.
			
			

page258



 1       Q    I USED A SPECIFIC AMOUNT BEFORE.  ARE YOU AWARE OF

 2  ANY AMOUNTS OF MONEY F.D.F.A. PAID TO MR. HULSY?

 3       A    I DON'T KNOW ANY SPECIFICS ABOUT AMOUNTS.  BUT I

 4  HAD THE GENERAL IMPRESSION DURING THAT TIME THAT MR. HULSY

 5  WAS GETTING PAID TO SOME EXTENT FROM — BY THE F.D.F.A.

 6       Q    IN FACT, HE WAS GETTING PAID FROM OTHER SOURCES IN

 7  THE LEGION BECAUSE THE LEGION HAD NO MONEY TO PAY MR. HULSY

 8  ISN'T THAT CORRECT?

 9       A    WELL, THE LEGION’s MONEY HAD GONE INTO THE

10  F.D.F.A. POCKET.  THE F.D.F.A. WAS PAYING THE LEGION.

11       MR. WAIER:  MOVE TO STRIKE.  NONRESPONSIVE.

12       THE COURT:  OVERRULED.

13

14  BY MR. WAIER:

15       Q    SIR, AGAIN, MY QUESTION TO YOU IS:  THE LEGION HAD

16  NO MONEY TO PAY MR. HULSY; ISN'T THAT CORRECT?

17       MR. MUSSELMAN:  ASKED AND ANSWERED.

18       THE COURT:  SUSTAINED.

19       MR. WAIER:  YOUR HONOR, THAT’s WHY I SAID MY QUESTION

20  WAS NONRESPONSIVE.  HE DIDN'T ANSWER IT.

21       THE COURT:  HE ANSWERED IT.  LET’s GO ON.

22       MR. WAIER:  YOUR HONOR, IF WE COULD TAKE A FIVE-MINUTE

23  BREAK, I COULD FIGURE OUT HOW MUCH I WILL DO TO WRAP IT UP.

24       THE COURT:  SURE.  MAKE IT 10.  NOTHING OCCURS IN 5

25  MINUTES.  SEE YOU IN 10.

26

27                   (PROCEEDINGS RECESSED.)

28
			
			

page259



 1  BY MR. WAIER:

 2       Q    A COUPLE OF MORE AREAS.  MR. MARCELLUS, I BELIEVE

 3  YOUR TESTIMONY WAS, EARLIER TODAY, THAT IT WAS MR. Carto’s

 4  IDEA THAT YOU PRESENT INVOICES FOR YOUR SALARY AND THAT THEN

 5  YOU WERE, THEREAFTER, PAID BY BANQUE CONTRADE?

 6       A    YES.

 7       Q    SIR, ISN'T IT TRUE IT WAS YOUR IDEA?

 8       A    NO.  AS I RECALL, I DON'T RECALL IT BEING MY IDEA.

 9       MR. WAIER:  WHY DON'T WE MARK WHAT WE'LL HAVE AS A

10  MAY 31, 1990 MEMORANDUM TO WILLIS AND ELISABETH FROM

11  SOMEBODY INITIALED T., WITH A COPY OF A CONTRACT — MARK

12  THAT AS EXHIBIT 175.

13       MR. BEUGELMANS:  THANK YOU.

14

15  BY MR. WAIER:

16       Q    BEFORE I HAND YOU WHAT IS MARKED FOR

17  IDENTIFICATION AS 175, DID YOU EVER COMMUNICATE WITH

18  WILLIS CARTO SOMETIME IN MAY OF 1990 THAT YOU WANTED TO BE

19  AN INDEPENDENT CONTRACTOR AS OPPOSED TO A SALARIED EMPLOYEE?

20       A    YES, I BELIEVE I DID.

21       Q    YOU WANTED TO DO THAT BECAUSE YOU DIDN'T WANT TO

22  PAY TAXES ON THE MONIES YOU RECEIVED?

23       A    NO, THAT’s NOT TRUE.

24       Q    WHAT WAS THE REASON WHY YOU WANTED TO BECOME AN

25  INDEPENDENT CONTRACTOR?

26       MR. MUSSELMAN:  OBJECTION.  IRRELEVANT.

27       THE COURT:  OVERRULED.

28       THE WITNESS:  I WANTED TO BECOME AN INDEPENDENT
			
			

page260



 1  CONTRACTOR SIMPLY BECAUSE I WANTED TO BE ABLE TO GET MY

 2  SALARY IN FULL AND BE ABLE TO DO OTHER WORK ON THE OUTSIDE,

 3  BECAUSE AT THAT TIME, I HAD BEEN DOING CONSULTATION WORK,

 4  SOFTWARE-RELATED CONSULTATION WORK.  I WAS THE EDITOR OF AN

 5  OUTSIDE NEWSPAPER.  I WAS PAID FOR THAT.  I WAS RECEIVING

 6  MONEY FROM OTHER SOURCES, AND I WISHED TO CONSOLIDATE THAT

 7  AND BE AN INDEPENDENT CONTRACTOR TO WHOEVER I WORKED WITH.

 8

 9  BY MR. WAIER:

10       Q    DID YOU COMMUNICATE THIS, ALL THE ACTIVITIES YOU

11  WERE DOING, TO EITHER LEWIS OR LAVONNE FURR IN 1990 WHEN YOU

12  WERE RECEIVING THIS OUTSIDE INCOME?

13       A    MY CONTRACT SPECIFIED I REPORTED TO MR. CARTO, NOT

14  LEWIS AND LAVONNE FURR.  WHY WOULD I DO THAT?

15       Q    DID YOU REPORT THAT TO MR. CARTO?

16       A    HE KNEW IT, SURE.

17       Q    DID YOU REPORT THAT TO HIM?

18       A    I GAVE HIM A COPY OF THE NEWSLETTER I WAS EDITING.

19       Q    YOU FELT THAT WAS PROPER, THAT AS A MANAGING

20  DIRECTOR, YOU COULD HAVE THE OUTSIDE ACTIVITIES?

21       A    CERTAINLY.

22       Q    BECAUSE MR. CARTO SAID IT WAS OKAY?

23       A    NO, BECAUSE I SAID IT WAS OKAY.

24       Q    OKAY.  YOU DIDN'T CARE IF MR. CARTO AGREED OR NOT;

25  YOU WERE GOING TO DO IT AS MANAGING DIRECTOR?

26       A    IT DIDN'T OCCUR TO ME HE WOULD DISAGREE.  IT WAS

27  WEEKEND AND EVENING WORK.

28       Q    LET ME HAND YOU WHAT WE HAVE MARKED FOR
			
			

page261



 1  IDENTIFICATION AS COURT’s EXHIBIT 175.  SIR, THIS IS ON A

 2  YELLOW PIECE OF PAPER.  THIS IS THE ORIGINAL.  AND THE VERY

 3  FIRST PAGE DATED MAY 31, 1990 TO WILLIS AND ELISABETH,

 4  THERE’s A T. ON THE BOTTOM.

 5       A    YES.

 6       Q    IS THAT YOU?

 7       A    LIKELY, YES.

 8       Q    WELL, YOU RECOGNIZE THAT AS YOUR INITIAL?

 9       A    NO, I DON'T.  BUT IN MEMOS TO WILLIS AND

10  ELISABETH, I OFTEN PUT T, PERIOD.

11       Q    DO YOU RECALL THIS MEMORANDUM?  READ IT, PLEASE.

12       A    OUT LOUD?

13       Q    NO, READ IT TO YOURSELF FIRST.  AND THEN I'LL

14  REFER TO SPECIFIC PORTIONS.

15       A    OKAY.

16            I UNDERSTOOD THIS, YES.  YEAH.

17       Q    YOU WROTE THAT MEMORANDUM, DID YOU?

18       A    YES.

19       Q    AND YOU PREPARED THE AGREEMENT THAT’s ATTACHED,

20  TOO, DID YOU NOT, THE INDEPENDENT CONTRACTOR AGREEMENT?

21       A    I DON'T KNOW FOR SURE IF I PREPARED THIS

22  AGREEMENT.  IT LOOKS AS THOUGH I DID.

23       Q    THAT CAME FROM YOUR COMPUTER?

24       MR. MUSSELMAN:  IS THAT A QUESTION?

25

26  BY MR. WAIER:

27       Q    ISN'T THAT TRUE?

28       A    THE TEXT OF IT DID.  AS FAR AS FILLING IT IN, YES,
			
			

page262



 1  I SUPPOSE IT DID, ALTHOUGH I DON'T THINK I EVER USED THAT

 2  TYPEFACE.  I THINK WE CAN SAY THAT I PREPARED THIS CONTRACT.

 3       Q    WELL, YOUR SIGNATURE APPEARS, DOES IT NOT, ON THE

 4  FOURTH PAGE OF THIS AGREEMENT?

 5       A    YES, IT DOES.

 6       Q    AND YOU BACKDATED THIS AGREEMENT, DID YOU NOT?

 7       A    YES, AS I SAID.

 8       Q    WHY DID YOU WANT TO BACKDATE THE AGREEMENT TO

 9  1987?

10       A    I DON'T RECALL AT THIS TIME WHY I DID THAT.

11       Q    DID IT RELATE TO YOUR REPORTING OF TAXES?

12       MR. MUSSELMAN:  OBJECTION.  RELEVANCE.

13       THE COURT:  OVERRULED.

14       THE WITNESS:  I DON'T THINK SO.  I'M SQUARE WITH THE

15  I.R.S.  I DON'T OWE ANY TAXES.  I DON'T KNOW THAT — I

16  CAN'T SEE WHY I WOULD HAVE DONE THAT FOR A TAX REASON.

17

18  BY MR. WAIER:

19       Q    OKAY.  IN THE AGREEMENT ON MAY 31, 1990, YOU

20  TESTIFIED THAT AFTER THIS POINT IN TIME, YOU PREPARED

21  INVOICES FOR YOUR PAYMENTS.  AND YOU SAID THAT WAS QUITE A

22  BURDEN BECAUSE MR. CARTO HAD YOU DO THAT FOR PURPOSES OF

23  RECEIVING YOUR SALARY.  ISN'T THAT TRUE?

24       A    WELL, YES, EVERY THREE MONTHS.

25       Q    SIR, AND YOU SAID THAT WAS MR. Carto’s

26  SUGGESTION.  ISN'T IT TRUE THAT THAT WAS YOUR SUGGESTION

27  NOW?

28       A    NO.  THE MONEY — WHEN HE WANTED TO PAY ME OUT OF
			
			

page263



 1  THE LEGION’s ACCOUNT IN SWITZERLAND AND WANTED ME TO INVOICE

 2  EVERY THREE MONTHS, THAT BECAME A BURDEN.

 3       Q    WELL, SIR, LET ME READ TO YOU IN YOUR OWN

 4  LANGUAGE.  MAY 31, 1990, IT SAYS “FROM HERE ON OUT, I WILL

 5  SUBMIT REGULAR STATEMENTS TO THE COMPANY FULLY ITEMIZING ALL

 6  WORK DONE DURING THE BILLING PERIOD AND THE CHARGES.  THESE

 7  CHARGES WILL ADD UP TO THE AMOUNTS LISTED IN ATTACHMENT A,"

 8  PARENTHESIS, “FOR YOUR REFERENCE AND MINE ONLY,"

 9  UNDERLINED.  “THE,” QUOTE, “'DOCUMENT' WILL OTHERWISE NOT

10  EXIST.  THE TOTAL WILL ADD UP TO CURRENT COMPENSATION

11  LEVELS."

12            FIRST OF ALL, LET ME ASK YOU THIS:  WHY DID YOU

13  STATE THAT YOU WANTED THIS DOCUMENT ONLY TO EXIST BETWEEN

14  WILLIS, ELISABETH AND YOURSELF AND NOBODY ELSE?

15       A    BECAUSE WHILE EMPLOYED, SANDY SISSON WAS AN

16  INDEPENDENT CONTRACTOR, AND ELISABETH AND WILLIS WERE VERY

17  WORRIED THAT OTHERS IN THE COMPANY MIGHT ALSO WANT TO BE

18  EMPLOYED AS OR WANT TO WORK AS INDEPENDENT CONTRACTORS.  AND

19  THEY DID NOT WANT THAT.  SO THEY — THEY WANTED ME TO KEEP

20  THIS JUST BETWEEN MYSELF AND THEM.

21       Q    YOU DON'T SAY THAT.  YOU SAY THIS — THIS IS YOUR

22  SUGGESTION; ISN'T THAT RIGHT?

23       A    I DIDN'T SEE THE POINT IN HAVING TO SAY THAT.  IT

24  WAS ALREADY DISCUSSED.

25       Q    YOU INDICATE DOWN HERE ABOUT 1099 FORMS.  ISN'T IT

26  TRUE THAT YOU TOLD WILLIS AND ELISABETH CARTO YOU WANTED TO

27  BECOME AN INDEPENDENT CONTRACTOR AND YOU ALSO DIDN'T WANT

28  THE LEGION TO SUBMIT 1099 FORMS SO THAT THE I.R.S. WOULD
			
			

page264



 1  HAVE NO UNDERSTANDING OF MONIES YOU RECEIVED?

 2       A    DID I SUGGEST SUCH A THING IN THERE?  I DON'T

 3  THINK I DID.

 4       Q    DO YOU RECALL THAT?

 5       A    NO, BECAUSE AT THAT TIME, I KNEW IN THE COURSE OF

 6  BUSINESS THE COMPANY HAD TO PREPARE 1099’s FOR THE PEOPLE

 7  THAT IT PAID.  I DON'T SEE HOW I COULD HAVE ASKED THE

 8  COMPANY TO ILLEGALLY SUPPRESS THOSE.

 9       Q    LET ME READ THE LAST PARAGRAPH.  YOU SAY “SANDY,

10  AS I MENTIONED, SUBMITS REGULAR INVOICES AS A COMPANY, NOT

11  AN INDIVIDUAL, AND HAS NOT BEEN REQUIRED TO PROVIDE EITHER A

12  SOCIAL SECURITY NUMBER OR A FED I.D. NUMBER; THUS, SHE DOES

13  NOT APPEAR ON ANY I.R.S. 1099 FORMS.  WE CAN MAKE A SIMILAR

14  BACKDATED CONTRACT FOR HER IF YOU THINK IT’s NECESSARY.

15  SHE'LL COOPERATE GLADLY."

16            WHY WOULD YOU MENTION THAT?

17       A    AS I SIT HERE NOW, I DON'T RECALL WHAT MY THINKING

18  WAS.

19       Q    ISN'T IT TRUE THAT YOU WANTED A SIMILAR SITUATION

20  AS SANDY SO YOU WOULDN'T HAVE TO REPORT YOUR INCOME TO THE

21  INTERNAL REVENUE SERVICE?

22       MR. MUSSELMAN:  OBJECTION.  RELEVANCE.

23       THE COURT:  OVERRULED.

24       THE WITNESS:  NO, BECAUSE I DID REPORT MY INCOME TO THE

25  I.R.S. AND I DID PAY TAXES.

26

27  BY MR. WAIER:

28       Q    IT WAS AFTER THIS POINT IN TIME, THOUGH, THAT YOU
			
			

page265



 1  STARTED PREPARING INVOICES FOR YOUR COMPENSATION; ISN'T THAT

 2  TRUE?

 3       A    YES.

 4       Q    VERY SIMILAR TO WHAT YOU SAY — WAS THIS

 5  AGREEMENT EVER SIGNED BY THE LEGION, BY THE WAY, EXHIBIT

 6  175, THE CONTRACT THAT YOU PREPARED?

 7       A    I BELIEVE I HAVE A SIGNED COPY.

 8       Q    WHO SIGNED IT BESIDES YOURSELF?

 9       A    I THINK — I THINK IT BEARS WILLIS Carto’s

10  SIGNATURE.

11       Q    NOW, SIR, AGAIN, YOU UNDERSTAND THAT YOU ARE UNDER

12  PENALTY OF PERJURY?  YOU SWORE TO TELL THE TRUTH?

13       A    YES.

14       Q    AND YOU ARE SAYING THAT YOU HAVE FILED THE INCOME

15  TAX RETURNS AND YOU HAVE DONE EVERYTHING CONSISTENT WITH THE

16  I.R.S.?

17       MR. MUSSELMAN:  OBJECTION.  RELEVANCE.

18       THE COURT:  SUSTAINED.  ARGUMENTATIVE.

19       MR. WAIER:  IT GOES TO IMPEACHMENT.

20       THE COURT:  ARGUMENTATIVE.

21

22  BY MR. WAIER:

23       Q    LET ME SHOW YOU WHAT WE'LL MARK AS EXHIBIT 176,

24  WHICH IS AN AUGUST 18, 1985 — LOOKS LIKE, I CAN'T TELL THE

25  EXACT DATE — BUT SIGNED BY SOMEONE NAMED TOM.

26       MR. BEUGELMANS:  MAY WE SEE IT, COUNSEL?

27       MR. WAIER:  I'M SORRY.

28
			
			

page266



 1  BY MR. WAIER:

 2       Q    LET ME HAND YOU THIS DOCUMENT.  DID YOU PREPARE

 3  THIS DOCUMENT, MR. MARCELLUS?

 4       A    YES.

 5       Q    AND YOUR SIGNATURE APPEARS ON THE SECOND PAGE?

 6       A    YES.

 7       Q    SIR, IN LOOKING AT THE LAST TWO PARAGRAPHS, LET ME

 8  READ THOSE.  AND STARTING AT THE TOP PARAGRAPH, IT SAYS --

 9  THIS WAS A LETTER YOU WROTE TO WILLIS, IS IT NOT?

10       THE COURT:  ARE YOU READING NOW OR NOT?

11       MR. WAIER:  NOT YET.

12

13  BY MR. WAIER:

14       Q    THIS IS A LETTER TO WILLIS FROM YOU?

15       A    IT LOOKS LIKE A MEMO.  THE DATE, I DON'T SEE THE

16  DATE.

17       MR. BEUGELMANS:  COULD THE WITNESS HAVE A CHANCE TO

18  READ THE DOCUMENT?

19       THE COURT:  CERTAINLY.

20       THE WITNESS:  YES, OKAY.

21

22  BY MR. WAIER:

23       Q    YOU PREPARED THIS LETTER?

24       A    YES.

25       Q    LET ME — LET ME ASK YOU — LET ME READ YOU THIS

26  QUESTION CONCERNING, QUOTE, “TAX STUFF."

27       A    FINE.

28       Q    “NOW, AS FOR THAT TAX STUFF, I REALLY DON'T LIKE
			
			

page267



 1  THAT VERY MUCH EITHER.  WE NEGOTIATED BASED ON MY WORKING

 2  FOR NOONTIDE AS AN INDEPENDENT SUBCONTRACTOR.  AND NOW ALL

 3  OF A SUDDEN, THE RULES ARE BEING CHANGED ON ME.  LOOK, IF

 4  YOU GOT THE IDEA THAT YOU ARE SOMEHOW BEING FORCED TO IT,

 5  WELL, DAVID’s NEVER FILED A TAX RETURN IN THIS COUNTRY.  SO

 6  IF YOU SET HIM UP AS AN EMPLOYEE AND HE DECIDED NOT TO FILE,

 7  IT’s NO BIG DEAL BECAUSE THE I.R.S. NEVER HEARD OF HIM

 8  ANYWAY.  BUT FOR ME, THE CASE IS QUITE DIFFERENT.  I STOPPED

 9  FILING JUST THREE YEARS AGO."

10            YOU STOPPED FILING WHAT?

11       A    IN 1981, WHEN I WROTE THAT LETTER, I HAD NOT FILED

12  AN INCOME TAX RETURN, I BELIEVE, FOR THREE YEARS.

13       Q    SO DOES THAT REFRESH YOUR RECOLLECTION THAT YOU,

14  FOR A PERIOD OF TIME, HAD NOT FILED TAX RETURNS?

15       MR. MUSSELMAN:  AS TO WHAT PERIOD OF TIME?  VAGUE.

16       MR. WAIER:  AS TO ANY PERIOD.

17       MR. MUSSELMAN:  IT’s IRRELEVANT.

18       THE COURT:  THE QUESTION IS ASKED AND ANSWERED.  ANSWER

19  STANDS.

20

21  BY MR. WAIER:

22       Q    NOW, ISN'T IT TRUE THAT THE FIRST TIME THAT YOU

23  BECAME AWARE THAT MONIES WERE COMING FROM BANQUE CONTRADE

24  WAS STARTING IN APRIL OF 1991?

25       A    1991?

26       Q    YES.

27       A    YES, THAT WOULD BE ABOUT RIGHT.  YEAH.  THAT'S

28  RIGHT.
			
			

page268



 1       Q    IN FACT, LET ME SHOW YOU WHAT WE HAVE MARKED FOR

 2  IDENTIFICATION AS COURT’s EXHIBIT 178.  THIS IS A

 3  PREPARATION — LOOKS LIKE SOMETHING PREPARED TO WILLIS,

 4  JUNE 17, 1991, AND ALSO ATTACHED TO THIS IS A — LOOKS LIKE

 5  A BANK TRANSFER TO F.S.O.  DO YOU SEE THAT?  DO YOU RECALL

 6  JUNE 17, 1991, PREPARING AN INVOICE FOR YOUR PRIOR MONTH'S

 7  WORK FROM 4-17-91 TO 6-17-91 TO WILLIS FOR PAYMENT THROUGH

 8  THE BANQUE CONTRADE?

 9       A    ONLY TO WILLIS FOR PAYMENT OF MY SALARY, NOT

10  HAVING ANYTHING TO DO WITH THE BANQUE CONTRADE.

11       Q    YOU KNEW IT WAS COMING FROM OVERSEAS?

12       A    I ASSUMED SINCE PREVIOUS CHECKS HAD, THAT WOULD,

13  TOO.

14       Q    YOU RECEIVED CHECKS FROM OVERSEAS PRIOR TO THIS

15  TIME, JUNE 17, 1991?

16       A    FROM THE BANQUE CONTRADE?

17       Q    YES.

18       A    I DON'T KNOW WHEN I RECEIVED THE FIRST CHECK FROM

19  BANQUE CONTRADE.

20       Q    IN FACT, YOU RECALL RECEIVING A BONUS IN FEBRUARY

21  1991 OF $6,000 FROM THE BANQUE CONTRADE, OR WHAT WAS

22  CLASSIFIED AS A BONUS TO YOU?

23       A    I RECALL RECEIVING A BONUS ABOUT THAT AMOUNT.  IT

24  SEEMED TO ME IT WAS LESS THAN THAT.  COULD HAVE BEEN THAT

25  MUCH.  AT ABOUT THAT TIME, IT WAS FROM BANQUE CONTRADE, YES.

26       Q    YOU UNDERSTOOD THAT CAME FROM THE FARREL ESTATE?

27       A    I UNDERSTOOD IT.  I ASSUMED — I ASSUMED THAT IT

28  DID.  I DIDN'T KNOW FOR SURE WHERE IT CAME FROM.
			
			

page269



 1       Q    AND DO YOU RECALL RECEIVING THESE VARIOUS VOUCHERS

 2  FROM THE BANQUE CONTRADE LAUSANNE S.A. AT THE TIME THAT THE

 3  AMOUNTS WERE SENT TO YOU?

 4       A    NO.  I DID NOT RECEIVE THESE VOUCHERS.

 5       Q    BUT YOU KNEW IT CAME FROM THAT BANK?  IT WENT INTO

 6  YOUR ACCOUNT; ISN'T THAT CORRECT?

 7       A    NO, I SIMPLY RECEIVED A CHECK DRAWN ON THAT

 8  ACCOUNT.  IN THIS CASE, IT WAS MADE OUT TO F.S.O. INSTEAD OF

 9  TOM MARCELLUS.

10       Q    AT YOUR DIRECTION?

11       A    YES.

12       Q    NOW, YESTERDAY — I SHOULDN'T SAY “YESTERDAY."

13  IT’s BEEN A WEEKEND AGO.  I ASKED YOU TO REVIEW A DOCUMENT.

14  LET ME PULL THAT OUT.  HAD TO DO WITH THE H.E.F.

15  APPLICATION.

16       A    UH-HUH.

17       Q    DO YOU RECALL THAT?

18       A    UH-HUH.  H.E.F., THE ACCOUNT WITH NATIONAL

19  FOUNDATION.

20       Q    YES.  DO YOU RECALL THAT?  I THINK WE HAVE IT.

21  THERE WE GO.  WE MARKED THAT FOR IDENTIFICATION AS 172.  AND

22  YOU SAID THAT YOU HAD A DIFFICULTY BECAUSE THERE WAS ONLY

23  ONE PAGE TO IT.  DO YOU RECALL?

24       A    NOT THAT.  I DON'T RECALL HAVING SAID I WAS HAVING

25  DIFFICULTY WITH IT.  I THINK I SAID THAT I THOUGHT THERE

26  MIGHT BE MORE THAN ONE PAGE.

27       MR. WAIER:  OKAY.  MARK THIS NEXT IN ORDER.

28            LET ME HAND YOU WHAT WE HAVE MARKED FOR
			
			

page270



 1  IDENTIFICATION AS 179, WHICH IS A FRONT AND BACK PAGE OF THE

 2  APPLICATION TO THE H.E.F.

 3       MR. BEUGELMANS:  YOUR HONOR, AT THIS TIME, WE OBJECT TO

 4  COUNSEL TAKING EXHIBITS WE HAVEN'T SEEN BEFORE THAT HAS NOT

 5  BEEN IDENTIFIED AND ATTEMPTING TO USE THEM — THEY'RE NOT

 6  FOR IMPEACHMENT.  IF THEY WERE, PERHAPS — BECAUSE HE'S

 7  INTRODUCING EVIDENCE THAT HAS NOT BEEN MADE AVAILABLE TO THE

 8  PLAINTIFF.

 9       MR. WAIER:  THEY HAD BEEN PROVIDED.  THIS IS FOR

10  REFRESHING THE RECOLLECTION.

11       THE COURT:  THEY HAVEN'T BEEN ADMITTED INTO EVIDENCE.

12  THAT MEANS I DON'T SEE THEM UNTIL THEY ARE.  YOU SHOULD SHOW

13  THEM TO OPPOSING COUNSEL FIRST, UNLESS THEY WERE PRODUCED

14  PURSUANT TO ALL THE DISCOVERY RULES.  THE ONLY EXCEPTION TO

15  THAT IS IMPEACHMENT.

16       MR. WAIER:  THEY WERE PRODUCED THROUGH THE DISCOVERY

17  RULES.  THESE WERE ALL PRODUCED WITH RESPECT TO DOCUMENTS

18  THAT THEY REQUESTED.  WE FILED OBJECTIONS TO THOSE WITH

19  RESPECT TO — TO THIS TRIAL.  THOSE OBJECTIONS NEED TO BE

20  RULED ON.  THEY HAD WITHIN 5 DAYS TO BRING A MOTION

21  CONSISTENT WITH THE OBJECTIONS.  THAT’s FOR ANOTHER TIME.

22       MR. BEUGELMANS:  THEY HAVE NOT BEEN PRODUCED, NOR THE

23  LAST TWO EXHIBITS.

24       MR. WAIER:  THIS HAS BEEN PRODUCED THROUGHOUT, YOUR

25  HONOR.

26       THE COURT:  ANYWAY, SHOW IT TO OPPOSING COUNSEL BEFORE

27  YOU SHOW IT TO THE OTHER SIDE.

28       MR. WAIER:  I DID ALREADY, YOUR HONOR.
			
			

page271



 1       THE COURT:  OKAY.

 2

 3  BY MR. WAIER:

 4       Q    TAKE A LOOK AT — YOU NOTICE THE FRONT PAGE IS

 5  THE EXACT SAME AS EXHIBIT 172, DO YOU SEE THAT, WHICH YOU

 6  IDENTIFIED PREVIOUSLY AS THE --

 7       A    IT’s NOT THE SAME.  THIS SAYS WILLIS ON IT, AND IT

 8  SAYS E.X. 26.  THIS DOES NOT.

 9       Q    OTHER THAN THE WRITINGS, THE PRINTED MATERIAL,

10  WHAT HAS BEEN TYPED IN?

11       A    IT LOOKS LIKE THEY'RE THE SAME.

12       Q    IN OTHER WORDS, THE SAME OTHER THAN SOMEBODY HAS

13  WRITTEN ON THE EXHIBIT 179; IS THAT CORRECT?

14       A    THEY APPEAR TO BE, YES.

15       Q    IF YOU TURN AROUND TO THE BACK SIDE OF THIS,

16  REMEMBER, YOU PREVIOUSLY TESTIFIED THAT YOU HAD SEEN THE

17  APPLICATION BEFORE?  DO YOU RECALL THAT?

18       A    YES.

19       Q    DOES THE BACK SIDE OF THIS LOOK LIKE THE

20  APPLICATION YOU HAD SEEN BEFORE WITH RESPECT TO THE H.E.F.

21  ACCOUNT BY THE LEGION?

22       A    THIS IS NOT CLEAR TO ME THAT I SAW THIS AT THE

23  TIME.

24       Q    YOU KNEW THAT BOARD OF REGENTS WITH THE HISTORICAL

25  FOUNDATION AT THE TIME IT WAS PREPARED; ISN'T THAT

26  TRUE?

27       A    NO.  IN FACT, NOW THAT YOU MENTIONED IT HERE, THE

28  NAME REGENTS HASN'T OCCURRED TO ME IN CONSIDERATION WITH THE
			
			

page272



 1  H.E.F. AT ALL.

 2       Q    YOU WERE A DONOR MANAGER, WERE YOU NOT?

 3       A    YES.

 4       Q    DO YOU RECALL THAT THE ORIGINAL DONOR APPLICANT

 5  WAS JOHN L. KENT?

 6       A    NO.

 7       Q    DID YOU KNOW A JOHN L. KENT?

 8       A    I KNEW BY NAME THE DIRECTOR OF THE LEGION, I

 9  BELIEVE.

10       Q    WERE YOU AWARE THAT — WHO WERE YOU AWARE WAS THE

11  ORIGINAL DONOR APPLICANT WITH RESPECT TO H.E.F.?

12       A    I DON'T KNOW.  I KNOW, AT SOME POINT IN TIME,

13  WILLIS DID SOMETHING AND I BECAME THE DONOR APPLICANT.

14       Q    YOU DID NOT SET UP H.E.F., DID YOU?

15       A    NO.  I BELIEVE MR. CARTO FILLED OUT THE

16  APPLICATION FOR ME, AS I PREVIOUSLY TESTIFIED.

17       Q    YOU WEREN'T AT THE LEGION AT THE TIME THAT THIS

18  FORM WAS FILLED OUT?

19       A    YES, I'M SURE I WAS.

20       Q    DID YOU SEE THIS FORM BEFORE IT WAS FILED?

21       A    I DON'T KNOW IF I DID OR DIDN'T.

22       Q    DO YOU SEE MR. — MRS. LEWIS FURR, THAT'S

23  LAVONNE FURR, ON THE BACK SIDE UNDER THE BOARD OF REGENTS?

24       A    YES.

25       Q    DO YOU RECALL SHE WAS ON THE BOARD OF REGENTS OF

26  H.E.F. IN THE VERY BEGINNING?

27       A    NO.

28       Q    DO YOU SEE ANOTHER GENTLEMAN, KEITH STIMLY,
			
			

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 1  S-T-I-M-L-Y?  DO YOU KNOW WHO THAT IS?

 2       A    YES.

 3       Q    WHO IS KEITH STIMLY?

 4       A    HE WAS AN EDITOR AT THE LEGION FROM ABOUT, I

 5  THINK, IN 1983 HE WAS THERE.

 6       Q    DID HE REPORT TO YOU?

 7       A    YES.

 8       Q    HOW ABOUT MR. LEWIS FURR, ARE YOU AWARE HE WAS A

 9  DIRECTOR OF THE LEGION AT THIS TIME?

10       A    YES, I BELIEVE HE WAS.

11       Q    NOW, DO YOU SEE ANYWHERE — NOW YOU HAVE THIS,

12  YOU RECALL MY QUESTION ON FRIDAY WAS DO YOU SEE ANYWHERE ON

13  HERE THAT REFERENCES THE LEGION?  DO YOU SEE ANYWHERE ON

14  THIS PARTICULAR APPLICATION THAT REFERENCES THE LEGION?

15       A    I SEE “LEGION DIRECTOR” AND “LEGION DIRECTOR” --

16  “LEGION DIRECTOR” AND “LEGION EMPLOYEE."

