Including information about his associates
page 909
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. )
)
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 12, 1996
15
VOLUME 8
16
PAGES 909-1014
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 910
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 12, 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
24
25
26
BARBARA J. SCHULTZ, CSR, RPR
27 CSR NO. 8021
OFFICIAL REPORTER
28 VISTA, CALIFORNIA
page 911 1 VISTA, CALIFORNIA, NOVEMBER 12, 1996, DEPARTMENT 11: 2 3 THE COURT: ON THE RECORD. GO AHEAD. 4 MR. WAIER: MAY I PROCEED? 5 THE COURT: YES, SIR. 6 MR. WAIER: THANK YOU, YOUR HONOR. AS YOU KNOW, I 7 REPRESENT ALL THE DEFENDANTS, INCLUDING ELISABETH AND WILLIS 8 CARTO. 9 I ALSO WOULD LIKE TO POINT OUT TO THE COURT I HAVE 10 GOOD LUCK I KNOW. SHE’s MY LIFE — MY WIFE AND MY LIFE, 11 MICHELLE, AND MY PARTNER, BRIAN URTNOWSKI, IS IN THE BACK AS 12 WELL. 13 THE COURT: PLEASED TO HAVE YOU HERE. 14 MR. WAIER: YOU KNOW, IT’s KIND OF FUNNY. THIS WEEKEND 15 I DON'T KNOW IF YOU GOT A CHANCE TO SEE THE EVANDER 16 HOLYFIELD MIKE TYSON FIGHT. IT WAS QUITE AN EVENT. IT 17 REMINDED ME A LITTLE BIT ABOUT THIS CASE. AND IN FACT, I 18 TOLD MY WIFE A LITTLE ABOUT THIS BECAUSE I WAS KICKING 19 MYSELF IN THE REAR END BECAUSE I DIDN'T BET ON THE FIGHT 20 WHEN HOLYFIELD WAS 25 TO 1. I THOUGHT, WHY DIDN'T I BET ON 21 THIS FIGHT BECAUSE LOW AND BEHOLD, HOLYFIELD KNOCKS OUT 22 TYSON. 23 THEN I THOUGHT, YOU KNOW WHAT? THAT’s OKAY, 24 BECAUSE LOU DUVAL, THE MANAGER FOR TYSON, HAPPENED TO BET ON 25 THE FIGHT. MADE $260,000. AND I THOUGHT JUST LIKE THE 26 LEGION MAYBE I'M ENTITLED TO THAT MONEY. 27 THAT’s WHAT THAT CASE IS REALLY ABOUT. IT WAS 28 ABOUT A RISK TAKEN, AND THERE’s NO DIFFERENCE BETWEEN WHAT
page 912 1 LOU DUVAL DID AND WHAT WILLIS CARTO DID. HE TOOK A CHANCE, 2 AND IT PAID OFF. 3 AND ONE OF THE THINGS I ASKED YOU TO DO, YOUR 4 HONOR, AT THE VERY BEGINNING OF THIS CASE, AND YOU 5 PROMISED — I KNOW YOU PROMISED YOU WOULD DO THAT IS WAIT 6 UNTIL THE ENTIRE CASE WAS OVER WITH, NOT AS MY ESTEEMED 7 COLLEAGUE WROTE IN A BOOK TITLED — A BOOK ON THE NEW YORK 8 TIMES BEST SELLER LIST, “ARREST OF JUDGMENT.” IT SOUNDS 9 LIKE JOHNNY COCHRAN A BIT, BECAUSE I BELIEVE WHEN YOU PUT 10 TOGETHER WHAT THE LAW IS AND THE FACTS IN THIS CASE, NOTHING 11 WAS DONE WRONG. EVERYTHING WAS APPROVED. 12 SURE, YOU SEE IN HINDSIGHT, JUST LIKE A LOT OF 13 MONDAY MORNING QUARTERBACKING, YOU SEE A SCORE, AND YOU LOOK 14 BACK, AND YOU SAY, YOU KNOW WHAT? DOGGONE IT. I SHOULD 15 HAVE SENT THE OUTLET PASS INSTEAD OF RUNNING IT UP THE 16 MIDDLE. I WOULD HAVE MADE A TOUCHDOWN. HE WAS WIDE OPEN. 17 IT’s EASY SITTING BACK AND SEEING A RETURN OF 3.2 MILLION. 18 I WANT TO CLARIFY THAT, YOUR HONOR. THE EVIDENCE 19 IS CLEAR TAXES WERE TAKEN OUT OF THE 7.5 MILLION. ESTATE 20 FEES WERE TAKEN OUT OF IT. STAMP FEES WERE TAKEN OUT OF IT, 21 REFERENCING TO THE BONDS. WHAT YOU WERE LEFT WITH WAS A NET 22 3.2 SOME MILLION DOLLARS. THAT’s WHAT YOU HAVE BEFORE YOU. 23 THAT’s THE EVIDENCE BEFORE YOU. 24 THE 7.5 MILLION IS UP IN CLOUDS BECAUSE WHETHER 25 WILLIS CARTO WAS ABLE TO UTILIZE THE FUNDS, 26 DISCRETIONARY-WISE, OR THE LEGION, THEY WOULD HAVE HAD TO 27 PAY TAXES. THAT’s UNREFUTED. IT’s NOT 7.5 MILLION. IF 28 THAT WOULD BE THE CASE, ANOTHER THREE AND A HALF MILLION
page 913 1 DOLLARS WINDFALL TO THE LEGION. 2 BUT LET ME START OFF BEFORE I GET INTO CERTAIN 3 ISSUES. I THINK IT’s IMPORTANT THAT THE COURT REALIZE WHAT 4 THE LAW IS, AND THE COURT OUGHT TO LOOK AT THIS — I KNOW 5 YOU WILL, YOUR HONOR, FROM A COMMON SENSE STANDPOINT. WE 6 CAN'T LOSE COMMON SENSE IN LOOKING AT THE FACTS AND WHAT 7 TOOK PLACE. COMMON SENSE FROM THE WAY MEETINGS WERE HELD. 8 COMMON SENSE THE WAY THE CORPORATION HAD BEEN RUN. COMMON 9 SENSE AS TO THE FACTS THAT HAVE BEEN BROUGHT FORTH IN THIS 10 TRIAL. 11 LET’s TAKE A LOOK, FIRST OF ALL, BEFORE I GET INTO 12 THE SPECIFICS AS TO WHAT THE LEGION IS SUED FOR, AND AGAIN 13 I'LL NOT TRY TO REGURGITATE EVERYTHING WE PUT IN THE TRIAL 14 BRIEF BECAUSE I BELIEVE WE HAVE PROVEN ALL THOSE FACTS, BUT 15 I WILL HIGHLIGHT SOME OF THOSE. 16 FIRST OF ALL, WITH RESPECT TO THE CIVIL CODE 17 SECTION NOW HAS BEEN AMENDED TO THE CORPORATIONS CODE 18 SECTION, THAT DOESN'T EVEN CLAIM A RIGHT OF ACTION. THE 19 SIXTH CAUSE OF ACTION SHOULD BE OUT. MORE IMPORTANTLY, THIS 20 ENTIRE COMPLAINT SHOULD BE OUT UNDER THE LAW, AND I'LL TELL 21 YOU WHY. 22 MR. BEUGELMANS MADE A BIG ISSUE OF THIS. THEY 23 SEEK INJUNCTIVE RELIEF IN THE COMPLAINT. REMEMBER, THIS IS 24 A NONPROFIT TEXAS CORPORATION, THE LEGION. AND I WILL 25 CONCEDE THIS ASPECT OF IT. BY WAY OF BACKGROUND NONPROFIT 26 CORPORATIONS ARE GIVEN SPECIAL PROTECTIONS WITHIN THE STATE 27 OF CALIFORNIA UNDER THE CORPORATIONS CODE. THE LEGISLATURE 28 ENACTED ITS OWN SEPARATE CODE SECTION WITHIN THE
page 914 1 CORPORATIONS CODE, AND THESE PROTECTIONS ALSO GO TO 2 DIRECTORS RECOGNIZING THAT DIRECTORS NORMALLY DO IT ON A 3 VOLUNTEER BASIS, LIKE LEWIS AND LAVONNE FURR, AND 4 RECOGNIZING THERE ARE PROTECTIONS TO THE PUBLIC THAT OUGHT 5 TO BE PUT IN PLACE. AND THAT IS WHY YOU HAVE A NUMBER OF 6 SECTIONS REQUIRING THE ATTORNEY GENERAL IN SOME RESPECTS BE 7 NOTIFIED, OR IN THIS CASE TO BE JOINED AS AN INDISPENSABLE 8 PARTY. 9 AND, YOUR HONOR, THE ATTORNEY GENERAL IS NOT A 10 PARTY TO THIS ACTION. HE HAS TO BE JOINED AS AN 11 INDISPENSABLE PARTY WHEN YOU ARE DEALING WITH INJUNCTIVE 12 RELIEF. AND THAT, YOUR HONOR, THEY HAVE FAILED TO DO. 13 AND IN FACT, I HAVE PLACED, AND I BELIEVE I KIND 14 OF BLOWN UP SOME STATUTES FOR YOU OUT OF TO MAKE IT A LITTLE 15 EASIER. THAT’s WHAT I GET FOR TURNING AROUND. 16 UNDER CORPORATIONS CODE SECTION 5233, TALKING 17 ABOUT SELF-DEALING TRANSACTIONS; INTERESTED DIRECTOR; 18 EXCEPTIONS; ACTIONS; BURDEN OF PROOF; LIMITATIONS AND 19 REMEDIES, I INVITE THE COURT TO REVIEW THESE. 20 IF YOU REVIEW THE COMPLAINT, THE ONLY WAY LEWIS 21 AND LAVONNE FURR AND ELISABETH CARTO CAN BE HELD ACCOUNTABLE 22 IF THEY SELF-DEALT, IF THEY SOMEHOW SELF-DEALT IN THIS CASE 23 IN CONSPIRACY WITH WILLIS CARTO AND LIBERTY LOBBY. IF YOU 24 BUY THAT SORT, THEY WOULD HAVE TO BE INVOLVED WITH A 25 SELF-DEALING TRANSACTION. 26 AND WHAT IT SAYS UNDER 5233(C): 27 “THE ATTORNEY GENERAL OR, IF THE ATTORNEY GENERAL 28 IS JOINED AS AN INDISPENSABLE PARTY, ANY OF THE FOLLOWING
page 915 1 MAY BRING AN ACTION IN THE SUPERIOR COURT OF THE PROPER 2 COUNTY." 3 “THE ATTORNEY GENERAL OR, IF HE IS JOINED AS AN 4 INDISPENSABLE PARTY." 5 WE KNOW FROM LAW SCHOOL WHAT INDISPENSABLE PARTY 6 IS ALL ABOUT. 7 THIS, I PRESUME, IS A SECTION THAT THEY BROUGHT 8 THIS ACTION UNDER. WELL, WE KNOW THAT THE ATTORNEY GENERAL 9 CERTAINLY IS NOT A PARTY, AND HE’s NOT BEEN NAMED AS AN 10 INDISPENSABLE PARTY, AND THEY DIDN'T DO THAT. 11 AND “THE ATTORNEY GENERAL, OR THE COURT IN AN 12 ACTION IN WHICH THE ATTORNEY GENERAL IS AN INDISPENSABLE 13 PARTY, HAS APPROVED A TRANSACTION BEFORE OR AFTER IT WAS 14 CONSUMMATED; OR 15 THE FOLLOWING FACTS ARE ESTABLISHED: 16 THE CORPORATION ENTERED INTO THE TRANSACTION FOR 17 ITS OWN BENEFIT; 18 THE TRANSACTION WAS FAIR AND REASONABLE AS TO THE 19 CORPORATION AT THE TIME THE CORPORATION ENTERED INTO THE 20 TRANSACTION." 21 AND THESE ARE ALL FACTS I WANT THE COURT TO LOOK 22 AT, BECAUSE I THINK BOTH OF THESE APPLY HERE REGARDLESS OF 23 WHETHER THE ATTORNEY GENERAL WAS INVOLVED. 24 “PRIOR TO CONSUMMATING THE TRANSACTION OR ANY 25 PART THEREOF THE BOARD OF DIRECTORS THEN IN OFFICE WITHOUT 26 COUNTING THE VOTE OF THE INTERESTED DIRECTOR OR DIRECTORS, 27 AND WITH KNOWLEDGE OF MATERIAL FACTS CONCERNING THE 28 TRANSACTION AND THE DIRECTOR’s INTEREST IN THE TRANSACTION."
page 916 1 DEFINITELY (A) AND (B), (C). WE HAVE SOME 2 QUESTIONS ABOUT VARIOUS MEETINGS THAT TOOK PLACE. I'LL GET 3 INTO THAT IN A MINUTE. 4 IF YOU RECALL MY OPENING STATEMENT WHEN I TOLD 5 THIS COURT, AND I BELIEVE WE PROVEN, WHENEVER A MINUTE OF A 6 MEETING OR A CORPORATE RESOLUTION BENEFITS THE LEGION TODAY, 7 WHEN LOOKING IN HINDSIGHT, MONDAY MORNING QUARTERBACKING, 8 IT’s OKAY. WILLIS HAD AUTHORITY TO DO THAT. THE FURRS HAD 9 AUTHORITY TO DO THAT. I'LL GET INTO THAT. BUT WHEN IT 10 DOESN'T BENEFIT THEM, THE MINUTES ARE NO GOOD. THE MEETINGS 11 DIDN'T TAKE PLACE. 12 THEY DON'T EVER CHALLENGE THE MINUTES IN THE 13 MEETINGS WHEN THINGS PURPORTEDLY ARE THEIR WAY. THEY DON'T 14 CHALLENGE. IN FACT, BY THEIR COMPLAINT THEY DON'T CHALLENGE 15 THE VALIDITY OF THE DISTRIBUTION AGREEMENT, THE MANDATE 16 AGREEMENT, THE SETTLEMENT AGREEMENT, BUT YET THOSE WERE ALL 17 TO BE APPROVED BY THE BOARD OF DIRECTORS UNDER THE NONPROFIT 18 CORPORATION LAW. THOSE HAD TO BE APPROVED BY THE BOARD OF 19 DIRECTORS. 20 WHERE ARE THE MINUTES FOR THOSE? BUT YET THAT AS 21 I WILL SHOW YOU LATER IS THE BASIS OF THEIR ENTIRE CLAIM. 22 WITHOUT THOSE AGREEMENTS THE LEGION HAS NOTHING, EVEN 23 REGARDLESS OF WHAT WILLIS CARTO DID AND HENRY FISCHER DID 24 AND THE FURRS DID IN TRYING TO RECOVER, ACQUIRE OR RECOVER 25 THE ASSETS. 26 THEY ADMIT IN THE COMPLAINT — I INVITE THE COURT 27 TO READ THE COMPLAINT THAT THE BASIS, THE SOLE BASIS OF 28 THEIR RIGHTS ARE IN THE DISTRIBUTION AGREEMENT, THE
page 917 1 SETTLEMENT AGREEMENT, THE MANDATE AGREEMENT, AND THEN THERE 2 WAS A SUPPLEMENT TO THE DISTRIBUTION AGREEMENT. THAT’s THE 3 SOLE RIGHT. 4 AGAIN, THEY'RE KNOCKED OUT OF THE BOX IN THE VERY 5 BEGINNING WITH RESPECT TO THAT. THEY DIDN'T INCLUDE THE 6 ATTORNEY GENERAL AS AN INDISPENSABLE PARTY. THEY CAN'T EVEN 7 GET DAMAGES, YOUR HONOR. 8 AND IF YOU RECALL MY ESTEEMED COLLEAGUE, MARK 9 LANE, TALKED ABOUT LAVONNE AND LEWIS FURR. I'M GOING OVER 10 SOME OF THE CONCEPTS. IT’s IMPORTANT THAT YOU KNOW WHAT THE 11 LAW IS. I KNOW YOU READ THE CODE. I WANT TO POINT THE 12 SECTIONS OUT. 13 THE FURRS WERE NONPAID DIRECTORS. IN THE 14 CORPORATIONS CODE 5231.5, THE ONLY THING THAT THEY CAN BE 15 ACCOUNTABLE FOR, AND YOU RAISED THIS QUESTION TO MR. LANE, 16 WAS THEIR ALLEGED FAILURE TO DISCHARGE DUTIES. IN OTHER 17 WORDS, IF THEIR DIRECTORS CONCEDED BY EVERYONE IN 1985 -- 18 REMEMBER YOU WERE CONCERNED, YOUR HONOR, THAT MAYBE WILLIS 19 CARTO DIDN'T GIVE THEM ALL THE INFORMATION NECESSARY FOR 20 THEM TO MAKE AN INFORMED DECISION AS TO WHETHER TO WORK OUT 21 A DEAL WITH WILLIS CARTO SO THEY COULD HAVE ABSOLUTE 22 DISCRETION TO UTILIZE THE FUNDS IN ANY DIRECTION AS SAW FIT, 23 AS LONG AS IT FULFILLED THE PURPOSES AND GOALS OF THE LEGION 24 AND FULFILLED THE PURPOSES AND GOALS OF JEAN FARREL-EDISON, 25 WHICH WERE NOT UNALIKE. THEY WERE THE SAME. AND THE ONLY 26 QUESTION IS WHETHER THEY HAD SUFFICIENT INFORMATION. 27 WHAT IS THE EVIDENCE ALONG THE LINES? THE 28 EVIDENCE IS THAT WILLIS DIDN'T KNOW THE VALUE OF THE NECA
page 918 1 CERTIFICATES. WILLIS DID NOT KNOW THE TOTAL VALUE OF THE 2 ESTATE AT THAT TIME. HE DID, AS WE KNOW, WENT TO THE BOARD 3 OF DIRECTORS, MORE SPECIFICALLY LEWIS AND LAVONNE FURR, WHO 4 BY ALL ACCOUNTS FROM MARCELLUS, WEBER, AND EVERYONE THAT YOU 5 HEARD IN THIS COURTROOM, RECOGNIZED THEM AS HAVING THE 6 AUTHORITY TO MAKE DECISIONS FOR THE CORPORATION. 7 THEY RAN THIS AS A SMALL CORPORATION. IT WASN'T 8 SOMETHING THAT YOU SAT DOWN, AND THEY HAD TO FORMALIZE THE 9 MEETINGS. MAYBE THEY SHOULD HAVE. BUT UNLIKE A LOT OF 10 CORPORATIONS IN THE COUNTRY, ESPECIALLY SMALL CORPORATIONS, 11 THEY DON'T DO THAT. IN FACT, MOST TIMES — THIS COURT IS 12 AWARE MOST OF THESE CORPORATIONS MERELY GET RESOLUTIONS AT 13 THE END OF THE YEAR TO FULFILL TAX PURPOSES. AND THAT'S 14 WHAT HAPPENED HERE, I SUBMIT. BUT THEY HAVE GIVEN NONPAID 15 DIRECTOR ALLEGED FAILURE TO DISCHARGE DUTIES. I'M NOT 16 TALKING ABOUT LEWIS AND LAVONNE FURR. NO. THEY CANNOT. 17 “NO CAUSE OF ACTION FOR DAMAGES SHALL ARISE 18 AGAINST ANY NONPAID DIRECTOR, INCLUDING ANY NONPAID DIRECTOR 19 WHO IS ALSO A NONPAID OFFICER, OF A NONPROFIT PUBLIC BENEFIT 20 CORPORATION BASED ON ANY ALLEGED FAILURE TO DISCHARGE THAT 21 PERSON’s DUTIES AS DIRECTOR OR OFFICER IF THE DUTIES ARE 22 PERFORMED IN THE MANNER THAT MEETS ALL THE FOLLOWING 23 CRITERIA." 24 FIRST OF ALL, THE EVIDENCE IS CLEAR THE ONLY 25 WRONG, IF ANY WRONG, BE ATTRIBUTED TO LEWIS AND LAVONNE FURR 26 WAS THEIR FAILURE TO MAYBE ASK ADDITIONAL QUESTIONS IN 27 1985. THAT’s IT. 28 COMING IN — COMING TO DECISIONS. THAT’s IT. NO
page 919 1 CAUSE OF ACTION. THERE’s BEEN NO EVIDENCE OF ANY 2 INTENTIONAL DEFALCATION ON THEIR PART. THERE’s NO EVIDENCE 3 OF ANY PUBLIC BENEFIT — I MEAN, ANY BENEFIT TO THEM INTO 4 THEIR OWN POCKETS. THERE’s NO EVIDENCE THAT THEY BECAME 5 RICH OVER THIS ESTATE. IN FACT, THERE’s NO EVIDENCE THAT 6 MR. CARTO BECAME RICH. HE DIDN'T. THE EVIDENCE IS HE 7 DIDN'T GET A PENNY OF IT. NO DAMAGES SHALL ARISE. 8 THE DUTIES ARE PERFORMED IN GOOD FAITH. HAS THERE 9 BEEN EVIDENCE BEFORE YOU THAT THE FURRS DID NOT PERFORM 10 THEIR DUTIES IN GOOD FAITH? NO. TO THE CONTRARY, THE 11 DUTIES ARE PERFORMED IN A MANNER SUCH DIRECTOR — SUCH 12 DIRECTOR BELIEVES TO BE IN THE BEST INTERESTS OF THE 13 CORPORATION. 14 DO YOU HAVE ANY EVIDENCE BEFORE YOU THAT THE FURRS 15 DIDN'T DO THAT? NO. THE EVIDENCE YOU HAVE BEFORE YOU IS 16 THAT THE CORPORATION WAS NOT IN A FINANCIAL WHEREWITHAL TO 17 DO IT, AND AS I'LL POINT OUT TO THE COURT, THEY WERE LEGALLY 18 INFIRMED TO DO THAT. THEY COULDN'T UNDER THE LAW INVEST IN 19 THAT NOR COULD THE FURRS COMMIT THIS NONPROFIT CORPORATION 20 TO COMMIT TO SUCH A QUOTE, SPECULATIVE VENTURE AT BEST. AND 21 I'M GOING TO GET INTO A TIME LINE IN A MINUTE SO I CAN SHOW 22 YOU WHERE THE RIGHTS ARISE. 23 THEN “THE DUTIES ARE PERFORMED WITH SUCH CARE, 24 INCLUDING REASONABLE INQUIRY, AS AN ORDINARILY PRUDENT 25 PERSON IN A LIKE POSITION WOULD USE UNDER SIMILAR 26 CIRCUMSTANCES." 27 WHAT HAD BEEN THE CIRCUMSTANCES? AS THE EVIDENCE 28 HAD SHOWN, LEWIS AND LAVONNE FURR WERE VOLUNTEER DIRECTORS,
page 920 1 TOOK THE ADVICE FROM MR. CARTO, FROM AMONG OTHERS, AND THEY 2 ACTED UPON IT. IN FACT, IF YOU READ LEWIS AND LAVONNE'S 3 DEPOSITIONS YOU WILL SEE THEY WERE INVOLVED IN THE LEGION ON 4 THE VOLUNTEER BASIS, BUT THEY DIDN'T SPEND A FULL-TIME 5 EFFORT TO IT. THEY WERE THERE. THEY READ THINGS OVER. 6 THEY HEARD FROM THEIR ADVISERS, AND THEY COMMIT THEMSELVES 7 AND COMMITTED TO THE CORPORATIONS BASED ON WHAT THEY HEARD 8 AND READ. THERE’s NO EVIDENCE THAT THEY DIDN'T USE 9 REASONABLE CARE. THE FURRS ARE GONE UNDER 5231.5. 10 NOW IF YOU LOOK AT 5231, THEY HAD AN OPPORTUNITY 11 TO RELY ON INFORMATION PRESENTED BY OTHERS, WHICH REMINDS 12 ME, YOUR HONOR, THERE’s A VERY IMPORTANT CONCEPT IN 13 CORPORATE LAW. THAT IMPORTANT CONCEPT, YOUR HONOR, IS THAT 14 THIS COURT, AND I POINTED THIS OUT IN THE BRIEF, MAY NOT 15 SUBSTITUTE ITS JUDGMENT. YOUR HONOR, THAT’s AN IMPORTANT 16 CONCEPT. THIS COURT MAY NOT SUBSTITUTE ITS JUDGMENT FOR 17 THAT OF THE DIRECTORS — THAT’s A LONG-STANDING CORPORATE 18 POLICY — WHEN DIRECTORS HAVE ACTED. UNLESS THEY SHOW THEY 19 CUT THEIR HAND IN THE TILL, THIS COURT MAY NOT SUBSTITUTE 20 ITS JUDGMENT FOR THAT OF THE CORPORATION. WE CITED THAT IN 21 THE BRIEF TO YOU. IT’s STRONG LAW. IT’s LONG-STANDING 22 LAW. 23 IF ANYTHING, THEY CAN BE ACCUSED OF — I'M SAYING 24 THEY AREN'T. WE'LL GET TO THOSE ISSUES IN JUST A MOMENT. 25 THEY COULD ONLY BE ACCUSED OF MISFEASANCE WITH RESPECT TO A 26 FAILURE TO ASK ADDITIONAL QUESTIONS. BUT WHAT QUESTIONS 27 COULD HAVE BEEN ASKED IN 1985? WILLIS TOLD IT. THERE'S 28 NECA CERTIFICATES OUT THERE. THESE NECA BEARER BONDS HE
page 921 1 CLAIMED WERE GIFTED BY JEAN FARREL-EDISON, WHO HAD RECENTLY 2 DIED, TO THE LEGION. 3 AND THE REASON WHY I WANT TO DISCUSS THAT AT THIS 4 JUNCTURE, YOUR HONOR, I THINK IT’s VERY IMPORTANT. I WOULD 5 LIKE TO PUT UP A TIME LINE FOR YOU. THIS TIME LINE, I 6 THINK, REALLY BRINGS INTO PERSPECTIVE THE IMPORTANCE OF 7 WHERE RIGHTS ARE ESTABLISHED. 8 WHAT I HAVE DONE FOR YOU, YOUR HONOR, BECAUSE 9 AGAIN, IT’s VERY EASY TO BE THE MONDAY MORNING QUARTERBACK 10 AND LOOK IN HINDSIGHT AND SAY, HEY, I SHOULD HAVE MADE THAT 11 BET ON HOLYFIELD AT 25 TO 1. BOY I WOULD BE A RICH MAN. 12 HOLYFIELD HAD A CHANCE. HE WAS TRAINING. HE HAD — HIS 13 TRAINERS THOUGHT HE WOULD WIN, THOUGHT HE WOULD WIN. HE 14 WOULD BEAT TYSON. HE WOULD BE THE NEW HEAVYWEIGHT CHAMPION 15 OF THE WORLD, NO DOUBT. HE WAS HEIR TO THE THRONE. DOES 16 THAT MEAN I SHOULD BET ON IT AT 25 TO 1? 17 THE ISSUE IS IN HINDSIGHT. I'M ASKING THE COURT 18 TO LOOK AT IT ON A STEP-BY-STEP BASIS. TAKE A LOOK IN 1985 19 PRIOR TO JEAN FARREL-EDISON DYING WE HAVE MR. CARTO AND 20 MRS. CARTO IN THIS AREA, WHICH I MARKED WITH A RED “X” OR 21 RED STAR. 22 WHAT RIGHTS DO THE LEGION HAVE AT THAT TIME TO 23 ANYTHING OF JEAN FARREL-EDISON? NOTHING. WE DO KNOW JEAN 24 FARREL-EDISON CREATED A CORPORATION THROUGH HER OWN 25 ATTORNEYS, AND THAT’s IN THE EXHIBITS. I WILL GO OVER THE 26 EXHIBITS BRIEFLY WITH YOU. CALLED NECA CORPORATION. 27 WHO WAS THE PRESIDENT OF THAT CORPORATION? JEAN 28 FARREL-EDISON, WHO WAS THE OWNER OF THE BEARER BONDS, THE
page 922 1 STOCK OF THAT CORPORATION. IT WAS A LIBERIAN CORPORATION 2 EVEN ADMITTED BY PLAINTIFFS. 3 JEAN FARREL-EDISON — UP UNTIL THE TIME SHE DIED 4 JEAN FARREL-EDISON EXERCISED DOMINION AND CONTROL OVER THE 5 BEARER BONDS. SHE EXERCISED A RIGHT TO THAT CORPORATION. 6 SHE EXERCISED VOTING RIGHTS TO THAT CORPORATION UNTIL THE 7 DAY SHE DIED. 8 YOU WILL NOT FIND ONE — NOT ONE DOCUMENT NOR HAS 9 PLAINTIFF, WHOSE BURDEN OF PROOF IT IS, SHOWN ONE DOCUMENT 10 SHOWING THE RIGHTS IN THE LEGION. 11 AND BY THE WAY, WHEN DID WILLIS GET HIS POWER OF 12 ATTORNEY? IT’s NOT DURING 1984. HE GOT IT IN 1985 AFTER 13 SHE DIED IN SEPTEMBER 1985; AND THAT HAPPENS TO BE, IF YOU 14 TAKE A LOOK AT THAT, IN SEPTEMBER 1985. THOSE ARE EXHIBITS 15 10 AND 11. HE WASN'T THE AGENT FOR ANY OF THAT RECOVERY 16 PRIOR TO HER DEATH, AND THERE’s NO DOCUMENT STATING THAT 17 THESE STOCKS WERE GIFTED TO THE LEGION PRIOR TO THIS TIME. 18 WHAT RIGHTS DID THE LEGION HAVE PRIOR TO HER 19 DEATH? NONE. THE ONLY THING THAT THE LEGION HAD AT THAT 20 POINT IN TIME WHEN SHE DIED WAS THE WORD OF MR. CARTO. 21 THAT’s IT. 22 AND WHAT DID HE DO? DID HE OMIT TO TELL THEM 23 ANYTHING? NO. HE CAME TO THE LEGION, AND WE KNOW THAT 24 THROUGH THE MINUTES. WE KNOW THAT THROUGH LAVONNE FURR'S 25 DEPOSITION. AND I POINT THE COURT FROM PAGES 50 THROUGH 26 95. I REQUEST THE COURT TO READ THAT BECAUSE SHE STATES 27 SPECIFICALLY HE CAME TO ME, LAVONNE FURR — SAID HE CAME TO 28 ME AND SAID: JEAN DIED. WE JUST FOUND OUT. I BELIEVE THAT
page 923 1 THOSE NECA SHARES, WHO JOAN ALTHAUS IS CONTESTING — BY THE 2 WAY, THEY WERE CONTESTED. IN FACT, YOU KNOW WHO TOOK 3 POSSESSION AND CONTROL AS THE EVIDENCE HAS SHOWN FROM THE 4 DISTRIBUTION AGREEMENT, WAS JOAN ALTHAUS. SHE TOOK CONTROL 5 OF THOSE NECA CERTIFICATES. THEY COULD NOT GET, THE 6 EVIDENCE SHOWS, THOSE NECA CERTIFICATES OUT OF THOSE BANKS. 7 WHY? BECAUSE WHAT DID WE HAVE SITTING IN FRONT OF US, A 8 WILL LEAVING EVERYTHING, EVERYTHING — REMEMBER THESE 9 CERTIFICATES DON'T SAY LEGION ON THEM. THE SAFETY DEPOSIT 10 BOXES ARE IN NECA CORPORATION, NOT LEGION. 11 ALL YOU HAVE IN 1985 WHEN THAT WILL GOES IS THE 12 WORD OF THIS MAN. AND HE GOES TO THE LEGION AND SAYS: 13 LOOK, I THINK IN TRUTH AND IN FACT I BELIEVE THAT THOSE 14 CERTIFICATES BELONGED TO THE LEGION, LAVONNE. AND LAVONNE 15 SAYS — AND IT’s IN THE DEPOSITION BECAUSE SHE’s THE ONE 16 THAT CAME OUT WITH THIS, SAYS: “WHAT DO WE HAVE TO DO?" 17 “I SCOUTED OUT THE TERRITORY. IT’s GOING TO COST 18 US A LOT OF MONEY TO DO IT." 19 AND BY THE WAY, YOUR HONOR, THESE CONTINGENCIES -- 20 AGAIN, HINDSIGHT. MR. BEUGELMANS WILL STICK UP HIS HAND. 21 I'LL STICK UP MY HAND IF I KNOW SOMEBODY IS GOING TO GET 22 SEVEN AND A HALF MILLIONS DOLLARS. I'LL TAKE THAT CASE, AND 23 I WILL GET MY LITTLE TIME CAPSULE AND GO BACK IN TIME, AND 24 THEN I WILL BE RICH 7 YEARS LATER. IT’s EASY FOR 25 MR. BEUGELMANS TO LOOK IN HINDSIGHT. 26 LOOK AT THE STATE OF THE CORPORATION, AND LET'S 27 LOOK WHAT WAS AVAILABLE; WHAT RIGHTS THEY HAD. 28 THE WILL COMES OUT, AND WE KNOW THE WILL SAYS, AND
