Transcripts - Week 2, 10-3-11

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Criminal Action No. 09-cr-00266-CMA UNITED STATES OF AMERICA, Plaintiff, v. 1. 2. 3. 4. 5. 6. DAVID A. BANKS; DEMETRIUS K. HARPER, a/k/a KEN HARPER; GARY L. WALKER; CLINTON A. STEWART, a/k/a C. ALFRED STEWART; DAVID A. ZIRPOLO; and KENDRICK BARNES,
Defendants. __________________________________________________________ REPORTER'S TRANSCRIPT (Jury Trial Day 6) __________________________________________________________ Proceedings before the HONORABLE CHRISTINE M. ARGUELLO, Judge, United States District Court, for the District of Colorado, commencing at 9:04 a.m. on the 3rd day of October 2011, Alfred A. Arraj United States Courthouse, Denver, Colorado. A P P E A R A N C E S FOR THE PLAINTIFF: MATTHEW T. KIRSCH and SUNEETA HAZRA, U.S. Attorney's Office - Denver, 1225 17th St., Suite 700, Denver, CO 80202 FOR THE DEFENDANTS: Pro Se
DARLENE M. MARTINEZ, RMR, CRR United States District Court For the District of Colorado
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I N D E X WITNESSES: LOUIS QUIJAS DIRECT EXAMINATION BY MS. HAZRA CROSS-EXAMINATION BY MR. BANKS JONATHAN LANDAU DIRECT EXAMINATION BY MS. HAZRA CROSS-EXAMINATION BY MR. BANKS CROSS-EXAMINATION BY MR. BARNES CROSS-EXAMINATION BY MR. WALKER EILEEN BERGMAN DIRECT EXAMINATION BY MR. KIRSCH CROSS-EXAMINATION BY MR. WALKER CROSS-EXAMINATION BY MR. BANKS REDIRECT EXAMINATION BY MR. KIRSCH JEFFREY KELLY DIRECT EXAMINATION BY MS. HAZRA CROSS-EXAMINATION BY MR. BANKS COURTNEY MULLEN DIRECT EXAMINATION BY MS. HAZRA CROSS-EXAMINATION BY MR. WALKER CROSS-EXAMINATION BY MR. BANKS REDIRECT EXAMINATION BY MS. HAZRA RECROSS-EXAMINATION BY MR. BANKS ROBERT FRICKE DIRECT EXAMINATION BY MS. HAZRA CROSS-EXAMINATION BY MR. WALKER CROSS-EXAMINATION BY MR. BANKS DOTTIE PETERSON DIRECT EXAMINATION BY MR. KIRSCH CROSS-EXAMINATION BY MR. BANKS REDIRECT EXAMINATION BY MR. KIRSCH FRANK SANTORO DIRECT EXAMINATION BY MS. HAZRA SPECIAL AGENT JOHN SMITH DIRECT EXAMINATION BY MS. HAZRA PAGE 821 830 837 845 851 852 854 888 899 906 912 926 934 955 961 965 966 967 981 983 985 999 1009 1013 1026
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E X H I B I T S NO. 1L 1J 3.00 11.00 9.00 12.00 15.00 160.02 16.00 17.00 18.00 21.00 24.00 71.00 160.01 160.03 161.00 161.02 166.02 166.03 166.01 181.00 191.00 200.05 200.01 201.00 212.01 221.00 226.02 231.00 300.01 301.00 311.00 331.00 341.00 342.00 350.01 351.00 381.00 430.08 431.00 436.03 500.01 608.18 608.67 609.03 .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... ..........................................
ADMITTED 942 1048 923 938 946 1021 859 948 878 878 953 1022 1038 863 894 866 867 880 882 885 1041 1019 914 919 920 1055 1044 1046 1050 1055 1052 1056 1059 991 995 1060 1061 1062 940 945 951 828 970 975 870
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609.01
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No. 72.00 73.00 73.01 102.00 103.00 162.00 182.00 192.00 202.00 212.00 213.00 222.00 223.00 223.01 232.00 233.00 233.01 233.02 332.00 272.00 304.00 304.01 312.00 312.01 313.00 353.00 382.00 383.00
ADMISSIBLE .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... .......................................... 1039 1040 1040 1041 877 1042 1024 924 1043 1044 1045 1046 1050 1051 1059 1052 1053 1054 1057 1057 1058 1061 1062 1063
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OCTOBER 03, 2011 (Proceedings commence at 9:04 a.m.) (The following is had in open court, outside the hearing and presence of the jury.) THE COURT: You may be seated. Are there any matters that need to
Good morning.
be brought to my attention before we bring in the jury? MR. KIRSCH: MR. BANKS: THE COURT: Not from the Government, Your Honor. Not from us, Your Honor. All right. Ms. Barnes, would you
please bring in the jury. (The following is had in open court, in the hearing and presence of the jury.) THE COURT: You may be seated.
Good morning, welcome back. Government may call its next witness. MS. HAZRA: Thank you, Your Honor.
Government calls Louis Quijas. COURTROOM DEPUTY: Remain standing, please.
Your attention, please. LOUIS QUIJAS having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record.
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THE WITNESS:
Louis Quijas, Q-U-I-J-A-S. DIRECT EXAMINATION
BY MS. HAZRA: Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Good morning, sir. Where are you currently employed?
At the U.S. Department of Homeland Security. What is your position there? I am an assistant secretary at the Department. In that capacity, to whom do you report? Secretary Napolitano. Prior to being at DHS, where were you previously? I ran a business for 3 years in Chantilly, Virginia. Prior to that? I was with the Federal Bureau of Investigation. How long were you with the FBI? A little over 6 years, ma'am. And do you know the years you were there? '02 to '08. What was your position with the FBI during that time
period? A. I was appointed by Director Mueller as the assistant
director of the FBI. Q. A. Just in case, for clarity, who is Director Mueller? Director Mueller is the director of the Federal
Bureau of Investigation. Q. And what, as the assistant director, what were your
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responsibilities? A. The director wanted to create an office within the
FBI called the Office of State and Local Law Enforcement, to be the primary liaison between the FBI and state and local law enforcement. There wasn't a position for that.
And as we developed a strategy under counter terrorism, we knew state and locals were going to be a critical part. My job, my office's job, was to be that connection between the 18,000 police departments and associations that are out there and being connected to the FBI. Q. I would like to turn your attention to 2003. Are you
familiar with what is known by the acronym of IACP conference? A. Q. A. Q. A. Yes, ma'am. And is that pronounced ICAP? No. It is usually just called IACP conference.
What is that conference? Well, it is actually an organization; International It is an international
Association of Chiefs of Police.
association of chief law enforcement executives, not only domestically, but internationally. And once a year they
have their national conference somewhere within the United States. This year it is going to be in Chicago. But it
brings in people internationally to meet to go to training seminars, have meetings and those type of activities.
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Q. A. Q. A.
In 2003, where was the IACP meeting? Philadelphia, ma'am. And approximately how many people attended? At that particular one, ma'am, I couldn't say. But
on average -- because I used to be on the board of the IACP when I was a former police chief -- I think we averaged around 13-, 14,000 people that would show up, register. show up. And then you would have people that would just But, on an average, it is the largest law
enforcement conference in the world. Q. A. Q. Did you attend the one in 2003? Yes, ma'am. Was there something significant about that conference
in terms of who else attended with you? A. mind. Two things about that conference that stuck in my The fact that a director was there, obviously,
because I always did the advance work; meeting with associations and stuff to head up things that were situations at the time that didn't become problems by the time he got there. That was basically my job, to make
sure that we smoothed it, if there were any feathers that were ruffled, I would do that prior to the director getting there, and giving him a brief. And the other significant thing is that my mom passed away while I was there.
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Q.
And when you say "the director," is that Director
Mueller? A. Q. A. Yes, Director Mueller. Did you meet many people in the convention in 2003? Yes, ma'am. That was my job, is to meet as many
people, to get to as many meetings as I possibly could, so by the time the director showed up, I could brief him on issues that were out there, particular groups; law enforcement or the sheriff departments, those type of things. And that was, basically, a standard brief that I would give him before he would speak to different groups. I would always have him speak to four or five different groups while he was there. Q. Do you recall meeting anyone from DKH at the
convention that year? A. Q. No, I don't. Do you recall meeting anybody from IRP at the
convention that year? A. Q. No, I don't. Was it your typical practice to schedule meetings
with potential vendors of software, software products at these meetings? A. Q. A pre-arranged meeting? Correct.
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A. Q. A.
No, ma'am. Why not? That wasn't my area of responsibility. Again, I
would oversee any technical, any operational pieces -that is what we call it within the FBI, any of the operational pieces. But the only meetings I would
pre-arrange that would be on my schedule would be meetings with sheriffs' associations, the national academy associations. I would meet with the special agents in
charge, the agents that run the Bureau's 56 field offices. Like they have a field office in Denver, I would meet with their SAC and let them know things I have been hearing. As far as pre-arranging meetings with vendors to specifically meet with them, that, in my 6 years I was there, I have never done that. Q. If, in the course of the convention, you happened to
meet a vendor, what authority, if any, did you have to enter into contracts? A. I had no authority to enter into contracts. It was,
again, not my responsibility to enter the FBI or my office into contracts. Q. And what was your routine practice if you did meet
vendors who had products they were potentially trying to sell to the FBI or enter into a contract with the FBI for? A. Keep in mind at those conventions, first thing they
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do is give you a big -- basically, a sign around your neck indicating Louis Quijas, Director of FBI. As you are
walking through the conference center hotel and the vendor area, there are people seeing that. from a large organization. you business cards. very much. I was there, obviously, to promote the positive relationship. So, obviously, I wasn't rude. My routine They know you are Give
They will talk to you.
My standard routine is, thank you
is, thank you very much. Here is my business card.
Give me your business card. Send me any information, and if
at all possible, I can help arrange a meeting for you back at headquarters. meet with vendors. Again, I was not operational, in the sense that I had a budget to buy any operational type of equipment or capabilities for the Bureau. Q. I believe you just said, sir, it was routine practice But that was not my responsibility to
to say, give me your business card, I will arrange a meeting if I can. Did the fact of your arranging
meetings -- in the course of that, did you make any promises or representations of the FBI to follow through with the meeting? A. No. No. There would be times, if I did reach out to
a particular unit within the FBI -- I mean, I always ask

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them, send me your brochure or DVD, all of those things, because it could be everything from ammunition to whatever. There would be times that I would never -- I
would never know the outcome of that, because I would just pass that along, or one of my administrative assistants would look at it and pass it on to the outfit within the Bureau that would be responsible for that. So there was never a requirement to get back with me and say, hey, I met with Bob Smith. That just was not
a routine thing that happened within my operation. Q. Thank you. Mr. Quijas, if you could look at the
manila folder in front of you, that has a document in there marked for identification purposes as Government's Exhibit 500.01. A. Yes, ma'am. MS. HAZRA: And, actually, Your Honor, if I could If I
have one moment, I believe it may be stipulated. could have a moment to check? THE COURT: MS. HAZRA: You may. It is stipulated, Your Honor.
So I
would move to admit Government's Exhibit 500.01, and to publish it. THE COURT: MR. BANKS: THE COURT: All right. Is that correct?
No objection. All right. Exhibit 500.01 is admitted,
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and it may be published. (Exhibit No. 500.01 is admitted.) Q. (BY MS. HAZRA) Mr. Quijas, you just talked about Is that individual
your administrative assistant. identified in this e-mail? A. Q. A. Q. Yes. And who is that? Terry.
Is that the Theresa Campos sending that second
e-mail? A. Q. Yes, ma'am. And the T Campos receiving the second e-mail at the
bottom -A. Q. Yes. -- from David Banks. MS. HAZRA: If you could highlight the bottom
portion of that e-mail, Special Agent, the lower e-mail. Q. (BY MS. HAZRA) As you can see, Mr. Quijas, this It talks about a meeting
reference is, "Hello, Terry." with you.
If you could look at that first paragraph, is
that paragraph consistent with the typical practice you described? A. Yes, ma'am. As I indicated, I would have asked
somebody to please send me additional literature, and I will pass it on. And, if at all possible, attempt to put
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you in contact with the right people within the Bureau. So, yes, that goes along with what I would normally have asked somebody to do. MS. HAZRA: Agent. Q. (BY MS. HAZRA) Does the fact that Terry has passed And if you could go to the top, Special
this along of any significance? A. Q. Say that again. The first statement, does that have any significance,
or is that your normal routine policy? A. That is the normal response. What Terry will do Please
is -- she is a very seasoned executive assistant.
keep in mind, I am dealing with 18,000 agencies out there, and thousands of people that have sent me letters. What
Terry would do normally, is she would look at this, and realize this is not something that Mr. Quijas would normally deal with. me, also. So she would get with an agent and say, this is what -- say it is software, ammunition, some other equipment, and she says, I will pass it on. would pass it on to an executive assistant. Usually she They would I had agents that were assigned to
look at it, and put a note and pass it on to somebody else. Some of this stuff would never come across my desk,
because it was follow-up and, again, not something I would

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normally deal with anyway. So to expedite the process, there was no sense for it sitting in my in box. My aide would take it and pass
it on to the other people within the Bureau that would actually respond to those type of inquiries. MS. HAZRA: Q. (BY MS. HAZRA) Thank you, Special Agent. To your knowledge, Mr. Quijas, did
you have any meetings with DKH or IRP? A. Q. Say it again? Do you remember any meetings between you and people
with DKH or IRP? A. No, ma'am. MS. HAZRA: THE COURT: MS. HAZRA: THE COURT: If I could have one moment, Your Honor? You may. Nothing further, Your Honor. Mr. Banks? CROSS-EXAMINATION BY MR. BANKS: Q. A. Q. Good morning, Mr. Quijas. Good morning. Sir, can you tell me, in your role as -- over the
office of law enforcement coordination, give a little more detail on exactly what that entails? A. Yeah. Again, our job was to, as a unit, to be the
primary point of contact for state and local law

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enforcement and their interactions with the FBI; be either the sheriff or the chief, a state superintendent. The
director, from the day I got there, had asked, if you have any issues, if you have any concerns about the FBI, please get with Louis' office. He will help sort it out.
Because some of the concerns is things were falling through the cracks, and the director wanted to make sure state and local issues were addressed. My specific role was to, basically, be the director's eyes and ears out in the law enforcement community. I sat at all senior level meetings, met with
the director every day as we did briefings regarding things that were going on around the world, and basically he would come to me and say, Louis, what do you think? And I would say, how does that impact the sheriff? we notified people? resources they need? That is what I did for the director, because nobody else sitting around the table came from local law enforcement or had ever been a police chief. So I was his How many agencies? Have
Do they have the
in-house police chief, if you will, to make sure that he had all of the knowledge and all of the information he needed before he made a final decision. And we realized
we didn't notify our chief, or we didn't provide the equipment or we didn't include a certain piece of the law
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enforcement community, if you will, in the particular operation. So that was really two-fold; the commission was to be the primary point of contact. My position,
specifically, was to be the director's eyes and ears for the Bureau out in law enforcement community. Q. A. Thank you, sir. Are you familiar with ViCAP?
Yes, I am, it has been awhile, so I would have to go
back and look at it, but, yes, I remember the name, yes. Q. Okay. Also, was it your role in Philadelphia during
the IACP convention, to handle command, to set up the command and control center at a particular hotel? A. Q. No. Was there a command and control center there set up
for the FBI at that particular time? A. Yes. I would think so, because we had the Director And based on
and all of the major executives were there.
my past experience, when you have that type of -- that many of the executives, you will have a command and control center. Q. You would normally go into the hotel and take up a
number of floors for their particular purposes? A. Q. A. For the Bureau's? Yes. Yes.
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Q.
Okay.
Now, you mentioned that there -- that you
don't typically set up pre-arranged meetings at -- for the convention; is that correct? A. them. Not with vendors, because I don't have contact with But I do set up -- I did set up meetings at the If a particular group wanted to
sheriff's association.
meet with me -- for example, the current upcoming conference, I have a budget meeting scheduled with the law enforcement associations. Q. Okay. I want to direct your attention back to
Government's Exhibit 500.01. A. Yes, sir. MR. BANKS: THE COURT: MR. BANKS: Q. (BY MR. BANKS) Your Honor, can we publish that? You may. Thank you. Now, Director -- I guess I still call
you Director.
I know you are no longer in that role.
Would there have been occasion for a company that wanted to at least provide an introduction, to, say, a vendor, with regards to something that they felt could help the office of law enforcement, your office there at the FBI, do you not recall a meeting with IRP regarding just an introduction, nothing to do with contracts, but just an introduction of what they could provide your office?
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A. Q.
No, I don't recall a meeting like that. Can we go down to the second -- you were on the
second page, sorry. Now, what does this e-mail say -- what does -- is this e-mail a communication from Mr. Banks to Terry. A. Q. A. I am assuming so, sir, yes. Okay. And what is the nature of that communication? Basically, And
It appears to be recapping a meeting.
what it says is "Your meeting with me went well."
this was a follow up, with additional literature for arranging a meeting in D.C. Q. Now -- okay. Do you remember a letter -- a formal
letter sent to you by Mr. Banks, a follow-up letter, that is consistent with this particular e-mail communication? A. Q. A. I don't recall. You don't recall? I don't recall that, sir. MR. BANKS: Your Honor, I would like to provide It is
this letter to refresh Mr. Quijas' recollection. part of discovery. THE COURT: MR. BANKS: All right.
Has it been marked?
Not as of yet, Your Honor.
Would you like to see this, Mr. Kirsch, Ms. Hazra? THE COURT: MS. HAZRA: Has it been marked as an exhibit? No, Your Honor, it has not.
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THE COURT:
Ms. Barnes what number will this be? 335. Exhibit 335. Defendants' Exhibit 335. Is it plausible or possible
COURTROOM DEPUTY: MR. BANKS: Okay.
COURTROOM DEPUTY: (BY MR. BANKS) Okay.
that you may have met with this company, based on the letter, and just clearly do not recall that particular meeting at the IACP convention? A. Could I have? Yes. It would have -- as it indicates
in the letter, "Many thanks for taking the time to meet." Obviously, I was doing something else. a drive-by. It could have been
The majority of those meetings are walking Oh, by the way, we have something. And
through the hall.
then what I call my drive-by encounters at those type of conferences. They are not a sit down, you have my full
attention, let me see what you have, oh, yes, I am interested. That is why I always say, give me your business Here is my card, and we'll get back to you. As it Send
indicates, I asked for some follow-up information. me some literature about it.
And on 750.01, I think the There was
key line there is, "Thank you for taking time." no pre-arranged. get. We met.
If we did meet, it's what you It is a very
I meet thousands of people at IACP.
huge conference.
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And, again, I am walking around with a sign around my neck that says, "Assistant Director FBI." that alone usually draws attention. And then
People think, we'll
do business with the FBI -- and a lot of people do. Q. Thank you, Mr. Quijas. And one final question.
Would it have been plausible -- I mentioned the command and control center at a particular hotel. Would it be
plausible that somebody caught you at that hotel and had a brief sit down with you to discuss -- whether it be 5 or 10 minutes, to discuss the contents regarding the action in the letter you just read? A. That would be very unlikely. That would be very
unlikely.
Because, again, if I had the time to sit down
and meet with people, then I would have had an assistant with me that would have taken notes, that would have done those type of follow-up. Again, my job was to make sure And if we had a So I
things didn't fall through the cracks.
drive-by, I would have pieces of paper everywhere. doubt if that occurred.
More than likely, times I spoke to vendors were on the -- there is a huge vendors' hall where they have everything from, as you know, helicopters to bullets. I walked through there and had those kind of drive-by conversations. MR. BANKS: Thank you, sir. That completes the And
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testimony. THE COURT: MS. HAZRA: THE COURT: MS. HAZRA: THE COURT: MR. WALKER: THE COURT: are excused. Government may call its next witness. MS. HAZRA: Landau. COURTROOM DEPUTY: Your attention, please. Your Honor, the Government calls Jon Anything further? I have no further redirect, Your Honor. May this witness be excused? Yes, Your Honor. Mr. Walker, did you want to -No. Nothing further, Your Honor. Thank you very much. You
All right.
JONATHAN LANDAU having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: L-A-N-D-A-U. DIRECT EXAMINATION BY MS. HAZRA: Q. Hello, Mr. Landau. Good morning. Where are you Jonathan Landau, J-O-N-A-T-H-A-N
currently employed? A. By Webroot Software.

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Q.
Prior to working for Webroot, did you previously work
for a company known as ESG Consulting? A. Q. A. Q. A. Yes. When did you work for them? From approximately 2000 to 2005. What was your position with ESG? It evolved over time, but ultimately recruiting, as
well as business development. Q. And in the time period of 2004, what was your
position there? A. Q. A. Q. A. Q. A. Q. It was a hybrid role; both recruiting and sales. Where were ESG's main offices at that time? In California, Santa Clara. Where were you based? Locally here in Denver. Were you telecommuting for the company? Correct. I worked from my home.
In 2004, did you have contact with a company known as
IRP Solutions? A. Q. A. Q. A. Q. I did, yes. How did you first come into contact with them? They contacted me directly via telephone. Who contacted you? David Banks. Did Mr. Banks explain what his role was with IRP
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Solutions? A. I don't know that I got a title from him
specifically, but he did indicate that he was an executive with the company. Q. A. And what did Mr. Banks want? He had interviewed -- or he told me that he had
interviewed candidates for the contract position with the company, and had identified the person he would like to hire for the role, and needed a staffing firm to payroll that person -- provide payroll services. Q. A. What does payroll mean, as you just used it? So that would mean that the consultant would
technically be an employee of the staffing firm of ESG Consulting; that we would pay that individual. We would
provide them with salary, we would pay employment taxes, et cetera, and then provide them as a consultant to the end customer; in this case, IRP. Q. case? A. It happens a lot in the staffing industry. I think Did this arrangement strike you as unusual in this
what I found unusual about it was that they just called ESG out of the blue. Typically, you would have a
relationship with a staffing partner that you would request. You wouldn't necessarily arrange a new staffing
firm from scratch and start a relationship and sign a

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contract for something that is as easy and simple as a payroll. Q. In the course of this conversation, did Mr. Banks
tell you what kind of work IRP Solutions did? A. He did indicate that at a high level that they were
doing software development for the law enforcement industry. Q. Did he tell you what the payrolled employee would be
doing? A. He had mentioned something, again, at high level
about work with the project. Q. In the course of your telephone conversations with
David Banks, did you all discuss the pay rate for the various payrolled employees, candidates? A. Initially, it didn't come up. So I did ask David at
some point, what did he have -- since normally I would have contact with the candidates in advance of this, so I would have discretion if I know what the candidate's expectations were around salary. But, in this case, I was
thrown in the middle of it, trying to piece it together. So, David -- when I asked, David said he didn't know. said talk to the candidate, find out what the person needed. Q. And, Mr. Landau, if I could get you to slow down a He
little bit so we can catch everything you are saying.

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Was there, in your mind, based on your conversation, was there more than one candidate for the position or not? A. David had indicated that they had interviewed
several, but that there was one specifically they wanted to hire. Q. A. Q. Do you recall that individual's name? Ken Barnes. Did you then discuss Ken Barnes' pay rate with David
Banks? A. Q. A. At that point in time, no. At some point in time did you? He said -- I am sorry, if I can correct that, I think
I asked the question -- if I recall correctly, I asked the question, what were you planning to pay Ken Barnes? said, I haven't had that conversation with him. Ken and ask him what he needs. Q. A. Q. rate? A. I did at a later point. So I did not have Ken's By "he," do you mean David Banks? Yes. Did you then follow up with Mr. Barnes on the pay He
Talk to
contact information.
So David had provided my contact
information to Ken, and Ken reached out to me, via e-mail, at which point he and I started communicating directly.
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Q.
So for clarity -- I apologize, I think I have been You had this telephone call with
lumping this together. David Banks; right? A. Q. A. Q. Yes.
That is when he talked about what he needed? Correct. Then you had follow-up communications with him
concerning the candidates? A. Correct. There were several telephone conversations
with David Banks initially, and telephone conversations were exchanged. later. later. Q. A. Q. A. That is Ken Barnes you communicated with? Yes. And what were your discussions with Mr. Barnes about? Just making sure that Ken wanted the job. So, again, Then Ken Barnes came into the picture
I communicated with him directly a day or two
being thrust in the middle of it, I didn't know the history leading up to that point. So I wanted to make
sure Ken wanted the job, and that he thought it was a good fit. I wanted to ensure that I was doing my part in the
staffing end of it to make sure that this consultant wanted to work with the company and was going to be a good fit. So Ken indicated, yes, he was excited about it.
He
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wanted to get to work.
We did have a discussion about
hourly rates and what Ken needed to earn. Q. rate? A. I asked Ken what he was looking for, and he gave me a I said, based What was that discussion concerning Ken's hourly
number that was roughly around $70 an hour.
on the market, based on the fact he hadn't been working, I was thinking closer to $50 an hour was more appropriate. Also trying to look at it from IRP's best interest. I went back and indicated that Ken was looking for something in the 70s, David had said, that is fine, pay him what he needs to make sure this happens. Q. A. Q. A. Q. To clarify, that was with David Banks? Correct. That approved the higher pay rate? Correct. At this point in your communications with Mr. Banks When
and Mr. Barnes, did you have any knowledge that Mr. Barnes had previously worked with David Banks at IRP? A. Q. you? A. Q. A. Yes, it would have. Why? I think it would have added some color to the
I did not know that, no. And would that knowledge have been of interest to
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situation.
And I think there -- I don't want to get into
too much detail, but there are other options, from a staffing standpoint. If they had known each other, they
probably could have come up with potential work arrangements that didn't involve ESG. Q. At some point in time did ESG enter into the contract
with IRP Solutions? A. Q. We did. Were you the sole decision maker there, or did you
consult others in your company? A. Q. A. Q. I consulted with others; with my boss. Is one of your bosses Susan Slakey? Yes. What were your responsibilities once ESG entered into
the contract with IRP and began payrolling Mr. Barnes? A. At that point I was really the facilitator; make sure Make sure the
there is a good working relationship. client is happy, IRP. being Ken Barnes.
Make sure the consultant is happy,
And also just collect -- try to
facilitate collecting time sheets and making sure everything is working smoothly. Q. At some point in time did you become aware that IRP
was not paying its invoices? A. I did, but it was much later in the process. And I
had left ESG probably a few months after this contract was
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executed.
And so I don't believe I was aware of it as an
employee of ESG. Q. Do you recall if you had any role in the decision to
keep Mr. Barnes employed or not at IRP Solutions? A. Yeah. So it wasn't my decision, but my two bosses
Susan and Ali, who was the founder of the company, when the invoices were not being paid, they indicated they wanted to remove Ken from the project, and it was my job to actually notify him on that. Normally, I would do that in person. But because
they were in Colorado Springs, and I was up in Denver, it was done over the telephone. Q. Did you have a chance to actually speak with
Mr. Barnes or not? A. Q. I did, yes. And do you recall his reaction to your telling him
that he could no longer work at IRP? A. It was surprisingly calm. Yeah, for someone who was
being told, basically, he no longer had a job, he didn't seem to bat an eye. He took it all in stride, and just
said, okay, I will collect my things and leave. MS. HAZRA: THE COURT: MS. HAZRA: If I could have one moment, Your Honor. You may. Nothing further, Your Honor. CROSS-EXAMINATION
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BY MR. BANKS: Q. Good morning, Mr. Landau. You testified that -- let
me ask you this first.
In a typical payrolling
relationship, is that normally predicated when you are contacted by a company to payroll somebody? Is that
typically predicated that the company already has knowledge of that person or that person may have worked for that company before? A. The former. Typically, that company has knowledge of
the consultant -- prior knowledge of the consultant, yes. Q. And that is why that prior knowledge is why they
would actually payroll that person, because they are familiar with the skill set; is that correct? A. Yes, in some cases. In other cases, they may have
gone out and done the recruiting on their own and found the person by their own meetings. Q. But, in some cases, again, that contractor may have
worked for them before; correct? A. Q. That's correct. Okay. Now, you said -- I want to ask you something With regards -- in your
about the staffing industry.
experience -- and how many years of experience do you have in the staffing industry? A. Q. About 10. Ten. In your experience, have you ever come upon the
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occasion where a client signs up a contractor for 6 months and then terminates that contractor early for whatever reason? A. Q. Yes. Under those particular -- would you have wanted to
know that the client was going to terminate that contract early? A. Q. A. Q. Would I have wanted to know at what point in advance? In advance of actually signing that contractor on? Yeah. I think that would be relevant information.
So you would say that in the staffing industry, these
types of things are sometimes unpredictable; correct? A. Q. What types of things? As far as when a client may or may not terminate a
particular contractor; correct? A. Q. Correct. And the contracts between, say, the staffing company
and, say, ESG, and a client, rather, are predicated on the fact that a client can terminate a contract at any time for that contractor for any reason; is that correct? A. Q. That's correct. Now, when a client terminates a contractor early,
does that impact your commissions? A. Q. Yes. So in a business-to-business relationship, you never
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really know how that relationship is going to turn out because business is sometimes unpredictable; correct? A. Q. Yes. I want to ask you now, do you recall your basic
up-front interactions or initial interactions with Mr. Banks in initiating this relationship with ESG? A. Q. I do, yeah. Can you -- let me ask a specific question. Do you
remember Mr. Banks -- do you remember at such time that ESG was not going to be able to move forward with the engagement? A. Well, there was a point in the dialog where we were
requesting a credit application from IRP Solutions, and IRP was not willing to provide a complete credit application. Q. Okay. Now, do you remember -- what do you remember Or do you remember his
Mr. Banks' response to that?
response to the fact that if they didn't provide a credit application -- what was his response, or what was your response to him not providing a full detailed credit application? A. Sir, it wasn't my decision to determine whether we
could work with a customer based on the lack of credit. That is when I escalated it to my boss, who indicated if we could get a mostly completed credit application, we
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would then make an assessment of whether or not to work with the company. So David Banks completed a portion of our credit application. Again, my boss then made the decision And, obviously, we
whether or not we worked with them. started working with IRP. Q. All right.
Now, did -- at any time, did Mr. Banks
say he would just move on and find another company? A. Q. A. He did, yeah. Now, what was your reaction to that? Again, it wasn't my decision to make. So I had to
defer to my boss in that scenario.
And if my boss was not
comfortable working with IRP, then we wouldn't have. Q. Now, at that time, did you contact Mr. Banks back, or
did Mr. Banks contact you back? A. I am not exactly sure what you are referring to.
There were multiple e-mails back and forth to discuss the credit application and the process we were going through there. Q. I will say it this way. When Mr. Banks said they
would move on from ESG, after that point, did you contact him back, or did he contact you back to try to move the relationship forward? A. To the best of my knowledge, I then spoke to my boss,
and he said, have them complete a portion of the credit