17       Q    DO YOU SEE WHERE IT SAYS LEGION FOR THE SURVIVAL

18  OF FREEDOM, INC., AS THE APPLICANT?

19       A    IT DOES NOT SAY “LEGION."

20       Q    THE APPLICANT IS JOHN L. KENT?

21       A    YES.

22       Q    NOW, YOU INDICATED THAT MONIES WERE

23  MYSTERIOUSLY — YOU SAID “MYSTERIOUSLY” — GOING TO

24  F.D.F.A., YOU DON'T KNOW WHY, FROM THE LEGION SOMETIME

25  IN — AFTER 1985; IS THAT CORRECT?

26       A    I THINK THAT WAS THE TIME PERIOD, YES.

27       Q    IT WASN'T MYSTERIOUS AT ALL TO YOU.  YOU KNEW

28  MONEY WAS GOING TO THE F.D.F.A. BECAUSE YOU AUTHORIZED IT.
			
			

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 1  IS THAT CORRECT?

 2       A    NOT MONEY FROM THE H.E.F. ACCOUNT, NO.

 3       Q    LET ME SHOW YOU A NATIONAL FOUNDATION, INC.,

 4  CONFIRMATION STATEMENT.

 5       MR. BEUGELMANS: YOUR HONOR, AGAIN, WE OBJECT.

 6  PLAINTIFF HAS STILL NOT RECEIVED A COPY OF DEFENDANT'S

 7  EXHIBITS, YOUR HONOR.  TO THIS DATE, I HAVEN'T SEEN THEM,

 8  FIRST OF ALL.  SECONDLY, THIS IS TRIAL BY AMBUSH.  THIS WAS

 9  NOT PRODUCED IN DISCOVERY.  THE FIRST TIME I HAVE SEEN IT IS

10  TODAY.

11       MR. WAIER:  SO WE'RE CLEAR, THERE WAS A MOTION BROUGHT

12  BY MR. BEUGELMANS WITH RESPECT TO THIS.  THIS MOTION SOMEHOW

13  GOT PUT INTO SOME VORTEX, A BLACK VORTEX AT JAMS.  NONE OF

14  HIS MOTIONS HAVE BEEN RULED ON; NONE OF HIS MOTIONS HAVE

15  BEEN SOLVED.  HE’s NEVER GONE FORWARD.  WE OBJECTED

16  PROPERLY.  WITH RESPECT TO TRIAL DOCUMENTS, HE DID NOT --

17  HE DID NOT FILE THE REQUISITE MOTION UNDER THE CODE OF CIVIL

18  PROCEDURE WITH RESPECT TO COMPELLING THE DOCUMENTS.

19  THEREFORE, HE’s OF NO STANDING AT THIS POINT.

20       THE COURT:  HE HAS STANDING TO RAISE IT.  HE CAN OBJECT

21  TO IT.  BUT LET’s DO THIS.  IF YOU HAVE EXTRA COPIES, GIVE

22  THEM TO HIM.  I'M GOING TO LET IT IN.  I'M NOT GOING TO GO

23  THROUGH A DISCOVERY DISPUTE HERE.  I'M NOT REAL HAPPY ABOUT

24  THIS.  GIVE HIM COPIES.  YOU KNOW WHAT IS COMING UP.  HE

25  NEEDS TO READ THIS.  YOU ARE SLOWING THE TRIAL DOWN BY

26  HAVING THE ATTORNEY READ IT AND THEN THE WITNESS READ IT

27  AND --

28       MR. WAIER:  WELL, THIS IS AN IMPEACHMENT DOCUMENT, IN
			
			

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 1  ANY EVENT.  BESIDES, THIS IS AN — IN THE LEGION’s OWN

 2  FILES.  THIS HAS BEEN PRODUCED, UNLIKE WHAT COUNSEL SAID.

 3       THE COURT:  MY INSTRUCTIONS WERE TO SHOW IT TO OPPOSING

 4  COUNSEL FIRST.  IF YOU KNOW YOU ARE GOING TO BE USING

 5  SOMETHING, HAVE AN EXTRA COPY, SHOW IT TO HIM.  OTHERWISE,

 6  WE'LL SPEND TOO MUCH TIME ON THE TRIAL.

 7

 8  BY MR. WAIER:

 9       Q    LOOK AT EXHIBIT 180.  SIR, YOU WERE RECEIVING

10  COPIES OF THESE DOCUMENTS FROM THE NATIONAL FOUNDATION, INC.

11  THIS ONE SPECIFICALLY IS DATED IN THE EARLY PART OF --

12  ACTUALLY, THROUGH 1985 — THROUGH 1986, I MEAN.  STRIKE

13  THAT.

14            FROM JANUARY 1985 THROUGH DECEMBER 1986, DO YOU

15  SEE THAT?

16       A    THE DATES RUN ON THIS FROM JANUARY '85 TO DECEMBER

17  '86, YES.

18       Q    AND IT HAPPENED TO BE FROM THE HISTORICAL

19  EDUCATION FOUNDATION, CARE OF TOM J. MARCELLUS.  DO YOU SEE

20  THAT?

21       A    YES.

22       Q    AND IT LISTS AN ADDRESS, 4009 PACIFIC COAST

23  HIGHWAY, TORRANCE, CALIFORNIA, 90505.  THAT WAS YOUR OFFICE

24  ADDRESS AT THIS PERIOD OF TIME?

25       A    THAT WAS THE H.E.F.’s ADDRESS.

26       Q    WELL, YOU WERE THERE, TOO, WEREN'T YOU?

27       A    I HAD — WELL, I HAD A — MY OWN P.O. BOX AT THAT

28  ADDRESS.  THIS WAS NOT MY ADDRESS.  THIS WAS MAILED TO
			
			

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 1  H.E.F.  AND SOMETIMES I WOULD PICK UP THE MAIL AND SOMETIMES

 2  ELISABETH WOULD PICK UP THE MAIL.

 3       Q    SIR, H.E.F. HAD THE SAME PURPOSES AS THE LEGION;

 4  ISN'T THAT TRUE?

 5       A    READING FROM THIS APPLICATION, I CAN SEE THAT THE

 6  PURPOSE OF THE TWO ORGANIZATIONS ARE LISTED THERE, THEY'RE

 7  SIMILAR, YES.

 8       Q    IN FACT, H.E.F. — YOU UNDERSTOOD WHEN YOU

 9  RECEIVED — DID YOU OBJECT TO THE PURPOSES WHEN YOU

10  RECEIVED THIS DOCUMENT, EXHIBIT 180?

11       A    WELL, THIS WAS A CHANGE IN THE PURPOSE.  I MEAN,

12  HERE IT SAYS TO VIGOROUSLY DEFEND THE RIGHT OF FREEDOM.  THE

13  ORIGINAL APPLICATION IS TO ADVANCE THE CAUSE OF HISTORY.

14  THERE’s A CONTRADICTION.  TO ANSWER THE QUESTION, NO, I

15  DON'T BELIEVE I RAISED AN OBJECTION.

16       Q    YOU UNDERSTOOD THAT WAS THE REASON FOR THE

17  HISTORICAL EDUCATION FOUNDATION; ISN'T THAT TRUE?

18       A    NO.  THE REASON I UNDERSTOOD FOR THE HISTORICAL

19  EDUCATION FOUNDATION WAS TO PROVIDE A PLACE FOR THE LEGION

20  TO PUT THE MONEY.

21       Q    YOU WERE RESPONSIBLE FOR THE DISBURSEMENTS FROM

22  THE ACCOUNT, ISN'T THAT TRUE, WHILE YOU WERE DONOR MANAGER?

23       A    SOME OF — SOME OF THE DISBURSEMENTS, OBVIOUSLY

24  NOT.  I DON'T BELIEVE I AUTHORIZED SOME OF THESE

25  DISBURSEMENTS.

26       Q    BUT YOU DID RECEIVE THIS DOCUMENT?

27       A    THIS DOCUMENT PROBABLY WOUND UP IN THE LEGION'S

28  FILES.  QUITE HONESTLY, I DIDN'T — OFTEN DIDN'T SEE THEM.
			
			

page277



 1  THEY — SOMETIMES I SAW THEM, SOMETIMES MRS. CARTO SAW

 2  THEM.  THEY MAY OR MAY NOT HAVE BEEN FILED IN A CONSECUTIVE

 3  FILE.  WE RECEIVED THESE EVERY FEW MONTHS, AND I DIDN'T LOOK

 4  AT THEM CAREFULLY, REALLY, UNTIL I CAME BACK AFTER MY

 5  18-MONTH ABSENCE.

 6       Q    DO YOU RECALL A PERSON BY THE NAME OF JENNY?

 7       A    JENNY?

 8       Q    JEANNE.  YES.

 9       A    JEANNE SCOTT, WHO WORKED THERE?

10       Q    DO YOU UNDERSTAND SOMEBODY FROM THE NATIONAL

11  FOUNDATION, INC.?

12       A    JENNY.  I DON'T RECALL WHO THAT PERSON IS.

13       Q    DOES THIS HELP REFRESH YOUR RECOLLECTION THAT YOU

14  RECEIVED THIS DOCUMENT, STATES “MR. MARCELLUS, PLEASE ACCEPT

15  MY APOLOGIES"?

16       A    NO.  NO, IT DOESN'T.

17       Q    WELL, WHEN YOU RECEIVED THIS DOCUMENT THAT SHOWED

18  VARIOUS DISBURSEMENTS TO THE FOUNDATION TO DEFEND THE FIRST

19  AMENDMENT, DID YOU CONTACT MR. CARTO AND ASK HIM WHERE THE

20  MONIES WENT TO AND WHY?

21       MR. MUSSELMAN:  MISSTATES THE TESTIMONY.  HE SAID WHEN

22  YOU RECEIVED THIS DOCUMENT.  THE TESTIMONY WAS THAT HE

23  DIDN'T KNOW IF HE EVER RECEIVED IT.

24       THE COURT:  SUSTAINED.

25

26  BY MR. WAIER:

27       Q    DO YOU RECALL RECEIVING THE DOCUMENT?

28       A    NO.
			
			

page278



 1       Q    DID YOU UNDERSTOOD AT THE TIME YOU WERE DONOR

 2  MANAGER, CERTAIN MONIES WERE GOING TO THE FOUNDATION TO

 3  DEFEND THE FIRST AMENDMENT OR H.E.F.?

 4       A    NO, I DON'T RECALL MONIES FROM H.E.F. WERE GOING

 5  TO F.D.F.A.

 6       Q    DO YOU RECALL SIGNING AN ESCROW WITH RESPECT TO A

 7  BUILDING THAT WAS PURCHASED OR RENOVATED BY F.D.F.A. AROUND

 8  THIS TIME?

 9       A    AROUND WHAT TIME, '86?

10       Q    '85 THROUGH '86.

11       A    YES.

12       Q    AND DOES THAT HELP REFRESH YOUR RECOLLECTION

13  CERTAIN MONIES WERE PAID TO THE F.D.F.A. CONCERNING THAT

14  BUILDING?

15       A    NO.  NO.  IT WAS MY UNDERSTANDING THAT THE

16  AGREEMENT WITH F.D.F.A. WAS THAT THEY WOULD BUY THE BUILDING

17  AS A GOOD INVESTMENT.  THEY ALREADY HAD A TENANT WHO COULD

18  PAY TOP DOLLAR FOR IT.  THAT WAS THE LEGION.

19       Q    AND IN FACT, DO YOU RECALL THAT THE LEGION --

20  THIS WAS AFTER THE ARSON; ISN'T THIS CORRECT?

21       A    THIS WAS PROBABLY A YEAR AND A HALF TO TWO YEARS

22  AFTER THE ARSON.

23       Q    AND THE LEGION HAD TO COME UP WITH THE SIZEABLE

24  RENT FOR THAT BUILDING, ISN'T THAT CORRECT, TO THE

25  F.D.F.A.?

26       A    THE RENTAL PREMIUM WAS HIGH, ON THE HIGH SIDE.

27  BUT THE PROPERTY WAS GOOD PROPERTY FOR WHAT OUR PURPOSES

28  WERE.  BUT I DON'T THINK WE HAD TO COME UP WITH A HUGE
			
			

page279



 1  AMOUNT.  WE HAD TO COME UP WITH SOME RENT.

 2       Q    DO YOU RECALL THAT YOUR FIRST RENT WAS ABOUT

 3  $40,000?

 4       A    NO.

 5       Q    WHAT DO YOU RECALL YOUR FIRST RENT TO BE?

 6       A    I DON'T KNOW.

 7       Q    BUT YOU WERE DONOR MANAGER.  YOU HAD ACCESS TO THE

 8  VARIOUS CONFIRMATIONS, STATEMENTS FROM THE NATIONAL

 9  FOUNDATION, INC., WHICH IS EXHIBIT 18; ISN'T THAT TRUE?

10       A    I COULD MAKE DISBURSEMENTS FROM THAT ACCOUNT, BUT

11  ONLY IF THE DISBURSEMENT REQUEST FORM WERE PREPARED WITH

12  MRS. Carto’s INVOLVEMENT.  I DIDN'T MAKE UNILATERAL

13  DISBURSEMENTS.

14       Q    MY QUESTION — LISTEN CAREFULLY.  YOU

15  RECEIVED — AS DONOR MANAGER, YOU WERE RECEIVING THE

16  CONFIRMATION STATEMENTS?

17       A    THEY WERE COMING TO ME AND, FOR THE MOST PART,

18  BEING FILED, YES.

19       Q    SO WHEN YOU SAW THESE STATEMENTS WHICH SHOWED THAT

20  MONIES WERE GOING TO THE FOUNDATION TO DEFEND THE FIRST

21  AMENDMENT, DID YOU EVER ASK MR. CARTO OR MRS. CARTO,

22  LEWIS FURR OR LAVONNE FURR WHY MONIES WERE BEING PAID TO THE

23  FOUNDATION TO DEFEND THE FIRST AMENDMENT?

24       A    AS I STATED, I DIDN'T PAY ATTENTION TO THESE UNTIL

25  MUCH LATER.

26       Q    DID YOU BELIEVE, AS DONOR MANAGER, YOU SHOULD HAVE

27  PAID ATTENTION?

28       A    NO.  WHEN I WOULD MAKE A DISBURSEMENT, I WOULD
			
			

page280



 1  HAVE AN IDEA OF HOW MUCH WAS IN THE ACCOUNT AND I WOULD MAKE

 2  THE DISBURSEMENT.  IT NEVER CAME TO A POINT WHERE IT HAD TO

 3  BE RECONCILED FOR ANY REASON.  I DIDN'T HAVE MUCH ATTENTION

 4  ON IT UNTIL LATER.

 5       Q    SIR, YOU HAD YOUR DEPOSITION TAKEN IN THIS

 6  MATTER.  DO YOU RECALL THAT?

 7       A    IN THE MATTER OF?

 8       Q    IN THIS CASE.

 9       A    IN THIS CASE HERE?

10       Q    YES.

11       A    OKAY.  YES.

12       Q    AND YOU DO RECALL THAT, IN FACT, I THINK IT LASTED

13  FOUR DAYS, DO YOU RECALL?

14       A    I THOUGHT IT LASTED FOUR WEEKS.

15       Q    FEELS THAT WAY WHEN YOU ARE IN DEPOSITION.

16            DO YOU RECALL TALKING ABOUT THIS, A BIG LEASE

17  PAYMENT THAT THE LEGION MADE TO THE F.D.F.A., WHICH REDUCED

18  THE RENT TO $666 PER MONTH?

19       A    I DON'T RECALL THAT TESTIMONY.  I MAY HAVE

20  TESTIFIED.  AND THERE COULD HAVE BEEN SORT OF AN INITIAL

21  BALLOON PAYMENT OR SOMETHING.

22       Q    DO YOU RECALL TESTIFYING THAT YOU PAID $666 IN

23  ADVANCE IN 1986 FOR FIVE YEARS, APPROXIMATELY $40,000?

24       MR. MUSSELMAN:  OBJECTION.  RELEVANCE OF HIS MEMORY OF

25  HIS PRIOR TESTIMONY.

26       THE COURT:  SUSTAINED.

27

28
			
			

page281



 1  BY MR. WAIER:

 2       Q    DID THE LEGION PAY $666 IN ADVANCE IN 1986 FOR

 3  FIVE YEARS, WHICH APPROXIMATED $40,000?

 4       A    I DON'T RECALL WHAT AGREEMENT WE HAD IN THE TERMS

 5  AND WHAT WAS PAID.

 6       Q    DO YOU RECALL AN ESCROW ACCOUNT SET UP BY

 7  JOHN CURRY’s FATHER IN COLUMBUS, NEBRASKA, C-U-R-R-Y?

 8       A    IT RINGS NO BELL.

 9       Q    DID YOU EVER MAKE A COMMENT CONCERNING GOING AFTER

10  THE FARREL ESTATE MONEY, THE LEGION GOING AFTER THE FARREL

11  ESTATE MONEY TO THE EFFECT IF WE WANTED TO GO AFTER THE

12  MONEY, WE WOULD HAVE STARTED MOVING ON THIS IN 1990 OR 1991?

13       A    SOUNDS LIKE A SENSELESS COMMENT.  I DON'T KNOW

14  WHAT CONTEXT IT IS.

15       Q    DO YOU RECALL YOUR DEPOSITION BEING TAKEN ON

16  AUGUST 17 IN THIS MATTER, 1994?

17       A    I'LL TAKE YOUR REPRESENTATION THAT WAS ABOUT THE

18  TIME I WAS DEPOSED IN THIS CASE.

19       MR. BEUGELMANS:  COUNSEL, WHICH VOLUME?

20       MR. WAIER:  THE DEPOSITION TAKEN AUGUST 17, 1984 --

21  1994.  EXCUSE ME.

22

23  BY MR. WAIER:

24       Q    LET ME READ TO YOU STARTING ON PAGE — ACTUALLY,

25  PAGE 84, LINES 18 THROUGH THE END OF PAGE 84, AND PAGE 85,

26  LINES 1 TO THE END, AND PAGE 86, LINES 1 THROUGH 3.

27       MR. BEUGELMANS:  OBJECTION.  IT’s NOT IMPEACHMENT.

28  IT’s IMPROPER TO USE THE DEPOSITION.
			
			

page282



 1       THE COURT:  I HAVEN'T SEEN IT.

 2       MR. WAIER:  IT DOESN'T MEAN — I CAN READ FROM A

 3  PARTY’s DEPOSITION.

 4       THE COURT:  COUNSEL, YOU AND I WON'T GET ALONG IF YOU

 5  KEEP INTERRUPTING.

 6       MR. BEUGELMANS: I HAVE THE ORIGINAL TRANSCRIPT HERE.

 7       THE COURT:  THANK YOU.

 8            COUNSEL, I'LL BE LIBERAL AND OVERRULE THE

 9  OBJECTION.

10       MR. WAIER:  I APOLOGIZE TO THE COURT.  I WILL NOT DO

11  THAT AGAIN.

12       THE COURT:  I TRUST YOU WON'T.

13

14  BY MR. WAIER:

15       Q   “QUESTION:  BUT MR. CARTO WASN'T RUNNING THE LEGION

16  PRIOR TO THAT TIME, WAS HE,” REFERRING TO THE FARREL-EDISON

17  ESTATE.

18            “ANSWER:  HE WAS.  HE WAS.  YES.  HE WAS THE

19  PERSON I REPORTED TO.

20            “QUESTION:  SO YOU ARE SAYING HE WAS ACTUALLY

21  RUNNING THE LEGION PRIOR TO THE TIME OF SEEKING RECOVERY OF

22  THE FARREL ESTATE?

23            “ANSWER:  AS THE BUSINESS AGENT OR BUSINESS

24  MANAGER AND THE PERSON WHO I WAS TO REPORT TO, WHO THEN

25  REPORTED TO THE BOARD, IN THAT SENSE, HE WAS RUNNING IT,

26  YES.

27            “QUESTION:  AND HOW MUCH WAS HE GETTING PAID

28  DURING THAT PERIOD OF TIME THAT HE WAS THE BUSINESS AGENT?
			
			

page283



 1            “ANSWER:  I'M NOT AWARE OF ANY PAYMENT THAT WAS

 2  MADE BY THE LEGION TO MR. CARTO.

 3            “QUESTION:  IN FACT, ISN'T IT TRUE THAT HIS SOLE

 4  SALARY DURING THAT PERIOD OF TIME WAS A DOLLAR A YEAR?

 5            “ANSWER:  I WASN'T EVEN AWARE HE WAS PAID A DOLLAR

 6  A YEAR.  BUT HE WAS IN A POSITION WHERE HE COULD GAIN

 7  CONTROL OF THE ASSETS, SUCH AS THESE, AND IT MAY BE

 8  WORTHWHILE NOT TO TAKE PAY FOR 10 YEARS IF YOU CAN GET YOUR

 9  HANDS ON MILLIONS OF DOLLARS.

10            “QUESTION:  AND IT MIGHT BE WORTH TAKING CONTROL

11  OF A COMPANY IF YOU CAN GET YOUR HANDS ON IT, TOO?

12            “ANSWER:  TRUE.  THAT’s NOT WHY WE DID THIS, NO."

13            AT THE TIME YOU SAID THAT STATEMENT, YOU WERE

14  TALKING ABOUT STARTING THE LITIGATION, ISN'T THAT CORRECT,

15  SUING MR. CARTO?

16       MR. MUSSELMAN:  OBJECTION.  THE TESTIMONY AND QUESTION

17  HE READ — HE MISSTATED THE FIRST QUESTION BY ADDING A

18  PARENTHETICAL NOT IN THE QUESTION.  HE QUOTED IT AS SAYING

19  IN REFERENCE TO THE FARREL ESTATE, AND THE QUESTION DOES NOT

20  SAY THAT.

21       THE COURT:  THE QUESTION DOES NOT, THAT’s TRUE.  BUT HE

22  WAS REFERRING TO IT ABOUT TWO LINES ABOVE, I THINK, OR HE

23  THINKS THAT’s WHAT IS GOING ON.

24       MR. WAIER:  I COULD READ BEFORE THAT.  I'M SORRY.

25       THE COURT:  I THINK HE’s RIGHT.

26

27  BY MR. WAIER:

28       Q    YOU WERE REFERRING TO SUING MR. CARTO IN THIS
			
			

page284



 1  LITIGATION, ISN'T THAT RIGHT, WHEN YOU MAKE THE STATEMENT

 2  “TRUE.  THAT’s NOT WHY WE DID THIS, NO,” SEEKING THE

 3  RECOVERY OF THE FARREL ESTATE?

 4       A    YES, THAT’s PROBABLY WHAT I MEANT.  YES.

 5       Q    THEN MY QUESTION TO YOU SAID: “WHY DID YOU DO IT?"

 6            “ANSWER:  IF WE WANTED TO GO AFTER THE MONEY, WE

 7  WOULD HAVE PROBABLY STARTED MOVING ON THAT IN 1990 OR 1991.

 8  WE BEGAN MOVING TO REMOVE MR. CARTO FROM THE CORPORATION NOT

 9  UNTIL 1993, AND EVEN AFTER THE LAST HALF OF 1993, BECAUSE

10  HIS BEHAVIOR WAS BECOMING INCREASINGLY ERRATIC AND

11  IRRATIONAL.  HE WAS TRYING TO CHANGE THE COURSE OF THE

12  CORPORATION.  HE WAS THREATENING TO FILE A LAWSUIT AGAINST

13  MEL MERMELSTEIN, AND WE HAD A LONG, DISASTROUS HISTORY WITH

14  MR. MERMELSTEIN, THAT IT COST THE CORPORATION TENS OF

15  THOUSANDS, IF NOT HUNDREDS OF THOUSANDS OF DOLLARS.  HE GOT

16  US INVOLVED IN TWO COPYRIGHT INFRINGEMENT SUITS.  THESE WERE

17  THE REASONS THAT COMPELLED US TO MOVE TO HAVE MR. CARTO

18  REMOVED FROM THE BOARD OF THE LEGION."

19       MR. MUSSELMAN:  OBJECTION.  MISSTATES THE --

20  CORRECTION, “REMOVED BY THE BOARD."

21

22  BY MR. WAIER:

23       Q    “REMOVED BY THE BOARD.”  NO, “REMOVED BY THE BOARD

24  OF THE LEGION."

25            NOW, SIR, THAT REFRESHES YOUR RECOLLECTION THAT

26  YOU KNEW EARLY ON IN 1990 THAT MR. CARTO WAS INVOLVED IN

27  DISPENSING FUNDS FROM THE FARREL ESTATE; ISN'T THAT TRUE?

28       A    I THINK IT WAS PROBABLY IN '91 WHEN I SAW THE
			
			

page285



 1  FIRST DISPENSATION FROM THAT ACCOUNT THAT I KNEW THAT, OR

 2  UNDERSTOOD THAT.

 3       Q    BUT YOU INDICATED IN YOUR TESTIMONY “IF WE WANTED

 4  TO GO AFTER THE MONEY, WE WOULD HAVE PROBABLY STARTED MOVING

 5  ON THAT IN 1990 OR 1991."

 6       A    YEAH, 1990 OR 1991.

 7       Q    NOW, IN FACT, DOES THIS NOW REFRESH YOUR

 8  RECOLLECTION THAT YOU HAD — THAT THE LEGION WAS

 9  RESPONSIBLE AND/OR HAD PAID HUNDREDS OF THOUSANDS OF DOLLARS

10  IN CONNECTION WITH THE MERMELSTEIN LITIGATION?

11       A    AT THE TIME I WAS SITTING THERE ANSWERING THE

12  QUESTION, I PROBABLY GAVE THAT RANGE.  I DON'T KNOW HOW MUCH

13  WE ACTUALLY SPENT ON THOSE LITIGATIONS.  I COULD PROBABLY

14  DETERMINE IT.  IT MIGHT HAVE BEEN IN THE AREA OF TOTAL,

15  MAYBE, 75- OR EVEN $100,000.  I DON'T THINK IT WOULD HAVE

16  BEEN HUNDREDS OF THOUSANDS OF DOLLARS.

17       Q    YOU DIDN'T CORRECT YOUR DEPOSITION ON THOSE LINES,

18  DID YOU?

19       A    THAT’s CORRECT.

20       Q    YOU REVIEWED IT THOROUGHLY PRIOR TO SIGNING YOUR

21  NAME TO THAT UNDER PENALTY OF PERJURY, DID YOU NOT?

22       A    I DID HAVE AN OPPORTUNITY TO REVIEW IT.  I DID NOT

23  MAKE THE CORRECTION.

24       Q    AT THIS POINT IN TIME, YOU WERE PRESIDENT OF THE

25  LEGION, ISN'T THAT TRUE, AT THE TIME YOU GAVE THE

26  DEPOSITION?

27       A    YES, I BELIEVE I WAS.  UH-HUH.

28       Q    SO YOU HAD ACCESS TO ALL OF THE FINANCIALS AT THAT
			
			

page286



 1  POINT IN TIME, DIDN'T YOU?

 2       A    YES.

 3       Q    AND YOU CERTAINLY HAD ACCESS TO MR. HULSY BECAUSE

 4  HE WAS COUNSEL TO THE CORPORATION AT THIS TIME; ISN'T THAT

 5  TRUE?

 6       A    YES, HE WAS RETAINED BY THE CORPORATION.

 7       Q    YOU WOULD HAVE KNOWN HOW MUCH HE WAS PAID?

 8       A    YES.

 9       THE COURT:  GOOD TIME TO STOP.  1:30.

10       MR. WAIER:  PERFECT.

11       THE COURT:  THIS OUGHT TO GET THIS CONCLUDED QUICK HERE

12  WITH THIS WITNESS.

13

14                   (PROCEEDINGS RECESSED.)