page 924 1 THAT HAPPENS TO BE EXHIBIT, I BELIEVE, 10 — NO, NOT 10. 2 I'M SORRY. IT’s EXHIBIT 8. AND THAT WILL SAYS FROM JEAN 3 AND NOBODY CONTESTS THIS WILL. 4 “I REVOKE ALL PREVIOUS TESTAMENTARY DISPOSITIONS 5 AND INTEND TO SUBMIT THE EXECUTION OF MY TESTAMENT TO THE 6 COLUMBIAN LAW. 7 I MAKE UNIVERSAL HEIRESS OF MADAME WALTER” — AND 8 I CAN'T READ THAT, “JOAN ALTHAUS.” SHE GETS EVERYTHING AND 9 ONLY IF SHE DIES DOES THE LEGION GET SOMETHING. SHE HADN'T 10 DIED. SHE GOT IT ALL. 11 AND OF INTEREST, YOUR HONOR, I WOULD LIKE YOU TO 12 TAKE A LOOK AT THE DISTRIBUTION AGREEMENT, EXHIBIT 20. 13 29 — I BELIEVE 28 AND 29 OR 29 SETTLEMENT AGREEMENT; 30, 14 MANDATE AGREEMENT. RIDER TO THE DISTRIBUTION AGREEMENT. 15 THESE ARE ALL SIGNED BY THE LEGION, MR. ROLAND ROCHAT, JOAN 16 ALTHAUS, AND THEY ADMIT — THEY ADMIT — YOU TALK ABOUT 17 ADMISSIONS. COUNSEL WANTS TO TALK ABOUT ADMISSIONS. THE 18 LEGION ADMITS THEY HAD NO RIGHT TO THE NECA CERTIFICATES. 19 READ THE LANGUAGE. 20 ALSO INTERESTING READ THE LANGUAGE, ONE OF OUR 21 DEFENSES: “HAS BEEN RELEASED.” ALL PARTIES RELEASED ONE 22 ANOTHER IN THE AGREEMENTS. 23 GUESS WHO SIGNED IT? THE LEGION RELEASED IT. 24 WILLIS CARTO WAS A PARTY. JOAN ALTHAUS WAS A PARTY. ROLAND 25 ROCHAT WAS A PARTY. THERE’s A RELEASE IN THE VERY 26 AGREEMENT. 27 LET’s GO FORWARD. SO WHAT RIGHTS DID THE LEGION 28 HAVE IN 1985 BUT A PRAYER? NO MONEY CAPITALIZATION — AND
page 925 1 BY THE WAY, THE LEGION COULD NOT HAVE INVESTED IN ANY 2 LITIGATION OVERSEAS, NOTWITHSTANDING THE SPECULATIVE NATURE 3 OF IT, NOR TAKEN A BET ON THE HOLYFIELD FIGHT. AND THE 4 REASON FOR THAT, YOUR HONOR — AND THAT IS WHY THE PRUDENT 5 JUDGMENT — THAT’s WHY THE PRUDENT JUDGMENT OF THE BOARD HAS 6 TO COME INTO PLAY HERE. I THOUGHT I HAD THAT. 7 UNDER SECTION — I DON'T HAVE BUT IN THE TRIAL 8 BRIEF — I THOUGHT I BLOWN THAT UP. I GUESS — I THOUGHT I 9 HAD THAT. 10 IN THE TRIAL BRIEF I POINTED THAT OUT, AND I 11 POINTED THAT OUT IN THE MOTION FOR JUDGMENT AS WELL. THAT 12 UNDER THE CORPORATIONS CODE RELATING TO DIRECTOR’s ACTIONS 13 AND WHAT THEY CAN AND CANNOT INVEST IN, THERE’s TWO AREAS 14 THAT YOU MUST LOOK AT. FIRST OF ALL, UNDER THE NONPROFIT 15 CORPORATION CODE, A CORPORATION MAY NOT INVEST — MAY NOT 16 INVEST ITS ASSETS OTHER THAN FOR ITS STATED PURPOSES. AND 17 IN OTHER WORDS, THEY'RE RESTRICTED UNDER THE CORPORATIONS 18 CODE BY THE BYLAWS. THAT’s THE FIRST INSTANCE. 19 WHAT DO WE HAVE AS THE BYLAWS? WE HAVE TWO 20 BYLAWS. WE HAVE AN ORIGINAL BYLAWS AND ONE PURPORTEDLY 21 ADMITTED. 22 TAKE A LOOK AT THE ORIGINAL BYLAWS TALKING ABOUT 23 WHAT THE LEGION COULD DO, EXHIBIT 2. THESE ARE THE ORIGINAL 24 BYLAWS AS WILLIS CARTO TESTIFIED TO, AND NOBODY DISPUTES 25 THAT SOMEBODY AMENDED THESE. THEY MAY DISPUTE WHEN THE 26 AMENDMENT WAS EFFECTED. 27 EXHIBIT 3 YOU WILL SEE THERE’s NO DIFFERENCE, AND 28 THERE’s NO CHANGE. AND IN FACT, THEY WERE AMENDED. THE
page 926 1 BYLAWS WERE AMENDED BY THAT. EVEN IF YOU GIVE IT DUE 2 WEIGHT, IT DOESN'T CHANGE THIS. 3 IT SAYS: “FINANCES, THE CORPORATION MAY ACCEPT 4 CONTRIBUTIONS OF MONEY, NEWSPAPER AND MAGAZINE SPACE, RADIO 5 AND TELEVISION TIME OR ANY OTHER THING OF VALUE TO BE 6 EXCLUSIVELY FOR THE PURPOSES FOR WHICH THIS CORPORATION WAS 7 ORGANIZED." 8 DO YOU RECALL ONE OF THE ARGUMENTS OF COUNSEL, 9 LET’s GO OUT. LET’s RAISE MONEY. WE DON'T HAVE ANY MONEY. 10 WE CAN GO OUT AND RAISE MONEY, GET DONATIONS. THAT IS NOT 11 ONE OF THE STATED PURPOSES OF THE ORGANIZATION. I ASK THE 12 COURT TO READ THE CHARTER. THEY COULDN'T DO IT BY LAW 13 BECAUSE THE CORPORATIONS CODE STATES NONPROFIT CORPORATIONS 14 MAY NOT DO ANYTHING OUTSIDE OF THEIR BYLAWS OR CHARTER. 15 RAISING MONEY FOR LITIGATION OVERSEAS IS OUTSIDE THE STATED 16 PURPOSE, ESPECIALLY ON THE SPECULATIVE VENTURE, WHICH YOU 17 WILL SEE THEY COULDN'T DO ANYWAY ACCORDING TO THE LAW. 18 AND LET’s READ WHAT THE PURPOSES ARE. TAKE A LOOK 19 AT EXHIBIT 1, THE CHARTER. 20 “THE PURPOSE FOR WHICH THE LEGION WAS FORMED IS TO 21 DO A GENERAL ADVERTISING BUSINESS AS AUTHORIZED BY 22 SUBDIVISION 41 OF ARTICLE 1302 OF THE TEXAS REVISED CIVIL 23 STATUTES OF 1925, TO WIT: AIDING AND ASSISTING THE PROMOTION 24 AND PRESERVATION OF AMERICAN CONSTITUTIONAL GOVERNMENT, AS 25 GUARANTEED BY THE CONSTITUTION OF THE UNITED STATES, THROUGH 26 PUBLICITY CAMPAIGNS CONDUCTED THROUGH THE MEDIUM OF 27 MAGAZINES, RADIO, TELEVISION, NEWSPAPERS, PAMPHLETS AND 28 PERIODICALS; AND TO PREPARE PATRIOTIC ADVERTISING COPY FOR
page 927 1 USE OF MAGAZINES RADIO, TELEVISION, NEWSPAPER, PERIODICALS; 2 AND TO CONDUCT PUBLICITY CAMPAIGNS DESIGNED TO EDUCATE THE 3 AMERICAN PUBLIC IN THE FUNDAMENTALS OF AMERICANISM. THE 4 ACTIVITIES OF THE CORPORATION, AS AUTHORIZED HEREIN, WILL BE 5 CONDUCTED WITHOUT PROFIT, AND THE ADVERTISING COPY WILL BE 6 PROVIDED FOR ACTUAL COST OF PRODUCTION AND WITHOUT PROFIT TO 7 THE CORPORATION." 8 WELL, YOUR HONOR, YOU WILL SEE, AS YOU HAVE SEEN, 9 THOSE PURPOSES WERE FULFILLED BY THE USE OF THAT MONEY IN 10 ANY EVENT. IT WENT TO A RADIO SPOT. AND I MUST TELL YOU IN 11 READING LEWIS AND LAVONNE’s DEPOSITION I WANT TO POINT THE 12 COURT OUT SPECIFICALLY TO PAGE 83 AND WHERE LAVONNE FURR IS 13 TALKING ABOUT THE RESOLUTION — MARCH 5, 1991 RESOLUTION, 14 WHICH IS A RED HERRING. THERE ARE TWO MINUTES FOR THAT 15 MEETING, NOT INCONSISTENT. LAVONNE FURR HAS MINUTES OF THE 16 MEETING, WROTE THE MINUTES DOWN. SHE WAS THE SECRETARY. 17 THOSE ARE PROPER MINUTES. LEWIS FURR WROTE DOWN MINUTES 18 TOO. HE WAS THE CHAIRMAN. THERE’s NO INCONSISTENCY WITH 19 THEM. IN FACT, ALL LEWIS DID WAS MEMORIALIZE THE DIRECTORS 20 THAT WERE ELECTED AND NOMINATED. LAVONNE ECHOED THAT AND 21 THEN INCLUDED THE RESOLUTIONS THAT WERE ADOPTED. SO THAT'S 22 A RED HERRING AGAIN. 23 LET ME TELL YOU WHAT SHE SAID. I WOULD LIKE TO 24 READ THIS. IT’s VERY IMPORTANT. IN THE DEPOSITION ON MARCH 25 22, 1996, SHE STATES, TALKING ABOUT THAT RESOLUTION, 26 REMEMBER, NOT PUTTING THE MONEY INTO THE CORPORATION, HAVING 27 PAT FOETISCH SET UP VIBET, THE OFFSHORE COMPANY DOING THESE 28 THINGS.
page 928 1 “QUESTION: WHAT WAS YOUR UNDERSTANDING WHAT WAS 2 MEANT BY THIS RESOLUTION? 3 “ANSWER FROM LAVONNE: TO CONTINUE WHAT HE STARTED 4 OUT TO DO. WE GAVE HIM” — REFERRING TO WILLIS CARTO — “A 5 POWER OF ATTORNEY. HE WAS FINANCING IT AND HE HAD OUR 6 BLESSINGS." 7 “QUESTION: AND HE HAD YOUR BLESSINGS TO 8 DISTRIBUTE THAT TO WHATEVER SOURCES HE DEEMED FIT? 9 “ANSWER: THAT’s CORRECT. 10 “QUESTION: AND DO YOU RECALL IN YOUR 11 CONVERSATIONS WITH THESE VARIOUS PEOPLE THAT ALL THE 12 DIRECTORS CONCURRED? 13 “ANSWER: THEY DID CONCUR. 14 “QUESTION: WAS IT YOUR UNDERSTANDING AS A 15 DIRECTOR THAT WILLIS WOULD HAVE THE AUTHORITY TO DISTRIBUTE 16 WHATEVER ASSETS WERE RECOVERED FROM JEAN FARREL-EDISON'S 17 ESTATE AT THIS TIME?" 18 “YES." 19 “QUESTION: AND I BELIEVE YOU TESTIFIED TO THAT 20 AFTER THIS POINT IN TIME HE DID KEEP YOU ABREAST AS TO HOW 21 HE WAS DISTRIBUTING MONIES? 22 “ANSWER: HE ALWAYS KEPT US INFORMED TO WHAT WAS 23 GOING ON. 24 “QUESTION: AT SOME POINT IN TIME AFTER THIS” -- 25 THIS IS AFTER THE JANUARY MEETING, 1991 MEETING — “DID YOU 26 HAVE AN OCCASION TO MEET WITH MR. CARTO PERSONALLY?" 27 “ANSWER: OVER THE TELEPHONE. 28 “QUESTION: WHY DON'T YOU TAKE A LOOK AT PARAGRAPH
page 929 1 PAGE 9 IN THE DECLARATION.” — REFERRING TO THE DECLARATION 2 THAT SHE SUPPLIED IN THIS ACTION EARLIER — “I BELIEVE YOU 3 HAVE THAT IN FRONT OF YOU, YOUR DECLARATION." 4 “ANSWER: ALL RIGHT. 5 “QUESTION: IT SAYS PARAGRAPH 16. 6 “ANSWER: CORRECT. 7 “QUESTION: DOES THAT REFRESH YOUR RECOLLECTION 8 THAT YOU MET WITH WILLIS APPROXIMATELY 2 MONTHS AFTER THE 9 BOARD MEETING ON JANUARY 9, 1991? 10 “ANSWER: THIS IS BY TELEPHONE. 11 “QUESTION: OKAY. SO WHEN YOU SAID 'MY HUSBAND 12 AND I MET WITH WILLIS,' YOU MEANT BY OVER THE TELEPHONE? 13 “ANSWER: OVER THE TELEPHONE. 14 “QUESTION: DID — TELL ME SPECIFICALLY IN THE 15 TELEPHONE CONVERSATION YOU HAD WITH WILLIS A COUPLE OF 16 MONTHS AFTER THE JANUARY 9, 1991 MEETING WHAT WAS SAID BY 17 YOU TO HIM. 18 “ANSWER: WE DISCUSSED HOW THE MONEY WOULD BE 19 DISTRIBUTED, IN WHICH WAY. WE DISCUSSED ABOUT THE RADIO AND 20 THE TELEVISION, AND I WAS THE ONE THAT BROUGHT UP THE AUDIO 21 AND VIDEO CASSETTES. MY DADDY WAS HARD OF HEARING, AND I 22 SAID, YOU KNOW, DADDY CAN'T READ THIS SPOTLIGHT ANYMORE. I 23 SAID, LET’s GO INTO THE AUDIO. HE WOULD BECAUSE HE LISTENS 24 TO TAPES ALL THE TIME. 25 I SAID, AND HE CAN'T SEE THE TV VERY WELL. I 26 SAID, WHY DON'T WE GO INTO THE AUDIO PART? 27 “QUESTION: DID YOU HAVE AN UNDERSTANDING AT THIS 28 TIME DURING YOUR CONVERSATIONS THAT BOTH YOU AND YOUR
page 930 1 HUSBAND HAD WITH WILLIS THAT SOME OF THE MONIES WOULD BE 2 DISTRIBUTED IN CONNECTION WITH A RADIO STATION? 3 “ANSWER: I DID." 4 YOU REMEMBER THIS IS 1991, AND A CORPORATION MAY 5 ONLY ACT THROUGH THE DIRECTORS AND OFFICERS. THIS GOES TO 6 THE STATUTE OF LIMITATIONS ARGUMENT AS WELL, YOUR HONOR. 7 “QUESTION: AND WHERE WERE YOU — AND WERE YOU 8 AWARE OF WHAT RADIO STATION THAT WAS? 9 “ANSWER: I CAN'T GIVE THE CALL LETTER. IT WAS, I 10 BELIEVE, IN FLORIDA. I CAN'T REMEMBER THE CALL LETTERS 11 RIGHT NOW. WE KNOW IT WAS SUN RADIO IN FLORIDA. 12 “QUESTION: AND HE TOLD YOU THAT MONIES WOULD BE 13 DISTRIBUTED TO THAT STATION? 14 “ANSWER: RIGHT. 15 “QUESTION: AND YOU AGREED WITH THAT? 16 “ANSWER: HE ASKED FOR THE APPROVAL OR ASKED FOR 17 HIS APPROVAL. WOULD I AND LEWIS AGREE TO IT, AND WE DID. 18 “QUESTION: DO YOU RECALL IF THE OTHER DIRECTORS 19 AGREED TO IT TOO? 20 “ANSWER: THEY DID, YES. 21 “QUESTION: AND DID YOU HAVE AN UNDERSTANDING OF 22 WHAT WAS BEING PROMOTED BY THE RADIO STATION? 23 “ANSWER: YES. THERE WAS NEWS AND HEALTH. IT WAS 24 A TALK SHOW. 25 “QUESTION: DO YOU EVER RECALL WHO THE TALK SHOW 26 HOST WAS? 27 “ANSWER: TOM VALENTINE. HE HAD OTHER — HE HAD 28 GUESTS, I MEAN, HE WASN'T, YOU KNOW, HE WAS THE — WHAT DO
page 931 1 YOU CALL IT, M.C.? 2 “QUESTION: RIGHT. SO YOU AGREED THAT ASSETS FROM 3 THE JEAN FARREL-EDISON’s ESTATE COULD BE UTILIZED FOR 4 PURPOSES OF PROMOTING THAT STATION? 5 “ANSWER: I DO. I KNEW TOM VALENTINE. 6 “AND DID YOU AGREE WITH WHAT MR. VALENTINE 7 ESPOUSED? 8 “ANSWER: WHEN I COULD HEAR HIM, YES." 9 THAT’s ONLY ONE ASPECT. THIS CUTS THROUGH THEIR 10 ARGUMENT THAT THE FURRS WEREN'T INFORMED. AND THE FURRS AS 11 YOU SEEN IN THE EVIDENCE HAVE DONE NOTHING WRONG. 12 GO BACK TO THE TIME LINE. WHAT RIGHTS DID THEY 13 HAVE IN 1985? A CHANCE TO ENTER INTO THE LITIGATION WITH NO 14 MONEY, AND WILLIS COMES UP WITH A PROPOSAL, AND THE PROPOSAL 15 IS SIMPLE, AND IT’s MEMORIALIZED BY A LETTER, WHICH 16 SUBSEQUENTLY WAS MEMORIALIZED BY CORPORATE ACTION. THAT IS, 17 LOOK, I WILL FINANCE — AS LAVONNE FURR SAID: I'LL FINANCE 18 IT. WHETHER HE TOOK IT BY LOANS OR DID IT THROUGH HIS OWN 19 POCKET, I'LL FINANCE IT IF I HAVE THE ABILITY TO DISTRIBUTE 20 IT AND DISTRIBUTE IT CONSISTENT WITH THE LEGION PURPOSES AND 21 JEAN FARREL-EDISON’s PURPOSES. 22 AND REMEMBER, AGAIN THERE WAS NO DOCUMENT. IN 23 FACT, THERE WAS LITIGATION. IN FACT, THERE WAS STOPPAGE OF 24 ASSETS BECAUSE THE LEGION DIDN'T HAVE A DOCUMENT SHOWING ANY 25 ENTITLEMENT TO ANYTHING OF JEAN FARREL-EDISON OTHER THAN 26 MR. Carto’s WORD, WHICH BY THE WAY, IT’s VERY INTERESTING. 27 THEY DON'T WANT — THEY DON'T WANT TO PUT ANY CREDIBILITY TO 28 HIS WORD. AGAIN, THEY WILL PUT CREDIBILITY TO HIS WORD WHEN
page 932 1 IT SUITS THEM, BUT THEY WON'T PUT CREDIBILITY TO HIS WORD 2 WHEN IT DOESN'T SUIT THEM. IT’s OKAY, WILLIS. YOU ARE 3 RIGHT. YOU ARE TELLING THE TRUTH NOW. IT’s PER THE 4 LEGION. 5 SO WHAT DOES HE DO? AT THAT POINT WE KNOW FOR A 6 FACT HE AND HIS WIFE AND HENRY FISCHER, WHO HAD A POWER OF 7 ATTORNEY FROM THE CORPORATION, WHO WAS DISCLOSED TO THE 8 CORPORATION, EMBARKED UPON TRYING TO RECOVER THESE NECA 9 BEARER CERTIFICATES, AGAIN, NOT IN ANYBODY’s NAME, BUT JEAN 10 FARREL-EDISON — IN THE POSSESSION AND CONTROL OF JEAN — I 11 MEAN, JOAN ALTHAUS. 12 AND THEY SPENT FIVE ARDUOUS YEARS AND LONG YEARS 13 PAYING ALMOST $400,000 IN ATTORNEY’s FEES. NOW, YOUR HONOR, 14 CIRCUMSTANTIALLY WHY WOULD LIBERTY LOBBY PAY $400,000 FOR 15 ATTORNEYS OVERSEAS? THEY HAVEN'T ANSWERED THAT QUESTION. 16 YOU KNOW WHY? BECAUSE THE ANSWER IS SELF-EVIDENT. IT WAS 17 LOANED TO WILLIS CARTO. 18 WHY WOULD WILLIS TAKE A LOAN ON HIS OWN TICKET 19 BECAUSE, BY THE WAY, THAT’s THE ONLY VEHICLE THAT COULD HAVE 20 TAKEN A LOAN ON THAT BECAUSE THE LEGION WAS PRECLUDED BY THE 21 BYLAWS AND PRECLUDED UNDER NONPROFIT CORPORATION LAW TO TAKE 22 ON A LOAN ON A SPECULATIVE VENTURE. 23 WHY WOULD WILLIS DO THAT? THE ANSWER IS 24 SELF-EVIDENT. BECAUSE HE HAD AN AGREEMENT. WITHOUT THAT 25 AGREEMENT THERE’s NO REASON FOR WILLIS TO DO THAT. HE 26 WASN'T BENEFITTING. 27 THERE’s NO REASON FOR LIBERTY LOBBY TO DO THAT. 28 THEY WEREN'T BENEFITTING. WHY? CAN THEY ANSWER THAT
page 933 1 QUESTION? THEY HAVEN'T BY THE EVIDENCE. 2 THE REASON IS SIMPLE. THERE WAS AN AGREEMENT, 3 WHICH VESTED RIGHTS IN WILLIS. AND WHAT WERE THE RIGHTS? 4 NOT TO PUT THE MONEY IN THE POCKET. YOU KNOW WHAT? THIS IS 5 WHAT WAS LEFT OF IT IN THE POCKET. NOTHING. HE HAD THE 6 RIGHT TO DISTRIBUTE THAT FOR THE CAUSES OF JEAN 7 FARREL-EDISON. WE HEARD THROUGH THE EVIDENCE THEY WERE THE 8 SAME AS THE LEGION'S: THE PROMOTION OF THE FIRST-AMENDED 9 RIGHTS, CONSTITUTIONAL RIGHTS THROUGH THE USE OF MEDIA, 10 RADIO, SO FORTH. 11 AND WILLIS, WHY WOULD HE DO THAT IF HE DIDN'T 12 BELIEVE HE HAD THE RIGHT? THERE’s AN ESTOPPEL ARGUMENT 13 HERE. NOW THE CORPORATION IS SAYING YOU DON'T HAVE THE 14 RIGHT, WILLIS, BECAUSE WE'RE NEW. WE'RE HERE IN 1993. 15 WE'RE NEW. YOU DON'T HAVE THE RIGHTS NOW BECAUSE YOU GOT 16 THE MONEY FOR US. THAT’s REALLY NICE. 17 IF YOU RECALL THE CASE THAT I — THE LUNDGREN CASE 18 I POINTED OUT IN MY BRIEF EARLIER, WHICH SAYS THAT THAT TYPE 19 OF CONDUCT IS DISDAINED, NOT ONLY GOES TO A LACHES BUT AN 20 ESTOPPEL ARGUMENT. YOU KNOW, GO AFTER IT. IF YOU MAKE 21 GOOD, IT’s OURS; BUT IF YOU LOSE, IT’s YOURS. 22 WHERE DO YOU THINK WE WOULD BE TODAY IF IN FACT 23 ZERO WOULD HAVE HAPPENED IN THE LITIGATION OVERSEAS? DO YOU 24 THINK THEY WOULD SAY, WILLIS — IN 1993, HERE WILLIS, LET ME 25 TAKE OUT MY WALLET AND GIVE ME THE MONEY. I CAN'T GET MY 26 WALLET OUT, FRANKLY. 27 THE COURT: MAYBE IT’s FULL OF ALL THAT MONEY. 28 MR. WAIER: NO, BUT HERE, WILLIS. THERE’s THE MONEY
page 934 1 BACK. 2 YOU KNOW WHAT? THAT ISN'T THE WAY IT WAS GOING TO 3 HAPPEN. IF NOTHING WOULD HAVE CAME FROM THE ESTATE AND 4 GREED WOULDN'T HAVE TAKEN OVER IN 1993, YOU WOULDN'T BE 5 HERE, EVEN BY WEBER’s TESTIMONY — I'LL GET INTO BRIEFLY. 6 HE EVEN ADMITTED AS LONG AS THE MONEY WENT TO THE GOALS, NOT 7 ONLY THE CONFERENCE OF THE LEGION, THE GOALS OF THE LEGION, 8 WE KNOW THAT. 9 BY THE WAY, THAT’s — DID COUNSEL SAY CIVIL CODE 10 SECTION 623? I THINK HE DID. 11 DO YOU RECALL WHAT WEBER SAID ON PAGE 155? HE 12 SAID HE WASN'T CONCERNED. HE WASN'T CONCERNED IN ANYTHING 13 WILLIS DID, AS LONG AS IT SPECIFICALLY WENT AND PRIMARILY 14 AIMED AT THE GOALS OF BOTH LEGION, WAS MEANT TO FURTHER THE 15 GOALS OF THE LEGION’s GOALS. AND I WANT TO EMPHASIZE THE 16 TERM “GOALS,” NOT TO EMPHASIZE ANYTHING ELSE BUT THE GOALS. 17 IT’s OKAY. AND AS LONG AS IT DIDN'T GO INTO THE POCKET. 18 THEY MADE AN ADMISSION. THEY'RE NOT CONCERNED 19 ABOUT ANYTHING CONCERNING THIS PRIOR TO SEPTEMBER OF 1993. 20 AGAIN, COUNSEL QUOTES LAW WHEN IT SUITS HIM, BUT THEN HE 21 DOESN'T BELIEVE IT APPLIES WHEN IT GOES AGAINST HIM WITH 22 NO — REMEMBER, WEBER IS A DIRECTOR, PRESENT DIRECTOR OF THE 23 FIRM. IN ESSENCE, HE AND GREG RAVEN ARE RUNNING THE FIRM OR 24 THE CORPORATION TO THIS DATE. 25 IF YOU ARE LOOKING FOR 620, I BELIEVE, CIVIL CODE 26 SECTION 623. 27 SO WHAT DO WE HAVE IN 1990, AND WHAT HAPPENS IN 28 1990? LOW AND BEHOLD ALL OF THE EFFORTS OF WILLIS CARTO AND
page 935 1 ELISABETH CARTO SPENDING OVER 3,000 HOURS OF HER TIME, 2 MONEY, EXPENSE, THEY ENTER INTO A SETTLEMENT AGREEMENT. 3 IT’s PAYING OFF. HOLYFIELD IS WINNING. I'M GETTING THE 4 MONEY. I CAN'T BELIEVE IT. I SUGGEST IT’s LONGER THAN 25 5 TO 1 LONG SHOT. 6 BUT IN ANY EVENT, A SETTLEMENT AGREEMENT IS 7 ENTERED INTO. WOULD YOU — NOW IT’s VERY INTERESTING THIS 8 AGREEMENT IN 1985. THE LEGION TODAY — TODAY I WANT TO 9 EMPHASIZE — TODAY SAYS NO CORPORATE AUTHORITY FOR THAT. 10 NONE WHATSOEVER. LEWIS AND LAVONNE FURR CAN'T ENTER INTO 11 THAT. NONE OF THAT. WE'RE GOING TO FOLLOW THE LAW. 12 1990 THIS TURNED AROUND. WILLIS HAD AUTHORITY TO 13 ENTER INTO IT. THE FURRS HAD AUTHORITY TO GRANT THEM THAT 14 AUTHORITY. HERE IS THE MINUTES. THEY DON'T CONTEST THOSE 15 MINUTES. THEY DON'T NITPICK THOSE MINUTES. YOU KNOW WHY? 16 BECAUSE EVEN BY THE COMPLAINT ALL OF THEIR RIGHTS STEM FROM 17 THAT AGREEMENT. THE LEGION’s RIGHTS, WHATEVER THEY ARE, 18 STEM FROM THESE AGREEMENTS. I DON'T CARE HOW YOU WANT TO 19 READ THE WORDING. THIS IS WHERE THEY CLAIM — AND YOU KNOW 20 SOMETHING, YOUR HONOR? THEY'RE OUT OF THE BOX AGAIN. 21 THAT’s WHAT THEY'RE SUING UNDER. THAT IS THEIR CLAIM TO 22 FAME. 23 AND I WOULD LIKE TO INVITE THE COURT TO READ 5142 24 AS POINTED OUT BY COUNSEL. WHY DID THEY NOT MAINTAIN THE 25 ACTION? MR. BEUGELMANS SAYS THAT I LOOK AT THINGS HIGHLY 26 TECHNICAL. WELL, I'M NOT THE LEGISLATURE, AND I DON'T 27 CREATE THE LAWS. I VOTE FOR MY CONGRESSMAN. I DON'T CREATE 28 THE LAWS. WHAT DOES IT SAY, YOUR HONOR? THEY SEEK
page 936 1 INJUNCTIVE RELIEF, DON'T THEY, IN THE COMPLAINT? 2 AND 5142 SAYS: “IN AN ACTION UNDER THIS SECTION, 3 THE COURT MAY NOT RESCIND OR ENJOIN THE PERFORMANCE OF A 4 CONTRACT.” THEY SEEK INJUNCTION UNDER THAT CONTRACT. 5 THAT’s THE BASIS OF THEIR ACTION. “UNLESS” — AND THERE'S 6 NO MAYBES ABOUT THIS — “ALL OF THE PARTIES TO THE CONTRACT 7 ARE PARTIES TO THE ACTION." 8 OKAY. WHERE IS JOAN ALTHAUS? FIND HER IN THE 9 CAPTION. WHERE IS ROLAND ROCHAT? FIND HIM IN THE CAPTION. 10 WHERE IS PAT FOETISCH? FIND HIM IN THE CAPTION. 11 THEY CAN'T EVEN MAINTAIN INJUNCTIVE RELIEF. THEY 12 CAN'T EVEN MAINTAIN THE ACTION TODAY. 13 THIS IS THE ONE POINTED OUT. DIDN'T THEY AMEND 14 THE COMPLAINT TO THE 5142? I BELIEVE THAT’s WHAT THEY 15 AMENDED THE COMPLAINT FOR, AND THE COURT ALLOWED IT. 16 SO WHAT DO WE HAVE IF IN FACT THAT CONTRACT, THE 17 DISTRIBUTION SETTLEMENT AGREEMENT, WAS NOT AUTHORIZED 18 BECAUSE THE SAME ACTIONS WERE TAKEN ALL THE WAY; AND 19 CONSISTENT THROUGHOUT IF YOU DON'T AUTHORIZE THIS AGREEMENT 20 WITH WILLIS BECAUSE OF SOME CORPORATE INFIRMITY, YOU 21 CERTAINLY CANNOT AUTHORIZE THE DISTRIBUTION AGREEMENT IN 22 1990. THE SAME ACTIONS WERE TAKEN. THE SAME PEOPLE WERE 23 CONSULTED. EVERYTHING IS THE SAME. THEY CAN'T HAVE THEIR 24 CAKE AND EAT IT TOO. 25 NOW ASSUME THE COURT BUYS THE ARGUMENT — I DON'T 26 KNOW HOW THE COURT CAN — THAT THIS AGREEMENT IN 1985 IS NO 27 GOOD, BUT THESE AGREEMENTS IN 1990 ARE GOOD, EVEN THOUGH 28 WILLIS DIDN'T SIGN IT, ALTHOUGH WE WILL ADMIT HE AUTHORIZED
page 937 1 MR. FOETISCH TO SIGN HIS NAME AND THE LEGION’s NAME. HE 2 ADMITS THAT. THAT’s WHAT HE TESTIFIED TO. 3 WHAT HAPPENS IN 1991? EARLY IN JANUARY THROUGH 4 MARCH THERE IS A DISTRIBUTION OF ASSETS OUTSIDE OF THE 5 ESTATE. AND I INVITE THE COURT TO READ THE DOCUMENTS, 6 EXHIBIT 29, 30, 31, 32, 33. IT TALKS ABOUT WHAT WAS 7 DISTRIBUTED. IT TALKS ABOUT THE AMOUNT. IT TALKS ABOUT 8 SETTING UP THIS CORPORATION NAMED VIBET. 9 AND BY THE WAY, I DO WANT TO INDICATE ONE THING 10 WHICH COUNSEL AGAIN HAS MISLED THIS COURT, AND THERE IS MANY 11 THINGS HE MISLED THE COURT IN, AS TO WHETHER LAVONNE FURR 12 TESTIFIED. IF YOU RECALL MR. BEUGELMANS EMPHATICALLY STATED 13 MR. CARTO BACK IN 1991 DIDN'T TELL LAVONNE FURR HOW MUCH WAS 14 IN THE ESTATE. OF COURSE, IF YOU TAKE A LOOK THE DOCUMENTS 15 DEFY WHAT MR. BEUGELMANS SAID. MR. CARTO COULDN'T HAVE 16 KNOWN BACK IN 1990 THROUGH UP TO JANUARY 1991 BECAUSE NOT 17 EVEN THE ATTORNEYS KNEW. THEY HADN'T SETTLED ON THE EXACT 18 AMOUNT OF THE ESTATE. THERE WERE OTHER ISSUES THEY HAD TO 19 LIQUIDATE, GEMS. THERE WAS NO WAY TO KNOW WHAT LAVONNE FURR 20 STATED IN THE DEPOSITION. 21 THE COURT: IF THERE’s NO WAY TO KNOW WAY BACK IN 80'S 22 WHEN HE FILED A — HE FILED A COMPLAINT IN THIS COUNTRY 23 SAYING THE ESTATE WAS WORTH 16 MILLION -- 24 MR. WAIER: NO. WHAT HE DID, HE VERIFIED A COMPLAINT 25 THAT HE BELIEVED THE NECA CERTIFICATES — READ THE 26 CLOSING — WERE VALID AT 16 MILLION. HE BELIEVED BASED ON 27 THE GOOD FAITH BELIEF HE VERIFIED THAT NOBODY HAD ANY RIGHTS 28 TO NECA AT THAT TIME.
