Including information about his associates
|
In Re: LIBERTY LOBBY, INC. Debtor |
Case No. 98-1046 Chapter 11 |
Washington, D.C.
Tuesday, June 29, 1999
Deposition of
BLAYNE C. HUTZELL
the witness, was called for examination by counsel for the creditor, at the law offices of Morrison & Hecker, 1150 18th Street, N.W., Suite 800, Washington, D.C. 20036, beginning at 2:00 p.m., before Hedy D. Blau, Shorthand Reporter and Notary Public for the District of Columbia, and were present on behalf of the respective parties:
MGB REPORTING, INC.
9805 Korman Court
Potomac, Maryland 20854
(301) 983-9315
APPEARANCES:
FOR THE CREDITOR LEGION FOR THE SURVIVAL OF FREEDOM, INC.:
MORRISON & HECKER
BY: Darrell W. Clark, Esquire
1150 18th Street, N.W.
Suite 800
Washington, D.C., 20036
(202) 728-3012
FOR THE DEBTOR:
PAUL D. PEARLSTEIN, ESQUIRE
1730 Rhode Island Avenue, N.W.
Suite 505
Washington, D.C. 20036
(202) 223-5848
FOR THE WITNESS:
NOTO & OSWALD, P.C.
BY: R. Scott Oswald, Esquire
1850 M Street, N.W.
Suite 920
Washington, D.C. 20036
(202) 261-2806
(202) 261-2835 (Fax)
ALSO PRESENT:
Vincent J. Ryan, Chairman - Liberty Lobby, Inc.
PROCEEDINGS
Whereupon,
BLAYNE C. HUTZELL
was called as a witness herein and, having been first duly sworn, was examined and testified as follows:
EXAMINATION BY COUNSEL FOR THE CREDITOR
THE LEGION FOR THE SURVIVAL OF FREEDOM, INC.
BY MR. CLARK:
Q. Would you state your name for the record?
A. Blayne C. Hutzell.
Q. And your address, Mr. Hutzell?
A. It is 11315 Oak Leaf Drive, No. 415, Silver Spring, Maryland 20105.
Q. Have you ever been deposed before?
A. Yes.
Q. Just so you don't forget, you need to verbalize any communications. A nod of your head or shrug of your shoulders can't get picked up by the electronic tape here. So I am going to ask you to speak clearly and into the microphone.
If you don't understand anything, I don't want you to guess. I don't want you to speculate. Just tell me you don't understand. Really, the purpose of this is to find out whatever information that I can that you know or that you have personal knowledge of. That is really the main purpose of what we are here for today.
Other than your counsel, did you speak to anybody about your deposition today?
A. Yes.
Q. To whom did you speak?
A. Willis Carto.
Q. Yes.
A. Paul Pearlstein.
Q. What did they tell you?
MR. OSWALD: I am going to object. Essentially, it was an attorney-client relationship between Mr. Pearlstein related to corporate conversations and, therefore, it is privileged.
MR. CLARK: Your objection is noted on the record.
BY MR. CLARK:
Q. Other than what your conversations were with were attorney, what were the substances of your conversations?
A. I don't understand.
Q. What did you talk about?
MR. OSWALD: Objection. In terms of this form, with whom? Would you please identify your conversations with whom?
BY MR. CLARK:
Q. In your conversation with Mr. Carto, please tell me what you talked about.
A. It was the time and place of the deposition.
Q. Did you discuss the substance of your testimony?
A. No.
Q. Did you speculate about what you would be asked about?
A. No.
Q. Did Mr. Carto speculate?
A. No.
Q. Was there anything else other than the time and place that was communicated to Mr. Carto?
A. To the best of my knowledge, no.
Q. How did you speak with him, by telephone, writing, meeting?
A. Telephone.
Q. How many times?
A. I don't remember how many times.
Q. Was it more than one?
A. As a reminder, maybe more than one.
Q. More than twice?
A. I don't remember.
Q. You spoke to him both times — or at least more than once — only about the time and the place of this deposition?
A. That is correct.
Q. What about your conversation with Mr.Pearlstein?
MR. PEARLSTEIN: I am going to object to that. I am sure his personal counsel would agree with me. I spoke to him as a member of the corporation. He is being deposed as the Comptroller.
MR. OSWALD: And, therefore, I am instructing him not to answer the question.
BY MR. CLARK:
Q. How long have you worked for Liberty Lobby?
A. Since April of 1980.
Q. What was your experience before that? What did you do for a living before 1980?
A. I have always been in the accounting field.
Q. Where did you work?
A. Prior to Liberty Lobby, 18 years ago? Let’s see. I was with the branch of the World Bank — IMF. No, it is not IMF. It is IFC, International Finance Corporation.
Q. When you first joined Liberty Lobby in 1980, what position did you hold?
A. Comptroller.
Q. You hold that position today?
A. Yes.
Q. Have you held that position continuously since 1980?
A. Yes.
Q. In your capacity as Comptroller, would you describe your areas of responsibility?
A. Yes. It would be paying bills, payroll, financial statements.
Q. What sort of financial statements?
A. For Liberty Lobby? Income and expense reports.
Q. Profit and loss?
A. Profit and loss and balance sheets.
Q. Who were those distributed to?
A. There is no distribution.
Q. You prepare them internally. Are they used for directors' meetings, for tax purposes, to keep --
MR. OSWALD: I am going to object to the form of the question. If you could ask him one question at a time, just so that he can answer the question.
MR. CLARK: I was just suggesting the areas where he may have distributed financial statements.
MR. OSWALD: That was a compound question. Objecting to form. I am asking you to rephrase the question.
BY MR. CLARK:
Q. Who did you distribute the financial statements to?
A. They are certainly used for the preparation of the tax returns.
Q. And they would go to whom?
A. An outside accountant.
Q. Who is the outside accountant?
A. Marlin Olsen.
Q. Is that a he?
A. It is a he.
Q. And that is the gentleman in Silver Spring?
A. That is correct.
Q. From those profit and loss, balance sheets, and income and expense statements Mr. Olsen prepares the tax returns?
A. It is from those, yes.
Q. Anyone else who receives the forms?
A. Not to the best of my knowledge.
Q. How are the forms compiled?
A. By a computer.
Q. Do you have a general ledger?
A. Yes, we do.
Q. So you take the information from the general ledger?
A. Yes.
Q. Are there other accounting means that you use to compile these statements?
A. Yes. We have cash receipts, cash disbursements, journal entries.
Q. So there is a general ledger?
A. Yes.
Q. Cash receipts?
A. Right.
Q. Cash disbursements?
A. Yes. And journal entries.
Q. Is the Comptroller the only role that you play at Liberty Lobby?
A. Yes.
Q. You have held no other position at Liberty Lobby?
A. Correct.
Q. Let’s talk a little bit about the assets of Liberty Lobby. We are all familiar with the schedules which you signed and to which you testified at the 341 meeting. Other than what has been listed on the schedules — and the schedules are very detailed — are there any other monies owed to Liberty Lobby?
A. I would like to see the schedule you are referring to.
MR. CLARK: We can go off the record.
(Whereupon, there was a short recess.)
BY MR. CLARK:
Q. I am going to show you for reference purposes the amended schedules of Liberty Lobby, which details all the assets and the liabilities of Liberty Lobby.
MR. PEARLSTEIN: Let me take a look at it after Scott has if you don't mind. Is that the amended?
MR. CLARK: Yes.
(Discussion off the record.)
BY MR. CLARK:
Q. Other than what is listed in there, are there any other monies that are owed to Liberty Lobby?
MR. OSWALD: Just to make sure, what is there
? Can you just define there
for us?
MR. CLARK: I have handed the witness a copy of the Amended Statement of Financial Affairs and Schedules. In particular Schedule B, which lists all of the assets of the debtor. I am asking the witness if other than what is listed on Schedule B as assets of the debtor, are there any other monies that are owed to Liberty Lobby?
MR. OSWALD: As of the date of this filing?
MR. CLARK: Right now. Currently.
THE WITNESS: Currently? It is possible.
BY MR. CLARK:
Q. As of the date of the filing, are there any other monies that are owed to the debtor?
A. No.
Q. Could you give me an idea between the date of the filing and today what the top five are in terms of monies owed to the debtor?
MR. OSWALD: I am going to object from the standpoint of we are talking about the filing here --
MR. CLARK: Counsel, if you can limit your objection to a nonspeaking objection, which I think is in compliance with the local rules, I would appreciate it.
MR. OSWALD: Fair enough.
MR. CLARK: If the witness doesn't understand the question, he can ask for clarification.
MR. OSWALD: Fair enough. I object. It is misleading. It is misleading because of the fact you have asked for information necessarily that is contained in this document, which is over 20 pages.
MR. CLARK: I am not going to fight with you. I am not going to entertain speaking objections in the deposition. Schedule B is only a few pages long. It lists all of the personal property of the debtor.
BY MR. CLARK:
Q. All I am asking is between when this was created and today, if you could tell me what the largest amounts of money that are owed, the top five. You are the Comptroller of the company and do the day-to-day operations of its books?
MR. OSWALD: Same objection.
THE WITNESS: I don't remember the top five.
BY MR. CLARK:
Q. Could you give me the top three?
MR. OSWALD: Objection for the same reasons.
THE WITNESS: I don't remember the top three.
BY MR. CLARK:
Q. Does FDFA owe any money to Liberty Lobby?
MR. OSWALD: Objection. Can we define FDFA, please?
BY MR. CLARK:
Q. What is FDFA, Mr. Hutzell?
A. FDFA is a 501(c)(3) organization.
Q. What is the name of FDFA? What is it known as?
A. It is the Foundation to Defend the First Amendment.
Q. Does Foundation to Defend the First Amendment owe any money to Liberty Lobby?
MR. OSWALD: Objection. As of when, counsel?
MR. CLARK: Today.
THE WITNESS: I don't believe so.
BY MR. CLARK:
Q. Does the Committee to Defend Liberty Lobby owe any money to Liberty Lobby?
MR. OSWALD: Objection. In terms of time, can we define when that is?
MR. CLARK: Today. Please assume that all of these questions, the next five, deal with as of today.
MR. OSWALD: That is fair.
THE WITNESS: Yes.
BY MR. CLARK:
Q. How much does CDLL owe Liberty Lobby?
A. CDLL? I don't know.
MR. OSWALD: Counsel, can we just define that term for him so we are clear in terms of record as to what that is?
BY MR. CLARK:
Q. Can you tell me what CDLL stands for, Mr.Hutzell?
A. Committee to Defend Liberty Lobby.
Q. You have told me that they owe money to Liberty Lobby?
A. I don't believe I said that. I thought you said FEL.
MR. OSWALD: Let him ask a question.
BY MR. CLARK:
Q. I am asking you if CDLL owes any money to Liberty Lobby?
A. I don't know.
Q. What is FEL?
A. Foundation for Economic Liberty.
Q. Does FEL owe any money to Liberty Lobby?
A. Yes.
Q. Can you tell me how much they owe?
MR. OSWALD: Again, just for clarification, as of today?
MR. CLARK: As of today.
MR. OSWALD: Thank you.
THE WITNESS: I don't know what that figure is.
BY MR. CLARK:
Q. Can you tell me within $10,000?
A. No.
Q. Is it over $50,000?
A. Is it over $50,000?
Q. Yes.
MR. OSWALD: Wait a minute. Objection. He just said he cannot tell you within $10,000.
MR. CLARK: I am trying to get more specific.
BY MR. CLARK:
Q. Is it between $0 and $50,000?
A. Yes.
Q. Is it between $50,000 and $100,000?
A. No.
Q. Is it between $25,000 and $50,000?
A. Yes.
Q. Is it between $30,000 and $50,000?
A. Probably.
Q. What is that money for?
A. It is monies that are shown in the loan account on Liberty Lobby’s records.
Q. Do you know when those loans were made?
A. I couldn't necessarily be a loan. It could be — when they were made? No, I don't know when they were made. It could not be a loan, either.
Q. Can you tell me when the monies were advanced to Liberty Lobby?
A. No.
MR. OSWALD: Just so we are clear on the record, you said that monies were advanced to Liberty Lobby.
MR. CLARK: That is correct.
MR. OSWALD: Your previous question was were monies owed to Liberty Lobby. I am confused myself as to which way monies are going. Are you saying advanced to Liberty Lobby or monies owed to Liberty Lobby?
MR. CLARK: I am not confused.
BY MR. CLARK:
Q. I am showing you an amended schedule, Schedule B, Question No. 2, which asks the bank accounts of the debtor. You have listed eight accounts.
MR. OSWALD: For clarification, can we mark this into the record as evidence in the deposition so we are clear as to what he is identifying?
MR. CLARK: It is something in the court record.
MR. OSWALD: Counsel, I am asking you in a deposition, even something in the court record — if this is a copy of that document, correct? It is not the authentic document?
MR. CLARK: That is correct.
MR. OSWALD: I am asking you right now to put it into the record so that we are clear as to what documents he is identifying. That is all. That is fair. We have no guarantee that this is an absolute reproduction of that document. Do we?
Every deposition I have been at, we mark it and put it in the record, so that there isn't an issue about whether or not what he is identifying.
MR. CLARK: Let me ask another question.
BY MR. CLARK:
Q. Mr. Hutzell, can you tell me what bank accounts Liberty Lobby has?
A. Yes.
Q. Would you number them and name them for me, please?
A. The operating account.
Q. Where is that located?
A. National Capital Bank of Washington. These are all at National Capital Bank of Washington.
Q. Okay.
A. Payroll account, MasterCard/Visa.
Q. Is that a third account, MasterCard/Visa?
A. Yes.
Q. Interest and refund account.
A. How many is that?
Q. That is number four.
A. Trust account.
Q. That is at National Capital Bank?
A. Yes.
MR. OSWALD: You indicated there is an operating account, payroll account, Mastercard/Visa, interest and refund account, and a trust account.
THE WITNESS: There is a PAC account. How many is that?
BY MR. CLARK:
Q. Six.
A. I think that is it in National Capital Bank. Then we have one account in Dothan, Alabama, at South Trust Bank of Alabama. I think it is called South Trust Bank, in Dothan. That is all.
