Including information about his associates
page 159
1 COURT OF APPEAL OF THE STATE OF CALIFORNIA
2 FOURTH APPELLATE DISTRICT
3 DIVISION ONE
4 ______________________________
)
5 LEGION FOR THE SURVIVAL OF )
FREEDOM, INC., ) DCA. NO. DO27959
6 )
PLAINTIFF AND ) FROM SAN DIEGO COUNTY
7 RESPONDENT, )
) HON. RUNSTON G. MAINO
8 VS. )
) TRIAL PROCEEDINGS
9 WILLIS CARTO, HENRY FISCHER, )
VIBET, INC., LIBERTY LOBBY, )
10 INC., ET. AL., )
)
11 DEFENDANTS AND )
APPELLANTS. )
12 ______________________________)
13
REPORTER’s APPEAL TRANSCRIPT
14
NOVEMBER 1, 1996
15
VOLUME 2
16
PAGES 159-207
17
18
APPEARANCES:
19
FOR THE PLAINTIFF AND JACQUES BEUGELMANS AND
20 RESPONDENT: THOMAS MUSSELMAN
1901 AVENUE OF THE STARS
21 CENTURY CITY, CA 90067
22 FOR THE DEFENDANTS AND PETER J. PFUND
APPELLANTS: 2382 S.E. BRISTOL
23 SUITE A
NEWPORT BEACH, CA 92660
24
25
26
BARBARA J. SCHULTZ, CSR, RPR
27 CSR NO. 8021
OFFICIAL REPORTER
28 VISTA, CALIFORNIA
page 160
1 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
2 IN AND FOR THE COUNTY OF SAN DIEGO
3 DEPARTMENT 11 HON. RUNSTON G. MAINO
4
_____________________________
5 )
LEGION FOR THE SURVIVAL OF )
6 FREEDOM, INC., )
)
7 PLAINTIFF, ) NO. N64584
)
8 VS. )
)
9 WILLIS CARTO, HENRY FISCHER, )
VIBET, INC., LIBERTY LOBBY )
10 INC., ET. AL., )
)
11 DEFENDANTS. )
_____________________________)
12
13 REPORTER’s TRANSCRIPT
14 NOVEMBER, 1, 1996
15
APPEARANCES:
16
FOR THE PLAINTIFF: JACQUES BEUGELMANS AND
17 THOMAS MUSSELMAN
1901 AVENUE OF THE STARS
18 CENTURY CITY, CA 90067
19
20 FOR THE DEFENDANTS: WAIER AND URTNOWSKI
BY: RANDALL S. WAIER
21 1301 DOVE STREET
NEWPORT BEACH, CA 92660
22
23
FOR THE DEFENDANT MARK LANE
24 LIBERTY LOBBY, INC.: 300 INDEPENDENCE AVENUE, S.E.
WASHINGTON, D.C. 20003
25
26
BARBARA J. SCHULTZ, CSR, RPR
27 CSR NO. 8021
OFFICIAL REPORTER
28 VISTA, CALIFORNIA
page 161 1 VISTA, CALIFORNIA, NOVEMBER 1, 1996, DEPARTMENT 11: 2 3 THE COURT: GO AHEAD WITH YOUR CROSS-EXAMINATION FROM 4 MR. MARCELLUS. 5 MR. WAIER: THANK YOU. 6 CROSS-EXAMINATION (CONTINUED) 7 BY MR. WAIER: 8 Q GOOD MORNING, MR. MARCELLUS. 9 A GOOD MORNING, MR. WAIER. 10 Q WE DONE THIS BEFORE? 11 A YES, I HAD THE PLEASURE OF ANSWERING YOUR 12 QUESTIONS NUMEROUS TIMES IN THE PAST. 13 Q IN FACT, YOU ARE FAMILIAR WITH LITIGATION THAT 14 TOOK PLACE BETWEEN THE HISTORICAL EDUCATION FOUNDATION 15 VERSUS LEGION FOR SURVIVAL OF THE FREEDOM, INC., CONCERNING 16 A $187,000 PROMISSORY NOTE? 17 A WAS THAT THE FIRST H.E.F. CASE? 18 Q IN FRONT OF JUDGE ROSS? 19 A YES. 20 Q AND YOU RECALL TESTIFYING IN THAT CASE? 21 A YES. 22 Q BEFORE WE GET INTO THAT, YOU INDICATED YOUR 23 BACKGROUND WITH THE LEGION. DO YOU RECALL THAT? 24 A DO YOU RECALL MY TESTIMONY ABOUT -- 25 Q YES. 26 A — THE BACKGROUND WITH THE LEGION? 27 Q YES, IN FACT, YOUR ROLE IN THE LEGION SINCE THE 28 TIME YOU WERE HIRED.
page 162 1 A I RECALL TESTIFYING TO THAT, YES. 2 Q AND YOU INDICATED THAT YOU WERE HIRED SOMETIME IN 3 19 — I BELIEVE YOU SAID '78? 4 A YES. 5 Q WHO HIRED YOU? 6 A AS I RECALL, I WAS HIRED BY DAVID MCCALDEN AFTER 7 HAVING BEEN INTERVIEWED ALSO BY MR. CARTO. 8 Q WHY WERE YOU INTERVIEWED BY MR. CARTO? 9 A WELL, MR. CARTO WAS CONSULTANT OR WORKED — HE 10 HAD SOME CAPACITY WITH THE COMPANY, AND I JUST PRESUMED THAT 11 WAS THE CASE. SO WHEN HE INTERVIEWED ME, I HAD NO 12 OBJECTION. 13 Q IN FACT, ISN'T IT TRUE THAT YOU REFERRED TO 14 MR. CARTO AS THE FOUNDER FOR THE INSTITUTE OF HISTORICAL 15 REVIEW? 16 A YES. 17 Q WHAT DID YOU MEAN WHEN YOU REFERRED TO HIM AS 18 “FOUNDER"? 19 A WELL, IN FACT, IT WAS MY SUGGESTION THAT HIS NAME 20 FOUNDER BE PUT ON THE LETTERHEAD. THE REASON I SUGGESTED 21 THAT WAS BECAUSE AT THE TIME THE INSTITUTE WAS FORMED AS 22 A — A TRADE NAME FOR THE LEGION, OR AN ENTITY OF THE 23 LEGION, HE WAS INSTRUMENTAL IN — I BELIEVE HE MAY HAVE 24 EVEN HAD SOME CONTRIBUTION TO DECIDING ON THE NAME AND THE 25 CONTENT OF ITS MATERIALS, WHAT WOULD BE PUBLISHED AND SO 26 FORTH, ALONG WITH MR. MCCALDEN. 27 Q IN FACT, MR. CARTO WAS INSTRUMENTAL IN YOU BEING 28 HIRED BY THE LEGION; ISN'T THAT CORRECT?
page 163 1 A I DON'T KNOW THAT. 2 Q IN FACT, UP UNTIL 1993, ISN'T IT TRUE THAT ALL 3 MAJOR EDITORIAL DECISIONS OF THE LEGION WERE APPROVED BY 4 MR. CARTO? 5 A NO. 6 Q IN FACT, DIDN'T YOU TESTIFY YESTERDAY THAT YOU 7 WERE CONCERNED THAT MR. CARTO WAS GOING TO CHANGE THE 8 EDITORIAL VIEWS OF THE LEGION, AND THEREFORE, THE STAFF 9 BECAME CONCERNED AS TO WHAT AUTHORITY HE HAD TO DO THAT? 10 A YES. 11 Q IN FACT, ISN'T IT TRUE THAT YOU WERE CONCERNED IN 12 EARLY 1993 THAT MR. CARTO WAS GOING TO FIRE MR. WEBER AS 13 EDITOR OF THE I.H.R.; ISN'T THAT CORRECT? 14 A YES. 15 Q YOU WERE CONCERNED BECAUSE AT THAT POINT IN TIME, 16 YOU BELIEVED MR. CARTO CONTROLLED THE LEGION; ISN'T THAT 17 TRUE? 18 A I DID. I DID OBSERVE OVER THE YEARS, MR. CARTO 19 EXERCISED A GREAT AMOUNT OF CONTROL OVER THE LEGION, YES. 20 Q IN FACT, YOU TOOK DIRECTION FROM MR. CARTO, DIDN'T 21 YOU? 22 A I DID. 23 Q IN FACT, YOU TOOK DIRECTION FROM MR. CARTO WHILE 24 YOU WERE PRESIDENT OF THE LEGION; ISN'T THAT TRUE? 25 A NO. 26 Q YOU NEVER TOOK ANY DIRECTION FROM HIM WHILE YOU 27 WERE PRESIDENT? 28 A I WAS NOT PRESIDENT UNTIL AFTER MR. Carto’s
page 164 1 RELATIONSHIP WAS TERMINATED. 2 Q I'M SORRY. YOU INDICATED THAT YOU WERE A DIRECTOR 3 OF THE LEGION; ISN'T THAT CORRECT? 4 A NO. I INDICATED I WAS DIRECTOR — NOT A 5 DIRECTOR. 6 Q THERE WAS SOME CONFUSION IN YOUR TESTIMONY. SO 7 WE'RE CLEAR ON THAT, WHEN YOU SAID YOU WERE A DIRECTOR OF 8 THE LEGION, WHAT DID YOU MEAN BY THAT? 9 A I MEANT I WAS DIRECTOR AS A MANAGING DIRECTOR, 10 WHICH MEANS THAT I RAN THE DAY-TO-DAY OPERATIONS. 11 Q SIMILAR TO A PRESIDENT OF A CORPORATION? 12 A I SUPPOSE OF PRESIDENT OR C.E.O. 13 Q YOU UNDERSTAND THAT WAS YOUR FUNCTION? 14 A YES. 15 Q AND YOU UNDERSTAND YOU HAD AUTHORITY ALONG WITH 16 THE TITLE OF DIRECTOR? 17 A I UNDERSTOOD I HAD A CERTAIN DEGREE OF AUTHORITY, 18 YES. 19 Q WHERE DID YOU GET THE UNDERSTANDING FROM? 20 A I GOT THAT UNDERSTANDING FROM EXPERIENCE IN 21 RUNNING THE DAY-TO-DAY OPERATIONS OF THE LEGION AND KNOWING 22 WHAT THINGS MR. CARTO WOULD BE INTERESTED IN, WHAT SHOULD BE 23 BROUGHT TO HIS ATTENTION, WHAT SHOULD BE DISCUSSED WITH HIM, 24 WHAT WERE THINGS I COULD DO ON MY AUTHORITY. 25 Q WHY DID YOU THINK YOU SHOULD BRING THINGS TO 26 MR. Carto’s ATTENTION WHILE DIRECTOR? 27 A I WAS UNDER AN AGREEMENT WITH THE LEGION ITSELF TO 28 REPORT TO MR. CARTO.
page 165 1 Q WHAT AGREEMENT? 2 A AN AGREEMENT THAT STATED THAT I WAS TO REPORT TO 3 MR. CARTO, WHO WAS TO REPORT TO THE BOARD. 4 Q WHO DID YOU ENTER THIS AGREEMENT INTO WITH? 5 A I BELIEVE THE CONTRACT WAS SIGNED BY LAVONNE FURR. 6 Q DID YOU HAVE DISCUSSION WITH MR. CARTO ABOUT THE 7 AGREEMENT BEFORE IT WAS SIGNED? 8 A I DON'T THINK SO. 9 Q WHEN DID YOU SIGN THE AGREEMENT? 10 A I SIGNED — I DON'T RECALL IF I SIGNED IT -- 11 ORIGINAL AGREEMENT WHEN I STARTED WORKING THERE. I KNOW 12 WHEN I CAME BACK TO WORK FOR THE LEGION IN '87, I SIGNED 13 SUCH AN AGREEMENT. 14 Q AND SO I'M CLEAR, YOUR TESTIMONY YESTERDAY, FROM A 15 PERIOD OF APPROXIMATELY EARLY 1986, FIRST COUPLE OF MONTHS 16 1986, THROUGH MID 1987, YOU WERE NO LONGER INVOLVED WITH THE 17 LEGION; IS THAT CORRECT? 18 A I WAS TO SOME EXTENT INVOLVED WITH THE LEGION. I 19 WAS NOT A REGULAR PAID EMPLOYEE. 20 Q SO I'M CLEAR ALSO, THIS AGREEMENT THAT YOU WERE 21 WORKING UNDER HAD AN AGREEMENT THE FIRST TIME YOU WERE WITH 22 THE LEGION FROM 1978 TO THE FIRST COUPLE OF MONTHS 1986? 23 A I DON'T RECALL IF I WAS WORKING UNDER A FORMAL 24 AGREEMENT, BUT THAT WAS MY UNDERSTANDING. AND IT WAS THE 25 SAME UNDERSTANDING I HAD WHEN I CAME BACK TO WORK AND SIGNED 26 THE FORMAL AGREEMENT. 27 Q DID YOU BELIEVE AT THE TIME THIS AGREEMENT WAS 28 SIGNED BY LAVONNE FURR?