page 938 1 YOUR HONOR, THEY'RE IN LITIGATION, AND JOAN 2 ALTHAUS IS SAYING, THEY'RE ALL MINE. BUT HE VALUED IN 19 -- 3 NOBODY HAS THEM AT THIS TIME. IT’s A RED HERRING. 4 BUT GUESS WHAT? CAN I TELL YOU SOMETHING, YOUR 5 HONOR? YOU POINTED OUT SOMETHING REAL INTERESTING. THE 6 FURRS HAD THAT INFORMATION TOO IN 1987. YOU KNOW WHY? 7 THEIR ATTORNEYS KNEW. THE LEGION’s ATTORNEYS KNEW IN 1987 8 BASED ON THE COMPLAINT. WHEN THE ATTORNEY KNOWS, THE 9 CORPORATION KNOWS. THERE’s NO ALLEGATION THAT THE ATTORNEYS 10 WERE HIDING ANYTHING FROM THE CORPORATION. IT’s PUBLIC 11 RECORD. THOSE DOCUMENTS ARE PUBLIC RECORD. 12 IF THE FURRS CAN BE ACCUSED OF ANYTHING — MAYBE 13 THEY SHOULD HAVE GONE TO NORTH CAROLINA. THEY KNEW ABOUT 14 THE LITIGATION. IT’s DISCUSSED IN THE MINUTES. 15 SO THE 16 MILLION, THE FURRS KNEW IT. I'M GLAD 16 YOU BROUGHT THAT POINT UP, OR THEY HAD THE MEANS TO KNOW IN 17 1987 BECAUSE IT’s A PUBLIC DOCUMENT. THERE’s NO HIDING THE 18 BALL. IF THEY WERE HIDING THE BALL, WILLIS WOULDN'T HAVE 19 PUT IT IN A PUBLIC DOCUMENT. YOU CAN'T OMIT TO TELL 20 SOMEBODY SOMETHING WHEN YOU PUT IT IN A PUBLIC DOCUMENT FOR 21 THE WORLD TO SEE. 22 YES, 1987. YOU ARE RIGHT. AND THAT WAS NOT ONLY 23 DISCLOSURE TO THE LEGION’s ATTORNEYS, BUT TO THE LEGION 24 ITSELF. THE LAW IS CLEAR. KNOWLEDGE TO THE ATTORNEYS IS 25 IMPUTED TO THE CORPORATION. THAT’s THE LAW. AND THERE'S 26 BEEN NO CLAIM THAT THE ATTORNEYS DIDN'T REPRESENT THE 27 LEGION. IN FACT, MR. BEUGELMANS, HE SAID THAT HE HAS A 28 PROBLEM BECAUSE IF THE ATTORNEYS WEREN'T REPRESENTING THE
page 939 1 LEGION, WERE THEY REPRESENTING WILLIS? NO. THE ATTORNEYS 2 REPRESENT — THEY GOT US; WHAT WE WANTED. WHEN IT SUITS 3 THEM, IT SUITS THEM. BUT THAT WAS KNOWLEDGE TO THE 4 CORPORATION IN 1987. NOTHING WAS HIDDEN. 5 REMEMBER WHAT THEY'RE CLAIMING. WILLIS WAS HIDING 6 THE BALL. THERE’s NO OMISSION TO DISCLOSE. HE DID INFORM 7 THE CORPORATION. HE INFORMED THE WORLD WHAT HE BELIEVED 8 THAT IS WORTH 16 MILLION. 9 BY THE WAY, AT THAT JUNCTURE DID THE LEGION COME 10 IN AND SAY, OUR DEAL IS OFF, WILLIS. SORRY. HEY, YOU THINK 11 IT’s 16 MILLION. WE'RE GOING TO GO FORWARD. FORGET YOU. 12 FORGET THE MONEY YOU SPENT UP TO 1987. YOU WON'T FIND ONE 13 MINUTE RESCINDING THAT. YOU WON'T FIND ANY ACTION FROM 14 LEWIS AND LAVONNE FURR RESCINDING THAT ACTION. I'M TELLING 15 YOU, UNDER THE LAW THEY WERE NOT ONLY FINANCIALLY INFIRMED; 16 THEY WERE LEGALLY INFIRMED TO DO THAT. I'LL POINT THAT LAW 17 OUT AT THE END OF MY DISCUSSION. 18 SO THERE’s NO MISINFORMATION HERE, HE INFORMED 19 THEM NOTHING. IT HELPS US OUT. 20 ANYWAY, THERE’s MUCH TO DO ABOUT THIS PERIOD OF 21 TIME. IF THE RIGHTS COME FROM THE LEGION, WHAT DID HAPPEN 22 WITH WILLIS IN 1991? HE INFORMED THE DIRECTORS. WHAT IS 23 GOING ON IN FACT, AS LAVONNE TESTIFIED, AND IF YOU TAKE A 24 LOOK AT THE DEPOSITION, AND I THINK THEY'RE IN PAGES 89 25 THROUGH 90, GUESS WHAT SHE TESTIFIES TO? REMEMBER, THERE'S 26 MUCH TO DO ABOUT THE INTERNATIONAL LEGION FOR THE SURVIVAL 27 OF FREEDOM, INC. DO YOU KNOW WHAT SHE TESTIFIES WHEN WILLIS 28 TOLD HER THERE WOULD BE A DISTRIBUTION OF MONEY IN JANUARY,
page 940 1 FEBRUARY AND MARCH OF 1991? SHE SUGGESTED — IN FACT, 2 SUGGESTED TO WILLIS THE NAME TO CALL THE CORPORATION. THE 3 DIRECTORS OF THE LEGION, INTERNATIONAL LEGION FOR THE 4 SURVIVAL OF FREEDOM. IT WASN'T SOMETHING WILLIS DID. SHE 5 PICKED THE NAME, LAVONNE FURR, AND SHE AGREED TO IT. 6 I SUBMIT, YOUR HONOR, IT PROBABLY WAS DONE FOR A 7 NUMBER OF REASONS. ONE, YOU HEARD THE MERMELSTEIN CASE. 8 YOU HEARD EVEN MR. MARCELLUS AND SITTING BACK THERE HE WAS 9 CONCERNED ABOUT THE ASSETS. HE WASN'T AN OFFICER AT THIS 10 TIME. HE WAS NOTHING OTHER THAN AN EMPLOYEE. THAT’s WHAT 11 HE WAS, AN EMPLOYEE. HE ADMITS IT HIMSELF. 12 THE COURT: I DON'T THINK MOST EMPLOYEES THINK THEY'RE 13 NOTHING. 14 MR. WAIER: I DON'T MEAN NOTHING, BUT IN THE HIERARCHY 15 AS DECISIONMAKING. I DON'T MEAN TO DEMEAN MR. MARCELLUS 16 WHEN I SAY THAT, BUT HE EVEN ADMITS THEY WERE TRYING TO 17 LIQUIDATE THE ASSETS, THE ASSETS OF THE LEGION, AND PUT HIM 18 IN OTHER SOURCES SUCH AS F.D.F.A. 19 THERE’s A THING CALLED THE UNCLEAN HANDS DOCTRINE 20 TOO THAT THE COURT OUGHT TO BE AWARE OF. IF THEY'RE GOING 21 TO SIT HERE AND THEN TURN AROUND AND SAY HE PUT MONEY IN 22 ORGANIZATIONS, WHEN IT’s DONE, AND TURN AROUND AND SAY, HEY, 23 TOO BAD. WE'RE COMING AFTER YOU NOW WHEN IT SUITS US. 24 WE'LL COME AFTER YOU WHEN IT SUITS ME. FORGET IT. 25 SO HERE WE ARE IN 1991. HE — LAVONNE FURR IN THE 26 OWN TESTIMONY, UNREFUTED, TESTIFIED SHE SET IT UP TO A 27 SEPARATE ORGANIZATION, AND THEY DID IT. HE FOLLOWED HER 28 INSTRUCTIONS. THEY SET UP A SEPARATE DEAL, SEPARATE BANK
page 941 1 ACCOUNT OVERSEAS. AND I'M NOT GOING TO GO INTO ALL THE 2 LABORS, MR. CARTO AND FISCHER. EVERYBODY ELSE DID NOTHING. 3 MR. FISCHER DO ANYTHING WRONG? NO CULPABILITY TO 4 MR. FISCHER. BUT WHAT HAPPENED, THEY SET UP EXACTLY WHAT 5 THE FURRS WANTED THEM TO DO AND WHAT THE CORPORATION WANTED 6 THEM TO DO. SO FAR NOTHING IS WRONG. AND WHEN THEY 7 TRANSFERRED THAT MONEY FROM THE ACCOUNT IN LONDON AND 8 SWITZERLAND TO THE NEW ACCOUNT UNDER VIBET, WHICH ALL 9 TRANSPIRED BY THE EVIDENCE IN MARCH OF 1991, THE ALLEGED 10 CONVERSION HAS TAKEN PLACE. UNLESS THEY'RE GOING TO ARGUE 11 THAT VIBET IS SOMEHOW A SUBSIDIARY OF THE LEGION, IF THAT'S 12 THE CASE, WE GOT THE WRONG PARTY HERE, AS I MENTIONED IN THE 13 MOTION FOR JUDGMENT. VIBET IS A REAL PARTY IN INTEREST. 14 VIBET HASN'T SUED. THEY SUED VIBET. THEY DIDN'T 15 TRY TO GET VIBET TO SUE, ASSUMING THEY OWN STOCK IN IT. 16 THERE’s NO EVIDENCE THAT THE LEGION OWNED STOCK IN VIBET. 17 THE WRONG PARTY IS SUED. THEY SHOULD BE KNOCKED OUT OF 18 COURT ON THAT BASIS. 19 GO TO 1991. THE ASSETS GO IN AND TAXES ARE PAID. 20 ESTATE FEES ARE PAID. AND LOW AND BEHOLD, WE'RE IN A 3.2 TO 21 3.5 MILLION DOLLARS. AND WHAT IS — WHAT DOES WILLIS DO? 22 HE DOES EXACTLY WHAT LAVONNE FURR AUTHORIZED HIM TO DO. HE 23 USES THE VEHICLE OF LIBERTY LOBBY BUT PUTS IT INTO SUN 24 RADIO. REMEMBER, THIS IS CONSISTENT WITH THE BYLAWS OF THE 25 LEGION. IT’s CONSISTENT WITH THE CHARTER OF THE LEGION, AND 26 IT WENT FOR A PURPOSE. IT DID NOT GO IN THIS MAN’s POCKET. 27 THERE IS NO EVIDENCE IT WENT INTO THIS MAN’s POCKET. IT 28 WENT, AS MR. WEBER SAID, TO FURTHER THE GOALS — THE
page 942 1 GOALS — THE GOALS OF THE LEGION. HE DID IT. HE DID 2 EVERYTHING THAT EVERYBODY WANTED HIM TO DO, AND HE UTILIZED 3 IT TO PROMOTE THOSE ISSUES HELD DEAR BY JEAN FARREL-EDISON 4 AND BY THE LEGION, AS WELL AS BY LIBERTY LOBBY, AS WELL AS 5 BY THE FOUNDATION TO DEFEND THE FIRST AMENDMENT. HE DID 6 IT. 7 IT’s IMPORTANT, YOUR HONOR, BECAUSE THIS 8 INFORMATION WAS KNOWN. AND REMEMBER, THE STATUTE OF 9 LIMITATIONS PURPOSE WAS KNOWN AS EARLY AS MARCH OF 1991. 10 THAT THE MONIES ARE GONE. THE MONIES HAD GONE INTO ANOTHER 11 ACCOUNT AUTHORIZED BY THE FURRS. IT WAS DONE. THEY ADMIT 12 IN THE DEPOSITION THEY KNEW ALL. 13 IN FACT, IT’s INTERESTING. MR. FURR IN HIS 14 DEPOSITION, AND I INVITE THE COURT TO READ THAT, HE’s THE 15 ONE WHO CONTACTED IN EARLY 1991 THE ATTORNEYS OVERSEAS. 16 REMEMBER, KNOWLEDGE OF THE ATTORNEYS IS IMPUTED TO THE 17 CORPORATION. 18 AND, YOUR HONOR, LOOK AT THE LETTERS. THE LETTERS 19 TALK ABOUT A DISTRIBUTION ALL THE WAY DOWN THE LINE OF WHAT 20 TOOK PLACE. THERE ARE LETTERS CONCERNING THIS. AND I 21 BELIEVE — IN FACT, I HAVE IT WRITTEN DOWN. IF YOU TAKE A 22 LOOK AT EXHIBITS, I BELIEVE THEY ARE FROM 38, 39, 40, 41, 40 23 ALL THE WAY UP TO THE MARCH 5, 1991 MINUTES, AND THEN 24 THEREAFTER EXHIBIT 44, YOU WILL SEE THAT ALL OF THIS 25 INFORMATION IS PROVIDED. THEY'RE IN THE HANDS OF THE 26 LEGION’s ATTORNEYS. ALL OF THE INFORMATION — IN FACT, 27 MARCH 8, 1991 IT TALKS ABOUT THE DISTRIBUTION IN DETAIL. IT 28 TALKS ABOUT THE MONEYS. THERE’s ANOTHER LETTER, JUNE 5,
page 943 1 1991. IT AGAIN DISCUSSES FROM THE ATTORNEY BIDDLE AND 2 COMPANY. YOU CAN GO ON AND ON AND ON. 3 THERE WAS NO CONCEALMENT. THERE WAS NO ADMISSION 4 TO STATE — THE EVIDENCE IS TO THE CONTRARY BEFORE YOU. THE 5 ATTORNEYS HAD ALL THE INFORMATION. THE CORPORATION HAD 6 CONSTRUCTIVE NOTICE OF EVERYTHING, AND IT DID RECEIVE IT. 7 REMEMBER, IT’s THE MEANS OF KNOWLEDGE. AND YOU 8 CERTAINLY CAN'T SAY YOU DON'T HAVE THE MEANS OF KNOWLEDGE 9 WHEN YOUR OWN ATTORNEYS WHO LEWIS FURR KNEW WHO THEY WERE -- 10 HE WROTE TO THEM. IT’s IN THE DEPOSITION, IN FACT, A LETTER 11 IN THE DEPOSITION MARKED AS AN EXHIBIT WHEN HE WROTE TO THEM 12 IN 1991. STATUTE OF LIMITATIONS HAS LONG RUN ON CONVERSION, 13 WHICH IS 3 YEARS; FRAUD, WHICH IS 3 YEARS. 14 SO WHAT RIGHTS DO THEY HAVE? THE ONLY RIGHTS COME 15 FROM THE AGREEMENTS THEMSELVES. I INVITE THE COURT TO READ 16 THE AGREEMENTS. ALL THE PARTIES WERE RELEASED. YOU READ 17 THE AGREEMENTS THAT THE ATTORNEY TO DISTRIBUTE THE ESTATE ON 18 BEHALF OF THE LEGION WENT TO ROLAND ROCHAT. WHERE IS HE? 19 WHY DIDN'T MR. BEUGELMANS INCLUDE HIM IN THE COMPLAINT? 20 WHY? THEY HAD TO UNDER 5142. WHY DIDN'T THEY INCLUDE HIM? 21 TAKE A LOOK AT WHAT THE LEGION DIRECTED. THAT IS 22 A DIRECTION FROM THE LEGION. BOTH IN THE MANDATE AGREEMENT, 23 THE DISTRIBUTION AGREEMENT, AND SETTLEMENT AGREEMENT ROLAND 24 ROCHAT WAS SOLELY RESPONSIBLE TO WORK ON BEHALF OF THE 25 LEGION TO DISTRIBUTE THE ASSETS. HE KNOWS HE DISTRIBUTED 26 THEM TO VIBET CORPORATION. WAS THAT WRONG? THEY DON'T 27 CONTEND THAT’s WRONG. HAVE YOU HEARD ANY EVIDENCE THAT 28 ROLAND ROCHAT DIDN'T DO AS THE LEGION TOLD HIM TO DO? NO.
page 944 1 HE HAD ABSOLUTE AUTHORITY TO NOT ONLY TO DISTRIBUTE THEM, 2 BUT TO DISPOSE OF THOSE ASSETS. 3 I INVITE THE COURT TO READ THE AGREEMENTS 4 CAREFULLY. THAT’s WHAT THEY LIVE AND DIE ON. THAT’s WHAT 5 THEY'RE GOING TO DIE ON. 6 NOW SO WHAT DO WE HAVE? 1991 EVERYTHING IS DONE. 7 LOW AND BEHOLD EVERYBODY IS HAPPY. THE LEGION IS HAPPY. 8 THEY'RE GETTING RADIO TIME. THEY GOT A RADIO STATION OUT 9 THERE PROMOTING THE GUARANTEES OF FREEDOM AND EXPRESSIONS 10 AND CONSTITUTIONAL RIGHTS AND ALL THE THINGS THAT JEAN 11 FARREL-EDISON WANTED. 12 SUN RADIO. THEY GOT SUN RADIO, WHO IS 13 INTERVIEWING MR. WEBER. MR. WEBER. INTERVIEW HIM, GETTING 14 THE STORY OF THE LEGION OUT. DOING EVERYTHING. GETTING 15 GREAT TIME. LAVONNE FURR’s DAD CAN LISTEN, CAN HEAR IT. HE 16 CAN'T SEE OR READ, BUT HE CAN LISTEN NOW. PROMOTING THE 17 IDEALS AND GOALS OF THE LEGION. 18 HAS WILLIS CARTO DONE ANYTHING YET? HAS HE NOT 19 GONE AND DONE WHAT HE AGREED TO DO? HAS HE NOT CARRIED HIS 20 END OF THE 1985 BARGAIN? HAS HE NOT PUT UP ALL THE MONEY? 21 HAD HE NOT GONE OVERSEAS? HAD HE NOT HIRED THE ATTORNEYS? 22 HAD HE NOT FULFILLED HIS END OF THE BARGAIN? HE DID. 23 AND DID THE LEGION FULFILL THEIR END OF THE 24 BARGAIN FROM THE 1985 AGREEMENT? THEY DID UP UNTIL THERE 25 WAS A NEW BOARD OF DIRECTORS. HAD UP UNTIL BECAUSE OF 26 EDITORIAL PROBLEMS BETWEEN MR. CARTO AND MR. WEBER. AND 27 UNTIL THEY DECIDED THAT THEY DIDN'T LIKE MR. Carto’s 28 THOUGHTS OF HOW THE INSTITUTE OF HISTORICAL REVIEW SHOULD BE
page 945 1 RUN, UP UNTIL THAT TIME, THEY DON'T DISPUTE ANYTHING. THEY 2 LIVED UP TO THEIR END OF THE BARGAIN. AFTER ALL, THIS 3 CONSIDERATION IS PAID FOR — THAT BARGAIN BY MR. CARTO, 4 LIBERTY LOBBY AND EVERYBODY ELSE, HIS LOAN TO THEM. 5 THEY LIVE UP TO THE END OF THE BARGAIN UNTIL 1993, 6 AND THEN LOW AND BEHOLD, IF YOU TAKE A LOOK — I WOULD LIKE, 7 YOUR HONOR, TO TAKE A LOOK. DO YOU KNOW WHEN THE FARREL 8 ESTATE COME UP? EVEN THEY KNEW SOMETIME IN 1993 MARCH OR 9 APRIL OF 1993, AS THE TESTIMONY GOES. THEY RAN THE 10 INVESTIGATION OF MR. CARTO, THE STAFF DID, THE EMPLOYEES. 11 THEY STATED THAT AT THAT POINT IN TIME THEY SAW A WIRE 12 TRANSFER OF 100,000. MR. MARCELLUS SAID HE SAW IT WAY BACK 13 IN 1991, A HUNDRED THOUSAND GOING TO SOME OTHER BANK OTHER 14 THAN THE LEGION ACCOUNT. 15 MR. MARCELLUS DURING 1991, 1992 WAS RECEIVING 16 MONIES INTO HIS OWN POCKET FROM BANQUE CONTRADE, NOT A 17 LEGION ACCOUNT. HE KNEW JANUARY 1991 HE WAS GETTING MONEY 18 IN THE POCKET. THEY WENT TO ONE OF HIS FAVORITE CAUSES, 19 SCIENTOLOGY. BACK IN 1991, 1992, IT WAS OKAY THEN FOR 20 MR. MARCELLUS, BUT THEN THEY TAKE OVER BECAUSE THEY SAY, 21 HEY, WAIT A SECOND. YOU KNOW WHAT. REMEMBER THAT FARREL 22 ESTATE? MR. HULSY TALKS ABOUT IT AND MR. HULSY’s IDEA — BY 23 THE WAY, THE ATTORNEY FOR THE LEGION TELLING THEM GET 24 EVERYTHING OUT OF THE CORPORATION DURING THE MERMELSTEIN 25 CASE, THE LETTER TO MR. MARCELLUS. GET EVERYTHING OUT OF 26 THE CORPORATION. YOU DON'T WANT IT IN THE CORPORATION. WE 27 COULD GET HIT WITH A JUDGMENT. THIS IS ONE WAY THEY 28 FOLLOWED THAT ADVICE. NOW THEY'RE GOING TO FOLLOW HIS
page 946 1 ADVICE NOW. HEY, WE CAN GET A WINDFALL HERE. REMEMBER THE 2 CORPORATE FORMALITIES WE HAVEN'T BEEN DOING IN THE PAST? 3 USE THAT AGAINST WILLIS CARTO. WE'RE GOING TO GET HIM. 4 WE'RE NOT ONLY GOING TO KICK HIM OUT OF THE FIRM, WE'LL PUT 5 THE SQUEEZE TO HIM, GET HIS CORPORATION. WE'LL GET 6 EVERYTHING WE CAN. WE'RE GOING TO DO THIS VENDETTA, RIGHT? 7 WHY? BECAUSE WILLIS CARTO SPENT ALL THAT MONEY. NOT ONLY 8 DID HE FURTHER THE GOALS OF THE LEGION, HE PUT $750,000, 9 UNREFUTED, INTO THE COFFERS, INTO THE LEGION COFFERS. BY 10 THE WAY, A GENTLEMAN THAT MR. WEBER CALLED AS LATE AS 11 1993 — EARLY, A LOYAL AND TRUE MEMBER AND FOUNDER OF THE 12 LEGION, JANUARY AND FEBRUARY 1993 AT THE INTERNATIONAL 13 CONFERENCE. 14 GOING TO THE RESOLUTION — BY THE WAY, YOUR HONOR, 15 SO THE RESOLUTIONS ARE CLEAR AS OPPOSED TO WHO MAY HAVE 16 ATTENDED THE MEETING, YOU WERE GUIDED BY, WHICH THIS LAW IS 17 VERY CLEAR TOO WITH RESPECT TO NOT PUTTING THE MONEY INTO 18 THE CORPORATION. PAT FOETISCH — BY THE WAY, LAVONNE FURR, 19 IN THE DEPOSITION, AND PLEASE READ IT OVER, STATES 20 CATEGORICALLY SHE KNEW PAT FOETISCH WAS SETTING UP. SHE 21 DIRECTED PAT FOETISCH TO DO THIS. AND SHE WENT ON. 22 BY THE WAY, MR. BEUGELMANS — I DIDN'T FINISH MY 23 THOUGHT ON THAT. HE SAID THAT LAVONNE FURR SAID ONLY A 24 MILLION DOLLARS. IN FURTHER QUESTIONING — I INVITE THE 25 COURT TO READ IT: “NO, THE MILLION DOLLARS WAS A CASH 26 SITUATION.” SHE DID NOT KNOW WHAT IT WAS WHEN WILLIS SAID 27 “A LITTLE BIT LESS THAN A MILLION DOLLARS.” SHE DID NOT 28 PLACE THAT VALUE ON THE GEMS. SHE DID NOT PLACE THE VALUE
page 947 1 OF THE NECA CERTIFICATES, WHICH HAD NOT BEEN SOLD AT THAT 2 TIME. READ IT. IT WAS EXPLAINED AND EXPLAINED IN GREAT 3 DETAIL, NOT AT THE BEHEST OF COUNSEL, BUT HER OWN BEHEST. 4 THAT’s WHAT I'M TALKING ABOUT, THE MISLEADING OF 5 THE COURT. READ THE ENTIRE DEPOSITION. YOU'LL SEE SHE WAS 6 KEPT ABREAST OF EVERYTHING. THIS IS MORE IMPORTANT. 7 WE ALL IN THE LEGAL PROFESSION KNOW WHAT THE TERM 8 PRIMA FACIE IS ALL ABOUT. PRIMA FACIE SAYS WHAT IT IS. 9 IT’s NOT REBUTTABLE, NOT A REBUTTAL PRESUMPTION. IT’s PRIMA 10 FACIE EVIDENCE, ADOPTION OF BYLAWS AND/OR RESOLUTIONS. THE 11 MARCH 5, 1991 RESOLUTIONS LAVONNE FURR TESTIFIED TO THEM. 12 SHE SIGNED THEM. SHE AGREED. SHE DISCUSSED THEM WITH 13 EVERYBODY. THEY WERE AGREED. THOSE ARE THE ONES YOU HAVE 14 BEFORE YOU, A COPY OF THOSE MINUTES. 15 IT SAYS: “THE ORIGINAL OR A COPY OF THE BYLAWS OR 16 OF THE MINUTES OF ANY INCORPORATORS, MEMBERS, DIRECTORS, 17 COMMITTEE OR OTHER MEANS." 18 IT DOESN'T HAVE TO BE JUST A DIRECTOR’s MEETING. 19 IT CAN BE A MEETING WITH SOME DIRECTOR CHARGED WITH THE 20 RESPONSIBILITY AND AUTHORITY OR RECOGNIZED. 21 AND THE LAW IS CLEAR TOO. THAT EVEN UNDER 22 NONPROFIT — IF A CONTRACT IS STILL VALID, IT DOESN'T HAVE 23 TO BE BY A DIRECTOR’s MEETING AS LONG AS THE PERSON WHO IS 24 AUTHORIZED IN THAT CONTRACT HAS OSTENSIBLE OR APPARENT 25 AUTHORITY. AND EVERYBODY AGREES LAVONNE FURR HAS OSTENSIBLE 26 AND APPARENT AUTHORITY. THAT’s IN THE NONPROFIT CORPORATION 27 CODE. 28 THAT CONTRACT WAS VALID. THE RESOLUTIONS ARE
page 948 1 VALID OF ANY RESOLUTION OR MEMBERS CERTIFIED TO BE A TRUE 2 COPY. HE HAD THAT BEFORE YOU, THE MARCH 5, 1991 MINUTES. 3 YOU ARE LEFT WITH THAT IN YOUR LAP, YOUR HONOR. 4 AND WHAT DOES THAT SAY? DON'T PUT THE MONEY IN 5 THE CORPORATION. PUT IT TO A SUITABLE PURPOSE, INCLUDING 6 RADIO. IT’s VERY IMPORTANT BECAUSE IT TRACKS EXACTLY WHAT 7 MR. WEBER SAID SHOULD BE DONE — SHOULD HAVE BEEN DONE WITH 8 THE MONEY. 9 IT SAYS: “RESOLVED” — THIS IS EXHIBIT 41 -- 10 “THAT THE FUNDS FROM THE ESTATE OF MISS JEAN FARREL NOT BE 11 ACCEPTED INTO THE CORPORATION BUT INSTEAD DIRECTED TO A 12 SUITABLE INDEPENDENT ORGANIZATION FOR THE PURPOSE OF 13 OPERATING A GENERAL NONPROFIT ADVERTISING, PUBLISHING AND 14 PUBLIC RELATIONS BUSINESS THROUGH THE MEDIA OF BOOKS, 15 PAMPHLETS, MAGAZINES, RADIO." 16 DOESN'T THIS HAUNTINGLY SOUND LIKE THE CHARTER OF 17 THE LEGION? IT SURE DOES. ISN'T THAT WHAT WAS DONE WITH 18 THE MONEY? IT SURE HAPPENED. 19 “TELEVISION, NEWSLETTERS, NEWSPAPERS, AUDIO AND 20 VIDEO CASSETTES AND ANY OTHER MEDIUM TO AID AND ASSIST IN 21 THE PROMOTION AND PRESERVATION OF INDIVIDUAL LIBERTY AND 22 FREEDOM OF SPEECH IN THE AREAS OF GOVERNMENT, RELIGION, 23 SCIENCE, HISTORY, THE ARTS, MEDICINE, PHILOSOPHY, THE PRESS 24 AND WRITTEN AND SPOKEN WORD TO EDUCATE THE PEOPLE OF ALL 25 COUNTRIES, INCLUDING THE UNITED STATES, IN THE CREATIVE 26 PRINCIPLE OF LIBERTY UNDER THE LAW." 27 WHAT BETTER WAY, YOUR HONOR, I SUBMIT, TO GET THAT 28 ACROSS TO THE PUBLIC AT THE MOST EFFICIENT WAY THAN BY
page 949 1 RADIO. RADIO IS A MEDIUM OF CHOICE, AND THAT’s WHAT 2 HAPPENED HERE. THERE’s NO EVIDENCE TO THE CONTRARY. AND 3 THAT YOUR HONOR, IS PRIMA FACIE EVIDENCE. 4 AND LAVONNE FURR TESTIFIED TO IT; THAT THAT WAS 5 WHAT THE CORPORATION WANTED ON MARCH 5, 1991. THAT IS WHAT 6 WILLIS DID. DIDN'T HIDE ANYTHING. THE CORPORATION KNEW. 7 THAT’s THE WHOLE BASIS. DID WILLIS HIDE SOMETHING? NO. 8 WAS WILLIS, LIKE MR. LANE SAID, WAS HE RESPONSIBLE TO TELL 9 THE LEGION STAFF ANYTHING ABOUT IT? NO. THEY'RE NOT MAKING 10 THE DECISIONS FOR THE CORPORATION. HIS RESPONSIBILITY AND 11 RESPONSIBILITY ONLY IS TO THE CORPORATION, ITS MEMBERS AND 12 DIRECTORS. THAT’s HIS RESPONSIBILITY. THAT’s WHERE THE 13 FIDUCIARY DUTY LIES. HIS FIDUCIARY DUTY DOES NOT LIE TO 14 MR. MARCELLUS OR WEBER WHO WERE EMPLOYEES. HE HAS NO 15 FIDUCIARY DUTY TO THEM, AND THAT’s WHERE THEY ARE TRYING TO 16 CONFUSE. HE FULFILLED HIS FIDUCIARY DUTIES BY UNREFUTED 17 EVIDENCE BY COMMUNICATING WITH THE DIRECTORS FOLLOWING THE 18 DIRECTIVES OF THE DIRECTORS. 19 NOW THE DIRECTORS TODAY IN HINDSIGHT 20 QUARTERBACKING SAY I WOULD HAVE DONE IT DIFFERENTLY. YOU 21 CAN'T LOOK AT THAT, YOUR HONOR. YOU CAN'T LOOK AT IT. 22 THAT’s WHERE WE'RE AT, PRIMA FACIE EVIDENCE. AND 23 REMEMBER I TOLD YOU ABOUT THE CORPORATION CODE 5214: 24 “INSTRUMENTS; LACK OF AUTHORITY IN SIGNING OFFICERS; 25 EFFECT. SUBJECT TO THE PROVISIONS OF SUBDIVISION (A), OF 26 SECTION 5141 AND 5142, ANY NOTE, MORTGAGE, EVIDENCE OF 27 INDEBTEDNESS, CONTRACT, CONVEYANCE OR OTHER INSTRUMENT IN 28 WRITING, AND ANY ASSIGNMENT OR ENDORSEMENT THEREOF, ANY
page 950 1 ASSIGNMENT EXECUTED OR ENTERED INTO BETWEEN ANY CORPORATION 2 AND ANY OTHER PERSON” — I THINK WILLIS WOULD QUALIFY FOR 3 THAT — “WHEN SIGNED BY THE CHAIRMAN OF THE BOARD, THE 4 PRESIDENT, OR ANY VICE-PRESIDENT, AND THE SECRETARY, ANY 5 ASSISTANT SECRETARY, THE CHIEF FINANCIAL OFFICER, IS NOT 6 INVALIDATED AS TO THE CORPORATION BY ANY LACK OF AUTHORITY 7 OF THE SIGNING OFFICERS IN THE ABSENCE OF ACTUAL KNOWLEDGE 8 ON THE PART OF THE OTHER PERSON THAT THE SIGNING OFFICERS 9 HAD NO AUTHORITY TO EXECUTE THE SAME." 10 WE DON'T HAVE THAT HERE. EVERYBODY BELIEVED THE 11 FURRS, AND YOU HEARD NO TESTIMONY TO THIS EFFECT. THE FURRS 12 HAD ABSOLUTE AUTHORITY TO MAKE THE DECISIONS THAT THEY MADE, 13 AND THEY MADE CORRECT DECISIONS TOO. THEY WERE ALL CORRECT, 14 AND THEY BENEFITTED. 15 THE LEGION DID GET SOMETHING OUT OF IT. THEY GOT 16 THE ENTIRE BOOTY. THEY GOT IT THROUGH MONEY IN THE COFFERS 17 AND THROUGH PROMOTION OF THE GOALS THAT WEBER ESPOUSED 18 SHOULD HAVE BEEN DONE. THAT’s WHAT THEY GOT. IT’s IN 19 HINDSIGHT NOW, 1993, WHEN THEY SAY WE WOULD LIKE TO HAVE THE 20 MONEY NOW. WELL, MR. WEBER AND MR. MARCELLUS WEREN'T AROUND 21 TO OPEN UP THEIR POCKETBOOKS TO GO AFTER IT. IT’s EASY TO 22 SAY I CAN DO IT NOW, AND I CAN TELL YOU I COULD GET A LOAN 23 TODAY IF I KNEW — IF I KNEW WITH CERTAINTY THAT I COULD GET 24 7.5 MILLION; BUT YOUR HONOR, GO TO A BANK. GO TO A BANK AND 25 SAY, HEY, BANK. I KNOW I GOT THIS MONEY I KNOW SITTING 26 OVERSEAS. NOT MONEY, THEY'RE STOCK CERTIFICATES. STOCK 27 CERTIFICATES NOT IN MY NAME. THE CORPORATION IS IN A DEAD 28 PERSON’s NAME. THERE’s A WILL GRANTING ALL OF THAT TO
page 951 1 SOMEBODY ELSE. AND ALL I GOT IS THE WORD OF SOMEBODY. I 2 DON'T TRUST WILLIS CARTO. I GOT TO RELY UPON THIS GUY. I 3 DON'T TRUST HIM. I HAVE TO RELY. HE'LL TESTIFY THAT THIS 4 IS MINE, AND THAT’s ALL I GOT. AND YOU KNOW FOR THAT I WANT 5 YOU TO PAY ME A MILLION DOLLARS, AND I WILL PAY YOU BACK. I 6 CAN'T TELL YOU WHEN, 5 YEARS, 7 YEARS, 10 YEARS, I'LL PAY 7 YOU BACK. 8 YOUR HONOR, ARE YOU GOING TO LOAN SOMEBODY MONEY 9 ON THAT? I DON'T THINK SO. I'M CERTAINLY NOT. 10 I DIDN'T MAKE A BET ON THE HOLYFIELD FIGHT. I 11 WISH I WOULD HAVE. 12 THE COURT: YOU KNOW YOU DON'T HAVE ANYTHING IN THE 13 POCKETS. 14 MR. WAIER: YOU GOT IT. I DON'T HAVE ANYTHING IN THE 15 POCKETS. IF I DID, MY WIFE WOULD HAVE IT BEFORE I DID. 16 IN ANY EVENT, THAT’s IMPORTANT. AND YOU KNOW, 17 YOUR HONOR, THERE’s ONE VERY IMPORTANT PIECE OF CORPORATE 18 LAW THAT GOES TO THIS TO WHY THE LEGION WAS NOT ONLY — YOU 19 HEARD UNREFUTED EVIDENCE THEY FINANCIALLY COULD NOT DO IT. 20 THEY HAD AN ARSON THE YEAR BEFORE. THEY WERE HAVING A 21 BUILDING FUND. THEY WERE — THEY LOST ALL OF THEIR 22 INVENTORY OR THE BULK OF THE INVENTORY, AS MR. MARCELLUS 23 TESTIFIED. ALL OF THEIR ASSETS WERE ENCUMBERED. HE CAN SAY 24 IT’s FALSE NOW. HE SIGNED THE DOCUMENTS. HE AGREED TO IT. 25 BUT LET’s TAKE WHAT THE LAW IS. I THINK IT'S 26 REALLY IMPORTANT THAT THE COURT REALLY HONE IN ON THE OTHER 27 PORTION OF THE NONPROFIT CORPORATION LAW. TO ME IT'S 28 EXTREMELY IMPORTANT.