Q. Is there a Medallion account?
A. That is the trust account.
Q. Are there any accounts overseas?
A. No.
Q. Can you describe the relationship between Liberty Lobby and James Webb or Webb Communications?
A. James Webb is the printer of Spotlight newspaper.
Q. Does he maintain an account for the benefit of Liberty Lobby?
A. I need a little more — what do you mean maintain an account?
MR. OSWALD: If you don't understand the question, his admonition to you was to say you don't understand the question.
THE WITNESS: I don't understand the question.
BY MR. CLARK:
Q. Is Mr. Webb holding any monies of Liberty Lobby?
A. Presently?
Q. Yes.
A. It is a possibility.
Q. Can you tell me how much?
A. No.
Q. Is it between $0 and $50,000?
A. It is probably less than that presently.
Q. Is it between $0 and $25,000?
A. It could be more than $25,000.
Q. Are the monies that are held by Mr. Webb or Webb Communications held in an account of some type?
A. An escrow account.
Q. Is Liberty Lobby named on the escrow account?
A. I am not sure.
Q. Are the monies held in the name of Mr. Webb?
A. Could be.
Q. Is interest paid on the account?
A. Could be. I am not sure.
Q. Who receives those statements?
A. I am not sure.
Q. Does the debtor receive the statements?
A. No.
MR. CLARK: Can we go off the record.
(Whereupon, there was a short recess.)
BY MR. CLARK:
Q. We were talking about the monies of Liberty Lobby that are held by James Webb or Webb Communications. Can you tell me, Mr. Hutzell, if the debtor receives a bank statement for those?
A. Now, today?
Q. Yes.
A. No.
Q. Did the debtor receive a bank statement for them?
A. Not under the previous arrangement.
Q. Can you tell me briefly what the arrangement was?
A. Yes. We recently opened a trust account with Webb, recently.
Q. When was that?
A. I am not sure what date, but it was within two or three months.
Q. In the past two or three months?
A. Yes.
Q. What was the account with Mr. Webb prior to that?
MR. OSWALD: Objection to the form of the question. I don't know if he can understand that question.
BY MR. CLARK:
Q. What was the financial relationship with Mr.Webb prior to that?
A. A week to week payment.
Q. Did Mr. Webb hold the money in some kind of account and pay himself with that account?
A. No. Not during that period of time when we were paying weekly. He didn't have any money, no escrow account.
Q. When was that account established?
A. Which account?
Q. The account I am thinking of is, when I was over there, there were hundreds of thousands of dollars being held by Webb Communications for the benefit of Liberty Lobby. In fact, they were more like advance payments to Webb Communications. Are you familiar with that?
A. Yes, I am.
Q. What is your understanding of that relationship?
A. That relationship was terminated.
Q. But is it — do you want to call it the Webb account? Let’s give it a name so we all know what we are talking about.
MR. OSWALD: I am just wondering, what is the question?
BY MR. CLARK:
Q. I am asking what type of account was that?
A. I am not sure what type it was.
Q. Did Liberty Lobby send money to Webb Communications before the work was done?
A. During what period of time?
Q. Around the time the bankruptcy was filed, say May, 1998.
A. Yes. They sent money to a trust account, an escrow account, or whatever you want to call it.
Q. Let’s just give it a name. In that May, 1998, relationship, do you want to call it the Webb account?
MR. OSWALD: Why don't we just call it the relationship as of May of '98?
BY MR. CLARK:
Q. Is that acceptable to you?
A. The Webb escrow account.
Q. During the time immediately prior to the bankruptcy filing, in the spring of 1998, approximately how much money was in this account?
A. I don't remember.
Q. Was it more than $100,000?
A. I really don't remember.
Q. To your knowledge, did the account ever exceed $100,000?
A. I don't think it did.
Q. When did that relationship, the relationship of May of 1998, terminate?
A. I am not sure of the date.
Q. Did it terminate prior to the bankruptcy filing or after the bankruptcy filing?
A. After.
Q. Did it terminate before September, '98, or after September, '98?
A. I am not sure.
Q. And the relationship now is that — you called it an escrow account?
A. Today?
Q. Yes.
MR. OSWALD: I don't think that is what he said. So why don't we just ask him what the relationship is.
BY MR. CLARK:
Q. What is the relationship today?
A. It is an escrow account.
Q. Do you know where those monies are held?
A. I don't remember the bank’s name.
Q. Is it possible that Mr. Webb was holding any money on behalf of Liberty Lobby on the date that Liberty Lobby filed bankruptcy?
A. I don't remember.
Q. I asked is it possible?
A. It is possible.
Q. If he did, could you tell me how much money that would be?
A. No. I don't know.
Q. Do you know how much an average press run is in terms of dollars for the Spotlight?
A. Yes.
Q. How much is that?
A. On an ordinary week $10,000 to $11,000 to $12,000 a week.
Q. The newspaper is printed how many times?
A. Weekly.
Q. The relationship that existed in May, 1998, was Webb paid ahead on a weekly basis, monthly basis?
A. Monies were put in the escrow account. Then as the paper was printed, those funds were reduced on a weekly basis.
Q. Who sent the funds to Mr. Webb?
A. I did.
Q. Did you do it by check?
A. By wire.
Q. From which account?
A. I don't remember what account.
Q. Generally, which account pays for the press runs?
A. The Spotlight account.
Q. Which of the accounts you have identified before is the Spotlight account?
A. I forgot that one. Please list the Spotlight account.
Q. Where is that?
A. National Capital Bank.
Q. Did anyone other than Mr. Webb have access to those funds?
A. I am not sure.
Q. Do you know any instances were someone other than Mr. Webb accessed those funds?
A. No.
Q. Has Liberty Lobby ever prepaid for postage?
A. Yes.
Q. How would it do that?
A. By check.
Q. Would it go to specific post offices or would it go to the main headquarters of the U.S. Post Office here?
A. It went to a specific postmaster.
Q. Did it do it at more than one post office?
A. I think just one post office handles the postage.
Q. Which postmaster is that?
A. I am not sure.
Q. Do you know if it is in Virginia?
A. I think it is in Pennsylvania.
Q. What is the average cost in postage of mailing the Spotlight for one week?
A. Currently $10,000 to $11,000 is a good estimate.
Q. How much would it prepay for postage?
A. I don't think there was a certain amount. Certainly the weekly amount wasn't the deciding factor.
Q. Was it more than $50,000?
A. Sometimes it was $50,000. I doubt if it was much more at any one time.
Q. Why would Liberty Lobby prepay for postage?
A. It had the cash to do so.
Q. Did those accounts earn interest?
MR. OSWALD: Objection. Which accounts?
BY MR. CLARK:
Q. Did the money that you prepaid the post office earn interest?
A. Not to the best of my knowledge.
Q. Can someone, then, take money out of the post office after prepaying for postage? In other words, once you prepaid are you stuck to use that money solely for postage or can you then take the money out?
A. I believe you can take the money out. I think you can take the money out at will.
Q. Does Liberty Lobby maintain any records with respect to postage that it prepaid and how postage that was prepaid was applied to postage used?
A. Yes.
Q. What means would that be?
A. Through the postal records.
Q. You identified for me previously the general ledger, cash receipts, cash disbursements, and journal entries. Postal records, are they included in any four of these?
A. That is not part of the financial records.
Q. Can you briefly describe to me what comprises the postal records?
A. I am not familiar with the postal records.
Q. Who has knowledge of the postal records?
A. The Circulation Manager.
Q. Who is the Circulation Manager?
A. Julia Foster.
Q. Help me out here. Would you pay the post office by check or wire?
A. Check.
Q. And this is the post office in Williamsport, Pennsylvania?
A. It could be, yes.
Q. You would sign the check as Comptroller?
A. Yes.
Q. How would the check get to the post office?
A. Mailed.
Q. Let’s assume it is $50,000. That appears as a credit in favor of Liberty Lobby?
A. On our account, yes.
Q. And that appears only in these postal records?
A. To the best of my knowledge.
Q. How does Julia Foster know that you have mailed the check to Williamsport, Pennsylvania, as prepaid for postage?
A. She would be informed.
Q. By whom?
A. By me.
Q. Can anyone else withdraw money from the post office from the money that is being held for Liberty Lobby?
A. Not to the best of my knowledge, no.
Q. Has it ever occurred where money has been sent to the post office and then returned to Liberty Lobby?
A. I don't recall an event like that, no.
Q. Is the money that is held by the post office accounted for in any of the records that you keep?
A. No.
Q. By you,
I mean you in your capacity as Comptroller?
A. No.
Q. When you compile a profit and loss statement, a balance sheet, any of the documents which you prepare — you have identified four for me, profit and loss, balance sheet, income and expense — I am sorry three.
Is the money that is being held by the post office accounted for in any of those statements?
A. It would be in the balance sheet, prepaid expense.
Q. Did Liberty Lobby prepay for any postage on the date that it filed bankruptcy?
A. I am not sure. I don't remember.
Q. We talked to you a little bit about the other assets that are at the building where Liberty Lobby is located. When I walked in the door at Liberty Lobby and walked around — you gave me a tour — I saw desks, computers, office furniture, various pieces of furniture that may be used to sort mail, tables, conferences tables, chairs. Can you tell me who owns that property?
A. Yes.
MR. OSWALD: Just so we are clear, are we defining specific pieces of property or are we saying all property?
MR. CLARK: I am getting there.
BY MR. CLARK:
Q. How about the computers. Can you tell me who owns the computers?
A. Yes.
Q. Who owns the computers?
A. Governmental Educational Foundation.
Q. What is the relationship with Liberty Lobby and Governmental Educational Foundation such that Liberty Lobby uses those computers? Is there a lease? Is there a letter agreement?
A. No.
Q. Does Liberty Lobby pay anything for the use of the computers?
A. There is an allocation of the equipment. Yes, it is an allocation to Liberty Lobby. It is called Equipment Rental.
Q. How much is Liberty Lobby paying for equipment rental?
A. It varies from month to month.
Q. Can you give me a ball park figure?
A. It is based on revenues.
Q. How much did they pay last month?
MR. OSWALD: Just so we are clear, can you define they
?
BY MR. CLARK:
Q. How much did Liberty Lobby pay last month, last month being May?
A. In cash?
Q. Yes.
A. To the best of my knowledge, no cash.
Q. Is there a journal entry or ledger entry?
A. Yes.
Q. What was the ledger entry?
A. It could be approximately $2,100.
Q. Per month?
A. Last month.
MR. OSWALD: So we are clear, the question was in May.
BY MR. CLARK:
Q. How about in April?
A. I am not sure.
Q. Is $2,100 an average, do you feel, for the monthly rate?
A. I don't have a feeling for that. It is done by revenue. It is allocated by revenue.
Q. Is there a percentage that they are allocated?
A. Yes.
Q. What is the percentage?
A. It varies.
Q. Varies on a monthly basis?
A. Yes, by month.
Q. How many computers are there?
A. I don't know.
Q. Are there more than 20?
A. I really don't know. More than 20?
MR. OSWALD: If you don't know, don't speculate. It is his admonition.
THE WITNESS: I don't know. I am not sure.
BY MR. CLARK:
Q. Are there more than 25?
A. I am not sure how many we have.
Q. What are the computers comprised of? Are there peripherals? Are there printers? Are there keyboards?
A. We have some PCs. And we have desktop printers for the newspaper.
Q. How long has Liberty Lobby been renting these computers from GEF?
A. I don't remember when it was started.
Q. Were they doing it on the date of the bankruptcy filing?
A. Yes.
Q. Let me show you what is Question No. 3 on the Statement of Financial Affairs asking to list all payments on loans, installments, purchases, or goods or services, and other debts aggregating more than $600 to any creditor made within 90 days immediately preceding the commencement of this case.
Can you show me where the allocation is made to GEF?
MR. OSWALD: Again, Darrell, I am going to object on the basis of the fact that you are not marking this into evidence. So we have no idea, again, the document to which you are referencing here today will be a document that was actually filed at that time.
MR. CLARK: You are welcomed to question the authenticity of the document at the hearing. You can preserve that objection.
MR. OSWALD: I am just stating my objection.
THE WITNESS: The question, again, please?
BY MR. CLARK:
Q. Can you show me where the allocation is made for use of the computers to GEF?
A. It would show up in the loan account with Governmental Educational Foundation. I don't think the loan account is here.
Q. Wouldn't that be a payment on a debt?
A. It would be a buildup of the loan, yes. If I understand your question, it would be a buildup of the loan. Are loan accounts in here?
MR. PEARLSTEIN: I don't think so.
THE WITNESS: Loan accounts aren't in here.
BY MR. CLARK:
Q. You don't see it in there?
A. No.
MR. OSWALD: Just so we are clear, this is a description here of all the creditors.
MR. CLARK: I asked him if it appeared on Question No. 2 of the Statement of Financial Affairs. That is all my question was.
THE WITNESS: I don't see it on here.
BY MR. CLARK:
Q. Who owns the desks?
A. Governmental Educational Foundation.
MR. PEARLSTEIN: May I just take a moment to talk to Scott?
MR. CLARK: Sure.
(Whereupon, there was a short recess.)
BY MR. CLARK:
Q. We were talking about the desks that are at the Liberty Lobby offices. Do you know approximately how many desks are there?
A. No. I have no idea.
Q. Could you tell me if there are more than 20 desks?
A. I would say there are more than 20.
Q. Are there more than 40?
A. I have no idea if it is more than 40.
Q. More than 50?
A. I wouldn't think so.
Q. How would you describe the condition of those desks?
A. Poor condition.
(Whereupon, there was a short recess.)
BY MR. CLARK:
Q. Do you know in May of 1999 the allocation that was made by Liberty Lobby for use of those desks?
A. The $2,000 figure I told you before includes all equipment.
Q. Could you just tell me what the term equipment
encompasses?