page 166 1 A I BELIEVE IT WAS LAVONNE, YES. 2 Q YOU BELIEVED LAVONNE FURR HAD AUTHORITY TO SIGN 3 THE AGREEMENT, DIDN'T YOU? 4 A IT DIDN'T OCCUR TO ME SHE DID NOT. 5 Q YOU BELIEVED SHE DID? 6 A YES. 7 Q BECAUSE YOU BELIEVED THAT SHE WAS A MEMBER OF THE 8 LEGION; ISN'T THAT TRUE? 9 A NO. 10 Q WHAT AUTHORITY DID YOU THINK LAVONNE FURR HAD TO 11 SIGN THE AGREEMENT ON BEHALF OF THE LEGION IN 1987? 12 A SHE WAS AN OFFICER OF THE CORPORATION AND 13 DIRECTOR. 14 Q DID YOU HAVE ANY OF THE OTHER DIRECTORS OF THE 15 CORPORATION SIGN? 16 A DID I HAVE ANY OF THE OTHER OFFICERS? 17 Q YEAH. WERE THERE DIRECTORS' NAMES ON THAT 18 CONTRACT THAT YOU SIGNED? 19 A AS I RECALL, HERS WAS THE ONLY ONE. 20 Q RIGHT. AND ARE YOU AWARE OF ANY BOARD MEETING 21 THAT APPROVED THAT CONTRACT? 22 A NO. 23 Q YOU BELIEVED THAT CONTRACT WAS VALID, THOUGH, 24 DIDN'T YOU? 25 A YEAH, I DID. 26 Q BECAUSE LAVONNE FURR SIGNED IT; ISN'T THAT RIGHT? 27 A IT COULD HAVE BEEN A CONTRACT FROM WILLIS CARTO, 28 AND I WOULD HAVE PROBABLY ACCEPTED IT, TOO.
page 167 1 Q SO YOU BELIEVED, AT LEAST TO LAVONNE FURR — TO 2 LAVONNE FURR, YOU BELIEVED THE CONTRACT WAS VALID AND BOUND 3 THE LEGION; ISN'T THAT CORRECT? 4 A YES. 5 Q NOW, AS DIRECTOR OF THE LEGION, YOU HAD MANY 6 FUNCTIONS; ISN'T THAT CORRECT? 7 A THAT’s CORRECT. 8 Q YOU SAID YOU OVERSAW THE DAY-TO-DAY AFFAIRS OF THE 9 NONPROFIT CORPORATION? 10 A YES. 11 Q AND YOU UNDERSTOOD, BEING A NONPROFIT CORPORATION, 12 THAT IT WAS GUIDED BY CERTAIN PRINCIPLES, CORPORATE 13 PRINCIPLES FOR FUNDING, BANKING, SO FORTH, UNLIKE PROFIT 14 CORPORATIONS? 15 A I UNDERSTOOD THERE WAS A DIFFERENCE BETWEEN 16 NONPROFIT AND PROFIT CORPORATIONS, YES. 17 Q IN FACT, YOU UNDERSTOOD THAT THERE WAS MORE 18 ACCOUNTABILITY FOR NONPROFIT CORPORATIONS? 19 MR. MUSSELMAN: OBJECTION. VAGUE. 20 MR. WAIER: WITHDRAW THE QUESTION. 21 22 BY MR. WAIER: 23 Q NOW, AS PART OF YOUR FUNCTIONS OF RUNNING THE 24 DAY-TO-DAY AFFAIRS OF THE LEGION, THAT INCLUDED THE BANKING, 25 DID IT NOT? 26 A ARE YOU ASKING WHAT I SHOULD HAVE TO HAVE 27 RESPONSIBILITY FOR, WHAT I DID HAVE RESPONSIBILITY FOR? 28 Q SIR, PLEASE ANSWER THE QUESTION. AS PART OF YOUR
page 168 1 FUNCTIONS, DID THAT INCLUDE THE BANKING OF THE LEGION WHILE 2 YOU WERE THE DIRECTOR? 3 A SOME OF THE BANKING. 4 Q OKAY. AND IN 1986, FOR EXAMPLE, WHO WAS THE -- 5 WHO WAS THE BANKING RELATIONSHIP WITH BETWEEN THE LEGION AND 6 THE BANK? WHAT WAS IT DOING BUSINESS WITH? 7 MR. MUSSELMAN: OBJECTION. NO FOUNDATION AS TO '86. 8 THE COURT: OVERRULED. IF THE WITNESS KNOWS THROUGH 9 HIS PERSONAL KNOWLEDGE, OBVIOUSLY. 10 THE WITNESS: WHEN IN '86? I WASN'T THERE PART OF 11 '86. 12 13 BY MR. WAIER: 14 Q WELL, YOU TESTIFIED AS TO THE ASSETS IN 1986. I 15 ASSUMED YOU WOULD KNOW THE BANK. 16 MR. MUSSELMAN: OBJECTION. 17 THE COURT: COUNSEL, DO NOT HARASS THE WITNESS BY THE 18 TONE OF YOUR QUESTION. HE MADE A GOOD POINT. HE — HE 19 WASN'T THERE IN 1986 THE ENTIRE TIME. ASK THE QUESTIONS 20 WITHOUT ALL THE ARGUMENTATIVE THINGS. WE DON'T HAVE A JURY 21 HERE. THERE’s NO ONE TO IMPRESS OTHER THAN ME, AND THAT 22 DOESN'T IMPRESS ME. 23 24 BY MR. WAIER: 25 Q THE FIRST TWO MONTHS OR THREE MONTHS OF 1986, WHO 26 WAS THE LEGION DOING BANKING WITH? 27 A I LEFT THE ORGANIZATION IN, I THINK, DECEMBER OF 28 '85. I WOULDN'T KNOW.
page 169 1 Q OKAY. HOW ABOUT DECEMBER OF '85. WHO IS THE BANK 2 THE LEGION WAS DOING BANKING WITH? 3 A I BELIEVE IT WAS — OUR CHECKING ACCOUNTS, OUR 4 ACCOUNTS — THE ACCOUNTS THAT I DEALT WITH WERE AT FIRST 5 INTERSTATE BANK. 6 Q AND WHEN YOU CAME BACK IN 1987, WHO WAS THE LEGION 7 BANKING WITH? 8 A THE ACCOUNTS I WAS AWARE OF WERE, I THINK, STILL 9 FIRST INTERSTATE BANK. 10 Q AND YOU WERE RECEIVING, AT THE TIME YOU WERE THE 11 DIRECTOR FROM 1987 FORWARD, THE MONTHLY BANKING STATEMENTS? 12 A NO. 13 Q WHO RECEIVED THOSE? 14 A WELL, THE MONTHLY BANKING STATEMENTS CAME TO THE 15 OFFICE AND WE SIMPLY PUT THEM ASIDE FOR ELISABETH CARTO. 16 Q WHY DID YOU PUT THEM ASIDE FOR ELISABETH CARTO? 17 A I BELIEVE SHE EITHER RECONCILED THEM HERSELF OR 18 SENT THEM OFF FIRST FOR THE ACCOUNTANT TO RECONCILE. 19 Q BUT YOU COULD HAVE LOOKED AT THEM IF YOU WANTED 20 TO; ISN'T THAT CORRECT? 21 A SURE. YES. 22 Q AND YOU DID — HOW LONG DID YOU MAINTAIN THIS 23 BANKING RELATIONSHIP WITH FIRST INTERSTATE? LEGION, I'M NOT 24 SAYING YOU, THE LEGION. 25 A RIGHT. I THINK WE STARTED WITH FIRST INTERSTATE 26 IN 1984 AND CONTINUED WITH IT UNTIL I LEFT THE ORGANIZATION 27 IN FEBRUARY OF 1994. 28 Q NOW, ISN'T IT TRUE, SIR, THAT THERE WAS A NUMBER
page 170 1 OF — STRIKE THAT. 2 DID YOU TELL US YESTERDAY THAT THE LEGION HAD NO 3 DEALINGS WITH THE F.D.F.A. WHILE YOU WERE THE DIRECTOR? 4 A NO. 5 Q IT DID HAVE DEALINGS? 6 A YES. 7 Q WHAT WERE THE DEALINGS? 8 A THE DEALINGS WERE FROM 1985, LATE 1985 ONWARD. 9 THE F.D.F.A. WAS THE LEGION’s LANDLORD. IT OWNED THE 10 BUILDING IN WHICH THE LEGION OPERATED. I HAD SOME 11 DEALINGS — THE LEGION HAD SOME DEALINGS WITH F.D.F.A. IN 12 AS EARLY, I THINK, AS 1984 WHEN MR. CARTO DIRECTED ME TO ASK 13 SOME CONTRIBUTORS TO MAKE THE CHECKS OUT TO F.D.F.A. RATHER 14 THAN THE LEGION OR THE INSTITUTE. SOME ALMOST $100,000 15 MYSTERIOUSLY DISAPPEARED OUT OF THE LEGION ACCOUNT, PAID OUT 16 TO F.D.F.A., SOMETIME IN 1985 AND 1986. MR. CARTO DIRECTED 17 ME TO RUN A FUND-RAISING CAMPAIGN EVEN, I BELIEVE, AT ONE 18 TIME IN WHICH DONORS WERE ENCOURAGED TO MAKE UP THE 19 COLLECTION TO F.D.F.A. 20 Q YOU DID ALL THAT -- 21 A YES. 22 Q — WHILE YOU WERE DIRECTOR OF THE LEGION? 23 A YES. 24 Q IN OTHER WORDS, YOU ENCOURAGED DONATIONS NOT TO GO 25 TO THE LEGION, BUT TO GO TO THE F.D.F.A., FOUNDATION TO 26 DEFEND THE FIRST AMENDMENT; IS THAT CORRECT? 27 A SOME DONATIONS, YES. 28 Q YOU BELIEVED THAT WAS OKAY?
