Us VS Head1

Case 2:08-cr-00093-KJM Document 472 Filed 08/02/11 Page 1 of 5
1 UNITED STATES DISTRICT COURT
2 EASTERN DISTRICT OF CALIFORNIA
3 --o0o--
4 UNITED STATES OF AMERICA, ) Case No. 2:08-cr-00093-KJM

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
) Sacramento, California
6 vs. ) Wednesday, April 2, 2008
) 3:19 P.M.
7 CHARLES HEAD, et al., )
) Hearing re: arraignment
8 Defendants. ) (Initial Appearance)
)
9
TRANSCRIPT OF PROCEEDINGS
10 BEFORE THE HONORABLE DALE A. DROZD
UNITED STATES MAGISTRATE JUDGE
11
APPEARANCES:
12
For Plaintiff: ELLEN V. ENDRIZZI
13 U.S. Attorney's Office
501 I Street, Suite 10-100
14 Sacramento, CA 95814
(916) 554-2700
15
For Defendant: LEXI NEGIN
16 Federal Defender's Office
801 I Street, 3rd Floor
(916) 498-5700
18
Court Recorder: JONATHAN ANDERSON
19 U.S. District Court
(916) 930-4193
21
Transcription Service: Petrilla Reporting &
22 Transcription
5002 - 61st Street
(916) 455-3887
24
Proceedings recorded by electronic sound recording;
25 transcript produced by transcription service.
1 SACRAMENTO, CALIFORNIA, WEDNESDAY, APRIL 2, 2008, 3:19 P.M.
2
3 THE CLERK: Calling Criminal Case 08-0093-FCD and
4 Criminal Case 08-116-LKK, United States v. Charles Christopher
5 Head. This is on for arraignment and defendant's initial
6 appearance.
7 (Pause.)
8 MS. ENDRIZZI: Good afternoon, Your Honor. Ellen
9 Endrizzi for the United States.
10 MS. NEGIN: Good afternoon, Your Honor. Lexi Negin
11 from the Federal Defender's Office on behalf of Mr. Head. Mr.
12 Head does qualify for appointed counsel. I understand that Mr.
13 Scott Tedmon is going to be the lawyer that is appointed for
14 him, but I am going to have him sign the financial affidavit,
15 and I think that Mr. Tedmon is going to be here tomorrow asking
16 for appointment, but our office has already made those
17 arrangements.
18 THE COURT: All right. So you're going to be asking
19 that it go over for one day for status of counsel?
20 MS. NEGIN: I can -- yes, I think that's the best way
21 to proceed, if I can just have a moment with Mr. Head?
22 THE COURT: All right.
23 (Pause - counsel conferring with defendant.)
24 MS. NEGIN: Thank you, Your Honor. That is the right
25 way to proceed.
1 THE COURT: And you also wish for it to go over for
2 full arraignment and entry of plea tomorrow?
3 MS. NEGIN: I think that makes the most sense, and
4 it's okay with Mr. Head. I've discussed it with him, and
5 that's the most appropriate way to proceed if that's acceptable
6 to the Court and the government.
7 THE COURT: It's all right with me, although I'd
8 prefer not to do a partial arraignment today given the fact
9 there's two indictments and it's fairly lengthy.
10 MS. NEGIN: I'd prefer everything to go over when Mr.
11 Tedmon can be here.
12 MS. ENDRIZZI: No objection to that, Your Honor.
13 THE COURT: All right. Mr. Head, I will advise you
14 that you have the right to counsel in these proceedings. In
15 this regard, you have the right to retain counsel of your own
16 choosing. If you're unable to afford to retain counsel, the
17 Court will appoint counsel to represent you.
18 Ms. Negin indicates that you qualify for appointment
19 of counsel. I will be appointing counsel to represent you.
20 It's anticipated that that is going to be panel attorney Scott
21 Tedmon who is available tomorrow afternoon at 2:00. Ms. Negin
22 from the Federal Defender's Office has indicated that it's
23 agreeable to you to put the matter over to tomorrow at 2:00 so
24 Mr. Tedmon can be here; is that correct?
25 THE DEFENDANT: Yes, Your Honor.

1 THE COURT: All right. And I'll advise you, you've
2 been charged in two indictments, the first numbered 08-93-FCD,
3 the second 08-116-LKK. Both indictments charge you with
4 conspiracy to commit mail fraud, various counts of mail fraud
5 and conspiracy to commit money laundering. I'll advise you in
6 full regarding the maximum possible penalties tomorrow when we
7 do a complete arraignment as well as entry of plea on both
8 indictments.
9 What is the government's position with respect to Mr.
10 Head's custody status?
11 MS. ENDRIZZI: We move for detention as both a danger
12 and a flight risk.
13 THE COURT: And you wish that matter to be put over
14 till tomorrow as well, Ms. Negin?
15 MS. NEGIN: Yes, Your Honor. Yes, we do, Your Honor.
16 There's a report that Mr. Tedmon can review tomorrow and
17 pretrial will make that available to him, and it makes the most
18 sense to put everything over.
19 THE COURT: At the request of the defense, the issue
20 of detention will also be continued to tomorrow at 2:00. Until
21 that time, Mr. Head will be ordered temporarily detained.
22 MS. NEGIN: Your Honor, there was just one other
23 issue I wanted to mention. Mr. Head was having some very
24 serious problems at the jail, and what -- the procedure that
25 we're supposed to follow is to contact the marshals,

1 specifically. I have not done that yet, but I'm going to as
2 soon as I get back to the office, and then I'll communicate
3 everything to Mr. Tedmon as well. Mr. Head just had a concern
4 about that, and I didn't have time to explain to him the
5 procedure. So I'm going to do that today, and then Mr. Tedmon
6 I'm sure will follow-up with that.
7 THE COURT: All right. Anything else we can do
8 today?
9 MS. ENDRIZZI: No, Your Honor. Thank you.
10 MS. NEGIN: No, Your Honor. Thank you.
11 THE COURT: Thank you.
12 (Whereupon the hearing in the above-entitled matter was
13 adjourned at 3:24 p.m.)
14 --o0o--
15 CERTIFICATE
16 I certify that the foregoing is a correct transcript from
17 the electronic sound recording of the proceedings in the above-
18 entitled matter.
19
20 July 10, 2011
21 Patricia A. Petrilla, Transcriber
22 AAERT CERT*D-113
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3 --o0o--
4 UNITED STATES OF AMERICA, ) Case No. 2:08-cr-00093-FCD

) Case No. 2:08-cr-00116-FCD
5 Plaintiff, )
6 vs. ) Thursday, April 3, 2008
) 2:17 P.M.
7 CHARLES HEAD, )
) Hearing re: status of counsel;
8 Defendant. ) arraignment; detention hearing
)
9
11
APPEARANCES:
12
(916) 554-2700
15
For Defendant: SCOTT L. TEDMON
16 Law Office of Scott L. Tedmon
717 K Street, Suite 227
(916) 441-4540
18
(916) 930-4193
21
22 Transcription
5002 - 61st Street
(916) 455-3887
24
1 SACRAMENTO, CALIFORNIA, THURSDAY, APRIL 3, 2008, 2:17 P.M.
2
3 THE CLERK: Calling Criminal Cases 08-0093-FCD and
4 08-0116-LKK, United States v. Charles Christopher Head. Your
5 Honor, this matter is on calendar for status of counsel,
6 arraignment and detention hearing.
9 MR. TEDMON: Good afternoon, Your Honor. Scott
10 Tedmon seeking appointment to represent Mr. Head who's present
11 in custody.
12 THE COURT: And does Mr. Head qualify for appointment
13 of counsel?
14 MR. TEDMON: Your Honor, the Federal Defender
15 interviewed him yesterday, and he does qualify for appointed
16 counsel.
17 THE COURT: Mr. Tedmon will be appointed.
18 Mr. Head, as I advised you yesterday, you have the
19 right to counsel in these proceedings. In this regard you have
20 the right to retain counsel of your own choosing. If you're
21 unable to afford to retain counsel, the Court appoints counsel
22 to represent you, and I have now appointed Mr. Tedmon to
23 represent you in both matters.
24 And Mr. Tedmon, has Mr. Head received copies of the
25 indictments first in Criminal Case No. 08-0093-FCD, that

1 indictment having been returned February 28th, 2008, and also
2 the indictment then returned March 13th, 2008 in Criminal Case
3 No. 08-0116-LKK? Has he received those indictments, has he
4 reviewed them, and do you waive their full reading on his
5 behalf?
6 MR. TEDMON: Yes, Your Honor.
7 THE COURT: Mr. Head, you have the right to remain
8 silent in these proceedings. You're not required to make any
9 statement here today, and anything you do say may be used
10 against you.
11 You've been charged in Criminal Case 08-0093-FCD as
12 follows: In count 1 you're charged with conspiracy to commit
13 mail fraud in violation of 18 USC Section 371. In counts 2
14 through 12, you're charged with mail fraud in violation of 18
15 USC Section 1341; and in count 13 of that indictment you're
16 charged with conspiracy to commit money laundering in violation
17 of 18 USC Section 1956 --
18 MS. ENDRIZZI: Your Honor --
19 THE COURT: -- (h).
20 MS. ENDRIZZI: Sorry to interrupt you.
21 Your Honor, he's only charged with actual mail fraud
22 counts in counts 2, 3, 5 and 6.
23 THE COURT: I'm sorry.
24 MS. ENDRIZZI: Yeah.
25 THE COURT: If convicted of those offenses, the

1 conspiracy to commit mail fraud charge carries with it a
2 maximum punishment of up to five years imprisonment, a fine of
3 up to $250,000.
4 What's the alternate fine?
5 MS. ENDRIZZI: That's a possibility because of the
6 loss in this fraud case.
7 THE COURT: Right. What is it? How --
8 MS. ENDRIZZI: It's basically --
9 THE COURT: Is it double, triple the loss? What is
10 it?
11 MS. ENDRIZZI: Yeah. It's what -- I think in this
12 one it's just the loss itself.
14 MS. ENDRIZZI: But then in the --
15 THE COURT: Money laundering --
16 MS. ENDRIZZI: -- last one, it's doubled.
17 THE COURT: A fine of up to $250,000 or the amount of
18 gain or loss brought about by the offense, whichever is
19 greater, or both fine and imprisonment, a three-year term of
20 supervised release.
21 The four mail fraud counts against you in that
22 indictment are each punishable by up to 20 years imprisonment,
23 a fine of up to $250,000, or again, the amount of the gain or
24 loss with respect to the offense if it is larger than $250,000,
25 or both fine and imprisonment, and a three-year term of

2 The money laundering conspiracy is punishable by up
3 to 10 year imprisonment, a fine of up to $500,000 or twice the
4 amount of the property involved in the criminal transaction,
5 whichever is greater, or both fine and imprisonment, a three-
6 year term of supervised release.
7 All of the counts in which you're charged in that
8 indictment carry with them a mandatory $100 special assessment.
9 And in addition, you may be ordered to pay restitution to any
10 victim of those offenses if you are convicted of them.
11 In Criminal Case No. 08-0116, you've again been
12 charged in count one of that indictment with conspiracy to
13 commit mail fraud in violation of 18 USC Section 371.
14 MS. ENDRIZZI: All of the counts, Your Honor.
15 THE COURT: All of them, okay.
16 In counts 2, 3, and 4 of that indictment, you've been
17 charged with mail fraud in violation of 18 USC Section 1341,
18 and in count 5 of that indictment you've been charged with
19 conspiracy to commit money laundering in violation of 18 USC
20 Section 1956(h), and 1957(b)(2).
21 The penalties for those offenses in the second
22 indictment, the conspiracy to commit mail fraud, mail fraud,
23 and conspiracy to commit money laundering are the same maximum
24 penalties as I've advised you of with respect to the first
25 indictment.
1 And Mr. Tedmon, does Mr. Head with to enter pleas of
2 not guilty to all the charges in both indictments and demand a
3 jury trial?
4 THE COURT: Those pleas of not guilty and demand for
5 jury trial will be entered on the Court's record.
6 Is there going to be a -- or has there already been a
7 notice of related cases filed?
8 MS. ENDRIZZI: There has. We filed on March 13th, I
9 believe, so we still have not yet heard from Judge Burrell.
10 THE COURT: Well --
11 MS. ENDRIZZI: So we have --
12 THE COURT: -- do you want status conferences set in
13 both cases in front of both judges?
14 MS. ENDRIZZI: I think that's probably advisable,
15 because I don't know if this is going to be a situation here it
16 does go to the first judge because of his caseload.
18 MR. TEDMON: And I would agree with that, Your Honor.
19 We have some proposed dates. For the 08-93-FCD case,
20 we'd be asking for April 28th at 10:00 a.m. for status; and for
21 the 08-116-LKK case, it would be April 29th, 2008 at 9:30 a.m.,
22 an the parties would agree to exclude time with the Court's
23 permission under local code T-2 complexity, and T-4, time to
24 prepare.
25 THE COURT: I take it not all the defendants are here

1 yet either; right?
2 MR. TEDMON: Correct.
3 MS. ENDRIZZI: Correct. The defendants will all have
4 been arraigned by April 22nd, and then in terms of the
5 complexity, we have over 110 boxes of search warrant materials
6 and 45 computers.
7 THE COURT: All right. Are those dates available,
8 Pete?
9 THE CLERK: Yes, Your Honor. April 28th at 10:00
10 a.m. before Judge Damrell and April 29th at 9:30 a.m. before
11 Judge Karlton.
12 THE COURT: Those will be the dates for status
13 conference.
14 And based upon the representation of counsel, I find
15 that the interests of justice compel the exclusion of time from
16 today's date to those status conference dates in both cases,
17 both due to the complexity of the matter in light of the vast
18 amount of discovery, the fact that none of the other co-
19 defendants have yet appeared in the case, and in order to
20 provide defense counsel with reasonable time to prepare,
21 accordingly, I'll exclude that period of time under 18 USC
22 Section 3161(H)(a)(b)(4) and (H)(a)(b)(2) local codes T-4 and
23 T-2.
24 And what is the government's position with respect to
25 Mr. Head's custody status?

1 MS. ENDRIZZI: Your Honor, it's my understanding that
2 the defense would like a custody hearing put over until April
3 17th, and we would ask that the defendant remain in custody
4 until that date.
5 THE COURT: Well, you know my position on that, Mr.
6 Tedmon. That's not what the law provides for. I can continue
7 it five days at your request, or I can issue -- you can submit
8 it, I can enter a detention order on both cases without
9 prejudice to the matter being put on calendar on April 17th for
10 me to reconsider the matter, which I certainly would, based
11 upon any new or additional information.
12 MR. TEDMON: I understand, Your Honor. And the
13 problem is, we were not going to be prepared within five
14 days --
15 THE COURT: Right.
16 MR. TEDMON: -- to have a meaningful hearing, and I
17 don't want to waste the Court's time. So I think the latter is
18 probably the better approach, would be to submit --
19 THE COURT: I assure you that I mean what I say. You
20 haven't told me anything yet, and so whatever you tell me is
21 almost certain to be new or additional information which would
22 justify me reconsidering it on the 17th.
23 MR. TEDMON: And that would be my preference, Your
24 Honor, is to -- for -- you know, for judicial economy as well
25 as just a meaningful hearing.

2 MR. TEDMON: So I would submit the matter for today.
4 MR. TEDMON: And then Ms. Endrizzi is correct, I'm
5 asking for April 17th at 2:00 p.m.
6 THE COURT: We'll put the April 17th at 2:00 p.m.
7 matter on calendar right now in this Court for the defense
8 motion for bail review in both cases.
9 And at this time, based upon the information
10 contained in the Pretrial Services report in both cases, I find
11 based upon the information currently available to me that by a
12 preponderance of the evidence no condition or combination of
13 conditions would reasonably assure the appearance of Mr. Head
14 were he to be released.
15 Accordingly, I'll order that he be detained pending
16 further proceedings and pending the defense motion for bail
17 review.
18 MR. TEDMON: Very good.
19 THE COURT: Anything else?
21 MR. TEDMON: No, Your Honor.
25 --o0o--
1 CERTIFICATE
4 entitled matter.
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6 July 7, 2009
8 AAERT CERT*D-113
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3 --o0o--

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
6 vs. ) Thursday, April 17, 2008
) 2:10 P.M.
8 Defendants. ) (Initial Appearance).
)
9
11
APPEARANCES:
12
For Plaintiff: S. ROBERT TICE-RASKIN
(916) 554-2700
15
For Defendant Lisa Vang: ALESSANDRO G. ASSANTI
16 A.G. Assanti & Associates, A PLC
33 Brookline St.
17 Aliso Viejo, CA 92656
(949) 500-0439
18
(916) 930-4193
21
22 Transcription
5002 - 61st Street
(916) 455-3887
24
1 SACRAMENTO, CALIFORNIA, THURSDAY, APRIL 17, 2008, 2:10 P.M.
2
3 (Call to order of the Court.)
4 THE CLERK: Calling Criminal Case 08-0116-FCD, United
5 States v. Lisa Vang. Your Honor, this matter is on calendar
6 for an arraignment.
7 MR. TICE-RASKIN: Good afternoon, Your Honor. Robert
8 Tice-Raskin on behalf of the United States.
9 MR. ASSANTI: Good afternoon, Your Honor. Alessandro
10 Assanti on behalf of Lisa Vang, who's also present in court.
11 THE COURT: And Mr. Assanti, are you making a general
12 appearance as retained counsel of record in the case?
13 MR. ASSANTI: Yes, sir, Your Honor.
14 THE COURT: And it appears that you are now a member
15 of the Bar of the Court?
16 MR. ASSANTI: Yes, sir.
17 THE COURT: Or have at least filed the necessary
18 paper?
19 MR. ASSANTI: That's correct, Your Honor.
20 THE COURT: All right. Ms. Vang, you have the right
21 to counsel in these proceedings. In this regard, you have the
22 right to retain counsel of your own choosing. If you're unable
23 to afford to retain counsel, the Court would appoint counsel to
24 represent you after considering an application from you. At
25 this time, Mr. Assanti is making a general appearance as your

1 retained counsel of record.
2 And counsel, has Ms. Vang received a copy of the
3 indictment that was returned March 13th, 2008 in criminal case
4 No. 08-0116-FCD, has she reviewed that indictment and do you
5 waive its full reading on her behalf?
6 MR. ASSANTI: Yes, sir, Your Honor. She has received
7 it and we do waive full reading.
8 THE COURT: Ma'am, you have the right to remain
9 silent in these proceedings. You're not required to make any
10 statement here today, and anything you do say may be used
11 against you. You've been charged in that indictment in count
12 one with conspiracy to commit mail fraud in violation of 18 USC
13 Section 371, in counts two through four -- is that correct? Is
14 she charged in all three?
15 MR. ASSANTI: Yes, Your Honor, she is.
16 THE COURT: Okay. In counts two through four with
17 mail fraud in violation of 18 USC Section 1341, and in count
18 five with conspiracy to commit money laundering in violation of
19 18 USC Section 1956.
20 If convicted of these offenses, the conspiracy count
21 carries with it a maximum punishment of up to five years in
22 prison, a fine of up to $250,000, or the amount of the gain or
23 loss associated with the conspiracy, whichever is greater, or
24 both fine and imprisonment, a three-year term of supervised
25 release.
1 The mail fraud counts are each punishable by up to 20
2 years in prison, a fine of up to $250,000, or the amount of
3 gain or loss associated with the fraud, whichever is greater,
4 or both fine and imprisonment, a three-year term of supervised
5 release.
7 to 10 years in prison, a fine of up to $500,000, or twice the
8 amount of the criminally derived property involved in the money
9 laundering transaction, whichever is greater, or both fine and
10 imprisonment, a three-year term of supervised release.
11 All five counts carry with them a mandatory $100
12 special assessment if you are convicted of the charge.
13 And Mr. Assanti, does Ms. Vang wish to enter pleas of
14 not guilty and demand a jury trial?
15 MR. ASSANTI: Yes, sir, Your Honor.
17 jury trial will be entered on the Court's record. The case --
18 let's see -- is it just the related case?
19 MR. TICE-RASKIN: It is, Your Honor.
20 THE COURT: Are we going to set -- but we want to set
21 this one for status on 4-28 as well, don't we?
22 MR. TICE-RASKIN: Yes, Your Honor.
23 THE COURT: The matter will be set for a status
24 conference before Judge Damrell to whom the case has now been
25 related on April 28th at 10:00 a.m.

1 I've received the Pretrial Services report. What's
2 the government's position regarding Ms. Vang's custody status?
3 MR. TICE-RASKIN: Your Honor, I think the parties are
4 in concurrence with the recommendation with one modification
5 and that would be that the appearance bond unsecured would be
6 signed not only by the parents, but by all there sisters and
7 Pretrial Services concurs in that recommendation as well.
8 THE COURT: So three -- all three instead of two?
10 THE COURT: Okay. Any objection, counsel?
11 MR. ASSANTI: No objection, Your Honor.
12 THE COURT: All right. The Court will follow the
13 recommendation of Pretrial Services and order Ms. Vang released
14 on a $150,000 unsecured appearance bond co-signed by herself
15 along with her parents and her three sisters, with Pretrial
16 Services supervision and the following special conditions:
17 That she report to and comply with the rules and
18 regulations of the Pretrial Services agency. That she report
19 in person to the Pretrial Services agency in this building
20 before she leaves the building today. That she reside at a
21 location approved by her pretrial services officer, not move or
22 absent herself from that residence without the prior approval
23 of her pretrial services officer.
24 Her travel is restricted to the Central and Eastern
25 Districts of California without the prior consent of her

1 pretrial services officer. She shall not possess a firearm,
2 destructive device, or other dangerous weapon. Additionally,
3 she shall provide written proof of divestment of any firearms
4 currently under her control. She shall seek and/or maintain
5 employment as approved by her pretrial services officer and
6 provide proof of the same as requested by that officer.
7 She shall report any contact with law enforcement to
8 her pretrial services officer within 24 hours. She shall not
9 apply for any travel document of any kind during the pendency
10 of this case. She shall not have contact with any of her co-
11 defendants in this case except in the presence of her defense
12 counsel.
13 She shall refrain from the excessive use of alcohol,
14 or any use of a narcotic drug or controlled substance without a
15 prescription by a licensed medical practitioner, and she shall
16 notify Pretrial Services immediately of any prescribed
17 medications. Medicinal marijuana, whether prescribed or not,
18 may not be used under any circumstances. She shall also submit
19 to drug or alcohol testing as deemed necessary by her pretrial
20 services officer.
21 Ma'am, do you understand each of the conditions that
22 I've placed on your release, and will you abide by those
23 conditions?
24 THE DEFENDANT: Yes.
25 THE COURT: And who's present today to sign on the

1 unsecured appearance bond, counsel? Just -- is your client, is
2 anyone else with your client today?
3 MR. ASSANTI: Yes, Your Honor, the client's
4 sister -- you full name? Mia Vang (phonetic) is her name, Your
5 Honor.
6 THE COURT: All right. What I want you to do is
7 this: have your client sign a "Notice To Defendant Being
8 Released," before -- and that's -- you can get that right up
9 here, come on up. Also, have her sign, and have her sister
10 sign the unsecured appearance bond in the amount of $150,000
11 before she leaves the courtroom today. Get another unsecured
12 appearance bond from Pete, my courtroom deputy, to have the
13 parents and the other two sisters co-sign. When can you get
14 those signatures on that appearance bond back to the Court?
15 MR. ASSANTI: I discussed this with counsel. We can
16 get it back within 10 days.
17 THE COURT: All right. Is that agreeable?
19 THE COURT: Within 10 days for the unsecured
20 appearance bond, co-signatures from the other family members.
21 In addition -- did you give counsel a slip? Okay.
22 Ms. Vang, you need to -- in addition to checking with
23 Pretrial Services before you leave the building today, you also
24 need to check in at the Marshal's Office on the fifth floor of
25 the building for purposes of fingerprint and photograph before

1 you leave, and you are ordered to appear at the date that we've
2 set for status conference unless there's a written waiver of
3 appearance on file and accepted by the Court prior to that
4 time.
5 Finally, I will advise you that having been ordered
6 released under the Bail Reform Act any intentional failure to
7 appear on your part in this case would not only cause you and
8 your family to owe the government $150,000, but would also
9 subject you to prosecution for failing to appear under 18 USC
10 Section 3146.
11 If that were to happen and you were convicted of
12 failing to appear, the failure to appear itself would be
13 punishable by up to 10 years in prison, a fine of up to
14 $250,000 or both fine and imprisonment, and any penalty for
15 failing to appear would have to be imposed consecutive to any
16 sentence that you might receive on the already pending charge.
17 So it's obviously very important you stay in touch
18 with your retained counsel, you cooperate fully with Pretrial
19 Services, you abide by all the conditions that I've placed on
20 your release, and that you make you scheduled court
21 appearances.
22 Anything else?
23 MR. TICE-RASKIN: Your Honor, I believe defense
24 counsel is prepared to make a motion for exclusion of time
25 between now and the status conference. There was a previous

1 finding of complexity and I believe he will also seek an
2 exclusion for preparation of counsel. I'd proffer to the Court
3 that there's well over 20,000 pages of discovery.
4 THE COURT: Mr. Assanti, do you agree that the
5 exclusion of time is appropriate under the -- in light of those
6 circumstances from today's date to the April 28th status
7 conference date?
8 MR. ASSANTI: Yes, it is, Your Honor.
9 THE COURT: Based upon representations of counsel, I
10 find that the period of time from today's date to the April
11 28th status conference date should be excluded from the Speedy
12 Trial Act calculation in order to provide defense counsel
13 reasonable time to prepare and in light of the complexity of
14 the case, and therefore order that period excluded under 18 USC
15 Section 3161(h)(A)(b)(2) and (b)(4) local codes T2 and T4.
16 Anything else?
17 MR. TICE-RASKIN: No, Your Honor. Thank you.
18 THE COURT: If you could just have Ms. Vang sign
19 those out in the audience, or outside, and then bring them back
20 in, and just bring them up to Pete, and you won't disturb us.
21 MR. ASSANTI: Certainly, sir.
23 MR. ASSANTI: Thank you very much, Your Honor.
24 MR. ASSANTI: Thank you.

2 --o0o--
3 CERTIFICATE
6 entitled matter.
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3 --o0o--

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
6 vs. ) Monday, April 14, 2008
) 2:28 P.M.
) Hearing re: modifications to
8 Defendants. ) conditions of release for
) Jeremy Head and Sarah Mattson
9 and Arraignment (Initial
Appearance).
10
11 TRANSCRIPT OF PROCEEDINGS
BEFORE THE HONORABLE DALE A. DROZD
12 UNITED STATES MAGISTRATE JUDGE
13 APPEARANCES:
14 For Plaintiff: ELLEN V. ENDRIZZI

U.S. Attorney's Office
15 501 I Street, Suite 10-100
Sacramento, CA 95814
16 (916) 554-2700
17 For Defendant Jeremy Head: CHRISTOPHER HAYDN-MYER

Attorney at Law
18 1478 Stone Point Drive, #400
Roseville, CA 95661
19 (916) 622-1703
20 For Defendant Sarah Mattson: STEVEN D. BAUER

Attorney at Law
21 428 J Street, Suite 350
22 (916) 447-8262
23 For Defendant Joshua Coffman: JOHN P. BALAZS

Law Office of John Balazs
24 916 2nd Street, Suite F
Sacramento, C 95814
25 (916) 447-9299
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1 APPEARANCES (Cont.):
2 For Defendant Justin Wiley: CLYDE M. BLACKMON

Blackmon & Associates
3 813 Sixth Street, Suite 450
4 (916) 441-0824
5 Court Recorder: (UNMONITORED)

U.S. District Court
7 (916) 930-4193
8 Transcription Service: Petrilla Reporting &

Transcription
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1 SACRAMENTO, CALIFORNIA, MONDAY, APRIL 14, 2008, 2:28 P.M.
2
3 THE CLERK: Calling criminal case 08-0093-FCD, United
4 States v. Jeremy Michael Head and Sarah Mattson. Your Honor,
5 this matter is on calendar for modifications to conditions of
6 release.
9 MR. BAUER: And good afternoon, Your Honor. Steve
10 Bauer on behalf of defendant Sarah Mattson. Ms. Mattson has
11 filed a waiver of her personal presence in this matter. She
12 lives in Phoenix and is unemployed, and rather than impose on
13 the Court for financial assistance, I've just waived her
14 presence.
16 MR. HAYDN-MYER: Good afternoon, Your Honor. Chris
17 Haydn-Myer for Jeremy Michael Head who is present and out of
18 custody.
19 THE COURT: All right. These two defendants appeared
20 before the Court, was it last week?
21 MR. BAUER: Yes, Your Honor.
22 MS. ENDRIZZI: Yes, Your Honor.
23 THE COURT: And at that time they were ordered
24 release on a -- because they came in on a summons, they hadn't
25 been interviewed by Pretrial Services. They were ordered

1 released on a $500,000 unsecured bond and directed to report to
2 Pretrial Services for an interview so that Pretrial Services
3 reports could be prepared, and then we -- it was agreed that we
4 would revisit the conditions of release at the subsequent
5 appearance, and I'm in receipt of the Pretrial Services reports
6 and those recommendations. Let's take up Mr. Head -- Jeremy
7 Head first.
8 What's the government's position in that regard?
9 MS. ENDRIZZI: Your Honor, I mean, it's completely
10 unsecured, and Pretrial has decided to pick 150 as their
11 number, which represents about 4.5 percent of the $6.7 million
12 loss, and that's a conservative estimate on the loss. This
13 defendant's facing a guideline range of 188 months to 235
14 months with acceptance, and even though he's a criminal history
15 category 1. 150 seems really low, especially, I mean, I just
16 thought the 500,000, at least 10 percent, would be appropriate.
17 THE COURT: Well, I think --
18 MS. ENDRIZZI: You know, I don't believe he should be
19 incarcerated.
20 THE COURT: I -- I'm assuming that -- let me take a
21 look at this one again. My assumption in reading this was
22 that -- I mean, you could say 500,000 but it doesn't mean
23 anything. I mean, the folks that are cosigning on the
24 unsecured bond are not -- it just happens in this particular
25 case the prospective cosigners, though they're willing to sign,

1 they're not good for 500,000. And so I just interpreted that
2 as, look, anybody who's willing, you know, family members who
3 are willing to sign, they should know, and more importantly the
4 defendant should know that if these people cosign for him and
5 he were to intentionally fail to appear, they lose everything
6 they could possibly muster.
7 MS. ENDRIZZI: You know, that -- I --
8 THE COURT: And that --
9 MS. ENDRIZZI: I agree with that.
10 THE WITNESS: And that Pretrial felt like 150
11 was -- that would render the entire family destitute.
12 MS. ENDRIZZI: But, you know, Your Honor, they picked
13 150 for all of the defendants, whether it was secured by
14 property or not. I'm --
15 THE COURT: Well I don't think that's true. I think
16 I've got varying recommendations, don't I? I mean, I'm taking
17 security on some --
18 MS. ENDRIZZI: You're --
19 THE COURT: -- if it's available.
20 MS. ENDRIZZI: You're taking, well --
21 THE COURT: I'm taking --
22 MS. ENDRIZZI: This --
23 THE COURT: You know --
24 MS. ENDRIZZI: This is the thing, is that you're
25 taking security for 150 on Justin and for -- Justin Wiley and
1 Sarah Mattson. We now have a situation where we have an
2 incredibly huge white collar case in terms of loss and in terms
3 of damage, yet the message that's being sent now is that, you
4 know, unless you get over $7 million in loss, you know, 150
5 will be fine for you. Haven't -- I mean, I guess I'm looking
6 at this in terms of the precedent it sets, and that it is not
7 representative of the potential sentence that they face. This
8 is not a Social Security case where it's $60,000 or, you know,
9 $200,000. Each one of them will be jointly and severally
10 liable --
11 THE COURT: I know, but --
12 MS. ENDRIZZI: -- 6.7.
13 THE COURT: -- I mean, if it's, you know, I've got to
14 look at the cases in terms of bail and flight risk --
15 MS. ENDRIZZI: Uh-huh.
16 THE COURT: -- I think, you know, in these cases at
17 least, I'm -- I've got people -- see, I --
18 (Pause.)
19 THE COURT: All right. Well, I mean, I get the point
20 in part. I think in some of the comparisons maybe it makes
21 sense and in others it doesn't. I mean, as to this defendant,
22 though, what is the government's position about what you think
23 the conditions of release should be?
24 MS. ENDRIZZI: Well, the government's position is
25 that it should be a bond of $500,000. I wanted one piece of

1 property, and the rest could have been unsecured. But there
2 has to be some sort of consequence. In this situation, if
3 nobody pays, nobody pays. And he gets to leave. You know?
4 And there's a judgment, but what does that matter? So, I mean,
5 the idea of having --
6 THE COURT: Why should I find him to be a flight
7 risk?
8 MS. ENDRIZZI: Because he's --
9 THE COURT: He's known about this for --
10 MS. ENDRIZZI: Right.
11 THE COURT: -- several years. You summonsed him. He
12 appeared and the family's willing to do whatever they can to
13 secure his appearance. I told him to come back. I told him to
14 interview, he interviewed.
15 MS. ENDRIZZI: Uh-huh.
16 THE COURT: I told him to come back, he came back. I
17 mean, I can't --
19 THE COURT: -- squeeze blood out of a turnip.
20 MS. ENDRIZZI: No, no, I --
21 THE COURT: If it's not there, it's not there. But,
22 I mean, why should I think that he won't appear?
23 MS. ENDRIZZI: I think now that he's going to see the
24 discovery and now that he will talk with Mr. Haydn-Myer and
25 know that 188 is an accurate calculation and know that his

1 brother has not turned in hordes of cash, the possibility of
2 flight is there. Now, I took that into --
3 THE COURT: I agree there is a possibility of flight.
4 MS. ENDRIZZI: Right. And I took that into
5 consideration because he has been working with Mr. Haydn-Myer.
6 But to say that 150 is an appropriate amount for these
7 defendants who are facing that time, it just seems very low.
8 THE COURT: Mr. Haydn-Myer --
9 MR. HAYDN-MYER: Yes, Your Honor.
10 THE COURT: -- what's your position?
11 MR. HAYDN-MYER: When I originally -- when we
12 originally showed up in court last week, I was actually going
13 to ask for 100 to 125,000 on the unsecured because I know Mr.
14 Head's financial status, in this case, lack thereof. In
15 regards to the amount of time he's facing, that is not a new
16 issue. Immediately we started going through the sentencing
17 guidelines, and it was back in 2006 and I actually thought, as
18 I -- I'll speak for Mr. Bauer here -- but we both came to
19 conclusions that the amount of time was actually much greater
20 than what has just been referred to the Court, which is also
21 something that Mr. Head has been aware of.
22 He's always been in contact with me, sometimes three
23 times a day, during this period of time, and I know the Court,
24 from past experience, has always looked at what type of
25 pressure, for lack of a better word, could be put on. Is the

1 unsecured or the secured coming from some close family
2 relationship? And it doesn't get any closer that this case for
3 Mr. Head. That's his grandparents, and I have spoken with his
4 grandmother. They're very close. His father and his brother,
5 whom I believe is a music teacher on the east coast, the
6 connection between the loss that would occur to his family is
7 direct.
8 And I believe -- I was going to argue for
9 lower -- but I believe that the conclusion that was drawn, I
10 mean, that's a very detailed report before the Court, is that
11 it should be 150,000 unsecured as was reported to Ms. Fabion.
12 So I'm just asking that the Court follow the recommendation of
13 Pretrial Services.
14 MS. ENDRIZZI: And, Your Honor, so that you know,
15 when we were originally talking, we had calculated the loss at
16 $100 million because of the value of all the property plus the
17 equity stripped.
18 MR. HAYDN-MYER: Thank you. That was correct.
19 MS. ENDRIZZI: So, 6.7 is incredibly conservative.
20 THE COURT: No, it's -- I mean, the allegations of
21 the indictment are a massive fraud, but there's certainly no
22 suggestion here that this defendant has access to any, any of
23 that. And I, you know, I just think that the recommendation
24 that's being made is in large part -- well, it's based upon no
25 prior record, the fact that he knew for quite a while, the fact
1 that he was summonsed in and then appeared, did his direct and
2 checked in, was interviewed, back again. And so it's, you
3 know, this doesn't come as a tremendous surprise. I understand
4 what the government is saying about the -- perhaps the gravity
5 of the situation may not have been fully realized, although Mr.
6 Haydn-Myer says, no, actually it was fully realized, that and
7 then some, and nonetheless the defendant has appeared.
8 I'm also cognizant of the fact that the longer a case
9 like this is pending, the pressure builds. There's no doubt
10 about that. But we've got a pretty lengthy list of Pretrial
11 Services conditions that hopefully will address that and that
12 if there's any warning signs that Mr. Head is not paying
13 attention to business, that can be reacted to and a release
14 order can be revoked very quickly if he doesn't pay attention
15 to business by doing as he's directed.
16 But in terms of setting a dollar amount under these
17 circumstances, I think I do understand what Pretrial Services
18 is doing. They look at what's available out there and say, you
19 know, it's -- we could say 500,000, but it really -- that means
20 nothing more than 150 for the folks that are agreeing to
21 cosign. 150 leaves them destitute, and, you know, that ought
22 to be enough for Mr. Head to realize that if he were to fail to
23 appear, he would be imposing drastic consequences on his
24 grandparents and his parents, and what the Court is relying
25 upon is that he wouldn't do that. No matter what else he would

1 do, he would not do that. You understand what I'm saying?
2 MR. HEAD: Yes, Your Honor.
3 THE COURT: I -- I'm going to, in this case, follow
4 the recommendation of Pretrial Services and order the defendant
5 released on a $150,000 unsecured bond cosigned by his father,
6 his grandparents, and his brother, Joshua Head with Pretrial
7 Services supervision and the following special conditions:
8 That he report to and comply with the rules and
9 regulations of the Pretrial Services Agency; that he report in
10 person to the Pretrial Services Agency on the first working day
11 following his release from custody. He is to reside at a
12 location approved by his Pretrial Services officer, not move or
13 absent himself from that residence without the prior approval
14 of his Pretrial Services officer. His travel is restricted to
15 the Central and Eastern Districts of California without the
16 prior consent of his Pretrial Services officer. He shall not
17 possess a firearm, destructive device, or other dangerous
18 weapon.
19 Additionally, he shall provide written proof of
20 divestment of any firearms currently under his control. He
21 shall seek and/or maintain employment as approved by his
22 Pretrial Services officer and provide proof of the same as
23 requested by his Pretrial Services officer. He shall report
24 any contact with law enforcement to his Pretrial Services
25 officer within 24 hours.

10
1 He shall not apply for any travel documents during
2 the pendency of this case. He shall not have any contact with
3 his co-defendants in this case except in the presence of his
4 defense counsel. He shall refrain from the excessive use of
5 alcohol or any use of a narcotic drug or other controlled
6 substance without a prescription by a licensed medical
7 practitioner. He shall notify Pretrial Services immediately of
8 any prescribed medications. Medicinal marijuana, whether
9 prescribed or not, may not be used under any circumstances. He
10 shall submit to drug or alcohol testing as approved by his
11 Pretrial Services officer.
12 And, Mr. Head, do you understand each of the
13 conditions that I've set on your pretrial release, and will you
14 abide by those conditions?
16 THE COURT: I will advise you, as I previously did,
17 that if you intentionally failed to appear in this matter, not
18 only would all of your relatives lose virtually everything they
19 have to their name and then some, but in addition to that, you
20 could be prosecuted for failing to appear. The penalty for the
21 failure to appear would be up to 10 years in prison, fine of up
22 to $250,000 or both, and that penalty would have to be imposed
23 consecutive to any sentence that you might receive on the
24 already pending charges if convicted.
25 So it's obviously very -- remains very important you

11
1 stay in touch with Mr. Haydn-Myer, you abide by all the
2 conditions I've set on your release, you cooperate fully with
3 Pretrial Services, and that you make all your scheduled court
4 appearances. Do you understand?
6 THE COURT: Given the nature of the fraud, the fact
7 that I -- is it Mr. Head -- is the co-defendant Mr. Head's
8 brother?
9 MR. HAYDN-MYER: Yes.
11 THE COURT: Given the fact, you know, that your
12 brother is, by all accounts it would appear, the lead defendant
13 in this case, the one that the government charges -- not that
14 everyone's not completely responsible, but that in large part
15 is the lead defendant in the case, given all that fact and the
16 massive nature of the fraud that's alleged, there's not going
17 to be a lot of leeway in terms of these conditions of release.
18 You need to make sure that you're in strict compliance.
19 MR. HEAD: Yes, sir.
20 THE COURT: All right?
21 MR. HAYDN-MYER: Thank you, Your Honor.
22 THE COURT: Anything else on this matter?
23 MR. HAYDN-MYER: Yes, Your Honor. Lastly, I'm going
24 to need 10 days, probably, from today's date to get the
25 signatures because they're in -- of course, on the east coast.

12
1 And if it's okay, when I get the copies, I'd like to have them
2 faxed and I'll serve the originals on the court clerk when I
3 get those; is that okay?
4 THE COURT: Get me the faxed copies as soon as you
5 got faxed copies and then file the originals as soon as you
6 have them?
8 THE COURT: Everything -- the original's due with the
9 Court within 10 days of today's date.
11 THE COURT: You're free to go, sir.
12 Now --
13 (Pause - Court and clerk conferring.)
14 THE COURT: Oh. Sign another appearance bond.
15 MR. HAYDN-MYER: Yes, Your Honor. Thank you.
16 THE COURT: Now, Ms. --
17 MR. BAUER: Mattson, Your Honor.
18 THE COURT: Ms. Mattson. What's the government's
19 position on this one?
20 MS. ENDRIZZI: We'll submit on the report, Your
21 Honor.
23 MS. ENDRIZZI: Following Mr. Head's colloquy.
25 MR. BAUER: And, Your Honor, I only have one

13
1 suggestion as to how best to accomplish that. The property
2 that's sought to be used to secure the $150,000 bond is located
3 in Ohio. I have contacted the Federal Defender's Office back
4 there. I have received a form that they use, although rarely,
5 to secure bonds, and I will recreate that. I'm going to need
6 time to get that to Ms. Mattson for signature in Arizona and
7 then on to her parents on Ohio with notaries and recording, and
8 I'd ask for three weeks to get that to the Court.
9 THE COURT: Any objection?
10 MS. ENDRIZZI: No, Your Honor.
11 MR. BAUER: And I -- being unfamiliar with Ohio, in
12 the Pretrial Services report requests, as it does frequently
13 here, that all equity in the property be used to secure the
14 bond. Everybody seems to believe that the equity in that house
15 is going to be used. It's between 140 and $143,000. I propose
16 to write that bond at 150 with the understanding that it may be
17 slightly under secured.
18 THE COURT: That's fine with -- I'm going to set the
19 bond at $150,000 to be secured by the posting of the property.
20 Until it's posted, the $500,000 unsecured appearance bond
21 remains in effect.
22 MR. BAUER: Fine.
23 THE COURT: Once it's posted, the secured bond of 150
24 secured by the full equity in that house will take its place.
25 All these conditions are the same, aren't they, or do we -- or

14
1 did we not -- no. We probably didn't set conditions. Did we?
2 PRETRIAL SERVICES OFFICER: Your Honor, some of the
3 conditions are changed. I think you did set a couple of
4 conditions at the last hearing, but her travel is restricted to
5 the District of Arizona and the Eastern District of California.
6 THE COURT: All right. And, Mr. Bauer, I'll --
7 MR. BAUER: Your Honor, I would request to expand
8 that to include the Central District of California.
9 THE COURT: Because?
10 MR. BAUER: She has close friends there, and she is
11 now unemployed as a result of this indictment. She may have to
12 look for work in Southern California.
13 THE COURT: Has she talked to you at all about that?
14 PRETRIAL SERVICES OFFICER: I was under the
15 impression that she was employed at a bar and grill in Arizona.
16 That's what was relayed to me.
17 MR. BAUER: Well, she is, Your Honor, at $5 an hour.
18 I think that that may be a temporary stop gap, having lost her
19 teaching job.
20 THE COURT: I'm not going to take that one on the
21 fly. If it turns out that she needs a modification of
22 conditions because -- to address her situation, then I'm going
23 to have her talk to Pretrial Services.
24 MR. BAUER: Okay.
25 THE COURT: And I'm not going to shoot from the hip
15
1 on that one.
2 MR. BAUER: I understand. And I assume that this is
3 a case where there will be courtesy supervision in the District
4 of Phoenix -- or Arizona?
5 PRETRIAL SERVICES OFFICER: Yes, Your Honor. I've
6 already been in contact with them, and they're -- they are
7 going to be expecting her call, and I will get in contact with
8 Ms. Mattson today and have her -- give her the contact numbers.
9 MR. BAUER: Okay. So I would ask that that 72 hours
10 be in touch with whoever it is in Arizona that's going to
11 supervise her, rather than have her have to come up here.
12 THE COURT: That was the plan, right?
13 PRETRIAL SERVICES OFFICER: Right.
14 THE COURT: The -- once the secured bond is posted,
15 it's in the amount of 150, but it will be secured by the full
16 equity in the house unless that equity were to be dramatically
17 less than anticipated. And, Mr. Bauer, I will direct you to
18 advise your client, as I know Pretrial Services will, as to the
19 additional conditions of release. I'm adopting each of the
20 conditions listed in the Pretrial Services report, including
21 the travel restriction, which may be modified based upon a
22 showing of good cause, but I would like that to be routed
23 through Pretrial Services.
24 MR. BAUER: Understood.
25 THE COURT: And I'll need another notice to defendant

16
1 being released acknowledging these conditions to be obtained
2 and filed with the Court.
3 MR. BAUER: That's kind of why I suggested I'd need
4 three weeks. I'm going to have mail going in all sorts of
5 directions.
6 THE COURT: Get the notice to defendant being
7 released back as soon as it's available.
8 MR. BAUER: Your Honor, it is my hope to, in
9 connection with this case, travel to Arizona. You may have
10 seen that travel request.
11 THE COURT: Not yet, I haven't. It's got to be --
12 MR. BAUER: And it should be --
13 THE COURT: -- on its way.
14 MR. BAUER: -- on your desk shortly.
16 MR. BAUER: I will meet with her and ensure that
17 those are signed.
18 THE COURT: All right. Anything else in this matter?
21 MS. ENDRIZZI: Thank you.
22 THE CLERK: Calling criminal case 08-0093-FCD, United
23 States v. Joshua Kaufman and Justin Wiley. Your Honor, this
24 matter's on calendar for an arraignment.

17
1 Endrizzi again for the United States.
2 MR. BALAZS: Good afternoon, Your Honor, John Balazs
3 on behalf of Joshua Kaufman, who's present in court.
4 MR. BLACKMON: Clyde Blackmon of Blackmon and
5 Associates for Mr. Justin Wiley, who's present in court, Your
6 Honor.
7 THE COURT: All right. And, Mr. Blackmon, making a
8 general appearance as retained counsel?
9 MR. BLACKMON: Yes, we are, Your Honor.
10 THE COURT: And, Mr. Balazs?
11 MR. BALAZS: Yep.
12 THE COURT: Your situation?
13 MR. BALAZS: The same.
14 THE COURT: Same. All right.
15 Mr. Kaufman and Mr. Wiley, each of you have the right
16 to counsel in these proceedings. In this regard, you have the
17 right to retain counsel of your own choosing, which you have
18 done, Mr. Kaufman, in retaining Mr. Balazs and what you've
19 done, Mr. Wiley, in retaining Mr. Blackmon to represent you.
20 Should you be unable to afford to retain counsel at some point,
21 you could apply to the Court for appointment of counsel. The
22 Court would consider the application and, if appropriate, would
23 appoint counsel to represent you.
24 And, Mr. Blackmon and Mr. Balazs, have your clients
25 received a copy of the indictment that was returned February

18
1 28th, 2008 in criminal case number 08-93-FCD; have they
2 reviewed that indictment; and do you waive its full reading on
3 their behalf?
4 MR. BLACKMON: On behalf of Mr. Wiley, yes, he has
5 received a copy of the indictment and we waive the full reading
6 of that.
7 MR. BALAZS: And the same as -- on behalf of Mr.
8 Kaufman.
9 THE COURT: Mr. Wiley, Mr. Kaufman, you've been
10 charged in that indictment that I just referred to. Both of
11 you charged in Count 1 with conspiracy to commit mail fraud in
12 violation of 18 USC Section 371; Mr. Wiley in Counts 2 and 7
13 with mail fraud in violation of 18 USC Section 1341; Mr.
14 Kaufman in Count 5 with mail fraud in violation of 18 USC
15 Section 1341, and both of you are charged in Count 13,
16 the -- that count alleging the conspiracy to commit money
17 laundering in violation of 18 USC Section 1956(h).
18 If convicted of those offenses, the conspiracy charge
19 carries with it a maximum possible punishment of up to five
20 years imprisonment, a fine of up to $250,000, or the amount of
21 gain or loss brought about by the offense, whichever is
23 supervised release. The mail fraud counts are punishable by up
24 to 20 years in prison, a fine of up to $250,000 or the amount
25 of gain or loss brought about by the offense, whichever is

19
1 greater, or both fine and imprisonment and a three-year term of
4 to 10 years in prison, fine of up to $500,000 or twice the
5 amount of criminally-derived property involved in the
6 transaction, whichever is greater, or both fine and
7 imprisonment and three-year term of supervised release. All
8 counts in which you're charged carry with them a mandatory $100
9 special assessment if you are convicted of the charge.
10 And, counsel, do both of your clients wish to enter
11 pleas of not guilty and demand a jury trial?
12 MR. BLACKMON: Mr. Wiley does, Your Honor.
13 MR. BALAZS: Yes, Your Honor.
14 THE COURT: Pleas of not guilty and demand for jury
15 trial will be entered on the Court's record and the matter is
16 set --
17 MS. ENDRIZZI: 28th, Your Honor.
18 THE COURT: Okay. For status on April 28?
19 THE CLERK: Yes, Your Honor.
20 MS. ENDRIZZI: Yes.
21 THE COURT: April 28th at what time, Pete?
22 THE CLERK: 10:00 a.m., Your Honor.
23 THE COURT: 10:00 a.m. before Judge Damrell for
24 status conference. There's previously been a finding of
25 excludable time both under 3161(h)(8)(B)(ii) and (h)(8)(B)(iv),

20
1 both to allow defense counsel reasonable time to prepare in
2 light of the amount of the discovery as well as based upon the
3 complexity of the case. Counsel concur that those findings are
4 appropriate with respect to these defendants as well up to the
5 date of the status conference?
6 MR. BLACKMON: Yes, I do, Your Honor.
7 MR. BALAZS: Yes, Your Honor.
8 THE COURT: And that'll be the order in these cases
9 as well.
10 And what is the -- let's take up Mr. Wiley first.
11 What's the government's position with respect to Mr. Wiley's
12 custody status?
13 MS. ENDRIZZI: Your Honor, we'll submit on that,
14 although I should note for the Court and while Mr. Wiley has
15 been very good about keeping in touch with Mr. Blackmon, there
16 was a home that he and Mr. Kaufman lived in in the Hills, the
17 Hollywood Hills when we first started discussing this matter
18 and I think it was worth between 900,000 and 1.2 million, and
19 it was paid for by proceeds and the mortgage payment was paid
20 for by proceeds, which I think they lived in with the cousin of
21 Justin Wiley.
22 And we told them, we said, if you sell that house,
23 keep those funds because you're going to need them for
24 restitution. That money is not in any sort of trust account
25 that we know of, so it's out there. It's gone. Their house
21
1 was filled with toys, and the cars, et cetera, et cetera, and
2 have a -- I would bet if they took off their jackets those
3 suits are worth $1,500 or more. But, as what's kind of been
4 precedent here today, $150,000, by property, is what's the
5 going rate.
6 THE COURT: Does the government have any reason at
7 this time to believe that Mr. Wiley's got assets hidden
8 anywhere?
9 MS. ENDRIZZI: You know, I don't know, because I know
10 his cousin or brother, Ryan, was in on it also as a straw
11 buyer. He received funds. I don't know what kind of
12 communication they still have. He may be looking at charges as
13 well. I just -- whether or not they sold their toys, I don't
14 know. That's the thing. They -- they've got tens, hundreds of
15 thousands of dollars that either they kept or they blew
16 through.
17 THE COURT: Mr. Blackmon, your position?
18 MR. BLACKMON: I'm sorry, Your Honor?
19 THE COURT: Your position with respect to bail.
20 MR. BLACKMON: Well, I was going to ask the Court
21 rather than a 100,000 -- $150,000 bond secured by property, I
22 was going to ask that the Court release Mr. Wiley on a
23 unsecured property -- or unsecured personal surety bond of some
24 greater value.
25 Mr. Wiley's parents -- Mr. Wiley is from

22
1 Philadelphia. His mother and father still reside there. His
2 mother's a high school principal in Philadelphia. His father
3 is a lawyer. The -- as the Court knows from the Pretrial
4 Services report, parents are willing to post property to secure
5 bail. However, we're concerned that equity in -- particularly
6 the equity in the family home that the Wileys own in a suburb
7 of Pennsylvania will be necessary to fund Mr. Wiley's defense
8 in this case, so we'd like to, if possible, keep that property
9 from having any additional liens on it.
10 All of the factors that were discussed in terms of
11 Mr. Head, who appeared before you just a few moments ago here,
12 apply to Mr. Wiley, who's known about this case since, I think,
13 approximately -- well, he was interviewed by FBI and IRS
14 agents, I believe, in July of 2006. He knew about the pendency
15 of this matter even before that.
16 He retained our law firm in February of 2006, so he's
17 known about this case for almost two years now, has taken steps
18 to secure representation, he's stayed in close contact with me.
19 He's made -- this is his first appearance, but as the Court
20 knows, he was summonsed to appear here today. I think that he
21 is absolutely not a flight risk despite the fact of the
22 considerable sentences that we're involved with here. So that
23 would be my position.
24 THE COURT: I'm going to adopt the recommendation of
25 Pretrial Services. I'd be requiring secured bonds on everybody

23
1 if I could because the fraud is a massive one, and I think it's
2 important for Mr. Wiley to understand that any failure to
3 appear not only would impact him, but would very seriously
4 impact his parents. If I had that ability with respect to Mr.
5 Head, I would have done so. It's just, you know, there's
6 nobody with any property willing to post on his behalf, or able
7 to post on his behalf. So to me, that's the difference.
8 That's why every case has to be looked at individually.
9 I think that if Mr. Wiley's parent -- if he
10 understands that his parents have their house -- equity in
11 their house on the line, and from my looks of it, you know,
12 they should be able, hopefully, to be able to do both the --
13 what's being suggested, but I think it's important at the
14 outset for him to understand that any failure to appear in the
15 future not only has a very real impact on himself but also on
16 his parents, and I'm banking, just like I was with Mr. Head,
17 that you would not put your parents in the situation where they
18 would get hurt any worse than they're already getting hurt.
19 But I think it's important that you know that it
20 really would have an impact on them because the -- like I said
21 before, the impact in these cases, it's going to get more --
22 there's going to get at a point in time where there's more
23 pressure, not less, and I think that's when it's the most
24 important that somebody understand that the folks that mean the
25 most to them are really on the line supporting them.

24
1 And I'm not just talking to Mr. Wiley, Mr. Kaufman.
2 The same's going to go for you, but I think it's important. So
3 I think the Pretrial Services recommendation is the right one.
4 I'm going to adopt it. I am going to order that Mr. Wiley be
5 released on a $150,000 collateral bond secured by the equity in
6 his parents' residence in Pennsylvania with Pretrial Services
7 supervision of the following conditions of release:
9 regulations of the Pretrial Services Agency. That he report in
10 person to the Pretrial Services Agency on the first working day
11 following his release from custody. He is to reside at a
12 location approved by the Pretrial Services officer, not move or
13 absent himself from that residence without the prior approval
14 of his Pretrial Services officer.
15 His travel is restricted to the Central and Eastern
16 Districts of California without the prior consent of his
17 Pretrial Services officer. He shall not possess a firearm,
18 destructive device, or other dangerous weapon. Additionally,
19 he shall provide written proof of divestment of any firearms
20 currently under his control.
21 He shall seek and/or maintain employment as approved
22 by his Pretrial Services officer, provide proof of the same as
23 requested by his Pretrial Services officer; shall report any
24 contact with law enforcement officers of any kind to his
25 Pretrial Services officer within 24 hours of that contact.

25
1 He shall surrender his passport to the clerk of the
2 U.S. District Court and obtain no new passport or other travel
3 document during the pendency of this case; and he shall not
4 have contact with his co-defendants in this case except in the
5 presence of counsel.
6 The passport situation; what is that with respect to
7 Mr. Wiley?
8 MR. BLACKMON: We have the passport --
9 THE COURT: Okay.
10 MR. BLACKMON: -- and are prepared to surrender it
11 today.
13 MR. BLACKMON: May I address two of the other
14 conditions, Your Honor?
15 THE COURT: Yes.
16 MR. BLACKMON: Condition number five about possession
17 of firearms. Mr. Wiley informs me he does own a firearm and he
18 will have to divest himself of that. The question is, how long
19 do we have to accomplish that?
20 THE COURT: Well, Pretrial Services in Southern
21 California is not going to want to supervise him if he's got
22 possession of a firearm, so as soon as he gets home.
23 MR. BLACKMON: Okay.
24 THE COURT: He needs to get it out -- where he
25 doesn't have possession. That means out of his house, with

26
1 somebody else. There's got to be somebody.
2 MR. BLACKMON: I assume, I mean --
3 THE COURT: Where -- who won't allow you access.
4 MR. WILEY: Yes, Your Honor.
5 THE COURT: Okay? Because the thing is, a Pretrial
6 Services officer doesn't want to be supervising you if they
7 know that you've got a -- possession of a firearm. It's just a
8 safety issue.
9 MR. BLACKMON: Okay. And we'll take care of that.
10 The other one is the ninth condition that he not have contact
11 with co-defendants. Mr. Wiley and Mr. Kaufman are closest
12 friends. They've known each other since middle school in
13 Philadelphia. They have roomed together and Mr. Wiley
14 describes the relationship between the two as virtually like
15 brothers, so I would like to ask the Court to excuse Mr. Wiley
16 and Mr. Kaufman from that ninth condition.
17 Mr. Balazs and I have both advised our clients that
18 they are not to talk about this case. I'm confident that Mr.
19 Wiley will, in fact, follow that advice.
20 THE COURT: What's -- I mean, I know that this has
21 been included in the conditions on a number of defendants.
22 What's -- but I don't know really the context. What's the
23 concern?
24 MS. ENDRIZZI: Well, I mean, I thought this was one
25 of their standard --
27
1 THE COURT: It's not --
2 MS. ENDRIZZI: -- conditions.
3 THE COURT: It's not in all cases.
4 MS. ENDRIZZI: Oh. Well --
5 THE COURT: I mean --
6 MS. ENDRIZZI: -- Your Honor, I didn't ask for it.
7 They're co-conspirators, but --
9 MR. BALAZS: And just to make --
10 MS. ENDRIZZI: -- you know --
11 THE COURT: I'll --
12 MS. ENDRIZZI: -- it's up to your discretion.
13 MR. BALAZS: -- just to make --
14 THE COURT: I'm going to modify that condition. I'll
15 allow them to have contact with each other outside the presence
16 of counsel, but not with their other co-defendants.
17 MR. BALAZS: That's fine.
18 MR. BLACKMON: That's fine.
19 THE COURT: Because they do have a -- it would appear
20 obvious that, I mean, you said that they were living together
21 throughout the investigation at one time, so I'm not going to
22 prevent them from having contact with each other, but with any
23 of their other co-defendants, they're going to be prevented
24 from having contact outside the presence of their lawyers.
25 MR. WILEY: Thank you.

28
1 MR. BALAZS: That's fine.
2 MR. KAUFMAN: Thank you, Your Honor.
3 THE COURT: Now, I assume it's going to take some
4 time to post this bond?
5 MR. BLACKMON: Yeah. I'm going to --
6 THE COURT: Three weeks?
7 MR. BLACKMON: I'm going to ask for three weeks since
8 it is on the east coast and as the Court knows, I'm involved in
9 another case in --
10 THE COURT: Is that still going on?
11 MR. BLACKMON: -- Yellow County. The penalty phase
12 is going to start a week from today.
13 THE COURT: Okay.
14 MR. BLACKMON: And we expect that to go about two
15 weeks.
16 THE COURT: Okay. How about three weeks, $150,000
17 unsecured appearance bond to be -- can you FedEx
18 that -- a -- one of those to the parents to be signed and filed
19 back --
20 MR. BLACKMON: Sure.
21 THE COURT: -- with the Court and I want Mr. Wiley's
22 signature --
23 MR. BLACKMON: Of course.
24 THE COURT: -- on $150,000 unsecured appearance bond
25 today, his parents to sign on a $150,000 unsecured appearance

29
1 bond as cosigners --
2 MR. BLACKMON: Okay.
3 THE COURT: -- filed with the Court as soon as
4 practical, and then to be replaced by the secured bond within
5 three weeks.
6 MR. BLACKMON: All right.
7 THE COURT: Just so that we've got a -- at least a
8 cosigned appearance bond bridging that time period.
9 MR. BLACKMON: That'll be fine, Your Honor.
10 THE COURT: And is that it with respect to this
11 defendant?
14 MR. BLACKMON: Who do we surrender the --
15 THE COURT: Actually, I'm going to advise you both of
16 the penalties for failing to appear once I get done with Mr.
17 Kaufman, so --
18 MR. BLACKMON: And --
19 THE COURT: -- was there another question?
20 MR. BLACKMON: And to whom do we surrender the
21 passport?
22 THE COURT: Do you -- does Pretrial want it, or do
23 you want it filed with the clerk's office?
24 PRETRIAL SERVICES OFFICER: The clerk's office on the
25 4th floor.
30
1 THE COURT: Can you drop it off in the --
2 MR. BLACKMON: Sure.
3 THE COURT: -- clerk's office?
4 MR. BLACKMON: Uh-huh.
5 THE COURT: On the way out. Oh. And they also need
6 to be -- both defendants are going to need to be fingerprinted
7 and photographed. I'm directing both to check in at the
8 marshal's office before they leave the building today for that
9 purpose.
10 Now, Mr. Balazs's client, Mr. Kaufman. Government's
11 position?
12 MS. ENDRIZZI: In this case, the $150,000 is really
13 worth almost nothing because I don't understand how Mr. Balazs
14 is retained. I don't understand, you know, we have a situation
15 here where Mr. Kaufman's mother and brother were both straw
16 buyers and benefitted from the scheme, yet they have nothing to
17 post. It seems a little bit unusual to be able to pay for
18 counsel and have nothing.
19 THE COURT: You want to enlighten us at all, Mr.
20 Balazs? That's your choice.
21 MR. BALAZS: I can enlighten the Court at an ex parte
22 hearing, but I'm not going to do it with the USA present.
23 THE COURT: The concern is that on paper we're being
24 told that there are no assets by anybody.
25 MR. BALAZS: I -- and I'm not aware of any other

31
1 assets. We do have a $150,000 unsecured bond that's going to
2 be signed by four people that have some earnings power besides
3 Mr. Kaufman, his mother, Lori Kaufman, and his grandmother and
4 step-grandfather, Donald and Anita Rio (phonetic). Mr.
5 Kaufman, in fact, lived with his grandparents for a number of
6 years. They've known him all his life. They represented to me
7 as well as Pretrial Services that they have the utmost
8 confidence in him and are willing to do whatever they can, but
9 they just don't have any property to be able to post.
10 Like Mr. Head and Mr. Wiley and the rest of them,
11 we've known about this case since at least July 2006. He has
12 been in contact with counsel, first Quinn Denvir before he
13 retired, and then me for quite some time. He's in contact with
14 me regularly, calls me. He always responds as soon as I call
15 him back. He was summonsed in here to appear in court, and
16 there is just no financial assets. With respect to the
17 house --
18 THE COURT: Let me cut you off.
19 Does the government want me to take an in camera
20 representation from Mr. Balazs about that circumstance?
21 MS. ENDRIZZI: You know, Your Honor, I think in this
22 position it might be appropriate. I mean, again --
23 THE COURT: I will.
24 MS. ENDRIZZI: -- we have these --
25 THE COURT: Let's take a very --

32
1 MS. ENDRIZZI: -- we have the $1 million.
2 THE COURT: Let's take --
3 MS. ENDRIZZI: I don't know where that is.
4 THE COURT: -- a very brief recess. Mr. Balazs, meet
5 me in the hallway. I think it'll --
6 MR. BALAZS: Okay.
7 THE COURT: -- take about two seconds.
8 (Recess from 3:10 p.m. to 3:11 p.m.)
9 THE COURT: I've heard from Mr. Balazs in camera, and
10 based upon his representations to me, there's no untoward
11 inference to be drawn, not even close.
12 MS. ENDRIZZI: Okay.
13 THE COURT: So I'm satisfied based upon what he told
14 me that that doesn't raise -- while outwardly one -- I can see
15 one wondering about it, having heard his representation,
16 there's not a reason for concern in that regard.
17 Anything else?
21 THE COURT: Any objection to the same conditions, Mr.
22 Balazs, as imposed with respect to Mr. Wiley?
23 MR. BALAZS: No, Your Honor.
24 THE COURT: Mr. Kaufman, did you hear all those
25 conditions?
33
1 MR. KAUFMAN: Yes, Your Honor.
2 THE COURT: All the same ones are imposed, including
3 the no contact with any other co-defendants except each other.
5 THE COURT: Except in the presence of counsel. Same
6 travel restriction. Everything else is the same. What's the
7 passport situation?
8 MR. BALAZS: I have the passport, and I'll bring it
9 down to the clerk's office right after court.
10 THE COURT: File it in the clerk's office before you
11 leave the building.
12 PRETRIAL SERVICES OFFICER: Your Honor?
13 THE COURT: I will advise both Mr. Wiley and Mr.
14 Kaufman, gentlemen, as I advised Mr. Head and Ms. Mattson's
15 lawyer before you that were -- if you were to intentionally
16 fail to appear in this matter, not only would the folks that
17 are posting bond on your behalf be very deeply hurt, but in
18 addition to that, you would be subjected to prosecution for
19 failing to appear under 18 USC Section 3146, a separate federal
20 felony offense.
21 In this case, that offense, if you were convicted of
22 failing to appear, would be punishable by up to 10 years in
23 prison, a fine of up to $250,000, or both, and that penalty for
24 failing to appear would have to be imposed consecutive to any
25 sentence that you might receive on the already pending charge.

34
1 So it's very important that you stay in touch with
2 your counsel, that you abide by all the conditions that I've
3 set on your release, that you cooperate fully with Pretrial
4 Services, and that you make all your scheduled court
5 appearances.
6 And you told -- you heard me tell Mr. Head in
7 particular, but it really applies to everybody in this case.
8 The allegations are a very massive fraud offense. Serious
9 matter. And given the amount of money involved, if there are
10 violations of the conditions of pretrial release, I'm not going
11 to be nearly as sympathetic about violations as I might be in a
12 far less serious case. This is a serious matter. You need to
13 treat it seriously, and all of that -- and part of all of that
14 is abiding, down to the letter, with all the conditions that
15 have been imposed. All right?
16 MR. WILEY: Yes, Your Honor.
17 MR. KAUFMAN: All right.
18 PRETRIAL SERVICES OFFICER: Just --
19 THE COURT: Yes?
20 PRETRIAL SERVICES OFFICER: Just one thing. I jumped
21 the gun and returned my pretrial reports. I know Mr. Kaufman
22 had a drug testing --
23 THE COURT: Oh, I'm sorry.
24 PRETRIAL SERVICES OFFICER: -- condition, but I don't
25 know that Mr. Wiley did. Given Mr. Kaufman's --

35
1 THE COURT: I'm sorry.
2 PRETRIAL SERVICES OFFICER: -- use, then I --
3 THE COURT: Yeah.
4 PRETRIAL SERVICES OFFICER: -- think the drug testing
5 is --
6 MR. BALAZS: We don't --
7 PRETRIAL SERVICES OFFICER: -- appropriate.
8 MR. BALAZS: We don't have any objection to that.
9 THE COURT: Hold --
10 PRETRIAL SERVICES OFFICER: But not for Mr. Wiley.
11 THE COURT: Hold on. I didn't realize there was
12 a -- I thought they both had non. No, you're right.
13 Mr. Kaufman, in addition to the conditions imposed
14 with respect to Mr. Wiley, there is the additional condition in
15 your case that you refrain from the excessive use of alcohol or
16 any use of a narcotic drug or other controlled substance.
17 Actually, I'm making -- that ought to be a condition on the
18 other one too, shouldn't it? I mean, just not the testing.
19 Let's go back. Mr. Wiley, and --
20 MR. BLACKMON: We have no objection to that one, Your
21 Honor.
22 THE COURT: Right. Mr. Wiley and Mr. Kaufman, both
23 of you also have the condition that you should -- you shall
24 refrain from the excessive use of alcohol or any use of a
25 narcotic drug or other controlled substance without a

36
1 prescription by a licensed medical practitioner, and you shall
2 notify Pretrial Services immediately of any prescribed
3 medications; medicinal marijuana, whether it's prescribed or
4 not, is not allowed under any circumstances.
5 And, Mr. Kaufman, as to you , you have an additional
6 condition. Mr. Wiley, not applying this to you. But, Mr.
7 Kaufman, that you submit to drug or alcohol testing as approved
8 by your Pretrial Services officer.
10 THE COURT: You understand those conditions as well,
11 gentlemen?
12 MR. KAUFMAN: Yes, I do.
13 MR. WILEY: All right.
14 THE COURT: All right. Anything else?
16 MR. BLACKMON: No, Your Honor.
18 MR. BALAZS: Thank you, Your Honor.
21 --o0o--
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37
1 CERTIFICATE
4 entitled matter.
5
6 July 12, 2011
8 AAERT CERT*D-113
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3 --o0o--

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
6 vs. ) Tuesday, April 22, 2008
) 2:49 P.M.
)
9
10 TRANSCRIPT OF PROCEEDINGS
BEFORE THE HONORABLE DALE A. DROZD
11 UNITED STATES MAGISTRATE JUDGE
12
APPEARANCES:
13
14 ELLEN V. ENDRIZZI
16 (916) 554-2700
17 For Defendant Elham Assadi: H. DEAN STEWARD

Law Offices of H. Dean Steward
18 107 Avenida Miramar, Suite C
San Clemente, CA 92672
19 (949) 481-4900
20 For Defendant Akemi Bottari: EDWARD M. ROBINSON

Law Office of Edward M. Robinson
21 21515 Hawthorne Blvd., Suite 665
Torrance, CA 90503
22 (310) 316-9333
23 For Defendant John Corcoran: MARY M. FRENCH

Federal Defender's Office
24 801 I Street, 3rd Floor
25 (916) 498-5700
ii
2 For Defendant Domonic McCarns: JAMES R. GREINER
Law Offices of James R. Greiner
3 555 University Avenue, Suite 290
4 (916) 649-2006
5 For Defendant Omar Sandoval: MICHAEL BRADLEY BIGELOW
Law Office of Michael B. Bigelow
7 (916) 443-0217
8 For Defendant Xochitl: CANDACE ANNE FRY
Sandoval: Law Office of Candace A. Fry
9 2401 Capitol Avenue
10 (916) 446-9322
11 For Defendant Kou Yang: CARL H. MANDABACH for
JOSEPH H. LOW, IV.
12 Law Firm of Joseph H. Low, IV.
One World Trade Center, #2320
13 Long Beach, CA 90831
(562) 901-0840
14
For Defendant K. Brotemarkle: ROBERT G. GAZLEY
15 Robert G. Gazley, Esq.
18685 Main Street
16 Suite 1, PMB 221
Huntington Beach, CA 92648
17 714-375-0628
18 Court Recorder: JONATHAN ANDERSON
U.S. District Court
20 (916) 930-4193
Transcription
22 5002 - 61st Street
23 (916) 455-3887
24
1 SACRAMENTO, CALIFORNIA, TUESDAY, APRIL 22, 2008, 2:49 P.M.

2
4 States v. Elham Assadi, Akemi Bottari, John Corcoran, Anh
5 Nguyen, Omar Sandoval, Xochitl Sandoval, Eduardo Vanegas, Kou
6 Yang, and Domonic McCarns.
7 Your Honor, this matter's on calendar for an
8 arraignment.
10 Endrizzi and Robert Tice-Raskin for the United States.
11 MR. STEWARD: Your Honor, starting alphabetically,
12 for Ms. Assadi, Dean Steward on her behalf. She's present.
13 MR. ROBINSON: Good afternoon. Edward Robinson on
14 behalf of Akemi Bottari. She's present in court with her
15 mother.
16 MS. FRY: Candace Fry on behalf of Xochitl Sandoval
17 who is present.
18 MR. BIGELOW: Michael Bigelow, Your Honor, on behalf
19 of Omar Sandoval seeking appointment. Mr. Sandoval is present
20 before the Court out of custody, Your Honor.
21 MS. FRENCH: Good afternoon. Mary French on behalf
22 of John Corcoran who's present in court. Your Honor, he
23 qualifies. We ask that our office be appointed.
24 MR. GREINER: Good afternoon, Your Honor. James
25 Greiner. I'll be seeking appointment for Domonic McCarns. Mr.
1 McCarns is present in court in custody.

2 THE COURT: Anyone else?
3 MR. MANDABACH: Carl Mandabach for Mr. Low, attorney
4 for Yang.
5 THE COURT: Anyone else? Is Eduardo Vanegas present?
6 And is Anh Nguyen present?
7 Government's request with respect to those
8 defendants?
9 MS. ENDRIZZI: Bench warrant, Your Honor, please.
10 THE COURT: That'll be the order, no bail bench
11 warrant as to those two defendants.
12 And is everyone except -- let's see. Ms. French,
13 you're seeking appointment. Ms. -- Mr. Bigelow, Ms. Fry,
14 you're seeking appointment. Mr. Greiner, are you seeking
15 appointment or --
16 MR. GREINER: Yes, Your Honor.
17 THE COURT: All right. And are all other counsel

18 making general appearances as retained counsel of record?
19 MR. BIGELOW: Yes, Your Honor.
20 MR. STEWARD: Yes, Your Honor.
21 MR. ROBINSON: Yes, Your Honor.
22 THE COURT: All right. Ms. -- let's see. Ms.
23 Assadi, Ms. Bottari, Mr. Corcoran, Mr. Sandoval, Ms. Sandoval,
24 and I'm sorry, Mr. Low (sic), is your client male or female?
25 MR. MANDABACH: My client's female, Your Honor.
1 THE COURT: Ms. Yang and Mr. McCarns, each of you had
2 the right to counsel in these proceedings. In this regard, you
3 have the right to retain counsel of your own choosing. Those
4 that I've indicated have retained counsel to represent them and
5 your lawyers are making general appearances for all purposes at
6 this time.
7 As to you, if at any point in these proceedings you
8 were to become unable to retain counsel to represent you, you
9 could apply to the Court for appointment of counsel. The Court
10 would consider your application and if appropriate, would
11 appoint counsel to represent you at that time.
12 The others that I've indicated, the Court has now
13 appointed Ms. French and the Federal Defender's Office to
14 represent you, Mr. Corcoran; Mr. Bigelow to represent you, Mr.
15 Sandoval; Ms. Fry to represent you, Ms. Sandoval; and Mr.
16 Greiner to represent you, Mr. McCarns.
17 And counsel, have each of your clients received a

18 copy of the indictment that was returned February 28th, 2008 in
19 Criminal Case No. 08-0093-FCD, have they reviewed the
20 indictment, and do you waive its full reading on your behalf?
21 MR. BIGELOW: On behalf of Mr. Sandoval, the answer
22 to all of the Court's questions is yes.
23 MR. STEWARD: Same, Your Honor, as to Ms. Assadi.
24 MR. ROBINSON: Your Honor, same with respect to Ms.
25 Bottari.
1 MS. FRENCH: Same with respect to Mr. Corcoran.

2 MS. FRY: Same as respecting Ms. Sandoval also.
3 Sorry.
4 THE COURT: Got both of those.
5 MR. GREINER: Same with respect to Mr. McCarns.
6 THE COURT: All right. And counsel, do each of your
7 clients wish to enter pleas of not guilty and demand a jury
8 trial?
9 MS. FRY: Yes, Your Honor.
10 MS. FRENCH: Yes, Your Honor.
11 MR. BIGELOW: On behalf of Mr. Sandoval, yes, Your
12 Honor.
13 MR. STEWARD: Yes for Ms. Assadi, Your Honor.
14 MR. ROBINSON: Your Honor, yes for Ms. Bottari.
15 MR. GREINER: Yes for Mr. McCarns.
16 MS. FRENCH: And yes for Mr. Corcoran.
17 MR. MANDABACH: Yes for Ms. Yang.

18 THE COURT: All right. And I will advise the
19 defendants that you are charged in the indictment as follows:
20 Count 1 charges you with conspiracy to commit mail fraud in
21 violation of 18 U.S.C. Section 371; counts 10 and 11 -- excuse
22 me, 9, 10, 11 each charge mail fraud in violation of 18 U.S.C.
23 Section 1341; and count 13, that charges conspiracy to commit
24 money laundering in violation of 18 U.S.C. Section 1956(h).
25 If convicted of those offenses, the conspiracy count
1 carries with it a maximum possible punishment of up to five

2 years in prison, fine of up to $250,000 or the amount of the
3 gain or loss associated with the offense, which is ever
6 The mail fraud count is punishable by up to 20 years
7 in prison, fine of up to $250,000 or the amount of gain or loss
8 associated with the offense, which is ever -- whichever is
11 The money laundering conspiracy punishable by up to
12 10 years in prison, fine of up to 500,000 or twice the amount
13 of the criminally derived property involved in the transaction,
14 whichever is greater, or both fine and imprisonment, three-year
15 term of supervised release. All counts carry with them a
16 mandatory 100-dollar special assessment upon conviction.
17 Ms. Assadi, you're charged in counts 1 and 13. Ms.

18 Bottari also in counts 1 and 13. Mr. Corcoran in counts 1, 10,
19 11, and 13. Mr. Sandoval in counts 1, 9, 10, and 13. Ms.
20 Sandoval in counts 1 and 13. Ms. Yang in counts 1 and 13. Mr.
21 McCarns in counts 1 and 13. Each of the defendants' pleas of
22 not guilty and demand for jury trial will be entered on the
23 Court's record.
24 With respect to scheduling, the matter has been set
25 for a status conference before Judge Damrell on April 28th at
1 10:00 a.m. with respect to the co-defendants, and there has

2 been a previous finding with respect to co-defendants of the
3 exclusion of time from today's -- ongoing through today all the
4 way to that status conference date, both based upon complexity
5 in order to provide defense counsel reasonable time to prepare.
6 The exclusion of time being under 18 U.S.C. Section
7 3161(h)(a)(b)(2) and (b)(4), local codes T4, and the Court's
8 prepared to make that same finding with respect to all of these
9 defendants.
10 Any objection from any counsel or does everyone agree
11 that the interest of justice compel the exclusion of time to
12 the status conference?
13 MR. BIGELOW: So agreed, Your Honor.
14 MR. STEWARD: We agree, Your Honor.
15 MS. FRY: Agreed.
16 MR. ROBINSON: We would agree, Your Honor.
17 MR. GREINER: Agree, Judge.

19 MR. GREINER: One thing, Judge. My client is also
20 charged in counts 2 through 12. That's Mr. McCarns. I want to
21 make sure the record reflects he's charged in count 1, 2
22 through 12, and count 13 of the indictment.
23 THE COURT: Is he? Ms. Endrizzi gave me a --
25 THE COURT: -- a sheet that I was relying on, but it
1 may have been wrong on that one.

2 MR. GREINER: The government may have dismissed which
3 I will accept --
4 THE COURT: I don't think so.
5 MR. GREINER: -- with prejudice.
6 MS. ENDRIZZI: One second.
7 THE COURT: Let me see what my penalty slip says.
8 MS. ENDRIZZI: Oh, I'm sorry, Your Honor. Mr.
9 McCarns is charged in count 11.
10 THE COURT: Count 11 only?
12 THE COURT: Of 2 through 12?
13 MS. ENDRIZZI: Yes.
14 THE COURT: Mr. McCarns, you've also been charged in
15 count 11, which is a mail fraud count in addition to 1 and 13,
16 the two conspiracy counts.
17 MR. GREINER: So I take it there was no dismissal

18 then by the government?
19 THE COURT: No, not as to 11 anyway.
20 All right. Not guilty pleas are entered as to that
21 count as well.
22 Now let's take up the matter of custody and I'm going
23 to start with Ms. Bottari. I've reviewed the pretrial services
24 report. What's the government's position?
25 MS. ENDRIZZI: We'll submit on that, Your Honor.
1 THE COURT: Any opposition, Mr. Robinson?

2 MR. ROBINSON: No. Thank you, Your Honor.
3 THE COURT: All right. The Court will adopt the
4 recommendation of pretrial services and order that the
5 defendant be released on a $150,000 collateral bond secured by
6 her parents' residential property posted with the court with
7 pretrial services supervision of the following special
8 conditions:
10 regulations of the pretrial services agency. That she report
11 in person to that agency today before she leaves the building.
12 That she reside at a location approved by her pretrial services
13 officer, not move or absent herself from that residence without
14 the prior approval of her pretrial services officer.
17 pretrial services officer.

18 She shall not possess a firearm, destructive device
19 or other dangerous weapon. Additionally, she shall provide
20 written proof of divestment of all firearms currently under her
21 control.
22 She shall seek and/or maintain employment as approved
23 by her pretrial services officers; provide proof of the same as
24 requested by that officer.
25 She shall report any contact she has with law
1 enforcement to her pretrial services officer within 24 hours.

2 She shall surrender her passport, not apply for any
3 new passport or other travel document during the pendency of
4 this case.
5 She shall not have any contact with her co-defendants
6 in this action unless it is in the presence of her defense
7 counsel or otherwise preapproved by her pretrial services
8 officer.
9 She shall refrain from any use of alcohol or any use
10 of a narcotic drug or other controlled substance without a
11 prescription by a licensed medical practitioner, and she shall
12 notify pretrial services immediately of any prescribed
14 may not be used.
15 I will advise you, ma'am, that having been ordered
16 released under the Bail Reform Act, any failure to appear on
17 your part would do two things. First of all, your parents

18 would owe the government $150,000 and the government would be
19 entitled to foreclose upon their home in order to secure that
20 amount of money.
21 Number two, you'd be subject to prosecution for
22 failing to appear under 18 U.S.C. Section 3146. If you were
23 convicted of failure to appear, the failure to appear itself
24 would be punishable by up to 10 years in prison, fine of up to
25 $250,000 or both fine and imprisonment, and that penalty would
10
1 have to be imposed consecutive to any sentence that you might

2 receive on the already pending charges.
3 So it's obviously very important that you stay in
4 touch with you retain counsel, Mr. Robinson, that you cooperate
5 fully with pretrial services, that you abide by all the
6 conditions that I've set on your release, and that you make
7 your scheduled court appearances. Do you understand and will
8 you do that?
9 DEFENDANT BOTTARI: Yes, I will.
11 Mr. Robinson, please get a notice to defendant being
12 released from Pete. Come on up. Have your client sign that
13 before she leaves the building -- before she leaves the
14 courtroom. How long before posting?
15 MS. ENDRIZZI: Two weeks, three weeks, whatever.
16 MR. ROBINSON: If we could have two weeks, Your
17 Honor --
18 THE COURT: Two weeks prior to posting the documents.
19 Until that time, do a 150,000-dollar unsecured appearance bond
20 for the defendant to sign.
21 I want you to sign a 150,000-dollar unsecured bond at
22 this time, which will be replaced by the secured bond your
23 parents' property is posted. What that means is in the interim
24 if you were to fail to appear, you'd owe the government
25 $150,000. All right?
11
1 DEFENDANT BOTTARI: Okay.

2 THE COURT: Pete's going to print that for you right
3 now too, Mr. Robinson.
4 MR. ROBINSON: Thank you, Your Honor.
5 THE COURT: Do you want all these folks downstairs
6 today?
7 The other thing you have to do, ma'am, before you
8 leave the building, in addition to checking in with pretrial
9 services, you need to report to the marshal's office for
10 purposes of fingerprint and photograph before you leave the
11 building today.
12 Anything else?
13 MR. ROBINSON: Yes. Thank you, Your Honor. I have
14 Ms. Bottari's passport. Do I surrender that to the Court or to
15 pretrial services?
16 THE COURT: Do you guys -- do you want to take it or
17 do you want it delivered to the fourth floor?

18 PRETRIAL SERVICES OFFICER: If he has time if he
19 could just take it the fourth floor for us to the clerk's
20 office, that --
21 THE COURT: If you would deliver it at the public
22 counter on the fourth floor, just tell them the -- take the
23 calendar and tell them the case number that it relates to,
24 they'll accept it down there and put it in the vault.
25 MR. ROBINSON: Your Honor, I'm going to ask my client
12
1 to do that. I've got to catch that flight. I do appreciate

2 the Court's instruction.
3 THE COURT: Yes.
4 MR. ROBINSON: One last thing, Your Honor.
5 THE COURT: Ma'am, you do that.
6 MR. ROBINSON: Ms. Bottari's mother, who's present in
7 court, lives in San Mateo. That's in the Northern District of
8 California. If she's -- she wants to spend the night there
9 tonight. Does she have permission from the Court to spend the
10 night in the Northern District tonight and then travel to Los
11 Angeles tomorrow?
12 THE COURT: I don't see any problem with that.
13 PRETRIAL SERVICES OFFICER: Your Honor, pretrial
14 services can allow her to do that. She'll just have to get
15 prior approval when she's wanting to visit family outside of
16 the district that she's been restricted to.
17 THE COURT: Just make sure you ask pretrial services

18 when you report to them before you leave the building. I don't
19 think that's going to be a problem.
20 MR. ROBINSON: Your Honor, thank you very much.
22 MR. ROBINSON: No. Thank you.
23 THE COURT: All right. You're free to go.
24 THE CLERK: Mr. Robinson, here's the --
25 THE COURT: All right. Let's take up Ms. Assadi.
13
1 If other folks want to take a seat at this point,

2 feel free. I hate to keep everybody standing, but I can't
3 think of any way to do this other than to take them one by one.
4 All right. With respect to Ms. Assadi, what is the
5 government's position?
6 MS. ENDRIZZI: We will submit on the pretrial
7 services report, Your Honor, and it's my understanding that we
8 need two or three -- two days or give them a week to get the
9 cosigner.
11 MR. STEWARD: Yes, Your Honor. Our only request is
12 that, which I'll get to in just a second, and also may we have
13 a -- the travel restriction to the Central District of
14 California lifted as well? My office is in the Central
15 District in Orange County.
16 THE COURT: That would seem to be appropriate, Ms.
17 Faubion, with respect to this defendant. Even though she's

18 living in San Diego, her lawyer is in Orange County which is in
19 the Central District.
20 PRETRIAL SERVICES OFFICER: We can modify that, Your
21 Honor. That's fine.
23 MR. STEWARD: And, Your Honor, the other request
24 would be, as counsel indicated, our surety is Dr. Mahdavi.
14
1 MR. STEWARD: He was unable to be here today.

2 THE COURT: Right.
3 MR. STEWARD: May we have till close of business
4 Friday to file that form?
8 Otherwise in agreement?
9 MR. STEWARD: Yes, Your Honor.
10 THE COURT: All right. The Court will adopt the
11 pretrial services recommendation, order that Ms. Assadi be
12 released on $150,000 unsecured bond cosigned by her fiancé with
13 pretrial services supervision of the following special
14 conditions:
16 regulations of the pretrial services agency; report in person
17 to that agency before she leaves the courtroom today.

18 You can come up, Mr. Robinson.
19 MR. ROBINSON: Your Honor, thank you very much.
20 THE COURT: Yeah, you won't interrupt.
21 MR. ROBINSON: Appreciate it.
22 THE COURT: And here you thought I wasn't going to do
23 anything for you. I told you I was going to get you going.
24 MR. ROBINSON: Forty-five minutes. Thank you very
25 much.
15
1 THE COURT: But you didn't -- I could tell you did

2 not believe me.
3 MR. ROBINSON: There were some questions, but -- I
4 appreciate it. Thank you.
5 THE COURT: You are to reside at a location approved
6 by your pretrial services officer and not move or absent
7 himself -- yourself from that residence without the prior
8 approval of your pretrial services officer. Your travel is
9 restricted to the Eastern, Central, and Southern Districts of
10 California without the prior consent of your pretrial services
11 officer.
12 You shall not possess a firearm, destructive device
13 or other dangerous weapon. Additionally, you shall provide
14 written proof of divestment of any firearms currently under
15 your control.
16 You shall seek and/or maintain employment as approved
17 by your pretrial services officer and not -- and provide proof

18 of the same as requested by that officer.
19 You shall report any contact you have with any law
20 enforcement officer to your pretrial services officer within 24
21 hours of that contact.
22 You shall surrender your passport to the clerk of the
23 U.S. District Court and not apply for any new passport or other
24 travel document during the pendency of this action.
25 You shall not have contact with your co-defendants in
16
1 this case unless it is in the presence of your defense counsel

2 or otherwise preapproved by your pretrial services officer.
3 You shall refrain from the excessive use of alcohol
4 or any use of a narcotic drug or other controlled substance
5 without a prescription by your licensed medical practitioner
6 and you shall notify pretrial services immediately of any
7 prescribed medications. Medicinal marijuana, whether
8 prescribed or not, may not be used under any circumstances.
9 And as I advised the defendant before you, ma'am, the
10 same is true with respect to the penalties for failure to
11 appear in your case. If you were to fail to appear, you and
12 your fiancé would be liable to the government on the unsecured
13 bond. In addition, you could be prosecuted as I indicated to
14 the prior defendant who came before you.
15 So it's obviously very important that you stay in
16 touch with your retained counsel, Mr. Steward, that you
17 cooperate fully with pretrial services, that you abide by all

18 the conditions that I've set on your release, and that you make
19 your scheduled court appearances. Do you understand and will
20 you do that?
21 DEFENDANT ASSADI: Yes, I will.
22 THE COURT: All right. The cosigner on the unsecured
23 bond, that signature should be delivered to the court by close
24 of business Friday. Go ahead and have Ms. Assadi sign the
25 notice to defendant being released, as well as a $150,000
17
1 unsecured appearance bond.

2 (Pause - Court and clerk confer.)
3 THE COURT: What I want you to do is leave -- have
4 your client sign the one she's signing. We're going to give
5 you another one to have the fiancé sign and return to the court
6 so that we have one on file.
7 MR. STEWARD: Understood, Your Honor. Understood.
8 THE COURT: And, ma'am, you too need to not only
9 check in with pretrial, but you need to go down to the
10 marshal's office before you leave the building today for
11 purposes of fingerprint and photograph.
12 DEFENDANT ASSADI: I will, Your Honor.
13 THE COURT: And anything further with respect to this
14 defendant?
16 MR. STEWARD: No, Your Honor. Thank you.

18 Let's see. Mr. --
19 THE DEPUTY: Your Honor?
20 THE COURT: Yeah?
21 THE DEPUTY: Do you mind if we did Mr. McCarns first
22 so then we can start getting ready to process the rest?
23 THE COURT: That's fine. Let's go to Mr. McCarns.
24 THE DEPUTY: Thank you.
25 (Court and clerk confer.)
18
1 THE COURT: Oh shoot. We can't -- yeah. I need him.

2 I'm sorry, man. He's on the next case, too. Nevermind.
3 MR. MANDABACH: Your Honor, Yang is also on the
4 second case. Do you want to do at that time or --
5 THE COURT: Yeah, we need her as well. Let me try to
6 get rid of some people.
7 Mr. -- let's go to Mr. Sandoval.
8 MR. BIGELOW: Michael Bigelow, Your Honor, on behalf
9 of Mr. Sandoval who is present.
10 THE COURT: And what's the government's position with
11 respect to this defendant?
12 MS. ENDRIZZI: Your Honor, the government will submit
13 on the pretrial services report and we would note that that
14 amount is 180,000, rather than 150.
15 THE COURT: Your position, Mr. Bigelow?
16 MR. BIGELOW: Submitted.
17 THE COURT: All right. The Court will adopt pretrial

18 services' recommendation, order that Mr. Sandoval be released
19 on his collateral bond secured by all the available equity in
20 his parents' residence at the -- as -- at the address indicated
21 in the pretrial services report with the following special
22 conditions of release: That he report to and comply with the
23 rules and regulations of the pretrial services agency; that he
24 report to that agency today before he leaves the building; that
25 he reside at a location approved by his pretrial services
19
1 officer and not move or absent himself from that residence

2 without the prior approval of his pretrial services officer.
4 Districts of California without the prior consent of his
6 He shall not possess a firearm, destructive device or
7 other dangerous weapon. He shall provide written proof of
8 divestment of all firearms currently under his control.
10 by his pretrial services officer and provide proof of the same
11 as requested by that officer.
12 He shall report any contact with law enforcement to
13 his pretrial services officer within 24 hours of contact.
14 He shall surrender his passport to the clerk of the
15 U.S. District Court and obtain no new passport or other travel
16 document during the pendency of this case.
17 He shall not have any contact with his co-defendants

18 in the case with the exception of his ex-wife, Ms. Sandoval,
19 unless it is in the presence of defense counsel or unless
20 otherwise preapproved by pretrial services.
21 He shall not operate a motor vehicle unless properly
22 licensed and insured.
23 He shall refrain from the excessive use of alcohol or
24 any use of a narcotic drug or other controlled substance
25 without a prescription by a licensed medical practitioner and
20
1 he shall notify pretrial services immediately of any prescribed

3 may not be used.
4 He shall submit to drug or alcohol testing as
5 approved by his pretrial services officer and he shall promptly
6 enroll and complete the necessary DUI class that is required in
7 connection with his state court action.
8 Mr. Sandoval, do you understand the conditions I've
9 placed on your release and will you abide by them?
10 DEFENDANT O. SANDOVAL: I will.
11 THE COURT: You've heard me apprise everyone before
12 you of the penalties and what would occur. It's a serious
13 matter. Make sure you stay in touch with your appointed
14 counsel, cooperate fully with pretrial services, make those
15 scheduled court appearances unless your appearance has been
16 waived by the Court, and otherwise comply with all conditions.
17 Please have the defendant sign a notice to defendant

18 being released.
19 How long for the posting of the property?
20 MS. ENDRIZZI: Three weeks, Your Honor.
21 MR. BIGELOW: I would like three weeks, Your Honor.
22 THE COURT: Within three weeks. Also an unsecured
23 appearance bond in the amount of $180,000 pending the posting
24 of the property to be signed by the defendant.
25 MR. BIGELOW: Thank you very much, Your Honor.
21

3 MR. BIGELOW: Not at the moment, Your Honor.
5 Let's go to Mrs. Sandoval next.
6 MS. FRY: Candace Fry for Ms. Sandoval.
7 THE COURT: Government's position with respect to Ms.
8 Sandoval's custody status?
9 MS. ENDRIZZI: Submitted on the report, Your Honor.
11 MS. FRY: No, Your Honor, I submit it.
12 THE COURT: All right. The Court will adopt that
13 recommendation as well, order that Ms. Sandoval be released on
14 a $150,000 bond secured by the posting of her parents' property
15 with pretrial services supervision of the following special
16 conditions:

18 regulations of pretrial services. That she report to that
19 agency today before she leaves the building. She's to reside a
20 location approved by her pretrial services officer and not move
21 herself from that residence without the prior approval of her
22

2 or other dangerous weapon and shall provide written proof of
3 divestment of any firearms under her control.
5 by her pretrial services officer and provide proof of the same
8 enforcement to her pretrial services officer within 24 hours of
9 that contact.
10 She shall surrender her passport to the clerk of the
11 U.S. District Court and shall not apply for any new travel
12 document or passport during the pendency of this action.
13 She shall not have contact with her co-defendants
14 save and except her ex-husband in this case unless in the
15 presence of her defense counsel or otherwise preapproved by
16 pretrial services.
17 She shall refrain from any use of alcohol or any use

18 of a narcotic drug or other controlled substance without a
19 prescription by a licensed medical practitioner and she shall
20 notify pretrial services immediately of any prescribed
22 may not be used.
23 How long for the posting of the property in this
24 case?
25 MS. FRY: Two weeks, Your Honor.
23
1 MS. ENDRIZZI: That's fine, Your Honor.

2 THE COURT: Posting of property within two weeks.
3 Ma'am, you've heard me tell everyone the penalties
4 for failure to appear and what the consequences would be. It's
5 very important you stay in touch with Ms. Fry, cooperate fully
6 with pretrial services, abide by all the conditions, and make
7 your scheduled court appearances. Do you understand --
8 DEFENDANT X. SANDOVAL: Yes.
9 THE COURT: -- and will you do that?
10 DEFENDANT X. SANDOVAL: Yes, I will.
12 MS. FRY: And do you wish her to sign --
13 THE COURT: I do.
14 MS. FRY: -- an unsecured bond?
15 THE COURT: Unsecured bond pending in the amount of a
16 hundred and --
17 MS. ENDRIZZI: Fifty, Your Honor.

18 THE COURT: -- 50,000 pending the posting of
19 property.
20 MS. FRY: Thank you, Your Honor.
21 THE COURT: Please have her sign both documents
22 before she leaves today.
23 MS. FRY: Thank you.
24 THE COURT: She also needs to check in with pretrial
25 as well as the marshal's office before she leaves.
24
1 MS. FRY: All right, Your Honor. Thank you.

3 Okay. I think that just leaves Ms. Yang and Mr.
4 McCarns, doesn't it?
5 Ms. Yang?
6 What is the government's --
8 THE COURT: I'm sorry, Ms. French. I'll get to that
9 next.
10 MS. FRENCH: Yes.
11 THE COURT: With respect to Ms. Yang, what's the
13 MS. ENDRIZZI: We will submit on the report, Your
14 Honor.
15 THE COURT:
16 MR. MANDABACH: Same here, Your Honor; submit on the
17 report.
18 THE COURT: Closer case.
19 MS. ENDRIZZI: It causes a little pause. Maybe you
20 could strenuously warn her.
21 THE COURT: Right. I will adopt the recommendation
22 of pretrial services.
23 I will advise you though, Ms. Yang, that -- and the
24 charges here are very serious and there are circumstances in
25 your background, particularly your status here and some other
25
1 matters, that raise concerns with the Court. I will you tell
2 you this: Pretrial services is going to strictly supervise
3 you. If you violate the conditions of your supervised release,
4 I think there's not going to be much of any leeway in your case
5 because there's already a number of reasons to be concerned by
6 the Court regarding you making appearances. There probably is
7 no second chance here. You need to comply with the conditions
8 that I'm going to impose.
9 I will order the defendant released on a $150,000
10 Nguyen with pretrial services supervision of the following
11 conditions of release:
12 That Ms. Yang report to and comply with the rules and
13 regulations of the pretrial services agency. That she report
14 to that agency today before she leaves the building. That she
15 reside at a location approved by her pretrial services officer
16 and not move or absent herself from that residence without the
17 prior approval of her pretrial services officer.

22 or other dangerous weapon. Additionally, she shall provide
23 written proof of divestment of any firearms currently under her
24 control.
26
1 by her pretrial services officer and she shall provide proof of

2 the same as requested by that officer.
4 enforcement to her pretrial services officer within 24 hours of
5 the contact.
6 She shall surrender any passport or travel document
7 that she currently possesses to the clerk of the court and she
8 shall not obtain any new passport or other travel document
9 during the pendency of this action.
10 She shall not have any contact with her co-defendants
11 in this case unless it's in the presence of her defense counsel
12 or otherwise preapproved by pretrial services, and she shall
13 notify her pretrial services officer of any developments or
14 pending court dates with regard to her immigration status or
15 immigration proceedings.
16 That latter is very, very important, as are all the
17 conditions that I've set on your release. Ms. Yang, you've

18 heard me advise those that came before you regarding the
19 consequences if you were to fail to appear in this action. Not
20 only would you and your cosigners be liable to the government
21 in the amount of $150,000, but if you intentionally fail to
22 appear, you could be prosecuted, convicted, sentenced to
23 additional time in prison. It would have to be imposed
24 consecutive to any sentence you might receive on the already
25 pending charges.
27
1 It's very important that you abide by each of the

2 conditions I've set on your release, that you stay in touch
3 with Mr. Low, that you cooperate fully with pretrial services,
4 and that you make your scheduled court appearances. Do you
5 understand and will you do that?
6 DEFENDANT YANG: Yes.
7 THE COURT: And Ms. Yang's charged in the other case
8 that we're going to call in a moment as well, correct?
10 THE COURT: Those conditions of release will be
11 applied in both cases, so the notice and the bonds should bear
12 both case numbers, Pete.
13 Please have the defendant sign a notice to defendant
14 being released. We have -- do we have a cosigner present?
15 MR. MANDABACH: We have one --
16 THE COURT: Okay. Have both Ms. Yang and the
17 cosigner who's present sign that unsecured bond. Pete will

18 provide a second unsecured bond to have the other cosigner sign
19 off on. How long before that'll be accomplished?
20 MR. MANDABACH: One week.
21 THE COURT: One week acceptable?
22 MS. ENDRIZZI: One week is fine.
23 THE COURT: Within one week to be filed with the
24 Court.
25 Anything further?
28

2 MR. MANDABACH: Thank you, Your Honor.
3 THE COURT: You can get the forms from Pete.
4 Mr. Corcoran.
5 And Mr. Corcoran's charged in both as well?
7 THE COURT: And the government's position with
8 respect to Mr. Corcoran's custody status?
9 MS. ENDRIZZI: We will submit on the report, just
10 with a strenuous warning.
11 THE COURT: Is that -- Ms. French, what's your
12 position?
13 MS. FRENCH: Your Honor, we're in agreement with the
14 pretrial services recommendation. He has known about this
15 since 2006. He talked to the investigators, he's here
16 voluntarily, and he's been in touch with our office
17 extensively. He actually found out about this from our office.

18 He never received a summons, but he's here today and he's -- I
19 don't believe there's a risk of flight. He's prepared to sign
20 the bond and his good friend is prepared to sign as well.
21 THE COURT: Is that recent grand theft conviction
22 completely unrelated?
23 MS. FRENCH: Yes.
24 THE COURT: Mr. Corcoran --
25 MS. FRENCH: I believe so, I should say.
29
1 THE COURT: Those circumstances cause me concern.

2 And so much as in the case with Ms. Yang, I'm going to advise
3 you that I'm going to set conditions of release, but any
4 violation of those conditions is unlikely to be met with a
5 great deal of leeway.
6 DEFENDANT CORCORAN: Yes, Your Honor.
7 THE COURT: Because there's reasons to be concerned
8 about your appearance. I know you're here today and I know you
9 took those steps and that's great. It's probably about the
10 main reason why you're being released in light of some of those
11 red flags, but you really got to pay attention to business and
12 make sure you're in full compliance with the conditions I set.
13 DEFENDANT CORCORAN: I will be, Your Honor.
14 THE COURT: I will adopt the pretrial services
15 recommendation, order that on both cases Mr. Corcoran be
16 released on a $150,000 unsecured bond cosigned by Mr. Musselman
17 with pretrial services supervision of the following special

18 conditions:
20 regulations of the pretrial services agency. That he report in
21 person to that agency today before he leaves the building.
22 That he reside a location approved by his pretrial services
23 officer, not move or absent himself from that residence without
24 the prior approval of his pretrial services officer.
30
1 District of California without the prior consent of his

4 other dangerous weapon. Additionally, he shall provide written
5 proof of divestment of any firearms currently under his
6 control.
8 by his pretrial services officer and provide proof of the same
10 He shall report any contact he has with law
11 enforcement to his pretrial services officer within 24 hours of
12 the contact. He shall surrender his passport or any other
13 travel document to the clerk of the U.S. District Court and
14 obtain no new passport or other travel documents during the
15 pendency of this action.
16 He shall not have any contact with his co-defendants
17 in this case unless it's in the presence of his defense counsel

18 or otherwise preapproved by his pretrial services officer.
19 He shall not operate a motor vehicle unless properly
20 licensed and insured.
31
1 may not be used.

2 He shall submit to drug or alcohol testing as
3 approved by his pretrial services officer and he shall comply
4 with all the conditions of his probation in his state court
5 matter.
6 He's on probation in that?
8 THE COURT: Okay.
9 Sir, do you understand the conditions that I've
10 placed on your release and will you abide by them?
11 DEFENDANT CORCORAN: I will, Your Honor.
12 THE COURT: And you've previously heard me advise
13 those who came before you regarding the impact of any failure
14 to appear in your case. Those same advisements apply to you as
15 well.
16 Anything further with respect -- oh, how long for the
17 cosign?
18 MS. FRENCH: Two weeks would be fine, Your Honor.
19 MS. ENDRIZZI: Two weeks is fine.
20 THE COURT: Within two weeks the co-signature to be
21 filed with the court. Have the defendant sign a notice to
22 defendant being released bearing the captions in -- or the
23 numbers of both cases, as well as a 150,000-dollar unsecured
24 bond.
25 Anything else?
32

2 MS. FRENCH: No, Your Honor.
6 THE COURT: And Mr. McCarns, right?
7 And with respect to Mr. McCarns, the government's
8 position?
9 MS. ENDRIZZI: Detention, Your Honor. He is here on
10 a writ. While we're going to have to do some research tonight
11 to figure out whether or not we need send him back to
12 Susanville or keep him here. He's only got a -- I think two or
13 three weeks left on his state charge, so -- but for the
14 meantime we'd ask that he be kept here in the marshal's
15 custody.
16 THE COURT: Your position, Mr. Greiner?
17 MR. GREINER: That's correct, Your Honor. I've

18 talked with the government attorneys. We're trying to figure
19 out the best way to get Mr. McCarns' state time done. His
20 projected release date was May 15th. As soon as we go through
21 that legal thicket, we'll be able to figure out how to get that
22 done so that then I can bring it back in front of the Court on
23 detention in this case.
25 MR. GREINER: But until that time, my hands are
33
1 somewhat tied so I would ask without prejudice --

3 MR. GREINER: -- the Court make a ruling today.
4 THE COURT: Based upon the information currently
5 before the Court, I find by a preponderance of the evidence
6 that no condition or combination of conditions will reasonably
7 assure the appearance of Mr. McCarns were I to issue a release
8 order, and accordingly I'll order that he be detained pending
9 further proceedings both in this case and in the companion
10 case. That order being without prejudice to the matter being
11 brought back before the Court based upon new or additional
12 information, particularly the completion of his state court
13 sentence.
14 MR. GREINER: I appreciate that, Judge.
15 THE COURT: Anything else with respect to that
16 matter?

18 MR. GREINER: No, Your Honor.
19 THE COURT: All right. I think we're ready then to
20 call the other case.
22 States v. Keith Brotemarkle, Benjamin Budoff, John Corcoran,
23 Kou Yang, and Domonic McCarns.
24 Your Honor, this matter's on calendar for an
25 arraignment.
34

3 MS. FRENCH: Good afternoon. Mary French on behalf
4 of John Corcoran who's present in court.
5 MR. GAZLEY: Good afternoon, Your Honor. Bob Gazley
6 on behalf of Mr. Brotemarkle who is also present before the
7 Court.
8 MR. MANDABACH: And Carl Mandabach for Mr. Low for
9 Kou Yang.
11 Greiner representing Domonic McCarns. Mr. McCarns is present
12 in court in custody.
13 THE COURT: And is there no appearance by Benjamin
14 Budoff?
15 MS. ENDRIZZI: We would ask for a warrant, Your
16 Honor.
17 THE COURT: Let the record reflect Mr. Budoff is not

18 present and the Court will issue a no bail bench warrant.
19 And Mr. Gazley, is it?
20 MR. GAZLEY: It's Gazley, Your Honor, thank you.
21 THE COURT: Gazley. And you're making a general
22 appearance as retained counsel of record?
23 MR. GAZLEY: Yes, sir, I am.
25 And Mr. Low -- is it Lou (phonetic)?
35
1 MR. MANDABACH: Mr. Mandabach for Mr. Low. It is a

2 general appearance by retained counsel, Your Honor.
4 MR. MANDABACH: Mr. Low's in trial in Southern
5 California so I'm filling in for him.
7 MR. MANDABACH: Sorry for the confusion.
8 THE COURT: That's all right.
9 And Mr. Greiner seeking appointment in this case as
10 well as are you, Ms. French?
12 MR. GREINER: That's correct, Your Honor.
14 Mr. Brotemarkle, Mr. Corcoran, Ms. Yang, and Mr.
15 McCarns, each of you have the right to counsel in these
16 proceedings. In this regard, you have the right to retain
17 counsel of your own choosing.

18 Mr. Brotemarkle, you've retained Mr. Gazley to
19 represent you.
20 Ms. Yang, you've retained Mr. Low and Mr. Mandabach
21 and their firm to represent you in this matter.
22 With respect to the two of you, if at any time you
23 were to become unable to afford to retain counsel, you could
24 apply to the Court for appointment of counsel. The Court would
25 consider the application, if appropriate, would consider
36
1 appointing counsel at that time.

2 With respect to you, Mr. Corcoran, the Court is
3 appointing the Office of the Federal Defender to represent you
4 in this matter as well.
5 And Mr. McCarns, the Court is appointing Mr. Greiner
6 to represent you in this matter as well.
7 And counsel, have your clients received a copy of the
8 indictment returned March 13th, 2008 in Criminal Case No. 08-
9 0116, have they reviewed that indictment, and do you waive its
10 full reading on their behalf?
11 MS. FRENCH: Your Honor, on behalf of Mr. Corcoran,
12 we received a copy of the indictment. He's reviewed it. He
13 understands it. We waive further reading. We'd like to enter
14 a not guilty plea and ask for a jury trial.
15 THE COURT: And?
16 MR. GREINER: On behalf of Mr. McCarns, we join.
17 MR. GAZLEY: Your Honor, on behalf of Mr.

18 Brotemarkle, we haven't yet received a hard copy of the
19 indictment. I'm understanding it will be emailed.
20 MS. ENDRIZZI: I will email it as soon as I get
21 upstairs, Your Honor.
22 MR. GAZLEY: We would at this time waive reading of
23 that indictment and enter a plea of not guilty.
24 THE COURT: Demand a jury trial?
25 MR. GAZLEY: Yes, sir, demand a jury trial.
37
1 THE COURT: And?

2 MR. MANDABACH: And as far as Defendant Yang, we
3 waive formal reading of the complaint and ask the -- plead not
4 guilty, ask for jury trial. Acknowledge receipt of the copy of
5 the indictment.
6 THE COURT: All right. Mr. Brotemarkle, Mr.
7 Corcoran, Mr. McCarns, and Ms. Yang, the indictment that I just
8 referred to charges in count 1 conspiracy to commit mail fraud
9 in violation of 18 U.S.C. Section 371, in counts 2 through 4
10 mail fraud in violation of 18 U.S.C. Section 1341, and in count
11 5 conspiracy to commit money laundering in violation of 18
12 U.S.C. Section 1956.
13 If -- Mr. Brotemarkle, you're charged in counts 1 and
14 5; Mr. Corcoran in counts 1, 3, 4, and 5; Ms. -- Mr. McCarns in
15 count 1; and Ms. Yang in counts 1 and 5.
16 If convicted of those offenses, the conspiracy count
17 carries with it a maximum punishment of up to five years in

18 prison, fine of up to $250,000 or the amount of gain or loss
19 associated with the offense, whichever is greater, or both fine
20 and imprisonment, a three-year term of supervised release.
21 The mail fraud counts in counts 2 through 4
22 punishable by up to 20 years in prison, fine of up to $250,000
23 or the amount of the gain or loss associated with the offense,
24 whichever is greater, or both fine and imprisonment, three-year
25 term of supervised release.
38

2 to 10 years in prison, fine of up to $500,000 or twice the
3 amount of criminally derived property involved in the
4 transactions, whichever is greater, or both fine and
5 imprisonment, a three-year term of supervised release. All the
6 counts carry with them a mandatory $100 special assessment and
7 you may be ordered to pay restitution to any victims of the
8 offenses charged in counts 1 through 4.
9 Your counsel have indicated that you all wish to
10 enter pleas of not guilty and demand a jury trial. Those pleas
11 of not guilty and demand for jury trial will be entered on the
12 Court's record.
13 This matter has also been set for status conference
14 before Judge Damrell on April 28th at 10:00 a.m. and there has
15 also in this case been exclusions under 3161(h)(a)(b)(2) and
16 (h)(a)(b)(4) under the Speedy Trial Act, both due to the
17 complexity of the case in order to provide defense counsel

18 reasonable time to prepare.
19 Does everyone concur that that exclusion is
20 appropriate for all defendants?
21 MR. MANDABACH: Yes, Your Honor.
22 MR. GAZLEY: On behalf of Mr. Brotemarkle, yes, sir.
24 MR. GREINER: On behalf of Mr. McCarns, yes, Your
25 Honor.
39
1 MR. MANDABACH: Yes, Your Honor --

3 MR. MANDABACH: -- on behalf of Defendant Yang.
4 THE COURT: Okay. The same exclusions then are
5 ordered with respect to these defendants as well. And we have
6 already dealt with Mr. McCarns, Ms. -- Mr. Corcoran, and Ms.
7 Yang with respect to custody status, correct?
8 MS. ENDRIZZI: Correct, Your Honor.
9 THE COURT: They are free to go.
10 And with respect to Mr. Brotemarkle, what is the
12 MS. ENDRIZZI: We will submit on the pretrial
13 services report, Your Honor.
14 THE COURT: And counsel, anything you wish to add?
15 MR. GAZLEY: No, Your Honor, I would submit.
17 MR. GAZLEY: Your Honor, if there was anything to

18 add, it would be one more mitigating factor against the flight
19 that in that Mr. Brotemarkle has hired through his family
20 private counsel to retain -- has retained private counsel for
21 the matter.
22 THE COURT: All right. The Court will follow the
23 recommendations of pretrial services officer, order the
24 defendant released on a $150,000 unsecured appearance bond
25 cosigned by Larry Brotemarkle, Dolores Brotemarkle, Karen
40
1 Knapp, Mary Kay Yingling, and Regina Brotemarkle with pretrial

2 services supervision of the following special conditions: That
3 the defendant comply with the rules and regulations of the
4 pretrial services agency; that he report in person to the
5 pretrial services agency before he leaves the building today;
6 that he reside a location approved by his pretrial services
7 officer, not move or absent himself from that residence for
8 more than 24 hours without the prior approval of his pretrial
9 services officer.
10 His travel is restricted to the Eastern District of
11 California and the Western District of Pennsylvania -- is that
12 where you -- counsel, or is that --
13 MR. GAZLEY: Your Honor, I was going to ask the Court
14 to consider allowing him to travel to the Central District also
15 inasmuch as my offices are located in Orange County.
16 THE COURT: I think that would be appropriate. We'll
17 make it Eastern and Central Districts of California and Western

18 District of Pennsylvania, as well as travel between those
19 locations. His travel is restricted to those locations,
20 however, without the prior consent of his pretrial services
21 officer.
23 other dangerous weapon. He shall provide written proof of
24 divestment of all firearms currently under his control.
41

4 medications. Medicinal marijuana, whether prescribe or not,
5 may not be used.
6 He shall seek and/or maintain employment and provide
7 proof of the same as requested by his pretrial services
8 officer. He shall surrender any passport or other travel
9 documents that he possesses to the clerk of the U.S. District
10 Court and not obtain any new passport or other travel documents
11 during the pendency of this action.
12 He shall have no contact with his co-defendants in
13 this action unless it's in the presence of defense counsel or
14 otherwise preapproved by his pretrial services officer, and he
15 shall report any contacts that he has with law enforcement to
16 his pretrial services officer within 24 hours of that contact.
17 And, Mr. Brotemarkle, you've heard me advise those

18 who came before you regarding the penalties for failure to
19 appear, as well as the importance of complying with all the
20 terms and conditions of release. Do you understand the
21 conditions I've set on your release and will you abide by them?
22 DEFENDANT BROTEMARKLE: I will.
23 THE COURT: Counsel, please have your client sign the
24 notice to defendant being released. The unsecured appearance
25 bond -- you don't have any cosigners with you, right?
42
1 MR. GAZLEY: No, not today, Your Honor.

2 THE COURT: How long will it take to get their
3 signatures on the --
4 MR. GAZLEY: Your Honor, inasmuch as there are so
5 many signatures to beget, we're looking for two weeks.
6 MS. ENDRIZZI: No objection, Your Honor.
7 THE COURT: Have your client sign a notice to
8 defendant being release before he leaves the courtroom, the
9 unsecured appearance bond that he's going to sign. Then get
10 another unsecured appearance bond to have the others circulate
11 and sign among them.
12 MR. GAZLEY: Thank you.

18 --o0o--
19 CERTIFICATE
the electronic sound recording of the proceedings in the above-
21 entitled matter.
22
23 July 13, 2011
Patricia A. Petrilla, Transcriber
24 AAERT CERT*D-113
25
3 --o0o--

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
6 vs. ) Monday, April 28, 2008
) 2:29 P.M.
)
9
11
APPEARANCES:
12
(916) 554-2700
15
For Defendant Eduardo Vanegas: ROBERT J. PETERS
16 Law Offices of Robert J. Peters
716 - 19th Street
(916) 442-1806
18
For Defendant Andrew Vu: STANLEY J. GREENBERG
19 A Law Corporation
6080 Center Drive, Suite 800
20 Los Angeles, CA 90045
(310) 215-7509
21
(916) 930-4193
24
25
ii

Transcription
3 5002 - 61st Street
4 (916) 455-3887
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1 SACRAMENTO, CALIFORNIA, MONDAY, APRIL 28, 2008, 2:29 P.M.
2
5 States v. Andrew Vu and Edward Vanegas (sic). Your Honor, this
6 matter is on calendar for an arraignment.
7 MR. GREENBERG: Good morning, Your Honor. Stanley
8 Greenberg appearing on behalf of Mr. Vu who is present.
9 MR. PETERS: Good morning, Your Honor. Bob Peters
10 appearing on behalf of Eduardo Vanegas, seeking appointment to
11 represent him for the panel, Your Honor.
12 MR. TICE-RASKIN: Good afternoon, Your Honor. Robert
13 Tice-Raskin for the United States.
14 (Pause.)
15 THE COURT: And Mr. Greenberg, are you making a
16 general appearance as retained counsel of record?
17 MR. GREENBERG: I am.
18 THE COURT: All right. Ready to proceed, Mr. Peters?
19 MR. PETERS: I am, Your Honor.
20 THE COURT: All right. Mr. Vu and Mr. Vanegas, each
21 of you the right to counsel in these proceedings. In this
22 regard, you have the right to retain counsel of your own
23 choosing. If you're unable to afford to retain counsel you may
24 apply to the Court for appointment of counsel, the Court will
25 consider that application and if appropriate will appoint

1 counsel to represent you.
2 Mr. Vu, Mr. Greenberg is making a general appearance
3 as retained counsel of record on your behalf. And Mr. Peters,
4 does Mr. Vanegas qualify for appointment of counsel?
5 MR. PETERS: He's filled out the financial
6 declaration and yes, he does.
7 THE COURT: Mr. Peters will then be appointed to
8 represent you, Mr. Vanegas.
9 Gentlemen, you've been charged -- well, first,
10 counsel, have your clients received a copy of the indictment
11 returned February 28th, 2008 in Criminal Case No. 08-93-FCD,
12 have they reviewed that indictment and do they waive it's full
13 reading?
14 MR. PETERS: On behalf of Mr. Vanegas, yes to all the
15 Court's inquiries.
16 MR. GREENBERG: And on behalf of Mr. Vu, the answer
17 is yes as to all those questions, Your Honor.
18 THE COURT: Is Mr. Vanegas charged only in the money
19 laundering conspiracy?
20 MR. TICE-RASKIN: That's correct, Your Honor.
21 THE COURT: All right. Mr. Vu and Mr. Vanegas,
22 you've both been charged in count three of -- or count 13 of
23 the indictment with conspiracy to commit money laundering in
24 violation of 18 USC Section 1956(h). Mr. Vu, you've also been
25 charged in count one with conspiracy to commit mail fraud in

1 violation of 18 USC Section 371.
2 If convicted of the money laundering conspiracy you
3 both face a maximum possible punishment of up to 10 years in
4 prison, a fine of up $500,000, or twice -- not more than twice
5 the amount of the criminally derived property involved in the
6 transaction, whichever is greater, or both fine and
7 imprisonment, a three-year term of supervised release.
8 Count one, Mr. Vu, in which you're charged, is
9 punishable by up to five years in prison, a fine of up to
10 $250,000 or both -- excuse me, the fine is also possibly the
11 amount of the gain or loss associated with the underlying
12 fraud, whichever is greater, or both fine and imprisonment, a
13 three-year term of supervised release, and both counts 1 and 13
14 carry with them the mandatory $100 special assessment if you
15 are convicted of the charged offense.
16 And counsel, do your clients wish to enter pleas of
17 not guilty and demand a jury trial?
18 MR. PETERS: Yes, Your Honor.
19 MR. GREENBERG: On behalf of Mr. Vu, yes.
21 a jury trial will be entered on the Court's record. I know the
22 case has been set for status conference before Judge Damrell.
23 What's the date?
24 THE CLERK: There was a hearing today, Your Honor.
25 It's going to be for August 18th at 10:00 a.m.?

1 THE COURT: So it was on today?
2 MR. TICE-RASKIN: It was, Your Honor.
3 THE COURT: Did these defendants appear at that time?
4 MR. GREENBERG: Mr. Vu did, and I did, Your Honor.
5 MR. PETERS: Mr. Vanegas did not, Your Honor. He
6 surrendered this morning.
7 THE COURT: All right. And there's -- the next
8 status conference is set for?
9 THE CLERK: August 18th, Your Honor at 10:00 a.m.
10 THE COURT: All right. That will be the date set in
11 the case.
12 What's the government's position regarding the
13 defendants' custody status?
14 MR. TICE-RASKIN: Your Honor, the government concurs
15 with the recommendations made as to each and submits on the
16 basis of the Pretrial Services reports.
17 THE COURT: Anything counsel wish to add?
18 MR. PETERS: Your Honor, with respect to Mr. Vanegas,
19 I agree with the -- we agree with the recommendations. The
20 only issue is that the signatores, or the appearance bond all
21 reside in the Phoenix area. I would request a --
22 THE COURT: How long is it going to take you to get
23 their signatures?
24 MR. PETERS: I'm going to request two weeks since I
25 have not met them. I just arranged his surrender this morning.
1 He's the only one in the family I've talked to as of yet.
2 THE COURT: How about by a week from Friday?
3 MR. PETERS: I'll take what you give me. That will
4 be fine.
5 THE COURT: It shouldn't take too long to get it
6 FedEx'd.
7 MR. PETERS: That will be fine.
8 THE COURT: What we'll do is have him sign an
9 unsecured appearance bond today. Then get a second one from
10 Pete for all the co-signers.
11 MR. PETERS: And I've discussed that with Pete prior
12 to court. That's fine, Judge.
13 THE COURT: All right. And how long do you need to
14 post property with respect to Mr. Vu's bond?
15 MR. GREENBERG: Well, I would like to correct one or
16 two things, if I can, Your Honor. Just a --
17 THE COURT: Oh, no, you already said you had no
18 objection --
19 MR. GREENBERG: No, I didn't.
20 THE COURT: -- no, go ahead.
21 MR. GREENBERG: I didn't say anything. I was
22 waiting.
23 (Laughter.)
24 MR. GREENBERG: The pretrial report indicates that my
25 client has no valid driver's license. Actually he does, and

1 I've shown it to the pretrial services officer who's present in
2 court. She can verify it, Ms. Baker. And also, the record
3 should reflect that my client has already surrendered his
4 passport.
5 As I read -- especially at the bottom of page 3 of
6 the Pretrial Services report, given all those factors, there's
7 nothing that jumps out to me that suggests that we would need
8 this secured bond, but I see the report, and if the Court is
9 inclined to order, I'm not going to quarrel with it. He does
10 have family that can put it up, so we'll get it out.
11 I had discussed with Ms. Endrizzi, since you asked,
12 three weeks to post it. We have to post it in a different
13 district. I frankly intend to move with all deliberate speed.
14 I think we can get it done sooner, but I'd like a little
15 cushion.
17 MR. TICE-RASKIN: No objection to three weeks for the
18 property bond. I would ask that an appearance bond signed by a
19 parent member be filed on a more expedited basis.
20 THE COURT: All right. How long would it take to get
21 his parents' signature on a co-signed parents' bond?
22 MR. GREENBERG: I would -- can't be too long.
23 THE COURT: All right. Okay. All right. With
24 respect to Mr. Vu, the Court will order that he be released on
25 a $150,000 collateral bond secured by the available equity in

1 his parents' residence with Pretrial Services supervision and
2 the following special conditions of release:
4 regulation of the Pretrial Services agency. Has he already
5 reported? No?
6 MR. GREENBERG: He had --
7 PRETRIAL SERVICES OFFICER: Andrew Vu -- I have met
8 with Andrew Vu today.
9 THE COURT: So he doesn't need to report again?
10 PRETRIAL SERVICES OFFICER: No, sir.
11 MR. GREENBERG: He's also been processed by the
12 marshals already, Your Honor.
13 THE COURT: That he reside at a location approved by
14 his pretrial services officer, not move or absent himself from
15 that residence without the prior approval of his pretrial
16 services officer. His travel is restricted -- is that travel
17 restriction going to work? District of Nevada and Eastern
18 District of California?
19 MR. GREENBERG: I have discussed with Ms. Baker it
20 should also be the Central District so he can come to my
21 office.
22 THE COURT: You're -- right.
23 PRETRIAL SERVICES OFFICER: Yes.
24 THE COURT: And Central District of California.
25 Central and Eastern of California and Nevada.

1 MR. GREENBERG: And I think -- I hate to get
2 technical and sound like a lawyer, but I think when you drive
3 from Las Vegas to Los Angeles, you only go through the Central
4 District -- from the District of Nevada to the Central
5 District. I don't think he goes out of the district, but I
6 would contemplate the travel between the two.
7 THE COURT: And travel between those three districts
8 as part of this condition.
9 And that he not possess a firearm, destructive
10 device, or other dangerous weapon. Additionally, he shall
11 provide written proof of divestment of any firearms currently
12 under his control. He shall seek and/or maintain employment as
13 approved by his pretrial services officer and provide proof of
14 the same as requested by that officer.
15 He should continue to work in the mortgage -- should
16 he continue to work in the mortgage or real estate business, he
17 shall provide Pretrial Services with a letter from his employer
18 indicating they're aware of the pending charges. He shall not
19 enter into any business in which he is a treasurer or officer
20 in charge of finances, or the handling of any finances for any
21 person.
22 He shall report any contact he has with law
23 enforcement agents or officers to his pretrial services officer
24 within 24 hours of that contact. He shall surrender his
25 passport to the Clerk of the U.S. District Court and obtain no

1 new passport or other travel document during the pendency of
2 this case. Counsel has indicated that that surrender of
3 passport has already taken place.
4 He shall not have contact with his co-defendants in
5 this case unless it is in the presence of his defense counsel,
6 or otherwise pre-approved by his pretrial services officer.
7 And he shall not operate a motor vehicle unless properly
8 licensed and insured. I understand he does have a valid
9 license but make sure he's in compliance with the license and
10 insurance requirements.
11 And have Mr. Vu sign a $150,000 unsecured appearance
12 bond as well as a "Notice To Defendant Being Released" before
13 he leaves the courtroom today. Pete will give you another
14 unsecured bond co-signed -- for the co-signers to sign off on
15 that will bridge the gap period while we're awaiting the
16 securing of the bond which shall occur within three weeks. If
17 we can get the parents' signature within one week, that would
18 be satisfactory; property to be posted within three.
19 With respect to Mr. Vanegas, and Mr. Vu, don't leave
20 just quite yet -- that's fine to take care of business while
21 we're --
22 MR. GREENBERG: The motion --
23 THE COURT: Yes, definitely. Definitely take care of
24 business, but stay there because I have an advisement for both
25 of you at the end.

10
1 With respect to Mr. Vanegas, the Court will set bond
2 in the amount of $150,000 to be co-signed by Sandra Elba
3 (phonetic) and Pablo Vanegas along with the defendant with
4 Pretrial Services' supervision of the following special
5 conditions:
7 regulations of the Pretrial Services agency, and Mr. Vanegas
8 -- does he need to report?
10 THE COURT: Yes. Report to Pretrial Services before
11 you leave the building today. He is to reside at a location
12 approved by his pretrial services officer, not move or absent
13 himself from that residence for more than 24 hours without the
14 prior approval of his pretrial services officer.
15 His travel is restricted to the Eastern District of
16 California and the District of Arizona without the prior
17 consent of his pretrial services officer. He shall not possess
18 a firearm, destructive device, or other dangerous weapon.
19 Additionally, he shall provide written proof of divestment of
20 all firearms currently under his control.
21 He shall refrain from excessive use of alcohol, or
23 without a prescription by a licensed medical practitioner. He
24 shall notify Pretrial Services immediately of any prescribed
25 medications. Medicinal marijuana whether prescribed or not may

11
1 not be used.
2 He shall seek and/or maintain employment and provide
3 proof of the same as requested by his pretrial services
4 officer. He shall not apply for a passport, or obtain any
5 passport or other travel document during the pendency of this
6 case. He shall not have contact with his co-defendants unless
7 it is in the presence of his defense counsel, or with the pre-
8 approval of his pretrial services officer. He shall report any
9 contact with any law enforcement officer to his pretrial
10 services officer within 24 hours of that contact.
11 Mr. Vanegas should sign the "Notice To Defendant
12 Being Released" as well as the unsecured bond before he leaves
13 the courtroom today. The co-signer's signatures to be filed
14 with the Court within 10 days of today's date.
15 Has Mr. Vanegas been processed by the marshals?
16 (No audible response.)
17 THE COURT: And so has Mr. Vu?
18 (No audible response.)
19 THE COURT: All right. So you don't need to do that
20 gentlemen. I will advise both of you that having been ordered
21 released under the Bail Reform Act, any failure to appear on
22 your part in this matter if intentional would subject you to
23 prosecution for failure to appear in violation of 18 USC
24 Section 3146. If you intentionally failed to appear and were
25 convicted of the failure to appear, of course not only would

12
1 you and your co-signers lose the bond, be liable to the
2 government for $150,000, but in addition to that, you could be
3 punished by up to 10 years in prison, a fine of up to $250,000
4 or both fine and imprisonment, and the penalty for failing to
5 appear would have to be imposed consecutive to any sentence
6 that you might receive on the already bending charge.
7 So it's very important, obviously, that you stay in
8 touch with your counsel, that you cooperate fully with Pretrial
9 Services that you abide by all the conditions that I've set on
10 your release, and that you make your scheduled court
11 appearances.
12 Do you understand Mr. Vu, and will you do that?
13 DEFENDANT VU: Yes.
14 THE COURT: And Mr. Vanegas, do you understand and
15 will you do that?
16 DEFENDANT VANEGAS: Yes, Your Honor.
18 MR. TICE-RASKIN: Your Honor, it's my understanding
19 in speaking with counsel for Mr. Vanegas that he will seek an
20 unopposed motion for exclusion of time between now and the
21 August 18 status conference under T2 and T4, as previously
22 noted for the Court, there's preliminary discovery of 20,000
23 pages and other discovery to be made available which would
24 number of 100 banker's boxes of documents.
25 THE COURT: Did Judge Damrell continue the exclusion

13
1 of time to the next status conference date?
2 MR. TICE-RASKIN: He did, as to all the remaining
3 defendants.
4 MR. PETERS: That would be my request, Your Honor.
5 THE COURT: Interests of justice compel the exclusion
6 of time with respect to Mr. Vanegas as well to the August 19th
7 date?
8 THE CLERK: 18th.
9 MR. TICE-RASKIN: August 18th, Your Honor.
10 THE COURT: The August 18th date under local codes T2
11 and T4, complexity and to provide defense counsel reasonable
12 time to prepare.
13 Anything else?
14 MR. GREENBERG: May I approach and give you this?
15 THE COURT: Of course. When you've got those
16 documents signed, just bring them up. Don't worry.
19 --o0o--
20 CERTIFICATE

22 entitled matter.
23
24 July 11, 2011
25 AAERT CERT*D-113
3 --o0o--

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
6 vs. ) Friday, May 16, 2008
) 2:15 P.M.
) Hearing re: defendant's
8 Defendants. ) motion to reopen detention.
)
9
10 BEFORE THE HONORABLE GREGORY G. HOLLOWS
11
APPEARANCES:
12
For Plaintiff: MATTHEW SEGAL for
13 S. ROBERT TICE-RASKIN
15 (916) 554-2700

18 (916) 649-2006

U.S. District Court
21 (916) 930-4193

Transcription
23 5002 - 61st Street
24 (916) 455-3887
25 Proceedings recorded by electronic sound recording;

transcript produced by transcription service.
1 SACRAMENTO, CALIFORNIA, FRIDAY, MAY 16, 2008, 2:15 P.M.
2
4 THE CLERK: Calling 08-cr-0093 and 08-cr-00116-FCD,
5 the United States v. Domonic McCarns. This matter is on
6 calendar for defendant's motion to reopen detention, Your
7 Honor.
8 MR. SEGAL: Good afternoon, Your Honor. Matthew Seal
9 for the United States. I'm standing in for Robert Tice-Raskin.
10 THE COURT: Mr. Segal, good afternoon.
12 Greiner. I've been appointed to represent Mr. McCarns in this
13 case. Mr. McCarns is present in court in custody.
14 THE COURT: Mr. Greiner, good afternoon to you.
15 Mr. Greiner this is your motion to seek to reopen
16 detention and I noted from the detention order that it was made
17 without prejudice to you coming in here and reopening. What do
18 you have?
19 MR. GREINER: What I have is this, Judge. I have
20 read the recommendation of pretrial. Based upon what has been
21 written and my conversations with pretrial what I would like to
22 do is ask the Court to continue this on its calendar to
23 Wednesday, May 28th, and the reasons for that is that based
24 upon what the recommendation is, I need to make some calls and
25 find a residence for my client to live. That seems to be a

1 part of the puzzle that may change the recommendation as it is
2 now from pretrial.
3 I would put it on next week, however, I'm going to be
4 in trial in front of Judge Damrell, so I can't make a 2:00
5 o'clock appearance next week. So I will be beating the bushes,
6 making phone calls. I've been making phone calls all last
7 night and today, I just haven't received any phone calls back.
8 So what I would like to do is put it on for May 28th at 2:00
9 o'clock.
10 THE COURT: Well, let me give you another little
11 piece of the puzzle, and it may have to do with finding some
12 security for a bond. So I just throw that out. We'll be
13 looking for that, Mr. Greiner.
14 MR. GREINER: Then there's another piece of the
15 puzzle that I have to be doing.
16 THE COURT: All right. So May 28th, 2008 at 2:00
17 p.m. We'll see you at that time.
18 MR. GREINER: Thank you, Judge.
19 MR. SEGAL: Thank you, Your Honor.
20 THE COURT: Being no other matters on calendar, this
21 Court's in recess.
24 --o0o--
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1 CERTIFICATE
4 entitled matter.
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6 July 12, 2011
8 AAERT CERT*D-113
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25
3 --o0o--

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
6 vs. ) Friday, June 6, 2008
) 2:45 P.M.
8 Defendants. ) motions to reopen detention
) hearing.
9
11
APPEARANCES:
12
(916) 554-2700
15
For Defendant Domonic McCarns: JAMES R. GREINER
16 Law Offices of James R. Greiner
555 University Avenue, Suite 290
(916) 649-2006
18
(916) 930-4193
21
22 Transcription
5002 - 61st Street
(916) 455-3887
24
1 SACRAMENTO, CALIFORNIA, FRIDAY, JUNE 6, 2008, 2:45 P.M.
2
4 THE CLERK: Calling Criminal Cases No. 08-0093-FCD,
5 and Criminal Case 08-0116-FCD, United States v. Domonic
6 McCarns. Your Honor, this matter is on calendar for
7 defendant's motions to reopen detention hearing.
12 in court in custody. If I may have just one moment, Your
13 Honor?
14 THE COURT: Sure.
15 (Pause - counsel conferring.)
16 MR. GREINER: Thank you very much, Your Honor. I can
17 kind of short circuit this a little bit.
18 THE COURT: Go right ahead.
19 MR. GREINER: Okay. I've been in trial. I've made
20 some good progress, as Mr. Walker has put in the report. What
21 we're asking is to continue this to next Friday, June 13th.
22 Mr. Walker's report indicates --
23 THE COURT: Are you going to have it -- do you think
24 you're going to have things tied up as far as a release plan
25 that you're proposing then?

1 MR. GREINER: Correct. That's what I'm going to get
2 to, to let the Court know where we're at.
3 THE COURT: The only thing that I'd tell you -- well,
4 it won't be me anyway, so don't bother telling me.
5 MR. GREINER: Okay. Well, I could tell you --
6 (Laughter.)
7 THE COURT: I mean, you'd just have to tell the judge
8 who's sitting on the 13th where you're at again.
9 But the only thing I would ask for the convenience of
10 the marshals if you don't have the loose ends tied up, you know
11 you can put it on any time you want with a phone call. So if
12 it's not tied up next Friday, please drop it from calendar so
13 Mr. McCarns doesn't have to come over and be downstairs all
14 day, and so the marshals don't have to transport him, because
15 they're getting pretty strapped these days themselves,
16 so -- all right? I know you're busy, you're in trial. I'm
17 just asking drop it if its' not ready to go.
18 MS. ENDRIZZI: Your Honor, I don't --
19 MR. GREINER: And I think that's a great suggestion.
20 I certainly will do that.
21 MS. ENDRIZZI: The only thing is I believe his
22 custody status was based on his initial parole status, and I
23 don't think we had found whether or not he was a danger or a
24 flight risk. We detained him primarily because he was under
25 the state custody. Now that his --

1 MR. GREINER: That is true. They're --
2 MS. ENDRIZZI: -- state custody has been revoked, we
3 need -- I believe we need to make an official finding.
4 THE COURT: Well, I made a finding. I've got the
5 order in front of me.
6 MS. ENDRIZZI: Okay.
7 THE COURT: I detained him that based upon the
8 preponderance of the evidence no condition or combination of
9 conditions would reasonably assure his appearance.
10 MS. ENDRIZZI: Okay. That --
11 THE COURT: I detained him as a flight risk. Now,
12 part of that was based upon that he was serving a state prison
13 term until May 15th and that he was here on a writ, but it was
14 also based upon the charges as well as his other personal
15 characteristics, and I reconfirmed that finding, although if
16 we've got a sold release plan, it would appear to me that
17 perhaps my concerns regarding flight risk could certainly be
18 allayed.
19 MR. GREINER: And I'm strongly moving in that
20 direction. I have had a few road bumps --
21 THE COURT: Okay. All right.
22 MR. GREINER: -- but road bumps have never stopped me
23 before.
24 MS. ENDRIZZI: Thank you, Your Honor.
25 THE COURT: All right. Thank you. So it's on

1 calendar next Friday at 2:00 p.m. for defendant's motion to
2 reopen --
3 MR. GREINER: Great.
4 THE COURT: -- or to reconsider.
5 MR. GREINER: Thanks, Judge.
8 --o0o--
9 CERTIFICATE
12 entitled matter.
13
14 July 13, 2011
16 AAERT CERT*D-113
17
18
19
20
21
22
23
24
25
3 --o0o--

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
6 vs. ) Friday, June 13, 2008
) 2:34 P.M.
) Hearing re: detention re:
8 Defendants. ) Domonic McCarns.
)
9
10 BEFORE THE HONORABLE KIMBERLY J. MUELLER
11
APPEARANCES:
12
(916) 554-2700
15
For Defendant Domonic McCarns: JAMES R. GREINER
16 Law Offices of James R. Greiner
(916) 649-2006
18
(916) 930-4193
21
22 Transcription
5002 - 61st Street
(916) 455-3887
24
1 SACRAMENTO, CALIFORNIA, FRIDAY, JUNE 13, 2008, 2:34 P.M.
2
4 THE CLERK: Calling out of order, Criminal Case 08-
5 93-FCD, and Criminal Case 08-116-FCD, United States v. Domonic
6 McCarns. This matter is on calendar for detention hearing,
7 Your Honor.
8 (Pause.)
11 THE COURT: Good afternoon, Ms. Endrizzi.
14 in court in custody.
15 THE COURT: Good afternoon, Mr. Greiner, Mr. McCarns.
16 THE DEFENDANT: Good afternoon.
17 THE COURT: I realize this matter has been continued
18 several times. This is on for detention hearing.
19 MR. GREINER: Correct. And --
20 THE COURT: And there's no supplemental bail report.
21 MR. GREINER: And where we left off was this, just to
22 bring the Court up to speed --
23 THE COURT: I listened to the last two hearings,
24 so --
25 MR. GREINER: Oh, the Court's up to speed.

1 THE COURT: I'm up to speed.
2 MR. GREINER: All right. I have a plan, different
3 than some other famous quote that was in history. I have a
4 plan and I've run it by the government, and I've run it by Mr.
5 Walker. In fact, I've been in Mr. Walker's office almost
6 everyday this week trying to work out a plan, and here's what I
7 can present to the Court, and I believe the government is in
8 agreement with the plan, and I believe pretrial is in agreement
9 with the plan, so let me present it to the Court.
10 Mr. McCarns, we have found a halfway house for him
11 down in Anaheim, California. It's a private halfway house.
12 His mother is willing to pay the cost. The cost of that is
13 $500 per month. The halfway house is Doc's, D-o-c-'-s Harbor
14 House. It's located at 630 S. Harbor Boulevard in Anaheim,
15 92804.
16 The individual that runs the program is Steve Savran,
17 last name spelled S-a-v-r-a-n. His phone number is 714-458-
18 0791, and --
19 THE COURT: And that's a federally contracted halfway
20 house?
21 MR. GREINER: No, it's not a federally contracted.
22 THE COURT: Okay.
23 MR. GREINER: It's a private.
24 THE COURT: Okay. But not under contract even?
25 MR. GREINER: It's not under contract, no.

1 THE COURT: Okay.
2 MR. GREINER: Mr. McCarns' mom, Ella Geeting
3 (phonetic), will foot the $500, we anticipate, and Mr. McCarns
4 is fully aware that he will be employed shortly after being
5 released to that halfway house, and then Mr. McCarns will be
6 responsible not only for being employed but for paying the
7 costs.
8 I have talked to Mr. Savran. I asked him if space
9 was available. He indicated to me it is available. I asked
10 Mr. Savran various questions that I anticipated the Court would
11 ask me about the facility, and I can represent this to you.
12 Mr. Savran wanted me to represent to the Court that Mr. McCarns
13 has no freebies. If he does not comply with the rules and
14 regulations of either the Harbor House, his state parole agent,
15 Dennis Mormon, who I've also talked to, and who I'll relay to
16 the Court, and pretrial, he will be under three umbrellas of
17 supervision.
18 If there's any rule violation, or he doesn't comply
19 with anything, Mr. Savran will pick up the phone, call the U.S.
20 Marshals, call pretrial and that will be it. Mr. Savran says
21 that he doesn't give any freebies. The rules are the rules and
22 he's to comply with them. Mr. McCarns understands that. He
23 understands the seriousness of what is facing him.
24 There -- at the Doc's Harbor House there is also drug
25 testing independent and in addition to what Mr. Mormon will

1 have Mr. McCarns do because he will be on state parole, and in
2 addition to what pretrial will have him on. So Mr. McCarns
3 will be under three umbrellas of drug testing, and they will be
4 at various times, some will be random, but Mr. Savran wanted
5 the Court to know that they have -- at the Harbor House they
6 have their own rules, they have their own drug testing far
7 beyond what pretrial and what the state parole will do.
8 THE COURT: Do they have substance abuse treatment?
9 MR. GREINER: They have substance abuse treatment,
10 they have alcohol treatment. It's a very structured program.
11 THE COURT: So that's an automatic condition of being
12 a resident?
13 MR. GREINER: Correct.
14 THE COURT: Okay.
15 MR. GREINER: Mr. Savran indicated that Mr. McCarns
16 will be required to be employed, obviously when Mr. McCarns
17 gets there, he will not have a job. So what his requirements
18 will be, he has to be out of Doc's Harbor House by 9:00 a.m.
19 He has to be out actively looking for a job.
20 He has to get the name, the address and the telephone
21 number of the places that he goes to find work for, and when he
22 reports back to Doc's Harbor House, he has to give that
23 information to Mr. Savran, and the reason for that is very
24 clear and simple, Mr. Savran then makes the phone call to
25 ensure that Mr. McCarns was at the place he said he was,

1 talking to the person he said he was talking to, because as Mr.
2 Savran put it, if he goes out looking for a job and he gives me
3 the name of an employer that he was talking to, and it turns
4 out he wasn't, the next phone call is to the U.S. Marshals.
5 I already indicated to the Court Mr. Savran said that
6 there is room. They're ready to take him. They will do an
7 interview process on the day he arrives, and he'll be then
8 placed into a room, and he'll be into the program.
9 THE COURT: So then who pays for transportation to
10 and from court appearances here?
11 MR. GREINER: I knew exactly the Court was going to
12 ask that question. Let's first cover how we get Mr. McCarns
13 down there, because that would probably be the first
14 prerequisite. Mr. McCarns -- my request is going to be that
15 the Court order Mr. McCarns released Monday morning bright and
16 early, because Mr. McCarns needs to get to the Greyhound Bus
17 Depot here in Sacramento to get down to the Greyhound Bus stop
18 that's right down the street from Doc's Harbor House. Mr.
19 Savran told me it's within walking distance.
20 Mr. McCarns will be able to go to the parole office
21 that's here in Sacramento and be able to pick up his $200 gate
22 money from the parole office to use to buy the ticket at the
23 Greyhound Bus Depot to get him down to Anaheim. Once down in
24 Anaheim, obviously, Mr. McCarns would be responsible for his
25 transportation up to any court appearances up here in the

1 Eastern District.
2 I will represent to the Court, as I have represented
3 to pretrial and to the government, I plan on filing with the
4 District Court a waiver of appearance, which has been filed in
5 this case by all other defendants that have been released, and
6 I would anticipate, barring something unusual that has not
7 happened with any other defendant in the case, that the
8 District Court judge, Judge Damrell would accept the waiver of
9 appearance and sign off.
10 I have told Mr. McCarns that even though that waiver
11 of appearance is there, if the District Court judge orders him
12 to appear that it's his responsibility then to make it to court
13 when that appearance is set. Mr. McCarns understands that,
14 understands his responsibilities.
15 That's how Mr. McCarns will get from Sacramento to
16 Anaheim to the halfway house, and that's answering the Court's
17 question to Mr. McCarns making his court appearances up here in
18 Sacramento.
19 In addition --
20 THE COURT: Is an unsecured bond still
21 contemplated --
22 MR. GREINER: Unsecured bond signed --
23 THE COURT: -- cosigned by the --
24 MR. GREINER: -- signed by both Mr. McCarns and by
25 his mother.
1 THE COURT: Um-hmm. And in what amount?
2 MR. GREINER: It has been $150,000 for all of the
3 other defendants and I think the government is satisfied with
4 that. I don't see any need for any amount larger than that,
5 especially in Mr. McCarns' position, because the Court has
6 three layers of assurances of what he's doing out there:
7 pretrial, the state parole agent, and the halfway house, and I
8 think that's at least two times more than anybody else that's
9 on the loose out there.
10 What I would suggest to the Court is that Mr. McCarns
11 could sign the unsecured bond today, and the Court could have
12 that ready to be put on file. I could get a bond and FedEx it
13 down to his mother who lives down in Southern California. She
14 could turn around and FedEx it back to me. I could get it on
15 file by next week, which would satisfy that condition.
16 I have spoke to his state parole agent, Dennis
17 Moorman, M-o-o-r-m-a-n. He's in Region 4 down in Anaheim. I
18 asked him if he had any concerns with Mr. McCarns being
19 released to a halfway house, and it's actually Mr. Moorman
20 that -- I won't say fully suggested, but 99 percent suggested
21 that that would be the best place for Mr. McCarns. He believes
22 that being in a program would be the best thing for Mr. McCarns
23 at this time, and he led me to the web site for each of the
24 addresses for me to find the halfway house. So Mr. Moorman is
25 on board.
1 I have been in contact with Mr. Walker, who's been
2 very helpful in this case, as bent over backwards listening to
3 all of my concern sand all of my plans. I think Mr. Walker's
4 on board.
5 I do want to make one emphasis to the Court. Mr.
6 McCarns fully understands he has to be employed while he's at
7 this halfway house, and part of the reason, apart from
8 following the rules and regulations, he needs to make sure that
9 his two children, and that the mother of his two children have
10 support, and he's very anxious to make sure that that occurs,
11 and I wanted to make sure the Court knew that that was a
12 driving force for Mr. McCarns.
13 I think I've addressed all of the Court's concerns.
14 I will answer any questions, or any questions the government
15 and pretrial may have, but that's the plan that I have finally
16 put altogether, Your Honor.
17 THE COURT: Okay. So maybe just for the record,
18 Officer Walker, on those conditions, are -- is your position
19 now that release is appropriate?
20 PRETRIAL SERVICES OFFICER: Yes, I agree with his
21 plan. I apologize for there not being a report. Per my last
22 conversation with Mr. Greiner, I was under the assumption that
23 he was going to take it off the calendar. This plan I heard
24 just today coming into court, and the plan that he's laid out,
25 I don't have any objection to it. I would just like to verify

1 some of the information because I haven't spoken to anybody
2 from the Doc's Harbor program.
3 THE COURT: You haven't been able to do that today,
4 yet?
6 THE COURT: After this hearing?
7 PRETRIAL SERVICES OFFICER: No, I just learned about
8 it 20 minutes ago.
9 THE COURT: Yes. Okay. Fair enough. And Ms.
10 Endrizzi?
11 MS. ENDRIZZI: Normally I would argue that he was a
12 definite flight risk given his history and lack of resources.
13 But I think this plan as set forth does provide enough
14 structure. However, I'm of the mindset as the person running
15 Doc's Harbor, if he steps out of line, I will come to this
16 Court immediately seeking detention as a flight risk.
17 And I would just ask that the Court emphasize to the
18 defendant that he should have no contact with is co-defendants.
19 I know that he has a fairly close relationship with Mr. Charles
20 Head, such that they were writing back and forth when Mr.
21 McCarns was in prison up in Susanville. They've been in
22 custody together now. I think it would be a mistake for him to
23 continue.
24 THE COURT: All right. Any objection to the no
25 contact condition?
10
1 MR. GREINER: Absolutely no objection. In fact, one
2 thing I have not had an opportunity to discuss with Mr. McCarns
3 is I believe that the government has requested, and the
4 District Court, I believe, has signed a -- somewhat of a
5 protective order regarding discovery, the dissemination of
6 discovery, and I will proctor that with Mr. McCarns. Basically
7 Mr. McCarns and I can have an investigators, potential
8 consultants, experts, but that discovery cannot be disseminated
9 to third persons, parties, it has to be kept within the
10 defensive sheen. So I think that the no contact order
11 certainly is in line.
12 MS. ENDRIZZI: to be more specific, just outside
13 of -- no contact without counsel present is, which I guess is
14 the typical no contact.
15 MR. GREINER: Yes.
16 THE COURT: So Officer Walker, will there be courtesy
17 supervision by one of your counterparts in the Anaheim area?
18 PRETRIAL SERVICES OFFICER: Yes, there will. Yes.
19 THE COURT: All right. So he'll have his state
20 parole and federal --
21 PRETRIAL SERVICES OFFICER: Pretrial.
22 THE COURT: -- pretrial. Okay. Anything else anyone
23 wants to say?
25 THE COURT: Based on the record presently before the

11
1 Court, the record created here this afternoon, I am prepared to
2 grant Mr. McCarns release on the following conditions: that is
3 that he co-sign with his mother, Ella Geeting, an unsecured
4 bond in the amount of $150,000. Mr. McCarns shall sign that
5 before I sign the release order. Mrs. Geeting shall sign that
6 and a copy be filed with the Court no later than next
7 Wednesday, close of business. Is that sufficient time? Faxed
8 signatures can also be provided.
9 MR. GREINER: Correct. Could I have till Thursday,
10 Judge?
11 THE COURT: Okay.
12 MR. GREINER: I just want to hedge my bets. I don't
13 want to make a representation to you or the government that I
14 can't make. Obviously, if I'm running into trouble they'll
15 file something, but I just want to hedge my bet a little bit.
16 THE COURT: Okay. So the mother's signature filed by
17 next Thursday, close of business. Additionally, the conditions
18 described by Mr. Greiner are imposed as follows:
19 The Court requests that the Pretrial Services
20 memorialize these in a written list of conditions, and they
21 include that Mr. McCarns shall reside at the halfway house in
22 Anaheim, Doc's Harbor House at the address provided by Mr.
23 Greiner. He will be supervised by Steve Savran. The Court
24 directs Mr. Savran to notify Pretrial Services if Mr. McCarns
25 fails to comply with any of the conditions of Doc's Harbor

12
1 House, and the Court understands that Doc's Harbor House has a
2 zero tolerance policy.
3 Mr. McCarns shall comply with all the conditions of
4 Doc's Harbor House, but in particular the substance abuse
5 treatment program, the requirement of seeking and maintaining
6 employment. Additionally, Mr. McCarns shall restrict his
7 travel to the Eastern District of California -- to and from the
8 Eastern District of California an the halfway house in Anaheim.
9 MR. GREINER: Right. Which is in the Central
10 District.
11 THE COURT: Central District. But just so it's
12 clear, Mr. McCarns, you should only be found either at court
13 here responding to this case, or at the Harbor House, in
14 transit between the two locations, or doing whatever the Harbor
15 House says you can do during the day in Anaheim. Those are the
16 only places you should be found during your release.
17 THE DEFENDANT: So I can't be like nowhere in Orange
18 County?
19 THE COURT: Only if Doc's Harbor House says that it's
20 all right. If it's complying with the conditions of Doc's
21 Harbor House; yes.
22 THE DEFENDANT: Okay.
23 THE COURT: The Court will sign the release order,
24 once I receive confirmation from Officer Walker that he's
25 confirmed the Doc's Harbor House information and that that

13
1 program complies with all the representations made here this
2 afternoon. So I would anticipate signing the release order
3 later this afternoon, and that would direct that Mr. McCarns be
4 released Monday morning -- you said at 9:00 a.m. Is that
5 realistic?
6 MR. GREINER: I would -- I'm not sure that's
7 realistic. I would request the Court put 8:00 a.m. simply
8 because I know how the jail works, and the earlier I have the
9 release date -- or release time, the better chance I have of
10 Mr. McCarns getting a Greyhound Bus to get down to Anaheim.
11 THE COURT: And is the Marshal's understanding that
12 if I direct release Monday morning at 8:00 a.m., that can be
13 complied with?
14 MARSHAL: Yes, Your Honor.
15 THE COURT: All right. That will be the order. The
16 Court's understanding is that immediately upon release Mr.
17 McCarns will obtain the $200 from his state parole agent, go
18 directly to the Greyhound station and travel by Greyhound to
19 Doc's Harbor House.
20 Is there anything else I need to make of record? Oh,
21 no contact -- Mr. McCarns, a condition as well that you have no
22 contact with any co-defendants except in the presence of
23 counsel.
24 THE DEFENDANT: Yes.
25 THE COURT: That includes Mr. Charles Head.

14
1 THE DEFENDANT: Oh, I don't even have to worry about
2 that.
3 PRETRIAL SERVICES OFFICER: Can you order Mr. McCarns
4 to report directly to pretrial right before he report to
5 parole.
6 THE COURT: Okay. So Mr. McCarns, one additional
7 condition, immediately upon your release from the jail on
8 Monday morning at 8:00 a.m., you shall first go meet with
9 Officer Walker in this building, and he'll make certain you
10 know where to meet him.
11 THE DEFENDANT: Yes, ma'am.
12 THE COURT: And once he says it's all right for you
13 to proceed, you may then go to your state parole agent to get
14 your $200.
15 THE DEFENDANT: Okay.
16 THE COURT: All right. I'll wait to hear from
17 Mr. -- from Officer Walker, but I anticipate signing that
18 release order later today.
19 MR. GREINER: Your Honor, may I give your clerk the
20 "Notice of Being Released" signed by Mr. McCarns and the
21 unsecured appearance bond signed by Mr. McCarns?
22 THE COURT: You may, and then we'll distribute a next
23 appearance and failure to appear admonition.
24 (Pause.)
25 THE COURT: Two more things, Mr. McCarns. I show the

15
1 next status conference is set before Judge Damrell on August
2 18th at 10:00 a.m. So your next court appearance, unless it is
3 waived, is August 18th before Judge Damrell in this courthouse.
4 If you fail to appear at any court appearance where you are
5 required to appear, you will be facing a bench warrant and
6 possibly additional charges over and above what you're already
7 facing simply for failure to appear.
8 Additionally, you've already heard, if you fail to
9 comply with any condition of pretrial release the government
10 will be seeking revocation of pretrial release. So you'll be
11 back here in court having to respond to such a petition. So
12 it's essential that you comply with all the conditions the
13 Court has just imposed.
14 Okay. Thank you.
18 --o0o--
19 CERTIFICATE

21 entitled matter.
22
23 July 13, 2011
24 AAERT CERT*D-113
25
Case 2:08-cr-00093-KJM Document 464 Filed 06/27/11 Page 1 of 18 1
1 SACRAMENTO, CALIFORNIA
2 JANUARY 12, 2009; MORNING SESSION
3 ---O0O---
5 THE CLERK: Calling case 08-093 and 08-0116, United
6 States versus Charles Head, et al.
7 On for motions hearing, Your Honor.
8 MS. ENDRIZZI: Ellen Endrizzi and Laura Ferris for the
9 United States.
10 MR. TEDMON: Scott Tedmon representing Charles Head,
11 present in custody. There were a kind of flurry of joinders,
12 so I'll try to get this score card to know who I'm appearing
13 for.
14 THE COURT: I think I have it.
15 McCarns, Vanegas, Jeremy Head, Justin Wiley,
16 Mr. Sandoval, Kou Yang, Joshua Coffman, Sarah Mattson and
17 Omar Sandoval as to 08-93; is that correct; 08-93?
18 MR. TEDMON: I think Mr. Bockman joined on behalf of
19 Mr. Corcoran.
20 THE COURT: Then you're ahead of me.
21 MR. TEDMON: Defendant Leonard Bernot joined today as
22 well and his attorney is Bruce Locke.
23 THE COURT: That includes all the co-defendants then
24 as to 93?
25 MR. TEDMON: I don't think so. The defendants that I
MICHELLE L. BABBITT, OFFICIAL COURT REPORTER -- (916) 448-7938 USDC

1 believe have not joined are Elham Assadi, represented by Dean
2 Steward; Akemi Bottari, represented by Edward Robinson; and
3 Andrew Vu, represented by Stanley Greenberg. Those
4 defendants have not joined. All the other defendants have.
5 That's what I show.
6 THE COURT: Is that your understanding?
7 MS. ENDRIZZI: That's my understanding also.
8 THE COURT: Anybody object to that recitation just
9 made by Mr. Tedmon? Those defendants as indicated have
10 joined in this motion and that's 093; is that correct?
11 MR. TEDMON: That's correct.
12 THE COURT: On 116?
13 MR. TEDMON: On 116, Your Honor, my look at the
14 listing of the defendants indicates everybody has joined in
15 the motion.
16 THE COURT: All the co-defendants in that case?
17 MR. TEDMON: Yes.
18 THE COURT: Any objection to that statement?
19 Those defendants will be considered joined to the
20 motions filed by Mr. Head.
21 Have we had appearance of counsel yet?
22 MR. TEDMON: Not yet. Now that we've got that
23 straight, I represent Charles Head, present in custody.
24 I'm also appearing for Bruce Locke who represents
25 Leonard Bernot. This is 093.

1 I'm also appearing for attorney Joseph Lowe, who
2 represents Kou Yang, and I think all other counsel are
3 present in 093.
4 THE COURT: Let me have appearances of counsel,
5 please.
6 MR. BLACKMON: Clyde Blackmon representing Justin
7 Wiley, who has a joinder on file, Your Honor, and not
8 present. There is a waiver of his appearance.
9 MR. BAUER: Steve Bauer. I represent Sarah Mattson.
10 She's not present, has a waiver on file.
11 MR. BIGELOW: Michael Bigelow on behalf of Omar
12 Sandoval, who is not present, and there is a waiver of
13 personal appearance on file.
14 MR. PETERS: Bob Peters for Eduardo Vanegas, who has a
15 waiver of appearance on file.
16 MS. FRY: Candace Fry representing Xochitl Sandoval,
17 who has waiver on file.
18 MR. HAYDN-MYER: Chris Haydn-Myer representing Jeremy
19 Head. He is not present and has a waiver on file.
20 MR. GREINER: James Greiner representing Domonic
21 McCarns. He has a waiver of presence on file.
22 MR. ASSANTI: Alessandro Assanti on behalf of Lisa
23 Vang, not present in court, but there is a waiver on file.
24 MR. SAMUEL: Dwight Samuel appearing for Mr. Benjamin
25 Budoff in 116, who has a waiver on file.

1 MR. BOCKMON: Matthew Bockmon appearing on behalf of
2 the Federal Defender's Office for Mr. Corcoran on both cases
3 through his appearance.
4 THE COURT: Does that complete all of the appearances
5 of defense counsel?
6 MR. TEDMON: Not yet. I was starting with 093.
7 There are two defendants in 116 I'm making appearances
8 for, and all the defendants I'm appearing for have waivers on
9 file.
10 I'm appearing for attorney Robert Gazley who
11 represents Keith Brotemarkle in case 116. He has a waiver on
12 file.
13 And I'm also appearing for Alessandro Assanti, who
14 represents Lisa Vang, who has waiver on file.
15 Just so the record is clear, 093, Kou Yang has a
16 waiver on file as well as Leonard Bernot. That should cover
17 the entire roster.
18 THE COURT: That covers all the defendants in 116 as
19 well?
20 MR. TEDMON: Yes.
21 MS. ENDRIZZI: There is one defendant in the 093 case
22 who has not yet been arrested. He has not yet made an
23 appearance before this court.
24 THE COURT: I'm going to proceed with my -- my
25 intention is to announce my decision on the motion to dismiss

1 as to both 093 and 116. I think they can be handled jointly,
2 although I'll refer to them as individual counts separately.
3 As to Counts One and Thirteen in case number 08-093
4 and Counts One and Five in case number 08-116, the defendant
5 argues that these counts are duplicitous because the
6 conspiracy charges for mail fraud and money laundering, each
7 charge multiple conspiracies; namely, the mail fraud
8 conspiracy also charges the offenses of bank fraud and wire
9 fraud, and, similarly, the money laundering conspiracy
10 charges, according to defendant's argument, also charges the
11 defenses of bank fraud and wire fraud.
12 Defendant's argument is unavailing. The Indictments
13 here do not charge two or more distinct crimes within either
14 the mail fraud or money laundering conspiracy charges. When
15 viewing mail fraud or wire fraud Indictments for duplicity,
16 courts look to determine, quote, the breath of fraudulent
17 activity alleged in the count; that is, whether it all falls
18 within one unitary scream to defraud, citing United States vs
19 Mastelotto.
20 In Mastelotto, the Ninth Circuit held that:
21 "If a set of fraudulent transactions
22 alleged in a count is within a
23 conceivable contemplation of a greedy mind,
24 no duplicity has occurred."
25 Likewise, in Worthington versus the United States, a

1 Seventh Circuit case:
2 "If there is but one general scheme to
3 defraud and numerous means for affecting
4 the same, the Indictment is not fatally
5 defective for duplicity."
6 Here, a fair reading of the Indictment in these cases
7 show that in the mail fraud and money laundering counts,
8 single conspiracies are charged. In describing the scheme to
9 defraud, the Indictments detail the events of the scheme,
10 which involve the commission of multiple crimes, including
11 potentially bank fraud and wire fraud, but this does not
12 create a duplicitous Indictment.
13 The Court noted two cases, Braverman versus the United
14 States, a Supreme Court case which recognizes:
15 "The allegation in a single count of a
16 conspiracy to commit several crimes is not
17 duplicitous, for the conspiracy is the
18 crime, however diverse the objects of the
19 conspiracy."
20 As well in United States versus Begay, an Indictment
21 charging conspiracy:
22 "To commit more than one offense is not
23 duplicitous because conspiracies can have
24 more than one object."
25 In these cases and before the court, the mail fraud

1 and money laundering schemes were manifested in different
2 acts that could potentially have been independent criminal
3 acts, but in this case were simply steps to the fruition of
4 the scheme to defraud by a mail fraud or money laundering.
5 Here, the Indictments are detailed and thorough and
6 more than adequately inform the defendant of charges against
7 him; moreover, any potential confusion the court believes
8 generated by these Indictments for the recitation of other
9 crimes as objects of the subject conspiracies can be remedied
10 by jury instructions.
11 Now, as to the second motion to dismiss, which
12 encompasses Counts Two, Three and Six in case 093 and Count
13 Three in 116, the defendant challenges these counts to the
14 extent they charge mail fraud based on various County
15 Recorder's Offices' mailings of grant deeds to straw buyers.
16 Defendant contends these counts must be dismissed
17 because the objective of the mail fraud in these counts was
18 to secure an ownership position relating to the real
19 properties at issue and that the purpose or objective was
20 completed at the time the grant deeds were filed by defendant
21 with the County Recorder's Offices.
22 According to defendant, the subsequent mailing of the
23 grant deeds by the Recorder's Offices to the straw buyers
24 cannot serve as the basis for mail fraud charges against the
25 defendant because those mailings in no way affected the

1 success of the alleged scheme.
2 Defendant is incorrect as he fails to accurately
3 describe the alleged scheme to defraud in the Indictments.
4 The defendant, in a sense, cuts the scheme short as alleged
5 in the Indictments. Defendants perpetrated a foreclosure
6 rescue or equity stripping scam.
7 As part of the alleged scam, defendant proceeded or
8 needed to change the names on the deeds so he could secure
9 the loans and ultimately strip the equity from the victims'
10 homes. Without the straw buyers' names on those deeds, which
11 were mailed during the execution of the scheme, the loans
12 would not have been funded.
13 Indeed, it was critical to the alleged scheme that the
14 deeds be mailed to addresses associated with the defendant to
15 avoid detection of the scheme by victim homeowners. The
16 alleged scheme did not end with the transfer of title,
17 because after recordation, the homeowner victims continued to
18 pay rent to the defendant.
19 Finally, as a mortgage broker, it is alleged that
20 defendant Head knew the deeds would be mailed by the
21 Recorder's Offices and could anticipate the mails being used
22 during the course of the scheme to defraud.
23 Now, defendant cites Kann, Parr and Maze. In each of
24 these cases, the subject mailings occurred after the alleged
25 schemes reached fruition, and thus the courts found the

1 mailings were not done for the purpose of executing the
2 scheme as the statute requires.
3 Here, the Indictments allege that the subject mailings
4 by the Recorder's Offices were made during the course of the
5 scheme and were an essential part of the ongoing scheme to
6 defraud. The mailings in this case were one step in the
7 alleged plot, one step towards receipt of the fruits of the
8 fraud.
9 Additionally, it is alleged that Head, as a broker,
10 knew that the mails would be used by the County Recorder's
11 Offices to provide copies of the grant deeds to the new
12 owners of the properties.
13 In this regard, United States Supreme Court decision
14 in U.S. versus Schmuck is analogous, and the Court finds that
15 reasoning very persuasive. There the Court held that:
16 "Although the mailings may not have
17 contributed directly to the duping of
18 either the retail dealers or the customers,
19 they were necessary to successful passage
20 of title to the cars, which, in turn, was
21 essential to the perpetration of the scheme
22 to defraud."
23 Following Schmuck, the Ninth Circuit in U.S. Lo felt
24 that in a similar situation, there the underlying mailings
25 for the fraud counts were grant deeds mailed by a County

1 Recorder, and in Lo, the Court held that:
2 "The grant deeds mailed by the County
3 Recorder to the lenders and owners, real
4 and sham, of two properties involved in
5 fraudulent real estate financing
6 transactions after the loans had been
7 funded and the deeds recorded, could be
8 found incidental to an essential aspect of
9 the overall sham sale scheme."
10 The Court found that mailing sufficed even though they
11 occurred after the loans had been funded and after the deeds
12 had been recorded because the mailings were part of the
13 execution of the scheme as conceived by the perpetrator at
14 the time.
15 For all the reasons set forth, the court denies the
16 motion to dismiss as to both cases.
17 And how are we going to proceed now? Are we going to
18 set this case for trial or preliminary motions to be made?
19 MR. TEDMON: We have a status conference date. The
20 court split the motions hearing from the status conference.
21 Back in December they were joined. Now they're split. I
22 think it's March --
23 THE COURT: This is both cases for status?
24 MR. TEDMON: Yes.
25 THE COURT: We have a date set?