A. Desks and furnishings and transportation equipment.
Q. What would transportation equipment include?
A. It would be a pickup truck.
Q. You said furniture. Does that include the conference table that I sat at?
A. Yes.
Q. How about the picture of Ms. Farrell?
A. I don't know if that is included or not.
Q. Chairs?
A. Yes.
Q. Computers, printers?
A. Yes.
Q. How about the telephones?
A. No.
Q. Who owns the telephones?
A. The telephone company. We rent the equipment.
Q. We
meaning Liberty Lobby?
A. Yes.
Q. How much does Liberty Lobby pay each month for telephones?
A. I don't remember that figure.
Q. Is it more than $1,000?
A. Yes, it is.
Q. Is it more than $2,000?
A. I am not sure of the figure.
Q. How would you describe the condition of the telephones?
A. A bit antiquated.
Q. Do they have rotaries on them?
A. Yes.
Q. Do you keep a beeper in your pocket?
A. Not a beeper, but a dialer.
Q. Are all of them that bad?
A. Not all. We have some touch tones, a few.
Q. Do you know how many telephones Liberty Lobby rents from the telephone company?
A. I am not sure of that figure. I can't tell you exactly.
Q. Does it rent them from Bell Atlantic?
A. I think it is Lucent Technology.
Q. Is that evidenced by a lease?
A. I am not sure.
Q. This is Question No. 2 of the Statement of Financial Affairs, and it lists Lucent $7,500.
MR. OSWALD: Objection, for the same reasons as before. We are not marking this into evidence at all.
MR. CLARK: I am just asking him to refresh his recollection.
BY MR. CLARK:
Q. Does this refresh your recollection as to how much is paid on a monthly basis?
A. That is not per month, no. It looks like maybe two or three months at that figure.
Q. So would it be $2,500 a month?
A. It could be.
Q. Does Mr. Carto have an office at Liberty Lobby?
A. Yes.
Q. When you took me around Liberty Lobby and gave me a tour, Mr. Carto’s office was locked. Is it routinely locked?
A. When he is not in town, yes.
Q. Have you ever been in his office?
A. Yes.
Q. What is in his office?
A. (Pause.)
MR. OSWALD: Objection, counsel.
BY MR. CLARK:
Q. Is there a desk?
A. Yes.
MR. OSWALD: Just the form of the question. Would you be a little more specific.
BY MR. CLARK:
Q. Is there a computer?
A. No.
Q. Is there a telephone?
A. Yes.
Q. Is there a safe?
A. No. You are talking about in his office?
MR. OSWALD: He asked you a question of whether there is a safe in the office.
THE WITNESS: No, not to the best of my knowledge.
BY MR. CLARK:
Q. Is there a closet in the office?
A. There is a closet.
Q. Is there a safe in the closet in the office?
A. Not to the best of my knowledge.
Q. Is there a safe in any of the walls in the office?
A. Mr. Carto’s office?
Q. Yes.
A. Not to the best of my knowledge.
Q. Is there a safe in the desk?
A. No. I don't know of a safe.
Q. Is Mr. Carto’s desk in the same condition as the other desks at Liberty Lobby?
A. Yes.
Q. Does Mr. Carto have a gun in the office?
MR. OSWALD: Objection, counsel. What in goodness name does that have to do at all with the scope of this deposition?
BY MR. CLARK:
Q. I am going to the assets of Liberty Lobby. Does Mr. Carto have a gun in his office?
A. Not to the best of my knowledge.
Q. Is there anything else other than a desk and a telephone that can be identified in Mr. Carto’s office?
A. There is a lamp.
Q. Is there a chair?
A. A chair.
Q. Are there any books or records of Liberty Lobby kept in Mr. Carto’s office?
A. What kind of books?
Q. Financial books?
A. Financial, no.
Q. Any financial records, checks?
MR. OSWALD: Objection. If we can ask one thing at a time, counsel.
BY MR. CLARK:
Q. Are there any financial records in Mr. Carto’s office?
A. Not to the best of my knowledge.
Q. Are there any checks in Mr. Carto’s office?
A. Not to the best of my knowledge. Ordinarily, no.
Q. Is there any cash in Mr. Carto’s office?
A. Not to the best of my knowledge.
Q. Other than what we have discussed here today and what was listed on Schedule B as the property of the debtor, is there any other property belonging to Liberty Lobby that you can think of?
A. Those two pieces of property that we found later are not here, but Darrell knows about it.
Q. The two pieces of real property in Kentucky?
A. Yes. One is in Kentucky and one is in Missouri.
Q. Do you know where in Missouri?
A. No. I am not sure where.
Q. Do you consider the Keifer estate to be property of Liberty Lobby?
A. No.
Q. Why not?
A. I am not sure of the status of the Keifer estate. I have heard it is anywhere between zero and a half a million dollars. I don't know anything about the Keifer estate.
Q. Does it happen that people sometimes will property or will cash to Liberty Lobby?
A. Yes.
Q. How is that handled?
MR. OSWALD: Objection, counsel. Can we take a specific instance at all? I am concerned about over-generalizing.
BY MR. CLARK:
Q. Let’s assume someone dies in another state and has left some property to Liberty Lobby. How would Liberty Lobby know that they have been named in a will or named in a trust?
A. Usually the executor of the will would get in touch with us about the estate.
Q. At the 341 meeting you identified very small trusts that Liberty Lobby receives insignificant amounts of money from. Are there other instances like that where Liberty Lobby has received cash through gifts or bequests? Bequests are things you would receive from a will.
A. Could have been.
Q. Are they turned over to you as the Comptroller for deposit into the bank account?
A. Yes.
Q. To your knowledge, is all the money turned over to you?
A. Yes.
Q. If anyone makes a pledge to Liberty Lobby of specific amounts of money, is that reported to you?
A. No.
Q. Who is that reported to?
A. A pledge meaning what?
Q. I want to give Liberty Lobby $300,000.
A. As it is received, it is given to me. I wouldn't necessarily know that.
Q. Who would know about that?
A. Certainly Willis, if there is anything substantial.
Q. By Willis, you mean Mr. Carto?
A. Yes.
Q. How would he know?
A. Somebody would have to tell him.
Q. Has anyone recently made any pledges — by pledge I mean a promise to give money — Liberty Lobby?
A. I guess I don't understand.
Q. Let me back up. Who is Colonel Dall?
A. He was Chairman of Liberty Lobby.
Q. He was sort of a famous person. Wasn't he?
A. That is what I understand. I didn't know him that well.
Q. Is he related to the Roosevelts?
A. That is my understanding.
MR. PEARLSTEIN: Who is Ball?
MR. CLARK: D-A-L-L.
MR. OSWALD: I am sorry, D.
BY MR. CLARK:
Q. Does he have a daughter?
A. I am not sure.
Q. You are not sure if he has a daughter?
A. Right.
Q. Are you aware of any pledges, promises, to give money to Liberty Lobby made recently by Colonel Dall, or has anyone in his family?
A. Not to the best of my knowledge.
Q. Are you aware of any pledges by Colonel Dall or anyone in his family to any entity that is related to Liberty Lobby?
A. I am not aware of it.
Q. Let’s talk a little bit about Liberty Lobby’s operation and the sources of its income. I assume it receives income from subscriptions?
A. Yes.
Q. And from sale of books?
A. They are the agent for the sale of books.
Q. And they receive some money from that?
A. Yes.
Q. Is it Liberty Library that receives most of the money from the sale of books?
A. Yes.
Q. How about coins?
A. Yes.
Q. Donations? Do they donate money?
A. Yes.
Q. Advertising revenue?
A. Yes.
Q. Can you just maybe make almost like a little pie chart and you can tell me the percentages of, say, subscription revenue, to the total amount of money that is received by Liberty Lobby?
A. I don't think I can do that.
Q. Can you tell me what percentage advertising is to Liberty Lobby’s revenue?
A. No.
Q. Is it more than 10 percent?
A. It probably is.
MR. OSWALD: Remember the admonition that Mr. Clark had for you. If you don't know, then say so.
THE WITNESS: I am not sure.
BY MR. CLARK:
Q. I asked you if it was more than 10 percent, and you said, yes.
Is it more than 12 percent?
A. I don't know.
Q. How about subscriptions, is that more than 10 percent?
A. It probably is.
Q. More than 20 percent?
A. I am not sure.
Q. How about mailing list rental, is that a source of funds for Liberty Lobby?
A. Yes, it is.
Q. Is it a significant source of funds for Liberty Lobby?
A. I wouldn't think so.
Q. Is it less than 10 percent?
A. I am not sure. But it probably is less than 10 percent.
Q. Are you familiar with an affidavit that you gave in the lawsuit in U.S. District Court. It is called the RICO lawsuit?
A. I am not familiar with it.
Q. I will represent to you that your affidavit described how much money Liberty Lobby paid to maintain its mailing list. Would that help refresh your recollection?
A. Yes.
Q. Do you remember the figure that you gave?
A. I don't remember the figure.
Q. Would it be fair to say that it is over $1 million?
A. Yes.
Q. What did you mean that it pays over $1 million to maintain the mailing list?
A. Well, when you talk about supplying the paper, people who open the mail, costs of mailing lists to promote the paper, that sort of thing.
Q. So when we talk about list rental, that is not the only income that is generated from the mailing list?
A. That would be list rental expense. Cost of rental is list rentals that we buy to promote the paper.
Q. I am talking about renting the Liberty Lobby mailing list out to other groups.
MR. OSWALD: I will stop you just for a moment. He is answering a different question than you are asking him. I just want to make sure we are clear on that. I object to the form of the question, because I don't think he understands the question that you are asking. So if you could back up and ask that question again.
BY MR. CLARK:
Q. I asked you if mailing list rental was a source of income to Liberty Lobby?
A. Yes, it is.
Q. That is renting the mailing list?
A. Our mailing list.
Q. Your mailing list, to other groups?
A. Yes.
Q. Then I asked you if it was a significant source of cash on an annual basis to Liberty Lobby?
A. I am not sure what percentage of total revenue.
Q. But you told me that it was less than 10 percent?
A. I would think so.
Q. You also said, and I think your recollection was refreshed, that you submitted an affidavit in the U.S. District Court discussing how much Liberty Lobby pays to maintain its own mailing list?
A. Yes.
Q. I believe the figure was over $1 million?
A. Yes.
Q. In fact, I think it was quite a bit over $1 million. I am asking you if it pays so much to maintain the list and it is such an insignificant source of income, why does Liberty Lobby devote so much cash to maintaining the list?
A. Well, the list is our subscribers, to keep the subscribers maintained at a certain level.
Q. Is it possible that the figure that you gave in the U.S. District Court case is inaccurate?
A. I don't think so.
Q. What percentage is donations to Liberty Lobby’s annual --
A. I don't remember.
Q. Can you give me a ball park?
A. No, I can't.
Q. Is it more than 10 percent?
A. Possibly.
Q. More than 20?
A. Possibly more than 20.
Q. More than 30?
A. I wouldn't know.
Q. Is it the most significant amount of money on an annual basis that Liberty Lobby receives?
MR. OSWALD: Objection. He stated he is not sure what the percentages are.
BY MR. CLARK:
Q. Is it the most significant?
A. It is significant, but I don't know if it is the most significant.
Q. How much did Liberty Lobby make in 1998?
A. I don't remember. What do you mean? I don't understand.
MR. OSWALD: Objection, in terms of — are you talking about gross sales?
BY MR. CLARK:
Q. What was the gross?
MR. OSWALD: Are you talking about profit? Objection to the form of the question. It is misleading.
THE WITNESS: It would be in the $3 million range, I believe.
BY MR. CLARK:
Q. Gross?
A. Yes.
Q. Do you have any idea how much donations accounted for of that $3 million?
A. No, I don't.
Q. What about monies that are donated to — can I call it FDFA? Do you know what I am talking about?
A. Yes, I do.
Q. And CDLL? Do you know what I am talking about when I say CDLL?
A. Yes.
Q. And GEF?
A. Yes.
Q. What about donations that are made to those entities?
MR. OSWALD: Okay, counsel, you are getting into an area here which we are going to need to spend some time. The reason is --
MR. CLARK: We can go off the record.
(Whereupon, there was a short recess.)
MR. CLARK: I asked Mr. Hutzell a question about donations that were made to FDFA, CDLL and GEF and counsel has asked me to not ask those questions.
MR. PEARLSTEIN: Specify which counsel.
MR. CLARK: Counsel for Mr. Hutzell has asked me not to ask those questions relying on a 1938 Third Circuit opinion, which is neither controlling in this District nor, I believe, wasn't even written at the time the Federal Rules of Evidence were passed by the rules committee.
I will, therefore, ask Mr. Hutzell to answer the question. If his counsel wishes to have him directed to not answer the question, I would be happy to take it up on a motion to compel. However, I would like to let you know on the record that would be with me seeking sanctions for renewing this deposition, for paying Hedy, and for paying for my time for seeking the motion to compel.
BY MR. CLARK:
Q. Mr. Hutzell, will you please tell me about donations that are made to FDFA, CDLL and GEF?
MR. OSWALD: I am going to object as to form first off. You are asking a compound question, and it is misleading.
BY MR. CLARK:
Q. Do you have any personal knowledge about donations by to FDFA?
A. Yes.
Q. Can you tell me how much money was donated to FDFA in 1998?
MR. OSWALD: I am going to object and I am going to take a break here will talk to my client.
(Whereupon, there was a short recess.)
BY MR. CLARK:
Q. Prior to our break I had asked Mr.Hutzell about donations made to FDFA. Do you have any personal knowledge about donations made to FDFA?
MR. OSWALD: I am going to object and I am going to ask just for a proffer so that I understand the line of questioning, if I could. Then I can properly instruct my client.
MR. CLARK: We are talking about Liberty Lobby’s operations. We are talking about the sources of cash or sources of revenue that Liberty Lobby receives. We talked about advertising, subscriptions, mailing list rental and donations. Mr.Hutzell has indicated that there is some form of — I don't know whether you want to call it a loan or some sort of transaction history, between FDFA, CDLL and GEF, and presumably also Liberty Library, where --
MR. OSWALD: I object to that characterization, but go ahead.
MR. CLARK: Where money has either changed hands or there are account balances on the books and things like that. I am asking if Mr. Hutzell has any knowledge about donations that are made to FDFA.