page 171 1 A YES. 2 Q IN FACT, ISN'T IT TRUE THAT YOU TOLD 3 JEAN FARREL-EDISON IN EARLY 1985 TO MAKE OUT HER 4 CONTRIBUTIONS TO THE F.D.F.A. AS OPPOSED TO THE LEGION? 5 A I MAY VERY WELL HAVE. 6 Q DID YOU WRITE HER A LETTER? 7 A I THINK YOU SHOWED THE LETTER THAT I WROTE IN THE 8 OPENING STATEMENT. 9 Q IN FACT, IF YOU WILL TAKE A LOOK AT EXHIBIT 10 146 -- 11 A I DON'T THINK MY BOOK GOES THAT HIGH. 12 MR. BEUGELMANS: YOUR HONOR, THE PLAINTIFF HAS NEVER 13 BEEN GIVEN A COMPLETE SET OF DEFENDANT’s EXHIBITS. 14 THE COURT: DO YOU HAVE A SERIES? 15 MR. WAIER: I MENTIONED TO COUNSEL THE OTHER DAY. WE 16 HAVEN'T BEEN ABLE TO SPEAK SINCE THE TIME HE SAID HE WOULD 17 SPEAK TO ME ABOUT IT. THERE WAS A MEETING WHERE THERE WOULD 18 BE A JOINT EXHIBIT LIST AND EXHIBITS PURSUANT TO OUR MEET 19 AND CONFER PRIOR TO THE TRIAL. WE DID PROVIDE THEM, APART 20 FROM WHAT — MR. BEUGELMANS' SET, COPIES OF THE EXHIBITS, 21 INCLUDING THE EXHIBITS IN THE BOOK. AND WE GAVE HIM A LIST 22 OF THE EXHIBITS, ONE OF WHICH WAS EXHIBIT 146. BUT HE WAS 23 PROVIDED THOSE. 24 MR. BEUGELMANS: YOUR HONOR, I MET WITH MR. URTNOWSKI, 25 MR. WAIER’s PARTNER, WHEN TRIAL WAS FIRST CALLED. I GAVE 26 HIM THE BOOK THAT’s BEFORE THE COURT. ALL THE EXHIBITS WERE 27 PREPARED. WE TALKED. HE SAID HE WOULD FAX ME THE 28 EXHIBITS. WE DON'T HAVE A COMPLETE SET. I TOLD MR. WAIER
page 172 1 THIS ON MONDAY WHEN TRIAL WAS CALLED, I DON'T HAVE A 2 COMPLETE SET OF EXHIBITS. 3 THE COURT: LET’s GET HIM A COMPLETE SET. 4 MR. WAIER: I CAN PROVIDE THE COURT. 5 THE COURT: I DON'T HAVE THEM EITHER. I DON'T HAVE 6 146. 7 MR. WAIER: THE PLAINTIFF WAS TO SUPPLY THE COURT WITH 8 A COMPLETE SET. I'M NOT GOING TO CONTEST IT IF HE SAYS HE 9 DIDN'T RECEIVE IT. WHAT EXHIBIT DO YOU END AT? 10 THE COURT: I DON'T BELIEVE THAT I HAVE BEEN FURNISHED 11 ANY DEFENDANT’s EXHIBITS. MY LAST EXHIBIT ENDS, I THINK, 12 82. THEN WE HAVE GONE PAST THAT, YOU KNOW. WE MARKED SOME 13 THINGS. 14 MR. WAIER: WHAT NUMBER ARE WE UP TO? 15 THE COURT: CLERK SAYS I GO THROUGH 88 FOR THE 16 PLAINTIFF. 17 MR. WAIER: OUR EXHIBITS WERE SUPPOSED TO START AT 18 101. WE — THE PRIOR AGREEMENT WAS SUPPOSED TO BE 19 PLAINTIFFS FROM 1 THROUGH 99 AND WE WERE TO BE 100 FORWARD. 20 I THOUGHT THEY WERE PROVIDED TO YOU. A LIST WAS PROVIDED. 21 I DO HAVE OUR EXHIBITS RIGHT HERE. 22 THE COURT: WE HAVE A LIST, BUT NO EXHIBITS. 23 MR. WAIER: I CAN PROVIDE A COPY OF THE BOOKLET NOW, IF 24 YOU LIKE. 25 THE COURT: I DON'T NECESSARILY NEED TO SEE AN EXHIBIT 26 BECAUSE THE WITNESS IS SEEING IT. USUALLY, I DON'T LOOK AT 27 THEM VERY MUCH UNLESS THEY'RE ADMITTED. 28 MR. WAIER: LET ME --
page 173 1 THE COURT: THERE’s OBVIOUSLY ANOTHER PROBLEM HERE. 2 MR. WAIER: I HAVE A BLOWUP, AND I WILL PROVIDE THE 3 COURT — I APOLOGIZE FOR ANY INCONVENIENCE TO THE COURT. I 4 THOUGHT THEY HAD BEEN PROVIDED. APPARENTLY, THEY HAVE NOT. 5 MR. BEUGELMANS: YOUR HONOR, WOULD THE COURT PLEASE 6 DIRECT MR. WAIER TO PROVIDE PLAINTIFFS A COPY MONDAY 7 MORNING. 8 MR. WAIER: I WILL PROVIDE IT OVER THE WEEKEND, IF YOU 9 LIKE. 10 THE COURT: GREAT. 11 MR. WAIER: LET ME HAND YOU IN THE BOOKS, EXHIBIT 146. 12 AND THIS WILL BE PROVIDED IN THAT IT HAS BEEN MARKED FOR 13 IDENTIFICATION. LET ME HAND THAT TO YOU. SEE IF I CAN'T 14 PULL THE BLOWUP. 15 16 BY MR. WAIER: 17 Q DO YOU HAVE THAT IN FRONT OF YOU? 18 A YES. 19 Q 146 MARKED FOR IDENTIFICATION, TAKE A LOOK AT THE 20 BLOWUP UNTIL WE GET THE EXHIBITS. BUT LET ME ASK YOU THIS: 21 DO YOU SEE THE BLOWUP IN FRONT OF YOU? 22 A I DO. 23 Q DOES THAT LOOK LIKE EXHIBIT 146? 24 A IT DOES. 25 Q IT’s IDENTICAL, ISN'T IT? 26 A I COULDN'T SAY. 27 Q BUT YOU WILL NOTICE THE NAME, “BEST REGARDS, 28 TOM MARCELLUS.” IS THAT YOUR SIGNATURE?
page 174 1 A I SEE “BEST, TOM MARCELLUS." 2 Q TAKE A LOOK -- 3 A NOT “BEST REGARDS." 4 Q “BEST.” I'M SORRY. I GAVE YOU A LOT OF CREDIT 5 THERE. IS THAT YOUR SIGNATURE? 6 A YES. 7 Q AND THAT WAS A LETTER THAT YOU HAD PREPARED TO 8 JEAN FARREL-EDISON; IS THAT CORRECT? 9 A YES. 10 Q AND THIS WAS SENT TO HER ON JANUARY 14, 1985? 11 A YES. 12 Q AND YOU WILL NOTICE DOWN HERE IN THE APPROXIMATELY 13 FIFTH PARAGRAPH DOWN, DO YOU SEE THAT? 14 A WOULD YOU POINT TO THE PARAGRAPH. 15 Q “AS FOR FUTURE CONTRIBUTIONS." 16 A YES. 17 Q IT SAYS: “PLEASE CONTINUE TO MAKE YOUR CHECKS OUT 18 TO THE FOUNDATION TO DEFEND THE FIRST AMENDMENT OR JUST 19 F.D.F.A. ” DO YOU SEE THAT? 20 A YES. 21 Q PRIOR TO THIS TIME, WASN'T JEAN FARREL-EDISON 22 MAKING CHECKS OUT TO THE FOUNDATION TO DEFEND THE FIRST 23 AMENDMENT? 24 A I BELIEVE WE HAD RECEIVED ONE CHECK FROM HER MADE 25 OUT TO F.D.F.A. PRIOR TO THAT TIME. 26 Q “WE,” WHO ARE YOU REFERRING TO? 27 A IT CAME TO THE LEGION’s OFFICE. 28 Q FOR F.D.F.A.?
page 175 1 A YES. 2 Q AND DO YOU KNOW WHY SHE WAS SENDING THAT TO THE 3 LEGION OR PAYMENT TO THE F.D.F.A.? 4 A YES, BECAUSE MR. CARTO HAD SUGGESTED THAT SHE DO 5 THAT. 6 Q BUT YOU SUGGESTED ALSO THAT SHE CONTINUE TO DO 7 THIS; ISN'T THAT CORRECT? 8 A YES. 9 Q AND IN FACT, YOU TOLD HER TO SEND THESE CHECKS IN 10 CARE OF — MADE OUT TO THE FOUNDATION TO DEFEND THE FIRST 11 AMENDMENT AND IN CARE OF THE I.H.R. AT THE LOCATION AND THE 12 BUSINESS ADDRESS; ISN'T THAT CORRECT? 13 A ON MR. Carto’s INSTRUCTIONS, THAT’s CORRECT. 14 MR. WAIER: MOVE TO STRIKE “MR. Carto’s INSTRUCTIONS." 15 THE COURT: SUSTAIN THE OBJECTION. 16 17 BY MR. WAIER: 18 Q PLEASE ANSWER THE QUESTION. 19 A I'M SORRY. 20 Q YOU WROTE THIS, DID YOU NOT? 21 A I DID. 22 Q AND YOU WROTE TO HER AND YOU TOLD HER TO MAKE OUT 23 CONTRIBUTIONS — CONTINUE TO MAKE OUT CONTRIBUTIONS 24 STRICTLY TO THE FOUNDATION TO DEFEND THE FIRST AMENDMENT AT 25 THE I.H.R. OFFICES; ISN'T THAT CORRECT? 26 A YES. 27 MR. MUSSELMAN: ASKED AND ANSWERED. 28 THE COURT: SUSTAINED.
page 176 1 BY MR. WAIER: 2 Q NOW, DID YOU EVER SEND HER ANOTHER LETTER TELLING 3 HER NOT TO DO THAT? 4 A I DON'T BELIEVE SO. 5 Q DID YOU BELIEVE THAT BY SENDING — HAVING HER 6 SEND MONEY TO THE FOUNDATION TO DEFEND THE FIRST AMENDMENT, 7 THAT WAS MONEY THAT SHOULD GO TO THE LEGION? 8 A YES. 9 Q DID YOU HAVE SOME SORT OF AN ARRANGEMENT WITH THE 10 F.D.F.A. THAT THAT MONEY WOULD BE REPAID? 11 A YES. 12 Q WITH WHOM? 13 A WITH MR. CARTO. 14 Q WAS THAT IN WRITING? 15 A NO. 16 Q WHY DIDN'T YOU PUT IT IN WRITING? 17 A BECAUSE IT WAS IN THE FORM OF A DIRECTION FROM 18 MR. CARTO THAT I DO THIS, AND I DID NOT ASK HIM TO PUT IT IN 19 WRITING. 20 Q DIDN'T YOU BELIEVE THAT YOU WERE IN CHARGE OF THE 21 DAY-TO-DAY AFFAIRS OF THE LEGION ON JANUARY 14, 1985, WERE 22 YOU NOT? 23 A THAT’s CORRECT. 24 Q AND DIDN'T YOU BELIEVE, TOO, THAT YOU HAD SOME 25 SORT OF A FIDUCIARY DUTY ON YOUR PART TO MAKE SURE THAT IF 26 THIS WAS THE CASE, THAT YOU WERE TELLING SOMEBODY ELSE TO 27 PUT MONEY TO ANOTHER ORGANIZATION OTHER THAN THE LEGION, 28 THAT YOU HAD SOME SORT OF AN AGREEMENT IN WRITING WITH THAT
page 177 1 ORGANIZATION? 2 A I DID HAVE A PROBLEM WITH THAT, MR. WAIER, BUT I 3 DID NOT DO ANYTHING ABOUT IT. 4 Q DID YOU BELIEVE AT THIS POINT IN TIME MR. CARTO 5 COULD FIRE YOU? 6 A YES, OR COULD ARRANGE TO HAVE ME FIRED. 7 Q THIS WAS IN JANUARY 1985? 8 A YES. 9 Q AND THAT WAS BECAUSE HE WAS A SUBSTITUTE 10 INCORPORATOR FOR THE LEGION; ISN'T THAT TRUE? 11 A NO, NOT TRUE. 12 Q DID YOU KNOW HE WAS A SUBSTITUTE INCORPORATOR AT 13 THAT TIME? 14 MR. MUSSELMAN: ASSUMES FACTS NOT IN EVIDENCE, DID YOU 15 KNOW THAT. 16 THE COURT: OVERRULED. 17 THE WITNESS: I HAVE NO IDEA HE WAS ANYTHING LIKE A 18 SUBSTITUTE INCORPORATOR. 19 20 BY MR. WAIER: 21 Q WHAT AUTHORITY DID YOU THINK MR. CARTO HAD AT THAT 22 POINT IN TIME THAT HE COULD FIRE YOU? 23 A THE AUTHORITY I BELIEVED HE HAD WAS A KIND OF A 24 INFLUENCE OVER THE FURRS. 25 Q WELL, THERE WERE OTHER DIRECTORS, WERE THERE NOT? 26 YOU TESTIFIED TO THAT YESTERDAY. THERE WERE OTHER DIRECTORS 27 IN THE LEGION BESIDES THE FURRS; ISN'T THAT CORRECT? 28 A I NEVER HAD ANY CONTACT WITH THEM.
