Dirtiest Trials of the Twentieth Century - The Who's Who Worldwide Registry Tragedy
459
22 (516) 485-6558
23
Proceedings recorded by mechanical stenography, transcript
24 produced by Computer-Assisted Transcription
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
461
1 M O R N I N G S E S S I O N
2
3 (Whereupon, the following takes place in the
4 absence of the jury.)
5 THE COURT: First of all, I have advised you that
6 this men's bathroom is next to the jury room and is not to
7 be used. I am advised that some of you are still using
8 it. Do not. Use the one upstairs.
9 I was requested to get permission, or attempt to
10 get permission to bring cellular phones into the
11 courthouse. I cannot get that permission.
12 You may not use it in any part of the Court,
13 either in the area by the magometer and the end of the
14 door.
15 You may use the cellular phones in cars. I know
16 they can be used there. I don't happen to use one, but I
17 see people driving along with one of these things in their
18 ear as they are driving. I don't know how they manage to
19 drive with that, but if you wish, you can use your
20 cellular phones in the car.
21 There are eight public phones in the court
22 building. Three, two, and two. Three in the lower level,
23 two on the upper level, I believe. Whatever. If you
24 cannot use those, use your cellular phones in the car, not
25 in the courthouse. We cannot allow that.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
462
1 We will wait for the j
ury to get here.
2 Anything else anyone wants to bring up?
3 (No response.)
4
5 (Whereupon, a recess is taken.)
6
7 THE CLERK: Jury entering.
8 (Whereupon, the jury at this time entered the
9 courtroom.)
10 THE COURT: Good morning, members of our well
11 rested jury.
12 Please be seated.
13 I want to thank you all for being here
14 punctually. I understand one juror was late. I am sure
15 there is a reason for that juror being late, and we
16 appreciate your punctuality and sense of responsibility.
17 Several announcements.
18 Today we have a judge's meeting, which means that
19 that will be from 1:00 to 2:00. We will take lunch from
20 1:00 to 2:15, instead of 12:30 to 1:30 only.
21 Also, there will be no court this Friday, so you
22 can go to work or do whatever else you want to do on
23 Friday.
24 The f
ollowing Friday, the 30th of January, we
25 will work from 1:30 to 5:30, January 30th, 1:30 to 5:30.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
463
1 You may proceed.
2 MS. SCOTT: Thank you, your Honor.
3 I would like to tell the Court we have provided
4 binders to all the jurors with respect to the exhibits
5 that we have, and continue in that fashion.
6 THE COURT: Good.
7 MS. SCOTT: And the government's first witness
8 will be Madeline Middlemark.
9 THE CLERK: Please raise your right hand.
10
11 M A D E L I N E M I D D L E M A R K ,
12 called as a witness, having been first
13 duly sworn, was examined and testified
14 as follows:
15
16 THE CLERK: Please state your name and spell your
17 last name slowly for the record.
18 THE WITNESS: Madeline Middlemark,
19 M I D D L E M A R K.
20 THE COURT: Have a seat, Ms. Middlemark.
21 You may proceed.
22
23
24
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
464
Middlemark-direct/Scott
1 DIRECT EXAMINATION
2 BY MS. SCOTT:
3 Q Good morning, Ms. Middlemark.
4 A Good morning.
5 Q Tell us where you live?
6 A 96 Storehill Road in Westbury.
7 THE COURT: S T O R E?
8 THE WITNESS: Correct.
9 Q Are you married?
10 A I am a widow.
11 Q Do you have any children?
12 A Yes, I have one son.
13 Q Do you know Bruce Gordon?
14 A Yes, I do.
15 Q How do you know him?
16 A I know Bruce Gordon because I grew up next door to
17 him.
18 Q And how long have you known him?
19 A Approximately 47 years.
20 Q And over those 47 years have you maintained a
21 friendship with him?
22 A
Yes, I have.
23 Q How often do you see him?
24 A Once a month, every other month.
25 Q And have you had occasion over the past 47 years to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Middlemark-direct/Scott
1 get to know other members of Mr. Gordon's family?
2 A Yes.
3 Q For example, who do you know in his family?
4 A I know his ex-wife Elissa Gordon.
5 I knew his son Todd, and I knew his son Curt, who
6 both passed away. I know his son Craig, and his sister,
7 Joyce Grossman, and his brother-in-law Richard Grossman.
8 Q Now, over the period of your friendship with
9 Mr. Gordon, have you had occasion to lend him money?
10 A Yes. I have.
11 Q How many times have you lent him money?
12 A Ten or 20.
13 Q Can you describe what types of loans you made to him?
14 A I don't understand the question.
15 Q Hav
e you loaned him money for his personal use or his
16 businesses?
17 A I believe both.
18 Q And how, if at all, were these loans secured?
19 A Well, Mr. Gordon for a large amount, say, 5,000,
20 10,000, usually gave me a handwritten note saying he owed
21 me the money. But if it was for like 500 or something
22 like that, I didn't get a note.
23 Q Now, if it was -- if the amount of the note was
24 written, were you given a copy of it?
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Middlemark-direct/Scott
1 Q Does Bruce Gordon always pay you back the money he
2 borrowed from you?
3 A Yes, he did.
4 Q How would he repay you?
5 A Sometimes in cash, if it was a small amount, or by
6 check.
7 Q Okay.
8 And when he repaid you, what did you do with the
9 promissory notes that memorialized th
e loans?
10 A I would rip them up.
11 Q So, after the money was repaid, did you keep any
12 record of the loans that you made to him?
13 A No.
14 Q Did you ever lend Mr. Gordon any money to pay his
15 ex-wife's medical expenses?
16 A Not to my knowledge, I did.
17 Q Did you ever hear of his ex-wife needing medical
18 treatment at any time?
19 A No, I didn't.
20 Q Have you ever loaned Mr. Gordon money to pay his
21 ex-wife's alimony?
22 A Not to my knowledge.
23 Q Now, when he asked you to borrow money, what did he
24 typically say he was going to use the money for?
25 A He usually needed it, like a bridge time loan, if he
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Middlemark-direct/Scott
1 was short on cash, or if he needed it for his business.
2 At one time he needed it to pay an attorney.
3 He really didn't go into all the details.
4 Q Okay.
5 I am directing your attention now to October
6 1993.
7 Do you remember loaning Mr. Gordon money at or
8 around that time?
9 A I don't remember.
10 Q Okay.
11 Now, for example, do you think you loaned him
12 $10,000 at that time?
13 A I don't remember whether I did or not.
14 Q I am going to show you Government's Exhibit 425-B.
15 (Handed to the witness.)
16 MS. SCOTT: I remind the Court it is in evidence
17 and it has been passed out to the jury for their binders.
18 Would you please read from that document?
19 A The whole thing?
20 Q Yes. Please, thank you.
21 A It says promissory note, $10,000, date, October
22 first, 1993. I, Bruce Gordon, hereby promise to pay to
23 the order of Madeline Middlemark the amount of $10,000,
24 and then in parenthesis, $10,000, on or
before five years
25 from the date of this note. Interest at the rate of 7.5
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
468
Middlemark-direct/Scott
1 percent per annum to be paid at maturity. Maturity date,
2 December 30th, 1998, Bruce Gordon.
3 Q Now, aside from the time that you testified before
4 the grand jury, have you ever seen that document before?
5 A No, I have not.
6 Q And in October of 1993, did you loan Mr. Gordon the
7 $10,000 referenced in that note?
8 A I don't believe I did.
9 Q Thank you, Ms. Middlemark.
10 One moment.
11 THE COURT: Yes.
12 (Whereupon, at this time there was a pause in the
13 proceedings.)
14 MR. WHITE: Thank you. No further questions.
15 MR. TRABULUS: Your Honor, if I may just have a
16 moment?
17 THE COURT: Surely.
18 (Whereupon, at this time there was a paus
e in the
19 proceedings.)
20
21 CROSS-EXAMINATION
22 BY MR. TRABULUS:
23 Q Good morning, Ms. Middlemark.
24 A Good morning.
25 Q Now, I think you just told Ms. Scott that you didn't
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Middlemark-cross/Trabulus
1 loan the $10,000 that was evident -- that was referred to
2 in the note you were just shown?
3 A Right.
4 Q I think you also indicated you don't remember one way
5 or another whether or not you loaned Mr. Gordon $10,000 in
6 October of 1993; is that correct?
7 A Yes, that's correct.
8 Q So, it is possible that you loaned him $10,000 in
9 1993 in October?
10 A It's possible.
11 Q And sometimes when you loaned him money did he pay
12 you back quite quickly?
13 A Yes, he did.
14 Q Sometimes within a matter of weeks or even days
?
15 A That's correct.
16 Q Now, do you recall whether or not when he paid you
17 back, he paid you back in cash or in check?
18 A No, I don't.
19 Q In some instances would he pay back in cash and
20 others in check?
21 A Yes.
22 Q When he paid back in check, would it sometimes be a
23 personal check?
24 A I don't remember.
25 Q Is it that you don't remember --
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Middlemark-cross/Trabulus
1 A I really don't remember whether it was his personal
2 check or company check. I really don't.
3 Q Okay.
4 Do you recall sometimes in 1993 or 1994 you did
5 lend Mr. Gordon 10,000, just not the particular date?
6 A I don't remember.
7 Q Okay.
8 Ms. Middlemark, did there come a time at
9 Mr. Gordon's request you went to an auction that was
10 loc
ated in a penthouse in Manhattan?
11 A Yes.
12 Q And was this an auction whereby a bankruptcy trustee
13 was having various items auctioned off?
14 A Yes.
15 Q Did you see the auction occurring?
16 A Yes.
17 Q Did you see the furnishings of the auction --
18 penthouse being auctioned off?
19 A Yes.
20 Q Did you see some of the decorations and artwork being
21 auctioned off?
22 A Yes.
23 Q And that was being auctioned off so -- withdrawn.
24 The property being auctioned off was supposed to
25 be the property of Who's Who Worldwide; is that correct?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Middlemark-cross/Trabulus
1 A I believe so.
2 Q And this was an auction of Who's Who Worldwide's
3 property, not Mr. Gordon's property; is that correct?
4 A I believe so.
5 Q Among the things you
saw auctioned off, was there
6 sculpture, do you recall?
7 A Everything in the apartment was auctioned.
8 Q Do you remember what some of the things in the
9 apartment were? Was there some sculpture there?
10 A Probably so.
11 Q Crystal?
12 A Crystal as far as glassware?
13 Q Yes.
14 A Yes, there was. But that was not auctioned.
15 Q Okay.
16 Any paintings? Did you see those auctioned?
17 A Yes.
18 MR. TRABULUS: No further questions.
19 MS. SCOTT: No further questions.
20 THE COURT: One moment, please.
21
22 CROSS-EXAMINATION
23 BY MR. WALLENSTEIN:
24 Q Good morning, Ms. Middlemark.
25 A Good morning.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Middlemark-cross/Wallenstein
1 Q Would you say it was a fairly regular appearance for
2 Mr. Gordon to borrow money from yo
u?
3 A I don't understand.
4 Q It wasn't unusual, was it?
5 A No.
6 Q You say it happened on ten or twelve occasions at
7 least?
8 A Yes.
9 Q Did he always repay the money?
10 A Yes, he did.
11 Q So, at this point in time he owes you nothing; is
12 that correct?
13 A That's not correct.
14 Q But he always repaid the loans?
15 A Yes.
16 Q Did you ever meet Mr. Gordon's accountant?
17 A No. I never had.
18 Q Never had any contact with him?
19 A No.
20 MR. WALLENSTEIN: Thank you.
21 No further questions.
22 MR. GEDULDIG: Judge, I have a question.
23 THE COURT: Go ahead.
24
25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Middlemark-cross/Geduldig
1 CROSS-EXAMINATION
2 MR. GEDULDIG:
3 Q Ms. Middlemark, I think you testified on direct
4 examination that you have known Mr. Gordon for some 47
5 years?
6 A Yes.
7 Q And you would consider yourself to be a personal
8 friend of his?
9 A Yes.
10 Q You know him very well?
11 A Yes.
12 Q Did you know any of the people that he was involved
13 in business with?
14 A No.
15 Q As you sit here now, do you know him to have misled
16 you with regard to the reasons that you were lending him
17 money?
18 A No.
19 Q As you hit here now, is there anything that you know
20 that he told you which you learned to be untrue?
21 A No.
22 MR. GEDULDIG: I have no other questions.
23 THE COURT: Anything else?
24 MS. SCOTT: Nothing further, your Honor.
25 THE COURT: You may step down.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Middlemark-cross/Geduldig
1 (Whereupon,
at this time the witness left the
2 witness stand.)
3 THE COURT: Please call your next witness.
4 MS. SCOTT: The government calls Maurice
5 Mansouri.
6 THE COURT: Step up and raise your right hand.
7
8 M A U R I C E M A N S O U R I ,
9 called as a witness, having been first
10 duly sworn, was examined and testified
11 as follows:
12
13 THE COURT: Be seated.
14 State your full name and spell your last name.
15 THE WITNESS: Maurice Mansouri, M A N S O U R I.
16
17 DIRECT EXAMINATION
18 MS. SCOTT:
19 Q Good morning, Mr. Mansouri.
20 A Good morning.
21 Q Can you tell us what you do for a living?
22 A Own a clothing store.
23 Q What is the name of that clothing store?
24 A Mansouri.
25 Q Where is it located?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Mans
ouri-direct/Scott
1 A In Greenvale, 270 Wheatley Plaza.
2 THE COURT: 270 what?
3 THE WITNESS: Wheatley Plaza.
4 Q How long has your store been in business?
5 A About 17 years.
6 Q I am showing you Government's Exhibits 485 through
7 494.