page 952 1 IT’s 5240, BY THE WAY, CORPORATIONS CODE 5240. IT 2 STATES — AND IT WARNS DIRECTORS OF NONPROFIT CORPORATIONS. 3 IT’s REALLY IMPORTANT. THE VERY FIRST THING SAYS THEY ARE 4 TO AVOID — AND THEY USE THE TERM “SPECULATION,” LOOKING 5 INSTEAD TO THE PERMANENT DISPOSITION OF FUNDS, CONSIDERING 6 THE PROBABLE OUTCOME, AS WELL AS THE PROBABLE SAFETY OF THE 7 CONDITIONS OF THE LEGION — OF THE CORPORATION’s CAPITAL. 8 FIRST OF ALL, WHAT CAPITAL DID THEY HAVE IN 1985? 9 THEY DIDN'T HAVE IT. WHAT DID THEY HAVE IN 1987? THEY 10 DIDN'T. WHAT WAS THE PROBABLE OUTCOME? TENUOUS AT BEST. 11 TYSON A KNOCKOUT IN THE SECOND ROUND. 12 WHAT ABOUT THE PERMANENT DISPOSITION OF THE 13 FUNDS? GOOD CHANCE THEY'RE THROWING THAT DOWN THE TOILET, 14 WHATEVER FUNDS THEY COULD RAISE, AND THEY HAD OTHER THINGS. 15 REMEMBER WHAT WAS TESTIFIED TO. THERE WAS A VERY SERIOUS 16 PIECE OF LITIGATION GOING ON AT THIS TIME, THE MERMELSTEIN 17 CASE. THE LEGION COULDN'T EVEN PAY ITS OWN ATTORNEYS IN THE 18 CASE DURING 1980'S. THEY HAD NO CAPITAL. THEY'RE BEING 19 SUED. THEY CAN'T EVEN PAY THE ATTORNEYS. HOW THEY GOING TO 20 GO OVERSEAS WHERE IT’s ILLEGAL TO HAVE A CONTINGENCY 21 ARRANGEMENT WHERE THEY GO OVERSEAS TO PAY ATTORNEYS, AND IT 22 WOULD HAVE BEEN AGAINST THE LAW FOR THE FURRS OR ANY 23 DIRECTOR TO AGREE TO SUCH A SPECULATIVE VENTURE. 24 AVOID SPECULATION. JUST LIKE THEY COULDN'T INVEST 25 IN THE LOTTERY, THEY COULDN'T INVEST IN THIS LOTTERY 26 OVERSEAS. THIS LOTTERY HAPPENED TO HIT. I'M WAITING FOR MY 27 LOTTERY TO HIT, BUT THEY COULDN'T DO THAT, YOUR HONOR. AND 28 THAT’s WHAT THAT IS, THE MANDATE OF SECTION 5241(1). THEY
page 953 1 COULDN'T DO THIS. 2 AND THERE’s NO EVIDENCE BEFORE YOU THAT THIS 3 WASN'T HIGHLY CONTROVERSIAL. WHAT DID YOU HAVE GOING FOR 4 YOU IN 1985? THE WORD OF A MISTRUSTED LEGION PERSON. 5 THERE’s NO EVIDENCE HE WAS EVEN AN AGENT IN 19 — BEFORE SHE 6 DIED SHE BECAME THE POWER OF ATTORNEY FOR THE ESTATE AFTER 7 SHE DIED. 8 WE DON'T HAVE ANY ISSUES OF SELF-DEALING WITH THE 9 FURRS. THEY DIDN'T SELF-DEAL. ALL THEY WOULD LIKE TO THINK 10 SO. AND WHAT MR. LANE SAID, IF THIS ACTION FALLS AND PREYS 11 UPON THE ACTION OF THE FURRS, THAT IS TRUE. THE FURRS USED 12 REASON AND PRUDENT JUDGMENT IN MAKING A DEAL, AND THEY SAID 13 WILLIS, LOOK, IF YOU ARE SO FORTUNATE TO GO OFF ON THE LARK 14 OF YOURS — AND I GOT TO ADMIT MY CLIENT IS SOMEONE 15 EXTRAVAGANT. HE COMES UP WITH IDEAS. I DON'T NECESSARILY 16 AGREE WITH THE POLITICAL VIEWS OR ANY OF THE THINGS, BUT I 17 HAVE TO TELL YOU HE DOES COME UP WITH THESE. SO DOES THE 18 OTHER SIDE. BUT IT HAPPENED TO HIT THIS TIME, AND WHEN IT 19 HITS, NO PROBLEM UNTIL WE GET A NEW BOARD WHO BECOMES GREEDY 20 AND SAYS, HEY, WE DON'T WANT WILLIS ANYMORE. WE DON'T LIKE 21 ELISABETH. WE DON'T LIKE THIS. WE'LL CONTINUE THIS FIGHT. 22 NOT ONLY DO THEY OUST HIM — AND THE COURT SEEN COURT 23 RECORDS TO WHAT THE ANIMOSITY BETWEEN THE TWO. LET’s HIT 24 HIM HARD. LET’s GO BACK ON THE DEAL. LET’s GO BACK ON THIS 25 DEAL. LET’s GO GET THEM BECAUSE WITHOUT THIS DEAL THEY HAVE 26 NOTHING. 27 AND READ THE AGREEMENTS. EVEN THE DISTRIBUTION 28 AGREEMENT SAYS ALL OF THE NECA CERTIFICATES BY RECITAL WERE
page 954 1 JOAN ALTHAUS'S. THAT’s WHAT IT SAYS. READ THEM. DOESN'T 2 SAY THEY WERE THE LEGION'S. THEY JUST SETTLED THE ESTATE, 3 THE RECITALS OF THE LEGION. SAID ALL OF THE CERTIFICATES 4 WERE JOAN ALTHAUS'S. 5 YOU WANT TO TALK ABOUT ADMISSION? THERE’s ANOTHER 6 ADMISSION. ALL OF THE ASSETS WERE JOAN ALTHAUS'S. HOWEVER, 7 THEY'RE TO REACH THE DISPUTE AND TO QUOTE IT, WE'RE GOING 8 TO — TO END THIS DISPUTE. WE'LL SETTLE THIS THING. AND IF 9 YOU WANT TO HOLD BY THE DIRECT LANGUAGE, YOUR HONOR, I KNOW 10 YOU RAISED AN EYEBROW WHEN I FIRST RAISED THIS IN OPENING 11 STATEMENT — AND BY THE WAY, I MUST TELL YOU LAVONNE FURR 12 DIDN'T KNOW ANYTHING ABOUT IT. THE NORTH CAROLINA 13 LITIGATION, THE DOCUMENTS BESPEAK FOR THAT. 14 HERE IS AN AFFIDAVIT OF LAVONNE FURR, WHICH IS IN 15 EVIDENCE. THIS WAS SUBMITTED IN THE NORTH CAROLINA 16 LITIGATION WHERE COUNSEL GOT IT. THIS IS IN THE BOOK. THIS 17 IS 1987. AND IF YOU TAKE A LOOK — IT’s ACTUALLY 24 JULY 18 1986 SHE KNEW ABOUT THIS. THIS IS ALL PART OF THE 19 LITIGATION. JULY 1986, A YEAR AFTER HER DEATH. PART OF THE 20 LITIGATION, NORTH CAROLINA. LAVONNE FURR KNEW ABOUT IT. 21 THE DIRECTORS KNEW ABOUT IT. THIS BESPEAKS THE LACK OF 22 KNOWLEDGE TO THE CONSUMER. SHE KNEW THE DOCUMENTS. SHE 23 READ THE DOCUMENTS. SHE HAD THE DOCUMENT. 24 THE COURT: HOW MUCH LONGER DO YOU THINK YOU WILL BE? 25 MR. WAIER: IF I COULD TAKE A FIVE MINUTE BREAK TO 26 CHECK MY NOTES, I WOULD BE DONE IN 15 MINUTES. 27 THE COURT: WHEN YOU COME BACK, I WOULD BE INTERESTED 28 IN KNOWING A FEW THINGS. NUMBER ONE, YOU TALKED ABOUT THIS
page 955 1 IDEA OF TAX. SOMEHOW THERE’s 3.2 MILLION NET. WHERE IS 2 THERE ANY EVIDENCE OF ANYONE — JUST A SECOND — ANYONE PAID 3 ANY TAX? I HAVEN'T HEARD IT. 4 AND ANOTHER THING I WOULD BE INTERESTED IS THE 5 COMMENTS OF MR. CARTO. IF MR. CARTO THINKS THE MONEY IS 6 HIS, THEN WHY DID HE SEEK AN AGENCY DESIGNATION FROM THE 7 LEGION TO GO OUT AND GET IT? WHY DID HE FILE A SUIT ON 8 BEHALF OF THE LEGION? WHY DID HE THEN GO TO THE LEGION AND 9 GET THEM TO GIVE UP THIS MONEY? THESE THINGS DON'T MAKE 10 SENSE. 11 MR. WAIER: GIVE UP THE MONEY? WHAT MONEY? THEY 12 DIDN'T HAVE ANY MONEY. 13 THE COURT: MARCH 5, 1991. 14 MR. WAIER: HE DIDN'T GET THEM TO DO THAT. 15 THE COURT: JUST A SECOND. I'M ASKING THE QUESTIONS. 16 I WANT YOU TO PUT IT IN YOUR THINKING CAP. 17 LOOK AT THIS DOCUMENT 208. IF YOU WANT, I'LL MAKE 18 A COPY, OR YOU CAN HAVE THIS. THIS IS WHAT MR. CARTO CAME 19 BACK WITH ON THE LAST DAY OF TESTIMONY. HE SAYS, WE HAVE 20 7.5 MILLION, AND THEN HE HAS VARIOUS DEDUCTIONS, AND YOU ADD 21 ALL THE DEDUCTIONS UP. IT ALMOST BALANCES OUT, NOT QUITE, 22 BUT ALMOST BALANCES OUT. I DON'T SEE ANY, FOR EXAMPLE, TAX 23 IN THERE, AND I DON'T SEE HOW VIBET COULD GET 3.5 MILLION, 24 IF THE FIGURES ARE CORRECT. THOSE ARE THINGS TO CONSIDER. 25 AND WHY DON'T I SEE YOU IN 10 MINUTES. 26 27 (PROCEEDINGS RECESSED.) 28
page 956 1 THE COURT: BACK ON THE RECORD. 2 MR. WAIER: YOUR HONOR, BEFORE I ADDRESS THE TWO 3 QUESTIONS, I WILL ADDRESS THOSE THREE QUESTIONS I BELIEVE 4 THEY WERE. 5 I WOULD INVITE THE COURT TO REVIEW CODE OF CIVIL 6 PROCEDURE SECTION 425.15, WHICH AGAIN WOULD CAUSE THIS 7 COMPLAINT TO BE DISMISSED BECAUSE IT SAYS: 8 “NO CAUSE OF ACTION AGAINST A PERSON SERVING 9 WITHOUT COMPENSATION AS A DIRECTOR OR OFFICER OF A NONPROFIT 10 CORPORATION DESCRIBED IN THIS SECTION, ON ACCOUNT OF ANY 11 NEGLIGENT ACT OR OMISSION BY THAT PERSON” — WE'RE TALKING 12 ABOUT THE FURRS AND ELISABETH CARTO, WHO IS A DIRECTOR BY 13 HER OWN TESTIMONY IN 1986 WHEN ALL OF THE ACTS — '85,'86 -- 14 WHEN THE ACTS TOOK PLACE BY THAT PERSON “WITHIN THE SCOPE OF 15 THAT PERSON’s DUTIES AS A DIRECTOR ACTING IN THE CAPACITY OF 16 A BOARD MEMBER, OR AS AN OFFICER ACTING IN THE CAPACITY OF, 17 AND WITHIN THE SCOPE OF THE DUTIES OF, AN OFFICER, SHALL BE 18 INCLUDED IN A COMPLAINT OR OTHER PLEADING UNLESS THE COURT 19 ENTERS AN ORDER ALLOWING THE PLEADING THAT INCLUDES THAT 20 CLAIM TO BE FILED AFTER THE COURT DETERMINES THAT THE 21 PARTIES SEEKING TO FILE THE PLEADING HAS ESTABLISHED 22 EVIDENCE THAT SUBSTANTIATES THE CLAIM." 23 I CAN GO ON. THAT NEVER OCCURRED HERE. THEY 24 NEVER DID THE PRELIMINARY STEP, WHICH IS TO PETITION THE 25 COURT, BEFORE THEY CAN FILE SUCH A COMPLAINT ON A NONPROFIT 26 CORPORATION. THIS IS CODE OF CIVIL PROCEDURE SECTION 27 425.15. 28 THEY'RE OUT OF THE BOX UNTIL THEY DO THAT.
page 957 1 THEY'RE NOT EVEN ENTITLED TO FILE THE COMPLAINT. THEY DID 2 AND THE ACTION SHOULD BE DISMISSED ON THAT GROUND ALSO. 3 GETTING BACK TO THE QUESTION, YOUR HONOR, YOU 4 TALKED ABOUT EXHIBIT 208. LET ME TALK ABOUT THAT FIRST. 5 THE DOCUMENTS THEMSELVES, AND I REFERRED THE COURT TO THE 6 VARIOUS EXHIBITS FROM THE ATTORNEYS, APPARENTLY FROM WHAT I 7 HAVE BEEN ABLE TO DISCERN IN TRYING TO RECONCILE 208 WITH 8 WHAT BIDDLE AND COMPANY AND QUILTER GOODSON DID IN 9 EXHIBITS — I'LL TELL YOU WHAT THE EVIDENCE SAID TOO. 10 BY THE WAY, IF YOU RECALL, THIS IS THE INFORMATION 11 THAT WAS PROVIDED TO WILLIS CARTO FROM THE ATTORNEYS FOR THE 12 CORPORATION. SPECIFICALLY ONE ON EXHIBIT 46 TALKS ABOUT A 13 BREAKDOWN, BUT THERE’s ACTUALLY IN ONE OF THE LETTERS — AND 14 I DID HAVE IT. I MARKED IT RIGHT HERE — WHERE IT TALKED 15 ABOUT 7.5 MILLION, AND I BELIEVE THAT IS -- 16 THE COURT: THAT’s THE LETTER FROM MR. HOOPER. 17 MR. WAIER: I BELIEVE THAT’s CORRECT. 18 THE COURT: SECOND PAGE OF THAT LETTER. 19 MR. WAIER: THAT’s CORRECT, WHERE HE IS ASKING FOR 25 20 THOUSAND POUNDS FROM, I BELIEVE, THE — FROM THE LEGION. HE 21 IS SAYING, LOOK, I GOT YOU 7.5 MILLION, BUT IF YOU ARE 22 REFERRING TO THAT LETTER, IT TALKS ABOUT TAXES WHERE I HAVE 23 BEEN LEFT HAZY. 24 YOU HEARD EVIDENCE FROM WILLIS CARTO, AMONG 25 OTHERS, TAXES WERE PAID. THE LETTERS TALK ABOUT TAXES PAID 26 ON THE ESTATE, AND ROLAND ROCHAT WAS RESPONSIBLE FOR THE 27 PAYMENT OF THOSE ESTATE TAXES. I'M NOT SURE IF THAT WAS 28 OVER AND ABOVE THE 7.5 MILLION OR PART AND PARCEL OF THE 7.5
page 958 1 MILLION, AND MAYBE — AND MR. AND MRS. Carto’s 2 RECONCILIATION OF THAT ACCOUNT ON 208 OR, WRONG OR RIGHT, IF 3 YOU RECALL THEY INDICATED IN THE TESTIMONY THAT THAT WAS 4 DONE BY MEMORY FOR THE MOST PART. THAT THEY DID THAT FROM 5 WHAT THEY COULD RECALL. THAT WAS THE TESTIMONY, YOUR 6 HONOR. IT DIDN'T COME FROM ANY ACCOUNTING — FROM AN 7 ACCOUNTANT. IT DIDN'T COME FROM ANY OF THAT. 8 MY RECONCILIATION IS DIFFICULT FOR ME TO 9 RECONCILE. THEY DID THAT MORNING FROM THE MEMORY. THAT WAS 10 THE TESTIMONY FROM WILLIS AND ELISABETH CARTO FROM WHAT I 11 CAN RECALL CAME IN BASED ON WHAT THEY WERE TOLD THROUGH 12 SOURCES, INCLUDING BLAYNE HUTZEL AND FROM THE ATTORNEYS 13 TRYING TO RECONCILE THIS. I'M NOT SURE WHETHER THOSE 14 MONIES — IF YOU TAKE A LOOK ON 208, THERE’s 400,000 AND 15 300,000 TO JOAN ALTHAUS AND ESTATE. THAT MAY BE PART OF THE 16 TAXES THAT WERE PAID. I'M NOT SURE. 17 THE COURT: YOU ARE TELLING ME, THOUGH, THAT 3 MILLION 18 IN TAXES HAVE BEEN PAID. I DON'T HAVE ANY EVIDENCE OF IT. 19 MR. WAIER: WELL, WHAT I'M — WHAT I'M INDICATING, YOU 20 KNOW, INHERITANCE HAD TO BE PAID. THEY TESTIFIED TAXES WERE 21 PAID. I DON'T KNOW IF IT WAS PAID IN THAT. 22 THE COURT: I DON'T KNOW IN THIS CASE IF ANYONE EVER 23 PAID ANY TAX. 24 MR. WAIER: WELL, IF YOU TAKE A LOOK AT THE 25 CORRESPONDENCE FROM THE ATTORNEYS — BY THE WAY, YOU KNOW 26 WHO HAD THAT INFORMATION? ROLAND ROCHAT, NOT A NAMED A 27 PARTY IN THE ACTION. IN ANY EVENT, ASSUMING THAT IS THE 28 CASE, I'M NOT SURE WHERE IT IS. AGAIN, I DON'T THINK 208
page 959 1 HELPS YOU THAT MUCH EXCEPT FOR GIVING A GOOD FAITH EFFORT ON 2 THE PART OF THE CARTOS TO TRY TO PUT DOWN WHAT THEY CAN 3 RECALL OR WHERE THEY BELIEVE THE MONEY WENT. IF YOU TAKE A 4 LOOK AT THAT 3.2 MILLION OR 2.6 MILLION, SOMEWHERE ALONG THE 5 FIGURES WENT AS NOTES TO LIBERTY LOBBY WHO THEN DIRECTED 6 THAT AS A VEHICLE DIRECTLY THROUGH THE SUN RADIO, CONSISTENT 7 WITH WHAT LAVONNE FURR TESTIFIED TO. 8 THE OTHER ISSUE — I DON'T KNOW IF THAT HELPED YOU 9 OUT. THAT’s WHAT THE EVIDENCE IS. THAT’s THE STATE OF THE 10 EVIDENCE. 11 NOW WITH RESPECT TO WILLIS CARTO, AT NO TIME DID 12 YOU HEAR HIM EXCEPT ONE OCCASION SAY HE COULD HAVE KEPT THE 13 MONEY. IN FACT, FACTS ARE FACTS. HE PROBABLY COULD HAVE. 14 BUT HE NEVER CLAIMED THAT. WHAT HE CLAIMED IS THAT — THIS 15 IS THE TESTIMONY. YOU IN YOUR ASKING ME THIS QUESTION, YOU 16 STOPPED WITH WILLIS COULD KEEP THE MONEY. NO, IT GOES ON. 17 THERE’s A QUALIFIER TO THAT, AND HE TESTIFIED TO THE 18 QUALIFIER. IT’s TESTIFIED TO BY LAVONNE FURR, THE 19 DIRECTOR. 20 ASSUME FOR THE MOMENT — BY THE WAY, BEFORE I SAY 21 THIS — THAT LAVONNE FURR SAID, YOU CAN KEEP THE MONEY. WHO 22 IS AT ALL LAVONNE FURR? YOU RECALL HE FINANCED THE ENTIRE 23 OPERATION. HE GETS TO KEEP THE LOTTERY PROCEEDS. HE BOUGHT 24 THE TICKET. OKAY. 25 WHETHER I TOLD HIM THE NUMBERS OR NOT HE BOUGHT 26 THE TICKET. HE GETS TO KEEP IT, ALTHOUGH IT’s AN 27 INTERESTING CONCEPT. MAYBE I GET TO KEEP THE MONIES IF I 28 GIVE THE NUMBERS, AND HE BUYS THE TICKET, BUT MORE
page 960 1 IMPORTANTLY, WHAT IS THE QUALIFIER, YOUR HONOR? THE 2 QUALIFIER SAYS SPECIFICALLY HE DIDN'T OWN THE MONEY. HE 3 CONTROLLED THE MONEY. FOR WHAT PURPOSE? TO ADVANCE THE 4 GOALS OF JEAN FARREL-EDISON, WHICH IS NOT CONTRARY TO THE 5 GOALS OF THE LEGION. AND THAT IS WHAT THEY DID. 6 YOU HAVE NO TESTIMONY HE PUT ANY MONEY IN THE 7 POCKET. 208 SHOWS TO THE CONTRARY. IF 208 SHOWS ANYTHING, 8 I MUST TELL YOU, YOUR HONOR, THE ONLY — THE ONLY EVIDENCE 9 YOU HAVE FROM THE PROMISSORY NOTE — YOU HAVE NO PROMISSORY 10 NOTE IN EVIDENCE. NONE. 11 I MUST TELL YOU THAT COUNSEL DID NOT SEEK TO GET 12 EXHIBIT 184 IN OR FERRET IT OUT LIKE YOU REQUESTED HIM TO 13 DO. YOU DID NOT ADMIT EXHIBIT 184. AND IN FACT, IT’s TOO 14 LATE NOW. THERE ARE NO PROMISSORY NOTES BEFORE YOU, NO 15 AMOUNTS. THAT ACCOUNTING IS GONE. YOU CANNOT CONSIDER THAT 16 ACCOUNTING BECAUSE IT’s NOT IN EVIDENCE. BUT WE'RE NOT 17 DISPUTING THE FACT THAT CERTAIN PROMISSORY NOTE — I WILL 18 TELL YOU THAT IT WAS TESTIFIED TO, BUT I WANTED TO INDICATE 19 TO YOU EXHIBIT 84 CANNOT BE RELIED ON BY THE COURT, ALTHOUGH 20 YOU CAN'T UNRING A BELL THAT’s BEEN RUNG. 21 HE DOESN'T DISPUTE THAT. AND, YOUR HONOR, I THINK 22 THAT’s WHERE EVERYBODY IS MISSING THE BOAT. THEY'RE LOOKING 23 AT THE MINUTIA. THEY'RE FAILING TO SEE THE FOREST FROM THE 24 TREES. 25 THE REAL ISSUE IS SIMPLE. DID HE HAVE A RIGHT TO 26 CONTROL THE FUNDS AND DISTRIBUTE THE FUNDS CONSISTENT WITH 27 WHAT THE LEGION WANTED? AND YOU KNOW WHAT THE LEGION 28 WANTED? LAVONNE FURR TOLD YOU. AND CONSISTENT WITH THE
page 961 1 IDEALS ESPOUSED BY JEAN FARREL-EDISON. YOU KNOW THAT TOO. 2 AND DID HE DO THAT? UNREFUTEDLY HE DID DO IT, YOUR HONOR, 3 AND THAT’s REALLY THE QUESTION BEFORE YOU. AND REALLY THAT 4 GOES INTO THE CAUSES OF ACTION. 5 I THINK IT’s EXTREMELY IMPORTANT BECAUSE LET'S 6 TAKE A LOOK AT CONVERSION. THAT SEEMS TO BE THE BIG FLAG 7 THAT THEY'RE WAVING. AND, YOUR HONOR, I THINK IT'S 8 EXTREMELY IMPORTANT THAT YOU REVIEW THIS. 9 WHAT ARE THE ELEMENTS OF CONVERSION? BEFORE ANY 10 PLAINTIFF CAN RECOVER FOR A CONVERSION, HE MUST PROVE BY A 11 PREPONDERANCE OF THE EVIDENCE THE FOLLOWING: THAT THE 12 PLAINTIFF OWNED, POSSESSED OR HAD A RIGHT TO POSSESS THE 13 PROPERTY AT THE TIME OF THIS INTERFERENCE. 14 WHAT THE TIME LINE — WHEN IS THE RIGHTS? THE 15 ONLY RIGHTS THEY WOULD HAVE HAD WOULD HAVE CAME FROM THE 16 AGREEMENT. RIGHT. I MEAN, THAT’s THE EVIDENCE. IT 17 CERTAINLY DIDN'T HAPPEN. THERE WERE NO RIGHTS HERE IN '85. 18 THE ONLY RIGHTS THAT WERE THERE WAS THE AGREEMENT WITH 19 MR. CARTO. 20 THE DEFENDANT INTERFERED WITH THE PROPERTY. DID 21 HE INTERFERE WITH THE PROPERTY? NO, HE DIDN'T CONSISTENT 22 WITH WHAT LAVONNE AND THE LEGION SAID. 23 MORE IMPORTANT, THAT THE INTERFERENCE WAS 24 SUBSTANTIAL. NO, IT WASN'T SUBSTANTIAL. IT WENT TO THE 25 GOALS OF THE LEGION, EVEN BY THE ADMISSION OF THE LEGION'S 26 NEW BOARD OF DIRECTORS. 27 BUT HERE IS THE MOST IMPORTANT THING. THAT THE 28 INTERFERENCE WAS INTENTIONAL. WELL, YOUR HONOR, SOMEBODY
page 962 1 WAS LED ASTRAY HERE. 2 MR. CARTO, HE PUT UP MONEY FROM '85 TO '91 OUT OF 3 HIS OWN POCKET THROUGH LOANS HE TOOK. AND WHY WOULD HE DO 4 IT AGAIN? I'M ASKING THE QUESTION. ASK YOURSELF THAT 5 QUESTION. WITH ONLY THE WORD OF JOAN ALTHAUS, WHY WOULD HE 6 DO THAT? AND JOAN ALTHAUS IS DEAD SO IT WILL RELY ON 7 MR. CARTO. IF MR. CARTO DOESN'T TESTIFY TO IT, IF MR. CARTO 8 DOESN'T PUT UP THE MONEY TO IT, THEY DON'T GET ANYTHING. IF 9 HE DOESN'T COOPERATE WITH THE LEGION, THE LEGION GETS 10 NOTHING. IF ELISABETH CARTO DOESN'T COOPERATE WITH THE 11 LEGION, THE LEGION GETS NOTHING. UP TO 1990 THEY GET 12 NOTHING. WITHOUT WILLIS AND ELISABETH CARTO, WHO THE 13 EVIDENCE IS CLEAR HAD THE RELATIONSHIP WITH JOAN ALTHAUS, 14 THEY GET NOTHING. 15 NOW WAS IT INTENTIONAL? NOW MERE NEGLIGENCE, YOUR 16 HONOR, AND I MIGHT INDICATE THAT DOESN'T FIT THE BILL. IT 17 JUST DOESN'T FIT THE BILL. CONVERSION CAN NOT BE NEGLIGENT 18 INTERFERENCE. IT HAS TO BE INTENTIONAL. AND THAT'S 19 SCHROEDER VERSUS AUTO DRIVEWAY — THE DRIVEAWAY COMPANY 20 (1974) CALIFORNIA SUPREME COURT CASE, 11 CAL. 3RD 908 AT 21 918. 22 YOUR HONOR, WILLIS CARTO DID AS HE SAID HE WAS 23 GOING TO DO. HE DID AS HE WAS INSTRUCTED TO DO. WHAT ELSE 24 COULD THE MAN HAVE DONE? IF HE WOULD HAVE DONE SOMETHING 25 ELSE WITH IT, IF HE WOULD HAVE DONE CONTRARY TO WHAT THE 26 BOARD OF THE LEGION — AND BY THE WAY, YOU NOTICE WILLIS 27 Carto’s NAME DOESN'T SHOW UP ON ANY OF THE BOARD MINUTES? 28 BUT IF HE WOULD HAVE DONE OTHER THAN WHAT THE CORPORATION
page 963 1 TOLD HIM TO DO AND INSTRUCTED HIM, HE WOULD HAVE BEEN IN 2 BREACH OF THE POWER OF ATTORNEY. HE WOULD BE IN BREACH OF 3 FIDUCIARY DUTY. SO WHAT PLAINTIFF IS DOING, WILLIS WAS 4 DAMNED IF HE DID AND DAMNED IF HE DIDN'T. AND WILLIS WAS, 5 ACCORDING TO THE PLAINTIFF, DAMNED FROM DAY ONE WHEN HE MADE 6 THE AGREEMENT TO PUT UP THE MONEY WHILE THEY SAT BACK WHILE 7 HE LABORED AND HAD PEOPLE ACROSS THE NATION LABORING AND 8 ACROSS THE SEAS LABORING, AND THEY SAT BACK ON THEIR MERRY 9 WAY AND SAT BACK UNTIL 1993 THEN DECIDE HEY, CORPORATE 10 OPPORTUNITY. 11 I'M NOT GOING TO GO INTO CORPORATE OPPORTUNITY 12 DOCTRINE AGAIN. I HAVE DONE THAT. I THINK IT’s CLEAR TO BE 13 AN OPPORTUNITY. THIS HAS TO BE AN OPPORTUNITY. THERE IS 14 NONE, IF YOU CAN'T AVAIL IT. THE LAW IS CLEAR IF THE 15 CORPORATION CANNOT AVAIL ITSELF OF IT, WHETHER IT'S 16 FINANCIALLY IMPACTED OR WHETHER IT’s LEGALLY INFIRMED, AND 17 IT’s LEGALLY INFIRMED, IT COULD NOT GET THE OPPORTUNITY. 18 THEY COULD NOT INDULGE IN SPECULATION UNDER THE LAW. 19 THE COURT: COUNSEL, YOU KEEP MAKING THAT ARGUMENT. 20 WHAT ABOUT IF MR. LANE WERE HERE AND THE EVIDENCE IS THAT 21 LIBERTY LOBBY GAVE THEM $400,000? CAN LIBERTY LOBBY NOT DO 22 IT EITHER THEN? 23 MR. WAIER: I SUGGEST IN MY OPINION — I AGREE. I 24 DON'T THINK THEY COULD HAVE. HOWEVER, THEY'RE NOT A 25 CALIFORNIA CORPORATION. THEIR OFFICES AREN'T IN 26 CALIFORNIA. THIS IS UNDER CALIFORNIA LAW, WHICH APPLIES TO 27 A FOREIGN CORPORATION WHOSE PRINCIPAL PLACE OF BUSINESS IS 28 HERE.