page 178 1 Q PLEASE ANSWER MY QUESTION. 2 A I WAS NOT AWARE OF ANY. I WAS NOT AWARE OF ANY 3 DIRECTORS OUTSIDE THE FURRS. I DID NOT HAVE ANY INVOLVEMENT 4 WITH THEM. 5 Q SIR, YOU UNDERSTOOD, AS RUNNING THE DAY-TO-DAY 6 AFFAIRS, THAT YOU WERE HELD ACCOUNTABLE TO THE BOARD OF 7 DIRECTORS OF THE LEGION; ISN'T THAT CORRECT? 8 A NO. 9 Q YOU DIDN'T BELIEVE THAT? 10 A NO. 11 Q HAD YOU SEEN THE BYLAWS OF THE LEGION AT THIS 12 POINT IN TIME? 13 A I DON'T BELIEVE I HAD. 14 Q YOU HAD ACCESS TO THEM, DID YOU NOT? 15 A I DON'T BELIEVE THEY WERE OUT. NO, I BELIEVE I 16 DID NOT HAVE ACCESS TO THEM. 17 Q DID YOU ASK ANYBODY WHO YOU WERE TO REPORT TO? 18 A I DIDN'T HAVE TO. IT WAS UNDERSTOOD. 19 Q IS THAT PART OF YOUR AGREEMENT? 20 A YES. 21 Q AND THAT WAS THE AGREEMENT YOU HAD WITH LAVONNE 22 FURR? 23 A YES. 24 Q SO AS FAR AS YOU UNDERSTOOD AT THIS POINT IN TIME 25 IN JANUARY 1985, IT WAS BOTH LAVONNE FURR AND WILLIS CARTO 26 THAT WAS RUNNING THE LEGION; ISN'T THAT CORRECT? 27 A I BELIEVE IT WAS MR. CARTO THAT WAS ESSENTIALLY 28 RUNNING THE LEGION.
page 179 1 Q AND BUT YOU ALSO BELIEVED — YOU ALSO MADE A 2 STATEMENT YOU BELIEVED MR. CARTO COULD HAVE SOMEONE AT THE 3 LEGION FIRE YOU; ISN'T THAT CORRECT? 4 A YES. 5 Q YOU THOUGHT HE HAD INFLUENCE OVER LAVONNE FURR; 6 ISN'T THAT CORRECT? 7 A YES. 8 Q YOU BELIEVED LAVONNE FURR COULD FIRE YOU? 9 A YES. 10 Q BECAUSE LAVONNE FURR, LIKE MR. CARTO, WAS RUNNING 11 THE LEGION AT THAT TIME? 12 A NO. 13 Q WHAT DID YOU UNDERSTAND LAVONNE FURR'S 14 RESPONSIBILITIES WERE AT THIS POINT IN TIME IN JANUARY OF 15 1995? 16 A LAVONNE -- 17 Q 1985, EXCUSE ME. 18 A LAVONNE FURR HAD, TO MY KNOWLEDGE, ABSOLUTELY 19 LITTLE, VERY LITTLE OR NO INVOLVEMENT AT ALL IN THE LEGION. 20 Q WHAT DID YOU UNDERSTAND HER POSITION TO BE WITH 21 THE LEGION AT THAT TIME, 1985? 22 A I'M SORRY, I UNDERSTOOD HER POSITION TO BE A KIND 23 OF A FORMALITY AND THAT MR. CARTO WAS THE ONE WHO WAS 24 RUNNING THINGS. 25 Q NOW, DID YOU THINK THIS WAS ILLEGAL ON YOUR PART 26 TO HAVE CONTRIBUTIONS EARMARKED FOR THE LEGION TO BE SENT TO 27 THE F.D.F.A. 28 A NO.
page 180 1 Q WHY? 2 A BECAUSE MR. CARTO HAD ASSURED ME THAT THESE 3 CONTRIBUTIONS EARMARKED FOR THE F.D.F.A. WERE IN FACT GOING 4 TO BE USED TO PAY ATTORNEYS DEFENDING US IN SOME LITIGATION 5 THAT WAS CURRENT AT OR ABOUT THAT TIME. 6 Q WHAT LITIGATION WAS THAT? 7 A I BELIEVE IT WAS THE MERMELSTEIN SUIT OR THE 8 SETTLEMENT OR SOMETHING HAVING TO DO WITH THAT OR THE 9 POSSIBILITIES OF MORE LITIGATION FROM THE SAME PERSON. 10 Q IN FACT, YOU WERE AWARE, WERE YOU — STRIKE THAT. 11 YOU WERE AWARE AT THIS POINT IN TIME IN 1985 THAT 12 THERE WAS A POSSIBILITY OF A JUDGMENT AGAINST THE LEGION IN 13 THAT LITIGATION? 14 A THE CONCERN EXPRESSED BY MR. CARTO AT THE TIME WAS 15 TO NOT HAVE — HAVE AS LITTLE MONEY AS POSSIBLE IN THE 16 LEGION’s ACCOUNT. 17 Q YOU AGREED TO THAT, DID YOU NOT? 18 A YES. 19 Q WHY DID YOU AGREE WITH THAT? 20 A I AGREED WITH IT BECAUSE MY EXPERIENCE WORKING FOR 21 THE CORPORATION WAS THAT MR. CARTO COULD MAKE THESE KIND OF 22 DECISIONS, AND THAT WHEN HE DIRECTED ME TO CARRY OUT SUCH A 23 DECISION, THAT IT WAS — IT WAS LEGITIMATE, IT WAS VALID AND 24 OKAY TO DO IT. 25 Q DID YOU ASK TO SEE ANY BOARD MINUTES AUTHORIZING 26 MR. CARTO TO GIVE YOU SUCH INSTRUCTIONS? 27 A I DID NOT. 28 Q DID YOU ASK TO SEE BOARD MINUTES AUTHORIZING YOU
page 181 1 TO DIVERT CONTRIBUTIONS FROM THE LEGION TO F.D.F.A.? 2 A I DID NOT. 3 Q IN FACT, THIS WASN'T THE ONLY LETTER YOU WROTE 4 REQUESTING DONATIONS TO BE DIVERTED FROM THE LEGION TO THE 5 F.D.F.A.; ISN'T THAT CORRECT? 6 A YOUR QUESTION SAYS “DIVERTED.” I DON'T KNOW IF I 7 LOOKED AT IT THAT WAY AT THE TIME. 8 Q YOU DIDN'T BELIEVE THERE WAS ANY CONVERSION OF ANY 9 OF THE ASSETS OF THE F.D.F.A. BY WRITING SUCH LETTERS? 10 A I DIDN'T THINK ABOUT IT THAT WAY. 11 Q IN FACT, ISN'T IT TRUE — ARE YOU AWARE OF AN 12 ORGANIZATION CALLED THE HISTORICAL EDUCATION FOUNDATION? 13 A NO. 14 Q YOU NEVER HEARD OF THE HISTORICAL EDUCATION 15 FOUNDATION? 16 A I HAVE HEARD OF THE NAME. I'M NOT AWARE OF SUCH 17 AN ORGANIZATION. 18 Q YOU HEARD OF THE NAME. WHAT DID YOU UNDERSTAND 19 THE HISTORICAL EDUCATION FOUNDATION TO BE? 20 A THE HISTORICAL EDUCATION FOUNDATION WAS THE NAME 21 OF THE ACCOUNT THAT THE LEGION STARTED WITH A COMPANY CALLED 22 THE NATIONAL FOUNDATION, AND IT WAS THE NATIONAL FOUNDATION 23 THAT WAS THE — THE HOLDER OF THE ACCOUNT CALLED HISTORICAL 24 FOUNDATION IN WHICH THE LEGION RAISED FUNDS AND PUT IN THIS 25 ACCOUNT AND DISBURSED. 26 Q WHEN YOU SAY “LEGION RAISED FUNDS,” IN FACT, YOU 27 NEVER RAISED ANY FUNDS; YOU HAD MR. CARTO DO THAT. ISN'T 28 THAT CORRECT?
page 182 1 A NO. I THINK DURING THE COURSE OF MY TIME WITH THE 2 LEGION THAT I WAS THE ONE WHO DID MOST ALL THE WORK INVOLVED 3 IN RAISING FUNDS. MR. CARTO MADE SOME — ARRANGED FOR 4 LOANS. I RAISED THE FUNDS. 5 Q MR. MARCELLUS, YOU TESTIFIED YESTERDAY, I BELIEVE, 6 THAT IN 1985, AFTER THE ARSON OF THE LEGION HEADQUARTERS, 7 YOU WENT ABOUT A FUND-RAISING CAMPAIGN TO RAISE MONIES TO 8 GET NEW OFFICES FOR LEGION; ISN'T THAT CORRECT? 9 A YES. 10 Q IN FACT, ISN'T IT TRUE THAT YOU WROTE LETTERS TO 11 VARIOUS PEOPLE ASKING FOR CONTRIBUTIONS? 12 A YES. 13 Q ISN'T IT TRUE THAT MR. CARTO ACTUALLY DRAFTED 14 THOSE LETTERS, TYPED THEM UP AND HAD YOU MERELY SIGN THEM, 15 FOR THE MOST PART? 16 A OH, I DON'T THINK SO. I THINK FOR THE MOST PART, 17 IT WOULD HAVE BEEN A MATTER OF ME DRAFTING THE LETTERS AND 18 SHOWING THEM TO MR. CARTO AND GETTING HIS OKAY ON THEM. 19 Q WHERE DID YOU GET THE NAMES TO SEND TO THE PEOPLE? 20 A WELL, AS IN MY POSITION IS MANAGING DIRECTOR, I 21 HAD ACCESS TO ALL THE -- 22 Q ISN'T IT TRUE MR. CARTO SUPPLIED THE NAMES AND 23 ADDRESSES TO WHERE THE CONTRIBUTIONS OR WHERE THE 24 CONTRIBUTORS WERE FOR YOU TO SEND THE LETTER ITSELF? 25 A THERE’s A POSSIBILITY FROM TIME TO TIME THE LEGION 26 RENTED MAILING LISTS. WE DID ON A COUPLE OF OCCASIONS RENT 27 BLOCKS OF NAMES FROM LIBERTY LOBBY. 28 Q IN FACT, ISN'T IT TRUE, MR. MARCELLUS, THAT WHEN
page 183 1 YOU WROTE TO THE VARIOUS INDIVIDUALS BACK IN 1985 FOR 2 CONTRIBUTIONS FOR THIS BUILDING FUND YOU TALKED ABOUT 3 YESTERDAY, THAT YOU TOLD THEM TO MAKE OUT THE CHECKS PAYABLE 4 TO HISTORICAL EDUCATION FOUNDATION? 5 A YES, THERE WERE SOME OCCASIONS WHERE I DID THAT. 6 YES. 7 Q WHY DID YOU DO THAT? 8 A ESSENTIALLY FOR THE SAME REASON THAT THIS F.D.F.A. 9 BUSINESS WAS GOING ON, AND THAT WAS THAT THIS WAS A SEPARATE 10 ACCOUNT. MR. CARTO ARRANGED TO HAVE IT SET UP SO THAT THE 11 FUNDS COMING INTO THE LEGION WOULDN'T ALL GO INTO THE 12 LEGION’s ACCOUNTS; WOULD, THEREFORE, BE, IN A SENSE, 13 DIFFICULT TO GRAB IF WE WERE — IF WE EXPERIENCED AN 14 UNFAVORABLE JUDGMENT IN A LAWSUIT. 15 Q DID MR. CARTO SET UP THE ACCOUNT? 16 A MR. CARTO DID THE RESEARCH AND MADE THE CONTACTS, 17 GOT THE PAPERWORK AND GAVE IT TO ME AND TOLD ME WHAT TO DO. 18 Q ISN'T IT — YOU DIDN'T SET UP THE ACCOUNT, DID 19 YOU? 20 A I BELIEVE I SIGNED TO ESTABLISH THE ACCOUNT, YES. 21 Q SIR, WASN'T THAT ROBERT BERKEL WHO ESTABLISHED THE 22 ACCOUNT? 23 A THAT ACCOUNT WAS ESTABLISHED LONG BEFORE 24 MR. BERKEL CAME ON THE SCENE. 25 Q WHEN DID THE — STRIKE THAT. 26 WHEN WAS THIS APPLICATION MADE, SIR? 27 A WHAT APPLICATION? 28 Q WASN'T THERE AN APPLICATION TO BEGIN THE ACCOUNT
page 184 1 WITH THE NATIONAL FOUNDATION? 2 A YES. 3 Q AND YOU INDICATED IT’s AN ACCOUNT; IS THAT 4 CORRECT? 5 A YES. 6 Q BUT YOU WERE A DIRECTOR OF THAT ACCOUNT? 7 A I WAS WHAT WAS TERMED, I BELIEVE, IF I REMEMBER 8 CORRECTLY, THE DONOR MANAGER, MEANING THAT I COULD — I HAD 9 THE AUTHORITY TO — TO MAKE DEPOSITS TO THE ACCOUNT AND TO 10 SPECIFY HOW — SPECIFY HOW MONIES WERE TO BE DISBURSED FROM 11 THAT ACCOUNT. 12 Q SO YOU WERE RESPONSIBLE FOR THE DISBURSEMENT OF 13 MONIES FROM THAT ACCOUNT, IS THAT CORRECT, WHILE YOU WERE 14 DONOR MANAGER? 15 A YES. 16 Q SO ANY AMOUNTS OF MONEY THAT CAME FROM THE 17 HISTORICAL EDUCATION FOUNDATION TO THE F.D.F.A. WOULD HAVE 18 BEEN AT YOUR AUTHORIZATION; ISN'T THAT CORRECT? 19 A I'M SORRY. I DIDN'T UNDERSTAND THE QUESTION. 20 Q WELL, LET ME LAY SOME FOUNDATION. 21 DID ANY OF THE MONEY FROM THE HISTORICAL EDUCATION 22 FOUNDATION — STRIKE THAT. 23 WAS THERE ANY MONEY TAKEN FROM THE HISTORICAL 24 EDUCATION FOUNDATION AND PROVIDED TO F.D.F.A.? 25 A YES. 26 Q AND THAT WAS AT YOUR AUTHORIZATION, WAS IT NOT? 27 A IT WAS NOT. 28 Q WHOSE AUTHORIZATION?