8 (Handed to the witness.)
9 Q There are two copies of each of them. Do you
10 recognize those?
11 A Yes, I do.
12 Q How do you recognize those? What do you recognize
13 those to be?
14 A The sales receipts for the merchandise we sold from
15 the store.
16 Q How do you recognize them?
17 A The receipts are usually issued in the store for
18 merchandise that customers buy.
19 Q Do they say Mansouri at the top?
20 A Yes, they do.
21 Q How are these documents created?
22 A Created by hands at the time of the purchase.
23 Q Who creates them?
24 A The salesperson.
25 Q Is that the salesperson who would be serving the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Mansouri-direct/Scott
1 customer at the time of the purchase?
2 A Yes.
3 Q And were these documents kept in the course of
4 regularly conducted business activity of Mansouri?
5 A Yes.
6 Q And was it the regular business practice of Mansouri
7 to keep these business records?
8 A Yes. .
9 MS. SCOTT: I offer Government's Exhibits 485
10 through 494 in evidence.
11 THE COURT: Any objection?
12 MR. TRABULUS: No objection.
13 THE COURT: Government's Exhibits 485 through 495
14 in evidence.
15 (Government's Exhibit 485 through 495 received in
16 evidence.)
17 Q Looking through those documents, do they show who the
18 name of the customer is?
19 A Yes, it does.
20 Q Who is that?
21 A Bruce Gordon.
22 Q Is that the customer on all the documents you have in
23 front of you?
24 A There is three of them, right?
25 Q Yes, that's right.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Mansouri-direct/Scott
1 A Yes.
2 Q Can you tell us what those documents show, what
3 occurred in those transactions that is recorded on those
4 documents?
5 A It shows the customer came to the store and purchased
6 items like jackets, pants, shirts, belts.
7 Q Going through them one by one, what is the date on
8 the first one, on Government's Exhibit 485?
9 A September 21, '91.
10 Q And what does the receipt there show was purchased?
11 A A pair of pants and a belt.
12 Q What was the total amount spent that day on those
13 items?
14 A I am sorry, it is more than that. That's the second
15 pag
e. Let me find where the first page of it is.
16 Two receipts, numbers 485 and 486. Those are the
17 same -- we write on the first one and then we finished up
18 on the second one as you can see.
19 So, on the second receipt it is a pair of pants,
20 a belt. And the first one is two sports jackets, two more
21 pants, two more shirts, and one more belt.
22 The total amount is $2,924.08.
23 Q And just for clarity, Government's Exhibit 485 and
24 486 record transactions that occurred on the same day?
25 A Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Mansouri-direct/Scott
1 Q Is that September 21st, 1981?
2 A Yes.
3 Q And if you can move on to the next transaction date.
4 A That's 487?
5 Q I am sorry, what is the date?
6 A That's Exhibit 487?
7 Q Yes; that's right.
8 A The date is October 2nd, 1991.
9 Q Please tell the jury what transactions occurred on
10 that day.
11 A It shows that there were two pairs of pants for
12 $618.45.
13 Q And moving on to the next transaction date, I believe
14 that is 487?
15 THE COURT: That was just 487, I believe.
16 Q I am sorry. I believe that that is 488.
17 A 488 is a copy have a charge. Am I correct?
18 Q Which transaction does that one relate to?
19 A This one relates to -- I have to figure this out.
20 Give me one minute, okay?
21 It looks like it pays a balance on Exhibit 486,
22 485, and Exhibit 487. If you look at the balances on
23 Exhibit 485, you have a balance of $924.08. And on
24 Exhibit 487 you have a balance of $217. If you add those
25 two, I think you will get $1,148.08. That's the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Mansouri-direct/Scott
1 combination of the two balances which was paid on that
2 date.
3 Q Now, putting aside Government's Exhibit 485, 486, 487
4 and 488 --
5 A Right.
6 Q I have to ask you to move on to the next transaction
7 date?
8 A 488 and 490?
9 Q Okay.
10 What is the date of that transaction?
11 A June 4th, 1992.
12 Q And what was purchased on that day?
13 A Three sports jackets -- four sports jackets, I am
14 sorry and seven pairs of pants.
15 Q And how much was the amount of that purchase?
16 A $5,088.65, total amount.
17 Q Going on to the next exhibit, 491, I believe; what
18 does that document show?
19 A The date on it is September 24th, 1992.
20 Q And what does that document show?
21 A That shows, again, purchases of one jacket -- it is
22 two receipts actually, 491 and 491-A, they refer to the
23 same thing. We start o
n one receipt and finished on
24 another receipt. He got one jacket, four pairs of pants,
25 and eight shirts.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
480
Mansouri-direct/Scott
1 Q And what is the total amount of that purchase?
2 A $3,130 -- I am sorry, it is not clear here. It is a
3 little faded. $3,130.23.
4 Q Okay.
5 Now, looking at the next items of 492, I believe
6 through -- 492 and 493.
7 A Yes.
8 Q What is the date of the purchase on
9 Government's Exhibit 492?
10 A I think 492 and 493 --
11 Q Do they show a balance?
12 A Yes, they show a balance.
13 I think 493, the balance on 493 is the total --
14 again, it is not clear here. Is it okay if I look here.
15 Q I will ask you to move on to 494 and 495.
16 A Okay.
17 494 is the same as 493. It is just more clear
18 copy.
19 Q Okay.
20 Can you tell the jury what that says?
21 A Yes. There was a purchase of three jackets, five
22 pairs of socks, one belt and one shirt for $2,831.85.
23 Q Now, looking at all of these documents together, can
24 you tell the jury how they were paid for?
25 THE COURT: What was the date of the last
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
481
Mansouri-direct/Scott
1 exhibit, 494 and 495?
2 THE WITNESS: 494, the date on it is April 4th of
3 1993.
4 I don't have a 95 there.
5 You want me to go receipt by receipt?
6 Q Can you tell from looking at those documents how the
7 purchases were paid for?
8 A Yes. This was -- Exhibit 494 was paid by American
9 Express.
10 Exhibit 491-A was partially cash.
11 Exhibit 489 was partially American Express.
12 Exhibit 487 is partially American Express.
13 Exhibit 485 is partially American Express. And
14 Exhibits 485 as I -- 488 as I mentioned earlier was a
15 combination of 487 and 485, also by American Express.
16 Q Thank you.
17 I am showing you Government's Exhibit 404-A and B
18 in evidence, Mr. Mansouri. And specifically I would like
19 you to read the date in the box for 63.
20 MR. TRABULUS: Objection.
21 MR. JENKS: I want to object also.
22 THE COURT: Is this document in evidence?
23 MR. JENKS: Yes.
24 THE COURT: What is the objection? You can state
25 it?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
482
Mansouri-direct/Scott
1 MR. JENKS: I don't believe he is a qualified
2 expert to testify as to a government exhibit related to a
3 tax form, or a form the IRS uses and sent off to the IRS.
4 Further, I object to the testimony as being
5 cumulativ
e. The American Express records are already in
6 evidence.
7 MR. TRABULUS: Your Honor, I have the same
8 objection. The particular exhibit being shown in evidence
9 is I believe dated 1991.
10 THE COURT: What is the exhibit?
11 MS. SCOTT: The 433-A form filled out in
12 September of 1991.
13 THE COURT: What part of the exhibit are you
14 showing to this witness?
15 MR. WHITE: I am showing the part that shows a
16 date and some expenses claimed for that time period.
17 I would add, your Honor, I am only asking the
18 witness to read off the information on the form. The form
19 is already in evidence.
20 THE COURT: You can read it, can't you?
21 MR. WHITE: All right.
22 THE COURT: Why do we need him to read it for?
23 Go ahead and read it.
24 MS. SCOTT: All right.
25 I will ask the Court to take notice that the date
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
483
Mansouri-direct/Scott
1 on this 433-A form is September 16th, 1991.
2 THE COURT: September 16th?
3 MS. SCOTT: Right.
4 The amount claimed for expenses at that time is
5 $175, as set forth in box 58, other expenses.
6 I will ask the Court and jury to compare the
7 amount which Mr. Mansouri reread from
8 Government's Exhibit 485 and 486.
9 Would you read to the jury that amount?
10 THE WITNESS: September 21st, '91?
11 Q Yes.
12 A The amount that was given to me or the amount that
13 was spent?
14 Q The amount spent total on the purchases on that day.
15 A $2,924.08.
16 MS. SCOTT: Thank you.
17 No further questions.
18 MR. TRABULUS: I have no questions.
19 THE COURT: You may step down.
20 (Whereupon, at this time the witness left the
21 witness stand.
)
22 THE COURT: Please call your next witness.
23 MS. SCOTT: The next witness is Brian Lucas.
24 MR. JENKS: Judge, may we approach with the
25 assistants United States Attorney for a moment?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
484
1 THE COURT: Yes.
2
3 (Whereupon, at this time the following took place
4 at the sidebar.)
5 THE COURT: Yes, Mr. Jenks.
6 MR. JENKS: Judge, I recognize that I don't
7 recognize Mr. Gordon. However, I am going to make an
8 objection to the calling of more store people at this
9 point. It is cumulative testimony. The American Express
10 records are in evidence. The jury has seen that he has
11 charged X amount on clothes, shoes and belts.
12 THE COURT: You are going so fast that you lost
13 me back at the American Express headquarters. Did you get
14 beyond that, Mr. Jen
ks?
15 MR. JENKS: I did, your Honor. I am sorry for
16 talking too quickly.
17 I object to the introduction of further testimony
18 regarding Mr. Gordon's personal purchases or sports
19 jackets and slacks and coats and so forth. It is
20 cumulative and for several reasons.
21 THE COURT: You mean it is the same sports
22 jacket?
23 MR. JENKS: It is not the same sports jacket.
24 THE COURT: How can it be cumulative then?
25 MR. JENKS: The American Express records in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
485
1 evidence which were introduced last week all reflect these
2 purchases on those records. We had someone from American
3 Express here, Mr. Garabedian testify that there were
4 numerous purchases made from the stores. This is highly
5 prejudicial. The jury has heard more than enough of this
6 testimony.
7 Further, I also object, your Honor, and I want to
8 make another objection for the record, and that is, having
9 the government stand up here with forms and documents,
10 which are IRS forms, which are already in evidence, and
11 having people who own stores or boutiques, or whatever
12 they are, testify as to what is on those documents. They
13 had nothing to do with those documents.
14 Further, I also objected, if you are going to
15 have the government read the documents in evidence,
16 Ms. Scott read whatever it was, 433 or 443, and then made
17 a speech concerning the documents. I will object to that
18 whole line of questioning.
19 THE COURT: I will deal with all your objections,
20 one at a time, if I remember them.
21 What is all this evidence for?
22 MR. WHITE: Your Honor, for a couple of
23 purposes. One is to show the nature of the expenses
24 incurred by Mr. Gordon for several reasons. One is for
25 comparison purposes. He tells the information a certain
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 thing on a certain date, his monthly expenses are $175,
2 and then spends $2,900 on a sports jacket five days
3 later. That is relevant.
4 THE COURT: Relevant to what?
5 MR. WHITE: To show what Mr. Gordon's spent.
6 THE COURT: What count are we talking about?
7 MR. WHITE: I don't know the number off the top
8 of my head. Each form is a separate count.
9 THE COURT: I wanted to know just what you were
10 trying to prove and to what count.
11 Mr. Jenks, as far as it being cumulative, they
12 are not cumulative. The testimony is with regard to
13 different stores with different kinds of purchases and
14 different types of items purchased?
15 MR. JENKS: Exce
pt with regard to the same
16 information collection information statement, and so
17 forth.
18 THE COURT: The government has the burden of
19 proving that these are false statements beyond a
20 reasonable doubt. These are all different purchases at
21 different stores. There is nothing cumulative about it.
22 Maybe hearing it repetitively may be difficult to
23 take. If I am representing somebody that may be. It is
24 perfectly proper to prove it.
25 What was the last objection? That the government
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 attorney, Ms. Scott read the thing.
2 MR. JENKS: Yes, when they read --
3 THE COURT: I read -- asked her to read the
4 thing.
5 The statement she made could have been brought
6 out in testimony, true. But it is only logical and
7 reasonable for the government to tell
the jury what they
8 want to do.
9 MR. JENKS: Through a summary expert, and maybe
10 summation. Not with Ms. Scott saying to the jury, you
11 see, I am trying to show you that this document means A,
12 B, C and D. Because they are the fact-finders and not
13 Ms. Scott.
14 THE COURT: The jury has been told that what
15 Ms. Scott said is not evidence. She is merely pointing
16 out the evidence in there. It is an interim type of
17 summation, that's right.
18 You want an opportunity now to give your interim
19 summation?
20 MR. JENKS: I don't want to give an interim
21 summation.
22 THE COURT: I will give you an opportunity.
23 MR. JENKS: I don't need that opportunity.
24 THE COURT: Did you ever hear the case tried by
25 Judge Lavalle, the Westmorland case, where he had a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 summation one-third at a time? Did you ever hear that?
2 MR. JENKS: No, Judge.
3 THE COURT: That is flexibility and
4 innovativeness. I am not that way myself. I wish I were.
5 I see nothing wrong with what the government did.
6 MR. JENKS: I note my objection for the record.
7 I realize I am not the attorney for Mr. Gordon.
8 THE COURT: I will let you object vociferously,
9 promiscuously, any other way you wish.
10 MR. JENKS: Thank you.
11 MS. SCOTT: Thank you, Judge.
12
13 (Whereupon, at this time the following takes
14 place in open court.)