15

16       THE COURT:  BACK ON THE RECORD.

17

18  BY MR. WAIER:

19       Q    MR. MARCELLUS, YOU INDICATED EARLIER ON IN YOUR

20  TESTIMONY THAT H.E.F. WAS MERELY AN ACCOUNT OF THE LEGION;

21  IS THAT CORRECT?

22       A    YES.

23       Q    AND YOU INDICATED THAT, IN OTHER WORDS, IT WAS A

24  BANK ACCOUNT?

25       A    IT WAS AN ACCOUNT WITH A COMPANY CALLED NATIONAL

26  FOUNDATION.  IT’s ON ONE OF THESE EXHIBITS HERE, NATIONAL

27  FOUNDATION, INCORPORATED.

28       Q    SIR, CAN YOU TELL ME, IF IT WAS AN ACCOUNT OF
			
			

page287



 1  LEGION, WHY WOULD THE LEGION BORROW MONEY FROM THAT ACCOUNT

 2  IF IT WAS LEGION MONEY?

 3       A    ONLY IF MR. CARTO INSISTED THAT IT SHOULD.

 4       Q    SIR, DIDN'T YOU SIGN A PROMISSORY NOTE ON BEHALF

 5  OF THE INSTITUTE OF HISTORICAL REVIEW WHICH YOU INDICATED

 6  WAS PART OF THE LEGION; ISN'T THAT RIGHT?

 7       A    AS PER THE PREVIOUS LITIGATION, YES.  YOU KNOW I

 8  DID.

 9       Q    LET ME HAND THIS TO YOU, A PROMISSORY NOTE FOR

10  $187,000 DATED JULY 1, 1991, COURT EXHIBIT IDENTIFICATION

11  NUMBER 184.

12       A    YES.

13       Q    YOU SIGNED THAT PROMISSORY NOTE?

14       A    I DID.

15       Q    IN FACT, THIS WAS A PROMISSORY NOTE FOR WHICH YOU

16  ALSO SIGNED A UCC-1 FINANCING STATEMENT; ISN'T THAT TRUE?

17       A    I BELIEVE THAT WAS ALSO FOR HISTORICAL EDUCATION

18  FOUNDATION, YES.

19       Q    EVEN THOUGH THIS PURPORTEDLY WAS A LEGION ACCOUNT;

20  ISN'T THAT RIGHT?  YOU SIGNED A PROMISSORY NOTE EVEN THOUGH

21  IT WAS LEGION MONEY?

22       A    YES.

23       Q    YOU TESTIFIED EARLIER YOU ARE AWARE OF AN

24  AGREEMENT BETWEEN THE LEGION AND WILLIS CARTO CONCERNING THE

25  RECOVERY AND DISPOSITION OF THE FARREL-EDISON ESTATE.  DO

26  YOU RECALL THAT?

27       A    I TESTIFIED RELATIVE TO IT, YES.

28       Q    LET ME SHOW YOU WHAT WE HAVE MARKED FOR
			
			

page288



 1  IDENTIFICATION AS EXHIBIT 185, A LETTER TO LAVONNE, DATED

 2  SEPTEMBER 14, 1985, PURPORTEDLY SIGNED BY MR. CARTO.  DO YOU

 3  RECOGNIZE MR. Carto’s SIGNATURE ON THAT?

 4       A    IT LOOKS LIKE ONE OF HIS SIGNATURES, YES.

 5       Q    AND IN FACT, YOU'VE SEEN THAT DOCUMENT BEFORE,

 6  HAVEN'T YOU?

 7       A    CAN I LOOK AT IT A MOMENT TO REFRESH MY MEMORY?

 8       Q    SURE.

 9       A    YES, I HAVE SEEN THIS.

10       Q    AND YOU UNDERSTOOD THAT THAT IS THE AGREEMENT

11  BETWEEN THE LEGION, OR AT LEAST REPRESENTS THE AGREEMENT

12  BETWEEN THE LEGION AND WILLIS CARTO CONCERNING THE RECOVERY

13  AND DISPOSITION OF THE FARREL-EDISON ESTATE?

14       A    IT LOOKS LIKE A ONE-SIDED NARRATIVE.  IT DOESN'T

15  LOOK LIKE AN AGREEMENT TO ME.  IT LOOKS LIKE A LETTER TO

16  LAVONNE FURR.

17       Q    YOU UNDERSTOOD THAT THE TERMS OF THAT LETTER WERE

18  AGREED TO BY LAVONNE FURR, DON'T YOU?

19       A    NO.

20       Q    DID YOU EVER TALK TO LAVONNE FURR ABOUT THE

21  SPECIFIC LETTER DATED SEPTEMBER 14, 1985?

22       A    I HAVE NOT SEEN THIS.  WHEN I TALKED TO HER, I

23  DIDN'T KNOW IT EXISTED.

24       Q    NOW, FINALLY, ONE LAST QUESTION AREA.  YOU

25  INDICATED IN YOUR TESTIMONY, I BELIEVE YOU ARE ADAMANT ABOUT

26  IT, ONE OF THE REASONS WHY YOU REMOVED WILLIS CARTO OR YOUR

27  GROUP ATTEMPTED TO REMOVE WILLIS CARTO WAS BECAUSE OF THE

28  EDITORIAL DEPARTURE HE WAS TAKING?
			
			

page289



 1       MR. MUSSELMAN:  OBJECTION.  MISSTATES THE TESTIMONY.

 2  HE DIDN'T SAY HE HAD REMOVED.

 3       MR. WAIER:  I SAID HIS GROUP.

 4       MR. MUSSELMAN:  FOR — FOR HIS GROUP, THE BOARD OF

 5  DIRECTORS.

 6       THE COURT:  NO QUESTION IS EVIDENCE.  I'M GOING TO

 7  OVERRULE IT.  HE WILL EXPAND ON THE QUESTION BECAUSE IF IT

 8  DOES NOT STATE HIS TESTIMONY.

 9

10  BY MR. WAIER:

11       Q    DO YOU RECALL THAT IN MARCH 1993, YOU TESTIFIED

12  THAT AT THAT POINT IN TIME, THAT YOU WERE LOOKING INTO

13  WILLIS CARTO AND HIS AUTHORITY?  DO YOU RECALL THAT?

14       A    THE SENIOR STAFF AT THE LEGION WAS, YES.

15       Q    AND THE SENIOR STAFF WAS VERY CONCERNED ABOUT

16  ABERRATIONS BY MR. CARTO ABOUT CHANGING THE EDITORIAL

17  DIRECTION OF THE I.H.R.?

18       A    YES.

19       Q    ISN'T IT TRUE THAT IT WAS YOU, AS EARLY AS 1991,

20  THAT SUGGESTED THESE CHANGES TO THE EDITORIAL REVIEW, THE

21  JOURNAL OF HISTORICAL REVIEW?

22       A    NO.

23       Q    SIR, LET ME HAND YOU WHAT WE'LL MARK AS NEXT IN

24  ORDER, WHICH IS EXHIBIT MARKED FOR IDENTIFICATION 186.

25       MR. BEUGELMANS:  AGAIN, THIS IS A DOCUMENT WHICH

26  PLAINTIFFS HAVE NEVER SEEN BEFORE.

27       MR. WAIER:  THIS IS IMPEACHMENT DIRECTLY, YOUR HONOR.

28       THE COURT:  GO AHEAD.
			
			

page290



 1  BY MR. WAIER:

 2       Q    LET ME HAND YOU WHAT WE'LL MARK AS EXHIBIT FOR

 3  IDENTIFICATION NUMBER 186, WHICH IS NOVEMBER 24, 1991,

 4  PURPORTED MEMO TO WILLIS FROM TOM.  LOOK AT THE SECOND PAGE

 5  OF THIS.  IS THAT YOUR SIGNATURE?

 6       A    YES.

 7       Q    DO YOU RECALL PREPARING THIS MEMO?

 8       A    YES.

 9       Q    IN FACT, DOES THIS NOT REFRESH YOUR RECOLLECTION

10  THAT IT WAS YOU AS EARLY AS NOVEMBER 1991 THAT SUGGESTED

11  THAT THE JOURNAL OUGHT TO TAKE A DIFFERENT DIRECTION FROM

12  THE STAGNATED POSITION?

13       A    WELL, IT’s TRUE THAT I WAS ALWAYS MAKING

14  SUGGESTIONS ABOUT — ABOUT THE JOURNAL HAVING DIFFERENT

15  THINGS IN IT, BUT NOT — NOT THE TYPE OF SWITCHING RAILROAD

16  TRACKS AS MR. CARTO NOT ONLY WAS SUGGESTING BUT WAS

17  INSISTING ON.  I ALWAYS SOUGHT WAYS TO TRY TO IMPROVE THE

18  JOURNAL, ITS LOOK, TO BROADEN THE CONTENT, SO FORTH.  BUT

19  THESE WERE SUGGESTIONS ON MY PART.  THESE WERE NOT

20  ULTIMATUMS.

21       Q    BUT IT WAS YOU WHO MADE THE SUGGESTIONS; ISN'T IT

22  TRUE?

23       A    I MADE SOME SUGGESTIONS.  AND THEY WERE MAINLY

24  RELATIVE TO THE APPEARANCE OF THE JOURNAL TO MAKE IT LOOK

25  MORE MODERN, BUT THEY WERE NOT CONCERNING THE TOPIC AREAS,

26  THE RADICAL TOPIC AREA DEPARTURE MR. CARTO WAS INSISTING ON.

27       Q    DIDN'T YOU, AT ONE POINT IN TIME, EMPHASIZE TO

28  MR. CARTO THE JOURNAL OUGHT TO CHANGE FROM THE EMPHASIS ON
			
			

page291



 1  HOLOCAUST-RELATED HISTORY AND GO TO SOME OTHER FORMS OF

 2  HISTORY?

 3       A    NO.  I ONLY SUGGESTED THAT — NOT THAT IT SHOULD

 4  CHANGE, BUT THAT IT COULD INCLUDE MORE AREAS, YES.

 5       Q    NOW, FINALLY, YOU INDICATED THAT YOU HAD MET WITH

 6  MR. HENRY FISCHER, I BELIEVE YOU STATED SOMETIME IN 19 --

 7  WAS IT '87 OR SO?

 8       A    I MET MR. FISCHER A COUPLE OF TIMES.  ONE OF THOSE

 9  MEETINGS COULD HAVE BEEN IN 1987.

10       Q    AND YOU INDICATED YOU DIDN'T KNOW WHY YOU MET

11  MR. FISCHER; IS THAT TRUE?

12       A    WELL, I DON'T UNDERSTAND WHY — THE FIRST TIME, I

13  DIDN'T UNDERSTAND WHY MR. CARTO BROUGHT HIM TO THE OFFICE.

14  LATER, HE BEGAN DOING TRANSLATION WORK, SO I UNDERSTOOD WHAT

15  MR. FISCHER’s ROLE WAS.

16       Q    YOU UNDERSTOOD BEFORE 1990 THAT MR. FISCHER WAS

17  INVOLVED IN THE RECOVERY OF THE FARREL-EDISON ESTATE; ISN'T

18  THAT TRUE?

19       A    AS I SIT HERE, I DON'T THINK I WAS AWARE OF THAT.

20       Q    IN FACT, DIDN'T MR. CARTO TELL YOU THAT ON THE FEW

21  OCCASIONS YOU MET WITH MR. FISCHER, HE WAS ALSO GOING TO BE

22  HELPING MR. CARTO IN THE RECOVERY OF THE FARREL-EDISON

23  ESTATE?

24       A    NO, I DON'T BELIEVE THAT WAS MENTIONED.

25       Q    WHEN WAS THE FIRST TIME YOU LEARNED MR. FISCHER

26  HAD ANYTHING TO DO WITH THE — WITH THE RECOVERY OF THE

27  FARREL-EDISON ESTATE?

28       A    I THINK IT WAS WHEN THE — WHEN WE DISCOVERED A
			
			

page292



 1  CHECK DRAWN ON THE LEGION ACCOUNT PAYABLE TO LIBERTY LOBBY,

 2  MR. Carto’s ORGANIZATION, THAT WAS ENCLOSED WITH A COVER

 3  LETTER TO MR. FISCHER.

 4       Q    THAT WAS THE FIRST TIME YOU UNDERSTOOD MR. FISCHER

 5  HAD ANYTHING TO DO WITH THE RECOVERY?

 6       A    I COULD BE MISTAKEN.  I BELIEVE SO.

 7       Q    NOW, YOU ALSO — IF YOU TAKE A LOOK AT EXHIBIT, I

 8  BELIEVE, 46, DO YOU RECALL THAT IN FRONT OF YOU, COUNSEL

 9  SHOWED YOU THAT ON DIRECT EXAMINATION?

10       A    THIS IS THE BIDDLE AND COMPANY LETTER.

11       Q    IT MIGHT HAVE BEEN EXHIBIT 45.  I MIGHT HAVE

12  WRITTEN --

13       MR. BEUGELMANS:  46, YOU ARE CORRECT, LETTER FROM

14  MR. HOOPER FROM BIDDLE AND COMPANY.

15       MR. WAIER:  NO, I'M ASKING HIM — I BELIEVE IT WAS ONE

16  CONCERNING FRITZ BERG.

17       THE WITNESS:  OH, NO, THIS IS NOT THE FRITZ BERG

18  LETTER.  THAT’s 45.

19

20  BY MR. WAIER:

21       Q    EXHIBIT 45, DO YOU HAVE THAT?

22       A    YES.

23       Q    WHEN WAS THE FIRST TIME YOU SAW THIS LETTER?

24       A    I THINK I MAY HAVE SEEN THIS LETTER FIRST SOMETIME

25  IN THE SUMMER OF 1993.

26       Q    WELL, YOU UNDERSTOOD THAT THE LEGION WAS SETTING

27  UP A SEPARATE ORGANIZATION TO — AT THIS PARTICULAR POINT

28  IN TIME IN MARCH 1991 CONSISTENT WITH MR. HULSY’s ADVICE FOR
			
			

page293



 1  PURPOSES OF RECEIVING DONATIONS; ISN'T THAT CORRECT?

 2       MR. MUSSELMAN:  OBJECTION.  MULTIPLE.  COMPOUND.

 3       THE COURT:  SUSTAINED.

 4

 5  BY MR. WAIER:

 6       Q    YOU TESTIFIED THAT MR. HULSY ADVISED YOU, AS WELL

 7  AS THE LEGION, THAT TO AVOID CREDITORS OR POTENTIAL JUDGMENT

 8  CREDITOR, THAT YOU COULD SET UP A SEPARATE ORGANIZATION

 9  ISN'T THAT CORRECT?

10       MR. MUSSELMAN:  OBJECTION.  MISSTATES THE TESTIMONY.

11  HE’s ASKING TO REPEAT HIS TESTIMONY.  I OBJECT.

12       THE COURT:  SUSTAINED.  IT’s ASKED AND ANSWERED.

13

14  BY MR. WAIER:

15       Q    ISN'T IT TRUE THAT YOU WERE AWARE IN MARCH OF 1991

16  THAT A SEPARATE ORGANIZATION WAS BEING SET UP FOR THIS

17  PURPOSE?

18       MR. MUSSELMAN:  WHAT IS THE PURPOSE?

19       MR. WAIER:  THE PURPOSE OF RECEIPT OF MONIES TO AVOID

20  THE PAYMENT OF A POTENTIAL JUDGMENT CREDITOR.

21       THE WITNESS:  THERE WAS ONE — A POINT WHERE

22  MRS. CARTO TOLD ME ABOUT THIS VIBET ORGANIZATION, VIBET

23  COMPANY THAT HAD BEEN SET UP TO CHANNEL THE FUNDS THROUGH

24  THE LEGION OR SOMETHING.  THAT’s THE FIRST I HEARD OF ANY

25  OTHER ORGANIZATION WHERE THE FARREL ESTATE GIFTS WERE GOING

26  TO COME TO THE LEGION.

27

28
			
			

page294



 1  BY MR. WAIER:

 2       Q    SHE TOLD YOU THIS SOMETIME IN 1990; ISN'T THAT

 3  TRUE?

 4       A    I HAVE TO SEE MY NOTE, REFRESH MY MEMORY.  I'M NOT

 5  SURE.

 6       Q    BUT IT WAS CERTAINLY WITHIN 1991; ISN'T THAT TRUE?

 7       A    IT COULD HAVE BEEN AS EARLY AS 1991.

 8       Q    WITH RESPECT TO THE LETTER, TALKING ABOUT THE

 9  CONRAD GEIEB, G-E-I-E-B, MONIES — DO YOU SEE THIS?

10       A    YES.

11       Q    — NONE OF THAT MONEY WENT INTO ANYTHING OTHER

12  THAN THE LEGION FOR SURVIVAL OF THE FREEDOM, INC.,

13  MR. GEIEB’s ESTATE?

14       A    CONRAD — SHOULD BE GRIEB, G-R-I-E-B.  YES, I

15  BELIEVE JUST BEFORE THIS, MR. GRIEB HAD DIED.  HE HAD GIFTED

16  SOME FUNDS TO THE LEGION.  FRITZ BERG WAS THE EXECUTOR, AND

17  THE LEGION RECEIVED THE CHECKS.

18       Q    THE CHECKS WEREN'T MADE OUT TO ANY OTHER

19  ORGANIZATION EXCEPT THE LEGION?

20       A    I DON'T RECALL WHO THE CHECKS WERE MADE OUT TO.

21       Q    THEY WENT INTO THE LEGION ACCOUNT, NOT SOME

22  ACCOUNT CALLED THE INSTITUTE FOR HISTORICAL REVIEW; ISN'T

23  THAT TRUE?

24       A    NO.  THEY WOULDN'T HAVE BEEN MADE OUT TO THE

25  LEGION.  THE LEGION HAD NO ACCOUNT.  IT WOULD BE THE

26  INSTITUTE FOR HISTORICAL REVIEW OR THE NOONTIDE PRESS.

27       Q    BUT NOT TO THE LEGION, FOR THE INSTITUTE OF

28  HISTORICAL REVIEW; IS THAT CORRECT?
			
			

page295



 1       A    NOT TO THE WHAT?

 2       Q    NOT TO THE INSTITUTE FOR HISTORICAL REVIEW?  THOSE

 3  MONIES DID NOT GO INTO ANY ACCOUNT FOR THIS INSTITUTE; ISN'T

 4  THAT CORRECT?

 5       A    THEY PROBABLY DID GO — GO INTO THE — THE

 6  INSTITUTE FOR HISTORICAL REVIEW ACCOUNT.

 7       Q    WHY DO YOU BELIEVE THAT?

 8       A    THAT’s WHERE THE MAJORITY OF THE FUNDS WE WERE

 9  RECEIVING WENT INTO THAT.  THAT WAS OUR CHECKING ACCOUNT.

10  THAT WAS OUR MAIN TRADE NAME.

11       Q    THE INSTITUTE FOR — STRIKE THAT.

12            I'M TALKING ABOUT THE — I'M TALKING ABOUT THE

13  INTERNATIONAL LEGION FOR THE SURVIVAL OF FREEDOM TRUST.

14       A    YES.

15       Q    GRIEB’s MONEY DIDN'T GO INTO THAT ACCOUNT, DID IT?

16       A    I DON'T BELIEVE SO.

17       Q    AND IN FACT, THERE WAS NO CHECK MADE OUT TO THE

18  INTERNATIONAL LEGION FOR THE SURVIVAL OF FREEDOM TRUST FROM

19  THE CONRAD GRIEB ESTATE, WAS THERE?

20       A    I NEVER SAW A CHECK MADE OUT TO INTERNATIONAL

21  LEGION FOR THE SURVIVAL OF FREEDOM.

22       Q    TRUST?

23       A    TRUST.

24       MR. WAIER:  I HAVE NOTHING FURTHER.

25       THE COURT:  REDIRECT?

26       MR. MUSSELMAN:  YES.

27       MR. LANE:  MAY I INQUIRE ON BEHALF OF THE LOBBY?

28       THE COURT:  THIS IS INTERESTING.  WE REALLY HAVE TWO
			
			

page296



 1  PARTIES HERE.  I THOUGHT WE ARE — THE AGREEMENT WAS WE

 2  WOULD HAVE ONE PERSON DO THE DIRECT AND ONE PERSON DO THE

 3  CROSS ON EACH SIDE.  I REALIZE YOU WEREN'T HERE WHEN WE DID

 4  THAT.

 5       MR. WAIER:  THAT WAS WITH RESPECT TO THE PLAINTIFF.

 6  AND WE HAD WITH RESPECT TO — THERE WAS ONLY ONE

 7  PLAINTIFF.  THERE ARE NUMEROUS DEFENDANTS.  THERE’s A

 8  BIFURCATION DUTY BECAUSE OF THE NUMEROUS DEFENDANTS.  THERE

 9  ARE SEVERAL ORGANIZATIONS BEING REPRESENTED BY SEPARATE

10  COUNSEL.

11       MR. BEUGELMANS:  MAY I BE HEARD?  THERE’s ONLY ONE SIDE

12  FOR THE DEFENDANTS.  THERE’s A UNIT OF INTEREST BETWEEN

13  WILLIS CARTO AND LIBERTY LOBBY.  HE’s THE PRESIDENT,

14  TREASURER, MEMBER OF THE BOARD OF DIRECTORS.  IT WILL BE AN

15  UNDUE CONSUMPTION OF TIME AND UNDUE PREJUDICE TO ALLOW

16  DOUBLE CROSS-EXAMINATION OF WITNESSES ON THAT SIDE.

17       THE COURT:  I'M GOING TO OVERRULE YOU AND LET MR. LANE

18  ASK QUESTIONS.  BUT I DON'T WANT TO HEAR THE SAME

19  QUESTIONS.  I THINK THAT’s A POINT WELL TAKEN.  I DON'T HAVE

20  TO HEAR THE SAME ANSWER TWICE UNLESS, FOR SOME REASON, IT'S

21  SOMETHING YOU THINK I MISSED.

22       MR. LANE:  THANK YOU.  THIS WILL BE DIFFERENT.

23       MR. WAIER:  I WILL BE EXCUSED FOR TWO MINUTES.  BE

24  RIGHT BACK.

25       MR. LANE:  MAY I PROCEED?

26       THE COURT:  YES.

27

28
			
			

page297



 1                        CROSS-EXAMINATION

 2  BY MR. LANE:

 3       Q    GOOD AFTERNOON, MR. MARCELLUS.

 4       A    GOOD AFTERNOON, MR. LANE.

 5       Q    YOU TESTIFIED THAT YOU LEFT THE LEGION IN FEBRUARY

 6  OF 1994; IS THAT CORRECT?

 7       A    '95, I THINK.

 8       Q    SO — YOU DID TESTIFY FEBRUARY 1994.  ARE YOU

 9  CHANGING YOUR ANSWER, THEN?

10       MR. MUSSELMAN:  ASKED AND ANSWERED IF IT’s THE SAME

11  QUESTION.

12       THE COURT:  OVERRULED.

13       THE WITNESS:  IT MUST HAVE BEEN — IT MUST HAVE BEEN

14  '95, FEBRUARY OF '95.

15

16  BY MR. LANE:

17       Q    HAVE YOU RECEIVED — DID YOU RECEIVE

18  APPROXIMATELY $73,000 FROM A BANK IN SWITZERLAND DURING

19  1991, '92 AND 93?

20       MR. MUSSELMAN:  ASKED AND ANSWERED.

21       MR. LANE:  NO, WE DON'T HAVE AN ANSWER.

22       THE COURT:  OVERRULED.  WE DIDN'T KNOW WHERE THE MONEY

23  CAME FROM, AS I REMEMBER IT.

24       THE WITNESS:  DID I RECEIVE?

25

26  BY MR. LANE:

27       Q    YOU OR THE DESIGNEE.

28       A    THAT — YEAH, THAT’s ABOUT — I'M SURE THAT'S
			
			

page298



 1  FAIRLY ACCURATE.

 2       Q    AND THAT INCLUDED A $6,000 BONUS, DOES IT?

 3       MR. MUSSELMAN:  ASKED AND ANSWERED.

 4       THE COURT:  OVERRULED.

 5       THE WITNESS:  I FORGET WHAT THE BONUS WAS, BUT I'LL

 6  TAKE YOUR WORD FOR IT.  IT WAS $6,000.

 7

 8  BY MR. LANE:

 9       Q    WHAT WAS THE BONUS FOR?

10       A    PROBABLY FOR GOOD PERFORMANCE.

11       Q    I BEG YOUR PARDON?

12       A    PROBABLY FOR GOOD PERFORMANCE.

13       Q    GOOD PERFORMANCE, OKAY.  DID YOU SWEAR THAT YOU

14  HAD NOT RECEIVED ANYTHING CLOSE TO $73,000 PREVIOUSLY?

15       MR. MUSSELMAN:  VAGUE AS TO TIME.

16       THE COURT:  SUSTAINED.

17

18  BY MR. LANE:

19       Q    DO YOU RECALL APPEARING BEFORE JUDGE SHAW IN

20  NEWPORT BEACH, CALIFORNIA, ON FRIDAY, JUNE 16, 1995,

21  REGARDING THE SEARCH WARRANT EXAMINATION?

22       MR. BEUGELMANS:  SEARCH WARRANT?

23

24  BY MR. LANE:

25       Q    SEARCH WARRANT EXAMINATION, THAT’s CORRECT.

26            DO YOU RECALL THAT?

27       A    I RECALL IT BEING AT THE COURT.  I RECALL JUDGE

28  SHAW.  I DON'T RECALL BEING ON THE STAND, BUT I MAY HAVE
			
			

page299



 1  BEEN ON THE STAND BRIEFLY.

 2       Q    BRIEFLY.  DO YOU RECALL BEING ASKED THIS QUESTION

 3  REGARDING WHAT YOU TOLD DETECTIVE ROOKER, R-O-O-K-E-R, IF

 4  YOU — DO YOU RECALL BEING ASKED IF YOU WERE — ADVISED

 5  DETECTIVE ROOKER THAT YOU HAD BEEN PAID FROM THIS SWISS BANK

 6  ACCOUNT?

 7       A    I'M SORRY, WAS THAT A QUESTION?

 8       Q    YES.

 9       A    I DIDN'T GET THE QUESTION.

10       Q    DO YOU RECALL BEING ASKED IF YOU TOLD

11  DETECTIVE ROOKER THAT YOU HAD RECEIVED FUNDS FROM THE SWISS

12  BANK?

13       A    I DON'T RECALL THAT.  NO.

14       Q    AND YOU RECALL AT ONE POINT BEING ASKED, IN FACT,

15  YOU HAD RECEIVED APPROXIMATELY $73,000; ISN'T THAT CORRECT?

16  DO YOU RECALL BEING ASKED THAT QUESTION?

17       A    NO, I DON'T.

18       Q    AND DO YOU RECALL ANSWERING “NO, NO, NOT ANYTHING

19  CLOSE TO THAT"?

20       A    I DON'T RECALL.  I DON'T RECALL.

21       Q    ALL RIGHT.  LET ME SHOW YOU THE TRANSCRIPT OF THE

22  PROCEEDING.

23       MR. BEUGELMANS:  WHICH PAGE, COUNSEL?

24       MR. WAIER:  I'LL SHOW YOU.

25                            (PAUSE)

26       MR. BEUGELMANS:  YOUR HONOR, MR. LANE HAS PROVIDED

27  PLAINTIFF WITH A COMPRESSED COPY OF A TRANSCRIPT STARTING

28  PAGE 274.  THERE’s NO REFERENCE IN THE PORTION THAT YOU
			
			

page300



 1  PROVIDED TO US WHICH ACCOUNT IS BEING REFERENCED IN THE

 2  EXAMINATION, WHOEVER CONDUCTED THIS EXAMINATION, SIR.  SO I

 3  DON'T THINK YOU CAN USE IT FOR THIS PURPOSE.

 4       MR. LANE:  I DON'T THINK THAT’s TRUE, YOUR HONOR.

 5       THE COURT:  I DON'T KNOW.  I DON'T SEE THESE THINGS.

 6       MR. BEUGELMANS:  WOULD YOU PLEASE TAKE A LOOK AT WHAT

 7  MR. LANE HAS.  THERE’s NO REFERENCE TO ANY BANQUE CONTRADE

 8  LAUSANNE ACCOUNT.

 9       MR. LANE:  TOP OF THE PAGE, YOUR HONOR.

10       THE COURT:  I'M GOING TO OVERRULE THE OBJECTION.  YOU

11  CAN — IT IS SOMEWHAT AMBIGUOUS.  YOU CAN GO INTO THAT ON

12  DIRECT.  I DON'T KNOW THAT IT MAKES A LOT OF DIFFERENCE.

13

14  BY MR. LANE:

15       Q    I'M GOING TO SHOW YOU PAGE 274 FROM THE HEARING I

16  MADE REFERENCE TO.  PLEASE TAKE YOUR TIME AND READ THAT TO

17  YOURSELF.

18       A    WANT ME TO READ THIS WHOLE --

19       Q    TO YOURSELF.  THE PART THAT’s 274 IS THIS ONE PART

20  HERE.  YOU CAN READ AS MUCH AS YOU WISH.

21       A    OKAY.  I CAN SEE IT THAT IT STATES THAT IN THE

22  TRANSCRIPT.

23       Q    ALL RIGHT.  THE BANK ACCOUNT YOU WERE BEING ASKED

24  ABOUT WAS THE SWISS BANK ACCOUNT WE HAVE TALKED ABOUT

25  EARLIER TODAY; ISN'T THAT CORRECT?

26       A    YES, IT SOUNDS LIKE IT WOULD HAVE BEEN.  YES.

27       Q    WASN'T THIS A SEARCH WARRANT WHICH WAS BASED UPON

28  ALLEGATIONS YOU MADE ABOUT THAT BANK ACCOUNT, THAT BANK
			
			

page301



 1  ACCOUNT?

 2       A    WELL, I THINK AS THAT STATES, I DIDN'T TELL

 3  MR. ROOKER ABOUT THE MONEY I HAD BEEN PAID FROM THAT

 4  ACCOUNT.

 5       Q    WE UNDERSTOOD YOU DIDN'T TELL HIM, BUT YOU DID

 6  MAKE ALLEGATIONS TO HIM, DID YOU NOT, WHICH LED TO THE

 7  SEARCH WARRANT BEING ISSUED?

 8       MR. BEUGELMANS:  YOUR HONOR, I OBJECT.  WHAT IS THE

 9  RELEVANCE OF THIS?

10       THE COURT:  I DON'T KNOW.  I SUSPECT IT WILL BE TIED

11  IN.  I WILL OVERRULE THE OBJECTION.  WE'RE GOING TO GET

12  THROUGH IT QUICKLY.

13       MR. LANE:  IT’s JUST BECAUSE — I SAY BECAUSE

14  PLAINTIFF’s COUNSEL DOUBTED THAT IT WAS THE SAME BANK

15  ACCOUNT.  IF THEY WOULD CONCEDE THAT, WE WOULD NOT NEED THE

16  BACKGROUND.

17       THE COURT:  YOU DON'T NEED TO EXPLAIN THE QUESTIONS.

18

19  BY MR. LANE:

20       Q    ISN'T THAT TRUE THAT THE MATTER BEFORE JUDGE SHAW

21  WAS A SEARCH WARRANT REGARDING THIS FARREL ESTATE FUNDS?

22       A    THAT WAS THE SUBSTANCE, YES.

23       Q    AND YOU WERE BEING ASKED BEFORE THE SEARCH WARRANT

24  WAS ISSUED IF YOU TOLD DETECTIVE ROOKER THE TRUTH YOU

25  RECEIVED $73,000 FROM THAT ACCOUNT; ISN'T THAT CORRECT?

26       A    WHAT I BELIEVE IT STATES, THAT I DIDN'T SAY SUCH A

27  THING TO MR. ROOKER.  DIDN'T I STATE THAT?

28       Q    WILL YOU ANSWER MY QUESTION.  IS THAT WHAT YOU --
			
			

page302



 1       A    YOUR QUESTION IS INCOMPREHENSIBLE.

 2       Q    I'LL TRY TO MAKE IT SIMPLE, MR. MARCELLUS.  WAS

 3  THIS QUESTION ASKED OF YOU:  “WHEN YOU MET WITH

 4  DETECTIVE ROOKER, ON MARCH 6, 1995, DID YOU EXPLAIN TO HIM

 5  OR ADVISE HIM THAT YOU RECEIVED MONEY FROM THE BANK AND PUT

 6  IT IN YOUR PERSONAL ACCOUNT?”  WERE YOU ASKED THAT QUESTION?

 7       A    YES.

 8       Q    DID YOU SAY “NO"?

 9       A    YES.

10       Q    AND THEN WERE YOU ASKED — IN FACT, THEN WERE YOU

11  ASKED YOU HAD; ISN'T THAT CORRECT?  AND DID YOU ANSWER “YES"?

12       A    YES.

13       Q    THEN WERE YOU ASKED, “IN FACT, YOU HAD RECEIVED

14  APPROXIMATELY $73,000; ISN'T THAT CORRECT?” IS THAT CORRECT?

15       A    YES.

16       Q    STILL UNDER OATH, DID YOU ANSWER “NO, NOT ANYTHING

17  CLOSE TO THAT"?

18       A    WELL, IT MIGHT NOT HAVE BEEN QUITE WITH THAT

19  DRAMA.  IT MIGHT HAVE BEEN “NO".  THINKING ABOUT IT FOR THE

20  FIRST TIME, IT MIGHT NOT HAVE SEEMED LIKE IT WAS THAT MUCH

21  MONEY.

22       Q    DID YOU ANSWER “NO, NOT ANYTHING CLOSE TO THAT"?

23       A    IT’s RIGHT THERE IN BLACK AND WHITE.  I MUST HAVE.

24       Q    AND NOW TODAY, YOU SAY YOU WERE PAID $73,000?

25       A    I ADMIT WITHOUT THE CALCULATIONS THAT IT COULD

26  HAVE BEEN IN THAT AREA, YES.

27       Q    DID YOU DELIBERATELY TRY TO MISLEAD THE COURT?

28       A    I DID NOT.
			
			

page303



 1       Q    DID MR. CARTO TELL YOU AT ONE POINT FUNDS FROM THE

 2  FARREL ESTATE WERE AVAILABLE FOR THE LEGION?

 3       MR. MUSSELMAN:  OBJECTION TO TIME.  VAGUE AS TO TIME.

 4

 5  BY MR. LANE:

 6       Q    DID HE EVER TELL YOU THAT?

 7       A    YES.  BOTH HE AND ELISABETH CARTO INDICATED TO ME

 8  SOME FUNDS WOULD BE AVAILABLE, YES.

 9       Q    DID MR. CARTO SAY TO YOU, “MR. MARCELLUS, TELL ME

10  ABOUT THE PRESSING DEBTS OF THE LEGION BECAUSE WE'LL PAY

11  THOSE RIGHT NOW FROM THE SWISS BANK ACCOUNT"?

12       A    NO.  NO, HE DIDN'T SAY ANY SUCH THING.

13       Q    DID YOU GIVE HIM A LIST OF DEBTORS WHO YOU THOUGHT

14  SHOULD BE PAID?

15       A    WELL, I WORKED WITH ELISABETH ON PREPARING A LIST

16  OF INDIVIDUAL CONTRIBUTORS, INDIVIDUALS WHO HAD LOANED MONEY

17  TO THE INSTITUTES WHOSE NOTES WERE COMING DUE.

18       Q    DID YOU SUGGEST K&I, INC., BE PAID?

19       A    K&I WAS A PRINTER.  I WOULD HAVE PROBABLY

20  SUGGESTED THEY BE PAID, YES.

21       Q    DO YOU KNOW HOW MUCH WAS PAID BASED ON YOUR

22  RECOMMENDATION?

23       A    I DO NOT.

24       Q    DID YOU DISCUSS GENERAL PUBLISHING PAID?

25       A    GENERAL PUBLISHING.  I DON'T RECALL WHO GENERAL

26  PUBLISHING WAS.  IT COULD BE A VENDOR, SOMEONE WE BOUGHT

27  BOOKS FROM THAT WE OWED MONEY TO.

28       Q    OKAY.  DID YOU SUGGEST THAT ARCATA, A-R-C-A-T-A,
			
			

