Willis Carto archive

Including information about his associates

Transcript of Legion v. Carto hearing of May 19, 1998


	page 1



 1        IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA

 2                IN AND FOR THE COUNTY OF SAN DIEGO

 3  DEPARTMENT D                    HON. RUNSTON G. MAINO

 4
    _____________________________
 5                               )
    LEGION FOR THE SURVIVAL OF   )
 6  FREEDOM, INC. A TEXAS        )
    CORPORATION,                 )
 7                               )
                PLAINTIFF,       )           NO. N64584
 8                               )
             VS.                 )
 9                               )
    WILLIS CARTO, ET AL.,        )
10                               )
                DEFENDANTS.      )
11  _____________________________)

12
                         REPORTER’s TRANSCRIPT
13

14                          MAY 19, 1998

15  APPEARANCES:

16      FOR THE PLAINTIFF:       SAMPSON and ASSOCIATES
                                 BY:  BRYAN D. SAMPSON AND
17                               ELIZABETH E. ARONSON
                                 2139 FIRST AVENUE
18                               SAN DIEGO, CA 92101

19

20      FOR THE DEFENDANTS:      J. BRIAN URTNOWSKI and ASSOCIATES
        WILLIS CARTO, ELISABETH  BY:  J. BRIAN URTNOWSKI
21      CARTO, LAVONNE FURR,     4695 MACARTHUR COURT
        LEWIS FURR, AND HENRY    NEWPORT BEACH, CA 92660
22      FISCHER

23

24                               JOE ALFRED IZEN, JR.
                                 5222 SPRUCE STREET
25                               BELLAIRE, TX  77401

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

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 1  VISTA, CALIFORNIA, MAY 19, 1998, DEPARTMENT D:

 2

 3       THE COURT:  BACK ON THE RECORD ON THE CASE OF THE

 4  LEGION FOR THE SURVIVAL OF FREEDOM VERSUS MR. WILLIS CARTO,

 5  ET AL.

 6            I SEE EVERYBODY IS HERE.  THERE ARE A NUMBER OF

 7  ISSUES TO BE DECIDED THIS MORNING.  I DO HAVE ALL MORNING TO

 8  DO THIS.  I DON'T HAVE THE AFTERNOON, THOUGH.  ABSENT SOME

 9  OTHER WAY OF DOING IT, HERE IS THE WAY I WOULD LIKE TO

10  ADDRESS THE THINGS.

11            FIRST, AN ORDER TO VACATE THE APPOINTMENT OF

12  RECEIVER.  SECOND, REQUIRE A BOND IN EXCESS OF THAT WHICH

13  HAS BEEN POSTED.  THIRD, PROTECTIVE ORDER FOR THE PERSONAL

14  PROPERTY OF THE DEBTORS OUTSIDE OF CALIFORNIA, AND MORE

15  SPECIFICALLY, I SUPPOSE, THE MAIL.  THEN A MOTION TO SELL

16  THE ESCONDIDO PROPERTY, FIGURING OUT WHETHER OR NOT THIS IS

17  THE RESIDENCE OF THE CARTOS.  WHAT IS THE STATUS OF THE

18  HEREFORD CORPORATION AND APPOINTMENT OF MR. GREG FRECH,

19  F-R-E-C-H.  A MOTION TO ADD THE HEREFORD CORPORATION,

20  INDEPENDENCE HOUSE, AND J.W. YOUNG AS ALTER EGOS OF

21  MR. CARTO.  MOTION TO STRIKE PORTIONS OF THE PLAINTIFF'S

22  AFFIDAVIT.  AND FINALLY, THIS ISSUE OF CONTEMPT, AND WHAT I

23  AM GOING TO DO ABOUT THAT.  ABSENT SOMEONE TELLING ME THAT

24  THERE SHOULD BE SOME OTHER ORDER, I THINK THAT’s AN ORDER TO

25  START WITH, MR. SAMPSON.

26       MR. SAMPSON:  I HAD A COUPLE OF THINGS TO MAKE SURE THE

27  DEBTOR’s EXAMS WERE CONTINUED OF WILLIS AND ELISABETH

28  CARTO.  THAT CAN BE DONE IN THE HALL.  YOU COVERED THE
			
			

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 1  CONTEMPT HEARINGS.  THERE WAS A MOTION FOR AN ASSIGNMENT

 2  ORDER THAT WAS CONTINUED TO TODAY.  I DID NOT GET AN

 3  OPPOSITION TO THAT.  THE ASSIGNMENT ORDER, FOR THE RECORD,

 4  WAS AGAINST VIBET AND LIBERTY LOBBY, SO THE LIBERTY LOBBY

 5  PART IS OUT.  THERE WAS A MOTION TO COMPEL FOR FURTHER

 6  DISCOVERY RESPONSES, AND THAT WAS PART OF THE FIFTH

 7  AMENDMENT ISSUE THAT WAS BEFORE THE COURT, AND THAT MIGHT BE

 8  WRAPPED UP IN ONE OF THE THINGS THE COURT ADDRESSED.

 9            AND THEN THERE’s ONE MINOR ISSUE, IF THE COURT

10  WOULD LIKE TO HEAR THIS.  MR. LENNON IS HERE WITH AN INTERIM

11  REPORT, VERY BRIEF.  WE CAN GET THAT OUT OF THE WAY FIRST.

12            I HAVE GIVEN A COPY TO OPPOSING COUNSEL.  THIS IS

13  TO LET EVERYONE KNOW WHAT HE HAS DONE TO DATE.

14       THE COURT:  I RECEIVED THAT THIS MORNING.  IT’s DATED

15  MAY 14TH, SIGNED BY MR. LENNON, WHO IS PRESENT.  MR. LENNON

16  IS ALWAYS WELCOME TO STAY.  I SUPPOSE HAVING RECEIVED THIS

17  REPORT, WE CAN MOVE ON.  HE’s --

18       MR. SAMPSON:  IF THE COURT HAS QUESTIONS, OR THE

19  DEFENDANTS' COUNSEL HAVE QUESTIONS, THEY CAN INQUIRE.

20       THE COURT:  I DON'T THINK I HAVE ANY QUESTIONS RIGHT

21  NOW.

22            DO THE — BEFORE WE GET STARTED, FIND OUT WHO WE

23  ARE REPRESENTING.  WE GO THROUGH THIS ALL THE TIME.

24  SOMETIMES I DON'T KNOW WHO YOU ARE REPRESENTING; WHO YOU

25  AREN'T.

26       MR. URTNOWSKI:  GOOD MORNING.

27       THE COURT:  WHO ARE YOU REPRESENTING TODAY?

28       MR. URTNOWSKI:  BRIAN URTNOWSKI.  TODAY I'M
			
			

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 1  REPRESENTING WILLIS CARTO, ELISABETH CARTO, LAVONNE FURR,

 2  LEWIS FURR, AND HENRY FISCHER.  LIBERTY LOBBY, AS THE COURT

 3  WAS MADE AWARE ON FRIDAY, FILED FOR A BANKRUPTCY PROTECTION

 4  IN THE DISTRICT COURT, WASHINGTON, D.C.

 5            ACCOMPANYING ME TODAY IS ATTORNEY JOE IZEN.

 6       MR. IZEN:  I'M HERE TO ASSIST IN THE MATTERS.

 7       MR. URTNOWSKI:  ALSO PRESENT ARE ELISABETH CARTO AND

 8  WILLIS CARTO.

 9       THE COURT:  YES, I RECOGNIZE THEM.  THANK YOU.

10            COUNSEL, DO YOU HAVE ANY COMMENTS OR QUESTIONS YOU

11  WANT TO ASK THE RECEIVER?

12       MR. URTNOWSKI:  NOT OF THE RECEIVER, YOUR HONOR, BUT I

13  THINK TO START, AS I STUMBLE OVER THE WORD, THIS COURT HAS

14  SAID --

15       THE COURT:  DO YOU WANT COFFEE?

16       MR. URTNOWSKI:  WATER.  THE COURT PREVIOUSLY SAID IT

17  FOUND LIBERTY LOBBY AND WILLIS CARTO TO BE ONE AND THE

18  SAME.  IF THE COURT HAS TAKEN THAT POSITION, THEN I BELIEVE

19  AT LEAST FOR THESE PROCEEDINGS ANY BANKRUPTCY FILING BY

20  LIBERTY LOBBY BEFORE THIS COURT SHOULD BE ASSUMED TO BE THE

21  BANKRUPTCY FILING OF WILLIS CARTO.  OTHERWISE, I DON'T KNOW

22  HOW WE GET PAST THIS COURT’s PREVIOUS FINDINGS, YOUR HONOR.

23       THE COURT:  INTERESTING ARGUMENT.  I'M NOT BUYING

24  THAT.  THAT’s AN AMAZING ARGUMENT.  ALL RIGHT.  I DON'T HAVE

25  TO TELL YOU WHY.  NO COURT WILL BUY THAT ONE.

26            ALL RIGHT.  LET’s TALK ABOUT THE ORDER TO VACATE

27  THE APPOINTMENT OF RECEIVER.  I READ THE POINTS AND

28  AUTHORITIES ON BOTH SIDES ON THIS.  I'M PREPARED TO DENY
			
			

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 1  THAT.

 2            ANY COMMENTS FROM DEBTORS' COUNSEL?

 3       MR. URTNOWSKI:  BRIEFLY.  THIS IS A VOID ORDER.

 4  COMPLIANCE WAS NOT FOLLOWED WITH THE APPLICATION REQUIRED --

 5  THE APPLICATION BONDS REQUIRED PRIOR TO PROCEEDING EX PARTE

 6  HERE.

 7            THE CASES ARE ALL CLEAR.  IT’s NOT A CLOSE CALL.

 8  IT’s VOID, AND ANY ORDER DIRECTING THE RECEIVER IS VOID AS

 9  WELL, YOUR HONOR.

10       THE COURT:  YEAH.  THAT’s THE SECOND ISSUE.  MIGHT AS

11  WELL DISCUSS THAT ALONG WITH THE FIRST, AND THAT IS THE BOND

12  UNDER C.C.P. 566.

13            WHAT ABOUT THAT, MR. SAMPSON?

14       MR. SAMPSON:  WE ADDRESSED THAT AT THE FIRST HEARING.

15  IT’s OUR POSITION THAT THE CASES AND THE AUTHORITY CITED BY

16  OPPOSING COUNSEL APPLY ONLY TO PREJUDGMENT.  HOWEVER, I

17  THINK EVERYONE WOULD BE WASTING AN ENORMOUS AMOUNT OF TIME

18  ON APPEAL ON THIS ISSUE.

19            WE DON'T HAVE A PROBLEM STIPULATING TO SOME MINOR

20  BOND, SO THAT WE CAN AMEND ANY POTENTIAL ERROR, BUT AGAIN,

21  WE HAVE A JUDGMENT.  AND THE DAMAGES TO THE DEFENDANT,

22  THERE’s ABSOLUTELY NO EVIDENCE HAS BEEN SHOWN TO DATE SO

23  PREJUDGMENT.  IF YOU HAVE A CLEAR CONCERN THAT THERE MAY NOT

24  BE LIABILITY POSTJUDGMENT, THERE’s ALREADY LIABILITY, AND

25  THE SOLE PURPOSE AGAIN IS TO ENFORCE THE JUDGMENT, SO I

26  DON'T REALLY SEE ANY DAMAGES ISSUE WHERE THE OPPOSING PARTY,

27  AS OPPOSED TO THE RECEIVER, SHOULD POST A BOND.

28       THE COURT:  WASN'T A BOND POSTED ANYWAY OF 2500?  YES.
			
			

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 1  MR. LENNON SAID, YES, IT WAS.

 2       MR. SAMPSON:  THERE’s TWO BOND ISSUES.  THERE’s A BOND

 3  BY THE RECEIVER AND A BOND BY THE APPLICANT, WHICH WOULD BE

 4  THE OPPOSING PARTY.  AND AGAIN, BECAUSE OF THE JUDGMENT

 5  ISSUE, WE BELIEVE THAT’s NOT REQUIRED.  AGAIN, IF THE COURT

 6  WANTS A BOND SO WE CAN FIX AN ISSUE, LET’s DO IT SO WE DON'T

 7  HAVE TO APPEAL IT; AND IF SO, THE OTHER SIDE HAS TO SHOW

 8  DAMAGES, I BELIEVE.  I WOULD RECOMMEND TO THE COURT AGAIN A

 9  $2,500 BOND, BUT AGAIN, I DON'T SEE WHY.

10       THE COURT:  I DON'T EITHER.

11       MR. URTNOWSKI:  YOUR HONOR, THE CASES ARE CLEAR.  IT'S

12  MANDATORY.  IT SAYS THE ORDER IS VOID.  IT ALSO SAYS IT

13  CANNOT BE REMEDIED BY HAVING A BOND POSTED AFTER THE

14  APPOINTMENT.  IT’s TOO LATE NOW FOR THIS COURT TO ALLOW HIM

15  TO POST A BOND TO CORRECT THE DEFICIENCY.  THIS APPLIES TO

16  THE RECEIVER THAT WAS APPOINTED.  THE RECEIVER IS VOID.  ALL

17  ORDERS FOLLOWING IT IS VOID REGARDING THE RECEIVER, AND YOU

18  CAN NOT CORRECT IT BY POSTING AN APPLICANT’s BOND

19  AFTERWARDS, YOUR HONOR.

20       THE COURT:  HAVEN'T WE BEEN THROUGH THIS BEFORE?  ISN'T

21  THIS A RECEIVER THAT’s APPOINTED BEFORE LIABILITY IS

22  DETERMINED HERE?  LIABILITY HAS BEEN DETERMINED.

23       MR. URTNOWSKI:  THAT WAS ARGUMENT, YOUR HONOR, WITHOUT

24  LAW, WITHOUT SUPPORT OF THE LAW.  THE CASES ARE VERY

25  PRECISE.  THEY SAY WHEN THE RECEIVER IS APPOINTED, THE

26  APPLICATION HAS TO BE.  THERE’s NO LAW ON POINT.  THEY CITED

27  NONE.  IT’s PURE ARGUMENT.  THE ONLY LAW BEFORE THE COURT IS

28  THAT THE APPOINTMENT OF THE THOMAS LENNON, INC. IS A VOID
			
			

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 1  APPOINTMENT, AND ALL OTHER ORDERS FOLLOWING ENFORCEMENT ARE

 2  VOID AS WELL, YOUR HONOR.  AND THERE’s NO DISTINCTION

 3  BETWEEN PREJUDGMENT AND POSTJUDGMENT IN THESE STATUTES.

 4       THE COURT:  DO YOU AGREE WITH THAT, MR. SAMPSON?

 5       MR. SAMPSON:  YOUR HONOR, I DISAGREE WITH THAT.  I

 6  GUESS THERE’s ONE OTHER ISSUE I CAN RAISE.  IT’s ONE OF

 7  THOSE — I HOPE IT’s NOT TOO MUCH OF A MIRACULOUS ARGUMENT.

 8  MR. URTNOWSKI DID FILE AN APPEAL, AND I BELIEVE THAT MAY

 9  VACATE HIS STANDING TO ARGUE THAT ISSUE.

10            I LOOKED AT THE CASES.  THEY'RE ALL PREJUDGMENT,

11  ONLY C.C.P. 708.560 DOES INCORPORATE SOME BUT NOT ALL.  PART

12  HAS TO BE SUPERCEDED, OR YOU WOULDN'T HAVE A POSTJUDGMENT

13  ISSUE.

14            THERE’s A CODE THAT SAYS THE PREJUDGMENT STATUTE

15  APPLIES FOR CERTAIN PROCEDURES, BUT THE PROCEDURES AGAIN ARE

16  VERY POSTJUDGMENT.  AND AGAIN, THE WHOLE PURPOSE IS

17  DIFFERENT POSTJUDGMENT.

18       MR. URTNOWSKI:  WITH RESPECT TO THE APPEAL, YOUR HONOR,

19  TWO ISSUES.  A VOID ORDER IS ALWAYS VOID.  AN APPEAL DOES

20  NOT STAY A VOID ORDER.  BY DEFINITION, YOU HAVE NO AUTHORITY

21  TO ISSUE THAT ORDER.  SECOND, SPECIFICALLY WITH THE

22  RECEIVER, THE CODE STATES THAT, FOR INSTANCE, IF MR. LENNON

23  COMPLETED THE DUTIES, OR YOU REVOKED HIS APPOINTMENT, MY

24  APPEAL WOULD BECOME MOOT.  HE ADDRESSED THAT IN THE

25  STATUTE.  IF TODAY YOU FIND THAT YOUR ORDER IS VOID, MY

26  APPEAL IS DISSOLVED, YOUR HONOR.

27       THE COURT:  SINCE LIABILITY HAS BEEN DETERMINED HERE,

28  WHAT IS THE PURPOSE OF THE RECEIVER POSTING A BOND OR THE
			
			

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 1  PARTIES POSTING A BOND?  WE KNOW WHAT THE PURPOSE IS BEFORE

 2  LIABILITY HAS BEEN ESTABLISHED.  THAT’s TO PROTECT YOUR

 3  CLIENT, IF THERE SHOULD BE NO LIABILITY.  BUT WHAT IS THE

 4  PURPOSE IF ONE --

 5       MR. URTNOWSKI:  THAT’s ONE PRONG OF THE PROTECTION DUE

 6  MY CLIENT.  THE OTHER IS THE FACT THAT EVEN IN A

 7  POSTJUDGMENT COLLECTION ACTIVITY THE RECEIVER OR THE

 8  APPLICANT CAN TAKE IMPROPER ACTIONS.  IT’s DESIGNED TO

 9  PREVENT ANY IMPROPER ACTION, AND THAT’s WHAT THE STATUTE

10  SAYS.  IT COULD BE HARASSMENT.  IT COULD BE AN IMPROPER STEP

11  DESIGNED TO GIVE PROTECTION TO THE PARTY WHO HAS TO FACE THE

12  RECEIVER.  POSTJUDGMENT OR PREJUDGMENT, THERE’s NO

13  DISTINCTION IN THE STATUTE.

14       THE COURT:  ANYTHING ELSE, MR. SAMPSON?

15       MR. SAMPSON:  REALLY NOTHING FURTHER.  I BELIEVE THE

16  RECEIVER’s BOND COVERS ANY OF THOSE ISSUES, AS FAR AS

17  POTENTIAL DAMAGES.

18       THE COURT:  IS THAT THE C.C.P. OR CIVIL CODE?

19       MR. URTNOWSKI:  C.C.P., YOUR HONOR, AND IT’s 566, I

20  BELIEVE.  YES, 566, YOUR HONOR.

21       THE COURT:  WELL, MR. LENNON HAS POSTED A 2500 BOND

22  AND, YOU KNOW, SO --

23       MR. URTNOWSKI:  THE CASES ARE CLEAR THAT’s — THAT IS

24  NOT THE APPLICANT’s BOND.  THAT IS THE BOND POSTED BY THE

25  RECEIVER.

26       THE COURT:  RIGHT.

27       MR. URTNOWSKI:  THERE ARE TWO DIFFERENT ISSUES.  THE

28  CASES ARE CLEAR.  THEY'RE DISTINCT.  THEY SAY THE RECEIVER'S
			
			

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 1  BOND IS NOT THE APPLICANT’s BOND.  WITHOUT THE APPLICANT'S

 2  BOND YOUR ORDER IS VOID, AND IT CANNOT NOT BE CORRECTED

 3  AFTERWARDS BY ALLOWING THEM TO POST A BOND NOW.

 4       THE COURT:  BUT YOU DON'T HAVE A CASE ON THAT AND

 5  NEITHER DOES MR. SAMPSON.

 6       MR. URTNOWSKI:  A CASE THAT SAYS THAT IT’s VOID?

 7       THE COURT:  NO.  YOU DON'T HAVE A CASE THAT SAYS THAT

 8  AFTER LIABILITY HAS BEEN DETERMINED THAT THE APPLICANT HAS

 9  TO POST A BOND.  MR. LENNON HAS POSTED BOND FOR 2500, WHICH

10  I THINK IS SUFFICIENT.  YOU DON'T HAVE A CASE SHOWING THAT

11  THEY DO.  IT WOULD BE STRANGE, WOULDN'T IT, THAT YOU CAN

12  THEN APPEAL, NOT POST A BOND, AND THEY TO ENFORCE THE

13  JUDGMENT HAVE TO POST A BOND TO FIND THE SUM.  IT DOESN'T

14  MAKE SENSE.

15       MR. URTNOWSKI:  IT’s NOT STRANGE BY US NOT POSTING AN

16  APPEAL BOND.  YOUR ORDER STAYS IN EFFECT, AND THE RECEIVER

17  GETS TO CARRY THE DUTIES OUT.  THAT’s THE RISK OF NOT

18  POSTING A BOND.

19       THE COURT:  ABSENT A CASE ON POINT, AND I DON'T THINK

20  THERE IS, I WILL MAKE THE FINDING THAT THE APPLICANT DOES

21  NOT HAVE TO POST A BOND ONCE LIABILITY HAS BEEN DETERMINED.

22  AND MR. LENNON HAS ALREADY POSTED A BOND IN THE AMOUNT OF

23  2500, WHICH IS SUFFICIENT TO SOLVE THE PROBLEMS COUNSEL IS

24  UPSET ABOUT.

25       MR. URTNOWSKI:  IS THE COURT STATING THAT THE APPLICANT

26  IS ALSO THE RECEIVER, OR THE APPLICANT’s BOND IS THE

27  RECEIVER’s BOND?

28       THE COURT:  NO.  I'M SAYING TWO DIFFERENT BONDS.
			
			

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 1  MR. LENNON POSTED HIS, AND THE APPLICANT DOES NOT HAVE TO

 2  POST ONE.  OKAY?  MAKES A GOOD CLEAN ISSUE FOR THE COURTS

 3  ABOVE ME.

 4            SECOND OR THIRD THING, PROTECTIVE ORDER FOR THE

 5  PERSONAL PROPERTY OUTSIDE OF CALIFORNIA.  THIS GOES INTO

 6  THIS MAIL ISSUE.

 7            NOW AS FAR AS LIBERTY LOBBY IS CONCERNED, I DON'T

 8  HAVE AUTHORITY TO DO ANYTHING ANYMORE.

 9       MR. URTNOWSKI:  WE UNDERSTAND.

10       THE COURT:  BECAUSE THERE’s BEEN BANKRUPTCY FILED.

11  BASED ON THE AUTHORITY THAT I HAVE, WE — THIS COURT HAS THE

12  AUTHORITY TO ORDER PERSONAL PROPERTY ANYWHERE IN THE WORLD

13  AND TO BE SEIZED AND BROUGHT TO THIS STATE, IF NEED BE, AND

14  SOLD TO SATISFY THE JUDGMENT.  MAIL CAN BE OPENED, AND

15  CHECKS CAN BE CASHED.

16            I WOULD ALWAYS MAKE AN EXCEPTION.  I CERTAINLY

17  THINK IT WOULD BE APPROPRIATE TO MAKE A PROTECTIVE ORDER, AS

18  FAR AS LETTERS THAT ARE CLEARLY FROM AN ATTORNEY, THAT HAVE

19  AN ATTORNEY’s RETURN ON THERE.  BUT OTHER THAN THAT, I CAN'T

20  SEE WHY YOUR CLIENTS ARE PROTECTED.

21       MR. IZEN:  I ASK TO RESPOND TO THAT, YOUR HONOR.

22       THE COURT:  SURE.

23       MR. IZEN:  SINCE LAST TIME THIS ISSUE CAME UP WITH MAIL

24  I HAVE DONE SOME FURTHER RESEARCH.  THE FIRST CASE THAT EVER

25  CONSIDERED MAIL SEIZURE IN CALIFORNIA WAS A VERY ANCIENT ONE

26  IN 1863.  THAT WAS LATHROP, L-A-T-H-R-O-P, V. MIDDLETON.

27  IT’s SO OLD THE LIBRARIES IN TEXAS ONLY HAD THE ORIGINAL

28  CALIFORNIA REPORTER, WHICH WAS — APPEARS AT PAGE 257 OF THE
			
			

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 1  CALIFORNIA REPORTER FOR 1863.