15
16 DIRECT EXAMINATION
17 BY MS. SCOTT:
18 Q Good morning --
19 THE COURT: I don't think this witness is sworn.
20 Do you want to rise and raise your right hand.
21
22 B R I A N L U C A S ,
23 called as a witness, having been first
24 duly s
worn, was examined and testified
25 as follows:
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Lucas-direct/Scott
1
2 THE COURT: Please be seated. State your full
3 name and spell your last name.
4 THE WITNESS: Brian Lucas, L U C A S.
5 THE COURT: You may proceed.
6
7 DIRECT EXAMINATION
8 BY MS. SCOTT:
9 Q Good morning, Mr. Lucas.
10 A Good morning.
11 Q Tell us what you do for a living,?
12 A Yes, the manager of the Glen Cove location of London
13 Jewelers. In addition I am responsible for the entire
14 computer operation, maintaining records and such.
15 Q How long have you been in that position?
16 A For eleven years.
17 Q Now, I am showing you Government's Exhibit 525, which
18 consists of several pages.
19 THE COURT: Is that for identification?
20 MS. SCOTT: That's correc
t.
21 (Handed to the witness.)
22 Do you recognize that exhibit?
23 A Yes, printouts from our computer system for purchases
24 made by Bruce Gordon from our store.
25 Q How are those records made?
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Lucas-direct/Scott
1 A This is information processed into our computer
2 system at the time of our purchase.
3 Q Who processes it into the system?
4 A The individual salespeople who help the customer.
5 Q Now, were these records kept in the course of
6 regularly conducted business activity of London jewelers?
7 A Yes, they are.
8 Q Was it the regular business practice of London
9 Jewelers to make and keep these records?
10 A Yes, it is.
11 MR. WHITE: I offer Government's Exhibit 525 in
12 evidence, a four-page document.
13 THE COURT: Any objection?
14 MR.
TRABULUS: No.
15 THE COURT: Government's Exhibit 525 in
16 evidence.
17 (Government's Exhibit 525 received in evidence.)
18 Q Now, Mr. Lucas, taking a look at that exhibit, can
19 you tell the jury what it shows Mr. Gordon purchasing from
20 your store?
21 A Yes. It shows that on one particular day, August
22 29th of 1992 Mr. Gordon purchased four pieces of
23 merchandise. One was a Tiffany 18 caret gold ring. One
24 was a diamond ring. One was a pair of earrings. And the
25 other one was a pendant with diamonds with an imitation
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Lucas-direct/Scott
1 Indian coin on a chain.
2 Q And these purchases were all made on one day?
3 A That's correct.
4 Q Can you tell the jury the total amount of the
5 purchases?
6 A The total amount of the merchandise was $1,660, and
7 then the tax on top of that.
8 Q And can you tell from looking at the documents how
9 the items were paid for?
10 A Unfortunately, no. At the time our system didn't
11 record the method of payment.
12 MS. SCOTT: Okay. No further questions.
13 MR. TRABULUS: No questions.
14 THE COURT: You may step down.
15 THE WITNESS: Thank you.
16 (Whereupon, at this time the witness left the
17 witness stand.)
18 THE COURT: Please call your next witness.
19 MR. WHITE: Your Honor, the government calls
20 Richard Grossman.
21 THE COURT: Raise your right hand.
22
23
24
25
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1 R I C H A R D C. G R O S S M A N ,
2 called as a witness, having been first
3 duly sworn, was examined and testified
4 as follows:
5
6 THE COUR
T: Please be seated. State your full
7 name and your last name.
8 THE WITNESS: Richard Charles Grossman,
9 G R O S S M A N.
10
11 DIRECT EXAMINATION
12 BY MR. WHITE:
13 Q Dr. Grossman, can you tell us how old you are?
14 A 66.
15 Q Where do you live?
16 A I will have in Los Angeles.
17 Q How long have you lived in Los Angeles?
18 A 30 some odd years or more.
19 Q Tell us what you do for a living?
20 A I am an orthodontist.
21 Q Are you married?
22 A Yes, I am.
23 Q Can you tell us what your wife's name is?
24 A My wife's name is Joyce Grossman.
25 Q How long have you been married?
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R. Grossman-direct/White
1 A A little over 33 years.
2 Q Do you have any children?
3 A We have three children.
4 Q Can you tell us the
ir ages?
5 A They are 44, 42 and 31.
6 Q Now, do you know a man named Bruce Gordon?
7 A I do.
8 Q Tell us how you know him?
9 A He is my brother-in-law.
10 Q He is your wife's sister -- I am sorry, your wife is
11 his sister?
12 A My wife is his sister, correct.
13 Q How long have you known Mr. Gordon?
14 A Almost as long as I have been married.
15 Q Now, are you testifying here today pursuant to a
16 court order granting you immunity?
17 A Yes, I am.
18 Q Can you tell us what your understanding is of the
19 effect of that order?
20 A The effect of that order is that I must tell the
21 truth or be prosecuted for perjury.
22 Q And what is your understanding of whether or not
23 anything you say in your testimony could be used to
24 prosecute you?
25 A That's the effect of the immunity, as to prevent me
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RY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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R. Grossman-direct/White
1 from being prosecuted for my testimony.
2 Q Now, did there come a time that you asked Mr. Gordon
3 regarding investing in a new business?
4 A Yes.
5 Q Can you tell us, why it is you did that?
6 A For a number of years family members and friends of
7 his had told us that they had invested with businesses
8 that he had, and had done well. We had never been
9 involved. So my wife and I at one point mentioned to him
10 that if such an opportunity became available we might want
11 to invest.
12 Q Approximately when was it that you mentioned that to
13 him?
14 A Probably late 1989, early 1990.
15 Q After you had this conversation did you have further
16 conversation with regard to investing in a business of
17 his?
18 A Yes.
19 Q Can you tell us whe
n that was?
20 A Sometime early in 1990.
21 Q And did Mr. Gordon tell you anything regarding the
22 business that you proposed to invest in?
23 A Yes. He described it as a Who's Who type of
24 business, wherein promotional items would be provided to
25 people, desk accessories, luggage, and so forth. And a
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R. Grossman-direct/White
1 directory would be printed each year. It was to be
2 circulated amongst business people.
3 Q Did you have any specific instructions -- discussions
4 with him with regard to being invested in this particular
5 company?
6 A Yes.
7 Q Can you tell us when that was?
8 A It was probably in April of 1990.
9 Q And what was discussed in this conversation?
10 A It was discussed we would invest $125,000 -- I say
11 "we" meaning between my wife and
myself, our family trust
12 and retirement plan, we would invest $125,000 in this
13 business, and we would have it returned to us as an
14 investment with 15 percent interest. And as an inducement
15 for making, we would get a percentage of ownership of the
16 business.
17 Q Let me show you Government's Exhibit 577?
18 THE COURT: For Identification?
19 MR. WHITE: For Identification, your Honor.
20 (Handed to the witness.)
21 Q Now, Dr. Grossman, if you can take a look at that,
22 please, and tell me if you recognize that exhibit?
23 A I do.
24 Q What is it?
25 A It is a letter from Who's Who Worldwide, over the
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R. Grossman-direct/White
1 signature of Bruce Gordon explaining his understanding of
2 our phone conversation, and the nature of the investment
3 for the $1
25,000, to be structured as a loan to the
4 company, and there would be a 50 percent equity in the
5 business.
6 MR. WHITE: The government would offer 577?
7 MR. TRABULUS: No objection.
8 MR. SCHOER: Who is it offered against?
9 MR. JENKS: It is not offered against the
10 corporation?
11 MR. WHITE: Against the defendants Gordon and
12 Reffsin.
13 MR. JENKS: No objection.
14 THE COURT: Mr. Wallenstein?
15 MR. WALLENSTEIN: No objection, your Honor.
16 THE COURT: Government's Exhibit 577 in
17 evidence.
18 (Government's Exhibit 577 received in evidence.)
19 Q If you can look at the top page, tell us the date?
20 A May 17th, 1990.
21 Q To whom is that letter addressed?
22 A To my wife and myself.
23 Q Who is the sender of the letter?
24 A Bruce Gordon.
25 Q Can you tell us just in substance what your -- what
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R. Grossman-direct/White
1 the letter says regarding your proposed investment?
2 A As I said a moment ago, it says that he suggests that
3 he speak to our accountant so that we could decide whether
4 or not we want the $125,000 investment to be a loan to the
5 company. And he talks about a 50 percent equity as an
6 inducement; as opposed to a straight investment and any
7 income paid to us would therefore be fully taxable.
8 Q Now, is there an attachment to that top letter?
9 A Yes, there is.
10 Q What is the attachment?
11 A It is a further breakdown. This is a letter, dated
12 the same day, May 17th, 1990. And it gives 18 terms for
13 this investment.
14 It says, first of all, that we would be 50
15 percent shareholders. The initial cash investment was to
16 be $75,000, with an addi
tional $50,000 to be called
17 whenever it is required. It repeats again we would be 50
18 percent owners of the company.
19 Q Dr. Grossman, if you can skip down to points six and
20 seven, and if you can take a look at those and just
21 summarize what those stated.
22 A As our investment was repaid to us in increments, our
23 ownership in the company would be reduced commensurately.
24 So ultimately we would own 25 percent of the business.
25 Q You would start off owning 50, and when the loan was
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R. Grossman-direct/White
1 fully paid off you would only own 25; is that correct?
2 A That's my understanding, yes.
3 Q If you can read outloud point 13 of that letter.
4 A The equity owned by Bruce Gordon in the company is 50
5 percent and will be increased to 75 percent when your
6 invest
ment of 125,000 plus 15 percent annual interest is
7 repaid to you.
8 Q Now, were the terms set forth in these two May 17th
9 letters the final terms of your agreement?
10 A No.
11 Q Did you have any further discussion with Mr. Gordon
12 regarding your investment in Who's Who Worldwide?
13 A Yes. I suggested in a phone conversation to him
14 subsequently that it didn't seem to start off at 50
15 percent and reduce down to 25 percent, so why not make it
16 25 percent right off the board.
17 Q Let me show you Government's Exhibit 578 for
18 Identification.
19 (Handed to the witness.)
20 Q Do you recognize that?
21 A Yes, I do.
22 Q What is that?
23 A A letter written a week later from Who's Who
24 Worldwide over the signature of Bruce Gordon, restating
25 the arrangements as now understood, as stated in paragraph
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R. Grossman-direct/White
1 1, that we would own 25 percent of the common stock in
2 Who's Who.
3 Q Dr. Grossman, if you can take a look at 578-A, is it
4 simply an enlargement of 578 that you have before you now?
5 A It looks to be the same, only enlarged.
6 MR. WHITE: The government offers 578 and 578-A.
7 THE COURT: Any objection?
8 MR. TRABULUS: No.
9 MR. JENKS: Assuming it is not offered against
10 the corporation, that's correct.
11 MR. WALLENSTEIN: No objection.
12 THE COURT: Government's Exhibit 578 and 578-A in
13 evidence.
14 (Government's Exhibit 578 received in evidence.)
15 (Government's Exhibit 578-A received in
16 evidence.)
17 MR. WHITE: Your Honor, should I put it on the
18 easel here or leave it here?
19 THE COURT: I think you ought to move it in front
20 so the jury can see it.
21 As I explained, nobody does it for us. We do it
22 ourselves. And we manage to do it all right by ourselves.
23 MR. WHITE: Not so well right now.
24 THE COURT: As soon as I said that he is hitting
25 the jury box with it.
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R. Grossman-direct/White
1 Q Dr. Grossman, following along the copy before you,
2 could you read the paragraph numbered one.
3 A You will own 25 percent of the common stock in Who's
4 Who Worldwide Registry, Inc.
5 Q Now, the investment that you and your wife were to
6 make, were you going to invest personally in your own
7 names?
8 A No.
9 Q And how was it that you were going to invest?
10 A My wife and I are both trustees of a small family
11 trust and a retirement plan. It is my professional
12 retirement plan. And
there was going to be a percentage,
13 the money from each.
14 Q Were those entities to be the ones actually
15 investing?
16 A Yes.
17 Q And were the agreements you had regarding your
18 investment ever memorialized in a written agreement?
19 A Yes, they were.
20 Q Let me show you Government's Exhibit 579 and 580,
21 Mr. Grossman.
22 You can take it out of the plastic and look at
23 them.
24 THE COURT: For Identification?
25 MR. WHITE: Yes.
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R. Grossman-direct/White
1 (Handed to the witness.)
2 THE COURT: Please say so, so we know what is in
3 evidence and what is not.
4 MR. WHITE: I will, your Honor. I am sorry.
5 Q Do you recognize 579 and 580?
6 A Yes, I do.
7 Q And what are they?
8 A One is a stock purchase agreement, and one
is a loan
9 agreement.
10 Q And are those the agreements that you referred to as
11 memorializing your investment in Who's Who Worldwide?
12 A Yes, they are.
13 MR. WHITE: Your Honor, the government offers
14 Exhibits 579 and 580.
15 THE COURT: Any objection?
16 MR. TRABULUS: No.
17 MR. JENKS: Against the individual defendants,
18 Mr. White?
19 MR. WHITE: Yes.
20 MR. JENKS: Your Honor, if you could just have
21 Mr. White on this set of documents indicate who the
22 documents are offered against?
23 MR. WHITE: Perhaps I can save time. None of
24 them are offered against anyone other than Mr. Gordon and
25 Mr. Reffsin.
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R. Grossman-direct/White
1 MR. JENKS: All right.
2 THE COURT: Government's Exhibits 579 and 580 in
3 evidence.
4 (
Government's Exhibit 579 received in evidence.)
5 (Government's Exhibit 580 received in evidence.)
6 Q Dr. Grossman, if you can take a look at Exhibit
7 580 --
8 A Yes.
9 Q Now, what is the date of that agreement on the first
10 line of the agreement.
