Including information about his associates
page 1
1 IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
2 IN AND FOR THE COUNTY OF SAN DIEGO
3 DEPARTMENT D HON. RUNSTON G. MAINO
4
_____________________________
5 )
LEGION FOR THE SURVIVAL OF )
6 FREEDOM, INC. A TEXAS )
CORPORATION, )
7 )
PLAINTIFF, ) NO. N64584
8 )
VS. )
9 )
WILLIS CARTO, ET AL., )
10 )
DEFENDANTS. )
11 _____________________________)
12
REPORTER’s TRANSCRIPT
13
14 MAY 19, 1998
15 APPEARANCES:
16 FOR THE PLAINTIFF: SAMPSON and ASSOCIATES
BY: BRYAN D. SAMPSON AND
17 ELIZABETH E. ARONSON
2139 FIRST AVENUE
18 SAN DIEGO, CA 92101
19
20 FOR THE DEFENDANTS: J. BRIAN URTNOWSKI and ASSOCIATES
WILLIS CARTO, ELISABETH BY: J. BRIAN URTNOWSKI
21 CARTO, LAVONNE FURR, 4695 MACARTHUR COURT
LEWIS FURR, AND HENRY NEWPORT BEACH, CA 92660
22 FISCHER
23
24 JOE ALFRED IZEN, JR.
5222 SPRUCE STREET
25 BELLAIRE, TX 77401
26
BARBARA J. SCHULTZ
27 CSR NO. 8021
OFFICIAL REPORTER
28 VISTA, CALIFORNIA
page 2 1 VISTA, CALIFORNIA, MAY 19, 1998, DEPARTMENT D: 2 3 THE COURT: BACK ON THE RECORD ON THE CASE OF THE 4 LEGION FOR THE SURVIVAL OF FREEDOM VERSUS MR. WILLIS CARTO, 5 ET AL. 6 I SEE EVERYBODY IS HERE. THERE ARE A NUMBER OF 7 ISSUES TO BE DECIDED THIS MORNING. I DO HAVE ALL MORNING TO 8 DO THIS. I DON'T HAVE THE AFTERNOON, THOUGH. ABSENT SOME 9 OTHER WAY OF DOING IT, HERE IS THE WAY I WOULD LIKE TO 10 ADDRESS THE THINGS. 11 FIRST, AN ORDER TO VACATE THE APPOINTMENT OF 12 RECEIVER. SECOND, REQUIRE A BOND IN EXCESS OF THAT WHICH 13 HAS BEEN POSTED. THIRD, PROTECTIVE ORDER FOR THE PERSONAL 14 PROPERTY OF THE DEBTORS OUTSIDE OF CALIFORNIA, AND MORE 15 SPECIFICALLY, I SUPPOSE, THE MAIL. THEN A MOTION TO SELL 16 THE ESCONDIDO PROPERTY, FIGURING OUT WHETHER OR NOT THIS IS 17 THE RESIDENCE OF THE CARTOS. WHAT IS THE STATUS OF THE 18 HEREFORD CORPORATION AND APPOINTMENT OF MR. GREG FRECH, 19 F-R-E-C-H. A MOTION TO ADD THE HEREFORD CORPORATION, 20 INDEPENDENCE HOUSE, AND J.W. YOUNG AS ALTER EGOS OF 21 MR. CARTO. MOTION TO STRIKE PORTIONS OF THE PLAINTIFF'S 22 AFFIDAVIT. AND FINALLY, THIS ISSUE OF CONTEMPT, AND WHAT I 23 AM GOING TO DO ABOUT THAT. ABSENT SOMEONE TELLING ME THAT 24 THERE SHOULD BE SOME OTHER ORDER, I THINK THAT’s AN ORDER TO 25 START WITH, MR. SAMPSON. 26 MR. SAMPSON: I HAD A COUPLE OF THINGS TO MAKE SURE THE 27 DEBTOR’s EXAMS WERE CONTINUED OF WILLIS AND ELISABETH 28 CARTO. THAT CAN BE DONE IN THE HALL. YOU COVERED THE
page 3 1 CONTEMPT HEARINGS. THERE WAS A MOTION FOR AN ASSIGNMENT 2 ORDER THAT WAS CONTINUED TO TODAY. I DID NOT GET AN 3 OPPOSITION TO THAT. THE ASSIGNMENT ORDER, FOR THE RECORD, 4 WAS AGAINST VIBET AND LIBERTY LOBBY, SO THE LIBERTY LOBBY 5 PART IS OUT. THERE WAS A MOTION TO COMPEL FOR FURTHER 6 DISCOVERY RESPONSES, AND THAT WAS PART OF THE FIFTH 7 AMENDMENT ISSUE THAT WAS BEFORE THE COURT, AND THAT MIGHT BE 8 WRAPPED UP IN ONE OF THE THINGS THE COURT ADDRESSED. 9 AND THEN THERE’s ONE MINOR ISSUE, IF THE COURT 10 WOULD LIKE TO HEAR THIS. MR. LENNON IS HERE WITH AN INTERIM 11 REPORT, VERY BRIEF. WE CAN GET THAT OUT OF THE WAY FIRST. 12 I HAVE GIVEN A COPY TO OPPOSING COUNSEL. THIS IS 13 TO LET EVERYONE KNOW WHAT HE HAS DONE TO DATE. 14 THE COURT: I RECEIVED THAT THIS MORNING. IT’s DATED 15 MAY 14TH, SIGNED BY MR. LENNON, WHO IS PRESENT. MR. LENNON 16 IS ALWAYS WELCOME TO STAY. I SUPPOSE HAVING RECEIVED THIS 17 REPORT, WE CAN MOVE ON. HE’s -- 18 MR. SAMPSON: IF THE COURT HAS QUESTIONS, OR THE 19 DEFENDANTS' COUNSEL HAVE QUESTIONS, THEY CAN INQUIRE. 20 THE COURT: I DON'T THINK I HAVE ANY QUESTIONS RIGHT 21 NOW. 22 DO THE — BEFORE WE GET STARTED, FIND OUT WHO WE 23 ARE REPRESENTING. WE GO THROUGH THIS ALL THE TIME. 24 SOMETIMES I DON'T KNOW WHO YOU ARE REPRESENTING; WHO YOU 25 AREN'T. 26 MR. URTNOWSKI: GOOD MORNING. 27 THE COURT: WHO ARE YOU REPRESENTING TODAY? 28 MR. URTNOWSKI: BRIAN URTNOWSKI. TODAY I'M
page 4 1 REPRESENTING WILLIS CARTO, ELISABETH CARTO, LAVONNE FURR, 2 LEWIS FURR, AND HENRY FISCHER. LIBERTY LOBBY, AS THE COURT 3 WAS MADE AWARE ON FRIDAY, FILED FOR A BANKRUPTCY PROTECTION 4 IN THE DISTRICT COURT, WASHINGTON, D.C. 5 ACCOMPANYING ME TODAY IS ATTORNEY JOE IZEN. 6 MR. IZEN: I'M HERE TO ASSIST IN THE MATTERS. 7 MR. URTNOWSKI: ALSO PRESENT ARE ELISABETH CARTO AND 8 WILLIS CARTO. 9 THE COURT: YES, I RECOGNIZE THEM. THANK YOU. 10 COUNSEL, DO YOU HAVE ANY COMMENTS OR QUESTIONS YOU 11 WANT TO ASK THE RECEIVER? 12 MR. URTNOWSKI: NOT OF THE RECEIVER, YOUR HONOR, BUT I 13 THINK TO START, AS I STUMBLE OVER THE WORD, THIS COURT HAS 14 SAID -- 15 THE COURT: DO YOU WANT COFFEE? 16 MR. URTNOWSKI: WATER. THE COURT PREVIOUSLY SAID IT 17 FOUND LIBERTY LOBBY AND WILLIS CARTO TO BE ONE AND THE 18 SAME. IF THE COURT HAS TAKEN THAT POSITION, THEN I BELIEVE 19 AT LEAST FOR THESE PROCEEDINGS ANY BANKRUPTCY FILING BY 20 LIBERTY LOBBY BEFORE THIS COURT SHOULD BE ASSUMED TO BE THE 21 BANKRUPTCY FILING OF WILLIS CARTO. OTHERWISE, I DON'T KNOW 22 HOW WE GET PAST THIS COURT’s PREVIOUS FINDINGS, YOUR HONOR. 23 THE COURT: INTERESTING ARGUMENT. I'M NOT BUYING 24 THAT. THAT’s AN AMAZING ARGUMENT. ALL RIGHT. I DON'T HAVE 25 TO TELL YOU WHY. NO COURT WILL BUY THAT ONE. 26 ALL RIGHT. LET’s TALK ABOUT THE ORDER TO VACATE 27 THE APPOINTMENT OF RECEIVER. I READ THE POINTS AND 28 AUTHORITIES ON BOTH SIDES ON THIS. I'M PREPARED TO DENY
page 5 1 THAT. 2 ANY COMMENTS FROM DEBTORS' COUNSEL? 3 MR. URTNOWSKI: BRIEFLY. THIS IS A VOID ORDER. 4 COMPLIANCE WAS NOT FOLLOWED WITH THE APPLICATION REQUIRED -- 5 THE APPLICATION BONDS REQUIRED PRIOR TO PROCEEDING EX PARTE 6 HERE. 7 THE CASES ARE ALL CLEAR. IT’s NOT A CLOSE CALL. 8 IT’s VOID, AND ANY ORDER DIRECTING THE RECEIVER IS VOID AS 9 WELL, YOUR HONOR. 10 THE COURT: YEAH. THAT’s THE SECOND ISSUE. MIGHT AS 11 WELL DISCUSS THAT ALONG WITH THE FIRST, AND THAT IS THE BOND 12 UNDER C.C.P. 566. 13 WHAT ABOUT THAT, MR. SAMPSON? 14 MR. SAMPSON: WE ADDRESSED THAT AT THE FIRST HEARING. 15 IT’s OUR POSITION THAT THE CASES AND THE AUTHORITY CITED BY 16 OPPOSING COUNSEL APPLY ONLY TO PREJUDGMENT. HOWEVER, I 17 THINK EVERYONE WOULD BE WASTING AN ENORMOUS AMOUNT OF TIME 18 ON APPEAL ON THIS ISSUE. 19 WE DON'T HAVE A PROBLEM STIPULATING TO SOME MINOR 20 BOND, SO THAT WE CAN AMEND ANY POTENTIAL ERROR, BUT AGAIN, 21 WE HAVE A JUDGMENT. AND THE DAMAGES TO THE DEFENDANT, 22 THERE’s ABSOLUTELY NO EVIDENCE HAS BEEN SHOWN TO DATE SO 23 PREJUDGMENT. IF YOU HAVE A CLEAR CONCERN THAT THERE MAY NOT 24 BE LIABILITY POSTJUDGMENT, THERE’s ALREADY LIABILITY, AND 25 THE SOLE PURPOSE AGAIN IS TO ENFORCE THE JUDGMENT, SO I 26 DON'T REALLY SEE ANY DAMAGES ISSUE WHERE THE OPPOSING PARTY, 27 AS OPPOSED TO THE RECEIVER, SHOULD POST A BOND. 28 THE COURT: WASN'T A BOND POSTED ANYWAY OF 2500? YES.
page 6 1 MR. LENNON SAID, YES, IT WAS. 2 MR. SAMPSON: THERE’s TWO BOND ISSUES. THERE’s A BOND 3 BY THE RECEIVER AND A BOND BY THE APPLICANT, WHICH WOULD BE 4 THE OPPOSING PARTY. AND AGAIN, BECAUSE OF THE JUDGMENT 5 ISSUE, WE BELIEVE THAT’s NOT REQUIRED. AGAIN, IF THE COURT 6 WANTS A BOND SO WE CAN FIX AN ISSUE, LET’s DO IT SO WE DON'T 7 HAVE TO APPEAL IT; AND IF SO, THE OTHER SIDE HAS TO SHOW 8 DAMAGES, I BELIEVE. I WOULD RECOMMEND TO THE COURT AGAIN A 9 $2,500 BOND, BUT AGAIN, I DON'T SEE WHY. 10 THE COURT: I DON'T EITHER. 11 MR. URTNOWSKI: YOUR HONOR, THE CASES ARE CLEAR. IT'S 12 MANDATORY. IT SAYS THE ORDER IS VOID. IT ALSO SAYS IT 13 CANNOT BE REMEDIED BY HAVING A BOND POSTED AFTER THE 14 APPOINTMENT. IT’s TOO LATE NOW FOR THIS COURT TO ALLOW HIM 15 TO POST A BOND TO CORRECT THE DEFICIENCY. THIS APPLIES TO 16 THE RECEIVER THAT WAS APPOINTED. THE RECEIVER IS VOID. ALL 17 ORDERS FOLLOWING IT IS VOID REGARDING THE RECEIVER, AND YOU 18 CAN NOT CORRECT IT BY POSTING AN APPLICANT’s BOND 19 AFTERWARDS, YOUR HONOR. 20 THE COURT: HAVEN'T WE BEEN THROUGH THIS BEFORE? ISN'T 21 THIS A RECEIVER THAT’s APPOINTED BEFORE LIABILITY IS 22 DETERMINED HERE? LIABILITY HAS BEEN DETERMINED. 23 MR. URTNOWSKI: THAT WAS ARGUMENT, YOUR HONOR, WITHOUT 24 LAW, WITHOUT SUPPORT OF THE LAW. THE CASES ARE VERY 25 PRECISE. THEY SAY WHEN THE RECEIVER IS APPOINTED, THE 26 APPLICATION HAS TO BE. THERE’s NO LAW ON POINT. THEY CITED 27 NONE. IT’s PURE ARGUMENT. THE ONLY LAW BEFORE THE COURT IS 28 THAT THE APPOINTMENT OF THE THOMAS LENNON, INC. IS A VOID
page 7 1 APPOINTMENT, AND ALL OTHER ORDERS FOLLOWING ENFORCEMENT ARE 2 VOID AS WELL, YOUR HONOR. AND THERE’s NO DISTINCTION 3 BETWEEN PREJUDGMENT AND POSTJUDGMENT IN THESE STATUTES. 4 THE COURT: DO YOU AGREE WITH THAT, MR. SAMPSON? 5 MR. SAMPSON: YOUR HONOR, I DISAGREE WITH THAT. I 6 GUESS THERE’s ONE OTHER ISSUE I CAN RAISE. IT’s ONE OF 7 THOSE — I HOPE IT’s NOT TOO MUCH OF A MIRACULOUS ARGUMENT. 8 MR. URTNOWSKI DID FILE AN APPEAL, AND I BELIEVE THAT MAY 9 VACATE HIS STANDING TO ARGUE THAT ISSUE. 10 I LOOKED AT THE CASES. THEY'RE ALL PREJUDGMENT, 11 ONLY C.C.P. 708.560 DOES INCORPORATE SOME BUT NOT ALL. PART 12 HAS TO BE SUPERCEDED, OR YOU WOULDN'T HAVE A POSTJUDGMENT 13 ISSUE. 14 THERE’s A CODE THAT SAYS THE PREJUDGMENT STATUTE 15 APPLIES FOR CERTAIN PROCEDURES, BUT THE PROCEDURES AGAIN ARE 16 VERY POSTJUDGMENT. AND AGAIN, THE WHOLE PURPOSE IS 17 DIFFERENT POSTJUDGMENT. 18 MR. URTNOWSKI: WITH RESPECT TO THE APPEAL, YOUR HONOR, 19 TWO ISSUES. A VOID ORDER IS ALWAYS VOID. AN APPEAL DOES 20 NOT STAY A VOID ORDER. BY DEFINITION, YOU HAVE NO AUTHORITY 21 TO ISSUE THAT ORDER. SECOND, SPECIFICALLY WITH THE 22 RECEIVER, THE CODE STATES THAT, FOR INSTANCE, IF MR. LENNON 23 COMPLETED THE DUTIES, OR YOU REVOKED HIS APPOINTMENT, MY 24 APPEAL WOULD BECOME MOOT. HE ADDRESSED THAT IN THE 25 STATUTE. IF TODAY YOU FIND THAT YOUR ORDER IS VOID, MY 26 APPEAL IS DISSOLVED, YOUR HONOR. 27 THE COURT: SINCE LIABILITY HAS BEEN DETERMINED HERE, 28 WHAT IS THE PURPOSE OF THE RECEIVER POSTING A BOND OR THE
page 8 1 PARTIES POSTING A BOND? WE KNOW WHAT THE PURPOSE IS BEFORE 2 LIABILITY HAS BEEN ESTABLISHED. THAT’s TO PROTECT YOUR 3 CLIENT, IF THERE SHOULD BE NO LIABILITY. BUT WHAT IS THE 4 PURPOSE IF ONE -- 5 MR. URTNOWSKI: THAT’s ONE PRONG OF THE PROTECTION DUE 6 MY CLIENT. THE OTHER IS THE FACT THAT EVEN IN A 7 POSTJUDGMENT COLLECTION ACTIVITY THE RECEIVER OR THE 8 APPLICANT CAN TAKE IMPROPER ACTIONS. IT’s DESIGNED TO 9 PREVENT ANY IMPROPER ACTION, AND THAT’s WHAT THE STATUTE 10 SAYS. IT COULD BE HARASSMENT. IT COULD BE AN IMPROPER STEP 11 DESIGNED TO GIVE PROTECTION TO THE PARTY WHO HAS TO FACE THE 12 RECEIVER. POSTJUDGMENT OR PREJUDGMENT, THERE’s NO 13 DISTINCTION IN THE STATUTE. 14 THE COURT: ANYTHING ELSE, MR. SAMPSON? 15 MR. SAMPSON: REALLY NOTHING FURTHER. I BELIEVE THE 16 RECEIVER’s BOND COVERS ANY OF THOSE ISSUES, AS FAR AS 17 POTENTIAL DAMAGES. 18 THE COURT: IS THAT THE C.C.P. OR CIVIL CODE? 19 MR. URTNOWSKI: C.C.P., YOUR HONOR, AND IT’s 566, I 20 BELIEVE. YES, 566, YOUR HONOR. 21 THE COURT: WELL, MR. LENNON HAS POSTED A 2500 BOND 22 AND, YOU KNOW, SO -- 23 MR. URTNOWSKI: THE CASES ARE CLEAR THAT’s — THAT IS 24 NOT THE APPLICANT’s BOND. THAT IS THE BOND POSTED BY THE 25 RECEIVER. 26 THE COURT: RIGHT. 27 MR. URTNOWSKI: THERE ARE TWO DIFFERENT ISSUES. THE 28 CASES ARE CLEAR. THEY'RE DISTINCT. THEY SAY THE RECEIVER'S
page 9 1 BOND IS NOT THE APPLICANT’s BOND. WITHOUT THE APPLICANT'S 2 BOND YOUR ORDER IS VOID, AND IT CANNOT NOT BE CORRECTED 3 AFTERWARDS BY ALLOWING THEM TO POST A BOND NOW. 4 THE COURT: BUT YOU DON'T HAVE A CASE ON THAT AND 5 NEITHER DOES MR. SAMPSON. 6 MR. URTNOWSKI: A CASE THAT SAYS THAT IT’s VOID? 7 THE COURT: NO. YOU DON'T HAVE A CASE THAT SAYS THAT 8 AFTER LIABILITY HAS BEEN DETERMINED THAT THE APPLICANT HAS 9 TO POST A BOND. MR. LENNON HAS POSTED BOND FOR 2500, WHICH 10 I THINK IS SUFFICIENT. YOU DON'T HAVE A CASE SHOWING THAT 11 THEY DO. IT WOULD BE STRANGE, WOULDN'T IT, THAT YOU CAN 12 THEN APPEAL, NOT POST A BOND, AND THEY TO ENFORCE THE 13 JUDGMENT HAVE TO POST A BOND TO FIND THE SUM. IT DOESN'T 14 MAKE SENSE. 15 MR. URTNOWSKI: IT’s NOT STRANGE BY US NOT POSTING AN 16 APPEAL BOND. YOUR ORDER STAYS IN EFFECT, AND THE RECEIVER 17 GETS TO CARRY THE DUTIES OUT. THAT’s THE RISK OF NOT 18 POSTING A BOND. 19 THE COURT: ABSENT A CASE ON POINT, AND I DON'T THINK 20 THERE IS, I WILL MAKE THE FINDING THAT THE APPLICANT DOES 21 NOT HAVE TO POST A BOND ONCE LIABILITY HAS BEEN DETERMINED. 22 AND MR. LENNON HAS ALREADY POSTED A BOND IN THE AMOUNT OF 23 2500, WHICH IS SUFFICIENT TO SOLVE THE PROBLEMS COUNSEL IS 24 UPSET ABOUT. 25 MR. URTNOWSKI: IS THE COURT STATING THAT THE APPLICANT 26 IS ALSO THE RECEIVER, OR THE APPLICANT’s BOND IS THE 27 RECEIVER’s BOND? 28 THE COURT: NO. I'M SAYING TWO DIFFERENT BONDS.