page 185 1 A I DON'T KNOW BECAUSE IT HAPPENED DURING THE TIME 2 PERIOD I WAS NOT THERE. 3 Q DID IT EVER HAPPEN DURING THE PERIOD WHILE YOU 4 WERE THERE? 5 A IT MAY HAVE. 6 Q WELL, SIR, WHEN YOU FIRST — WHEN DID YOU FIRST 7 START THIS ACCOUNT, HISTORICAL EDUCATION FOUNDATION? 8 A I THINK IT WAS STARTED IN 1983, 1984. 9 Q WASN'T IT STARTED AFTER THE FIRE? 10 A THERE’s A POSSIBILITY THAT IT WAS. I'M A LITTLE 11 BIT DIM ON THAT. 12 Q AND AT THAT POINT IN TIME, YOU BECAME DONOR 13 MANAGER? 14 A YES. 15 Q DID YOU EVER RELINQUISH THAT TITLE? 16 A WHEN I LEFT THE — RESIGNED FROM THE 17 ORGANIZATION, I — I DIDN'T RESIGN FROM THAT AS A SEPARATE 18 ACTION. I JUST RESIGNED FROM THE ORGANIZATION. 19 Q BUT YOU NEVER FILED AN OFFICIAL RESIGNATION AS 20 DONOR MANAGER, DID YOU? 21 A THAT’s CORRECT. 22 Q YOU WERE ALSO RESPONSIBLE FOR — YOU INDICATED 23 THIS BUILDING FUND. YOU PLACED A LOT OF THE MONEY FOR THE 24 BUILDING FUND INTO THE HISTORICAL EDUCATION FOUNDATION, DID 25 YOU NOT? 26 A YES. 27 Q IN FACT, CAN YOU SHOW — ARE YOU AWARE OF ANY ONE 28 DOCUMENT WHICH SAYS THAT THE HISTORICAL EDUCATION FOUNDATION
page 186 1 WAS AN ACCOUNT OF THE LEGION? 2 A I'M AWARE OF A WHOLE LOT OF DOCUMENTS THAT SAY 3 THAT. 4 Q HOW ABOUT WITH RESPECT TO THE APPLICATION, DO YOU 5 BELIEVE THAT SAID THAT? 6 A I WOULD NEED TO SEE IT TO REFRESH MY MEMORY. 7 Q LET ME HAND THIS TO YOU. IT’s CALLED APPLICATION 8 TO BEGIN A FOUNDATION ACCOUNT WITH NATIONAL FOUNDATION, 9 INC. CAN YOU SHOW ME ANYWHERE ON THE APPLICATION WHERE IT 10 SAYS THE LEGION? 11 THE COURT: DO WE HAVE AN EXHIBIT NUMBER THERE? 12 MR. WAIER: I DON'T BELIEVE WE DO, YOUR HONOR. IT MAY 13 BE IN THE EXHIBIT BOOK ITSELF. WHAT DID I DO WITH THE 14 EXHIBIT BOOK NOW? IT MIGHT BE ONE OF THE EXHIBITS WE 15 LISTED. LET ME CHECK. WE HAVE NOT PROVIDED A NUMBER. OUR 16 LIST GOES UP TO — THE ONE I'LL PROVIDE THE COURT ON MONDAY 17 MORNING, UP TO 171. I CAN MARK THIS FOR IDENTIFICATION AS 18 172 AND PROVIDE THE COURT AND COUNSEL WITH A COPY. I SHOWED 19 THE COUNSEL A COPY OF THAT. 20 THE COURT: THANK YOU. 21 22 BY MR. WAIER: 23 Q LET ME HAND YOU WHAT WE HAVE MARKED FOR 24 IDENTIFICATION AS EXHIBIT 172. DO YOU RECOGNIZE THIS 25 DOCUMENT, SIR? 26 A YES. 27 Q ISN'T THAT THE APPLICATION FOR THE ACCOUNT? 28 A IT APPEARS TO BE PERHAPS THE FIRST PAGE. I'M NOT
page 187 1 SURE IF IT IS THE ENTIRE APPLICATION OR NOT. 2 Q DID YOU PREPARE THAT? 3 A I DID NOT. 4 Q WHO PREPARED THAT? 5 A THIS WAS GIVEN TO ME BY MR. CARTO. 6 Q MR. CARTO PREPARED THAT; ISN'T THAT CORRECT? 7 A IT WAS GIVEN TO ME BY MR. CARTO. 8 Q CAN YOU SHOW ME ANYWHERE ON THIS APPLICATION, 9 FIRST PAGE, THAT IT SAYS IT’s A LEGION ACCOUNT? 10 A I DO NOT SEE WHERE — WHERE ON THE PAGE WHERE IT 11 SAYS IT’s A LEGION ACCOUNT. 12 Q DID MR. — DID MR. CARTO TELL YOU AT THE TIME HE 13 HANDED YOU THIS, THIS WAS A FOUNDATION TO DEFEND THE FIRST 14 AMENDMENT ACCOUNT? 15 A NO. 16 Q IN FACT, DIDN'T HE TELL YOU AT THE TIME THIS 17 ACCOUNT WAS SET UP, THIS WOULD BE AN INDEPENDENT 18 ORGANIZATION SERVICING NOT ONLY THE LEGION BUT ALSO THE 19 F.D.F.A. AND LIBERTY LOBBY? 20 A HE TOLD ME NO SUCH THING. 21 Q DID YOU ASK HIM? 22 A I DIDN'T HAVE TO. HE TOLD ME. 23 Q ARE YOU AWARE OF THE PURPOSE OF THE FOUNDATION TO 24 DEFEND THE FIRST AMENDMENT? 25 A BASED ON THE ITS PROMOTIONAL MATERIALS, YES. 26 Q YOU READ THE PROMOTIONAL MATERIALS? 27 A FROM TIME TO TIME. 28 Q THEIR PURPOSES ARE THE SAME. WHAT DO YOU
page 188 1 UNDERSTAND THE PURPOSES OF THE F.D.F.A. TO BE? 2 A I UNDERSTAND THE PURPOSES OF THE F.D.F.A. IS, AT 3 LEAST IN THE LAST FEW YEARS WHEN I WATCHED ITS PROMOTIONAL 4 MATERIALS, IS TO BILK THE UNAWARE. 5 Q LET ME ASK YOU THIS: THE PURPOSE OF THE F.D.F.A. 6 BACK IN 1985 — WHAT WERE THE PURPOSES IN 1985 THAT YOU 7 WERE AWARE OF? 8 A F.D.F.A. IN 1985? 9 Q YES. 10 A WELL, THE — MR. CARTO TOLD ME THAT THE F.D.F.A. 11 WAS TO DEFEND THE FIRST AMENDMENT. 12 Q AND THAT WAS SIMILAR TO WHAT THE LEGION WAS DOING 13 AS WELL? THAT’s THE PURPOSE OF THE LEGION, WAS TO DEFEND 14 THE FIRST AMENDMENT AS WELL? 15 A ON A MORE BROAD BASIS. 16 Q WELL, THE PURPOSES WERE ESSENTIALLY THE SAME 17 BETWEEN THE TWO; WASN'T THAT TRUE? 18 A NO. 19 Q WELL, IN FACT, YOU UNDERSTOOD THAT THE FOUNDATION 20 TO DEFEND THE FIRST AMENDMENT ALSO — ONE OF THE PURPOSES 21 WAS TO ADVANCE THE CAUSE OF HISTORY BY PROMOTING AND 22 UNDERTAKING SCHOLARLY AND ORIGINAL RESEARCH IN SIGNIFICANT 23 AREAS? 24 A ARE YOU TALKING ABOUT THE F.D.F.A. OR H.E.F.? 25 Q THE F.D.F.A. 26 A THAT’s AN H.E.F. APPLICATION. 27 Q I'M NOT ASKING YOU THAT. 28 A NO. THE ANSWER, THEN, IS NO, THE F.D.F.A.