page 304



 1  GRAPHICS BE PAID?

 2       A    THAT WOULD BE LIKELY BECAUSE THEY DID A LOT OF THE

 3  PRINTING, YES.

 4       Q    TODAY, YOU TESTIFIED THAT YOU FIRST HEARD ABOUT

 5  FUNDS BEING AVAILABLE FOR THE SWISS BANK DURING 1991, RIGHT?

 6       A    YES.

 7       Q    IN FACT, EARLIER IN THE DAY WHEN MR. WAIER ASKED

 8  ABOUT IT, YOU SAID 1991, I FIRST BECAME AWARE THAT FUNDS

 9  WERE COMING FROM BANQUE CONTRADE; IS THAT RIGHT?

10       A    AS CLOSE AS I CAN RECALL TO THE TIME, IT WAS 1991.

11       Q    AND THAT MR. WAIER ASKED YOU — SAID TO YOU, IN

12  FACT, YOU KNOW — YOU KNEW IN 1990 WILLIS CARTO HAD ACCESS

13  TO THE FUNDS DISTRIBUTION.  YOU CORRECTED HIM AND SAID NO,

14  IT WAS 1991.  IS THAT CORRECT?

15       MR. BEUGELMANS:  OBJECTION.  ASKED AND ANSWERED.  WE

16  ARE GOING OVER THE SAME TERRITORY.

17       THE COURT:  I DON'T NEED WHAT HE TESTIFIED TO BEFORE.

18  JUST ASK SOME QUESTIONS.

19       MR. LANE:  JUST TAKE ONE WORD.  CAN WE GET THE ONE

20  WORD?

21       THE WITNESS:  I SAID 1990 OR 1991.

22

23  BY MR. LANE:

24       Q    WHICH IS IT, DO YOU KNOW?

25       A    I DIDN'T.

26       Q    NOW, YOU DON'T KNOW WHICH IT WAS?

27       A    IT SEEMS MORE LIKELY TO BE 1991.

28       Q    DO YOU RECALL PREPARING AND SIGNING A 51-PAGE
			
			

page305



 1  DECLARATION IN THE CASE — IN SUPERIOR COURT NUMBER 720973,

 2  ORANGE COUNTY LAWSUIT BROUGHT BY WILLIS AND ELISABETH CARTO

 3  AGAINST THE LEGION?

 4       A    THE POLIS COURT — JUDGE POLIS' COURT?

 5       Q    I BELIEVE SO.  I'M SUPPOSED TO ASK THE QUESTIONS.

 6  YOU ARE SUPPOSED TO ANSWER THEM.

 7       A    THEN I CAN ANSWER YES.

 8       Q    YOU DID.  ALL RIGHT.  YOU WEREN'T ON A WITNESS

 9  STAND WHEN YOU WROTE THE DECLARATION, WERE YOU?

10       A    NO.

11       Q    YOU HAD TIME TO GO OVER EACH OF THE POINTS OF

12  THAT, DID YOU NOT?

13       A    YES.

14       Q    AND YOU SWORE TO THE ACCURACY OF EVERY STATEMENT

15  IN THERE, DID YOU NOT?

16       A    YES.

17       Q    THAT WAS SUBMITTED TO THE COURT, WAS IT NOT?

18       A    YES.

19       Q    AND THEREAFTER, YOU THEN HAD THAT PRINTED AS THE

20  DOCUMENT AND SENT THROUGHOUT THE UNITED STATES; IS THAT

21  CORRECT?

22       MR. BEUGELMANS:  OBJECTION.  RELEVANCE, YOUR HONOR.

23       THE COURT:  WHAT’s THE RELEVANCE?  BIAS AGAINST THE

24  LEGION, IS THAT IT?

25       MR. LANE:  I'LL GET TO IT IN A MOMENT.

26

27  BY MR. LANE:

28       Q    ISN'T THAT CORRECT?
			
			

page306



 1       A    YES, WE DID PRINT THAT AND SEND IT.

 2       Q    YOU EDITED DOCUMENTS IN THE PAST?

 3       A    YES.

 4       Q    YOU WENT OVER THIS SWORN STATEMENT OF YOURS BEFORE

 5  IT WAS SENT OUT WIDELY THROUGHOUT THE UNITED STATES?

 6       A    NO.

 7       Q    DIDN'T GO OVER IT?

 8       A    NO, I WENT OVER IT WHEN I DECLARED IT TO BE TRUE.

 9  AND THEN ONCE I DID THAT, I HAD NO NEED — I DON'T BELIEVE

10  I HAD A NEED TO EDIT IT FURTHER.  I MAY HAVE EDITED IT FOR

11  SPACE.

12       Q    WHO WOULD YOU CONSIDER TO BE THE SENIOR STAFF OF

13  THE LEGION BACK IN 1990?

14       MR. BEUGELMANS:  OBJECTION.  RELEVANCE, YOUR HONOR.

15       MR. LANE:  TIE IT UP IN A MOMENT.

16       THE COURT:  IF I NEED ARGUMENT, I WILL ASK FOR IT.

17  OVERRULED.

18       THE WITNESS:  I BELIEVE AT THAT TIME, IT WAS MYSELF AND

19  TED O’Keefe.  I DON'T THINK MR. WEBER AND MR. RAVEN HAD COME

20  ON BOARD YET.

21

22  BY MR. LANE:

23       Q    IN THE DOCUMENT THAT YOU SWORE TO AND SUBMITTED TO

24  THE COURT AND LATER HAD DISTRIBUTED, DID YOU SWEAR,

25  “MOREOVER, THE FUNDS FROM THE FARREL-EDISON BEQUEST WERE

26  UNDERSTOOD BY LEGION SENIOR STAFF TO HAVE BEEN AVAILABLE AS

27  EARLY AS 1990, THREE YEARS BEFORE THE STAFF MADE ANY MOVE TO

28  INVESTIGATE CARTO"?
			
			

page 307



 1       A    COULD BE TRUE.  YES.  I MEAN, IF I SEE IT IN BLACK

 2  AND WHITE, I WOULD ADMIT I COULD HAVE SAID AS EARLY AS '90.

 3       Q    PAGE 16.

 4       MR. MUSSELMAN:  COULD WE HAVE A COPY, PLEASE.

 5       MR. LANE:  EXCUSE ME.  IT’s IMPEACHMENT.  I DIDN'T KNOW

 6  HE WOULD MAKE THE STATEMENT.

 7       MR. BEUGELMANS:  I OBJECT TO THIS COURSE OF INQUIRY.

 8  IT’s NOT IMPEACHMENT.  IT’s SIMPLY WHAT THIS DECLARATION

 9  STATES IS MR. MARCELLUS REALIZED SOMETIME IN 1994 THAT THE

10  FUNDS WERE PROBABLY AVAILABLE IN 1990.  IT DOESN'T IMPEACH

11  ANYTHING HE SAID IN COURT TODAY.  THIS IS ALICE IN

12  WONDERLAND.  IT’s NOT EVEN IMPEACHMENT.  IT’s SO COLLATERAL,

13  IT’s TRYING TO CONFUSE THE COURT.

14       THE COURT:  I THINK IT IS IMPEACHMENT.  WHEN YOU ARE

15  GOING TO IMPEACH SOMEONE, SHOW THE SIDE THE DOCUMENT.

16       MR. LANE:  HE HAS IT.

17       MR. MUSSELMAN:  51-PAGE DOCUMENT, YOUR HONOR.

18       MR. LANE:  I ONLY QUOTED ONE SENTENCE AND I TURNED IT

19  TO THAT PAGE.

20       THE COURT:  COUNSEL, I DON'T NEED TO HAVE YOU ARGUE

21  WITH THE ATTORNEYS AND RESPOND TO EVERYTHING THEY SAY.

22  DIRECT YOUR COMMENT HERE.  IF YOU TWO COULD AGREE, YOU

23  WOULDN'T NEED ME.

24       MR. LANE:  RIGHT.

25       THE COURT:  CAN WE GO ON?

26

27  BY MR. LANE:

28       Q    WHEN YOU SAID IN THAT SWORN STATEMENT THAT SENIOR
			
			

page308



 1  STAFF KNEW AS EARLY AS 1990 THAT THE FUNDS WERE AVAILABLE

 2  FROM SWITZERLAND, YOU WERE REFERRING, WERE YOU NOT, TO

 3  YOURSELF, MR. WEBER, AND WHO ELSE?

 4       MR. BEUGELMANS: OBJECTION.  MISSTATES THE DECLARATION.

 5  THAT IS COMPLETELY AN ATTEMPT TO CONFUSE THE WITNESS.

 6  UNFAIR, YOUR HONOR.

 7       THE COURT:  WELL --

 8       MR. BEUGELMANS:  THAT’s NOT WHAT THE DECLARATION SAYS.

 9  YOU SEE, YOUR HONOR, IF I CAN MAKE AN OFFER OF PROOF, IN

10  APRIL 1993, WHEN THE INVESTIGATION BEGAN BY SENIOR STAFF,

11  THEY DISCOVERED THAT FUNDS WERE PROBABLY AVAILABLE AS EARLY

12  AS 1990.  THAT’s WHAT THE GIST OF THE DECLARATION — THAT'S

13  WHAT WAS SUBMITTED TO JUDGE POLIS, YOUR HONOR.  THE

14  DECLARATION DOES NOT SAY THAT STAFF KNEW IN 1990 THAT THE

15  FUNDS WERE AVAILABLE.

16       THE COURT:  WHATEVER IT SAYS, IT SAYS.  AND THE WITNESS

17  CAN EXPLAIN IT.

18       MR. BEUGELMANS:  I THINK HE’s CONFUSED THE WITNESS TO

19  WHAT THE CONTENTS ARE.  HE DOES NOT HAVE THE DECLARATION IN

20  FRONT OF HIM.  HE’s PUTTING THE WORDS IN HIS MOUTH.  THAT'S

21  UNFAIR.

22       THE COURT:  I DON'T THINK HE'LL PUT MUCH IN

23  MR. MARCELLUS' MOUTH HE DOESN'T WANT TO SAY.

24

25  BY MR. LANE:

26       Q    PARAGRAPH 64, PAGE 16 OF YOUR SWORN STATEMENT.

27  (PAUSE)  DOES IT SAY “MOREOVER, THE FUNDS FROM THE

28  FARREL-EDISON BEQUEST WERE UNDERSTOOD BY LEGION SENIOR STAFF
			
			

page309



 1  TO HAVE BEEN AVAILABLE AS EARLY AS 1990, THREE YEARS BEFORE

 2  THE STAFF MADE ANY MOVE TO INVESTIGATE CARTO"?  DOES IT SAY

 3  THAT?

 4       A    YES.

 5       Q    AND IS THE GIST OF THAT PARAGRAPH AN EFFORT ON

 6  YOUR PART TO SAY, IN ESSENCE, WE KNEW IN 1990 ABOUT THE

 7  FUNDS AND YOU CAN'T CHARGE US WITH GREED BECAUSE WE DIDN'T

 8  MOVE THEN; WE DIDN'T MOVE UNTIL CARTO DID OTHER BAD THINGS?

 9  ISN'T THAT WHAT THAT PARAGRAPH SAYS?

10       A    IN A SENSE, YES.  BUT ONLY BECAUSE MR. CARTO HAD

11  BEEN ACCUSING US CONSTANTLY IN THE SPOTLIGHT OF GOING AFTER

12  THE MONEY.

13       Q    YOUR ANSWER WAS IT WASN'T GREED ON OUR PART

14  BECAUSE WE KNEW ABOUT THE MONEY BEING AVAILABLE IN 1990 AND

15  WE DIDN'T ACT THEN?  ISN'T THAT WHAT THE PARAGRAPH SAYS?

16       A    YES.

17       Q    OKAY.  AND THE FOLLOWING PARAGRAPH, DOES THAT

18  INDICATE THAT YOU WERE SUSPICIOUS ABOUT CARTO WAY BACK IN

19  1990?  I'LL GIVE IT TO YOU TO READ PARAGRAPH 65.

20            I'LL SHOW IT TO THE ATTORNEYS.

21       MR. BEUGELMANS:  THANK YOU.

22

23  BY MR. LANE:

24       Q    MR. MARCELLUS, WE JUST READ PARAGRAPH 64; IS THAT

25  RIGHT?

26       A    YES.

27       Q    NOW I ASK YOU TO LOOK AT PARAGRAPH 65.

28       A    OKAY.  (PAUSE).
			
			

page310



 1            I READ 65.

 2       Q    ALL RIGHT.  IS THE GIST OF THAT PARAGRAPH

 3  FOLLOWING THE LANGUAGE WE JUST READ THAT YOU WERE SUSPICIOUS

 4  OF CARTO.  HE WOULDN'T GIVE YOU INFORMATION.  YOU WERE

 5  SUSPICIOUS WAY BACK THEN?

 6       A    NO.

 7       Q    DOESN'T SAY THAT?

 8       A    NO.

 9       Q    DOES IT SAY “SENIOR STAFF MADE EFFORTS TO

10  ASCERTAIN THE TRUE STATUS OF Carto’s AUTHORITY"?

11       A    YES.

12       Q    THAT YOU MADE EFFORTS TO DETERMINE ACTUAL

13  CORPORATE POLICIES?

14       A    YES.

15       Q    THAT YOU MADE EFFORTS TO VERIFY Carto’s PET

16  PROJECTS TO SEE IF THEY WERE AUTHORIZED BY THE LEGION BOARD

17  OF DIRECTORS, BUT THESE WERE PROVED IMPOSSIBLE BECAUSE CARTO

18  NEVER PERMITTED THE SENIOR LEGION STAFF MEMBERS TO SEE THE

19  MINUTES OF THE LEGION BOARD MEETINGS?

20       A    YES.

21       Q    AND WHEN YOU QUESTIONED — WHEN THE SENIOR STAFF

22  QUESTIONED CARTO, HE REFUSED TO REVEAL THE OFFICERS AND

23  DIRECTORS OF THE CORPORATION?

24       A    YES.

25       Q    SO DOES THAT INDICATE THAT YOU WERE THEN

26  SUSPICIOUS OF HIM?

27       A    RELATING TO THE MATTERS AT HAND, YES, BUT NOT

28  REGARDING THE MONEY.
			
			

page311



 1       Q    YOU THOUGHT HE WOULD --

 2       A    BUT THAT WAS IN '93, NOT '91 OR 90.

 3       Q    NOW, WHAT PART, IF ANY, DID YOU PLAY IN DRAFTING

 4  THE COMPLAINT IN THIS CASE?

 5       MR. MUSSELMAN:  OBJECTION.  ATTORNEY/CLIENT PRIVILEGE.

 6       THE COURT:  SUSTAINED.

 7

 8  BY MR. LANE:

 9       Q    WERE YOU THE SOURCE OF ANY INFORMATION FOR THE

10  COMPLAINT?

11       MR. MUSSELMAN:  ATTORNEY/CLIENT PRIVILEGE, YOUR HONOR.

12       THE COURT:  SUSTAINED.

13

14  BY MR. LANE:

15       Q    WERE YOU THE PRESIDENT OF THE LEGION WHEN THE

16  COMPLAINT WAS PREPARED?

17       A    YES.

18       Q    ALL RIGHT.  DID YOU HAVE A COPY OF THE COMPLAINT?

19       A    I DO NOT.

20       MR. BEUGELMANS:  PLAINTIFF WOULD OBJECT TO

21  MR. MARCELLUS BEING QUESTIONED CONCERNING THE COMPLAINT.

22  IT’s AN UNVERIFIED COMPLAINT.

23       THE COURT:  WELL, I'LL OVERRULE THE OBJECTION.

24            I THINK WE OUGHT TO BE ABLE TO BE DONE WITH THIS

25  IN HALF AN HOUR.

26       MR. LANE: I WILL BE DONE IN HALF AN HOUR.  THIS IS THE

27  LAST AREA.

28
			
			

page312



 1  BY MR. LANE:

 2       Q    YOU HAVE THE COMPLAINT IN FRONT OF YOU?

 3       A    YES.

 4       Q    WHEN WAS THE FIRST TIME YOU SAW IT?

 5       A    PROBABLY JUST AFTER IT WAS PREPARED, WHICH WOULD

 6  HAVE BEEN SOMETIME IN JULY OF '94.  POSSIBLY I MIGHT HAVE

 7  SEEN A DRAFT BEFORE THAT.

 8       Q    ALL RIGHT.  YOU SEE IT ON PAGE 1, LIBERTY LOBBY IS

 9  THE DEFENDANT?

10       A    I SEE LIBERTY LOBBY THERE, YES.

11       Q    DO YOU SEE ANOTHER LISTED AS THE — IDENTIFIED AS

12  A CORPORATION; IS THAT CORRECT?

13       A    I SEE IDENTIFIED AS A CORPORATION.

14       Q    AND IS THERE ONE OTHER CORPORATION AS A DEFENDANT,

15  VIBET, INC.?

16       A    YES, I SEE THAT.

17       Q    IS THAT THE ONLY OTHER CORPORATION LISTED?

18       MR. MUSSELMAN:  OBJECTION.  RELEVANCE, HIS

19  INTERPRETATION OF WHAT THE CAPTION OF THE COMPLAINT SAYS.

20       THE COURT:  WHATEVER IT SAYS, IT SAYS.  I'LL TAKE

21  JUDICIAL NOTICE OF THE COMPLAINT, WHICH IS IN FILE NUMBER

22  ONE OF THE EIGHT VOLUMES.

23

24  BY MR. LANE:

25       Q    WOULD YOU TURN TO PAGE 6, PLEASE.  DO YOU SEE THE

26  INSERTION ON PAGE 6, LINE 20, COMPLAINT: “IN PARTICULAR, ON

27  INFORMATION AND BELIEF, ONE OR MORE OF THE DEFENDANTS HAVE

28  CAUSED THE TRANSFER OF 100 THOUSAND DOLLAR” — DOLLAR IT
			
			

page313



 1  SAYS.  I TAKE IT, IT MEANS DOLLARS — “OF THE ASSETS TO THE

 2  DEFENDANT, LIBERTY LOBBY, FOR NO CONSIDERATION."

 3       A    I SEE THAT.

 4       Q    DO YOU KNOW WHAT THAT MEANS, “CAUSED THE TRANSFER

 5  OF 100 THOUSAND DOLLARS OF THE ASSETS TO THE DEFENDANT

 6  LIBERTY LOBBY FOR NO CONSIDERATION"?

 7       MR. MUSSELMAN:  OBJECTION.  RELEVANCE TO HIS

 8  INTERPRETATION.  AND CALLS FOR LEGAL CONCLUSION.

 9       THE COURT:  OVERRULED.

10

11  BY MR. LANE:

12       Q    WHAT DOES THAT MEAN?

13       A    TO ME, IT MEANS $100,000 OF MONEY OR ASSETS

14  BELONGING TO THE LEGION WERE TRANSFERRED TO LIBERTY LOBBY,

15  AND LIBERTY LOBBY AND LEGION DID NOT RECEIVE ANYTHING IN

16  EQUAL SHARE OR EQUAL VALUE.

17       Q    DO YOU KNOW HOW MUCH, IF ANY, SUMS LIBERTY LOBBY

18  PAID TO LAWYERS THROUGHOUT THE WORLD SO THAT THE FARREL

19  ESTATE COULD BE SECURED IN PART?

20       A    I DO NOT.

21       Q    YOU DON'T KNOW IF THERE WAS ANY CONSIDERATION, DO

22  YOU?

23       MR. MUSSELMAN:  CALLS FOR LEGAL CONCLUSION.

24       THE COURT:  SUSTAINED.

25

26  BY MR. LANE:

27       Q    IF YOU KNEW THAT LIBERTY LOBBY HAD PAID OVER

28  $300,000 TO LAWYERS TO PROSECUTE THE ESTATE, WOULD YOU HAVE
			
			

page314



 1  STILL HAVE SAID THAT IT WAS — THERE WAS NO CONSIDERATION?

 2       MR. MUSSELMAN:  CALLS FOR SPECULATION.  AND WITHOUT

 3  FOUNDATION HE SAID THIS.

 4       THE COURT:  SUSTAINED.

 5

 6  BY MR. LANE:

 7       Q    WOULD YOU HAVE — WOULD YOU HAVE SAID THAT IT'S

 8  NOT CORRECT TO PUT “NO CONSIDERATION,” I, AS PRESIDENT OF

 9  THE LEGION, DON'T WANT THAT IN THERE, IF YOU KNEW LIBERTY

10  LOBBY SPENT OVER $300,000?

11       MR. MUSSELMAN:  SAME OBJECTION.

12       THE COURT:  MAKE THE SAME RULING.  THIS IS AN

13  UNVERIFIED COMPLAINT.  HE DOESN'T SAY ANYTHING IN THE

14  COMPLAINT.

15

16  BY MR. LANE:

17       Q    WHEN YOU READ THIS IN 1994, JULY, I THINK YOU

18  SAID, DID YOU BELIEVE THAT STATEMENT WAS CORRECT AT THAT

19  TIME?

20       MR. MUSSELMAN:  OBJECTION.

21

22  BY MR. LANE:

23       Q    THAT LIBERTY LOBBY HAD NOT DONE ANYTHING WHICH

24  ENTITLED IT TO RECEIVE $100,000?

25       MR. MUSSELMAN:  OBJECTION.  RELEVANCE WHAT HE BELIEVED

26  WHEN HE READ THE COMPLAINT.

27       THE COURT:  SUSTAINED.

28       MR. LANE:  YOUR HONOR, MAY I JUST SUGGEST HE WAS THE
			
			

page315



 1  PRESIDENT OF THE CORPORATION AT THE TIME.

 2       THE COURT:  THAT MAY WELL BE TRUE.  THIS IS AN

 3  UNVERIFIED COMPLAINT.  HE DIDN'T SIGN IT.  I DON'T REALLY

 4  CARE WHAT HE THINKS ABOUT THIS ISSUE, HIS OPINION.

 5

 6  BY MR. LANE:

 7       Q    WOULD YOU TURN TO PAGE 9, PLEASE.

 8       A    OKAY.

 9       Q    THIS IS THE FIRST CAUSE OF ACTION BEGINNING ON

10  LINE 22 OF THAT PAGE; IS THAT CORRECT?

11       A    LINE 22 SAYS FIRST CAUSE OF ACTION.

12       Q    IT’s AGAINST ALL DEFENDANTS.  DOES IT NOT SAY THAT

13  ON LINE 24?

14       A    YES.

15       Q    AND THIS IS A CAUSE OF ACTION FOR DAMAGES DUE TO

16  CIVIL CONSPIRACY TO DEFRAUD; IS THAT CORRECT?

17       MR. MUSSELMAN:  SAME OBJECTION.  RECITING THE CONTENTS

18  OF THE COMPLAINT.

19       THE COURT:  SUSTAINED.  I KNOW WHAT THE COMPLAINT

20  SAYS.  I READ IT.  YOU DON'T HAVE TO ASK HIM WHAT IT SAYS. I

21  DON'T CARE WHAT THEY THINK.

22

23  BY MR. LANE:

24       Q    WHAT DID LIBERTY LOBBY DO TO PARTICIPATE IN THE

25  CIVIL CONSPIRACY TO DEFRAUD?

26       MR. BEUGELMANS: OBJECTION TO THE FORM OF THE QUESTION.

27       THE COURT:  OVERRULED.  IT WILL CALL FOR A NARRATIVE

28  QUESTION.  AND YOU ASKED A GENERAL QUESTION.  HE CAN GO ON
			
			

page316



 1  IN A GENERAL WAY.

 2

 3  BY MR. LANE:

 4       Q    WHAT DID LIBERTY LOBBY DO TO ENGAGE IN A CIVIL

 5  CONSPIRACY TO DEFRAUD?

 6       A    WELL, I BELIEVE THAT MR. CARTO ARRANGED THE

 7  LEGION’s FUNDS TO BE TRANSFERRED TO HIS ORGANIZATION,

 8  LIBERTY LOBBY.

 9       Q    AND WHAT DID LIBERTY LOBBY DO?

10       A    SPENT IT, I'M SURE.

11       Q    DO YOU KNOW THAT?

12       A    I DON'T KNOW THAT FOR A FACT.

13       Q    WHAT DID LIBERTY LOBBY DO WHICH LEADS YOU TO

14  CONCLUDE THAT THE SECOND CAUSE OF ACTION AGAINST ALL

15  DEFENDANTS, INCLUDING LIBERTY LOBBY, IS FOUND THAT THEY WERE

16  INVOLVED IN CONVERSION?

17       THE COURT:  I THINK YOU OUGHT TO ASK IF HE KNOWS WHAT

18  CONVERSION IS.  IT’s A LEGAL WORD OF ART, REALLY.

19

20  BY MR. LANE:

21       Q    DO YOU KNOW WHAT CONVERSION IS?

22       A    I CAN STAKE A STAB AT IT.

23       Q    THAT’s NOT THE BEST WAY.  DO YOU KNOW WHAT IT IS?

24       A    WELL, I HAVEN'T BEEN TRAINED IN THE LAW.  I DON'T

25  KNOW THE LEGAL DEFINITION.

26       Q    WHAT IS IT THAT LIBERTY LOBBY DID — TO YOUR

27  KNOWLEDGE, WHAT DID LIBERTY LOBBY DO TO BRING IT INTO THE

28  COURT AS A DEFENDANT UNDER ANY ALLEGATION OF THE COMPLAINT?
			
			

page317



 1       A    WELL, THERE WAS EVIDENCE THAT WE KNEW THAT

 2  MR. CARTO HAD BEEN INSTRUMENTAL IN WORKING WITH THESE

 3  FARREL — WITH THE FARREL GIFT.  HE WAS INVOLVED IN THAT.

 4  WE KNEW HE WAS THE TREASURER OF LIBERTY LOBBY.  WE SAW

 5  EVIDENCE THAT ASSETS OF THE LEGION AND THE FORM OF ITS FUNDS

 6  IN THE SWISS ACCOUNTS WERE BEING TRANSFERRED OR CONVERTED TO

 7  LIBERTY LOBBY’s USE.  AND THAT’s YOUR ANSWER.

 8       Q    WHAT FUNDS DID YOU SEE --

 9       A    WE SAW AN --

10       Q    — EVIDENCE OF?

11       A    — ADVISEMENT FROM THE SWISS BANK THAT $100,000

12  HAD BEEN TRANSFERRED.

13       Q    IS THAT YOUR TOTAL KNOWLEDGE OF WHAT LIBERTY LOBBY

14  DID, THAT IT RECEIVED $100,000?

15       MR. MUSSELMAN:  OBJECTION.  VAGUE WHAT LIBERTY LOBBY

16  DID.

17

18  BY MR. LANE:

19       Q    TO BRING IT INTO THE COURTROOM?

20       THE COURT:  OVERRULED.

21       THE WITNESS:  I DON'T RECALL HAVING ANY ADDITIONAL

22  EVIDENCE OF ANY SUBSEQUENT OR PREVIOUS CONVERSIONS THAN THAT

23  ONE.

24

25  BY MR. LANE:

26       Q    DO YOU KNOW WHO PAID THE BILLS FOR THE LAWYERS TO

27  PROSECUTE THE ESTATE ON BEHALF OF THE LEGION OR ANYONE

28  ASSOCIATED WITH THE LEGION?
			
			

page318



 1       MR. MUSSELMAN:  OBJECTION.  WITHOUT FOUNDATION THAT

 2  ANYONE PROSECUTED THE ESTATE.

 3       THE COURT:  ALSO ASKED AND ANSWERED.  SUSTAIN THE

 4  OBJECTION.

 5       MR. LANE:  NO FURTHER QUESTIONS.

 6       THE COURT:  REDIRECT.

 7       MR. MUSSELMAN:  YES.

 8

 9                       REDIRECT EXAMINATION

10  BY MR. MUSSELMAN:

11       Q    LOOK AT EXHIBIT 89, 21 AUGUST 1986 AFFIDAVIT.

12       MR. WAIER:  EXCUSE ME, I DON'T HAVE AN 89.

13       MR. BEUGELMANS:  YES, YOU DO.

14       MR. MUSSELMAN:  I GAVE IT TO YOU.

15

16  BY MR. MUSSELMAN:

17       Q    TELL ME IF YOU HAVE SEEN IT BEFORE.

18       A    YES, I HAVE.

19       Q    WHEN WAS THAT?

20       A    IT WAS IN AUGUST OF '86 WHEN I PREPARED IT.

21       THE COURT:  LET ME INTERRUPT A MOMENT SO WE GET AN

22  IDENTIFICATION OF IT FOR THE BENEFIT OF THE CLERK.  IT SAYS

23  AFFIDAVIT, 21 AUGUST 1986, AND SIGNED BY THOMAS J.

24  MARCELLUS.  I'M NOT SAYING HE SIGNED IT.  THAT’s WHAT THE

25  DOCUMENT IS.

26       MR. WAIER:  YOUR HONOR, I MIGHT ADD ON THIS BASIS, I'LL

27  OBJECT.  THIS WAS NEVER PRODUCED IN DISCOVERY IN THIS

28  MATTER.  IT ALSO WAS NOT PRODUCED AS PART OF THE EXHIBITS IN
			
			

page319



 1  OUR BOOK.  THE SAME OBJECTIONS THAT THEY HAVE BEEN RAISING,

 2  WE'RE RECEIVING THIS FOR THE FIRST TIME.  I DON'T BELIEVE

 3  THERE’s ANY THEORY ABOUT IMPEACHING THEIR WITNESS UNLESS

 4  THEY WANT TO CALL MR. MARCELLUS AS A HOSTILE WITNESS.  THIS

 5  IS OUTSIDE THE SCOPE, IN ANY EVENT.

 6       MR. MUSSELMAN:  CAN I BE HEARD?  I'M NOT IMPEACHING

 7  HIM.  THEY OPENED THE DOOR TO WHAT THEY KNEW, WHEN HE KNEW

 8  IT ABOUT THE FARREL ESTATE AND MISS FARREL’s INTENTION.

 9       MR. WAIER:  WELL, YOUR HONOR, THE ONLY BASIS OF THIS

10  DOCUMENT — ONE, THEY NEVER PROVIDED IT TO US.  WE ASKED

11  FOR EVERY DOCUMENT.  THIS WAS NEVER PROVIDED.  MORE

12  IMPORTANTLY, THE ONLY TIME THAT THIS WOULD COME INTO PLAY

13  IS — IS IF HE NEEDED TO HAVE HIS RECOLLECTION REFRESHED.

14  THERE’s BEEN NO FOUNDATION FOR THIS IN CONNECTION WITH

15  HAVING THE RECOLLECTION REFRESHED.  THERE’s NO RELEVANCY TO

16  THE DOCUMENT.

17       THE COURT:  I'LL SUSTAIN THE OBJECTION.  YOU CAN USE IT

18  TO REFRESH HIS RECOLLECTION.  I HAVE READ IT, FOR WHATEVER

19  THAT’s WORTH.

20

21  BY MR. MUSSELMAN:

22       Q    DID YOU HAVE ANY DISCUSSIONS WITH MR. CARTO IN

23  1986 ABOUT THE NEED FOR YOU TO PREPARE ANY LEGAL DOCUMENTS

24  FOR THE DISPUTE IN EUROPE?

25       A    YES, I MET WITH HIM AND HIS WIFE AND MR. HOOPER IN

26  1986.