page 10 1 MR. LENNON POSTED HIS, AND THE APPLICANT DOES NOT HAVE TO 2 POST ONE. OKAY? MAKES A GOOD CLEAN ISSUE FOR THE COURTS 3 ABOVE ME. 4 SECOND OR THIRD THING, PROTECTIVE ORDER FOR THE 5 PERSONAL PROPERTY OUTSIDE OF CALIFORNIA. THIS GOES INTO 6 THIS MAIL ISSUE. 7 NOW AS FAR AS LIBERTY LOBBY IS CONCERNED, I DON'T 8 HAVE AUTHORITY TO DO ANYTHING ANYMORE. 9 MR. URTNOWSKI: WE UNDERSTAND. 10 THE COURT: BECAUSE THERE’s BEEN BANKRUPTCY FILED. 11 BASED ON THE AUTHORITY THAT I HAVE, WE — THIS COURT HAS THE 12 AUTHORITY TO ORDER PERSONAL PROPERTY ANYWHERE IN THE WORLD 13 AND TO BE SEIZED AND BROUGHT TO THIS STATE, IF NEED BE, AND 14 SOLD TO SATISFY THE JUDGMENT. MAIL CAN BE OPENED, AND 15 CHECKS CAN BE CASHED. 16 I WOULD ALWAYS MAKE AN EXCEPTION. I CERTAINLY 17 THINK IT WOULD BE APPROPRIATE TO MAKE A PROTECTIVE ORDER, AS 18 FAR AS LETTERS THAT ARE CLEARLY FROM AN ATTORNEY, THAT HAVE 19 AN ATTORNEY’s RETURN ON THERE. BUT OTHER THAN THAT, I CAN'T 20 SEE WHY YOUR CLIENTS ARE PROTECTED. 21 MR. IZEN: I ASK TO RESPOND TO THAT, YOUR HONOR. 22 THE COURT: SURE. 23 MR. IZEN: SINCE LAST TIME THIS ISSUE CAME UP WITH MAIL 24 I HAVE DONE SOME FURTHER RESEARCH. THE FIRST CASE THAT EVER 25 CONSIDERED MAIL SEIZURE IN CALIFORNIA WAS A VERY ANCIENT ONE 26 IN 1863. THAT WAS LATHROP, L-A-T-H-R-O-P, V. MIDDLETON. 27 IT’s SO OLD THE LIBRARIES IN TEXAS ONLY HAD THE ORIGINAL 28 CALIFORNIA REPORTER, WHICH WAS — APPEARS AT PAGE 257 OF THE
page 11 1 CALIFORNIA REPORTER FOR 1863. 2 WHAT THAT CASE SAID WAS THAT IN THE SEIZURE OF THE 3 MAIL, A BOAT, A FERRY ACROSS THE RIVER IN BUTTE COUNTY, 4 WOULD NOT INTERFERE WITH THE MAIL. THEY SEIZED THE BOAT. 5 THEY DIDN'T SEIZE THE MAIL. THEY TALKED ABOUT THE ISSUE OF 6 INTERRUPTIONS OF THE MAIL, AND THEY CITED A LOUISIANA CASE. 7 WHAT YOU DISCERN FROM THIS CASE IS THAT THEY HAD 8 CONCERN FOR THE SEIZURE OF THE MAIL; BUT IF THERE WAS ANY 9 PROPERTY THAT WAS A VESSEL FOR THE MAIL, THAT THE VESSEL 10 COULDN'T BE SEIZED, BECAUSE SOMEBODY COULD SHIP THE MAIL 11 SOME OTHER WAY. THERE WAS NO OPENING OF MAIL OUT OF THE 12 LATHROP CASE. 13 YOU MOVE ON THEN TO THE CONSIDERATION OF WHAT IS 14 MAIL AND WHAT IS ITS RIGHTS? WELL, MAIL IS NOT PROPERTY. 15 MAIL IS COMMUNICATION. MAIL IS CONSIDERED TO BE BY THE 16 FEDERAL COURTS THAT HAVE CONSIDERED THE ISSUE A — A 17 COMMUNICATION IN WHICH PRIVACY RIGHTS EXIST. 18 THE QUESTION IS, DO — DOES WILLIS CARTO OR 19 ELISABETH CARTO HAVE PRIVACY RIGHTS IN THE MAIL? AND DOES 20 THE CORPORATION, SUCH AS WHETHER IT’s PROFIT OR NONPROFIT, 21 CAN BE ARGUED? LIBERTY LOBBY OR SOME OF THE OTHER 22 CORPORATIONS THAT HAVE BEEN MENTIONED, DO THEY HAVE A RIGHT 23 TO PRIVACY? 24 NOW THERE’s ONLY ONE CASE IN CALIFORNIA ON THE 25 RIGHT OF PRIVACY OF CORPORATE BUSINESS ENTITIES. I'M 26 ARGUING THIS MORE IN THE NATURE OF THE CORPORATE THAN I AM 27 THE INDIVIDUAL NOW. THE DISTINCTION IS MADE THAT AN 28 INDIVIDUAL HAS RIGHTS OF PRIVACY, AND THE GENERAL RULE IS
page 12 1 THAT CORPORATE ENTITIES OR OTHERS DO NOT HAVE RIGHTS TO 2 PRIVACY, BUT H and M ASSOCIATES V. THE CITY OF EL CENTRO, 167 3 CAL. RPTR. 392 — THAT’s A DECISION FROM THE FOURTH 4 DISTRICT, DIVISION ONE. I DON'T KNOW ENOUGH — IT'S 5 IMPERIAL COUNTY. I GUESS IT’s THE COURT THAT SITS OVER US 6 HERE. THEY HELD THAT A PARTNERSHIP HAS PRIVACY RIGHTS IN 7 THE STATE OF CALIFORNIA. 8 NOW WHERE DOES THAT LEAVE US? WELL, THE ANSWER IS 9 THAT THE PRIVACY RIGHTS, THE SEIZURE OF THE MAIL, THE 10 PRIVACY RIGHTS HAVE TO BE PROTECTED. AND AS FAR AS AN 11 INDIVIDUAL IS CONCERNED, THE PRIVACY RIGHTS EXIST. THE 12 SEIZURE OF MAIL WITHOUT PROTECTION OF THE PRIVACY RIGHTS IS 13 A VIOLATION OF DUE PROCESS. 14 WE GO FROM THAT CASE TO THE SOCIALIST WORKERS 15 PARTY V. THE ATTORNEY GENERAL OF THE UNITED STATES, 16 666 F. SUPP. 621, AND THE SOUTHERN DISTRICT OF NEW YORK, A 17 CASE WHERE THE SOCIALIST WORKERS PARTY WAS UNHAPPY FBI 18 STEAMED OPEN THE MAIL AND READ IT AND SENT IT ALONG ITS WAY. 19 THE COURT: THE FBI DIDN'T HAVE A JUDGMENT, A RECEIVER. 20 MR. IZEN: NO. I WILL GET TO THAT. THEY HAD NATIONAL 21 SECURITY. 22 WHAT THEY WERE TALKING ABOUT, THEY WERE HELD 23 LIABLE. THAT ESTABLISHES THAT THERE’s PRIVACY RIGHTS ON 24 WHICH YOU CAN SUE FOR THE VIOLATION. 25 NOW THE ISSUE OF THE QUESTION OF BANKRUPTCY, COULD 26 THIS RECEIVER HERE DO MORE THAN A TRUSTEE IN BANKRUPTCY 27 COULD DO? THERE’s A CASE, WHICH I WILL HAVE THE CITE FOR 28 YOU BEFORE THE END OF THE DAY — IT’s IN THE BRIEFCASE. I
page 13 1 COULDN'T FIND — IN RE BERRY, B-E-R-R-Y, NORTHERN DISTRICT 2 OF CALIFORNIA. IT WAS HELD IN THAT CHAPTER 7 CASE A U.S. 3 BANKRUPTCY TRUSTEE COULD NOT SEIZE THE DEBTOR’s MAIL AND 4 OPEN IT WITHOUT PROTECTION OF THE DEBTOR’s RIGHTS TO 5 PRIVACY. THAT’s A VIOLATION OF DUE PROCESS. 6 NOW AGAIN, IT’s AN ASSERTION OF THE ARGUMENT THE 7 RECEIVER HAD A PROBLEM WITH LAST TIME. THERE ARE RIGHTS 8 THAT ARE PERSONAL IN NATURE NOT SUBJECT TO SEIZURE TO YOUR 9 ASSERTIONS FROM THE PERSON. WHAT YOU SAID, DID THEY HAVE A 10 JUDGMENT? THE ANSWER IS, NO, BUT THAT’s COUNTERED BY THE 11 FACT THAT THERE’s CERTAIN TYPES OF RIGHTS IN SOCIETY THAT 12 ARE NOT MERE PROPERTY RIGHTS. THESE PRIVACY RIGHTS, WHICH 13 THE CONSTITUTION OF THE STATE OF CALIFORNIA RECOGNIZES, AS 14 DOES THE U.S. CONSTITUTION UNDER THE FIRST AMENDMENT HAVE TO 15 BE PROTECTED. THEY'RE NOT SUBJECT TO SEIZURE. 16 NOW WHERE DOES THAT LEAVE US? I CONCEDE TO YOU ON 17 THE RECORD THAT IF YOU SIT IN THE JURISDICTION WHERE A 18 CORPORATION, A FOR PROFIT BUSINESS DOES NOT HAVE PRIVACY 19 RIGHTS AT ALL, THEN NO CONCERN NEED TO BE MADE TO BE GIVEN 20 TO THE VIOLATION OF THE RIGHT OF PRIVACY. WE'RE NOT IN SUCH 21 A JURISDICTION. CALIFORNIA, WITH THAT CASE I GAVE YOU, 22 FOLLOWS THE MINORITY RULE, H and M ASSOCIATES V. THE CITY OF 23 EL CENTRO, THAT THE ENTITIES DO HAVE PRIVACY RIGHTS. 24 CERTAINLY FOR WILLIS CARTO AND ELISABETH CARTO, WHO ARE 25 INDIVIDUALS, THE SEIZURE OF THEIR MAIL IS A VIOLATION OF 26 PERSONAL RIGHTS; AND WHEN YOU APPOINTED THE RECEIVER, HE DID 27 NOT ACCEDE TO THE PERSONAL RIGHTS OF THESE DEBTORS. 28 PERIOD. THAT’s TO THE MAIL. THAT’s A SITUATION WHERE THE
page 14 1 RECEIVER’s OFFICE IS LIMITED IN THAT REGARD, AND THAT'S 2 BASICALLY WHERE WE STAND. 3 WHAT SHOULD BE DONE ABOUT THE PROTECTION OF THE 4 MAIL? WELL, IF THERE’s GOING TO BE SOME SORT OF 5 INTERCEPTION OF MAIL FOR EVEN A BUSINESS ENTITY — AND I 6 DON'T KNOW THAT WE HAVE ONE HERE SINCE LIBERTY LOBBY HAS 7 FILED A NOTICE OF BANKRUPTCY AND WE HAVE A STAY IN EFFECT ON 8 THEM, SO REALLY I'M NOT GOING FORWARD IN ATTEMPTING TO 9 ASSIST IN THAT REGARD ON LIBERTY LOBBY — THE COURT REQUIRE 10 SOME SORT OF SCREENING IN SUCH A WAY THAT THE PERSONAL 11 INFORMATION IS NOT MADE PUBLIC; THE PERSONAL INFORMATION IS 12 PROTECTED, AND THE BUSINESS INFORMATION WOULD THEN BE GIVEN 13 OVER TO THE PROPER CREDITOR. 14 CERTAINLY THIS IS NOT — THIS IS — THE RECEIVER 15 IS NOT UNBIASED. THIS RECEIVER IS IN A COMPENSATION-TYPE 16 SITUATION. THE COURT IS NOT PAYING HIM. SO WHERE IS HE 17 GETTING PAID? THE ANSWER IS HE IS GETTING PAID OUT OF THE 18 MONEY HE RECEIVES. THAT HE NOT AN UNBIASED PARTY THAT WOULD 19 BE REQUIRED UNDER THE LAW TO DO ANY SCREENING TO PROTECT THE 20 DEBTOR’s PRIVACY RIGHTS. 21 SO BASICALLY YOU HAVE A FEDERAL ISSUE, AS WELL AS 22 THE CALIFORNIA STATE ISSUE, ON WHAT SHOULD BE DONE TO 23 PROTECT THE PRIVACY RIGHTS. THEY'RE TAKING EXTREME MEASURES 24 TO TRY TO COLLECT THE JUDGMENT. WHEN YOU ARE GOING TO 25 BANKRUPTCY AND YOU FILE A VOLUNTARY PETITION, YOU COULD MAKE 26 THE ARGUMENT THESE PEOPLE WAIVED THEIR RIGHTS. THEY WAIVED 27 THEIR RIGHTS. THEY PUT A TRUSTEE OVER. WELL, THE ANSWER TO 28 THAT IS THE TRUSTEE DOES NOT ACCEDE TO PURELY PERSONAL
page 15 1 RIGHTS OF THE DEBTOR IN CERTAIN REGARDS, RIGHTS TO HIS 2 FAMILY, THE RIGHT TO PRIVACY AND THE MAIL AND THE OTHER 3 THINGS THAT I ARGUED BEFORE. SO THE BANKRUPTCY TRUSTEE 4 APPOINTMENT IS LIMITED JUST AS THE RECEIVERS IS HERE. BUT 5 IN ANY EVENT, WE DON'T HAVE A SITUATION WHERE HE WAS 6 VOLUNTARILY APPOINTED. HE IS AN ADVERSE PARTY. HE’s — AND 7 THE INDIVIDUALS DID NOT REQUEST HIM. THEY HAVE EXCEEDED THE 8 BOUNDS AND LIMITS THROUGH YOUR ORDER AND THROUGH THE 9 INTERPRETATION AND OPERATION OF THE ORDER AT LEAST OF WHAT A 10 RECEIVER CAN DO. THAT’s BEYOND HIS POWERS TO TRY TO EXCEED 11 AND EXERCISE A POWER OVER THE PERSONAL RIGHTS AND MATTERS. 12 I STAND BY WHAT I TOLD YOU PREVIOUSLY. THAT THE 13 IRS EVEN IS NOT ALLOWED TO OPEN MAIL. THE ONLY THEORY THAT 14 WOULD ALLOW MAIL TO BE OPENED IS THAT THE MAIL OF A BUSINESS 15 OR MAIL OF AN INDIVIDUAL — AND AN INDIVIDUAL IS LIKE AN IN 16 CONFIDANT AND THIS APPOINTMENT TOOK OVER FOR ALL PURPOSES 17 THAT INDIVIDUAL’s PERSONAL RIGHTS, AS WELL AS HIS PROPERTY 18 RIGHTS. AND I THINK YOU HAVE SOME EXPERIENCE IN HAVING 19 GUARDIANS APPOINTED, AND THE ANSWER THERE IS THAT’s THE 20 FURTHEST CONTROL YOU CAN EXERCISE OVER SOMEONE, BECAUSE 21 LEGAL FINDING IS THEY'RE INCAPABLE OF EXERCISING THEIR OWN 22 PERSONAL RIGHTS. I DON'T SEE THAT THE RECEIVER HAS THE 23 POWERS THAT A GUARDIAN WOULD HAVE; AND ADMITTEDLY, WE ARE IN 24 AN AREA THERE’s NOT A LOT OF — LOT OF TREATISES AND LAW ON 25 IT, BUT — AND THOSE CASES THAT I HAVE CITED THEY STAND FOR 26 THE PROPOSITION WHAT IS GOING ON HERE TODAY IS WRONG, AND 27 IT’s IN SUPPORT OF IT. 28 THE COURT: MR. SAMPSON’s POINTS AND AUTHORITIES CITED
page 16 1 A CASE AND CITED CALIFORNIA CIVIL CODE SECTION. AS I SEE 2 IT, THE REAL PROBLEM WITH THE ARGUMENT THAT YOU ARE MAKING 3 IS THAT BECAUSE OF THE WAY THE COLLECTION HAS GONE IN THIS 4 CASE THE RECEIVER WILL BE APPOINTED. IT’s REALLY THE LAST 5 THING THAT YOU WANT TO DO. 6 I DON'T SEE THAT A CHECK IS COMMUNICATION LIKE A 7 PRIVATE COMMUNICATION. A CHECK IS SIMPLY MONEY. IF MONEY 8 WAS IN A LETTER, YOU ARE SAYING THAT THE MONEY COULDN'T BE 9 SEIZED? IF THE RECEIVER CAN SEIZE THE MAIL, AND THERE’s A 10 $100 BILL TO MR. CARTO, YOU ARE TELLING ME THAT THE RECEIVER 11 CAN'T TAKE THAT BECAUSE THAT’s SOME SORT OF A COMMUNICATION. 12 MR. IZEN: I WOULD BE WILLING TO ADDRESS THAT, IF I 13 MIGHT, THAT QUESTION. THE ANSWER IS THE — IT’s NOT THE 14 QUESTION OF CAN THE RECEIVER ATTACH A CHECK? THE PROBABLE 15 COURT PROCESS ALLOWS THE RECEIVER TO ATTACH A CHECK, IF HE 16 CAN GET IT LAWFULLY. THE QUESTION IS WHETHER THE RECEIVER 17 CAN OPEN THE MAIL. I'M SAYING THAT THE RECEIVER CAN'T OPEN 18 THE MAIL. THERE HAS TO BE SOME OTHER TYPE OF SCREENING 19 ATTENDANT TO THE COURT ORDER TO PROTECT PRIVACY RIGHTS OTHER 20 THAN LETTING A BIASED RECEIVER RUMMAGE THROUGH EVERYBODY'S 21 MAIL, DECIDES WHAT THEY WANT AND DOESN'T WANT AND DECIDES 22 WHAT IS PERSONAL COMMUNICATION, DECIDES WHAT ISN'T, AND THEN 23 YOU TAKE THE RISK. THAT’s MY POSITION. CLEARLY CHECKS ARE 24 NOT A PRIVACY COMMUNICATION. 25 THE PROBLEM IS THAT THEY COME IN AN ENVELOPE AND 26 WHICH EVERY COURT IN THE LAND HAS RECOGNIZED THAT 27 EXPECTATION TO THE RIGHT OF PRIVACY. AND THE POINT IS 28 SOMEBODY ELSE OTHER THAN THE RECEIVER SHOULD BE MAKING THE
page 17 1 DECISIONS, OTHERWISE THE DEBTOR’s RIGHT OF PRIVACY, SUCH AS 2 THEY ARE, WHETHER IT’s ENTITY’s PRIVACY OR INDIVIDUAL 3 PRIVACY, ARE REDUCED TO NOTHING. THAT’s THE POINT. 4 THE COURT: YES, MR. SAMPSON. 5 MR. SAMPSON: I WILL KEEP IT BRIEF, YOUR HONOR. FIRST, 6 THE MATTER OF PROTOCOL. WE WILL STIPULATE THAT MR. IZEN CAN 7 BE ADMITTED PRO HAC VICE TO ARGUE, AS LONG AS HE'S 8 QUALIFIED. WE DIDN'T DO THAT YET. 9 THE COURT: WE DIDN'T. 10 MR. SAMPSON: BY THE BOOK. SECOND, AS FAR AS THE MAIL 11 SEIZURE, MR. IZEN WASN'T PRESENT IN WASHINGTON, D.C. WHERE 12 WE EXHAUSTEDLY ARGUED THIS LAST MONDAY. THE CASE THAT HE 13 CITED, IN RE BERRY, IS ACTUALLY IN RE BENNY, B-E-N-N-Y. IT 14 IS A NORTHERN DISTRICT FEDERAL CASE. WE HAVE CITED IN RE 15 CRABTREE, WHICH IS 37 BANKRUPTCY 426, A TENANCY CASE THAT 16 CITES BENNY. 17 IF YOU LOOK AT THE CRABTREE CASE, WHICH WE 18 ENCLOSED WITH THE EXHIBIT, IT CITES BENNY. UNDER THE BENNY 19 CASE — IT’s A GOOD INTERESTING CASE FOR THE COURT TO 20 REVIEW. WHAT HAPPENED THERE IS FOR YEARS BANKRUPTCY 21 TRUSTEES HAD SEIZED MAIL OF THE DEFENDANTS BECAUSE THE 22 TRUSTEES HANDBOOK TOLD THEM TO DO IT. FINALLY SOMEBODY 23 WISED UP AND SAID, HEY, YOU HAVE TO APPEAL THIS AND FIGURE 24 OUT IF IT’s RIGHT. 25 ON APPEAL THE APPELLATE COURT SAID THAT THE 26 TRUSTEE CAN TAKE MAIL OF THE DEBTOR, BUT THERE HAS TO BE A 27 PROTECTION PROCESS WHERE THERE’s A HEARING. AND AT THE 28 HEARING THEY THEN ISSUE AN ORDER ALLOWING IT. WE HAD THE
page 18 1 HEARING. WE HAD THE ORDER SPECIFICALLY ALLOWING IT. 2 THE NEXT THING IN THE BENNY CASE THAT IS VERY 3 EDUCATIONAL FOR THE PARTIES TODAY IS THAT THE BENNY CASE 4 INVOLVES SEIZURE OF MAIL OF AN INDIVIDUAL OUT OF NEVADA 5 BRINGING IT BACK INTO CALIFORNIA. AGAIN, THAT’s AN OUT OF 6 STATE SEIZURE AND BRINGING IT BACK. 7 THE LAST ITEM THE COURT SHOULD LOOK AT IS THE 8 PROCESS THAT — THAT WAS USED BY THE COURTS IN BOTH THE 9 BENNY AND CRABTREE CASE TO PROTECT EXACTLY WHAT MR. IZEN IS 10 TALKING ABOUT. THE WAY THE COURT DECIDED THAT IT WOULD BE 11 FAIR WOULD BE TO HAVE THE MAIL COME INTO THE RECEIVER, AND 12 THE RECEIVER TO LOG IN ALL OF THE MAIL. AND THIS COURT HAS 13 ALREADY ISSUED AN ORDER REGARDING THE LOG AND PHOTOCOPY, TO 14 TAKE OUT THE MONEY AND RETURN THE OTHER MAIL DIRECTLY TO THE 15 DEBTORS. 16 AND IF THERE’s ANY QUESTIONS — AND THE COURT HAS 17 JURISDICTION TO RESOLVE THOSE. WE HAVE ALL OF THOSE EXCEPT 18 RETURNING THE MAIL SUBJECT TO AN ORDER TODAY, BECAUSE THE 19 COURT WANTED TO HEAR THE OTHER SIDE AND GET THE FULL 20 ARGUMENT ON THE ISSUE AGAIN. I BELIEVE THAT’s THE MOST FAIR 21 PROCEDURE TO PROTECT RIGHTS. 22 THE LOG IS MAINTAINED AS A PRIVACY RIGHT OF THE 23 RECEIVER, AND THE COURT, OF COURSE, THE DEFENDANTS NEED TO 24 SEE WHAT WAS TAKEN AND NOT — I DON'T SEE A PROBLEM WITH 25 THAT. AND I HAVE GOT NO PROBLEM WITH THE JUDGMENT CREDITORS 26 NOT SEEING THE LOG ABSENT A COURT ORDER, AND WE HAVEN'T SEEN 27 ANY LOGS TO DATE. EVERYTHING HAS GONE THROUGH MY OFFICE 28 THAT WOULD HAVE COME FROM MR. LENNON. SO I BELIEVE THAT'S
page 19 1 THE CORRECT PROCESS. AND IF YOU WANT A LITTLE MORE 2 AUTHORITY, THE COURT MENTIONED THIS EARLIER, C.C.P. SECTION 3 700.070 AUTHORIZES THE EXACT SAME PROCESS WITH THE KEEPER 4 WHERE YOU USE THE MARSHAL TO GO IN AND DO THE VERY SAME 5 THING WITH INDIVIDUALS. IT DOESN'T NEED TO BE A BUSINESS. 6 IT’s ANY ENTITY. SO UNDER THAT PROCEDURE, I BELIEVE WE'RE 7 ENTITLED TO SEIZE MAIL, TAKE OUT THE MONEY, PHOTOCOPY 8 FINANCIAL INFORMATION AND RETURN THE REST TO THE DEBTORS. 9 MR. IZEN: I WOULD LIKE TO MAKE ONE POINT I DID NOT 10 BRING UP. THERE’s AT RISK HERE AND AT ISSUE THE 11 ASSOCIATIONAL RIGHTS OF THE PEOPLE THAT DONATE TO LIBERTY 12 LOBBY. WE CONCEDE THAT LIBERTY LOBBY IS TEMPORARILY OUT OF 13 THE COURTROOM, AND THE CARTOS ARE INVOLVED IN POLITICAL 14 ACTIVITY THROUGH LIBERTY LOBBY AND OTHER ENTITIES. THE 15 COURT KNOWS SOMETHING ABOUT THE ACTIVITIES. THE COURT -- 16 THEY ENGAGE IN. THE COURT HEARD BOTH SIDES DURING THE 17 TRIAL. 18 WHEN YOU HAVE ASSOCIATIONAL PRIVACY RIGHTS, YOU 19 HAVE THE RIGHT TO SECRECY, BOTH THE DONATORS, THE PEOPLE 20 THAT DONATE MONEY TO YOU, YOUR MEMBERSHIP LIST, YOUR THINGS 21 OF THAT SORT, THE MAILING LISTS. WE'RE CONCERNED THAT THE 22 MATTERS BE PROTECTED. THEY ARE NOT THE TYPE OF MATTERS THAT 23 SHOULD BE ALLOWED TO BE REVEALED TO THE GENERAL PUBLIC SO 24 THEY CAN BE USED BY HOSTILE FEDERAL AGENCIES, OR HOSTILE 25 PARTIES, OR WHATEVER. THAT’s THE REASON WHY YOU HAVE 26 ASSOCIATIONAL PRIVACY UNDER THE FIRST AMENDMENT. 27 THE CASE I CITED YOU, THE SOCIALIST WORKERS PARTY, 28 HAD THREE VERSIONS. THEY HAD ONE AT 463 F. SUPP. 515, A
page 20 1 1978 CASE. THE BATTLE WENT ON FOR 8 OR 10 YEARS AND 2 BASICALLY STANDS FOR THE PROPOSITION THAT WHEN YOU HAVE 3 POLITICAL ACTIVITY GOING ON, THE RIGHTS TO ASSOCIATIONAL 4 PRIVACY ARE ACCENTED. 5 AGAIN, AS FAR AS THE SCREENING PROCESS AND OTHER 6 THINGS IS CONCERNED, THAT’s NOT BEEN FOLLOWED UP TO THIS 7 POINT. WE OBJECTED, AND WE OBJECT PROPERLY NOW. IT SEEMS 8 THE RECEIVER CONCEDES THAT THE PROCESS WAS OVERBOARD, AND 9 THEY NEED TO DO CERTAIN OTHER THINGS. IF CALIFORNIA LAW 10 PROVIDES FOR A SCREENING PROCESS UNDER THE STATUTE, I AM 11 CERTAINLY NOT AN EXPERT ON IT, IT CAME ABOUT BECAUSE OF 12 THESE DECISIONS THAT I HAVE JUST POINTED THE COURT TO. THE 13 EXAMINATION OF THE FACTS OF THE BANKRUPTCY CASE I BELIEVE 14 WHEN YOU READ IT YOU WILL SEE THAT THEY RULED THAT IT WAS 15 VIOLATION OF DUE PROCESS TO INTERCEPT A DEBTOR’s MAIL 16 WITHOUT THE SAFEGUARD OF BEING IN FORCE AND EFFECT. SO WE 17 NEED SOMETHING ELSE OTHER THAN WHAT WE HAVE. IN THAT 18 REGARD, WE NEED SOMETHING THAT WOULD PREVENT HOSTILE PARTIES 19 WHO WANT TO INJURE EACH OTHER IRRESPECTIVE OF THE MONEY TO 20 DISSEMINATE, ELICIT AND IN VIOLATION OF THE ASSOCIATIONAL 21 PRIVACY PEOPLE YOU ARE RECEIVING MAIL FROM; PEOPLE YOU ARE 22 SENDING MAIL TO. THANK YOU. 23 THE COURT: MR. LENNON IS GONE. 24 MR. SAMPSON: HE STEPPED OUT, YOUR HONOR. 25 THE COURT: ALL RIGHT. I WANT TO MAKE SURE HE CAN KEEP 26 A LOG WHERE HE IS RETURNING THE MAIL TO THE JUDGMENT DEBTOR, 27 OR IS HE RETURNING IT TO ONE OF THE ATTORNEYS? 28 MR. URTNOWSKI: YESTERDAY I RECEIVED SOME MAIL FROM THE
page 21 1 RECEIVER. HE SENT IT IN SEVERAL PACKAGES. I DIDN'T BRING 2 IT HERE. HE SENT BACK MAIL BELONGING TO WILLIS CARTO, 3 ELISABETH CARTO, VIBET, AN ENTITY THAT I DON'T REPRESENT. I 4 WILL RETURN THAT TO HIM. 5 IT WAS DISTURBING THAT SOME OF THE MAIL HAD 6 PREVIOUSLY BEEN OPENED AND UNTIL THIS POINT I THOUGHT THE 7 COURT’s ORDER WAS SPECIFICALLY TO RETAIN THE MAIL UNOPENED 8 UNTIL TODAY’s HEARING. HE DID NOT RETURN ANY LIBERTY LOBBY 9 MAIL, YOUR HONOR. 10 MR. IZEN: I WOULD LIKE TO BRING UP ONE LAST POINT IN 11 RESPONSE TO THE COURT’s QUESTION ABOUT THE CHECKS. 12 SOMETHING ELSE CROSSED MY MIND. 13 THE COURT: OKAY. 14 MR. IZEN: I AM NOT APPROACHING THIS LITIGATION, NOR 15 HAVE I APPROACHED THIS LITIGATION ON APPEAL AS A FOR PROFIT 16 ENTITY. I DO NOT BELIEVE LIBERTY LOBBY IS THE TRADITIONAL 17 FOR PROFIT ENTITY. I THINK THE CASE BEFORE YOU EARLIER WAS 18 TRIED UNDER THE WRONG THEORY. I DON'T THINK THERE’s PROFIT 19 OPPORTUNITIES, BUT WE'LL SEE WHAT THE COURT OF APPEALS DOES 20 WITH THAT. BUT THE QUESTION ABOUT THE CHECKS, THERE’s NO 21 DOUBT THAT PEOPLE SEND IN WHAT THEY THINK ARE DONATIONS. 22 NOW WHAT DO YOU DO? DO YOU DIVERT THAT TO THE JUDGMENT 23 CREDITOR? WHEN A PERSON SENDS IN A DONATION, THEY'RE 24 THINKING THAT THERE’s GOING TO BE POLITICAL ACTIVITY DONE 25 WITH THE DONATION. THAT’s SOMETHING I THROW OUT. THAT 26 PROBLEM IS GOING TO REAR ITS UGLY HEAD NOT FOR CARTO 27 PERSONALLY PER SE, UNLESS SOMEBODY LIKE MISS FERREL IS 28 SENDING A CHECK TO CARTO AND SAYS DO WITH IT — PUT IN IT
page 22 1 ONE OF THE ENTITIES, OR DO WITH IT WHATEVER YOU WANT TO DO. 2 I DON'T HAVE THE EVIDENCE FROM MR. CARTO ON THE STAND ABOUT 3 HOW MUCH DONATIONS HE RECEIVED. 4 THE COURT: I DON'T THINK MISS FERREL WILL BE WRITING 5 ANY CHECKS ANYWAY. 6 MR. IZEN: THAT’s TRUE. 7 THE COURT: OUTSIDE THE JURISDICTION OF THIS COURT FOR 8 SURE. 9 MR. IZEN: THE CHECKS THEY INTERCEPT, THERE’s GOING TO 10 BE A QUESTION AS TO WHETHER OR NOT THOSE ARE SPECIAL FUNDS 11 RECEIVED IN THE HANDS OF WHOEVER RECEIVES THEM SUCH THAT 12 THEY CAN BE DIVERTED FOR THIS JUDGMENT. IF THIS IS NOT FOR 13 PROFIT, THEN THESE PEOPLE ARE NOT GIVING THESE MONIES TO THE 14 GENERAL FUND OF WHOEVER TO PAY THIS JUDGMENT. THEIR IDEA 15 WAS SOMETHING DIFFERENT WOULD BE DONE WITH THE MONIES. 16 NOW I BRING THAT UP, BECAUSE IT’s CLEAR -- 17 CALIFORNIA LAW IS CLEAR THAT THE INTENTIONS OF THE DONOR IS 18 IF IT’s NOT A FOR PROFIT DONATION WHICH HAVE TO BE OBEYED, 19 YOU'LL PUT YOURSELF IN A POSITION OF POTENTIALLY DEFRAUDING 20 THE PEOPLE INDIRECTLY BY THE FACT THEY THINK SOMETHING IS 21 BEING DONE WITH THE MONEY WHEN IN ACTUALITY SOMETHING QUITE 22 DIFFERENT IS HAPPENING. 23 THE COURT: THAT’s AN INTERESTING ARGUMENT. IT DOESN'T 24 SEEM TO YOU THAT IF YOU SEND MONEY TO AN ORGANIZATION THAT 25 OWES A LAWFUL DEBT, THAT’s WHAT YOU ARE SENDING THE MONEY 26 FOR, AMONG OTHER THINGS? 27 LET’s SUPPOSING MY SON HAS A DEBT THAT HE HAS TO 28 PAY, AND SO I GIVE HIM $100 AND SAY, THIS GOES TO THE MOVIE,
page 23 1 AND RECEIVER SEIZED THE $100. GEE, THAT WASN'T RIGHT. 2 SUPPOSED TO GO TO THE MOVIE WITH THAT. I DON'T FOLLOW THAT 3 ARGUMENT. 4 MR. IZEN: LET ME ADDRESS YOUR ARGUMENT TWO WAYS. 5 NUMBER ONE, YOU ARE ASSUMING THAT A PERSON GIVES A DONATION 6 EXPECTS FOR IT TO GO TO THE GENERAL FUND OF THAT 7 ORGANIZATION AND DIDN'T GIVE ANY SPECIAL CONDITIONS. IT 8 DOESN'T EXPECT ANY SPECIAL CONDITIONS ON A GIFT. BUT THE 9 STATE OF CALIFORNIA LAW IS REPLETE WITH IMPOSITIONS BY THE 10 COURT OF SPECIFIC INSTRUCTIONS AND ENFORCEMENT OF SPECIFIC 11 INSTRUCTIONS BY DONOR. THE REAL QUESTION WILL BE WHAT THE 12 DONOR INTENDED. I AGREE. IF THEY INTEND FOR IT TO GO TO 13 THE GENERAL FUND OF THAT ORGANIZATION, THEN IT CAN BE USED 14 TO PAY THE DEBTS. IF THEY INTEND FOR IT TO BE USED FOR 15 CERTAIN POLITICAL ACTIVITY, AND YOU RUN A AD OR HAVE THE 16 SPOTLIGHTER NEWSPAPER, YOU ARE SAYING, WE'RE DOING XY AND Z 17 WITH THE MONEY, AND YOU DON'T DO THAT. THE MONEY GOES TO 18 SOMEBODY FOR SOME JUDGMENT OR SOMETHING YOU HAVE A PROBLEM. 19 THAT’s THE POINT I'M ADDRESSING. SO PERHAPS THAT CAN BE 20 ADDRESSED LATER BY PERSONS WHO ARE DONATING THE FUNDS. 21 THE COURT: MAYBE THEY'LL READ ABOUT IT IN THE 22 NEWSPAPER AND DECIDE NOT TO SEND ANY MORE MONEY. THAT’s NOT 23 ANYTHING THEY CAN DO. 24 MR. SAMPSON: I CAN SHORTCUT THAT. ON PAGE 5 OF THE 25 ORDER APPOINTING THE RECEIVER, PARAGRAPH 15, THE COURT HAS 26 ISSUED AN ORDER THAT THE RECEIVER WILL HOLD AND RETAIN ALL 27 MONIES SUBJECT TO FURTHER COURT ORDER. THAT ISSUE CAN BE 28 ADDRESSED AT A LATER TIME, IF NECESSARY. IT’s PREMATURE
page 24 1 NOW. THAT PROTECTION IS IN PLACE. 2 THE COURT: I'M NOT GOING TO CHANGE THE PREVIOUS ORDER 3 THAT I GAVE TO THE RECEIVER, THE AUTHORITY I GAVE TO THE 4 RECEIVER. THEY REALLY DO ACT UNDER THE AUTHORITY OF THE 5 COURT. I REALIZE WE DON'T PAY THEM. HOPEFULLY, THEY ALWAYS 6 KEEP THAT IN MIND. AND THIS IS A DRASTIC REMEDY. IT'S 7 FORCED UPON ME BY THE ACTIONS OF THE DEBTORS. IT’s NOT 8 SOMETHING THAT I ENJOY DOING. I WISH I COULD SEE ANOTHER 9 ALTERNATIVE. MANY OF THE COMMENTS THAT THE DEBTORS ARE 10 MAKING ARE ONES THAT DISTURB ME, BUT THERE’s A BALANCING 11 HERE, AND THIS IS THE ONLY WAY TO DO IT. IT’s THE ONLY WAY 12 TO DO IT. WE'RE GOING TO GET INTO THAT LATER ON WHEN WE 13 TALK ABOUT GOING TO JAIL. ALL RIGHT. 14 THE RECEIVER CAN — MAKE IT CLEAR — CAN OPEN AND 15 SEIZE AND OPEN MAIL THAT’s ADDRESSED TO ANY JUDGMENT 16 DEBTOR. THEY CAN TAKE OUT THE CHECKS AND CASH THE CHECKS 17 SIMPLY TO FURTHER DISBURSEMENT OF THOSE FUNDS. THEY CAN 18 KEEP A LOG OR KEEP A LOG OF THE MAIL RECEIVED, AND THEY'RE 19 NOT TO REVEAL THE CONTENTS OF ANY COMMUNICATION THAT DOESN'T 20 DEAL WITH FINANCIAL DOCUMENTS OR RECORDS. THEY CAN SEIZE 21 ALSO FINANCIAL DOCUMENTS OF ANY SORT. 22 MR. SAMPSON: MAY I CLARIFY THAT? I WOULD SUGGEST THEY 23 PHOTOCOPY IT AND RETURN THE ORIGINAL DOCUMENT. 24 THE COURT: THAT’s FINE. THEY CAN DEFINITELY MAKE, BUT 25 I DON'T WANT THEM MAKING PHOTOCOPIES OF THE CONTENTS OF 26 COMMUNICATIONS AND THAT SORT OF THING OR REVEALING THAT TO 27 ANYBODY. 28 LET’s TALK ABOUT SOME OF THE BIG ISSUES HERE.