page 189 1 PURPOSES HAD NOTHING TO DO WITH HISTORY, AS FAR AS I KNOW. 2 Q AND HOW ABOUT TO PRESERVE AND DISSEMINATE 3 HISTORICAL FINDINGS AMONG HISTORIANS AND THE PUBLIC? 4 A THAT WAS NOT PART OF THE — OF THE F.D.F.A. 5 PURPOSES AS I UNDERSTAND IT. 6 Q I THOUGHT THE F.D.F.A. PURPOSES WERE TO DEFEND THE 7 FIRST AMENDMENT -- 8 A YES. 9 Q — AMONG OTHER THINGS? 10 A NO. I UNDERSTAND IT TO BE AN ORGANIZATION -- 11 INITIALLY, AN ORGANIZATION THAT DEFENDED THE FIRST 12 AMENDMENT, PUBLISHING, FREEDOM OF SPEECH, SO ON, SO FORTH. 13 Q THAT WAS ONE OF THE CAUSES OF THE HISTORICAL 14 EDUCATION FOUNDATION AS WELL, WASN'T IT? 15 A HISTORICAL EDUCATION FOUNDATION WAS MORE 16 INTERESTED IN HISTORICAL MATERIALS AND DISSEMINATING 17 HISTORY. 18 Q WASN'T THAT ONE OF THE CAUSES OF THE HISTORICAL 19 EDUCATION FOUNDATION? 20 A I DON'T THINK SO. 21 Q WASN'T THAT ONE OF THE CAUSES OF THE LEGION OF THE 22 SURVIVAL OF THE FREEDOM, INC.? 23 A I DON'T THINK IT IS. 24 Q HOW ABOUT THE I.H.R., INSTITUTE OF HISTORICAL 25 REVIEW? 26 A NO. 27 Q SO IT WASN'T ONE OF THE CAUSES OF THE LEGION OR 28 THE INSTITUTE OF HISTORICAL REVIEW TO PROMOTE THE DEFENSE OF
page 190 1 THE FIRST AMENDMENT AND CONSTITUTIONAL RIGHTS RELATIVE TO 2 THE FIRST AMENDMENT? 3 MR. MUSSELMAN: OBJECTION. COMPOUND. 4 THE COURT: SUSTAINED. 5 6 BY MR. WAIER: 7 Q WASN'T THAT ONE OF THE DEFENSES RAISED BY THE 8 LEGION IN THE MERMELSTIEN CASE, WAS THE FIRST — ITS RIGHTS 9 UNDER THE FIRST AMENDMENT? 10 MR. MUSSELMAN: OBJECTION. RELEVANCE. 11 THE COURT: SUSTAINED. WHAT’s THE RELEVANCE OF THE 12 MERMELSTEIN CASE? I KNOW ABOUT — I HEARD YOUR OPENING 13 STATEMENTS AND ALL AS TO THE ISSUE THAT’s IN FRONT OF ME, 14 WHICH IS THE AUTHORITY OF MR. CARTO, WHETHER HE ABUSED THE 15 AUTHORITY AS TO THE FARREL ESTATE. 16 MR. WAIER: WELL, YOUR HONOR, NO. ONE OF THE ISSUES, 17 IF YOU ARE ASKING FOR AN OFFER OF PROOF, IS VERY SIMPLE. 18 THESE ORGANIZATIONS ALL WORK TOGETHER. THEY WERE ALL 19 INTEGRATED. THEREFORE, FUNDS THAT WOULD HAVE BEEN EARMARKED 20 FOR THE LEGION COULD PROPERLY BE EARMARKED FOR THE F.D.F.A., 21 FOR LIBERTY LOBBY, AND IN OTHER WORDS, THERE WASN'T A 22 CONVERSION OF ASSETS PER SE BY PRIOR CONDUCT, EVEN THROUGH 23 MR. MARCELLUS TESTIFIED THAT MONIES WENT FREELY FROM ONE 24 CORPORATION BACK TO ANOTHER CORPORATION, THAT THEY WERE 25 INTERMINGLED. BECAUSE IT WENT TO ONE CERTAIN CAUSE, THAT 26 GOES TO CONVERSION. THAT GOES TO FRAUD. AND THAT GOES TO 27 BREACH OF FIDUCIARY DUTY, ALL OF THESE ISSUES. 28 THE COURT: I'M NOT SO SURE I AGREE WITH YOU. I KNOW
page 191 1 THAT’s THE ARGUMENT. I CAN TELL THAT FROM MR. Carto’s 2 TESTIMONY. BUT EACH ONE OF THESE ORGANIZATIONS IS A LEGAL 3 INDIVIDUAL IN THE EYES OF THE LAW. WHEN MR. CARTO — IF HE 4 IS TOLD — IF I FIND THAT TO BE TRUE THAT HE WAS SUPPOSED 5 TO RECOVER MONIES FROM THE FARREL ESTATE ON BEHALF OF THE 6 LEGION, AS I UNDERSTAND THE LAW, EVEN THOUGH IT MIGHT BE A 7 GOOD THING FOR HIM TO DO, HE HAS NO AUTHORITY TO DO ANYTHING 8 OTHER THAN TURN THOSE OVER TO THE LEGION. HE DOESN'T CARRY 9 OUT THE WISHES OF THE DECEDENT MISS FARREL OR HIS OWN 10 WISHES. HE ONLY OPERATES AS AN AGENT OF THE LEGION. THAT'S 11 THE ISSUE HERE. HE CAN'T DECIDE TO — WHERE THEY GO, EVEN 12 IF THEY'RE TO A BETTER ORGANIZATION. 13 MR. WAIER: THAT ISSUE WITH RESPECT TO THE WILL, THE 14 WILL NEVER DESIGNATED ANYTHING TO THE LEGION. THAT’s THE 15 FIRST ISSUE. THE WISHES OF JEAN FARREL-EDISON, THE — THE 16 WILL ITSELF LITIGATED IN EUROPE. 17 THE COURT: WHEN IT WAS SETTLED OUT, THE LEGION GOT 45 18 PERCENT, THE RESIDUAL BENEFICIARY UNDER THE WILL. IT DIDN'T 19 MENTION ANY OF THE OTHER ORGANIZATIONS. 20 MR. WAIER: IT MENTIONED MR. CARTO. 21 THE COURT: I WILL LET YOU DEVELOP THE DEFENSE OVER 22 THEIR OBJECTION. I'M TELLING YOU, THAT JUST BECAUSE I LET 23 IT IN DOES NOT NECESSARILY MEAN I'M BUYING THE ARGUMENT THAT 24 I HEARD SO FAR WHERE THE MONIES SHOULD HAVE GONE. YOU -- 25 IF YOU WANT TO PROVIDE ME LAW I'M WRONG -- 26 MR. WAIER: I'LL BE MORE THAN — THAT’s PART AND 27 PARCEL OF THE CLOSING ARGUMENT WITH THE LAW. 28 THE COURT: I CERTAINLY HOPE SO. GO AHEAD. OVERRULE
page 192 1 THE OBJECTION. I'M TELLING YOU, THAT BECAUSE I'M HEARING IT 2 DOESN'T MEAN I THINK IT’s WORTH ANYTHING. 3 4 BY MR. WAIER: 5 Q NOW I'M LOST AGAIN. I CAN'T REMEMBER WHERE I WAS 6 AT. 7 LET ME GO INTO -- 8 THE COURT: THE QUESTION WAS WHETHER OR NOT THIS WASN'T 9 THE SAME DESIRE OF BOTH ORGANIZATIONS. I BELIEVE THAT WAS 10 THE -- 11 THE WITNESS: YOU ARE TALKING -- 12 MR. WAIER: WHAT I'M INDICATING BY THIS, IT WAS THE 13 DESIRE OF THE LEGION, THROUGH MR. MARCELLUS, THAT ANYTHING 14 THAT JEAN FARREL DID GOES TO SOME OTHER ORGANIZATION, 15 INCLUDING THE F.D.F.A. THAT WAS CARRIED INTO EFFECT. 16 MR. MUSSELMAN: THAT’s AN ARGUMENT, NOT A QUESTION. 17 MR. WAIER: AN OFFER OF PROOF. 18 THE COURT: THAT’s THE OFFER OF PROOF. I INDICATED HOW 19 I FEEL ABOUT THAT ARGUMENT AND OVERRULE YOUR OBJECTION. 20 21 BY MR. WAIER: 22 Q MR. MARCELLUS, YOU INDICATED YESTERDAY THAT -- 23 ACTUALLY, YOU INDICATED TODAY THAT MR. CARTO WAS THE FOUNDER 24 OF THE INSTITUTE OF HISTORICAL REVIEW, WHICH IS A PART OF 25 THE LEGION; ISN'T THAT CORRECT? 26 A YES. 27 Q AND WHAT DUTIES DID YOU BELIEVE THAT THE FOUNDER 28 HAD?
page 193 1 A IT DIDN'T OCCUR TO ME. 2 Q IN FACT, YOU TALKED ABOUT YESTERDAY THROUGH — ON 3 DIRECT EXAMINATION, THAT MR. CARTO CONTINUED TO PUT HIMSELF 4 OUT AS THE INSTITUTE OF HISTORICAL REVIEW AFTER HE WAS 5 OUSTED FROM THE LEGION; ISN'T THAT CORRECT? 6 A DID I MAKE THAT STATEMENT? 7 Q YES. DO YOU RECALL TALKING ABOUT THAT? 8 A I KNOW HE DID, BUT I DON'T RECALL MAKING THAT 9 STATEMENT. 10 Q DO YOU THINK IT WAS WRONG FOR HIM TO SAY HE WAS 11 AFFILIATED WITH THE INSTITUTE OF HISTORICAL REVIEW AFTER 12 SEPTEMBER 1993 WHEN HE WAS ALLEGEDLY OUSTED FROM THE LEGION? 13 A YES. 14 Q SIR, DIDN'T YOU ALSO SEND OUT WRITTEN MATERIALS 15 UNDER THE LEGION AND INSTITUTE OF HISTORICAL REVIEW 16 LETTERHEAD AFTER THAT POINT IN TIME WHERE YOU NAMED HIM AS 17 THE FOUNDER? 18 A SOME LETTERHEAD WAS USED AFTER THAT POINT, YES. 19 IT HAD HIS NAME AS FOUNDER. 20 Q AS AFFILIATED WITH THE LEGION; ISN'T THAT CORRECT? 21 A THAT’s CORRECT. 22 Q THAT WAS NOT JUST SOMETIME, IT WAS ALL THE WAY 23 THROUGH INTO 1984; ISN'T THAT CORRECT? 24 A '84? 25 Q 1994, EXCUSE ME. 26 A IT MAY VERY WELL HAVE TAKEN US THAT LONG TO PRINT 27 NEW LETTERHEAD, YES. 28 Q WELL, WHEN YOU WERE SENDING THESE LETTERHEADS OUT
page 194 1 WITH MR. Carto’s NAME ON IT AFTER YOU ALLEGEDLY OUSTED HIM 2 OR HAD HIM OUSTED FROM THE LEGION, DID YOU BELIEVE THAT 3 PEOPLE WOULD JUST IGNORE THE FACT THAT YOU PUT LETTERHEAD 4 OUT THAT WAS AFFILIATING MR. CARTO WITH THE LEGION? 5 A WELL, HE WAS THE FOUNDER. 6 Q YOU INDICATED SOME DEALINGS THAT THE LIBERTY -- 7 STRIKE THAT. 8 DID LIBERTY LOBBY HAVE ANY DEALINGS WITH THE 9 LEGION? 10 A SOME. 11 Q THAT WAS, I THINK YOU IDENTIFIED, JUST BUYING 12 BOOKS BACK AND FORTH? 13 A ESSENTIALLY, AND SOME MAILING LISTS RENTAL. BY 14 AND LARGE, MR. CARTO TOOK GREAT PAINS TO KEEP THE TWO 15 ORGANIZATIONS SEPARATE. 16 Q WHAT DO YOU MEAN TOOK GREAT PAINS KEEPING THE 17 ORGANIZATIONS SEPARATE? 18 A HE FORBADE ME TO TALK TO ANYONE AT LIBERTY LOBBY. 19 Q DID YOU BELIEVE HE HAD A RIGHT TO DO THAT? 20 A I DIDN'T — IT DIDN'T OCCUR TO ME WHETHER OR NOT 21 HE HAD A RIGHT. IT WAS A — WHAT HE TOLD ME TO DO, SO I 22 CARRIED OUT HIS WISHES. 23 Q DID YOU UNDERSTOOD — WHEN DID YOU FIRST 24 UNDERSTAND MR. CARTO HAD AN AFFILIATION WITH LIBERTY LOBBY? 25 A QUITE EARLY ON WHEN I STARTED THE EMPLOYMENT WITH 26 THE LEGION. 27 Q END OF 1970'S? EARLY 1980'S? 28 A I WOULD SAY PROBABLY WITHIN WEEKS OF MY STARTING