 2            WHAT THAT CASE SAID WAS THAT IN THE SEIZURE OF THE

 3  MAIL, A BOAT, A FERRY ACROSS THE RIVER IN BUTTE COUNTY,

 4  WOULD NOT INTERFERE WITH THE MAIL.  THEY SEIZED THE BOAT.

 5  THEY DIDN'T SEIZE THE MAIL.  THEY TALKED ABOUT THE ISSUE OF

 6  INTERRUPTIONS OF THE MAIL, AND THEY CITED A LOUISIANA CASE.

 7            WHAT YOU DISCERN FROM THIS CASE IS THAT THEY HAD

 8  CONCERN FOR THE SEIZURE OF THE MAIL; BUT IF THERE WAS ANY

 9  PROPERTY THAT WAS A VESSEL FOR THE MAIL, THAT THE VESSEL

10  COULDN'T BE SEIZED, BECAUSE SOMEBODY COULD SHIP THE MAIL

11  SOME OTHER WAY.  THERE WAS NO OPENING OF MAIL OUT OF THE

12  LATHROP CASE.

13            YOU MOVE ON THEN TO THE CONSIDERATION OF WHAT IS

14  MAIL AND WHAT IS ITS RIGHTS?  WELL, MAIL IS NOT PROPERTY.

15  MAIL IS COMMUNICATION.  MAIL IS CONSIDERED TO BE BY THE

16  FEDERAL COURTS THAT HAVE CONSIDERED THE ISSUE A — A

17  COMMUNICATION IN WHICH PRIVACY RIGHTS EXIST.

18            THE QUESTION IS, DO — DOES WILLIS CARTO OR

19  ELISABETH CARTO HAVE PRIVACY RIGHTS IN THE MAIL?  AND DOES

20  THE CORPORATION, SUCH AS WHETHER IT’s PROFIT OR NONPROFIT,

21  CAN BE ARGUED?  LIBERTY LOBBY OR SOME OF THE OTHER

22  CORPORATIONS THAT HAVE BEEN MENTIONED, DO THEY HAVE A RIGHT

23  TO PRIVACY?

24            NOW THERE’s ONLY ONE CASE IN CALIFORNIA ON THE

25  RIGHT OF PRIVACY OF CORPORATE BUSINESS ENTITIES.  I'M

26  ARGUING THIS MORE IN THE NATURE OF THE CORPORATE THAN I AM

27  THE INDIVIDUAL NOW.  THE DISTINCTION IS MADE THAT AN

28  INDIVIDUAL HAS RIGHTS OF PRIVACY, AND THE GENERAL RULE IS
			
			

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 1  THAT CORPORATE ENTITIES OR OTHERS DO NOT HAVE RIGHTS TO

 2  PRIVACY, BUT H and M ASSOCIATES V. THE CITY OF EL CENTRO, 167

 3  CAL. RPTR. 392 — THAT’s A DECISION FROM THE FOURTH

 4  DISTRICT, DIVISION ONE.  I DON'T KNOW ENOUGH — IT'S

 5  IMPERIAL COUNTY.  I GUESS IT’s THE COURT THAT SITS OVER US

 6  HERE.  THEY HELD THAT A PARTNERSHIP HAS PRIVACY RIGHTS IN

 7  THE STATE OF CALIFORNIA.

 8            NOW WHERE DOES THAT LEAVE US?  WELL, THE ANSWER IS

 9  THAT THE PRIVACY RIGHTS, THE SEIZURE OF THE MAIL, THE

10  PRIVACY RIGHTS HAVE TO BE PROTECTED.  AND AS FAR AS AN

11  INDIVIDUAL IS CONCERNED, THE PRIVACY RIGHTS EXIST.  THE

12  SEIZURE OF MAIL WITHOUT PROTECTION OF THE PRIVACY RIGHTS IS

13  A VIOLATION OF DUE PROCESS.

14            WE GO FROM THAT CASE TO THE SOCIALIST WORKERS

15  PARTY V. THE ATTORNEY GENERAL OF THE UNITED STATES,

16  666 F. SUPP. 621, AND THE SOUTHERN DISTRICT OF NEW YORK, A

17  CASE WHERE THE SOCIALIST WORKERS PARTY WAS UNHAPPY FBI

18  STEAMED OPEN THE MAIL AND READ IT AND SENT IT ALONG ITS WAY.

19       THE COURT:  THE FBI DIDN'T HAVE A JUDGMENT, A RECEIVER.

20       MR. IZEN:  NO.  I WILL GET TO THAT.  THEY HAD NATIONAL

21  SECURITY.

22            WHAT THEY WERE TALKING ABOUT, THEY WERE HELD

23  LIABLE.  THAT ESTABLISHES THAT THERE’s PRIVACY RIGHTS ON

24  WHICH YOU CAN SUE FOR THE VIOLATION.

25            NOW THE ISSUE OF THE QUESTION OF BANKRUPTCY, COULD

26  THIS RECEIVER HERE DO MORE THAN A TRUSTEE IN BANKRUPTCY

27  COULD DO?  THERE’s A CASE, WHICH I WILL HAVE THE CITE FOR

28  YOU BEFORE THE END OF THE DAY — IT’s IN THE BRIEFCASE.  I
			
			

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 1  COULDN'T FIND — IN RE BERRY, B-E-R-R-Y, NORTHERN DISTRICT

 2  OF CALIFORNIA.  IT WAS HELD IN THAT CHAPTER 7 CASE A U.S.

 3  BANKRUPTCY TRUSTEE COULD NOT SEIZE THE DEBTOR’s MAIL AND

 4  OPEN IT WITHOUT PROTECTION OF THE DEBTOR’s RIGHTS TO

 5  PRIVACY.  THAT’s A VIOLATION OF DUE PROCESS.

 6            NOW AGAIN, IT’s AN ASSERTION OF THE ARGUMENT THE

 7  RECEIVER HAD A PROBLEM WITH LAST TIME.  THERE ARE RIGHTS

 8  THAT ARE PERSONAL IN NATURE NOT SUBJECT TO SEIZURE TO YOUR

 9  ASSERTIONS FROM THE PERSON.  WHAT YOU SAID, DID THEY HAVE A

10  JUDGMENT?  THE ANSWER IS, NO, BUT THAT’s COUNTERED BY THE

11  FACT THAT THERE’s CERTAIN TYPES OF RIGHTS IN SOCIETY THAT

12  ARE NOT MERE PROPERTY RIGHTS.  THESE PRIVACY RIGHTS, WHICH

13  THE CONSTITUTION OF THE STATE OF CALIFORNIA RECOGNIZES, AS

14  DOES THE U.S. CONSTITUTION UNDER THE FIRST AMENDMENT HAVE TO

15  BE PROTECTED.  THEY'RE NOT SUBJECT TO SEIZURE.

16            NOW WHERE DOES THAT LEAVE US?  I CONCEDE TO YOU ON

17  THE RECORD THAT IF YOU SIT IN THE JURISDICTION WHERE A

18  CORPORATION, A FOR PROFIT BUSINESS DOES NOT HAVE PRIVACY

19  RIGHTS AT ALL, THEN NO CONCERN NEED TO BE MADE TO BE GIVEN

20  TO THE VIOLATION OF THE RIGHT OF PRIVACY.  WE'RE NOT IN SUCH

21  A JURISDICTION.  CALIFORNIA, WITH THAT CASE I GAVE YOU,

22  FOLLOWS THE MINORITY RULE, H and M ASSOCIATES V. THE CITY OF

23  EL CENTRO, THAT THE ENTITIES DO HAVE PRIVACY RIGHTS.

24  CERTAINLY FOR WILLIS CARTO AND ELISABETH CARTO, WHO ARE

25  INDIVIDUALS, THE SEIZURE OF THEIR MAIL IS A VIOLATION OF

26  PERSONAL RIGHTS; AND WHEN YOU APPOINTED THE RECEIVER, HE DID

27  NOT ACCEDE TO THE PERSONAL RIGHTS OF THESE DEBTORS.

28  PERIOD.  THAT’s TO THE MAIL.  THAT’s A SITUATION WHERE THE
			
			

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 1  RECEIVER’s OFFICE IS LIMITED IN THAT REGARD, AND THAT'S

 2  BASICALLY WHERE WE STAND.

 3            WHAT SHOULD BE DONE ABOUT THE PROTECTION OF THE

 4  MAIL?  WELL, IF THERE’s GOING TO BE SOME SORT OF

 5  INTERCEPTION OF MAIL FOR EVEN A BUSINESS ENTITY — AND I

 6  DON'T KNOW THAT WE HAVE ONE HERE SINCE LIBERTY LOBBY HAS

 7  FILED A NOTICE OF BANKRUPTCY AND WE HAVE A STAY IN EFFECT ON

 8  THEM, SO REALLY I'M NOT GOING FORWARD IN ATTEMPTING TO

 9  ASSIST IN THAT REGARD ON LIBERTY LOBBY — THE COURT REQUIRE

10  SOME SORT OF SCREENING IN SUCH A WAY THAT THE PERSONAL

11  INFORMATION IS NOT MADE PUBLIC; THE PERSONAL INFORMATION IS

12  PROTECTED, AND THE BUSINESS INFORMATION WOULD THEN BE GIVEN

13  OVER TO THE PROPER CREDITOR.

14            CERTAINLY THIS IS NOT — THIS IS — THE RECEIVER

15  IS NOT UNBIASED.  THIS RECEIVER IS IN A COMPENSATION-TYPE

16  SITUATION.  THE COURT IS NOT PAYING HIM.  SO WHERE IS HE

17  GETTING PAID?  THE ANSWER IS HE IS GETTING PAID OUT OF THE

18  MONEY HE RECEIVES.  THAT HE NOT AN UNBIASED PARTY THAT WOULD

19  BE REQUIRED UNDER THE LAW TO DO ANY SCREENING TO PROTECT THE

20  DEBTOR’s PRIVACY RIGHTS.

21            SO BASICALLY YOU HAVE A FEDERAL ISSUE, AS WELL AS

22  THE CALIFORNIA STATE ISSUE, ON WHAT SHOULD BE DONE TO

23  PROTECT THE PRIVACY RIGHTS.  THEY'RE TAKING EXTREME MEASURES

24  TO TRY TO COLLECT THE JUDGMENT.  WHEN YOU ARE GOING TO

25  BANKRUPTCY AND YOU FILE A VOLUNTARY PETITION, YOU COULD MAKE

26  THE ARGUMENT THESE PEOPLE WAIVED THEIR RIGHTS.  THEY WAIVED

27  THEIR RIGHTS.  THEY PUT A TRUSTEE OVER.  WELL, THE ANSWER TO

28  THAT IS THE TRUSTEE DOES NOT ACCEDE TO PURELY PERSONAL
			
			

page 15



 1  RIGHTS OF THE DEBTOR IN CERTAIN REGARDS, RIGHTS TO HIS

 2  FAMILY, THE RIGHT TO PRIVACY AND THE MAIL AND THE OTHER

 3  THINGS THAT I ARGUED BEFORE.  SO THE BANKRUPTCY TRUSTEE

 4  APPOINTMENT IS LIMITED JUST AS THE RECEIVERS IS HERE.  BUT

 5  IN ANY EVENT, WE DON'T HAVE A SITUATION WHERE HE WAS

 6  VOLUNTARILY APPOINTED.  HE IS AN ADVERSE PARTY.  HE’s — AND

 7  THE INDIVIDUALS DID NOT REQUEST HIM.  THEY HAVE EXCEEDED THE

 8  BOUNDS AND LIMITS THROUGH YOUR ORDER AND THROUGH THE

 9  INTERPRETATION AND OPERATION OF THE ORDER AT LEAST OF WHAT A

10  RECEIVER CAN DO.  THAT’s BEYOND HIS POWERS TO TRY TO EXCEED

11  AND EXERCISE A POWER OVER THE PERSONAL RIGHTS AND MATTERS.

12            I STAND BY WHAT I TOLD YOU PREVIOUSLY.  THAT THE

13  IRS EVEN IS NOT ALLOWED TO OPEN MAIL.  THE ONLY THEORY THAT

14  WOULD ALLOW MAIL TO BE OPENED IS THAT THE MAIL OF A BUSINESS

15  OR MAIL OF AN INDIVIDUAL — AND AN INDIVIDUAL IS LIKE AN IN

16  CONFIDANT AND THIS APPOINTMENT TOOK OVER FOR ALL PURPOSES

17  THAT INDIVIDUAL’s PERSONAL RIGHTS, AS WELL AS HIS PROPERTY

18  RIGHTS.  AND I THINK YOU HAVE SOME EXPERIENCE IN HAVING

19  GUARDIANS APPOINTED, AND THE ANSWER THERE IS THAT’s THE

20  FURTHEST CONTROL YOU CAN EXERCISE OVER SOMEONE, BECAUSE

21  LEGAL FINDING IS THEY'RE INCAPABLE OF EXERCISING THEIR OWN

22  PERSONAL RIGHTS.  I DON'T SEE THAT THE RECEIVER HAS THE

23  POWERS THAT A GUARDIAN WOULD HAVE; AND ADMITTEDLY, WE ARE IN

24  AN AREA THERE’s NOT A LOT OF — LOT OF TREATISES AND LAW ON

25  IT, BUT — AND THOSE CASES THAT I HAVE CITED THEY STAND FOR

26  THE PROPOSITION WHAT IS GOING ON HERE TODAY IS WRONG, AND

27  IT’s IN SUPPORT OF IT.

28       THE COURT:  MR. SAMPSON’s POINTS AND AUTHORITIES CITED
			
			

page 16



 1  A CASE AND CITED CALIFORNIA CIVIL CODE SECTION.  AS I SEE

 2  IT, THE REAL PROBLEM WITH THE ARGUMENT THAT YOU ARE MAKING

 3  IS THAT BECAUSE OF THE WAY THE COLLECTION HAS GONE IN THIS

 4  CASE THE RECEIVER WILL BE APPOINTED.  IT’s REALLY THE LAST

 5  THING THAT YOU WANT TO DO.

 6            I DON'T SEE THAT A CHECK IS COMMUNICATION LIKE A

 7  PRIVATE COMMUNICATION.  A CHECK IS SIMPLY MONEY.  IF MONEY

 8  WAS IN A LETTER, YOU ARE SAYING THAT THE MONEY COULDN'T BE

 9  SEIZED?  IF THE RECEIVER CAN SEIZE THE MAIL, AND THERE’s A

10  $100 BILL TO MR. CARTO, YOU ARE TELLING ME THAT THE RECEIVER

11  CAN'T TAKE THAT BECAUSE THAT’s SOME SORT OF A COMMUNICATION.

12       MR. IZEN:  I WOULD BE WILLING TO ADDRESS THAT, IF I

13  MIGHT, THAT QUESTION.  THE ANSWER IS THE — IT’s NOT THE

14  QUESTION OF CAN THE RECEIVER ATTACH A CHECK?  THE PROBABLE

15  COURT PROCESS ALLOWS THE RECEIVER TO ATTACH A CHECK, IF HE

16  CAN GET IT LAWFULLY.  THE QUESTION IS WHETHER THE RECEIVER

17  CAN OPEN THE MAIL.  I'M SAYING THAT THE RECEIVER CAN'T OPEN

18  THE MAIL.  THERE HAS TO BE SOME OTHER TYPE OF SCREENING

19  ATTENDANT TO THE COURT ORDER TO PROTECT PRIVACY RIGHTS OTHER

20  THAN LETTING A BIASED RECEIVER RUMMAGE THROUGH EVERYBODY'S

21  MAIL, DECIDES WHAT THEY WANT AND DOESN'T WANT AND DECIDES

22  WHAT IS PERSONAL COMMUNICATION, DECIDES WHAT ISN'T, AND THEN

23  YOU TAKE THE RISK.  THAT’s MY POSITION.  CLEARLY CHECKS ARE

24  NOT A PRIVACY COMMUNICATION.

25            THE PROBLEM IS THAT THEY COME IN AN ENVELOPE AND

26  WHICH EVERY COURT IN THE LAND HAS RECOGNIZED THAT

27  EXPECTATION TO THE RIGHT OF PRIVACY.  AND THE POINT IS

28  SOMEBODY ELSE OTHER THAN THE RECEIVER SHOULD BE MAKING THE
			
			

page 17



 1  DECISIONS, OTHERWISE THE DEBTOR’s RIGHT OF PRIVACY, SUCH AS

 2  THEY ARE, WHETHER IT’s ENTITY’s PRIVACY OR INDIVIDUAL

 3  PRIVACY, ARE REDUCED TO NOTHING.  THAT’s THE POINT.

 4       THE COURT:  YES, MR. SAMPSON.

 5       MR. SAMPSON:  I WILL KEEP IT BRIEF, YOUR HONOR.  FIRST,

 6  THE MATTER OF PROTOCOL.  WE WILL STIPULATE THAT MR. IZEN CAN

 7  BE ADMITTED PRO HAC VICE TO ARGUE, AS LONG AS HE'S

 8  QUALIFIED.  WE DIDN'T DO THAT YET.

 9       THE COURT:  WE DIDN'T.

10       MR. SAMPSON:  BY THE BOOK.  SECOND, AS FAR AS THE MAIL

11  SEIZURE, MR. IZEN WASN'T PRESENT IN WASHINGTON, D.C. WHERE

12  WE EXHAUSTEDLY ARGUED THIS LAST MONDAY.  THE CASE THAT HE

13  CITED, IN RE BERRY, IS ACTUALLY IN RE BENNY, B-E-N-N-Y.  IT

14  IS A NORTHERN DISTRICT FEDERAL CASE.  WE HAVE CITED IN RE

15  CRABTREE, WHICH IS 37 BANKRUPTCY 426, A TENANCY CASE THAT

16  CITES BENNY.

17            IF YOU LOOK AT THE CRABTREE CASE, WHICH WE

18  ENCLOSED WITH THE EXHIBIT, IT CITES BENNY.  UNDER THE BENNY

19  CASE — IT’s A GOOD INTERESTING CASE FOR THE COURT TO

20  REVIEW.  WHAT HAPPENED THERE IS FOR YEARS BANKRUPTCY

21  TRUSTEES HAD SEIZED MAIL OF THE DEFENDANTS BECAUSE THE

22  TRUSTEES HANDBOOK TOLD THEM TO DO IT.  FINALLY SOMEBODY

23  WISED UP AND SAID, HEY, YOU HAVE TO APPEAL THIS AND FIGURE

24  OUT IF IT’s RIGHT.

25            ON APPEAL THE APPELLATE COURT SAID THAT THE

26  TRUSTEE CAN TAKE MAIL OF THE DEBTOR, BUT THERE HAS TO BE A

27  PROTECTION PROCESS WHERE THERE’s A HEARING.  AND AT THE

28  HEARING THEY THEN ISSUE AN ORDER ALLOWING IT.  WE HAD THE
			
			

page 18



 1  HEARING.  WE HAD THE ORDER SPECIFICALLY ALLOWING IT.

 2            THE NEXT THING IN THE BENNY CASE THAT IS VERY

 3  EDUCATIONAL FOR THE PARTIES TODAY IS THAT THE BENNY CASE

 4  INVOLVES SEIZURE OF MAIL OF AN INDIVIDUAL OUT OF NEVADA

 5  BRINGING IT BACK INTO CALIFORNIA.  AGAIN, THAT’s AN OUT OF

 6  STATE SEIZURE AND BRINGING IT BACK.

 7            THE LAST ITEM THE COURT SHOULD LOOK AT IS THE

 8  PROCESS THAT — THAT WAS USED BY THE COURTS IN BOTH THE

 9  BENNY AND CRABTREE CASE TO PROTECT EXACTLY WHAT MR. IZEN IS

10  TALKING ABOUT.  THE WAY THE COURT DECIDED THAT IT WOULD BE

11  FAIR WOULD BE TO HAVE THE MAIL COME INTO THE RECEIVER, AND

12  THE RECEIVER TO LOG IN ALL OF THE MAIL.  AND THIS COURT HAS

13  ALREADY ISSUED AN ORDER REGARDING THE LOG AND PHOTOCOPY, TO

14  TAKE OUT THE MONEY AND RETURN THE OTHER MAIL DIRECTLY TO THE

15  DEBTORS.

16            AND IF THERE’s ANY QUESTIONS — AND THE COURT HAS

17  JURISDICTION TO RESOLVE THOSE.  WE HAVE ALL OF THOSE EXCEPT

18  RETURNING THE MAIL SUBJECT TO AN ORDER TODAY, BECAUSE THE

19  COURT WANTED TO HEAR THE OTHER SIDE AND GET THE FULL

20  ARGUMENT ON THE ISSUE AGAIN.  I BELIEVE THAT’s THE MOST FAIR

21  PROCEDURE TO PROTECT RIGHTS.

22            THE LOG IS MAINTAINED AS A PRIVACY RIGHT OF THE

23  RECEIVER, AND THE COURT, OF COURSE, THE DEFENDANTS NEED TO

24  SEE WHAT WAS TAKEN AND NOT — I DON'T SEE A PROBLEM WITH

25  THAT.  AND I HAVE GOT NO PROBLEM WITH THE JUDGMENT CREDITORS

26  NOT SEEING THE LOG ABSENT A COURT ORDER, AND WE HAVEN'T SEEN

27  ANY LOGS TO DATE.  EVERYTHING HAS GONE THROUGH MY OFFICE

28  THAT WOULD HAVE COME FROM MR. LENNON.  SO I BELIEVE THAT'S
			
			

page 19



 1  THE CORRECT PROCESS.  AND IF YOU WANT A LITTLE MORE

 2  AUTHORITY, THE COURT MENTIONED THIS EARLIER, C.C.P. SECTION

 3  700.070 AUTHORIZES THE EXACT SAME PROCESS WITH THE KEEPER

 4  WHERE YOU USE THE MARSHAL TO GO IN AND DO THE VERY SAME

 5  THING WITH INDIVIDUALS.  IT DOESN'T NEED TO BE A BUSINESS.

 6  IT’s ANY ENTITY.  SO UNDER THAT PROCEDURE, I BELIEVE WE'RE

 7  ENTITLED TO SEIZE MAIL, TAKE OUT THE MONEY, PHOTOCOPY

 8  FINANCIAL INFORMATION AND RETURN THE REST TO THE DEBTORS.

 9       MR. IZEN:  I WOULD LIKE TO MAKE ONE POINT I DID NOT

10  BRING UP.  THERE’s AT RISK HERE AND AT ISSUE THE

11  ASSOCIATIONAL RIGHTS OF THE PEOPLE THAT DONATE TO LIBERTY

12  LOBBY.  WE CONCEDE THAT LIBERTY LOBBY IS TEMPORARILY OUT OF

13  THE COURTROOM, AND THE CARTOS ARE INVOLVED IN POLITICAL

14  ACTIVITY THROUGH LIBERTY LOBBY AND OTHER ENTITIES.  THE

15  COURT KNOWS SOMETHING ABOUT THE ACTIVITIES.  THE COURT --

16  THEY ENGAGE IN.  THE COURT HEARD BOTH SIDES DURING THE

17  TRIAL.

18            WHEN YOU HAVE ASSOCIATIONAL PRIVACY RIGHTS, YOU

19  HAVE THE RIGHT TO SECRECY, BOTH THE DONATORS, THE PEOPLE

20  THAT DONATE MONEY TO YOU, YOUR MEMBERSHIP LIST, YOUR THINGS

21  OF THAT SORT, THE MAILING LISTS.  WE'RE CONCERNED THAT THE

22  MATTERS BE PROTECTED.  THEY ARE NOT THE TYPE OF MATTERS THAT

23  SHOULD BE ALLOWED TO BE REVEALED TO THE GENERAL PUBLIC SO

24  THEY CAN BE USED BY HOSTILE FEDERAL AGENCIES, OR HOSTILE

25  PARTIES, OR WHATEVER.  THAT’s THE REASON WHY YOU HAVE

26  ASSOCIATIONAL PRIVACY UNDER THE FIRST AMENDMENT.

27            THE CASE I CITED YOU, THE SOCIALIST WORKERS PARTY,

28  HAD THREE VERSIONS.  THEY HAD ONE AT 463 F. SUPP. 515, A
			
			

page 20



 1  1978 CASE.  THE BATTLE WENT ON FOR 8 OR 10 YEARS AND

 2  BASICALLY STANDS FOR THE PROPOSITION THAT WHEN YOU HAVE

 3  POLITICAL ACTIVITY GOING ON, THE RIGHTS TO ASSOCIATIONAL

 4  PRIVACY ARE ACCENTED.

 5            AGAIN, AS FAR AS THE SCREENING PROCESS AND OTHER

 6  THINGS IS CONCERNED, THAT’s NOT BEEN FOLLOWED UP TO THIS

 7  POINT.  WE OBJECTED, AND WE OBJECT PROPERLY NOW.  IT SEEMS

 8  THE RECEIVER CONCEDES THAT THE PROCESS WAS OVERBOARD, AND

 9  THEY NEED TO DO CERTAIN OTHER THINGS.  IF CALIFORNIA LAW

10  PROVIDES FOR A SCREENING PROCESS UNDER THE STATUTE, I AM

11  CERTAINLY NOT AN EXPERT ON IT, IT CAME ABOUT BECAUSE OF

12  THESE DECISIONS THAT I HAVE JUST POINTED THE COURT TO.  THE

13  EXAMINATION OF THE FACTS OF THE BANKRUPTCY CASE I BELIEVE

14  WHEN YOU READ IT YOU WILL SEE THAT THEY RULED THAT IT WAS

15  VIOLATION OF DUE PROCESS TO INTERCEPT A DEBTOR’s MAIL

16  WITHOUT THE SAFEGUARD OF BEING IN FORCE AND EFFECT.  SO WE

17  NEED SOMETHING ELSE OTHER THAN WHAT WE HAVE.  IN THAT

18  REGARD, WE NEED SOMETHING THAT WOULD PREVENT HOSTILE PARTIES

19  WHO WANT TO INJURE EACH OTHER IRRESPECTIVE OF THE MONEY TO

20  DISSEMINATE, ELICIT AND IN VIOLATION OF THE ASSOCIATIONAL

21  PRIVACY PEOPLE YOU ARE RECEIVING MAIL FROM; PEOPLE YOU ARE

22  SENDING MAIL TO.  THANK YOU.

23       THE COURT:  MR. LENNON IS GONE.

24       MR. SAMPSON:  HE STEPPED OUT, YOUR HONOR.

25       THE COURT:  ALL RIGHT.  I WANT TO MAKE SURE HE CAN KEEP

26  A LOG WHERE HE IS RETURNING THE MAIL TO THE JUDGMENT DEBTOR,

27  OR IS HE RETURNING IT TO ONE OF THE ATTORNEYS?

28       MR. URTNOWSKI:  YESTERDAY I RECEIVED SOME MAIL FROM THE
			
			

page 21



 1  RECEIVER.  HE SENT IT IN SEVERAL PACKAGES.  I DIDN'T BRING

 2  IT HERE.  HE SENT BACK MAIL BELONGING TO WILLIS CARTO,

 3  ELISABETH CARTO, VIBET, AN ENTITY THAT I DON'T REPRESENT.  I

 4  WILL RETURN THAT TO HIM.

 5            IT WAS DISTURBING THAT SOME OF THE MAIL HAD

 6  PREVIOUSLY BEEN OPENED AND UNTIL THIS POINT I THOUGHT THE

 7  COURT’s ORDER WAS SPECIFICALLY TO RETAIN THE MAIL UNOPENED

 8  UNTIL TODAY’s HEARING.  HE DID NOT RETURN ANY LIBERTY LOBBY

 9  MAIL, YOUR HONOR.

10       MR. IZEN:  I WOULD LIKE TO BRING UP ONE LAST POINT IN

11  RESPONSE TO THE COURT’s QUESTION ABOUT THE CHECKS.

12  SOMETHING ELSE CROSSED MY MIND.

13       THE COURT:  OKAY.

14       MR. IZEN:  I AM NOT APPROACHING THIS LITIGATION, NOR

15  HAVE I APPROACHED THIS LITIGATION ON APPEAL AS A FOR PROFIT

16  ENTITY.  I DO NOT BELIEVE LIBERTY LOBBY IS THE TRADITIONAL

17  FOR PROFIT ENTITY.  I THINK THE CASE BEFORE YOU EARLIER WAS

18  TRIED UNDER THE WRONG THEORY.  I DON'T THINK THERE’s PROFIT

19  OPPORTUNITIES, BUT WE'LL SEE WHAT THE COURT OF APPEALS DOES

20  WITH THAT.  BUT THE QUESTION ABOUT THE CHECKS, THERE’s NO

21  DOUBT THAT PEOPLE SEND IN WHAT THEY THINK ARE DONATIONS.

22  NOW WHAT DO YOU DO?  DO YOU DIVERT THAT TO THE JUDGMENT

23  CREDITOR?  WHEN A PERSON SENDS IN A DONATION, THEY'RE

24  THINKING THAT THERE’s GOING TO BE POLITICAL ACTIVITY DONE

25  WITH THE DONATION.  THAT’s SOMETHING I THROW OUT.  THAT

26  PROBLEM IS GOING TO REAR ITS UGLY HEAD NOT FOR CARTO

27  PERSONALLY PER SE, UNLESS SOMEBODY LIKE MISS FERREL IS

28  SENDING A CHECK TO CARTO AND SAYS DO WITH IT — PUT IN IT
			
			

page 22



 1  ONE OF THE ENTITIES, OR DO WITH IT WHATEVER YOU WANT TO DO.

 2  I DON'T HAVE THE EVIDENCE FROM MR. CARTO ON THE STAND ABOUT

 3  HOW MUCH DONATIONS HE RECEIVED.

 4       THE COURT:  I DON'T THINK MISS FERREL WILL BE WRITING

 5  ANY CHECKS ANYWAY.

 6       MR. IZEN:  THAT’s TRUE.

 7       THE COURT:  OUTSIDE THE JURISDICTION OF THIS COURT FOR

 8  SURE.

 9       MR. IZEN:  THE CHECKS THEY INTERCEPT, THERE’s GOING TO

10  BE A QUESTION AS TO WHETHER OR NOT THOSE ARE SPECIAL FUNDS

11  RECEIVED IN THE HANDS OF WHOEVER RECEIVES THEM SUCH THAT

12  THEY CAN BE DIVERTED FOR THIS JUDGMENT.  IF THIS IS NOT FOR

13  PROFIT, THEN THESE PEOPLE ARE NOT GIVING THESE MONIES TO THE

14  GENERAL FUND OF WHOEVER TO PAY THIS JUDGMENT.  THEIR IDEA

15  WAS SOMETHING DIFFERENT WOULD BE DONE WITH THE MONIES.

16            NOW I BRING THAT UP, BECAUSE IT’s CLEAR --

17  CALIFORNIA LAW IS CLEAR THAT THE INTENTIONS OF THE DONOR IS

18  IF IT’s NOT A FOR PROFIT DONATION WHICH HAVE TO BE OBEYED,

19  YOU'LL PUT YOURSELF IN A POSITION OF POTENTIALLY DEFRAUDING

20  THE PEOPLE INDIRECTLY BY THE FACT THEY THINK SOMETHING IS

21  BEING DONE WITH THE MONEY WHEN IN ACTUALITY SOMETHING QUITE

22  DIFFERENT IS HAPPENING.

23       THE COURT:  THAT’s AN INTERESTING ARGUMENT.  IT DOESN'T

24  SEEM TO YOU THAT IF YOU SEND MONEY TO AN ORGANIZATION THAT

25  OWES A LAWFUL DEBT, THAT’s WHAT YOU ARE SENDING THE MONEY

26  FOR, AMONG OTHER THINGS?

27            LET’s SUPPOSING MY SON HAS A DEBT THAT HE HAS TO

28  PAY, AND SO I GIVE HIM $100 AND SAY, THIS GOES TO THE MOVIE,
			
			