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application.
So I would have then contacted Mr. Banks and
told him the same thing. Q. Okay. Now, who did you speak to regarding the credit
app, as far as the problem with the credit application or Mr. Banks' disinterest in providing a total credit profile? A. Q. A. Q. A. Q. Who did I speak to within my own company? Yes. With my boss Ali Shafi. So you spoke directly to Ali Shafi concerning that? Correct. Mr. Shafi -- Ali -- I will say Ali. The other name
is a little difficult.
Ali, at that point, says, okay, go
ahead -- being the executive -- top executive in the company, go ahead and work with this company; correct? A. He said, have them complete a portion of it, then we
will assess whether we work with them or not. Q. So IRP was not chasing your business down at that
particular point, but you were contacting them back to do the business; is that correct? A. Well, we were having a normal dialog we would have
with any customer. MR. BANKS: THE COURT: MR. BANKS: May I have a moment, Your Honor? You may. I don't have anything further, Your
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Honor. THE COURT: All right. CROSS-EXAMINATION BY MR. BARNES: Q. Mr. Landau, you said you had earlier spoke with Ken
Barnes about the position and pay rate and particulars and whatnot. Did you discuss his prior pay history for that
position or what he was getting paid, you know, in the future for similar positions? A. My recollection, based on his resume, is he hadn't So I didn't find
worked in probably a year and a half. grounds to discuss prior. Q.
So anything prior to a year and a half, you didn't
ask about what the rate was, then? A. Q. Not that I can recall. Okay. Is it unusual in your experience that maybe -Is it unusual that a person
so granted the market rate.
may feel they are qualified or request a rate higher than the market rate for a certain position? A. Q. A. Q. Sure, that can happen. And that does happen; correct? Yes. And that is determined on, basically -- is that
correct, that it is really determined on the client they are working for. They've interview, and they feel that
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this person qualifies, they can agree to that rate that the contractor is asking for; is that correct? A. Q. Correct. Okay. Also, in your experience, isn't it
advantageous to you if an employee is submitted for a position and he's had prior work history and good work history with a previous client and they know the manager; they have worked there before, isn't that advantageous in your profession at times, because that person could be, you know, easily rehired? A. As long as it is a good work history together, yes. MR. BARNES: MR. WALKER: THE COURT: No further questions. Your Honor, if I could continue cross. You may, Mr. Walker. CROSS-EXAMINATION BY MR. WALKER: Q. Hello, Mr. Landau. You mentioned earlier that in
your early conversations with David Banks, he indicated that IRP was doing software development for the law enforcement industry; is that correct? A. Q. That is my recollection, yes. At any point did he say specifically that IRP had
contracts in place with any agency? A. Q. I don't recall. And as part of doing or making the decision about
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providing the requested payrolling services to IRP Solutions, did you play any role in making a decision on go or no go? A. Q. A. I did not. And who did make that decision? It would have been Ali Shafi who decided whether or
not we work with the company at all. Q. And in the course of Mr. Shafi making his decision,
did he ask for your input? A. We had phone conversations about it, and I provided But ultimately it was his
my background information. decision. Q.
And in the course of providing that background
information, did he ask you if IRP had told you that they had contracts with any agencies? A. I don't recall if he asked that specific question. MR. WALKER: THE COURT: No further questions. Anything further?
Any redirect. MS. HAZRA: THE COURT: MS. HAZRA: THE COURT: No, Your Honor. May this witness be excused. Yes, Your Honor, thank you. Thank you very much. You are excused.
Government may call its next witness. MR. KIRSCH: Thank you, Your Honor.
The Government
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calls Eileen Bergman. COURTROOM DEPUTY: Your attention, please.
EILEEN BERGMAN having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: My name is Eileen Bergman,
E-I-L-E-E-N, last name B-E-R-G-M-A-N. MR. KIRSCH: THE COURT: May I proceed, Your Honor. You may. DIRECT EXAMINATION BY MR. KIRSCH: Q. A. Q. A. Good morning, Ms. Bergman. Good morning. Could you please tell the jury where you work. I work for Headway Workforce Solutions. At the time
it was called Headway Corporate Resources. Q. A. What is your position there? I am the senior vice president of operations and
quality. Q. And what sort of a company is Headway? What services
do they provide? A. Headway is a general staffing company. We provide We provide
traditional temp work, temporary staffing.

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large-scale contract work for projects. major payrolling of employees.
And we also do
That means that the client
identifies who they want to put to work, and we put them to work on our payroll at the client's site. Q. The position you have now, is that the same position
that you held back in 2004? A. same. Q. A. Q. Okay. And how long have you been with Headway? My title is different now, but my job is somewhat the
Since May 1, 2000. And did you work in the staffing industry before you
joined Headway? A. Yes. I have been in the staffing business since May
of 1987. Q. All right. I want to direct your attention now to
late 2004.
In that time period, did you have contact with
a company called IRP Solutions Corporation? A. Q. A. Yes. Do you remember how that contact started? Yes. Ken Harper contacted our office and spoke to
Judy Reed, who is the administrator for the office, and mentioned that he was looking to put four people on a payroll for a special project for the New York Police Department. Q. Let me interrupt you for just a minute, because I
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don't really want to talk about the contents of that conversation with you. A. Q. Okay. Did you have a conversation with Mr. Harper that day
or sometime soon thereafter? A. Judy passed that information on to Camille Plummer, She tried calling him, and then So I got in touch with him, and we
who works for me.
couldn't reach him. spoke on that day. Q.
Let me ask you about that conversation.
Did
Mr. Harper give you information about what it is that he was looking for? A. Q. A. Yes. What did he tell you? He said he had four people that he wanted to put to
work on our payroll for a special project for three months for the New York Police Department. elaborating? Q. A. Please. When I asked him about the nature of the project, he Should I keep
told me that his company puts together software platforms for -- they just won a bid for the New York Police Department to do a software project for the 911 call; taking a crime from the 911 call to all of the steps, until it goes into the courtroom. And in my experience,
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it sounded like something we would be interested in helping out with on the payrolling side. Q. Did Mr. Harper explain how it was that he had gotten
in contact with Headway? A. I asked him that, because I was a little surprised to But he said he
get the phone call from someone in Denver.
had heard about us -- he had searched us out on the internet. Q. And we do have an elaborate website.
Did you have any conversation with Mr. Harper about
the possibility of hiring additional employees beyond these four that you had discussed? A. Yes. He had used the term "sweetener" for Headway;
that there may be an opportunity to use our temp staffing services where we would actually do recruiting and put the people to work on this project. So there may be more
opportunities for Headway to engage in this relationship. Q. Can you explain -- did you understand what that term
"sweetener" meant? A. I think what he meant by sweetener is we were
starting off with payrolling four people, which in our world is not a lot. We usually have -- the smallest
account at the time was 10 people, but the largest was a thousand. So I think -Your Honor, we object, speculation to
MR. BANKS:
what Mr. Harper was actually thinking with regard to the

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word "sweetener." THE COURT: Q. Sustained to what he was thinking. What was your understanding -- how
(BY MR. KIRSCH)
were you interpreting that term when it was used? A. I was interpreting it that there would be more
opportunities for Headway to provide more in-depth services for this prospect, for this client. Q. And those other services, how does the profitability
of those services compare for Headway to the profitability of payrolling four employees? A. When you do payrolling, you get a lower markup
because the client has identified the people that they want to put to work. the agency. pay. So there is no recruiting cost to
So we were quoting a 25 percent markup over
And I believe the pay ranges were anywhere from $60
an hour to $75 an hour. When we do the recruiting -- our traditional staffing -- at the time the average markups were anywhere from 45 percent to 80 percent, depending on the number of temps that someone would be bringing on board. Obviously,
the larger amount of temps, the lower the markup. Q. Can I please ask you to look at what is marked for
identification as Government's Exhibit 160.02 for right now. Ms. Bergman, it is going to be in one of those 160.02. Take a look at
folders there in front of you.
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that and let me know if you recognize that exhibit, please. A. Q. A. Q. A. Q. Yes, I do. Is a part of that exhibit an e-mail from you? Yes, that I had sent Ken Harper. I don't want to ask you about the contents yet. Yes. Is there a part of that exhibit that is a response to
your e-mail -A. Q. A. Q. Yes. -- from Mr. Harper? Yes. And where does this -- where do these e-mails fall in
the time frame of Headway's relationship with IRP? A. 30th. Mr. Harper had reached out to Headway on November So this would be the following day. MR. KIRSCH: Your Honor, I would move to admit and
publish Government Exhibit 160.02. THE COURT: MR. ZIRPOLO: THE COURT: you may publish. (Exhibit No. 160.02 is admitted.) MR. KIRSCH: Thank you, Your Honor. Any objection? No objection. Exhibit 160.02 will be admitted, and
Can we expand the lower part of that page, please,

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Special Agent Smith. Q. (BY MR. KIRSCH) We have got this on the screen for Are you able to see that there?
you now, Ms. Bergman. A. Q. Yes, thank you.
And this message has a date of November 30, 2004; is
that right? A. Q. Yes. Now, did you say that that was the date that you had
the call? A. Q. Yes. The initial call. And the subject line, is that what
is indicated in the subject line when you refer to the "conversation of this afternoon"? A. Yes. MR. KIRSCH: exhibit now? please. Q. (BY MR. KIRSCH) Now, I want to direct your Could we please publish page 2 of that
Just expand down to the bottom of the text,
attention, Ms. Bergman, to the paragraph that begins, "We are interested," in the middle of the screen now. A. Q. Yes. What was the basis for you using the term, or terms,
"Your new contract with the NYPD"? A. It was my understanding, based on my conversation
with Mr. Harper, that this was a contract that -- a new

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contract that would possibly turn into more business for Headway. MR. KIRSCH: All right. Could we please publish
page 1 again and expand the message on the top. Q. (BY MR. KIRSCH) Can you see that one on the screen
now, Ms. Bergman? A. Q. Yes. Again, this was the response that you got to that
message that we were just looking at? A. Q. Yes. Is there any place in this e-mail where Mr. Harper
corrected you or suggested that you were wrong when you said that they had a contract with the New York Police Department? A. Q. No. There is no indication that I was wrong.
Did he ever do that at any point during your
conversations with him or e-mails with him? A. No. MR. KIRSCH: Q. (BY MR. KIRSCH) Thank you, Special Agent Smith. How is it -- did you have a
discussion with Mr. Harper about how you were going to establish the payroll and the billing for this account? A. Yes, we had discussions. I am trying to remember if
we had originally quoted something more than a 25 percent markup. I don't remember. But we ultimately decided on a
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25 percent markup over the pay for the four payrollees. Q. Okay. And did you -- what was Headway's standard
practice, in terms of the timing of payroll and billing at that time? A. Our standard practice is to pay people weekly, and to
bill the client immediately upon -- payroll being at the end of the week, after payroll is cut. And in payrolling
accounts, traditionally we get paid within seven days, if not prior to that, because there is a lower markup, but we still have to pay the employees and the employer taxes. Q. Did you have a discussion with Mr. Harper about those
terms? A. Yes. He wanted to extend the payment terms to 30
days, and also set up a bi-weekly payroll, which means that the employees would get paid every two weeks, and subsequently the client would be billed every two weeks. Q. A. Q. Did Headway ultimately agree to those terms? Yes, we did. And, ultimately, Headway did agree to enter into a
relationship -- contractual relationship with IRP? A. Q. Yes. And we -- yes.
Can I direct your attention, please, now to what is
marked for identification as Government Exhibit 160.01. Do you have that one in front of you? A. Yes, I do.
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Q. A. Q. A.
Do you recognize that exhibit? Yes, I do. Can you identify it, please. Yes. It was a standard contract at the time that we
used to use for Headway for payrolling services. Q. And is this particular copy of that standard contract
the one that was entered with IRP? A. Q. A. Yes. Is that your signature on page 3 of that document? Yes. MR. KIRSCH: Your Honor, I would move to admit and
publish Government Exhibit 160.01. THE COURT: MR. ZIRPOLO: THE COURT: Any objection? No objection. 160.01 will be admitted.
(Exhibit No. 160.01 is admitted.) MR. KIRSCH: THE COURT: MR. KIRSCH: Thank you, Your Honor. And may be published. Thank you, Your Honor.
Special Agent Smith, can you expand starting at paragraph 4 of that contract, please. Q. (BY MR. KIRSCH) Ms. Bergman, on the screen now
there are a couple of paragraphs, including paragraph four, that appears to have the lines drawn through it. Does that relate to anything we have talked about so far
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today? A. Well, it was an agreement that we had made.
Traditionally, at the time we would require a deposit from a new client. did. Q. A. All right. Yes. MR. KIRSCH: If we can publish the bottom of page 3 And that's why that is crossed through? Mr. Harper asked that we waive that, and we
now, please, where the signatures are. Q. (BY MR. KIRSCH) There at the point that this was
signed, Ms. Bergman, had you had any conversations with the name -- the person whose name is printed there on the right side, David Banks? A. on. Q. COO. Did you -- there is a title there that appears to say Did you have an understanding about what Mr. Banks' I don't believe I spoke to David Banks until later
position was at that time? A. Yes. It is my understanding that a COO is the chief
operating officer of a company. Q. And what was your information -- did you have
information other than this contract that suggested that Mr. Banks was the COO? A. Had anyone else told you that?
There may have been some e-mails back and forth to
expect his signature, but I honestly don't recall.

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Q.
All right. MR. KIRSCH: Thank you, Special Agent Smith. Once this business began, did
Q.
(BY MR. KIRSCH)
Headway have a system that it used to keep track of the hours that the employees were working? A. Yes. At the time we used paper time sheets that
could be faxed over by the employee once they were filled out at the end of their pay period and they signed it. They would then either turn it in or fax it over to the client, IRP Solutions, for signature, and then faxed over to us. Q. And I'm not sure that I have asked you this. In this payrolling You
just used the term "employees."
agreement that Headway set up with IRP, whose employees are we talking about? A. We are talking about the four people that IRP
Solutions had determined that they wanted to put to work on our payroll, but on their project. Q. A. Q. A. Okay. So are those people Headway employees?
Yes, they are. All right. They are Headway employees, but they are directed by We don't direct their work or
the clients on what to do. oversee the work. Q. All right.
But they are our employees. Now, you were just talking about the time
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cards.
And I'm going to ask you to take a look at two They are marked for identification as 161.00 Let's start with 161.00. Can you take a look
documents. and 161.02.
at those and tell me if you recognize those documents, please. A. Yeah. This would be a bi-weekly time sheet that we Our
had customized for IRP Solutions and the employee.
employee would have been Darrell Brantley, for the pay period -- for the bi-weekly pay period ending 12/19/2004. Q. If you look through all of the documents that are in
that exhibit, are all of those documents time sheets for employees that were payrolled by Headway at IRP Solutions? A. Yes. MR. KIRSCH: Your Honor, I would move to admit
Government Exhibit 161.00. THE COURT: MR. ZIRPOLO: THE COURT: Any objection? No objection. Exhibit 161.00 is admitted.
(Exhibit No. 161.00 is admitted.) MR. KIRSCH: Q. (BY MR. KIRSCH) Thank you, Your Honor. Ms. Bergman, same questions about
Exhibit 161.02. please. A. Okay.
Can you start by identifying those,
These are also time sheets for three of the But in my handwriting at the top it says,
four employees.
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"Do not pay." Q. Okay. Those were -- but those were time cards that
were submitted to Headway; is that right? A. Yes. MR. KIRSCH: Your Honor, I would move to admit
Government Exhibit 161.02. THE COURT: MR. ZIRPOLO: THE COURT: Any objection? No objection. Exhibit 161.02 will be admitted.
(Exhibit No. 161.02 is admitted.) MR. KIRSCH: Q. (BY MR. KIRSCH) Thank you. Ms. Bergman, can you explain how it
is that -- you started to do this, but can you explain in a little more detail how it is that Headway used the information that was contained in these time cards? A. What we would do is we would take the time sheets,
double check the hours, make sure they took out time for lunch, and then we would process a check for -- if the week ending was on a Sunday, so they would get paid the following Friday, either by check or by direct deposit: And on the same Friday, the bill was initiated to the client. Q. Okay. And those -- were those used to create
paychecks? A. Yes.
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Q.
And what was the reason that you had the employees
sign these time sheets? A. It was showing their proof that they had worked the
hours that they had put on the time sheets. Q. And what about -MR. KIRSCH: Your Honor, could we go ahead and
publish Government Exhibit 161.02? THE COURT: Q. You may. In this time sheet, am I right that
(BY MR. KIRSCH)
the employee's signature we were just discussing is over on the left side of the screen; Ms. Bergman? A. Q. That's right. What about the signature on the lower right, what, if
any, is the significance of that? A. That would show that someone from IRP Solutions had
signed off on Sharon Ruff's time for those two weeks and was approving it for payment. Q. All right. Was the name that is listed there, was
that a name that you recognized from the course of your dealings with IRP? A. No. But I believe these were faxed to us. So it was
coming from the company.
And there had been discussion --
there was no indication that these people had not worked. Q. All right. I am going to jump ahead a little bit.
You indicated that that writing in the upper right-hand

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corner, is yours? A. Q. A. Q. A. Yes. Where it says "Do not pay"? That's correct. Why did you write that on this set of time cards? Okay. We had an agreement with IRP Solutions that And I had told our
they would pay in net 30 days.
accounts receivable department to give me a heads up when that 30 days came upon us so we could start calling to get our money. It was a new client, and I wanted to make sure
we got paid on time. At some point, I started calling Mr. Harper, and then David Banks. And there was dialog back and forth
that indicated that they were not going to be paying us. And although we had received the time sheets, we had determined internally at Headway that it was -- something wasn't right, and we weren't going to be paying the employees. Q. And had you communicated that information to someone
at IRP? A. I communicated that to IRP. I also called the
employees, and had some very disturbing conversations with them on the phone, which indicated to me that something was not -- something was not right. Q. I am going to talk to you about those in just a
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minute. MR. KIRSCH: Right now, Your Honor, I would like to
move into evidence what I understand is a stipulated exhibit; that is Government Exhibit 609.03. THE COURT: correct? MR. WALKER: Honor. THE COURT: MR. WALKER: THE COURT: You may. No objection. Exhibit 609.03 is admitted. Could we check? One moment, Your It is showing as stipulated; is that
(Exhibit No. 609.03 is admitted.) MR. KIRSCH: Thank you, Your Honor. May it be
published in just a moment, Your Honor. THE COURT: Q. Yes. Just before we get there,
(BY MR. KIRSCH)
Ms. Bergman, what is the date on this time card that is on the screen right now? A. 2005. MR. KIRSCH: Exhibit 161.02? Q. A. Q. (BY MR. KIRSCH) Yes. And this is a time card for what employee?
It is for the bi-weekly period ending February 13,
And can we publish page 2 of this
Is the same date indicated there?
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A. Q.
Darrell Brantley. And then the final page of this exhibit -MR. KIRSCH: If we can publish that, please. -- that is a time card for what
Q.
(BY MR. KIRSCH)
employee? A. Q. A. Shaun Haughton. And what is the time period ending there? Week ended February 13, 2005. MR. KIRSCH: If I could now, Special Agent Smith,
ask you to publish Government Exhibit 609.03, starting at page 2. Q. Can you expand the left side of that, please. Ms. Bergman, does this appear to be
(BY MR. KIRSCH)
a Headway time sheet? A. Q. A. Q. Yes, it does. From that same relationship? Yes. As far as you know, is there any reason that those
time sheets would be signed prior to their completion? A. There is no reason that a time sheet would be signed
prior to its completion. MR. KIRSCH: exhibit now. Q. (BY MR. KIRSCH) Can you identify -- first of all, Can I please publish page 10 of that
does this appear to be another blank time sheet? A. Yes, it does.

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Q. A. Q.
For which pay period? For bi-weekly pay period ending February 13, 2005. Do you recall how that compares to the ones we were
looking at earlier that you had marked "Do not pay"? A. The other one was filled in and signed by someone at
IRP Solutions. Q. Was it for the -- was it marked 2/13/2005, do you
recall? A. Q. A. I believe so, yes. What is the time period marked there? This is for pay period ending February 27, 2005. MR. KIRSCH: Q. (BY MR. KIRSCH) Could we publish page 12, please? What is the time period marked
there? A. Q. Bi-weekly period ending 3/13/2005. And approximately when did you say you had notified
IRP that you were not going to be payrolling employees there further? A. I believe it was the middle of February. I apologize. Thank you. One other question I would
have to check my notes. Q. That's all right.
about the time cards. MR. KIRSCH: Agent Smith. Q. (BY MR. KIRSCH) Did you care -- as the Headway You can take that down now, Special
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representative, did you care whether the people in whose names these time cards were being submitted, whether those were the people who were actually performing any work reflected on the time sheets? MR. BANKS: Objection, Your Honor. There has been
no foundation for this line of question. THE COURT: MR. KIRSCH: THE COURT: the question. MR. KIRSCH: THE COURT: MR. KIRSCH: Thank you, Your Honor. The objection is lack of foundation. Thank you, Your Honor. I will sustain as worded. I am sorry, what is the basis? I will sustain as to the way you worded
Can we go back and publish Government Exhibit 161.00, please? Q. (BY MR. KIRSCH) Ms. Bergman, I think we discussed
this is a time card for an employee named Darrell Brantley; is that correct? A. Q. That's correct. Was Mr. Brantley one of the people that Headway
payrolled at IRP? A. Q. Yes, that's correct. How is it that Mr. Brantley came to be an employee of
Headway? A. His name was submitted to us by Mr. Harper in an

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e-mail shortly after our first conversation on November 30th of 2004, giving us a list of the four employees that he wanted to payroll, along with their hourly pay rate. Q. All right. And when this time card was submitted,
did it constitute a representation that Darrell Brantley had performed the work that is reflected in this time sheet? A. Q. Yes. If you had learned that someone other than
Mr. Brantley had performed that work, would that have mattered to you? MR. BANKS: foundation. THE COURT: THE WITNESS: Overruled. It is unacceptable for us to pay We -- by Objection, Your Honor, lack of
someone for work that they did not perform.
Darrell Brantley filling out this time sheet and signing it, we are under the assumption that he did the work, and he should be paid. But it is not ethical for us to pay
someone for work that someone else did. Q. (BY MR. KIRSCH) If you had received information that
work performed -- work reflected in some of these time sheets had, in fact, been performed by Mr. Banks, would that have mattered to Headway? A. Absolutely.
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Q. A.
Why is that? He was not on our payroll. So we could not have paid
him, and we should not have been paying anyone else for work that was being done by an employee of IRP Solutions. Q. At some point back in -MR. KIRSCH: Q. (BY MR. KIRSCH) Thank you, Special Agent Smith. At some point back in your
testimony, I think you mentioned that Headway generated invoices, as well? A. Q. Yes, that's correct. Can we go back now and make sure -- can you explain
the relationship of those invoices to the time cards we have just been looking at? A. Those invoices -- the time cards were signed and sent
over to Headway every two weeks, and then we paid the employees. We generated an invoice. And on the date of
the invoice, we were expecting payment 30 days after the date of the invoice. Q. Do you know at that time how the invoices were
transmitted to the client; in this case, IRP? A. You know, I honestly can't remember if they were
mailed or if they were prepared electronically and e-mailed. I honestly don't remember. There have been so
many changes in that over the years. Q. I am not sure I have asked you where Headway's
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corporate offices were then. A. At the time, the corporate offices moved three times.
I think the corporate was still down in Raleigh, but the invoices were being generated by New York -- the New York office. Q. Can I ask you to take a look at what is marked for
identification as Government Exhibit 162.00. A. Q. A. Q. 162.00? Yes. Okay. Do you recognize the documents that are contained
within that exhibit? A. Q. A. Yes. What are they, please? This is an invoice for the date of 1/21/2005, for And it is for
week ending -- for period ending 1/16/2005.
the services of one, two, three, four employees. Q. A. Q. Was this an invoice that was directed to IRP? Yes. And is there another similar invoice contained on
pages 3 and 4 of that exhibit? A. Yes. MR. KIRSCH: Your Honor, I would ask to find that
Government Exhibit 162.00 is admissible. THE COURT: Any objection?