1 MS. ENDRIZZI: We do.
2 THE CLERK: March 16th.
3 MR. TEDMON: I think on March 16th we can come back.
4 THE COURT: My question is: What is your
5 understanding? Are we moving toward the motions or looking
6 toward a trial date? I've got two cases of some length this
7 year that are going to last some time, particularly one that
8 may becoming up, I guess, toward the end of summer, which
9 will last four to six months.
10 My concern is to make sure we have -- keep that in
11 mind. You have a client that's incarcerated.
12 MR. TEDMON: I appreciate that.
13 Just as a quick status update, I believe there is a
14 stipulation that's been circulated with regard to a large
15 volume of material that the government is going to supply to
16 the defense. It's in excess of 100 banker's boxes of
17 material. This is in excess of what we've been given in
18 terms of discovery thus far. There's going to be a lot of
19 work to be done in that regard. That's one.
20 Two, I think there will be other motions to be filed.
21 There were several searches and that sort of thing. I don't
22 know what all counsel are planning on doing, but I suspect
23 there will be other motions. That will be within the court's
24 consideration.
25 And then, ultimately, whoever is left, if there's a

1 trial, the case will go to trial. I think we're looking at
2 an extended period of time --
3 THE COURT: You're going to do motions -- let's do
4 this. What I would like on March 16th is some type of idea
5 whether there will be motions. I'm assuming -- you think
6 you'll have a briefing schedule in mind by then?
7 MR. TEDMON: I think that might be slightly early to
8 set one because of the other information that we're going to
9 be getting. What I would be prepared to do is file a case
10 status report in advance of the 16th of March, and I'll do it
11 on behalf of all counsel, at least as it regards where we are
12 in the discovery process.
13 If we are or not prepared to set a motion schedule on
14 the 16th of March and any prospective trial date, at least
15 the court has something before it before we come to court.
16 THE COURT: That would be helpful.
17 MR. TEDMON: That way we'll be more efficient.
18 MR. SAMUEL: I'm Mr. Samuel for Mr. Budoff in 116.
19 I've been working with the prosecution, but, unfortunately,
20 my client's name was redacted from the materials that were
21 supplied. We've just now determined what materials I'm
22 requesting all over again. That will also go in the hopper
23 maybe when we get back in March; maybe not.
24 MS. ENDRIZZI: What we did was provide thousands of
25 pages to defense of what we considered "hot documents,"

1 23,000 or so in each case. What Mr. Samuels refers to, his
2 client is charged in the second case. He also got discovery
3 from the first case. So his client's name would have been
4 redacted from the discovery in the first case.
5 We'll get him unredacted copies so he can be sure
6 where Mr. Budoff's name appears.
7 The additional delay is we've had the evidence from
8 the search warrants and Grand Jury subpoenas, which is over
9 200 banker's boxes available to the defense. They would like
10 it all scanned and OCR'd rather then go through it themselves
11 and determine what they want. That's what's causing this
12 delay.
13 MR. TEDMON: I think we all agree in the long run,
14 rather than to hand-search, it makes more sense to do it
15 electronically. It may take time now, but will speed the
16 case up ultimately.
17 Just so the Court is aware of my situation, Mr. Head
18 has been extremely cooperative with me, but I do have an
19 interest in moving this case forward. He's in custody at
20 this point. I'm doing everything I can in conjunction with
21 my client and everyone else to move it forward. I'm very
22 much aware of that.
23 THE COURT: We'll have a status conference on the 16th
24 at 10:00 a.m.
25 Time will be excluded until that date under T2 and T4.

1 Anything further?
2 MR. TEDMON: No.
3 MS. ENDRIZZI: No.
4 (Whereupon, proceedings concluded at
5 12:10 p.m.)
6 ---o0o---
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1 ---oOo---
3 I certify that the foregoing is a correct transcript
4 from the record of proceedings in the above-entitled matter.
8 MICHELLE L. BABBITT, CSR 6357
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25

1 IN THE UNITED STATES DISTRICT COURT
2 FOR THE EASTERN DISTRICT OF CALIFORNIA
3 ---oOo---
4 BEFORE THE HONORABLE FRANK C. DAMRELL, JR., JUDGE
5 ---oOo---
6 UNITED STATES OF AMERICA, )

)
7 Plaintiff, )
)
8 vs. ) No. Cr. S-08-093
) No. Cr. S-08-116
)
10 Defendants. )
)
11
12 ---oOo---
13
14 REPORTER'S TRANSCRIPT
15
16 RULING ON MOTIONS
17
18 JANUARY 12, 2009
19 ---oOo---
20
21
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23
24
25 Reported by: MICHELLE L. BABBITT, CSR #6357

1 APPEARANCES
3 For the Government:
4 McGREGOR W. SCOTT
UNITED STATES ATTORNEY
5 501 I Street
Sacramento, California 95814
6 BY: ELLEN ENDRIZZI
Assistant U.S. Attorney
7
For Defendant C. Head:
8 SCOTT TEDMON
Attorney at Law
9
For Defendant Bernot:
10 BRUCE LOCKE
Attorney at Law
11
For Defendant Yang:
12 JOSEPH LOWE
Attorney at Law
13
For Defendant Wiley:
14 CLYDE BLACKMON
Attorney at law
15
For Defendant Mattson:
16 STEVE BAUER
Attorney at Law
17
For Defendant Omar Sandoval:
18 MICHAEL BIGELOW
Attorney at Law
19
For Defendant Vanegas:
20 BOB PETERS
Attorney at Law
21
For Defendant Xochitl Sandoval:
22 CANDACE FRY
Attorney at Law
23
For Defendant J. Head:
24 CHRIS HAYDN-MYER
Attorney at Law
25

1 APPEARANCES
3 For Defendant McCarns:

JAMES GREINER
4 Attorney at Law
5 For Defendant Vang:

ALESSANDRO ASSANTI
6 Attorney at Law
7 For Defendant Budoff:

DWIGHT SAMUEL
8 Attorney at Law
9 For Defendant Corcoran:

MATTHEW BOCKMON
10 Attorney at Law
11 For Defendant Brotemarkle:

ROBERT GAZLEY
12 Attorney at Law
13
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24
25

2 MONDAY, MARCH 16th, 2009; 10:00 A.M.
3 ---O0O---
5 THE CLERK: Calling criminal case 08-116, United
7 On for status, Your Honor.
9 United States.
11 not present but who has a waiver on file.
12 MR. SAMUELS: Dwight Samuel appearing for
13 Benjamin Budoff, who has a waiver in the file.
14 MR. BOCKMON: Matthew Bockmon for Charles Head and
15 there's a waiver on file -- pardon me -- for John Corcoran,
16 who has a waiver on file.
17 MR. ASSANTI: Alessandro Assanti representing Lisa
18 Vang. There is a waiver on file.
20 McCarns. He has a waiver on file.
21 MR. BLACKMON: Clyde Blackmon representing Justin
22 Wiley. There is a waiver on file.
23 MR. TEDMON: Your Honor, as to Keith Brotemarkle, I'm
24 appearing for Robert Gazley. Mr. Brotemarkle has a waiver on
25 file.

1 I'm also appearing on behalf of Kou Yang, represented
2 by Joseph Lowe. Mr. Yang has a waiver of appearance on file.
3 THE COURT: Is that all the appearances?
4 Should we call both cases?
8 United States.
10 who has a waiver on file, and also appearing for Kou Yang,
11 who is represented by Joseph Lowe, who has a waiver on file.
12 MR. HAYDN-MYER: Chris Haydn-Myer for Jeremy Michael
13 Head, not present. He has a written waiver on file.
14 MR. BOCKMON: Matthew Bockmon representing John
15 Corcoran. He was waiver on file.
17 McCarns. Mr. McCarns has a waiver on file.
18 I am specially appearing for Bruce Locke who
19 represents Leonard Bernot. Mr. Bernot has a waiver on file.
20 I'm also specially appearing for Stanley Greenberg.
21 He represents Andrew Vu. Mr. Vu has a waiver on file.
22 MR. BIGELOW: Michael Bigelow on behalf of Omar
23 Sandoval, who is not present. He has a waiver of personal
24 appearance on file.
25 MS. FRY: Candace Fry representing Xochitl Sandoval,

1 who has a waiver on file.
2 MR. BAUER: Steve Bauer representing Sarah Mattson,
3 who is not present. She also has waiver on file.
4 MR. PETER: Bob Peters representing Edward Vanegas.
5 He is not present. There is a waiver of appearance on file.
6 MR. BALAZ: John Balaz on behalf of Joshua Coffman.
7 He's not present and also has a waiver on file.
8 MR. BLACKMON: Clyde Blackmon for Mr. Wiley. He's not
9 named in the first case. He's named in the second one.
10 THE COURT: Is that all the appearances, Mr. Tedmon?
12 The status of the case, Your Honor, is this: We have
13 been seeking the stipulations from various counsel to be able
14 to get the chain of custody agreed upon so we can get these
15 documents copied and to the defense.
16 As I spoke to the court at the motions hearing, we
17 were going to try to attempt to finish that process up by
18 today. There's only one or two stipulations that will be
19 provided today or tomorrow.
20 So in talking to the U.S. Attorney's Office, once they
21 get the stipulations in, they will move immediately to start
22 having the documents copied. My understanding is that will
23 be a fairly speedy process as far as getting the information
24 to us.
25 We've also talked about having the documents copied,

1 getting them to the defense on a rolling basis as opposed to
2 waiting till they're all done, because we will lose time
3 otherwise. We're agreeable to that as well. That will
4 continue to move the case forward.
5 Additionally, there are other considerations as it
6 relates to the status of the case. I know there's some
7 defendants that are still obviously dealing with the
8 government in terms of potential plea negotiations. Beyond
9 that, there are possible motions that we're still looking at
10 but can't really identify them specifically until we get the
11 rest of the discovery.
12 So my suggestion to the court is to continue the
13 matter for further status to Monday, June 15, and then we can
14 either move that date by stipulation and order if we don't
15 have enough information to bring to the court's attention in
16 person.
17 The other thing I would offer up to the court, two
18 weeks to 30 days prior to that date, I'm willing to submit a
19 case status report to the court in advance of the June 15th
20 date so the court has an understanding where we're going.
21 THE COURT: That applies to both cases?
22 MR. TEDMON: That's correct. And then T2 and T4 would
23 apply as it has in the past.
24 THE COURT: Let me hear from the government.
25 MS. ENDRIZZI: Everything Mr. Tedmon has said is

1 accurate. What we've been doing is providing those
2 defendants that were in negotiations with hard copies of
3 their 302s in addition to the discovery we have previously
4 provided. The reason the discovery was delayed was because
5 of the substantial cost. It was about $75,000 to scan all of
6 these loan files and related documents, not just 302s which
7 the defendants currently have.
8 So that was the issue regarding the stipulation and
9 that's what's caused the substantial delay here in terms of
10 getting those documents scanned, but they have been available
11 to the defense and we are moving forward.
12 THE COURT: Let me ask you this: Do we need a written
13 status report if we're going to have a hearing on the 15th of
14 June? Any reason for that? It seems to me, in your
15 stipulation, you can make a report to me if you're not going
16 to be able to complete whatever needs to be done by that
17 date.
18 MR. TEDMON: That's fine. I can do it within the body
19 of the stipulation.
20 THE COURT: Let's do that then.
21 MR. TEDMON: Okay.
22 THE COURT: So let me hear from all the defendants in
23 this case. Is that in agreement? Come up and put it on the
24 record here. This is a substantial continuance.
25 MR. BALAZ: John Balaz on behalf of Joshua Coffman.

1 That's acceptable.
2 MR. BAUER: On behalf of Sarah Mattson, that's
3 agreeable.
4 MR. SAMUEL: Dwight Samuel on behalf of Mr. Budoff.
5 That's agreeable.
6 MS. FRY: On behalf of Xochitl Sandoval, that's
7 acceptable.
8 MR. BIGELOW: Michael Bigelow on behalf of
9 Mr. Sandoval. That's acceptable.
10 MR. ASSANTI: Alessandro Assanti on behalf of Lisa
11 Vang. That is acceptable.
12 MR. PETERS: Bob Peters on behalf of Eduardo Vanegas.
13 That is acceptable, Your Honor.
14 MR. HAYDN-MYER: Chris Haydn-Myer on behalf of Jeremy
15 Head. That's acceptable.
16 MR. BLACKMON: Clyde Blackmon for Justin Wiley.
17 That's acceptable to me, Your Honor.
18 MR. BOCKMON: Matthew Bockmon for John Corcoran.
19 That's acceptable.
21 McCarns. That's acceptable.
22 I've also had discussions with Bruce Locke about this
23 before I came. That's acceptable to him on behalf of his
24 client, Leonard Bernot.
25 Also, Stanley Greenberg, through e-mails, I've had

1 conversations with him. That's acceptable to him on behalf
2 of his client, Andrew Vu.
3 MR. TEDMON: As to defendant Keith Brotemarkle, that's
4 acceptable pursuant to Robert Gazley. He has had
5 conversations with me.
6 And on behalf of Kou Yang, that's acceptable as to his
7 attorney, Joseph Lowe.
8 THE COURT: As to 08-116 and 08-093, United States
9 versus Charles Head, et al., the matters will be continued to
10 the 15th of June for further status. Time will be excluded
11 under local codes T2 and T4.
12 In the event the parties need further time, the court
13 requests a stipulation with a status as to the situation as
14 to the 15th of June.
15 MR. TEDMON: That's fine.
17 (Whereupon, proceedings concluded.)
18 ---o0o---
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3 ---oOo---
5 ---oOo---

)
7 Plaintiff, )
)
8 vs. ) No. Cr. S-08-093
) No. Cr. S-08-116
)
10 Defendants. )
)
11
12 ---oOo---
13
15
16 RULING ON MOTIONS
17
18 JANUARY 12, 2009
19 ---oOo---
20
21
22
23
24

1 APPEARANCES
4 McGREGOR W. SCOTT
5 501 I Street
7
8 SCOTT TEDMON
Attorney at Law
9
For Defendant Bernot:
10 BRUCE LOCKE
Attorney at Law
11
For Defendant Yang:
12 JOSEPH LOWE
Attorney at Law
13
For Defendant Wiley:
14 CLYDE BLACKMON
Attorney at law
15
For Defendant Mattson:
16 STEVE BAUER
Attorney at Law
17
For Defendant Omar Sandoval:
18 MICHAEL BIGELOW
Attorney at Law
19
For Defendant Vanegas:
20 BOB PETERS
Attorney at Law
21
For Defendant Xochitl Sandoval:
22 CANDACE FRY
Attorney at Law
23
For Defendant J. Head:
24 CHRIS HAYDN-MYER
Attorney at Law
25

1 APPEARANCES
3 For Defendant McCarns:

JAMES GREINER
4 Attorney at Law
5 For Defendant Vang:

ALESSANDRO ASSANTI
6 Attorney at Law
7 For Defendant Budoff:

DWIGHT SAMUEL
8 Attorney at Law
9 For Defendant Corcoran:

MATTHEW BOCKMON
10 Attorney at Law
11 For Defendant Brotemarkle:

ROBERT GAZLEY
12 Attorney at Law
13 For Defendant Coffman:

JOHN BALAZ
14 Attorney at Law
15
16
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19
20
21
22
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24
25

3 --o0o--

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
6 vs. ) Thursday, August 13, 2009
) 2:39 P.M.
8 Defendants. ) motion for bail review.
)
9
11
APPEARANCES:
12
(916) 554-2700
15
For Defendant Charles Head: SCOTT L. TEDMON
16 Law Offices of Scott L. Tedmon
1050 Fulton Avenue, Suite 118
(916) 482-4545
18
(916) 930-4193
21
22 Transcription
5002 - 61st Street
(916) 455-3887
24
1 SACRAMENTO, CALIFORNIA, THURSDAY, AUGUST 13, 2009, 2:39 P.M.

2
3 THE CLERK: Calling Criminal Cases 08-0093-FCD,
4 Criminal Case 08-00116-FCD, United States v. Charles Head.
5 Your Honor, this matter's on calendar for defendant's
6 motions for bail review.
9 MR. TEDMON: Good afternoon, Your Honor. Scott
10 Tedmon representing Charles Head who's present in custody.
11 THE COURT: And the matter is on calendar on the
12 defendant's motion for bail review. I've reviewed the motion
13 of the government -- or, the motion of the defendant. I've
14 reviewed the government's opposition, but not all of the
15 exhibits.
16 And Mr. Tedmon, it's your motion, so I'll hear from
17 you first.
18 MR. TEDMON: Well, Your Honor, as I indicated in the
19 written motion, we -- Mr. Head was recently detained based on a
20 flight risk and in terms of what we've been presenting to the
21 Court now, there is substantial assets by way of secured and
22 unsecured bail. Pretrial services has recommended release
23 based on the program that's been presented to the Court. The
24 total amount of bail is $250,000. I think it's worthy of note
25 that with every other defendant in this case, the maximum bail
1 that's been set is $150,000, the vast majority of which is

2 unsecured. There are, I think, three defendants that a
3 $150,000 collateral bond required. We have far exceeded that.
4 In addition, I think there's a major statement that's
5 being made by the family through Joshua Head in terms of
6 putting his property up, the full equity value that it has, and
7 in addition -- that's in Virginia. And in addition, Mr. Oliver
8 Conner is putting up his piece of property which is
9 unencumbered for its full equity value. He resides in Los
10 Angeles and the property's in Southern California. I think the
11 showing of confidence that Mr. Head is going to appear is very
12 clear through those expressions of postage.
13 In addition, the family's willing to sign unsecured
14 bonds to express what they can at this point in terms of their
15 confidence that Mr. Head is going to appear. So I think the
16 threshold determination as far as value of equity, secured,
17 unsecured combined, is more than sufficient to release him.

18 As far as the rest of it's concerned, I think
19 pretrial services has done a fine job of going through and
20 enumerating for the Court what the proper conditions of release
21 are. The one thing I would say to Your Honor as far as
22 location of residence for Mr. Head, there are two options.
23 The first one we checked into is with Jared Shultz
24 who lives in San Jacinto, California near Palm Springs. After
25 Gina Faubion had talked to Mr. Schultz, she felt that that
1 would not be the best situation because he has a prior felony

2 conviction that's been completely taken care of, but she felt
3 slightly uncomfortable with that.
4 So Mr. Conner, who's also posting property, has
5 offered to put a place up for Mr. Head in Los Angeles in the
6 Compton area. It's an apartment. He's willing to waive any
7 rent so Mr. Head can get on his feet. He's willing to waive
8 any security deposit and he's willing to pay for the water and
9 utilities to give Mr. Head a chance to get his employment
10 going, which has been offered through his brother, Joshua.
11 So I don't know how anybody else could make a more
12 positive statement on behalf of Mr. Head as far as their
13 complete confidence he's going to show up than to post
14 property, offer a job, offer a place to stay, give him a chance
15 to get on his feet, and the rest of it. So I think there's
16 clearly sufficiency there as far as the release plan is
17 concerned and I would certainly urge the Court to follow the

18 recommendation of pretrial services in terms of the release
19 plan they proposed.
20 THE COURT: Several questions first. The employment
21 by Joshua Head though is in Virginia.
22 MR. TEDMON: It's not. Let me clarify that. The
23 business is headquartered out of Hampton, Virginia. It's
24 Headstrate Entertainment. What they do is they're a
25 distribution company for DVDs and CDs that go to churches,
1 retail stores, and there's some online sales. I talked to Mr.

2 Joshua Head several times about this. What they do is he has
3 salesmen. They're put on a commission basis. He has them sign
4 a contract for commission. It's 20 percent of what they sell,
5 and he has salesmen in different places.
6 He does have contacts from a business standpoint in
7 California. And I specifically asked Mr. Joshua Head if your
8 brother, Charles, is released, is that a viable opportunity for
9 him and he said absolutely it is. I cannot pay him a set
10 amount of salary, but there is an employment opportunity there
11 and there are numerous business opportunities in terms of sales
12 either direct or through online opportunities in Southern
13 California. So while the business is headquartered in
14 Virginia, there is an opportunity for Mr. Head to work within
15 the Central District of California.
16 THE COURT: What do you say about the government's
17 suggestion, at least, that since his detention that Mr. Head

18 has tried to smuggle cell phones or have cell phones smuggled
19 in to him in the Sacramento County Jail so that he can conduct
20 business or make other contacts that he wants to make without
21 those being monitored, as well as their suggestion that he's
22 abused the legal mail system at the jail by engaging in clearly
23 personal correspondence but labeling everything legal mail in
24 an attempt to thwart any monitoring of his non-privilege
25 communications, along with their suggestion that what he's
1 really been up to since detained is to try to hatch new schemes

2 to defraud in order to, A, bail himself out, B, extricate
3 himself from the situation that he might find himself, and
4 lastly, their allegation that since detained that he has
5 offered in one way or another to compensate people or to insure
6 their providing him of assistance to be released on bail?
7 MR. TEDMON: Well, Your Honor, I've read all the
8 letters and let me start with this --
9 THE COURT: I've not. I just read the government's
10 memorandum.
11 MR. TEDMON: Okay. Well I have. I've read them
12 through a couple times. Let me start with the allegation that
13 Mr. Head is engaged in putting together or hatching, as the
14 Court says, some sort of another criminal enterprise or
15 program.
16 First of all, in the letters, Mr. Head references a
17 person by the name of Robert Oliver and it is -- it goes

18 throughout the course of the 11 letters -- for the most part,
19 the 11 letters that the government's attached. Fortunately or
20 unfortunately, I represent Mr. Oliver and I'm familiar very
21 much so with Mr. Oliver's case, obviously.
22 THE COURT: You're not the hub, are you?
23 MR. TEDMON: He's -- apparently so. Yeah, I'm the
24 hub. But what's happened here is this: I think in terms of
25 this case as far as Mr. Head is concerned, this has been
1 completely blown out of any perspective of reality in terms of

2 taking his letters and saying he's hatching a scheme. That's
3 just not true.
4 Mr. Oliver has been in the county jail for three
5 years. He's actually coming up for sentencing Tuesday in front
6 of Judge Karlton. Mr. Oliver pled to five counts, other -- the
7 remaining counts were dismissed, and he's pending sentencing.
8 What Mr. Oliver has done is continued to try to
9 continue with his contacts with people that he says
10 legitimately have these huge development programs
11 internationally in Africa, over in Asia, and all the rest of
12 it. So I'm very familiar with that.
13 What Mr. Head is referring to isn't anything he's
14 hatching. Mr. Oliver has talked to Mr. Head about this, has
15 got in his ear, and that's what all this correspondence is
16 about. The government has not brought one thing to this Court
17 that would indicate that any of that is criminal, one. Two,

18 that it's illegal. They want to infer that, but they don't
19 have any proof of it.
20 And thirdly, I would submit that everything that's in
21 here is conjectural at best and what Mr. Head is doing is
22 trying to get correspondence out to people to let them know
23 there may be a possibility that there would be a chance to make
24 a sizeable amount of money based on the programs Mr. Oliver's
25 telling him about. That's what going on in these letters.
1 It's not anything that he's hatching at all. That's a complete

2 fiction.
3 THE COURT: Okay.
4 MR. TEDMON: So that's the first thing. The second
5 thing is with regard to the cell phone allegation, there are
6 references in the letters to Mr. Head asking somebody to bring
7 a cell phone in so he can make phone calls or get a period of
8 hours together to try to facilitate finding out about these
9 programs or moving them forward. Okay. That's what the
10 letters say in their essential form.
11 THE COURT: You can't do that.
12 MR. TEDMON: Well, I understand that. But here's the
13 important thing. And I think pretrial services talks about
14 this in their report. If there's any criminal activity that
15 Mr. Head's involved in, that's one thing. There's none. He
16 wrote a letter. That's all he did. The government has not
17 brought one thing into this courtroom to indicate from the jail
18 or anyplace else that Mr. Head has facilitated that. He's
19 referenced it in a letter. Nothing's happened as a result of
20 that. That's it.
21 Now, you know, the --
22 THE COURT: So it's okay if you write --
23 MR. TEDMON: I'm not --
24 THE COURT: -- if you write people and say can you
25 try to smuggle in a cell phone so that I can use it to make
1 unmonitored calls, but as long as that person has the good

2 sense not to do so, no harm, no foul, Mr. Head didn't any
3 wrong?
4 MR. TEDMON: Well, no, I'm not saying it's okay. I'm
5 not saying it's okay.
6 THE COURT: Good.
7 MR. TEDMON: But what I'm saying, Your Honor, is
8 this: It's one thing to write something to somebody and say
9 hey, this is what I would like to do. Okay? You know, I mean
10 this preparation for a crime if you want to put it in that sort
11 of context, which I don't think is the case here, but if we
12 want to be a little more legal about it, is one thing. To do
13 something and act on it is something totally different. And
14 there's nothing in the record, and there won't be because it
15 doesn't exist, that anything was carried through with regard to
16 that. He does reference it in the letters and I'm not going to
17 ignore that, it's in there.

18 THE COURT: Okay.
19 MR. TEDMON: And I understand --
20 THE COURT: So the fact that he was -- so somehow the
21 argument is he gets credit for the fact that he was
22 unsuccessful in his attempts to have a cell phone --
23 MR. TEDMON: Well --
24 THE COURT: -- smuggled in to him?
25 MR. TEDMON: No, not --
1 THE COURT: I mean it's kind of silly.

2 MR. TEDMON: Well, that's not really what I'm saying.
3 I mean I'm saying he's referencing it in the letters and
4 nothing ever comes of it. I don't say that it's unsuccessful
5 at all. It didn't happen. It's referenced in the letters and
6 nothing happened. That's a fact.
7 THE COURT: Well the government -- tell me if I'm
8 wrong. The government says he asked people in the letters to
9 smuggle in a cell phone and gave them some instructions on how
10 he thought they might be able to do so. Are you saying --
11 MR. TEDMON: He --
12 THE COURT: -- that's not what the letters --
13 MR. TEDMON: No, I didn't say that.
14 THE COURT: Okay.
15 MR. TEDMON: He -- there's references --
16 THE COURT: I'm just trying to be clear.
17 MR. TEDMON: Well, and I'm being clear with the Court
18 because they -- the exhibits speak for themselves. There are a
19 couple references in these letters where he tells people that
20 if a cell phone is a certain size, that it might slip through
21 this little slide opening. He says that. I concede that.
22 THE COURT: Okay.
23 MR. TEDMON: But that's the extent of it.
24 THE COURT: Okay.
25 MR. TEDMON: And I don't think in the context of
10
1 flight risk, which is what we're here for, it's not a mini
2 trial on that issue; that if you take it in its total context,
3 that that overruns what the bail proposal is.
4 THE COURT: No, it just --
5 MR. TEDMON: That's my view.
6 THE COURT: -- just heightens my concern --
7 MR. TEDMON: Yeah.
8 THE COURT: -- about whether Mr. Head is someone to
9 be trusted.
10 MR. TEDMON: I understand.
11 THE COURT: And --
12 MR. TEDMON: And I think that's a fair concern, but I
13 don't think that runs over the totality of what's being
14 presented to this Court today.
15 THE COURT: Okay.
16 MR. TEDMON: In terms of the legal mail issue, there
17 are certainly attempts by Mr. Head to send legal mail out that
18 appears to me to be personal in nature in terms of the
19 recipient. Now, I don't countenance that either, and that
20 would obviously give the Court some concern, and I would
21 understand that. But I also want the Court to understand this:
22 Mr. Head for the better part of the last year and a half has
23 had a running battle with the Sacramento County main jail in
24 terms of not getting his mail out, not getting his mail in, and
25 I can tell you on one occasion he sent me a letter took a month
11
1 to get three blocks to me. That's a concern I've talked to the

2 Federal Defender's Office about it and I've talked to Gary
3 Yandel (phonetic) about it.
4 I think what happened there, frankly, is that Mr.
5 Head got frustrated that he couldn't even correspond with his
6 friends and his family and in one instance couldn't get
7 something to his lawyer in a timely manner and he made an error
8 in judgment, no doubt. But it got to the point where on May
9 the 26th Mr. Head filed a motion, because he wasn't willing to
10 wait for me, with the district court and we had a hearing in
11 front of Judge Damrell on this mail issue. I mean this is a
12 serious matter in terms of his ability to get his mail and to
13 receive it.
14 So that's the context of that particular issue. Am I
15 saying that was okay? No. Would it give the Court some
16 concern? I understand that. But understand the context of
17 what he was trying to do in terms of just having communication

18 with people he should have been able to communicate with.
20 MR. TEDMON: All right? I think those are the areas
21 the Court's asking about. If I missed one --
22 THE COURT: How about the government's final
23 suggestion is that there are some communications that Mr. Head
24 has made since his incarceration suggesting to others that he
25 would insure them, basically, if they would assist him by
12
1 conveying to them a car or, you know, otherwise paying them

2 back; that hey, if you help me out, don't worry, I'll take care
3 of you when I get out?
4 MR. TEDMON: Yeah, I don't agree with that assertion.
5 I think -- read the letters in their total context. What Mr.
6 Head is saying is he's going to back to this program that Mr.
7 Oliver's talking about and he's saying that if it moves forward
8 and it comes to fruition, that there's going to be a
9 significant financial gain as a result of this program and I
10 don't think what he's saying at all is that, you know, scratch
11 my back, I'll scratch yours or that I'm going to in an untoward
12 way compensate you.
13 What he is saying is that there would be a sizeable
14 stream of income and that he would be able to take care of
15 things in terms of anything that they may be willing to help
16 him with now, but it's not some sort of unhanded -- the way I
17 read it, some sort of unhanded or improper presentation of what

18 he's asking for help for. That's not the way I read it at all,
19 so I would disagree with that.
21 MR. TEDMON: Just that I think given the total
22 context of things, the government cannot sustain their burden
23 of preponderance of the evidence as far as a flight risk goes.
24 I think pretrial services hit the nail on the head as far as
25 the release conditions.
13
1 I would say this: I don't think that Ms. Endrizzi's

2 suggestion if the Court would release Mr. Head that a Vaccaro
3 bond is appropriate. I don't think this case is in anywhere
4 near that territory.
5 Secondly, I would not -- I don't think that there's a
6 third party custodial need here at all. And finally in terms
7 of any curfew, I don't think that serves any purpose. In fact,
8 if the Court were to release Mr. Head, given his employment
9 with Headstrate Entertainment, it would seem to me that there
10 would have to be some ability to be available to meet with
11 people after hours in terms of sales calls and the rest, so I
12 don't think those things are necessary.
13 As the Court well knows, the least restrictive
14 conditions are what are appropriate and I think what's been
15 laid out by pretrial services hits the mark in every instance,
16 and I would ask the Court to adopt those as the conditions and
17 release Mr. Head on a $250,000 total bail secured by the two

18 pieces of property with the balance to be secured by the
19 unsecured signatures of the family.
20 THE COURT: From the government?
21 MS. ENDRIZZI: Briefly, Your Honor, I think the issue
22 with the Mercedes is best put forth with the quotes on pages 2
23 and 3 where he does say "I'm going to offer my Mercedes as
24 collateral for Oliver to use his real estate to secure my bail;
25 I hope it's agreeable to him." And then he also quoted
14
1 something to a man named Dion (phonetic) about giving him his

2 -- "I'm happy to have it released to you immediately if you
3 need some security," things like that.
4 I think the issue is, is that Mr. Head is a flight
5 risk and a danger and he set that forth in his letters. As
6 soon as we let him out, he will have his phone, he will have
7 his internet, he will have the mail in order to conduct more of
8 these scams, and what would be worse is to leave him on his own
9 in a rental property in Southern California without anybody
10 around him, he's free to operate his own businesses.
11 I think -- the flavor of the letters give you a
12 little bit of an insight into Mr. Head and his thought
13 processes, but essentially, he's not going to be amenable to
14 supervision. He will be a true challenge in the greatest sense
15 if he is released. Partially because pretrial supervision is
16 not going to have the manpower to sit on him like he would need
17 to.
18 This man, Robert Oliver, they're talking about
19 business ventures and zero coupons and bonds, et cetera, et
20 cetera; issues over in Africa. He talks about going to get his
21 Mercedes himself in Miami. I know that Mr. Head loves South
22 Beach. He had a condo down there. I think we would have a
23 tough time keeping Mr. Head under wraps here and that the
24 threat of a new fraud is great.
25 Mr. Head has said all along that he's innocent and
15
1 that his scheme for foreclosure rescue scams is completely

2 legit. Yet one of the first pieces of paper that we found in
3 the search warrants was his business plan which set out the
4 lies that people were supposed to tell these homeowners. So I
5 think we're really putting the community in danger by letting
6 him go, because I think a new fraud scheme would be hatched
7 immediately, and we -- I also think he would be a flight risk,
8 just because he is not going to stay in one spot and his
9 attitude is I should be out and be free to go.
10 MR. TEDMON: Your Honor, if I could respond just --
11 THE COURT: Just hold on one second.
12 What's the government's position based upon the
13 pretrial services report regarding the outstanding warrant down
14 in Southern California? Do you know is that still there or
15 not?
16 MS. ENDRIZZI: I --
17 THE COURT: Pretrial seems to report that it is.

19 THE COURT: Mr. Tedmon's assured me in his motion
20 that it's been taken care of. What's the --
22 THE COURT: Does the government have a position?
23 MS. ENDRIZZI: You know what, I think there is an
24 issue with the outstanding warrant. I know that the victim
25 just showed up and she is -- wants to speak eventually. But
16
1 it's a situation where I think we're running into

2 administrative problems rather than a true issue. I mean I
3 think the warrant still exists and --
4 MR. TEDMON: I can -- Your Honor, I think I can
5 enlighten the Court on that because this has been very
6 confusing and I can tell you this: Dealing with Los Angeles
7 County for the last week or so on this makes me happy I'm up
8 here. I mean it is ridiculous down there.
9 Here's what happened. In my moving papers we
10 identified the warrant that we were told existed. This was
11 back in 2008. I wrote the LA County Superior Court. They
12 wrote back to me indicating the warrant had been cleared and in
13 fact general collection had removed any payment program from
14 Mr. Head's account. Case closed as far as we knew.
15 Then when Ms. Faubion ran the rap sheet, this warrant
16 pops up. And so we finally got the warrant number and it turns
17 out that LA County has another warrant that wasn't even in the
18 system but now it's in there. What it relates to is a traffic
19 matter that went to warrant and what happened was on
20 approximately March 10th, the warrant issued. Mr. Head was
21 arrested on March 21st. This was in 2008. He never got notice
22 because he was in custody. And so it sat there. But because
23 it was sitting in the system, it didn't get anywhere else. So
24 Mr. Addison (phonetic) who's present in court, my investigator,
25 has been spending the last three days trying to basically track
17
1 this thing down.

2 Wednesday, yesterday, we were in a position to file
3 the bond and clear the warrant pursuant to LA County's
4 authority. They were going to move it to Sacramento, clear it,
5 so we'd be fine for today. We got to the step of giving them
6 the bond papers and then LA County said no, sorry, because he's
7 got a federal hold, we're not going to let you post the bond.
8 So it's there. It's ready to be taken care of.
9 THE COURT: Okay.
10 MR. TEDMON: And that's where that's at.
12 Anything else from the government?
13 MS. ENDRIZZI: No, I would --
14 THE COURT: It be -- all right.
15 MS. ENDRIZZI: I would submit, although the victim
16 does wish to speak.
17 THE COURT: And I do understand or have been put on

18 notice by the government that there a was a victim who wished
19 to make a reasonable -- a statement of reasonable length to the
20 Court and under 18 U.S.C. Section 3771, any victim or alleged
21 victim of the offense does have a right to do so at any
22 proceeding where release, plea, sentencing or any parole
23 proceeding is at issue. So it's my intention to allow the
24 individual to speak for a reasonable period of time.
25 MR. TEDMON: Before we do that, Your Honor, could I
18
1 just make one other clarifying point that Ms. Endrizzi had
2 mentioned?
3 THE COURT: What I was going to do is after we
4 heard --
5 MR. TEDMON: Okay.
6 THE COURT: I was going to turn back to you for
7 figuring that you might have something to say about everything
8 at once.
9 MR. TEDMON: Fair enough. Thank you.
10 THE COURT: Good afternoon.
11 MS. MERCHANT: Good afternoon. How are you?
12 THE COURT: Fine. And your name, ma'am?
13 MS. MERCHANT: I'm sorry I was late, I got behind an
14 accident and couldn't move.
15 THE COURT: And your name, ma'am?
16 MS. MERCHANT: My name is Laura Merchant.
17 THE COURT: All right. And you wish to speak to the

18 Court regarding the defendant's motion for release?
19 MS. MERCHANT: Yes, I do.
21 MS. MERCHANT: My name's Laura Merchant. I have been
22 in this fraud victim for two -- since 2004. Charles Head works
23 with other people. I am involved with Leonard Berno
24 (phonetic). I contacted the FBI when this first happened
25 because it was such a big scheme, which was John Summercamp
19
1 (phonetic), and yes, I do know that they seized the Mercedes

2 that they called and told me.
3 But with this happening what they have done to the
4 victims which there are loan modifications out there to help
5 people who are, you know, for loans, but what he has done is --
6 what they do is they move one loan to another place to another
7 place to another place so that when you try to find out who has
8 your loan and the people who has it, nobody can find out what's
9 going on. Originally mine was done with GMAC. GMAC now
10 belongs to the people who belongs to ETS. My house of 32 years
11 last week went on the block because nobody could find out who
12 belonged to who. And it's all related to this scam.
13 It should not be this way. If he is released, he's
14 going to be doing this to other people. There's going to be
15 more victims. When this first started, there were 25 victims.
16 Now it's gone to 500. How many more people are we going to let
17 lose their homes because of what's happening with him?

18 Not just him, with all of them that's involved in
19 this. Because we need programs out there to help us, but we
20 can't get them because what they have done is they have moved
21 the loans to one person to another and to another. And it's
22 all gone through him and down the chain of all those people
23 that have had it done. And yes, letting him be released is
24 just letting more victims be out there.
25 Right now I'm working with Sam Farr, Dianne Feinstein
20
1 to pass bills so that this doesn't happen to other people. But

2 in the meantime, we need people to help us listen to what we're
3 having to go through. Because releasing him and giving him his
4 cell phone and giving him the Mercedes, make him pay me back
5 what they've taken away from us first, because I'm just one of
6 the 500 people out there.
7 THE COURT: Thank you, ma'am.
8 MS. MERCHANT: You're welcome.
9 THE COURT: Anything in closing, Mr. Tedmon?
10 MR. TEDMON: Yes, Your Honor. First of all just to
11 clarify a couple things, the government's assertion that Mr.
12 Head is going to somehow compensate somebody using the example
13 of putting his Mercedes as collateral for Mr. Oliver, that is
14 -- that's not even close to even what you're asking about. Mr.
15 Oliver is a gentleman that's in custody.
16 The reason that Mr. Head talks about the Mercedes and
17 going to Miami is this: The government did not properly follow

18 their forfeiture procedures with regard to this one vehicle and
19 Judge Damrell expanded my representation to take care of any
20 forfeiture proceeding matters. So what happened was the
21 government agreed that they could not legally hold on to the
22 Mercedes. Now this is while Mr. Head was in custody. They
23 said we want to just turn it over to you or work out something
24 with Mercedes-Benz Financial to get the vehicle.
25 So it turns out the vehicle that was originally
21
1 seized is down in Miami. So what Mr. Head is talking about is

2 if I'm released, I can get my Mercedes and if I could post that
3 as collateral for Mr. Oliver if that would help him with bail,
4 then I'll do that. That's all that is. It's not some
5 compensation for some other good deed. It's not --
6 THE COURT: Well here's what they quote in their
7 brief. They say that in a letter the defendant states: "I'm
8 going to offer my Mercedes as collateral for Oliver to use his
9 real estate to secure my bail.
11 THE COURT: I hope he is agreeable to this."
12 MR. TEDMON: All right.
13 THE COURT: And later he -- in a letter to an
14 individual, Dion, Mr. Head writes:
15 "I'm about ready to leave, but unfortunately I don't
16 have enough equity in the two homes my family has to post
17 bail. I need someone else to allow me to use their home,

18 real estate, to secure my bail. I'm in dire straits, but
19 I'm sure that upon my release I will be able to quickly
20 raise cash to give to the government for my bail so you
21 can simply remove your home as security."
22 MR. TEDMON: Okay. I misunderstood what Ms. Endrizzi
23 was saying. I thought she said Robert Oliver. The Oliver he's
24 talking about is Oliver Conner, who's the gentleman that's
25 willing to post the bail.
22
1 And all Mr. Head is saying, Your Honor, is this: If

2 I get out, I'm entitled my Mercedes. I'll post it as
3 collateral if that would help get the property off of the block
4 as far as a deed of trust is concerned. And if I'm able to
5 make money, then I can post cash bail with the court to replace
6 the property that's being put into place. That's all that is.
7 There's nothing untoward about that at all. It's just
8 replacing bail with -- from one form to another.
9 That's what he's referring to there in that
10 quotation. So that should take care of that. I mean I just
11 don't see that as being any sort of major issue there. It's
12 all conjectural on Mr. Head getting out on a bail program which
13 we presented, which he should. Two, if he gets out and he's
14 able to get assets, then he -- we can come back to court and
15 ask the judge to consider taking these assets and replace the
16 ones that originally posted. That happens. There's nothing
17 improper about that at all. It's -- there's no contractual

18 arrangement at all.
19 And furthermore, Your Honor, let me point this out.
20 Mr. Conner's available by telephone if the Judge -- if you want
21 to talk to him. So is Mr. Shultz. So is Joshua Head. They
22 have been clearly advised as to what the ramifications would be
23 if Mr. Head were to take off. They lose what they have. And
24 they have been clearly -- that's been clearly explained not
25 only by myself but by pretrial and they have no hesitation
23
1 whatsoever that Mr. Head is going to do anything other than

2 follow what pretrial says he should do, period. That's the
3 context of what we're dealing with here. And I'm asking the
4 Court to do that.
5 As far as the warrant goes, we're in position to
6 clear that. That's not a problem. And I think as far as the
7 rest of it is concerned, I understand Ms. Merchant's concern.
8 But the reality is that's her position, that's not my position,
9 and that's not Mr. Head's position. The charges and the weight
10 of the evidence are the least important factor. And while I
11 understand and appreciate where she's coming from, I'm not
12 quite sure I follow what she's talking about as far as these
13 loans going from place to place to place. Mr. Head's been in
14 custody for a year and a half. So I don't know what's happened
15 between that point and now. Obviously, she feels she's a
16 victim of his conduct. Mr. Head disputes that. We'll have a
17 trial and that'll all come out in the wash, as far as that's
18 concerned.
19 But the point is this: The Court has to assess
20 whether Mr. Head is a flight risk or a danger. The government
21 has not brought anything before this Court in terms of concrete
22 evidence --
23 THE COURT: I only detained him as -- I want to make
24 one thing clear. I only detained him as a flight risk.
25 MR. TEDMON: I understand that, but Ms. Endrizzi --
24
1 THE COURT: In my opinion --

2 MR. TEDMON: -- raised the issue of danger and I just
3 don't want to let that go.
4 THE COURT: Well actually, the magistrate judge in
5 the Central District detained him as both. I don't think that
6 that's -- I don't think that's available under the law.
7 MR. TEDMON: Okay, I just --
8 THE COURT: So I disagree to that extent and although
9 I didn't make an issue of it I don't think at the time, my
10 order was clear that I was detaining him as a flight risk.
11 MR. TEDMON: As a danger?
12 THE COURT: As a -- I was detaining him as a --
13 MR. TEDMON: As a flight risk.
14 THE COURT: -- risk only.
15 MR. TEDMON: Okay. All right. I just --
16 THE COURT: And that's what my order says.

18 THE COURT: You raised some other questions about my
19 order. Maybe with the full pretrial services report in front
20 of you, it explains the basis for -- I don't think it's
21 critical, but in your motion you said we don't understand where
22 some of these grounds for your conclusion based upon the boxes
23 on the detention order that I checked. Hopefully with the full
24 pretrial services package in front of you, those questions have
25 been answered? I --
25
1 MR. TEDMON: Yeah, the --

2 THE COURT: I looked at it again and as far as I'm
3 concerned, the pretrial services reports that I had in front of
4 me at the time support each and every one of the grounds that I
5 cited in my initial detention order.
6 MR. TEDMON: Well the only one that I was concerned
7 about, Your Honor, was the box that was checked relative to --
8 THE COURT: Mental state?
9 MR. TEDMON: Yeah. And, you know, there was some --
10 THE COURT: It was reported originally that the
11 defendant suffered from depression for over two years and, you
12 know, once everything comes crashing down and one's facing
13 serious federal criminal charges, if you've got a history of
14 depression, boy I'll tell you one thing that'll make you really
15 depressed.
16 MR. TEDMON: Well, yeah, it will, but I didn't see
17 any sort of clinical support for that. He said I was depressed

18 for a couple years because of circumstances. I mean I don't
19 know if that raises itself his mental problems, but I guess
20 that's in the eye of the beholder.
21 But in any event, the -- I think the conclusionary
22 point I'd like to make, Your Honor, is this: Every other
23 defendant has been released on $150,000 bail. Secured or
24 unsecured, whatever the case may be, every one of them.
25 Mr. Head has now come before this Court with a bail
26
1 proposal of a quarter of a million dollars with two separate

2 properties, two separate families being affected if he were to
3 take off, and in the totality of the circumstances, it is clear
4 to me, and I think it's clear to pretrial, that the government
5 has not sustained a preponderance of the evidence in terms of
6 Mr. Head being a flight risk. There are sufficient conditions
7 to assure his appearance. There's sufficient bail to do that
8 as well and the Court should release him as requested by the
9 defense and as proposed by pretrial services in their report.
10 THE COURT: Can I ask one last question of the
11 government that I forgot to ask? Remind me what's the
12 government's position regarding what they believe the total
13 loss amount in connection with the charges is?
14 MS. ENDRIZZI: Well, Your Honor, a conservative
15 calculation with two schemes is about $20 million.
16 THE COURT: Okay.
17 MS. ENDRIZZI: I -- once we get to sentencing, I'm

18 going to go for actually not only the losses to the bank, which
19 this amounts includes, but also the total value of the homes
20 seized rather than just the equity, because most all -- I would
21 say 90 percent of these victims lost their homes completely.
22 So we would take the value of the home when it was involved in
23 the scheme, whether it be $400,000, $600,000, $300,000, and add
24 that as the loss rather than the stolen equity, which may have
25 been 50 percent or a third, et cetera.
27
1 THE COURT: Anything that you wish to say in that

2 regard, Mr. Tedmon?
3 MR. TEDMON: Yeah, we contest that allegation and
4 there's a trial that's waiting and we will sort it out then.
6 MS. ENDRIZZI: Your Honor, I just want to note
7 because Mr. Tedmon's talking about a quarter of a million
8 dollars, on page 3 of his filing it says that it's three
9 hundred seventy-five eighty thousand dollars. I -- for what's
10 it worth --
11 MR. TEDMON: Yeah, well, I'm -- actually I'm going
12 with what pretrial says they're recommending. They're
13 recommending be released on a 250,000-dollar bond.
15 MR. TEDMON: Ninety-five thousand secured --
16 MS. ENDRIZZI: Not that I think that the additional
17 money --
18 MR. TEDMON: -- and 155,000 unsecured. That I'm --
19 that's what I'm referring to.
20 THE COURT: All right. Submitted?
21 MR. TEDMON: Submitted.
22 THE COURT: Submitted?
23 MS. ENDRIZZI: Yes, Your Honor. Thank you.
24 THE COURT: All right. I'm going to deny the defense
25 motion. Let me set out the reasons why.
28
1 The allegations are serious. The scope of the fraud

2 alleged is huge. Mr. Head is alleged to have been one of the
3 prime movers in connection with the scheme to defraud that by
4 the government's estimation is huge. The defense disputes
5 that. The allegation is he's one of the key members, if not
6 the key participant in this particular indictment. So I don't
7 think comparison of him to other defendants is necessarily all
8 that helpful in this case.
9 He was originally detained as a flight risk. I am
10 not overly impressed with the bail package that's being
11 presented. Probably the most significant proffer with respect
12 to the bail that's being proposed is his -- the residence that
13 his brother and his brother's family live in. That obviously
14 is of significance. It's the roof over their head. One would
15 hope that most human beings would have a hard time taking an
16 intentional act that put their brother's -- their own brother
17 and their brother's family at risk of losing their home.

18 The problem with that is that through no fault of the
19 brother there's just not very much equity in that property.
20 About $37,000. That's not very much. Mr. Head seems to think
21 he's got the ability to generate large amounts of cash and he's
22 made comments that, you know, they can be taken what they're
23 worth, but certainly the notion of trying to replace or
24 substitute people who are willing to post bail for him out of
25 their position of risk once he's released and can get back to
29
1 making money in his terms, certainly that thought's entered his

2 mind.
3 Thirty-seven thousand would -- of equity is not all
4 that much. The government points out that it may be such a
5 small amount that the U.S. Marshals might not even be worth --
6 find it worth moving to foreclose on.
7 The other piece of property, Mr. Conner's, it's a
8 rental property. Income generating, but, you know, not all
9 that critical as best I can tell to him. Sure he wouldn't want
10 to lose it, but it's not worth all that much either. The total
11 combined equity max is ninety-six thousand five in a fraud that
12 although being disputed the government claims is millions and
13 millions of dollars.
14 What's troubling to me is that there are other
15 individuals who know Mr. Head well, who do have property, but
16 over the last year they haven't been in much of a hurry to come
17 to the court and post it for one reason or another. I'm not
18 saying that they should and I'm not saying that they shouldn't.
19 It's just that those who presumably would know him best seem
20 somewhat reluctant to put their property or homes on the line.
21 After all this time, these two properties, both of
22 which have problems associated with them as far as I'm
23 concerned in terms of what they represent to the Court in terms
24 of some assurance that Mr. Head will not fail to appear, they
25 have weaknesses in that regard. Others have property. Aren't
30
1 interested in posting it.

2 As far as all the family members willing to sign
3 unsecured bond, that would be much more significant to me if,
4 A, some of them hadn't already signed unsecured bonds for
5 others and therefore, you know, are obligated already based
6 upon potential failures to appear, but more importantly, if
7 they were individuals who appeared on their face to be folks
8 whom those unsecured bonds could be easily collected against.
9 That is, that they were people with substantial income or
10 people with substantial assets. As best I can tell from the
11 pretrial services report, they are not. They are well-
12 intentioned. They wish to help. Unfortunately, they don't
13 have much.
14 Now I understand that people's lack of ability to
15 post financial bond, the defendant certainly can't be punished
16 for that, but there are other factors here that cause the Court
17 concern. The defendant's prior conduct indicated on the

18 original pretrial services report or pretrial detention order,
19 while perhaps not egregious, raises some concerns regarding his
20 -- how much he can be trusted to appear when and where he's
21 required to do so.
22 And then we've got allegations of conduct, and I'm
23 not getting into a mini trial over, you know, did he violate
24 the law, did he not violate the law? No, but there's enough
25 there that certainly suggests strongly to me that Mr. Head is
31
1 certainly not above trying to violate rules and regulations

2 that he knows are in place when it doesn't suit him.
3 The fact that -- you know, he was unsuccessful in his
4 attempts to have people bring cell phones into the jail so that
5 he could use them to make unmonitored calls, that just does not
6 impress me a heck of a lot. It shows to me that when it suits
7 him, when he decides that he needs to do something, that's what
8 he's going to do. And as far as rules and regulations, you
9 know, I'll just work my way around those. None of that leaves
10 me with a warm fuzzy feeling about whether $96,000 in property
11 in a case of this magnitude adequately provides me with
12 assurances that he will abide by the conditions of pretrial
13 release and that he will make all of his scheduled court
14 appearances.
15 The job that's being proffered. He's basically --
16 his brother's going to employ him as a commission sale person
17 to distribute DVDs and CDs in Los Angeles and we're going to

18 put him in an apartment in Compton where a friend of his is
19 going to pay his rent to get him started? I mean that just
20 seems like, you know, on a wing and a prayer let's hope this
21 works.
22 I just don't think that the -- either -- I don't find
23 either the bail that's being proffered or the conditions of
24 release that are being proffering are anywhere close in my
25 opinion to giving the Court adequate assurances that Mr. Head
32
1 will make his scheduled court appearances and abide by the

2 conditions of release.
3 Now, maybe I've got it totally wrong. If so, I'm
4 sure that Judge Damrell will overrule or issue a contrary
5 order. But I've got serious concerns that are not adequately
6 addressed by the proffered conditions of release, and for those
7 reasons I'm denying the motion to revoke the detention order
8 and to set bail.
9 Anything else?
10 MR. TEDMON: One other thing, Your Honor, just before
11 we close. As far as having other property available, the
12 government's kind of postulated that, but that's just not the
13 case. I mean there isn't other property available. We have
14 been --
15 THE COURT: That was taken out of the pretrial
16 services report.
17 MR. TEDMON: Well, yeah, I don't agree with that.

18 We've endeavored to try to find --
19 THE COURT: I thought you were endorsing everything
20 they said?
21 MR. TEDMON: Well, not that part.
22 THE COURT: Okay.
23 MR. TEDMON: I don't recall that, but that's not --
24 that's just not the case that there's necessarily other
25 property out there. We have looked high and low to try and see
33
1 if we -- you know, bump this up a bit. So I just wanted to

2 make it clear to the Court from my perspective where that's at,
3 but beyond that, the only other thing I would ask the Court to
4 consider before we close this hearing is would the Court have
5 any interest in pursuing a third-party custodial arrangement
6 with Jared Shultz down in San Jacinto. That was something
7 that --
8 THE COURT: To --
9 MR. TEDMON: -- is being offered which would be more
10 restrictive, but we don't have any more --
11 THE COURT: That --
12 MR. TEDMON: -- equity or property to give to the
13 Court.
14 THE COURT: To me that would have -- there would have
15 to be much tighter conditions of release, a much more stable
16 release plan which might involve a third-party custodian, and a
17 much more significant bond. All of it.

18 MR. TEDMON: More significant bond?
19 THE COURT: All of it.
21 THE COURT: In my mind.
22 MR. TEDMON: Because Mr. Shultz is ready to do that,
23 if the Court were to be inclined to consider that.
24 THE COURT: Based upon that proffer change alone,
25 same ruling. For me.
34
1 MR. TEDMON: Okay.

3 MR. TEDMON: The only thing we could add on is if
4 there was some sort of electronic monitoring in the house.
5 Third-party custodial arrangement and electronic monitoring. I
6 mean that's about as tight as you can put somebody under. If
7 the Court want to consider a curfew, that would be fine, too.
8 I mean there's conditions that are still out there I think to
9 satisfy any concern that Mr. Head would not show up.
10 THE COURT: I mean I'll go on the record for purposes
11 of a motion to reconsider in front of Judge Damrell that with
12 this bail package, third-party custodian, electronic
13 monitoring, and a curfew, I'd still deny the motion. It would
14 take all those things plus a more substantial secured bond --
16 THE COURT: -- as far as I'm concerned.
17 MR. TEDMON: Okay. Understood.

18 THE COURT: All right?
19 MS. ENDRIZZI: Nothing further. Thank you.
21 MR. TEDMON: Thank you.
22 THE COURT: Court will stand in recess.
25 --o0o--
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1 CERTIFICATE
4 entitled matter.
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6 July 13, 2011
8 AAERT CERT*D-113
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2 NOVEMBER 2, 2009; MORNING SESSION
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5 THE CLERK: Calling criminal cases 08-093 and 08-116,
6 United States versus Charles Head.
7 On for status regarding counsel, Your Honor.
8 MS. ENDRIZZI: Ellen Endrizzi for the United States.
9 MR. TEDMON: Scott Tedmon representing Charles Head
10 who is present in custody.
11 THE COURT: This matter is on for a status.
12 I received a letter from the defendant. The courtroom
13 deputy advised me those issue have been resolved with respect
14 to representation?
15 MR. TEDMON: That's correct. I met with Mr. Head on
16 Friday for a lengthy period of time. We've resolved those
17 issues and we're ready to move forward.
18 THE COURT: Where do we stand on trial in this matter?
19 MR. TEDMON: We have a status conference set in
20 January. We are endeavoring to get through all of the
21 discovery between now and then so that when we get to court
22 in January, we can set a briefing schedule and a trial date.
23 That's my hope.
24 THE COURT: January 15th?
25 MR. TEDMON: Yes. There are other defendants

1 involved, but that's what I'm hoping for.
3 We'll continue this matter to the 15th of January for
4 further status. Time will be excluded under T4 and T2.
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7 Plaintiff, )
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8 vs. ) No. Cr. S-08-093
) No. Cr. S-08-116
)
10 Defendants. )
)
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16 STATUS CONFERENCE
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18 NOVEMBER 2, 2009
19 ---oOo---
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24

1 APPEARANCES
4 McGREGOR W. SCOTT
5 501 I Street
7
8 SCOTT TEDMON
Attorney at Law
9 1050 Fulton Avenue
Suite 218
10 Sacramento, California 95825
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2 JANUARY 5, 2010; MORNING SESSION
3 ---O0O---
5 THE CLERK: Calling out of order 08-093 and 08-116,
6 United States versus Charles Head.
7 MS. ENDRIZZI: Ellen Endrizzi for the United States.
9 present in custody.
10 THE COURT: This matter is on calendar on the
11 defendant's motion to suppress evidence derived from
12 interference with the defendant's mail correspondence.
13 Counsel, I understand there's an agreement as to the
14 hearing. I want to get into details of what this hearing is
15 about however.
16 What is the date you agreed upon? There's a date in
17 March, I think, but sooner did you want a date?
18 MR. TEDMON: I'll speak to that.
19 We anticipate this being an all-day hearing. My
20 understanding from your clerk is the first available date is
21 March the 5th for an all-day hearing based on your court's
22 calendar. If that's what it is, that's what it is.
23 I would ask, though, that if a date opens up in
24 advance of that, given the fact Mr. Head is in custody, I
25 would certainly be amenable to moving it forward. The only

1 thing I've talked to Ms. Endrizzi about, which is a fair
2 request, we don't want to short-set it too much so that it
3 limits our ability to get the materials we need to make sure
4 the evidentiary hearing moves smoothly.
5 THE COURT: All right. I have no idea what will open
6 up, but maybe sometime the first part of February would be a
7 preferable date?
8 MR. TEDMON: Yes.
9 THE COURT: If some trial doesn't go forward, then we
10 will certainly notify the parties, but right now it's the 5th
11 of March; is that correct?
13 THE COURT: That's at 10:00 a.m., so I understand, the
14 5th of March.
15 As I see it, there's only three aspects. One is a
16 motion to suppress evidence that may be produced at trial,
17 and it's not clear to me whether any of these mailings would
18 be proffered by the government or relevant, whether
19 admissible in the first place, but in any event, is that one
20 aspect of the motion?
21 If it's unlawful seizure, then this evidence would not
22 be presented at trial.
23 Is that your under understanding, Ms. Endrizzi?
24 MS. ENDRIZZI: That is.
25 THE COURT: Is this mooted by the fact you may not

1 even introduce this?
2 MS. ENDRIZZI: That's my point. I can tell you now,
3 the likelihood of my producing it would be almost zero. We
4 could have another bail hearing without the letters quite
5 easily if we want to take that off the issue as well.
6 THE COURT: I guess the point here is if there's some
7 possibility they may be introduced, I presume -- is that your
8 concern?
9 MR. TEDMON: That's my concern in any hearing.
10 THE COURT: Well, let's -- maybe there could be a
11 stipulation in advance of a hearing, but if there's not a
12 stipulation worked out that would moot this issue, we'll set
13 the date as we have for the 5th of March for a hearing on
14 this, but if it's moot, it's moot.
15 Now, with respect to the detention hearing, same would
16 apply, obviously. If there is going to be a new motion and
17 the government stipulates that it will not introduce any of
18 these materials, then there will be no need for a hearing on
19 the motion as such. Again, I think the parties should be
20 able to work that out. If they can, there would be no need
21 for a hearing.
22 There's another aspect of the motion, more in the
23 nature of injunctive relief, which is appropriately a 1983
24 claim and not under a motion to suppress, and I'm sure you
25 understand that.

2 THE COURT: So the court is not going to have a
3 hearing with a view to imposing any injunction relief that's
4 being requested. That's a separate type of claim,
5 independent of the criminal action and independent of this
6 motion.
7 MR. TEDMON: Understood.
8 THE COURT: There's also some requests with regard
9 to -- I assume the defendant has all the documents in
10 question or is there some question about that?
11 MR. TEDMON: I think there is a question about that.
12 What I've requested is to have the government produce to me
13 every document they've seized, secured and copied forwarded
14 to the U.S. Attorney.
15 In addition, I've asked for any communications between
16 the U.S. Attorney's Office, the jail and/or the marshals
17 relative to my client only, obviously, and I don't believe
18 from what I've read that I have all of that.
19 THE COURT: Let's take the first part.
20 MS. ENDRIZZI: We can provide the letters in their
21 entirety to Mr. Tedmon probably by tomorrow or the day after.
22 THE COURT: By stipulation, the government has agreed
23 to that. I'm not sure what else you're talking about in
24 terms of communications.
25 MR. TEDMON: Government's Exhibit 3 to their response,

1 there was a one-page exhibit where there was a sequence of
2 three e-mails between Ms. Endrizzi and Deputy Shelton where
3 they were talking about information being passed back and
4 forth relative to Mr. Head and his bail motion.
5 I want any other e-mail communications between the
6 U.S. Attorney, the jail, whether Deputy Shelton or somebody
7 else, or if the marshals were included in that, so I can see
8 what the flow of information is back and forth as it relates
9 to my client, because it could have an impact on what is
10 going on here.
11 MS. ENDRIZZI: The government produced e-mail, one,
12 for context, but, two, if there was a hearing, a 1983
13 hearing, that would be Jenks material and we would be under
14 an obligation to produce it.
15 So if we have a decision -- I would oppose providing
16 those e-mails unless we have an injunctive issue under 1983.
17 They're very broad in its scope in terms of "all
18 communications between the U.S. Attorney's Office, the
19 marshals and the jail."
20 THE COURT: You just said all you're interested in are
21 the e-mails with respect to the bail hearing?
22 MR. TEDMON: Well, any communication with respect to
23 Mr. Head. It could touch on the bail hearing. It could
24 touch on other matters that may come out of those. I don't
25 know what they say in terms of whether it would be anything

1 that would be a concern at trial, but I think if it relates
2 to Mr. Head, I'm entitled to those transmittals.
3 THE COURT: You may be, but for purposes of this
4 motion, if these issues are mooted, that's really a
5 separate -- that's a different track. That's not about the
6 correspondence that is the subject of your motion or motions;
7 correct?
8 If they are not going to introduce any of this, then
9 it's a question whether there may be some e-mails that may or
10 may not be relevant to your defense of Mr. Head in the
11 criminal case. That's what you're suggesting.
12 I'm not going to get into the 1983 matter. I'm
13 talking about criminal prosecution at this time. If you can
14 establish that somehow that's relevant and it's discoverable,
15 then I think you have a case to make, but I don't think we're
16 there yet.
17 In other words, if none of this is going to be
18 introduced into evidence at the bail hearing or at the trial,
19 then you're talking about the possibility of some
20 correspondence between the jailer and the U.S. Attorney's
21 Office, and I don't know how that gets into anything.
22 I don't know. Maybe there's something in there.
23 Maybe you could have an informal review of that, Mr. Tedmon,
24 and then obviate the need for any motion in that regard.
25 MR. TEDMON: That would be agreeable.

1 THE COURT: It just strikes me as being somewhat
2 peripheral to the motion you're filing if it's going to be
3 mooted. If they're going to produce everything and they're
4 not going to introduce anything, then I question whether that
5 would be particularly important.
6 MR. TEDMON: I agree. If the matter is mooted, it's
7 mooted. At this point it's not.
8 THE COURT: Maybe informal discovery could take place
9 and that could be resolved.
11 MR. TEDMON: That's agreeable.
12 THE COURT: Now, the final matter here is at the
13 hearing that may or may not take place now, the request to
14 produce Deputy Shelton as a witness, that's appropriate. But
15 I'm not going to enter an order that Ms. Endrizzi testify,
16 whether this is mooted or not. I'm not going to make that
17 order. That's not appropriate.
18 Does that cover all the requests you have pursuant to
19 your motion, Mr. Tedmon?
20 MR. TEDMON: Yes.
21 Could I have one moment?
22 (Whereupon, a conference was held
23 between Mr. Tedmon and the defendant.)
24 MR. TEDMON: That would be everything I've requested
25 in the motion.

1 The only other matter, and this is a little bit
2 premature, but I want to list it for the court's
3 consideration later, if there's an agreement between the
4 parties and it renders this whole issue moot, we'll let the
5 court know and take the matter off calendar.
6 But the other would be the outcropping of that, which
7 is a new bail hearing. That's part of the concern here.
8 From my perspective, it needs to go to a new magistrate
9 because you can't unring the bell.
10 Then the other part of it, anything that was filed
11 relative to the original bail hearing, I think needs to be
12 sealed, because if the magistrate is able to look back on all
13 the stuff that Judge Drozd looked at, it makes no sense.
14 It's really not a new hearing.
15 I'm prepared to file a new motion, the government can
16 respond with a new response, I can find a reply, if that's
17 appropriate, and then we can have a hearing. I want the
18 court to know and Ms. Endrizzi to know that I think that's an
19 appropriate order.
20 THE COURT: It may well be.
21 MR. TEDMON: If we get to that point.
22 THE COURT: I don't know what happened at the bail
23 hearing. I don't know what was produced, but if it's now not
24 going to be introduced, the magistrate judge should not
25 consider it.

1 I understand what you're saying.
2 MS. ENDRIZZI: And, actually, at that bail hearing,
3 Judge Drozd said on the record that he had received the
4 United States' letters, but had not read them and had only
5 read the brief.
6 MR. TEDMON: He read some of them but did not read
7 them all.
8 THE COURT: Maybe it would be appropriate to have a
9 separate magistrate judge. If you can reach a stipulation --
10 MR. TEDMON: I think we can. I just wanted to raise
11 that.
12 THE COURT: Anything further?
13 MR. TEDMON: Nothing further.
14 Thank you, Your Honor.
16 ---o0o---
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)
7 Plaintiff, )
)
8 vs. ) No. Cr. S-08-093
) No. Cr. S-08-116
)
10 Defendants. )
)
11
12 ---oOo---
13
15
16 STATUS CONFERENCE
17
18 JANUARY 5, 2010
19 ---oOo---
20
21
22
23
24

1 APPEARANCES
4 McGREGOR W. SCOTT
5 501 I Street
7
8 SCOTT TEDMON
Attorney at Law
9 1050 Fulton Avenue
Suite 218
11
12
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25

3 --o0o--

) Case No. 2:08-cr-00116-LKK
5 Plaintiff, )
6 vs. ) Friday, March 5, 2010
) 11:08 A.M.
8 Defendants. )
)
9
10 BEFORE THE HONORABLE EDMUND F. BRENNAN
11
APPEARANCES:
12
For Plaintiff: MATTHEW C. STEGMAN
(916) 554-2700
15
For Defendant Charles Head: SCOTT L. TEDMON
16 Law Offices of Scott L. Tedmon
(916) 482-4545
18
For Defendant Jeremy Head: CHRISTOPHER HAYDN-MYER
19 Attorney at Law
1478 Stone Point Drive, #400
20 Roseville, CA 95661
(916) 622-1703
21
For Defendant Leonard Bernot: BRUCE LOCKE
22 Moss & Locke
(916) 469-0667
24
25
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2 For Defendant Joshua Coffman: JAMES P. GREINER specially for

JOHN P. BALAZS
3 Law Office of John Balazs
916 2nd Street, Suite F
4 Sacramento, C 95814
(916) 447-9299
5
For Defendant John Corcoran: TIMOTHY ZINDEL for
6 MATTHEW C. BOCKMON
Federal Defender's Office
7 801 I Street, 3rd Floor
8 (916) 498-5700
9 For Defendant Sarah Mattson: JOSEPH J. WISEMAN

Attorney at Law
10 1477 Drew Avenue, Suite 106
Davis, CA 95618
11 (530) 759-0700

14 (916) 649-2006
15 For Defendant Omar Sandoval: MICHAEL BRADLEY BIGELOW

Law Office of Michael B. Bigelow
17 (916) 443-0217
18 For Defendant X. Sandoval: CANDACE ANNE FRY

Law Office of Candace A. Fry
19 2401 Capitol Avenue
20 (916) 446-9322
21 For Defendant Kou Vang: JAMES R. GREINER for

JOSEPH HAWKINS LOW, IV.
22 Law Firm of Joseph H. Low, IV.
One World Trade Center, #2320
23 Long Beach, CA 90831
(562) 901-0840
24
25
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2 For Defendant K. Brotemarkle: SCOTT L. TEDMON for

ROBERT G. GAZLEY, Esq.
3 18685 Main Street
Suite 1, PMB 221
4 Huntington Beach, CA 92648
(714) 375-0628
5
For Defendant B. Budoff: DWIGHT M. SAMUEL
6 Law Offices of Dwight M. Samuel
117 J Street, Suite 202
(916) 447-1193
8
For Defendant Lisa Vang: JAMES R. GREINER for
9 TIMOTHY E. WARRINER
Law Office of Timothy Warriner
11 (916)443-7141

U.S. District Court
14 (916) 930-4193

Transcription
16 5002 - 61st Street
17 (916) 455-3887
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1 SACRAMENTO, CALIFORNIA, FRIDAY, MARCH 5, 2010, 11:08 A.M.
2
3 THE CLERK: Calling Criminal 08-0093-FCD, and
4 Criminal 08-116-FCD, United States v. Charles Head, Jeremy
5 Michael Head, Leonard Bernot, Joshua Coffman, John Corcoran,
6 Sarah Mattson, Domonic McCarns, Omar Sandoval, Xochitl
7 Sandoval, Kou Yang, Keith Brotemarkle, Benjamin Budoff, and
8 Lisa Vang. Your Honor, this matter is on calendar for an
9 arraignment.
10 THE COURT: All right. I'll take the roll call in
11 the order in which you appear on the calendar. For Defendant
12 Charles Head?
13 MR. TEDMON: Yes, good morning, Your Honor. Scott
14 Tedmon representing Charles Head. I have one question, Your
15 Honor, just procedurally. Are we going to do the 093 case
16 first, and then the 116 case second? Because there's different
17 defendants in either indictment.
18 THE COURT: Yes, I -- it is my intent to go through
19 the lower numbered -- through the case ending in 93 first.
20 MR. TEDMON: First. Okay.
21 THE COURT: Yes.
22 MR. TEDMON: As to case 093, Scott Tedmon
23 representing Charles Head who is not present. He has a court
24 approved waiver on file for this arraignment.
25 THE COURT: All right. Thank you, Mr. Tedmon. As to

1 Jeremy Head?
2 MR. HAYDN-MYER: Good morning, Your Honor. Chris
3 Haydn-Myer for Jeremy Head. He is not present and he does have
4 a written waiver on file with the Court.
5 THE COURT: All right. Good morning. And as to
6 Leonard Bernot?
7 MR. LOCKE: Your Honor, Bruce Locke on behalf of Mr.
8 Bernot. He is -- also has a waiver on file.
9 THE COURT: All right. That pronunciation is Bernot?
10 MR. LOCKE: It is. It fools me every time also, Your
11 Honor.
12 THE COURT: All right. Good morning, Mr. Locke. As
13 to Defendant Coffman?
14 MR. GREINER: Good morning, Your Honor. James
15 Greiner, I'm making a special appearance for John Balazs. John
16 Balazs represents Joshua Coffman. Joshua Coffman has a waiver
17 of presence on file and it's been accepted by the Court.
18 THE COURT: All right. Good morning, Mr. Greiner.
19 As to Defendant Corcoran?
20 MR. ZINDEL: Your Honor, Tim Zindel from the Federal
21 Defender's Office standing in for Matthew Bockmon on behalf of
22 Mr. Corcoran in both cases.
23 THE COURT: All right. And good morning again, Mr.
24 Zindel. As to Defendant Mattson?
25 MR. WISEMAN: Good morning, Your Honor. Joseph

1 Wiseman on behalf of Ms. Mattson who is not present in Court.
2 She has a waiver on file that the Court has accepted.
3 THE COURT: All right. Good morning, Mr. Wiseman.
4 As to Defendant McCarns?
6 Greiner representing Domonic McCarns. Mr. McCarns has a waiver
7 of presence on file that the Court has accepted.
8 THE COURT: All right. Thank you, Mr. Greiner. As
9 to Defendant Sandoval?
10 MR. BIGELOW: Omar Sandoval, Your Honor. Michael
11 Bigelow on behalf of Mr. Sandoval who is not present. There's
12 a waiver of appearance on file which has been accepted by this
13 Court.
14 THE COURT: Okay. Thank you, Mr. Bigelow. As
15 to -- is that Xochitl Sandoval, is that --
16 MS. FRY: Xochitl Sandoval, Your Honor. Candace Fry
17 appearing for her, and her waiver is on file.
18 THE COURT: All right. How do you pronounce that
19 first name again?
20 MS. FRY: Zochi (phonetic).
21 THE COURT: Okay. It's a "z" then. All right. Good
22 morning, Ms. Fry. As to Defendant -- is it Cow Yang?
23 MR. GREINER: Kou Yang, Your Honor.
24 THE COURT: Kou Yang.
25 MR. GREINER: James Greiner making a special

1 appearance for attorney Joseph Low. Mr. Low represents Kou
2 Yang. Mr. Yang has a waiver of presence on file that's been
3 accepted by this Court.
4 THE COURT: All right. Thank you, Mr. Greiner. AS
5 to defendant Keith Brotemarkle?
6 MR. TEDMON: Good morning, Your Honor. Scott Tedmon
7 making a special appearance for Robert Gazley who represents
8 Mr. Brotemarkle. There is a waiver on file. The Court has
9 accepted it for this appearance.
10 THE COURT: All right. And as to Defendant Budoff,
11 B-u-d-o-f-f?
12 MR. SAMUEL: Correct. Your Honor, Dwight Samuel
13 appearing for Mr. Budoff who is not present, but there's a Rule
14 10 waiver on file which the Court has accepted.
15 THE COURT: All right. Thank you, Mr. Samuel. As to
16 Defendant Lisa Vang?
18 Greiner making a special appearance for attorney Timothy
19 Warriner. Mr. Warriner represent Lisa Vang. Ms. Vang has a
20 waiver of presence on file that's been accepted by this Court.
21 THE COURT: All right. Thank you, Mr. Greiner. It's
22 a busy morning for you.
23 MR. GREINER: It is.
24 MR. STEGMAN: And Your Honor, if I may, Matthew
25 Stegman for the United States.

1 THE COURT: All right. Good morning to you too, Mr.
2 Stegman.
3 THE COURT: All right. We will proceed with
4 indictment 08-93. The defendants are charged in count 1 of
5 that indictment with conspiracy to commit mail fraud in
6 violation of Title 18 United States Code, Section 1349. The
7 defendants that are charged in that count are Charles Head,
8 Jeremy Head, Leonard Bernot, that would be 1, 2, and
9 3 -- defendants 1, 2, and 3 on the calendar as it appears this
10 morning -- defendant No. 4, Joshua Coffman; Defendant No. 5,
11 John Corcoran; Defendant No. 6, Sarah Mattson; Defendant No. 7,
12 Domonic McCarns; Defendant No. 8, Omar Sandoval; Defendant nO.
13 9, Xo -- is it Zochitl Sandoval?
14 MS. FRY: Just Zochi (phonetic) --
15 THE COURT: Zochi.
16 MS. FRY: -- the rest of it is silent.
17 THE COURT: Okay, Xochitl (Zochi) Sandoval, and then
18 Defendant No. 13 (sic) on the calendar, Kou Yang. If these
19 defendants are convicted as to this count, the maximum
20 penalties that they face are a term of imprisonment of up to 20
21 years, a term of supervised release of three years, a fine of
22 up to $250,000 or twice the amount of the property involved in
23 the transaction, whichever is greater, and a special assessment
24 of $100.
25 Counts 2 through 12 of the indictment charge the

1 following defendants with mail fraud in violation of Title 18
2 United States Code Section 1341. The defendants charged in
3 those counts are Charles Head, No. 1 on the calendar; No. 2 on
4 the calendar, Jeremy Head; No. 3 on the calendar, Leonard
5 Bernot; No. 4 on the calendar, Joshua Coffman; No. 5 on the
6 calendar, John Corcoran; No. 6 on the calendar, Sarah Mattson;
7 No. 7 on the calendar Domonic McCarns; No. 8 on the calendar,
8 Omar Sandoval.
9 If convicted as to these counts, the maximum
10 penalties that the defendants face as to each count is a term
11 of imprisonment of up to 20 years, a term of supervised release
12 of three years, a fine of up to $250,000 or twice the amount of
13 the property involved in the transaction, whichever is greater,
14 and a special assessment of $100.
15 Mr. Stegman, did I get the defendants and the counts
16 correct?
17 MR. STEGMAN: You did, Your Honor. Thank you.
18 THE COURT: All right. Counsel, do each of the
19 defendants wish to enter pleas of not guilty as to the -- all
20 counts in which they've been charged in the indictment ending
21 in 093? As to Charles Head?
22 MR. TEDMON: Yes, Your Honor. Not guilty, request a
23 jury trial.
24 THE COURT: All right. AS to Jeremy Head?
25 MR. HAYDN-MYER: Yes, Your Honor, not guilty, jury

1 trial.
2 THE COURT: Leonard Bernot?
3 MR. LOCKE: Yes, Your Honor.
4 THE COURT: Joshua Coffman?
5 MR. GREINER: Yes, Your Honor, not guilty, request
6 jury trial.
7 THE COURT: John Corcoran?
8 MR. ZINDEL: Not guilty, Your Honor. We would
9 request a jury trial.
10 THE COURT: Sarah Mattson?
11 MR. WISEMAN: Not guilty, Your Honor, and we do
12 request a jury trial as well.
13 THE COURT: Domonic McCarns?
14 MR. GREINER: Not guilty, request a jury trial, Your
15 Honor.
16 THE COURT: Omar Sandoval?
17 MR. BIGELOW: Not guilty, Your Honor, and request a
18 jury trial.
19 THE COURT: Xochitl Sandoval?
20 MS. FRY: Not guilty and request a jury trial, Your
21 Honor.
22 THE COURT: Kou Yang?
23 MR. GREINER: Not guilty, Your Honor, and request a
24 jury trial.
25 THE COURT: Keith Brotemarkle?

1 MR. TEDMON: Your Honor, Mr. Brotemarkle is not
2 charged in 093.
3 THE COURT: Oh, thank you. Let's see -- actually I
4 was going down the list on the calendar, rather than the list
5 that's up here in the penalty slip.
6 Let's see, I think the next one would be Kou Yang.
7 MR. GREINER: Not built, Your Honor, request jury
8 trial.
9 THE COURT: All right. Those pleas of not guilty are
10 hereby entered as are the requests for jury trial.
11 As to further proceedings, I notice from the docket
12 that you're already set for a status conference before Judge
13 Damrell for May 24, 2010 at 10:00 a.m.; is that correct?
14 MR. TEDMON: Correct, Your Honor.
15 MR. GREINER: Correct, Your Honor.
16 THE COURT: All right. Is there anything further we
17 need to do as to the indictment ending in 93?
18 MR. STEGMAN: No, Your Honor.
19 MR. TEDMON: No.
21 MR. GREINER: Judge, the only thing in 093 on behalf
22 of my client, Mr. McCarns, being joined by Mr. Coffman and Ms.
23 Yang would be to request that the government provide Brady and
24 Giglio materials and any discovery from any investigating
25 office to comply with the due process and constitutional rights

1 of the clients and the Rule 16.
2 THE COURT: All right. Mr. Stegman?
3 MR. STEGMAN: Your Honor, we'll comply with our legal
4 obligations.
5 THE COURT: All right. Has there been -- Mr. Greiner
6 has there been a discovery request, a written discovery request
7 presented?
8 MR. GREINER: There has not been a written discovery
9 request presented. The government has produced voluminous
10 discovery to date. I'm just making sure that everybody's on
11 board so that when this does go to jury trial, nobody's
12 surprised, Judge.
13 THE COURT: All right. That's noted on the record
14 and you also have Mr. Stegman's representation that
15 they'll -- the government will comply with its obligations.
16 MR. GREINER: Absolutely. Thank you, Judge.
17 THE COURT: All right. Let's move on to the
18 indictment ending in 116. We don't need to repeat the
19 appearances again, but I will run through the charges. All
20 right. This indictment charges in count 1 the following
21 defendants: No. 1 on the calendar, Charles Head; No. 11 on the
22 calendar, Keith Brotemarkle; No. 12 on the calendar, Benjamin
23 Budoff; No. 5 on the calendar, John Corcoran; No. 7 on the
24 calendar, Domonic McCarns; No. 13 on the calendar, Lisa Vang;
25 and No. 10 on the calendar, Kou Yang.

10
1 And those defendants are all charged in count 1 of
2 the indictment with conspiracy to commit mail fraud in
3 violation of Title 18, United States Code Section 1349. If
4 convicted of this offense, the defendants face the following
5 maximum penalties: a term of imprisonment of up to 20 years, a
6 term of supervised release of three years, a fine of up to
7 $250,000, or twice the amount of the property involved in the
8 transaction, whichever is greater.
9 The indictment charges in counts -- let's see, in
10 count 4 Charles Head is charged; in counts 3 and 4, John
11 Corcoran is charged; and in count 2 Lisa Vang is charged with
12 violations of Title 18, United States Code Section 1341, mail
13 fraud. If convicted of these charges, the maximum penalties
14 that each of the defendants named in the counts face is a term
15 of imprisonment of up to 20 years a term of supervised release
16 of three years, a fine of up to $250,000, or twice the amount
17 of the property involved in the transaction, whichever is
18 greater, and a special assessment of $100.
19 Mr. Stegman, did I get the defendants and counts
20 correct?
21 MR. STEGMAN: You did, Your Honor. Thank you.
22 THE COURT: All right. Counsel, do each of the
23 defendants wish to enter pleas of not guilty and request a jury
24 trial? As to Charles Head?

11
1 THE COURT: And as to Keith Brotemarkle?
3 THE COURT: As to Benjamin Budoff?
4 MR. SAMUEL: Yes, Your Honor.
5 THE COURT: As to John Corcoran?
6 MR. ZINDEL: Yes.
7 THE COURT: As to Domonic McCarns?
9 THE COURT: As to Lisa Vang?
11 THE COURT: As to Kou Yang?
13 THE COURT: All right. Those pleas of not guilty are
14 hereby entered as are the requests for jury trial, and again, I
15 notice that on the docket, this matter is also set for status
16 at the same time, May 24th, 10:00 a.m. before Judge Damrell.
18 THE COURT: All right. Anything further that we need
19 to do as to this indictment?
21 MR. GREINER: Judge, on behalf of Mr. McCarns, and
22 Ms. Yang, and Ms. Vang, the same request as in 093, that the
23 government comply with Brady and Giglio material, the
24 constitutional rights of the clients under the due process
25 clause and Rule 16 discovery. The government has produced

12
1 voluminous discovery today. We're just making sure that when
2 this case does go to trial that everybody's on the same page.
3 THE COURT: All right. That's duly noted. Mr.
4 Stegman, I assume it's the representation in this indictment
5 MR. STEGMAN: Yes, Your Honor.
6 THE COURT: All right. Anything further?
7 MR. GREINER: Thank you, Judge.
8 MR. STEGMAN: No.
9 MR. TEDMON: No.
10 THE COURT: All right. Thank you, counsel.
12 MR. STEGMAN: Thank you.
14 adjourned at 11:21 a.m.)
15 --o0o--
16 CERTIFICATE
19 entitled matter.
20
21 July 13, 2011
23 AAERT CERT*D-113
24
25

3 ---O0O---
4 BEFORE THE HONORABLE KIMBERLY J. MUELLER, JUDGE
5
6 UNITED STATES,
7 Plaintiff,
8 Vs. CASE NO. CR. 2:08-093 KJM
9 CHARLES HEAD, ET AL.,

10 Defendants.
11 ___________________________/
12
13
14
15 ---o0o---
16
18 THURSDAY, FEBRUARY 10TH, 2011
19 RE: STATUS CONFERENCE
20
21 ---o0o---
22
23
24
25 Reported by: CATHERINE E.F. BODENE,
CSR. No. 6926
CATHERINE E.F. BODENE, OFFICIAL COURT REPORTER, USDC

(916) 446-6360
1 APPEARANCES
2 ---o0o---
3
4 For the Plaintiff:
5 UNITED STATES ATTORNEY'S OFFICE
501 I STREET, SUITE 10-100
6 Sacramento, California 95814-2322
7 BY: MATTHEW C. STEGMAN,
Assistant. U.S. Attorney
8
9
10
11 For the Defendant Charles Head:
12 LAW OFFICES OF SCOTT L. TEDMON
14 BY: SCOTT L. TEDMON,
Attorney At Law
15
16
17
18 For the Defendant Jeremy Head:
19 CHRISTOPHER HAYDN-MYER LAW OFFICES
1478 Stone Point Dirve, Suite 400
20 Roseville, California 95661
21 BY: CHRISTOPHER HAYDN-MYER,

Attorney At Law
22
23
24
25 ---o0o---

(916) 446-6360
1 APPEARANCES
2 ---o0o---
3
4 For the Defendant Leonard Bernot:
5 MOSS & LOCKE
7 BY: BRUCE LOCKE,
Attorney At Law
8
9
10
11 For the Defendant Joshua Coffman:
12 LAW OFFICE OF JOHN BALAZS
14 BY: JOHN P. BALAZS,
Attorney At Law
15
16
17
18 For the Defendant John Corcoran:
19 OFFICE OF THE FEDERAL DEFENDER
21 BY: MATTHEW C. BOCKMON,

Deputy Federal Defender
22
23
24
25 ---o0o---

(916) 446-6360
1 APPEARANCES
2 ---o0o---
3
4 For the Defendant Sara Mattson:
5 WISEMAN LAW GROUP, PC
1477 Drew Avenue, Suite 106
6 Davis, California 95618
7 BY: JENNIFER NOBLE,
Attorney At Law
8
9
10
11 For the Defendant Domonic McCarns:
12 LAW OFFICES OF JAMES R. GREINER
14 BY: JAMES R. GREINER,
Attorney At Law
15
16
17
18 For the Defendant Omar Sandoval:
19 LAW OFFICE OF MICHAEL B. BIGELOW
428 J STREET, SUITE 350
21 BY: MICHAEL B. BIGELOW,

Attorney At Law
22
23
24
25 ---o0o---

(916) 446-6360
1 APPEARANCES
2 ---o0o---
3
4 For the Defendant Xochitl Sandoval:
5 LAW OFFICE OF CANDACE A. FRY
2401 Capitol Avenue
7 BY: CANDACE ANNE FRY,
Attorney At Law
8
9
10
11 For the Defendant Kou Yang:
12 THE LAW FIRM OF JOSEPH HAWKINS LOW, IV
One World Trade Center, Suite 2320
13 Long Beach, California 90831
14 SPECIAL APPEARANCE BY:
SCOTT TEDMON, Attorney At Law
15
16
17
18
19
20
21 ---o0o---
22
23
24
25

(916) 446-6360
1
2 THURSDAY, FEBRUARY 10TH, 2011 - 10:00 A.M.
3 ---o0o---
4 THE CLERK: Calling Criminal S-08-93, United States
5 v. Charles Head, Jeremy Head, Leonard Bernot, Joshua Coffman,
6 John Corcoran, Sarah Mattson, Domonic McCarns, Omar Sandoval,
7 Xochitl Sandoval and Kou Yang. This on for status
8 conference.
9 MR. STEGMAN: Good morning, Your Honor. Matthew

11 THE COURT: Good morning, Mr. Stegman.
13 representing Charles Head who is not present but has a waiver
14 on file.
15 THE COURT: Good morning, Mr. Tedmon.

17 Haydn-Myer for Jeremy Head. He's also not present but does
18 have a waiver on file.
19 THE COURT: Good morning, Mr. Haydn-Myer.
20 MR. LOCKE: Good morning, Your Honor. Bruce Locke on
21 behalf of Leonard Bernot who has a waiver on file.

22 THE COURT: Good morning, Mr. Locke.
23 MR. BALAZS: Good morning, Your Honor. John Balazs
24 on behalf of Joshua Coffman. He also has a waiver on file.
25 THE COURT: Good morning, Mr. Balazs.

(916) 446-6360
2
1 MR. BOCKMON: Good morning, Your Honor. Matthew
2 Bockmon, Federal Defender's Office, for John Corcoran who is
3 not present. He has a waiver on file.

4 THE COURT: Good morning, Mr. Bockmon.
5 MS. NOBLE: Good morning, Your Honor. Jennifer
6 Nobel. I'm standing in for Joseph Wiseman. Mr. Wiseman
7 represents Sarah Mattson who has a waiver on file. She's out
8 of custody.
9 THE COURT: Good morning, Miss Noble.

11 Greiner. I represent Domonic McCarns. Mr. McCarns has a
12 waiver of presence on file.
13 THE COURT: Good morning, Mr. Greiner.
14 MR. BIGELOW: Good morning, Your Honor. Michael
15 Bigelow on behalf of Mr. Sandoval who is not present. There

16 is a waiver on file.
17 THE COURT: Good morning, Mr. Bigelow.
18 MS. FRY: Good morning. Candace Fry on behalf of
19 Xochitl Sandoval whose waiver is also on file.
20 THE COURT: Good morning, Miss Fry.
21 MR. TEDMON: And Scott Tedmon specially appearing for

22 Joseph Low who represents Kou Yang who also has a waiver on
23 file.
24 THE COURT: Good morning once again, Mr. Tedmon.
25 This is on for a status. The case has been going for

(916) 446-6360
3
1 some time.
2 What is the parties request this morning?
3 MR. TEDMON: Your Honor, with the exception of

4 Mr. Locke, all parties are in agreement to continue the
5 matter for further status until May 12th, 2011, at 10:00 a.m.
6 We would all agree that time can be excluded under
7 Local Code T-2 for complexity and T-4 for counsel
8 preparation.
9 THE COURT: Can you help me understand. I'm in the

10 learning process. Has discovery been completed? Is
11 discovery ongoing?
12 MR. TEDMON: It's essentially completed, Your Honor.
13 Let me give the Court a brief summary.
14 We received in the initial discovery from the
15 government 193,391 pages. We then received materials that

16 were submitted to the grand jury by way of subpoena.
17 Then we received six separate search warrant disks of
18 search warrant materials from the various searches. And
19 that, from my best estimate, is about another 100,000 pages
20 or so. And then there were five computers that were recently
21 mirrored and provided to the defense, and that has a large

22 volume of materials.
23 So this case is exceptionally large in terms of the
24 volume of documents. And at least on behalf of myself, and I
25 think other counsel as well, we are just trying to move our

(916) 446-6360
4
1 way through all this mass of material. And that's what we're
2 doing so...
3 THE COURT: Do you believe it is likely the case

4 would proceed to trial or other resolution this year yet?
5 MR. TEDMON: No.
7 MR. TEDMON: In fact, I've talked to Mr. Stegman
8 about this in the past. Some of us are in another case in
9 front of Judge Burrell which has about 700,000 pages of

10 documents.
11 That's set for trial in September of 2012. And it is
12 my considered opinion that this case will be set sometime
13 after that just so the Court has an idea from where I stand
14 of where this is going.

16 Does any other defense counsel have anything to say?
17 Besides you Mr. Locke. We'll get to you in a moment.
18 (Counsel nod heads.)
19 THE COURT: So you all agree with that
20 representation.
21 Mr. Stegman, anything to say?

22 MR. STEGMAN: I have agreed to recommend a trial date
23 after September 2012 because I also have concerns about time,
24 but I do understand the defense needs time to get through the
25 discovery, they need to be prepared, and so I intend to be

(916) 446-6360
5
1 reasonable in that regard.
2 MR. TEDMON: That would be accurate. We just had
3 discussions about the timing of it.

4 THE COURT: All right. You would agree both T-2 and
5 T-4 are appropriate grounds of exclusion?
6 MR. TEDMON: Absolutely.
8 THE COURT: We will then confirm this for a further
9 status on May 12th at 10:00 a.m.

10 Time between now and then is excluded under Local
11 Code T-2 and T-4. That's for everyone but Mr. Bernot.
12 For Mr. Bernot, your request?
13 MR. LOCKE: My request is that we set a trial date,
14 Your Honor. My client would like to go to trial as soon as
15 possible, like April or July.

16 THE COURT: All right. What trial dates can we
17 offer?
18 MR. STEGMAN: Your Honor, if I may be heard?
19 I think really what Mr. Locke is doing now is making
20 a motion for severance because there is a preference for
21 joint trials -- keeping trials together. And the government

22 would like to respond.
23 And I think the appropriate thing to do here would be
24 for Mr. Locke to file a written motion setting this for
25 trial and a severance motion, I suppose.

(916) 446-6360
6
1 THE COURT: Any objection to that procedure,
2 Mr. Locke?
3 MR. LOCKE: No. I can do that, but I think we

4 could --
5 THE COURT: We can set a date and hold it in case I
6 do -- Given the way calendars fill up, we'll set a date as a
7 place holder. But perhaps given the briefing, we'll set it
8 for July. And then that can be vacated if I deny the motion.
9 Any objection to that approach?

10 Just so -- It's a way of my ticklering what might be
11 coming up.
12 MR. LOCKE: That would be fine.
13 MR. STEGMAN: I do have some concerns. I'm not sure
14 I can articulate them now, but I think as it stands now the
15 defendants are all joined. And I think that good cause to --

16 or good cause for time exclusion -- exclusion of time for
17 some of the co-defendants is an exclusion of good time. It
18 is a reason for exclusion of time as to this defendant. And
19 I'm concerned that we're going to be needing to be gearing up
20 for trial and --
21 THE COURT: I'm not pre-judging the question by

22 setting a date or holding a date. And by moving it to July,
23 are you concerned that does not give enough time for me to
24 consider the question and decide on a motion for severance
25 and then thereafter give you time to prepare?

(916) 446-6360
7
1 MR. STEGMAN: I'm confident it will give the Court
2 enough time, but I have three trials scheduled between now
3 and July. And this case is a complex case. And I do need to

4 get heavily involved in the case.
5 And I'm just concerned that I'm not going to have
6 time to take care of all that, respond to a severance motion
7 and do the trials.
8 And I think at this point, since all the defendants
9 are still joined, if there is a status conference set for

10 May, that should be the case for Mr. Bernot as well.
11 THE COURT: Mr. Locke, your response?
12 MR. LOCKE: Rather than setting a trial date, could
13 you just hold a date?
14 THE COURT: That's what I'm suggesting that I would
15 do.
16 MR. LOCKE: Right.
17 THE COURT: I'm going to pencil in a date in July,
18 and you, Mr. Locke, shall move promptly for severance.
19 MR. LOCKE: Yes, I will file it.
20 THE COURT: You will respond.
21 If you want oral argument, request it in your

22 briefing. We'll set oral argument, and I will decide that
23 question promptly.
24 And then if the July date pressures you too much,
25 Mr. Stegman, if I decide to grant severance, then you can

(916) 446-6360
8
1 argue for a continuance of the trial date.
2 MR. STEGMAN: Very good.
3 THE COURT: All right. So what date can we hold in

4 July?
5 THE CLERK: July 11th or July 25th.
6 THE COURT: Any preference, Mr. Locke?
7 MR. LOCKE: The 11th.
8 THE COURT: Mr. Stegman?
9 MR. STEGMAN: I would then ask for the 25th.

10 THE COURT: We're going to hold the 11th. But again,
11 subject to the discussion we've just had.
12 So we'll hold July 11th as a trial date for
13 Mr. Bernot. And Mr. Locke, you will file your motion
14 promptly. And the Court's resolution will proceed according
15 to the Local Rules.

16 MR. LOCKE: Thank you.
18 Anything further on this matter?
20 THE COURT: Miss Schultz?
21 (Court and Clerk confer.)

22 THE COURT: The Court's understanding is Mr. Bernot
23 would not then be appearing at the status?
24 MR. LOCKE: Would not be appearing?
25 THE COURT: At the status we set?

(916) 446-6360
9
1 Would you still appear at the status?
2 MR. LOCKE: Yes.
3 THE COURT: All right. We'll note that you will

4 appear then.
5 MR. STEGMAN: Then just to make sure, time is
6 excluded under T-2 and T-4 for Mr. Bernot.
7 THE COURT: Any objection to that?
8 MR. LOCKE: No.
9 THE COURT: Motion filings have some automatic

10 effect, but so the record is clear, time between now and the
11 next status for now is excluded under Local Code T-2 and
12 T-4.
15 Anything further now?

16 (No response.)
18 (Whereupon, the matter was concluded.)
19 ---o0o---
20
21
22
23
24
25

(916) 446-6360
1 REPORTER'S CERTIFICATE
2 ---o0o---
3
STATE OF CALIFORNIA )
4 COUNTY OF SACRAMENTO )
5
6
I certify that the foregoing is a correct transcript
7
from the record of proceedings in the above-entitled matter.
8
9
10 IN WITNESS WHEREOF, I subscribe this
certificate at Sacramento, California on this 27TH day of
11 JUNE, 2011.
12
13
14 /S/_Catherine E.F. Bodene_________________________
CATHERINE E.F. BODENE, CSR NO. 6926
15 Official United States District Court Reporter
16
17
18
19
20
21
22
23
24
25

(916) 446-6360

3 ---O0O---
4 BEFORE THE HONORABLE KIMBERLY J. MUELLER, JUDGE
5
6 UNITED STATES,
7 Plaintiff,
8 Vs. CASE NO. CR. 2:08-093 KJM
9 CHARLES HEAD, ET AL.,

10 Defendants.
11 ___________________________/
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18 THURSDAY, FEBRUARY 10TH, 2011
19 RE: STATUS CONFERENCE
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24
25 Reported by: CATHERINE E.F. BODENE,
CSR. No. 6926

(916) 446-6360
1 APPEARANCES
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3
4 For the Plaintiff:
5 UNITED STATES ATTORNEY'S OFFICE
501 I STREET, SUITE 10-100
6 Sacramento, California 95814-2322
7 BY: MATTHEW C. STEGMAN,
Assistant. U.S. Attorney
8
9
10
11 For the Defendant Charles Head:
12 LAW OFFICES OF SCOTT L. TEDMON
14 BY: SCOTT L. TEDMON,
Attorney At Law
15
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17
18 For the Defendant Jeremy Head:
19 CHRISTOPHER HAYDN-MYER LAW OFFICES
1478 Stone Point Dirve, Suite 400
20 Roseville, California 95661
21 BY: CHRISTOPHER HAYDN-MYER,

Attorney At Law
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25 ---o0o---

(916) 446-6360
1 APPEARANCES
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3
4 For the Defendant Leonard Bernot:
5 MOSS & LOCKE
7 BY: BRUCE LOCKE,
Attorney At Law
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9
10
11 For the Defendant Joshua Coffman:
12 LAW OFFICE OF JOHN BALAZS
14 BY: JOHN P. BALAZS,
Attorney At Law
15
16
17
18 For the Defendant John Corcoran:
19 OFFICE OF THE FEDERAL DEFENDER
21 BY: MATTHEW C. BOCKMON,

Deputy Federal Defender
22
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(916) 446-6360
1 APPEARANCES
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3
4 For the Defendant Sara Mattson:
5 WISEMAN LAW GROUP, PC
1477 Drew Avenue, Suite 106
6 Davis, California 95618
7 BY: JENNIFER NOBLE,
Attorney At Law
8
9
10
11 For the Defendant Domonic McCarns:
12 LAW OFFICES OF JAMES R. GREINER
14 BY: JAMES R. GREINER,
Attorney At Law
15
16
17
18 For the Defendant Omar Sandoval:
19 LAW OFFICE OF MICHAEL B. BIGELOW
428 J STREET, SUITE 350
21 BY: MICHAEL B. BIGELOW,

Attorney At Law
22
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24
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(916) 446-6360
1 APPEARANCES
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3
4 For the Defendant Xochitl Sandoval:
5 LAW OFFICE OF CANDACE A. FRY
2401 Capitol Avenue
7 BY: CANDACE ANNE FRY,
Attorney At Law
8
9
10
11 For the Defendant Kou Yang:
12 THE LAW FIRM OF JOSEPH HAWKINS LOW, IV
One World Trade Center, Suite 2320
13 Long Beach, California 90831
14 SPECIAL APPEARANCE BY:
SCOTT TEDMON, Attorney At Law
15
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20
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23
24
25

(916) 446-6360
1
2 THURSDAY, FEBRUARY 10TH, 2011 - 10:00 A.M.
3 ---o0o---
4 THE CLERK: Calling Criminal S-08-93, United States
5 v. Charles Head, Jeremy Head, Leonard Bernot, Joshua Coffman,
6 John Corcoran, Sarah Mattson, Domonic McCarns, Omar Sandoval,
7 Xochitl Sandoval and Kou Yang. This on for status
8 conference.
9 MR. STEGMAN: Good morning, Your Honor. Matthew

11 THE COURT: Good morning, Mr. Stegman.
13 representing Charles Head who is not present but has a waiver
14 on file.
15 THE COURT: Good morning, Mr. Tedmon.

17 Haydn-Myer for Jeremy Head. He's also not present but does
18 have a waiver on file.
19 THE COURT: Good morning, Mr. Haydn-Myer.
20 MR. LOCKE: Good morning, Your Honor. Bruce Locke on
21 behalf of Leonard Bernot who has a waiver on file.

22 THE COURT: Good morning, Mr. Locke.
23 MR. BALAZS: Good morning, Your Honor. John Balazs
24 on behalf of Joshua Coffman. He also has a waiver on file.
25 THE COURT: Good morning, Mr. Balazs.

(916) 446-6360
2
1 MR. BOCKMON: Good morning, Your Honor. Matthew
2 Bockmon, Federal Defender's Office, for John Corcoran who is
3 not present. He has a waiver on file.

4 THE COURT: Good morning, Mr. Bockmon.
5 MS. NOBLE: Good morning, Your Honor. Jennifer
6 Nobel. I'm standing in for Joseph Wiseman. Mr. Wiseman
7 represents Sarah Mattson who has a waiver on file. She's out
8 of custody.
9 THE COURT: Good morning, Miss Noble.

11 Greiner. I represent Domonic McCarns. Mr. McCarns has a
12 waiver of presence on file.
13 THE COURT: Good morning, Mr. Greiner.
14 MR. BIGELOW: Good morning, Your Honor. Michael
15 Bigelow on behalf of Mr. Sandoval who is not present. There

16 is a waiver on file.
17 THE COURT: Good morning, Mr. Bigelow.
18 MS. FRY: Good morning. Candace Fry on behalf of
19 Xochitl Sandoval whose waiver is also on file.
20 THE COURT: Good morning, Miss Fry.
21 MR. TEDMON: And Scott Tedmon specially appearing for

22 Joseph Low who represents Kou Yang who also has a waiver on
23 file.
24 THE COURT: Good morning once again, Mr. Tedmon.
25 This is on for a status. The case has been going for

(916) 446-6360
3
1 some time.
2 What is the parties request this morning?
3 MR. TEDMON: Your Honor, with the exception of

4 Mr. Locke, all parties are in agreement to continue the
5 matter for further status until May 12th, 2011, at 10:00 a.m.
6 We would all agree that time can be excluded under
7 Local Code T-2 for complexity and T-4 for counsel
8 preparation.
9 THE COURT: Can you help me understand. I'm in the

10 learning process. Has discovery been completed? Is
11 discovery ongoing?
12 MR. TEDMON: It's essentially completed, Your Honor.
13 Let me give the Court a brief summary.
14 We received in the initial discovery from the
15 government 193,391 pages. We then received materials that

16 were submitted to the grand jury by way of subpoena.
17 Then we received six separate search warrant disks of
18 search warrant materials from the various searches. And
19 that, from my best estimate, is about another 100,000 pages
20 or so. And then there were five computers that were recently
21 mirrored and provided to the defense, and that has a large

22 volume of materials.
23 So this case is exceptionally large in terms of the
24 volume of documents. And at least on behalf of myself, and I
25 think other counsel as well, we are just trying to move our

(916) 446-6360
4
1 way through all this mass of material. And that's what we're
2 doing so...
3 THE COURT: Do you believe it is likely the case

4 would proceed to trial or other resolution this year yet?
5 MR. TEDMON: No.
7 MR. TEDMON: In fact, I've talked to Mr. Stegman
8 about this in the past. Some of us are in another case in
9 front of Judge Burrell which has about 700,000 pages of

10 documents.
11 That's set for trial in September of 2012. And it is
12 my considered opinion that this case will be set sometime
13 after that just so the Court has an idea from where I stand
14 of where this is going.

16 Does any other defense counsel have anything to say?
17 Besides you Mr. Locke. We'll get to you in a moment.
18 (Counsel nod heads.)
19 THE COURT: So you all agree with that
20 representation.
21 Mr. Stegman, anything to say?

22 MR. STEGMAN: I have agreed to recommend a trial date
23 after September 2012 because I also have concerns about time,
24 but I do understand the defense needs time to get through the
25 discovery, they need to be prepared, and so I intend to be

(916) 446-6360
5
1 reasonable in that regard.
2 MR. TEDMON: That would be accurate. We just had
3 discussions about the timing of it.

4 THE COURT: All right. You would agree both T-2 and
5 T-4 are appropriate grounds of exclusion?
6 MR. TEDMON: Absolutely.
8 THE COURT: We will then confirm this for a further
9 status on May 12th at 10:00 a.m.

10 Time between now and then is excluded under Local
11 Code T-2 and T-4. That's for everyone but Mr. Bernot.
12 For Mr. Bernot, your request?
13 MR. LOCKE: My request is that we set a trial date,
14 Your Honor. My client would like to go to trial as soon as
15 possible, like April or July.

16 THE COURT: All right. What trial dates can we
17 offer?
18 MR. STEGMAN: Your Honor, if I may be heard?
19 I think really what Mr. Locke is doing now is making
20 a motion for severance because there is a preference for
21 joint trials -- keeping trials together. And the government

22 would like to respond.
23 And I think the appropriate thing to do here would be
24 for Mr. Locke to file a written motion setting this for
25 trial and a severance motion, I suppose.

(916) 446-6360
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1 THE COURT: Any objection to that procedure,
2 Mr. Locke?
3 MR. LOCKE: No. I can do that, but I think we

4 could --
5 THE COURT: We can set a date and hold it in case I
6 do -- Given the way calendars fill up, we'll set a date as a
7 place holder. But perhaps given the briefing, we'll set it
8 for July. And then that can be vacated if I deny the motion.
9 Any objection to that approach?

10 Just so -- It's a way of my ticklering what might be
11 coming up.
12 MR. LOCKE: That would be fine.
13 MR. STEGMAN: I do have some concerns. I'm not sure
14 I can articulate them now, but I think as it stands now the
15 defendants are all joined. And I think that good cause to --

16 or good cause for time exclusion -- exclusion of time for
17 some of the co-defendants is an exclusion of good time. It
18 is a reason for exclusion of time as to this defendant. And
19 I'm concerned that we're going to be needing to be gearing up
20 for trial and --
21 THE COURT: I'm not pre-judging the question by

22 setting a date or holding a date. And by moving it to July,
23 are you concerned that does not give enough time for me to
24 consider the question and decide on a motion for severance
25 and then thereafter give you time to prepare?

(916) 446-6360
7
1 MR. STEGMAN: I'm confident it will give the Court
2 enough time, but I have three trials scheduled between now
3 and July. And this case is a complex case. And I do need to

4 get heavily involved in the case.
5 And I'm just concerned that I'm not going to have
6 time to take care of all that, respond to a severance motion
7 and do the trials.
8 And I think at this point, since all the defendants
9 are still joined, if there is a status conference set for

10 May, that should be the case for Mr. Bernot as well.
11 THE COURT: Mr. Locke, your response?
12 MR. LOCKE: Rather than setting a trial date, could
13 you just hold a date?
14 THE COURT: That's what I'm suggesting that I would
15 do.
16 MR. LOCKE: Right.
17 THE COURT: I'm going to pencil in a date in July,
18 and you, Mr. Locke, shall move promptly for severance.
19 MR. LOCKE: Yes, I will file it.
20 THE COURT: You will respond.
21 If you want oral argument, request it in your

22 briefing. We'll set oral argument, and I will decide that
23 question promptly.
24 And then if the July date pressures you too much,
25 Mr. Stegman, if I decide to grant severance, then you can

(916) 446-6360
8
1 argue for a continuance of the trial date.
2 MR. STEGMAN: Very good.
3 THE COURT: All right. So what date can we hold in

4 July?
5 THE CLERK: July 11th or July 25th.
6 THE COURT: Any preference, Mr. Locke?
7 MR. LOCKE: The 11th.
8 THE COURT: Mr. Stegman?
9 MR. STEGMAN: I would then ask for the 25th.

10 THE COURT: We're going to hold the 11th. But again,
11 subject to the discussion we've just had.
12 So we'll hold July 11th as a trial date for
13 Mr. Bernot. And Mr. Locke, you will file your motion
14 promptly. And the Court's resolution will proceed according
15 to the Local Rules.

16 MR. LOCKE: Thank you.
18 Anything further on this matter?
20 THE COURT: Miss Schultz?
21 (Court and Clerk confer.)

22 THE COURT: The Court's understanding is Mr. Bernot
23 would not then be appearing at the status?
24 MR. LOCKE: Would not be appearing?
25 THE COURT: At the status we set?

(916) 446-6360
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1 Would you still appear at the status?
2 MR. LOCKE: Yes.
3 THE COURT: All right. We'll note that you will

4 appear then.
5 MR. STEGMAN: Then just to make sure, time is
6 excluded under T-2 and T-4 for Mr. Bernot.
7 THE COURT: Any objection to that?
8 MR. LOCKE: No.
9 THE COURT: Motion filings have some automatic

10 effect, but so the record is clear, time between now and the
11 next status for now is excluded under Local Code T-2 and
12 T-4.
15 Anything further now?

16 (No response.)
18 (Whereupon, the matter was concluded.)
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25

(916) 446-6360
1 REPORTER'S CERTIFICATE
2 ---o0o---
3
STATE OF CALIFORNIA )
4 COUNTY OF SACRAMENTO )
5
6
I certify that the foregoing is a correct transcript
7
from the record of proceedings in the above-entitled matter.
8
9
10 IN WITNESS WHEREOF, I subscribe this
certificate at Sacramento, California on this 27TH day of
11 JUNE, 2011.
12
13
14 /S/_Catherine E.F. Bodene_________________________
CATHERINE E.F. BODENE, CSR NO. 6926
15 Official United States District Court Reporter
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17
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21
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25

(916) 446-6360
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF CALIFORNIA
---oOo---
BEFORE THE HONORABLE KIMBERLY J. MUELLER, JUDGE
---oOo---
UNITED STATES OF AMERICA,
Plaintiff,
vs. No. 2:08-cr-0093
VOLUME 1
CHARLES HEAD and JEREMY Pages 1 to 23
MICHAEL HEAD,
Defendants.
---oOo---
REPORTER'S TRANSCRIPT
TRIAL PROCEEDINGS
OPENING STATEMENTS
TUESDAY, MAY 7, 2013
---oOo---
Reported by: DIANE J. SHEPARD, CSR #6331, RPR
DIANE J. SHEPARD, OFFICIAL COURT REPORTER, USDC -- (916) 554-7460

1 APPEARANCES
4
BENJAMIN B. WAGNER
5 UNITED STATES ATTORNEY
BY: MICHAEL D. ANDERSON
7 MATTHEW A. MORRIS
Assistant U.S. Attorneys
8
9 For the Defendant, Charles Head:
10 SCOTT L. TEDMON
LAW OFFICES OF SCOTT L. TEDMON
11 980 Ninth Street, 16th Floor
12
13 For the Defendant, Jeremy Michael Head:
14 CHRISTOPHER HAYDN-MYER
CHRISTOPHER HAYDN-MYER LAW OFFICE
15 1478 Stone Point Drive, Suite 400
Roseville, California 95661
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25

2 TUESDAY, MAY 7, 2013
3 ---oOo---
4 -- OPENING STATEMENTS --
5 MR. ANDERSON: Bait and switch. That's what Charles
6 Head said to do. The defendants in this case told homeowners
7 whatever it took and left out whatever facts they needed to in
8 order to steal those people's homes and equity.
9 During this trial you'll hear from a number of those
10 homeowners and other witnesses who will explain exactly what it
11 is the defendants did. In general, the defendants' plan was
12 this. Step one, get a homeowner to unwittingly sign over his
13 or her home, title to the home. Step two, get someone you
14 control and pay to go on title to that home, become a straw
15 buyer for that home. Step three, take out loans for the full
16 value of the home, skimming the equity off into a shell company
17 you control. Step four, if possible evict the former homeowner
18 from their own home. Often that person won't know they are not
19 on title until the eviction notice shows up. Step five, turn
20 around and sell that home to someone else for a profit. This
21 cycle was repeated over and over again.
22 In the early 2000s, Charles Head ran a company called
23 Head Financial Services in Southern California. He had a
24 number of employees, including his brother, Jeremy Michael
25 Head, who goes by the name Michael Head.

1 At first, Head Financial Services was a typical
2 mortgage broker shop. They would help people get refinances
3 and mortgages on their home in exchange for a moderate fee.
4 But Charles Head wanted to make lots of money, a lot more money
5 than they were making, so he set out to change Head Financial
6 Services. He got together a group of his closest employees,
7 many of whom he was friends with or had close relationships
8 with, and he began to train them in a new program. The
9 foreclosure program.
10 I'm going to go through this foreclosure program in
11 some detail, but as I do, pay attention to the two types of
12 false statements and lies that the defendants had to tell in
13 order to make this program work. The first were to the
14 homeowners and the second were to the lenders.
15 Charles Head had his employees set up shell
16 companies. Charles Head's shell company was called Creative
17 Loans and Mike Head was Financial Enterprises, and there were a
18 number of other companies as well. Charles Head and his sales
19 agents sent out postcards to homeowners who were in distress,
20 people who were behind on their mortgage payments. Those
21 postcards promised to help people. So as a result, homeowners
22 would pick up the phone and call the sales agents that worked
23 for Charles Head. People like Mike Head, their friend like
24 Joshua Coffman, Justin Wiley, and even occasionally Charles
25 Head himself.

1 The sales agents would make the pitch. The pitch,
2 I'm going to tell you about in a minute, and there are copies
3 of scripts that Charles had created for this pitch, and you'll
4 get an opportunity to see some of those scripts. You'll also
5 hear from people some of the other things Charles Head said to
6 say that he didn't write down on paper.
7 The victim homeowners will come in, and they will
8 tell you some of the common false statements that were made to
9 them. False statements like you'll stay on title to your home,
10 an investor will go on title with you for one year and then go
11 off title, most or all of your equity will remain in your home,
12 your credit will be repaired.
13 But in this trial you'll also see what really
14 happened. The homeowners were taken completely off title. The
15 so-called investors weren't investors at all but really straw
16 buyers controlled by the defendants. The equity was almost
17 immediately stolen out of the homes and credit was not
18 repaired.
19 Because the real key in what the defendants were
20 doing was to get people to sign documents. These documents
21 were supposed to provide cover for the defendants. The sales
22 agents would say one thing aloud to the homeowners and then
23 have them sign something that was very different than what they
24 were telling them. To do this, the defendants would rely on
25 their charm, their likability. They would rush people through

1 the signing process. They wouldn't show people every single
2 document. They would mis-explain certain documents or not
3 explain them. And in some cases that you'll hear about they
4 would just out and out forge people's signatures.
5 Many homeowners were deceived in this way. The end
6 result was that the homeowners would sign over title to their
7 own homes, or it would look like they had, to one of the
8 defendants' straw buyers. You'll learn in this trial that a
9 straw buyer means a person who acts like they are the buyer of
10 the home but isn't really a true buyer in the conventional
11 sense. You'll learn in this case that the straw buyers were
12 typically family and friends of the defendants or other people
13 they had a business relationship with.
14 For example, Charles Head was a straw buyer on
15 several properties and so was Mike Head's girlfriend, Sarah
16 Mattson. The straw buyers weren't really buying the home.
17 They were just acting as though they were, allowing their
18 identity to be used in exchange for money.
19 You'll learn from several witnesses that this
20 deception was important, and the reason that the deception was
21 important was because the next step was to get the loans that I
22 had mentioned earlier.
23 And by getting those loans, the defendants would act
24 like this was a real arm's length transaction, like it was a
25 real sale of the home. And you'll see some of those loan

1 applications. And the evidence will show that those loan
2 applications were full of false statements, too. Those loan
3 applications had false statements about who was going to occupy
4 the home, false statements about who the real buyer was, the
5 straw buyer's income, their employment, other false statements
6 relative to whether or not financing should be given for the
7 loan.
8 The false statements about who was going to occupy
9 the home, for example, were really important because that's
10 what allowed them to get 100 percent financing on the home.
11 Bigger loans on the homes so they could pull out more money.
12 The false statements about the straw buyer's
13 employment and income were important, because that's what
14 allowed these straw buyers, who shouldn't have qualified for
15 the loans, to be able to get the loans in the first place.
16 And you'll even see in this trial e-mails between
17 Charles Head and his office manager, Kou Yang, where they
18 discussed how to set up fraudulent verifications of employment.
19 What do we do when the lenders call to verify that somebody
20 actually has the job we've put down on the application. What's
21 more, the documents will show that each straw buyer was buying
22 multiple properties, listing each one as their primary
23 residence in a short timeframe.
24 Now if you think about this, this is obviously
25 impossible. A person can only live in one primary residence at

1 a time. But they were able to conceal that they were doing
2 this from the bank by sending multiple loan applications, a
3 different loan application for each property to different
4 lenders. All in a really tight timeframe so it wouldn't show
5 up on credit reports. In this way, the lenders were deceived.
6 So to recap, here's where we are. The defendants
7 have made false statements to the homeowners in order to get on
8 title, and then they've made false statements to the lenders in
9 order to get loans on the property. This is where the money
10 comes in.
11 So to get the money, the sales go into escrow just
12 like a normal sale. They act like the homeowner that they are
13 targeting is actually selling the house to the straw buyer. So
14 it goes to an escrow company. They open up escrow. And you're
15 going to see some of those escrow documents. You'll also see
16 some summary charts that show what happened in escrow and the
17 bank records. A lot of that through Agent Fitzpatrick here.
18 And from those records, you'll see that out of escrow
19 tens of thousands of dollars, sometimes hundreds of thousands
20 of dollars in each transaction were diverted into the shell
21 companies controlled by the defendants and their
22 co-conspirators. Shell companies with names like Matrix,
23 Financial Enterprises, Creative Loans, Paragon, and so on and
24 on and on.
25 Toward the end of the trial, you'll get walked

1 through the bank records that show how that money, the
2 homeowners' equity, was taken out of escrow and then split with
3 Charles Head and his conspirators and then spent.
4 So now the defendants have the property in a straw
5 buyer's name. They've taken the equity out of the property and
6 used it for their own purposes. What they do next is they
7 start collecting monthly payments from the homeowners.
8 Remember, this is supposed to be a thing to help the
9 homeowners, so the homeowners think that they refinanced their
10 home, or they are in some sort of program where they make a
11 monthly payment and keep their home, payments on the home.
12 And part of the promise is these homeowners are still
13 on title as they do this. Just like with a mortgage company or
14 refinance. But when the homeowner misses a payment, and you'll
15 hear even in some cases when the homeowner didn't miss any
16 payments, the defendants moved to evict the homeowner from
17 their own home. Not foreclose like they own the home but evict
18 somebody like they're a renter in their own home. And they do
19 this using documents that they had the homeowners unwittingly
20 sign or in some cases not sign.
21 So why do this? This allowed the defendants to then
22 make more money off the home by re-selling it. They could do
23 one of two things. Force the homeowner to buy it back for an
24 inflated price or sell it on to a third party for even more
25 money.

1 In this trial, you'll hear from some of the
2 homeowners who lost their homes and equity to the defendants.
3 You'll hear from lender representatives who will talk about the
4 loans. You'll hear from agents who investigated the case,
5 other witnesses involved in the marketing aspects of what the
6 defendants did. You'll even hear from people who have pled
7 guilty in this case, who worked with the defendants, and who
8 will be testifying in hopes of getting reduced sentences. You
9 will not like what those people have done themselves and what
10 they will admit to, but it will give you an insider perspective
11 of what the defendants were doing at the time. And you'll also
12 see the documents, and e-mails, and things that corroborate
13 what they are telling you.
14 And there will be many documents in this case. Some
15 of them seized during search warrants, others obtained from
16 escrow companies and lenders. And you'll have a chance to
17 review all of those records.
18 Finally, at the end of the case, after hearing all of
19 the evidence, you'll receive instructions from the judge
20 regarding the crimes the defendants are charged with, the law
21 that you should apply in the case, and when a defendant is held
22 responsible or should be held responsible under the law for
23 their part in a conspiracy to commit a fraud.
24 For now, just pay close attention to the evidence as
25 we walk through it. Because in the end, the evidence that you

1 see, the evidence that will come from the witness stand and in
2 the exhibits will show that the defendants stole millions of
3 dollars this way. That many, many families had their homes
4 taken and that much of their equity was gone.
5 When I have a chance to speak with you again, I'm
6 going to ask you to carefully consider that evidence, consider
7 the law that the judge gives you, and I'm going to ask you to
8 return a verdict finding Jeremy Michael Head and Charles Head
9 guilty. Thank you.
10 THE COURT: All right. Mr. Tedmon, I believe there
11 is sufficient time if you would like to make an opening
12 statement.
13 MR. TEDMON: There is.
16 Good afternoon. You have heard from Mr. Anderson
17 about what he expects the evidence to show. And a couple
18 things I just want to say parenthetically. First of all, what
19 the lawyers say, as the court instructed, is not evidence.
20 This is an opening statement. This is kind of a roadmap of
21 what we believe the evidence will show. So it's to give you
22 some guidance and structure as the witnesses start to come in
23 through the witness stand in terms of what the evidence will
24 ultimately show in the case.
25 I represent Charles Christopher Head. One thing I

1 want to make sure you're clear on is, he's referred to so far
2 as Charles Head, but I think during the course of trial he will
3 be referred to as Chris or Chris Head. So I want to make sure
4 it's clear at the outset that's my client Charles Head or Chris
5 Head. And I want to make sure there is no confusion there.
6 That's the same person.
7 What Mr. Anderson says is simply not true, and that's
8 not what the evidence is going to show. The evidence is going
9 to show this, that my client, Chris Head, had a background in
10 the mortgage industry, and he had a company called Head
11 Financial Services. He also had a couple of other companies,
12 Dynasty Realty, Creative Loans, Funding Foreclosure. He was
13 involved in the real estate and lending business. That's what
14 he did.
15 And during the period of time that foreclosures
16 became a problem, he came up with a legal program to help
17 people. There was no deceit. I'll get to that in a minute.
18 He sent out postcards or mailing materials to people. They
19 could respond or they could not respond. It was their choice.
20 The Government's going to call people from Postcard Mania to
21 talk about the literature that he sent. He did. And then
22 ultimately people would respond, and the program would be
23 presented.
24 Now there is a couple things I want to make sure
25 you're very clear on. The Government's going to call a litany

1 of people that have been charged in this case, pled guilty,
2 made a deal, and they're going to testify. Okay. That's what
3 they're going to do. And they're going to try to put the meat
4 on the bones of their case through these cooperators in terms
5 of what they claim my client did in terms of a fraudulent
6 manner.
7 I submit to you when you hear their evidence and
8 their testimony, it's not credible. It's self-serving. And it
9 certainly shouldn't apply to my client. And that's forecast.
10 We will get into that in more detail when they testify. So the
11 fact that people are cooperating doesn't mean anything in terms
12 of what Mr. Head did or didn't do, and you're going to judge
13 that for yourself. And I'll get into their companies in a
14 minute. But Mr. Head had this program. The Government
15 produced no evidence that the program itself is not legal
16 because it is legal. Their issue is with how it was presented.
17 And here's the way the evidence is going to come
18 down. The homeowner was met and contacted. The program was
19 explained. Now there are certain people that will come in here
20 and testify they misrepresented themselves to homeowners, and
21 they pled guilty. But they're trying to make a deal to his
22 detriment. And they're not credible. So keep that in mind as
23 you listen to the evidence. Who is saying what to who and
24 when. Mr. Head isn't there most of the time, but they're
25 trying to lay it off on him to get a deal. That's what the

1 evidence is going to show.
2 So the program is explained to the homeowners. The
3 homeowners were not goaded into anything. The homeowners were
4 not forced like with a gun to their head to sign anything.
5 You're going to get the contracts. Equity Purchase Agreement.
6 That's the foundation of this program. It's a perfectly legal
7 contract. And the homeowners reviewed it. There was a notary
8 there, and they signed it. And the terms speak for themselves.
9 I expect the Government will have a lot of drama
10 coming through the witness stand about what these people were
11 told or not told. Some of it may be true, a lot of it may not
12 be true. But here's the reality, and this is what you need to
13 grab onto. It's a contract. There is a cancellation clause.
14 They have a week before the contract even kicks into gear.
15 Mr. Anderson just said they are forced into this. No, they're
16 not. That's not true. And that's not what the evidence will
17 show.
18 And the contract states very specifically you are
19 selling your house. And for that you are getting
20 consideration. 5,000, 20,000, 15,000, whatever the number is.
21 They're selling the house. The testimony is going to be
22 they're going to lose their house anyway. Mr. Head is giving
23 them an opportunity to do two things. One, get some money that
24 they otherwise would not have gotten, and, two, they can stay
25 there. They're not going to be kicked out of their house, and

1 have their family relocated, and have their kids have to go to
2 other schools. That's the program.
3 And the contract speaks very clearly to that. When
4 you sell your house, you sign over the deed. And there will be
5 volumes of documents that will show that exact point. He's not
6 stealing their property. They're selling it. Voluntarily and
7 willingly. And that's what the evidence is going to show.
8 Now, when we get to this whole issue of Mr. Head's
9 running these other companies, let's get to this whole area of
10 these cooperators that I just talked about. And let me give
11 you the lineup, okay. You're going to hear the following
12 companies associated with certain people. Financial
13 Enterprises, which Mr. Anderson has already talked about,
14 that's Mike Head. And Mr. Haydn-Myer obviously will have a
15 chance, if he chooses, to have an opening statement. But
16 Jeremy Michael Head goes by Mike Head. So just like Chris is
17 Charles Head, Jeremy Michael Head is Mike Head. That's what
18 you're going to hear.
19 So Financial Enterprises is Mike Head's company.
20 Matrix Investments, Joshua Coffman's company; Loan Foreclosure
21 Help, Leonard Bernot; Paragon Financial, Anh Nguyen; Dynamic
22 Partners, Akemi Botari; Statewide Financial Group, Omar
23 Sandoval; Mainline Investments, Justin Wiley; Choice Financial
24 Network, also known as Choice One, Andrew Vu; Bridge Capital
25 Investments, Ely Assadi; Nations Property Management, John

1 Corcoran.
2 Now those are companies you're going to hear about
3 and those are names you're going to hear. And the following
4 people that did misrepresent things, by their own admission
5 because they plead guilty in this case, they are felons, are
6 going to come in here, and they're going to tell you somehow it
7 was Mr. Head's fault. Pass the blame to Mr. Head. It was his
8 program after all. That's what they're going to try to have
9 you believe. It's his program. They prostituted it. That's
10 what happened. That's what the evidence is going to show.
11 And the Government's going to call, I expect, Akemi
12 Botari, Justin Wiley, Andrew Vu, Ely Assadi. They are also
13 going to call a person named Eduardo Vanegas, Sarah Mattson,
14 and Kou Yang.
15 Now Sarah Mattson and Kou Yang have also plead
16 guilty. They didn't own a company. But they plead guilty
17 because of their misdeeds. Not Mr. Head's. And you're also
18 going to find out with regards, for example, to Mr. Sandoval,
19 he had a prior conviction for theft. Nothing to do with
20 Mr. Head. He kind of does that on his own. That's Omar
21 Sandoval.
22 Kou Yang, who Mr. Head trusted to take care of
23 paperwork for the lenders, also had a prior felony conviction
24 for theft. Had nothing to do with Mr. Head. She did that on
25 her own. She violated his trust is what she did. That's what

1 the evidence is going to show.
2 What this case is going to come down to is this,
3 homeowners that were presented a program that they could choose
4 to involve themselves within or not. They had plenty of time
5 to look at a contract. They signed the contract in front of a
6 notary in almost every instance. The contract is very straight
7 forward. They had a week or more to get out of it if they
8 chose not to. They can go talk to a lawyer, anybody they want.
9 There is no rush to judgment here for them to sign it, hurry up
10 and do something with it. The contract speaks for itself,
11 equity purchase agreements, lease after option. You're going
12 to see all these documents.
13 Wiring instructions. Mr. Anderson says they stole
14 the money. They said wire the money to a certain account. The
15 seller knew that, the money was being wired out. They signed
16 it in front of a notary. The documents speak the loudest in
17 this case. Not the drama you may hear.
18 And as far as the cooperators go, we will get into
19 them when they testify. But they all have a motive. They're
20 trying to get a deal. And the only gateway, their get out of
21 jail free card or limit my time is to dump on somebody, and
22 it's going to be Charles Head. That's their only option.
23 There's your case. There's your evidence. And at
24 the end of it, I will come back to you in closing argument and
25 tell you exactly the way I see this evidence fit, exactly what

1 the law is as the Court gives it to you, and the verdict that
2 you will come back with is not guilty as to Count 1, which is
3 conspiracy to commit mail fraud, and not guilty on Counts 2, 3,
4 5 and 6, mail fraud. Thank you very much for your time.
5 THE COURT: All right. Mr. Haydn-Myer, two
6 questions. Do you wish to make an opening? And is there
7 sufficient time for you to do that this afternoon?
8 MR. HAYDN-MYER: It's going to be close, but I would
9 like to try.
10 THE COURT: All right. How much time do you believe
11 you need?
12 MR. HAYDN-MYER: Ten minutes.
13 THE COURT: All right. That will take us right to
14 1:30 p.m., so I will let you know when it's 1:30 p.m.
15 MR. HAYDN-MYER: Can you see that, Your Honor?
16 THE COURT: I can. Can the jury see that on their
17 screens? All right.
18 MR. HAYDN-MYER: As you've been told, I represent
19 Mike Head. And Mike Head, as also you have learned, ended up
20 in California. He wasn't always from California. He actually
21 came from Pittsburgh, and that's where he went to high school.
22 From what you've heard from the evidence already you know that
23 Chris Head and Mike Head worked together in California.
24 When Mike was 25 years old, he then went to Boston.
25 While he was in Boston, he realized he wanted to go and work in

1 a different area. And that is when he came to California in
2 February of 2003. And he went to work for Head Financial
3 Services, which had already been in business since 2001.
4 While he was there, he had to learn an entirely new
5 trade. He wasn't skilled in real estate, but he did his best,
6 he researched, and he became the best that he could in regards
7 to the real estate transactions.
8 He wanted to become his own entity. He wanted to own
9 his own business. As a lot of people realize, when you have an
10 older brother and younger brother, you want to get out, you
11 want to do your own thing. So he started Financial Enterprises
12 in December of 2003. And that's the incorporation.
13 The program that's been mentioned several times in
14 regards to the foreclosures was actually finding houses where
15 the homeowners were already losing their property. They were
16 being taken from their homes by different groups, Centex, for
17 example. There was already a trustee sale in place. The
18 homeowners that are going to be testifying were already losing
19 their property before they received a postcard.
20 Mr. Tedmon spoke in great detail about the sales
21 agreements, the sales agreements in regards to Financial
22 Enterprises, what was going out, what they were receiving. As
23 an example, that is an Equity Purchase Agreement for Emily
24 Silva. You can see the date. You can see that it's from
25 Financial Enterprises. And you can see that it's an agreement

1 to sell.
2 Second paragraph. Once again, that's a little bit
3 closer look. They would have them sign a residential lease
4 after sale agreement. As you can see, the top of it in bold
5 letters from the California Association of Realtors is a
6 Residential Lease After Sale.
7 Notice of Cancellation. Mr. Tedmon also went to
8 this. This was a document that the homeowners would receive
9 saying that if you don't want to sell your property -- you
10 don't want to sell your property, you have a timeframe in which
11 you can cancel the agreement. If you look at it, it says
12 Notice of Cancellation, the signing of the Equity Purchase
13 Agreement, and the second thing - you may cancel this contract
14 or the sale of your house without any penalty.
15 Once again, after Mr. Michael Head formed Financial
16 Enterprises, he went to Arizona because he wanted to keep
17 working on his own. While he was in Arizona, he got an office
18 in Mesa. And that's the office. A lot of the documents that
19 we're going to be reviewing, a lot of the documents that we're
20 going to be asking questions about of the witnesses were taken
21 from his office. He kept all of them. They had records of the
22 transactions.
23 When all of the evidence is complete, and I'm
24 speaking to you, I'm going to be discussing the agreements that
25 the homeowners signed. I'm going to be talking about the

1 financial records that went through Financial Enterprises. And
2 I'm going to be discussing with you the efforts that Mike Head
3 took to assist the homeowners. And I'm going to ask you to
4 find Mike Head not guilty of conspiracy and not guilty of mail
5 fraud. Thank you.
6 THE COURT: All right. Ladies and gentlemen, that
7 concludes the opening statements of the parties.
8 Can we clear the screen, Ms. Schultz?
9 All right. And that concludes our proceedings for
10 today. Again, those opening statements were not evidence as
11 you heard, as my instructions indicated to you. I have already
12 reviewed with you the admonitions that will remain in effect
13 during trial, but particularly as we conclude for the evening,
14 please bear in mind those ground rules. Don't talk with anyone
15 about the case, keep an open mind about where the case is
16 going, don't start to think about it, its ultimate conclusion,
17 don't do any research of any kind, don't read any news reports,
18 don't do any electronic research.
19 If anyone approaches you about the case, please let
20 me know first thing when you arrive tomorrow, and I will
21 discuss that with you at that time.
22 Thank you again for your patience during jury
23 selection. Thank you for your service as it begins now as a
24 member of this jury.
25 You may follow Ms. Schultz now to the jury room where

1 she will give you a brief orientation, and then you will be
2 excused for the day. We will ready to start promptly at 1:30
3 tomorrow, and I promise 1:30 tomorrow. Leave your notebooks on
4 your chair.
5 (Jury out.)
6 THE COURT: You may be seated.
7 All right. We'll start tomorrow at 1:30 p.m. with
8 the Government's case. Can the Government provide a headliner
9 of the witnesses?
10 MR. ANDERSON: Yes, Your Honor, and I've already
11 emailed this to counsel. But for the Court's benefit it will
12 be Shannon Taylor, Richard Figueroa, Pamela Graham, also known
13 by Speights, Will Thorn, Ron Spriggs. We'll be prepared with
14 more witnesses after that if need be, but I don't think we will
15 need to be. And it may not be in exactly that order. We're
16 going to try and coordinate with people's schedules to get them
17 back home if they need to be back home.
18 THE COURT: Anything to say about these witnesses,
19 Mr. Tedmon or Mr. Haydn-Myer? Are any of them in particular
20 persons you think need to be given a Fifth Amendment
21 advisement?
22 MR. TEDMON: No.
23 MR. HAYDN-MYER: No.
24 THE COURT: Anything else we need to discuss today
25 yet, Mr. Anderson?

1 MR. ANDERSON: No, Your Honor.
2 THE COURT: Mr. Tedmon?
4 THE COURT: Mr. Haydn-Myer?
5 MR. HAYDN-MYER: No, Your Honor.
6 THE COURT: All right. Please be ready to go no
7 later than 1:20 p.m. tomorrow. I'll come in a few minutes
8 early but then just expect your witness will be ready to go at
9 that time. Thank you very much.
10 (Court adjourned. 1:30 p.m.)
11
12 CERTIFICATION
13
14 I, Diane J. Shepard, certify that the foregoing is a
15 correct transcript from the record of proceedings in the
16 above-entitled matter.
17
18
19 /s/ DIANE J. SHEPARD

DIANE J. SHEPARD, CSR #6331, RPR
20 Official Court Reporter
United States District Court
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
VOLUME 2
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
WEDNESDAY, MAY 8, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
17
18
19
20
21
22
23
24
25

1 I N D E X
2 GOVERNMENT WITNESSES PAGE
3 SHANNON TAYLOR
DIRECT EXAMINATION BY MR. MORRIS 31
4 CROSS-EXAMINATION BY MR. TEDMON 52
CROSS-EXAMINATION BY MR. HAYDN-MYER 65
5 REDIRECT EXAMINATION BY MR. MORRIS 66
6 RICHARD FIGUEROA
REDIRECT EXAMINATION BY MR. MORRIS 98
8 RECROSS-EXAMINATION BY MR. TEDMON 100
9 RONALD SPRIGGS
DIRECT EXAMINATION BY MR. ANDERSON 103
11 WILLIAM THORN
13 PAMELA GRAHAM
14
15
16
17
18
19
20
21
22
23
24
25

2 DEFENSE EXHIBITS MARKED FOR IDENTIFICATION

No. Description Page
3
A Settlement agreement re Pamela Graham/Speights 153
4
6 GOVERNMENT EXHIBITS RECEIVED IN EVIDENCE

7
11-A 54 North Shelly, Fresno – Loan File 33
8 11-B 54 North Shelly, Fresno – Escrow File 33
11-C 54 North Shelly, Fresno – Related Bank 33
9 Records
11-D 54 North Shelly, Fresno – Search Warrant 33
10 Documents
11-E 54 North Shelly Fresno Check – Mailings and 33
11 Other (Count 5)
11-F County Recorder Title Documents 33
12 10-A 240 West Queen Street #1 Inglewood - Loan 70
Files
13 10-B 240 West Queen Street #1 Inglewood - Escrow 70
File
14 10-C 240 West Queen Street #1 Inglewood - 70
Related Bank Records
15 10-D 240 West Queen Street #1 Inglewood - Search 70
Warrant Documents
16 10-F County Recorder Title Documents 70
9-A Kalen’s Press postcard proofs 107
17 51-11 Photos – FCO location (page 11) 111
9-B Kalen's Press invoices 113
18 8-A Postcard Mania mailings 126
8-B Postcard Mania mail schedule 129
19 15-B 1929 West 65th Street, Los Angeles – Escrow 146
File
20 15-D 1929 West 65th Street, Los Angeles – Search 148
Warrant Documents
21
22
23
24
25

2 WEDNESDAY, MAY 8, 2013
3 ---oOo---
4 THE CLERK: Calling criminal matter 08-0093, United
5 States versus Charles Head and Jeremy Head. On for jury trial,
6 day three, Your Honor.
7 THE COURT: All right. Good afternoon. All counsel
8 are present. We were waiting on a juror, but we're now ready
9 to go. Is there anything else we need to discuss?
10 MR. ANDERSON: Your Honor, there is a quick thing.
11 The parties have reached an additional stipulation regarding
12 the admission of Government Exhibit 9-B. I have a copy that I
13 can bring forward.
14 THE COURT: All right. The Court has received that.
15 Anything to say about that, Mr. Tedmon, Mr. Haydn-Myer?
16 MR. TEDMON: No, Your Honor, that's fine. Just one
17 other procedural point. As the Court is aware, there is a
18 lengthy stipulation relating to almost all the Government and
19 Defense documents in the case. Mr. Anderson suggested, and I
20 agree, that rather than read this to the jury, because they're
21 going to have no clue what we're talking about, is to reference
22 the stipulation, as the exhibits come in, that they are
23 stipulated to. And that way I think it's easier for the Court
24 to keep track and makes more sense for the jury.
25 THE COURT: That would be a further stipulation as to

1 the stipulation, Mr. Anderson?
2 MR. ANDERSON: I guess so, Your Honor. And if that
3 turns out not to be working after a day or so, we could revisit
4 the issue. But I think it will work well that way.
5 THE COURT: I think it's fine. If any further record
6 needs to be made, it can be made during a working session. The
7 stipulations themselves will be filed?
8 MR. TEDMON: Yes.
9 MR. ANDERSON: Exactly.
10 THE COURT: Fine with you, Mr. Haydn-Myer?
13 MR. ANDERSON: And then, Your Honor, I think
14 Mr. Haydn-Myer had one other issue he wanted to raise regarding
15 the testimony of one of the Government's witnesses.
16 THE COURT: Is that a witness who would come on
17 before 3:00 today?
18 MR. ANDERSON: Probably not. I think she'll come on
19 after 3:00.
20 THE COURT: Who is the witness?
21 MR. ANDERSON: It's Pamela Graham.
22 THE COURT: Mr. Haydn-Myer, are you willing to wait
23 until a working session at 3:00?
25 THE COURT: Assuming she does not come on before

1 then. Otherwise, if you need, we'll take a slightly early
2 break.
3 All right. Anything else? Let's bring the jury in.
4 You have your first witness ready, Mr. Anderson?
5 MR. ANDERSON: Yes, we do, Your Honor. Mr. Morris
6 will call the first witness.
8 (Jury in.)
9 THE COURT: You may be seated. Good afternoon,
10 ladies and gentlemen of the jury. We're prepared to begin now
11 with the presentation of evidence. To that end, Assistant
12 United States Attorney Mr. Morris will call the Government's
13 first witness. Mr. Morris.
14 MR. MORRIS: Your Honor, the Government calls Shannon
15 Taylor.
16 THE CLERK: If you would come forward and face me,
17 please.
18 (Photograph of Ms. Taylor taken by the Clerk.)
19 THE CLERK: Thank you. Please enter the witness box.
20 Please raise your right hand.
21 Do you solemnly swear to tell the truth, the whole
22 truth, and nothing but the truth, so help you God?
23 THE WITNESS: Yes.
24 THE CLERK: Please state your full name and spell
25 your last name for the record.

1 THE WITNESS: Shannon Taylor, S-h-a-n-n-o-n,
2 T-a-y-l-o-r.
3 THE COURT: All right. The photographs will be in
4 the binders at the end of each day just as an easy reference
5 for you. Mr. Morris, you may proceed.
6 SHANNON TAYLOR,
7 a witness called by the Government, having been first duly
8 sworn by the Clerk to tell the truth, the whole truth, and
9 nothing but the truth, testified as follows:
10 DIRECT EXAMINATION
11 BY MR. MORRIS:
12 Q. Ms. Taylor, where do you live?
13 A. In Clovis, California.
14 Q. I'm going to ask you to think back to the spring of
15 2004. Did you live in Clovis in spring of 2004?
16 A. No. I lived at 54 North Shelly in Fresno.
17 Q. At that point in 2004 how long had you lived at that
18 address?
19 A. I believe it was four years.
20 Q. Is 54 North Shelly Avenue a house?
21 A. Yes.
22 Q. At that time, in the March or April timeframe of
23 2004, did you own the house or rent it?
24 A. Own.
25 Q. Also in that timeframe, the spring of 2004, were you

1 behind on your mortgage?
2 A. Yes.
3 Q. How far behind would you characterize that you were
4 at that time?
5 A. I had received a letter stating that we needed to
6 catch up or we will be going into foreclosure.
7 Q. So you were facing foreclosure at that time?
8 A. Yes.
9 MR. MORRIS: And Your Honor, the Government's going
10 to move to bring some exhibits in that are covered by the
11 stipulation filed last week. I'll go through them in order.
12 We'll be moving to admit Exhibit 11-A, which are loan
13 documents from Olympus Mortgage, and those are business
14 records; 11-B, which are escrow documents from Castlehead, and
15 those are business records; 11-C, which are bank records from
16 Bank of America, which are business records; 11-D, which are
17 documents -- in fact I think one document -- recovered in a
18 search warrant at A-1 Property Management; 11-E, which are bank
19 records from Bank of America, and 11-F, which are public
20 records from the Fresno County Recorder's Office.
21 THE COURT: All right. With the understanding those
22 are covered by stipulations, any objection to the admission of
23 those Exhibits 11-A through -F, Mr. Tedmon?

2 THE COURT: All right. 11-A through -F are admitted.
3 (Government Exhibits 11-A to 11-F, inclusive,
4 admitted into evidence.)
5 Q. BY MR. MORRIS: Now, Ms. Taylor, in the course,
6 again, looking at the Spring of 2004, in that period of time,
7 did you become aware of a company called Head Financial
8 Services?
9 A. Yes.
10 Q. How did you learn about them?
11 A. A postcard in the mail.
12 Q. Can you recall to the best of your recollection what
13 that postcard said?
14 A. It had to do with helping people out who were having
15 financial issues, and refinance, and help with foreclosure.
16 Q. Do you recall any -- do you recall any details as far
17 as names or businesses that were on that postcard?
18 A. I don't recall.
19 Q. Okay. Did you do anything in response to receiving
20 that postcard?
21 A. Yes, I called the number on it.
22 Q. Okay. And if you recall, who did you speak to when
23 you called that number?
24 A. I believe I spoke to a secretary, and then I believe
25 I spoke to Josh Coffman.

1 Q. And what did you tell Mr. Coffman?
2 A. I just told him of our situation, and, you know, what
3 could they offer.
4 Q. And what did Mr. Coffman say to you?
5 A. That they could help us.
6 Q. Did he give you any details as far as how they could
7 help you?
8 A. Not really. They wanted to meet with us.
9 Q. Okay. On the basis of that -- when you say meet with
10 us, who is us?
11 A. Me and my ex-husband.
12 Q. And so in response to that conversation with
13 Mr. Coffman, did you agree to met with him?
14 A. Yes.
15 Q. And do you recall approximately when that happened?
16 A. I don't recall exactly, but it was very relatively
17 soon. I can't remember if it was a week or maybe two weeks.
18 Q. Okay. Where did you meet them?
19 A. At my house.
20 Q. Okay. And if you recall, who did you meet?
21 A. Josh Coffman, Charles Head, and Cindy Gastelum.
22 Q. And that was at your house?
23 A. Yes.
24 Q. In Fresno?
25 A. Yes.

1 Q. How many times did you meet with any of those three
2 people?
3 A. Once.
4 Q. Just that one meeting?
5 A. Just the once.
6 Q. And would you describe the meeting that you had with
7 them that time?
8 A. Very friendly. They were obviously trying -- well,
9 it felt like trying to get us to understand that they're there
10 to help us. And we all sat at the kitchen table together. And
11 Josh did a lot of the talking, but Charles would nod and, you
12 know, kind of have that air of "we're here to help you."
13 Q. And if you already covered this, I apologize, in
14 addition to Josh and Charles, who was the third person?
15 A. Cindy Gastelum.
16 Q. What was your understanding of Cindy Gastelum's role
17 there?
18 A. She was a notary.
19 Q. What if anything -- or do you recall anything about
20 the substance of what they were telling you they could do with
21 you with respect to your foreclosure?
22 A. They said that we would be --
23 MR. TEDMON: Objection, Your Honor. If she's going
24 to talk about who's speaking, we need to know exactly who is
25 speaking.

1 Q. BY MR. MORRIS: That's a good point. To the best of
2 your recollection when you can remember an individual saying
3 something --
4 A. Josh Coffman did most of the speaking. So I'm going
5 to from the best of my recollection saying Josh was speaking
6 about this. Saying that they had an investor, and that we
7 would be on title with them. And then we would do this for a
8 year, and make payments, rental-type payments to them, and then
9 after that year, we would refinance and get the house back into
10 our name fully.
11 Q. Was there any conversation that you were part of with
12 regard to paying what was past due on your current mortgage?
13 A. Not that I recall.
14 Q. What was your understanding -- over the course of
15 that year, what was your understanding, if any, about any
16 monthly payments that you would continue to make on the house?
17 A. They were like rent payments. They were rent
18 payments because we had to fill out like a rental agreement.
19 Q. And how were you going to make those rent payments?
20 A. I made them with cashier's checks and sent them to
21 Matrix Investments in Costa Mesa, I believe.
22 Q. So it was your understanding that you were not paying
23 your mortgage to your previous lender at that point?
24 A. Right. Yes.
25 Q. When you mentioned earlier investor on title, I think

1 was the term that you used, what was your -- when you say that
2 your understanding was there would be an investor on title,
3 what was your understanding of that?
4 A. My understanding was that we would be on the title
5 together.
6 Q. Okay. And why did you think that you would stay on
7 title together with the investor?
8 A. To the best of my recollection, I believe I was told
9 that.
10 Q. So your best memory is that as of April or May,
11 whenever this meeting happened, was that you had a specific
12 conversation about --
13 MR. TEDMON: Objection, Your Honor. Leading.
14 THE COURT: Sustained.
15 Q. BY MR. MORRIS: Is it your testimony -- let me
16 clarify. This is in the timeframe of April or May of 2004?
17 A. Uh-huh. Yes.
18 Q. And your recollection is you did specifically discuss
19 staying on title at that meeting?
20 MR. TEDMON: Objection. Leading.
22 Q. BY MR. MORRIS: Do you recall whether you had
23 discussions of staying on title at that meeting?
24 A. Yes.
25 Q. And what do you recall about those discussions?

1 A. I recall asking and then them saying that we would be
2 on the title with the person, the investor.
3 Q. And having previously said that the speaking was
4 primarily Josh, your previous testimony was that Charles Head
5 was nodding and agreeing throughout the process?
8 Q. BY MR. MORRIS: What was Mr. Head doing while
9 Mr. Coffman was talking to you?
10 A. He would chime in whenever it looked like we needed
11 reassurance.
12 Q. Did Mr. Coffman -- or Mr. Charles Head disagree with
13 Mr. Coffman?
14 A. No.
15 Q. Did Mr. Head ever take Mr. Coffman aside --
16 A. No.
17 Q. -- to have a private conversation with him?
18 A. Not that I recollect.
19 MR. TEDMON: Objection, Your Honor. I'm objecting
20 based on speculation.
21 Q. BY MR. MORRIS: Do you recall ever having --
22 THE COURT: Sustained. The jury shall disregard the
23 answer to the last question.
24 Q. BY MR. MORRIS: Do you recall Mr. Charles Head ever
25 leaving your presence with Mr. Coffman?

1 A. No.
2 Q. Do you recall Mr. Coffman ever leaving with
3 Ms. Gastelum?
4 A. Not that I recollect.
5 Q. Do you recall any discussion during this meeting
6 about the equity in your home?
7 A. No.
8 Q. And do you recall any discussion as part of this
9 meeting about getting cash up front as part of the deal?
10 A. Yes.
11 Q. What do you recall about that part of the
12 conversation?
13 A. From what I remember, there was a conversation about
14 $20,000 from the financing so that we could get financially
15 caught up on everything, you know, set us up so that within a
16 year we could refinance again.
17 Q. Did you sign any papers that day, or do you recall
18 signing any papers that day?
19 A. Yes.
20 Q. Okay. If you would, to the best of your
21 recollection, would you describe the process by which you
22 signed papers that day?
23 A. It was rather hurried.
24 Q. Do you recall approximately how many pages you
25 signed?

1 A. A lot. It was quite a -- I'm going to say at least a
2 dozen.
3 Q. Do you recall having any conversation about copies of
4 papers at that meeting?
5 A. Yes.
6 Q. What do you recall about that conversation?
7 A. I did ask if we were going to receive copies, and
8 they said when they got back to their office, they would --
9 MR. TEDMON: Objection, Your Honor. The witness
10 needs to describe who is the speaker. Not "they."
11 THE COURT: Once again, if you can tee it up with
12 your questions, Mr. Morris. And when you're answering, if you
13 can clarify who is speaking, that would help move things along.
14 So that objection is sustained. Can you start with
15 this question again, Mr. Morris?
16 Q. BY MR. MORRIS: Including to the best of your memory
17 who said it --
18 A. I believe Cindy Gastelum had told me that when she
19 got back to the office, that they would fax me or send me via
20 mail copies.
21 Q. Was there any -- did anybody else present at this
22 meeting say anything about copies?
23 A. Not to my recollection.
24 Q. After this meeting then -- move on. After the one
25 meeting you had, what's the next thing you recall about your

1 interactions with Mr. Coffman or with Head Financial Services?
2 A. I do recall that we hadn't received the copies in
3 quite a while, and we were making our payments. And then I had
4 inquired to Castlehead Financial if I could get a copy of --
5 well, if I could get copies of everything. And from then
6 forward I would start receiving very nasty phone calls from
7 Josh Coffman and threats that he was going to evict us.
8 Q. Did you ask Mr. Coffman after the first meeting? Did
9 you ask Mr. Coffman for copies?
11 Q. Did you eventually receive copies of the documents
12 that you allegedly signed that day?
13 A. We did receive some copies, but it wasn't everything
14 we signed. And that's why I made a phone call to find out
15 where are the rest of the copies.
16 Q. And what was -- what's your basis for saying it
17 wasn't everything you signed?
18 A. It just -- it was just like the rental, the lease
19 agreement, and, well, there was a couple other papers, but it
20 wasn't everything. I mean, it was very substantially less
21 paperwork, and I'm like, hmm.
22 Q. Did you pay your monthly payments?
23 A. Yes.
24 Q. And did you -- do you have recollections of how you
25 went about paying those payments?

1 A. Yes. I mailed them to Matrix.
2 Q. And after you -- I think your testimony was you
3 called Castlehead Escrow for the documents?
4 A. Yes.
5 Q. Would you describe what happened with your
6 relationship, if anything, after that phone call that you made
7 to Castlehead Escrow?
8 A. After that phone call, that's when we -- like I said,
9 we were receiving phone calls from Josh threatening us. I had
10 to hire an attorney. He served me with a notice unlawful -- or
11 an eviction notice.
12 MR. TEDMON: Objection, Your Honor. Just for
13 clarification, when she says "he," we need to know who that is.
14 THE WITNESS: Josh Coffman.
15 THE COURT: I think it's clear from context, but
16 that's clarified it. Overruled.
17 Q. BY MR. MORRIS: And to the best of your memory, how
18 much time elapsed between when you called asking for copies of
19 the documents you signed and the first time somebody mentioned
20 eviction to you?
21 A. It was just a couple of days.
22 Q. At any point in this process did you receive a
23 written notice that a mortgage would be taken out against the
24 property?
25 A. No.

1 Q. Behind you on the stand there is binders of
2 documents.
3 Your Honor, may I approach to point out the exhibit
4 I'd ask her to look at?
5 THE COURT: Can you identify the binder?
6 Q. BY MR. MORRIS: I'm asking her to look at
7 Exhibit 11-B.
8 THE COURT: Why don't you pull that out and there
9 should be a tabbed number.
10 THE WITNESS: Okay.
11 Q. BY MR. MORRIS: And if you could look at page four of
12 11-B?
13 A. 11-B? I thought you said E.
14 Q. B as in Bravo, page four.
15 A. Okay.
16 MR. MORRIS: Your Honor, I'll be asking to publish
17 that to the jury, but we're still working on getting connected.
18 THE COURT: All right. 11-B has been admitted. Once
19 a document is admitted, it may be published.
20 (Pause in proceedings.)
21 MR. MORRIS: I'll proceed without publishing now.
22 THE COURT: Well, if you can proceed, we'll try to
23 fix this on a break if we can. And if need be, we will come
24 back and publish these.
25 Q. BY MR. MORRIS: Do you recognize document 11-B4?

1 A. No.
2 Q. If you can look, say, at the bottom third there
3 appear to be two signatures on that document. Do you recognize
4 the signatures on it?
5 A. Yes.
6 Q. Is that your signature on the right side?
7 A. Yes.
8 Q. To the left where the signature purports to be
9 Benjamin D. Taylor, Jr., do you know who Benjamin D. Taylor is?
10 A. Yes.
11 Q. Who is Benjamin D. Taylor?
12 A. He was my husband for 17 years.
13 Q. Having been married to Benjamin Taylor for 17 years,
14 are you confident that you're able to recognize his signatures?
15 A. Yes.
16 Q. Does that signature appear to be his signature on
17 that document?
18 A. Yes.
19 Q. If you look above those two signatures where it says
20 "for the account of," and it appears to be written Financial
21 Enterprises, do you know who Financial Enterprises is?
22 A. No.
23 Q. At the time that you signed this, do you have any
24 recollection of knowing who Financial Enterprises is?
25 A. No.

1 Q. The handwriting there between Bank of America and
2 Financial Enterprises, do you recognize that handwriting?
3 A. No.
4 Q. Do you have any memory of -- well, do you have any
5 understanding of what it is that this document purports to be?
6 A. No.
7 Q. If you could look down below your signature, there
8 appears to be a date, what date appears to be written on this
9 document?
10 A. I believe it says May the 10th, 2004. May something.
11 And the 3rd is crossed out.
12 Q. And the stamp there looks like a notary stamp. The
13 name in that notary stamp, is that the same name that you
14 recognize as having been somebody that you recognize having met
15 as part of this process?
16 A. Yes.
17 Q. And I'll ask you then to flip over to 11-F. And do
18 you recognize this document?
19 A. No.
20 Q. Do you -- if you look at the bottom third or so of
21 the -- of the page, do you recognize the signature there?
22 A. Yes.
23 Q. And the part that's above your name, does that appear
24 to be your signature?
25 A. Yes.

1 Q. And subject to the same previous question about your
2 husband, does that appear, based on your 17 years of marriage
3 to Mr. Taylor, does that appear to be his signature?
4 A. Yes.
5 Q. As you stand here today, do you understand what this
6 document is?
7 A. Not fully.
8 Q. You say not fully. So what, today, is the extent of
9 your understanding of what this document is?
10 A. I believe, looking at this document, that it grants
11 Adam Coffman the deed to the house.
12 Q. Comparing your understanding of the document today to
13 -- well, actually, hit something else.
14 Down below your signature there appears to be a date.
15 What date appears to be written there?
16 A. 4-8-04. But that was crossed out and then 4-15-04.
17 Q. And does that appear to be the same name on the
18 notary stamp that we previously talked about?
19 A. Yes.
20 Q. So comparing your understanding today of what this
21 document is, is that different from any understanding that you
22 might have had on 4-15-04, what this document is?
23 A. Yes.
24 Q. In what way is your understanding of the document
25 today different than how you understood it in 2004?

1 A. I believe that this document does not include us on
2 the deed.
3 Q. And so in April 2004, what was your understanding of
4 this document?
5 A. That we would be on together.
6 Q. Who is Adam Coffman?
7 A. Josh Coffman's brother.
8 Q. On April 14th, 2004, had you ever met Adam Coffman
9 before?
10 A. No.
11 Q. Since that time, have you ever met Adam Coffman?
12 A. No.
13 Q. Assuming that you actually signed this document in
14 April 2004, in that month, did you have the intent to deed your
15 house to Adam Coffman?
16 A. No.
17 MR. MORRIS: Just a moment, Your Honor.
19 Q. BY MR. MORRIS: If you would turn to Exhibit 11-B, as
20 in Bravo, page 8, 9 and 10.
21 A. Okay.
22 Q. Have you had a chance to review those?
23 A. Yes.
24 Q. With respect to the documents on the whole, do you
25 recognize those documents?

1 A. No.
2 Q. Let me call your attention then on page 9, 11-B9,
3 there appears to be a signature and your name on that page.
4 Does that appear to be your signature?
5 A. No.
6 Q. And the signature of Benjamin Taylor to the left,
7 subject to the same prior discussion about 17 years of
8 marriage, does that appear to be Benjamin D. Taylor Jr.'s
9 signature as it was when you were married to him?
10 A. No.
11 Q. And the following page 11-B10, having reviewed that
12 signature, does that appear to be your genuine signature?
13 A. No.
14 Q. And the signature to the left of it, does that appear
15 to be your husband, Benjamin Taylor's signature?
16 A. No.
17 Q. And if you could turn forward to page 11-B8 -- sorry,
18 one page earlier than that.
19 Having reviewed those initials at the bottom of the
20 page, does that appear to be your initials?
21 A. No.
22 MR. MORRIS: And, Your Honor, rather than going back
23 to re-publish both the prior pages, I'll ask that we bring up a
24 split screen with those two, just to wrap up with those two.
25 (Discussion between counsel and paralegal.)

1 THE COURT: So you're publishing together 11-B4 and
2 11-F?
3 MR. MORRIS: Yes. Which were what we had previously
4 shown.
5 THE COURT: Yes.
6 Q. BY MR. MORRIS: As you sit here today, can you -- do
7 you have any explanation for why there are two dates on these
8 two documents with your signature?
9 A. No.
10 Q. You can bring it down.
11 Going back to the rent payments, if we can focus on
12 the period where you were testifying about eviction
13 proceedings, or discussions, at that time did you have proof
14 that you had been making your monthly payments to Matrix?
15 A. Yes.
16 Q. Did you have proof of where you had been mailing
17 those payments, those monthly payments?
18 A. Yes.
19 Q. And where was it that you had been mailing them to?
20 A. Matrix Investment. Again I believe Costa Mesa.
21 Q. Bring up Exhibit 11-E, please, and publish to the
22 jury. Do you recognize the document in front of you?
23 A. Yes.
24 Q. How do you recognize that?
25 A. It's one of the payments I sent.

1 Q. Okay. Was Union Bank of California was that the bank
2 you traditionally banked at?
3 A. Yes.
4 Q. And the amount of that check, is that consistent with
5 the monthly check that you sent to Matrix Investment?
6 A. Yes.
7 Q. Were you evicted from the house?
8 A. Attempted.
9 Q. But that didn't end up happening, eviction didn't
10 happen?
11 A. No.
12 Q. What did end up happening with you and this house?
13 A. I hired an attorney, and through a long process they
14 -- Josh, Adam Coffman, and my attorney, and his attorney, came
15 to an agreement that we would not be evicted, and that we would
16 jointly sell the house and then split the proceeds.
17 Q. Did you ever receive money from splitting the
18 proceeds?
19 A. No.
20 Q. If you knew in April 2004 what you learned over the
21 course of the next year or two, would you have called Josh
22 Coffman when the postcard came to you?
23 MR. TEDMON: Objection, Your Honor. Calls for
24 speculation, and it's not relevant.

1 Q. BY MR. MORRIS: Did the process that unfolded over
2 the year or two after April of 2004, did that conform with your
3 expectation of what would happen?
4 A. No.
5 MR. TEDMON: Objection. Asked and answered.
6 THE COURT: Overruled.
7 Q. BY MR. MORRIS: You can answer.
8 A. No.
9 Q. Let me ask it this way. Your understanding now is
10 that -- I think your testimony was your understanding now is
11 that the grant deed granted the title to one person
12 individually?
15 Q. BY MR. MORRIS: Based on that, if that's your
16 testimony, if you knew then that -- if you knew that fact then,
17 would you have agreed to enter this deal?
18 MR. TEDMON: Same objection. Speculation.
19 MR. MORRIS: Goes to the materiality of false
20 statements, Your Honor.
22 Q. BY MR. MORRIS: Do you want me to repeat that?
23 THE COURT: I sustained.
24 Q. BY MR. MORRIS: If we go back to April 2004, was your
25 belief that you would remain on title, was that an important

1 factor in your decision to enter this deal?
2 A. Yes.
3 Q. And if you could review quickly 11-E again, which I
4 think is in front of you. What date appears on the document
5 there?
6 A. September 18th, 2004.
7 MR. MORRIS: Thank you.
8 THE COURT: All right. Mr. Tedmon, any
9 cross-examination?
11 CROSS-EXAMINATION
12 BY MR. TEDMON:
13 Q. Good afternoon, Ms. Taylor. Good afternoon.
14 A. Good afternoon.
15 Q. I want to start with this meeting that you had with
16 Mr. Coffman.
17 A. Yes.
18 Q. And Mr. Head, and Ms. Gastelum, correct?
19 A. Yes.
20 Q. Now when was that exactly as far as you know?
21 A. I believe in April, yes, 2004.
22 Q. Okay. And was your ex-husband present during the
23 time of this meeting?
24 A. Yes.
25 Q. During the entire time?

1 A. Yes.
2 Q. All right. And you had a chance to ask questions
3 about the program at that time, correct?
4 A. Yes.
5 Q. As did your husband?
6 A. Yes.
7 Q. And you did so, correct?
8 A. Yes.
9 Q. All right. How long did the meeting last?
10 A. It was only a couple of hours.
11 Q. All right. And at the conclusion of the meeting, I
12 believe it's your testimony that you signed a dozen documents
13 or so, is that right?
14 A. At least, yes.
15 Q. Okay. One of the documents was called an Equity
16 Purchase Agreement, do you recall that?
17 A. Vaguely.
18 Q. All right. What do you recall of it?
19 A. Signing it.
20 Q. All right. And that particular document was really
21 the centerpiece of this program, you recall that, though,
22 correct, the Equity Purchase Agreement?
23 A. No.
24 Q. You don't recall that?
25 A. No.

1 Q. Have you had a chance to review an Equity Purchase
2 Agreement before you testified here today?
3 A. No.
4 Q. Well, let me do it this way. The Equity Purchase
5 Agreement, or the document that you signed, you understood
6 signed over title to your home, you knew that, didn't you?
7 A. No.
8 Q. You did not know that?
9 A. No.
10 Q. Okay. Did you subsequently go through an escrow
11 signing?
12 A. Yes.
13 Q. All right. If we could have Government's 11-B put on
14 the screen, please. And do you see that document on the
15 screen? And you can look at it on the screen, or in the
16 binder, or whatever is easiest for you.
17 A. Yes.
18 Q. Do you see that?
19 A. Yes.
20 Q. That is a settlement statement, correct?
21 A. I have no idea.
22 Q. All right. Well, you've testified you had a separate
23 signing for the escrow process, is that right?
24 A. No.
25 Q. You did not?