MR. OSWALD: I am going to object to the question. I am instructing my client not to answer the question, and I will just inform you that I will seek a protective order within seven days.
BY MR. CLARK:
Q. Mr. Hutzell, so are you refusing to answer?
MR. OSWALD: I am instructing my client not to answer the question.
BY MR. CLARK:
Q. Mr. Hutzell, do you have any personal knowledge of donations made to CDLL?
MR. OSWALD: I am going to object and I am going to instruct my client not to answer for the same reasons I just gave. Just for the record, I have given Mr. Clark two cases, and in particular the cases of In Re: Fox, Leitstein v. Capital Company. This is a Circuit Court of Appeals Third Circuit case in which the court held that absent an express interrelationship between the companies in terms of management, in terms of board of directors, et cetera, that evidence of any transaction recorded in the books — it indicates here on page 25 that we know of no rule of law requiring delivery of applicant’s books to the trustees that he may examine the transactions between the appellant and others have no interest in or connection with the bankrupt.
In this case while we agree that any financial transactions between Liberty Lobby and any of these other organizations would indeed be relevant or within the scope of this deposition, the donations, the donors to those other organizations, are not. We will seek a limited protective order at a minimum asking the court to find that that is irrelevant to this deposition. If the court finds that it is relevant, then we will ask the court to seal that information in the court file. And we will seek that protective order in seven days.
MR. CLARK: Mr. Oswald has given me two cases, one of them a Circuit case from 1938, which I believe is, if not so old as to not even be recognized, certainly not a binding precedent in this District. The other case is a 1994 case from a Bankruptcy Court in Colorado, where the issue apparently was Rule 2004 exam, which this is not, and conducting a Rule 2004 exam after an adversary proceeding, which none has been filed in this case. And I believe for that matter alone, it is inapplicable.
MR. PEARLSTEIN: Objection. This is a 2004 exam. Is it not?
MR. CLARK: It is indeed a deposition.
MR. OSWALD: This is a 2004 exam.
MR. CLARK: Let’s go off the record.
(Whereupon, there was a short recess.)
MR. OSWALD: I am going to renew my objection, again, but for different reasons. The scope of a deposition is much more limited to a 2004 deposition. This is clearly a privilege. It is clearly a trade secret. We are now asserting that trade secret. And because of that, as I said, we will seek the protective order. The cases that I gave Mr. Clark were based upon the fact of my understanding that this is a 2004 deposition. I now find — I conferred with counsel for the corporation. That was my understanding. Again, I apologize for giving cases that are not on point. However, there are plenty of cases that are on point on this matter, specifically — and let me cite them: William P. Tavoulareas v. Washington Post Company. This is a 1986 United States District Court, District of Columbia case. It ordered that 111 Federal Rules Decision 653, which basically reiterates the proposition that certain types of information of unrelated organizations are outside the scope under Rule 26. So I raise the objection again and I will instruct my client not to answer. We will file a motion for protective order based upon Rule 23(e) as opposed to the 2004. So thank you for that clarification, counsel.
BY MR. CLARK:
Q. Do you have any personal knowledge, Mr. Hutzell, about donations made to Governmental Educational Foundation?
MR. OSWALD: I am going to again, for the same reasons, object and instruct my client not to answer and will file a protective order within seven days.
BY MR. CLARK:
Q. Do you have any personal knowledge, Mr. Hutzell, about donations made to Liberty Library?
MR. OSWALD: I am going to object to the form of the question. I don't know if Liberty Library is --
THE WITNESS: Liberty Library is part of Liberty Lobby.
MR. OSWALD: Is a separate organization?
THE WITNESS: It is not a separate organization. It is part of Liberty Lobby.
BY MR. CLARK:
Q. Liberty Library is part of Liberty Lobby?
A. Yes. It is an operating department.
Q. Can you explain to me that relationship? Are there books that are owned or are held by Liberty Library?
A. There are books sold by Liberty Library.
Q. Through the Spotlight?
A. Sometimes.
Q. How?
A. They have book lists that they mail out.
Q. We talked about the sources of cash of Liberty Lobby’s operations.
A. Yes.
Q. I asked you about book revenue?
A. Yes.
Q. And your response, I believe, that it received only a minimal amount of fees? You had a word for it.
MR. OSWALD: Objection to the form of the question. I think it is unintelligible.
THE WITNESS: Could I hear the question again, please?
BY MR. CLARK:
Q. I previously asked you about the sources of cash in the operation of Liberty Lobby?
A. Yes.
Q. I previously asked you if Liberty Lobby received any money from the sale of books?
A. Yes.
Q. Could you refresh my memory as to your response?
A. Yes. Liberty Lobby is an agent to the sale of books.
Q. Liberty Lobby is the agent?
A. Yes.
Q. For whom?
A. Governmental Educational Foundation.
Q. Let me see if I can get this straight. Can I call them GEF?
A. Yes.
Q. GEF owns some books. Is that correct?
A. Yes.
Q. Do they own all of the books?
A. Yes.
Q. GEF hires Liberty Lobby to sell the books?
A. GEF pays Liberty Lobby a commission.
Q. On books that are sold?
A. Book sales, yes.
Q. And an ad is put, for example, in the Spotlight?
A. Yes.
Q. To sell these books?
A. Yes.
Q. Who pays for the ad?
A. Governmental Educational Foundation.
Q. Let’s assume someone purchases a book. The money goes where?
A. Purchases it where?
Q. Which of these accounts which you previously identified does the money go into?
A. It goes into the operating account generally.
Q. A check made to Liberty Library?
A. Yes, if it is made payable to Liberty Library or Liberty Lobby. It could be either one.
Q. It goes into the operating account?
A. Generally, yes.
Q. Does Liberty Lobby then take a percentage?
A. No.
Q. What happens to the money?
MR. OSWALD: Objection as to form. I think it is misleading.
BY MR. CLARK:
Q. What happens to the money?
A. On the cash statement that is prepared for the court, the money received for books is put into the loan account of GEF for the sale of books.
Q. Could you repeat that, please, for clarification?
A. The cash statements prepared for the courts, for the trustee, the book sales are credited to the loan account of GEF, are debited to the loan account of GEF and credited to books sales of GEF.
(Whereupon, there was a short recess.)
MR. OSWALD: Just for the record, we took a break. I was confused about the terminology that we were using, but Mr. Hutzell has informed me so I am aware of what we are talking about.
THE WITNESS: The cash coming in for the books. Is that your question?
BY MR. CLARK:
Q. Yes.
A. It goes into the operating account originally at Liberty Lobby. And there is a credit to book sales in Liberty Lobby.
Q. When you say a credit to book sales, some money is withheld?
A. No. The full amount goes in book sales. At the end of the month books sales are debited and the loan account for GEF is credited to the book sales. On GEF’s records, the loan account with Liberty Lobby is debited and book sales show up in GEF. That is done by a journal entry.
Q. When I asked you before about the cash, income received by Liberty Lobby, does any of that money stay at Liberty Lobby?
MR. OSWALD: Objection as to form. It is confusing in terms of stay.
What does that mean?
BY MR. CLARK:
Q. Are you confused by the question, Mr. Hutzell?
A. Yes.
Q. Let’s assume someone buys a book for $20.
A. Yes.
Q. Liberty Lobby gets a check for $20?
A. Yes.
Q. Twenty dollars goes into the operating account?
A. Yes.
Q. And at the end of the month — let’s say that was the only book that was sold — $20 is debited into the account?
A. That $20 stays in the bank account. It stays in.
Q. And the loan balance is reduced?
A. And the loan balance is debited from GEF. Books sales are debited in Liberty Lobby and the loan account is credited with GEF in Liberty Lobby.
Q. So it is as if --
A. The cash stays there. The cash stays in Liberty Lobby. In GEF there is a debit, a loan receivable for Liberty Lobby a credit to book sales. So book sales show up in GEF but no cash is transferred. The cash stays in Liberty Lobby.
Q. So this goes as a payment to the existing loan relationship?
A. That is correct.
Q. Between GEF and Liberty Lobby?
A. Yes.
Q. That loan relationship between GEF and Liberty Lobby, is that a new loan relationship? In other words, did that start again after the bankruptcy was filed?
A. No.
Q. So this was money that was borrowed a long time ago?
A. It has been going on like this for years.
Q. So these payments that are being made — for example, a payment that would be made last month may be credited against money that was borrowed long ago from GEF?
MR. OSWALD: Objection. Counsel, he has not said that there is any money being borrowed.
MR. CLARK: I am just asking the question.
MR. OSWALD: Objection. I think it is confusing. It is misleading, because you are misstating his testimony previously.
BY MR. CLARK:
Q. You told me there was a loan relationship. You told me there was a loan balance.
A. Yes.
Q. You said it goes in as a payment. I am just saying a payment on what? Is it a loan that was recently made?
A. It could be a payment for anything.
Q. So you don't know from your position --
A. Specifically what item --
Q. What you are paying to?
A. That is correct.
Q. Whether it was a pre-petition debt, pre-bankruptcy debt or post-bankruptcy debt?
A. You are talking about the --
Q. Whether it was money that was debited?
A. To the loan account?
Q. Yes.
A. The loan account?
Q. That is correct.
A. I don't know exactly what monies are applied against the payment. It just goes into the loan account.
Q. Who maintains those books for GEF?
A. I do.
Q. So presumably, then, you would know whether it is applied to all the new balances?
A. Yes. If I looked at all the records, yes. Sure, I could tell you.
Q. Did you zero out those loan balances on the day the bankruptcy was filed?
A. No.
Q. So it is quite possible, then, that it could be --
MR. OSWALD: Objection. He stated he does not know.
MR. CLARK: Counsel, I am just asking him to clarify.
MR. OSWALD: Objection.
BY MR. CLARK:
Q. It is quite possible, then, it could be to a pre-bankruptcy loan?
MR. OSWALD: Objection. It is misleading. It misstates his previous testimony.
BY MR. CLARK:
Q. Given what you have just told me, Mr. Hutzell, that you did not zero out the books on the date of the bankruptcy filing, is it not, then, possible that these monthly book receipts could be applied to pre-bankruptcy loans?
MR. OSWALD: Objection for the same reasons.
MR. CLARK: Are you instructing him not to answer?
MR. OSWALD: No. I am stating my objection for the record, counsel, as to form. If I don't state my objection as to form, it is waived. Therefore, I am stating it.
THE WITNESS: The loan accounts were not cleared out at the date of bankruptcy.
BY MR. CLARK:
Q. My question is: Is it possible, based upon your testimony --
A. Yes.
Q. — that these payments received every month, credited every month for book sales, would be applied to pre-bankruptcy loans?
MR. OSWALD: Objection. It misstates his testimony.
THE WITNESS: I am not sure I understand. The book sale entry is not a cash entry. It is a book entry. I guess that is where I am confused.
BY MR. CLARK:
Q. Is the debt to GEF carried on Liberty Lobby’s books as a loan?
A. Excuse me?
MR. OSWALD: Objection, counsel, this whole line of questioning is misleading. Because this is done on a cash basis pursuant to the election. What he is talking about is on accrual basis. So you are talking apples and oranges. That is why there is this problem here, because we have a fundamental difference. You are speaking Greek; he is speaking Latin. And it is totally different from what is — it is irrelevant because of the fact that this is done on a cash basis. You have asked him a cash question. He said the money goes into Liberty Lobby and it stays there. Therefore, in terms of the accrual basis, it is of little relevance. Because if the money doesn't go anywhere, what is the point?
That is why we are having a problem here. Because you are talking cash and he is talking accrual. It is one or the other.
BY MR. CLARK:
Q. Can you put it into terms that I would understand, then, Mr. Hutzell?
A. I will try. Cash comes into Liberty Lobby for book sales. Cash is debited. Book sales is credited at that point. On Liberty Lobby’s records, now, we are talking about.
Q. As far as GEF?
MR. OSWALD: Objection as to form. Difficult to understand.
THE WITNESS: On the cash statement preferred for the trustee that cash is credited to the loan account for GEF, because there are no book sales in Liberty Lobby. All book sales are in GEF. BY MR. CLARK:
Q. Thank you for your answer. My question goes to — let me see if I can ask this. If there was money that was owed to GEF, there was a balance on the books, it was owed to GEF on the date that Liberty Lobby filed bankruptcy?
A. I am not sure whether it was a receivable or a payable. I am not sure.
Q. Didn't you testify at the 341 meeting as to moneys that were owed to GEF?
A. I am not sure they were on that — I don't know if the loan accounts were listed.
Q. I previously asked you about the payment for the computers, $2,100 a month to Liberty Lobby to pay for the computers.
A. Yes.
Q. I asked you to show it to me on payments on debts, and you said it was carried on the loan account.
A. Yes. But there is no cash activity there.
Q. Right. But there was a loan account when Liberty Lobby filed for bankruptcy?
A. That is correct.
Q. I will have to go back and look at the transcript. But I believe your testimony at the 341 meeting was that it was a substantial amount of money that Liberty Lobby owed GEF on the date that it filed bankruptcy.
MR. OSWALD: Wait for a question.
BY MR. CLARK:
Q. Does that sound correct?
A. I am not sure.
Q. That is fine. I will look. Suffice it to say you can't tell whether the money that is received on a monthly basis from book sales applies to the most recent loan from GEF or to the furthest in time?
MR. OSWALD: Objection as to the question itself. It is misleading. It misstates the previous testimony.
(Whereupon, Hutzell Deposition Exhibit
No. 1 was marked for identification.)
(Discussion off the record.)
BY MR. CLARK:
Q. I show you what has been marked as Exhibit No. 1 which purports to be an ad in the Spotlight. Have you seen that ad before?
A. No.
MR. PEARLSTEIN: Can you determine the year?
MR. CLARK: 1998.
MR. PEARLSTEIN: I am sorry, in terms of the day?
MR. CLARK: I believe it is May 4, 1998. It asks for a response by May 22nd.
BY MR. CLARK:
Q. Have you seen any advertising like that, any subscription solicitations like that?
A. No.
Q. Do you see on the bottom --
MR. PEARLSTEIN: I am sorry, can I see a copy?
MR. CLARK: I think I gave you a copy.