page 964 1 I AGREE WITH COUNSEL. I BELIEVE CALIFORNIA LAW 2 DOES APPLY IN THE CIRCUMSTANCE. OLINCY V. MERLE NORMAN 3 COSMETICS, WHICH IS A CASE — MERLE NORMAN COSMETICS WAS A 4 CLIENT OF MINE DEALT WITH THE ISSUES. 5 AMERICAN CENTER FOR EDUCATION V. CAVNAR, WHICH IS 6 A 1978 CASE, DEALT WITH THIS SITUATION. IN ESSENCE WHAT IT 7 SAYS IS THAT THE COURT IS TO TAKE INTO ACCOUNT FACTORS WHEN 8 A FOREIGN NONPROFIT CORPORATION IS INVOLVED AS TO WHETHER 9 CALIFORNIA LAW WILL APPLY. GIVEN THE PURPOSES OF THE 10 CALIFORNIA NONPROFIT LAW, IF THAT FOREIGN CORPORATION HAS 11 THE PRINCIPAL PLACE OF BUSINESS HERE, ITS PRIMARY DIRECTORS 12 ARE HERE, IT TRANSACTS BUSINESS HERE, PRIMARILY THEN 13 CALIFORNIA LAW WILL APPLY. AND I TEND TO BELIEVE CALIFORNIA 14 LAW DOES APPLY. 15 WITH LIBERTY LOBBY THAT’s NOT AN ISSUE. IT’s NOT 16 AN ISSUE IN CALIFORNIA, AND IT IS NOT A RED HERRING. IF WE 17 BRING IT UP TO THAT STANDARD, CALIFORNIA LAW WOULDN'T APPLY 18 TO LIBERTY LOBBY UNDER THE VARIOUS CASES THAT I JUST TOLD 19 YOU. IF IT DID, YOUR HONOR, WELL POCKS ON THEIR HOUSE. 20 SHAME FOR THEM TO MAKE THE LOANS. SHAME FOR WILLIS CARTO 21 INDIVIDUALLY TO PUT UP MONEY. BY THE WAY, SHAME ON YOU, 22 WILLIS, FOR DOING THAT BECAUSE WHAT ENDS UP HAPPENING DOWN 23 THE LINE SOMEBODY ELSE, YOU ARE WRONG. WHO IS WRONG? 24 YOUR HONOR, IF YOU TAKE A LOOK AT, AGAIN, TAKING 25 OVER THE THING WITH CONVERSION, AND I THINK THAT’s IMPORTANT 26 AND IT IS IMPORTANT. IT WASN'T INTENTIONAL. THEY HAVEN'T 27 SHOWN THAT CRITICAL ELEMENT OF CONVERSION. 28 NOT ONLY THAT, YOUR HONOR, THEY NEVER HAD
page 965 1 POSSESSION OF THE PROPERTY, THE LEGION, UNTIL WHEN? THEY 2 DIDN'T HAVE POSSESSION OF THE NECA CERTIFICATES UNTIL 1990. 3 HE COULDN'T HAVE CONVERTED ANYTHING HERE. THEY HAD NO 4 RIGHTS. THEY HAD NO RIGHTS BECAUSE OF THE WILL. THE ONLY 5 TIME THAT THEY CAN COLORABLY CLAIM THEY HAD A RIGHT IS BY 6 THE AGREEMENTS, WHICH MR. CARTO RATIFIED BUT DIDN'T SIGN. 7 IF THEY WERE CLAIMING THAT ALL THE AGREEMENTS — REMEMBER, 8 FOR THEM TO PREVAIL IN ANY RESPECT, THE FIRST QUESTION IS 9 1990 AGREEMENTS. IF THEY CONTEST THE 1985 AGREEMENT AND SAY 10 IT’s WRONG, THEN THE 1990 AGREEMENT IS WRONG, AND THERE’s NO 11 RIGHTS IN THE LEGION. YOU HAVE TO FOCUS ON THAT BECAUSE 12 THESE ARE STRONG LEGAL ARGUMENTS, AND THEY CAN'T GET BY 13 THOSE. 14 THE OTHER ISSUE IS THE ASPECT OF ESTOPPEL. THE 15 EVIDENCE IS CLEAR WILLIS BELIEVED, AS WELL AS ALL THE OTHER 16 AGENTS FROM ATTORNEYS ALL THE WAY DOWN, BELIEVE THAT LAVONNE 17 FURR AND LEWIS FURR HAD THE AUTHORITY TO GRANT BOTH THE 18 AGREEMENTS HERE AND THE DISTRIBUTION OF THE FUNDS HERE, EVEN 19 ACCORDING TO THE PRIMA FACIE EVIDENCE YOU HAVE BEFORE YOU. 20 THAT’s ESTOPPEL. WE CLAIMED THAT AS PART OF THE DEFENSES IN 21 THE MATTER. THEY'RE ESTOPPED TO SAY THERE WAS NO AUTHORITY 22 THERE. THEY ARE ESTOPPED TO SAY THE CORPORATION DIDN'T 23 AUTHORIZE IT, AND THAT IS A STRONG, LEGAL ARGUMENT BECAUSE 24 THEY CAN'T COME BACK IN 1994 — BY THE WAY, WHEN THEY FILED 25 THE COMPLAINT JULY 22, 1994, OVER 3 YEARS AFTER THE FACT AND 26 OVER 4 YEARS AFTER THE AGREEMENT AND SAY THERE WAS NO 27 AUTHORITY, ESPECIALLY WHEN WILLIS COMPLIED WITH AND IF YOU 28 READ LAVONNE FURR’s DECLARATION, EXACTLY WHAT SHE TOLD THEM
page 966 1 TO DO AND EXACTLY WHAT THOSE MINUTES SAY WERE TO OCCUR, 2 INCLUDING SETTING UP BY PAT FOETISCH THE SEPARATE 3 ORGANIZATION, SO WE GET INTO ESTOPPEL ARGUMENT. 4 I DON'T WANT TO MINIMIZE THE STATUTE OF 5 LIMITATIONS ARGUMENT. IT’s CLEAR NOW THROUGH THE UNREFUTED 6 EVIDENCE THAT LEWIS AND LAVONNE FURR ONLY HAD ACTUAL 7 KNOWLEDGE IN 1991. THE DISPOSITION OF THE ASSETS, MORE THAN 8 3 YEARS BEFORE THE COMPLAINT WAS FILED AND CONVERSION IS A 3 9 YEAR STATUTE UNDER CODE OF CIVIL PROCEDURE SECTION 338. 10 THEY HAD THE MEANS. AND THAT WAS THE OTHER CASE 11 THAT I CITED TO YOU IN OUR MOTION FOR JUDGMENT UNDER 631.8, 12 WHICH IS A SALVESON CASE, AND THAT CASE IT STATES IT’s THE 13 MEANS OF KNOWLEDGE. AND THEY CERTAINLY HAD THE MEANS. THEY 14 HAD THE ATTORNEYS. THE ATTORNEYS ARE THE MEANS OF 15 KNOWLEDGE. MR. ROCHAT, THE AGENT FOR THE LEGION WHO DID ALL 16 THE DISTRIBUTION, WAS THE MEANS OF KNOWLEDGE. 17 THEY KNEW ALL OF THAT. IN FACT, LEWIS FURR 18 COMMUNICATED WITH COUNSEL. I WANT TO EMPHASIZE THAT POINT 19 BECAUSE SHE DID. LAVONNE FURR GOT DIRECT INFORMATION FROM 20 WILLIS AND ITS — THERE MUST BE AT LEAST 45 PAGES DISCUSSING 21 THAT OF HER DEPOSITION. AND THEY WERE THE RECIPIENTS OF ALL 22 OF THIS WRITTEN DOCUMENTATION FROM THE ATTORNEYS. 23 THE STATUTE OF LIMITATIONS IS A SERIOUS ISSUE, AND 24 BECAUSE YOU HAVE A SUCCESSOR BOARD OF DIRECTORS DOESN'T TOLL 25 IT. I'M UNAWARE OF ANY LAW THAT SAYS THAT THE STATUTE OF 26 LIMITATIONS IS TOLLED EVERY TIME YOU HAVE A NEW BOARD OF 27 DIRECTORS. IF THAT’s THE CASE, YOU NEVER WOULD HAVE A 28 STATUTE OF LIMITATIONS. IT JUST WON'T BE EXISTENT.
page 967 1 IN ANY EVENT, THEIR WHOLE CLAIM IS THE FACT THAT 2 MR. CARTO OMITTED TO TELL THE CORPORATION ANYTHING. THAT'S 3 NOT TRUE. YOU KNOW THE EVIDENCE DOESN'T SAY THAT MR. CARTO 4 COMMUNICATED FROM '87 THROUGH PUBLIC DOCUMENTS AND COURT 5 FILINGS TO DIRECT COMMUNICATION WITH LAVONNE FURR TO THE 6 BOARD OF DIRECTORS. THE ONLY PEOPLE HE DIDN'T COMMUNICATE 7 WITH — AND YET HE DOES SAY HE DID, BUT HE DIDN'T 8 COMMUNICATE WITH WAS MR. MARCELLUS AND WEBER WHO AREN'T 9 ENTITLED TO THAT INFORMATION. THEY WERE STAFF EMPLOYEES, 10 NOT IN THE DECISION-MAKING PROCESS OF THE CORPORATION. 11 AGAIN, CONSISTENT THROUGHOUT FROM MR. MARCELLUS’s DIRECTION 12 TO DONATORS, PUT IT IN SOME OTHER ORGANIZATION. LEWIS AND 13 LAVONNE FURR PUT IT IN SOME OTHER ORGANIZATION, AND THEY 14 DID. HE DID AS HE WAS TOLD. NO BREACH OF FIDUCIARY DUTY. 15 THERE WOULD HAVE BEEN A BREACH IF HE DIDN'T DO IT. 16 YOU GOT TO SEPARATE WHAT ACTUALLY HAPPENED. THE 17 COMMON SENSE CAN'T LEAVE THIS CASE. THERE MAY BE SYMPATHY. 18 THERE MAY BE THIS; THERE MAY BE THAT. 19 AND I MADE MANY ARGUMENTS TO JURIES, WHICH I TELL 20 YOU PROMISED TO TAKE YOUR UNBIASED, COMMON SENSE APPROACH. 21 YOU ARE NOT TO LEAVE YOUR COMMON SENSE AT HOME WHEN YOU COME 22 AND SIT ON THIS JURY. THE LAW IS CLEAR. HE DID WHAT HE HAD 23 TO DO UNDER THE LAW. 24 NOW WITH RESPECT TO CONVERSION, STATUTE OF 25 LIMITATIONS IS EXTREMELY IMPORTANT. IT ISN'T JUST ACTUAL 26 KNOWLEDGE, WHICH YOU KNOW BY THE EVIDENCE AND LAVONNE FURR'S 27 AND LEWIS FURR’s TESTIMONY WAS MORE THAN 3 YEARS. IT WENT 28 TO A SEPARATE ORGANIZATION, INTERNATIONAL LEGION FOR THE
page 968 1 SURVIVAL OF FREEDOM, INC., NAMED BY THE WAY BY LAVONNE 2 FURR’s OWN WORDS BY HER SUGGESTION TO WILLIS AND TO ROLAND 3 ROCHAT OR PAT FOETISCH AS THE NAME TO PUT TO THE NEW 4 CORPORATION OFFSHORE. SHE KNEW ABOUT IT MORE THAN 3 YEARS 5 BEFORE THE COMPLAINT WAS FILED. THAT IS THE UNREFUTED 6 EVIDENCE. 7 THE ONLY EVIDENCE THEY HAVE SHOWN — I WANT THE 8 COURT TO HONE IN ON THIS — IS THE FACT THAT MR. MARCELLUS 9 DIDN'T KNOW AND MR. WEBER DIDN'T KNOW. SO WHAT? THEY 10 WEREN'T DIRECTORS. THEY WEREN'T OFFICERS. THEY WEREN'T 11 ANYTHING WITH RESPECT TO THE DECISION-MAKING ASPECT OF THIS 12 CORPORATION; AND IN FACT, IF ANYTHING, IT WAS MR. MARCELLUS 13 BY HIS OWN TESTIMONY THROUGH A CONTRACT — BY THE WAY, I 14 MUST ADD THAT HE SAYS THE FURRS HAD AUTHORITY FOR THEM TO 15 ENTER INTO ANOTHER BENEFIT TO THEM. HE DISAVOWS ALL THE 16 REST, BUT HE SAYS THAT CONTRACT IS GOOD. REPORTS TO WILLIS, 17 BUT THAT’s OKAY. IT DOESN'T MATTER IF MR. WEBER KNEW OR 18 MR. MARCELLUS KNEW. MR. HULSY KNEW. YOU HEARD THAT FROM 19 THE TESTIMONY WITH RESPECT DURING THE MERMELSTEIN CASE AS 20 EARLY 1990, 1991. STATUTE OF LIMITATIONS IS IMPORTANT. 21 THE ONLY OTHER CLAIM, YOUR HONOR, THAT COLORABLY 22 CAN COME INTO THE PICTURE HERE, AND THAT THEY HAVE SOMEHOW 23 INARTICULATELY PLED IN THE COMPLAINT IS THAT SOMEHOW WILLIS 24 CARTO, WHO YOU KNOW DIDN'T BENEFIT ONE IOTA, OBTAINED 25 PROPERTY THROUGH FRAUD. AND THE BASIS OF THAT FRAUD CLAIM, 26 YOUR HONOR, IS A FAILURE TO DISCLOSE. 27 NOW THEY HAD THE OPPORTUNITY TO CALL THE FURRS, 28 THE PLAINTIFF. YOU REMEMBER STRONGER AND MORE AVAILABLE
page 969 1 EVIDENCE. REMEMBER, LET’s NOT LOSE SIGHT OF SOMETHING. 2 THEY HAVE THE BURDEN, NOT MR. CARTO, NOT MRS. CARTO, NOT 3 LIBERTY LOBBY, NOT VIBET, NOT ANYBODY ELSE, NOT HENRY 4 FISCHER. THE BURDEN IS ON THE PLAINTIFF. 5 MR. CARTO DOESN'T HAVE TO EXPLAIN HIS ANSWERS. 6 THE BURDEN IS ON THEM TO SHOW THAT HIS ACTIONS WERE 7 INAPPROPRIATE AND UNWARRANTED AND UNAUTHORIZED. THEY MUST 8 SHOW IT WAS DONE BY FRAUD. 9 WHAT’s THE BASIS OF A FRAUD CLAIM? THEY'RE 10 CLAIMING IT’s AN OMISSION TO DISCLOSE. THEY LOSE. 1987, 11 YOUR HONOR, DISCLOSED IN PUBLIC DOCUMENTS AS TO THE VALUING 12 OF THE NECA CERTIFICATES. 1990 DISCLOSED TRANSACTIONS 13 ATTORNEYS IMPUTED TO THE CORPORATION. NOT ONLY DO YOU HAVE 14 THAT, BUT YOU GOT DISCLOSURES BY MR. CARTO IRREFUTABLY TO 15 LAVONNE AND TO LEWIS FURR TELLING THEM EXACTLY WHAT WAS 16 HAPPENING; AND IN FACT, EVEN HER SUGGESTING THE NAME OF THE 17 OFFSHORE CORPORATION WHO PUT THIS MONEY IN. 18 YOU HAVE, AND AS SHE TESTIFIED WITHOUT HESITATION, 19 SHE WAS TOLD ALL THE WAY DOWN THE LINE. NOT ONLY DO YOU 20 HAVE THAT, WHERE IS THE OMISSION TO DISCLOSE? WHERE IS THE 21 FRAUD? YOU CAN'T HAVE FRAUD UNLESS YOU SHOW NONDISCLOSURE, 22 AN INTENTIONAL NONDISCLOSURE. AND I SUGGEST, YOUR HONOR, I 23 WANT COUNSEL TO TELL ME WHERE THE EVIDENCE OF NONDISCLOSURE 24 IS EXCEPT FOR ONE PIECE OF EVIDENCE. DO YOU KNOW WHAT THAT 25 WAS, YOUR HONOR? MR. MARCELLUS AND/OR MR. WEBER, WHO ARE 26 EMPLOYEES, ASKED MR. CARTO SOMETIME I BELIEVE IN 1993 — YOU 27 REMEMBER, THEY'RE EMPLOYEES — ASKED HIM -- 28 THE COURT: YOU MADE THAT POINT.
page 970 1 MR. WAIER: I KNOW. I THINK IT’s IMPORTANT TO 2 EMPHASIZE THAT THAT’s WHERE THE NONDISCLOSURE COMES FROM. 3 THE COURT: YOU KNOW, I DON'T WANT TO PREVENT YOU FROM 4 MAKING THE ARGUMENT. I DON'T HAVE TO HAVE A POINT 5 EMPHASIZED TO ME 15 TIMES — WAIT A SECOND. WHEN I'M 6 TALKING, YOU STOP TALKING. I'M NICE ABOUT THIS. DON'T KEEP 7 TELLING ME THEY'RE EMPLOYEES. I KNOW THEY'RE EMPLOYEES. 8 ALL RIGHT. GO ON. 9 MR. WAIER: WITH RESPECT TO FRAUD — I APOLOGIZE TO THE 10 COURT. I SOMETIMES GET UP IN THE HEAT. 11 THE COURT: YES, YOU DO. 12 MR. WAIER: IN ANY EVENT, YOUR HONOR, FOR THEM TO SHOW 13 FRAUD THEY HAVE TO SHOW A NONDISCLOSURE THAT LED TO THE 14 LEGION’s DISADVANTAGE. 15 WHERE IS THE NONDISCLOSURE? THERE HAS BEEN NONE 16 SHOWN. NONE WHATSOEVER. AND THAT IS THE CRUX OF THE MATTER 17 WITH FRAUD. NOT ONLY WAS THERE DISCLOSURE, THERE WERE MEANS 18 OF DISCLOSURE; AND IN FACT, THE FURRS WERE DISCLOSED. 19 THAT’s THE EVIDENCE. YOU GOT TO STICK WITH THE EVIDENCE IN 20 THE CASE. 21 HE’s DONE EVERYTHING CONSISTENT. IF YOU DON'T 22 HAVE FRAUD, AND THEY HAVEN'T PROVED EVEN BY A PREPONDERANCE 23 OF THE EVIDENCE — AND YOU KNOW FRAUD CLAIMS ARE DISFAVORED 24 EVEN BY A PREPONDERANCE OF THE EVIDENCE, ANY FRAUD. THEY 25 HAVEN'T SHOWN CONVERSION. THEY HAVEN'T SHOWN ANYTHING. 26 AND, YOUR HONOR, WITHOUT THOSE TWO PREDICATES, THEY DON'T 27 HAVE IT. 28 MY LAST STATEMENT, LEWIS AND LAVONNE FURR
page 971 1 NOTHING. THERE IS NO EVIDENCE SAYING THAT THEY DID ANYTHING 2 WRONG. THAT THEY BENEFITTED. THAT THEY DID OTHER THAN WHAT 3 THEY BELIEVED WAS THE RIGHT THING TO DO WITH THE 4 CORPORATION, INCLUDING FOLLOWING THE LAW AS IT THEN EXISTED 5 AND NOW EXISTS. 6 WILLIS CARTO, THERE HAS BEEN NO FRAUD SHOWN ON HIS 7 PART NOR HAS THERE BEEN SHOWN CONVERSION ON HIS PART 8 INDIVIDUALLY OR IN CONJUNCTION WITH ANY OTHER PERSON. 9 ELISABETH CARTO, THERE’s THE OLD COMMERCIAL, WHERE 10 IS THE BEEF? WHERE IS THE BEEF? WHERE IS THE EVIDENCE THAT 11 ELISABETH CARTO DID ANYTHING OTHER THAN PUTTING IN 3,000 12 HOURS OF HER TIME TO SECURE THE ESTATE AND HER OWN EFFORTS. 13 THERE’s NO EVIDENCE SHE BENEFITTED. THERE’s NO EVIDENCE 14 THAT SHE HAD ANYTHING TO DO; AND IN FACT, THERE’s NO 15 EVIDENCE THAT SHE PARTICIPATED OTHER THAN LOOKING FOR AN 16 ATTORNEY AND SPENDING A TREMENDOUS AMOUNT OF TIME ATTENDING 17 COURT HEARINGS. NONE. BUT YOU DO HAVE HER TESTIFYING AS TO 18 THE WEAK FINANCIAL STATUS. SHE WAS THE TREASURER. THAT'S 19 THE ONLY EVIDENCE YOU HAVE, THE WEAK FINANCIAL STATUS. HE 20 COULDN'T DO IT. THE ASSETS WERE ENCUMBERED. COULDN'T PAY 21 ITS OWN ATTORNEYS AND MERMELSTEIN. 22 HENRY FISCHER, THEY COULD HAVE NOTICED HENRY 23 FISCHER FOR THIS CASE. THEY DIDN'T DO IT. AND, YOUR HONOR, 24 WHERE IS THE EVIDENCE OF ANYTHING THAT HENRY FISCHER DID 25 WRONG OR NOT COMMISSIONED TO DO? NONE. THERE’s NO EVIDENCE 26 OTHER THAN THE FACT HE WAS PAID FOR HIS SERVICES, WHICH BY 27 THE WAY, NOT ONLY DOES MR. WEBER IN THE DEPOSITION AGREE 28 SHOULD HAVE BEEN DONE, THE EXPENSES SHOULD BE PAID FOR ANY
page 972 1 AGENTS OF THE LEGION TO RECOVER THE ASSETS. THAT WAS PART 2 OF THE CHARGE TO MR. CARTO FROM LAVONNE FURR AND TO THE 3 DIRECTORS, AND I MEAN, AND AS OF THE DIRECTORS OF THE 4 LEGION. THERE’s NO EVIDENCE HE DID ANYTHING BUT RECEIVE A 5 FEE FOR THE COUNTLESS HOURS HE PUT IN AS EMPHASIZED BY 6 WILLIS CARTO. WITHOUT HENRY FISCHER THERE WOULD HAVE BEEN 7 ZERO. 8 AND WHAT EVIDENCE IS THERE OF LIBERTY LOBBY OTHER 9 THAN THE FACT, RIGHT OR WRONG, LEGAL OR ILLEGAL, WHICH IS 10 NOT AT ISSUE IN THE COURT, THEY PUT UP ALL OF THIS MONEY IN 11 THE WAY OF A LOAN TO WILLIS CARTO, AS WELL AS YOU DID HEAR 12 WILLIS CARTO PUT OUT FOR THEIR OWN EXPENSES. THEY PUT UP 13 ALL THE MONEY. AND YOU MUST ASK YOURSELF THAT QUESTION. 14 WHY IF IT WASN'T FOR THE AGREEMENT THAT WILLIS HAD — IF 15 WILLIS WASN'T WILLING TO GO ON THE LINE AND COMMIT HIMSELF 16 TO REPAY THE LOANS. 17 WHAT HAVE THEY DONE OTHER THAN THEY DIDN'T 18 PERSONALLY BENEFIT. THEY WERE MERELY LIBERTY LOBBY. 19 THEY — IT WAS MERELY A VEHICLE UPON WHICH THE DIRECTION OF 20 THE BOARD OF DIRECTORS OF THE LEGION UTILIZED FOR PURPOSES 21 OF GETTING THE MONEY TO THE RADIO STATION, SUN RADIO. 22 WHETHER IT WAS DONE RIGHT OR WRONG IS NOT AN ISSUE. WHETHER 23 IT WAS NEGLIGENT ON LAVONNE’s PART TO AGREE TO THAT OR 24 WHETHER IT WAS NEGLIGENT ON SOMEBODY ELSE’s PART, THAT’s NOT 25 WHAT IS BEING SUED HERE. EVEN IF IT WAS, THEY'RE UNPAID 26 DIRECTORS AND OFFICERS, AND THERE’s NO CAUSE OF ACTION 27 AGAINST THEM UNDER THE LAW. THERE IS NOTHING OUT THERE. 28 THIS IS NOT SOMETHING WHERE SOMEBODY GOES OUT AND GOES TO A
page 973 1 BANK AND GOES TO SOMEBODY’s ACCOUNT AND SAYS, I AM THAT 2 ACCOUNT, NOT IN 1985 AND NOT IN 1990, AND THEN STEALS THE 3 MONEY AND PUTS IT IN HIS OWN POCKET AND WALKS AWAY. THEN 4 ALMOST 4 YEARS AFTER THE FACT SOMEBODY SAYS, HEY, YOU 5 CLEANED OUT MY ACCOUNT. NOTHING WAS CLEANED OUT. 6 YOUR HONOR, WHEN YOU REVIEW ALL THE EVIDENCE AND 7 APPLY THE LAW, AND I MAY NOT AGREE WITH SOME OF THE LAW, BUT 8 IT’s THERE. I MAY NOT AGREE WITH THE PRIMA FACIE EVIDENCE. 9 I MAY NOT AGREE ABOUT THE LACK OF AUTHORITY. I MAY NOT 10 AGREE THAT I HAVE TO INCLUDE THE ATTORNEY GENERAL. I MAY 11 NOT AGREE THAT ANY TIME I SEEK AN INJUNCTION LIKE THE LEGION 12 DOES HERE UNDER A CONTRACT I HAVE TO NAME ALL THE PARTIES TO 13 THE AGREEMENTS, WHICH THEY HAVEN'T DONE. THEY HAVEN'T NAMED 14 ROLAND ROCHAT, AND THEY ARE PARTIES. AND INVITE THE COURT 15 TO LOOK AT IT. I MAY NOT AGREE WITH THAT, BUT I HAVE TO DO 16 IT. I MAY NOT AGREE I HAVE TO PETITION THE COURT BEFOREHAND 17 TO FILE THE LAWSUIT, BUT I DID. 18 THE COURT: WHAT WAS THAT SECTION AGAIN? 19 MR. WAIER: 425. CALIFORNIA CODE OF CIVIL PROCEDURE 20 425.15 SECTION TALKS ABOUT NONPROFIT CORPORATION PETITIONING 21 THE COURT BEFORE YOU MAY FILE A LAWSUIT AND GET ANY APPROVAL 22 OF THE BOARD. 23 I MAY NOT AGREE WITH THE LAWS, YOUR HONOR, BUT I'M 24 BOUND BY THEM. THE FURRS WERE BOUND BY THEM. THE FURRS 25 WERE BOUND BY NOT SPECULATING. WILLIS IS BOUND TO FOLLOW 26 THE DIRECTORS AND FOLLOW WHAT THE LEGION WANTED, AND THAT'S 27 WHAT HAPPENED. PURE AND SIMPLE. 28 AND WE MUST DIVORCE OURSELVES FROM THE MONDAY
page 974 1 QUARTERBACKING. WE MUST DIVORCE OURSELVES HOW THAT POINT 2 COULD BE UTILIZED TODAY AS IT WAS UTILIZED BACK THEN AS IT 3 UTILIZED. AND THE PROPER, PRUDENT BUSINESS JUDGMENT OF THE 4 LEGION CANNOT BE QUESTIONED. IT WAS UTILIZED FOR THE 5 PURPOSES FOR WHICH IT WAS CREATED. IT WAS UTILIZED FOR THE 6 PURPOSES FOR WHICH JEAN FARREL-EDISON WANTED. IT WAS 7 UTILIZED FOR THE PURPOSES OF ADVANCING THE VERY GOALS, AS 8 MR. WEBER TESTIFIED, OF THE LEGION. 9 FOR THAT, YOUR HONOR, WE DO NOT BELIEVE THAT UNDER 10 ANY THEORY WITHIN THE COMPLAINT THAT THEY HAVE PROVEN BY A 11 PREPONDERANCE OF THE EVIDENCE ANY OF THE THEORIES AS AGAINST 12 ANY SINGLE DEFENDANT OR ANY CONJUNCTION OF THE DEFENDANTS, 13 AND WE DO BELIEVE THAT WE HAVE PROVED BY A PREPONDERANCE OF 14 THE EVIDENCE ESTOPPEL. WE PROVED BY A PREPONDERANCE OF THE 15 EVIDENCE LATCHES. WE PROVED BY A PREPONDERANCE OF THE 16 EVIDENCE STATUTE OF LIMITATIONS, BOTH FOR FRAUD, THE THREE 17 YEAR FRAUD CAUSE OF ACTION, AS WELL AS THE THREE YEAR 18 CONVERSION CAUSE OF ACTION. WE PROVED BEYOND A 19 PREPONDERANCE OF THE EVIDENCE THAT NOTHING WAS DONE WRONG. 20 FOR THAT WE REQUEST A JUDGMENT BE RENDERED IN FAVOR OF THE 21 DEFENDANTS. THANK YOU. 22 THE COURT: THANK YOU. ONE FINAL QUESTION I HAVE. 23 YOUR ARGUMENT SEEMED TO SAY A NONPROFIT ORGANIZATION CAN'T 24 GO OUT AND HIRE ATTORNEYS EITHER ON A CONTINGENCY OR A JUST 25 WITH MONEY OR SOLICIT CONTRIBUTIONS BECAUSE THAT’s NOT WHAT 26 THE ORGANIZATION IS SET UP FOR. 27 IS THAT WHAT YOU ARE SAYING? 28 MR. WAIER: I'M SAYING THAT — I'M SAYING THAT ON THIS
page 975 1 TYPE — I'M NOT SAYING THAT. WHAT I'M SAYING IS IN 2 CONJUNCTION WITH THEIR CHARTER AND PURPOSES THEY LEGALLY 3 CAN'T DO IT. THEIR BYLAWS DO NOT PERMIT. THERE’s A 4 CORPORATIONS CODE, NONPROFIT CORPORATIONS CODE SECTION, 5 WHICH STATES, IF YOU ARE GOING TO GO BEYOND THE PURPOSES OF 6 THE CORPORATION — AND I DON'T HAVE IT OFFHAND. I CAN GET 7 THAT FOR THE COURT IF THE COURT WILL ALLOW ME A LITTLE BIT. 8 IT SAYS THAT WHEN YOU GOT OUTSIDE PURPOSES YOU MUST CONTACT 9 THE ATTORNEY GENERAL AND THEN GET HIS APPROVAL BEFORE YOU DO 10 THAT. BEFORE YOU EMBARK ON SUCH A VENTURE IN 1985, THEY 11 WOULD HAVE HAD TO CONTACT THE ATTORNEY GENERAL FOR PURPOSES 12 OF SOLICITING CONTRIBUTIONS FOR THE PURPOSE AND NOTIFYING 13 THE ATTORNEY GENERAL ABOUT THAT. THAT’s WHAT THE LAW SAYS, 14 AND THAT’s NOT WHAT HAPPENED HERE. THERE IS A MECHANISM TO 15 GO BEYOND YOUR CHARTER AND BEYOND YOUR PURPOSES, BUT YOU 16 MUST PETITION THE ATTORNEY GENERAL BEFOREHAND, AND THAT 17 DIDN'T HAPPEN HERE. THANK YOU. 18 THE COURT: THANK YOU. WOULD THE PLAINTIFF LIKE TO SAY 19 ANYTHING? 20 MR. BEUGELMANS: YES. YOUR HONOR, COUNSEL, ON FRIDAY 21 AFTERNOON BEFORE YOUR HONOR INVITED COUNSEL TO MAKE A 22 CLOSING ARGUMENT, YOU STATED THAT IF COUNSEL PREFER TO SOAR 23 UPON THE WINGS OF THEIR IMAGINATION. I BELIEVE MR. WAIER 24 SOARED SO HIGH HIS WINGS HAVE COME LOOSE FROM HIS BODY, AND 25 HE HAS FALLEN TO THE GROUND WITH ALL OF HIS ARGUMENTS. 26 I DON'T INTEND TO ATTEMPT TO DAZZLE THE COURT WITH 27 ANY RHETORIC. WHAT I WOULD LIKE TO DO IS BRIEFLY AND BEFORE 28 LUNCH GO OVER SOME OF THE EVIDENCE AND POINT OUT WHY THE
page 976 1 EVIDENCE AS APPLIED TO THE LAW ENTITLES THE PLAINTIFF TO A 2 VERDICT IN THE CASE. 3 THE FIRST THING IS I WOULD LIKE TO VERY BRIEFLY 4 POINT OUT THE CODE SECTIONS IN THE CORPORATIONS CODE, 5 NONCORPORATION LAW, UPON WHICH THE DEFENDANTS IN THIS ACTION 6 ARE ALL LIABLE. 7 SECTION 6215 STATES: “ANY DIRECTORS, OFFICERS, 8 EMPLOYEES OR AGENTS OF THE CORPORATION WHO DO ANY OF THE 9 FOLLOWING ARE LIABLE JOINTLY AND SEVERALLY FOR ALL DAMAGES 10 RESULTING THEREFROM TO THE CORPORATION." 11 PART B, “MAKE OR CAUSE TO BE MADE IN THE BOOKS, 12 MINUTES, OR RECORDS OR ACCOUNTS OF A CORPORATION ANY ENTRY 13 WHICH IS FALSE IN ANY MATERIAL PARTICULAR — IN ANY MATERIAL 14 PARTICULAR KNOWING SUCH ENTRY IS FALSE." 15 WE KNOW, YOUR HONOR, THAT EXHIBIT 60 IS A FALSE 16 MINUTE. WE KNOW, YOUR HONOR, THAT THE MINUTES OF THE 17 MEETING OF THE BOARD OF DIRECTORS OF MARCH 5, 1991 UPON 18 WHICH THE DEFENDANTS RELY ON THE CONTENTION THAT THE LEGION 19 DECLINED TO ACCEPT THE FARREL BEQUEST IS FALSE. 20 MR. WAIER: I DON'T NORMALLY OBJECT ON A BENCH TRIAL. 21 THAT’s IMPROPER LAW. 22 THE COURT: WELL, COUNSEL, I'M GOING TO OVERRULE THE 23 OBJECTION. HE’s GIVING ME HIS OPINION IT’s FALSE. 24 MR. WAIER: NO. IT’s IMPROPER LAW TO APPLY THAT 25 SECTION. THERE’s AN ATTORNEY GENERAL CAUSE OF ACTION, NOT A 26 PUBLIC CAUSE OF ACTION OR PRIVATE RIGHT. 27 THE COURT: OVERRULED. 28 MR. BEUGELMANS: CORPORATIONS CODE SECTION 7231 STATES