1 A. No.
2 Q. Okay. Well, let's start over then. You had a
3 meeting with Mr. Coffman?
4 A. Yes.
5 Q. And Mr. Head and Ms. Gastelum?
6 A. Yes.
7 Q. You signed documents?
8 A. Yes.
9 Q. Okay. At that point, after you signed the documents,
10 they left, correct?
11 A. Yes.
12 Q. Okay. Is it your testimony you had no other signings
13 of any other document?
14 A. No.
15 Q. You did not -- you didn't go to an escrow company?
16 A. No.
17 Q. Well, let's look at 11-B. Have you ever seen this
18 before?
19 A. No.
20 Q. You don't recognize this at all?
21 A. No.
22 Q. All right. Well, you knew you were signing over your
23 title to the home, you knew that, correct?
24 A. No.
25 Q. Well, Ms. Taylor, you've testified that you

1 understood there was going to be a transfer of title, but you
2 were going to stay on it, somebody else was going to be added,
3 correct?
4 A. Yes.
5 Q. That would require a transaction legally, you know
6 that, correct?
7 A. No, I don't.
8 Q. You did not know that?
9 A. No. I'm not a realtor or a mortgage --
10 Q. Well, you bought a house before, right?
11 A. Yes.
12 Q. When you bought the house, you went through an escrow
13 signing, didn't you?
14 A. Yes.
15 Q. But you didn't recall doing any of that here?
16 A. No.
17 Q. All right. Well, let's pull up Government's 11-B4.
18 That's now on the screen. That is the document entitled
19 Addition and/or Amendment to Escrow Instructions, do you see
20 that?
21 A. Yes.
22 Q. Dated May 3rd, do you see that?
23 A. Yes.
24 Q. Right here?
25 All right. Now, you testified earlier that your

1 signature -- that is your signature, correct?
2 A. Yes.
3 Q. All right. And you also testified earlier that that
4 is your husband -- or ex-husband's signature, Benjamin Taylor,
5 correct?
6 A. Yes.
7 Q. So you don't dispute you signed this document?
8 A. I don't recall signing this document.
9 Q. Well, your testimony is that that's your signature
10 though, right?
11 A. Yes.
12 Q. So apparently you signed the document?
13 A. Not apparently, no.
14 Q. Okay. Well, is that your signature or not?
15 A. Yes, it is.
16 Q. All right. And this document indicates that you were
17 authorizing funds to be wired to the account of Financial
18 Enterprises, do you see that?
19 A. Yes.
20 Q. But your testimony is you had no idea that was going
21 to happen?
22 A. No.
23 Q. All right. Well, let's go back to Government's 11-B.
24 And in this section here it says -- and the arrow isn't really
25 lining up -- but in the middle, near the top, it says name of

1 seller, do you see that?
2 A. Yes.
3 Q. It says Benjamin D. Taylor, Jr., and Shannon M.
4 Taylor, correct?
5 A. Yes.
6 Q. That is you and your former husband?
7 A. Yes.
8 Q. And then it says in the settlement date, 5-14-2004,
9 correct?
10 A. Yes.
11 Q. Are you familiar with what's called a HUD-1 form?
12 A. No.
13 Q. Well, let me ask you this. When you purchased your
14 home initially --
15 A. Yes.
16 Q. -- you indicated that you went through an escrow
17 process?
18 A. Yes.
19 Q. And there was several documents you signed, there is
20 a multitude of documents you signed?
21 A. Yes.
22 Q. And one of those is a summary of where all the money
23 is supposed to go, do you recall that?
24 A. Yes.
25 Q. Okay. And it would be a document similar to

1 Government's 11-B, do you recall that?
2 A. Yes.
3 Q. Okay. So if we can go to page two, of 11-B, and
4 let's go ahead, if we can, and expand to include line 1304.
5 Okay. Now this is on the screen. Do you see where
6 it says the line 1304?
7 A. Yes.
8 Q. Says, Financial Enterprises seller proceeds, correct?
9 A. Yes.
10 Q. And then it has an amount of $95,613.43, correct?
11 A. Yes.
12 Q. And it's your testimony you had never seen this
13 document before?
14 A. Never.
15 Q. Now you understood from this program that you entered
16 into that -- well, strike that.
17 You contacted Mr. Coffman or somebody at Head
18 Financial Services because you were going to lose your home?
19 A. Yes.
20 Q. And so they came up, and Mr. Coffman talked to you --
21 A. Yes.
22 Q. -- about it?
23 And it was Mr. Coffman primarily that talked?
24 A. Yes.
25 Q. And part of the agreement you had entered into was

1 that you were going to rent your home, make rent payments?
2 A. Yes.
3 Q. Now you know the difference between owning and
4 renting, don't you?
5 A. Yes.
6 Q. A renter makes payments because they don't own the
7 home, correct?
8 A. Yes.
9 Q. You were a renter, correct?
10 A. Well, it does say lease on the top also, yeah.
11 Q. Well, you were aware of that?
12 A. Yes.
13 Q. So you didn't own the home, that's why you were
14 renting it, correct?
15 A. Yes.
16 Q. You also understood that as long as you made your
17 rent payments that at the end of 12 months, or the contract
18 term, that you could then enter into an equity split, do you
19 recall that?
20 A. No.
21 Q. You don't recall them talking about that?
22 A. No.
23 Q. But you knew you had to make your rent payments on
24 time?
25 A. Yes.

1 Q. And ultimately you stopped paying rent?
2 A. No.
3 Q. You did not?
4 A. No.
5 Q. Okay. Well, you were making your rent payments, as I
6 understood your testimony, to Matrix Investment Group?
7 A. Yes.
8 Q. And at some point you stopped making the payments to
9 Matrix Investment Group, right?
10 A. No.
11 Q. You did not?
12 A. No. That's why I hired an attorney.
13 Q. Well, in September of 2005, you stopped making your
14 payments to Matrix Investment Group?
15 A. No.
16 Q. Well, do you recall giving an estimate to Special
17 Agent Chris Fitzpatrick sitting at this table?
18 A. Yes.
19 Q. You gave him a statement in April of 2007, do you
20 recall that?
21 A. Maybe.
22 Q. Okay. And he met with you at your home? Where did
23 you meet Mr. Fitzpatrick?
24 A. No.
25 Q. Where was the interview?

1 A. I believe it was over the phone.
2 Q. Okay. Did you ever have a personal meeting here in
3 Sacramento?
4 A. No.
5 Q. But you do recall talking to Special Agent
6 Fitzpatrick, correct?
7 A. Yes.
8 Q. And he asked you a bunch of questions about this
9 transaction, true?
10 A. Yes.
11 Q. And one of those topics was whether you continued to
12 make your payments to Matrix Investment Group, do you recall
13 those questions?
14 A. Vaguely.
15 Q. Okay. And you told Special Agent Fitzpatrick that in
16 September of 2005 you stopped making your payments to Matrix
17 Investment?
18 A. I don't recall that.
19 MR. TEDMON: Your Honor, may I approach and have the
20 witness review this report?
21 THE COURT: Have you shown this to Mr. Morris?
22 MR. TEDMON: It's Head 3599. May I approach?
23 THE COURT: You may approach.
24 Q. BY MR. TEDMON: Ms. Taylor, I'm asking you to read
25 this to yourself. It's paragraph four. And then let me know

1 when you're finished.
2 A. (Witness reviewing document.) Okay.
3 Q. Have you had a chance to read that?
4 A. Yes.
5 Q. Does that refresh your recollection on what you told
6 Special Agent Fitzpatrick?
7 A. No.
8 Q. It does not?
9 A. No.
10 Q. Are you denying that you told Special Agent
11 Fitzpatrick that you stopped making your mortgage payments or
12 rent payments in September of 2005?
13 A. I'm not denying it. I just -- I have proof I did.
14 Q. So you're saying that report's wrong?
15 A. I'm not saying anything.
16 Q. Okay. But your testimony is different from that,
17 isn't it?
18 A. Yes.
19 Q. Okay. And you knew as part of this program,
20 Ms. Taylor, that if you didn't make your payments, that you
21 would have violated the Equity Purchase Agreement and given up
22 any right to an equity share or returning of the property to
23 you, you knew that, didn't you?
24 A. No.
25 Q. Ultimately, you got your property back, is that

1 right?
2 A. No.
3 Q. Or it was sold?
4 A. Yes.
5 Q. And who was involved in that? Mr. Coffman?
6 A. Yes.
7 Q. When did that take place?
8 A. A year later or so. I don't remember the exact date.
9 Q. Now, you've testified that there's some signatures,
10 Government's 11-B8, 9 and 10, that you testified are not yours?
11 A. Yes.
12 Q. Do you recall that?
13 A. Yes.
14 Q. You don't know who signed your name, do you?
15 A. No.
16 MR. TEDMON: One moment, Your Honor.
18 Q. BY MR. TEDMON: And a couple other questions. When
19 Mr. Coffman was threatening you with eviction --
20 A. Yes.
21 Q. -- did he tell you it was because you were in default
22 of your agreement? Or what did he say?
23 A. I believe he stated I hadn't made the payments
24 because he sent them back to me.
25 Q. He sent the payments back to you?

1 A. Yes.
2 Q. That's what Mr. Coffman said?
3 A. No. He did not say that. But that is what happened.
4 Q. Let me get this straight. Mr. Coffman sent the
5 payments back to you?
6 A. Yes.
7 Q. How many of those got sent back?
8 A. Three.
9 Q. All right. And when was that?
10 A. Oh, gosh, April, and May, and June, I believe, or --
11 I can't recall exactly, but there was three.
12 Q. Was that 2005?
13 A. I can't recall.
14 Q. Okay. And that related to your dealings with
15 Mr. Coffman?
16 A. Yes.
17 Q. And that's Joshua Coffman?
18 A. Yes.
19 MR. TEDMON: Nothing further. Thank you.
20 THE COURT: All right. Mr. Haydn-Myer.
23 BY MR. HAYDN-MYER:
24 Q. Good afternoon, Ms. Taylor.
25 A. Hello.

1 Q. You've had some testimony in regards to the payments
2 made to Matrix, is that correct?
3 A. Yes.
4 Q. Did you make any other payments to any other business
5 other than Matrix?
6 A. No.
7 MR. HAYDN-MYER: Nothing further. Thank you, Your
8 Honor.
9 THE COURT: All right. Mr. Morris, any redirect?
10 REDIRECT EXAMINATION
11 BY MR. MORRIS:
12 Q. Mr. Tedmon was asking you, I think, about a previous
13 escrow signing?
14 A. Yes.
15 Q. So I wonder if you could compare the process of
16 signing documents that you went through with Josh Coffman,
17 Charles Head, and Cindy Gastelum, and compare those to the
18 process you went through on your previous escrow, and if you
19 could explain your perception of the differences between those
20 two processes?
21 A. When we originally bought the property, we -- it was
22 a time that was set. We had to go in for an appointment. And
23 it took, gosh, probably about an hour, hour-and-a-half for her
24 to go through all the paperwork, explain the effects, explain
25 to us what we were initialling and signing. It was a lot

1 different.
2 And then the other meeting where we signed that
3 stuff, it was much more hurried, and paperwork that didn't
4 really get explained and I guess we should have asked questions
5 about.
6 MR. MORRIS: Nothing further, Your Honor.
7 THE COURT: All right. Mr. Tedmon, any recross?
8 MR. TEDMON: Just one moment, Your Honor, real quick.
9 No, Your Honor.
10 THE COURT: All right. Mr. Haydn-Myer?
12 THE COURT: Is Ms. Taylor excused?
13 MR. MORRIS: Yes, Your Honor. From our perspective.
17 THE COURT: All right. You may step down. The
18 Government's next witness.
19 MR. MORRIS: The Government calls Richard Figueroa.
20 THE COURT: All right. We'll go until 3:00 and then
21 take our break at that point today.
22 THE CLERK: Mr. Figueroa, if you will come forward
23 please. If you would please stand in front of the witness
24 stand so I can take your photo.
25 (Photograph taken of Mr. Figueroa by the Clerk.)

1 THE CLERK: Thank you, sir. Please step into the
2 jury box. Please raise your right hand.
5 THE WITNESS: Yes, ma'am.
8 THE WITNESS: Richard Figueroa, R-i-c-h-a-r-d. Last
9 name F-i-g-u-e-r-o-a.
10 RICHARD FIGUEROA,
15 BY MR. MORRIS:
16 Q. Mr. Figueroa, where do you live?
17 A. In the City of Inglewood, California, sir.
18 Q. What's your address?
19 A. 614 West Spruce.
20 Q. Did you formerly live at 240 West Queen Street,
21 Number 1, in Inglewood?
22 A. Yes, sir.
23 Q. When approximately did you live there?
24 A. I acquired the condominium around middle, late '99,
25 and I stayed at that residence until maybe '05, I believe. To

1 the best of my recollection.
2 Q. And thinking back to the late 2003 to 2000 -- early
3 2004 time period, were you the owner of that condominium?
4 A. Yes, sir, I was.
5 Q. Were you again in that time period, late 2003, were
6 you falling behind on your mortgage payments?
7 A. Yes, sir. I had lost my employment in the early part
8 of 2003, so I had fallen behind a bit on a couple of months on
9 my mortgage.
10 Q. And in that time period, well, were you -- was it
11 your impression that you were facing foreclosure?
12 A. Yes, sir, it was.
13 Q. Why did you think you were getting close to
14 foreclosure?
15 A. I really didn't know how long the -- you know, the
16 bank would honestly take before they foreclosed the property.
17 I was just struggling trying to make my monthly payments. So
18 in my mindset, it just would eventually happen.
19 MR. MORRIS: And, Your Honor, pursuant to the
20 parties' stipulation, I'm going to ask to admit a series of
21 exhibits at this time. And those are Exhibit 10-A, which are
22 business records, lender business records; 10-B, which are
23 business records from Castlehead Escrow; 10-C, which are bank
24 records from Washington Mutual Bank; 10-D, which are documents
25 found during execution of search warrants; and 10-F, which are

1 public records from the Los Angeles County Recorder's Office.
2 THE COURT: All right. So not 10-E?
3 MR. MORRIS: That's correct, Your Honor.
4 THE COURT: So 10-A, -B, -C, -D and -F. Agreed that
5 this is covered by the parties' stipulation? Mr. Tedmon?
8 THE COURT: All right. 10-A, B, C, D and F are
9 admitted.
10 (Government Exhibits 10-A, 10-B, 10-C, 10-D and 10-F,
12 Q. BY MR. MORRIS: Thinking back again to late 2003 or
13 early 2004, did you become aware of a company named Head
14 Financial Services?
15 A. Yes, sir. I want --
16 Q. How did you become aware of them?
17 A. I want to say maybe late 2003 a gentleman knocked on
18 our door. He introduced himself as a representative for a
19 Christian organization that was in the business of helping
20 families like myself in our situation. And that's how I came
21 across him.
22 Q. Okay. Did you ask him about how he could help?
23 A. We did.
24 Q. And what did he tell you?
25 A. He told me that they'd come back later on and explain

1 the program to us, which they did.
2 Q. And at that later meeting, what explanation did you
3 receive about the program?
4 A. They basically told us that they --
5 MR. TEDMON: Objection, Your Honor. Again, if we can
6 have the witness identify specifically who he's talking about.
8 Q. BY MR. MORRIS: Do you know who all was present at
9 that meeting?
10 A. It was the first gentleman that walked into our door
11 was a Hispanic male. I really don't recall his name. He was
12 accompanied when they returned to our property by a female.
13 And unfortunately I do not recall their names.
14 Q. And so with that understanding of this unknown male
15 and unknown female, was there a difference in roles between
16 what one of them said and what somebody else said?
17 A. No, sir.
18 Q. So to the best of your knowledge, did one of them
19 talk and another one didn't talk?
20 A. They kind of worked as a team.
21 Q. Okay. So with the understanding that -- well, is it
22 your testimony that you -- for particular items that you don't
23 recall which of those two people said each of the following
24 things?
25 A. No. They were pretty both consistent with the

1 version of the story of how they were going to help us out. I
2 couldn't tell you in detail exactly what they both said, but it
3 was pretty much the exact same thing.
4 Q. And what was it that they told you?
5 A. They told us that they were working on a program
6 where they would either help us refinance our property or
7 re-negotiate our property with our broker, but that we would
8 not lose our house.
9 Q. Okay. Did you have any discussions about overdue
10 taxes?
11 A. Yes, sir.
12 Q. And what's your memory of the discussion you had
13 about overdue taxes?
14 A. That part of what they were going to -- or their
15 program would consist to bring all our debts current and up to
16 date including the taxes or back taxes owed on the property.
17 Q. Did you have any understanding about receiving any
18 cash up front as part of this?
19 A. That actually came out later in the process where
20 they said they would give us around $5,000 to help us pay off
21 any other debts we had. Basically clean up our credit.
22 Q. Did you at that time have any understanding about
23 whether you would continue to own the condominium?
24 A. It was my understanding I would own the condominium.
25 Q. Did you have any understanding at that time that

1 somebody else would become a joint owner with you?
2 A. No, sir.
3 Q. Did you -- was there any understanding -- did you
4 have any understanding at the time about whether you would
5 change where you sent your monthly payment?
6 A. I guess.
7 Q. What was your understanding --
8 A. I was instructed to basically show that I could
9 continue to prove that I could sustain my home I would make a
10 monthly what they called like a rent payment, and it was made
11 to Head Financial.
12 Q. Did you decide right away that you wanted to take
13 part of in this program?
14 A. My wife and I talked about it for a few times, a
15 couple of -- actually, probably more than because, you know, we
16 were desperate. I could not find work. I want to say maybe
17 about a week or two weeks later after the initial contact and
18 the second contact, we called back the gentleman and said that,
19 you know, we'd like to participate in the program.
20 Q. And what's your best memory of when that was that you
21 made that call?
22 A. I want to say maybe late '03, early '04. That's my
23 best recollection.
24 Q. Did you sign any documents as part of making your
25 decision to take part in the program?

1 A. Yes, sir.
2 Q. What can you tell us about your recollection of the
3 process of signing those documents?
4 A. The -- that Hispanic male and that female, or second
5 female, came into our house. And I remember that first part of
6 it was sort of entering what I thought was an agreement into
7 Head Financial and their representing us where they kind of
8 stipulated, you know, what they would do and how they would do
9 it. I signed some paperwork that night.
10 And I would say maybe a month or so later, a little
11 bit more -- I'm bad with time right now. I'm sorry about that.
12 I did sign some additional paperwork.
13 Q. Did you have any understanding when you signed the
14 paperwork about how long the agreement would be?
15 A. I was told that it would be roughly about six months,
16 six to eight months before they would either refinance or
17 reestablish my loan with my mortgage company.
18 Q. And when you say mortgage, are you referring to the
19 mortgage company that you had prior --
20 A. Ameriquest Mortgage, yes, sir, where I had my
21 mortgage.
22 Q. After you entered this agreement, did your desire to
23 take part in it change?
24 A. Prior to anything as far as being finalized I had
25 started working. I had found myself a job, and we were able

1 to, you know, basically at that point I could sustain, I guess,
2 my own mortgage.
3 So I hadn't heard from Head Financial in some time,
4 and I knew that -- I felt this deadline approaching as far as
5 me thinking the house would be foreclosed. So I remember
6 calling the offices, and it's the only time I've ever spoken to
7 Mr. Head.
8 I called in and said, you know --
9 Q. Can I interrupt for a second. When you say,
10 Mr. Head, who is your memory of who Mr. Head is?
11 A. Charles Head.
12 MR. TEDMON: Your Honor, can we have a foundation as
13 to how he knows who he is speaking to on the phone. I would
14 object and ask that it be stricken at this point.
15 THE COURT: That objection is sustained. The jury
16 shall disregard the answers. You may law a foundation.
17 Q. BY MR. MORRIS: Did somebody identify themselves by
18 name when you called the office?
19 A. Yes, sir.
20 Q. And what name did they use when they identified
21 themselves?
22 A. Charles Head.
23 Q. And if you can continue, then, your answer?
24 A. Okay. So because I hadn't heard back from their
25 office, I didn't know where we stood as far as any of the

1 process.
2 And, I'm sorry, I need to go back a few steps to the
3 initial day where they had me sign, where we thought our
4 agreement was -- I was instructed not to basically contact
5 Ameriquest, which was my mortgage company. That they would do
6 all the representation for us.
7 MR. TEDMON: Object. This is a narrative. We need
8 to have questions. We can't follow it otherwise.
10 MR. MORRIS: I'll try to get it more under control.
11 Q. BY MR. MORRIS: What timeframe is it -- let me take
12 you back then to late 2003.
13 A. Yes, sir.
14 Q. And that was -- I think your testimony was that that
15 was when you first decided you were interested in the program?
16 A. Yes, sir.
17 Q. Okay. And did you receive instruction then about
18 contacting --
19 A. Yes, sir.
20 Q. And what instruction did you receive about contacting
21 your mortgage lender?
22 A. Actually not to contact my mortgage lender. That
23 once they negotiated or started the negotiations, they would be
24 the ones that would basically be representing me.
25 Q. Did you receive any instruction about continuing to

1 pay your monthly mortgage?
2 A. I wasn't specifically told not to do it, but that's
3 how I understood it.
4 Q. Was there later then conversation -- was there any
5 other time where they had some discussion with you about
6 contacting your mortgage company?
7 A. No.
8 MR. TEDMON: Your Honor, objection. When we use the
9 word "they," we do not know who the speaker is.
11 Q. BY MR. MORRIS: Okay. There was no future --
12 Then the question is, was there any additional
13 instruction from somebody, from anybody, about contacting or
14 not contacting --
15 MR. TEDMON: Objection. Vague as to time. Who it
16 is.
17 Q. BY MR. MORRIS: Sorry. After December 2003 was there
18 any further instruction from anybody about contacting a
19 mortgage company?
20 MR. TEDMON: Same objection.
22 THE WITNESS: The -- again, when I didn't hear back
23 from them, some time had lapsed, that's when I decided to call
24 the office. The young lady answered the phone and then was --
25 then transferred the call to the person who identified himself

1 as Charles Head.
2 Q. What, if anything, did you say to the person who
3 identified himself as Charles Head?
4 A. Basically I told him that I didn't know where we
5 stood as far as any of the process or where basically my
6 situation was at. And I felt, you know, this imminent
7 foreclosure date basically upon me, and I needed to find a
8 resolution or something. So at that particular time it was my
9 wish to say, well, you know what, I'll just contact the company
10 myself, and I'll just start making my payments. I could do
11 this.
12 Q. Did the person who identified himself as Charles Head
13 respond to you when you said that?
14 A. He actually answered the phone and basically at that
15 point explained to me that if I wanted to stop them
16 representing me, it would cost me about $10,000. Because
17 that's how much money he had invested in labor or in manpower.
18 Q. At that point did you have $10,000?
19 A. No, sir. I did not.
20 Q. Did you -- was there any other substance of that
21 conversation that you had on that phone call?
22 A. Yeah, basically at that point he told me that they
23 were close to finalizing the agreement, and I would -- to
24 finalize or finish signing some paperwork. And I believe it
25 was later that week. I want to say late July of '04.

1 Q. What's your next recollection of -- well, did you
2 ever have any more contact with Mr. Charles Head?
3 A. No, sir.
4 Q. Did you have any contact after that point with
5 somebody who said they were working on behalf of Head Financial
6 Services?
7 A. Yes.
8 Q. Who was that?
9 A. There was a couple of months had already -- well,
10 once I signed the paperwork in July, all the calls seemed to
11 have stopped.
12 Q. Sorry. When you say all the calls seemed to have
13 stopped, what calls are you referring to?
14 A. From Ameriquest and I guess their collection
15 department. So we felt the sense of relief that the program
16 had actually started its function. So we continued to make our
17 payments. I believe it was $1,000. Around six months or so --
18 Q. Let me interrupt. You continued to make your
19 payments. To whom were you making payments?
20 A. To Head Financial. I would write the checks out and
21 mail them out to an address in Orange County. I don't remember
22 the address. But I know it was in Orange County somewhere.
23 Q. And then what was the -- after that, what was the
24 next contact that you recall with Head Financial?
25 A. A gentleman came to our door accompanied by a female

1 that basically -- I was not home -- told my wife that they were
2 there to make an assessment of the property. Basically see its
3 value, so they could allow themselves to walk in. That they
4 were in representation for Head Financial. And I believe the
5 gentleman's name was Adam Coffman or Jeremy Coffman. One of
6 those two. I know it was a Coffman.
7 Q. Why do you believe that the name was Coffman?
8 A. I remember the last name.
9 Q. Have you ever -- had you ever met somebody named
10 Coffman before that date?
11 A. No, sir.
12 Q. Did you have any acquaintances, did you know anybody
13 named Adam Coffman?
14 A. No, sir.
15 Q. Did you attempt to call Head Financial Services after
16 that date?
17 A. I attempted to call them when I basically found out
18 that I was being evicted from the house.
19 Q. How did you find out you were being evicted from the
20 house?
21 A. I had a call from Head Financial, and told me that
22 the property had been sold. And that the new owner of the
23 property had no interest in having tenants there, and we needed
24 to get out.
25 Q. Did you attempt to call Head Financial after that

1 phone call?
2 A. I called a couple of times, and, you know,
3 unfortunately, I don't remember the person's name. And
4 basically just, you know, I went ballistic. I couldn't believe
5 what had just happened. They really couldn't offer me anything
6 other than you got to go.
7 Q. I'll ask you to look in the binder in front of you at
8 tab 10-B, page three.
9 A. Yes, sir.
10 Q. Do you recognize this document?
11 A. No, sir.
12 Q. I'll direct you to this section. Above your name
13 there appears to be a signature. Do you recognize your
14 signature?
15 A. Similar to mine, but it's not mine.
16 Q. Do you remember signing this document?
17 A. No, sir.
18 Q. The items above that are handwritten, is that your
19 handwriting?
20 A. No, sir.
21 Q. Zoom back out. As you sit here today, does this
22 document have any meaning to you?
23 A. No. I'm not sure what it is you're showing me.
24 Q. And if you could pull forward to 10-F in the binder
25 in front of you, page two.

1 A. Okay.
3 A. I may have seen it. I can't tell you if I recall it
4 or not.
5 Q. Do you have any memory of signing this document?
6 A. No, sir, I don't.
7 Q. And looking at what appears to be a date of May 2nd,
8 2004. On May 2nd, 2004, did you know somebody named Adam
9 Coffman?
10 A. No, sir, I did not.
11 Q. On May 2nd, 2004, did you intend to sell your house
12 to Adam Coffman?
13 A. No, sir.
14 Q. Do you remember signing this document?
15 A. I may have, sir, I signed some documents. I don't
16 recall everything I signed.
17 Q. About how many documents did you sign?
18 A. A lot.
19 Q. Do you still live at 240 West Queen Street?
20 A. No, sir, we don't.
21 Q. What ended up happening to your home?
22 A. Well, after we got evicted, my understanding is it
23 was sold I think two or three more times.
24 Q. As part of your conversations with the people who had
25 come to your house, did you have any conversations about the

1 equity of your house?
2 A. No, sir.
3 Q. Did you have any conversations about the title to
4 your house?
5 A. No, sir.
6 Q. What was it that you thought was happening when you
7 signed the documents?
8 MR. TEDMON: Object. Vague as to time. He indicated
9 he signed the documents at different time periods.
11 Q. BY MR. MORRIS: Assuming that you signed the document
12 on May 2nd, 2004, what did you think you were doing when you
13 signed the document on May 2nd, 2004?
14 A. I was under the belief at that moment that I was
15 signing basically a right of attorney or power of attorney for
16 them to represent me and my property.
17 Q. Represent you and your property with respect to what?
18 A. To my loan -- to my loan, and my brokerage company,
19 and them to stop, basically, the foreclosure of my property.
20 Q. On May 2nd, 2004, did you intend to take $80,000 of
21 equity out of your house?
22 A. No, sir.
23 Q. On May 2nd, 2004, did you intend to give $80,000 to
24 Charles Head?
25 A. No, sir.

1 MR. MORRIS: No further questions, Your Honor.
2 THE COURT: All right. Mr. Tedmon.
3 MR. TEDMON: Thank you, Your Honor.
4 CROSS-EXAMINATION
5 BY MR. TEDMON:
6 Q. Mr. Figueroa, good afternoon.
7 A. Good afternoon, sir.
8 Q. You indicated that you had an initial contact with an
9 unknown Hispanic male initially, correct?
10 A. Yes, sir.
11 Q. All right. And that person did not identify himself
12 as being with Head Financial Services, is that right?
13 A. Not at that date, sir.
14 Q. This person came back a second time?
15 A. Yes, sir.
16 Q. With an unknown female?
17 A. Yes, sir.
18 Q. Did they identify themselves as being with Head
19 Financial Services at that point?
20 A. Yes, sir.
21 Q. And how long between the first meeting and the second
22 meeting?
23 A. I want to say maybe two weeks.
24 Q. Two weeks?
25 A. Yes, sir.

1 Q. Were both those meetings at your home?
2 A. Yes, sir.
3 Q. Now, Mr. Morris asked you questions about certain
4 documents. I want to go through some of those with you.
5 A. That's fine, sir.
6 Q. If we could pull up Government's 10-D2, please. And
7 you can either find it in the binder or it will be on your
8 screen as well. It's already been admitted. So whichever is
9 easiest for you.
10 A. Okay.
11 Q. Do you recognize that document?
12 A. No, sir.
13 Q. It indicates on the document Equity Purchase
14 Agreement, correct?
15 A. That's what it says, yes, sir.
16 Q. And it's dated December 1st at the very top, do you
17 see that?
18 A. Yes, sir.
19 Q. Okay. Now, your meeting with this unknown Hispanic
20 male was in 2003, I think you testified, is that right?
21 A. I believe so. Yes, sir.
22 Q. Now if we can turn to page -- well, it's Government's
23 Exhibit 10-D3, the next page of the exhibit. I'm going to put
24 an arrow near where it says seller, do you see that?
25 A. Yes, sir.

1 Q. That's your signature, correct?
2 A. It looks like mine, yes, sir.
3 Q. Okay. So you signed this Equity Purchase Agreement
4 at some point, correct?
5 A. I may have, yes.
6 Q. All right. Well, you indicated that looks like your
7 signature, true?
8 A. Yes.
9 Q. And this -- these were signed on the second meeting,
10 is that right?
11 A. I couldn't tell you at what point they were signed.
12 Q. Well -- and I know this has been a while?
13 A. Yes, sir.
14 Q. 2003 we're talking about.
15 Does it sound correct that in December of 2003 you
16 signed documents relative to the status of your home?
17 A. It's a possibility. I couldn't -- it's been so long
18 I couldn't pinpoint a specific date for you.
19 Q. Well, the Equity Purchase Agreement shows
20 December 1st. Do you have any dispute with that fundamentally?
21 A. No, sir.
22 Q. Okay. And it indicates -- and again if we can go to
23 Government's Exhibit 10-D2, please. And if we can have this
24 section expanded, please.
25 Okay. Now this document identifies you as the seller

1 and Adam Coffman as the buyer, correct, at the very top?
2 A. Yes, sir.
3 Q. And it then goes on to state in this section: In
4 consideration of the covenants and agreements hereinafter
5 contained, seller, that's you, agrees to sell and convey to
6 buyer, that's Mr. Coffman, and buyer, Mr. Coffman agrees to
7 purchase from you, the seller, your property located at 240
8 Queen Street, correct?
9 A. That's what it reads, sir.
10 Q. And you signed this document?
11 A. Yes, sir.
12 Q. You agreed to sell your property?
13 A. No, sir. I did not.
14 Q. Well, that's what the contract says, correct?
15 A. I understand that.
16 Q. All right. And you signed it?
17 A. Yes, sir.
18 Q. And it also states that you were given $5,000 as a
19 consideration, do you recall that?
20 A. I was given $5,000, that is true.
21 Q. And beyond that, after you signed this contract to
22 sell your home on December 1st, you were allowed to stay in the
23 home, correct?
24 A. Not in the way you're presenting it, but, yes, I was.
25 Q. Well, you were allowed to stay in the home, correct?

1 A. Yes, sir.
2 Q. All right. And then if we can go to Government's
3 10-D2, please. And see the whole document. And then expand
4 this section.
5 Okay. See where it says "physical possession"?
6 A. Yes, sir.
7 Q. All right. And then it says: The title to the
8 property shall be transferred to the buyer, that's Mr. Coffman,
9 on April 10th, 2004, do you see that?
10 A. Yes, sir.
11 Q. Now this is the same Equity Purchase Agreement you
12 signed, correct?
13 A. Yes, sir.
14 Q. And it says that you could stay -- essentially stay
15 in the property until April 10th, 2004, correct?
16 A. Yes, sir.
17 Q. And then that's the move-out date, correct?
18 A. That's what's on the piece of paper.
19 Q. That's the agreement you signed?
20 A. Again, I was not under the aware (sic) that the
21 property was being sold.
22 Q. Well --
23 A. I did sign the paperwork, but I was not told that my
24 property was being sold.
25 Q. Okay. Well, you don't dispute the fact you signed

1 the Equity Purchase Agreement we're talking about, correct?
2 A. No.
3 Q. All right. Let's go to Government's 10-D. This is a
4 Notice of Cancellation, correct, that's what it says?
5 A. Yes, sir.
6 Q. And this is your signature, correct?
7 A. Yes, sir.
8 Q. And it says you signed the Equity Purchase Agreement
9 on December 1st, 2003, correct?
10 A. That's what it has.
11 Q. All right. And you had until December 6, 2003, to
12 cancel the agreement, correct?
13 A. That's what's on there, yes, sir.
14 Q. And you signed the document?
15 A. Yes, sir.
16 Q. So you had five days after you signed the contract to
17 decide you didn't want to go forward, correct?
18 A. Based on the paperwork.
19 Q. Right. Well, and you agree you signed it?
20 A. Yes, sir.
21 Q. Did you read it before you signed it?
22 A. No, sir.
23 Q. You didn't read anything?
24 A. No.
25 Q. You just signed documents?

1 A. Yes, sir.
2 Q. How close were you to foreclosure at the time you
3 talked to this unknown Hispanic male?
4 A. Honestly, sir, I don't know.
5 Q. Had you gotten several notices?
6 A. I think I had received one. I had not received
7 several.
8 Q. Did you read those?
9 A. Well, it's kind of hard not to read them.
10 Q. But you didn't read this?
11 A. No. I was under the belief of what had been
12 instructed to me. I thought we had a different agreement, so I
13 did not -- I did not sit there and go through every piece of
14 document. I wish I had.
15 Q. Was it your habit and custom to not read things
16 before you signed them?
17 A. Normally, I think when I'm under a lot of pressure
18 and I feel a sense of urgency, I don't think I sit there and
19 actually take the time to want to read it. I should. But I
20 can't go back and change that.
21 Q. But you understand that's the terms that you agreed
22 to in terms of the contract?
23 A. Yes, sir.
24 THE COURT: Mr. Tedmon, how much longer do you have?
25 MR. TEDMON: Probably another 15 minutes or so.

1 THE COURT: Okay. Let's go ahead and take a break
2 now rather than wait until the close of this cross.
3 During the break, please keep in mind my admonitions.
4 No discussion of the case amongst yourself or anyone else. No
5 research of any kind. Continue to keep an open mind. And if
6 anyone approaches you during the break, please let me know.
7 Let's a take a 15-minute break. We'll see you back here at
8 3:15. Thank you.
9 (Jury out.)
10 THE COURT: I'm telling Mr. Figueroa he may step
11 down, but he should be back in his seat at 3:15.
12 You may be seated. Quickly, can we cover the issue
13 with Ms. Graham/Ms. Speights? At least give me a heads up
14 what's going on there.
15 MR. HAYDN-MYER: Yes, Your Honor. There is a
16 settlement agreement between Ms. Speights/Graham and several of
17 the people involved in this case, including Mike Head, and I'm
18 objecting to either the settlement agreement being brought in,
19 or, basically the terms of the settlement being brought in for
20 Ms. Graham/Speights pursuant to Rule 408, compromise, offers
21 and negotiations.
22 THE COURT: This is a civil case?
24 THE COURT: Is there an exhibit number?

1 MR. ANDERSON: No, Your Honor. We haven't marked
2 that. I think Mr. Haydn-Myer is referring to testimony
3 regarding it.
4 THE COURT: All right. Do you anticipate attempting
5 to submit a written document or simply -- you do anticipate
6 eliciting testimony?
7 MR. ANDERSON: Well, it's a little tricky, Your
8 Honor. Because she fights to keep the house. She does get the
9 title back into her own name but with the equity gone.
10 So I think Mr. Haydn-Myer has a good point, and we
11 don't want to get into "they settled, therefore they admitted
12 guilt, therefore you jurors should find them guilty." That's
13 not where we want to go. What I suggest instead is that I ask
14 these questions, which are a little bit leading, and very
15 direct, and call for yes/no answers, and hopefully that will
16 satisfy the situation.
17 Essentially, were you eventually able to get the
18 title put back into your name? Was a substantial portion of
19 your equity gone when you received the title back?
20 THE COURT: If those are the only questions that
21 touch on this issue, does that resolve your concern,
22 Mr. Haydn-Myer?
23 MR. HAYDN-MYER: It does, Your Honor. I'm not
24 exactly concerned about the lawsuit that was filed. I'm just
25 concerned about the settlement resolution, and that should

1 settle all the issues.
2 THE COURT: If those are the only two questions
3 you're going to ask. Can you also advise? Any problem with
4 advising Ms. Speights, AKA Graham, that she should not
5 volunteer information about civil litigation or a settlement
6 thereof?
7 MR. ANDERSON: Yes, Your Honor. I will speak with
8 her and let her know that before we come back from the break.
9 My other part of it, though, is the Government's
10 willing to make this compromise, but, really, on the terms that
11 defense not use this as an opportunity to try and
12 mischaracterize the other way what happened, which would be the
13 defendants followed through on their promises because she got
14 her house back when that's obviously not the case.
15 So if defense counsel is willing not to, you know,
16 use the settlement against us and the fact that we can't bring
17 up the settlement, I think this is an adequate resolution.
18 THE COURT: Your proposal, Mr. Haydn-Myer, is to
19 avoid any reference to the settlement one way or the other?
20 MR. HAYDN-MYER: That's correct, Your Honor. As long
21 as Ms. Graham/Speights testifies that she did get her house
22 back, I think that would be adequate.
23 THE COURT: All right. And if any door is opened, we
24 can have this discussion again.
25 MR. ANDERSON: Right.

1 THE COURT: It sounds like you have an approach that
2 will work to address concerns. But if we need to re-visit once
3 she's testified, we can. Anything to say on this point,
4 Mr. Tedmon?
5 MR. TEDMON: Just I would join. I think Mr. Head may
6 have signed the settlement agreement as well. So I have an
7 equal interest although not as severe as Mr. Haydn-Myer.
8 THE COURT: So this applies as to each defendant?
9 MR. TEDMON: Yes.
11 THE COURT: All right. Ten-minute break.
12 (Break taken.)
13 THE COURT: We're back on the record. There is more
14 to discuss?
15 MR. TEDMON: Yes, there is.
16 MR. ANDERSON: Sorry, Your Honor. We thought we
17 solved it, but we haven't. I spoke with Ms. Graham, she'll
18 answer the two questions that I mentioned the way that we
19 suggested. But there's really more to the story than that,
20 apparently.
21 So when she got the property back, it had a much
22 bigger loan or much bigger mortgage on the property than it had
23 previously had. As a result, there was a much bigger mortgage
24 payment and a balloon payment on it. And as a result of that,
25 she eventually lost the house. And I would like to ask those

1 questions without reference to the settlement.
2 THE COURT: And you would object to that?
3 MR. TEDMON: Yes. And the reason is this --
4 THE COURT: So let me ask this, can you call Messrs.
5 Thorn and Spriggs before you call Graham?
6 MR. TEDMON: Yes.
7 THE COURT: Let's do that and talk about this at the
8 end of the day.
9 MR. TEDMON: Okay.
10 (Jury in.)
11 THE COURT: Welcome back to the courtroom, ladies and
12 gentlemen. We'll continue now with Mr. Tedmon's cross.
13 Q. BY MR. TEDMON: Thank you, Your Honor.
14 Mr. Figueroa, I want to just ask you a few more
15 questions. I would ask that the Government's 10-D4 be put on
16 the screen, please.
17 Okay. Just let me know when you get to that
18 document?
19 A. I'm ready.
20 Q. Okay. This is addendum number one to the Equity
21 Purchase Agreement, do you see that?
22 A. Yes, sir.
23 Q. And that relates to the document that I've asked you
24 some questions about, that you agreed you signed earlier?
25 A. Yes, sir.

1 Q. And at the bottom of this document there is a
2 signature. That's your signature, correct?
3 A. Yes, sir.
4 Q. All right. So you signed it?
5 A. Yes, sir.
6 Q. Did you remember reviewing this?
7 A. No, sir.
8 Q. You just signed it without looking at it, is that
9 your testimony?
10 A. I remember signing a lot of paperwork. It was a lot
11 of paperwork. I can't tell you that I specifically went
12 through every single piece of paper and read it. No, sir.
13 Q. Well, this is an addendum dated December 1st, 2003,
14 at Inglewood, California, correct?
15 A. Yes, sir.
16 Q. And your home was located at Inglewood, California,
17 correct?
18 A. Yes, sir.
19 Q. And the date of December 1st, 2003, is the same date
20 as that that shows on the Equity Purchase Agreement that I've
21 asked you questions about, correct?
22 A. Yes, sir.
23 Q. And it indicates on item number three, if we can have
24 that expanded, please, it says: Adam Coffman or his agent will
25 allow Mr. Richard Figueroa to pay rent on the property until

1 new sale is completed or October 10, 2003. Which I would
2 expect would be a typo. It should be 2004. But it says you
3 were paying rent, correct?
4 A. Yes, sir.
5 Q. Clearly states that in this addendum?
6 A. Yes, sir.
7 Q. And that's what you signed off on?
8 A. Yes, sir.
9 Q. And you were paying rent because you no longer were
10 going to own the property, that's why you were renting it,
11 correct?
12 A. That's not how I understood it.
13 Q. That's what the document says?
14 A. I understand what the document says.
15 Q. Okay. And going back to Government's Exhibit 10-D2,
16 and if we can have this section expanded, please.
17 You're aware in this Equity Purchase Agreement at
18 least you're identified as the seller, correct, we've talked
19 about that earlier?
20 A. Yes, sir. Yes. You informed me of that earlier.
21 Q. All right. And it says here, starting with the
22 sentence, "seller": Seller hereby warrants that no other
23 persons live in the premises who claim either a possessory or
24 ownership interest in said premises and that the property shall
25 be vacated by all inhabitants and keys delivered to the buyer

1 on or before April 10, 2004, (move-out date).
2 That's what it says, correct?
3 A. Yes, sir. That's what it says.
4 Q. You signed that document?
5 A. Yes, sir.
6 Q. And the agreement was you could stay there until
7 April 10th, until the sale was completed, and you had to move
8 out, that's what the document says, correct?
9 A. That's what the document says.
10 Q. So you weren't evicted; it was part of the contract
11 you signed?
12 A. Again, that's not what I was told.
13 Q. That's what the contract says, correct?
14 A. I understand what the contract says.
15 MR. TEDMON: Thank you. I have nothing further.
16 THE COURT: Mr. Haydn-Myer.
17 MR. HAYDN-MYER: No questions, Your Honor.
20 BY MR. MORRIS:
21 Q. Just briefly, Your Honor. 10-D, page one.
22 Mr. Tedmon showed you this document. Do you recall
23 signing the document?
24 MR. TEDMON: Your Honor, I didn't hear the number.
25 THE COURT: This is 10-D.

2 Q. BY MR. MORRIS: Do you recall signing this document?
3 A. No, sir. I remember signing a lot of paperwork. I
4 don't know the specifics of what I signed.
5 Q. Do you recall receiving a copy of this document?
6 A. No, sir. I don't.
7 Q. Prior to today, do you recall ever seeing this
8 document before?
9 A. No, sir.
10 Q. 10-D2.
11 MR. TEDMON: 10-D2?
12 Q. BY MR. MORRIS: Mr. Tedmon asked you about this
13 document. Do you recall seeing this document before?
14 A. I may have, sir. I can't recall.
15 Q. Do you recall receiving a copy of this document,
16 before?
17 A. No, sir.
18 Q. 10-D3.
20 Q. BY MR. MORRIS: Mr. Tedmon pointed out your signature
21 on this page of the document. Do you recall seeing this page
22 of the document before?
23 A. I may have. I mean, I just don't recall, sir.
25 A. No, sir.

1 Q. 10-D4.
2 Mr. Tedmon showed you this page of the document. Do
3 you recall signing this document?
4 A. Same. I may have. I don't recall it itself.
6 A. No, sir.
7 Q. Mr. Tedmon pointed out areas where the document
8 contains the word "seller."
9 Assuming that this is your signature, did you intend
10 to sell your house on December 1st, 2003?
11 A. No, sir.
12 Q. Did you intend to sell your house at any time between
13 December 1st, 2003 and May 2004?
14 A. No, sir.
15 Q. Did you intend to give equity to Mr. Charles Head?
16 A. No, sir.
17 Q. Did you intend to allow somebody else to be on title
18 to the house?
19 A. No, sir.
21 THE COURT: All right. Any further recross
22 Mr. Tedmon?
23 MR. TEDMON: Just very briefly, Your Honor.
24 RECROSS-EXAMINATION
25 BY MR. TEDMON:

1 Q. Can I have Government 10-B, Please.
2 This is the Notice of Cancellation, do you see that?
3 A. Yes, sir.
4 Q. Mr. Morris is much taller than I am. I'll fix the
5 microphone and put it where it should be.
6 I want to expand this box here. Can you read that
7 starting with "I/we"?
8 A. "I/we, the seller, have received two copies of this
9 Notice of Cancellation."
10 Q. And that's your signature below, correct?
11 A. Yes, sir.
12 Q. Which you've already testified is your signature?
13 A. Yes, sir.
14 Q. You're confirming by signing this -- you agreed at
15 least that you received copies of this cancellation notice,
16 that's what the document says, correct?
17 A. That's what the document says.
18 Q. You don't have any recollection of getting any,
19 though?
20 A. I have no recollection of getting it, sir.
21 Q. It doesn't mean you didn't, you just don't recall?
22 A. I don't recall even seeing it.
23 Q. Seeing what?
24 A. This document.
25 Q. Well, you have to have seen it, you signed it?

1 A. I understand that.
2 Q. You also must have seen the Equity Purchase
3 Agreement, you signed it --
4 A. I understand.
5 Q. -- correct?
6 So when you answer Mr. Morris that "I don't recall
7 seeing it," that can't be possible because you signed them,
8 correct?
9 A. I saw a lot of paperwork.
10 Q. So you did see them and you did sign them, correct?
11 A. Yes, sir.
13 THE COURT: Mr. Morris, any final redirect?
15 THE COURT: All right. Is Mr. Figueroa excused? Mr.
16 Morris?
17 MR. MORRIS: He is, Your Honor.
22 THE COURT: You are excused, sir. You may step down.
23 The Government's next witness?
24 MR. ANDERSON: The United States calls Ronald
25 Spriggs.

1 THE COURT: Any time there is a change in witnesses,
2 if you want to stand and stretch. I know we just had a break,
3 but any time you feel a need to stretch.
4 THE CLERK: Mr. Spriggs, would you come forward,
5 please. Will you stand in front of the witness stand so I
6 might take your photograph, please.
7 (Photograph of Mr. Spriggs taken by the Clerk.)
8 THE CLERK: Thank you, sir. Please step up to the
9 witness box.
12 THE WITNESS: I do.
15 THE WITNESS: Ronald Spriggs, R-o-n-a-l-d,
16 S-p-r-i-g-g-s.
17 RONALD SPRIGGS,
22 BY MR. ANDERSON:
23 Q. Good afternoon, Mr. Spriggs. What do you do for a
24 living?
25 A. I operate a printing business and sell printing.

1 Q. What type of printing?
2 A. Everything from black and white copies up to
3 sheet-fed commercial offset litho.
4 Q. Do you also sell postcards as part of that printing
5 business?
6 A. That's one of the items.
7 Q. All right. How long have you had your printing
8 business?
9 A. At the location in that area since 1988.
10 Q. And what area is that?
11 A. Irvine, California.
12 Q. What's the name of the business?
13 A. Kalen's Press.
14 Q. Are you the owner and primary employee of that
15 business?
16 A. Yes.
17 Q. Do you know a person by the name of Charles Head?
18 A. I met him back in 2004.
19 Q. I know it's been a few years, but do you see him here
20 in court today?
21 A. Yes, I do.
22 Q. Could you please identify where he's seated and an
23 article of his clothing?
24 A. A white shirt right there. (Indicating.)
25 MR. ANDERSON: Your Honor, I would ask that the

1 record reflect that the witness has identified defendant,
2 Charles Head.
3 THE COURT: The record shall so reflect.
4 Q. BY MR. ANDERSON: How did you first meet Charles
5 Head?
6 A. He drove up to my store.
7 Q. Where was your store located at that time?
8 A. Sky Park Circle by the John Wayne County Airport.
9 Q. And what year was that, approximately?
10 A. I believe March of 2004.
11 Q. What happened when Charles Head arrived?
12 A. He expressed an interest in designing a postcard and
13 printing.
14 Q. Did you agree to do a postcard and printing for him?
15 A. Yes.
16 Q. What were the nature of your discussions regarding
17 that postcard and printing initially?
18 A. Well, he was looking for a unique photograph to put
19 on his postcard.
20 Q. Did you help him locate a photograph?
21 A. Yes. At that time, I had a freelance graphic
22 designer in there that helped him find some pictures. And it
23 was a high-res picture bought over the internet, and then I did
24 some graphic design and layout.
25 Q. I would like you to look at Government's Exhibit 9-A.

1 And that's in the binder that's in front of you. It's in the
2 plastic sleeve right there. I think you may recognize it.
3 A. This? Yeah.
4 Q. If you can open that up?
5 A. Yeah.
6 Q. Do you recognize Government's Exhibit 9-A?
7 A. Yes, I do.
8 Q. How are you able to recognize it?
9 A. Because this is the file that I prepared for him.
10 Q. Prepared for Charles Head?
11 A. Yes.
12 Q. And is that -- what you're holding in your hand, 9-A,
13 is that an actually proof that you used?
14 A. Well, it's a press sheet off a Heidelberg.
15 Q. What is a press sheet off a Heidelberg?
16 A. It's offset lithography. It's a 28-by-40 press, and
17 it's a six-color press. And it's able to do the AQ on the
18 front like it is and nothing on the back. Because when it goes
19 to mailing, the indicia has to go in, and the people's names
20 and addresses through variable data, so you can't have a
21 coating on the back.
22 MR. ANDERSON: Your Honor, I would ask at this time
23 that Government's Exhibit 9-A be admitted into evidence.
24 THE COURT: Any objection, Mr. Tedmon?

3 (Government Exhibit 9-A, Kalen’s Press postcard
4 proofs, admitted into evidence.)
5 Q. BY MR. ANDERSON: Let's go ahead and publish that.
6 So on the screen is that, I guess, a smaller version
7 of the large item you have in your hand?
8 A. Yes.
9 Q. And on the front, it looks like there are multiple
10 postcards, is that correct?
11 A. Correct.
12 Q. How does it work that there are multiple postcards?
13 A. Well, usually on -- nowadays they do gang runs where
14 you buy a piece of real estate, and that's why you get a good
15 price. He had such a large order, 100,000, we decided to
16 dedicate the whole run to him for this job.
17 Q. And I notice that each of the images on the front are
18 the same, is that right?
19 A. Correct.
20 Q. Who selected that image?
21 A. Well, I prepped one image, the front and the back,
22 and then I send it to pre-press.
23 Q. I mean who chose that the card should look like this?
24 A. He did. Because it was an expensive picture.
25 Q. Now let's look at the back part of this, which is

1 Government's Exhibit 9-A, page two.
2 A. Okay. Yeah. What it was, was I think the first run
3 everybody got in on it, and then the subsequent runs everybody
4 wanted their picture on it.
5 MR. TEDMON: Objection, Your Honor. Can we have more
6 clarification on "everyone."
7 THE COURT: Well, sustained. Subject to your laying
8 more foundation.
9 Q. BY MR. ANDERSON: Now we saw on the front all the
10 pictures were the same, the ones chosen by Charles Head, but on
11 the back are there different pieces of information for the
12 different cards?
13 A. Yes. It's got each individual's separate phone
14 number.
15 Q. Let's zoom in on a few examples of these cards. We
16 need to grab a little more.
17 THE COURT: You may need to get the ELMO tee'd up for
18 better resolution.
19 MR. ANDERSON: This item is so large it may make
20 sense to pass it around to the jury, Your Honor.
21 THE COURT: Why don't you elicit more testimony.
22 Q. BY MR. ANDERSON: So on this particular item were
23 different people's names and phone numbers included for the
24 different cards?
25 A. Say again, please?

1 Q. Were there different names for each of the cards?
2 A. Yes.
3 Q. And were those all people that Charles Head said were
4 working with him?
5 A. At that time, he just gave me the information to put
6 on the various postcard runs. Everybody got the same amount so
7 if we ran -- I think the first run was 50,000, per se, then
8 everybody gets 50,000. And then if somebody wanted a 100,000,
9 we would list that name twice up. Because they just tell us
10 what the end result, and then we figure out how to lay it out.
11 Q. Okay. With this first order, do you recall what
12 happened to the order, did you actually fill the order?
13 A. Yeah. It was a good run.
14 Q. And when you filled the order, what was done with the
15 cards, do you know?
16 A. Went to bindery to cut out to get ready for the
17 mailing house.
18 Q. And what's a mailing house?
19 A. Mailing house is where the variable data is flowed in
20 with the bar code, if they have the indicia for the postage,
21 and the different names and addresses off their Excel
22 spreadsheet.
23 Q. Were all the postcards sent to same mailing house?
24 A. Yes. Well, I was given a name and address of a
25 mailing house by him, and it was drop-shipped there.

1 Q. When you say "him," you mean Charles Head?
2 A. Yes, sir.
3 Q. Following that first order, did you do any subsequent
4 orders for people related to Head Financial Services?
5 A. Yes. Each one was unique after this because they all
6 wanted a different image for their particular next run,
7 subsequent runs.
8 Q. All right. And did you do a number of different runs
9 for people related to Head Financial Services?
10 A. Yeah.
11 Q. Is that a "yes"?
12 A. Yes.
13 Q. How did you go about collecting orders?
14 A. I believe initially he said come by the office and/or
15 call or get a hold of certain people that he told me to see if
16 they wanted postcards.
17 Q. And do you recall where that office was for Head
19 A. 960 South Coast Plaza Drive. Across the street from
20 South Coast Plaza.
21 Q. Is there anything in particular you remember being in
22 that office that stood out in your mind?
23 A. Fish tank.
24 MR. TEDMON: Objection. Relevance.
25 MR. ANDERSON: Well, it's a not strictly relevant

1 right now, but it ties back in with a change in business
2 location, and a certain item that this witness recognizes shows
3 up at another location.
4 THE COURT: Well, it's overruled. You can repeat the
5 answer you gave.
6 MR. ANDERSON: You can answer the question.
7 THE WITNESS: Well, yeah, they had a 400-gallon salt
8 water fish tank in there. Right in the front office.
9 Q. BY MR. ANDERSON: I would like you to take a look at
10 Government's Exhibit 51-11.
11 Your Honor, this exhibit is covered by a stipulation.
12 A photograph taken at FCO Incorporated, 1520 Nutmeg Place,
13 Suite 210, Costa Mesa, California.
14 MR. TEDMON: Your Honor, could I inquire of counsel
15 the exhibit number again is?
16 MR. ANDERSON: 51, page 11.
17 MR. TEDMON: Okay. 51-11.
18 THE COURT: So no objection to that being admitted
19 and published, Mr. Tedmon?
23 THE COURT: All right. 51, page 11, is admitted and
24 may be published.
25 (Government Exhibit 51-11, Photos – FCO location

1 (page 11), admitted into evidence.)
2 Q. BY MR. ANDERSON: It will show up in the screen in
3 front of you. Do you recognize that tank?
4 A. Yes.
5 Q. Is there a particular reason why a fish tank would
6 stand out in your mind?
7 A. Because I'm a salt water enthusiast for fish tanks.
8 Q. As you took orders -- we can take that photograph
9 down.
10 As you took orders from people at Head Financial
11 Services, did you print additional runs of cards?
12 A. Yes, I did.
13 Q. Do you know an approximate amount of cards that you
14 produced for people associated with Head Financial Services?
15 A. If I had to guess, you know, without going through --
16 MR. TEDMON: Objection, Your Honor.
17 THE WITNESS: -- all the data --
18 THE COURT: What's the objection?
19 MR. TEDMON: He has to guess. That's not
20 appropriate. That's speculation.
22 Q. BY MR. ANDERSON: You're not allowed to guess, but
23 you can estimate if you have a reasonable estimate of a range
24 of how many?
25 A. If I had to estimate, without going through the

1 software, anywhere from a million to a million-and-a-half
2 pieces.
3 Q. I would like to show you what's been marked for
4 identification as Government's Exhibit 9-B.
5 And, Your Honor, this exhibit is admissible pursuant
6 to the stipulation of the parties that it's an authentic copy
7 of documents seized by law enforcement officers at A-1
8 Investment Management, Suite 307, 3700 Newport Boulevard,
9 Newport Beach, California, on November 16, 2006, during the
10 execution of a search warrant.
11 THE COURT: Mr. Tedmon, agree that this exhibit can
12 be admitted and published?
13 MR. TEDMON: This is 9-B?
14 MR. ANDERSON: 9-B.
15 MR. TEDMON: Can I approach counsel very quick?
16 That's fine, Your Honor, no objection.
18 MR. HAYDN-MYER: No objection.
19 THE COURT: What page of the stipulation is that on?
20 MR. ANDERSON: Your Honor, that's the stipulation
21 that was handed up to the Court today.
22 THE COURT: All right. 9-B is, without objection,
23 admitted and may be published.
24 (Government Exhibit 9-B, Kalen's Press Invoices,

1 Q. BY MR. ANDERSON: Do you recognize page one of
2 Government's Exhibit 9-B?
3 A. Yes, sir. Yes, I do.
4 Q. What is it?
5 A. It's one of my invoices from my shop.
7 A. Because it's unique. It's PrintSmith software.
8 Q. Okay. And is this just one of many invoices that you
9 produced related to Head Financial Services?
10 A. Yes.
11 Q. Let's go to Government's Exhibit 9-B, page three. Is
12 this another example of an invoice that you sent?
13 A. Yes. It's December '05. There's earlier ones. I
14 got them back as far as March '04.
15 MR. TEDMON: Objection, Your Honor. Move to strike
16 other than, yes, he recognizes the exhibit.
17 THE COURT: Sustained. The jury shall disregard the
18 answer after the word "yes."
19 Q. BY MR. ANDERSON: Do you have invoices going back
20 earlier -- did you send invoices going back earlier than
21 December?
22 MR. TEDMON: Objection. Vague as to who.
23 MR. ANDERSON: To Head Financial Services.
24 THE COURT: You may answer that question.
25 THE WITNESS: Yes. Yes.

1 Q. BY MR. ANDERSON: I'm looking at page four and then
2 also page -- well, let's do page four first.
3 Is this another example of an invoice you sent to
4 Head Financial Services?
5 A. Yes. January '05.
6 Q. Looking at page five, is this another example of an
7 invoice you sent to Head Financial Services?
8 A. Yes. The names are changing. Yes.
9 MR. ANDERSON: All right. Thank you. No further
10 questions.
14 BY MR. TEDMON:
15 Q. Good afternoon, Mr. Spriggs.
16 A. Good afternoon, sir.
17 Q. I don't have a lot of questions, but I want to just
18 clarify a few things.
19 The first exhibit the Government showed you, 9-B,
20 it's got the series of the same photographs on it. Do you
21 recall that? That was the first order -- yes, the one you have
22 in your hand?
23 MR. ANDERSON: 9-A, Mr. Tedmon.
24 MR. TEDMON: I misspoke. 9-A.
25 THE WITNESS: 9-A?

1 Q. BY MR. TEDMON: That was the first job that you did?
2 A. The initial run. Yes, sir.
3 Q. And then you understood that -- well, strike that.
4 You then had various employees of Mr. Head's come in
5 and order their own postcards, correct?
6 A. No, sir. He was the only one that ever came in my
7 shop.
8 Q. Okay. Well, let me ask it this way then. The
9 exhibits that you've testified to -- and what I'm referring to
10 specifically, let's start with 9-B, Government's 9-B, that
11 invoice is from your company, Head Financial Services, Lenny
12 Bernot. Do you see that?
13 A. Not on the screen I don't.
14 Q. Well, let's do it this way. Let's be real simple
15 about it. Put it on the screen?
16 A. It is now.
17 Q. Expand this section for you. See that right there,
18 Lenny Bernot?
19 A. Yes, sir.
20 Q. Those are for Lenny Bernot, correct, that order?
21 A. Correct.
22 Q. All right. And based on your dealings, the employees
23 were responsible for paying for their own postcards, correct?
24 A. From what I remember, yes.
25 Q. And they paid it with their own credit card, do you

1 recall that?
2 A. No, I don't. Because it would be in the software. I
3 have all the credit card numbers that were used for every job.
4 Q. But you recall that the employees paid for their own
5 cards?
6 A. I was given a number over the phone to use.
7 Q. Are you saying they did or did not pay for their own
8 Postcards? I mean each individual employee.
9 MR. ANDERSON: Objection. Calls for speculation.
10 Lack of foundation.
11 THE COURT: Overruled. You may answer. Without
12 speculating.
13 THE WITNESS: I was given credit card numbers by
14 different people, and that's how I remember getting the job
15 paid for because everything was pre-paid up front.
16 Q. BY MR. TEDMON: Okay. Let me do it this way. Do you
17 recall giving a statement about a month ago to Special Agent
18 Chris Fitzpatrick who is sitting at the table here?
19 A. Yes.
20 Q. And was that a personal meeting or was that over the
21 phone? I'm talking about the interview with Agent Fitzpatrick?
22 A. It was over the phone.
23 Q. All right. And Agent Fitzpatrick asked you about how
24 the cards were paid for, do you recall that?
25 A. Yes, I do.

1 Q. All right. And you told him that each employee paid
2 for their own cards, correct?
3 A. I believe that's correct.
4 Q. All right. Because that's what they did?
5 A. Okay.
6 Q. Do you agree with that?
7 A. Somewhat.
8 Q. Well, did they pay for their own cards or not? I'm
9 talking about each employee.
10 A. No. Because there was a husband-and-wife team, and
11 they gave me different credit cards numbers at different times.
12 Q. A husband-and-wife team?
13 A. Or, yeah, well, the two with the same last name. One
14 would give me the credit card number for the other.
15 Q. Who were the husband-and-wife team, do you recall the
16 name?
17 A. Yeah. Same last name. I just assumed it was a
18 husband and wife.
19 Q. What's the last name you're referring to?
20 A. If they are not on this run, then they're on the
21 other ones.
22 Q. Do you recall what the name of the husband and wife
23 team was?
24 A. Omar and Xochitl Sandoval.
25 Q. Omar and Xochitl Sandoval. That's the

1 husband-and-wife team?
2 A. I'm assuming it was a husband and wife.
3 Q. And one or the other would call and give you a credit
4 card number, is that your testimony?
5 A. Yes.
6 Q. Could we have Government's 9-B3 put on the screen,
7 please.
8 Now, this went to Head Financial Services, correct,
9 this invoice?
10 A. Yes.
11 Q. Okay. And this one is directed to Charles Head,
12 correct?
13 A. Yes.
14 Q. All right. And if we can go to 9-B4, this one is
15 directed to Justin Wiley, correct?
16 A. Yes.
17 Q. And then 9-B5 is directed to Josh Coffman, correct?
18 A. Yes.
19 Q. All different people, do you agree with that?
20 A. Yes.
21 Q. And each employee paid for their own cards, that's
22 your recollection, correct?
23 A. Yeah. Then, again, the credit card numbers would be
24 in the software.
25 Q. But you don't -- you don't have that information

1 before you today, the software, do you?
2 A. No, I do not.
3 Q. But you do recall that the employees paid for their
4 own cards?
5 A. As far as I know, yes.
6 MR. TEDMON: Okay. Nothing further. Thank you, Your
7 Honor.
9 MR. HAYDN-MYER: Nothing further, Your Honor. Thank
10 you.
11 THE COURT: Any redirect, Mr. Anderson?
12 MR. ANDERSON: No, Your Honor. Thank you.
13 THE COURT: All right. Is Mr. Spriggs excused?
14 MR. ANDERSON: Yes.
20 Government's next witness, and perhaps the Government attorney
21 who is not getting the witness can put this exhibit back in the
22 sleeve.
23 MR. MORRIS: Your Honor, the Government calls Will
24 Thorn.
25 THE CLERK: Come forward, Mr. Thorn. Would you stand

1 in front of the -- thank you, sir.
2 (Photograph taken of Mr. Thorn by the Clerk.)
3 THE CLERK: Do you solemnly swear to tell the truth,
4 the whole truth, and nothing but the truth, so help you God?
5 THE WITNESS: Yes, I do.
8 THE WITNESS: My name is William Thorn, spelled
9 W-i-l-l-i-a-m, T-h-o-r-n.
10 THE COURT: You may proceed.
11 WILLIAM THORN,
16 BY MR. MORRIS:
17 Q. Mr. Thorn, where do you work?
18 A. I work for a company called Postcard Mania.
19 Q. Where is that located?
20 A. Clearwater, Florida.
21 Q. What's your job title at Postcard Mania?
22 A. I am the vice president for finance and legal.
23 Q. How long have you been in that position at Postcard
24 Mania?
25 A. Since it started in 2001.

1 Q. And have you had any other positions at Postcard
2 Mania?
3 A. Well, I briefly worked for a company for a month in
4 1998 where I was doing shipping. But other than that, no.
5 Q. What type of business is Postcard Mania?
6 A. We are a direct mail marketing company.
7 Q. And what is it that you do as a direct mail -- you
8 the company do as a direct mail marketing company?
9 A. We design print advertising material like postcards,
10 brochures. What people generally call junk mail they get in
11 the mail.
12 Q. Does the company also arrange for the mailing of
13 those postcards?
14 A. Yes.
15 Q. Can you describe briefly when you say that the
16 company designs postcards, what is it that the company does to
17 design postcards, what's that process?
18 A. One, you have to know what kind of business the
19 person is in. For example, a dentist, we could get a picture
20 of somebody smiling with nice teeth, say, and then put in
21 certain words and texts that they like, to advertise what they
22 wanted to advertise, maybe a discount or something. And put it
23 all together in a format that the Post Office requires. And
24 then once we put that together, we send it to the customer for
25 their approval. Once they approve it, we then print it.

1 Q. Do any of your customers provide their own designs?
2 A. Yes. From time to time, yes.
3 Q. Can you describe the process of printing the
4 postcards?
5 A. Well, once a design is done, it's in electronic
6 format. And I do not know all the technology on this, but it
7 goes basically to another computer, which prints out a plate, a
8 printing plate, and that goes onto a printer, and runs through
9 lots of times, as many times as you need it to to print that
10 card.
11 Q. And then what is it that the company does with
12 respect to mailing of postcards?
13 A. We get a mailing list either supplied by the customer
14 or purchased from us based on their criteria, you know, who
15 they want to mail to. And we then put each address on the
16 individual cards. We package them up by zip code in the way
17 that the Post Office wants them. And we take it over to the
18 Post Office and give it to them, and they stamp they received
19 it and send it on it's way.
20 Q. Can you explain a bit more about the distinction
21 between the sources for mailing lists for those mailings?
22 A. There's certain companies in the country that
23 actually gather mailing list information, you know, how much
24 people's income is, whether they own a house, whether they
25 rent, how old they are. All this kind of information. And you

1 can go to them and buy them. We're a broker. We don't collect
2 that information ourselves. But we would go to such a company
3 with the criteria that somebody wanted and order lists for
4 them. And if they already have their own list, then they don't
5 buy a list from us. They just send us what their mailing list
6 is.
7 Q. When you say "they"?
8 A. Being the customer.
9 Q. So a customer could either supply you with a list or
10 ask you to get them a list?
11 A. Yes. Absolutely.
12 Q. Okay. I'll ask you to look in the binder in front of
13 you at the tab that's marked 8-A. And leaf through the various
14 pages there of that tab, if you could. If it's not there --
15 Can you review those?
16 A. Yeah. These are a bunch of postcards. Looks like
17 it's mainly all postcards, yes.
18 Q. Do you recognize those as being postcards that
19 Postcard Mania would have manufactured?
20 A. Yes.
21 Q. How do you recognize them as such?
22 A. One is -- although I'm not a designer, I get to see
23 postcards that are made, and I recognize this as some of the
24 pictures we use. But also on each postcard it has our account
25 with the Post Office, which only we're allowed to use. So we

1 would have printed these cards.
2 Q. And have you reviewed Postcard Mania's records with
3 respect to the postcards that you have in front of you?
4 A. I'm sorry?
5 Q. Have you reviewed the records that Postcard Mania
6 retains with respect to the postcards that you're looking at?
7 A. Yes.
8 Q. And have you previously -- have you compared the
9 postcards in front of you with those business records that you
10 had previously reviewed?
11 A. Yes, I have.
12 Q. And are those postcards in front of you accurate
13 depictions of the business records that Postcard Mania
14 maintains?
15 A. Yes. These are copies of postcards that we have
16 printed for our customers.
17 Q. And the business records that I'm referring to are
18 they made by Postcard Mania in the ordinary course of its
19 business?
20 A. Yes.
21 Q. And are they made by somebody at or near the time
22 that they would reflect information contained on the cards?
23 A. Yeah. All our records are kept internally. And
24 whoever is doing the job, that aspect of the job, does the
25 paperwork right there and then.

1 Q. Is it a regular practice for Postcard Mania to
2 maintain these records?
3 A. Yes.
4 Q. Why do you maintain these records?
5 A. Well, sometimes we would just go back to see what
6 kind of a design we did for somebody in the past. So we go
7 back to the old job we did. Or just to find out what happened
8 on the job for whatever reason. Sometimes, honestly, people
9 use credit cards when they work with us, and they call the
10 credit card company and say they never ordered this job or
11 something strange. And we have to put together the records to
12 demonstrate to the credit card company they did in fact order
13 this. So we have to keep accurate records in that regard.
14 MR. MORRIS: Your Honor, Government moves to admit
15 Exhibit 8-A as a business record.
16 THE COURT: Mr. Tedmon, any objection?
17 MR. TEDMON: No.
20 THE COURT: This is 39 pages?
21 MR. MORRIS: It is, Your Honor. The actual official
22 exhibit is the original. What is in our binders is
23 photocopies.
24 THE COURT: So 8-A is admitted in full.
25 (Government Exhibit 8-A, Postcard Mania mailings,

2 Q. BY MR. MORRIS: And if we could pick 8-A11, please.
3 And I have a copy on the screen in front of you.
4 A. Oh, yeah.
5 Q. I put an arrow there. Could you explain the
6 significance of that section of --
7 A. That box?
8 Q. Yes.
9 A. Yes. That is called an indicia. That's a post
10 office term, I suppose. It is printed on the card normally
11 where somebody would place a postal stamp to show that it's
12 paid for. And that is our identification with our name on it.
13 That means we use our account when we mail those cards. We
14 have to mail those cards from our office in Clearwater,
15 Florida. We can't take them to a post office say in
16 Sacramento, for instance, because they won't accept it, and
17 they would call and complain and you know.
18 Q. And as you discussed the process that the business
19 uses to print these, who provides the information that's
20 printed on these cards?
21 A. Well, basically it's a collaboration between us and
22 the customer. You know, we may make suggestions, try to say
23 this kind of line, or they may say we want to say this. It's a
24 collaboration. Ultimately it's approved by the customer, but
25 we certainly add marketing ideas and what have you.

1 Q. If you'd turn to tab 8-B in the binder in front of
2 you, please.
3 A. Okay.
4 Q. And there's three pages there. If you could review
5 all three pages of that.
6 A. Okay.
7 Q. Do you recognize these three pages?
8 A. Yes, I do.
9 Q. Are these true and accurate copies of business
10 records maintained by Postcard Mania?
11 A. Yes, they are. They are our records.
12 Q. In the course of keeping those business records, are
13 they kept in the ordinary course of business for Postcard
14 Mania?
15 A. Yes. We keep these kind of records for each of our
16 customers.
17 Q. And are they made at or near the time of what is
18 recorded on them by somebody with knowledge of what's recorded
19 on that form?
20 A. Yes.
21 Q. Is it a regular practice of Postcard Mania to
22 maintain these records?
23 A. Yes, it is.
24 MR. MORRIS: Your Honor, the Government would move to
25 admit Exhibit 8-B.

5 THE COURT: 8-B is admitted. That's three pages.
6 MR. MORRIS: It is, Your Honor.
7 (Government Exhibit 8-B, Postcard Mania mail
8 schedule, admitted into evidence.)
9 Q. BY MR. MORRIS: I'll have you look at page two, if
10 you would.
11 A. Page two?
12 Q. Yes.
13 A. Oh, of that section.
14 Q. Exactly. Try to zoom a bit. But looking at that
15 and/or the one in front of you, can you describe what it is
16 that this page is?
17 A. This is a form we use, and it's usually filled out by
18 the customers. Sometimes we do it over the phone for them and
19 have them sign off on it.
20 But it basically details how they want the mailing to
21 go, like what schedule, do they want the address to go to just
22 whoever the current resident is, or do they want the actual
23 name of the person. You know, first class mail, standard mail.
24 One is faster than the other. Those kind of things are
25 compiled on this so we mail it the way they want it to be

1 mailed.
2 Q. So this form has both printed aspects and looks like
3 handwritten portions of it?
4 A. Right.
5 Q. How is the handwritten part normally put into this
6 form?
7 A. The majority of time it's given to the customer.
8 They fill it out and they send it back to us. Sign it off and
9 send it back to us. Sometimes if they have a little difficulty
10 with it, we'll walk them through it and fill it out for them,
11 then send it to them, and they'll sign it and send it back.
12 Q. So your basic form would be the blank printed part?
13 A. Yes.
14 Q. And if you could look to the third page, please.
15 A. Okay.
16 Q. What is this document?
17 A. This is not one of our documents. This was sent to
18 us by Charles Head as a schedule for when he wanted certain
19 cards to be mailed.
20 Q. So this is generated by somebody outside Postcard
21 Mania?
22 A. Yes.
23 Q. Why does Postcard Mania maintain this in its business
24 records?
25 A. Well, it's specifically when he wants it mailed.

1 Basically looks like he didn't have enough room on the form to
2 put this detail, so he added this page. And it says what days
3 he wanted which cards to go out and how many.
4 Q. Okay. And if you could go to the first page?
5 A. Uh-huh.
6 Q. And what's the significance of this record in your
7 business records?
8 A. This, again, was not originated by us. This looks
9 like it came from Mr. Head. And, again, it's a schedule of
10 cards going out and when he wants them to go out.
11 Q. Okay. And based on your records, why is this top
12 part that I've zoomed in -- what's the significance of this
13 part of the document?
14 A. Foreclosure postcards. That's just the name of the
15 postcards. They have on the postcards.
16 Yeah, it looks like they had printed on them a
17 reference number, as you can see, and then he used that
18 reference number to tell us which cards he wanted to go out and
19 how many on which date.
20 Q. And what's the significance of that reference number
21 to you?
22 A. Doesn't mean anything to me. It seemed like it was
23 just a reference number that they came up with themselves for
24 their own purposes.
25 Q. If you could compare -- I'm going to have you look at

1 another page in a second -- but look at the category April 8th,
2 2004 cards with a reference number 1015 there?
3 A. Uh-huh.
4 Q. And if you could flip to the next page, please. And
5 does that refresh your recollection of the relationship between
6 the page you just looked at --
7 A. Yes. And his handwritten -- yes. That's right.
8 Refers our original document plus what he added. They combine
9 each other.
12 THE COURT: Mr. Tedmon, any cross-exam?
13 MR. TEDMON: Just some.
15 BY MR. TEDMON:
16 Q. Good afternoon, Mr. Thorn.
17 A. Afternoon, sir.
18 Q. The testimony you've given today regarding Head
19 Financial Services, you weren't the individual that actually
20 dealt with Head Financial Services for these orders, correct?
21 A. No not directly.
22 Q. Do you know who did?
23 A. A girl named Angela May and Mandy Day.
24 Q. Mandy Day, D-a-y?
25 A. Yeah. Her name changed through the years. Her first

1 name is Mandy. I can tell you that part.
2 Q. So your testimony is based on just your review of
3 documents, not any personal interaction, correct?
4 A. I would say so. When going through the documents, I
5 did notice -- because I'm the accounting guy -- where I stamped
6 invoices that were paid, and I hand wrote that in. But that
7 was my only involvement with the documents. I did not talk
8 directly with him or work out the documents otherwise.
9 Q. So in terms of the content of the postcards, you
10 weren't involved in that discussion at all?
11 A. No.
12 Q. Now is it fair to say that your company is a
13 marketing type of company?
14 A. Marketing and printing, yes.
15 Q. And it's not unusual, is it, that a customer would
16 ask for a large number of runs of postcards to be mailed out;
17 that's pretty normal, isn't it?
18 A. Yes. That's not unusual.
19 Q. And you indicated earlier, for lack of a better term,
20 it's kind of the junk mail we all get, right?
21 A. Yeah.
22 Q. I don't want to call it the junk mail guy, but we all
23 get that stuff, correct?
24 A. Well, don't tell my owner I said that.
25 Q. I won't. I promise. You've been there a long time?

1 A. Yeah.
2 Q. But it's fair to say that when the stuff is mailed
3 out, most people throw it away?
4 A. I would say. I don't know. Honestly, I couldn't
5 tell you a percentage or something like that. But obviously
6 not everybody throws it away because it generates business.
7 Q. Based on your experience in this industry, the reason
8 that there is a large volume of documents that go out is
9 because a lot of them either fall on deaf ears or they are
10 thrown out, correct, you know that as a marketing guy?
11 A. Yeah, you know a certain percentage are not going to
12 be replied to. Absolutely.
16 THE COURT: Any redirect?
17 MR. MORRIS: No, Your Honor.
18 THE COURT: All right. Is Mr. Thorn excused?
19 MR. MORRIS: Yes, Your Honor.
24 THE COURT: You are excused. You may step down.
25 Can we at least start with the next witness?

1 MR. ANDERSON: Yes, Your Honor. The United States
2 calls Pamela Graham.
3 THE CLERK: Ms. Graham, would you come forward,
4 please. Stand in front of witness box so I may take your
5 photograph.
6 (Photograph of Ms. Graham taken by the Clerk.)
12 THE WITNESS: Pamela Graham, P-a-m-e-l-a,
13 G-r-a-h-a-m.
15 PAMELA GRAHAM,
20 BY MR. ANDERSON:
21 Q. Good afternoon, Ms. Graham.
23 Q. Are you familiar with the property 1929 West 65th
24 Street, Los Angeles, California?
25 A. Yes, I am.

1 Q. How are you familiar with it?
2 A. That was my home.
3 Q. What type of property is it?
4 A. Single-story home.
5 Q. How long had you lived there for?
6 A. I believe like maybe eight years.
7 Q. From approximately when to when?
8 A. I believe it was from 2000 to 2008. I'm not sure.
9 Q. In 2004, did you become interested in refinancing
10 your mortgage?
11 A. Yes, I did.
12 Q. Why was that?
13 A. Because I was in the middle of a divorce, and I was
14 trying to lower my payments down so I can afford it.
15 Q. Did you receive a postcard offer in the mail?
16 A. Yes, I did.
17 Q. Who was that from?
18 A. From Head Financial Enterprise.
19 Q. Did you do anything in response to that postcard?
20 A. I called the number that was on the card.
21 Q. Do you recall who you spoke to, if anyone?
22 A. I think it was a secretary, but I'm not for sure.
23 Q. Okay.
24 A. I can't really say.
25 Q. And what did you say?

1 A. I was looking to refinance my home to lower my
2 payments down.
3 Q. Now as a result of that call, did you get a phone
4 call back from somebody?
5 A. Yes, I did.
6 Q. Who did you get a call back from?
7 A. I believe it was Jeremy Head.
8 Q. Okay. Did he go by another name?
9 A. I think it was Michael Head. I'm not sure.
10 Q. What did you discuss on the phone with Jeremy Head?
11 A. I believe I told him I was trying to refinance to
12 make my payments lower. And I had just had a divorce so I was
13 trying to make my payments a little bit lower so I can afford
14 it.
15 Q. Did Jeremy Head tell you anything in response to
16 that?
17 A. He said he would work with me.
18 Q. Did you have any follow-up conversation about what
19 the term of the refinance would be?
20 A. A little bit we did. We talked about how much the
21 payments might be and how much they could lower it down some.
22 Q. What did he tell you?
23 A. Looking at maybe like 1200. I'm not sure.
24 Q. Was there a follow-up meeting?
25 A. Yes.

1 Q. Do you recall approximately when that was?
2 A. That was like after I talked to him on the phone to
3 approve me and then he came by the house.
4 Q. And when you say came by the house, was that came by
5 your house on West 65th Street?
6 A. Yes, sir.
7 Q. Did Jeremy Head come alone or was he with someone
8 else?
9 A. He came with a young woman.
10 Q. Do you recall the young woman's name?
11 A. I believe it was Cindy, if I'm not mistaken.
12 Q. Did you sit down and speak with them?
13 A. Yes, I did.
14 Q. Were both Jeremy Head and the woman present at the
15 same time?
16 A. Yes.
17 Q. Did you talk to them about your divorce and tell them
18 what was going on with your personal situation?
19 A. Yes, I did.
20 MR. HAYDN-MYER: Objection. Relevance.
22 Q. BY MR. ANDERSON: Did they discuss the terms of the
23 -- the proposed refinance with you?
24 A. Yes.
25 MR. HAYDN-MYER: Objection. Vague as to "they."

2 Q. BY MR. ANDERSON: During that meeting -- and this is
3 a yes-or-no question. I'll have a follow-up question.
4 During that meeting, were the terms of a refinance
5 discussed?
6 A. Yes.
7 Q. Okay. Who did most of the talking between Jeremy
8 Head and the woman?
9 A. Jeremy did.
10 Q. Did the woman ever contradict Jeremy Head?
11 A. No.
12 Q. What did Jeremy Michael Head tell you?
13 A. That he could refinance my home without a problem,
14 and I was pre-approved for it as well.
15 Q. Based on your discussion regarding refinancing your
16 home, did you believe that you would be removed from title to
17 your home?
18 A. No.
19 Q. Did you believe that anyone else would be added to
20 title with you?
21 A. No.
22 Q. Did you believe that the equity would remain in your
23 house except for -- that's a leading question.
24 Did you discuss any -- made my own objection.
25 Did you discuss anything about any equity coming out

1 of the home and coming to you?
2 A. No, we didn't.
3 Q. Did you discuss something about $2,500?
4 MR. HAYDN-MYER: Objection. Leading.
5 MR. ANDERSON: Well --
7 Q. BY MR. ANDERSON: Was there discussion about money
8 from the home?
10 THE COURT: That's overruled. Just to move this
11 along. Answer the question and then wait for the next
12 question.
14 Q. BY MR. ANDERSON: What was your understanding about
15 money from the home?
16 A. That the equity would stay in there, and they would
17 get their portion, and then that would be it.
18 Q. Okay. So based on your discussion regarding the
19 refinance, did you have any additional discussion with Jeremy
20 Michael Head about how his company would receive its payment?
21 A. Just through escrow and for them signing all the
22 papers. And that was it.
23 Q. All right. Now were you given any documents to sign
24 at this meeting?
25 A. Yes, they did.

1 Q. Were there any of them that gave you pause as you
2 were reviewing the documents?
3 A. Yes.
4 Q. What gave you pause?
5 A. The top of the document. It said lease and seller, I
6 believe, on the side. Rental lease.
7 Q. When you saw the document that said lease on the top
8 of it and seller on the side, what did you do?
9 A. I questioned him about it.
10 Q. When you say "him," you mean Jeremy Head?
11 A. Yes.
12 Q. And what did Jeremy Head say to you in response?
13 A. He said that's the papers that they had. That's what
14 they work with. Those documents.
15 Q. Did he explain them at all to you?
16 A. No. He just kept saying that's the documents that
17 they work with. That's the ones that they use.
18 Q. Did you ask him if you should be worried about that?
19 A. I did. But he said everything was fine.
20 Q. Did he say anything about changing those documents?
21 A. No.
22 Q. Now based on that conversation with him, did you get
23 an understanding as to whether or not you were selling your
24 house?
25 A. No. I didn't think I was selling my home.

1 Q. After signing documents, did you get copies of those
2 documents?
3 A. Later on I did.
4 Q. So initially did you have copies of the documents?
5 A. No.
6 Q. So at this point you signed the documents. What
7 happens next with your involvement with Jeremy Head?
8 A. After that, he took the documents -- because I was
9 questioning him because some of the stuff wasn't filled out.
10 And he told me don't worry about it. Everything was fine. And
11 that he'll mail me the documents. But I never got them until
12 like later on.
13 Q. Did you call to follow up?
14 A. Yes, I did.
15 Q. What did you call to follow-up about?
16 A. Because I started receiving stuff in the mail with
17 another person's name like someone had just moved in. And then
18 I questioned him about that, and he said everything was fine.
19 Q. And again when you say "he," you're still referring
20 to Jeremy Head?
21 A. Yes, sir.
22 Q. When he said everything was fine, did he say anything
23 about selling your house?
24 A. No.

1 THE COURT: Sustained. Mr. Anderson --
2 MR. ANDERSON: It's a closed question.
3 MR. HAYDN-MYER: Move to strike.
4 THE COURT: That motion is granted. Open-ended
5 questions.
6 Q. BY MR. ANDERSON: What about when you called him, did
7 you call him --
8 All right. So you had mentioned that there was
9 something that arrived in the mail?
10 A. Yes.
11 Q. All right. What arrived in the mail?
12 A. It was like, you know, how when you get ready to
13 move, and you have a postcard about you moving to a new
14 address. Or I got letters like that that came in like
15 Pennysavers and "welcome to your new home." And it had like a
16 Marrisa Page on there.
17 Q. First of all, did you know anyone by the name of
18 Marrisa Page?
19 A. Never met her.
20 Q. Had you ever heard the name before you started
21 getting those?
22 A. Never.
23 Q. Did those concern you that you were receiving them?
24 A. Yes.
25 Q. What did you do once you started receiving that and

1 became concerned?
2 A. I started calling the company to find out who was
3 Marrisa Page.
4 Q. Who did you call at the company?
5 A. Jeremy Michael Head.
6 Q. First of all, were you able to reach him ever?
7 A. No.
8 Q. Did you leave messages?
9 A. Yes.
10 Q. Were you able it get any calls back?
11 A. No.
12 Q. Did you eventually get ahold of Jeremy Michael Head
13 and speak to him about Marrisa Page?
14 A. I believe I spoke with his brother, but I didn't
15 speak -- which is Charles Head. I didn't speak to Jeremy
16 Michael Head.
17 Q. Well, first of all, why do you think I spoke with
18 Charles Head?
19 A. Because he said his name was Charles Head.
20 Q. What was the nature of conversation?
21 A. I told him that I kept getting flyers in the mail
22 saying a Marrisa Page, and I didn't know who she was. And he
23 kept telling me everything was fine. The same thing. Kept
24 telling me what Jeremy Michael Head was saying. He kept saying
25 everything was fine.

1 Q. And during this time were you making payments?
2 A. Yes, I was.
3 Q. All right. What sort of payments did you think you
4 were making?
5 A. I thought I was making them to the mortgage company,
6 to them.
7 Q. Okay. And was the company that you were writing the
8 checks to Financial Enterprises?
9 A. Yes.
10 Q. Did you eventually see a grant deed?
11 A. Yes.
12 Q. All right. Would you tell us about how you first saw
13 the grant deed?
14 A. Eventually I got -- I kept getting stuff in the mail
15 for Marrisa Page, and then a document came recorded from the
16 county's office, and it said grant deed.
17 Q. Did you know what a grant deed was?
18 A. Yes.
19 Q. Okay. And what about that grant deed caught your
20 attention?
21 A. When I saw the front of it, it said Marrisa Page.
22 And then it had a little flap on there, and I opened it up, and
23 it had "property, Marrisa Page."
24 Q. At that point what was your reaction?
25 A. I was upset.

1 Q. What did you do next?
2 A. Start crying for a long time. Start calling --
3 eventually I start calling -- I think it was Coldwell Banker to
4 find out if my property was transferred over, and then they
5 told me that it was.
6 Q. Okay. I'm going to show you some documents.
7 Your Honor, I would ask that Government's
8 Exhibit 15-B be admitted, pursuant to the stipulation, as
9 escrow records?
10 THE COURT: All right. The entire series of 15?
11 MR. ANDERSON: Let's start with 15-B, Your Honor.
12 THE COURT: Any objection to that being admitted and
13 published, Mr. Tedmon?
17 THE COURT: All right. 15-B is admitted.
18 (Government Exhibit 15-B, 1929 West 65th Street, Los
19 Angeles – Escrow File, admitted into evidence.)
20 MR. ANDERSON: I would like to go to page three.
21 THE COURT: We have five minutes left today, so you
22 can cover as much as you can in that time.
23 Q. BY MR. ANDERSON: Okay.
24 Do you recognize this document entitled Wire
25 Instructions and Authorization?

1 A. No.
2 Q. Before your involvement speaking with the agents and
3 me regarding this case, do you recall seeing this document
4 before?
5 A. Never seen it.
6 Q. There is a signature above the name Pamela Speights.
7 Do you recognize that signature?
8 A. No.
9 Q. And we should clarify. Your name is Pamela Graham
10 now. Did you have another name you went by before?
11 A. No, just Pamela Graham. Pamela Speights was my
12 married name.
13 Q. So back in 2004 were you going by Pamela Speights?
14 A. Yes.
15 Q. Is that signature of Pamela Speights your signature?
16 A. No.
17 MR. ANDERSON: Your Honor, I would like at this time
18 to ask that Government's Exhibit 15-D be admitted as documents
19 found during search warrant at FCO Incorporated, 1520 Nutmeg
20 Place, Suite 210, Costa Mesa, California, and A-1 Investment
21 Management, Suite 307, 3700 Newport Boulevard, Newport Beach,
22 California.
23 THE COURT: Any objections to this being admitted,
24 Mr. Tedmon?

3 THE COURT: All right. 15-D is admitted.
4 (Government Exhibit 15-D, 1929 West 65th Street, Los
5 Angeles – Search Warrant Documents, admitted into evidence.)
6 Q. BY MR. ANDERSON: And if we could pull up the
7 previous document. We'll go split screen on this. 15-B, page
8 three. Zoom in on the top portion of each.
9 Now these two documents, do they appear to be the
10 same document except that on the 15-D, the search warrant
11 document --
12 MR. HAYDN-MYER: Objection. Leading. Relevance.
13 THE COURT: Sustained as to leading.
14 Q. BY MR. ANDERSON: What's the difference between these
15 two documents?
17 THE COURT: Sustained. The documents speak for
18 themselves. What's the question for this witness?
19 Q. BY MR. ANDERSON: Let's zoom out on 15-D. We'll look
20 at the bottom.
21 Do you see the notary stamp on the bottom?
22 A. Yes.
23 Q. Do you recognize that name in the notary stamp, Cindy
24 Gastelum?
25 A. Yes.

1 Q. How do you recognize that name?
2 A. I believe she was the young lady that came with
3 Jeremy.
4 Q. Okay. Let's look at 15-D, page two. Just 15-D, page
5 two. There is another document that has a signature on it. Do
6 you see the signature on 15-D, page two, above the word
7 "affiant"?
8 A. Yes.
9 Q. Do you recognize that signature?
10 A. No.
11 Q. Is that your signature?
12 A. No.
13 Q. Go to 15-D, page three. If we look at the bottom
14 right.
15 THE COURT: This will be the last series of questions
16 related to this exhibit, Mr. Anderson, for today.
17 Q. BY MR. ANDERSON: There are tenant's initials and
18 then there are two initials. Do you see that on that page?
19 A. Yes.
20 Q. Are those your initials?
21 A. No.
22 MR. ANDERSON: That was the final question.
23 THE COURT: We have come to 4:30, so that's the close
24 of business for today.
25 Ladies and gentlemen of the jury, as we leave for the

1 evening, please remember my admonitions. Especially important
2 over evening breaks. Don't discuss the case with anyone,
3 including family members or friends. Do not do any research of
4 any kind, consult the dictionary for definitions, go on the
5 internet. Don't discuss the case on your Facebook account, if
6 you have one. If anyone attempts to contact you about the case
7 in any way whatsoever, please let me know first thing tomorrow.
8 Tomorrow we will have our schedule go from 8:30 to
9 1:30 with the two short breaks. So if you could please be
10 ready to go so that we can start right on time at 8:30. We
11 will see you then. Have a good evening. Thank you very much.
12 THE COURT: Ms. Graham, you may step down, but you
13 should be ready to go at 8:30 in the morning, and you can take
14 your seat at that time.
16 (Jury out.)
17 THE COURT: All right. We'll have a brief
18 housekeeping session. You may be seated. So two issues on the
19 Court's agenda. Witnesses lined up for tomorrow? So I can
20 just be aware of who they are. And then follow-up on the issue
21 with Ms. Graham. Is there anything else we need to discuss
22 this evening yet?
23 MR. TEDMON: No, that's it.
25 THE COURT: All right. Maybe we can start with

1 Ms. Graham. So there was the additional issue as to what she
2 would testify that she got the house back but with added debt,
3 is that what I heard?
4 MR. TEDMON: Yeah. But there's some additional
5 information I think Mr. Anderson wanted to try to incorporate.
6 MR. ANDERSON: She got the property back heavily
7 encumbered and ended up losing it as a result of the much
8 higher mortgage payments that were on the home when she got it
9 back, after the equity had been taken out.
10 THE COURT: All right. So without reference to the
11 settlement agreement, you're taking the lead on this one,
12 Mr. Haydn-Myer?
14 THE COURT: What's the problem that additional
15 information coming in?
16 MR. HAYDN-MYER: Because it's two separate
17 transactions. After the settlement agreement occurred, there
18 were different conditions that were actually written into the
19 settlement agreement.
20 So our position is that she already received income
21 from the settlement agreement. It makes it look as if it was a
22 continuous transaction when it fact it wasn't.
23 THE COURT: Mr. Tedmon, anything to add to that?
24 MR. TEDMON: The only thing I would add, Your Honor,
25 is the Government's attempting to bootstrap this independent

1 transaction, which is the settlement, into the cause of this
2 witness losing her home. And I think that's disconnected and
3 shouldn't be allowed.
4 THE COURT: Mr. Anderson?
5 MR. ANDERSON: Well, it's not bootstrapping. It's
6 not really a separate transaction. They encumbered the
7 property and gave her back heavily-encumbered property.
8 They're directly the but-for cause -- I would say the
9 proximate cause of what happened. It's not settlement that
10 caused this situation. It was that her choice was to get back
11 a heavily-encumbered property or to have no property.
12 THE COURT: How extensive is the settlement
13 agreement? Someone does have a copy of that here?
14 MR. ANDERSON: I think Mr. Haydn-Myer does. We
15 didn't bring it. We're not intending to use it.
16 THE COURT: I understand that.
17 MR. HAYDN-MYER: Your Honor, I have -- it actually
18 was produced in the Government's discovery, but it's not an
19 official court signed document. It just has the signatures of
20 Mr. Charles Head on it. But the document itself is, with
21 signature pages, 11 -- I'm sorry -- with signature lines,
22 11 pages.
23 THE COURT: All right. I think I'll take a look at
24 that overnight. That may give me some additional information,
25 and we can meet at 8:25, and I will let you know how we will

1 resolve this.
2 Ms. Streeter can make a copy if that is the only copy
3 you have, Mr. Haydn-Myer.
4 MR. HAYDN-MYER: It is, Your Honor. And should I
5 just mark it as Defense Exhibit Jeremy Michael Head A for the
6 Court record?
7 THE COURT: That's fine.
8 (Defendants' Exhibit A, Settlement Agreement re
9 Pamela Graham/Speights, marked for identification.)
10 MR. ANDERSON: Your Honor, all I'd ask for is we have
11 a minute or two, maybe a little bit more, after the Court makes
12 its ruling, so I can talk to Ms. Graham and make sure she's
13 aware of the parameters of the Court's ruling.
14 THE COURT: Let's say 8:20. We will meet at 8:20.
15 So the witnesses after Ms. Graham, who is lined up for
16 tomorrow?
17 MR. ANDERSON: Omar Sandoval, Kou Yang, Elizabeth
18 Huerta, Mary Salazar, Don Daley. That should be more than
19 enough to get us through tomorrow, I would think.
20 THE COURT: Elizabeth Huerta, is that what you said?
21 MR. ANDERSON: Yes, Your Honor. She has changed her
22 name. It's Elizabeth Russell.
23 THE COURT: All right. Are some of these witnesses
24 covered by the defense's Fifth Amendment motion?
25 MR. ANDERSON: Ms. Russell/Huerta is, Your Honor.

1 MR. TEDMON: Yes.
2 THE COURT: All right. Anything else to say about
3 that lineup of witnesses, Mr. Tedmon?
4 MR. TEDMON: No. I think Sandoval, Yang, Russell
5 will be rather lengthy. I think Donald Daley is an IRS agent.
6 MR. ANDERSON: He is, Your Honor.
7 I'm sorry. There was one other who is a potential
8 witness for tomorrow. Nickadia Daniels. He is a victim.
9 MR. TEDMON: And that's another homeowner. So that
10 might be lengthy as well.
11 MR. HAYDN-MYER: Just to clarify, Daley -- we have a
12 report from him that's only four pages. That was the
13 observations of Charles Head. Or are we thinking of something
14 different?
15 MR. ANDERSON: He did observations, but he also was a
16 finder at one of the search warrant locations, and there are
17 probably -- I know there are records related to that as far as
18 being a finder. I think we may not call him, but it's a
19 possibility.
20 THE COURT: And just so I'm clear, I'm assuming the
21 parties' stipulations remove a number of people from the
22 Government's list, all the custodians of records?
23 MR. ANDERSON: Yes, Your Honor. It looks like all of
24 them will not be needed.
25 THE COURT: That includes the recorder's office

1 representative?
2 MR. ANDERSON: No. I'm sorry. That's not entirely
3 true. We do have two recorders who are lined up from counties
4 within the district who can explain documents related to the
5 charged mail fraud counts. Just because it's a little
6 confusing to understand them without somebody with knowledge to
7 explain.
8 And then Nora Rivas from Castlehead Escrow is a
9 potential witness, but it wouldn't necessarily be as a
10 custodian of record. It would be because of her dealings with
11 Head Financial Services.
12 THE COURT: But custodians from B of A, Citibank,
13 Wells Fargo, J.P. Morgan, no need for them?
14 MR. ANDERSON: Correct.
15 THE COURT: All right. If there's nothing further,
16 I'll see you tomorrow morning at 8:20. I'll wait to get that
17 before you all leave. All right. See you tomorrow.
19
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25

1 CERTIFICATION

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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
VOLUME 3
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
THURSDAY, MAY 9, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
17
18
19
20
21
22
23
24
25

1 I N D E X
3 PAMELA GRAHAM
DIRECT EXAMINATION BY MR. ANDERSON (CONT'D) 169
4 CROSS-EXAMINATION BY MR. HAYDN-MYER 173
REDIRECT EXAMINATION BY MR. ANDERSON 190
5
OMAR SANDOVAL
6 DIRECT EXAMINATION BY MR. ANDERSON 193
CROSS-EXAMINATION BY MR. TEDMON 268
7 REDIRECT EXAMINATION BY MR. ANDERSON 288
RECROSS-EXAMINATION BY MR. TEDMON 295
8
MARY SALAZAR
9 DIRECT EXAMINATION BY MR. MORRIS 302
FURTHER REDIRECT EXAMINATION BY MR. MORRIS 331
11
ELIZABETH RUSSELL
13
14
15
16
17
18
19
20
21
22
23
24
25

1
DEFENSE EXHIBITS MARKED FOR IDENTIFICATION
2 No. Description Page
3 JMH-B Check #1074 for $3,500.00, payable to 177

Pamela Speights
4 JMH-C Check #688 for $1,274.00, payable to 186
Financial Enterprises
5 JMH-D Check to Financial Enterprises with note on 187
the top of it which says "for February
6 payment"
JMH-E Letter from Mary Salazar, dated 5-14-05 323
7
8
GOVERNMENT EXHIBITS RECEIVED IN EVIDENCE
10 22-A 633 Hudson Lane, Modesto - Loan File 219

19-A 3646 Milton Way, North Highlands - Loan 224
11 File
20-A 1161 Saratoga Way, Tracy - Loan File 225
12 31-A 1606 Silvercup Court, Redlands, CA - 227
Residential Loan Applications
13 31-B 4005 W. Sunswept, Santa Ana, CA - 229
Residential Loan Application
14 31-C 718 Mendell Street, San Francisco, 230
California - Residential Loan Applications
15 40-B Email from Kou Yang - FW: Straw Buyer, 239
dated 3/8/2005
16 40-M Email from Kou Yang - dated 7/11/2005, 241
40-D Email from Charles Head - Re: Thanks, 244
17 dated 5/26/05
17-A 9311 Monte Visa Street, Rancho Cucamonga - 253
18 Loan File
36-A 16309 Windcrest Drive, Fontana, CA - 254
19 Residential Loan Applications
36-B 1612 East Poppy Street, Long Beach, CA - 255
20 Residential Loan Application
40-N Email from Kou Yang - FW: LeadBull.com VIP 258
21 Accounts Info, dated 10/25/04
45-E Script 263
22 20-C 1161 Saratoga Way, Trace - Related Bank 291
Records
23
24
25


2
3 13-A 823 West San Joaquin Avenue, Tulare – Loan 310

File
4 13-B 823 West San Joaquin Avenue, Tulare – 310
Escrow File
5 13-C 823 West San Joaquin Avenue, Tulare – 310
13-E Related Bank Records
6 823 West San Joaquin Avenue, Tulare – 310
Mailings and Other (Count 3 and Count 4)
19-B5 3646 Milton Way, North Highlands – Escrow 348
8 File (pages 1-5 only)
19-C 3646 Milton Way, North Highlands – Related 350
9 Bank Records
10
11 DEFENSE EXHIBITS RECEIVED IN EVIDENCE

12
JMH-B Check #1074 for $3,500.00, payable to 179
13 Pamela Speights
CH-K6 "Affidavit Of Deed" re: 1929 West 65th 181
14 Street, Los Angeles
JMH-C Check #688 for $1,274.00, payable to 189
15 Financial Enterprise
JMH-E Letter from Mary Salazar, dated 5-14-05, 324
16 CH-B1 “Equity Purchase Agreement” re: 823 West 326
San Joaquin Avenue, Tulare
17 CH-B3 "Residential Lease After Sale" re: 823 331
West San Joaquin Avenue, Tulare
18 CH-B2 "Option Agreement" re: 823 West San Joaquin 357
Avenue, Tulare
19 CH-B6 "Affidavit Of Deed" re: 823 West San 357
Joaquin Avenue, Tulare
20
21
22
23
24
25

2 THURSDAY, MAY 9, 2013
3 ---oOo---
4 THE CLERK: Calling matter 08-00093 KJM, United
5 States versus Charles Head and Jeremy Michael Head. Jury
6 trial, day four, Your Honor.
7 THE COURT: Good morning. All counsel are present.
8 Parties are present.
9 Just having reviewed the settlement agreement, so
10 that I'm clear, does the Government agree this is --
11 MR. ANDERSON: We've actually reached a resolution,
12 Your Honor. And I wish I could take credit for it, but this
13 was Mr. Morris' good idea.
14 The Government's concern was that we needed to
15 explain how the property went back into Ms. Graham's name, and
16 there is an Exhibit 15-F, pages six and seven, which contain
17 the grant deed back from Marrisa Page to Ms. Graham.
18 So Mr. Morris' suggestion is that we just agree not
19 to introduce those pages of 15-F, remove them from the exhibit,
20 and leave her explanation essentially at the point it is now
21 with her testimony. Not discuss what happened to the property
22 later. We've gotten to the point about the equity being taken.
23 I think it's pretty clear what happened so we won't go any
24 further.
25 THE COURT: Is that a stipulation?

1 MR. HAYDN-MYER: Yes, your Honor. We will stipulate
2 to that.
3 THE COURT: So there will be no more questions?
4 MR. ANDERSON: There will be more questions. But no
5 questions that take the narrative further.
6 THE COURT: But not into this area. So you also
7 agree with that, Mr. Tedmon?
8 MR. TEDMON: I do.
9 THE COURT: So 15-F5 and 6 are withdrawn as proposed
10 exhibits?
11 MR. ANDERSON: 15F, six and seven.
12 THE COURT: Six and seven. Agreed?
13 MR. TEDMON: Agreed.
14 MR. HAYDN-MYER: Agreed.
15 THE COURT: All right. That is accepted. We were
16 waiting for one juror.
17 MR. TEDMON: There is another issue that's come up,
18 Your Honor, that I want to address the Court on. It relates to
19 Government witness --
20 MR. ANDERSON: Your Honor, there is an issue that
21 Mr. Tedmon wants to raise, but it does involve Mr. Bigelow's
22 client. And Mr. Bigelow is here.
23 THE COURT: And that's Ms. Huerta?
24 MR. TEDMON: No. Omar Sandoval, Your Honor.
25 Two things. One, I just want to clarify something

1 for the Court to make sure everything is accurate. When we
2 talked about Mr. Sandoval's prior state court conviction for
3 vehicle theft, it was our understanding that it was a felony
4 conviction.
5 I went through his rap sheet again last night in
6 preparation for today. He was charged with a felony in San
7 Bernardino County. However, according to the rap sheet he was
8 convicted of a misdemeanor vehicle theft because it was reduced
9 under Penal Code 17(b). That's what the rap sheet shows.
10 I don't think it changes the analysis as far as my
11 ability to ask him were you convicted of vehicle theft, but it
12 was not a felony as far as what I can tell now after reviewing
13 the rap sheet.
14 I talked to Mr. Anderson about it, and I think the
15 proposal is I simply ask him: Were you convicted of vehicle
16 theft in San Bernardino County? The analysis still applies
17 that it's probative and should be allowed in.
18 THE COURT: Anything to say about that, Mr. Anderson?
19 MR. ANDERSON: I don't think it changes the analysis
20 enough for the Court to change its ruling. That's fine. I
21 think Mr. Tedmon's proposal makes sense.
22 THE COURT: All right. That's understood. No
23 reference to a felony. Vehicle theft only.
25 And the other issue, Your Honor, is probably maybe a

1 larger one. It involves Mr. Bigelow, potentially.
2 According to the rap sheet -- when I saw this I
3 thought I better go through it very carefully. According to
4 the rap sheet Mr. Sandoval is a citizen of Mexico, not of the
5 United States. And I pulled his plea agreement -- or I had it,
6 and I went through that. At least in the plea agreement there
7 is no advisement that he is subject to immigration or
8 deportation consequences.
9 Kou Yang, who is, according to her rap sheet, a
10 citizen of Tailand, does have that paragraph which is typically
11 in the plea agreements.
12 And my concern is that if in fact Mr. Sandoval is not
13 a citizen of the United States and that advisement was not put
14 in his plea agreement, then it may affect the validity of his
15 plea, potentially. I was not here during the plea colloquy.
16 But the Court needs to understand the dynamics here. And if
17 this is accurate, I think it needs to be explored certainly
18 before he testifies.
19 THE COURT: This Court took that plea.
20 MR. TEDMON: Yes. And it was in March.
21 THE COURT: My standard practice is to cover
22 citizenship consequences.
23 MR. TEDMON: I understand that.
24 THE COURT: Are you saying if it was covered in the
25 plea in open court, would that satisfy your concerns? You

1 think it has to be in writing as well?
2 MR. TEDMON: There is a Ninth Circuit case, and I
3 don't have the name of it offhand, that is pretty specific
4 about advising clients that they need to be specifically
5 informed and understand there can be immigration consequences
6 with deportation. And that's why these are put in the plea
7 agreements even sometimes when they are not even needed.
8 My concern is that if he was advised of that in open
9 court, the record would certainly reflect that. But typically
10 the lawyer goes through these issues with the client before
11 they plead, and it's fully explained by the lawyer to the
12 client. That's why it's in those plea agreements and that's
13 why they sign it.
14 So I don't doubt this Court followed its normal
15 practice and advised him that he could be subject to
16 deportation if he's not a citizen. That's standard colloquy
17 for a change of plea. But I wasn't representing him. I'm just
18 raising it to the Court. Because on the paperwork I've got --
19 and I wasn't here for the change of plea. I don't know what
20 the status of that is.
21 THE COURT: Mr. Haydn-Myer, are you joining in this?
23 THE COURT: Mr. Anderson, anything to say?
24 MR. ANDERSON: I've never heard the Court take a plea
25 where you didn't advise the defendant of the immigration

1 consequences. But Mr. Bigelow is here.
2 THE COURT: Mr. Bigelow, could you come forward.
3 THE COURT: So you're representing Mr. Sandoval?
4 MR. BIGELOW: I am.
5 THE COURT: Do you have anything to say about this
6 point?
7 MR. BIGELOW: Nothing to say at this point, no. I
8 would like talk to Mr. Anderson, however.
9 THE COURT: Pardon me?
10 MR. BIGELOW: I would like to talk with Mr. Anderson,
11 however.
12 THE COURT: All right. My question to you --
13 MR. BIGELOW: I have no recollection, and I'm not
14 going to answer the Court's questions.
15 THE COURT: I'm moving on to a general Fifth
16 Amendment question. I just wanted to create a record now.
17 You're here representing Mr. Sandoval. You will be
18 present here during his testimony?
19 MR. BIGELOW: I am. For most of it, yes. I intend
20 to be here for all of it.
21 THE COURT: And can you represent to the Court that
22 Mr. Sandoval has been advised --
23 MR. BIGELOW: I'm not going to answer the Court's
24 question.
25 THE COURT: Even that question?

1 MR. BIGELOW: Not that question.
2 THE COURT: All right. Would you object to the
3 Court, outside the presence of the jury, giving --
4 MR. BIGELOW: I want to talk to Mr. Anderson. I want
5 to talk to my client. It's been a long time, Judge.
6 THE COURT: I'm asking about a general Fifth
7 Amendment advisement. Separate and apart from this question.
8 MR. BIGELOW: I'm sorry. I'm not understanding the
9 Court. I apologize. I apologize.
10 THE COURT: My separate question, separate from the
11 citizenship issue, is one way or other, either through you or
12 by talking to Mr. Sandoval directly, I want to make certain he
13 has been advised of his Fifth Amendment rights.
14 MR. BIGELOW: Absolutely. I apologize. Yes.
15 THE COURT: You are comfortable representing to the
16 Court that he is fully aware of his right to remain silent?
17 MR. BIGELOW: Yes.
18 THE COURT: And he is prepared to take the stand
19 today with that understanding?
20 MR. BIGELOW: Yes.
21 THE COURT: All right. On the citizenship question,
22 would Mr. Sandoval be called immediately following Ms. Graham?
23 MR. ANDERSON: That was the plan, Your Honor.
24 THE COURT: How long do you think you need with
25 Mr. Anderson, Mr. Bigelow?

1 MR. BIGELOW: Minute and a half.
2 THE COURT: I'll give you that minute. I'll have
3 Ms. Streeter check to see if the juror is available. I'll come
4 back, and hopefully we can proceed within the next five minutes
5 to bring the jury in.
6 (Break taken.)
7 THE COURT: All right. We're back on the record.
8 Anything the Court needs to know?
9 MR. BIGELOW: No, Your Honor. We're good to go.
10 Again, I apologize for over-talking the Court. It's way too
11 early to surprise me with anything. And we're fine.
12 Everything is cool.
14 MR. ANDERSON: I think what Mr. Bigelow is trying to
15 say is that Mr. Sandoval spoke with Mr. Bigelow and said
16 immediately, oh, yeah, I know that, the judge instructed me on
17 that when she took my plea. I understand that's a risk.
18 THE COURT: He's not putting words in your mouth. I
19 think -- the tongue is in the cheek, but --
20 MR. ANDERSON: No. That's literally what he said,
21 Your Honor. That's not tongue in cheek.
22 MR. BIGELOW: That's exactly what he said, but I was
23 going to let it come from there. I wanted to be in this trial
24 because you guys are having way too much fun.
25 THE COURT: We are. Unless Mr. Tedmon has authority

1 that it needs to be both in writing and the oral advisement,
2 I'm going to go with that.
3 And our jury is here now, so let's bring Ms. Graham
4 back first. Get her in the stand.
5 MR. ANDERSON: Yes, Your Honor.
6 (Ms. Graham enters the courtroom.)
7 (Jury in.)
8 THE COURT: You may be seated. Welcome back to
9 court, ladies and gentlemen of the jury. We had a little bit
10 of housekeeping to do this morning, which is why we kept you
11 waiting a few minutes. We're going to continue now with the
12 direct examination of Ms. Graham. We'll take a break around
13 10:00 or so.
14 Ms. Graham, you were sworn yesterday. You continue
15 to testify subject to that oath.
17 THE COURT: Mr. Anderson.
18 PAMELA GRAHAM,
19 a witness called by the Government, having been previously
22 DIRECT EXAMINATION (CONT'D)
23 BY MR. ANDERSON:
24 Q. Let's pick up on the next page where we left off,
25 Government's Exhibit 15-D, page four. And we'll look to the

1 bottom right on that page. There is a set of initials. Are
2 those your initials?
3 A. Yes.
4 Q. Looking at Government's Exhibit 15-D, page five.
5 Looking at the bottom, do you recognize if those are your
6 initials?
7 A. Yes.
8 Q. Are they?
9 A. Yes.
10 Q. And we'll go to the page 15-D, page seven. There is
11 a signature on that page. Is that your signature, if you know?
12 A. I'm not sure.
13 Q. And 15-D, page nine, there is a signature on that
14 page on the seller line. Do you know if that's your signature?
15 A. No.
16 Q. When you say "no," is that, no, it's not your
17 signature?
18 A. No, it's not my signature.
19 Q. Turning to the next page, 15-D, page ten. There is
20 another signature on a seller line. Does that look like your
21 signature?
22 A. No. That's not my signature.
23 Q. 15-D, page 11, there is a signature about midway down
24 the page. Does that appear to be your signature?

1 Q. Go to 15-D, page 12, option agreement. There is a
2 set of initials most of the way down that page. Are you able
3 to tell if those are your initials?
4 A. No. Those are not my initials.
5 Q. To 15-D, page 13. Are you able to tell if those are
6 your initials?
7 A. No. Those are not my initials.
8 Q. Go to page 15-D -- excuse me -- Exhibit 15-D, page
9 14. Is that your signature?
11 Q. 15-D, page 15, is that your signature?
13 Q. 15-D, page 16. Is that your signature on the seller
14 line?
16 Q. Let's go to Government's Exhibit 15-B, page two --
17 well, actually page one first.
18 Prior to your involvement with this case, so back
19 when you were dealing with Michael Head, did you ever get an
20 opportunity to see this document that you recall?
21 A. No.
22 Q. Let's look at page two of that document. What about
23 page two of this document?
24 A. No.
25 Q. When you dealt with Mike Head and Head Financial

1 Services, did you agree to sell your house?
2 A. No. I did not.
3 Q. Did you agree to have title taken out of your name?
4 A. No, I did not.
5 Q. Did you agree to have your title go into someone
6 else's name?
7 A. No, I did not.
8 Q. Did you agree to have $83,022.43 of your equity taken
9 by Financial Enterprises?
10 A. No, I did not.
11 Q. Did you agree to have that equity go to Mike Head or
12 Charles Head?
14 Q. If you had known that title was going to be taken out
15 of your name, that $83,000 of your equity was going to be taken
16 out of your house, would you have dealt with Mike Head and Head
18 A. No.
19 Q. Would you have dealt with Financial Enterprises?
20 A. No.
21 MR. ANDERSON: No further questions.
23 MR. TEDMON: Your Honor, I think Mr. Haydn-Myer is
24 going to take --
25 THE COURT: All right. Mr. Haydn-Myer. So you're

1 not waiving? We'll come back to you next?
2 MR. TEDMON: Yes.
4 CROSS-EXAMINATION
6 Q. Good morning, Ms. Speights.
7 A. Good morning.
8 Q. As I understand from your testimony yesterday, when
9 you met with Mike Head, there was another person there, and her
10 name was Cindy, was that correct?
11 A. Yes.
12 Q. And it was Cindy -- and I believe Mr. Anderson
13 actually showed you a document -- looked like Gastelum?
14 A. Yes.
15 Q. And they were at your house, is that correct?
16 A. Yes.
17 Q. And you're certain the person's name was Cindy and
18 not Sarah, is that correct?
19 A. I'm not 100 percent sure.
20 Q. Was the last name Gastelum?
21 A. Yes.
22 Q. So you're 100 percent sure it was Gastelum?
23 A. I believe so, yes.
24 Q. How long did the meeting last?
25 A. No more than an hour.

1 Q. And did they both sit down with you and discuss the
2 documents?
3 A. Yes.
4 Q. While you were discussing the documents, I believe
5 you said you signed the documents, is that correct?
6 A. Yes.
7 Q. How many documents would you guess you signed?
8 A. Probably just one I signed and a couple of that I
9 initialed.
10 Q. And in regards to the one you signed, do you remember
11 the name of the document that you signed?
12 A. I believe it said "lease rental," I believe.
13 Q. Did it say "sale" on the top of it?
14 A. I'm not sure.
15 Q. I believe you also testified that you had documents
16 that were mailed back to you, is that also correct?
17 A. Yes.
18 Q. Did you have the documents mailed back to you within
19 a week or two weeks after you signed them?
20 A. No.
21 Q. How much longer was it?
22 A. I think like maybe a couple more weeks. Not a month.
23 It was a couple more weeks after that. Maybe three or so.
24 Q. So it was a couple more weeks before you got the
25 documents back to you?

1 A. Yes.
2 Q. And these are the documents that you actually signed
3 during the meeting with Mr. Michael Head and Ms. Gastelum, is
4 that correct?
5 A. I believe so.
6 Q. Do you have those documents with you?
7 A. No.
8 Q. Where are those documents?
9 A. I believe -- I'm not sure.
10 Q. Do you know what you did with the documents that you
11 signed?
12 A. I think we sent them off-site at my job storage.
13 Q. Have you shown those documents to anybody in
14 connection with the Government?
15 A. Yes, I did.
16 Q. Do you think they have a copy of them?
17 A. They might. I'm not sure.
18 Q. Have they ever showed them to you since?
19 A. Yes.
20 Q. When did they show them to you?
21 A. About a couple of days ago.
22 Q. And those were the documents that you actually
23 received several weeks after you signed them from Mr. Head?
24 A. That was the lease documents, yes.
25 Q. So you got the lease document back?

1 A. Uh-huh.
2 THE COURT: Could you please answer using "yes" or
3 "no," so it's clear.
4 THE WITNESS: Okay. Okay.
5 Q. BY MR. HAYDN-MYER: And you saw that it was a lease,
6 so you were actually renting your property back, is that
7 correct?
8 A. No.
9 Q. But it was a lease agreement that you signed?
10 A. Yes.
11 Q. And when you read the lease agreement, you knew at
12 that time that you had actually signed a document which said
13 you were leasing your property, isn't that correct?
14 A. Yes.
15 Q. Did you ever receive any consideration, any monies,
16 from Financial Enterprises in regard to the transactions?
17 A. No.
18 Q. Isn't it a fact that when you entered into the
19 agreement with Financial Enterprises, they were going to give
20 you money, a check?
21 A. Yes.
22 Q. And that's what you were told, is that correct?
23 A. At first, yes.
24 Q. And then you received a check, isn't that also
25 correct?

1 A. No.
2 Q. Approximately one month later didn't you receive a
3 check from Financial Enterprises on an amount that you
4 negotiated with them in regards to the agreement?
5 A. No.
6 MR. HAYDN-MYER: I believe, Your Honor, this is going
7 to be Defense Exhibit JMH-B because of the A that we put in.
8 THE COURT: Do you have a copy for the Court?
9 MR. HAYDN-MYER: I do, Your Honor.
10 THE COURT: All right. If you could hand that to
11 Ms. Streeter.
12 MR. HAYDN-MYER: Just to be clear, Your Honor, I'm
13 going to give the court clerk a copy of JMH-B.
14 (Defendant's Exhibit JMH-B, Check #1074 for
15 $3,500.00, payable to Pamela Speights, marked for
16 identification.)
17 THE COURT: All right. And you provided copies to
18 Mr. Anderson and Mr. Tedmon?
19 MR. HAYDN-MYER: Yes, Your Honor. May I approach?
20 THE COURT: Proceed. You may.
21 Q. BY MR. HAYDN-MYER: Ms. Speights, I'm handing you
22 JMH-B.
23 A. (Witness reviewing document.)
24 Q. Have you had time to review it?
25 A. Uh-huh.

1 Q. Now, Ms. Speights, I'm sure that you've actually
2 cashed checks and had different items go on like that, is that
3 correct?
4 A. Yes.
5 Q. And I believe that you're familiar with the part
6 where they actually will send you a copy back of the check that
7 has a signature and a stamp showing that that check was
8 actually deposited, is that correct?
9 A. Yes.
10 Q. And if you look at JMH-B, can you see the back of the
11 check?
12 A. Uh-huh.
13 Q. It should be on the front page?
14 A. Yes.
15 Q. And it has what name signed above it?
16 A. Pamela Speights.
17 Q. What is the amount on the check?
18 A. I believe it's like 3,500.
19 Q. And the date of the check?
20 A. 7-2-04.
21 Q. And the check is written from Financial Enterprises
22 to Pamela Speights, is that correct?
23 A. Yes.
24 Q. Ms. Speights, didn't you receive a check on
25 July 2nd -- or between July 2nd and July 10th written from

1 Financial Enterprises for $3,500?
2 A. If if says it, then it's there. But I can't recall.
3 Q. Well, if you would, please, take a look at the
4 signature --
5 A. Okay.
6 Q. -- that appears? Isn't that your signature?
7 A. Yes.
8 Q. So if you signed the check, then you did receive the
9 consideration for $3,500?
10 A. Yes.
11 Q. From Financial Enterprises?
12 A. Yes.
13 MR. HAYDN-MYER: May I approach again, Your Honor?
14 THE COURT: You may.
15 MR. HAYDN-MYER: May I publish that to the jury, Your
16 Honor?
17 THE COURT: Any objection, Mr. Anderson?
20 MR. TEDMON: No.
21 THE COURT: All right. You may. JMH-B is admitted.
22 (Defendant's Exhibit JMH-B, Check #1074 for
23 $3,500.00, payable to Pamela Speights, admitted into evidence.)
24 Q. BY MR. HAYDN-MYER: Can you see that, Ms. Speights?
25 A. Yes.

1 Q. Of course what we're looking at is JMH-B, and that's
2 the same discussion that you and I had in regards to the
3 consideration from Financial Enterprises, isn't that correct?
4 A. Yes.
5 Q. Now originally when you entered into the agreement, I
6 believe it was in late May, early June, is that correct?
7 A. Yes.
8 Q. Now you said you called Financial Enterprises to
9 speak with Jeremy Michael Head in regards to documents, is that
10 correct?
11 A. Yes.
12 Q. Isn't it also true that the reason you called to
13 speak to Financial Enterprises was because the check had not
14 arrived yet?
15 A. I can't recall that.
16 Q. Isn't it true, Ms. Speights, that the reason that you
17 were calling wasn't just for the documents, it was because you
18 had actually negotiated a contract with Financial Enterprises
19 to purchase your place, and you were making sure that you got
20 the first part of the consideration, which was $3,500?
21 A. No.
22 MR. HAYDN-MYER: If we can, please, can we have
23 CH-K6. I believe we already entered into a stipulation
24 regarding the document.
25 THE COURT: Any objection to that submission?

1 MR. ANDERSON: No objection, Your Honor.
2 THE COURT: Mr. Tedmon, no objection?
4 THE COURT: All right. CH-K6 is admitted.
5 (Defendant's Exhibit CH-K6, "Affidavit Of Deed" re:
6 1929 West 65th Street, Los Angeles, admitted into evidence.)
7 MR. HAYDN-MYER: And, Your Honor, I can do it one of
8 two ways. I can actually approach Ms. Speights with it, or we
9 can show it on the display. What's more convenient?
10 THE COURT: Whatever works for you.
11 MR. HAYDN-MYER: Can we have it displayed on the
12 screen, please.
13 THE COURT: And Ms. Graham, if you cannot see what's
14 on the screen clearly, let me know.
16 Q. BY MR. HAYDN-MYER: Showing you CH-K6. Can I have
17 that blown up, please. Can you see that blown-up section,
18 Ms. Speights?
19 A. Yes.
20 Q. Now do you see where it says "consideration in the
21 amount of"?
22 A. Yes.
23 Q. What is the amount that is the consideration?
24 A. 35.
25 Q. $3,500, isn't that correct?

1 A. Yes.
2 Q. And the top section blown up.
3 THE COURT: You should be able to delete those
4 markings now. Are you clear on how to do that?
5 THE CLERK: Lower left corner.
6 MR. HAYDN-MYER: Thank you.
7 Q. BY MR. HAYDN-MYER: Can I have a little bit more of
8 the top section, please.
9 And do you see in CH-K6 where it says "affidavit of
10 deed"?
11 A. Yes.
12 Q. And do you see beneath that where it says $3,500?
13 A. Yes.
14 Q. Doesn't that mean, Ms. Speights, that when you signed
15 that document, you wanted $3,500 for the initial part of the
16 transaction for the deed?
17 MR. ANDERSON: Objection. Assumes facts not in
18 evidence regarding signing.
21 Q. BY MR. HAYDN-MYER: The reason you didn't want to
22 discuss the $3,500 payment before when I first started asking
23 you about it was because you knew that the $3,500 actually
24 appeared on the affidavit of the deed, isn't that correct?
25 A. No.

1 MR. HAYDN-MYER: Can I get 15-D8, Government, please.
2 Page eight. Thank you. And the top section.
3 Q. BY MR. HAYDN-MYER: Can you see that exhibit,
4 Ms. Speights?
5 A. Yes.
6 Q. Do you see where it says "Equity Purchase Agreement"
7 on the top of it?
8 A. Yes.
9 Q. And if you go down a couple of paragraphs, you see
10 where it says "consideration"?
11 A. Yes.
12 Q. Do you see the amount written there?
13 A. Yes.
14 Q. And the total sum is $3,500, isn't that correct?
15 A. Yes.
16 Q. Once again, Ms. Speights, the reason you didn't want
17 to admit to receiving the $3,500 was because it also appears in
18 the Equity Purchase Agreement, isn't that correct?
19 A. Yes.
20 Q. Ms. Speights, you knew you were entering into an
21 Equity Purchase Agreement when you met with Mr. Head, didn't
22 you?
23 A. No.
24 Q. Ms. Speights, on May 7th did you meet with agents
25 from the Government?

1 A. Yes.
2 THE COURT: Can you clarify the year?
3 MR. HAYDN-MYER: Yes, Your Honor. 2013.
4 THE COURT: Is your answer still --
5 THE WITNESS: Yes.
7 Q. BY MR. HAYDN-MYER: Were you shown a grant deed by
8 Special Agent Chris Fitzpatrick?
9 A. Yes.
10 Q. Did you tell Special Agent Fitzpatrick that the
11 signature on the document was yours?
12 A. I have to look at it.
13 Q. The grant deed?
14 A. Yes.
15 Q. Do you remember what the grant deed looked like?
16 A. Yes.
17 Q. Which one was it?
18 A. I can't remember offhand. I have to look at what you
19 have.
20 Q. The only thing I have, Ms. Speights, in regards to
21 that, it is marked, is a sentence -- may I approach -- in a
22 report?
23 MR. ANDERSON: I think she means which grant deed.
24 THE COURT: Is the grant deed attached to the report?

1 MR. HAYDN-MYER: I'm sorry, Your Honor, may I ask
2 Special Agent Fitzpatrick?
4 MR. HAYDN-MYER: Thank you, Your Honor. I think we
5 resolved the issue.
7 Q. BY MR. HAYDN-MYER: Ms. Speights, did you continue
8 making payments to Financial Enterprises?
9 A. Yes.
10 Q. And did you make payments in July?
11 A. Yes.
12 Q. Did you make payments in August?
13 A. Yes.
14 Q. Did you make payments in September?
15 A. Yes.
16 Q. Did you make payments in October?
17 A. Yes.
18 Q. Did you make payments in November?
19 A. Yes.
20 Q. December?
21 A. Yes.
22 Q. January?
23 A. Yes.
24 Q. February?
25 A. Yes.

1 Q. And March?
2 A. Yes.
3 Q. At one point did you become late on the payments to
4 Financial Enterprises?
6 MR. HAYDN-MYER: What I'm going to do, Your Honor, is
7 mark this one JMH-C. And I've got a copy for the Court,
8 Mr. Tedmon and Mr. Anderson.
9 THE COURT: All right. You can hand the Court's copy
10 to Ms. Streeter.
11 THE CLERK: Do you have one that's marked?
12 THE COURT: All right. Thank you.
13 (Defendant's Exhibit JMH-C, Check #688 for $1,274.00,
14 payable to Financial Enterprise, marked for identification.)
15 MR. HAYDN-MYER: My apologies, Your Honor. May I
16 approach, Your Honor?
18 Q. BY MR. HAYDN-MYER: Ms. Speights, what I'm showing
19 you is JMH-C.
20 A. Okay.
21 Q. Do you recognize it?
22 A. Yes.
23 Q. Now, as you look at JMH-C, what is it?
24 A. It's a check.
25 Q. And who is the check written to?

1 A. Financial Enterprise.
2 Q. And there is something in the line, the signature
3 line, written above Financial Enterprises, what is that?
4 A. It says for March payment.
5 Q. And the date on the check is?
6 A. 4-14-05.
7 Q. And the check is written -- did you write the check?
8 A. Yes.
9 Q. Now when you wrote "March" up there in the date for
10 April, does that refresh your recollection whether or not you
11 were late with payments to Financial Enterprises?
12 A. Yes.
13 Q. Were you late with payments to Financial Enterprises?
14 A. Define being late.
15 Q. 30 days?
16 A. No.
17 Q. Isn't it the reason you wrote March payment in April
18 because you were actually a month behind?
19 A. No.
20 MR. HAYDN-MYER: This is going to be JMH-D, Your
21 Honor. If I may approach, Your Honor?
23 (Defendant's Exhibit JMH-D, Check to Financial
24 Enterprises with note on the top of it which says "for February
25 payment," marked for identification.)

1 Q. BY MR. HAYDN-MYER: Ms. Speights, if you would please
2 take a look at JMH-D.
4 Q. And do you recognize that check, Ms. Speights?
5 A. Yes.
6 Q. And you wrote that check to Financial Enterprises --
7 A. Yes.
8 Q. -- correct?
9 And that was in March, is that also correct?
10 A. Yes.
11 Q. And you also wrote another note on the top of it
12 which says "for February payment," isn't that correct?
13 A. Yes.
14 Q. But it wasn't February that the date of the check is,
15 it's March, is that correct?
16 A. Yes.
17 Q. Weren't you late also on that month?
19 MR. HAYDN-MYER: May I publish JMH-C, Your Honor?
21 Mr. Anderson: No, Your Honor.
24 THE COURT: JMH-C is admitted, and it may be
25 published.

1 (Defendant's Exhibit JMH-C, Check #688 for $1,274.00,
2 payable to Financial Enterprise, admitted into evidence.)
3 Q. BY MR. HAYDN-MYER: Showing you JMH-C, Ms. Speights,
4 is that the check that we were discussing earlier today?
5 A. Yes.
6 Q. Now do you see the words that are written right above
7 account number, looks like 1-0-0-5?
8 A. Yes.
9 Q. And that says "uncollected funds," is that correct?
10 A. Yes.
11 Q. Did you bounce that check to Financial Enterprises,
12 Ms. Speights?
13 A. No. I can't recall that.
14 Q. I'm sorry, Ms. Speights, is your answer, "no," or you
15 can't recall?
17 MR. HAYDN-MYER: Can I have one quick moment, Your
18 Honor, please?
21 MR. HAYDN-MYER: I have no further questions, thank
22 you.
23 THE COURT: All right. Mr. Tedmon, any questions.
24 MR. TEDMON: No questions, Your Honor.
25 THE COURT: Mr. Anderson, any redirect?

3 BY MR. ANDERSON:
4 Q. Ms. Graham, did you agree to sell your house for
5 $3,500?
6 A. No.
7 Q. Did you agree to sell the equity in your house for
8 $3,500?
9 A. No.
10 Q. When you got those lease documents several weeks
11 after signing, what was your reaction?
12 A. I was upset.
13 Q. Why were you upset?
14 A. Because they was taking my house.
15 Q. What did you do when you got those lease documents?
16 A. I cried.
17 Q. Why did you continue to make payments after receiving
18 the lease documents?
19 A. Because they told me to keep making payments.
20 MR. TEDMON: Objection, Your Honor. Vague. "They?"
22 Q. BY MR. ANDERSON: When you say "they," who do you
23 mean?
24 A. Financial Enterprise.
25 Q. Do you remember specifically the people you talked to

1 about making the payments?
2 A. No. I'm not sure.
3 Q. What was your thinking in continuing to make those
4 payments?
5 A. That it was going to get resolved.
6 Q. What was going to get resolved?
7 A. About the documents that they gave me, the lease
8 documents. I was still waiting for the other documents to come
9 in.
10 Q. Why did you think that it was going to get resolved?
11 A. Because they kept telling me everything was fine.
12 That's the documents that they have for me to sign. Everything
13 was okay.
14 Q. Did you think that things would get set right?
15 A. Yes, I did.
16 Q. Did they get set right?
17 A. No.
18 Q. Let's talk about one of the exhibits that
19 Mr. Haydn-Myer showed you, 15-D, page eight.
20 Now, first of all, did you get a chance to look at
21 the whole document before we zoomed in?
22 A. Yes.
23 Q. Your signature is not anywhere on this document, is
24 that right, first page?
25 A. No.

1 Q. Second, I want to look at the consideration section.
2 Do you see the part where it says, "in consideration for said
3 property, buyer agrees to pay seller seller's equity in the
4 property, the total sum of $3,500 payable at the time, one,
5 seller delivers to buyer a properly prepared and executed grant
6 deed to the property, and a bill of sale for any personal
7 property included in the sale, and, two, seller surrenders to
8 buyer possession of the property that's vacant, clean and in
9 good condition."
10 Do you see that part?
11 A. Yes.
12 Q. Now after signing the documents and about the time
13 that we saw the check, the $3,500 check, that you can't recall
14 anymore, did you vacate your house and surrender the property?
15 A. No.
16 MR. ANDERSON: Thank you. No further questions.
17 THE COURT: All right. Any further recross,
18 Mr. Haydn-Myer?
22 THE COURT: All right. Is Ms. Graham excused,
23 Mr. Anderson?
24 MR. ANDERSON: Yes, Your Honor. She is.

1 MR. TEDMON: Yes.
4 THE COURT: You are excused, ma'am. You may step
5 down. The Government's next witness?
6 MR. ANDERSON: The United States calls Omar Sandoval.
7 THE CLERK: Mr. Sandoval, if you will come forward.
8 Would you stand in front of the witness stand and face this
9 way, and I'll take your photograph.
10 (Photograph of Mr. Sandoval taken by the Clerk.)
16 THE WITNESS: My name is Omar Sandoval. Spelling is
17 O-m-a-r. Last name, Sandoval, S-a-n-d-o-v-a-l.
18 OMAR SANDOVAL,
23 BY MR. ANDERSON:
24 Q. Good morning, Mr. Sandoval.
25 A. Good morning.

1 Q. Do you know a person by the name of Charles Head?
2 A. I do.
3 Q. How do you know him?
4 A. He was introduced to me by brother-in-law, Richard
5 Quan.
6 Q. Approximately when was that?
7 A. Exact date I can't really say, but I would say around
8 '99.
9 Q. After meeting Charles Head, did you have an ongoing
10 opportunity to be in contact with him?
11 A. I did.
12 Q. What was the nature of the contact between you and
13 Charles Head?
14 A. It was both personal and at the same time business.
15 Q. What sort of business?
16 A. Real estate.
17 Q. Did you eventually go to work for Charles Head?
18 A. I did.
19 Q. Where did you go to work for him?
20 A. The first time was through a company called Pyramid
21 Properties out in Lynwood, California, where we were doing
22 refinances.
23 Q. Did you eventually stop working for him at that time?
24 A. I did.
25 Q. What did you go to do after that?

1 A. Several things. Plumbing, worked in electrical. I
2 ended up doing mechanical work for airplanes.
3 Q. In the early 2000s did you have an opportunity to
4 reconnect with Charles Head?
5 A. I did. When I was working at SCA as an airplane
6 mechanic, I kind of got frustrated with the scheduling and
7 everything. Decided to get back into real estate. And through
8 my contact with my brother-in-law, Richard Quan, I found that
9 Charles Head owned a real estate company. And I reached out to
10 him because I wanted to get into real estate.
11 Q. When you reached out to Charles Head, what happened
12 next?
13 A. Pretty much he did offer me the opportunity to go
14 work for him, and we pretty much made an agreement or an
15 arrangement to go work at his office.
16 Q. What office was that?
17 A. That was Head Financial Services.
18 Q. Where was it located at the time?
19 A. In Long Beach, California, off of Atlantic.
20 Q. I'm going to slow you down a little bit.
21 A. No problem.
22 Q. Could you describe the office for us?
23 A. Approximately -- I want to say it's 1300 square feet,
24 had about nine to twelve cubicles, two separations and offices,
25 processing, Charles' office, and another office across the

1 hallway that also had processors and same kind of deal.
2 Smaller office, though.
3 Q. Did the size of the office offer you an opportunity
4 to see and hear what was going on often with other people in
5 the office?
6 A. Yes.
7 Q. I'm going to jump ahead a little bit, but have you
8 plead guilty in this case?
9 A. I did.
10 Q. And are you testifying as part of your plea agreement
11 here?
12 A. No.
13 Q. Do you have a plea agreement where you've agreed to
14 cooperate with the Government?
15 A. Oh, yes.
16 Q. While you were working in the office, what were your
17 initial duties?
18 A. Pretty much just to canvass with people that were
19 interested in refinancing their homes.
20 Q. Now as you were working in the office, did you
21 eventually see that a new program was developed?
22 A. Yeah.
23 Q. Could you describe for us the circumstances where you
24 first became aware there was something new going on in the
25 office?

1 A. New as in refinances? Or new as in other types of
2 programs?
3 Q. Other types of programs.
4 A. The -- I know you're jumping ahead a little bit.
5 Q. Why don't I jump back.
6 So when you started, what types of loans were you
7 initially doing?
8 A. When I first started, it was just regular refinances.
9 Q. And who was in charge of the office?
10 A. At that time, it was Charles Head and Kou Yang.
11 Q. As you worked in refinances, did you eventually move
12 on to working with something else?
13 A. I did. After I took a period from leave in his
14 office.
15 Q. Okay. How long were you on leave from his office?
16 A. I want to say a good five months. Somewhere around
17 that range.
18 Q. And then after that did you come back to the office?
19 A. Yeah, I did.
20 Q. When you came back, what were you working on?
21 A. I still continued to work on refinances, and a few
22 months later there was a change in the type of loans that we
23 were doing.
24 Q. What was the change?
25 A. Well, I wasn't involved in it at the beginning. So

1 most of the -- I was more or less hearing at the office. They
2 were working on lease buy-backs or lease options on properties,
3 on foreclosure properties.
4 Q. Is there a reason why you weren't initially included?
5 MR. TEDMON: Objection. Calls for speculation.
7 Q. BY MR. ANDERSON: Was there something going on
8 between you and Charles Head at that time where you perceived
9 that you weren't as close as some of the other people were in
10 the office?
11 MR. TEDMON: Objection, Your Honor. Relevance. It's
12 also vague.
14 Q. BY MR. ANDERSON: All right. So initially, were you
15 aware of other people working on a program you were not working
16 on?
17 A. Yeah.
18 Q. Okay.
19 A. Yes. Sorry.
20 Q. Who were you initially aware was working on that
21 other program?
22 A. Initially, it was -- it was Michael Head, Charles
23 Head, and Anh Nguyen.
24 Q. Nguyen?
25 A. Nguyen. That's how I think you say his name.

1 Q. Did there come a point where you eventually discussed
2 or were brought in to work on this program as well?
3 A. Yeah. It was later in the events, but it was more or
4 less because I spoke Spanish, I guess.
5 Q. Could you describe for us what happened that
6 initially got you involved?
7 A. The first -- the first thing that originally got me
8 involved was Michael Head was doing a transaction where he
9 requested for me to translate for him. Once I, you know,
10 discovered what the whole scenario was, and I saw there was
11 potential to make good money, I wanted part in.
12 Q. Why don't we talk about that first situation with
13 Mike Head. How were you approached to get involved with Mike
14 Head?
15 A. What happened is I guess one of the telemarketers got
16 a person that was losing their property. Michael Head
17 obviously did not speak Eng -- Spanish -- I'm sorry -- so he
18 requested for me to translate everything for him.
19 And so kind of in the translation I obviously found
20 out most of the stuff. Because while I was translating, I was
21 hearing everything because it was coming out of my mouth.
22 But the -- once the whole process had gone through,
23 then I saw that there was potential to make money, and
24 obviously I was paid a hefty sum to help him out, so, you know,
25 I just saw a good opportunity.

1 Q. What did Mike Head ask you to translate for the
2 person?
3 A. What was called a lease buy-back option or where
4 pretty much the person would sign over their property.
5 Or actually, what the initial -- what the initial
6 steps were that you would talk to the person, you would tell
7 them that you were going to refinance their house. You would
8 ask them specific questions that would kind of predispose the
9 person to whether they --
10 MR. HAYDN-MYER: Objection, Your Honor. Beyond the
11 scope of the question. Narrative.
12 THE COURT: Sustained as to narrative.
14 THE COURT: Answer the question, then wait for the
15 next question.
16 THE WITNESS: Sure. No problem.
17 Q. BY MR. ANDERSON: Okay. So --
18 A. Michael Head.
19 Q. So Michael Head told you to say certain things to the
20 person on the phone who spoke only Spanish. What were those
21 things?
22 A. He asked -- he told me to tell him that -- to get
23 information as if he was refinancing.
24 Q. All right. What other information did Mike Head tell
25 you to relay to the person on the phone?

1 A. From the initial one, that was pretty much it.
2 Q. Were there subsequent calls?
3 A. Yeah.
4 Q. During the subsequent calls, did Michael Head -- Mike
5 Head tell you to relay additional information?
6 A. Yeah.
7 MR. HAYDN-MYER: Objection. Vague.
8 THE WITNESS: Subsequent call was --
9 THE COURT: Hold on one second.
10 MR. ANDERSON: Just a "yes" or "no."
11 THE COURT: Can you speak up a bit, Mr. Haydn-Myer.
12 MR. HAYDN-MYER: Objection. Vague as to subsequent
13 calls. Timeframe, please.
14 THE COURT: Sustained. Subject to your clarifying
15 the timeframe.
16 Q. BY MR. ANDERSON: So we're still talking about the
17 same transaction, correct?
18 A. Yes, correct.
19 Q. Okay. So were there subsequent calls in that same
20 transaction?
21 A. Yes.
22 Q. During those subsequent calls, did Mike Head ask you
23 to relay additional information to the person on the other end
24 of the phone, the homeowner?
25 A. Yes.

1 Q. That's great. You answered the question. I'll ask
2 you a follow-up.
3 A. Sure.
4 Q. What information did Mike Head have you relay?
5 A. Just that they didn't qualify for refinance, and that
6 we had different options for them.
7 Q. Did you see Mike Head make any effort to determine
8 whether or not they would qualify for a refinance?
9 A. Directly, no.
10 Q. What was the other option that Mike Head asked you to
11 relay to the homeowner?
12 A. He said that once -- I'm sorry -- when I spoke to the
13 client, the additional information was that the person did not
14 qualify, and that we had investors that could help him with
15 that situation.
16 Q. Did he ask you to specifically use the word
17 "investors"?
18 A. Yes.
19 Q. Was there any other information regarding the
20 property that you were asked to relay to the homeowner?
21 A. Yeah. That the person would be pretty much -- that
22 the person would have an investor come in, help him out with
23 the property, and that they would be able to stay in the
24 property.
25 Q. You mentioned the word "option" earlier. Did that

1 figure in this conversation at all?
2 A. Yeah, they would have what is called a buy-back
3 option or a lease option.
4 Q. And was anything described about the equity in the
5 property?
6 A. Yeah. That the person would lose 50 percent of the
7 equity of the property subsequently, a year after.
8 Q. Okay. Now, did you subsequently learn that that was
9 not a true statement?
10 A. Correct.
11 Q. What was the truth of that situation?
12 A. We would initially remove the full 100 percent of the
13 equity.
14 MR. HAYDN-MYER: Objection. Vague. We were speaking
15 of a specific transaction.
16 THE WITNESS: So that transaction --
17 THE COURT: Hold on one second. Overruled. But ask
18 questions to clarify.
19 THE WITNESS: I'm sorry.
20 Q. BY MR. ANDERSON: And when I asked that question, did
21 you understand me to be referring to the specific transaction
22 we have been talking about?
23 A. I did.
24 Q. Were documents eventually signed by the homeowner in
25 this situation?

1 A. Yes.
2 Q. Do you know anything about that signing and those
3 documents?
4 A. The initial signing was done by Cindy Gastelum. She
5 went out with the documents, had the person sign them, and came
6 back with it.
7 Q. Were there any problems with the documents once they
8 were signed?
9 A. The dates were wrong.
10 Q. So what happened as a result?
11 A. We just pretty much re-did the documents again.
12 Q. When you say re-did the documents again, what do you
13 mean?
14 MR. HAYDN-MYER: Objection. Vague as to "we."
16 THE WITNESS: Sorry. I --
17 THE COURT: Clarify the question.
18 Q. BY MR. ANDERSON: Sure. Who noticed that there was a
19 problem with the documents, do you know?
20 A. No, I don't. I just know that there was a problem.
21 Q. Okay. Do you know what, if anything, was done about
22 the problem with the dates on the documents?
23 A. The dating was incorrect.
24 Q. Okay. Do you know what was done in response to that
25 problem?

1 A. Myself, I signed the documents for the homeowner
2 along with Cindy Gastelum, who notarized them.
3 Q. So you forged the signatures?
4 A. Correct.
5 Q. Now did you know what the intent was -- this is just
6 a "yes" or "no," and I'll ask you a follow-up question.
7 Did you know what the intent was with the house,
8 whether or not it would go back to the homeowner?
9 MR. HAYDN-MYER: Objection. Question calls for
10 speculation.
12 Q. BY MR. ANDERSON: That's why I'm asking if he knew,
13 and then I'll ask a follow-up, if the Court would permit it.
14 THE COURT: Whose intent are you talking about?
15 Clarify the question.
16 Q. BY MR. ANDERSON: Did Mike Head ever express to you
17 what he expected to happen with the home?
18 A. Yes.
20 A. That we would -- that pretty much the person would
21 lease the property back and more than likely they would
22 default.
23 Q. So was the plan for the homeowner to keep the house
24 or lose the house?
25 A. I'm sorry. Re-ask the question?

1 Q. Okay.
2 MR. HAYDN-MYER: Objection, Your Honor. Calls for
3 speculation.
4 THE COURT: Well, he's asked for a clarification. So
5 overruled. But ask a question, and then I'll consider an
6 objection.
7 Q. BY MR. ANDERSON: According to Mike Head, if he told
8 you, did he tell you who he expected to end up with the house
9 in the end?
10 A. No, he did not.
11 Q. Now you said you were paid a substantial fee for your
12 help. How much were you paid for translating in this
13 transaction?
14 A. 5,000.
15 Q. How did that fee compare to the regular refinance
16 work you had been doing?
17 A. A little bit higher.
18 Q. So during the course of this transaction, did you see
19 -- you said you saw an opportunity to make a lot of money.
20 Could you describe how you were able to identify an opportunity
21 to make a lot of money?
22 A. Since the initial set-up or what I was seeing, again,
23 I wasn't involved at that point, but what I was seeing was that
24 most of the properties had a substantial amount of equity built
25 into it already. So because of the fact that even if you were

1 taking 50 percent of the equity itself, it was a lot, no matter
2 what.
3 Q. Did you become involved in these transactions
4 yourself beyond just translating for Mike Head?
5 A. Yes.
6 Q. How did that come about?
7 A. I requested from Charles Head to get involved.
8 Q. What did Charles Head tell you?
9 A. He didn't say no. He just said, okay, if you want to
10 get involved, then I'll give you the breakdown.
11 Q. Did you eventually do a number of these transactions
12 yourself?
13 A. I did.
14 Q. Do you know approximately how many?
15 A. Between eight to ten.
16 Q. Did you receive any training in how to conduct the
17 transactions?
18 A. Non-formal, yes.
19 Q. Who gave you non-formal training?
20 A. It was either by -- either Charles would give you a
21 pamphlet that pretty much gave you a breakdown of what steps to
22 take, and then at the same time you were also told what to say
23 and what not to say over the phone, by either -- primarily
24 Charles Head because that's my primary contact.
25 Q. Okay. Let's focus on Charles first. What did

1 Charles tell you about what you should and shouldn't say over
2 the phone?
3 A. Specifically -- re-ask the question. I'm not quite
4 -- you know, it's kind of vague.
5 Q. Vague as to time?
6 A. No. What I'm saying is that it's not like -- you're
7 asking me, like, you know, what did he tell you to say or not
8 to say, but it -- what I'm asking --
9 Q. Did Charles Head tell you a lot of things about what
10 you should and shouldn't say?
11 A. Yeah.
12 Q. Let's focus in. Did Charles Head tell you anything
13 about what you should say regarding equity in the home?
14 A. Yeah.
16 A. To tell the client that we would be removing
17 50 percent of the equity.
18 Q. Was that an accurate statement?
19 A. No.
20 Q. What was the truth?
21 A. We removed 100 percent of the equity.
22 Q. Do you know, based on conversations or observations
23 of Charles Head, or the environment, whether or not Charles
24 Head knew that 100 percent of the equity was being removed?
25 A. Yes.

1 Q. How do you know?
2 A. We gave him 50 percent.
3 Q. So what was the deal that you arranged with Charles
4 Head?
5 A. We would -- we would talk to the client. We would
6 close out the whole deal. And once the transaction had been
7 done and the funds were wired to our account, then we would
8 write out a check to Charles Head for 50 percent. And we would
9 both split the payment of house itself while the client was
10 making lease payments to us for the period of the one-year
11 term.
12 Q. So half went to Charles Head. Who got the other
13 half?
14 A. I did.
15 Q. Was Charles Head aware of that part of the
16 arrangement?
17 A. Yes.
18 Q. Do you know if others who worked for Charles Head had
19 a similar arrangement?
20 MR. TEDMON: Objection, Your Honor. Speculation.
21 THE COURT: Just answer the question. Do you know?
22 Overruled.
24 Q. BY MR. ANDERSON: How do you know?
25 A. We all discussed it.

1 MR. HAYDN-MYER: Objection. Vague as to "we."
3 Q. BY MR. ANDERSON: Did you discuss with other people
4 you worked with whether or not they had a similar arrangement
5 with Charles Head?
6 A. Yes.
7 Q. Who did you discuss that with?
8 A. Andrew Vu. I've dropped some of the names right now.
9 I apologize. Josh Coffman. Justin Wiley. Those are the
10 primary people that I talked to.
11 Q. Was it also a topic of conversation around the
12 office, generally, these types of transactions?
13 A. These transactions themselves, yes. Not the
14 commission splits, though.
15 Q. All right. So we've covered the deal and what people
16 are supposed to say.
17 How were -- I'm sorry. Did Charles Head tell you
18 anything about what you should say to homeowners regarding
19 investors?
20 A. Yes.
21 Q. What did he say?
22 A. Whenever we found a person that had a situation, we
23 would tell them that -- just to tell them that an investor
24 would help them with their situation.
25 Q. Were there actual investors being used to help people

1 with their situation?
2 A. No.
3 Q. What was being used instead?
4 A. Straw buyer.
5 Q. What's a straw buyer?
6 A. Straw buyer is somebody that can qualify for the
7 property at 100 percent financing with good credit.
8 Q. Did Charles Head ever say anything to you about using
9 straw buyers?
10 A. Yes.
11 Q. What did he say to you?
12 A. Yes. To locate people that had good credit, that we
13 could use for the same purpose of purchasing properties.
14 Q. So whose responsibility was it to locate straw
15 buyers?
16 A. It was actually everybody. All the people that were
17 involved in the transactions.
18 Q. Did you locate any straw buyers yourself?
19 A. I did.
20 Q. I'm going to come back to that a little bit later.
21 Did you receive any other instructions from Charles
22 that were generally about how far you could go in telling
23 homeowners what you needed to do in -- what you needed to in
24 order to close the deal?
25 A. It would be pretty much as to whatever -- it was more

1 or less tell the homeowner what they want to hear without, you
2 know, like -- I'm having a hard time explaining.
3 Tell the homeowner whatever they need to hear but
4 without it being too -- where it's too -- basically that, tell
5 the homeowner what they need to hear.
6 Q. Was there another --
7 A. No. It's because it's kind of -- it changed as time
8 went by. At the beginning, you didn't have to tell the
9 homeowners pretty much anything. And once the market got
10 saturated, then you had to start being a little bit -- hold
11 back a little bit, hold back the actual truth.
12 Q. So did what Charles Head tell you as time went on
13 change?
14 A. Yes.
15 Q. How did it change?
16 A. Just on the amount of information that was given out
17 to the homeowner.
18 Q. And as time went on, was Charles Head telling you to
19 give more or less information to the homeowners?
20 A. Less.
21 Q. In order to solicit homeowners, what method was used?
22 A. We would get what is called the farm list from title
23 companies where they would give us people that were in NODs, so
24 notice of defaults.
25 The list would then be taken to a mailing company,

1 along with postcards that would then be mailed out by them.
2 And we would pretty much put 800 numbers on them, which went to
3 our cell phones.
4 And once the person called us, then we would make
5 appointments with them to either, A, meet up with them, or, B,
6 send documents to them at that point already.
7 Q. Did Charles Head ever tell you what you should say
8 regarding the title to the home, who would be on title to the
9 home?
10 A. Yes.
12 A. That the person would stay on title on the property.
13 Q. Now you had mentioned signing -- could you talk to us
14 about -- let me ask a more specific question.
15 What types of documents were actually given to
16 homeowners at signing?
17 A. The original documents that were given to the
18 homeowner were the actual contracts that kind of broke
19 everything down, where they had to initial several papers, and
20 at the same time also had one that had to be notarized, stating
21 the fact that they understood all the stuff -- all the things
22 in the documents, and also another one that was a five-day
23 right of rescission, which made the person feel comfortable
24 because we told them you had five days to change your mind.
25 Q. Were there methods used in order to encourage the

1 homeowners to sign the documents without reviewing them
2 carefully?
3 A. We would tell them -- it would just depend.
4 Personally, I would tell them that these documents had been
5 reviewed already by attorneys and that everything was in order.
6 Q. Was there ever a situation where multiple documents
7 were used with the intention of not really carrying through on
8 some of the documents?
9 A. You would have two notes or grant deeds signed.
10 Q. And what was the idea with the multiple grant deeds?
11 A. Well, the initial grant deed would be, obviously, the
12 one that was being recorded -- well, not obviously -- you don't
13 know.
14 The original grant deed was one that was going to be
15 recorded to the county, and the secondary one was the one that
16 would revert property back to the homeowner, but that wasn't
17 recorded at any time.
18 Q. Was there a particular reason why you would give a
19 homeowner a grant deed that you didn't actually intend to
20 record?
21 A. Make them feel comfortable.
22 Q. Are you aware, based on your conversations or
23 observations of Charles Head and the company, whether or not
24 Charles Head was aware that these grant deeds were not going to
25 be filed?

1 A. Oh, yeah.
2 Q. How are you aware?
3 A. Two different ways. One was they always went through
4 processing, which Kou Yang handled. And so we were aware that
5 they sat in the office there.
6 And secondary was because, you know, we were
7 instructed that we wouldn't be recording them. Because if we
8 did, then the person pretty much had control of the property.
9 And if there was a problem, we wouldn't be able to deal with
10 the person because they technically -- well, not technically
11 speaking, but they owned the property.
12 Q. Okay. And was there anything about your knowledge of
13 how real estate transactions worked that indicated to you that
14 this other deed also would not be filed?
15 A. Yeah.
16 Q. What was that?
17 A. Whenever you do a loan, or for a purchase or
18 refinance, there's only one grant deed that is actually being
19 signed, which is the original one that gives you title to the
20 property. There is no additional ones.
21 Q. Now once a homeowner had signed some of the
22 documents, was there a step in this process where loans were
23 obtained?
24 A. Yes.
25 Q. Could you describe how those loans were obtained?

1 A. If we had a straw buyer, we would go and fill out one
2 primary document -- well, one primary 1003, which is a loan
3 application that had all the information to be able to obtain a
4 loan.
5 Q. Do you know whether or not those loan documents
6 contained false statements?
7 A. Yes.
8 Q. How do you know that?
9 A. They're -- primarily because the loans were being
10 done by stated assets program through -- that the banks
11 offered. We would put different jobs for them because we knew
12 that specific jobs were not going to be qualifying for a person
13 for the amount of income they would have to make.
14 Q. And so certain information had to be changed in order
15 for people to qualify for loans?
16 A. Correct.
17 Q. And that would be the straw buyers who would be
18 qualifying for the loans?
19 A. Correct.
20 Q. You had mentioned earlier that you knew some of the
21 straw buyers. Could you let us know which straw buyers you
22 knew?
23 A. I knew Juan Urena.
24 MR. TEDMON: Sorry, Your Honor, I didn't catch that.
25 THE COURT: Could you say that name again?

1 THE WITNESS: Juan Urena.
2 Q. BY MR. ANDERSON: How do you know Juan Urena?
3 A. He is my father-in-law.
4 Q. What does he do for a living?
5 A. Right now he's retired.
6 Q. What did he do for a living?
7 A. He used to work at Pacific Center Metals as shipping
8 and receiving.
9 Q. Did he ever work for any entities connected with
10 Charles Head that you're aware of?
11 A. I would probably have to look at documents, but we
12 used several.
13 Q. I mean in reality.
14 A. No.
15 Q. Was it ever listed that he -- well, we'll show
16 documents in a minute.
17 Okay. So Juan Urena. Anybody else?
18 A. Abraham Urena.
19 Q. Who is Abraham Urena?
20 A. My brother-in-law.
21 Q. Did you recruit both Juan Urena and Abraham Urena?
22 A. Yes.
23 Q. What job did Abraham Urena have at the time?
24 A. At the time I think it was a machinist.
25 Q. Were the straw buyers supposed to receive money in

1 exchange for being used as straw buyers?
2 A. Yes.
3 Q. How much money?
4 A. 5,000.
5 Q. Did you know anyone else who was a straw buyer?
6 A. Edward Vanegas.
7 Q. Who is Mr. Vanegas?
8 A. Edward Vanegas is an old high school friend of mine.
9 Was.
10 Q. Did you recruit him?
11 A. Yes, I did.
12 Q. Did you recruit any other straw buyers that you can
13 recall?
14 A. Sandra Salgado.
15 Q. Who is Sandra Salgado?
16 A. She is married to Abraham Urena.
17 Q. And any others?
18 A. Not that I can recall right now.
19 MR. ANDERSON: Your Honor, I would ask that
20 Government's Exhibit 22-A be admitted pursuant to the records
21 stipulation.
25 MR. HAYDN-MYER: No objection, Your Honor.

1 THE COURT: 22-A is admitted.
2 (Government Exhibit 22-A, 633 Hudson Lane, Modesto -
3 Loan File, admitted into evidence.)
4 Q. BY MR. ANDERSON: Do you recognize this name, Abraham
5 Urena, is that the person you've been referring to?
6 A. Yes.
7 Q. And the property 633 Hudson Lane, do you recognize
8 that property?
9 A. It's not to me specifically, no, but I do remember
10 the property.
11 Q. How do you remember it?
12 A. Discussions with my brother-in-law.
13 Q. Was this a property that you had -- you had done the
14 transaction for?
15 A. No.
16 Q. Was it the case that straw buyers were shared among
17 people who worked for Charles Head?
18 A. Yes.
19 Q. How did that happen?
20 A. It would depend on who actually had a straw buyer.
21 If you had somebody that would qualify, then what you would do
22 is you would say, well, I have somebody that qualifies. And if
23 you have -- if you had a transaction that you wanted to get
24 through, you would just request the person, hey, can I have
25 your straw buyer.

1 Q. How was it that people were aware of other
2 individual's straw buyers within the office?
3 A. Usually it was because Kou was the one that was
4 processing, so she was aware that somebody else needed a straw
5 buyer, so she would just put us in contact with each other.
6 Q. Were there any time constraints on the use of straw
7 buyers?
8 A. You needed to have the person in prior to the person
9 actually funding a loan and getting it in to record or else it
10 would hit their credit.
11 Q. So did that require using a straw buyer multiple
12 times within a short time period?
13 A. Correct.
14 Q. I would like to go to the bottom half of this page.
15 It lists Abraham Urena's employer as Statewide Financial Group.
16 Does that name mean anything to you?
17 A. That's my company.
18 Q. Did Abraham Urena ever work for you?
19 A. No.
20 Q. Do you know why Statewide Financial Group is listed
21 here as his employer?
22 A. In order to do a verification of employment.
23 Q. What's a verification of employment?
24 A. That's where the financial institution that's
25 financing the loan will contact the -- their employer and

1 request either, one, verbal verification that the person is
2 employed by you, or, B, a statement that states the fact that
3 that person works for you.
4 Q. And the title is listed as senior account executive.
5 Have you ever known Abraham Urena to work as a senior account
6 executive?
7 A. No.
8 Q. What type of job did you say he had before?
9 A. Machinist.
10 Q. Now Statewide Financial, can you describe the
11 circumstances under which you set that company up?
12 A. It was set up for the sole purpose of being able to
13 market to people that were in stress -- distressed property
14 situations.
15 Q. Was it an actual company with employees and a
16 business location?
17 A. One employee, me.
18 Q. Okay. Well, did anyone ask you to set up a company
19 like this?
20 A. Not asked. It was -- it was in the document that I
21 said that gave us a breakdown on how to set it up. It was just
22 said this is what you need to do in order to set it up.
23 Q. What document are you referring to?
24 A. The one that gave -- there was an e-mail or -- it's a
25 breakdown. I don't know if you guys have a copy of it. But

1 there is a breakdown of it that just kind of gives you a
2 breakdown. You're going to contact this person. You're going
3 to talk to this person. This is what you're going to do in
4 order to set it up. So it was just in order for us to be able
5 to have wired -- well, funds wired to our --
6 MR. TEDMON: Objection, Your Honor. Beyond the scope
7 of the question.
9 MR. TEDMON: Move to strike.
11 Q. BY MR. ANDERSON: Is the Court striking the entire
12 answer?
13 THE COURT: I'm just sustaining the objection.
14 Q. BY MR. ANDERSON: Okay. So I'll pick up with the
15 next question.
16 So who gave you the document that explained how to
17 set up your --
18 A. Charles.
19 Q. Charles Head?
20 A. Yes. Charles Head. Sorry.
21 Q. All right. You said there was an account and
22 something with a wire. Did you set up a bank account related
23 to this?
24 A. Correct. In order to be -- in order to set up an
25 account with any bank as an LLC, you had to create an LLC to

1 begin with. So we were instructed first to create an LLC.
2 Q. So you created an LLC. Then did you get a bank
3 account related to that LLC?
4 A. Correct.
5 Q. What was the purpose of the bank account?
6 A. To be able to wire finds into the account and manage
7 the properties.
8 Q. Once the funds were into that LLC, how were the funds
9 distributed out of the LLC?
10 A. Once the funds came in, we would either withdraw the
11 amount that needed to cover Charles Head's part, along with the
12 straw buyer, and also the money that went back to the
13 homeowner.
14 Q. And when homeowners were pitched on this program,
15 were they sometimes offered money in exchange for signing up?
16 A. Every time.
17 Q. Do you recall approximately how much money was
18 offered?
19 A. It depended. It depended on the equity on the
20 property. Sometimes five, sometimes ten.
21 Q. Thousand?
22 A. Yes.
23 Q. You also mentioned Eduardo Vanegas as someone you
24 knew?
25 A. Yes.

1 Q. Are you familiar with his signature?
2 A. Yes, very much.
3 Q. How are you familiar with it?
4 A. He has a weird signature that it's kind of hard to
5 forget. Pretty difficult to duplicate.
6 Q. Did you become familiar with his signature during the
7 course of your knowing him as a friend of yours?
8 A. I did. Especially through filling out loan
9 documents.
12 stipulation as another mortgage company document.
18 (Government Exhibit 19-A, 3646 Milton Way, North
19 Highlands - Loan File, admitted into evidence.)
20 Q. BY MR. ANDERSON: First of all, do you recognize the
21 property 3846 (sic) Milton Way, North Highlands, California?
22 A. I do not.
23 Q. So was that a property you were involved with
24 personally?
25 A. No.

1 Q. Do you recognize the name Eduardo Vanegas?
2 A. I do.
3 Q. Let's go to page three of this exhibit.
4 Are you able to recognize whether or not that's
5 Mr. Vanegas' signature?
6 A. That is his signature.
7 Q. Make sure you don't get too far from the microphone.
8 A. Okay.
10 Government's Exhibit 20-A be admitted into the record as part
11 of the stipulations as another mortgage company document.
17 (Government Exhibit 20-A, 1161 Saratoga Way, Tracy -
19 Q. BY MR. ANDERSON: Do you see the property address on
20 Saratoga Court in Tracy California?
21 A. Yes, I do.
22 Q. Is this a property you were personally involved with?
23 A. Yes.
24 Q. How were you involved with it?
25 A. This is one of the properties that I did.

1 Q. Did you make false statements in the course of
2 recruiting the homeowner into the program for this property?
3 A. Yes, I did.
4 Q. Now looking down below, let's get the bottom half of
5 that page. Is this an Eduardo Vanegas straw buyer transaction?
6 A. Correct.
7 Q. And there is an employer listed, Financial
8 Enterprise, do you see that there?
9 A. I do.
10 Q. Do you know what Financial Enterprise is?
11 A. Another LLC that was set up also for the same
12 purpose.
13 Q. Do you know whose LLC that was?
14 A. I would be lying to say that I do specifically.
15 Q. Okay. Do you know whether or not Mr. Vanegas ever
16 worked for Financial Enterprise?
18 Q. Do you know if Mr. Vanegas was an account executive,
19 II?
20 A. No, he was not.
21 Q. Let's go to page three. Do you see the signature on
22 the borrower signature line?
23 A. I do.
24 Q. Are you able to recognize whether or not that's

1 A. That is Mr. Vanegas' signature.
2 MR. ANDERSON: Now let's go to Government's
3 Exhibit 31-A. And Your Honor, I would ask that this be
4 admitted as another mortgage company document pursuant to the
5 stipulation.
11 (Government Exhibit 31-A, 1606 Silvercup Court,
12 Redlands, CA - Residential Loan Applications, admitted into
13 evidence.)
14 Q. BY MR. ANDERSON: Go on the top half of this
15 document, first.
16 Do you recognize this property address on Silvercup
17 in Redlands, California?
18 A. No, I do not.
19 Q. Was this a transaction you were personally involved
20 with?
21 A. No.
22 Q. Do you see that Mr. Vanegas is also -- well, "Vanega"
23 is listed on this transaction?
24 A. Yeah. Without the "s".
25 Q. Let's go on the bottom half of that page. Do you see

1 where Dynasty Realty is listed?
2 A. Uh-huh.
3 Q. As the employer?
4 A. I do.
5 Q. Do you know what Dynasty Realty is?
6 A. That's Charles' original real estate company.
7 Charles Head's original real estate company.
8 Q. Did Mr. Vanegas to your knowledge ever work for
9 Dynasty Realty?
11 Q. Was he an account executive II for Dynasty Realty?
12 A. No, he was not.
13 Q. Let's look at page two of this exhibit. Gross
14 monthly income is listed as $13,575, do you see that?
15 A. I do.
16 Q. Are you aware -- is it within your knowledge whether
17 or not Mr. Vanegas made that amount of money each month?
18 A. No -- I'm sorry. Yes, he did not make that money.
20 A. Vanegas was my friend, and I knew a lot about him.
21 Q. Okay. Let's go to page three. And we will zoom in
22 on the signature. Do you see the signature on the borrower
23 signature line?
24 A. I do.
25 Q. Are you able to tell whether or not that's

2 A. That is not Mr. Vanegas' signature.
3 Q. Let's go to Government's Exhibit 31-B.
4 THE COURT: Any objection? When you moved 31-A, did
5 you mean the entire 31 series?
6 MR. ANDERSON: I didn't, Your Honor. I should say
7 that. Exhibit 31-B I would ask to have admitted pursuant to
8 the stipulation as another mortgage company document.
13 THE COURT: 31-B is admitted.
14 (Government Exhibit 31-B, 4005 W. Sunswept, Santa
15 Ana, CA - Residential Loan Application, admitted into
16 evidence.)
17 Q. BY MR. ANDERSON: Are you familiar with this address,
18 4005 West Sunswept, Santa Ana, California?
19 A. No, I'm not.
20 Q. Was this a property transaction you were personally
21 involved with?
22 A. No, it is not.
23 Q. You see that it is another Mr. Eduardo Vanegas?
24 A. I do.
25 Q. Looking to the bottom half, again Financial

1 Enterprises is listed as the employer, was that also not true
2 in this case?
3 A. Correct.
4 Q. Now Mr. Vanegas, did he work in the office at Head
6 A. He did not.
7 Q. What was the nature of his contact with Head
9 A. It was through me.
10 Q. Okay. How about for the other straw buyers, Juan
11 Urena and Abraham?
12 A. Same. Likewise. Juan Urena doesn't even speak
13 English, and Abraham Urena was also through me.
14 Q. I'll look to the third page. Are you able to
15 recognize whether or not that's Mr. Vanegas' signature?
16 A. That's his signature.
17 MR. ANDERSON: Your Honor, I would like to ask that
18 Government's Exhibit 31-C be admitted into evidence as another
19 mortgage company document pursuant to the record stipulation.
24 THE COURT: 31-C is admitted.
25 (Government Exhibit 31-C, 718 Mendell Street, San

1 Francisco, California - Residential Loan Applications, admitted
2 into evidence.)
3 THE COURT: Once you have covered this exhibit, then
4 we will take our break.
5 Q. BY MR. ANDERSON: Are you familiar with the property
6 718 Mendel Street, San Francisco, California?
7 A. I am not.
8 Q. So this is another one you weren't involved with?
9 A. Correct.
10 Q. If we go to page three. Is that Mr. Vanegas'
11 signature on the borrower line?
12 A. Yeah.
13 Q. Is that "yes"?
14 A. Yes. Yes.
15 MR. ANDERSON: Your Honor, that covers this exhibit.
16 THE COURT: All right. We have come to a good time
17 for our first break of the morning. During that break, as
18 always, keep in mind my admonitions not to begin discussing the
19 case or thinking about its conclusion. If someone does contact
20 you during the break, please let me know. Let's make this a
21 15-minute break. Be ready to go at just after 10:15 a.m. All
22 right. Thank you. Have a good break.
23 (Jury out.)
24 THE COURT: You may be seated if you wish. The Court
25 is standing just to offset the sitting. Is there anything we

1 need to discuss, Mr. Anderson?
7 THE COURT: All right. 15 minutes.
8 (Break taken.)
9 THE COURT: Do you have an issue?
10 MR. ANDERSON: Not really. We have a positive
11 development. We have the immunity orders for witnesses that we
12 anticipate may need them, Your Honor, so if you would like to
13 take those now.
15 MR. TEDMON: Your Honor, I'm taking a moment to jot
16 the names. I have reviewed the orders.
17 THE COURT: Mr. Haydn-Myer, you as well?
19 THE COURT: Are these affecting witnesses that are
20 coming up?
21 MR. ANDERSON: One of them possibly will testify
22 today. Although I don't know given our progress.
23 THE COURT: If we could just focus on that one? Is
24 that possible?
25 MR. ANDERSON: That's fine. We can hand that up.