MR. PEARLSTEIN: I don't have one.
MR. CLARK: There it is.
MR. PEARLSTEIN: I am sorry, thank you.
BY MR. CLARK:
Q. Do you see the words down there in black print starting with Important
?
A. Yes.
Q. Important, please make all checks payable to the Committee to Defend Liberty Lobby or just CDLL. Send this coupon with payment to CDLL, 300 Independence Avenue, Southeast, Washington, D.C. 20003.
A. Yes.
Q. Is that the same address as Liberty Lobby?
A. Yes, it is.
Q. Have you ever seen this subscription solicitation in the Spotlight before?
A. No.
Q. Is it customary at Liberty Lobby for subscriptions offers to come from someone other than Liberty Lobby?
MR. OSWALD: Objection, again, dealing with issues of personal knowledge here.
THE WITNESS: Not to the best of my knowledge.
BY MR. CLARK:
Q. Is this practice continuing?
MR. OSWALD: Objection. He has indicated he has never seen this before. How can he possibly testify as to whether it is continuing?
BY MR. CLARK:
Q. This is the solicitation by CDLL selling subscriptions in the Spotlight. If someone were to subscribe to the Spotlight on this ad, would you, as Comptroller of Liberty Lobby, receive that check?
A. Yes.
Q. Where would that money go?
A. This is May?
Q. That is asking that the checks be made payable to CDLL?
A. You mean the check, when we receive it, where would it go?
Q. Yes.
A. It would be put in the bank and — put it in the bank account of CDLL and credit the loan account to Liberty Lobby.
Q. Has CDLL received a loan from Liberty Lobby?
A. Back in May — excuse me. What is your question again?
Q. Has CDLL received a loan for Liberty Lobby?
MR. OSWALD: Objection, counsel, ever, at what point?
MR. CLARK: Between May 4, 1998 and today.
THE WITNESS: Give me an example of what you are getting at here.
BY MR. CLARK:
Q. Has CDLL received a loan from Liberty Lobby?
MR. OSWALD: To the best of your knowledge, has there been a loan that CDLL has received from Liberty Lobby, at any point since May — I am sorry, since May of when?
MR. CLARK: As of May 4, 1998.
THE WITNESS: Okay, the answer is no. In May there was no CDLL organization.
BY MR. CLARK:
Q. May 4, 1998?
A. Not before that.
Q. When was it created?
A. I am not sure when it was created.
Q. Was it created before May 4, 1998?
A. Probably after.
Q. Well, this ad appeared in the Spotlight. A. Yes.
Q. At that time CDLL didn't exist?
MR. OSWALD: Again, counsel --
MR. CLARK: I am just asking the question.
MR. OSWALD: Counsel, I am going to object. I am going to object, because what you are saying is you are representing this as May of '98. You have no independent basis to determine indeed that that is the date of this advertisement.
MR. CLARK: I am simply asking.
MR. OSWALD: I object.
THE WITNESS: What date is that, please?
BY MR. CLARK:
Q. Let’s assume this was May 4, 1998.
A. Yes. I did not know of an organization called CDLL.
Q. Do you presently know of an organization called CDLL?
A. I have heard of it.
Q. Did you just previously tell me you maintained the checkbook for CDLL?
A. I didn't say that.
Q. I asked if someone sent a check in to CDLL at this address for a subscription to the Spotlight who would receive that check?
A. GEF, to an account called CDLL.
Q. Is that an account that is maintained by GEF?
A. At what date?
Q. Has it changed hands?
A. I guess I don't understand. Back in May?
Q. Yes.
A. In May.
MR. OSWALD: May of 1998.
THE WITNESS: May of 1998.
MR. OSWALD: Why don't we take a five-minute break here just so we are clear. We can give this some thought.
THE WITNESS: I am trying answer this properly.
MR. OSWALD: Why don't we take a five-minute break.
MR. CLARK: We can go off the record if you like.
(Whereupon, there was a short recess.)
BY MR. CLARK:
Q. When we broke, Mr. Hutzell, we were talking about CDLL. Can you tell me when you first learned about CDLL?
A. I am not sure when I first learned about it.
Q. Do you know about it now?
A. No.
Q. There is a disclosure in the debtor’s Disclose Statement of Liberty Lobby of a transaction with CDLL. During the period of the bankruptcy, did you know about that disclosure on the Disclosure Statement?
MR. OSWALD: Objection. We are talking about a specific disclosure in the Disclosure Statement. If you could point the witness to it.
BY MR. CLARK:
Q. Did you know about CDLL when that disclosure was made?
MR. OSWALD: Again, objection for the same reason. It is misleading. We don't know which disclosure you are talking about here.
THE WITNESS: What date? Give me a specific.
BY MR. CLARK:
Q. Between May of 1998 and today. There is a transaction where $100,000 was loaned.
A. Yes.
Q. Do you know what I am talking about?
A. Yes.
MR. OSWALD: Wait until he asks the question before you answer the question.
BY MR. CLARK:
Q. Tell me what you know about that.
A. Back in August --
Q. August of --?
A. Of 1998. CDLL gave $100,000 as a contribution to Liberty Lobby.
Q. Do you know why it made that contribution?
A. No. I do not know why.
Q. Did you as Comptroller receive that donation?
A. Yes.
Q. How was it made?
A. Check.
Q. Where did you put the money?
A. In Liberty Lobby?
Q. Yes.
A. In contributions.
Q. Is that recorded on the bankruptcy form?
A. Yes. In contributions — at that time, August.
MR. OSWALD: Objection. Counsel, can you tell me which form you are talking about.
MR. CLARK: Mr. Hutzell knows what I am talking about.
THE WITNESS: The Cash Statement Form for the trustee.
MR. CLARK: Yes.
THE WITNESS: It was on contributions at that time.
BY MR. CLARK:
Q. Who signed the check on behalf of CDLL?
A. I don't know.
Q. You don't know who it was or you don't recognize the signature?
A. I don't know who it was. I don't remember who it was.
Q. You don't remember?
A. I don't know. I do not know who signed the check.
Q. Is that the first time you had ever seen a check from CDLL?
A. Possibly.
Q. Did you know of CDLL’s existence prior to August, 1998?
A. Yes.
Q. When did you first learn of CDLL’s existence?
A. The end of June of '98.
Q. How did you learn of its existence?
A. Mr. Willis Carto informed me.
Q. Do you recall what he said to you?
A. No.
Q. Do you recall generally the substance of that conversation?
A. No, I don't.
Q. Did he inform you when CDLL was formed?
A. No, he didn't.
Q. Why did he tell you?
A. I don't know.
Q. Who has CDLL’s books?
A. I don't know.
Q. You previously testified that GEF maintains CDLL’s books?
MR. OSWALD: Objection, counsel. That is misstating his testimony.
THE WITNESS: No.
BY MR. CLARK:
Q. That is not your testimony?
A. That is correct. It is not. What was the question, again, please?
MR. OSWALD: Just answer the question. He asked you a question and you answered, No.
BY MR. CLARK:
Q. Who maintains CDLL’s books?
A. I don't know.
Q. Do you know at any time who maintained CDLL’s books?
A. No. I don't know who is doing that.
Q. You previously made a statement which I believed to have been GEF maintains CDLL’s books.
A. No. That is not true.
Q. Can you explain? What, did I just not hear your statement correctly or would you like to clarify or change your answer?
MR. OSWALD: Objection, counsel. It is not changing his answer. It is misstating what he said.
BY MR. CLARK:
Q. I said is it something that needs clarification? Did I misunderstand?
A. GEF does not keep the records for CDLL organization.
Q. Have you ever seen a check payable to CDLL?
A. Yes.
Q. When?
A. I don't remember when specifically.
Q. Well, you told me you first learned of CDLL in August of '98 and today is June of '99.
MR. OSWALD: Objection. That is not what he said, counsel. That is misstating his testimony.
MR. CLARK: June of '98, sometime in the past year.
BY MR. CLARK:
Q. Could you tell me when you saw the check? A. What check?
Q. The check made payable to CDLL?
A. I never saw any checks made payable to CDLL after June 30.
Q. I assume you are talking about 1998?
A. Right, 1998.
Q. Who was that check from?
A. I don't remember.
Q. Do you know if it was a personal check, business check?
A. I have no idea. I didn't see any CDLL checks after June 30.
Q. Do you know of any wire transfers to CDLL?
A. No. After June 30?
Q. At any time?
A. I don't remember.
Q. Was there ever any wire transfers from the account in Switzerland to CDLL?
A. Not to the best of my knowledge.
Q. Do you have any personal knowledge of transfers from CDLL to Willis Carto?
A. No, I don't.
Q. Do you have any personal knowledge of transfers from CDLL to cash?
A. No.
Q. How many checks have you seen made payable to CDLL?
A. I don't know.
Q. Was it more than five?
A. I have no idea. When? What period of time?
MR. OSWALD: Remember his admonition. If you don't know, then your answer is you don't know.
THE WITNESS: I don't know.
BY MR. CLARK:
Q. I am asking you have you seen more than five checks payable?
A. To CDLL?
Q. Yes.
A. Ever?
Q. Yes.
A. Yes.
Q. Have you seen more than ten?
A. Yes.
Q. Have you seen more than 50?
A. Probably.
Q. More than 100?
A. I am not sure.
Q. Were there more than 150?
A. I am not sure.
Q. Who had those checks?
MR. OSWALD: Objection, counsel.
BY MR. CLARK:
Q. In whose possession were those checks?
A. Checks payable to CDLL?
Q. Yes.
A. What period of time?
Q. Well, you have told me, Mr. Hutzell, that you have known of them for just about one year. Are you telling me that at multiple locations you have seen checks payable to CDLL?
A. No, I am not. I am not saying that.
Q. Well, you asked me at what period in time. When did you see the checks made payable to CDLL?
A. Prior to June 30, '98.
Q. Who had possession of those checks?
A. I guess I don't understand.
Q. When you saw the checks, were they at the Liberty Lobby offices?
A. Yes.
Q. Were they in your office?
A. In the Liberty Lobby office.
Q. Were they in Mr. Carto’s office?
A. No.
Q. Were they in the conference room?
A. The mail room, and then my office eventually, yes.
Q. What did you do with the checks?
A. Deposit them.
Q. Where did you deposit them?
A. CDLL bank account.
Q. I just asked you who maintained the books of CDLL and you told me you didn't know.
A. That is correct.
Q. Did you use a deposit ticket?
A. Yes.
Q. Where did you get the deposit ticket?
A. Out of the book of deposit tickets from the bank.
Q. Where did you get those?
A. Where?
Q. Yes.
A. The deposit tickets? At the bank.
Q. Did you set up CDLL’s account?
A. I guess I don't understand. Bank account?
Q. Yes.
A. For CDLL?
Q. Yes.
A. As an organization?
Q. Yes.
A. I don't know anything about it.
Q. What was the account that you deposited checks into?
A. It was called CDLL.
Q. Where was that account?
A. In the Governmental Educational Foundation.
Q. Can you explain, please?
A. Yes. The Governmental Educational Foundation had a bank account called CDLL.
Q. Where is that bank account?
A. National Capital Bank.
Q. Who is the signatory on that account?
A. I don't remember.
(Whereupon, there was a short recess.)
(Whereupon, Hutzell Deposition Exhibit
No. 2 was marked for identification.)
BY MR. CLARK:
Q. I am showing you what has been marked as Exhibit No. 2. Can you identify that document for me, please?
MR. OSWALD: Can anyone read this document? If you can identify that?
THE WITNESS: No, I can't identify this.
BY MR. CLARK:
Q. Can you tell me what the check says at the top?
A. Committee to Defend Liberty Lobby.
Q. What account is it written on, what bank?
A. It is Crestar.
Q. Who is the signatory?
A. I can't read that.
Q. Is it George Cadar?
A. It is possible.
Q. Would you recognize his signature?
A. No.
Q. Who is the check made payable to?
A. I can't read that. I don't know.
Q. It is a two-word name. Does the second word look like records
?
MR. OSWALD: Counsel, he has indicated he can't read it.
THE WITNESS: I can't read it.
MR. OSWALD: And I can't, either.
THE WITNESS: I can't read it.
BY MR. CLARK:
Q. You can't tell me who that is made payable to?
A. No.
Q. If I told you it was Resistance
Records --
MR. OSWALD: Counsel, he has indicated that he cannot read the document.
MR. CLARK: I am asking him if that helps him in reading it.
THE WITNESS: No, I can't read it. I just can't read it.
MR. PEARLSTEIN: Any clue as to what year this might be or when it is?
MR. CLARK: I think it is August 22, 1998. It looks like it cleared the bank August 25, 1998.
MR. CLARK: I believe it says Resistance Records on the back of the check as well.
THE WITNESS: I don't know anything about it.
BY MR. CLARK:
Q. Do you know who Resistance Records is?
A. I have heard of Resistance Records, yes.
Q. Who are they?
MR. OSWALD: Objection, counsel. You are using were.
Is there any reason for that at all?
BY MR. CLARK:
Q. I said who are they.
A. I don't know who they are. I have heard of them.
Q. How have you heard of them?
A. I think they sell tapes and records.
Q. Have you had any business dealings with them?
MR. OSWALD: Objection. Who is you
? Does it mean him personally?
BY MR. CLARK:
Q. In any capacity, have you had any business dealings with them?
A. No.
Q. Personal knowledge, I mean?
A. No.
(Whereupon, Hutzell Deposition Exhibit
No. 3 was marked for identification.)
BY MR. CLARK:
Q. Let me show you what has been marked as Exhibit No. 3. Is that your signature at the bottom?
A. Yes, it is.
Q. In what capacity are you signing?
A. For Foundation for Economic Liberty.
Q. Do you hold an office with them?
A. Yes, I do.
Q. What is your office?
A. Chairman.
Q. When was it founded?
A. I don't remember.
Q. Was it founded more than five years ago?
A. Possibly.
Q. Who is the agreement with?
A. This agreement in my hand?
Q. Yes.
A. Jason Snow and Resistance Records.
Q. Is this the same organization as the check is written to?
A. I am not sure.
MR. OSWALD: Objection. Counsel, he has indicated that he cannot read this document.