page 25 1 MR. URTNOWSKI: I'M SORRY, CLARIFICATION. THE 2 ATTORNEY/CLIENT PRIVILEGE CANNOT -- 3 THE COURT: YES. THAT’s FROM BEFORE. AND I SHOULD 4 MAYBE MAKE THAT CLEAR AGAIN. IT’s ALWAYS BEEN CLEAR IF THE 5 LETTER IS ONE THAT CLEARLY COMES FROM AN ATTORNEY WITH A -- 6 OR SAYSLEGAL MAILON IT, OR HAS THAT LETTERHEAD KNOWING 7 THAT IT COMES FROM AN ATTORNEY; THINGS WE HATE TO SEE IN THE 8 MAIL, THEN THOSE I THINK I'M GOING TO BALANCE THIS OUT. AND 9 ALTHOUGH IT MIGHT CONTAIN CHECKS AND FINANCIAL INFORMATION, 10 IT MIGHT NOT EVEN BE AN ATTORNEY/CLIENT PRIVILEGE. WHO 11 KNOWS WHO ALL THE ATTORNEYS ARE FOR ALL THE CORPORATIONS. 12 NOT TO SEIZE THAT — OPEN IT. SEND IT DIRECTLY. 13 MR. URTNOWSKI: ONE OTHER ISSUE ON A TACTICAL BASIS 14 THAT OCCURRED WITH RESPECT TO LEWIS FURR. HIS MAIL WAS 15 SEIZED. IN HIS MAIL WAS PRESCRIPTION MEDICINE. HE LIVES IN 16 A RURAL AREA, AND HIS MEDICINE COMES THROUGH THE MAIL. HE 17 NEEDS IT. THEY HAD TO RETAIN A LAWYER. THE POST OFFICE 18 EVENTUALLY RELEASED THAT PRESCRIPTION. FOR THE FUTURE, I 19 WOULD ASK THAT WITH RESPECT TO ANY OF THE INDIVIDUALS THAT 20 IF THERE ARE PACKAGES THAT ARE OBVIOUSLY PRESCRIPTION 21 MEDICINE THEY NOT BE SEIZED AND IMMEDIATELY DELIVERED TO 22 THEIR CLIENT. 23 THE COURT: ABSOLUTELY. I DON'T HAVE A PROBLEM WITH 24 THAT. I THINK MR. LENNON KNOWS. HE’s AN EXPERIENCED FELLOW 25 HERE, AND HE KNOWS WHAT THE INTENT OF THIS COURT IS, THAT 26 IS, TO SEIZE CHECKS, CASH THEM, HOLD THEM, SEE WHAT WE'RE 27 GOING TO DO WITH THEM, MAKE COPIES OF FINANCIAL DOCUMENTS. 28 BUT EVERYTHING ELSE IS THEIR LIVES GO ON AS NORMAL.
page 26 1 MR. URTNOWSKI: I UNDERSTAND. I WAS SAYING MR. LENNON 2 DIDN'T SEIZE THE MEDICINE. IT GOT SEIZED BACK IN ARKANSAS. 3 THAT WAS THE DISTINCTION. 4 AND THE FINAL DISTINCTION I HEARD, WITH RESPECT TO 5 THE MAIL THAT COMES IN, THE JUDGMENT CREDITOR WILL NOT BE 6 ALLOWED TO SEE THE LIST OF PEOPLE WHO HAVE SENT MAIL; IS 7 THAT ACCURATE? 8 THE COURT: AT THIS TIME, YES, THAT’s ACCURATE. 9 MR. SAMPSON: IF I COULD ASK ONE POINT OF 10 CLARIFICATION. WHEN THE MAIL IS RETURNED, WOULD THE DEBTORS 11 LIKE IT RETURNED TO MR. URTNOWSKI OR DIRECTLY TO THE 12 DEBTOR? WE HAD BOTH HAPPENING. WHICHEVER YOU GUYS PREFER. 13 MR. URTNOWSKI: TO ME. 14 THE COURT: OKAY. THAT’s EVERY JUDGMENT DEBTOR THAT 15 YOU REPRESENT. YOU DON'T REPRESENT SOME JUDGMENT DEBTORS. 16 WHAT DO WE DO IF THEY'RE ADDRESSED TO VIBET? 17 MR. URTNOWSKI: NO OPINION. I HAVE NO REPRESENTATION. 18 THE COURT: OKAY. WHAT ABOUT THE HEREFORD 19 CORPORATION? I NOTICED ON THAT ACTION TO QUIET TITLE 20 LAVONNE FURR SIGNED THAT AS FROM THE HEREFORD CORPORATION. 21 IF THE RECEIVER GETS LETTERS FROM HEREFORD CORPORATION, WHAT 22 DOES HE DO WITH THEM? SEND THEM TO YOU? 23 MR. URTNOWSKI: RIGHT NOW I DON'T KNOW THAT THERE’s AN 24 ORDER DIRECTING THE RECEIVER TO SEIZE ANYTHING FROM HEREFORD 25 CORPORATION. 26 THE COURT: THAT’s WHAT WE'RE GETTING TO NEXT. ADD THE 27 HEREFORD CORPORATION, INDEPENDENCE HOUSE, AND J.W. YOUNG AS 28 ALTER EGOS OF MR. CARTO OR SOME OF THE OTHER JUDGMENT
page 27 1 DEBTORS. 2 THAT MAYBE FALLS INTO SOME OF THE ARGUMENTS BY THE 3 DEFENSE, THE DEBTORS, TO STRIKE PORTIONS OF THE PLAINTIFF'S 4 AFFIDAVITS. I DON'T UNDERSTAND SOME OF THE ORGANIZATIONS. 5 THE WALK AFFIDAVIT I'M TOLD IS NOT — IT’s THE SAME THING I 6 USED TO HEAR IN THE TRIAL. IT’s NOT RELEVANT. LACK OF 7 FOUNDATION AND NOT THE BEST EVIDENCE. SORT OF CAME AS A 8 THREE SHOTGUN BLAST AT ME. 9 CLEARLY IT’s RELEVANT. HE SAYS THAT J.W. YOUNG IS 10 MR. CARTO. HE IDENTIFIES PICTURES, AND HE SAYS THAT J.W. 11 YOUNG SAYS HE PERSONALLY OWNS THE ESCONDIDO PROPERTY. THAT 12 SEEMS PRETTY RELEVANT. 13 WE HAVE THE MARCELLUS DEPOSITION, OR STATEMENT, 14 WHATEVER IT IS. SAME ARGUMENT. IN THIS ONE HE SAYS THAT 15 THERE IS A CONNECTION BETWEEN CARTO AND INDEPENDENCE HOUSE, 16 AND WE HAVE THE FRECH, F-R-E-C-H, DEPOSITION. 17 THE RELEVANCY IS IF I ORDER THE SALE, HERE IS 18 SOMEONE WHO COMES FROM A RESPECTED BROKERAGE HOUSE WHO SAYS 19 THAT HE CAN'T IN FACT SELL THE HOUSE. 20 MR. SAMPSON, IS IT YOUR REQUEST THAT I ADD 21 HEREFORD CORPORATION, INDEPENDENCE HOUSE, AND J.W. YOUNG TO 22 THE LIST OF DEBTORS? AND IF THAT IS SO, WHAT ABOUT THE 23 DEFENSE YOU DON'T REPRESENT ANY OF THESE PEOPLE? WHERE IS 24 THE STANDING HERE? 25 MR. SAMPSON: WE DO REQUEST THEY BE ADDED TO THE 26 INDIVIDUAL DEBTORS AS ALTER EGOS. I THINK — I'M NOT GOING 27 TO REPEAT ALL THE EVIDENCE. IT SOUNDS LIKE THE COURT READ 28 IT THOROUGHLY. SO THAT IS THE REQUEST. WE SERVED IT ON ALL
page 28 1 OF THEIR KNOWN ADDRESSES. THEY HAD THE OPPORTUNITY UNDER 2 THE STATUTE, THE CASES WE CITED, AS FAR AS AMENDING IT, SO 3 THE COURT IS ENTITLED TO A NOTICED MOTION TO AMEND THE 4 JUDGMENT. 5 THE COURT: IT HAPPENS ALL THE TIME. WHY SHOULDN'T I 6 ADD THE PEOPLE, REALIZING THAT YOU DON'T REPRESENT HEREFORD 7 CORPORATION, INDEPENDENCE HOUSE, OR THE — UNLESS YOU WANT 8 TO ADMIT J.W. YOUNG IS MR. CARTO, YOU DON'T REPRESENT J.W. 9 YOUNG EITHER. 10 MR. URTNOWSKI: THE REASON WHY YOU SHOULDN'T ADD IT 11 STARTS OUT ONE PROCEDURALLY. WITH RESPECT TO THE HEREFORD 12 CORPORATION, THE MOVING PAPERS MADE MUCH OF THE FACT THAT 13 THIS WAS AN ALTER EGO OF WILLIS CARTO. THAT THIS WAS NOT A 14 VALID PANAMANIAN CORPORATION. THIS WAS NOT A VALID 15 CALIFORNIA CORPORATION. I POINTED OUT THAT IT WAS -- 16 CORPORATION CAN OWN PROPERTY IN A FOREIGN CORPORATION AS 17 LONG AS IT DOESN'T TRANSACT INTERSTATE VESSELS. 18 THE COURT: I BELIEVE YOU ARE RIGHT ON THAT. 19 MR. URTNOWSKI: WHAT WE HAVE IS MR. SAMPSON STATING 20 THAT IN THE DECLARATION HIS INVESTIGATION HAS DISCLOSED THAT 21 HEREFORD CORPORATION IS NOT A VALID PANAMANIAN CORPORATION. 22 I DID FILE AN OBJECTION WITH THAT, AND I THINK THAT SOME OF 23 THE OBJECTIONS WERE WELL-TAKEN, INCLUDING THE FACT THERE’s A 24 LACK OF FOUNDATION. THERE’s NO SUPPORT FOR THAT. 25 MR. SAMPSON IS NOT A PARTY TO HERE. WE HAVE NO 26 EVIDENCE RIGHT NOW THAT THE CORPORATION IS NOT A VALID 27 CORPORATION, SO WE HAVE TO ASSUME THAT THE HEREFORD 28 CORPORATION IS VALID.
page 29 1 WE HAVE GOT OVER ONE OF THE HURDLES THAT SHOWS 2 IT’s NOT MR. CARTO. IT IS NOW A VALID CORPORATION. YOU 3 HAVE NO EVIDENCE BEFORE YOU OTHERWISE. 4 THE COURT: WAIT A MINUTE. I DON'T EVEN HAVE ANY 5 EVIDENCE THAT THE CORPORATION EXISTS EXCEPT IN THE MINDS OF 6 SOMEBODY. I HAVE ZERO PIECE OF PAPER SHOWS IT'S 7 INCORPORATED ANYWHERE IN THE WORLD. 8 MR. URTNOWSKI: YOU HAVE DEEDS THAT HAVE BEEN SUBMITTED 9 INTO EVIDENCE BY THE MOVING PARTIES THAT SHOW THIS IS AN 10 ENTITY. YOU HAVE EVIDENCE BEFORE THE COURT THAT SAYS 11 HEREFORD CORPORATION IS A PANAMANIAN CORPORATION. THEY 12 SUBMITTED THAT EVIDENCE. I HAVEN'T OBJECTED TO IT. THAT'S 13 ON THE RECORD THAT IS BEFORE THE COURT. HEREFORD 14 CORPORATION IS A PANAMANIAN CORPORATION. 15 WHAT YOU DON'T HAVE IS ANY EVIDENCE SAYING IT'S 16 NOT A VALID CORPORATION, ANY COMPETENT EVIDENCE. NOT SAYING 17 MR. SAMPSON IS NOT COMPETENT; THAT STATEMENT ISN'T. 18 WHAT YOU HAVE BEFORE THE COURT IS THE EVIDENCE 19 THAT MR. CARTO DOES NOT OWN THE COMPANY. MRS. CARTO DOES 20 NOT. THEY HAVE TESTIFIED TO IT. THEY'RE NOT OFFICERS. 21 THEY'RE NOT SHAREHOLDERS. THEY DON'T KNOW WHO THE OFFICERS 22 ARE TODAY. THEY DON'T OWN THE PROPERTY. THE HEREFORD 23 CORPORATION DOES. THERE’s NO EVIDENCE TO CONTRADICT THAT. 24 WE'RE GETTING INTO THE ALTER EGO THEORIES, GOING BACK AND 25 FORTH. GENERALLY IT FLOWS THE OTHER DIRECTION. YOU DON'T 26 SAY THE CORPORATION IS THE ALTER EGO OF WILLIS CARTO. YOU 27 SAY WILLIS CARTO IS THE ALTER EGO OF THE CORPORATION. IN 28 EVERY CASE THEY CITED DEALING WITH CORPORATE ALTER EGOS SAYS
page 30 1 THAT THE INDIVIDUALS ARE THE ALTER EGO OF THE CORPORATION. 2 I SEE NO LAW IN THE PAPERS SAYING THAT THE CORPORATION CAN 3 BECOME THE ALTER EGO OF WILLIS CARTO. I DO SEE IS LAW THAT 4 SAYS IN ORDER TO AMEND THE JUDGMENT TO INCLUDE A NONPARTY AS 5 AN ALTER EGO, ONE OF THE THRESHOLDS THAT HAS TO BE OVERCOME 6 IS THE FACT THAT ALTER EGO — POTENTIAL ALTER EGO HAS TO 7 HAVE CONTROL OF THE LITIGATION. THEY HAVE NOT MADE AN 8 ALLEGATION THAT HEREFORD CORPORATION CONTROLLED THE 9 LITIGATION OR MR. YOUNG OR INDEPENDENCE HOUSE, WHOEVER THAT 10 IS. THERE’s NO EVIDENCE OF IT. 11 MR. CARTO HAS TESTIFIED IN HIS DECLARATION THAT 12 HE — THAT HEREFORD CORPORATION DID NOT CONTROL IT. 13 ELISABETH CARTO TESTIFIED THE SAME. THERE’s NO EVIDENCE 14 SUPPORTING ALTER EGO. THERE WAS NO CHALLENGE TO THEIR 15 DECLARATIONS. THAT’s THE ONLY EVIDENCE THAT’s BEFORE THE 16 COURT. THEY HAVEN'T ADDRESSED ANY OF THE ALTER EGO 17 HURDLES. THERE’s NO COMMINGLING OF BANK ACCOUNTS SHOWN. 18 THERE’s NO CO-REPRESENTATION BY THE SAME COUNSEL SHOWN. 19 THEY DON'T HIT ANY OF THE STANDARDS ASSOCIATED. IT’s JUST A 20 BLANK STATEMENT TRYING TO PUSH THROUGH A JUDGMENT. AND I 21 UNDERSTAND THE FRUSTRATION IN COLLECTING A JUDGMENT. I 22 THINK I MIGHT WANT TO COLLECT ONE MYSELF, BUT THERE’s LEGAL 23 PROCESS YOU HAVE TO COMPLY WITH. HEREFORD CORPORATION I 24 THINK I POINTED OUT TO THE COURT THEY WERE NOT EVEN SERVED. 25 NOW IF YOU ARE MAKING A DETERMINATION TODAY THAT 26 THE HEREFORD CORPORATION IS MR. CARTO, MRS. CARTO, 27 INDEPENDENCE HOUSE, THAT DETERMINATION DID NOT OCCUR WHEN 28 THE MOVING PAPERS WERE FILED. HEREFORD CORP., LOOKING AT
page 31 1 THE PROOF OF SERVICE, I THINK IT WAS SERVED ONQuail Ridgee 2 ROAD, THE Cartos’ RESIDENCE. 3 WHAT THE LAW SAYS — CORPORATION CODE SAYS WHEN 4 YOU DON'T KNOW WHO THE OFFICERS ARE, WHEN YOU CAN'T FIND 5 THEM, AND YOU ARE DEALING WITH A FOREIGN CORPORATION THAT IS 6 NOT FILED WITH THE SECRETARY OF STATE, ITS OFFICERS, YOU 7 COME BACK BEFORE YOUR HONOR. YOU APPLY FOR AN ORDER HERE 8 ALLOWING THE PROCESS TO BE SERVED ON THE SECRETARY OF 9 STATE. STATUTES CITE IT DOESN'T JUST COVER SUMMONS. IT 10 COVERS LEGAL PROCESS, THESE ENTITIES. 11 YOU ASKED ME WHY YOU SHOULDN'T RULE. THEY'RE NOT 12 PROPERLY BEFORE THE COURT. 13 THE COURT: YOU SAY THERE’s NO EVIDENCE. THERE'S 14 DIRECT EVIDENCE FROM YOUR CLIENTS SAYING THAT THE HEREFORD 15 CORPORATION IS NOT THEIR ALTER EGO, NOT ONE AND THE SAME. 16 AND I, OF COURSE, CAN BELIEVE THAT OR DISBELIEVE THAT. 17 WHAT ABOUT THE CIRCUMSTANTIAL EVIDENCE IN THIS 18 CASE? I FORGOT EXACTLY WHAT MRS. CARTO SAID, AS FAR AS HOW 19 LONG SHE HAS LIVED THERE, 15 YEARS. 20 MR. URTNOWSKI: MRS. CARTO SAYS SHE LIVED THERE SINCE, 21 I BELIEVE, 1981, OR THEREAFTER. 15 YEARS THEY HAVE LIVED IN 22 THE HOUSE. THAT’s UNDISPUTED. 23 THE COURT: SO I'M ASKED TO BELIEVE SOME CORPORATION 24 THAT THEY HAVE NO CONTROL OVER. THAT THEY DON'T KNOW WHO 25 THE OFFICERS ARE. THEY DON'T KNOW ANYTHING ABOUT IT. 26 THERE’s NO ADDRESS FOR IT AND REFUSE TO ANSWER QUESTIONS 27 ABOUT IT EXCEPT TO GIVE THIS AFFIDAVIT, WHICH IS NOT SUBJECT 28 TO CROSS-EXAMINATION OR ASKING THEM ANYTHING. THIS
page 32 1 CORPORATION PURCHASED THIS HOME FOR THEM, AND THEN LIBERTY 2 LOBBY PAYS TAXES — ORGANIZATION THAT I BELIEVE TO BE THE 3 SAME AS MR. CARTO. 4 INCIDENTALLY, THAT’s AN INTERESTING ISSUE, ISN'T 5 IT, A NONPROFIT CORPORATION PAYING FOR THE TAXES ON A 6 PERSONAL HOME, BUT MAYBE THAT’s A FIFTH AMENDMENT PROBLEM 7 FOR YOUR CLIENT. 8 I AM ASKED TO BELIEVE SOMETHING THAT'S 9 UNBELIEVABLE. THERE’s NOBODY THAT I KNOW OF EVER WHO HAS A 10 CORPORATION THAT BUYS THEM A HOME. YOU DON'T KNOW ANYTHING 11 ABOUT IT. YOU LIVE IN IT BASICALLY FOR FREE AND PAY THE 12 TAXES AND, I GUESS, YOU DON'T EVEN PAY THE TAXES. THAT'S 13 RIGHT. YOU PAY — JUST A SECOND. YOU PAY, I GUESS, TO KEEP 14 THE PLACE UP. THEN YOU REPRESENT TO PEOPLE THAT IT’s YOURS, 15 AND YOU SUE THE POLICE DEPARTMENT SAYING YOU INVADED MY 16 PERSONAL HOME. 17 AND THEN I'M ASKED TO BELIEVE THIS. IT'S 18 UNBELIEVABLE. 19 MR. URTNOWSKI: IT’s NOT — YOU ARE ADDRESSING THOSE 20 ISSUES, SUING THE POLICE DEPARTMENT SAYING THEY ATTACKED 21 THEIR RESIDENCE. A RESIDENCE CAN BE A LEASEHOLD. IT CAN BE 22 AN OWNERSHIP. THAT’s THE SAME WITH THE REASON WE DON'T KNOW 23 WHY THEY'RE LIVING IN THE HOUSE. THEY MIGHT HAVE A 99 YEAR 24 LEASE. IT HASN'T BEEN DISCOVERED. THERE’s NO EVIDENCE 25 BEFORE YOU. 26 THIS ALSO OCCURRED 15 YEARS AGO. WHO KNOWS WHAT 27 HAPPENED TO THE CORPORATION IN THAT TIME. MAYBE MR. CARTO 28 OWNED IT WHEN IT WAS FORMED. MAYBE HE HAS SINCE TRANSFERRED
page 33 1 THE CORPORATION TO ANOTHER CORPORATION TO ANOTHER 2 INDIVIDUAL. I DON'T KNOW THAT. THERE’s NO EVIDENCE BEFORE 3 THE COURT THAT ANYTHING IMPROPER WAS DONE HERE. 4 SHE’s — MRS. CARTO HAS TESTIFIED THAT THEY PAID 5 THE EXPENSES ON THE HOUSE. WHY ISN'T — COULDN'T THAT BE 6 CONSIDERED RENT? YOU HAVE ONE CHECK FOR LIBERTY LOBBY. 7 THE COURT: I WOULD LIKE TO LIVE IN A $600,000 HOUSE 8 AND PAY THE EXPENSES AND CONSIDER THAT TO BE RENT. 9 MR. URTNOWSKI: I THINK THE CARTOS WOULD LIKE TO LIVE 10 IN A $600,000 HOUSE TOO, BUT THIS ISN'T IT. 11 THE COURT: OR WHATEVER IT’s WORTH, 200,000. 12 MR. URTNOWSKI: THIS APPEARS TO BE WORTH 250,000. IT'S 13 NOT A $600,000 HOUSE. IT’s NOT AN EXTRAVAGANT HOUSE. 14 WHAT IS IMPORTANT THEY DON'T OWN IT. YOU HAVE 15 NOTHING BEFORE YOU. YOU DON'T HAVE AN INFERENCE THAT THEY 16 OWN IT. YOU — THERE’s NO EVIDENCE. 17 THE COURT: ISN'T POSSESSION NINE-TENTHS OF OWNERSHIP; 18 THAT OLD THING WE LEARNED IN LAW SCHOOL? SHE LIVED IN IT 19 FOR 15 YEARS. 20 MR. URTNOWSKI: MY RENTERS IN THE CONDOMINIUM WON'T 21 MAKE THE CLAIM THEY OWN THE PROPERTY. THEY DON'T KNOW, FOR 22 INSTANCE, MY CASE HOW I HOLD THAT PROPERTY, WHETHER AS A 23 CORPORATION OR NOT. ALL THEY KNOW IS WHAT THEIR OBLIGATIONS 24 ARE, AND THEIR OBLIGATIONS APPARENTLY PAY THE RENT AND KEEP 25 UP THIS PROPERTY. ALL YOU HAVE — YOU CAN INFER IS THAT 26 IT’s A LEASEHOLD OWNED BY A FOREIGN CORPORATION THAT'S 27 ENTITLED TO HOLD PROPERTY IN THIS STATE. 28 THERE WAS NO EVIDENCE REGARDING HEREFORD
page 34 1 CORPORATION BEFORE THE UNDERLYING TRIAL. YOU HAD STOPPED 2 EXAMINATION OF THAT WHEN IT WAS ATTEMPTING TO GO INTO, SO 3 THERE’s NOTHING BEFORE THE COURT THAT SAYS WHO THE HEREFORD 4 CORPORATION IS EXCEPT THAT WE KNOW IT’s NOT MR. CARTO AND 5 MRS. CARTO. WE KNOW IT’s A VALID PANAMANIAN CORPORATION. 6 THEY HAVE NOT UNCOVERED WHO IT IS. I DON'T KNOW WHO IT IS, 7 AND I SURE DON'T KNOW WHO INDEPENDENCE HOUSE IS. THAT’s A 8 NEW NAME. 9 THE COURT: WHAT ABOUT THE FACT THAT LAVONNE FURR ON 10 11-13-89 SIGNS THE STIPULATION TO JUDGMENT TO QUIET TITLE 11 AND PERMANENT INJUNCTION RELATIVE TO THIS EASEMENT? WE 12 HEARD THE NAME LAVONNE FURR, HAVEN'T WE? 13 MR. URTNOWSKI: TWO ISSUES THERE. ONE, THAT WAS IN 14 1989, 9 YEARS AGO. A LOT CAN OCCUR. TWO, THAT LAWSUIT 15 DIDN'T DEAL WITH PROPERTY INTERESTS IN THE ESTATE ON QUAIL 16 RIDGE. IT DEALT WITH AN EASEMENT NEAR THE PROPERTY. 17 OWNERSHIP OF Quail Ridge WASN'T IN DETERMINATION, BUT THAT 18 WAS THE HEREFORD CORPORATION. 19 IN THE DECLARATION SUBMITTED BEFORE APPARENTLY THE 20 TITLE COMPANY SUED MR. CARTO. THEY REALIZED THEIR MISTAKE. 21 THEY WENT BACK AND CHANGED THE — CHANGED THE LAWSUIT TO ADD 22 IN THE HEREFORD CORPORATION. 23 THE COURT: THEY NEVER SUED MR. CARTO. THEY SUED J.W. 24 YOUNG. 25 MR. URTNOWSKI: HE ALLEGES THAT MR. YOUNG IS 26 MR. CARTO. THEY ADD THE HEREFORD CORPORATION. THAT IS THE 27 PROPERTY OWNER. IT WAS THEN. IT IS NOW. MR. CARTO DOES 28 NOT CONTROL IT. THERE’s NO EVIDENCE BEFORE THE COURT THAT