1 MR. TEDMON: I need 30 seconds. I'm writing the
2 names down because the orders are all the identical.
3 MR. ANDERSON: Technically, we can do this ex parte,
4 Your Honor, but it makes more sense if defense counsel takes a
5 look at them.
6 THE COURT: Any reason not to bring Mr. Sandoval in?
7 MR. ANDERSON: No.
8 THE COURT: Let's do that. And Mr. Haydn-Myer, if we
9 get to your cross again soon is there any way for you to be a
10 little quicker on the draw with these exhibits.
11 MR. HAYDN-MYER: Yes, Your Honor. I don't think
12 Mr. Sandoval is going to be an issue.
13 THE COURT: You have all the supplies you need to
14 pre-mark?
15 MR. HAYDN-MYER: Actually, a lot of them were
16 provided yesterday. However because of the direction of her
17 testimony, I didn't put actually two on. I just had one I
18 didn't have marked at all. But I'll be more efficient.
19 THE COURT: All right. Let's bring the jury in.
20 (Jury in.)
22 court, ladies and gentlemen. We'll continue now with the
23 direct examination of Mr. Sandoval. Mr. Anderson.
24 Q. BY MR. ANDERSON: I would like to bring up a split
25 screen, Exhibit 31 -B, page three, and 31-C, page three. And

1 we're going to zoom in on the middle of each of those pages.
2 In your association with Mr. Vanegas, did you know
3 where he lived?
4 A. Yeah.
5 Q. Did he ever live at 4005 West Sunswept in Santa Ana,
6 California?
7 A. No.
8 Q. Did he ever live at 718 Mendell Street in San
9 Francisco, California?
10 A. No.
11 Q. We need page three of both those exhibits.
12 Now, on both 31-B and 31-C, page three, it's checked
13 that he intends to occupy the property as his primary
14 residence, is that correct?
15 A. That's what it states on there, yes.
16 Q. Was he actually going to occupy either of those
17 properties as his primary residence?
18 A. No.
19 Q. Do you know why that box is checked "yes" on both of
20 these applications?
22 speculation. Lack of foundation as to that answer.
23 THE COURT: Just answer the question. Do you know?
25 Q. BY MR. ANDERSON: How do you know? Do you know based

1 on your knowledge of how the real estate --
2 A. Yeah. Based on the previous experience on doing
3 loans.
4 Q. What's the advantage of checking "yes" to owner
5 occupied?
6 A. The loan to values are higher.
7 Q. What's a loan to value?
8 A. The amount that the bank is willing to lend you
9 against the value of the property.
10 Q. Do you know if this box was generally checked in the
11 foreclosure transactions conducted by people at Head Financial
12 Services?
13 MR. TEDMON: Objection, Your Honor. Vague.
15 Q. BY MR. ANDERSON: Are you familiar with the standard
16 practice with foreclosure transactions at Head Financial
17 Services?
18 A. Yes.
19 Q. Do you know whether or not it was standard practice
20 to check "yes" on this box?
21 A. Yes.
23 A. Because when we filled out the documents, we usually
24 filled out two sets --
25 MR. TEDMON: Objection, Your Honor. The witness

1 keeps referring to "we," and I think he needs to speak to
2 specifically who are we talking about.
3 THE WITNESS: When I --
4 THE COURT: Sustained. Start over and tee up the
5 question so it's more clear.
6 Q. BY MR. ANDERSON: How do you know that this box
7 was to be checked?
8 A. Specific to myself, when I did loans, I would fill
9 out two sets of documents. One being for the first loan, and
10 the second being for the second loan, which would give us the
11 full amount of the property value.
12 Q. Is there a reason why you did that?
13 A. To be able to get the maximum amount from the banks
14 itself.
15 Q. Did anyone ever tell you that that was what was to be
16 done in these transactions?
17 A. It was common knowledge.
18 Q. Why do you --
19 MR. TEDMON: Objection. Non-responsive. Move to
20 strike.
21 THE COURT: That motion is granted. The jury shall
22 disregard that answer.
23 Q. BY MR. ANDERSON: Was this ever discussed around the
24 office that you needed 100 percent loans?
25 A. Yes.

1 MR. TEDMON: Objection. It's vague, Your Honor. We
2 don't know who he's talking to.
3 MR. ANDERSON: Well, that's the next question.
4 THE COURT: All right. With that understanding.
6 Q. BY MR. ANDERSON: Who discussed that in the office?
7 A. Either myself, personally, I discussed it with Kou
8 Yang, Charles Head. That's it.
9 Q. Okay. So when you say that you -- by getting the
10 larger amount of financing, what was the financial advantage,
11 if any?
12 A. Less of a down payment.
13 Q. Did that put more money into the pockets of the
14 people doing the transactions like yourself?
15 A. Correct.
17 THE COURT: Sustained. Who, what, where, when, why,
18 generally.
19 THE WITNESS: We would benefit --
20 MR. ANDERSON: I've got to ask you a question.
21 THE COURT: Wait for the next question.
22 Q. BY MR. ANDERSON: Why would you check this box?
23 A. Myself, I would benefit by checking these boxes in
24 order to acquire the largest amount from the bank. So that way
25 when the funds were transferred into our account, it would be

1 the maximum amount possible.
2 Q. So if we looked through some of the other loan
3 transactions, would you expect to also see that box checked on
4 the other loan applications that we've talked about?
5 MR. TEDMON: Objection, Your Honor. Vague as to
6 other loan applications. There is a multitude of them.
8 Q. BY MR. ANDERSON: That we've just talked about with
9 Mr. Vanegas?
10 A. Yes.
11 Q. Did there come a time when you did not want other
12 people to use Mr. Vanegas as a straw buyer anymore?
13 A. Yes.
14 Q. What was the reason you didn't want other people
15 using him as a straw buyer?
16 A. It was brought to my attention that documents were
17 being filled out without their knowledge.
18 Q. Without whose knowledge?
19 A. Without the straw buyer's knowledge -- or my straw
20 buyer's knowledge, Abraham Urena, Juan Urena, or Eduardo
21 Vanegas.
22 Q. How did that come to your attention?
23 A. Abraham Urena came to me and said that he received
24 documents to a property he had not signed for.
25 Q. What did you do as a result of learning that

1 information?
2 A. I requested to Kou Yang and Charles Head to stop
3 using my straw buyers.
4 MR. ANDERSON: Let's look at Government's
5 Exhibit 40-B. Your Honor, I would ask that this be admitted,
6 pursuant to the stipulation, as an e-mail.
7 THE CLERK: 40-B or D, Mr. Anderson?
8 MR. ANDERSON: B. And, Your Honor, I would ask to
9 read the general stipulation regarding the e-mails at this
10 time.
11 THE COURT: Any objection to 40-B being admitted or
12 the general stipulation being read, Mr. Tedmon?
13 MR. TEDMON: Is it 40-B as in boy?
14 THE COURT: B as in boy, yes.
15 MR. TEDMON: That's fine, Your Honor. No objection.
17 MR. HAYDN-MYER: No objections, Your Honor.
19 (Government Exhibit 40-B, Email from Kou Yang - FW:
20 Straw Buyer, dated 3/8/2005, admitted into evidence.)
21 MR. ANDERSON: Your Honor, may I read?
23 MR. ANDERSON: It's stipulated between the parties
24 that e-mails admitted pursuant to this stipulation from the
25 e-mail addresses or addressees, charleshead@headmortgage.com,

1 charleschead@headmortgage.com, charleshead, charleschead, and
2 charlesc.head, with a period after the C, belong to and were
3 used by defendant Charles Head.
4 It is further stipulated between the parties that
5 e-mails admitted pursuant to this stipulation from the e-mail
6 addresses or addressees, mhead@financialenterprises.com,
7 mike@headmortgage.com, and mikehead, belong to and were used by
8 defendant Jeremy Michael Head.
9 Q. BY MR. ANDERSON: So let's take a look at Government
10 Exhibit 40-B.
11 First of all, you're not a sender or receiver on this
12 e-mail, is that correct?
13 A. Correct.
14 Q. But it's listed as from Kou Yang to Charles Head at
15 the top, is that right?
16 A. Correct.
17 Q. And it references, "who do I use because Omar told me
18 not to let anyone use his straw buyer."
19 Is that consistent with the time period March 8th,
20 2005 when you were asking people not to use your straw buyers?
21 A. Correct.
22 MR. ANDERSON: Let's look at Government's
23 Exhibit 40-M. Your Honor, I would ask that this be admitted
24 pursuant to the stipulation.

1 THE CLERK: Is that M as in Mary?
2 THE COURT: M as in Mary, 40-M.
6 THE COURT: 40-M is admitted.
7 (Government Exhibit 40-M, Email from Kou Yang - dated
8 7/11/2005, admitted into evidence.)
9 Q. BY MR. ANDERSON: Have you ever seen this e-mail
10 chain before?
11 There is a binder behind you that you can also pull
12 out, and it will have each page of the e-mail. Behind you.
13 You can see it.
14 Let's start at the back, which would be 40-M. There
15 is a page five, but there's nothing on it. Start at 40-M, page
16 four.
17 There is an e-mail address listed here, "To Sandoval"
18 and says, "mail to omarsandoval@headmortgage.com." Do you know
19 whose e-mail address that is?
20 A. That is mine.
21 Q. And were you using this e-mail address back in 2004
22 and 2005?
23 A. That is correct.
24 Q. So let's go to the page before this one, and let's
25 look at this e-mail chain. Take a look at that.

1 A. Okay.
2 Q. What's going on in this e-mail? Is this an e-mail
3 from you to somebody?
4 A. This was a discussion to a property that Lenny Bernot
5 wanted Eddie Vanegas to sign title over to, and Vanegas,
6 trusting me, didn't want to sign it over because he felt that
7 if he signed it over, there was a possibility that they would
8 default on the property, and he would be left holding -- in a
9 sense holding the ball, but being left with the debt itself.
10 Q. Let's back up. Who is Lenny Bernot?
11 A. Lenny Bernot was another person like myself that also
12 started an LLC and created -- the bank -- did the whole bank
13 accounts and everything the same way.
14 Q. Is this e-mail then in reference to a transaction
15 where Eddie Vanegas was a straw buyer?
16 A. Correct.
17 Q. And why were you involved in it, in this e-mail?
18 A. Just because Eddie -- primarily because Lenny Bernot
19 knew that Eddie Vanegas was my friend, and that I would
20 probably be able to get him to sign documents much easier than
21 he would.
22 Q. Let's skip forward to page two. The whole document
23 will be in evidence, so it can be reviewed later. And look at
24 the bottom of that page. Pull up the message there.
25 Do you see where it says, "make sense, tell Eddie we

1 can find a new straw buyer if he's willing to pay the fee we
2 gave him"? Do you see that portion?
3 A. Yes.
4 Q. Were you cc'd on this e-mail?
5 A. Yeah.
6 Q. Who was it from?
7 A. It's from Charles.
8 Q. And who is the person it's to?
9 A. To Kou.
10 Q. And who is Kou?
11 A. Kou Yang was the processor for all the loans.
12 Q. What's being discussed in this message where it's
13 referencing, "tell Eddie we can find a new straw buyer if he's
14 willing to pay the fee we gave him"?
15 A. They were requesting for Eddie to give back the 5,000
16 that he had received for the property.
17 Q. So that was a fee -- his straw buyer fee?
18 A. Correct.
19 Q. Was Eddie Vanegas ever a true investor in any of
20 these properties?
21 MR. TEDMON: Objection, Your Honor. Vague. Also
22 calls for conclusion.
24 Q. BY MR. ANDERSON: Did Eddie Vanegas ever invest any
25 money in these properties?

1 A. No.
2 Q. Which way did the money flow?
3 A. Usually to myself.
6 Q. BY MR. ANDERSON: So he never put any money in?
8 Q. BY MR. ANDERSON: Did he --
9 THE COURT: Overruled. That information has been
10 elicited.
11 Q. BY MR. ANDERSON: Thank you, Your Honor.
12 Did he get money back out of the properties on the
13 transactions other than the $5,000?
14 A. No.
15 MR. ANDERSON: Now, let's go to Government's
16 Exhibit 40-D. Your Honor, I would ask that 40-D be admitted
17 pursuant to the record stipulation.
19 MR. TEDMON: Just one moment, Your Honor. No, Your
20 Honor.
23 THE COURT: 40-D is admitted. D as in dog.
24 (Government Exhibit 40-D, Email from Charles Head -
25 Re: Thanks, dated 5/26/05, admitted into evidence.)

1 Q. BY MR. ANDERSON: This one is a rather lengthy chain.
2 Would you mind grabbing the binder behind you so you can look
3 through each page of it. You want it pull out the binder that
4 has the 40-D exhibit in it.
5 Okay. We start at the back of it. If you take a
6 quick look, you will have to look over two pages, pages three
7 and four, see if you recognize this e-mail.
9 Q. Do you recognize the e-mail?
10 A. Yeah.
11 Q. Let's start on page three, at the bottom of the page.
12 A. Uh-huh.
13 Q. Can you tell us what this discussion between you and
14 Charles Head is about?
15 A. We were talking about a transaction that we had just
16 completed, and at the same time we were also talking about a
17 purchase of my property, which Charles Head lent me money for.
18 Q. Why are you being thanked for waiting for your
19 foreclosure proceeds?
20 A. A hundred percent I don't know.
21 MR. TEDMON: Objection. If he doesn't know, Your
22 Honor --
24 Q. BY MR. ANDERSON: Is there part of the reason that
25 you do know?

1 A. Yeah. Because I'm looking at it right here.
2 Q. Okay. So what's the reason?
3 A. Apparently, he didn't have the funds at that point.
4 MR. HAYDN-MYER: Objection. Speculation.
6 Q. BY MR. ANDERSON: According --
7 MR. HAYDN-MYER: I'm sorry. Strike the answer.
9 disregard the last answer.
10 Q. BY MR. ANDERSON: What, according to Charles Head,
11 was the reason that you had to wait?
12 A. He had allocated funds for something different.
13 Q. Does Charles Head indicate that he has additional
14 wires of money coming in?
15 A. At this point, no.
16 Q. How about down on the sentence?
17 A. I'm sorry. Talking about on this page. Yeah. I
18 don't know the amounts. Well, it's on here, but I don't
19 remember the amounts directly.
20 Q. Okay. So you don't independently remember those
21 amounts, you just remember it from the e-mail?
22 A. Yeah.
23 Q. Okay. Let's look at the top of the page.
24 A. Sure.
25 Q. Refer you to the line that says, "I spoke to Ron at

1 Kalen's Press." Who is Ron at Kalen's Press?
2 A. That would be the guy that did the printing for us
3 for the postcards.
4 Q. When you did your initial printing of the postcards,
5 do you recall who paid for that?
6 A. No, I don't.
7 Q. Let's go to the next page, 40-D2. I guess that's the
8 previous page, really. 40-D2. And I would like to refer you
9 to this middle message.
10 This is from Charles Head to you, is that correct?
11 A. Yeah.
12 Q. Point out a portion, "I've been concentrating on NOD
13 files lately, so we do very little in terms of loans other than
14 our own foreclosure files."
15 Do you know what an NOD file is?
16 A. Notice of default.
17 Q. Could you explain for us what that's referring to?
18 A. It would be referring to the people that were facing
19 foreclosure.
20 Q. So the types of transactions that we've been
21 discussing through your testimony?
22 A. Correct.
23 Q. So at this point, is your understanding of what
24 Charles Head is telling you that there are very little other
25 types of loans being done by the business?

1 A. Correct.
2 Q. Let's go to the top of the page. Is this a message
3 from Charles to you?
4 A. Correct.
5 Q. "See if you can find a processor to work your files
6 and a good source of leads if what Keith is providing is not
7 enough." Do you see that sentence?
8 A. Yes, I do.
9 Q. Can you tell us what that's referring to?
10 A. This is actually referring to standard loans. Keith
11 would provide us leads for us to be able to contact people.
12 That's cold calling. And what he was talking about was the
13 fact that I was in Long Beach, and I had a different office.
14 So we wanted to proceed on regular loans in that office.
15 Q. Can you describe for us how -- you said initially you
16 were working in Long Beach with Charles Head?
17 A. Correct.
18 Q. Was there a point where the situation changed
19 somewhat?
20 A. Yeah, Charles left to Irvine -- Irvine, yeah, the
21 Pacific Mercantile Bank building, and I stayed behind.
22 Q. Was that near South Coast Plaza?
23 A. Yes.
24 Q. Could that be in Costa Mesa?
25 A. It is Costa Mesa. You're right.

1 Q. So at that point were you still working for Charles
2 in the Long Beach office?
3 A. Yes, I was.
4 Q. Was this while you were still primarily working on
5 other types of loans, normal loans?
6 A. Correct.
7 Q. And what was Charles working on during that time?
8 A. They had changed the whole purpose to file only for
9 NODs.
10 Q. Let's go to the page before that, 40-D. Look at this
11 middle message. Is that from -- I'm sorry. I want to ask you
12 another question since it was brought up. Who is Keith?
13 A. Keith worked at the office as a -- I think it was an
14 office manager to be honest. I'm not a hundred percent.
15 Q. He worked for Charles?
16 A. Charles -- I think he was the office manager.
17 Q. Is his last name Brotemarkle, do you know?
18 A. No, I don't remember his last name.
19 Q. Could you take a look at this middle message and tell
20 us what you are writing to Charles Head about?
21 A. We're discussing two things. One, we're still
22 discussing the Long Beach office and getting it to do standard
23 loans, and, two, we're discussing Eddie Vanegas and Lenny
24 Bernot's situation with that same property that we were talking
25 about getting notarized over to him.

1 Q. So that was the situation we were talking about with
2 a previous e-mail?
3 A. Right. Where I said Eddie Vanegas did not trust
4 Lenny Bernot just to a hundred percent transfer property title
5 to him.
6 Q. And if we look at the top message, from Charles to
7 you, correct?
8 A. Uh-huh.
9 Q. "There is a huge issue with that property. We are
10 trying to sell it after upgrading it. But who wants to do that
11 if we cannot contact the seller. No trust issues were
12 involved. We cannot get our funds if we cannot find a seller
13 that can authorize the release of our funds."
14 Do you know what that's in reference to?
15 A. They weren't able to get in contact with Vanegas.
16 Q. Vanegas is the person he's referring to as the
17 seller?
18 A. Right.
19 Q. Why is it important to get in contact with Vanegas in
20 order to complete this transaction?
21 A. Vanegas has to sign everything. Vanegas has to sign
22 everything.
23 Q. Is that because he's the straw buyer on the property,
24 and it's technically in his name?

2 Q. BY MR. ANDERSON: Why is it that Vanegas is necessary
3 to complete the transaction?
4 A. Because you can't do a transfer of title without the
5 person on the grant deed signing it.
6 Q. Okay. So I want to ask you about some other people
7 and see if you know them and if you can explain who they were.
8 A. Sure.
9 Q. Who is Xochitl Sandoval?
10 A. She's my current wife.
11 Q. Did she work with you as well?
12 A. Correct.
13 Q. Were properties ever put in her name?
14 A. Yes.
15 Q. Who is Sarah Mattson?
16 A. She was Michael Head's girlfriend.
17 Q. Do you know whether or not she was involved in
18 putting any properties into her name?
19 A. Yes.
21 A. Reality. Just know.
22 Q. Okay. Do you know if she had any other roles in the
23 office?
25 Q. Do you know who she primarily worked with?

1 A. With Michael Head.
2 Q. Are you familiar with the name Marrisa Page?
3 A. No, I am not.
4 Q. How about Adam Coffman?
5 A. I know who he is. I don't know him at all, though.
6 Q. How do you know who he is?
7 A. I just know that he's brother to Josh Coffman.
8 Q. Do you know where Adam Coffman lived in 2004/2005?
9 A. I do not.
10 Q. Are you familiar with the name Marrisa Page?
11 A. No.
12 Q. Do you know where Charles Head lived --
13 A. Yes --
14 MR. TEDMON: Objection. Vague as to time.
16 Q. BY MR. ANDERSON: I didn't finish the question. Do
17 you know where Charles Head lived in 2004 and 2005?
18 A. Yes.
19 MR. ANDERSON: Your Honor, I would like to ask that
20 Government's Exhibit 17-A be admitted as a mortgage document
21 pursuant to the stipulation.

2 (Government Exhibit 17-A, 9311 Monte Visa Street,
3 Rancho Cucamonga - Loan File, admitted into evidence.)
4 Q. BY MR. ANDERSON: Do you know if Charles Head lived
5 at 9311 Monte Vista Street in Rancho Cucamonga?
7 Q. And that's in 2004, 2005, 2006?
8 A. Correct.
9 Q. Have you ever known Charles Head to live at that
10 address?
11 A. No, I have not.
12 Q. Let's look down at the middle of that page. Who is
13 listed as the borrower on this property?
14 A. Charles C. Head.
15 Q. And I would like to go to page three of the same
16 exhibit. Does this mortgage application list that Charles Head
17 intends to use that property as his primary residence?
18 A. Yes.
19 MR. ANDERSON: Let's go to Government's Exhibit 36-A.
20 And, Your Honor, I would ask that this also be admitted as a
21 mortgage company document pursuant to the stipulation.

2 (Government Exhibit 36-A, 16309 Windcrest Drive,
3 Fontana, CA - Residential Loan Applications, admitted into
4 evidence.)
5 Q. BY MR. ANDERSON: Have you ever known Charles Head to
6 live at 16309 Windcrest Drive in Fontana, California?
7 A. No.
8 Q. Did Charles Head live in San Bernardino County at
9 all, that you knew of?
10 A. Not that I knew of.
11 Q. During the time period 2004/2005 did he live in San
12 Bernardino County?
13 A. Not that I'm aware of.
14 Q. I would like to look at the middle of this page. Is
15 this a loan application for Charles C. Head?
16 A. Yes.
17 Q. Let's go to page three. Does this application mark
18 that Charles Head intends to use the property as his primary
19 residence?
20 A. Yes.
21 Q. Let's go to the bottom of that page. Do you see the
22 "Andrew Vu" printed there?
23 A. Yes, I do.
24 Q. Do you know who Andrew Vu is?
25 A. Yes.

1 Q. Who is Andrew Vu?
2 A. Andrew Vu was another I guess you would call agent
3 like myself that also set up an LLC, and was also doing the
4 same type of transactions.
5 MR. ANDERSON: Let's go to Government's Exhibit 36-B.
6 Your Honor, I would ask that this be admitted pursuant to the
7 stipulation as another mortgage company document.
13 (Government Exhibit 36-B, 1612 East Poppy Street,
14 Long Beach, CA - Residential Loan Application, admitted into
15 evidence.)
16 Q. BY MR. ANDERSON: Do you know if Charles Head lived
17 at 1612 East Poppy Street in Long Beach, California -- in Los
18 Angeles, California during 2004/2005?
19 A. No.
20 Q. No, you don't know, or, no, he didn't live there?
21 A. No, I don't know him living there.
22 Q. Okay. And this application is also a Charles Head
23 application, is that correct?
24 A. Correct.
25 Q. Let's go to page three. Did this application also

1 get checked that, yes, he intended to occupy the property as
2 his primary residence?
3 A. Yes.
4 Q. I would like to go further in this -- this exhibit to
5 page five. You had mentioned briefly, earlier, multiple
6 applications for the same -- not just for different properties
7 but sometimes you'd do two applications for one property, is
8 that right?
9 A. Correct.
10 Q. Why is that?
11 A. The first one was to get the 80 percent financing,
12 and the second was to get the 20 percent financing in order to
13 be able to do 100 percent financing on the property.
14 Q. So just a method of splitting up 100 percent
15 financing?
16 A. Correct.
17 Q. Is this an example, since there is a second
18 application with a smaller loan amount, of a 20 percent loan?
19 A. Yeah, it would be the smaller amount.
20 Q. Okay. So we can take the exhibit down.
21 Once you completed the transactions that you were
22 personally involved with, did you keep copies of the documents?
23 A. Sometimes I did. Sometimes I didn't.
24 Q. But you were able to if you wanted to?
25 A. Yes.

1 Q. Were those documents kept anywhere in the office as
2 well?
3 A. In the processing with Kou Yang.
4 Q. Were they accessible?
5 A. I guess accessible if you walk in and grab them.
6 Q. Okay. So if somebody wanted to make copies for a
7 homeowner, it was something that was possible to do?
8 MR. TEDMON: Objection. Speculation.
10 Q. BY MR. ANDERSON: Sorry. Your answer was?
11 A. Yes, you would.
12 Q. I would like to ask you a few more people. Are you
13 familiar with Ely Assadi?
14 A. No, I am not.
15 Q. How about Dynamic Partners, have you heard that name
16 before?
17 A. I've heard of the name, but I don't know where it's
18 coming from.
19 Q. Do you remember what context you heard it in?
20 A. I want to say that it's another one like Statewide
21 Financial Group.
22 Q. Do you know a person by the name of Akemi Botari?
23 A. I do know Akemi, yes. Akemi was once Charles Head's
24 girlfriend?
25 Q. Did she also work for Head Financial Services?

1 A. At the beginning I think she did.
3 identification as Government's Exhibit 40-N.
4 MR. ANDERSON: Your Honor, I would ask that this be
5 admitted as an e-mail pursuant to the stipulation.
6 THE COURT: 40-N as in Nancy?
10 THE COURT: Any objection, Mr. Haydn-Myer?
12 THE COURT: 40-N is admitted.
13 (Government Exhibit 40-N, Email from Kou Yang - FW:
14 LeadBull.com VIP Accounts Info, dated 10/25/04, admitted into
15 evidence.)
16 Q. BY MR. ANDERSON: How did you know who to send
17 postcards to or how were leads generated?
18 A. Primarily it was through the title companies.
19 Q. What is this e-mail an example of?
20 A. It's an example of actual loan leads.
21 Q. So a different method of lead generation?
22 A. Correct.
23 Q. There are people listed on the "to" line of this
24 e-mail. Go up to that.
25 A. Uh-huh.

1 Q. Where it says Omar on that "to" line, is that you?
3 Q. So once loans were obtained on the properties, was
4 anything done in -- was anything done with an escrow company?
5 A. Once the loan was obtained --
6 Q. Well, as part of the transaction process was an
7 escrow company used in any way?
8 A. Yes.
9 Q. What was -- what happened with the escrow company,
10 what was the purpose of using an escrow company?
11 A. The escrow company was in charge of making sure all
12 documents were in order, and that funds were allocated to the
13 proper people.
14 Q. Was the escrow process the point where money was
15 taken out of the equity of the home?
16 A. Correct.
17 Q. How is escrow -- if you know.
18 Let me ask you this way. Do you know how escrow was
19 directed to get money out of the home and to a company you
20 controlled or someone else controlled?
21 A. Yeah, I do know.
22 Q. How were they directed?
23 A. There would be a document with wiring instructions
24 included into all the files.
25 Q. After the equity was taken, did you continue to

1 collect payments from people that you had done these
2 transactions with?
3 A. With the homeowner?
4 Q. Yes.
5 A. Yes.
6 Q. What was the goal with those payments?
7 A. Partial --
8 MR. TEDMON: Your Honor, it's vague. I don't know
9 what goal means.
11 Q. BY MR. ANDERSON: What was your objective in
12 collecting payments from the homeowners?
13 A. To pay part of the actual mortgage payment that --
14 from the loan that we had gotten on the property.
15 Q. What was the eventual -- what was your eventual plan
16 for the properties?
17 A. What do you mean what's my eventual plan?
18 Q. Who were the properties supposed to end up with?
19 MR. TEDMON: Objection. Vague.
21 Q. BY MR. ANDERSON: Were the properties supposed to go
22 back to the homeowners?
25 Q. BY MR. ANDERSON: Who was supposed to get back the

1 property in the end?
3 THE COURT: Can you pinpoint properties.
4 Q. BY MR. ANDERSON: The properties that you were
5 involved with, who was eventually supposed to get those
6 properties?
7 MR. TEDMON: Objection. He has testified to a
8 multitude of transactions. Each could be different. It's
9 vague.
10 THE COURT: We're talking about eight to nine.
11 Q. BY MR. ANDERSON: Well, was it the same for your
12 transactions, did you have the same plan?
13 A. Yes.
14 Q. All right. So what was the plan with the
15 transactions?
16 A. My plan with my transactions was that the person
17 would default, and I would wind up with the property.
18 Q. Did you ever hear a similar plan expressed by anyone
19 else you were working with?
20 A. Yes.
21 Q. Who expressed that same plan?
22 A. Pretty much everybody in the office. Andrew Vu,
23 Charles Head, Michael Head, Josh Coffman. It was common
24 knowledge.
25 MR. ANDERSON: Thank you.

1 MR. TEDMON: Objection. Move to strike the last part
2 of the answer. Common knowledge.
3 THE COURT: That is granted. The jury shall
4 disregard the phrase "common knowledge." All right.
5 Q. BY MR. ANDERSON: Could you take a look in your
6 binder at Exhibit 45-E?
7 A. 45-E, you said?
8 Q. Yes.
9 A. Okay.
10 Q. All right. Do you recognize Government's
11 Exhibit 45-E? It's a five-page exhibit. You should take a
12 look at each page.
15 A. Yes.
17 A. This is a form that was given to me also in order to
18 know the step-by-steps on how to proceed on one of these
19 foreclosure or NOD properties.
20 Q. Who gave you the form?
21 A. Charles Head.
23 Government's Exhibit 45-E be admitted into evidence.

3 THE COURT: All right. 45-E is admitted, five pages.
4 (Government Exhibit 45-E, Script, admitted into
5 evidence.)
6 Q. BY MR. ANDERSON: In addition to what's on this
7 script, did Charles Head give you additional information orally
8 about what you should do?
9 A. Yes.
10 Q. So let's cover just what's on the script, though, for
11 now.
12 Let's start at number one. Starts, "the list, call
13 Landsafe Title, request an NOD list." Do you see that portion?
14 A. I do.
15 Q. What's that instructing you to do?
16 A. On how to get the lead source with the NOD list.
17 Q. Let's go to the next section, section two. What does
18 this section instruct you to do?
19 A. On how to retrieve the postcards.
20 Q. Let's go to section three. What does this section
21 instruct you to do?
22 A. This one is once the contact has already been made
23 with the client.
24 Q. What is the first thing you're supposed to do with
25 the client?

1 A. The first thing is to tell them that we would be
2 trying to refinance their home.
3 Q. Why is that?
4 A. I personally would be to set them up in order for me
5 to be able to come back to them and tell them that they didn't
6 qualify.
7 Q. And it instructs you to find out the safe estimated
8 value of the home. Why is that?
9 A. In order to see if it's a transaction that is worth
10 us doing to begin with.
11 Q. What would make a transaction worth doing?
12 A. Something that had a substantial amount of equity
13 built into it.
14 Q. Why does it need a substantial amount of equity?
15 A. To be able to both pay off the person, the homeowner,
16 the straw buyer, be able to have funds left over, to be able to
17 maintain the property, or make the payments, and also gain a
18 profit.
19 Q. Does it list selling points on this procedure, this
20 document?
21 A. It does.
22 Q. What are the selling points that are listed?
23 A. One is that they're going to get cash out. Two is
24 that their payments are going to be close to what they already
25 are paying. Three is that they would be retaining ownership of

1 the -- well, not retaining ownership, but being able to stay in
2 their house.
3 Q. Does it go on to explain what you're to tell the
4 people verbatim when you speak with them?
5 A. It does, yes.
6 Q. "That we have a few different programs to help people
7 in foreclosure. The first way we help -- the first way to help
8 is we can try to refinance the home using your credit. The
9 second way is to sell the home to one of our investors
10 outright. They pay all cash within a week. They will give you
11 any amount you like, 5,000 to 15,000, and 45 days to find a new
12 place to live. The last way, this is in parentheses, what we
13 want them to do, is to allow one of our investors to finance
14 the home for you in another person's name. It works like a
15 refinance, but we set it up as if it's a purchase so the bank
16 thinks the loan is for someone else. This will allow you to
17 catch up on the mortgage payments and get 5 to $10,000 in your
18 hands in cash. Repeat this often when you talk to them. The
19 investor will also pay off the late payments and wire within
20 the week," and so on.
21 Do you see that portion?
22 A. I do.
23 Q. What are you being instructed to do there?
24 A. To give the person different options.
25 Q. Were there other options that were actually being

1 conducted?
2 A. No.
3 Q. Was there an option one with a refinance for these
4 people?
5 A. There wasn't an option one.
6 Q. Okay. Did you have investors set up to purchase the
7 homes on the terms that are listed here?
8 MR. TEDMON: Objection. Vague as to time.
9 THE COURT: Can you clarify?
10 Q. BY MR. ANDERSON: When conducting these transactions,
11 were the -- well, the investors were people like Juan Urena,
12 correct?
13 A. Correct.
14 Q. Abraham Urena?
15 A. Correct.
16 Q. Were they in a financial position or situation to
17 step forward and purchase the homes outright from these people?
18 A. No.
19 Q. So what were you really trying to get the people to
20 do, to sign up for?
21 A. The lease buy-backs.
22 Q. Now, in addition to what's written here, did Charles
23 Head -- excuse me -- was there anything about the 100 percent
24 of the equity being taken out of the home that you were told to
25 -- or were you told to tell the homeowners that 100 percent of

1 their equity would be taken out?
2 A. No.
3 Q. Were you told the opposite?
4 A. 50 percent.
5 Q. Let's go to section four. The section entitled "bait
6 and switch, you've heard about this before." Do you see that
7 section?
8 A. I do.
9 Q. Can you explain what you're being told to do in this
10 section?
11 A. Bait and switch pretty much referred to the fact that
12 we would tell the customer that their home was going to be
13 refinanced, and we would then contact them back and tell them
14 that unfortunately we weren't going to be able to do that.
15 So we would pretty much bait them by telling them
16 that we would refinance and then tell them afterwards how we
17 weren't able to do so, and then offer the option of giving them
18 the lease buy-back option.
19 Q. As time progressed, did the instruction on what to
20 tell the homeowner change?
21 A. Yes.
22 Q. Who started giving different instructions, additional
23 instruction?
24 A. The initial ones were via e-mail and verbal. Some
25 through either Kou, who sent out e-mails, or others went by --

1 I talked specifically personally to Charles Head.
2 Q. Were you in a position to see false statements being
3 made to homeowners?
4 A. Personally, yes.
5 Q. Could you tell us who you saw or heard making false
6 statements to homeowners?
7 A. It was only at the beginning, when the office was all
8 together. Mike Head, Josh Coffman. And there is another guy.
9 I just can't -- Josh Coffman and his buddy. I can't remember
10 his name right now. Sorry.
11 Q. That's fine. Were there other things also listed in
12 these instructions that were designed to be told to the
13 homeowner in order to make them feel more comfortable?
14 A. That their name would stay on title.
15 Q. Was that true?
16 A. No.
17 MR. ANDERSON: No further questions, Your Honor.
18 THE COURT: All right. Mr. Tedmon, are you taking
19 cross first?
20 MR. TEDMON: Yes.
23 BY MR. TEDMON:
24 Q. Good morning, Mr. Sandoval.
25 A. Good morning.

1 Q. I want to start where Mr. Anderson left off, so I
2 would like to have Government's Exhibit 45-E2 put on the
3 screen, please. And if we could expand this section here.
4 Okay. Mr. Anderson didn't ask you about this, so I'm
5 going to. Do you see where it says in the italics, "always use
6 the phrase 'refinance the home back into your name'"?
7 A. Correct.
8 Q. Now you testified just a few minutes ago that one of
9 the options the homeowner was supposed to be given was that
10 they could refinance their home, correct?
11 A. That's correct.
12 Q. All right. And then it turned out that they couldn't
13 be refinanced, correct?
14 A. Correct.
15 Q. Now you knew enough about the mortgage industry to
16 know if a person is going through foreclosure or is on the
17 doorstep to losing their home, they're not going to be able to
18 refinance, you knew that, didn't you?
19 A. Yes, I did.
20 Q. So that was true, you could not refinance your home?
21 A. Correct.
22 Q. So the program as it was set up was to allow them to
23 stay in their home because they were going to sell it, true,
24 and then rent it back, you knew that?
25 A. I knew that, yeah.

1 Q. You knew that. In fact, you have already testified
2 to a multitude of transactions where that in fact occurred,
3 true?
4 A. Correct.
5 Q. Now in this document it says here, "it makes it seem
6 like it's not an outright sale even though they know it is."
7 See that?
8 A. Yes.
9 Q. Okay. So the homeowner knew at the time they were
10 reviewing the program that it was a sale of their home,
11 correct, and that's what this refers to?
12 A. Correct.
13 Q. And in point of fact, the reason that there was a
14 lease option or a rental agreement in some instances was
15 because the homeowner no longer owned the home, they were
16 renting it at that point, after the transaction completed,
17 true?
19 Q. And that's what that's referring to, correct?
21 Q. Then it goes on to say, "wait a few seconds so they
22 can understand what you are saying."
23 The reason that that's being instructed is so the
24 homeowner knows what's happening, correct?

1 Q. And in fact, in every one of these equity purchase
2 agreement programs there was at least a five-day period between
3 the date the homeowner signed the documents to where they could
4 cancel, correct?
6 Q. So they had every opportunity to check into what the
7 program was about, true?
8 A. That is true.
9 Q. And that's what this is referring to, correct?
11 Q. We can take that off the screen, please.
12 Now, Mr. Sandoval, this program that you've testified
13 about, and that you were involved in six or seven times,
14 whatever the number is, was it always involving someone or
15 families that were going to lose their home?
16 A. Yes.
17 Q. In fact, each one of these individuals was on the
18 doorstep to foreclosure, correct?
20 Q. And you know from your background in the finance
21 industry that if the bank foreclosures, they take the property,
22 correct?
23 A. They do.
24 Q. And they take all their money, correct?

1 Q. They get nothing, correct?
3 Q. Now in this program, these individuals actually got
4 money, didn't they?
5 A. Yes, they did.
6 Q. 5,000, 10,000, whatever the number is, correct?
8 Q. And that number that they got, that amount of money
9 they got, was specifically set out in the Equity Purchase
10 Agreement, correct?
12 Q. And you've already testified to a few of those
13 documents?
14 A. Correct.
15 Q. And that was the pattern and practice of Mr. Head and
16 Head Financial Services in this program, correct?
18 Q. And it was very well set out for the homeowner to
19 review, correct?
20 A. Document-wise, yes.
21 Q. And in each instance, the homeowner got their money,
22 didn't they?
24 Q. Now another part of the program was that they not
25 only got money they would not have gotten otherwise if the home

1 was foreclosed, they got to stay there, true?
2 A. True.
3 Q. And that was part of the rental process, correct?
5 Q. All right. So their family wasn't kicked out of the
6 home, they got to stay there, correct?
8 Q. All right. And then another part of this program was
9 they had a responsibility to pay rent on a monthly basis
10 timely, true?
11 A. True.
12 Q. All right. And if at the end of the prescribed
13 period of time noted in the contract, then and only then would
14 they have an opportunity to either share in an equity split by
15 selling the home or possibly getting their home back, correct?
17 Q. And that was explained to the homeowners in every
18 instance by you, correct?
19 A. By myself?
20 Q. Yes.
21 A. No.
22 Q. You did not explain that?
23 A. Not every single time.
24 Q. But that was part of the program, correct?
25 A. Yes.

1 Q. So if that's part of the program, and that's supposed
2 to be explained to the homeowner, and you didn't do it, that's
3 on you, correct?
4 A. Correct.
5 Q. Not on Mr. Head, correct?
6 A. I guess not.
7 Q. And you also know that as part of the program that if
8 the homeowner defaulted or did not pay their payment timely,
9 their option was eviscerated, it ended, it was cancelled,
10 correct?
12 Q. Because they violated the term of the contract, true?
14 Q. And at that point, in that eventuality where they did
15 not pay on time, they didn't own the home because the contract
16 spelled that out, correct?
18 Q. They still got to keep their money, correct?
19 A. That is also true.
20 Q. And then if they violated the term of their contract,
21 any option was eliminated, true?
22 A. True.
23 Q. And whoever owned the home at that point was entitled
24 to the equity or whatever value the home had, correct?

1 Q. And that's the way the program was set up?
2 A. Correct.
3 Q. And it was explained to -- it was supposed to be
4 explained to the homeowners that way, correct?
6 Q. And if it wasn't explained to the homeowners that
7 way, that's on the person making the presentation, true?
8 A. True.
9 Q. Now Mr. Anderson touched on this during the direct.
10 You pled guilty in this case, correct?
11 A. I did.
12 Q. And you pled guilty March 20th of this year, correct?
14 Q. Right. You have a lawyer in the case?
15 A. I do.
16 Q. Michael Bigelow?
18 Q. Right. Mr. Bigelow is here in the courtroom? Is
19 that Mr. Bigelow back here?
20 A. Yes.
21 Q. Now part of your deal is that you are cooperating
22 with the Government, true?
24 Q. And you pled to the Superseding Indictment, Count 1,
25 Conspiracy to Commit Mail Fraud, correct?

2 Q. That was just a couple months ago?
3 A. That's true.
4 Q. You were charged in 2008, correct?
6 Q. But you didn't plead till two months ago, correct?
8 Q. You've had a chance to look at all the discovery, and
9 you did so with Mr. Bigelow, didn't you?
10 A. Yes.
11 Q. All right. And then only a couple months ago you
12 decided to plead guilty and cooperate with the Government,
13 that's the timing, correct?
14 A. Yes.
15 Q. After reviewing all the documents, and all the
16 discovery, and all the statements, true, that's what happened?
17 A. Yes, that's correct.
18 Q. Now you're aware because you pled guilty that you're
19 looking at a statutory maximum of 20 years in federal prison,
20 correct?
21 A. I understand.
22 Q. And Judge Mueller advised you of that when she took
23 your plea?
24 A. She did.
25 Q. You're also aware that in the plea agreement, subject

1 to negotiations between Mr. Bigelow and the U.S. Attorney's
2 Office and Mr. Anderson, that there would be certain
3 guidelines, do you recall that?
4 A. Yes.
5 Q. Okay. And you recall that the guidelines talk about
6 what your sentence might be, correct?
7 A. Yes.
8 Q. You know it's up to the judge to decide, Judge
9 Mueller, as to what your sentence will ultimately be?
10 A. I understand.
11 Q. And in the plea agreement your guidelines --
12 MR. ANDERSON: Objection, Your Honor.
14 MR. ANDERSON: It's going to penalty and punishment.
16 MR. TEDMON: Well, Your Honor, I would ask that I be
17 allowed to indicate -- have him indicate what his expectation
18 is. It's a cooperation deal.
19 MR. HAYDN-MYER: I'm going to join in that, Your
20 Honor, in regards to his specific intent.
21 MR. TEDMON: And goes to his motive and bias.
22 THE COURT: With that clarification, I'm going to
23 allow the question. But the jury may recall some reference to
24 this during jury selection. The issue of penalty is not one
25 for the jury to decide. So I'm allowing this not because it

1 tells you anything about a penalty that would apply to the
2 defendants in this case. This is with respect to the fact that
3 Mr. Sandoval has testified that he is cooperating. So it's
4 only to be considered in that context.
5 MR. TEDMON: And that's the only context I'm asking
6 for.
7 THE COURT: Not for any other purpose. So with that
8 clarification, one or two more questions.
9 MR. TEDMON: Just a couple. Thank you, Judge.
10 Q. BY MR. TEDMON: Mr. Sandoval, you're aware that your
11 guideline range based on negotiations is somewhere in the
12 neighborhood of 78 to 97 months; you're aware of that, correct?
13 A. I am.
14 Q. Now as part of this plea offer and this cooperation
15 deal, the Government has indicated they can give you up to
16 50 percent off of the bottom of the your guidelines, correct?
17 A. That's right.
18 Q. So one-half of 78 months, for example, correct?
19 A. Yes.
20 Q. All right. So that gets you down to 39 months,
21 right? Correct?
22 A. Yes.
23 Q. Okay. And by the way, before I move to something
24 else, you have a prior conviction in state court for vehicle
25 theft, don't you?

1 A. I do.
2 Q. 1996 out of San Bernardino County, correct?
3 A. Yes.
4 Q. And that was vehicle theft, correct?
5 A. You have the information. I really don't know.
6 Q. Well, it involved the taking of a vehicle?
7 A. Yes, I was.
8 Q. You stole something?
9 A. Yes.
10 Q. And in this case you pled guilty to mail fraud
11 because you were stealing things from other people, correct?
12 Money?
13 A. Correct.
14 Q. Now Mr. Head had nothing to do with the case in 1996,
15 did he?
16 A. No.
17 Q. That was you?
18 A. Yes.
19 Q. You testified about a person named Kou Yang, do you
20 recall that?
21 A. Yes.
22 Q. Now Kou Yang is the lady that was in charge of all
23 the loan processing, correct?
24 A. Yes.
25 Q. And I think you testified that before the office --

1 well, strike that.
2 When the office was in Long Beach, Ms. Yang's office
3 was across the hall or down the hall, is that correct?
4 A. It was inside the same office as ours.
5 Q. It was?
6 A. Yes.
7 Q. Okay. And then when the offices moved to Costa Mesa,
8 did you ever go in there?
9 A. Periodically. But I didn't work in there.
10 Q. Are you aware that Ms. Yang's office was down the
11 hall in Costa Mesa and away from the corporate office?
12 A. It was in the same building, yeah. It was in the
13 same unit, suite, or whatever you want to call it.
14 Q. So you're not sure of how the set-up was in Costa
15 Mesa?
16 A. No.
17 Q. All right. Now in any event, Ms. Yang was the one
18 that ran all the paperwork, correct?
20 Q. And can you describe for the jury what her function
21 was, Ms. Yang's, as far as you knew?
22 A. To complete processing of the loan, acquiring the
23 bank's loans, finding out the steps or the requirements that
24 the bank required for the person to qualify for a loan.
25 Q. Okay. And she also was responsible for filling out

1 forms, correct?
3 Q. And having them signed, correct?
4 A. Yes.
5 Q. And you're aware that she signed names for other
6 people, correct?
8 Q. And that was Kou Yang that did that?
9 A. Yes.
10 Q. In fact, you're aware she signed Charles Head's name
11 on forms?
12 A. Yeah.
13 Q. Now with regard to -- well, strike that.
14 Well, let's talk about this. Statewide Financial,
15 when was that set up?
16 A. I don't recall the exact date, but it was in '94.
17 Q. It was when?
18 A. The year of '94 -- sorry, 2004.
19 Q. 2004?
20 A. Taking some years off. Sorry.
21 Q. Just want to clarify. And that was your company?
23 Q. You were the --
24 A. Sole.
25 Q. You were everything?

1 A. Yes.
2 Q. So on the forms that you signed with the Secretary of
3 State's office you were the president, and vice-president, and
4 head bottle washer?
5 A. Right.
6 Q. You did it all?
8 Q. So these transactions you talked about, those were
9 all done -- well, were they all done through your company?
10 A. My personal ones, yes.
11 Q. Okay. And that would include Juan Urena's deal,
12 correct?
14 Q. Abraham Urena's deal, correct?
16 Q. Sandra Salgado? Sorry if I got that wrong.
17 A. Salgado. Yes.
18 Q. And then Eduardo Vanegas?
19 A. Yes.
20 Q. All done through your company?
21 A. Not all of them. Just my deals.
22 Q. Your deals?
23 A. Yes.
24 Q. And Kou Yang processed those, is that right?
25 A. Yes.

1 Q. And you dealt with her directly, correct?
2 A. Yes.
3 Q. I want to go back to the beginning of your testimony.
4 You indicated that you worked for Mr. Head the first time for a
5 company -- I believe you said it was Pyramid Properties, is
6 that correct?
7 A. Yeah. I remember it being called Pyramid Properties.
8 Q. When was that?
9 A. The year specifically I don't remember, but it was --
10 had to be in the late '90s, like '99 or 2000. Somewhere around
11 that range.
12 Q. And how long did you work for Pyramid Properties?
13 A. Not too long. A couple of months probably.
14 Q. What did you do there for at least two months?
15 A. We had a marketing service. They did cold calling.
16 And then whenever somebody wanted to refinance their house,
17 they would then transfer it to me, and I would talk to them.
18 Q. And that was done for some transactions during the
19 period of time you were there, correct?
20 A. I actually didn't do any transactions.
21 Q. You didn't do any?
22 A. No. It was terrible. Nobody wanted to refinance
23 from 9 1/2 to 9 1/4.
24 Q. So it didn't work out?
25 A. No. It didn't work out.

1 Q. So you went out to be an electrician and a plumber?
2 A. Yeah, I did several odd jobs.
3 Q. And then the second time you went to work for
4 Mr. Head was at Head Financial Services in Long Beach?
5 A. Correct.
6 Q. Now what I want to clarify is that I think you said
7 you then left that employment for five months or something?
8 A. Yeah. For several months. I don't know the specific
9 time on how many months it was.
10 Q. Okay.
11 A. But, yeah, Charles, and myself, and a couple of other
12 employees had a little bit of a falling out, so we --
13 technically I ended up getting fired.
14 Q. Okay. And do you recall how long you were -- I know
15 the timeframe is difficult because it's been a long time.
16 A. It is very difficult.
17 Q. How long were you working there from the time you
18 started to when this falling out or when you got fired
19 occurred, how many months?
20 A. It wasn't too long. I would say five, six months.
21 Q. And then I think you testified that there was another
22 five-month period or so that went by?
23 A. Yeah. It was -- I don't recall the exact amount of
24 times, but there was some time that went by.
25 Q. And then you were hired back?

1 A. Right.
2 Q. When was that?
3 A. I don't remember if it was at the end of 2003 or the
4 beginning of 2004. Somewhere around that range, though.
5 Q. Okay. And then do you recall when you set up
6 Statewide Funding?
7 A. Not specifically.
8 Q. Do you recall the year?
9 A. It was in '04.
10 Q. Okay. And from that point you did your own deals
11 through your company, correct?
12 A. That's correct. The marketing part of it and the
13 acquiring, yes.
14 Q. I'm sorry?
15 A. The marketing, yes.
16 Q. Now with regard to Kou Yang, she had the
17 relationships with the lenders directly, you know that,
18 correct?
19 A. Do I know that she had the relationships with the
20 lenders?
21 Q. With lenders, yes.
22 A. She had relationships.
23 Q. And lenders would give her information in terms of
24 what they needed to have properties go through for sale -- or
25 loans to be approved is a better way to say it, correct?

2 Q. And based on your experience, you know that during
3 that period of time the lenders just wanted some paper, they
4 didn't really care much what it said, you know that, correct?
6 MR. TEDMON: If he knows, Your Honor.
7 THE COURT: Just answer the question "yes" or "no."
8 THE WITNESS: Yes.
9 Q. BY MR. TEDMON: Yes, they just wanted paper?
10 A. Yes, I knew.
11 Q. They didn't care what was on it?
12 MR. ANDERSON: Objection. Lack of foundation.
13 THE COURT: Sustained. You may lay more of a
14 foundation if you want to explore.
15 MR. TEDMON: That's fine. He answered the question.
16 MR. ANDERSON: Motion to strike, Your Honor.
17 THE COURT: That motion is denied.
18 Q. BY MR. TEDMON: Now during the period of time that
19 you were with Head Financial Services, it's fair to say that
20 Kou Yang was really the person that ran the office, correct?
21 A. That's fair to say.
22 Q. In fact, Mr. Head wasn't there a lot of the time,
23 correct?
25 Q. When is your sentencing, Mr. Sandoval, do you know?

1 A. I do not.
2 Q. Do you expect the Government to make a motion to this
3 court to reduce the sentence from what it would be otherwise?
4 A. It would be -- I don't expect it. I would like it.
5 Q. Okay. Well, the Government's agreed to it in the
6 plea agreement, correct?
7 A. Nothing has been promised to me.
8 Q. It's not promised. Right. And it depends on how you
9 testify and how well you do, you know that, don't you?
10 A. I would assume.
11 Q. Yeah. How well you do for the Government, correct?
12 A. Yes.
13 Q. And the Government's the one that holds the key to
14 whether they're going to make a motion to ask this court to
15 reduce your sentence, correct?
19 MR. HAYDN-MYER: Nothing, Your Honor.
20 THE COURT: Okay. Any redirect?
22 THE COURT: We have 12 minutes before our next break.
23 Do you think you will conclude in that time?
24 MR. ANDERSON: I hope so.

2 BY MR. ANDERSON:
3 Q. What's your understanding of what type of testimony
4 you're supposed to give?
5 A. The truth.
6 Q. What's your understanding of who makes the final
7 decision as to what sentence you get in this case?
8 A. The judge.
9 Q. Mr. Tedmon asked you about these people that were
10 near foreclosure. Do you know in your experience that if they
11 had been foreclosed on, the bank would have given them the
12 equity that was remaining in the home after the foreclosure
13 sale?
15 MR. ANDERSON: Does he know.
16 THE COURT: Just a "yes" or "no" answer.
17 THE WITNESS: No, I don't know.
18 Q. BY MR. ANDERSON: Do you know if these people, if
19 they had gotten correct advice from the people at Head
20 Financial Services, was there equity in the homes that you were
21 dealing with in your transactions where they could have sold
22 the home and kept the equity for themselves?
23 MR. TEDMON: Objection, Your Honor. Compound. And,
24 secondly, the characterization "correct information" is vague.

1 Q. BY MR. ANDERSON: So you testified about false
2 statements that were made by you and others earlier in these
3 transactions, correct?
5 Q. All right. And what was the purpose of making false
6 statements to homeowners?
7 A. Primarily get them to sign.
8 Q. To get them to sign what?
9 A. To sign the documents allowing us to be able to
10 proceed with the sale of their property.
11 Q. Why did you want them to sign the documents?
12 A. Business. Straight answer is business. It was just
13 we wanted to get access to the property.
14 MR. TEDMON: Objection, Your Honor, to the word "we."
15 THE WITNESS: I.
18 Q. BY MR. ANDERSON: When you met with people, did you
19 give homeowners correct and full information about what was on
20 the documents they were being asked to sign?
21 A. Most of the connections were not face-to-face. It
22 was over the phone. And the information that was given was a
23 brief explanation of what the contract said, not an actual
24 description of everything.
25 Aside from that, the only difference was in how much

1 we told them in regards to how much equity we we're going to
2 pull out and who the investor actually was, and so that
3 information was withheld.
4 Q. Why was it withheld?
5 A. Mostly my fear was the person would say no.
6 Q. So your concern was if they knew the truth, they
7 wouldn't go along with the deal?
8 A. Correct.
9 Q. I'm going to ask you a question in multiple parts, so
10 the first one is going to be "yes" or "no".
11 A. Okay.
12 Q. Do you know if Charles Head knew that false
13 statements were being made to these homeowners?
17 Q. BY MR. ANDERSON: How do you know that Charles Head
18 knew that?
19 A. When I would go into his office, I would have
20 discussions with him in regards -- not too many -- but once in
21 a while when there was a problem, I would ask him how to go
22 about certain problems or hurdles.
23 Q. Can you give us examples of the type of advice that
24 Charles Head would give you?
25 A. Primarily it was in regards to the title itself.

1 Q. Can you give us an example?
2 A. Later in the transactions we had a problem with
3 people starting to get more -- well, I need to see my name on
4 the title. So then just the direct question was asked, you
5 know, what should we do. Said, well, tell them they are going
6 to get them. We're working supposedly on some documents that
7 had to do with it. But I never received anything or saw
8 anything.
9 Q. I want to show you what's been marked as Government's
10 Exhibit 20-C, and we'll look at pages four, five, six, seven,
11 eight.
12 Your Honor, these I would ask to be admitted as bank
13 records from Bank of America, pursuant to the parties'
14 stipulation. You can grab the binder behind you, if you'd
15 like.
16 THE COURT: Any objection to 20-C, Mr. Tedmon?
17 MR. TEDMON: Just one quick moment, Your Honor,
18 please. No. No objection.
22 (Government Exhibit 20-C, 1161 Saratoga Way, Trace -
23 Related Bank Records, admitted into evidence.)
24 THE WITNESS: 20-Charlie?

1 Q. BY MR. ANDERSON: We have page four up on the screen.
2 Do you recognize this item?
3 A. Yeah.
4 Q. What is it?
5 A. It's a check that I cashed out from the -- from my
6 account.
7 Q. Why did you cash it out from your account?
8 A. I don't remember which transaction it was, but it was
9 partially to pay Charles Head for his 50 percent, another 5,000
10 for the straw buyer, and another, I think, 5,000 for the
11 homeowner.
12 Q. Was this the proceeds of one of these transactions
13 that you conducted?
14 A. Yes.
15 Q. Let's go to page five. What do we see on page five?
16 Do you see that cashier's check?
17 A. Which are we looking at? 36?
18 Q. You can look on your screen if you'd like.
19 A. Yes.
20 Q. That's a cashier's check made out to Creative Loans,
21 is that right?
23 Q. And that's for --
24 A. Charles Head.
25 Q. I'm sorry?

1 A. That is for the 50 percent of the equity in the
2 property.
3 Q. Who is Creative Loans? What is Creative Loans?
4 A. Creative Loans was another LLC like mine that was
5 owned by -- at this point I'm guessing Charles Head.
6 Q. Who instructed you to write a check to Creative
7 Loans?
8 MR. TEDMON: Objection. Calls for facts not in
9 evidence. No indication anyone instructed him to do anything.
11 Q. BY MR. ANDERSON: How did you know to write a check
12 to Creative Loans?
13 A. It was part of the agreement in order for us to learn
14 how to do these type of transactions.
15 Q. Let's look at the next page, page six. Who is this
16 cashier's check made out to?
17 A. To straw buyer Eduardo Vanegas.
18 Q. What is that check for?
19 A. That is for his involvement in the transaction as the
20 straw buyer.
21 Q. Let's look at page seven. Who is this check made out
22 to?
23 A. This is for Lisa Malentino. This is for the
24 property.
25 Q. So was Lisa Malentino the homeowner?

2 Q. That's a check for $5,000?
4 Q. And the final page, page eight, do you know what that
5 is?
6 A. That's 5,000 cash. More than likely petty cash for
7 myself.
8 Q. Money for yourself.
9 Now Mr. Tedmon also brought up your entry of a plea.
10 I want to go back in time. Back -- do you recall speaking with
11 agents back in 2007 and earlier?
12 A. Yes.
13 Q. At that time, did you admit to committing fraud?
14 A. Yes.
15 Q. And did you write out a description of some of the
16 things you had done?
17 A. For myself, yes.
18 Q. And you know we've been talking about them. Do you
19 see Charles Head here in court today?
20 A. Yes.
21 Q. Could you please point out where he is?
22 A. Wearing blue.
24 record reflect that the witness has identified the defendant,
25 Charles Head.

1 THE COURT: It shall.
2 Q. BY MR. ANDERSON: And do you see Mike Head here in
3 court today?
4 A. I do.
5 Q. Could you please point him out?
6 A. He's in the corner, wearing blank and pink -- or
7 peach.
9 record reflect the witness has identified the defendant, Jeremy
10 Michael Head.
12 Q. BY MR. ANDERSON: And at every point during this
13 direct and cross-examination when you referred to Charles Head,
14 were you referring to the person you just pointed out?
15 A. Yes.
16 Q. And when you referred to Mike Head, were you
17 referring to the person that you just pointed out as Mike Head?
20 THE COURT: Any further recross, Mr. Tedmon.
21 MR. TEDMON: Just briefly, Your Honor.
23 BY MR. TEDMON:
24 Q. Mr. Sandoval, Mr. Anderson asked you questions about
25 a series of checks a few minutes ago?

1 A. Sure.
2 Q. Those checks were written as a result of what your
3 agreement was with Mr. Head, correct?
5 Q. And the check to Lisa Malentino is consistent with
6 what was represented to her --
7 A. By myself.
8 Q. -- by yourself in terms of what she was to receive
9 pursuant to the Equity Purchase Agreement, correct?
11 Q. So it was just a follow-through?
12 A. Yes.
13 Q. And then Mr. Anderson asked you if you had made
14 statements to agents in the past about the case. Do you recall
15 that?
16 A. Yes.
17 Q. And that was in 2006, 2007, does that sound about
18 right?
19 A. About right.
20 Q. But you pled guilty about two months ago, correct?
22 Q. It took you seven years to admit your guilt to this
23 court, correct?
25 Q. With the cooperation deal attached, correct?

1 A. Correct.
5 THE COURT: All right. Any further redirect?
7 THE COURT: Is Mr. Sandoval excused?
8 MR. ANDERSON: He is.
11 THE COURT: All right. You are excused, sir. You
12 may step down.
13 That brings us to a good time for our second break of
14 the morning. Let's a take a 15-minute break until noon.
15 During that break, as always, remember my admonitions. We will
16 see you in 15 minutes. Thank you very much.
17 (Jury out.)
18 THE COURT: All right. You may be seated. I have
19 the immunity orders. I'm going to review at least the order
20 for Ms. Huerta/Ms. Russell and try to resolve that during this
21 break.
22 Is there anything else we need to discuss before I do
23 that?
24 MR. TEDMON: I don't think so, no.

2 THE COURT: I'll see you in 15 minutes.
3 MR. TEDMON: Is defense going to get a copy of those
4 for our cross-examination?
5 THE COURT: If I sign something, it will get filed
6 promptly, and I will make copies for you.
8 (Break taken.)
9 THE COURT: All right. We're back in court outside
10 the presence of the jury. Counsel is present.
11 You have the immunity order for Ms. Russell?
13 THE COURT: Does she have her own attorney?
14 MR. ANDERSON: She doesn't, Your Honor. We asked her
15 if she would like one, she had said she didn't want one. And
16 we asked if she felt like she needed immunity, at first she
17 said no, but then called back and asked if she could have
18 immunity before testifying. We had already started preparing
19 an order just in case. That's the situation we're at.
20 THE COURT: Is it anyone's position that I need to
21 have a discussion with her about her rights?
22 MR. TEDMON: I think the Court does. She doesn't
23 have counsel. It's a legal document. She's a layman. I think
24 absolutely.
25 THE COURT: Do you expect her to be called today?

1 MR. ANDERSON: We expect her as the next witness,
2 Your Honor.
3 THE COURT: And how long do you expect Kou Yang to
4 take?
5 MR. ANDERSON: As a witness?
6 THE COURT: Yes.
7 MR. ANDERSON: Probably more than just today. So our
8 hope was to get the other witnesses on today so they could
9 leave and not come back. Ms. Yang is going to have to come
10 back no matter what, I think.
11 MR. ANDERSON: So who do you plan to put on today
12 yet?
13 MR. ANDERSON: It would be Ms. Russell, Mary Salazar
14 and then Kou Yang.
15 THE COURT: So not Daley or Daniels today?
16 MR. ANDERSON: Correct, Your Honor.
17 THE COURT: All right. Why don't we have
18 Ms. Russell come in now. Talk to her briefly. Let's do this
19 as quickly as possible.
20 If there are any issues, then we will -- I'm going to
21 have an initial discussion without Ms. Russell being under
22 oath. Any concern about that, Mr. Tedmon?
23 MR. TEDMON: I think she should be sworn. I mean,
24 she's giving answers to the Court.

1 MR. HAYDN-MYER: I think it would be more prudent if
2 she was sworn first, Your Honor.
3 THE COURT: Let me ask you this. You are Elizabeth
4 Huerta, also known as Elizabeth Russell?
5 MS. RUSSELL: No. It's Russell now. I changed my
6 name from Huerta. Huerta is my maiden name.
7 THE COURT: All right. I am Judge Mueller. I did
8 sign an order with your name on it just a few moments ago.
9 Have you received a copy of that order?
10 MS. RUSSELL: No.
11 MR. ANDERSON: We can give her a copy.
12 THE COURT: Let's make certain she has a copy of the
13 order.
14 Actually, given the fact that she hasn't seen the
15 order, do you need to call her next? Can you call another
16 witness next, and then I will recall Ms. Russell after she's
17 had time to read the order.
18 MR. ANDERSON: That makes sense, Your Honor. Let's
19 call Mary Salazar.
21 Ms. Russell, I didn't realize you had not received a
22 copy of the order yourself. So I'm going to give you time to
23 read that. I understand you are here today without an
24 attorney, is that correct?
25 MS. RUSSELL: Correct.

1 THE COURT: So you're excused now. You may wait in
2 the hall. Review the order. Then I'm going to call you back.
3 Then my plan is to place you under oath and ask you a few
4 questions outside the presence of the jury. All right?
5 MS. RUSSELL: All right. Thank you.
6 THE COURT: Thank you. We will see you in a bit.
7 (Ms. Russell exits the courtroom.)
8 (Jury in.)
9 THE COURT: All right. You may be seated. Welcome
10 back to the courtroom, ladies and gentlemen of the jury. The
11 Government is in the process of calling its next witness. We
12 did have a bit of housekeeping, and we may need to take one
13 more break today before the next witness. But we'll hear from
14 one witness before we consider our need to do that.
15 Mr. Morris, you are calling this witness?
16 MR. MORRIS: The Government calls Mary Salazar.
17 THE COURT: Mary Salazar.
18 Ms. Streeter you didn't have a chance to take a
19 photograph. We need to take a photograph for our jury binders,
20 so if you could step down Ms. Salazar.
21 (Photograph of Ms. Salazar taken by the Clerk.)

2 THE WITNESS: My name is Mary Salazar.
4 MARY SALAZAR,
9 BY MR. MORRIS:
10 Q. Ms. Salazar, are you familiar with the address 823
11 West San Joaquin in Tulare, California?
12 A. Yes.
13 Q. How are you familiar with that address?
14 A. That's my residence.
15 Q. Was it your residence in 2004?
16 A. Yes.
17 Q. Do you recall approximately when you had first moved
18 to that residence?
19 A. In '92.
20 Q. Was that a house?
21 A. It's a home, yeah, a house.
22 Q. In April 2004 did you own that house?
23 A. Yes.
24 Q. Do you own that house now?
25 A. No.

1 Q. In April 2004, approximately spring of 2004, were you
2 getting behind on your payments on the house?
3 A. Yes.
4 Q. How far behind were you?
5 A. Probably three, four months.
6 Q. Were you far enough behind that you were concerned
7 about foreclosure?
8 A. I had already been -- it was in foreclosure.
9 Q. And in that same time period did you become familiar
10 with a company either by the name of Head Financial Services or
12 A. Yes.
13 Q. Do you recall which of those?
14 A. I remember it saying Head Financial Services.
15 Q. How did you find out about this organization?
16 A. I would get like a postcard in the mail.
17 Q. Do you recall what the postcard said?
18 A. Just the heading and then phone number.
19 Q. Just a heading and a phone number?
20 A. Just like the heading of the -- it would say Head
21 Financial and then a phone number.
22 Q. Okay. In response to receiving that postcard, did
23 you take any action?
24 A. It took a while. I did take some action.
25 Q. What did you do?

1 A. I called that number.
2 Q. Okay. And do you recall -- well, do you recall who
3 you spoke to when you called that number?
4 A. It was a woman first.
5 Q. And what, if anything, did you say to that woman?
6 A. Exact words, I don't remember.
7 Q. To the best of your recollection what it was that you
8 said?
9 A. Just the interest in the card, and that I had
10 explained that I was in foreclosure.
11 Q. And what happened next?
12 A. I know I talked to a man, but I don't know if it was
13 that moment or if he returned the call.
14 Q. Okay. So either on that call or a later call --
15 A. Yes. On the same day.
16 Q. Do you recall who that man identified himself as?
17 A. Michael Head.
18 Q. What, if anything, do you recall about the
19 conversation that you had with the person identifying himself
20 as Michael Head?
21 A. I remember him -- for me to explain my situation, and
22 I gave him some information. And I remember him saying -- I
23 think my question -- I'm pretty sure my question was to him was
24 could I refinance, and he said, no, I was too close to
25 foreclosure.

1 Q. Okay. Did you have any more conversations other than
2 what you just relayed to us about refinancing wouldn't work?
3 A. Only that he could come -- that he needed to meet
4 with me. But I couldn't go. Not to where he was at.
5 Q. Do you have a recollection at the time where you
6 thought he was, the place where he was at?
7 A. Well, on the card it showed down south somewhere.
8 Q. Well, then did you arrange to meet with him?
9 A. He made the suggestion that he would come to me.
10 Q. And did you meet with him?
11 A. Yes, that evening.
12 Q. That same evening?
13 A. That same day, that evening. It was late, but it was
14 evening.
15 Q. And where was that meeting held? Where did you meet
16 him?
17 A. In my home.
18 Q. Do you recall if anybody else was present at that
19 meeting?
20 A. He brought someone with him, yes.
21 Q. So three of you --
22 A. Yes.
23 Q. -- total?
24 What, if anything, do you recall about that meeting
25 at your house?

1 A. He -- he only said that he could offer me a program
2 or a way of getting out of foreclosure. That he could help me
3 get out of foreclosure.
4 Q. Do you recall any details of the program that you
5 just testified to?
6 A. Only that he -- there would be a fee besides. You
7 know, that he would be able to pay the attorney fees or the
8 foreclosure fees and all that, and then there would be a fee
9 separately.
10 Q. When you say a fee, what was your understanding of
11 this fee?
12 A. I thought maybe for what their job was, you know,
13 their paperwork. I don't know.
14 Q. Did Michael Head bring with him any documents that
15 day?
16 A. Yeah. A lot of paper.
17 Q. What do you recall about those documents?
18 A. Not much. Just a lot of wording, maybe about twelve
19 papers, or fifteen, in a stack.
20 Q. Did you have any discussion with -- this is a yes or
21 no question. Did you have any discussion regarding the title
22 to your house?
23 A. No.
24 Q. Did you have any discussion about the equity in your
25 house?

1 A. No.
2 Q. Did you eventually sign any documents that day?
3 A. I do remember signing some papers that day.
4 Q. What's your recollection of what your intent was when
5 you signed those papers that day?
6 A. That he was taking me out of foreclosure. That I was
7 going to be able to keep my home.
8 Q. To your recollection, was it your intent to sell him
9 your house?
10 A. Never.
11 Q. Was it your intention to sell your house to anybody?
12 A. Never.
13 Q. Was it your intention to cash equity out of your
14 house?
15 A. No.
16 Q. Did you have any conversation regarding making
17 monthly payments at that meeting?
18 A. Yes.
19 Q. What's your recollection of the conversation about
20 monthly payments?
21 A. That I would make payments, but his words were like
22 this is like if you're -- this is like if you're leasing for a
23 year and then you continue paying on your home.
24 Q. You said for a year. Was it your understanding that
25 there was some time limit to this program?

1 A. Yes. Yes. Or until I paid off what I owed.
2 Q. And what's your recollection of what you understood
3 would happen at the end of that time period?
4 A. I know I paid before the year what I was supposed to
5 pay. Maybe ten and a half months later I started calling.
6 Q. Before -- the question that I was trying to get at
7 is, when you signed the papers, what did you think would happen
8 at the end of that one-year period?
9 A. That I would continue paying my home.
10 Q. Did you sign those papers with the intent that you
11 would move out of the house after a year?
12 A. Never. No. No.
13 Q. After -- well, when you signed the papers, did you
14 receive copies of them?
15 A. I received a stack of papers. There was wording on
16 them.
17 Q. Were those signed copies or unsigned copies?
18 A. Nothing signed.
19 Q. Did you ever have any conversation with anybody about
20 trying to get copies of signed paperwork?
21 A. When I seen that I was getting no response, yes, I
22 called my nephew. He's not really my nephew, but I consider
23 him my nephew.
24 Q. So was that after that meeting where you signed the
25 papers?

1 A. Oh, it was like ten and a half months later.
2 Q. Did you have any conversations with anybody between
3 the meeting and when you spoke with your nephew about getting
4 signed copies of papers?
5 A. No.
6 Q. Do you recall approximately how much your monthly
7 payment was supposed to be?
8 A. With -- with Financial Enterprises?
9 Q. Yes.
10 A. I believe it was 800. 7- or 800 a month.
11 MR. MORRIS: Your Honor, at this time I'm going to
12 move to admit Government's Exhibit 13-A --
13 These are all covered by the stipulation. 13-A,
14 which are lender business records; 13-B, which are escrow
15 business records; 13-C, which are Bank of America bank records;
16 13-E, which are records obtained from search warrants and
17 public records; 13-F, which are public records from Tulare
18 County Recorder's office.
19 THE COURT: Is 13-E two pages only?
20 MR. MORRIS: Three pages, Your Honor.
21 THE COURT: The stipulation references pages one and
22 two.
23 MR. MORRIS: Does it? For 13-E, Your Honor?
24 THE COURT: That's what the stipulation says.
25 Any objection to 13-A, 13-B, 13-C, 13-E, three pages,

1 and 13-F, Mr. Tedmon?
5 THE COURT: All right. All of those exhibits are
6 admitted with the understanding that 13-E is three pages.
7 MR. MORRIS: Your Honor, Mr. Anderson just double
8 checked. It's mentioned at different places in the stipulation
9 because the first two pages came from public records and the
10 third page is a bank record from Bank of America.
11 THE COURT: Thank you for that clarification. They
12 are admitted. You may publish them.
13 (Government Exhibits 13-A, 13-B, 13-C, 13-E, and 13-F
14 (see index for descriptions), admitted into evidence.)
15 MR. MORRIS: I would ask for 13-E, page one, please.
16 Q. BY MR. MORRIS: Ms. Salazar, does that appear to be
17 your signature?
18 A. Yes.
19 Q. And to your recollection, is this one of the
20 documents that you signed?
21 A. I don't know.
22 Q. Can you zoom out, please. Do you recognize this
23 document?
24 A. Not sure.
25 Q. Do you have in your mind an idea of what this

1 document is?
2 A. I do now.
3 Q. What's your understanding today of what this document
4 is?
5 A. Regards to property.
6 Q. Do you have any understanding with regards to a
7 property of what this document does?
8 A. Yeah. It I guess like records the property to
9 someone.
10 Q. Okay. Do you know somebody named Sarah Mattson?
11 A. I've never met her.
12 Q. On May 4th of 2004 had you ever met somebody named
13 Sarah Mattson?
14 A. No.
15 Q. On May 4th of 2004 had you ever heard the name Sarah
16 Mattson?
17 A. No.
18 Q. On May 4th, 2004 did you intend to deed your house to
19 Sarah Mattson?
20 A. No.
21 Q. And, Ms. Salazar, do you recognize this document?
22 A. No.
23 Q. Have you ever seen this document before?
24 A. No.
25 Q. Do you recognize the address of 949 South Coast

1 Drive, Costa Mesa California, 92626?
2 A. No.
3 Q. Have you ever lived in Costa Mesa, California?
4 A. Born and raised in Tulare
5 Q. Have you ever worked in Costa Mesa, California?
6 A. No.
7 Q. Do you have any relatives who live on South Coast
8 Drive, Costa Mesa, California?
9 A. No.
10 Q. Do you have any idea why that would be listed as an
11 address for you on this document?
12 A. No, I have no idea.
13 Q. 13-B, page two. If you look at line 305 on this
14 document --
15 A. 305?
16 Q. -- do you see the number $28,070.59?
17 A. On 304?
18 Q. Yes.
19 A. Yes, I see the number.
20 Q. In May of 2004 were you familiar with the name
22 A. In May? Yes.
23 Q. 2004?
24 A. Yes.
25 Q. What was your understanding of who Financial

1 Enterprises was?
2 A. I just -- I don't know. Like somebody would take me
3 out of foreclosure.
4 Q. Okay. So did you know that it was associated -- I
5 guess --
6 Did you become familiar with that name through this
7 program that you --
8 A. Yes.
9 Q. Was it your intent in May 2004 to give $28,070.59 to
11 A. No.
12 Q. Page five, same exhibit. I'm going to ask you to
13 look at page 13-B5. Do you recognize this document?
14 A. No.
15 Q. Does that appear to be your signature?
16 A. Yeah, could be.
17 Q. Okay. Do you recall signing this document?
18 A. The top one looks like mine. The bottom one's kind
19 of different.
20 Q. Okay. Now how many times did you meet with the
21 people involved in this program?
22 A. Once.
23 Q. If you look on the left side of your screen, this is
24 the document we were just talking about?
25 A. Uh-huh.

1 Q. And the right side is the document we talked about
2 before?
3 A. Uh-huh.
4 Q. As you sit here, can you come up with any explanation
5 for why there are two different dates --
8 THE WITNESS: I don't know why.
9 THE COURT: Okay. The jury shall disregard that
10 answer. I know the question wasn't complete, but the phrasing
11 of that question is objectionable. That objection is
12 sustained.
13 Q. BY MR. MORRIS: Do you recall which date you met with
14 the people involved in this program?
15 A. The actual date? My daughter got married May 1st.
16 It was really close to that.
17 Q. If you had to guess which of those days is the right
18 date, do you have a basis to make that?
19 A. May 4th.
20 Q. And on what basis did you know it was May 4th?
21 A. Because I remember my daughter had just gotten
22 married. I remember that exactly.
23 Q. Did you meet with Cindy Gastelum a second time on May
24 10th?
25 A. I don't know who that is.

1 Q. After you signed the documents, did you move out of
2 the house?
3 A. No.
4 Q. If I can move then forward, you were speaking about,
5 I think, talking to your nephew about this transaction.
6 Do you recall making payments over -- monthly
7 payments to Financial Enterprises?
8 A. I recall making payments at Bank of America.
9 Q. At some point did you get complete copies of the
10 signed documents involving this transaction?
11 A. Yes. When my nephew asked for them.
12 Q. Okay. Do you know who your nephew asked -- that's a
13 yes or no question. Do you know who your nephew asked to get
14 --
15 MR. HAYDN-MYER: Objection. Calls for hearsay.
16 THE COURT: Overruled. You may answer that question
17 yes or no.
19 Q. BY MR. ANDERSON: Was the answer, yes, you do know
20 who?
21 A. Who he asked?
22 Q. You do recall? How do you know who your nephew
23 contacted?
24 A. We were sitting at the dining room table.
25 Q. You were sitting with your nephew?

1 A. My table.
2 Q. Who did your nephew contact about the documents?
3 A. Michael Head.
4 Q. If he was sitting with you and talking to Michael,
5 does that mean that he was on the phone?
6 A. Yes.
7 Q. Do you recall the conversation or the half of the
8 conversation that your nephew had with Michael Head?
10 THE COURT: Just answer that question yes or no.
11 Overruled.
12 THE WITNESS: Only what my nephew said.
13 Q. BY MR. MORRIS: And as a result -- well, how would
14 you describe the -- without saying what was said, how would you
15 describe that conversation?
17 MR. Morris: I'm not asking for the content, Your
18 Honor. I'm describing the tone and tenor of the conversation.
19 THE COURT: All right. The objection is overruled.
20 Respond to the question without saying what was said.
21 THE WITNESS: He was angry.
22 Q. BY MR. MORRIS: Your nephew was angry?
23 A. Yes. Yes.
24 Q. And after that conversation, did you receive copies
25 of the signed documents from the transaction?

1 A. Yes.
2 Q. How long after that conversation did you receive the
3 documents?
4 A. The next day.
5 Q. How did you get them?
6 A. Like registered mail or something like that.
7 Q. When you compared those documents with what you
8 remembered signing, was it the same or was it different?
9 A. I don't remember. I really don't.
10 Q. Well, how long did you continue making monthly
11 payments?
12 A. It was -- I was finished making the payments about
13 10th, 11th month into it.
14 Q. And do you have any recollection of what happened
15 then with respect to this transaction?
16 A. No, I don't.
17 MR. MORRIS: One moment, please.
18 Q. BY MR. MORRIS: And you had previously -- well, let
19 me clarify. What was it you thought you were getting from this
20 deal?
21 A. He was taking me out of foreclosure.
22 Q. And what was your understanding of what these monthly
23 payments were for?
24 A. The money I would owe for foreclosure and the fee.
25 Q. So it was -- let me ask if I'm accurate.

1 Was it accurate to say that you thought you were
2 paying back the fee, is that what you're saying?
3 A. And the money they used to pay --
4 Q. And the arrears --
5 A. -- foreclosure.
6 Q. So at the completion of, I think you said, ten,
7 eleven or twelve months --
8 A. Seven months, maybe.
9 Q. -- what did you think you had done at that point?
10 A. Finished paying what I was -- that I owed them.
11 Q. Do you believe at that point that you had lived up to
12 your obligation under the agreement?
13 A. Oh, yes.
14 Q. Did you believe that at the completion of those 10 to
15 12 months that you would then lose the house?
16 A. No.
17 Q. Did you believe at the completion of those 10 to
18 12 months that somebody else already owned your house?
19 A. No.
20 Q. Did you believe that somebody would attempt to evict
21 you from the house?
22 A. No.
23 Q. Now I think your previous testimony is you still live
24 in this house, but you're no longer the owner?
25 A. No.

1 Q. How did it come to be that you were no longer the
2 owner of the house?
3 THE COURT: There is some water there, if you'd like,
4 and tissue.
5 THE WITNESS: The only way that I could get it back
6 was my daughter, Andrea, got the house back. She got the house
7 back during that time.
8 Q. BY MR. MORRIS: I want to make sure that the reporter
9 got that. Was what you just said that your daughter got the
10 house?
11 A. Yes. Andrea.
12 Q. How is it that your daughter came to be the owner of
13 the house?
14 A. She was able to qualify to get it back.
15 Q. And just so you now live with your daughter?
16 A. No. She has her own home. I give her rent. I pay
17 rent. And that was my house.
18 Q. And if you could explain, why was it that your
19 daughter had to buy the house and you couldn't?
20 A. They wanted too much for it.
21 Q. They being? When you say "they," who do you mean?
22 A. I guess it was -- Victor was the one making the
23 arrangements, and he was talking -- I don't know with who.
24 Q. Okay. So at the conclusion, through something that
25 you don't -- it sounds like you can't testify to what Victor

1 was doing, right?
2 A. No.
3 Q. But at the conclusion, it was your understanding that
4 your daughter had to come onto the title?
5 A. Yes. She had to buy the house back.
6 Q. Do you know whether she bought the house back --
7 Do you know how much money she had to pay to buy the
8 house back?
9 A. Almost 140,000.
10 Q. I'll ask you to look at Exhibit 13-E, page three. Do
11 you recognize this document?
12 A. It looks like one of my checks.
13 Q. Is that a check that you would have written?
14 A. My signature, but I don't know what the numbers are
15 on the top.
16 Q. Okay.
17 A. It's my bank. It's also the bank that I went to.
18 Q. And so based on your best recollection is this a
19 check that you would have written?
20 A. Yeah.
21 Q. And approximately -- or is it your habit to write the
22 current date when you write a check?
23 A. You mean put "August"?
24 Q. When you write a check, do you normally put the
25 current date on the date you're writing it on the check?

1 A. It's been so long, I don't remember.
2 Q. Based on your knowledge and your understanding today,
3 why would you have written a check to Financial Enterprises?
4 A. To pay off the foreclosure that they had paid off for
5 me.
6 Q. So would this be part of what you had previously said
7 was your attempting to live up to your part of the deal?
8 A. Yes.
9 Q. Do you have any -- this is yes or no.
10 Do you have any knowledge about whether there was any
11 equity left in the house when your daughter bought it?
12 A. Yes, I do.
13 Q. And how do you know that?
14 A. She said there was none.
15 Q. Okay.
16 MR. HAYDN-MYER: Objection. Hearsay.
17 THE COURT: Your response to that?
19 THE COURT: That objection is sustained. The jury
20 shall disregard that last answer.
21 Q. BY MR. ANDERSON: When you signed papers, assuming
22 you signed them in April or May of 2004, did you intend for
23 your daughter to become the owner of your house?
24 A. No.
25 Q. Did you intend to sell the house to anybody?

1 A. No.
2 Q. Would you have signed those documents if you had
3 known you were going to lose your house?
4 A. No.
5 Q. Would you have signed those documents if you had
6 known that the equity would be removed from your house?
7 A. No.
8 Q. Would you have signed those documents if you knew
9 that you would be renting from your daughter in the year 2013?
10 A. No.
12 THE COURT: All right. Mr. Haydn-Myer, you're going
13 to begin cross-examination?
14 MR. HAYDN-MYER: Yes, Your Honor. Thank you.
15 THE COURT: All right. You may proceed.
18 Q. Good afternoon, Ms. Salazar.
19 A. Hello.
20 Q. If I may ask the Court clerk, what's my last exhibit,
21 Defense Exhibit JMH?
22 THE CLERK: D as in David.
23 MR. HAYDN-MYER: If I may approach the court clerk?
24 THE COURT: You may. It should be E.
25 MR. ANDERSON: This is E.

1 THE CLERK: The last number you used is D.
2 MR. HAYDN-MYER: My apologies, JMH-E. If I may
3 approach, Your Honor?
5 (Defendant's Exhibit JMH-E, Letter from Mary Salazar,
6 dated 5-14-05, marked for identification.)
7 Q. BY MR. HAYDN-MYER: Ms. Salazar, I'm showing you
8 JMH-E, and if you would please take a look at that.
10 THE COURT: Is there a question?
11 Q. BY MR. HAYDN-MYER: Do you recognize that document,
12 Ms. Salazar?
13 A. I'm not sure. It seems familiar, but I'm not sure.
14 Q. Is that your signature at the bottom of it?
15 A. Yes, it is.
16 Q. Is it possible that you had somebody type this
17 document up for you, and then you signed it after you got
18 through the information?
19 A. Yes, but --
20 Q. And then you sent the document or had somebody send
21 the document for you to Mike Head at Financial Enterprises, is
22 that correct?
23 A. I believe so.
24 MR. HAYDN-MYER: May I publish the document, Your
25 Honor?

2 MR. ANDERSON: Mr. Morris.
3 THE COURT: I'm sorry. Mr. Morris?
7 THE COURT: All right. JMH-E is admitted. You may
8 publish.
9 (Defendant's Exhibit JMH-E, Letter from Mary Salazar,
10 dated 5-14-05, admitted into evidence.)
11 Q. BY MR. HAYDN-MYER: In regards to JMH-E, you already
12 said that's your signature at the bottom of it, is that
13 correct?
14 A. Yes.
15 Q. And you had somebody assist you with this document
16 then you reviewed it and signed it, is that also correct?
17 A. Yes.
18 Q. And the first sentence says, "I, Mary Salazar, will
19 be exercising the right to purchase back my home as it states
20 in our agreement," is that correct?
21 A. That's what it says.
22 Q. Correct. And that means that you, based on your
23 signature, were trying to buy back or purchase back the home
24 that you had sold to Financial Enterprises and Mike Head,
25 correct?

1 A. That's what it looks like.
2 MR. HAYDN-MYER: May I approach, again, Your Honor?
3 THE COURT: What are you planning to show?
4 MR. HAYDN-MYER: CH-B1. We've already entered into a
5 stipulation.
6 THE COURT: All right. You may show that, CH-B1.
7 Q. BY MR. HAYDN-MYER: If you would please, Ms. Salazar,
8 look at the document and the signatures that are on it.
9 A. (Witness reviewing document.) Yes.
10 Q. Those are your signatures, aren't they?
11 A. I don't see a signature on this one. Only the second
12 one.
13 Q. Yes. Only the second one. Sorry.
14 A. It looks like my signature.
15 MR. HAYDN-MYER: If we can publish, please, CH-B1,
16 first page.
17 THE COURT: Any objection, Mr. Morris?
20 MR. TEDMON: No objection, Your Honor. I think this
21 document in the CH-B series is subject to the stipulation.
22 THE COURT: Yes, it appears to be, which addresses
23 authenticity. I'm double checking, making sure there is no
24 objection to it being admitted.
25 MR. TEDMON: No objection.

1 THE COURT: CH-B1 is admitted.
2 (Defendant's Exhibit CH-B1, “Equity Purchase
3 Agreement” re: 823 West San Joaquin Avenue, Tulare, admitted
4 into evidence.)
5 Q. BY MR. HAYDN-MYER: Thank you. Can you see the
6 monitor, Ms. Salazar?
7 A. Yes.
8 Q. At the top it says Equity Purchase Agreement, is that
9 correct?
10 A. Yes.
11 Q. And it has Mary Salazar and Sarah Mattson, is that
12 correct?
13 A. Yes.
14 Q. And if we can go to the second page, please, which is
15 going to be -- I'm sorry, my screen has a resolution notifier
16 on it. Does everybody else's?
17 And when I previously asked you if that was your
18 signature, you said "yes" referring to that right there, is
19 that correct?
20 A. It it looks like my signature.
21 Q. And do you see where it says "notice required by
22 California law"?
23 A. Yes.
24 Q. If we can go to the next page.
25 Do you see where it says, "Mrs. Salazar can sell the

1 guest house in the back for the proceeds that it may produce"?
2 A. I see that. I don't know --
3 Q. Ms. Salazar, did you have a guest house in the back?
4 A. Not in the back.
5 Q. Where was it?
6 A. There was a house next to it.
7 Q. Was it a guest house?
8 A. I didn't consider it a guest house. At the time I
9 had it as a rental.
10 Q. Did you negotiate in regards to the rental?
11 A. No. Never.
12 Q. Based on this agreement, Ms. Salazar, doesn't it say
13 that you can actually sell the house in the back for the
14 proceeds that it may produce?
15 A. Yeah, I could.
16 MR. HAYDN-MYER: If I may approach, Your Honor, I
17 would like to show Ms. Salazar, CH-B2, B as in boy.
19 Q. BY MR. HAYDN-MYER: Do you recognize that document?
20 A. No.
21 Q. Turn to page three. Is that your signature,
22 Ms. Salazar?
23 A. It looks like it.
24 MR. HAYDN-MYER: May I approach again, Your Honor?
25 THE COURT: You may. What are you showing the

1 witness?
2 MR. HAYDN-MYER: CH-B6.
3 THE WITNESS: (Witness reviewing document.)
4 Q. BY MR. HAYDN-MYER: Ms. Salazar, is that your
5 signature on the bottom of the document?
6 A. Looks like it.
7 MR. HAYDN-MYER: Can I have one moment, Your Honor?
10 MR. HAYDN-MYER: Thank you, Ms. Salazar, I have no
11 further questions.
12 THE COURT: All right. Mr. Tedmon?
14 THE COURT: Any redirect, Mr. Morris?
15 MR. MORRIS: Just briefly, Your Honor.
17 BY MR. MORRIS:
18 Q. Mr. Haydn-Myer I think was just talking to you about
19 this document. According to this document, when was it signed?
20 A. May 27th, '04.
21 Q. According to this document, when is the deadline for
22 exercising a cancellation option?
23 A. Before the 4th of May, '04.
24 THE COURT: What are you displaying?
25 MR. MORRIS: JMH-E, the exhibit that Mr. Haydn-Myer

1 showed her.
2 Q. BY MR. HAYDN-MYER: And Ms. Salazar, what's the date
3 on this document?
4 A. May 14th, 2005.
5 Q. Did your understanding of what had happened change
6 between the fall of 2004 and May of 2005?
7 A. What had happened like --
8 Q. Let me back up. I think when I previously was
9 talking to you, you said that when you sent your last payment,
10 you believed you had complied with the terms of the agreement?
11 A. Yes.
12 Q. And I think you testified before that you had said
13 that you didn't think you had sold your house to anybody at
14 that point?
15 A. No.
16 Q. But now in May of 2005 it appears that you're
17 exercising a right to purchase back your house. And I'm
18 wondering if something had changed between the time you sent
19 your last check and this letter?
20 A. No.
21 Q. Did you become aware at some point that you had sold
22 your house? Not that you recall?
23 A. No.
25 THE COURT: All right. Any further recross,

1 Mr. Haydn-Myer?
2 MR. HAYDN-MYER: I do, Your Honor. And I believe I
3 have an additional document. I apologize to the Court. So if
4 I can go back in my original cross. Thank you.
5 THE COURT: So any objection to cross being reopened,
6 Mr. Morris?
8 THE COURT: All right. JMH-F?
9 MR. HAYDN-MYER: No, Your Honor. It's CH-B, as in
10 boy, 3.
11 THE COURT: Do you wish to approach?
12 MR. HAYDN-MYER: I do.
13 Q. BY MR. HAYDN-MYER: Ms. Salazar, showing you that
14 document, CH-B3, would you please turn to the last page.
15 Does your signature appear on the last page?
16 A. Yes.
17 MR. HAYDN-MYER: If I may, Your Honor. I'm almost
18 done.
21 Q. BY MR. HAYDN-MYER: And just to be clear,
22 Ms. Salazar, what is the date that you actually believe that
23 you met with Mr. Head, Michael Head?
24 A. Almost sure it was May 4th, that day I signed.
25 MR. HAYDN-MYER: I have no further questions. Thank

1 you, Your Honor.
2 THE COURT: All right. Any redirect, Mr. Morris?
3 FURTHER REDIRECT EXAMINATION
4 BY MR. MORRIS:
5 Q. Can you bring up CH-B3?
6 THE COURT: This is covered by the stipulation, so no
7 objection to it coming in?
8 MR. TEDMON: That's correct, Your Honor.
9 THE COURT: All right. I didn't hear an official
10 motion.
11 MR. MORRIS: I thought it was in, Your Honor. I
12 apologize.
13 THE COURT: So B3 may be published?
15 (Defendant's Exhibit CH-B3, "Residential Lease After
16 Sale" re: 823 West San Joaquin Avenue, Tulare, admitted into
17 evidence.)
18 Q. BY MR. MORRIS: Ms. Salazar, is this the document
19 that Mr. Haydn-Myer just showed you?
20 A. I believe so.
21 Q. Okay. And if we can go to page five of that, please.
22 What's the date on this document?
23 A. April 28, 2004.
24 Q. Do you recall -- well, that's asked and answered.
25 How much time passed between -- to the best of your

1 recollection -- between the time that you signed documents and
2 the time that you first got copies of the signed documents?
3 A. Eleven months.
5 THE COURT: Mr. Haydn-Myer, any further recross.
6 MR. HAYDN-MYER: No further recross, Your Honor.
7 THE COURT: May Ms. Salazar be excused? Mr. Morris?
13 THE COURT: Ms. Salazar, you may step down. The
14 Government would intend to call Ms. Russell next?
16 THE COURT: Ladies and gentlemen, we need to take a
17 quick break. I'm hoping that we can do this to get through
18 Ms. Russell's testimony yet today. But give us at least five
19 minutes. You can retire to the jury room take a good stretch
20 break.
21 During that break, as always, remember my admonitions
22 not to discuss the case and all the other admonitions I gave
23 you. We'll call you back as soon as we're ready.
24 (Jury out.)
25 THE COURT: Let's bring Ms. Russell in.

1 Ms. Streeter, I will ask you to swear Ms. Russell
2 without taking her photograph yet.
5 MS. RUSSELL: I do.
6 THE COURT: All right. Ms. Russell, as I indicated,
7 I have a few questions for you.
8 You've had an opportunity to review the order --
9 MS. RUSSELL: Yes.
10 THE COURT: -- that I signed. You understand that
11 you have just been sworn, and that means that, first of all,
12 your answers are being recorded. There is a record being made.
13 You do, of course, have a Fifth Amendment right to remain
14 silent, and there's no obligation that you testify here today
15 except subject to that order. There are limitations to that
16 order.
17 MS. RUSSELL: Okay.
18 THE COURT: I've granted you immunity, but there are
19 exceptions.
20 MS. RUSSELL: I understand.
21 THE COURT: Such that your testimony is subject to
22 the potential of your being prosecuted for perjury or making of
23 a false statement if you do not answer truthfully.
24 So do you have any questions about the order that I
25 signed today as it applies to you?

1 MS. RUSSELL: No, I don't.
2 THE COURT: You do not have an attorney, as I
3 understand it?
4 MS. RUSSELL: That's correct.
5 THE COURT: You have chosen on your own not to
6 consult with an attorney?
7 MS. RUSSELL: Yes.
8 THE COURT: All right. Having reviewed the order,
9 are you aware of your rights, your rights generally, your right
10 to consult with an attorney, do you wish to testify today?
11 MS. RUSSELL: Yes.
12 THE COURT: All right. Is there anything I need to
13 cover at this point, counsel?
14 MR. ANDERSON: Often to set up an immunity order some
15 questions will be asked to see if the witness will invoke the
16 Fifth Amendment, but I think perhaps defense would stipulate
17 that I'm going to ask questions regarding a transaction that
18 Ms. Huerta was involved with with the Turners and her
19 relationship with Charles Head and Head Financial Services.
20 And I believe that Ms. Huerta has said that she will testify
21 with a grant of immunity but asked not to testify without it.
22 THE COURT: Let me clarify. Ms. Russell -- sometimes
23 known as Ms. Huerta --
24 MR. ANDERSON: I apologize. Ms. Russell.
25 THE COURT: -- in terms of all the background that

1 has brought you here today, the Court's understanding is that
2 with the order that has been issued, you are not invoking your
3 right to remain silent under the Fifth Amendment, is that
4 correct.
5 MS RUSSELL: Correct.
6 THE COURT: Without the order, you had contemplated
7 invoking your right to invoke your right to remain silent?
8 MS. RUSSELL: No. Not necessarily. I'm willing to
9 testify with or without it.
10 THE COURT: All right. But you do understand you do
11 have the right to remain silent?
12 MS. RUSSELL: I do understand.
13 THE COURT: The order directs you to testify. It may
14 be moot.
15 Is there a need to talk to witnesses before an order
16 is issued? The Court's understanding is that there were --
17 MR. ANDERSON: That was my understanding, too, Your
18 Honor, that she wanted the immunity order.
19 But if she's willing to testify without it, I mean,
20 obviously, the Government hasn't been contemplating criminal
21 prosecution for her for reasons that I think will be clear once
22 she testifies.
23 But it's a difficult situation for the Government
24 because she doesn't have an attorney, and I don't want to get
25 in a position where I'm trying to push her one direction or

1 another. She needs to make that decision on her own.
2 THE COURT: So the Government's offer of immunity
3 stands, regardless of her response to the Court's questions
4 about the Fifth Amendment today.
5 MR. ANDERSON: Really, I mean, it comes down to her
6 and whether or not she thinks she will incriminate herself. I
7 know what I think the evidence will be, and based on our
8 conversations -- and she has spoken with agents -- and my view
9 of it is it's not a criminal case we would pursue.
10 But it is something where she will admit to saying
11 things that were not true. I believe she'll say that she said
12 things that were not true to homeowners. So there is --
13 THE COURT: You're not modifying your position?
14 MR. ANDERSON: No. I think it's up to her. It's a
15 gray area. She's in a gray area. And the Government's
16 position is what it is with regard to her testimony.
17 THE COURT: Mr. Tedmon, anything to say on this
18 point?
19 MR. TEDMON: Well, Your Honor, I think she is going
20 to give responses that would incriminate herself. That's the
21 whole reason we're having to go through this process.
22 The order indicates that Ms. Russell is likely to
23 refuse to testify. Now she's saying something different. I
24 think we need this order in place not only to ensure the
25 witness' rights, certainly, but if something were to come up

1 during the course of the examination that all of a sudden she
2 decides she doesn't want to answer, then the order would cover
3 that. So I think we do need the order to protect her.
4 THE COURT: I'm not questioning that necessarily.
5 Although the certain grounds appear to be not as solid as was
6 represented. Anything to say on this, Mr. Haydn-Myer?
7 MR. HAYDN-MYER: I join, Your Honor. My concern is
8 more with the cross-examination. There might be an issue that
9 comes up in it, and then she would actually be asking for
10 immunity in the middle of the cross-examination. It's just
11 safer to have the immunity agreement in place.
12 MR. ANDERSON: That is part of the Government's
13 concern. I don't know what Mr. Tedmon and Mr. Haydn-Myer are
14 going to ask, but they have indicated to me over the past
15 several days that they are concerned about it. So that's, I
16 think, where the Government's more certainty in the order is
17 coming from is.
18 THE COURT: So the Court is clarifying, the order has
19 been issued. There is a statute that applies. The Court has
20 read the statute. It's a mandatory statute.
21 But in this case it's in light of Ms. Russell's not
22 having her own attorney, that -- and some uncertainty as to
23 whether or not she would invoke the Fifth Amendment at any
24 point during her testimony that the Court is confirming the
25 grant of immunity as covered by the order.

1 Having heard the discussion with counsel,
2 Ms. Russell, do you have any questions?
3 MS. RUSSELL: No.
4 THE COURT: All right. Do you remain willing to
5 testify today?
6 MS. RUSSELL: Yes.
7 THE COURT: All right. Do you have any questions
8 about the order the Court signed?
9 MS. RUSSELL: No.
11 MR. TEDMON: Your Honor, can I ask one follow-up
12 question. Does Ms. Russell have any interest as she sits here
13 right now in talking to a lawyer about the effect of the
14 immunity agreement? Because she would have a right to do that.
15 I would just like to have that on the record.
16 THE COURT: Ms. Russell, your response to that
17 question? Do you wish to consult an attorney before you
18 testify subject to that order?
19 MS. RUSSELL: No.
22 MR. HAYDN-MYER: That's fine, Your Honor.
23 THE COURT: All right. I think we can proceed. How
24 long will it take?
25 MR. ANDERSON: The direct shouldn't be too long, Your

1 Honor. I hope to complete it by 12:30.
2 THE COURT: We're at 1:30.
3 MR. ANDERSON: I'm sorry. 1:30. I don't know that
4 we'll get through cross-examination. I will move as quickly as
5 I can.
6 THE COURT: We'll do as much as we can, but we will
7 conclude at 1:30 today.
8 Just stay there, Ms. Russell. Can Ms. Russell
9 continue to testify subject to the oath already given?
10 MR. TEDMON: I think so. I don't see why not.
11 MR. ANDERSON: It might be safest just to re-swear
12 her in front of the jury and she needs her photograph taken as
13 well.
14 THE COURT: All right. That's the practice we will
15 follow then.
16 (Jury in.)
18 And now, Ms. Russell, we'll ask that you step down
19 for a photograph, and then we'll administer the oath to you.
20 The Government is calling its next witness.
21 MR. ANDERSON: Elizabeth Russell.
22 (Photograph taken of Ms. Russell by the Clerk.)

3 THE COURT: All right. I'm sorry. Go ahead.
4 THE WITNESS: Say my name?
5 THE COURT: Yes, I'm sorry.
6 THE WITNESS: Elizabeth Russell, E-l-i-z-a-b-e-t-h
7 R-u-s-s-e-l-l.
8 THE COURT: All right. I'm trying to move this
9 faster. Start with Ms. Russell's testimony. We may not
10 complete it today, but Mr. Anderson will do as much as he can.
11 ELIZABETH RUSSELL,
16 BY MR. ANDERSON:
17 Q. Good afternoon, Ms. Russell. Have you previously
18 gone by a different name?
19 A. Yes.
20 Q. What was that name?
21 A. Huerta, H-u-e-r-t-a.
22 Q. Why did you change your name?
23 A. I got married. That was my maiden name.
24 Q. Do you know somebody by the name of Charles Head?
25 A. I do.

1 Q. How do you know Charles Head?
2 A. I was in a relationship with him, and he is the
3 father of my two children.
4 Q. Have you also had a business relationship with
5 Charles Head?
6 A. Yes, I have.
7 Q. How long have you known Charles Head?
8 A. I've known him since 1996.
9 Q. When did the business relationship start?
10 A. 2003.
11 Q. What were the circumstances that led to you getting
12 into business with Charles Head?
13 A. I was working for a company that was going to be
14 going out of business, and I needed to, you know, get a
15 different job. I wanted to get something part time so that I
16 could have more time with my children in the evenings. I had a
17 second job as well.
18 Q. Did you speak with Charles Head about that?
19 A. Yes, I did.
20 Q. Did he offer you a position?
21 A. He didn't offer me. I asked for one, if I could work
22 in his office filing or answering phones, and he said I could.
23 Q. Did you begin working in the office doing those basic
24 office tasks?
25 A. Yes.

1 Q. Which office were you working in?
2 A. Long Beach.
3 Q. Do you remember approximately when that was?
4 A. I know the year. I cannot recall the month. I know
5 it was in 2003.
6 Q. Approximately how long did you work in that Long
7 Beach office?
8 A. Several months before we moved to the Costa Mesa
9 location.
10 Q. Is that the location near South Coast Plaza?
12 Q. At some point did the nature of your job duties
13 change?
14 A. Yes.
15 Q. When was that?
16 A. I was a receptionist, and he asked me after several
17 months if I wanted to get in on the -- I don't know what you
18 would call it. I thought they were loans at that time. The
19 foreclosure. And I said that I did.
20 Q. Why did you say that you wanted to get involved with
21 the foreclosures?
22 A. Well, I was only working part time, like I said, and
23 I had a second job. And I did see everyone else that was
24 working in the office making decent money, and I wanted a part
25 of that. And plus I looked at it as me learning a different

1 trade, something new.
2 Q. How did you learn how to do the foreclosure loans?
3 A. We had weekly meetings where he would basically go
4 over the details, tell us what to say to the customer, or, you
5 know, the client in this case, and go from there.
6 Q. And when you say "he," who do you mean?
7 A. Charles. I'm sorry.
8 Q. Did you participate in some of those meetings?
9 A. Yes, I did.
10 Q. Did you eventually conduct a foreclosure transaction?
11 A. Yes, I did.
12 Q. How many transactions did you do?
13 A. One.
14 Q. Prior to conducting that transaction, did you learn
15 from Charles Head what to say to the homeowners?
16 A. Yes.
17 Q. What things did Charles Head tell you to say to the
18 homeowners?
19 A. Well, we had to look for -- one of the main things
20 was to look for equity in the home. Part of it was to -- the
21 more equity the better, I guess. So we were looking for
22 somewhere between 80,000 to 100,000 in equity. If they had
23 that amount, that's a loan we would be able to do. And he
24 would say we would offer the client anywhere from 5 to 10
25 thousand dollars, depending on how much equity was in the home,

1 that we would give back to them so that they could catch up on
2 bills or make any necessary payments. And we also -- let me
3 think.
4 Q. Did he tell you anything about what was supposed to
5 happen -- what to tell the homeowners about what was supposed
6 to happen with the equity in the home?
7 A. Yes.
9 A. That the equity would be -- they would get part of
10 their equity back. They wouldn't get all of it, but they would
11 get part of the equity back.
12 Q. Did he tell you that it was supposed to be split
13 eventually 50/50?
16 Q. BY MR. ANDERSON: What was the split with the
17 homeowner supposed to be?
19 evidence.
21 Q. BY MR. ANDERSON: What portion was the homeowner
22 supposed to retain of their equity?
23 A. That, I honestly don't remember.
24 Q. Did Charles Head tell you anything about what you
25 were supposed to say to homeowners about the title to the

1 property?
2 A. Yes.
4 A. He said that the owner would be on title along with
5 the investor.
6 Q. You said you did one of these transactions. Who was
7 that with?
8 A. Ms. Turner.
9 Q. When you spoke with Ms. Turner, did you relay to her
10 the information that Charles Head told you to tell her?
11 A. Yes.
12 Q. And did that include information that she was to
13 remain on title with an investor to the home?
16 Government's Exhibit 19-A be admitted, pursuant to the
17 stipulation, as a mortgage record.
18 THE COURT: Objection?
20 THE CLERK: 19-A is already in.
21 THE COURT: That makes it easy.
22 Q. BY MR. ANDERSON: All right. Well, you can see it in
23 the binder in front of you. Does that mortgage application --
24 A. All right.
25 Q. Are you ready?

1 Does that mortgage application list the property that
2 you dealt with with the Turners?
3 A. Is that 100 Duffy Avenue? No.
4 Q. I think you might be in the wrong --
5 A. 19-A?
6 Q. Yes.
7 A. That's what I have.
8 MR. ANDERSON: Your Honor, may I approach?
10 MR. ANDERSON: Your Honor, at some point in the
11 process the first page went missing of that exhibit. I'm sure
12 it's up there somewhere.
13 THE COURT: Can you display a copy? Is there a copy
14 someplace that you can show the witness?
16 Q. BY MR. ANDERSON: All right. What's the address at
17 the top of Exhibit 19-A?
18 A. 3646 Milton Way, North Highlands, California 95660.
19 Q. Was that the Turner's property?
20 A. Yes.
21 Q. And that's the property we've been referring to where
22 you spoke with Ms. Turner?
23 A. Yes.
24 Q. Could you describe how the process went in order to
25 get this deal done with Ms. Turner?

1 A. She called the number. She received one of my
2 postcards that we had mailed out. She called my number. I
3 answered. She had a few questions for me. I answered her
4 questions. She said that this was something that she was
5 willing to do to save her home.
6 And then we set up a meeting where I flew to her
7 home, and had the contract with me, and went over all the
8 details, everything that Charles had said to say to the client,
9 and she signed the contract.
10 Q. The explanations you gave Ms. Turner, were those
11 explanations based on what had been explained to you by Charles
12 Head?
13 A. Yes.
14 Q. After Ms. Turner signed the contract, what did you do
15 next?
16 A. Just flew back home and handed over the paperwork.
17 Within a week she -- well, actually within a few days she
18 needed part of that money that we were supposed to give her,
19 you know, the 5,000 to $10,000 in equity. She had bills that
20 she needed to pay or catch up on, and unfortunately the loan
21 sometimes would take several weeks. I knew she needed this
22 money, so I sent her money from my personal account to cover
23 that money that I had said that I would give to her.
24 Q. Did there come a point when the transaction was
25 completed?

1 A. Yes.
2 Q. Did you receive money as a result of completing the
3 transaction?
4 A. Yes.
5 Q. Did Charles Head get any money from the transaction?
6 A. Yes.
7 Q. I would like to go to Government's Exhibit 19-B5,
8 Your Honor. If it's not already admitted, I would ask that it
9 be admitted as an escrow document pursuant to the stipulation.
14 THE COURT: 19-B5 is admitted.
15 (Government Exhibit 19-B5, 3646 Milton Way, North
16 Highlands – Escrow File (pages 1-5 only), admitted into
17 evidence.)
18 Q. BY MR. ANDERSON: When you went to see Ms. Turner,
19 did you go alone or did you go with someone else?
20 A. I went with someone else.
21 Q. Who did you go with?
22 A. Cindy -- Lucero I think was her last name.
23 Q. What was her role?
25 Q. Looking at Government's Exhibit 19-B5, do you

1 recognize this document?
2 A. I do.
3 Q. What is it?
4 A. It's wire instructions.
5 Q. Wire instructions for what?
6 A. I believe it's for the equity.
7 Q. Now looking at the bottom of the page there is a
8 notary stamp, Cindy Gastelum?
9 A. Yes. That was the last name.
10 Q. Okay. Did you explain this document to Ms. Turner in
11 accordance with what Charles Head had told you?
12 A. Yes.
13 Q. Let's go to Government's Exhibit 19-C1.
15 Exhibit 19-C be admitted as bank records pursuant to the
16 stipulation.
19 THE COURT: Just C-1?
20 MR. ANDERSON: Well, the whole C exhibit, but we'll
21 start talking about page one.
22 THE COURT: Understanding it's all of C, Mr. Tedmon?
23 MR. TEDMON: That's fine. No objection.
25 MR. HAYDN-MYER: No objection. Your Honor.

1 THE COURT: All right. 19-C in full is in.
2 (Government Exhibit 19-C, 3646 Milton Way, North
3 Highlands – Related Bank Records, admitted into evidence.)
4 Q. BY MR. ANDERSON: This first page, do you recognize
5 it?
6 A. Vaguely.
7 Q. Is that a business account application?
8 A. Yes.
9 Q. What's it for?
10 A. For Meridian Financial Group.
11 Q. And what's Meridian Financial Group?
12 A. It was the LLC that I started.
13 Q. Did anyone ask you to set up an LLC?
14 A. Yes. Charles.
15 Q. Now, after this transaction was completed, did you
16 learn something that concerned you about the transaction?
17 A. Yes.
18 Q. What did you learn?
19 A. Well, Ms. Turner had a lot of questions regarding the
20 contract, and she sent me an e-mail with about 20 questions
21 that I didn't know the answers to. I then went to Ms. Yang,
22 who was the office manager, and I asked her about some of the
23 questions because I wanted to relay the information back to
24 Ms. Turner. At that time, that's when I was made aware that
25 the transaction was not legal.

1 Q. All right. And what about the transaction -- what
2 about what you had told Ms. Turner about the transaction and
3 what was really happening with the transaction weren't the
4 same?
5 A. Well, the main thing was we had -- well, I was told
6 to tell her that she would be on title along with the investor,
7 and that was not the case. The paperwork that got filed was
8 the investor on title only.
9 Q. Following this transaction, were you still getting
10 phone calls from people looking -- responding to postcards?
11 A. Yes.
12 Q. How did you handle those phone calls after you
13 learned what you learned about the Turner transaction?
14 A. I told them the truth.
15 Q. And when you told people the truth about what was
16 going to happen in these type of deals, were you able to get
17 any more clients?
18 A. No.
19 Q. When people knew what the actual deal was, would
20 anyone sign up with you?
21 A. No.
22 MR. TEDMON: Objection. Speculation as to what some
23 other person might do.
25 Q. BY MR. ANDERSON: Well, based on your experience in

1 telling people what actually was going to happen with their
2 property, after explaining that to people, did you have a
3 single person agree to do a transaction?
4 A. No.
5 MR. ANDERSON: Your Honor, I would like to turn to
6 Government's Exhibit 19-C3.
7 THE COURT: All right. That's already in. You may
8 publish.
9 Q. BY MR. ANDERSON: Is this a continuation of the C1
10 that we just looked at?
11 A. Yes, it is. I'm sorry.
12 Q. Is that your signature on this document setting up
13 the account?
14 A. Yes, it is.
15 Q. Looking at 19-C4, do you recognize that document?
16 A. Yes.
17 Q. What is it?
18 A. I think it's just a statement from the Wells Fargo
19 account by Meridian Financial.
20 Q. Does it show a wire transfer into your account?
21 A. Yes, it does.
22 Q. How much is that wire transfer for?
23 A. $89,242.99.
24 Q. Do you know where that money came from?
25 A. The equity of Ms. Turner's home.

1 Q. Turning to 19-C5. Do you see a $45,000 -- $45,061.38
2 withdrawal?
3 A. Yes.
4 Q. Do you know what that was for?
5 A. That was for Charles Head.
6 Q. And if you turn to 19-C6, there is a cashier's check,
7 do you see that cashier's check?
8 A. Yes.
9 Q. For $45,053.38?
10 A. Yes.
11 Q. And it's made out to Creative Loans?
12 A. Correct.
13 Q. Who was that check for?
14 A. Charles Head.
15 Q. Was that money that had come from the Turner's
16 property?
17 A. Yes.
18 Q. After you found out that what you had told the
19 Turners wasn't true, did you speak with Charles Head about it?
20 A. Yes.
21 Q. What did you say to Charles Head?
22 A. I -- well, we had -- he had wondered why I hadn't
23 done any more transactions, and I basically said that I didn't
24 feel that this was something I could continue doing since I
25 knew that it wasn't right.

1 Q. How did Charles Head respond to that?
2 A. Kind of laughed it off.
3 MR. ANDERSON: Your Honor, I have no further
4 questions for this witness.
5 THE COURT: All right. It's 1:29 p.m. My suggestion
6 is that we break for the day.
7 MR. TEDMON: I would agree.
8 THE COURT: All right. So ladies and gentlemen of
9 the jury, we've come to the close of business for today and for
10 the week. Because tomorrow is Friday we will not have court.
11 We will resume again Monday morning again now at 8:30 a.m.
12 Monday, Tuesday and Thursday of next week we'll begin at
13 8:30 a.m. On Wednesday again at 1:30 p.m.
14 Just so you know, on Tuesday we will conclude early.
15 The Court has a conflict, and so we'll conclude by quarter of
16 12:00 at the latest on Tuesday. But otherwise, our default
17 schedule is running now with that one exception of June 13th.
18 As we break for the weekend, please keep in mind all
19 of my admonitions very carefully. No discussing the case with
20 anyone. No doing any research of any kind. If you happen to
21 see any press reports that appear to discuss this case, do not
22 read them, disregard them. Don't Tweet. Don't Facebook post.
23 If anyone attempts to contact you in any way, including through
24 e-mail, please let me know first thing Monday morning.
25 Have a very good weekend. Thank you for all of your

1 hard work so far, and we'll see you on Monday. Thank you.
2 (Jury out.)
3 THE COURT: You may step down, ma'am. You should be
4 ready to go at 8:30 a.m. Monday morning, and you can take your
5 seat at that time, here.
6 You may remain seated if you wish. I'm standing
7 because I have to.
8 So just a couple of business matters. It's become
9 clear at this point that given the pattern, even when this
10 stipulation addresses only authenticity, you're stipulating to
11 full admissibility. There are no objections preserved.
12 MR. TEDMON: We are.
13 THE COURT: So with that understanding, now that it's
14 perfectly clear, I won't ask if there are objections. It's
15 only if you think someone is trying to move something in that's
16 not covered by the stipulation, let me know.
17 But if someone says this is covered by the
18 stipulation, I will accept that. I won't check to see if there
19 are any remaining objections.
20 MR. TEDMON: Your Honor, we can say that it's covered
21 by the stipulation and ask that it be published?
22 THE COURT: Yes.
23 And I signed the rest of the immunity orders.
24 Ms. Streeter will file them. If they have not already been
25 filed, they will be filed by close of business today. So I'll

1 expect you can pull those off of CM/ECF if you wish to.
2 Can the Government please make sure that the
3 witnesses covered by those orders get copies and have a chance
4 to review them before they come into court. I will still have
5 a colloquy with them as we did with Ms. Russell.
6 MR. ANDERSON: The timing was difficult for today,
7 Your Honor. I apologize for that.
8 THE COURT: What does Monday look like? We'll finish
9 with Ms. Russell. And then Ms. Yang?
10 MR. ANDERSON: Ms. Yang, Your Honor.
11 THE COURT: And then you still have Mr. Daley and
12 Daniels lined up.
13 MR. ANDERSON: I don't know that we'll need
14 Mr. Daley, so he may not testify at all. Ms. Daniels because
15 she's a little bit more local, we're more flexible with her.
16 So we may not use her there. We may try and use her in a
17 different spot so we can make sure that we have enough
18 witnesses. One of the few that doesn't need to fly here.
19 So at least tentatively have lined up Heydi Galindo,
20 Nora Rivas, Lisa and Jacob Malentino, Denise Hickman, Gwen Lee,
21 Karie Joest, Richard and Brenda Clark, Irma Valdez. Those are
22 the most likely witnesses that we will be conferring this
23 afternoon, and I would be happy to send an e-mail to counsel
24 tomorrow with a little better idea of who is most likely to
25 testify.

2 MR. TEDMON: That would be much appreciated.
3 THE COURT: If you can do that.
4 Also just checking back on exhibits. Even though I
5 don't think CH-B2 and CH-B6 were moved, it's assumed they are
6 admitted now?
8 MR. TEDMON: Yes.
9 MR. ANDERSON: No objection.
10 THE COURT: All right. CH-B2 and CH-B6, so they are
11 admitted based on the stipulation. Is there anything else we
12 need to discuss today?
13 (Government Exhibit CH-B2, "Option Agreement" re: 823
14 West San Joaquin Avenue, Tulare, admitted into evidence.)
15 (Government Exhibit CH-B6, "Affidavit Of Deed" re:
16 823 West San Joaquin Avenue, Tulare, admitted into evidence.)
17 MR. TEDMON: I guess the only other thing I would add
18 on the immunities, if any of these witnesses have an attorney,
19 if the Government is aware of them, let us know. Might speed
20 things up.
21 MR. ANDERSON: Mr. Goldizen does have an attorney who
22 we have been in contact with. He is located in Arizona, and
23 I'm happy to provide that information to Mr. Tedmon if he wants
24 to e-mail me in advance. I don't think his attorney will be
25 coming out here, though, for the testimony, and we've just

1 spoken with him to arrange it.
2 THE COURT: He's the only one?
3 MR. ANDERSON: That I'm aware of, Your Honor, yes.
4 Obviously, we inquire, but people's minds change, and sometimes
5 they end up with attorneys that weren't expected.
6 THE COURT: All right. To the extent we can arrange
7 for the Court's colloquy with any of these persons to occur
8 before we start or on the scheduled breaks, that's ideal.
9 MR. ANDERSON: Okay.
12 At some point next week I'm going to confer with you
13 on the schedule and see if you still think we're looking at
14 five weeks.
15 MR. ANDERSON: I think we're doing pretty well. I
16 think it will be less.
17 THE COURT: That what it appears to me given the rate
18 at which exhibits are coming in, for example.
19 MR. TEDMON: I think it will be less.
20 MR. ANDERSON: The stipulation has been a monumental
21 help.
22 THE COURT: All right. I'll see you Monday morning.
23 I'll be available starting at 8:20.
24 MR. ANDERSON: Thank you, Your Honor.

2 CERTIFICATION

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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
VOLUME 4
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
MONDAY, MAY 13, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
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20
21
22
23
24
25

1 I N D E X
3 ELIZABETH RUSSELL
5 FURTHER REDIRECT EXAMINATION BY MR. ANDERSON 452
FURTHER RECROSS-EXAMINATION BY MR. TEDMON 453
6
KOU YANG
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24
25

1
3 43-F Equity Purchase Agreement – Teri Turner, 370

40-P Email from Charles Head, Re Foreclosures, 393
4 dated 8/26/04
40-U Email dated 7/22/04 re: Sales 442
5 46-A Property Tracking Statement 458
46-B Property Tracking Statement 458
6 40-C Email from Kou Yang - Re: Franklin 471
Appraisal, dated 4/26/2005
7 40-H Email from Kou Yang – Re: Taylors, dated 471
5/13/2005
8 40-I Email from Kou Yang – Re: Simone Vu Deal, 471
dated 4/15/2005
9 40-J Email from Charles Head – Trip, dated 471
3/21/2005
10 40-O Email from Charles Head, Re: Training, 482
dated 7/22/04
11 40-Z Email dated 8/31/04 re: Tracy 486
40-AA Email dated 5/3/05 re: Stuff 486
12 40-DD Email dated 5/31/05 re: Charles Mortgages 486
40-EE Email dated 4/21/05 re: Singleton 486
13 41-B Email from Kou Yang – FW: Mattson, dated 497
10/28/2004
14 42-A Email from Kou Yang, Re: Fucso/Scallin, 528
dated 4/10/2006
15 42-B Email from Kou Yang, Re: 529
Ferrantello/Wallace, dated 4/25/2006
16 41-C Email from Kou Yang – Mattson-Long Beach – 529
Correction.pdf, dated 8/23/2004
17 42-C Email from Kou Yang Re: Queen, dated 531
5/4/2006
18 42-D Email from Kou Yang Re: Freeman, dated 532
5/15/2006
19 42-E Email from Kou Yang Re: Castillo/Siplin 534
inquiry, dated 8/14/06
20 40-Y Email dated 8/26/04 re: FW 538
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22
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2
CH-D3 "Residential Lease After Sale" re: 3646 386
3 Milton Way, North Highlands
CH-KK1 Residential Purchase Agmt. Re 1240 Willow 407
4 St., Oakland CA
CH-KK2 Uniform Residential Loan Application 412
5 CH-KK3 Uniform Residential Loan Application 417
CH-KK4 Name Affidavit 422
6 CH-KK5 Name Affidavit 422
CH-KK6 Occupancy Affidavit & Financial Status 425
7 CH-KK7 Borrower’s New Residential Telephone 429
Number Confirmation
8 CH-KK8 Good Faith Estimate – Itemization 430
CH-KK9 Castlehead Inc. Escrow – Master Stmt. 430
9 CH-KK10 HUD-1 Stmt. 430
CH-KK11 Grant Deed 430
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2 MONDAY, MAY 13, 2013
3 ---oOo---
6 trial, day five, Your Honor.
8 The parties are present. The Court's apologies. My private
9 driveway wasn't such a private driveway this morning, so I was
10 backed up in a way I don't usually expect.
11 You've seen the communication from Juror Number 12?
12 MR. TEDMON: Yes.
13 THE COURT: I told her she did not need to show up
14 this morning if she can't drive. I exercised discretion to
15 communicate that message. Is there any objection to her being
16 excused?
17 MR. TEDMON: I don't, Your Honor. No.
21 THE COURT: Mr. Haydn-Myer.
22 All right. So then we would just move Mr. Hill into
23 that seat, and I'll advise the jurors as to what has
24 happened --

1 THE COURT: -- with her. So anything else we need to
2 discuss this morning?
3 MR. TEDMON: We agreed on a redaction on a couple
4 other exhibits. I don't know if the Court got those.
5 THE COURT: They have been put in my binders.
6 MR. ANDERSON: It's 40-A, page two, and 40-G, page
7 one.
8 THE COURT: All right. I'm going to look at those as
9 they come in, if they do. And if I have any questions, I'll
10 let you know.
11 MR. TEDMON: I think that's it.
12 THE COURT: All right. Can we put Ms. Russell on the
13 stand?
14 Welcome back Ms. Russell. We continue to be outside
15 the presence of the jury. You continue to be willing to
16 testify without counsel?
18 THE COURT: And understanding the limitations in the
19 immunity agreement you've been provided?
21 MR. TEDMON: One other thing, Your Honor, before we
22 bring the jury in. I have a packet of exhibits, Defense
23 Exhibits CH-KK1 through 11, and I have the Court's copy here.
24 I'm going to do that now to speed things up.
25 THE COURT: You can set it by Ms. Streeter.

1 MR. TEDMON: I've given a copy to the Government and
2 Mr. Haydn-Myer.
3 THE COURT: So these are different?
4 MR. TEDMON: Yes. These are new.
5 THE COURT: So they replace --
6 MR. TEDMON: No. They are in addition to. The last
7 defense exhibit was CH-JJ. And this is KK, KK1 through 11.
8 And can I approach Ms. Russell and just provide these
9 to her now?
10 THE COURT: You may. You have a copy, Mr. Anderson?
11 MR. ANDERSON: Yes, I was just handed a copy by
12 Mr. Tedmon.
13 THE COURT: All right. Let's bring the jury in now.
14 (Jury in.)
16 court, ladies and gentlemen of the jury. A good Monday morning
17 to you. You've noticed that one of your members is missing.
18 Ms. Moreno contacted the Court actually on Friday. She has
19 fractured her right lower leg. And so she provided a doctor's
20 note and a picture of her foot in the cast. She cannot drive.
21 After consulting with counsel, I've confirmed that
22 she is being excused for those reasons. So those of you in the
23 front row can scoot over. Mr. Hill, you will take her seat
24 now. So that's clear and we've already taken care of her
25 notes.

1 THE COURT: All right. So we're going to proceed
2 with the cross-examination of Ms. Russell. Mr. Tedmon.
3 MR. TEDMON: Correct. Thank you, Your Honor.
4 ELIZABETH RUSSELL,
8 CROSS-EXAMINATION
9 BY MR. TEDMON:
10 Q. Good morning, Ms. Russell.
11 A. Good morning.
12 Q. I want to just kind of re-set a couple things from
13 Friday. You testified that your current name is Elizabeth
14 Russell, that's your married name?
15 A. Correct.
16 Q. Correct. Now prior to that your maiden name was
17 Huerta?
18 A. Yes.
19 Q. And you also went by Liz during that period of time,
20 is that correct?
21 A. Yes.
22 Q. And the period of time I'm speaking about is 2003 --
23 THE COURT: Could you please pull the microphone
24 over. Just make certain you're speaking into it.
25 Q. -- 2003 to 2006, would that be approximately correct?

1 A. I'm sorry?
2 Q. Yeah. You went by Elizabeth and also Liz, correct?
3 A. Correct.
4 Q. And you were Huerta in terms of your maiden name
5 until when?
6 A. 2006.
7 Q. Okay. Now as far as the contact you had, you
8 testified with regard to Ms. Turner. Do you recall that
9 testimony?
10 A. Yes.
11 Q. And you and -- I believe you testified Cindy went to
12 see Ms. Turner, personally?
13 A. Yes.
14 Q. And that was in the Sacramento area, correct?
15 A. Correct.
16 Q. Did you drive or did you fly?
17 A. We flew.
18 Q. All right. And how long --
19 Your Honor -- could you just turn the microphone kind
20 of towards you. That's better. Thank you. And then just
21 speak into it so we can hear.
22 How long was the trip?
23 A. About an hour maybe.
24 Q. To Sacramento?
25 A. I'm not sure.

1 Q. Okay. That's fine. You got here from Southern
2 California?
3 A. Right.
4 Q. And then you met with Ms. Turner at her home,
5 correct?
6 A. Correct.
7 Q. And how long did you meet with her going through
8 these various documents, would you say, approximately?
9 A. About an hour.
10 Q. About an hour. Okay. Was anybody else with her?
11 A. No.
12 Q. And so it was the three of you, it was Cindy,
13 yourself and Ms. Turner?
14 A. Correct.
15 Q. Now, when you came out to see Ms. Turner, you
16 presented her and explained what's called an Equity Purchase
17 Agreement, do you recall that?
18 A. I believe so.
19 Q. Okay. And that was basically the foundational
20 document for the program, you knew that, correct?
21 A. Correct.
22 Q. You need to speak up into the microphone.
23 A. Sorry. Yes.
24 Q. The court reporter needs to hear you as well.
25 THE COURT: I think if you pull it down a little bit

1 that's going to help.
2 THE WITNESS: Okay. How is that?
3 Q. BY MR. TEDMON: That's better. And this meeting that
4 you had with Ms. Turner was in October of 2004, do you recall
5 that?
6 A. I believe so.
7 MR. TEDMON: Your Honor, pursuant to the stipulation,
8 I would ask that Government's 43-F, I'm moving it and ask it be
9 admitted into evidence.
10 THE COURT: All right. It's covered by the
11 stipulation. It may come in.
12 MR. TEDMON: And that would be 43-F through 43-F10,
13 just to make sure we're clear.
14 THE COURT: All right. Those are admitted.
15 (Government Exhibit 43-F, Equity Purchase Agreement –
16 Teri Turner, admitted into evidence.)
17 Q. BY MR. TEDMON: Can I have Exhibit 43-F, the first
18 page on the screen, please.
19 Now, Ms. Russell, we can do this one of two ways,
20 whichever is easiest for you. The documents that I'm going to
21 be asking you about would be on the monitor. You can certainly
22 look at that. That's been admitted into evidence. There's
23 also binders that have tabs with numbers that have the
24 originals or what we're using as originals for the trial. So
25 you can use either one. Okay. I'm going to operate off the

1 monitor.
2 A. I don't believe I have a binder.
3 Q. I think they are to your right-hand side.
4 A. Okay. How do I know each one?
5 THE COURT: On the spine there should be numbers at
6 the bottom.
7 THE WITNESS: Okay. Well, for now I'll look here.
8 Q. BY MR. TEDMON: If you need to refer to the paper
9 documents, just let me know. Okay?
10 A. Okay.
11 Q. Now, this document we're looking at, 43-F, this is
12 the Equity Purchase Agreement for Ms. Turner, correct?
13 A. It looks that way.
14 Q. All right. And it's dated October 4th, 2004,
15 correct?
16 A. Correct.
17 Q. Now if we can have that expanded, please, those first
18 two paragraphs.
19 What we've got here is the Equity Purchase Agreement,
20 do you see that?
21 A. Yes.
22 Q. And it's between Terri Jean Turner as seller, that's
23 what that says, correct?
24 A. Correct.
25 Q. And Meridian Financial as the purchaser, true?

1 A. Yes.
2 Q. Now, Meridian Financial is your company, correct?
3 A. Correct.
4 Q. And it relates to the property at 3646 Milton Way in
5 North Highlands, correct?
6 A. Yes.
7 Q. Now the second paragraph -- and it's highlighted
8 here -- says, "seller" -- who is Terri Jean Turner, correct?
9 A. Yes.
10 Q. -- "agrees to sell and convey to purchaser" -- that's
11 Meridian Financial, who is you, true?
12 A. True.
13 Q. -- "and convey to purchaser and purchaser agrees to
14 purchase from seller the real property described as 3646 Milton
15 Way, North Highlands, California," correct?
16 A. Correct.
17 Q. Now you know and you explained to Ms. Turner that
18 this was a sales agreement, correct?
19 A. I don't know if I referred to it as a seller's
20 agreement.
21 Q. Well, the document clearly states she's selling her
22 property, true?
23 A. True.
24 Q. And in this particular transaction the consideration
25 for the sale of the property is $4,000, do you see that?

1 A. Yes.
2 Q. And this was presented to Ms. Turner by you, correct?
3 A. Correct.
4 Q. Now on page 43-F2, which is the second page of this
5 contract, it says, "purchaser shall take title to the
6 property," correct?
7 A. Correct.
8 Q. That's part of this contract?
9 A. Yes.
10 Q. Now Ms. Turner signed this contract, did she not?
11 A. Yes.
12 Q. And then further down on 43-F2 it says, "physical
13 possession," right there, correct?
14 A. Yes.
15 Q. And it says here, "title of the property shall be
16 transferred to the purchaser," correct?
17 A. Yes.
18 Q. And that is Meridian Financial?
19 A. Yes.
20 Q. Who is you, correct?
21 A. Yes.
22 Q. Now, moving on to 43-F3 of the exhibit, the bottom
23 paragraph says "entire agreement," do you see that?
24 A. Yes.
25 Q. And it says clearly in this paragraph that this

1 Equity Purchase Agreement is the entire agreement, that's what
2 it says, true?
3 A. True.
4 Q. And it also says, "this agreement is a result of
5 arms-length negotiation," correct?
6 A. Yes.
7 Q. And Ms. Turner signed this?
8 A. Yes.
9 Q. In your presence?
10 A. Yes.
11 Q. And then it goes on to say, "purchaser and seller
12 each acknowledge that neither the other nor any agent of the
13 other has made any promises, representations or warranty
14 whatsoever, express or implied, not contained herein concerning
15 the subject matter hereof to induce them to execute this
16 agreement," that's what that says, correct?
17 A. Correct.
18 Q. So what that means is Ms. Turner and Meridian are
19 agreeing to the terms of this document, correct?
20 A. Correct.
21 Q. Nothing more, nothing less, that's what it says,
22 true?
23 A. True.
24 Q. Well, let's go back to the last sentence. And then
25 the last sentence here says, "purchaser and seller acknowledge

1 that they shall not execute and have not executed this
2 agreement in reliance of any such promises, representations or
3 warranty not expressly contained herein," correct?
4 A. Correct.
5 Q. The contract speaks for itself, correct?
6 A. Correct.
7 Q. And then the last sentence of that section says --
8 and I'll point to this section here -- "purchaser and seller
9 have been given the option to have this agreement reviewed by
10 an attorney of their choice," correct?
11 A. Correct.
12 Q. Did Ms. Turner request an attorney review this?
13 A. No.
14 Q. But the document allows her that opportunity, does it
15 not?
16 A. Yes.
17 Q. Then we go to the next paragraph. And it says,
18 "seller hereby represents that all negotiations and dealings
19 with purchaser have been and are at arms-length, and that no
20 duress or undue influence has been exerted by purchaser over
21 seller or seller's family in connection with this purchase.
22 Seller is aware that the purchaser may be purchasing property
23 for immediate re-sale." That's what the contract says, true?
24 A. True.
25 Q. So the contract says to the seller, the purchaser is

1 buying your property, correct?
2 A. Correct.
3 Q. And it further goes on to say in the contract that
4 the purchaser can put it up for immediate re-sale, that's what
5 it says, correct?
6 A. Correct.
7 Q. And that no duress or undue influence has been
8 exerted, correct?
9 A. Correct.
10 Q. "Seller's acknowledgement." Last sentence, "seller's
11 decision to sell was not made in reliance on any
12 representations of purchaser which are not expressly contained
13 in the agreement," correct?
14 A. Correct.
15 Q. So the agreement has its own terms in and of
16 themselves, do you agree with that?
17 A. Yes.
18 Q. And that's what she agreed to because she signed it,
19 true?
20 A. True.
23 Q. BY MR. TEDMON: She signed the contract, correct?
24 A. Yes.

1 A. Yes.
2 Q. With these terms attached?
3 A. Yes.
4 Q. And then it indicates in the next paragraph that
5 after selling the property -- that being Ms. Turner to
6 Meridian, who is you -- that she would then lease for a monthly
7 rental of $650, correct?
8 A. Correct.
9 Q. And the reason she's renting the property, as you
10 know, is because she would no longer own it, correct?
11 A. Correct.
12 Q. Now my understanding from your testimony on Friday
13 was that Ms. Turner signed the contract the day you were there?
14 A. Yes.
15 Q. Is that right?
16 A. Yes.
17 Q. Okay. And so you had a chance to observe her either
18 initial or sign the document, correct?
19 A. Yes.
20 Q. That's Ms. Turner's initials that were signed in your
21 presence, true?
22 A. Yes.
23 Q. And these are your initials, E.H., at that time
24 Elizabeth Huerta, as the purchaser, correct?
25 A. Yes.

1 Q. And then there is an addendum, which is Government's
2 43-F5, and I just want to ask you about one paragraph here. It
3 says, "pursuant to this addendum, purchaser is granting seller
4 the potential right to share in the equity of the property at
5 the expiration of the term of the lease," and then there is
6 some terms and conditions, do you see that?
7 A. Yes.
8 Q. So part of the document here is that there is this
9 12-month lease term where she's renting the property, correct?
10 A. Correct.
11 Q. And then it says that the seller is granting the
12 purchaser -- strike that -- the purchaser is granting the
13 seller a potential right to share in the equity at the end of
14 this 12-month period, that's what it says, correct?
15 A. Yes.
16 Q. And Ms. Turner agreed to that term by signing the
17 contract, correct?
18 A. Correct.
19 Q. And then on Government's 43-F6 there is a dated block
20 here, you see that, 4-October-04?
21 A. Yes.
22 Q. And the signature here Terri Jean Turner, correct?
23 A. Yes.
24 Q. And that was signed in your presence by Ms. Turner,
25 correct?

1 A. Correct.
2 Q. And then 43-F7 is an additional exhibit relating to
3 landlord costs and some other items, and Ms. Turner signed that
4 as well, correct?
5 A. Yes.
6 Q. With a date of 4-October-04?
7 A. Correct.
8 Q. Now, beyond the Equity Purchase Agreement there was
9 also an acknowledgement form that she reviewed and initialed,
10 correct?
11 A. Correct.
12 Q. Let's go through that one. Paragraph one states,
13 "seller acknowledges that the purchaser has not made any
14 representations, promises or verbal agreements regarding the
15 purchase of seller's residence that are not contained within
16 the Equity Purchase Agreement or the other documents executed
17 concurrently herewith," do you see that?
18 A. Yes.
19 Q. So that is saying -- well, strike that.
20 And then the seller's initials are right there,
21 correct?
22 A. Correct.
23 Q. Agreeing to that term, correct?
24 A. Correct.
25 Q. And that's Ms. Turner's initial, correct?

1 A. Correct.
2 Q. And Ms. Turner is acknowledging that condition or
3 acknowledgement, true?
4 A. True.
6 A. Yes.
7 Q. That anything other than the contract means nothing,
8 correct?
9 A. Correct.
10 Q. Now going to paragraph four, do you see that,
11 paragraph four?
12 A. Yes.
13 Q. This is Ms. Turner's initials, correct?
14 A. Yes.
15 Q. Signed in your presence, true?
16 A. True.
17 Q. And paragraph four says, "seller understands that the
18 Equity Purchase Agreement, which seller has entered into with
19 purchaser, is not a loan, and it is not a mortgage, pursuant to
20 the terms of the Equity Purchase Agreement, seller" -- that's
21 Ms. Turner, correct?
22 A. Yes.
23 Q. -- "is selling his or her entire interest in the
24 property to purchaser," that's Meridian and that's you,
25 correct?

1 A. Correct.
2 Q. It's very clear from this acknowledgement, which she
3 initialed, she's selling her property, true?
4 A. True.
5 Q. It's not a loan and it's not a mortgage, correct?
6 A. Correct.
7 Q. And Ms. Turner acknowledged that?
8 A. Correct.
9 Q. And then the last paragraph on 43-F8, paragraph five
10 states -- this paragraph here says, "seller understands that
11 except -- except as set forth in the addendum to the Equity
12 Purchase Agreement, purchaser has not made any promise or
13 representation to transfer title to" -- and then we'll go to
14 page nine -- "the property back to the seller," that's
15 Ms. Turner, "at a later date, to re-sell the property to the
16 seller at a later date, or to grant seller an option to
17 purchase the property," other than what's in the addendum,
18 correct?
19 A. Correct.
20 Q. And Ms. Turner signed that as well, true?
21 A. True.
22 Q. And then paragraph six, that's seller's initials,
23 that Ms. Turner, correct?
24 A. Correct.
25 Q. And it says, "seller acknowledges that purchaser has

1 not made any promises or representations to seller that the
2 Equity Purchase Agreement is method whereby purchaser will
3 refinance seller's residence on behalf of seller, or that the
4 Equity Purchase Agreement is in any way to be considered a
5 refinancing of the seller's residence on seller's behalf,"
6 correct?
7 A. Correct.
8 Q. And Ms. Turner initialed that paragraph as well,
9 correct?
10 A. Yes.
11 Q. Agreeing to that term, correct?
12 A. Correct.
13 Q. Paragraph seven, highlighted portion says, "purchaser
14 will be the sole owner of the property," that's Meridian,
15 correct?
16 A. Correct.
17 Q. And that "seller's only interest in the property will
18 be to continue to reside at the property pursuant to the lease
19 agreement executed concurrently herewith, and pursuant to the
20 addendum to the Equity Purchase Agreement," that's what it
21 says, right?
22 A. Yes.
23 Q. And Ms. Turner initialed that as well?
24 A. Yes.
25 Q. So she knew by initialling this -- strike that.

1 The contract states that Meridian will be the sole
2 owner of the property, one, correct?
3 A. Correct.
4 Q. Two, that Ms. Turner will no longer own the property,
5 correct?
6 A. Correct.
7 Q. And three, there is a lease agreement where she can
8 rent the property to stay there, correct?
9 A. Correct.
10 Q. And in addition, as we've covered earlier, her
11 consideration given was $4,000, true?
12 A. True.
13 Q. Let's go to paragraph eight. Again, this is
14 Ms. Turner's initials, right?
15 A. Yes.
16 Q. And paragraph eight says, "seller represents that he
17 or she is voluntarily entering into the Equity Purchase
18 Agreement and that purchaser has offered seller an opportunity
19 to review each and every term of the Equity Purchase Agreement,
20 and all other documents executed concurrently herewith, and
21 that purchaser has allowed seller with the opportunity to have
22 an attorney review each and every term of the Equity Purchase
23 Agreement and all other documents executed concurrently on
24 seller's behalf," correct?
25 A. Correct.

1 Q. Okay. Now, when you met with Ms. Turner, you didn't
2 tell her you can't go see a lawyer, did you?
3 A. No.
4 Q. In fact, that paragraph allows her to do so if she
5 chooses to, correct?
6 A. Correct.
7 Q. And she initialed it, correct?
8 A. Correct.
9 Q. Agreeing to that term?
10 A. Yes.
11 Q. And then paragraph nine, above her signature line,
12 "seller specifically represents that he or she has carefully
13 reviewed the Equity Purchase Agreement and all other documents
14 executed concurrently herewith, and that seller understands the
15 Equity Purchase Agreement and all other documents executed
16 concurrently herewith," and then there's a dated block of
17 4-October-04, correct?
18 A. Correct.
19 Q. And Ms. Turner's signature above her typed name,
20 correct?
21 A. Yes.
22 Q. And then finally there is one other form, Affidavit
23 of Deed, do you see that?
24 A. Yes.
25 Q. And section two of this document says, "consideration

1 in the amount of $4,000 was paid therefor," correct?
2 A. Correct.
3 Q. And that's Ms. Turner's initials, it was done so in
4 your presence?
5 A. Yes.
6 Q. And then item E says, "in execution and delivery of
7 said deed I was not acting under any misapprehension as to the
8 effect thereof, and acted freely and voluntarily, and was not
9 acting under coercion or duress," correct?
10 A. Correct.
11 Q. And she initialed that as well?
12 A. Yes.
14 A. Yes.
15 Q. Indicating she is not under any duress or coercion as
16 it relates to any of this, correct?
17 A. Correct.
18 Q. And then at the bottom it says, "this declaration is
19 made under the penalty of perjury," do you see that?
20 A. Yes.
21 Q. And that's Ms. Turner's signature, correct?
22 A. Correct.
23 Q. And it's dated October 4th, 2004, correct?
24 A. Yes.
25 Q. And it's notarized by Cindy Gastelum, do you see

1 that?
2 A. Yes.
3 Q. And there is a signature here. Do you know whose
4 signature that is?
5 A. I believe it's Cindy's.
6 Q. Gastelum?
7 A. Yes.
8 Q. And she was the Cindy you're referring to that went
9 with you on this trip?
10 A. Yes.
11 Q. Now there was a notation in the Equity Purchase
12 Agreement we just reviewed about a rental or lease agreement
13 that Ms. Turner entered into, correct?
14 A. Yes.
15 MR. TEDMON: Your Honor, I would move, pursuant to
16 the stipulation, Defendant's CH-D, as in dog, 3, please.
17 THE COURT: All right. As covered by the stipulation
18 CH-D3 is admitted.
19 (Defendant's Exhibit CH-D3, "Residential Lease After
20 Sale" re: 3646 Milton Way, North Highlands, admitted into
21 evidence.)
22 Q. BY MR. TEDMON: Let's go ahead and move forward then.
23 Do you see this here? Let me just have that expanded. This
24 upper section, please.
25 Now this is a Residential Lease After Sale, correct?

1 A. Yes.
2 Q. Now this is another document you brought to present
3 to Ms. Turner for her review and signature, is that right?
4 A. Yes.
5 Q. And it's between the buyer, Meridian Financial,
6 correct?
7 A. Correct.
8 Q. Who is also noted as the landlord because Meridian is
9 going to own the property, correct?
10 A. Correct.
11 Q. And the seller/tenant, Terri Jean Turner, right?
12 A. Yes.
13 Q. Which is wholly consistent with what the Equity
14 Purchase Agreement called for, true?
15 A. True.
16 Q. And the address that we're dealing with is 3646
17 Milton Way, North Highlands, correct?
18 A. Correct.
19 Q. That's Ms. Turner's residence, correct?
20 A. Yes.
21 Q. The same property that she was selling to Meridian
22 under the Equity Purchase Agreement, correct?
23 A. Correct.
24 Q. And now she's going to be a renter, true?
25 A. True.

1 Q. Consistent with the contract, correct?
2 A. Yes.
3 Q. If we could have the whole document, please. And the
4 rent, if you can see that there, is $650 a month, is that
5 right? Paragraph three, rent, do you see that?
6 A. Yes.
7 Q. Okay. And that's what was expressed in the Equity
8 Purchase Agreement as well, correct?
9 A. Correct.
10 Q. Now, there is a couple of initials at the bottom. If
11 you can't see that, let me know and I'll expand it. But it
12 says "tenant initials," do you see that, right here?
13 A. Yes.
14 Q. That's Ms. Turner's initials, correct?
15 A. Correct.
16 Q. And then landlord initial is E.H., that's you, right?
17 A. Yes.
18 Q. And then if we can go to page two of the document,
19 please, thank you. The date on this is October 4th, 2004,
20 correct?
21 A. Yes.
22 Q. And that is the same date that the Equity Purchase
23 Agreement was signed, correct?
24 A. Yes.
25 Q. And at the bottom it talks about keys and locks, do

1 you see that?
2 A. Yes.
3 Q. Right here? And Ms. Turner is acknowledging two keys
4 to the premises pursuant to her rental agreement, correct?
5 A. Correct.
6 Q. And then again on this page there's two initials, one
7 for tenant, one for landlord, do you see that?
8 A. Yes.
9 Q. Tenant was Ms. Turner, landlord is you, correct?
10 A. Yes.
11 Q. And that's what those initials reflect, true?
12 A. Yes.
13 Q. And if we can go to page three of the document.
14 Again, this is page three of the same rental or lease
15 agreement. See the bottom there it says "tenant's and
16 landlord's initials"?
17 A. Yes.
18 Q. And again, it shows Ms. Turner for the tenant and
19 your initials for the landlord, correct?
20 A. Yes.
21 Q. And then if we can go to page four, please, of the
22 document. Just expand that section, please.
23 Okay. And it shows here that Meridian Financial is
24 the landlord, correct?
25 A. Yes.

1 Q. Terri Jean Turner in the tenant, true?
2 A. Yes.
3 Q. And that's her signature signed in your presence,
4 correct?
5 A. Yes.
6 Q. Acknowledging the terms of this contract, correct?
7 A. Correct.
8 Q. If we could have the full document, please.
9 And then again at the bottom there's initials, tenant
10 for Ms. Turner -- or by Ms. Turner -- and landlord by you,
11 correct?
12 A. Yes.
13 Q. And if we go to the next page, which is the last page
14 of the document, please. Thank you. And then just have this
15 section expanded. Thank you.
16 And then there is an acknowledgement by both the
17 landlord and tenant relative to the contract, and then
18 Ms. Turner signs as the tenant/seller, correct?
19 A. Correct.
20 Q. Because she knew she was selling the property and she
21 was becoming a tenant?
24 Q. BY MR. TEDMON: It says tenant/seller, correct?
25 A. Correct.

1 Q. You've already testified that the Equity Purchase
2 Agreement is a contract to sell the property, correct?
3 A. Correct.
4 Q. So "seller" would be consistent with the Equity
5 Purchase Agreement, true?
6 A. True.
7 Q. Also, because the property's being sold and
8 Ms. Turner is renting the property, the tenant language there
9 is consistent with the Equity Purchase Agreement, correct?
10 A. Correct.
11 Q. And Ms. Turner signed both documents, the Equity
12 Purchase Agreement and this lease rental agreement, true?
13 A. True.
14 Q. Dated October 4th, 2004, correct?
15 A. Correct.
16 Q. And then Meridian Financial is the landlord/buyer,
17 correct?
18 A. Correct.
19 Q. And buyer is consistent with the fact that the Equity
20 Purchase Agreement indicates Meridian is purchasing the
21 property, they're buying it, correct?
22 A. Correct.
23 Q. And then you're renting it so Ms. Turner can stay
24 there, correct?
25 A. Correct.

1 MR. ANDERSON: Objection. Asked and answered.
4 And so that would be the landlord designation,
5 correct?
6 A. Correct.
7 Q. And that's consistent with what the Equity Purchase
8 Agreement says, correct?
9 A. Correct.
10 Q. That's fine. Thank you.
11 Now this particular transaction took place on
12 October 4th, 2004, correct?
13 A. Yes.
14 Q. Okay. You testified on Friday that Mr. Charles Head
15 had told you to represent certain things to Ms. Turner that
16 were of concern to you, correct?
17 A. Correct.
18 Q. All right. But in point of fact, you had had some
19 concerns about or questions at least about the program and how
20 it was being presented a few months before, correct?
21 A. Correct.
22 Q. In fact, you sent an e-mail to Mr. Head expressing
23 your concern, true, do you recall that?
24 A. Yes.
25 MR. TEDMON: Your Honor, I would ask pursuant to the

1 stipulation that Government's Exhibit 40-P be introduced into
2 evidence.
3 THE COURT: All right. As covered by the
4 stipulation, 40-P is admitted.
5 (Government Exhibit 40-P, Email from Charles Head, Re
6 Foreclosures, dated 8/26/04, admitted into evidence.)
7 Q. BY MR. TEDMON: We're showing 40-P on the screen. Do
8 you see that, Ms. Russell?
9 A. Yes.
10 Q. Okay.
11 A. It's a little small.
12 Q. We're going to walk our way through it. My eyes
13 aren't any good so I can't read it either. Let's have this
14 expanded first.
15 Now this date is August 25th, 2004, correct? Do you
16 see that?
17 A. Yes.
18 Q. And it's from Charles Head to Liz, do you see that?
19 A. Yes.
20 Q. And Liz is you, correct?
21 A. Correct.
22 Q. And the subject is "foreclosures"?
23 A. Correct.
24 Q. All right. Now in this first section of the e-mail
25 string Mr. Head says, "are you still interested in doing this,"

1 do you see that?
2 A. Yes.
3 Q. "We intend to start the marketing and send the cards
4 next week. I have heard around the office that you may not
5 want to do this." Do you see that?
6 A. Yes.
7 Q. Now, you had some hesitation about this back in
8 August, did you not?
9 A. Yes.
10 Q. All right. And Mr. Head says, "if this is the case,
11 please tell me sooner than later." And by Mr. Head I mean
12 Charles Head, correct?
13 A. Correct.
14 Q. "Please let me know what you think," do you see that?
15 A. Yes.
16 Q. And then there is an issue about delays. Mr. Head
17 was dealing with the IRS. Somebody stealing some money from
18 him. And then it says: "Let me know what you want to do. I
19 need to know if you are with us or not." Correct?
20 A. Correct.
21 Q. And if we can have the full document, please. And
22 can I have this middle section expanded. Can we have a little
23 bit more of the header. I'm sorry. Thank you. Okay.
24 Now this first e-mail was August 25th that we just
25 reviewed, correct?

1 A. Correct.
2 Q. This is August 26th, the next morning, and it's from
3 Liz to Charles Head, do you see that?
4 A. Yes.
5 Q. So you wrote this and you sent it to Charles Head?
6 A. Yes.
7 Q. And it's regarding foreclosures, true?
8 A. True.
9 Q. And you say to him, "my main concern is lack of
10 communication or should I say miscommunication among the people
11 in the office," do you see that?
12 A. Yes.
13 Q. Then you go on to state, "while you were gone, we
14 were meeting with Anh weekly, discussing different aspects of
15 the business." Now who is Anh?
16 A. He was one of the I believe -- I don't know what the
17 term would be -- loan officer in the office.
18 Q. Anh Nguyen, does that sound right?
19 A. Yes.
20 Q. And then you say, "Chris" -- now let me stop there
21 just to make sure everybody is clear on this. Chris is also
23 A. Correct.
24 Q. In fact, he went by Chris more than he went by
25 Charles?

1 A. In the beginning, yes.
2 Q. You knew him as Chris?
3 A. Yes.
4 Q. So we're talking about Charles Head.
5 "Chris, you are telling me how to sell the program
6 one way, others are saying different things," correct?
7 A. Correct.
8 Q. So there are certain people that weren't following
9 Mr. Head's instructions, that's why you stated that, correct?
10 A. Correct.
11 Q. "I know that the business is legal, but I'm concerned
12 that our tactics might not meet the criteria that others might
13 perceive as legal," correct?
14 A. Correct.
15 Q. So you're concerned about what was happening?
16 A. Correct.
17 Q. And you expressed that?
18 A. Yes.
19 Q. "I don't lie nor would I like to start doing so. I'm
20 very much afraid of getting myself involved in anything that
21 might involve fraud."
22 So you're concerned about lying; you don't want to
23 lie?
24 A. Correct.
25 Q. "We've been going over some proposed contracts from

1 different attorneys, and it looks like we're doing some things
2 that are wrong."
3 Now when you state that, you were reviewing contracts
4 that were provided by attorneys, is that correct?
5 A. I believe so.
6 Q. And that's the reason you wrote that?
7 A. Yes.
8 Q. All right.
9 "Bottom line is this, I don't want to get in trouble.
10 It's one thing if I get sued by someone who misunderstands as
11 long as I know I did everything right. Another if I did the
12 wrong" -- in quote -- "thing. I want to know exactly what I'm
13 supposed to be saying because I assure you that we are not all
14 on the same page." Do you see that?
15 A. Yes.
16 Q. Now that is a similar reference to earlier in the
17 e-mail when you're telling Charles Head that some people are
18 selling the program one way or doing it differently than
19 Mr. Head had asked them to do, correct?
20 A. Correct.
21 Q. All right.
22 "You should speak with everyone individually to find
23 out how they are selling the program. You will get different
24 responses all around. You know me. I can do anything as long
25 as I'm doing the right thing, but tell me what is the right

1 thing." And that's your e-mail?
2 A. Correct.
3 Q. All right. So if we can have the full document,
4 please. And if we can go to this upper section here, including
5 the heading.
6 So that same day, August 26th, at about 1:30 p.m. you
7 get a response from Mr. Head, correct?
8 A. Yes.
9 Q. And it's regarding foreclosures, true?
10 A. Yes.
11 Q. And he says, "I would expect a different answer all
12 the way around" -- I'm sorry -- "all around from each party
13 because there is not a" -- quote -- "set way to sell them," do
14 you see that?
15 A. Yes.
16 Q. "You will get sued, period." That's what he's
17 telling you, right, it's going to happen?
18 A. Yes.
19 Q. "It doesn't matter how you set it up. Some party is
20 going to sue you because that's just part of the business.
21 I've had borrowers want to sue me every year for loans. We did
22 everything by the law, and they still want to sue." Do you see
23 that?
24 A. Yes.
25 Q. So he's telling you you're going to get sued over

1 these types of matters, correct?
2 A. Correct.
3 Q. In fact, it's happened to him before, that's what
4 he's saying here, correct?
5 A. Correct.
6 Q. Relative to loans, correct?
7 A. Yes.
8 Q. Even though he's doing everything right. That's what
9 it says?
10 A. Yes.
11 Q. "It cannot be avoided. I had two sets of attorneys
12 guide me as to how to minimize the risk involved with lawsuits.
13 All the attorneys agree that it is possible to lose in court in
14 California if the client is able to prove that there is a
15 possibility the transaction was thought to be a loan by the
16 client." Do you see that?
17 A. Yes.
18 Q. Now, this is in August -- August, what, 26 to be
19 exact, correct?
20 A. Yes.
21 Q. You met with Ms. Turner in October, a few months
22 later, correct?
23 A. Yes.
24 Q. And you've testified, and we've looked at the
25 documents, that it is clear the Equity Purchase Agreement is

1 not a loan, true?
2 A. True.
3 Q. It is a contract to sell the home, correct?
4 A. Correct.
5 Q. "In other words, the business we are in is evolving,
6 and, thus, there is not a set way to sell it. I am trying to
7 develop a system so it is easier for the guys to propose to the
8 clients rather than having everyone trying different things. I
9 want uniformity, but I've yet to receive the final form from
10 the last attorney." Do you see that?
11 A. Yes.
12 Q. Now in your e-mail that preceded this you indicated
13 you looked at some forms from attorneys, correct?
14 A. Correct.
15 Q. Mr. Head is now telling you he's using attorneys,
16 he's waiting for the final forms, correct?
17 A. Correct.
18 Q. And this pre-dates your visit with Ms. Turner by
19 approximately two months, correct?
20 A. Yes.
21 Q. And the Equity Purchase Agreement and the lease
22 rental option that Ms. Turner signed are clear on their face,
23 true?
24 A. True.
25 Q. It is a sale, correct?

1 A. Correct.
2 Q. And she is now renting, correct?
3 A. Correct.
4 Q. Then Mr. Head goes on. "Once I get it, I have to go
5 over everything once again with our group. Until I have all
6 the revised forms, I cannot train people on how to proceed."
7 Now the forms he's speaking of, as you know, is this
8 form from the attorney, the final form, correct?
9 A. Correct.
10 Q. "As far as the fraud issue is concerned, I know you
11 do not want to do anything that would be in the least bit
12 misleading. If this is your concern, you can sell them up
13 front and be very frank about it." Do you see that? Correct?
14 A. Yes.
15 Q. He's telling you to be honest, right?
16 A. Correct.
17 Q. Be frank with them, tell them what it is, correct?
18 A. Correct. But I didn't know what "it" is.
19 Q. Well, that's what it says --
20 A. Right.
21 Q. -- in the e-mail?
22 Then he says: "Maybe you should listen to me sell.
23 I constantly tell the client that it is not a loan."
24 And that's in caps, do you see that?
25 A. Yes.

1 Q. That's what he's talking about, that's the "it", it
2 is not a loan, correct?
3 A. Correct.
4 Q. And he making that abundantly clear in this e-mail to
5 you, is he not?
6 A. Yes.
7 Q. "I tell them a buyer will" -- in caps -- "outright
8 purchase their home and give them a portion of the equity." Do
9 you see that?
10 A. Yes.
11 Q. Now Ms. Turner was given $4,000, right?
12 A. Yes.
13 Q. And Ms. Turner sold her home, correct?
14 A. Correct.
15 Q. That's exactly what Mr. Head is saying here, correct?
16 A. Correct.
17 Q. "In a year they can buy it back. If they're not cool
18 with that, I move on. We just don't do the deal." Right?
19 A. Right.
20 Q. "I don't want to have any issues. Some of my guys
21 are a little misleading, but the forms they sign are direct and
22 to the point." And by the forms he means the contracts, you
23 know that, correct?
24 A. Yes.
25 Q. The Equity Purchase Agreement?

1 A. Yes.
2 Q. And the lease rental agreement?
3 A. Yes.
4 Q. "You should have no problems. If you are not
5 100 percent down to do this, please let me know. My time and
6 money is too valuable to waste. Let me know. Chris." Right?
7 A. Yes.
8 Q. He's telling you if you want to do it, fine, if you
9 don't, let me know, right?
10 A. Right.
11 Q. That's fine for that. Thank you.
12 So in terms of the contract with Ms. Turner, you
13 testified Friday that was the only transaction you were
14 involved with, is that right?
15 A. Yes.
16 Q. That's it?
17 A. That's it.
18 Q. On any level that was the one and that was it?
19 A. For that particular program, yes.
20 Q. And part of your concern you expressed on Friday was
21 that you didn't want any lies going on that you were a part of?
22 A. Right.
23 Q. Now let me ask you this, at the time that this was
24 happening, were you living at 4005 West Sunswept in Santa Ana?
25 A. I had just moved there, I believe.

1 Q. Okay. And how long did you live there?
2 A. About two years.
3 Q. So that would have been from 2004 to 2006?
4 A. Yes.
5 Q. Approximately?
6 A. Yes.
7 Q. You were there during the year 2005, correct?
8 A. Correct.
9 Q. And were you living there with your now husband
10 Mr. Russell?
11 A. He moved in eventually, yes.
13 A. The beginning of 2005.
14 Q. Okay.
15 A. April 2005.
16 Q. All right. And then he was there through however
17 long you were there through 2006 at some point?
18 A. Correct.
19 Q. And you testified on Friday that after you came back
20 from the Turner transaction, that you were concerned about the
21 way the program was being administered, and you didn't want to
22 be a part of it, correct?
23 A. Correct.
24 Q. Do you know a Josh Coffman?
25 A. Yes.

1 Q. And does Mr. Coffman have his company called Matrix
2 Investments?
3 A. Yes.
4 Q. Do you know a person by the name of Andrew Vu?
5 A. Yes.
6 Q. Who is that?
7 A. One of the other loan officers in the office.
8 Q. He was a broker?
9 A. I'm not sure what his title was.
10 Q. But he was in the loan side of it?
11 A. Correct.
12 MR. TEDMON: Your Honor, at this time, I would -- and
13 this comes from Government discovery -- I would ask the witness
14 to look at the top page of that packet in front of her,
15 Defendant's CH-KK1.
16 Q. BY MR. TEDMON: Do you see that document?
17 A. Yes.
18 Q. That is a California Residential Purchase Agreement,
19 correct?
20 A. Correct.
21 Q. And it's dated May 20th, 2005, correct?
22 A. Correct.
24 A. Not really.
25 Q. Does it have your name and your now husband's name?

1 A. Yes.
2 Q. At the bottom where it says buyer initials, do you
3 see that, E.H.?
4 A. Yes.
5 Q. That's your initial, correct?
6 A. Yes.
7 Q. And if you can go to the second to the last page of
8 the exhibit?
9 MR. ANDERSON: What's the Bates number?
10 MR. TEDMON: It's Head-000707. And I'll ask her
11 about 708 as well.
12 Q. BY MR. TEDMON: Do you see your signature at the top,
13 "buyer"?
14 A. You said second to last page?
15 Q. Second to last page, yes. I'm sorry.
16 MR. ANDERSON: Mr. Tedmon, you have given her a whole
17 stack of multiple exhibits.
18 MR. TEDMON: I'm sorry. May I approach, Your Honor?
20 MR. TEDMON: Let me make this a little clearer. Take
21 this off. And I'm only asking you about KK1.
23 Q. BY MR. TEDMON: If you can go to the second to the
24 last page of that document, see where it says buyer and then
25 has a signature?

1 A. Yes.
2 Q. And then underneath the signature says Elizabeth
3 Huerta?
4 A. Yes.
5 Q. That's you, correct?
6 A. Correct.
7 Q. And that's your signature?
8 A. Yes.
9 Q. And to the right of that it also says buyer, there is
10 a signature, and that is James Russell?
11 A. Yes.
12 Q. And that's your current husband's signature, correct?
13 A. Correct.
14 Q. All right. Now, having reviewed the document, you
15 acknowledge these are your signatures, you signed a Residential
16 Purchase Agreement on May 20th, 2005, correct, Ms. Russell?
17 A. Correct.
18 MR. TEDMON: Your Honor, I'd move KK1 into evidence.
23 THE COURT: CH-KK1 is admitted and may be published.
25 (Defendant's Exhibit CH-KK1, Residential Purchase

1 Agmt. Re 1240 Willow St., Oakland CA, admitted into evidence.)
2 Q. BY MR. TEDMON: Now this is page one of the Exhibit
3 KK1 that's been introduced into evidence. Do you see that on
4 the screen?
5 A. Yes.
6 Q. And for the jury's benefit, this is what we have been
7 talking about, a Residential Purchase Agreement, correct?
8 A. Yes.
9 Q. Dated May 20th, 2005, correct?
10 A. Correct.
11 Q. And it's between you and James Russell, correct?
12 A. Yes.
13 Q. And you're making an offer to buy a house, correct?
14 A. Looks that way.
15 Q. For $360,000, correct?
16 A. Correct.
17 Q. And the address is 1240 Willow Street, Oakland,
18 California, do you see that?
19 A. Yes.
20 Q. So you and your now husband were making an offer to
21 buy this property, correct?
22 A. Correct.
23 Q. And then at the bottom it's got initials, do you see
24 those?
25 A. Yes.