page 195 1 TO WORK THERE. 2 Q AT THAT POINT IN TIME, WHAT UNDERSTANDING DID YOU 3 HAVE AS TO AN AFFILIATION BETWEEN LIBERTY LOBBY AND THE 4 LEGION? 5 A MY UNDERSTANDING WAS THAT THERE WAS NO 6 RELATIONSHIP BETWEEN THE TWO ENTITIES OTHER THAN THE FACT 7 THAT MR. CARTO WAS A KIND OF AGENT OR CONSULTANT TO THE 8 LEGION. 9 Q NOW, WHEN YOU RETURNED IN 1987 — STRIKE THAT. 10 AFTER THE ARSON THAT TOOK PLACE AT THE LEGION 11 HEADQUARTERS 1984, DID THE LEGION EVENTUALLY MOVE INTO NEW 12 OFFICES? 13 A YES. 14 Q WHERE WAS THAT? 15 A IT WAS 1619 CABRILLO AVENUE. 16 Q WASN'T ONE OF YOUR LANDLORDS LIBERTY LOBBY? 17 A NO. 18 Q WHO WERE YOUR LANDLORDS? 19 A THE GUY WHO OWNED THE TAILOR SHOP NEXT DOOR. 20 Q AFTER THAT, DID YOU MOVE INTO ANY BUILDINGS IN 21 WHICH THE FOUNDATION TO DEFEND THE FIRST AMENDMENT WAS THE 22 LANDLORD? 23 A YES. 24 Q WHEN WAS THAT? 25 A THAT WOULD HAVE BEEN THE END OF '85. NO, DECEMBER 26 OF '85, I THINK. 27 Q JUST ABOUT THE TIME YOU WERE LEAVING? 28 A JUST BEFORE. I SORT OF OVERSAW THE MOVE AND THEN
page 196 1 I RESIGNED. 2 Q NOW, IN THAT REGARD, MR. MARCELLUS, DID YOU HAVE 3 ANOTHER LANDLORD — DID THE LEGION HAVE ANOTHER LANDLORD? 4 A LATER, YES. 5 Q WHO WAS THAT? 6 A I BELIEVE LIBERTY LIFELINE FOUNDATION. 7 Q WHAT WAS LIBERTY LIFELINE FOUNDATION? 8 A GOOD QUESTION. 9 Q DIDN'T YOU SIGN THE LEASE WITH LIBERTY LIFELINE? 10 A I PROBABLY DID. 11 Q WELL, DID YOU TRY TO FIND OUT WHO THE LANDLORD WAS 12 BEFORE YOU SIGNED THE LEASE? 13 A I UNDERSTOOD IT TO BE ELISABETH CARTO. 14 Q WHERE DID YOU GET THAT UNDERSTANDING? 15 A THE H.E.F. USED A P.O. BOX IN TORRANCE AND MAIL 16 USED TO COME FOR LIBERTY LIFELINE FOUNDATION ADDRESSED TO 17 ELISABETH CARTO. AND I ACTUALLY, AT SOME POINT, SAW SOME 18 PROMOTIONAL MATERIALS THAT HAD AT ONE TIME BEEN PRODUCED BY 19 SOMETHING CALLING THE LIBERTY LIFELINE FOUNDATION. I WAS 20 GENERALLY FAMILIAR WITH IT. ELISABETH WAS THE PERSON WHO 21 CONTROLLED THAT ENTITY. 22 Q BUT YOU COMMITTED THE LEGION TO A LEASE WITH 23 LIBERTY LIFELINE, DID YOU NOT? 24 A YES. 25 Q WHY? 26 A BECAUSE THE LEGION NEEDED THE SPACE AND LIBERTY 27 LIFELINE WAS WILLING TO LEASE THE SPACE. AND BECAUSE 28 ELISABETH CARTO WAS ASSOCIATED WITH THE LEGION AND HAD BEEN
page 197 1 FOR YEARS, I HAD NO REASON TO DOUBT THAT IT WAS LEGITIMATE. 2 Q IN 19 — YOU TESTIFIED YESTERDAY — JUST SO I'M 3 CLEAR, YESTERDAY YOU TESTIFIED THAT IN 1985 AFTER JEAN 4 FARREL-EDISON’s DEATH, THAT THE LEGION’s ASSETS WERE ABOUT 5 $200,000? 6 A I THINK I TESTIFIED MAYBE AFTER HER DEATH, THE 7 LEGION’s ASSETS MIGHT HAVE BEEN OVER $100,000 OR 125-. I 8 DON'T THINK I SAID 200,000. 9 Q I BELIEVE YOU SAID 150- TO 200,000. 10 MR. MUSSELMAN: OBJECTION. COUNSEL IS INSTRUCTING THE 11 WITNESS WHAT THE TESTIMONY WAS. IT’s NOT A QUESTION. 12 THE COURT: OVERRULED. I THINK HE IS TRYING TO JOG THE 13 MEMORY. 14 MR. MUSSELMAN: HE SAID CORRECT. 15 16 BY MR. WAIER: 17 Q 1986, DIDN'T YOU INDICATE THAT THE ASSETS OF THE 18 LEGION WERE 200,000? 19 A '86. 20 Q YES? 21 A I THINK I MIGHT HAVE SAID BETWEEN 150- TO 200,000. 22 Q HOW ABOUT 1987? 23 A AROUND THE SAME APPROXIMATE AMOUNT. 24 Q ARE YOU FAMILIAR WITH A GENTLEMAN WITH THE NAME OF 25 ROBERT BERKEL? 26 A YES. 27 Q HE SUCCEEDED YOU AFTER YOU LEFT THE LEGION IN 28 1986?
page 198 1 A THAT’s CORRECT. 2 Q AND HE WAS WITH THE LEGION FOR A PERIOD OF TIME 3 UNTIL YOU RETURNED? 4 A HE WAS THERE, YES, JUST ABOUT THE ENTIRE PERIOD. 5 I BELIEVE I WAS ABSENT. 6 Q WHAT WERE THE ASSETS OF THE LEGION IN 1986? WHAT 7 DID THEY COMPRISE? 8 A THEY COMPRISED ESSENTIALLY, I WOULD SAY, CASH AND 9 INVENTORY. 10 Q HOW MUCH CASH? 11 A I DON'T RECALL WHAT THE BREAKDOWN ON THE ASSETS 12 WERE. 13 Q WASN'T VERY MUCH, WAS IT? 14 A WHEN I CAME BACK TO WORK, THERE — THE POINT I 15 CAME BACK TO WORK IN '87? 16 Q YES. 17 A THERE WASN'T A LOT OF CASH IN JUNE OF '87 WHEN I 18 RETURNED. 19 Q IN FACT, WHEN YOU TESTIFIED AS TO 1986, THAT -- 20 THE ASSETS OF 1986, YOU WERE RELYING ON FINANCIAL 21 STATEMENTS? 22 A I WAS RELYING UPON MY — WHAT I RECALLED ABOUT 23 THE FINANCIAL STATEMENTS DURING THAT PERIOD, YES. 24 Q SIR, ISN'T IT TRUE THAT YOU SAID — STRIKE THAT. 25 SOME OF THE ASSETS WERE IN BOOK INVENTORY; IS THAT 26 CORRECT? 27 A YES. 28 Q AND SOME WERE IN OFFICE FURNITURE; IS THAT
page 199 1 CORRECT? 2 A THERE WERE SOME. YEAH, SURE. 3 Q SOME WERE INVOLVED IN — SOME OF THE ASSETS WERE 4 OTHER TANGIBLE THINGS, SUCH AS PICTURES AND SO FORTH? 5 A I DON'T KNOW WHAT THE DEGREE TO WHICH THOSE ASSETS 6 WOULD AMOUNT TO MUCH, BUT I WILL GRANT YOU YES, THEY WERE 7 PROBABLY INCLUDED IN THE ASSETS. 8 Q SIR, ISN'T IT TRUE THAT ALL OF THE ASSETS OF THE 9 LEGION WERE ENCUMBERED IN 1986? 10 A THEY MAY VERY WELL HAVE BEEN, YES. 11 Q IN FACT, ISN'T IT TRUE THAT THERE WAS — THEY 12 WERE ENCUMBERED AS SECURITY FOR A PROMISSORY NOTE OF 13 $40,000? 14 A THAT COULD VERY WELL BE TRUE, YES. 15 Q IN FACT, YOU KNOW THAT COULD BE TRUE, DON'T YOU? 16 A WITHOUT REFRESHING MY MEMORY, SEEING THE DOCUMENT 17 TO THE TIMES AND THE AMOUNTS, NO, I DON'T HAVE A CLEAR 18 RECOLLECTION. 19 Q IN 1991, DIDN'T YOU INDICATE TO THIS COURT THAT 20 THE LEGION HAD APPROXIMATELY $200,000 IN ASSETS? 21 A I WASN'T HERE IN 1991 IN THIS COURT. 22 Q NO, NO. DID YOU INDICATE TO THIS COURT THAT IN 23 1991, THE LEGION HAD ASSETS OF $200,000? 24 A YES. I MAY VERY WELL HAVE TESTIFIED TO THAT. 25 Q ISN'T IT TRUE THOSE ASSETS WERE ENCUMBERED, ALL OF 26 THEM? 27 A WELL, I SINCE KNOW THEY WERE — THEY SHOULDN'T 28 HAVE BEEN ENCUMBERED.
page 200 1 Q SIR, PLEASE ANSWER THE QUESTION. ISN'T IT TRUE 2 THAT IN 1991, THE $200,000 WORTH OF ASSETS THAT YOU TALKED 3 ABOUT WERE ALL ENCUMBERED? 4 A FALSELY, YES. 5 Q FALSELY? 6 A YES, I BELIEVE THEY WERE FALSELY ENCUMBERED. 7 Q SIR, DIDN'T YOU FILE — YOU, MR. MARCELLUS, FILE 8 A UCC-1 ENCUMBERING ALL OF THOSE ASSETS? 9 A YES, SIR, I DID. 10 Q SIR, WELL -- 11 A EXCUSE ME. NO, I DID NOT FILE IT. I SIGNED IT. 12 Q AND YOU SIGNED THAT KNOWING THAT IT WAS GOING TO 13 BE FILED WITH THE SECRETARY OF STATE OF THIS — OF THIS 14 STATE; ISN'T THAT CORRECT? 15 A I ASSUMED IT WOULD BE FILED IF I SIGNED IT, YES. 16 Q WHICH ENCUMBERED EVERY SINGLE ASSET OF THE LEGION; 17 ISN'T THAT CORRECT? 18 MR. MUSSELMAN: CALLS FOR LEGAL CONCLUSION. 19 THE COURT: SUSTAINED. HE CAN TESTIFY WHAT HE THOUGHT 20 IT ENCUMBERED. 21 MR. WAIER: SURE. 22 23 BY MR. WAIER: 24 Q YOU UNDERSTOOD THAT TO COVER EVERY SINGLE ASSET OF 25 THE LEGION; ISN'T THAT CORRECT? 26 A NO, ONLY BOOKS AND INVENTORY. 27 MR. WAIER: I WOULD LIKE TO MARK AS NEXT IN ORDER, YOUR 28 HONOR, THE UCC-1, AND IT’s AS LEGIBLE AS I CAN GET IT
page 201 1 FOR — FROM THE LEGION TO THE HISTORICAL EDUCATION 2 FOUNDATION. IT’s NEXT IN ORDER, EXHIBIT 173. 3 4 BY MR. WAIER: 5 Q LET ME HAND YOU, ALTHOUGH IT’s NOT THAT LEGIBLE. 6 DO YOU RECOGNIZE THAT DOCUMENT, SIR? 7 A I BELIEVE I HAVE SEEN THIS BEFORE, YES. 8 Q I WILL REPRESENT TO YOU THAT IF YOU RECALL, THIS 9 WAS SHOWN TO YOU IN PRIOR LITIGATION BETWEEN THE PARTIES 10 CONCERNING THE $187,000 PROMISSORY NOTE. 11 A H.E.F. BUSINESS? 12 Q YES. 13 A YES. 14 Q DO YOU RECALL THAT AT LEAST THE ONE SHOWN TO YOU 15 THERE, YOUR SIGNATURE DID APPEAR, ALTHOUGH IT’s NOT AS 16 LEGIBLE HERE? 17 A WELL, NOT ONLY IS IT NOT AS LEGIBLE, I CAN'T EVEN 18 SEE IT. 19 Q DO YOU RECALL SIGNING SUCH A UCC-1? 20 A I BELIEVE I DID. I BELIEVE I DID SIGN THE UCC-1. 21 Q DO YOU BELIEVE THIS IS THE ONE YOU SIGNED? I CAN 22 PROVIDE YOU A MORE CLEARER ONE ON MONDAY WHEN YOU COME 23 BACK. BUT THIS, I WILL STATE TO YOU, CAME FROM YOUR OWN 24 EXHIBITS PRODUCED DURING YOUR DEPOSITION. 25 MR. MUSSELMAN: OBJECTION, YOUR HONOR. HE’s TELLING 26 THE WITNESS WHAT THE EXHIBIT IS. 27 MR. WAIER: JUST TO REFRESH THE RECOLLECTION. 28 MR. MUSSELMAN: NO SUCH EVIDENCE WITHOUT FOUNDATION.