page 35 1 HE DOES. THERE WAS NONE IN THE UNDERLYING TRIAL. WE 2 HAVEN'T SEEN ANY COMMINGLING OF BANK ACCOUNTS. WE HAVE SEEN 3 NO COMMINGLING OF OWNERSHIP INTERESTS. ALL YOU HAVE IS 4 MR. AND MRS. CARTO LIVING ON A PROPERTY AND PAYING RENT BY 5 KEEPING UP THE ESTATE AND THE EXPENSES ON THE ESTATE. 6 SIMPLY NOTHING TO ALLOW AN AMENDMENT OF THE JUDGMENT HERE. 7 AND FINAL ISSUE I WOULD SAY, YOUR HONOR, IS 8 THERE’s NO EVIDENCE THAT HEREFORD CORPORATION CONTROLLED THE 9 LITIGATION AS REQUIRED TO ADD A DOE AMENDMENT. AND I THINK 10 THE COURT SHOULD ALSO LOOK THROUGH LAW ON THIS REVERSE ALTER 11 EGO THEORY THAT’s BEING PRESENTED HERE. I FOUND NO LAW. I 12 COULD FIND NO LAW. 13 MR. IZEN: I WOULD LIKE TO ADDRESS SOMETHING. MY ROLE 14 HAS BEEN ON THE FIFTH AMENDMENT ISSUE. WE SPOKE PREVIOUSLY 15 OF THE POSSIBILITY OF IN CAMERA REVIEW TO CERTAIN QUESTIONS 16 AND THE RULING BY THE COURT. MR. URTNOWSKI ADDRESSES A FACT 17 SITUATION THAT GOES WAY BACK WAY PRIOR TO THE FERREL 18 DONATION. 19 THE FERREL DONATION COULD NOT BE IN THE 20 CONTEMPLATION OF ANY PARTY IT DOESN'T SEEM LIKE TO ME IN THE 21 TIME OF 1992 BASED ON WHAT I KNOW OF THE FACTS. 22 NOW YOUR COMMENT ABOUT YOU ONLY HAVE 23 CIRCUMSTANTIAL EVIDENCE TENDS TO, AS FAR AS THIS MOTION IS 24 CONCERNED, TENDS TO HIGHLIGHT THE FACT THAT YOU ARE RULING 25 ON WHAT EVIDENCE IS BEFORE YOU. NOW I DON'T WANT TO WAIVE 26 THE Cartos’ FIFTH AMENDMENT PRIVILEGE AGAINST 27 SELF-INCRIMINATION TO IDENTIFYING DOCUMENTS OR TESTIFYING, 28 HOWEVER, IN THIS CASE I ANTICIPATED GOING FORWARD ON A
page 36 1 RECORD WHEREBY THEY COULD EXPLAIN THEIR DEALINGS WITH THE 2 HOUSE, HAVE A RULING ON THAT ISSUE ON THE QUESTIONS, SUBMIT 3 THE INFORMATION IN CAMERA; AND IF IT IS NOT INCRIMINATING, 4 WHICH I SUSPECT IT’s NOT UNDER THE CIRCUMSTANCES, SINCE THIS 5 FERREL MONEY IS NOT CONNECTED WITH — I CAN'T SEE ANYTHING 6 THEY ACQUIRED PRIOR TO 1992 THAT CAN BE MADE PART OF THE 7 RECORD. AND YOU CAN USE THAT INFORMATION SUCH THAT YOU CAN 8 RULE ON THIS MOTION. I WOULD THINK IT WOULD BE PREMATURE 9 WITHOUT GETTING THE BENEFIT OF THAT INFORMATION. 10 I HAVE REASON TO BELIEVE THAT THE ORIGINAL 11 PANAMANIAN CORPORATION RECORDS INCORPORATING THAT 12 CORPORATION ARE AVAILABLE. I HAVE REASON TO BELIEVE THAT 13 THE CARTOS CAN ANSWER QUESTIONS CONCERNING THEIR LEASEHOLD; 14 WHAT THEY HAVE DONE WITH THE HOUSE SINCE IT WAS TRANSFERRED; 15 THE REASON WHY IT WAS TRANSFERRED SO LONG AGO, OR SO SHORT 16 AGO, OR WHATEVER. AND I BELIEVE THEY PROBABLY WOULD KNOW 17 WHO WAS THE PERSON THEY DEALT WITH, AS FAR AS CARETAKING ON 18 THE PROPERTY AND WHAT THE ARRANGEMENT IS IN LIVING THERE. 19 I DON'T WANT TO ASSUME BY THE RECORD HERE AS WE 20 HAVE IT THAT IT IS A SITUATION WHERE THE COURT WILL NOT KNOW 21 THE THINGS OR WILL RULE ON CIRCUMSTANTIAL EVIDENCE. THERE 22 HAS BEEN A CRIMINAL CHARGE MADE. I DON'T THINK WE CAN GO 23 BACK AS FAR AS PREDATING ANY DISPOSITIONS OF FUNDS OR 24 MONIES, BUT I WANT A RULING OF THE COURT TO THAT EFFECT ON 25 THIS FERREL. I THINK THE PROBLEM COMES FROM THE CRIMINAL 26 ASPECT WHEN MISS FERREL GIVES THE DONATION AND WHAT IS DONE 27 WITH IT AFTER SHE GAVE THE DONATION. 28 THE COURT: THE LAW ISN'T THAT THIS HOUSE CAN'T BE
page 37 1 SEIZED UNLESS THE FERREL MONEY WENT INTO THE HOUSE. THIS IS 2 A JUDGMENT AGAINST MR. CARTO. IF HE GOT THIS MONEY FROM HIS 3 GREAT GRANDFATHER AND IT WAS GIVEN TO HIM AT AGE 6, IT CAN 4 BE SEIZED. 5 MR. IZEN: I'M NOT SAYING THAT. I DON'T THINK THAT THE 6 LAW IS THAT THE PROPERTY CAN BE SEIZED BECAUSE SOMEBODY GOT 7 A JUDGMENT AND THEY WANT IT, SO THEY WANT TO ADD EVERYBODY, 8 INCLUDING THE PRESIDENT OF THE U.S. 9 THE QUESTION IS, WHO WAS THE VIRTUAL 10 REPRESENTATIVE OF THE TRIAL? DID THIS CORPORATION HAVE 11 SOMETHING TO GAIN BY OR LOSE BY THE TRIAL OF THIS CASE? DID 12 IT RUN THAT PRIOR TO LITIGATION? AND YOU LOOK TO THE RECORD 13 AND THE PRIOR TRIAL. YOU LOOK TO WHATEVER RECORD, THE 14 AFFIDAVITS, OR WHATEVER THEY HAVE GIVEN YOU. THE POINT IS 15 THERE’s DIRECT TESTIMONY FROM THE CARTOS. THEY'RE UNDER 16 INVESTIGATION CRIMINALLY. THAT’s BEEN INSTITUTED BY THE 17 CREDITORS. THEY'RE ENTITLED TO A RULING AND ENTITLED TO PUT 18 THE EVIDENCE IN. THIS IS NOT A TRIAL ON AFTERWARDS, THE WAY 19 I UNDERSTAND IT. 20 THE COURT: IF THE CARTOS WANT TO TESTIFY HERE IN OPEN 21 COURT, I WOULD CERTAINLY — THEY WILL BE GIVEN THAT 22 OPPORTUNITY. I AM NOT GOING TO HAVE ANY EX PARTE 23 COMMUNICATIONS, EVEN ON THE RECORD, WITH THE CARTOS. I 24 FORMED AN OPINION DURING THE COURSE OF THE TRIAL THAT THEY 25 ARE NOT FORTHRIGHT WITH THE COURT. THERE’s NO REASON FOR ME 26 TO LISTEN TO MORE OF THAT. 27 WAS THE HEREFORD CORPORATION REPRESENTED DURING 28 THE TRIAL IN FRONT OF ME? THAT’s ONE OF THE REASONS I ASKED
page 38 1 YOU ABOUT THE FURRS SIGNING OF THE QUITCLAIM. 2 MR. SAMPSON, ANY COMMENTS YOU WOULD LIKE TO MAKE? 3 MR. SAMPSON: I'LL KEEP IT BRIEF, YOUR HONOR. AS FAR 4 AS THE EVIDENCE BEFORE THE COURT, MR. CARTO TESTIFIED THAT 5 HE SET UP THIS ENTITY, WHATEVER IT IS, TO HIDE SO PEOPLE 6 WOULDN'T KILL HIM. THAT’s IN THE DECLARATION BEFORE THE 7 COURT. THAT’s PRETTY MUCH DIRECT TESTIMONY THAT HE OWNS IT, 8 AND IT BELONGS TO HIM, AND THAT IT IS HIM IN ESSENCE AND HIS 9 WIFE. 10 AND IN ADDITION, HE’s THE ONE THAT RAN IN TO THE 11 POLICE, SUED THE POLICE AND CLAIMED THAT HIS PERSONAL 12 PROPERTY AND HIS HOME WAS INVADED IN THE COURSE OF THAT. 13 WITH MR. WALK AND MR. MARCELLUS THEY ALSO TESTIFIED IT WAS 14 HIS HOUSE. HE OWNED IT. AND I THINK THAT’s THE KIND OF 15 EVIDENCE WE HAVE TO PUT BEFORE THE COURT. WE CAN NEVER GET 16 EVERYTHING BEFORE THE COURT, BUT I BELIEVE WE GOT ENOUGH SO 17 THE BURDEN IS SHIFTED, AND THERE’s NO CONTRADICTORY 18 EVIDENCE. THERE ARE PROCEDURES IF HEREFORD CORPORATION 19 EXISTS FOR IT TO COME IN AND ASSERT THE INTERESTS BUT TO 20 THIS DATE IT HASN'T. AND WE BELIEVE IT’s ON PROPER NOTICE. 21 SO -- 22 MR. URTNOWSKI: YOUR HONOR -- 23 THE COURT: ANYTHING ELSE? 24 MR. URTNOWSKI: IF THE COURT IS INCLINED TO RULE THAT 25 THE HEREFORD CORPORATION IS MR. AND MRS. CARTO, I HAVE PUT 26 IN A REQUEST TO OBTAIN THE PANAMANIAN RECORDS TO SHOW WHO 27 OWNS IT. THAT IT’s VALID. IT’s JUST AS MR. SAMPSON HAD NO 28 PAPERS BEFORE HIM, AND I ASSUME HE HAS NO PAPERS BECAUSE
page 39 1 THERE’s NONE SUBMITTED TO HIS DECLARATION. 2 I WOULD REQUEST MORE TIME FROM THIS COURT TO 3 CONTINUE THE HEARING — THERE’s ALREADY A RESTRAINING ORDER 4 ON THE PROPERTY. THE PROPERTY ALREADY HAS YOU PROTECTED 5 FROM MR. CARTO, MRS. CARTO FROM TRANSFERRING ANY INTEREST IN 6 THE PROPERTY — TO ALLOW ME TO OBTAIN CORPORATE RECORDS FROM 7 PANAMA TO SUBMIT TO THE COURT TO SHOW WHO THE OWNERS OF 8 HEREFORD CORPORATION IS. 9 I THOUGHT I MIGHT HAVE THOSE BY TODAY. I DON'T. 10 I EXPECT TO HAVE THEM SHORTLY, DAYS, MAYBE A WEEK, MAYBE 11 TWO. 12 THE COURT: WELL, THE PROBLEM, AS I SEE IT, IS THAT 13 IT’s JUST ANOTHER ONE OF THESE DELAYS. THERE IS A REQUEST 14 BY THE DEBTORS, AND IT’s 50 SOME ITEMS, 59 ITEMS LONG. I 15 FORGOT WHEN THE REQUEST WAS GIVEN TO THEM. 16 COUNSEL, CAN SOMEONE FILL ME IN ON THAT? LET'S 17 SEE, 2-27-98. I KNOW AT LEAST ON THAT DATE, PROBABLY BEFORE 18 THAT DATE. 19 MR. SAMPSON: THAT WAS THE TURNOVER ORDER THAT WAS 20 PERSONALLY SERVED ON BOTH MR. AND MRS. CARTO ON THE 10TH OF 21 APRIL. IT WAS SERVED ON MR. CARTO ON THE 27TH. WE RESERVED 22 IT IN OPEN COURT ON THE RECORD SO THERE WOULD BE NO 23 QUESTIONS. 24 THE COURT: SO THE FIRST THING ASKED FOR IS ALL 25 DOCUMENTS IN DEBTOR’s POSSESSION CONCERNING THE HEREFORD 26 CORPORATION. SO THERE’s BEEN PLENTY OF TIME TO DO THIS, AND 27 YOU CAN BRING IT IN HERE TODAY. IT HASN'T BEEN DONE. I AM 28 NOT GOING TO GRANT A CONTINUANCE.
page 40 1 ANYTHING ELSE? ANY OTHER ARGUMENT? 2 OVER THE OBJECTION OF THE DEBTORS, I AM GOING TO 3 ADD THE HEREFORD CORPORATION, INDEPENDENCE HOUSE, AND J.W. 4 YOUNG AS ALTER EGOS OF MR. CARTO. THEY'RE NOW JUDGMENT 5 DEBTORS. 6 GO INTO THE MOTION TO SELL THE ESCONDIDO 7 PROPERTY. I THINK I PRETTY MUCH ANSWERED THAT BY MAKING THE 8 PREVIOUS RULING. I DO BELIEVE THAT THIS IS A RESIDENCE OF 9 THE CARTOS. THEY OWN IT. THE HEREFORD CORPORATION, BASED 10 ON THE EVIDENCE I HAVE, IS NOTHING MORE THAN A SHAM. 11 I AM PREPARED TO APPOINT GREG FRECH TO SELL IT AND 12 THE ELISORS TO SIGN THE DOCUMENTS. 13 MR. URTNOWSKI: TODAY WE'RE HERE FOR AN APPLICATION TO 14 SELL. THE CIVIL CODE OF CIVIL PROCEDURES 704.770 REQUIRES 15 AN OSC TO BE SET; THE CARTOS BE GIVEN 20 DAYS NOTICE TO PUT 16 ON PROOF AS TO WHY THE CORPORATION — WHY THE PROPERTY 17 SHOULD NOT BE SOLD AND MAY NOT BE SOLD. 18 THE COURT: ANYTHING YOU WANT TO ADD, MR. SAMPSON? 19 MR. SAMPSON: THE CORRECT PROCEDURE DOES REQUIRE 20 ANOTHER HEARING TO BE SET TODAY. IN THE INTERIM, WE'RE 21 ASKING FOR AUTHORITY TO START ADVERTISING IT. 22 THE ONE ADMINISTRATIVE ISSUE AS WE'RE SELLING IT 23 IS, THE PERSON APPOINTED TO SELL IT WOULD REQUIRE ACCESS TO 24 INSPECT THE HOUSE, MEASURE IT, AND THEN LIST IT. THAT CAN 25 BE DONE. THERE’s A 20 DAY HEARING. THEN THERE’s A SALE 26 DATE SET, AND THEN THE SALE WOULD BE HELD IN OPEN COURT 27 SUBJECT TO OVERBID. IT WILL BE DONE BY THE CODE. 28 MR. URTNOWSKI: THAT’s ALL PREMATURE TOO IF WHAT
page 41 1 COUNSEL IS SUGGESTING THEY LIST THE PROPERTY FOR SALE NOW 2 AND HAVE ACCESS TO THE Cartos’ RESIDENCE. THERE’s BEEN NO 3 DETERMINATION THAT THE PROPERTY IS TO BE SOLD YET. 4 THE COURT: YOU ARE NOT ASKING FOR ACCESS NOW, ARE 5 YOU? YOU ARE GOING TO BRING YOUR HEARING 20 DAYS, 21 DAYS. 6 MR. SAMPSON: MR. URTNOWSKI IS OFF ON THAT POINT. THE 7 WAY THIS GOES IS IF SOMEBODY RESIDES IN THE PROPERTY, NEED A 8 COURT ORDER TO AUTHORIZE THE SALE. REALLY TRULY THEY HAVE 9 BEEN PUT ON NOTICE OF THIS FOR MORE THAN THE REQUIRED 10 AMOUNT, AT LEAST 17 DAYS. THE COURT CAN SET A SALE DATE OUT 11 OF 120 DAYS, AND THEN IN THE INTERIM THEY CAN MARKET IT AND 12 DO THE REST. AS FAR AS ANOTHER OSC, ESSENTIALLY WOULD BE 13 RULING ON THE SAME THING THE COURT CAN RULE ON TODAY. 14 THE COURT: THAT’s RIGHT. THAT’s WHY I AM WONDERING 15 WHY I'M DOING IT. 16 MR. URTNOWSKI: ONE THING THE COURT REQUIRES — THE 17 CODE REQUIRES YOU TO DO IT. TWO, THERE WAS NO EVIDENCE 18 REQUIRED TO BE PUT FORTH TODAY THAT THE PROPERTY WOULD NOT 19 BE SOLD, BECAUSE THAT WAS NOT BEFORE THE COURT. 20 THE COURT: ALL RIGHT. IF YOU WANT TO GIVE ME A DATE, 21 I DO HAVE A MURDER TRIAL STARTING. IT WILL BE A LONG TRIAL, 22 TOUGH TRIAL, ABOUT 3 MONTHS. 23 MR. URTNOWSKI: THE CODE REQUIRES THAT THE CARTOS BE 24 GIVEN 20 DAYS PERSONAL NOTICE OF AN OSC. IT HAS TO BE AFTER 25 20 DAYS, YOUR HONOR. 26 THE COURT: JUNE 8 WOULD BE 20 DAYS. YOU WILL BE HERE 27 ON THAT DATE. YOU ARE GETTING THEIR NOTICE RIGHT NOW IN 28 COURT. WE'LL BE CHOOSING A JURY ON THAT DATE. I DON'T
page 42 1 THINK THIS SHOULD TAKE TOO LONG. 2 HOW ABOUT COMING IN AT 3 IN THE AFTERNOON? 3 MR. URTNOWSKI: FINE. 4 THE COURT: SEE YOU AT 3 O'CLOCK ON THAT DATE. I 5 ALREADY RULED ON STRIKING PORTIONS OF THE PLAINTIFF'S 6 AFFIDAVIT. 7 LET’s TALK ABOUT THE CONTEMPT. LET ME MAKE SOME 8 GENERAL COMMENTS FIRST. IF THE PARTIES HERE WOULD LIKE TO 9 TRY TO SETTLE THIS CASE, I AM NOT GOING TO DO THAT. JUST TO 10 SETTLE IT I HAVE TO TALK TO YOU INDIVIDUALLY. I DON'T WISH 11 TO DO THAT. I CAN PROVIDE A JUDGE FOR YOU. I WILL FIND 12 SOMEBODY TO TRY TO SETTLE IT. 13 THE LAST THING THAT I WANT TO DO IN THIS WHOLE 14 WORLD, MR. AND MRS. CARTO, IS SEND YOU TO JAIL, BUT 15 ULTIMATELY IT’s COMING TO THAT. YOU ARE NOT DEALING HERE 16 WITH SOME LAW FIRM THAT’s A HICK LAW FIRM WHO IS TRYING TO 17 ENFORCE SOME JUDGMENT THAT YOU GET OUT OF SMALL CLAIMS 18 COURT. THEY KNOW WHAT THEY ARE DOING. YOUR LIFE IS 19 COLLAPSING AROUND YOU, AND YOU BETTER BE SERIOUS ABOUT 20 THIS. 21 MY PROBLEM IS THIS. YOU HAVE TWO AREAS, AS I SEE 22 IT, FOR CONTEMPT. FIRST THE FAILURE TO ANSWER QUESTIONS. 23 THIS IS THIS WHOLE ISSUE OF THE FIFTH AMENDMENT. 24 PRELIMINARILY I LOOKED AT THAT, AND I SIMPLY DON'T SEE 25 THERE’s ANY FIFTH AMENDMENT PRIVILEGE AND AS I UNDERSTAND 26 THE LAW IN THE CASES CITED; AND SECOND, IT’s MUCH EASIER TO 27 ISSUE CONTEMPT FOR THE FAILURE TO TURN OVER DOCUMENTS. 28 THERE ARE ABOUT 56 AREAS THAT THEY WANT DOCUMENTS TURNED
page 43 1 OVER. I LOOKED AT IT AND SOME ARE DUPLICATIVE AND 2 EVERYTHING ELSE. THERE ARE 51 OF THEM. I CAN GO THROUGH 3 THEM ONE BY ONE WHERE I THINK THAT THESE ARE LAWFUL ORDERS 4 OF THIS COURT FOR YOU TO DO THINGS, AND YOU ARE NOT DOING 5 THEM, AND THIS IS ADDRESSED TO BOTH YOU AND YOUR WIFE. AND 6 IF YOU ARE FOUND IN CONTEMPT, I WILL GIVE YOU 5 DAYS ON EACH 7 ONE OF THESE, AND I AM GOING TO RUN IT CONSECUTIVE. TELL 8 THE JAIL NO EARLY OUT. THAT’s 255 DAYS. YOU CAN SEEK WHAT 9 REMEDY YOU WANT FROM THE JUDGES ABOVE ME. THAT’s WHAT IS 10 GOING TO HAPPEN. 11 AND THEN AFTER THAT I WILL WORRY ABOUT PUTTING YOU 12 INTO JAIL UNTIL YOU ANSWER THE QUESTIONS. IT’s SORT OF LIKE 13 THE SUSAN MACDOUGLE THING. YOU WATCHED THAT. YOU GO TO 14 JAIL UNTIL YOU ANSWER THE QUESTIONS. YOU DON'T ANSWER THE 15 QUESTIONS, YOU STAY IN JAIL. IT’s THE LAST THING I WANT TO 16 DO IN THE WORLD. 17 AND I'M NOT GOING TO SEND YOU TO JAIL TODAY. I 18 DON'T CARE WHAT IS GIVEN TO ME. I WILL GIVE YOU AN 19 OPPORTUNITY TO COMPLY WITH THE LAWFUL ORDERS OF THIS COURT 20 ULTIMATELY. I AM EXTREMELY RELUCTANT TO SEND SOMEONE OF 21 YOUR AGE AND YOUR WIFE’s AGE TO JAIL, BUT I WILL HAVE TO DO 22 IT. DO WHAT YOU WANT TO DO. IT’s COMING AND, YOU KNOW, I 23 LIVED WITH THIS CASE AND THE FALSE TESTIMONY THAT I HAVE 24 GOTTEN AND MULTIPLE CORPORATIONS; THE FACT THAT YOU 25 REPRESENT YOURSELF AS AN OWNER IN ONE POSITION, NOT AS AN 26 OWNER IN ANOTHER. I'M NOT GETTING TIRED OF IT, BUT YOU 27 CAN'T EXPECT THIS COURT TO HAVE INFINITE PATIENCE. 28 I DON'T KNOW WHAT YOU WANT TO DO ABOUT THE
page 44 1 CONTEMPT. MY FEELING IS I WOULD PROBABLY PUT IT FOR AN OSC, 2 GIVE MR. CARTO ANOTHER CHANCE TO COMPLY. AND THERE ARE TWO 3 BIG AREAS HERE. ONE IS TO ANSWER THE QUESTIONS PROPOSED BY 4 COUNSEL. IF YOU THINK YOU HAVE A FIFTH AMENDMENT RIGHT 5 THERE, THEN SO BE IT, AND WE'LL HANDLE THAT; BUT IT WILL BE 6 HANDLED AFTER YOU COMPLY WITH THE TURNOVER ORDER ON THE 7 DOCUMENTS. I MEAN, AN ATTORNEY HERE TELLS ME HE THINKS THAT 8 IF NEED BE DOCUMENTS ON THE HEREFORD CORPORATION CAN 9 APPEAR. NOW HE CAN'T REVEAL HIS COMMUNICATIONS WITH YOU, 10 BUT I CAN INFER THEY APPEAR BECAUSE YOU EITHER HAVE ACCESS 11 TO THEM OR YOU HAVE THEM YOURSELF, YET THAT’s THE FIRST 12 THING THEY ASKED FOR IN THIS. 13 AND MR. SAMPSON, IS IT CORRECT THERE HAS BEEN NO 14 DOCUMENTS FROM THE HEREFORD CORPORATION GIVEN TO YOU BY 15 MR. CARTO? 16 MR. SAMPSON: WE RECEIVED NO DOCUMENTS IN RESPECT TO 17 THE TURNOVER ORDER, YOUR HONOR. 18 THE COURT: I DON'T KNOW WHAT YOU WANT TO DO ON THE 19 CONTEMPT. I WANT TO EMPHASIZE AGAIN I'M RELUCTANT TO DO IT, 20 BUT I THINK WHEN I SET THE DATE FOR THIS CONTEMPT HEARING, 21 YOU'LL PRETTY MUCH TELL ME WHERE YOU WANT TO BE LIVING THAT 22 NIGHT BY THE WAY YOU COME DRESSED. IF YOU ARE DRESSED IN 23 THE NICE SUIT AND EVERYTHING, I ASSUME YOU ARE GOING TO 24 COOPERATE WITH THE ORDERS OF — THE LAWFUL ORDERS OF THIS 25 COURT. IF YOU WANT TO GO TO JAIL, YOU MIGHT AS WELL COME IN 26 THE DUNGAREES. THE SUIT WILL NOT DO YOU MUCH GOOD IN JAIL. 27 THERE’s WHERE WE ARE. 28 MR. SAMPSON, WHAT DO YOU WANT TO DO ABOUT THIS