11 A The 1st day of August, 1990.
12 Q And if you can look at the last page, who is it
13 signed by on behalf of Who's Who Worldwide?
14 A Bruce Gordon.
15 Q And what entity is this an agreement with?
16 A The Grossman family trust.
17 Q Who signs on behalf of the Grossman family trust?
18 A I did.
19 Q If you can look at the first page of that agreement,
20 could you read aloud paragraph numbered one.
21 A Agreement made as of the 1st day of August 1990 by
22 and --
23 Q I am sorry, at the bottom of the page, the one that
24 is numbered one.
25 A I am sorry.
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R. Grossman-direct/White
1 THE COURT: Mr. Grossman, when you read, slow
2 down. People have a tendency to read at a faster rate
3 than they speak. That is except me, everybody else reads
4 at a faster rate. So slow down.
5 THE WITNESS: Receipt of funds is the heading.
6 Who's Who Worldwide Registry acknowledges receipt
7 from the trust of the sum of $100,300.
8 Q Now, if you look at the top of the next page, does it
9 say anything regarding the issuance of stock certificates?
10 A Yes. Paragraph two refers to issuance of
11 certificates.
12 Promptly after the execution of this agreement
13 Who's Who Worldwide Registry shall take such action as may
14 be necessary to cause to be issued to the trust
15 certificates of stock representing 20 percent of the
16 issued and outstanding shares of all
classes of the stock
17 of Who's Who Worldwide Registry.
18 Q Okay.
19 Now, if you can look at 579, the other
20 agreement.
21 Again, tell us when that is dated?
22 A Also dated the 1st day of August, 1990.
23 Q If you look at the last page, who are the
24 signatories?
25 A The same signatories, Bruce Gordon and myself.
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1 Q In connection with this agreement, you are signing on
2 behalf of what entity?
3 A The Richard C. Grossman DMD, Inc., defined benefit
4 pension plan.
5 Q Again, if you look at page 1, the paragraph at the
6 bottom that is numbered 1, how much money is your pension
7 plan investing in Who's Who Worldwide?
8 A I don't see a dollar amount here, but it talks about
9 purchasing five percent of the total amount issued
.
10 THE COURT: It would be on page 2, number 2.
11 A The amount paid was $24,700.
12 Q These two agreements combined granted your pension
13 plan and your family trust, what total percentage of
14 ownership in the company?
15 A 25 percent.
16 Q And what was the breakdown as between the two
17 entities?
18 A Twenty percent was owned by the family trust, and 5
19 percent was owned by the pension plan as of that day.
20 Q Now, from August 1990 right up until today, has the
21 total percentage ownership that you held, your family
22 entities held in Who's Who Worldwide ever changed?
23 A No.
24 Q Did the breakdown between the two entities change?
25 A Yes.
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R. Grossman-direct/White
1 Q When was that?
2 A About a month or so after the original -- after these
3 two agreements that you have in front of me, August 1st of
4 1990, later in September, I believe it was, of 1990, the
5 family trust assigned a portion of its interest in the
6 company to the pension plan. So the pension plan then
7 owned ten percent of the company and the family trust
8 owned 15 percent.
9 Q But the total was still 25?
10 A That's correct.
11 Q Let me show you Exhibit 581 for Identification.
12 (Handed to the witness.)
13 Q Do you recognize this?
14 A Yes, I do.
15 Q Can you tell us what that is?
16 A This is the assignment agreement dated September 4th,
17 1990.
18 Q And that's an agreement between who?
19 A Between the Grossman family trust and the defined
20 benefit pension plan.
21 Q Is that the agreement that affects the transfer you
22 just described?
23 A Yes, it is.
24 MR. WHITE: Your Honor
, the government offers
25 Exhibit 581.
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R. Grossman-direct/White
1 MR. TRABULUS: No objection.
2 MR. JENKS: No objection.
3 THE COURT: Government's Exhibit 581 in
4 evidence.
5 (Government's Exhibit 581 received in evidence.)
6 Q Now, after the execution of this assignment
7 agreement, was there ever any other change in the entity's
8 ownership percentage?
9 A No.
10 Q Did you or Mrs. Grossman ever own any stock in Who's
11 Who Worldwide personally?
12 A No.
13 Q Who owned the remaining 75 percent of the
14 corporation?
15 A My assumption was that it was Bruce Gordon.
16 MR. WHITE: Your Honor, may I have a moment to
17 consult with Mr. Trabulus?
18 THE COURT: Yes.
19 (Whereupon, at this time there was a pause in the
20 proceedings
.)
21 MR. WHITE: Your Honor, at this point the
22 government would offer Exhibits 815, 802 and 804, which
23 the parties have stipulated -- let me make sure I word the
24 stipulation correctly.
25 (Mr. White confers with Mr. Trabulus.)
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1 MR. TRABULUS: Your Honor, the parties stipulate
2 that these are excerpts from testimony.
3 THE COURT: Excerpts from testimony?
4 MR. TRABULUS: Correct, testimony given by
5 Mr. Gordon, and there may be some -- I am not sure of the
6 particular exhibit he is referring to, but there may be
7 statements made by other individuals as well.
8 THE COURT: No objection?
9 MR. TRABULUS: I am not going to object.
10 MR. JENKS: 804, 802 -- just a second.
11 (Whereupon, at this time there was a pause in the
12 proceedin
gs.)
13 MR. WHITE: Your Honor, they --
14 THE COURT: No. One of the lawyers are still
15 looking at it.
16 MR. JENKS: Judge, I am really trying to find the
17 exhibits through these books.
18 THE COURT: Go ahead, Mr. Jenks.
19 MR. JENKS: Your Honor, I have no objection.
20 They are being offered against Mr. Gordon, Mr. White, I
21 take it?
22 MR. WHITE: Yes.
23 THE COURT: Government's Exhibits 802, 804 and
24 815 in evidence.
25 (Government's Exhibit 802 received in evidence.)
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1 (Government's Exhibit 804 received in evidence.)
2 (Government's Exhibit 815 received in evidence.)
3 MR. WHITE: Your Honor, may I read from the
4 testimony just admitted?
5 This is from Exhibit 802, testimony from
6 Mr. Gordon in connection with Re
ed Publishing U.S.A., Inc.
7 and Reed Publishing against Who's Who Worldwide Registry,
8 September 25th, 1992. It is a deposition of Bruce W.
9 Gordon.
10 THE COURT: Do you have a copy of that?
11 MR. WHITE: I believe I have an extra copy.
12 (Copy of transcripts handed to the court
13 reporter.)
14 MR. WHITE: I will begin reading on page 4, line
15 2.
16 Bruce W. Gordon having first been duly sworn by a
17 Notary Public of the State of New York was examined and
18 testified as follows.
19 Examination by Mr. Bailey.
20 THE COURT: Who is that?
21 MR. WHITE: Mr. Bailey, B A I L E Y.
22 THE COURT: Spell the names that you know are
23 strange to us.
24 MR. WHITE: Okay.
25 Question: Could you state your name for the
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1 r
ecord, please.
2 Answer: Bruce Gordon. G O R D O N.
3 Question: What's your middle name, Mr. Gordon?
4 Answer: William, W I L L I A M.
5 Now reading from page 48, line 7.
6 Question: Are you the sole owner of Who's Who
7 Worldwide registry, Inc.?
8 Answer: No, I am not.
9 Question: Who else is?
10 Answer: Dr. Richard Grossman.
11 Question: How much does he own?
12 There is no answer.
13 Reading from page 51 --
14 MR. TRABULUS: Your Honor, I think the record
15 should show that the reason there is no answer, is the
16 following linings after the words, how much does he own?
17 Was excerpted by the government and they chose not to
18 introduce them. So it should not indicate that Mr. Gordon
19 failed to answer the question.
20 THE COURT: Very well.
21 MR. WHITE: There was an objection in the
22 transcript and there was extran
eous material.
23 THE COURT: I am instructing the jury that
24 Mr. Gordon did not fail to answer the question. It was
25 just a mechanical procedure during the trial.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 Go ahead.
2 MR. WHITE: Page 51.
3 Question: What is the extent of Dr. Richard
4 Grossman's ownership interest in Who's Who Worldwide
5 Registry, Inc.?
6 Answer: 25 percent.
7 Question: 25 percent?
8 Answer: Yes.
9 Question: Do you own the other 75 percent?
10 Answer: That is correct.
11 Question: Is this a subchapter S corporation?
12 Answer: No, it is not.
13 Question: Is it a regular corporation?
14 Answer: Regular corporation.
15 Question: Have there ever been any other owners
16 of the company besides you and Dr. Grossman?
17 Answer: No.
18 MR. WHITE: Now, your Honor, I am reading from
19 Government's Exhibit 804. And it is in connection with
20 Reed Elsevier, Inc., versus Who's Who Worldwide Registry,
21 Inc. it is a transcript of a non-jury trial before the
22 Honorable David F. Jordan, United States Magistrate Judge,
23 February 17th, 1994.
24 I am reading from page 2, line 19.
25 Question: Mr. Gordon, are you still president of
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1 Who's Who Worldwide Registry, Inc.?
2 Answer: Yes.
3 Question: Is that still the corporate name?
4 Answer: Yes.
5 Question: Are you still an owner?
6 Answer: Yes.
7 Question: What percentage do you own?
8 Answer: 75 percent.
9 Question: I have read a recent Dunn & Bradstreet
10 that indicated that, I think it's your brother-in-law,
11
Richard Grossman, owns a hundred percent; is that wrong?
12 Answer: Wrong.
13 Question: Do you know how they got that
14 information?
15 Answer: Umm, probably from me. They probably
16 misunderstand. I said I may sell my shares to them. This
17 was a few months ago when something happened in my
18 personal life that I had a severe loss. And when you lose
19 your oldest son, I think that you change your values in
20 your life. And I think I was a little depressed and
21 demoralized and came very close to doing that, but I never
22 did it. And I think I told D & B that I was considering
23 doing that.
24 Lastly, reading from Exhibit 815, it is in
25 connection with Blanche Brodie against Who's Who
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1 Worldwide, Inc. and Bruce Gordon. It is an examination
2 before trial of Mr. Gordon on October 22nd, 1992.
3 I will begin reading page 5, line 9.
4 Question: Mr. Gordon, can you tell me how long
5 you have been with Who's Who Worldwide, Inc.?
6 Answer: About three years.
7 Question: Is that the official title, Who's Who
8 Worldwide, Inc.?
9 Answer: No.
10 Question: What is the title?
11 Answer: Who's Who Worldwide Registry, Inc.
12 Question: Are you a shareholder in Who's Who
13 Worldwide?
14 Answer: Yes.
15 Question: I am going to use Who's Who as a
16 shorthand; is that all right with you?
17 Answer: Fine.
18 Question: How many shares of Who's Who do you
19 own?
20 Answer: I don't know.
21 Question: Are there any other shareholders?
22 Answer: Yes.
23 Question: Can you tell me who they are?
24 Answer: Dr. Richard Grossman.
25 Question: Are there any other
shareholders?
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1 Answer: No.
2 MR. NELSON: Before we proceed further, your
3 Honor, I have one question for clarification purposes.
4 Have the entire transcripts of the last three
5 exhibits been admitted in evidence or only those portions
6 read into the record? I am not clear on that?
7 MR. WHITE: Neither. It is neither the whole
8 transcript, nor just the portion I read. They are the
9 exhibits that are marked -- the parts exhibited --
10 admitted were the exhibits that were marked and were
11 provided to defense counsel.
12 MR. NELSON: The entire marked exhibit is
13 admitted in evidence; is that correct?
14 MR. WHITE: Yes.
15 MR. NELSON: Thank you.
16 Q Dr. Grossman, in August of 1990 when you signed those
17 agreements regarding your i
nvestment in Who's Who
18 Worldwide, what was your understanding of what role you
19 and your wife were to have in the day to day management or
20 financial affairs of the company?
21 A We were silent investors.
22 Q And subsequently what role did you actually have in
23 the management and financial affairs of the company?
24 A None.
25 Q Were you ever consulted in advance regarding business
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1 decisions affecting the company?
2 A No.
3 MR. WHITE: Your Honor, I have another portion of
4 testimony to offer, Exhibit 799.
5 THE COURT: Any objection?
6 MR. TRABULUS: No, your Honor, the same
7 stipulation applies, 799 is an excerpt of testimony given
8 by Mr. Gordon.
9 THE COURT: Very well, Government's Exhibit 799
10 in evidence.
11 MR. WHITE: Your Honor, I will read from 799. It
12 is in connection with in re: Who's Who Worldwide Registry,
13 Inc., debtor in the U.S. bankruptcy court. It is a
14 deposition of Bruce Gordon, April 15th, 1993:
15 I will begin reading from page 21, line 25.
16 Question: Does Mr. Grossman reside in Los
17 Angeles?
18 Answer: Yes.
19 Question: Is she on salary from the company,
20 from the debtor?
21 Answer: No.
22 Question: Other than as owner of the stock does
23 she have any function within the company?
24 Answer: Her and her husband did.
25 Question: Let's just stay with her? What is her
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1 function?
2 Answer: Sounding board. She has been in her own
3 business for many years and has a great deal of business
4 experience. She
complements me in such a way that our own
5 people cannot do it.
6 Question: Does she get paid any stipend in
7 return for her fees to act as director of the company.
8 There is an objection, the question is restated.
9 Question: Stipend in return for her serving as a
10 director of the company?
11 Answer: No.
12 Question: Has she recently attended any
13 directors' meetings in person? Question?
14 Answer: When you say recently, how recently.
15 Question: In the last 12 months.
16 Answer: Informal directors meetings I have been
17 out to L A several times. I consult with her on the
18 phone, talk to her and her husband on a weekly, sometimes
19 daily basis.