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MR. ZIRPOLO: THE COURT:
No objection. 162.00 is found admissible.
(Exhibit No. 162.00 is found admissible.) MR. KIRSCH: (BY MR. KIRSCH) Thank you, Your Honor. And, Ms. Bergman, I am going to now
ask you to look at what is marked for identification as Government Exhibits 17 and 18. A. Q. In this packet? They should be in a different folder. 17.00 may just
say 17, or it may say 17.00 and 18. A. Q. A. Q. A. Q. A. Got it. Okay.
Let's start with 17, if you could, please. Yes. Do you recognize that exhibit? Yes. What is it, please? It is an invoice for period -- I am sorry, for period
ending on 12/19/2004, for the four payrollees. Q. A. At IRP? At IRP Solutions, yes. MR. KIRSCH: Your Honor, I would move to admit
Government Exhibit 17. THE COURT: MR. ZIRPOLO: THE COURT: Any objection? No objection. Exhibit 17 is admitted.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
(Exhibit No. 17.00 is admitted.) (BY MR. KIRSCH) And, then, directing your attention Can you identify that one?
to Exhibit 18, Ms. Bergman. A.
This is an invoice for the period ending January 2,
2005, for three employees that were assigned to IRP Solutions. MR. KIRSCH: Your Honor, I would move to admit
Government Exhibit 18. THE COURT: MR. BANKS: Your Honor. THE COURT: 18 will be admitted. Any objection? One moment, Your Honor. No objection,
(Exhibit No. 18.00 is admitted.) MR. KIRSCH: Thank you, Your Honor.
May we publish that? THE COURT: MR. KIRSCH: that, please. Q. (BY MR. KIRSCH) Ms. Bergman, can you just explain You may. Can you just expand the top part of
the first page of this invoice to the jury, please. A. Sure. The upper left-hand corner has the Headway
logo and address, which is where the time card was paid from and the billing was submitted from. And then And
underneath that is the client name; IRP Solutions. its "Attention: Ken Harper." He was our point of
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contact, with his address.
And then it discusses the
customer number and the invoice number, the invoice date, and the total amount of $26,751.73. MR. KIRSCH: exhibit, please. Q. (BY MR. KIRSCH) I am not going to expand this one, Then, if we can publish page 2 of that
but can you just explain what that page 2 is? A. Sure. This means that the invoice was -- included
billing for Darrell Brantley for the week ending -- for period ending January 2, 2005. It is showing that
Mr. Brantley worked a total of 80 hours for the two weeks, but he also had over time. And then same with Shaun
Haughton -- Shaun A. Haughton and Sharon Ruff. Q. Okay. Thank you. I want to now take you back to the
time that you have mentioned a little bit again, when you determined that these invoices were not getting paid. You
indicated, I think, that you had notified someone at IRP when you first learned that; is that right? A. Q. A. Yes. And who was it that you notified? I had contacted Ken Harper, but he was not returning So I called David Banks, the chief
my phone calls.
operating officer. Q. At some point did you send an e-mail to Mr. Harper to
notify him about those invoices?

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A. Q.
I believe I did. Can I direct your attention to what is marked as Do you recognize that exhibit?
Exhibit 166.02. A. Q. A. Yes, I do. What is it?
This is an e-mail stating that -- showing what the
outstanding invoices were for -Q. yet. A. Q. A. Q. A. Q. A. Okay. Was it an e-mail from you? Yes. To whom was it directed? Ken Harper at IRP Solutions. And what was the subject matter? Outstanding receivables. MR. KIRSCH: Your Honor, I move to admit I don't want you to talk about the content of it just
Government's Exhibit 166.02. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. 166.02 is admitted.
(Exhibit No. 166.02 is admitted.) MR. KIRSCH: Thank you, Your Honor.
Can we publish that first page? THE COURT: You may.

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Q.
(BY MR. KIRSCH)
Do you remember Ms. Bergman, whether
this e-mail was before or after you had reached Mr. Harper on the phone? A. I'm not sure, because I had been trying to reach him But I don't remember
and he was not returning my calls.
if he did or if I just started generating e-mails to reach him. Q. Did you ultimately have an exchange -- a series of
e-mails with Mr. Harper about the outstanding invoices? A. Yes. At this point I was very concerned about It was already building up very
getting our payment in. quickly. Q.
Can I ask you to take a look, please, at what is
marked for identification as Government Exhibit 166.03. Did you have a chance to do that? A. Q. Yes. Yes.
And can you generally identify what is contained in
that exhibit? A. Dialog regarding our concern about getting paid and
the number of invoices that were outstanding at this point. Q. A. And who are the parties to that dialog? So it was from me to Ken Harper. And I copied Rich
Barlotta, who was our manager of credit and collections, and Debbie Antico, who was our collections administrator.
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Q.
And are there previous e-mails also contained in this
exhibit just between you and Mr. Harper? A. Yes. MR. KIRSCH: Your Honor, I would move to admit and
publish Government Exhibit 166.03. THE COURT: MR. BANKS: THE COURT: published. (Exhibit No. 166.03 is admitted.) MR. KIRSCH: bottom. please. Q. (BY MR. KIRSCH) Can you see that on your screen now, Can we start with page 2 at the Any objection? No objection, Your Honor. 166.03 is admitted, and may be
Can you expand that message at the bottom,
Ms. Bergman? A. Q. Yes. Is that the same e-mail that we just looked at a
moment ago in the other exhibit? A. Yes. MR. KIRSCH: that screen. Q. (BY MR. KIRSCH) We put the one above that on the Can you identify how this Can we go up to the next message on
screen now, Ms. Bergman.
message relates to the one there at the bottom of the screen?

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A.
This is telling me that he needed -- that Mr. Harper
needed to know the total amount of the invoices, and that he was going to contact his COO about setting up a payment schedule. Q. Did you have any verbal discussion with Mr. Harper Do you remember?
about a payment schedule? A. Q.
Very possibly, but I don't recall. Do you remember whether Mr. Harper gave you any
reasons why it was that he might need a payment schedule, as opposed to simply paying the invoices? A. I was not aware of any problem with payment until a
little bit later, when the COO told me that they needed to set up a payment schedule. Q. then. MR. KIRSCH: Can we go, please, to the bottom of All right. We'll talk about that in just a moment,
page 1 of this exhibit. Q. (BY MR. KIRSCH) Ms. Bergman, can you tell us, is
this your response, then, to the e-mail we just looked at? A. Yes. MR. KIRSCH: And, then, finally, if we can just
expand those next two at once. Q. (BY MR. KIRSCH) There is reference in the message on
the bottom of the screen now, Ms. Bergman, to expecting a payment to Headway within seven days?
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A. Q. A.
That's correct. Did Headway receive any payments within seven days? No. MR. KIRSCH: Thank you, Special Agent Smith. At some point you indicated that you
Q.
(BY MR. KIRSCH)
spoke to Mr. Banks about this idea about the payment schedule. Did Mr. Banks give you any information about
why it was that IRP needed a payment schedule? A. I believe it is in one of the e-mails. And off the Oh,
top of my head, I don't recall the details on that.
they were reconfiguring their office, and at some point he had offered to make a personal -- to sign off on a document stating he would pay for it personally, which we did then send him a document, but we never got a signature back from him. Q. Can I direct your attention now to what is marked for
identification as 166.01. A. Q. A. Q. A. Yes, I have it. And do you recognize that exhibit? Yes, I do. What is it? It is an e-mail from me confirming my conversation
with David Banks, the chief operating officer of IRP, telling him that we were terminating the contract due to IRP's default.
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MR. KIRSCH:
Your Honor, I would move to admit and
publish Government Exhibit 166.01. THE COURT: MR. BANKS: THE COURT: published. (Exhibit No. 166.01 is admitted.) MR. KIRSCH: Thank you, Your Honor. Any objection? No objection, Your Honor. 166.01 is admitted, and it may be
If you would expand the text of that, please, Special Agent. Q. (BY MR. KIRSCH) We have that message on page 1 on
the screen now, Ms. Bergman. A. Q. A. Q. Yes. There is a reference to an "attached guarantee." Yes. Is that the one that you were just describing a
moment ago? A. Q. Yes. Did you say whether or not you ever received an
executed guarantee from Mr. Banks? A. He never sent the signed document back to us, so we
never received the executed guarantee. Q. As far as you know, has Headway ever received a
payment from IRP on any of these invoices? A. We received no payments from IRP Solutions for all of
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the work that we paid for those four employees. Q. And would the various invoices that we've looked
at -- or that you've looked at over the course of your testimony, would those accurately reflect the amount that IRP owes Headway? A. Q. Yes. You also mentioned earlier that you had had a
conversation with one or more of the terminated employees. A. Q. A. Yes. How is it that you contacted those employees? They were calling us to ask about paychecks that we
were trying to decide what to do with, because as an employer, it is our obligation to pay under the wages and hours for work that is completed. But, by this point, I
had strong suspicions that there was something not right about this whole situation, and kind of put myself out on a limb by saying we weren't going to pay. Q. I want to take you back a little bit before -At some point did you communicate to
perhaps before that.
those employees that they were going to be terminated? A. We had -- we didn't inform them that they were After we spoke with Is that
terminated until our final decision.
them and -- can I elaborate a little bit here? okay? Q.
I need you to answer that question that I asked you.

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A. Q.
All right. Yes.
Can you ask the question again?
At some point did you have a conversation in
which you told the employees that you were -- that you were terminating the project with IRP? A. Q. Yes, that's correct. Okay. And can you describe the responses -- the
response or responses you got to conveying that information? A. There was something very odd about their responses.
Our dialog with the employees -- because I do believe that I had called them directly -- something didn't seem right to me. Q. A. All right. They were -- they were -- when I was asking them
questions about the hours worked or about their assignment, they just kept referring me back to IRP Solutions. Our employees know that they're our employees
and if we ask them questions, they traditionally will be very up front with us. But the fact that they were not
willing to answer my questions, led me to believe that there was something not right in this relationship. MR. KIRSCH: Honor? THE COURT: MR. KIRSCH: Yes. Thank you, Ms. Bergman.
Could I have a moment, please, Your
I have no
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further questions. THE COURT: All right. We have been sitting for
more than an hour and a half, so we are going to take a 15-minute recess. We will reconvene at 10:55.
Court will be in recess. (A break is taken from 10:40 a.m. to 10:56 a.m.) (The following is had in open court, outside the hearing and presence of the jury.) THE COURT: You may be seated.
Ms. Barnes, would you please bring the jury in. (The following is had in open court, in the hearing and presence of the jury.) THE COURT: You may be seated.
Cross-examination? MR. WALKER: THE COURT: Yes, Your Honor. Mr. Walker, you may proceed. CROSS-EXAMINATION BY MR. WALKER: Q. A. Q. Hello, Ms. Bergman. Hi. During the Government's review of Government Exhibit
609.03, which we are going to bring up for you. MR. WALKER: THE COURT: Q. Your Honor, may we publish this? You may. I will show this to you so you can
(BY MR. WALKER)
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look at it and be able to refresh your memory. Now, we see here, as you pointed out, we have time sheets from Darrell Brantley with the employee name, and the employee's signature filled in. Does Headway have a
policy that prohibits putting in your name or signature on a time sheet without submitting them? A. Q. No. And in the scenario where an employee that works off They are blank.
site or remotely and wants to ensure their time sheets can be completed, what are the parts of the time sheet that must by law be filled in or completed by the employee? MR. KIRSCH: conclusion. THE COURT: Q. A. Q. If she knows. if you know. Objection, calls for a legal
(BY MR. WALKER)
Can you repeat the question, please? By law -- this is if you know -- what are the parts
that the employee must fill in that cannot be filled in by anyone else? A. Q. By law, I don't know the answer to that. So, Ms. Bergman, would it be possible for the
employee who is working remotely and off site, to sign the time sheet and fill in their name, and then later complete the other parts of the time sheet in case they would not be at the office another time?
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A. Q. A. Q.
Do I have to answer yes or no? Yes, please. Can you repeat the question? Yes. Would it be possible -- let me rephrase it to
clarify for you. Would it be a violation of Headway corporate policy for an employee to fill in their name and sign their time sheet in order to permit completion of the time sheet later, in the event they were working remotely and that the time sheets must be submitted? A. Q. That would not be against policy. And, Ms. Bergman, can you tell me what you see on the
right side of Darrell Brantley's time sheet that is being explained here, at the bottom on the right? A. Q. A. Q. You mean the manager name? Yes. It is blank. So does this indicate that the employee filled out
his name and signature but did not get it pre-approved with no hours in it? A. Q. That's correct, yes. And also, Ms. Bergman, is the manager name and
signature required to consider a time sheet approved -A. Q. Yes. -- by the client?
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A. Q.
Yes. So it is correct that these time sheets would not be
fit for submission to Headway by IRP Solutions? A. Q. That's correct, yes. Okay. I want to go back, Ms. Bergman, to the
statements and initial conversations between yourself and IRP Solutions, particularly the conversations you had in an e-mail with Mr. Harper. MR. WALKER: If we could, Your Honor, publish
Government Exhibit 160.02 again. THE COURT: MR. WALKER: Q. (BY MR. WALKER) You may. Please scroll down. And, Ms. Bergman, if you will look If
at the 4th paragraph that begins "We are interested." you can read that to yourself to refresh your memory on that. A. Q. I read it. Okay. Thank you.
And in the first sentence there, could you
read that first sentence back to the Court, please. A. "We are interested in getting in on the ground floor So let's do whatever
of your new contract with the NYPD.
needs to be done to get this rolling." Q. Okay. Thank you. And, as you just read, you said
that you wanted to get in on the ground floor of a new contract with the NYPD. Did Mr. Harper, previous to this
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time, make any mention of a contract with the NYPD that IRP had had? A. Yes. He had to have for me to refer to it in this
e-mail. Q. Okay. Well, Ms. Bergman, I want to show another
e-mail from Mr. Harper to you. MR. WALKER: exhibit. Your Honor, this is not yet an
We just came across this, and I would like to
show it to Mr. Kirsch and get approval to show it to Ms. Bergman. THE COURT: Approach.
(A bench conference is had, and the following is had outside the hearing of the jury.) THE COURT: MR. WALKER: Another newly-discovered exhibit? Your Honor, this was in discovery.
And in doing the search for the terms, contract and representations, we found this one. THE COURT: discovery? MR. WALKER: MR. BANKS: Mr. Harper. MR. KIRSCH: That's correct, a different Bates Yes. An e-mail exchange from Ms. Bergman and So this has already been produced in
number on the bottom. THE COURT: Let me see it. So you have seen this?
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor.
MR. KIRSCH: THE COURT:
I have seen that before, Your Honor. All right. Do you have any objection
to it being introduced? MR. KIRSCH: May I have a moment, please, Your In fact, I have to double
I don't, Your Honor.
check, but I believe that this e-mail is actually a part of one of the exhibits that the Government has marked. don't know that it was introduced. or 3. I
I believe it is page 2
If I can have a moment, Your Honor. THE COURT: MR. KIRSCH: Is this it? Your Honor, I think it is a different So I believe it is
format, but it is the same message. already in evidence, Your Honor. THE COURT: introduced it. MR. KIRSCH: THE COURT: MR. WALKER: Okay.
It is not in evidence, you never
So that is the e-mail. Your Honor, I would like to refer to
the Government exhibit. THE COURT: MR. WALKER: You can use 160.03. Thank you, Your Honor.
(The following is had in the hearing of the jury.) THE COURT: So we have discussed that this is
actually 160.03 of the Government's exhibits. And you may proceed, Mr. Walker.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
MR. WALKER: THE COURT:
Thank you, Your Honor. Just to make sure, is there any
objection to 160.03 being admitted? MR. KIRSCH: THE COURT: have it admitted? MR. WALKER: THE COURT: Yes, Your Honor. 160.03 is admitted. No objection. That is what you would like to do is
(Exhibit No. 160.03 is admitted.) (BY MR. WALKER) Okay. Ms. Bergman, we've just
established the fact that you stated in your e-mail to Mr. Harper that you wanted to "be on the ground floor," in your words -- your words, "in a contract with the NYPD." That e-mail was sent on November 30, 2004, at 2:54 p.m. The exhibit we're now dealing with, 160.03, the Government's exhibit -MR. WALKER: Please scroll up a little higher to
get the date and time. Q. (BY MR. WALKER) You will see there, Ms. Bergman --
what is the date and time on that e-mail? A. Q. November 30th at 5:33 p.m. So do you agree that this e-mail was sent to you
after your e-mail to Mr. Harper? A. Q. Yes. Stating you wanted to "get in on the ground floor"?
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A.
Yes. MR. WALKER: Can we scroll down? And if you look, Ms. Bergman, at the Read that to
Q.
(BY MR. WALKER)
first paragraph, and the third line. yourself.
Let me know when you have read it.
Could you read that for the Court, please, that one sentence. A. "We have a great project that we will be looking to
wrap up for the New York Police Department." Q. And so would you agree, Ms. Bergman, that Mr. Harper
does not state there that there was a contract in place with the NYPD? A. Q. A. Q. Do I have to answer yes or no? Yes, please. Thank you. Does Mr. Harper, in that sentence, indicate that IRP I will restate the question for you.
Solutions had a contract with the NYPD? A. I am sorry, could you say it one more time? I don't
mean to be difficult. Q. Sure. Not a problem. Does Mr. Harper, in that line
which you just read, state that IRP Solutions had a contract with NYPD? A. Q. A. He does not. Could you answer -No, there is no contract.
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Q.
Thank you.
And, in the course of bringing on people
for IRP Solutions, they mention to you that they were working with law enforcement; is that correct? A. Q. Yes. And they did mention that they were working on
projects for different agencies; is that correct? A. I was under -- no. I was under the impression that
it was the New York Police Department. Q. Okay. And so they indicated they were working on
projects with the NYPD that is correct? A. Q. Yes. And in the course of working on projects -- clarify A company builds a Would you
this is your understanding, as well.
product that is encompassed within a project. agree with that? A. Yes.
But usually with a contract in place,
especially -Q. Okay. Let me stop you right there. So you are
making the assumption that a contract is in place; correct? A. Q. Yes. Okay. Thank you.
Ms. Bergman, did Headway initiate any type of litigation against IRP Solutions for non-payment -A. Yes.
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Q. A. Q. A.
-- to the best of your knowledge? Yes. And what was the nature of that litigation? At the time we had a full-time attorney working for
us, and he had contacted an attorney in Colorado to -- at this point, I'm not familiar with the legal process. But
there was definitely -- the process was put in motion. Q. Do you know if that was a civil litigation? MR. KIRSCH: THE COURT: Q. Objection, irrelevant, Your Honor. Sustained. Ms. Bergman, are you aware of IRP
(BY MR. WALKER)
ever denying that they owe you money? MR. KIRSCH: THE COURT: THE WITNESS: the money. Q. (BY MR. WALKER) Thank you. And you also mentioned Objection, relevance. I'll allow her to answer. IRP never denied that they owed us
earlier that when you talked to IRP Solutions -- to your employees who worked at IRP Solutions, that they had odd reactions; is that correct? A. Q. Yes. And you were notifying these employees suddenly of
their release from their employment? A. Q. That's correct. Would you think it a situation where people might
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have different reactions? A. Q. Yes. But not the reactions that they had.
And in your work with the staffing company, did you
have training on dealing with replacement employees? A. Q. Yes. And in that training, what was the content of the
dealing with the realm of potential reactions from employees? A. Most of the training was based on terminating an
employee because of behavioral issues on the job; tardiness, lateness, et cetera. It really wasn't based on
how to terminate someone when the client -- when the contract was broken between Headway and the client. Q. here. Okay. Thank you. And let's go back a little farther
In the early part of your testimony, you had
mentioned that IRP -- or that Mr. Harper said to you that there could be a potential sweetener to your relationship with IRP Solutions. Did you view this as a positive or a
negative potential occurrence? A. Q. I viewed it as a positive. And would that sweetener have been something that --
that you would have money to pursue in the course of the relationship with IRP Solutions? A. Q. Yes. And did that sweetener have any bearing on your
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decision to go forward to provide services with IRP Solutions? A. It didn't, no. But it affected our agreement to
extend the terms from 5 days to 30 days, and to do a bi-weekly payroll as opposed to weekly. MR. WALKER: Thank you.
No further questions. THE COURT: Mr. Banks. CROSS-EXAMINATION BY MR. BANKS: Q. Ms. Bergman, a minute ago you -- both in the
Government examination and our questioning, you saw time sheets that were filled out -- pre-signed time sheets by Mr. Brantley and Mr. Haughton; is that correct? A. Q. A. Q. Yes. Now, those time sheets were not submitted; correct? The ones that were after the contract was terminated? No, ma'am, the ones you viewed that only had the
signature. A. Q. A. Oh, with nothing else filled in? Yes. No. There would be no point in them submitting a
time sheet in that condition. Q. Therefore, they were not paid for any of those
particular time sheets that the Government has presented

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to you? A. Q. That's correct, yes. Okay. How long have you been in the staffing
industry? A. Q. A. Q. Since 1987. Okay. Thirty-plus years it looks like.
It is 24 years. Twenty-four years. Okay. You consider yourself a
pretty smart, experienced and crude business person, don't you? A. Q. Yes. What is Headway's policy for extending credit to any Is there a corporate policy in place?
company? A. Q. A. Yes.
Can you explain that policy? The policy is that we have the client company fill We do a Dun & Bradstreet on In
out a credit application.
them to see if they are listed and how they are rated. the case of IRP Solutions, there was not enough information on the D & B, Dun & Bradstreet, to justify doing business with them.
So I engaged the assistance of my credit manager, Rich Barlotta, to make the decision on this. It was not
my place to make that decision, it was the credit manager's decision.

901
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
And what was his communication to you regarding the
ability to proceed or not to proceed? A. We had had a call -- and I am trying to remember if
it was with you or Ken Harper -- about the terms of the contract. And it was Rich Barlotta's recommendation that
we move forward with this. Q. Now, did at such time Headway feel like more due
diligence should have been done? A. Absolutely, yes. MR. KIRSCH: Objection, Your Honor, to the
question, as to what did Headway feel. THE COURT: THE WITNESS: Overruled. Yes. More due diligence -- in
hindsight, more due diligence should have been done. Q. (BY MR. BANKS) Now, in 24 years in the staffing
industry, have you come upon occasion where you would employ a particular contractor with a company, say, for a 6-month contract, and the client would terminate that much shorter than those 6 months for various reasons? If they
would -- say, for example, they just didn't want to move forward any more. A. Q. Yes, that's correct. And during those types of situations, Headway would
also lose money; correct, or anticipated revenue? A. Yes. But there is a big difference between
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
anticipated revenue and money that was not paid on our receivables. Q. That is not what I am asking. Were commissions --
commissions would be lost underneath when a client -- once revenue was actually put on the books, from an accounting perspective, it's revenue that is anticipated by the company; correct? A. You are using the term "commissions," which don't
apply here. Q. A. Q. A. Q. A. Q. A. Q. Let me rephrase the question. Okay. Have you been in a position of a recruiter? No, I'm not a recruiter. Have you ever been a recruiter? No. Have you ever been an account manager? Yes. Okay. And you sign a contract with a client for so That happens?
many contractors; correct? A. Q. Yes.
And, on occasion, unannounced to you -- unexpected to
you, a client may terminate that engagement at any given time; correct? A. Q. Correct. That is permitted by contract?
903
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
Yes. In addition, the contractor can terminate their
employment at any time; correct? A. Q. Yes. And that is the nature of the staffing industry;
correct? A. Q. Yes. So if a company terminates their project early, that
anticipated revenue will not be received; correct? A. Yes. That's correct. And anticipated revenue would
not be received. Q. Thank you. And if there are commissions to be paid,
say, to the account manager or to the recruiter on that account, they would lose those commissions because the client has decided to terminate the contract; correct? A. It is not relevant here, because I was not on
commission. Q. I am just asking you a general question about the You have 23 years of experience. Objection to the relevance, Your
staffing industry. MR. KIRSCH: Honor. THE COURT: Q. (BY MR. BANKS)
Sustained. Was there anyone else employed as a
contract employee with Headway outside of the people -Darrell Brantley, Shaun Haughton, the people mentioned in
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
the Government's examination? A. We had many people working for Headway as contract
employees. Q. A. Q. I am talking specifically about IRP Solutions. No. Just those four people.
Do you not recall a gentleman by the name of John
Shannon being employed by Headway? A. That name rings a bell. Was he the former New York
City Policeman. Q. A. Q. A. Q. That's correct? Yeah, I do remember that name. Okay. And he was staffed through Headway?
I believe so, yes. Now, did you contact the NYPD regarding John Shannon;
that he may be involved with part of a fraud in this company? MR. KIRSCH: THE COURT: Q. (BY MR. BANKS) Objection, relevance. Sustained. John Shannon worked for Headway;
correct? A. Q. Yes. And he was a former -- according to your testimony,
he was a former NYPD veteran; correct? A. Q. Yes. And he worked for IRP Solutions; correct?
905
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
Yes. Do you remember what capacity he worked in for IRP
Solutions? A. I don't remember his title. There were database
analysts. Q. IRP? A. Q.
There were -- I don't remember his title.
Did you also pay John Shannon as a contractor with
If he submitted time sheets, yes.
I believe we did.
What happened with John Shannon's relationship with Did Headway take any action
IRP, as far as Headway?
regarding John Shannon at IRP? A. When this all started to come to a head, and IRP was
not paying, and I knew that IRP was working on a project for the New York Police Department, I did call the New York Police Department. MR. KIRSCH: THE COURT: THE WITNESS: THE COURT: THE WITNESS: Objection, relevance, Your Honor. Overruled. You may answer.
I can continue? Yes. I did call the New York Police
Department to express my concern that a former New York City Policeman was being paid by my company to work on a project that appeared to be -- I mean, I am just going to talk freely here. That appeared to be a bogus project,
because we were engaged to put these people to work and no

906
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
payment was made. Q. (BY MR. BANKS) Did the NYPD contact you back with
any conclusion to your inquiry? MR. KIRSCH: Objection to the relevance of the
response from the New York Police Department. THE COURT: Q. (BY MR. BANKS) Sustained. What did you conclude from talking to
the NYPD? MR. KIRSCH: THE COURT: MR. BANKS: Objection, relevance. Sustained. Okay. Your Honor.
Can I have a moment, Your Honor? THE COURT: MR. BANKS: THE COURT: You may. No further questions, Your Honor. Anyone else?
Any redirect? MR. KIRSCH: THE COURT: MR. KIRSCH: Yes, please, Your Honor. You may proceed. Thank you, Your Honor.
Your Honor, could I please publish Government Exhibit 161.00, page 4? THE COURT: MR. KIRSCH: You may. Can you expand the left side of that,
please, Special Agent Smith. REDIRECT EXAMINATION

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
BY MR. KIRSCH: Q. Ms. Bergman, you were just asked about Mr. Shannon And this is a time sheet that was
being an employee.
submitted in Mr. Shannon's name; is that right? A. Yes. I apologize I did not remember this. I'm a
little nervous. Q. It's no problem. MR. KIRSCH: exhibit? Q. (BY MR. KIRSCH) Does that appear to be another time If you want to just look through --
Well, can we display page 8 of that
sheet in his name? A. Q. Yes. And page 12 of that exhibit -MR. KIRSCH: Q. (BY MR. KIRSCH) Could we display that? Does that appear to be another time
sheet in his name? A. Q. Yes. Do you have any questions that he was one of the four
employees that was payrolled there? A. Q. He was definitely one of the four employees. All right. Now, you were also asked some questions The invoices
that used the term "anticipated revenue."
that were issued to IRP for the work that those employees had performed, did those constitute anticipated revenue, as far as you were concerned?
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q. A.
No. What do those represent? That was for work done that we paid the employees
for, and we were billing the client for. Q. Was Headway, in 2004, generally in the business of
making loans to its clients? A. Q. No. I also want to ask you again about a couple of the
e-mail exhibits. MR. KIRSCH: And if we could start, Your Honor, by
publishing, again, Government Exhibit 160.02, page 2. THE COURT: MR. KIRSCH: Q. (BY MR. KIRSCH) You may. Can you expand the text of that. Now, Ms. Bergman, this is your
e-mail, I believe, in which you refer to the new contract with the NYPD; is that right? A. Q. A. Yes. Right in the middle of the screen there? Yes. MR. KIRSCH: 1, please. Q. (BY MR. KIRSCH) That e-mail was sent at what time? Okay. And if we can go back to page
What date and time? A. p.m.