27       Q    WHAT DID HE TELL YOU ABOUT THE NEED FOR A LEGAL

28  DOCUMENT?
			
			

page320



 1       A    MR. HOOPER AND MR. CARTO TOLD ME THAT THE

 2  LITIGATION PROCEEDING IN THE BRITISH HIGH COURT, IT WAS

 3  NECESSARY — BECAUSE I HAD HAD AN INVOLVEMENT WITH

 4  MISS FARREL AND I HAD BEEN IN TOUCH WITH HER AND HAVE

 5  CORRESPONDED WITH HER REGULARLY AND SHE HAD COMMUNICATED HER

 6  INTENTIONS WITH REGARD TO THE LEGION, THAT IT WOULD BE

 7  NECESSARY AND HELPFUL FOR ME TO PREPARE AN AFFIDAVIT STATING

 8  THOSE FACTS TO HELP THE LEGION OBTAIN ITS FUNDS IN — WIN

 9  THE CASE IN THE BRITISH COURT.

10       Q    DID THEY TELL YOU WHETHER YOU SHOULD PUT ANYTHING

11  IN THE AFFIDAVIT ABOUT HER INTENTION TO LEAVE THE MONEY TO

12  THE LEGION?

13       MR. WAIER:  OBJECTION.  LEADING.

14       THE COURT:  OVERRULED.

15       THE WITNESS:  IT WAS MR. HOOPER AND MR. CARTO SPELLED

16  OUT WHAT POINTS I SHOULD MAKE IN --

17       MR. WAIER:  I'M GOING TO OBJECT WITH RESPECT TO WHAT

18  MR. HOOPER SAYS.  THAT IS HEARSAY.  MR. CARTO IS A PARTY;

19  MR. HOOPER IS NOT.

20       THE COURT:  SUSTAIN THE OBJECTION TO MR. HOOPER.

21

22  BY MR. MUSSELMAN:

23       Q    WAS MR. HOOPER AND MR. CARTO PRESENT AT THE SAME

24  MOMENT WITH YOU?

25       A    YES.

26       MR. MUSSELMAN:  I THINK THAT WOULD MAKE MR. HOOPER'S

27  STATEMENTS TO MR. CARTO ADMISSIBLE TO THE INTENT.

28       THE COURT:  IT WAS AN ADOPTIVE ADMISSION.
			
			

page321



 1  BY MR. MUSSELMAN:

 2       Q    WHAT DID THEY TELL YOU?

 3       A    I WAS — THEY LAID OUT THE BASIC POINTS THEY

 4  WANTED ME TO MAKE IN AN AFFIDAVIT.  AND I WAS ASKING THEM

 5  QUESTIONS.  MR. CARTO ASKED ME SOME QUESTIONS ABOUT WHAT I

 6  RECALLED FROM THE MEETING WITH HER.  MR. HOOPER ASKED SOME

 7  QUESTIONS.  AND AFTER I RESPONDED, THEY — THEY THEN TOLD

 8  ME WHAT POINTS WOULD BE REQUIRED AND WHAT POINTS I WOULD

 9  NEED TO MAKE IN THE AFFIDAVIT.  AND SINCE ALL THE POINTS

10  THEY WANTED ME TO MAKE WAS SIMPLY STATING THE FACTS AS I

11  RECALL THEM, I AGREED.  I WAS WILLING TO DO IT.

12       Q    CAN YOU REMEMBER WHAT THEY TOLD YOU TO INCLUDE,

13  WITHOUT LOOKING AT EXHIBIT 89?

14       A    YES.  I THINK THAT THE ESSENCE IS THAT THEY WANTED

15  ME TO ESTABLISH A RELATIONSHIP, SHOW THE COURT, THE BRITISH

16  COURT, I HAD A RELATIONSHIP WITH MISS FARREL, THAT WE HAD

17  CORRESPONDED, THAT SHE HAD ALWAYS EXPRESSED THE INTENTION TO

18  KEEP SUPPORTING THE LEGION.

19       MR. WAIER:  I'M GOING TO OBJECT WITH RESPECT TO THIS

20  TESTIMONY.  MOVE TO STRIKE.  IT’s CALLING FOR HEARSAY WHAT

21  MISS FARREL-EDISON SAID TO MR. MARCELLUS.

22       THE COURT:  OVERRULED.  IT’s NOT FOR THE TRUTH OF THE

23  MATTER.  IT’s SHOWING WHAT IS IN THE MIND WHEN HE MAKES AN

24  AFFIDAVIT, WHAT IS IN MR. Carto’s MIND.  OVERRULED.

25       THE WITNESS:  WHERE WAS I?  IT WAS SUGGESTED THAT I

26  INCLUDE IN THE AFFIDAVIT THE NATURE OF THE CORRESPONDENCE I

27  HAD WITH MISS FARREL, THE NATURE OF HER — THE GIFT SHE HAD

28  MADE TO THE LEGION DURING THE TIME THAT I WAS AT THE LEGION,
			
			

page322



 1  THAT I ALSO INCLUDE IN THE STATEMENT WHAT SHE TOLD ME WHEN I

 2  MET HER ABOUT MAKING FUTURE SUBSTANTIAL GIFTS TO THE

 3  LEGION.  IT ONLY CONCERNED THE LEGION.  SO THESE ARE THE

 4  MAIN POINTS THAT I WANTED TO MAKE IN MY LETTER TO SHOW THE

 5  COURT THAT IN FACT MISS FARREL INTENDED FOR THE LEGION TO

 6  BENEFIT SUBSTANTIALLY FROM HER GIFT.

 7

 8  BY MR. MUSSELMAN:

 9       Q    DID YOU PREPARE A LETTER OR SOME OTHER DOCUMENT?

10       A    I PREPARED — I MADE OUT — I TYPED AN AFFIDAVIT

11  AND THEN SIGNED IT.  I TITLED IT “AFFIDAVIT” AND I TYPED OUT

12  THE FACTS AS I RECALLED THEM, AND THEN I SIGNED IT AT THE

13  BOTTOM.

14       Q    WHO DID YOU GIVE THE ORIGINAL TO?

15       A    I GAVE IT TO — EXPRESSED IT TO MR. AND

16  MRS. CARTO AT THEIR REQUEST.

17       Q    COULD YOU LOOK AT EXHIBIT 54, PLEASE.

18       MR. WAIER:  YOUR HONOR, SO THE COURT IS AWARE, I KNOW

19  YOU READ THIS, SUPPOSED MARKED FOR IDENTIFICATION

20  EXHIBIT 86.  IT’s NOT AN AFFIDAVIT.  IT’s NOT SIGNED UNDER

21  PENALTY OF PERJURY.  THERE’s NOTHING IN HERE THAT INDICATES

22  AN AFFIDAVIT OTHER THAN THE NOMENCLATURE AT THE TOP.

23       THE COURT:  I BELIEVE IT WAS 89.

24       MR. WAIER:  IF IT’s 89, I'M SORRY.  YEAH, 89.

25       THE COURT:  AND I DID NOT READ 89.  I LOOKED AT THE

26  TOP.  IT SAID AFFIDAVIT.  AND I LOOKED AT THE BOTTOM.  I

27  HAVE NOT READ IT.  DON'T TRY TO PRESUME I DO SOMETHING.

28       MR. WAIER:  I THOUGHT YOU SAID YOU READ IT.
			
			

page323



 1       THE COURT:  MAYBE I DID.  IF I DID, I'M SORRY.  I SAID

 2  I READ THE TOP AND THE DATE.  AND I HAVEN'T READ THE TEXT AT

 3  ALL.

 4       MR. WAIER:  THANK YOU.

 5

 6  BY MR. MUSSELMAN:

 7       Q    EARLIER, YOU WERE BEING QUESTIONED BY DEFENSE

 8  COUNSEL AND THEY ASKED YOU WHETHER YOU HAD A CONVERSATION

 9  WITH MRS. CARTO WHERE SHE TOLD YOU ABOUT VIBET.  AND YOU

10  STATED THAT YOU DIDN'T KNOW WHAT IT WAS, AND YOU MIGHT WANT

11  TO LOOK AT A MEMO THAT YOU WROTE.  IS THIS THAT MEMO?

12       A    YES.

13       Q    THIS MORNING OR EARLIER, WITHOUT LOOKING AT THE

14  MEMO, YOU DISCUSSED SHE MIGHT HAVE TOLD YOU AS EARLY AS

15  1991.  DOES THIS EXHIBIT 54 REFRESH YOUR RECOLLECTION ABOUT

16  WHEN SHE TOLD YOU?

17       A    YES.  THIS MAY BE THE FIRST TIME I HEARD ABOUT

18  VIBET, JULY 1993.

19       Q    YOU RECALL TELLING YOU ABOUT IT BEFORE THAT --

20  WITHDRAW THE QUESTION.

21            AT WHAT POINT DID YOU BECOME A DIRECTOR ON THE

22  BOARD OF DIRECTORS, AS OPPOSED TO A MANAGER DIRECTOR OF THE

23  LEGION?

24       A    BY SEPTEMBER 1993.

25       Q    AND PRIOR TO BECOMING A DIRECTOR, DID YOU EVER

26  FEEL YOU HAD THE AUTHORITY TO HIRE ATTORNEYS AND FILE

27  LAWSUITS FOR THE LEGION?

28       MR. WAIER:  OBJECTION.  RELEVANCY.  LACKS FOUNDATION.
			
			

page324



 1       THE COURT:  OVERRULED.

 2       THE WITNESS:  NO.

 3

 4  BY MR. MUSSELMAN:

 5       Q    WHAT WAS YOUR UNDERSTANDING PRIOR TO YOU BECOMING

 6  A DIRECTOR ABOUT WHO HAD THAT TYPE OF POWER?

 7       A    THAT WOULD BE VESTED IN — I FIGURED THAT WOULD

 8  BE VESTED IN THE BOARD.  THE BOARD WOULD HAVE THAT

 9  AUTHORITY.

10       Q    AND PRIOR TO YOUR BECOMING A MEMBER OF THE BOARD

11  OF DIRECTORS, WHO DID YOU REPORT TO THAT YOU UNDERSTAND HAD

12  AUTHORITY TO SPEAK TO YOU ON BEHALF OF THE BOARD?

13       A    MR. CARTO.

14       Q    WAS IT YOUR UNDERSTANDING HE WAS REPORTING TO SOME

15  OTHER GROUP OF PERSONS?

16       A    YES.

17       Q    WHAT GROUP?

18       A    THE BOARD OF DIRECTORS OF THE LEGION.

19       Q    COULD YOU LOOK AT EXHIBIT 46, PLEASE, JUNE 5, 1991

20  LETTER.

21       A    YES.

22       Q    DID YOU SEE THE COPY OF THIS LETTER BEFORE YOU

23  BECAME A MEMBER OF THE BOARD OF DIRECTORS?

24       MR. WAIER:  WHICH LETTER WAS THIS?

25       MR. MUSSELMAN:  46.

26       THE WITNESS:  NO.  NO.

27

28
			
			

page325



 1  BY MR. MUSSELMAN:

 2       Q    WHEN DID YOU FIRST SEE A COPY?

 3       A    I BELIEVE I FIRST SAW THIS PROBABLY IN LATE 1993.

 4       Q    EARLIER, YOU WERE ASKED IN EXHIBIT 173, UCC, WHAT

 5  LOOKS LIKE A UCC FORM --

 6       A    YES.

 7       Q    DID YOU EVER HAVE ANY DISCUSSIONS WITH MR. CARTO

 8  WHERE HE TOLD YOU WHAT THE PURPOSE OF IT WAS?

 9       A    YES.

10       Q    WHAT WAS THAT?

11       A    THE PURPOSE WAS TO PUT THE LEGION’s ASSETS WHERE

12  THEY COULD NOT BE OR NOT EASILY BE TAKEN IN THE EVENT OF AN

13  ADVERSE JUDGMENT.

14       Q    AND DO YOU HAVE AN UNDERSTANDING ABOUT WHETHER

15  THERE WAS A DEBT TO THE H.E.F.?

16       MR. WAIER:  OBJECTION.  OUTSIDE THE SCOPE.  LACKS

17  FOUNDATION.  RELEVANCY.  ASKED AND ANSWERED.

18       THE COURT:  I THINK IT’s ASKED.  SUSTAINED.

19

20  BY MR. MUSSELMAN:

21       Q    COULD YOU LOOK AT THE EXHIBIT — I THINK IT HAS A

22  DATE OF JULY '91.  173.  IT MIGHT BE LOOSE.

23       A    JULY — TELL ME ABOUT IT.

24       Q    I THINK IT’s THE UCC FORM.

25       A    OKAY.

26       Q    IN ANY CASE --

27       A    I THINK WE HAVE IT.

28       Q    DID YOU KNOW AS OF JULY 1991 THAT THE FARREL
			
			

page326



 1  ESTATE LITIGATION HAD SETTLED?

 2       A    NO, I DIDN'T KNOW IT HAD SETTLED.  I DIDN'T KNOW.

 3  I HAVE NOT SEEN ANY DOCUMENTS ON IT.  THERE WERE

 4  REPRESENTATION FROM THE CARTOS THAT SOME MONIES HAD BEEN

 5  RELEASED AND THAT IT WOULD BE SETTLED.  BUT I DON'T THINK I

 6  HAD THE UNDERSTANDING AT THAT TIME THAT IT WAS A DONE DEAL,

 7  IT WAS ALL SETTLED.  MONEY WAS STILL TIED UP IN PLACES, AND

 8  I DIDN'T KNOW WHAT IT MEANT.

 9       Q    THERE WAS SOME TESTIMONY FROM YOU EARLIER ABOUT

10  THE F.D.F.A. RECEIVING MONEY FROM THE LEGION.  DID MR. CARTO

11  EVER TELL YOU HOW F.D.F.A. SPENT THAT MONEY?

12       A    NO.

13       Q    AS OF AUGUST 1993, DID YOU HAVE AN UNDERSTANDING

14  WHETHER THERE WERE DIRECTORS OF THE LEGION OTHER THAN

15  MR. AND MRS. FURR?

16       A    YES.

17       Q    WAS IT YOUR UNDERSTANDING THAT THERE WERE OTHER

18  DIRECTORS?

19       A    YES.

20       Q    BETWEEN THE TIME THAT YOU FIRST STARTED THERE AND

21  AUGUST OF '93, WAS THERE A TIME THAT YOU UNDERSTOOD THERE

22  WAS NO DIRECTORS OTHER THAN THEM?

23       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.

24       THE COURT:  OVERRULED.

25       MR. WAIER:  YOUR HONOR, HE STATED AUGUST, WHEN HE

26  STARTED THERE IN AUGUST 1993.  I DON'T BELIEVE THAT WAS HIS

27  PRIOR TESTIMONY.

28       MR. MUSSELMAN:  THE ENDING DATE OF AUGUST '93.  I CAN
			
			

page327



 1  REASK THE QUESTION.

 2

 3  BY MR. MUSSELMAN:

 4       Q    FROM THE TIME YOU STARTED THROUGH AUGUST '93, WAS

 5  THERE A POINT IN TIME THAT YOU THOUGHT THAT THE FURRS WERE

 6  THE ONLY DIRECTORS AND THERE WERE NO OTHER DIRECTORS?

 7       A    NO.

 8       Q    EITHER OF THE FURRS EVER TELL YOU THERE WERE NO

 9  OTHER DIRECTORS IN THAT TIME FRAME?

10       A    NO.

11       Q    DID MR. CARTO?

12       A    NO.

13       Q    EARLIER, YOU WERE INTERROGATED IN REFERENCE TO

14  SOME DEPOSITION TESTIMONY, VOLUME 3, PAGE 85, LINES 18

15  ET SEQ. WHERE THERE WAS A QUOTE THAT SAID, QUOTE, “IF WE HAD

16  WANTED TO GO AFTER THE MONEY.”  DO YOU RECALL THAT

17  QUESTIONING?

18       A    YES.

19       Q    DO YOU RECALL WHAT YOU MEANT WHEN YOU SAID “IF WE

20  HAD WANTED TO GO AFTER THE MONEY"?

21       A    WELL --

22       MR. WAIER:  OBJECTION.  ASKED AND ANSWERED.

23       THE COURT:  OVERRULED.

24       THE WITNESS:  YES.  AT THE TIME, THERE WERE, I THINK,

25  QUESTIONS IN THAT DEPOSITION, PREVIOUS QUESTIONS IN THAT

26  DEPOSITION THAT IMPLIED THAT WE DID IT TO GRAB THE MONEY,

27  THAT WE TRIED TO TERMINATE MR. Carto’s RELATIONSHIP WITH THE

28  LEGION TO GET THE MONEY.  AND MR. CARTO HAD BEEN ON A LONG
			
			

page328



 1  CAMPAIGN IN HIS NEWSPAPER ACCUSING US OF BEING MONEYGRUBBERS

 2  AND TRYING TO STEAL THE MONEY AND SO ON, SO FORTH.  I WANTED

 3  TO SAY THAT TO INDICATE THAT IF WE HAD ONLY BEEN INTERESTED

 4  IN THE MONEY, WE WOULD HAVE PROBABLY BEEN INTERESTED LONG

 5  BEFORE THE SPRING OF 1993.

 6

 7  BY MR. MUSSELMAN:

 8       Q    DO YOU RECALL THERE WAS SOME DISCUSSION ABOUT

 9  CONVERSATIONS YOU HAD WITH MR. HULSY ABOUT DEALING WITH

10  LEGION CREDITORS, DEALING WITH LEGION ASSETS DUE TO THE

11  EXISTENCE OF LEGION CREDITORS.  DO YOU RECALL THAT?

12       A    YES.

13       Q    DID MR. HULSY EVER TELL YOU THAT IT WOULD BE OKAY

14  IF THE LEGION TRANSFERRED ALL THE FARREL ASSETS TO SOME

15  OTHER PARTY?

16       MR. WAIER:  OBJECTION.  OBJECTION.  CALLS FOR HEARSAY.

17  CALLED FOR POTENTIAL ATTORNEY/CLIENT PRIVILEGED

18  COMMUNICATION.  IT CALLS FOR WHAT MR. HULSY SAID.

19       THE COURT:  YES.  SUSTAIN IT AS TO WHAT MR. HULSY MIGHT

20  HAVE SAID.  I DON'T THINK YOU CAN — THE ATTORNEY/CLIENT

21  PRIVILEGE APPLIES HERE.

22       MR. WAIER:  WELL, HE CAN'T WAIVE IT BECAUSE HE’s NOT

23  WITH THE CORPORATION ANY LONGER.  THAT’s THE ONLY REASON WHY

24  I RAISED IT.

25       THE COURT:  ALL RIGHT.

26       MR. BEUGELMANS:  WE DO HAVE A CORPORATE OFFICER IN

27  COURT.  WE CAN WAIVE IT IF THAT’s NECESSARY.

28
			
			

page329



 1  BY MR. MUSSELMAN:

 2       Q    PRIOR TO AUGUST 1993, DID MR. CARTO EVER TELL YOU

 3  THAT HE WAS CAUSING THE LEGION TO TRANSFER THE FARREL ASSETS

 4  TO SOMEONE OTHER THAN THE LEGION?

 5       MR. WAIER:  OBJECT AS LEADING.

 6       THE COURT:  I THINK IT’s ASKED AND ANSWERED ALSO.  I

 7  THINK WE HAVE GONE OVER THIS.

 8

 9  BY MR. MUSSELMAN:

10       Q    YOU WERE INTERROGATED IN REFERENCE TO LITIGATION

11  CONCERNING H.E.F.  YOU KNOW WHAT THE OUTCOME OF THE H.E.F.

12  LITIGATION WAS?

13       A    YES.

14       Q    WHAT WAS THAT?

15       A    THE LEGION PREVAILED IN BOTH ACTIONS, BUT I

16  BELIEVE THAT ONE OF THE ACTIONS WAS APPEALED AND HAS GONE

17  BACK TO THE ORIGINAL COURT FOR SOME CORRECTION OR SOME

18  RETRYING OF SOME ISSUE.

19            YOU JUMPED UP TOO SOON.

20       Q    LOOK AT EXHIBIT 3.

21       A    OKAY.

22       Q    TURN TO THE LAST PAGE.

23       A    YES.

24       Q    DO YOU RECOGNIZE ANY OF THE SIGNATURES?

25       A    I RECOGNIZE TWO OF THEM.

26       Q    WHICH TWO?

27       A    WILLIS CARTO AND LAVONNE FURR.

28       Q    AND IN TERMS OF ORDER FROM TOP TO BOTTOM DOWN THE
			
			

page330



 1  PAGE, WHICH IS HIS?

 2       A    LAVONNE FURR’s COME FIRST, AND ANOTHER SIGNATURE,

 3  LOOKS LIKE BRUCE HOLMAN, I DON'T RECOGNIZE HIS, AND THERE'S

 4  WILLIS Carto’s ON THE BOTTOM.

 5       Q    BEFORE YOU LEFT THE LEGION, DID YOU HAVE AN

 6  UNDERSTANDING ABOUT WHETHER OR NOT EXHIBIT 3 WAS A VALID

 7  BYLAWS OF THE LEGION?

 8       MR. WAIER:  OBJECTION.  CALLS FOR LEGAL CONCLUSION.

 9  LACKS FOUNDATION.

10       THE COURT:  OVERRULED.

11       THE WITNESS:  I DON'T THINK I EVER SAW THESE BYLAWS

12  PREVIOUS TO 1993.

13

14  BY MR. MUSSELMAN:

15       Q    HAVE YOU REPORTED TO THE TAXING AUTHORITIES ALL

16  THE INCOME THAT YOU RECEIVED FROM THE LEGION?

17       A    YES.

18       Q    AND DID THAT REPORTING INCLUDE PAYMENTS MADE ON

19  YOUR BEHALF TO F.S.O.?

20       A    YES.

21       MR. MUSSELMAN:  ONE MOMENT, YOUR HONOR.

22

23  BY MR. MUSSELMAN:

24       Q    PRIOR TO THE FURRS' DEPARTURE IN THE FALL OF 1993,

25  DID YOU BELIEVE THAT THE ACTIVITY THAT YOU UNDERTOOK WAS

26  AUTHORIZED WITHIN THE SCOPE OF YOUR POWERS?

27       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.  CALLS FOR

28  LEGAL CONCLUSION.  ASKED AND ANSWERED.  RELEVANCY.
			
			

page331



 1       THE COURT:  JUST TOO GENERAL.  SUSTAIN IT ON THAT.

 2       MR. MUSSELMAN:  NO FURTHER QUESTIONS.

 3       THE COURT:  ANY RECROSS?

 4       MR. WAIER:  YES, BRIEFLY.

 5       THE WITNESS:  IF IT’s BRIEF, FINE; OTHERWISE, I HAVE TO

 6  REALLY GO TO THE BATHROOM.

 7       THE COURT:  NOTHING HAS BEEN BRIEF AROUND HERE.

 8       THE WITNESS:  I CAN RUN AND BE BACK IN 5 MINUTES.

 9       MR. WAIER:  IT’s AN OXYMORON WHEN THE ATTORNEY SAYS IT

10  WILL BE BRIEF.

11       THE WITNESS:  I LEARNED THAT THE HARD WAY.

12       THE COURT:  SEE YOU IN 10 MINUTES.

13

14                   (PROCEEDINGS RECESSED.)

15

16       MR. WAIER:  MAY I PROCEED?

17       THE COURT:  YES, SIR.

18

19                       RECROSS EXAMINATION

20  BY MR. WAIER:

21       Q    MR. MARCELLUS, I HAVE A COUPLE OF QUESTIONS FOR

22  YOU ON RECROSS.  FROM THE TIME THAT YOU RETURNED TO THE

23  LEGION IN 1987 UNTIL MID 1993, YOU KNEW WHO THE DIRECTORS

24  WERE FOR THE LEGION BECAUSE YOU FILED WITH THE SECRETARY OF

25  STATE THE STATEMENT WITHIN CALIFORNIA THAT DISCLOSED THAT

26  INFORMATION; ISN'T THAT TRUE?

27       MR. MUSSELMAN:  ASKED AND ANSWERED.

28       THE COURT:  SUSTAINED.
			
			

page332



 1  BY MR. WAIER:

 2       Q    TAKE A LOOK AT EXHIBIT 46, WHICH IS THE JUNE 5,

 3  1991 LETTER FROM WILLIS CARTO COUNSEL POINTED OUT TO YOU, TO

 4  WILLIS CARTO FROM BIDDLE AND COMPANY.

 5       A    YES.

 6       Q    YOU HAD NO KNOWLEDGE, DO YOU, WHETHER THIS LETTER

 7  WAS SHOWN TO LAVONNE FURR AT THIS POINT IN TIME, DO YOU?

 8       A    NO.

 9       MR. BEUGELMANS:  AT WHICH TIME?

10

11  BY MR. WAIER:

12       Q    1991.

13       A    NO.

14       Q    AND YOU HAVE NO KNOWLEDGE AS TO WHETHER THIS

15  LETTER WAS SHOWN TO LEWIS FURR; ISN'T THAT CORRECT?

16       A    THAT’s CORRECT.

17       Q    IN FACT, IT VERY WELL COULD HAVE BEEN SHOWN TO

18  THEM AT THIS POINT IN TIME; ISN'T THAT RIGHT?

19       A    I SUPPOSE.

20       Q    YOU UNDERSTOOD THAT WILLIS CARTO TOOK HIS

21  DIRECTION FROM THE BOARD OF DIRECTORS OF THE LEGION AT THIS

22  POINT IN TIME, 1991?

23       A    YES.

24       Q    IN 1990, HE TOOK THE DIRECTION FROM THE BOARD OF

25  DIRECTORS, TOO; ISN'T THAT CORRECT?

26       A    THAT WAS MY UNDERSTANDING.

27       Q    SIR, ONE LAST AREA.  YOU TESTIFIED THAT YOU HAD A

28  MEETING, AND YOU WERE PRETTY PRECISE IN THE TESTIMONY, THAT
			
			

page333



 1  YOU HAD A MEETING WHERE YOU SAT DOWN WITH MR. CARTO AND

 2  MR. HOOPER, THE ATTORNEY FROM BIDDLE AND COMPANY.  DO YOU

 3  RECALL?

 4       A    YES.

 5       Q    AND AS A RESULT OF THAT CONVERSATION, IT WAS A

 6  PRETTY LENGTHY CONVERSATION, WASN'T IT?

 7       A    NO.

 8       Q    WELL, IT WAS ENOUGH TO GO OVER TO TELL YOU WHAT

 9  THEY WANTED IN THE, QUOTE, “AFFIDAVIT"; ISN'T THAT CORRECT?

10       A    YES.

11       Q    AND IN FACT, MR. HOOPER TALKED WITH YOU; IS THAT

12  CORRECT?

13       A    I BELIEVE MR. HOOPER, YES.

14       Q    ISN'T IT TRUE YOU NEVER HAD A DISCUSSION WITH

15  MR. HOOPER?

16       A    NOW I THINK ABOUT IT, IT COULD HAVE BEEN ANOTHER

17  BRITISH ATTORNEY WHO WAS WORKING ON THE CASE.  BUT I BELIEVE

18  IT WAS MR. HOOPER.

19       Q    SIR, DO YOU RECALL YOUR DEPOSITION WAS TAKEN IN

20  THIS CASE AUGUST 15, 1994?

21       A    YES.

22       Q    AND YOU WERE UNDER OATH; ISN'T THAT RIGHT?

23       A    YES.

24       Q    AND EVERYTHING YOU TOLD THEM THERE WAS THE TRUTH?

25       A    YES.

26       MR. WAIER:  YOUR HONOR, I WOULD LIKE TO READ FROM THE

27  DEPOSITION ON PAGE 95, STARTING ON LINES 16 THROUGH THE END,

28  TO PAGE 96, ALL THAT PAGE, AND THEN THROUGH 97 TO LINES 1
			
			

page334



 1  THROUGH 11.

 2       MR. BEUGELMANS:  STARTING WHERE?

 3       MR. WAIER:  STARTING PAGE 95.

 4       MR. BEUGELMANS:  LINE?

 5       MR. WAIER:  16, THROUGH 97 LINE 11.

 6            IN FACT, I WILL RESTRICT THAT TO LINE 96, LINES 1

 7  THROUGH 9.

 8

 9  BY MR. WAIER:

10       Q    PAGE 95, LINE 16:

11            “QUESTION:” — THIS WAS TO YOU, MR. MARCELLUS --

12  “WERE YOU AWARE HOW MUCH MR. HOOPER WAS PAID?

13            “ANSWER:  NO.

14            “QUESTION:  DID YOU HAVE ANY DISCUSSIONS WITH

15  MR. HOOPER?

16            “ANSWER:  NO.

17            “QUESTION:  HAVE YOU EVER HAD ANY DISCUSSIONS WITH

18  MR. HOOPER?

19            “ANSWER:  YES, I MET HIM ONCE BRIEFLY.

20            “QUESTION:  WHERE WAS THIS?

21            “ANSWER:  AT THE L.A. AIRPORT IN 1985 OR '86.  I

22  DON'T RECALL THE YEAR."

23            PAGE 96, LINE 1:

24            “QUESTION:  WHAT WAS THE OCCASION OF MEETING

25  MR. HOOPER?

26            “ANSWER:  HE WAS FLYING INTO TOWN, LOS ANGELES,

27  AND I MET HIM AT THE L.A. AIRPORT WITH WILLIS AND ELISABETH

28  CARTO.  I THINK HE WAS BETWEEN FLIGHTS AND HE HAD TO RUSH.
			
			

page335



 1  AND I BASICALLY SHOOK HANDS WITH HIM AND THAT WAS --

 2            “QUESTION:  NO CONVERSATION WAS INDULGED IN?

 3            “ANSWER:  NOT THAT I CAN RECALL.

 4            “QUESTION:  DO YOU HAPPEN TO KNOW WHO HIRED

 5  MR. HOOPER?

 6            “ANSWER:  NO."