20 Q Now, Dr. Grossman, did you ever speak to Mr. Grossman
21 at a meeting on a daily basis?
22 A No.
23 MR. TRABULUS: Objection to form, your Honor.
24 THE COURT: Overruled.
25 Q Did you ever speak to Mr. Gordon regarding the
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1 business on a weekly basis?
2 A No, not usually weekly, no.
3 Q Now, the August 1990 agreements you identified for us
4 before indicated that stock certificates would be issued
5 to you; is that correct?
6 A Yes.
7 Q After August of 1990 did you have any conversations
8 with Mr. Gordon regarding these stock certificates?
9 A A number of times.
10 Q Can you tell us the substance of these conversations?
11 A The certificates were not forthcoming. And so I was
12 a little antsy about it and I requested them.
13 Q What was Mr. Gordon's response?
14 A We will get them to you as soon as we can.
15 Q Let me show you Exhibits 585, 586, and 589 through
16 92, all for Identification.
17 (Han
ded to the witness.)
18 Q If you can will be at each one of those and tell me
19 whether you recognize them.
20 (Whereupon, at this time there was a pause in the
21 proceedings.)
22 A Yes.
23 Q What are they?
24 A They are all stock certificates or copies of stock
25 certifications. Two are for Who's Who Worldwide Registry,
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1 Inc. another two are for Sterling Who's Who, Inc. and
2 another two, which are in black and white, so they may be
3 copies, for Publishing Ventures, Inc.
4 MR. WHITE: The government would offer 585, 586,
5 and 589 through 592.
6 THE COURT: Any objection?
7 MR. TRABULUS: No.
8 THE COURT: Government's Exhibits 585, 586, 589
9 through 592 in evidence.
10 (Government's Exhibit 585 received in evidence.)
11
(Government's Exhibit 586 received in evidence.)
12 (Government's Exhibit 589 through 592 received in
13 evidence.)
14 Q You mentioned Sterling Who's Who and Publishing
15 Ventures, Inc. can you tell us what those are?
16 A They were a couple of subsidiary corporations to
17 Who's Who.
18 Q All right.
19 Now, if you can look specifically at Exhibits 585
20 and 586, those are the certificates for Who's Who
21 Worldwide; is that right?
22 A Yes, they are.
23 Q If you look at the bottom left-hand corner, do you
24 recognize the signature there?
25 A Yes, I do.
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1 Q And whose signature is it?
2 A It looks like my signature.
3 Q And what does it say under your name?
4 A Secretary.
5 Q Dr. Grossman, if you can take a look at
6 Government's Exhibit 585, and tell me if that's -- if
7 those are simply enlargements of 585 and 586?
8 A They appear to be such, yes.
9 MR. WHITE: The government will offer 585-A.
10 THE COURT: Any objection?
11 MR. TRABULUS: No.
12 THE COURT: 585-A, Government's Exhibit in
13 evidence.
14 (Government's Exhibit 585-A received in
15 evidence.)
16 MR. WHITE: Just lean it against that.
17 THE COURT: Watch so it doesn't fall against
18 anybody.
19 MR. WHITE: Can everybody see it or do I need to
20 raise it up?
21 (Whereupon, the exhibit/exhibits were published
22 to the jury.)
23 Q Now, Dr. Grossman, you can follow on your copy.
24 The signature in the lower left-hand corner of
25 each certificate is the one you identified as your own?
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irect/White
1 A Yes.
2 Q Now, looking at 585 and 586, do you recognize who
3 signed on behalf -- who signed as president of the
4 corporation?
5 A As best as I can make out the signature, it looks
6 like Bruce Gordon. It is difficult to read that
7 signature.
8 Q Now, in addition to 585 and 586, the other four stock
9 certificates that you got, that you identified, can you
10 tell us the circumstances under which you signed them?
11 A Yes.
12 I received them with a little post-it stick'em
13 note attached requesting that I put my signature on where
14 it said secretary. The certificates were blank, and
15 whoever it was that sent them to me asked that I return
16 them and they would be completed and executed further at
17 the office.
18 Q And you say whoever sent it to you. Do you know who
19 you received them from?
20 A It was
one of the secretarial people in the office at
21 the time. I am not sure which one.
22 Q In what office?
23 A In the Who's Who Worldwide office.
24 Q And can you tell us when in relation to August of
25 1990 you received these stock certificates to sign?
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1 A Several years later.
2 Q Now, aside from the preprinted information on these
3 forms, was there ever any of the handwriting that appears
4 on them now on there when you got them to sign?
5 A You mean where it says that this certifies that so
6 and so owns something or another?
7 Q Yes.
8 A That was blank.
9 Q Okay.
10 Now, if you can take a look at 585.
11 That indicates that Joyce Grossman is the owner
12 of 75 shares, does it not?
13 A Yes.
14 Q Did your wife ever o
wn 75 shares of the company?
15 A No.
16 Q And does that certificate indicate when -- does that
17 contain a date, that certificate?
18 A Yes, it does.
19 Q What is the date?
20 A January 23rd, 1990.
21 Q Now, is that when you signed it?
22 A No.
23 Q And when was it that your family entities actually
24 invested in Who's Who Worldwide?
25 A The initial investments were sometime in May of 1990,
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1 and it continued -- it was finished, the 125 dollar -- the
2 125,000 dollars was completely invested I think by
3 September of that year.
4 Q Now, if you look at the other stock certificate,
5 Exhibit 586, that indicates that your pension plan owns 25
6 shares of company; is that correct?
7 A That's what it indicates.
8 Q Now, did
your pension plan ever own 25 shares in the
9 company?
10 A No.
11 Q And what was the date that 586 -- I am sorry.
12 586 bears what date?
13 A January 23rd, 1990.
14 Q And did you sign that certificate on that date?
15 A No. It was several years later.
16 Q Doctor, if you look at 585 and 586, and look at the
17 handwritten portions.
18 Were any of the handwritten portions there when
19 you signed them?
20 A No. As I said earlier, they were blank.
21 Q Okay.
22 Let me show you Exhibit 584.
23 (Handed to the witness.)
24 THE COURT: Is that for identification?
25 MR. WHITE: Yes. I am sorry, your Honor, 584 for
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1 Identification.
2 Q Now, if you look at the bottom, is that your
3 signature?
4 A It is my signat
ure.
5 Q And --
6 MR. WHITE: Your Honor, the government offers
7 584.
8 THE COURT: Any objection?
9 MR. TRABULUS: No.
10 THE COURT: Government's Exhibit 584 in
11 evidence.
12 (Government's Exhibit 584 received in evidence.)
13 THE COURT: What is 584, Dr. Grossman?
14 THE WITNESS: It is a waiver of notice of a
15 special meeting of the board of directors of Who's Who
16 Worldwide Registry, Inc.
17 THE COURT: What is the date on it?
18 THE WITNESS: It is dated January 3rd, 1990.
19 Q Now, Dr. Grossman, who signed on the line above yours
20 on that document?
21 A It looks like Bruce Gordon.
22 Q Now, if you can simply read aloud the body of the
23 document.
24 A The undersigned, being all of the directors of Who's
25 Who Worldwide Registry, Inc., the corporation, a New York
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1 corporation, hereby waives notice of a special meeting of
2 the board of directors of the corporation, and consent
3 that said meeting be held in person or by telephone
4 conference on January 9th, 1990 at 2:00 p.m. at the
5 corporation's offices at 99 Seaview Boulevard, Port
6 Washington, New York, for the following purposes.
7 THE COURT: You are not going to get into that,
8 are you?
9 MR. WHITE: No, your Honor.
10 Q Would you just read --
11 MR. WHITE: Your Honor, the purposes?
12 THE COURT: Yes.
13 MR. WHITE: Yes.
14 Q If you can read just the second purpose referenced
15 there.
16 A To authorize the issuance of shares of stock in the
17 corporation to Joyce Grossman, and to the Richard C.
18 Grossman DMD, Inc. defined benefit pension plan.
19 Q Now, when is that docum
ent dated?
20 A January 3rd, 1990.
21 Q Now, were shares of Who's Who Worldwide ever issued
22 to Joyce Grossman personally?
23 A No.
24 Q Now, can you tell us the circumstances under which
25 you signed this document?
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1 A This came after I had, we had all of our investment
2 paid back. And we really weren't all that concerned with
3 the details of what was happening with Who's Who
4 Worldwide. We received a lot of correspondence, on a
5 number of occasions things to be sent back, signed by me,
6 bank accounts to be opened, and so forth and so on. They
7 had me on it as a signatory on occasion. And I didn't
8 really pay too much interest. Often times I would receive
9 it. I knew Mr. Gordon wasn't going to do anything to harm
10 us. So if he sent us s
omething, or his office sent us
11 something to be signed, I signed it or often times signed
12 it, didn't pay too much attention to it, and sent it back
13 again.
14 Q The 125,000 that you owned -- excuse me, the two
15 family entities loaned to Who's Who Worldwide, when was
16 that repaid approximately?
17 A It was repaid about a year and a half after the
18 investment was made. It was actually being repaid during
19 that time. But it was completely repaid about a year and
20 a half after.
21 Q And you placed your signature of this document where
22 in relation to when the loan was fully repaid?
23 A Well after.
24 Q So, did you sign this document on January 3rd, 1990?
25 A No, I did not. I didn't even notice the date, to
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1 tell you the truth.
2 THE COURT: Is this a good time to take a break?
3 MR. WHITE: Yes, it is, your Honor.
4 THE COURT: Members of the jury, we will take a
5 ten-minute recess.
6 Please do not discuss the case. Keep an open
7 mind. Please recess yourselves.
8 (Whereupon, at this time the jury leaves the
9 courtroom.)
10
11 (Whereupon, a recess is taken.)
12
13 THE CLERK: Jury entering.
14 (Whereupon, the jury at this time entered the
15 courtroom.)
16 THE COURT: Please be seated, members of the
17 jury.
18 You may proceed.
19 MR. WHITE: Thank you.
20 MR. WHITE: At this point the government will
21 offer Exhibit 583, by a stipulation of the defense that
22 this is a business record of Who's Who Worldwide.
23 THE COURT: What is it?
24 MR. WHITE: Minutes of a special meeting of the
25 board of directors of Who's Who Worldwi
de Registry.
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1 THE COURT: Dated?
2 MR. WHITE: It is undated, your Honor.
3 THE COURT: All right.
4 Any objection?
5 MR. TRABULUS: No objection.
6 THE COURT: Government's Exhibit 583 in
7 evidence.
8 (Government's Exhibit 583 received in evidence.)
9 Q Dr. Grossman, if you can take a look at Exhibit 583.
10 (Handed to the witness.)
11 If you can review it, it says it is minutes of a
12 meeting of the board of directors; is that correct?
13 A That's correct.
14 Q And without reading it aloud, can you tell us when
15 the board of director's meeting took place according to
16 this document?
17 A January 9th, 1990.
18 Q Does it indicate you were present at that meeting?
19 A It indicates I was present by telephone call.
20 Q If you look down at the bottom, does it indicate that
21 any shares of stock were issued at that meeting?
22 A Yes.
23 Q And in substance, what does it indicate?
24 A That 15 shares of the corporation's capital stock be
25 issued to Joyce Grossman, and that five shares of the
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1 capital stock be issued to Richard C. Grossman DMD, Inc.,
2 defined benefit pension plan.
3 Q Now, did you participate by telephone -- let me start
4 again.
5 Did you participate by telephone in a board of
6 director's meeting in Who's Who Worldwide in January of
7 1990?
8 A No, I did not.
9 Q Now, if you can put that down and turn your attention
10 to Exhibits 585 and 586, the Worldwide stock
11 certificates.
12 Can you tell us when was the first time that you
13 saw those certificates with the blanks filled in,
14 indicating that your wife and your pension plan were the
15 owners of shares?
16 A I saw them in the office of Mr. Picard, who was our
17 bankruptcy attorney about a year ago.
18 THE COURT: How do you spell that, Picard?
19 THE WITNESS: P I C A R D.
20 Q You said approximately a year ago, so that was early
21 1997?
22 A Yes.
23 Q And why --
24 A Or late 1996. I don't remember exactly, but about
25 that time.
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1 Q Why was it that you had retained Mr. Picard?
2 A Well, when Who's Who Worldwide Registry went
3 bankrupt, and when Mr. Gordon didn't have assets any
4 longer, the trustee turned his attention against the
5 Grossmans, my wife and myself, because we were the ones
6 who were supposed to have the deep pockets after that.
7 Q What action, if any, did the trustees take against
8 you?
9 A They wanted to collect three and a half million
10 dollars from us. So, we needed to have an attorney in New
11 York State to represent us.
12 Q Was a lawsuit instituted against you?
13 A Yes.
14 Q Was it in connection with that lawsuit that you saw
15 these documents?
16 A That's how I found out about it, yes.
17 Q Now, after you saw these documents, what was your
18 reaction?
19 A Well, I was rather surprised because the way the
20 shares were distributed wasn't accurate at all.
21 Q And in what way was it not accurate?
22 A Well, first of all, we never -- my wife and I as
23 trustees for our respective family entities never owned
24 more than 25 percent of the company.
25 Secondly, that even wasn't represented accura
tely
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1 on these papers. It talks about a certain number of
2 shares. It didn't deal with percentages. It talked about
3 200 shares of the company as the full amount of stock
4 certificates. And then there is only 75 and 25, so there
5 is still 100 shares remaining. And at that time I wasn't
6 aware of the fact that maybe there were no other shares
7 issued and so forth.
8 Q Now, after you saw these documents in connection with
9 the bankruptcy proceeding, tell us what you did.