It was sent from me on November 30, 2004, at 2:54
909
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
MR. KIRSCH:
Okay.
Now, can we please publish I believe that was the one
Government Exhibit 160.03.
that was admitted during the cross-examination, Your Honor? THE COURT: I am sorry, yes, you may. I am sorry.
(BY MR. KIRSCH)
Going back down to the very bottom
of the page -- the very bottom of the page there, what was the date and time of that e-mail from Ken Harper? A. Q. November 30, 2004, at 5:33 p.m. After the e-mail that we just looked at; is that
right? A. Yes. MR. KIRSCH: exhibit, please. Q. Now can we publish page 2 of that
And expand the text of that. Now, you were asked about this
(BY MR. KIRSCH)
e-mail, Ms. Bergman, and whether the term "contract" appears in this e-mail. that right? A. Q. That's correct. Is there anything in this e-mail that you read as And I believe you said no. Is
inconsistent with the idea that there was a contract between IRP and the New York Police Department? A. In the first paragraph, "We have a great project that
we are going to be looking to wrap up for the New York Police Department."
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Did you interpret that statement as being
inconsistent with the idea that there was a contract, or consistent? A. Consistent that there would be a contract in place
with IRP and New York -MR. ZIRPOLO: THE COURT: Q. A. Objection, speculation. Overruled. You can answer that, Ms. Bergman.
(BY MR. KIRSCH)
It would be consistent with the thought that there
was a contract in place between IRP and the New York Police Department. Q. And, again, did Mr. Harper ever correct this
statement from your e-mail in which you explicitly referred to a contract between IRP and the New York Police Department? A. Q. No, I don't believe he did. That understanding that IRP had a contract with the
New York Police Department, was that one of the things that your company was considering when deciding whether to do business with IRP in the first place? A. Q. A. Yes. Why is that? Because it meant that there was -- obviously, IRP was
going to be billing the New York Police Department, and they would be paid through their contract.
And there
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
would be a better -- less of a chance of them being in default with Headway. Q. Was that any more or less of an issue, given the
testimony that you provided about the fact that the Dun & Bradstreet report didn't have enough information to make a report on its own? A. It was in their favor that they were doing business
with the New York City Police Department. MR. KIRSCH: MR. BANKS: THE COURT: Thank you, Ms. Bergman. Will you permit any redirect? Recross? No.
May this witness be excused? MR. KIRSCH: THE COURT: THE WITNESS: THE COURT: take? MS. HAZRA: About 25 to 30 minutes on direct Yes, please, Your Honor. You may be excused. Okay. How long is the next witness going to Thank you.
examination, Your Honor. THE COURT: All right. Why don't we go ahead and
move forward with that. MS. HAZRA: Kelly. Ms. Barnes, if we could have Exhibits 200.00 through 203, as well as Exhibits 3 and 11.
Your Honor, the Government calls Jeff
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COURTROOM DEPUTY:
Your attention, please.
JEFFREY KELLY having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: K-E-L-L-Y. DIRECT EXAMINATION BY MS. HAZRA: Q. Good morning, Mr. Kelly. Where are you currently Jeffrey Kelly, J-E-F-F-R-E-Y
employed? A. Q. A. Q. Self-employed in Atlanta, Georgia. What is the nature of your current business? Own a home and health care company. At some point in your employment history did you work
for Kelly Services? A. Q. Yes, I did. And given your last name and the name of that
company, was there any relation between you and the founders of Kelly Services? A. Q. A. Q. Not at all. When did you work for Kelly Services? From May of 2004 until April of 2006. What was your position there?
913
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Well, in New York City, I was the branch manager.
And while in South Florida, I was the area sales manager. Q. What time period were you in New York City, if you
recall? A. Q. A. Q. A. Q. A. Q. From May of 2004, until May of 2005. That is the period you were branch manager? In New York, yes. Is that New York City? Yes. What kind of business is Kelly Services? It is a professional staffing company. Is there a particular kind of staffing needs you were
in charge of? A. Q. Yes. I was the branch manager for their IT division.
As the branch manager for IT, did you come into
contact with a company known as IRP Solutions? A. Q. A. 2004. Q. A. Do you remember who contacted you? Yes. First name Ken, and last name, I believe, was Yes, I did. Do you recall approximately when that was? I know it was either the first or second quarter of
Barnes. Q. Do you recall, did Ken Barnes contact you or you
contact Mr. Barnes?

914
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q. A.
He contacted me. What did he say he wanted? He wanted to establish a business relationship with
Kelly Services for what was termed a payroll service deal. Q. Mr. Kelly, if you could please look what has been
marked for identification purposes, in a manila envelope in front of you, as Government Exhibit 200.05. recognize that document? A. Q. A. Q. Yes, I do. Is that an e-mail to you? Yes, ma'am. In looking at that e-mail, do you recall who you Do you
spoke with at IRP Solutions based on that e-mail? A. Q. It was Ken Harper. We're going to -- does this e-mail accurately reflect
your conversation with Ken Harper concerning the business opportunities with IRP Solutions? A. Yes, it does. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 200.05 be admitted. THE COURT: MR. BANKS: THE COURT: Any objection? No objection, Your Honor. Exhibit 200.05 will be admitted.
(Exhibit No. 200.05 is admitted.) Q. (BY MS. HAZRA) We are going to return back to that
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
e-mail in a second. with Mr. Harper.
You were describing the conversation
Did he identify what kind of company IRP
was in this initial phone conversation? A. Yeah. He indicated that they were a software
consultant of sorts, and looking to partner up with us to facilitate IT work. Q. Did Mr. Harper identify any deals in this
conversation or in some of the follow-up conversation? A. Yes. He mentioned to me that they had a project they
were working on with the New York City Police Department. Q. And did he explain what kind of work he wanted done
by these employees? A. Yes. But he also let me know that they had already
located the employees in question, and they just simply needed Kelly to do the administrative, or the billing portion of that deal. MS. HAZRA: Your Honor, if I could ask that
Government Exhibit 200.05 be published at this time. THE COURT: MS. HAZRA: Special Agent. Q. (BY MS. HAZRA) This is an e-mail, is that right, It may. If you could highlight the top half,
from Ken Harper to yourself? A. Q. Yes. Is the time frame; the date of this e-mail consistent
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with these initial conversations with Mr. Harper concerning potential work with IRP Solutions? A. Yes. We had a previous telephone conversation, which But I believe the time frame
he alludes to in his e-mail. was roughly about right. Q.
And that e-mail, obviously, concerns the staffing of
five consultants? A. Q. Yes. What is the -- I would like to direct your attention It says, "I want Kelly IT to be
to the bottom paragraph.
in a position to further assist IRP Solutions in any other future services." What does that mean? What was your
understanding of that? A. I took that to mean that either they wanted us to
payroll service some additional consultants, or they would even want us to help staff future open positions that they were going to be working on with the NYPD. MS. HAZRA: Q. (BY MS. HAZRA) Thank you, Special Agent. Did Kelly Services decide to enter
into a contract with IRP Solutions? A. Q. Yes, we did. Did Mr. Harper statements have any effect on your
decision to enter into that contract? A. Q. Yes. What effect?

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Well, when he mentioned that the NYPD was the end
client, there was a high level of interest on our parts to work with them, because it was -MR. HARPER: statements. THE COURT: Q. (BY MS. HAZRA) Overruled. You may continue to answer. You were What Objection, Your Honor, inconsistent
effect did Mr. Harper's statements have? explaining. A.
Well, the process was when I was approached by
Mr. Harper, I had to go to my boss to explain to him what we would be doing. And the fact that the NYPD was the end
client factored heavily into our decision to work with them. Q. A. Why is that? Because it was the NYPD. It was a high-profile
client.
And it was a way that we thought we would be And it was a situation where we
assured to get paid.
wanted to work on behalf of the NYPD. Q. A. Q. You wanted to work -- I missed the last part. On behalf of the NYPD. Was the contract with IRP Solutions to payroll
employees, I believe you said? A. Q. Yes. In the payrolling situation, whose employees are the
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people? A. Q. A. Q. The actual employees, they were IRP's employees. But who pays their wages? Kelly. And how does Kelly Services make money in that
arrangement? A. We charged a pretty nominal fee to just do the Ordinarily, markups were a But in a
payroll portion of the deal.
lot higher if the employee worked the hours.
situation where the employees belonged to another company, the fees we charged were lower, but we would still tend to make a profit. Q. You charged those fees to IRP Solutions; is that
correct? A. Q. Yes. If you can please look at what has been marked for
identification purposes as Government's Exhibit 200.01. Do you recognize that document? A. Q. A. Yes. What is that document? It is a Service Agreement that was constructed by
Kelly Services to point out the terms and conditions that we would operate under with IRP Solutions. Q. Does that document memorialize your agreement, as I
believe you just said?

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A.
Yes. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 200.01 be admitted. THE COURT: MR. ZIRPOLO: THE COURT: Any objection? No objection. Exhibit 200.01 will be admitted.
(Exhibit No. 200.01 is admitted.) Q. (BY MS. HAZRA) Mr. Kelly, how does Kelly Services
record the hours these employees worked at IRP Solutions? A. Typically, hours were recorded by the use of time
cards. Q. And if you could please turn and look at what has
been marked for identification purposes as Government's Exhibit 201.00. 201.00? A. Q. A. Yes. What is that? These are time cards that were submitted by IRP's Do you recognize Government's Exhibit
employees. Q. A. To Kelly Services? Yes. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 201.00 be admitted. MR. BANKS: THE COURT: No objection, Your Honor. 201.00 is admitted.
920
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(Exhibit No. 201.00 is admitted.) MS. HAZRA: THE COURT: MS. HAZRA: May it be published, Your Honor? It may. Special Agent, if you could just If you could highlight
publish the first page of that. the text. Q. (BY MS. HAZRA)
Mr. Kelly, are these the five
individuals that Kelly Services payrolled to IRP Solutions? A. According to these time cards, I would say yes. These I
can't say I remember the actual names of them. appear to be authentic time cards. MS. HAZRA:
And, Special Agent, if you could
highlight the bottom left-hand one. Q. (BY MS. HAZRA) If you could walk through, for the Why are
jury, the different signatures on this time card. there two signatures? side supposed to be? A.
What is the one on the left-hand
That is supposed to reflect the actual person who
performed the hours of service. Q. A. And how about the one on the right-hand side? That would be the customer's signature or, in this
case, a representative from IRP who authorizes the hours on the time card. Q. And why do you ask for the customer's signature?
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A.
It is a way to verify that the hours were worked,
that way we could submit invoices based on those hours, because they were, in fact, verified by the client's signature. Q. And does this time card concern a particular day
worked by the employee? A. Q. A. Yes. And what is that day? September the 20th. MS. HAZRA: Q. (BY MS. HAZRA) Thank you, Special Agent. I believe you just said that Kelly
Services pays the payrolled employees for the hours they've worked? A. Q. A. Q. Yes. Those are hours that have been approved? Yes. If you could please look at what has been marked for
identification purposes as Government's Exhibit 203.00. Do you recognize that exhibit? A. Q. A. Yes. What is this exhibit? This is just a summary of the earnings by the
employees based on the hours that were submitted. Q. A. And who paid these earnings? Kelly Services.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
MS. HAZRA:
Your Honor, I would ask that
Government's Exhibit 203.00 be made admissible. THE COURT: MR. BANKS: THE COURT: MR. BANKS: THE COURT: (BY MS. HAZRA) Any objection? Can I have a moment, Your Honor? Sure. No objection. Exhibit 203.00 is made admissible. Mr. Kelly, I believe you were talking Can you please describe
about invoices being generated. what those are. A.
An invoice is just a bill that is generated based on
the hours that were worked by employees. Q. A. Q. A. Q. A. Q. And did Kelly Services bill IRP for these employees? Yes. How are the invoices or bills transmitted to IRP? They are mailed. In the U.S. Mail? Yes. If you could please look at what has been marked for Do you
identification purposes as Government's Exhibit 3. recognize Government's Exhibit 3? A. Q. A. Yes. What is that?
This is a copy of an invoice that was sent to IRP
Solutions by Kelly Services.

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Q. A. Q.
For the employees we have been discussing? Yes, ma'am. If you can please look at what has been marked for Do
identification purposes as Government's Exhibit 11. you recognize Government's Exhibit 11? A. Q. A. Yes. What is that? This, too, is an invoice that was sent to IRP
Solutions by Kelly Services. MS. HAZRA: Your Honor, I would ask that
Government's Exhibits 3 and 11 be admitted. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. Exhibits 3 and 11 will be admitted.
(Exhibit Nos. 3.00, 11.00 are admitted.) MS. HAZRA: Could Government's Exhibit 11 be
published, Your Honor? THE COURT: MS. HAZRA: It may. And if you could highlight just the
employee list and description that box there, Special Agent. Q. (BY MS. HAZRA) Mr. Kelly, is this the five employees
that Kelly Services payrolled to IRP? A. Q. Based on the time cards, I would say yes. And does this invoice account for both regular and
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overtime hours? A. Q. A. Yes, it does. And what does the "Service Description" column mean? Service description would just refer to the types of Kelly has several different And, again, I was in charge
services that were rendered. divisions within its company. of the IT services division. MS. HAZRA: Q. (BY MS. HAZRA)
Thank you Special Agent. Could you please look, Mr. Kelly, at
what has been marked for identification purposes as Government's Exhibit 202.00. Government's Exhibit 202.00? A. Q. A. Yes. And what is it? This is a collection of additional invoices that were Do you recognize
sent to IRP Solutions. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 202.00 be deemed admissible. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. 202.00 is made admissible.
(Exhibit No. 202.00 is found admissible.) Q. (BY MS. HAZRA) Mr. Kelly, did IRP pay Kelly Services
on any of these invoices? A. No, they did not.

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Q.
Did you, when you became aware of that, did you take
any steps to collect the money? A. Q. A. Yes, I did. What did you do? After receiving calls from our corporate office, from
the collections' department, they wanted me to reach out to IRP, since I was the one who had the relationship with them. So I attempted to call IRP. I e-mailed them, as
well, in an effort to collect on the unpaid invoices. Q. A. Q. A. Q. Were you able to reach anyone at IRP? No. Did you leave voice mails? Yes. Approximately how many times did you call or e-mail,
would you say? A. Q. A. Q. I would say at least 20 times, including calls. Who were you trying to reach at IRP? Mr. Harper. At any point in time did Kelly Services get paid on
these invoices? A. Q. No. And do the invoices, if they were added up,
accurately reflect the amount of money that IRP owed Kelly Services? A. Yes.
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Q.
Did IRP's failure to pay have any personal financial
effect on you? A. Q. A. Yes. What was that? It cost me my entire bonus for that year. MS. HAZRA: If I could have one moment, Your Honor.
I have nothing further. THE COURT: Mr. Banks? CROSS-EXAMINATION BY MR. BANKS: Q. Mr. Kelly, how long has Kelly Services been in
business? A. Q. A. Q. A. Q. A. It has been 70, 80 years. A rather large company? Yes. Would you say a million, billion dollar company? Billions. Does Kelly Services have a general credit policy? I'm not sure what you mean by "general credit
policy." Q. Does it have a credit policy before they extend
credit to any company or client that they may do business with? A. They do a credit check. They do check the D & B
ranking, that sort of thing, yeah.

927
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Q.
Did you conduct -- did you do a credit report in the
case of IRP? A. I didn't personally do it. We had a representative
from our corporate department that did it. Q. A. What was the result of that credit report? There was some push back from our corporate office as
to whether or not we should enter into a business arrangement. But, again, I pressed for the relationship, And my
because the client -- the end client was the NYPD.
boss, who was the regional vice president, concurred with me, that we should proceed. And then the president of the
division also agreed we should do it. Q. So against the advice of your credit department, you
decided to proceed? A. I wouldn't say it was against the advice. They had
questions about it.
Normally, when a D & B report comes
back, it is either a green light for them or they ask us additional questions. additional questions. Q. So the NYPD, obviously, a large metropolitan In this case, they asked some
organization, from a business development perspective, would present fairly rich opportunities for Kelly Services, would you say? A. If we were dealing directly with the NYPD, yes, I But, in this case, it wasn't the case.
would say that.
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So the thought was that because they were the end client, then we would stand a very good chance of getting paid, which you understand is the real concern whenever a corporate credit department asks additional questions about clients. Q. Yes. But does -- in the event that credit is
somewhat not up to snuff, you would say, as far as Kelly would go, would you agree that at that point that Kelly and its management would have to assume the risk associated with moving forward with a suspect credit rating? A. I wouldn't agree with that. As a local business
leader, they relied heavily on my opinion about this particular arrangement. NYPD was the client. I went back to the fact that the
We would be receiving the services,
and that was the main reason for why we agreed -- we agreed to proceed with IRP. Q. A. Q. Has Kelly lost money on engagements in the past? Oh, sure. And what were some of the reasons they would lose Would a company go bankrupt or whatever? MS. HAZRA: THE COURT: Q. (BY MR. BANKS) Objection, Your Honor, relevance. Sustained. In your testimony to -- in the
money?
Government's examination or questioning, you said you were

929
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of -- you were interested because the NYPD was involved? A. Q. A. Q. Yes. Correct? That's correct. Do you have any evidence or any information to
provide that IRP was not engaged with the NYPD? A. Q. Could you restate your question? I am sorry, I will try to make it a little clearer.
Do you have any information, or is it your understanding that IRP was not engaged with the NYPD? A. All I had to go on is what Mr. Harper told me. I So I
didn't have any evidence that they were involved.
didn't have any evidence that they weren't involved. if that answers your question. Q. That answers my question.
Now, have you heard the term "billable consultant"? A. Q. A. Yes. Can you explain what that means to you? Well, to us a billable consultant was a professional;
in this case, someone with an IT background, who would work for our clients and that person is billable; meaning that for every hour or fraction thereof, that person would generate revenue for the company. Q. Okay. Do you have -- that is your understanding of a
billable consultant.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
Do you have the other understanding when an executive -MS. HAZRA: THE COURT: MR. BANKS: (BY MR. BANKS) Objection, Your Honor. Sustained. I understand, Your Honor. Now, you mentioned the name
Mr. Barnes in your examination when the Government asked you a question of who you did business with. A. Q. A. Right. The name Mr. Barnes, how did that come to you? I merely made a mistake. Ken Barnes is someone else
I know, and Ken Harper is the person from your company that I dealt with. Q. You know another Ken Barnes that is not affiliated
with IRP? A. Yes, I do. MR. BANKS: Thank you.
I have no further questions. THE COURT: Anybody else?
Any redirect? MS. HAZRA: THE COURT: excused? MS. HAZRA: THE COURT: Yes, Your Honor, thank you. Thank you very much, Mr. Kelly, you are
No, Your Honor. All right. May this witness be
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excused. All right. lunch. 1:15. We are going to go ahead and break for
If you can be back at 1:15, we will reconvene at So court is in recess. (Lunch break is taken from 11:57 a.m. to 1:17 p.m.) (The following is had in open court, outside the
hearing and presence of the jury.) THE COURT: Okay. You may be seated.
It has been brought to my attention that the
defendants request to receive free transcripts of the trial of this proceeding. It has been more than two
years, I believe, since financial affidavits were submitted, so, therefore, before I can approve that, I need for you all to fill out the CJA forms, the financial affidavits with the clerk's office. MR. WALKER: THE COURT: MS. HAZRA: All right?
Very well, Your Honor. All right. One matter. Anything further? Not this witness, but the
next witness the Government has, there is a stipulated Exhibit 609.01, which is a photograph of a white board. We have the actual white board here, Your Honor. So, one, I want to make sure that we could -- as we raised in the pretrial conference, substitute the stipulated photograph with the actual exhibit. And, if
so, we would ask permission to display that, at least on a

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chair, because there isn't an easel.
We can move the
chair, obviously, where ever it is most convenient for everyone. THE COURT: MR. WALKER: All right. Any objection?
Your Honor, we would like the
opportunity to review the photograph versus the actual white board before we would stipulate to that. THE COURT: MS. HAZRA: THE COURT: MR. WALKER: photograph? MS. HAZRA: MR. KIRSCH: MR. WALKER: THE COURT: 609.01, I believe. 609.01. That is right. All right. It is here right now, Your Honor. All right. Let's take it out.
What is the exhibit number for the
Thank you. So the issue is whether the photograph
is depictive of what is on the white board? MR. WALKER: Yes, Your Honor.
Your Honor, we stipulate to using the white board. THE COURT: So 609.01 will be admitted, and the
Government will be allowed to use it, and the defendants will be allowed to use the actual white board in their testimony. (Exhibit No. 609.01 is admitted.) MS. HAZRA: Your Honor, would it be permissible if
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we display it between Ms. Martinez and the Government table, so the jury and counsel can still see it. THE COURT: I think that will be the best way. You know what is in there. You
have the photograph.
If you
want to move closer, you may move closer, as well. MR. BANKS: Your Honor, when they are talking about
a specific portion of the board, as long as the Government will say exactly what they're looking at, then we can zero in a little more effectively on the actual computer image. THE COURT: That would be great. That is also
better for the record.
So when we talk about items like
that, if you don't describe exactly what you are looking at, it doesn't come out in black and white. So I would
request the Government be sure to identify which portion of the board they are referring to. MS. HAZRA: THE COURT: MR. WALKER: THE COURT: the jury. (The following is had in open court, in the hearing and presence of the jury.) THE COURT: You may be seated. Certainly, Your Honor. All right. Anything else?
No, Your Honor. Ms. Barnes, would you please bring in
Government may call its next witness. MS. HAZRA: Thank you, Your Honor.
The Government
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calls Courtney Mullen. COURTROOM DEPUTY: Your attention, please.
COURTNEY MULLEN having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: M-U-L-L-E-N. DIRECT EXAMINATION BY MS. HAZRA: Q. Good afternoon, Ms. Mullen. Where are you currently Courtney Mullen, C-O-U-R-T-N-E-Y
employed? A. I'm currently employed in Massachusetts for the
Commonwealth. Q. Prior to that employment, did you work at a company
known as The Computer Merchants? A. Q. A. Yes, I did. When did you work for The Computer Merchants? I worked for The Computer Merchants from 2001 through
February of 2006. Q. A. Q. What office were you located? Norwell, Massachusetts. What was your position with The Computer Merchants in
2004 and 2005?

935
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A. Q. A.
I was an account executive. What does that mean? I primarily did sales for the company, and some
recruiting. Q. What kind of business did the Computer Merchant do at
that time? A. Q. A. IT consulting services and staffing. What do you mean by staffing? Temporary placement of work resources related to
technology and administrative services. Q. At some point in 2004, did you learn of a potential
business opportunity with IRP Solutions? A. Q. A. Yes, I did. What was your understanding of that opportunity? My understanding was IRP Solutions was in business
providing software solutions to the state and local government, and they had a need for temporary staffing services. Q. IRP? A. Q. A. Q. A. Yes, I did. Who did you speak with? Ken Harper. Did you talk to him on the telephone? Yes.
Based on this, did you reach out to talk to anyone at
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Q.
Did Mr. Harper tell you more about what IRP's
business was? A. Q. A. Yes. What did he say? That IRP was developing a software -- a software
product for police departments; that he had currently -they had a contract with the New York Police Department, as well as some other contracts in the works, to provide the software to. Q. And in this conversation, or shortly thereafter, did
Mr. Harper tell you what he wanted from The Computer Merchants? A. Q. A. He did. And what was that? He was looking for our first engagement to assist in He actually had a few So
providing temporary services.
consultants in mind that he had already interviewed.
he was going to introduce us to those folks, and then we would provide payroll services. Q. You just mentioned "first engagement." Was there
some indication from Mr. Harper that there would be follow-up work for The Computer Merchants? A. Q. A. Yes, there was. And what was that? Well, typically, this type of engagement, where we're
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working with a company to do payrolling services, isn't that lucrative for the company. So we had talked about
future business; where The Computer Merchants would actually find the consultant and introduce the consultant to IRP Solutions. As their business was to grow, we could
help support them in that way. Q. Would that kind of arrangement that you just talked
about, is that more profitable to The Computer Merchants than payrolling? A. Yes, it is, because we are providing more of a
service. Q. A. What happens in the payrolling arrangement? The client introduces the consultant to us, and we
then will provide payroll on a bi-weekly or semi-monthly basis, and then we bill the client for that. Q. And in this initial arrangement, would The Computer
Merchants charge any additional extra to IRP or not? A. There is some additional charge. It is mostly just
to cover the statutory costs involved with hiring an employee. Q. Did The Computer Merchants decide to enter into a
contract with IRP? A. Q. A. Yes. What was the basis for this decision? That this was a start of our relationship.
And that
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we would provide this service, and then continue to grow our relationship together. Q. I would like you to look at -- there is a stack of If you could please
manila envelopes in front of you.
look at what is marked for identification purposes as Government's Exhibit 9 or 9.00. numbered folder in front of you. A. Q. 9? Yes: If you can please open it up and look at that Do you recognize that document? There should be a
document. A. Q. A. Q.
Yes, I do. What is it? This is an e-mail to me from Ken Harper. Is the time period on this e-mail consistent with the
initial stage of your communications with Ken Harper? A. Yes, it is. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 9 be admitted and published. THE COURT: MR. WALKER: THE COURT: be published. (Exhibit No. 9.00 is admitted.) MR. KIRSCH: And, Special Agent, if you could Any objection? No objection, Your Honor. Exhibit 9 will be admitted, and it may
highlight the text of Government's Exhibit 9.

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Q.
(BY MS. HAZRA)
Ms. Mullen, this e-mail references
the "future business with our deployment efforts at the New York Police Department" and "a great project that we will be looking to wrap up." Were those statements
consistent with what Mr. Harper told you about the nature of IRP's business? A. Q. Yes, they are. And in the last paragraph, I draw your attention to Do you see that word
the "sweetener," which is in quotes. in the third paragraph? A. Q. used? A. Yes.
What was your understanding of that term as it is
That that would be an opportunity where we provide an
additional service; which would be sourcing and finding a consultant that would be able to help IRP Solutions, and that would be more profitable to the company, because we are providing an additional service than just payrolling. Q. And in this initial payrolling arrangement, it
appears to involve two staffers; is that correct? A. Q. That's correct. Did The Computer Merchants actually end up payrolling
three employees? A. Q. Yes, we did. And if you can please look at what has been marked
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
for identification purposes as Government's Exhibit 430.08. MR. WALKER: Your Honor, could we ask the
Government to restate exhibit number. MS. HAZRA: Q. A. Q. A. Q. A. Q. A. (BY MS. HAZRA) Yes, I do. Do you recognize that exhibit? Yes, I do. What is that? This is an e-mail from Ken Harper on 9/15/2004. To you? To me. MS. HAZRA: Your Honor, I ask that Government's 430.08. Do you see that in front of you?
Exhibit 430.08 be admitted and published. THE COURT: MR. BANKS: THE COURT: may be published. (Exhibit No. 430.08 is admitted.) MS. HAZRA: If you could highlight the text of Any objection? No objection. Exhibit 430.08 will be admitted, and it
that, Special Agent. Q. (BY MS. HAZRA) Ms. Mullen, does this e-mail contain
the names of the three employees who were ultimately payrolled by The Computer Merchants to IRP Solutions?
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A. Q.
Yes, it does. And the e-mail references -THE JURORS: It is not showing up on one of the Sorry, Your Honor.
juror's screens. Q.
Thank you.
(BY MS. HAZRA)
-- referenced the Department of Was that your understanding, that this
Homeland Security.
was new additional business? A. Yes. MS. HAZRA: Q. (BY MS. HAZRA) Thank you, Special Agent. How were these three individuals --
how did these three individuals record their time that they worked for IRP Solutions? A. Q. They used a time sheet. How was that time sheet -- how was that time sheet
transmitted to The Computer Merchants? A. Q. A. Either by fax or by e-mail. What was the purpose of the time sheet? The consultant fills out the number of hours that They then have it approved by a supervisor;
they work.
authorized signature of the client, and then they submit that to The Computer Merchants so that they can receive a paycheck for the hours worked. Q. So based on your testimony, The Computer Merchants
use the time card as the basis for the check? A. Yes.
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Q.
What else -- does The Computer Merchants have any
other use for the time card? A. They then use that time card in order to bill the
client for the number of hours worked. Q. Could you please look at what has been marked for Do
identification purposes as Government's Exhibit 1L. you recognize Government's Exhibit 1L? A. This is a time sheet for David Zirpolo. MS. HAZRA:
Your Honor, I ask that Government's
Exhibit 1L be admitted and published. THE COURT: MR. BANKS: THE COURT: be published. (Exhibit No. 1L is admitted.) MS. HAZRA: Thank you. Any objection? No objection, Your Honor. Exhibit 1L will be admitted, and it may
Special Agent, if you can highlight starting with the top portion. Q. (BY MS. HAZRA) Ms. Mullen, if you can walk through
this, I think you said this is referencing David Zirpolo? A. Q. A. Yes. And what is the week ending designation there? That would be the end of the calendar week for which
the individual worked. Q. And the time is obviously reported in the handwritten
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portion? A. Q. A. Yes. What are the two signatures at the bottom? The first signature is the employee. So this would
be David Zirpolo.
And the second is the supervisor, which
would be the client. MS. HAZRA: Special Agent, if you could highlight
the Monday hours on Government's Exhibit 1L, please. Q. (BY MS. HAZRA) Those would be the hours that David
Zirpolo worked that Monday, September 20th? A. Yes. MS. HAZRA: Special Agent, if you could please --
Your Honor, I ask permission to publish the first page of Government's Exhibit 201.00, which has previously been admitted. THE COURT: may be published. MS. HAZRA: If you could highlight the bottom Okay. Yes, it has been admitted. It
left-hand time card there, Special Agent. Q. (BY MS. HAZRA) Ms. Mullen, are you able to see that
other time card on the screen in front of you? A. Q. Yes, I am. And can you tell me the employee that that time card
concerns? A. David Zirpolo.