page 977 1 THE OBLIGATIONS AND DUTIES OF A DIRECTOR AND AN OFFICER 2 WHILE ACTING IN GOOD FAITH. 3 AND LAST, YOUR HONOR, SECTION 5047.5 STATES VERY 4 CLEARLY THAT “INTENTIONAL, WANTON, OR RECKLESS ACTS, GROSS 5 NEGLIGENCE, OR AN ACTION BASED ON FRAUD, OPPRESSION OR 6 MALICE” COMES WITHIN THE CAUSES OF ACTION WHICH A 7 CORPORATION CAN ALLEGE AGAINST THE DIRECTORS AND OFFICERS. 8 COUNSEL STATED ONLY A FEW MINUTES AGO, AND THE 9 WORDS ARE STILL IN MY EARS, I WANT COUNSEL TO TELL ME WHAT 10 EVIDENCE THERE IS OF NONDISCLOSURE. I WOULD LIKE TO READ TO 11 THE COURT FROM THE DEPOSITION OF LAVONNE FURR. 12 “QUESTION BY MR. BEUGELMANS: PLEASE TELL ME THE 13 NAMES OF THE ORGANIZATIONS INTO WHICH THE 45 PERCENT SHARE 14 OF THE FARREL SETTLEMENT THAT DID NOT GO TO THE ALTHAUS 15 PARTIES WENT. 16 “ANSWER: TO THE INTERNATIONAL LEGION AND VIBET. 17 “QUESTION: HOW MUCH OF THE TOTAL THAT WENT TO THE 18 TWO ORGANIZATIONS, THE INTERNATIONAL LEGION AND VIBET? 19 “ANSWER: I DON'T RECALL THE EXACT TOTAL. 20 “QUESTION: WAS IT MORE THAN A MILLION DOLLARS? 21 “ANSWER: I DON'T BELIEVE IT WAS. 22 “QUESTION: WHO TOLD YOU THE AMOUNT TOTAL THAT 23 WENT TO BOTH OF THOSE ORGANIZATIONS? 24 “ANSWER: MR. CARTO." 25 MR. WAIER SAID SHE DIDN'T TESTIFY ABOUT THE VALUE 26 OF THE GEMS. IN FACT, IF YOU READ FURTHER, PAGE 106, I 27 ASKED: 28 “QUESTION: DO YOU HAVE ANY KNOWLEDGE THAT THE
page 978 1 PROCEEDS FROM THE SALE OF ANY GEMS OF THE FARREL ESTATE WERE 2 DEPOSITED INTO EITHER THE INTERNATIONAL LEGION OR VIBET 3 ACCOUNTS? 4 “ANSWER: IT WAS." 5 MR. WAIER: WHAT PAGE? 6 THE COURT: 106. COUNSEL, PLEASE, HE WAS GOOD ABOUT 7 YOUR ARGUMENT. YOU DID THIS DURING THE TRIAL. YOU SEEM 8 NEVER TO HEAR THE PAGE NUMBER AND EVERYTHING. IF YOU MISS 9 IT AT THIS STAGE OF THE PROCEEDING, THEN YOU JUST MISS IT. 10 LET’s NOT INTERRUPT AGAIN, UNLESS YOU HAVE A LEGAL REASON TO 11 DO. THEN I'LL RULE ON IT. 12 MR. BEUGELMANS: MR. WAIER STATED MR. CARTO DOESN'T 13 HAVE TO EXPLAIN HIS ACTIONS. WELL, IN FACT MR. CARTO WAS AN 14 AGENT, AND AN AGENT HAS A FIDUCIARY DUTY. HE MUST EXPLAIN 15 THE ACTS. THAT’s A CAUSE OF ACTION GIVEN. 16 LIKEWISE WITH MR. FISCHER. HE WAS AN AGENT 17 SPECIFICALLY, AND WE'LL GET INTO SOME OF THE DOCUMENTS THAT 18 SHOW CLEARLY THEY WERE AGENTS AT ALL TIMES ACTING ON BEHALF 19 OF THE LEGION. 20 MR. WAIER STATES, SHOW ME THE INTENTION. SHOW ME 21 THE UNLAWFUL INTENTION. WELL, YOUR HONOR, EVIDENCE CODE 22 SECTION 665 SAYS THAT PEOPLE INTEND THE ORDINARY 23 CONSEQUENCES OF THEIR VOLUNTARY ACTS. HE HIMSELF ACTED AS 24 AN AGENT. 25 AND EVIDENCE CODE SECTION 668 STATES AN UNLAWFUL 26 INTENT IS PRESUMED FROM AN UNLAWFUL ACT. 27 MR. WAIER STATED THAT MR. CARTO WAS NOT AN AGENT 28 PRIOR TO 1985. IT APPEARS THAT COUNSEL HAS ABANDONED THE
page 979 1 ARGUMENT MADE EARLIER IN THE TRIAL AT ALL TIMES MR. CARTO 2 WAS AN INCORPORATOR MEMBER, AND THEREFORE HAD SOME SUPREME 3 AUTHORITY OVER THE LEGION, AND YET THE SAME ARGUMENT IS MADE 4 SUBROSA. 5 MR. WAIER KEEPS SAYING LAVONNE HAD NOTICE. 6 LAVONNE HAD NOTICE AND ETC., ETC. BUT, YOUR HONOR, THE FACT 7 THAT LAVONNE DID OR DID NOT HAVE NOTICE IS OF NO CONSEQUENCE 8 AS A MATTER OF LAW. A CORPORATION ACTS BY AND THROUGH ITS 9 BOARD OF DIRECTORS. IT’s NOT SIMPLY LEWIS AND LAVONNE, BUT 10 ALL OF THE DIRECTORS IN A DULY-CONSTITUTED MEETING WHO HAD 11 TO DECIDE THE AFFAIRS OF THE CORPORATION. 12 YOU RECALL THE FIRST DAY OUT OF THE BOX I ASKED 13 MR. CARTO ABOUT THE DUTIES AND OBLIGATIONS; WHAT HE 14 UNDERSTOOD THE DUTIES AND OBLIGATIONS OF THE DIRECTORS 15 WERE. MR. CARTO SAID THEY WERE MERELY A FRONTISPIECE, A 16 FRONTISPIECE. 17 HE TESTIFIED IN FACT HE, WILLIS CARTO AND LAVONNE, 18 MADE ALL DECISIONS AHEAD OF THE MEETINGS OF THE BOARD OF 19 DIRECTORS. THEY WERE INCORPORATORS, AND IN THAT CAPACITY 20 THEY WERE ENTITLED TO DECIDE ALL. 21 IT’s CLEAR, IN FACT, AB INITIO FROM THE BEGINNING 22 IN 1966 WHEN MR. CARTO CAME ABOARD THE CORPORATION WHEN HE 23 THOUGHT HE PURCHASED AND BOUGHT IT HE RAN THE CORPORATION 24 LIKE HIS OWN PRIVATE BUSINESS WITH LEWIS AND LAVONNE FURR AS 25 MERE FRONTISPIECES, AS PUPPETS. THE OTHER DIRECTORS, BE IT 26 MR. TAYLOR, WHO TESTIFIED CANDIDLY, OR MR. KERR, WHO ALSO 27 CANDIDLY STATED: WE WERE NEVER GIVEN NOTICE OF ANY 28 MEETING. WE NEVER DISCUSSED ANYTHING IN THE MEETING. WE
page 980 1 NEVER EVER KNEW ABOUT THE FARREL ESTATE OR THE 7.5 MILLION 2 BEQUEST BEFORE 1993. 3 THE CORPORATIONS CODE IS EXPLICIT, YOUR HONOR. 4 SECTION 5211 STATES MEETINGS OF THE BOARD OF DIRECTORS MUST 5 BE CALLED AND NOTICED PROPERLY, AND ALL DIRECTORS MUST 6 ATTEND EITHER IN PERSON OR TELEPHONICALLY WITH ALL OF THE 7 DIRECTORS BEING ABLE TO SPEAK TO ONE ANOTHER. CLEARLY THIS 8 NEVER OCCURRED. 9 MR. WAIER MAKES A BIG POINT ABOUT THE FURRS 10 RATIFYING ALL OF THE ACTIONS AND HAVING ACTUAL KNOWLEDGE 11 ABOUT ALL THE ACTIONS TAKEN BY MR. CARTO. WHAT IS CLEAR 12 FROM THE DEPOSITION OF LAVONNE FURR AND LEWIS FURR IS IN 13 FACT THEY RELIED UPON MR. CARTO. LAVONNE SAYS OVER AND OVER 14 AGAIN, WE TRUSTED WILLIS CARTO. WE RELIED UPON HIM. IF HE 15 TOLD US HE HAD A DISCUSSION WITH HIS DIRECTOR, WE BELIEVED 16 HIM. WELL, WE KNOW THAT MR. CARTO DIDN'T HAVE DISCUSSIONS 17 WITH CERTAIN DIRECTORS. AND THESE WERE DISCUSSIONS OF A 18 CRITICAL NATURE. THEY'RE DISCUSSIONS GOING TO THE BEQUEST 19 THAT WAS LEFT TO THE LEGION. 20 NOW MR. WAIER ATTEMPTED TO ARGUE THE FACTS OF THE 21 UNDERLYING LITIGATION, THE NECA LITIGATION. HE KNOWS 22 NOTHING ABOUT IT NOR DO I. THERE’s NOTHING IN THE RECORD. 23 WHAT I PRESUME HAPPENED IS THAT NECA WAS SET UP TO CONVEY 24 ASSETS IN A TRUST, BUT FOR SOME REASON BEFORE JEAN CAN IN 25 FACT TRANSFER THE ASSETS TO NECA, SHE DIED, AND SO THERE WAS 26 SOME KIND OF A DRY TRUST LITIGATION THEN ENSUED TO WHETHER 27 OR NOT NECA WAS A GIFT THAT WAS MADE BEFORE DEATH OR WHETHER 28 NECA ASSETS CAME TO THE CORPORATION. IN THE EVENT — WHAT
page 981 1 IS VERY, VERY CLEAR, YOUR HONOR, IS THAT NECA WAS FORMED FOR 2 THE PURPOSE OF THE LEGION AND NO OTHER PURPOSE. 3 IF YOUR HONOR HAS THE EVIDENCE IN FRONT OF HIM, I 4 WOULD LIKE BRIEFLY TO TAKE YOUR HONOR THROUGH SOME OF THE 5 CRITICAL EXHIBITS. I KNOW THERE’s BEEN A MASS OF THEM. I 6 SIMPLY LIKE TO POINT OUT A FEW FOR THE COURT’s USE PERHAPS 7 IN EVALUATING THIS EVIDENCE. 8 EXHIBIT 6, YOUR HONOR, IS INTERESTING BECAUSE IT 9 WAS MADE BEFORE JEAN FARREL’s DEATH. AND IN EXHIBIT 6, 10 WHICH IS IN EVIDENCE, LAVONNE FURR STATES: “THE ARSON OF THE 11 CORPORATE HEADQUARTERS HAS BROUGHT FORTH ADDITIONAL SUPPORT 12 FROM PERSONS WHO DO NOT WISH TO SEE THE WORK OF THE 13 CORPORATION BROUGHT TO AN END. AMONG THOSE SUPPORTERS IS 14 MISS JEAN FARREL, A CITIZEN OF COLUMBIA RESIDING IN 15 SWITZERLAND. MISS FARREL VISITED THE OFFICES OF THE 16 CORPORATION LATE MARCH OF LAST YEAR. SHE IS THE FOUNDER OF 17 NECA CORPORATION, WHICH SHE HAS CREATED FOR THE CORPORATION 18 AND WILL COME UNDER CONTROL OF THE CORPORATION UPON HER 19 DEATH." 20 NOW YOUR HONOR WILL RECALL IN HER DEPOSITION I 21 ASKED LAVONNE FURR: 22 “DID YOU EVER SPEAK — DID YOU OR YOUR HUSBAND 23 SPEAK WITH JEAN FARREL?" 24 “AND SHE STATED: NO." 25 WELL, THE ONLY PLACE THAT LAVONNE FURR COULD HAVE 26 GOTTEN THE INFORMATION WAS FROM WILLIS CARTO. WILLIS CARTO 27 TOLD LAVONNE FURR FROM THE GET-GO NECA BELONGED TO THE 28 LEGION UPON THE DEATH OF JEAN FARREL.
page 982 1 EXHIBIT 9, YOUR HONOR, IS A POWER OF ATTORNEY THAT 2 WAS GIVEN TO WILLIS CARTO BEFORE THE FAMOUS LETTER OF 3 SEPTEMBER 14, 1995. THIS IS THE POWER OF ATTORNEY DATED 4 SEPTEMBER 7, 1985 BEFORE THE ALLEGED AGREEMENT WAS ENTERED 5 INTO BETWEEN LAVONNE AND LEWIS; CARTE BLANCHE GIVEN TO GO 6 AFTER THE ESTATE. IT’s INTERESTING BECAUSE EXHIBIT 8, 9 7 SAYS: 8 “THE BEARER OF THIS INSTRUMENT, MR. WILLIS A. 9 CARTO, HAS BEEN DESIGNATED THE BUSINESS AGENT FOR THIS 10 INSTITUTE AND HAS THE POWER OF ATTORNEY TO CONDUCT ALL 11 BUSINESS AFFAIRS IN THE NAME OF AND FOR THE BENEFIT OF THIS 12 INSTITUTE, IN PARTICULAR AS IT CONCERNS THE ESTATE OF MISS 13 JEAN FARREL." 14 HE WAS AN AGENT BEFORE ENTERING INTO THIS 15 PURPORTED DEAL. 16 EXHIBIT 10, YOUR HONOR, THIS IS FOUR DAYS AFTER 17 THE CONTRACT, IF YOU WILL, WAS ENTERED INTO BETWEEN WILLIS 18 CARTO AND LAVONNE FURR GIVING MR. CARTO THE RIGHT TO GAMBLE 19 THIS INHERITANCE. 20 AND IT STATES: “A REPORT WAS MADE BY THE BUSINESS 21 AGENT FOR THE CORPORATION, MR. W. A. CARTO, WHO TRAVELLED TO 22 LUTRY, WHERE MISS FARREL LIVED, SEPTEMBER 8 AND RETURNED ON 23 THE 12TH." 24 THE SIGNIFICANCE OF MISS FARREL’s DEATH IS THAT 25 DIRECT CONTROL OF NECA CORPORATION HAS NOW PASSED TO THE 26 LEGION. 27 EXHIBIT 11, ANOTHER POWER OF ATTORNEY NOTARIZED: 28 “THE BEARER OF THIS DOCUMENT, MR. WILLIS A. CARTO, HAS BEEN
page 983 1 DESIGNATED BUSINESS AGENT FOR THIS CORPORATION AND HAS FULL 2 POWER OF ATTORNEY TO CONDUCT ALL BUSINESS AFFAIRS IN THE 3 NAME OF AND FOR THE BENEFIT OF THIS CORPORATION AND FOR ITS 4 TRADE NAMES AND WHOLLY-OWNED SUBSIDIARIES, INCLUDING THE 5 INSTITUTE FOR HISTORICAL REVIEW AND NECA CORPORATION." 6 WHOLLY-OWNED SUBSIDIARY. 7 EXHIBIT 20, YOUR HONOR, I WASN'T GOING TO TALK 8 ABOUT IT MUCH. IT’s INTERESTING. EXHIBIT 20, IF YOU LOOK 9 AT IT STATES: “THAT THE DIAMONDS WILL BE SHARED 45/55." 10 AND I WILL MAKE A COMMENT ON THAT LATER ON. IT’s KIND OF 11 INTERESTING, AND IT GOES TO THE ACCOUNTING ISSUE. 12 EXHIBIT 21, FASCINATING. MARCH 3, 1987, WILLIS -- 13 LAVONNE FURR, I'M SORRY, STATES: 14 “A DISCUSSION ENSUED REGARDING THE ESTATE OF MISS 15 JEAN FARREL, WHICH IS INVOLVED IN LITIGATION IN SWITZERLAND 16 AND OTHER PLACES. IT’s HOPED THAT A SETTLEMENT WILL BE 17 REACHED SOON. THIS IS DEPENDENT ON THE CORPORATION 18 RELINQUISHING CLAIM TO A SIZABLE PORTION OF THE ESTATE, 19 PERHAPS AS MUCH AS 50 PERCENT." 20 YOU RECALL THAT MR. CARTO TESTIFIED THAT AS OF 21 JANUARY 1, 1987, THE LEGION HAD ALREADY RELINQUISHED ITS 22 INTEREST IN THE FARREL BEQUEST TO HIM. IT’s STRANGE. 23 EXHIBIT 27, YOUR HONOR, SHOWS WHO THE DIRECTORS 24 WERE AT THE TIME. IT WASN'T JUST LEWIS AND LAVONNE. IT WAS 25 MR. KERR WHO AT THAT TIME WAS THE VICE-CHAIRMAN AND 26 DIRECTOR; MR. KERR, WHO STATED UNDER OATH CANDIDLY THAT HE 27 WAS NEVER GIVEN ANY NOTICE OF THE MEETING OF MARCH 5, 1991 28 AND DIDN'T ATTEND ANY AND NEVER KNEW ABOUT THE FARREL ESTATE
page 984 1 PRIOR TO 1993, SEPTEMBER 1993. 2 EXHIBIT 35, YOUR HONOR, MINUTES DATED JANUARY 9, 3 1991 — INTERESTING, YOUR HONOR, BECAUSE MR. WAIER TESTIFIED 4 THAT NONE OF THE MINUTES MENTIONED MR. CARTO, AND WE RAN 5 ACROSS THREE. GOING THROUGH THE ONE I'M TOUCHING ON EXHIBIT 6 35 STATES: “MR. CARTO SAID THAT THE ENGLISH COURT” -- 7 “MR. CARTO SAID THAT THE ENGLISH COURT HAD SCHEDULED A 8 HEARING FOR JANUARY 31 AT WHICH TIME THE FUNDS DUE THE 9 CORPORATION SHOULD BE LIBERATED AND SENT TO SWITZERLAND. AT 10 THAT TIME THE CORPORATION SHOULD BE ABLE TO PAY ITS MANY 11 DEBTS INCURRED OVER THE LAST FIVE YEARS FOR ATTORNEYS." 12 WHY WOULD WILLIS CARTO SAY THAT IF THE LEGION 13 RELINQUISHED AND HE PAID THE FEES? IT DOESN'T MAKE SENSE, 14 YOUR HONOR. 15 FURTHER ON IT SAYS: “RESOLVED, THAT THE 16 RESOLUTION OF THIS BOARD OF SEPTEMBER 19, 1985, BE CONFIRMED 17 THIS DATE AND THAT MR. WILLIS A. CARTO IS HEREBY AUTHORIZED 18 AND INSTRUCTED TO TAKE WHATEVER MEASURES AS IN HIS JUDGMENT 19 ARE REQUIRED TO SECURE THE PROPERTY OF THE CORPORATION AS 20 DERIVED FROM THE ESTATE AND ASSETS OF MISS JEAN FARREL." 21 WHY DOES HE NEED THAT? WHAT IS GOING ON HERE? 22 EXHIBIT 41, YOUR HONOR, IS THE FAMOUS EXHIBIT 23 WHICH THE LEGION RELINQUISHED THE INTEREST IN THE FARREL 24 ESTATE. AND OF COURSE WE KNOW FROM THE FURR’s DEPOSITION AT 25 THE TIME THEY RELINQUISHED THEY HAD NO KNOWLEDGE TO THE 26 VALUE OF THE SETTLEMENT. THEY HAD NO KNOWLEDGE WHATSOEVER. 27 THEY BELIEVED IT WAS LESS THAN A MILLION. 28 BUT WHAT IS INTERESTING ABOUT MARCH 5, 1995,
page 985 1 EXHIBIT 41, IS MRS. FURR STATES: “MR. TAYLOR REPORTED THAT 2 THE TENTH INTERNATIONAL REVISIONIST CONFERENCE HELD IN 3 WASHINGTON D.C WAS A GRAND SUCCESS." 4 MR. TAYLOR WASN'T PRESENT AT ANY SUCH MEETING. 5 THIS IS A PALPABLE FRAUD, YOUR HONOR. 6 AND OF COURSE, EXHIBIT 42 IS A MEETING OCCURRING 7 SIMULTANEOUSLY. AND MR. WAIER THIS MORNING SAID THERE'S 8 NOTHING UNUSUAL ABOUT THAT THEY HAD TWO MEETINGS. WHAT IS 9 INTERESTING, IF YOU READ MR. FURR’s MINUTES, EXHIBIT 42, HE 10 SAYS THAT — LET ME SEE HERE, MR. KERR WAS PRESENT. 11 HOWEVER, MR. TAYLOR IS NOT. THEY CAN'T SEEM TO GET WHO IS 12 PRESENT; WHO ISN'T; WHO THE DIRECTORS ARE; WHO AREN'T. VERY 13 ODD. 14 NOW EXHIBIT 46, YOUR HONOR, IS THE ONE WHERE THE 15 $7,500,000 SOME COME INTO PLAY. WHAT IS INTERESTING ABOUT 16 EXHIBIT 46, WHEN YOU TAKE THIS TO LOOK AT IT, IS THE 17 $7,585,179, WHICH HAS BEEN TRANSFERRED TO THE LEGION AS OF 18 JUNE 5, 1991, DOESN'T INCLUDE THE GEMS. 19 IT SAYS THE TOP OF PAGE 3: “ON YOUR INSTRUCTIONS, 20 MY FIRM HAS NO PART TO PLAY IN THE REALIZATION OF THE GEMS, 21 AND I REFER YOU TO PARAGRAPH NUMBER 5 OF BRIAN PALMER’s FAX 22 TO YOU OF APRIL 5, 1991." 23 NOW I DON'T WANT TO BE NITPICKING. I DON'T WANT 24 TO BELABOR TINY THINGS LIKE MISSING GEMS. YOU KNOW, THEY'RE 25 NOT PART OF THIS $7,585,179.60. I KNOW MR. CARTO DID HIS 26 BEST TO PROVIDE A COMPLETE ACCOUNTING. I WISH HE WOULD HAVE 27 MENTIONED THE VALUE OF THE GEMS AND WHAT HAPPENED TO THEM. 28 I'M SURE IT’s AN OVERSIGHT. THERE’s NO EVIDENCE BEFORE THE
page 986 1 COURT WHAT THE VALUE WAS. 2 HAS THE COURT SEEN MARATHON MAN? IT MIGHT BE 3 INTERESTING TO RENT THE FILM AND LOOK AT IT. IT STRIKINGLY 4 PARALLELS EXHIBIT 49. FASCINATING. 5 EXHIBIT 49, YOUR HONOR, IS A POWER OF ATTORNEY 6 DATED DECEMBER 9, 1992. NOW THIS IS ALMOST 10 MONTHS AFTER 7 THE LEGION HAS RELINQUISHED ITS INTEREST TO WILLIS CARTO. 8 AND IT STATES AS FOLLOWS: 9 “THE PURPOSE OF THE MEETING WAS TO DISCUSS THE 10 STATUS OF THE ESTATE OF MISS JEAN FARREL. THE SECRETARY 11 HAVE REPORTED THAT THE OFFICIALS IN SWITZERLAND REQUIRE A 12 NEW POWER OF ATTORNEY FROM MR. HENRY J. FISCHER IN ORDER FOR 13 HIM TO ACT FOR THE CORPORATION IN THIS MATTER." 14 VERY STRANGE. IF ANYTHING HAS BEEN, WHY IS THE 15 POWER OF ATTORNEY TO HENRY FISCHER? WHAT IS GOING ON HERE? 16 WE KNOW, OF COURSE, THAT AS OF MARCH 2, 1993, 17 EXHIBIT 51, MR. KERR IS STILL VICE-CHAIRMAN AND DIRECTOR. 18 MR. TAYLOR IS A DIRECTOR. 19 THERE’s NO QUESTION THAT EXHIBIT 59 IS A 20 RESIGNATION OF THE FURRS. THEY RESIGNED SEPTEMBER 16, 1996 21 FOLLOWED BY WILLIS Carto’s LETTER OF SEPTEMBER 21, 1993 IN 22 WHICH HE INCLUDES A BLANK MINUTE OF BOARD OF DIRECTORS 23 RESCINDING THE RESIGNATION. AND THEN LOW AND BEHOLD 24 EXHIBIT 60 IS BACK-DATED MINUTES, DATED SEPTEMBER 16, 1993, 25 SIGNED BY LEWIS AND LAVONNE FURR AND STATING THAT 26 MR. KERR — MR. KERR IS PRESENT BY TELEPHONE. 27 IF THIS CASE IS ABOUT ANYTHING, YOUR HONOR, IT'S 28 ABOUT A COMPLETE DISREGARD FOR THE LAW. MR. CARTO WITH OR
page 987 1 WITHOUT THE INTENTIONAL COMPLICITY OF MRS. AND MRS. FURR, 2 THE ELDERLY COUPLE, HAS USED THEM AND ABUSED THEM FOR HIS 3 OWN PURPOSES. TO MR. CARTO A CORPORATION IS NOTHING BUT A 4 SHIRT HE USED WHEN IT SUITS HIS PURPOSES AND TAKES OFF WHEN 5 IT DOESN'T. 6 THIS GETS US TO ANOTHER INTERESTING ISSUE, THE 7 ISSUE OF THE INTENT OF JEAN FARREL. MR. WAIER SAID AT LEAST 8 A DOZEN TIMES JEAN FARREL’s INTENT HAS BEEN FULFILLED. I 9 SUBMIT THAT JEAN FARREL’s INTENT WAS NOT FULFILLED BY THE 10 MONEY BEING COMMINGLED WITH LIBERTY LOBBY FUNDS AND THAT 11 BEING USED TO PREPARE THE STOCK OPTION FOR THE SALE OF 12 STOCK. 13 MR. CARTO TESTIFIED THEY COULDN'T HAVE HIS NAME 14 ASSOCIATED WITH THE LEGION. IT WAS TOO EMBARRASSING FOR HIS 15 LEGITIMATE ACTIVITY WITH LIBERTY LOBBY. LIBERTY LOBBY, 16 AFTER ALL, IS RESPECTABLE, CANNOT BE INVOLVED IN ANYTHING AS 17 SENSITIVE SHALL WE SAY AS REVISIONISM. NO. HE HAD TO 18 HIDE — HIDE ALL THAT BEHIND THE CORPORATE SHELL, BEHIND THE 19 FACADE. BUT, YOUR HONOR, JEAN FARREL HAD NO SUCH SCRUPLES. 20 SHE SIMPLY DIDN'T. JEAN FARREL KNEW WHAT SHE WANTED. SHE 21 WAS A VERY STUBBORN LADY, ECCENTRIC. THE WILL IS A KICK. I 22 DON'T KNOW IF YOUR HONOR HAS READ THE WILL. 23 THE COURT: YES, ABOUT SOMEBODY WATCHING THE BODY FOR 24 FIVE DAYS. 25 MR. BEUGELMANS: FOR FIVE DAYS. SHE KNEW WHAT SHE 26 WANTED WAS FOR THE MONEY TO GO TO THE LEGION AND THE I.H.R. 27 FOR THE PURPOSE OF REVISIONISM. EVERY LETTER THAT'S 28 INTRODUCED BY THE DEFENSE CONCERNING HER INTENT IS EITHER
page 988 1 SILENT OR TALKS ABOUT REVISIONISM. IT WAS HER BUGABOO. SHE 2 WAS CRAZY ABOUT REVISIONISM. YOU AND I MAY NOT LIKE IT, BUT 3 THAT’s WHAT SHE INTENDED. SHE INTENDED THE MONEY TO GO FOR 4 REVISIONISM, NOT FOR SOME RADIO SHOW ABOUT GARDENING AND 5 MECHANICS OR ANYTHING ELSE. REVISIONISM WAS HER THING. 6 YOUR HONOR, PLEASE READ THE LETTERS. READ JEAN 7 FARREL’s LETTER. THEY'RE INSTRUCTIVE. 8 I DON'T BELIEVE AS A MATTER OF LAW JEAN FARREL'S 9 INTENT MATTERS ONE WIT; BUT NONETHELESS, IF COUNSEL WANTS TO 10 INJECT THE ISSUE OF INTENT IN THIS CASE, THEN I BELIEVE THAT 11 THAT CUTS AGAINST THE ARGUMENT, THE ENTIRE EDIFICE, WHICH 12 THEY CONSTRUCTED THAT THE MONEY WENT TO THE SAME PURPOSE. 13 IT’s NOT THE SAME PURPOSE. 14 LIBERTY LOBBY WITH ITS TABLOID POLITICAL USE PAPER 15 SPOTLIGHT ADDRESSES ONE AUDIENCE WHERE THE I.H.R. WITH THE 16 PUBLICATIONS HAS A COMPLETELY DIFFERENT PURPOSE, ONE WHICH 17 WE MAY OR MAY NOT LIKE, BUT IT IS WHAT IT IS. IT’s WHAT 18 JEAN FARREL WANTED. 19 ON THE ISSUE OF STATUTE OF LIMITATIONS, YOUR 20 HONOR, COUNSEL HAS MADE A NUMBER OF REPRESENTATIONS ABOUT 21 THE KNOWLEDGE TO THE FURRS. THAT THEY HAVE IMPUTED 22 KNOWLEDGE. THAT ISN'T JUST THE KNOWLEDGE TO THE FURRS, IT'S 23 KNOWLEDGE TO THE ENTIRE BOARD OF DIRECTORS THAT MATTERS. 24 BUT WHAT IS REALLY IMPORTANT WHEN WE TALK ABOUT THE STATUTE 25 OF LIMITATION WITH A NONPROFIT CORPORATION IS THE ISSUE OF 26 CORPORATE DOMINATION BY AN ILLEGAL BOARD. IT’s CLEAR, YOUR 27 HONOR, THAT SO LONG AS A BOARD OF DIRECTORS IS DOMINATED BY 28 DIRECTORS WHO ARE NOT FURTHERING ITS PURPOSE AND NOT OBEYING
page 989 1 CORPORATE MANDATES, NOT FOLLOWING THE LAW BUT SIMPLY MAKING 2 DECISIONS WITH COMPLETE — WITHOUT ANY REGARD AT ALL TO 3 DULY-CONSTITUTED MEETINGS, WITH CONSULTING THEIR DIRECTORS, 4 THE STATUTE OF LIMITATION IS TOLLED. REID V. ROBINSON 5 (1923) 64 CAL. APP. 46; SAN LEANDRO CANNING COMPANY V. 6 PERILLO (1931), 211 CAL. 4TH 482. 7 MR. WAIER STATED THERE’s KNOWLEDGE TO THE 8 ATTORNEYS. IT — REALLY IT’s IRRELEVANT THAT THERE WAS 9 KNOWLEDGE TO THE ATTORNEYS. THE QUESTION IS WAS THE 10 CORPORATION DOMINATED ILLEGALLY BY A BOARD THAT WAS 11 FOLLOWING THE LAW OR NOT. EVEN KNOWLEDGE TO THE ATTORNEYS, 12 YOUR HONOR, IS NOT RELEVANT. 13 CITE THE CASE OF FOORMAN, F-O-O-R-M-A-N, V. MYERS, 14 M-Y-E-R-S, 1934 — THIS IS 37 P.2D 469 — WHERE THE COURT 15 STATED: “AN ATTORNEY, WHO IS EMPLOYED ONLY FOR THE SPECIAL 16 PURPOSES OF BRINGING A SUIT IS NOT BOUND TO DISCLOSE HIS 17 PRINCIPAL, KNOWLEDGE OF FACTS WHICH ARE BEYOND THE SCOPE OF 18 HIS EMPLOYMENT AND ARE KNOWN TO THE PARTIES CONCERNED TO BE 19 WITHIN THE AUTHORITY OF INDEPENDENT AGENTS OF THE 20 PRINCIPAL." 21 AND WHAT MR. CARTO WAS AT ALL TIMES AND HELD OUT 22 WAS AN INDEPENDENT AGENT. HE DEALT WITH THE ATTORNEYS. 23 YOUR HONOR, STATEMENTS WERE MADE ABOUT NECA, HOW 24 NECA DIDN'T EXIST, HOW NECA WAS SIMPLY SOME STRONG WIND. IF 25 YOU LOOK AT EXHIBIT 183, THERE’s SOME INTERESTING RESPONSES 26 TO INTERROGATORIES. I WILL READ A FEW TO YOU, YOUR HONOR. 27 THESE ARE VERIFIED BY WILLIS A. CARTO AND VERIFIED IN THE 28 PRESENCE OF A NOTARY PUBLIC.