10 A Well, I -- we tried to defend ourselves. And I spoke
11 to Mr. Gordon on a couple of occasions, and advised him
12 that we didn't own 100 percent of the company, as
13 seemingly the certificates were trying to represent. And
14 on a subsequent occasion had to say the same thing again.
15 Q Let's take the first occasion. Do you recall when
16 that was?
17 A Immediately after we had found out about the
18 misrepresentation, or the representation that wasn't as we
19 understood it.
20 Q Did you have a conversation with Mr. Gordon?
21 A I did have a conversation.
22 Q Was this in person or on the telephone?
23 A That may have been in person.
24 Q Tell us what was said?
25 A He said that he had forgotten.
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1 Q He had forgotten what?
2 A That we hadn't owned 100 percent of the company.
3 Q Now, did you ever discuss this subject with
4 Mr. Gordon after that?
5 A Yes, I did, in a phone conversation.
6 Q And approximately when was that?
7 A Just about a year ago now.
8 Q And what, if anything, prompted that telephone c
all?
9 A I was informed by Mr. Picard that Mr. Gordon had
10 redated that -- the fact that the Grossmans had owned 100
11 percent of the company. And I then called Mr. Gordon as
12 we were leaving New York City going back to California
13 after the meeting with Mr. Picard, and told him that he
14 has to stop saying that because it is not the case.
15 Q And what response, if any, did Mr. Gordon have?
16 A Again, he gave me the same response.
17 Q Which was?
18 A I had forgotten.
19 Q Now, after that conversation did you do anything?
20 A Yes. We had occasion to write him a letter about the
21 same subject.
22 Q Let me show you Government's Exhibit 599 for
23 Identification.
24 (Handed to the witness.)
25 Do you recognize that, Dr. Grossman?
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1 A Yes, I do.
2 Q What is that?
3 A A letter dated January 16th, 1997, to Mr. Gordon from
4 me, restating what I had just said.
5 MR. WHITE: Your Honor, the government offers
6 599.
7 THE COURT: Any objection?
8 MR. TRABULUS: Objection.
9 THE COURT: Can I see it, please?
10 (Handed to the Court.)
11 THE COURT: Sustained.
12 Q Now, Dr. Grossman, did you receive any compensation
13 from Who's Who Worldwide in 1992?
14 A Yes, I did.
15 Q Can you explain for us how that came about?
16 A I received a telephone call from Mr. Gordon, in which
17 he said I would be receiving some money from the company.
18 And then probably a week or two later a couple of rather
19 large checks came with a W-2 form.
20 Q Okay.
21 Can you tell us what the gross amount of the two
22 checks was?
23 A Before taxes had been taken out h
ere in New York it
24 was for $400,000.
25 Q Let me show you Government's Exhibits 594 and 595 for
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R. Grossman-direct/White
1 Identification.
2 (Handed to the witness.)
3 Q Have you had a chance to look at those exhibits?
4 A Yes.
5 Q What are they?
6 A Two checks. One was made out to me. One was made
7 out to my wife. Dated December 18th, 1992.
8 Q Are those the checks you just referred to previously?
9 A Yes.
10 MR. WHITE: Your Honor, the government offers
11 Exhibits 594 and 595.
12 THE COURT: Any objection?
13 MR. TRABULUS: No.
14 THE COURT: Government's Exhibits 594 and 595 in
15 evidence.
16 (Government's Exhibit 594 received in evidence.)
17 (Government's Exhibit 595 received in evidence.)
18 Q Can you tell us the amounts of the che
cks?
19 A $156,543.10, each check.
20 Q Now, you said you received a W-2 with these checks?
21 A Yes.
22 Q And in whose name was the W-2?
23 A My name.
24 Q Now, after you received the check and the W-2, what
25 did you do?
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1 A I deposited both checks, and I sent the remark of the
2 check addressed to my wife back to Who's Who with a note
3 indicating that since the W-2 had been made out to me,
4 then that amount in the check to her should be sent to
5 me. And I received then a check back again for that
6 amount to me.
7 Q So, the actual checks would match the W-2?
8 A That's correct.
9 Q Now, take a look at 596 for Identification.
10 (Handed to the witness.)
11 Q Do you recognize that?
12 A Yes, I do.
13 Q And wha
t is that?
14 A This is a check made out to me dated December 24th,
15 1992, and the amount of $156,543.10.
16 MR. WHITE: The government offers 596.
17 THE COURT: Any objection?
18 MR. TRABULUS: No.
19 THE COURT: Government's Exhibit 596 in
20 evidence.
21 (Government's Exhibit 596 received in evidence.)
22 Q Dr. Grossman, is 596 simply the replacement check for
23 the one you sent back?
24 A That's correct.
25 Q And after you received all these checks, what did you
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1 do?
2 A I spoke to my accountant and told him what had
3 happened with this large amount of money that had been
4 received.
5 He said before the end of the year we have to
6 make some tax payments. And so, he proceeded to calculate
7 out how much was appropria
te to pay to California for
8 state income tax, and the additional amount of federal
9 income tax that would have to be paid. And we did so.
10 Q Now, after paying all the taxes, what was the net
11 amount that you had?
12 A Approximately about $240,000, I believe, something in
13 that vicinity.
14 Q Now, what was your understanding of why this money
15 was sent to you?
16 A My understanding is that it was sent to me for all of
17 the times that I had to be burdened with signing checks --
18 signing bank cards and things of this nature.
19 Q Okay.
20 Now, did you later have a conversation with
21 Mr. Gordon regarding this money?
22 A Yes, very early in the next year, in 1993.
23 He called and indicated since the holiday time
24 had been a rather decreasing amount of my own coming in,
25 and they needed some money in order to produce their
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1 annual registry, and would I send the money back to him.
2 Q And did you agree to do that?
3 A I did, minus whatever had been paid in taxes.
4 Q Now, if you can take a look at Exhibits 597 and 598
5 for Identification.
6 (Handed to the witness.)
7 Q Do you recognize those?
8 A Yes, I do.
9 Q What are they?
10 A Well, 597 is a photocopy of the front and back of my
11 check to Who's Who Worldwide Registry dated January 5th,
12 1993, in the amount of $200,000.
13 And 598 is a letter with a breakdown, and this is
14 dated January 25th, indicating how the money was
15 distributed from the total that I had been paid, less the
16 California taxes of $39,500, and less the 200,000 that had
17 been returned previously, showing that there was a balance
18 due to Who's Who Worldwide and minus the taxes that I paid
19 to the federal government, so I was now enclosing a check
20 of $35,911.20.
21 MR. WHITE: Your Honor, the government offers 597
22 and 598.
23 THE COURT: Any objection?
24 MR. TRABULUS: No objection to 597. Objection to
25 598.
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1 THE COURT: Can I see 598?
2 (Handed to the Court.)
3 MR. WHITE: They are two-pages, your Honor.
4 THE COURT: You are objecting to both parts of
5 598, Mr. Trabulus?
6 MR. TRABULUS: Your Honor, I am not sure what you
7 are referring to when you say both parts.
8 THE COURT: One is a check, and the other is a
9 letter.
10 MR. TRABULUS: I am sorry. I didn't realize a
11 check was attached to it. I am not objecting to the check
12 at all.
13 THE COURT: All right.
14 Sustained as to the letter. The check will go in
15 as 598-A, I suppose.
16 MR. WHITE: I don't believe we have a 598-A, so
17 that's fine.
18 THE COURT: And 597 is also in evidence.
19 (Government's Exhibit 597 received in evidence.)
20 (Government's Exhibit 598-A received in
21 evidence.)
22 Q Dr. Grossman, if you can look at 597, and that's the
23 $200,000 check you wrote.
24 A Yes.
25 Q In the memo part of the check did you make any
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1 notations?
2 A Yes. I printed the word "loan" on it.
3 Q Now, was it your understanding that this loan was to
4 Who's Who Worldwide or to Mr. Gordon personally?
5 MR. TRABULUS: Objection to form, your Honor.
6 MR. WHITE: Your Honor, I can rephrase it.
7
THE COURT: Go ahead.
8 Q What was your understanding as to whom this loan --
9 what was your understanding as to whom you were extending
10 this loan to?
11 MR. TRABULUS: Objection as to form.
12 THE COURT: Well, did you have a discussion about
13 what this $200,000 was to be?
14 THE WITNESS: No, we did not have discussions.
15 THE COURT: You just did this unilaterally?
16 THE WITNESS: This was in response to a request
17 from Mr. Gordon which I referred to earlier, sir.
18 THE COURT: He requested a return of the money?
19 THE WITNESS: That's correct.
20 THE COURT: You sent a check for $200,000?
21 THE WITNESS: That is correct.
22 THE COURT: You said it was a loan?
23 THE WITNESS: I said it was a loan. And there
24 was a subsequent correspondence in which I indicated to
25 him it didn't have to be a loan. I just did that because
H
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1 I wasn't sure how it was to be characterized.
2 THE COURT: Right now we are getting as to how
3 you decided it was a loan. You decided that yourself?
4 THE WITNESS: Absolutely.
5 THE COURT: All right.
6 Overruled.
7 Q Dr. Grossman, I think you mentioned this before, but
8 let me clarify.
9 In your conversation with Mr. Gordon did he say
10 why he needed this money back?
11 A Yes. He indicated they needed money for publication
12 expenses to put out the registry, and didn't have enough
13 because returns to the business had been rather weak
14 because of the holiday time, and so, would I send the
15 money back?
16 I said, of course.
17 Q Now this money you regarded as a loan, was that money
18 ever repaid?
19 A No, it was not.
20 Q D
id you ever subsequently ask Mr. Gordon about the
21 repayment of the loan?
22 A No, I didn't.
23 Q And was there a reason why not?
24 A Well, frankly, I didn't know for sure whether or not
25 it really was a loan, or whether I was just giving it
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1 back.
2 One of the reasons I wasn't sure how to
3 characterize it is because I had received this money as
4 income in a W-2 form, and I didn't know quite how -- what
5 was appropriate. I am not that sophisticated in these
6 business things to understand. So I characterized it as a
7 loan, but it didn't necessarily have to be a loan.
8 More importantly than that, I very seldom
9 receive, if ever, ever received a check or two checks in
10 that amount of money at one time. And a kind of a nice
11 high, a nice
little three for a few days. But that's kind
12 of easy come, easy go. It is not something that I worked
13 awfully hard to earn.
14 Q Let me show you Government's Exhibit 593 for
15 Identification.
16 (Handed to the witness.)
17 Do you recognize that?
18 A Yes, I do.
19 Q What is that?
20 A A compensation agreement between Bruce Gordon and the
21 shareholders of Who's Who Worldwide Registry, Inc.
22 Q And does it bear your signature?
23 A It does.
24 MR. WHITE: Your Honor, the government offers
25 Exhibit 593.
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1 THE COURT: What is the date on that?
2 THE WITNESS: January 26th, 1993.
3 THE COURT: Any objection?
4 MR. TRABULUS: No.
5 THE COURT: Government's Exhibit 593 in
6 evidence.
7 (Government's Exhibi
t 593 received in evidence.)
8 Q Now, the date that you just read, January 26th, 1993,
9 is that the date that you signed it?
10 A That's the date I signed it.
11 Q Now, can you tell us, did you make any change to the
12 date when you signed it?
13 A Well, the date of the month and day of the month were
14 blank, and the year had been typed in as 1990. So I
15 corrected the year to 1993, and filled in the date of the
16 month and the month.
17 Q Now, can you explain the circumstances under which
18 you signed this agreement?
19 A Yes.
20 I received this and looked at it late one night,
21 just before 11:30, just before I was going to bed. And I
22 saw it was something that was requested of me from Who's
23 Who Worldwide. And as usual I looked where I had to sign
24 it and not too much else. I saw that the day was blank
25 and that the year was incorr
ect. I corrected the year,
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1 filled in the date, and wrote my name on it. And I stuck
2 it in a FEDEX envelope for the next morning to be sent out
3 again.
4 Q Now, did any Who's Who Worldwide employee ever
5 contact you to verify the existence of this compensation
6 agreement?
7 A No.
8 Q Have you ever had any conversation at all about the
9 compensation agreement with any Worldwide employee?
10 A No.
11 Q Now, prior to 1996 did Mr. Gordon ever advise you
12 that Who's Who Worldwide was paying personal expenses of
13 his?
14 A No.
15 Q Now, did you ever have any discussion with Mr. Gordon
16 regarding this subject?
17 A Yes.
18 Q Tell us when that was?
19 A Sometime in early '96, I guess.
20 Q And what were the ci
rcumstances of this conversation?
21 A I had -- in connection with the bankruptcy defense I
22 had received transcripts of documents from the bankruptcy
23 case, in which I realized that there had been certain
24 personal expenditures made by Mr. Gordon, apparently paid
25 for by Who's Who.
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1 Q And did you then discuss that with Mr. Gordon?
2 A Yes, I did.
3 Q And can you tell us the substance of that
4 discussion.
5 A He said to me that this was a rather common practice,
6 and CEOs of corporations usually have some kind of a
7 fund -- I am blocking on the name of the fund, but it
8 was -- it seemed like a very appropriate function. And
9 the way he described it. And at the end of the year
10 whatever had been spent for those purchases would be
11 de
ducted from his annual income.
12 Q Did Mr. Gordon ever indicate to you that he owed back
13 taxes to the IRS?
14 A About the same time that the discussion occurred,
15 also.
16 Q Did he actually ask you to loan him money for
17 purposes of repaying the IRS?
18 A No. He had indicated that he had a program worked
19 out with the IRS that he was paying them periodically.