 7       MR. WAIER:  NOTHING FURTHER OF THIS WITNESS.

 8       THE COURT:  MR. LANE, ANY QUESTIONS?

 9       MR. LANE:  NO THANK YOU, YOUR HONOR.

10       THE COURT:  THANK YOU FOR YOUR TESTIMONY.  THERE’s BEEN

11  A MOTION TO EXCLUDE WITNESSES, MR. MARCELLUS, I SHOULD --

12  HE CAN STAY IF HE’s NOT GOING TO BE A WITNESS.

13       MR. WAIER:  WE ASK THAT HE BE ORDERED BACK.  WE INTEND

14  TO PRESENT HIM IN A SMALL AREA IN OUR CASE IN CHIEF IF IT

15  GOES THAT FAR.

16       THE COURT:  WHY DON'T WE DO THAT RIGHT NOW.  SAVE HIM A

17  TRIP BACK, UNLESS HE’s GOING TO BE HERE ANYWAY.

18       THE WITNESS:  NO, I LIVE IN ORANGE COUNTY.  IT’s A BIT

19  OF A TRIP.  I'M SELF-EMPLOYED.  I HAVE TO WORK.

20       MR. WAIER:  WE CAN'T.  WE HAVE TO ESTABLISH FURTHER

21  FACTS, PART OF THE OBJECTIONS THAT HAVE BEEN RAISED AS A

22  RESULT OF CERTAIN FACTS WE HAVEN'T ESTABLISHED TO THIS

23  DATE.  ALSO WITH RESPECT TO TRIAL STRATEGY, AS WELL AS WITH

24  THE WORK PRODUCT, WE INTEND TO CALL HIM IN THE CASE IN

25  CHIEF.  HE’s HERE, AND — HE’s HERE.  I REQUEST THE COURT

26  ORDER HIM BACK.  WE INTEND TO ONLY CALL HIM FOR A CERTAIN

27  LENGTH.

28       THE COURT:  I DON'T HAVE THE AUTHORITY TO ORDER HIM
			
			

page336



 1  BACK AT A CERTAIN TIME.  STAY IN TOUCH WITH THE ATTORNEYS

 2  HERE.  AND WHEN — IF WE NEED YOU, WE'LL CALL YOU.  AND I

 3  INTEND TO MAKE IT AS PAINLESS AS POSSIBLE.  HE’s BEEN HERE A

 4  LONG TIME.  I THINK WE OUGHT TO BE ABLE TO DO IT AND GET IT

 5  OVER WITH.

 6       THE WITNESS:  AGREEABLE WITH ME.

 7       MR. BEUGELMANS:  PLAINTIFF WOULD CONTINUE WITH

 8  MR. CARTO.

 9       THE COURT:  VERY WELL.  MR. CARTO, IF YOU WOULD RESUME

10  THE STAND.

11

12                          WILLIS CARTO,

13  CALLED AS A WITNESS ON BEHALF OF THE PLAINTIFF, HAVING BEEN

14  PREVIOUSLY SWORN, TESTIFIED AS FOLLOWS:

15

16                 DIRECT EXAMINATION (CONTINUED)

17  BY MR. BEUGELMANS:

18       Q    MR. CARTO, DO YOU UNDERSTAND THAT YOU ARE STILL

19  UNDER OATH?

20       A    YES.

21       Q    NOW, WHEN WE CONCLUDED ON THURSDAY, I BELIEVE, OR

22  FRIDAY MORNING, I ASKED YOU IF VIBET WAS ORGANIZED BY

23  PATRICK FOETISCH.  DO YOU RECALL THAT?

24       A    YES.

25       Q    WAS VIBET ORGANIZED BY PATRICK FOETISCH?

26  QUESTION, VIBET WAS ORGANIZED TO PUT THE FARREL MONEY

27  ELSEWHERE OTHER THAN THE LEGION ACCOUNTS; IS THAT CORRECT?

28       A    THAT WAS CERTAINLY ONE OF THE CONSIDERATIONS.
			
			

page337



 1       Q    WAS IT ORGANIZED FOR THAT PURPOSE, SIR?

 2       A    THAT WAS CERTAINLY ONE OF THE CONSIDERATIONS.

 3       Q    I WOULD LIKE TO READ FROM THE DEPOSITION, PAGE 16,

 4  STARTING LINE 12 THROUGH 18.

 5       MR. WAIER:  ON OCTOBER 17, 1995?

 6       MR. BEUGELMANS:  CORRECT.

 7       MR. WAIER:  WHAT PAGE?

 8       MR. BEUGELMANS:  16, STARTING LINE 12.

 9       MR. WAIER:  NO OBJECTION TO HIM READING IT.

10

11  BY MR. BEUGELMANS:

12       Q    “QUESTION:  FOR WHAT REASON WAS VIBET ORGANIZED?

13            “ANSWER:  I THINK THAT’s EXPRESSED IN THE MINUTES

14  THAT ARE IN — IN YOUR POSSESSION WHEN THE DECISION WAS MADE

15  TO — FOR VERY GOOD, VALID AND APPROPRIATE REASONS TO PUT

16  THE FUNDS IN THE FARREL ESTATE ELSEWHERE THAN THE BANK

17  ACCOUNT OF THE LEGION OR ELSEWHERE IN THE COUNTRY."

18            SIR, TO YOUR KNOWLEDGE, HAS VIBET MAINTAINED A

19  BANK ACCOUNT?

20       A    I'M SORRY, WHAT?

21       Q    HAS VIBET MAINTAINED A BANK ACCOUNT?

22       A    YES.

23       Q    DID YOU HAVE ANYTHING TO DO WITH SETTING UP

24  VIBET’s BANK ACCOUNT?

25       A    NO.

26       Q    AND DID THE VIBET BANK ACCOUNT — WAS IT SET UP

27  AT THE BANQUE CONTRADE LAUSANNE, SWITZERLAND?

28       A    YES.
			
			

page338



 1       Q    IS IT TRUE ALL THE MONEY THAT WENT INTO THE VIBET

 2  ACCOUNT AT BANQUE CONTRADE LAUSANNE, SWITZERLAND, CAME FROM

 3  THE FARREL ESTATE?

 4       A    NO, NONE OF THE MONEY CAME FROM THE FARREL ESTATE.

 5       Q    I WOULD LIKE TO READ, SIR, FROM YOUR DEPOSITION,

 6  PAGE 117.

 7       MR. WAIER:  WHAT LINES?

 8       MR. BEUGELMANS:  STARTING LINE 3.

 9       MR. WAIER:  TO WHERE?

10       MR. BEUGELMANS:  LINE 7.

11            “QUESTION:  --

12       MR. WAIER:  CAN I READ IT?

13       MR. BEUGELMANS:  I'M SORRY?

14       MR. WAIER:  TO LINE?  WHAT LINE?

15       MR. BEUGELMANS:  7.

16       MR. WAIER:  YOUR HONOR, I'M NOT SURE WHY HE’s READING

17  IT.  IF IT’s FOR IMPEACHMENT, IT DOESN'T IMPEACH HIS

18  TESTIMONY.  IT’s A PARTY, SO HE CAN READ IT.

19       THE COURT:  I WON'T KNOW UNTIL I HEAR IT.  OVERRULE THE

20  OBJECTION.

21

22  BY MR. BEUGELMANS:

23       Q    “QUESTION:  HAS VIBET EVER RECEIVED MONIES FROM

24  ANY SOURCE OTHER THAN THE FUNDS WHICH ARE TRANSFERRED TO

25  VIBET FROM YOUR SHARE OF THE 45 PERCENT OF THE SETTLEMENT OF

26  THE FARREL ESTATE?

27            “ANSWER:  I DON'T THINK SO."

28       A    MR. BEUGELMANS --
			
			

page339



 1       Q    NO QUESTION PENDING, SIR.

 2       A    NO, I THINK I HAVE TO SAY THIS FOR THE BENEFIT OF

 3  EVERYONE.  I THINK YOU, AS WELL AS PERHAPS OTHERS, ARE

 4  LABORING UNDER A BIG MISCONCEPTION.  AT NO TIME DID VIBET

 5  EVER GET ANY MONEY FROM THE FARREL ESTATE.  THE FARREL

 6  ESTATE WAS DEVISED BY WILL TO JOAN ALTHAUS AND HAD NOTHING

 7  TO DO WITH VIBET.  VIBET WAS A — WHAT IS — I MEAN,

 8  NOTHING TO DO WITH NECA CORPORATION, WHICH WAS SET UP BY

 9  MISS FARREL AND INTO WHICH SHE TRANSFERRED ALL OF HER OTHER

10  ASSETS, OTHER THAN HER HOUSEHOLD GOODS AND A FEW — SOME

11  GOLD COINS, WHICH SHE THEN DEVISED BY WILL TO JOAN ALTHAUS

12  FOR THE PURPOSE OF HER SEEING THAT NECA CORPORATION WAS PUT

13  INTO MY HANDS.  AT NO TIME DID VIBET EVER RECEIVE ANY OF

14  THAT MONEY.  ALL OF THE ESTATE MONEY WENT 100 PERCENT TO

15  JOAN ALTHAUS.  I THINK WE HAVE TO BE VERY CAREFUL ABOUT OUR

16  NOMENCLATURE HERE.

17       MR. BEUGELMANS:  MOVE TO STRIKE.  NONRESPONSIVE.

18       THE COURT:  SUSTAINED.

19

20  BY MR. BEUGELMANS:

21       Q    SIR, NECA WAS SET UP TO TRANSFER JOAN FARREL'S

22  ASSETS TO THE LEGION, CORRECT?

23       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.

24       THE COURT:  OVERRULED.

25       THE WITNESS:  PART OF HER ASSETS.

26

27  BY MR. BEUGELMANS:

28       Q    SIR, YOU HAD IN FRONT OF YOU THE EXHIBIT BOOK.
			
			

page340



 1       A    EXCUSE ME.  I WAS WRONG.  IT WAS SET UP TO

 2  TRANSFER NECA CORPORATION INTO VIBET, BUT NOT THE ASSETS OF

 3  HER ESTATE.

 4       Q    DID VIBET EXIST PRIOR TO JEAN FARREL’s DEATH?

 5       A    NO.

 6       Q    DID YOU EVER DISCUSS VIBET WITH JEAN FARREL?

 7       A    NO.

 8       Q    NOW, NECA CORPORATION, THE OWNERSHIP OF NECA WAS

 9  EVIDENCED BY 20 SHARES OF STOCK; IS THAT CORRECT?

10       A    BEARER STOCK, YES.

11       Q    AND THEY WERE GIFTED TO THE LEGION FOR THE

12  SURVIVAL OF FREEDOM, INC., DURING JEAN FARREL’s LIFETIME,

13  CORRECT?

14       A    THAT’s A TOUGH LEGAL QUESTION.  THE OWNERSHIP, OF

15  COURSE, RESIDED IN THE BEARER SHARES THEMSELVES, WHICH SHE

16  REFERRED TO AS MINE, MEANING WILLIS CARTO.

17       Q    SIR, PLEASE TURN TO THE COMPLAINT THAT YOU SIGNED

18  IN THE PRESENCE OF NOTARY PUBLIC, EXHIBIT 183, PLEASE.

19  NORTH CAROLINA COMPLAINT.  I HAVE A COPY I CAN SHOW.  IT

20  WILL BE FASTER.

21       MR. WAIER:  COULD YOU WAIT UNTIL WE PULL IT OUT?

22       MR. BEUGELMANS:  SURE.

23       MR. WAIER:  I HAVE IT NOW.

24

25  BY MR. BEUGELMANS:

26       Q    TURN TO THE COMPLAINT, VERY END, PAGE 2.  WOULD

27  YOU PLEASE READ PAGE 2 OF THE COMPLAINT, WHICH IS CONTAINED

28  IN EXHIBIT 183, PARAGRAPH 5 AND PARAGRAPH 6.
			
			

page341



 1       A    (PAUSE)  RIGHT.

 2       Q    READ THAT INTO THE RECORD.

 3       MR. WAIER:  WHICH LINES, PLEASE?

 4       MR. BEUGELMANS:  PARAGRAPH 5 AND PARAGRAPH 6.

 5       MR. WAIER:  YOUR HONOR, I WILL OBJECT WITH RESPECT TO

 6  THIS TESTIMONY.  AND IT LACKS FOUNDATION.  CALLS FOR A LEGAL

 7  CONCLUSION.  RELEVANCY.  AND POTENTIAL HEARSAY WITH RESPECT

 8  TO BOTH.  ALSO NOT THE BEST EVIDENCE WITH RESPECT TO

 9  PARAGRAPH 6.  AND ALSO RELEVANCY.

10       THE COURT:  THIS IS THE COMPLAINT FILED IN

11  NORTH CAROLINA, CORRECT?

12       MR. BEUGELMANS:  CORRECT.

13       THE COURT:  I THINK I REMEMBERED IT.

14       MR. BEUGELMANS:  THE VERIFIED COMPLAINT SIGNED IN FRONT

15  OF A NOTARY PUBLIC.  THE COMPLAINT IS THE LAST PAGES.  IT'S

16  IN REVERSE CHRONOLOGICAL ORDER.  WE RECEIVED IT FROM THE

17  COURT IN NORTH CAROLINA.

18       THE COURT:  WHAT PAGE?

19       MR. BEUGELMANS:  TURNING BACK FROM THE VERY, VERY BACK

20  OF THE EXHIBIT, IT WILL BE PAGE 2 OF THE COMPLAINT.  IF I

21  COULD APPROACH, YOUR HONOR.

22       THE COURT:  I READ OVER THIS EXHIBIT.  THIS IS

23  SOMETHING MR. CARTO SIGNED.  I WILL OVERRULE THE OBJECTION.

24       MR. WAIER:  MAY I BRIEFLY BE HEARD, YOUR HONOR?

25       THE COURT:  VERY BRIEFLY.

26       MR. WAIER:  WITH RESPECT TO THE AFFIDAVIT, WHERE HE

27  SIGNS THIS PARTICULAR AFFIDAVIT, IT DOES NOT STATE THAT --

28  HOW HE OBTAINED HIS KNOWLEDGE.  THERE’s NO FOUNDATION HOW HE
			
			

page342



 1  OBTAINED HIS KNOWLEDGE.  IF THE KNOWLEDGE CAME FROM HEARSAY,

 2  YOUR HONOR, THEN IT’s HEARSAY.  IF IT CAME FROM SOMEBODY

 3  ELSE, CAME FROM ATTORNEYS, IT’s HEARSAY.  IT ALSO STATES A

 4  LEGAL CONCLUSION.  IT DOESN'T STATE THAT HE DID ALL OF IT,

 5  STATES THAT THIS IS HIS KNOWLEDGE.  WHERE HE GETS THE

 6  KNOWLEDGE, THERE HAS TO BE A FOUNDATION LAID.

 7       THE COURT:  OBJECTION WILL BE OVERRULED.

 8

 9  BY MR. BEUGELMANS:

10       Q    PLEASE READ PARAGRAPH 5 AND 6.

11       A    FIVE: “THAT NECA CORPORATION, WHICH IS PRINCIPALLY

12  THE SUBJECT OF THIS ACTION, IS A CORPORATION FORMED BY THE

13  DECEASED, JEAN FARREL, E., AS A LIBERIAN,” L-I-B-E-R-I-A-N,

14  “CORPORATION ON OR ABOUT NOVEMBER 25, 1983."

15            SIX: “THAT NECA CORPORATION HAS SUBSTANTIAL

16  ASSETS, HAVING A VALUE IN EXCESS OF 16 MILLION DOLLARS,

17  U.S., WHICH ASSETS ARE HELD IN MANY DIFFERENT COUNTRIES AND

18  CITIES IN THE WORLD.  NECA CORPORATION STOCK WAS COMPOSED OF

19  20 BEARER CERTIFICATES, ALL OF WHICH CERTIFICATES OF STOCK

20  WERE GIFTED TO THE LEGION FOR THE SURVIVAL OF FREEDOM, INC.

21  DURING A LIFETIME WITH JEAN FARREL, E., IN WHICH

22  CERTIFICATES ARE STILL PROPERTY OF THE LEGION FOR THE

23  SURVIVAL OF FREEDOM, INC."

24       Q    THANK YOU.  IN THE NORTH CAROLINA LITIGATION DID

25  YOU HAVE OCCASION TO ANSWER WRITTEN INTERROGATORIES?

26       A    WELL, I BELIEVE SO.

27       Q    IF YOU WOULD, PLEASE, SIR, IN THE BEGINNING OF

28  EXHIBIT 183, THERE IS A SET OF RESPONSES, PLAINTIFF'S
			
			

page343



 1  ANSWERS TO DEFENDANTS' SECOND SET OF INTERROGATORIES.  RIGHT

 2  BEFORE THAT, A VERIFICATION.  DO YOU SEE THAT, SIR?

 3       MR. WAIER:  WHICH PAGE?

 4       MR. BEUGELMANS:  BEGINNING OF THE FOURTH PAGE,

 5  EXHIBIT 183.

 6

 7  BY MR. BEUGELMANS:

 8       Q    VERIFICATION ON PAGE 4.

 9       A    YES.

10       Q    IS IT YOUR SIGNATURE, THE VERIFICATION ON PAGE 5?

11       A    YES.

12       Q    DID YOU READ THE RESPONSES, THE PLAINTIFF'S

13  ANSWERS TO DEFENDANTS' SECOND SET OF INTERROGATORIES BEFORE

14  YOU SIGNED THE VERIFICATION ON PAGE 5, 183?

15       A    I THINK SO.

16       MR. WAIER:  MAYBE I'M MISSING SOMETHING.  I'M NOT SURE

17  WHAT HE’s READING.  PAGE FOUR OF THE DOCUMENT HE’s TALKING

18  ABOUT IS SIGNED BY WILLIAM M. ALEXANDER, JUNIOR.

19       THE COURT:  WHY DON'T THE TWO OF YOU COME UP TOGETHER

20  AND MAYBE LOOK AT IT.

21

22  BY MR. BEUGELMANS:

23       Q    SIR, DID YOU RECEIVE PLAINTIFF’s ANSWERS TO THE --

24  MR. CARTO, DID YOU REVIEW PLAINTIFF’s ANSWERS TO DEFENDANTS'

25  SECOND SET OF INTERROGATORIES BEFORE YOU SIGNED THE

26  VERIFICATION HERETO?

27       A    I'M SURE I DID.

28       Q    SIR, WILL YOU PLEASE READ ANSWER CAPITAL 6-C.
			
			

page344



 1       MR. WAIER:  OBJECT, YOUR HONOR.  THERE ARE NO

 2  INTERROGATORIES FOR WHICH --

 3       MR. BEUGELMANS:  YES, SIR, THE INTERROGATORIES ARE

 4  RIGHT BELOW THAT.  THE ENTIRE FILE FROM NORTH CAROLINA HAS

 5  BEEN PRODUCED.  TAKE THE TIME AND READ THE EXHIBIT AND SEE

 6  IT.

 7       THE COURT:  POINT IT OUT TO HIM.

 8       MR. WAIER:  YES, PLEASE.

 9            THESE EXACTLY, I DON'T HAVE COPIES OF THE

10  INTERROGATORIES AND THEY WEREN'T PROVIDED TO US.

11       MR. BEUGELMANS:  I BELIEVE THEY DO.  IT’s PLAINTIFF'S

12  EXHIBIT --

13       THE COURT:  I'M GOING TO OVERRULE THE OBJECTION, IF

14  THAT’s AN OBJECTION FOR NOT SHOWING IT.  YOU CAN COME UP AND

15  LOOK AT WHAT YOUR CLIENT IS LOOKING AT.

16       MR. WAIER:  IT’s IRRELEVANT WITHOUT THE

17  INTERROGATORIES.

18       MR. BEUGELMANS:  THE INTERROGATORIES ARE HERE,

19  COUNSEL.

20       THE COURT:  OVERRULED.

21

22  BY MR. BEUGELMANS:

23       Q    SIR, PLEASE READ ANSWER 6, CAPITAL C.

24       A    YES.  NOW, THIS IS DATED 1987; IS THAT RIGHT?

25       MR. WAIER:  ONE SECOND, YOUR HONOR.  I HAVE AN

26  OBJECTION.  WITHOUT THE QUESTION THERE, HE’s ASKING TO READ

27  STATEMENTS THAT ARE VERIFIED ANSWERS OR PURPORTED VERIFIED

28  ANSWER TO INTERROGATORIES.  THERE’s NO INTERROGATORIES WHICH
			
			

page345



 1  STATES, THEREFORE, IT’s IRRELEVANT.

 2       THE COURT:  MAYBE I CAN SOLVE THE PROBLEM.  I'M GOING

 3  TO TAKE JUDICIAL NOTICE OF THIS ENTIRE DOCUMENT.

 4       MR. BEUGELMANS:  THANK YOU.  WITHDRAW THE QUESTION.

 5       THE COURT:  THAT DOESN'T MEAN I'LL NECESSARILY BELIEVE

 6  EVERYTHING IN IT, BUT I'LL TAKE JUDICIAL NOTICE OF IT.

 7       MR. WAIER:  I DO WANT TO INDICATE, I DON'T BELIEVE

 8  THERE WAS A PROPER REQUEST IN WRITING UNDER THE CODE OF

 9  CIVIL PROCEDURE TO REQUEST YOU FOR THAT PURPOSE AND I

10  BELIEVE THAT HAD TO BE DONE, WHICH HAD NOT.  THEREFORE, WE

11  OBJECT TO YOU TAKING JUDICIAL NOTICE.

12       MR. BEUGELMANS:  MAY I PROCEED?

13       THE COURT:  GO AHEAD.

14

15  BY MR. BEUGELMANS:

16       Q    MR. CARTO, IS THE MONEY THAT WENT TO THE VIBET

17  ACCOUNT YOUR MONEY?

18       A    YES.

19       Q    IN HER WILL, DID JEAN FARREL LEAVE A BEQUEST TO

20  WILLIS CARTO?

21       A    NO.

22       MR. WAIER:  OBJECTION.  THE BEST EVIDENCE IS THE WILL

23  ITSELF.  RELEVANCY.

24       THE COURT:  I'M SORRY, I DIDN'T HEAR THE ANSWER OR THE

25  QUESTION.

26                   (QUESTION AND ANSWER READ.)

27       MR. WAIER:  I OBJECTED BEFORE THE ANSWER AS BEING NOT

28  THE BEST EVIDENCE.  LACKS FOUNDATION.  THE WILL IS THE BEST
			
			

page346



 1  EVIDENCE.

 2       THE COURT:  YES, I READ THE WILL.  THE ANSWER IS “NO"

 3  TO IT, THAT QUESTION.

 4            COUNSEL, ON JUDICIAL NOTICE, IF YOU LOOK, IT'S

 5  451, MANDATORY JUDICIAL NOTICE, PERMISSIBLE JUDICIAL NOTICE

 6  WHEN YOU HAVE TO GIVE NOTICE.  YOU DON'T HAVE TO GIVE IT FOR

 7  MANDATORY JUDICIAL NOTICE.

 8       MR. WAIER:  THERE’s RULES OF COURT WITH RESPECT TO

 9  REQUESTING THE COURT TO TAKE PERMISSIVE JUDICIAL NOTICE.

10       THE COURT:  THAT’s TRUE.  THEY DON'T OVERRIDE THE

11  EVIDENCE CODE.

12            LET’s PROCEED.

13

14  BY MR. BEUGELMANS:

15       Q    NOW, MR. CARTO THE I.H.R. IS SIMPLY A TRADE NAME

16  OF THE LEGION, CORRECT?

17       A    YES.

18       Q    I.H.R. NEVER MAINTAINED A BANK ACCOUNT IN ITS OWN

19  NAME, HAS IT?

20       A    YES, IT HAS.

21       Q    WAS THAT BANK ACCOUNT IN EXISTENCE IN THE YEAR

22  1985?

23       A    OF COURSE.

24       Q    AND WHO HAD SIGNATORY POWER IN THAT BANK ACCOUNT?

25       A    WELL, MR. MARCELLUS DID.  I FRANKLY DON'T RECALL.

26  I DON'T THINK I DID.  I TRUSTED MR. MARCELLUS AND THE OTHER

27  EMPLOYEES TO ADMINISTER THE BANK ACCOUNT, PAY THE BILLS AND

28  PUT THE MONEY IN IT THAT BELONGED IN IT.
			
			

page347



 1       Q    DID YOU EVER INSTRUCT MR. MARCELLUS TO TRANSFER

 2  MONEY FROM AN I.H.R. ACCOUNT TO AN ACCOUNT OWNED BY LIBERTY

 3  LOBBY?

 4       MR. WAIER:  OBJECTION.  RELEVANCY.

 5       THE COURT:  OVERRULED.

 6       THE WITNESS:  I CERTAINLY DON'T THINK SO.

 7

 8  BY MR. BEUGELMANS:

 9       Q    DID YOU INSTRUCT MR. MARCELLUS TO TRANSFER MONEY

10  FROM AN I.H.R. ACCOUNT TO AN F.D.F.A. ACCOUNT?

11       MR. WAIER:  OBJECTION.  RELEVANCY.

12       THE COURT:  OVERRULED.

13       THE WITNESS:  I — WITHOUT SAYING FOR CERTAIN, BUT I

14  BELIEVE I DID.

15

16  BY MR. BEUGELMANS:

17       Q    NOW, AS OF MARCH 1987, HAD THE BOARD OF THE LEGION

18  FOR THE SURVIVAL OF FREEDOM, INC., RELINQUISHED ITS INTEREST

19  IN THE FARREL ESTATE TO WILLIS CARTO?

20       MR. WAIER:  OBJECTION.  CALLS FOR LEGAL CONCLUSION.

21  LACKS FOUNDATION.

22       THE COURT:  OVERRULED.

23       THE WITNESS:  AS OF THAT TIME, THERE HAD BEEN AN

24  AGREEMENT BETWEEN MYSELF AND THE OTHER MEMBER, MRS. FURR,

25  AND WHO HAPPENED TO BE THE SECRETARY/TREASURER OF THE BOARD

26  AS WELL, AND HER HUSBAND IN REGARD TO THAT MATTER.

27       MR. BEUGELMANS:  MOVE TO STRIKE.  NONRESPONSIVE.

28       THE COURT:  OVERRULED.
			
			

page348



 1  BY MR. BEUGELMANS:

 2       Q    MR. CARTO, HAD THE BOARD OF DIRECTORS OF THE

 3  LEGION RELINQUISHED ANY INTEREST IT MIGHT HAVE — THAT THE

 4  LEGION MIGHT HAVE IN THE FARREL ESTATE TO YOU AS OF MARCH

 5  1987?

 6       A    YES.

 7       Q    SIR, ARE YOU ABLE TO DISTINGUISH BETWEEN THE

 8  PERSONAL FUNDS THAT YOU USED IN THE FARREL LITIGATION FROM

 9  THE FUNDS THAT YOU BORROWED TO PURSUE THE FARREL LITIGATION?

10       A    YES.

11       Q    I WOULD LIKE TO READ FROM YOUR DEPOSITION, PAGE

12  54.

13       MR. WAIER:  WHAT LINES?

14

15  BY MR. BEUGELMANS:

16       Q    BEFORE I ASK THAT, SIR, HOW MUCH DO YOU CONTEND

17  WILLIS CARTO SPENT IN PURSUING THE FARREL LITIGATION ABROAD?

18       A    MY OWN MONEY?

19       Q    YES, SIR.

20       A    WELL, I DON'T KNOW, JUST A FEW THOUSAND, WHICH I

21  REIMBURSED MYSELF.

22       Q    AND THE REST WAS MONEY FROM F.D.F.A. AND FROM

23  LIBERTY LOBBY, CORRECT?

24       A    NO.  THERE WERE OTHER ENTITIES AS WELL.

25       Q    ISN'T IT TRUE THAT THE GREAT BULK OF THE MONEY

26  CAME FROM F.D.F.A. AND LIBERTY LOBBY TO PURSUE THE FARREL

27  ESTATE?

28       A    YES.
			
			

page349



 1       Q    AND IN ESSENCE, THE LEGION BORROWED FROM F.D.F.A.

 2  TO FINANCE THE FARREL LITIGATION, CORRECT?

 3       MR. WAIER:  OBJECTION.  CALLS FOR LEGAL CONCLUSION.

 4  LACKS FOUNDATION.  ASKED AND ANSWERED.

 5       THE COURT:  SUSTAINED ON ASKED AND ANSWERED.

 6

 7  BY MR. BEUGELMANS:

 8       Q    DID THE LEGION BORROW FROM F.D.F.A. TO LITIGATE

 9  THE FARREL LITIGATION?

10       MR. WAIER:  OBJECTION.  ASKED AND ANSWERED.

11       THE COURT:  OVERRULED.

12       THE WITNESS:  WITHOUT REVIEWING THE FIGURES, I COULDN'T

13  SAY.  I DON'T — I DON'T BELIEVE SO.  HOWEVER, THAT’s MY

14  OPINION AT THIS TIME.

15

16  BY MR. BEUGELMANS:

17       Q    THAT, IN FACT, THE LEGION, PLAINTIFF IN THIS

18  ACTION, BORROWED FROM F.D.F.A. TO FINANCE THE FARREL

19  LITIGATION, CORRECT?

20       A    ISN'T THAT THE SAME QUESTION?

21       MR. WAIER:  OBJECTION.  ASKED AND ANSWERED.

22       MR. BEUGELMANS:  I DON'T BELIEVE WE HAD AN ANSWER, YOUR

23  HONOR.

24       THE COURT:  SIR, IF YOU PLEASE, JUST LET THE ATTORNEY

25  MAKE THE OBJECTION.  YOU ARE A WITNESS.  YOU JUST ANSWER

26  QUESTIONS IF YOU CAN.  IF YOU CAN'T, FINE.

27            ANY OBJECTION TO THE QUESTION?

28       MR. WAIER:  OBJECTION.  ASKED AND ANSWERED.  SECOND
			
			

page350



 1  TIME ASKED.

 2       THE COURT:  SUSTAINED.

 3       MR. BEUGELMANS:  YOUR HONOR, MAY I HAVE THE ANSWER READ

 4  BACK.  IT WENT BY ME.

 5

 6  BY MR. BEUGELMANS:

 7       Q    YOU DON'T BELIEVE SO?

 8       MR. WAIER:  OBJECTION.  ASKED AND ANSWERED.

 9       THE COURT:  IS THAT A QUESTION?  I DON'T BELIEVE SO.

10

11  BY MR. BEUGELMANS:

12       Q    NO, IS THAT THE ANSWER?  YOU DON'T BELIEVE THAT

13  THE LEGION BORROWED MONEY FROM F.D.F.A. TO PURSUE THE FARREL

14  LITIGATION?

15       MR. WAIER:  OBJECTION.  ASKED AND ANSWERED.

16       THE COURT:  SUSTAINED.

17

18  BY MR. BEUGELMANS:

19       Q    I WOULD LIKE TO READ FROM THE DEPOSITION, PAGE

20  157, BEGINNING AT LINE 22, TO 157, LINE 7.

21       MR. WAIER:  NO OBJECTION.

22

23  BY MR. BEUGELMANS:

24       Q    “QUESTION:  DID YOU EVER MAKE A PROPOSITION TO THE

25  FURRS, LEWIS AND LAVONNE FURR, OR EITHER OF THEM, THAT THE

26  LEGION FOR THE SURVIVAL OF FREEDOM, INC. SHOULD BORROW MONEY

27  FROM F.D.F.A.?"

28            AND THERE’s COLLOQUY.
			
			

page351



 1            “ANSWER:  I'M SORRY, THERE’s A PLANE GOING OVER.

 2  I CAN'T HEAR YOU.

 3            “QUESTION:  SHOULD BORROW MONEY FROM F.D.F.A. TO

 4  FINANCE THE FARREL LITIGATION.

 5            “ANSWER:  WELL, IN ESSENCE, THAT’s WHAT HAPPENED,

 6  AS I RECALL.  SO I MUST HAVE DONE THAT OR MUST HAVE

 7  DISCUSSED IT."

 8            NOW, SIR, YOU NEVER HAD AUTHORITY TO WITHDRAW ANY

 9  FUNDS FROM THE BANQUE CONTRADE ACCOUNT THAT VIBET

10  MAINTAINED, CORRECT?

11       A    CORRECT.

12       Q    AND YOU NEVER HAD AUTHORITY TO DIRECT PAT FOETISCH

13  TO WITHDRAW MONEY FROM THE BANQUE CONTRADE ACCOUNT, DID YOU?

14       A    WELL, THE — I WOULD HAVE TO ANSWER THAT QUESTION

15  AS TO NEGATIVE.  I BELIEVE I DID HAVE THE AUTHORITY TO DO

16  IT, AS WELL AS THE — AS WELL AS THE BOARD OF DIRECTORS.

17       Q    DID YOU EVER GIVE INSTRUCTIONS TO PATRICK FOETISCH

18  TO WITHDRAW ANY FUNDS FROM BANQUE CONTRADE, LAUSANNE?

19       A    YES.  WHEN I SAY “INSTRUCTIONS,” I HAVE TO AMEND

20  THAT I REQUESTED HIM FROM TIME TO TIME TO DO THAT.

21       Q    ALL RIGHT.  I'D LIKE TO READ FROM DEPOSITION PAGE

22  20, STARTING LINE 22, THROUGH PAGE 21, LINE 2.