page 23



 1  AND RECEIVER SEIZED THE $100.  GEE, THAT WASN'T RIGHT.

 2  SUPPOSED TO GO TO THE MOVIE WITH THAT.  I DON'T FOLLOW THAT

 3  ARGUMENT.

 4       MR. IZEN:  LET ME ADDRESS YOUR ARGUMENT TWO WAYS.

 5  NUMBER ONE, YOU ARE ASSUMING THAT A PERSON GIVES A DONATION

 6  EXPECTS FOR IT TO GO TO THE GENERAL FUND OF THAT

 7  ORGANIZATION AND DIDN'T GIVE ANY SPECIAL CONDITIONS.  IT

 8  DOESN'T EXPECT ANY SPECIAL CONDITIONS ON A GIFT.  BUT THE

 9  STATE OF CALIFORNIA LAW IS REPLETE WITH IMPOSITIONS BY THE

10  COURT OF SPECIFIC INSTRUCTIONS AND ENFORCEMENT OF SPECIFIC

11  INSTRUCTIONS BY DONOR.  THE REAL QUESTION WILL BE WHAT THE

12  DONOR INTENDED.  I AGREE.  IF THEY INTEND FOR IT TO GO TO

13  THE GENERAL FUND OF THAT ORGANIZATION, THEN IT CAN BE USED

14  TO PAY THE DEBTS.  IF THEY INTEND FOR IT TO BE USED FOR

15  CERTAIN POLITICAL ACTIVITY, AND YOU RUN A AD OR HAVE THE

16  SPOTLIGHTER NEWSPAPER, YOU ARE SAYING, WE'RE DOING XY AND Z

17  WITH THE MONEY, AND YOU DON'T DO THAT.  THE MONEY GOES TO

18  SOMEBODY FOR SOME JUDGMENT OR SOMETHING YOU HAVE A PROBLEM.

19  THAT’s THE POINT I'M ADDRESSING.  SO PERHAPS THAT CAN BE

20  ADDRESSED LATER BY PERSONS WHO ARE DONATING THE FUNDS.

21       THE COURT:  MAYBE THEY'LL READ ABOUT IT IN THE

22  NEWSPAPER AND DECIDE NOT TO SEND ANY MORE MONEY.  THAT’s NOT

23  ANYTHING THEY CAN DO.

24       MR. SAMPSON:  I CAN SHORTCUT THAT.  ON PAGE 5 OF THE

25  ORDER APPOINTING THE RECEIVER, PARAGRAPH 15, THE COURT HAS

26  ISSUED AN ORDER THAT THE RECEIVER WILL HOLD AND RETAIN ALL

27  MONIES SUBJECT TO FURTHER COURT ORDER.  THAT ISSUE CAN BE

28  ADDRESSED AT A LATER TIME, IF NECESSARY.  IT’s PREMATURE
			
			

page 24



 1  NOW.  THAT PROTECTION IS IN PLACE.

 2       THE COURT:  I'M NOT GOING TO CHANGE THE PREVIOUS ORDER

 3  THAT I GAVE TO THE RECEIVER, THE AUTHORITY I GAVE TO THE

 4  RECEIVER.  THEY REALLY DO ACT UNDER THE AUTHORITY OF THE

 5  COURT.  I REALIZE WE DON'T PAY THEM.  HOPEFULLY, THEY ALWAYS

 6  KEEP THAT IN MIND.  AND THIS IS A DRASTIC REMEDY.  IT'S

 7  FORCED UPON ME BY THE ACTIONS OF THE DEBTORS.  IT’s NOT

 8  SOMETHING THAT I ENJOY DOING.  I WISH I COULD SEE ANOTHER

 9  ALTERNATIVE.  MANY OF THE COMMENTS THAT THE DEBTORS ARE

10  MAKING ARE ONES THAT DISTURB ME, BUT THERE’s A BALANCING

11  HERE, AND THIS IS THE ONLY WAY TO DO IT.  IT’s THE ONLY WAY

12  TO DO IT.  WE'RE GOING TO GET INTO THAT LATER ON WHEN WE

13  TALK ABOUT GOING TO JAIL.  ALL RIGHT.

14            THE RECEIVER CAN — MAKE IT CLEAR — CAN OPEN AND

15  SEIZE AND OPEN MAIL THAT’s ADDRESSED TO ANY JUDGMENT

16  DEBTOR.  THEY CAN TAKE OUT THE CHECKS AND CASH THE CHECKS

17  SIMPLY TO FURTHER DISBURSEMENT OF THOSE FUNDS.  THEY CAN

18  KEEP A LOG OR KEEP A LOG OF THE MAIL RECEIVED, AND THEY'RE

19  NOT TO REVEAL THE CONTENTS OF ANY COMMUNICATION THAT DOESN'T

20  DEAL WITH FINANCIAL DOCUMENTS OR RECORDS.  THEY CAN SEIZE

21  ALSO FINANCIAL DOCUMENTS OF ANY SORT.

22       MR. SAMPSON:  MAY I CLARIFY THAT?  I WOULD SUGGEST THEY

23  PHOTOCOPY IT AND RETURN THE ORIGINAL DOCUMENT.

24       THE COURT:  THAT’s FINE.  THEY CAN DEFINITELY MAKE, BUT

25  I DON'T WANT THEM MAKING PHOTOCOPIES OF THE CONTENTS OF

26  COMMUNICATIONS AND THAT SORT OF THING OR REVEALING THAT TO

27  ANYBODY.

28            LET’s TALK ABOUT SOME OF THE BIG ISSUES HERE.
			
			

page 25



 1       MR. URTNOWSKI:  I'M SORRY, CLARIFICATION.  THE

 2  ATTORNEY/CLIENT PRIVILEGE CANNOT --

 3       THE COURT:  YES.  THAT’s FROM BEFORE.  AND I SHOULD

 4  MAYBE MAKE THAT CLEAR AGAIN.  IT’s ALWAYS BEEN CLEAR IF THE

 5  LETTER IS ONE THAT CLEARLY COMES FROM AN ATTORNEY WITH A --

 6  OR SAYS “LEGAL MAIL” ON IT, OR HAS THAT LETTERHEAD KNOWING

 7  THAT IT COMES FROM AN ATTORNEY; THINGS WE HATE TO SEE IN THE

 8  MAIL, THEN THOSE I THINK I'M GOING TO BALANCE THIS OUT.  AND

 9  ALTHOUGH IT MIGHT CONTAIN CHECKS AND FINANCIAL INFORMATION,

10  IT MIGHT NOT EVEN BE AN ATTORNEY/CLIENT PRIVILEGE.  WHO

11  KNOWS WHO ALL THE ATTORNEYS ARE FOR ALL THE CORPORATIONS.

12  NOT TO SEIZE THAT — OPEN IT.  SEND IT DIRECTLY.

13       MR. URTNOWSKI:  ONE OTHER ISSUE ON A TACTICAL BASIS

14  THAT OCCURRED WITH RESPECT TO LEWIS FURR.  HIS MAIL WAS

15  SEIZED.  IN HIS MAIL WAS PRESCRIPTION MEDICINE.  HE LIVES IN

16  A RURAL AREA, AND HIS MEDICINE COMES THROUGH THE MAIL.  HE

17  NEEDS IT.  THEY HAD TO RETAIN A LAWYER.  THE POST OFFICE

18  EVENTUALLY RELEASED THAT PRESCRIPTION.  FOR THE FUTURE, I

19  WOULD ASK THAT WITH RESPECT TO ANY OF THE INDIVIDUALS THAT

20  IF THERE ARE PACKAGES THAT ARE OBVIOUSLY PRESCRIPTION

21  MEDICINE THEY NOT BE SEIZED AND IMMEDIATELY DELIVERED TO

22  THEIR CLIENT.

23       THE COURT:  ABSOLUTELY.  I DON'T HAVE A PROBLEM WITH

24  THAT.  I THINK MR. LENNON KNOWS.  HE’s AN EXPERIENCED FELLOW

25  HERE, AND HE KNOWS WHAT THE INTENT OF THIS COURT IS, THAT

26  IS, TO SEIZE CHECKS, CASH THEM, HOLD THEM, SEE WHAT WE'RE

27  GOING TO DO WITH THEM, MAKE COPIES OF FINANCIAL DOCUMENTS.

28  BUT EVERYTHING ELSE IS THEIR LIVES GO ON AS NORMAL.
			
			

page 26



 1       MR. URTNOWSKI:  I UNDERSTAND.  I WAS SAYING MR. LENNON

 2  DIDN'T SEIZE THE MEDICINE.  IT GOT SEIZED BACK IN ARKANSAS.

 3  THAT WAS THE DISTINCTION.

 4            AND THE FINAL DISTINCTION I HEARD, WITH RESPECT TO

 5  THE MAIL THAT COMES IN, THE JUDGMENT CREDITOR WILL NOT BE

 6  ALLOWED TO SEE THE LIST OF PEOPLE WHO HAVE SENT MAIL; IS

 7  THAT ACCURATE?

 8       THE COURT:  AT THIS TIME, YES, THAT’s ACCURATE.

 9       MR. SAMPSON:  IF I COULD ASK ONE POINT OF

10  CLARIFICATION.  WHEN THE MAIL IS RETURNED, WOULD THE DEBTORS

11  LIKE IT RETURNED TO MR. URTNOWSKI OR DIRECTLY TO THE

12  DEBTOR?  WE HAD BOTH HAPPENING.  WHICHEVER YOU GUYS PREFER.

13       MR. URTNOWSKI:  TO ME.

14       THE COURT:  OKAY.  THAT’s EVERY JUDGMENT DEBTOR THAT

15  YOU REPRESENT.  YOU DON'T REPRESENT SOME JUDGMENT DEBTORS.

16  WHAT DO WE DO IF THEY'RE ADDRESSED TO VIBET?

17       MR. URTNOWSKI:  NO OPINION.  I HAVE NO REPRESENTATION.

18       THE COURT:  OKAY.  WHAT ABOUT THE HEREFORD

19  CORPORATION?  I NOTICED ON THAT ACTION TO QUIET TITLE

20  LAVONNE FURR SIGNED THAT AS FROM THE HEREFORD CORPORATION.

21  IF THE RECEIVER GETS LETTERS FROM HEREFORD CORPORATION, WHAT

22  DOES HE DO WITH THEM?  SEND THEM TO YOU?

23       MR. URTNOWSKI:  RIGHT NOW I DON'T KNOW THAT THERE’s AN

24  ORDER DIRECTING THE RECEIVER TO SEIZE ANYTHING FROM HEREFORD

25  CORPORATION.

26       THE COURT:  THAT’s WHAT WE'RE GETTING TO NEXT.  ADD THE

27  HEREFORD CORPORATION, INDEPENDENCE HOUSE, AND J.W. YOUNG AS

28  ALTER EGOS OF MR. CARTO OR SOME OF THE OTHER JUDGMENT
			
			

page 27



 1  DEBTORS.

 2            THAT MAYBE FALLS INTO SOME OF THE ARGUMENTS BY THE

 3  DEFENSE, THE DEBTORS, TO STRIKE PORTIONS OF THE PLAINTIFF'S

 4  AFFIDAVITS.  I DON'T UNDERSTAND SOME OF THE ORGANIZATIONS.

 5  THE WALK AFFIDAVIT I'M TOLD IS NOT — IT’s THE SAME THING I

 6  USED TO HEAR IN THE TRIAL.  IT’s NOT RELEVANT.  LACK OF

 7  FOUNDATION AND NOT THE BEST EVIDENCE.  SORT OF CAME AS A

 8  THREE SHOTGUN BLAST AT ME.

 9            CLEARLY IT’s RELEVANT.  HE SAYS THAT J.W. YOUNG IS

10  MR. CARTO.  HE IDENTIFIES PICTURES, AND HE SAYS THAT J.W.

11  YOUNG SAYS HE PERSONALLY OWNS THE ESCONDIDO PROPERTY.  THAT

12  SEEMS PRETTY RELEVANT.

13            WE HAVE THE MARCELLUS DEPOSITION, OR STATEMENT,

14  WHATEVER IT IS.  SAME ARGUMENT.  IN THIS ONE HE SAYS THAT

15  THERE IS A CONNECTION BETWEEN CARTO AND INDEPENDENCE HOUSE,

16  AND WE HAVE THE FRECH, F-R-E-C-H, DEPOSITION.

17            THE RELEVANCY IS IF I ORDER THE SALE, HERE IS

18  SOMEONE WHO COMES FROM A RESPECTED BROKERAGE HOUSE WHO SAYS

19  THAT HE CAN'T IN FACT SELL THE HOUSE.

20            MR. SAMPSON, IS IT YOUR REQUEST THAT I ADD

21  HEREFORD CORPORATION, INDEPENDENCE HOUSE, AND J.W. YOUNG TO

22  THE LIST OF DEBTORS?  AND IF THAT IS SO, WHAT ABOUT THE

23  DEFENSE YOU DON'T REPRESENT ANY OF THESE PEOPLE?  WHERE IS

24  THE STANDING HERE?

25       MR. SAMPSON:  WE DO REQUEST THEY BE ADDED TO THE

26  INDIVIDUAL DEBTORS AS ALTER EGOS.  I THINK — I'M NOT GOING

27  TO REPEAT ALL THE EVIDENCE.  IT SOUNDS LIKE THE COURT READ

28  IT THOROUGHLY.  SO THAT IS THE REQUEST.  WE SERVED IT ON ALL
			
			

page 28



 1  OF THEIR KNOWN ADDRESSES.  THEY HAD THE OPPORTUNITY UNDER

 2  THE STATUTE, THE CASES WE CITED, AS FAR AS AMENDING IT, SO

 3  THE COURT IS ENTITLED TO A NOTICED MOTION TO AMEND THE

 4  JUDGMENT.

 5       THE COURT:  IT HAPPENS ALL THE TIME.  WHY SHOULDN'T I

 6  ADD THE PEOPLE, REALIZING THAT YOU DON'T REPRESENT HEREFORD

 7  CORPORATION, INDEPENDENCE HOUSE, OR THE — UNLESS YOU WANT

 8  TO ADMIT J.W. YOUNG IS MR. CARTO, YOU DON'T REPRESENT J.W.

 9  YOUNG EITHER.

10       MR. URTNOWSKI:  THE REASON WHY YOU SHOULDN'T ADD IT

11  STARTS OUT ONE PROCEDURALLY.  WITH RESPECT TO THE HEREFORD

12  CORPORATION, THE MOVING PAPERS MADE MUCH OF THE FACT THAT

13  THIS WAS AN ALTER EGO OF WILLIS CARTO.  THAT THIS WAS NOT A

14  VALID PANAMANIAN CORPORATION.  THIS WAS NOT A VALID

15  CALIFORNIA CORPORATION.  I POINTED OUT THAT IT WAS --

16  CORPORATION CAN OWN PROPERTY IN A FOREIGN CORPORATION AS

17  LONG AS IT DOESN'T TRANSACT INTERSTATE VESSELS.

18       THE COURT:  I BELIEVE YOU ARE RIGHT ON THAT.

19       MR. URTNOWSKI:  WHAT WE HAVE IS MR. SAMPSON STATING

20  THAT IN THE DECLARATION HIS INVESTIGATION HAS DISCLOSED THAT

21  HEREFORD CORPORATION IS NOT A VALID PANAMANIAN CORPORATION.

22  I DID FILE AN OBJECTION WITH THAT, AND I THINK THAT SOME OF

23  THE OBJECTIONS WERE WELL-TAKEN, INCLUDING THE FACT THERE’s A

24  LACK OF FOUNDATION.  THERE’s NO SUPPORT FOR THAT.

25            MR. SAMPSON IS NOT A PARTY TO HERE.  WE HAVE NO

26  EVIDENCE RIGHT NOW THAT THE CORPORATION IS NOT A VALID

27  CORPORATION, SO WE HAVE TO ASSUME THAT THE HEREFORD

28  CORPORATION IS VALID.
			
			

page 29



 1            WE HAVE GOT OVER ONE OF THE HURDLES THAT SHOWS

 2  IT’s NOT MR. CARTO.  IT IS NOW A VALID CORPORATION.  YOU

 3  HAVE NO EVIDENCE BEFORE YOU OTHERWISE.

 4       THE COURT:  WAIT A MINUTE.  I DON'T EVEN HAVE ANY

 5  EVIDENCE THAT THE CORPORATION EXISTS EXCEPT IN THE MINDS OF

 6  SOMEBODY.  I HAVE ZERO PIECE OF PAPER SHOWS IT'S

 7  INCORPORATED ANYWHERE IN THE WORLD.

 8       MR. URTNOWSKI:  YOU HAVE DEEDS THAT HAVE BEEN SUBMITTED

 9  INTO EVIDENCE BY THE MOVING PARTIES THAT SHOW THIS IS AN

10  ENTITY.  YOU HAVE EVIDENCE BEFORE THE COURT THAT SAYS

11  HEREFORD CORPORATION IS A PANAMANIAN CORPORATION.  THEY

12  SUBMITTED THAT EVIDENCE.  I HAVEN'T OBJECTED TO IT.  THAT'S

13  ON THE RECORD THAT IS BEFORE THE COURT.  HEREFORD

14  CORPORATION IS A PANAMANIAN CORPORATION.

15            WHAT YOU DON'T HAVE IS ANY EVIDENCE SAYING IT'S

16  NOT A VALID CORPORATION, ANY COMPETENT EVIDENCE.  NOT SAYING

17  MR. SAMPSON IS NOT COMPETENT; THAT STATEMENT ISN'T.

18            WHAT YOU HAVE BEFORE THE COURT IS THE EVIDENCE

19  THAT MR. CARTO DOES NOT OWN THE COMPANY.  MRS. CARTO DOES

20  NOT.  THEY HAVE TESTIFIED TO IT.  THEY'RE NOT OFFICERS.

21  THEY'RE NOT SHAREHOLDERS.  THEY DON'T KNOW WHO THE OFFICERS

22  ARE TODAY.  THEY DON'T OWN THE PROPERTY.  THE HEREFORD

23  CORPORATION DOES.  THERE’s NO EVIDENCE TO CONTRADICT THAT.

24  WE'RE GETTING INTO THE ALTER EGO THEORIES, GOING BACK AND

25  FORTH.  GENERALLY IT FLOWS THE OTHER DIRECTION.  YOU DON'T

26  SAY THE CORPORATION IS THE ALTER EGO OF WILLIS CARTO.  YOU

27  SAY WILLIS CARTO IS THE ALTER EGO OF THE CORPORATION.  IN

28  EVERY CASE THEY CITED DEALING WITH CORPORATE ALTER EGOS SAYS
			
			

page 30



 1  THAT THE INDIVIDUALS ARE THE ALTER EGO OF THE CORPORATION.

 2  I SEE NO LAW IN THE PAPERS SAYING THAT THE CORPORATION CAN

 3  BECOME THE ALTER EGO OF WILLIS CARTO.  I DO SEE IS LAW THAT

 4  SAYS IN ORDER TO AMEND THE JUDGMENT TO INCLUDE A NONPARTY AS

 5  AN ALTER EGO, ONE OF THE THRESHOLDS THAT HAS TO BE OVERCOME

 6  IS THE FACT THAT ALTER EGO — POTENTIAL ALTER EGO HAS TO

 7  HAVE CONTROL OF THE LITIGATION.  THEY HAVE NOT MADE AN

 8  ALLEGATION THAT HEREFORD CORPORATION CONTROLLED THE

 9  LITIGATION OR MR. YOUNG OR INDEPENDENCE HOUSE, WHOEVER THAT

10  IS.  THERE’s NO EVIDENCE OF IT.

11            MR. CARTO HAS TESTIFIED IN HIS DECLARATION THAT

12  HE — THAT HEREFORD CORPORATION DID NOT CONTROL IT.

13  ELISABETH CARTO TESTIFIED THE SAME.  THERE’s NO EVIDENCE

14  SUPPORTING ALTER EGO.  THERE WAS NO CHALLENGE TO THEIR

15  DECLARATIONS.  THAT’s THE ONLY EVIDENCE THAT’s BEFORE THE

16  COURT.  THEY HAVEN'T ADDRESSED ANY OF THE ALTER EGO

17  HURDLES.  THERE’s NO COMMINGLING OF BANK ACCOUNTS SHOWN.

18  THERE’s NO CO-REPRESENTATION BY THE SAME COUNSEL SHOWN.

19  THEY DON'T HIT ANY OF THE STANDARDS ASSOCIATED.  IT’s JUST A

20  BLANK STATEMENT TRYING TO PUSH THROUGH A JUDGMENT.  AND I

21  UNDERSTAND THE FRUSTRATION IN COLLECTING A JUDGMENT.  I

22  THINK I MIGHT WANT TO COLLECT ONE MYSELF, BUT THERE’s LEGAL

23  PROCESS YOU HAVE TO COMPLY WITH.  HEREFORD CORPORATION I

24  THINK I POINTED OUT TO THE COURT THEY WERE NOT EVEN SERVED.

25            NOW IF YOU ARE MAKING A DETERMINATION TODAY THAT

26  THE HEREFORD CORPORATION IS MR. CARTO, MRS. CARTO,

27  INDEPENDENCE HOUSE, THAT DETERMINATION DID NOT OCCUR WHEN

28  THE MOVING PAPERS WERE FILED.  HEREFORD CORP., LOOKING AT
			
			

page 31



 1  THE PROOF OF SERVICE, I THINK IT WAS SERVED ONQuail Ridgee

 2  ROAD, THE CARTOS' RESIDENCE.

 3            WHAT THE LAW SAYS — CORPORATION CODE SAYS WHEN

 4  YOU DON'T KNOW WHO THE OFFICERS ARE, WHEN YOU CAN'T FIND

 5  THEM, AND YOU ARE DEALING WITH A FOREIGN CORPORATION THAT IS

 6  NOT FILED WITH THE SECRETARY OF STATE, ITS OFFICERS, YOU

 7  COME BACK BEFORE YOUR HONOR.  YOU APPLY FOR AN ORDER HERE

 8  ALLOWING THE PROCESS TO BE SERVED ON THE SECRETARY OF

 9  STATE.  STATUTES CITE IT DOESN'T JUST COVER SUMMONS.  IT

10  COVERS LEGAL PROCESS, THESE ENTITIES.

11            YOU ASKED ME WHY YOU SHOULDN'T RULE.  THEY'RE NOT

12  PROPERLY BEFORE THE COURT.

13       THE COURT:  YOU SAY THERE’s NO EVIDENCE.  THERE'S

14  DIRECT EVIDENCE FROM YOUR CLIENTS SAYING THAT THE HEREFORD

15  CORPORATION IS NOT THEIR ALTER EGO, NOT ONE AND THE SAME.

16  AND I, OF COURSE, CAN BELIEVE THAT OR DISBELIEVE THAT.

17            WHAT ABOUT THE CIRCUMSTANTIAL EVIDENCE IN THIS

18  CASE?  I FORGOT EXACTLY WHAT MRS. CARTO SAID, AS FAR AS HOW

19  LONG SHE HAS LIVED THERE, 15 YEARS.

20       MR. URTNOWSKI:  MRS. CARTO SAYS SHE LIVED THERE SINCE,

21  I BELIEVE, 1981, OR THEREAFTER.  15 YEARS THEY HAVE LIVED IN

22  THE HOUSE.  THAT’s UNDISPUTED.

23       THE COURT:  SO I'M ASKED TO BELIEVE SOME CORPORATION

24  THAT THEY HAVE NO CONTROL OVER.  THAT THEY DON'T KNOW WHO

25  THE OFFICERS ARE.  THEY DON'T KNOW ANYTHING ABOUT IT.

26  THERE’s NO ADDRESS FOR IT AND REFUSE TO ANSWER QUESTIONS

27  ABOUT IT EXCEPT TO GIVE THIS AFFIDAVIT, WHICH IS NOT SUBJECT

28  TO CROSS-EXAMINATION OR ASKING THEM ANYTHING.  THIS
			
			

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 1  CORPORATION PURCHASED THIS HOME FOR THEM, AND THEN LIBERTY

 2  LOBBY PAYS TAXES — ORGANIZATION THAT I BELIEVE TO BE THE

 3  SAME AS MR. CARTO.

 4            INCIDENTALLY, THAT’s AN INTERESTING ISSUE, ISN'T

 5  IT, A NONPROFIT CORPORATION PAYING FOR THE TAXES ON A

 6  PERSONAL HOME, BUT MAYBE THAT’s A FIFTH AMENDMENT PROBLEM

 7  FOR YOUR CLIENT.

 8            I AM ASKED TO BELIEVE SOMETHING THAT'S

 9  UNBELIEVABLE. THERE’s NOBODY THAT I KNOW OF EVER WHO HAS A

10  CORPORATION THAT BUYS THEM A HOME.  YOU DON'T KNOW ANYTHING

11  ABOUT IT.  YOU LIVE IN IT BASICALLY FOR FREE AND PAY THE

12  TAXES AND, I GUESS, YOU DON'T EVEN PAY THE TAXES.  THAT'S

13  RIGHT.  YOU PAY — JUST A SECOND.  YOU PAY, I GUESS, TO KEEP

14  THE PLACE UP.  THEN YOU REPRESENT TO PEOPLE THAT IT’s YOURS,

15  AND YOU SUE THE POLICE DEPARTMENT SAYING YOU INVADED MY

16  PERSONAL HOME.

17            AND THEN I'M ASKED TO BELIEVE THIS.  IT'S

18  UNBELIEVABLE.

19       MR. URTNOWSKI:  IT’s NOT — YOU ARE ADDRESSING THOSE

20  ISSUES, SUING THE POLICE DEPARTMENT SAYING THEY ATTACKED

21  THEIR RESIDENCE.  A RESIDENCE CAN BE A LEASEHOLD.  IT CAN BE

22  AN OWNERSHIP.  THAT’s THE SAME WITH THE REASON WE DON'T KNOW

23  WHY THEY'RE LIVING IN THE HOUSE.  THEY MIGHT HAVE A 99 YEAR

24  LEASE.  IT HASN'T BEEN DISCOVERED.  THERE’s NO EVIDENCE

25  BEFORE YOU.

26            THIS ALSO OCCURRED 15 YEARS AGO.  WHO KNOWS WHAT

27  HAPPENED TO THE CORPORATION IN THAT TIME.  MAYBE MR. CARTO

28  OWNED IT WHEN IT WAS FORMED.  MAYBE HE HAS SINCE TRANSFERRED
			
			

page 33



 1  THE CORPORATION TO ANOTHER CORPORATION TO ANOTHER

 2  INDIVIDUAL.  I DON'T KNOW THAT.  THERE’s NO EVIDENCE BEFORE

 3  THE COURT THAT ANYTHING IMPROPER WAS DONE HERE.

 4            SHE’s — MRS. CARTO HAS TESTIFIED THAT THEY PAID

 5  THE EXPENSES ON THE HOUSE.  WHY ISN'T — COULDN'T THAT BE

 6  CONSIDERED RENT?  YOU HAVE ONE CHECK FOR LIBERTY LOBBY.

 7       THE COURT:  I WOULD LIKE TO LIVE IN A $600,000 HOUSE

 8  AND PAY THE EXPENSES AND CONSIDER THAT TO BE RENT.

 9       MR. URTNOWSKI:  I THINK THE CARTOS WOULD LIKE TO LIVE

10  IN A $600,000 HOUSE TOO, BUT THIS ISN'T IT.

11       THE COURT:  OR WHATEVER IT’s WORTH, 200,000.

12       MR. URTNOWSKI:  THIS APPEARS TO BE WORTH 250,000.  IT'S

13  NOT A $600,000 HOUSE.  IT’s NOT AN EXTRAVAGANT HOUSE.

14            WHAT IS IMPORTANT THEY DON'T OWN IT.  YOU HAVE

15  NOTHING BEFORE YOU.  YOU DON'T HAVE AN INFERENCE THAT THEY

16  OWN IT.  YOU — THERE’s NO EVIDENCE.

17       THE COURT:  ISN'T POSSESSION NINE-TENTHS OF OWNERSHIP;

18  THAT OLD THING WE LEARNED IN LAW SCHOOL?  SHE LIVED IN IT

19  FOR 15 YEARS.

20       MR. URTNOWSKI:  MY RENTERS IN THE CONDOMINIUM WON'T

21  MAKE THE CLAIM THEY OWN THE PROPERTY.  THEY DON'T KNOW, FOR

22  INSTANCE, MY CASE HOW I HOLD THAT PROPERTY, WHETHER AS A

23  CORPORATION OR NOT.  ALL THEY KNOW IS WHAT THEIR OBLIGATIONS

24  ARE, AND THEIR OBLIGATIONS APPARENTLY PAY THE RENT AND KEEP

25  UP THIS PROPERTY.  ALL YOU HAVE — YOU CAN INFER IS THAT

26  IT’s A LEASEHOLD OWNED BY A FOREIGN CORPORATION THAT'S

27  ENTITLED TO HOLD PROPERTY IN THIS STATE.

28            THERE WAS NO EVIDENCE REGARDING HEREFORD
			
			