20 Q Now, did there come a time that you learned that
21 Who's Who Worldwide had filed for bankruptcy?
22 A Yes.
23 Q And approximately when did you learn that fact?
24 A In the fall of 1995.
25 Q Now, did you have a discussion with Mr. Gordon
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1 regarding the filing of a bankruptcy petition?
2 A Yes, I did.
3 Q Was that in the fall of '96? Is that how you learned
4 it
?
5 A No. I learned it because I started receiving reams
6 of legal documents from the law firm of the bankruptcy
7 trustee and I started raising questions at that point.
8 Q Did you have a discussion with Mr. Gordon regarding
9 Who's Who Worldwide filing bankruptcy?
10 A Yes.
11 Q Tell us the subject of that discussion?
12 A Well, he indicated that that was based on -- at least
13 to the my understanding, it was based primarily on the
14 fact that when the government had raided the facilities
15 they had taken his bank account records and checkbooks and
16 so forth, and he was unable to pay his bills in a timely
17 fashion, and that that is what promulgated the proceeding.
18 MR. WHITE: The government would offer 610 and
19 610-A, which are certified copies of the Who's Who
20 Worldwide bankruptcy petition and its amendment.
21 THE COURT: Any objection?
22 MR. TRABULUS: No, your Honor.
23 THE COURT: Government's Exhibits 610 and 610-A
24 for Abel in evidence.
25 (Government's Exhibit 610 received in evidence.)
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1 (Government's Exhibit 610-A received in
2 evidence.)
3 MR. JENKS: Your Honor, once again, these are not
4 being offered against the corporation; is that correct,
5 Mr. White?
6 MR. WHITE: That's correct.
7 THE COURT: You may proceed.
8 Q Dr. Grossman, let me show you Exhibit 610.
9 If you can look through that, first of all.
10 (Handed to the witness.)
11 A I am looking for a date.
12 Q Now, aside from when you met with your own attorney
13 or with the government in connection with this case, have
14 you ever seen that document before?
15 A No.
16 MR. WHITE: M
r. Grossman, if you can look at page
17 1 of the bankruptcy petition.
18 (Handed to the witness.)
19 A Yes.
20 Q And the pages that have a post-it on them and compare
21 them to Exhibit 610-B, and tell us if it is strictly an
22 enlargement of those pages.
23 A The secondary certificate is. I don't know what this
24 is.
25 (Mr. White confers with the witness.)
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1 A All of those are, seem to be those that are indicated
2 here.
3 Q So 610-B appears to be an enlargement of the
4 bankruptcy petition?
5 A Right.
6 MR. WHITE: Your Honor, the government offers
7 610-B.
8 THE COURT: Any objection?
9 MR. TRABULUS: I would like to see which ones
10 they are.
11 (Whereupon, at this time there was a pause in the
12 pro
ceedings.)
13 MR. TRABULUS: No objection.
14 THE COURT: Government's Exhibit 610-B for Baker,
15 in evidence.
16 (Government's Exhibit 610-B received in
17 evidence.)
18 (Whereupon, the exhibit/exhibits were published
19 to the jury.)
20 Q Now, if you can turn in your copy, Dr. Grossman, to
21 the page that has the heading, secretary's certificate.
22 A Yes.
23 Q Could you just follow along while I read the first
24 paragraph.
25 It says: The undersigned, the duly elected
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1 acting secretary of Who's Who Worldwide Registry, Inc., a
2 New York corporation, does hereby certify that the
3 following resolutions were duly adopted at a meeting of
4 the board of directors of said corporation, duly called
5 and held at the offices of the cor
poration, on the 21st of
6 March, 1994 at 10:00 a.m., that day at which a quorum of
7 the directors were present and acting throughout, and that
8 the same have not been amended or rescinded in any
9 respect.
10 Is it correct, Dr. Grossman, that the rest of
11 that indicates that the board of directors approved the
12 filing of the bankruptcy petition?
13 A Yes.
14 Q If you can follow along while I read the last
15 paragraph.
16 It says witness whereof I have hereunto set my
17 hand and the seal of the corporation this 21st day of
18 March, 1994, signed, Bruce Gordon, acting secretary.
19 MR. WHITE: Your Honor, I would like to read from
20 Exhibit 799, which is the transcript already admitted in
21 evidence.
22 THE COURT: Very well.
23 MR. WHITE: Your Honor, it is the deposition of
24 Mr. Gordon from April 14th, 1994, in connection with the
25 bankruptcy proceeding of the Who's Who Worldwide
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1 bankruptcy proceeding, page 24, line 3.
2 Question: Did you have a meeting of the board of
3 directors shortly before you filed the petition of
4 bankruptcy?
5 Answer: I spoke to my sister, my brother-in-law
6 by phone.
7 Question: And you made minutes of that meeting;
8 is that right?
9 Answer: Yes.
10 Now reading from page 40 of the same exhibit,
11 beginning with line 5.
12 Question: Let's go back to the secretary's
13 certificate which is immediately following the first page
14 of Exhibit A.
15 Have you seen that document before, Mr. Gordon?
16 Answer: Yes.
17 Question: Is that your signature at the bottom?
18 Answer: Yes.
19 Question: It refers to a board o
f directors
20 meeting at 10:00 a.m. on March 21st. Do you recall
21 attending that meeting?
22 Answer: Yes.
23 Question: Which of the directors were present in
24 person?
25 Answer: I was present.
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1 Question: Were either of the Grossmans present?
2 Answer: No.
3 Question: Were either of the Grossmans on the
4 telephone with you at that time?
5 Answer: Yes.
6 Question: Which one?
7 Answer: Joyce Grossman, and later on Richard
8 Grossman.
9 Question: Are you the only three directors of
10 the corporation?
11 Answer: Yes.
12 Q Dr. Grossman, did you ever participate in a board of
13 directors meeting in March of 1994 to discuss the filing
14 of a bankruptcy petition?
15 A No.
16 Q Now, if you could t
urn to the page of the bankruptcy
17 petition which is entitled list of equity security
18 holders.
19 Do you have it before you?
20 A Yes.
21 Q You can follow along as I read the list of the equity
22 security holders.
23 Joyce C. Grossman, listed as a 75 percent
24 shareholder; is that right?
25 A Yes.
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1 Q It lists yourself, Richard C. Grossman as a 25
2 percent shareholder; is that right?
3 A Yes.
4 Q Could you read aloud for us under where it says
5 declaration at the bottom.
6 THE WITNESS: I Bruce Gordon president for Who's
7 Who Worldwide Registry, Inc. named as debtor in this case
8 declare under penalty of perjury that I have read the
9 foregoing list of equity security holders consisting of
10 one sheet including t
his declaration, and it is true and
11 correct as to the best of my information and belief.
12 Q And, it is again signed and dated?
13 A By Bruce Gordon. It looks like March 21st, 1994.
14 Q Now, is the information regarding your ownership
15 interest in Who's Who Worldwide accurate on that document?
16 A No.
17 Q In March of '94, did you or your wife or any of your
18 family entities own 100 percent of Who's Who Worldwide?
19 A No.
20 Q If you can now turn to the next marked page in the
21 bankruptcy petition, which is the upper right hand page on
22 Exhibit 610-B?
23 MR. TRABULUS: 610-B?
24 MR. WHITE: 610-B is the enlargement.
25 Q Do you have it, Dr. Grossman?
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1 A I do.
2 Q Does it also set forth that your wife owns 75 percent
3
of the company and you own 25 percent?
4 A Yes, it does.
5 Q And is that accurate?
6 A No, it is not accurate.
7 MR. WHITE: Your Honor, I would like to read
8 again from Exhibit 799, transcript of Mr. Gordon's
9 deposition from April 14th, 1994, in connection with the
10 bankruptcy proceeding.
11 THE COURT: Very well.
12 MR. WHITE: Beginning page 30, line 9.
13 Question: Does Who's Who Worldwide Registry have
14 any preferred stock?
15 Answer: No.
16 Question: Does it have only a single class of
17 common stock?
18 Answer: I believe that is the case.
19 Question: Under item five there is only a single
20 name indicated, a person who owns 20 percent or more of
21 the voting securities of a debtor. Is that wrong?
22 Answer: I believe Joyce Grossman and there is a
23 trust, I am not sure, I don't know.
24 Question: I thought y
ou indicated earlier that
25 you have the authority to vote all of the stock?
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1 Answer: Yes, that's true.
2 Question: So item five then should list your
3 name, I suppose. I know you can't read it because it is
4 small writing. It says, quote, list the name of any
5 person who directly or indirectly owns, controls or holds
6 with power to vote, unquote.
7 Answer: I have the power to vote 100 percent of
8 the stock.
9 Question: And the names of the people who
10 actually own the stock would be Richard Grossman, Joyce
11 Grossman and perhaps a trust?
12 Answer: I believe that to be accurate.
13 Question: At the time of the trial I believe you
14 owned 75 percent of the stock of Who's Who Worldwide
15 Registry; is that correct?
16 Answer: No, I
am not sure if I could vote 75
17 percent of the stock or 100 percent of the stock. It's
18 something that's not important in the operation of my
19 business.
20 Comment by Mr. Flaum.
21 THE COURT: F L A U M?
22 MR. WHITE: Yes.
23 Mr. Flaum says: The question was not voting.
24 The question was ownership.
25 Could you read the question back, please.
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1 And the record is read back.
2 Answer: There's been a change in ownership.
3 Question: Perhaps you can explain then how you
4 owned 75 percent of it then, but apparently you own none
5 of it now?
6 Answer: I think there was a little confusion.
7 It's that I have an employment agreement where up to a
8 certain point I get 75 percent of the profits and Joyce
9 and the trust get the rema
ining 25 percent. However, I do
10 have the ability, the voting rights on a stock, and that's
11 what I meant.
12 Question: Perhaps you will recall at trial I
13 indicated to you that Dunn & Bradstreet recently listed
14 Dr. Grossman as owning 100 percent of the stock, and I had
15 asked you if that was correct, and you said that's not
16 right, that you owned 75 percent. You had contemplated
17 selling it to him or this trust, but you had not done so.
18 Do you recall that testimony?
19 Answer: Yes, I recall D & B had them. That's
20 what I recall. And I had indicated to you that -- was
21 this something about an employment agreement also in it?
22 Question: This is the first time I've heard of
23 it, so I'm not aware of the employment agreement.
24 Answer: I vote 100 percent of the stock. I also
25 have permission to tell people that I vote a hundred
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1 percent of the stock in writing, and that's what I meant.
2 Your Honor, I read from page 65 of the same
3 exhibit, beginning at line 4.
4 Question: The next page is the filing -- let me
5 repeat.
6 The next page in the filing is the list of equity
7 security holders?
8 Answer: Yes.
9 The list of equity holders. No securities.
10 Answer: Yes.
11 Question: Do I take it that this is not quite
12 accurate either, that some of the shares of stock is
13 actually owned by a trust?
14 Answer: Where it says 25 percent shareholder,
15 that is the trust.
16 Question: So, Ms. Grossman does own 75 percent?
17 Answer: Correct.
18 Question: And Dr. Grossman doesn't own it
19 directly, a trust owns his?
20 Answer: That's the truth, right.
21 Question: By trust you mean it's an investment
22 of a percentage or a profit sharing plan?
23 Answer: I don't know what the trust -- what that
24 trust consists of.
25 Question: Did you provide this information to
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1 Mr. Flaum, F L A U M, before it was put on the schedule?
2 Answer: Which information? This information?
3 Question: Yes, this information.
4 Answer: Again, it was done with my accountant.
5 Question: But did you?
6 Answer: I had him put, to some of this, yes.
7 Your Honor, finally, page 72 of that transcript,
8 line 12.
9 Question: Did you ever at any time hold the
10 record ownership of stock in the company?
11 Answer: No.
12 The government would now offer Exhibit 800, which
13 is a transcript of an April 29th, 1994 ban
kruptcy hearing,
14 portions of a transcript.
15 THE COURT: Any objection?
16 MR. TRABULUS: No.
17 THE COURT: Government's Exhibit 800 in
18 evidence.
19 (Government's Exhibit 800 received in evidence.)
20 THE COURT: What is the date on that?
21 MR. WHITE: April 29th, 1994.
22 It is a hearing in the bankruptcy proceeding, and
23 I will read from page 33, line 22.
24 Question: Who are the shareholders for
25 Worldwide?
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1 Answer: For all intense and purposes, I am, but
2 the actual names are Joyce and Richard Grossman, and the
3 trust owns 45 percent and Richard Grossman.
4 Question: When did they become shareholders?
5 Answer: From the beginning.
6 Question: Five years ago?
7 Answer: Five years ago.
8 Question: Does
the company maintain shares
9 certificates with their names on it?
10 Answer: I believe so.
11 Finally, your Honor, the government would offer
12 Exhibit 801, which are portions of a September 9, 1994
13 bankruptcy hearing.
14 THE COURT: Any objection?
15 MR. TRABULUS: No.
16 THE COURT: Is that 804, Mr. White?
17 MR. WHITE: 801, your Honor.
18 THE COURT: Government's Exhibit 801 in
19 evidence.
20 (Government's Exhibit 801 received in evidence.)
21 MR. WHITE: Reading from page 51, line 1.
22 Question: One last question -- this is 801, page
23 51, line 1.
24 Question: One last question, and that is whether
25 or not any employees of the debtor are also employees of
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1 Publishing Ventures.
2 Answer by Mr. Reffsin, no.
3 Question: Mr. Gordon, are you an employee of any
4 of those -- of these entities other than the debtor?
5 Mr. Gordon: Do I draw salary?
6 Question: No. Are you an employee, is the
7 question.
8 Mr. Gordon: Define "employee."
9 Question: Do you work for any other entities?
10 Mr. Gordon: For compensation?
11 Question: What is your role?
12 Mr. Gordon: For compensation. With Sterling,
13 Who's Who, sometimes once a week, sometimes once every two
14 weeks. Very seldom.