23       MR. WAIER:  I'M SORRY, I DID HAVE AN OBJECTION, YOUR

24  HONOR, WITH RESPECT TO THE QUESTION STARTING LINE 13 AND

25  ENDING LINE 16 THAT I WOULD REQUEST A RULING ON BEFORE IT'S

26  READ.

27       MR. BEUGELMANS:  I'M NOT ASKING TO READ LINE 13 OR 16.

28  IT’s PAGE 20, LINE 23 TO PAGE 21, LINE 2.
			
			

page352



 1       MR. WAIER:  I THOUGHT YOU SAID TO LINE 22.  I

 2  APOLOGIZE.  I HAVE NO PROBLEMS WITH THAT.

 3

 4  BY MR. BEUGELMANS:

 5       Q    “QUESTION:  DID YOU EVER GIVE MAITRE FOETISCH” --

 6  STRIKE THAT.

 7            “QUESTION:  DID YOU EVER GIVE INSTRUCTIONS TO

 8  MAITRE FOETISCH TO WITHDRAW ANY FUNDS FROM BANQUE CONTRADE,

 9  LAUSANNE?

10            “ANSWER:  I DON'T BELIEVE I HAD AUTHORITY TO GIVE

11  HIM INSTRUCTIONS ON THAT MATTER."

12            SIR, YOU DON'T KNOW WHICH LAW VIBET WAS ORGANIZED

13  UNDER, DO YOU?

14       MR. WAIER:  OBJECTION.  VAGUE AND AMBIGUOUS.

15       THE COURT:  OVERRULED.

16       THE WITNESS:  MY RECOLLECTION IS THAT IT WAS AN

17  OFFSHORE, NOT A CORPORATION.  THE BAHAMAS, I BELIEVE.

18

19  BY MR. BEUGELMANS:

20       Q    I WOULD LIKE TO READ FROM THE DEPOSITION, SIR,

21  PAGE 10, LINE 7 THROUGH 9.

22            “QUESTION:  DO YOU HAVE ANY INFORMATION AS TO WHAT

23  LAW VIBET, INCORPORATED, IS INCORPORATED UNDER?

24            “ANSWER:  NO."

25            DO YOU HAVE ANY KNOWLEDGE, SIR, AS TO WHO THE

26  DIRECTORS OF VIBET, INC., BAHAMIAN CORPORATION, MAY HAVE

27  BEEN SINCE IT FIRST INCORPORATED UP TO TODAY?

28       A    AT THE TIME, I WAS NOT CONSULTED AT ALL AS TO THE
			
			

page353



 1  IDENTITY OF THE DIRECTORS, AND I DO NOT KNOW WHO THEY WERE

 2  OR WHO THEY ARE.

 3       Q    AND THESE DIRECTORS — STRIKE THAT.

 4            DO YOU KNOW IF THERE WAS A NOMINEE APPOINTED UNDER

 5  THE LAWS OF BAHAMA?

 6       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.

 7       MR. BEUGELMANS:  IF I COULD MAKE AN OFFER OF PROOF.

 8  FROM OTHER LITIGATION MY UNDERSTANDING THAT WHEN YOU

 9  ORGANIZE A LAW — OR ORGANIZE A CORPORATION UNDER THE LAW

10  OF BAHAMA OR OTHER OFFSHORE NATIONS OF THAT TYPE, THE

11  CORPORATION IS RUN BY WHAT IS CALLED A NOMINEE.  THAT’s THE

12  PERSON IN CHARGE OF THE CORPORATION.

13       THE COURT:  YOU WANT TO FIND OUT IF HE KNOWS WHO THE

14  NOMINEE IS?

15       MR. BEUGELMANS:  YES.

16       MR. WAIER:  OBJECT, YOUR HONOR.  IT LACKS FOUNDATION HE

17  KNEW WHAT THE LAW WAS, LET ALONE WHETHER THERE WAS A NOMINEE

18  OR EVEN A TERM “NOMINEE.”  I'M UNFAMILIAR WITH THE TERM.

19       THE COURT:  HE CAN TELL US.  OVERRULED.

20       THE WITNESS:  NO.

21

22  BY MR. BEUGELMANS:

23       Q    SIR, IS IT VIBET, INCORPORATED, OR VIBET, LIMITED?

24       A    I DON'T KNOW.

25       Q    NOW, IS VIBET — STRIKE THAT.

26            WAS VIBET, LIMITED, UNDER THE UMBRELLA OF AN

27  ENTITY, THE INTERNATIONAL LEGION FOR THE SURVIVAL OF

28  FREEDOM, INC.?
			
			

page354



 1       MR. WAIER:  OBJECTION.  VAGUE AND AMBIGUOUS.  LACKS

 2  FOUNDATION.  ASSUMES FACTS NOT IN EVIDENCE.

 3       THE COURT:  SUSTAINED.

 4

 5  BY MR. BEUGELMANS:

 6       Q    SIR, DO YOU KNOW WHAT THE INTERNATIONAL — STRIKE

 7  THAT.

 8            DO YOU KNOW IF THERE EVER WAS AN ENTITY BY THE

 9  NAME OF INTERNATIONAL LEGION FOR THE SURVIVAL OF FREEDOM,

10  INC.?

11       A    YES.

12       Q    HOW DO YOU KNOW THAT, SIR?

13       A    BECAUSE MY UNDERSTANDING IS — BUT I MAY BE

14  WRONG, IT MIGHT BE THE OTHER WAY AROUND, THAT THE

15  INTERNATIONAL LEGION FOR THE SURVIVAL OF FREEDOM WAS THE

16  FOUNDATION OR THE MOTHER CORPORATION OF VIBET.

17       Q    DO YOU KNOW IF IT’s A CORPORATION OR A TRUST OR

18  SOME OTHER TYPE OF ENTITY?

19       A    I BELIEVE --

20       MR. WAIER:  OBJECT.  LACKS FOUNDATION.  CALLS FOR

21  HEARSAY.

22       THE COURT:  OVERRULED.  IF HE KNOWS PERSONALLY.

23       THE WITNESS:  I'M SORRY, I DON'T RECALL.

24

25  BY MR. BEUGELMANS:

26       Q    DO YOU KNOW UNDER WHICH LAWS THE INTERNATIONAL

27  LEGION FOR THE SURVIVAL OF FREEDOM WAS FORMED?

28       A    NO.
			
			

page355



 1       Q    DO YOU KNOW IF IT’s AN OFFSHORE CORPORATION?

 2       A    NO.

 3       Q    DO YOU KNOW IF IT STILL EXISTS?

 4       A    NO.

 5       Q    HAVE YOU EVER HAD ANY KNOWLEDGE AS TO WHO THE

 6  DEBTORS OF INTERNATIONAL LEGION ARE?

 7       A    IF I DID, I DON'T RECALL WHO THEY WERE AT THE

 8  TIME, NOR WHO THEY MAY BE AT THIS TIME, IF IT’s STILL IN

 9  EXISTENCE.

10       Q    SIR, HAVE YOU EVER OPENED AN ACCOUNT ON BEHALF OF

11  THE INTERNATIONAL LEGION FOR THE SURVIVAL OF FREEDOM?

12       A    NO.

13       Q    ARE YOU AWARE OF ANY SUCH ACCOUNT EVER EXISTING?

14       MR. WAIER:  OBJECTION.  CALLS FOR HEARSAY.  LACKS

15  FOUNDATION.

16       THE COURT:  OVERRULED.

17       THE WITNESS:  NO.

18

19  BY MR. BEUGELMANS:

20       Q    ISN'T IT TRUE, SIR, THAT THE INTERNATIONAL LEGION

21  FOR THE SURVIVAL OF FREEDOM IS A TRUST ORGANIZED UNDER THE

22  LAWS OF THE BRITISH VIRGIN ISLANDS?

23       MR. WAIER:  OBJECTION.  ASKED AND ANSWERED.  LACKS

24  FOUNDATION.  RELEVANCY.

25       THE COURT:  ASKED AND ANSWERED.  SUSTAINED.

26

27  BY MR. BEUGELMANS:

28       Q    MAY I READ FROM THE DEPOSITION PAGE 98, LINE 10
			
			

page356



 1  THROUGH 13.  TO GIVE CONTEXT, GO TO LINE 6.

 2            “QUESTION:  DOES EXHIBIT 13 REFRESH YOUR

 3  RECOLLECTION TO THE TYPE OF ENTITY WHICH THE INTERNATIONAL

 4  LEGION FOR THE SURVIVAL OF FREEDOM IS?

 5            “ANSWER:  YES.  AND IT IS IN FACT A TRUST

 6  ORGANIZED UNDER THE LAWS OF THE BRITISH VIRGIN ISLANDS."

 7       MR. WAIER:  OBJECTION.  VAGUE AND AMBIGUOUS WITHOUT

 8  REFERENCING TO WHAT EXHIBIT 13 IS.

 9       THE COURT:  OVERRULED.

10

11  BY MR. BEUGELMANS:

12       Q   “ANSWER:  I WILL ASSUME THAT IT IS.  OTHERWISE, I

13  WOULDN'T HAVE SAID THAT IT WAS."

14       A    IS THAT A QUESTION?

15       THE COURT:  NO, SIR, IT’s NOT.  HE’s READING FROM THE

16  DEPOSITION.

17

18  BY MR. BEUGELMANS:

19       Q    NOW, MR. CARTO, YOU HAVE BEEN THE TREASURER OF

20  LIBERTY LOBBY FOR MORE THAN 40 YEARS, CORRECT?

21       A    YES.

22       Q    ARE YOU CURRENTLY ALSO AN OFFICER OF LIBERTY

23  LOBBY, INCORPORATED?

24       A    YES.

25       Q    AND WHAT POSITION DO YOU HOLD AS AN OFFICER

26  CURRENTLY?

27       A    I'M TREASURER.

28       Q    AND ANY OTHER OFFICE?
			
			

page357



 1       A    I'M CHIEF EXECUTIVE OFFICER.

 2       Q    AND ALSO A DIRECTOR, CORRECT?

 3       A    YES.

 4       Q    HOW LONG HAVE YOU BEEN A C.E.O. OF LIBERTY LOBBY,

 5  INC.?

 6       A    SINCE 1955.

 7       Q    AND HOW LONG HAVE YOU BEEN A DIRECTOR ON THE BOARD

 8  OF LIBERTY LOBBY, INC.?

 9       A    SINCE 1955.

10       Q    SIR, IS LIBERTY LOBBY INDEBTED TO VIBET?

11       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.  RELEVANCY.

12       THE COURT:  OVERRULED.

13       THE WITNESS:  NOT TO MY KNOWLEDGE.

14

15  BY MR. BEUGELMANS:

16       Q    SIR, WOULD YOU PLEASE TURN TO EXHIBIT 84 IN FRONT

17  OF YOU, SIR.

18       MR. WAIER:  I DON'T HAVE A EXHIBIT 84 IN MY BOOK.

19       THE WITNESS:  THERE’s NOTHING IN THERE.  IT’s BLANK.

20  THIS IS BLANK.  NO EXHIBIT HERE.

21       THE COURT:  DO YOU WANT TO USE MY BOOK?

22       MR. BEUGELMANS:  YOUR HONOR, LET ME USE MY BOOK SO YOU

23  CAN FOLLOW ALONG.  MAY I APPROACH?

24       THE COURT:  YES.

25

26  BY MR. BEUGELMANS:

27       Q    SIR, THE PAGES OF EXHIBIT 84 HAVE BEEN NUMBERED.

28  AND PAGE NUMBER 1 IS A DOCUMENT ENTITLED “PROMISSORY NOTE."
			
			

page358



 1  HAVE YOU EVER SEEN THIS DOCUMENT BEFORE, SIR?

 2       A    YES.  I SIGNED IT.

 3       Q    AND DOES THAT NOTE EVIDENCE A LOAN IN THE SUM OF

 4  $200,000 FROM VIBET CORPORATION TO LIBERTY LOBBY, INC.?

 5       A    YES.

 6       MR. WAIER:  OBJECTION.  DOCUMENT SPEAKS FOR ITSELF.

 7       THE COURT:  OVERRULED.

 8       THE WITNESS:  YES.

 9

10  BY MR. BEUGELMANS:

11       Q    HAS THAT LOAN BEEN REPAID, SIR?

12       A    NO.

13       Q    PAGE 2 IS A DRAFT AMOUNT OF $200,000 PAYABLE TO

14  LIBERTY LOBBY, INC.  DO YOU SEE THAT, SIR?

15       A    YES.

16       Q    DID LIBERTY LOBBY, INC., RECEIVE THE $200,000

17  REFLECTED IN EXHIBIT 2?

18       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.

19       THE COURT:  OVERRULED.

20       MR. WAIER:  HEARSAY.

21       THE WITNESS:  APPARENTLY, THIS IS — IS THE VOUCHER,

22  WHICH THIS NOTE OF DECEMBER 10, 1991 REFLECTS.

23

24  BY MR. BEUGELMANS:

25       Q    THANK YOU, SIR.  HAVE YOU EVER SEEN EXHIBIT 3

26  BEFORE, SIR?

27       A    THAT’s MY SIGNATURE.

28       Q    AND DID LIBERTY LOBBY, INC., IN FACT BORROW
			
			

page359



 1  $200,000 FROM LIBERTY LOBBY, INC., ON THE DATE THAT THE NOTE

 2  WAS MADE, JANUARY 3, 1992?

 3       A    YES.

 4       Q    HAS THAT NOTE BEEN REPAID, SIR?

 5       A    NO.

 6       THE COURT:  EXCUSE ME.  YOU SAID EXHIBIT 3.  YOU MEANT

 7  PAGE 3.

 8

 9  BY MR. BEUGELMANS:

10       Q    TURNING, SIR, TO PAGE 5, HAVE YOU EVER SEEN PAGE 5

11  BEFORE?

12       A    YES.  THAT’s MY SIGNATURE.

13       Q    AND ON OR ABOUT FEBRUARY 3, 1992, DID LIBERTY

14  LOBBY, INC., BORROW $200,000 FROM VIBET CORPORATION?

15       A    YES.

16       Q    HAS THAT NOTE BEEN REPAID, SIR?

17       A    NO.

18       Q    TAKE A LOOK AT PAGE 7.  HAVE YOU SEEN THAT

19  DOCUMENT BEFORE, SIR?

20       A    YES.

21       Q    IS THAT YOUR SIGNATURE?

22       A    YES.

23       Q    ON OR ABOUT MARCH 3, 1992, DID VIBET

24  CORPORATION — STRIKE THAT.

25            DID LIBERTY LOBBY, INC., BORROW $200,000 FROM

26  VIBET CORPORATION?

27       A    APPARENTLY.

28       Q    HAS THAT NOTE BEEN REPAID, SIR?
			
			

page360



 1       A    I DON'T THINK SO.

 2       Q    SIR, LOOKING AT PAGE 14, HAVE YOU SEEN PAGE 14

 3  BEFORE?

 4       A    YES.

 5       Q    IS THAT YOUR SIGNATURE, SIR?

 6       A    YES.

 7       MR. WAIER:  WHAT PAGE?

 8       MR. BEUGELMANS: PAGE 14.

 9

10  BY MR. BEUGELMANS:

11       Q    DID LIBERTY LOBBY, INC., BORROW $200,000 FROM

12  VIBET CORPORATION ON OR ABOUT APRIL 1, 1992?

13       A    APPARENTLY.

14       Q    HAS THAT DEBT BEEN REPAID?

15       A    NO.

16       Q    SIR, PAGES 8, 9, 10, 11, 12, AND 13 REFLECT

17  TRANSFERS OF MONEY FROM BANQUE CONTRADE LAUSANNE, TO LIBERTY

18  LOBBY, INC., ON VARIOUS DATES; IS THAT CORRECT?

19       MR. WAIER:  OBJECTION.

20       THE WITNESS:  ASSUMING THESE ARE COPIES, YES INDEED.

21       MR. BEUGELMANS:  YOUR HONOR, I WOULD LIKE TO MAKE AN

22  OFFER OF PROOF.  I DON'T KNOW IF THE COURT WANTS ME TO PULL

23  OUT THE VERIFICATIONS FROM MR. CARTO TO THE DOCUMENT.  THIS

24  IS A DISCOVERY RESPONSE FROM LIBERTY LOBBY, INC., WE'RE

25  LOOKING AT.  DOES THE COURT WANT ME TO INTRODUCE THE SIGNED

26  VERIFICATION INTO EVIDENCE?

27       THE COURT:  WELL, I'M GOING TO WAIT UNTIL YOU ARE DONE

28  WITH THE CASE TO SEE IF THERE’s AN OBJECTION TO THE COPIES
			
			

page361



 1  COMING IN.

 2

 3  BY MR. BEUGELMANS:

 4       Q    SIR, BEGINNING AT PAGE 16 OF EXHIBIT 84, THERE'S

 5  SOME HANDWRITTEN NOTES THAT APPEAR TO BE AN ACCOUNTING OF

 6  MONIES PAID.  DO YOU SEE THAT, SIR?

 7       A    YES.

 8       Q    AND WERE THOSE PREPARED BY MR. HUTZEL, THE

 9  ACCOUNTANT FOR LIBERTY LOBBY?

10       A    THAT APPEARS TO BE HIS WRITING.

11       Q    THROUGH PAGES 16 THROUGH 19 CONSTITUTE AN

12  ACCOUNTING OF THE SUMS THAT WERE PAID TO PURSUE THE FARREL

13  LITIGATION ABROAD?

14       A    A GOOD PART OF IT.

15       Q    AS WELL AS MONIES PAID IN NORTH CAROLINA, CORRECT?

16       A    EXHIBIT 84, PAGE 16.  YES.  WELL, NO.  THIS IS

17  RIDICULOUS.  IT COSTS MORE THAN $138.  MULLINAX AND

18  ALEXANDER PERFORMED MORE THAN $138, SO THIS ISN'T — THIS

19  IS NOT COMPLETE.

20       Q    SIR, DO YOU RECALL A REQUEST BEING MADE TO YOU TO

21  PRODUCE AN ACCOUNTING OF THE MONIES SPENT BY WILLIS CARTO TO

22  PURSUE THE FARREL LITIGATION?

23       MR. WAIER:  OBJECTION.  RELEVANCY, VAGUE AND AMBIGUOUS

24  TO TIME.

25       THE COURT:  OVERRULED.

26       THE WITNESS:  THE REQUEST WAS TO ME PERSONALLY?

27

28
			
			

page362



 1  BY MR. BEUGELMANS:

 2       Q    YES.

 3       A    YES.

 4       Q    AND DO YOU RECALL A REQUEST BEING MADE TO LIBERTY

 5  LOBBY, INCORPORATED, TO PRODUCE ACCOUNTING OF MONEY SPENT IN

 6  PURSUIT OF THE FARREL BEQUEST?

 7       A    YES.

 8       Q    ARE THE DOCUMENTS PAGE 17 THROUGH — PAGES 16

 9  THROUGH 19 OF EXHIBIT 4 THE DOCUMENTS WHICH YOU PRODUCED IN

10  RESPONSE TO THOSE REQUESTS?

11       A    WELL, I PRESUME.

12       Q    THANK YOU, SIR.

13            I WOULD LIKE YOU TO TAKE A LOOK AT EXHIBIT 48.

14  HAVE YOU EVER SEEN EXHIBIT 48 BEFORE, SIR?

15       A    NO.

16       Q    HAVE YOU EVER SEEN EXHIBIT 49 BEFORE, SIR?

17       A    NO.

18       Q    DO YOU KNOW IF --

19       MR. WAIER:  WHAT EXHIBIT, EXHIBIT 48 AND 49?

20       MR. BEUGELMANS:  I'M SORRY.  I APOLOGIZE.  PAGE 48 AND

21  49 OF EXHIBIT 84.  I APOLOGIZE.

22

23  BY MR. BEUGELMANS:

24       Q    SIR, DO YOU KNOW IF ON OR ABOUT THE DATE THAT

25  PAGE 48 WAS PREPARED, WHETHER OR NOT THE SUM OF $200,000 WAS

26  TRANSFERRED FROM THE VIBET, INC., ACCOUNT AT BANQUE CONTRADE

27  LAUSANNE TO AN ACCOUNT MAINTAINED BY FOUNDATION TO DEFEND

28  THE FIRST AMENDMENT?
			
			

page363



 1       A    WELL, YOU WILL HAVE TO — I MEAN, THE DOCUMENT

 2  SPEAKS FOR ITSELF.  I HAVE NO INDEPENDENT RECOLLECTION OF

 3  THAT.

 4       Q    DO YOU HAVE ANY REASON TO BELIEVE THAT EXHIBIT 48

 5  IS NOT A TRUE AND CORRECT COPY OF AN ORIGINAL DOCUMENT?

 6       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.

 7       THE COURT:  OVERRULED.

 8       MR. WAIER:  CALLS FOR SPECULATION ALSO, YOUR HONOR.

 9

10  BY MR. BEUGELMANS:

11       Q    DO YOU HAVE ANY REASON TO BELIEVE THAT PAGE 48 IS

12  ANYTHING OTHER THAN A TRUE AND CORRECT COPY OF AN ORIGINAL

13  DOCUMENT?

14       A    NO.

15       Q    EXHIBIT 49?

16       THE COURT:  I THINK PAGE 49.

17       MR. BEUGELMANS: I'M SORRY.  I KEEP MAKING THAT

18  MISTAKE.

19

20  BY MR. BEUGELMANS:

21       Q    PAGE 49, MR. CARTO, REFLECTS A TRANSFER OF

22  $250,000 FROM THE BANQUE CONTRADE LAUSANNE ACCOUNT TO THE

23  F.D.F.A.  DO YOU SEE THAT, SIR?

24       A    YES.

25       MR. WAIER:  OBJECTION.  ASKING FOR THE WITNESS TO READ

26  FROM A DOCUMENT THAT’s NOT — AND ALSO TESTIFIED TO A

27  DOCUMENT NOT IN AS AN EXHIBIT.

28       THE COURT:  OVERRULED.
			
			

page364



 1  BY MR. BEUGELMANS:

 2       Q    DO YOU HAVE ANY REASON TO BELIEVE THAT EXHIBIT --

 3  PAGE 49 OF EXHIBIT 84 IS NOT A CORRECT COPY OF AN

 4  AUTHENTICAL ORIGINAL DOCUMENT?

 5       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.  RELEVANCY.

 6  BEST EVIDENCE.

 7       THE COURT:  OVERRULED.

 8       THE WITNESS:  NO.

 9

10  BY MR. BEUGELMANS:

11       Q    SIR, BY THE WAY, THE F.D.F.A. AT ALL RELEVANT

12  TIMES HAD ITS OFFICES IN THE SAME BUILDING AS LIBERTY LOBBY,

13  CORRECT?

14       A    YES.

15       Q    AND IT’s IN FACT A BUILDING WHICH ONE TIME WAS

16  OWNED BY LIBERTY LOBBY.  THE ONLY TENANT OF THAT BUILDING

17  HAS BEEN LIBERTY LOBBY AND F.D.F.A., CORRECT?

18       A    NO.

19       Q    AS OF 1991, WAS F.D.F.A. A TENANT OF LIBERTY

20  LOBBY, INC.?

21       A    YES.

22       Q    AS OF 1990, WAS IT A TENANT?

23       A    WELL, YOU SAY A TENANT OF LIBERTY LOBBY, INC.  IT

24  WAS A TENANT OF THE BUILDING.

25       Q    LET ME ASK THE QUESTION THIS WAY:  FROM 1983 UP TO

26  TODAY, HAS THE FOUNDATION TO DEFEND THE FIRST AMENDMENT

27  MAINTAINED ITS PRINCIPAL PLACE OF BUSINESS, SOLE PLACE OF

28  BUSINESS AT THE LIBERTY LOBBY, INC., HEADQUARTERS,
			
			

page365



 1  WASHINGTON, D.C.?

 2       A    YES.

 3       Q    AND IN FACT, AT NO TIME SINCE 1993 TO TODAY HAS

 4  THE FOUNDATION TO DEFEND THE FIRST AMENDMENT HAD ANY

 5  EMPLOYEES, CORRECT?

 6       A    WHAT’s AN EMPLOYEE?

 7       Q    DID YOU UNDERSTAND THE QUESTION WHEN I ASKED IN

 8  YOUR DEPOSITION, SIR?

 9       A    PARDON?

10       Q    DID YOU UNDERSTAND THAT QUESTION WHEN I ASKED IN

11  YOUR DEPOSITION?

12       MR. WAIER:  OBJECTION.  VAGUE AND AMBIGUOUS.  LACKS

13  FOUNDATION.  WHAT DEPOSITION?

14       THE COURT:  SUSTAINED.

15

16  BY MR. BEUGELMANS:

17       Q    DO YOU RECALL YOUR DEPOSITION BEING TAKEN ON

18  OCTOBER 17, 1995 IN THIS CASE?

19       A    YES.  I'M SIMPLY ASKING FOR THE TECHNICAL

20  DEFINITION OF “EMPLOYEE” BEFORE I ANSWER THE QUESTION.

21       Q    ON OCTOBER 17, 1995, WHETHER F.D.F.A. HAD ANY

22  EMPLOYEES.

23       A    DO I RECALL ANSWERING THAT?

24       Q    YES.

25       A    I MAY HAVE ANSWERED IT WITHOUT REALLY KNOWING WHAT

26  IS IN YOUR MIND.  IT HAS — LET’s SAY THIS F.D.F.A. HAS NO

27  PAYROLL.  IT DOESN'T HAVE ANY EMPLOYEES WHO HAVE THEIR

28  WITHHOLDING TAX TAKEN OUT AND SOCIAL SECURITY AND THAT SORT
			
			

page366



 1  OF THING.  SO IF THAT’s WHAT YOU MEAN BY EMPLOYEES, THEN IT

 2  HAS NO EMPLOYEES.

 3       Q    SIR, PLEASE LOOK AT PAGE 50 OF EXHIBIT 84.

 4       A    YES.

 5       Q    HAVE YOU EVER SEEN PAGE 50 BEFORE?

 6       A    NO.

 7       Q    DO YOU RECOGNIZE THE SIGNATURE ON PAGE 50?

 8       A    I RECOGNIZE THE NAME.

 9       Q    WHO IS THAT?

10       A    THE NAME IS BILL SWEET.

11       Q    BY THE WAY, DID YOU LOOK AT THE PRODUCTION OF

12  DOCUMENT RESPONSE BEFORE YOU SIGNED THE VERIFICATION?

13       MR. WAIER:  OBJECTION.  LACKS FOUNDATION THAT A

14  VERIFICATION WAS SIGNED BY MR. CARTO.

15       MR. BEUGELMANS:  MAY I GET THE VERIFICATION?

16       THE COURT:  PARDON?

17       MR. BEUGELMANS:  DOES THE COURT WANT ME TO GET THE

18  VERIFICATION NOW?  I CAN DIG IT UP.  THANK YOU.

19            (PAUSE)

20            YOUR HONOR, IF I CAN MAKE AN OFFER OF PROOF, I

21  HAVE IT SOMEWHERE IN THE MASSIVE FILES.  I WILL FIND IT AT A

22  BREAK AND GIVE TO THE COURT.

23       MR. WAIER:  I OBJECT.  LACKS FOUNDATION.  HE’s ASKING

24  THE WITNESS --

25       THE COURT:  HE’s GOING TO ANOTHER QUESTION, COUNSEL.  I

26  DON'T NEED TO HEAR ARGUMENT ON SOMETHING NOT IN FRONT OF

27  ME.

28
			
			

page367



 1  BY MR. BEUGELMANS:

 2       Q    MR. CARTO, DO YOU KNOW HOW MUCH F.D.F.A. RECEIVED

 3  FROM THE VIBET ACCOUNT AT BANQUE CONTRADE LAUSANNE SINCE

 4  THAT ACCOUNT WAS FIRST OPENED?

 5       MR. WAIER:  OBJECTION.  CALLS FOR HEARSAY.  LACKS

 6  FOUNDATION.

 7       THE COURT:  OVERRULED.

 8       THE WITNESS:  NO.

 9

10  BY MR. BEUGELMANS:

11       Q    SIR, DID YOU BORROW THE MONEY FROM LIBERTY LOBBY,

12  INC., THAT WAS USED TO PROSECUTE THE FARREL LITIGATION?

13       MR. WAIER:  OBJECTION.  ASKED AND ANSWERED.

14       THE COURT:  SUSTAINED.

15

16  BY MR. BEUGELMANS:

17       Q    SIR, DID YOU GIVE LIBERTY LOBBY, INC., ANY TYPE OF

18  COLLATERAL FOR THE LOANS THAT LIBERTY LOBBY ALLEGEDLY MADE

19  TO WILLIS CARTO?

20       MR. WAIER:  OBJECTION.  RELEVANCY.

21       THE COURT:  OVERRULED.

22       THE WITNESS:  NO.

23

24  BY MR. BEUGELMANS:

25       Q    AND WITH RESPECT TO THE MONEY THAT WAS ALLEGEDLY

26  BORROWED FROM F.D.F.A. BY WILLIS CARTO TO PURSUE THE FARREL

27  LITIGATION, DID YOU GIVE F.D.F.A. ANY COLLATERAL?

28       A    NO.
			
			

page368



 1       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.  RELEVANCY.

 2       THE COURT:  OVERRULED.

 3

 4  BY MR. BEUGELMANS:

 5       Q    AND IN FACT, SIR, AS OF 1985, YOU PERSONALLY OWNED

 6  NO ASSETS, CORRECT?

 7       A    AS OF 1985, I PERSONALLY OWNED NO ASSETS?

 8       Q    IS THAT CORRECT, SIR?

 9       A    WELL, I HAVE ASSETS.

10       Q    AS OF 1985, WERE YOU RECEIVING A SALARY FROM ANY

11  SOURCE?

12       A    NO.

13       Q    AS OF 1985, SIR, DID YOU OWN ANY REAL PROPERTY?

14       A    NO.

15       Q    AS OF 1985, SIR, DID YOU OWN A CAR?

16       A    NO.

17       Q    DID YOU OWN ANY STOCKS OR BONDS?

18       A    NO.

19       MR. WAIER:  OBJECTION.  RELEVANCY TO THIS LINE OF

20  QUESTIONING TO WHAT ASSETS MR. CARTO HAD.

21       THE WITNESS:  EXCUSE ME.  SO YOU DON'T — IN 1985, I

22  THINK I DID OWN SOME STOCK, YES.

23

24  BY MR. BEUGELMANS:

25       Q    DID YOU PLEDGE THAT STOCK AS COLLATERAL?

26       A    NO, I DID NOT.

27       Q    DO YOU KNOW THE APPROXIMATE VALUE OF THAT STOCK IN

28  1985?
			
			

page369



 1       A    WELL, IT WAS IN THE LOW FIVE FIGURES.

 2       Q    BETWEEN THE TIME THAT JEAN FARREL DIED IN 1985 AND

 3  SEPTEMBER — STRIKE THAT.

 4            BETWEEN THE TIME JEAN FARREL DIED IN 1985 AND THE

 5  DATE THAT THE SETTLEMENT AGREEMENT WAS ENTERED INTO

 6  CONCERNING THE FARREL ESTATE IN SWITZERLAND, DID YOU OWN ANY

 7  REAL PROPERTY?

 8       A    NO.

 9       Q    DID YOU OWN ANY STOCKS OR BONDS OTHER THAN THE

10  ONES YOU MENTIONED BEFORE THAT WERE WORTH LESS THAN $100,000?

11       A    NO.

12       Q    DID YOU OWN ANY REAL PROPERTY?

13       A    NO.

14       Q    DID YOU OWN ANY OTHER TANGIBLE ASSETS WHATSOEVER?

15       A    YES.

16       Q    WHAT OTHER ASSETS?

17       MR. WAIER:  OBJECTION.  RELEVANCY.  OFFER OF PROOF.

18       THE COURT:  OVERRULED.

19

20  BY MR. BEUGELMANS:

21       Q    BANK ACCOUNT, SIR?

22       A    YES.

23       Q    AND AT ANY TIME DURING THAT TIME FRAME, SIR, DID

24  YOU HAVE MORE THAN $25,000 IN AN ACCOUNT, AT THAT BANK

25  ACCOUNT?

26       MR. WAIER:  OBJECTION.  VIOLATES RIGHTS OF PRIVACY.

27  RELEVANCY.

28       THE COURT:  SUSTAIN THE OBJECTION.
			
			

page370



 1  BY MR. BEUGELMANS:

 2       Q    AT ANY TIME, SIR, BETWEEN THE DEATH OF JEAN FARREL

 3  AND THE TIME THAT THE FARREL LITIGATION WAS SETTLED, DID YOU

 4  OWN MORE THAN $25,000 IN CASH?

 5       MR. WAIER:  OBJECTION.  RIGHTS OF PRIVACY.  VAGUE AND

 6  AMBIGUOUS.  LACKS FOUNDATION.  RELEVANCY.

 7       THE COURT:  OVERRULED IF HE HAD CASH RATHER THAN AN

 8  ACCOUNT.

 9       THE WITNESS:  NO.  I HAD BOOKS, CLOTHES, TYPEWRITER.

10

11  BY MR. BEUGELMANS:

12       Q    IN 1985, YOU DIDN'T FILE A TAX RETURN, DID YOU?

13       MR. WAIER:  OBJECTION.  RELEVANCY.

14       THE COURT:  SUSTAINED.

15       MR. BEUGELMANS:  NOTHING FURTHER.  THANK YOU.

16       THE COURT:  DO YOU WISH TO ASK ANY QUESTIONS NOW OR

17  NOT?

18       MR. LANE:  MAY WE HAVE A BRIEF RECESS?

19       THE COURT:  OKAY.  TAKE A BRIEF RECESS.

20

21                   (PROCEEDINGS RECESSED.)