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Q.
And can you see if you are able to recognize the
signature of the supervisor who approved it on the right-hand side? A. Yes. It's the same signature as the time card on the
left-hand side. Q. As you can see, on 9/20 -- can you see how many hours
Mr. Zirpolo recorded working for Kelly Services? A. Q. Ten. At the time that Mr. Zirpolo submitted the time card
to The Computer Merchants on Monday for the week ending 9/26, did you have knowledge that he was also working for Kelly Services for that same day? A. Q. know? A. Q. A. Yes. Why is that? Well, because it wouldn't be possible to work in two So that would concern No, I did not. And is that information that you would have wanted to
places at one time on the same day.
me that the person might not be performing work that day. MS. HAZRA: Q. (BY MS. HAZRA) Thank you, Special Agent. Could you please look at what has
been marked for identification purposes as Government's Exhibit 431.00. A. Would you repeat that, please?
945
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Q.
Certainly.
431.
Do you recognize Government's
Exhibit 431.00? A. Q. A. Yes. What is this? This is time sheets -- several of them. The first
one is David Zirpolo, for the week ending 9/26. Q. I don't want you to tell me what is in them. Are
these time sheets for all of the employees That Computer Merchants payrolled -- concerning the employees that The Computer Merchants payrolled at IRP Solutions? A. Yes. MS. HAZRA: Your Honor, I ask that Government's
Exhibit 431 be admitted. THE COURT: MR. ZIRPOLO: THE COURT: Any objection? No objection, Your Honor. Exhibit 431 will be admitted.
(Exhibit No. 431.00 is admitted.) Q. (BY MS. HAZRA) Ms. Mullen, I believe you said that
The Computer Merchants then invoiced IRP based on these time cards; is that right? A. Q. A. Q. That's right. And how is that invoice sent to IRP? By fax or by e-mail. If you could please look at what has been marked for Do
identification purposes as Government's Exhibit 12.

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you recognize Government's Exhibit 12? A. Q. A. Yes. What is Government's Exhibit 12? This is an invoice from The Computer Merchants to IRP
Solutions. Q. A. What is the date of the invoice? The invoice date is October 1, 2004. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 12 be admitted. THE COURT: MR. ZIRPOLO: THE COURT: Any objection? No objection. Exhibit 12 will be admitted.
(Exhibit No. 12.00 is admitted.) MS. HAZRA: apologize. Your Honor, may Government's Exhibit 12 be published? THE COURT: MS. HAZRA: top portion. Q. (BY MS. HAZRA) Ms. Mullen, does this -- can you It may. Special Agent, can you highlight the May I have one moment, Your Honor? I
please explain what this invoice is concerning? A. The invoice is to IRP Solutions. The purpose of the
invoice is to provide them with a bill for the hours worked by the consultants. And the consultant, David
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Zirpolo, has an employee ID number for The Computer Merchants, and that is what precedes his name. Q. Thank you. And where was these sent? From what
location was this invoice sent? A. It would be sent from the address on top, 95
Longwater Circle in Norwell. Q. Is that where The Computer Merchants was located at
the time? A. Q. A. Yes. And it would be sent to what address? Sent to 7350 Campus Drive, Suite 200, in Colorado
Springs. Q. Does looking at this invoice refresh your
recollection as to how it was sent to IRP Solutions? A. Q. A. Q. The invoice was sent by mail. Did IRP pay on this invoice? No, not to my knowledge. When you discovered they weren't paying, did you make
any attempts to collect payment? A. Q. A. Yes. What did you do? Well, I was alerted by accounting. As a sales
executive, when a client doesn't pay for, typically, 30 to 60 days, and when I'm alerted of that, I followed up with the client by phone and by e-mail to speak to them about
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making payment. Q. Who did you contact, or who did you attempt to
contact? A. Q. A. Q. I attempted to contact Ken Harper. Were you successful in reaching him? We did have e-mail exchanges, but not by phone. And, Ms. Mullen, if you could please look what has
been marked for identification purposes as Government's Exhibit 16. A. Q. A. Yes. And what is Government's Exhibit 16? This is an e-mail from Ken Harper to Jennifer Do you recognize Government's Exhibit 16?
Bassett. Q. A. And are you also cc'd in the e-mail string? Yes. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 16 be admitted and published. THE COURT: MR. BANKS: THE COURT: be published. (Exhibit No. 16.00 is admitted.) MS. HAZRA: If you could highlight the bottom Any objection? Without objection, Your Honor. Exhibit 16 will be admitted, and it may
message first, Special Agent. Q. (BY MS. HAZRA) Ms. Mullen, who is the J. Bassett
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listed there? A. She -- that is Jennifer Bassett. She works in The
Computer Merchants' accounting department. Q. A. Q. And why was she involved in this case? She is handling accounts receivables. So at some point in time did you involve her to get
payment? A. Q. Yes. And are both you and Ms. Bassett in the same
location -A. Q. Yes, we are. -- at that time? Were you e-mailing from that
location? A. Q. A. Q. Yes. Where was that? Norwell, Massachusetts. And where was the server for The Computer Merchants
at this time? A. Q. Norwell, Massachusetts. The e-mail references "outstanding invoices." Is
this e-mail consistent with your communications, as well, with Mr. Harper? A. Q. Yes. In this e-mail -- actually, it has a prior one. MS. HAZRA: Special Agent, if you could turn to
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page 2. Q.
If you could highlight that message. This is the first e-mail that
(BY MS. HAZRA)
Jennifer is responding to; is that correct? A. Q. Yes. There is a "COO" reference there. Do you see that
"COO"? A. Q. COO? A. No. MS. HAZRA: Special Agent. If you could go back to the first page, If you could Yes. Did you ever have an opportunity to speak with the
We saw Ms. Bassett's e-mail.
highlight the top portion, Special Agent. Q. (BY MS. HAZRA) Is that e-mail Ken Harper's response
to Ms. Bassett's earlier e-mail? A. Q. Yes. Did The Computer Merchants receive that payment
schedule on December 16, 2004, as promised? A. Q. No. Did you receive payment during this month of
December? A. Q. No. At some point in time did you -- did you or
Ms. Bassett have to follow up concerning outstanding invoices?

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A. Q.
Yes. If you could please look -MS. HAZRA: Thank you, Special Agent. If you could please turn and look at
Q.
(BY MS. HAZRA)
what has been marked for identification purposes as Government's Exhibit 436.03. A. Q. A. Yes. What is it? This is a letter to Jennifer Bassett at The Computer Do you recognize that?
Merchants, from David Banks, at IRP Solutions. MS. HAZRA: Your Honor, I ask that Government's
Exhibit 436.03 be admitted and published. THE COURT: MR. BANKS: THE COURT: published. (Exhibit No. 436.03 is admitted.) MS. HAZRA: If you could highlight the text of Any objection? No objection, Your Honor. 436.03 will be admitted, and may be
that, Special Agent. Q. (BY MS. HAZRA) Ms. Mullen, was it your understanding
from this letter that this was the proposed payment plan, payment schedule that IRP had promised in an earlier e-mail? A. Q. Yes. And the total of those invoices there, is that an
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accurate reflection of what was owed to The Computer Merchants at that time? A. Q. 2005? A. Q. A. Q. No. Did they pay any of those installments? No. If you could please turn and look at what has been Yes. Did IRP pay that first installment on January 12,
marked for identification purposes as Government's Exhibit 21. A. Q. Could you repeat that? 21. It might be that it is in a box behind you.
Do you recognize Government's Exhibit 21? A. Q. A. Yes. What is Government's Exhibit 21? This is an invoice from The Computer Merchants to IRP
Solutions. Q. A. Q. And what is the date of this invoice? January 21, 2005. So during the time period that you're corresponding
over payment, was The Computer Merchants continuing to payroll the employees at IRP Solutions? A. Yes. MS. HAZRA: Your Honor, I would ask that
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Government's Exhibit 21 be admitted and published. THE COURT: MR. BANKS: THE COURT: Any objection? No objection, Your Honor. Government Exhibit 21 will be admitted,
and may be published. (Exhibit No. 21.00 is admitted.) MS. HAZRA: Special Agent. Q. (BY MS. HAZRA) What does this invoice -- what If you could just highlight the text,
employee does this invoice concern? A. Q. This concerns David Zirpolo. And was this invoice also -- how was this invoice
transmitted to IRP Solutions? A. Q. A. Q. A. Q. This invoice was also mailed. From where? Norwell, Massachusetts. And did IRP pay this invoice? No. Could you please look at what has been marked for Do you recognize
identification purposes as 432.00. 432.00? A. Q. A. Yes.
What is the group of documents that's there? These are more invoices from The Computer Merchants
to IRP Solutions.
954
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
MS. HAZRA:
Government's Exhibit 432.00 be made admissible. THE COURT: MR. BANKS: THE COURT: (BY MS. HAZRA) Any objection? No objection. Exhibit 432.00 is made admissible. Ms. Mullen, at some point in time did
employees of The Computer Merchants try to personally collect the debt? A. Q. A. Q. A. Yes, they did. Were they successful? No. What happened? A couple of the other account executives from The
Computer Merchants were here in Colorado on business with other clients, and they went to visit IRP Solutions, and they weren't able to see anyone at IRP Solutions because they were stopped by security. Q. As far as you know, did IRP ever pay on these
invoices? A. Q. No. Did you suffer any personal financial repercussions? MR. WALKER: THE COURT: (BY MS. HAZRA) Objection, Your Honor, relevance. Sustained. As far as you know, did they make any
payments to anyone?
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A.
No. MS. HAZRA: Your Honor, may I have a moment? Thank you.
Nothing further, Your Honor. THE COURT: Mr. Walker? CROSS-EXAMINATION BY MR. WALKER: Q. A. Q. bit. Hello, Ms. Mullen. Hello.
You had stated -- I am sorry, let me rewind a little We have gone over quite a bit here in the last few
minutes. One of the first things that the Government presented was an e-mail from Mr. Harper to you. MR. WALKER: Your Honor, I would ask we have that
published, Government's Exhibit 9.00. THE COURT: Q. All right. It may be published.
(BY MR. WALKER)
Ms. Mullen, if you need a second to
just refresh your memory on that, or are you okay? A. Q. I'm okay. And, in that e-mail, if you look at the first
paragraph, and the third line, would you read the end of that sentence for me, please? A. Q. A. The third line? Yes. It begins "We have."
"We have a great project that we will be looking to

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wrap up for the New York Police Department.
Hence, that
is the reason we are reaching out to your firm." Q. Okay. Thank you. And the next e-mail presented by the It
MR. WALKER:
Government I would also like to publish, Your Honor. is Government's Exhibit 430.08. THE COURT: Q. A. Q. You may.
(BY MR. WALKER) I do.
Do you see that e-mail, Ms. Mullen?
And in that e-mail -- if you can also read the second
sentence, which begins, "We have." A. "We have been in discussions with DHS concerning This will be a huge
supplying our CILC Solution to them.
victory for IRP Solutions when that project is brought to fruition, as well." Q. All right. Thank you. So, in that e-mail that you
just read, would you agree that Mr. Harper is talking about potentially closing business with DHS, in the future tense? A. Q. Yes. And would you also agree that in this e-mail there is
no assertion by Mr. Harper that a contract has already been closed with DHS? A. Q. Could you repeat that? Would you also agree that there is no assertion by
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Mr. Harper in this e-mail that a contract has been closed with the Department of Homeland Security? A. Q. I would agree. Would you also agree that in the previous e-mail that
you read, and the statement that you read specifically, we have great a project that we are working on. There was also no assertion by Mr. Harper that a contract was closed with the NYPD? A. Could I see the exhibit again? MR. WALKER: THE COURT: Q. Your Honor, may we publish 9.00? You may. The line you want to focus on,
(BY MR. WALKER)
Ms. Mullen, is the third line down that begins with "We have a great project." A. Q. Yes. Would you also agree that Mr. Harper is speaking in
the future tense, about looking to wrap up a project? A. Q. Yes. Would you also agree that there is no assertion in
that line that there is a present contract in place with the New York Police Department? A. Q. Yes. And so let's go back a little bit further. When you
first started your testimony, you said -- and I did take good notes. You said, quote, we had a contract with the
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
NYPD.
But given these e-mail communications, the only
ones provided by the Government that represent the conversation between yourself and Mr. Harper, you said, quote, they had a contract with the NYPD. Is that an assumption that you made, Ms. Mullen, based on conversations that were had between yourself and Mr. Harper? A. No. I do recall him saying that he was working a
contract with the New York Police Department. Q. time. I believe you were -- I believe you were interviewed by the FBI just this year; is that correct? A. Q. A. Q. Yes. Was that your first interview with the FBI? Yes. And so there is a time span there of at least 7 Okay. And let's -- we'll look at the statements in
years; is that correct? A. Q. That's correct. And would you agree that the e-mails that have just
been presented to you are more or less time aged reports or accounts of what happened, as far as your discussion and your interview with the FBI? could. Would you agree that the e-mails that were
Let me rephrase, if I
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
presented by the Government were more fresh at the time that you read them than your memory was at the time that the FBI interviewed you in 2011? A. I guess I don't really understand. So are the
e-mails fresh when I read them? Q. Right. Would your memory have been more fresh at the
time you got those e-mails from Mr. Harper than they were in 2011 when the FBI interviewed you? A. Sure, because I would have spoken with Mr. Harper
within days of receiving the e-mails. Q. As opposed to 7 years later, when you were Okay. Thank you.
interviewed by the FBI. THE COURT: THE WITNESS: Q. (BY MR. WALKER)
You have to verbalize your response. Yes. Thank you. Ms. Mullen, you also
stated that Mr. Banks provided a proposed payment schedule to you, which was shown in Government's Exhibit 436.03. Do you recall -A. Q. A. Q. Yes. -- that letter and payment schedule? Yes. And when you saw that payment schedule, what did that
indicate to you, as far as Mr. Banks' intentions? A. It indicated that he was communicating that he was
planning to attempt making payment.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
So he would be planning an attempt to make payments;
is that correct? A. Q. Uh-huh. So that indicated to you that he had at least, in his
mind, he believed he would be able to pay on that payment schedule? MS. HAZRA: THE COURT: Q. Objection, Your Honor. Sustained. Would you agree that the proposed
(BY MR. WALKER)
payment schedule was an intention of the company to pay you? MS. HAZRA: THE COURT: Q. Objection, Your Honor. Sustained. Ms. Mullen, when Mr. Banks sent you
(BY MR. WALKER)
the proposed payment schedule, did you have a conversation with him regarding the payment schedule after receiving the letter? A. Q. A. Q. After receiving the letter? Yes. No. And what does a payment schedule typically indicate
when it's received in a situation where payment hasn't been originally received? MS. HAZRA: THE COURT: Objection, Your Honor, relevance. Overruled.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
(BY MR. WALKER)
Would you like me to restate the
question? A. Q. Please. What is the meaning of a payment schedule that you
receive from a customer who hasn't been able to pay on time? A. It is their plan to pay. MR. WALKER: Honor. THE COURT: Further cross? Mr. Banks. I have no further questions, Your
CROSS-EXAMINATION BY MR. BANKS: Q. Ms. Mullen, did The Computer Merchants keep a contact
database at the time to track all contacts and information between them and their clients? A. Q. A. Q. Yes. And potential clients; correct? Yes. Do you recall filling out information related to IRP
Solutions in that contact database? A. Q. Yes. Do you recall on your initial conversation, what was
your initial entry into that contaact database? A. Yes. After speaking with the client, the entry was
not -- the client appeared to be somebody who was doing

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business in my sector at the time, which is state and local government services across the country. They were
developing a software solution, that I was told was getting some traction, and that it would be a good client for me to work with, because those are the types of clients I was going after, as well. Q. Now, in your statement you just made, there is no
mention of a contract in place; is that correct? A. Q. That's correct. Is there some reason you wouldn't capture that
critical piece of information if it were told to you? A. Not necessarily. It was a very free format type of
database.
So, really, any note taking was very
generalized. Q. Does The Computer Merchants have a credit policy If they do, can you explain a
before they extend credit? little bit about that? A.
Typically what we do is we profile a client by doing We look them up on the Dun &
what is called a D & B.
Bradstreet, look at how long they have been in business. In this particular case, the president had indicated that this was a bit of a risk for us; that the company, IRP Solutions, we did find some information on the internet about a history on the company from the company's website. But the Dun & Bradstreet, I believe, just came back
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
average. So -- but I did get the go ahead to move forward based on the type of business, being in my sector, and the discussion we had about future opportunities. Q. Now, you said you got the go ahead. That go ahead
was from who? A. Q. My sales manager, as well as accounting. So would you say it is the policy of The Computer
Merchants to review the credit history, and if that credit history doesn't meet muster, somebody has to make a decision on whether or not the company is going to assume the risk? A. Q. Would that be a correct assertion?
I guess it is hard for me to answer that. Have you had -- have you ever had an issue where the
credit didn't come back or the credit was bad for a company that was looking for services from The Computer Merchants? A. Q. In my experience, no. So you have never dealt with a small business or a
company that may not have a rich credit history? A. I had dealt with a company that didn't have a rich
credit history, but I had not dealt with a company that had a bad credit history. Q. Okay. And can you talk a little bit -- you mentioned
there has been some discussions about, I think you said,

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quote, a bit of a risk, from you.
Is that the president
of the company who articulated that? A. Q. I would say my sales manager. Okay. Now, The Computer Merchants typically engages
with clients via a contract; correct? A. Q. Yes. Do you consider that contract -- or does The Computer
Merchants consider that contract the final agreement that governs the entire business relationship? A. It depends on the engagement. Multiple contracts
could be used, depending upon the engagement. Q. Specifically the engagement with IRP Solutions,
typical services agreement to provide payrolling or staffing services. Would you consider that to be the all
inclusive document that governs the relationship between those two -- between The Computer Merchants and IRP? A. It would be the contract between The Computer
Merchants and IRP, and then the time sheets in the case of staff augmentations, for that contract. Q. Now, you also mentioned that it would not be possible
for a person to work two jobs at once; is that correct? A. Q. A. Q. It would be very difficult. Difficult by whose standards, yours? Well, my standards, yes. Have you ever been an IT or technology professional?
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
I have. And can you tell us a little bit about what capacity
you've worked in? MS. HAZRA: THE COURT: Q. (BY MR. BANKS) Objection, Your Honor, relevance. Sustained. Have you ever known, in your history
in the staffing industry, of an independent contractor working multiple contracts? A. Yes. MR. BANKS: Your Honor. THE COURT: Anybody else? Thank you. I have nothing further,
Any redirect? MS. HAZRA: Could I have one moment, Your Honor? REDIRECT EXAMINATION BY MS. HAZRA: Q. Ms. Mullen, in making your decision to go forward
with IRP, what role, if any, did Mr. Harper's statements about impending contracts have in that decision? A. They had a large role, because the nature of our
first engagement, which is the payrolling of the three consultants that he introduced to us, that is not a very lucrative assignment for us. It is what we call a
pass-through type of business, and we were using that as an entry forum. So the future was really what I was
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looking forward to as a salesperson. MS. HAZRA: Thank you.
I have no further questions, Your Honor. THE COURT: excused? MS. HAZRA: MR. BANKS: recross? THE COURT: Sure. RECROSS-EXAMINATION BY MR. BANKS: Q. Ms. Mullen, you said a moment ago that you did not Yes, Your Honor. Your Honor, can I have one question on All right. May this witness be
make that decision; correct? A. Q. What decision? To proceed with IRP Solutions, but that that was made
by a higher authority; is that correct? A. In the nature of the business, it is a team decision.
So my information provided to my sales manager, and we do weekly staff meetings, and things are discussed. And that
is where we would talk about new clients and then decide if we are going to move forward or not. Q. But if the sales manager or his boss says it is a no
go, would it go through? A. If my boss says it is a no go, then I wouldn't
proceed with it, no.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MR. BANKS: THE COURT: excused? MS. HAZRA: THE COURT:
Thank you. All right. Now may this witness be
Yes, Your Honor. All right. Thank you very much
Ms. Mullen, you are excused. Government may call its next witness. MS. HAZRA: Robert Fricke. COURTROOM DEPUTY: Your attention, please. Thank you Your Honor. Government calls
ROBERT FRICKE having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: name is R-O-B-E-R-T. F-R-I-C-K-E. DIRECT EXAMINATION BY MS. HAZRA: Q. A. Q. A. Good afternoon, sir. Good afternoon. Where are you currently employed? I work for a company called ProSol Associates in My name is Robert L. Fricke. Middle initial L. First
Last name is
Colorado Springs.
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Q. A. Q.
How long have you been there? Almost one year. Prior to this employment, had you previously been
employed as a Special Agent with the Federal Bureau of Investigations? A. Q. A. Q. A. Q. Yes. How long were you an FBI agent? I was an agent for approximately 20-and-a-half years. When did you leave the FBI? I retired on March 3, 2008. I would like to turn your attention to 2005. Were
you in a particular office at the FBI? A. Yes. I worked in the Colorado Springs Resident
Agency, which is part of the FBI Denver division. Q. I would like to turn your attention to February 9th Did you participate in the execution of a search
of 2005.
warrant that day? A. Q. A. Yes, I did. What address or what location? It was in the northern part of Colorado Springs in an
office park off of the Woodman exit on I-25. Q. What was located at the address; a building -- a
business or a home? A. Q. It was a business. Do you recall what businesses were located there?
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Well, there was -- the premises that we searched was And there were other businesses; banks.
IRP Solutions.
There was a -- I believe Regis University was there all in that area. Q. I asked a bad question, I apologize Special Agent.
The actual business you were searching was what? A. Q. IRP Solutions. At some point during the search, did you collect
evidence related to your investigation? A. Q. Yes. There should be a manila folder in front of you.
Could you please look at what has been marked for identification purposes as Government's Exhibit 608.18. A. Q. A. Q. A. Yes. Do you recognize this document? I do. Had it come into your possession before today? I have reviewed -- yes, I have reviewed it before. I
have reviewed some of these documents. Q. A. When did you take -- when did you take this document? During the -- at the conclusion of our search on
February 9th. Q. A. Where did you find it during the search? This was in -- I believe the best description would
be a backpack that was in an office in that -- an

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individual office in the overall business location. Q. Does Government 608.18 bear additional identifying
marks by you? A. Q. A. Yes. And what are those? At the bottom right I see "No. 10," with my initials
and my handwriting, which is how I marked that individual piece of evidence that I took. MS. HAZRA: Your Honor, I would ask that Government
Exhibit 608.18 be admitted and published. THE COURT: MR. BANKS: THE COURT: published. (Exhibit No. 608.18 is admitted.) MS. HAZRA: Thank you. Any objection? No objection, Your Honor. 608.18 will be admitted, and it may be
I don't know if there is a way to highlight the whole thing. Let's start with the top portion. There
appears to be a list. section. Q. (BY MS. HAZRA)
If you could highlight that
Does that appear to be a typewritten
list on the left-hand side? A. Q. I am sorry? Is that a computer-generated typewritten list on the
left-hand side?
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A. Q.
Yes, it appears to be. And then, obviously, there is handwriting to the
right? A. Q. A. Q. Yes. Do you see who the e-mail is from and to? Yes, at the top left. I believe you said -- you testified that you got this Do you know whose backpack you got this
from a backpack. e-mail from? A.
It was marked with the name Harper.
And so -- and
that was -- at the conclusion of the search, I asked him to come and sign the receipt from that room. Q. So based on the way the backpack was, do you have an
understanding whose office that was where you found the backpack? A. I understood at the time, and still understand, it
was Mr. Harper's office. MS. HAZRA: Agent. Q. (BY MS. HAZRA) And is the remainder of this e-mail If you could just scroll down, Special
all more handwriting? A. Q. A. Q. Yes. And are there some names and numbers there, as well? Yes. On the right-hand side, is there -- of this document,
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the bottom right, there appears to be an e-mail address; is that right? A. Q. A. Q. Yes. Is that for Headway? Yes. And then there is a list of about five companies; is
that right? A. Appears to be, yes. I see four. There might be
another. Q.
But I see the title "Five companies," yes.
This wasn't the only document that you seized that
day; is that right? A. That's correct. MS. HAZRA: 608.64. I believe, Your Honor, I will turn to
That has been stipulated. THE COURT: MS. HAZRA: Yes, it has been. I would ask it be published, Your
Honor. THE COURT: Q. (BY MS. HAZRA) It may be published. Mr. Fricke, again, on the bottom
right-hand side, whose initials is that? A. Q. A. My initials. What does this document appear to be? This is a similar document; an e-mail from
Mr. Zirpolo to Mr. Harper. Q. And is the title -DARLENE M. MARTINEZ, RMR, CRR United States District Court For the District of Colorado
973
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 again. Q.
MS. HAZRA:
Maybe if you can highlight the title of
that, Special Agent, and the top text. Q. list? A. Yes. MS. HAZRA: Your Honor, I would ask to publish (BY MS. HAZRA) Again, it appears to have a similar
another stipulated exhibit, Government's Exhibit 608.65. THE COURT: It is stipulated. It will be
admitted -- I am sorry, it may be published. MS. HAZRA: Thank you, Your Honor.
If you could start highlighting that top portion,
(BY MS. HAZRA)
And, again, is this another document
that you seized during the search warrant? A. I believe it is. Can we go down to the bottom. Yes.
Yes, it is, uh-huh. Q. Again, what does Government's Exhibit -- for the
record, what does 608.65 appear to be? A. Q. A. Q. An e-mail from Mr. Zirpolo to Mr. Harper. What is the subject matter of that? "Staffing." And is there one IP address visible that isn't
scratched out on that one? A. Yes. The fourth from -- the second from the bottom,
bstonetech.com.
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MS. HAZRA:
I ask permission to publish another
stipulated exhibit, Government's 608.66. THE COURT: It is stipulated. It is admitted, and
it may be published. Q. (BY MS. HAZRA) First, Mr. Fricke, do you see your
initials in the bottom right-hand corner of 608.66? A. Yes. MS. HAZRA: Special Agent, if you could highlight
the top portion of that. Q. A. Q. A. Q. (BY MS. HAZRA) What is this exhibit?
This is an e-mail from Mr. Zirpolo to Mr. Harper. What is the subject matter of this e-mail? "Staffing." And, Mr. Fricke, you see on the left-hand side there
appear to be some initials; is that right? A. Q. Yes. It appears there is initials, and then a dash with
another set of initials next to them; is that correct? A. Q. A. That's correct. "DB -- EB"? Yes. MS. HAZRA: Special Agent, if you could scroll down What are the markings on Are they handwritten or
to the bottom portion of that. the remainder of this e-mail? typed?
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A. Q.
Handwritten. And with the exception of the "No. 10" and the
initials "RLF," is the remainder of this handwriting someone else's, not yours? A. Correct. MS. HAZRA: Your Honor, at this time I would ask
Government's Exhibit 608.67 be admitted and published as a stipulated exhibit. THE COURT: It is stipulated. It will be admitted,
and it may be published. (Exhibit No. 608.67 is admitted.) MS. HAZRA: Q. (BY MS. HAZRA) Thank you, Your Honor. Again, if you could highlight --
again, do you recognize your initials on that? A. Yes. MS. HAZRA: Special Agent. Q. A. Q. (BY MS. HAZRA) What is Government's Exhibit 608.67? Can you highlight the top portion,
This is an e-mail from Mr. Zirpolo to Mr. Harper. And, again, what does the subject matter of this
e-mail appear to be? A. Q. "Staffing." And, again, in addition to the typewritten pages, are
there a number of handwritten notes? A. Yes.