15 Question: Do you get paid from Sterling?
16 Mr. Gordon: No.
17 Question: Do you get paid from Publishing
18 Ventures?
19 No -- Mr. Gordon, no.
20 Question: Do you get paid from Who's Who
21 Executive Club?
22 Answer: No.
23 Question: All right. No compensation?
24 Mr. Gordon: No.
25 Question: But are you an officer of any of those
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1 entities.
2 Mr. Gordon: Yes.
3 Question: What is your position?
4 Mr. Gordon: I believe I am president of all the
5 entities.
6 Question: Do you have an ownership interest in
7 any those entities (sic)?
8 Mr. Gordon: No.
9 Question: Your only role is as president?
10 Mr. Gordon: I am a hired hand.
11 Q Dr. Grossman, did you ever at any time -- let me back
12 up.
13 Did you, your wife or any family entities ever
14 own more than 25 percent of Who's Who Worldwide?
15 A No.
16 MR. WHITE: Your Honor, I have no further
17 questions.
18 THE COURT: Cross-examination.
19 MR. TRABULUS: Thank you, your Honor.
20 THE COURT: Mr. Trabulus, do you wish this
21 document, which is blocking my view, to which I have no
22 objec
tion --
23 MR. TRABULUS: I don't want to block your view,
24 and I don't need the document, your Honor.
25 THE COURT: Let's ask the government to remove
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1 it. They put it there and in all fairness they should
2 take it away.
3 MR. WHITE: We will clean up our own mess, your
4 Honor.
5
6 CROSS-EXAMINATION
7 BY MR. TRABULUS:
8 Q Good afternoon, Dr. Grossman.
9 I am Norman Trabulus, and I am Mr. Gordon's
10 attorney.
11 Dr. Grossman, are you aware that there was a
12 lawsuit brought by Reed Elsevier against Who's Who
13 Worldwide? Did Mr. Gordon make you aware of that?
14 A At what time?
15 Q While the lawsuit was ongoing.
16 A I knew there was some action going on, but I didn't
17 know quite what the extent of it was.
18 Q Dr. Grossman, did there come a point in time that
19 Mr. Gordon advised you that Reed Elsevier had obtained a
20 judgment against Who's Who Worldwide?
21 A Yes.
22 Q And was that point in time right after the judgment
23 was obtained?
24 A I don't recall.
25 Q Did he discuss with you that as a result of that
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1 fact, it was necessary for Who's Who Worldwide to take
2 some action?
3 A I suppose. I don't recall. I don't know what you
4 are referring to.
5 Q Well, did he tell you as a result of that it was
6 necessary to file chapter 11?
7 A I am not sure.
8 Q Dr. Grossman, I believe you were asked some questions
9 by Mr. White concerning bankruptcy?
10 A Yes.
11 Q I have to ask you, how familiar are you with
1
2 bankruptcy?
13 A I am not very familiar with bankruptcy.
14 Q Are you aware of the difference between a bankruptcy
15 that is a liquidation, where the company or the assets
16 gets sold off, and a type of bankruptcy which is called
17 the reorganization?
18 A In general. Not very specifically.
19 Q Would it be consistent -- withdrawn.
20 Is it not correct that at a certain point in time
21 Mr. Gordon told you that as a result of a judgment that
22 had been awarded Reed Elsevier against Who's Who
23 Worldwide, Who's Who Worldwide would have to go into a
24 reorganization type of bankruptcy to enable it to survive?
25 A Yes, I think he did at one point.
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1 Q Okay.
2 Was that in a telephone conversation that you had
3 with Mr. Gordon?
4 A I
am sure it was a telephone conversation. I don't
5 remember any in-person conversations to that effect.
6 Q Was that a conversation that wife was also on as
7 well?
8 A It is possible.
9 Q Were you aware that you were a director of the
10 company, Who's Who Worldwide?
11 A Not at that time.
12 Q Is it correct to say though that in this conversation
13 Mr. Gordon conferred with you, and also with your wife, if
14 she was on the phone, concerning an upcoming filing of a
15 Chapter 11 petition, a reorganization petition?
16 A I don't think there was ever any mention of an
17 up-coming filing. I don't think he was very specific
18 about the terms.
19 Q Did he tell you it was already done, or that it would
20 have to be done?
21 A Most things that he discussed with us were after the
22 fact. So I would have to assume that was the case in this
23
time as well.
24 Q In this particular case you are just assuming that it
25 was after the fact; is that correct? You don't have a
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1 clear recollection?
2 A I don't have a clear recollection.
3 Q So, it is possible that he advised you and your wife
4 before the Chapter 11 filing, that there was indeed going
5 to be a reorganization filing; is that right?
6 A Yes. It is a possibility. But since I am not
7 awfully knowledgeable about the differences at that time,
8 you may be correct.
9 Q Okay.
10 Now, you told Mr. White that in I think February
11 of 1996, or in the fall of 1996, I may have the time that
12 you stated incorrectly, but that you had a conversation
13 with Mr. Gordon in which he told you that the government's
14 raid precipitated a bank
ruptcy or brought about a
15 bankruptcy; is that right?
16 A Yes.
17 Q Do you recall what he was talking about, or was a
18 change from a reorganization, to a liquidation where the
19 company would have to be sold off?
20 A I don't know. I wasn't familiar at that time, until
21 you are describing the difference, I wasn't aware of the
22 significance of the difference.
23 Q Do you recall in this conversation -- withdrawn.
24 In this conversation that you had with Mr. Gordon
25 in which he talked about the government raid and its
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1 effect, that was after the conversation you had about
2 going in for reorganization because of the judgment; is
3 that correct?
4 A It may have been after. But under those
5 circumstances I was not aware that the reorganiz
ation was
6 a bankruptcy.
7 Q Okay.
8 Were you aware that the reorganization was
9 something -- withdrawn.
10 Were you given to understand by Mr. Gordon that
11 the reorganization would be something that you hoped would
12 give the company a chance to survive and continue in
13 operation?
14 A Yes.
15 Q And now, when Mr. Gordon told you what you described
16 as a bankruptcy, which was precipitated by the government
17 raid, was that something where you understood the company
18 would not be able to survive at that point?
19 A No.
20 Q You thought that it still might survive?
21 A I had no way of making any judgment at all.
22 Q Okay.
23 Did he tell you whether the company -- withdrawn.
24 Did he tell you whether he expected the company
25 to continue in existence at that point?
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1 A He said it looked doubtful as I recall his
2 terminology. I am not sure.
3 Q Okay.
4 Earlier on when he told you about the
5 reorganization after the Reed judgment, did he tell you at
6 that point that it looked doubtful as to whether the
7 company would continue?
8 A Earlier on?
9 Q Yes.
10 A No.
11 Q Now, the conversation which you had with Mr. Gordon
12 concerning the bankruptcy being precipitated by the raid
13 that reflected a change in what he gave you was his
14 prognosis of the company; is that right?
15 A Yes.
16 Q Now, let me ask you, when you first spoke to
17 Mr. Gordon -- withdrawn.
18 When you first spoke to Mr. Gordon about
19 investing in Who's Who Worldwide, Inc., Who's Who
20 Worldwide Registry -- Who's Who Worldwide Registry, I am
21 s
orry, did he describe to you what the business was going
22 to be?
23 A Yes.
24 Q That was in late 1989 or early 1990?
25 A Probably early 1990.
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1 Q Right around -- you identified some documents that
2 were dated in January of 1990, and I think you indicated
3 some of the actual investing of money occurred after
4 that.
5 MR. WHITE: Objection. There is no document he
6 identified relating to an investment of January of 1990.
7 THE COURT: Mr. White, I just want to hear the
8 word "objection." I never go back to determine what
9 occurred before. We would spend a lot of time doing
10 that. If the witness has a recollection as to whether
11 that occurred or didn't occur, we will let him answer.
12 That's how we handle it.
13 MR. TRABULUS: Your
Honor, if you bear with me, I
14 will go through my notes to try to identify the particular
15 document.
16 THE COURT: Good. Take your time. Not too much
17 time, but take your time.
18 Since it is past my lunch hour -- I told you we
19 will have a late lunch today. That is difficult for me,
20 but easy for you, I am sure. Some of you may not even eat
21 lunch. Who knows.
22 Q Do you have Exhibit 584 before you?
23 THE COURT: What is that?
24 MR. TRABULUS: A waiver of notice of special
25 meeting of board of directors of Who's Who Worldwide
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1 Registry, Inc.
2 A I have it in my hand.
3 Q And that is one of the documents that you testified
4 about; is that correct?
5 A Yes.
6 Q And it is dated -- it indicates a date of January
7 3rd, 1990; is that correct?
8 A That's correct.
9 Q And is that around the time period that you were
10 having conversations with Mr. Gordon concerning
11 prospective investment that turned out to be in Who's Who
12 Worldwide Registry?
13 A I think it is beforehand.
14 Q So it would have been a little bit afterwards in
15 early January of 1990?
16 Excuse me, when specifically do you believe that
17 you had the conversation?
18 A In about April of that year.
19 Q Okay.
20 Had you had any conversations in 1989 concerning
21 an investment?
22 A We might have had, but not specifically as to the
23 nature of the business, or what it was.
24 Q Now, when Mr. Gordon told you about the business, can
25 you tell me what it was that he described the business as
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rossman-cross/Trabulus
1 going to be?
2 A When we discussed it in April?
3 Q Yes.
4 A He discussed the fact that it was a business wherein
5 people who had responded to his mailings by returning a
6 card would be contacted by people in his own office for
7 membership in this organization, and they would be
8 included in his directory and registry.
9 Q Now, in describing that to you, did he describe it to
10 you as anything other than a legitimate business?
11 A No. He never described it as anything other than a
12 legitimate business.
13 Q Did he talk about the prospects of members networking
14 with each other?
15 A I am not sure if he did it at that time or
16 subsequently.
17 Q He did at some point in time?
18 A Yes, he did.
19 Q Did he talk to you about the types of people who were
20 going to be invited to be listed in the
registry?
21 A Corporate heads and significant people in business.
22 Q Now, I believe you testified that initially you and
23 your wife acquired shares in the sense that one was for
24 your pension plan and the other was for a trust that was a
25 family trust; is that correct?
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1 A Some percentage of the business was to go into my
2 pension plan, or was being an investment of the pension
3 plan. And the balance was for the family trust.
4 Q Initially 20 percent, you understood that a 20
5 percent ownership of Who's Who Worldwide Registry was to
6 go into the family trust?
7 A Yes.
8 Q And five percent was to go into the pension plan?
9 A Yes.
10 Q And now, can you explain to the jury, and not in a
11 great deal of detail, and I am not trying to pr
y into the
12 family thing, but just the nature of a family trust, what
13 it is, your family trust.
14 A Well, it is just a -- it is like a holding body for
15 investments. And my wife and I are trustees for it.
16 Q Your wife and you are trustees?
17 A Yes.
18 Q And do you understand it to mean that legal title to
19 the assets of the trust is in your name and your wife's
20 name?
21 A I suppose so.
22 Q Now, are there also people who are beneficiaries of
23 the trust?
24 A Yes.
25 Q And would those be your children?
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1 A Yes.
2 Q Now, those are the people who have the benefits of
3 the assets of the trust; is that correct?
4 A At some time in the future.
5 Q At some point in the future they could get the income
6 and the assets --
7 A Yes.
8 Q And they have that right or that interest right
9 now -- withdrawn.
10 Again, not to -- do they get any income from it
11 at this point?
12 A No.
13 Q At this point the income goes to you and your wife,
14 but down the road it may go to your children; is that
15 right?
16 A Yes. There is not that much income, I must tell you.
17 Q All right.
18 And although they have a legal right in the trust
19 assets, to have them at some time in the future, they
20 don't have title to those assets; is that right?
21 MR. WHITE: Objection.
22 THE COURT: What is the relevancy of that,
23 Mr. Trabulus?
24 MR. TRABULUS: Your Honor, we -- I will withdraw
25 the question.
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1 Q Now, you indicated that
you received a considerable
2 amount of money in late 1992 from Who's Who Worldwide
3 Registry?
4 A Right.
5 Q And that amount of money I think you indicated was
6 about $400,000 before taxes?
7 A That's correct.
8 Q And do you know how much taxes were paid by that by
9 way of W-2 withholding, and also, separately the state
10 taxes which were withheld, which were paid. And you can
11 refer to documents to refresh your recollection. Do you
12 have any documents there?
13 A I think we received based on the two checks we
14 received, it comes to the order of $213,000, so the
15 difference would have been subtracted, that's about
16 $80,000 to pay taxes.
17 Q That's federal taxes?
18 A I don't know what it was. I don't have the W-2 in
19 front of me. I haven't seen it for a while.
20 Q The state taxes paid were paid by you?
21 A Unles
s New York taxes were paid out of that initial
22 $87,000, I don't know.
23 Q All right.
24 A It didn't concern me at the time, so there was no
25 reason for me to recall.
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1 Q Now, you have indicated that you thought that was in
2 return for the time and trouble you had spent doing a
3 variety of different paperwork-type things; is that
4 correct?
5 A Yes. And there were also several occasions where my
6 wife and I made some trips to New York, and we helped him
7 do some decorating around the office. My wife was a
8 decorator and I gave him a hand.
9 Q We will do that afterwards.
10 Can you tell us the paperwork type things you
11 recall doing?
12 A There were a number of occasions where American
13 Express or other types of credit card co
mpanies would need
14 to have the statements signed by somebody else aside from
15 Mr. Gordon. And so, the office would send the things to
16 sign, papers to send back in reference to those things.
17 Also, the