22

23       MR. WAIER:  YOUR HONOR, WE WERE GOING TO RESERVE

24  QUESTIONS OF MR. CARTO UNTIL WE PUT ON OUR CASE IN CHIEF IF

25  THAT’s NECESSARY.

26       THE COURT:  THAT’s PERFECTLY ALL RIGHT.

27            MR. CARTO, IF YOU WOULD LIKE TO STEP DOWN AND BE

28  WITH MR. LANE AND MR. WAIER, THAT’s FINE.  WE STILL HAVE AN
			
			

page371



 1  HALF HOUR.  CAN WE CALL SOMEBODY ELSE?

 2       MR. BEUGELMANS:  AT THIS POINT, WHAT PLAINTIFF WOULD

 3  PROPOSE TO DO IS READ ONE OF TWO DEPOSITIONS OF UNAVAILABLE

 4  WITNESSES.  THAT WOULD BE THE DEPOSITION OF MR. HARVEY

 5  TAYLOR AND DEPOSITION OF MR. THOMAS KERR.

 6       MR. WAIER:  YOUR HONOR, THERE’s BEEN NO FOUNDATION LAID

 7  FOR THE READING OF THESE DEPOSITIONS OR UNAVAILABILITY.

 8  UNDER THE EVIDENCE CODE, THEY MUST SHOW THEIR

 9  UNAVAILABILITY.  THEY MUST SHOW THEY ATTEMPTED TO SUBPOENA

10  THE WITNESSES AND THAT THEY HAVE BEEN UNSUCCESSFUL IN

11  SUBPOENAING THE WITNESSES.  THERE HAS TO BE A PROPER

12  FOUNDATION BEFORE THEY CAN READ NONPARTY TESTIMONY.

13       MR. BEUGELMANS:  MAY I MAKE AN OFFER OF PROOF?

14       THE COURT:  THAT’s THE LAW.  YES.

15       MR. BEUGELMANS:  WITH RESPECT TO MR. THOMAS KERR, THE

16  DEPOSITION WAS TAKEN IN MR. WAIER’s OFFICE.  MR. KERR HAD

17  NEUROSURGERY SINCE THEN.  HE WAS SUBPOENAED.  I HAVE SPOKEN

18  TO HIM.  MR. WEBER, WHO IS PRESENT --

19       THE COURT:  WHO IS PRESENT?

20       MR. BEUGELMANS:  MR. WEBER IS PRESENT IN COURT, HAD

21  COMMUNICATIONS WITH HIM.  I HAVE MR. KERR’s TELEPHONE NUMBER

22  AND THE CLERK CAN VERIFY MR. KERR IS PRESENTLY UNWELL.  HE'S

23  UNDER SUBPOENA.  I TOLD HIM IF HE HAD TO BRING HIM HERE,

24  POSSIBLY COULD BE ARRANGED SO WE COULD DRIVE HIM.  BUT THE

25  COURT CAN VERIFY HE’s VERY, VERY ILL AT THIS TIME.  SO IT'S

26  UP TO THE COURT.

27       MR. WAIER:  WE COMMUNICATED WITH MR. KERR.

28  MR. KERR — I REPRESENTED MR. KERR IN ANOTHER ACTION IN
			
			

page372



 1  THIS MATTER.  HE’s WILLING TO TESTIFY.  HE’s BEEN

 2  SUBPOENAED.  THE UNDERSTANDING WAS WHEN THEY WERE GOING TO

 3  ATTEMPT TO CALL HIM, WE BE GIVEN PRIOR NOTICE.

 4       MR. BEUGELMANS:  I DON'T WANT TO ARGUE THE POINT.  THEN

 5  I ASK COUNSEL TO HAVE MR. KERR PRESENT TOMORROW AT 9:30 TO

 6  QUESTION HIM.  I DON'T WANT TO MAKE A SICK MAN — IN THAT

 7  CASE, MR. TAYLOR, HARVEY TAYLOR RESIDES IN SACRAMENTO.  HIS

 8  DEPOSITION WAS TAKEN IN SACRAMENTO.  IT’s — THE ORIGINAL

 9  TRANSCRIPT IS LODGED WITH THE COURT.  HE’s UNAVAILABLE 150

10  MILES FROM THE COURT.

11       THE COURT:  HE’s ONLY UNAVAILABLE IF YOU SEND HIM MONEY

12  AND HE DIDN'T WANT TO RESPOND AND ALL SORTS OF THINGS.  SO

13  IT DOESN'T SOUND LIKE TO ME YOU HAVE SHOWN HE'S

14  UNAVAILABLE.

15       MR. BEUGELMANS:  YOUR HONOR, AGAIN, I CAN CONTACT HIM

16  AND MAYBE HE'LL COME DOWN.  I DOUBT HE WILL.  WE HAD TO GO

17  TO SACRAMENTO TO TAKE THE DEPOSITION.  THEN RECESS TODAY TO

18  9 O'CLOCK TOMORROW MORNING AND PUT MR. KERR ON AND BRING

19  MR. TAYLOR DOWN.

20       THE COURT:  ALL RIGHT.  IS THERE ANY OTHER WITNESS WHO

21  IS IN THE COURTROOM WE CAN CALL?

22       MR. BEUGELMANS:  YOUR HONOR, MR. WEBER IS PRESENT, BUT

23  I WOULD LIKE TO HAVE SOME TIME TO SPEAK TO HIM.  I THOUGHT

24  THERE WOULD BE MORE EXAMINATION OF MR. CARTO TODAY.  I'M NOT

25  REALLY PREPARED TO GO FORWARD WITH MR. WEBER THIS

26  AFTERNOON.  IF THE COURT WANTS, I'LL GIVE IT A TRY.

27       THE COURT:  GIVE IT A TRY.  YOU KNOW YOUR CASE.

28       MR. BEUGELMANS:  THANK YOU.
			
			

page373



 1       THE COURT:  TIME IS OUR STOCK AND TRADE AROUND HERE.

 2

 3                       MARK EDWARD WEBER,

 4  CALLED AS A WITNESS ON BEHALF OF THE PLAINTIFF, HAVING BEEN

 5  FIRST DULY SWORN, TESTIFIED AS FOLLOWS:

 6                       DIRECT EXAMINATION

 7       THE CLERK:  PLEASE STATE YOUR FULL NAME AND SPELL YOUR

 8  LAST FOR THE RECORD.

 9       THE WITNESS:  MARK EDWARD WEBER, W-E-B-E-R.

10       MR. BEUGELMANS:  YOUR HONOR, MAY I TROUBLE THE COURT

11  FOR THE COURT’s COPY OF THE EXHIBITS.

12       THE COURT:  UH-HUH.

13

14  BY MR. BEUGELMANS:

15       Q    MR. WEBER, WHAT IS YOUR CURRENT EMPLOYMENT?

16       A    I'M CURRENTLY AN EMPLOYEE OF THE LEGION FOR THE

17  SURVIVAL OF FREEDOM, INCORPORATED.

18       Q    WHAT IS YOUR CAPACITY?

19       A    I AM THE DIRECTOR OF THE I.H.R., OF THE INSTITUTE

20  FOR HISTORICAL REVIEW, AND I AM THE EDITOR OF ITS MAIN

21  PERIODICAL, THE JOURNAL OF HISTORICAL REVIEW.

22       Q    ARE YOU CURRENTLY A MEMBER OF THE BOARD OF

23  DIRECTORS OF THE PLAINTIFF?

24       A    YES, I AM.

25       Q    WHEN WERE YOU FIRST A DIRECTOR, TO YOUR KNOWLEDGE?

26       A    I BECAME A DIRECTOR IN 1995, I THINK.  THE BOARD

27  NAMED ME AS THE DIRECTOR TO FILL THE VACANCY LEFT BY THE

28  RESIGNATION OF TOM MARCELLUS.
			
			

page374



 1       Q    HOW WOULD YOU — STRIKE THAT.

 2            WERE YOU PRESENT AT A MEETING WHERE YOU WERE

 3  ELECTED TO BE A DIRECTOR?

 4       A    YES, I WAS.

 5       Q    AND HOW LONG WERE YOU A DIRECTOR AFTER 1985 UNTIL

 6  YOU CEASED BEING A DIRECTOR?

 7       A    OH, WELL, IN ADDITION TO THAT, THERE’s EVIDENCE

 8  THAT I WAS SUPPOSEDLY A MEMBER OF THE BOARD OF DIRECTORS.

 9       MR. WAIER:  OBJECT.  AND MOVE TO STRIKE AS BEING

10  NONRESPONSIVE.

11       THE COURT:  SUSTAIN THE OBJECTION.

12

13  BY MR. BEUGELMANS:

14       Q    SIR, HAVE YOU BEEN ADVISED — STRIKE THAT, BY

15  WILLIS CARTO YOU WERE DIRECTOR OF THE LEGION IN THE MID

16  1980'S?

17       A    YES, I WAS.

18       Q    AND WHEN DID MR. CARTO SO ADVISE YOU?

19       A    IN 1986, I BELIEVE WILLIS CARTO PHONED ME AND

20  ASKED ME IF I WOULD BE WILLING TO SERVE AS A MEMBER OF THE

21  BOARD OF DIRECTORS.

22       Q    AND DID YOU AGREE AT THAT TIME?

23       A    I TOLD HIM THAT I TENTATIVELY AGREED AND I WISHED

24  HE WOULD CALL ME THE NEXT DAY AFTER I HAD SOME TIME TO THINK

25  ABOUT IT.  HE DID THAT.  AND THE NEXT DAY, I SAID I AGREED.

26       Q    WHY DID YOU ASK FOR TIME TO THINK ABOUT IT?

27       A    I WAS CONCERNED ABOUT ANY POSSIBLE LEGAL

28  COMPLICATIONS THAT MIGHT ARISE FROM THAT, WHAT MY
			
			

page375



 1  RESPONSIBILITIES MIGHT BE.

 2       Q    DID YOU HAVE OCCASION TO CONSULT WITH AN ATTORNEY

 3  BETWEEN THE FIRST AND SECOND TELEPHONE CALLS?

 4       A    YES, I DID.

 5       Q    THE FOLLOWING DAY, YOU ACCEPTED MR. Carto’s

 6  PROPOSITION?

 7       A    I ACCEPTED HIS PROPOSITION, YES.

 8       Q    WERE YOU PRESENT AT A MEETING OF THE BOARD IN 1985

 9  OR '86 WHERE YOU WERE ELECTED TO THE BOARD OF DIRECTORS?

10       A    NO.

11       Q    DID MR. CARTO INFORM YOU SOMETIME IN 1985 OR 1986

12  THAT YOU HAD, IN FACT, BEEN ELECTED A DIRECTOR?

13       A    NO, I WAS NOT SO INFORMED.

14       Q    DID YOU HEAR ANYTHING FURTHER FROM MR. CARTO IN

15  1985 TO 1986 TO THE EFFECT YOU HAD BECOME A MEMBER?

16       A    NO, I WAS NOT SO INFORMED.

17       Q    AND AT THAT TIME, MID 1980'S, WAS IT YOUR

18  UNDERSTANDING THAT YOU WERE, IN FACT, A DIRECTOR OF THE

19  LEGION?

20       A    WILLIS CARTO ASKED ME IF I WOULD BE WILLING TO

21  SERVE.

22       MR. WAIER:  OBJECTION.  MOVE TO STRIKE AS BEING

23  NONRESPONSIVE.  CALLS FOR “YES” OR “NO” ANSWER.

24       THE COURT:  OVERRULED.

25       THE WITNESS:  WILLIS CARTO ASKED ME IF I WOULD BE

26  WILLING TO SERVE AS A MEMBER OF THE BOARD OF DIRECTORS.  I

27  SAID I WOULD.  THAT’s THE LAST I HEARD FROM WILLIS CARTO OR

28  ANYONE ELSE ABOUT THAT APPOINTMENT OR ABOUT THAT
			
			

page376



 1  RELATIONSHIP UNTIL I WAS, MYSELF, NAMED A DIRECTOR IN 1995.

 2

 3  BY MR. BEUGELMANS:

 4       Q    SUBSEQUENT TO THE FURRS RESIGNING AS DIRECTORS IN

 5  1993, DID YOU LEARN THAT ON PAPER YOU HAD, IN FACT, BEEN

 6  DESIGNATED AS A DIRECTOR OF THE LEGION IN MID 1980?

 7       MR. WAIER:  OBJECTION.  LEADING.  ASSUMES FACTS NOT IN

 8  EVIDENCE.

 9       THE COURT:  OVERRULED.

10       THE WITNESS:  AFTER 1993, AFTER SEPTEMBER 1993, I SAW

11  WHAT PURPORTED TO BE MINUTES OF A BOARD MEETING IN 1986,

12  MARCH, AT WHICH I WAS SUPPOSEDLY ELECTED AS A MEMBER OF THE

13  BOARD OF DIRECTORS.  AND I ALSO SAW WHAT PURPORTS TO BE

14  MINUTES OF A BOARD MEETING IN MARCH 1987 IN WHICH I'M

15  REFERRED TO AS A MEMBER OF THE BOARD BUT SUPPOSEDLY ABSENT

16  AT THE BOARD MEETING.

17

18  BY MR. BEUGELMANS:

19       Q    IN EITHER 1986 OR 1987, DID YOU EVER ATTEND A

20  MEETING OF THE BOARD OF DIRECTORS OF THE LEGION FOR THE

21  SURVIVAL OF FREEDOM, INC., EITHER IN PERSON, TELEPHONICALLY,

22  OR OTHERWISE?

23       A    NOT ONLY DID I NOT ATTEND ANY SUCH MEETING, I WAS

24  NOT INFORMED OF ANY MEETING OF THE BOARD OF DIRECTORS.

25       MR. WAIER:  OBJECTION.  MOVE TO STRIKE THAT PORTION

26  ABOUT INFORMED.  NONRESPONSIVE.

27       THE COURT:  OVERRULED.

28
			
			

page377



 1  BY MR. BEUGELMANS:

 2       Q    SIR, PRIOR TO THE FURRS RESIGNING AS DIRECTORS IN

 3  SEPTEMBER 1993, WHAT POSITIONS DID YOU HOLD WITH THE LEGION?

 4       A    I BEGAN WORKING FULL TIME FOR THE LEGION IN

 5  JANUARY 1991.  AND I WAS AN EDITOR AT THAT TIME, ASSOCIATE

 6  EDITOR OF THE JOURNAL OF HISTORICAL REVIEW.  I BELIEVE IN

 7  APRIL 1992, I BECAME THE EDITOR, MAIN EDITOR OF THE JOURNAL

 8  OF HISTORICAL REVIEW.  THAT WAS MY MAIN POSITION AS OF

 9  SEPTEMBER 1993 AS WELL.

10       Q    WHAT WERE YOUR JOB RESPONSIBILITIES AS EDITOR?

11       A    WELL, I WAS RESPONSIBLE FOR DECIDING WHAT WENT

12  INTO THE JOURNAL OF HISTORICAL REVIEW; OF COURSE,

13  MAINTAINING A RELATIONSHIP WITH THE VARIOUS CONTRIBUTORS OF

14  THE JOURNAL; ANSWERING CORRESPONDENCE.  IN ADDITION, I ALSO

15  ANSWERED QUESTIONS OF JOURNALISTS.  I CONDUCTED INTERVIEWS

16  ON BEHALF OF I.H.R. AND SIMILAR THINGS.

17       Q    WHAT IS YOUR EDUCATIONAL BACKGROUND, SIR?

18       A    I HOLD A BACHELOR’s DEGREE IN HISTORY WITH HIGH

19  HONORS FROM PORTLAND STATE UNIVERSITY IN PORTLAND, OREGON,

20  AND A MASTER’s DEGREE IN HISTORY FROM INDIANA UNIVERSITY,

21  BLOOMINGTON, INDIANA.

22       Q    PRIOR TO SEPTEMBER 1993, HAD YOU EVER KNOWINGLY

23  BEEN A MEMBER OF THE BOARD OF DIRECTORS OF ANY INSTITUTION?

24       A    NO.

25       Q    DO YOU HAVE ANY FORMAL LEGAL TRAINING, SIR?

26       A    NO FORMAL LEGAL TRAINING.

27       Q    PRIOR TO SEPTEMBER 1993, DID YOU HAVE ANY

28  INVOLVEMENT IN MAINTAINING THE BANK ACCOUNTS OF THE LEGION?
			
			

page378



 1       A    PRIOR TO 19 — SEPTEMBER 1993, NO.

 2       Q    PRIOR TO SEPTEMBER 1993, DID YOU HAVE ANY

 3  INVOLVEMENT WHATSOEVER IN TERMS OF THE LITIGATION INVOLVING

 4  THE ESTATE OF JEAN FARREL?

 5       A    I THINK IT WAS IN 1992 I ASKED FIRST TOM MARCELLUS

 6  ABOUT THE JEAN FARREL ESTATE.  I HAD READ SOMETHING ABOUT IT

 7  IN A NEWSPAPER THERE WAS ALREADY SOME PUBLIC NOTICE ABOUT.

 8       MR. WAIER:  OBJECTION.  MOVE TO STRIKE AS

 9  NONRESPONSIVE.  ALSO NARRATIVE.

10       THE COURT:  I THINK IT’s NONRESPONSIVE.  I THINK YOU

11  CAN GO BIT BY BIT SO COUNSEL CAN OBJECT IF HE WISHES TO.

12

13  BY MR. BEUGELMANS:

14       Q    MR. WEBER, WHEN DID YOU FIRST BECOME AWARE THERE

15  WAS SUCH A THING AS THE FARREL BEQUEST OR THE FARREL LEGACY,

16  IF YOU WILL?

17       A    I BELIEVE IN 1992, PROBABLY THE SPRING OR SUMMER

18  1992.

19       Q    HOW DID YOU BECOME AWARE OF THAT FACT, SIR?

20       A    AS I RECALL, I SAW SOMETHING IN A NEWSPAPER

21  ARTICLE ABOUT IT.

22       MR. WAIER:  OBJECTION.  CALLS FOR HEARSAY.

23       THE COURT:  OVERRULED.  IT’s NOT WHETHER THIS ARTICLE

24  IS TRUE OR NOT.  IT’s WHY SOMETHING IS IN HIS MIND.

25  BESIDES, HE’s NOT TELLING US WHAT IS IN THE ARTICLE.

26

27  BY MR. BEUGELMANS:

28       Q    AFTER LEARNING THAT THERE WAS A FARREL BEQUEST
			
			

page379



 1  WHAT, IF ANYTHING, DID YOU DO, SIR?

 2       A    WELL, I HAD CONCERN NOT JUST ABOUT THAT, BUT ALSO

 3  BECAUSE I RECEIVED INQUIRIES FROM PEOPLE ABOUT THE FARREL

 4  BEQUEST.

 5       MR. WAIER:  OBJECTION.  MOVE TO STRIKE.

 6  NONRESPONSIVE.

 7       THE COURT:  SUSTAIN THE OBJECTION.

 8

 9  BY MR. BEUGELMANS:

10       Q    LET ME WITHDRAW THE QUESTION, MR. WEBER.  PLEASE

11  JUST RESPOND TO THE QUESTION.  WE'LL GET TO EVERYTHING.

12            IN YOUR CAPACITY AS AN EDITOR FOR THE I.H.R., DID

13  YOU HAVE OCCASION TO RESPOND TO MEMBERS OF THE PUBLIC OR THE

14  PRESS CONCERNING THE AFFAIRS OF THE LEGION?

15       A    YES.

16       Q    AND SOMETIME BEGINNING 1992, DID YOU RECEIVE

17  INQUIRIES FROM THE MEDIA CONCERNING THE SO-CALLED FARREL

18  LEGACY?

19       A    EITHER MEDIA OR FROM SUPPORTERS OF THE I.H.R. WHO

20  ASKED ME ABOUT THIS.

21       Q    WHEN YOU FIRST BEGAN RECEIVING SUCH INQUIRIES,

22  WHAT KNOWLEDGE, IF ANY, DID YOU HAVE CONCERNING THE FARREL

23  BEQUEST OTHER THAN WHAT YOU READ IN THE NEWSPAPER?

24       A    I — PERHAPS NONE.  PERHAPS I HAD HAD A

25  SUPERFICIAL CONVERSATION WITH ANOTHER MEMBER OF THE STAFF

26  ABOUT IT.  BUT ESSENTIALLY, I KNEW NOTHING ABOUT IT AT THAT

27  TIME.

28       Q    PRIOR TO SEPTEMBER 1993, DID YOU HAVE ANY
			
			

page380



 1  DISCUSSIONS WITH WILLIS CARTO CONCERNING THE FARREL BEQUEST?

 2       A    YES.

 3       Q    DO YOU RECALL WHEN THE FIRST DISCUSSION WAS, SIR?

 4       A    PROBABLY IN SPRING OR SUMMER OF 1992.

 5       Q    DO YOU RECALL IF ANYBODY WAS PRESENT DURING THE

 6  FIRST DISCUSSION WITH MR. CARTO CONCERNING THE FARREL

 7  BEQUEST?

 8       A    YES.

 9       Q    WHO WAS PRESENT?

10       A    TOM MARCELLUS.

11       Q    ANYBODY ELSE?

12       A    NO.

13       Q    DO YOU RECALL WHAT MR. CARTO SAID, IF ANYTHING,

14  CONCERNING THE FARREL BEQUEST AT THAT MEETING IN 1992?

15       A    YES.

16       Q    WHAT DID HE SAY?

17       A    AT FIRST, HE REFUSED TO ANSWER ANY QUESTIONS ABOUT

18  THE FARREL ESTATE.  WHEN I POINTED OUT OR MENTIONED WHAT I

19  FELT WAS THE ABSURDITY OF KNOWING LESS ABOUT THE MATTER THAN

20  WHAT JOURNALISTS KNEW ABOUT IT, HE RELENTED A BIT AND HE

21  GAVE ONLY A VAGUE ANSWER ABOUT THE BEQUEST.  HE WOULDN'T SAY

22  ANYTHING ABOUT THE AMOUNTS, AND ALL HE SAID WAS THAT WELL,

23  THERE’s MONEY COMING, BUT IT’s SORT OF TIED UP.

24       Q    AFTER THAT, DID YOU HAVE ANY FURTHER DISCUSSIONS

25  WITH MR. CARTO CONCERNING THE FARREL BEQUEST?

26       A    NOT THAT I RECALL.

27       Q    PRIOR TO SEPTEMBER 1993, DID YOU HAVE ANY

28  CONVERSATIONS WITH EITHER LEWIS FURR OR LAVONNE FURR?
			
			

page381



 1       A    YES.

 2       Q    DID YOU DISCUSS WITH THEM THE FARREL BEQUEST?

 3       A    NOT SPECIFICALLY.

 4       Q    DID YOU EVER MENTION THE FARREL BEQUEST TO

 5  LEWIS FURR PRIOR TO SEPTEMBER 1993?

 6       A    I HAD ONE TELEPHONE CONVERSATION WITH LEWIS FURR.

 7  I THINK IT WAS IN EARLY SEPTEMBER 1993.  WE SPOKE ABOUT

 8  LEGION MATTERS, AND IT BECAME A KIND OF EMOTIONAL

 9  CONVERSATION.  WE MIGHT HAVE TALKED ABOUT THE FARREL

10  BEQUEST, BUT IT WAS A MORE GENERAL CONVERSATION ABOUT ISSUES

11  OF RESPONSIBILITY AND DIRECTION OF THE CORPORATION.

12       Q    DURING THE CONVERSATION YOU HAD WITH MR. LEWIS

13  FURR IN SEPTEMBER OF 1993, DID MR. FURR INDICATE TO YOU

14  WHETHER OR NOT THE FARREL LITIGATION WAS SETTLED?

15       MR. WAIER:  OBJECTION.  LEADING.

16       THE COURT:  OVERRULED ON THAT GROUND.

17       THE WITNESS:  NO, HE DID NOT.

18

19  BY MR. BEUGELMANS:

20       Q    PRIOR TO SEPTEMBER 1993, DID YOU HAVE ANY

21  DISCUSSIONS WITH LAVONNE FURR CONCERNING THE FARREL ESTATE?

22       A    NO.

23       Q    PRIOR TO SEPTEMBER 1993, DID YOU HAVE ANY

24  KNOWLEDGE FROM ANY SOURCE WHATSOEVER THAT THE LITIGATION

25  INVOLVING THE LEGION AND JOAN ALTHAUS CONCERNING THE FARREL

26  BEQUEST HAD BEEN SETTLED?

27       MR. WAIER:  OBJECTION.  RELEVANCY.  CALLS FOR HEARSAY.

28  LACKS FOUNDATION.
			
			

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 1       THE COURT:  OVERRULED.

 2       THE WITNESS:  PRIOR TO SEPTEMBER 1993?

 3

 4  BY MR. BEUGELMANS:

 5       Q    YES, SIR.

 6       A    NO.

 7       Q    SIR, DID THERE COME A TIME WHEN YOU PERSONALLY

 8  FORMED AN OPINION THAT WILLIS CARTO WAS PERHAPS EXERCISING

 9  AN AUTHORITY OVER THE LEGION WHICH HE DID NOT LEGALLY HAVE?

10       MR. WAIER:  OBJECTION.  RELEVANCY.  LACKS FOUNDATION.

11       THE COURT:  OVERRULED.

12       MR. WAIER:  YOUR HONOR, MAY I BE HEARD ON THAT?

13       THE COURT:  NO.

14       THE WITNESS:  YES, I DID.

15

16  BY MR. BEUGELMANS:

17       Q    WHEN WAS THAT SIR?

18       A    THAT WAS ON APRIL 6, 1993.

19       Q    WHAT WERE THE CIRCUMSTANCES OF YOU FORMING THAT

20  OPINION IN YOUR MIND?

21       A    THERE WAS A VERY DRAMATIC EMOTIONAL MEETING THAT

22  TOOK PLACE ON THAT DAY AT WHICH I WAS PRESENT, WILLIS CARTO

23  WAS PRESENT, TOM MARCELLUS AND TED O’Keefe AND GREG RAVEN.

24  AT THAT MEETING, CARTO INSISTED THAT ALL DISCUSSION OR

25  DEALINGS WITH THE HOLOCAUST ISSUE WERE TO EVENTUALLY BE

26  REMOVED ENTIRELY FROM THE JOURNAL BY THE END OF THE YEAR.

27  AT THAT MEETING, CARTO WAS ASKED FOR THE BASIS OF — FOR

28  HIS AUTHORITY TO MAKE THAT DEMAND.
			
			

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 1            WILLIS CARTO EMOTIONALLY SAID I'M AN AGENT OF THE

 2  BOARD OF DIRECTORS.  HE WAS THEN ASKED WHO WERE THE MEMBERS

 3  OF THE BOARD OF DIRECTORS, AND CARTO ANGRILY SAID YOU DON'T

 4  NEED TO KNOW THAT.  AND HE REFUSED TO PROVIDE ANY FURTHER

 5  INFORMATION ABOUT THE MEMBERSHIP OF THE BOARD OF DIRECTORS.

 6  AND I FELT — AND SUBSEQUENTLY, WE DISCUSSED IT WITH

 7  OTHERS.  I FELT VERY STRONGLY THIS WAS ENTIRELY IMPROPER AND

 8  WRONG AND ILLICIT.

 9       MR. WAIER:  OBJECTION.  MOVE TO STRIKE THE LAST PORTION

10  AS TO WHAT THEY FELT AND THOUGHT AS NONRESPONSIVE AND

11  IMPROPER OPINION TESTIMONY.

12       THE COURT:  OVERRULED.  IT’s GOES TO WHY HE WOULD

13  REMEMBER THIS PARTICULAR DATE.  IT’s NOT FOR THE TRUTH OF

14  THE MATTER.  AND HIS OPINION DOESN'T MATTER, ONLY MATTERS

15  THAT HE HAD AN OPINION THAT WAS STRONGLY HELD AND THAT’s WHY

16  HE MIGHT REMEMBER SOMETHING.

17

18  BY MR. BEUGELMANS:

19       Q    AS OF THE DATE OF THAT MEETING, APRIL 1993, WERE

20  YOU AWARE OF THE IDENTITY OF THE DIRECTORS OF THE LEGION?

21       A    NO, I WAS NOT.

22       Q    DID YOU UNDERSTAND THAT THE LEGION WAS A NONPROFIT

23  CORPORATION AT THAT TIME?

24       A    YES, I UNDERSTAND THAT.

25       Q    PRIOR TO SEPTEMBER 1993, HAD YOU EVER SEEN ANY

26  BYLAWS OF THE LEGION?

27       MR. WAIER:  OBJECTION.  LACKS FOUNDATION.  RELEVANCY.

28       THE COURT:  OVERRULED.
			
			

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 1       THE WITNESS:  I THINK SO.  I SAW BYLAWS OF THE LEGION,

 2  THE 1966 BYLAWS, PROBABLY SOMETIME IN THE SUMMER OR SPRING

 3  OF 1993.  BUT I CAN'T SAY FOR SURE.

 4

 5  BY MR. BEUGELMANS:

 6       Q    AND AM I CORRECT, SIR, THAT THE 1966 BYLAWS YOU

 7  ARE REFERRING TO ARE EXHIBIT 3 IN THE BOOK IN FRONT OF YOU?

 8       MR. WAIER:  OBJECTION.  LEADING.

 9       THE COURT:  OVERRULED.

10       THE WITNESS:  THAT’s CORRECT.

11

12  BY MR. BEUGELMANS:

13       Q    PRIOR TO THE LITIGATION BEING INITIATED IN THIS

14  LAWSUIT, HAD YOU EVER SEEN ANY OTHER BYLAWS, ALLEGED BYLAWS

15  OF THE LEGION?

16       A    I SAW — AT SOME POINT, I SAW, I THINK, THE

17  BYLAWS THAT PRECEDED THESE.  BUT I DON'T REMEMBER WHEN I

18  FIRST SAW THEM.

19       Q    PRIOR TO SEPTEMBER 1993, DID YOU EVER INQUIRE FROM

20  LAVONNE FURR AS TO THE NATURE OF WILLIS Carto’s AUTHORITY

21  OVER THE LEGION?

22       A    YES.

23       Q    WHEN WAS THAT, SIR?

24       A    I, ALONG WITH TOM MARCELLUS, WHO WAS — AND

25  OTHERS, SENT A LETTER TO LAVONNE AND LEWIS FURR ASKING OR

26  STATING OUR BELIEF THAT THERE WAS A PROBLEM ABOUT AUTHORITY

27  AND RESPONSIBILITY WITH THE CORPORATION.

28       Q    WHEN WAS THAT, SIR?
			
			

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 1       A    THERE WERE SEVERAL LETTERS.  AND AS I RECALL, THEY

 2  WERE ON OR ABOUT — IN AUGUST 1993.

 3       THE COURT:  EXCUSE ME A MINUTE.  I HAVE A CALL FROM

 4  ANOTHER JUDGE WHO SAYS IT’s AN EMERGENCY.  SHE’s ON THE CAR

 5  PHONE.  (PAUSE)  SEE YOU TOMORROW AT 9:30.

 6

 7                   (PROCEEDINGS RECESSED.)

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