page 990 1 I'LL QUOTE SOME. “TOM MARCELLUS HAS KNOWLEDGE OF 2 THE GIFT OF NECA CORPORATION STOCK TO THE LEGION AS 3 EVIDENCED BY HIS PERSONAL CONTACT WITH HER AT THE TIME SHE 4 VISITED MR. CARTO, AS WELL AS THROUGH CORRESPONDENCE. 5 MR. EDWARD J. COUGHLIN WAS HIRED BY JEAN FARREL, E., TO SET 6 UP NECA CORPORATION AS A MEANS TO TRANSMIT OR TRANSFER HER 7 PROPERTY FROM THE PERSONAL OWNERSHIP TO OWNERSHIP OF THE 8 LEGION. THE LEGION HAS LEGAL OWNERSHIP OF ALL NECA 9 CORPORATION SHARES." 10 “11(A): LITIGATION AT PRESENT IN SINGAPORE WITH 11 O.C.B.C. BANK AND SITUATION SIMILAR IN ALL RESPECTS TO 12 HENDERSONVILLE LITIGATION. LONDON” -- 13 (THE REPORTER ASKED MR. BEUGELMANS TO REPEAT.) 14 MR. BEUGELMANS: “LONDON WHERE SHARES REMAIN IN BOX." 15 THE COURT: I'M SORRY. 16 MR. BEUGELMANS: IN THE BOX IN HERFORD, GERMANY. 17 THE COURT: I DIDN'T UNDERSTAND WHAT YOU SAID. MAYBE 18 GO REAL SLOW AND SPELL IT OUT. I DIDN'T GET IT. 19 MR. BEUGELMANS: RATHER THAN — IT’s 11(A) OF THE 20 VERIFIED RESPONSE TO INTERROGATORIES STATE: 21 “THAT ALL LITIGATION WAS THE SAME AS THE NORTH 22 CAROLINA LITIGATION." 23 AND LASTLY, MR. CARTO STATED THE LEGION CLAIMS 24 OWNERSHIP OF NECA BY EVERY VIRTUE OF MISS FARREL’s CLEAR AND 25 STATED INTENT. HER CLEAR AND STATED INTENT HAD SHE INTENDED 26 TO LEAVE MONEY TO WILLIS CARTO FOR HIS PERSONAL USE OR 27 DISCRETION, SHE HE WOULD HAVE CLEARLY HAVE STATED THE SAME. 28 SHE TRUSTED WILLIS CARTO TO DO WHAT SHE WANTED WITH THE
page 991 1 ASSETS. TRANSMIT THEM TO THE LEGION. 2 ALSO, ONE OF THOSE STATE THAT THE KEYS WERE LEFT 3 IN MR. Carto’s POSSESSION FOR THE LEGION. IT’s IN HIS STACK 4 OF PAPERS. 5 ON THE ISSUE OF CORPORATE OPPORTUNITY, YOUR HONOR, 6 IF THE LEGION HAD NO ASSETS IN 1985, IT’s BECAUSE THEY WERE 7 DRAINED AWAY AT WILLIS Carto’s INSTRUCTIONS TO ACCOUNT AT 8 F.D.F.A. 9 MR. MARCELLUS TESTIFIED, AND IT WAS UNREBUTTED, 10 THAT IN 3 MONTHS 1985 THE LEGION RAISED $125,000, AND THAT 11 THE MONEY WAS DEPOSITED INTO F.D.F.A. ACCOUNTS AT MR. WILLIS 12 Carto’s SPECIFIC INSTRUCTION. 13 AS A MATTER OF FACT, THE ONLY MENTION OF F.D.F.A. 14 IN ANY OF JEAN FARREL’s CORRESPONDENCE IS THE LETTER, WHICH 15 SHE CONFIRMS GIFTS FOR THE LEGION SHOULD BE MADE PAYABLE TO 16 F.D.F.A. ACCOUNT. 17 MR. LANE IN HIS CLOSING STATEMENT DIDN'T SAY A LOT 18 THAT WAS INTERESTING EXCEPT HE MADE A BIG DEAL ABOUT THE 19 FACT THAT THE FURRS WERE QUOTE THREATENED, AND THAT’s WHY 20 THEY RESIGNED. WELL, YOUR HONOR, JUDGE POLIS SPECIFICALLY 21 FOUND THEY WERE NOT. THAT THE RESIGNATION WAS VOLUNTARY. 22 I WOULD LIKE MR. CARTO TO THINK ABOUT SOMETHING -- 23 ALL OF US TO THINK ABOUT SOMETHING. IN FACT, THE LETTERS 24 THAT WERE SENT BY STAFF, BY MR. MARCELLUS, MR. WEBER AND 25 RAVEN TO MR. AND MRS. FURR IN JULY, AUGUST AND SEPTEMBER OF 26 1993 WERE NOT THREATS IN LIGHT OF WHAT HAS HAPPENED TO THE 27 PEOPLE SINCE THEN. THEY WERE PROPHECIES, YOUR HONOR. 28 I'M GOING TO GO THROUGH MY NOTES. I DON'T KNOW IF
page 992 1 THERE’s ANYTHING TO RESPOND. THE LAW CITED BY MR. WAIER ON 2 SELF-DEALING IS INAPPLICABLE. THE PLAINTIFFS HAVEN'T SUED 3 FOR SELF-DEALING BUT FOR GROSS NEGLIGENCE AND FOR 4 CONVERSION. 5 ON THE ISSUE OF CONVERSION, I THINK I WOULD LIKE 6 TO BRIEFLY POINT OUT, YOUR HONOR, TO WITKIN, NINTH EDITION, 7 TORTS SECTION 613. 8 THE COURT: GO OFF THE RECORD. DID YOU WANT TO GET 9 DONE BY NOON OR NOT? 10 MR. BEUGELMANS: I COULD, YOUR HONOR. I PROBABLY 11 COULD. 12 THE COURT: WELL, WE WANT TO STOP IN 3 MINUTES. 13 (OFF-THE-RECORD DISCUSSION.) 14 THE COURT: ON THE RECORD. I HAD A FEW QUESTIONS FOR 15 YOU. NUMBER ONE, DOES THE CAUSE OF ACTION NUMBER SIX APPLY 16 HERE? IS THAT A CAUSE OF ACTION OR DOES THAT SIMPLY GIVE 17 YOU THE RIGHT TO SEEK AN INJUNCTION? WHAT IS IT YOU ARE 18 SEEKING AN INJUNCTION FOR, ASSUMING YOU HAVE THE RIGHT? 19 WHAT DID FISCHER DO WRONG? 20 YOU ARE ASKING FOR AN ACCOUNTING. ARE YOU ASKING 21 FOR AN ACCOUNTING FOR THE GEMS OR NOT? SOME EVIDENCE THAT 22 THERE ARE UNCUT DIAMONDS AROUND HERE. AND WHAT ARE YOU 23 ASKING AN ACCOUNTING FOR? 24 AND ALSO, DO YOU SEE ANY PROBLEM WITH THE IDEA 25 THAT IF THERE IS A CONVERSION HERE THAT LIBERTY LOBBY 26 CONVERTED ONE AMOUNT AND MR. CARTO CONVERTED ANOTHER AMOUNT, 27 NAMELY, IF I GO TO 208, WHICH WAS PREPARED BY MR. CARTO, HE 28 SAYS LIBERTY LOBBY HAS 2.6 MILLION. YOUR ARGUMENT, OF
page 993 1 COURSE, IS THAT MR. CARTO HAS CONVERTED A LOT MORE THAN 2 THAT. EXACTLY WHAT AMOUNT I DON'T KNOW THAT YOU ARE 3 SEEKING. I KNOW IT FROM THE COMPLAINT WHAT YOU ARE 4 SEEKING. AFTER ALL THE EVIDENCE, I WONDER WHAT AMOUNT, AND 5 IF YOU THINK THERE ARE DEDUCTIONS, FOR EXAMPLE, FOR 6 OBTAINING THE FARREL MONEY. 7 THOSE ARE SOME QUESTIONS I HAD. I DON'T KNOW IF 8 YOU CAN ANSWER THEM OR IF YOU WANT TO. I DON'T KNOW IF YOU 9 WANT TO DO IT WITHIN THE NEXT 10 MINUTES. 10 MR. BEUGELMANS: YOUR HONOR, IF I COULD HAVE THE LUNCH 11 RECESS, I'LL RESEARCH THE POINTS AND TRY TO CONCLUDE BRIEFLY 12 AFTER LUNCH, NOT GO OVER MATERIAL -- 13 THE COURT: YOU MIGHT LOOK AT C.C.P. 425.15 AND WAS IT 14 COMPLIED WITH? IF SO, HOW. IF NOT, DOES IT MAKE A 15 DIFFERENCE? ALL RIGHT. I THINK WE'LL TAKE A BREAK THEN. 16 SEE YOU AT 1:30. 17 18 (PROCEEDINGS RECESSED.) 19 20 THE COURT: GO AHEAD. 21 MR. BEUGELMANS: THANK YOU. YOUR HONOR, BEFORE LUNCH 22 THE COURT ADDRESSED SEVERAL QUESTIONS TO COUNSEL. I WOULD 23 LIKE TO ANSWER ALL WITH THE EXCEPTION OF THE QUESTION OF THE 24 INJUNCTION I'LL TOUCH ON ON THE VERY LAST. 25 THE FIRST QUESTION THE COURT ASKED WAS CONCERNING 26 THE SIXTH CAUSE OF ACTION, WHICH CITES TO CORPORATIONS CODE 27 SECTION 6215. THERE WAS A TYPO IN THE COMPLAINT. SAID 28 CIVIL CODE 6215. WHAT 6215 SAYS IS THAT OFFICERS AND
page 994 1 DIRECTORS WHO CAUSE FALSE MINUTES OR RECORDS TO BE 2 PREPARED -- 3 MR. WAIER: OBJECT. YOU AMENDED THAT. IT DOES NOT 4 STATE THAT. YOU AMENDED IT TO SAY CORPORATIONS CODE 5214 5 PURSUANT TO THE AMENDMENT OF COUNSEL. NOW HE’s GOING BACK 6 AND SAYING SOMETHING ELSE TO THE SIXTH CAUSE OF ACTION. 7 THE COURT: I THOUGHT IT WAS IN THE 5 SECTIONS. 8 MR. WAIER: EXACTLY. 9 MR. BEUGELMANS: WHAT THE CAUSE OF ACTION IS FALSIFIED 10 RECORDS OF THE CORPORATION. AND BASICALLY UNDER 6215 ANY 11 OFFICER OR DIRECTOR WHO IS RESPONSIBLE OR PARTICIPATES IN 12 FALSIFYING COURT RECORDS — CORPORATION RECORDS, IS JOINTLY 13 AND SEVERALLY LIABLE. CALIFORNIA AND A NOTICED PLEADINGS 14 CASE — WE DON'T HAVE TO QUOTE THE CORRECT CODE SECTION. 15 THE SIXTH CAUSE OF ACTION IS PRETTY STRAIGHT 16 FORWARD. THEY WERE FALSIFIED DOCUMENTS OF THE CORPORATION. 17 IN FACT, WE HAVE SHOWN THAT TO BE TRUE. THE MINUTES OF 18 MARCH 5, 1991 FALSIFIED AS OF THE SUBSEQUENT PAYMENT. 19 EXHIBIT 60 -- 20 THE COURT: WHAT SECTION ARE WE USING FOR CAUSE OF 21 ACTION NUMBER SIX? 22 MR. BEUGELMANS: 6215. CORPORATIONS CODE SECTION 23 6215. THE SECOND POINT WAS -- 24 MR. WAIER: OBJECT AT THIS POINT. THAT’s NOT THE CAUSE 25 OF ACTION. THAT’s BEEN AMENDED. 26 THE COURT: WHAT CAUSE OF ACTION — WHAT WAS THE NUMBER 27 THAT WAS AMENDED? 28 MR. WAIER: SIXTH.
page 995 1 MR. WAIER: 5142, YOUR HONOR. 2 THE COURT: THAT’s WHAT I THOUGHT. GO AHEAD. I 3 AMENDED IT TO 5142, AS I REMEMBER. THE MINUTES SHOW THAT 4 IT’s 5142 OF THE CORPORATIONS CODE. THAT’s WHAT I REMEMBER 5 TOO. 6 MR. BEUGELMANS: YOUR HONOR, I QUICKLY CHECKED THE 7 JUDGES BENCHBOOK, WHICH I'M SURE YOUR HONOR HAS IN THE 8 CHAMBERS, AND THE COURT HAS AUTHORITY TO AT ANY TIME BEFORE 9 THE CONCLUSION OF AN ACTION BEFORE IT GOES TO JUDGMENT TO 10 CONFORM ACCORDING TO PROOF OF FACTS SHOWN AT TRIAL. 11 BUT ANY EVENT, WHAT IS ALLEGED IN THE SIXTH CAUSE 12 OF ACTION IS FALSIFIED RECORDS. THAT’s A VIOLATION OF THE 13 CORPORATIONS CODE. IT DOES MAKE THOSE WHO FALSIFY CORPORATE 14 RECORDS JOINTLY AND SEVERALLY LIABLE FOR ANY HARM TO THE 15 CORPORATION. 16 THE SECOND QUESTION, YOUR HONOR -- 17 MR. WAIER: YOUR HONOR, AGAIN, THAT’s BEYOND THE SCOPE 18 OF MY ARGUMENT. HE’s NOW GOING BEYOND THAT, AND THAT IS NOT 19 THE POINT OF REBUTTAL. 20 THE COURT: WELL, MAY OR MAY NOT BE THE POINT OF 21 REBUTTAL. IF I ASK HIM A QUESTION, I THINK I CAN GET AN 22 ANSWER. 23 VERY WELL, LET’s GO ON TO SOME OF THE OTHER 24 THINGS. 25 MR. BEUGELMANS: THANK YOU. YOUR HONOR INQUIRED AS TO 26 MR. FISCHER’s LIABILITY, IF ANY. YOUR HONOR, AGAIN WE HAVE 27 TO REMEMBER THAT MR. FISCHER WAS AN AGENT FOR THE 28 CORPORATION BEGINNING 1985 AND CONTINUES TO BE AN AGENT AS
page 996 1 FAR AS THE RECORD IS CONCERNED. THE LAST POWER OF ATTORNEY 2 WAS GRANTED IN 1992. THAT’s EXHIBIT 49. 3 MR. FISCHER HAD RESPONSIBILITY SINCE THE INCEPTION 4 AS A SPECIAL AGENT TO RECOVER THE FUNDS OF NECA FOR THE 5 BENEFIT OF THE PLAINTIFF. HE WAS A SPECIAL AGENT FOR THAT 6 PURPOSE AND AS SUCH HE HAS A DUTY TO ACCOUNT AND A FIDUCIARY 7 DUTY TO SHOW THAT THE PROCEEDS HAVE BEEN SPENT AS INTENDED 8 BY THE CORPORATION. 9 ALSO, MR. FISCHER IS A SIGNATORY ON VIBET, 10 ACCORDING TO MR. CARTO, AND VIBET IS THE VEHICLE PURSUANT TO 11 WHICH THE ENTIRE SCAM HAS BEEN CARRIED OUT. 12 LASTLY, MR. FISCHER HAS PROVIDED NO ACCOUNTING, 13 BUT WE KNOW, ACCORDING TO EXHIBIT NUMBER 208, MR. FISCHER 14 RECEIVED $300,000 FROM THE SETTLEMENT. 15 THE THIRD QUESTION, YOUR HONOR, WAS WHETHER OR NOT 16 THE LIABILITY OF LIBERTY LOBBY IS CONGRUENT AND PARALLEL TO 17 THE LIABILITY OF WILLIS CARTO AS AN INDIVIDUAL. 18 YOUR HONOR, I DON'T WANT TO GO OVER ALL OF THE LAW 19 THAT I CITED TO THE COURT THE OTHER DAY IN MY CLOSING, BUT I 20 WOULD REMIND YOU, YOUR HONOR, OF THE LAW THAT I DID CITE 21 FROM WITKIN CONCERNING THE JOINT AND SEVERAL LIABILITY OF 22 THOSE WHO PARTICIPATE IN AN UNLAWFUL ACT. THIS WAS AN 23 UNLAWFUL CONDUCT. 24 THE NEXT QUESTION WAS HOW MUCH TO DEDUCT FROM THE 25 $7,500,000. LEAVING ASIDE THE QUESTION OF THE JEWELS, YOUR 26 HONOR, MR. CARTO TESTIFIED AT TRIAL ABOUT $400,000 WAS SPENT 27 IN ATTORNEY’s FEES RECOVERING THE ESTATE ASSETS. ALTHOUGH 28 THERE WAS NO SPECIFIC ACCOUNTING OF THAT AMOUNT, WE'LL ADOPT
page 997 1 IT FOR THE PURPOSES OF ARGUMENT. 2 ALSO, YOUR HONOR, IT WAS TESTIFIED BY 3 MR. MARCELLUS THAT THERE WAS A LOAN ON THE BOOKS OF THE 4 LEGION FOR $250,000, AND IT WAS CARRIED ON THE LEGION'S 5 BOOKS AS A LOAN FROM VIBET TO THE LEGION. WE DON'T KNOW, 6 YOUR HONOR, WHETHER OR NOT THE MONEY WAS TRANSFERRED TO THE 7 LEGION; BUT FOR THE PURPOSES OF ARGUMENT WE'LL SAY THAT 8 $250,000 CAN BE CREDITED, SINCE I ASSUME THAT THE COURT WILL 9 BE GIVING A JUDGMENT AGAINST VIBET IN ANY EVENT SINCE THEY 10 WERE THE DEFAULTING PARTY. 11 OVER AND ABOVE THAT, YOUR HONOR, IT APPEARS THAT 12 MR. MARCELLUS’s SALARY WAS PAID FOR A PERIOD OF 13 APPROXIMATELY A YEAR OR MAYBE A YEAR AND A HALF, AND ALSO 14 THAT THERE WAS SOME ADVANCES TO MR. MARCELLUS. $70,000, 15 YOUR HONOR, MIGHT BE FAIR. I THINK THAT’s MORE THAN 16 GENEROUS. 17 SO IN TOTAL, I WOULD SAY IF THE COURT WERE TO 18 DEDUCT $720,000 FROM THE GROSS RECOVERY, EXCLUDING THE 19 DIAMONDS, THAT MIGHT BE A PRETTY FAIR APPROXIMATION. 20 AGAIN, YOUR HONOR, AS YOU WILL RECALL A PARTY'S 21 OWN CONDUCT PREVENTED THE ASCERTAINMENT OF DAMAGES. THE 22 PARTY IS ESTOPPED, AND I WILL GIVE THAT CITE AGAIN. IT’s AN 23 IMPORTANT CASE, YOUR HONOR. 24 IT’s “ONE WHOSE WRONGFUL CONDUCT RENDERED 25 DIFFICULT THE ASCERTAINMENT OF DAMAGES CANNOT ESCAPE 26 LIABILITY BECAUSE THE DAMAGE CANNOT BE MEASURED WITH 27 EXACTNESS.” THAT’s AMERICAN LOAN CORPORATION V. CALIFORNIA 28 COMMERCIAL CORPORATION (1963), 211 CAL. APP. 2ND, 515.
page 998 1 YOUR HONOR, ALSO, AS TO THE EFFECT, IF ANY, OF 2 C.C.P SECTION 425.15 IN THE ACTION, IT’s OUR POSITION, YOUR 3 HONOR, THAT C.C.P. SECTION 425.15 IS INAPPLICABLE. IF YOU 4 LOOK AT THE LANGUAGE, IT STATES: 5 “NO CAUSE OF ACTION AGAINST A PERSON SERVING 6 WITHOUT COMPENSATION AS A DIRECTOR OR OFFICER OF THE 7 NONPROFIT CORPORATION DESCRIBED IN THIS SECTION, ON ACCOUNT 8 OF ANY NEGLIGENT ACT OR OMISSION BY THAT PERSON WITHIN THE 9 SCOPE OF THAT PERSON’s DUTIES AS A DIRECTOR ACTING IN THE 10 CAPACITY OF A BOARD MEMBER." 11 WHAT HAPPENED HERE IS ANY ACT OR OMISSION OF LEWIS 12 OR LAVONNE FURR WERE TAKEN ULTRA VIRES. THEY ARE NOT TAKING 13 AS ACTION A DULY-CONSTITUTED BOARD AT MEETINGS OF THE BOARD 14 OF DIRECTORS HELD AS A NONPROFIT CORPORATION LAW. THEY WERE 15 RUBBER STAMPS FOR THE WISHES OF MR. WILLIS CARTO. 16 A FEW POINTS BEFORE I CLOSE. THERE’s BEEN A 17 SUGGESTION THAT THE FURRS ARE BASICALLY AN OLD INVALID 18 COUPLE WHO WERE USED AS PAWNS BY WILLIS CARTO. THAT MAY OR 19 MAY NOT BE TRUE. I REMIND THE COURT THAT MR. LEWIS FURR WAS 20 A COURT CLERK IN LOUISIANA FOR A PERIOD OF 12 YEARS FROM 21 1948 TO 1960. HE SHOULD HAVE KNOWN BETTER THAN DO WHAT THEY 22 DID. HE SHOULDN'T HAVE FALSIFIED RECORDS, SHOULD NOT HAVE 23 PARTICIPATED IN THE SHAMEFUL CONDUCT. 24 THERE IS NO CUSTOM AND HABIT EXCEPTION TO THE 25 NONPROFIT CORPORATION LAW. THE MERE FACT THAT LAVONNE FURR 26 AND MR. CARTO RAN THIS CORPORATION THE WAY THEY DID FOR MANY 27 YEARS DOES NOT RATIFY THE ILLEGALITY OF THE CONDUCT. 28 LAVONNE FURR TESTIFIED IN THE DEPOSITION SHE
page 999 1 RELIED EXCLUSIVELY ON WILLIS CARTO. SHE NEVER CONSULTED AN 2 ATTORNEY BUT GOT HER INSTRUCTIONS TO THE CORPORATE 3 FORMALITIES FROM MR. CARTO. 4 DEFENDANT HAS ARGUED SOMEHOW THE PLAINTIFF IS 5 ESTOPPED BECAUSE OF THE LETTER WHICH MR. WEBER WROTE TO 6 MR. GRAY, EXHIBIT 44. I SAY QUITE THE CONTRARY, OR 7 MR. MARCELLUS WOULD SAY, AU CONTRAIRE. 8 YOUR HONOR, WHAT THAT LETTER SHOWS IS THE GOOD 9 FAITH MEMBERS OF THE STAFF, THEY ARE NOT CHALLENGING 10 MR. Carto’s LEGALITY OR ILLEGALLY. THEY WERE TRYING TO 11 ASCERTAIN THE TRUTH. THEY WERE ACTING IN GOOD FAITH. IN 12 ANY EVENT, AS MR. WAIER STATED REPEATEDLY AND VOCIFEROUSLY, 13 IT DOES MATTER THAT MR. WEBER OR MARCELLUS KNEW THEY WERE 14 EMPLOYEES. 15 AGAIN, YOUR HONOR, CORPORATIONS CODE SECTION 5233 16 IS NOT THE BASIS OF PLAINTIFF’s CAUSE OF ACTION. WE'RE NOT 17 ALLEGING THAT THE FURRS HAD GOTTEN THE MONEY ON THEIR OWN 18 BEHALF AS INDIVIDUALS. 19 IN THAT CONNECTION, YOUR HONOR, BEFORE WE BROKE AT 20 NOON I WANT TO BRIEFLY TALK ABOUT CONVERSION. IF THE COURT 21 WILL TAKE A LOOK WHEN THE CASE IS OVER AT WITKIN, NINTH 22 EDITION, TORTS SECTION 614 IT SAYS — WITKIN LAYS IT OUT 23 CLEARLY WHERE AN AGENT FAILED TO TURN OVER A SUM DEFINITE 24 RECEIVED BY HIM FOR PRINCIPAL’s ACCOUNT, CAUSE OF ACTION FOR 25 CONVERSION IS PLEADED. THAT’s SECTION 614. 26 THERE’s NO ELEMENT OF THE CAUSE OF ACTION FOR 27 CONVERSION THAT THE DEFENDANT ACTUALLY PUT THE MONEY IN HIS 28 POCKET. PROPERTY NEED NOT BE TAKEN, YOUR HONOR. IT'S
page 1000 1 SIMPLY ASSERTING POSSESSION OR CONTROL OVER PROPERTY 2 SUFFICIENT FOR CONVERSION. 3 LIKEWISE, THE REFUSAL TO RETURN PROPERTY ON DEMAND 4 CONSTITUTES CONVERSION. THE UNAUTHORIZED TRANSFER OF 5 PROPERTY CONSTITUTES CONVERSION. 6 DEFENDANT ARGUED QUITE STRENUOUSLY THAT PLAINTIFF 7 NEVER HAD RIGHT OR TITLE TO THE NECA ASSETS. OF COURSE, 8 THAT’s CONTRADICTED BY THE COMPLAINT FILED IN NORTH CAROLINA 9 AND SIGNED UNDER PENALTY OF PERJURY IN THE PRESENCE OF A 10 NOTARY PUBLIC BY MR. WILLIS CARTO. BUT I THINK THE 11 CONVERSION HAS BEEN AMPLY PROVED BY THE FACTS AS YOUR HONOR 12 HEARD THEM IN TESTIMONY IN THIS MATTER. CONVERSION IS AN 13 INTENTIONAL TORT AND ANY PROHIBITION ON CAUSES OF ACTION FOR 14 MERE NEGLIGENCE TAKEN BY A DIRECTOR IN GOOD FAITH ARE 15 OUTSIDE OF THE CAUSE OF ACTION FOR CONVERSION OF FRAUD. 16 CONTRARY TO WHAT MR. WAIER ASSERTED, BIZARRELY THE 17 PLAINTIFFS ARE NOT SUING TO RESCIND THE FARREL SETTLEMENT. 18 ON THE CONTRARY, THE PLAINTIFFS ARE SUING TO ENFORCE THE 19 FARREL SETTLEMENT. THE FARREL SETTLEMENT WAS A SETTLEMENT 20 BETWEEN ALTHAUS AND LEGION PURSUANT TO WHICH LEGION WAS TO 21 RECEIVE 45 PERCENT OF THE NET ASSETS, WHICH IT DID. 22 THERE’s NO QUESTION THAT THE MONEY WENT TO MAITRE 23 ROCHAT AND WAS DISTRIBUTED THEREAFTER TO MAITRE FOETISCH WHO 24 PUT THE MONEY IN AN ACCOUNT AT VIBET UNDER THE UMBRELLA OF 25 THE BAHAMAS CORPORATION, THE INTERNATIONAL LEGION FOR THE 26 SURVIVAL OF FREEDOM. 27 MR. WAIER STATED ONLY IF DIRECTORS ARE CAUGHT WITH 28 THE HAND IN THE TILL ARE THEY LIABLE. THAT’s NOT TRUE, YOUR
page 1001 1 HONOR. VERY BRIEFLY THE CORPORATIONS CODE SECTION 4047.5, 2 6215 AND 7231 PUT THAT TO REST. 3 AN ARGUMENT WAS MADE BY MR. WAIER THAT THE 4 SETTLEMENT AND MANDATE SOMEHOW CONSTITUTE A RELEASE OF ALL 5 CLAIMS BETWEEN THE LEGION AND MR. CARTO. AGAIN, THAT’s A 6 NOVEL ARGUMENT SINCE CARTO MADE HIMSELF A PARTY TO THE 7 SETTLEMENT AND SIGNED ON BEHALF OF HIMSELF OR HAD THE 8 CONTRACT SIGNED OR THE SETTLEMENT SIGNED BY SOMEONE ELSE ON 9 HIS OWN BEHALF. IT’s A BIZARRE ARGUMENT. THAT BY DOING SO, 10 HE CAUSED THE LEGION TO RELEASE HIM. IT WAS HIS AGENT. THE 11 LEGION DID NOT PARTICIPATE DIRECTLY. HE WAS THE AGENT. HE 12 PUT HIS OWN NAME IN THE DOCUMENT, AND THE DOCUMENT WAS 13 SIGNED ON HIS BEHALF AND ON BEHALF OF THE LEGION AT THE 14 INSTRUCTIONS OF LEWIS CARTO. HOW THAT CAN CONSTITUTE A 15 RELEASE IS JUST ODD. 16 ONCE AGAIN THE SEPTEMBER 1985 CONTRACT THAT 17 MR. WAIER TALKED ABOUT, THERE IS NO CONTRACT, YOUR HONOR. 18 IT’s A UNILATERAL LETTER SENT BY WILLIS CARTO TO LAVONNE 19 FURR. THERE IS NO RESOLUTION OF A PROPERLY CONVENED AND 20 CONDUCTED MEETING OF THE BOARD OF DIRECTORS WHICH ENTERS 21 INTO SUCH A CONTRACT, EVEN IF SUCH A CONTRACT COULD BE 22 ENTERED INTO, WHICH THE PLAINTIFFS DISPUTE. IN ANY EVENT, 23 IF THE LETTER OF MR. CARTO WERE TO CONSTITUTE THE CONTRACT, 24 IT’s SO VAGUE AND SUBJECT TO SO MANY DIFFERENT 25 INTERPRETATIONS TO BE UNENFORCEABLE AB INITIO. 26 MR. WAIER STATED THERE’s NO EVIDENCE THAT IT WENT 27 INTO THIS MAN’s POCKET, MEANING WILLIS CARTO MONEY DOESN'T 28 HAVE TO GO INTO YOUR POCKET FOR YOU — FOR A PERSON TO BE
page 1002 1 FOUND GUILTY OF CONVERSION. 2 MR. WAIER ARGUED AT LENGTH THAT THE CORPORATION 3 HAD CONSTRUCTIVE NOTICE AND THEREFORE IS ESTOPPED FROM 4 BRINGING THE LAWSUIT; BUT, YOUR HONOR, SO LONG AS THE 5 AFFAIRS OF THE CORPORATION ARE DOMINATED BY WILLIS CARTO 6 WITH THE KNOWING OR INDIFFERENT COMPLICITY OF THE FURRS AND 7 DELEGATION OF THE CALIFORNIA CORPORATION, THE STATUTE OF 8 LIMITATION WAS TOLLED. IT’s NOT UNTIL THE NEW BOARD OF 9 DIRECTORS HAD POWER TO RECTIFY THE MISCONDUCT THAT THE 10 STATUTE OF LIMITATIONS BEGAN TO RUN. THAT WAS IN SEPTEMBER 11 1993. THIS ACTION WAS FILED IN JULY OF 1994. 12 MR. WAIER STATES, QUOTE, EVERYBODY AGREES THAT 13 LAVONNE HAD OSTENSIBLE AUTHORITY. NOT SO. HER ONLY 14 AUTHORITY WAS TO ACT AS A MEMBER OF THE BOARD OF DIRECTORS 15 AS ONE OF A DULY-CONSTITUTED AND FUNCTIONING BOARD OF 16 DIRECTORS. SHE HAD NO AUTHORITY TO ACT IN CONCERT WITH 17 WILLIS CARTO IN COMPLETE DISREGARD OF CORPORATION LAW. ANY 18 SUCH ACTION IS ULTRA VIRES. 19 A FEW MORE POINTS AND I'LL REST. AND MR. WAIER 20 IMPLORED THE COURT NOT TO LOOK AT THE MINUTIAE BUT, YOUR 21 HONOR, THIS IS A COURT OF LAW. THIS IS NOT SOME KIND OF A 22 SHOW ON TELEVISION. THE COURT WELL KNOWS THAT THE DEVIL IS 23 ALWAYS IN THE DETAILS, YOUR HONOR, AND AS WE SIT HERE TODAY 24 AFTER ALL THIS LITIGATION AND THE 8 VOLUMES OF MOTIONS AND 25 REFERENCED TO JAMS AND THE APPEALS AND ALL THE OTHER 26 NONSENSE THAT’s HAPPENING IN THE CASE, WE STILL DON'T HAVE A 27 CLEAR IDEA OF HOW MUCH MONEY WAS RECOVERED AND HOW IT WAS 28 SPENT.