page 45 1 CONTEMPT PROCEEDING? 2 MR. SAMPSON: WE SET IT SO IT COULD BE HEARD TODAY, BUT 3 THE COURT IS BEING VERY FAIR. IT WOULD TAKE MORE TIME IF 4 YOU SET IT FOR 20 MORE DAYS ON JUNE 8TH, OR IT CAN BE HEARD 5 TOGETHER. THAT WOULD BE ONE WAY OF SETTLING BOTH ISSUES AT 6 ONCE. IF THE COURT ISSUED THE NOTICE TODAY, AGAIN SERVICE 7 WOULDN'T BE A PROBLEM. 8 THE COURT: RIGHT. I WOULD ISSUE THE NOTICE AGAIN, AND 9 THEY'RE BOTH HERE TO BE SERVED. 10 MR. IZEN: LET ME STATE OBJECTIONS ON THE RECORD BUT 11 ALSO ASK SOME QUESTIONS TO THE EXTENT THAT THERE ARE 12 DOCUMENTS THAT ARE REQUESTED. THERE’s AN ELEMENT IN HERE OF 13 TRACING THE FERREL MONIES. THAT’s THE CRIMINALITY PROBLEM 14 WITH WHAT HAS BEEN EXPRESSED IN SWITZERLAND, THE CHARGES, 15 WHAT COSTA MESA WAS ATTEMPTING TO FOLLOW. I HAVE NOT BEEN 16 IN THE CASE LONG ENOUGH TO LOOK DOWN THE DOCUMENTS TO SEE 17 WHAT DOCUMENTS RAISE A PROBLEM WITH THAT; WHAT DON'T. IT 18 WOULD BE MY POSITION TO TENDER WITHOUT IDENTIFICATION THE 19 DOCUMENTS SIMPLY BECAUSE ANY OF THE DOCUMENTS THAT THEY ARE 20 DESIRING UNDER THE UNDERSTANDING THAT UNDER UNITED STATES V. 21 DOE IT’s THE MERE ACT OF IDENTIFYING THEM THAT CAN BE 22 INCRIMINATING, RATHER THAN THE DOCUMENT THEMSELVES. I THINK 23 IN JUDGMENT COLLECTION THEY'RE SIMPLY INTERESTED IN THE 24 CONTENTS OF THE DOCUMENT. THEY DON'T NECESSARILY CARE ABOUT 25 TYING THE DOCUMENTS TO THAT PERSON FOR PURPOSES OF 26 AUTHENTICATION. 27 NOW PREVIOUSLY WE INDICATED THAT WE WISHED AN IN 28 CAMERA REVIEW OF THE QUESTIONS THAT WERE PRESERVED. ARE YOU
page 46 1 DENYING THAT TO THE DEBTORS? 2 THE COURT: UNLESS YOU CAN GIVE ME SOME AUTHORITY WHERE 3 I HAVE TO DO IT. I DON'T WANT TO DO IT. I DON'T BELIEVE 4 IT’s APPROPRIATE. IN ALL CANDOR, I DON'T HAVE ANY 5 CONFIDENCE IN WHAT YOUR CLIENTS TELL ME, BASED ON THE 6 TRIAL. THEY WEREN'T CANDID WITH ME AT THE TRIAL, AND I HAVE 7 NO REASON TO BELIEVE IN THE COURSE OF THIS CASE THAT THEY'VE 8 BEEN CANDID AGAIN. WHY SHOULD I LISTEN TO PEOPLE I DON'T 9 THINK ARE CANDID WITH ME? 10 MR. IZEN: IT’s NOT A QUESTION OF CANDOR. IT’s A 11 QUESTION OF CONSTITUTIONAL RIGHTS. I THINK THE CASES ARE 12 CLEAR, BOTH IN CALIFORNIA AND OTHERWISE, THAT IT’s THE 13 RESPONSIBILITY OF THE DEBTORS OR THE PERSON BEING ASKED THE 14 QUESTIONS, WHO IS A CITIZEN WITH FIFTH AMENDMENT RIGHTS, TO 15 PROVIDE THE COURT WITH ENOUGH INFORMATION TO BE ABLE TO 16 UNDERSTAND AND RULE ON THEIR ASSERTION OF PRIVILEGE. 17 WE'RE NOT REFUSING TO DO THAT. IF YOU CLOSE THE 18 DOOR ON THAT, WE'RE SIMPLY PRESERVING THAT FOR APPEAL. IT 19 IS THE DEBTORS' INTENTIONS HERE TO GO FORWARD WITH ANY OF 20 THESE QUESTIONS AND EXPLAIN THEIR CONCERNS TO THE COURT, AND 21 THEN IF THE COURT WERE TO COMPEL THEM TO ANSWER THE 22 QUESTIONS, THEN THEY WOULD BE IN THE POSITION OF SOMEONE WHO 23 HAD EITHER BEEN ERRONEOUSLY COMPELLED AND APPEAL THAT OR GO 24 TO JAIL. AND THERE’s SOME OBJECTION FOR WITH ERRONEOUSLY 25 COMPELLED, NOT UNDER THE FOREIGN JURISDICTION, UNDER 26 CASTER. WE WANT TO MAKE SURE WE'RE ON THE RIGHT BASE ON 27 THAT. 28 THE COURT UNDERSTANDS OUR POSITION. WE'RE NOT THE
page 47 1 SOLE ARBITER OF THE PRIVILEGE. IF THE COURT FINDS THE IN 2 CAMERA REVIEW OR OTHERWISE THEY'RE NOT CREDIBLE, MAKES ITS 3 FINDING ACCORDINGLY AND SAYS THE FIFTH AMENDMENT PRIVILEGE 4 DOESN'T APPLY, BECAUSE THEY'RE NOT CREDIBLE IN LIGHT OF ALL 5 THE OTHER EVIDENCE IN THE CASE. THE COURT CAN MAKE THAT 6 FINDING, AND THE APPEALS COURTS OR WHO REVIEWS IT CAN MAKE 7 THE DETERMINATION. 8 THE COURT: I DON'T GET TO THAT ISSUE IF I GO ON THE 56 9 ITEMS THEY ASKED FOR. THE ONES I EXCLUDED WERE THINGS OF 10 TURNING OVER THEIR PERSONAL FINANCIAL INFORMATION. 11 MR. IZEN: LET ME PRESS THE PANAMANIAN JUDGE THING. I 12 TAKE THE RESPONSIBILITY TO THE COURT VERY SERIOUSLY. 13 THERE’s AN IMPLICATION BY THE COURT THAT MR. URTNOWSKI, OR 14 COUNSEL, OR DEFENSE, WHATEVER, CAN ALL OF A SUDDEN PRODUCE 15 RECORDS. WELL, THE ANSWER TO THAT, IF THIS RECEIVER REALLY 16 KNOWS WHAT HE’s DOING, AND HE’s FROM A TOP HOT SHOT LAW 17 FIRM, THEY KNOW THE PANAMANIAN RECORDS ARE AVAILABLE TO 18 EVERYBODY. ALL IT TAKES IS A REQUEST, WHICH HAS BEEN MADE 19 BY US, TO GET RECORDS, WHICH ARE PUBLIC RECORD. YOU CAN ASK 20 DOWN THERE FOR THE STATUS OF A CORPORATION, ITS ARTICLES AND 21 ALL THESE THINGS LIKE YOU CAN ASK UP HERE. 22 NOW WE'RE NOT SAYING WE WOULDN'T DO THAT, BUT WE 23 KIND OF — WE'RE AMAZED THAT WOULD BE TAKEN AS SOMETHING 24 THAT THE COURT WOULD HAVE UMBRAGE AGAINST US. THIS IS A 25 MATTER OF PUBLIC RECORD. WE MAY BE ABLE TO PRODUCE IT 26 EASIER THAN THEY HAVING SOME FAMILIARITY PREVIOUSLY WITH 27 PANAMANIAN LAW, BUT YOU ARE DEALING WITH AN ISSUE THAT'S 28 PUBLIC RECORD. I DON'T KNOW WHAT THE OTHER DOCUMENTS ARE.
page 48 1 I WILL CERTAINLY LOOK AT IT, AND HOPEFULLY SOMETHING CAN BE 2 DONE TO TENDER THEM WITH AND GIVE THEM THE SPECIFIC 3 INFORMATION, WITHOUT SPECIFICALLY IDENTIFYING THEM — IN A 4 WAY THEY WOULD BE USELESS IN ANY CRIMINAL CASE BUT CAN BE 5 USED TO THE EXTENT THEY NEED THEM FOR THE INFORMATION HERE. 6 THE COURT: I'LL HEAR FROM MR. SAMPSON IN A MINUTE, BUT 7 BASED ON WHAT I READ, IT’s AWFULLY HARD FOR ME TO BELIEVE 8 THAT SWITZERLAND WILL DO ANYTHING ABOUT THIS. COSTA MESA 9 PROBABLY IS — THE STATUTE OF LIMITATIONS RUNS OUT IN A FEW 10 MONTHS ON THAT ANYWAY, AND THEY HAVE TAKEN THE EVIDENCE AND 11 RETURNED IT TO THE PARTIES. POLICE NORMALLY DON'T RETURN 12 EVIDENCE TO PARTIES WHEN THEY THINK THEY ARE GOING TO BE 13 PROSECUTING. IRS MAY HAVE ITS OWN DIFFICULTIES WITH 14 MR. CARTO AND MRS. CARTO, BUT THIS COURT HASN'T BEEN 15 NOTIFIED TO GIVE ANY COPIES OF TRANSCRIPTS OR DOCUMENTS TO 16 ANY GOVERNMENTAL AGENCY. 17 THE ATTORNEY GENERAL MAY BE A BIT INTERESTED IN 18 THIS BUSINESS OF LIBERTY LOBBY PAYING FOR THE TAXES ON THE 19 HOME THAT MR. CARTO LIVES IN. ONE WONDERS WHEN YOU TALK 20 ABOUT PEOPLE SENDING MONEY TO LIBERTY LOBBY IF THEY THOUGHT 21 THEY WERE SENDING MONEY FOR THAT PURPOSE. SO THESE WORK 22 TOGETHER, DON'T THEY? 23 BUT IF I TAKE THE ATTACHMENTAFILED BY THE 24 DEBTORS AND I GO THROUGH THAT FOR THE THINGS THEY'RE ASKING 25 FOR, FOR EXAMPLE, HEREFORD CORPORATION, LIBERTY LOBBY, 26 VIBET, FOUNDATION TO DEFEND THE FIRST AMENDMENT — LOOK AT 27 THESE ORGANIZATIONS, LIBERTY LIFE LINE, DOWNEY SAVINGS, 28 WELLS FARGO, SOUTH BAY BANK, UNITED VIRGINIA BANK, SHEARSON
page 49 1 LEHMAN HUTTON, WHEAT FIRST SECURITIES, ASA LIMITED COMMON, 2 STANDARD CHARTERED BANK IN ZIMBABWE, RADNOVICH FINANCIAL 3 SERVICES, INGEBORG BUSCH TRUST, HOMESTAKE MINING 4 CORPORATION, BORDIER ET CIE, PARSON TRADING, THE ATLANTIC 5 FIXTURES, VISTA INVESTMENT, LONDON REAL ESTATE PORTFOLIO, 6 FLEMING PRIVATE ASSET MANAGEMENT, QUILTER GOODSON, CHARLES 7 SCHWAB, JACK WHITE AND COMPANY. QUILTER GOODSON EXISTS -- 8 THAT WAS THE LAW FIRM, AS I REMEMBER IT, IN LONDON. I KNOW 9 THESE THINGS HAVE TO EXIST. JACK WHITE AND COMPANY, BANK OF 10 N.T. BUTTERFIELD AND SON, LIMITED, VENEZUELA GOLDFIELD'S, 11 KAYLA SATELLITE BROADCASTING, SOUND COMMUNICATIONS, H.F. 12 HUTTON. IT GOES ON AND ON AND ON. 13 IF I TAKE OUT, FOR EXAMPLE, ITEM 33 AND 34, WHICH 14 ARE THE PERSONAL RECORDS OF MR. AND MRS. WILLIS CARTO, AND 15 THEN LATER ON I TAKE OUT SOME OF THE OTHER THINGS WHERE 16 THEIR FINANCIAL ADVISORS ARE BEING ASKED TO TELL US ABOUT 17 THEM, MOST OF THESE FIFTH AMENDMENT THINGS DISAPPEAR. I 18 CAN'T BELIEVE THAT MR. WILLIS CARTO HAS ANY ARGUMENT OF 19 FIFTH AMENDMENT RIGHT AS TO ALL THE OTHER THINGS. 20 THEN WE DO ALSO HAVE THE REAL PROBLEM OF CONFLICT 21 HERE. MR. URTNOWSKI IS REPRESENTING THE FURRS AND THE 22 CARTOS, BECAUSE THEY MAY WELL BE IN OPPOSITION TO EACH 23 OTHER, BUT — AND I'M NOT GOING TO GO THROUGH ALL THE OTHER 24 ORGANIZATIONS THAT ARE LISTED HERE. THEY ARE NUMEROUS. ANY 25 WAY. 26 MR. IZEN: YOUR HONOR, I STRONGLY TAKE THE POSITION 27 THAT WE SHOULD BE ALLOWED TO INTRODUCE ANY TESTIMONY ON THE 28 ISSUES THE SALE OF THE HOUSE AND THE ENTITIES THAT CAN'T BE
page 50 1 LINKED IN ANY WAY TO THE FERREL MONIES. 2 IT WAS NEVER MY INTENTION TO CLAIM ANY KIND OF 3 PRIVILEGE EXCEPT TO WHAT THE MONIES OR PROPERTIES WERE THAT 4 CAME FROM THE FERREL MONIES. AND IN LIGHT OF THE CRIMINAL 5 PROSECUTIONS THAT WERE RECOMMENDED OR INVESTIGATION WHAT YOU 6 RAISED, I WOULD SAY 80 PERCENT OF THAT PROBABLY IS FROM 7 PRIOR YEARS. POSSIBLY THAT DID NOT EXIST. THE RECORDS -- 8 THE CONTENTS DIDN'T EXIST AT THE TIME FERREL GAVE THE 9 DONATION. 10 THE COURT: THAT DOESN'T MAKE A DIFFERENCE. THAT'S 11 WHAT I AM TELLING YOU. IT DIDN'T MAKE A BIT OF DIFFERENCE. 12 MR. IZEN: IT DOES TO THE FIFTH AMENDMENT. 13 THE COURT: I DON'T SEE IT. IT’s YOUR BURDEN TO SHOW 14 IT AND, YOU KNOW, YOU CITED CASES TO ME, AND IT IS NOT A 15 REASONABLE PROBABILITY OR POSSIBILITY BASED ON THE EVIDENCE 16 I HAVE THAT YOUR CLIENTS WILL BE IN CRIMINAL DIFFICULTIES 17 HERE. I HAVE THE SORT OF FEELING THAT THEY WILL BE BUT -- 18 MR. IZEN: YOU MADE SOME COMMENTS THAT SHOULD BE 19 ADDRESSED. YOU SAY IS THE IRS INTERESTED? NOBODY DONATES 20 TO LIBERTY LOBBY AND THE ENTITY IS TOLD IT’s TAX 21 DEDUCTIBLE. THAT’s NUMBER ONE. 22 NUMBER TWO, MY UNDERSTANDING IS THAT THEY PAY FOR 23 A PORTION OF THAT LEASEHOLD BECAUSE THEY GET CERTAIN 24 PRIVILEGES. 25 THE COURT: THAT MAY BE. 26 MR. IZEN: SO I DON'T SEE THAT THE IRS HAS ANY BIG 27 INTEREST IN THIS AT ALL, OR I'M SURE THEY WOULD BE IN THE 28 GALLERY. IT CERTAINLY HAS BEEN PUBLICIZED. I DO A LOT OF
page 51 1 DEALINGS WITH THE PEOPLE IS WHAT I AM TRYING TO SAY. 2 AS FAR AS THE PANAMANIAN SITUATION IS CONCERNED, 3 IT’s PUBLIC RECORD, OWNERSHIP OF THE HOUSE, OR WHATEVER. 4 I'M PREPARED TO EXPEDITE THAT. I THINK I CAN GET THAT 5 TODAY. 6 THE COURT: WHATEVER. I'M TRYING TO TELL YOU I WOULD 7 LIKE TO AVOID HAVING TO PLACE MR. AND MRS. CARTO INTO JAIL. 8 MR. IZEN: CERTAINLY I WOULD LIKE TO AVOID THAT. IF I 9 HAVE TO GO ON APPEAL, I WOULD LIKE THE STRONGER CASE. I'M 10 CONCEDING, ALTHOUGH YOU DON'T THINK IT’s IMPORTANT I THINK 11 IT’s IMPORTANT, THAT THE ONLY POSSIBLE CRIMINALITY COMES 12 FROM THE USE OF THE FERREL MONIES. THAT COMES AFTER A 13 CERTAIN DATE, AND SOME OF THE STUFF THEY ASKED FOR IS PRIOR 14 TO THAT. 15 WE WOULD LIKE TO HAVE A RECESS TO SEE HOW WE'RE 16 GOING TO PROCEED AND WHAT EVIDENCE WE MAY OR MAY NOT BE ABLE 17 TO ELICIT IN LIGHT OF THE COURT’s RULINGS. 18 THE COURT: WELL -- 19 MR. IZEN: I'M NOT TALKING ABOUT LEAVING. I'M TALKING 20 ABOUT GOING OUT IN THE HALL AND COMING BACK. 21 THE COURT: FOR PROCEDURAL MATTERS I THINK I WILL 22 CONTINUE THE OSC FOR CONTEMPT HEARING FOR THE 8TH. I MAY 23 NOT BE ABLE TO HANDLE IT. 24 I WILL TELL YOU WHAT THE PROBLEM IS IS THIS. THAT 25 THIS IS A CRIMINAL TRIAL, WHICH IS GOING TO START ON THE 26 FIRST OF JULY — JUNE, FIRST OF JULY TO TAKE THE EVIDENCE. 27 WE'LL USE THE MONTHS OF JUNE TO CHOOSE THE JURY. BECAUSE OF 28 THE NATURE OF THE CASE IT WILL TAKE A LONG TIME TO CHOOSE
page 52 1 THE JURY, AND WE HAVE 14 JURORS COMING IN EACH DAY. ONCE WE 2 GET TO ABOUT 80 JURORS, THEN WITH ALL THE CHALLENGES AND 3 EVERYTHING ELSE THAT OCCUR, WE CAN PRETTY MUCH I THINK STOP 4 OUR JURY SELECTION PROCEDURE. I HAVE TO TALK WITH THE 5 ATTORNEYS ABOUT THAT. SO THERE MIGHT BE SOME TIME IN THE 6 LATTER PART OF JUNE TO COME BACK AND SPEND A DAY OR SO ON 7 CONTEMPT HEARING. 8 AGAIN, KEEP IN MIND THE OFFER, IF YOU CAN SETTLE 9 THE CASE. THEY SAY A SKINNY SETTLEMENT IS BETTER THAN A FAT 10 LAWSUIT, AND YOU ARE CHURNING UP AN AWFUL LOT OF MONEY ON 11 BOTH SIDES. IF YOU CAN COME TO AN AGREEMENT, YOU MAYBE 12 OUGHT TO THINK ABOUT IT. 13 MR. IZEN: LET ME, BEFORE YOU MOVE, MOVE TO PLACE 14 WILLIS CARTO AND ELISABETH ON THE STAND TO AT LEAST TO THE 15 TESTIMONY WHAT THEY KNOW ABOUT THE LEASEHOLD AND THE 16 HEREFORD CORPORATION, SO THAT REGARDLESS OF WHAT YOUR RULING 17 IS ON THE HOUSE, WE'LL HAVE THAT PRESERVED ON THE RECORD BY 18 WAY OF OFFER OF PROOF OR OTHERWISE. 19 THE COURT: MR. SAMPSON, ANY COMMENTS YOU WANT TO 20 MAKE? 21 MR. SAMPSON: YOUR HONOR, THE HOUSE ISSUE IS RESOLVED. 22 AS FAR AS THE OSC ISSUE, I BELIEVE THE TESTIMONY 23 WOULD BE REQUIRED AT THE HEARING. IF WE'RE GOING TO DO THIS 24 PIECEMEAL, I WOULD LIKE SOME NOTICE. I WOULD PREFER TO HAVE 25 IT DONE ALL AT ONCE. 26 THE COURT: HOW LONG WOULD IT TAKE FOR YOUR CLIENTS? 27 MR. IZEN: I NEED TO CONFER FOR TWO MINUTES. 28 UNDERSTAND THIS — THIS IS LIKE AN OFFER OF PROOF. IF YOU
page 53 1 DON'T WANT TO ACCEPT THIS EVIDENCE AS PART OF YOUR RULING 2 THAT YOU SHOULD ADD THESE PARTIES, I WANT TO MAKE SURE IT'S 3 CONSIDERED AN OFFER OF PROOF. IF YOU WILL CONSIDER IT AND 4 RECONSIDER YOUR OFFER, I WANT THIS ON THE RECORD FOR 5 PURPOSES OF APPEAL. 6 THE COURT: I'M ALWAYS WILLING TO CONSIDER EVERYTHING. 7 I AM NOT IN A POSITION, UNLESS YOU TELL ME THERE’s SOME LAW 8 THAT SAYS I HAVE TO DO IT, TO CONSULT WITH MR. AND 9 MRS. CARTO WITHOUT THE OTHER SIDE BEING PRESENT. 10 MR. IZEN: THIS THING ON THE ISSUE OF THE HOUSE, THE 11 PANAMANIAN STUFF, AS YOU SAY, THEY HAVE A RIGHT TO FIND ANY 12 ASSETS IRRESPECTIVE OF WHAT THE PARTIES DID TO EACH OTHER 13 AND THE JUDGMENT. I UNDERSTAND THAT OR WHAT THE FINDINGS 14 AND CONDUCT WERE. THAT CONDUCT IS WHAT’s BEEN CLAIMED TO 15 BE. THERE’s BEEN CRIMINAL ALLEGATIONS OF MISUSE OF THE 16 MONEY. OKAY. THAT DOESN'T HAVE ANYTHING TO DO WITH BUYING 17 A HOUSE IN 1981. IT DOESN'T HAVE ANYTHING TO DO WITH THE 18 CORPORATION OWNING THE HOUSE. DOESN'T HAVE ANYTHING TO DO 19 WITH WHY THE CORPORATION OWNED THE HOUSE. I CAN GO FORWARD 20 SAFELY ON THAT AND HAVE YOU CONSIDER THAT THIS IS THE ALTER 21 EGO EVIDENCE AND THE OTHER STUFF. 22 AS FAR AS THE EX PARTE ISSUE, WHAT YOU DO THAT FOR 23 IS YOU GO IN CAMERA TO KEEP THE OTHER SIDE FROM 24 UNDERSTANDING WHAT THEY'RE AFRAID OF CRIMINALLY, SO THAT'S 25 NOT REVEALED. IN OTHER WORDS, YOU DON'T HAVE TO CONFESS YOU 26 DID SOMETHING IN ORDER TO PRESERVE THE FIFTH AMENDMENT. YOU 27 ONLY HAVE TO REVEAL ENOUGH IN CAMERA TO SHOW A REASONABLE 28 FEAR, AND THEY ONLY REQUIRE YOU — YOU TO DO THIS IN
page 54 1 CAMERA. THEY DON'T REQUIRE YOU TO DO IT IN OPEN COURT WHERE 2 OTHER PARTIES LIKE THE IRS CAN SIT AND WRITE DOWN WHAT YOU 3 SAY AND SAY, DIDN'T YOU SAY THIS IN OTHER WORDS TO ASSERT 4 THE FIFTH AMENDMENT? DIDN'T YOU SAY YOU WERE AT SUCH AND 5 SUCH HOUSE AND HE WAS FOUND DEAD THE SAME NIGHT AND DAY? 6 THAT KIND OF THING. THAT’s WHY YOU HAVE THE EX PARTE. IT'S 7 CALLED IN CAMERA, NOT EX PARTE. 8 THE COURT: WE CAN TAKE A BREAK. I HAVE UNTIL NOON, IF 9 YOU WANT TO CONSULT WITH YOUR CLIENTS ABOUT WHAT THEY WANT 10 TO DO. IF THEY WANT TO TESTIFY TODAY ABOUT THE HEREFORD 11 CORPORATION, I MIGHT TAKE THE TESTIMONY TODAY SUBJECT TO 12 HAVING THEM PUT ON THE STAND LATER ON. 13 MR. IZEN: I THINK THEY PROBABLY WILL. 14 THE COURT: I WILL TAKE A BREAK HERE. FIVE, 10 15 MINUTES. 16 17 (PROCEEDINGS RECESSED.) 18 19 THE COURT: BACK ON THE RECORD. THE REPORTER ASKED IF 20 WE COULD MEET AT 8:30 ON JUNE 8TH. IS THAT A POSSIBILITY? 21 THE REASON IS THE NATURE OF THIS CASE WE'RE DOING REQUIRES 22 TWO REPORTERS. WE HAVE TO MAKE A DAILY TRANSCRIPT. IT'S 23 HARD TO DO IT IF THEY COME IN AT — IF YOU COME IN AT 3:30. 24 8 O'CLOCK THEN OR 8:30. 25 MR. SAMPSON: THAT IS THE OSC’s AND -- 26 THE COURT: YES, THE OSC'S, AND IT’s ALSO THE — AND 27 THIS IS WHERE I AM NOT FAMILIAR WITH THE LAW, THE PROCEDURE 28 THAT ONE HAS TO GO THROUGH IN ORDER TO SELL THE HOUSE.