976
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q.
MS. HAZRA:
If you could scroll down to the bottom
half of that, Special Agent. Q. (BY MS. HAZRA) Now, looking at the bottom half of
Government's Exhibit 608.67, again, with the exception of your initials there at the bottom, is the remainder of this handwriting yours? A. Q. No. Thank you. I would next ask to show you what has But it is
been stipulated as Government's Exhibit 609.01. rather large --
MS. HAZRA: -- so at this point, Your Honor, I would ask permission to display it to the jury. THE COURT: MS. HAZRA: exhibit? THE COURT: (BY MS. HAZRA) He may. What is Government's Exhibit 609.01? You may. Your Honor, may Mr. Fricke approach the
This is a white board. From where did you obtain this white board? From Mr. Harper's office. Where was it located, if you can remember, within the
office? A. As I walked in the front door of the office, straight And there were offices off And this was in the
ahead there was a break room.
of both sides of the break room.
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office on the left of the break room. side of the building, in the back. Q.
It was on the I-25
There appear to be on the left-hand side, a long list Can you please identify that if you are
in black there. able to? A. Yes.
It's says "Staff."
Then it has a list of names
or initials. Q. Thank you. And then what is the writing --
immediately to the right there are various red columns. If you can please identify those. A. The columns are headed with initials in the left. This one says "Blackstone." And there is initials
"MSX."
underneath it, with numbers next to the initials in the right column. Q. A. What is below the "Blackstone" column? Underneath "Blackstone" is "Randstad." It is also initials. I believe This looks
that says "Randstad."
like a partial name, initials, and then numbers to the right of that. Q. And immediately to the left of that, still sticking
with the lower left-hand corner of the white board, what is that wrote in black there? A. This is a mix -- it appears to say "Judgment." And
underneath it has got names and initials. Q. Then if we move to the middle top portion of the
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board there, what is the -- if you would move up, it is red and black, above where your hand is. A. Q. A. Okay, up here. What does that appear to be? Well, we have initials. We have a number/Hr, which We have got names such as
appears to represent per hour. "system -- " MR. BANKS:
Objection, Your Honor.
He cannot
testify what the "Hr" actually represents. THE COURT: Q. A. (BY MS. HAZRA) Sustained. If you would please continue.
We have words such as "Analyst," "DBA," "System" And then there are names to the right of
something. those. Q.
So, just so we are clear, for the top entry on that,
there is an initial? A. Q. A. Q. A. Yes. A number/Hr? Yes. Then what is the next name after that? Then this one is "System" something. It looks like
"Ad," and I can't read the rest of it.
This is something,
and it looks like "S," and I can't read the rest of it. But it is "Ad," it looks like an M, and then it is scribble after that. Next word clearly is "Analyst" and
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the next initials at the bottom are "DBA." Q. And then what is the row in red writing immediately
to the right of the column you just read? A. These appear to be names. "Shaun," and it is "H" --
I can't read the whole name. "Daryl Brantley."
The next name appears to be
The next is "John," and it has an Last one is
"Sha," and I can't read the rest of it.
"Sharon," and it looks like "Ru," and I can't read the rest of it. Q. Below that there is some more red writing, another
column, I believe starting with the letter "C." A. Q. A. It appears to say "C-O-N-S-U-L-T-E-'S." Are there more entries below that? And then it is "PDream-16," "DZ-60 LS," and "ST-25,"
and then the initials "RA." Q. A. Then what is on the right-hand portion of the board? On the right it is "31st-1st." And it looks like it
says "N" and an "M." And I can't read the rest of that. Then there is "31st." And it appears to be "Leod," but I can't read the very end -- the last letter. be "2nd." And then this is smudged. It appears to
I can't -- "1"
something and it is "Audi." Q.
Appears to be.
I'm trying to make sure I have covered the board, but
it is difficult for me to see. MS. HAZRA: I apologize, Your Honor.

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Q.
(BY MS. HAZRA)
You read there is a "Blackstone"
column.
What is the entry to the right of the } if you
are facing the white board? A. "Headway." And it appears to be "Staff." And it
could be "ing," but it is sort of scribbled. Q. A. Below "Headway" are there some notations, as well? There is initials, with initials in parentheses in And on the bottom, there are just two
the top three. initials. Q.
The initials with the initials in parentheses next to
that, can you read first one as an example? A. Yes. The first one is "SR." And then in parentheses
it is "DB." Q. A. And how about the remainder one? Then it is "SH." And then in parentheses is "GW." And then in parentheses it is "ST."
And then it is "DB."
Then the following one is "JS," with nothing in parentheses next to it. MS. HAZRA: THE COURT: MS. HAZRA: questions. THE COURT: All right. The witness may be seated. Your Honor, may I have one moment? You may. Your Honor, I have no further
Mr. Walker, do you want to remove the board? MR. WALKER: No, Your Honor. I would like to leave
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it there. THE COURT: proceed. CROSS-EXAMINATION BY MR. WALKER: Q. A. Q. Mr. Fricke -Yes. -- you were an FBI agent for, I believe you said All right. Mr. Walker, you may
20-and-a-half years? A. Q. Right. And I would assume you are very familiar with the
FBI's policies for evidence handling? A. Q. Yes. Could you give us an overview of what the policy is
for collecting and marking evidence? MS. HAZRA: THE COURT: MR. WALKER: Objection, Your Honor, relevance. What is the relevance? Your Honor, the evidence has been
defaced before being admitted. THE COURT: That should have been objected to in
terms of its being admitted. MR. WALKER: Q. (BY MR. WALKER) Okay, Your Honor. Mr. Fricke if we can go back to
Government's Exhibit 608.18, which is the e-mail that you made your notes on at the bottom.
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A.
Yes. MR. WALKER: Your Honor, may we have that
published, please? THE COURT: MR. WALKER: bottom of that. Q. (BY MR. WALKER) Mr. Fricke, you mentioned earlier Which of You may. 608.18. If you can scroll to the
you did make notes on this piece of evidence. these notes exactly are your notes? A.
The markings I made are the "No. 10" and my initials,
"RLF," in the bottom right. Q. Okay. You did not make the marks that look very If you look
similar with the other dark writing there?
immediately to the "Government" exhibit tag, that says something else. A. Q. You did not make that note?
No, I did not. And there is another marking on that document that You did not make
looks very similar with a phone number. that marking? A. Q. No, I did not.
How about the marking above that that looks like it Did you make that marking?
reads "Eileen." A. I did not.
MR. WALKER: THE COURT:
Thank you. Mr. Banks?
No further questions.
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MR. BANKS:
Yes. CROSS-EXAMINATION
BY MR. BANKS: Q. Mr. Fricke, you have no idea what that board means,
do you, or the writing on there, do you? A. I don't have a thorough understanding of what they I can read some of the words, and have an idea
mean, no.
what those words mean, but I don't know the full context of why that was written on the board. MR. BANKS: Okay. Thank you.
No further questions, Your Honor. THE COURT: MS. HAZRA: THE COURT: MS. HAZRA: THE COURT: Any redirect? No, Your Honor, thank you. May the witness be excused? Yes, Your Honor. Thank you very much, you are excused.
How long is the next witness going to take? MR. KIRSCH: Your Honor, I think the direct of the
next witness is probably about 20 minutes. THE COURT: Why don't we go ahead and take a break.
It is right after lunch, and it is hard to sit still for so long. We will take a break and reconvene at 2:50.
(A break is taken from 2:36 p.m. to 2:52 p.m.) (The following is had in open court, outside the hearing and presence of the jury.)
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THE COURT:
You may be seated.
Ms. Barnes, if you can please bring in the jury. MS. HAZRA: There is a chance we may be calling
Special Agent John Smith this afternoon to testify if we get to him. Your Honor, the Government does not intend to
elicit from Mr. Smith any statements the defendants made during the course of the investigation. We want to make
them aware, and we would be objecting to the defendants trying to get their statements out through Special Agent Smith. THE COURT: All right. We'll address those at the
time we come to them. MS. HAZRA: Thank you.
(The following is had in open court, in the hearing and presence of the jury.) THE COURT: You may be seated.
Government may call its next witness. MR. KIRSCH: Dottie Peterson. COURTROOM DEPUTY: Your attention, please. Your Honor, the Government calls
DOTTIE PETERSON having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record.
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THE WITNESS:
Dottie Peterson.
D-O-T-T-I-E.
Peterson is P-E-T-E-R-S-O-N. DIRECT EXAMINATION BY MR. KIRSCH: Q. Ms. Peterson, can you tell the jury where you work,
please. A. Q. A. Q. A. Q. A. Snelling Staffing Services. What is your position at Snelling Staffing Services? I am the owner. How long have you worked at that business? For 12-and-a-half years. How long have you been the owner? I have been a partner for seven, and full owner since
January. Q. A. Q. And what sort of a company is Snelling? We are a full service staffing agency. And when you use the term "staffing agency," can you
explain what you mean by that? A. Uh-huh. We do temp and temp-to-hire placements,
payrolling, career placement. Q. Does your company have a focus in a particular type
of work? A. Q. No. Okay. We can do anything. You also mentioned the term "payrolling." How
does -- what do you mean when you use the term

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"payrolling"? A. Sure. That would be where someone would come to us
and they would ask us to pay someone that they have selected on their own. them for them. Q. Okay. When you set up a payrolling arrangement, So, in other words, we didn't find
who's employees would the people who are getting paid be? A. Well, any time that they would be on our payroll,
technically they would be considered our employees. Q. A. Who would issue a paycheck to those people? I would. In this case, I would issue a paycheck to
those people. Q. Okay. At some point did Snelling do business with a
company called IRP? A. Q. A. Q. Yes, we did. Do you recall roughly when that was? Back in 2004. Okay. And do you remember how it is that IRP first
came to Snelling's attention? A. Q. A. I do. How is that? I received a phone call asking -- explaining that
they needed some help augmenting their staff. Q. Do you remember who it was that you talked to in that
initial call?
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A. me. Q.
Yes.
Someone named Lisa had initiated the call to
As a result of that call, did you arrange any
personal meetings? A. Yes. I arranged for a meeting to go out there and
talk with them about what their needs would be. Q. A. Q. A. Did that meeting actually happen? Yes, it did. When was this in relation to the call? I don't recall an exact date, but I would say within Very close.
a week, a couple days, perhaps. Q. A. Q. A. Q. A. Q.
And where is that you went for this meeting? Colorado Springs. Did you go to a particular place in Colorado Springs? Their office building. And, just to be clear, when you say "their office"? IRP Solutions/ buildings. Sorry.
And at the IRP office, did you meet with anyone in
particular? A. Q. A. Q. I did. Who was that? David Banks. Okay. Anyone else that you met that day that you
recall? A. I met Lisa when I had walked in.

She had greeted me.
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I only remember meeting David that particular day. Q. During that meeting, did you get any information from
Mr. Banks about what kind of business IRP was engaged in? A. Q. A. Yes. What did Mr. Banks tell you about that? They made software, or something like that, for the
New York Police Department. Q. Did you get any information from him about the status
of IRP's business with the New York Police Department? A. Q. A. Q. The status about that? Let me ask you a different question. Please. Did Mr. Banks make any statements about whether or
not that business was active, whether it was in the future, anything like that? A. I don't recall specifically. But I was under the
impression, not based on anything he said, that it was active. Q. It was in force. And after that meeting, did you run any type
Okay.
of a credit check on IRP? A. Q. No, I did not. Was that -- did Snelling -- was that a part of
Snelling's practice, to run credit checks on prospective customers? A. We did not do that, no.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Not for any customers?
Was that something that you
had found necessary to do? A. Q. No. Did you make a decision that Snelling would do
business with IRP? A. Q. Yes. And what information did you use to make that
decision? A. Just the -- they were only going to be payrolling a We had a contract in place; 30-day
couple of people. payment terms.
And, you know, it was a reasonable amount
for a 30-day turn around. Q. Okay. Do you recall the names of the people that you
agreed to payroll? A. Q. A. I do. Who were they? Amos Clark, Patrick Dreams, and then later a Samuel
Thurman. Q. Did you meet more than one Samuel Thurman during the
course of your interactions with IRP? A. Q. I did. And can you explain which of the Samuel Thurmans you
agreed to payroll? A. Q. The son. Okay. And do you recall the positions -- let's start
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
with Mr. Dream and Mr. Clark.
Do you recall the positions
those people were going to fill? A. Q. A. I believe they were both security. What about Mr. Thurman? It was posed to me that he did website development or So he had a different job there.
web creation. Q.
I think that this may have been contained in an
answer you gave a minute ago, but did you agree upon particular payment terms? A. Q. A. Q. Yes. What were those? Thirty days. Thirty days from the date that an invoice was
received? A. Q. Yes, that is correct. Did you have a mechanism in place to keep track of
the time for those employees? A. Q. Yes, we had time cards. Okay. Can I ask you to look, please, at what is
marked for identification as Government's Exhibit 341.00. It should be in a folder there in front of you, 341.00. A. Q. A. Q. Okay. Yes.
Do you have that in front of you now? I do. Can you recognize what is contained in that exhibit?
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A. Q. A. Q. A. Q.
Yes. What are those? Those are time cards. Snelling time cards? Yes. Do they pertain to employees that Snelling was Our time cards.
payrolling at IRP? A. Yes. MR. KIRSCH: Your Honor, I would move to admit and
publish Government Exhibit 341.00. THE COURT: MR. BANKS: THE COURT: published. (Exhibit No. 341.00 is admitted.) MR. KIRSCH: Special Agent. Q. (BY MR. KIRSCH) Ms. Peterson, can you just sort of Can we just enlarge that top card, Any objection? No objection. 341.00 will be admitted, and may be
walk us through the information here on this card, sort of start in the top left. there? A. This would be where the employee puts their name. What information gets reflected up
And then the name of the company in which they are working. Q. All right. And then there is a box down below that.
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What information is in there? A. That is where the employee is signing off saying that
they understand that the hours that are reflected on the other side are, in fact, the hours they worked, and that the breaks they indicate there were, in fact, taken. Q. Then it looks like it says "Snelling office location"
in the black box. A. Q. A. Q. Uh-huh. Was that your office's location at the time? Yes. Then there is a signature at the bottom. What was
the meaning of that signature? A. Q. A. Q. A. Are we talking about on the left? On the left side still. That is where the employee signs. What about the signature on the right? Where it says "Client signature," that is where the
designated representative from the company indicates that they agree that those are, in fact, the hours that the employee did work, and they signed that the breaks they indicated, they had taken. Q. Do you recognize the name there under the client's
signature? A. Q. I do. Who is that?

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A. Q.
Samuel Thurman. And now, just to be clear again, so is that the son
or the father? A. Q. That would be the father. And the dates that are reflected there appear to be
in April? A. Q. Yes. Is that around when you recall that this relationship
began? A. Yes. MR. KIRSCH: Q. (BY MR. KIRSCH) Thank you, Special Agent Smith. How is it that Snelling would bill
IRP for the work that those employees performed? A. Well, we would -- after we would create a check for
the employee based on the time they had mentioned they worked, versus what they did on the time card, we would then create an invoice for the bill rate we had agreed upon for the same number of hours. You know, we had to
balance number of hours paid to number of hours billed and invoice weekly. Q. I don't think I asked you before, but how is it that Snelling is
Snelling made money in this arrangement? paying the employees' wages; right? A. Q. That's correct. So how does Snelling make money?
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A.
We would put a bill rate on a certain markup For example, perhaps if we were paying
percentage.
someone $10 an hour, if we were payrolling it could be anywhere between -- it could be considered a 30 percent markup. Or it could also indicate 130 percent. But,
basically, we would turn around and bill the company $13 an hour for that same work performed. Q. A. Q. Did you do that in this case? We did. You mentioned these invoices a moment ago. Were
there invoices generated and sent to IRP as a part of this work? A. Q. Yes. Can I ask you to look now at the other -- one of the
other folders in front of you marked 342.00? A. Q. Yes. And I want to know if you recognize the contents of
that exhibit? A. Q. A. Yes. What are they? Those are the bills for the hours that we had paid,
and then turned around and billed IRP for. MR. KIRSCH: Your Honor, I would move to admit
Government Exhibit 342.00. THE COURT: Any objection?

995
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Honor?
MR. BANKS: THE COURT:
No objection, Your Honor. 342.00 will be admitted.
(Exhibit No. 342.00 is admitted.) MR. KIRSCH: Now can we publish those, please, Your
THE COURT:
You may. Ms. Peterson, the invoices on the
(BY MR. KIRSCH)
screen now -- are you able to see that there? A. Q. Uh-huh. On the top right there, in the middle, it looks like Is that right?
it says "Paid." A. Q. A. Q. A. Q. A. Q. A.
That is what it says. Was this invoice paid? No, it was not. Are all of those invoices marked that way? Yes, they are. Were any of those invoices paid? No, they were not. Why are they marked that way, do you know? Because we had to write them off. That is what
QuickBooks say, once you are done. Q. A. Q. Once you have written them off? Yes. At some point -MR. KIRSCH: Thank you, Special Agent Smith.
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Q.
(BY MR. KIRSCH)
At some point were you asked about
payrolling a fourth employee? A. Q. A. Yes. Who raised that issue with you? Do you remember?
I believe that Lisa, again, had called us regarding
the fourth employee. Q. Okay. And who did you -- did you have an
understanding about who this fourth employee would be? A. Q. A. Q. A. Q. I was given her name and an amount. What name were you given? Sylvia. What amount were you given? $25 an hour is what we were to pay her. And did you have an understanding about what sort of
job Sylvia was going to perform? A. Q. A. Q. A. Administrative support. Did that request raise any issues for you? Absolutely. Why is that? $25 an hour for administrative support is not In addition -Objection, Your Honor, speculation. Overruled. I can continue? You can finish.
legitimate at all. MR. WALKER: THE COURT: THE WITNESS: Q.
(BY MR. KIRSCH)
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
It was not a legitimate pay rate.
In addition, the
individual was already working there. Q. A. How is it that you know that? It was a name that I had come across in my dealings
with them. Q. All right. When you got this request, then, did you
take any action with respect to IRP? A. Q. A. I did. What did you do? I had called Mr. Banks and shared with him that we
needed to change the payment terms from 30 days to upon receipt, due to the expected increase in outgoing payroll. Q. And what was Mr. Banks' response to you telling him
you were going to change the payment terms to due upon receipt? A. He got very angry with me and said that I put him in That now he would have to find And I should have been more
a difficult position.
other ways of doing this.
forthcoming with our financial fortitude before getting involved with them. Q. A. Q. Did Mr. Banks agree, then, to the change in terms? No, he did not. Did you take any additional action with respect to
IRP after this conversation? A. In regard to specifically the contract?

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q. A. over. Q. A.
Yes. No. Not in regard to the contract. It was just
Did you terminate it? Yeah. It was done. We didn't do any more receipt of
payroll.
I think we paid what they had already racked up
under our agreement, but didn't accept anything after that. Q. Okay. And did you make any attempts to collect on
the outstanding invoices for the work that those employees had already performed? A. Q. Yes, I did. Did those efforts ever include trying to go to the --
back to the IRP office in person? A. Q. A. Q. A. Q. A. Yes. And when you made that attempt, what happened? The security guards would not let me in. Did you recognize either of those security guards? I did. Who were they? They are the individuals I payrolled as security
guards at IRP. MR. KIRSCH: Honor. Thank you. THE COURT: Mr. Banks?
Those are all of my questions, Your
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MR. BANKS:
Thank you, Your Honor. CROSS-EXAMINATION
BY MR. BANKS: Q. Ms. Peterson, you mentioned you were the owner of
Snelling Personnel (sic)? A. Q. A. Q. Yes. Is that a franchise? Yes. Okay. I want to talk about -- what is your -- have
you heard of the position executive admin? A. Q. I have heard of that term, yes. So an executive administrative assistant to, say, a
president, vice president, along those particular lines; correct? A. Q. Yes. What type of rates do -- salaries, if you know, do
executive administrative assistants get paid in the industry? A. Executive administrative assistant in Colorado in
2004 or today? Q. You can do 2004 or today. MR. KIRSCH: Your Honor, I would ask that the
question be limited to 2004. THE WITNESS: 2004. I would say 34- to 40- would
have been probably a start.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
(BY MR. BANKS)
For an executive administrative
assistant? A. Q. A. Q. Yes. So $40,000 a year. Roughly $20 an hour, correct?
I guess, yeah, without that in front of me. So an executive admin of $25 an hour is not that far
out of the ballpark; correct? A. Q. A. Q. A. Q. Well, it would be for me, yes. It would be for you? Yes. For payrolling the person, yes, it would be.
For you -- for your company? For payrolling the individual, yes. Okay. Not necessarily -- you wouldn't necessarily
say that that is an industry standard for every staffing company out there, would you? A. I don't think I can speak for other staffing But for what I know about the industry, at
companies.
that time, that was way off. Q. Okay. Thank you. Now, you were interviewed by the
FBI in both 2006 and 2009; correct? A. Q. I believe so. And do you recall your interview in 2006 and what you
told the FBI? A. Q. Specifically in reference to what? Specifically in reference to Mr. Banks coming out to
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
meet you regarding the changing that you just testified about -- the changing of invoices being paid immediately versus the net term you had previously set up. A. I don't believe that I ever said that Mr. Banks came
out to meet me. Q. So how did you talk to Mr. Banks when you say he How did you do that, on the phone?
became angry or upset? A. Q.
On the phone, uh-huh. Did you mention that to the FBI in your initial 2006
interview? A. Q. A. Q. That I talked with him on the phone? Yes. I don't recall. Do you recall any sort of statements you made to the
FBI regarding Mr. Banks', what you consider angry demeanor toward you? A. I don't recall. I mean, I don't. Specifically in
2006, I don't. Q. Now, what changed -- do you recall being alerted by a
company -- do you remember a call providing information to the FBI about a company called Adams Evens & Ross in 2009 who had accused IRP of scamming. A. Do you remember that?
Adams Evens & Ross -- could you repeat your question
one more time? Q. Do you remember mentioning Adams Evens & Ross in your
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
2009 interview? A. Q. I don't recall it, but I know who they are. Okay. Do you remember -- you know who they are. Who
are they, and what were you -- what did they tell you? A. I don't recall what they told me -- what Evens & Ross No, I don't recall. Would you say your story changed between 2006
told me. Q.
Okay.
to 2009, as far as your account of what happened with IRP Solutions? A. No, I would not say that. MR. BANKS: Your Honor, I would like to provide --
I would like to provide Ms. Peterson with her FBI -THE COURT: Ask her a question. If she gives you
an answer that is different, then you can move forward. But we will not have a comparison of the two. If you
believe her story has changed, ask her direct questions. MR. BANKS: Q. (BY MR. BANKS) Okay. In your interview in 2006, did you
mention anything about Adams Evens & Ross? A. Q. In 2006, I don't recall. Okay. Further, in your interview in 2006, did you
mention anything about Mr. Banks getting angry with you over the phone? A. I don't recall talking about that specifically, but I
recall talking about Mr. Banks, because it was part of the

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case, yes. Q. Was that a fairly important event that you consider
that took place; Mr. Banks getting angry at you? Important piece of information that the FBI should know, that he may be threatening or an out-of-control individual? MR. KIRSCH: Objection to this witness' opinion
about that, Your Honor. THE COURT: MR. BANKS: THE COURT: MR. BANKS: Sustained. Can I have a moment, Your Honor? You may. Your Honor, I would like to now provide
Ms. Peterson with her 2006 testimony. THE COURT: Has she given testimony that you think
is inconsistent with that, or for what purpose? MR. BANKS: THE COURT: impeach? MR. BANKS: impeach her. THE COURT: All right. Give it to Ms. Barnes. To refresh her recollection, then to Well, she has provided -Is it to refresh her recollection or
This will be 336. COURTROOM DEPUTY: THE COURT: the 2006?