BY MR. CLARK:
Q. I just asked is that the same. And your answer is?
A. I don't know.
Q. And you don't know because?
A. I can't read it. I can't read the check.
Q. What is FEL?
A. It is a 501(c)(3)(a) organization.
Q. Do they transact any business?
A. Do they?
Q. Yes.
A. Yes.
Q. What do they do?
MR. OSWALD: Objection. Can you tell me, again, what it is that you — how far we are going here?
MR. CLARK: No. I don't think I need to.
MR. OSWALD: I will instruct the client not to answer and we will file a protective order within seven days.
MR. PEARLSTEIN: What was the question?
MR. CLARK: What business does FEL transact?
BY MR. CLARK:
Q. What is the address at the bottom of the letterhead?
A. 130 on 3rd Street, S.W.
Q. Is that an address ever used by Liberty Lobby?
A. I don't believe so.
Q. Is that the building next door?
A. I don't understand.
MR. OSWALD: Objection. The building next door to what, counsel?
MR. CLARK: Liberty Lobby
MR. OSWALD: The question is 130 3rd Street, is that the --
THE WITNESS: That is the Liberty Lobby building.
BY MR. CLARK:
Q. Is FEL also located within the Liberty Lobby building?
A. Yes.
Q. Where in the Liberty Lobby building?
A. It is throughout the Liberty Lobby building.
Q. Is it my understanding you won't tell me what business it is that FEL conducts?
A. I would rather not get into that.
MR. OSWALD: Let’s take 60 seconds.
(Whereupon, there was a short recess.)
MR. OSWALD: Okay, I am going to withdraw the objection as to any financial transactions between FEL and Liberty Lobby. If you have any questions about financial transactions between the two they are clearly relevant to the deposition. I think what we are concerned about is potential privilege, specifically issues relating to the donors of the organization, et cetera. If you still want to go into that area, we will seek a protective order on that. However, in terms of any financial transactions, if you have any questions on that, I withdraw the objection on that.
BY MR. CLARK:
Q. I simply want to know what business FEL conducts at 130 3rd Street, Southeast, Washington, D.C.
MR. OSWALD: I think he has answered it is a 501(c)(3) nonprofit organization. He indicated they are nonprofit.
THE WITNESS: And they share office space, personnel, supplies, with Liberty Lobby.
BY MR. CLARK:
Q. Does the Foundation for Economic Liberty do anything? Let me break that down? Do they have a PAC?
MR. OSWALD: Objection. Counsel, what relevance is whether they have a PAC? First off, 501(c)(3) cannot have PACs as a matter of law. So I object to the question.
MR. CLARK: Well, then, presumably the answer would be no.
BY MR. CLARK:
Q. What business does FEL conduct at 130 3rd Street?
MR. OSWALD: Counsel, I am going to object again. I think we can get to the same point. I will just state for the record, I think we can get to what you need in terms of financial transactions relevant to the deposition. If you are going to force me to instruct my client not to answer, I will do it. I will seek the protective order. But I will say for the record that I believe that what is relevant here are any financial transactions. You asked about financial transactions previously between GEF and Liberty Lobby. It is clearly an area that is relevant to the deposition. If you ask those questions, I think those are appropriate questions. However, if we deal with issues relating to proprietary information about the corporation, I think it is outside the scope of the deposition. Therefore, I will instruct him not to answer on that.
MR. CLARK: I am going to ask him the question. If you are instructing him not to answer, you should simply say, For the reasons stated.
MR. OSWALD: Fair enough.
BY MR. CLARK:
Q. Mr. Hutzell, tell me what business FEL conducts at 130 3rd Street, Southeast?
MR. OSWALD: Objection. I instruct my client not to answer for the reasons that we already gave.
MR. PEARLSTEIN: I want to make it clear that that objection has nothing to do with the corporation, the corporate counsel.
BY MR. CLARK:
Q. We were previously talking about CDLL. You told me that GEF maintains an account called CDLL, correct?
A. As of what period?
Q. Prior to June 30, 1998.
MR. OSWALD: Answer the question if you can answer.
BY MR. CLARK:
Q. Do you know who currently maintains the account called CDLL?
A. No. I don't know.
Q. Do you know who else other than GEF has maintained the account called CDLL?
A. No. I am not aware of it.
Q. Did the checks that you saw, that you viewed, look like the check in Exhibit No. 2?
A. No.
Q. What was different about it?
A. It was a check drawn on --
MR. OSWALD: Wait one second. Can you restate that question. Which checks are you talking about, checks coming in?
BY MR. CLARK:
Q. You testified you saw checks.
A. Checks written?
Q. Made payable.
A. Right.
Q. Have you seen a check written on a CDLL account?
A. Yes.
Q. When?
A. Up to June 30, '98.
Q. You have testified that in August of '98 CDLL loaned $100,000 to Liberty Lobby as a contribution?
A. Yes.
Q. And they paid you by check?
A. Yes.
Q. Did that check look like this check?
A. I am not sure.
Q. Is it signed by George Cadar?
A. I am not sure.
Q. Was it from a Crestar account?
A. I am not sure of that, either.
Q. How did you know that GEF maintained an account called CDLL?
A. I keep the records for GEF.
Q. Despite keeping the records of GEF, you do not know who keeps the records of CDLL?
A. That is correct.
Q. Are there other accounts that GEF maintains?
MR. OSWALD: Let’s just pause for a second here. It is 5:00 right now. How much longer are we going to go?
MR. CLARK: No later than 6:30.
MR. OSWALD: 6:30!
MR. CLARK: Could you repeat the question.
(Whereupon, the record was read back by the court reporter.)
MR. OSWALD: I am going to instruct the client not to answer other than specific financial transactions between GEF and Liberty Lobby on the grounds of relevance. I am sorry, was that the last question?
THE WITNESS: GEF.
MR. CLARK: GEF.
THE WITNESS: Yes, GEF.
MR. OSWALD: So again, unless it relates to a specific transaction between the Liberty Lobby and GEF, I instruct him not to answer. We will file a protective order within seven days.
MR. PEARLSTEIN: Just for the record, there is a hearing on Thursday. It is not inconceivable that you might want to be present and file before that, because the judge might consider that.
MR. OSWALD: I can't do it before then. It would be impossible to do that.
MR. PEARLSTEIN: Well, if he asks the question in the hearing --
MR. CLARK: He is to be a witness Thursday.
MR. OSWALD: Did you subpoena him as a witness?
(Discussion off the record.)
BY MR. CLARK:
Q. Do you have a position at GEF?
A. I don't understand the question.
Q. Well, you told me you keep the records of GEF.
A. Yes.
Q. Are you employed by GEF?
A. No.
Q. Do you hold any title in GEF?
A. No.
Q. An officer of GEF?
A. No.
Q. Director of GEF?
A. No.
Q. By what authority do you keep the records of GEF?
A. I am the Comptroller.
Q. Are you paid for that responsibility?
A. No. Not in GEF.
MR. OSWALD: Answer the question that is asked of you.
BY MR. CLARK:
Q. Who pays you as Comptroller of GEF?
A. Liberty Lobby.
Q. How much, Mr. Hutzell, are you paid to keep the records of GEF?
A. It is a monthly allocation.
Q. When you say monthly allocation, I want to know if it is the same basis as the computers and the desks?
A. Well, salary is allocated direct and indirect. The direct part would be directly working for Liberty Lobby, the people who work directly for the Spotlight, and the people who support the Spotlight and other organizations. The indirect portion of the salaries is allocated on a percentage of revenue of the organizations.
Q. Could you tell me approximately how much of your salary is paid from the allocation of GEF?
A. No. I don't know.
Q. Could you tell me last month how much the allocation was?
A. No. I don't remember what percentage it was. It varies. I don't remember the percentage.
Q. Just for the sake of understanding the remainder of Liberty Lobby’s operations, I am just going to ask you very briefly about advertising revenue received by Liberty Lobby. Does Liberty Lobby do its advertising in-house?
A. What kind of advertising?
Q. Advertising in Spotlight?
A. Yes.
Q. If I want to buy an ad in the Spotlight, could you maybe just take me step by step how I would do that?
A. Yes. You would get in touch with our advertising department in Cumberland, Maryland.
Q. What is the name of that advertising department?
A. It is just the advertising department of Liberty Lobby.
Q. Is there a name in the phone book in Cumberland, Maryland, that I would look for?
A. There might be — yes, there is. I don't know what the name of the organization is. I forget the name of the advertising department.
Q. And it is a subsidiary of Liberty Lobby?
A. No. It is just a department. It is just like the circulation department.
Q. They are employees of Liberty Lobby?
A. Yes, they are.
Q. Is that the way that Liberty Lobby has done business in the past with advertising?
A. Yes. National Media, I believe, is the name of that department.
Q. Is it separately incorporated?
A. No. It is just a department.
Q. And the ad goes in the Spotlight?
A. Yes.
Q. And you have to pay for the ad?
A. Yes.
Q. Do I send my check to you, Blayne Hutzell, at Liberty Lobby?
A. No, to the advertising department.
Q. Then what do they do with the check?
A. They accumulate them and send them down to me.
Q. And you deposit the checks?
A. Yes.
Q. Do you deposit all advertising checks?
A. Yes.
Q. For example, if GEF wanted to put an ad in Spotlight, has that ever happened?
A. Yes.
Q. Does GEF pay National Media, send a check, or is this just an allocation?
A. It would probably go through the loan account.
Q. Does Liberty Lobby benefit financially from all of the ads that go into the Spotlight? I am not trying to trick you here. I just want to carve out all of the ads that are put in here for the Liberty Library and all the other — just all of the — let’s call them third-party ads that go into the Spotlight. Are they all Liberty Lobby’s ads that go into there? Advertising that is sold by Liberty Lobby? I am not trying to be difficult.
A. Yes, I am trying to answer.
Q. Do you understand my question?
MR. OSWALD: I am just concerned about the form. I felt better about the way you put it at the end rather than how you started.
BY MR. CLARK:
Q. Do you understand what I mean?
A. Ask it again.
Q. I open up an issue of the Spotlight.
A. Yes.
Q. Let’s say there are 30 ads in there.
A. What kind of ads?
Q. Oh, there is a whole bunch, anything from selling books and coins, which we know are somewhat related to Liberty Lobby, to — there seems to be a lot of ads directed to the elderly, prostate and vitamins. There may be some guns I have seen advertised.
A. Yes.
Q. Let’s call them all of the non-Liberty Lobby ads.
A. Yes.
Q. Are those spaces sold solely by the debtor?
A. Yes.
Q. So the debtor uses the advertising space in the Spotlight solely for its own benefit?
A. Yes.
Q. For example, GEF would never be able to sell an ad space to a vitamin manufacturer and the money would go to GEF?
A. Right.
Q. That would never happen?
A. No.
Q. Do you know how donations to Liberty Lobby are treated on Liberty Lobby’s tax return?
MR. OSWALD: I am going to object, just to the form of the term donation.
I am not sure that has been used in the context that has been defined.
MR. CLARK: I am sure it has been used.
MR. CLARK: We were talking about the sources of the cash from Liberty Lobby, and he stated that donations were a significant — he couldn't decide whether it was between 10 percent or 20 percent.
MR. OSWALD: I think the word he used was contribution,
actually.
THE WITNESS: We call it contributions.
BY MR. CLARK:
Q. Are contributions reported on Liberty Lobby’s tax returns?
A. No.
Q. Why not?
A. Contributions are not taxable.
Q. What does Liberty Lobby consider a contribution to be?
A. A nontaxable source of revenue.
Q. Subscription income?
A. That is taxable.
Q. Bequests, a devise?
A. That would be nontaxable.
Q. What about if I just feel like donating 20 bucks to Liberty Lobby, to the cause?
A. Nontaxable.
Q. Income from trusts?
A. That is nontaxable.
Q. Is it anywhere reported on the tax return?
A. Not as revenue.
Q. Where is it reported?
A. It is a reconciliation of surplus.
Q. Do you agree with the manner in which Liberty Lobby reports its contributions on those tax returns?
A. Yes.
Q. Do you agree with the way that Liberty Lobby reports all of its income?
A. Yes.
Q. Is there any income that is not reported that you feel should be reported?
A. No.
Q. Are contributions reported on the monthly operating reports submitted to the U.S. Trustee?
A. Yes.
Q. Where are they reported?
A. On the income statement.
Q. I want to talk about monies that are paid to Mr. Carto for his expenses. We have in this case — and I will represent to you and I think Mr.Hutzell you are well aware — my client has objected to and the debtor has put in the Disclosure Statement that Mr. Carto has received thousands of dollars cash as reimbursement for his expenses during the period of the bankruptcy filing. Am I correct? Is that your understanding as well?
MR. OSWALD: I am going to object to the form of the question. It is misleading. If you understand it, you can answer the question.
THE WITNESS: I don't understand the question.
BY MR. CLARK:
Q. Does Mr. Carto have his expenses paid by Liberty Lobby?
A. Yes.
Q. How are they paid to Mr. Carto?
A. By check.
Q. Who is the check generally written to?
A. Generally?
Q. Yes.
A. Cash.
Q. Who signs the check?
MR. OSWALD: Objection. Are we talking about a specific check, counsel?
MR. CLARK: He said generally cash.
BY MR. CLARK:
Q. Who signs the check? Are there many people who sign checks there?
MR. OSWALD: You are using check
in the singular, and I am a stickler for form. If you are saying various checks, in general, fine. But if we are talking about a specific check, then I think you ought to show him.