page 202 1 THE COURT: OVERRULE THE OBJECTION. 2 3 BY MR. WAIER: 4 Q DOES THIS LOOK FAMILIAR TO THE UCC-1 YOU SIGNED? 5 A IT LOOKS SIMILAR TO ONE THAT — THAT I SAW IN THE 6 H.E.F. CASE WHERE MY SIGNATURE WAS MORE LEGIBLE. 7 Q AND DO YOU RECALL, ON THIS UCC-1 STATEMENT THAT 8 WAS SIGNED, THE LEGION GAVE AS SECURITY ALL OF THE OFFICE 9 EQUIPMENT, LEASEHOLD INTEREST — LEASEHOLD INTEREST, MAILING 10 LISTS, BOOKS AND BOOK INVENTORY, ACCOUNTS RECEIVABLE -- 11 THAT WOULD INCLUDE THE FARREL ESTATE; ISN'T THAT CORRECT? 12 MR. MUSSELMAN: OBJECTION. CALLS FOR LEGAL CONCLUSION. 13 THE COURT: SUSTAINED. 14 15 BY MR. WAIER: 16 Q DIDN'T YOU CONSIDER THE FARREL ESTATE TO BE 17 ACCOUNTS RECEIVABLE OF THE LEGION? 18 A DIDN'T OCCUR TO ME IT WAS AN ACCOUNT RECEIVABLE. 19 IT’s NOT AN ACCOUNT RECEIVABLE AS I UNDERSTAND AN ACCOUNT 20 RECEIVABLE. 21 Q DIDN'T YOU THINK THE MONEY WAS OWED TO THE LEGION? 22 A WELL, I DIDN'T KNOW WHAT LEGALLY HAD TO TAKE PLACE 23 BEFORE IT COULD BE DETERMINED THAT IT WAS SUPPOSED TO BE THE 24 LEGION'S. 25 Q HOW ABOUT FUTURE ACCOUNT RECEIVABLES? THAT WAS 26 ALSO LISTED ON THIS UCC-1. 27 A YES, I CAN SEE THAT. 28 Q DID YOU BELIEVE THE FARREL ESTATE WAS A FUTURE
page 203 1 ACCOUNT RECEIVABLE? 2 A I DON'T — NO, I DON'T THINK IT OCCURRED TO ME 3 THIS INVOLVED ANYTHING TO DO WITH THE FARREL ESTATE. 4 Q IT GOES ON, “AND ALL OTHER TANGIBLE AND INTANGIBLE 5 ASSETS OWNED BY THE DEBTOR,” THE DEBTOR BEING THE LEGION. 6 SIR, WHAT OTHER ASSETS WERE LEFT TO THE LEGION THAT WERE 7 LEFT UNENCUMBERED? 8 A THE CEILING FAN MAYBE. I DON'T KNOW. THIS IS 9 PRETTY THOROUGH. 10 Q SIR, DOES THAT NOW REFRESH YOUR RECOLLECTION THAT 11 ALL OF THE ASSETS, INCLUDING ACCOUNTS RECEIVABLE AND FUTURE 12 ACCOUNTS RECEIVABLE, WERE ENCUMBERED AS OF 1991? 13 MR. MUSSELMAN: CALLS FOR LEGAL CONCLUSION. 14 THE COURT: OVERRULED. I KNOW WHAT THE ANSWER IS. GO 15 AHEAD. 16 MR. WAIER: I'M ASKING IF IT REFRESHES HIS 17 RECOLLECTION. HE STATED IT WASN'T. I ASK IF THIS REFRESHES 18 HIS RECOLLECTION. 19 THE WITNESS: ASSUMING I SIGNED THIS, IF I DID SIGN IT 20 AT THE TIME I SIGNED IT, YES, I BELIEVED AT THAT TIME THAT 21 THE ASSETS WERE — ALL THE ASSETS WERE ENCUMBERED. 22 23 BY MR. WAIER: 24 Q THIS WAS SIGNED IN APPROXIMATELY JULY OF 1991; 25 ISN'T THAT CORRECT? 26 A THAT WOULD FIT. 27 Q I BELIEVE YOU TESTIFIED IN PRIOR LITIGATION THAT 28 THIS WAS DONE AT THE DIRECTION OF MR. CARTO?
page 204 1 A YES. 2 Q WELL, ISN'T IT TRUE IT WAS DONE AT THE DIRECTION 3 OF WILLIAM F. HULSY, THE ATTORNEY FOR THE LEGION, WHO YOU 4 IDENTIFIED YESTERDAY? 5 A WHO I IDENTIFIED YESTERDAY? 6 Q DIDN'T YOU IDENTIFY HIM AS BEING THE ATTORNEY FOR 7 THE LEGION? 8 A PERHAPS I DID. I DON'T RECALL. MAYBE I DID. 9 Q WAS HE THE ATTORNEY FOR THE LEGION IN 1991? 10 A YES. 11 Q ISN'T IT TRUE THAT YOU DID THIS AT THE DIRECTION 12 OF MR. HULSY? 13 A NO. 14 MR. WAIER: I WOULD LIKE TO HAVE MARKED AS NEXT IN 15 ORDER — WOULD BE EXHIBIT 174 MARKED FOR IDENTIFICATION A 16 LETTER DATED MAY 29, 1991, TO TOM MARCELLUS FROM WILLIAM 17 HULSY. 18 MR. BEUGELMANS: MAY WE SEE IT, COUNSEL? 19 MR. WAIER: I'LL HAND YOU A COPY. 20 21 BY MR. WAIER: 22 Q LET ME HAND YOU WHAT I HAVE MARKED FOR 23 IDENTIFICATION AS EXHIBIT 174. MR. MARCELLUS, ISN'T IT TRUE 24 THAT AT THIS POINT IN TIME, YOU WERE ASKING MR. HULSY, THE 25 ATTORNEY FOR THE LEGION, WHAT YOU COULD DO TO HIDE ASSETS 26 FROM CREDITORS? SIR, BEFORE YOU LOOK AT THE LETTER, COULD 27 YOU ANSWER MY QUESTION? 28 A WHAT WAS THE QUESTION?
page 205 1 Q ISN'T IT TRUE THAT AT THIS TIME IN MAY OF 1991, 2 THAT YOU WERE ASKING MR. HULSY HOW THE LEGION COULD BEST 3 HIDE ASSETS FROM CREDITORS OR POTENTIAL CREDITORS? 4 A I BELIEVE I DID ASK THAT OF MR. HULSY, YES. 5 Q IN FACT, HE RESPONDED WITH A LETTER; ISN'T THAT 6 CORRECT? 7 A YES. 8 Q THIS IS THE LETTER YOU HAVE IN FRONT OF YOU? 9 A YES. 10 Q AND YOU DO RECALL RECEIVING THIS AT ABOUT THAT 11 TIME? 12 A YES. 13 Q AND THIS WAS AT THE SAME POINT IN TIME — STRIKE 14 THAT. 15 THIS WAS AFTER THE JEAN FARREL-EDISON ESTATE HAD 16 BEEN SETTLED BY MR. CARTO; ISN'T THAT CORRECT? 17 A I DON'T KNOW. I DON'T KNOW EXACTLY WHEN THAT WAS 18 SETTLED. I HAVE TO SEE THE DOCUMENTS TO REFRESH MY MEMORY. 19 Q DO YOU RECALL IT WAS SETTLED IN 1990? 20 A SEEMS LIKE 1990. 21 Q ACTUALLY, BEFORE THE LETTER, WASN'T IT? 22 A IF IT WAS 1990, THEN IT WAS BEFORE THIS LETTER. 23 Q SIR, CAN YOU SHOW ME ANYWHERE IN THE LETTER, IF 24 YOU COULD — SHOW ME ANYWHERE IN THE LETTER WHERE IT TALKS 25 ABOUT ANYTHING COMING FROM THE JEAN FARREL-EDISON ESTATE. 26 MR. MUSSELMAN: OBJECTION. THIS WITNESS HAS TESTIFIED 27 HE WROTE THE LETTER. 28
page 206 1 BY MR. WAIER: 2 Q YOU REVIEWED THE LETTER -- 3 THE COURT: COUNSEL, WHEN YOU HEAR THE OBJECTION, 4 INSTEAD OF ARGUING WITH HIM — YOU WILL NEVER AGREE WITH 5 HIM; OTHERWISE, YOU WOULDN'T NEED ME. 6 MR. WAIER: I'M WITHDRAWING THE QUESTION AND ASKING A 7 NEW QUESTION. I'M SORRY. I APOLOGIZE, YOUR HONOR. 8 9 BY MR. WAIER: 10 Q SIR, YOU REVIEWED THE LETTER, DID YOU NOT, AT THE 11 TIME — ABOUT THE TIME THAT — MAY 29, 1991? 12 A I'M SURE I DID. 13 Q AND IF YOU WILL TAKE A LOOK AT THIS LETTER, AT THE 14 TIME YOU GOT IT, YOU READ IT AND YOU ACTED ON IT, DID YOU 15 NOT? 16 A NO. 17 MR. MUSSELMAN: COMPOUND. THREE DIFFERENT PARTS. 18 19 BY MR. WAIER: 20 Q OKAY. AT THE TIME YOU GOT THIS LETTER, YOU ACTED 21 UPON THE ADVICE MR. HULSY GAVE YOU; ISN'T THAT CORRECT? 22 A NO, THAT’s NOT CORRECT. 23 Q YOU DIDN'T FILE THE UCC-1 AFTER THAT ENCUMBERING 24 THE ASSETS OF THE LEGION? 25 A THERE WERE INTERVENING EVENTS AND OTHER 26 PERSONALITIES INVOLVED. I DIDN'T JUST GET THIS LETTER AND 27 DECIDE TO ACT. NO, I TOOK IT UP WITH THE CARTOS, WHO ASKED 28 ME TO WRITE TO HULSY IN THE FIRST PLACE TO GET THIS
page 207 1 INFORMATION. 2 Q WILLIS CARTO — YOU UNDERSTOOD WILLIS CARTO HAD 3 CONVERSATIONS WITH MR. HULSY AT THIS TIME; ISN'T THAT 4 CORRECT? 5 A I DON'T — YES. I INTRODUCED MR. CARTO TO 6 MR. HULSY. SO THERE WAS SOME CONTACT BEFORE THE LETTER, 7 SURE. 8 THE COURT: GO OFF THE RECORD A SECOND IF YOU ARE GOING 9 TO MAKE IT. 10 MR. WAIER: THIS MIGHT BE A GOOD TIME. THANK YOU, YOUR 11 HONOR. 12 13 (PROCEEDINGS RECESSED.) 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28