page 34



 1  CORPORATION BEFORE THE UNDERLYING TRIAL.  YOU HAD STOPPED

 2  EXAMINATION OF THAT WHEN IT WAS ATTEMPTING TO GO INTO, SO

 3  THERE’s NOTHING BEFORE THE COURT THAT SAYS WHO THE HEREFORD

 4  CORPORATION IS EXCEPT THAT WE KNOW IT’s NOT MR. CARTO AND

 5  MRS. CARTO.  WE KNOW IT’s A VALID PANAMANIAN CORPORATION.

 6  THEY HAVE NOT UNCOVERED WHO IT IS.  I DON'T KNOW WHO IT IS,

 7  AND I SURE DON'T KNOW WHO INDEPENDENCE HOUSE IS.  THAT’s A

 8  NEW NAME.

 9       THE COURT:  WHAT ABOUT THE FACT THAT LAVONNE FURR ON

10  11-13-89 SIGNS THE STIPULATION TO JUDGMENT TO QUIET TITLE

11  AND PERMANENT INJUNCTION RELATIVE TO THIS EASEMENT?  WE

12  HEARD THE NAME LAVONNE FURR, HAVEN'T WE?

13       MR. URTNOWSKI:  TWO ISSUES THERE.  ONE, THAT WAS IN

14  1989, 9 YEARS AGO.  A LOT CAN OCCUR.  TWO, THAT LAWSUIT

15  DIDN'T DEAL WITH PROPERTY INTERESTS IN THE ESTATE ON QUAIL

16  RIDGE.  IT DEALT WITH AN EASEMENT NEAR THE PROPERTY.

17  OWNERSHIP OF Quail Ridge WASN'T IN DETERMINATION, BUT THAT

18  WAS THE HEREFORD CORPORATION.

19            IN THE DECLARATION SUBMITTED BEFORE APPARENTLY THE

20  TITLE COMPANY SUED MR. CARTO.  THEY REALIZED THEIR MISTAKE.

21  THEY WENT BACK AND CHANGED THE — CHANGED THE LAWSUIT TO ADD

22  IN THE HEREFORD CORPORATION.

23       THE COURT:  THEY NEVER SUED MR. CARTO.  THEY SUED J.W.

24  YOUNG.

25       MR. URTNOWSKI:  HE ALLEGES THAT MR. YOUNG IS

26  MR. CARTO.  THEY ADD THE HEREFORD CORPORATION.  THAT IS THE

27  PROPERTY OWNER.  IT WAS THEN.  IT IS NOW.  MR. CARTO DOES

28  NOT CONTROL IT.  THERE’s NO EVIDENCE BEFORE THE COURT THAT
			
			

page 35



 1  HE DOES.  THERE WAS NONE IN THE UNDERLYING TRIAL.  WE

 2  HAVEN'T SEEN ANY COMMINGLING OF BANK ACCOUNTS.  WE HAVE SEEN

 3  NO COMMINGLING OF OWNERSHIP INTERESTS.  ALL YOU HAVE IS

 4  MR. AND MRS. CARTO LIVING ON A PROPERTY AND PAYING RENT BY

 5  KEEPING UP THE ESTATE AND THE EXPENSES ON THE ESTATE.

 6  SIMPLY NOTHING TO ALLOW AN AMENDMENT OF THE JUDGMENT HERE.

 7            AND FINAL ISSUE I WOULD SAY, YOUR HONOR, IS

 8  THERE’s NO EVIDENCE THAT HEREFORD CORPORATION CONTROLLED THE

 9  LITIGATION AS REQUIRED TO ADD A DOE AMENDMENT.  AND I THINK

10  THE COURT SHOULD ALSO LOOK THROUGH LAW ON THIS REVERSE ALTER

11  EGO THEORY THAT’s BEING PRESENTED HERE.  I FOUND NO LAW.  I

12  COULD FIND NO LAW.

13       MR. IZEN:  I WOULD LIKE TO ADDRESS SOMETHING.  MY ROLE

14  HAS BEEN ON THE FIFTH AMENDMENT ISSUE.  WE SPOKE PREVIOUSLY

15  OF THE POSSIBILITY OF IN CAMERA REVIEW TO CERTAIN QUESTIONS

16  AND THE RULING BY THE COURT.  MR. URTNOWSKI ADDRESSES A FACT

17  SITUATION THAT GOES WAY BACK WAY PRIOR TO THE FERREL

18  DONATION.

19            THE FERREL DONATION COULD NOT BE IN THE

20  CONTEMPLATION OF ANY PARTY IT DOESN'T SEEM LIKE TO ME IN THE

21  TIME OF 1992 BASED ON WHAT I KNOW OF THE FACTS.

22            NOW YOUR COMMENT ABOUT YOU ONLY HAVE

23  CIRCUMSTANTIAL EVIDENCE TENDS TO, AS FAR AS THIS MOTION IS

24  CONCERNED, TENDS TO HIGHLIGHT THE FACT THAT YOU ARE RULING

25  ON WHAT EVIDENCE IS BEFORE YOU.  NOW I DON'T WANT TO WAIVE

26  THE CARTOS' FIFTH AMENDMENT PRIVILEGE AGAINST

27  SELF-INCRIMINATION TO IDENTIFYING DOCUMENTS OR TESTIFYING,

28  HOWEVER, IN THIS CASE I ANTICIPATED GOING FORWARD ON A
			
			

page 36



 1  RECORD WHEREBY THEY COULD EXPLAIN THEIR DEALINGS WITH THE

 2  HOUSE, HAVE A RULING ON THAT ISSUE ON THE QUESTIONS, SUBMIT

 3  THE INFORMATION IN CAMERA; AND IF IT IS NOT INCRIMINATING,

 4  WHICH I SUSPECT IT’s NOT UNDER THE CIRCUMSTANCES, SINCE THIS

 5  FERREL MONEY IS NOT CONNECTED WITH — I CAN'T SEE ANYTHING

 6  THEY ACQUIRED PRIOR TO 1992 THAT CAN BE MADE PART OF THE

 7  RECORD.  AND YOU CAN USE THAT INFORMATION SUCH THAT YOU CAN

 8  RULE ON THIS MOTION.  I WOULD THINK IT WOULD BE PREMATURE

 9  WITHOUT GETTING THE BENEFIT OF THAT INFORMATION.

10            I HAVE REASON TO BELIEVE THAT THE ORIGINAL

11  PANAMANIAN CORPORATION RECORDS INCORPORATING THAT

12  CORPORATION ARE AVAILABLE.  I HAVE REASON TO BELIEVE THAT

13  THE CARTOS CAN ANSWER QUESTIONS CONCERNING THEIR LEASEHOLD;

14  WHAT THEY HAVE DONE WITH THE HOUSE SINCE IT WAS TRANSFERRED;

15  THE REASON WHY IT WAS TRANSFERRED SO LONG AGO, OR SO SHORT

16  AGO, OR WHATEVER.  AND I BELIEVE THEY PROBABLY WOULD KNOW

17  WHO WAS THE PERSON THEY DEALT WITH, AS FAR AS CARETAKING ON

18  THE PROPERTY AND WHAT THE ARRANGEMENT IS IN LIVING THERE.

19            I DON'T WANT TO ASSUME BY THE RECORD HERE AS WE

20  HAVE IT THAT IT IS A SITUATION WHERE THE COURT WILL NOT KNOW

21  THE THINGS OR WILL RULE ON CIRCUMSTANTIAL EVIDENCE.  THERE

22  HAS BEEN A CRIMINAL CHARGE MADE.  I DON'T THINK WE CAN GO

23  BACK AS FAR AS PREDATING ANY DISPOSITIONS OF FUNDS OR

24  MONIES, BUT I WANT A RULING OF THE COURT TO THAT EFFECT ON

25  THIS FERREL.  I THINK THE PROBLEM COMES FROM THE CRIMINAL

26  ASPECT WHEN MISS FERREL GIVES THE DONATION AND WHAT IS DONE

27  WITH IT AFTER SHE GAVE THE DONATION.

28       THE COURT:  THE LAW ISN'T THAT THIS HOUSE CAN'T BE
			
			

page 37



 1  SEIZED UNLESS THE FERREL MONEY WENT INTO THE HOUSE.  THIS IS

 2  A JUDGMENT AGAINST MR. CARTO.  IF HE GOT THIS MONEY FROM HIS

 3  GREAT GRANDFATHER AND IT WAS GIVEN TO HIM AT AGE 6, IT CAN

 4  BE SEIZED.

 5       MR. IZEN:  I'M NOT SAYING THAT.  I DON'T THINK THAT THE

 6  LAW IS THAT THE PROPERTY CAN BE SEIZED BECAUSE SOMEBODY GOT

 7  A JUDGMENT AND THEY WANT IT, SO THEY WANT TO ADD EVERYBODY,

 8  INCLUDING THE PRESIDENT OF THE U.S.

 9            THE QUESTION IS, WHO WAS THE VIRTUAL

10  REPRESENTATIVE OF THE TRIAL?  DID THIS CORPORATION HAVE

11  SOMETHING TO GAIN BY OR LOSE BY THE TRIAL OF THIS CASE?  DID

12  IT RUN THAT PRIOR TO LITIGATION?  AND YOU LOOK TO THE RECORD

13  AND THE PRIOR TRIAL.  YOU LOOK TO WHATEVER RECORD, THE

14  AFFIDAVITS, OR WHATEVER THEY HAVE GIVEN YOU.  THE POINT IS

15  THERE’s DIRECT TESTIMONY FROM THE CARTOS.  THEY'RE UNDER

16  INVESTIGATION CRIMINALLY.  THAT’s BEEN INSTITUTED BY THE

17  CREDITORS.  THEY'RE ENTITLED TO A RULING AND ENTITLED TO PUT

18  THE EVIDENCE IN.  THIS IS NOT A TRIAL ON AFTERWARDS, THE WAY

19  I UNDERSTAND IT.

20       THE COURT:  IF THE CARTOS WANT TO TESTIFY HERE IN OPEN

21  COURT, I WOULD CERTAINLY — THEY WILL BE GIVEN THAT

22  OPPORTUNITY.  I AM NOT GOING TO HAVE ANY EX PARTE

23  COMMUNICATIONS, EVEN ON THE RECORD, WITH THE CARTOS.  I

24  FORMED AN OPINION DURING THE COURSE OF THE TRIAL THAT THEY

25  ARE NOT FORTHRIGHT WITH THE COURT.  THERE’s NO REASON FOR ME

26  TO LISTEN TO MORE OF THAT.

27            WAS THE HEREFORD CORPORATION REPRESENTED DURING

28  THE TRIAL IN FRONT OF ME?  THAT’s ONE OF THE REASONS I ASKED
			
			

page 38



 1  YOU ABOUT THE FURRS SIGNING OF THE QUITCLAIM.

 2            MR. SAMPSON, ANY COMMENTS YOU WOULD LIKE TO MAKE?

 3       MR. SAMPSON:  I'LL KEEP IT BRIEF, YOUR HONOR.  AS FAR

 4  AS THE EVIDENCE BEFORE THE COURT, MR. CARTO TESTIFIED THAT

 5  HE SET UP THIS ENTITY, WHATEVER IT IS, TO HIDE SO PEOPLE

 6  WOULDN'T KILL HIM.  THAT’s IN THE DECLARATION BEFORE THE

 7  COURT.  THAT’s PRETTY MUCH DIRECT TESTIMONY THAT HE OWNS IT,

 8  AND IT BELONGS TO HIM, AND THAT IT IS HIM IN ESSENCE AND HIS

 9  WIFE.

10            AND IN ADDITION, HE’s THE ONE THAT RAN IN TO THE

11  POLICE, SUED THE POLICE AND CLAIMED THAT HIS PERSONAL

12  PROPERTY AND HIS HOME WAS INVADED IN THE COURSE OF THAT.

13  WITH MR. WALK AND MR. MARCELLUS THEY ALSO TESTIFIED IT WAS

14  HIS HOUSE.  HE OWNED IT.  AND I THINK THAT’s THE KIND OF

15  EVIDENCE WE HAVE TO PUT BEFORE THE COURT.  WE CAN NEVER GET

16  EVERYTHING BEFORE THE COURT, BUT I BELIEVE WE GOT ENOUGH SO

17  THE BURDEN IS SHIFTED, AND THERE’s NO CONTRADICTORY

18  EVIDENCE.  THERE ARE PROCEDURES IF HEREFORD CORPORATION

19  EXISTS FOR IT TO COME IN AND ASSERT THE INTERESTS BUT TO

20  THIS DATE IT HASN'T.  AND WE BELIEVE IT’s ON PROPER NOTICE.

21  SO --

22       MR. URTNOWSKI:  YOUR HONOR --

23       THE COURT:  ANYTHING ELSE?

24       MR. URTNOWSKI:  IF THE COURT IS INCLINED TO RULE THAT

25  THE HEREFORD CORPORATION IS MR. AND MRS. CARTO, I HAVE PUT

26  IN A REQUEST TO OBTAIN THE PANAMANIAN RECORDS TO SHOW WHO

27  OWNS IT.  THAT IT’s VALID.  IT’s JUST AS MR. SAMPSON HAD NO

28  PAPERS BEFORE HIM, AND I ASSUME HE HAS NO PAPERS BECAUSE
			
			

page 39



 1  THERE’s NONE SUBMITTED TO HIS DECLARATION.

 2            I WOULD REQUEST MORE TIME FROM THIS COURT TO

 3  CONTINUE THE HEARING — THERE’s ALREADY A RESTRAINING ORDER

 4  ON THE PROPERTY.  THE PROPERTY ALREADY HAS YOU PROTECTED

 5  FROM MR. CARTO, MRS. CARTO FROM TRANSFERRING ANY INTEREST IN

 6  THE PROPERTY — TO ALLOW ME TO OBTAIN CORPORATE RECORDS FROM

 7  PANAMA TO SUBMIT TO THE COURT TO SHOW WHO THE OWNERS OF

 8  HEREFORD CORPORATION IS.

 9            I THOUGHT I MIGHT HAVE THOSE BY TODAY.  I DON'T.

10  I EXPECT TO HAVE THEM SHORTLY, DAYS, MAYBE A WEEK, MAYBE

11  TWO.

12       THE COURT:  WELL, THE PROBLEM, AS I SEE IT, IS THAT

13  IT’s JUST ANOTHER ONE OF THESE DELAYS.  THERE IS A REQUEST

14  BY THE DEBTORS, AND IT’s 50 SOME ITEMS, 59 ITEMS LONG.  I

15  FORGOT WHEN THE REQUEST WAS GIVEN TO THEM.

16            COUNSEL, CAN SOMEONE FILL ME IN ON THAT?  LET'S

17  SEE, 2-27-98.  I KNOW AT LEAST ON THAT DATE, PROBABLY BEFORE

18  THAT DATE.

19       MR. SAMPSON:  THAT WAS THE TURNOVER ORDER THAT WAS

20  PERSONALLY SERVED ON BOTH MR. AND MRS. CARTO ON THE 10TH OF

21  APRIL.  IT WAS SERVED ON MR. CARTO ON THE 27TH.  WE RESERVED

22  IT IN OPEN COURT ON THE RECORD SO THERE WOULD BE NO

23  QUESTIONS.

24       THE COURT:  SO THE FIRST THING ASKED FOR IS ALL

25  DOCUMENTS IN DEBTOR’s POSSESSION CONCERNING THE HEREFORD

26  CORPORATION.  SO THERE’s BEEN PLENTY OF TIME TO DO THIS, AND

27  YOU CAN BRING IT IN HERE TODAY.  IT HASN'T BEEN DONE.  I AM

28  NOT GOING TO GRANT A CONTINUANCE.
			
			

page 40



 1            ANYTHING ELSE?  ANY OTHER ARGUMENT?

 2            OVER THE OBJECTION OF THE DEBTORS, I AM GOING TO

 3  ADD THE HEREFORD CORPORATION, INDEPENDENCE HOUSE, AND J.W.

 4  YOUNG AS ALTER EGOS OF MR. CARTO.  THEY'RE NOW JUDGMENT

 5  DEBTORS.

 6            GO INTO THE MOTION TO SELL THE ESCONDIDO

 7  PROPERTY.  I THINK I PRETTY MUCH ANSWERED THAT BY MAKING THE

 8  PREVIOUS RULING.  I DO BELIEVE THAT THIS IS A RESIDENCE OF

 9  THE CARTOS.  THEY OWN IT.  THE HEREFORD CORPORATION, BASED

10  ON THE EVIDENCE I HAVE, IS NOTHING MORE THAN A SHAM.

11            I AM PREPARED TO APPOINT GREG FRECH TO SELL IT AND

12  THE ELISORS TO SIGN THE DOCUMENTS.

13       MR. URTNOWSKI:  TODAY WE'RE HERE FOR AN APPLICATION TO

14  SELL.  THE CIVIL CODE OF CIVIL PROCEDURES 704.770 REQUIRES

15  AN OSC TO BE SET; THE CARTOS BE GIVEN 20 DAYS NOTICE TO PUT

16  ON PROOF AS TO WHY THE CORPORATION — WHY THE PROPERTY

17  SHOULD NOT BE SOLD AND MAY NOT BE SOLD.

18       THE COURT:  ANYTHING YOU WANT TO ADD, MR. SAMPSON?

19       MR. SAMPSON:  THE CORRECT PROCEDURE DOES REQUIRE

20  ANOTHER HEARING TO BE SET TODAY.  IN THE INTERIM, WE'RE

21  ASKING FOR AUTHORITY TO START ADVERTISING IT.

22            THE ONE ADMINISTRATIVE ISSUE AS WE'RE SELLING IT

23  IS, THE PERSON APPOINTED TO SELL IT WOULD REQUIRE ACCESS TO

24  INSPECT THE HOUSE, MEASURE IT, AND THEN LIST IT.  THAT CAN

25  BE DONE.  THERE’s A 20 DAY HEARING.  THEN THERE’s A SALE

26  DATE SET, AND THEN THE SALE WOULD BE HELD IN OPEN COURT

27  SUBJECT TO OVERBID.  IT WILL BE DONE BY THE CODE.

28       MR. URTNOWSKI:  THAT’s ALL PREMATURE TOO IF WHAT
			
			

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 1  COUNSEL IS SUGGESTING THEY LIST THE PROPERTY FOR SALE NOW

 2  AND HAVE ACCESS TO THE CARTOS' RESIDENCE.  THERE’s BEEN NO

 3  DETERMINATION THAT THE PROPERTY IS TO BE SOLD YET.

 4       THE COURT:  YOU ARE NOT ASKING FOR ACCESS NOW, ARE

 5  YOU?  YOU ARE GOING TO BRING YOUR HEARING 20 DAYS, 21 DAYS.

 6       MR. SAMPSON:  MR. URTNOWSKI IS OFF ON THAT POINT.  THE

 7  WAY THIS GOES IS IF SOMEBODY RESIDES IN THE PROPERTY, NEED A

 8  COURT ORDER TO AUTHORIZE THE SALE.  REALLY TRULY THEY HAVE

 9  BEEN PUT ON NOTICE OF THIS FOR MORE THAN THE REQUIRED

10  AMOUNT, AT LEAST 17 DAYS.  THE COURT CAN SET A SALE DATE OUT

11  OF 120 DAYS, AND THEN IN THE INTERIM THEY CAN MARKET IT AND

12  DO THE REST.  AS FAR AS ANOTHER OSC, ESSENTIALLY WOULD BE

13  RULING ON THE SAME THING THE COURT CAN RULE ON TODAY.

14       THE COURT:  THAT’s RIGHT.  THAT’s WHY I AM WONDERING

15  WHY I'M DOING IT.

16       MR. URTNOWSKI:  ONE THING THE COURT REQUIRES — THE

17  CODE REQUIRES YOU TO DO IT.  TWO, THERE WAS NO EVIDENCE

18  REQUIRED TO BE PUT FORTH TODAY THAT THE PROPERTY WOULD NOT

19  BE SOLD, BECAUSE THAT WAS NOT BEFORE THE COURT.

20       THE COURT:  ALL RIGHT.  IF YOU WANT TO GIVE ME A DATE,

21  I DO HAVE A MURDER TRIAL STARTING.  IT WILL BE A LONG TRIAL,

22  TOUGH TRIAL, ABOUT 3 MONTHS.

23       MR. URTNOWSKI:  THE CODE REQUIRES THAT THE CARTOS BE

24  GIVEN 20 DAYS PERSONAL NOTICE OF AN OSC.  IT HAS TO BE AFTER

25  20 DAYS, YOUR HONOR.

26       THE COURT:  JUNE 8 WOULD BE 20 DAYS.  YOU WILL BE HERE

27  ON THAT DATE.  YOU ARE GETTING THEIR NOTICE RIGHT NOW IN

28  COURT.  WE'LL BE CHOOSING A JURY ON THAT DATE.  I DON'T
			
			

page 42



 1  THINK THIS SHOULD TAKE TOO LONG.

 2            HOW ABOUT COMING IN AT 3 IN THE AFTERNOON?

 3       MR. URTNOWSKI:  FINE.

 4       THE COURT:  SEE YOU AT 3 O'CLOCK ON THAT DATE.  I

 5  ALREADY RULED ON STRIKING PORTIONS OF THE PLAINTIFF'S

 6  AFFIDAVIT.

 7            LET’s TALK ABOUT THE CONTEMPT.  LET ME MAKE SOME

 8  GENERAL COMMENTS FIRST.  IF THE PARTIES HERE WOULD LIKE TO

 9  TRY TO SETTLE THIS CASE, I AM NOT GOING TO DO THAT.  JUST TO

10  SETTLE IT I HAVE TO TALK TO YOU INDIVIDUALLY.  I DON'T WISH

11  TO DO THAT.  I CAN PROVIDE A JUDGE FOR YOU.  I WILL FIND

12  SOMEBODY TO TRY TO SETTLE IT.

13            THE LAST THING THAT I WANT TO DO IN THIS WHOLE

14  WORLD, MR. AND MRS. CARTO, IS SEND YOU TO JAIL, BUT

15  ULTIMATELY IT’s COMING TO THAT.  YOU ARE NOT DEALING HERE

16  WITH SOME LAW FIRM THAT’s A HICK LAW FIRM WHO IS TRYING TO

17  ENFORCE SOME JUDGMENT THAT YOU GET OUT OF SMALL CLAIMS

18  COURT.  THEY KNOW WHAT THEY ARE DOING.  YOUR LIFE IS

19  COLLAPSING AROUND YOU, AND YOU BETTER BE SERIOUS ABOUT

20  THIS.

21            MY PROBLEM IS THIS.  YOU HAVE TWO AREAS, AS I SEE

22  IT, FOR CONTEMPT.  FIRST THE FAILURE TO ANSWER QUESTIONS.

23  THIS IS THIS WHOLE ISSUE OF THE FIFTH AMENDMENT.

24  PRELIMINARILY I LOOKED AT THAT, AND I SIMPLY DON'T SEE

25  THERE’s ANY FIFTH AMENDMENT PRIVILEGE AND AS I UNDERSTAND

26  THE LAW IN THE CASES CITED; AND SECOND, IT’s MUCH EASIER TO

27  ISSUE CONTEMPT FOR THE FAILURE TO TURN OVER DOCUMENTS.

28  THERE ARE ABOUT 56 AREAS THAT THEY WANT DOCUMENTS TURNED
			
			

page 43



 1  OVER.  I LOOKED AT IT AND SOME ARE DUPLICATIVE AND

 2  EVERYTHING ELSE.  THERE ARE 51 OF THEM.  I CAN GO THROUGH

 3  THEM ONE BY ONE WHERE I THINK THAT THESE ARE LAWFUL ORDERS

 4  OF THIS COURT FOR YOU TO DO THINGS, AND YOU ARE NOT DOING

 5  THEM, AND THIS IS ADDRESSED TO BOTH YOU AND YOUR WIFE.  AND

 6  IF YOU ARE FOUND IN CONTEMPT, I WILL GIVE YOU 5 DAYS ON EACH

 7  ONE OF THESE, AND I AM GOING TO RUN IT CONSECUTIVE.  TELL

 8  THE JAIL NO EARLY OUT.  THAT’s 255 DAYS.  YOU CAN SEEK WHAT

 9  REMEDY YOU WANT FROM THE JUDGES ABOVE ME.  THAT’s WHAT IS

10  GOING TO HAPPEN.

11            AND THEN AFTER THAT I WILL WORRY ABOUT PUTTING YOU

12  INTO JAIL UNTIL YOU ANSWER THE QUESTIONS.  IT’s SORT OF LIKE

13  THE SUSAN MACDOUGLE THING.  YOU WATCHED THAT.  YOU GO TO

14  JAIL UNTIL YOU ANSWER THE QUESTIONS.  YOU DON'T ANSWER THE

15  QUESTIONS, YOU STAY IN JAIL.  IT’s THE LAST THING I WANT TO

16  DO IN THE WORLD.

17            AND I'M NOT GOING TO SEND YOU TO JAIL TODAY.  I

18  DON'T CARE WHAT IS GIVEN TO ME.  I WILL GIVE YOU AN

19  OPPORTUNITY TO COMPLY WITH THE LAWFUL ORDERS OF THIS COURT

20  ULTIMATELY.  I AM EXTREMELY RELUCTANT TO SEND SOMEONE OF

21  YOUR AGE AND YOUR WIFE’s AGE TO JAIL, BUT I WILL HAVE TO DO

22  IT.  DO WHAT YOU WANT TO DO.  IT’s COMING AND, YOU KNOW, I

23  LIVED WITH THIS CASE AND THE FALSE TESTIMONY THAT I HAVE

24  GOTTEN AND MULTIPLE CORPORATIONS; THE FACT THAT YOU

25  REPRESENT YOURSELF AS AN OWNER IN ONE POSITION, NOT AS AN

26  OWNER IN ANOTHER.  I'M NOT GETTING TIRED OF IT, BUT YOU

27  CAN'T EXPECT THIS COURT TO HAVE INFINITE PATIENCE.

28            I DON'T KNOW WHAT YOU WANT TO DO ABOUT THE
			
			