BY MR. CLARK:
Q. Please answer the question.
A. Generally myself and one other person.
Q. Who is that?
A. Anne Cronin.
Q. Does Mr. Carto ever sign the checks himself?
A. I am not sure whether he has ever signed a check or not.
Q. Does Mr. Carto submit vouchers or expense requests in order to be reimbursed for his expenses?
A. Yes.
Q. At Liberty Lobby do you have a form that you use?
A. No. He usually just writes up something on a piece of paper and submits the vouchers or invoices, whatever he has.
Q. Receipts, for example?
A. Receipts.
Q. Who does he submit them to?
A. He submits them to me for payment.
Q. Do you review?
A. Yes.
Q. Presumably you add them up?
A. Yes.
Q. And you write him a check?
A. Yes.
Q. How often do you do this?
A. Whenever he gives them to me.
Q. Does it happen on a weekly basis? I know he is in California.
A. I don't think there is any set period of time, regular time — no regular time.
Q. Does this include travel he does solely for Liberty Lobby or expenses that he incurs solely for Liberty Lobby?
A. To the best of my knowledge.
Q. If he makes a trip to Washington and does work for Liberty Lobby and CDLL, would he apportion the expenses between the entities?
A. No.
Q. Who pays for all of these expenses?
A. Liberty Lobby.
Q. Just so I am clear, they are usually verified or backed up with a receipt or a bill?
A. Yes.
Q. Do you remember when I came to Liberty Lobby to look at some documents that I asked for?
A. Yes.
Q. How come those documents were never produced to me?
A. They weren't on the list.
MR. OSWALD: What documents are we talking about, counsel?
THE WITNESS: Invoices.
BY MR. CLARK:
Q. Invoices, receipts.
A. That wasn't part of the request.
Q. For the sake of argument, I believe it was.
MR. OSWALD: Counsel, this is not a representative deposition.
MR. CLARK: I hear you. I am just asking him why they are here.
MR. OSWALD: He is here based upon his own personal knowledge. This isn't a 30(b)(6) deposition.
BY MR. CLARK:
Q. Can you list some of the items for which Mr.Carto has sought reimbursement?
A. Travel and office supplies.
Q. Office supplies?
A. Yes. He has spent some for office supplies.
Q. Meals?
A. That is part of travel.
Q. Where does he stay when he is in Washington?
A. He stays at the Liberty Building.
Q. That is the building at --
A. 300 Independence.
Q. Is there a bed there?
A. Yes.
Q. Is there an apartment?
A. You can call it an apartment if you like. There is a kitchen, and there is a little living room and a bedroom.
Q. What other types of items does he receive reimbursement for?
A. I think I listed all of them basically.
Q. How about the taxes on his house?
A. I have no knowledge of that.
Q. You have no knowledge of Liberty Lobby paying the taxes on his house?
A. No, I do not.
Q. How about the house that is allegedly owned by the Hereford Corporation?
A. I have no knowledge of that.
Q. Is Mr. Carto issued a 1099 by Liberty Lobby?
A. No.
Q. Does he receive any income from Liberty Lobby?
A. No.
Q. Doesn't he receive a nominal income from Liberty Lobby?
MR. OSWALD: Objection, counselor. He just answered the question.
BY MR. CLARK:
Q. Does Mr. Carto rent a car while he is here?
A. No.
Q. Does he go out to dinner?
A. I don't know. I am assume that he goes out to dinner, yes.
Q. So travel, office supplies, meals?
A. Yes.
Q. You have reimbursed him for meals before?
A. Yes, I have.
Q. How about anything in California, any of his travels out there?
A. I am not sure whether there would be anything out there or not. If he is traveling in California, yes. That is all I know.
Q. Food for his house?
A. Not to the best of my knowledge, no.
Q. Is it possible?
A. No.
Q. What is in the apartment at 300 Independence Avenue? You said there is a bed?
A. There is a bedroom. I have never been in it myself, but I imagine there is a mattress there.
Q. Television?
MR. OSWALD: Don't speculate?
THE WITNESS: Television in the living room, yes.
BY MR. CLARK:
Q. Cable TV?
A. No.
Q. Refrigerator?
A. In the kitchen.
Q. Chest of drawers?
A. I am not sure.
Q. Who owns all that?
A. All that
meaning --?
Q. The TV, the bed, the mattress, the refrigerator?
A. I am not sure.
Q. Does Liberty Lobby own it?
A. No.
MR. OSWALD: If you don't know, don't speculate.
THE WITNESS: I am not sure. It is not Liberty Lobby.
BY MR. CLARK:
Q. It is not owned by Liberty Lobby?
A. No. That is right.
Q. Does whoever owns it charge Mr. Carto for its use?
A. No.
Q. In 1998 Liberty Lobby started the practice of wiring Mrs. Carto’s pay to Bank of America in Las Vegas. And I will represent to you my recollection of seeing the checks is that you would write on the back — you would sign Mrs. Carto’s pay check and wrote, deposit now for purposes used,
and you would sign the wire transfer. Why was that practice started?
A. I don't know why. I was told to do it.
Q. Do you know if this account was listed in her bankruptcy petition?
A. I don't know.
Q. To the best of your knowledge, can you identify all of the organizations related to Liberty Lobby — and by related I mean share an officer or a director. You talked about GEF. You talked about FEL, of which you are the chairman you are also an employee of Liberty Lobby. How about FDFA?
MR. OSWALD: Objection. Counselor, you can ask one specific question instead of all of these string phrases of how about this?
You can ask one specific question.
BY MR. CLARK:
Q. The question is how about FDFA?
A. Yes. We share.
Q. Who are some of the shared officers and directors?
MR. OSWALD: Objection. I don't think that is what he was answering to.
THE WITNESS: I am answering to the space.
BY MR. CLARK:
Q. You share space with FDFA?
MR. OSWALD: That is why your question is misleading, because you string a number of different things there and you assume he is answering something else. So I am going to ask it again. I am going to ask it again, because of the fact that these compound questions are misleading. So just for the sake of clarity, counsel, please ask one question with a subject and a predicate so he can answer question.
BY MR. CLARK:
Q. Does Liberty Lobby share an officer or director with FDFA?
A. No.
Q. Mr. Carto is the Treasurer of Liberty Lobby. Is he not?
A. Right.
Q. Is he employed by FDFA?
A. No.
Q. Does he hold any title in FDFA?
A. No.
Q. Do any employees of Liberty Lobby also work for FDFA?
A. We share employees.
Q. So you share space and you share employees?
A. Personnel, yes.
Q. Can you tell me what business FDFA is in?
MR. OSWALD: Again, counsel --
MR. CLARK: Yes, I apologize if we got into that earlier. We addressed that issue and you have instructed him not to answer.
BY MR. CLARK:
Q. How about VIBET.
MR. OSWALD: Counsel, is that an acronym or is it --
MR. CLARK: I don't know.
THE WITNESS: I don't know anything about VIBET.
BY MR. CLARK:
Q. Let me show you what we will mark as Exhibit No. 4.
(Whereupon, Hutzell Deposition Exhibit
No. 4 was marked for identification.)
BY MR. CLARK:
Q. This is a handwritten document. Some initials appear here. They are slightly cut off at the bottom. It appears to be addressed to Willis, dated 3/23/94. Is that your signature at the bottom?
A. That is my initials, yes.
Q. So you created this document?
A. Yes.
Q. Can you tell me what this exhibit is, Mr.Hutzell?
A. No, not specifically. It is information, that is all, information.
Q. This is a note that you wrote to Mr.Carto?
A. Yes.
Q. You can see in the center section it says, LL --
and I presume that is Liberty Lobby?
A. Yes.
Q. -- and GEF can clean their account with FDFA and FEL by borrowing from VIBET.
A. Yes.
Q. On the bottom it suggests that FDFA and FEL can pay off the VIBET notes?
A. Yes.
Q. Do you understand what your note was about?
A. No. I don't know anything about VIBET. It is just a statement I made to Mr. Carto.
Q. Well, presumably you would have to know something about VIBET in order to mention it in a note?
A. Maybe.
Q. Well, can you tell me what you know about VIBET?
A. I don't know anything about VIBET.
Q. Well, is it a corporation, partnership?
A. I don't know.
MR. OSWALD: Again, counsel, he has indicated he doesn't know about VIBET.
BY MR. CLARK:
Q. How could you write the word VIBET,
if you didn't know anything about VIBET?
MR. OSWALD: Counsel, we are now getting into an area of harassing questions. The man has answered the question. He does not know about VIBET. If you continue on this line of questioning, on the ground of harassment I will instruct him not to answer.
THE WITNESS: I don't know anything about VIBET.
BY MR. CLARK:
Q. Can you tell me anything as to the meaning of this note?
MR. OSWALD: Counsel, is there a particular part of the note to which you are referencing?
BY MR. CLARK:
Q. Please tell me what the note means.
A. I think the note means a suggestion of some sort to Mr. Carto.
Q. A suggestion in what way?
A. As written on the note, a suggestion.
Q. A suggestion that Liberty Lobby borrow some money from — it looks like VIBET?
A. That is right, a suggestion.
Q. Did Liberty Lobby ever borrow any money from VIBET?
A. Yes.
Q. Was this the document which started the borrowing from VIBET?
A. No.
Q. What was the document that started the borrowing from VIBET?
MR. OSWALD: Objection, counsel, misleading. It presumes a fact here to which he has not referenced, that somehow there was a document that started borrowing from VIBET. Again, it is misleading.
MR. CLARK: Mr. Hutzell has told me that Liberty Lobby has borrowed money from VIBET.
THE WITNESS: Yes.
BY MR. CLARK:
Q. By what means did Liberty Lobby borrow from VIBET?
A. There was a note made.
Q. Do you know when it was made?
A. No. I don't recall.
Q. Do you know if it was before or after this?
A. I don't recall.
(Whereupon, Hutzell Deposition Exhibit
No. 5 was marked for identification.)
MR. OSWALD: What was the aversion to marking the Petition before but now we are marking specific documents? I am just wondering.
MR. CLARK: I will tell you later.
BY MR. CLARK:
Q. Exhibit No. 5 is a copy of the Amended List of Creditors holding the 20 largest unsecured claims against the debtor. And there you will see it lists on No. 2 VIBET as a creditor with a note payable of $2.45 million.
A. Yes.
Q. You are the Comptroller of Liberty Lobby.
A. Yes.
Q. When did you learn about this note payable?
A. I don't know what specific date it was, but I knew about it.
MR. OSWALD: Answer the question.
BY MR. CLARK:
Q. It was in May of 1998?
A. Yes.
Q. So presumably you knew about it before May of 1998 because you came and testified about this?
A. Yes.
Q. At the creditors' meeting?
A. Yes.
Q. Can you give me an idea of when you learned about the note from VIBET?
A. There were several notes, if I remember right, several notes, making up the $2,450,000. It wasn't one note.
Q. What did Liberty Lobby do with the money?
A. I do not recall.
Q. Do you know over what period of time?
A. Not offhand I don't.
Q. Is it over the course of a year?
A. I just don't know.
Q. Well, you told me before that Liberty Lobby made $3 million last year gross?
A. Yes.
Q. $2.45 million is pretty close to the gross annual?
A. No. This would not be an income. This would be a note payable. This would not be part of the income.
Q. Sure. But $2.45 million, certainly if it came in within one year, you would remember that coming in within the space of 12 months. Wouldn't you?
A. Again, it would not go into income. None of this money would go into income.
Q. Well, where would it go?
A. Note payable.
Q. What did Liberty Lobby do with the $2.45 million?
A. I don't recall specifically what it did.
Q. Can you give me some general ideas? Did it use it for operating expenses?
A. It could have. I don't know specifically.
Q. Do you recall the timing of when it received that money?
A. No, I don't.
Q. Was it 1992?
A. It could have been that far back, but I don't know.
MR. OSWALD: Objection. He has indicated he doesn't know.
MR. CLARK: No, that is fine. I am going to show him what we are going to mark as Exhibit
No. 6.
(Whereupon, Hutzell Deposition Exhibit
No. 6 was marked for identification.)
BY MR. CLARK:
Q. These are wire transfer instructions to a bank in Switzerland.
A. Yes.
Q. Have you seen this document before?
A. No.
Q. Do you see that address for VIBET that is up at the top of the page?
A. Yes.
Q. It doesn't coincide with the address for VIBET on the creditors' list.
A. I don't know anything about VIBET.
Q. Is this the first time you have ever seen that address?
A. I am not sure if this is the first time or not. I can't recall.
Q. This note asks to wire transfer the sum of $200,000 immediately. It is dated May 1, 1992. Then you transfer an identical sum to Liberty Lobby. Do you recognize that account?
A. Yes, I do.
Q. Which account is that?
A. The operating account.
Q. So you transfer $200,000 to the operating account in May of '92, and you do the same thing, transfer an identical sum to the same recipient in June, July, August, and September of 1992. So that is one in May, one in June, one in July, one in August, one in September. It is a million dollars in five months in 1992?
A. Yes. It is possible, yes.
Q. How long have you been the Comptroller of Liberty Lobby?
A. Since 1980.
Q. Any recollection of this money coming into the operating account of Liberty Lobby, $ 1 million in five months.
A. Yes, I remember getting it, but I don't know when.
Q. Does this refresh your recollection?
A. It is possible that we got this, yes.
Q. Do you know what Liberty Lobby did with $1 million?
A. No, I do not. I have no idea what they did with it specifically.
Q. Did you spend it on the newspaper?
A. Could have.
Q. If I went back and looked at the checks in that time period, would this be money that was transferred out, maybe to the account in Alabama?
A. I doubt it.
Q. Is it this document, Exhibit No. 6 — these monies, Exhibit No. 6 — that you are referencing in your handwritten note?
A. No correlation.
Q. This is an additional loan from VIBET?
A. I don't think it was a loan. I think it was a suggestion. Exhibit No. 4 is a suggestion only.
Q. It seems to be that you are suggesting that Liberty Lobby borrow $1.5 million, approximately, from VIBET. And what is paid back to VIBET is substantially less.
MR. OSWALD: Objection, counsel. I don't believe the document necessarily reflects that at all. I think it speaks for itself.
THE WITNESS: Exhibit No. 4 is only a suggestion only.
BY MR. CLARK:
Q. And you are suggesting that Liberty Lobby borrow money from VIBET?
A. If it can.
Q. To pay off balances?
A. Possibly.
Q. And FEL, an organization of which you are the chairman of the board — is there any conflict of interest if the chairman of the board of a company suggesting that another company in which it serves a the comptroller borrow money?
MR. OSWALD: I am going to object to that question. That is badgering the witness. It is speculating about a conflict of interest.