1 Q. That E.H. is you, correct?
2 A. Yes.
3 Q. And then the other initial is I think J.R., that's
4 James Russell, correct?
5 A. Yes.
6 Q. And then the seller's initials, do you see that?
7 A. Yes.
8 Q. Do you recall dealing with a guy by the name of
9 Leonard Ambrose?
10 A. No.
11 Q. You do not recall that?
12 A. No.
13 Q. But you don't dispute you were making an offer to buy
14 a house, correct?
15 A. Correct.
16 Q. And then showing you -- and this is Head-000707, the
17 second to the last page of the document, it's got your
18 signature there, correct?
19 A. Correct.
20 Q. James Russell, your now husband's signature there,
21 correct?
22 A. Yes.
23 Q. And then "seller," the name typed in is Leonard
24 Ambrose, Jr., correct?
25 A. Correct.

1 Q. And there is a signature above that, correct?
2 A. Yes.
3 Q. So this is an offer to purchase the home in Oakland,
4 correct?
5 A. Correct.
6 Q. And according to the document at least, Mr. Ambrose
7 has accepted, correct?
8 A. Correct.
9 Q. And then the last page of the exhibit there is an
10 addendum, do you see that?
11 A. Yes.
12 Q. And the addendum is dated August 16th, 2005, for the
13 same address, 1240 Willow Street, Oakland, do you see that?
14 A. Yes.
15 Q. And the change is that yourself and Mr. Russell agree
16 with Mr. Ambrose that the price will be $415,000 as opposed to
17 the 360 in the original offer, correct?
18 A. Correct.
19 Q. And then at the bottom it has your signature and that
20 of your now husband, correct?
21 A. Yes.
22 Q. And then "Leonard Ambrose" typed in as the seller,
23 correct?
24 A. Yes.
25 Q. With a signature above?

1 A. Yes.
2 Q. Now in conjunction with this offer -- well, strike
3 that.
4 Based on this document we've looked at there was an
5 agreement to sell between you and Mr. Russell and Mr. Ambrose,
6 you've already indicated that to be correct, true?
7 A. True.
8 Q. All right. And in conjunction with purchasing the
9 home, you filled out a Uniform Residential Loan Application,
10 correct?
11 A. Correct.
12 Q. And I would direct you to Defendant's CH-KK2. Should
13 be the next document in line as you work your way through that
14 stack. Do you see that?
15 A. Yes.
17 A. I think so.
18 Q. Okay. In fact, this is the document that you filled
19 out or at least had filled out and signed for a loan
20 application to purchase Willow, correct?
21 A. Correct.
22 MR. TEDMON: Your Honor, I would move CH-KK2 into
23 evidence.
24 THE COURT: Objection?

3 (Defendant's Exhibit CH-KK2, Uniform Residential Loan
4 Application, admitted into evidence.)
5 Q. BY MR. TEDMON: Ms. Russell, I'm going to put the
6 first page up.
7 All right. And I want to go through a portion of
8 this with you. It indicates that the borrower's name right
9 there is Elizabeth Huerta, correct?
10 A. Correct.
11 Q. That's you?
12 A. Yes.
13 Q. Your present address is West Sunswept, correct?
14 A. Correct.
15 Q. Which is the residence you have indicated was your
16 place where you stayed from 2004 through 2006?
17 A. Correct.
18 Q. Now on this loan application the subject property is
19 1240 Willow Street, correct?
20 A. Correct.
21 Q. That's the same address that you entered into a sales
22 agreement between yourself, Mr. Russell, and Mr. Ambrose,
23 correct?
24 A. Correct.
25 Q. Oakland, California, right?

1 A. Yes.
2 Q. And on this document you indicate it's a purchase,
3 that's the purpose of the loan, right?
4 A. Right.
5 Q. And the property will be your primary residence,
6 correct?
7 A. Correct.
8 Q. Then further down it says you are self-employed with
9 Patriotic Ventures?
10 A. Yes.
11 Q. What's Patriotic Ventures?
12 A. My husband's company.
13 Q. Did you work there?
14 A. Yes.
15 Q. Did you earn income from that particular company?
16 A. No. He's self-employed. He just has me listed as an
17 executive officer. I help him with like all the filing, making
18 phone calls.
19 Q. Okay. So you assisted him?
20 A. Correct.
21 Q. But it was not an income-generating job for you?
22 A. Correct.
23 Q. All right. This is the second page of the document,
24 and it indicates your base employment income is $15,000, do you
25 see that?

1 A. Yes.
2 Q. You weren't making $15,000 a month then, were you?
3 A. No.
4 Q. In fact, you were making no money from Patriotic
5 Ventures, correct?
6 A. Well, no, I wasn't getting a check, but he's my
7 husband.
8 Q. Well, this is your loan application, correct?
9 A. Correct.
10 Q. And you're reporting you make $15,000 a month,
11 correct?
12 A. Correct.
13 Q. That's not true, is it?
14 A. Correct.
15 Q. And then going to the last page of the document, this
16 is Bates number Head-000569. It says "acknowledgement and
17 agreement" here, do you see that?
18 A. Yes.
19 Q. Okay. Then you sign it as the borrower's signature,
20 correct?
21 A. Correct.
22 Q. And the date is August 26th, 2005, do you see that?
23 A. Yes.
24 Q. Now the interviewer's name is Andrew Vu, correct?
25 A. Correct.

1 Q. And it says "telephone," do you see that, right here,
2 the telephone interview?
3 A. Yes.
4 Q. Now you reviewed this document before you signed it,
5 right?
6 A. Not really.
7 Q. You didn't review it before you signed it?
8 A. No. Not really.
9 Q. What did you review, if not all of it?
10 A. I really didn't know much about this. I knew that my
11 husband -- Josh Coffman had talked to him about purchasing a
12 property in Oakland that my husband agreed to purchase. And
13 that's really the extent of what I know about this particular
14 document.
15 Q. Okay. Well, let's stay with that for a moment then.
16 Josh Coffman wanted to purchase the property, right?
17 A. I believe so.
18 Q. And he wanted to use you and your husband to do it,
19 correct?
20 A. Correct.
21 Q. So we just reviewed this document. You've indicated
22 you're representing to the lender it's going to be your primary
23 residence, correct?
24 A. Correct.
25 Q. And that wasn't true, was it?

1 A. No, I guess not.
2 Q. That was a lie?
3 A. Yes.
4 Q. But lies offend you, that's what you testified to on
5 Friday?
6 A. Correct.
7 Q. But you were okay lying this time?
8 A. I also didn't read the entire thing.
9 Q. Well, Ms. Russell, we have reviewed the document. It
10 says primary residence, true?
11 A. True.
12 Q. That was not accurate, correct?
13 A. Correct.
14 Q. Now beyond your application for a loan, your now
15 husband filled out one as well -- or at least signed one,
16 correct?
17 A. I believe so.
18 Q. Okay. Could you look at Defendant's CH-KK3. And I
19 want to ask you if you recognize that document.
20 A. It's the same for Willow?
21 Q. Correct. But it's for James Russell, do you see
22 that?
23 A. Yes.
24 MR. TEDMON: Your Honor, I would move Defendant's
25 CH-KK3 in evidence.

2 MR. ANDERSON: Sorry, Your Honor. Just a second.
3 No. No objection.
6 THE COURT: CH-KK3 is admitted an may be published.
7 (Defendant's Exhibit CH-KK3, Uniform Residential Loan
8 Application, admitted into evidence.)
10 Ms. Russell, I'm going to go through this a little
11 more quickly. This is page one, do you see that?
12 A. Yes.
13 Q. Uniform Residential Loan Application?
14 A. Yes.
15 Q. And it's for the Willow Street address in Oakland?
16 A. Yes.
17 Q. And the borrower on this form is James Russell,
18 correct?
19 A. Correct.
20 Q. That's your now husband?
21 A. Yes.
22 Q. True? Indicates that his present address is Sunswept
23 Avenue, correct?
24 A. Correct.
25 Q. As your form reflected, correct?

1 A. Correct.
2 Q. And your now husband indicates that this Willow
3 Street in Oakland will be his primary residence, correct?
4 A. Correct.
5 Q. And let me go back to this just briefly.
6 It indicates on borrower, Patriotic Ventures, do you
7 see that?
8 A. Yes.
9 Q. And then it says years on the job, three, correct?
10 A. Correct.
11 Q. Now that's your now husband's -- or was at least his
12 business at that time, correct?
13 A. Correct.
14 Q. Going to the next page of the document, it indicates
15 that he's making $13,000 a month, correct?
16 A. Correct.
17 Q. As far as you know, during that timeframe was that
18 accurate?
19 A. I don't think so.
20 Q. In fact, he didn't make anything close to that, did
21 he?
22 A. I don't know to be honest with you.
23 Q. Well, it's not accurate. How is it not accurate?
24 A. I don't know.
25 Q. Is your testimony he didn't make $13,000 a month?

1 A. $13,000 a month? There was sometimes when he did
2 make that amount.
3 Q. Okay. On average did he make that amount in 2005?
5 Q. Okay. Well, your form indicated you made 15,000 a
6 month, correct?
7 A. A month?
8 Q. $15,000 a month from Patriotic Ventures, that's what
9 your loan application stated?
10 A. I thought that said a year. No.
11 Q. Well, let's clarify it. Maybe I'm wrong. It says
12 here. Gross monthly income, do you see that? We're on
13 Head-000571, the top. "Gross monthly income"?
14 A. Okay.
15 Q. Okay. And then the gross monthly income is, in your
16 now husband's case, Mr. Russell, 13,000 a month, correct?
17 A. Okay.
18 Q. That's what it says, correct?
19 A. Correct.
20 Q. All right. Going back to your loan application, this
21 is Head-000567, says gross monthly income -- "monthly,"
22 correct?
23 A. Yes.
24 Q. And yours indicates it's 15,000 a month, correct?
25 A. Correct.

1 Q. That was not true?
2 A. No.
3 Q. But that's what you signed off on on the application,
4 correct?
5 A. Correct. But, again, I did not read it.
6 Q. Okay. But you signed it?
7 A. Yes.
8 Q. All right. And then similar to your application, it
9 indicates the interviewer's name is Andrew Vu, do you see that?
10 A. Yes.
11 Q. And it was a telephone interview according to the
12 form?
13 A. Yes.
14 Q. And then your husband's signature is under
15 "borrower," correct?
16 A. Correct.
17 Q. And the date is 8-26-05, true?
18 A. True.
19 Q. And neither you nor your now husband ever intended to
20 occupy the premises on Willow Street in Oakland, did you?
21 A. No.
22 Q. Now after the loan application was signed, you recall
23 this matter going forward to loan, don't you?
24 A. Yes, I believe so.
25 Q. Okay. And part of that process was to sign your name

1 so everyone would know what your signature is, called a name
2 affidavit, do you recall that?
3 A. I think so.
4 Q. Both you and your husband signed those?
5 A. I believe so.
6 Q. Can you take a look at defense Exhibit CC-KK4 and
7 KK-5, please.
8 THE COURT: CH?
9 MR. TEDMON: CH, yes. KK4, Your Honor, and KK5.
10 Q. BY MR. TEDMON: We'll start with KK4. Do you see
11 that?
12 A. Yes.
13 Q. That is a Name Affidavit for you, is that right?
14 A. Yes.
16 A. I guess so.
17 Q. Well, it's got your name and signature, correct?
18 A. Correct.
19 Q. And notarized by Vanessa Tran?
20 A. Yes.
21 MR. TEDMON: Your Honor, I would move CH-KK4 in
22 evidence.

3 (Defendant's Exhibit CH-KK4, Name Affidavit, admitted
4 into evidence.)
5 Q. BY MR. TEDMON: And if we can go to CH-KK5. That's
6 the next document in order. Do you have that in front of you?
7 A. Yes.
8 Q. That is a similar Name Affidavit for your now
9 husband, James Russell, correct?
10 A. Correct.
11 Q. Do you recognize his signature on that form?
12 A. Yes.
13 Q. And it's notarized by Vanessa Tran?
14 A. Yes.
16 CH-KK5 into evidence.
21 THE COURT: All right. That exhibit is admitted and
22 may be published.
23 (Defendant's Exhibit CH-KK5, Name Affidavit, admitted
24 into evidence.)
25 Q. BY MR. TEDMON: Thank you. We're going to start with

1 CH-KK4. This is the Name Affidavit for you, correct?
2 A. Yes.
3 Q. Okay. And you're certifying under penalty of perjury
4 that you are the person named below, and that's your true and
5 correct signature, correct?
6 A. Yes.
7 Q. And that is in fact your true and correct, signature?
8 A. Yes.
9 Q. And this was subscribed to before a notary, Vanessa
10 Tran, do you see that?
11 A. Yes.
12 Q. August 26, 2005?
13 A. Yes.
14 Q. And then with regard to CH-KK5, this is a Name
15 Affidavit for your now husband, James Russell, true?
16 A. Yes.
17 Q. And he's certifying that his signature is true and
18 correct under penalty of perjury, and here's his signature,
19 correct?
20 A. Correct.
21 Q. And that is in fact his signature?
22 A. Yes.
23 Q. And likewise, James Russell's signature and form was
24 notarized and subscribed before Notary Public Vanessa Tran?
25 A. Yes.

1 Q. August 26, 2005?
2 A. Yes.
3 Q. Now, at this time and through 2006 you resided at
4 4005 West Sunswept in Santa Ana, correct?
5 A. Yes.
6 Q. Can you please take a look at Defendant's CH-KK6.
7 That's the next one in order. A one page document.
8 Do you see that?
9 A. Yes.
10 Q. Says "Occupancy Affidavit and Financial Status" at
11 the top?
12 A. Yes.
13 Q. Property address is 1240 Willow Street, Oakland,
14 California?
15 A. Yes.
16 Q. And then it's got your signature and that of your
17 husband's, correct?
18 A. Correct.
19 Q. And it's subscribed before a notary public, Vanessa
20 Tran, correct?
21 A. Yes.
23 CH-KK6 into evidence.

3 THE COURT: CH-KK 6 is admitted.
4 (Defendant's Exhibit CH-KK6, Occupancy Affidavit &
5 Financial Status, admitted into evidence.)
6 Q. BY MR. TEDMON: I'm going to put this on the monitor,
7 Ms. Russell.
8 Now this document makes certain representations by
9 you and your now husband, doesn't it?
10 A. Yes.
11 Q. And in fact, it's making a representation to New
12 Century Mortgage that "we, the undersigned purchasers of the
13 above-captioned property, understand that one of the conditions
14 of our loan is that we occupy the subject property, and we do
15 hereby certify as follows" -- and it's x'd -- "we will occupy
16 the subject property upon the close of escrow. If unable to
17 occupy by close of escrow, we will occupy by the following
18 date," and there is no date indicated. Correct?
19 A. Correct.
20 Q. And that is signed by you and your now husband,
21 correct?
22 A. Yes.
23 Q. Before notary Vanessa Tran, correct?
24 A. Yes.
25 Q. Then it also says above the signature, "we are aware"

1 -- that being you and Mr. Russell -- "we are aware of and
2 understand that if we fail to occupy the property as indicated
3 above or do not disclose material facts relating to our
4 financial condition, our loan may be subject to acceleration
5 with respect to repayment of the debt and the undersigned
6 borrowers may be subject to legal action under state or federal
7 law. It is against the law to misrepresent facts as an
8 inducement to influence a lender to make a loan." Do you see
9 that?
10 A. Yes.
11 Q. Now this document, Occupancy Affidavit and Financial
12 Status, Defense CH-KK6, is a representation you and your
13 husband will occupy the Willow Street address upon the close of
14 escrow as your primary residence, correct?
15 A. Correct.
16 Q. And that is an absolute lie, correct?
17 A. I guess so.
18 Q. You never did?
19 A. No.
20 Q. In fact, you never moved in there at all, did you?
21 A. No.
22 Q. In fact, you never even seen saw the property, did
23 you?
24 A. No.
25 Q. This was what Josh Coffman wanted you to do, correct?

1 A. I didn't have any dealings with Josh Coffman. My
2 husband did.
3 Q. Well, you had dealings with regard to this property,
4 Ms. Russell, correct?
5 A. I just signed the paperwork.
6 Q. Your testimony is you didn't look at any of it?
7 A. I didn't read it.
8 Q. Well, let's take this document we have in front of
9 us. The very top says "Occupancy Affidavit and Financial
10 Status," right?
11 A. Yes.
12 Q. Okay. That's pretty clear, isn't it?
13 A. I guess so.
14 Q. All right. And you and your husband signed it in
15 front of a notary, correct?
16 A. Correct.
17 Q. So you would agree you're charged with knowing what
18 you're signing, correct?
19 A. Correct.
20 Q. And you're agreeing on this form that you're going to
21 occupy the property as your permanent -- I'm sorry -- as your
22 primary residence, correct?
23 A. Correct.
24 Q. And that wasn't true?
25 A. I guess not.

1 Q. Well, let's take the guess out of it. Did you ever
2 occupy it as your primary residence?
3 A. No.
4 Q. So that was not correct, was it?
5 A. Correct.
6 Q. Can we take a look at Defendant's CH-KK7, the next
7 one in order. Do you see that?
8 A. Yes.
9 Q. It says, "Borrowers' New Residential Telephone Number
10 Confirmation," correct?
11 A. Correct.
12 Q. "Borrower's name, Elizabeth Huerta and James Russell,
13 new home address, 1240 Willow Street Oakland," correct?
14 A. Correct.
15 Q. And it's got your confirmation signatures below that,
16 see that?
17 A. Yes.
18 Q. Those are your signatures, right?
19 A. Yes.
20 MR. TEDMON: Your Honor, I would move Defense Exhibit
21 CH-KK7 into evidence, please.

2 (Defendant's Exhibit CH-KK7, Borrower’s New
3 Residential Telephone Number Confirmation, admitted into
4 evidence.)
5 Q. BY MR. TEDMON: Thank you.
6 Ms. Russell, this document you are now confirming
7 that your new residential telephone number will be related to
8 the Willow Street address, correct?
9 A. Correct.
10 Q. That wasn't true, was it?
11 A. Correct.
12 Q. And you signed it and your husband signed it, right?
13 A. Yes.
14 Q. August 26, 2005?
15 A. Yes.
16 Q. So that was a lie, wasn't it?
17 A. I guess so.
18 Q. Could you take a look at the next exhibit in order,
19 Defendant's CH-KK8, please. Says "Good Faith Estimate
20 Itemization" at the top?
21 A. Yes.
22 MR. ANDERSON: Your Honor, if it will move things
23 along, I'll stipulate to the admissibility of the rest of this
24 series of exhibits, and Mr. Tedmon can show them simultaneously
25 to the jury.

1 MR. TEDMON: That would be great, Judge.
4 THE COURT: CH-KK8 through CH-KK11 are admitted and
5 may be published.
6 (Defendant's Exhibit CH-KK8, CH-KK9, CH-KK10 and
7 CH-KK11, (see index for descriptions), admitted into evidence.)
8 Q. BY MR. TEDMON: Okay, Ms. Huerta, we can dispense
9 with the formalities of admitting the documents. I'm going to
10 put these up in sequence to speed this along a bit.
11 So this is CH-KK8, and there's the sticker at the
12 bottom. Now, this is a Good Faith Estimate, correct?
13 A. Yes.
14 Q. And it indicates the lender is New Century Mortgage?
15 A. Yes.
16 Q. And the borrower are you and your now husband, right?
17 A. Yes.
18 Q. And it's got a bunch of numbers, which we won't worry
19 about, and at the bottom it's got both you and your husband's
20 signature, correct?
21 A. Correct.
22 Q. And this relates to the Willow Street property,
23 correct?
24 A. Yes.
25 Q. And then on page two of that exhibit there is

1 additional information relative to the amount financed and so
2 forth, and then at the bottom again you and your husband are
3 signing this, confirming that you've acknowledged it, you agree
4 with it, and you're signing off on it, correct?
5 A. Correct.
6 Q. Defendant's CH-KK9 is from Castlehead Inc. Escrow, do
7 you see that?
8 A. Yes.
9 Q. And it's their Master Statement. Says right there
10 Master Statement?
11 A. Yes.
12 Q. The seller is Leonard Ambrose, Jr., correct?
13 A. Yes.
14 Q. The buyers are you and James Russell?
15 A. Yes.
16 Q. And the property is the Willow Street address
17 property in Oakland, California?
18 A. Yes.
19 THE COURT: How much longer do you have with
20 Ms. Russell?
21 MR. TEDMON: Maybe 10, 15 minutes, Your Honor.
22 THE COURT: All right. It's come to the time for our
23 first break of the day, so let's go ahead and take that break.
24 A 15-minute break. And during that break, as always, please
25 remember my admonitions not to discuss the case, not to begin

1 thinking about its conclusion, don't do any homework. If
2 anyone contacts you during the break, please let me know
3 immediately. Have a good break. We'll start again at
4 10:15 a.m.
5 (Jury out.)
6 THE COURT: You may step down and be back in the
7 witness chair at 10:15.
8 Just a couple of -- in this last set of exhibits
9 there are some Social Security numbers.
10 MR. ANDERSON: They should be redacted.
11 THE COURT: So before the finals go to the jury, if
12 you can redact those.
13 MR. TEDMON: I will redact them.
14 THE COURT: And was 43-F actually covered by the
15 stipulation? When someone says it's covered by the
16 stipulation, I'm not going to question that unless someone
17 jumps up and down and objects. 43-F is in. I just wanted to
18 make clear that's going to be my practice.
19 MR. ANDERSON: If it is, it's under the search
20 warrant section of the stipulation, not the bank records
21 section of the stipulation.
22 THE COURT: All right. So someone says covered by
23 the stipulation subject to Rule 11 I'm accepting that.
24 MR. ANDERSON: In any event, the Government has no
25 objection to it coming it.

1 THE COURT: All right. So 15-minute break.
2 (Break taken.)
3 THE COURT: All right. Ready to go?
4 MR. TEDMON: All set.
5 THE COURT: All right. Let's bring the jury back in.
6 (Jury in.)
7 THE COURT: Welcome back, ladies and gentlemen. The
8 audience may be seated. It looks as if one of you gave me a
9 note. Do you want me to read that before the session begins?
10 JUROR 2: If you could, a definition.
11 THE COURT: Hold on one second. Counsel, let's just
12 do a quick sidebar rather than ask you to leave again. We'll
13 be back in just a moment.
14 (Begin sidebar conference.)
15 THE COURT: We were off the record looking at a note
16 from Juror Number 2. "What is the court's definition of arm's
17 length agreement."
18 My question is, does counsel wish to stipulate to any
19 definition to share?
20 MR. ANDERSON: I don't think it's really a definable
21 legal term.
23 MR. TEDMON: Yeah, I don't -- I don't know how we'd
24 even define it. I just don't know how we do it. I don't know
25 if we can.

1 MR. HAYDN-MYER: I don't know if the court can be put
2 in the actual position to define an arm's length agreement.
3 Arm's length agreement is not in the jury instructions, so I
4 don't know if there is an obligation to do it. Not that I'm
5 aware of. Anybody?
6 THE COURT: It's just that the Court has wondered if
7 we -- because of so much discussion of contracts,
8 consideration, it has occurred to me that the jury may need
9 some clarification. I think we'll say we're not in a position
10 at this time, but we're thinking about it.
11 MR. TEDMON: Okay. That's fair.
12 THE COURT: All right. Any objection to that
13 approach?
14 MR. TEDMON: NO.
16 MR. ANDERSON: No.
17 MR. MORRIS: No.
18 (End sidebar discussion.)
19 THE COURT: All right. We're back on the record now
20 in the presence of jury.
21 The Court has consulted with counsel based on the
22 note. What I have to tell you at this point in time is that
23 we're considering how to respond. We have in mind the
24 question. The note came from Juror Number 2. And I will let
25 you know if we can respond. We just need to consider the

1 applicable law. And thank you, though, for sharing that
2 question with us.
3 Mr. Tedmon.
5 Q. BY MR. TEDMON: Ms. Russell, before the break we were
6 going through these documents, and I have just a few more I
7 want to go through with you. Okay?
8 A. Okay.
9 Q. Again, this relates to the Willow Street transaction,
10 and what I'm showing you has been marked as CH-KK10. And the
11 upper portion of this indicates it's a Housing and Urban
12 Development settlement statement, do you see that?
13 A. Yes.
14 Q. Okay. And the name of the borrower is James Russell,
15 your now husband, correct?
16 A. Correct.
17 Q. And the property location again is 1240 Willow Street
18 in Oakland, correct?
19 A. Correct.
20 Q. And the name of the seller is Leonard Ambrose,
21 correct?
22 A. Correct.
23 Q. Now that's the same person that we've referenced
24 earlier in some of these other documents as the seller of the
25 property, correct?

1 A. Yes.
2 Q. All right. And then the third page of that Exhibit
3 KK10, and that's Head-000398 for reference for counsel. This
4 is an attachment, do you see that?
5 A. Yes.
6 Q. And it indicates the buyer is also you, correct?
7 A. Correct.
8 Q. All right. And then finally Defendant's CH-KK11 is a
9 grant deed, correct?
10 A. Correct.
11 Q. And the grant deed indicates that Leonard Ambrose, an
12 unmarried man, hereby grants to James Russell, a single man,
13 and Elizabeth Huerta, a single woman, as joint tenants, the
14 property described in the City of Oakland, and that would be
15 the Willow Street address, correct?
16 A. Correct.
17 Q. All right. And this was notarized before a notary,
18 Elsa Orlana -- I don't know if I'm pronouncing that right --
19 but you see that there?
20 A. Yes.
21 Q. And that was initialed by Mr. Ambrose, at least
22 that's his signature above his name, correct?
23 A. Correct.
24 Q. Now with regard to this transaction we reviewed these
25 documents, and you and your now husband represented it was

1 going to be your primary residence, correct?
2 A. Correct.
3 Q. And that was not true?
4 A. Correct.
5 Q. And you were dealing with Andrew Vu on this, correct?
6 A. It was my understanding it was Josh Coffman.
7 Q. And you dealt with Josh Coffman as well?
8 A. Correct.
9 Q. All right. And that's the only people you dealt
10 with, correct?
11 A. I believe so.
12 Q. Okay. Now, Ms. Russell, before you started
13 testifying on Friday you were given a grant of immunity,
14 correct?
15 A. Correct.
16 Q. And the grant of immunity that the Government gave
17 you, which Judge Mueller signed, compelled you to testify,
18 correct?
19 A. Correct.
20 Q. And it also gave you a complete pass on any crimes
21 you may have committed, correct?
22 A. Correct.
23 Q. The only crime that you're not protected from is
24 perjury, correct?
25 A. Correct.

1 Q. So in all of your involvement with this entire
2 matter, you didn't get charged with any crimes, correct?
3 A. Correct.
4 Q. And you were given complete immunity?
5 A. Correct.
6 MR. TEDMON: Nothing further, Your Honor. Thank you.
8 MR. HAYDN-MYER: No questions, Your honor.
12 BY MR. ANDERSON:
13 Q. Ms. Russell, were you with Charles Head when he met
14 with Shannon Taylor?
15 A. I don't know who that is.
16 Q. Do you have any knowledge of what Charles Head told
17 Shannon Taylor?
19 THE COURT: Overruled. Answer this question "yes or
20 no."
21 THE WITNESS: No.
22 Q. BY MR. ANDERSON: Were you with Charles Head when he
23 spoke with Richard Figueroa?
24 A. No.
25 Q. Do you have any knowledge of what Charles Head told

1 Richard Figueroa?
2 A. No.
3 Q. Now when you met with Ms. Taylor, you said you talked
4 to her for about an hour?
5 MR. TEDMON: Your Honor --
6 THE WITNESS: Turner?
7 THE COURT: Hold on. Is there an objection?
8 MR. TEDMON: I'm sorry. Go ahead. I'm sorry,
9 counsel. I misheard.
10 MR. ANDERSON: All right.
11 THE COURT: Are you clear on the question?
12 Q. BY MR. ANDERSON: When Mr. Tedmon cross-examined you,
13 you said that you met with Ms. Taylor for about an hour, is
14 that right?
15 A. Ms. Turner?
16 Q. Excuse me. Ms. Turner for about an hour?
17 A. Correct.
18 Q. Who explained the transaction to Ms. Turner?
19 A. I did.
20 Q. Do you have any legal training?
21 A. No.
22 Q. Do you have any real estate training?
23 A. No.
24 Q. Who did you get all your training from?
25 A. Charles.

1 Q. Did Ms. Turner indicate that she had any legal
2 training?
3 A. No.
4 Q. Did she appear to have any real estate training?
5 A. No.
6 Q. When you talked to Ms. Turner about the contract, did
7 you tell Ms. Turner things about the contract that weren't
8 true?
9 A. Yes.
10 Q. Was Ms. Turner told she would remain on title to the
11 home?
12 A. Yes.
13 Q. Now I want to talk again about Government's
14 Exhibit 40-P, that's the e-mail that Mr. Tedmon was showing
15 you. Let's pull that up.
16 I want to look at your portion first. Now when
17 you're writing this e-mail, you're saying "I'm very much afraid
18 of getting myself involved in anything that might involve
19 fraud," is that right?
21 Q. You're indicating to Charles Head that you're
22 concerned this program is fraudulent, is that right?
23 MR. TEDMON: Objection. Leading, Your Honor.
25 Q. BY MR. ANDERSON: Are you indicating a particular

1 concern to Charles Head?
2 A. Yes.
3 Q. What is the concern?
4 A. Everyone was saying different things, and that's what
5 was getting confusing to me. We were told to let the client
6 know that they were going to be on title --
7 MR. TEDMON: Objection. Non-responsive at this
8 point. Also when she says "we," that's vague.
10 Q. BY MR. ANDERSON: Who told you that the people --
11 that the homeowners were to be told that they were to remain on
12 title?
13 A. Charles Head.
14 Q. Now when you write this e-mail expressing concern
15 about fraud, let's look at Charles Head's response.
16 He writes back, putting in writing, that he's very up
17 front.
18 "I constantly tell the client it's not a loan. I
19 tell them that a buyer will outright purchase their home and
20 give them a portion of the equity." Is that right? In
21 response to your concerns about fraud?
22 A. Correct.
23 Q. And that's what he put in writing then on August 26,
24 2004, is that correct?
25 A. Yes.

1 Q. Was Charles Head saying anything different not in
2 writing?
3 A. There was something in the contract when they were
4 showing me earlier. There was a page missing.
5 MR. TEDMON: Objection, Your Honor. That's
6 non-responsive. He asked if Mr. Head said anything.
8 Q. BY MR. ANDERSON: Well, let's do it this way. Let's
9 look at Government's Exhibit 40-U.
10 Your Honor, I ask that that be admitted pursuant to
11 stipulation.
13 stipulations of the parties, 40-U is admitted.
14 (Government Exhibit 40-U, Email dated 7/22/04 re:
15 Sales, admitted into evidence.)
16 Q. BY MR. ANDERSON: Let's look at the header first. So
17 this is an e-mail from Charles to Liz again, is that right?
18 A. Yes.
19 Q. Let's look at the actual message of the -- and this
20 is July 21st, 2004, correct?
21 A. Correct.
22 Q. All right. Let's look at the message here. If we
23 can zoom back out and then show each portion.
24 Do you see the part between those lines right there?
25 A. Yes.

1 Q. What does that say?
2 A. "Stress you will still be on title, but the investor
3 will be on title with you."
4 Q. That's Charles Head writing that, is that right?
5 A. Correct.
6 Q. And in fact if we look at Government's Exhibit 43-F,
7 page one, there were things even on the written contract that
8 weren't accurate, isn't that correct?
9 A. Correct.
10 Q. Did Meridian Financial actually purchase the
11 property?
12 A. No.
13 Q. Who purchased the property?
14 A. Eduardo Vanegas.
15 Q. Who is Eduardo Vanegas?
16 A. I never met him, but I was told to use him in the
17 contract.
19 the last response. Said who is he.
20 THE COURT: Sustained. The motion to strike is
21 granted. The jury shall disregard that last answer.
22 Q. BY MR. ANDERSON: So let me ask the question again
23 but just give the first part of the answer. Who is Eduardo
24 Vanegas?
25 A. I'm not sure how I'm supposed to answer. I don't

1 know who he is.
2 Q. Okay. Did anyone tell you to use Eduardo Vanegas in
3 this transaction?
4 A. Yes.
5 Q. Who told you that?
6 A. Charles Head.
7 Q. And let's go to Government's Exhibit 19-A. Should be
8 admissible pursuant to stipulation if not already admitted.
9 Government's Exhibit 19-A.
10 So this is the loan application for that house in
11 North Highlands, is that right?
12 A. Correct.
13 Q. And who is listed as the purchaser on this
14 agreement -- on this application, I mean?
15 A. Is that "borrower"?
16 Q. Borrower.
18 Q. Not Meridian, is that correct?
20 Q. There was an address used on Charles -- on CH-D3,
21 page five, of 949 South Coast Drive, do you recall that
22 address?
23 A. That was our office.
24 Q. Whose office was that?
25 A. Charles Head, Head Financial.

1 Q. Now do you know what a straw buyer is?
2 A. I know the term.
3 Q. For the property in Oakland, other than your name
4 being used on the loan application, did you have any
5 involvement in getting that deal set up?
6 A. Not really.
7 Q. Did you talk at all to the seller of the property or
8 the homeowner?
9 A. No, I did not.
10 Q. Other than the one transaction you did as a sales
11 agent with Ms. Turner, did you do any other transactions as a
12 sales agent?
13 A. I did one other.
14 Q. As a sales agent?
15 A. No. It was a different loan altogether. A regular
16 conventional loan.
17 Q. Not involved with the foreclosure program?
18 A. Correct.
19 Q. How did your one transaction compare with the other
20 people that you were working with at Charles Head's office who
21 were also doing foreclosure transactions?
22 A. You mean --
23 Q. By number?
24 A. Oh, I only made about $1,000 on a commission.
25 Q. And compared to the other people who were doing

1 foreclosure transactions, did it seem like they were doing less
2 transactions than you, a similar number, or more transactions
3 than you?
6 Q. BY MR. ANDERSON: All right. Who were some of the
7 other people doing foreclosure transactions that you were aware
8 of?
9 A. Names?
10 Q. Yes.
11 A. Josh Coffman, Justin Wiley, I believe is the last
12 name, Andrew Vu, Anh Nguyen. There was quite a bit of people.
13 I don't remember everyone's names. Charles Head. Michael
14 Head. There was a few more. Leonard Bernot, I think is the
15 last name. Omar Sandoval. There was a few others.
16 Q. With respect just to the people whose names you
17 mentioned, were you doing -- your one transaction, was that
18 approximately the same number, less than or more than those
19 other people were doing?
20 A. Less than.
21 Q. After you started telling individuals that they would
22 go off title to their homes, were you able to close any other
23 transactions?
24 A. No.
25 Q. How many calls were you receiving on a typical week?

1 A. 20 to 30.
2 Q. How long did that go on for?
3 A. Maybe a month or two.
5 THE COURT: Any further recross, Mr. Tedmon?
6 MR. TEDMON: Yes. Just some, Your Honor.
8 BY MR. TEDMON:
9 Q. Ms. Russell, I want to go to Government's 40-U, which
10 Mr. Anderson was just asking you about. If I could have that
11 put up, please. Now, if I could have that expanded, that top
12 section.
13 This is your response to Mr. Head's e-mail that
14 Mr. Anderson asked you about, correct?
15 A. Correct.
16 Q. And this is July 21st, 2004, correct?
17 A. Correct.
18 Q. And if we can back the document up again, please.
19 And Mr. Head's e-mail to you is July 21st, 2004,
20 correct?
21 A. Yes.
22 Q. All right. So as of July 21st, 2004, Mr. Head's
23 telling you you need to stress that the investor will be on
24 title with the seller, correct?
25 A. Correct.

1 Q. All right. Now you're aware -- we don't need that
2 anymore.
3 You're aware that there were a variety -- this
4 program evolved, similar to the e-mail I showed you earlier,
5 correct?
6 A. Correct.
7 Q. And you're also aware, because you've testified, that
8 Mr. Head was dealing with lawyers about this program, correct?
9 A. Correct.
10 Q. And things changed from time to time, correct?
11 A. Correct.
12 Q. In terms of the program itself?
13 A. Correct.
14 Q. But the best evidence is that the contract speaks for
15 itself, you would agree with that, correct?
16 MR. ANDERSON: Objection. Argumentative.
18 Q. BY MR. TEDMON: Well, we went through Ms. Turner's
19 transaction, correct?
20 A. Correct.
21 Q. It doesn't say on there she's going to stay on title,
22 does it?
23 A. No.
24 Q. That's the contract?
25 A. But I told her that she would. I was told to say

1 that.
2 Q. That's your testimony you were told to say that?
3 A. Correct.
4 Q. That's what you told her, correct?
5 A. Correct.
6 Q. You had a choice to make, didn't you, Ms. Russell, to
7 tell her or not, correct?
8 A. As far as I knew she would still be on title.
9 Q. Okay. That didn't answer my question. Let me ask it
10 again.
11 When you met with Ms. Turner, you had the contract,
12 correct?
13 A. Yes.
14 Q. We've already established the contract does not say
15 Ms. Turner will stay on title with the investor, correct?
16 A. Correct.
17 Q. All right. So when you told Ms. Turner that she
18 would stay on title, that was your decision to do that, you
19 were there by yourself with Ms. Gastelum, right?
20 A. Correct.
21 Q. Charles Head was not with you?
22 A. No.
23 Q. You have an immunity agreement, don't you?
24 A. Yes.
25 Q. You can't be prosecuted for anything, can you?

1 A. Correct.
2 Q. You have complete protection from the Government,
3 correct?
4 A. Correct.
5 Q. And you're testifying on behalf of the Government,
6 correct?
7 A. Correct.
8 Q. And you and Charles Head are estranged, you have two
9 other children, right?
10 A. Correct.
11 Q. Is it fair to say your relationship is not great?
12 A. Correct.
13 Q. All right. Let's go to 40-P again. Put that up,
14 please.
15 Now, this e-mail, 40-P, which we've covered earlier
16 this morning, is Mr. Head's response to you about some
17 concerns, true?
18 A. True.
19 Q. And the concerns related to other people in the
20 office maybe not saying the correct things, correct?
21 A. Correct.
22 Q. All right. So this is dated August 26th, 2004,
23 correct?
24 A. Correct.
25 Q. That's over a month after the e-mail that the

1 Government showed you, 40-U, true?
2 A. Yes.
3 Q. And in this e-mail Mr. Head indicates -- I want to
4 find the correct section here -- "I want uniformity, but I have
5 yet to receive the final form from the last attorney," correct?
6 A. Correct.
7 Q. Now you've already testified you're aware there were
8 changes made to the program, correct?
9 A. Correct.
10 Q. And those were generated by contracts that were
11 provided by the attorneys, correct?
12 A. Correct.
13 Q. And this e-mail was August 26, 2004, correct?
14 A. Correct.
15 Q. Over a month after the first e-mail the Government
16 showed you?
17 A. Yes.
18 Q. And it discusses changes in the program from the
19 lawyers, doesn't it?
20 A. Correct.
21 Q. Now your testimony is you made $1,000 commission on
22 this last deal, is that what I understood?
23 A. Not the Turner one, no.
24 Q. What did you make on that?
25 A. I don't remember the exact number.

1 Q. Approximately.
2 A. I don't remember. I know the equity that I -- well
3 Meridian Financial received was about 42.
4 Q. $42,000?
5 A. Right. And out of that I was to pay her the $4,000.
6 I was to pay Vanegas, 5,000. I was to cover her part of the
7 mortgage for the duration of the program, which was 12 months.
8 Q. Exactly. And that's what you were supposed to do?
9 A. Correct.
10 Q. All right. And then with regard to the Leonard
11 Ambrose 2005 transaction, the Willow Street Oakland address --
12 A. Uh-huh.
13 Q. -- what did you get for that from Mr. Coffman?
14 A. I didn't get anything.
15 Q. You didn't get any money?
16 A. As far as I know.
17 Q. Did your husband?
18 A. I'm not sure.
19 Q. Can you say he did or didn't, or don't you know?
20 A. I don't know.
22 THE COURT: Any further redirect.
24 BY MR. ANDERSON:
25 Q. Mr. Tedmon, brought up a point.

1 There was the July e-mail I showed you, then the
2 August e-mail that Mr. Tedmon showed you, and then the
3 transaction with the Turners were in October, is that right?
4 A. Yes.
5 Q. Why, by the time you got to October, were you telling
6 the Turners that they were on title given that sequence of
7 e-mails?
8 A. Because we were told to do that. We still had weekly
9 meetings where we went over what we were supposed to tell the
10 client.
13 MR. TEDMON: Just very briefly.
14 FURTHER RECROSS-EXAMINATION
15 BY MR. TEDMON:
16 Q. These weekly meetings that you refer to, in 40-P you
17 indicated Anh Nguyen was doing some of the training, right?
18 A. Correct.
19 Q. So the meetings were being run by Anh Nguyen?
20 A. Most of them were run by Charles.
21 Q. But Anh Nguyen ran some of them as well, correct?
22 A. A few.
23 Q. Is it also correct that Mr. Head for the most part
24 wasn't around much?
25 A. Yeah, he wasn't around much.

1 Q. He was not?
2 A. He was not.
4 THE COURT: Mr. Haydn-Myer, just checking.
7 MR. ANDERSON: No, Your Honor. Thank you.
8 THE COURT: This witness is excused now.
9 Mr. Anderson?
12 MR. TEDMON: Yes.
15 THE COURT: You may step down, ma'am. You are
16 excused. The Government's next witness.
17 MR. MORRIS: The Government calls Kou Yang.
18 THE COURT: If you wish to stand and stretch as this
19 witness is being located, feel free to do so.
20 THE CLERK: Ms. Yang, would you come forward, please,
21 so I can take your photograph.
22 (Photograph taken of Ms. Yang by the Clerk.)

3 THE WITNESS: Kou Yang, K-o-u Y-a-n-g.
4 KOU YANG,
9 BY MR. MORRIS:
10 Q. Ms. Yang, I'll ask you to think back to the 2004 to
11 2006 time frame. Were you working then?
12 A. Yes.
13 Q. What was your occupation?
14 A. Loan processor.
15 Q. Where did you work?
16 A. At Head Financial.
17 Q. Who was your boss?
18 A. Charles Head.
19 Q. Do you see Charles Head in the courtroom today?
20 A. Yes, I do.
21 Q. Would you identify him please and perhaps mention an
22 article of clothing that he is wearing?
23 A. Yes, he is sitting at the this table over here and
24 wearing a black shirt.
25 MR. MORRIS: Your Honor, may the record reflect that

1 the witness identified Charles Head.
3 Q. BY MR. MORRIS: Do you recall when you started
4 working for Charles Head?
5 A. I would think about 2002.
6 Q. Did you know Charles Head before working for him?
7 A. Yes, I did.
8 Q. How did you know him?
9 A. He was a boyfriend of my friend, Elizabeth Huerta.
10 Q. So how long, if you recall, had you known him prior
11 to starting to work for him?
12 A. Probably about three to four years.
13 Q. Could you describe your job duties as a loan
14 processor?
15 A. What I was supposed to do was when the loan documents
16 or when the file was ready, they would bring it to me. And
17 what I would do is I would order escrow, order title, and then
18 getting -- get it -- get the appraisal, make sure the appraisal
19 comes in. And once all of that is done, I print the 1003, and
20 I package it, and I send it to the designated banks that the
21 loan officer gives me.
22 Q. Prior to working for Charles Head, had you worked in
23 the loan industry?
24 A. No.
25 Q. Prior to working for Charles Head, did you have any

1 formal training in processing loans?
2 A. No.
3 Q. How did you learn how to do your loan processing
4 duties?
5 A. Charles taught me how to process loans.
6 Q. Now you mentioned -- you said when they would bring
7 you loan documents when the file was ready. Who is the "they"
8 that you were referring to?
9 A. The loan officers.
10 Q. And you used the term 1003. What did you mean by the
11 term 1003?
12 A. The 1003 was the loan application. Every loan
13 document required a loan application.
14 Q. If you could look behind you, there is a binder that
15 has Government exhibits in it. I would ask you to look at
16 Government's Exhibit 46-A and 46-B. If you could take a moment
17 and go through all the pages.
19 MR. MORRIS: And, Your Honor, the Government's going
20 to move 46-A and B in pursuant to the stipulation. Both
21 exhibits are documents that were seized by law enforcement
22 officers on November 16th, 2006. 46-A were seized at FCO
23 Incorporated in Costa Mesa. 46-B were seized at A-1 Investment
24 Management in Newport Beach.
25 THE COURT: And both were covered by the stipulation?

1 MR. MORRIS: They were, Your Honor.
2 THE COURT: 46-A and B will be received into evidence
3 pursuant to the stipulation, and they may be published.
4 (Government Exhibit 46-A and 46-B, Property Tracking
5 Statements, admitted into evidence.)
6 Q. BY MR. MORRIS: Do you recognize the documents in
7 46-A and -B?
8 A. Yes, I do.
9 Q. How do you recognize those documents?
10 A. I recognize them because it was a list of mortgages
11 that we had to, you know, put together so that we can make sure
12 that the mortgages were paid each month.
13 Q. Do you recognize the handwriting that's on 46-B, page
14 one?
15 A. Yes.
16 Q. Whose handwriting is that?
17 A. That is my handwriting.
18 Q. Can you describe what your role was with respect to
19 this document?
20 A. My role was to make sure that when it came time to
21 pay the mortgage each month, that I made sure that I called
22 each of the banks and/or I wrote checks for each one of those
23 banks and made sure that they were all paid.
24 And then when I'm done with it, then I write down
25 when I paid for it or with what check number so that, you know,

1 we can make sure that every single mortgage was paid for.
2 Q. On this document, what does LO mean on the document?
3 MR. TEDMON: Your Honor, for clarification this is
4 46-B.
5 THE COURT: It is. I believe he clarified 46-B was
6 being published. This is 46-B. The first page of 46-B.
7 Q. BY MR. MORRIS: What does LO mean?
8 A. LO means loan officer.
9 Q. And in the column for loan officer what does CCH
10 mean?
11 A. It means Charles Christopher Head.
12 Q. And in the column "loan officer" who was Mike?
13 A. Mike Head.
14 Q. And the names in parentheses, do you recall what the
15 names in parentheses were?
16 A. Yes.
17 Q. Who were the people that are listed in parentheses on
18 this document?
19 A. That was the straw buyer.
20 Q. When you use straw buyer, what do you mean by that
21 term?
22 A. That was the person -- sorry -- that was the person
23 that -- that was -- that the loan was put in their name to
24 obtain the property through the bank.
25 Q. And the name that's not in parentheses, who is that?

1 A. That would be the seller.
2 Q. Okay. Go to page five. It will come up on the
3 screen. But we're looking at page five of 46-B. Do you
5 A. Yes.
6 Q. What's this document?
7 A. That is the split between Charles Head, Head
8 Financial, and the loan officer.
9 Q. Were you involved in the production or maintenance of
10 this document?
11 A. Yes.
12 Q. Okay. So what did all this information on this
13 document mean to you?
14 A. That means that this is the amount, the dollar amount
15 in A, $462.03 was the amount that Josh Coffman was responsible
16 to pay.
17 Q. And when it says "split" -- and you mentioned Josh
18 Coffman -- does the fact that there is a split mean that there
19 is somebody other than Josh Coffman who is involved in a
20 particular property?
21 A. Yes.
22 Q. Who was the other person who would be involved in
23 these properties?
24 A. Charles Head.
25 MR. TEDMON: Objection, Your Honor. Can we take them

1 one at a time?
2 THE COURT: Sustained. The jury shall disregard that
3 last answer.
4 Q. BY MR. MORRIS: Well, is there a difference on any of
5 those properties of who the other person would have been?
6 A. No. This list was for all of Josh Coffman's
7 properties that he was involved in.
8 Q. And so this Coffman Palmdale property, who was the
9 other person who was splitting the financial transactions on
10 the Palmdale property?
11 A. Charles Head.
12 Q. And the Carson property, who was splitting the
13 financial transactions on the Carson property?
14 A. Charles Head.
15 Q. And who was splitting the financial transactions on
16 the Fresno property?
17 A. Charles Head.
18 Q. And who was splitting the financial transactions on
19 the Rialto property?
20 A. Charles Head.
21 Q. And the Fontana property?
22 A. Charles Head.
23 Q. And Rancho Cucamonga?
24 A. That was Charles -- that was Charles Head.
25 Q. And Redlands?

1 A. Charles Head.
2 Q. I'll ask you to bring up 11-A, page one, please.
3 Your Honor, 11-A was previously admitted while Ms. Taylor was
4 testifying.
5 Do you recognize the document in front of you?
6 A. Yes.
7 Q. What is that document?
8 A. That is the 1003 -- no -- yeah, 1003. Yeah.
9 Q. And did you work with this type of document when you
10 were working for Charles Head?
11 A. Yes.
12 Q. Who taught you how to fill out this document?
13 A. Charles Head.
14 Q. Let me take you to -- ask you to think about when you
15 first started working for Charles Head, do you recall what
16 types of loan transactions you were working on?
17 A. Yes. When we first started -- when I first started
18 working with Charles Head, we did regular conventional homes.
19 If someone was to purchase a property, we would do the loan.
20 If a regular person wanted to, you know, refinance their home,
21 we would refinance their homes for them. It was a regular
22 mortgage office.
23 Q. Do you recall in the course of your employment for
24 Mr. Head the types of transactions changing?
25 A. Yes.

1 Q. How did they change?
2 A. We stopped doing conventional, you know, loans. We
3 would do a few here and there, but the majority of our loans
4 were, you know, foreclosure loans. Meaning, that if somebody
5 was in foreclosure, we would, you know, find a buyer and help
6 them out of the foreclosure.
7 Q. And are you able -- are you able to recall
8 approximately -- I don't need a date -- but are you able to
9 recall in your mind when that change -- that shift happened
10 from one type to loan to another?
11 A. Yes.
12 Q. How did you learn that the office would be changing
13 the types of loans that they were doing?
14 A. Charles informed us that we will be working on a new
15 type of loan, and it involved foreclosures.
16 Q. Okay. So I'm going to ask you then at this point to
17 focus your testimony on that period after you were informed
18 you'd be doing foreclosure transactions.
19 What was your role in the office regarding these
20 1003s during that time period?
21 A. My role in the office was to make sure that they were
22 filled out properly when they came over to the processing desk.
23 So the loan officers would fill it out with, you know, the
24 buyer's information.
25 And when they came over to the processing desk, we

1 would make sure that everything was filled out, that, you know,
2 there were phone numbers and addresses for their employment,
3 previous addresses, their income was in there, and that the
4 debt-to-income ratio, you know, was good. And so as long as
5 all of that looked good, we could then go ahead and process --
6 print it and process.
7 Q. You just said -- the question about the
8 debt-to-income ratio looking good. What does looking good
9 mean?
10 Well, first of all, what's a debt-to-income ratio?
11 A. The debt-to-income ratio is, for instance, if you
12 make a certain amount, your debt has to offset it so that you
13 can afford the property. So if you have a lot of debt, but you
14 make $5,000, you may not qualify for a loan because there is a
15 lot of debt there.
16 So it's your debt-to-income ratio. So I just needed
17 -- I had to make sure it was below a certain amount, the amount
18 that was required by the bank.
19 Q. Do you ever recall a loan officer bringing a document
20 where the debt-to-income ratio did not look good?
21 MR. TEDMON: Objection. Vague as to time and
22 specifics.
23 THE COURT: Overruled. Just answer the question "yes
24 or no."
25 THE WITNESS: Okay. Yes.

1 Q. BY MR. MORRIS: And so what would you do if somebody
2 brought a loan application where the debt-to-income ratio did
3 not look good?
4 MR. TEDMON: Objection. Vague as to specifics. Each
5 could be different.
6 THE COURT: Sustained. Lay a better foundation.
7 Q. BY MR. MORRIS: Did you have anything that you would
8 do if a loan officer brought one of those types of documents to
9 you?
10 A. Yes.
11 Q. Was it always the same thing, or was there more than
12 one thing that you might do?
13 A. Majority of the time it was exactly the same thing.
14 Q. So what was it that you would do, when you would do
15 the exact same thing, if somebody brought a document to you
16 with a debt-to-income ratio that didn't look good?
17 A. I would take it back to the loan officer, and the
18 majority of the time they would tell me that, you know, it's
19 been updated, and then I could then go in and print it out and
20 then submit it to the bank.
21 Q. And just for this question, just a "yes or no."
22 Do you know or do you have a reason to know what they
23 did between the time you sent it back to them and it came back
24 to you?
25 MR. TEDMON: Objection. Vague as to "they."

1 Q. BY MR. MORRIS: The loan officers.
2 THE COURT: All right. With that clarification,
3 overruled.
4 THE WITNESS: Um --
5 Q. BY MR. MORRIS: That's just "yes or no." Do you have
6 a reason to know what was done by the loan officers between
7 those two events?
8 A. Yes.
9 Q. How do you know what they would do?
10 A. Because when they would tell me that it was ready.
11 When I go back in there, if the income was $5,000, it would now
12 be 6,500.
13 Q. Okay. Now what did you do with these documents once
14 they were filled out?
15 A. Once they were filled -- once the 1003 was filled
16 out, I would print it, and then submit it, and stack it with
17 the title, the escrow, the appraisal, any financial
18 documentations or any other documentations that the bank
19 required to submit a loan.
20 Q. Who signed these documents?
21 A. The loan officer, which because Charles has a
22 broker's office --
23 MR. TEDMON: Objection, Your Honor. That's beyond
24 the scope of the question.
25 THE COURT: Sustained. Wait for the next question.

1 Q. BY MR. MORRIS: And in your office who was the loan
2 officer?
3 A. Charles Head.
4 Q. I think you previously mentioned that one of your
5 duties was ordering title. Can you explain what ordering title
6 means?
7 A. Yes. When a file is ready to be submitted, what they
8 would do is submit a escrow and title order form. And with
9 that form we would then, you know, submit that over to the
10 escrow company. And the escrow company will then open escrow,
11 and then they would at the same time open title, you know, get
12 a title.
13 Q. And what do you mean by the term "opening escrow"?
14 A. Because in order to do a loan, you have to have an
15 escrow account. And so that was, you know -- and what they do
16 is they prepare the loan -- not the loan documents because the
17 bank prepares the loan documents -- but the escrow company took
18 care of all the money that was being exchanged. So that is
19 their job.
20 Q. Do you recall who you worked with with respect to
21 opening escrow?
22 A. Yes. At the beginning we were working with a company
23 by the name of Castlehead Escrow.
24 Q. Okay. And do you recall the names of any people that
25 you worked with at Castlehead Escrow?

1 A. Yes. Originally we worked with someone by the name
2 of Nancy. I'm not sure of her last name, but her name was
3 Nancy. And then the second person that I worked with was Nora
4 Rivas.
5 Q. Was it your testimony that -- well, if you know, how
6 does this application get to a lender?
7 A. The 1003?
8 Q. Uh-huh.
9 A. I submit it to the bank. I print it out, and I stack
10 it. And then once the loan document -- all the loan paperwork
11 is stacked, then I send it to the lender via transbox.
12 Transbox is a way of transporting documents from the brokers to
13 the lenders. They would provide us with these envelopes.
14 Q. Did you have any correspondence with the lenders
15 after you sent the file to them?
16 A. Yes.
17 Q. What types of correspondence would you have with
18 lenders after you sent them the file?
19 A. Once I send the file to the lender, it goes into
20 underwriting. And so I wait a few days, roughly three to
21 four days. Once it goes through underwriting, and it is either
22 approved or denied, then they would send me a fax telling me,
23 you know, whether it's been approved or it's been denied. If
24 it's been approved, then they would sent me a list of
25 conditions.

1 Q. And what if it was denied?
2 A. Then sometimes they will call me and tell me this
3 does not work. You know, we cannot approve this loan because
4 of these various reasons. Or sometimes they will send me a fax
5 that says this loan was denied due to these reasons.
6 Q. Do you remember typical reasons that you would see on
7 more than one occasion?
8 A. Yes.
9 Q. If you could give an example of a reason for denial
10 that you remember seeing as part of this process?
11 A. I remember that a loan was denied because the lender
12 did not believe that the buyer was going to live in this
13 property because they had information that they lived out of
14 state.
15 Q. Can you think of any other examples of why a lender
16 would deny a property in your experience?
17 A. Another time that a loan was denied was because of
18 income. You know, they didn't believe that the income was
19 sufficient.
20 For instance, if someone is a school teacher, you
21 cannot state that they make $8,000 because it's common
22 knowledge that a teacher does not make $8,000. So they used to
23 tell us that we would overstate a loan.
24 Q. What do you mean by overstate a loan?
25 A. What I mean is if a teacher roughly makes $4,500 a

1 month and you state that they make $8,000, that's an
2 overstatement.
3 Q. What, if anything, would you do if you received a
4 denial from a lender for one of these loan applications?
5 A. Whenever I would receive a denial, I will then tell
6 the loan officer and Charles Head.
7 Q. And do you have any knowledge -- this is just a "yes
8 or no" -- do you have any knowledge of whether or not those
9 denied loans would then be resubmitted to a different lender?
10 A. Yes.
12 A. Because the same property, the same buyer would then
13 be submitted to me to go to a different bank. Because all they
14 do is they just change, you know, the form. There is a form
15 that they have to fill out. The loan officers have to fill out
16 what bank they want it to be submitted to. So they would then
17 submit it to me going to go Bank B instead of Bank A, but I
18 have just seen that loan, and then now it's going to a
19 different bank.
20 Q. And would the information on the second application
21 be the same as on the first application?
22 A. It would be the same except for the items that the
23 first bank, you know, requested. Because then it would be
24 denied at the second bank also.
25 Q. In the course of your duties at Head Financial

1 Services did you meet Jeremy Michael Head?
2 A. Yes.
3 Q. What was the nature of your interaction with Jeremy
4 Michael Head?
5 A. He was -- he was another loan officer.
6 MR. MORRIS: Your Honor, I'm going to turn to a
7 series of e-mails. They are all covered by our stipulation. I
8 don't know if the Court would prefer to move in a number of
9 them now or move them one at a time.
10 THE COURT: Are they a series?
11 MR. MORRIS: They are, but they they are through the
12 40 and 41 series, and they are not a large contiguous block.
13 So if I could do it maybe a few at a time would that be best?
15 MR. MORRIS: We're going to move then for exhibits
16 40-B, as in bravo; C, as in Charlie; H, as in hotel; I, as in
17 India; and J, as in Juliette. And these are all covered by the
18 stipulation.
19 THE COURT: All right. I believe 40-B is already in.
20 THE CLERK: Yes, ma'am.
21 THE COURT: But otherwise C, H, I and J are admitted.
22 MR. TEDMON: That's fine, Your Honor.
23 THE COURT: They may be published.
24 (Government Exhibits 40-C, 40-H, 40-I, 40-J, (see
25 index for descriptions), admitted into evidence.)

1 Q. BY MR. MORRIS: Do you recall anybody else at Head
2 Financial Service with the same name as you when you worked
3 there?
4 A. No.
5 Q. If you could just take a moment to review this
6 e-mail. And is this an example -- you previously had mentioned
7 the word straw buyer as being somebody who would be the owner
8 of a house but not really going to be owning the house.
9 Is this an example about the discussion amongst the
10 office about straw buyers?
11 A. Yes.
12 Q. And who is it that you're e-mailing on this e-mail?
13 A. Charles Head.
14 Q. And what are you asking him?
15 A. I'm asking him, you know -- well, the first one Josh
16 sent me the e-mail. I sent Josh an e-mail asking who his straw
17 buyer was going to be, and then Josh sent me an e-mail back
18 saying that Charles had told him that he was going to take care
19 of the straw buyer. I sent an e-mail to Charles asking him,
20 well, who are we going to use because Omar, the person that
21 brought the straw buyer to the table, said that we could not
22 use his straw buyer.
23 Q. Was it normal for you to have correspondence with
24 Charles Head about straw buyers?
25 A. Yes.

1 Q. Was it normal for you to ask him who to put on a
2 transaction as a straw buyer?
3 A. Yes.
4 Q. Go to 40-H. You previously mentioned somebody who
5 you worked in escrow with, Nora.
6 Having reviewed this e-mail, are you referring to
7 that same Nora in this e-mail?
8 A. Yes.
9 Q. And who is it that you're sending this e-mail to?
10 A. I am sending this e-mail to Josh, and I am cc'ing
11 Charles Head.
12 Q. Now the first few sentences here: "Any day now.
13 Just need the writ for the sheriffs to remove them. I already
14 called them yesterday."
15 Do you have any recollection of what you were talking
16 about in that part of the e-mail?
17 A. Yes. A writ is a documentation that the sheriffs
18 need in order to go and physically remove a tenant from a
19 property that they're being evicted from.
20 Q. And then you say -- the next sentence looks like it
21 reads: "Just so you know, the Taylors called Nora and asked
22 for all documents they signed in escrow. Nora says she will
23 have to release it because it's all rightfully theirs. I know
24 that you had Cindy sign the escrow instructions, et cetera, for
25 the sellers."

1 Do you recall what you were discussing in that
2 portions of the e-mail?
3 A. Yes. There was -- you know, because I convert -- I
4 have conversations with the escrow company daily. And so I was
5 talking to Nora about a different, you know, transaction, and
6 she said, hey, by the way, I just want to let you know that the
7 sellers, the Taylors, called me, and, you know, they want the
8 documents that they signed. You know, the escrow documents.
9 And she said, you know, I'm going to have to release it because
10 it's theirs. They should have a copy of it.
11 Q. Why would you feel the need to inform Josh and your
12 boss, Charles, that Nora was telling you she was going to have
13 release a file?
14 A. That was pretty much the nature of the office. A lot
15 of stuff was, you know, reported back to Charles. Because
16 these were things that he needed to know. You know, if someone
17 -- if something happened, we'd have to inform him so that we
18 would know what to do next.
19 A lot of customers don't ask for the escrow
20 documents. So in this particular case because they physically
21 called Nora it was different.
22 Q. And this last sentence: "I know that you had Cindy
23 sign the escrow instructions, et cetera, for the sellers."
24 What's that part of e-mail telling?
25 A. Escrow instructions are -- they do not have to be

1 signed by a notary. Only the loan documents and some documents
2 in the escrow packet. So the escrow instructions could just be
3 signed.
4 And in this particular case I believe that the
5 Taylors did not sign their escrows instructions. And when the
6 escrow company asked for the escrow documents, I remember that
7 Cindy, who was assisting, you know -- was the office assistant
8 at that time, had signed the escrow documents for -- to be
9 turned in to escrow.
10 Q. Signed whose signature? Her signature or somebody
11 else's?
12 A. Signed the Taylors' signature.
13 Q. Let me stop then and ask, were you arrested for your
14 role in what happened at Head Financial Services?
15 A. Yes.
16 Q. And have you pled guilty in this case?
17 A. Yes.
18 Q. Are you testifying here today because you agreed to
19 testify as a condition of your plea agreement?
20 A. Yes.
21 Q. Have you ever been arrested before the time you were
22 arrested in this case?
23 A. Yes.
24 Q. When were you previously arrested?
25 A. In 1998.

1 Q. What were you charged with in that arrest?
2 A. Grand theft.
3 Q. Were you convicted?
4 A. Yes.
5 Q. What did you steal prior to this episode?
6 A. I was working at a bank, and I was what they call
7 skimming off, you know, an account.
8 Q. How much money did you steal while you were working
9 at that bank?
10 A. The total amount was 44,000.
11 Q. What happened when you were convicted?
12 A. I went to prison, and then I was released.
13 Q. Do you recall whether or not that prior conviction
14 and prison sentence happened before or after you met Charles
15 Head?
16 A. Before.
17 Q. So the answer is yes, you do recall?
18 A. Yes.
19 Q. And the answer is before you met Charles Head?
20 A. Yes.
21 Q. Did you ever have any discussion with Charles Head
22 about your prior conviction for theft?
23 A. Yes.
24 Q. What did you tell Charles Head about your prior
25 conviction for theft?

1 A. I told him everything that happened. When -- you
2 know, everything that happened. And because he knew because
3 Elizabeth -- he was living with Elizabeth at that time, and
4 Elizabeth knew everything that was going on.
5 Q. Let me ask you to turn to Exhibit 4-I, as in India.
6 THE COURT: 4-0, 40-I?
7 MR. MORRIS: Yes, I apologize.
9 Q. BY MR. MORRIS: Go to page two. I apologize. Go to
10 page two. Do you remember somebody named Steve Cangrill?
11 A. He is a loan -- a processor over at a lender.
12 Q. Do you have in mind right now what the term "an
13 overstated problem" is?
14 A. Yes.
15 Q. What's an overstated problem?
16 A. An overstated problem is like I explained earlier.
17 If you are a teacher, and it's common knowledge that you make
18 4,500, if you state on your loan documents that you make
19 $8,000, that would be considered overstating.
20 Q. I'm going to ask you -- if we can go back to the
21 first page just for a second. So farther up this e-mail chain
22 we have a header from you to Charles. And then the second
23 page, please.
24 So you say to Charles: "This is the San Jose deal.
25 We need a co-borrower because the stated income is very high.

1 Should we add someone to deal?"
2 What did you mean when you wrote that?
3 A. What I meant was the loan -- the representative from
4 the bank had told me that, you know, it's overstated. They
5 don't have enough income. So I'm e-mailing him, asking him,
6 you know, should we add another person. Because if you add a
7 co-borrower to the deal, then what happens is we can then use a
8 co-borrower's income also. And then once we add the
9 co-borrower and their income, we no longer have a
10 debt-to-income ratio.
11 Q. So what was your recollection of -- how were you
12 going to add a co-borrower to a deal?
13 A. That's why I'm asking him. You know, what do you
14 want me to do? Who should I add? Pretty much.
15 Q. Go back to the first page.
16 So the reply from Charles is: "Yeah, why not."
17 And then how did you reply then to Charles after he
18 says, "yeah, why not"?
19 A. Well, who? Who do you want me to add?
20 Because I don't pick and choose who to add, so you
21 have to tell me who. And then I'm like, well, I can add Amber,
22 which at that time was, you know, someone that was waiting, you
23 know.
24 Q. What do you mean by someone who was waiting?
25 A. Because our straw buyers came to the table, you know,

1 with like, okay, we have five straw buyers that are waiting.
2 Once we're done with straw buyer number one, and their deals
3 are done, we go to straw buyer number two, three, and so forth.
4 Q. Was there a limit to how many transactions you could
5 use a straw buyer for?
6 A. Yes, there was.
7 Q. So how is it that you thought you had a limit on how
8 many transactions you could use a straw buyer for?
9 A. Because -- how do I know?
10 Q. What was your understanding of this limitation on
11 using straw buyers?
12 A. My understanding of the limitations was we had to
13 always try to get one straw buyer done within the same month or
14 as close as we can. Because once the bank funds the loan, then
15 the next month it's then on their credit. So once these
16 mortgages are on their credit, we can no longer do owner
17 occupied.
18 Q. Why is that?
19 A. Because then that would mean that they have this debt
20 for this home, so why -- you know -- that's added debt to the
21 home. And not only that, the bank is not going to believe that
22 this is now owner occupied. It would have to be an investment
23 property.
24 Q. Do you recall any instances where a bank rejected a
25 loan for a straw buyer because one of your earlier transactions

1 had already hit their credit report?
2 A. Yes.
3 Q. And you were explaining this. I think you were up to
4 the: "I can add Amber. I need an address out here."
5 What does that mean?
6 A. That means that Amber did not live in the area, or in
7 California, or wherever this new property that we were
8 submitting the loan for.
9 Q. Okay. And it says, "I'll use the same address that
10 Simone lives at now."
11 Why would you just not use Amber's real address?
12 A. Because then the bank would deny it because how --
13 why would someone that lives, let's say, in Florida buy a house
14 in California when they --
15 MR. TEDMON: Object, Your Honor. Object to the
16 second part of the answer. Non-responsive. Also speculation.
18 Q. BY MR. MORRIS: Okay. So you finish out that e-mail
19 with, "how does that sound?" What's the reply from Charles
20 Head?
21 A. "Sounds good. Amber can care less. Her fee is
22 2,000, though."
23 Q. "Her fee is 2,000." What does that mean to you?
24 A. Well, what that means to me is the normal straw buyer
25 their fee is 5,000. Her fee is 2,000, which means she has a

1 discounted, you know --
2 Q. I'll ask you turn to 40-J, please.
3 On this e-mail from Charles to you, above the arrow
4 there is a sentence that says, "she'll be missing work to go to
5 a few classes I told her to sign up for."
6 Do you recall the context of this e-mail, or do you
7 recall what's going on around this time?
8 A. Yes.
9 Q. What was happening in the office?
10 A. Charles in this particular e-mail was going on a
11 trip, and he had hired somebody new. And he wanted -- he was
12 telling me what I, you know, need to do with this assistant
13 that he had hired, how to use her, what she could do, what I
14 can use her for.
15 Q. In that section there was "one of them you need to
16 pay for." Was it part of your job duties to pay for office
17 expenses?
18 A. Yes.
19 Q. And starting on the end here to the next one, "hire
20 that new girl and have Liz train her."
21 Was it your experience that hiring and firing
22 decisions were made by Charles?
23 A. Yes.
24 Q. Was it your experience that Charles would pick who
25 trained people?

1 A. Yes.
2 Q. What's Dynasty Realty?
3 A. Dynasty Realty is the real estate side of Charles'
4 business.
5 Q. Was it a practice within your office to answer phones
6 by different names depending on which phone line was ringing?
7 A. Yes. We were told on a number of occasions how to
8 answer each phone.
9 Q. Can you bring that up.
10 And, Your Honor, I'm going to move in at this point
11 Exhibits 40-M, as in Mike, and 40-N, as in November, and 40-O,
12 as in Oscar. All three are in by stipulation.
13 THE COURT: M and N are already in, I believe. 40-O
14 may come in subject to the stipulation.
15 MR. MORRIS: Okay.
16 THE COURT: That is admitted.
17 (Government Exhibit 40-O, Email from Charles Head,
18 Re: Training, dated 7/22/04, admitted into evidence.)
19 Q. BY MR. MORRIS: Let's go to N, 40-N, as in November.
20 Take a moment to review, if you could.
22 Q. Do you recall the events going on in this e-mail or
23 being discussed in this e-mail?
24 A. Yes. Charles Head had just signed up with a new
25 company called LeadBull and what their job was to do was to

1 provide us with leads to call customers to see if they wanted
2 to do a loan. And he was informing me to let the office know
3 that it was up and running and they can retrieve leads.
4 Q. So the bottom e-mail is Charles directing you to get
5 all the sales people to go to a website?
8 Q. BY MR. MORRIS: What's your understanding of the
9 bottom e-mail?
10 A. From my understanding when I read the e-mail was to
11 inform all the loan officers to go to LeadBull.com and pull
12 referrals, leads, and to call them.
13 Q. And did you comply with Charles' request?
14 A. Yes.
15 Q. Okay. If you could look at this list of people in
16 the "to" line. If we could go down.
17 And, if you could, for the ones that you recall, if
18 you recall who it was that you sent this e-mail to?
19 A. Yes.
20 Q. Do you remember who Velba was?
21 A. Yes. She was an loan officer.
22 Q. Do you remember who Andrew was?
23 A. Yes. He was also a loan officer.
24 Q. Do you remember Andrew's last name?
25 A. Andrew Vu.

1 Q. Do you remember Anh?
2 A. Yes.
3 Q. Do you remember Anh's last name?
4 A. Might be Nguyen.
5 Q. And in your e-mail, "Charles" in your address book,
6 was there anybody other than Charles Head?
7 A. No. There was only one.
8 Q. And who is Cindy?
9 A. Cindy was the office assistant.
10 Q. And who is Ely Assadi?
11 A. She was another loan officer that was brought on.
12 Q. Do you remember somebody named Josh?
13 A. Yes.
14 Q. What was Josh's last name, if you recall?
15 A. Coffman.
16 Q. Do you remember Justin?
17 A. Yes.
18 Q. Who was Justin?
19 A. Justin Wiley.
20 Q. And it looks like you info'd yourself. You're the
21 only Kou?
22 A. Yes, I am the only Kou.
23 Q. Who was Leonard, if you recall?
24 A. Leonard Bernot.
25 Q. What was his role in the office?

1 A. He was also a loan officer.
2 Q. Do you recall who Liz was?
3 A. Yes. Liz Huerta.
4 Q. And who is Mike, if you recall?
5 A. Mike Head.
6 Q. And who is Omar, if you recall that?
7 A. Omar Sandoval.
8 Q. And what was Omar's role in the office?
9 A. Omar was also a loan officer.
10 Q. Do you recall who Sam was?
11 A. Yes. She was another processor.
12 Q. Okay. So not a loan officer but a processor?
13 A. Yes. Because -- and the reason why I included them
14 on this e-mail was to let them know that there's going to be
15 loans coming in now because we have new leads.
16 Q. Okay. And who is Vanessa, if you recall?
17 A. She is another processor.
18 Q. If you can bring that down and go to 40-O.
19 And if you could take a moment to review this e-mail.
20 Do you recall what's being described in this e-mail?
21 A. Yes.
22 Q. What was this discussion about?
23 A. I was e-mailing Charles to let him know that the
24 unemployment office that we were signing up with, the people
25 that come are just not really good employees. And I'm asking

1 him, you know, to get more help. You know, could we go to
2 either the Orange County Register or the Pennysaver. You know,
3 somewhere else besides where we've been going because -- so
4 that we can get different people.
5 Q. And was it your experience that decisions on where to
6 look for new people to hire was a decision that Charles made?
7 A. Yes.
8 MR. MORRIS: I don't think we've moved it in yet,
9 Your Honor. Government's Exhibit 40-Z, as in zulu, 40-AA, -DD
10 and -EE. All pursuant to the stipulation.
11 THE CLERK: Would you repeat those?
12 MR. MORRIS: Z as in Zulu, AA, as in alpha, and DD as
13 in delta, and EE, as in echo.
14 THE CLERK: The last one?
15 MR. MORRIS: EE, as in echo.
16 THE COURT: All right. As agreed by the stipulation,
17 those exhibits are admitted and may be published.
18 (Government Exhibits 40-Z, 40-AA, 40-DD, 40-EE, (see
20 Q. BY MR. MORRIS: 40-Z, please.
21 If you could take a moment to review this e-mail. Do
22 you recall what you were discussing with Charles in this
23 e-mail?
24 A. Yes.
25 Q. What's going on in the office at this point?

1 A. I'm e-mailing Charles back because Charles, you know,
2 e-mailed us first to let us know if the issue has been
3 resolved. Because Tracy has not responded to him yet, and he
4 will call her if it doesn't get resolved.
5 The whole reason for him sending me this e-mail was
6 because he had asked Tracy for a favor to verify. And --
7 Q. Stop there. To verify what?
8 A. Employment for the buyer on the property.
9 Q. Did the buyer on the property work for Tracy?
10 A. No.
11 Q. Do you remember who the buyer on the property was?
12 A. I am -- I do not remember the name of the buyer, but
13 I remember the situation.
14 Q. So after Charles had asked Tracy to verify the buyer,
15 verify the employment for the buyer, what's your recollection
16 of what happened next?
17 A. When it came time for funding -- and that is usually
18 when the lender verifies employment -- Tracy would not verify
19 the employment. And so the bank had called us and said we
20 didn't get the verification done. What's going on? And that's
21 when the whole thing started.
23 A. What happened was when I received the information, I
24 told Charles and Josh, the loan officer, informed them of what
25 was going on.

1 And so this is Charles Head, you know, coming back
2 asking has this been fixed. I'm pretty much telling him that
3 the verification of employment is done already, and that this
4 is, you know, for Josh and Justin's house, the one in L.A., I
5 remember.
6 And I'm -- by this time, because I had been going
7 back and forth with Tracy, and she was not very pleasant with
8 me. She was telling me, you know, a whole bunch of stuff like
9 I'm not doing this --
10 MR. TEDMON: Objection, Your Honor. At this point
11 it's become non-responsive.
12 MR. MORRIS: It is.
14 Q. BY MR. MORRIS: If you can look at the part where
15 I've marked. Just above that. You say, "I already verified
16 employment." Who did you verify employment with?
17 A. The lender.
18 Q. Do you recall -- sorry, a couple above that. Do you
19 recall the lender calling you back?
20 A. Yes.
21 Q. And did you -- what did you do in response to the
22 lender calling you back?
23 A. I answered it, you know, Dynasty Realty, and I
24 verified it.
25 Q. Who did you identify yourself as?

1 A. Tracy.
2 Q. Is Tracy a nickname for you?
3 A. No. Tracy was the person that was supposed to
4 originally do it.
5 Q. When you verified the environment, did you think that
6 the person you were talking about really worked for the place
7 where you were answering the phone for?
8 A. No.
9 Q. Can you pull it out. And what was Charles' response
10 when you explained what you had just done?
11 A. He told me that I did a great job and to "blank" her.
12 Q. If we could go to Exhibit 40-AA, please. Do you
13 recall the context of this discussion with Charles Head?
14 A. Yes.
15 Q. When you're describing a private line like the other
16 one, what are you talking about?
17 A. A phone line in which we would then answer whatever
18 company that we wanted it to be.
19 Q. Why did you want it to be a private phone line?
20 A. So that they could not trace it back to Head
21 Financial Services or our company.
22 Q. Why did you not want somebody to be able to trace a
23 phone number back to Head Financial Services?
24 A. Because we were either asking them to -- we were
25 doing a verification of employment, or, you know, whatever

1 verification, we did not want the bank to think that we were
2 doing the verification. We wanted to let the bank think that
3 it was a legitimate employer doing a verification.
4 Q. And if we could go to 40-DD, please. If you could
5 take a moment to review this e-mail.
7 Q. Do you recall the context of this e-mail?
8 A. Yes. This was the e-mail that I sent to Charles Head
9 and to Jack Corcoran, who was now taking over our accounting
10 business.
11 Q. Why did you send this e-mail to Jack and Charles
12 Head?
13 A. Because Jack is the person that is now taking over
14 the responsibilities, and Charles because I'm supposed to cc
15 him on all of the stuff that I work on.
16 Q. Can you go to the second page, please.
17 Do you recall or do you recognize this document?
18 A. Yes.
19 Q. How do you recognize this document?
20 A. It is a document that I made.
21 Q. And was this part of the documents that you looked at
22 previously in Exhibits 46-A?
23 A. Yes.
24 Q. If we could go to 40-EE, please.
25 THE COURT: How long do you need to review this?

1 MR. MORRIS: We could take a break here, Your Honor.
2 I still have several e-mails. This is a good point to break.
3 THE COURT: If EE is in, and we can do that quickly,
4 let's do that and then take our break.
5 Q. BY MR. MORRIS: Take a moment and recall this e-mail
6 or refresh your recollection with this e-mail.
7 A. (Witness reviewing document.) Yes.
8 Q. Do you recall roughly what's going on in this e-mail?
9 A. Yes. Heather, which is an employee, is sending this
10 to me, asking me that a -- you know, a seller is asking what
11 all of this means, and if I can please let her know what it is.
12 Q. And what was your response to Heather when she had
13 questions about that information?
14 A. That Charles has to be the person for these types of
15 questions because I don't work with that. It's all on Charles.
16 MR. MORRIS: Okay. We'll break here.
17 THE COURT: All right. Ladies and gentlemen, this is
18 the time for our second break of the morning.
19 Again, let's take a 15-minute break. Come back at
20 this point let's say at 12:05. During the break, as always,
21 remember all of any admonitions. We will see you at 12:05.
22 Thank you.
23 (Jury out.)
24 THE COURT: You may step down. Please be back in
25 your seat, though, at 12:05.

1 THE WITNESS: Thank you.
2 THE COURT: I just want to confer briefly again about
3 the note. The juror note. You may be seated if you'd like.
4 I've had some quick research done. There is no
5 guidance from the Ninth Circuit. You know, generally this kind
6 of thing would be clarified in final instructions, if at all.
7 I don't think there are any definitional instructions
8 applicable to the charges here.
9 Another circuit provides some guidance that I think
10 make sense. My suggestion is to give a very general
11 instruction given that there is a question. I would rather not
12 completely ignore the question.
13 But it's clear that there is no legal definition of
14 the term that was asked about, the arm's length agreement.
15 Common usage is the general rule.
16 And so my thought would be to give an instruction
17 along these lines, subject to hearing from you: You have heard
18 reference to a number of terms including arm's length
19 agreement. You should interpret these terms according to their
20 common usage and according to your common understanding of
21 them.
22 Is there any objection to that?
23 MR. TEDMON: I don't think -- I mean, it doesn't
24 really define it for him because there is no legal definition.
25 THE COURT: If you want to think about it and come

1 back at 12:00. I hesitate -- given that there is a curious
2 juror -- again I hesitate to say nothing and appear completely
3 unresponsive.
4 I mean, they've heard the instruction not to go
5 consult a dictionary on their own. But to the extent the Court
6 can be responsive without erring, that would be my preference.
7 Why don't you think about it, meet and confer if you
8 can, and I'll come back at 12:00 and see if we can --
9 MR. ANDERSON: Perhaps even, Your Honor, if we could
10 take it up tomorrow morning and give us a little bit of time to
11 think about it and the implications of giving an instruction
12 like that.
13 THE COURT: I'll think about that. It's a pretty
14 plain vanilla instruction. It seems to me.
15 I'll come back at 12:00. If your thoughts have
16 evolved during that period of time, you can let me know.
17 (Break taken.)
18 THE COURT: All right. We're back on the record
19 outside the presence of jury. Ms. Yang is in the jury box.
20 Any objection to her being there while we discuss this note?
22 MR. TEDMON: No.
23 THE COURT: So any further comments? The Court is
24 reluctant to wait just because I'm going to excuse the jury.
25 MR. ANDERSON: That's okay, Your Honor. We have a

1 position on it, which is that we prefer that instruction not be
2 given by the Court.
3 I think Mr. Haydn-Myer agrees for reasons he can
4 articulate himself.
5 THE COURT: What are the Government's reasons? Do
6 you wish to make more of a record?
7 MR. ANDERSON: Yes, Your Honor. It would be one
8 thing if both Mr. Haydn-Myer and Mr. Tedmon were asking for it,
9 but they're not. And I think it's not a particularly relevant
10 instruction to the issues that are going to be decided by the
11 jury. They are going to receive final instructions at the end.
12 I think that this instruction is just simply
13 unnecessary. And given that it's unnecessary, the fact that
14 defense counsel doesn't want it, that's the direction we're
15 going. I don't want to defend the instruction on appeal if
16 it's something we didn't want and defense counsel doesn't want.
18 MR. TEDMON: Well, I don't know that completely
19 squares it up. Mr. Haydn-Myer apparently doesn't want it. I
20 had indicated off the record that I didn't have a problem with
21 it.
22 But, I mean, obviously the Court can't instruct on
23 something that's not a legal definition. There also is an
24 instruction that will say use your common sense. That's one of
25 the final instructions. Seems to me that kind of fits in that

1 category.
2 THE COURT: So what's your position?
3 MR. TEDMON: My position is if the Court wants to
4 give it, I have no objection to it.
6 MR. HAYDN-MYER: No, Your Honor. I believe it would
7 detract from the final jury instructions that the Court's going
8 to read at that time. I think we just acknowledge the juror,
9 appreciate the question, and just inform him that they will
10 receive final instructions at the end.
11 THE COURT: Any comment on that proposal,
12 Mr. Anderson?
13 MR. ANDERSON: I think that's sensible. That way it
14 doesn't chill the jurors from feeling free to ask additional
15 questions if they want to.
17 MR. TEDMON: I'm fine with that, Your Honor, if you
18 want to wait until later. But I want the Court to understand
19 I'm not objecting to it being given now.
20 THE COURT: I understand that. Hold on one second.
22 THE COURT: All right. Here's a hybrid instruction
23 that I will give: You have heard reference to a number of
24 terms. You should interpret these terms according to their
25 common usage and according to your common understanding of

1 them. You are reminded the Court will provide final
2 instructions at the close of evidence. And the final
3 instructions will control your deliberations.
4 That's a hybrid. Do you wish to record your
5 objection to that, Mr. Anderson?
6 MR. ANDERSON: I would like to hear defense's
7 position on that instruction first.
8 MR. HAYDN-MYER: I have no objection to that, Your
9 Honor.
11 MR. TEDMON: I have no objection.
13 THE COURT: All right. That's the instruction I'll
14 provide then. All right. Let's bring the jury in.
15 (Jury in.)
16 THE COURT: You may be seated. Welcome back to the
17 courtroom, ladies and gentlemen of the jury.
18 After conferring with counsel and considering the
19 note the Court received, I'm going to just give you this brief
20 clarification: You have heard reference to a number of terms.
21 You should interpret these terms according to their common
22 usage and according to your common understanding of them. You
23 are reminded that the Court will provide final instructions at
24 the close of evidence, and those final instructions will
25 control your deliberations.

1 Mr. Morris, you may proceed.
2 MR. MORRIS: Thank you. And Your Honor, the
3 Government's going to move in Exhibits 41-B and 41-C pursuant
4 to the stipulation.
5 THE COURT: All right. As covered by the stipulation
6 those exhibits are admitted.
7 (Government Exhibit 41-B, Email from Kou Yang – FW:
8 Mattson, dated 10/28/2004, admitted into evidence.)
9 (Government Exhibit 41-C, Email from Kou Yang –
10 Mattson-Long Beach – Correction.pdf, dated 8/23/2004, admitted
11 into evidence.)
12 Q. BY MR. MORRIS: 41-B. If you will take a moment and
13 review the e-mail that's on the screen in front of you.
14 If you recall, who was Mary Nguyen?
15 A. She is a representative of the bank.
16 Q. And what's the subject line of this e-mail?
17 A. Mattson.
18 Q. And when Mary at the bank e-mailed you about Mattson
19 and said, "we're going to pass on this deal because the
20 borrower is trying to do a 100 percent on a property to get
21 cash out," what does a 100 percent mean to you?
22 A. That means 100 percent of the value of the property.
23 Q. And then the next sentence: "She bought five
24 properties within the last six months. This is a red flag
25 because we know that the refi is to take cash out to buy

1 another property." What do those two sentences mean to you?
2 A. That means that these five properties that she had
3 previously purchased showed up on her credit report, and it
4 shows when she bought them, so they can determine that it's
5 within the last six months. And the bank, as she's a
6 representative of the bank, is saying this throws up a red flag
7 because we know she's only doing this refinance to take money
8 out so she can then buy another property.
9 Q. So is this an example of what you previously talked
10 about where if you don't get your straw buyers done fast
11 enough, the buyer will reject the loan?
14 Q. BY MR. MORRIS: Is this consistent with your
15 experience with not getting your straw buyers done fast enough?
16 A. Yes.
17 Q. Do you recall this as being an example of a bank
18 rejecting a loan for that reason?
19 A. Well, this particular property that they're talking
20 about, she already owns this property, and she's had it, now
21 she wants to take cash out on it.
22 Q. And the final sentence, "not to mention the
23 overstated income," what does that mean to you?
24 A. That, you know, the loan officer overstated her
25 income.

1 Q. And after the bank sent you that, who did you tell?
2 A. I told Mike Head.
3 Q. Why did you e-mail this to Mike Head?
4 A. Because it was Mike Head's loan.
5 Q. And if we go to 41-C, please. Take a moment to
6 review this e-mail.
8 Q. From you to who?
9 A. To Mike Head.
10 Q. And do you recall the context of this e-mail that you
11 sent to Mike Head?
12 A. Yes.
13 Q. What are you talking about in this e-mail?
14 A. I am talking about an appraisal. The appraisals are
15 supposed to be in the buyer's name. And in this particular
16 case it was in another name because of the previous straw
17 buyer.
18 Now once that loan did not go through, we had to
19 assign this property to another straw buyer. In order to do
20 that, you have to have the appraisal in that buyer's name. And
21 a majority of the time when you ask the appraisal company, they
22 will then charge you another fee to do another appraisal.
23 Q. Did you do something other than getting another
24 appraisal in this case?
25 A. In this particular case, what I did was this

1 particular appraiser did not lock the document. Normally they
2 do. But in this particular case they did not lock the
3 document, so I was able to go in and change the name of the
4 buyer.
5 Q. Why did you do that?
6 A. Because that is what has been asked of me.
7 Q. By whom?
8 A. Charles Head.
9 Q. And then who did you tell that you had just done that
10 to?
11 A. I told Mike Head that.
12 Q. Why would you send that to Mike Head?
13 A. So that he would know that this appraisal is fixed,
14 and it's ready to go, you know, to find the next loan to go
15 through to.
16 Q. What did you mean by "if anybody asks you about this,
17 my name is Bennett I ain't in it"?
18 A. I was pretty much telling him that I got it done for
19 him because we did not think that I was going to be able to do
20 it. And I got it done for him, and I pretty much did him a
21 favor.
22 MR. MORRIS: Your Honor, I'm going to ask her to
23 review 11-D, which was previously admitted.
25 Q. BY MR. MORRIS: If you would take a moment to review

1 this document.
4 A. Yes.
5 Q. How do you recognize it?
6 A. Because this was a document that I was asked to make
7 up.
8 Q. Do you recall doing this type of document for more
9 than one property?
10 A. Yes. On every single property has to have a closing
11 worksheet.
12 Q. And who filled the document in?
13 A. I did.
14 Q. Is this your handwriting on the document?
15 A. Yes, that is correct.
16 Q. We're going to look at the top half first. Where we
17 say "buyer name is Adam Coffman," is that what you had
18 previously described as a straw buyer?
19 A. Yes.
20 Q. And who is the foreclosure specialist on this
21 property?
22 A. Josh Coffman.
23 Q. And who owned the property before this transaction?
24 A. Benjamin and Shannon Taylor.
25 Q. Now what was in your understanding "total seller

1 proceeds"?
2 A. That was the total amount that was going to be wired
3 from escrow to the sellers.
4 Q. And then what are these next lines below? What is
5 the significance of those two lines?
6 A. The proceeds to sellers for the 20,000 was the amount
7 that they had agreed upon when they sold -- when they agreed to
8 this, was what they were going to give to the Taylors. They
9 were going to write them a check for $20,000 when it closed.
10 And the next one is "proceeds to buyer," and that is
11 how much Adam Coffman was going to make.
12 And then the total amount is the amount, after all
13 the deductions, what was going to Josh and Charles.
14 Q. And this next line below?
15 A. That was the split because Josh and Charles had a
16 50-50 agreement. That all proceeds from these loans they would
17 split it 50-50. So whatever was left, they just divide it in
18 half.
19 Q. Did you process this paper on more than just this
20 file?
21 A. Yes.
22 Q. Was a 50-50 split consistent with what you did on
23 other files?
24 A. Yes. Majority of the time. There were a few that
25 they got --

1 Q. Are you aware of anybody who had other than a 50-50
2 split?
3 A. Yes.
4 Q. Who, if you recall, in the office had other than a
5 50-50 split with Charles?
6 A. I believe that Mike Head, they had a different
7 agreement.
8 Q. What's this next line?
9 A. Outstanding invoices due to Head Financial, which are
10 like fees as in, you know, any type of fees that could occur
11 during the loan. Anything can come up like, for instance, if
12 we paid their mortgage so that it could be current enough so
13 that the loan can proceed, so that it doesn't go into
14 foreclosure, that's what that is.
15 Q. And this next line, "arrears paid by HFS Inc.," what
16 was that line for?
17 A. That was like arrears on their loan. It's pretty
18 much almost the same thing. Anything that had -- that Head
19 Financial had to pay out for the loan prior to it closing.
20 Q. How about the next line, "checks paid by HFS Inc. to
21 escrow"?
22 A. Yes. Like in order to close a loan there were like
23 closing costs or any title fees or whatever that would come up,
24 any fees in escrow, escrow would then -- even though you get
25 100 percent loan, you still have to pay a little bit of fee,

1 whatever that comes up, and that is what we put there, like
2 closing fees.
3 Q. Why are there two columns there on those lines?
4 A. There are two columns because it is half. Because
5 both parties involved they pay -- they share it equally.
6 Q. Okay. And then so did you calculate this line where
7 it says "check due agent"?
8 A. Yes.
9 Q. How did you calculate that?
10 A. I pretty much just went straight down and just used a
11 calculator and just minus out the amounts.
12 Q. Is the same true of this line here?
13 A. Yes.
14 Q. And what are you supposed to do upon completion of
15 the funding of one of these loans?
16 A. I'm supposed to submit this form to the agent. And
17 as soon as they receive it, they're supposed to have a check
18 for Charles Head for his portion.
19 MR. MORRIS: If I may have a moment, Your Honor.
22 MR. MORRIS: Your Honor, I'm going to have the
23 witness look at 15-B and 15-D, which our records show have been
24 admitted. If not, I'll move them pursuant to stipulation.
25 THE COURT: They are in. So 15-B and -D.

1 Q. BY MR. MORRIS: Do you recognize the documents in
2 front of you?
3 A. Yes.
4 Q. How do you recognize those?
5 A. Those were escrow instructions that were given to us
6 by our escrow company, Castlehead.
7 Q. Did you have any role in processing these as part of
8 your job duties?
9 A. Yes. This form usually comes over to us from escrow,
10 and this was supposed to be signed at closing.
11 Q. When it came from Castlehead Escrow, was it already
12 filled out or was it blank?
13 A. Sometimes it was filled out because we had the
14 information, and sometimes they were blank.
15 Q. And what was your understanding of the purpose of
16 this -- well, let me do this.
17 What's your understanding of the purpose of this
18 form?
19 A. The purpose of this form is to give instructions to
20 escrow on where to wire the funds to.
21 Q. And who is giving these instructions, according to
22 this form?
23 A. The instructions are given by the agent because it's
24 going into their account.
25 Q. So who fills out -- do you know who fills out this

1 portion of the form?
2 A. The agent. It's their bank information.
3 Q. If you can zoom that one.
4 Have you ever seen a version of the document like the
5 one on the right without the bank information in it?
6 A. Yes.
7 Q. Okay. When is it that you would see that version of
8 the form?
9 A. When it originally comes from the escrow company.
10 Q. Now, does it come from the escrow company with a
11 signature on it?
12 A. No.
13 Q. Do you know when in the process a signature gets put
14 on this form? And that's a "yes or no"?
15 A. Yes.
16 Q. How do you know when the signature goes onto the
17 form?
18 A. When it -- because when I get it, I give it to them
19 to have it signed. And when I get it back, it's signed.
20 Q. Again a "yes or no." Are you -- was it your custom
21 to be present when this form was being signed?
22 A. No.
23 Q. And if we could go back to 46-B, please. I think we
24 spoke about the top line. I don't recall if we spoke about the
25 second. Do you recall in this form who Justin is?

1 A. Yes.
2 Q. Who is Justin?
3 A. He is another loan officer, Justin Wiley.
4 Q. And what is that handwritten note down there?
5 A. That means that property has gone to eviction.
6 Q. Was that your handwriting on eviction also?
7 A. Yes.
8 Q. What would have caused you to write that on this
9 file?
10 A. Once the seller does not pay their portion of the
11 rent for a certain amount of, you know, dates, what I would be
12 instructed to do is to get the renters at that time evicted
13 from the property for non-payment.
14 Q. If we could zoom out. I don't think we spoke about
15 this earlier.
16 Based on this form, what's your understanding of the
17 homeowner of the address listed here, who owned this home?
18 A. Well, according to the paper it's Pamela Speights.
19 Q. Okay. And who was the loan officer that was involved
20 in the transaction for Ms. Speights?
21 A. Mike Head.
22 Q. And for San Joaquin and Tulare, California, who was
23 the owner of that property?
24 A. Mary Salazar.
25 Q. And who was the loan officer involved in that

1 transaction?
2 A. Mike Head.
3 Q. Zoom out, please. Second page. Do you recall who
4 Lenny was?
5 A. Yes. That is Leonard Bernot.
6 Q. I see his name twice here. Why is his name listed
7 twice on one transaction?
8 A. Because not only was he the loan officer, he was also
9 the straw buyer.
10 Q. And if we can go to page four.
11 And for the transaction on Milton Way in North
12 Highlands, California, who was the loan officer on that?
13 A. It was Liz.
14 Q. And what's your recollection of who Liz was when you
15 were working with this document?
16 A. Liz was the loan officer.
17 Q. Okay. Do you know Liz's last name?
18 A. Huerta.
19 Q. So the same Liz you were previously talking about?
20 A. Yes. Liz Huerta.
21 Q. Go back to the first page of that. Is that your
22 handwriting at the top of the page?
23 A. Yes.
24 Q. Why would you have written the "December 2004" on
25 this?

1 A. Because that was the month that the -- that the
2 mortgages were for. The month of December 2014 -- I mean 2004.
3 Q. If we can go 46-A, page 32, please.
4 And is that your handwriting at the top of this page?
5 A. Yes.
6 Q. And why would you have written the date on the top of
7 this page?
8 A. Because that was the mortgages for the month of
9 May 2005.
10 Q. Was it your practice to update this document
11 periodically?
12 A. Yes. Every month I am supposed to add new mortgages
13 that fund, and, you know, update it if it sold or whatever.
14 Q. Do you recall -- you can zoom back out.
15 Do you recall why it was -- why it would be at any
16 given moment that you would write something on here in
17 handwritten --
18 A. Because what I would do is print out the sheet, the
19 most current mortgage sheet. And then I would have it at my
20 desk. And then my job was to go through them and pay each one
21 of them. And as they are paid, I'm writing "paid" on them.
22 And then if I'm paying with a check, I write the check number
23 or the confirmation number.
24 Q. Did you have any -- other than this spreadsheet, did
25 you have any method that you used to keep track of properties

1 and straw buyers?
2 A. Yes. We had a board --
3 Q. What was that method?
4 A. Sorry. We had a board in our office, which in our
5 office we had a huge -- it was in a huge room, and so I just
6 had like a white board.
7 Q. And you said you had the white board, does that mean
8 that you maintained that white board?
9 A. Yes. My job was to maintain the white board.
10 Q. What type of information would you put on to that
11 white board?
12 A. I would put the seller's name, the straw buyer's
13 name, the address of the property, and the loan officer. And
14 then I would also put what banks they were submitted at.
15 Q. How often would you update that white board?
16 A. Pretty much daily because there were, you know, loans
17 that were being submitted daily.
18 Q. Where was it located within the office?
19 A. It was in the front of the office when you first walk
20 in. To the left.
21 Q. Who among the employees had access to that place
22 where the white board was?
23 A. Everybody in the office.
24 Q. Do you recall if there was ever a time when your
25 white board had the same straw buyer listed for more than one

1 property?
2 A. Yes.
3 Q. Was this common?
4 A. That is common.
5 Q. Did loan officers ever comment to you about the white
6 board?
7 A. Yes.
8 Q. Did you have conversations that led you to believe
9 that those loan officers were looking at and aware of the white
10 board?
11 A. Yes.
12 Q. Did Head Financial Service have any kind of a filing
13 system for all these documents?
14 A. Well, the -- there were two sets of papers. There
15 was the first set, which was the foreclosure set, and that was
16 filed separately. That was the documents that they signed at
17 the very beginning, the seller signed at the very beginning.
18 And then there was the loan set, that I -- you know,
19 I kept. What happens is once the loan is processed, it's
20 closed, and I file it in the closed files.
21 And the others, that was a foreclosure set, and that
22 was given -- you know, that was there also in a file, but it
23 was labelled something else.
24 Q. Where were those files kept within the office?
25 A. We had like a little filing, you know, drawer. And,

1 you know, they were like lined in the back. Because we had the
2 front office, and then there was an extension of the office,
3 and it was where we kept our filing cabinets.
4 Q. Was it in a part of the office that only you had
5 access to?
6 A. No.
7 Q. Who else had access to that part of the office?
8 A. Everybody.
9 Q. Were both sets of files located back there?
10 A. Yes.
11 Q. Did anybody ever come to you and ask you to see a
12 file from a previously closed transaction?
13 A. Sometimes they would. To just -- a reference.
14 Q. If somebody asked you that, do you recall what you
15 would have told them?
16 A. I mean, it's in the back. It's in the filing
17 cabinet. I can either pull it. They can pull it. Anybody can
18 pull it.
19 Q. Were the filing cabinets locked?
20 A. No.
21 Q. Were the filing cabinets behind a locked door?
22 A. No.
23 Q. Were the cabinets in an office that belonged to
24 somebody exclusively within the organization?
25 A. No.

1 Q. You, I think, previously had mentioned that you knew
2 Jeremy Michael Head from his involvement in this?
3 A. Yes.
4 Q. I don't think I asked you. Do you recognize Jeremy
5 Michael Head in the courtroom today?
6 A. Yes.
7 Q. Would you please point him out and perhaps identify
8 an article of clothing that he is wearing?
9 MR. HAYDN-MYER: I'll stipulate.
10 THE COURT: All right. The defense is stipulating
11 that Jeremy Michael Head is seated in the courtroom next to
12 Mr. Haydn-Myer.
13 Q. BY MR. MORRIS: And do you recall interacting with
14 Jeremy Michael Head in the office spaces for Head Financial
15 Services?
16 A. Yes.
17 Q. How would you interact with him? What type of
18 interactions would you have with him in the office?
19 A. He was a loan officer. We -- you know, he was
20 different than the other loan officers because --
21 Q. In what way was he different from the other loan
22 officers?
23 A. Because he was the brother of Charles Head.
24 Q. Were there any other ways in which he was different
25 from the other loan officers?

1 A. I know that he was making more money than other loan
2 officers.
4 A. Because his split was different, or he would get
5 deals where he didn't have to pay Charles.
6 Q. And when you say his split was different, your
7 knowledge of that is based on what?
8 A. On the sheets that I would fill out.
9 Q. So you were responsible for doing the split?
10 A. Yes.
11 Q. Do you recall at some point Jeremy Michael Head's
12 involvement in the organization ending, or maybe changing, or
13 ending from what you just described?
14 A. Probably about 2006, I would say. I can't really --
15 I mean, I don't really remember dates. But he -- when we moved
16 to the new office -- oh, maybe -- probably about 2006. Because
17 we moved to an office in Costa Mesa, and he stopped working
18 with us because he had moved to Arizona. That was when he
19 stopped working with us.
20 Q. After Jeremy Michael had moved to Arizona, did the
21 office continue with the foreclosure transactions after he
22 left?
23 A. Yes.
24 Q. Do you recall having any interaction with Jeremy
25 Michael Head after he went to Arizona?

1 A. No.
2 MR. MORRIS: May I have a moment, Your Honor.
5 Q. BY MR. MORRIS: When you testified that there was a
6 different split between Michael and the other loan officer --
7 and this is "yes or no" -- do you recall what Michael's
8 percentage split was?
9 A. No -- well -- no because -- I don't remember.
10 Q. Do you recall if it was less than, equal to, or
11 greater than the other loan officers?
12 A. His split was greater than.
13 Q. I think you -- just a couple more questions.
14 I think you mentioned Nora at Castlehead Escrow. Did
15 Head Financial exclusively use Castlehead Escrow during your
16 time there?
17 A. Not the entire time.
18 Q. If you recall, which other escrow companies did you
19 use?
20 A. Ticor Title and Escrow. We used them for later --
21 the later part of --
22 Q. Do you recall any other escrow companies?
24 Q. But it was not just Castlehead?
25 A. It was not just Castlehead.

2 THE COURT: All right. Any cross-examination,
3 Mr. Tedmon? Are you going first?
4 MR. TEDMON: I'll go first.
6 CROSS-EXAMINATION
7 BY MR. TEDMON:
8 Q. Good afternoon, Ms. Yang.
10 Q. I want to start with how you first met Mr. Head. It
11 was through Liz Huerta, correct?
12 A. Yes.
13 Q. And that was in 2000, was it not? Does it sound
14 right?
15 A. It was before that.
16 Q. It was before 2000?
17 A. Yes.
18 Q. When was it, do you recall?
19 A. It was probably 1999, '98. Because I know that -- I
20 met him before she had the baby. I met him before she had the
21 baby.
22 Q. And the baby being Mr. Head and Ms. Huerta's baby?
23 A. Yes.
24 Q. What year was that?
25 A. I cannot recall.

1 Q. Okay. Now you testified that you suffered a felony
2 conviction in 1998?
3 A. Yes.
4 Q. And you went to prison for some period of time?
5 A. Yes.
6 Q. When were you released?
7 A. 19 -- 2000.
8 Q. 2000. And that was a grand theft conviction?
9 A. Yes.
10 Q. That was out of Orange County?
11 A. Yes.
12 Q. How soon after being released did you start working
13 for Head Financial Services?
14 A. I would say in 2001 or 2002.
15 Q. Okay. And Ms. Huerta is the one that referred you to
16 Mr. Head to get a job?
17 A. Yes.
18 Q. Okay. And Mr. Head, as part of his due diligence,
19 had to contact your parole officer and clear it, correct?
20 A. Yes.
21 Q. And did he so?
22 A. Yes.
23 Q. All right. And he gave you an opportunity to work,
24 correct?
25 A. Yes.

1 Q. All right. Now by that time Mr. Head and Ms. Huerta
2 were a couple, is that right?
3 A. No.
4 Q. They were not?
5 A. No. They were no longer a couple when I started
6 working there.
7 Q. Okay.
8 A. Yeah.
9 Q. They were done?
10 A. They were done. Yeah.
11 Q. All right. Now when you first started working at
12 Head Financial Services, you testified they did conventional
13 loans, correct?
14 A. Yes.
15 Q. All right. And can you just briefly describe for the
16 jury what you mean by conventional loan?
17 A. Conventional loan is a normal loan like, for
18 instance, if you have a home, and you needed to refinance a
19 home, you would call them, and they would refinance a home for
20 you. Or if, you, you know, wanted to buy a home, and you
21 needed to get a loan for that home, you would go to Head
22 Financial, and they would then obtain a loan for you.
23 Q. Okay. And part of your job duties was to have a
24 relationships with various lenders, correct?
25 A. Yes.

1 Q. And the reason for that was to see if you could get
2 the loan with the best terms for the clients, is that fair to
3 say?
4 A. Yes.
5 Q. All right. And that was a primary part of your job?
6 A. Yes.
7 Q. Okay. So you had regular interaction with the
8 lenders?
9 A. Yes. Because I have to talk to them daily.
10 Q. Right. Now, that would include an account executive,
11 does that term sound familiar with you?
12 A. Yes.
13 Q. What's an account executive?
14 A. A representative of the bank. The person that comes
15 out and tells you, you know, what new products they have. They
16 tell you -- you know, like, for instance, we have a, you know,
17 a stated loan. You know, so they would tell us, you know, you
18 can submit loans to us with stated income, stated assets.
19 Stuff like that. They would just update us on new programs
20 that they had.
21 Q. Let me ask you this, just so we're clear on the
22 timeframe, what period of -- strike that -- what range of
23 years, when you were working for Head Financial, did Head
24 Financial primarily engage in conventional loans when you were
25 there?

1 A. When I was there?
2 Q. Yes.
3 A. Probably about a year-and-a-half.
4 Q. And your testimony is you started in 2002?
5 A. I would say 2001.
6 Q. 2001?
7 A. Or 2002.
8 Q. Okay. And a stated income/stated asset loan is just
9 that, you state the income?
10 A. Yes.
11 Q. You state on the loan application what your assets
12 and debts are, correct?
13 A. Yes.
14 Q. And then the lender would have an opportunity to
15 check that out, correct?
16 A. Yes.
17 Q. Sometimes they did sometimes they didn't?
18 A. Yes.
19 Q. And it wasn't unusual during that period of time, say
20 2001 to 2004, for the lenders to simply accept the paper and
21 make the loan, correct?
22 A. Yes.
23 Q. In fact, based on your relationships with certain
24 lenders and account executives, they just wanted paper of some
25 kind so they could process it through and make the loan,

1 correct?
2 A. I don't know what the lenders' intentions were, but
3 their job was to get loans.
4 Q. Yeah. That's how they made their money?
5 A. That's their job, yes.
6 Q. Exactly. Now, you started out as a loan processor
7 for Head Financial Services, correct?
8 A. Yes.
9 Q. And then at some point you indicated that Mr. Head,
10 Charles Head, changed the direction or function of Head
11 Financial Services, correct?
12 A. Yes.
13 Q. And you testified that -- and there's been some
14 e-mails to this effect -- that he had consulted with lawyers
15 about foreclosures, correct?
16 A. Yes.
17 Q. Now you're aware that there were forms or contracts
18 drawn up for these foreclosure programs, correct?
19 A. Yes.
20 Q. All right. You didn't involve yourself on that end
21 though, did you?
22 A. No.
23 Q. You were strictly dedicated to the loan side,
24 correct?
25 A. Yes.

1 Q. All right. But based on your employment with Head
2 Financial Services, you were aware, although not dealing
3 directly with them, that these Equity Purchase Agreements were
4 contracts to sell homes, correct?
5 A. Well, I never really read through them, but, I mean,
6 what we were told was these --
7 Q. I'm not asking what you were told. I'm asking what
8 you understood.
9 A. That they were to sell their homes to the new buyer.
10 Q. Correct. Now when the business kind of changed over
11 to the foreclosure side, you still handled the loan processing,
12 correct?
13 A. Yes.
14 Q. All right. And all the documents you've testified
15 to, for example, you were responsible for making the mortgage
16 payments and keeping track of that, correct?
17 A. Yes.
18 Q. You also handled payroll, correct?
19 A. Yes.
20 Q. All right. You did the Quick Books for the company?
21 A. Yes.
22 Q. And did you sign payroll checks?
23 A. Yes.
24 Q. Now Mr. Head gave you authority to sign his name in
25 certain circumstances, correct?

1 A. Yes. On the checks, yes.
2 Q. On the checks. All right.
3 How much of your time would you say you spent
4 interacting with the lenders during the course of, let's say, a
5 week?
6 A. Probably half of my time because I had to go back and
7 forth with them with what exactly they needed and what they
8 wanted so that I can go back and relay the information.
9 Q. So you were the contact person, clearly?
10 A. Yes. I'm the processor. Most processors are the
11 contact person between the broker and the lender.
12 Q. And you also directed the information to be put on
13 the 1003s?
14 A. The information?
15 Q. Well, you testified about these 1003s, the loan
16 applications?
17 A. I did not fill out the 1003s.
18 Q. What was your function with regard to the 1003s?
19 A. I was to look over them, make sure that they were
20 completely filled out, and make sure that the stated income
21 was, you know, and the DTI worked. And then once that was
22 done, then I can print them out and submit it.
23 Q. Okay. And the person that would have taken the
24 information was the independent loan officers?
25 A. Yes.

1 Q. Or individual loan officers, I should say?
2 A. Majority of the time they were already filled out
3 because there was one straw buyer that was buying multiple
4 properties.
5 Q. But that was the loan officers' responsibility,
6 correct?
7 A. Yes.
8 Q. And you were just working as a pass-thru for those
9 documents, is that what you're saying?
10 A. I was the person that they would submit the loans to,
11 and then they tell me where to send it to. And then I would
12 package it, send it to the bank. And then when it was
13 approved, they would send it back with conditions that I needed
14 to fulfill. And then that information was passed on to whoever
15 that was going to be provide me with the information.
16 Q. But you were in effect kind of a gatekeeper between
17 the applicant and the banks?
18 A. Yes.
19 Q. That's your responsibility?
20 A. Yes.
21 Q. Yeah. Did you also supervise the loan officers, was
22 that part of your duty, would you say?
23 A. No, I do not supervise.
24 Q. You just interacted with them?
25 A. I just interacted with them.

1 Q. Okay. Now you've testified about the business
2 itself, and that it moved at some point?
3 A. Yes.
4 Q. Originally when you worked there it was in Long
5 Beach, is that correct?
6 A. Yes.
7 Q. All right. And your physical location in terms of
8 where you worked each day was that different from where the
9 corporate part of the operation was situated?
10 A. No. We were all in the same office.
11 Q. Common hallways?
12 A. Yes. In the same office.
13 Q. All right. And then when did it move to Costa Mesa?
14 A. It moved to Costa Mesa, I would say, 2006. 2005.
15 Q. And when it moved to Costa Mesa, was there a separate
16 location for the corporate employees and another spot for loan
17 processing?
18 A. Yes.
19 Q. And that was down the hall through a corridor, is
20 that correct?
21 A. Well, we were in the same office for, I would say,
22 better part of a year to -- about a year. And then it grew, so
23 they moved the processing to the very next unit.
24 Q. Okay. Had a separate entrance?
25 A. Yes.

1 Q. Okay. When was that?
2 A. That was probably in 2006.
3 Q. Do you remember when?
4 A. I cannot recall dates.
5 Q. Okay. You mentioned a gentleman by the name of Jack
6 Corcoran?
7 A. Yes.
8 Q. When did he come on?
9 A. He came on in 2006.
10 Q. And what were his duties?
11 A. He was to take over the -- everything that had to do
12 with accounting because I'm not an accountant.
13 Q. So you stayed on with the loans?
14 A. Yes.
15 Q. And Mr. Corcoran was in charge of doing all the
16 accounting?
17 A. Yes.
18 Q. Do you remember when in 2006 that took place?
19 A. I do not recall.
20 Q. Okay. Now you testified on direct to Mr. Morris that
21 you would submit the 1003s, and then you would -- I believe the
22 term you used was stack it. What does stack it mean?
23 A. Stacking is the bank requires the loan documents, the
24 loan packet, to come in a particular order. So they would ask
25 for the cover sheet. And then what I would do is I would have

1 the cover sheet, then I would stack it like this, and then the
2 next one would be the 1003s, and I would stack it, and then the
3 escrow, and I would stack it, and then the title instructions,
4 you know. So I would stack it according to what the bank
5 requests.
6 Q. Was every bank different?
7 A. Yes.
8 Q. In terms of stacking order?
9 A. Yes.
10 Q. All right. Did the escrow company have a similar
11 kind of thing for closing, as far as you know, stacking
12 documents in certain orders?
13 A. No.
14 Q. No. Did you deal with that at all?
15 A. Not really because it was done by the notary.
16 Q. Okay. Now beginning in about 2004 or so Charles Head
17 wasn't there very often, was he; he was gone a lot?
18 A. He was gone on vacation quite a few times, yes.
19 Q. He travelled a lot or was gone out of the office,
20 correct?
21 A. For most -- yeah, part of the time he was gone.
22 Q. Okay. Now you testified that you would e-mail him or
23 cc him, do you recall that?
24 A. Yes.
25 Q. Okay. Well, let's pull up Government's 41-B. This

1 was testified to on direct.
2 Now if you can take a look at 41-B, Mr. Head isn't
3 cc'd on that e-mail, is he?
4 A. Yeah, he -- no, I didn't cc him. Just Mike Head.
5 Q. And that date is 10-28-04, correct?
6 A. Yes.
7 Q. Can we go to 41-C, please. Mr. Head, Charles Head,
8 isn't cc'd on that e-mail either, is he?
9 A. No.
10 Q. And that's 8-23-04, correct?
11 A. Yes.
12 MR. TEDMON: Your Honor, I would, pursuant to the
13 stipulation, ask that Government's Exhibit 42-A be admitted.
14 THE COURT: All right. As provided by the
15 stipulation, 42-A is admitted.
16 (Government Exhibit 42-A, Email from Kou Yang, Re:
17 Fucso/Scallin, dated 4/10/2006, admitted into evidence.)
18 Q. BY MR. TEDMON: I would ask you to review that
19 e-mail. This is an e-mail from you to Sam Vu, correct?
20 A. Yes.
21 Q. And you're dealing with a signing, is that correct?
22 A. A signing, yes.
23 Q. Mr. Head isn't cc'd on that one either, is he?
24 A. No because it was --
25 Q. I'm just asking whether he was cc'd or not.

1 A. Yes.
2 Q. That was April 10th of '06, correct?
3 A. Yes.
4 MR. TEDMON: I'd ask that the Government's
5 Exhibit 42-B be admitted into evidence.
7 MR. TEDMON: Pursuant to the stipulation.
8 THE COURT: It is.
9 MR. TEDMON: It is already?
10 THE COURT: No. I mean it is admitted.
11 (Government Exhibit 42-B, Email from Kou Yang, Re:
12 Ferrantello/Wallace, dated 4/25/2006, admitted into evidence.)
13 Q. BY MR. TEDMON: All right. Can we have that, please.
14 What is this e-mail referring to?
15 A. Can you make it a little bit bigger?
16 Q. Sure. Let's do this. Let's put the bottom section
17 first. Okay. This is from Sam Vu to you, Jack Corcoran, and
18 cc'ing Lisa Vang, correct?
19 A. Yes.
20 Q. And it's April 25th, 2006?
21 A. Yes.
22 Q. And Sam Vu is asking in this e-mail, "can you wire
23 $10,000 to her account." Do you know who "her" is?
24 A. "Her" is the buyer.
25 Q. And that would be? Who do you think that is based on

1 what you're looking at here?
2 A. It's probably Ferrantello.
3 Q. The $10,000, that would have been the consideration
4 given the sale of the home, correct?
5 A. No.
6 Q. No. Do you know what that $10,000 is for?
7 A. Yes. That $10,000 was to cover closing costs.
8 Q. And that would need to be sent out through the
9 escrow?
10 A. That was to give her the money so she can go to the
11 bank and get a cashier's check in her name to send to the
12 escrow company.
13 Q. Which would be Alliance Title in this interest?
14 A. Yes.
15 Q. Okay. And then lets go back to the top of the
16 document.
17 Q. And there is another e-mail from Lisa Vang to you,
18 Sam Vu and Jack Corcoran on the same transaction; is that
19 correct?
20 A. Yes.
21 Q. And you respond "is this done?" And you send it to
22 Lisa Vang, Sam Vu, and Jack Corcoran, correct?
23 A. Yes.
24 Q. Charles Head is not cc'd on this one either, is he?
25 A. No.

1 MR. TEDMON: Your Honor, pursuant to the stipulation
2 if we can have 42-C admitted.
4 (Government Exhibit 42-C, Email from Kou Yang Re:
5 Queen, dated 5/4/2006, admitted into evidence.)
6 Q. BY MR. TEDMON: Can I have that shown, please.
7 Can you see that e-mail, Ms. Yang?
8 A. Yes.
9 Q. Do you want me to make it larger?
10 A. Yeah.
11 Q. And just speak into the microphone so the reporter
12 can hear. Let's go to the bottom here and work from the bottom
13 towards the top.
14 This is from Sam Vu to David Parks regarding Queen,
15 do you see that?
16 A. Yes.
17 Q. He's asking if there is any news, and this is
18 May 3rd, 2006, correct?
19 A. Yes.
20 Q. And there is a response on May 4th, 2006 indicating
21 that maybe it's not their number anymore, correct?
22 A. Yes.
23 Q. And if we go to the top portion of the document,
24 42-C, the top says, "Subject Queen," from yourself to Sam Vu,
25 cc David Parks and Jack Corcoran, do you see that?

1 A. Uh-huh.
2 Q. And it's directing them to get with Jack and get a
3 letter from Nations Property Management, do you see that?
4 A. Yes.
5 Q. Mr. Head isn't cc'd on that one either, is he?
6 A. No.
7 MR. TEDMON: And if we can go to 42-D, Your Honor, I
8 would move pusuant to the stipulation that be admitted.
9 THE COURT: 42-D is admitted.
10 (Government Exhibit 42-D, Email from Kou Yang Re:
11 Freeman, dated 5/15/2006, admitted into evidence.)
12 Q. BY MR. TEDMON: And if we could show that. And let's
13 do the bottom half, please.
14 This is an e-mail from Sam, do you see that?
15 A. Yes.
16 Q. "Senior loan processor," right here?
17 A. Yes.
18 Q. Okay. That's Sam Vu?
19 A. Yes.
20 Q. All right. And then if we go to the middle section
21 of the document, 42-D, you're talking about sending a check for
22 17,000, correct?
23 A. Yes.
24 Q. And charges of wiring, or VOD, which would be
25 Verification of Deposit, correct?

1 A. Uh-huh.
2 Q. Is that "yes"?
3 A. Yes.
4 Q. And that's from Sam Vu to you on May 15th, 2006,
5 correct?
6 A. Yes.
7 Q. Strike that. I think I misspoke. It's from Sam Vu
8 to Lisa Vang, correct?
9 A. Yes.
10 Q. And you're cc'd along with Jack Corcoran?
11 A. Yes.
12 Q. The subject is Freeman, which would be the
13 transaction, correct?
14 A. Yes.
15 Q. And if we go to the top of the document, please. Now
16 this is from you on May 15th, 2006, to Sam Vu and Lisa Vang, cc
17 Jack Corcoran. And you're telling them, "Lisa, tell me when
18 you've told him to get the money back," right?
19 A. Yes.
20 Q. And you're the processing manager?
21 A. Yes.
22 Q. And Mr. Head isn't cc'd on that either, is he?
23 A. No.
24 MR. TEDMON: I would ask that 42-E, Your Honor, be
25 admitted pursuant to the stipulation.

1 THE COURT: It is admitted.
2 Q. BY MR. TEDMON: And if we show that.
3 (Government Exhibit 42-E, Email from Kou Yang Re:
4 Castillo/Siplin inquiry, dated
5 8/14/06, admitted into evidence.)
6 Q. BY MR. TEDMON: And if we can get this first half.
7 Now the bottom is from Lisa Vang to Keith with Dana
8 Capital and then also to you.
9 A. Yes.
10 Q. Now, who is Keith from Dana Capital?
11 A. That is Keith Brotemarkle.
12 Q. Okay. And what is Dana Capital?
13 A. That was a company that he had worked for also.
14 Q. And what did that company do?
15 A. They do loans. They're a broker/mortgage company.
16 Q. Okay. Let me ask you this, in your duties as a loan
17 processor you dealt with both private lenders and banks,
18 correct?
19 A. Yes.
20 Q. Okay. Explain to the jury what the difference is
21 between a private lender and a bank?
22 A. Well, a bank is a lender and then -- that you would
23 get a loan through and submit your paperwork to. A private
24 lender is someone that has money, that will be willing to lend
25 it to you for a mortgage.

1 Q. Okay. And is it fair to say, based on your
2 experience, that banks would be, for example, federally
3 insured, their deposits?
4 A. Yes.
5 Q. Private lenders would not, correct?
6 A. No.
7 Q. It's just their own money?
8 A. Yes.
9 Q. Dana Capital, what were they, private lenders or was
10 that a bank?
11 A. They are not a private lender.
12 Q. What were they?
13 A. They were a broker just like Head Financial except
14 for they were bigger, and they had more licenses, and they were
15 able to do loans in other states.
16 Q. Okay. What private lenders do you recall dealing
17 with during your time at Head Financial?
18 A. We didn't do too many private lending.
19 Q. I'm asking if you recall who they might have been?
20 A. No.
21 THE COURT: Mr. Tedmon, let's take a short stretch
22 break. We're in our final leg for today. We have half an
23 hour. I know it can be slow going sometimes listening to all
24 this detail. Let's take a break in place. The Court needs one
25 so I assume you need one as well.

2 Q. BY MR. TEDMON: Okay. Can we go to the upper half of
3 the document, please. This is 42-E again.
4 Now this is from you to Keith, with Dana Capital, and
5 Lisa Vang, correct?
6 A. Correct.
7 Q. And you cc T. Vang, and who is that?
8 A. Tua Vang.
9 Q. What does that person do?
10 A. That person is someone that worked within the
11 company, but their job was to -- I believe his job was to get
12 new straw buyers.
13 Q. You believed that to be the role or do you know?
14 A. I am almost positive that he was -- that's what -- I
15 didn't work directly with him too often, but that was his
16 department.
17 Q. You cc'd him, right?
18 A. Yes.
19 Q. And you cc'd Sam Vu, right?
20 A. Yes.
21 Q. You didn't cc Charles Head, correct?
22 A. Correct.
23 Q. Now in this e-mail you're talking about VODs, which
24 is a Verification of Deposit, correct?
25 A. Yes.

1 Q. And then "60 days seasoning," do you see that?
2 A. Yes.
3 Q. Now 60 days seasoning is oftentimes required by the
4 banks, correct?
5 A. Yes.
6 Q. And what that means is, that if somebody makes a
7 deposit, it needs to be in there for 60 days, it needs to
8 season, correct?
9 A. Yes.
10 Q. And that would be indicia of stability as far as the
11 lender is concerned?
12 A. Yes.
13 Q. So that's what you're referring to here?
14 A. Yes.
15 Q. Now at the end it says: "We sometimes -- well,
16 sometimes we need the 60 days, sometimes we don't. He really
17 needs to just chill."
18 Now when you say that sometimes you don't need the
19 60 days, it means the lender doesn't require that?
20 A. Right. It all depends on the lender.
21 Q. What do you mean when it says, "he really needs to
22 chill," what's that all about?
23 A. I think that somebody was getting antsy about, oh, is
24 going to -- you know, is this going to be okay, is this going
25 to be okay. And I'm pretty much just telling everybody to just

1 relax and just, you know, we'll just see. Because we don't
2 know what they want towards the end.
3 Q. And, again, you were the person that was the go-to
4 person to make sure all the stuff was put together, correct?
5 A. Yes. Well, the processing part of it, yes.
6 Q. Right. That's what I mean. Thank you.
7 MR. TEDMON: Your Honor, pursuant to the stipulation,
8 if not admitted already, I would ask that Government's
9 Exhibit 40-Y be admitted into evidence.
10 THE COURT: It is not yet in. 40-Y is admitted
11 subject to the stipulation.
12 (Government Exhibit 40-Y, Email dated 8/26/04 re: FW,
14 Q. BY MR. TEDMON: And can we have that shown, please.
15 Now, Ms. Yang this is a -- we'll have it blown up so
16 you can read it -- this is an e-mail dated August 26, 2004,
17 correct?
18 A. Yes.
19 Q. And it's from Charles Head to Tracy Thompson,
20 correct?
21 A. Yes.
22 Q. Now who is Tracy Thompson?
23 A. She was someone that used to work in our office when
24 we were doing conventional loans at the very beginning.
25 Q. All right. And you're cc'd, correct?

1 A. Yes.
2 Q. And Mr. Head says here about the -- talks about the
3 bounced check, you informed him of that. He apologizes.
4 Then he says: "As you probably already know, Kou
5 pretty much handles all the transactions of the office and the
6 daily operations. I don't oversee anything anymore. But she
7 does e-mail me for help." And then he goes on and explains
8 what happened with the bounced check.
9 Now in August 2004 you were running the show, weren't
10 you?
11 A. No, I was not.
12 Q. Well, Mr. Head was gone most of the time, wasn't he?
13 A. He would go on vacations, yes.
14 Q. And he entrusted you to make sure the operation ran
15 smoothly, correct?
16 A. Of the office, yes.
17 Q. The office. Yes. That's what he's saying here,
18 correct?
19 A. Well, if you know about this e-mail, I was blind cc'd
20 on it, so I was not cc'd. Because he didn't want Tracy to know
21 that I am looking at this e-mail. But what happened in this
22 e-mail --
23 Q. Let me ask some questions first, okay. Blind cc just
24 means that the person that is receiving the e-mail doesn't know
25 you're getting it.

1 A. Yes.
2 Q. But the content of the e-mail, Ms. Yang, indicates
3 from Mr. Head's perspective that you pretty much handle all the
4 transactions of the office and the daily operations. That's
5 what he says, right?
6 A. That's what he is saying.
7 Q. And that is correct, isn't it?
8 A. No.
9 Q. It is not? In August of 2004 you weren't running the
10 daily operations, is that your testimony?
11 A. Yes.
12 Q. Okay. And if other witnesses said something
13 different, would they be lying?
14 A. Yes.
15 Q. Well, you've been convicted of a felony, two of them
16 as a matter of fact, this one and the one in '98, correct?
17 A. Yes.
18 Q. And they are both for theft-related matters, true?
19 A. Yes.
20 Q. And your testimony -- excuse me -- your testimony
21 today, and whenever it ends, is subject to or pursuant to a
22 plea agreement, correct?
23 A. Yes.
24 Q. All right. You agreed to plead guilty to Count 1,
25 conspiracy to commit mail fraud, true?

1 A. Yes.
2 Q. And you did that through your lawyer?
3 A. Yes.
4 Q. Joseph Low?
5 A. Yes.
6 Q. Is Mr. Low here today?
7 A. No because it was --
8 Q. That's fine. Is he from out of town?
9 A. Yes.
10 Q. So he's not here?
11 A. No.
12 Q. All right. And you reviewed a plea agreement and
13 signed it, is that correct?
14 A. Yes.
15 Q. And part of that agreement was to cooperate with the
16 Government in this trial, correct?
17 A. Yes.
18 Q. Now you know from your plea that the statutory
19 maximum penalty for you is 20 years, correct?
20 A. Yes.
21 Q. All right. And you're also aware in the plea
22 agreement that there are certain guidelines that can control
23 your sentence or at least have impact on your sentence,
24 correct?
25 A. Yes.

1 Q. You also know that pursuant to your guidelines in the
2 plea agreement --
3 MR. ANDERSON: Objection, Your Honor. I would ask
4 for the same instruction the Court gave last time.
5 MR. TEDMON: That's fine. We can instruct. It's not
6 a matter of punishment. It goes to her credibility.
7 THE COURT: Well, sustained as to any further
8 questions eliciting information about penalties.
9 The Court will instruct the jury again in final
10 instructions. The jury, and as you heard during the jury
11 selection process, the question of penalty for the defendants
12 standing trial is not for the jury. These questions have only
13 been related to Ms. Yang's possible exposure. But you are not
14 to consider penalty with respect to Charles Head or Jeremy
15 Michael Head.
16 MR. TEDMON: Thank you, Your Honor. With that
17 understanding.
18 Q. BY MR. TEDMON: You know that in the plea agreement
19 the Government's recommending that you be sentenced to the low
20 ends of the guidelines, correct?
21 A. Yes.
22 Q. And your low end is 108 months according to your plea
23 agreement?
24 A. Yes.
25 Q. And you're also hoping that the Government makes a

1 motion to reduce your sentence up to 50 percent of that,
2 correct?
3 A. Yes.
4 Q. And that's based on your testimony, correct?
5 A. It's based on me telling the truth about what
6 happened.
7 Q. Right. And you're testifying for the Government,
8 correct?
9 A. Yes.
10 Q. All right. You haven't been sentenced yet, have you?
11 A. No.
12 Q. When is that supposed to take place?
13 A. Well, at this current time I believe there is a
14 conference in July sometime.
15 Q. Right. Your sentencing has been put off after this
16 trial is over with, right?
17 A. I believe so.
18 Q. Okay. And it's your hope and expectation you will
19 get some significant reduction for cooperating with the
20 Government in this case, isn't that right?
21 A. Yes.
23 THE COURT: Mr. Haydn-Myer, any questions?
24 MR. HAYDN-MYER: Yes, Your Honor, thank you.

2 Q. Good afternoon, Ms. Yang.
4 Q. Can I have Government's Exhibit 46-B up, please. Can
5 you see that, Ms. Yang?
6 A. Okay.
7 Q. Now, I believe you already testified in regards to
8 this document today, is that correct?
9 A. Yes.
10 Q. And the top section it says "client," correct?
11 A. Yes.
12 Q. Then "LO" stands for loan officer, is that correct?
13 A. Yes.
14 Q. Just briefly, how many loans, if you know of, did
15 Elizabeth Huerta work on?
16 A. I know that she had the one, and then I think she may
17 have had like one more. But it was not many at all.
18 Q. A total of, at the most, two?
19 A. Probably, yes.
20 Q. And as we go one more over on the Government's
21 Exhibit 46-B, you can see where it says "address," is that
22 correct?
23 A. Yes.
24 Q. The next box over it says "Diff and one-half," what
25 does that mean?

1 A. That is usually the difference of between the rent
2 and the mortgage and then the half of the other person, the
3 agent.
4 Q. I don't understand what the half of the agent means.
5 Can you explain that?
6 A. Well, when -- when their agreement was that the
7 loan -- Charles was to pay half of the loan, and the agent was
8 to pay the other half.
9 Q. So as you look down one, it says Joest, and then it
10 says Ryan Wiley, and then it has Justin under LO, is that
11 correct?
12 A. Yes.
13 Q. And it says loan officer, is that also correct?
14 A. Yes.
15 Q. And then you go back over to difference and one-half,
16 and it says "paid number 1151," is that your handwriting?
17 A. Yes.
18 Q. What does that mean, "paid number 1151"?
19 A. That means that that was the check that was used to
20 pay.
21 Q. Pay whom?
22 A. The bank.
23 Q. Did Justin receive any payments on a monthly basis in
24 regards to covering the mortgage, if you know, for that piece
25 of property with Ryan Wiley?

1 A. Yes. They would get the payments, and then they
2 would have to pay their half.
3 Q. So who sent Justin Wiley a payment for that property?
4 A. The renters.
5 Q. So that would be Justin's end of it, is that correct?
6 A. Yes.
7 Q. And why are you marking number 1151 on this piece of
8 paper, on this document?
9 A. Because we had to ultimately make that payment to the
10 bank.
11 Q. And can we go back to the original, please. A little
12 bit higher up, please. I'm sorry. I'm going to re-define
13 that. Can you see where it says Speights? I'm having trouble
14 drawing a line on it. The next box above it and Speights,
15 please.
16 So under Speights, we're still looking at 46-B, do
17 you see where it says "Mike"?
18 A. Yes.
19 Q. And then if you go down past that it has the address,
20 and then it says "none," is that correct?
21 A. Yes.
22 Q. The reason it says "none" is because that Mike was
23 making the payments on that property, isn't that correct?
24 A. Yes.
25 Q. And I believe you testified earlier that you on some

1 properties were actually writing checks to the banks, is that
2 correct?
3 A. Yes.
4 Q. But isn't it true that Mike, Mike Head, was actually
5 writing checks to cover his properties that are listed on 46-B?
6 A. Yes. Where it says "none," that means I don't have
7 to make any payments. That means he's making the payments.
8 Q. Thank you. We can take 46-B off.
9 I believe you also testified that the lenders would
10 actually come in to Head Financial Services and basically pitch
11 you programs, is that correct?
12 A. Yes. That was their job.
13 Q. And when you say "program," are you referring to
14 something where the banks would say -- or the lenders -- I
15 understand that you have people that want loans, and sometimes
16 they won't qualify for one, but we actually have several
17 different programs that may fit their needs?
18 A. Yes.
19 Q. And that was when we had some discussion in regards
20 to stated loans versus other types, is that correct?
21 A. Yes.
22 Q. In approximately 2004 do you have any idea how many
23 programs different lending institutions would pitch you?
24 A. There -- I mean, they would come in every other day
25 with new programs. There were so many different lenders, so I

1 do not -- I do not have a count of how many. But there were
2 quite a few, yes.
3 Q. Could you give me an estimate for 2004, how many
4 different programs you were pitched by the lenders?
5 A. Probably about 20, 25 programs.
6 Q. And it was also the loan officer's jobs to try to
7 memorize and understand those programs, is that correct?
8 A. Yes.
9 Q. Now, I believe you stated earlier that part of your
10 job was putting together a packet and then sending it to a
11 lender, is that correct?
12 A. Yes.
13 Q. And sometimes the lenders would kick the packets back
14 because they wanted additional information, is that also
15 correct?
16 A. They would like do a contingent upon, yes.
17 Q. Okay. When you say contingent upon, what it means is
18 when the packet goes to the lender, it's reviewed, is that
19 correct?
20 A. Yes.
21 Q. And the lender will say, okay, there's something in
22 this packet where we're either not going to do the loan, or we
23 are going to do the loan, but we want something changed in this
24 particular loan?
25 A. No.

1 Q. What is it?
2 A. They do not tell us to change anything. They just
3 tell us we cannot approve this loan because the debt-to-income
4 is too high. We cannot do this loan because we believe that
5 the borrower does not live in the state. We do not -- we are
6 denying this loan because -- they will not tell us to change
7 it.
8 Q. I'm sorry. I didn't mean change. Will they ever
9 send it back with the reasons why the loan was not approved?
10 A. Yes.
11 Q. Now did you ever send any of those packets, you
12 personally, send any of those packets to the lenders after
13 something was adjusted?
14 A. No.
15 Q. Not once?
16 A. Not that I recall. The normal protocol is the bank
17 normally will not take it, so we have to send it to a different
18 bank in order to guaranty that we will get an approval.
19 Q. Was the approval because the program would be changed
20 depending on the lender?
21 A. No. The approval is based upon the application. The
22 program is there. The loan that you submit to them has to fit
23 within that program. If it does not fit, they will deny it.
24 Q. Correct. But what you have is actually two separate
25 lenders that have several different programs, is that correct?

1 A. Yes.
2 Q. So what it would be is, sometimes one lender would
3 approve a loan and another lender may reject the same loan, is
4 that correct?
5 A. Yes.
6 Q. So it's because they have different programs, 20 to
7 25 in 2004 that you're aware of, correct?
8 A. No. There are different --
9 Q. Wait one second. Let me rephrase that.
10 MR. ANDERSON: I think she understood the question,
11 Your Honor.
12 THE COURT: Do you have a question?
13 MR. HAYDN-MYER: I do.
14 THE COURT: Let Mr. Haydn-Myer ask his question.
15 Q. BY MR. HAYDN-MYER: Because there are so many
16 different programs being offered by so many different lenders,
17 you could actually have one person that would qualify for one
18 lending institution but not another, is that correct?
19 A. Yes.
20 MR. HAYDN-MYER: Can I speak to Mr. Anderson really
21 quick, Your Honor.
23 (Discussion between counsel.)
24 Q. BY MR. HAYDN-MYER: When you were working at Head
25 Financial Services in approximately 2004 through 2005, did you

1 ever met a Sarah Mattson?
2 A. Yes.
3 Q. Did Sarah Mattson ever come to you in regards to
4 questions on how to complete loan applications?
5 A. Yes.
6 Q. Do you remember the types of questions that she had?
7 A. I mean, just, you know, "what do I put in here?"
8 Just, you know, it's self-explanatory. It says name, date of
9 birth, you know, Social Security. So she'll just ask me
10 questions that if I knew, I would just answer her because I had
11 done it before.
12 Q. Did you ever train Sarah Mattson in regards to the
13 completion of any type of a lending packet?
14 A. I may have showed her once or twice, but it was not
15 my responsibility to train Sarah.
16 Q. Why wasn't it your responsibility?
17 A. She did not work for Head Financial.
18 Q. Who did she work for?
19 A. Mike Head.
20 Q. Thank you. In regards to the dates, I believe you
21 said that it was 2006 that Mike Head left and went to Arizona,
22 is that correct?
23 A. Yeah. Probably. I don't know dates exactly. But
24 that sounds about right.
25 Q. Is it possible it was 2005?

1 A. I still saw him in the office in Costa Mesa. I mean,
2 I don't know. I mean, I don't remember dates.
3 Q. Is it possible it was 2005?
4 A. It could be possible, yes.
5 MR. HAYDN-MYER: All right. Thank you. I have no
8 How long do you think you need?
9 MR. MORRIS: We may be able to be done. Not sure if
10 I get recrossed.
11 THE COURT: All right. Let's see what we can get
12 done in five minutes at least.
14 BY MR. MORRIS:
15 Q. Ms. Yang, are you familiar with the difference
16 between a mortgage lender and mortgage broker?
17 A. Yes.
18 Q. What is the difference?
19 A. Mortgage lender is the bank that you're borrowing the
20 money from. And a mortgage broker is the broker that pretty
21 much brings the loans to the lenders. So kind of like an
22 insurance broker type of thing. They are the middle person.
23 Q. I think Mr. Tedmon asked you if you were the
24 pass-thru, I think was the word he used, that all documents
25 passed through you, and I think you said "yes" to that?

1 A. Yes.
2 Q. Do you recall any instances where you would not pass
3 a document through, where you would send it back to a loan
4 officer?
5 A. Oh, yes. Yes. Like if -- like if a loan didn't look
6 right or, you know, the DTI -- because I was in charge of
7 making sure the DTI worked -- if that didn't go, you know, if I
8 caught it, then I would then turn it back to them. Or if they
9 submitted something that, you know, wasn't right, I would
10 submit it back to them. But I was the pass-thru person in
11 terms of I was processing the loans that came through the
12 processing office.
13 Q. And I think on the dates that the office moved to
14 Costa Mesa I think you said you were not sure about that?
15 A. No. I would say probably 2005.
16 Q. Do you recall if Jack Corcoran was working in Costa
17 Mesa or if he was employed prior to that?
18 A. In Costa Mesa.
19 Q. Can you bring up 40-DD, please. Does that e-mail
20 help narrow down when you think you may have been in Costa
21 Mesa?
22 A. Yes.
23 Q. When do you think you were in Costa Mesa?
24 A. 2005.
25 Q. So sometime before May 31st, 2005?

1 A. Yes. Shortly.
2 Q. Bring that down.
3 Your testimony -- I think Mr. Tedmon was asking about
4 Charles being gone frequently.
5 When Charles was gone, were you able to get in touch
6 with him if you needed to?
7 A. Oh, yes. Via phone I would always be able to reach
8 him. Via e-mail always. Anytime. He would then just respond.
9 Q. And do you recall doing that, calling him or
10 e-mailing him when he was outside the office?
11 A. Oh, yes. All the time.
12 Q. Bring up 42-E, please.
13 Can you explain what you meant by seasoning when you
14 were talking about that earlier?
15 A. Yes. Seasoning means that the money has to be in the
16 client's account for at least 60 days. Because the bank is
17 going to require that, you know, the statements that we provide
18 to them show that they've had it for at least 60 days.
19 Q. Did you ever have a borrower who did not have a lot
20 of money in their account for 60 days?
21 A. Yes, all the time.
22 Q. What did you do in those instances?
23 A. In those instances what we would do is when we first
24 get the straw buyer --
25 MR. TEDMON: Your Honor, I'm going to object. The

1 question is, "what did you do?" And she's saying "we."
3 Q. BY MR. MORRIS: What did you do in those instances
4 where a straw buyer didn't have enough money in their account?
5 A. I would -- by the time I get it, it's already taken
6 care of.
7 Q. What do you mean by taken care of?
8 A. The person that would set up these straw buyers,
9 which in this particular case was Tua Vang, like I said
10 earlier, he was the person that worked directly with the straw
11 buyers. What he would do is he would look at it, and he would
12 already know that in order for this loan to fund they have to
13 have money in their account. So previous to that they are
14 wired money to have in their account to season.
15 Q. Who would wire that money to them to season the
16 accounts?
17 A. At this particular time Jack Corcoran. He would be
18 instructed to do so.
19 Q. Were you part of the conversations where he was
20 instructed to do so?
21 A. Not at the beginning because I don't get it until
22 afterwards. Because the seasoning happens while they are being
23 qualified to be a straw buyer.
24 Q. If we can go to 42 -B, please.
25 I think Mr. Tedmon was asking you about this

1 transaction or this e-mail. I'm seeing two things being
2 described to happen here.
3 Can you explain why there's two financial
4 transactions being done as part of this e-mail?
5 A. Oh, it's actually just -- well, it is two. The first
6 thing is wiring the money to the buyer, which in this case was
7 Ferrantello. And then the second one is getting Ferrantello to
8 turn around and get us a check for $9,990.
9 Q. Why would you do that?
10 A. Because Ferrantello did not have enough money in her
11 account for the closing of the loan.
12 Q. Well, then why didn't you, or Sam Vu, or Jack, or
13 Lisa just send the money that you're going to wire to Lisa --
14 or to Ferrantello, why don't you just send that to escrow?
16 speculation as to anybody other than herself.
17 THE COURT: Sustained. Can you clarify the question?
18 Q. BY MR. MORRIS: You just testified that the point of
19 this is to get money to Ferrantello, and that Ferrantello is
20 going to turn right around and send that to escrow.
21 Do you understand why it is Head Financial Services
22 would not have wired the money straight to escrow?
23 A. Yes.
24 Q. What is your understanding of why you wouldn't do
25 that?

1 A. Because escrow would not accept a cashier's check
2 from the broker. They would only accept it from the person
3 that was buying the home. Because in a normal situation I
4 would not give you money to close your loan. You would give
5 your own money.
6 THE COURT: That brings to us 1:30, Mr. Morris. We
7 should take our break for the day. We have come to the
8 conclusion of this day of trial.
9 As we break for the afternoon and evening, remember
10 that we will see you again tomorrow at 8:30. And tomorrow we
11 will go until shortly before 12:00. So we have a short day
12 tomorrow, 8:30 to 11:40 or so.
13 During this longish break, please keep in mind all of
14 my admonitions. Don't do any research of any kind, don't
15 consult dictionaries, don't go to the library, don't go online,
16 don't communicate about the case in any way whatsoever to
17 family members, to fellow jurors. And if anyone does attempt
18 to contact you during the break, let me know first thing
19 tomorrow morning. Have a good evening. See you tomorrow at
20 8:30. Thank you.
21 (Jury out.)
22 THE COURT: All right. You may step down but be back
23 in your seat at 8:30.
24 All right. You may be seated. Just quickly to
25 review the order for tomorrow once Ms. Yang is concluded.

1 MR. ANDERSON: Your Honor, we have Ms. Irma Valdez,
2 Ms. Nickadia Daniels, possibly Craig Krammer, Andrew Vu, Akemi
3 Botari, Richard and Brenda Clark, Delma Romero, Emily Silva,
4 Denise Hickman. Obviously, at this pace -- oh, yes, Nora
5 Rivas, excuse me. Obviously at this pace we won't get through
6 all those people, but that's who we have planned so far.
7 THE COURT: All right. Well, the Court assumes that
8 Ms. Russell and Ms. Yang are taking longer than many of the
9 other witnesses.
10 MR. ANDERSON: Yes. That's the case.
11 THE COURT: You'll have them lined up so that we can
12 move from one to the next?
13 MR. ANDERSON: That's correct, Your Honor. We're
14 just holding a few people that we thought we'd get to today
15 over till tomorrow, plus the people we already had scheduled
16 for tomorrow.
17 THE COURT: Is there anything else we need to discuss
18 today, Mr. Anderson?
19 MR. ANDERSON: I don't think so, Your Honor.
20 MR. TEDMON: Your Honor, for the Government's
21 benefit, you know, these last two witnesses have been very
22 lengthy. Obviously, from my perspective, I expect this to go
23 much more quickly in terms of the lineup that they've given us.
24 Just for witness accommodation. I understand their concerns.

1 MR. HAYDN-MYER: Nothing further, Your Honor.
2 THE COURT: All right. Tomorrow is a short day, but
3 by midweek, by close of business on Wednesday afternoon we
4 could review kind of where we are with the overall schedule.
5 MR. ANDERSON: That's fine. And I should say, I'm
6 not trying to rush defense counsel at all. I'm just trying to
7 allow everybody to plan. They are welcome to take as much time
8 as they need. We will keep bringing the witness. It just
9 helps when they coordinate with us, as they've been doing.
10 MR. TEDMON: That's what we're trying to do. I won't
11 rush. I'll do what I can.
12 THE COURT: All right. Thank you.
13 (1:34 p.m.)
14 CERTIFICATION
15
19
20

23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
VOLUME 5
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
17
18
19
20
21
22
23
24
25

1 I N D E X
3 KOU YANG
REDIRECT EXAMINATION BY MR. MORRIS (CONT'D) 565
5 IRMA MARIE VALDEZ

8
NORA RIVAS
10
11
13 20-A 1161 Saratoga Way, Tracy – Loan File 621

20-B 1161 Saratoga Way, Tracy – Escrow File 625
14 14-B 117 Steckel Drive, Santa Paula – Escrow 664
File
15
16
17
18
19
20
21
22
23
24
25

3 ---oOo---
4 THE CLERK: Calling criminal matter 08-0093, the
5 United States versus Charles Head and Jeremy Michael Head. On
6 for jury trial, day six, Your Honor.
7 THE COURT: Good morning.
8 MR. ANDERSON: Good morning, Your Honor.
9 THE COURT: All counsel are present. All parties are
10 present. Some jurors had traffic issues, but I'm informed they
11 are all here now. Are we ready to go, Mr. Anderson?
13 There is one issue we want to warn the Court about.
14 Nora Rivas, she's testifying today, she's one of the people for
15 which immunity was required. Mr. Morris spoke to her this
16 morning, her view of it is she doesn't care whether or not she
17 has immunity. Obviously, the Court should bring her in and see
18 what she wants to to. We're limited in what we can direct her
19 to do.
20 THE COURT: All right. You're not suggesting you're
21 withdrawing the immunity?
22 MR. ANDERSON: No. It's something that she's
23 entitled to, if she wants it. The question is whether or not
24 she wants it. And if the Court could go through the questions
25 with her.

1 THE COURT: I will. Mr. Tedmon, anything further?
2 MR. TEDMON: No.
5 THE COURT: How much longer do we think we have with
6 Ms. Yang?
7 MR. MORRIS: Your Honor, I would expect three to
8 five minutes on redirect.
10 MR. TEDMON: I just have a few questions.
11 THE COURT: So then Ms. Rivas would follow Ms. Yang?
12 MR. ANDERSON: No. The next witness will be
13 Ms. Valdez.
14 THE COURT: All right. In any event, before we get
15 to Ms. Rivas we'll take a break. Do you anticipate Daniels
16 also testifying today?
17 MR. ANDERSON: I'm sorry, Your Honor?
18 THE COURT: Daniels.
19 MR. ANDERSON: I don't think we'll get to Ms. Daniels
20 in this amount of time. We do have Mr. and Mrs. Clark
21 available. And Ms. Silva is on her way. So I think that will
22 probably take up the day.
24 (Jury in.)

1 court, ladies and gentlemen. I understand a number of you
2 faced some traffic issues. The Court also has been facing
3 those. But thank you for leaving early enough to begin
4 essentially on time. We're going to continue with a bit more
5 of redirect of Ms. Yang. For that purpose, I'll acknowledge
6 Mr. Morris.
7 KOU YANG,
11 REDIRECT EXAMINATION (CONT'D)
12 BY MR. MORRIS:
13 Q. Good morning, Ms. Yang.
14 A. Good morning.
15 Q. I think where we left off yesterday was we were
16 talking about seeding of accounts.
17 If you would refresh for myself and for the jury what
18 you mean when you talk about seeding an account?
19 A. Seasoning?
20 Q. Seasoning an account.
21 A. Seasoning. I think we were talking about the 60-day
22 seasoning. That means that a buyer has to have money in their
23 account for at least 60 days prior to closing so that we can
24 provide a bank statement for verification to the bank, to the
25 lender, that the buyer has had this money in their account for

1 at least 60 days.
2 Q. And I think what you had said was that if an account
3 needed to be seasoned, you weren't the one that did that, is
4 that your testimony?
5 A. Yes.
6 Q. Were you aware of who in the office did do that?
7 A. Yes.
8 Q. Okay. How were you aware of that?
9 A. Because we were informed to ask a certain person to
10 wire the funds.
11 Q. Okay. Who were you asked to ask to wire the funds?
12 A. I was asked to ask Jack Corcoran to wire the finds.
13 Q. And who asked you to ask Jack Corcoran to wire the
14 funds?
15 A. Charles Head.
16 Q. And did you ever become aware after that whether the
17 seasoning had actually happened?
18 A. Can you repeat that?
19 Q. Did you have some reason to learn or know after that
20 that it had actually happened?
21 A. Yes. Because we were provided with a statement or
22 the verification to provide to the lender.
23 Q. Okay. I think Mr. Haydn-Myer asked you about Liz,
24 who at the time was going by Liz Huerta, and he was asking you
25 about the number of transactions that she was involved with.

1 Do you have reason to know how many transactions she
2 was involved with?
3 A. I know of one for sure, but I do know that another
4 one came up that was kind of vague, that, you know, we all
5 didn't really know much about. But I know for one for sure,
6 and I believe there is a second one.
7 Q. And is that number of transactions different from the
8 number of transactions that other loan officers did?
9 A. Definitely.
10 Q. Was it less than, greater than, or more than those
11 numbers?
12 A. Less than.
13 Q. Do you have reason to know why Liz did fewer
14 transactions than others?
15 A. Yes.
16 Q. What is your basis for how you knew that?
17 A. She had spoken to me on several occasions. She was
18 concerned about the transactions and --
19 MR. TEDMON: Objection, Your Honor. This is not
20 801(d)(2)(e), and I would object on that basis. It's hearsay.
22 MR. MORRIS: Your Honor, I think Ms. Huerta's
23 credibility was attacked by both Mr. Haydn-Myer and Mr. Tedmon,
24 and this is a prior consistent statement. I think it comes in.
25 THE COURT: Response to that, Mr. Tedmon?

1 MR. TEDMON: Well, the credibility speaks for itself.
2 The jury can evaluate Ms. Huerta's testimony. This is clearly
3 an attempt to get in a statement that's hearsay. And they're
4 impeaching, you know, effectively their own witness. I don't
5 think it's appropriate.
6 THE COURT: Based on the exception cited, the
7 objection is overruled. You may answer.
8 THE WITNESS: Okay. Ms. Huerta had confided in me
9 because we are friends. She didn't confide in me and say that
10 she was concerned about doing any more transactions. I asked
11 her, you know, why, and she told me that everything just didn't
12 seem right. And she also at that time, when she was leaving,
13 she said "you should leave, too."
14 Q. BY MR. MORRIS: And then in cross yesterday you were
15 asked about the layout of the office that you were in.
16 Can you clarify, was there more than one office that
17 you worked in during the time that you worked for Charles Head?
18 A. Yes. There was the first one that was in Long Beach.
19 The office that we had in Long Beach on Atlantic was one huge
20 room like similar to this, and everybody was just in one room.
21 Q. Okay. And then after Long Beach, where did you work?
22 A. After Long Beach, we worked in Costa Mesa, and there
23 we each had our individual offices.
24 Q. Okay. And then was there any location after Costa
25 Mesa?

1 A. Yes. The processing office was, you know,
2 intermingled with the loan officers. So a year-and-a-half
3 after we moved to Costa Mesa, they moved the processing office
4 to the office next door. So in the first office was all loan
5 officers. In the second office was all the processors.
6 Q. Do you recall approximately when you moved from Costa
7 Mesa to that third location?
8 A. We moved there, I would say, in 2006. At the end of
9 2006.
10 Q. Do you recall the circumstances in the company that
11 were occurring around that time of that move?
12 A. Yes.
13 Q. What was going on in the company at the time of that
14 move?
15 A. I was told by Charles that we were selling, I guess,
16 the processing part of the business and the loans part of the
17 business to different people. And so therefore we had to move
18 to a different location because we had a new owner.
19 Q. After you moved to that new location, who did you
20 consider your boss to be?
21 A. I was told that my boss was Benjamin Budoff, but my
22 boss was still Charles Head.
23 Q. And when you say your boss was still Charles Head,
24 why do you say that?
25 A. Because I still spoke to him about transactions. He

1 still got paid on the transactions.
2 Q. And I think it was Mr. Tedmon who had asked you or on
3 cross had talked about that your involvement was in loans, not
4 talking to homeowners, is that correct?
5 A. Yes.
6 Q. In the course of your job duties, did you ever have
7 an opportunity or an occasion to interact with the homeowners
8 outside of the process of making a transaction happen?
9 A. Yes.
10 Q. What was the circumstances in which you would
11 interact with those homeowners?
12 A. When the homeowners, when the sellers did call and
13 speak to me, it was about their transaction, their concern
14 about their home, the status of their home, what was going to
15 happen. They were pretty much confused about what was going
16 on.
17 Q. And without going into the content of what the
18 homeowners told you, what they said, could you describe those
19 conversations in terms of their tone, or their tenor, or how
20 they were?
21 A. Some were scared to lose their home. Some were angry
22 that they felt that their home had been taken away from them.
23 So it was a variety of customers being scared and being angry.
24 Q. What did you do when you received those types of
25 phone calls?

1 A. I would then refer them to Charles, and then Charles
2 would then, you know, figure out with his loan officers --
4 speculation unless she's personally aware of it.
6 Q. BY MR. MORRIS: Did you ever have reason to be
7 personally aware of what Charles would do after you referred
8 those phone calls to him?
9 A. Yes.
10 Q. How were you personally aware of that?
11 A. Because I was told by Charles Head that he would have
12 the loan officers take care of it.
14 THE COURT: All right. Mr. Tedmon, any
15 recross-examination?
18 BY MR. TEDMON:
19 Q. Ms. Yang. Good morning.
20 A. Good morning.
21 Q. Let's start with Elizabeth Huerta. Your testimony is
22 this morning that you had a conversation with her, correct?
23 A. Yes.
24 Q. All right. You plead guilty about two months ago,
25 true?

1 A. Yes.
2 Q. You were arrested in 2008, correct?
3 A. Yes.
4 Q. All right. So for five years you also retained an
5 attorney, is that right?
6 A. Yes.
7 Q. Mr. Low?
8 A. Yes.
9 Q. And you had an opportunity to review all the
10 discovery in this case, correct?
11 A. Yes.
12 Q. For five years you didn't plead guilty, correct?
13 A. Yes.
14 Q. And you reviewed all the discovery in the case, which
15 is voluminous, true?
16 A. Yes.
17 Q. And then on March 12th of this year you met with the
18 Government and you gave them a statement, correct?
19 A. Yes.
20 Q. Five years after you were arrested, true?
21 A. Yes.
22 Q. And then the next day, March 13th, you plead guilty
23 before Judge Mueller, correct?
24 A. Yes.
25 Q. And we covered that yesterday, I believe, conspiracy

1 to commit mail fraud, true?
2 A. Yes. Yes.
3 Q. Now you also had a debriefing with the Government on
4 April 14th of this year, correct?
5 A. Yes.
6 Q. That was in preparation for this trial, true?
7 A. That was to go over e-mails that we had gone over
8 yesterday.
9 Q. Right. Well, you've testified in this trial, right?
10 A. Yes.
11 Q. And you expected to testify, correct?
12 A. Yes.
13 Q. It's a cooperation deal?
14 A. Yes.
15 Q. All right. So on April 14 -- I'm sorry -- April 18th
16 you met with the Government in preparation for your testimony
17 in this court, correct?
18 A. Yes.
19 Q. All right. Now nowhere in your statement to the
20 Government in March, March 12th, and nowhere in your statement
21 to the Government on April 18th, did you mention anything about
22 a conversation with Elizabeth Huerta, did you?
23 A. I did.
24 Q. You did?
25 A. Yes.

1 Q. Okay. And what did you tell them?
2 A. I told them that Elizabeth had told me to leave when
3 she was leaving.
4 Q. And you recall that specifically?
5 A. Yes.
6 Q. Which interview was that that you told them that?
7 A. The first interview.
8 Q. The one in March?
9 A. Yes. I remember because we had spoken about our
10 friendship.
11 Q. Okay. Well, you told the agent that you had met
12 Charles Head through Elizabeth Huerta, is that correct?
13 A. Yes, I did.
14 Q. All right. You were aware that Agent Sommercamp, who
15 is sitting at the table here at the end -- do you recognize
16 him?
17 A. Yes, I do.
18 Q. -- he wrote a report of your interview from March
19 12th, are you aware of that?
20 A. Yes.
21 Q. Have you had a chance to review it?
22 A. I have not.
23 Q. You have not. Well, what I would like you to do
24 then --
25 Well, let me ask you this, if I gave you the report

1 of Special Agent Sommercamp, would that refresh your
2 recollection of what you did or did not tell him on March 12th?
3 A. I know exactly what I told him, and I did mention to
4 him that when Elizabeth left, she told me that I should leave
5 also.
6 MR. TEDMON: Your Honor, may I approach?
8 Q. BY MR. TEDMON: Ms. Yang, I want you to review Agent
9 Sommercamp's report. And when you're done, tell me.
11 MR. MORRIS: Your Honor, we will object. She says
12 she recollects the conversation. I'm not sure what there is to
13 refresh at this point.
15 THE WITNESS: (Witness reviewing document.) Okay.
16 Q. BY MR. TEDMON: Have you had a chance to review that?
17 A. Yes.
18 Q. Now in Agent Sommercamp's report, nowhere does he
19 report that you told him that Elizabeth Huerta told you to
20 leave, did he; it's not in the report?
21 A. It's not in the report.
22 Q. That's my question. It's not in the report, correct?
23 A. Correct.
24 Q. And you know Agent Sommercamp is an experienced
25 agent, trained to take statements, you know that don't you?

1 A. Yes.
2 Q. Did you talk to anybody since your testimony
3 yesterday? Did you meet with anyone?
4 A. No.
5 Q. Now a couple of the final questions. You testified
6 that in 2006 the businesses were being sold, correct?
7 A. Yes.
8 Q. All right. That was actually the summer of 2006,
9 correct?
10 A. I -- probably, yes. But I know that it was 2006.
11 Q. And Mr. Head sold both sides of his business in the
12 summer of 2006, correct?
13 A. Yes.
14 MR. TEDMON: Nothing further. Thank you, Your Honor.
17 THE COURT: Mr. Morris, any redirect?
19 THE COURT: This witness is excused, Mr. Morris?
25 THE COURT: You may step down. You are excused. The

2 MR. ANDERSON: United States calls Irma Valdez.
3 (Photograph taken of Ms. Valdez by the Clerk.)
4 THE CLERK: Thank you. Please step into the witness
5 box. Please raise your right hand.
7 truth, and nothing but the truth, so help you God.
11 THE WITNESS: My name is Irma, I-r-m-a, Marie,
12 M-a-r-i-e, V-a-l-d-e-z.
14 IRMA MARIE VALDEZ,
19 BY MR. ANDERSON:
20 Q. Good morning, Ms. Valdez.
21 A. Good morning.
22 Q. What is your current occupation?
23 A. My current occupation right now I'm a senior
24 investigation research specialist.
25 Q. Who do you work for?

1 A. I work for Signature Group Holdings, successors in
2 interest to Fremont Reorganization Corporation formally known
3 as Fremont Investment and Loan.
4 Q. What do you do as a senior investigative research
5 specialist?
6 A. I was -- because of my background -- I have an
7 underwriting background. I've been in the mortgage industry
8 for 25 years. I was -- I've hooked up with our legal
9 departments, and currently my job position consists of
10 investigating mortgage fraud, stolen identity, testifying on
11 behalf of our company on federal and state subpoenas. And any
12 internal cases that we may have I'll do depositions.
13 Q. I think you mentioned, but how long have you been in
14 the mortgage industry?
15 A. Twenty-five years.
16 Q. Could you walk us through what your experience in the
17 mortgage industry is?
18 A. Oh, wow. I've done a little bit of collections.
19 I've done -- majority of my time in the mortgage industry has
20 been on the origination side. I was an underwriter, processor,
21 underwriter trainer, ombudsman manager. Quite a few positions.
22 Quite a few titles.
23 Q. When did you start working for Fremont?
24 A. I started with Fremont in October of 1997, and, my
25 gosh, it's like 16 years now. It's -- I've held several

1 positions throughout the years.
2 Q. When you started with Fremont, what was your job?
3 A. When I first started with Fremont from October of '97
4 up until August of 2002 I was a senior underwriter in the
5 residential lending division.
6 Q. What does an underwriter do?
7 A. An underwriter's position is, once they receive the
8 loan package, we evaluate all the documents to determine if
9 it's an acceptable risk for the underwriter -- I mean for the
10 lender to take, to lend to any particular borrower.
11 There is a certain amount of calculating income, due
12 diligence on employment, evaluating credit, appraisal, the
13 preliminary title reports, see if there is any issues.
14 Q. So is it fair to say that Fremont is a type of
15 lender?
16 A. At that particular point in time we were a wholesale
17 lender, predominantly. We did have a small little retail side.
18 Q. What's a wholesale lender?
19 A. A wholesale lender doesn't deal directly with the
20 borrower. A retail lender, the borrower goes directly to a
21 bank, they fill out an application, and that bank approves them
22 or declines. And if they decline them, they have to go to
23 another bank, do the same process all over again.
24 The wholesale is where the borrower goes to a
25 wholesale mortgage or mortgage banker, and they fill out an

1 application, they compile the income documentation, other
2 documents that they may require, and the mortgage
3 broker/mortgage banker shops it to various lenders in the best
4 interest for the borrower.
5 Q. Between 2004 and 2006 was Fremont that type of
6 lender?
7 A. Yes. We were a wholesale lender.
8 Q. Beginning -- you took us up through 2002. But after
9 2002 did your job duties change?
10 A. Yes. From August of 2002 up until mid 2008 my title
11 was a senior training specialist, and I would train the account
12 executives nationwide on Fremont's underwriting guidelines.
13 So any account executives that Fremont hired, we had
14 three different levels of experience, classes that we trained,
15 and we would travel to their centers and stuff.
16 Q. In the course of your duties, did you become very
17 familiar with the underwriting guidelines for Fremont?
18 A. Absolutely. I taught the underwriting guidelines to
19 all the account executives.
20 Q. Was there a geographic area that Fremont focused on
21 giving loans in?
22 A. Fremont lends in the majority of all states except I
23 think it was like 46 out of the 50 states. There was handful
24 like North Dakota, South Dakota, Alabama. There was like four
25 or five that we didn't lend in. And it would change throughout

1 the years.
2 Q. Could you describe for us the way the loan process
3 worked at Fremont in the 2004 to 2006 time period?
4 A. Okay. Fremont had -- firsthand contact was their
5 account executives. We had inside account executives and
6 outside account executives.
7 The duties of an inside account executive, they were
8 sitting in a cubicle. We had ten operation centers. We had
9 two in New York, two in Chicago, two in Florida, and four in
10 California. And the inside contract executives would sit on
11 the phone and market nationwide a broker or a -- to get
12 business.
13 Outside account executives were located in the
14 various states, and they had a certain location, as far as they
15 can drive within that, you know, area.
16 Q. So when you say market, what do you mean the account
17 executives were marketing?
18 A. Well, for example, if it was an outside account
19 executive in Sacramento, they would pull a phonebook out,
20 internet's a big resource these days, check out where the
21 brokers are, go to the broker's office. They could actually
22 walk into the broker's office as opposed to an inside account
23 executive, who just calls.
24 And they have to -- they, you know, talk to the
25 broker, see if they are doing business with Fremont, and they

1 try to get them approved to do business with Fremont. And
2 that's how they acquire business for us.
3 Q. So could you walk us through how a loan would travel
4 through the process of Fremont in that time period?
5 A. Once the inside or outside account executives would
6 create or have that relationship with the broker, they would
7 submit loans through them. The loans would come into our
8 office, whether it was an outside or inside, and we had an
9 operation center. They were set up in various teams. The
10 teams would -- in each op center they would have, you know, an
11 inside rep team, an outside rep team, and there would be three
12 or four teams through -- whether it was inside or outside.
13 Once the loan package actually came in, it would
14 sometimes go to a processor, or it would go to an underwriter.
15 The processor in our center -- in our op center as a lender is
16 different than the processor that's in, like, a broker's
17 office. Different duties. But it's kind of the same title.
18 Our processor is pretty much data entry. They would
19 input the loan into the system. Then it would proceed to the
20 next -- they prepped it for the underwriter to look at. They
21 would pull a credit report. They would sent out the mandatory
22 pre-disclosures, and they would submit it to the underwriter.
23 They also pulled what we call an AVM, Automated Value Module,
24 that gives us property values.
25 Then once the underwriter receives it, they evaluate

1 the entire package. They go through their process of
2 scrutinizing the loan and doing their due diligence, and then
3 they approve it or decline it.
4 Once the loan is approved -- if it was declined, it
5 goes to a different department to be processed and send the
6 docs -- not the docs -- the paperwork out that -- to the
7 borrower stating that they were declined and to the broker.
8 If it went to a -- it was approved, the loan would
9 proceed to the next stage. It would go back to the account
10 manager. And there is -- once the underwriter approved the
11 docs, there is a certain amount of documentation that is
12 printed out in the system, and that is faxed over to the
13 broker.
14 Q. I'm going to pause you there. So let's talk about
15 the underwriter.
16 A. Okay.
17 Q. So the loan comes in, and it eventually makes its way
18 to an underwriter?
19 A. Correct.
20 Q. At that point, what is the underwriter looking at the
21 loan to see, what are the things an underwriter is looking for?
22 A. The underwriter has to evaluate the entire loan
23 package. The underwriter is familiar with the lender's
24 guidelines. Each lender has a different guideline. So they're
25 familiar with the programs, the products.