page 44



 1  CONTEMPT.  MY FEELING IS I WOULD PROBABLY PUT IT FOR AN OSC,

 2  GIVE MR. CARTO ANOTHER CHANCE TO COMPLY.  AND THERE ARE TWO

 3  BIG AREAS HERE.  ONE IS TO ANSWER THE QUESTIONS PROPOSED BY

 4  COUNSEL.  IF YOU THINK YOU HAVE A FIFTH AMENDMENT RIGHT

 5  THERE, THEN SO BE IT, AND WE'LL HANDLE THAT; BUT IT WILL BE

 6  HANDLED AFTER YOU COMPLY WITH THE TURNOVER ORDER ON THE

 7  DOCUMENTS.  I MEAN, AN ATTORNEY HERE TELLS ME HE THINKS THAT

 8  IF NEED BE DOCUMENTS ON THE HEREFORD CORPORATION CAN

 9  APPEAR.  NOW HE CAN'T REVEAL HIS COMMUNICATIONS WITH YOU,

10  BUT I CAN INFER THEY APPEAR BECAUSE YOU EITHER HAVE ACCESS

11  TO THEM OR YOU HAVE THEM YOURSELF, YET THAT’s THE FIRST

12  THING THEY ASKED FOR IN THIS.

13            AND MR. SAMPSON, IS IT CORRECT THERE HAS BEEN NO

14  DOCUMENTS FROM THE HEREFORD CORPORATION GIVEN TO YOU BY

15  MR. CARTO?

16       MR. SAMPSON:  WE RECEIVED NO DOCUMENTS IN RESPECT TO

17  THE TURNOVER ORDER, YOUR HONOR.

18       THE COURT:  I DON'T KNOW WHAT YOU WANT TO DO ON THE

19  CONTEMPT.  I WANT TO EMPHASIZE AGAIN I'M RELUCTANT TO DO IT,

20  BUT I THINK WHEN I SET THE DATE FOR THIS CONTEMPT HEARING,

21  YOU'LL PRETTY MUCH TELL ME WHERE YOU WANT TO BE LIVING THAT

22  NIGHT BY THE WAY YOU COME DRESSED.  IF YOU ARE DRESSED IN

23  THE NICE SUIT AND EVERYTHING, I ASSUME YOU ARE GOING TO

24  COOPERATE WITH THE ORDERS OF — THE LAWFUL ORDERS OF THIS

25  COURT.  IF YOU WANT TO GO TO JAIL, YOU MIGHT AS WELL COME IN

26  THE DUNGAREES.  THE SUIT WILL NOT DO YOU MUCH GOOD IN JAIL.

27  THERE’s WHERE WE ARE.

28            MR. SAMPSON, WHAT DO YOU WANT TO DO ABOUT THIS
			
			

page 45



 1  CONTEMPT PROCEEDING?

 2       MR. SAMPSON:  WE SET IT SO IT COULD BE HEARD TODAY, BUT

 3  THE COURT IS BEING VERY FAIR.  IT WOULD TAKE MORE TIME IF

 4  YOU SET IT FOR 20 MORE DAYS ON JUNE 8TH, OR IT CAN BE HEARD

 5  TOGETHER.  THAT WOULD BE ONE WAY OF SETTLING BOTH ISSUES AT

 6  ONCE.  IF THE COURT ISSUED THE NOTICE TODAY, AGAIN SERVICE

 7  WOULDN'T BE A PROBLEM.

 8       THE COURT:  RIGHT.  I WOULD ISSUE THE NOTICE AGAIN, AND

 9  THEY'RE BOTH HERE TO BE SERVED.

10       MR. IZEN:  LET ME STATE OBJECTIONS ON THE RECORD BUT

11  ALSO ASK SOME QUESTIONS TO THE EXTENT THAT THERE ARE

12  DOCUMENTS THAT ARE REQUESTED.  THERE’s AN ELEMENT IN HERE OF

13  TRACING THE FERREL MONIES.  THAT’s THE CRIMINALITY PROBLEM

14  WITH WHAT HAS BEEN EXPRESSED IN SWITZERLAND, THE CHARGES,

15  WHAT COSTA MESA WAS ATTEMPTING TO FOLLOW.  I HAVE NOT BEEN

16  IN THE CASE LONG ENOUGH TO LOOK DOWN THE DOCUMENTS TO SEE

17  WHAT DOCUMENTS RAISE A PROBLEM WITH THAT; WHAT DON'T.  IT

18  WOULD BE MY POSITION TO TENDER WITHOUT IDENTIFICATION THE

19  DOCUMENTS SIMPLY BECAUSE ANY OF THE DOCUMENTS THAT THEY ARE

20  DESIRING UNDER THE UNDERSTANDING THAT UNDER UNITED STATES V.

21  DOE IT’s THE MERE ACT OF IDENTIFYING THEM THAT CAN BE

22  INCRIMINATING, RATHER THAN THE DOCUMENT THEMSELVES.  I THINK

23  IN JUDGMENT COLLECTION THEY'RE SIMPLY INTERESTED IN THE

24  CONTENTS OF THE DOCUMENT.  THEY DON'T NECESSARILY CARE ABOUT

25  TYING THE DOCUMENTS TO THAT PERSON FOR PURPOSES OF

26  AUTHENTICATION.

27            NOW PREVIOUSLY WE INDICATED THAT WE WISHED AN IN

28  CAMERA REVIEW OF THE QUESTIONS THAT WERE PRESERVED.  ARE YOU
			
			

page 46



 1  DENYING THAT TO THE DEBTORS?

 2       THE COURT:  UNLESS YOU CAN GIVE ME SOME AUTHORITY WHERE

 3  I HAVE TO DO IT.  I DON'T WANT TO DO IT.  I DON'T BELIEVE

 4  IT’s APPROPRIATE.  IN ALL CANDOR, I DON'T HAVE ANY

 5  CONFIDENCE IN WHAT YOUR CLIENTS TELL ME, BASED ON THE

 6  TRIAL.  THEY WEREN'T CANDID WITH ME AT THE TRIAL, AND I HAVE

 7  NO REASON TO BELIEVE IN THE COURSE OF THIS CASE THAT THEY'VE

 8  BEEN CANDID AGAIN.  WHY SHOULD I LISTEN TO PEOPLE I DON'T

 9  THINK ARE CANDID WITH ME?

10       MR. IZEN:  IT’s NOT A QUESTION OF CANDOR.  IT’s A

11  QUESTION OF CONSTITUTIONAL RIGHTS.  I THINK THE CASES ARE

12  CLEAR, BOTH IN CALIFORNIA AND OTHERWISE, THAT IT’s THE

13  RESPONSIBILITY OF THE DEBTORS OR THE PERSON BEING ASKED THE

14  QUESTIONS, WHO IS A CITIZEN WITH FIFTH AMENDMENT RIGHTS, TO

15  PROVIDE THE COURT WITH ENOUGH INFORMATION TO BE ABLE TO

16  UNDERSTAND AND RULE ON THEIR ASSERTION OF PRIVILEGE.

17            WE'RE NOT REFUSING TO DO THAT.  IF YOU CLOSE THE

18  DOOR ON THAT, WE'RE SIMPLY PRESERVING THAT FOR APPEAL.  IT

19  IS THE DEBTORS' INTENTIONS HERE TO GO FORWARD WITH ANY OF

20  THESE QUESTIONS AND EXPLAIN THEIR CONCERNS TO THE COURT, AND

21  THEN IF THE COURT WERE TO COMPEL THEM TO ANSWER THE

22  QUESTIONS, THEN THEY WOULD BE IN THE POSITION OF SOMEONE WHO

23  HAD EITHER BEEN ERRONEOUSLY COMPELLED AND APPEAL THAT OR GO

24  TO JAIL.  AND THERE’s SOME OBJECTION FOR WITH ERRONEOUSLY

25  COMPELLED, NOT UNDER THE FOREIGN JURISDICTION, UNDER

26  CASTER.  WE WANT TO MAKE SURE WE'RE ON THE RIGHT BASE ON

27  THAT.

28            THE COURT UNDERSTANDS OUR POSITION.  WE'RE NOT THE
			
			

page 47



 1  SOLE ARBITER OF THE PRIVILEGE.  IF THE COURT FINDS THE IN

 2  CAMERA REVIEW OR OTHERWISE THEY'RE NOT CREDIBLE, MAKES ITS

 3  FINDING ACCORDINGLY AND SAYS THE FIFTH AMENDMENT PRIVILEGE

 4  DOESN'T APPLY, BECAUSE THEY'RE NOT CREDIBLE IN LIGHT OF ALL

 5  THE OTHER EVIDENCE IN THE CASE.  THE COURT CAN MAKE THAT

 6  FINDING, AND THE APPEALS COURTS OR WHO REVIEWS IT CAN MAKE

 7  THE DETERMINATION.

 8       THE COURT:  I DON'T GET TO THAT ISSUE IF I GO ON THE 56

 9  ITEMS THEY ASKED FOR.  THE ONES I EXCLUDED WERE THINGS OF

10  TURNING OVER THEIR PERSONAL FINANCIAL INFORMATION.

11       MR. IZEN:  LET ME PRESS THE PANAMANIAN JUDGE THING.  I

12  TAKE THE RESPONSIBILITY TO THE COURT VERY SERIOUSLY.

13  THERE’s AN IMPLICATION BY THE COURT THAT MR. URTNOWSKI, OR

14  COUNSEL, OR DEFENSE, WHATEVER, CAN ALL OF A SUDDEN PRODUCE

15  RECORDS.  WELL, THE ANSWER TO THAT, IF THIS RECEIVER REALLY

16  KNOWS WHAT HE’s DOING, AND HE’s FROM A TOP HOT SHOT LAW

17  FIRM, THEY KNOW THE PANAMANIAN RECORDS ARE AVAILABLE TO

18  EVERYBODY.  ALL IT TAKES IS A REQUEST, WHICH HAS BEEN MADE

19  BY US, TO GET RECORDS, WHICH ARE PUBLIC RECORD.  YOU CAN ASK

20  DOWN THERE FOR THE STATUS OF A CORPORATION, ITS ARTICLES AND

21  ALL THESE THINGS LIKE YOU CAN ASK UP HERE.

22            NOW WE'RE NOT SAYING WE WOULDN'T DO THAT, BUT WE

23  KIND OF — WE'RE AMAZED THAT WOULD BE TAKEN AS SOMETHING

24  THAT THE COURT WOULD HAVE UMBRAGE AGAINST US.  THIS IS A

25  MATTER OF PUBLIC RECORD.  WE MAY BE ABLE TO PRODUCE IT

26  EASIER THAN THEY HAVING SOME FAMILIARITY PREVIOUSLY WITH

27  PANAMANIAN LAW, BUT YOU ARE DEALING WITH AN ISSUE THAT'S

28  PUBLIC RECORD.  I DON'T KNOW WHAT THE OTHER DOCUMENTS ARE.
			
			

page 48



 1  I WILL CERTAINLY LOOK AT IT, AND HOPEFULLY SOMETHING CAN BE

 2  DONE TO TENDER THEM WITH AND GIVE THEM THE SPECIFIC

 3  INFORMATION, WITHOUT SPECIFICALLY IDENTIFYING THEM — IN A

 4  WAY THEY WOULD BE USELESS IN ANY CRIMINAL CASE BUT CAN BE

 5  USED TO THE EXTENT THEY NEED THEM FOR THE INFORMATION HERE.

 6       THE COURT:  I'LL HEAR FROM MR. SAMPSON IN A MINUTE, BUT

 7  BASED ON WHAT I READ, IT’s AWFULLY HARD FOR ME TO BELIEVE

 8  THAT SWITZERLAND WILL DO ANYTHING ABOUT THIS.  COSTA MESA

 9  PROBABLY IS — THE STATUTE OF LIMITATIONS RUNS OUT IN A FEW

10  MONTHS ON THAT ANYWAY, AND THEY HAVE TAKEN THE EVIDENCE AND

11  RETURNED IT TO THE PARTIES.  POLICE NORMALLY DON'T RETURN

12  EVIDENCE TO PARTIES WHEN THEY THINK THEY ARE GOING TO BE

13  PROSECUTING.  IRS MAY HAVE ITS OWN DIFFICULTIES WITH

14  MR. CARTO AND MRS. CARTO, BUT THIS COURT HASN'T BEEN

15  NOTIFIED TO GIVE ANY COPIES OF TRANSCRIPTS OR DOCUMENTS TO

16  ANY GOVERNMENTAL AGENCY.

17            THE ATTORNEY GENERAL MAY BE A BIT INTERESTED IN

18  THIS BUSINESS OF LIBERTY LOBBY PAYING FOR THE TAXES ON THE

19  HOME THAT MR. CARTO LIVES IN.  ONE WONDERS WHEN YOU TALK

20  ABOUT PEOPLE SENDING MONEY TO LIBERTY LOBBY IF THEY THOUGHT

21  THEY WERE SENDING MONEY FOR THAT PURPOSE.  SO THESE WORK

22  TOGETHER, DON'T THEY?

23            BUT IF I TAKE THE ATTACHMENT “A” FILED BY THE

24  DEBTORS AND I GO THROUGH THAT FOR THE THINGS THEY'RE ASKING

25  FOR, FOR EXAMPLE, HEREFORD CORPORATION, LIBERTY LOBBY,

26  VIBET, FOUNDATION TO DEFEND THE FIRST AMENDMENT — LOOK AT

27  THESE ORGANIZATIONS, LIBERTY LIFE LINE, DOWNEY SAVINGS,

28  WELLS FARGO, SOUTH BAY BANK, UNITED VIRGINIA BANK, SHEARSON
			
			

page 49



 1  LEHMAN HUTTON, WHEAT FIRST SECURITIES, ASA LIMITED COMMON,

 2  STANDARD CHARTERED BANK IN ZIMBABWE, RADNOVICH FINANCIAL

 3  SERVICES, INGEBORG BUSCH TRUST, HOMESTAKE MINING

 4  CORPORATION, BORDIER ET CIE, PARSON TRADING, THE ATLANTIC

 5  FIXTURES, VISTA INVESTMENT, LONDON REAL ESTATE PORTFOLIO,

 6  FLEMING PRIVATE ASSET MANAGEMENT, QUILTER GOODSON, CHARLES

 7  SCHWAB, JACK WHITE AND COMPANY.  QUILTER GOODSON EXISTS --

 8  THAT WAS THE LAW FIRM, AS I REMEMBER IT, IN LONDON.  I KNOW

 9  THESE THINGS HAVE TO EXIST.  JACK WHITE AND COMPANY, BANK OF

10  N.T. BUTTERFIELD AND SON, LIMITED, VENEZUELA GOLDFIELD'S,

11  KAYLA SATELLITE BROADCASTING, SOUND COMMUNICATIONS, H.F.

12  HUTTON.  IT GOES ON AND ON AND ON.

13            IF I TAKE OUT, FOR EXAMPLE, ITEM 33 AND 34, WHICH

14  ARE THE PERSONAL RECORDS OF MR. AND MRS. WILLIS CARTO, AND

15  THEN LATER ON I TAKE OUT SOME OF THE OTHER THINGS WHERE

16  THEIR FINANCIAL ADVISORS ARE BEING ASKED TO TELL US ABOUT

17  THEM, MOST OF THESE FIFTH AMENDMENT THINGS DISAPPEAR.  I

18  CAN'T BELIEVE THAT MR. WILLIS CARTO HAS ANY ARGUMENT OF

19  FIFTH AMENDMENT RIGHT AS TO ALL THE OTHER THINGS.

20            THEN WE DO ALSO HAVE THE REAL PROBLEM OF CONFLICT

21  HERE.  MR. URTNOWSKI IS REPRESENTING THE FURRS AND THE

22  CARTOS, BECAUSE THEY MAY WELL BE IN OPPOSITION TO EACH

23  OTHER, BUT — AND I'M NOT GOING TO GO THROUGH ALL THE OTHER

24  ORGANIZATIONS THAT ARE LISTED HERE.  THEY ARE NUMEROUS.  ANY

25  WAY.

26       MR. IZEN:  YOUR HONOR, I STRONGLY TAKE THE POSITION

27  THAT WE SHOULD BE ALLOWED TO INTRODUCE ANY TESTIMONY ON THE

28  ISSUES THE SALE OF THE HOUSE AND THE ENTITIES THAT CAN'T BE
			
			

page 50



 1  LINKED IN ANY WAY TO THE FERREL MONIES.

 2            IT WAS NEVER MY INTENTION TO CLAIM ANY KIND OF

 3  PRIVILEGE EXCEPT TO WHAT THE MONIES OR PROPERTIES WERE THAT

 4  CAME FROM THE FERREL MONIES.  AND IN LIGHT OF THE CRIMINAL

 5  PROSECUTIONS THAT WERE RECOMMENDED OR INVESTIGATION WHAT YOU

 6  RAISED, I WOULD SAY 80 PERCENT OF THAT PROBABLY IS FROM

 7  PRIOR YEARS.  POSSIBLY THAT DID NOT EXIST.  THE RECORDS --

 8  THE CONTENTS DIDN'T EXIST AT THE TIME FERREL GAVE THE

 9  DONATION.

10       THE COURT:  THAT DOESN'T MAKE A DIFFERENCE.  THAT'S

11  WHAT I AM TELLING YOU.  IT DIDN'T MAKE A BIT OF DIFFERENCE.

12       MR. IZEN:  IT DOES TO THE FIFTH AMENDMENT.

13       THE COURT:  I DON'T SEE IT.  IT’s YOUR BURDEN TO SHOW

14  IT AND, YOU KNOW, YOU CITED CASES TO ME, AND IT IS NOT A

15  REASONABLE PROBABILITY OR POSSIBILITY BASED ON THE EVIDENCE

16  I HAVE THAT YOUR CLIENTS WILL BE IN CRIMINAL DIFFICULTIES

17  HERE.  I HAVE THE SORT OF FEELING THAT THEY WILL BE BUT --

18       MR. IZEN:  YOU MADE SOME COMMENTS THAT SHOULD BE

19  ADDRESSED.  YOU SAY IS THE IRS INTERESTED?  NOBODY DONATES

20  TO LIBERTY LOBBY AND THE ENTITY IS TOLD IT’s TAX

21  DEDUCTIBLE.  THAT’s NUMBER ONE.

22            NUMBER TWO, MY UNDERSTANDING IS THAT THEY PAY FOR

23  A PORTION OF THAT LEASEHOLD BECAUSE THEY GET CERTAIN

24  PRIVILEGES.

25       THE COURT:  THAT MAY BE.

26       MR. IZEN:  SO I DON'T SEE THAT THE IRS HAS ANY BIG

27  INTEREST IN THIS AT ALL, OR I'M SURE THEY WOULD BE IN THE

28  GALLERY.  IT CERTAINLY HAS BEEN PUBLICIZED.  I DO A LOT OF
			
			

page 51



 1  DEALINGS WITH THE PEOPLE IS WHAT I AM TRYING TO SAY.

 2            AS FAR AS THE PANAMANIAN SITUATION IS CONCERNED,

 3  IT’s PUBLIC RECORD, OWNERSHIP OF THE HOUSE, OR WHATEVER.

 4  I'M PREPARED TO EXPEDITE THAT.  I THINK I CAN GET THAT

 5  TODAY.

 6       THE COURT:  WHATEVER.  I'M TRYING TO TELL YOU I WOULD

 7  LIKE TO AVOID HAVING TO PLACE MR. AND MRS. CARTO INTO JAIL.

 8       MR. IZEN:  CERTAINLY I WOULD LIKE TO AVOID THAT.  IF I

 9  HAVE TO GO ON APPEAL, I WOULD LIKE THE STRONGER CASE.  I'M

10  CONCEDING, ALTHOUGH YOU DON'T THINK IT’s IMPORTANT I THINK

11  IT’s IMPORTANT, THAT THE ONLY POSSIBLE CRIMINALITY COMES

12  FROM THE USE OF THE FERREL MONIES.  THAT COMES AFTER A

13  CERTAIN DATE, AND SOME OF THE STUFF THEY ASKED FOR IS PRIOR

14  TO THAT.

15            WE WOULD LIKE TO HAVE A RECESS TO SEE HOW WE'RE

16  GOING TO PROCEED AND WHAT EVIDENCE WE MAY OR MAY NOT BE ABLE

17  TO ELICIT IN LIGHT OF THE COURT’s RULINGS.

18       THE COURT:  WELL --

19       MR. IZEN:  I'M NOT TALKING ABOUT LEAVING.  I'M TALKING

20  ABOUT GOING OUT IN THE HALL AND COMING BACK.

21       THE COURT:  FOR PROCEDURAL MATTERS I THINK I WILL

22  CONTINUE THE OSC FOR CONTEMPT HEARING FOR THE 8TH.  I MAY

23  NOT BE ABLE TO HANDLE IT.

24            I WILL TELL YOU WHAT THE PROBLEM IS IS THIS.  THAT

25  THIS IS A CRIMINAL TRIAL, WHICH IS GOING TO START ON THE

26  FIRST OF JULY — JUNE, FIRST OF JULY TO TAKE THE EVIDENCE.

27  WE'LL USE THE MONTHS OF JUNE TO CHOOSE THE JURY.  BECAUSE OF

28  THE NATURE OF THE CASE IT WILL TAKE A LONG TIME TO CHOOSE
			
			

page 52



 1  THE JURY, AND WE HAVE 14 JURORS COMING IN EACH DAY.  ONCE WE

 2  GET TO ABOUT 80 JURORS, THEN WITH ALL THE CHALLENGES AND

 3  EVERYTHING ELSE THAT OCCUR, WE CAN PRETTY MUCH I THINK STOP

 4  OUR JURY SELECTION PROCEDURE.  I HAVE TO TALK WITH THE

 5  ATTORNEYS ABOUT THAT.  SO THERE MIGHT BE SOME TIME IN THE

 6  LATTER PART OF JUNE TO COME BACK AND SPEND A DAY OR SO ON

 7  CONTEMPT HEARING.

 8            AGAIN, KEEP IN MIND THE OFFER, IF YOU CAN SETTLE

 9  THE CASE.  THEY SAY A SKINNY SETTLEMENT IS BETTER THAN A FAT

10  LAWSUIT, AND YOU ARE CHURNING UP AN AWFUL LOT OF MONEY ON

11  BOTH SIDES.  IF YOU CAN COME TO AN AGREEMENT, YOU MAYBE

12  OUGHT TO THINK ABOUT IT.

13       MR. IZEN:  LET ME, BEFORE YOU MOVE, MOVE TO PLACE

14  WILLIS CARTO AND ELISABETH ON THE STAND TO AT LEAST TO THE

15  TESTIMONY WHAT THEY KNOW ABOUT THE LEASEHOLD AND THE

16  HEREFORD CORPORATION, SO THAT REGARDLESS OF WHAT YOUR RULING

17  IS ON THE HOUSE, WE'LL HAVE THAT PRESERVED ON THE RECORD BY

18  WAY OF OFFER OF PROOF OR OTHERWISE.

19       THE COURT:  MR. SAMPSON, ANY COMMENTS YOU WANT TO

20  MAKE?

21       MR. SAMPSON:  YOUR HONOR, THE HOUSE ISSUE IS RESOLVED.

22            AS FAR AS THE OSC ISSUE, I BELIEVE THE TESTIMONY

23  WOULD BE REQUIRED AT THE HEARING.  IF WE'RE GOING TO DO THIS

24  PIECEMEAL, I WOULD LIKE SOME NOTICE.  I WOULD PREFER TO HAVE

25  IT DONE ALL AT ONCE.

26       THE COURT:  HOW LONG WOULD IT TAKE FOR YOUR CLIENTS?

27       MR. IZEN:  I NEED TO CONFER FOR TWO MINUTES.

28  UNDERSTAND THIS — THIS IS LIKE AN OFFER OF PROOF.  IF YOU
			
			

page 53



 1  DON'T WANT TO ACCEPT THIS EVIDENCE AS PART OF YOUR RULING

 2  THAT YOU SHOULD ADD THESE PARTIES, I WANT TO MAKE SURE IT'S

 3  CONSIDERED AN OFFER OF PROOF.  IF YOU WILL CONSIDER IT AND

 4  RECONSIDER YOUR OFFER, I WANT THIS ON THE RECORD FOR

 5  PURPOSES OF APPEAL.

 6       THE COURT:  I'M ALWAYS WILLING TO CONSIDER EVERYTHING.

 7  I AM NOT IN A POSITION, UNLESS YOU TELL ME THERE’s SOME LAW

 8  THAT SAYS I HAVE TO DO IT, TO CONSULT WITH MR. AND

 9  MRS. CARTO WITHOUT THE OTHER SIDE BEING PRESENT.

10       MR. IZEN:  THIS THING ON THE ISSUE OF THE HOUSE, THE

11  PANAMANIAN STUFF, AS YOU SAY, THEY HAVE A RIGHT TO FIND ANY

12  ASSETS IRRESPECTIVE OF WHAT THE PARTIES DID TO EACH OTHER

13  AND THE JUDGMENT.  I UNDERSTAND THAT OR WHAT THE FINDINGS

14  AND CONDUCT WERE.  THAT CONDUCT IS WHAT’s BEEN CLAIMED TO

15  BE.  THERE’s BEEN CRIMINAL ALLEGATIONS OF MISUSE OF THE

16  MONEY.  OKAY.  THAT DOESN'T HAVE ANYTHING TO DO WITH BUYING

17  A HOUSE IN 1981.  IT DOESN'T HAVE ANYTHING TO DO WITH THE

18  CORPORATION OWNING THE HOUSE.  DOESN'T HAVE ANYTHING TO DO

19  WITH WHY THE CORPORATION OWNED THE HOUSE.  I CAN GO FORWARD

20  SAFELY ON THAT AND HAVE YOU CONSIDER THAT THIS IS THE ALTER

21  EGO EVIDENCE AND THE OTHER STUFF.

22            AS FAR AS THE EX PARTE ISSUE, WHAT YOU DO THAT FOR

23  IS YOU GO IN CAMERA TO KEEP THE OTHER SIDE FROM

24  UNDERSTANDING WHAT THEY'RE AFRAID OF CRIMINALLY, SO THAT'S

25  NOT REVEALED.  IN OTHER WORDS, YOU DON'T HAVE TO CONFESS YOU

26  DID SOMETHING IN ORDER TO PRESERVE THE FIFTH AMENDMENT.  YOU

27  ONLY HAVE TO REVEAL ENOUGH IN CAMERA TO SHOW A REASONABLE

28  FEAR, AND THEY ONLY REQUIRE YOU — YOU TO DO THIS IN
			
			

page 54



 1  CAMERA.  THEY DON'T REQUIRE YOU TO DO IT IN OPEN COURT WHERE

 2  OTHER PARTIES LIKE THE IRS CAN SIT AND WRITE DOWN WHAT YOU

 3  SAY AND SAY, DIDN'T YOU SAY THIS IN OTHER WORDS TO ASSERT

 4  THE FIFTH AMENDMENT?  DIDN'T YOU SAY YOU WERE AT SUCH AND

 5  SUCH HOUSE AND HE WAS FOUND DEAD THE SAME NIGHT AND DAY?

 6  THAT KIND OF THING.  THAT’s WHY YOU HAVE THE EX PARTE.  IT'S

 7  CALLED IN CAMERA, NOT EX PARTE.

 8       THE COURT:  WE CAN TAKE A BREAK.  I HAVE UNTIL NOON, IF

 9  YOU WANT TO CONSULT WITH YOUR CLIENTS ABOUT WHAT THEY WANT

10  TO DO.  IF THEY WANT TO TESTIFY TODAY ABOUT THE HEREFORD

11  CORPORATION, I MIGHT TAKE THE TESTIMONY TODAY SUBJECT TO

12  HAVING THEM PUT ON THE STAND LATER ON.

13       MR. IZEN:  I THINK THEY PROBABLY WILL.

14       THE COURT:  I WILL TAKE A BREAK HERE.  FIVE, 10

15  MINUTES.

16

17                   (PROCEEDINGS RECESSED.)

18

19       THE COURT:  BACK ON THE RECORD.  THE REPORTER ASKED IF

20  WE COULD MEET AT 8:30 ON JUNE 8TH.  IS THAT A POSSIBILITY?

21  THE REASON IS THE NATURE OF THIS CASE WE'RE DOING REQUIRES

22  TWO REPORTERS.  WE HAVE TO MAKE A DAILY TRANSCRIPT.  IT'S

23  HARD TO DO IT IF THEY COME IN AT — IF YOU COME IN AT 3:30.

24  8 O'CLOCK THEN OR 8:30.

25       MR. SAMPSON:  THAT IS THE OSC’s AND --

26       THE COURT:  YES, THE OSC'S, AND IT’s ALSO THE — AND

27  THIS IS WHERE I AM NOT FAMILIAR WITH THE LAW, THE PROCEDURE

28  THAT ONE HAS TO GO THROUGH IN ORDER TO SELL THE HOUSE.
			
			

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 1       MR. SAMPSON:  CORRECT.