BY MR. CLARK:
Q. Did that cross your mind?
A. No.
Q. 'Here I am chairman of a company and I want to take this other company that I am the comptroller of and have them pay their loan with me in full by borrowing with a company'?
A. I don't consider it a conflict of interest.
Q. Are you familiar with Anatol Richmond?
A. I have met him.
Q. He is the man you hired to serve as Liberty Lobby’s independent financial analyst?
A. Right.
Q. Are you familiar with his conclusion that there is absolutely no recovery against VIBET?
A. That is correct.
Q. Were you aware of that at the time that you made the suggestion?
A. Probably not. Since this was back in 1994, he probably didn't get involved until after the bankruptcy.
Q. Have you signed any notes on behalf of Liberty Lobby?
A. Personally?
Q. Yes.
A. I don't think so.
Q. Well, we looked at one here where we looked at FEL. Did you do the same for Liberty Lobby?
MR. OSWALD: Objection. He has already answered the question, counselor.
MR. CLARK: I said 'personally.'
THE WITNESS: No.
BY MR. CLARK:
Q. Have you ever signed in your capacity as Comptroller?
A. A note?
Q. Yes, a note payable?
A. Not to the best of my knowledge.
Q. Can you tell me who has copies of the mailing lists?
A. No. I don't know who all has copies of the mailing lists.
Q. Can you give me an idea of how many organizations may have a copy?
A. I have no idea.
Q. Do you know if Mr. Carto plans to start another publication?
A. I have no knowledge of that.
Q. Do you know if Mr. Carto intends to compete with the Spotlight if a trustee were appointed?
A. I have no knowledge of that.
Q. Who or what is KAKW?
A. That is an accounting firm, Kassenbaum and Abel, and a couple of other people.
Q. They are listed on here on your schedules?
A. Yes. That is the firm that started doing our trustee reports. It has since merged in with American Express.
Q. Are they at 6011 Executive Boulevard, Rockville, Maryland?
A. I don't know where they are now, but they could have been there at one time. They could have moved somewhere else when they merged with American Express.
Q. American Express Tax and Business Service?
A. That is correct.
(Discussion off the record.)
BY MR. CLARK:
Q. Is there any reason why they are listed on the equipment repair schedules?
MR. OSWALD: It may just be a mistake.
THE WITNESS: Conti, he worked for at one time KAKW. He did some work on our computer.
BY MR. CLARK:
Q. So that was money that was owed to him for work done?
A. That is correct.
Q. Prepetition?
A. Prepetition, that is correct.
Q. He is the man you have currently hired as your accountant?
A. He does the trustee reports.
Q. He is paid by Liberty Lobby?
A. Yes.
Q. And it is Mike Conti?
A. C-O-N-T-I.
Q. He did this work here?
A. Yes.
Q. To your knowledge, does Mr. Carto have checks signed for him that are otherwise blank where the payee and the amount would be listed?
MR. OSWALD: Objection, counsel. For clarification, can we see what check?
THE WITNESS: I have to know a little bit more.
BY MR. CLARK:
Q. Are you familiar with Mr. Carto’s practice of having George Cadar sign CDLL checks for him that are blank?
A. I am not aware of that. I don't know anything about that.
Q. Have you ever encountered that practice with Mr. Carto?
A. No.
Q. Do you know who Mr. Carto’s attorneys are?
A. No.
Q. You have no knowledge as to any of his attorneys?
A. Mr. Carto personally?
Q. Yes. How about Joe Wiseman?
A. I have heard of Joe Wiseman, but I don't know what he did for Willis.
Q. Do you know him to represent Mr. Carto?
A. I don't know what Mr. Wiseman did.
I don't know.
Q. Does he represent Liberty Lobby?
A. He could, but I am not certain.
Q. How about Mr. Urtnowski?
A. He could as well.
Q. Has Liberty Lobby ever paid Mr.Urtnowski?
A. It is possible.
Q. Do you know how much?
A. No.
Q. How about Mr. Izen?
A. Yes.
Q. Does Mr. Lane ever represent Mr. Carto?
A. It is possible.
Q. In what capacity, specific lawsuits, anything that you can recall, any specific legal action?
A. I can't think of anything specifically, but he could represent Willis. He could have. I don't know if there were cases.
Q. When I visited your office, in your office in particular, you had a whole thick file of lawsuits which Liberty Lobby was involved in, whether it was a title action or a tax action, various people. There was a proceeding up in Washington County, Maryland. Do you know what I am talking about?
A. Yes.
Q. I was interested in seeing them to make sure that they had been resolved prior to the bankruptcy. Do you remember that?
A. Yes.
Q. In any of those actions, the file, do you recall anyone representing Mr. Carto?
A. No. I don't recall.
Q. Do you remember a wire transfer that Liberty Lobby made to an attorney in Switzerland in August of 1998?
A. It is possible.
Q. In fact, the wire transfer bears your signature. Does it not?
A. That is possible.
Q. It was attached to an earlier pleading, and I think you and I spoke about it?
A. Yes.
Q. Who directed you to make that wire transfer?
A. I would like to see the wire transfer, who it was to.
Q. I will get a copy to you, I apologize. I have two more questions about that.
(Whereupon, Hutzell Deposition Exhibit
No. 7 was marked for identification.)
BY MR. CLARK:
Q. Mr. Hutzell, I am showing you what has been marked as Exhibit No. 7. Have you seen this document before?
A. Yes.
Q. Whose signature is that in the middle of the page below the handwritten arrow?
A. The initials?
Q. Yes.
A. Willis Carto.
Q. Up at the top underneath Richard,
it says, LL.
A. Yes.
Q. What does that mean?
A. Liberty Lobby.
Q. Can you tell me what the handwriting on this note means?
A. Wire $7,800.
Q. Do you know why it was sent from Liberty Lobby?
A. No, I don't, but it was returned.
(Whereupon, Hutzell Deposition Exhibit
No. 8 was marked for identification.)
BY MR. CLARK:
Q. What I am going to show you is Exhibit No. 8. This is the actual wire transfer. Is that your signature at the bottom?
A. Yes.
Q. So you did, in fact, transfer by wire $7,800 to Mr. Richard?
A. Yes.
Q. Do you know what this $7,800 was for?
A. No, I don't.
Q. Is Mr. Richard employed by Liberty Lobby?
A. Not to the best of my knowledge.
Q. Who is he employed by?
A. I don't know.
Q. Why did you do it?
A. At the request of Willis Carto.
Q. Do you ever, in your capacity as the Comptroller, question directions given to you by Mr.Carto?
A. Generally not.
Q. Have you had occasion to recently?
A. I don't remember that I ever did.
Q. So he gives you an instruction and you follow it?
A. Yes. This one was returned. Are you aware of that.
MR. CLARK: I am aware. Note, too, that Exhibit No. 7 was actually sent care of Mr. Lane, who is one of the attorneys of record of Liberty Lobby.
(Whereupon, Hutzell Deposition Exhibit
No. 9 was marked for identification.)
BY MR. CLARK:
Q. Do you know if Mr. Lane saw this letter?
A. (Pause.)
Q. The letter from Mr. Richard, Exhibit No. 7?
A. I don't know. I don't know if Mr. Lane saw this or not.
Q. Exhibit No. 9 is another wire transfer. It says, Transfer requested by Liberty Lobby, Inc., attention Blayne Hutzell.
Is that your signature at the bottom on the left-hand side?
A. No, it isn't.
Q. Whose signature is that?
A. Probably a bank employee.
Q. Do you recall being involved in this wire transfer?
A. Not specifically.
Q. Have you wired money to Mr. Izen?
A. Yes, I did.
Q. At whose direction did you wire money?
A. Willis Carto.
Q. Do you know what the money was for?
A. No, I don't.
Q. Do you know if Mr. Izen represented Mr.Carto?
A. I am not aware of what Izen did. I don't know.
Q. I am sorry, I think I asked you before and your answer was, It is possible.
Seeing that wire transfer, does that change your --
A. No.
(Whereupon, Hutzell Deposition Exhibit
No. 10 was marked for identification.)
BY MR. CLARK:
Q. The next is Exhibit No. 10. If you could turn to page two of Exhibit No. 10, whose signature is that in the corner bottom?
A. That is Willis Carto’s initials.
Q. Do you understand what that direction is? Was that directed at you, that note?
A. Possibly.
Q. What is your understanding of what that note is directing you to do?
A. Wire money, $250.
Q. From whom?
A. Liberty Lobby.
Q. What does the note say?
A. But this was returned.
Q. I understand.
MR. OSWALD: Counsel, the note speaks for itself. I mean, are you asking him to read the note?
MR. CLARK: I am asking him what his understanding of the note is.
MR. OSWALD: Do you have an understanding?
THE WITNESS: I don't know what the note is all about, but we wired the money and the money was returned.
BY MR. CLARK:
Q. Let me ask you: The note says, W. A. Carto.
I assume that is Willis A. Carto?
A. Yes.
Q. This was wired from Liberty Lobby’s account. Is that your signature on the bottom of the first page?
A. My initials.
Q. Why would you understand this to be a wire of Liberty Lobby’s money when the note says, From W.A. Carto
?
MR. OSWALD: Objection, counsel. It is misleading. Somehow we would assume that these two documents are integrated documents. I don't think necessarily there is anything to assume that. I have no idea where this document came from and whether or not it is integrated here.
MR. CLARK: Well, it has the same date, the same bank account, same amount of money.
THE WITNESS: It is possible Willis gave Liberty Lobby the money to do this. That is possible.
BY MR. CLARK:
Q. Do you recall this transaction? It was shortly after the bankruptcy was filed?
A. I don't recall it, but it is a possibility that Willis gave us this money to make the wire transfer.
Q. Do you have a receipt of that, then, in your cash journal?
A. We should have yes. If that happened, yes.
Q. Do you know what this is for?
A. No, I don't.
Q. Have you wired money to this law firm before?
A. I don't think I did. I don't believe I have.
Q. If Mr. Carto were to give you money to make that wire transfer, would it always have come out of this operating account?
A. The wire, yes.
Q. Why wouldn't Mr. Carto just walk over to the bank right behind the building?
A. I don't know that answer.
Q. Is it common for him to give you cash to wire for him?
A. Not generally.
Q. Has he ever done it before?
A. I don't recall that he ever has.
Q. So would you recall it if it ever happened?
A. Possibly, yes.
Q. You say it is possible here that he --
A. It is very possible that he gave us the money to make the wire, yes.
Q. Yet, it is your testimony that you don't recall him ever doing it?
A. Ever.
Q. Who is Dr. Bradley J. Smith?
A. I don't know.
Q. Are you familiar with the directors of Liberty Lobby?
A. Without seeing the list — a bit familiar. I don't know them all. I don't know the name.
Q. That name doesn't stand out to you
A. No.
Q. If I told you he was a chiropractor in Michigan, would that help to refresh your recollection?
A. Yes.
Q. Can you tell me now who he is?
A. Yes, he is a director of Liberty Lobby.
Q. Is he currently a director of Liberty Lobby?
A. That I don't know. I am not sure.
MR. CLARK: All right, thanks. That is all the questions I have.
MR. OSWALD: I just have two.
EXAMINATION BY COUNSEL FOR THE WITNESS
BY MR. OSWALD:
Q. First off, we went into the dichotomy of a contribution and before we talked a little bit about a contribution. In your mind, did you feel — what was a contribution? Was it a gift to Liberty Lobby?
A. Yes.
Q. As a gift, how did you book that in for tax purposes?
A. As a nontaxable contribution.
Q. For these contributions, which you believe were gifts, were there any services or anything in return that the donors received other than an occasional copy of the magazine?
A. No.
MR. CLARK: What magazine?
MR. OSWALD: The magazine, the Spotlight.
MR. CLARK: Newspaper.
MR. OSWALD: I am sorry, the newspaper, the Spotlight.
BY MR. OSWALD:
Q. We had an issue before about book sales and we talked about book sales coming into Liberty Lobby. Was it your testimony that the book sales coming into Liberty Lobby, those cash amounts remained in those accts and were never transferred to any organization, including GEF?
A. That is correct.
A. Okay, finally dealing with the expense issue, there is an issue of expenses and Mr. Carto’s expenses. In your position as the Comptroller of the organization, at any time have you received expenses or expense reimbursements as Comptroller of Liberty Lobby for any other organizations other than Liberty Lobby?
A. No.
Q. Including Mr. Carto?
A. That is correct.
FURTHER EXAMINATION BY COUNSEL FOR
THE LEGION FOR THE SURVIVAL OF FREEDOM, INC.
BY MR. CLARK:
Q. Based on Mr. Oswald’s definition of contribution, where you may receive a copy of the Spotlight, what differentiates that with a subscription? Isn't that all a subscriber receives is a copy of the Spotlight?
A. There are people who give us donations. In return, we give them a copy of the Spotlight.
Q. Every week?
A. Yes.
Q. So for the donations that you receive, the donors also receive a copy of the Spotlight?
A. Yes, certain ones, not everyone, not every donor.
EXAMINATION BY COUNSEL FOR THE DEBTOR
BY MR. PEARLSTEIN:
Q. Is it a copy or a subscription?
A. Well, it is a couple of BOP members who pledge --
Q. The Board of Policy?
A. The Board of Policy, who pledge a certain amount of money per year, per quarter. That is considered a contribution. And they get a weekly copy of the Spotlight.
FURTHER EXAMINATION BY COUNSEL FOR THE DEPONENT
BY MR. OSWALD:
Q. Is that a courtesy copy of the Spotlight?
A. Yes.
FURTHER EXAMINATION BY COUNSEL FOR
THE LEGION FOR THE SURVIVAL OF FREEDOM, INC.
BY MR. CLARK:
Q. How many people are on the Board of Policy?
A. Currently? About 9,600.
Q. Do you know how much they pay to be on the board?
A. Minimum, $64.
Q. Per year?
A. Yes. That is minimum.
Q. How much is a subscription to the Spotlight?
A. Currently?
Q. Yes.
A. One year it is $59.
MR. CLARK: I have no further questions.
(Whereupon, the deposition of Blayne Hutzell was concluded at 6:25 p.m.)