1 Every -- all the information within that loan file is
2 very important. And we look at it to determine whether it's an
3 acceptable risk. There is some information that is actually
4 calculated into like a debt ratio, which is a comparison of how
5 much income they make versus how much debt they have.
6 And then there is other documentation in that file or
7 information within the file that we may glance at and look at
8 it as a compensating factor in the overall picture of the loan.
9 For example, if it's a purchase, we look at, you know, do they
10 have assets, where is all the money coming to close this loan.
11 If -- so there's a bunch of information, and we go
12 through each section. We have different income types. We had
13 full, easy, and stated. We had to determine do we have the
14 acceptable, you know, documents for whatever income type they
15 submitted the loan for.
16 So we priced the loan out based off the different --
17 we evaluate the credit report. We establish a certain credit
18 rate for it, and that establishes a certain program that they
19 qualify for. A-plus borrowers qualify for better loans than a
20 D borrower would.
21 Q. Through this process is an underwriter using
22 something called underwriting guidelines?
23 A. Absolutely.
24 Q. What are underwriting guidelines?
25 Actually, let me ask this question, what role do the

1 underwriting guidelines play in the decision-making process of
2 an underwriter?
3 A. The underwriting guidelines is kind of the lender's
4 Bible. There is -- this is -- these are our guidelines. If
5 there is an exception to that guideline, it has to go up the
6 chain to get the acceptable approval if we're going to proceed
7 in that direction.
8 Q. Were all applications for mortgage loans at Fremont
9 reviewed by an underwriter?
10 A. Yes, they were.
11 Q. In your experience, was that common in the mortgage
12 industry?
13 A. Absolutely.
14 Q. Did an underwriter have to approve every loan
15 application before it could be funded?
17 Q. Were underwriters at Fremont paid a commission if
18 they approved a loan?
19 A. Our underwriters were salaried. And there was an
20 incentive, but it was based off how many loans they underwrote
21 based -- I mean, whether they approved them or declined them.
22 Q. Why was the incentive based on the number of loans
23 reviewed rather than number of loans approved?
24 A. Because they didn't want to sway them one way or
25 another.

1 Q. So you don't want to create an incentive to approve
2 loans that shouldn't be approved?
3 A. Absolutely.
4 Q. Were loan applications reviewed for evidence of
5 fraud?
6 A. To the best of our ability. We had limited
7 resources. We had have some internet websites that we would go
8 to. But, yes, to the best of our ability.
9 Q. Did you ever find evidence of fraud?
10 A. Absolutely.
11 Q. What happened in the case that fraud was found?
12 A. At that particular point in time, Fremont's
13 underwriting guidelines specifically states they have zero
14 tolerance to fraud. So it would be taken to the manager. We
15 would agree to decline it because we always had to have a
16 second signature to decline a loan. And we would go back to
17 the broker and either a phone call and fax out a denial.
18 Q. Is the term DTI used in the loan industry?
19 A. Yes.
20 Q. What does it mean?
21 A. It's debt-to-income. Some say DR, debt/ratio,
22 debt-to-income ratio.
23 Q. What does that mean?
24 A. That's the comparison. As an underwriter we
25 calculate their income, how much they bring in a month. All

1 their outstanding debts. Their mortgage payment, their rental,
2 their -- any installment loans, student loans, revolving credit
3 report, alimony, any outstanding debts they have. We
4 calculate -- we total the income. We total the debt. We
5 divide it into the income. And there is a certain percentage
6 that is acceptable for each product.
7 Q. Does that make debt and income of a borrower an
8 important factor in deciding whether or not to approve a loan?
9 A. Absolutely. Because it determines their ability to
10 repay us.
11 Q. What about the value of the underlying property, is
12 that an important factor?
13 A. Yes. It's the collateral. If this loan does not
14 pay, that's our recourse is we have at least the collateral to
15 gain our money back.
16 Q. Have you heard the abbreviation LTV?
17 A. Yes.
18 Q. What's that mean?
19 A. That is loan to value.
20 Q. What is loan to value?
21 A. Loan to value is another ratio. It's how much the
22 property is appraised for and what's the loan we're going to
23 lend to them.
24 For example, the property is appraised for a 100,000,
25 and our loan amount is 75,000, you divide that into the

1 property value, and it's 75 percent loan to value.
2 And we would have a CLTV, which we would lend a first
3 and second. So if the property value was a 100,000, and we
4 lent a first of 75,000 and a second of 25,000, the loan to
5 value would be 75 percent, but the CLTV would be 100 percent.
6 Q. So were those also important factors in determining
7 whether or not to approve a loan?
8 A. Yes. Absolutely.
9 Q. What about the employment history of the borrower,
10 was that also an important factor?
11 A. Very important factor because that's how they're
12 going to -- their ability to repay us.
13 Q. And credit score, is that important as well?
14 A. Absolutely. Credit score can actually decline a
15 borrower depending on their credit score. Each product or
16 program that we had was a certain credit score. If they want
17 100 percent financing, they had to have a certain credit score.
18 If they wanted a loan altogether, they had to have a minimum
19 500 -- it ranged from 500 to 800-something.
20 Q. Are you familiar with the term "owner occupied"?
21 A. Yes.
22 Q. How about "primary residence"?
23 A. That is -- yes, that's one and the same.
24 Q. They are synonymous terms?
25 A. Correct.

1 Q. Are they important in the determination of whether or
2 not to give certain types of loans?
3 A. It's very important because once again it's a
4 different level of risk. We have owner occupied where the
5 borrower resides in the subject property and they occupy it.
6 Investment property where they reside in it part of
7 the time. And second home -- well, investment property is kind
8 of like -- I'm sorry -- second home is where they --
9 Owner occupied, they reside in it all the time.
10 Second home is where they reside in the property part time.
11 Investment property is where they don't have -- don't intend to
12 reside in the property at all.
13 Owner occupied is the best type you can have because,
14 realistically, if someone come across -- they have money
15 problems, they are going to pay the roof over their head versus
16 an investment property. So investment property -- we didn't
17 have 100 percent financing for investment properties. If it
18 was owner occupied -- so there was -- someone who is submitting
19 a loan as an investment property --
20 Q. Let me slow you down a little bit again. I'm sorry.
21 Starting to talk a little fast.
22 Is it the case that if a property was going to be
23 owner occupied, there were different loan products available
24 for that owner-occupied house --
25 A. Yes.

1 Q. -- that otherwise would be available?
3 Q. And was one of the things that you could obtain by
4 having an owner-occupied house that you couldn't with an
5 investment property 100 percent financing on that property?
6 A. That is a true statement.
7 Q. Do you know if that was common in the industry as
8 well?
9 A. Yes. It was common.
10 Q. And I think you were starting to get into the reason
11 why. Is there a particular reason why it's the case that
12 owner-occupied properties are able to get more financing and
13 better terms on their loans?
14 A. Once again, it's a level of risk. It's a higher risk
15 if it's not owner occupied. It's less of a risk if it is owner
16 occupied. So there's better pricing, there's better products
17 for the owner-occupied, primary residence borrower.
18 Q. All right. Now did Fremont require potential
19 borrowers to complete a loan application?
20 A. Yes.
21 Q. Was that done in every single case?
22 A. Every single.
23 Q. Is there a particular name for that loan application?
24 A. It's commonly known as a 1003 because that's the form
25 number, but it's a Uniform Residential Loan Application.

1 Q. Is that a standard loan application that's used
2 across the industry?
3 A. Absolutely.
4 Q. Do you know who --
5 Well, let me ask it this way. Does Fremont complete
6 that loan application?
7 A. As a wholesale lender, no, Fremont does not complete
8 that loan application.
9 Q. Who are the individuals that would complete that loan
10 application?
11 A. The borrower or the broker.
12 Q. When a 1003 form was submitted to Fremont, was that
13 form retained?
14 A. Yes.
15 Q. Was it made part of a permanent file?
17 Q. Is that done in the regular course of business?
18 A. Yes, it is.
19 Q. Are you familiar with the 1003 form?
20 A. Very.
21 Q. I'm going to get back to that in a minute. Was there
22 such a thing as an 80-20 loan?
23 A. Fremont did have an 80-20 loan.
24 Q. What is an 80-20 loan?
25 A. It's 100 percent financing.

1 Q. What does the 80 stand for and what does the 20 stand
2 for?
3 A. It's represents the loan to value. The combined loan
4 to value. It's where Fremont -- the example I had given to you
5 as a 100,000 property, where we lent 75 percent and 25 percent
6 with a combined loan to value of 100 percent, the 80 -- it
7 would be sliced differently. If it was $100,000 property, we
8 would lend 80,000 on the first, that's 80 percent of property
9 value, and 20,000 on the second, which is a combined loan to
10 value of 100 percent, but it's sliced as an 80-20 versus a
11 75-25.
12 Q. So there's 75-25 loans, 80-20 loans, they add up to
13 100 either way?
14 A. Actually, we had an 80-20, an 85-15, and a 90-10. I
15 just gave the example of 75-25 for the CLTV.
16 Q. Now does the form, this 1003 form that we were just
17 discussing, does it also state on it it's a crime to submit
18 false information on the form?
19 A. Absolutely. In the declaration section.
20 Q. Is that important to the lender?
21 A. Absolutely. All that information on that application
22 needs to be accurate, truthful, forthcoming because we rely on
23 that information on whether we're going to approve or decline
24 the loan.
25 Any time that information changes, we have to

1 completely re-evaluate the loan to see if it's still an
2 acceptable loan to borrowers to lend to.
3 Q. In preparation for your testimony today, did you
4 review some loan applications and files related to some
5 properties in this case?
6 A. Yes, I did.
7 Q. I'd like to discuss first 240 West Queen Street. Was
8 that one of the properties that you reviewed an application
9 for?
10 A. Yes, it was.
13 stipulation as a mortgage company document.
14 THE COURT: It's already in.
15 MR. ANDERSON: Problem solved.
16 Q. BY MR. ANDERSON: Okay. I'm going to walk through
17 this form with you, and I'll ask you questions to explain
18 certain portions of the form. Is that okay?
19 A. Sure.
20 Q. So we're looking at the top half of the first page of
21 Exhibit 10-A. It says Uniform Residential Loan Application at
22 the top. Is this the form 1003 that you were discussing?
24 Q. And there is an address, subject property address?
25 MR. TEDMON: Your Honor, just a moment. It's not

1 coming up on our monitor.
2 THE COURT: Still not showing.
3 MR. TEDMON: It wasn't on. That's fine. Thank you.
4 MR. ANDERSON: Do you want me to wait?
5 MR. TEDMON: No. We're good.
6 Q. BY MR. ANDERSON: So there is a line that says
7 "subject property address," do you see that?
8 A. I do.
9 Q. 240 West Queen Street, Number 1, Inglewood,
10 California?
11 A. Yes.
12 Q. What information goes on that line?
13 A. That is the property that the lender is taking as
14 collateral for the loan.
15 Q. Looking just above that there is an amount listed,
16 172 in this particular case, what is that line?
17 A. That represents the first loan that we lent on this
18 property. This loan funded as a first and a second, with a
19 combined loan to value of 100 percent. That's an 80-20.
20 Q. This would be the first loan, so the 80 percent loan,
21 is that right?
23 Q. And in this case 172,000 for that 80 percent?
24 A. Yes.
25 Q. And then next to it there is a line that says

1 "interest rate," what does that indicate?
2 A. That is the interest rate that they -- there's --
3 sometimes we may receive multiple loan applications. So in
4 this particular case that's the interest rate. You may have
5 what they are submitting it for, and then what they actually
6 qualified for. This is the final 1003, and that's the loan
7 that -- the interest rate the loan funded at.
8 Q. And we'll go to the second loan in a little bit.
9 There is a second loan for this property, is that right?
10 A. Yes, there is.
11 Q. Does that have a different interest rate for that
12 second loan?
14 Q. Is that usually a higher interest rate on the
15 20 percent portion of the loan?
16 A. It's a lot higher, yes.
17 Q. So looking then to the right, it says "number of
18 months." Maybe we can get that a little bigger.
19 Where it says "number of months," what does that
20 indicate?
21 A. That's the term on how they're -- we had different
22 terms. This means that it's a 30-year loan, 360 months of
23 payments, and it's due in 30 years. So it's fully amortized.
24 If it was a 30 -- if it said 360 over 180, that means
25 it was -- the payments are based off 30 years, but it's a

1 balloon. It's only due in 15. So this is fully amortized.
2 Q. So the other one you are explaining you would make
3 payments for 15 years and then owe the rest of the 15 at the
4 end?
5 A. Correct.
6 Q. And then there's a number of checked boxes with
7 "amortization type, fixed rated, GPM, other ARM." Do you see
8 those?
9 A. Yes.
10 Q. Okay. Where it says -- first of all ARM, is that
11 usually pronounced "arm"?
12 A. Yes. Adjustable rate mortgage.
14 A. Adjustable rate mortgage it states a 2/28. The loan
15 is fixed for two years, and then it adjusts for the remaining
16 28 years. So the two years that it's fixed plus the 28 years
17 that it adjusts based off specific terms, it's a 30-year loan.
18 Q. So now we're going to look down a little bit lower on
19 this page to -- there is a line "purpose of loan," do you see
20 that area?
21 A. Yes.
22 Q. What's checked in this case?
23 A. It's a purchase transaction.
24 Q. What does that purport to mean?
25 A. That states that the borrower doesn't currently own

1 the property. They are looking to purchase the property. The
2 financing is to actually acquire that property.
3 Q. I notice there is a box that's not checked below that
4 saying "refinance." What does that mean in contrast?
5 A. Refinance means that they currently own the property,
6 and they are vested on that property, and they are just looking
7 to change the current mortgage that they have now on different
8 terms, or get cash out, or --
9 Q. And now if we look to the right of that box that says
10 "property will be," and there are three check boxes - primary
11 residence, secondary residence, and investment?
12 A. That's correct. That's the three different level of
13 risks. Primary residence, owner occupied, second home and
14 investment property.
15 Q. So this particular mortgage application is indicating
16 what?
17 A. Primary residence.
18 Q. And that means that the borrower intends to live in
19 the property?
20 A. Yes. That they will reside in that subject property.
21 Q. All right. Let's go down a little bit further on
22 this page. Who is listed as the borrower here?
23 A. Adam Coffman.
24 Q. Is that an important piece of information to know who
25 the borrower is?

1 A. Absolutely.
2 Q. Why is that?
3 A. Well, we pull the borrower's credit. We need to know
4 who we're lending the money to.
5 Q. Are you familiar with the term straw buyer?
6 A. Yes.
7 Q. What is a straw buyer?
8 A. Straw buyer is a person that they are using their
9 credit for, but they have no intention of making the payments
10 or residing in the subject property. They are just kind of
11 like a front person.
12 Q. Is straw buyer a term that's commonly used in the
13 mortgage industry?
14 A. In a negative way, yes. It's not -- if we find out
15 through the underwriting process that this is in fact a straw
16 buyer, it would be declined at that point in time.
17 Q. Why would it be declined?
18 A. Because we don't actually know who we're lending the
19 money to.
20 Q. All right. Looking down to "present address," are
21 there situations where a person's present address would be an
22 important piece of information to know?
23 A. Yes.
24 Q. Why is that?
25 A. On a loan application it's required to disclose -- we

1 have to have at least a two-year history of where that borrower
2 has resided. So if they resided in their primary residence for
3 six months, then we need to know exactly where they've been.
4 Also where they lived in the past indicates what
5 credit grade they're going to get based on how they paid that
6 person in the past, whether they are renting. That's how we
7 establish a credit grade and ultimately a program or product
8 they qualify for.
9 Q. Can it raise a red flag if somebody puts down an
10 address near where the home they're saying they're purchasing
11 is but in reality live in a different state, or far away from
12 the home they're purporting to purchase?
13 A. Absolutely.
14 Q. Why is that?
15 A. It's a major concern. And there is additional
16 questions that we may ask just to get a complete picture of,
17 well, why are they moving. And if they are moving -- and if
18 they actually live in a different state, but they are moving to
19 purchase an owner occupied, is their job going to be able -- do
20 they have a job here? There's many questions depending on what
21 we find out.
22 Q. Let's look a little bit lower to the employment
23 information section. If you look to the name and address of
24 employer, it's listed as Shoreline Realty in this case, is that
25 correct?

2 Q. Is the name and address of the employer an important
3 piece of information in making a loan decision?
4 A. Oh, absolutely.
5 Q. Why is that?
6 A. Well, this is their ability to repay us. Do they
7 have stability, you know, income coming in. All this
8 information is very important to be truthful and accurate. If
9 any is misleading or not forthcoming, it completely compromises
10 the integrity of the entire loan process.
11 Q. How about the years on the job?
12 A. Once again, we require a minimum two-year history.
13 If it's less than two years, they have to disclose additional.
14 It's depending on what they do and how long they've been there.
15 It could be a deciphering factor on whether we're going to
16 approve the loan or not.
17 For example, if they are self-employed for six
18 months, they are not likely to get a loan if someone was
19 self-employed for three-plus years and have a history of making
20 money.
21 Q. What about "position title, type of business," is
22 that an important piece of information?
23 A. Absolutely.
24 Q. Why is that?
25 A. We kind of look at the overall picture of the file.

1 Where do they work? What's their position? How much money do
2 they make? Does it make sense?
3 I mean, we use it in different aspects of -- on how
4 they pay their bills. Sometimes, you know, somebody's income
5 is feast and famine. Construction. It could be good. It
6 could be bad. So we kind of look at the overall picture to
7 determine if it's an acceptable risk.
8 Q. Is a person's job title ever compared with their
9 claimed income to see if there's a match or mismatch?
10 A. Absolutely.
11 Q. Could you explain that?
12 A. Well, it -- also it's relative to location. For
13 example, if somebody's a secretary in Utah making $10,000 a
14 month, that's very questionable. However, if they are in New
15 York City and they are an executive secretary, good
16 possibility. That's a good chance.
17 Q. There is also a phone number listed, a business
18 phone. Is there a way that that number is used in the loan
19 process?
20 A. They have the business phone located there. I mean,
21 they know they're supposed to put the business phone, but
22 sometimes it's their direct line.
23 So as an underwriter, our process is to use the
24 internet, pull it up on the website, use the phone number from
25 the website and call to verify employment that way.

1 Q. Why do you go through that extra process of trying to
2 find the number independently?
3 A. Because we want to make sure that's a legit company.
4 We want to make sure that we have the correct phone number.
5 We've come across many a times where they put a phone number on
6 the application, but it's actually their friend that's going to
7 verify their income or something else.
8 Q. So is it fair to stay steps are taken to try and
9 prevent that from happening?
10 A. Correct. And throughout the years we've even doubled
11 that step. At one point in time we only verified one time two
12 days prior to funding. And then it got to a point where at the
13 time of the underwriting, the underwriter would have to verify,
14 and at the time of funding, the funder would have to re-verify
15 because we would couch loans at that point in time, too.
16 Q. Despite these precautions, is it the case that
17 sometimes that people are able to fool the system?
18 A. Absolutely.
19 Q. Let's look at page two of this exhibit. What's shown
20 in section five, which is at the top of page two of this
21 exhibit?
22 A. This is the income. And I believe on this loan it
23 was a stated loan, so they would state their income on the
24 application, and then we would verify that they in fact had the
25 job and the position.

1 And then on the right-hand side is kind of a
2 breakdown of what they currently pay now and what their
3 proposed payment once this loan funds would be.
4 Q. Is income an important piece of information?
5 A. Absolutely.
6 Q. Why is that?
7 A. Once again, it's their ability to repay us. So if
8 income, whether it be, you know, full doc or stated, whether
9 it's verified or not, we use it in the calculation.
10 And if that debt ratio is not acceptable for the
11 program that they are requesting, it could be declined.
12 Q. How about liabilities, are those important as well?
13 A. Yes.
14 Q. Why is that?
15 A. Liabilities is it's -- it's how many payments they
16 have to make. We use their liabilities in comparison to their
17 income. So if they have too much outstanding debt, I mean,
18 more than likely if they lose their job or something happens,
19 we're going to have a problem collecting our payment.
20 Q. Just to be clear, where it's listing income, that's
21 monthly, is that correct?
22 A. Yes.
23 Q. Let's go ahead and move down the page to the bottom
24 half. Is this the assets and liabilities section, part six?

1 Q. What's shown in this section?
2 A. On the right-hand side is their assets, and on the
3 left-hand side is all the debt they owe, liabilities.
4 Q. Is that backwards?
5 A. On the right-hand side is their assets, their
6 checking account, their savings -- I'm sorry -- left-hand side,
7 right-hand side. I apologize. It is backwards.
8 Q. So left-hand side assets, right-hand side
9 liabilities?
10 A. Yes.
11 Q. Are those also important pieces of information to be
12 reported correctly?
13 A. Absolutely.
14 Q. Why is that?
15 A. It's used in the overall evaluation process of
16 underwriting. We use the liabilities to calculate their debt
17 ratio, the assets. Especially if it's a person's purchase
18 transaction, we need to know where all that money is coming
19 from. And it shows their financial stability. I mean, do they
20 have ability to save? Do they have ability to, you know, risk
21 their financial responsibility?
22 Q. Are there types of loans where -- or are there
23 situations where bank statements are required in order to show
24 assets that are in bank accounts or claim to be in bank
25 accounts?

1 A. Yes. There are certain programs and products that
2 require.
3 Q. Let's go ahead and go to the next page, page three.
4 The top section, "schedule of real estate owned," what's being
5 asked for there?
6 A. If the borrower owns any additional property, whether
7 it's, you know, financed or they own it free and clear, that
8 information needs to be disclosed here. Because even if they
9 own it free and clear, there's still property taxes and
10 insurance that affect their debt ratio.
11 Q. Are there things that are done in order to --
12 Let me ask it more directly. Are credit reports
13 pulled to see what other outstanding loans borrowers have?
14 A. Yes.
15 Q. Why is that done?
16 A. Credit reports are pulled because it's a third-party
17 resource that the lender could use to compare what they have on
18 their 1003 versus what -- because, you know, some people
19 forget, some people, you know, don't disclose all information.
20 Or they just purchased a car that hasn't -- the first payment
21 is not due, but yet it shows up on the credit report, and it
22 doesn't show up on their 1003.
23 So we compare them, and we use that as a tool to see
24 if we have the exact picture when we're calculating the debt
25 ratio.

1 Q. If someone were to submit loans asking to purchase
2 two different primary residences -- same person, but two
3 different primary residences -- would that raise any red flags?
4 A. Absolutely. Because, I mean, when we're evaluating a
5 loan, you can only have one primary residence. One of them has
6 to be a second home, or one of them has to be investment
7 property. And second homes are typically in a resort-type
8 area. It can't be the house next door.
9 Q. If a person were to submit that to Fremont, was there
10 a high probability -- submit both of them to Fremont, was there
11 a high probability that that would have been discovered?
12 A. Yes. And it would have been declined if they were
13 both submitted as owner occupied.
14 Q. Now if they were submitted to Fremont and another
15 lender, would that have reduced the possibility of you
16 catching --
17 A. Unfortunately, yes.
18 Q. And if it was done in a short time period, would that
19 have also prevented you from seeing it on a credit report?
21 Q. Okay. Let's go to the declaration section. There
22 are a series of yes-or-no questions in the declaration section,
23 is that right?
24 A. Yes.
25 Q. Now if we go down to number -- well, it's letter L,

1 do you see that one?
2 A. I do.
3 Q. What is that question?
4 A. That's another question that kind of gives the
5 borrower the opportunity to disclose whether it's an owner
6 occupied or not.
7 It states, "do you intend to occupy the property as
8 your primary residence?" And they check "yes or no." So
9 sometimes on the front page they'll have it's owner occupied,
10 but on this page they'll have, no, it's not. So then we kind
11 of cross check.
12 Q. In this case what was checked?
13 A. Yes, it is. So it is consistent with the first page.
14 Q. And looking at question M, what is that question?
15 A. It states, "have you had an ownership interest in a
16 property within the last three years?"
17 Q. So what does that mean?
18 A. Have they purchased another property, or do they have
19 any current real estate that they own.
20 Q. What's checked here?
21 A. "No."
22 Q. Let's go to the left-hand side, "details of
23 transaction," what's shown there?
24 A. This is kind of a summary of the transaction. The
25 purchase price was 215,000, and they put the estimated closing

1 costs. And then the first was 217 -- I'm sorry -- the total
2 cost -- it's just kind of a breakdown, how we had the secondary
3 financing as well, and this loan amount. And then how much
4 they potentially have to come in to close.
5 We evaluate this section, but we rely heavily more on
6 the final, which is -- or the estimated HUD-1 settlement
7 statement. So this is not always completely accurate.
8 Q. Okay. So that would be the one portion of the
9 document that doesn't need to be completely accurate?
10 A. We do use it. The numbers itself. However, we do
11 use it for subordinate financing. Because sometimes they will
12 put a private party in there that we're not lending the second
13 on, but we'll see subordinate financing. And we're like, okay,
14 where is that subordinate financing coming from. It's not cash
15 brought in.
16 So it is used for different purposes. Just we're not
17 looking at the numbers exactly because we rely on a different
18 party for that.
19 Q. In this particular case, subordinate financing, is
20 that the second loan that Fremont also did?
22 Q. And then looking to the the bottom P, cash from --
23 well, tell us what section P says?
24 A. Cash from -- that just basically states, does the
25 borrower have to come in with cash to close, or are they

1 getting cash back.
2 Q. Okay. Let's go to the bottom of this page. Let's
3 grab a little bit higher.
4 First of all, there is an acknowledgement and
5 agreement section, do you see that?
6 A. Yes.
7 Q. Without reading the whole thing, could you summarize
8 the information in there?
9 A. This goes into detail about how the information has
10 to be truthful and accurate. And it's -- there's fines and
11 penalties if it's not. And it just goes into detail.
12 And then the borrower is required to sign,
13 acknowledging that the information they provided to us was true
14 and accurate.
15 Q. And then there is a signature line below that. Whose
16 signature goes in that line?
17 A. The bottom section has to do with the loan officer.
18 Q. I'm sorry. The one just below, the borrower's
19 signature.
20 A. The borrower's signature. That's where the borrower
21 acknowledges the declaration, and the acknowledgement and
22 agreement.
23 Q. And looking at the bottom section that you were just
24 referring to, whose information goes there?
25 A. That's the loan officer at the broker's office. How

1 they took this application, was it through mail, telephone, you
2 know, internet. And then they sign and date it that this
3 information is accurate as well.
4 Q. And in this case it's Charles Head, Head Financial
5 Services?
7 Q. Okay. Let's go to page four. What's on page four?
8 A. Well, page four is just if they have additional
9 debts/liabilities that they need to disclose.
10 Q. Okay. Let's go to page five of this exhibit. What
11 is page five?
12 A. This is the Uniform Residential Loan Application on
13 the second. The loan amount's for the 43,000.
14 Q. So that would be the loan amount right there, 43,000?
15 A. Correct.
16 Q. Is the information collected on this form the same --
17 is this the same Uniform Residential Loan Application as we
18 just saw in the first one?
20 Q. Let's go to page nine. What is this form?
21 A. This is Fremont's internal verification that we
22 verified employment. This form -- the information is typed
23 into the system, and this form is printed out and put in the
24 file.
25 Q. What does this particular form show?

1 A. It's a request for verification of employment. The
2 way, as a lender, we use this form is different than the way a
3 broker would use this form.
4 They would print this form, mail it out to the actual
5 employer, have them complete it and send it back. We just use
6 it the same standard form, but we use it as our internal
7 call-in form.
8 Q. When you say internal call-in form, what do you mean?
9 A. Where either the underwriter or the funder has called
10 the employment. I mean, they went into the internet, pulled up
11 the verification, got the phone number, called and spoke with
12 someone at that employer, and verified the borrower's
13 employment.
14 Q. So did this form also come out of the file for the
15 Queen Street property we have been talking about?
16 A. Yes, it did.
17 Q. What does the existence of this form indicate to you?
18 A. It's our due diligence part showing that we verified
19 their employment.
20 Q. And in this case with Shoreline Realty in Long Beach?
22 Q. Let's turn to page ten. What is this form?
23 A. This is our handwritten manual form. Many times our
24 underwriter or account executive will pull this form out of
25 their desk. And as they are on the phone verifying it, they

1 are scribbling information. They are writing it down prior to
2 typing it into the system and printing that one page.
3 Q. So this is also part of the verification process?
4 A. Correct.
5 Q. Let's go to page ten -- excuse me -- page eleven of
6 Exhibit 10-A. What is this form?
7 A. This loan was signed by a power of attorney.
8 Q. And who is the power of attorney in this case?
9 A. The power of attorney was Joshua Coffman, I believe.
10 Q. Joshua Coffman for Adam Coffman?
11 A. Yes.
12 Q. Looking to page twelve. What is this document?
13 A. This is an occupancy affidavit that the borrower
14 signs at closing. And it should be completed. A box should be
15 checked and signed indicating whether it's going to be an
16 owner-occupied property or investment property.
17 Q. In this case is the box checked?
18 A. Unfortunately it's not.
19 Q. In addition to looking at the loan file for -- I'm
20 sorry -- we were supposed to talk about Government's
21 Exhibit 10-B first.
22 You had mentioned a HUD-1 before. What is that?
23 A. The HUD-1 is the final settlement statement. It's a
24 complete accounting of this entire transaction.
25 So any -- where the loan is coming from, any debts to

1 be paid, and to what parties they are being paid to.
2 Q. I've brought up a HUD-1. Do copies of HUD-1s go to
3 the lender?
4 A. Yes. We do have a copy of the HUD-1 on file, and
5 it's stamped by the escrow company as certified.
6 Q. This particular one, though, this came from the
7 escrow company, not from your files, is that right?
8 A. That is correct. Because I didn't see the stamp on
9 it.
10 Q. Is this also for the 240 West Queen Street property?
11 A. Yes, it is.
12 Q. And I would like to look on the left-hand side if we
13 go down. Does this left-hand side of this first page of the
14 HUD-1 show any information relevant to the loan that was being
15 given?
16 A. Yes. On the top it shows 101. It shows the purchase
17 price. The purchase price of this loan -- the combined loans.
18 This property was 215,000.
19 And then it shows the settlement charges. That total
20 dollar amount of $2,620 is a total from the second page, and
21 it's itemized out. Then there was some county taxes.
22 And then down below here shows the amount of earnest
23 money. The amount on the first was 172,000, and the amount on
24 the second was 43,000. So the first of 172 and our second of
25 43 is the combined total of 215,000.

1 And then it talks about non-recurring closing costs.
2 All this information is important because we're looking at it
3 to evaluate it. Non-recurring closing costs. Can I see the
4 section on the other side for a second? This same page. Just
5 the other side real fast.
6 As a lender we do allow the seller to provide a
7 certain percentage of non-recurring closing costs. And you
8 will see on this side it's on the seller side coming to the
9 buyer's side, and it's within the certain percentage. I think
10 it was -- it depends on the product, but it was anywhere from
11 three to six percent that was allowed. And that's calculated
12 based off the purchase price.
13 Q. So in this case that's the $2,620 figure?
14 A. Correct. Yes. And it reflects as a disbursement on
15 the seller side.
16 Q. That's a lot of big words. Can you explain what you
17 mean by the closing costs, non-reimbursable, non-refundable?
18 A. On a purchase transaction, the loan was -- the
19 property sold for 215,000. So the borrower has to come up with
20 215,000 to buy this property. But for the entire transaction
21 there is additional fees by third parties. There could be a
22 lender fee. There could be a broker fee. For any services
23 rendered. There could be appraiser fee. So that amount is
24 calculated above and beyond the purchase price. So they have
25 to come up with the 215 plus whatever closing costs there is.

1 As a lender, we allow some of those closing costs.
2 And non-recurring means that -- property taxes are considered
3 recurring. It recurs. Every year they have to pay property
4 taxes. Non-recurring can be something that it was just for
5 that loan. Like maybe a title fee or there's certain fees. It
6 gets very complicated.
7 Q. Okay. So this 215 figure that we see as total
8 consideration, ultimately what is that purporting to be?
9 A. That is to purchase the property.
10 Q. When you say amount to purchase the property, what
11 does the lender expect that to be, the amount paid to who?
12 A. Paid to the seller to actually -- for the buyer to
13 acquire that property.
14 Q. Does the lender expect any portion of that money to
15 go back to the purported buyer of the property to get cashed
16 out?
17 A. Absolutely not.
18 Q. Why not?
19 A. On a purchase transaction, the buyer benefits from
20 this transaction by acquiring the property. There shouldn't be
21 any kickbacks or anything like that.
22 Anything pertaining to that should be disclosed on
23 this HUD-1. If anything is disclosed on this HUD-1, the lender
24 is to evaluate it and determine if we're okay with it because
25 we're financing this property for them. So it should be fully

1 disclosed, and the lender should approve or decline.
2 Q. Now should the broker receive a portion of the money
3 for the purchase price?
4 A. The broker should receive only fees for services
5 rendered. Any fees above and beyond should be disclosed as
6 well.
7 Q. When you say fees for services rendered, what does
8 that typically mean?
9 A. That is disclosed prior to us even drawing docs. So
10 all those fees should be established. There should be no
11 kickbacks to the broker as well. There should be no reason for
12 the broker to get any fees that is not disclosed on the HUD.
13 Q. In review of the file, in preparation for your
14 testimony, did you notice anything about this file that was
15 unusual?
16 A. I did.
17 Q. What did you notice?
18 A. I noticed on the seller side there was a significant
19 amount going back to the broker. And then in evaluating the
20 file I determined that --
21 Q. Let me pause there. And let's go look where that is.
22 Is that on page two where you see that?
23 A. Yes, it is.
24 Q. First of all, higher up on page two is where typical
25 broker fees are disclosed, is that right?

2 Q. So if we go up there first, we could take a look. So
3 is this top portion where normal fees are disclosed?
4 A. Yes.
5 Q. Now let's go look at the bottom of the page. You
6 said you noticed something. Could you point out what you
7 noticed?
8 A. It's line 1305. 1305.
9 Q. What does that line say?
10 A. It says Charles C. Head, and it's 80,000 --
11 Q. $80,841.54?
12 A. -- fifty-four cents, yes.
13 Q. What was unusual about that?
14 A. That was very unusual, and that as an underwriter
15 would be an ultimate red flag. When I was evaluating the file
16 to determine how it got through our system, when I pulled the
17 documents apart and looked at the fax, when the actual final
18 HUD-1 was sent to us, it was sent to us after the loan had
19 funded. So it wasn't disclosed to us until after the loan was
20 probably in post-closing.
21 What I did realize is that the documents that were
22 sent to us was always on just the buyer. The seller side was
23 not completed until the final HUD-1.
24 Q. So let's make that clear because we've been kind of
25 walking around it. If we go to the top of this page. Just

1 look at the corner, the top right corner.
2 Does a HUD-1 have a column for the borrower's side
3 and for the seller's side?
5 Q. And the type of HUD-1 we're looking at here, it has
6 the information for both sides, is that right?
7 A. That is true.
8 Q. Are there other types of HUD-1s that are released
9 during the course of a transaction that will only show one side
10 or the other side?
11 A. There's the standard HUD-1, but then there's
12 estimated closing costs that are provided by escrow that will
13 just show the borrower's fees on the transaction. Or sometimes
14 they will provide the estimated HUD-1 on this exact form, but
15 they just won't fill out the seller section.
16 Q. So how was it that Fremont sent $80,841.54 to Charles
17 Head before it knew that he was receiving the money from this
18 loan?
19 A. Well, there's -- we rely heavily on all parties to do
20 their job. Certain parties -- we're most concerned about the
21 buyer because we don't have a whole lot of control of the
22 seller. We rely on other parties to disclose information to us
23 on where the seller's proceeds are going to once the seller
24 receives them.
25 But what happens at times is that there may be --

1 when we're -- as an underwriter, when I'm evaluating any liens
2 on the property, if this was a lien on the property, then it
3 may have been acceptable. And we would have disclosed needed
4 to pay it off.
5 However, because as a lender -- and we're doing a
6 purchase transaction, we need to make sure that the property is
7 clear from all liens because we need to record in first
8 position. If this was not a lien on the property, we would dig
9 into it a little deeper, like, why is the broker receiving more
10 funds.
11 Q. So was this a lien on property like that?
12 A. No, it was not.
13 Q. So should this money have gone to Charles Head?
14 MR. TEDMON: Objection, Your Honor. Speculation.
16 Q. BY MR. ANDERSON: Based on the underwriting
17 guidelines, had this information been disclosed to Fremont,
18 would those underwriting guidelines have permitted this
19 payment?
20 A. No, it would not.
21 Q. Okay. Let's look at page three. Are you familiar
22 with this document at all?
23 A. This is an escrow -- let me see -- this is the wire
24 instructions from escrow, yes.
25 Q. How are you familiar with this document?

1 A. Whenever the loan is wired out, we need instructions
2 from the closing -- the title company or the escrow where the
3 wire -- where the funds are to be received, who is going to
4 receive the funds. And these are our instructions on where the
5 funds are going to.
6 Q. This is not a Fremont document, though?
7 A. No, it's not.
8 Q. And this was not pulled from the Fremont file?
9 A. Actually, Fremont has a lot of documents in file that
10 belongs to third parties. It's a complete file, but, yet, not
11 all the information came from Fremont's computers or systems.
12 It could have come from, you know, the appraisal from the
13 appraiser. Lots of documents from the escrow company. And the
14 escrow company, their file is different than our file.
15 So we have a lot of different documentations from
16 various parties plus our own internal documentation, and, yes,
17 this was received.
18 Q. Okay. But that's another document that if you had
19 had knowledge of it ahead of time, would not have --
21 MR. ANDERSON: I already got it with an earlier
22 question.
23 THE COURT: The question is withdrawn.
24 Q. BY MR. ANDERSON: Let's move on to Government's
25 Exhibit 20. We will go through this a bit faster.

1 20-A. And, Your Honor, if it's not admitted already,
2 I would ask that it be admitted pursuant to stipulation.
3 THE COURT: As covered by the stipulation, 20-A is
4 admitted.
5 (Government Exhibit 20-A, 1161 Saratoga Way, Tracy –
7 THE COURT: Can you also focus and try to prevent
8 narrative?
10 THE COURT: And can you wait for the next question
11 once you've answered a question. 20-A is admitted.
12 Q. BY MR. ANDERSON: So question/answer.
13 Is this another Uniform Residential Loan Application?
14 A. Yes, it is.
15 Q. What property is it for?
16 A. This is Saratoga property.
17 Q. Was --
18 A. Saratoga property, Tracy, California.
19 Q. Was this another loan that application that went
20 through Fremont?
21 A. Yes.
22 Q. Have you reviewed the file for this loan as well?
23 A. I have.
24 Q. Is this the same type of form that we just looked at
25 with respect to the other property?

2 Q. Is the information on this form equally important to
3 be truthful as it was on the other form?
4 A. Absolutely.
5 Q. I notice there is a different borrower listed on this
6 form, Eduardo Vanegas, do you see that?
7 A. I do.
8 Q. And that's claiming to be the purchaser/borrower of
9 this property, is that correct?
11 Q. And is this also another property where primary
12 residence is listed?
13 A. Yes.
14 Q. So again, the employment, the primary residency, the
15 income, all of those facts would be important to approving or
16 disapproving this application?
17 A. Very important.
18 Q. Would it have been important to know if Mr. Vanegas
19 was simultaneously purchasing other properties or allowing his
20 name to be used to purchase other properties?
21 A. Absolutely.
22 Q. Should a person like Mr. Vanegas, if Fremont was
23 aware that he was being paid a sum of money, approximately
24 $5,000, would that have any impact on whether or not the loan
25 would be approved?

1 A. If that was found out through the underwriting
2 process, it would have been declined.
3 Q. And if we go to page three. We're in section eight,
4 declarations, question L. What was that question and answer?
5 A. They answered, yes, it was going to be owner
6 occupied.
7 Q. And section M?
8 A. That, no, they don't have any other ownership in
9 property within the last three years.
10 Q. And then we'll look to the bottom half of that page.
11 Does this have the same advisement as the other form
12 that we saw?
14 Q. It's also signed by someone in the borrower's
15 signature line?
16 A. Yes.
17 Q. And then also in the interviewer's -- broker's
18 section it's signed as well, is that correct?
19 A. Charles Head, yes.
20 Q. And if we go to page five, is this another loan for
21 the same property?
22 A. Yes.
23 Q. And it looks like these are organized, actually, the
24 opposite way?
25 A. Correct. This is for the first, and the other one

1 was for the second.
2 Q. Let's show an example of the difference of interest
3 rate. If we look at the first here, what's the interest rate?
4 A. 6 point -- can you enlarge it?
5 Q. 6.1 percent, is that right?
6 A. Kind of blurry.
7 Q. I don't think that helped at all?
8 A. No.
9 Q. Well, let's go to page one, and we'll see if we can
10 tell there's difference. Page one. There we go?
11 A. This is the second. It was 11.375.
12 Q. And if we go to page nine again, Exhibit 20-A, is
13 this another one of those occupancy affidavit and financial
14 status forms?
15 A. Yes.
16 Q. Again, no check box?
17 A. Correct.
18 Q. Or no boxes checked, I should say. And if we go to
19 page eleven. What is this form?
20 A. Fremont's internal verification of employment form.
21 Q. What does this form indicate happened?
22 A. That they verified employment.
23 Q. Who did they verify employment with?
24 A. Down below they spoke with --
25 Q. If we could move down?

1 A. Down below. Mike Harris.
2 Q. Who is listed as?
3 A. The owner of the company.
4 Q. If we go back up to the top, what company are we
5 looking at?
6 A. Financial Enterprise in Huntington Beach.
7 Q. Again, listing Mike Harris as the owner?
8 A. Correct.
9 Q. Let's go to page twelve. What's this form?
10 A. This is Fremont's internal form that they use when
11 they are actually on the phone verifying the employment.
12 Q. So another part of that same process, verification?
13 A. Correct.
14 Q. Let's go to Government's Exhibit 20-B.
15 Your Honor, I'd ask that it be admitted as an escrow
16 document pursuant to the records stipulation.
17 THE COURT: As covered by the stipulation, 20-B is
18 admitted.
19 (Government Exhibit 20-B, 1161 Saratoga Way, Tracy –
20 Escrow File, admitted into evidence.)
21 Q. BY MR. ANDERSON: At the top of this form, what
22 property is this for?
23 A. 1161 Saratoga Court, Tracy, California.
24 Q. So the one we've just been looking at loan
25 applications for, is that right?

2 Q. That's listed here in section G?
3 A. Yes.
4 Q. Who is listed as the borrower?
6 Q. What's it listing as his address?
7 A. 1161 Saratoga Court, Tracy, California.
8 Q. Assuming that this was being purchased as a primary
9 residence, is that a fairly typical thing you would see that
10 the person would list their new address?
11 A. Typically, no. If they don't reside there currently.
12 Q. Who is listed as the seller on this?
13 A. Jake and Lisa Malentino.
14 Q. Is that in section E?
15 A. Correct.
16 Q. And then the lender is that also listed up here?
17 A. On section F.
18 Q. Fremont Investment?
19 A. Fremont Investment Loan.
20 Q. What is this part that says "settlement date," what
21 does that mean?
22 A. That's the date the transaction completed.
23 November 19th, 2004.
24 Q. And "settlement agent," what does that mean?
25 A. That's the person -- the escrow company that

1 conducted the settlement.
2 Q. And then again we can see an example of the borrower
3 side / seller side, is that what we see here?
5 Q. Let's go ahead and go to page two. Do you see line
6 1306, Statewide Financial Group proceeds?
7 A. Yes.
8 Q. That lists $68,933.66?
10 Q. Would that have been an important -- would it have
11 been an important piece of information for Fremont to know
12 under its underwriting guidelines if that money was actually
13 going to a company controlled by someone associated with the
14 broker?
15 A. If that information was found out through the lending
16 process, it would have been declined.
17 Q. And let's look up to the top of this form. In this
18 case was a broker listed?
19 A. Yes. Head Financial Services.
20 Q. Two $500 fees, one for processing, one for broker?
21 A. Correct.
22 Q. Are those fairly typical amounts as far as you know?
23 A. Yes.
24 Q. So in reviewing these loan applications, that
25 information that we've discussed for both loan applications,

1 was that all important information to be truthfully disclosed?
2 A. Very important information.
3 Q. Would it have influenced whether or not Fremont would
4 have approved the loan if different information was known or if
5 it was known that false information was put down?
6 A. Absolutely. Anytime the information changes --
8 the last part of it. It's a "yes or no" answer.
9 THE COURT: As what?
10 MR. TEDMON: A "yes or no" question.
12 THE WITNESS: Absolutely. Yes.
13 MR. ANDERSON: No further questions. Thank you.
14 THE COURT: All right. And that actually brings us
15 to 10:00. We're going to take one break this morning given
16 that we're ending early. We will take a 15-minute break.
17 Please be back at 10:15.
18 During the break, as always, remember my admonitions
19 which I'm certain you can recite to yourselves at this point.
20 I'll remind you periodically in more depth. Have a good break.
21 We will see you at 10:15.
22 (Jury out.)
23 THE COURT: So what's the likelihood we'll get to
24 Ms. Rivas?
25 MR. ANDERSON: Very likely. Well, a lot of that

1 depends on Mr. Haydn-Myer and Mr. Tedmon.
2 MR. TEDMON: We go until 11:45 a.m. today?
3 THE COURT: Yeah. Maybe 20-of.
4 MR. TEDMON: I think we will get to it.
5 MR. HAYDN-MYER: Ms. Rivas is your next witness?
7 THE COURT: Then I would like to bring her in and
8 have a colloquy with her.
9 But, first, just to clarify something. On the Yang
10 hearsay objection, I think you meant 801(d)(1) for starters.
11 MR. MORRIS: Your Honor, that was Mr. Tedmon who
12 brought it. I brought it up as a prior consistent statement
13 after her credibility had been --
14 THE COURT: Right. You referenced (d)(2). I think
15 you meant (d)(1).
16 MR. MORRIS: Mr. Tedmon referenced the rule. Not I.
17 MR. TEDMON: Yeah. Well --
18 THE COURT: In any event, I didn't want to have an
19 extended discussion in front of the jury, and perhaps I was
20 also cutting to the chase. I think there were other exceptions
21 that could have applied including 803(1) and (3). Do you want
22 to make any more of a record?
23 MR. TEDMON: No. It's stated as I intended.
24 THE COURT: Your issues are preserved.
25 All right. Let's bring Ms. Rivas in.

1 MR. ANDERSON: We have another issue, Your Honor.
2 All right. It appears that Ms. Silva came in and sat
3 through a portion of Ms. Yang's testimony. Nobody was aware of
4 it until the conclusion of her testimony. I think it was
5 inadvertent.
6 THE COURT: Well, the Court relies on the parties to
7 police that.
8 MR. TEDMON: It's their witness. I don't even know
9 what she looks like.
10 MR. ANDERSON: And, frankly, neither do we, Your
11 Honor. We haven't met her in person before.
12 THE COURT: Well, is there a proposal?
13 MR. HAYDN-MYER: Yes, Your Honor, I move that she not
14 testify.
16 MR. TEDMON: I join.
17 THE COURT: All right. I'll consider that during the
18 break. After Ms. -- I'm sorry? Who are we on now? Irma
19 Valdez. When would Ms. Silva testify?
20 MR. ANDERSON: Probably not today. I don't think
21 we're going to get to her.
22 THE COURT: All right. And your response to the
23 request that she not testify?
24 MR. ANDERSON: We'd like her to testify, Your Honor.
25 THE COURT: All right. Let's bring Ms. Rivas in.

1 Hopefully for about three minutes, max.
2 (Ms. Nora Rivas enters courtroom).
3 THE COURT: Ms. Rivas, if you could please come
4 forward.
6 the whole truth, and nothing but the truth?
10 THE WITNESS: Nora Rivas, N-o-r-a, R-i-v-a-s.
11 THE COURT: Ms. Rivas, the Court has a few questions
12 for you. You're appearing here today without counsel?
13 MS. RIVAS: Correct.
14 THE COURT: You have received a subpoena to appear?
15 MS. RIVAS: Yes.
16 THE COURT: Have you received a copy of an order the
17 Court signed with respect to your testimony?
18 MS. RIVAS: Yes.
19 THE COURT: All right. The Court signed that order
20 with the understanding that you are being called to testify?
21 MS. RIVAS: Correct.
22 THE COURT: And the Court's order at this point
23 compels you to testify. A record will be made of whatever you
24 say. Typically you would have a right to remain silent in the
25 face of a subpoena.

1 MS. RIVAS: Okay.
2 THE COURT: The Court had been advised that it was
3 likely that you would invoke the Fifth Amendment in response to
4 the subpoena. Is that a fair understanding?
5 MS. RIVAS: Yes.
6 THE COURT: All right. So the order does compel you
7 to testify. It grants you immunity with limitations. You
8 could still be subject to prosecution for perjury or making a
9 false statement based on whatever is made of record during your
10 testimony. You understand that?
11 MS. RIVAS: I do.
12 THE COURT: Have you at any point wished to consult
13 with counsel regarding your testimony --
14 MS. RIVAS: No.
15 THE COURT: -- in this case?
16 MS. RIVAS: No. I'm okay.
17 THE COURT: And you're not asking for time to consult
18 with counsel before you are called to testify which the Court
19 understand is likely to occur today yet?
20 MS. RIVAS: Yes. I'm sorry. I don't understand the
21 question.
22 THE COURT: You are not requesting time to consult
23 with counsel before your testimony?
24 MS. RIVAS: Oh, no, no, no.
25 THE COURT: All right. Does counsel have any other

1 questions it wishes the Court to cover?
2 MR. MORRIS: Not from the Government.
7 THE COURT: Thank you, Ms. Rivas. That's all the
8 Court needed to know. And again I expect you to be called this
9 morning yet. You may step down.
10 All right. Ten-minute break.
11 (Break taken.)
12 THE COURT: All right. Are we ready for the jury?
14 But on the issue with Ms. Silva, I've discussed with
15 defense counsel, and we think the best way to proceed with her
16 today is to excuse the jury a little bit early, call her in,
17 and ask her open-ended questions about the length of time and
18 what she heard. So we can establish that record today and then
19 discuss tomorrow or at some other point convenient to the Court
20 what we're going to do about it. But at least so we can make
21 the record while it's fresh in her mind.
22 MR. HAYDN-MYER: I'm going to ask that the Court do
23 the open-ended questions, please, but I am in agreement with
24 the plan.
25 THE COURT: So simply to probe what she heard and

1 saw?
3 THE COURT: 11:30.
4 So we'll complete this witness, and then Ms. Rivas,
5 and break by 11:30 to review with Ms. Silva. All right.
7 THE COURT: Let's bring the jury in. Yes.
8 (Jury in.)
9 THE COURT: You may be seated. Welcome back, ladies
10 and gentlemen of the jury. We had a brief bit of housekeeping
11 to perform, and as a result of that our plan now is to excuse
12 you at 11:30 to do a bit more housekeeping of our own. So just
13 FYI. We have testimony we will take until then. Mr. Tedmon.
15 THE COURT: Cross-examination.
17 BY MR. TEDMON:
18 Q. Ms. Valdez, good morning.
19 A. Good morning.
20 Q. You testified on direct that you are currently
21 working for Signature Holdings, is that correct?
23 Q. And Signature Holdings is a different company from
24 Fremont, correct?

1 Q. All right. Now, when did Signature Holdings become
2 your employer?
3 A. June 11th of 2010.
4 Q. Okay. Prior to that you were working for Fremont?
5 A. Fremont Reorganizing. It was Fremont from '97 to mid
6 2008. Then it changed to Fremont Reorganizing Corporation.
7 And then it changed -- on June 11th of 2010 it changed to
8 Signature Group Holdings.
9 Q. And you're aware, because you've been with Fremont
10 for all these years, that in 2008 they filed Chapter 11
11 bankruptcy, correct?
12 A. Our parent company did. Not Fremont Investment and
13 Loan.
14 Q. Okay. Well, they ended up having to reorganize
15 because of failure to follow their own guidelines, that was
16 part of their financial problems, correct?
17 A. I don't know the extent of it.
18 Q. All right.
19 A. All I know is that mid 2008 is when we changed to
20 Fremont Reorganizing Corporation.
21 Q. Well, you're aware that the State of Massachusetts
22 sued Fremont for deceptive and unfair practices in terms of
23 their own loan programs, correct?
24 A. I wasn't involved with that lawsuit. But, yes, I did
25 hear bits and pieces.

1 Q. And as a result of that and other things there was
2 this reorganization that had to take place, correct?
3 A. I don't know when that lawsuit took place and when
4 the reorganization, I do not know.
5 Q. Okay. But in any event, Fremont is no longer,
6 correct?
7 A. That is correct. However, Signature has acquired
8 their assets and liabilities.
9 Q. Right. And that's a new holding group, correct?
10 A. Yes.
11 Q. And Fremont is no more in its original form?
13 Q. And that's been true since approximately 2008,
14 correct?
15 A. Yes.
16 Q. You are also aware that as part of Fremont's
17 reorganization, that was due in large part from pressure from
18 regulators, correct?
19 A. I don't know the extent of the reorganization. Our
20 company was fairly large, and I was not working with corporate
21 or legal at that point in time. So I don't know the extent of
22 it.
23 Q. Well, you know that regulators were checking into
24 Fremont's business activities, you know that?
25 A. Yes, I did hear something.

1 Q. And the reason was because they were weren't
2 following their own procedures and policies in their loan
3 reviews, correct?
4 A. I don't know the extent of it. I have never read the
5 entire order.
6 Q. All right. Well, you're aware of some of it, though,
7 true?
8 A. True.
9 Q. And you're aware that during this mid 2000 period of
10 time that we're speaking of in this trial -- okay, you got that
11 period in time in mind?
12 A. Yes.
13 Q. All right -- - that it was very common for Fremont
14 and others to not follow their own policies, you're aware of
15 that, correct?
16 A. We're dealing with many people involved and --
17 Q. Well, the answer is "yes or no"?
18 A. Potentially, yes.
19 Q. Yes. And you would agree, would you not, that the
20 guidelines that you've spoken about today are only as good as
21 those that are followed, correct?
22 A. Correct.
23 Q. And that would be true for Fremont, correct?
24 A. True, yes.
25 Q. And in fact, they've been called on the carpet for

1 not following their own guidelines, correct?
2 A. Possibly.
3 Q. All right. Well, you've heard of the Carl Levin
4 Subcommittee?
5 A. No.
6 Q. Senator Levin? You're not aware of that?
7 A. No.
8 Q. Are you aware of the various Wall Street firms that
9 have been sued because they did not follow their own
10 regulations?
11 A. I saw a documentary, "Inside Job," that kind of
12 enlightened me.
13 Q. And Fremont was in that same area of concern as far
14 as these investigations that they didn't follow their own
15 rules, you're aware of that, aren't you?
16 A. I think all lenders were at that particular point in
17 time.
18 Q. Well, that includes Fremont then, correct?
19 A. Correct.
20 Q. Now you talked about training from, I think, 2002 to
21 mid 2008 you were a senior training specialist for account
22 executives, is that correct?
23 A. Yes.
24 Q. All right. And there are inside and outside account
25 executives?

1 A. Yes.
2 Q. Now the outside account executives would go to
3 businesses, true?
4 A. True.
5 Q. And part of their job -- and you trained them to do
6 so -- is to develop relationships with brokers or loan
7 processors, correct?
8 A. Everybody in that industry. Yes, relationships are
9 important.
10 Q. And as far as Fremont goes, how did an account
11 executive get paid during this period of time that we're
12 speaking of?
13 A. They were paid based off the loans they funded.
14 Q. Correct. And that was on a commission basis?
15 A. Correct.
16 Q. So if the loans didn't close, they don't get paid,
17 correct?
18 A. True.
19 Q. And the account executives were the ones that were
20 the first point of contact with, for example, a senior loan
21 processor at a particular location, correct?
23 Q. They had the relationship, true?
25 Q. And you know that part of the concern now, looking

1 back, is that the account executives were not doing their job
2 for people like Fremont, correct?
3 A. That's such a general statement. I -- I would
4 disagree with all of it. I mean, not -- yes and no, I would
5 say.
6 Q. Well, let me ask it this way, as far as the account
7 executive is concerned, they don't get paid unless a loan
8 closes, correct?
10 Q. They have a strong financial interest in making sure
11 those loans get closed, correct?
13 Q. Now as far as the underwriters are concerned, you
14 indicated that they were -- at least as far as Fremont was
15 concerned, they were on salary, correct?
16 A. Yes.
17 Q. And that in addition they had an incentive, I think
18 that was your testimony, if the loan was approved, correct?
19 A. Approved or declined.
20 Q. Approved or declined?
21 A. Yes.
22 Q. So was it just a matter of having loans pass through
23 their desk as far as the incentive goes?
24 A. No. They were required -- depending on which year it
25 was they were required to underwrite a certain amount of loans

1 per week. Let's say it was 22 or 25. Any loans underwritten
2 above 25 they would get maybe $25 a loan.
3 Q. So there was a threshold number?
4 A. Correct.
5 Q. And that anything above that that got funded, they
6 got money for, is that --
7 A. No. Underwritten.
8 Q. Maybe I'm not understanding. Let's say the threshold
9 is 25.
10 A. Okay.
11 Q. Anything above 25, whether approved or not, they get
12 an incentive for, is that right?
13 A. Approved or declined. When their incentive is
14 pulled, they go through the system and pull up by their
15 initials.
16 Q. Okay.
17 A. So it's not whether it funded or not. It doesn't
18 matter whether the loan funded or not. It was underwritten.
19 Q. So I'm an underwriter --
20 A. Uh-huh.
21 Q. -- I have a threshold of 25 per month. Let's just
22 use a hypothetical. And I have 35 loans that pass through my
23 desk during that month. So I'm ten above the threshold.
24 Whether they are approved or declined I get an incentive?
25 A. Yes.

1 Q. Okay. So they're working off of volume, true?
2 A. Yes.
3 Q. Well, in other words, they get their salary, correct,
4 and then the more loans that the underwriter can get on their
5 desk to stack up, anything above 25 in our example, they get
6 extra money for, true?
8 Q. So it would behoove the underwriter to make sure that
9 these account executives are sending them a lot of paper,
10 correct?
11 A. Um --
12 Q. Well, that's their incentive?
13 A. Well, the production was -- the volume was so high
14 back then. We had many reps, you know, submitting loans. I
15 mean, we were even working Saturdays at times. It was just --
16 Q. It was crazy.
17 A. It was crazy.
18 Q. It was crazy back then. And the reason it was crazy
19 was because the lenders, like Fremont, just wanted paper so
20 they could process these loans through, that's what was going
21 on, correct?
22 A. I disagree.
23 Q. Well, that's your view.
24 Let me ask you this. Let me ask you this. As far as
25 Fremont goes, okay, you trained the account executives,

1 correct?
2 A. Yes.
3 Q. Okay. Who was supposed to keep the account
4 executives in check in terms of them doing what you trained
5 them to do?
6 A. They have -- well, what happens is once the loan
7 comes in, it's out of the account executive's hands. Now it's
8 into the op center. But account executives had sales managers.
9 Q. All right. Did you supervise them?
10 A. No.
11 Q. Did you train them?
12 A. Some, yes, came through the class. Not all.
13 Q. How many classes was this training involved, by the
14 way, for account executives? Let's start with them.
15 A. It depends on their level of knowledge. We had
16 anywhere from a week class if they were experienced, to a
17 two-week class with -- if they were, you know, not experienced,
18 and to a 13-week class.
19 Q. Okay. What about the sales managers?
20 A. Sales managers would typically go through the week or
21 the two-week class depending on where they came from.
22 Q. And after that training, they went off and did their
23 job?
24 A. Yes.
25 Q. You didn't have any follow-up with them after that,

1 did you?
2 A. That's not necessarily true. Because we did -- we
3 followed up with them for anywhere, depending on their level,
4 from three to six months. And they would field calls through
5 us since we were their first point of contact on certain, you
6 know, scenarios that they had come across on how underwriting
7 guidelines were interpreted.
8 Q. Okay. But, ultimately, whatever paper was pushed
9 through the account executive and went on to the loan op
10 division or the underwriters, it was out of their hands at that
11 point, correct?
12 A. Correct.
13 Q. I'm talking about the AEs?
14 A. Yes.
15 Q. In short, account executives are salespeople, that's
16 really what they are?
17 A. That is true.
18 Q. And you're training them to sell, that's what you
19 did?
20 A. No.
21 Q. No?
22 A. I was training them the underwriting guidelines so
23 they knew what a good loan was and what Fremont's looking for
24 versus, you know -- because they need to know what a good loan
25 is so they won't waste the time of the op center.

1 Q. Well, that's what you trained them to do?
2 A. Correct.
3 Q. We've already covered what the problems were back in
4 the mid 2000s, so we'll leave that at that.
5 MR. ANDERSON: Objection. Argumentative.
7 Q. BY MR. TEDMON: Are you aware of a term sub-prime
8 loans?
9 A. Yes.
10 Q. Fremont was involved with sub-prime loans, correct?
11 A. Fremont was considered a sub-prime lender. But not
12 all our borrowers were sub-prime.
13 Q. Explain what a sub-prime lender is?
14 A. A sub-prime lender is an alternative lending source.
15 Banks are considered kind of A-paper. They have regulations.
16 Sub-prime or alternative lending source -- and the
17 reason I call it an alternative lender is because we may have
18 had considered sub-prime -- they look at debt ratios a little
19 higher. They do collateral that is a little less -- a little
20 bit more risky than an A-paper would do. They accept a little
21 less documentation possibly. They have -- kind of view it as
22 A-paper is in a box. You either fit in the box or you don't.
23 Sub-prime is kind of like a rubber band. It will stretch a
24 little bit. It's got guidelines that are somewhat flexible.
25 Q. Right. And that was the area within which Fremont

1 was operating, the sub-prime area, not the box -- the bank box?
2 A. Correct.
3 Q. So your illustration was it's kind of like a rubber
4 band or a little more flexible, correct?
5 A. Yes.
6 Q. As a matter of fact, the sub-prime world, especially
7 back then, would take all kinds of loans that a bank would not
8 touch, correct?
9 A. Potentially.
10 Q. All right. And the whole goal of sub-prime lender
11 was to accumulate as many loans as they could and bundle them,
12 correct?
13 A. Correct.
14 Q. And by bundling I mean they would put millions and
15 millions of dollars of loans together and then ship them off up
16 the line to somebody that's bigger than Fremont, correct?
17 A. Yes.
18 Q. All right. And ultimately it would get to a company
19 like Bear Stearns back then, correct?
20 A. Possibly.
21 Q. The Wall Street folks, correct?
22 A. Sure.
23 Q. All right. And at that point, after Fremont had
24 taken these riskier loans, bundled them, and sent them up the
25 line, it got to Wall Street, correct?

2 Q. All right. And Bear Stearns isn't in business
3 anymore, is it?
4 A. I don't believe so, no.
5 Q. Well, it went to these giant Wall Street firms, and
6 they would securitize all of this paper and make loans to other
7 countries, huge corporations and the like, correct?
9 Q. And it all started with these sub-prime lenders
10 passing along the paper and bundling them off, that's how it
11 ultimately got to that level, correct?
12 A. Possibly.
13 Q. Possibly?
14 A. Well, because we had the potential to portfolio our
15 loans. We had the potential to sell them. We had -- but we're
16 still responsible for them. We still have investors that come
17 back to us and ask us to re-purchase our loans.
18 Q. Exactly.
19 A. So our incentive is to make a good loan because we
20 don't want that loan to come back.
21 Q. Your incentive is to do that, correct, but you're
22 making a margin -- Fremont made a margin by bundling these
23 loans and passing them up the line, they made a lot of money
24 doing that, didn't they?
25 A. That's in the secondary market. I'm sure, you know,

1 every company did at that point in time.
2 Q. At that point in time, correct. Their goal was to
3 bundle them and make their margin, that made a lot of money for
4 Fremont, correct?
5 A. Fremont was successful.
6 Q. They are not anymore; they are out of business,
7 correct?
8 A. I -- they may not be doing the same type -- the
9 company was sold off, and it was still very profitable. And
10 the new company has a different business model.
11 We didn't go through the bankruptcy. We were bought
12 out of the bankruptcy. So there was a lot of assets and
13 liability, potential liability.
14 Q. But the bankruptcy was a Chapter 11 reorganization,
15 you're aware of that, correct?
17 Q. And that was filed by Fremont, true?
18 A. Fremont General, our parent company.
19 Q. Correct. And Fremont General is no longer Fremont
20 General, correct, in fact, it's Signature Holdings Group, now?
21 A. Yes.
22 MR. TEDMON: Just one moment, Your Honor, please.
23 Thank you, Ms. Valdez. I have nothing further.

1 CROSS-EXAMINATION
3 Q. Good morning, Ms. Valdez.
4 A. Good morning.
5 Q. In regards to the loan programs that were being
6 offered, did Fremont offer a W-2 stated or a stated wage earner
7 loan?
8 A. Yes.
9 Q. And that was in 2004?
11 Q. What is that?
12 A. A stated wage earner loan is someone who works for a
13 company, that receives a paycheck and a W-2, but chooses to go
14 stated and not provide the documentation.
15 Q. So that was actually a program where a person would
16 receive W-2s from their employment, but Fremont would not
17 require the W-2s, they would just say whatever was written in
18 the stated portion?
19 A. That particular product was required to have a higher
20 credit score, better quality borrower, and, of course, it's a
21 higher risk than someone who provided the income documentation,
22 so it would be priced accordingly.
23 Q. I'm sorry, Ms. Valdez. The question I asked you was,
24 it would be somebody that actually had W-2s, Fremont knew they
25 had W-2s, but Fremont was not requiring W-2s, is that correct?

1 A. Yes.
2 MR. HAYDN-MYER: Thank you. Nothing further.
5 BY MR. ANDERSON:
6 Q. Did account executives have any authority to approve
7 or deny a loan?
8 A. No.
9 Q. Who were the people that could approve or deny a
10 loan?
11 A. An underwriter, an ops manager, a regional production
12 manager.
13 Q. What were some the steps taken to preserve the
14 independence of the underwriting process?
15 A. We had the operations center that would handle the
16 loan once the loan was submitted into underwriting or
17 processing to the funding stage.
18 Q. Were there separate chains of command?
20 Q. Separate supervisors?
22 Q. Separate means of compensation?
24 Q. Was there any quality control done?
25 A. Yes.

1 Q. How was quality control done?
2 A. Quality control was based off of each individual
3 position. And then we had a post quality control that did an
4 in-depth.
5 Q. Did underwriters get to pick which loans they got to
6 review?
7 A. No. It was completely put at random. It was kind of
8 like a round robin. The next underwriter that was ready to go,
9 they would go sign a loan out.
10 Q. Mr. Tedmon stopped you before you were able to answer
11 the question. But why did you disagree with him when he said
12 lenders just wanted paper?
13 A. Well, we were responsible for the paper from the time
14 -- I mean, its entire existence. Because we had the potential
15 -- I mean, we had to re-purchase any bad loans back.
16 Q. Would you explain what that means, what do you mean
17 re-purchase bad loans back?
18 A. Well, we have an obligation to -- okay, when
19 everything was -- back in the day, when the broker was in
20 place, the lender was in place, the investor was in place, the
21 the broker would submit a loan to Fremont. Fremont will
22 ultimately fund it.
23 The broker would submit a loan to Fremont. If
24 Fremont underwrote it, approved it, and funded it, we had the
25 option to keep it, and collect the payments on it, and service

1 it ourselves, or we had the option to sell it to an investor.
2 If we sold it to an investor, there is a contract
3 that we have with that investor. And there's also a contract
4 that the broker has with Fremont. Any bad loans the investor
5 could sell back to us -- send back to us. We would evaluate
6 it. We would re-purchase if it was wrongdoing on our part, or
7 if it was wrongdoing on the broker's part.
8 And then in that case, if it was the broker, as a
9 lender if we re-purchased the loan back, we would go back and
10 ask -- have recourse from the broker because we had a contract
11 with them. If the broker was no longer in business, then we
12 would eat it. We would re-purchase it, and possibly, you know,
13 charge it off, you know, sell the property, whatever it may be.
14 Q. As a result, were steps taken to make sure that the
15 loans that were being approved should be approved?
16 A. Yes.
17 Q. What were some of those steps?
18 A. We had the post quality control. After the loan was
19 funded, we had a quality control department that re-verified
20 income. They sent out what we call a 4506, if it was a full
21 doc loan, to see if the pay stubs and W-2 were accurate. They
22 would send them to the IRS, and it would come back with their
23 incomes.
24 If we found any information on that -- and there was
25 a percentage of loans that they would quality control. And

1 then also the investor had the ability to quality control the
2 loans as well.
3 Q. Were the underwriting guidelines taught to all
4 underwriters?
5 A. Yes.
7 A. We have an -- we had an operation -- a training
8 operation. It was an ops training specialist in each center
9 that would train the account managers, the funders, and all the
10 underwriters on the underwriting guidelines.
11 Q. Did the underwriters have any incentive that you're
12 aware of to approve fraudulent loans?
13 A. No.
16 MR. TEDMON: Briefly.
18 BY MR. TEDMON:
19 Q. The way the system was set up for the underwriter,
20 for example, was to get as many applications to them on their
21 desk because that's how it would make them the most amount of
22 money, correct?
23 A. Not necessarily.
24 Q. Well, let's go back to my example. We have 25 loans.
25 That's my threshold. Anything above that, whether it's

1 approved or denied, I get extra money for, correct?
2 A. That is true.
3 Q. So it is volume-based in that example?
4 A. Yes.
5 Q. Okay. And that's for the underwriter?
6 A. Correct.
7 Q. Okay. Now Mr. Anderson just asked you about this
8 follow-up to my question, that he thinks I didn't let you
9 answer, that you had to take your bad paper back, right?
10 A. Yes.
12 Well, that's one option, correct? You can take the
13 bad paper back. Or the other option is to file bankruptcy, and
14 that's what Fremont did, correct?
15 A. No.
16 Q. Fremont filed Chapter 11?
17 A. As of today, we will potentially -- Signature Group
18 Holdings acquired all their assets and liabilities.
19 Q. That's fine. Let me back up.
20 You worked for Fremont during the mid 2000s, true?
21 A. Yes.
22 Q. You are specifically aware that Fremont Investment
23 and Loan filed Chapter 11 bankruptcy in 2008, true?
24 A. No.
25 Q. That is not true?

1 A. Fremont Investment Loan did not file bankruptcy.
2 Fremont General Corp did.
3 Q. And they are the parent company?
4 A. Based off layers, yes.
5 Q. Yes. So let me ask it this way. Let's call it
6 Fremont, okay. Fremont General. Okay. There are other
7 companies under Fremont General, correct?
8 A. Many, yes.
9 Q. One of which is Fremont Investment and Loans, who you
10 worked for, correct?
11 A. Yes.
12 Q. Fremont General filed Chapter 11 bankruptcy, true?
13 A. True.
14 Q. They asked for protection from the federal courts
15 under the bankruptcy laws, true?
16 A. Yes.
19 MR. HAYDN-MYER: No questions.
20 THE COURT: Mr. Anderson, any further redirect?
22 THE COURT: Is Ms. Valdez excused? Mr. Anderson?

3 THE COURT: You are excused. You may step down. All
4 right. The Government's next witness?
5 MR. MORRIS: Government calls Nora Rivas.
6 (Photograph taken of Ms. Rivas by the Clerk.)
7 THE CLERK: Thank you, you may take the witness
8 stand.
13 your last name for the record?
14 THE WITNESS: Nora Rivas, N-o-r-a, R-i-v-a-s.
15 NORA RIVAS,
20 BY MR. MORRIS:
21 Q. Ms. Rivas, what's your occupation?
22 A. Currently I'm a real estate assistant.
23 Q. Did you have any other jobs prior to being a real
24 estate assistant?
25 A. Yes. I was an escrow officer.

1 Q. When were you an escrow officer?
2 A. Approximately I was promoted as an escrow officer in
3 2002.
4 Q. And when did you stop being on escrow officer?
5 A. Would have been around 2009.
6 Q. And who was your employer when you were an escrow
7 officer?
8 A. I had three employers, Castlehead Escrow, then I
9 worked for Birchwood Escrow, and then I worked for Tomayo and
10 Associates.
11 Q. Do you recall approximately the time when you were
12 working for Castlehead Escrow?
13 A. Yes.
14 Q. When was it that you were working for Castlehead?
15 A. I worked there from about 2001 to 2005.
16 Q. Okay. Do you -- well, start with this. What is an
17 escrow company?
18 A. An escrow company basically handles real estate
19 transactions, either refinances, or purchase transactions where
20 the sale of the property is transferred to another owner, as
21 well as refinancing, receiving loan proceeds and distributing
22 funds.
23 Q. So when you say handle a real estate transaction, can
24 you explain what it is -- what do you mean by saying an escrow
25 company handles a real estate transaction?

1 A. Well, we basically just handle the funds that come
2 in, coordinate with the lender and the title company to assist
3 to clear the title, and to distribute the funds of the
4 transaction.
5 Q. What do you mean by "clear the title"?
6 A. Clear the title would be making sure that the title
7 is clear of any liens, anything that would prevent the transfer
8 of the title, or adding a new encumbrance and paying off an old
9 encumbrance.
10 Q. What is an encumbrance?
11 A. A loan from a bank.
12 Q. And then you said that you worked with lenders also.
13 What does an escrow company do in their interactions with a
14 lender?
15 A. Escrow typically will receive the loan documents,
16 process the estimated closing statements for costs, what
17 everything is going to cost. And pretty much that's what we do
18 with the lender.
19 Q. Okay. So in addition to what you do with the lender
20 and what you do with clearing title, what else, if anything,
21 does an escrow company do with respect to real estate
22 transactions?
23 A. Just receiving funds, distributing funds.
24 Q. And when you distribute funds, how do you know where
25 to distribute funds to?

1 A. We receive instructions from the parties involved,
2 the lender, the title company, buyer, seller, realtors.
3 Q. Okay. What types of instructions -- in what form do
4 these instructions come to an escrow company?
5 A. The escrow company usually has a packet of paperwork
6 that needs to be completed, a set for the seller, the buyer.
7 Some of it's taken verbally and then printed out on an escrow
8 instruction, and signed and authorized or completed by whomever
9 is filling it out.
10 Q. What is your understanding, as an escrow officer, of
11 the escrow company or escrow officer's duties with respect to
12 these transactions?
13 A. I'm sorry. Can you repeat the question?
14 Q. What is your understanding -- with respect to these
15 transactions? What is the escrow company or escrow officer's
16 duties with respect to these transactions?
17 A. Duties would just be to make copies of documents,
18 receive them, check for completion, for signatures, distribute
19 copies to whomever is requesting them as parties to the
20 transaction.
21 Q. Do you verify the truthfulness of anything the
22 company receives?
23 A. No.
24 Q. If you can think back again to that time at
25 Castlehead Escrow, do you recall a client of Castlehead Escrow

1 called Head Financial Services?
2 A. I do.
3 Q. Do you recall who you used to interact with at Head
5 A. On a daily basis I typically would interact with Kou
6 Yang.
7 Q. Do you recall any other people that you interacted
8 with at Head?
9 A. I had occasion to speak to Mike Head or Charles Head,
10 or one of their loan agents. All their names I don't remember.
11 Q. With respect to Kou Yang, can you describe your daily
12 interactions with Kou Yang?
13 A. Kou would sort of be my -- the contact person at Head
14 if I needed some documents missing in a file, or she would
15 contact me to open the transactions either by fax or by phone.
16 If the lender needed anything, I would contact them with regard
17 to conditions, things of that nature.
18 Q. What was your understanding of what Head Financial
19 Services was?
20 A. I understood them to be a mortgage broker transacting
21 in loans and brokering loans out.
22 Q. And what is your understanding of what a loan broker
23 is, a mortgage broker is?
24 A. I would understand them sort of at the capacity of a
25 real estate agent in a way. Finding clients to do business

1 with and putting them in loans, things of that nature.
2 Q. Would you have considered at the time Head Financial
3 Services to be your client?
4 A. The company's client, yes.
5 Q. Were there other people at the company who would have
6 interacted with Head Financial Services?
7 A. Yes. My manager, Nancy Galarza.
8 Q. Anybody else that you can think of that would have
9 interacted with Head Financial Services?
10 A. Probably an assistant level. My assistant in the
11 office receiving phone calls or taking messages.
12 Q. Was Nancy Galarza your supervisor the entire time
13 that you were working at Castlehead?
14 A. Not the entire time. She came in, I believe, in
15 about 2001. I don't recall the exact date. But I was under
16 different management, and then she became manager.
17 Q. Did you have other companies you worked with other
18 than Head Financial Services?
19 A. Yes.
20 Q. And are you aware of anybody -- prior to your
21 relationship with Head Financial Services of anybody else in
22 the company who had an interaction with them?
23 A. Yes. Nancy Galarza.
24 Q. I think you also previously said that you would
25 receive money from parties in these transactions. Can you

1 describe how it is that Castlehead Escrow would receive funds?
2 A. Funds are wired in or brought in as a cashier's check
3 from a buyer, or the lender would wire the money.
4 Lenders typically wire to the title company because
5 that's the norm, and then we would receive funds -- remaining
6 funds from the title company.
7 Q. Did Castlehead Escrow maintain records of these funds
8 coming in and out of --
9 A. Yes.
10 Q. How did you maintain them, what types of records did
11 you maintain?
12 A. Any time funds were received into the escrow trust
13 account, a receipt would be generated.
14 Q. Does Castlehead Escrow maintain records of monies
15 that it disburses from the escrow account?
16 A. Yes.
17 Q. Are you familiar with a type of document called a
18 HUD-1?
19 A. Yes.
20 Q. What's a HUD-1?
21 A. A HUD-1 is basically a final statement of all of the
22 disbursed funds, received funds in the real-estate transaction.
23 Q. Of these various people you've spoken about, or
24 groups, lenders, escrow officers, who creates and maintains a
25 HUD-1?

1 A. The escrow company does.
2 Q. Was this a document or type of document that you
3 worked with in your capacity as an escrow officer?
4 A. Yes.
5 Q. Can you describe in general terms how it is that you
6 would prepare or work with that document?
7 A. Generally, a HUD is a document that's generated by a
8 software that the company enters data in from beginning to the
9 end of the real estate transaction.
10 Q. Okay. So how would you -- if you would give an
11 example of information that you would enter into the software?
12 A. You would have a screen for what's the name of the
13 buyer, what's the name of the seller, what's the property
14 address, a screen for the legal description, a screen for the
15 sales price, the loan amount.
16 Q. And how would you know what to put into those screens
17 when you're entering it?
18 A. I receive instructions on what the terms of the sale
19 are from the buyer, the seller, or the realtor, or the loan
20 agent, as well as the lender.
21 Q. What else does the software do once you enter this
22 information into it?
23 A. It's sort of like a calculator. So I enter the
24 information, and I have to reference different party's figures
25 to match, so that it balances out, and we all have the same

1 figures at the close.
2 MR. MORRIS: Your Honor, I'm going to ask to admit
3 Government's 14-B. It is covered by the stipulation, and I
4 don't think it has been admitted yet.
5 THE COURT: 14-B, as covered by the stipulation, is
6 admitted.
7 (Government Exhibit 14-B, 117 Steckel Drive, Santa
8 Paula – Escrow File, admitted into evidence.)
9 Q. BY MR. MORRIS: And I would ask to publish that for
10 the first page, please.
11 Do you recognize the type of document that's on the
12 screen in front of you?
13 A. That would be what's considered a HUD-1.
14 Q. And is this the document that you were just talking
15 about that the software creates?
16 A. Yes.
17 Q. I'm going to ask you to explain certain parts of it
18 to the jury so they understand the significance of various
19 parts of it.
20 A. Okay.
21 Q. What is this top part up here?
22 A. That is to explain what type of loan. Number one,
23 whether it's -- what type of financing is involved. The --
24 that would be either, one, two, three, four, or five. You
25 would just enter a checkmark to whatever the loan instructions

1 state that the type of loan it is.
2 Q. And so where would you get that information to enter?
3 A. From loan documents.
4 Q. And this number six that says "escrow number," what's
5 the significance of that?
6 A. That's our internal number for the assignment of a
7 number to our escrow file.
8 Q. And the loan number, what's the significance of that?
9 A. That is also the loan number referenced on the loan
10 documents pertaining to the buyer's loan.
11 Q. And you receive that from whom?
12 A. The bank, the lender.
13 Q. This block eight appears not to be filled out.
14 What's the significance of block eight?
15 A. Mortgage insurance number. I believe if it's a FHA
16 loan, they assign it a particular case number, federal case
17 number. I don't know the exact meaning of the number. It's
18 just a number that's given.
19 Q. Where would you have received that information from?
20 A. As well from the loan documents.
21 Q. I'm going to see if I can expand a little bit here.
22 Now this next section here, where would you get the information
23 to put in block D?
24 A. Again, that would be provided within the escrow
25 instructions. There would be a statement of identity that's

1 completed by the buyer and then turned into escrow, and it
2 provides the name of the buyer, their address, occupation, et
3 cetera.
4 Q. And the information contained in block E, where would
5 you find that information?
6 A. As well on the statement of identity or another
7 document with the seller information providing forwarding
8 address, Social Security number, et cetera.
9 Q. And what's the significance of block I?
10 A. The settlement date is actually the actual close of
11 escrow date, the date that the recording documents are recorded
12 with the county.
13 Q. Does the information on this document -- I'm speaking
14 in general -- does it change throughout the course of a
15 transaction?
16 A. The documents -- the final HUD shouldn't change,
17 but --
18 Q. And you say final HUD, do I take it then that there
19 is a version prior to the final HUD?
20 A. There could be estimated HUDs.
21 Q. And in section H, what's the significance of that
22 section?
23 A. That's the name of the settlement agent/escrow
24 company's -- what we're considered -- the escrow company's
25 name.

1 Q. And can you describe what we're looking at in this
2 section of the form?
3 A. The system within itself, when I enter the
4 information, it assigns it a number to a line. I don't always
5 know what the line reference is in reference to. But the first
6 one would be the sales price, total consideration. And then
7 the second, line 103 would be settlement charges to the
8 borrower would typically be the loan charges from the lender to
9 the buyer.
10 Q. And the column J and column K, is there a
11 significance of the left and right side?
12 A. The left would pertain to charges to the buyer, and
13 the right, which is the K side, would be charges to the seller.
14 Q. So a number like this "103, settlement charges to
15 borrower," where would you get information that would tell you
16 how -- where that information comes from?
17 A. The lender's instructions within the loan documents.
18 Q. Okay. What about this number in 101, "total
19 consideration," where do you get that information from?
20 A. That is given by the buyer and the seller, whatever
21 they decided to sell the property or buy the property for.
22 Q. I notice 107 and 407 seem to be the same number, is
23 there a reason for that?
24 A. Oh, because one would be a credit and one would be a
25 debit.

1 Q. Can you explain how it is that a credit and debit
2 would show up on both sides of the column?
3 A. With reference to the property taxes, the buyer and
4 the seller responsible -- the seller would be responsible from
5 the close of escrow up until the tax year or that particular
6 term of property taxes is due, and then the taxes are often
7 already paid in advance. So you would debit the seller to
8 credit the buyer for that period of time.
9 Q. And that next line, the 109 and 409, is that a
10 similar type of situation?
11 A. It's also a proration, correct, for homeowners'
12 association dues.
13 Q. Okay. And then these total amounts, how are those
14 calculated?
15 A. They are basically a sum total. It's again a
16 calculation of debits and credits, and it comes up with the
17 number based on what is inserted in the --
18 Q. So that's not entered by you; it's calculated by the
19 program?
20 A. Correct.
21 Q. And in general terms, can you explain what we're
22 looking at at the bottom part of this form?
23 A. On the left, under 200, amount paid by borrowers
24 would be amounts received on behalf of the borrower.
25 Q. Such as from whom?

1 A. The first line would be, for example, the initial
2 deposit from the buyer.
3 Q. Okay. And that line 202, "principal amount of new
4 loans," where does that number come from?
5 A. That comes from the loan documents as well. That is
6 the amount of the new loan.
7 Q. And 204, "second new loan," where does that come
8 from?
9 A. If there's first and a second, there is a separate
10 set of documents referencing a loan amount if there's a
11 secondary loan.
12 Q. This 205, "credit for closing costs," what does that
13 mean?
14 A. Often times in a real estate -- an agreement between
15 the buyer and the seller, the buyer -- the seller can agree to
16 pay the buyer's closing costs, costs of the purchase of the
17 property. That's an agreement between the buyer and the
18 seller.
19 Q. And these two lines over here that say payoff to
20 Countrywide Home Loans and pay off to Household, where does
21 that information come from?
22 A. That comes from the seller's existing mortgages.
23 Q. How do you get that data?
24 A. Usually it's provided by the seller through, again,
25 those escrow instructions where you insert information on any

1 existing encumbrances on the property.
2 Q. Go to the next page. And looking at page two of the
3 same document, I see that there are two columns on the right
4 side there. Is that the same as what you previously discussed,
5 one for buyer, one for seller?
7 Q. What, generally speaking, are we looking at in this
8 section of the document?
9 A. This work a breakdown of the totals on the first
10 page.
11 Q. Okay.
12 A. So line 808 --
13 Q. In general through those line 800 series numbers,
14 what's in there?
15 A. Those are all the loan charges from the lender for
16 the buyer, the buyer's lender.
17 Q. So these numbers here that show document fees, and
18 loan fees, and appraisals, where do you get that information
19 from?
20 A. Again, from the lender's instructions and the loan
21 documents.
22 Q. And this "other charges see attached," what types of
23 information would lead you to put that into an escrow file?
24 A. Those are often prorations with regard to maybe
25 interest -- no, those are in 900. I apologize. It could be

1 just additional escrow checks issued. Another breakdown would
2 be -- give you more information.
3 Q. And continuing down the page, what's that line 1101?
4 A. 1101. Settlement or escrow fees. Those would be the
5 fees charged by the escrow company.
6 Q. And these items in there, what are those items on the
7 file?
8 A. Those would be the title company's charges for the
9 transaction as well.
10 Q. And how would you know what to put into those
11 sections of the document?
12 A. The title company sends us a list of their charges,
13 and we enter them into our software.
14 Q. This section here, 1200 numbers, what goes into that
15 section of the form?
16 A. Those are recording charges for recording documents.
17 Q. What are recording charges?
18 A. For example, the county recorder's office has fees
19 for every page that you file. It's recorded into public
20 record.
21 Q. Where do you get the information to put into that
22 section?
23 A. Again, from the title company.
24 Q. And this item down here at 1309, what is that item?
25 A. That is an instruction -- or it's an amount that was

1 paid out to that particular party, Financial Enterprises, under
2 seller proceeds.
3 Q. How do you know what to put into that column or into
4 that line?
5 A. Again, I receive instructions written by the seller
6 to how to wire out their money or send out their proceeds.
7 Q. I think you had said that there's final HUD-1s and
8 other versions of HUD-1s. Does every party get all of the
9 information that's on a HUD-1?
10 A. No. It's not required that every party sign the
11 HUD-1 or see the HUD-1.
12 Q. Do you ever prepare HUD-1s where only one column is
13 visible?
14 A. Yes. That's possible.
15 Q. And in what circumstances do you do that?
16 A. Sometimes the lenders only want to see the buyer's
17 side just to keep everything simple and not confuse things.
18 Q. Looking at $58,697.92, and I'll ask you to go to page
19 three, please. What's this document?
20 A. This is a document that's sent to us from our bank,
21 from our trust account, confirming an outgoing wire went out.
22 When we receive this, then we receipt it into our file.
23 Q. And do you keep a copy of this in your file?
24 A. Yes.
25 Q. Why do you keep a copy in there?

1 A. We're required to do so.
2 Q. So comparing the name and the amount, is this your
3 confirmation of that -- I think it was seller's proceeds on the
4 previous page that I highlighted?
5 A. That would confirm that, yes.
6 Q. So you received this from whom?
7 A. From East West Bank, which is where the escrow
8 company's trust account is.
9 Q. And if you could go to the next page, please. Do you
11 A. That appears to be the receipt of funds from monies
12 that were received into escrow from, it says, buyer.
13 Q. Okay. Do you just -- does Castlehead Escrow keep
14 this document?
15 A. Yes.
16 Q. Why do you keep this record in your files?
17 A. Again, it's required.
18 Q. And so if you could -- does Castlehead create this
19 document?
20 A. Yes.
21 Q. So that number, what's the purpose of putting that
22 number on there?
23 A. To reference the particular file that the funds
24 should be -- the funds should be entered into, the software.
25 So it knows where it belongs.

1 Q. And in this case the amount appears to be how much?
2 A. $4,000.
3 Q. And it was received according to your records from?
4 A. The buyer, Marrisa Page.
5 Q. And what form did that fund come in to you in?
6 A. A cashier's check.
7 Q. Did you ever receive funds in other ways?
8 A. Other than?
9 Q. Other than cashier's checks?
10 A. Yes. Escrow companies can receive a personal checks,
11 can receive wire transfer.
12 Q. And this information with the -- looks like account
13 number, Bank of America, how does that information get entered
14 into this form?
15 A. It's taken from the check directly.
16 Q. If you can zoom out for a sec.
17 On the bottom half of this document, what's this that
18 we're looking at?
19 A. That's a copy of a cashier's check.
20 Q. Do you normally keep a copy of that check along with
21 the receipt that you generate?
22 A. Yes.
23 Q. Why do you do that?
24 A. Just to reference whatever funds were being received.
25 We always are asked to keep a copy.

1 Q. So it's made payable to whom?
2 A. Castlehead Escrow.
3 Q. And this item here with the "escrow 2419," do you
4 have any knowledge of how that number would be written on the
5 check?
6 A. I have no knowledge how it would have been written on
7 there. It could have come in that way, could have been written
8 in after. I don't know.
9 Q. Now this $4,000 check -- I'll ask you to go back to
10 page one, please.
11 When you receive a check for $4,000 for a file, what
12 do you then do?
13 A. We receive it. We enter it into the system so that
14 it will generate a receipt. Again referencing the escrow
15 number so it knows where to place the receipt.
16 Q. And do you enter it into that software you were
17 talking about?
18 A. Yes.
19 Q. And where would it show up?
20 A. I believe it would show up on the previous page --
21 Q. Back up. Page one.
22 A. Right there on that line number. It would be 201.
23 Q. Okay. So based on this file, this $4,000 on line
24 201, that's the check that we just looked at a second ago?
25 A. Correct.

1 Q. Okay. And if I could ask you to look at page five of
2 the exhibit. What's this document?
3 A. That's wire instruction and authorizations prepared
4 by Castlehead in the event anyone wants to wire their funds.
5 Q. So this is internal document that your company
6 creates?
7 A. Correct.
8 Q. For what purpose? Why do you have this form?
9 A. Oftentimes we don't generate it on a typical basis.
10 Someone will request it. Or it's sometimes part of the
11 instructions. Just depends on the escrow officer and how they
12 print out the paperwork.
13 Q. If you didn't receive instructions from a party to
14 use this form, would Castlehead have used the form itself?
15 A. No.
16 Q. If you can zoom out. What significance does this
17 section of the form have for you -- or would it have had for
18 you as an escrow officer?
19 A. Well, it would instruct us where to wire funds for
20 this particular party, whomever signed it.
21 Q. I think you said you don't always use this form for
22 every transaction?
23 A. Correct.
24 Q. Are there particular types of transactions where you
25 would want to use this form?

1 A. There's no type. It's just an accommodation.
2 Q. Without -- I won't go back to it unless you want to.
3 The previous page we looked at with that wire receipt that you
4 received?
5 A. Yes.
6 Q. The wire that you send, is this how you know where to
7 send it?
9 Q. And what's the significance of this section of the
10 form to you?
11 A. Well, there would be the party's signature
12 authorizing the escrow company to wire the money, as well as an
13 acknowledgement from the notary that that person signed in
14 their presence.
15 MR. MORRIS: Your Honor, I would like to bring in
16 Exhibit 15-B. It is previously covered by the stipulation, and
17 I don't believe it's in yet.
18 THE COURT: 15-b has been entered.
19 MR. MORRIS: I stand corrected.
20 Q. BY MR. MORRIS: And if we could go to page three of
21 15-B. We're going now to a different file, but is this the
22 same form you were just talking about?
24 MR. MORRIS: Your Honor, I'll ask to bring in
25 Exhibit 15-D. This is covered by stipulation.

1 THE COURT: It's also in.
2 MR. MORRIS: Then I stand corrected again.
3 And if I could have 15-B3 and 15-D split side by
4 side.
5 Q. BY MR. MORRIS: These forms that Castlehead prepares,
6 do you send them to people?
7 A. Yeah. They are sent to -- they are part of the
8 instruction or whoever requests it.
9 Q. When you send them out, are there any handwritten
10 portions already filled into them?
11 A. When we send them out, no, typically not.
12 Q. When you receive them back, what's different about
13 the forms than when you sent them out?
14 A. They are usually filled out.
15 Q. And so on the left, this form that has the wiring
16 instructions on it --
17 A. Yes.
18 Q. -- is that what you're used to seeing in the file?
19 A. Yes.
20 Q. On the right -- on the right, which appears to not
21 have anything filled out but does have a signature, have you
22 ever seen a form like that in your escrow files?
23 A. No.
24 Q. You can bring those down. What's your understanding
25 of the significance -- in your role as an escrow officer,

1 what's your understanding of the significance of a notary's
2 signature?
3 A. The significance would be that the notary is
4 acknowledging that someone signed a document in their presence,
5 and they are attesting to that.
6 Q. Do you have certain files that within Castlehead you
7 would expect to be notarized?
8 A. Yes.
9 Q. What types of forms do you expect to see notarized?
10 A. A grant deed, deeds of trust. Those are the typical
11 ones that are notarized.
12 Q. These wiring instructions that seem to have a notary
13 signature, do you require a notary signature on all of these
14 wire instructions?
15 A. No. Not all wire instructions are required.
16 Q. What would have caused Castlehead to want to have a
17 notary signature on a particular wiring instruction?
18 A. Those are only required when the wire is being sent
19 to a third party.
20 Q. What does that mean, "wire being sent to a third
21 party"?
22 A. Other than who the check would typically be made
23 payable to.
24 Q. And again, "typically made payable to," who is it
25 that you would typically make a check payable to?

1 A. You could make a check payable to a realtor, any
2 party who you are issuing a check to, if the check -- if they
3 invoice the file, or money is going out to them, you would need
4 an authorization to send it to someone else.
5 MR. MORRIS: May I have a moment, Your Honor.
8 THE COURT: All right. Mr. Tedmon, any cross?
9 MR. TEDMON: Yes.
11 BY MR. TEDMON:
12 Q. Good morning, Ms. Rivas.
13 A. Good morning.
14 Q. You testified earlier that you had interaction with a
15 lady by the name of Kou Yang, do you recall that?
16 A. Yes.
17 Q. Okay. And when you dealt with Ms. Yang, that was
18 when she was working for Head Financial Services, correct?
19 A. Yes.
20 Q. Now the fact is, is that your interaction with Head
21 Financial Services was directly with Kou Yang, correct?
22 A. On a daily basis typically I would just work with
23 Kou.
24 Q. Right. And in fact, you always dealt with Kou,
25 correct?

1 A. If we were on the phone, yes, typically I would just
2 speak to Kou.
3 Q. All right. And Kou was the one that opened the
4 escrows, she would send you the documents and that sort of
5 thing, correct?
6 A. They came from Head Financial. Sometimes they would
7 come via fax, so I don't know who filled them out. But if I
8 had a question about it or any clarification needed, I would
9 contact Kou.
10 Q. So Kou was your go-to contact?
11 A. Correct.
12 Q. All right. Now you indicated that Nancy Galarza was
13 a person that was your supervisor in 2001?
14 A. Yes.
15 Q. Did she leave at some point? Did she leave
16 Castlehead?
17 A. After -- I think she did leave after, but I had
18 already been transferred to another office prior to that. So
19 Castlehead has multiple branches, and I was in this particular
20 branch. But before me transferring to a different branch, she
21 was still the manager. She was still supervising. But I heard
22 she left after. I don't know the exact date.
23 Q. Okay. But for the time period we're dealing with,
24 you were in the same office for a period of time?
25 A. Correct.

1 Q. And she was your supervisor?
2 A. Yes.
3 Q. And then she was transferred to another office -- or
4 you were transferred?
5 A. I was transferred, yes.
6 Q. So what office did you and Ms. Galarza work out of?
7 A. Out of the Southgate office.
8 Q. Southgate?
9 A. Yes.
10 Q. And then you were transferred to where?
11 A. Lakewood.
12 Q. Lakewood?
13 A. Yes.
14 Q. And when was that transferred effected?
15 A. I believe it was in -- my dates are really bad, but I
16 believe it was sometime in 2005.
17 Q. Okay. And how long were you at the Lakewood office?
18 A. I was there about four, five months, and then I
19 returned to the Southgate office.
20 Q. So that was a short stay?
21 A. Yes.
22 Q. During this period of time that you were either in
23 the Southgate office, and then you went to Lakewood and came
24 back to Southgate, in terms of Head Financial Services your
25 contact and your dealings was with Kou Yang, correct?

1 A. Correct.
2 Q. That never changed?
3 A. Right. But I only worked with Head Financial when I
4 was working in Southgate.
5 Q. So for this short period of time that you were at
6 Lakewood, you didn't have any dealings with Head Financial?
7 A. Correct.
8 Q. Now Mr. Morris had asked you some questions about a
9 HUD-1?
10 A. Yes.
11 Q. If we can have I believe it's Exhibit 14-B put on the
12 screen. Page one.
13 Now you had answered some questions relative to this
14 document a little earlier?
15 A. Yes.
16 Q. This is a HUD-1?
17 A. Yes.
18 Q. Now you testified that there can be estimated
19 settlement statements for both sellers and buyers that are on
20 HUD-1s, correct?
21 A. Yes.
22 Q. And also a thing called a final HUD-1, correct?
23 A. Yes.
24 Q. Now if we can just have this upper section expanded,
25 please.

1 In your experience -- and I want you to just focus on
2 this area right in here or maybe above, one of those two spots,
3 in your experience in dealing with escrows, when there is a
4 final HUD-1, it's stamped on there "final," correct?
5 A. Correct.
6 Q. And it's also your experience -- we can have that
7 taken off, please.
8 It's also your experience that when it's an estimated
9 settlement statement for either the buyer or the seller, or
10 both, that it says "estimated," correct?
11 A. Correct.
12 Q. All right. Now 14-B, which we've just looked at, has
13 no -- it's not denoted at all whether it's final or estimated,
14 does it?
15 A. I didn't see it there.
16 Q. Well, let's go forward to -- well, if we could have
17 14-B1 put back on, please. The whole document.
18 In reviewing this first page, do you see anything in
19 there that would indicate whether that's an estimated HUD-1 or
20 a final HUD-1?
21 A. I don't.
22 Q. And if we could go to page two.
23 Now this is page two of this particular document, do
24 you see anything in there that would indicate that's a final
25 HUD-1 or estimated HUD-1?

1 A. I don't.
2 Q. If we could go to Government's 15-B. This is the
3 other HUD-1 you were testifying about earlier?
4 A. Yes.
5 Q. Take a look at page one, and do you see anything in
6 that document that would indicate it's a final HUD-1 or
7 estimated HUD-1?
8 A. I don't.
9 Q. And let's go to page two. Do you see anything
10 denoting that as being a final or an estimated HUD-1?
11 A. I don't.
12 Q. That's fine. Thank you.
13 Now in terms of the final closings, is it fair to say
14 that the escrow offer or company is kind of a gatekeeper of the
15 documents, would that be fair?
16 A. Gatekeeper?
17 Q. Well, let me say something. That's a bad question.
18 The function of the escrow officer is to keep all the
19 documents organized, correct?
20 A. To receive the documents, yes, and organize them.
21 Q. Do you have what's called stacking orders?
22 A. Yeah. Sometimes you'll have a stacking order. Not
23 everybody does their stacking order the same.
24 Q. Did you have a stacking order that you followed?
25 A. Yeah. There were some tabs in there that the company

1 gave you, and you would put whatever behind those tabs.
2 Q. And that was just to keep the documents in a certain
3 sequence?
4 A. Yes, correct.
5 Q. So when you went through the documents with the
6 purchaser, that it was in some kind of organized manner?
7 A. When I went over the documents with who?
8 Q. With the person buying the property.
9 A. The person buying the property wouldn't look at my
10 file. That's just our record. The buyer doesn't typically go
11 through my file.
12 Q. So that was just for internal purposes?
13 A. Correct.
14 Q. And when a property was closed as it relates to the
15 HUD-1, it would indicate "final" on the HUD-1?
16 A. It typically does. I don't recall. There's so many
17 different types of software. I pretty much thought they were
18 uniform. I don't know why one would say "final" and one
19 wouldn't.
20 Q. Well, they were all generated out of the same
21 computer program?
22 A. For this particular escrow company, yes.
23 Q. And your testimony this morning is, and your
24 recollection is it would say "final" or "estimated," correct?
25 A. Correct.

1 Q. And neither of those exhibits had either of that,
2 correct?
3 A. Yeah, and I don't know why.
4 Q. Now I'm going to go back to Kou Yang. You purchased
5 a home in Whittier, California?
6 A. Yes. Correct.
7 Q. And Ms. Yang assisted you in that, didn't she?
8 A. Yes.
9 Q. And, in fact, you provided Ms. Yang your personal
10 information?
11 A. I did.
12 Q. So that a loan application could be filled out,
13 correct?
14 A. Correct.
15 Q. And that's called a 1003 or 1003?
16 A. Correct.
17 Q. Or a Uniform Residential Loan Application?
18 A. Yes.
19 Q. All right. You gave your information to Ms. Yang,
20 correct?
21 A. Correct.
22 Q. And Ms. Yang completed the form for you, didn't she?
23 A. Yes.
24 Q. And Ms. Yang padded your bank account to make sure
25 you had more money in your account than what it really did,

1 correct?
2 A. That's not correct. My account was accurate. I
3 think what she did was the income that was in there was both my
4 husband's and my -- our income together. So when she filled
5 out the application, she just put my name but put the total
6 income of my spouse and myself.
7 Q. And that's what Ms. Yang did?
8 A. Correct.
9 Q. So it erroneously reflected what you were making
10 singularly, correct?
11 A. On a regular month I have made that amount in the
12 past. But for every single month, no, it wouldn't reflect --
13 Q. Okay. It wasn't accurate?
14 A. It was not -- it was an estimate.
15 THE COURT: Mr. Tedmon, I gather you have some more
16 time with this witness? We're at 11:30.
17 MR. TEDMON: Okay. I've only got a couple more
18 questions, actually.
19 THE COURT: Why don't you take your couple more
20 questions.
21 Q. BY MR. TEDMON: And Ms. Rivas, Ms. Yang took your
22 bank statements and she averaged them to get a higher figure,
23 so the loan application would have a greater chance of being
24 approved, correct?
25 A. That's what I understood, yes.

1 Q. And, again, I just want to confirm, Ms. Yang is the
2 one that filled out the Residential Loan Application?
3 A. That's how I understood it, yes.
4 MR. TEDMON: Nothing further. Thank you, Judge.
5 THE COURT: All right. We are going to have to break
6 at this point. So we'll continue with this witness first thing
7 tomorrow morning. Is there any cross from you, Mr. Haydn-Myer?
9 THE COURT: All right. Ms. Rivas, we need to have
10 you back tomorrow morning at 8:30 -- I'm sorry -- 1:30. So
11 1:30 tomorrow afternoon. But I believe we will finish with you
12 tomorrow.
13 Ladies and gentlemen of the jury, I am excusing you
14 for the day now. And, yes, you should be ready to go at 1:30
15 tomorrow afternoon.
16 During our longish break, please, as always, remember
17 my admonitions. Please do not do any homework. Don't consult
18 any dictionaries on your own. Don't read any news reports.
19 Don't begin to think about the outcome of this case. Don't
20 discuss it with family members, or friends, or your fellow
21 jurors. And if anyone does attempt to contact you during the
22 break, plesae let me know first thing tomorrow. We'll see you
23 tomorrow afternoon. Thank you.
24 (Jury out.)
25 THE COURT: All right. You may step down.

1 Let's bring Ms. Silva in. And just to clarify what
2 the Court said earlier, I count on the party calling a witness
3 to monitor whether or not they are in the courtroom. Assuming
4 that person is in the best position to identify that witness.
5 MR. ANDERSON: It's not always the case, but I think
6 it's definitely the case in this situation. I would
7 acknowledge that.
8 MR. HAYDN-MYER: Yes, Your Honor. We did not know
9 what she looked like. Just to clarify for the record. That
10 would be --
11 THE COURT: Ms. Silva, please come forward. If you
12 could swear her.
15 MS. SILVA: I swear.
18 THE WITNESS: Emily Silva, E-m-i-l-y, S-i-l-v-a.
19 THE COURT: Ms. Silva, I am Judge Mueller. I need to
20 ask you a few questions. And first, just so you know, you have
21 been sworn. There is a record being made of these proceedings.
22 And I just need to ask you some questions about your having
23 been in the audience earlier this morning. Technically, just
24 so you know -- you're here without counsel, correct.
25 MS. SILVA: Yes.

1 THE COURT: Generally, you have a Fifth Amendment
2 right to remain silent. I'm just trying to understand a few
3 things about this morning's proceedings and your presence
4 during those.
5 MS. SILVA: I didn't know that -- when I walked in I
6 didn't realize I wasn't supposed to sit here, and that was it.
7 THE COURT: Yeah. That wasn't up to you necessarily
8 to know that.
9 About what time did you walk into the courtroom, do
10 you recall?
11 MS. SILVA: There was hardly anybody here. There was
12 just that lady. That was right around 8:00-something.
13 THE COURT: And then for how long were you in the
14 courtroom?
15 MS. SILVA: I was in here until -- I don't know her
16 name -- the lady that was here, the very first one with the
17 black dress.
19 MS. SILVA: The very first lady, when she walked out,
20 I followed her out. I think I realized I wasn't supposed to --
21 I don't think they realized I was here. That was the thing.
22 And I went out to let people know I was here, and then
23 that's --
24 THE COURT: So briefly what did you see? What did
25 you see before the lady in the black dress was here?

1 MS. SILVA: The gentlemen all coming in and getting
2 prepared. Pretty much.
3 THE COURT: And then you saw the jury come in?
4 MS. SILVA: Yes. I saw them walk in.
5 THE COURT: All right. And so for how long did you
6 observe the lady in the black dress?
7 MS. SILVA: I guess throughout her whole thing. When
8 she walked out, I followed her out.
9 THE COURT: So you observed all of her testimony?
10 MS. SILVA: Yeah. I was sitting there when she was
11 talking. Yes, I did.
12 THE COURT: All right. And were you taking notes at
13 any time?
14 MS. SILVA: No.
16 MS. SILVA: No.
17 THE COURT: All right. Are there any other questions
18 counsel wishes me to ask? I'll at least consider.
19 Mr. Anderson?
20 MR. ANDERSON: I think it might behoove the Court
21 what she recalls of that testimony, how close of attention she
22 was paying.
24 MR. TEDMON: Yes, I would ask for just a further
25 inquiry for details of her recollection of testimony.

1 THE COURT: Mr. Haydn-Myer do you join in that?
3 THE COURT: Without having you recount word for word,
4 can you summarize what you recall of the testimony of the lady
5 in the black dress?
6 MS. SILVA: Well, they were asking her some
7 questions, and she was repeating something of the places where
8 they used to have their offices. And trying to think. They
9 were talking about that. And then they asked her something
10 about someone else. There was some other lady that she was
11 saying something about someone else. I don't know the name.
12 But they were saying -- they were asking her something about
13 another person, and I don't recall the names. But that's all I
14 remember pretty much.
15 THE COURT: All right. Any other general subject
16 area you recall being covered during her testimony?
17 MS. SILVA: Not really. I mean, it's hard. I mean
18 -- let me think. I can be -- they asked her about that. And
19 then they asked her about some other person. And then that
20 gentleman, one of the lawyers got up and asked her a few
21 questions. And she went through a piece of paper and looked to
22 see if something was -- not sure what she was looking for, but
23 I remember her doing that. And that was pretty much it. And
24 then she left, and I left after her.

1 MS. SILVA: But I was here between 8:00, whatever
2 time she left.
3 THE COURT: And did you talk to her --
4 MS. SILVA: No.
5 THE COURT: -- at any point after you left the
6 courtroom?
7 MS. SILVA: I went straight outside, and I introduced
8 myself. I believe it was the gentleman on the right. I
9 introduced myself.
10 THE COURT: So you're identifying Officer Sommercamp?
11 MS. SILVA: Yes. John Sommercamp. I introduced
12 myself to him so that they would know that I was here. I
13 didn't realize that I was supposed to be outside. And so I --
14 he then said just stay here, and then we'll call you when
15 you're needed.
16 THE COURT: And between 8:00 and 8:30 or so you were
17 just sitting in the --
18 MS. SILVA: I was sitting back there.
19 THE COURT: And did you talk to anyone during that
20 time?
21 MS. SILVA: No, ma'am.
22 MS. SILVA: All right. Anything further,
23 Mr. Anderson?
24 MR. ANDERSON: Not from us.

1 MR. TEDMON: No.
4 THE COURT: All right. Thank you very much. You may
5 step down. All right. Do the defense motions stand?
6 MR. HAYDN-MYER: Your Honor, if I may?
7 THE COURT: I just need to know, do the defense
8 motions stand?
11 MR. TEDMON: I'm sorry, Your Honor?
12 THE COURT: Does the defense motion stand, your
13 motion to preclude Ms. Silva's testimony?
14 Mr. Haydn-Myer has said his motion stands. I don't
15 have time to consider the substance of any motions. Given
16 Mr. Haydn-Myer's indication, I will consider my options.
17 I would encourage the parties to meet and confer, and
18 then I would meet with you at 1:15 tomorrow to discuss the
19 matter further.
20 MR. TEDMON: That's what I was going to ask, if we
21 could meet and confer. I guess for the record at this point I
22 would still stand on my original position, but I would like to
23 talk to the parties. To do this right now I think is a little
24 difficult.
25 THE COURT: All right. So 1:15 p.m. I'll consider

1 Jeremy Michael Head's motion and any other motion from Charles
2 Head. Anything further we need to discuss today?
6 THE COURT: All right. See you tomorrow afternoon.
7 (Court adjourned. 11:41 a.m.)
9 CERTIFICATION
10
14
15
16 /S/ DIANE J. SHEPARD

18
19
20
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
VOLUME 6
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
17
18
19
20
21
22
23
24
25

1 I N D E X
3 NORA RIVAS
4
LISA MALENTINO
6 EMILY SILVA
8
HEYDI GALINDO
11 FURTHER RECROSS EXAMINATION BY MR. MORRIS 803
12
BRENDA CLARK
14
15
16
17
18
19
20
21
22
23
24
25

1
GOVERNMENT EXHIBITS MARKED FOR IDENTIFICATION
3 21-G Postcard received by Witness Emily Silva 729

6
JMH-F Notary Public documentation 760
7
8

21-G Postcard received by Witness Emily Silva 730
11 21-E 2171 South Prospect Street, Porterville – 739
Mailings and Other (Money Order) (Count 11)
21-D 2171 South Prospect Street, Porterville – 747
13 Search Warrant Documents
21-B 2171 South Prospect Street, Porterville – 754
14 Escrow File
12-A 1325 West Evergreen Way, Visalia – Loan 803
15 File
16-B 14718 Condon Avenue, Lawndale – Escrow File 817
16
17
DEFENSE EXHIBITS RECEIVED IN EVIDENCE
19 JMH-F Notary Public documentation 763

CH-L1 “Equity Purchase Agreement” re: 14718 820
20 Condon Avenue, Lawndale
CH-L2 "Option Agreement" re: 14718 Condon 823
21 Avenue, Lawndale
22
23
24
25

3 ---oOo---
6 trial, day seven, Your Honor.
7 THE COURT: Good afternoon. Mr. Anderson is present
8 for the United States. Defense counsel are present, and
9 Charles Head and Jeremy Michael Head are present.
10 Apologies for the delay. The Court was detained
11 longer than it expected to be. On the issue of Ms. Silva, is
12 there further argument? Mr. Haydn-Myer, you're seeking to have
13 Ms. Silva excluded?
14 MR. HAYDN-MYER: Yes, Your Honor. I believe I'm the
15 only one. I don't believe Mr. Tedmon is going to join in it.
16 And Mr. Tedmon actually provided a memo to both myself and the
17 Government, Mr. Anderson, Mr. Morris, yesterday. And I
18 understand the position of the law. It looks like it is within
19 the Court's discretion. However it's a remedy that's not used
20 frequently.
21 I'm just renewing my objection in regards to
22 Ms. Silva testifying. I believe she was here during Kou Yang's
23 statements that were elicited by Mr. Morris about when she was
24 receiving phone calls, some of the homeowners were scared and
25 angry. And I'm going to submit on that point, Your Honor.

1 THE COURT: And just so I'm clear, what role does
2 Ms. Silva play?
3 MR. ANDERSON: Your Honor, Ms. Silva is one of the
4 victims. She dealt almost exclusively with Mr. Jeremy Michael
5 Head.
7 MR. ANDERSON: She did deal with some other people,
8 but she didn't deal with Charles Head as far as we know.
9 THE COURT: And so I'm clear, I have consulted some
10 of the case law. And once I go retrieve my glasses I can tell
11 you the name of the cases. I did read them, and I remember
12 them clearly enough. And so certainly excluding a witness
13 entirely is disfavored. That is clear to the Court.
14 Help me understand how it was that Ms. Silva was able
15 to sit in the courtroom for as long as she did without the
16 Government knowing.
17 MR. ANDERSON: Yes, Your Honor. I appreciate the
18 opportunity, one, to have the evening to look at the case law
19 and consult with everybody else, and I would like to supplement
20 the record on that.
21 Ms. Silva had only been interviewed by anyone from
22 the Government over the phone. Due to the geographic scope of
23 the scheme and the victims located all throughout California
24 and the United States, many of the people we've never met in
25 person.

1 It is my standard practice to advise witnesses not to
2 enter the courtroom when I do the pretrial interviews. I can't
3 tell you for sure that I did that in this case. I don't have
4 an independent recollection. But I often do tell the witnesses
5 that. I spoke with Ms. Silva on March 29th, 2013, and that's
6 when I would have told her, if I did.
7 Her travel was coordinated by Ms. Parker from our
8 office. And Ms. Parker, who I spoke with, also said that it's
9 her general practice to inform the witnesses not to enter the
10 courtroom, but she also does not have an independent
11 recollection where she could say definitively that she told
12 Ms. Silva that on this instance. I have worked with Ms. Parker
13 before on other trials, and this is the only time that this
14 particular type of event has happened.
15 In addition, there is a witness sign on the outside
16 of the courtroom door which informs witnesses that they are not
17 to enter the courtroom until called for. Apparently, Ms. Silva
18 didn't see that. I know the Court heard from her yesterday.
19 And at least my impression was that Ms. Silva was being very
20 forthright and just confused by the situation and apologetic
21 that it happened.
22 So I don't think it was any intentional act on the
23 part of anybody from the Government. And I've consulted with
24 everybody who is involved with the trial from the Government,
25 and nobody realized it was her.

1 THE COURT: Any disputing those representations,
2 Mr. Haydn-Myer?
4 THE COURT: All right. The other thing we haven't
5 discussed, and I did not probe with Ms. Silva, based on the
6 timing, I assume she was here during the Court's discussion
7 with counsel of Ms. Rivas' immunity.
8 MR. TEDMON: My understanding -- my recollection of
9 Ms. Silva's testimony or statements was that when Ms. Yang
10 finished her testimony, she exited the courtroom with Ms. Yang.
11 THE COURT: But if she was sitting in the courtroom
12 starting at 8:00? I recall she said she arrived at 8:00 a.m.
13 Am I correct in that recollection?
14 MR. ANDERSON: That's my recollection.
15 MR. TEDMON: Something like that.
16 THE COURT: So she would have heard the Court's
17 housekeeping session with counsel. Not the Court's colloquy
18 with Ms. Rivas, but the discussion of the need to have that
19 colloquy and a reference to immunity.
20 So anything to say about that? Her awareness,
21 possibly, that that's an issue with certain witnesses?
23 MR. TEDMON: I don't know how that would impact her
24 testimony if she even knows what immunity is.
25 MR. ANDERSON: I agree with counsel. I don't know

1 that it would be an impact. But she is here, and if the Court
2 or counsel wants to ask her additional questions, the
3 Government has no objection to that.
4 The Government's view of what she did remember that
5 she was asked about yesterday was that she -- she remembered
6 very little. She didn't really seem to assimilate much of the
7 information she took from the courtroom. Probably because she
8 dropped in in the middle of trial. It would have been
9 confusing to listen at that point.
10 THE COURT: The Court got the impression she wasn't
11 familiar with the players. She didn't necessarily know the
12 names of persons such that information that she was hearing
13 stuck.
14 My main question is, is there a reason to at least
15 allow some very basic cross-exam. Ms. Silva -- I have no
16 indication that Ms. Silva did anything wrong. No indication
17 that any Government counsel or member of the Government team
18 violated the Court's order.
19 But given that she did observe, again, any reason not
20 to allow Mr. Haydn-Myer to briefly use that information and
21 cross-exam, if he chooses to? Mr. Anderson?
22 MR. ANDERSON: If Mr. Haydn-Myer is asking for that,
23 I don't have an objection.
25 MR. HAYDN-MYER: Your Honor, if I may, while she's

1 testifying, if I do decide to ask her any questions in regards
2 to what she heard, I will ask for maybe a sidebar at that time.
3 I sincerely doubt I'm going to be asking her any questions like
4 that.
5 THE COURT: All right. Why do we need a sidebar?
6 MR. HAYDN-MYER: I thought we were going to do it in
7 front of the jury. You're asking me to cross-examine her
8 outside the presence of the jury?
9 Because I thought one of the options -- there's
10 several. There's, of course, that Ms. Silva not testify. That
11 I'm allowed to cross-examine her.
12 When I'm reading the case law, it looks like the
13 cross-examine would be more along the lines of not whether or
14 not a potential witness or a witness actually views some of the
15 testimony. It would be other areas like drug use in the
16 bathroom or something like that. Pursuant to the case law.
17 But I don't believe I'm going to be asking Ms. Silva
18 questions about what she heard while Ms. Yang was testifying.
19 THE COURT: The Court's thought would be if she
20 provides a response to an answer that appears to parrot what
21 was said in court yesterday, that might create the basis for
22 some cross-examination. Aren't you just saying that because
23 you heard another witness say that?
24 I can't predict. It seems unlikely given what we've
25 heard. But I'm telling you without a sidebar I'm inclined to

1 allow that type of cross-examination.
2 MR. HAYDN-MYER: Yes, Your Honor. I understand the
3 Court's point. Thank you.
4 THE COURT: So at this point, I'm denying the motion
5 on behalf of Jeremy Michael Head to exclude Ms. Silva entirely.
6 I will allow, if appropriate, some cross-examination based on
7 the fact that she observed some of Ms. Yang's testimony.
8 The door may not be opened there. But if it is, it
9 would be allowed. At least one of cases I reviewed was U.S. v.
10 English, and I'll let you know the other one once I retrieve my
11 glasses. I'll do that while Ms. Streeter checks to see whether
12 we have all of our jurors now. Anything else we need to
13 discuss? Mr. Anderson?
16 MR. TEDMON: Briefly, Your Honor, I advised counsel
17 and Ms. Streeter, I'm dealing with a migraine today, and I'm
18 okay. But if I become concerned about my ability to
19 concentrate or focus, I'll pass a note up or something.
21 MR. TEDMON: That's all.
22 THE COURT: All right. We're informed of that. Hope
23 you improve. I know that can be a difficult condition to
24 struggle with. Mr. Haydn-Myer?
25 MR. HAYDN-MYER: Nothing further. Thank you.

1 THE COURT: If the jurors are ready, I'll come back,
2 and we will bring them in. We could put the witness in the
3 stand.
4 (Jury in.)
5 THE COURT: All right. Welcome back to court, ladies
6 and gentlemen of the jury. The Court was retrieving its
7 eyeglasses, which it needs to do any real business.
8 We are ready to proceed again with Ms. Rivas on the
9 stand. And we'll take one break this afternoon, right around
10 3:00 and 3:15.
11 I'll acknowledge counsel to continue with Ms. Rivas.
12 Mr. Haydn-Myer.
13 NORA RIVAS,
19 Q. Good afternoon, Ms. Rivas.
21 Q. Can I have 14-B1 that was displayed yesterday. I
22 believe yesterday you were being asked questions about that
23 document, is that correct?
24 A. Yes.
25 Q. Can I get the lower right corner, please, and up

1 about two inches, the entire right panel. Thank you.
2 Can you see where it says number 505?
3 A. Yes.
4 Q. What does it say there?
5 A. 505 says "payoff to Countrywide Home Loans."
6 Q. And did you input that information?
7 A. Yes.
8 Q. And --
9 A. The name of the bank, yes.
10 Q. I'm sorry?
11 A. The name of the bank, yes.
12 Q. And how do you know to input the information there?
13 A. We receive what are called the payoff demands from
14 whichever lender has the loan against the property, and we
15 enter the statement with whatever payoff name is on there.
16 Q. And if you slide down to 506, do you see where it
17 says "payoff to Household"?
18 A. Yes.
20 A. That would be a second mortgage possibly with
21 Household is the name of the lender.
22 Q. Can I have 14-B2, please. Same lower right corner or
23 lower right panel. And can I expand it all the way across to
24 the other side of the page so it can be like the lower half
25 with the numbers. Perfect.

1 Do you see where it says 1108, "title insurance"?
2 A. Yes.
3 Q. And you go all the way across to the opposite side
4 where it says $1,008?
5 A. Yes.
6 Q. Where did that information come from?
7 A. From the title company.
8 Q. And do you see 1115?
9 A. Yes.
10 Q. And do you see the amount that's listed there?
11 A. Yes.
12 Q. And what is that amount?
13 A. Looks like the first and second half property taxes.
14 Q. And do you see where it says "taxes plus penalty?
15 A. Right.
16 Q. Where does that information come from?
17 A. From the title company.
18 Q. Is it common practice to have the taxes and the
19 penalty paid?
20 A. Yes. It's part of clearing the title is that all
21 property taxes are paid current at the time of closing. So
22 it's a requirement usually by the buyer's lender to make sure
23 that the property doesn't have any liens against it, which
24 includes property tax liens.
25 MR. HAYDN-MYER: Thank you. No further questions,

1 Your Honor.
2 THE COURT: All right. Any redirect?
4 THE COURT: All right. May this witness be excused?
5 Mr. Morris?
11 THE COURT: You are excused. You may step down. The
13 MR. MORRIS: Government calls Lisa Malentino.
14 THE CLERK: Ms. Malentino, if you will come forward,
15 please.
16 (Photograph taken of Ms. Malentino by the Clerk.)
22 THE WITNESS: Lisa Malentino, L-i-s-a,
23 M-a-l-e-n-t-i-n-o.
24 LISA MALENTINO,

4 BY MR. MORRIS:
5 Q. Ms. Malentino, are you familiar with the address 1161
6 Saratoga Court in Tracy, California?
7 A. Yes.
8 Q. How do you know that address?
9 A. I lived there.
10 Q. When approximately did you live there?
11 A. 2000 to 2005.
12 Q. If I draw your attention back to the fall of 2004, at
13 that time were you the owner of that home?
14 A. Yes.
15 Q. Were you at that same time period falling behind on
16 your mortgage?
17 A. Yes.
18 Q. How far behind were you, if you remember?
19 A. I believe it was like two months.
20 Q. Were you -- in your mind, were you facing
21 foreclosure?
22 A. I was. I didn't want to, but...
23 Q. But you thought that was a possibility?
24 A. I thought it was, yes.
25 MR. MORRIS: Your Honor, with respect to exhibits, I

1 understand 20-A, -B, -C are admitted by our records. I would
2 ask to admit 20-F pursuant to the stipulation.
3 THE COURT: -A, -B, -C are admitted. 20-F, as
4 covered by the stipulation, is admitted.
5 (Government Exhibit 20-F, County Recorder Title
6 Documents, admitted into evidence.)
7 Q. BY MR. MORRIS: Again, in the fall of 2004 did you
8 become aware of a company called Head Financial Services?
9 A. It was Statewide.
10 Q. Statewide. How did you become aware of Statewide?
11 A. From a postal card that had been sent in the mail.
12 Q. You said had been sent?
13 A. Yeah. A couple of times I had received it.
14 Q. What do you recall about that postcard?
15 A. It said if you were facing foreclosure, give us a
16 call. We can help, you know, fix credit, get better interest
17 rates, help you get back on your feet. That kind of stuff.
18 Q. Did you do anything in response to receiving the
19 postcard?
20 A. I called the number that was on there.
21 Q. Do you remember who you spoke to when you called that
22 number?
23 A. Omar Sandoval.
24 Q. And what did you tell Omar Sandoval when you called
25 him?

1 A. Other than inquiring about, you know -- I thought
2 they would try to get us a better interest rate. And he said,
3 yes, that he can help do that. I told him what was going on
4 with me, and he said he can help.
5 Q. When he said he could help, did he give you any
6 explanation of how it is that he could help?
7 A. He said that he can help fix my credit so that I can
8 get a better interest rate and affordable payments.
9 Q. Okay. Did he tell you anything else?
10 A. That's all when we first spoke. That's what he told
11 me.
12 Q. So were there subsequent phone calls after that call?
13 A. Yes.
14 Q. On those subsequent phone calls, were there any other
15 details that were revealed to you?
16 A. He said that he -- he just told me that -- and I
17 asked him how he would -- what was it that he would do. He
18 said he would give us some cash to help pay off any, you know,
19 debts that I had, so that we can start working on our credit,
20 get it so that it can get better by the time we finish the
21 process.
22 Q. And you say the process, what was your understanding
23 of this process?
24 A. I thought he said that they would -- he would go on
25 -- the company would go on like on the title with me, so we can

1 get a lower payment to -- for the first 12 months. And once
2 the 12 months was up, and we paid our payments on time, they
3 would go in and take their name off the title with me. But my
4 name would stay on title with them. That 12 months, everything
5 looked good, so by then my credit rate will be better, and he
6 would look for a better interest rate for me, and he would give
7 back the house fully in my name.
8 Q. Did you have any discussions about the stuff that you
9 were behind on paying?
10 A. With him?
11 Q. Yes.
12 A. No. Just with the house.
13 Q. That's what I was referring to. With respect to the
14 house you said you were behind, I think, facing foreclosure.
15 So did you have any understanding from talking to him
16 about your arrears on your foreclosure, that the deal involved
17 that?
18 A. No. Just that he would help me not foreclose.
19 Q. So to avoid foreclosure?
20 A. Yes.
21 Q. Did you have any conversation with him about whether
22 there would be an ability to back out of the deal in less than
23 a year?
24 A. He told me I couldn't. That I had to stay at least
25 -- it was like a lease for 12 months. I had to finish off the

1 12 months.
2 Q. Did you have any discussion with Omar about whether
3 or not you would remain the owner of the house?
4 A. Yes. I kept asking him over and over to make sure
5 that -- that we were not off title. And he said, no, you won't
6 be. We can't do that.
7 Q. Why you did you keep asking him that?
8 A. I don't know. I just kept -- that was my biggest
9 question. I wanted to make sure that my name wouldn't come off
10 that title, and he kept saying, no, no, we can't do that.
11 Q. After having these phone conversations with Omar
12 Sandoval, did you ever meet with somebody related to this
13 transaction?
14 A. Yes. We met with somebody at an airport.
15 Q. Do you remember who you met with?
16 A. She didn't give her name. It was a lady.
17 Q. What was your understanding of what that lady was
18 doing?
19 A. That Omar was sending her to sign the paper. Because
20 they were going to give us the cash for -- to pay off the bills
21 that -- the bills that I had. He wanted me to pay them off.
22 Q. And you said you met them at the airport, which
23 airport was that?
24 A. San Jose Airport.
25 Q. Was there anybody other than that lady with you to

1 your recollection?
2 A. With her?
3 Q. Yes. I'm sorry. At that meeting.
4 A. No, just her.
5 Q. And how many times did you meet with somebody related
6 to this process or this transaction?
7 A. Just her that one time, and then a notary that came
8 to my house.
9 Q. I'm sorry?
10 A. Yeah. She came to fill out paperwork also. That was
11 the only time.
12 Q. And would you describe then the meeting that you had
13 with -- I take it you don't recall the names of people that
14 you're talking about?
15 A. I don't remember the names.
16 Q. Would you describe the meeting that you had?
17 A. With the first one?
18 Q. Yes.
19 A. She came -- she met us. She called us on my cell
20 phone, and she told us to meet her -- actually it was like in
21 the parking stall as you walk in. We didn't even go into the
22 airport. And she came out, and she had met us right there.
23 Q. And what happened at that meeting?
24 A. She just had me sign the paperwork, saying that she
25 was going to -- make sure our address is right, so that she can

1 send the money for the -- what they were going to give us, the
2 5,000.
3 Q. And then you said there was a second meeting?
4 A. Somebody came to our house.
5 Q. Can you describe that meeting, please?
6 A. They came, they sat down, and we filled out some
7 paperwork.
8 Q. And do you recall any of the people who were at that
9 meeting?
10 A. Just it was one person, one lady.
11 Q. Do you recall having any discussion at either --
12 Well let me start with this. Do you recall having
13 any discussion during the phone calls with Omar about the
14 equity in your house?
15 A. He never talked about the equity in my house.
16 Q. Do you recall having any discussion at either of
17 those two meetings about the equity in your house?
18 A. No, I don't recall.
19 Q. Do you recall having any discussion about making a
20 monthly payment as part of the process?
21 A. Every month we would pay 1,975 to them.
22 Q. And that 1,975, how does that compare with what your
23 mortgage was before that process?
24 A. We were paying 2500.
25 Q. Do you recall who you were paying that monthly

1 payment to once you were in the process?
2 A. The 1,975?
3 Q. Yes.
4 A. Omar. Statewide Financial, actually. That's the
5 name he told me to write down.
6 Q. And how did you pay that monthly payment?
7 A. By check.
8 Q. Did you hand deliver it, or did you mail it?
9 A. I mailed it.
10 Q. In late 2004, before you got this postcard, were you
11 familiar with a person by the name of Eduardo Vanegas?
12 A. No.
13 Q. Since this time, have you become familiar with the
14 name Eduardo Vanegas?
15 A. Now I know who he is. I mean, I don't know him
16 personally, but I seen it on the paperwork.
17 Q. How did you first become aware of name Eduardo
18 Vanegas?
19 A. I want to say like maybe three months into the
20 process somebody came to the house asking for him. Asking my
21 babysitter. I had a babysitter that took care of my kids
22 there. And she told him he didn't live there.
23 So it was a couple times that they came. So I
24 started asking Omar, trying to get ahold of Omar to ask why was
25 someone looking for someone by this name.

1 Q. How were you trying to get in touch with Omar?
2 A. I had his phone number that he gave me.
3 Q. And did you succeed in getting in touch with Omar?
4 A. Yes, I did.
5 Q. What did you say to him?
6 A. He just said that --
7 Q. What did you say you to him?
8 A. I asked him who is this Eduardo Vanegas that someone
9 keeps coming to ask for. And he kept saying, oh, just tell him
10 he's not there. And I kept asking him, well, who is this
11 person? And he goes, oh, no, it's nobody.
12 Q. Did you make your monthly payments under the process?
13 A. Yes.
14 Q. I'm going to ask you to think forward then to the
15 fall of 2005. Did you have any further interactions with
16 Statewide or Omar at that time?
17 A. I had been trying to contact Omar, I believe. I want
18 to say it could be July or August. I can't remember if it was
19 end of July, beginning of August.
20 Q. Why were you trying to contact Omar at that time?
21 A. Because I started asking -- trying to figure out -- I
22 wanted to make sure he was working on his credit and things
23 that he said he was going to do by the time December came
24 along. And I wanted to see how it was going. And also I had
25 -- I was just -- he hadn't contacted me, so I wanted to see --

1 you know, get ahold of him to make sure everything was okay.
2 Plus I was kind of -- when this guy kept coming, asking for
3 Eduardo Vanegas, I wanted to know why. Still he wasn't
4 answering me why. Who this person was.
5 Q. So when you asked Omar about your credit being
6 improved and being worked on, what did Omar say?
7 A. He just said they're working on it.
8 Q. And I think you've covered how he responded about the
9 Eduardo Vanegas.
10 How did he respond when you asked him about the "are
11 we on track to be done with the process"?
12 A. He would just say yes.
13 Q. And what, if anything, do you recall about -- any
14 further contact or what contact you might have had next after
15 those conversations in the July or August timeframe?
16 A. I hadn't heard from him for a few months up until, I
17 want to say, maybe October, beginning of October. He had said
18 I couldn't contact him because he -- his grandma was sick or
19 something like that. He said he was out of town in Mexico or
20 -- and that's why I couldn't contact him.
21 Q. Okay. And what, if anything, ended up happening to
22 -- with respect to your living at that house?
23 A. What do you mean?
24 Q. After the conversations about "I'm off in Mexico" and
25 "I have a death in the family," did you have further

1 conversations with Omar, or Statewide, or anybody else about
2 the house?
3 A. He did tell me I had to send my payment to some -- to
4 a management company. Start sending it to a different place,
5 and then after that he --
6 Q. Did you do that?
7 A. Yes.
8 Q. Okay. And --
9 A. He would say to write it -- write it to the property
10 management.
11 Q. And when you got to the end of your year, what
12 happened?
13 A. At the end of the year, I think in November, it was a
14 month before, he -- I had tried to contact him again. I had
15 noticed that one of my checks hadn't cleared. And so I tried
16 to contact him. And he said, oh, you need to call John
17 Corcoran. And he gave me the phone number because you didn't
18 pay that month. And I says, what do you mean I didn't pay it?
19 He says, oh, well, your check bounced.
20 Q. Had you paid that month?
21 A. Yes. November -- it was October's check he was
22 talking about.
23 So then -- I said okay. So I talked to this John
24 Corcoran, and he told me I had to come up with that amount plus
25 December's amount. And I said wait a minute, why do I have to

1 pay December? I thought the process is supposed to be complete
2 by this month.
3 Q. Did he have any explanation -- John Corcoran, any
4 explanation --
5 A. He says, well, you default by that one payment.
6 That's all he said. He said you need to send me this amount,
7 which was $4,000.
8 Q. Did you send him that amount?
9 A. Yes. But he wanted it in a money order.
10 Q. Sorry. Money order you said?
11 A. Uh-huh. Yes.
12 Q. What, if anything, did -- do you know whether or not
13 they cashed that money order?
15 Q. Did you have any conversations at the end of the year
16 about whether your credit had been fixed?
17 A. Yes.
18 Q. What did they tell you at the end of the year about
19 your credit?
20 A. They said that they still were working on it. They
21 didn't say it was fixed or not.
22 Q. Did you have any conversations at the end of the year
23 about refinancing the home?
24 A. Yes.
25 Q. What were those conversations?

1 A. They told me that John Corcoran said the only deal he
2 can get me is a $4,000 payment. And I asked him how can I
3 afford it. If I can't afford a $2,500 payment, how can I
4 afford a $4,000 payment? He says, well, that's the best I can
5 do right now. I can give you somebody else, and you can try to
6 see if they can find you something better.
7 Q. Do you still live in that house?
8 A. No.
9 Q. When did you move out of that house?
10 A. In July -- I want to say the summer of 2006.
11 Q. Did you ever successfully get the refinance?
12 A. No.
13 Q. If you can bring up 20-B, please. On the screen in
14 front of you, Ms. Malentino, if you can see it, there is a
15 block E, and it appears to a mailing address of 3939 Atlantic
16 Avenue in Long Beach. Have you ever lived in Long Beach?
17 A. No.
18 Q. In 2004 were you living in Long Beach?
19 A. No.
20 Q. Did you have any family that were living at Atlantic
21 Avenue in Long Beach?
22 A. No.
23 Q. Did you have anybody that received mail for you in
24 Long Beach?
25 A. No.

1 Q. And looking at block D, again in 2004, was Eduardo
2 Vanegas living with you at the Saratoga address in 2004?
3 A. No.
4 Q. Have you ever met Eduardo Vanegas?
5 A. No.
6 Q. If you can go to page two, please. In the end of
7 2004 was it your intention to send $68,933.66 to a company
8 called Statewide Financial Group?
9 A. No.
10 Q. In November 2004, was it your intent to sell your
11 house?
12 A. No.
13 Q. 20-B4, please. Looking at this form as a whole, if
14 you can see it on your screen, do you recognize this form?
15 A. That's my signature, but I don't recall that form.
16 Q. Let's focus in there, then. So you think that is
17 your signature?
18 A. The top one. But the bottom, the handwriting one, I
19 don't hand write like that.
20 Q. But this --
21 A. Yes.
22 Q. -- appears to be your signature?
23 A. Yes.
24 Q. Zoom back out, please. Is that your handwriting in
25 that portion of the form?

1 A. No.
2 Q. As you sit here today, do you understand what this
3 form says?
4 A. Authorized to wire some kind of money.
5 Q. Okay. Do you have any recollection of signing this
6 form?
7 A. No.
8 Q. Before today, do you recall seeing this form before?
9 A. No. Just the day that I came in with you on Monday.
10 Q. You can take that down. Did you intend in 2004 to
11 give up title to your home?
12 A. No.
13 Q. Was your belief that you would remain on the title to
14 your home, was that important to you when you decided whether
15 or not to deal with Omar Sandoval?
16 A. Yes.
17 Q. And was your belief that -- well, strike that.
18 Did you have any understanding or belief about what
19 would happen to the equity of your house when you signed the
20 papers with Omar Sandoval?
21 A. I didn't think they were going to touch the equity.
22 Q. At the time, did you understand what equity in a
23 house was?
24 A. Yes.
25 Q. And was your belief that they weren't going to touch

1 the equity in the house, was that important to you --
2 A. Yes.
3 Q. -- when you decided whether or not to deal with Omar
4 Sandoval?
5 A. Yes.
7 THE COURT: All right. Any cross-examination,
8 Mr. Tedmon?
12 THE COURT: All right. This witness may be excused,
13 Mr. Morris?
15 THE COURT: All right. You may step down
16 Ms. Malentino. The Government's next witness.
17 MR. ANDERSON: The United States calls Emily Silva.
18 THE COURT: As always, during these exchanges, if you
19 want to stand and stretch, feel free. Up to you.
20 (Photograph taken of Ms. Silva by the Clerk.)

1 THE WITNESS: Emily Silva, E-m-i-l-y, S-i-l-v-a.
3 EMILY SILVA,
8 BY MR. ANDERSON:
9 Q. Good afternoon, Ms. Silva.
11 Q. What type of work do you do?
12 A. I'm a mail carrier for the postal service.
13 Q. Are you familiar with a house 2171 Prospect Street in
14 Porterville, California?
15 A. Yes, sir.
16 Q. How are you familiar with that house?
17 A. I lived there for about nine years, and I actually
18 deliver the mail there now.
19 Q. Now were you living in that house in the 2004/2005
20 time period?
21 A. Yes. I -- yes, I was. I moved there 1999.
22 Q. Did you end up owning that house?
23 A. Yes, I did.
24 Q. When did you buy it?
25 A. 2001, I believe it was. Because I rented it for a

1 while.
2 Q. Did there come a time when you started getting a
3 little behind on the mortgage payments?
4 A. Yes. Unfortunately, yes.
5 Q. When you were -- when you became a little bit behind
6 on those mortgage payments, did you receive anything in the
7 mail?
8 A. Yes, I did.
9 Q. Anything talking about helping you with your
10 mortgage?
11 A. Yes, I did.
12 Q. What did you get?
13 A. You want to see the little card? I have it with me.
14 That's what mail carriers do. Not necessarily.
15 Okay. There it is. There it is. It says: "Facing
16 foreclosure? Don't wait." And it has a number, and it was
17 addressed to me, and it has a contact number. You might come
18 and get it if you want.
19 Q. Do you mind if we take that from you?
20 A. Don't mind at all.
21 THE COURT: You may approach.
22 MR. ANDERSON: Your Honor, we'll mark that as 21-G.
23 THE COURT: All right. You may approach. If you can
24 show that to defense counsel as well. 21-G.
25 (Government Exhibit 21-G, Postcard received by

1 Witness Emily Silva, marked for identification.)
2 Q. BY MR. ANDERSON: Let me clear up a couple things
3 about the card. There's some handwriting on the card?
4 A. It was a fax number that was -- you know what, I
5 don't even know if that was their fax number. Just something I
6 wrote on it.
7 Q. And there's also a 1-8-7-7 number?
8 A. I don't know what that could be.
9 Q. Okay.
10 A. That's an old card.
12 Government's Exhibit 21-G be admitted into evidence.
16 THE COURT: All right. 21-G is admitted.
17 (Government Exhibit 21-G, Postcard received by
18 Witness Emily Silva, admitted into evidence.)
19 Q. BY MR. ANDERSON: Okay. So once you received the
20 postcard, did you do anything to follow up on the postcard?
21 A. Yes, I did.
23 A. I called. I called the number that was on there.
24 Q. When you called the number on the postcard, were you
25 able to reach anybody?

1 A. Yes, I was.
2 Q. Who did you reach?
3 A. Don't know if it was a secretary at first, but then I
4 spoke with a Michael Head.
5 Q. When you spoke with Michael Head, can you tell us
6 what you initially said to him?
7 A. It's been a few years now, but I can probably say
8 that I was probably telling him my sad story of how I needed
9 help.
12 Q. BY MR. ANDERSON: Did you explain your situation to
13 him?
14 A. Yes, I did.
15 Q. Once you had explained your situation to Michael
16 Head, did he say anything to you?
17 A. Yes.
18 Q. What did Michael Head tell you?
19 A. He told me that he was going to help me with the
20 situation. That he was going to help me -- do I continue just
21 telling you what he said.
22 Q. No. This is good. Let's do it question and answer.
23 A. Okay.
24 Q. Did Michael Head explain to you in that conversation
25 how he could help you?

1 A. I don't know if it was in that conversation or
2 another one later on, but, yes, he did explain how he could
3 help me.
4 Q. So did you have a series of conversations with
5 Michael Head?
6 A. At least a couple. Two, three.
7 Q. So understanding that you can't recall specifically
8 which of the three -- two or three conversations he explained
9 things to you, in the course of those conversations did Michael
10 Head explain to you what his program was?
11 A. Yes.
12 Q. What did Michael Head say to you?
13 A. He said what we do is we will have you pay us $1,000
14 for a year. After that year, we will find you a loan with a
15 bank when you have good credit, and we will have restored or
16 cleared your bad credit.
17 Q. Did Michael Head tell you anything about what would
18 happen with the title to your home?
19 A. No.
20 Q. Did he tell you anything about what would happen to
21 the equity in your home?
22 A. No.
23 Q. Based on your conversations with Michael Head, what
24 did you think was going to happen with the title and equity in
25 your home?

1 A. Okay. I was going to get this loan after a year with
2 the bank. And I would just get a new loan and have new
3 payments, and that would have been great. I would have had a
4 -- no bad credit record, let's say.
5 Q. So for that year that you were to be making payments,
6 who were you supposed to be making payments to for that year?
7 A. Head Financial Services.
8 Q. What types of payments did you think those were?
9 A. Good question. I'm thinking I'm paying them a
10 mortgage of some sort, I guess.
11 Q. Okay. Did you think that those were rent payments?
12 A. No.
13 Q. Why didn't you think they were rent payments?
14 A. Because the house was mine. I was still living in
15 it. I wouldn't consider it to be rent, but...
16 Q. All right. So after you've had these conversations
17 with Michael Head where you've discussed what he can do for
18 you, was there anything else that happened to follow up on
19 those conversations?
20 A. Okay.
21 Q. I guess what I'm getting at is, what happened next in
22 the process?
23 A. Well, next in the process I continued to make the
24 payments. And after a year of that, he apparently found a bank
25 that was going to help me.

1 Q. Okay. Well, I think we've jumped --
2 A. Okay.
3 Q. So you've discussed this with Michael Head. Did you
4 meet anyone in person?
5 A. Yes, I did.
6 Q. Do you recall who you met in person?
7 A. No, I don't. It was a gentleman. No name. I
8 couldn't recall the name.
9 Q. What did you meet with the gentleman for?
10 A. To sign the paperwork, the new paperwork for the new
11 loan for the new home -- for the new home loan. You know, the
12 bank stuff. Because apparently they've got me now a loan with
13 a new bank. And I met with them to sign those papers.
14 Q. Why did you think that you had a loan with a new
15 bank?
16 A. I was told by them that I had a loan with a new bank.
17 We now found you a new bank.
19 A. Michael.
20 Q. Where did you meet with the gentleman?
21 A. I met him in Tulare, California, at a Black Bear
22 Restaurant about 30 miles from where I live.
23 Q. When you met with this person, what did you do?
24 A. Met there, sat there and signed these papers.
25 Q. Was it a small amount of papers or a large amount of

1 papers?
2 A. Big stack of papers. Big -- there were long papers,
3 and there was a ton of them.
4 Q. How did the signing go? Could you describe the
5 process?
6 A. We pretty much sat there in one of the booths, had
7 something to drink, like water, whatever it was, and he would
8 tell me sign here, print here, sign here, print here, and just
9 flip the pages, and I did that.
10 Q. Did he explain the documents to you?
11 A. I don't recall that he explained every little thing.
12 He would tell me where to sign, where to put the initials, yes.
13 Q. So after that signing, did you meet with anyone else?
14 A. No.
15 Q. Did you sign documents with anyone else?
16 A. No.
17 Q. Did you begin making monthly payments?
18 A. Yes.
19 Q. Did you make payments -- who did you make the
20 payments to?
21 A. I think it was considered First -- First something
22 Financial. Something in Minnesota. It was a bank.
23 Q. Who were you actually writing the checks and sending
24 them to?
25 A. To them. To this bank. And I made the payments. It

1 was $1,600 payments now. Yeah. And that was the monthly
2 payment that I was making, which was big surprise since I was
3 only paying $1,000, now I'm paying 1,600.
4 Q. All right. Let's step back.
5 A. Okay.
6 Q. Stay in chronological order.
7 A. Okay.
8 Q. So you've met with somebody who Michael Head had you
9 sign documents with?
10 A. Correct.
11 Q. And as part of that deal you're supposed to send
12 payments, is that right?
13 A. Yes.
14 Q. How much were those payments supposed to be?
15 A. $1,600.
16 Q. Who were you supposed to send payments to?
17 A. To the bank.
18 Q. Did you ever send payments -- did you ever send
19 $1,000 payments?
20 A. Yes, I did. I send $1,000 to Michael Head, but that
21 was prior to this signing of these papers to the bank. That
22 was the one year that I paid them $1,000.
23 Q. Okay. That's what I want to talk about.
24 A. Okay.
25 Q. I want to talk about that year.

1 A. Okay.
2 Q. So in order to start that year with Michael Head, did
3 you have any documents that you need -- that you signed before
4 you started that year?
5 A. Yes.
6 Q. Okay. When and with who did you sign those
7 documents?
8 A. Those were sent to me in the mail. I didn't meet
9 anyone for those.
10 Q. Okay. When the documents were sent to you in the
11 mail --
12 A. Uh-huh.
13 Q. -- did you go sign them by yourself, or did you sign
14 them with someone else?
15 A. Just pretty much I was told to sign what I received.
16 Some of them would come in Express Mail, some Priority, but
17 mostly Express Mail. And I was told to sign those forms and
18 send them back as soon as I received it.
19 Q. Okay. Did you sign them with a notary or without a
20 notary?
21 A. Without a notary.
22 Q. After you signed those documents, where did you send
23 them to?
24 A. Okay. There was two different places. First I sent
25 them to Costa Mesa. Then I started sending them to -- not the

1 documents -- but the payments.
2 Q. We're not to payments yet.
3 A. The documents, I'm assuming it was Costa Mesa. It
4 must have been the very first place.
5 Q. Okay.
6 A. Okay.
7 Q. After you sent the documents in, did you have a
8 conversation with anybody before you started sending checks, or
9 did you just start sending checks?
10 A. I probably spoke with -- okay, I know at some time I
11 did speak with a secretary. Her name was Sarah. And I spoke
12 with her, and she would be my contact that I would -- she would
13 say, you know, send this payment to blah, blah, blah.
14 Q. Did you ever ask questions of Sarah?
15 A. Not really. I assumed she was a secretary.
16 Q. Did you begin sending payments to somebody during --
17 and we're talking about the year period?
18 A. Uh-huh.
19 Q. Who did you send payments to?
20 A. Head Financial Services.
21 Q. Initially where did you send those payments, what
22 location?
23 A. Costa Mesa, California.
24 Q. Did that eventually change?
25 A. Yes.

1 Q. Where did it change to?
2 A. It changed to Arizona.
3 Q. When you sent those payments, what method did you
4 use?
5 A. Money order.
6 Q. Did you send them through the mail?
7 A. Yes.
8 Q. When you mailed them, did you mail them from --
9 A. From Porterville. From where I live.
10 Q. And can you describe for us where Porterville is
11 located?
12 A. Okay. Easiest way is 45 miles north of Bakersfield.
13 About 30 miles east of Tulare in the foothills.
15 identification as Government's Exhibit 21-E.
16 And, Your Honor, I would ask that that be admitted
17 pursuant to the records stipulation.
18 THE COURT: As covered by the stipulation that
19 exhibit is admitted.
20 (Government Exhibit 21-E, 2171 South Prospect Street,
21 Porterville – Mailings and Other (Money Order) (Count 11),
23 THE WITNESS: Sorry, got to get my glasses. Okay.
24 Oh, yeah.
25 Q. BY MR. ANDERSON: Do you recognize this document?

1 A. Yes.
2 Q. Is this a copy of a postal money order?
3 A. Yes.
4 Q. Do you recognize this particular postal money order?
5 A. Yes.
7 A. My signature. My writing. The Financial
8 Enterprises.
9 Q. And it's for $1,000, is that correct?
10 A. Yes.
11 Q. And the date is January 13th, 2006?
12 A. 2006, yes.
13 Q. Do you know what this money order would have been
14 for?
15 A. A payment, the yearly payment that I was supposed to
16 do at $1,000.
17 Q. Would that have been a payment that you mailed on or
18 near January 13th, 2006?
19 A. Yes.
20 Q. Okay. All right. We can take that exhibit down.
21 Now I want to clarify. Those documents that you
22 signed that were mailed to you and you sent back, what was your
23 understanding of those documents?
24 A. It goes back to pretty much the same thing. It's --
25 I was going to sign those, and I was going to make these

1 payments for a year, and that was my understanding. They were
2 going to take care of me, let's say, for a year. And that's
3 why I sent them back and signed them.
4 Q. Did you think that you were going to remain on title
5 to your home?
6 A. Oh, yes.
7 Q. Did you think that the equity in your home was going
8 to remain in the home?
9 A. Yes.
10 Q. Why did you think both of those things?
11 A. That would be the normal thing to do. You buy a
12 home. The home is yours. And your equity is yours. And the
13 title is yours.
14 Q. Was there anything in your discussions with Michael
15 Head that indicated differently than that?
16 A. No.
17 Q. Do you know a person by the name of Jason Marshal?
18 A. No. I know the name from paperwork that I've seen,
19 but I don't know him personally.
20 Q. Did Jason Marshal ever live with you during --
21 A. No.
22 Q. Did you remain in your house for that year?
23 A. Yes, I did.
24 Q. Now you're making payments to Head Financial
25 Services. Does there eventually come a time when you realize

1 something is not quite right or not what you expected?
2 A. At the time I'm making the payments, no.
3 Q. Is there a point where you eventually realize things
4 aren't --
5 A. Yes.
6 Q. What causes that realization?
7 A. At the time that I signed the new loan for the bank.
8 Q. What about that process -- well, first of all, how
9 did it come about that you were going to sign a new loan for
10 the bank?
11 A. I was told by Head Financial, or Michael, or who was
12 speaking to me that this was going to occur. We are going to
13 find you a bank that is going to get you a new loan. You've
14 now been with us for a year, you have not been late, and this
15 is -- like their job is done. They're going to help me to get
16 this loan.
17 Q. So when you went to sign the loan -- actually, I
18 shouldn't assume that.
19 What about getting the new loan caused you to think
20 that there was something wrong?
21 A. It was right after that when I get the payment, and I
22 find out now it's $1,600, and these guys were going to help me.
23 I already had a hard time making the $1,000. How was I going
24 to make 16.
25 Q. Why was $1,600 more than you thought it would be?

1 A. Because the house had been appraised. It was an
2 original $95,000 loan. The house now had been appraised. It
3 was sent by Head Financial to appraise the home for this new
4 loan. The house now had been appraised 210, 215,000. So the
5 payment is not necessarily going to be the same $1,000. Now I
6 had no clue at the time, of course.
7 Q. Did you find out that the loan was bigger than you
8 expected it to be?
9 A. Oh, yes.
10 Q. How did you find that out?
11 A. When I received the payment. The paperwork from the
12 bank telling me what my payment was going to be.
13 Q. Was the -- so when you -- when you heard that the
14 house was appraising at over $200,000, who do you think owned
15 that house?
16 A. Me.
17 Q. And how much of the equity did you think was in that
18 house?
19 A. Oh, about 100,000.
20 Q. So how big did the loan end up being the new loan?
21 A. The new loan was for, I think, 210 -- 205 or 210. I
22 am not 100 percent sure, but I know it was -- I remember being
23 ecstatic and going, oh, my goodness, I just have $100,000
24 equity. How did this happen? It was in the year that
25 everything was going up real fast.

1 Q. Okay. So did you find out that that equity wasn't
2 really yours?
3 A. Not at the time. I had no clue.
4 Q. How did you finally find out that there was a problem
5 with the equity?
6 A. Okay. Let me -- I'm trying to keep this straight.
7 How did I eventually find out?
8 Q. All right. Well, let's step back. You said you
9 realized there was a problem with the payment?
10 A. Right.
11 Q. What did you do when you realized there was a problem
12 with the payment?
13 A. Well, the first thing I did, I had called the bank,
14 and they go, well, there is a first and a second on it, and the
15 first is this amount. The second is that amount.
16 So I contacted -- contacted Head Financial, spoke
17 with Sarah Maston or Mattson -- I'm not sure -- and I spoke
18 with her, and I asked her so now what happened -- what happened
19 to this? Why is my payment so much higher? And she says,
20 well, I'll have to talk to Michael about that. He'll get back
21 to you. Today is 2013. I never heard a word, so.
22 Q. Did you ever get a chance to talk to Michael Head
23 after that?
24 A. After that, no.
25 I did ask what happened to my equity when I found

1 out. I think I'm getting ahead of myself here, and that's
2 typical of me here.
3 But when I found out that the value of the home had
4 gone up, and it was no longer -- it wasn't really mine. What
5 happened to my equity? Well, let's go back. Sorry.
6 THE COURT: Why don't you wait for the next question.
7 THE WITNESS: Yeah. I'm getting ahead of myself.
8 Q. BY MR. ANDERSON: What I'm trying to do is go through
9 things in order.
10 A. Yeah, and I have a problem trying to tell you the
11 whole story.
12 THE COURT: It's the attorney's job to ask you a
13 question. So wait for his question, then answer, and wait for
14 his next question.
16 Q. BY MR. ANDERSON: My questions are going to be asking
17 you one thing at a time.
18 A. Okay.
19 Q. So let's jump back. You're making payments on the
20 house, correct?
21 A. Uh-huh.
22 Q. Now what's the next interaction you have with Michael
23 Head and Head Financial Services as you're making those
24 payments on the house?
25 A. I really don't have any more interaction with them

1 except asking the question, "what happened to my equity?"
2 Q. How did to come about that you asked the question,
3 "what happened to my equity?"
4 A. I'm thinking it's when I found out that there was
5 somebody else's name on there with me.
6 Q. Okay. So you found out that there was someone else's
7 name on title to your house?
8 A. Yes.
9 Q. How did you find out there was someone else's name on
10 title to the house?
11 A. I got a paper stating the name of Jason Marshal and
12 Emily Silva, who I had no clue who this Jason Marshal was.
13 Q. Was it a grant deed granting the house from you to
14 Jason Marshal?
15 A. I don't think that was the paper.
16 Q. Let me --
17 A. That actually --
18 Q. Can I show you an exhibit?
19 A. Sure.
20 Q. Let's look at Government's Exhibit 21-F.
21 Your Honor, I would ask that this be admitted
22 pursuant to the records stipulation.
23 THE COURT: As covered by the stipulation, 21-F is
24 admitted.

1 Documents, admitted into evidence.)
2 Q. BY MR. ANDERSON: And we can zoom out if that helps,
3 too. Do you recognize this document?
4 A. I see -- I recognize my signature, yes.
5 Q. Does it look -- and if it helps, we can also show you
6 a paper copy of the document.
7 A. No. I can see that this is my signature.
8 Q. Did you ever intend to grant your house to Jason
9 Marshal?
10 A. No.
11 Q. Did you know that that was happening?
12 A. No.
13 Q. You had mentioned that you signed the documents and
14 mailed them back, and you later met with a man to do signing.
15 Did you ever meet with Annelie Durbin?
16 A. No.
17 Q. Let's go ahead and look at the bottom of this
18 document.
20 Exhibit 21-D be admitted as documents found during search
21 warrants, pursuant to the stipulation.
22 THE COURT: As covered by the stipulation, 21-D is
23 admitted.
24 (Government Exhibit 21-D, 2171 South Prospect Street,
25 Porterville – Search Warrant Documents, admitted into

1 evidence.)
2 Q. BY MR. ANDERSON: Let's take a look at Government's
3 Exhibit 21-D. We will go to page two -- I'm sorry -- we're
4 going to page three.
5 Do you see the signature --
6 A. Yes. That is my signature.
7 THE COURT: Wait for the rest of the question.
8 What's the question?
9 Q. BY MR. ANDERSON: The signature on the line
10 "affiant," do you recognize that signature?
11 A. Yes.
12 Q. Whose signature is that?
13 A. Mine.
14 Q. Do you recall ever meeting with Annelie Durbin?
15 A. No.
16 Q. And if we go up on that page, there's some initials.
17 Does that appear to be how you write your initials?
19 Q. Let's go to Government's Exhibit 21-D, page four.
20 Do you recall if you met with anybody to sign
21 documents in order to get into this one-year program on
22 December 2nd, 2004?
23 A. No. Not for the one-year program, no.
24 Q. How are you able to remember that particular day?
25 A. That's my birthday.

1 Q. Let's go to page five. Do you see those initials
2 right here?
3 A. Yep.
4 Q. Do you recognize those initials?
5 A. No. Those are not mine.
6 Q. Let's go to page seven. Do you see the initials at
7 the bottom of the page?
8 A. Yes.
9 Q. Are those your initials, do you know?
10 A. No. I always sign E.R.S. That's just E.S.
11 Q. Let's go to page eight. Is this your writing on the
12 signature line?
13 A. Yes.
14 Q. And the date of birth, is that your date of birth?
15 A. Correct.
16 Q. And your mother's maiden name?
17 A. Yes.
18 Q. Let's go to page nine. Are you able to recognize
19 whether or not that's your signature?
20 A. That is my signature.
21 Q. Let's go to page ten.
22 A. Yes.
23 Q. You're anticipating my question. I've got to ask it,
24 though, or I wouldn't have a job.
25 Is that your signature on that line?

1 A. Yes.
2 Q. Let's go to page eleven. Do you see the four sets of
3 initials on this page?
4 A. Yes, sir.
6 A. No.
7 Q. Why do you say they're not?
8 A. I don't sign E.S.
9 Q. Let's go to page twelve. Do you see the four sets of
10 initials on that page?
11 A. Yes.
13 A. No.
14 Q. And looking at the bottom, does that appear to be
15 your signature? We can zoom in on it.
16 A. Yes.
17 Q. It does appear --
18 A. Um, yeah. It's my scribble. But why would I put the
19 R at the end? Okay, yeah, that one looks like mine.
20 Q. What were you saying about the R at the end?
21 A. Well, it says Emily Silva R., and I would always
22 write Emily R. Silva.
23 Q. But it does appear to be --
24 A. It appears to be. Oh, I see, excuse me, but under it
25 says Emily Silva R., and that's how they must have wanted me to

1 sign it.
2 Q. Okay. Let's go to page 13. That 2171 South Prospect
3 Street, Porterville, California, was that your house?
4 A. Yes.
5 Q. And you see that December 2nd, 2004, date again?
6 A. Yes.
7 Q. Let's go to the next page. Does that appear to be
8 your signature on this page?
9 A. Yes.
10 Q. We're going to go to the next document, which is
11 starting at page 15 -- 21-D, page 15.
12 Do you recognize this document? And when I say do
13 you recognize this document, do you recognize this document
14 from back prior to getting ready for this trial?
15 A. I don't know.
16 Q. Do you recall signing a Residential Lease After Sale
17 agreement in 2004 or 2006?
18 A. No.
19 Q. Let's go down to the bottom of that page. Do those
20 appear to be your initials?
21 A. No.
22 Q. And I said 2004, 2006. Do you remember signing
23 something like this in 2005 either?
24 A. I don't really recall. I mean, it's been a long
25 time. Looking at this, that's not my initial.

1 Q. Let's go to the next page, and we'll look at the same
2 spot. There is another set of initials. Are those your
3 initials?
4 A. No.
5 Q. Go to page 17. Are those your initials?
6 A. No.
7 Q. Page 18. Are those your initials?
8 A. No.
9 Q. Go to page 19. Do you see the line "tenant/seller"?
10 A. Yes. That's my signature.
11 Q. We will go to page 21-D -- I'm sorry -- Exhibit 21-D,
12 page 20.
13 Here's another copy of that grant deed. Are you able
14 to tell whether or not that's your signature?
15 A. That's my signature.
16 Q. And then we'll look at the bottom again. Do you
17 recall meeting with an Annelie Durbin, notary public, on
18 December 9th, 2004?
19 A. No.
20 Q. Let's look at the next page. Are you able to tell
21 whether or not that appears to be your signature?
22 A. Yes.
23 Q. Does it appear to be your signature?
24 A. Yes.
25 Q. And again we have a notary on December 9, 2004, from

1 Annelie Durbin, is that correct?
2 A. I think that's what it says.
3 Q. Let's look at the top of that document. That wiring
4 information is not filled in, is that right?
5 A. Uh-huh. Correct.
6 Q. Did you intend to wire the equity out of your house
7 to anyone associated with Michael Head?
8 A. No.
9 Q. Let's go to page 22, there's initials and a signature
10 on this page.
11 A. Okay.
12 Q. Do those initials look like yours?
13 A. Yes.
14 Q. And it looks like there's three letters in that, is
15 that right?
16 A. Yes.
17 Q. Is that how you typically sign your initials?
18 A. Yes.
19 Q. And there is a signature on the affiant line, do you
20 see that signature?
21 A. Yes.
23 A. Yes.
24 Q. Whose does it appear to be?
25 A. Mine.

1 Q. Let's go to page 23. Do you see the signature there?
2 A. Yes.
3 Q. Whose signature does that -- well, do you recognize
4 that signature?
5 A. No.
7 A. No.
8 Q. Take that exhibit down.
10 Exhibit 21-B be admitted pursuant to the records stipulation.
11 THE COURT: 21-B as covered by the stipulation is
12 admitted.
13 (Government Exhibit 21-B, 2171 South Prospect Street,
14 Porterville – Escrow File, admitted into evidence.)
15 Q. BY MR. ANDERSON: Let's pull up that exhibit, page
16 one.
17 Now, do you see this part where it says "name of
18 borrower"?
19 A. Yes.
20 Q. There is that Jason Marshal name?
21 A. Yes.
22 Q. Prior to receiving a deed in the mail, had you ever
23 seen that name before?
24 A. No.
25 Q. And did Mr. Marshal live at 2171 South Prospect

1 Street?
2 A. Never.
3 Q. The name of seller, do you see Emily R. Silva written
4 there?
5 A. Yes.
6 Q. Now did you think you were selling your home --
7 A. No.
8 Q. -- in January 2005?
9 A. No.
10 Q. Did you ever use the address, 949 South Coast Drive
11 Number 450, Costa Mesa, California?
12 A. This is the first time I've ever seen this. No.
13 Q. So you never lived or had a business at that
14 location?
15 A. No.
16 Q. Let's go to page two. Did you ever intentionally
17 direct over $60,000 out of the equity in your home to Financial
18 Enterprises?
19 A. No.
20 Q. Did you know that you were doing that?
21 A. No.
22 Q. Let's look at the next page, page three. Let's look
23 at the bottom, first. Does that look like a document we saw
24 just a few minutes ago --
25 A. Yes.

1 Q. -- with your signature on it?
2 A. Yes.
3 Q. And if you recall, that document wasn't filled out at
4 the top, is that right?
5 A. Correct.
6 Q. Let's go to the top of that document. And it's
7 filled out on this document, is that right?
8 A. Yes.
9 Q. This handwriting at the top of the document, is that
10 yours?
11 A. No.
12 Q. Do you need a minute? Are you okay?
13 A. That's okay. I'm okay. Go ahead. It's okay. It's
14 okay. It's okay.
15 THE COURT: There's some water to your right as well.
16 Would you like a glass of water?
17 THE WITNESS: It's all right. I'm fine. I've never
18 seen that before. Go ahead.
19 Q. BY MR. ANDERSON: At some point you received
20 something in the mail showing Jason Marshal on title to your
21 home, is that right?
22 A. Correct.
23 Q. After that happened, did you do anything, what was
24 your reaction?
25 A. My reaction was to call them and ask them who is

1 this.
2 Q. Who did you call and ask?
3 A. I called Head Financial, and I spoke with Sarah.
4 Q. Was Sarah able to answer your question?
5 A. Yes.
6 Q. What did she tell you?
7 A. She told me that his name had to go on there to help
8 get the loan. Supposedly had better credit. I don't know.
9 Q. At that point did that satisfy you?
10 A. No.
11 Q. Why not?
12 A. I didn't understand why he needed to go on the loan
13 with me.
14 Q. Did you do anything else to follow-up at that point?
15 A. Just contact them, I guess, and find out why, and I
16 was never told why.
17 Q. Did you ever talk to Michael Head about it?
18 A. No. Not about this, no.
19 Q. Did you talk to Michael Head about anything else
20 around that time?
21 A. I don't think so.
22 Q. Did you have any follow-up conversations with Michael
23 Head later in the process, not in the initial getting set up,
24 but later in the process, did you have discussions with Michael
25 Head?

1 A. I don't think so. I don't recall much more.
2 Q. Now when it came time to get the new loan, was there
3 a point where anyone threatened you with eviction?
4 A. Yes.
5 Q. Who threatened you with evasion?
6 A. Yes. That's Michael Head had told me if you don't
7 have $5,000 in three days, you're out of there.
8 Q. Can you describe how that conversation started?
9 A. Not really. How it started, I don't know.
10 Q. Could you describe the conversation to us in more
11 detail then?
12 A. If you want your deed back, you have to have --
13 That's my question comes up. What do you mean if I want my
14 deed back? And that was kind of the beginning of why I don't
15 have a deed, why isn't it mine.
16 But if you want your deed back, then you need to have
17 $5,000 in three days or you're out of there. You will be
18 evicted.
19 Q. Had you been making your payments up to that point?
20 A. Yes.
21 Q. What did you respond to Michael Head, if anything?
22 A. I remember crying just like I just did. And he just
23 devastated me. I didn't know this was coming.
24 Q. Did you end up sending $5,000 to him?
25 A. Yes, I did.