page 55 1 MR. SAMPSON: CORRECT. 2 THE COURT: I HAVE TO LOOK THAT UP. WE DON'T NORMALLY 3 GET TO THAT. THIS IS THE FIRST ONE I HAVE DONE THAT'S 4 GOTTEN THIS FAR. ALL RIGHT. LET’s SEE. 5 ANYTHING ELSE WE WANT TO DO IN THE REMAINING 6 HOUR? 7 MR. IZEN: YES. I WOULD LIKE TO — MR. JOE IZEN FOR 8 WILLIS CARTO. I WOULD LIKE TO CALL MR. CARTO TO THE STAND 9 AND OFFER THE TESTIMONY WE WERE TALKING ABOUT CONCERNING THE 10 HEREFORD CORPORATION AND OWNER OF THE CORPORATION. HIM -- 11 PUTTING HIM ON THE STAND TO EXPLAIN THE HISTORY OF THE HOUSE 12 AND THE STATEMENTS, AND IT WILL BE SUBJECT TO 13 CROSS-EXAMINATION. 14 I TOLD MR. SAMPSON I ANTICIPATE BEING ABLE TO GET 15 THE PANAMANIAN CORPORATION RECORDS TO HIM WITHIN A WEEK. WE 16 REQUESTED THEM FROM THE PANAMANIAN AUTHORITIES. THEY'LL BE 17 IN SPANISH. HE CAN GET HIS OWN TRANSLATION. 18 AND WE ANTICIPATE BEING ABLE TO GET SOME 19 FINANCIALS, WHICH — WHICH WILL SHOW HOW THE HOUSE WAS 20 PURCHASED AND WHAT WAS SPENT ON IT TO MAINTAIN IT. THINGS 21 OF THAT REGARD MAY HAVE SOME BEARING ON THE COURT’s DECISION 22 ON THE HOUSE. WE'RE ASKING THIS COURT TO CONSIDER IT AS 23 EVIDENCE BEARING ON THE MOTION SUBSTITUTING THE PARTIES AND 24 THE JUDGMENT AND ALSO THE ISSUE OF THE SALE OF THE HOUSE. 25 THE COURT: I AM DEFINITELY WILLING TO LISTEN TO 26 ANYTHING. RIGHT NOW I CAN TELL YOU THAT BASED ON THE 27 EVIDENCE I HAVE AT THIS TIME, I BELIEVE THAT THIS RESIDENCE 28 IS IN FACT THE CARTOS. THAT THEY'RE THE OWNER OF IT. AS I
page 56 1 SAID, THE HEREFORD CORPORATION IS A SHAM. IT’s AN ALTER EGO 2 OF THE CARTOS. 3 I DON'T KNOW IF THE DEBTORS ARE OBJECTING TO 4 THIS. IF THEY DO, I WOULD PROBABLY OVERRULE THE OBJECTION, 5 BUT IF MR. CARTO AND MRS. CARTO, IF SHE WANTS TO TESTIFY, 6 THEY WOULD BE SUBJECT TO RECALL BY THE DEBTORS BECAUSE THEY 7 DON'T HAVE NOTICE OF THIS OR ANYTHING. PROBABLY NOT 8 PREPARED TO REALLY CROSS-EXAMINE OR CROSS-EXAMINATION. WHEN 9 THEY GET THE DOCUMENTS FROM PANAMA, THEY MIGHT BE IN A 10 BETTER POSITION TO ASK ABOUT THEM. CERTAINLY WE HAVE AN 11 HOUR. I'M GLAD TO LISTEN TO THE CARTOS. 12 MR. IZEN: I'M CALLING MR. WILLIS CARTO. HE’s THE ONE 13 THAT HAS ANY KNOWLEDGE. STEP FORWARD, PLEASE. 14 THE COURT: HAVE MR. CARTO AGAIN, EVEN THOUGH HE WAS 15 SWORN EARLIER IN THE TRIAL, THAT WAS A COUPLE OF YEARS AGO. 16 17 WILLIS CARTO, 18 CALLED AS A WITNESS BY AND ON HIS OWN BEHALF, HAVING BEEN 19 FIRST DULY SWORN, TESTIFIED AS FOLLOWS: 20 THE CLERK: THANK YOU, SIR. PLEASE TAKE A SEAT. 21 WOULD YOU STATE YOUR FULL NAME AND SPELL YOUR LAST 22 FOR THE RECORD. 23 THE WITNESS: WILLIS A. CARTO. C-A-R-T-O. 24 MR. IZEN: YOUR HONOR, I ASSUME THAT I CAN REMAIN 25 SEATED, AND THERE’s NO MICROPHONE TO SPEAK INTO. 26 THE COURT: FINE, SIR. 27 28 DIRECT EXAMINATION
page 57 1 BY MR. IZEN: 2 Q MR. CARTO, ARE YOU FAMILIAR WITH A CORPORATION 3 KNOWN AS THE HEREFORD CORPORATION? 4 A YES. 5 Q WOULD YOU STATE TO THE COURT WHEN THE FIRST TIME 6 YOU BECAME AWARE OF THE NAME HEREFORD CORPORATION WAS? 7 A WELL, I BELIEVE, 1981. 8 Q AND WHAT WAS THE OCCASION THAT YOU FIRST HEARD 9 MENTION OF THE NAME HEREFORD CORPORATION? HOW DID YOU 10 BECOME FAMILIAR WITH IT? 11 A THAT WAS WHEN I CHANGED THE NAME OF INDEPENDENCE 12 HOUSE, PANAMANIAN CORPORATION, TO HEREFORD CORPORATION. 13 Q SO INDEPENDENCE HOUSE WAS A PANAMANIAN CORPORATION 14 AND THE NAME WAS CHANGED TO ANOTHER NAME? 15 A YES. 16 Q WHAT WAS THAT NAME? 17 A INDEPENDENCE HOUSE WAS CHANGED TO HEREFORD 18 CORPORATION. 19 Q ABOUT WHEN DID THAT OCCUR? 20 A WELL, IT WAS 1981, I BELIEVE. 21 Q IS THERE A DOCUMENTATION OF THAT CHANGE OF NAME 22 THAT YOU BELIEVE CAN BE OBTAINED FROM THE PANAMANIAN 23 CORPORATE AUTHORITIES? 24 A UNQUESTIONABLY. 25 Q AND YOU SET IN MOTION THE EFFORT TO OBTAIN THE 26 DOCUMENTS? 27 A YES. 28 Q AS FAR AS THE HEREFORD CORPORATION IS CONCERNED,
page 58 1 DO YOU KNOW WHO THE ORIGINAL SHAREHOLDERS WERE? 2 A YES. 3 Q WOULD YOU STATE TO THE COURT WHO THE SHAREHOLDERS 4 WERE? 5 A I WAS. 6 Q WERE YOU THE ONLY SHAREHOLDER? 7 A WELL, MY WIFE AND I JOINTLY OWN THE SHARES. 8 Q HOW MANY SHARES, DO YOU REMEMBER? 9 A 100, I THINK. 10 Q AND FOR HOW LONG WERE YOU AND YOUR WIFE — I GUESS 11 THAT’s ELISABETH CARTO, THE ONLY SHAREHOLDERS? 12 A UNTIL 6 YEARS AGO. 13 Q AND 6 YEARS AGO WOULD PLACE THIS WHEN? 1992? 14 A YES. 15 Q NOW DURING 1992, DID THE SHAREHOLDERS CHANGE? 16 A YES. 17 Q WHO ACQUIRED THE SHARES IN 1992 THAT WAS NOT A 18 SHAREHOLDER PRIOR TO 1992? 19 A ELISABETH’s NEPHEW IN GERMANY BECAME THE OWNER AT 20 THAT TIME. 21 Q WHAT WAS THE NAME? 22 A HANS DIRK OLDEMEIER. 23 Q YOU WERE INVOLVED IN A SUIT, WERE YOU NOT, WITH 24 SOME PEOPLE THAT ALLEGE THAT THEY REPRESENTED AN 25 ORGANIZATION KNOWN AS THE LEGION FOR SURVIVAL OF FREEDOM? 26 A NO, NOT THEM THEN. 27 Q WHEN COULD YOU GIVE US THE DATE THAT THE TRANSFER 28 OF THE SHARES OCCURRED AND COMPARE THAT TO THE DATE THAT THE
page 59 1 LAWSUIT WAS FILED? 2 A I BELIEVE 1992. I DON'T REMEMBER THE DATE. 3 Q NOW WHAT WAS THE REASON WHY THIS GENTLEMAN, HANS, 4 OBTAINED THE TRANSFER OF THE SHARES? 5 A BECAUSE AFTER DISCUSSIONS ELISABETH AND I WHO, OF 6 COURSE, HAVE NO CHILDREN UNFORTUNATELY, DECIDED TO — TO AT 7 FIRST TO MAKE HANS DIRK THE BENEFICIARY OF OUR WILL OR 8 TRUST. WE DIDN'T DECIDE. AND THEN WE DECIDED IT WOULD BE 9 SIMPLER TO GIFT IT TO HIM DURING OUR LIFE TIME. 10 AS TREASURER OF LIBERTY LOBBY, I HAVE SEEN MANY, 11 MANY, MANY TIMES WHERE OWNERS OF PROPERTY HAVE, AFTER THEY 12 DIE, HAVE — THE ESTATE HAS SUFFERED TRAGEDY BECAUSE OF OH, 13 A NUMBER OF REASONS. AND SO WE THOUGHT THAT GIFT WOULD BE 14 BETTER THAN EITHER A TRUST OR WILL. 15 Q SO HANS, THE GENTLEMAN, HANS DIDN'T PAY FOR THE 16 STOCK, BUT HE GOT THE STOCK BY GIFT IN 1992? 17 A TRUE. 18 Q PRIOR TO 1992 — FROM 1981 TO 1992, HOW LONG A 19 PERIOD OF TIME DID THAT CORPORATION HAVE TITLE IN ITS NAME, 20 THE PROPERTY THAT IS THE SUBJECT OF THE PROCEEDINGS BEFORE 21 THIS COURT THAT’s LOCATED HERE IN THIS COUNTY? 22 A WELL, IF I UNDERSTAND YOUR QUESTION CORRECTLY, IT 23 WOULD BE 100 PERCENT OF THE TIME. 24 Q WHAT WAS THE ORIGINAL SOURCE OF THE MONIES TO 25 PURCHASE THE PROPERTY THAT YOU ARE LIVING IN NOW THAT'S 26 LOCATED IN THIS COUNTY, PART OF THESE LEGAL PROCEEDINGS? 27 A THE MAJORITY OF IT CAME FROM A SALE OF OUR 28 CONDOMINIUM IN LOS ANGELES. THE BALANCE WAS MADE UP OF A
page 60 1 COMBINATION OF MONEY I WAS ABLE TO PUT TOGETHER — ELISABETH 2 AND I WERE ABLE TO PUT TOGETHER. AND THE BALANCE THE OWNER 3 TOOK $70,000 AS PAPER. 4 Q NOW THIS — WAS THIS A HOMESTEAD THAT YOU HAD THAT 5 YOU SOLD AND TOOK THE MONEY FROM TO BUY THE PROPERTY LOCATED 6 IN THIS COUNTY? 7 A IN MY OPINION THAT'S, I SUPPOSE, A LEGAL 8 QUESTION. I DON'T KNOW IF I CAN ANSWER THAT OR NOT. 9 Q SO AFTER THAT SALE YOU TOOK THOSE FUNDS. YOU 10 PURCHASED THAT PROPERTY. WHEN WAS IT THEN PLACED IN A 11 CORPORATION, THE HEREFORD CORPORATION? 12 A 1981. 13 Q HOW LONG DID YOU OWN IT PERSONALLY, IF YOU DID 14 BEFORE THEN? 15 A OH, I DIDN'T. 16 Q YOU DIDN'T? 17 A NO. NO. 18 Q THERE — WAS THERE EVER A TIME THAT THAT PROPERTY 19 WAS OWNED PERSONALLY BY YOU OR YOUR WIFE, ELISABETH? YOU 20 USED THE FUNDS FROM THE SALE OF THAT OTHER RESIDENCE. YOU 21 TOLD US ABOUT THE CORPORATION WAS SET UP. YOU PUT THOSE 22 FUNDS IN THE CORPORATION, AND THEN THE CORPORATION BOUGHT 23 THE PROPERTY? 24 A THE ACTUAL TRANSACTION WAS HANDLED BY AN ATTORNEY, 25 AND I FRANKLY DON'T REMEMBER THE DETAILS OF THE TRANSFERS OF 26 MONEY, BUT BASICALLY AS I SAID. 27 Q WELL, HEREFORD CORPORATION USED YOURS AND 28 ELISABETH’s MONEY YOU GOT FROM A SALE OF ANOTHER PARCEL OF
page 61 1 REAL ESTATE TO BUY THIS PROPERTY THAT MR. SAMPSON WANTS THE 2 COURT TO ALLOW THEM TO SELL? 3 A RIGHT. 4 Q OKAY. AND THAT CORPORATION, HOW WAS IT THAT YOU 5 REMAINED LIVING IN THAT PROPERTY? 6 A I DON'T UNDERSTAND THE QUESTION. 7 Q WELL, YOU AND ELISABETH LIVED IN THE PROPERTY 8 MR. SAMPSON IS ATTEMPTING TO SELL; IS THAT CORRECT? 9 A WELL, ALL RIGHT. LET ME EXPLAIN THIS. YES, 10 THAT’s TRUE. HOWEVER, IN I THINK FEBRUARY OF THIS YEAR MY 11 RESIDENCE WAS OFFICIALLY CHANGED TO THE DISTRICT OF 12 COLUMBIA, UNFORTUNATELY BECAUSE OF MANY REASONS I HAVE TO 13 SPEND MORE TIME IN WASHINGTON NOW THAN IN CALIFORNIA. 14 Q IRRESPECTIVE OF YOUR EFFORTS TO CHANGE YOUR 15 RESIDENCE OFFICIALLY, WHATEVER, FROM 1981 TO 1992, DID YOU 16 AND ELIZABETH CARTO LIVE IN THAT HOUSE THAT MR. SAMPSON IS 17 ATTEMPTING TO SELL? 18 A OH, YES. 19 Q WHO MAINTAINED THE HOUSE? 20 A WE DID. 21 Q AND WHO SPENT THE FUNDS TO PAY THE TAXES ON THE 22 HOUSE? 23 A FOR THE MOST PART WE DID. 24 Q NOW THERE’s BEEN SOME INDICATION THAT LIBERTY 25 LOBBY PAID SOME OF THE TAXES ON THE HOUSE. THAT’s THE 26 BANKRUPT ENTITY, WHATEVER IT IS, THAT WAS PART OF THIS 27 PROCEEDING, STILL IS, HAS A BANKRUPTCY STAY OPERATING ON 28 IT.
page 62 1 HOW WOULD IT BE THAT LIBERTY LOBBY WOULD PAY ANY 2 PORTION OF THE TAXES OR THE TAXES ON THAT REAL ESTATE THAT 3 MR. SAMPSON IS ATTEMPTING TO SELL? 4 A WELL, FOR THE SIMPLE REASON THAT I SENT AN INVOICE 5 TO LIBERTY LOBBY FOR THE AMOUNT OF THE 6 MONTHS TAX BILL FOR 6 THE OFFICE THAT I USE AT THAT HOUSE, AND A CHECK WAS SENT TO 7 ME, AND AS MY INVOICE SAID, PAYABLE TO THE TAX COLLECTORS 8 AND IN SAN DIEGO. THE CHECK WAS DUALLY SENT TO HIM WHEN IT 9 WAS RECEIVED. 10 Q OKAY. LET ME ASK YOU THIS. WHAT HAVE YOU BEEN 11 DOING FOR THE HEREFORD CORPORATION, IF ANYTHING, WHICH WOULD 12 BE CONSIDERATION FOR THE HEREFORD CORPORATION ALLOWING YOU 13 TO REMAIN IN THAT HOUSE, BOTH YOU AND YOUR WIFE? 14 A EVERYTHING. WE PAID THE TAXES. ALMOST 15 EVERYTHING. WE PAID THE TAXES. WE HAVE PAID THE TAXES UP 16 UNTIL NOW. WE PAY ALL THE EXPENSES. WE KEEP UP THE 17 PROPERTY AND THE GROUNDS. THERE’s ABOUT 6 ACRES OF FORMER 18 AVOCADO PROPERTY, MOST OF IT FULL OF WEEDS WE HAVE TO 19 DISPOSE OF IN CASE OF FIRE. WATERING THE TREES AND THE 20 FOLIAGE, PLANTING TREES, KEEPING THE GROUNDS LANDSCAPED AND 21 TERRACED, PAINTING THE HOUSE, TRYING TO GET RID OF THE 22 TERMITES, ETC., ETC., ETC. 23 Q IF WE WERE TO CHECK THE AMOUNT OF MONIES THAT WERE 24 USED FOR THE MAINTENANCE OF THE HOUSE, AMOUNT OF MONIES THAT 25 WERE USED TO PAY THE TAXES ON THE HOUSE AND THE AMOUNT OF 26 MONEY THAT WAS USED TO PAY ON THE $70,000 NOTE, WOULD THEY 27 FIND THAT ANY OF IT WOULD BE ATTRIBUTABLE TO THE FERREL 28 ESTATE MONEY THAT WAS PART OF THE DISPUTE IN THIS COURT IN
page 63 1 ANOTHER TRIAL? 2 MR. SAMPSON: OBJECTION. MISTATES TESTIMONY. 3 THE COURT: OVERRULED. 4 THE WITNESS: IT WOULD BE IMPOSSIBLE. 5 MR. IZEN: MISSTATES TESTIMONY — EXCUSE ME. I TRY TO 6 COVER THE OBJECTION ANY WAY I CAN. I DON'T KNOW WHAT 7 TESTIMONY I WOULD BE MISSTATING. 8 THE COURT: I OVERRULED THE OBJECTION. 9 MR. IZEN: I THINK IT’s TRUE THAT THAT WAS AT ISSUE IN 10 THAT OTHER TRIAL, ALTHOUGH I WAS A MERE SPECTATOR AND READ 11 THE TRANSCRIPT. 12 THE COURT: I OVERRULED THE OBJECTION. 13 MR. IZEN: THANK YOU. 14 THE COURT: CAN'T WIN TWICE. 15 16 BY MR. IZEN: 17 Q AS FAR AS THE — I WANT TO KNOW IF THE UPKEEP OF 18 THE HOUSE, THE PURCHASE OF IT, OR ANY WAY ANY MONEY SPENT ON 19 IT IS ATTRIBUTABLE TO THE FERREL MONEY? 20 A ABSOLUTELY NONE. 21 Q OKAY. ARE THERE DOCUMENTATION THAT WOULD STILL BE 22 AVAILABLE TO BE ABLE TO SHOW THE SOURCES OF MONEY FOR THE 23 UPKEEP OF THE HOUSE? THE SOURCES OF MONEY FOR THE PURCHASE 24 OF THE HOUSE? THE PAYMENT ON THE NOTE? 25 A SO THAT WHICH HAS BEEN MISHANDLED AND LIQUIDATED 26 AND LOST AND THROWN AROUND BY THE THIEVES AND CROOKS THAT 27 INVADED MY HOUSE ON APRIL MARCH 22ND, 1995 -- 28 Q OKAY. ASIDE FROM THAT, THERE MIGHT BE SOME GAPS
page 64 1 IN THE RECORDS, BUT THERE IS SOME RECORDS? 2 A ABSOLUTELY. 3 Q THAT WOULD SUBSTANTIATE? 4 A ABSOLUTELY. 5 Q THESE ARE RECORDS THAT YOU COULD MAKE AVAILABLE TO 6 YOUR ATTORNEYS TO GIVE THE RECEIVER OR MAKE AVAILABLE TO 7 THEM; IS THAT CORRECT? 8 A IF WE CAN FIND THEM, YOU BET. 9 Q OKAY. WAS THE NOTE PAID BY CHECK ON THE HOUSE, 10 THE $70,000? YOU SAID THERE WAS A NOTE FOR $70,000. WAS 11 THAT MADE BY CHECKS ROUTINELY? 12 A I'M SURE IT WAS. I DON'T REMEMBER. WE DID PAY IT 13 OFF SOME YEARS AFTER WE PURCHASED THE HOUSE. WE DECIDED 14 RATHER THAN PAY THE INTEREST MAKE AN EFFORT TO PAY THE LOAN 15 OFF. 16 Q HOW LONG AGO WAS IT PAID OFF? 17 A I AM SORRY. I DON'T REMEMBER. IT WAS MAYBE 5, 6 18 YEARS AFTER WE PURCHASED THE HOUSE. 19 Q SO THAT WOULD BE IN '87 OR '88? 20 A I THINK SO. 21 Q DID YOU EVEN KNOW MISS FERREL IN '87 OR '88? 22 A YES. 23 Q OKAY. AS FAR AS THE ISSUE CONCERNING AN EASEMENT 24 IS CONCERNED, DID YOU HAVE ANY KIND OF PROPERTY INTEREST IN 25 THAT REAL ESTATE WHILE HEREFORD CORPORATION OWNED REAL 26 ESTATE THAT YOU UNDERSTOOD YOU OWNED, IN YOUR MIND? 27 A THAT I PERSONALLY OWNED? 28 Q YES. DID YOU HAVE ANY PROPERTY INTEREST OUT THERE
page 65 1 WITH HEREFORD CORPORATION? ANY KIND OF INTEREST IN 2 PROPERTY? 3 A REAL PROPERTY? 4 Q YES. 5 A WELL, OF COURSE YOU KNOW FURNITURE AND -- 6 Q YOU HAVEN'T HAD ANY LEGAL TRAINING, HAVE YOU? 7 A WELL, NOT ENOUGH TO ANSWER YOUR QUESTIONS. 8 Q OKAY. YOU DON'T KNOW THE DIFFERENCE BETWEEN A 9 LEASEHOLD AND A LIFE ESTATE OR ANYTHING LIKE THAT? 10 A WELL, NO, I DON'T. 11 Q DID YOU EVER MAKE A REFERENCE TO SOMEONE WHO WAS 12 SUING TO TRY TO FORCE AN EASEMENT ON THE PROPERTY, THIS 13 PROPERTY MR. SAMPSON IS TRYING TO SELL, THAT QUOTE, THIS IS 14 MY PROPERTY, END QUOTE? 15 A IF YOU ARE REFERRING TO THIS OLD SITUATION WHERE 16 THE CONNECTICUT INSURANCE CAME IN AND TRIED TO DEMOLISH A 17 LOT OF THE PROPERTY -- 18 Q I DIDN'T KNOW THEY COULD DO THAT. 19 A THEY CERTAINLY DID. THEY CAME IN WITHOUT TELLING 20 US, AND THEY BULLDOZED A BIG ROAD THROUGH IT WITHOUT EVEN 21 HAVING THE COURTESY OF ASKING, LET ALONE TELLING US. 22 AT THAT TIME I PROCURED A LAWYER IN SAN DIEGO AND 23 FOR WHO REPRESENTED THE HEREFORD CORPORATION AND DEALT WITH 24 IT. 25 Q THAT’s FINE, MR. CARTO. WITH THE COURT'S 26 PERMISSION, WE'RE TRYING TO GET A DIRECT ANSWER TO THIS ONE 27 QUESTION, AND THAT IS, DID YOU REMEMBER MAKING A STATEMENT 28 TO SOMEBODY AS ALLEGED BY MR. SAMPSON IN THE PAPERS, MOVING
page 66 1 PAPERS IN THIS COURT, QUOTE, I OWN THIS PROPERTY, END 2 QUOTE. WE'RE TALKING ABOUT THE PROPERTY MR. SAMPSON IS 3 TRYING TO SELL HERE IN THIS CASE? 4 A ABSOLUTELY NOT. 5 Q YOU DON'T REMEMBER MAKING THAT? 6 A EVERYONE — THERE WAS NO SECRET IT WAS OWNED BY 7 THE HEREFORD CORPORATION. THEY KNEW IT WAS OWNED BY THE 8 HEREFORD CORPORATION. I KNEW IT WAS OWNED BY THE HEREFORD 9 CORPORATION. I LIVED THERE. I MAY HAVE — I HAVE SAID TO 10 THEM,I REPRESENT THE OWNER, SO GET OFF THE PROPERTY.I 11 WOULD SAY THAT. I DIDN'T — WHY WOULD I SAY I OWNED IT? 12 THAT WOULD BE STUPID. 13 Q WERE YOU A TENANT ON THE PROPERTY? WHAT WAS YOUR 14 STATUS ON THE PROPERTY? 15 A WELL, YES, WE WERE A TENANT. 16 Q OKAY. AND IN YOUR MIND THE TENANT DOES OR DOESN'T 17 OWN THE PROPERTY? 18 A OF COURSE NOT, NO MORE THAN EMPLOYEES OWN THE 19 COMPANY. 20 Q AS FAR AS THAT RELATIONSHIP IS CONCERNED WITH THE 21 CORPORATION, HOW LONG DID YOU REMAIN A TENANT OUT THERE? 22 A WITH THE HEREFORD CORPORATION? 23 Q YES. 24 A WELL, WE STILL ARE. 25 Q OKAY. AND AS YOU UNDERSTOOD IT, WHAT ARE YOUR 26 DUTIES OCCUPYING THAT PROPERTY? WHAT ARE YOU SUPPOSED TO DO 27 IN EXCHANGE FOR STAYING THERE? 28 A AS I EXPLAINED, TO KEEP IT UP, TO KEEP IT
page 67 1 PRESENTABLE, TO KEEP THE GROUNDS AND THE REAL PROPERTY IN AS 2 GOOD A CONDITION AS POSSIBLE, AND TO PAY THE EXPENSES, TO 3 PAY FOR THE LABORERS TO COME AROUND AND THE TRADESMEN AND SO 4 ON, AND PAY FOR THE WATER, IRRIGATE THE PLANTS, AND 5 GARDENERS AND TREE SURGEONS COME IN AND HAVE TO PRUNE THE 6 TREES, THAT SORT OF THING. 7 Q AND YOU STAYED OUT THERE, AND THAT’s YOUR STATUS 8 PRESENTLY TESTIFYING ON THE WITNESS STAND TODAY? YOU LIVED 9 THERE OR HAD LIVED THERE AS YOUR PRIMARY RESIDENCE? YOU DID 10 AS A TENANT? 11 A YES. 12 Q WHEN THE PROPERTY WAS TRANSFERRED TO THE 13 CORPORATION, AND HANS, THIS GENTLEMAN, HANS, GOT THE SHARES, 14 WAS IT THE INTENT THAT AFTER YOU DIED, YOU OR YOUR WIFE 15 DIED, THE PROPERTY WOULD GO TO SOMEBODY ELSE; YOUR TENANCY 16 WOULD BE AT AN END? 17 A YES. 18 Q THEN THE CORPORATION COULD PUT WHOEVER THEY WANTED 19 IN THERE? 20 A CERTAINLY. 21 Q OR RENT IT OUT, WHATEVER. 22 WHAT’s THE TERM OF YOUR LEASE? HOW LONG WAS IT 23 UNDERSTOOD THAT YOU WOULD BE ALLOWED TO LIVE IN THE HOUSE? 24 A WE HAVE A LIFE TENANCY. 25 Q OKAY. SO WITH GOOD BEHAVIOR, TAKING CARE OF THE 26 HOUSE, YOU COULD BE THERE THE REST OF YOUR LIFE, UNLESS THE 27 CORPORATION DECIDES TO SELL IT? 28 A THAT’s RIGHT.