Yes, Your Honor.
Is this one statement or two or just
1004
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
MR. BANKS: THE COURT:
Just 2006. All right.
We'll start there.
COURTROOM DEPUTY: THE WITNESS: that all right?
Defendants' Exhibit 336. Is
May I get my reading glasses?
Okay. Is there a particular paragraph you
THE COURT:
would like her to refer to? MR. BANKS: Not necessarily, Your Honor. I am just
going to ask her a couple questions -- ask her a couple of questions based on her recollection, and there will be nothing in that document -THE COURT: So, essentially, when she told you she
didn't remember, you wanted her to confirm she didn't? MR. BANKS: THE COURT: THE WITNESS: out loud? THE COURT: THE WITNESS: (BY MR. BANKS) To yourself. Okay. Okay. Right. So skim it over. So read the whole thing to myself or
You would agree, Ms. Peterson, there
is nothing in there about Mr. Banks becoming angry with you, and you never communicated anything like that to the FBI, correct? A. Q. I would agree there is nothing in here about that. Okay. Would you also agree there is nothing in that
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interview about information you had received from Adams Evens & Ross about IRP being involved in some sort of scam; correct? A. this. Q. Okay. So my question for you is, why didn't you I don't see any mention of Adams Evens & Ross in
provide that information to the FBI upon your first interview? A. Information? Which information are you speaking
about? Q. About Mr. Banks, first of all, and becoming very,
very angry. A. I don't know that I didn't. I am just saying -- I am
saying it is not in here. Q. Are you saying the FBI agent -- you told him, and the
FBI agent did not put it in the report? MR. KIRSCH: THE COURT: Q. A. Q. (BY MR. BANKS) Objection, calls for speculation. Sustained. Is that in the report?
It is not in the report. Thank you. Neither is anything in the report about
Adams Evens & Ross providing you with information that IRP was a scam company? A. Q. There is nothing in here like that. Okay. Let me ask you this. When you -- did the
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information you received from Adams Evens & Ross influence your testimony to the FBI in a more negative fashion? A. Am I allowed to ask a question here? I have no idea
where he is talking Adams Evens & Ross. where this is coming from. MR. BANKS:
I am unclear
Your Honor, may I provide another
exhibit to Ms. Ross to refresh her recollection -Ms. Peterson, I'm sorry. THE COURT: MR. BANKS: This is which year? 2009 interview, Your Honor. Defendants' Exhibit 337.
COURTROOM DEPUTY: Q. (BY MR. BANKS)
If you could just read over the first First two paragraphs, I think,
few paragraphs to start. will be sufficient. THE COURT: THE WITNESS: okay. Q. (BY MR. BANKS)
Just to yourself. Oh, okay. I see it in here in 2009,
Based on the information provided in
that report that is reported in there, did the information you received from Adams Evens & Ross influence you to change your testimony -- change your information that you provided to the FBI in 2006? A. DKH. Q. The information that you are alluding to talks about We were contacted regarding IRP. Okay. Was IRP not part of that information from
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Adams Evens & Ross? A. Q. A. Q. We were not told that when we were contacted. If you could read to yourself the second page. Second page. Okay.
I believe it is in the second paragraph -- first or You did not
second paragraph, the term "unglued" okay.
provide testimony to the FBI, quote, unquote, Mr. Banks became unglued when you told him about changing the invoice terms, correct? A. Did I provide testimony, or is it in the record?
What are you asking? Q. Did you provide the FBI -- you refreshed your In 2006 -- you have stated that that was
recollection.
not in the 2006 FBI report about Mr. Banks' attitude toward you on the phone. information to the FBI. Now, in 2009, you provided this Can you explain why you did not
provide that information in 2006, and now in 2009, when Robert Moen -- when Special Agent Moen was interviewing you, you are providing these additional details. Was that
not important in 2006, or was something said to you? THE COURT: Mr. Banks, you have about five
questions in that statement. MR. BANKS: I am sorry, Your Honor. I'll break it
down question by question. Q. (BY MR. BANKS) So, in 2009, is it reported from what
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you read that Mr. Banks came "unglued"? A. Q. A. Q. A. Q. Yes. Is there a reason you did not report that in 2006? There would not have been a reason I did not in 2006. And do you know what that reason would have been? I said there was not a reason why I didn't in 2006. You just chose to provide more summarized information
in 2006; is that correct? A. Q. A. I don't think that is the case at all. Well, would you agree that -Sir, it happened. That is all there is to it.
Whenever I chose to relay it, it happened. Q. 2009? A. I don't think I could comment on my memory in the two Different years there. Would you say your memory was better in 2006 than in
years. Q.
In your opinion, does a person's memory get worse
with time? A. Q. No, that would not be my opinion. So your opinion is it gets better over time? I mean,
your memory gets better over time? A. I also don't know if I could say that. I can say
that it did happen. happen. Q. Okay.
And how I relayed it, did, in fact,
Now, one final question.
Under your
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impression -- you used the term that under your impression that business was active, correct? A. Q. Where are we speaking about? With the NYPD. This is in your previous testimony on
direct examination. A. Q. Oh, today, yes. So that was just your impression. Nobody gave you
any indication that there was any -- contract wise or otherwise going on with the NYPD; correct? A. Q. A. Q. Well, I was told that you did that work. Did what work? Software stuff for the NYPD. Software stuff. MR. BANKS: THE COURT: Okay, all right.
I have no further questions. Anyone else?
Any redirect? MR. KIRSCH: Yes, please, Your Honor. REDIRECT EXAMINATION BY MR. KIRSCH: Q. Ms. Peterson, this -- the information that you got
that IRP did software work for the NYPD, did you -- what was your understanding about what relationship, if any, that work was going to have to IRP's ability to pay the bills for those employees you were payrolling? A. Well, that was their client. So their client would
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pay them for the work, and they, in turn, would pay us for ours. Q. I want to ask you a little bit about now these So D --
reports of the interviews you were shown.
Defendant's Exhibit 336, and then Defendant's Exhibit 337. A. Q. Okay. And just to be clear, 336 is a report that was
prepared in 2006; is that right? A. Q. A. Q. A. Q. Yes. And then 337 is a report that was prepared in 2009? Yes. Now, did you write either of those? No, I did not. And did you, after they were written, did the agents
ever show them to you and say, hey, did we include everything you told us? A. Q. No, they did not. Do you know -- when you participated in the 2009
interview, were there questions that were asked that had not been asked of you in 2006? A. Q. I don't recall. Do you remember -- you don't remember any of the
specific questions? A. Q. I don't. Okay. But did I correctly understand your testimony
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that you are sure that it is, in fact, true that Mr. Banks came "unglued" when you conveyed the information that you needed to change the billing terms? A. Q. Absolutely sure. I want to ask you a couple of questions also about What kind of a company
this company Adams Evens & Ross. is that? A. Q.
They are a collection agency. And Mr. Banks asked you about the information that And what information
Adams Evens & Ross provided to you. did you get from Adams Evens & Ross? A.
There was an e-mail -- just a blanket e-mail that
went out to lots of people regarding a company called DKH that was not paying their bills. Q. At the time that you visited IRP's offices or spoke
to anyone from IRP, did you have any understanding that IRP might be linked or associated in any way with DKH? A. Q. No. Did you have any understanding that some of the very
same employees who had worked at DKH might be working at IRP? A. Q. No. Did you have any understanding that some of the very
same executives of DKH might then have become executives of IRP?

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A.
No. MR. KIRSCH: MR. WALKER: Thank you, Ms. Peterson. Your Honor, we ask that Defendant's
Exhibit 336 be admitted. MR. KIRSCH: THE COURT: in. Any further questions? May this witness be excused? MR. KIRSCH: THE COURT: are excused. Government may call its next witness. MS. HAZRA: Thank you, Your Honor. Yes, please, Your Honor. Thank you very much, Ms. Peterson, you Objection, Your Honor. No, those sorts of reports don't come
The Government calls Frank Santoro. If we could have available Exhibit 24 and Exhibit 191 -- sorry 190.03 in that series. COURTROOM DEPUTY: Your attention, please.
FRANK SANTORO having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: S-A-N-T-O-R-O.
Frank Santoro.
F-R-A-N-K
1013
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MS. HAZRA: Q. A. Q. A. Q. A.
DIRECT EXAMINATION
Good afternoon.
Where are you currently employed?
At The Judge Group. What kind of company is The Judge Group? It is a staffing firm. Where is The Judge Group located? Our headquarters are in Conshohocken, Pennsylvania in
the suburb of Philadelphia. Q. A. Q. A. Q. A. Is that where you work? Correct. How long have you been with The Judge Group? For 20 years. And what is your position there? Currently, I am a director of the National Recruiting
Center. Q. A. Q. A. Q. What did you do for The Judge Group in 2004 and 2005? Back then I was an IT recruiter. What kind of recruiting did you do in that sense? Information technology professional. During the course of your time as an IT recruiter,
did you become familiar with a company called IRP Solutions? A. Q. I did. Specifically, were you aware of a business
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opportunity with them? A. Q. Yes. What was the business opportunity with The Judge What was your understanding of that?
Group? A.
My understanding of it was that IRP Solutions
approached us and said they wanted to develop a business relationship on a long-term basis, and that they had their own stable or permanent employees, but they needed to bring on three contractors or temporary employees for a finite project, and wanted to know if we could payroll those individuals on a contract basis, with the promise we would have future contracts or future temporary needs from them. Q. Did you understand what this temporary employees
would be working on? A. You are referring to the type of project they would
be working on? Q. A. Yes. Other than the fact that it was computer programming
related, no, not the scope of the project. Q. And did you have any understanding of what -- who
IRP's clients were; who they worked with? A. Q. I personally did not. And you made some comments about future Can you explain what you mean by that?
opportunities.
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A.
That in addition to -- in addition to saying that
there are three individuals who we need to have on contract or on temporary assignment immediately, we will also give you other job opportunities and the prospect for placing more people, which would be more business or future business to us. So we began to recruit on other
opportunities outside of the three individuals that were immediate starts. Q. And in terms of the profitability of The Judge Group,
what is more profitable, a payroll situation, or one where The Judge Group would find employees? A. Q. One where The Judge Group finds the employees. In the payrolling process, how does that work? For
the three employees, whose employees are they technically? A. They are our employees. So when we payroll someone,
it simply means that a company -- the word "payrolling" in our industry means that a company has approached the staffing company and says, I don't wish to employ these people long-term. Their need is finite. However, we
found them; you don't have to do the sourcing of the individuals, you don't have to find them. Therefore, that
is why it is not as profitable as when we find them on our own. So in strictest term, payrolling means that the client firm has found the individuals to do the work.
We
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are only, in effect, acting as the payroll company. Q. And how does The Judge Group make money in that
arrangement, payrolling them? A. The markups are lower. So we come to an agreement And if we can come to
that provides us a minimal markup.
terms on that, and it is mutually agreeable, then that is it. But it is smaller margins than what are normal or our
routine business is. Q. I believe you mentioned that The Judge Group
payrolled three employees for IRP; is that correct? A. Q. That's correct. And what were your job duties in relation to those
employees? A. My personal job duty at the time was just to act as a
recruiter for one of the individuals on the project. Q. A. Q. And who was that individual? His name was Enrico Howard. Did you get to meet Mr. Howard in the course of
overseeing him? A. Q. I did not. And what was your -- did you have any expectations
for Mr. Howard, in terms of -- did he have to meet any requirements before you start letting him be payrolled? A. Other than routine initial paperwork, which is the
Government I -9 forms -- just signing a contract that he's

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agreeing to the rate of pay.
There is just initial
paperwork that goes along with everyone starting a new assignment. Beyond that, there was no requirements. He
was already -- it was already decided that he was the person that was going to fulfill the job. So there wasn't
any other qualifying that I needed to do that I would typically do in other arrangements. Q. When you mentioned I-9 paperwork, can you please
explain what that is. A. That is the government employment form for employment I believe it is put out by Homeland But,
eligibility purposes. Security.
I might not be right about that.
essentially, it is eligibility for employment, and for every person that starts working for us as a contract or temporary employee, has to fill that paperwork out and indicate that they're eligible to work here in the United States. Q. And is it your expectation that the person who fills
out that paperwork and be payrolled will actually perform the work? A. Q. Correct. And it will not be performed by another individual
who has not gone through your process? A. No, absolutely not. No, it would not be another
person, it would be the person who signed the I-9 form who
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would explicitly be the person who should be doing the work for us. Q. In this arrangement with IRP, how did the three
employees report their hours that they worked to The Judge Group? A. The Judge Group had, and still has, a web-based time So each week, it is a 7-day time
card keeping system. sheet. worker. "submit."
And you fill out electronically your hours as a And then at the end of the week, you click That then goes to the approving manager who
says that your hours were just submitted by your worker, do you agree with what they have entered? And the manager
then, if he or she approves, approves the hours, and then from that, payroll is generated. Q. And why does The Judge Group require the manager to
approve the hours, the time cards? A. To verify that what a person puts down on the time
sheet is correct, and that they accurately worked those hours. Q. Thank you. Could you please look -- there should be There should be one
some manila folders in front of you.
marked for identification purposes as Government's Exhibit 191.00. Please open up that folder and look at those Do you recognize the documents contained
documents.
within Government Exhibit 191.00?

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A. Q. A.
Yeah, I recognize these. What are they?
Yes.
They are printouts of the electronic time card system
that my company, The Judge Group, uses. Q. And do they concern the three employees that The
Judge Group payrolled at IRP? A. Cliff Stewart, Kendra Haughton -- yeah, I see all
three names in here. MS. HAZRA: Your Honor, I ask that Government's
Exhibit 191 be admitted. THE COURT: MR. ZIRPOLO: THE COURT: Any objection? No objection. Exhibit 191.00 will be admitted.
(Exhibit No. 191.00 is admitted.) Q. (BY MS. HAZRA) I believe you were saying, but what
are the names of the three employees that The Judge Group payrolled? A. Q. Clifford Stewart, Kendra Haughton and Enrico Howard. And is the time period there -- when does the first
time card start? A. Q. A. From the exhibit here? Yes. First page, first time card shows as Monday,
September 27, 2004. Q. And is the last -- when was the last time card
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submitted, it covers what week? A. Q. Well -If you go to the last page of Government's Exhibit
141 -- excuse me, 191? A. The last page is -- the last working day was Tuesday,
February 8, 2005. Q. I believe you just were talking about payroll; is
that correct? A. Q. I'm sorry? You were just testifying about payroll coming off of
these time cards? A. Q. A. Yes. What is payroll? Is that --
Payroll is the weekly mechanism that we pay our It is run through our accounting department,
contractors.
and they take these -- these are printouts, but they take the electronic version of these time cards, which automatically connects with a payroll system, and a check is then generated. Q. If you could please look at what has been marked for
identification purposes as Government's Exhibit 24. MS. HAZRA: And, also, Ms. Barnes, I don't know if
I included Government's Exhibit 15 in that, and I apologize. Q. (BY MS. HAZRA) Let's start with Exhibit 15.
Do you
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recognize that document? A. Q. A. Yeah, I recognize these documents. What is Government's Exhibit 15? This is a photocopy of a payroll check from our Yes.
company made out to Clifford Stewart. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 15 be admitted and published. THE COURT: MR. BANKS: THE COURT: be published. (Exhibit No. 15.00 is admitted.) MS. HAZRA: Special Agent. Q. (BY MS. HAZRA) This is a check concerning Clifford If we could highlight the top part, Any objection? No objection. Exhibit 15 will be admitted, and it may
J. Stewart; is that correct? A. Q. A. Correct, Clifford J. Stewart. How was this check sent to Mr. Stewart? This would have been through the U.S. Mail. MS. HAZRA: bottom half. Q. (BY MS. HAZRA) Is there writing on the back that And if you can scroll down to the
appears to be an endorsement? A. Yeah. That is what it appears to be. I wouldn't
have seen this because that would have been after we

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mailed it. Q.
But, yes, that is what it appears to me. Thank you. Thank you, Special Agent. If you could please look now at What is Government's Exhibit 24?
All right.
MS. HAZRA: Q. (BY MS. HAZRA)
Government's Exhibit 24. Government's Exhibit 24? A. Yes, I am sorry.
Yes, I have it right here in front
of me. Q. A. What is Government's Exhibit 24? This looks like the same -- another check, different
date, made out from my company, The Judge Group, to Clifford J. Stewart. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 24 be admitted and published. THE COURT: MR. BANKS: THE COURT: be published. (Exhibit No. 24.00 is admitted.) Q. (BY MS. HAZRA) What is the date on this check, Any objection? No objection. Exhibit 24 will be admitted, and it may
Mr. Santoro? A. Q. On Exhibit 24, the date is 2/18/2005. And how would this check have been sent to
Mr. Stewart? A. It would have been the same way; U.S. mail.
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MS. HAZRA: (BY MS. HAZRA)
Thank you, Special Agent. What documents did The Judge Group
provide to IRP to get payment? A. We have a routine invoicing process that is up to the
company to decide whether they do that through the U.S. Mail, electronic invoices, or in some cases some companies have automatic invoicing that doesn't even require an invoice. Q. If you could please look at what has been marked for
identification purposes as Government's Exhibit 192. A. Q. A. Q. A. Q. A. 190.02? 192.00. Got it. Do you recognize that document, or those documents? I do, yes. What are they? These are standard invoicing printouts of our
standard invoices that go from our company to our client firms to -- in this case, these documents appear to be for IRP Solutions, and have the names of the three individuals who worked for us at that time, three separate invoices. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 192 be deemed admissible. THE COURT: MR. BANKS: Any objection? No objection, Your Honor.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
THE COURT: admissible.
Exhibit 192.00 will be deemed
(Exhibit No. 192.00 is found admissible.) (BY MS. HAZRA) Mr. Santoro, did IRP pay on these
invoices? A. Q. No. Did you personally make any attempts to collect
payment with regard to these invoices? A. Q. A. Personally, no. Did others in your company? I don't have direct knowledge of that. I do know we
have a collections department whose job it is routinely to call on either slow pays or no pays. Q. At some point in time were you responsible for
communicating to Mr. Howard about IRP's failure to pay and the effect it has on him? A. No. That was our problem. Only the day that we
released him. Q. A. Q. A. Q. A. Q. I'm sorry, who released Mr. Howard? I did. How did you do that? Telephone. Were you able to get ahold of him? Yes. And what was his -- when you say released, what did
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you tell him, if you can remember specifically? A. I told him what we knew at that time, which was
several months had gone by since you started working on that project, we paid you a lot of money, and the company hasn't paid us a dime. Q. that? A. It wasn't what I would expect from somebody who went This project is over.
What was Mr. Howard's reaction when you told him
to work that day and thought that he had a job and then was told that the job exists no longer. muted response, I would say. MS. HAZRA: MR. WALKER: Honor? THE COURT: MR. WALKER: THE COURT: You may. Mr. Walker? I have nothing further, Your Honor. May I please have a moment, Your It was very -- a
No, Your Honor, no cross. All right. Thank you very much.
May this witness be released? MS. HAZRA: THE COURT: are released. THE WITNESS: THE COURT: MS. HAZRA: Thank you. Government may call its next witness. Thank you, Your Honor. Yes, Your Honor. All right. Thank you very much. You
May I have one moment, Your Honor?

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THE COURT: MS. HAZRA:
You may. Your Honor, the Government calls
Special Agent John Smith. COURTROOM DEPUTY: Your attention, please.
SPECIAL AGENT JOHN SMITH having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: It's John, J-O-H-N, middle initial
W., last name Smith, S-M-I-T-H. DIRECT EXAMINATION BY MS. HAZRA: Q. A. Q. Hello Special, Agent Smith. Hello. I think the jury is probably aware of this, but where
are you employed? A. Q. A. Q. A. Q. For the Federal Bureau of Investigation. How long have you been an FBI agent? Approximately 8 years. Where are you currently stationed? I'm a Special Agent in Tucson, Arizona. At some point previously, were you in an office in
Colorado Springs, Colorado? A. Yes, that's correct.

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Q. A. Q.
When were you an FBI agent in Colorado Springs? From March 2004 to June 2007. During that time, did you conduct an investigation
into IRP and DKH and individuals associated with those companies, as well as Leading Team? A. Q. A. Q. Yes, that's correct. What was your role in regards to that investigation? I was the case agent in charge of the investigation. In the course of your investigation, did you discover
a certain relationship between and among the various individuals involved in those three companies? A. Q. Yes, I did. Based on your investigation, Special Agent Smith, is
there an existing family relationship between David Banks and Gary Walker? A. Q. A. Yes. What is that? David Banks is Gary Walker's brother-in-law. MR. ZIRPOLO: THE COURT: Q. (BY MS. HAZRA) Objection, relevance. Overruled. And how are they brother-in-laws,
because you can be brother-in-laws two different ways. A. David Banks has a sister named Yolanda, and she is So Yolanda Walker is married
married to Mr. Gary Walker. to Gary Walker.
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Q.
In the course of your investigation, did you discover
whether Yolanda Walker was also involved with DKH, IRP or Leading Team? A. Q. Yes, I did. And what was her role in those companies, based on
your investigation? A. Based on the investigation, she worked at those
companies in accounts payable. Q. In the course of your investigation, did you
encounter an individual by the name of Charlisa Stewart? A. Q. Yes, I did. And based -- what is Ms. Stewart's relation to
Mr. Cliff Stewart? A. Charlisa Stewart is married to a gentleman named
Cliff Stewart. Q. And are you aware of any existing relationship
between Cliff Stewart and Clinton A Stewart? A. Q. A. Q. Yes, I am. What is that? Clifford Stewart is the brother of Clinton Stewart. And in the course of your investigation, did you come
across an individual by the name of Lawanna Clark? A. Q. Yes, I did. Does Ms. Clark have any relation to any of the
defendants named in this case?

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A. Q. A. Q.
Yes, she does. What is that? Lawanna Clark is the sister of David Banks. And have you discovered information about an
individual named Esther Bailey-Banks? A. Q. Yes. What is Ms. Esther Bailey-Bank's relationship with
any of the named defendants in this case? A. Q. Ms. Esther Bailey-Banks is married to David Banks. Additionally, have you discovered some other people
who may have worked at IRP, DKH or Leading Team? A. Q. Yes, I have. Is one of those individuals by the name of Sylvia
McGhee? A. Q. Yes. Based on your investigation, do you have any idea of
the kind of work Ms. McGhee did? A. Q. A. Yes, I do. What is that? She answered the phone and did
administrative/clerical type of work. Q. At some point in time in your investigation, did you
execute a search warrant in connection with this case? A. Q. Yes, I did. What day did you do that?
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A. Q.
The search warrant was executed on February 9, 2005. And where -- what location did you search? What was
the address? A. The address of the search was 7350 Campus Drive,
Suite 200, Colorado Springs, Colorado. Q. A. What was located at that address? At that address of the search was the business
location of IRP Solutions, DKH Enterprises and Leading Team. Q. A. Q. Were you able to enter the business that day? Yes, I was. Can you please describe to the jury the layout of the
business? A. Yes, the layout. So if you got off the elevator or That is where the
stairs, you come into a reception area. security guards were located.
Then there was a door there
that opened up in -- I describe it as a typical office space. It is a fairly large space with cubicles, you And around the
know, in the middle of the office space.
whole perimeter there were offices for the stand-alone offices along the edges of the whole building. Q. side? A. Q. Exactly. There was an entryway in the beginning, if I
So cubicles in the middle and offices around the
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understand you correctly? A. Yes. Entryway at the beginning where the security
guards were. Q. On the day of the search, were you able to identify
particular offices? A. Q. A. Yes, I was. On the day of the search, what was in those offices? Well, in the offices it was, you know, computers and
paperwork and things that would be in an office. Q. Prior to going to search the premises that day, had
you come -- investigated the appearances of some of the individuals associated with those companies? A. Q. A. Yes, I have. How had you done that? Before the search, I had run a Colorado DMV; driver
license photos of all of the individuals I thought related to the search. Q. Did you see some of the individuals that you were
investigating at the offices that day? A. Q. A. Q. Absolutely. Did you see Demetrius Harper that day? Yes, I did. Special Agent, do you see Demetrius Harper in the
courtroom today, as well? A. Yes, I do.

1032
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Q.
Could you please identify him by where he is sitting
and an article of clothing, if necessary? A. Yes. At this table in front of me, left-hand side,
in the middle, with the yellowish color sports jacket. MS. HAZRA: May the record reflect the witness has
identified Mr. Harper. THE COURT: Q. (BY MS. HAZRA) It will so reflect. On the day you went to search the
offices that day, did you see Mr. Ken Barnes? A. Q. A. Q. Yes, I did. Do you see Mr. Barnes in the courtroom today? Yes, I do. Would you please identify him from where he is
sitting. A. He is on right side of this table, the gentleman
closest to me. MS. HAZRA: Your Honor, could the record reflect
the witness identified Mr. Barnes? THE COURT: Q. (BY MS. HAZRA) It will so reflect. On date of the search, did you also
see Mr. David Banks? A. Q. A. Q. Yes, I did. Do you see Mr. Banks in the courtroom today? Yes. Could you please identify him by where he is sitting
1033
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and an article of clothing, if necessary. A. Mr. Banks is sitting at the head of that table,
closest to you, in the dark-colored suit, with a light shirt. MS. HAZRA: Your Honor, could the record reflect
the witness has identified Mr. David Banks. THE COURT: Q. (BY MS. HAZRA) It will so reflect. On the day of the search, did you
also see Mr. Gary Walker? A. Q. A. Q. A. Yes, I did. Do you see Mr. Walker in the courtroom today? Yes. Would you please identify him by where he is sitting. Yes, on the left side of this table, on the end
closest to Mr. Banks. MS. HAZRA: Your Honor, could the record reflect
the witness identified Mr. Walker? THE COURT: Q. (BY MS. HAZRA) Is will so reflect. In the course of your investigation,
or during the day of the search, did you also see Mr. David Zirpolo? A. Q. A. Q. I did not see him that day. Do you believe he was there on the day of the search? Yes, I believe he was there. And in the course of the investigation, you have seen
1034
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photographs of Mr. Zirpolo and Mr. Stewart? A. Q. Yes, I have. Do you recognize Mr. David Zirpolo in the courtroom
today? A. Q. A. Yes, I do. Would you please identify him by where he is sitting? Sitting on the right side of the table, closest to So the furthest individual away from me. Could the record reflect the witness
Mr. Banks.
MS. HAZRA:
has identified Mr. David Zirpolo? THE COURT: Q. (BY MS. HAZRA) It will so reflect. Do you see Clinton Stewart in the
courtroom today? A. Q. A. Yes, I do. Could you identify him, please? Yes. Mr. Clinton Stewart is on the left side of the
table, gentleman closest to me, in the dark suit. MS. HAZRA: Your Honor, could the record reflect
the witness has identified Mr. Clinton Stewart? THE COURT: Q. (BY MS. HAZRA) It will so reflect. I would like to go back to the In the
search.
You were describing the office space.
course of the search, did you see offices belonging to any of the defendants in this case? A. Yes, I did.
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Q. A.
And whose offices did you -- were you able to locate? I was able to locate Clinton Stewart's, David --
David Banks' office, Gary Walker's office, and the offices of Demetrius Harper and David Zirpolo. Q. On the day of the search, did the FBI make some
attempts to memorialize the location of these offices? A. Q. A. Yes, we did. And how did you do that? Well, we had a sketch from the county assessor's And we assigned --
office of the layout of the building.
so when we went in to search, we assigned each room or area of that office space a letter designation. Q. And in the course of searching and seizing items or
computers from those offices, did you make any notations to record where you recovered those items? A. Q. A. Oh, yes, absolutely. How did do you that? Well, when -- there was a letter beside each office.
So also there was indications of whose office that was based on name plates and other things in the office. So
when you search an office and you seize something, it was documented in our evidence logs from that office. Q. You referenced name plates. So did some of these
offices bear identifying name plates? A. Yes, they did.

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Q.
On the day -- as part of your search of the offices
that day, did you discover evidence relating to 42 staffing companies named in the Indictment? A. Q. Oh, yes, we did. Have you done additional investigation into those 42
staffing companies? A. Q. Yes. What was the time frame of the involvement of DKH,
IRP and Leading Team with those 42 companies? A. Q. The time frame is from late 2002 to February of 2005. In the course of -MS. HAZRA: Q. (BY MS. HAZRA) Your Honor, if I could withdraw that. Special Agent, at this time, if you
could please look at what has been marked for identification purposes as Government's Exhibit 42. MS. HAZRA: It might be easier -- Ms. Barnes, we
are going to go through a lot of exhibits, so I don't know if it is easier for the Special Agent to get them. THE COURT: No, Ms. Barnes needs to get them. Are
they consecutively numbered? MS. HAZRA: They are not, Your Honor. 102 and 103. So it is 42,
then 71, 72, 73 and 73.01. THE COURT: MS. HAZRA: Q. (BY MS. HAZRA)
181 and 182.
Let's stop there for now. Certainly. I was hoping we would.
In the course of your work on this

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case, are you aware of certifications that were received from the various staffing companies involved? A. Q. Yes. And all these certifications are also marked as an
exhibit? A. Q. Yes, they are marked. If you could please look at Government's Exhibit 42.
Do you recognize that document? A. Q. A. Yes, I do. What is it? These are invoices from a company called Ajilon
Consulting to DKH Enterprises. Q. And is the time frame of those invoices consistent
with the time frame of your investigation? A. Yes, they are. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 42 be deemed admissible. THE COURT: MR. BANKS: THE COURT: Q. (BY MS. HAZRA) Any objection? No objection. Exhibit 42 is deemed admissible. Special Agent, if you could please
turn to Government's Exhibit 71. A. Q. A. Okay. What is Government's Exhibit 71? Government's Exhibit 71 are time cards from a company
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called Aquent, for their employees that they had that filled out these time cards. Q. And are the employees for whose those time cards are
for, are they associated in any way in your investigation? Sorry, let me ask you that again. Do those employees listed there have any connection with your investigation into DKH, IRP and Leading Team? A. Yes. Here it says the client was DKH. Your Honor, I would ask Government's
MS. HAZRA:
Exhibit 71 be admitted. THE COURT: MR. BANKS: THE COURT: Any objection? No objection, Your Honor. Exhibit 71 is admitted.
(Exhibit No. 71.00 is admitted.) Q. (BY MS. HAZRA) If you can please look at What is Government's Exhibit 72?
Government's Exhibit 72. A.
Government's Exhibit 72.00 are invoices from a
company called Aquent, same one we just discussed, that were sent to Clint Stewart at DKH Enterprises. Q. And, again, do they concern the time period that
corresponds to the time cards and to your investigation into Aquent and DKH and IRP and Leading Team? A. Yes, they do. MS. HAZRA: Your Honor, I ask that Government's
Exhibit 72 be deemed admissible?