1 Q. After you sent the $5,000 to Michael Head, what else
2 happened?
3 A. That's, I think, that's when the process of the new
4 loan started to happen.
5 Q. Did you expect to have to pay that $5,000?
6 A. No.
7 Q. Did you give any permission for equity to be taken
8 out of your home?
9 A. Never.
10 Q. Did you give any permission for the title to go out
11 of your name?
12 A. No.
14 THE COURT: All right. Mr. Haydn-Myer, are you going
15 to take the lead?
20 Q. Good afternoon.
21 A. Afternoon.
22 Q. Can I have Government's Exhibit 21-D put back up,
23 please. D as in dog. And can I have 21-F now.
24 Ms. Silva --
25 A. Yes.

1 Q. -- can you see that okay?
2 A. Yes.
3 Q. I believe you've been asked several questions about
4 Annelie Durbin?
5 A. Uh-huh.
6 Q. And I believe you said you've never met her, and you
7 never met with a notary, is that correct?
8 A. Correct.
9 Q. And do you see the date there, December 9th?
10 A. Yes.
11 Q. Are you sure you never actually went and met with
12 Ms. Durbin or she came to your house?
13 A. I am sure I did not.
14 Q. Have you ever been to a notary before?
15 A. Yes.
16 Q. And you know when you go to a notary, they do things,
17 they take your driver's license number, they sometimes get your
18 fingerprint, and then you sign off on the documents, is that
19 correct?
20 A. Correct.
21 MR. HAYDN-MYER: And if I may, Your Honor, it's going
22 to be JMH-F, and I believe I have copies for everybody.
23 (Defendant's Exhibit JMH-F, Notary Public
24 documentation, marked for identification.)
25 THE COURT: All right. You'd like to approach?

1 Q. BY MR. HAYDN-MYER: Yes, Your Honor. Would you look
2 at that, please.
3 A. Okay.
4 Q. Could you look at page two.
5 As you see, Ms. Silva, there is actually a signature
6 that appears on the right, is that correct?
7 A. Yes.
9 A. That is my signature.
10 Q. And if you go back over to the left, there is a name
11 and the name is?
12 A. Emily Rocha Silva.
13 Q. And the address is?
14 A. 2171 South Prospect.
15 Q. And there's also another number that's written there?
16 A. The driver's license number.
17 Q. Yes. Do you recognize the driver's license number?
18 A. That is my driver's license number.
19 Q. And if you could turn to page four, please.
20 A. I don't know this person. Four?
21 Q. Yes.
22 A. Okay.
23 Q. Is that also your signature on the bottom?
24 A. Yes.
25 Q. And there's also a place for a thumbprint there, is

1 that correct?
2 A. I see one there, yes.
3 Q. Since you've already been with a notary before, your
4 experience, obviously, is where you signed your name and then
5 took a thumbprint, is that correct?
6 A. That's what you would do if you go to a notary, yes.
7 Q. Now does that refresh your recollection at all about
8 meeting with Annelie Durbin?
9 A. This is almost scary that I have no recollection of
10 meeting with anyone except the gentleman that I had explained
11 before.
12 Q. If you'd like, go to the front page there of that
13 document, JMH-F. There is a date written up there, is that
14 correct? On the left.
15 A. Too small. On the left? Okay. I see it now.
16 Q. What's the date?
17 A. Says December 9th, 2004.
18 Q. And if you would, please, look back at the monitor?
19 Is the monitor still on?
20 A. Yes.
21 Q. Do you see the date there?
22 A. Yes.
23 Q. And what's the date on the monitor?
24 A. December 9th, 2004.
25 Q. And do you see where it says the next few lines over

1 grant deed? I'm sorry. On JMH-F, the paperwork that I've
2 given you.
3 A. Oh, okay. Oh, my God. Jesus Christ. Okay. I don't
4 remember meeting with anyone, but --
5 Q. Now it has been some time, Ms. Silva?
6 A. Yeah.
7 Q. After looking, obviously, at the notary book, and
8 thinking back to December 9th, didn't you meet with the notary?
9 A. I don't -- I don't recall. I'm not even going to
10 tell you I didn't. I don't recall meeting with any woman.
11 MR. HAYDN-MYER: May I publish it to the jury, Your
12 Honor?
17 THE COURT: JMH-F may be published. It is admitted.
18 (Defendant's Exhibit JMH-F, Notary Public
19 documentation, admitted into evidence.)
20 THE WITNESS: I don't remember.
21 Q. BY MR. HAYDN-MYER: I'm showing to the jury and
22 Ms. Silva JMH-F. And that's what we were discussing about,
23 correct?
24 A. Yes.
25 Q. And you see where it says December 9th?

1 A. Yes.
2 Q. That was the December 9th date that also appeared on
3 the other notaries that Mr. Anderson was showing you earlier?
4 A. Okay. Yes.
5 Q. And I believe he showed you three or four different
6 notary signatures, and every time you said --
7 A. I don't. I do not remember signing with anyone.
8 Q. But now, from what I understand you're saying,
9 Ms. Silva, is you've gone from "I didn't" to "I don't
10 remember"?
11 A. I do not recall ever meeting with a woman to sign
12 papers.
13 Q. I'm sorry, Ms. Silva. Just to be clear.
14 A. Yes.
15 Q. After showing you your signature, the dates, the
16 other documents we're going through, isn't it just possible
17 that you don't remember?
18 A. Possible I don't remember.
19 Q. And you don't remember because it was quite some time
20 ago, is that correct?
21 A. Correct. And what it has done to my life, probably
22 don't remember it.
23 Q. Ms. Silva, there are probably other events like --
24 I'll show you. Do you see where it says "affidavit of deed,"
25 right here?

1 A. Yes.
2 Q. So it is possible that you actually met with
3 Ms. Annelie Durbin in Porterville, and then you signed the
4 notary book after she put her stamp on it, is that correct?
5 It's possible, isn't it, Ms. Silva?
6 A. I can't say that I remember this part at all, but --
7 I don't know. It could be possible. I don't know. I wouldn't
8 have signed a deed.
9 THE COURT: Do you wish to retrieve that?
10 MR. HAYDN-MYER: Yes, please.
11 Q. BY MR. HAYDN-MYER: Ms. Silva, when you first met or
12 had phone contact with Michael Head, your house was up for a
13 trustee sale, is that correct?
14 A. I'm assuming that's what it was because then it goes
15 on the list of foreclosures, yes.
16 Q. And the agreement that you had with Mr. Michael Head
17 was he going to try to keep you in your house, is that also
18 correct?
19 A. Yes.
20 Q. And he asked you to make payments, is that also
21 correct?
22 A. Correct.
23 Q. And you made the payments, is that also correct?
24 A. Yes.
25 Q. And at the end of it, at the end of that period of

1 time, you called Michael Head, and you were actually put into a
2 new loan, is that correct?
3 A. Correct.
4 Q. And you still remained in your house through that
5 period of time, is that correct?
6 A. Yes.
7 Q. So when he told you that he was going to keep you in
8 your house and away from that particular trustee sale, he kept
9 his word to keep you in the house, didn't he?
10 A. Yes, I was paying $1,000 a month to stay there.
11 MR. HAYDN-MYER: Thank you. May I have one quick
12 moment, Your Honor?
13 THE COURT: Yes.
14 Q. BY MR. HAYDN-MYER: Sorry, Ms. Silva. Thank you.
15 A. That's okay.
16 Q. Ms. Silva, were you always on time with your
17 payments, or were you late a couple of times?
18 A. I was on time pretty much as much as I could. I was
19 pretty much on time with $1,000.
20 Q. When you say pretty much on time, there were a few
21 months when you actually did fall behind, is that correct?
22 A. I always made my payments.
23 Q. I believe you did make your payments, Ms. Silva, but
24 I'm asking if you were behind several times during several
25 different months?

2 MR. HAYDN-MYER: Thank you. No further questions,
3 Your Honor.
4 THE COURT: All right. Mr. Tedmon, any questions?
5 MR. TEDMON: Some.
7 CROSS-EXAMINATION
8 BY MR. TEDMON:
9 Q. Ms. Silva, hi.
10 A. Hello.
11 Q. I want to just ask you some clarifying questions.
12 Your testimony this afternoon indicates that you met and dealt
13 with Mike Head, correct?
14 A. Not met.
15 Q. You dealt with him?
16 A. Dealt with him on the phone.
17 Q. All right. And when you testified regarding making
18 these $1,000 payments that Mr. Haydn-Myer and Mr. Anderson had
19 talked about, you recall that, correct?
20 A. Yes.
21 Q. And those payments were made to Financial Enterprises
22 not Head Financial, correct?
23 A. I guess it would have been Financial Enterprises,
24 yes.
25 Q. And there was an exhibit that was shown, it was

1 $1,000, said Financial Enterprises?
2 A. Yes. Okay.
3 Q. So I just want to clarify, those payments were to
4 Financial Enterprises not Head Financial, true?
5 A. True. I think the card said Head Financial. That's
6 why.
7 Q. But I'm talking about --
8 A. Okay. Yes.
9 Q. -- once you made the contact, your contact was with
10 Financial Enterprises not Head Financial?
11 A. Correct.
12 Q. So when you've testified today, at times you said
13 Mike Head and Head Financial, that wouldn't be accurate, it was
14 actually Mike Head and Financial Enterprises, true?
15 A. True.
19 THE COURT: All right. This witness is excused,
20 Mr. Anderson?
25 MR. TEDMON: Yes.

1 THE COURT: You are excused, ma'am. You may step
2 down.
3 THE WITNESS: Thank you.
4 THE COURT: It's 3:00. Let's take our mid-afternoon
5 break. We've come to the time for our one break of this
6 afternoon. During that break, as always, remember my
7 admonitions. Don't discuss the case with each other. If
8 anyone contacts you during the break, let me know. Let's make
9 this a 15-minute break. So be ready to go at 3:15. Thank you.
10 (Jury out.)
11 THE COURT: All right. You may be seated. Let me
12 just complete my record briefly. The two cases I reviewed on
13 the question of disqualifying Ms. Silva as a witness were U.S.
14 v. English, 92 F.3d 909, Ninth Circuit 1996. That had to do
15 with a Government witness, suggesting that issues of misconduct
16 and prejudice should be probed while noting that
17 disqualification is strongly disfavored. And U.S. v. Hobbs 31
18 F.3d 918. In that case, a defense witness. But also factors
19 to consider and noting the option of permitting
20 cross-examination.
21 So those are the cases I reviewed in considering
22 Mr. Haydn-Myer's motion. Who do we have lined up for the rest
23 of the day?
24 MR. ANDERSON: Your Honor, we have Ms. Galindo, who
25 is an underwriter for Argent -- or was an underwriter for

1 Argent -- Richard and Brenda Clark. Although I think we'll
2 only call Brenda Clark. We can bring Paul Howard from the IRS.
3 And Andrew Vu is also available. I don't know how far we're
4 going to get.
5 THE COURT: All right. So no one covered by an
6 immunity agreement?
9 MR. TEDMON: No.
11 THE COURT: 3:15 then.
12 (Break taken.)
13 THE COURT: We're back on the record. The Kings are
14 staying in case you cared. That's one thing I learned on my
15 break. Whether or not you have a position I guess it's big
16 news. All right. Are we ready to go?
18 THE COURT: Let's bring the jury in, and then you can
19 get your next witness. We'll call her up as soon as the jury
20 is seated.
21 (Jury in.)
22 THE COURT: You may be seated. Welcome back ladies
23 and gentlemen. One more time today. We will go until 4:30.
24 The Government is ready to call its next witness.
25 MR. MORRIS: Your Honor, the Government calls Heydi

1 Galindo.
2 THE COURT: All right. Ms. Galindo, please come
3 forward.
4 (Photograph of Ms. Galindo taken by the Clerk.)
7 THE WITNESS: Yes.
10 THE WITNESS: Heydi Galindo. My first name is
11 H-e-y-d-i. Galindo, G-a-l-i-n-d-o.
13 HEYDI GALINDO,
18 BY MR. MORRIS:
19 Q. Ms. Galindo, what's your occupation?
20 A. A loan processor.
21 Q. Who do you work for?
22 A. Westcom Credit Union.
23 Q. I'm going to ask you to think back to the 2003 to
24 2005 timeframe. Did you still work with Westcom Credit Union
25 then?

1 A. No.
2 Q. Who did you work for back then?
3 A. Olympus Mortgage.
4 Q. What was Olympus Mortgage?
5 A. Sub-prime mortgage company.
6 Q. And what was your job at Olympus Mortgage?
7 A. I was an underwriter.
8 Q. What does an underwriter do?
9 A. We approve or decline loans.
10 Q. And I think when you said you're -- this was a
11 sub-prime mortgage lender. So when you say you approved or
12 declined loans, you were approving or declining mortgage loans?
14 Q. Can you describe what it is that -- actually, what
15 was your occupational experience prior to coming to Olympus?
16 A. If I could recall, I was in working for an
17 optometrist.
18 Q. So when you -- did you have any mortgage experience
19 prior to Olympus?
20 A. No.
21 Q. Can you describe then -- well, were you always an
22 underwriter at Olympus?
23 A. No.
24 Q. What was your first job at Olympus?
25 A. I started up as a set-up, moved to docs, and then

1 underwriting.
2 Q. Can you explain -- we'll go one at a time through
3 those -- but if you could explain, what is set-up?
4 A. Set-up, we are in charge of inputting all the
5 application in, all the member's information into the system,
6 and submitting it to the next department.
7 Q. And I think you said the next one was docs. What is
8 docs?
9 A. Docs, we double check, make sure everything is
10 correct before docs go out for signing.
11 Q. And then -- and so you went from set-up to docs and
12 then underwriting?
14 Q. About how long had you been at Olympus before you
15 became an underwriter?
16 A. I would say about a year-and-a-half.
17 Q. Did you receive any training from Olympus on how to
18 be an underwriter?
19 A. I sure did.
20 Q. What kind of training did you receive?
21 A. I was trained by individuals, by different
22 underwriters, by the underwriting manager. And they started me
23 at different levels.
24 Q. Can you describe -- when you say different levels,
25 can you describe what you mean by different levels?

1 A. They give you level one authorities, level two, level
2 three. So when you first start as an underwriter, they start
3 you off, you know, with minimal loan amounts, you know,
4 depending on the experience that I had at that time. And
5 depending on how they felt, how I was improving, they would
6 move me up.
7 Q. So what would be the distinction then between a level
8 one to, say, a level two?
9 A. Just more like a loan amounts, pretty much.
10 Q. Largely driven by loan amount, the dollar value of
11 the loan?
12 A. Exactly.
13 Q. And they were three levels, one, two and three?
14 A. That is correct. If I can remember, there must have
15 been maybe a four. I'm not -- I can't recall for sure though.
16 Q. Were you a level one your entire time there?
17 A. No.
18 Q. What was the final level you got to?
19 A. I only got to level two.
20 Q. Can you describe how you were trained by Olympus,
21 what it was that you were supposed to do as an underwriter?
22 A. We basically -- I was provided guidelines. And like
23 I said, I was trained by different personnel in there.
24 But pretty much we had a book that we went by
25 depending on the borrower's qualifications. We had to follow

1 guidelines, matrix.
2 Q. So when you say depending on the borrower's
3 qualifications, what types of things were you supposed to
4 consider for qualifications for a borrower?
5 A. Their credit profile, credit scores, credit history,
6 employment history.
7 Q. Anything else you can think of that was part of
8 your --
9 A. Well, I pretty much had to underwrite the whole file.
10 That's including everything that's, you know, in a package such
11 as reviewing the 1003s, the credit, the title, the appraisal.
12 Q. Going beyond the individual who is asking for the
13 loan, were there things that you would evaluate about the house
14 or the loan that would affect your underwriting decision?
15 A. I looked at it in every way. If they had multiple
16 properties, I would look, you know, to see the mileage, how far
17 it was from where they are living now to where they are
18 purchasing now.
19 Q. Can you explain why that would be important to you?
20 A. Occupancy is -- because it would determine on the
21 pricing. If it was an owner occupied or an investment
22 property, pricing would be different.
23 Q. In what way?
24 A. Rates-wise.
25 Q. Which one would have a higher rate?

1 A. The investment property.
2 Q. And why is that, if you know? Do you know why it is
3 that the company would price them differently?
4 A. Just because it was going to be an investment for
5 investment purposes.
6 Q. So why is it that mileage or distance, what is that
7 telling you about occupancy?
8 A. That's just to determine whether if it makes sense
9 that they are moving from, you know, from where they are at now
10 to -- and how far they're going to travel to work and back
11 home. So it just had to make common sense to me.
12 Q. What would happen -- or what were your procedures
13 then as you review one of these files, once you've considered
14 all of these things, did you have the authority to approve or
15 decline a loan by yourself?
16 A. I sure did.
17 Q. If you had suspicions, or if you thought a loan was
18 something that was worrisome to you, did you have any
19 procedures available to you to get a second opinion?
20 A. I did. We had actually systems to verify if members
21 had additional properties, to verify their income, to -- and we
22 also had, of course, every department had managers that we
23 would go to with higher level authorities.
24 Q. Let's talk about that for a second. You say every
25 department had managers. So you had a manager within

1 underwriting?
2 A. Underwriting department had a manager, yes.
3 Q. What were the other departments within Olympus?
4 A. We had a set-up manager. We have the docs manager.
5 We have underwriting managers. We had funding managers. So
6 every department had their own.
7 Q. How were you compensated when you were an
8 underwriter?
9 A. Pay-wise you're saying? Salary?
10 Q. Not numbers. But how was your salary determined?
11 A. Salary.
12 Q. Salary. Were you paid on commission?
13 A. No.
14 Q. What types of loans did Olympus fund when you were
15 there?
16 A. Are you taking about like if we did 100 percent
17 financing, if we did 80-20s, or what type of products?
18 Q. What's a 100 percent financing?
19 A. 100 percent financing you pretty much don't come in
20 with anything besides the closing costs. You're getting
21 financed the whole amount.
22 Q. What's an 80-20?
23 A. An 80-20 is what we call -- back in the days of
24 piggyback -- is two individual loans. One that's 80 percent,
25 and the second one is 20 percent.

1 Q. Do you have any recollection of whether or not an
2 investment property was eligible for 100 percent financing when
3 you were working for Olympus?
4 A. I know -- that I could remember and recall, because
5 it's been such a long time, you know, it was all based on the
6 guidelines once again. You know, investments only qualified
7 for a certain amount loan to value. Can't remember exactly how
8 much it was. But, yes, there was restrictions on investment
9 properties.
10 Q. What do you mean by loan to value?
11 A. You know, if the property was an investment, you
12 know -- and like I said, I can't remember exactly what the
13 guidelines were. But, you know, say your max was 90 percent
14 loan to value of the appraised value.
15 Q. Was there anything on the application that was more
16 important than others, or particular things that would clue in
17 that you would look at closely?
18 A. I would look at every loan closely. I mean, I'm
19 talking about the application, the 1003 application, the
20 credit. Just everything that was provided to me in that file.
21 Q. Why was that important to you?
22 A. I had to review every document and make sure that I
23 had a good borrower, you know, to qualify them. Especially to
24 repay back, you know, the mortgage.
25 Q. Why did these things factor into your evaluation of

1 whether somebody can pay back the mortgage?
2 A. That's what I did.
3 Q. Why is it -- these things that you've mentioned,
4 credit score, employment history, whether you live near your
5 work, why do these things factor into when you were making an
6 evaluation?
7 A. It was all, like I said, common sense. And, you
8 know, how to make a decision based on what the scenario was.
9 MR. MORRIS: I'm going to ask to bring up
10 Government's Exhibit 11-A, which is previously admitted, Your
11 Honor.
12 THE COURT: All right. You may publish that.
13 Q. BY MR. MORRIS: Do you recognize the type of document
14 that's on the screen in front of you?
15 A. Yes.
16 Q. The section that I've underlined on that document,
17 what's the significance of that portion of the document to you
18 as an Olympus underwriter?
19 A. Well, you kind of crossed it off --
20 Q. Sorry. Trying to do that section there inside the
21 box. Don't expand that. That section there?
22 A. The square?
23 Q. Inside that square, is there significance of that
24 square to you?
25 A. "Property will be primary residence, secondary

1 residence, or an investment property"?
2 Q. Did that affect your decision to underwrite a loan?
3 MR. TEDMON: Objection, Your Honor. It's vague. If
4 we're talking about this exact loan, that would be one thing.
5 Generally, something else.
6 THE COURT: Sustained. Can you clarify?
7 Q. BY MR. MORRIS: Let me clarify this. Do you
8 recognize this particular document?
9 A. Just the application or the --
10 Q. I think you said the type of document you recognized
11 was a loan application. Do you specifically recognize this
12 particular loan application?
13 A. Yes.
14 Q. So if you were underwriting a loan, and a box was
15 checked primary residence versus investment, would that -- on
16 any loan, would that have a significance to you in making an
17 approval or decline decision?
18 A. Yes.
19 Q. Why is that?
20 A. Like I said, because we have guidelines and a matrix
21 that we go based off when it's a second home or an investment
22 property.
23 Q. Zoom back out. And now this section of the document
24 here, what, if anything, was the significance of this section
25 of the application to you as an underwriter?

1 A. The employment information. We had to see how many
2 -- where they worked, where they lived, how many years on the
3 job. We had to make sure that they were on the line of "job"
4 for, you know, for such a period of time that was required to.
5 Q. Why did that matter to you?
6 A. Consistency.
7 Q. Now in this case, what's this line of the document?
8 What's listed there above that arrow? Do you need me to expand
9 it more?
10 A. Please.
11 Q. Sorry. What's that line of the document?
12 A. The borrower's name.
13 Q. And this block of the document, what's the
14 significance of that block of the document?
15 A. Where they currently live.
16 Q. Okay. And if you can zoom out.
17 And this block of the document? This general -- this
18 portion of it?
19 A. Employment information.
20 Q. So you were just talking about amount of time on the
21 job. Is that where -- the point where I've hit with the arrow,
22 is that where you would have looked for that information?
24 Q. Would you have reviewed that information at the
25 arrow, the second arrow?

1 A. Repeat that. I'm sorry?
2 Q. In reviewing an application, would you have reviewed
3 that information in the box above that arrow?
4 A. Yes.
5 Q. What was the significance of that box to you?
6 A. To determine how much monthly income they made on
7 their position.
8 Q. And second page, please. And in this portion at the
9 top there -- don't need to zoom -- that section to the right of
10 the green line, what's the significance of that portion of the
11 document?
12 A. Their monthly income.
13 Q. Was that important information for you in deciding to
14 approve or decline a loan?
15 A. Yes.
16 Q. And the next page. And this portion of the document,
17 what's -- what significance, if any, did this section have for
18 you?
19 A. I had to check every box that was marked to make sure
20 there was no prior bankruptcy, foreclosure, or make sure they
21 were a citizen, or any current judgments, you know, just their
22 status.
23 Q. If you saw things in there that deviated from the
24 matrix that you talked about before, what would you do?
25 A. Question it. Provide proof.

1 Q. That box that's checked, it looks like to the line
2 L -- L reads: "Do you intend to occupy the property as your
3 primary residence." Was that check box significant to you as a
4 loan underwriter?
5 A. Every section was, yes.
6 Q. And this section at the bottom to the right of the
7 line that I just made, what was the significance of that
8 section to you?
9 A. That indicated whether the loan officer or account
10 executive interviewed the borrower, whether it was by phone, by
11 face, by, you know, telephone or --
12 Q. Zoom back out and go to page one.
13 See if I can get it zoomed in enough. I might have
14 to do this in two zooms.
15 If the information by the arrow there, the 16776 Red
16 Wing Lane, if that weren't where the person currently lived,
17 would that have caused you to be concerned about funding a
18 loan?
19 A. That wasn't for me to verify. That was the account
20 manager's. That I recall.
21 Q. If the file indicated that Adam Houston Coffman lived
22 in a different state than the address listed there, would that
23 have caused you to be concerned about approving the loan?
24 A. I would question it.
25 Q. Why would you question that?

1 A. Because they're purchasing a property in a different
2 state where they're not living or where they're not -- where
3 they're working.
4 MR. MORRIS: Your Honor, I would like to go to
5 Government's 17-A, which I believe has been admitted.
6 THE COURT: It has been.
7 Q. BY MR. MORRIS: And what's the significance of that
8 line with an address above the arrow?
9 A. The property they're purchasing.
10 Q. Okay. And so, again, on this document --
11 Let me ask you. Let me clarify again. Are you -- do
12 you recollect this particular transaction?
13 A. This transaction for this --
14 Q. Yeah. From your own memory do you remember this
15 transaction?
16 A. Not this transaction. I remember the application.
17 Q. So going off of your understanding then as speaking
18 from your experience as an underwriter, on a loan for Monte
19 Vista Street in Rancho Cucamonga, with the property listed as
20 primary residence -- if you can zoom out -- would it affect
21 your underwriting decision if the borrower never left the
22 former address?
23 A. From La Habra to Rancho Cucamonga? If it's the first
24 property, I would say no. Like I said, it would depend also
25 where they lived since it is quite a couple miles.

1 Q. Let me clarify then.
2 A. Okay.
3 Q. If the -- for a loan on Rancho Cucamonga, which is
4 marked as a primary residence, if the person borrowing it never
5 moved out of the former residence, would that have concerned
6 you?
7 MR. TEDMON: Objection, Your Honor. Vague as to time
8 as to when the move may have occurred.
10 Q. BY MR. MORRIS: If the person buying the house didn't
11 intend to move out of the prior house, would that have
12 concerned you?
14 evidence.
15 MR. MORRIS: It's a hypothetical, Your Honor.
16 MR. TEDMON: She's not an expert.
18 Q. BY MR. MORRIS: Are you familiar with the term straw
19 buyer?
20 A. Yes.
21 Q. What does the term straw buyer mean to you?
22 A. Just buying a property either for somebody else or to
23 help them qualify.
24 Q. In what way would you help somebody qualify as a
25 straw buyer?

2 speculation.
4 Q. BY MR. MORRIS: In your experience -- well, you said
5 that you understood straw buyer to mean somebody who's helping
6 somebody buy a house by qualifying?
7 A. That I could recall, yes.
8 Q. What did you mean by that?
9 A. Like a co-signer.
10 Q. You can zoom out. Go to page three.
11 And on this document, on line L, "do you intend to
12 occupy the property as your primary residence," what would the
13 significance of that check box have been to you?
14 A. That they were occupying subject property.
15 Q. In this portion with the text and the signature, what
16 was the significance to you of that portion of a loan
17 application?
18 A. Acknowledging that all the information that was
19 provided is true and correct.
20 Q. Okay. And who's -- recognizing you don't recognize
21 the signature, but above that who is it that's supposed to sign
22 this portion of the form?
23 A. The borrower.
24 Q. When you were an underwriter, did you ever decline a
25 loan?

1 A. Yes.
2 Q. Can you give some examples of reasons why you would
3 decline a loan?
4 A. Income was just overstated. Property occupancy just
5 didn't, you know, make any sense.
6 Q. When did you leave Olympus Mortgage?
7 A. When they closed down.
8 Q. And do you recall roughly when that was?
9 A. If I could remember, I would say 2005.
10 Q. And are you still in the mortgage industry now?
11 A. I am.
12 Q. Where do you work now?
13 A. Westcom Credit Union.
14 MR. MORRIS: Just a moment, Your Honor. Nothing
15 further, Your Honor.
16 THE COURT: All right. Cross-examination,
17 Mr. Tedmon?
18 MR. TEDMON: Yes, Your Honor. Thank you.
20 BY MR. TEDMON:
21 Q. Good afternoon, Ms. Galindo.
22 A. Hello.
23 Q. I want to go to the exhibits that Mr. Morris was
24 asking you about. If we could have the first page of
25 Government's Exhibit 11-A put on the screen please.

1 Now you testified regarding this Uniform Residential
2 Application, correct?
3 A. Yes.
4 Q. And in terms of this particular exhibit, you were not
5 the underwriter that dealt with this loan, correct?
6 A. I don't know. I don't recall the borrower's name or
7 any of the information on this application.
8 Q. Correct. And so when you're testifying about
9 recognizing certain things, what you're saying is you're
10 recognizing what the form requires to be filled in, correct?
12 Q. Not that you reviewed and approved or denied this
13 particular loan, true?
15 Q. Okay. In fact, you have no independent information
16 about Government's 11-A in terms of the documents -- the items
17 in the document itself, do you?
18 A. I'm sorry. I didn't understand your question.
19 Q. In terms of Government's 11-A --
20 A. Uh-huh.
21 Q. -- you have no independent knowledge about any
22 information that was put on this form, do you?
23 A. No.
24 Q. And if Olympus Mortgage at that time dealt with this
25 exact loan application, you don't know who looked at it, do

1 you, as you sit here today?
2 A. This --
3 Q. This loan that we're looking at right here?
4 A. Just the application?
5 Q. The application.
6 A. Well, it's an application that we've been using for
7 many years, and it's the same --
8 Q. No. Let me restate the question so we're clear.
9 This loan, Government's 11-A, that relates to -- if
10 we can have that expanded -- the borrower's name is Adam
11 Coffman, do you see that?
12 A. Uh-huh.
13 Q. If Olympus Mortgage dealt with Adam Coffman's loan
14 application, you don't know who dealt with that within Olympus
15 Mortgage, do you?
17 Q. And you didn't, did you?
18 A. No.
19 Q. And if we could have Government's 17-A, please, the
20 first page.
21 Now this is the second Uniform Residential Loan
22 Application Mr. Morris was asking you about, correct? Just a
23 few minutes ago?
24 A. I can't tell the difference.
25 Q. Okay. Well, let's go ahead and expand this middle

1 section. Do you see it says borrower's name Charles Head?
2 A. Right.
3 Q. Okay. If Olympus Mortgage dealt with this loan, you
4 didn't have any personal contact with it, did you?
6 Q. All right. And you don't know who did, if anyone, at
7 Olympus Mortgage, correct?
9 Q. On this particular loan?
11 Q. So if we can have that taken down please.
12 So all of your testimony today relates simply to
13 generalizations about the Uniform Residential Loan Application,
14 true?
15 A. True.
16 Q. Not any specific loan you're testifying about,
17 correct?
19 Q. Now you indicated that you got to a level two
20 underwriter?
22 Q. Did that need a second signature?
23 A. Yes. Depending on the loan amounts.
24 Q. Okay. So the way Olympus had it set up, there was
25 level one, which was the lower amounts of the total value of

1 the loan?
2 A. Right. Right.
3 Q. And then it got progressively higher in terms of
4 authority, signature authority, for level two, three, and maybe
5 four, correct?
6 A. Yes.
7 Q. So you got to level two, but you still needed a
8 second signature for certain amounts of money, correct?
9 A. Yes.
10 Q. Do you know or do you recall what the level was that
11 you required a second signature for?
12 A. I do not recall.
13 Q. Okay. Now during the period of time that you worked
14 for Olympus, before they closed down in 2005, how many
15 underwriters would you say were employed at any level by
16 Olympus?
17 A. This is just an estimate.
18 Q. That's fine.
19 A. Have to say from eight to twelve.
20 Q. Total?
21 A. Roughly, yeah.
22 Q. Okay. And then those eight to twelve had managers
23 they reported to, correct?
25 Q. How many managers did Olympus have during the time

1 you worked there?
2 A. All underwriters reported to the same manager.
3 Q. One manager for all the underwriters?
4 A. If I could recall.
5 Q. And then you indicated there was a set-up department,
6 which is where you started in, correct?
7 A. Yes.
8 Q. How many people worked in the set-up department at
9 Olympus during the time you worked there?
11 Q. Can you approximate?
12 A. What I do recall is we all had teams. So maybe there
13 was a team -- each team would have two set-ups per team,
14 account managers that would have like four account managers per
15 team. And if I could remember, probably the same thing for
16 underwriters. I think we were divided by -- I could be wrong.
17 And maybe we could have had different supervisors for the
18 underwriters as well.
19 Q. So there were various levels of job descriptions,
20 correct?
21 A. Yes.
22 Q. And they each had their own function, true?
23 A. Yes.
24 Q. Like the set-up folks, what did they do?
25 A. They set up the loans. They input all the borrower's

1 information into the system, created a loan file for all the
2 documentation for the transaction.
3 Q. Okay. And that was kind of the first level?
4 A. Exactly, yes.
5 Q. And then I think you testified there were people that
6 were in the docs or document section, do you recall that?
7 A. Yes.
8 Q. What did they do?
9 A. They're the ones that prepare the docs and sent to
10 escrow for signing. So they reviewed, made sure the spelling
11 of the borrower's name was correct, the property address was
12 correct. They make sure, you know, everything was the way it's
13 supposed to be.
14 Q. And by the way it's supposed to be, you mean for the
15 escrow companies?
16 A. The information, you know, the spelling of everything
17 on, you know, on the paper.
18 Q. All right. Were the document folks, were they the
19 ones that dealt with the file last since that was the last
20 point before it headed off to escrow?
21 A. No.
22 Q. Where were they in the process of things?
23 A. That would be after the -- it would be set-up to
24 underwriting. From underwriting it would go back to an account
25 manager. They obtained all the conditions that the underwriter

1 requested. Once received, they would sign them off. Once the
2 file was ready, then the account manager would order signing
3 docs.
4 Q. Okay. So the account manager was a critical person
5 in the process. Is that correct?
6 A. Yes.
7 Q. And in fact the account manager is the one that once
8 the underwriter said we need certain conditions, was
9 responsible for following up and making sure that took place,
10 correct?
12 Q. It didn't go back to underwriting, did it, it went to
13 docs?
14 A. It did not go back to underwriting.
15 Q. So if you, as an underwriter, requested certain
16 conditions from the account manager, and he or she did not
17 perform those, you would never know that, would you?
18 A. No.
19 Q. Now you're aware that Olympus Mortgage went out of
20 business in 2005, correct?
21 A. Yes.
22 Q. In fact, you were there until the very end, true?
23 A. Yes.
24 Q. Olympus Mortgage was part of a larger organization
25 called Ameriquest, correct?

1 A. Yes.
2 Q. And Ameriquest was actually the company, as you know,
3 that started the stated income/stated asset loan, correct?
4 A. I'm not sure about that.
5 Q. You're not sure they came up with that?
6 A. No.
7 Q. Well, you are aware that Ameriquest was investigated
8 by virtually every state and the federal government for
9 predatory lending practices, correct?
10 A. I'm not sure about that.
11 Q. Well, Ameriquest is out of business, too, isn't it?
12 You know that. You're in the mortgage world.
13 A. Yeah, I was out for quite a while so I don't know.
14 Q. Well, are you aware that Ameriquest was sued by the
15 Attorney General of the State of California?
16 A. No.
17 Q. For violating their own lending practices?
18 A. No.
19 Q. You're not. Would you agree with this statement,
20 that policies and procedures are only as good as those that are
21 followed? Would you agree with that?
22 A. Yes.
23 Q. And at Olympus Mortgage they didn't follow their
24 policies and procedures at all, did they?

1 Q. You may have, true?
2 A. Yes.
3 Q. But you know other people did not?
4 A. I can't answer that.
5 Q. Well, in any event, they went out of business in
6 2005, right?
7 A. Yes.
8 Q. And they've been out of business since, true?
9 A. Yes.
12 MR. HAYDN-MYER: No questions.
15 BY MR. MORRIS:
16 Q. Ms. Galindo, Mr. Tedmon was asking you about your
17 familiarity with particular files in this case.
18 The training that you received at Olympus, was that
19 -- can you describe how that training was done?
20 A. Like I mentioned, I was sat with different
21 underwriters with different level authorities. I was provided
22 guidelines and documentation to review and practice before I
23 was authorized to approve or decline any loans.
24 Q. The documentation you received, who did you receive
25 that from?

1 A. From set-up. Whoever submitted the loans to me. I
2 don't really remember.
3 Q. Okay. And then the materials that you were taught by
4 Olympus, how did you receive those materials?
5 A. By management.
6 Q. Did you have like binders or instructions you're
7 supposed to use?
8 A. Yes. We had a manual.
9 Q. Was it a manual created only for you?
10 A. No. It was a company manual for underwriting on
11 the --
12 Q. Did you know any of the other underwriters that
13 worked there at the same time as you?
14 A. Yes.
15 Q. Are you aware of whether they received the same
16 manual that you did?
17 A. I don't know that.
18 MR. MORRIS: Your Honor, may I approach the witness?
20 Q. BY MR. MORRIS: Ms. Galindo, I've handed you an item.
21 Do you recognize the item that's in front of you?
22 A. Yes, I do.
23 Q. What is it that's in front of you?
24 A. It's a loan approval.
25 Q. Was that a document that you used within your job

1 duties at Olympus?
2 A. Yes.
3 Q. That loan approval, is there an address that the loan
4 approval is on?
5 A. Yes.
6 Q. What was the address that that loan approval was for?
7 A. Do you want me to give you the property address?
8 Q. Yes, please.
9 A. 1325 West Evergreen Court, Visalia 93277.
10 Q. Is there anything on that document that would
11 indicate to you whether you were the person who approved or
12 declined that loan?
13 A. Yes.
14 Q. What is it that tells you that?
15 A. My name is in the loan approval.
16 MR. MORRIS: Approach, Your Honor?
18 Q. BY MR. MORRIS: Now with respect to that property,
19 Visalia, would all of your previous testimony about the
20 procedures you used and what was important to you, would that
21 have applied to that property?
22 MR. TEDMON: Objection. Vague. She's testified to a
23 lot of things.
24 THE COURT: Overruled. You may answer to the extent
25 you're able.

1 THE WITNESS: Can you repeat that question?
2 Q. BY MR. MORRIS: With respect to that property in
3 Visalia, your previous testimony about things that were
4 important to you, things that would have mattered to you in
5 approving that loan, would those factors have applied to that
6 property in Visalia?
7 A. Yes, just like any other.
9 THE COURT: All right. Mr. Tedmon, any further
10 cross?
13 BY MR. TEDMON:
14 Q. Ms. Galindo, relating to this Evergreen property that
15 you just testified about, you approved that loan according to
16 that document, true?
17 A. Yes.
18 Q. Now as an underwriter you have an obligation to check
19 certain things out before you approve a loan, correct?
20 A. Yes.
21 Q. You don't just accept it for face value, at least
22 you're not supposed to, right?
23 A. Correct.
24 Q. If you question the appraisal, you can have a new
25 appraisal done, correct?

2 Q. Well, if you see an appraisal that seems out of the
3 ordinary, based on your experience your company had the
4 authority to go order their own appraisal, true?
5 A. I don't remember that.
8 Q. All right. Well, in terms of verification of
9 employment, you had the authority to go check to see if that
10 was legitimate or not, correct?
11 A. Yes.
12 Q. And you were satisfied in this case that that was
13 okay, correct? You approved the loan.
15 Q. You approved the loan, correct?
16 A. Right.
17 Q. So you were satisfied that all the information
18 provided was okay as far as you were concerned, correct?
19 A. Based on what I had in the file, yes.
20 Q. But my point is, you had an opportunity as an
21 underwriter to check all those various areas out in your file,
22 if you wanted to, you had the authority, correct?
23 A. Yes.
24 Q. And if you didn't, that was your decision, correct?
25 A. It wasn't my responsibility to check employment

1 information.
2 Q. All right. Well, whose was it?
3 A. The account manager.
4 Q. The account manager. Now, what was the account
5 manager supposed to do to check out to see if these items that
6 were listed were legitimate?
7 A. They had to complete a verification of employment
8 form.
9 Q. All right. Do you know if they did that in this
10 case?
11 A. I don't know.
12 Q. Let me ask you this. You approved this loan
13 according to what you've testified to, correct?
14 A. Yes.
15 Q. All right. And by "this" I mean the Evergreen
16 property.
17 A. I don't recall the address.
18 Q. Okay. Well, you read it into the transcript as 1325
19 West Evergreen Court, Visalia. That's what I'm talking about.
20 A. I approved the loan, but I don't recall the property
21 address or any of the terms.
22 Q. I understand. It's been a long time.
23 A. Yes.
24 Q. I get that. My question, though, is, when you
25 approved the loan, is that the end of the process, or is there

1 other things that have to happen?
2 A. I mean, all those conditions that I requested there
3 is prior to that loan closing.
4 Q. Okay. So if you requested certain conditions, the
5 account manager is the one that's supposed to do that, right?
7 Q. That person checks it all out?
9 Q. Then it comes back to you for approval or not?
10 A. No.
11 Q. And that's what you testified to when I was asking
12 you earlier, correct?
13 A. Yes.
14 Q. All right. So once you approve a loan, it goes to
15 the account manager, right?
17 Q. With certain conditions?
18 A. Yes.
19 Q. It's the account manager's job, not yours, to satisfy
20 those conditions?
22 Q. So when you approve a loan, that's not the end of the
23 inquiry for Olympus, true?
24 A. Yes.
25 Q. And if the conditions were not met, but the account

1 manager in fact let the loan go through to fund, you weren't in
2 that decision-making, were you?
3 A. No.
6 MR. HAYDN-MYER: No questions. Thank you.
8 MR. MORRIS: Briefly, Your Honor.
9 Your Honor, I'm going to ask to bring up 12-A. I'll
10 ask that it be admitted pursuant to the stipulation.
12 admitted.
13 (Government Exhibit 12-A, 1325 West Evergreen Way,
14 Visalia – Loan File, admitted into evidence.)
15 FURTHER RECROSS EXAMINATION
16 BY MR. MORRIS:
17 Q. Do you recognize what this form is, the general
18 category of form that we're looking at?
19 A. Yes.
20 Q. And what's the address for this form?
21 A. 1325 West Evergreen Drive, Visalia 93277.
22 Q. Can we go to page five, please. Do you recognize
23 this form?
24 A. Yes.
25 Q. Have you seen one of these before?

1 A. Yes.
2 Q. What are these?
3 A. It's a verification of employment.
4 Q. Is that a form that's maintained by Olympus Mortgage?
5 A. Yes.
6 Q. What's the purpose of this form?
7 A. To verify employment on the borrower and providing
8 all the information of the employer, who they spoke with, and
9 who it was verified with.
10 MR. MORRIS: Your Honor, may I re-approach with the
11 same item?
12 THE COURT: You may. This is an unmarked piece of
13 paper.
14 MR. MORRIS: I will mark it later.
16 Q. BY MR. MORRIS: And to clarify, is this the same
17 document that I showed you previously to refresh your
18 recollection? Not the one on the screen. The one in front of
19 you. Is that the same one we were talking about the last time?
20 A. Yes.
21 Q. Is there anything on that document that would
22 indicate to you whether or not the verification of employment
23 had been accomplished prior to funding the loan?
24 A. It has not been satisfied on this approval. It shows
25 requested.

1 Q. Okay. And when is it supposed to be done, according
2 to that?
3 A. According -- at time of funding.
4 MR. MORRIS: If I can re-approach, Your Honor.
7 THE COURT: Any further recross?
8 MR. TEDMON: Very briefly. May I approach, Your
9 Honor.
12 BY MR. TEDMON:
13 Q. Now that's the same document that Mr. Morris showed
14 you to refresh your recollection on certain things relative to
15 this loan, correct?
16 A. Yes.
17 Q. And based on that document, that was being handled by
18 team four, do you see that, the upper right-hand corner?
19 A. Yes.
20 Q. That's the team you were in?
21 A. If I could recall, I guess.
22 Q. Okay. If we could have Government's 12-A5, please,
23 shown on the screen.
24 This is the document you just testified about,
25 correct, the verbal verification of employment?

2 Q. It says the employer is Shoreline Realty, correct?
3 A. Yes.
4 Q. Okay. And then, "spoke to Karen White," do you see
5 that?
6 A. Yes.
7 Q. Now that information was being entered in, based on
8 your experience, by the account manager, would that be right?
9 A. Yes.
10 Q. And that would be reflected by a manager, correct?
11 A. Yes.
12 Q. And the occupation, as far as I understand it, is
13 team three manager, is that right?
14 A. Yes.
15 Q. But you're in team four, according to the document
16 that refreshed your recollection, true?
17 A. I don't -- the occupation on this form is to
18 determine the borrower's.
19 Q. So the borrower is the team three manager, is that
20 the way you read this?
21 A. That's what I'm seeing here.
22 Q. Okay. Do you know who filled out the information on
23 Government's 12-A5?
24 A. On this form now?
25 Q. Yes.

1 A. I only see one section.
2 Q. All right. Let's look at the whole document. Do you
3 know who filled that out?
4 A. Yes.
5 Q. Who filled it out?
6 A. The account manager.
7 Q. And do you know who the account manager was in this
8 case?
9 A. Jasmine Valenzuela.
10 Q. Was Jasmine Valenzuela on your team?
11 A. Yes.
12 Q. So Jasmine Valenzuela is the one that would be
13 responsible for making sure this is accurate, not you, correct?
14 A. Correct.
15 Q. And you don't know if this is accurate or not, do
16 you?
17 A. I don't.
20 MR. HAYDN-MYER: No questions, Your Honor. Thank
21 you.
22 THE COURT: Mr. Morris, any further redirect?
24 THE COURT: This witness is excused? Mr. Morris?

2 MR. TEDMON: Yes.
5 THE COURT: You may step down, ma'am. You are
6 excused. Government's next witness.
7 MR. MORRIS: The Government calls Brenda Clark.
8 Your Honor, while we're calling can I retrieve the
9 document --
10 THE COURT: You may. Ms. Clark, please come forward.
11 (Photograph is taken of Ms. Clark by the Clerk.)
17 THE WITNESS: First name is Brenda, B-r-e-n-d-a.
18 Last name is Clark, C-l-a-r-k.
19 BRENDA CLARK,
24 BY MR. MORRIS:
25 Q. Ms. Clark, where do you live?

1 A. You want the whole address or just -- I live in
2 Hawthorne, California.
3 Q. I'm going to ask you to think back to the spring of
4 2004. Were you living in Hawthorne, California then?
5 A. No.
6 Q. Where were you living in the spring of 2004?
7 A. In our home in Lawndale, California.
8 Q. What was the address in Lawndale?
9 A. That was 14718, and it's Condon, spelled C-o-n-d-o-n,
10 Avenue. It's in Lawndale, California 90260.
11 Q. Is that a house, or condominium, or apartment?
12 A. It was a family home. It was a house.
13 Q. In early 2004 did you own that house?
14 A. Yes.
15 Q. How long had you owned it for?
16 A. Four years.
17 Q. In that spring to summer of 2004, did you find
18 yourself falling behind on your payments on the house?
19 A. We were getting to that point, yes.
20 Q. Were you concerned about the potential of
21 foreclosure?
22 A. Yes.
23 Q. In that time period, did you become aware of a
24 company called Head Financial Services?
25 A. By a postcard I received in the mail, yes.

1 Q. So that's "yes"?
2 A. Yes.
3 Q. And the way you found out about it was how?
4 A. Through a postcard I received in the mail.
5 Q. Okay. Do you recall anything about that postcard?
6 A. Just -- well, I can't describe the front of it, but
7 it had to do with -- if you're -- something with foreclosure on
8 the front of it. And on the back side it had an address, a
9 phone number, and a guy's name by Mike, and to call to, you
10 know, discuss.
11 Q. Did you do anything in response to receiving that
12 postcard?
13 A. Well, I spoke with my husband first and then I made
14 the phone call.
15 Q. Do you recall who you spoke to when you called the
16 number?
17 A. I spoke with Mike.
18 Q. What did you tell Mike?
19 A. I let him know our situation.
20 Q. And in general terms what was your situation?
21 A. That we were going -- I believe we were going into
22 our second month of owing, you know, on our mortgage. And we
23 didn't want to go any further than that, so we wanted to
24 refinance. To refinance and, you know, get it to current,
25 clean again.

1 Q. What, if anything, did Mike say in response to that?
2 A. I can't recall exact words, but that that's what they
3 did and that they could help.
4 Q. Okay. And when you say that they could help, did you
5 have any idea of what the terms of the help would be that they
6 would give you?
7 A. Not at that point, no.
8 Q. Did you subsequently become aware of what you thought
9 the help would entail?
10 A. After I had spoken with him a few other times, yes.
11 Q. Okay. And what was -- what was your understanding of
12 what the help would be?
13 A. That -- well, that our current mortgage was going to
14 be paid off. The debts we had on our credit would be paid off.
15 And then our mortgage amount would remain the same. And that
16 they would -- Financial Enterprise would also be included on
17 title with us, my husband and me.
18 Q. Prior to calling Mike after that postcard -- so
19 before you call him --
20 A. Uh-huh.
21 Q. -- had you spoken to anybody else about trying to
22 find a way to avoid foreclosure?
23 A. A couple other places, yes.
24 Q. And those other places, what deals had you been
25 offered by those other places?

1 MR. HAYDN-MYER: Objection. Hearsay.
3 THE COURT: Sustained. On both grounds.
4 Q. BY MR. MORRIS: In response to your phone call, did
5 you meet with anybody from Financial Enterprises?
6 A. Not in the beginning, no.
7 Q. But if not in the beginning, does that mean sometime
8 after the beginning you did?
9 A. Yes.
10 Q. Okay. Do you recall who you met?
11 A. It was -- first name was Sarah. I'm not sure of the
12 last name. And then a guy by the name of Josh. And another
13 lady by the name of Cindy.
14 Q. Where did you meet them?
15 A. We met at our house in Lawndale.
16 Q. Do you recall how many times you met with them?
17 A. Just one time.
18 Q. Okay. Would you describe, to the best of your
19 recollection, the meeting that you had that one time?
20 A. We sat down. And they handed us the paperwork to
21 sign for the refinance. And they just talked about other
22 things in regards to the house, our dog. And then we had --
23 the notary notarized it. And then we asked for our copies.
24 They didn't have our copies. They said it was supposed to be
25 mailed to us. And that's about all, you know, throughout this.

1 Q. Do you recall anything about how the documents were
2 presented to you for signature?
3 A. They were --
4 Q. That's a "yes or no"?
5 A. Yes. Yes.
6 Q. What do you recall about how the documents were given
7 to you for signature?
8 A. They were handed to us one on top of another.
9 Q. What do you mean by that?
10 A. Where one -- she was sitting down -- or they were
11 handed to you like that. And as soon as one came in, the other
12 one came in. And then we were being told what it was and to
13 sign by the highlighted line -- where the highlight was to
14 sign.
15 Q. What was your understanding of what those documents
16 were that you were signing?
17 A. To refinance the house.
18 Q. What, if anything, do you recall about your
19 understanding of whether you would stay on title to the house?
20 A. What do you mean by understanding?
21 Q. Do you recall any discussion about ownership of the
22 house changing hands?
23 A. Not changing hands, no.
24 Q. Do you recall any discussion about the equity in the
25 house?

1 A. No.
2 Q. Do you recall any discussion about whether this was a
3 permanent or temporary program?
4 A. Temporary.
5 Q. Okay. What, in general, can you recall about --
6 about discussion about how long the program would last?
7 A. That Financial Enterprise would remain on title with
8 my husband and I for approximately a year to two years. And
9 then we would -- you know, to re-establish our credit, and then
10 we would obtain a new loan just in our name and us only on
11 title.
12 Q. Do you have any recollection of discussing monthly
13 payments?
14 A. At the house with these folks?
15 Q. As part of the discussion.
16 A. No.
17 Q. Had you had a discussion about that prior to this
18 meeting?
19 A. Yes.
20 Q. What was your understanding about monthly payments?
21 A. They would remain the same -- excuse me -- remain the
22 same of what we were currently making.
23 Q. Do you recall who you were supposed to mail monthly
24 payments to?
25 A. As far as I -- I don't recall offhand, but it would

1 be to Financial Enterprise.
2 Q. Now in 2004 did you know somebody by the name of
3 Marrisa Page?
4 A. No.
5 Q. When you signed these documents at the table, was it
6 your intent to sell your house to somebody named Marrisa Page?
7 A. No.
8 Q. Did you later become familiar with the name Marrisa
9 Page?
10 A. Yes.
11 Q. When is your first recollection of learning the name
12 Marrisa Page?
13 A. I'm not sure of the exact date, but it's when we
14 received the county recording document in the mail from the
15 county recording office. It had her name on there that we sold
16 it to her.
17 Q. And do you recall your reaction when you received
18 that document?
19 A. Well, I didn't know how to react. I had a -- my
20 problem was when my husband got home what was going to happen.
21 Q. And why do you say that that would be a problem?
22 A. When he got home, he blamed me for selling the house
23 under him.
24 MR. HAYDN-MYER: Objection.

1 Q. BY MR. MORRIS: Do you --
4 disregard that last comment.
5 Q. BY MR. MORRIS: If you could describe then your --
6 A. My reaction?
7 Q. -- your reaction then?
8 A. I was pretty much stumbled, startled, you know, like,
9 what's this, you know, what did I do. I didn't sign anything.
10 You know, just pretty much I was in tears.
11 Q. Did you, subsequently to this time, attempt to
12 refinance your house again?
13 A. Oh, after that point?
14 Q. After this meeting.
15 A. I believe one time maybe, yes.
16 Q. Do you recall whether you were able to get that
17 refinance completed?
18 A. No.
19 Q. Did you ever get signed copies of the papers that you
20 signed that day?
21 A. No. We never received them.
22 MR. MORRIS: Your Honor, I'm going to ask to bring in
23 16-B, which I don't know if it's in or not. It's covered by
24 the stipulation.
25 THE COURT: As covered by the stipulation, 16-B is

1 admitted.
2 (Government Exhibit 16-B, 14718 Condon Avenue,
3 Lawndale – Escrow File, admitted into evidence.)
4 Q. BY MR. MORRIS: If you could bring up page one,
5 please.
6 Are you familiar with this document? I'll zoom it in
7 for you.
8 A. No. Oh, in the beginning? Or when?
9 Q. At any point. Are you familiar with what this
10 document is?
11 A. I've seen it, yes. Not the top portion.
12 Q. Do you recall when you -- when you first saw this
13 document?
14 A. That was when my husband went down to Castlehead
15 Escrow and requested copies -- our copies of the sale, and he
16 was given this document. This one document. But it had a fax
17 information on the top.
18 Q. So when your husband came back from Castlehead
19 Escrow, how many pages of documents did you have?
20 A. He had one.
21 Q. And it was this page?
22 A. Yes.
23 Q. And so if you could go to page two. I'll zoom in
24 just to see if it's easier for you to see. But do you
25 recognize this page of the document?

1 A. No.
2 Q. If you could zoom out.
3 In 2004 was it your intention, by signing these
4 documents, to send $71,000 to a company called Financial
5 Enterprises, LLC?
6 A. No.
7 Q. What ended up happening to your house?
8 A. We lost it.
9 Q. When you signed these documents, was it your
10 intention to sell your house to somebody?
11 A. No.
12 Q. Was it your intention to remove yourself from the
13 title to your house?
14 A. No.
15 Q. Was it your intention to give the equity in your
16 house to anybody?
17 A. No.
18 Q. Was your belief that you would remain on title to the
19 house important to you in making your decision to deal with
20 Michael Head?
21 A. Yes.
22 Q. And was your belief that the equity would remain in
23 the house important to your decision to deal with Michael Head?
24 A. Yes, it was.

1 THE COURT: Cross-examination? Mr. Haydn-Myer?
3 THE COURT: We can at least get started on cross.
4 Five minutes.
5 CROSS-EXAMINATION
7 Q. Good afternoon, Ms. Clark.
9 Q. When you met with -- sorry -- you said three people,
10 is that correct?
11 A. Correct.
12 Q. I believe you said they gave you some documents to
13 sign, is that also correct?
14 A. Well, they handed them to us, yes.
15 Q. What I'd like to do, if you don't mind, is I would
16 like to hand you a couple of items and see if you recognize the
17 signatures on them. The first one is CH-L1.
18 May I approach, Your Honor?
20 Q. BY MR. HAYDN-MYER: Ms. Clark, would you please look
21 through that document and see if there's any signatures in
22 there. Try the second page, please.
23 A. Okay.
24 Q. There is a couple pages to it.
25 A. Okay.

1 Q. Do you recognize any of those signatures, Ms. Clark?
2 A. Yes.
3 Q. And the signatures are who?
4 A. My husband, Richard Clark, and mine, Brenda Clark,
5 MR. HAYDN-MYER: Can I have CH-L1 published, please.
6 It's entered by previous stipulation, Your Honor.
7 THE COURT: CH-L1, as covered by the parties'
8 stipulation, is admitted.
9 (Defendant's Exhibit CH-L1, “Equity Purchase
10 Agreement” re: 14718 Condon Avenue, Lawndale admitted into
11 evidence.)
12 Q. BY MR. HAYDN-MYER: Can I have page two, please. Can
13 you see that, Ms. Clark?
14 A. Yes, I can.
15 Q. When I previously asked you about the signatures,
16 there is two signatures that appear on the document. The one
17 on the far right says Brenda Clark, is that correct?
18 A. Yes, it does.
19 Q. And when you said you recognized the signature,
20 that's your signature on the document?
21 A. Yes.
22 Q. Now the signature on the left --
23 A. Uh-huh.
24 Q. -- whose signature is that?
25 A. I believe it's my husband's. I can't be accurate.

1 He knows his. I don't.
2 Q. Have you ever seen his signature before?
3 A. I have. But it changes. He would know it more than
4 me. But, yes, it's probably his, yes.
5 Q. Thank you. Can I have page three, please, of the
6 same exhibit.
7 Showing you page three, there was another two
8 signatures that appear on the lower right side or middle right
9 side, do you recognize those signatures?
10 A. I do. But I'm not sure if mine is mine because my B
11 always connects.
12 Q. Does it look similar to yours or is it not yours at
13 all?
14 A. It is my name, Brenda Clark, yes.
15 Q. Does it look similar to your signature?
16 A. Some of it.
17 Q. And do you see that -- the signature right above it?
18 A. Yes.
19 Q. Does that look like your husband's signature or not?
20 A. To be certain I can't be -- I cannot be certain, but
21 that's usually how he signs. But, no, it looks like his
22 because that's how he signs it.
23 MR. HAYDN-MYER: Thank you. May I approach, again,
24 Your Honor?

1 Q. BY MR. HAYDN-MYER: If you would, Ms. Clark, please
2 look at that. I believe it's on the third page also in regards
3 to the signature.
5 Q. And after looking at CH-L2 and looking at the back
6 page, did you recognize the signature on the back page?
7 A. As being mine, no. Excuse me. As being mine, no.
8 Q. Is it your signature or is it not your signature?
9 A. Not my signature.
10 MR. HAYDN-MYER: Can I show it on the screen, please.
11 That would be CH-L, page 3.
12 THE COURT: CH-L?
13 MR. HAYDN-MYER: It's going to be page three.
14 THE COURT: So "L" without any number following it?
16 THE COURT: And that's covered by a stipulation?
17 MR. HAYDN-MYER: Yes, it is.
18 THE COURT: So CH-L will come in as covered by the
19 parties' stipulation. And this will be the last question.
20 MR. ANDERSON: I'm not sure there is an exhibit at
21 least with that number in our binder. What are you looking at,
22 Mr. Haydn-Myer?
23 MR. HAYDN-MYER: CH-L2.
24 THE COURT: L2. All right. CH-L2 comes in.
25 The Court's chart does have a CH-L, just so you know.

1 But I am noting that it is CH-L2 that's coming in by
2 stipulation.
3 (Defendant's Exhibit CH-L2, "Option Agreement" re:
4 14718 Condon Avenue, Lawndale, admitted into evidence.)
5 Q. BY MR. HAYDN-MYER: And if I could have that up on
6 the exhibit (sic), please.
7 In regards to what I just asked you, I believe you
8 testified that the signature "Brenda Clark" is not yours on the
9 top one?
10 A. I said it wrong. The signature is mine. The
11 initials aren't mine. The signature is mine.
12 Q. Thank you very much for the clarification. Do you
13 recognize the signature beneath it as being your husband's,
14 Richard Clark's.
15 A. It looks like his, but I can't be sure.
16 Q. That's fine.
17 THE COURT: Do you have more questions?
18 MR. HAYDN-MYER: This is a good spot.
19 THE COURT: We're at 4:30, so we're going to take our
20 break for the afternoon. We will begin tomorrow at 8:30.
21 8:30 to 1:30 is our schedule tomorrow.
22 During the evening please remember, as always, my
23 admonitions, no research, no discussing the case, no thinking
24 about its ultimate conclusion. If anyone does approach you,
25 please let me know in the morning. We'll see you and should be

1 able to start right at 8:30 tomorrow. Thank you, as always,
2 for your service. Have a good evening.
3 (Jury out.)
4 THE COURT: You may step down, ma'am. If you could
5 be back in that chair tomorrow morning at 8:30. Thank you.
6 You may be seated. Just some housekeeping. Can you
7 give us a lineup of witnesses tomorrow? Potentially, Mr. Clark
8 after Ms. Clark? Howard, Vu? Who else may be up tomorrow?
9 MR. ANDERSON: It's Andrew Vu, Your Honor.
10 THE COURT: But there's also a Howard.
11 MR. ANDERSON: Yes. Sorry. Paul Howard, Karie
12 Joest, Gwen Lee, Sarah Mattson, Justin Wiley. Again, I don't
13 think we'll get to everybody, but they will be available.
14 THE COURT: All right. Here's another question. Can
15 you tell me at this point are there additional witnesses that
16 you know you will not be calling from the witness list?
17 MR. ANDERSON: There are a lot of witnesses on the
18 witness list I don't think we will be calling. I haven't
19 looked specifically for the purpose of excluding people. We've
20 always been looking at who we're including. I think we're on
21 track for us to most likely finish next week with our
22 case-in-chief.
23 THE COURT: All right. If you could, by the close of
24 business tomorrow, just share with the Court who you believe
25 you will not be calling.

1 MR. ANDERSON: Yes. We absolutely can do that. I
2 would ask that we not be held strictly to that list, though,
3 because it may be that we need to revise that.
4 THE COURT: For example, I think you said you were
5 still reserving the right to call county recorder's office
6 employees.
7 MR. ANDERSON: Yes, Your Honor. We are going to call
8 county recorder's office employees from Sacramento and from
9 Tulare County.
10 THE COURT: All right. And no stipulation would moot
11 your need to call those persons?
12 MR. ANDERSON: We can try and work one out, but
13 because of the type of the document and the need to explain it,
14 I don't know that we'll be able to reach one. But we'll
15 certainly try. We have a few days between now and next week
16 where we can maybe work that out.
17 THE COURT: That's one category where it appears to
18 the Court that might be a possibility, without knowing exactly
19 what you're trying to establish there.
20 All right. Well let's compare notes on that
21 tomorrow. Is there anything else we need to discuss tonight?
25 MR. HAYDN-MYER: No, Your Honor. Thank you.

1 THE COURT: All right. I'll be available at 8:20
2 tomorrow. We will start promptly at 8:30. Thank you.
5 CERTIFICATION
10
11

14
15
16
17
18
19
20
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
Volume 7
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
17
18
19
20
21
22
23
24
25

1 I N D E X
3 BRENDA CLARK
CROSS-EXAMINATION BY MR. HAYDN-MYER (CONT'D) 835
5 RECROSS-EXAMINATION BY MR. HAYDN-MYER 848
6 PAUL HOWARD
REDIRECT EXAMINATION BY MR. ANDERSON 917
9 JUSTIN WILEY
12 FURTHER REDIRECT EXAMINATION BY MR. ANDERSON 971
13
SARAH MATTSON
15
16
17
18
19
20
21
22
23
24
25

2 GOVERNMENT EXHIBITS MARKED FOR IDENTIFICATION

3
12-G Loan Approval 833
4
5
DEFENSE EXHIBITS MARKED FOR IDENTIFICATION
7 JMH-G Check #1079 for $2,000, payable to Brenda 838

Clark
8 JMH-H Check #1081 for $9,029.00, payable to 840
Brenda Clark
9 JMH-I Grant Deed regarding Brenda Clark 843
JMH-J Financial Enterprises Statement, Dated 1012
10 8/15/05
JMH-K Check #1089 for $926.73, payable to 1015
11 Washington Mutual

13
43-G 2006 Taxes Due (Tax Collector) 857
14 43-A FC Sales Pitch 857
43-B HFS Work Flow Marketing 859
15 43-C Equity Purchase Agreement 860
43-D Weekly Meeting – 1PM Friday 875
16 43-E List of Mortgage Companies 876
43-H Hand-written Notes (Redacted) 877
17 43-I Hand-written Notes – Lenny 878
43-J Fax to Xochitl 880
18 44-A Secretary of State – Article of 882
Incorporation (Head Financial Services,
19 Inc.)
44-B Signature Card 883
20 44-C Secretary of State – Limited Liability 885
Company Articles of Organization for
21 Creative Loans, LLC
44-D Pacific Mercantile Bank – 886
22 Personal/Business Internet Banking
Enrollment Form for Creative Loans LLC
23 44-E California Secretary of State Statement 888
of Information – Creative Loans LLC
24
25

1
3 44-F Orange County Fictitious Business Name 889

Statement – Nations Property Management
4 44-G Orange County Fictitious Business Name 890
Statement – Fundingforeclsures.com
5 44-H Head Financial Services Inc. Stock 891
Certificate
6 12-B 1325 West Evergreen Way, Visalia – 932
Escrow File
7 12-C 1325 West Evergreen Way, Visalia – 932
Related Bank Records
8 12-E 1325 West Evergreen Way, Visalia – 933
Mailings and Other (Count 2)
9 33-A 1517 Georgetown Avenue, Palmdale, CA - 937
10 33-B 19410 Tillman Avenue, Carson, CA - 938
11 36-C 265 East Pleasant, Long Beach, CA - 940
12 30-A 8345 Terhune Ave, Sun Valley, CA - 979
13 30-B 2717 E Victor Hugo Ave, Phoenix, AZ - 979
14 30-C 1321 Bankers Drive, Carson, CA - 979
15 30-D 3247 Lees Ave, Long Beach, CA - 979
16 30-E 185 West 232nd Place, Carson, CA - 979
17 18-A 15425 Ross Drive, Adelanto - Loan File 992
18-B 15425 Ross Drive, Adelanto – Escrow File 992
18 18-C 15425 Ross Drive, Adelanto – Related Bank 992
Records
19 18-D 15425 Ross Drive, Adelanto – Search 992
Warrant Documents
21
22
23
24
25


2
CH-L5 "Notice Of Cancellation" re: 14718 Condon 837
3 Avenue, Lawndale
CH-L6 "Affidavit Of Deed" re: 14718 Condon 837
4 Avenue, Lawndale
JMH-H Check #1081 for $9,029.00, payable to 841
5 Brenda Clark
JMH-G Check #1079 for $2,000, payable to Brenda 841
6 Clark
JMH-I Grant Deed regarding Brenda Clark
7 CH-A1 “Equity Purchase Agreement” re: 1325 West 949
Evergreen Court, Visalia
8 CH-A2 "Option Agreement" re: 1325 West 949
9 CH-A3 "Residential Lease After Sale" re: 1325 949
West Evergreen Court, Visalia
10 CH-A5 "Notice Of Cancellation" re: 1325 West 949
11 CH-A6 "Affidavit Of Deed" re: 1325 West 949
12 JMH-J Financial Enterprises Statement, Dated 1014
8/15/05
13 JMH-K Check #1089 for $926.73, payable to 1016
Washington Mutual
14
15
16
17
18
19
20
21
22
23
24
25

3 ---oOo---
5 States versus Charles Head and Jeremy Michael Head. On for
6 jury trial, day eight, Your Honor.
8 All parties are present. Anything to discuss before we bring
9 the witness back in and the jurors?
10 MR. ANDERSON: Just a real quick one, Your Honor.
11 Yesterday Mr. Morris showed Ms. Galindo an exhibit just for the
12 purpose of refreshing her memory. We've marked it for
13 identification as Exhibit 12-G. We're not asking to have it
14 admitted but just for identification purposes.
15 THE COURT: Understood. Mr. Tedmon? Mr. Haydn-Myer?
16 MR. TEDMON: Yes.
18 THE COURT: And is there a title for that?
19 MR. MORRIS: Loan approval, Your Honor.
20 THE COURT: All right. Marked only.
21 (Government Exhibit 12-G, Loan Approval, marked for
22 identification.)
23 THE COURT: Also, so I know, have we seen M.S. and
24 E.S. as covered by Jeremy Michael Head's motions in limine.
25 MR. HAYDN-MYER: I'm sorry, Your Honor?

1 THE COURT: Just so I'm remaining alert when I need
2 to, M.S. and E.S. were the subject of your motions in limine,
3 two and three, have we seen those? They were just identified
4 by initials in the motions. I'm assuming E.S. was Emily Silva?
6 THE COURT: And M.S.?
7 MR. HAYDN-MYER: Mary Salazar.
8 THE COURT: All right. So we have seen those two
9 witnesses. All right. Can we bring Ms. Clark in?
11 THE COURT: And you have more cross, Mr. Haydn-Myer,
12 correct?
14 THE COURT: Is Ms. Clark available?
15 MR. ANDERSON: She is, Your Honor.
16 MR. MORRIS: I saw her in the hallway.
17 Mr. Sommercamp is getting her. I'll just double check.
18 (Jury in.)
20 court, ladies and gentlemen of the jury. We are ready to
21 continue with the cross-examination of Ms. Clark.
22 Ms. Clark, you were sworn yesterday. You continue to
23 testify subject to that oath.
24 THE WITNESS: Okay. Thank you.
25 THE COURT: Mr. Haydn-Myer, you may continue.

1 BRENDA CLARK,
5 CROSS-EXAMINATION (CONT'D)
7 Q. Good morning, Ms. Clark.
8 A. Good morning.
9 MR. HAYDN-MYER: May I approach, Your Honor?
11 Q. BY MR. HAYDN-MYER: Showing you Defense CH-L3. Would
12 you please look at that, Ms. Clark.
13 Ms. Clark, would you please look at the last page at
14 the signature line.
16 Q. Do you recognize the signature, Ms. Clark?
17 A. That's my name, but that's not the way I sign it.
18 Q. Is that your signature or not your signature?
19 A. Not my signature.
20 MR. HAYDN-MYER: May I approach, again, Your Honor?
22 Q. BY MR. HAYDN-MYER: Showing you defense CH-L5.
23 A. That one looks like my signature.
24 Q. And that's CH-L5, the one you're looking at?
25 A. I don't know. Oh, CH -- yeah, yes.

1 Q. Thank you. Showing you CH-L6. Is that your
2 signature, Ms. Clark?
3 A. It looks like it. It's just -- well my B connects,
4 and this isn't. That's the problem.
5 Q. If I showed you L5 again, the one you just said was
6 your signature --
7 A. Does that one connect?
8 Q. And look at that B.
9 A. See, that didn't connect either. That's what I'm
10 confused about. So, okay, I mean, it looks like it. But other
11 than my Bs usually connect from top to bottom.
12 Q. And after examining L5, I believe you've already
13 testified that that is your signature, is that correct?
14 A. Which one was that? I have no idea. Which one is
15 L5? Oh, this one. That this one is mine? Yeah, that one's --
16 MR. TEDMON: Your Honor, I'm having a hard time
17 following this in terms of "this one." I'm having a hard time
18 following.
19 THE COURT: Can you clarify which exhibit is which?
20 Q. BY MR. HAYDN-MYER: Yes. We're looking at L5.
21 A. That's this one?
22 Q. Yes.
23 A. Right. Oh, yeah.
24 Q. That's your signature?
25 A. As far as I know, yes. I mean, yes, it looks like it

1 it, yes.
3 With the Court's permission, I would like to publish
4 CH-L5. It's already covered by the stipulation.
5 THE COURT: CH-L5, as covered by the stipulation, is
6 admitted.
7 (Defendant's Exhibit CH-L5, "Notice Of Cancellation"
8 re: 14718 Condon Avenue, Lawndale, admitted into evidence.)
9 Q. BY MR. HAYDN-MYER: Ms. Clark, showing you L-5. This
10 is the one we just discussed in regards to your signature
11 there, is that correct?
12 A. The signature is mine, yes.
13 Q. And do you recognize the signature on the left?
14 A. That would be my husband's.
15 MR. HAYDN-MYER: And can I please publish CH-L6?
16 THE CLERK: Are you moving for admission?
18 THE COURT: It's covered by the stipulation. L-6 is
19 also admitted subject to the stipulation.
20 (Defendant's Exhibit CH-L6, "Affidavit Of Deed" re:
21 14718 Condon Avenue, Lawndale, admitted into evidence.)
22 Q. BY MR. HAYDN-MYER: Ms. Clark, showing you L6, you've
23 just testified that that is your signature, is that correct?
24 A. The signature is mine, yeah.
25 Q. And showing you this signature over here, is that

1 your husband's?
2 A. It looks like it, yes. I'm sorry. Yes, it looks
3 like it.
4 Q. Thank you. You can take down L6.
5 Now, Ms. Clark, did you ever receive any checks,
6 payments from Financial Enterprises?
7 A. No.
8 Q. Didn't you have discussions with Michael Head in
9 regards to an advance that you would receive of $2,000?
10 A. No.
11 MR. HAYDN-MYER: I'm sorry, Madam Clerk. I believe
12 it's Exhibit G, is that correct? My next one? JMH-G?
13 THE CLERK: Yes, sir.
14 (Defendant's Exhibit JMH-G, Check #1079 for $2,000,
15 payable to Brenda Clark, marked for identification.)
16 Q. BY MR. HAYDN-MYER: May I approach, Your Honor?
18 Q. BY MR. HAYDN-MYER: Ms. Clark, I'm showing you JMH-G.
19 If you could take a look at that.
20 A. Okay.
21 Q. Do you see there is a second -- you've gotten checks
22 back from the bank, correct?
23 A. I don't get checks back from the banks.
24 Q. Have you ever seen the back of a check before?
25 A. Before it was signed.

1 Q. Looking at this exhibit that I just gave you --
2 A. Uh-huh.
3 Q. -- do you see the back of it?
4 A. Yes.
5 Q. There is a signature?
6 A. Right.
7 Q. Do you see the name on the back?
8 A. The name that --
9 Q. That's handwritten there.
10 A. Right. Right. Okay. Yes.
11 Q. Is that your name?
12 A. That's my name.
13 Q. There's also an account written beneath it. Do you
14 recognize that?
15 A. No.
17 A. That one doesn't look like my signature, no.
18 Q. What about that one doesn't look like your signature,
19 Ms. Clark?
20 A. Because it doesn't. It's just the way -- because I'm
21 right-handed, and I don't go to the -- I mean, I can show you
22 my signatures if you want, but it doesn't look like mine. I
23 don't know the account number. I never get checks back either,
24 so I wouldn't know how it would look on the back of a check.
25 Q. You would agree, though, that the top of that check

1 says Financial Enterprises, is that correct?
2 A. That's what the top of the check says, yes.
3 Q. And it's written to Brenda Clark, is that also
4 correct?
5 A. That's what it says, yes.
7 A. Yes.
8 Q. And there is a signature on what appears to be the
9 copy of a back of a check that says Brenda Clark, is that also
10 correct?
11 A. That's what it shows, yes.
12 Q. Ms. Clark, isn't it also true that you did receive a
13 check in the amount of $9,029 from Financial Enterprises?
14 A. We didn't receive any checks from them.
15 MR. HAYDN-MYER: I believe it's going to be JMH-H,
16 Your Honor.
18 (Defendant's Exhibit JMH-H, Check #1081 for
19 $9,029.00, payable to Brenda Clark marked for identification.)
23 Q. BY MR. HAYDN-MYER: Ms. Clark, I'm showing you JMH-H.
24 A. Uh-huh.
25 Q. And that is a check, isn't it?

1 A. Looks like it, yes.
2 Q. And it's written to Brenda Clark, correct?
3 A. Again, yes.
4 Q. And it's in the amount of $9,029, is that correct?
5 A. Yes.
6 Q. And there is a signature that appears on the back of
7 that one also, correct?
8 A. Correct.
9 Q. Now is that your signature?
10 A. No.
11 MR. HAYDN-MYER: If I may, Your Honor, JMH-H is
12 covered by the stipulation by the Government.
13 MR. MORRIS: Your Honor, it's part of 16-C.
14 THE COURT: All right. Well, JMH-H is admitted
15 subject to the stipulation.
16 MR. HAYDN-MYER: Thank you. And I believe JMH-G is
17 also covered by the Government's stipulation.
18 THE COURT: All right then JMH-G also covered by the
19 stipulation is admitted.
20 (Defendant's Exhibit JMH-H, Check #1081 for
21 $9,029.00, payable to Brenda Clark, admitted into evidence.)
22 (Defendant's Exhibit JMH-G, Check #1079 for $2,000,
23 payable to Brenda Clark, admitted into evidence.)
24 Q. BY MR. HAYDN-MYER: Showing you JMH-H, Ms. Clark.
25 What you just testified to is you never received any checks and

1 that signature on the back of that check is not yours, is that
2 correct?
3 A. Correct.
4 Q. Showing you JMH-G. That was a check that I just
5 showed you in the amount of $2,000 that also has "Brenda Clark"
6 written on the back of it, but you're saying you didn't receive
7 that check either?
8 A. No. No.
9 Q. Showing you the Exhibits H and G, isn't it true that
10 both of the accounts end in 0296?
11 A. Yes.
12 Q. Is there anybody else, Ms. Clark, that had permission
13 to sign your name on checks and have them deposited in your
14 accounts?
15 A. No. I mean, just me and my -- I don't even know what
16 account that is, so I don't know on that one.
17 Q. Did your husband ever sign your name for you?
18 A. Sign my name? No.
19 Q. Ms. Clark, if you know, did you have negotiations
20 with Mr. Head, Michael Head, asking for the deed to be placed
21 back in your and your husband's name?
22 A. Yes.
23 Q. Did you get the deed placed back in you and your
24 husband's name?
25 A. In point in time, yes.

1 Q. And that point in time was approximately September of
3 A. No.
4 MR. HAYDN-MYER: It's going to be marked JMH-I.
6 (Defendant's Exhibit JMH-I, Grant Deed regarding
7 Brenda Clark, marked for identification.)
10 Q. BY MR. HAYDN-MYER: Showing you JMH-I.
11 A. Okay.
12 Q. Is that a grant deed?
13 A. Yes.
14 Q. Is your name written on it?
15 A. My name -- yes.
16 Q. Have you ever seen that document before?
17 A. This one I have, but this isn't in just mine and my
18 husband's name.
19 Q. Correct.
20 A. That's what you had asked me, though.
21 Q. Is your name written on the deed?
22 A. Yes, it is.
23 Q. In regards to the dates --
24 A. Uh-huh.
25 Q. -- is that the correct date that the deed was sent to

1 you or within a week?
2 A. I can't recall the actual exact dates here, so it was
3 -- I know it was probably in -- yeah, it would have been in '04
4 that we received this one.
5 MR. HAYDN-MYER: May I publish this, Your Honor?
10 THE COURT: Yes, JMH-I may be published. It's
11 admitted.
12 (Defendant's Exhibit JMH-I, Grant Deed regarding
13 Brenda Clark, admitted into evidence.)
14 Q. BY MR. HAYDN-MYER: Can you see that, Ms. Clark?
15 A. Yes.
16 Q. Now, didn't you have discussions with Mr. Michael
17 Head and ask him to have a deed filed that had your name on it
18 also in 2004?
19 A. That had -- that we asked to have it filed?
20 Q. Yes.
21 A. That's how it was originally filed.
22 Q. I'm sorry. Did you ask Mr. Michael Head after you
23 had your discussions with Josh and two other people --
24 A. Right. Okay.
25 Q. -- to have you and your husband's name put back on

1 title on a deed?
2 A. Yes.
3 Q. And then in 2004, Mr. Michael Head had you and your
4 husband placed back on a deed in 2004, isn't that correct?
5 A. Yes.
6 Q. Now if you can recall, Ms. Clark, you made payments
7 to Financial Enterprises for a few months, is that correct?
8 A. Yes.
9 Q. And at one point, I believe it was five or six months
10 into it, you stopped making payments, is that correct?
11 A. Yes.
12 Q. So the initial contract was approximately June of
13 2004 that you entered into with Financial Enterprises?
14 A. Correct.
15 Q. You made payments for approximately five months?
16 A. I believe we made six, but yes.
17 Q. And then you lived there for how much longer after
18 those six months?
19 A. We lost our home in 2011.
20 Q. So from the beginning of 2005 to 2011, which is
21 approximately six years --
22 A. Okay.
23 Q. -- did you pay mortgage?
24 A. No. Because we didn't have one.
25 Q. Did you pay rent?

1 A. No.
2 MR. HAYDN-MYER: No further questions, Your Honor.
3 Thank you.
4 THE COURT: All right. Mr. Tedmon, do you have
5 cross?
6 MR. TEDMON: Just very briefly.
8 CROSS-EXAMINATION
9 BY MR. TEDMON:
10 Q. Ms. Clark, good morning.
11 A. Morning.
12 Q. I just have a couple questions. You testified
13 yesterday on direct that you received a postcard, do you recall
14 that?
15 A. Correct.
16 Q. Okay. And you indicated the postcard was from Head
17 Financial Services, that's what you testified to, do you recall
18 that?
19 A. Not Head Financial. Financial Enterprise.
20 Q. Okay. The postcard was from Financial Enterprises.
21 Okay. That's fine. That's all I need. Thank you.
23 MR. MORRIS: Briefly, Your Honor.
24 /// /// ///
25 /// /// ///

2 BY MR. MORRIS:
3 Q. If I could just clarify the time of what happened. I
4 think your testimony was that the initial interaction with
5 Financial Enterprises was spring of 2004, is that correct?
6 A. Yes.
7 Q. And at that time it was your understanding that you
8 would not be removed from title?
9 A. Correct.
10 Q. Did you make your monthly payments from that point
11 forward -- or did you begin making monthly payments at that
12 point?
13 A. Yes.
14 Q. At what point did you realize that you were not on
15 title as promised?
16 A. That would have been -- I believe this was September
17 range. Well, yeah, September. September, October range of
18 '04.
19 Q. And then when you learned that, what did you do?
20 A. We went to the sheriffs.
21 Q. Did you have any conversations with --
22 A. Prior to going there, yes. I contacted -- well, I
23 tried to contact them. We'll put it that way.
24 Q. And then the deed that Mr. Haydn-Myer just showed
25 you --

1 A. Right.
2 Q. -- did that occur before or after you complained that
3 you hadn't gotten what you bargained for?
4 A. After.
6 THE COURT: Any further recross, Mr. Haydn-Myer?
9 Q. In regards to the timeline that Mr. Morris just spoke
10 of, after you received the grant deed with you and your
11 husband's name on it, you still did not make payments to
12 Financial Enterprises, isn't that correct?
13 A. The one -- the one that you had showed me?
14 Q. Yes.
15 A. Before that or after that?
16 Q. After that.
17 A. After that is when we stopped.
18 MR. HAYDN-MYER: Thank you. Nothing further.
19 THE COURT: Mr. Morris -- sorry -- Mr. Tedmon?
21 THE COURT: Mr. Morris?
23 THE COURT: Is this witness excused?

3 THE COURT: All right. You may step down. You are
5 MR. ANDERSON: The United States calls Paul Howard.
6 THE CLERK: Mr. Howard, if you will come forward,
7 please. If you could stand there in front of the witness
8 stand.
9 (Photograph taken of Mr. Howard by the Clerk.)
15 THE WITNESS: My name is Paul Howard, H-o-w-a-r-d.
16 PAUL HOWARD,
21 BY MR. ANDERSON:
22 Q. Good morning.
23 A. Good morning.
24 Q. What do you do for a living?
25 A. I'm an IRS supervisory special agent.

1 Q. How long have you been an IRS agent?
2 A. I became an IRS special agent in 1987.
3 Q. Are you on the civil or criminal side?
4 A. Criminal.
5 Q. What does a special agent for IRS in the criminal
6 investigative side do?
7 A. We conduct investigations of criminal tax law, bank
8 secrecy act violations, money laundering, things like that.
9 Q. Do you have any training or education that assists
10 you in the performance of your job duties?
11 A. Yes, we do.
12 Q. Could you briefly summarize that for me?
13 A. Initially, we go to a police academy, which is
14 located in Georgia. Stay there for about six months, and we
15 learn all types of things associated with our duties.
16 Q. Do you have ongoing training in the course of your
17 job?
18 A. Yes, we do.
19 Q. Have you participated in investigations in the course
20 of your employment?
21 A. Yes.
22 Q. Can you give us an approximate number of how many
23 investigations you've participated in?
24 A. I've participated in well over 200.
25 Q. Did you have any involvement in the investigation of

1 Charles Head, Jeremy Michael Head, and Head Financial Services?
2 A. Yes, I did.
3 Q. What was the nature of your involvement?
4 A. I was a finder on a search warrant.
5 Q. When approximately was that?
6 A. That was November 16th, 2006.
7 Q. What is a finder on a search warrant?
8 A. A finder ensures that the items that are seized from
9 a search warrant location fit within the scope of what is
10 allowed to be seized.
11 Q. How does a finder go about doing a finder's job?
12 When you do the finder's job, what do you do?
13 A. Typically what happens is when we conduct a search
14 warrant, we have many searchers. And those searchers will look
15 for items that may or may not be subject to seizure.
16 Once they find those items, they bring it to my
17 attention as the finder, and I'll determine if it fits.
18 Q. And if it does fit, what do you do next?
19 A. We will bag it, usually inventory it, and then seize
20 it.
21 Q. Once it's seized, is it preserved for evidence?
22 A. Yes, sir.
23 Q. Let's go to your specific involvement in this case.
24 You said November 16th, 2006?
25 A. Yes.

1 Q. Were search warrants executed on that day?
2 A. Yes.
3 Q. Are you aware of one or more than one search warrant
4 being executed?
5 A. In relation to this case I believe there's several.
6 Q. Were some of those in Southern California and one of
7 them in Arizona?
9 Q. Were you a participant in one of the specific
10 searches?
11 A. Yes, I was.
12 Q. What address were you a finder at?
13 A. I was a finder at 961 North Citrus Drive in La Habra.
14 Q. What was the significance of that address?
15 A. That was the residence of Charles Head.
16 Q. In preparation for the November 16th search warrant
17 did you do anything before that?
18 A. We did have a meeting, I believe it was on Tuesday,
19 to discuss the nature of the search, the nature of the
20 investigation. It was a pretty much an all-hands meeting.
21 And then Wednesday we had the opportunity to review
22 the search warrant affidavit, review the particulars of the
23 Attachment B, and familiarize ourselves with the investigation.
24 Q. And then on Thursday was that the day you executed
25 the search?

1 A. Yes.
2 Q. Were other people also assigned roles in the course
3 of the search?
5 Q. What other types of roles did people have at 961
6 North Citrus in La Habra?
7 A. We had a team leader. He was an IRS agent. We had
8 searchers, many searchers from IRS. Most of them from Southern
9 California. We had a person provide a sketch and another
10 person take photographs.
11 Q. Were computer forensic people also included in that
12 search?
13 A. Yes.
14 Q. What was their role?
15 A. Their role was to download and image computers that
16 were found at the location.
17 Q. Was that for the purpose of later searching those
18 images for documents, and e-mails, and things of that nature?
19 A. Yes.
20 Q. Going to Thursday, November 16th, do you recall what
21 the property at 961 North Citrus generally appeared like, what
22 type of property was it?
23 A. It was a single-family residence. I believe it was
24 two-story. It was at the end of a dead-end street.
25 I don't recall many other particulars about the

1 outside of the structure. We were not tasked with actually
2 making entry on that morning.
3 Q. When you entered the house, did you fulfill your role
4 as a finder?
5 A. Yes.
6 Q. In the course of being a finder, did you identify and
7 preserve certain pieces of documentary evidence?
8 A. Yes.
9 Q. I would like you to turn to Government's
10 Exhibit 43-A. That's in one of the binders that's behind you.
11 A. Yes.
12 Q. Before we get into the specific document, when a
13 search warrant is conducted, are rooms assigned different
14 identifiers?
15 A. Yes, they are.
16 Q. Why is that done?
17 A. So we can have a better tracking of where items are
18 found.
19 Q. Was that done in this case?
20 A. Yes, it was.
21 Q. When you collect evidence, do you make records to
22 show where specifically that evidence came from?
23 A. Yes, we do.
24 Q. Did you do that in this case?
25 A. Yes, we did.

1 Q. How did you do that?
2 A. We broke down each location as a room number or a
3 room site, and then designated when we located a piece of
4 evidence. When we put it in a bag for keeping, we identified
5 the room and location in that room where it was found.
6 Q. Was there a room that appeared to be an office in the
7 house?
8 A. Yes.
9 Q. I would like you to look at Government's
10 Exhibit 43-A. Do you recognize that item?
11 A. I do.
13 A. This was contained in one of the items that we seized
14 from the office location.
15 Q. Do you recall specifically where in the office this
16 item was located?
17 A. I would have to refer to my notes on that.
18 Q. Would referring to your notes help refresh your
19 recollection?
20 A. Yes, it would.
21 MR. ANDERSON: Your Honor, with the Court's
22 permission.
24 Q. BY MR. ANDERSON: Go ahead.
25 A. Yes. This was found in Room K, at the bottom of the

1 desk drawer on the right side.
2 Q. So Room K, was that the office?
3 A. Yes, it was.
4 Q. And the desk drawer, was there -- could you describe
5 the -- I'm sorry -- so there was a desk in the room?
7 Q. And in that was a -- you searched the drawers?
8 A. I may not have searched it, but another person may
9 have searched it. And I made sure that this fit within the
10 scope before we actually seized it.
11 Q. Were there items -- other items in that drawer that
12 indicated Charles Head used that desk?
13 A. Yes.
14 Q. What sort of items were there?
15 A. There were several other documents. One of which was
16 a handwritten Equity Purchase Agreement.
17 Q. Were there also bills and things of that nature with
18 Charles Head's name on them?
19 A. There were.
20 Q. And let's turn to Government's Exhibit 43-G.
21 A. Yes.
22 Q. Do you recognize Government's Exhibit 43-G?
23 A. Yes, I do.
24 Q. What is it?
25 A. This appears to be a tax collector statement from San

1 Bernardino County in 2006 for a property located at 9311 Monte
2 Vista Street, and the owner is listed as Charles C. Head.
3 Q. Where did you find -- well, did you find this item at
4 that house?
5 A. Yes, I did.
6 Q. Where did you find it?
7 A. That was found in Room K, on the top of the desk.
9 Government's Exhibit 43-G be admitted into evidence.
13 THE COURT: All right. 43-G is admitted.
14 (Government Exhibit 43-G, 2006 Taxes Due (Tax
15 Collector), admitted into evidence.)
16 MR. ANDERSON: So let's turn back to Government's
17 Exhibit 43-A. Your Honor, I would ask that Government's
18 Exhibit 43-A be admitted into evidence.
22 THE COURT: All right. 43-A is also admitted.
23 MR. ANDERSON: If we could publish that, please.
24 (Government Exhibit 43-A, FC Sales Pitch, admitted
25 into evidence.)

1 Q. BY MR. ANDERSON: Let's turn to Government's
2 Exhibit 43-B. Do you recognize Government's Exhibit --
3 MR. TEDMON: Your Honor, I don't have a problem
4 publishing this. If he's going to ask questions about it,
5 fine. If not, I would like it taken off the screen.
6 Q. BY MR. ANDERSON: Well, let's look at 43-A. Were
7 there items on 43-A that appeared to be relevant to the
8 investigation?
9 A. Yes.
10 Q. Including this line about "paid off the mortgage,"
11 "stress you will still be on title, but the investor will be on
12 title with you"?
13 A. Yes. That's one of them.
14 Q. And other things as well referenced to some sort of
15 foreclosure rescue plan?
16 A. Absolutely.
17 THE COURT: And this is a portion of 43-A?
18 Q. BY MR. ANDERSON: Yes, Your Honor. We can zoom out
19 and show the whole thing. Here's the top part.
20 Talking about a monthly payment as well?
21 A. Yes.
22 Q. Equity. And if we look at the very top, we can see
23 what the title of the document is?
24 A. Yes. It says "Head Financial Services."
25 Q. And below that above the text?

1 A. Sure. It says "FC Sales Pitch."
2 Q. Okay. Let's look at Government's Exhibit 43-B. And
3 we can take 43-A down.
4 Do you recognize Government's Exhibit 43-B?
5 A. Yes.
7 A. This was another document found in Room K. And this
8 was associated with what was in or about the desk.
9 Q. Did you also take this piece of evidence, log it, and
10 preserve it?
11 A. Yes, I did.
13 Government's Exhibit 43-B be admitted.
19 (Government Exhibit 43-B, HFS Work Flow Marketing,
21 Q. BY MR. ANDERSON: Before we zoom in, what's the title
22 of this document?
23 A. The title is "HFS Work Flow Marketing."
24 Q. And if we go in can we see a little bit of -- so this
25 document described what to do with leads and marketing efforts?

2 Q. Let's turn to Government's Exhibit 43-C. Do you
3 recognize Government's Exhibit 43-C?
4 A. Yes.
6 A. This was also found in Room K in or about the desk
7 area. This is a handwritten Equity Purchase Agreement.
8 Q. And this exhibit is actually 31 pages long, if you
9 could look at each of the pages?
10 A. Yes, it is.
11 Q. Do you recognize all 31 of those pages?
12 A. Yes.
13 Q. Were those all found in that desk?
16 Government's Exhibit 43-C be admitted.
21 THE COURT: 43-C is admitted. That's 31 pages?
23 THE COURT: You may publish.
24 (Government Exhibit 43-C, Equity Purchase Agreement,

1 Q. BY MR. ANDERSON: What format was this document in
2 when you found it?
3 A. This was a handwritten statement. I believe it was
4 attached to a legal note pad.
5 Q. And were there pages that follow this first page that
6 were also part of that note pad?
7 A. Yes. The pages were sequential.
8 Q. All right. So what is this document titled?
9 A. This is the "Equity Purchase Agreement."
10 Q. Let's go to page two. Is page two a continuation of
11 that same agreement from page one?
12 A. Yes, it is.
13 Q. Let's look at page three. What's written on page
14 three?
15 A. Says "charleschead@aol.com." Below that says
16 "charles.head@headmortgage.com."
17 Q. Let's go to page four. Do you see the top line
18 "50K cards at .06/card"?
19 A. Yes, I do.
20 Q. What does this document appear to be referring to?
22 speculation.
24 Q. BY MR. ANDERSON: Does this document total various
25 sums and numbers of callers of cards and responses that could

1 be expected?
2 A. Yes, it does.
3 Q. And if we zoom out. Does it also list "core campaign
4 operating costs"?
5 A. Yes, it does.
6 Q. And then if we go down. Then talk about "acquisition
7 cost for property, estimated six property max, estimated
8 300,000 market value max/property, minus 90,000 acquisition
9 cost, minus 118,000 total campaign cost?"
10 A. Yes. That's what it says.
11 Q. Let's go to the next page. Page five. Top line on
12 that page "10,000 names from listing service (homeowners in
13 default on mortgage)." Is that the top line?
14 A. Yes, it is.
15 Q. Then does it go through and say "contact 10,000
16 prospects five times each in five-week period?"
17 A. Yes.
18 Q. And then lists various numbers of postcards and
19 costs?
20 A. Yes.
21 Q. Let's go to page six. Is there also what appeared to
22 be a to-do list in this set of documents?
23 A. Yes.
25 speculation.

2 Q. BY MR. ANDERSON: Is there a list of items written in
3 a tense suggestive that they were things to do?
5 Q. Is that what we see here on page six?
6 A. Sorry.
7 Q. Go ahead.
8 A. That is part of it.
9 Q. "Commit Equity Purchase Agreement to memory, build
10 and practice closes?"
11 A. Yes.
12 Q. And then if we go to the next page, is that
13 continuation on that list?
14 A. Yes, that's what it appears to be.
15 Q. Some of those items "Beemer, Benz, and Denali?"
17 Q. Do you know if Charles Head had any of those
18 vehicles?
19 A. I know he did have a BMW.
20 Q. Are you sure about the others, do you know one way or
21 another?
22 A. I am not sure about the others.
23 Q. Looking on the next page. Multiple references to a
24 sister, do you know if Charles Head had a sister?
25 A. Yes, I do.

1 Q. How do you know?
2 A. She was present at the search warrant site.
3 Q. Let's go to page nine. Does this page list a "fight
4 close, a bounce back close," along with sales pitches like
5 "what we offer simply means to bounce back?"
6 MR. TEDMON: Objection as to sales pitch, the
7 characterization. The document speaks for itself.
9 Q. BY MR. ANDERSON: Discuss closes?
10 A. Yes, it does.
11 Q. Look at page 10. So state "you already know that
12 financially D can be devastating, but like anything else simply
13 taking the situation head on and doing what's gonna work for
14 you can make all the difference?"
16 Q. Let's look at page 11. Let's zoom in on the
17 illustration up top. Do you see the illustration next to the
18 words, "the system"?
19 A. I do.
20 Q. Does it appear to have a small house with an "H" on
21 it?
22 A. Yes, it does.
23 Q. And then a box with the word "bank" in it?
24 A. Yes.
25 Q. Both those are connected by lines to "escrow

1 company"?
3 Q. And "dot dot dot" to "listing company"?
4 A. Yes.
5 Q. And then "you."
6 And if we go down below on that page. Does it again
7 list things about postcards and costs and mailings?
9 Q. If we look to page 12. Is there a listing of
10 "marketing expenses, acquisition expenses, consideration,
11 acquisition cost"?
12 A. Yes.
13 Q. Looking at page 13. Does it describe "market value,
14 existing debt, consideration, processing costs, acquisition
15 costs, pre-split profit, walk-away profit"?
16 A. Yes, it does.
17 Q. What is listed as the walk-away profit?
18 A. Fifty percent F, which amounts to, in this
19 illustration, 14,250.
20 Q. So half of the pre-split profit?
21 A. Yes.
22 Q. Let's go to page 14. Listing "keep your house,"
23 "lower monthly payments" and "dollars X"?
25 Q. Let's go to page 15. While we're here, do you know

1 whether or not this is Charles Head's handwriting?
2 A. I do not.
3 Q. What linked it to Charles Head based on what you were
4 looking at in your investigation?
5 A. Well, it was found at his residence. It was found at
6 a desk within his residence in an office area.
7 Q. Now was it an area that he appeared to have access to
8 based on the documents that were found?
10 speculation.
12 Q. BY MR. ANDERSON: All right. So what does this page
13 list?
14 A. This says, "while targeting the areas of the country
15 with the highest annual property appreciation, and through
16 direct or indirect contact with those areas' escrow companies,
17 obtain list of properties and property owners in
18 pre-foreclosure, contact these prospects via a direct mail
19 marketing package and receive calls from those that are
20 interested, purchase their equity interest and refinance to
21 cash in, sell property at a later date at appreciated price for
22 an additional profit."
23 Q. Let's look to page 16. Does this page list various
24 business entities and phone numbers as well as some dollar
25 figures?

1 A. It does.
2 Q. Including Washington Mutual, a loss mitigation
3 department?
4 A. Yes.
5 Q. Let's look to page 17 of Exhibit 43-C. What does
6 this page say?
7 A. It states, "weaknesses, hard buy, in real estate
8 investment the greatest competition is for the properties in
9 areas of greatest value appreciation, the majority of
10 pre-foreclosure properties are not in areas of high value
11 appreciation, property market value 60,000 to 160,000."
12 Q. And then is there a diagram below on that page?
14 Q. Let's look at page 18. Start at the top half of the
15 page. Does this talk about targeting pre-foreclosures in areas
16 and cities with the highest value appreciation?
17 A. Yes, it does.
18 Q. Does it list benefits of this approach?
19 A. Yes, it does.
20 Q. Then does it list draw backs of that approach lower
21 on that page?
22 A. Yes.
23 Q. And what is -- if we go down to the bottom, what's
24 the -- what is listed next to conclusion?
25 A. States, "conclusion, to keep eating I will need a

1 system that can benefit from mid value properties in mildly
2 appreciating areas."
3 Q. Let's go to page 19. What is listed on this page?
4 A. It states, "alternatives to the big re-sale payoff,
5 hold and rent out, either private or government program,
6 example Section 8," and then there is an asterisk, says, "in
7 this case it's important to know the rentable value of a
8 property before acquiring it and ensuring that the rentable
9 value is higher than the holding cost after equity draw."
10 Q. Let's look at the next page. Page 20. I'll just
11 point out the final line, "bounce back," was that term also
12 used earlier on the page talking about "closes"?
13 A. Yes, it was.
14 Q. Let's look at page 21. What type of item is listed
15 on this page?
16 A. This appears to be counties located in Florida.
17 Q. Let's look at page 22. What's stated on this page?
18 A. "My name is," and "property management, asset
19 protection services, debt collection and asset recovery."
20 Q. Let's go to page 23.
21 A. This says, "business, LLC Dynamics." It's broken
22 off. I believe it says, "security, local partnership style."
23 And then under it it says, "grass roots initiative." There is
24 a bullet point that says "software" and "IT."
25 Q. And then there's some other entries as well?

1 A. Yes.
2 Q. Let's go to page 24. All right. Now, do you see
3 this heading that says "benefits"?
4 A. Yes.
5 Q. What are listed as benefits?
6 A. First is "don't lose home, stay in home, monthly
7 payment reduced, return most of equity."
8 Q. Is that "retain" or "return"?
9 A. I believe it says "return." "Credit repaired." And
10 there is a some words in the parentheses I can't make out. And
11 below that it says, "at end of 12 months will guaranty
12 financing, Creative Loans will go off title." And below that
13 it says, "dollars in hand, knock out bills."
14 Q. And now let's go back to the part that said "equity,"
15 and there is an arrow coming off that, is that right?
16 A. Yes.
17 Q. Let's look at where that arrow points to, and we'll
18 highlight that section. What does that say?
19 A. "Don't let it go if they balk on losing equity."
20 "Pick that." It's scratched out. "Ask them, well, what would
21 you work for?" And number one, "find out what would."
22 Q. All right. So let's pause there, and let's go to
23 page 25. What's the heading of this page?
24 A. The heading is called "The Deal," "continued" in
25 parentheses.

1 Q. What does it say under "The Deal continued"?
2 A. "Once they sign Equity Purchase Agreement, you buy
3 house and take out all equity."
4 Q. Does it say "all equity"?
5 MR. TEDMON: Objection, Your Honor. Asked and
6 answered.
8 Q. BY MR. ANDERSON: All right. Is there an
9 illustration beneath that line?
11 Q. Let's go down and let's highlight that illustration.
12 What's the example used?
13 A. Well, it shows a figure that's supposed to be a
14 house, I believe. On the left it says, "200,000 market value."
15 On the right it says, "$100,000 debt plus $100,000 equity,"
16 with an arrow down to "100,000." To the left of that "100,000"
17 is subtracted "acquisition cost 5 percent of market value,"
18 which is 5,000, "consideration to seller", which is 5,000,
19 "loan processing fee," which is 2,500, for "initial profit" of
20 87,500.
21 Q. All right. And then are there any other lines
22 talking about putting money in a trust, or saving money, or
23 returning money at the end to a homeowner?
24 A. I don't see anything on that page.
25 Q. Yeah. Let's look below the initial profit line of

1 $87,500. Is there an additional subtraction made?
2 A. Yes. "Minus 15,000 marketing cost." "One deal
3 equals 72,500 walk-away profit; two deals equals 160,000
4 walk-away profit; three deals $247,500 walk-away profit."
5 Q. Now if we go down to the bottom. So let's talk about
6 evicting sellers who fail to pay for an appreciated profit.
7 A. Yes.
8 Q. In this example, taking that home, assuming
9 12 percent annual appreciation, selling it for 224,000, thereby
10 making an additional $24,000 profit?
11 A. Yes.
12 Q. Let's go to page 26. Do you see the line "what
13 lender focus on"?
14 A. Yes, I do.
15 Q. All right. And what follows that?
16 A. Says, "bottom equal additional expense divided by
17 income."
18 Q. And you're assuming that's "additional expense"
19 because it's abbreviated?
20 A. Yes, sir.
21 Q. All right. So what is beneath that, is there an
22 abbreviation?
23 A. There's some initials. It says, "LTV equals." Below
24 that it says, "L/V." Below that it appears "DTID/I." And
25 below that it's "D/I."

1 Q. And if we go down to the bottom of that page, does it
2 talk about what LTV equals?
3 A. It's loan to value.
4 Q. So in this case it's represented as LTV equals "loan"
5 over "value"?
6 A. Yes.
7 Q. And beneath that there's also written "debt-to-income
8 ratio"?
10 Q. Let's go to page 27. I've highlighted something from
11 the middle of the page. What is that indicating?
12 A. What it says is "primary residence, second home,
13 investment property."
14 Q. Let's go beneath that. What does that say?
15 A. "Solely, spouse, other."
16 Q. And if we go back to the top of the page. Would you
17 describe what's shown there?
18 A. Looks like some initials pointing to some other
19 initials.
20 Q. What letters are primarily used along that right-hand
21 column?
22 A. On the right hand column is "N" with an arrow to a
23 "Y, N, Y."
24 Q. Let's go to page 28. What's shown on the top part of
25 this page?

1 A. The top letters is words called "The Deal." At the
2 left it says, "total market value 200,000." A drawing which
3 appears to be a home has "100,000" in parentheses over
4 "100,000." The "100,000" in parentheses is sided by "still
5 owned" and under that is "equity."
6 Q. And also lists "benefits/the offer" and a number of
7 things beneath that?
8 A. Yes, it does.
9 Q. That includes "stop foreclosure by buying house,
10 5,000 consideration, lower payment, get to stay in property,
11 sister company will help repair credit."
12 And you need to go down on the page. "If they keep
13 the lease agreement, then after one year get back half equity."
14 Are all those included?
16 Q. And also "common reasons for foreclosure"?
17 A. Yes.
18 Q. "Divorce, job loss, the economy, death of a
19 breadwinner."
20 Let's look at page 29. There are other references to
21 some of the terms we have seen before?
22 A. Yes, there are.
23 Q. Let's look at page 30. What's listed on this page?
24 A. The first statement says, "monthly payment, keep
25 home/stay in home, credit repair service, clean up existing

1 credit problems, delete any incorrect entries." In parens
2 "BofA." Also "register your payments with CL."
3 Q. What's listed on this line right here?
4 A. "Retain most equity."
5 Q. And let's go to the next page. Final page of this
6 exhibit. Just highlight a few things. What's on the first
7 line?
8 A. It says "Postcard Mania."
9 Q. And the second line?
10 A. Says, "find escrow, title report." Next line says,
11 "find original appraiser or appraisal --
12 MR. TEDMON: Objection. That's not what it says.
13 It's A-p-p-r.
15 Q. BY MR. ANDERSON: Just read the letters.
16 A. Okay. "Find o-r-i-g a-p-p-r, quick comps, compile
17 and format file with value, Keith meeting, close Lawrence,
18 5,000 c-o-n-s plus dollar same/month or 3,800 cons plus 100
19 less/month."
20 Q. We're going to turn to page 43-D now, which is a
21 one-page exhibit. Do you recognize Government's Exhibit 43-D?
22 A. Yes, I do.
24 A. That was another document that was found in Room K,
25 next to the desk.

2 Government's Exhibit 43-D be admitted.
6 THE COURT: 43-D is admitted.
7 (Government Exhibit 43-D, Weekly Meeting – 1PM
8 Friday, admitted into evidence.)
9 Q. BY MR. ANDERSON: What's the heading of this
10 document?
11 A. The heading says "Weekly Meeting, 1 p.m. Friday."
12 Q. Does it discuss "switching to foreclosures," item
13 number two?
14 A. Yes, it does.
15 Q. And then "marketing, 25 percent mortgages, 75 percent
16 NOD"?
18 Q. Let's go to Government's Exhibit 43-E, it's a
19 one-page exhibit. Do you recognize it?
20 A. Yes, I do.
22 A. This was also seized from Room K in and around the
23 desk area.
25 Government's Exhibit 43-E be admitted into evidence.

5 THE COURT: 43-E is admitted.
6 (Government Exhibit 43-E, List of Mortgage Companies,
8 Q. BY MR. ANDERSON: What type of items are listed on
9 43-E?
10 A. It appears to be some financial institutions with
11 what appear to be addresses, and then next to each of those are
12 amounts, dollar amounts.
13 Q. So "New Century, West San Joaquin, Mortgage Lenders
14 Condon Avenue"?
15 A. Yes.
16 Q. "West 65th Street," things of that nature?
18 Q. Let's go to Government's Exhibit 43-F. This is a
19 ten-page exhibit. That's not admitted yet. It is.
20 All right. Do you recognize Government's
21 Exhibit 43-F?
22 A. Yes, I do.
24 A. Once again, this was found in Room K, which is the
25 office location, on or about the desk area.

1 Q. This is listed as an Equity Purchase Agreement
2 involving Terri Jean Turner?
3 A. Yes.
4 Q. That's for a property in North Highlands?
6 Q. Let's go to 43-H. Do you recognize Government's
7 Exhibit 43-H?
8 A. Yes, I do.
10 A. This was another document that was seized from Room
11 K.
13 Government's Exhibit 43-H be admitted into evidence.
17 THE COURT: 43-H is admitted.
18 (Government Exhibit 43-H, Hand-written Notes
19 (Redacted), admitted into evidence.)
20 Q. BY MR. ANDERSON: Looking at the bottom of that page,
21 do you recognize any names there, people that you know?
22 A. Yes.
23 Q. Who do you recognize?
24 A. Chris Fitzpatrick, IRS Criminal Investigator.
25 Q. Sitting right here in court?

1 A. Yes.
2 Q. Is there any list of various things underneath Chris
3 Fitzpatrick's name related to things you knew were going on in
4 the investigation?
5 A. Yes, there is.
6 Q. I want to highlight something that's been on all the
7 documents at the very bottom. Ask a quick question to clarify.
8 There is a number that's printed down there. When
9 you found these documents, did it have that number on it, on
10 the very bottom right?
11 A. No, they do not.
12 Q. Is that put on later to keep track of the documents?
13 A. Yes, it is.
14 Q. Let's go to Government's Exhibit 43-I. Do you
15 recognize Government's Exhibit 43-I?
16 A. Yes, I do.
18 A. That's another document that was seized in Room K.
20 Government's Exhibit 43-I be admitted into evidence.
24 THE COURT: 43-I is admitted.
25 (Government Exhibit 43-I, Hand-written Notes – Lenny,

2 Q. BY MR. ANDERSON: Is this a list of items 1 to 5?
3 A. Yes.
4 Q. Including "list Miami at 1.2 million, give docs for
5 Highland to Lenny, give docs for Miami to Lenny, get Xochitl to
6 give us her notary book to verify Vanegas signature on transfer
7 of Highlands to Lenny, check to see what is owed by Garfinkle"?
8 A. Yes.
9 Q. Let's go to Government's Exhibit 43-J. Do you
10 recognize Government's Exhibit 43-J?
11 A. Yes, I do.
13 A. That was another document seized from Room K.
14 Q. Do you know where in Room K it was seized from?
15 A. It was found on the closet floor.
16 Q. What type of document is this?
17 A. It's a fax.
19 Government's Exhibit 43-J be admitted.
21 MR. TEDMON: Your Honor, I would like some
22 clarification. What I heard is it was found on the closet
23 floor. Is that what was said? Can we have more foundation as
24 to what that means specifically?
25 THE COURT: All right. I'll allow you to lay further

1 foundation.
2 Q. BY MR. ANDERSON: You said it was found on the closet
3 floor. Where was that closet?
4 A. That closet was in Room K.
6 MR. TEDMON: No objection. That's fine.
9 THE COURT: All right. 43-J is admitted.
10 (Government Exhibit 43-J, Fax to Xochitl, admitted
11 into evidence.)
12 Q. BY MR. ANDERSON: Who is on the "to" and "from" line
13 of this document?
14 A. It's from Charles Head. It's to -- I don't know how
15 to pronounce that name -- it's X-o-c-h-i-t-l.
16 Q. If we look at the bottom half of this document --
17 A. It gives a description of what direction is being
18 provided.
19 Q. And what direction is being provided in this fax?
20 A. Once again, it has that name. It says, "here is the
21 list of four units we have for sale or need to be listed.
22 28718 Menifee Springs, Menifee, California."
23 In parens "waiting on Ray to finish."
24 "16007 Estrella, Gardena, California; 633 Hudson,
25 Modesto, California listed for 254K; 16309 Windcrest, Fontana,

1 California, listed for 420K."
2 Q. And then there is additional information, and that
3 will be admitted into evidence?
4 A. Yes.
5 Q. And if we look at the bottom, who does it purport to
6 be signed by?
7 A. There is a --
9 speculation. He can testify what the document shows.
11 MR. ANDERSON: Purport, Your Honor.
12 MR. TEDMON: Well, that's still speculation.
13 THE COURT: You can rephrase.
14 Q. BY MR. ANDERSON: Whose name is listed as being the
15 person who has signed it? I'm not asking you who signed it.
16 I'm asking you whose name is listed on the document.
17 MR. TEDMON: It's typed in?
18 THE COURT: Just clarify which part of the document
19 you're referring to.
20 Q. BY MR. ANDERSON: I think this speaks for itself.
21 Why don't we move on.
22 Let's go to Government's Exhibit 44-A. Do you
23 recognize Government's Exhibit 44-A?
24 A. I do.
25 Q. What is it?

1 A. This appears to be a Secretary of State for State of
2 California, dated August 16th, 2001.
3 Q. How are you able to recognize this particular
4 document?
5 A. This was also seized in Room K.
6 Q. Do you recall from where in Room K?
7 A. On the floor, next to the desk, on the left side.
9 Government's Exhibit 44-A be admitted.
14 (Government Exhibit 44-A, Secretary of State –
15 Article of Incorporation (Head Financial Services, Inc.),
17 Q. BY MR. ANDERSON: Let's go to page two. Purport to
18 be Articles of Incorporation of Head Financial Services?
19 A. Yes.
20 Q. And looking down on the page, who is listed as the
21 name and address of the corporation's initial agent for service
22 of process?
23 A. Charles Head, 846 East San Antonio, Apartment 3, Long
24 Beach, California 90807.
25 Q. And going to the final page, page three, whose name

1 is listed as the incorporator?
2 A. Charles Head.
3 Q. Let's go to Government's Exhibit 44-B. Do you
4 recognize Government's Exhibit 44-B?
5 A. Yes, I do.
6 Q. What is it?
7 A. This appears to be a copy of a signature card for
8 Pacific Mercantile Bank.
9 Q. What account name?
10 A. The account owner is listed as Head Financial
11 Services, Incorporated, DBA Dynasty Realty.
13 document?
14 A. This was another document that was found in Room K.
15 Q. Where in Room K was it found?
16 A. It was found on the floor, next to the desk, on the
17 left side.
19 Government's Exhibit 44-B be admitted into evidence.
25 (Government Exhibit 44-B, Signature Card, admitted

1 into evidence.)
2 Q. BY MR. ANDERSON: There are two names and signatures
3 on the bottom right quadrant of this document, first page. Do
4 you know what that section of the document is for?
5 A. That is for the bank to know who the account owners
6 are.
7 Q. So, in your experience, people who are listed in that
8 section have access to the account?
9 A. They have access to withdraw funds, make funds --
10 deposits -- transfer funds from that account, yes.
11 Q. And if we zoom out, is there a signature and date?
13 Q. What date is on the bottom left?
14 A. 8-26-04.
15 Q. All right. Let's go to Government's Exhibit 44-C. Do
16 you recognize Government's Exhibit 44-C?
17 A. I do.
18 Q. What type of document is it?
19 A. This is from the State of California, Secretary of
20 State's Office, registration for limited liability company.
22 document?
23 A. This was found in Room K.
25 Government's Exhibit 44-C be admitted.

6 (Government Exhibit 44-C, Secretary of State –
7 Limited Liability Company Articles of Organization for Creative
8 Loans, LLC, admitted into evidence.)
9 Q. BY MR. ANDERSON: What's the name of the limited
10 liability company for which this document --
11 A. Creative Loans, LLC.
12 Q. And if we go down on that page to the bottom half on
13 the declaration section, who is listed as the name of the
14 organizer?
15 A. The name is Charles C. Head.
16 Q. And what's the date?
17 A. Date is June 9, 2004.
18 Q. If we go to page six of this document. Who is listed
19 as signing for the company and the member?
20 A. Charles C. Head.
21 Q. In both cases?
22 A. Yes.
23 Q. Let's look at page seven. Was that also part of
24 these documents?
25 A. Yes, it was.

1 Q. What's written there?
2 A. Says, "there is no operating agreement for our LLC,
3 Charles Head, manager, Creative Loans, LLC."
4 Q. Let's go to page 44 -- excuse me -- Government's
5 Exhibit 44-D. Do you recognize Government's Exhibit 44-D?
6 A. Yes, I do.
8 A. This is another document taken from Room K.
9 MR. ANDERSON: Your Honor, I would ask that this
10 exhibit be admitted.
12 MR. TEDMON: Can we just have a little more specifics
13 as to where in Room K this was found?
14 Q. BY MR. ANDERSON: Where in Room K was this found?
15 A. This was found on the floor, next to the desk on the
16 left side.
18 Exhibit 44-D be admitted.
23 THE COURT: All right. 44-D is admitted.
24 (Government Exhibit 44-D, Pacific Mercantile Bank –
25 Personal/Business Internet Banking Enrollment Form for Creative

1 Loans LLC, admitted into evidence.)
2 Q. BY MR. ANDERSON: What type of document is this?
3 A. It says it's an internet banking enrollment form from
4 Pacific Mercantile Bank.
5 Q. What's the account name?
6 A. The account name is Creative Loans, LLC.
7 Q. Is there an owner's e-mail address listed?
8 A. Yes.
9 Q. What is it?
10 A. Charles Head at headmortgage.com.
11 Q. Let's go to Government's Exhibit 44-E. Do you
12 recognize Government's Exhibit 44-E?
13 A. Yes, I do.
14 Q. What is it?
15 A. This is a State of California, Statement of
16 Information for a Limited Liability Company.
17 Q. How were you able to recognize this particular
18 document?
19 A. This, too, was seized from Room K.
20 Q. To anticipate the objection, what area of Room K was
21 it in?
22 A. It was found on the floor, next to the desk on the
23 left side.
25 Government's Exhibit 44-E be admitted.

2 MR. TEDMON: With that clarification, Your Honor, I
3 have no objection.
4 THE COURT: All right. 44-E is admitted.
5 Mr. Haydn-Myer? I'm sorry.
7 THE COURT: All right. Now 44-E is admitted.
8 (Government Exhibit 44-E, California Secretary of
9 State Statement of Information – Creative Loans LLC, admitted
10 into evidence.)
11 Q. BY MR. ANDERSON: What company is this for?
12 A. This is for Creative Loans, LLC.
13 Q. What's listed as the address of the business?
14 A. 949 South Coast Drive, Number 450, Costa Mesa,
15 California.
16 Q. Who is listed as the agent for service of process?
17 A. Charles Head.
18 Q. What is listed, if we go down, as the address for
19 service?
20 A. The address for is listed at 3939 Atlantic Avenue,
21 Suite 110, Long Beach, California.
22 Q. Let's go to Government's Exhibit 44-F. Do you
23 recognize Government's Exhibit 44-F?
24 A. Yes.

1 A. This was found in Room K, on the floor, next to the
2 desk, on the left side.
4 government's Exhibit 44-F be admitted.
9 THE COURT: 44-F is admitted.
10 (Government Exhibit 44-F, Orange County Fictitious
11 Business Name Statement – Nations Property Management, admitted
12 into evidence.)
14 A. This appears to be a Fictitious Business Name
15 Statement for Orange County.
16 Q. And what is the fictitious business name?
17 A. Nations Property Management.
18 Q. What's the name of the registering company?
20 Q. And the address?
21 A. 949 South Coast Drive, Suite 450, Costa Mesa.
22 Q. And then let's look down at the bottom right. Who is
23 the signature -- who is the signer for this document?
24 A. The signer appears to be John J. Corcoran, CFO.
25 Q. Let's go to Government's Exhibit 44-G. Getting very

1 near the end. Do you recognize Government's Exhibit 44-G?
2 A. Yes, I do.
4 A. This was also seized from Room K. It was found on
5 the floor, next to the desk, on the left side.
7 Government's Exhibit 44-G be admitted.
12 THE COURT: 44-G is admitted.
13 (Government Exhibit 44-G, Orange County Fictitious
14 Business Name Statement – Fundingforeclsures.com, admitted into
15 evidence.)
17 A. This is a Fictitious Business Name Statement also
18 from Orange County.
19 Q. What is the fictitious business name listed here?
20 A. Fundingforeclosures.com.
21 Q. What is the name of the registrant?
23 Q. And the address?
24 A. 949 South Coast Drive, Suite 450, Costa Mesa,
25 California.

1 Q. And we'll look at the bottom right. You may or may
2 not be able to make it out. Can you see who signed for this
3 one?
4 A. It appears to be John --
5 Q. -- something and then CFO?
6 A. Yes.
7 Q. Let's go to Government's Exhibit 44-H. Do you
8 recognize Government's Exhibit 44-H?
9 A. Yes, I do.
10 Q. How do you recognize it?
11 A. This was also seized at the search warrant site, Room
12 K. Found on the floor, next to the desk, on the left side.
14 government's Exhibit 44-H be admitted.
18 THE COURT: 44-H is admitted.
19 (Government Exhibit 44-H, Head Financial Services
20 Inc. Stock Certificate, admitted into evidence.)
22 A. It appears to be a Head Financial Statement, Head
23 Financial Services, Incorporated, stock certificate.
24 Q. Once you finished collecting evidence at Charles
25 Head's residence, what was done with it?

1 A. It was secured in a box and then provided to the case
2 agent.
3 Q. And do you know if it was transported up to
4 Sacramento?
5 A. Yes, it was.
6 Q. How was that done?
7 A. The boxes of evidence were placed in a U-Haul and
8 transported to Sacramento by the case agent.
9 Q. And did you participate in that?
10 A. I did follow the U-Haul as far as Sacramento.
12 Thank you.
13 THE COURT: All right. And that actually brings us
14 to 10:00. Let's take our first break of the day. It will be a
15 15-minute break. And during that break, as always, please
16 remember my admonitions. I will see you at 10:15.
17 (Jury out.)
18 THE COURT: You may be seated. You may step down.
19 Please be back in your seat at 10:15.
20 Is there anything we need to discuss? Mr. Anderson?

1 THE COURT: All right. 10:15.
2 (Break taken.)
3 THE COURT: Please come forward. So you are
4 concluded with direct?
6 THE COURT: So who is going to go first?
7 MR. TEDMON: I'll go first, Your Honor.
9 (Jury in.)
10 THE COURT: You may be seated. Welcome back once
11 again, ladies and gentlemen. We are turning now to the
12 cross-examination. And Mr. Tedmon will lead off with that.
15 BY MR. TEDMON:
16 Q. Special Agent Howard, good morning.
17 A. Good morning.
18 Q. I want to go back a little bit in time to
19 November 16th, 2006. That was the date of the search, correct?
21 Q. Now on that date there were other searches as well,
22 true?
23 A. Yes.
24 Q. Did you participate in any other searches or was it
25 just the one in La Habra?

1 A. Just the one in La Habra.
2 Q. And that's the one you're testifying to about here?
4 Q. Now you indicated that you were a finder in this
5 particular search, correct?
7 Q. Who is the team leader, if you recall?
8 A. The IRS team leader was Sean Breslin.
9 Q. And now is he the one that was kind of responsible
10 for everything, kind of oversaw the search, would that be fair
11 to say?
12 A. I guess that would be a fair assessment. Team leader
13 usually has a different role in a search warrant. And his was
14 kind of truncated that day.
15 Q. Who did you report to once you did the finding?
16 A. I would probably report my findings to the case
17 agent.
18 Q. That would be Mr. Fitzpatrick?
20 Q. Was Mr. Fitzpatrick there during the search?
21 A. He was.
22 Q. And I'm talking about the search in La Habra.
23 A. Yes.
24 Q. Now just to clarify, the items you've testified to
25 here today, are those items you personally found, or were those

1 items other people found and gave them to you?
2 A. They most likely found by other individuals.
3 Q. Who would they have been?
4 A. There is a list of team members that were there on
5 the site. I don't know who specifically found those --
6 searched for those items. But they would have searched for
7 them, found them, identified them as potentially items we would
8 want to take. I would then look at them, make final
9 determination whether we would want to seize them.
10 Q. So actually what happened was when you say finder,
11 you didn't personally find any of the items you testified to
12 today, right?
13 A. I may not have, yes.
14 Q. It may have been somebody else?
16 Q. And then they were handed to you, you reviewed them,
17 correct?
18 A. Yes.
19 Q. The documents themselves --
20 A. Yes.
21 Q. -- in this case?
22 And then to determine if in fact that was appropriate
23 for seizure pursuant to the search warrant, correct?
25 Q. So you were more of a supervisor of the people

1 finding the documents, as opposed to being the finder yourself,
2 would that be fair to say?
3 A. I didn't direct the search, but I did want to find --
4 I did want to look at what was found before we actually found
5 it, if that makes sense. Before we actually seized it.
6 Q. So it was found first by somebody else. You reviewed
7 it to see if you were actually going to seize it or not?
9 Q. And that's what you're testifying to about here
10 today?
11 A. Yes.
12 Q. Now if we could have Government's Exhibit 43-A put on
14 This is a document that you testified about this
15 morning, correct?
16 A. Yes.
17 Q. And you've reviewed this document before you came to
18 court today, correct?
19 A. Yes, I did.
20 Q. There is no date on this document, is there?
21 A. Could you blow it up just a little, please.
22 Q. Which section do you want?
23 A. All of it.
24 Q. I don't know if we can do that. Let's try half of
25 it.

1 Looking at the upper half and items one through five,
2 there is no date on there, is there?
4 Q. Now if we can have the bottom half. And looking at
5 that part of the document, there is no date on there is there?
7 Q. And you don't know who generated this document, do
8 you?
9 A. I do not.
10 Q. Can we go to Government's 43-B, please. I would like
11 to ask you to take a look at this document. This is the one
12 entitled "FHS Work Flow Marketing," do you see that?
13 A. Yes, I do.
14 Q. There is no date on this document either, is there?
15 A. No, sir.
16 Q. And you don't know who generated this document
17 either, do you?
18 A. I do not.
19 Q. If we go to Government's 43-C, please. Now this is
20 page one of an exhibit that has 31 pages, correct?
21 A. Yes.
22 Q. And you've already testified to or about this exhibit
23 a little earlier this morning, correct?
24 A. Yes, sir.
25 Q. All right. You've had a chance to review all

1 31 pages of this document before you came to court today,
2 correct?
3 A. Yes, I did.
4 Q. All right. And it's correct that there is no date on
5 this document, is that right?
6 And if you want to look through each page, feel free.
7 A. It does not appear to be dated.
8 Q. It's not dated, is it?
10 Q. And you don't know who actually wrote out these
11 handwritten 31 pages, do you?
12 A. I do not.
13 Q. If we could go to Government's 43-D, please. That's
14 also an exhibit, that's handwritten, you testified to earlier
15 today, correct?
16 A. Yes, sir.
17 Q. There is no date on this document, either, is there?
18 A. There is not.
19 Q. And you don't know who wrote this, do you?
20 A. I do not.
21 Q. Now go to Government's 43-E, please. This is another
22 handwritten document, correct?
23 A. Yes.
24 Q. There is no date on this either, is there?
25 A. No, there is not.

1 Q. And you don't know who wrote this, do you?
2 A. I do not.
3 MR. TEDMON: Could I have one moment, Your Honor?
6 Q. BY MR. TEDMON: Now, Special Agent Howard, you
7 testified that you found a document labelled Government's
8 Exhibit 43-F. And I don't believe that was moved into
9 evidence, Your Honor. I want to check?
10 THE CLERK: What number?
11 MR. TEDMON: 43-F as in Frank.
12 THE COURT: I believe that's correct. Are you
13 seeking to move it?
14 MR. TEDMON: Yes.
15 THE COURT: Sorry. 43-F was on May 13th. 43-F is
16 in.
17 MR. TEDMON: Okay. If we could put up 43-F. Now
18 this is a document -- strike that.
19 This document specifically was found in what you
20 described as the office area in the La Habra location, correct?
22 Q. And I think you testified it was found in the desk,
23 correct?
24 A. It was found on the table in front of the desk.
25 Q. On the table in front of the desk. Okay.

1 Now the top of this document says "Equity Purchase
2 Agreement," correct, Special Agent Howard?
3 A. Yes.
4 Q. Can we have that section blown up, please. It's
5 dated October 4th, 2004, correct?
7 Q. It's an agreement between Terri Jean Turner and
8 Meridian Financial, true?
9 A. Yes.
10 Q. Do you know who Terri Jean Turner is?
11 A. I do not.
12 Q. Do you know who Meridian Financial is?
13 A. I do not.
14 Q. Now this paragraph here says "agreement to sell and
15 property description," true?
16 A. Yes.
17 Q. And it goes on to say, "the seller, who is Terri Jean
18 Turner, agrees to sell and convey to purchaser, who was
19 Meridian, and purchaser agrees to purchase from seller the
20 property at 3646 Milton Way," true?
21 A. Yes.
22 Q. So you've been an IRS agent for how long?
23 A. Twenty-six years.
24 Q. All right. You've seen contracts before, true?
25 A. Yes.

1 Q. Thousands of them, correct?
2 A. Probably.
3 Q. All right. This is a contract to sell property,
4 based on your experience, correct?
5 MR. ANDERSON: Objection. Calls for legal
6 conclusion.
8 Q. BY MR. TEDMON: Well, the document says that the
9 seller agrees to sell to the purchaser property located on
10 Milton Way, correct?
11 A. Yes.
12 Q. All right. And then if we can have the full page of
13 page one, please, and then expand that section.
14 This section of the document that you found at the
15 location you searched in La Habra indicates that "the purchaser
16 agrees to pay the seller for consideration the total sum of
17 $4,000," correct?
19 Q. If we could go to Government's 43-F8, please. And if
20 we can expand just the top section for now.
21 Now this is part of the document you seized that day
22 on the table in front of the desk, correct?
23 A. That's right.
24 Q. All right. And it's an Acknowledgement by Seller,
25 correct?

1 A. Yes.
2 Q. All right. And all of these documents were
3 sequentially in the same location, correct, when you seized
4 them?
5 A. For this exhibit.
6 Q. For this exhibit.
7 A. Yes.
8 Q. I'm speaking of Exhibit 43-F.
9 A. Yes, sir.
10 Q. So it indicates in the document that "other than
11 what's in this agreement, there are no other solicitations,
12 representations, or offers," correct?
13 A. Yes.
14 Q. What it says. And then if we can have the full
15 document again, please. And if we can expand number four.
16 It says -- and this is the document you seized --
17 "seller understands that the Equity Purchase Agreement, which
18 seller has entered into with purchaser, is not a loan, and it
19 is not a mortgage, pursuant to the terms of the Equity Purchase
20 Agreement, seller is selling his/her entire interest in the
21 property to purchaser," correct?
23 Q. And if we can have the full document again. And go
24 back to the top.
25 The first sentence in paragraph one says, "seller

1 acknowledges that the purchaser has not made any
2 representations, promises or verbal agreements regarding the
3 purchase of the seller's residence that are not contained
4 within the Equity Purchase Agreement or other documents
5 executed concurrently herewith," correct?
7 Q. And if we could go to Government's Exhibit 43-F10.
8 Please. This is an Affidavit of Deed, true?
9 A. Yes.
10 Q. And this was found along with the other documents in
11 43-F?
13 Q. And it says in 2B, "consideration in the amount of
14 $4,000 was paid therefore," correct?
15 A. Yes.
16 Q. And it says in Section E, "in execution and delivery
17 of said deed, I was not acting under any misapprehension as to
18 the effect thereof and acted freely and voluntarily, and was
19 not acting under coercion or duress," and it's initialled
20 correct?
22 Q. And it's initialed in B, and it's initialed in E,
23 correct?
24 A. Correct.
25 Q. And if we could go to the full document, please. And

1 then above "affiant" there is a signature, correct?
2 A. Yes, sir.
3 Q. Appears to say Terri Jean Turner, would you agree
4 with that?
5 A. Looks pretty close.
6 Q. And then it's notarized?
7 A. Yes, sir.
8 Q. That's fine with that exhibit. Thank you.
9 Now you're aware that prior to the search, which took
10 place on November 16th, 2006, that there had been an ongoing
11 investigation, true?
12 A. Yes.
13 Q. And, in fact, prior to the search, Special Agent
14 Fitzpatrick, who is the case agent, and others interviewed
15 people about this matter, correct?
16 A. Yes, I'm sure of it.
17 Q. Okay. And they interviewed Mr. Charles Head before
18 the search, didn't they?
19 A. That much I'm not aware of.
20 Q. You don't know that?
21 A. No.
22 Q. But people were interviewed, you know that?
23 A. Yes.
24 Q. Okay. Can we go to Government's Exhibit 43-H,
25 please. Now this is a handwritten document, correct?

1 A. Yes, it is.
2 Q. Now on this document it indicates in this section,
3 "Chris Fitzpatrick, IRS, criminal investigate, 916, equity
4 skimming, equity stripping," do you see that?
5 A. Yes.
6 Q. Now Special Agent Fitzpatrick is the case agent,
7 correct?
8 A. Yes.
9 Q. And Special Agent Fitzpatrick and others in the
10 Internal Revenue Service interviewed people in advance of this
11 search, correct?
12 A. Yes.
13 Q. And part of their theory was this was an equity
14 stripping problem, correct?
15 A. Yes.
16 Q. And they made that known to people when they were
17 interviewing them, you know that, don't you? That was part of
18 their questioning?
19 A. I'm not sure what questions they asked the witnesses.
20 Q. Well, you knew about the case, right?
21 A. Yes, sir.
22 Q. You knew generally what it involved, correct?
23 A. I did, yes.
24 Q. You read the search warrant before it was served,
25 correct?

1 A. Yes.
2 Q. The search warrant laid out the Government's theory,
3 correct?
4 A. Right.
5 Q. And that theory was that there was money being taken
6 from homeowners inappropriately, correct?
7 A. Correct.
8 Q. And those topics were discussed or questioned of
9 witnesses prior to the search, correct?
10 A. That I don't know.
11 Q. You don't know. Okay.
12 Now can we have the full document, please. Other
13 than this section here that says "own Iquoteshop.com, arrow,
14 purchased, scribble, February 2005, making payments, dash,"
15 there is no date on this document, correct?
16 A. No.
17 Q. And you don't know who wrote this document, do you?
18 A. No, I do not.
19 Q. And if we could go to -- well, we can take that off.
20 Thank you.
21 And then there are two other pages to 43-H, 1, 2 --
22 sorry -- two pages, H1 and H2, is that correct?
23 A. Yes.
24 Q. That exhibit?
25 A. Yes.

1 Q. I'm not going to put it on the screen, but page two
2 is also handwritten, is that right?
3 A. Yes, it is.
4 Q. And there is no date on that page either?
6 Q. And you don't know who wrote that either?
7 A. I do not.
8 Q. We can go to 43-I, please. This is another
9 handwritten document, correct?
10 A. Yes.
11 Q. And again there is no date on this at all, correct?
12 A. There is not.
13 Q. And you don't know who wrote this correct?
14 A. I do not know who wrote it.
15 Q. Okay. If we can go to 43-J, please. Now this is a
16 -- it says "fax" at the top, right?
17 A. Yes.
18 Q. To X-o-c-h-i-t-l?
19 A. Yes.
20 Q. I'm not going to try. From Charles Head?
21 A. Yes, sir.
22 Q. Now, on this document there is no date, correct?
24 Q. And I think you testified you found it on the closet
25 floor in Room K, which is the office, is that right?

1 A. Yes.
2 Q. Now this document doesn't have a fax header on it
3 either, does it?
4 A. No, it does not.
5 Q. And you know from your experience that things that
6 are faxed typically have fax headers on them, true?
7 A. True.
8 Q. So it appears that this wasn't even sent, correct?
9 A. I don't know if it was sent or not.
10 Q. There is no indication it was?
11 A. It doesn't have a fax header.
12 Q. Okay. If we can go to Government's 44-A2, please.
13 This is the Articles of Incorporation for Head
14 Financial Services? Take a moment if you need to find that.
15 A. Which number?
16 Q. 44-A2. It's also on the screen.
17 A. Yes, sir.
18 Q. And this is the Articles of Incorporation of Head
21 Q. And the date endorsed by the Secretary of State of
22 the State of California is August 15th, 2001, correct?
24 Q. If we can go to Government's Exhibit 44-B, please.
25 Now, this section here of 44-B indicates who has

1 signatory authority of the Pacific Mercantile Bank account,
2 correct?
3 A. Yes.
4 Q. And it would be, according to this, Charles Head?
5 A. Yes.
6 Q. And Kou Yang, correct?
8 Q. And if we could have the full document again, please.
9 The date on this document at the bottom is August 26, 2004,
10 correct?
12 Q. All right. And if we can have the full document
13 again, please.
14 So August 26, 2004, the account owner is Head
15 Financial Services DBA Dynasty Realty, correct?
16 A. Yes.
17 Q. And the address is 949 South Coast Drive, Number 450,
18 Costa Mesa, correct?
19 A. Yes.
20 Q. And that would be effective August 26, 2004 as far as
21 this document is concerned, correct?
22 A. Correct.
23 Q. And then if we can go to Government's Exhibit 44-C,
24 please. This is Articles of Organization, correct?
25 A. Yes.

1 Q. For Creative Loans, is that right?
3 Q. And this is dated June 15th, 2004, correct?
5 Q. All right. And if we can have the full document
6 again, please. And the address is 949 South Coast Drive,
7 Number 450, Costa Mesa, true?
8 A. Yes.
10 Q. BY MR. TEDMON: And then if we can go to Government's
11 Exhibit 44-E, please. This is a Secretary of State, Statement
12 of Information form, correct?
14 Q. For Creative Loans?
15 A. Yes, sir.
16 Q. And if you can see the street address, it's 949 South
17 Coast Drive, Number 450, Costa Mesa, correct?
18 A. Yes.
19 Q. And the date of filing on this is June 21, 2004,
20 correct?
22 Q. If we can go to Government's 44-F, please. This is a
23 Fictitious Business Name Statement, correct?
24 A. Yes, it is.
25 Q. From the Orange County Clerk Recorder's Office, Tom

1 Daly, do you see that at the top?
2 A. Yes, sir.
3 Q. Now this is for Nations Property Management, true?
4 A. Yes, sir.
5 Q. And the location is 949 South Coast Drive, Suite 450,
6 correct?
7 A. That is for Creative Loans.
8 Q. Okay. Let me go back then. The registrant is
9 Creative Loans, correct?
11 Q. And the address is 949 South Coast Drive, Suite 450?
12 A. Yes. For Creative Loans.
13 Q. For Creative Loans. There is no address for Nations
14 Property Management, would you agree with that, on this form?
15 A. There is an address.
16 Q. There is?
17 A. Yes.
18 Q. In fact, it's line two, right?
19 A. Yes.
20 Q. And that address is 3337 South Bristol, Suite 240,
21 Santa Ana, correct?
23 Q. So according to this form, Nations Property
24 Management operates in a different location than Creative
25 Loans, would you agree?

1 A. Yes.
2 Q. And the date of this filing -- can we have that
3 expanded, please -- is May 25th, 2005, correct?
5 Q. Now if we can go to Government's 44-G, please. This
6 is a Fictitious Business Name Statement, correct?
7 A. Yes, it is.
8 Q. For Fundingforeclosures.com, true?
10 Q. And this is filed on May 25th, 2005, is that right?
11 A. Yes.
12 Q. And the registrant is Creative Loans, correct?
13 A. Yes, it is.
14 Q. The address for both Fundingforeclosures and Creative
15 Loans on this form is 949 South Coast Drive, Suite 450, Costa
16 Mesa, correct?
17 A. Yes.
18 Q. And then finally Government's Exhibit 44-H, if we
19 could put that up. This is the Head Financial Services stock
20 certificate, correct?
21 A. Yes, it is.
22 Q. Okay. It's a California Close Corporation, correct?
23 A. Yes.
24 Q. You know what a California Close Corporation is,
25 don't you?

1 A. No, sir.
2 Q. You don't?
3 A. No.
4 Q. Well, in any event, it certifies that Charles Head is
5 the record holder of 1,000 shares, correct?
7 Q. And it's dated August 31st, 2001?
8 A. Yes, sir.
9 Q. Now other than your role in the search of the La
10 Habra location, do you have any other duties in this case?
11 A. No.
12 Q. Did you write any reports regarding this case?
13 A. I did not.
14 Q. And when the items that were located and seized from
15 La Habra were moved to Sacramento, who were they turned over
16 to?
17 A. The items were turned over to Special Agent Chris
18 Fitzpatrick.
19 Q. And they were stored at the Watt Avenue location in
20 Sacramento?
21 A. I do now know where they were stored.
22 Q. Were they stored somewhere in Sacramento as far as
23 you know?
24 A. Yes.
25 Q. Once those records were turned over, did that

1 conclude your involvement in this case other than testifying
2 here today?
3 A. I believe it did, yes, at that point.
4 MR. TEDMON: Thank you, Your Honor. No questions.
5 THE COURT: Mr. Haydn-Myer, any cross?
9 THE COURT: This witness may be excused?
10 Mr. Anderson?
13 MR. TEDMON: I'm sorry, Your Honor, can I have one
14 moment. Your Honor, could I have the Court's permission to ask
15 a couple follow-up questions?
17 Q. BY MR. TEDMON: Special Agent Howard, Mr. Anderson
18 asked you about -- well, strike that.
19 Let's just do it this way. If we can put up
20 Government's Exhibit 43-A and then just expand this section
21 here.
22 There is a series of "Head-SW" and so forth, do you
23 see that?
24 A. Yes, sir.
25 Q. What does that represent?

1 A. That represents a tracking number.
2 Q. And what does that mean?
3 A. It's probably either put on by the investigative
4 agency or the U.S. Attorney's Office.
5 Q. And you're aware there were multiple searches done
6 relative to this investigation, true?
7 A. Yes, sir.
8 Q. Were they all done on the same day, do you know?
9 A. I'm aware of many being done on the same day. I'm
10 not sure if every search warrant was done on the same day.
11 Q. But it would be fair to say most of them were?
12 A. Yes.
13 Q. As far as you know?
14 A. Yes.
15 Q. So this North Citrus -- we don't have to expand that
16 I'm just identifying it -- that would indicate the location,
17 generally, the site, is that correct?
18 A. Yes.
19 Q. And that would be the La Habra residence you're
20 talking about?
21 A. Yes, sir.
22 Q. Now if we can pull up Government's 43-F again,
23 please. Blow that up. This has a different designation, does
24 it not?
25 A. Yes, it does.

1 Q. All right. Now you testified that this was found on
2 the table in front of the desk in the La Habra location, true?
3 A. Yes.
4 Q. But FCO is a different search site, correct?
5 A. Yes.
6 Q. So according to this document it came from a
7 different location, not the La Habra address?
8 A. Well, that's what that may indicate, yes.
9 Q. So are your notes in error as far as where this
10 document came from?
11 A. I don't believe so.
12 Q. Well, then how do you explain the different location
13 designation on 43-F?
14 A. Well, I didn't put that tab on there, so I can't
15 explain how that tab got on there.
16 Q. Okay. Well, you're aware that FCO was another
17 location that was searched, correct?
18 A. I'm not aware of that. But I believe if that's what
19 you say it is.
20 Q. Okay. And according to the document, it was found at
21 the FCO site not the NCitrus site, correct?
22 A. That's what this would indicate.
24 THE COURT: All right. Mr. Haydn-Myer, any cross?

4 BY MR. ANDERSON:
5 Q. In a case like this, with multiple search warrants,
6 are sometimes the same document found at multiple locations?
7 A. Yes.
8 Q. With respect to that 43-F, what did you do to verify
9 that that particular document was also found at Charles Head's
10 house?
11 A. Well, I looked through the entire search warrant
12 evidence that we took from the North Citrus location, and I
13 found that information in that box or in that search warrant
14 grouping.
15 Q. Was that also consistent with your notes?
16 A. Yes, it was.
18 THE COURT: Mr. Tedmon, any recross?
20 BY MR. TEDMON:
21 Q. Special Agent Howard, you know it's important when
22 you're doing searches to be accurate, correct?
23 A. Absolutely.
24 Q. And the chain of custody is important as well. You
25 testified to how the documents were transported to Sacramento,

1 correct?
2 A. Yes.
3 Q. And the Government has a strong interest in making
4 sure that when they label things, that's accurate, correct?
6 Q. So as to 43-F, there is an irregularity between what
7 you say you found at a location and what is located on the
8 document itself, true?
9 A. I can tell you that I found that. I can't tell you
10 how that appeared on --
11 Q. I'm asking you is there an irregularity between the
12 two?
13 A. Yes.
14 MR. TEDMON: Thank you. Nothing further.
19 THE COURT: Now is Mr. Howard excused?
25 THE COURT: All right. You may step down, sir. You

1 are excused. Government's next witness.
2 MR. ANDERSON: The United States calls Justin Wiley.
3 (Photograph taken of Mr. Wiley by the Clerk.)
9 THE WITNESS: Name is Justin Wiley, J-u-s-t-i-n.
10 Wiley, W-i-l-e-y.
12 JUSTIN WILEY,
17 BY MR. ANDERSON:
18 Q. Good morning, Mr. Wiley.
19 A. Good morning.
20 Q. Do you know Charles Head?
21 A. I do.
22 Q. Do you know Jeremy Michael Head?
23 A. I do.
24 Q. How do you know Charles Head?
25 A. Through Mike.

1 Q. How did you know Mike?
2 A. Mike was a teammate in college. We ran together at
3 Pittsburgh.
4 Q. When was that, approximately?
5 A. That was '97 to 2001.
6 Q. Did you stay in touch with Mike after you graduated?
7 A. I did.
8 Q. What was your contact with him after that?
9 A. It was -- it was here and there. I mean, it was not
10 much. But here and there. But then he invited me out to visit
11 him in California.
12 Q. Do you remember about when that was?
13 A. That was October of 2003.
14 Q. When you visited in 2003, did you begin considering
15 whether or not you should move to California?
16 A. He had mentioned possibly coming out and working with
17 him and his brother. And he asked me just to come out, check
18 it out, see if I liked California or not. And that was the
19 extent of it.
20 Q. Did you eventually move to California?
21 A. I did.
23 A. January 2004.
24 Q. Why did you move?
25 A. Mike had asked me to, and I decided I was going to

1 work with him and his brother.
2 Q. Where were you going to work with him?
3 A. At his brother's office in Long Beach, Head
4 Financial.
5 Q. When you say brother, are you referring to --
7 Q. Did you end up going to work for Head Financial
8 Services?
9 A. I did.
10 Q. How long did you work there for?
11 A. Start to finish?
12 Q. Yes.
13 A. January 2004 till about October 2004.
14 Q. During the course of working for Head Financial
15 Services, did you participate in opening up any LLCs?
16 A. I opened up one with Jeremy Head, Financial
17 Enterprises.
18 Q. Now was there another friend of yours and Mike who
19 also worked for Head Financial Services?
20 A. Josh Coffman.
21 Q. How did you know Josh?
22 A. Josh was my best friend since grade school. I've
23 known Josh since I was eleven.
24 Q. Did he also go to work for Head Financial Services?
25 A. He did.

1 Q. When was that approximately?
2 A. That was before me. About October, September of 2004
3 -- sorry -- 3 -- 2003.
4 Q. Now, in this case have you plead guilty?
5 A. Yes.
6 Q. And are you testifying pursuant to a cooperation
7 agreement with the Government?
8 A. Yes.
9 Q. When you first began working for Head Financial
10 Services, what type of work were you doing?
11 A. I was starting off as just a loan officer.
12 Q. What sorts of things did you do as a loan officer?
13 A. Just trying to do loans, just standard loans,
14 refinances, and purchases for people who were -- either had a
15 home or wanted to buy a home.
16 Q. Did you know how to do loans before you started
17 working for Head Financial Services?
18 A. No.
19 Q. How did you learn?
20 A. On the fly. Didn't receive any training.
21 Q. Was there anyone who assisted you?
22 A. Not -- I mean, I would go to -- they had a cousin
23 that worked there, Jeff McGee. I would go to him sometimes.
24 But there was one account executive that worked for Pacific
25 Mercantile, who kind of helped me out. I did my first loan

1 through him, so he kind of helped me out and told me what to
2 do.
3 Q. What was Charles' role with Head Financial Services?
4 A. From what I understood he was the owner.
5 Q. And did Jeremy Michael Head have a role with Head
7 A. He worked there. I mean, I don't know if there was
8 -- you know, there wasn't a title, but he was -- he was up
9 there.
10 Q. What do you mean by "up there"?
11 A. Meaning that everyone went to Mike. If Charles
12 wasn't there, everyone went to Mike with questions.
13 Q. Now you said you started out doing refinances and
14 regular mortgages. Did that eventually change?
15 A. Yes.
16 Q. Could you describe how you first encountered a
17 different type of work at Head Financial Services?
18 A. When I first started, Charles wasn't around much at
19 all. And then maybe about two months in he came back to the
20 office. This is still down in Long Beach. And he approached
21 myself, Josh Coffman, and Akemi Botari to see if we wanted to
22 start working with him in a foreclosure program or idea that he
23 had been working on.
24 Q. Did Charles Head tell you anything to encourage you
25 to be interested in the program?

1 A. He said that I can make a lot more money.
2 Q. What was your reaction?
3 A. I mean, sounded good to me, so yes.
4 Q. Did you go on to learn more about the program that
5 Charles Head was proposing?
6 A. Yes.
7 Q. How did you go about learning more about it?
8 A. We went -- he invited us over to his house, Charles.
9 The three of us. Just to go over documents and -- there is a
10 lot of documents and forms that he had. But there wasn't much
11 training involved.
12 Q. When did you go over to Charles Head's house?
13 A. It was on weekends. I was there twice maybe. Maybe
14 three times.
15 Q. And you said you and Mike Head started an LLC. Why
16 did you do that?
17 A. Charles informed us that we needed to all start our
18 own LLCs.
19 Q. So who was supposed to be targeted by this new
20 program?
21 MR. TEDMON: Objection, Your Honor. The word
22 "target" is inappropriate.
24 Q. BY MR. ANDERSON: Did the new program involve
25 soliciting anyone?

1 A. It focused on people that were losing their homes or
2 in that process.
3 Q. Pre-foreclosure?
4 A. Yes.
5 Q. Did Charles Head tell you what to do to encourage
6 business from those people?
7 A. We had postcards that were sent out.
8 Q. Do you know who put up the money for those postcards
9 initially?
10 A. Charles did.
11 Q. What did Charles describe the program to you as?
12 A. Describe -- I'm sorry --
13 Q. What did he say the program was? What were you
14 supposed to be doing?
15 A. I mean, he never -- he never spoke specifically about
16 what it was exactly. It was just kind of, again, learn as you
17 go along.
18 Q. All right. How did you know what to say to
19 homeowners that you spoke with?
20 A. We were given a four-page sheet that he wanted us to
21 say verbatim.
22 MR. ANDERSON: Your Honor, I believe it's already
23 admitted. If we could publish Government's Exhibit 45-E.
25 Q. BY MR. ANDERSON: Do you recognize Government's

1 Exhibit 45-E?
2 A. I do.
4 A. That's what was given to me by Charles.
5 Q. Did there come a time where you did a transaction in
6 this program?
7 A. Yes.
8 Q. Did you do one or more than one transaction?
9 A. I did four total.
10 Q. Could you describe -- well, do you recall who the
11 first transaction was with?
12 A. Yes. It was Karie Joest in Visalia, California.
13 Q. We can take down 45-E. There are binders behind you,
14 and if you will go to the 12 series?
15 A. 1 through 12?
16 Q. Just the Exhibit 12 series. It will be printed on
17 the side. Yes. Just have it ready, and we'll get to that in a
18 minute.
19 A. Okay.
20 Q. How was it that you first came to know about Karie
21 Joest?
22 A. She contacted me through a postcard that she
23 received.
24 Q. And did you speak with her over the phone?
25 A. I did.

1 Q. Did you set up a meeting with her in person?
2 A. Yes.
3 Q. Did you go to the meeting alone or with someone else?
4 A. With Charles and a notary, Cindy Gastelum.
5 Q. Where was the meeting?
6 A. At Karie Joest's house.
7 Q. When you went to Ms. Joest's house, was there a
8 person who did most of the talking?
9 A. Charles did all the talking.
10 Q. Why was that?
12 Q. BY MR. ANDERSON: Let me ask it a little different.
13 Why didn't you do more of the talking?
14 A. Charles wanted to -- he wanted us -- he came along
15 because he wanted us to watch him talk and get a feel for how
16 to handle everybody.
17 Q. During the course of that meeting, did you have an
18 opportunity to hear what was going on?
19 A. I did. But a lot of it's not clear. A lot of the
20 terms and a lot of things he was saying back then I wasn't that
21 familiar with.
22 Q. In the course of learning about this transaction
23 later, did you come to realize that some things that were said
24 to Miss Joest were not true?

2 Q. BY MR. ANDERSON: Just a "yes" or "no."
3 A. Yes.
4 Q. What are some of the things that were told to
5 Ms. Joest during this meeting that were not true?
6 A. She was told that it was going to be set up like a
7 refinance when in fact she was selling her house.
8 Q. Now, did Ms. Joest sign documents related to the
9 transaction?
10 A. Yes.
11 Q. What happened after she signed those documents?
12 A. We left, went back and then, you know, started the
13 process the next day.
14 Q. What was the process the next day?
15 A. We had straw buyers.
16 Q. What's a straw buyer?
17 A. Straw buyer was someone that Charles -- they were
18 people that Charles asked us to recruit or find. Friends,
19 family members that we trusted that we could put the homes in
20 their names.
21 Q. Do you recall what the straw buyer was for the Joest
22 property?
23 A. My brother, Ryan Wiley.
25 Government's Exhibit 12-A be admitted into evidence pursuant to

1 the stipulation.
2 THE COURT: 12-A is already in.
3 Q. BY MR. ANDERSON: Do you know what type of document
4 this is?
5 A. A loan application.
6 Q. Do you know what property it's for?
7 A. It's Karie Joest's property.
8 Q. Is that West Evergreen Drive in Visalia, California?
9 A. Yes.
10 Q. Who is listed as the borrower on this property?
11 A. My brother, Ryan Wiley.
12 Q. Back when this loan application was filled out, where
13 did your brother live?
14 A. In Philadelphia, Pennsylvania.
15 Q. Do you know if he had any intention of moving to
16 California?
17 A. He did not.
18 Q. Was the plan for him to move to West Evergreen Drive
19 in Visalia, California?
20 A. No.
22 A. Because Ryan had a job in Philadelphia and had no
23 plans of coming to California.
24 Q. Let's look at the lower portion of this page. Do you
25 see the employment section?

1 A. Yes.
2 Q. Do you know whether or not Ryan Wiley worked for
3 Shoreline Realty in Long Beach, California?
4 A. He did not.
5 Q. Was he a Team III manager?
6 A. No.
7 Q. Do you know whether or not Charles Head knew that
8 this information about Ryan Wiley wasn't true?
9 A. He knew.
10 Q. How do you know he knew?
11 A. Because he had all this set up. He had a company --
12 this company was set up just to verify employment for straw
13 buyers.
14 Q. Was Mike Head aware of this as well?
15 A. Yes.
17 A. Because he used this as well.
18 Q. Was the fact that Ryan Wiley was your brother and
19 didn't live in California common knowledge in your office?
20 A. Yes.
21 Q. Look at page two of this application. Do you know
22 whether or not this base employment information, income
23 information about your brother was correct?
24 A. I don't know for a fact, no.
25 Q. And then we will go to the last page. Maybe this

1 flows from what you said earlier, but where the box is checked,
2 "yes," "do you intend to occupy this property as your primary
3 residence," is that correct information?
4 A. No. No.
5 Q. How did it come about that your brother's name got on
6 this application and his signature?
7 A. I gave his information to one of the processors, Kou
8 Yang. Just his name, birth date and Social Security number.
9 And then the file was set up by her.
10 Q. And looking at page five of the same exhibit, this
11 Shoreline Realty Company, is that the company that was set up
12 to verify employment?
13 A. Yes, there was Shoreline, and there was also Dynasty.
14 Q. You can take that down.
15 Do you know what happened to the title to this
16 property, Ms. Joest's property?
17 A. It was transferred over to my brother.
18 Q. Do you know what happened to the equity in the
19 property?
20 A. The equity was wired to my account. The LLC,
21 Financial Enterprises.
22 Q. Let's go to Government's Exhibit 12-B2.
24 Exhibit 12-B be admitted into the record as covered by the
25 stipulation.

1 THE COURT: As covered by the stipulation,
2 Government's Exhibit 12-B is admitted into evidence.
3 (Government Exhibit 12-B, 1325 West Evergreen Way,
4 Visalia – Escrow File, admitted into evidence.)
5 Q. BY MR. ANDERSON: Go to page two. Line 1304,
6 Financial Enterprises, seller proceeds, $81,153.22. Was
7 Financial Enterprise -- whose company was Financial
8 Enterprises?
9 A. Myself and Jeremy Head.
10 Q. Let's go to page three. Whose bank information is on
11 page three?
12 A. That's mine. Financial Enterprises. Myself and
13 Jeremy Head again.
14 Q. All right. Once the money was in the Financial
15 Enterprises account, do you recall what happened to it?
16 A. I was asked by Charles to make a cashier's check out
17 to him for half of the amount.
19 Government's Exhibit 12-C be admitted into evidence as bank
20 records pursuant to the stipulation.
21 THE COURT: As covered by the stipulation, 12-C is
22 admitted.
23 (Government Exhibit 12-C, 1325 West Evergreen Way,
24 Visalia – Related Bank Records, admitted into evidence.)
25 Q. BY MR. ANDERSON: Let's go to page three. Do you

1 recognize page three?
2 A. Yes, I do.
3 Q. What is it?
4 A. That's the cashier's check that was made out to
5 Charles after that property closed.
6 Q. And that's for $41,765.82?
7 A. Yes.
8 Q. And if we could go to Government's Exhibit 12-E.
9 Your Honor, I'd ask that it be admitted pursuant to
10 the records stipulation.
11 THE COURT: As covered by the stipulation, 12-E is
12 admitted.
13 (Government Exhibit 12-E, 1325 West Evergreen Way,
14 Visalia – Mailings and Other (Count 2), admitted into
15 evidence.)
16 Q. BY MR. ANDERSON: And is this a deed granting
17 Ms. Joest's property to your brother, Ryan Wiley?
18 A. Yes.
19 Q. After this first transaction, did you continue doing
20 these foreclosure transactions?
21 A. Yes.
22 Q. Did you continue meeting with people?
23 A. Yes.
24 Q. In the course of those meetings, did you make false
25 statements to people regarding what would happen with their

1 homes equity, who would go on title?
2 A. Yes.
3 Q. What did you do with the money that you received from
4 those transactions?
5 A. Held onto it.
6 Q. Did you ever split any of it?
7 A. Yes.
8 Q. Who did you split it with?
9 A. Charles Head.
10 Q. Now while you were doing these transactions, did you
11 have the opportunity to observe other people conducting similar
12 transactions?
13 A. I knew -- I mean, everyone in the office was doing
14 foreclosures at that time. But observe -- I wasn't in on
15 conversations, so, no.
16 Q. Was Joshua Coffman doing foreclosure transactions?
17 A. Yes.
18 Q. Did he receive the same script from Charles Head that
19 you did?
20 A. Yes.
21 Q. Was Jeremy Michael Head doing foreclosure
22 transactions?
23 A. Yes.
24 Q. Was Akemi Botari doing foreclosure transactions?
25 A. Yes.

1 Q. Were there other people you're aware of also doing
2 foreclosure transactions?
3 A. Not initially. It was just us. But then later on he
4 brought most of the office in.
5 Q. Was Omar Sandoval doing any of these transactions?
6 A. Yes.
7 Q. Ely Assadi?
8 A. Yes.
9 Q. Leonard Bernot?
10 A. Yes.
11 Q. Anh Nguyen?
12 A. Yes.
13 Q. When you had questions about how to do these
14 transactions, was there someone you went to?
15 A. I went to Charles initially.
16 Q. Charles --
17 A. Charles Head.
18 Q. Did Charles ever tell you what you should say to
19 homeowners?
20 A. I was still trying to get a grasp of everything early
21 on and was told that -- I was told that it didn't matter what I
22 said. Just get them to sign. Because it didn't matter because
23 they were going to F-up.
24 MR. TEDMON: Objection. Non-responsive. The
25 question is what he was told to say to homeowners. Move to

1 strike.
2 THE COURT: Sustained. Motion granted. The jury
3 shall disregard the last answer.
4 Q. BY MR. ANDERSON: Let me slightly rephrase the
5 question. What did Charles Head tell you?
6 A. Tell them they'll stay on title, tell them that the
7 money goes into a trust. If they ask about equity, you know,
8 just do whatever you can to get them to sign.
9 Q. And how did Charles Head describe the people that
10 were the homeowners you were dealing with?
11 A. He just -- I mean, he just said a lot of them were
12 irresponsible, didn't deserve to have homes in the first place,
13 and it didn't matter because they were, like I said, F-ups.
14 Q. Did you ever talk to Charles Head about the owner
15 occupancy of these homes?
16 A. Yes. He said if you go owner occupied, you get a
17 lower rate. And not to worry about it because everybody is
18 doing it, so it's a very minor thing.
19 Q. Do you know if the other individuals who were doing
20 foreclosure transactions were also sharing a portion of the
21 proceeds with Charles Head?
22 MR. TEDMON: Objection, Your Honor. Vague. He's
23 named several people.
24 THE COURT: Well, overruled. But just answer that
25 question "yes" or "no."

1 THE WITNESS: Yes.
2 Q. BY MR. ANDERSON: Who do you know of that was sharing
3 a portion of their proceeds with Charles Head?
4 A. Akemi Botari and Josh Coffman.
5 Q. How do you know that those two were?
6 A. Because I was -- that was the deal that we had worked
7 out with Charles when the three of us first started.
8 Q. Do you know of a person by the name of Adam Coffman?
9 A. I do.
10 Q. Who is Adam Coffman?
11 A. That's Josh Coffman's brother.
12 Q. How long have you known Adam?
13 A. Because of Josh I've known Adam for years growing up
14 in Philadelphia.
16 entire 33 series of exhibits be admitted into the record
17 pursuant to the stipulation as mortgage documents.
18 THE COURT: 33?
19 MR. ANDERSON: The 33 series, 33-A, B.
20 THE COURT: Those two?
22 THE COURT: As covered by the stipulation 33-A and -B
23 are admitted.
24 (Government Exhibit 33-A, 1517 Georgetown Avenue,
25 Palmdale, CA - Residential Loan Application, admitted into

1 evidence.)
2 (Government Exhibit 33-B, 19410 Tillman Avenue,
3 Carson, CA - Residential Loan Application, admitted into
4 evidence.)
5 Q. BY MR. ANDERSON: Where did Adam Coffman live in
6 2004/2005?
7 A. Philadelphia.
8 Q. Did you know of any plans of his to move to
9 California?
10 A. No.
11 Q. Was it common knowledge around the office that he was
12 the brother of Josh Coffman?
13 A. Yes.
14 MR. ANDERSON: Your Honor, I -- well, we can publish
15 33-A.
17 Q. BY MR. ANDERSON: Did you ever know Josh -- excuse me
18 -- Adam Coffman to live at 16776 Red Wing Lane, Huntington
19 Beach, California?
20 A. No.
21 Q. Are you familiar with that address?
22 A. Yes, I am.
24 A. Because that was a property that was first put in my
25 name when I initially moved out to California.

1 Q. Who put that property into your name?
2 A. Mike Head.
3 Q. So in 2004 or 2005 it would have been incorrect to
4 say that he had rented for two years at that address?
5 A. Yes.
6 Q. And did you know if he intended to move to a house on
7 Georgetown Avenue in Palmdale, California?
8 A. He did not.
9 Q. Let's go to page three of this document. So that's
10 not a house he would occupy as his primary residence?
11 A. No.
12 Q. Let's go to Government's Exhibit 33-B. Do you see
13 the same address listed as his residence on that page?
14 A. Yes.
15 Q. Let's go down lower to the employment information
16 section.
17 Do you know if Adam Coffman worked for Shoreline
18 Realty as a commercial loan officer?
19 A. He did not.
20 Q. Do you know what type of work he was in?
21 A. I do not, no. I'm not sure. I think he was just out
22 of college.
23 Q. And let's go to the third page of this exhibit. Did
24 he ever occupy a house on Tillman Avenue in Carson, California,
25 as his primary residence?

1 A. No.
2 Q. Do you know where Charles Head lived during 2004 and
3 2005?
4 A. In La Habra, California.
6 Government's Exhibits 36-A, B, C all be admitted pursuant to
8 THE COURT: A and B are already in. 36-C, as covered
9 by the stipulation, is admitted.
10 (Government Exhibit 36-C, 265 East Pleasant, Long
11 Beach, CA - Residential Loan Applications, admitted into
12 evidence.)
13 Q. BY MR. ANDERSON: Let's look at the first page of
14 36-A. Do you see borrower's name Charles Head?
15 A. Yes.
16 Q. Do you see the address below it, present address 961
17 North Citrus Drive, La Habra, California?
18 A. Yes.
19 Q. Was that his actual address?
20 A. Yes.
21 Q. Let's go to the employment information. Do you see
22 Dynasty Realty, real estate agent?
23 A. Yes.
24 Q. Do you know if Charles Head had any connection with
25 Dynasty Realty?

1 A. From what I understood, that was one of his
2 companies.
3 Q. So not as a real estate agent but as a person who
4 controlled --
7 Q. BY MR. ANDERSON: Did you understand him to be a real
8 estate agent for that company?
9 A. No. Just a mortgage broker.
10 Q. And then let's look at the top and see the address on
11 this property.
12 Did Charles Head ever live at that address on
13 Windcrest Drive in Fontana, California, that you're aware of?
14 A. No.
15 Q. Go to page three. So based on your interactions with
16 Charles Head, the line saying, "yes," he intended to occupy the
17 property as a primary residence was not accurate?
20 Q. BY MR. ANDERSON: Was that line indicating that
21 Charles Head intended to occupy the property in Fontana as a
22 primary residence accurate?
23 A. No.
24 Q. Let's go to Government's Exhibit 36-B. Do you
25 recognize that address?

1 A. I do not.
2 Q. Did you ever know Charles Head to live on East Poppy
3 Street in Long Beach, California, in 2004 and 2005?
4 A. No.
5 Q. Go to page three. "Do you intend to occupy the
6 property as your primary residence" is checked "yes." Is that
7 an accurate statement based on your knowledge of Charles Head's
8 whereabouts in 2004?
9 A. No.
10 Q. Let's go to Government's Exhibit 36-C. Do you see
11 the address on East Pleasant in Long Beach, California?
12 A. Yes.
13 Q. Did you ever know Charles Head to live at that
14 address in 2004?
15 A. No.
16 Q. Did he ever express an interest to you in moving to
17 that address?
18 A. No.
19 Q. And we will go to page three briefly. Were you aware
20 of an intent on his part to occupy that residence as a primary
21 residence?
22 A. No.
23 Q. Do you know somebody by the name of Sarah Mattson?
24 A. I do.
25 Q. How do you know her?