page 68 1 Q AS FAR AS THIS LITIGATION IS CONCERNED THAT TOOK 2 PLACE WITH THE DISPUTE WITH LSF OR THE FOLKS OR WHO OWNS LSF 3 OR ANY OF THE REST OF THAT STUFF, CAN YOU TELL US ANYTHING 4 ABOUT THE INTERESTS THAT HEREFORD CORPORATION WOULD HAVE HAD 5 IN THE OUTCOME OF THAT LITIGATION? 6 A I DON'T THINK -- 7 Q WHAT DID HEREFORD CORPORATION STAND TO LOSE, THE 8 OWNER OF THE HOUSE, ONE WAY OR THE OTHER, WITH THE OUTCOME 9 OF THE LITIGATION? 10 A AS FAR AS I CAN SEE, NONE AT ALL. 11 Q DID YOU EVER SEE MR. HANS TAKING PART IN ANY OF 12 THE LITIGATION? 13 A OH, NO. HE WAS IN GERMANY, I BELIEVE. 14 Q DID THE HEREFORD CORPORATION PAY ANY LEGAL FEES OF 15 THE LITIGATION? 16 A OH, NO. 17 Q AND DID THE HEREFORD CORPORATION OR HANS KNOW 18 ABOUT THE EXISTENCE OF THE LITIGATION, TO YOUR PERSONAL 19 KNOWLEDGE? 20 A I BELIEVE SO, YES. YES. 21 Q CAN YOU BASE THAT BELIEF ON ANYTHING OTHER THAN 22 SPECULATION? 23 A WELL, WHEN HE VISITED HERE THE LAST TIME THERE WAS 24 DISCUSSION THAT HE HAPPENED TO BE AN UNWILLING VICTIM OF 25 THIS RAID WHEN HE VISITED HERE. HE WAS AND HIS COUSIN WERE 26 VISITING. I WAS IN WASHINGTON. ELISABETH WAS HERE. AND AT 27 THE TIME HE WAS ROUSED OUT OF BED LIKE A CRIMINAL BY THESE 28 THUGS DRESSED LIKE MONKEYS, AND HE WAS VERY WELL AWARE OF
page 69 1 WHAT WAS GOING ON BECAUSE OF THE WAY HE WAS TREATED. OF 2 COURSE BEING -- 3 Q LET ME STOP YOU. THEN HE KNEW ABOUT THE DISPUTE 4 BECAUSE OF THIS RAID IN COSTA MESA, OR RATHER COSTA MESA 5 AUTHORITIES DID ON THE HOUSE MR. SAMPSON IS TRYING TO SELL, 6 CORRECT? 7 A YES, SIR. AND BEING IN LAW SCHOOL AT THAT TIME, 8 HE WAS VERY MUCH INTERESTED IN IT AND COULDN'T BELIEVE THAT 9 IT WAS HAPPENING — THIS TYPE OF THING COULD HAPPEN IN 10 AMERICA. HE WAS QUITE INTERESTED IN THAT. 11 Q THE HEREFORD CORPORATION, DID THE CORPORATION HAVE 12 ANY INTEREST IN THE FERREL MONIES AT ALL THAT IT TRIED TO 13 ASSERT? 14 A NONE. 15 Q OKAY. HAVE YOU EVER PUT ANY OF YOUR ASSETS WITH 16 HEREFORD CORPORATION ASSETS THAT YOU KNOW OF LIKE YOUR BANK 17 ACCOUNT OR DEPOSIT CHECKS THAT YOU RECEIVED INTO HEREFORD 18 CORPORATION’s ACCOUNTS OR ANYTHING LIKE THAT? 19 A NO. 20 Q OKAY. AS FAR AS YOU KNOW, DOES HEREFORD 21 CORPORATION DO ANYTHING OTHER THAN OWN THE REAL ESTATE AND 22 LET YOU LIVE THERE? DOES IT HAVE ANY OTHER ACTIVITIES IN 23 THE STATE OF CALIFORNIA? 24 A NONE. 25 Q AS FAR AS YOU KNOW, IS THE HEREFORD CORPORATION 26 STILL IN GOOD STANDING IN PANAMA? 27 A ABSOLUTELY. 28 Q YOU HOPE TO BE ABLE TO PRODUCE RECORDS THAT SHOW
page 70 1 THAT? 2 A CORRECT. 3 Q THAT’s BEEN REQUESTED? 4 A CORRECT. 5 Q OKAY. BESIDES THE ESTATE PLANNING, OR RATHER TO 6 SEE THAT THE HOUSE WAS PASSED ON TO HANS, YOU OR YOUR WIFE'S 7 HEIR, WAS THERE ANY OTHER REASON FOR THE TRANSFER OF THE 8 HOUSE AT THAT TIME? DID YOU OWE ANYBODY ANY MONEY THAT YOU 9 WERE AFRAID THEY WOULD GET BECAUSE YOU HAD MORE MONEY THAN 10 $125,000 HOMESTEAD EXEMPTION UNDER CALIFORNIA LAW, OR 11 WHATEVER IT WAS, BACK IN THOSE DAYS? 12 A NO. ELISABETH AND I DON'T HAVE ANY DEBTS. 13 Q AND HEREFORD GOT THE HOUSE YOU SAID IN 14 APPROXIMATELY 1981? 15 A I BELIEVE. 16 Q AND THE NOTE WOULD HAVE BEEN PAID OFF IN '88? 17 A WELL, APPROXIMATELY, SOMEWHERE '86, '87, '88, I 18 SUPPOSE. 19 MR. IZEN: OKAY. I PASS THE WITNESS. 20 THE COURT: YOU MAY CROSS-EXAMINE. 21 MR. SAMPSON: WE HAVE A COUPLE OF QUESTIONS. WE WOULD 22 LIKE TO RESERVE THE RIGHT TO ASK QUESTIONS IN THE NEXT 23 HEARING. WE WEREN'T PREPARED. 24 THE COURT: SURE. 25 MR. IZEN: I DON'T HAVE ANY OBJECTION TO THAT. I THINK 26 I CAN'T OBJECT. I WOULD LIKE THE COURT TO CONSIDER THIS 27 EVIDENCE. I WILL BE ASKING THEM TO, AS PART OF THIS 28 HEARING, IF THERE’s ANY PROBLEM WITH THE STATUS OF THE
page 71 1 EVIDENCE, THEN I WOULD REQUEST THAT THE MATTER BE CARRIED 2 ALONG FOR PURPOSES OF ENTRY OF FINAL ORDER, IF THERE’s ANY 3 VALUE TO IT THAT THE COURT SEES, SO I WILL HAVE A COMPLETE 4 RECORD IF THE MATTER HAS TO BE APPEALED. 5 I'M NOT TRYING TO DELAY THE MATTER. 6 THE COURT: MR. SAMPSON, YOU DON'T WISH TO 7 CROSS-EXAMINE NOW OR YOU DO? 8 MR. SAMPSON: I HAVE A COUPLE OF QUESTIONS. I WOULD 9 LIKE TO RESERVE THE RIGHT TO FINISH AT THE NEXT HEARING. 10 THE COURT: YOU DO HAVE THAT RIGHT. 11 12 CROSS-EXAMINATION 13 BY MR. SAMPSON: 14 Q SIR, APPROXIMATELY 1981, '81 IS WHEN YOU 15 ESTABLISHED HEREFORD CORPORATION; IS THAT CORRECT? 16 A NO. I THINK IT WAS '79. OH, YES, EXCUSE ME. 17 YES. THAT’s CORRECT. YES, THAT’s CORRECT. 18 Q THAT WAS INDEPENDENCE HOUSE IN 1979? 19 A YES. 20 Q AND YOU AND YOUR WIFE ARE THE SOLE SHAREHOLDERS OF 21 HEREFORD CORPORATION; IS THAT CORRECT? 22 A YES. 23 Q WERE YOU THE SOLE SHAREHOLDERS OF INDEPENDENCE 24 HOUSE AT THAT TIME? 25 A YES. 26 Q WHO WERE THE OFFICERS OF HEREFORD CORPORATION IN 27 1981-82 WHEN IT WAS ESTABLISHED? 28 A SOME — A LAW FIRM IN PANAMA CITY.
page 72 1 Q WHO WERE THE BOARDS OF DIRECTORS, DO YOU RECALL? 2 A NO. NO. LONG SPANISH NAMES. 3 Q DID YOU PAY ANY FEES TO THESE PEOPLE IN PANAMA TO 4 MAINTAIN THE CORPORATION STATUS? 5 A IT’s A LAW FIRM. 6 Q THAT WAS NOT ANSWERING MY QUESTION. DID YOU 7 PERSONALLY PAY ANY FEES TO THEM TO MAINTAIN THEIR POSITION 8 AS OFFICERS AND DIRECTORS OF HEREFORD CORPORATION? 9 A YES. 10 Q WHERE DID THE MONIES COME FROM? 11 A WELL, I GOT THEM FROM USUALLY FROM ELISABETH OR 12 OTHER SOURCES OF MONEY. 13 Q HAVE YOU BEEN PAYING THOSE PANAMANIAN ATTORNEYS 14 OVER THE LAST 15 YEARS? 15 A YES. 16 Q AND THEY HAVE BEEN PAID RECENTLY AS OF 1998 TO 17 MAINTAIN THE CORPORATION? 18 A YES. 19 Q DID YOU PAY THAT? 20 A IN 1998? 21 Q CORRECT. 22 A NO. I DON'T THINK THAT IT WAS PAID IN 1998. THE 23 ARRANGEMENT WITH HANS DIRK IS THAT WHEN HE FINISHES LAW 24 SCHOOL AND WHEN HE BECAME A LAWYER AND WAS RECEIVING INCOME, 25 THAT HE WOULD TAKE OVER THE PAYMENT OF THAT PARTICULAR 26 DEBT. 27 Q HAS HE COMPLETED LAW SCHOOL YET? 28 A HE HAS.
page 73 1 Q WHEN DID HE COMPLETE LAW SCHOOL? 2 A A FEW MONTHS AGO. 3 Q SO 1997 YOU PAID THE LAWYERS IN PANAMA? 4 A I DID. 5 Q ARE THOSE LAWYERS — AS OF TODAY, ARE THEY THE 6 SAME LAW FIRM THAT’s BEEN THE OFFICERS CONTINUOUSLY OVER THE 7 LAST 15 YEARS? 8 A NO. 9 Q WHEN DID THAT CHANGE, IF YOU CAN GIVE ME A 10 CHRONOLOGY? 11 A I DON'T KNOW. I CAN'T TELL YOU. THERE’s BEEN, I 12 THINK, ONE, MAYBE TWO CHANGES IN THEIR PARTNERSHIPS, AND I 13 CAN'T DESCRIBE THAT. 14 Q THAT’s THE SAME WITH THE BOARD OF DIRECTORS? 15 A THEY HAVE APPOINTED THE BOARD OF DIRECTORS. I 16 HAVE HAD NOTHING TO SAY ABOUT THAT. 17 Q DO YOU KNOW WHERE THE MINUTES OF THE CORPORATION 18 ARE MAINTAINED? 19 A YES. 20 Q WHERE? 21 A IN PANAMA. 22 Q WITH THE SAME LAW FIRM? 23 A YES. 24 Q DO YOU HAVE ANY WRITTEN AGREEMENT AUTHORIZING YOU 25 AND YOUR WIFE TO STAY ON THE Quail Ridge PROPERTY? 26 A AS I JUST ANSWERED MR. IZEN, YES. 27 Q AND WHERE IS THAT WRITTEN AGREEMENT MAINTAINED? 28 A WITH THE OWNER OF THE SHARES.
page 74 1 Q SO THAT WOULD BE WITH YOUR NEPHEW, HANS DIRK? 2 A YES. 3 Q WHAT’s HIS CURRENT ADDRESS? 4 A I DON'T REMEMBER. 5 Q WHEN WAS THAT WRITTEN AGREEMENT PREPARED? 6 A IN 1992. 7 Q WAS THERE A PREVIOUS WRITTEN AGREEMENT BEFORE 8 THAT? 9 A NO. 10 Q YOU MENTIONED THAT THERE WERE — MAYBE I MISHEARD 11 YOU. I WANT TO GET THIS CLEARED UP. IN 1992 YOU 12 TRANSFERRED YOUR SHARES TO HANS DIRK; IS THAT CORRECT? 13 A THAT’s CORRECT. 14 Q YOU SAID THERE WAS A SECOND SHAREHOLDER TOO OR 15 JUST HANS DIRK? 16 A JUST HANS DIRK. 17 Q SO ALL OF YOUR AND YOUR WIFE’s SHARES 100 PERCENT 18 WENT TO HANS DIRK? 19 A THAT’s CORRECT. 20 Q OTHER THAN THE WRITTEN AGREEMENT REGARDING YOUR 21 STAYING ON THE PROPERTY, WHICH YOU GAVE TO MR. HANS DIRK IN 22 1992, WERE THERE ANY OTHER WRITTEN AGREEMENTS IN CONJUNCTION 23 WITH THE TRANSFER OF THE STOCK? 24 A NO, I DON'T THINK SO. 25 Q DID YOU HAVE ACTUAL STOCK CERTIFICATES ISSUED IN 26 YOURS AND YOUR WIFE’s NAME IN 1981, '82? 27 A NO. 28 Q HAVE YOU EVER HAD STOCK CERTIFICATES ISSUED IN THE
page 75 1 CORPORATION? 2 A YES. 3 Q WHEN WERE THEY ISSUED? 4 A WHEN THE CORPORATION WAS ESTABLISHED. 5 Q THE HEREFORD CORPORATION IN 1981, '82; IS THAT 6 CORRECT? 7 A NO, WHEN IT WAS ESTABLISHED IN '78. 8 Q IS THAT INDEPENDENCE HOUSE? 9 A YES. 10 Q AND THERE WERE STOCKS ISSUED IN INDEPENDENCE 11 HOUSE? 12 A THAT’s CORRECT. 13 Q WERE THERE STOCKS ISSUED — TO GET BACK TO MY 14 QUESTION, IN HEREFORD CORPORATION WHEN THAT WAS SET UP IN 15 THE EARLY 80'S? 16 A IT WASN'T SET UP. IT WAS THE SAME CORPORATION. 17 Q OKAY. JUST A NAME CHANGE? 18 A AS I STATED PREVIOUSLY, IT WAS AN AMENDMENT TO THE 19 CORPORATE CHARTER, AND THAT CHANGED THE NAME. 20 Q THANK YOU. WERE NEW STOCK ISSUED UNDER HEREFORD 21 CORPORATION’s NAME IN THE 80’s THEN? 22 A YES. 23 Q AND WHERE WERE THOSE MAINTAINED? 24 A SAME PLACE THAT THE ORIGINAL STOCK WAS. 25 Q AND IS THAT? 26 A IN GERMANY. 27 Q WHERE IN GERMANY? 28 A WITH THE NEW OWNER.
page 76 1 Q SO THE 1979 STOCK WERE MAINTAINED IN GERMANY? 2 A NO. NO. THE AGREEMENT WAS MADE IN 1992 AND THE 3 STOCK SUBSEQUENTLY WAS TRANSFERRED. 4 Q DO YOU UNDERSTAND THAT THERE ARE MINUTES OF 5 HEREFORD CORPORATION AUTHORIZING THAT TRANSFER? 6 A THE TRANSFER OF WHAT? 7 Q 1992 TRANSFER OF STOCK TO HANS DIRK? 8 A I DON'T BELIEVE THERE WAS. 9 MR. SAMPSON: YOUR HONOR, WE RESERVE THE RIGHT TO 10 FOLLOW UP AT THE NEXT HEARING. 11 THE COURT: VERY WELL. THANK YOU, MR. CARTO. BE 12 CAREFUL. THERE’s A STEP THERE. REDIRECT. 13 MR. IZEN: YOUR HONOR, I DON'T HAVE ANYTHING FURTHER OF 14 THIS WITNESS. I WANT TO TELL THE COURT THERE’s PANAMANIAN 15 DOCUMENTS WHICH HAVE BEEN REQUESTED WHICH MAY BEAR ON THIS 16 ISSUE, AND I'M GOING TO REQUEST THE COURT OR BEG THE COURT 17 TO CARRY THIS ALONG TO THE — UNTIL THE COURT GETS THE 18 EVIDENCE. GIVE US A REASONABLE CHANCE TO — AND I THINK I 19 CAN GET IT TO HIM. IT DOESN'T HURT ME AT ALL. I THINK IT 20 HELPS MY CASE. I THINK I CAN GET IT TO HIM WITHIN 7 DAYS. 21 THE COURT: VERY GOOD. BE CAREFUL OF THE STEP WHEN YOU 22 STEP DOWN, MR. CARTO. THANK YOU FOR YOUR TESTIMONY. 23 DID YOU WANT TO PUT ANYONE ELSE ON THE STAND? 24 MR. IZEN: THIS WOULD BE A DIFFERENT ISSUE. I'M 25 REQUESTING THAT HIS TESTIMONY BE CONSIDERED ON THE TWO 26 ISSUES OF THE SALE OF THE HOUSE AND SUBSTITUTION OF 27 PARTIES. IF IT’s NOT ALLOWED, THEN IT CAN BE CONSIDERED AS 28 AN OFFER OF PROOF FOR PURPOSES OF APPEAL, PERFECTING THAT.
page 77 1 AS FAR AS THE FIFTH AMENDMENT ISSUE IS CONCERNED, 2 MR. WEBER IS HERE. I WOULD LIKE TO CALL HIM TO THE STAND TO 3 CONFIRM THE FACT THAT HE DID MAKE THE COMPLAINT TO 4 SWITZERLAND, AND THEY INTENDED TO TRY TO BE TAKING 5 PROSECUTION. 6 THE COURT: I DON'T HAVE ANY REASON TO DOUBT THAT. YOU 7 CAN PUT HIM ON THE STAND, IF YOU WANT. 8 MR. IZEN: I WOULD LIKE TO CALL HIM, IF I MIGHT, 9 BRIEFLY. I WON'T GO BEYOND THE ISSUE OF REQUESTING THE 10 INVESTIGATION. 11 MR. SAMPSON: WE HAVE NOT HAD A CHANCE TO TALK WITH 12 HIM. IF I COULD HAVE A SECOND. 13 MR. IZEN: NO OBJECTION. 14 MR. SAMPSON: FOR THE RECORD, WE RECEIVED NO NOTICE OF 15 THIS. WE'RE WILLING TO STIPULATE THAT THEY DID INITIATE AN 16 INQUIRY IN THE RESPONDENT’s — DEFENDANT’s PAPERS. THEY 17 ADMIT THAT WAS A CIVIL INQUIRY. AND WHETHER THE CRIMINAL 18 AUTHORITIES HAVE TURNED THAT INTO A PROSECUTION OR NOT AGAIN 19 IS OUT OF — OUT OF OUR CLIENT’s CONTROL, LIKE IT IS IN THE 20 UNITED STATES. 21 THE COURT: ARE YOU WILLING TO ACCEPT THAT 22 STIPULATION? 23 MR. IZEN: NO, SIR. I'M NOT ON THE MATTER OF CIVIL. I 24 DON'T THINK THAT’s CORRECT AT ALL. THE ONLY THING I WILL 25 TELL THE COURT IS THAT THEY HAVE KIND OF A NEVER NEVER LAND 26 OF LAWS BETWEEN CIVIL AND CRIMINAL WE DON'T HAVE, BUT WE 27 WOULD PROBABLY CONSIDER THEM IN THE NATURE OF MISDEMEANORS, 28 YOU KNOW, HERE, BUT THEY'RE STILL PROBABLY CRIMINAL. WE CAN
page 78 1 ARGUE THAT ABOUT FOREIGN LAW. I WOULD STILL LIKE TO CALL 2 MR. WEBER, IF I MIGHT, BRIEFLY TO HAVE HIM IDENTIFY THIS 3 LETTER. 4 THE COURT: I CAN HAVE HIM DO THAT, EVEN OVER YOUR 5 OBJECTION. I DON'T SEE ANY HARM. I DON'T SEE THAT IT’s ALL 6 THAT CRUCIAL. I DON'T THINK HE’s GOING TO BE DENYING THAT, 7 ONE OF THESE DOCUMENTS THAT WE HAVE HERE. 8 9 MARK WEBER, 10 CALLED AS A WITNESS ON BEHALF OF THE DEFENDANTS, HAVING BEEN 11 FIRST DULY SWORN, TESTIFIED AS FOLLOWS: 12 THE CLERK: THANK YOU, SIR. PLEASE TAKE A SEAT. 13 WOULD YOU STATE YOUR FULL NAME AND SPELL YOUR LAST 14 FOR THE RECORD. 15 THE WITNESS: MY FULL NAME IS MARK EDWARD WEBER. 16 W-E-B-E-R. 17 18 DIRECT EXAMINATION 19 BY MR. IZEN: 20 Q GOOD MORNING, SIR. DID YOU HAVE — YOU HAD AN 21 OPPORTUNITY TO EXAMINE THE JUDGMENT, THE DEBTORS COLLECTED 22 OPPOSITION WITH THE DECLARATION OF BRIAN URTNOWSKI AND THE 23 DOCUMENTS ATTACHED TO IT? 24 A WITHOUT LOOKING AT IT I CAN'T SAY FOR CERTAIN BUT 25 PROBABLY I DID. 26 MR. IZEN: COULD I APPROACH THE WITNESS, JUST BRIEFLY? 27 THE COURT: SURE. 28 MR. IZEN: OR ELSE SOMEBODY CAN HAND HIM THE FILE.
page 79 1 THE COURT: YES. YOU CAN ALWAYS APPROACH THE WITNESS. 2 HERE IS THE PURPORTED LETTER, EXHIBIT A, HERE. 3 4 BY MR. IZEN: 5 Q RIGHT. THAT’s ALL I WANTED HIM TO SEE. HAND IT 6 TO HIM. I GOT MY OWN. 7 I'M PUTTING IN FRONT OF YOU WHAT I THINK THE JUDGE 8 OF THIS COURT HAS POLITELY GIVEN ME, ATTACHMENT TO 9 MR. URTNOWSKI’s AFFIDAVIT. I THINK IT’s EXHIBIT A. IT 10 BEGINS WITH A REFERENCE TO LEGION FOR SURVIVAL OF FREEDOM, 11 INCORPORATED. IT HAS THE DATE MONDAY, AUGUST 12, 1996. 12 DO YOU SEE THAT? IS THAT WHAT YOU HAVE IN FRONT 13 OF ME? 14 A NO. WHAT I HAVE IN FRONT OF ME IS A LETTER 15 INDICATED 12 OF AUGUST 1996. 16 Q IT’s UP IN THE RIGHT-HAND CORNER. IT HAS — IT 17 HAS (MR. IZEN SPOKE IN FRENCH. THE REPORTER ASKED FOR A 18 SPELLING.) J-U-G-E-S D'I-N-S-T-R-U-C-T-I-O-N. 19 A YES. 20 Q MY FRENCH IS TERRIBLE. I'M SORRY. THIS IS N.C.R. 21 THERE? 22 A YES, I SEE THAT. 23 Q NOW DID YOU WRITE THIS LETTER IN CONJUNCTION WITH 24 MR. RAVEN? 25 A I DRAFTED THIS LETTER TOGETHER WITH MR. RAVEN, 26 YES. 27 Q OKAY. AND YOU MADE THIS COMPLAINT TO A JUDGE IN 28 SWITZERLAND?
page 80 1 MR. SAMPSON: OBJECTION. CALLS FOR LEGAL CONCLUSION. 2 MR. IZEN: I DON'T KNOW. I THINK HE HAS THE 3 UNDERSTANDING WHO HE’s COMPLAINING TO. 4 THE COURT: OVERRULED. I REALIZE ALSO THAT THE 5 QUESTION IS NOT EVIDENCE. 6 7 BY MR. IZEN: 8 Q SURE. 9 A IT’s -- 10 Q TELL ME WHO YOU UNDERSTOOD YOU WERE WRITING TO, 11 MR. WEBER. THAT’s A BETTER WAY. 12 A I UNDERSTOOD IT WAS JUGES D'INSTRUCTION 13 (PHONETICS). I UNDERSTAND HE’s NOT A JUDGE QUITE IN OUR 14 SENSE, BUT THAT’s THE TITLE IN SWITZERLAND. 15 Q YOU UNDERSTAND YOU WERE COMPLAINING TO THIS GUY, 16 WHOEVER HE IS? 17 A THAT’s CORRECT. 18 Q AND DID YOU MAKE THE STATEMENT IN THIS LETTER 19 SPECIFICALLY WHERE YOUR OFFICE WERE TO BEGIN A CRIMINAL 20 INVESTIGATION OF HENRY J. FISCHER AND WILLIS A. CARTO? 21 A YES. 22 Q CAN YOU TELL THE COURT WHAT LAW OF SWITZERLAND YOU 23 WERE RELYING ON AND URGING THAT A CRIMINAL INVESTIGATION OF 24 FISCHER AND CARTO BE DONE? 25 A I CAN'T RECALL. 26 Q BUT THERE WAS ONE OR YOU WOULDN'T HAVE WRITTEN A 27 LETTER AND URGED A CRIMINAL PROSECUTION? 28 A I DON'T REMEMBER NOW HOW THAT ALL HAPPENED. IT'S
page 81 1 PROBABLY IN OUR CORRESPONDENCE, BUT I WAS TOLD THAT CARTO 2 HAD LIKELY VIOLATED A LAW IN SWITZERLAND AND HENRY FISCHER 3 AND WE HAD ALREADY APPROACHED THE AUTHORITIES IN COSTA MESA, 4 AS YOU KNOW, AND WE WERE SORT OF GIVEN THE RUNAROUND. THE 5 AUTHORITIES IN COSTA MESA SAID THAT THEY WERE NOT SURE IF A 6 VIOLATION OF THE LAW HAD OCCURRED IN COSTA MESA. AND I WAS 7 TOLD THAT LIKELY THE LAW HAD BEEN VIOLATED IN SWITZERLAND. 8 I WASN'T SURE, AND THAT’s WHY WE WROTE THE LETTER. 9 Q OKAY. NOW WITH RESPECT TO BEING TOLD ABOUT 10 CRIMINAL VIOLATION IN SWITZERLAND, WAS THIS AN OFFICIAL 11 STATEMENT FROM THE SWISS AUTHORITY OR WAS THAT SOME PRIVATE 12 ATTORNEY’s OPINIONS? 13 A NO. I DON'T EVEN REMEMBER EXACTLY WHAT THE BASIS 14 FOR THAT DETERMINATION WAS NOW. 15 Q BUT YOU SAY THERE WAS CORRESPONDENCE THAT BACKS 16 THAT UP, AT LEAST TO YOUR CONCLUSION. THERE’s SOME CRIMINAL 17 VIOLATION THAT THEN LED YOU TO PUT THIS PARAGRAPH IN THIS 18 LETTER? 19 A I DON'T RECALL, MR. IZEN, WITHOUT — I SAID OUR 20 CORRESPONDENCE FILES MIGHT TELL THAT. I DON'T RECALL RIGHT 21 NOW WHAT SPECIFICALLY IT WAS THAT LED ME TO BELIEVE THAT A 22 SPECIFIC VIOLATION OF LAW HAD OCCURRED IN SWITZERLAND BY 23 CARTO AND FISCHER. 24 Q AND OKAY. SINCE THAT LETTER THAT YOU WROTE, HAVE 25 YOU RECEIVED OR COME TO HAVE ANY KNOWLEDGE OF ANY ACTION ON 26 THAT COMPLAINT, THAT EXHIBIT A, WHATEVER WE WANT TO CALL IT, 27 OTHER THAN WHAT MR. URTNOWSKI HAS ATTACHED TO HIS AFFIDAVIT 28 AS EXHIBIT B AND EXHIBIT C?