1039
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
THE COURT: MR. WALKER: THE COURT:
Any objection? No objection, Your Honor. Exhibit 72 is deemed admissible.
(Exhibit No. 72.00 is found admissible.) (BY MS. HAZRA) If you could look at Government's Do you recognize those
Exhibits 73.00 and 73.01. documents? A. Q. Yes, I do.
Start with Government's Exhibit 73.00.
What are
those? A. Exhibit 73.00 are copies or photocopies of paychecks
made payable to various people from the company we have been discussing, Aquent. Q. A. And what is 73.01? 73.01 is a summary of the checks in 73.00 that were
made payable by Aquent. Q. Just to clarify, these are checks from Aquent to the
employees? A. Correct. The checks are from Aquent to the
employees. MS. HAZRA: Your Honor, I would ask that
Government's Exhibits 73.00 and 73.01 be deemed admissible. THE COURT: MR. BANKS: Any objection? No objection, Your Honor.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
THE COURT:
73.00 and 73.01 are deemed admissible.
(Exhibit Nos. 73.00, 73.01 are found admissible.) (BY MS. HAZRA) I'll next have you look at what is
marked for identification purposes as Government's Exhibit 102.00. A. Q. A. Okay. What is 102.00? They are invoices from a company called Ciber that The first one here is for work done by
were sent to DKH.
Kendrick Barnes and Darrell Brantley. Q. Do these invoices correspond in time frame with the
time period of your investigation into DKH Enterprises? A. Yes, they do. MS. HAZRA: Your Honor, I ask that Government's
Exhibit 102.00 be made admissible. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. 102.00 is deemed admissible.
(Exhibit No. 102.00 is found admissible.) (BY MS. HAZRA) Next, Special Agent, if you could What is 103.00?
look at Government's Exhibit 103.00. A. 103.00 is paycheck data.
So a summary from the The first The second
company Ciber of what was paid to consultants. one here is what was paid to Kendrick Barnes. one is Kendrick Barnes also.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
MS. HAZRA:
Your Honor, I ask that Government's
Exhibit 103.00 be deemed admissible. THE COURT: MR. WALKER: THE COURT: Any objection? No objection. 103.00 is deemed admissible.
(Exhibit No. 103.00 is found admissible.) (BY MS. HAZRA) Next if you could turn to
Government's Exhibit 181. A. Q. A. Okay. What is Government's Exhibit 181.00? 181.00 are time cards from a company called
Interactive Business Systems for -- the employees on here are Sharon Ruff, Michele Harris, and handwritten "DKH" at the bottom. Q. Thank you. MS. HAZRA: 181.00 be admitted. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. Exhibit 181.00 is admitted. I would ask that Government's Exhibit
(Exhibit No. 181.00 is admitted.) (BY MS. HAZRA) Special Agent, If you could turn to
Government's Exhibit 182.00. A. Q. Okay. What is 182.00?

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A.
182.00 are invoices from the company we just
discussed, Interactive Business Systems, that were sent to DKH Enterprises for the work done by Sharon Ruff and Michele Harris. Q. And what is the time period? Are those invoices from
July 31, 2003 to October 15, 2003? A. Yes, they are. MS. HAZRA: Your Honor, I ask that Government's
Exhibit 182.00 be deemed admissible. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. Exhibit 182.00 is deemed admissible.
(Exhibit No. 182.00 is found admissible.) MS. HAZRA: THE COURT: those away? MS. HAZRA: THE COURT: Ms. Barnes. MS. HAZRA: Ms. Barnes, if he could have And then 221, 222, Yes, Your Honor. They can be put away. Are you out of exhibits, Special Agent? All right. Next round? Can they put
You can put them to the side now,
Government's Exhibits 212 and 213. 223, 223.01 and 226.02. Q. (BY MS. HAZRA)
If you could please look at What is Government's Exhibit
Government's Exhibit 212.00. 212.00?
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A.
212.00 are invoices from a company called Kforce
Professional Staffing, to the attention of David Banks, Leading Team, Inc. for work done by Bailey, Esther; Amos Clark; Shaun Haughton and others. Q. And is the time period of those invoices from
December 2002 to March 2003? A. Yes. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 212.00 be made admissible. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. Exhibit 212.00 is deemed admissible.
(Exhibit No. 212.00 is found admissible.) Q. (BY MS. HAZRA) Then if you could please turn, What is
Special Agent, to Government's Exhibit 213. Government's Exhibit 213? A. Q. A. Q. A. Start with page 1? Sure. Okay. Just generally, what is the document?
This Exhibit 213.00 is copies of checks from the
Leading Team, Inc. bank account. Q. A. Are they both dated in February of 2003? Yes, they are. MS. HAZRA: Your Honor, I would ask that
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Government's Exhibit 213.00 be deemed admissible. THE COURT: MR. WALKER: THE COURT: Any objection? No objection, Your Honor. Exhibit 213.00 is deemed admissible.
(Exhibit No. 213.00 is found admissible.) Q. (BY MS. HAZRA) Special Agent, if you could please What is Government's
look at Government's Exhibit 221.00. Exhibit 221.00? A.
221.00 are -- it says on here "Work Ticket."
called them time cards from a company called Labor Ready for the customer of DKH Enterprises, and the employees are Amos Clark and Judith Gordon. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 221.00 be admitted into evidence. THE COURT: MR. BANKS: THE COURT: MR. BANKS: THE COURT: Any objection? May with have one moment, Your Honor? You may. No objection. Exhibit 221.00 is admitted.
(Exhibit No. 221.00 is admitted.) Q. (BY MS. HAZRA) Special Agent, if you could turn to
Government's Exhibit 222.00. A. Q. A. Okay. What is that exhibit? These are invoices from the company that is talked
1045
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about, Labor Ready, to DKH Enterprises. sheet is a summary of the attachments. MS. HAZRA:
And the cover
Government's Exhibit 222.00 be deemed admissible. THE COURT: MR. WALKER: THE COURT: Any objection? No objection, Your Honor. 222.00 is deemed admissible.
(Exhibit No. 222.00 is found admissible.) Q. (BY MS. HAZRA) Special Agent, if you could please Are
look at Government's Exhibits 223.00 and 223.01.
those both the same type of documents in both of those exhibits? A. Q. A. Yes, they are the same type of documents. What type of documents are they? They are copies of the paychecks from the company
Labor Ready to various people who -- various people. Q. A. Among those are Amos Clark and Judith Gordon? Judith Gordon and Amos Clark. MS. HAZRA: Your Honor, I ask that Government's
Exhibits 223.00 and 223.01 be found admissible. THE COURT: MS. HAZRA: Honor. THE COURT: MR. BANKS: Any objection? One moment, Your Honor.
Be admitted or deemed admissible? Sorry, admissible. Thank you, Your
1046
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
THE COURT: MR. BANKS: THE COURT: admissible.
You may. No objection. Exhibits 223.00 and 223.01 are deemed
(Exhibit Nos. 223.00, 223.01 are found admissible.) (BY MS. HAZRA) Next, Special Agent, could you please What is that
look at Government's Exhibit 226.02. document? A.
226.02 is a letter from DKH Enterprises to -- it is a
letter to a lady named Laurie, at a company called Labor Finders, talking about a payment schedule based on -- for many payments based on schedule. It is outlined in this
schedule, signed by Demetrius Harper, president of DKH Enterprises. MS. HAZRA: one moment? THE COURT: MS. HAZRA: You may. Thank you. Your Honor, I ask that Your Honor, I apologize, could I have
Government's Exhibit 226.02 be admitted. THE COURT: MR. BANKS: THE COURT: Any objection? No objection, Your Honor. Exhibit 226.02 is admitted.
(Exhibit No. 226.02 is admitted.) MS. HAZRA: THE COURT: May it be published, Your Honor? It may.
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Q.
(BY MS. HAZRA)
Special Agent, is this the letter you
were just referring to? A. Q. That's it. And it talks about outstanding invoices to Labor
Finders; is that right, in that typed paragraph? A. Q. Yes. Then it lists outstanding invoices with a payment
schedule, I guess; is that correct? A. Yes. MS. HAZRA: line. Q. (BY MS. HAZRA) Does the fax -- you can see part of Maybe you can better see on a paper Could you then scroll down to the fax
that, Special Agent. copy.
Does the fax header indicate where this document came from? A. Q. A. Q. Yes, it does. What company is that? Labor Ready. Is Labor Ready the same company we were just
reviewing outstanding invoices and payroll records in connection with? A. Q. Yes, it is. Thank you. If you could please look -- I don't know Do you
if you have more exhibits in front of you or not.

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have 1J? A. No. MS. HAZRA: 1J, 231, 232, 233.00, 233.01 and
233.02, 272, 301, 302, 304.00 and 304.01. THE COURT: Q. (BY MS. HAZRA) Let's take it a step at a time. Special Agent, if you could please What is Government's
look at Government's Exhibit 1J. Exhibit 1J? A.
1J is a group time sheet from a company called Lloyd
Staffing for a company name of DKH Enterprises. MS. HAZRA: 1J be admitted? THE COURT: MR. WALKER: Any objection? No objection. I would ask that Government's Exhibit
MS. HAZRA: And may it be published, Your Honor? THE COURT: published. (Exhibit No. 1J is admitted.) Q. (BY MS. HAZRA) Special Agent, is this -- you said it Exhibit 1J is admitted, and it may be
is a time card.
Do you see the individuals to whom this
time card concerns? A. Q. A. Yes, I do. Who are those individuals? The individuals are David A. Zirpolo, in top left. And below that is Barbara
Below that is Gary Walker.
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McKenzie. Q. And can you identify the signatures on the bottom of
Government's Exhibit 1J? A. Q. A. Q. Yes. Whose signatures are those? On the bottom right it is Demetrius Harper. Thank you. If you could please look, Special Agent, What is Government's Exhibit
at Government's Exhibit 231. 231? A.
They are time cards related to the same company we
just discussed, Lloyd Staffing for DKH Enterprises. Q. A. Is the time period all in the beginning of 2004? Yes. The first one is week ending -Objection, Your Honor, that exhibit --
MR. WALKER: can you verify? THE COURT: MR. WALKER: THE COURT: that of Mr. Harper. Q. (BY MS. HAZRA)
Which are we talking about? Mr. Harper. Well, the signature purported to be All right. Special Agent, is the time period in
the beginning part of 2004 for Government's Exhibit 231.00? A. Yes, it is. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 231.00 be admitted?

1050
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
THE COURT: MR. BANKS: THE COURT:
Any objection? No objection. Exhibit 231.00 is admitted.
(Exhibit No. 231.00 is admitted.) (BY MS. HAZRA) Special Agent, if you could please What is that
look at Government's Exhibit 232.00. exhibit? A.
232.00 are invoices from the company Lloyd Staffing
to the attention of Demetrius Harper, DKH Enterprises, for work done by Barbara McKenzie, Gary Walker and David Zirpolo. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 232.00 be deemed admissible. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. 232.00 is deemed admissible.
(Exhibit No. 232.00 is found admissible.) (BY MS. HAZRA) Next, Special Agent, if you could
please look at Government's Exhibit 233.00, 233.01 and 233.02. A. Q. A. Are they all the same type of document?
Yes, they are. What type of document are they? They are copies of payroll checks from Lloyd Staffing
to the people whose time cards we just looked at. Q. That would be Barbara McKenzie, Gary Walker and David
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Zirpolo? A. Barbara McKenzie, Gary Walker and David Zirpolo,
correct. MS. HAZRA: Your Honor, I ask that Government's
Exhibits 233.00, be deemed admissible. THE COURT: MR. BANKS: MS. HAZRA: THE COURT: deemed admissible. (Exhibit Nos. 233.00, 233.01, 233.02 are found admissible.) MS. HAZRA: Q. (BY MS. HAZRA) Thank you, Your Honor. Next, Special Agent, if you could Any objection? No objection. And I would ask -Exhibits 233.00, 233.01 and 233.02 are
please look at Government's Exhibit 272. A. Q. A. Okay. What is Government's Exhibit 272? 272.00 are multiple copies of invoices from a company
called Mentor 4, Incorporated to DKH Enterprises, to the attention of Demetrius Harper, for work done by Sylvia McGhee, Craig Simmons and Charlisa Stewart. Q. And is the time frame of these from July 2003 to
October 2003? A. Yes. MS. HAZRA: Your Honor, I ask that Government's
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Exhibit 272.00 be found admissible. THE COURT: MR. WALKER: THE COURT: Any objection? No objection, Your Honor. 272.00 is deemed admissible.
(Exhibit No. 272.00 is found admissible.) Q. (BY MS. HAZRA) Next, Special Agent, if you can What is
please look at Government's Exhibit 301.00. Government's Exhibit 301.00? A.
301.00 are copies of time sheets from a company
called AdvectA related to the client DKH Enterprises, and the employees on these cards are Shaun Haughton, Enrico Howard -- and that is all I see. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 301.00 be admitted. THE COURT: MR. WALKER: THE COURT: Any objection? No objection, Your Honor. Exhibit 301.00 is admitted.
(Exhibit No. 301.00 is admitted.) Q. (BY MS. HAZRA) Next, Special Agent, if you can What is that?
please look at Government's Exhibit 302.00. A.
302.00 are copies of invoices sent from the company
we just discussed AdvectA, to DKH Enterprises, attention Demetrius Harper. Q. Is there any indication on those invoices that Let me ask you a different
AdvectA had any other name?
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question, Special Agent.
In the course of your
investigation, did you learn AdvectA also went by the name of Pro Staff. A. Yes. MS. HAZRA: Your Honor, I ask that Government's
Exhibit 302.00 be found admissible. THE COURT: MR. BANKS: THE COURT: Q. (BY MS. HAZRA) Any objection? No objection, Your Honor. 302.00 is deemed admissible. Next, Special Agent if you can please What is Government's
look at Government's Exhibit 304.00. Exhibit 304.00? A. 304.00 are copies of invoices.
The invoices were
sent from Leading Team to representatives of the company AdvectA. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 304.00 be found admissible. THE COURT: MR. BANKS: THE COURT: Any objection? No objection, Your Honor. 304.00 is deemed admissible.
(Exhibit No. 304.00 is found admissible.) Q. (BY MS. HAZRA) Special Agent, if you could turn to What is Government's Exhibit
Government's Exhibit 304.01. 304.01? A.
304.01 are copies of checks that were sent from Pro

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Staff, also the name AdvectA, to Leading Team, Inc. Q. A. So checks from Pro Staff to Leading Team? Yes. Checks from Pro Staff, paid to the order of
Leading Team. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 304.01 be deemed admissible. MR. WALKER: THE COURT: MR. BANKS: THE COURT: admissible. (Exhibit No. 304.01 is found admissible.) Q. (BY MS. HAZRA) Special Agent, if you can please turn Are you out of exhibits? May we have a moment, Your Honor? You may. No objection, Your Honor. Exhibit 304.01 will be deemed
to Government's Exhibit 311. A. 311. Q. A. Q. A. Q. A.
I have two we have not discussed, but I do not have
What are the two exhibits you have? 300.01 and 212.01? First one was 300, you say? 300.01. What is Government's Exhibit 300.01? 300.01 is a copy -- looks like of a credit
application that was completed for the business DKH Enterprises, and this was completed for the company we just discussed AdvectA/Pro Staff.
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MS. HAZRA:
Government's Exhibit 300.01 be admitted. THE COURT: MR. BANKS: THE COURT: Any objection? No objection, Your Honor. Exhibit 300.01 will be admitted.
(Exhibit No. 300.01 is admitted.) THE COURT: MS. HAZRA: THE WITNESS: (BY MS. HAZRA) The other one was? 212.01; is that correct? Yes. What is Government's Exhibit 212.01? It's an invoice from the
212.01 is the cover sheet.
company Kforce Professional Staffing that was sent to David Banks, of Leading Team, Inc., for work done by Esther Bailey, Michael Benjamin, Norman Bowden, Amos Clark, Damon Curnell, Shaun Haughton, Diane Lithwick, Willie Pee and Lisa Stewart. time sheet for Kforce. Q. A. For the same individuals, I take it? Yes. MS. HAZRA: Your Honor, I would ask that Then attached to that is a
(Exhibit No. 212.01 is admitted.)

1056
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. batch.
MS. HAZRA:
Now we are ready to move to the next
THE COURT: MS. HAZRA: and 313. Q.
Ms. Barnes. Ms. Barnes, if he could have 311, 312 351 and 353. 381, 382 and 383.
331 and 332.
(BY MS. HAZRA)
Special Agent, start with What is that?
Government's Exhibit 311.00. A.
311.00 are time cards from a company called PDS, and
there are numerous time cards. Q. Is the client identified on those time cards, or are
the individuals listed on those time cards associated with your investigation? A. Q. A. Yes, they are. Who are those individuals? The first time card appears to be signed by David
Zirpolo. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 311.00 be admitted. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. Exhibit 311.00 is admitted.
(Exhibit No. 311.00 is admitted.) (BY MS. HAZRA) Special Agent, if you could please And what is that?
look at Government's Exhibit 312.00. A.
312.00 are invoices from Productive Data Commercial

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Solutions, PDCS, to IRP Solutions. Q. And are the invoices connected to the time cards that
you have just been looking at? A. Yes, they are. MS. HAZRA: Your Honor, I ask that Government's
Exhibit 312.00 be found admissible? THE COURT: MR. WALKER: THE COURT: Any objection? No objection, Your Honor. Exhibit 312.00 is deemed admissible.
(Exhibit No. 312.00 is found admissible.) Q. (BY MS. HAZRA) Special Agent, do you have
Government's Exhibit 312.01 in front of you? A. Q. A. Yes, I do. What is that exhibit? Okay. These are invoices from Productive Data
Commercial Solutions related to a consultant William H. Williams, Jr. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 312.01 be made admissible. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. Exhibit 312.01 is deemed admissible.
(Exhibit No. 312.01 is found admissible.) Q. (BY MS. HAZRA) Next, Special Agent, if you can look
at Government's Exhibit 313.

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A. Q. A.
Okay. What is Government's Exhibit 313.00? 313.00 is a copy of a paycheck that was made --
written by Productive Data Commercial Solutions to William Williams. MS. HAZRA: Your Honor, I would ask that
(Exhibit No. 313.00 is found admissible.) Q. (BY MS. HAZRA) Next, Special Agent, if you could What is
331.00 are time cards from a company called Robert And the client is Leading Team. Report
Hall Technology. to Gary Walker. Q.
Are the time cards associated with any specific
employees? A. Q. A. Q. Yes, they are. And who are those? The first one is Mikel Nelson. Jimmy West. In what way
Sorry to interrupt you, Special Agent.
was Gary Walker's name on these time cards? A. I am sorry, he was the client approver of the first
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two time cards. MS. HAZRA: Your Honor. I would ask that
(Exhibit No. 331.00 is admitted.) Q. (BY MS. HAZRA) Next, if you could please turn to What is that exhibit,
Government's Exhibit 332.00. Special Agent? A.
332.00 are copies of invoices from Robert Half
Technology to Gary Walker of Leading Team. Q. And do they correspond in time roughly with the time
cards that were just approved by Gary Walker? A. Yes, they do. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 332.00 be deemed admissible. THE COURT: MR. BANKS: THE COURT: Any objection? No objection. 332.00 is deemed admissible.
(Exhibit No. 332.00 is found admissible.) Q. (BY MS. HAZRA) Next, Special Agent if you could I am sorry,
please look at Government's Exhibit 351.00. first should be 350.01. A. 350.01? Do you have that?
I do not have that one?

1060
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
MS. HAZRA:
I apologize, Ms. Barnes, I might have 350.01. Thank you.
neglected to say that. Q. A. (BY MS. HAZRA)
What is 350.01?
Exhibit 350.01 is a credit application that was
completed by IRP Solutions Corporation for the staffing company SOS Staffing, and it was signed by David A. Banks. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 350.01 be admitted. THE COURT: MR. WALKER: THE COURT: Any objection? No objection. Exhibit 350.01 is admitted.
(Exhibit No. 350.01 is admitted.) (BY MS. HAZRA) Next, look at Government's Exhibit
351.00. A. Q. A.
Do you recognize that exhibit?
Yes, I do. What is that exhibit? 351.00 are invoices from the staffing company we just And at
talked about, SOS Staffing, sent to IRP Solutions.
the bottom of each of these is a copy of the time card associated with that invoice. Q. So it is both the time card and an invoice; is that
right? A. That's correct. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 351.00 be admitted.

1061
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
THE COURT: MR. BANKS: THE COURT:
Any objection? No, no objection, Your Honor. Exhibit 351.00 is admitted.
(Exhibit No. 351.00 is admitted.) (BY MS. HAZRA) Next, if you could look at
Government's Exhibit 353.00. A. Q. A. Okay. What is Government's Exhibit 353.00? 353.00 is a check that was made payable by IRP
Solutions to SOS Staffing. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 353.00 be deemed admissible. THE COURT: MR. BANKS: THE COURT: admissible. (Exhibit No. 353.00 is found admissible.) (BY MS. HAZRA) Next, Special Agent, if you could What is Any objection? No objection. Exhibit 353.00 will be deemed
please look at Government's Exhibit 381.00. Government's Exhibit 381.00? A. 381.00 are copies of time cards.
The company they
relate to is Sunny Side Temp Side. staffing company. Enterprises.
And that is the
And the client company is DKH
And the employees are Narasimha -- I can't
read the last name, and Gary Walker.

1062
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
MS. HAZRA:
Government's Exhibit 381.00 be admitted? THE COURT: MR. BANKS: THE COURT: Any objection? No objection. 381.00 is admitted.
(Exhibit No. 381.00 is admitted.) (BY MS. HAZRA) Next, Special Agent, if you could What is
382.00 are invoices from the company we just
discussed, Sunny Side Temp Side, to the attention of Demetrius Harper at DKH Enterprises. Q. And is this in September and October of 2003? Are
those the dates? A. Yes. MS. HAZRA: Your Honor, I would ask that
Government's Exhibit 382.00 be deemed admissible. THE COURT: MR. BANKS: THE COURT: Any objection? No objection, Your Honor. Exhibit 382.00 is deemed admissible.
(Exhibit No. 382.00 is found admissible.) (BY MS. HAZRA) Next, Special Agent, if you could
please turn to Government's Exhibit 383.00. A. Q. Okay. What is Government's Exhibit 383.00?
1063
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A.
383.00 are copies of checks that were paid out of the
account of Temp Side Sunny Side to Mr. Gary L. Walker. MS. HAZRA: Your Honor, I would ask that
(Exhibit No. 383.00 is found admissible.) Q. A. Q. A. Q. A. (BY MS. HAZRA) Are you out of those, Special Agent?
I have one exhibit left. What is that exhibit you have left? 316.01. 316 --- .01. MS. HAZRA: If I could have one moment, Your Honor. I think you can disregard that Thank you, though.
Q.
(BY MS. HAZRA)
exhibit, Special Agent. MS. HAZRA: THE COURT: please. MS. HAZRA:
If we can please get -Can I have the parties approach,
Certainly.
(A bench conference is had, and the following is had outside the hearing of the jury.) THE COURT: Okay. We just wasted 25 minutes on Do they have
exhibits that were not objected to, at all.

1064
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to go through this, because you all are going to stipulate. If you really have an objection, no problem.
If you stipulate and are not going to object, I would like to move this forward. MR. BANKS: Your Honor, our line of questioning
would be to conduct -THE COURT: MR. BANKS: Take your hand off of the microphone. -- to obtain all of the documents,
particularly the banking records. THE COURT: to their admission. But the issue is, you are not objecting That is all we are doing is going The jury is sitting over there I
through this exercise.
bored to death wondering why we are wasting their time.
don't know why we can't just stipulate to those -- let the jury go, you can sit down and decide which you don't have a problem with, and we can come in tomorrow morning and have all of this done. MR. BANKS: MS. HAZRA: MR. KIRSCH: How many are left? There are still several more. Your Honor, I think there are
somewhere -- approximately four more companies that we would need to go through. THE COURT: time. MR. BANKS: We don't want to waste our time.
I would rather not waste the jury's
1065
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THE COURT:
Can we go ahead and let the jury go,
and you all come in and resolve this? MR. BANKS: THE COURT: Yes. We will go over this stuff.
Look it over, then you and the You can
Government start tomorrow with the stipulateds.
tell me you will not object to just admit them, then move on with the testimony. MR. BANKS: I agree.
(The following is had in the hearing of the jury.) THE COURT: Ladies and gentlemen, you will be happy I believe we are
to hear we are going to let you go home.
going to have some agreement with respect to the rest of these exhibits as to whether they will be admitted or not, and we won't have to sit here and go through exhibit by exhibit. The parties have agreed to get together on that. Please leave your
You all are free to go home. notes here.
Don't speak to anyone about this, don't do Go home,
any research on it; my usual warning to you.
enjoy, kick back, and we will see you back here at -- I don't think I have anything tomorrow morning -- 9:00 a.m.. so see you back here promptly to start at 9:00 a.m. All right. The jury is excused, and we are in
recess until tomorrow. (Court is in recess at 4:49 p.m.)
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R E P O R T E R ' S
C E R T I F I C A T E
I, Darlene M. Martinez, Official Certified shorthand Reporter for the United States District Court, District of Colorado, do hereby certify that the foregoing is a true and accurate transcript of the proceedings had as taken stenographically by me at the time and place aforementioned.
Dated this 5th day of December, 2011.
_____________________________ s/Darlene M. Martinez RMR, CRR

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816

Government calls Louis Quijas. COURTROOM DEPUTY: Remain standing, please.

Louis Quijas, Q-U-I-J-A-S. DIRECT EXAMINATION

period? A. I was appointed by Director Mueller as the assistant

responsibilities? A. The director wanted to create an office within the

What is that conference? Well, it is actually an organization; International It is an international

Association of Chiefs of Police.

And when you say "the director," is that Director

No, ma'am. Why not? That wasn't my area of responsibility. Again, I

They will talk to you.

My standard routine is, thank you

is, thank you very much. Here is my business card.

Give me your business card. Send me any information, and if

a particular unit within the FBI -- I mean, I always ask

No objection. All right. Exhibit 500.01 is admitted,

Is that the Theresa Campos sending that second

reference is, "Hello, Terry." with you.

If you could look at that first paragraph, is

is -- she is a very seasoned executive assistant.

because it was follow-up and, again, not something I would

primary point of contact for state and local law

Do they have the

Yes, I am, it has been awhile, so I would have to go

and all of the major executives were there.

Now, you mentioned that there -- that you

I know you are no longer in that role.

It appears to be recapping a meeting.

what it says is "Your meeting with me went well."

Has it been marked?

Not as of yet, Your Honor.

COURTROOM DEPUTY: MR. BANKS: Okay.

COURTROOM DEPUTY: (BY MR. BANKS) Okay.

through the hall.

And on 750.01, I think the There was

If we did meet, it's what you It is a very

I meet thousands of people at IACP.

People think, we'll

Because, again, if I had the time to sit down

things didn't fall through the cracks.

drive-by, I would have pieces of paper everywhere. doubt if that occurred.

currently employed? A. By Webroot Software.

Prior to working for Webroot, did you previously work

In 2004, did you have contact with a company known as

Solutions? A. I don't know that I got a title from him

firm from scratch and start a relationship and sign a

doing? A. He had mentioned something, again, at high level

little bit so we can catch everything you are saying.

So David had provided my contact

lumping this together. David Banks; right? A. Q. A. Q. Yes.

concerning the candidates? A. Correct. There were several telephone conversations

I communicated with him directly a day or two

wanted to get to work.

We did have a discussion about

number that was roughly around $70 an hour.

And I think there -- I don't want to get into

Make sure the consultant is happy,

And also just collect -- try to

And so I don't believe I was aware of it as an

me ask you this first.

about the staffing industry.

So you would say that in the staffing industry, these

Mr. Banks' response to that?

Now, did -- at any time, did Mr. Banks

defer to my boss in that scenario.