 2       THE COURT:  I HAVE TO LOOK THAT UP.  WE DON'T NORMALLY

 3  GET TO THAT.  THIS IS THE FIRST ONE I HAVE DONE THAT'S

 4  GOTTEN THIS FAR.  ALL RIGHT.  LET’s SEE.

 5            ANYTHING ELSE WE WANT TO DO IN THE REMAINING

 6  HOUR?

 7       MR. IZEN:  YES. I WOULD LIKE TO — MR. JOE IZEN FOR

 8  WILLIS CARTO.  I WOULD LIKE TO CALL MR. CARTO TO THE STAND

 9  AND OFFER THE TESTIMONY WE WERE TALKING ABOUT CONCERNING THE

10  HEREFORD CORPORATION AND OWNER OF THE CORPORATION.  HIM --

11  PUTTING HIM ON THE STAND TO EXPLAIN THE HISTORY OF THE HOUSE

12  AND THE STATEMENTS, AND IT WILL BE SUBJECT TO

13  CROSS-EXAMINATION.

14            I TOLD MR. SAMPSON I ANTICIPATE BEING ABLE TO GET

15  THE PANAMANIAN CORPORATION RECORDS TO HIM WITHIN A WEEK.  WE

16  REQUESTED THEM FROM THE PANAMANIAN AUTHORITIES.  THEY'LL BE

17  IN SPANISH.  HE CAN GET HIS OWN TRANSLATION.

18            AND WE ANTICIPATE BEING ABLE TO GET SOME

19  FINANCIALS, WHICH — WHICH WILL SHOW HOW THE HOUSE WAS

20  PURCHASED AND WHAT WAS SPENT ON IT TO MAINTAIN IT.  THINGS

21  OF THAT REGARD MAY HAVE SOME BEARING ON THE COURT’s DECISION

22  ON THE HOUSE.  WE'RE ASKING THIS COURT TO CONSIDER IT AS

23  EVIDENCE BEARING ON THE MOTION SUBSTITUTING THE PARTIES AND

24  THE JUDGMENT AND ALSO THE ISSUE OF THE SALE OF THE HOUSE.

25       THE COURT:  I AM DEFINITELY WILLING TO LISTEN TO

26  ANYTHING.  RIGHT NOW I CAN TELL YOU THAT BASED ON THE

27  EVIDENCE I HAVE AT THIS TIME, I BELIEVE THAT THIS RESIDENCE

28  IS IN FACT THE CARTOS.  THAT THEY'RE THE OWNER OF IT.  AS I
			
			

page 56



 1  SAID, THE HEREFORD CORPORATION IS A SHAM.  IT’s AN ALTER EGO

 2  OF THE CARTOS.

 3            I DON'T KNOW IF THE DEBTORS ARE OBJECTING TO

 4  THIS.  IF THEY DO, I WOULD PROBABLY OVERRULE THE OBJECTION,

 5  BUT IF MR. CARTO AND MRS. CARTO, IF SHE WANTS TO TESTIFY,

 6  THEY WOULD BE SUBJECT TO RECALL BY THE DEBTORS BECAUSE THEY

 7  DON'T HAVE NOTICE OF THIS OR ANYTHING.  PROBABLY NOT

 8  PREPARED TO REALLY CROSS-EXAMINE OR CROSS-EXAMINATION.  WHEN

 9  THEY GET THE DOCUMENTS FROM PANAMA, THEY MIGHT BE IN A

10  BETTER POSITION TO ASK ABOUT THEM.  CERTAINLY WE HAVE AN

11  HOUR.  I'M GLAD TO LISTEN TO THE CARTOS.

12       MR. IZEN:  I'M CALLING MR. WILLIS CARTO.  HE’s THE ONE

13  THAT HAS ANY KNOWLEDGE.  STEP FORWARD, PLEASE.

14       THE COURT:  HAVE MR. CARTO AGAIN, EVEN THOUGH HE WAS

15  SWORN EARLIER IN THE TRIAL, THAT WAS A COUPLE OF YEARS AGO.

16

17                          WILLIS CARTO,

18  CALLED AS A WITNESS BY AND ON HIS OWN BEHALF, HAVING BEEN

19  FIRST DULY SWORN, TESTIFIED AS FOLLOWS:

20       THE CLERK:  THANK YOU, SIR.  PLEASE TAKE A SEAT.

21            WOULD YOU STATE YOUR FULL NAME AND SPELL YOUR LAST

22  FOR THE RECORD.

23       THE WITNESS:  WILLIS A. CARTO.  C-A-R-T-O.

24       MR. IZEN:  YOUR HONOR, I ASSUME THAT I CAN REMAIN

25  SEATED, AND THERE’s NO MICROPHONE TO SPEAK INTO.

26       THE COURT:  FINE, SIR.

27

28                       DIRECT EXAMINATION
			
			

page 57



 1  BY MR. IZEN:

 2       Q    MR. CARTO, ARE YOU FAMILIAR WITH A CORPORATION

 3  KNOWN AS THE HEREFORD CORPORATION?

 4       A    YES.

 5       Q    WOULD YOU STATE TO THE COURT WHEN THE FIRST TIME

 6  YOU BECAME AWARE OF THE NAME HEREFORD CORPORATION WAS?

 7       A    WELL, I BELIEVE, 1981.

 8       Q    AND WHAT WAS THE OCCASION THAT YOU FIRST HEARD

 9  MENTION OF THE NAME HEREFORD CORPORATION?  HOW DID YOU

10  BECOME FAMILIAR WITH IT?

11       A    THAT WAS WHEN I CHANGED THE NAME OF INDEPENDENCE

12  HOUSE, PANAMANIAN CORPORATION, TO HEREFORD CORPORATION.

13       Q    SO INDEPENDENCE HOUSE WAS A PANAMANIAN CORPORATION

14  AND THE NAME WAS CHANGED TO ANOTHER NAME?

15       A    YES.

16       Q    WHAT WAS THAT NAME?

17       A    INDEPENDENCE HOUSE WAS CHANGED TO HEREFORD

18  CORPORATION.

19       Q    ABOUT WHEN DID THAT OCCUR?

20       A    WELL, IT WAS 1981, I BELIEVE.

21       Q    IS THERE A DOCUMENTATION OF THAT CHANGE OF NAME

22  THAT YOU BELIEVE CAN BE OBTAINED FROM THE PANAMANIAN

23  CORPORATE AUTHORITIES?

24       A    UNQUESTIONABLY.

25       Q    AND YOU SET IN MOTION THE EFFORT TO OBTAIN THE

26  DOCUMENTS?

27       A    YES.

28       Q    AS FAR AS THE HEREFORD CORPORATION IS CONCERNED,
			
			

page 58



 1  DO YOU KNOW WHO THE ORIGINAL SHAREHOLDERS WERE?

 2       A    YES.

 3       Q    WOULD YOU STATE TO THE COURT WHO THE SHAREHOLDERS

 4  WERE?

 5       A    I WAS.

 6       Q    WERE YOU THE ONLY SHAREHOLDER?

 7       A    WELL, MY WIFE AND I JOINTLY OWN THE SHARES.

 8       Q    HOW MANY SHARES, DO YOU REMEMBER?

 9       A    100, I THINK.

10       Q    AND FOR HOW LONG WERE YOU AND YOUR WIFE — I GUESS

11  THAT’s ELISABETH CARTO, THE ONLY SHAREHOLDERS?

12       A    UNTIL 6 YEARS AGO.

13       Q    AND 6 YEARS AGO WOULD PLACE THIS WHEN?  1992?

14       A    YES.

15       Q    NOW DURING 1992, DID THE SHAREHOLDERS CHANGE?

16       A    YES.

17       Q    WHO ACQUIRED THE SHARES IN 1992 THAT WAS NOT A

18  SHAREHOLDER PRIOR TO 1992?

19       A    ELISABETH’s NEPHEW IN GERMANY BECAME THE OWNER AT

20  THAT TIME.

21       Q    WHAT WAS THE NAME?

22       A    HANS DIRK OLDEMEIER.

23       Q    YOU WERE INVOLVED IN A SUIT, WERE YOU NOT, WITH

24  SOME PEOPLE THAT ALLEGE THAT THEY REPRESENTED AN

25  ORGANIZATION KNOWN AS THE LEGION FOR SURVIVAL OF FREEDOM?

26       A    NO, NOT THEM THEN.

27       Q    WHEN COULD YOU GIVE US THE DATE THAT THE TRANSFER

28  OF THE SHARES OCCURRED AND COMPARE THAT TO THE DATE THAT THE
			
			

page 59



 1  LAWSUIT WAS FILED?

 2       A    I BELIEVE 1992.  I DON'T REMEMBER THE DATE.

 3       Q    NOW WHAT WAS THE REASON WHY THIS GENTLEMAN, HANS,

 4  OBTAINED THE TRANSFER OF THE SHARES?

 5       A    BECAUSE AFTER DISCUSSIONS ELISABETH AND I WHO, OF

 6  COURSE, HAVE NO CHILDREN UNFORTUNATELY, DECIDED TO — TO AT

 7  FIRST TO MAKE HANS DIRK THE BENEFICIARY OF OUR WILL OR

 8  TRUST.  WE DIDN'T DECIDE.  AND THEN WE DECIDED IT WOULD BE

 9  SIMPLER TO GIFT IT TO HIM DURING OUR LIFE TIME.

10            AS TREASURER OF LIBERTY LOBBY, I HAVE SEEN MANY,

11  MANY, MANY TIMES WHERE OWNERS OF PROPERTY HAVE, AFTER THEY

12  DIE, HAVE — THE ESTATE HAS SUFFERED TRAGEDY BECAUSE OF OH,

13  A NUMBER OF REASONS.  AND SO WE THOUGHT THAT GIFT WOULD BE

14  BETTER THAN EITHER A TRUST OR WILL.

15       Q    SO HANS, THE GENTLEMAN, HANS DIDN'T PAY FOR THE

16  STOCK, BUT HE GOT THE STOCK BY GIFT IN 1992?

17       A    TRUE.

18       Q    PRIOR TO 1992 — FROM 1981 TO 1992, HOW LONG A

19  PERIOD OF TIME DID THAT CORPORATION HAVE TITLE IN ITS NAME,

20  THE PROPERTY THAT IS THE SUBJECT OF THE PROCEEDINGS BEFORE

21  THIS COURT THAT’s LOCATED HERE IN THIS COUNTY?

22       A    WELL, IF I UNDERSTAND YOUR QUESTION CORRECTLY, IT

23  WOULD BE 100 PERCENT OF THE TIME.

24       Q    WHAT WAS THE ORIGINAL SOURCE OF THE MONIES TO

25  PURCHASE THE PROPERTY THAT YOU ARE LIVING IN NOW THAT'S

26  LOCATED IN THIS COUNTY, PART OF THESE LEGAL PROCEEDINGS?

27       A    THE MAJORITY OF IT CAME FROM A SALE OF OUR

28  CONDOMINIUM IN LOS ANGELES.  THE BALANCE WAS MADE UP OF A
			
			

page 60



 1  COMBINATION OF MONEY I WAS ABLE TO PUT TOGETHER — ELISABETH

 2  AND I WERE ABLE TO PUT TOGETHER.  AND THE BALANCE THE OWNER

 3  TOOK $70,000 AS PAPER.

 4       Q    NOW THIS — WAS THIS A HOMESTEAD THAT YOU HAD THAT

 5  YOU SOLD AND TOOK THE MONEY FROM TO BUY THE PROPERTY LOCATED

 6  IN THIS COUNTY?

 7       A    IN MY OPINION THAT'S, I SUPPOSE, A LEGAL

 8  QUESTION.  I DON'T KNOW IF I CAN ANSWER THAT OR NOT.

 9       Q    SO AFTER THAT SALE YOU TOOK THOSE FUNDS.  YOU

10  PURCHASED THAT PROPERTY.  WHEN WAS IT THEN PLACED IN A

11  CORPORATION, THE HEREFORD CORPORATION?

12       A    1981.

13       Q    HOW LONG DID YOU OWN IT PERSONALLY, IF YOU DID

14  BEFORE THEN?

15       A    OH, I DIDN'T.

16       Q    YOU DIDN'T?

17       A    NO.  NO.

18       Q    THERE — WAS THERE EVER A TIME THAT THAT PROPERTY

19  WAS OWNED PERSONALLY BY YOU OR YOUR WIFE, ELISABETH?  YOU

20  USED THE FUNDS FROM THE SALE OF THAT OTHER RESIDENCE.  YOU

21  TOLD US ABOUT THE CORPORATION WAS SET UP.  YOU PUT THOSE

22  FUNDS IN THE CORPORATION, AND THEN THE CORPORATION BOUGHT

23  THE PROPERTY?

24       A    THE ACTUAL TRANSACTION WAS HANDLED BY AN ATTORNEY,

25  AND I FRANKLY DON'T REMEMBER THE DETAILS OF THE TRANSFERS OF

26  MONEY, BUT BASICALLY AS I SAID.

27       Q    WELL, HEREFORD CORPORATION USED YOURS AND

28  ELISABETH’s MONEY YOU GOT FROM A SALE OF ANOTHER PARCEL OF
			
			

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 1  REAL ESTATE TO BUY THIS PROPERTY THAT MR. SAMPSON WANTS THE

 2  COURT TO ALLOW THEM TO SELL?

 3       A    RIGHT.

 4       Q    OKAY.  AND THAT CORPORATION, HOW WAS IT THAT YOU

 5  REMAINED LIVING IN THAT PROPERTY?

 6       A    I DON'T UNDERSTAND THE QUESTION.

 7       Q    WELL, YOU AND ELISABETH LIVED IN THE PROPERTY

 8  MR. SAMPSON IS ATTEMPTING TO SELL; IS THAT CORRECT?

 9       A    WELL, ALL RIGHT.  LET ME EXPLAIN THIS.  YES,

10  THAT’s TRUE.  HOWEVER, IN I THINK FEBRUARY OF THIS YEAR MY

11  RESIDENCE WAS OFFICIALLY CHANGED TO THE DISTRICT OF

12  COLUMBIA, UNFORTUNATELY BECAUSE OF MANY REASONS I HAVE TO

13  SPEND MORE TIME IN WASHINGTON NOW THAN IN CALIFORNIA.

14       Q    IRRESPECTIVE OF YOUR EFFORTS TO CHANGE YOUR

15  RESIDENCE OFFICIALLY, WHATEVER, FROM 1981 TO 1992, DID YOU

16  AND ELIZABETH CARTO LIVE IN THAT HOUSE THAT MR. SAMPSON IS

17  ATTEMPTING TO SELL?

18       A    OH, YES.

19       Q    WHO MAINTAINED THE HOUSE?

20       A    WE DID.

21       Q    AND WHO SPENT THE FUNDS TO PAY THE TAXES ON THE

22  HOUSE?

23       A    FOR THE MOST PART WE DID.

24       Q    NOW THERE’s BEEN SOME INDICATION THAT LIBERTY

25  LOBBY PAID SOME OF THE TAXES ON THE HOUSE.  THAT’s THE

26  BANKRUPT ENTITY, WHATEVER IT IS, THAT WAS PART OF THIS

27  PROCEEDING, STILL IS, HAS A BANKRUPTCY STAY OPERATING ON

28  IT.
			
			

page 62



 1            HOW WOULD IT BE THAT LIBERTY LOBBY WOULD PAY ANY

 2  PORTION OF THE TAXES OR THE TAXES ON THAT REAL ESTATE THAT

 3  MR. SAMPSON IS ATTEMPTING TO SELL?

 4       A    WELL, FOR THE SIMPLE REASON THAT I SENT AN INVOICE

 5  TO LIBERTY LOBBY FOR THE AMOUNT OF THE 6 MONTHS TAX BILL FOR

 6  THE OFFICE THAT I USE AT THAT HOUSE, AND A CHECK WAS SENT TO

 7  ME, AND AS MY INVOICE SAID, PAYABLE TO THE TAX COLLECTORS

 8  AND IN SAN DIEGO.  THE CHECK WAS DUALLY SENT TO HIM WHEN IT

 9  WAS RECEIVED.

10       Q    OKAY.  LET ME ASK YOU THIS.  WHAT HAVE YOU BEEN

11  DOING FOR THE HEREFORD CORPORATION, IF ANYTHING, WHICH WOULD

12  BE CONSIDERATION FOR THE HEREFORD CORPORATION ALLOWING YOU

13  TO REMAIN IN THAT HOUSE, BOTH YOU AND YOUR WIFE?

14       A    EVERYTHING.  WE PAID THE TAXES.  ALMOST

15  EVERYTHING.  WE PAID THE TAXES.  WE HAVE PAID THE TAXES UP

16  UNTIL NOW.  WE PAY ALL THE EXPENSES.  WE KEEP UP THE

17  PROPERTY AND THE GROUNDS.  THERE’s ABOUT 6 ACRES OF FORMER

18  AVOCADO PROPERTY, MOST OF IT FULL OF WEEDS WE HAVE TO

19  DISPOSE OF IN CASE OF FIRE.  WATERING THE TREES AND THE

20  FOLIAGE, PLANTING TREES, KEEPING THE GROUNDS LANDSCAPED AND

21  TERRACED, PAINTING THE HOUSE, TRYING TO GET RID OF THE

22  TERMITES, ETC., ETC., ETC.

23       Q    IF WE WERE TO CHECK THE AMOUNT OF MONIES THAT WERE

24  USED FOR THE MAINTENANCE OF THE HOUSE, AMOUNT OF MONIES THAT

25  WERE USED TO PAY THE TAXES ON THE HOUSE AND THE AMOUNT OF

26  MONEY THAT WAS USED TO PAY ON THE $70,000 NOTE, WOULD THEY

27  FIND THAT ANY OF IT WOULD BE ATTRIBUTABLE TO THE FERREL

28  ESTATE MONEY THAT WAS PART OF THE DISPUTE IN THIS COURT IN
			
			

page 63



 1  ANOTHER TRIAL?

 2       MR. SAMPSON:  OBJECTION.  MISTATES TESTIMONY.

 3       THE COURT:  OVERRULED.

 4       THE WITNESS:  IT WOULD BE IMPOSSIBLE.

 5       MR. IZEN:  MISSTATES TESTIMONY — EXCUSE ME.  I TRY TO

 6  COVER THE OBJECTION ANY WAY I CAN.  I DON'T KNOW WHAT

 7  TESTIMONY I WOULD BE MISSTATING.

 8       THE COURT:  I OVERRULED THE OBJECTION.

 9       MR. IZEN:  I THINK IT’s TRUE THAT THAT WAS AT ISSUE IN

10  THAT OTHER TRIAL, ALTHOUGH I WAS A MERE SPECTATOR AND READ

11  THE TRANSCRIPT.

12       THE COURT:  I OVERRULED THE OBJECTION.

13       MR. IZEN:  THANK YOU.

14       THE COURT:  CAN'T WIN TWICE.

15

16  BY MR. IZEN:

17       Q    AS FAR AS THE — I WANT TO KNOW IF THE UPKEEP OF

18  THE HOUSE, THE PURCHASE OF IT, OR ANY WAY ANY MONEY SPENT ON

19  IT IS ATTRIBUTABLE TO THE FERREL MONEY?

20       A    ABSOLUTELY NONE.

21       Q    OKAY.  ARE THERE DOCUMENTATION THAT WOULD STILL BE

22  AVAILABLE TO BE ABLE TO SHOW THE SOURCES OF MONEY FOR THE

23  UPKEEP OF THE HOUSE?  THE SOURCES OF MONEY FOR THE PURCHASE

24  OF THE HOUSE?  THE PAYMENT ON THE NOTE?

25       A    SO THAT WHICH HAS BEEN MISHANDLED AND LIQUIDATED

26  AND LOST AND THROWN AROUND BY THE THIEVES AND CROOKS THAT

27  INVADED MY HOUSE ON APRIL MARCH 22ND, 1995 --

28       Q    OKAY.  ASIDE FROM THAT, THERE MIGHT BE SOME GAPS
			
			

page 64



 1  IN THE RECORDS, BUT THERE IS SOME RECORDS?

 2       A    ABSOLUTELY.

 3       Q    THAT WOULD SUBSTANTIATE?

 4       A    ABSOLUTELY.

 5       Q    THESE ARE RECORDS THAT YOU COULD MAKE AVAILABLE TO

 6  YOUR ATTORNEYS TO GIVE THE RECEIVER OR MAKE AVAILABLE TO

 7  THEM; IS THAT CORRECT?

 8       A    IF WE CAN FIND THEM, YOU BET.

 9       Q    OKAY.  WAS THE NOTE PAID BY CHECK ON THE HOUSE,

10  THE $70,000?  YOU SAID THERE WAS A NOTE FOR $70,000.  WAS

11  THAT MADE BY CHECKS ROUTINELY?

12       A    I'M SURE IT WAS. I DON'T REMEMBER.  WE DID PAY IT

13  OFF SOME YEARS AFTER WE PURCHASED THE HOUSE.  WE DECIDED

14  RATHER THAN PAY THE INTEREST MAKE AN EFFORT TO PAY THE LOAN

15  OFF.

16       Q    HOW LONG AGO WAS IT PAID OFF?

17       A    I AM SORRY.  I DON'T REMEMBER.  IT WAS MAYBE 5, 6

18  YEARS AFTER WE PURCHASED THE HOUSE.

19       Q    SO THAT WOULD BE IN '87 OR '88?

20       A    I THINK SO.

21       Q    DID YOU EVEN KNOW MISS FERREL IN '87 OR '88?

22       A    YES.

23       Q    OKAY.  AS FAR AS THE ISSUE CONCERNING AN EASEMENT

24  IS CONCERNED, DID YOU HAVE ANY KIND OF PROPERTY INTEREST IN

25  THAT REAL ESTATE WHILE HEREFORD CORPORATION OWNED REAL

26  ESTATE THAT YOU UNDERSTOOD YOU OWNED, IN YOUR MIND?

27       A    THAT I PERSONALLY OWNED?

28       Q    YES.  DID YOU HAVE ANY PROPERTY INTEREST OUT THERE
			
			

page 65



 1  WITH HEREFORD CORPORATION?  ANY KIND OF INTEREST IN

 2  PROPERTY?

 3       A    REAL PROPERTY?

 4       Q    YES.

 5       A    WELL, OF COURSE YOU KNOW FURNITURE AND --

 6       Q    YOU HAVEN'T HAD ANY LEGAL TRAINING, HAVE YOU?

 7       A    WELL, NOT ENOUGH TO ANSWER YOUR QUESTIONS.

 8       Q    OKAY.  YOU DON'T KNOW THE DIFFERENCE BETWEEN A

 9  LEASEHOLD AND A LIFE ESTATE OR ANYTHING LIKE THAT?

10       A    WELL, NO, I DON'T.

11       Q    DID YOU EVER MAKE A REFERENCE TO SOMEONE WHO WAS

12  SUING TO TRY TO FORCE AN EASEMENT ON THE PROPERTY, THIS

13  PROPERTY MR. SAMPSON IS TRYING TO SELL, THAT QUOTE, THIS IS

14  MY PROPERTY, END QUOTE?

15       A    IF YOU ARE REFERRING TO THIS OLD SITUATION WHERE

16  THE CONNECTICUT INSURANCE CAME IN AND TRIED TO DEMOLISH A

17  LOT OF THE PROPERTY --

18       Q    I DIDN'T KNOW THEY COULD DO THAT.

19       A    THEY CERTAINLY DID.  THEY CAME IN WITHOUT TELLING

20  US, AND THEY BULLDOZED A BIG ROAD THROUGH IT WITHOUT EVEN

21  HAVING THE COURTESY OF ASKING, LET ALONE TELLING US.

22            AT THAT TIME I PROCURED A LAWYER IN SAN DIEGO AND

23  FOR WHO REPRESENTED THE HEREFORD CORPORATION AND DEALT WITH

24  IT.

25       Q    THAT’s FINE, MR. CARTO.  WITH THE COURT'S

26  PERMISSION, WE'RE TRYING TO GET A DIRECT ANSWER TO THIS ONE

27  QUESTION, AND THAT IS, DID YOU REMEMBER MAKING A STATEMENT

28  TO SOMEBODY AS ALLEGED BY MR. SAMPSON IN THE PAPERS, MOVING
			
			

page 66



 1  PAPERS IN THIS COURT, QUOTE, I OWN THIS PROPERTY, END

 2  QUOTE.  WE'RE TALKING ABOUT THE PROPERTY MR. SAMPSON IS

 3  TRYING TO SELL HERE IN THIS CASE?

 4       A    ABSOLUTELY NOT.

 5       Q    YOU DON'T REMEMBER MAKING THAT?

 6       A    EVERYONE — THERE WAS NO SECRET IT WAS OWNED BY

 7  THE HEREFORD CORPORATION.  THEY KNEW IT WAS OWNED BY THE

 8  HEREFORD CORPORATION.  I KNEW IT WAS OWNED BY THE HEREFORD

 9  CORPORATION.  I LIVED THERE.  I MAY HAVE — I HAVE SAID TO

10  THEM, “I REPRESENT THE OWNER, SO GET OFF THE PROPERTY.”  I

11  WOULD SAY THAT.  I DIDN'T — WHY WOULD I SAY I OWNED IT?

12  THAT WOULD BE STUPID.

13       Q    WERE YOU A TENANT ON THE PROPERTY?  WHAT WAS YOUR

14  STATUS ON THE PROPERTY?

15       A    WELL, YES, WE WERE A TENANT.

16       Q    OKAY.  AND IN YOUR MIND THE TENANT DOES OR DOESN'T

17  OWN THE PROPERTY?

18       A    OF COURSE NOT, NO MORE THAN EMPLOYEES OWN THE

19  COMPANY.

20       Q    AS FAR AS THAT RELATIONSHIP IS CONCERNED WITH THE

21  CORPORATION, HOW LONG DID YOU REMAIN A TENANT OUT THERE?

22       A    WITH THE HEREFORD CORPORATION?

23       Q    YES.

24       A    WELL, WE STILL ARE.

25       Q    OKAY.  AND AS YOU UNDERSTOOD IT, WHAT ARE YOUR

26  DUTIES OCCUPYING THAT PROPERTY?  WHAT ARE YOU SUPPOSED TO DO

27  IN EXCHANGE FOR STAYING THERE?

28       A    AS I EXPLAINED, TO KEEP IT UP, TO KEEP IT
			
			

page 67



 1  PRESENTABLE, TO KEEP THE GROUNDS AND THE REAL PROPERTY IN AS

 2  GOOD A CONDITION AS POSSIBLE, AND TO PAY THE EXPENSES, TO

 3  PAY FOR THE LABORERS TO COME AROUND AND THE TRADESMEN AND SO

 4  ON, AND PAY FOR THE WATER, IRRIGATE THE PLANTS, AND

 5  GARDENERS AND TREE SURGEONS COME IN AND HAVE TO PRUNE THE

 6  TREES, THAT SORT OF THING.

 7       Q    AND YOU STAYED OUT THERE, AND THAT’s YOUR STATUS

 8  PRESENTLY TESTIFYING ON THE WITNESS STAND TODAY?  YOU LIVED

 9  THERE OR HAD LIVED THERE AS YOUR PRIMARY RESIDENCE?  YOU DID

10  AS A TENANT?

11       A    YES.

12       Q    WHEN THE PROPERTY WAS TRANSFERRED TO THE

13  CORPORATION, AND HANS, THIS GENTLEMAN, HANS, GOT THE SHARES,

14  WAS IT THE INTENT THAT AFTER YOU DIED, YOU OR YOUR WIFE

15  DIED, THE PROPERTY WOULD GO TO SOMEBODY ELSE; YOUR TENANCY

16  WOULD BE AT AN END?

17       A    YES.

18       Q    THEN THE CORPORATION COULD PUT WHOEVER THEY WANTED

19  IN THERE?

20       A    CERTAINLY.

21       Q    OR RENT IT OUT, WHATEVER.

22            WHAT’s THE TERM OF YOUR LEASE?  HOW LONG WAS IT

23  UNDERSTOOD THAT YOU WOULD BE ALLOWED TO LIVE IN THE HOUSE?

24       A    WE HAVE A LIFE TENANCY.

25       Q    OKAY.  SO WITH GOOD BEHAVIOR, TAKING CARE OF THE

26  HOUSE, YOU COULD BE THERE THE REST OF YOUR LIFE, UNLESS THE

27  CORPORATION DECIDES TO SELL IT?

28       A    THAT’s RIGHT.
			
			

page 68



 1       Q    AS FAR AS THIS LITIGATION IS CONCERNED THAT TOOK

 2  PLACE WITH THE DISPUTE WITH LSF OR THE FOLKS OR WHO OWNS LSF

 3  OR ANY OF THE REST OF THAT STUFF, CAN YOU TELL US ANYTHING

 4  ABOUT THE INTERESTS THAT HEREFORD CORPORATION WOULD HAVE HAD

 5  IN THE OUTCOME OF THAT LITIGATION?

 6       A    I DON'T THINK --

 7       Q    WHAT DID HEREFORD CORPORATION STAND TO LOSE, THE

 8  OWNER OF THE HOUSE, ONE WAY OR THE OTHER, WITH THE OUTCOME

 9  OF THE LITIGATION?

10       A    AS FAR AS I CAN SEE, NONE AT ALL.

11       Q    DID YOU EVER SEE MR. HANS TAKING PART IN ANY OF

12  THE LITIGATION?

13       A    OH, NO.  HE WAS IN GERMANY, I BELIEVE.

14       Q    DID THE HEREFORD CORPORATION PAY ANY LEGAL FEES OF

15  THE LITIGATION?

16       A    OH, NO.

17       Q    AND DID THE HEREFORD CORPORATION OR HANS KNOW

18  ABOUT THE EXISTENCE OF THE LITIGATION, TO YOUR PERSONAL

19  KNOWLEDGE?

20       A    I BELIEVE SO, YES.  YES.

21       Q    CAN YOU BASE THAT BELIEF ON ANYTHING OTHER THAN

22  SPECULATION?

23       A    WELL, WHEN HE VISITED HERE THE LAST TIME THERE WAS

24  DISCUSSION THAT HE HAPPENED TO BE AN UNWILLING VICTIM OF

25  THIS RAID WHEN HE VISITED HERE.  HE WAS AND HIS COUSIN WERE

26  VISITING.  I WAS IN WASHINGTON.  ELISABETH WAS HERE.  AND AT

27  THE TIME HE WAS ROUSED OUT OF BED LIKE A CRIMINAL BY THESE

28  THUGS DRESSED LIKE MONKEYS, AND HE WAS VERY WELL AWARE OF
			
			