page 82 1 A WELL, I'M LOOKING AT THIS EXHIBIT C FOR THE FIRST 2 TIME HERE. I HAVEN'T SEEN IT BEFORE NOW. 3 Q YOU HAVEN'T SEEN THAT BEFORE? 4 A NO. 5 Q LET ME AMEND MY QUESTION. WOULD YOU LOOK AT THAT 6 AND SEE IF YOU CAN TELL US WHETHER YOU THINK THAT RELATES, 7 WITH YOUR LIMITED KNOWLEDGE OF FRENCH, TO THE COMPLAINT 8 EARLIER? 9 A ARE YOU REFERRING TO THE LETTER FROM MR. FOETISCH 10 IN ENGLISH, OR ARE YOU REFERRING TO A DOCUMENT IN FRENCH? 11 Q OKAY. I MAY HAVE BEEN MISDIRECTING YOU. 12 THERE IS AN EXHIBIT B CALLED A REQUISITION. IT 13 SAYSREQUISITIONTHERE. 14 A YES, IN FRENCH. 15 Q THAT’s YOUR EXHIBIT B, CORRECT? 16 A WELL, THERE’s TWO DOCUMENTS. WELL, NO. THERE'S 17 TWO DOCUMENTS IN THIS EXHIBIT B SECTION. 18 Q OKAY. BUT THE REQUISITION IS PART OF THE EXHIBIT 19 B SECTION? 20 A THAT SEEMS TO BE, YES. UH-HUH. 21 Q THAT SEEMS TO BE, WOULD YOU NOT AGREE, RELATED 22 THAT REQUISITION TO YOUR COMPLAINT? 23 A YES. 24 Q AND IT HAS (MR. IZEN SPOKE IN FRENCH) THERE AT THE 25 TOP? 26 A YES. 27 Q OR HOWEVER YOU PRONOUNCE THAT IN FRENCH? 28 A YES.
page 83 1 Q AND YOU HAVE SOME CORRESPONDENCE WHICH MIGHT SHED 2 SOME LIGHT ON HOW FAR THIS INVESTIGATION HAS GONE; IS THAT 3 CORRECT? 4 A WE HAD SOME VERY LIMITED CORRESPONDENCE WITH THE 5 JUGES D'INSTRUCTION (PHONETICS). I DON'T KNOW WHAT THE 6 STATUS OF THE INVESTIGATION. THAT’s ALL. 7 Q AND YOU CAN'T REALLY TELL THE COURT WHETHER 8 THERE’s GOING TO BE ANY CRIMINAL CHARGE RETURNED AGAINST THE 9 CARTOS OR NOT AT THIS POINT? 10 A THAT’s CORRECT. I CANNOT SAY THAT. 11 Q AND IT WAS YOUR UNDERSTANDING THAT THE DIVERSION 12 OF FUNDS FROM A SETTLEMENT OF A SWISS ESTATE, THAT IS THE 13 USE OF IN A MANNER CONTRARY TO THE TERMS OF THE SETTLEMENT 14 OF THE SWISS ESTATE, COULD BE CRIMINAL UNDER THE LAW, 15 CORRECT? 16 A I DON'T KNOW IF I WOULD PUT IT THAT WAY, 17 MR. IZEN. I HAD REASON TO BELIEVE AND HAVE REASON TO 18 BELIEVE THAT CARTO AND FISCHER HAVE ACTED ILLEGALLY AND 19 VIOLATED SWISS LAW. I AM NOT AN EXPERT ON THIS, AND THAT'S 20 THE DETERMINATION, AS FAR AS I'M CONCERNED, FOR THE SWISS TO 21 MAKE. 22 Q BUT WHAT OTHER BASIS COULD THERE BE FOR THE 23 CRIMINAL ACTIVITY OTHER THAN THE DISPOSITION OF FUNDS FROM A 24 SWISS ESTATE IN THE MANNER CONTRARY TO THE SETTLEMENT ON THE 25 TERMS OF THE COURT RECORD OVER THERE? 26 A WELL, I CAN'T ANSWER THAT QUESTION. THAT’s — I 27 MEAN, IT’s A REASONABLE QUESTION, BUT I CAN'T ANSWER IT 28 DEFINITIVELY.
page 84 1 Q NOW AS FAR AS THE EMBEZZLEMENT IS CONCERNED, THE 2 TERM THAT HAS BEEN USED BEFORE ABOUT THE FUNDS, WHOEVER 3 SHALL BE RESPONSIBLE FOR HANDLING THEM, AS FAR AS THE 4 EXHIBIT IS CONCERNED, THE LETTER, THE EXHIBIT A THAT YOU 5 WROTE, THIS COMPLAINT, DID YOU INTEND THAT TO BE A COMPLAINT 6 OF EMBEZZLEMENT? 7 A NOT NECESSARILY. 8 Q IT — YOU DIDN'T EXCLUDE IT, BUT YOU DIDN'T 9 NECESSARILY EMPHASIZE IT? 10 A THAT’s CORRECT. 11 Q NOW YOU ALSO MADE COMPLAINTS, SIMILAR COMPLAINTS, 12 TO THE INTERNAL REVENUE SERVICE, HAVE YOU NOT? 13 A I HAVE NOT, NO. 14 Q WHAT ABOUT THE FBI? 15 A I HAVE NOT. 16 Q WHAT ABOUT MR. RAVEN OR ANYBODY WITH THE 17 CORPORATION LSF? 18 A I THINK MR. RAVEN CONTACTED THE IRS. I DID NOT, 19 BUT I DON'T RECALL ABOUT THAT. 20 Q WHAT ABOUT THE FBI? 21 A I DON'T THINK EITHER OF US DID. I MIGHT BE WRONG, 22 BUT I DIDN'T. 23 Q YOU DO AGREE, DO YOU NOT, THAT NOBODY IS URGED TO 24 TAKE A CHARITABLE DONATION OF ANY MONEY THEY GIVE LSF OR 25 LIBERTY LOBBY OR WHATEVER? 26 A I'M SORRY? 27 Q THE CHARITABLE DONATION — PEOPLE PRIVATELY 28 OFFERING THE MONEY, THEY GIVE YOU MONEY THEY GAVE IN
page 85 1 DONATIONS. YOU DON'T URGE THEM TO WRITE IT OFF THE TAX 2 RETURN. YOU DON'T SAY, WE'RE A 501(C)(3) GROUP? 3 A WE DO NOW. WE'VE GIVEN 501(C)(3) STATUS. 4 Q BUT THAT WAS NOT ALWAYS THE CASE? 5 A NO, THAT WAS NOT ALWAYS THE CASE. 6 Q WHAT ABOUT COMPLAINTS TO THE SHERIFF OF THE 7 COUNTY, THIS COUNTY OR OTHERWISE? HAVE YOU MADE CRIMINAL 8 COMPLAINTS TO THEM? 9 A WELL, IN SAN DIEGO COUNTY YOU ARE REFERRING TO? 10 Q YES, COUNTY WE'RE SITTING, I GUESS. 11 A NO, I HAVEN'T DONE ANYTHING LIKE THAT. 12 Q WITH RAVEN OR LSF? 13 A NOT TO MY KNOWLEDGE. 14 Q WHAT ABOUT THE COSTA MESA POLICE? 15 A WE HAVE — WELL, I AND TOM MARCELLUS, BUT I THINK 16 PRINCIPALLY I BROUGHT WHAT WE BELIEVE WAS EVIDENCE OF 17 CRIMINAL ACTIVITY BY CARTO TO THE COSTA MESA POLICE. 18 Q OKAY. ARE YOU AWARE OF ANY PENDING INVESTIGATIONS 19 OTHER THAN THE COSTA MESA INVESTIGATION OR THE ONE IN 20 SWITZERLAND? 21 A NO. 22 Q DID YOU HAVE FAMILIARITY WITH THE HEREFORD 23 CORPORATION WHILE YOU WORKED WITH MR. CARTO? 24 A I DON'T BELIEVE SO. 25 Q DID YOU EVER CONTACT LSF OR ANYBODY WITH LSF, 26 INCLUDING YOURSELF, EVER CONTACT PANAMA TO DETERMINE THE 27 TRUE STATUS OF THAT CORPORATION? 28 A COULD YOU REPEAT THE QUESTION?
page 86 1 Q DID YOU EVER CONTACT PANAMA ABOUT HEREFORD 2 CORPORATION? 3 A I NEVER DID. 4 Q ANYONE WITH LSF DO IT BEFORE TODAY THAT YOU KNOW? 5 A NOT TO MY KNOWLEDGE. 6 MR. IZEN: I PASS THE WITNESS. THANK YOU. 7 THE COURT: ANY CROSS-EXAMINATION? 8 MR. SAMPSON: NO. 9 THE COURT: THANK YOU, MR. WEBER, FOR YOUR TESTIMONY. 10 THERE’s A STEP THERE. 11 MR. IZEN: WE'RE NOT THERE YET, BUT THIS EVIDENCE IS 12 TENDERED FOR THE PURPOSES OF YOUR BEING ABLE TO RULE ON THE 13 REASONABLENESS OF FEAR OF PROSECUTION, SUCH WHATEVER WORTH 14 IT HAS. ALSO, OBVIOUSLY, THERE’s — I TRIED TO GET SOME 15 KNOWLEDGE OF HEREFORD, BUT APPARENTLY LSF DOESN'T KNOW 16 ANYTHING ABOUT IT. 17 THAT’s IT, AS FAR AS I WANT TO GO. 18 THE COURT: I GUESS WE'LL SEE EACH OTHER ON THE 8TH OF 19 JUNE. 20 MR. SAMPSON: WE HAVE A COUPLE OF MINOR ISSUES, IF I 21 COULD CLEAR UP. 22 FIRST OF ALL, THERE WAS A MOTION FOR AN ASSIGNMENT 23 ORDER ON CONTRACTS HELD BY VIBET. THERE WAS NO OPPOSITION. 24 I WILL SUBMIT AN ORDER TO THE COURT, IF THAT’s OKAY. 25 THE COURT: I WILL SIGN THAT. 26 MR. SAMPSON: THERE WAS A MOTION TO COMPEL FURTHER 27 DISCOVERY RESPONSES, AND THAT WAS BRIEFED BEFORE THE COURT. 28 THAT WAS OUR MOTION GIVING ALL THE OBJECTIONS, THE FIFTH
page 87 1 AMENDMENT, EVERYTHING ELSE. I DON'T THINK THERE’s BEEN A 2 DEFINITIVE RULING ON THAT TODAY. 3 THE COURT: I'D FORGOTTEN ABOUT THAT MOTION. 4 MR. URTNOWSKI: ISN'T THAT THE SAME ONE AS THE JUDGMENT 5 DEBTOR EXAMINATION QUESTION, THE DOCUMENTS WITH THE SEPARATE 6 STATEMENTS? YOU SUBMITTED ONE AND I SUBMITTED ONE. 7 MR. SAMPSON: THE COURT HAS BEEN WRAPPING TOGETHER. I 8 WANT TO MAKE SURE WE'RE CLEAR THAT I GUESS THOSE — THE 9 MOTION TO COMPEL OVERLAPS WITH THE OSC, SO TO THE EXTENT THE 10 COURT WANTS TO RULE ON THAT AT OSC, FINE. I WANT THE RECORD 11 CLEAR. 12 THE COURT: I WILL DO THAT AT THE OSC. 13 MR. SAMPSON: WE ALSO HAD A MOTION BY THE DEFENDANTS TO 14 QUASH THE SUBPOENA. I SUBPOENAED RECORDS FROM MR. URTNOWSKI 15 TO FIND OUT WHO WAS PAYING HIM, AND THAT’s THE IN RE GOODMAN 16 GRAND JURY PROCEEDINGS. GOODMAN CASE, THE COURT RECALLS 17 THAT THAT WAS MR. URTNOWSKI’s MOTION TO QUASH. 18 THE COURT: I DIDN'T KNOW ABOUT THAT MOTION. I KNEW 19 THAT YOU HAD TAKEN SOMETHING OFF CALENDAR, A BIG HUGE THICK 20 THING. 21 MR. SAMPSON: I TOOK OFF THE MOTION TO COMPEL DISCOVERY 22 RESPONSES FROM MR. URTNOWSKI BASED ON SANCTIONS AWARDS. WE 23 RESOLVED THAT ISSUE. 24 THE COURT: HE PAID YOU 6,000. 25 MR. SAMPSON: SEVEN THOUSAND AND SOME WITH INTEREST AND 26 COSTS, YOUR HONOR. 27 MR. URTNOWSKI: IT WAS A MOTION SET ORIGINALLY FOR 28 APRIL 10TH. IT WAS A BUSINESS RECORDS SUBPOENA THAT WAS
page 88 1 SERVED NOT ON ME BUT MY SECRETARY, BUT IT WAS ADDRESSED TO 2 ME INDIVIDUALLY. IN THEIR OPPOSITION HE SAID IT WOULD BE 3 MOOT BECAUSE IT WOULD BE RESEARCHED. THAT HAS NEVER 4 OCCURRED. AND AS WELL AS OBJECTING TO THE SERVICE, YOUR 5 HONOR, I OBJECTED TO THE FORM OF THE BUSINESS RECORDS 6 SUBPOENA AS BEING IMPROPER DISCOVERY DEVICE. THAT IT WAS 7 GOVERNED BY THE DISCOVERY CODES 2020 AND 2024, AND THE 8 DISCOVERY CUTOFF HAD RUN AT THE TIME OF TRIAL. 9 I ALSO OBJECTED TO THE SCOPE OF THE DOCUMENTS. 10 ASKED THAT THEY WERE NOT PRECISELY DRAWN AS A SUBPOENA 11 REQUIRES. FOR INSTANCE, THEY SAY, AND THIS IS WITH RESPECT 12 TO ALL OF THEM,ANY AND ALL DOCUMENTS IN YOUR POSSESSION OR 13 CONTROL FROM TIME — THE PERIOD OF JANUARY 1, 1998 TO THE 14 PRESENT CONCERNING,AND THEY HAVE DIFFERENT TOPICS. THIS 15 ONE IS CONCERNING COPIES OF PAYMENTS TO YOU. SUBPOENA IS 16 REQUIRED TO BE PRECISELY DRAWN. CONCERNING COPIES OF 17 PAYMENTS, I DON'T KNOW WHAT THAT IS. TAX RETURNS? LETTERS 18 TO THE CLIENT? BILLING STATEMENTS? THE WHOLE SUBPOENA IS 19 OVERBROAD, BUT IT’s NEVER BEEN SERVED ON ME. 20 THE COURT: DO YOU WANT TO — I KNOW THIS IS A MOTION 21 THAT COMPLETELY PASSED ME BY. 22 MR. URTNOWSKI: HOW COULD THAT BE? 23 THE COURT: WITH 50,000 MOTIONS. 24 MS. ARONSON: YOUR HONOR, AS TO SERVICE SERVED AT HIS 25 LAW — SERVICE ON THE LEGAL SECRETARY, HIS LEGAL SECRETARY 26 IS AN AGENT UNDER CASE WARNER BROTHERS V. GOLDEN WEST MUSIC 27 SALES, AND CITE IS 36 CAL. APP. 3D 1012. WE'LL BE HAPPY TO 28 RE-SERVE THE SUBPOENA, BUT IT DOESN'T SEEM TO BE A REASON
page 89 1 FOR DOING SO. 2 THE COURT: RIGHT. I DON'T SEE ANY REASON TO RE-SERVE 3 IT. I DON'T KNOW THAT I AM IN A POSITION TO RULE ON IT. 4 WHAT IS IT, MR. SAMPSON, YOU WANTED AND HE WON'T 5 GIVE YOU? 6 MR. SAMPSON: I WILL MAKE IT SIMPLE. WE WANTED TO 7 KNOW — IN RE GOODMAN CASE SAYS THAT — IT’s A NINTH CIRCUIT 8 CASE, YOU CAN SUBPOENA RECORDS FROM AN ATTORNEY’s FINANCIAL 9 RECORDS ON THEIR CLIENT, THAT IS, ANY PAYMENTS TO 10 MR. URTNOWSKI BY JUDGMENT DEBTORS, ANY PAYMENTS BY THIRD 11 PARTIES ON THE JUDGMENT DEBTOR’s ACCOUNTS, AND THEN THE FEE 12 ARRANGEMENT. SO WE KEPT IT SIMPLE. LIMITED IT. BASICALLY 13 TOOK THE LANGUAGE FROM THE GOODMAN CASE SO IT WOULD COMPLY 14 AND, OF COURSE, THE RESULTS ARE OBVIOUS. IF HE’s GETTING 15 PAID, WE WOULD LIKE TO KNOW WHERE, SO WE CAN LEVY ON IT. 16 THE COURT: SURE. 17 MR. URTNOWSKI: IT’s NOT SPECIFICALLY DRAWN, AND I 18 OBJECT, BUT I ALSO PRESERVE MY OBJECTION FOR SERVICE. I WAS 19 NOT PROPERLY SERVED. MY SECRETARY IS NOT MY AGENT. THEY 20 DID NOT NAME THE BUSINESS AS AN ENTITY. THEY NAMED ME 21 INDIVIDUALLY. THERE’s A DECLARATION FROM ME AND HER STATING 22 FOR ME SHE DOESN'T HAVE MY AUTHORITY AND FROM HER. SHE 23 KNOWS SHE DOESN'T HAVE THE AUTHORITY. 24 BESIDES THAT OBVIOUS INFIRMITY, IT’s OVERBROAD. 25 NOW I SUPPOSE THAT IF THEY SERVE ME IN TIME, MAYBE WE CAN 26 SET IT FOR JUNE 8TH. 27 THE COURT: MR. SAMPSON, WHAT IS YOUR OPINION TO THE 28 PROPER THING TO DO HERE? I THINK I KNOW WHAT I AM GOING TO
page 90 1 DO. WHAT IS YOUR IDEA? 2 MR. SAMPSON: YOUR HONOR, I LOOK AT THIS AS TWO 3 ALTERNATIVES. WE CAN SUBPOENA THE RECORDS, OR I CAN SET THE 4 DEBTOR’s EXAM FOR THE SAME INFORMATION. WE WILL GET TO THE 5 SAME POINT. I THINK BOTH ARE AUTHORIZED, AT LEAST MY 6 READING OF THE POSTJUDGMENT CODE AND JUDGE AHART’s COMMENTS 7 IN THE RUTTER GROUP POSTCOLLECTION OR ENFORCEMENT OF 8 JUDGMENT BOOKS. SO I HAVE NO PROBLEM THE COURT CONTINUING 9 THIS. IF YOU WANT TO HEAR THIS ON JUNE 8TH AT 8:30 OR IF 10 THE COURT WANTS TO TAKE A RECESS, WHATEVER IS BEST FOR THE 11 COURT. 12 THE COURT: I'M NOT GOING TO QUASH THE SUBPOENA. SET A 13 DEBTOR’s EXAM FOR MR. URTNOWSKI ON THE 8TH. I MAY NOT BE 14 ABLE TO DO IT. I CAN'T DO EVERYTHING AND STILL CHOOSE THE 15 JURY. SOME THINGS WILL HAVE TO GIVE WAY, AND IT WILL BE THE 16 CIVIL CASE. 17 AS I UNDERSTAND THE LAW, THE INFORMATION 18 MR. SAMPSON WANTS IS DISCOVERABLE. MIGHT AS WELL GET TO IT. 19 MR. URTNOWSKI: YOUR HONOR, HE ASKED FOR ALL DOCUMENTS 20 CONCERNING COPIES OF PAYMENTS. WHAT ARE DOCUMENTS 21 CONCERNING? IT’s OVERBROAD, YOUR HONOR. IT’s MY TAX 22 RETURNS? IT’s A LETTER TO THE CLIENT? 23 THE COURT: NO, IT ISN'T THAT. HE MADE IT CLEAR WHAT 24 IT IS. AND AS I REMEMBER THAT CASE, IT MAKES IT CLEAR. 25 IT’s NOT YOUR PERSONAL TAX RETURN OR ANYTHING LIKE THAT. 26 IT’s REAL SIMPLE. HOW ARE YOU GETTING PAID BY THESE VARIOUS 27 DEBTORS THAT YOU REPRESENT, SO THAT MR. SAMPSON CAN FIND OUT 28 WHERE THEY HAVE THEIR MONIES, SO HE CAN LEVY ON THAT? IT'S
page 91 1 YOU SIMPLY START PULLING THE STRING AND SEE WHAT COMES OUT 2 OF THE RABBIT HOLE. 3 MR. URTNOWSKI: WHAT IS THE STATUS OF THE SUBPOENA? 4 THE COURT: I'M NOT QUASHING IT. AND EITHER COMPLY 5 WITH IT ON THE DATE IN QUESTION, OR WE'LL HAVE A DEBTOR'S 6 EXAM FOR YOU ON THAT DATE, IF WE HAVE THE TIME. BRING THIS 7 STUFF IN ON THE 8TH. I THINK YOU KNOW THE CALL OF THE 8 SUBPOENA. THERE’s NO MAGIC TO THIS ONE. 9 ANYTHING ELSE? 10 MR. URTNOWSKI: JUST FOR THE COURT, DOES THE COURT RULE 11 SERVICE WAS PROPER ON ME? 12 THE COURT: YES. I'M NOT QUASHING THE SUBPOENA. TAKE 13 WHATEVER CORRECTION YOU WANT. 14 MR. SAMPSON: THE ONLY TWO ITEMS LEFT — I MADE A 15 CHECKLIST. I SHOULD HAVE DONE A SCHEDULING NOTICE OR 16 SOMETHING. 17 WE HAVE THE DEBTOR’s EXAMINATION OF MR. AND 18 MRS. CARTO SET FOR TODAY. GIVEN THE CONTEMPT ORDERS, WE CAN 19 GO FORWARD TODAY, OR WE CAN CONTINUE THAT TO THE 8TH, 20 WHATEVER THE COURT PREFERS. 21 THE COURT: I DON'T CARE. I ONLY HAVE 20 MORE MINUTES 22 I CAN SPEND WITH YOU. IF THE CARTOS WOULD LIKE TO SUBMIT TO 23 THE EXAMINATION, FINE. I CAN TELL YOU, BASED ON THE PRESENT 24 KNOWLEDGE THAT I HAVE, THERE’s NO FIFTH AMENDMENT RIGHT TO 25 THE QUESTIONS, BUT IT’s UP TO THEM WHAT THEY WANT TO DO. 26 MR. URTNOWSKI: YOUR HONOR, WE WOULD LIKE TO RESERVE IT 27 TO JUNE 8 FOR THE HEARING ON CONTEMPT. THEY SAT FOR 28 JUDGMENT DEBTOR’s EXAMS, THOUGH POSTPRIVILEGE. WE GET A
page 92 1 FINAL DETERMINATION. 2 MR. SAMPSON: I WILL AGREE. WE WON'T WASTE TIME AND 3 MONEY TODAY. I WANT TO DEPOSE THEM. I KNOW WHAT THE 4 ANSWERS WILL BE UNTIL THE COURT ISSUES THE FINAL RULING. 5 THE COURT: RIGHT. ANYTHING ELSE I NEED TO DO? 6 MR. SAMPSON: THE COURT CAN ORDER THEM BACK FOR THE 7 DEBTOR’s EXAM. 8 THE COURT: THE CARTOS ARE ORDERED BACK FOR THE 9 DEBTOR’s EXAM. BOTH ARE PRESENT IN COURT. BE HERE ON THE 10 8TH OF JUNE, 8:30 IN THE MORNING. 11 MR. SAMPSON: I WILL GO AHEAD AND PREPARE THE ORDERS 12 ESPECIALLY TO SET THE OSC REGARDING THE SALE OF THE HOUSE 13 TOO. I WILL LAY OUT THE LAW ON THAT FOR EVERYONE. 14 THE COURT: I APPRECIATE THAT. I HAVEN'T DONE THIS 15 BEFORE, AND I AM HOPING NOT TO HAVE TO DO IT. IF ANYONE 16 WANTS TO TAKE ME UP ON TRYING TO FIND SOMEONE TO SETTLE THE 17 CASE, I SURE WOULD LIKE TO DO IT. IF SOME WAY CAN BE FOUND 18 TO KEEP THE CARTOS OUT OF JAIL, I WOULD LIKE TO DO THAT TOO. 19 MR. SAMPSON: MY CLIENTS STIPULATED TO AN INFORMAL OR 20 FORMAL SETTLEMENT CONFERENCE WITH ANOTHER JUDGE. IF 21 MR. URTNOWSKI HAS A MOMENT TO TALK WITH THE CLIENTS, WE CAN 22 SET THAT UP. 23 THE COURT: YOU TWO CAN TALK AND FIGURE OUT SOME DATES, 24 AND I WILL TRY TO FIND SOMEONE TO DO IT FOR YOU. I HAVE 25 SOME PEOPLE IN MIND WHO ARE VERY, VERY KNOWLEDGEABLE IN THE 26 CIVIL AREA, AND I THINK YOU WOULD GET A FAIR SHOT. 27 I WOULD EMPHASIZE THERE HAS TO BE REAL HONESTY 28 WITH THE JUDGE YOU TALK TO. YOU DON'T HAVE THAT WITH ME
page 93 1 RIGHT NOW TO THE EXTENT I COULD EVER SETTLE IT. ALL RIGHT. 2 THANKS A LOT, AND WE WILL SEE YOU ON THE 8TH. 3 MR. URTNOWSKI: THANK YOU. 4 5 (PROCEEDINGS CONCLUDED.) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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1 STATE OF CALIFORNIA )
2 )SS
3 COUNTY OF SAN DIEGO )
4
5 I, BARBARA J. SCHULTZ, C.S.R. NO. 8021, AN
6 OFFICIAL REPORTER OF THE SUPERIOR COURT OF THE STATE OF
7 CALIFORNIA, IN AND FOR THE COUNTY OF SAN DIEGO, HEREBY
8 CERTIFY THAT I REPORTED IN MACHINE SHORTHAND THE PROCEEDINGS
9 HAD AND TESTIMONY ADDUCED IN THE TRIAL OF THE WITHIN CASE,
10 AND THAT THE FOREGOING TRANSCRIPT, CONSISTING OF PAGES FROM
11 1 TO 94, INCLUSIVE, IS A FULL, TRUE AND CORRECT TRANSCRIPT
12 TO THE BEST OF MY ABILITY OF THE SAID PROCEEDINGS.
13 DATED AT VISTA, CALIFORNIA, THIS 24TH DAY OF MAY,
14 1998.
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19 ____________________________
BARBARA J. SCHULTZ
20 CSR NO. 8021
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