page 1003 1 IT’s ODD WHEN YOU LOOK AT THE ACCOUNTING, EXHIBIT 2 208, AND THEN YOU LOOK AT MR. HUTZEL’s MEMORANDUM SENT TO 3 MR. CARTO IN 1994. IT APPEARS FROM MR. Carto’s TESTIMONY 4 FROM THE ACCOUNTING THAT THE MONEY WAS LOANED BY VIBET TO 5 LIBERTY LOBBY AND TO F.D.F.A., AND THAT ALL THIS WAS 6 CONCLUDED BY THE END OF 1993. AND YET IN MR. HUTZEL'S 7 MEMORANDUM OF 1994 THERE’s A SUGGESTION THAT MILLIONS MORE 8 CAN BE BORROWED. 9 BUT ALSO, YOUR HONOR, TAKE A LOOK AT THAT, AND 10 MR. MUSSELMAN, WHAT IS THAT, EXHIBIT 209? TAKE A LOOK AT 11 209 BECAUSE WHAT IT SHOWS HERE IS A SHELL GAME. THERE ARE 12 AT LEAST HALF A DOZEN NONPROFIT AND DIFFERENT ORGANIZATIONS, 13 AND MONEY IS TRANSFERRED FROM ONE TO ANOTHER. 14 NOW MR. LANE TALKED THIS MORNING ABOUT WASHINGTON, 15 D.C. LAW. 16 MR. WAIER: MR. LANE? 17 MR. BEUGELMANS: I'M SORRY, MR. WAIER, AND SO DID 18 MR. LANE. ACTUALLY, I DON'T KNOW HOW THEY CONDUCT THE 19 BUSINESS IN WASHINGTON, D.C. I KNOW WHO WHO THEY ELECTED 20 FOR MAYOR, BUT IN CALIFORNIA, IN CALIFORNIA WE HAVE CLEAR 21 LAWS, AND WE HAVE A TRADITION OF RESPECTING AND HONORING THE 22 LAW, AND THAT WAS NOT DONE IN THIS CASE. 23 THE LAST POINT, YOUR HONOR, HAS TO DO WITH A 24 STATEMENT MADE BY MR. WAIER, WHICH I FOUND TO BE SHOCKING, 25 AND THAT WAS THE FOLLOWING STATEMENT: ALL THEY HAD WAS THIS 26 MAN’s WORD. IF WILLIS CARTO DIDN'T COOPERATE, THE LEGION 27 GOT NOTHING. AND MR. WAIER SAID THAT MR. CARTO WAS NOT AN 28 AGENT BEFOREHAND.
page 1004 1 WELL, YOUR HONOR, I BEG TO DIFFER. AGAIN, YOUR 2 HONOR, PLEASE LOOK AT THE COMPLAINT, THIS EXHIBIT 183. 3 THAT’s NORTH CAROLINA COMPLAINT. PAGE 11 — I'M SORRY, 4 PAGE 3, PARAGRAPH 11 STATES AS FOLLOWS: 5 “ON THE FIFTH DAY OF APRIL, 1984, JEAN FARREL, 6 E., SURRENDERED THE KEY TO THE SAFETY DEPOSIT BOX AT FIRST 7 UNION NATIONAL BANK TO WILLIS A. CARTO, IN HIS CAPACITY AS 8 AGENT FOR THE LEGION FOR THE SURVIVAL OF THE FREEDOM, INC., 9 AND INFORMED HIM OF THE METHOD OF ACCESS AS A DEPUTY OF THE 10 CORPORATION, AND BY SURRENDERING OF THIS KEY EFFECTED 11 DELIVERY OF THE CONTENTS OF THE BOX TO THE PLAINTIFF." 12 YOUR HONOR, IF THERE’s ANYONE TO BE ESTOPPED IN 13 THE ACTION IT’s WILLIS CARTO AND HIS COHORTS. THERE’s A 14 STRANGE PARALLEL IN THE CASE, YOUR HONOR. MR. CARTO WAS THE 15 FOUNDER OF THE I.H.R., AND THE I.H.R. WAS FOUNDED FOR THE 16 PURPOSE OF PROMOTING REVISIONISM. WE ALL KNOW ABOUT THE 17 HOLOCAUST AND THE CLAIMS THAT HAVE BEEN MADE BY REVISIONISTS 18 AND THE BANDYING ABOUT OF NUMBERS AS IF IT REALLY MAKES A 19 DIFFERENCE WHETHER 3 MILLION OR 6 MILLION OR 2 MILLION OR 1 20 MILLION PEOPLE DIED; BUT WHAT WE HAVE IN THIS CASE IS A 21 STRANGE PARALLEL WHERE THE NUMBERS DON'T SEEM TO MATTER 22 MUCH. IT’s JUST THE NUMBER OF THE DAY AND THE FACTS OF THE 23 DAY. IT’s REWRITING OF HISTORY. WHAT MR. CARTO SIGNED AND 24 UNDER PENALTY OF PERJURY WHAT HE REPRESENTED TO THE ENTIRE 25 WORLD AND THE LEGION, THE MINUTES ALL THE WAY THROUGH 26 JANUARY 1991, INCLUDING THE MARCH 5, 1991 MINUTES STATE THAT 27 IT WAS THE LEGION THAT WAS TO RECOVER THE ASSETS THAT 28 MR. CARTO WAS SECURING. BUT NOW THERE’s BEEN A STRANGE
page 1005 1 ATTEMPT TO REWRITE HISTORY, REDEFINE WHAT REALLY HAPPENED, 2 AND THE COURT SHOULD NOT ALLOW THIS, YOUR HONOR. 3 LASTLY, YOUR HONOR, THE TEMPORARY RESTRAINING 4 ORDER. THE PLAINTIFF WOULD RESPECTFULLY REQUEST THAT ALL 5 DEFENDANTS AND THEIR AGENTS BE PREVENTED FROM HOLDING 6 THEMSELVES OUT TO BE LEGION FOR THE SURVIVAL OF FREEDOM, 7 INC. OR ENPOWER TO ACT FOR THE LEGION. IN OTHER WORDS, THAT 8 THEY BE PROHIBITED FROM CLAIMING TO BE DIRECTORS, OFFICERS, 9 INCORPORATORS, SUBSTITUTE INCORPORATORS, MEMBERS, EMPLOYEES 10 AGENTS, ATTORNEYS, ETC. 11 SECONDLY, THE PLAINTIFFS PRAY FOR A TEMPORARY 12 RESTRAINING ORDER AND A PERMANENT INJUNCTION PROHIBITING THE 13 REMOVAL OR TRANSFER OR ENCUMBRANCE OF ANY AND ALL ASSETS, 14 INCLUDING ANY EQUITABLE INTEREST IN AND POSSESSION OR 15 CONTROL OF ANY ASSET OR PROPERTY OF THE LEGION, INCLUDING 16 BUT NOT LIMITED TO RECORDS, ACCOUNTS, THE BEARER SHARES OF 17 NECA CORPORATION, NECA ASSETS, SHARES OF VIBET, VIBET'S 18 ASSETS, SHARES OF THE INTERNATIONAL LEGION FOR THE SURVIVAL 19 OF FREEDOM, INC., ITS ASSETS, AND ANY AND ALL OTHER ASSETS 20 DERIVED FROM JEAN FARREL-EDISON ESTATE, INCLUDING BUT NOT 21 LIMITED TO THE SETTLEMENT OF THE LITIGATION AROUND THE WORLD 22 INVOLVING JEAN ALTHAUS AND THE LEGION. 23 ALSO, YOUR HONOR, THAT ANY ASSETS RECEIVED FROM 24 ROLAND ROCHAT OR HIS — AT BIDDLE AND COMPANY, QUILTER 25 GOODISON, THE SWITZERLAND AND NORTH CAROLINA COURTS, AND 26 PROCEEDS OF ANY OF THE ABOVE, REGARDLESS OF WHETHER THEY 27 CAME THROUGH FOETISCH, VIBET, THE INTERNATIONAL LEGION, 28 F.D.F.A., THE DEFENDANTS AND/OR THE BANQUE CONTRADE BE
page 1006 1 RESTRAINED, YOUR HONOR AND -- 2 MR. WAIER: I'M GOING TO OBJECT. YOU CANNOT RESTRAIN 3 ANY PARTY WHO IS NOT MADE A PARTY OF THIS ACTION. 4 THE COURT: COUNSEL, YOU WILL GET AN — I'LL GIVE YOU 5 AN OPPORTUNITY FINALLY TO RESPOND. IT’s NICE IF YOU FOLLOW 6 THE INSTRUCTIONS AND LET HIM GIVE THE ARGUMENT. HE LET YOU 7 GIVE YOUR ARGUMENT. 8 MR. BEUGELMANS: IT’s NOT F.D.F.A. BE RESTRAINED, BUT 9 ALL THE DEFENDANTS BE RESTRAINED FROM ENCUMBERING, SELLING, 10 DIVESTING THEMSELVES OR OTHERWISE SELLING ANY OF THE ASSETS 11 THAT CAME FROM THE JEAN FARREL-EDISON ESTATE. 12 THE COURT: WHAT ARE YOU ASKING FOR IN THE FIFTH CAUSE 13 OF ACTION, MONEY HAD AND RECEIVED? 14 MR. BEUGELMANS: I BELIEVE THAT WILL BE THE ENTIRE 7.5 15 MILLION LESS THE $720,000 THAT THE PLAINTIFF IS CONCEDING 16 POSSIBLY WAS SPENT IN GOOD FAITH. 17 AND, OF COURSE, WE'RE ASKING FOR AN ACCOUNTING 18 WITH RESPECT TO THE DIAMOND. AT THIS POINT WE HAVE NO 19 REASON TO BELIEVE THAT THE DEFENDANTS CAN EVER PROVIDE A 20 CREDITABLE ACCOUNTING WITH RESPECT TO THE OTHER ASSETS. 21 AND WE WANT A JUDGMENT TO THE ASSETS. WE WOULD 22 WANT AN ACCOUNTING TO THE DIAMONDS. 23 THE COURT: WHAT ABOUT CAUSE OF ACTION NUMBER ONE? I 24 THINK YOU MENTIONED ON FRIDAY THAT IT APPEARS THAT THAT 25 ISN'T PROBABLY A CAUSE OF ACTION. THAT IS A CIVIL 26 CONSPIRACY. 27 MR. BEUGELMANS: THERE IS NO CAUSE OF ACTION FOR CIVIL 28 CONSPIRACY. THEY'RE JOINT TORT-FEASORS RESPONSIBLE FOR
page 1007 1 WHATEVER DAMAGES ARE CAUSED. 2 THE COURT: VERY GOOD. WHAT ABOUT CAUSE OF ACTION 3 NUMBER EIGHT? WHAT ARE YOU ASKING FOR THERE? DECLARATORY 4 RELIEF? ARE YOU ASKING — ASKING ME TO DECLARE RELIEF AS TO 5 WHAT? 6 MR. BEUGELMANS: I BELIEVE, YOUR HONOR, IT’s THE SAME 7 AS THE INJUNCTION, BASICALLY, THAT THE PROCEEDS FROM THE 8 SETTLEMENT OF THE LITIGATION INVOLVING THE ESTATE OF JEAN 9 FARREL-EDISON ARE RIGHTFULLY THE PROPERTY OF LEGION FOR THE 10 SURVIVAL OF FREEDOM, INC., AND THAT WE HAVE NO CONTROL AT 11 THIS TIME. 12 AS YOU KNOW, YOUR HONOR, THERE WAS TESTIMONY BOTH 13 FROM MR. CARTO AND FROM THE FURRS IN THE DEPOSITIONS THAT 14 WHATEVER IS STILL IN VIBET OR THE INTERNATIONAL LEGION IS 15 THE PROPERTY OF THE LEGION FOR THE SURVIVAL OF THE FREEDOM, 16 INC., THE PLAINTIFF IN THIS ACTION. 17 THE COURT: MR. WAIER, I DON'T WANT A COMPLETE 18 RENDITION OF THE ARGUMENT AGAIN. 19 MR. WAIER: NO. 20 THE COURT: YOU CAN CERTAINLY ADDRESS YOURSELF TO CAUSE 21 OF ACTION NUMBER SIX, BECAUSE THAT DIDN'T COME UP. AND IF 22 YOU LIKE TO YOU CAN ADDRESS YOURSELF TO ANYTHING NEW ON THE 23 OTHER CAUSES OF ACTION. 24 MR. WAIER: FIRST OF ALL, AND I APPRECIATE THIS, IF YOU 25 TAKE A LOOK AT — I WANT TO TALK ABOUT HENRY FISCHER. TAKE 26 A LOOK AT EXHIBIT 37, WHICH IS THE POWER OF ATTORNEY, WHICH 27 COUNSEL RELIES UPON. 28 THAT POWER OF ATTORNEY STATES STRICTLY, HENRY
page 1008 1 FISCHER IS EMPOWERED TO EXPEDITE THE LAWFUL PORTION OF THE 2 ESTATE OF JEAN FARREL IN NECA CORPORATION TO THE CUSTODY OF 3 MR. ROLAND ROCHAT. THAT’s WHAT THE EVIDENCE SAID. THAT'S 4 WHAT THAT DOCUMENT SAYS. IT DIDN'T SAY TO THE CORPORATION. 5 IT SAYS TURN IT OVER THE ROLAND ROCHAT. THAT’s WHAT 6 MR. FISCHER DID. SO THEREFORE, YOUR HONOR, THERE’s NO 7 EVIDENCE THAT MR. FISCHER DID ANYTHING OTHER THAN WHAT HE 8 WAS INSTRUCTED TO DO BY HIS POWER OF ATTORNEY. 9 COUNSEL DID NOT READ THE POWER OF ATTORNEY 10 CORRECTLY TO THIS COURT, AND I WOULD HOPE THAT THE COURT 11 REVIEWS THE DOCUMENTS IN ORDER FOR BOTH COUNSEL’s SAKE. 12 WE'RE MERELY GIVING YOU ARGUMENT. 13 WITH RESPECT TO THE SIXTH CAUSE OF ACTION — NOW 14 I'M GETTING CONFUSED. IS HE SEEKING AN AMENDMENT OF THAT 15 FOR THAT PURPOSE? IF THAT’s THE CASE, NOW WE HAVE BEEN 16 PREJUDICED AGAIN, BECAUSE I WILL TELL YOU UNDER THAT 17 SECTION, CORPORATIONS CODE 6215, THERE IS NO PRIVATE RIGHT 18 OF ACTION. THAT MERELY ALLOWS THE ATTORNEY GENERAL — IN 19 FACT, THERE ARE REMEDIES IN THE NONPROFIT CORPORATIONS CODE 20 STRICTLY IN THE FORM OF TO THE ATTORNEY GENERAL IN WHICH 21 THEY — HE CAN CITE PEOPLE FOR FALSIFYING RECORDS, SO FORTH, 22 IF THERE’s BEEN EVIDENCE OF FALSIFICATION. THERE’s BEEN NO 23 EVIDENCE OF FALSIFICATION. THERE’s NOBODY HERE TESTIFIED TO 24 FALSIFICATION EXCEPT FOR HARVEY TAYLOR, WHO DOESN'T REMEMBER 25 WHO THE DIRECTORS WERE TWO MONTHS AGO, LET ALONE. AND THEN 26 HIS TESTIMONY WAS REFUTED BY ELISABETH CARTO AND WILLIS 27 CARTO WHO HAD THE CONVERSATIONS WITH HIM. 28 SO, YOUR HONOR, I — AND HE’s ALSO A BIASED
page 1009 1 WITNESS. BUT MORE IMPORTANTLY, YOUR HONOR, COUNSEL HAS 2 MISSED THE BOAT. I DON'T WANT TO REGURGITATE IT. 3 THE COURT: THEN PLEASE DON'T. IF I HEARD IT ONCE, I 4 DON'T NEED TO HEAR IT AGAIN. 5 MR. WAIER: I WANT TO MAKE THE DISTINCTION THE PRIMA 6 FACIE EVIDENCE GOES TO THE RESOLUTIONS, NOT TO THE MINUTES. 7 IT STATES SPECIFICALLY UNDER THE CODE SECTION IT TALKS ABOUT 8 PRIMA FACIE EVIDENCE TO ANY RESOLUTION, NOT WHETHER THERE 9 WAS A DIRECT OR PRESENT OR NOT PRESENT. IT MERELY GOES TO 10 RESOLUTIONS. THAT’s THE ONLY ISSUE INVOLVED IN THE MINUTES 11 AS BEING PRIMA FACIE EVIDENCE. IT HAS NOTHING TO DO WHO 12 ATTENDED; WHO WAS THERE; WHO WASN'T THERE. 13 ALSO AMERICAN CENTER FOR EDUCATION V. CAVNAR IS A 14 NONPROFIT CORPORATION CASE IN WHICH IT STATES AN AMERICAN 15 CENTER FOR THE EDUCATION, EVEN THOUGH THE NONPROFIT 16 CORPORATIONS CODE IN CALIFORNIA STATES VARIOUS FORMALITIES 17 THAT MUST BE MET IF IT’s A SMALL CORPORATION THAT DEALS THE 18 SAME WAY IT CAN HAVE INFORMAL MINUTES. IT DOESN'T, IN OTHER 19 WORDS, IT DOESN'T INVALIDATE ACTIONS OF THE BOARD BECAUSE 20 THERE’s INFORMALITY, AND THAT’s CONSISTENT WITH GENERAL 21 CORPORATION LAW. AND THAT WE CITED IN THE PAPERWORK. 22 THAT’s ANOTHER RED HERRING. 23 THE COURT: THE IDEA WAS NOT TO RESPOND TO HIS ENTIRE 24 ARGUMENT. 25 MR. WAIER: I'M SORRY. 26 THE COURT: BECAUSE HE DOES HAVE THE BURDEN. IT HAS TO 27 END SOMEWHERE. 28 IT SEEMED TO ME MY QUESTIONS BROUGHT UP SOME AREAS
page 1010 1 YOU HAD NOT COVERED, NAMELY, CAUSE OF ACTION NUMBER SIX. 2 MR. WAIER: YES. NO PRIVATE RIGHT OF ACTION — IN 3 ESSENCE, IT’s 5214. THAT’s THE PRESENT CAUSE OF ACTION. 4 THERE’s BEEN NO MENTION OF A MOTION TO AMEND AGAIN, AND SO 5 CONSEQUENTLY, WE HAVE BEEN PREJUDICED. THERE’s THAT ASPECT 6 HE’s NOT BROUGHT A MOTION TO AMEND. 7 SECOND OF ALL, YOUR HONOR, WITH RESPECT TO THE 8 ONLY THING YOU WANT ME TO ADDRESS, I WANT TO SAY 425.15, I 9 READ THAT SECTION AGAIN. IT SAYS NO CAUSE OF ACTION MAY BE 10 BROUGHT AGAINST A DIRECTOR OR AN OFFICER — AND THAT IS 11 IMPORTANT TO NOTE — UNLESS YOU PETITION BY A VERIFIED 12 PETITION. THAT’s WHY THE NONPROFIT CORPORATION LAW AND THAT 13 CALIFORNIA CODE OF CIVIL PROCEDURE SECTION WAS ENACTED. 14 THEY UNDERSTAND THAT VOLUNTEER DIRECTORS HOLD A VERY 15 ESTEEMED POSITION WITHIN THE LAW WITH RESPECT TO THE 16 NONPROFIT CORPORATION. THEREFORE YOU MUST PETITION THE 17 COURT BEFORE YOU DO THAT, AND YOU CANNOT BRING A LAWSUIT 18 UNLESS YOU BRING A VERIFIED COMPLAINT AGAINST — A VERIFIED 19 PETITION AGAINST THE DIRECTORS TO THE COURT ASKING THE COURT 20 IF YOU CAN FILE IT. IT TOLLS THE STATUTE OF LIMITATION FROM 21 THAT POINT IN TIME WHEN YOU BRING THE PETITION BECAUSE THEY 22 RECOGNIZE THAT THE COURT HAS TO CONSIDER THAT. BUT UNTIL 23 YOU DO THAT, YOU ARE NOT ENTITLED TO FILE A COMPLAINT, WHICH 24 THEY DID ANYWAY, AND IT SHOULD BE DISMISSED BECAUSE IT DID 25 NOT FOLLOW, INTERESTINGLY ENOUGH, THE LAW. THAT IS THE 26 LAW. 27 IS THERE ANY OTHER POINT YOU WANT ME TO ADDRESS, 28 YOUR HONOR?
page 1011 1 THE COURT: HE’s ASKING FOR AN ACCOUNTING FOR THE 2 DIAMONDS. 3 MR. WAIER: YOUR HONOR, THE BURDEN OF PROOF IS ON 4 THEM. THE ACCOUNTING IS ALL THERE. IN FACT, THAT’s THE 5 REASON WHY WE STAND HERE TODAY BECAUSE THEY DIDN'T NAME THE 6 RIGHT PARTIES IN THIS ACTION. 7 ROLAND ROCHAT, IF YOU TAKE A LOOK AT THAT, HE 8 WAS — IF YOU TAKE A LOOK AT THE DISTRIBUTION AGREEMENT, THE 9 SETTLEMENT AGREEMENT, HE WAS HANDLING THAT DISTRIBUTION. 10 AND I SUGGEST, YOUR HONOR, THE DIAMONDS DIDN'T COME IN ANY 11 DIRECTION. IT DIDN'T GO TO LIBERTY LOBBY AND DIDN'T GO TO 12 WILLIS CARTO. THERE’s NO EVIDENCE BEFORE YOU THAT IT WENT 13 TO ANY OF THE DEFENDANTS BEFORE YOU. IF MR. ROCHAT TOOK OFF 14 TO SAUDI ARABIA WITH IT, THAT’s ANOTHER STORY. YOU HAVE NO 15 EVIDENCE THAT THE DIAMONDS OR GEMS WENT TO ANYBODY HERE 16 BEFORE YOU TODAY. SO THEREFORE, THERE’s A LACK OF PROOF. 17 MR. CARTO TESTIFIED HE NEVER GOT THE GEMS. SO 18 WITH RESPECT TO THAT, THERE’s A LACK OF PROOF. MAYBE THE 19 PROPER PARTY SHOULD HAVE BEEN BROUGHT, ROLAND ROCHAT AND 20 DOCTOR PATRICK FOETISCH. 21 THE OTHER THING I WANT TO EMPHASIZE, IF YOU TAKE A 22 LOOK AT BAJI 1330, 13.30, IT STATES THAT A CORPORATION NOT 23 ONLY ACTS THROUGH ITS DIRECTORS, BUT THERE’s A — BAJI -- 24 ACTS THROUGH IT’s OFFICERS. 25 THERE IS NO QUESTION THAT LAVONNE FURR WAS 26 SECRETARY/TREASURER DURING ALL OF THIS POINT IN TIME, AND 27 THAT IS WHAT BAJI — WHAT YOU INSTRUCT A JURY ON. ANY 28 ACTIONS TAKEN BY HER ARE THE ACTIONS AS AN OFFICER ARE THE
page 1012 1 ACTIONS OF THE CORPORATION. THAT’s 13.30. SO — AND WE 2 HAVE SHOWN HERE, AND THE LAW — I'M NOT GOING TO 3 REGURGITATE. 4 ANY OTHER QUESTIONS? 5 THE COURT: I DON'T THINK SO. THOSE ARE THE ONLY 6 AREAS. 7 MR. WAIER: I DO QUARREL WITH HIS OFFSETS. I THINK IF 8 YOU LOOK AT 208, YOUR HONOR, 208 HAD A NUMBER OF OTHER -- 9 EVEN MR. WEBER TESTIFIED AS LONG AS IT WAS PAID TO AGENTS IN 10 CONNECTION WITH THIS, AND IT’s EVEN IN THE DEPOSITION, THOSE 11 WERE PROPER EXPENDITURES. FOR EXAMPLE, HAVING TO PAY OFF, 12 EVEN ACCORDING TO THE AGREEMENT, JOAN ALTHAUS; HAVING TO PAY 13 OFF ALL OF THE OTHER ATTORNEYS USING THESE FUNDS. 14 IF YOU WILL TAKE A LOOK AT 208, IT TALKS ABOUT 15 LOSS OF CAL FUTURES WERE ONE OF THE DOCUMENTS THAT JEAN 16 FARREL HAD, AND IT JUST I DON'T THINK THAT WAS A 17 DISTRIBUTION. THAT SAYS THAT THEY LOST IN VALUE $500,000. 18 I DON'T — AND THERE’s NO EVIDENCE THAT 7.5 MILLION DOLLARS 19 TOOK INTO ACCOUNT A VALUE, WHICH IS SUBSEQUENTLY DECREASED 20 BY THE 500,000. THAT’s WHY 208 IS DIFFICULT TO UNDERSTAND, 21 AND I TRIED TO DO THAT. IT’s DIFFICULT. CERTAINLY A LOSS 22 CAN'T BE ATTRIBUTED TO MR. CARTO, ESPECIALLY WHEN ROLAND 23 ROCHAT WAS THE ONE INVOLVED WITH ALL OF THOSE TRANSACTIONS. 24 THAT’s THE EVIDENCE YOU HAVE BEFORE YOU, INCLUDING THE LAWS 25 OF EURODISNEY AND ALL OF THESE OTHER THINGS. 26 THE ONLY THING ON HERE I SEE IS 2.6.5 OR 27 $2,650,000 TO LIBERTY LOBBY. F.D.F.A. YOU HAVE NO EVIDENCE 28 OTHER THAN THIS AS TO A HUNDRED THOUSAND, BUT YOU ALSO HAVE
page 1013 1 TESTIMONY THAT YOU HAD 400 TO $500,000 THAT LIBERTY LOBBY 2 PUT IN. YOU HAVE TESTIMONY OF ELISABETH CARTO; WHAT SHE PUT 3 IN. YOU ALSO HAVE TESTIMONY AS TO WILLIS’s TIME AND 4 EFFORT. 5 WHAT I'M SAYING, YOUR HONOR, EVEN IF YOU WERE TO 6 CONSIDER DAMAGES, WHICH I DON'T THINK YOU SHOULD GET TO THAT 7 POINT, BUT IF YOU DO, THERE’s MORE OFFSETS. THIS SHOWS THE 8 GREED THAT’s TRYING TO TAKE PLACE HERE. THEY'RE SAYING WE 9 GET EVERYTHING. YOU DID ALL THE WORK, BUT YOU GET NO 10 OFFSETS FOR IT. IN OTHER WORDS, YOU PAID ATTORNEYS 11 OVERSEAS. YOU TOOK MONEY OUT, AND YOU PAID TAXES, OR YOU 12 PAID JOAN ALTHAUS’s ESTATE. YOU PAID AN EXPEDITER 13 $800,000. THAT’s OURS. YOU HAD NO RIGHT TO DO IT, EVEN 14 THOUGH YOU ACQUIRED THE ESTATE. I DON'T THINK THAT’s THE 15 LAW, EVEN IF YOU GET TO THAT POINT ON DAMAGES. 16 THE COURT: THAT OUGHT TO DO IT THEN. 17 MR. BEUGELMANS: MAY I ADDRESS A FEW POINTS, BRIEFLY? 18 THE COURT: I THINK WE HAVE TO PUT AN END TO IT HERE. 19 WHAT YOU ARE ENTITLED TO GET FROM ME, OF COURSE, 20 IS A STATEMENT OF DECISION, WHICH DOES NOT, AND I EMPHASIZE 21 THE WORD “NOT” GO INTO THE EVIDENTIARY ISSUES. IT SIMPLY 22 GOES TO THE ULTIMATE ISSUES. IT’s LIKE A JURY VERDICT, 23 REALLY, IF A JURY FINDS CONVERSION. I'LL TELL YOU ALL THE 24 REASONS WHY. 25 WHAT I WILL DO IS I WILL WRITE A LETTER TO YOU, 26 WHICH WON'T BE A STATEMENT OF DECISION, WHICH WILL EXPLAIN 27 TO YOU HOW I SAW THE EVIDENCE AND WHICH WITNESSES I BELIEVED 28 AND WHICH WITNESSES I DIDN'T AND SO ON, SO FORTH. I DO THAT
page 1014 1 WITH SOME TREPIDATION, BECAUSE IT’s USUALLY BETTER NOT TO DO 2 IT. JUST LEAVE YOU ALL IN THE DARK; BUT YOU BOTH SPENT A 3 LOT OF TIME AND MONEY ON THE CASE. BOTH ARE INTERESTED. I 4 THINK YOU ARE ENTITLED TO KNOW HOW I'M LOOKING AT IT, AND 5 WHY I'M GOING TO REACH CERTAIN DECISIONS. I'LL GET TO THAT 6 AS SOON AS I POSSIBLY CAN. I CAN'T PROMISE YOU WHEN IT WILL 7 BE BUT AS SOON AS I CAN GET TO IT. IT WILL DEPEND SOMEWHAT 8 ON THE NEXT TWO CASES. THEY'RE CRIMINAL CASES WITH NO TIME 9 WAIVERS. 10 I WANT TO THANK YOU FOR PUTTING ON THE CASE AND 11 FOR GIVING IT THE ATTENTION THAT YOU HAVE GIVEN IT. 12 MAKE SURE WE HAVE YOUR ADDRESS AND MAKE SURE WE 13 HAVE THE CORRECT ADDRESS OF MR. LANE. SEND HIM A COPY TOO. 14 THANK YOU VERY MUCH. 15 MR. WAIER: THANK YOU FOR YOUR INDULGENCE AND PATIENCE, 16 YOUR HONOR. 17 MR. BEUGELMANS: THANK YOU. 18 19 (PROCEEDINGS CONCLUDED.) 20 21 22 23 24 25 26 27 28