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 1  WHAT WAS GOING ON BECAUSE OF THE WAY HE WAS TREATED.  OF

 2  COURSE BEING --

 3       Q    LET ME STOP YOU.  THEN HE KNEW ABOUT THE DISPUTE

 4  BECAUSE OF THIS RAID IN COSTA MESA, OR RATHER COSTA MESA

 5  AUTHORITIES DID ON THE HOUSE MR. SAMPSON IS TRYING TO SELL,

 6  CORRECT?

 7       A    YES, SIR.  AND BEING IN LAW SCHOOL AT THAT TIME,

 8  HE WAS VERY MUCH INTERESTED IN IT AND COULDN'T BELIEVE THAT

 9  IT WAS HAPPENING — THIS TYPE OF THING COULD HAPPEN IN

10  AMERICA. HE WAS QUITE INTERESTED IN THAT.

11       Q   THE HEREFORD CORPORATION, DID THE CORPORATION HAVE

12  ANY INTEREST IN THE FERREL MONIES AT ALL THAT IT TRIED TO

13  ASSERT?

14       A    NONE.

15       Q    OKAY.  HAVE YOU EVER PUT ANY OF YOUR ASSETS WITH

16  HEREFORD CORPORATION ASSETS THAT YOU KNOW OF LIKE YOUR BANK

17  ACCOUNT OR DEPOSIT CHECKS THAT YOU RECEIVED INTO HEREFORD

18  CORPORATION’s ACCOUNTS OR ANYTHING LIKE THAT?

19       A    NO.

20       Q    OKAY.  AS FAR AS YOU KNOW, DOES HEREFORD

21  CORPORATION DO ANYTHING OTHER THAN OWN THE REAL ESTATE AND

22  LET YOU LIVE THERE?  DOES IT HAVE ANY OTHER ACTIVITIES IN

23  THE STATE OF CALIFORNIA?

24       A    NONE.

25       Q    AS FAR AS YOU KNOW, IS THE HEREFORD CORPORATION

26  STILL IN GOOD STANDING IN PANAMA?

27       A    ABSOLUTELY.

28       Q    YOU HOPE TO BE ABLE TO PRODUCE RECORDS THAT SHOW
			
			

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 1  THAT?

 2       A    CORRECT.

 3       Q    THAT’s BEEN REQUESTED?

 4       A    CORRECT.

 5       Q    OKAY.  BESIDES THE ESTATE PLANNING, OR RATHER TO

 6  SEE THAT THE HOUSE WAS PASSED ON TO HANS, YOU OR YOUR WIFE'S

 7  HEIR, WAS THERE ANY OTHER REASON FOR THE TRANSFER OF THE

 8  HOUSE AT THAT TIME?  DID YOU OWE ANYBODY ANY MONEY THAT YOU

 9  WERE AFRAID THEY WOULD GET BECAUSE YOU HAD MORE MONEY THAN

10  $125,000 HOMESTEAD EXEMPTION UNDER CALIFORNIA LAW, OR

11  WHATEVER IT WAS, BACK IN THOSE DAYS?

12       A    NO.  ELISABETH AND I DON'T HAVE ANY DEBTS.

13       Q    AND HEREFORD GOT THE HOUSE YOU SAID IN

14  APPROXIMATELY 1981?

15       A    I BELIEVE.

16       Q    AND THE NOTE WOULD HAVE BEEN PAID OFF IN '88?

17       A    WELL, APPROXIMATELY, SOMEWHERE '86, '87, '88, I

18  SUPPOSE.

19       MR. IZEN:  OKAY.  I PASS THE WITNESS.

20       THE COURT:  YOU MAY CROSS-EXAMINE.

21       MR. SAMPSON:  WE HAVE A COUPLE OF QUESTIONS.  WE WOULD

22  LIKE TO RESERVE THE RIGHT TO ASK QUESTIONS IN THE NEXT

23  HEARING.  WE WEREN'T PREPARED.

24       THE COURT:  SURE.

25       MR. IZEN:  I DON'T HAVE ANY OBJECTION TO THAT.  I THINK

26  I CAN'T OBJECT.  I WOULD LIKE THE COURT TO CONSIDER THIS

27  EVIDENCE.  I WILL BE ASKING THEM TO, AS PART OF THIS

28  HEARING, IF THERE’s ANY PROBLEM WITH THE STATUS OF THE
			
			

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 1  EVIDENCE, THEN I WOULD REQUEST THAT THE MATTER BE CARRIED

 2  ALONG FOR PURPOSES OF ENTRY OF FINAL ORDER, IF THERE’s ANY

 3  VALUE TO IT THAT THE COURT SEES, SO I WILL HAVE A COMPLETE

 4  RECORD IF THE MATTER HAS TO BE APPEALED.

 5            I'M NOT TRYING TO DELAY THE MATTER.

 6       THE COURT:  MR. SAMPSON, YOU DON'T WISH TO

 7  CROSS-EXAMINE NOW OR YOU DO?

 8       MR. SAMPSON:  I HAVE A COUPLE OF QUESTIONS.  I WOULD

 9  LIKE TO RESERVE THE RIGHT TO FINISH AT THE NEXT HEARING.

10       THE COURT:  YOU DO HAVE THAT RIGHT.

11

12                        CROSS-EXAMINATION

13  BY MR. SAMPSON:

14       Q    SIR, APPROXIMATELY 1981, '81 IS WHEN YOU

15  ESTABLISHED HEREFORD CORPORATION; IS THAT CORRECT?

16       A    NO.  I THINK IT WAS '79.  OH, YES, EXCUSE ME.

17  YES.  THAT’s CORRECT.  YES, THAT’s CORRECT.

18       Q    THAT WAS INDEPENDENCE HOUSE IN 1979?

19       A    YES.

20       Q    AND YOU AND YOUR WIFE ARE THE SOLE SHAREHOLDERS OF

21  HEREFORD CORPORATION; IS THAT CORRECT?

22       A    YES.

23       Q    WERE YOU THE SOLE SHAREHOLDERS OF INDEPENDENCE

24  HOUSE AT THAT TIME?

25       A    YES.

26       Q    WHO WERE THE OFFICERS OF HEREFORD CORPORATION IN

27  1981-82 WHEN IT WAS ESTABLISHED?

28       A    SOME — A LAW FIRM IN PANAMA CITY.
			
			

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 1       Q    WHO WERE THE BOARDS OF DIRECTORS, DO YOU RECALL?

 2       A    NO.  NO.  LONG SPANISH NAMES.

 3       Q    DID YOU PAY ANY FEES TO THESE PEOPLE IN PANAMA TO

 4  MAINTAIN THE CORPORATION STATUS?

 5       A    IT’s A LAW FIRM.

 6       Q    THAT WAS NOT ANSWERING MY QUESTION.  DID YOU

 7  PERSONALLY PAY ANY FEES TO THEM TO MAINTAIN THEIR POSITION

 8  AS OFFICERS AND DIRECTORS OF HEREFORD CORPORATION?

 9       A    YES.

10       Q    WHERE DID THE MONIES COME FROM?

11       A    WELL, I GOT THEM FROM USUALLY FROM ELISABETH OR

12  OTHER SOURCES OF MONEY.

13       Q    HAVE YOU BEEN PAYING THOSE PANAMANIAN ATTORNEYS

14  OVER THE LAST 15 YEARS?

15       A    YES.

16       Q    AND THEY HAVE BEEN PAID RECENTLY AS OF 1998 TO

17  MAINTAIN THE CORPORATION?

18       A    YES.

19       Q    DID YOU PAY THAT?

20       A    IN 1998?

21       Q    CORRECT.

22       A    NO.  I DON'T THINK THAT IT WAS PAID IN 1998.  THE

23  ARRANGEMENT WITH HANS DIRK IS THAT WHEN HE FINISHES LAW

24  SCHOOL AND WHEN HE BECAME A LAWYER AND WAS RECEIVING INCOME,

25  THAT HE WOULD TAKE OVER THE PAYMENT OF THAT PARTICULAR

26  DEBT.

27       Q    HAS HE COMPLETED LAW SCHOOL YET?

28       A    HE HAS.
			
			

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 1       Q    WHEN DID HE COMPLETE LAW SCHOOL?

 2       A    A FEW MONTHS AGO.

 3       Q    SO 1997 YOU PAID THE LAWYERS IN PANAMA?

 4       A    I DID.

 5       Q    ARE THOSE LAWYERS — AS OF TODAY, ARE THEY THE

 6  SAME LAW FIRM THAT’s BEEN THE OFFICERS CONTINUOUSLY OVER THE

 7  LAST 15 YEARS?

 8       A    NO.

 9       Q    WHEN DID THAT CHANGE, IF YOU CAN GIVE ME A

10  CHRONOLOGY?

11       A    I DON'T KNOW.  I CAN'T TELL YOU.  THERE’s BEEN, I

12  THINK, ONE, MAYBE TWO CHANGES IN THEIR PARTNERSHIPS, AND I

13  CAN'T DESCRIBE THAT.

14       Q    THAT’s THE SAME WITH THE BOARD OF DIRECTORS?

15       A    THEY HAVE APPOINTED THE BOARD OF DIRECTORS.  I

16  HAVE HAD NOTHING TO SAY ABOUT THAT.

17       Q    DO YOU KNOW WHERE THE MINUTES OF THE CORPORATION

18  ARE MAINTAINED?

19       A    YES.

20       Q    WHERE?

21       A    IN PANAMA.

22       Q    WITH THE SAME LAW FIRM?

23       A    YES.

24       Q    DO YOU HAVE ANY WRITTEN AGREEMENT AUTHORIZING YOU

25  AND YOUR WIFE TO STAY ON THE Quail Ridge PROPERTY?

26       A    AS I JUST ANSWERED MR. IZEN, YES.

27       Q    AND WHERE IS THAT WRITTEN AGREEMENT MAINTAINED?

28       A    WITH THE OWNER OF THE SHARES.
			
			

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 1       Q    SO THAT WOULD BE WITH YOUR NEPHEW, HANS DIRK?

 2       A    YES.

 3       Q    WHAT’s HIS CURRENT ADDRESS?

 4       A    I DON'T REMEMBER.

 5       Q    WHEN WAS THAT WRITTEN AGREEMENT PREPARED?

 6       A    IN 1992.

 7       Q    WAS THERE A PREVIOUS WRITTEN AGREEMENT BEFORE

 8  THAT?

 9       A    NO.

10       Q    YOU MENTIONED THAT THERE WERE — MAYBE I MISHEARD

11  YOU.  I WANT TO GET THIS CLEARED UP.  IN 1992 YOU

12  TRANSFERRED YOUR SHARES TO HANS DIRK; IS THAT CORRECT?

13       A    THAT’s CORRECT.

14       Q    YOU SAID THERE WAS A SECOND SHAREHOLDER TOO OR

15  JUST HANS DIRK?

16       A    JUST HANS DIRK.

17       Q    SO ALL OF YOUR AND YOUR WIFE’s SHARES 100 PERCENT

18  WENT TO HANS DIRK?

19       A    THAT’s CORRECT.

20       Q    OTHER THAN THE WRITTEN AGREEMENT REGARDING YOUR

21  STAYING ON THE PROPERTY, WHICH YOU GAVE TO MR. HANS DIRK IN

22  1992, WERE THERE ANY OTHER WRITTEN AGREEMENTS IN CONJUNCTION

23  WITH THE TRANSFER OF THE STOCK?

24       A    NO, I DON'T THINK SO.

25       Q    DID YOU HAVE ACTUAL STOCK CERTIFICATES ISSUED IN

26  YOURS AND YOUR WIFE’s NAME IN 1981, '82?

27       A    NO.

28       Q    HAVE YOU EVER HAD STOCK CERTIFICATES ISSUED IN THE
			
			

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 1  CORPORATION?

 2       A    YES.

 3       Q    WHEN WERE THEY ISSUED?

 4       A    WHEN THE CORPORATION WAS ESTABLISHED.

 5       Q    THE HEREFORD CORPORATION IN 1981, '82; IS THAT

 6  CORRECT?

 7       A    NO, WHEN IT WAS ESTABLISHED IN '78.

 8       Q    IS THAT INDEPENDENCE HOUSE?

 9       A    YES.

10       Q    AND THERE WERE STOCKS ISSUED IN INDEPENDENCE

11  HOUSE?

12       A    THAT’s CORRECT.

13       Q    WERE THERE STOCKS ISSUED — TO GET BACK TO MY

14  QUESTION, IN HEREFORD CORPORATION WHEN THAT WAS SET UP IN

15  THE EARLY 80'S?

16       A    IT WASN'T SET UP.  IT WAS THE SAME CORPORATION.

17       Q    OKAY.  JUST A NAME CHANGE?

18       A    AS I STATED PREVIOUSLY, IT WAS AN AMENDMENT TO THE

19  CORPORATE CHARTER, AND THAT CHANGED THE NAME.

20       Q    THANK YOU.  WERE NEW STOCK ISSUED UNDER HEREFORD

21  CORPORATION’s NAME IN THE 80’s THEN?

22       A    YES.

23       Q    AND WHERE WERE THOSE MAINTAINED?

24       A    SAME PLACE THAT THE ORIGINAL STOCK WAS.

25       Q    AND IS THAT?

26       A    IN GERMANY.

27       Q    WHERE IN GERMANY?

28       A    WITH THE NEW OWNER.
			
			

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 1       Q    SO THE 1979 STOCK WERE MAINTAINED IN GERMANY?

 2       A    NO.  NO.  THE AGREEMENT WAS MADE IN 1992 AND THE

 3  STOCK SUBSEQUENTLY WAS TRANSFERRED.

 4       Q    DO YOU UNDERSTAND THAT THERE ARE MINUTES OF

 5  HEREFORD CORPORATION AUTHORIZING THAT TRANSFER?

 6       A    THE TRANSFER OF WHAT?

 7       Q    1992 TRANSFER OF STOCK TO HANS DIRK?

 8       A    I DON'T BELIEVE THERE WAS.

 9       MR. SAMPSON:  YOUR HONOR, WE RESERVE THE RIGHT TO

10  FOLLOW UP AT THE NEXT HEARING.

11       THE COURT:  VERY WELL.  THANK YOU, MR. CARTO.  BE

12  CAREFUL.  THERE’s A STEP THERE.  REDIRECT.

13       MR. IZEN:  YOUR HONOR, I DON'T HAVE ANYTHING FURTHER OF

14  THIS WITNESS. I WANT TO TELL THE COURT THERE’s PANAMANIAN

15  DOCUMENTS WHICH HAVE BEEN REQUESTED WHICH MAY BEAR ON THIS

16  ISSUE, AND I'M GOING TO REQUEST THE COURT OR BEG THE COURT

17  TO CARRY THIS ALONG TO THE — UNTIL THE COURT GETS THE

18  EVIDENCE.  GIVE US A REASONABLE CHANCE TO — AND I THINK I

19  CAN GET IT TO HIM.  IT DOESN'T HURT ME AT ALL.  I THINK IT

20  HELPS MY CASE.  I THINK I CAN GET IT TO HIM WITHIN 7 DAYS.

21       THE COURT:  VERY GOOD.  BE CAREFUL OF THE STEP WHEN YOU

22  STEP DOWN, MR. CARTO.  THANK YOU FOR YOUR TESTIMONY.

23            DID YOU WANT TO PUT ANYONE ELSE ON THE STAND?

24       MR. IZEN:  THIS WOULD BE A DIFFERENT ISSUE.  I'M

25  REQUESTING THAT HIS TESTIMONY BE CONSIDERED ON THE TWO

26  ISSUES OF THE SALE OF THE HOUSE AND SUBSTITUTION OF

27  PARTIES.  IF IT’s NOT ALLOWED, THEN IT CAN BE CONSIDERED AS

28  AN OFFER OF PROOF FOR PURPOSES OF APPEAL, PERFECTING THAT.
			
			

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 1            AS FAR AS THE FIFTH AMENDMENT ISSUE IS CONCERNED,

 2  MR. WEBER IS HERE.  I WOULD LIKE TO CALL HIM TO THE STAND TO

 3  CONFIRM THE FACT THAT HE DID MAKE THE COMPLAINT TO

 4  SWITZERLAND, AND THEY INTENDED TO TRY TO BE TAKING

 5  PROSECUTION.

 6       THE COURT:  I DON'T HAVE ANY REASON TO DOUBT THAT.  YOU

 7  CAN PUT HIM ON THE STAND, IF YOU WANT.

 8       MR. IZEN:  I WOULD LIKE TO CALL HIM, IF I MIGHT,

 9  BRIEFLY. I WON'T GO BEYOND THE ISSUE OF REQUESTING THE

10  INVESTIGATION.

11       MR. SAMPSON:  WE HAVE NOT HAD A CHANCE TO TALK WITH

12  HIM.  IF I COULD HAVE A SECOND.

13       MR. IZEN:  NO OBJECTION.

14       MR. SAMPSON:  FOR THE RECORD, WE RECEIVED NO NOTICE OF

15  THIS.  WE'RE WILLING TO STIPULATE THAT THEY DID INITIATE AN

16  INQUIRY IN THE RESPONDENT’s — DEFENDANT’s PAPERS.  THEY

17  ADMIT THAT WAS A CIVIL INQUIRY.  AND WHETHER THE CRIMINAL

18  AUTHORITIES HAVE TURNED THAT INTO A PROSECUTION OR NOT AGAIN

19  IS OUT OF — OUT OF OUR CLIENT’s CONTROL, LIKE IT IS IN THE

20  UNITED STATES.

21       THE COURT:  ARE YOU WILLING TO ACCEPT THAT

22  STIPULATION?

23       MR. IZEN:  NO, SIR.  I'M NOT ON THE MATTER OF CIVIL.  I

24  DON'T THINK THAT’s CORRECT AT ALL.  THE ONLY THING I WILL

25  TELL THE COURT IS THAT THEY HAVE KIND OF A NEVER NEVER LAND

26  OF LAWS BETWEEN CIVIL AND CRIMINAL WE DON'T HAVE, BUT WE

27  WOULD PROBABLY CONSIDER THEM IN THE NATURE OF MISDEMEANORS,

28  YOU KNOW, HERE, BUT THEY'RE STILL PROBABLY CRIMINAL.  WE CAN
			
			

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 1  ARGUE THAT ABOUT FOREIGN LAW.  I WOULD STILL LIKE TO CALL

 2  MR. WEBER, IF I MIGHT, BRIEFLY TO HAVE HIM IDENTIFY THIS

 3  LETTER.

 4       THE COURT:  I CAN HAVE HIM DO THAT, EVEN OVER YOUR

 5  OBJECTION.  I DON'T SEE ANY HARM.  I DON'T SEE THAT IT’s ALL

 6  THAT CRUCIAL.  I DON'T THINK HE’s GOING TO BE DENYING THAT,

 7  ONE OF THESE DOCUMENTS THAT WE HAVE HERE.

 8

 9                           MARK WEBER,

10  CALLED AS A WITNESS ON BEHALF OF THE DEFENDANTS, HAVING BEEN

11  FIRST DULY SWORN, TESTIFIED AS FOLLOWS:

12       THE CLERK:  THANK YOU, SIR.  PLEASE TAKE A SEAT.

13            WOULD YOU STATE YOUR FULL NAME AND SPELL YOUR LAST

14  FOR THE RECORD.

15       THE WITNESS:  MY FULL NAME IS MARK EDWARD WEBER.

16  W-E-B-E-R.

17

18                       DIRECT EXAMINATION

19  BY MR. IZEN:

20       Q    GOOD MORNING, SIR.  DID YOU HAVE — YOU HAD AN

21  OPPORTUNITY TO EXAMINE THE JUDGMENT, THE DEBTORS COLLECTED

22  OPPOSITION WITH THE DECLARATION OF BRIAN URTNOWSKI AND THE

23  DOCUMENTS ATTACHED TO IT?

24       A    WITHOUT LOOKING AT IT I CAN'T SAY FOR CERTAIN BUT

25  PROBABLY I DID.

26       MR. IZEN:  COULD I APPROACH THE WITNESS, JUST BRIEFLY?

27       THE COURT:  SURE.

28       MR. IZEN:  OR ELSE SOMEBODY CAN HAND HIM THE FILE.
			
			

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 1       THE COURT:  YES.  YOU CAN ALWAYS APPROACH THE WITNESS.

 2  HERE IS THE PURPORTED LETTER, EXHIBIT A, HERE.

 3

 4  BY MR. IZEN:

 5       Q    RIGHT.  THAT’s ALL I WANTED HIM TO SEE.  HAND IT

 6  TO HIM.  I GOT MY OWN.

 7            I'M PUTTING IN FRONT OF YOU WHAT I THINK THE JUDGE

 8  OF THIS COURT HAS POLITELY GIVEN ME, ATTACHMENT TO

 9  MR. URTNOWSKI’s AFFIDAVIT.  I THINK IT’s EXHIBIT A.  IT

10  BEGINS WITH A REFERENCE TO LEGION FOR SURVIVAL OF FREEDOM,

11  INCORPORATED.  IT HAS THE DATE MONDAY, AUGUST 12, 1996.

12            DO YOU SEE THAT?  IS THAT WHAT YOU HAVE IN FRONT

13  OF ME?

14       A    NO.  WHAT I HAVE IN FRONT OF ME IS A LETTER

15  INDICATED 12 OF AUGUST 1996.

16       Q    IT’s UP IN THE RIGHT-HAND CORNER.  IT HAS — IT

17  HAS (MR. IZEN SPOKE IN FRENCH. THE REPORTER ASKED FOR A

18  SPELLING.) J-U-G-E-S D'I-N-S-T-R-U-C-T-I-O-N.

19       A    YES.

20       Q    MY FRENCH IS TERRIBLE.  I'M SORRY.  THIS IS N.C.R.

21  THERE?

22       A    YES, I SEE THAT.

23       Q    NOW DID YOU WRITE THIS LETTER IN CONJUNCTION WITH

24  MR. RAVEN?

25       A    I DRAFTED THIS LETTER TOGETHER WITH MR. RAVEN,

26  YES.

27       Q    OKAY.  AND YOU MADE THIS COMPLAINT TO A JUDGE IN

28  SWITZERLAND?
			
			

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 1       MR. SAMPSON:  OBJECTION.  CALLS FOR LEGAL CONCLUSION.

 2       MR. IZEN:  I DON'T KNOW.  I THINK HE HAS THE

 3  UNDERSTANDING WHO HE’s COMPLAINING TO.

 4       THE COURT:  OVERRULED.  I REALIZE ALSO THAT THE

 5  QUESTION IS NOT EVIDENCE.

 6

 7  BY MR. IZEN:

 8       Q    SURE.

 9       A    IT’s --

10       Q    TELL ME WHO YOU UNDERSTOOD YOU WERE WRITING TO,

11  MR. WEBER.  THAT’s A BETTER WAY.

12       A    I UNDERSTOOD IT WAS JUGES D'INSTRUCTION

13  (PHONETICS).  I UNDERSTAND HE’s NOT A JUDGE QUITE IN OUR

14  SENSE, BUT THAT’s THE TITLE IN SWITZERLAND.

15       Q    YOU UNDERSTAND YOU WERE COMPLAINING TO THIS GUY,

16  WHOEVER HE IS?

17       A    THAT’s CORRECT.

18       Q    AND DID YOU MAKE THE STATEMENT IN THIS LETTER

19  SPECIFICALLY WHERE YOUR OFFICE WERE TO BEGIN A CRIMINAL

20  INVESTIGATION OF HENRY J. FISCHER AND WILLIS A. CARTO?

21       A    YES.

22       Q    CAN YOU TELL THE COURT WHAT LAW OF SWITZERLAND YOU

23  WERE RELYING ON AND URGING THAT A CRIMINAL INVESTIGATION OF

24  FISCHER AND CARTO BE DONE?

25       A    I CAN'T RECALL.

26       Q    BUT THERE WAS ONE OR YOU WOULDN'T HAVE WRITTEN A

27  LETTER AND URGED A CRIMINAL PROSECUTION?

28       A    I DON'T REMEMBER NOW HOW THAT ALL HAPPENED.  IT'S
			
			

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 1  PROBABLY IN OUR CORRESPONDENCE, BUT I WAS TOLD THAT CARTO

 2  HAD LIKELY VIOLATED A LAW IN SWITZERLAND AND HENRY FISCHER

 3  AND WE HAD ALREADY APPROACHED THE AUTHORITIES IN COSTA MESA,

 4  AS YOU KNOW, AND WE WERE SORT OF GIVEN THE RUNAROUND.  THE

 5  AUTHORITIES IN COSTA MESA SAID THAT THEY WERE NOT SURE IF A

 6  VIOLATION OF THE LAW HAD OCCURRED IN COSTA MESA.  AND I WAS

 7  TOLD THAT LIKELY THE LAW HAD BEEN VIOLATED IN SWITZERLAND.

 8  I WASN'T SURE, AND THAT’s WHY WE WROTE THE LETTER.

 9       Q    OKAY.  NOW WITH RESPECT TO BEING TOLD ABOUT

10  CRIMINAL VIOLATION IN SWITZERLAND, WAS THIS AN OFFICIAL

11  STATEMENT FROM THE SWISS AUTHORITY OR WAS THAT SOME PRIVATE

12  ATTORNEY’s OPINIONS?

13       A    NO. I DON'T EVEN REMEMBER EXACTLY WHAT THE BASIS

14  FOR THAT DETERMINATION WAS NOW.

15       Q    BUT YOU SAY THERE WAS CORRESPONDENCE THAT BACKS

16  THAT UP, AT LEAST TO YOUR CONCLUSION.  THERE’s SOME CRIMINAL

17  VIOLATION THAT THEN LED YOU TO PUT THIS PARAGRAPH IN THIS

18  LETTER?

19       A    I DON'T RECALL, MR. IZEN, WITHOUT — I SAID OUR

20  CORRESPONDENCE FILES MIGHT TELL THAT.  I DON'T RECALL RIGHT

21  NOW WHAT SPECIFICALLY IT WAS THAT LED ME TO BELIEVE THAT A

22  SPECIFIC VIOLATION OF LAW HAD OCCURRED IN SWITZERLAND BY

23  CARTO AND FISCHER.

24       Q    AND OKAY.  SINCE THAT LETTER THAT YOU WROTE, HAVE

25  YOU RECEIVED OR COME TO HAVE ANY KNOWLEDGE OF ANY ACTION ON

26  THAT COMPLAINT, THAT EXHIBIT A, WHATEVER WE WANT TO CALL IT,

27  OTHER THAN WHAT MR. URTNOWSKI HAS ATTACHED TO HIS AFFIDAVIT

28  AS EXHIBIT B AND EXHIBIT C?
			
			

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 1       A    WELL, I'M LOOKING AT THIS EXHIBIT C FOR THE FIRST

 2  TIME HERE.  I HAVEN'T SEEN IT BEFORE NOW.

 3       Q    YOU HAVEN'T SEEN THAT BEFORE?

 4       A    NO.

 5       Q    LET ME AMEND MY QUESTION.  WOULD YOU LOOK AT THAT

 6  AND SEE IF YOU CAN TELL US WHETHER YOU THINK THAT RELATES,

 7  WITH YOUR LIMITED KNOWLEDGE OF FRENCH, TO THE COMPLAINT

 8  EARLIER?

 9       A    ARE YOU REFERRING TO THE LETTER FROM MR. FOETISCH

10  IN ENGLISH, OR ARE YOU REFERRING TO A DOCUMENT IN FRENCH?

11       Q    OKAY.  I MAY HAVE BEEN MISDIRECTING YOU.

12            THERE IS AN EXHIBIT B CALLED A REQUISITION.  IT

13  SAYS “REQUISITION” THERE.

14       A    YES, IN FRENCH.

15       Q    THAT’s YOUR EXHIBIT B, CORRECT?

16       A    WELL, THERE’s TWO DOCUMENTS.  WELL, NO.  THERE'S

17  TWO DOCUMENTS IN THIS EXHIBIT B SECTION.

18       Q    OKAY.  BUT THE REQUISITION IS PART OF THE EXHIBIT

19  B SECTION?

20       A    THAT SEEMS TO BE, YES.  UH-HUH.

21       Q    THAT SEEMS TO BE, WOULD YOU NOT AGREE, RELATED

22  THAT REQUISITION TO YOUR COMPLAINT?

23       A    YES.

24       Q    AND IT HAS (MR. IZEN SPOKE IN FRENCH) THERE AT THE

25  TOP?

26       A    YES.

27       Q    OR HOWEVER YOU PRONOUNCE THAT IN FRENCH?

28       A    YES.
			
			

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 1       Q    AND YOU HAVE SOME CORRESPONDENCE WHICH MIGHT SHED

 2  SOME LIGHT ON HOW FAR THIS INVESTIGATION HAS GONE; IS THAT

 3  CORRECT?

 4       A    WE HAD SOME VERY LIMITED CORRESPONDENCE WITH THE

 5  JUGES D'INSTRUCTION (PHONETICS).  I DON'T KNOW WHAT THE

 6  STATUS OF THE INVESTIGATION.  THAT’s ALL.

 7       Q    AND YOU CAN'T REALLY TELL THE COURT WHETHER

 8  THERE’s GOING TO BE ANY CRIMINAL CHARGE RETURNED AGAINST THE

 9  CARTOS OR NOT AT THIS POINT?

10       A    THAT’s CORRECT.  I CANNOT SAY THAT.

11       Q    AND IT WAS YOUR UNDERSTANDING THAT THE DIVERSION

12  OF FUNDS FROM A SETTLEMENT OF A SWISS ESTATE, THAT IS THE

13  USE OF IN A MANNER CONTRARY TO THE TERMS OF THE SETTLEMENT

14  OF THE SWISS ESTATE, COULD BE CRIMINAL UNDER THE LAW,

15  CORRECT?

16       A    I DON'T KNOW IF I WOULD PUT IT THAT WAY,

17  MR. IZEN.  I HAD REASON TO BELIEVE AND HAVE REASON TO

18  BELIEVE THAT CARTO AND FISCHER HAVE ACTED ILLEGALLY AND

19  VIOLATED SWISS LAW.  I AM NOT AN EXPERT ON THIS, AND THAT'S

20  THE DETERMINATION, AS FAR AS I'M CONCERNED, FOR THE SWISS TO

21  MAKE.

22       Q    BUT WHAT OTHER BASIS COULD THERE BE FOR THE

23  CRIMINAL ACTIVITY OTHER THAN THE DISPOSITION OF FUNDS FROM A

24  SWISS ESTATE IN THE MANNER CONTRARY TO THE SETTLEMENT ON THE

25  TERMS OF THE COURT RECORD OVER THERE?

26       A    WELL, I CAN'T ANSWER THAT QUESTION.  THAT’s — I

27  MEAN, IT’s A REASONABLE QUESTION, BUT I CAN'T ANSWER IT

28  DEFINITIVELY.
			
			

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 1       Q    NOW AS FAR AS THE EMBEZZLEMENT IS CONCERNED, THE

 2  TERM THAT HAS BEEN USED BEFORE ABOUT THE FUNDS, WHOEVER

 3  SHALL BE RESPONSIBLE FOR HANDLING THEM, AS FAR AS THE

 4  EXHIBIT IS CONCERNED, THE LETTER, THE EXHIBIT A THAT YOU

 5  WROTE, THIS COMPLAINT, DID YOU INTEND THAT TO BE A COMPLAINT

 6  OF EMBEZZLEMENT?

 7       A    NOT NECESSARILY.

 8       Q    IT — YOU DIDN'T EXCLUDE IT, BUT YOU DIDN'T

 9  NECESSARILY EMPHASIZE IT?

10       A    THAT’s CORRECT.

11       Q    NOW YOU ALSO MADE COMPLAINTS, SIMILAR COMPLAINTS,

12  TO THE INTERNAL REVENUE SERVICE, HAVE YOU NOT?

13       A    I HAVE NOT, NO.

14       Q    WHAT ABOUT THE FBI?

15       A    I HAVE NOT.

16       Q    WHAT ABOUT MR. RAVEN OR ANYBODY WITH THE

17  CORPORATION LSF?

18       A    I THINK MR. RAVEN CONTACTED THE IRS.  I DID NOT,

19  BUT I DON'T RECALL ABOUT THAT.

20       Q    WHAT ABOUT THE FBI?

21       A    I DON'T THINK EITHER OF US DID.  I MIGHT BE WRONG,

22  BUT I DIDN'T.

23       Q    YOU DO AGREE, DO YOU NOT, THAT NOBODY IS URGED TO

24  TAKE A CHARITABLE DONATION OF ANY MONEY THEY GIVE LSF OR

25  LIBERTY LOBBY OR WHATEVER?

26       A    I'M SORRY?

27       Q    THE CHARITABLE DONATION — PEOPLE PRIVATELY

28  OFFERING THE MONEY, THEY GIVE YOU MONEY THEY GAVE IN
			
			

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 1  DONATIONS.  YOU DON'T URGE THEM TO WRITE IT OFF THE TAX

 2  RETURN.  YOU DON'T SAY, WE'RE A 501(C)(3) GROUP?

 3       A    WE DO NOW.  WE'VE GIVEN 501(C)(3) STATUS.

 4       Q    BUT THAT WAS NOT ALWAYS THE CASE?

 5       A    NO, THAT WAS NOT ALWAYS THE CASE.

 6       Q    WHAT ABOUT COMPLAINTS TO THE SHERIFF OF THE

 7  COUNTY, THIS COUNTY OR OTHERWISE?  HAVE YOU MADE CRIMINAL

 8  COMPLAINTS TO THEM?

 9       A    WELL, IN SAN DIEGO COUNTY YOU ARE REFERRING TO?

10       Q    YES, COUNTY WE'RE SITTING, I GUESS.

11       A    NO, I HAVEN'T DONE ANYTHING LIKE THAT.

12       Q    WITH RAVEN OR LSF?

13       A    NOT TO MY KNOWLEDGE.

14       Q    WHAT ABOUT THE COSTA MESA POLICE?

15       A    WE HAVE — WELL, I AND TOM MARCELLUS, BUT I THINK

16  PRINCIPALLY I BROUGHT WHAT WE BELIEVE WAS EVIDENCE OF

17  CRIMINAL ACTIVITY BY CARTO TO THE COSTA MESA POLICE.

18       Q    OKAY.  ARE YOU AWARE OF ANY PENDING INVESTIGATIONS

19  OTHER THAN THE COSTA MESA INVESTIGATION OR THE ONE IN

20  SWITZERLAND?

21       A    NO.

22       Q    DID YOU HAVE FAMILIARITY WITH THE HEREFORD

23  CORPORATION WHILE YOU WORKED WITH MR. CARTO?

24       A    I DON'T BELIEVE SO.

25       Q    DID YOU EVER CONTACT LSF OR ANYBODY WITH LSF,

26  INCLUDING YOURSELF, EVER CONTACT PANAMA TO DETERMINE THE

27  TRUE STATUS OF THAT CORPORATION?

28       A    COULD YOU REPEAT THE QUESTION?
			
			

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 1       Q    DID YOU EVER CONTACT PANAMA ABOUT HEREFORD

 2  CORPORATION?

 3       A    I NEVER DID.

 4       Q    ANYONE WITH LSF DO IT BEFORE TODAY THAT YOU KNOW?

 5       A    NOT TO MY KNOWLEDGE.

 6       MR. IZEN:  I PASS THE WITNESS.  THANK YOU.

 7       THE COURT:  ANY CROSS-EXAMINATION?

 8       MR. SAMPSON:  NO.

 9       THE COURT:  THANK YOU, MR. WEBER, FOR YOUR TESTIMONY.

10  THERE’s A STEP THERE.

11       MR. IZEN:  WE'RE NOT THERE YET, BUT THIS EVIDENCE IS

12  TENDERED FOR THE PURPOSES OF YOUR BEING ABLE TO RULE ON THE

13  REASONABLENESS OF FEAR OF PROSECUTION, SUCH WHATEVER WORTH

14  IT HAS.  ALSO, OBVIOUSLY, THERE’s — I TRIED TO GET SOME

15  KNOWLEDGE OF HEREFORD, BUT APPARENTLY LSF DOESN'T KNOW

16  ANYTHING ABOUT IT.

17            THAT’s IT, AS FAR AS I WANT TO GO.

18       THE COURT:  I GUESS WE'LL SEE EACH OTHER ON THE 8TH OF

19  JUNE.

20       MR. SAMPSON:  WE HAVE A COUPLE OF MINOR ISSUES, IF I

21  COULD CLEAR UP.

22            FIRST OF ALL, THERE WAS A MOTION FOR AN ASSIGNMENT

23  ORDER ON CONTRACTS HELD BY VIBET.  THERE WAS NO OPPOSITION.

24  I WILL SUBMIT AN ORDER TO THE COURT, IF THAT’s OKAY.

25       THE COURT:  I WILL SIGN THAT.

26       MR. SAMPSON:  THERE WAS A MOTION TO COMPEL FURTHER

27  DISCOVERY RESPONSES, AND THAT WAS BRIEFED BEFORE THE COURT.

28  THAT WAS OUR MOTION GIVING ALL THE OBJECTIONS, THE FIFTH
			
			

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 1  AMENDMENT, EVERYTHING ELSE.  I DON'T THINK THERE’s BEEN A

 2  DEFINITIVE RULING ON THAT TODAY.

 3       THE COURT:  I'D FORGOTTEN ABOUT THAT MOTION.

 4       MR. URTNOWSKI:  ISN'T THAT THE SAME ONE AS THE JUDGMENT

 5  DEBTOR EXAMINATION QUESTION, THE DOCUMENTS WITH THE SEPARATE

 6  STATEMENTS?  YOU SUBMITTED ONE AND I SUBMITTED ONE.

 7       MR. SAMPSON:  THE COURT HAS BEEN WRAPPING TOGETHER.  I

 8  WANT TO MAKE SURE WE'RE CLEAR THAT I GUESS THOSE — THE

 9  MOTION TO COMPEL OVERLAPS WITH THE OSC, SO TO THE EXTENT THE

10  COURT WANTS TO RULE ON THAT AT OSC, FINE.  I WANT THE RECORD

11  CLEAR.

12       THE COURT:  I WILL DO THAT AT THE OSC.

13       MR. SAMPSON:  WE ALSO HAD A MOTION BY THE DEFENDANTS TO

14  QUASH THE SUBPOENA.  I SUBPOENAED RECORDS FROM MR. URTNOWSKI

15  TO FIND OUT WHO WAS PAYING HIM, AND THAT’s THE IN RE GOODMAN

16  GRAND JURY PROCEEDINGS.  GOODMAN CASE, THE COURT RECALLS

17  THAT THAT WAS MR. URTNOWSKI’s MOTION TO QUASH.

18       THE COURT:  I DIDN'T KNOW ABOUT THAT MOTION.  I KNEW

19  THAT YOU HAD TAKEN SOMETHING OFF CALENDAR, A BIG HUGE THICK

20  THING.

21       MR. SAMPSON:  I TOOK OFF THE MOTION TO COMPEL DISCOVERY

22  RESPONSES FROM MR. URTNOWSKI BASED ON SANCTIONS AWARDS.  WE

23  RESOLVED THAT ISSUE.

24       THE COURT:  HE PAID YOU 6,000.

25       MR. SAMPSON:  SEVEN THOUSAND AND SOME WITH INTEREST AND

26  COSTS, YOUR HONOR.

27       MR. URTNOWSKI:  IT WAS A MOTION SET ORIGINALLY FOR

28  APRIL 10TH.  IT WAS A BUSINESS RECORDS SUBPOENA THAT WAS
			
			

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 1  SERVED NOT ON ME BUT MY SECRETARY, BUT IT WAS ADDRESSED TO

 2  ME INDIVIDUALLY.  IN THEIR OPPOSITION HE SAID IT WOULD BE

 3  MOOT BECAUSE IT WOULD BE RESEARCHED.  THAT HAS NEVER

 4  OCCURRED.  AND AS WELL AS OBJECTING TO THE SERVICE, YOUR

 5  HONOR, I OBJECTED TO THE FORM OF THE BUSINESS RECORDS

 6  SUBPOENA AS BEING IMPROPER DISCOVERY DEVICE.  THAT IT WAS

 7  GOVERNED BY THE DISCOVERY CODES 2020 AND 2024, AND THE

 8  DISCOVERY CUTOFF HAD RUN AT THE TIME OF TRIAL.

 9            I ALSO OBJECTED TO THE SCOPE OF THE DOCUMENTS.

10  ASKED THAT THEY WERE NOT PRECISELY DRAWN AS A SUBPOENA

11  REQUIRES.  FOR INSTANCE, THEY SAY, AND THIS IS WITH RESPECT

12  TO ALL OF THEM, “ANY AND ALL DOCUMENTS IN YOUR POSSESSION OR

13  CONTROL FROM TIME — THE PERIOD OF JANUARY 1, 1998 TO THE

14  PRESENT CONCERNING,” AND THEY HAVE DIFFERENT TOPICS.  THIS

15  ONE IS CONCERNING COPIES OF PAYMENTS TO YOU.  SUBPOENA IS

16  REQUIRED TO BE PRECISELY DRAWN.  CONCERNING COPIES OF

17  PAYMENTS, I DON'T KNOW WHAT THAT IS.  TAX RETURNS?  LETTERS

18  TO THE CLIENT?  BILLING STATEMENTS?  THE WHOLE SUBPOENA IS

19  OVERBROAD, BUT IT’s NEVER BEEN SERVED ON ME.

20       THE COURT:  DO YOU WANT TO — I KNOW THIS IS A MOTION

21  THAT COMPLETELY PASSED ME BY.

22       MR. URTNOWSKI:  HOW COULD THAT BE?

23       THE COURT:  WITH 50,000 MOTIONS.

24       MS. ARONSON:  YOUR HONOR, AS TO SERVICE SERVED AT HIS

25  LAW — SERVICE ON THE LEGAL SECRETARY, HIS LEGAL SECRETARY

26  IS AN AGENT UNDER CASE WARNER BROTHERS V. GOLDEN WEST MUSIC

27  SALES, AND CITE IS 36 CAL. APP. 3D 1012.  WE'LL BE HAPPY TO

28  RE-SERVE THE SUBPOENA, BUT IT DOESN'T SEEM TO BE A REASON
			
			

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 1  FOR DOING SO.

 2       THE COURT:  RIGHT.  I DON'T SEE ANY REASON TO RE-SERVE

 3  IT.  I DON'T KNOW THAT I AM IN A POSITION TO RULE ON IT.

 4            WHAT IS IT, MR. SAMPSON, YOU WANTED AND HE WON'T

 5  GIVE YOU?

 6       MR. SAMPSON:  I WILL MAKE IT SIMPLE.  WE WANTED TO

 7  KNOW — IN RE GOODMAN CASE SAYS THAT — IT’s A NINTH CIRCUIT

 8  CASE, YOU CAN SUBPOENA RECORDS FROM AN ATTORNEY’s FINANCIAL

 9  RECORDS ON THEIR CLIENT, THAT IS, ANY PAYMENTS TO

10  MR. URTNOWSKI BY JUDGMENT DEBTORS, ANY PAYMENTS BY THIRD

11  PARTIES ON THE JUDGMENT DEBTOR’s ACCOUNTS, AND THEN THE FEE

12  ARRANGEMENT.  SO WE KEPT IT SIMPLE.  LIMITED IT.  BASICALLY

13  TOOK THE LANGUAGE FROM THE GOODMAN CASE SO IT WOULD COMPLY

14  AND, OF COURSE, THE RESULTS ARE OBVIOUS.  IF HE’s GETTING

15  PAID, WE WOULD LIKE TO KNOW WHERE, SO WE CAN LEVY ON IT.

16       THE COURT:  SURE.

17       MR. URTNOWSKI:  IT’s NOT SPECIFICALLY DRAWN, AND I

18  OBJECT, BUT I ALSO PRESERVE MY OBJECTION FOR SERVICE.  I WAS

19  NOT PROPERLY SERVED.  MY SECRETARY IS NOT MY AGENT.  THEY

20  DID NOT NAME THE BUSINESS AS AN ENTITY.  THEY NAMED ME

21  INDIVIDUALLY.  THERE’s A DECLARATION FROM ME AND HER STATING

22  FOR ME SHE DOESN'T HAVE MY AUTHORITY AND FROM HER.  SHE

23  KNOWS SHE DOESN'T HAVE THE AUTHORITY.

24            BESIDES THAT OBVIOUS INFIRMITY, IT’s OVERBROAD.

25  NOW I SUPPOSE THAT IF THEY SERVE ME IN TIME, MAYBE WE CAN

26  SET IT FOR JUNE 8TH.

27       THE COURT:  MR. SAMPSON, WHAT IS YOUR OPINION TO THE

28  PROPER THING TO DO HERE?  I THINK I KNOW WHAT I AM GOING TO
			
			

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 1  DO.  WHAT IS YOUR IDEA?

 2       MR. SAMPSON:  YOUR HONOR, I LOOK AT THIS AS TWO

 3  ALTERNATIVES.  WE CAN SUBPOENA THE RECORDS, OR I CAN SET THE

 4  DEBTOR’s EXAM FOR THE SAME INFORMATION.  WE WILL GET TO THE

 5  SAME POINT.  I THINK BOTH ARE AUTHORIZED, AT LEAST MY

 6  READING OF THE POSTJUDGMENT CODE AND JUDGE AHART’s COMMENTS

 7  IN THE RUTTER GROUP POSTCOLLECTION OR ENFORCEMENT OF

 8  JUDGMENT BOOKS.  SO I HAVE NO PROBLEM THE COURT CONTINUING

 9  THIS.  IF YOU WANT TO HEAR THIS ON JUNE 8TH AT 8:30 OR IF

10  THE COURT WANTS TO TAKE A RECESS, WHATEVER IS BEST FOR THE

11  COURT.

12       THE COURT:  I'M NOT GOING TO QUASH THE SUBPOENA.  SET A

13  DEBTOR’s EXAM FOR MR. URTNOWSKI ON THE 8TH.  I MAY NOT BE

14  ABLE TO DO IT.  I CAN'T DO EVERYTHING AND STILL CHOOSE THE

15  JURY. SOME THINGS WILL HAVE TO GIVE WAY, AND IT WILL BE THE

16  CIVIL CASE.

17            AS I UNDERSTAND THE LAW, THE INFORMATION

18  MR. SAMPSON WANTS IS DISCOVERABLE.  MIGHT AS WELL GET TO IT.

19       MR. URTNOWSKI:  YOUR HONOR, HE ASKED FOR ALL DOCUMENTS

20  CONCERNING COPIES OF PAYMENTS.  WHAT ARE DOCUMENTS

21  CONCERNING?  IT’s OVERBROAD, YOUR HONOR.  IT’s MY TAX

22  RETURNS?  IT’s A LETTER TO THE CLIENT?

23       THE COURT:  NO, IT ISN'T THAT.  HE MADE IT CLEAR WHAT

24  IT IS.  AND AS I REMEMBER THAT CASE, IT MAKES IT CLEAR.

25  IT’s NOT YOUR PERSONAL TAX RETURN OR ANYTHING LIKE THAT.

26  IT’s REAL SIMPLE.  HOW ARE YOU GETTING PAID BY THESE VARIOUS

27  DEBTORS THAT YOU REPRESENT, SO THAT MR. SAMPSON CAN FIND OUT

28  WHERE THEY HAVE THEIR MONIES, SO HE CAN LEVY ON THAT?  IT'S
			
			

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 1  YOU SIMPLY START PULLING THE STRING AND SEE WHAT COMES OUT

 2  OF THE RABBIT HOLE.

 3       MR. URTNOWSKI:  WHAT IS THE STATUS OF THE SUBPOENA?

 4       THE COURT:  I'M NOT QUASHING IT.  AND EITHER COMPLY

 5  WITH IT ON THE DATE IN QUESTION, OR WE'LL HAVE A DEBTOR'S

 6  EXAM FOR YOU ON THAT DATE, IF WE HAVE THE TIME.  BRING THIS

 7  STUFF IN ON THE 8TH.  I THINK YOU KNOW THE CALL OF THE

 8  SUBPOENA.  THERE’s NO MAGIC TO THIS ONE.

 9            ANYTHING ELSE?

10       MR. URTNOWSKI:  JUST FOR THE COURT, DOES THE COURT RULE

11  SERVICE WAS PROPER ON ME?

12       THE COURT:  YES.  I'M NOT QUASHING THE SUBPOENA.  TAKE

13  WHATEVER CORRECTION YOU WANT.

14       MR. SAMPSON:  THE ONLY TWO ITEMS LEFT — I MADE A

15  CHECKLIST.  I SHOULD HAVE DONE A SCHEDULING NOTICE OR

16  SOMETHING.

17            WE HAVE THE DEBTOR’s EXAMINATION OF MR. AND

18  MRS. CARTO SET FOR TODAY.  GIVEN THE CONTEMPT ORDERS, WE CAN

19  GO FORWARD TODAY, OR WE CAN CONTINUE THAT TO THE 8TH,

20  WHATEVER THE COURT PREFERS.

21       THE COURT:  I DON'T CARE.  I ONLY HAVE 20 MORE MINUTES

22  I CAN SPEND WITH YOU.  IF THE CARTOS WOULD LIKE TO SUBMIT TO

23  THE EXAMINATION, FINE.  I CAN TELL YOU, BASED ON THE PRESENT

24  KNOWLEDGE THAT I HAVE, THERE’s NO FIFTH AMENDMENT RIGHT TO

25  THE QUESTIONS, BUT IT’s UP TO THEM WHAT THEY WANT TO DO.

26       MR. URTNOWSKI:  YOUR HONOR, WE WOULD LIKE TO RESERVE IT

27  TO JUNE 8 FOR THE HEARING ON CONTEMPT.  THEY SAT FOR

28  JUDGMENT DEBTOR’s EXAMS, THOUGH POSTPRIVILEGE.  WE GET A
			
			

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 1  FINAL DETERMINATION.

 2       MR. SAMPSON:  I WILL AGREE.  WE WON'T WASTE TIME AND

 3  MONEY TODAY.  I WANT TO DEPOSE THEM.  I KNOW WHAT THE

 4  ANSWERS WILL BE UNTIL THE COURT ISSUES THE FINAL RULING.

 5       THE COURT:  RIGHT.  ANYTHING ELSE I NEED TO DO?

 6       MR. SAMPSON:  THE COURT CAN ORDER THEM BACK FOR THE

 7  DEBTOR’s EXAM.

 8       THE COURT:  THE CARTOS ARE ORDERED BACK FOR THE

 9  DEBTOR’s EXAM.  BOTH ARE PRESENT IN COURT.  BE HERE ON THE

10  8TH OF JUNE, 8:30 IN THE MORNING.

11       MR. SAMPSON:  I WILL GO AHEAD AND PREPARE THE ORDERS

12  ESPECIALLY TO SET THE OSC REGARDING THE SALE OF THE HOUSE

13  TOO.  I WILL LAY OUT THE LAW ON THAT FOR EVERYONE.

14       THE COURT:  I APPRECIATE THAT.  I HAVEN'T DONE THIS

15  BEFORE, AND I AM HOPING NOT TO HAVE TO DO IT.  IF ANYONE

16  WANTS TO TAKE ME UP ON TRYING TO FIND SOMEONE TO SETTLE THE

17  CASE, I SURE WOULD LIKE TO DO IT.  IF SOME WAY CAN BE FOUND

18  TO KEEP THE CARTOS OUT OF JAIL, I WOULD LIKE TO DO THAT TOO.

19       MR. SAMPSON:  MY CLIENTS STIPULATED TO AN INFORMAL OR

20  FORMAL SETTLEMENT CONFERENCE WITH ANOTHER JUDGE.  IF

21  MR. URTNOWSKI HAS A MOMENT TO TALK WITH THE CLIENTS, WE CAN

22  SET THAT UP.

23       THE COURT:  YOU TWO CAN TALK AND FIGURE OUT SOME DATES,

24  AND I WILL TRY TO FIND SOMEONE TO DO IT FOR YOU.  I HAVE

25  SOME PEOPLE IN MIND WHO ARE VERY, VERY KNOWLEDGEABLE IN THE

26  CIVIL AREA, AND I THINK YOU WOULD GET A FAIR SHOT.

27            I WOULD EMPHASIZE THERE HAS TO BE REAL HONESTY

28  WITH THE JUDGE YOU TALK TO.  YOU DON'T HAVE THAT WITH ME
			
			

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 1  RIGHT NOW TO THE EXTENT I COULD EVER SETTLE IT.  ALL RIGHT.

 2  THANKS A LOT, AND WE WILL SEE YOU ON THE 8TH.

 3       MR. URTNOWSKI:  THANK YOU.

 4

 5                    (PROCEEDINGS CONCLUDED.)

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page 94



 1  STATE OF CALIFORNIA   )

 2                        )SS

 3  COUNTY OF SAN DIEGO   )

 4

 5            I, BARBARA J. SCHULTZ, C.S.R. NO. 8021, AN

 6  OFFICIAL REPORTER OF THE SUPERIOR COURT OF THE STATE OF

 7  CALIFORNIA, IN AND FOR THE COUNTY OF SAN DIEGO, HEREBY

 8  CERTIFY THAT I REPORTED IN MACHINE SHORTHAND THE PROCEEDINGS

 9  HAD AND TESTIMONY ADDUCED IN THE TRIAL OF THE WITHIN CASE,

10  AND THAT THE FOREGOING TRANSCRIPT, CONSISTING OF PAGES FROM

11  1 TO 94, INCLUSIVE, IS A FULL, TRUE AND CORRECT TRANSCRIPT

12  TO THE BEST OF MY ABILITY OF THE SAID PROCEEDINGS.

13            DATED AT VISTA, CALIFORNIA, THIS 24TH DAY OF MAY,

14  1998.

15

16

17

18

19                                ____________________________
                                  BARBARA J. SCHULTZ
20                                CSR NO. 8021

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