1 A. I met her through Mike, Mike Head.
2 Q. Are you aware of where she worked in 2004, 2005?
3 A. My dates -- I'm kind of confused as to the dates, but
4 at some point she wound up working for Mike.
6 THE COURT: Mr. Tedmon, cross?
8 CROSS-EXAMINATION
9 BY MR. TEDMON:
10 Q. Mr. Wiley, good morning.
11 A. How are you?
12 Q. Doing all right. Thanks. You are testifying
13 consistent with a cooperation deal, correct?
14 A. Yes.
15 Q. Is that "yes"?
16 A. Yes.
17 Q. Please speak into the microphone, okay, so we can all
18 hear you. You pled guilty to conspiracy to commit mail fraud,
19 correct?
20 A. Yes.
21 Q. And you agreed to cooperate with the Government,
22 true?
23 A. Yes.
24 Q. Your statutory maximum sentence could be five years,
25 you know that, don't you?

1 A. Yes.
2 Q. And your plea agreement states that you can get up to
3 50 percent off of your sentence, correct?
4 A. Yes.
5 Q. And you're certainly hoping that happens, don't you?
6 A. Yes.
7 Q. In fact, your attorney, Mr. Blackmon, is here this
8 morning; he's seated in the audience section, correct?
9 A. Yes.
10 Q. Now based on how you do today will determine whether
11 the Government makes a motion to reduce your sentence, you know
12 that, don't you?
13 A. Yes.
14 Q. And then it's up to the judge to decide whether you
15 get a reduction or not, correct?
16 A. Yes.
17 Q. All right. But it depends on how you perform today,
18 true?
19 A. Yes.
20 Q. Now you testified that you came out here -- well,
21 strike that. When did you come out to California again?
22 A. January 2004.
23 Q. And that was from Pittsburgh?
24 A. No. That was from New York.
25 Q. New York. Where in New York?

1 A. Manhattan.
2 Q. Were you working at the time?
3 A. Yes.
4 Q. Where were you working?
5 A. Doing some modeling.
6 Q. Where?
7 A. I was doing some modeling.
8 Q. Modeling?
9 A. Yes. In New York.
10 Q. How long were you doing that?
11 A. Not long. About nine months.
12 Q. All right.
13 A. About five months in Miami, five months in New York.
14 Q. Was that going successfully for you?
15 A. Yeah. It was, but lost interest fast.
16 Q. All right. So as I understand it, you -- Mike Head
17 and you spoke about coming out to California?
18 A. Yes.
19 Q. And you came out in January, approximately January of
20 2004?
21 A. Yes.
22 Q. Now when you first started, I think you testified
23 that you were doing loans?
24 A. Yes.
25 Q. Can you describe for the jury what your job was

1 regarding loans, what did you do?
2 A. I fill out 1003s, either cold call people who were
3 listed who wanted purchases or refinances, or if they called
4 in, take the calls. But I really didn't deal with too many
5 people.
6 Q. You didn't deal with too many people?
7 A. I only did one refinance and one purchase.
8 Q. And that was over what period of time?
9 A. Two, three months.
10 Q. All right. Now during this period of time I think
11 you've testified Mr. Head was hardly there?
12 A. Yes.
13 Q. And in fact, Kou Yang who was the senior loan
14 officer, she was running the office wasn't she?
15 A. Yes.
16 Q. And if people had questions, they would go to Kou,
17 correct?
18 A. Correct. But I would see Kou actually go to Mike at
19 times.
20 Q. Well, the go-to person was Kou in the first instance,
21 that's for sure?
22 A. For sure? I wouldn't say "for sure."
23 Q. Well, Charles Head wasn't there --
24 A. No.
25 Q. -- almost at all, was he, during this period of time

1 we're talking about?
2 A. Yes.
3 Q. All right. And Kou was the senior loan processor,
4 true?
5 A. True.
6 Q. She was responsible and in fact did the loan
7 processing for Head Financial Services, true?
8 A. True.
9 Q. All right. She also signed Uniform Residential Loan
10 Applications, correct?
11 A. True.
12 Q. In fact, she signed Charles Head's name on Uniform
13 Residential Loan Applications, you know that, don't you?
14 A. Yes, I do.
15 Q. And she was running the office, that's fair to say,
16 correct?
17 A. If you want to say that.
18 Q. Well, I want to know what you want to say. Did she
19 run the office or not?
20 A. I wouldn't say -- no, I wouldn't say she ran the
21 office. She definitely checked in with Charles. And if she
22 had other questions, I've seen her go to Mike as well.
23 Q. Okay. Well, you said Charles wasn't there,
24 Mr. Wiley, correct?
25 A. Yes.

1 Q. So the person that would be there to go talk to about
2 loans was Ms. Yang, true; that was the person that was
3 physically there?
4 A. Yes.
5 Q. And that's what people did, correct?
6 A. Yes.
7 Q. All right. Now you testified regarding this
8 transaction with Ms. Joest, do you recall that?
9 A. Yes.
10 Q. Where did you travel to, again?
11 A. Visalia, California.
12 Q. And who went with you?
13 A. Charles and Cindy Gastelum.
14 Q. Who is Cindy Gastelum?
16 Q. All right. Did you go by car or did you fly?
17 A. Car.
18 Q. How long did it take you to get there?
19 A. I don't remember to be honest. Two, three,
20 four hours.
21 Q. Was it a one-day trip? Two-day trip? How long were
22 you there?
23 A. One-day trip.
24 Q. Drove up, met, came back?
25 A. Yes.

1 Q. So there were documents that were taken along with
2 you to the trip, correct?
3 A. Yes.
4 Q. And those documents related to what are called Equity
5 Purchase Agreements, true?
6 A. Yes.
8 A. Yes.
9 MR. TEDMON: Your Honor, if it isn't already
10 admitted, I would move pursuant to the stipulation to have
11 Exhibits CH-A1 through CH-A6 admitted into evidence.
12 THE COURT: All right. Those are not yet admitted.
13 CH-A1 and CH-A6 as covered by the stipulation are admitted.
14 THE CLERK: Is it one through six or one and six?
15 MR. TEDMON: It's -A1 through -6.
16 THE COURT: A1 through -6. With that clarification,
17 that series is admitted.
18 (Defendant's Exhibits CH-A1, CH-A2, CH-A3, CH-A5 and
19 CH-A6, (See index for descriptions), admitted into evidence.)
20 Q. BY MR. TEDMON: If can he with have CH-A1 put on the
21 screen, please.
22 Mr. Wiley, this is an Equity Purchase Agreement,
23 correct?
24 A. Yes.
25 Q. And if we could have the top section expanded,

1 please.
2 It indicates on April 13th there was an agreement
3 between Karie Joest and Ryan Wiley, do you see that?
4 A. Yes.
5 Q. Now Ryan Wiley was your brother?
6 A. Yes.
7 Q. Ryan Wiley wasn't there at the meeting?
8 A. Correct.
9 Q. So Ryan Wiley was the purchaser of the home according
10 to this contract, correct?
11 A. Yes.
12 Q. Now the property contemplated in this agreement is
13 1325 West Evergreen Court, Visalia, correct?
14 A. Yes.
15 Q. And that's the location of Ms. Joest's home, true?
16 A. True.
17 Q. True?
18 A. True.
19 Q. And that's where you met her, correct?
20 A. Correct.
21 Q. Now when you met with her, you reviewed this contract
22 with her, correct?
23 A. I did not, no.
24 Q. Well, she reviewed it, correct?
25 A. Yes.

1 Q. All right. And it says here, "in consideration of
2 the covenants and agreements hereinafter contained, seller
3 agrees to sell and convey to buyer, and buyer agrees to
4 purchase from seller the real property," and then it's located
5 at Evergreen, correct?
6 A. Yes.
7 Q. And if we can have the whole document, please. And
8 then in the middle of this first page of the Equity Purchase
9 Agreement there is a consideration section, do you see that
10 right there?
11 A. Yes.
12 Q. And Ms. Joest is to be given consideration in the
13 amount of $3,000, correct?
14 A. Yes.
15 Q. And that was explained to her, wasn't it?
16 A. Not clearly.
17 Q. As far as you were concerned it wasn't clearly
18 explained?
19 A. No. Because she didn't -- she didn't seem that --
20 that savvy, and she didn't ask any questions. It was kind of
21 just Charles just kind of reeling off things, and her just
22 saying, yes, yes, okay, okay, sign here, okay. I mean, she
23 really didn't have time to really go through everything.
24 Q. All right. Well, how long were you there?
25 A. Forty-five minutes, if that.

1 Q. Okay. Was there any insistence -- well, strike that.
2 You know that Ms. Joest had the opportunity to review
3 this later if she chose to, you know that, that's what the
4 contract says, correct?
5 A. That's what it --
6 Q. That's what it said?
7 A. She should have had five days, but she didn't have
8 five days.
9 Q. We will get to that in a minute. Okay. Let's go to
10 the second page, please. Let's go to the bottom. That's Karie
11 Joest's signature?
12 A. Yes.
13 Q. Date 4-13-04, correct?
14 A. Yes.
15 Q. That's the date you were there, true?
16 A. Yes.
17 Q. Now it says she has a right to cancel through April
18 19th, correct?
19 A. Yes.
20 Q. So she had between April 19th -- I'm sorry -- April
21 13th and April 19th to cancel this deal under the contract,
22 true?
23 A. True. But that date's wrong.
24 MR. TEDMON: I didn't ask a question. I move to
25 strike.

3 Q. BY MR. TEDMON: Just answer the question, Mr. Wiley.
4 Now if we can go to CH-A2, page one, please. This is
5 an Option Agreement, do you see that?
6 A. Yes.
7 Q. Same date, April 13th, 2004, is that right?
8 A. Yes.
9 Q. And the optionee is Karie Joest, correct?
10 A. Yes.
11 Q. All right. And if we can go to page three of that
12 document. Page three. Thank you.
13 That's Karie Joest's signature, correct?
14 A. Yes.
15 Q. Go to CH-A3, please. Okay. This is a document
16 entitled Residential Lease After Sale, correct?
17 A. Yes.
18 Q. And the seller/tenant is Karie Joest, correct?
19 A. Yes.
20 Q. Which is consistent with the Equity Purchase
21 Agreement in that Ms. Joest is selling her home? It's
22 consistent, correct?
23 A. Yes.
24 Q. All right. And now because she sold her home, she's
25 the tenant, that's what the document says, correct?

1 A. Yes.
2 Q. And then item A says, "landlord," who is Ryan Wiley,
3 "rents to tenant and tenant rents from landlord the real
4 property improvements described 1325 West Evergreen, Visalia,"
5 correct?
6 A. Yes.
7 Q. So this document reflects Ms. Joest's selling of her
8 property and now becoming a tenant, true?
9 A. Yes.
10 Q. And if we can go to page four, please. Thank you.
11 Paragraph 38 says, "other terms and conditions and
12 supplements," do you see that?
13 A. Yes.
14 Q. And then it says, "buyer has a one-year lease option,
15 seller agrees to credit buyer lease payment as down payment,"
16 do you see that?
17 A. Yes.
18 Q. So that's an additional term of the contract,
19 correct?
20 A. Yes.
21 Q. And if we can go to page four, please -- I'm sorry --
22 page five.
23 And then it says, "tenant/seller," and that's
24 Ms. Joest's signature, correct?
25 A. Yes.

1 Q. Go to CH-A5, please. Now this is a Notice of
2 Cancellation, correct?
3 A. Yes.
4 Q. And it says -- I'm sorry -- that upper section,
5 please.
6 The seller signed the Equity Purchase Agreement on
7 April 13, 2004, correct?
8 A. Yes.
9 Q. And that's the date she signed the Equity Purchase
10 Agreement as reflected in CH-A1, correct?
11 A. Yes.
12 Q. And then it says, "you may cancel for the sale of
13 your house without any penalty or obligation at any time before
14 midnight on April 19th, 2004," correct?
15 A. Correct.
16 Q. And then it gives her instructions on how to do so if
17 she chose to cancel, correct?
18 A. Correct.
19 Q. Now you know she didn't cancel this deal, did she?
20 A. She did not.
21 Q. Okay. And if we can have the full document, please.
22 And that's her signature, correct?
23 A. Yes.
24 Q. If we can go to CH-A6, please.
25 A. But she also signed a grant deed that day.

1 THE COURT: Wait for the question.
2 MR. TEDMON: Mr. Wiley, I know you're trying hard.
3 Just wait for the question.
4 Q. BY MR. TEDMON: Affidavit of Deed is CH-A6. Do you
5 see that?
6 A. Yes.
7 Q. And if we can expand this section here. Item E says,
8 "in execution and delivery of said deed, I was not acting under
9 any misapprehension as to the effect thereof and acted freely
10 and voluntarily, and was not acting under coercion or duress,"
11 correct?
12 A. Yes.
13 Q. And those are her initials, true?
14 A. True.
15 Q. May I have the full document, please. And that's her
16 signature on the Affidavit of Deed, correct?
17 A. Correct.
18 Q. She signed those documents, and you went back to
19 Southern California, correct?
20 A. Yes.
21 Q. And the documents clearly express it's the sale of a
22 home, do they not?
23 A. Yes.
24 Q. Now Mr. Wiley, you haven't been sentenced yet, have
25 you?

1 A. No.
2 Q. When is your sentencing?
3 A. Not exactly sure. I think maybe some time in July.
4 Q. Right. It keeps getting continued until after this
5 trial is done, correct?
6 A. Yes.
7 Q. And you won't be sentenced until this trial is over?
8 A. Yes.
9 Q. And your sentence it contingent on how you do today
10 in court, you know that, don't you?
11 A. Yes.
12 Q. For the Government?
13 A. Yes.
15 THE CLERK: Mr. Tedmon, you admitted CH-A4, but on
16 your exhibit list it says reserved. It doesn't identify a
17 document.
18 MR. TEDMON: Let me clarify that, Your Honor.
19 THE COURT: Mr. Haydn-Myer, will you have cross?
21 THE COURT: We're at 11:45, so let's take our break
22 before we move to cross. But let's clarify CH-A4 first.
23 MR. TEDMON: Yeah, Your Honor, just for the jury and
24 everyone's clarification, the exhibits within the A section are
25 CH-A1, CH-A2, CH-A3. And Ms. Streeter is right. A4 was

1 reserved, so there is no document to move in. So then it would
2 go to CH-A5 and then finally CH-A6.
3 THE COURT: That clarifies the record as to the CH-A
4 series. Let's take our second break of the morning. That will
5 be another 15-minute break. So until noon. During this break,
6 please remember my admonitions not to discuss the case, do any
7 research, think about its conclusion. If anyone attempts to
8 contact you, let me know. Have a good break. See you in
9 15 minutes.
10 (Jury out.)
11 THE COURT: Now you may step down. Please be back in
12 your seat at 12:00.
13 All right. Anything to discuss? Mr. Anderson?
14 Mr. Tedmon.
17 THE COURT: All right. You're up next.
18 Fifteen minutes.
19 (Break taken.)
20 THE COURT: Mr. Wiley can come forward. Are we ready
21 to go?
22 MR. MORRIS: Your Honor, one item I wanted to remind
23 the Court, and I've spoken with Mr. Haydn-Myer and Mr. Tedmon.
24 We expect to call Sarah Mattson shortly, and there
25 are aspects of her testimony that the Court ruled on a motion

1 in limine to prevent. And toward the end of the direct, I will
2 be a bit more directive and leading than would otherwise be
3 normal just to make sure we don't inadvertently go down --
4 THE COURT: And the defense has agreed to some
5 leading to comply with the Court's order on the motion in
6 limine?
7 MR. TEDMON: Yes.
9 THE COURT: All right. Thank you. Let's bring the
10 jury back in.
11 (Jury in.)
12 THE COURT: All right. You may be seated.
13 THE WITNESS: One juror is indicating she needs a new
14 pen. That's Ms. King. Anyone else need a new pen?
16 THE COURT: With that, now, Mr. Haydn-Myer, your
17 cross.
20 Q. Hello, Mr. Wiley.
21 A. How are you?
22 Q. Good. Thank you. May I have Government's
23 Exhibit 33-A, please. Do you recognize that document that was
24 shown to you earlier, Mr. Wiley?
25 A. Yes.

1 Q. And that was, I believe, a property that you spoke
2 about that involved Mike Head, is that correct?
3 A. Yes.
4 Q. And do you remember the address?
5 A. No. I mean, all the properties that they were
6 showing to me previously -- I mean, I wasn't familiar with
7 them.
8 Q. Did you actually see the address on this piece of
9 property?
10 A. I'm looking at it right now, yes. This one.
11 Q. What's the address?
12 A. Georgetown. Looks like 1517 Georgetown Avenue,
13 Palmdale.
14 Q. Are you familiar with that address at all, sir?
15 A. No.
16 Q. Thank you. You can take it down.
17 Was there ever a piece of property that you and
18 Mr. Michael Head lived at?
19 A. Yes. That was in Huntington Beach, the Redwood
20 property.
21 Q. What was the address on that one?
22 A. 16667 Redwood.
23 Q. How long did you live there?
24 A. About nine months.
25 Q. And who did you live there with?

1 A. Mike Head, myself, and Josh Coffman.
2 Q. Was your name ever put on title to that property,
3 sir?
4 A. Yes.
5 Q. And was it put on title to that property by Mike
6 Head?
7 A. Yes.
8 Q. And was it later sold?
9 A. Yes.
10 Q. Did you receive any equity from the transaction?
11 A. No.
12 Q. Did you receive any payments from the transaction?
13 A. Mike gave me $5,000 originally when I first moved out
14 to L.A.
15 Q. But in regards to this specific piece of property,
16 the one that you lived at with Mike Head and I believe
17 Mr. Coffman --
18 A. Uh-huh.
19 Q. -- did you receive any money for the sale of that
20 property?
21 A. No.
22 Q. What was the $5,000 for?
23 A. For allowing me to put that property in my name.
24 Q. Was there any other reason other than that?
25 A. No.

1 Q. In regards to Financial Enterprises, how many
2 accounts did they have for checking?
3 A. There were two. One for myself and one for Mike.
4 Q. Were you the only signer on the one account for
5 yourself?
6 A. Yes.
7 Q. Was there a separate signing account for Michael
8 Head?
9 A. Yes.
10 Q. Did you receive the checks at a separate address or
11 was it the same address?
12 A. I'm not clear. Can you tell me your question again.
13 I'm not clear.
14 Q. That's fine. The address that occurred -- let's back
15 up a little bit.
16 A. Uh-huh.
17 Q. Did you actually see the addresses for the business
18 on both signature accounts for Financial Enterprises?
19 A. Which address? I'm not clear. Which address are you
20 talking about?
21 Q. On the one Financial Enterprises account that you had
22 that you were the sole signatory on --
23 A. Uh-huh.
24 Q. -- do you remember the address on that account?
25 A. Do I remember it? No.

1 Q. Do you have any idea how many checks you drafted out
2 of that account?
3 A. No. I'm not going to guess, no.
4 MR. HAYDN-MYER: Can I check with my client real
5 quick, Your Honor?
7 Q. BY MR. HAYDN-MYER: I believe you were asked earlier
8 about specific property transactions and monies that went to
9 Financial Enterprises, is that correct, during your direct?
10 A. Yes.
11 Q. When you were referring to your account and your
12 Financial Enterprises, those monies went to you and then were
13 later distributed, is that correct?
14 A. Yes.
15 Q. It's not that the monies were going to Mike Head
16 under his separate account, that was your account as you
17 testified to earlier, correct?
18 A. Correct.
20 Honor.
21 THE COURT: All right. Any redirect?
24 BY MR. ANDERSON:
25 Q. I guess the follow-up is, did Mike Head have an

1 account that he ran his foreclosure property transactions
2 through?
3 A. Yes.
4 Q. And then Mr. Tedmon showed you CH-A1, if we could
5 pull that up.
6 It's an Equity Purchase Agreement. And then you were
7 starting to answer something about having less time to cancel
8 than was written on this document. What do you mean by less
9 time to cancel?
10 A. It was just I know what date's on there, but I'm not
11 sure if the date was put on correctly. She should have had
12 five days to decide if she wanted to go through with it or not.
13 But that same meeting she signed a grant deed, which if she had
14 five days to think -- like that shouldn't have happened that
15 day.
16 MR. TEDMON: Objection.
18 MR. TEDMON: The objection is he's testifying to
19 stuff that Ms. Joest may have done. If it's his personal
20 knowledge, I guess it's okay. It seems a little speculative to
21 me.
22 THE COURT: Overruled. You'll have a chance to
23 recross.
24 Q. BY MR. ANDERSON: So the answer to that question, was
25 that based on what you saw and observed when the documents were

1 signed?
2 A. Yes. Yes.
3 Q. And do the dates appear to match up on these
4 documents the way they should?
5 MR. TEDMON: Objection. Vague. There's a multitude
6 of documents.
8 Q. BY MR. ANDERSON: On the deed and the Equity Purchase
9 Agreement?
10 A. Some of the dates don't -- some of the dates don't
11 match up.
12 Q. Do you know why that is?
13 A. Because if she had five days to think about it, she
14 shouldn't have signed the grant deed --
15 MR. TEDMON: Objection.
16 THE WITNESS: -- the same day that we met with her.
17 MR. TEDMON: It's speculation as to what she should
18 have or could have done.
19 THE COURT: Sustained as to should. The jury shall
20 disregard the last half of that answer.
21 Q. BY MR. ANDERSON: Let's walk through it.
22 What's the date that you are referring to on the
23 Equity Purchase Agreement? Do you need to look at the next
24 page or is the first page sufficient?
25 A. That's fine.

1 Q. Okay. Was that the date that you were having an
2 issue with or was it a different date?
3 A. It was the date -- the 19th. I saw something on
4 there that said April 19th.
5 Q. All right. Let's go to CH-A5. Is this the document
6 you mean?
7 A. Yes.
8 Q. Notice of Cancellation?
9 A. Yes.
10 Q. And then if we go to CH-A6, Affidavit of Deed, in
11 relationship to CH-A5 what is the date?
12 A. The 20th it reads.
13 Q. And the other was the 19th, is that right?
14 A. Yes.
15 Q. So that's not five days, is that what you mean?
18 Q. BY MR. ANDERSON: What do you mean? What's the
19 issue?
20 A. The issue is just on the 13th -- so if we were
21 signing documents that day, so the day that we met was April
22 13th --
23 Q. Uh-huh.
24 A. -- you have to give them five days -- from what I
25 understood five days to think about it, then you can go back

1 and sign a grant deed and sign paperworks that need to be
2 notarized.
3 If we met that day -- the first day that we met on
4 the 13th, the grant deed shouldn't have been signed. So that
5 date -- if we met on the 13th, that date should have been
6 April 8th.
7 Q. Okay.
8 A. So the dates are off.
9 Q. Okay. And did you ever witness any signing of
10 documents that appeared improper to you?
12 Q. BY MR. ANDERSON: All right. Did you ever witness
13 anyone write someone else's signature on documents?
14 A. I know Kou signed for Charles on certain things.
15 Q. Did you ever see anything with Cindy Gastelum?
16 A. Can you be more specific, please?
17 Q. Have you ever seen documents re-signed in someone
18 else's name?
19 A. Re-signed? In regards to Cindy?
20 Q. In regards to anybody with Head Financial Services.
21 A. No. Re-sign, I mean, I know I signed for my brother.
22 Josh signed for his brother. But, no.
23 Q. Okay. We can take that down.
24 So was it a common thing at Head Financial Services
25 for people to sign documents in other people's names?

1 A. Yes.
3 THE COURT: Mr. Tedmon, further cross?
5 BY MR. TEDMON:
6 Q. Mr. Wiley, Mr. Anderson just asked you if it was
7 common, quote, unquote, for people to sign documents for
8 others. Do you recall that question?
9 A. Yes.
10 Q. Okay. Are you familiar with a Power of Attorney?
11 A. Yes.
12 Q. There were Power of Attorneys given as between
13 certain people in the Head Financial Services office, correct?
14 A. Yes.
15 Q. So that would give them the authority to sign the
16 documents for another person, true?
17 A. Yes.
18 Q. Now let's go to this whole issue of the dates, and
19 I'm not going to spend an inordinate amount of time on this,
20 but I want to clarify something. If we could have CH-A5 put on
22 Okay. This is the Notice of Cancellation, correct?
23 A. Yes.
24 Q. Regarding the Karie Joest matter?
25 A. Yes.

1 Q. Now the document says that the Equity Purchase
2 Agreement was signed by Ms. Joest on April 13th, 2004?
3 A. Yes.
4 Q. Okay. And then we can agree that the document says
5 that she has until April 19th, 2004 to cancel, correct?
6 A. Yes.
7 Q. All right. And that's her signature, which you've
8 testified to earlier?
9 A. Yes.
10 Q. You saw her sign the document, true?
11 A. Yes. True.
12 Q. So let's go to CH-A6.
13 Okay. Now this is an Affidavit of Deed, correct?
14 A. Yes.
15 Q. It's not a grant deed, is it?
16 A. No.
17 Q. Okay. Nobody's shown you a grant deed in all of your
18 testimony, correct?
19 A. Correct.
20 MR. ANDERSON: Objection. Misstates the evidence.
22 Q. BY MR. TEDMON: There's not an exhibit that says
23 "Grant Deed" that anybody has shown you today?
24 A. No.
25 Q. So this says -- and if we can just expand this.

1 This says, "in execution of delivery of said deed."
2 Now the "said deed" is the Affidavit of Deed that we're dealing
3 with here, correct?
4 A. Correct.
5 Q. Not a grant deed, correct?
6 A. It wasn't shown to me, but she did sign one.
7 Q. Well, I'm talking about this document here?
8 A. Yes.
9 Q. Okay. So in delivery of this document she wasn't
10 acting under misapprehension, duress, coercion, et cetera?
11 A. No.
12 Q. That's not correct?
13 A. She was not, no.
14 Q. Okay. Let me ask the question. She initialed this,
15 correct?
16 A. Yes.
17 Q. She's confirming that in execution of said deed, the
18 Affidavit of Deed, this document, that she was not acting under
19 any misapprehension, she acted freely and voluntarily and was
20 not acting under coercion or duress, correct?
21 A. Yes.
22 Q. And if we can have the full document. That's her
23 signature there, true?
24 A. True.
25 Q. Now you had no other contact --

1 Let me ask you this, did you have any other contact
2 with Ms. Joest after you left on April 13th?
3 A. No.
4 Q. And so under the terms of this agreement, she had
5 between April 19th of 2004 (sic) and April 19th of 2004 to
6 cancel, correct?
7 A. Yes.
11 THE COURT: Anything further, Mr. Anderson?
14 BY MR. ANDERSON:
15 Q. So this is April 20th, right, the Affidavit of Deed?
16 A. Yes.
17 Q. Okay. Let's go ahead and show you an actual deed.
18 Let's look at Government's Exhibit 12-E. What's the date on
19 that?
20 A. 20th. Same day we were there.
21 Q. So were you there on both the 13th and the 20th?
22 A. We only made one trip up.
25 MR. TEDMON: Yes, Your Honor leave that exhibit up,

1 please.
3 BY MR. TEDMON:
4 Q. Okay. Let's expand this section here.
5 Okay. Now this is notarized by Cindy Gastelum,
6 right?
7 A. Yes.
8 Q. And the date is April 20th, that would have been the
9 day after, correct?
10 A. Yes.
11 Q. All right. The day after you -- well, strike that.
12 You met with her on April 13th, correct?
13 A. No.
14 Q. Which date did you meet with her on?
15 A. 20th. We only made one trip.
16 Q. And which date did you meet her on?
17 A. The 20th.
18 Q. So that's the same date as this document, right?
19 A. Yes. So the dates --
21 THE COURT: Nothing further, Mr. Tedmon?
22 MR. TEDMON: No.

1 MR. ANDERSON: I'm sorry, Your Honor. Just one
2 moment. No, Your Honor, that's fine.
3 THE COURT: All right. Mr. Wiley is excused?
9 THE COURT: You are excused. You may step down. The
11 MR. MORRIS: The Government calls Sarah Mattson.
12 (Photograph taken of Ms. Mattson by the Clerk.)
18 THE WITNESS: Sarah Mattson, S-a-r-a-h,
19 M-a-t-t-s-o-n.
21 SARAH MATTSON,

1 BY MR. MORRIS:
2 Q. Ms. Mattson, I would like you to direct your
3 attention back to 2003, the summer of 2003.
4 Did you meet somebody named Jeremy Michael Head in
5 that time period?
6 A. Yes.
7 Q. How did you come to meet Mr. Head?
8 A. A friend introduced us.
9 Q. In the summer of 2003, before you met Mr. Head, were
10 you employed?
11 A. I had a teaching job upcoming for the fall.
12 Q. And then in the summer of 2003 did you work for
13 Mr. Head?
14 A. Yes.
15 Q. Okay. What were your general job duties? Again,
16 confining to summer of 2003, what were your job duties for
17 Mr. Head?
18 A. Mostly kind of clerical. Assistant work. Making
19 phone calls, filing papers, basic things like that.
20 Q. Were you working full-time or part-time?
21 A. It was part-time, I would say.
22 Q. Do you recall approximately how much you were making
23 working for him?
24 A. I don't. It might have been a few hundred dollars a
25 week.

1 Q. Do you recall where you were working that summer?
2 A. The office that was located in Long Beach.
3 Q. And was that the office -- was there a company name
4 that you were working for?
5 A. Head Financial. I wasn't working for Head Financial,
6 but that's where the office was located.
7 Q. Do you recall the name of Michael Head's company that
8 you were working for?
9 A. Financial Enterprises.
10 Q. And what type of work was Financial Enterprises doing
11 while you worked there in the summer of 2003?
12 A. Loan, refinances, loan purchases.
13 Q. So what types of things was it that the office --
14 what within the loan industry was the office doing?
15 A. At that time, loan purchases and refinances.
16 Q. Did you continue working for Mike Head after the
17 summer of 2003?
18 A. Off and on part-time when he needed some extra help,
19 yes.
20 Q. And you had previously said you were starting a new
21 job in that time period, so that was in addition to your other
22 job?
23 A. Yes.
24 Q. At some point did you have a personal relationship
25 with Mr. Head?

1 A. Yes.
2 Q. In very basic terms, general terms, can you describe
3 the relationship you had with Jeremy Michael Head?
4 A. We dated off and on for several years.
5 Q. Okay. Now, if I could draw your attention forward
6 then into this -- after the summer of 2003 and into the 2004
7 timeframe, did your job duties change with respect to Financial
8 Enterprises?
9 A. As far as when I started working there full-time
10 again or during the part-time?
11 Q. Either, I guess.
12 At some point in this process did your job duties
13 change from what you've previously described to new job duties?
14 A. Yes.
15 Q. When did that happen?
16 A. When I started working there full-time, summer of
17 2004.
18 Q. And what were your new job duties that arose then at
19 this second or this later period of employment?
20 A. A variety of things. I continued doing a lot of
21 clerical-type work, filing, making phone calls. I also did
22 things as far as personal things such as making doctor's
23 appointments. I even babysat, things like that. And then I
24 also -- I was a notary, and I did notary work as well.
25 Q. Were you given an opportunity to get involved in any

1 -- personally involved in any purchases or transactions
2 involving houses?
3 A. Yes.
4 Q. What was your understanding of the role that you were
5 going to play in these transactions?
6 A. I would be used as an investor. My credit would be
7 used to purchase the home. I would be on title for one year,
8 and then that would be it as far as my role was concerned.
9 Q. Did you have any expectations about how you would be
10 paid for this new role that you were doing?
11 A. As far as an investor or --
12 Q. Yeah. What you just described, the investor part.
13 A. Investor? Typically, I was told I would get 2,500 to
14 $5,000.
15 Q. And did you have any obligations to earn that money
16 other than what you've previously testified about with respect
17 to this investor role?
18 A. No.
19 Q. Okay. And then, briefly, you mentioned notary as
20 being a new job duty at this time period.
21 Can you describe what your duties were as a notary
22 with respect to Financial Enterprises?
23 A. On a couple of occasions I would go out with some
24 documents and have the homeowner sign them, and then I would
25 return them to the office.

1 Q. Was Financial Enterprises still working out of the
2 Long Beach location in this time period, this spring of 2004
3 time period?
4 A. No. The office was in Costa Mesa.
5 Q. Was the office in Costa Mesa -- was it only Financial
6 Enterprises that were in those offices or were there other
7 organizations there?
8 A. There were other organizations.
9 Q. Do you recall any of the other businesses that were
10 in that location?
11 A. The main one was Head Financial. And other people
12 had their own businesses, but I don't know the names.
13 Q. In your duties answering phones, filing, and in your
14 general office clerical duties that you previously testified
15 about, did you have -- were you aware of any other employees of
17 A. Not at that time, no.
18 Q. Confining myself to that summer of 2003 into --
19 yes -- spring to summer of 2004?
20 A. No.
21 Q. And is that true both of the Long Beach location and
22 the Costa Mesa location?
23 A. Yes.
24 Q. In that time period of 2003 to summer of 2004, were
25 you aware of any branch locations for Financial Enterprises

1 other than the two addresses you've already talked about?
2 A. No.
3 MR. MORRIS: Your Honor, I'm going to move in the
4 30-A through E series. These are covered by the stipulation.
5 THE COURT: As covered by the stipulation, 30-A
6 through -E are admitted.
7 (Government Exhibits 30-A, 30-B, 30-C, 30-D and 30-E,
8 (see index for description, admitted into evidence.)
9 Q. BY MR. MORRIS: I would like to publish Exhibit 30-C,
10 as in Charlie, please.
11 Ms. Mattson, do you generally recognize the type of
12 document that's on the screen in front of you?
13 A. Yes.
14 Q. What type of document is that?
15 A. It's a loan application.
16 Q. Were these among the type of documents that you would
17 see in the course of your employment at Financial Enterprises?
18 A. Yes.
19 Q. If we could go to the next page, please. Sorry, one
20 more. Does that appear to be your signature on this document?
21 A. Yes.
22 Q. And the date April 15th, 2004?
23 A. Yes.
24 Q. And if we could go back to the first page now.
25 So I'm going to ask you to focus your attention now

1 on the April 2004 timeframe, if you could?
2 A. Okay.
3 Q. Do you recall any of the circumstances that surround
4 the events that led up to your signing this document on
5 April 15th, 2004?
6 A. Not very much, no.
7 Q. Okay. Are you familiar with the address 1321 Bankers
8 Drive, Carson, California?
9 A. I've seen that before, yes.
10 Q. If you could zoom in. On April 15th, 2004 was it
11 your intention to occupy 1321 Bankers Drive in Carson,
12 California, as your primary residence?
13 A. No.
14 Q. Where were you living on April 15, 2004?
15 A. Brea, California.
16 Q. Were you planning on staying in Brea at that point?
17 A. Yes.
18 Q. On April 15th, 2004 were you employed by Financial
19 Enterprises?
20 A. Not full-time, no.
21 Q. About how much time per week were you spending
22 employed by Financial Enterprises?
23 A. Very minimal. Maybe an hour or two, possibly, if
24 that.
25 Q. Per week?

1 A. Yes.
2 Q. On April 15th, 2004 had you been employed by
3 Financial Enterprises for two years?
4 A. No.
5 Q. In April of 2004 were you a loan consultant?
6 A. No.
7 Q. Had you been in the financial or mortgage industry
8 for five years in April 2004?
9 A. No.
10 Q. How old were you in April 2004?
11 A. Twenty-three.
12 Q. Other than your teaching job and this job for
13 Financial Enterprises, had you had any other significant
14 employment prior to April 15th, 2004?
15 A. No significant, no.
16 Q. Do you recall -- between your teaching job and your
17 part-time work for Financial Enterprises, do you recall
18 approximately how much money you were making in April 2004?
19 A. From teaching I was making approximately $4,000 a
20 month. And part-time work was not very -- not very much.
21 Q. Go to the next page, please.
22 Were you making $8,950 a month in April of 2004?
23 A. No.
24 Q. Did you have any retirement accounts in April 2004?
25 A. I had a Teacher State Retirement account.

1 Q. Do you recall how long had you been working as a
2 California teacher at that point?
3 A. One year almost. One full year.
4 Q. Do you recall approximately how much money was in
5 your retirement account after a year?
6 A. Approximately $3,000.
7 Q. Did you have a 401k with $15,000 in it?
8 A. No.
9 Q. Do you recall whether you owned any cars in April of
10 2004?
11 A. Yes. I owned a Pontiac Grand Am, personally, and I
12 took a loan out and was on title for a Nissan.
13 Q. Now you said you owned the Pontiac personally and you
14 were on title for the Nissan. In your mind, what's the
15 distinction between owning a car personally and being on title
16 for another car?
17 A. I was asked to take a loan out for the Nissan.
18 Q. Who asked you to take that loan out?
19 A. Mike Head.
20 Q. Mike Head. Did you drive the Nissan?
21 A. No.
22 Q. Zoom back out. Next page.
23 Did you -- in April 2004 did you fill this form out
24 on a computer?
25 A. No.

1 Q. Did you input the information into a computer that
2 would be filled out later?
3 A. No.
4 Q. This will be a "yes" or "no." Do you know who put
5 the information onto this form?
6 A. No.
7 Q. Do you know how it is that your signature came to be
8 on this form?
9 A. I was asked to come in the office and sign some
10 paperwork.
11 Q. Asked by whom?
12 A. Mike Head.
13 Q. And was this the paperwork he asked you to sign?
14 A. Yes.
15 Q. Okay. You can take that down. And I would like to
16 go to Exhibit 13-A, please. 13-A, which I believe is in. And
17 if I could go forward. Next page. One more.
18 THE CLERK: I don't show that 13-A has been admitted.
19 MR. MORRIS: May 9th on ours, Your Honor.
20 THE COURT: I show, too, May 9th.
21 Q. BY MR. MORRIS: And so if I can draw your attention
22 forward now from April of '04 to June -- approximately June 7th
23 of 2004, does that appear to be your signature on this form?
24 A. Yes.
25 Q. And we can zoom out and go back to page one, please.

1 In the course of your job duties at Financial
2 Enterprises, did you become familiar with the address 823 West
3 San Joaquin in Tulare, California?
4 A. Yes.
5 Q. And was your signature on this document related to
6 your job duties at Financial Enterprises in San Joaquin -- or
8 A. Yes.
9 Q. Now looking at that address, was it your intention in
10 June of 2004 to occupy 823 San Joaquin in Tulare as your
11 primary residence?
12 A. No.
13 Q. Again taking the June 2004 timeframe, were you -- had
14 your employment situation changed in the summer of 2004, spring
15 to summer of 2004?
16 A. It did in the summer.
17 Q. What was the change of your employment?
18 A. I stopped teaching, and I went to work for Financial
19 Enterprises full-time.
20 Q. So in June 2004 were you working for Financial
21 Enterprises?
22 A. At the end of June, yes.
23 Q. At the beginning of June -- I think you previously
24 testified you were still part-time in 2004, so it would be
25 accurate to say that in early June you were employed by

2 A. Part-time.
3 Q. Just not full-time?
4 A. Yes.
5 Q. So between April and June of 2004 had you become a
6 commercial loan consultant?
7 A. No.
8 Q. What is a commercial loan consultant?
9 A. I'm not sure.
10 Q. By June of 2004 had you been working for Financial
11 Enterprises and Mike Head for two years?
12 A. No.
13 Q. And by that point had you been involved in the
14 mortgage industry for five years?
15 A. No.
16 Q. Next page. So early June 2004, between your
17 part-time work for Mike Head, Financial Enterprises, and what
18 would end up being your last month teaching for the State of
19 California, approximately how much money were you making in
20 June?
21 A. I was continuing to make approximately $4,000 a month
22 teaching and then part-time work was minimal.
23 Q. So in June you still weren't making $8,950?
24 A. No.
25 Q. Between April and June had you acquired a 401k worth

1 $15,000?
2 A. No.
3 Q. Was Mike Head still the one driving the Nissan?
4 A. Yes.
5 Q. But it still remained titled in your name?
6 A. Yes.
7 Q. Did Mike Head ever tell you why he wanted you to take
8 the title to the Nissan in your name?
9 A. He said his credit was ruined because he had identity
10 theft done on him.
11 Q. Now did you -- as with the April -- same question
12 from April. Did you fill out this form?
13 A. No.
14 Q. Do you have any personal knowledge of who did fill it
15 out?
16 A. No.
17 Q. How did your signature come to be on this form?
18 A. I went to the office and signed on the form.
19 Q. Did somebody ask you to come to the office?
20 A. Yes.
21 Q. Who asked you to come to the office to sign the
22 document?
23 A. Mike Head.
24 Q. Who presented the document to you to sign?
25 A. Mike Head.

1 Q. Now between the summer of 2003 and June of 2004, had
2 you become aware of any Tulare branch office for Financial
3 Enterprises?
4 A. No.
5 Q. Were you still continuing to answer the phones for
7 A. Yes.
8 Q. Were you still continuing to do filing and document,
9 office work for Financial Enterprises?
10 A. Yes.
11 Q. Had you seen any indication that there was an office
12 in Tulare, California for Financial Enterprises?
13 A. No.
14 Q. Go to page 13-A11, please. Do you know of anybody
15 other than Mike Head who was in a leadership position within
17 A. No.
18 Q. To your knowledge in June 2004 had you received an
19 offer to be -- be in management for the loan consultant team in
20 Tulare County?
21 A. No.
22 Q. Can you go to the next page, please. Are you
23 familiar with the document in front of you?
24 A. I have seen it, yes.

1 A. Yes.
2 Q. What's your understanding of what that document is
3 saying?
4 A. That I will be moving to Tulare to work for Financial
5 Enterprises in Tulare.
6 Q. Had you been working for Financial Enterprises for
7 over two years?
8 A. No.
9 Q. Were you aware of any Tulare branch office that would
10 be opened by the 21st of June 2004?
11 A. No.
12 Q. Did you accept a new job position in Tulare?
13 A. No.
14 Q. Did you intend to be a branch manager for Financial
15 Enterprises in Tulare, California?
16 A. No.
17 Q. Did you plan to move to Tulare?
18 A. No.
20 Let me pause for a moment and ask you, were you
21 arrested for your role in the transactions that you were
22 involved with in Financial Enterprises?
23 A. Yes.
24 Q. Have you plead guilty in this case?
25 A. Yes.

1 Q. And are you testifying today because as part of your
2 guilty plea you agreed to cooperate with the Government?
3 A. Yes.
4 Q. Let me go to 30-D, please.
5 Do you recognize the address 3247 Lees Avenue in Long
6 Beach, California?
7 A. Yes.
8 Q. How do you recognize that address?
9 A. I've seen it on documents and paperwork before.
10 Q. Was that documents and paperwork that you dealt with
11 in the course of your duties at Financial Enterprises?
12 A. Yes.
13 Q. Go forward to page two, please. One more. Is that
14 your signature?
15 A. Yes.
16 Q. And so now drawing your attention to the August 2004
17 timeframe, if I could -- we can go back to page one -- was it
18 your intention in August 2004 to occupy 3247 Lees Avenue in
19 Long Beach as your primary residence?
20 A. No.
21 Q. Where were you living, if you recall, in August of
22 2004?
23 A. I believe I was still in Brea, California.
24 Q. By August 2004 had you been working for Financial
25 Enterprises for two years by this point?

1 A. No.
2 Q. Had you become a commercial loan consultant between
3 June and August?
4 A. No.
5 Q. And had you accumulated five years of experience in
6 the mortgage industry by this point?
7 A. No.
8 Q. Let me go to the next page, please. So now in the
9 August of 2004 time period had your employment with the State
10 of California ended?
11 A. Yes.
12 Q. Were you working anywhere other than at Head
15 Q. I'm sorry. Financial Enterprises?
16 A. Yeah.
17 Q. That was it?
18 A. Yeah.
19 Q. Do you recall approximately how much money you were
20 making per month working at Financial Enterprises in August of
21 2004?
22 A. I would say approximately $5,000 per month.
23 Q. You weren't making $18,347.16 per month?
24 A. No.
25 Q. Zoom out. Since June -- well, did you still have a

1 retirement account with California Teachers at this point?
2 A. Yes.
3 Q. Do you recall approximately how much that retirement
4 would have been worth during that year?
5 A. It was approximately still around $3,000.
6 Q. Did you have a 401K worth $22,000?
7 A. No.
8 Q. Did you have a Bank of America account with about
9 $56,000 in it?
10 A. I had a Bank of America account but not with that
11 much money, no.
12 Q. Do you recall approximately how much money would have
13 been in your BofA account?
14 A. Maybe 5,000, maybe 10,000 at the most.
15 Q. Did you have another account with little over $19,000
16 in it?
17 A. No.
18 Q. Was Mike Head still driving the Nissan at this point?
19 A. Yes.
20 Q. It was still in your name?
21 A. Yeah.
22 Q. Next page, please. Do you recall why it is that you
23 would have signed this document?
24 A. Probably because Mike had asked me to.

4 disregard that last answer.
5 Q. BY MR. MORRIS: Over the course of your involvement
6 with Financial Enterprises, did you sign loan applications?
7 A. Yes.
8 Q. Can you recall any loan applications that you didn't
9 sign because you were asked to do so by Mike?
10 A. No.
11 Q. And I would like to bring up Government's 18-B, if we
12 could, Your Honor. I'll double check.
13 THE COURT: 18-B I do not believe is admitted.
14 MR. MORRIS: Then I would ask to admit the 18 series,
15 18-A through -F.
16 THE COURT: All right. 18-A through -F, as covered
17 by the stipulation, are admitted.
18 (Government Exhibit 18-A, 18-B, 18-C, 18-D, 18-F,
19 (see index for description) admitted into evidence.)
20 MR. TEDMON: No objection. That's fine.
21 MR. MORRIS: I would like to bring up 18- -- bring up
22 18-A just for now. Let's go to B then. 18-B is fine.
23 Q. BY MR. MORRIS: Did you become familiar, during the
24 course of your employment with Financial Enterprises, with an
25 address 15425 Ross Drive in Adelanto, California?

1 A. Yes.
2 Q. How did you become familiar with that address?
3 A. It was one of the foreclosure properties.
4 Q. Zoom out. And if you could go to page 18-B5, please.
5 Does that appear to be your signature?
6 A. Yes.
7 Q. Do you recall submitting a loan application for the
8 Adelanto property?
9 A. Not this specific.
10 Q. I'm going to ask you then to think now to the
11 September 2004 time period, and if we can go back to page three
12 in this exhibit.
13 In September 2004 did you intend -- well, in
14 September 2004 do you recall applying for a loan for the
15 Adelanto property?
16 A. Yes.
17 Q. Seems like vaguely?
18 A. Vaguely, yes.
19 Q. Do you recall whether it was going to be as an
20 investment or as a primary residence?
21 A. I didn't intend to live there. I guess investment.
22 Q. And if you can come out. Some of the same types of
23 questions. Between August and September had anything changed
24 in terms of your employment?
25 A. No.

1 Q. And so in September of 2004 approximately how much
2 money do you think you were making per month?
3 A. Approximately 5,000 per month.
4 Q. And did you have any income sources, any significant
5 income sources other than the money that you were receiving
6 from Financial Enterprises and Mike Head?
7 A. No.
8 Q. Next page, please. Were you making $17,651 per
9 month?
10 A. No.
11 Q. Zoom out. Between August and September had those
12 Bank of America accounts grown to 19,000 and/or $53,000?
13 A. No.
14 Q. Had your 401k become a $22,000 401k since August?
15 A. No.
16 Q. Next page. Did you intend to occupy 15425 Ross Drive
17 in Adelanto as your primary residence?
18 A. No.
19 Q. Take it down. If we could bring up 30-E, please.
20 Do you recall the address of 185 West 232nd place in
21 Carson, California?
22 A. Yes.
23 Q. How do you recall that address?
25 Q. And when you say foreclosure property, what does that

1 mean to you?
2 A. The homeowners were in foreclosure, so they entered
3 into an agreement with Mike. Then an investor would I guess
4 purchase the property, and they would pay rent back for a year.
5 Q. Zoom out. In September of 2004, the previous exhibit
6 we talked about, the loan application --
7 A. Uh-huh.
8 Q. -- did you become aware at some point that these
9 applications had false information on them?
10 A. Yes.
11 Q. When did that occur to you? When did you become
12 aware that these documents had false information on them?
13 A. I would say fall 2004.
14 Q. Okay. Is there any reason why that sticks in your
15 mind, or what it is that makes you think fall was around when
16 you realized what was going on?
17 A. I had been working there full-time for a few months,
18 and I was starting to learn more about loan applications and
19 things like that.
20 Q. Okay. Did you ever question why you were being asked
21 to sign documents with false information on it?
22 A. I did.
23 Q. Who did you ask?
24 A. Mike Head.
25 Q. And what did Mike Head say when you asked him why you

1 were being asked to sign documents with false information on
2 them?
3 A. He said reps from the bank told him what to put on
4 the applications to get loans approved. And he also told me
5 that the properties were not really mine so what was on the
6 loan application didn't really matter.
7 Q. What is your understanding of the "properties aren't
8 really mine" when you say that?
9 A. Financial Enterprises would be in control of the
10 properties and manage them.
11 Q. Okay. On any -- strike that. If we can go down to
12 the bottom half here. Now actually let me go -- go forward to
13 page three, I apologize.
14 And so I'll draw your attention forward now from
15 September of '04. Does that appear to be your signature?
16 A. Yes.
17 Q. Does that appear to be a document dated
18 December 10th, 2004?
19 A. Yes.
20 Q. Okay. So if we can go back to the first page, at the
21 bottom.
22 In December 2004 had you passed two years yet with
24 A. No.
25 Q. Were you -- had you passed five years yet in the

1 mortgage industry?
2 A. No.
3 Q. Had you become a commercial loan consultant since
4 September of 2004?
5 A. No.
6 Q. Next page, please. Do you recall approximately how
7 much you were making in December of 2004?
8 A. I believe it was still approximately $5,000 per
9 month.
10 Q. You weren't making $18,356?
11 A. No.
12 Q. Did you have $15,000 in a 401k in December of 2004?
13 A. No.
14 Q. I'll ask to bring up 30-A and go to page three,
15 please. One more.
16 I'm going to ask you to draw your attention forward
17 to March of 2006. Does that appear to be your signature on
18 this document?
19 A. Yes.
20 Q. And if we could go back to page one, please. Do you
21 recognize the address of 8345 Terhune Avenue in Sun Valley,
22 California?
23 A. Yes.
24 Q. How do you recognize that address?
25 A. It was a foreclosure property.

1 Q. Do you recall anything about this property or this
2 transaction?
3 A. Such as?
4 Q. Just asking if you recall anything.
5 A. I don't remember specifics, I don't think.
6 Q. Okay. Were you still working for Financial
7 Enterprises in March of 2006?
8 A. Yes.
9 Q. Second page, please. Do you recognize that address?
10 A. Yes.
11 Q. Okay. Was that an address that you understood to be
12 associated with Financial Enterprises?
13 A. Yes.
14 Q. Okay. You can take it down for a second then.
15 I think the last time we talked about the locations
16 that you worked for Financial Enterprises we were talking up
17 into the 2004 timeframe. Did you become aware of Financial
18 Enterprises changing locations after the Costa Mesa location?
19 A. Yes.
20 Q. Do you recall approximately when that change of
21 locations happened?
22 A. Summer of 2005.
23 Q. Okay. And where is it -- or where is it that the
24 company moved to in 2005?
25 A. Arizona. Mesa, Arizona.

1 Q. Did you work for Financial Enterprises when it was in
2 Arizona?
3 A. Yes.
4 Q. Okay. Did you move there completely?
5 A. Partially.
6 Q. What do you mean by partially?
7 A. I split time between Arizona and California.
8 Q. This is -- start with a "yes" or "no" here. Do you
9 have any reason to know why Financial Enterprises moved to
10 Arizona?
11 A. Yes.
12 Q. Okay. What's your basis for understanding why it is
13 that Financial Enterprises left Costa Mesa to go to Arizona?
14 How do you know that?
15 A. I know Mike and Charles had a --
16 Q. How do you know --
17 A. Oh, because I went with him.
18 Q. But how do you know the reasoning behind the move, if
19 you do?
20 A. I would say things that Mike told me.
21 Q. What is it that Mike told you about why he moved to
22 Arizona?
23 A. He and his brother had a disagreement, so he was no
24 longer working out of the Costa Mesa office. And while Mike
25 was in Arizona, he met Sonny Rock who became -- they decided to

1 go into business together and open up an office in Arizona.
2 Q. And what, if you recall, was the nature of the
3 disagreement between Mike and Charles that led Mike to move to
4 Arizona?
5 A. I was told it was over --
7 Q. BY MR. MORRIS: I was told by...
8 A. Mike.
9 Q. By Mike.
11 MR. TEDMON: The objection is if she was told by
12 somebody what it was, that's hearsay. And it's not in
13 furtherance of anything.
15 Q. BY MR. MORRIS: Who told you the reason why?
16 A. Mike.
17 MR. MORRIS: Okay. And, Your Honor, I'd ask to bring
18 it in as an admission of a party opponent?
20 MR. TEDMON: I'd want an offer of proof as to what
21 the admission is.
22 MR. MORRIS: Statement of a party opponent.
23 THE COURT: Move to another line of questioning, and
24 we'll come back to this.
25 Q. BY MR. MORRIS: If we can go back to 30-A, page two.

1 At this point in your employment for Financial
2 Enterprises, approximately how much money were you making?
3 A. I would say approximately $5,000 per month.
4 Q. You weren't making $16,175 per month?
5 A. No.
6 Q. Did you have a Bank of America account with a balance
7 of $23,000 in it?
8 A. No.
9 Q. Did you have a 401K with a balance now of $48,000 in
10 it?
11 A. No.
12 Q. Or a Bank of America account with $9,000 in it?
13 A. Possibly.
14 Q. Zoom out, please. And the next page.
15 And with respect to 8345 Terhune Avenue in Sun
16 Valley, California, did you intend to occupy that as your
17 primary residence in 2006?
18 A. No.
19 MR. MORRIS: I'll ask to bring up 30-B, Your Honor.
20 THE COURT: All right. That's in.
21 Q. BY MR. MORRIS: And then does that appear to be your
22 signature on this page?
23 A. Yes.
24 Q. So if I could call your attention to the June 2006
25 time period. If you can go back to page one.

1 Did you become familiar with the address 2717 East
2 Victor Hugo Avenue in Phoenix, Arizona?
3 A. Yes.
4 Q. Did you intend to occupy that address as your primary
5 residence in 2006?
6 A. No.
7 Q. How did you come to be familiar with this address in
8 2006?
9 A. It was a foreclosure property.
10 Q. Was it a foreclosure property that was part of the
11 foreclosure process that Financial Enterprises was working on?
12 A. Yes.
13 Q. Next page, please.
14 Were you still working for Financial Enterprises at
15 this point?
16 A. Yes.
17 Q. Approximately how much money were you making?
18 A. Approximately $5,000 per month.
19 Q. You weren't making $21,175 a month from Financial
20 Enterprises?
21 A. No.
22 Q. And page four, please.
23 And pointing to line J says, "do you intend to occupy
24 the property as your primary residence," and it looks like the
25 "yes" box is checked. Is that a true or false statement?

1 A. False.
2 Q. I'd like you now to think back as we talk about the
3 spring of 2004 time period.
4 I think your previous testimony was your -- between
5 spring and summer your job duties began to change with respect
6 to Financial Enterprises.
7 And you've testified, also, I think, about
8 foreclosure properties. And I wonder if you could explain what
9 you mean by a foreclosure property?
10 A. People who were in foreclosure would sign agreements,
11 Equity Purchase Agreements. And the investor, the buyer, would
12 obtain title. And for one year the original homeowners would
13 pay rent back to Financial Enterprises for one year.
14 Q. Did you have any involvement in initial contacts with
15 homeowners who would end up taking part in this program?
16 A. No. Not typically.
17 Q. In the course of your duties answering phones, did
18 you have any contact with them?
19 A. Yes.
20 Q. In what way? Can you explain the context that you
21 might have -- or how you would come to be in contact with some
22 of these people through those duties?
23 A. At times I was asked to get their information,
24 specific information, names, addresses.
25 Q. Stop you for a second. Asked by whom?

1 A. Mike Head.
2 Q. So Mike Head would ask you to do what?
3 A. Get their information, basic information such as
4 names, address, loan balance, things like that.
5 Q. When you say "loan balance," what are you referring
6 to?
7 A. How much they owed on their home.
8 Q. And what would you do with that information once you
9 had gathered it?
10 A. Sometimes I would input it into a computer program.
11 Sometimes I would hand write it and pass it on to Mike Head.
12 Q. Were you ever in a position to observe what Mike Head
13 did with that information once you passed it to him?
14 A. Not typically. No.
15 Q. Okay. Did you ever prepare any documents with
16 respect to these foreclosure transactions?
17 A. Yes.
18 Q. What types of documents did you work on?
19 A. The Equity Purchase Agreements and all the documents
20 that were with that.
21 Q. Can you recall what some of those documents were that
22 went with it?
23 A. I know there is a Notice of Cancellation. I believe
24 there were wire instructions, grant deed.
25 Q. Do you recall ever being in a position to observe

1 Mike Head interacting with those customers before they had
2 signed the documents?
3 A. No.
4 Q. Do you recall any processes for sending or receiving
5 documents?
6 A. Yes.
7 Q. What do you recall about that?
8 A. Sometimes if the people who were in foreclosure lived
9 out of town, I would prepare the documents, and then we would
10 send them to the people or to a notary in the area.
11 Q. Okay. Were you ever present at meetings with
12 potential clients?
13 A. Yes.
14 Q. Can you describe the types of meetings that you were
15 at with potential clients?
16 A. The meetings I was at typically they had already
17 been -- the program had already been explained to them, and I
18 took the documents and had them sign the documents.
19 Q. Let me make sure I understand then. You don't have
20 any independent recollection of being at a meeting where
21 somebody is being convinced to sign the documents?
22 A. No.
23 Q. What, if anything, was different between what you
24 observed and did in the Costa Mesa office and what you observed
25 and did in the Arizona office?

1 A. In Arizona they had a few more employees. Mike had a
2 business partner, Sunny Rock.
3 Q. Was there any difference in the documents that you
4 were seeing processed?
5 A. No. They were pretty much the same.
6 Q. Now in the course of both your Costa Mesa employment
7 and your Arizona employment, your testimony had been that you
8 would prepare documents, and you listed several of them that
9 you would deal with, who would you give those documents to when
10 you had prepared them?
11 A. Mike Head.
12 Q. Did you ever receive the documents back from Mike
13 Head?
14 A. At times, yes.
15 Q. Did you have any of that type of interaction with any
16 other employees of Financial Enterprises or of Head Financial
17 Services?
18 A. In Arizona, yes.
19 Q. And who did you interact within Arizona?
20 A. Sunny Rock, Stephen Goldizen. He was there. And
21 Patrick Harding.
22 Q. Now did you decide at some point that you wanted to
23 stop being involved in these foreclosure transactions?
24 A. Yes.
25 Q. Why did you want to stop being involved in these?

1 A. I didn't really like what was going on. It was
2 pretty stressful, too.
3 Q. What specifically did you not like about what was
4 going on?
5 A. Well, the loan application information was incorrect.
6 There was some information being given to people that was not
7 accurate.
8 Q. What do you mean by --
9 First of all, what information was being given to
10 people that you didn't think was accurate?
11 A. For example, one of the homeowners called in who had
12 missed a few payments and was told by Mike that he had been
13 covering the payments to the investor for the month or two that
14 he missed, and that he needed to get caught up. And I knew
15 that was an inaccurate statement.
16 Q. You had previously said that your role at one point
17 was to be an investor, is that right?
18 A. Yes.
19 Q. Did you receive monthly payments from Mike as an
20 investor?
21 A. No.
22 Q. Other than the upfront payments that you mentioned,
23 that 2,500 to 5,000, did you ever receive payments for your
24 involvement in these transactions?
25 A. Not typically. There were a couple at the end I got

1 maybe some money, but usually it was money that was owed to me
2 anyways, so.
3 Q. Okay. Do you have any other examples? You had
4 mentioned, I think, that you thought that false information was
5 being given to people, and an example that you just gave was
6 about the investor payments.
7 Do you recall any other examples of what you thought
8 was false information being given to people?
9 A. No, not specifically.
10 Q. So these concerns about false information being given
11 to people, who did you think was giving people false
12 information to people as part of this program?
13 A. Mike Head.
14 Q. Do you recall approximately when it was that you
15 decided you wanted to back out of this situation?
16 A. I would say spring of 2006.
17 Q. Do you recall what it is that makes you put it at
18 that time in your mind?
19 A. I started to look for other jobs. I wanted to go
20 back to teaching. I was looking for teaching jobs.
21 Q. So was it before, around, or after the time that the
22 operation moved to Arizona?
23 A. It was after.
24 Q. Do you remember how long after?
25 A. Probably about -- maybe nine months after.

1 Q. And I think your previous testimony had been that the
2 move to Arizona was in 2005?
3 A. Yes.
4 Q. Does that refresh your recollection on when you
5 wanted to back out?
6 A. I couldn't give you a specific date.
7 Q. This is a "yes" or "no." Was there anything that made
8 you decide not to back out of your involvement in this program?
9 A. Yes.
10 Q. And would it be accurate to say that one of the
11 concerns that you had about backing out of the program was that
12 you were financially on the hook for many of these properties?
13 A. Yes.
14 Q. Was it your understanding then that you were still on
15 the mortgage loans for these properties?
16 A. Yes.
17 Q. Was it your understanding that you were still on
18 title to these properties?
19 A. Yes.
20 Q. Were you personally receiving monthly payments from
21 the people who were currently living in these properties?
22 A. No.
23 Q. Did you have any independent source of income that
24 would have allowed you to make mortgage payments on the
25 properties that were in your name?

1 A. No.
2 Q. Did anybody tell you that if you stopped being
3 involved with these transactions, that the burden of the
4 obligations would fall on you and you alone?
5 A. Yes.
7 A. Mike Head.
8 Q. As a result of what Mr. Head told you, did you
9 continue staying involved in this program after when you wanted
10 to back out of it?
11 A. Yes.
12 MR. MORRIS: Okay. No further questions, Your Honor.
14 MR. TEDMON: Your Honor, I think Mr. Haydn-Myer --
15 THE COURT: Mr. Haydn-Myer, cross-examination?
19 Q. Good afternoon, Ms. Mattson.
20 A. Hi.
21 Q. I'm trying to get more of a scope of what Financial
22 Enterprises was doing. So if you could help me with that.
23 I understand you worked with them for a couple years,
24 is that correct?
25 A. Yes.

1 Q. So what's going on is there's actually a homeowner
2 that's basically in a trustee sale, is that correct?
3 A. Foreclosure, yes.
4 Q. And then they're going to lose all of the equity in
5 their home, isn't that also correct?
6 A. Yes.
7 Q. So what you're doing as Financial Enterprises, you're
8 going to them and saying, hey, look, we got a contract, we want
9 to you sign it, we're going to wipe out the note, the people
10 that are actually trying to take your home, and if you make it
11 through a year with us, then we're going to give you an
12 opportunity to get your house back; and that's how you
13 understood it, isn't it?
14 A. Yes.
15 Q. Who was paying the mortgage on the homes?
16 A. Mike Head. Financial Enterprises.
17 Q. Financial Enterprises was, weren't they?
18 A. Yes.
19 Q. So when you would go to a homeowner, the debt was
20 still there, because you had to take over the debt, however,
21 Financial Enterprises was the group that was actually making
22 the payments to just another lending institution, correct?
23 A. Yes.
24 Q. So on all of these pieces of property, how did you
25 keep track of how to pay the loans?

1 A. I created a spreadsheet of what the loans were.
2 Q. A spreadsheet of what the loans were. Did you also
3 create a spreadsheet of one person, a homeowner, and the amount
4 of payments that they would send to you?
5 A. I usually kept track of their monthly -- who paid
6 that month and who didn't, yes.
7 Q. And you were busy with it, you put a lot of work into
8 it, didn't you, for both; because you had to keep up with not
9 only making payments to the lender, but, also, you had to keep
10 up with who was sending their payments into Financial
11 Enterprises, correct?
12 A. Yes.
13 MR. HAYDN-MYER: I'm sorry, Madam Clerk, what's the
14 next in order?
15 THE COURT: I believe it's a J. Is that right,
16 Ms. Streeter?
17 THE CLERK: Yes. JMH-J.
18 MR. HAYDN-MYER: And I have copies for the parties.
19 May I approach, Your Honor?
21 (Defendant's Exhibit JMH-J, Financial Enterprises
22 Statement, Dated 8/15/05, marked for identification.)
23 Q. BY MR. HAYDN-MYER: Ms. Mattson, I'm showing you
24 JMH-J. Do you recognize anything about that document?
25 A. It looks like a statement that we would send out to

1 the original homeowners for their monthly payments.
2 Q. I believe there is a name on the upper left-hand
3 side, is that correct?
4 A. The company name or the person's name?
5 Q. The person's name.
6 A. Yes. I see it.
7 Q. And the name is?
8 A. Emily Silva.
9 Q. So this was a document that Financial Enterprises was
10 creating, and I believe you actually created the document,
11 isn't that fair, Ms. Mattson?
12 A. I believe I did.
13 Q. And weren't you also the one -- or the person that
14 would actually input the information into a computer program
15 that would create this document?
16 A. Typically, yes.
17 Q. And you remember Ms. Silva, correct?
18 A. I remember the name, yes.
19 Q. You remember the account, is that correct?
20 A. I don't remember the -- the address, yes. But I
21 don't remember the specific.
22 Q. You remember receiving bills back and forth, and
23 checks, and documentation between Financial Enterprises,
24 basically you and Ms. Silva, is that correct?
25 A. Yes.

1 Q. And you remember she was late, isn't that correct?
2 A. I don't remember that. But seeing this, yes, it
3 looks like it.
4 Q. Does it refresh your recollection?
5 A. Somewhat, yes.
6 Q. As a matter of fact, she was late approximately
7 $4,500, is that correct?
8 A. According to this, yes.
9 MR. HAYDN-MYER: May I publish?
12 THE COURT: Mr. Tedmon.
13 MR. TEDMON: No, Your Honor?
14 THE COURT: JMH-J is admitted and may be published.
15 (Defendant's Exhibit JMH-J, Financial Enterprises
16 Statement, Dated 8/15/05, admitted into evidence.)
17 Q. BY MR. HAYDN-MYER: Showing you JMH-J.
18 What we're looking at is actually a document by
19 Financial Enterprises that you created, that has Emily Silva's
20 name on the upper left-hand side, is that correct?
21 A. Yes.
22 Q. And then as Ms. Silva became late or made her
23 payments, you would actually include that in that computer
24 program, is that correct?
25 A. Yes.

1 Q. So when we asked about -- or when I asked you about
2 the $4,500, that was actually what you were referring to right
4 A. Yes.
5 Q. How did you know where to send the money in regards
6 to Emily Silva for the mortgage?
7 A. We received mortgage statements with the -- I guess
8 the investor's -- their mortgage statement.
9 Q. And even though Emily Silva was obviously late here,
10 Financial Enterprises, in particular you, Ms. Mattson, would
11 actually write a check and still send it to the lender, isn't
12 that correct?
13 A. Yes.
14 MR. HAYDN-MYER: And Your Honor, this is JMH-K.
15 THE COURT: All right. Do you wish to show that to
16 the witness?
17 MR. HAYDN-MYER: I do, Your Honor.
19 (Defendant's Exhibit JMH-K, Check #1089 for $926.73,
20 payable to Washington Mutual, marked for identification.)
21 Q. BY MR. HAYDN-MYER: Would you please take a look at
22 JMH-K.
23 A. Uh-huh.
25 A. Yes. I recognize the handwriting. I recognize the

1 signature. Yes.
2 Q. It's actually a check that you wrote, is that
3 correct?
4 A. Yes.
5 Q. And if you would please, take a look at the address
6 on it?
7 A. In the bottom part? The four part?
8 Q. Yes.
9 A. It's Prospect Street, Porterville, California.
10 MR. HAYDN-MYER: Thank you. May I publish, Your
11 Honor?
16 THE COURT: All right. JMH-K may be published. It
17 is admitted.
18 (Defendant's Exhibit JMH-K, Check #1089 for $926.73,
19 payable to Washington Mutual, admitted into evidence.)
20 Q. BY MR. HAYDN-MYER: Showing you JMH-K, Ms. Mattson.
21 That's obviously your signature at the bottom, isn't
22 that correct?
23 A. Yes.
24 Q. And what we're talking about was Ms. Silva's
25 property, which was the prior one, JMH-J, the address, correct?

1 A. Yes.
2 Q. So what you were doing was, actually, even though
3 Ms. Silva was late by $4,000, you would actually still write
4 checks from Financial Enterprises to the lender to cover the
5 expense, didn't you?
6 A. Yes.
7 Q. And in order to make sure you had a record of it, you
8 would actually write the address of the property to correspond
9 to the document that you'd actually created showing the
10 payments that Ms. Silva was making, isn't that correct?
11 A. Yes.
12 MR. HAYDN-MYER: Your Honor, that's a pretty good
13 place to break because I have quite a bit more.
14 THE COURT: Are you done? You have more?
15 MR. HAYDN-MYER: I have a lot more.
16 THE COURT: Well, we are very close to 1:30. So with
17 that understanding, we can let the jury go two minutes early.
18 It is the end of our week, the close of our second
19 week of trial. So as we excuse you for the weekend, Friday and
20 the weekend, just a reminder we'll start again Monday at 8:30.
21 Go from 8:30 to 1:30 on Monday and Tuesday and Thursday of next
22 week, have an afternoon session, as always, on the 22nd.
23 During this long break, please especially remember
24 all of my admonitions. Please do no homework, consult no
25 dictionaries, don't read any news reports of the case if you

1 happen to come across any, don't discuss the case with anyone,
2 family members or friends, or fellow jurors.
3 If anyone attempts to approach you over the weekend
4 in any way whatsoever, please let me know first thing Monday
5 morning. And if you learn of any of these admonitions being
6 violated, please let me know.
7 Have a very good weekend. Thanks, as always, for
8 your service. We'll see you Monday morning.
9 (Jury out.)
10 THE COURT: You may step down. But if you could step
11 in the hall and be back in your seat by 8:30 Monday morning.
12 You may be seated. Two things the Court wants to
13 cover. One is I want to follow up on the objection to the
14 statement against interest as represented by the Government.
15 And then are you ready to tell me which witnesses you
16 do not anticipate calling at this point, Mr. Anderson? Just so
17 I can get a sense of where we are in the course of trial.
18 MR. ANDERSON: We could take a stab at it, but if the
19 Court is willing, I'd appreciate another afternoon to figure it
20 out, and we can e-mail counsel and the Court's deputy clerk, if
21 you'd like, with the answer.
22 THE COURT: All right. If I can know by the time we
23 start on Monday. I would like to give the jury -- if we have
24 some reasonable estimate -- just give them an update by early
25 to mid of next week. You still think you're on track to close

1 by the middle of next week?
2 MR. ANDERSON: With the Government's case-in-chief,
3 yes. I think we should be done some time Wednesday, maybe.
4 THE COURT: At this point, do you know, Mr. Tedmon,
5 will you be putting on a case in defense?
6 MR. TEDMON: We're evaluating that, Your Honor.
7 THE COURT: All right. And Mr. Haydn-Myer?
8 MR. HAYDN-MYER: Still evaluating, Your Honor.
9 THE COURT: All right. Then, Mr. Morris, what
10 exactly were you planning to elicit? I'll let you make a
11 proffer, and then I would like to be clear on Mr. Tedmon's
12 objection.
13 MR. MORRIS: I can withdraw it, Your Honor.
14 What I was going to get was the reason for the
15 falling out, and it would have been a statement by Mike Head,
16 which is a statement of a party opponent. But I'm fine not
17 getting it in. I think we can get it in through other
18 evidence. And if not, I don't think its vital.
19 THE COURT: So you don't want to ask the question
20 again of this witness?
21 MR. MORRIS: No.
22 THE COURT: If it's withdrawn, I will not resolve a
23 dispute I don't need to.
24 Is there anything further we need to discuss today?

3 THE COURT: All right. We'll see you Monday morning
4 at 8:30.
7 CERTIFICATION
12
13

16
17
18
19
20
21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
Volume 8
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
MONDAY, MAY 20, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
17
18
19
20
21
22
23
24
25

1 I N D E X
3 SARAH MATTSON
CROSS-EXAMINATION BY MR. HAYDN-MYER (CONT'D) 1032
RECROSS-EXAMINATION BY MR. HAYDN-MYER 1085
5 FURTHER REDIRECT EXAMINATION BY MR. MORRIS 1089
FURTHER RECROSS-EXAMINATION BY MR. HAYDN-MYER 1090
6
NICKADIA DANIELS
9 DELMA ROMERO
11
JOHN SOMMERCAMP
14
CHRIS FITZPATRICK
16
17
18
19
20
21
22
23
24
25

2 GOVERNMENT EXHIBITS MARKED FOR IDENTIFICATION

3
13-G Bank statement 1082
4

7
JMH-L Silva Payment Voucher with payment due 1034
8 date 10/1/05
JMH-M Silva Payment Voucher with payment due 1034
9 date 1/1/06
JMH-N Financial Enterprises Statement, Dated 1037
10 4/17/06
JMH-O Check #1069 for $667.46, payable to 1037
11 Sovereign Bank
JMH-P Financial Enterprises Statement, Dated 1041
12 12/15/04
JMH-Q Check #1658 for $2,286.42, payable to New 1041
13 Century
JMH-R Check #1726 for $1,612.44, payable to 1043
14 Homecomings Financial
JMH-S Financial Enterprises Statement, Dated 1045
15 3/1/05
JMH-T Check #1239 for $624.44, payable to Litton 1045
16 Loan Servicing
JMH-U Financial Enterprises Statement, Dated 1047
17 2/15/05
JMH-V Countrywide Home Loans Monthly Statement, 1047
18 Dated 4/8/05
JMH-W Check #1088 for $1,185.67, payable to 1050
JMH-X Check #1090 for $1,201.61, payable to 1050
JMH-Y Check #1091 for $881.01, payable to 1050
22
23
24
25


2
3 JMH-Z Check #1067 for $2,762.67, payable to 1053

Acoustic Home Loans
4 JMH-AA Check #1073 for $1,898.64, payable to 1053
Homecomings
5 JMH-BB Check #1079 for $2,102.36, payable to 1053
Select Portfolio Servicing
6 JMH-CC Check #1082 for $1,069.96, payable to 1056
Washington Mutual
7 JMH-DD Check #1152 for $2,011.69, payable to 1056
Acoustic Home Loans
8 JMH-EE Chart created by Sarah Mattson, 1058
JMH-FF Email dated 4/25/06 re: Revision to No 1064
9 Ratio on Brandon Davis
JMH-GG Check #1021 for $13,500.00, payable to 1065
10 Sarah Mattson
JMH-HH Overdraft Letter from Bank of America, 1107
11 Dated 4/25/06
12
13
14
15
16
17
18
19
20
21
22
23
24
25


3
4 12-E 1325 West Evergreen Way, Visalia – 1031

Mailings and Other (Count 2) - AS MODIFIED
5 26-A 4574 Canyon Road, El Sobrante – Loan File 1097
26-B 4574 Canyon Rd, El Sobrante – Escrow File 1098
6 26-C 4574 Canyon Road, El Sobrante – Related
Bank Records 1098
22-B 633 Hudson Lane, Modesto – Escrow File 1118
8 22-C 633 Hudson Lane, Modesto – Related Bank 1118
Records
9 22-D 633 Hudson Lane, Modesto – Search Warrant 1118
Document
CH-G3 "Residential Lease After Sale" re: 633 1130
11 Hudson Lane, Modesto
43-K Email from Liz Re: Foreclosures – dated 1163
12 8/26/2004
2 Business Entities 1164
13 1 Escrow Summary Chart 1166
32-A 1284 West Victoria Street, Rialto, San 1176
14 Bernardino, CA Residential Loan
Applications
15 32-B 7429 Orien Avenue, La Mesa, CA Residential 1176
Loan Applications
16 32-C 7852 S. 3rd Avenue, Phoenix, AZ - 1176
17 35-A 37025 Bordeaux, Palmdale, CA - Residential 1178
Loan Applications
18 35-B 17739 Seville Avenue, Fontana, CA - 1178
19 35-C 8345 Terhune Avenue, Sun Valley, CA - 1178
20 14-A1 117 Steckel Drive, Santa Paula – Loan File 1183
14-A2 117 Steckel Drive, Santa Paula – Loan File 1183
21 14-C 117 Steckel Drive, Santa Paula – Related 1183
Bank Records
22 14-D 117 Steckel Drive, Santa Paula - Search 1183
Warrant Documents
23 4 Proceeds Summary Charts 1190
24
25


2
3 JMH-L Silva Payment Voucher with payment due 1035

date 10/1/05
4 JMH-M Silva Payment Voucher with payment due 1035
date 1/1/06
5 JMH-N Financial Enterprises Statement, Dated 1038
4/17/06
6 JMH-O Check #1069 for $667.46, payable to 1039
Sovereign Bank
7 JMH-P Financial Enterprises Statement, Dated 1041
12/15/04
8 JMH-Q Check #1658 for $2,286.42, payable to New 1042
Century
9 JMH-R Check #1726 for $1,612.44, payable to 1044
Homecomings Financial
10 JMH-S Financial Enterprises Statement, Dated 1045
3/1/05
11 JMH-T Check #1239 for $624.44, payable to 1046
Litton Loan Servicing
12 JMH-U Financial Enterprises Statement, Dated 1048
2/15/05
13 JMH-V Countrywide Home Loans Monthly Statement, 1049
Dated 4/8/05
14 JMH-W Check #1088 for $1,185.67, payable to 1050
Washington Mutual
15 JMH-X Check #1090 for $1,201.61, payable to 1051
Washington Mutual
16 JMH-Y Check #1091 for $881.01, payable to 1052
Washington Mutual
17 JMH-Z Check #1067 for $2,762.67, payable to 1053
Acoustic Home Loans
18 JMH-AA Check #1073 for $1,898.64, payable to 1054
Homecomings
19 JMH-BB Check #1079 for $2,102.36, payable to 1055
Select Portfolio Servicing
20 JMH-CC Check #1082 for $1,069.96, payable to 1056
Washington Mutual
21 JMH-DD Check #1152 for $2,011.69, payable to 1057
Acoustic Home Loans
22 JMH-EE Chart created by Sarah Mattson 1060
JMH-GG Check #1021 for $13,500.00, payable to 1066
23 Sarah Mattson
24 Ratio on Brandon Davis (Page 2 only)
JMH-HH Overdraft Letter from Bank of America, 1201
25 Dated 4/25/06

1
3
4 Ratio on Brandon Davis (Pages 4 & 5 only)
CH-O1 “Equity Purchase Agreement” re: 4574 1099
5 Canyon Road, El Sobrante
CH-O3 "Residential Tenancy Agreement" re: 4574 1100
CH-O4 "Acknowledgement By Seller" re: 4574 1100
CH-O6 "Affidavit Of Deed" re: 4574 Canyon Road, 1101
8 El Sobrante
CH-G1 “Equity Purchase Agreement” re: 633 1127
CH-G3 "Residential Lease After Sale" re: 633 1130
CH-G4 "Acknowledgement By Seller" re: 633 1134
12
13
14
15
16
17
18
19
20
21
22
23
24
25

2 MONDAY, MAY 20, 2013
3 ---oOo---
5 States versus Charles Head and Jeremy Michael Head. This is on
6 for jury trial, and today is day nine.
7 THE COURT: Good morning. All attorneys are present.
8 The parties are present. I received the stipulation that you
9 filed. Any update on the witness list?
10 MR. ANDERSON: Yes, Your Honor. We've been able to
11 narrow it, and I think we'll either finish today or tomorrow.
12 Hopefully today.
13 We have Sarah Mattson to finish. We may or may not
14 call Akemi Botari, Nickadia Daniels, Delma Romero, John
15 Sommercamp, and then Chris Fitzpatrick.
16 THE COURT: All right. That sounds good. So we'll
17 compare notes on what is likely to happen the rest of the week.
18 We should probably start turning to jury instructions fairly
19 soon.
20 MR. TEDMON: Yes.
21 MR. ANDERSON: I think so.
22 MR. TEDMON: I would think so, Your Honor.
23 THE COURT: All right. Do you know at this point if
24 you're going to put on cases in defense? Mr. Tedmon? Or do
25 you need to wait?

1 MR. TEDMON: We need to wait. At this point I don't
2 know.
4 MR. HAYDN-MYER: I have witnesses scheduled, Your
5 Honor. But I believe, based on my conversations and
6 communications with the Marshal's office, they will not be here
7 until Thursday because of the flights.
8 THE COURT: All right. We'll compare notes at the
9 end of the day. All right. Can we bring Ms. Mattson back in?
10 MR. ANDERSON: We can, Your Honor. There were two
11 other things I wanted to cover real quickly with the Court.
13 MR. ANDERSON: The first is that we added a second
14 page to Government's Exhibit 12-E. After discussion with
15 defense counsel, that was the compromise in order to get the
16 stipulation. It's sequential in the Bates numbering, so it's
17 just the next page from the discovery.
18 THE COURT: A copy is in the Court's binder?
19 MR. ANDERSON: Yes. We've added a copy for the
20 Court.
21 And the other thing is the Government's going to move
22 to dismiss Count 4 the Superseding Indictment.
23 THE COURT: All right. So 12-E came in last week.
24 You're saying you modified it after the fact, but it's still in
25 with that modification?

1 MR. ANDERSON: We've modified 12-E by adding an
2 additional page, and I think that there is a stipulation that
3 entire exhibit is admissible.
4 THE COURT: Agreed, Mr. Tedmon?
5 MR. TEDMON: Yes.
8 THE COURT: All right. So 12-E with the additional
9 page is admitted. Count 4 is dismissed. Anything to say about
10 Court 4, Mr. Tedmon?
11 MR. TEDMON: No. It's as relates only to Jeremy
12 Michael Head.
17 MR. TEDMON: No.
18 THE COURT: All right. Let's bring Ms. Mattson in.
19 And we can bring the jury in.
20 (Government Exhibit 12-E, 1325 West Evergreen Way,
21 Visalia – Mailings and Other (Count 2) - AS MODIFIED - admitted
22 into evidence.)
23 (Jury in.)
25 court, ladies and gentlemen of the jury. We hope you had a

1 good weekend. We are ready to pick up where we left off, and
2 that is with the continuing examination of Ms. Mattson.
3 Ms. Mattson, you were sworn last week.
4 THE WITNESS: Yes.
5 THE COURT: You continue to testify subject to that
6 oath.
7 THE WITNESS: Yes.
8 THE COURT: Understood?
9 THE WITNESS: Yes.
11 SARAH MATTSON,
15 CROSS-EXAMINATION (CONT'D)
17 Q. Good morning, Ms. Mattson. How are you?
18 A. Good morning. I'm fine, thank you.
19 Q. I believe last time we were on the witness stand --
20 or you were on the witness stand I was asking you questions
21 about a couple of documents. One of them was JMH-J. Do you
22 recognize that document?
23 A. Yes.
24 Q. And just as a refresher, that was a document that you
25 put together for Financial Enterprises, is that correct?

1 A. Yes.
2 Q. And Emily Silva is a person that you had the contract
3 with, is that also correct?
4 A. Yes.
5 Q. And when you're looking at this, the dates are the
6 monies that are due to Financial Enterprises, when you slide
7 over for description, it's a "late fee, payment due," when you
8 slide over again, there is "charges, credits, and balance," is
9 that correct?
10 A. Yes.
11 Q. And when you total the bottom for that statement
12 month that was the amount that Ms. Silva was late based on the
13 contract, is that correct?
14 A. Yes.
15 Q. Then I believe I also showed you JMH-K, is that
16 correct?
17 A. Yes.
18 Q. And that's your name at the bottom of it, correct?
19 A. My signature, yes.
20 Q. And this is a check written from a Financial
21 Enterprises' account to cover a mortgage on the contract that
22 you have with Ms. Silva, is that correct?
23 A. Yes.
24 MR. HAYDN-MYER: If I may approach, Your Honor? I
25 have two items marked for identification. One is JMH-L and the

1 other one is JMH-M.
2 THE COURT: You may. Two pages?
3 (Defendant's Exhibit JMH-L, Silva Payment Voucher
4 with payment due date 10/1/05, marked for identification.)
5 (Defendant's Exhibit JMH-M, Silva Payment Voucher
6 with payment due date 1/1/06, marked for identification.)
7 MR. HAYDN-MYER: May I approach the witness, Your
8 Honor?
10 Q. BY MR. HAYDN-MYER: Ms. Mattson, what I'm showing you
11 is JMH-M and JMH-L.
12 Do you understand what those documents are,
13 Ms. Mattson?
15 Q. Are those documents something that you would look at
16 -- sorry -- may I publish, Your Honor?
19 THE COURT: Sorry. Mr. Morris?
23 THE COURT: All right. This is L?
25 THE COURT: All right. L is admitted.

1 (Defendant's Exhibit JMH-L, Silva Payment Voucher
2 with payment due date 10/1/05, admitted into evidence.)
3 Q. BY MR. HAYDN-MYER: Now, Ms. Mattson, what we're
4 looking at is something that Ms. Silva sent in to Financial
5 Enterprises, is that correct?
6 A. Yes. That's what it looks like.
7 Q. And the total amount enclosed is $5,000, is that also
8 correct?
9 A. Yes.
10 Q. And do you see where a person wrote "June, July,
11 August, September, October"?
12 A. Yes, I see that.
13 Q. Now, is that, based on the records that we've just
14 looked at, Ms. Silva catching up for June, July, August,
15 September and October to Financial Enterprises?
16 A. That's what it looks like to me.
17 MR. HAYDN-MYER: If I may, Your Honor, can I publish
18 JMH-M?
23 THE COURT: M is admitted.
24 (Defendant's Exhibit JMH-M, Silva Payment Voucher
25 with payment due date 1/1/06, admitted into evidence.)

1 Q. BY MR. HAYDN-MYER: Now, Ms. Mattson, what we're
2 looking at is another document that was sent to Financial
3 Enterprises, isn't that correct?
4 A. Yes.
6 A. Yes.
7 Q. And if you look at "amount due" right there, what
8 Ms. Silva is doing, based on the records that you've been
9 keeping, is she's trying to get up to the amount due on the
10 3,900, but she sent 2,000, is that correct?
11 A. Yes.
12 Q. Now you did have some homeowners that were in the
13 process or at one point had been evicted, is that correct?
14 A. If I remember correctly, yes, that sounds right.
15 Q. But in Ms. Silva's case, she got her house back,
16 didn't she?
17 A. Yes.
18 Q. And at one point she was at least $5,000 behind in
19 payments to Financial Enterprises, is that also correct?
20 A. Yes.
21 Q. So was Financial Enterprises working with Ms. Silva
22 to complete the contract?
23 A. It seems like it, yes.
24 Q. Based on the terms of the contract, could Financial
25 Enterprises have evicted Ms. Silva at 30 days?

1 A. Yes.
2 MR. HAYDN-MYER: Madam Clerk, I believe the next in
3 order would be N, is that correct? N as in Nancy?
4 THE CLERK: Yes.
5 MR. HAYDN-MYER: Your Honor, I've marked two more
6 items. One is going to be JMH-N, and one is going to be JMH-O.
7 I've shown them to both counsel.
8 THE COURT: All right. Do you have a copy for the
9 Court?
11 (Defendant's Exhibit JMH-N, Financial Enterprises
13 (Defendant's Exhibit JMH-O, Check #1069 for $667.46,
14 payable to Sovereign Bank, marked for identification.)
18 JMH-O and I'm showing you JMH-N. Do you recognize those
19 documents, Ms. Mattson?
20 A. Yes.
21 MR. HAYDN-MYER: If I may, Your Honor, permission to
22 publish JMH-N first?

2 THE COURT: N is admitted.
3 (Defendant's Exhibit JMH-N, Financial Enterprises
5 Q. BY MR. HAYDN-MYER: Ms. Mattson, can you see JMH-N on
6 your screen?
7 A. Yes.
8 Q. Looking up to the left-hand corner there is a name
9 that appears there, that's Richard and Brenda Clark, is that
10 correct?
11 A. Yes.
12 Q. And this a document that you generated?
13 A. Yes.
14 Q. While you were working for Financial Enterprises?
15 A. Yes.
16 Q. You actually put the information into this document,
17 is that correct?
18 A. Yes, usually it was me.
19 Q. Looking down at the dates, August all the way down,
20 and looking off to the right there is a description, is that
21 correct?
22 A. Yes.
23 Q. The charges, 1918. Is that a charge meaning that was
24 what was owed by the Clarks to Financial Enterprises for that
25 individual month?

1 A. Yes.
2 Q. Do you see the balance?
3 A. Yes.
4 Q. Were you keeping a running balance of payments that
5 were owed by the Clarks with this document?
6 A. Yes.
7 Q. So the total due, based on the terms of the contract,
8 on May 1st of 2006, was $32,631 that the Clarks owed to
9 Financial Enterprises based on the terms of the contract, is
10 that correct?
11 A. Yes. That's what it looks like.
12 MR. HAYDN-MYER: Showing you JMH-O. May I have that
13 published, Your Honor?
14 THE COURT: Any objection? Mr. Morris?
18 THE COURT: O is admitted.
19 (Defendant's Exhibit JMH-O, Check #1069 for $667.46,
20 payable to Sovereign Bank, admitted into evidence.)
21 Q. BY MR. HAYDN-MYER: I'm sorry. If I remember
22 correctly when we were speaking of the Silvas, you had a way of
23 corresponding the check to the spreadsheet that you created for
24 Financial Enterprises, is that correct?
25 A. I'm not sure what you mean.

1 Q. That's fine. When you were writing a check, if it
2 was for a specific piece of property, you would actually write,
3 more often than not, the name of the specific piece of property
4 on the check, is that correct?
6 Q. And you've done that right there, is that correct?
7 A. Yes.
8 Q. Now based on the two addresses that appear on JMH-O
9 and JMH-N, you can tell that that check was written to pay a
10 mortgage for the Clark account, is that correct?
11 A. Yes.
12 Q. And the date of that check is January 26 of '06, is
13 that correct?
14 A. Yes.
15 Q. So between January and February of '06, the Clarks
16 owed Financial Enterprises approximately $25,000, is that
17 correct?
18 A. Yes.
19 Q. But Financial Enterprises was still making the
20 mortgage payments for the Clark account even though the Clarks
21 were behind by about 25 grand, is that correct?
22 A. Yes.
23 MR. HAYDN-MYER: Madam Clerk, I believe I'm on P, is
24 that correct?
25 THE CLERK: Yes.

1 MR. HAYDN-MYER: May I approach, Your Honor? I've
2 marked P and Q, JMH.
4 (Defendant's Exhibit JMH-P, Financial Enterprises
6 (Defendant's Exhibit JMH-Q, Check #1658 for
7 $2,286.42, payable to New Century, marked for identification.)
8 THE COURT: Do you wish to approach the witness?
12 JMH-P and JMH-Q. Do you recognize the documents?
13 A. Yes.
14 Q. Permission to publish JMH-P first?
19 THE COURT: P is admitted.
20 (Defendant's Exhibit JMH-P, Financial Enterprises
22 Q. Now similar to what we had with the Clarks and
23 Ms. Silva, you have another account for the Lees, is that also
24 correct?
25 A. Yes.

1 Q. And this was a document that you worked on,
2 generated, put information into in the course of working for
3 Financial Enterprises, correct?
4 A. Yes.
5 Q. Now looking to the balance, you're keeping a running
6 balance, and you come down to a total due in January '05 for
7 $8,350, is that correct?
8 A. Yes.
9 Q. And the $8,350 were actually monies that are owed to
10 Financial Enterprises by the Lees based on the contract, is
11 that correct?
12 A. Yes.
13 Q. Also similar to the Clarks and Ms. Silva?
14 A. Yes.
15 MR. HAYDEN-MYER: Sorry, Your Honor, permission to
16 publish Q?
21 THE COURT: Q is admitted.
22 (Defendant's Exhibit JMH-Q, Check #1658 for
23 $2,286.42, payable to New Century, admitted into evidence.)
24 Q. BY MR. HAYDN-MYER: You had a way of actually
25 identifying the check that you were writing to cover the

1 mortgage on the Lees' account, is that correct?
2 A. Yes.
3 Q. And that's by the address there, is that correct?
4 A. Yes.
5 Q. So if you looked at the address on the document that
6 you generated, the 117 North Steckel, it actually corresponds
7 to the check that we're looking at as JMH-Q, correct?
8 A. Yes.
9 Q. And the date of the check is December 15th of '05, is
10 that correct?
11 A. Yes.
12 Q. So between December and January, even though the Lees
13 owed $8,350, in December of '05 Financial Enterprises was
14 making payments on that contract to a mortgage, correct?
15 A. Yes.
16 MR. HAYDN-MYER: I believe the next letter is R.
17 THE CLERK: Yes.
20 (Defendant's Exhibit JMH-R, Check #1726 for
21 $1,612.44, payable to Homecomings Financial, marked for
22 identification.)
24 Honor?

1 Q. BY MR. HAYDN-MYER: Ms. Mattson, showing you JMH-R,
2 do you recognize that?
3 A. Yes.
4 MR. HAYDN-MYER: Permission to publish JMH-R, Your
5 Honor.
10 THE COURT: R is admitted.
11 (Defendant's Exhibit JMH-R, Check #1726 for
12 $1,612.44, payable to Homecomings Financial, admitted into
13 evidence.)
14 Q. BY MR. HAYDN-MYER: This is the document that I just
15 showed you, Ms. Mattson, is that correct?
16 A. Yes.
17 Q. And that's your signature at the bottom, is that also
18 correct?
19 A. Yes.
20 Q. And as you look to the left there is an address
22 A. Yes.
23 Q. And that is actually another account, another
24 contract that Financial Enterprises is paying a mortgage to, is
25 that correct?

1 A. Yes.
2 MR. HAYDN-MYER: I believe the next in order would be
3 S, Your Honor.
4 THE COURT: That's what I show, yes.
5 MR. HAYDN-MYER: Your Honor, I'm approaching with two
6 items, JMH-S and JMH-T. With the Court's permission?
8 (Defendant's Exhibit JMH-S, Financial Enterprises
10 (Defendant's Exhibit JMH-T, Check #1239 for $624.44,
11 payable to Litton Loan Servicing, marked for identification.)
13 Honor?
15 Q. BY MR. HAYDN-MYER: Ms. Mattson, I'm showing you two
16 documents, JMH-S and JMH-T. Do you recognize the documents?
17 A. Yes.
18 MR. HAYDN-MYER: Permission to publish JMH-S, Your
19 Honor?
24 THE COURT: S is admitted.
25 (Defendant's Exhibit JMH-S, Financial Enterprises

2 Q. BY MR. HAYDN-MYER: Now, Ms. Mattson, as with the
3 others, this is a document that you generated while working for
4 Financial Enterprises, correct?
5 A. Yes.
6 Q. And Pamela Speights is the name of a person that
7 Financial Enterprises had a contract with, is that also
8 correct?
9 A. Yes.
10 Q. And as you look down through the descriptions, you
11 can see that on March 15th of '05 the total due was $3,822 to
13 A. Yes.
14 Q. And Ms. Mattson, you also had a way of marking this
15 account when you were writing a check to cover the mortgage for
16 that contract, is that also correct?
17 A. Yes.
18 MR. HAYDEN-MYER: Permission to publish JMH-T?
23 THE COURT: T is admitted.
24 (Defendant's Exhibit JMH-T, Check #1239 for $624.44,
25 payable to Litton Loan Servicing, admitted into evidence.)

1 Q. BY MR. HAYDN-MYER: And the address that you wrote on
2 this check is 1921 West 65th Street, Los Angeles, correct?
3 A. Yes.
4 Q. And by looking at JMH-S, you can tell that
5 Ms. Speights was not paying or was late on her contract on
6 March 15th, correct?
7 A. Yes.
8 Q. And by looking at the check dated May 26, '06, you
9 can tell that Financial Enterprises was still making payments
10 on the mortgage that related to Ms. Speights' contract with
12 A. Yes.
13 MR. HAYDN-MYER: And, Your Honor, I believe I'm on
14 JMH-U.
15 THE COURT: Correct.
16 MR. HAYDN-MYER: May I approach, Your Honor, with
17 JMH-U and V?
19 (Defendant's Exhibit JMH-U, Financial Enterprises
21 (Defendant's Exhibit JMH-V, Countrywide Home Loans
22 Monthly Statement, Dated 4/8/05, marked for identification.)
24 Honor?

2 JMH-V -- sorry -- JMH-U and JMH-V. Do you recognize the
3 documents, Ms. Mattson?
4 A. Yes.
5 MR. HAYDN-MYER: Permission to publish JMH-U?
7 MR. MORRIS: No, Your Honor. Subject to the -- I
8 think we're going to have to do redacted copies of a lot of
9 these exhibits before they become final. But no objection to
10 the admission of the documents subject to later redaction of
11 personal information.
12 MR. HAYDN-MYER: I agree to that.
15 THE COURT: U is admitted.
16 (Defendant's Exhibit JMH-U, Financial Enterprises
18 Q. BY MR. HAYDN-MYER: Ms. Mattson, showing you JMH-U.
19 Similar to the other documents we have talked about, this is a
20 document that you generated while working for Financial
21 Enterprises, is that correct?
22 A. Yes.
23 Q. And you can tell that the contract this belongs to is
24 actually Mary Salazar, is that correct?
25 A. Yes.

1 MR. HAYDN-MYER: Permission to publish JMH-V?
4 THE COURT: Mr. Tedmon.
5 MR. TEDMON: No, Your Honor?
6 THE COURT: V is admitted.
7 (Defendant's Exhibit JMH-V, Countrywide Home Loans
8 Monthly Statement, Dated 4/8/05, admitted into evidence.)
9 Q. BY MR. HAYDN-MYER: Now, Ms. Mattson, this isn't a
10 check, is that correct?
11 A. No, it's not a check.
12 Q. But there is a way that you can tell -- well, first
13 of all, what is this, Ms. Mattson?
14 A. It looks like a mortgage statement.
15 Q. Correct.
16 A. Loan.
17 Q. Is there a way that Financial Enterprises was
18 covering mortgage through direct deposits?
20 Q. I'm sorry. Through automatic withdrawals?
21 A. I don't recall specifically if they were or weren't.
22 I know we wrote checks most of the time, but I don't remember
23 for sure.
24 MR. HAYDN-MYER: I believe I'm on W, Madam Clerk?
25 THE CLERK: Yes.

1 MR. HAYDN-MYER: If I may approach, Your Honor. I
2 have three items, W, X and Y.
3 THE COURT: All right. You may.
4 (Defendant's Exhibit JMH-W, JMH-X, JMH-Y, (see index
5 for description), marked for identification.)
7 Honor?
10 JMH-X, -W and -Y. Do you recognize those items?
11 A. Yes.
12 MR. HAYDN-MYER: Permission to publish JMH-W, Your
13 Honor?
18 THE COURT: W is admitted.
19 (Defendant's Exhibit JMH-W, Check #1088 for
20 $1,185.67, payable to Washington Mutual, admitted into
21 evidence.)
22 Q. BY MR. HAYDN-MYER: Showing you JMH-W. There is
23 another address that's written on that check, is that correct?
24 A. Yes.
25 Q. And your name is signed on that check, is that also

1 correct?
2 A. Yes.
3 Q. And that is actually a check written from Financial
4 Enterprises to cover another mortgage for a person you had a
5 contract with, is that also correct?
6 A. Yes.
7 MR. HAYDN-MYER: Permission to publish JMH-X?
12 THE COURT: X is admitted.
13 (Defendant's Exhibit JMH-X, Check #1090 for
15 evidence.)
16 Q. BY MR. HAYDN-MYER: Now, Ms. Mattson, showing you
17 JMH-X. That's your signature on the check, is that also
18 correct?
19 A. Yes.
20 Q. And there is also an address off to the left, is that
21 correct?
22 A. Yes.
23 Q. Now that is you writing a check to cover another
24 contract --
25 A. Yes.

1 Q. -- that has a mortgage, is that correct?
2 A. Yes.
3 MR. HAYDN-MYER: Permission to publish JMH-Y?
8 THE COURT: Y is admitted.
9 (Defendant's Exhibit JMH-Y, Check #1091 for $881.01,
10 payable to Washington Mutual, admitted into evidence.)
11 Q. BY MR. HAYDN-MYER: Showing you JMH-Y. That's your
12 name on the check, correct, Ms. Mattson?
14 Q. And as you look off to the left there is another
15 address, is that also correct?
16 A. Yes.
17 Q. There is a number there. Is that a mortgage account
18 number, if you know?
19 A. Yes, I believe so.
20 Q. So what this is, is you writing a check from a
21 Financial Enterprises account to cover another mortgage for
22 another contract, is that correct?
23 A. Yes.
24 MR. HAYDN-MYER: I believe the next letter is going
25 to be Z, is that correct, Madam Clerk?

1 THE CLERK: Yes.
2 MR. HAYDN-MYER: Your Honor, should I go back to AA?
3 THE COURT: After that, yes.
4 MR. HAYDN-MYER: Your Honor, may I approach? I have
5 marked three items, JMH-Z, JMH-AA and JMH-BB.
6 (Defendant's Exhibit JMH-Z, JMH-AA, JMH-BB, (see
7 index for descriptions), marked for identification.)
8 THE COURT: All right, you may.
10 Honor?
13 JMH-Z and JMH-AA and JMH-BB. Can you take a look at those,
14 please.
15 A. (Witness reviewing documents.)
16 Q. Do you recognize those items?
17 A. Yes.
18 MR. HAYDN-MYER: Permission to publish JMH-Z, Your
19 Honor?
24 THE COURT: Z is admitted.
25 (Defendant's Exhibit JMH-Z, Check #1067 for

1 $2,762.67, payable to Acoustic Home Loans, admitted into
2 evidence.)
3 Q. BY MR. HAYDN-MYER: That is your signature on that
4 check, correct, Ms. Mattson?
5 A. Yes.
6 Q. And off to the left of your signature there is an
7 address and an account number, is that also correct?
8 A. Yes.
9 Q. Now, Ms. Mattson, isn't that another check being
10 written to cover another mortgage on a different contract that
11 someone has with Financial Enterprises?
12 A. Yes.
13 MR. HAYDN-MYER: Permission to publish JMH-AA?
15 MR. MORRIS: No.
17 MR. TEDMON: No.
18 THE COURT: AA is admitted.
19 (Defendant's Exhibit JMH-AA, Check #1073 for
20 $1,898.64, payable to Homecomings, admitted into evidence.)
21 Q. BY MR. HAYDN-MYER: Is that your signature on JMH-AA,
22 Ms. Mattson?
23 A. Yes.
24 Q. And off to the left is another address and another
25 account number, is that also correct?

1 A. Yes.
2 Q. And isn't this, as we look at the check, a check that
3 is written to cover another mortgage on another contract?
4 A. Yes.
5 Q. With Financial Enterprises, is that correct?
6 A. Yes.
7 MR. HAYDN-MYER: Permission to publish JMH-BB, Your
8 Honor?
13 THE COURT: BB is admitted.
14 (Defendant's Exhibit JMH-BB, Check #1079 for
15 $2,102.36, payable to Select Portfolio Servicing, admitted into
16 evidence.)
17 Q. BY MR. HAYDN-MYER: Is that your signature on JMH-BB,
18 Ms. Mattson?
19 A. Yes.
20 Q. And off to the left is an address and looks like
21 another account number, is that also correct?
22 A. Yes.
23 Q. Now, Ms. Mattson, are you writing a check to Select
24 Portfolio to cover a mortgage on another contract that someone
25 has with Financial Enterprises?

1 A. Yes.
2 MR. HAYDN-MYER: Your Honor, I've marked two items,
3 JMH-CC and JMH-DD. Permission to approach?
5 (Defendant's Exhibit JMH-CC, Check #1082 for
6 $1,069.96, payable to Washington Mutual, marked for
7 identification.)
8 (Defendant's Exhibit JMH-DD, Check #1152 for
9 $2,011.69, payable to Acoustic Home Loans, marked for
10 identification.)
11 MR. HAYDN-MYER: Permission to approach the witness,
12 Your Honor?
15 JMH-CC and JMH-DD. Would you please look at those?
16 A. (Witness reviewing documents.)
17 Q. Do you recognize them?
18 A. Yes.
19 MR. HAYDEN-MYER: Permission to publish JMH-CC?
21 MR. MORRIS: No objection.
24 THE COURT: CC is admitted.
25 (Defendant's Exhibit JMH-CC, Check #1082 for

2 evidence.)
3 Q. BY MR. HAYDN-MYER: Ms. Mattson, JMH-CC, is that your
4 signature on the check?
5 A. Yes.
6 Q. And there is an address and an account number off to
7 the left, is that also correct?
8 A. Yes.
9 Q. Now, is this you writing a check from Financial
10 Enterprises to cover another mortgage on another contract that
11 you had with somebody?
12 A. Yes.
13 MR. HAYDN-MYER: Permission to publish JMH-DD, Your
14 Honor?
16 MR. MORRIS: No objection.
19 THE COURT: DD is admitted.
20 (Defendant's Exhibit JMH-DD, Check #1152 for
21 $2,011.69, payable to Acoustic Home Loans, admitted into
22 evidence.)
23 Q. BY MR. HAYDN-MYER: Showing you JMH-DD. Is that your
24 signature on that check, Ms. Mattson?
25 A. Yes.

1 Q. And there is another account number off to the left
2 and an address, is that correct?
3 A. Yes.
4 Q. Now is this you writing a check from Financial
5 Enterprises to cover a mortgage and another contract with a
6 person?
7 A. Yes.
8 Q. How many years did you work for or with Financial
9 Enterprises, Ms. Mattson?
10 A. Full time for two years.
11 Q. At times, after we have looked at the different
12 checks that have been going to the mortgages, did you have
13 mortgage payments to different mortgage companies or lenders
14 that were totalling more than $40,000 to $50,000 in a month?
15 A. I don't remember specifically.
16 MR. HAYDN-MYER: Your Honor, I have an item marked
17 JMH-EE. I believe that's the next in order.
18 THE COURT: It is.
19 MR. HAYDN-MYER: May I approach?
21 (Defendant's Exhibit JMH-EE, Chart created by Sarah
22 Mattson, marked for identification.)
24 Honor?

1 Q. BY MR. HAYDN-MYER: Ms. Mattson, I'm showing JMH-EE,
2 and it's lengthy in detail, so if you would just take your time
3 and look over it.
5 Q. Have you had an opportunity to look at that document,
6 Ms. Mattson?
7 A. Yes, I have.
8 Q. Does it look familiar?
9 A. Yes.
10 Q. Did you create that document?
11 A. If -- yeah, I think I did. Either this one or
12 something very similar.
13 Q. I want you to please just take a look at it and see
14 if it's something that you -- I believe you created it. I
15 believe you generated, created the entire document as a flow
16 sheet. Is that what you're thinking as you're looking at it?
17 A. Yes.
18 Q. And you actually created that document while you were
19 working for Financial Enterprises, is that correct?
20 A. Yes.
21 MR. HAYDN-MYER: Permission to publish JMH-EE, Your
22 Honor?

2 THE COURT: JMH-EE is admitted.
3 (Defendant's Exhibit JMH-EE, Chart created by Sarah
4 Mattson, admitted into evidence.)
5 Q. BY MR. HAYDN-MYER: Now looking at the top portion of
6 JMH-EE, you can see there is a property address on the top
7 left, is that correct?
8 A. Yes.
9 Q. And the reason you put the property address up there
10 was because that was how you were organizing this list, by
11 properties, is that correct, Ms. Mattson?
12 A. Yes.
13 Q. And as you look over to the right one, it says "bank
14 name," and that's the lending institution that you're going to
15 be making a mortgage payment to, is that correct?
16 A. Yes.
17 Q. And do you see where it says "first loan, second
18 loan"?
19 A. Yes.
20 Q. Some of the properties that you were dealing with had
21 first loans and second loans, is that also correct?
22 A. Yes.
23 Q. So when you were organizing this, you put all the
24 properties on the left, the bank name, the first loan and the
25 second loan, and then another first loan amount and a second

1 loan amount, is that correct?
2 A. Yes.
3 Q. And a mailing address?
4 A. Yes.
5 Q. Now what I'm going to try and do is I'm going to try
6 to put this at the top because the document is a little large
7 for the screen, and I'm going to slide it down. So we're going
8 to go from first loan to second loan.
9 So it's first loan to second loan, correct?
10 A. Yes.
11 Q. And as you slide to the bottom, there is an amount
12 that's listed there, 34,000 on the left column and 12,000 on
13 the right, is that correct?
14 A. Yes.
15 Q. Now were those the totals of the loan amounts that
16 you were paying based on JMH-EE?
17 A. Yes.
18 Q. Now the loan amounts were monthly, is that correct?
19 A. Yes.
20 Q. So when you were talking about a given month, you
21 would add, of course, the 34,000 to the $12,000 based on the
22 spreadsheet that you created for the mortgage payments that
23 were being paid for that month, correct?
24 A. Yes.
25 Q. So based on the document that you created for

1 Financial Enterprises, JMH-EE, it was between 36,000 --
2 sorry -- between 46,000 and 47,000 dollars for the month in
3 mortgage payments, is that correct?
4 A. Yes.
5 Q. Ms. Mattson, going back through your duties for
6 Financial Enterprises for those approximately two years, we've
7 already seen that you created documents to track the monies
8 that were being paid to the mortgages and you were signing off
9 on the checks, is that correct?
10 A. Yes.
11 Q. And did you ever do anything in regards to processing
12 of loans at any location that you worked?
13 A. What do you mean by "processing"?
14 Q. Did you ever work on any 1003s, fill in any of the
15 information on them?
16 A. The loan applications?
17 Q. Yes.
18 A. Yes.
19 Q. What exactly did you do?
20 A. Most of the time I put in -- I was able to put in the
21 basic information, name, Social Security number. I don't
22 remember everything else on the loan application.
23 Q. How about contracts, when you were working for
24 Financial Enterprises, did you ever send out the contracts, the
25 Equity Purchase Agreements, the Notices of Cancellation to the

1 people that you were trying to negotiate a deal with?
2 A. Yes.
3 Q. Did you ever send out second contracts or additional
4 information to them?
5 A. I don't remember.
6 Q. If you know, were you the only one that was sending
7 out packets to other people you were trying to negotiate with
8 from Financial Enterprises for the Equity Purchase Agreements
9 or did somebody else do it?
10 A. No. When we were in Arizona, I believe some of the
11 other people sent things out, too.
12 Q. When you were in Arizona who were you working with?
13 A. Sunny Rock.
14 Q. Anybody else?
15 A. There was a few other people in the office. There
16 was Stephen Goldizen, Patrick Harding. And then there was a
17 receptionist as well.
18 Q. Did you ever negotiate with any of the lenders, any
19 people that were trying -- that you were actually trying to
20 borrow money from to cover the mortgages in the contracts?
21 A. Can you explain what you mean a little better?
22 Q. Yes. Did you ever send e-mails back and forth with
23 lenders to try and make a determination on loan rates and
24 things like that?
25 A. I don't remember.

1 MR. HAYDN-MYER: I believe the next in order would be
2 JMH-FF?
4 MR. HAYDN-MYER: May I approach Your Honor, with an
5 item marked JMH-FF?
7 (Defendant's Exhibit JMH-FF, E-mail dated 4/25/06 re:
8 Revision to No Ratio on Brandon Davis, marked for
9 identification.)
11 Honor?
13 Q. BY MR. HAYDN-MYER: Ms. Mattson, this has several
14 pages also, so if you would just take your time and look
15 through it.
16 A. Okay. (Witness reviewing document.)
17 Q. Ms. Mattson, do you recognize that?
18 A. I don't. My name is on it, obviously, but I don't
19 remember that specifically, no.
20 Q. Thank you.
21 Ms. Mattson, earlier you discussed the amount of
22 money that you were being paid, and I think you said it was
23 approximately $5,000 a month, is that correct?
24 A. Yes.
25 Q. At times, though, it would fluctuate between

1 different amounts depending on different things, is that
2 correct?
3 A. Yes.
4 Q. One month is it true that you were paid as much as
5 $13,500 or more?
6 A. It's possible.
7 Q. Is it possible that you were paid more than $15,000
8 in one month?
9 A. I suppose. I don't know. I don't remember.
10 Q. Is it possible?
11 A. It could be, but it may not have all been salary for
12 my duties.
13 Q. What else could it have been?
14 A. Reimbursement for money I was owed for other things,
15 personal expenses.
16 Q. Did you ever get any bonuses?
17 A. I may have. I don't remember.
18 MR. HAYDN-MYER: I believe I'm on GG, Your Honor?
19 THE COURT: You are.
20 MR. HAYDN-MYER: May I approach, Your Honor, with
21 JMH-GG?
23 (Defendant's Exhibit JMH-GG, Check #1021 for
24 $13,500.00, payable to Sarah Mattson, marked for
25 identification.)

1 Q. BY MR. HAYDN-MYER: May I approach the witness, Your
2 Honor?
4 Q. BY MR. HAYDN-MYER: Showing you JMH-GG.
5 A. Okay.
7 A. Yes.
8 MR. HAYDN-MYER: Permission to publish JMH-GG, Your
9 Honor?
14 THE COURT: JMH-GG may be published. It is admitted.
15 (Defendant's Exhibit JMH-GG, Check #1021 for
16 $13,500.00, payable to Sarah Mattson, admitted into evidence.)
17 Q. BY MR. HAYDN-MYER: Now, Ms. Mattson, this is one of
18 the examples where you were paid over $5,000 for payroll for a
19 month, is that correct?
20 A. Yes.
21 Q. And in this check you're obviously being paid 13,500
22 for payroll, is that correct?
23 A. Yes.
24 MR. HAYDN-MYER: Your Honor, can I have one quick
25 moment. I believe I'm almost done.

2 (Discussion between defendant and counsel.)
3 MR. HAYDN-MYER: Permission to approach, Your Honor?
4 THE COURT: With a new exhibit?
5 MR. HAYDN-MYER: No. A prior exhibit, Your Honor.
6 THE COURT: All right. And which exhibit, is that?
7 MR. HAYDN-MYER: JMH-FF, Your Honor.
9 Q. BY MR. HAYDN-MYER: Ms. Mattson, showing you JMH-FF
10 again. Are you cc'd on this e-mail?
11 A. Yes.
12 Q. And I realize it was in 2006, but the e-mail is to a
13 person named Sunny Rock, is that correct?
14 A. Yes.
15 Q. Now who was Sunny Rock?
16 A. He was Mike's business partner while in Arizona.
17 Q. Did you ever work with or for Sunny Rock?
18 A. Yes.
19 Q. Now turning to that second page of the document --
20 A. Uh-huh.
21 Q. -- read the first paragraph?
22 A. "Want to" --
23 Q. Just to yourself. My apologies.
24 A. Sorry. (Witness reviewing document.) Okay.
25 Q. And could you read the paragraph right after that?

2 Q. Now you mentioned earlier that you did put some
3 information into 1003s, is that correct?
4 A. Yes.
5 Q. Now the reason you're cc'd on this e-mail is because
6 you're going to fill out the 1003 in this particular loan,
7 isn't it?
8 A. Obviously --
9 MR. MORRIS: Objection, Your Honor. The witness has
10 testified she doesn't recall the items contained in the
11 e-mails.
12 THE COURT: Overruled. You may answer.
13 THE WITNESS: Possibly.
14 Q. BY MR. HAYDN-MYER: Now based on that paragraph that
15 you just read and the one above it, aren't you being given
16 directions by a lender to do something on a 1003?
17 A. It appears that way, yes.
18 Q. Aren't they telling you to actually change the
19 numbers in a 1003 in order to qualify for the loan?
20 A. Yes.
21 MR. HAYDN-MYER: Permission to publish, Your Honor?
23 MR. MORRIS: Yes, Your Honor. I don't think she can
24 authenticate the information in the exhibit or the exhibit
25 itself for that matter.

1 THE COURT: The exhibit has a number of pages. The
2 objection is sustained at this point.
3 Is there anything you want to make a record,
4 Mr. Tedmon?
6 MR. HAYDN-MYER: Your Honor --
7 THE COURT: You may lay a further foundation if
8 you're able.
9 MR. HAYDN-MYER: Thank you. Just in regards to the
10 second page, may I publish the second page that Ms. Mattson
11 just spoke to, Your Honor.
12 THE COURT: Any objection to that section page, Mr.
13 Morris?
14 MR. MORRIS: Same objection, Your Honor.
15 THE COURT: This is 2383?
16 MR. HAYDN-MYER: Yes, Your Honor. Page 2383, the one
17 Ms. Mattson just spoke to on the witness stand.
18 THE COURT: All right. Given her tentative answer,
19 the objection is sustained.
20 Q. BY MR. HAYDN-MYER: Being more specific, Ms. Mattson,
21 were you or were you not given directions by the lender to
22 change the information in a 1003 based on the e-mail that
23 you're cc'd on here?
24 A. Yes.
25 MR. HAYDN-MYER: May I publish it now, Your Honor?

1 THE COURT: Can you get a more clear answer? Your
2 question was "were you or were you not."
3 Q. BY MR. HAYDN-MYER: Given the information that you
4 see before you in this e-mail, do you know whether or not the
5 lender was telling you to change the information in the 1003?
6 A. It seems that way, yes.
7 MR. HAYDN-MYER: Again, permission to publish?
8 THE COURT: This is page two?
9 MR. HAYDN-MYER: Just page two.
12 THE COURT: Mr. Tedmon, anything further to say?
14 THE COURT: Page 2 of FF may be published. It is
15 admitted.
16 (Defendant's Exhibit JMH-FF, Email dated 4/25/06 re:
17 Revision to No Ratio on Brandon Davis (Page 2 only), admitted
18 into evidence.)
19 Q. BY MR. HAYDN-MYER: When I asked you about the two
20 paragraphs, the first paragraph I was referring you to was this
21 one right here, "want to re-cast this file on a no ratio basis,
22 underwriting is having a problem with getting his income at
23 15,000 a month to pass the reasonableness stated income test,
24 by going no ratio, we do not have to address either income
25 reasonableness or calculate a DTI" -- debt to income, is that

1 correct?
2 A. Yes.
3 Q. -- "please send me revisions on this basis, 1008,
4 1003, on both first and second liens, do not disclose income or
5 calculate any DTI, please fax at your earliest convenience,
6 want to get UW" -- underwriting?
7 A. That sounds right, yes.
8 Q. -- "proceeding."
9 And it's signed by a guy named Gary, and he is with
10 AFM Mortgage Bankers, right, out of Austin, Texas?
11 A. Yes.
12 Q. So when you were answering "yes" earlier to my
13 questions, when you were reading this, they were telling you
14 that you had already sent in a loan application, and they
15 didn't think it was passing with their people, correct, in the
16 mortgage?
17 A. Yes.
18 Q. The underwriters are saying, well, I don't know if we
19 can get it passed, correct?
20 So what's happening here is, Gary Gordon is sending
21 an e-mail back to Sunny Rock, and they are telling you, we know
22 it's wrong, we know the numbers don't match, it's not working,
23 you change the numbers and then re-send it back to us, correct?
24 A. Yes. It seems that way, yes.
25 MR. HAYDN-MYER: Your Honor, I have no further

1 questions. It's going to take me a second to clean up my --
2 THE COURT: Exhibits.
3 MR. HAYDN-MYER: No further questions, Your Honor.
4 THE COURT: Mr. Tedmon, do you have questions?
6 THE COURT: All right. Mr. Morris, redirect? Once
7 Mr. Haydn-Myer has cleared the podium. Do you have redirect,
8 Mr. Morris?
9 MR. MORRIS: I do, Your Honor. I am waiting for him
10 to clear.
11 THE COURT: All right. How long do you believe you
12 have, Mr. Morris?
13 MR. MORRIS: I would say 10 to 15 minutes, Your
14 Honor.
15 THE COURT: Well, let's get started. We will take
16 five minutes, and then we'll take our break.
18 BY MR. MORRIS:
19 Q. Ms. Mattson, Mr. Haydn-Myer asked you about this
20 exhibit earlier, it's JMH-W. And I think he was asking you
21 what the purpose of this check was.
22 And I'm wondering if you could tell me whose name is
23 this down here where my pen is on the screen?
24 A. Heather Hancheck.
25 Q. Who is Heather Hancheck?

1 A. She was a buyer, an investor.
2 Q. When you say investor, what did she invest?
3 A. She allowed her credit to be used to purchase a home.
4 Q. So she didn't give any money to invest in this house?
5 A. No.
6 Q. Do you recognize the address on that check?
7 A. The -- which one?
8 Q. Sorry. The address in the memo line.
9 A. Memo line. Vaguely familiar. I don't remember that,
10 specifically.
11 Q. Okay. Well, let me ask you this, I think your
12 testimony was that you had check-writing authority on Financial
13 Enterprises' accounts, is that correct?
14 A. Yes.
15 Q. And is it also true that -- I think your testimony
16 was that you did some of the bookkeeping for the accounts?
17 A. Yes.
18 Q. Okay. Other than foreclosure properties, what types
19 of financial transactions went on in these accounts?
20 A. What do you mean by that?
21 Q. Well, were there anything -- were there any
22 transactions as part of these bank accounts that you managed
23 for Financial Enterprises that didn't involve foreclosure
24 transactions?
25 A. Yes.

1 Q. Such as what?
2 A. I guess personal and business, bills, car payments,
3 utilities, things like that.
4 Q. Personal car payments?
5 A. Yes.
6 Q. For whom?
7 A. Mike Head.
8 Q. Okay. And you said bill and utility payments. Were
9 those bill and utility payments on foreclosure properties that
10 the company owned?
11 A. No. Those were personal or business.
12 Q. Personal bill and utility payments for whom?
13 A. Mike Head.
14 Q. And on this check JMH-W, what was the date that the
15 check was written?
16 A. January 27th, 2006.
17 Q. And I'll ask you to look at JMH-X, which was another
18 document you looked at this morning with Mr. Haydn-Myer.
19 What was the date that this check was written?
21 Q. Who is Devin Bradley?
22 A. He was another investor.
23 Q. And I'm looking at JMH-Y, which you looked at this
24 morning, what date was this check written?

1 Q. And whose name is down here in the memo?
2 A. John Marshal.
3 Q. Who is John Marshal?
4 A. He was an investor.
5 Q. Did John Marshal invest money of his own in this
6 property?
7 A. No, not that I'm aware of.
8 Q. So in your experience was John Marshal, like the
9 other investors, giving their credit?
10 A. Yes.
11 Q. In this Exhibit JMH-Z, what date was this check
12 written?
13 A. January 26, 2006.
14 Q. And who is listed in the memo for that check?
15 A. Heather Hancheck.
16 Q. And I think you testified a moment ago that Heather
17 Hancheck was one of the people that you were calling investors?
18 A. Yes.
19 Q. Look at JMH-W and Z, hopefully. Why would you be
20 writing checks on two different properties for Heather Hancheck
21 on the same date?
22 A. I was writing the checks to make payments for two
23 different loans for this -- the same person.
24 Q. Okay.
25 THE COURT: Did you mean same day?

1 MR. MORRIS: Did I say a different day?
2 THE COURT: The dates are not exactly the same day.
3 Q. BY MR. MORRIS: Good point. If you can clarify,
4 January 27th and January 26th, why would you be writing
5 successive checks on two different days for the person -- the
6 same person in the memo line?
7 A. To make the mortgage payment on the two different
8 properties.
9 THE COURT: Let's take our first break of the
10 morning. During that break, which will be a 15-minute break,
11 please, as always, remember my admonitions not to begin
12 thinking about the conclusion of the case, not to do any
13 research. If anyone approaches you, let me know. Have a good
14 break. See you at 10:15.
15 (Jury out.)
16 THE COURT: You may be seated. You may step down,
17 ma'am, please be back at 10:15 in your seat.
18 Just so the Court is clear on the redactions for the
19 JMH series, L through GG. What would be redacted?
20 MR. MORRIS: Your Honor, as with many of ours, I
21 would request partial account numbers and personal addresses of
22 the straw buyers.
23 THE COURT: Even when the addresses are material to
24 the charges?
25 MR. MORRIS: Not with respect to that, no, Your

1 Honor.
2 THE COURT: Anything but the addresses that are
3 material to the charges? That's what you're referring to,
4 Mr. Haydn-Myer?
5 MR. HAYDN-MYER: I would assume they were referring
6 to -- yeah, the addresses I would obviously want to keep. Any
7 information in regards to the account numbers on the backs of
8 the checks, the deposits, I'm fine with that.
9 THE COURT: All right. So I'll assume you can agree
10 on those redactions. If there are any disputes, let me know.
11 Anything further at this point? Mr. Morris?
12 Mr. Anderson?
18 THE COURT: All right. Fifteen minutes.
19 (Break taken.)
20 (Jury in.)
22 again, ladies and gentlemen. We will continue with the
23 redirect of Ms. Mattson and acknowledge Mr. Morris for that
24 purpose. Mr. Morris.
25 Q. BY MR. MORRIS: Ms. Mattson, another one here. If I

1 could have you look at Exhibit JMH-AA. What's the date that
2 that check was written?
3 A. January 26, 2006.
4 Q. Okay. And I think your testimony was that you think
5 this was another mortgage payment on one of the foreclosure
6 properties?
7 A. Yes.
8 Q. And Exhibit JMH-BB, what's the date that you wrote
9 that check?
10 A. January 26, 2006.
11 Q. And for JMH-CC, what was the date that you wrote that
12 check?
13 A. January 26, 2006.
14 Q. Okay. Do you recognize the address on that check?
15 A. Yes, I do.
16 Q. Do you recall how it is that you recognize that
17 address?
19 Q. Do you recall who the buyer was on that transaction?
20 A. I believe I was.
21 Q. And on this check, which was JMH-DD, who is this
22 person, Stephen Goldizen?
23 A. He was also an investor, and he worked in the Arizona
24 office as well.
25 Q. So he was a co-worker at the Arizona location after

1 Mike Head moved there?
2 A. Yes.
3 Q. And when you say he was an investor, did he invest
4 his money in this property?
5 A. No, not that I'm aware of.
6 Q. When you were a buyer on a property, did you invest
7 any of your money to buy the property up front?
8 A. No.
9 Q. And these buyers -- other than you, you worked within
10 Head Financial -- so the buyers other than you, did they
11 collect rent from the owners --
12 MR. TEDMON: Objection, Your Honor. Did Mr. Morris
13 say Head Financial or Financial Enterprises?
14 THE COURT: Just start over. Ask the question again.
15 The objection is sustained.
16 Q. BY MR. MORRIS: So not talking about your duties
17 working with Financial Enterprises, other buyers other than
18 you, did those buyers engage in collecting rent from the people
19 living in those houses?
20 A. No.
21 Q. How did Financial Enterprises get the rent for these
22 houses?
23 A. The original homeowners would send the monthly
24 payment to Financial Enterprises.
25 Q. And then what would Financial Enterprises do with

1 that rent money when it came in?
2 A. Deposit it into their account.
3 Q. Did the owners -- again not yourself -- but the other
4 owners, did they arrange for repairs to properties that were
5 being managed by Financial Enterprises?
6 A. Not that I'm aware of, no.
7 Q. Did they search for new tenants when an old tenant
8 moved out?
9 A. No.
10 Q. Were you in -- at the time that you worked for
11 Financial Enterprises, did you -- were you aware of any houses
12 which were eventually sold again after the initial transaction
13 that brought them into the program?
14 A. Yes.
15 Q. And what were the circumstances surrounding those
16 sales of those houses?
17 A. Sometimes the sale was to the -- back to the original
18 homeowner. Then there was also transactions where a second
19 investor would take over.
20 Q. And when you say "a second investor would take over,"
21 what do you mean by that?
22 A. Another investor would take -- acquire the property,
23 take a loan out for the property.
24 Q. When you say these subsequent investors, did they
25 provide up-front money as part of that purchase?

1 MR. HAYDN-MYER: Objection. Speculation. Lack of
2 foundation.
3 THE COURT: Sustained. You can ask the foundational
4 question.
5 Q. BY MR. MORRIS: In your experience doing the
6 bookkeeping for Financial Enterprises, and writing the checks
7 for Financial Enterprises, and tracking all the properties on
8 that large spreadsheet, were you aware of any investor ever
9 putting money in as part of the process of buying a house?
10 A. No.
11 Q. Now when these houses were sold, subsequent, after
12 they became part of the program, where did the money from those
13 sales go?
14 A. Usually it went to Financial Enterprises.
15 Q. Do you recall approximately how many properties you
16 were a buyer on?
17 A. Maybe five.
18 Q. For people -- for buyers who were outside of
19 Financial Enterprises, people other than yourself, are you
20 aware of any of the proceeds of the subsequent sales ever being
21 given to those buyers, the original buyers?
22 A. No. Other than the flat fee that was paid to them.
23 Q. And when was that flat fee paid?
24 A. When the transaction closed.
25 Q. The first transaction?

1 A. Yes.
2 MR. MORRIS: May I approach, Your Honor?
3 THE COURT: You may. Is the document the witness is
4 being shown marked?
5 MR. MORRIS: It is marked but not yet with a number.
6 We'll call it 13-G, Your Honor. I'm asking her to review it at
7 this point. Asking her to review it. But marked for
8 identification purposes only. Call it 13-G.
10 (Government Exhibit 13-G, Bank statement, marked for
11 identification.)
12 Q. BY MR. MORRIS: Do you recognize the document I just
13 handed you?
14 A. Yes, it looks like a bank statement.
15 Q. Were these the types of bank statements that you were
16 working with when you were managing the finances for Financial
17 Enterprises?
18 A. Yes.
19 Q. We had talked previously about a number of checks
20 that all seem to be written on January 26th, January 27th of
21 2006, having reviewed that document, what was the balance of
22 that account prior to you writing those checks, the date before
23 you wrote the checks?
24 A. On January 25th it is -- looks like negative $280.45.
25 Q. So having reviewed that document, did anything happen

1 between the time that it was overdrawn $200 and the time that
2 you wrote that series of checks?
3 A. There was a credit for $170,494.87.
4 Q. Does the statement give you any idea where that
5 credit came from?
6 A. Castlehead Escrow.
7 Q. In your experience working for Financial Enterprises,
8 what does a deposit from Castlehead Escrow -- what would be
9 coming from them as a deposit into this account?
10 A. Usually that was when a foreclosure transaction
11 closed.
14 Q. BY MR. MORRIS: Do you have any recollection of a
15 foreclosure property closing around January 25th, 2006?
16 A. No, not specifically.
17 Q. Let me bring up JMH-EE. Now you recall this was the
18 document Mr. Haydn-Myer was talking to you about earlier today?
19 A. Yes.
20 Q. And if I could draw your attention to the third
21 column, third row from the bottom, what's the date on that row?
23 Q. And following that row across, that's the property
24 address listed for that transaction?
25 A. Yes.

1 Q. What is the property address listed for that
2 transaction?
3 A. 1284 West Victoria Street, Rialto, California.
4 Q. Did you receive, you being Financial Enterprises,
5 receive rent checks from people who were in the prior
6 properties?
7 A. Can you --
8 Q. Properties that were in the foreclosure program.
9 A. Yes.
10 Q. What did you do with those checks when they arrived
11 at Financial Enterprises?
12 MR. HAYDN-MYER: Objection. Asked and answered.
14 MR. MORRIS: You can answer.
15 THE WITNESS: Deposit them in Financial Enterprises'
16 account.
17 Q. BY MR. MORRIS: I'd ask you to look at an exhibit you
18 previously looked at called JMH-R. What's the date that you
19 wrote this check?
20 A. May 24th, 2006.
21 Q. In your experience, managing the accounts, what does
22 "NSF" mean?
23 A. Non-sufficient funds.
24 Q. What are non-sufficient funds?
25 A. There's not enough money to cover the check.

1 Q. And I'll ask you to look at JMH-T, what's the date
2 that you wrote JMH-T?
3 A. May 26, 2006.
4 Q. And what does this check indicate with respect to
5 sufficient or non-sufficient funds?
6 A. Not.
7 MR. MORRIS: May I have a moment, Your Honor?
8 THE COURT: Yes.
10 THE COURT: All right. Any recross, Mr. Haydn-Myer?
12 Now, Your Honor, with permission, there was a couple
13 areas I would like to get back into that Mr. Morris didn't
14 directly touch, but I should be brief with both those areas.
15 THE COURT: Well, you can proceed, and we will see
16 what Mr. Morris does.
19 Q. Ms. Mattson, when I was asking you before about the
20 packets that were being sent out, did some of the people that
21 you were negotiating the contracts with, did they call up and
22 then the information was given to you, and you would input the
23 information into an Equity Purchase Agreement and Cancellation,
24 and then send it to them?
25 A. Usually I would get the information from Mike Head

1 and then input it in, yes.
2 Q. How did you actually -- did you mail it to the people
3 you were negotiating with, the homeowners?
4 A. At times, yes.
5 Q. How did you mail it to them?
6 A. I don't -- I don't remember.
7 Q. What was the common practice when you got the
8 information back, what would you do with it, the signed Equity
9 Purchase Agreements?
10 A. I usually make note that we had it, and then either
11 let Mike or Sunny know, and then they would proceed from there.
12 Q. Did you ever send back any of the escrow account
13 information or anything like that?
14 A. I don't. I don't remember.
15 Q. That's fine. I'd like to show you a document again
16 that was previously marked JMH-FF, and the bottom of the page
17 is 2385. May I approach, Your Honor?
19 Q. BY MR. HAYDN-MYER: Do you recognize the handwriting
20 on the document, Ms. Mattson?
21 A. Yes, it looks like mine.
22 Q. Showing you JMH-FF 2386, would you please look at
23 that page?
25 Q. Is that your handwriting, Ms. Mattson?

1 A. Yes, it looks like it.
2 MR. HAYDN-MYER: Permission to publish JMH-FF page
3 2385, Your Honor?
4 MR. MORRIS: Can I have a second, Your Honor, with
5 counsel?
6 THE COURT: You may. And previously page two was
7 admitted, so using that convention for numbering, this would be
8 pages four and five.
11 MR. MORRIS: No objection, Your Honor.
14 THE COURT: Pages 4 and 5 of FF are admitted and may
15 be published.
16 (Defendant's Exhibit JMH-FF, Email dated 4/25/06 re:
17 Revision to No Ratio on Brandon Davis (Pages 4 & 5 only),
19 Q. BY MR. HAYDN-MYER: Ms. Mattson, did you complete
20 this pre-grade loan submission form?
21 A. It looks like my handwriting, yes.
22 Q. So you would have written in the "Brandon Davis," the
23 name, the loan amount, the loan to value, correct?
24 A. Yes.
25 Q. And this is for a purchase, is that correct?

1 A. Yes.
2 Q. And what does "NOO" mean?
3 A. I don't --
4 Q. Is it non-owner occupied?
5 A. Yeah. That probably is right.
6 MR. HAYDN-MYER: Permission to publish? I believe
7 the Court is correct. I believe it would be page five.
8 THE COURT: Pages four and five are both admitted.
9 MR. MORRIS: No objection, Your Honor.
11 THE COURT: They are already in. So, yes, 2386 is
12 page five.
13 Q. BY MR. HAYDN-MYER: And this is just the second page,
14 essentially, for the pre-grade loan submission form for Brandon
15 Davis, is that correct?
16 A. Yes.
17 Q. And the loan to value is 20 percent, is that also
18 correct?
19 A. Yes.
20 Q. And you've check marked the box "non-owner occupied,"
21 is that also correct?
22 A. Yes.
23 Q. So Ms. Mattson, after looking at the document, this
24 is for 100 percent financing on a non-owner occupied property
25 for Brandon Davis, isn't that correct?

1 A. Yes.
2 Q. Now Mr. Morris spoke to you about some financial
3 difficulties that the company you were working for, Financial
4 Enterprise, was going through, is that correct?
5 A. Yes.
6 Q. Isn't it also true that at times Mr. Michael Head was
7 actually putting his own money back into the checking accounts
8 in order to help the business?
9 A. That could be. I don't remember specifically.
10 MR. HAYDN-MYER: Can I have one quick second with my
11 client, Your Honor?
14 MR. HAYDN-MYER: Thank you, Ms. Mattson. No further
15 questions, Your Honor.
16 THE COURT: Mr. Tedmon, anything?
20 BY MR. MORRIS:
21 Q. Just a couple questions.
22 In this time period, the spring 2006, were you aware
23 of any other source of income that Mike Head had?
24 A. No.
25 Q. Were you aware if he was working in a fast-food

1 restaurant, for example?
2 A. No.
3 Q. Were you aware of where this money would be coming
4 from that would be getting deposited back into the account by
5 Mike Head?
6 A. No.
8 THE COURT: All right. May Ms. Mattson be excused?
9 Mr. Morris?
10 MR. HAYDN-MYER: Your Honor, I have just a couple
11 brief questions.
12 THE COURT: Based on that redirect?
16 Q. Ms. Mattson, aren't you aware that Mr. Michael Head
17 re-financed his house, and took the money from the refinance to
18 put it back into the checking accounts for Financial
19 Enterprises?
20 A. That could be. I don't remember specifically.
22 THE COURT: All right. Mr. Morris?
24 THE COURT: All right. Now Ms. Mattson may be
25 excused? Mr. Haydn-Myer?

5 THE COURT: All right. You may step down. You are
7 MR. ANDERSON: The United States calls Nickadia
8 Daniels.
9 THE COURT: Is she in the hall?
10 MR. ANDERSON: She was, Your Honor. It may be that
11 she had to take a quick break.
13 THE CLERK: Your Honor, there is a problem with the
14 camera. May I take her photograph at the end of her testimony?
16 THE CLERK: Do you swear to tell the truth, the whole
17 truth, and nothing but the truth, so help you God.
21 THE WITNESS: Nickadia Daniels, N-i-c-k-a-d-i-a
22 D-a-n-i-e-l-s.
24 /// /// ///
25 /// /// ///

1 NICKADIA DANIELS,
6 BY MR. ANDERSON:
7 Q. Good morning, Ms. Daniels.
8 A. Good morning.
9 Q. Are you familiar with the address 4574 Canyon Road in
10 El Sobrante, California?
11 A. I am.
13 A. I lived there.
14 Q. How long did you live there for?
15 A. I think for maybe two or three years.
16 Q. Starting approximately from when to when?
17 A. If I can remember correctly, probably September,
18 October, I think, of 2005 till December of 2007 or '08.
19 Q. So those are estimates of time?
20 A. Those are.
21 Q. All right. We will show you documents a little bit
22 later, and maybe it will jog your memory. Before then do you
23 know who lived in the house?
24 A. My sister and her husband.
25 Q. Now at some point did you fall behind on payments,

1 mortgage payments?
2 A. Yes, I did.
3 Q. And as a result of that did you get in contact with a
4 company who was offering to help you?
5 A. Yes, I did.
6 Q. What company was that?
8 Q. How did you hear about Financial Enterprises?
9 A. Well, when I fell behind in my mortgage payments, I
10 got a lot of mail from various companies saying that they could
11 help me stay out of foreclosure, and so Financial Enterprises
12 was one of those companies.
13 Q. Did you respond to the mailing that you received from
14 Financial Enterprise?
15 A. Yes, I did.
17 A. I believe I called them and spoke with someone about
18 assisting me to stay out of foreclosure.
19 Q. Do you recall who you spoke with?
20 A. At first it was a lady. I don't recall her name.
21 But later on it was a gentleman by the name of J. Michael Head.
22 Q. When you spoke with Michael Head, what did you talk
23 about?
24 A. About his being able to help me to stay out of
25 foreclosure. He told me that they could loan me some money,

1 like about -- I think it was like about 10 or 15,000 thousand
2 dollars, and let me stay in my home, and pay rent, and then in
3 about a year I would be able to re-purchase my home back from
4 them and go from there.
5 Q. Did Michael Head tell you what was supposed to happen
6 with the title to that property during the year?
7 A. He told me that they would be added to the deed of
8 the property, and that I would not have to relinquish the
9 property at all. That they would just be -- their name,
10 Financial Enterprises, just would be put onto the deed.
11 Q. So who then would be on the deed to the property?
12 A. Myself and Financial Enterprises as far as I knew.
13 Q. Now what about the equity in the house, did Michael
14 Head tell you if any equity was going to be removed?
15 A. No. He said that the equity would remain in the
16 home, and that at the end of the year, that any equity that was
17 made in that year, that I would get a portion of that equity
18 for that year, and Financial Enterprises would get a portion of
19 that equity for that year.
20 Q. All right. So let me see if I understand that right.
21 The equity that was already in home when you met Financial
22 Enterprises would stay in the home, was that your
23 understanding?
24 A. That was my understanding.
25 Q. And whatever equity was earned during the course of

1 that year would be split between you, and Michael Head, and
3 A. That's what I understood, yes.
4 Q. Now did you end up entering into the deal?
5 A. Yes, I did.
6 Q. Was the fact that you thought your name was going to
7 remain on title an important factor for you in deciding to
8 enter into the deal?
9 A. Yes, it was.
10 Q. And that your equity was going to remain in the home,
11 was that also an important factor for you?
12 A. Yes, it was.
13 Q. Was there some particular reason why you wanted your
14 name to remain on title to the home?
15 A. The home was very sentimental to me.
18 Q. BY MR. ANDERSON: Well, without getting into the
19 details, was there a particular reason why you wanted your name
20 on title and that was a very important factor to you?
21 A. Yes, it was.
22 Q. Now after you entered into the deal with Mike Head,
23 what happened next?
24 A. Some time later I lost my job, and I fell behind in
25 getting -- in making my rent. And I notified Financial

1 Enterprises that that was happening, and I was told that I
2 would have to leave the home.
3 Q. Now did that seem consistent with what you had
4 understood from your earlier conversations with Mike Head?
5 A. No, it did not.
6 Q. Why not?
7 A. Because I was told that -- from what I can recall, I
8 was told that I would be able to stay in the house, and they
9 would help me through whatever I was going through in order to
10 -- and I was telling him that I had lost my job, and that I
11 needed to have a little bit of time to get my money together,
12 and --
13 Q. Well, let me ask you this --
14 A. Okay.
15 Q. -- initially, did you get copies of the documents for
16 the transaction you had entered into?
17 A. I had asked for them as far as I can remember. I
18 don't think that I got all of them from them that I asked for.
19 Q. Did you ever send a letter by fax asking for those
20 documents?
21 A. I believe I did.
22 Q. And did you receive the documents that you requested?
23 A. I don't believe so.
24 Q. Now did you ever know a person by the name of Stephen
25 Goldizen?

1 A. I did not at the time, no.
2 Q. Did you learn of the name later?
3 A. I did.
4 Q. Did Mr. Goldizen move into your home with you?
6 Q. Did he ever occupy your home in 2006 to your
7 knowledge?
8 A. To my knowledge, no.
9 Q. Well, were you there in 2006?
10 A. I believe I was.
12 Government's Exhibit 26-A be admitted, pursuant to the records
13 stipulations, as a mortgage company document.
15 admitted.
16 (Government Exhibit 26-A, 4574 Canyon Road, El
17 Sobrante – Loan File, admitted into evidence.)
18 Q. BY MR. ANDERSON: Let's go to page four. Look at the
19 date. Do you see February 28th, 2006?
20 A. Yes.
21 Q. On that day did Mr. Goldizen purchase your home and
22 move into it?
23 A. Not to my knowledge.
24 Q. Did you think you were selling your home to
25 Mr. Goldizen?

1 A. No, I did not.
2 Q. Did you think you were selling your home to Financial
3 Enterprises?
4 A. No, I did not.
6 Government's Exhibit 26-B be admitted as an escrow document;
7 26-C, as bank records; and 26-F, as title records, pursuant to
9 THE COURT: As covered by the stipulation those three
10 exhibits are admitted.
11 (Government Exhibits 26-B, 26-C, 26-F, (see index for
12 descriptions), admitted into evidence.)
13 Q. BY MR. ANDERSON: Did you give permission for
14 $35,880.05 of your equity to be taken out of your home by
17 Q. If we could go to 26-B, page two. And if we go back
18 one page to page one.
19 Do you recognize the signature on this page?
20 A. It looks like mine.
21 Q. All right. Did you know that by putting your
22 signature on this page it would be used to move $35,000 out of
23 your equity?
25 Q. Let's go to Government's Exhibit 26-F. Was granting

1 Stephen Goldizen sole ownership of your house what you intended
2 to do when you entered into the transaction with Financial
3 Enterprises?
4 A. No.
5 Q. If you had known that this would happen, would you
6 have entered into the deal?
7 A. No, I would not have.
9 THE COURT: All right. Cross-examination, starting
10 with Mr. Haydn-Myer?
15 Q. Good morning, Ms. Daniels.
16 A. Good morning.
17 MR. HAYDN-MYER: Your Honor, it's previously been
18 marked CH-01, and the stipulation does cover it.
19 THE COURT: 01? All right. So CH-01 as covered by
20 the stipulation is admitted.
21 (Defendant's Exhibit CH-O1, “Equity Purchase
22 Agreement” re: 4574 Canyon Road, El Sobrante, admitted into
23 evidence.)
24 MR. HAYDN-MYER: May I approach, please?

1 Q. BY MR. HAYDN-MYER: Ms. Daniels, I'm going to show
2 you a document. Would you please look at it?
6 Q. And showing you the back page, is that your
7 signature?
9 Q. Showing you CH -- or will be showing CH-O3, as
10 covered by the stipulation.
12 stipulation, Exhibit CH-O3 is admitted.
13 (Defendant's Exhibit CH-O3, "Residential Tenancy
14 Agreement" re: 4574 Canyon Road, El Sobrante, admitted into
15 evidence.)
16 Q. BY MR. HAYDN-MYER: Ms. Daniels, would you please
17 look at that? Is that your signature?
19 MR. HAYDN-MYER: I'm going to refer to CH-O4, Your
20 Honor, as previously covered by the stipulation.
21 THE COURT: All right. That exhibit also is
22 admitted.
23 (Defendant's Exhibit CH-O4, "Acknowledgement By
24 Seller" re: 4574 Canyon Road, El Sobrante, admitted into
25 evidence.)

1 MR. HAYDN-MYER: May I approach?
3 Q. BY MR. HAYDN-MYER: Do you recognize the signature?
4 A. It looks like mine somewhat.
5 Q. There is also initials on that page. Are those your
6 initials or not, Ms. Daniels?
7 A. They look like my initials.
8 MR. HAYDN-MYER: And I'm going to be showing
9 Ms. Daniels CH-O6, previously covered by the stipulation.
10 THE COURT: All right. O6 is admitted, CH-O6.
11 (Defendant's Exhibit CH-O6, "Affidavit Of Deed" re:
12 4574 Canyon Road, El Sobrante, admitted into evidence.)
13 Q. BY MR. HAYDN-MYER: Ms. Daniels, would you please
14 look at CH-O6 and tell me if that's your signature?
15 A. It looks somewhat like my signature.
16 Q. If we can have CH-O1, the last page presented on the
17 exhibit, please, displayed.
18 When I gave you the document earlier, Ms. Daniels,
19 and you said that signature looks like yours. That's was what
20 we were discussing, correct?
21 A. I'm sorry?
22 Q. Can you see the display?
23 A. Yes.
24 Q. When I asked you earlier about your signature, I
25 believe you said that that signature looks like yours, is that

1 correct?
2 A. Yes.
3 Q. Now when you were talking to Mr. Michael Head on the
4 phone, did he come and meet with you or was it just a phone
5 conversation?
6 A. It was a phone conversation.
7 Q. How did you end up with the documents?
8 A. I believe they were faxed to me.
9 Q. Now where did you receive the fax at?
10 A. I believe I received the fax at my job.
11 Q. Now where did you actually review the document at,
12 the CH-O1, the one that has your signature on it?
13 A. Where did I review it?
14 Q. Yes. Where did you look at it?
16 Q. When you got the document, while you were at work --
17 A. Uh-huh.
18 Q. -- you signed it, correct?
19 A. Yes, I did.
20 Q. Did you sign it at work or did you go somewhere else?
21 A. I believe I was at work.
22 Q. Did you take some time to review it?
23 A. I read over it.
24 Q. And after you completely read over it, while you were
25 at work, that's when you signed it, is that correct?

1 A. I couldn't say that but probably.
2 Q. And how did you get that one document, that Equity
3 Purchase Agreement, back to Financial Enterprises?
4 A. I believe that I faxed it back.
5 Q. From work?
6 A. Probably.
7 Q. Can I have CH-O3, please, the last page. And I
8 believe I asked you earlier, and you said that was your
9 signature also, or it looked like your signature, is that
10 correct?
11 A. Yes, it does.
12 Q. Now if we could go to the first page of CH-O3. When
13 you received this document, did you also receive it with the
14 Equity Purchase Agreement while you were at work?
15 A. Probably.
16 Q. Where did you review the Residential Tenancy
17 Agreement at?
18 A. Probably at work.
19 Q. And did you also sign it at work?
20 A. Probably.
21 Q. How did you get the document back to Financial
22 Enterprises?
23 A. I believe I faxed it back.
24 Q. Can I have CH-O4, please. The last page.
25 And I believe you've already testified that you

1 believe that looks like your signature, is that correct?
2 A. It looks like it, yes.
3 Q. And can I have the first page on CH-O4. And this
4 looks like the document that you received at work?
6 Q. Is this also the document that you reviewed while you
7 were at work and then faxed back to Financial Enterprises?
8 A. Probably.
9 Q. That's fine. You can take it down.
10 Now, Ms. Daniels, I believe you said that you asked
11 for a copy of the documents that you had and you didn't receive
12 any from Financial Enterprises, is that correct?
14 Q. Now when you faxed the documents, didn't you just
15 take them back out of the machine and already have a copy
16 available for you?
17 A. That is a possibility.
18 Q. So isn't it more likely that you already had a copy
19 of all of the documents with you, and you didn't actually need
20 a copy from Financial Enterprises because you just faxed them?
21 A. I cannot remember exactly what I said in my letter to
22 Financial Enterprises, but I believe that at the time that I
23 wrote Financial Enterprises there was some questions about the
24 documents that I had as opposed to the ones that they had, and
25 I wanted to make sure that we were on the same page.

1 Q. Correct, Ms. Daniels, but I believe the documents
2 that you signed and you've testified to in some detail, you
3 faxed each one back to Financial Enterprises, so didn't you
4 already have the answers to you because you read them while you
5 were at work?
6 A. I would not have written a letter requesting them had
7 I had what it was that I was requesting.
8 Q. At a later time, Ms. Daniels, didn't you go and get
9 an Affidavit of Deed notarized?
10 A. I went and had a notary to say that Financial
11 Enterprises could be put onto the deed that I had. At least
12 that was my understanding of what I was doing.
13 MR. HAYDN-MYER: May I approach, Your Honor? It's
14 CH-O6.
15 THE COURT: Which is already in, you may.
16 MR. HAYDN-MYER: Yes. Per stipulation.
17 THE WITNESS: (Witness reviewing document.) I'm
18 sorry, my contacts are new, and I'm sort of trying to adjust to
19 them.
20 MR. HAYDN-MYER: Take your time.
22 Q. BY MR. HAYDN-MYER: That is your signature, correct?
24 MR. HAYDN-MYER: Permission to publish, Your Honor?

1 Q. BY MR. HAYDN-MYER: Can I have CH-O6, please. The
2 person you went to when you had it notarized, this document
3 that we have reviewed, what did that person look like?
5 Q. Where did you meet the person?
6 A. At the notary place.
7 Q. And was that close to where you live?
8 A. It was a little ways away from where I lived.
9 Q. And you did it on the 30th day of January, is that
10 correct?
11 A. I guess so.
12 Q. Can I have the full CH-O6, please.
13 Under the Affidavit of Deed, it says that the deed is
14 going to go to Stephen Goldizen?
15 A. I don't think that that was in there when I signed
16 that.
17 Q. You don't think it was there or you don't remember
18 it?
19 A. I don't think it was there.
20 Q. Is it possible it was there?
21 A. There's all kinds of possibilities, so, sure, there
22 is a possibility, but I don't recall seeing it.
23 Q. Where did you get the Affidavit of Deed?
24 A. I believe it was faxed to me, or maybe I got it when
25 I went to the notary's office. I'm not sure. I can't recall.

1 Q. How long was it in your possession before you went to
2 the notary?
3 A. I don't know. I can't recall.
4 Q. That's fine. You can take the exhibit down. Thank
5 you.
6 Did you ever make any payments to Financial
7 Enterprises --
8 A. I did.
9 Q. -- based on the contract?
10 How many payments did you make, Ms. Daniels?
12 Q. Did any of your payments come back for non-sufficient
13 funds?
14 A. Not to my knowledge.
15 MR. HAYDN-MYER: I'm sorry, Madam Clerk, I've lost my
16 place in regards to the JMH.
17 THE COURT: I believe HH is next.
18 MR. HAYDN-MYER: May I approach, Your Honor, JMH-HH.
20 (Defendant's Exhibit JMH-HH, Overdraft Letter from
21 Bank of America, Dated 4/25/06, marked for identification.)
22 MR. HAYDN-MYER: Permission to approach?
24 Q. BY MR. HAYDN-MYER: Showing you JMH-HH.

1 Q. Does that refresh your recollection?
2 A. No, it does not.
3 MR. HAYDN-MYER: May I have a quick second, Your
4 Honor?
6 MR. HAYDN-MYER: Your Honor, I believe this is
7 previously covered by the stipulation. It's a Financial
8 Enterprises account. And permission to publish?
10 MR. ANDERSON: Sorry, which one is this?
11 THE COURT: JMH-HH.
12 MR. ANDERSON: Your Honor, I don't think there is
13 foundation laid. Maybe we could come back and talk about a
14 stipulation at a break or something.
15 THE COURT: All right. Any position on this,
16 Mr. Tedmon?
18 THE COURT: You can either lay further foundation now
19 or wait to see if you can reach a stipulation on the break.
20 MR. HAYDN-MYER: Yes, Your Honor. This was actually
21 provided by the Government in their discovery.
22 THE COURT: Is there a corresponding Government
23 exhibit identifier? This has happened once before with a JMH
24 exhibit.
25 MR. HAYDN-MYER: It's a Bank of America bank account,

1 which I thought was covered under our stipulation in regards
2 to --
3 MR. ANDERSON: It's not, Your Honor. I'm sure we can
4 work something out. I don't have a problem with it. But I
5 would like to see what this came out of, and then we can go
6 from there.
7 THE COURT: All right. Sustained for now. But you
8 may lay a further foundation if you believe you're able to with
9 this witness or later seek a stipulation.
11 Q. BY MR. HAYDN-MYER: Ms. Daniels, as part of your
12 agreement with Financial Enterprises wasn't it their obligation
13 to also help you pay the property taxes that were owed on it?
14 A. I believe that there was.
15 Q. I'm sorry? What?
16 A. I believe that there was.
17 Q. And did they pay the property taxes on it?
18 A. I am not sure.
19 Q. And just to be clear, at the time you were
20 negotiating with Financial Enterprises, you were behind on your
21 mortgage, is that correct?
22 A. Yes.
23 Q. And part of the fees, were they also paid by
24 Financial Enterprises as part of your agreement?
25 A. Part of the fees for?

1 Q. Being late on the mortgage?
2 A. They were supposed to, as I understood Financial
3 Enterprises, to bring me up from arrears and to maintain the
4 mortgage payment for me for a year.
5 Q. And the interest you were behind was almost $20,000,
6 isn't that correct?
7 A. I don't think so. I don't know.
8 Q. But Financial Enterprises did pay that, is that
9 correct?
10 A. I don't know.
11 MR. HAYDN-MYER: Can I have one more moment, Your
12 Honor. I believe I'm almost done.
14 MR. HAYDN-MYER: Thank you, Ms. Daniels. Nothing
15 further, Your Honor.
16 THE COURT: All right. Mr. Tedmon, any questions?
18 THE COURT: All right. Mr. Anderson, redirect?
21 BY MR. ANDERSON:
22 Q. Would you have sent that letter to Mike Head if you
23 didn't think you were missing some documents?
24 A. I don't believe I would have.
25 Q. And was your testimony about your signatures -- and

1 we can pull up an example, that would be CH-O1 -- let's look at
2 that.
3 Well, first of all, on the first page there is no
4 signature or initial, right?
5 A. Right.
6 Q. Okay. And then on the second page there's only those
7 initials in that little box there, is that right?
8 A. Yes.
9 Q. Is it your testimony that -- and we will go to the
10 fourth page. I think there is a signature there.
11 Is your testimony that you know that's your signature
12 and you recognize the document, or you're not sure, it looks
13 like your signature?
14 A. It looks like my signature. I'm not certain that it
15 is.
16 Q. And at your work is there a fax header put on the
17 faxes that come into the office?
18 A. I -- I am not sure. I thought that there was, but
19 I'm not certain.
20 Q. All right. And you don't see one on these documents?
21 A. No, I do not.
22 Q. The information that you relied on in your decision
23 to enter into the deal with Financial Enterprises, who did you
24 get that information from?
25 A. I got the information from J. Michael Head.

1 Q. And did you believe what he had told you about the
2 transaction you were entering into?
3 A. Yes, I did.
5 THE COURT: Any further recross, Mr. Haydn-Myer?
8 MR. TEDMON: No.
9 THE COURT: May Ms. Daniels be excused?
10 Mr. Anderson?
16 THE COURT: Did you want to get that photograph now?
18 THE COURT: Ms. Daniels, if you could step down but
19 wait for a photograph.
20 (Photograph taken of Ms. Daniels by the Clerk.)
21 THE COURT: All right. Government's next witness?
22 MR. MORRIS: United States calls Delma Romero.
23 (Photograph taken of Ms. Romero by the Clerk.)

4 THE WITNESS: Delma Romero, D-e-l-m-a, R-o-m-e-r-o.
5 DELMA ROMERO,
10 BY MR. MORRIS:
11 Q. Ms. Romero, are you familiar with the address
12 633 Hudson Lane in Modesto, California?
13 A. Yes, I am.
15 A. I used to live there.
16 Q. Do you recall approximately when you lived there?
17 A. It's been years. 2003, 2004, somewhere like that.
18 Q. Do you still live there?
19 A. No.
20 Q. Is that an apartment or a single family home?
21 A. A home. Single.
22 Q. Now at the time that you lived there, the 2003, let's
23 start there, did you own that house or did you rent it?
24 A. I was in the process of buying that house.
25 Q. Did you eventually buy the house?

1 A. Yes, I did, and was there.
2 Q. Let me bring your attention forward to the spring of
3 2005. Did you own the house in the spring of 2005?
4 A. I don't recall the exact days, but I believe so.
5 Q. Okay. Around that time did you find yourself falling
6 behind on your mortgage payments?
7 A. Yes, I did.
8 Q. How far behind were you, if you recall?
9 A. Approximately three or four months.
10 Q. Were you far enough behind that you were worried that
11 you were facing foreclosure?
12 A. Yes.
13 Q. During that time period, did you become familiar with
14 a company -- well, did you become familiar with a company that
15 offered to try to help you solve your financial problems?
16 A. Yes.
17 Q. How did you become familiar with this company?
18 A. Mail.
19 Q. What did you receive in the mail?
20 A. I received a card. I used to receive multiple cards.
21 But one in particular, it was kind of like a 5' by 7' card.
22 Q. Do you recall anything about that postcard?
23 A. Yes. It read, you know, if you're in financial
24 crisis or need help, call this number, e-mail address.
25 Q. Did you do anything in response to receiving that

1 postcard?
2 A. Yes, I did. I called.
3 Q. Okay. Do you recall who you spoke to?
4 A. Someone with the name Charles Head.
5 Q. Did you call once or more than once?
6 A. Multiple times.
7 Q. Okay. And what did you tell Charles Head?
8 A. I explained the situation that I was in. I was
9 behind. I needed some help.
10 Q. And what did Charles Head say to you?
11 A. He told me that they could help me. That I was -- I
12 called the right person.
13 Q. Did they give any details or did Charles Head give
14 you any details about how they could help you?
15 A. They basically heard my situation and just went along
16 with what I said.
17 Q. Do you recall talking to anybody other than Charles
18 Head in that process?
19 A. Other people, but I don't recall their names exactly.
20 Q. What was your understanding of how the program would
21 help you avoid foreclosure?
22 A. My understanding was that I was going to get some
23 help. I was going to be back on current, and I would continue
24 to own my home.
25 Q. Did you recall whether you would make payments to

1 somebody throughout the course of the program?
2 A. Yes. I would continue making payments.
3 Q. Do you recall whether this was meant to be a program
4 that would last for a particular amount of time, or would it
5 have been ongoing?
6 A. Supposed to last 12 months.
7 Q. What was your understanding of what was supposed to
8 happen after 12 months?
9 A. After 12 months I would continue to be the owner of
10 the home.
11 Q. Do you recall any discussion about the equity that
12 was in the home?
13 A. Nothing in detail. At that time I didn't even think
14 about it. I just needed help.
15 Q. And do you recall any discussion about who would be
16 on title to the home during that one year?
17 A. I asked. I never got anything in writing, but it was
18 supposed to be me.
19 Q. Now after these conversations, did you eventually
20 come to sign some documents related to this program?
21 A. I did.
22 Q. How did that come about?
23 A. Faxed, they would fax me.
24 Q. Okay. And do you recall who faxed those documents to
25 you?

1 A. Company named Nationwide.
2 Q. And do you recall -- did you sign the documents that
3 you were faxed?
4 A. I did.
5 Q. Do you recall the circumstances that were around at
6 that time when you signed the documents?
7 Well, let me ask you this, do you recall where you
8 were when you signed the documents?
9 A. At home.
10 Q. Was there anybody there with you?
11 A. No. Basically I signed it with me except for the day
12 that I had to sign on this booklet with my fingerprint on it.
13 Q. So on that day somebody did come and was there when
14 you signed it?
15 A. Yes. A woman came over.
16 Q. Did you -- while that woman was there for that
17 signature, do you recall making a phone call to the company
18 that you were working with?
19 A. I did.
20 Q. Okay. Why did you call the company while she was
21 there?
22 A. I called the company because she in her own way of
23 trying to, you know, let me know something was wrong, or she
24 thought there was something wrong. She mentioned, what are you
25 getting out of this? Are you aware that this is -- might not

1 be -- that they might not be telling you everything?
2 Q. And in response to that you made a phone call?
3 A. I did. And she was nice enough to write some things
4 on a paper to see if they would respond to those questions.
5 Q. Did the person you called respond?
6 A. In their own way they did, but they basically told me
7 what I wanted to hear.
8 Q. So you ended up signing the documents?
9 A. I did.
10 MR. MORRIS: Your Honor, I show 22-A as being
11 admitted. I would like to admit the remainder of the 22 series
12 under the stipulation. That would be 22-B, -C, -D and -F. If
13 I'm wrong on 22-A, I'll move that in at this time, too.
14 THE COURT: 22-B, -C, -D and -F?
15 MR. MORRIS: Yes.
16 THE COURT: All right. Those are admitted. A is in.
17 (Government Exhibits 22-B, 22-C, 22-D, 22-F, (see
19 Q. BY MR. MORRIS: Ms. Romero, do you recognize the
20 document in front of you?
21 A. No.
22 Q. Have you ever seen it before?
23 A. No.
24 Q. I'd ask you to look above that arrow. In March of
25 2005 were you living in Costa Mesa, California?

1 A. No.
2 Q. Did you have relatives that lived in Costa Mesa?
3 A. I knew a friend but not enough to consider that a
4 place where I would live.
5 Q. Did you receive mail at an address in Costa Mesa,
6 California?
7 A. Not at all.
8 Q. Zoom back out, please. And the next page.
9 In March 2005 when you signed these documents, was it
10 your intention to give $37,985.18 to a company called Creative
11 Loans, LLC?
12 A. No.
13 Q. Page five, please. Do you recognize this document?
14 A. I recognize some, but it wasn't filled in. It was
15 blank.
16 Q. So what parts do you recall being blank when you last
17 saw it?
18 A. Everything from the "date" all the way to the bottom
19 "for the account of," and my signature was the only one that I
20 filled in.
21 Q. Do you recall signing this document?
22 A. Yes.
23 Q. But when you signed it that information was blank, is
24 that what your testimony is?
25 A. Yeah. None of that was there.

1 Q. Okay. You can zoom out.
2 And do you recall somebody named Vita Stigall?
3 A. I don't recall a particular name, but it seems like
4 that's the person that came over to my home.
5 Q. 22-D, please. Do you recognize this document?
6 A. It doesn't look familiar.
7 Q. Does that appear to be your signature?
8 A. No.
9 Q. Do you have any idea what this document is?
10 A. Not at all.
11 Q. Did you -- after you had signed the documents as part
12 of this program, did you begin making payments?
13 A. Yes, I did.
14 Q. Okay. Where did you make those payments?
15 A. Nations Property Management. They were mailing me.
16 Q. You mailed them. Okay.
17 At some point were you late on a payment to Nations
18 Management?
19 A. Yeah. Several times.
20 Q. Do you recall what happened after you were late with
21 the payment?
22 A. They would just work with me, but, I mean, I needed
23 to still keep making those payments.
24 Q. Okay. Did you ever receive any paperwork from
25 Nations in response to being late with a payment?

1 A. At almost 12 months I did.
2 Q. What happens -- what happened after almost 12 months,
3 what was the paperwork that you received after almost
4 12 months?
5 A. It was a letter saying that I needed to look for me
6 to re-buy my home, in different words.
7 Q. Do you recall your reaction when you received a
8 letter talking about re-buying your home?
9 A. Yes. I didn't know what that was about.
10 Q. Up until you received that letter, was it your belief
11 that you still owned your home?
12 A. No. At that point I kind of was like, oh, it was
13 something I didn't want to think about, but it was.
14 Q. In March of 2005, did you believe that the equity in
15 your home would remain yours?
16 A. Yeah. That everything would stay the same.
17 Q. Was that belief important to you in making your
18 decision to sign the documents that day?
19 A. Yes.
20 Q. In March of 2005, did you believe that you would
21 remain on title with an investor throughout the 12 months?
22 A. Yes, I did.
23 Q. Was that belief important to you in making the
24 decision to sign these documents?
25 A. Yes.

1 Q. Do you still live in that home?
2 A. No.
3 Q. What happened -- when did you move out of the home?
4 A. After I received an eviction notice saying I needed
5 to move out in three days.
6 Q. And did you move out?
7 A. I did.
9 THE COURT: All right. Cross-examination,
10 Mr. Tedmon?
13 BY MR. TEDMON:
14 Q. Ms. Romero, good morning.
15 A. Good morning.
16 Q. You indicated that you received a mailer to your home
17 when you were in the status of having to face a foreclosure, is
18 that correct?
20 Q. Okay. And do you recall what company sent the
21 mailer?
22 A. Not specifically, I don't.
23 Q. Okay. Well, when you received the mailer, my
24 understanding is you contacted the phone number, is that
25 correct?

2 Q. And you spoke to somebody there, correct, is that
3 your recollection?
4 A. I'm sorry?
5 Q. You spoke to somebody?
6 A. I spoke to somebody.
7 Q. All right. And in fact you spoke to a person named
8 Domonic McCarns, does that sound right?
9 A. That's a name of someone I spoke to.
10 Q. Okay. In fact, you never spoke to Charles Head, did
11 you?
12 A. I did. Now it's been a while. It's kind of hard to
13 remember specifically. But those two names do sound familiar.
14 Q. Well let me ask you this, do you recall the postcard
15 coming from a Head Financial Services, does that sound right?
16 A. Sounds like it would be.
17 Q. Okay. And you received the postcard and you followed
18 up by contacting that company, correct?
19 A. Yes.
20 Q. All right. And when you contacted the company, you
21 spoke with a person named Domonic McCarns, that's who you spoke
22 with, correct?
23 A. I couldn't assure you that.
24 Q. All right. Well, do you recall giving a statement to
25 Special Agent Chris Fitzpatrick on March 20th, 2007, relative

1 to this investigation?
2 A. Yes.
3 Q. All right. And you gave Special Agent Fitzpatrick a
4 statement, correct?
5 A. Yes.
6 Q. All right. Now that was in 2007. Your memory
7 certainly was better then than it is now, would that be fair to
8 say?
9 A. Yes, of course.
10 MR. TEDMON: May I approach, Your Honor?
12 Q. BY MR. TEDMON: Ms. Romero, what I would like you to
13 do is just review the first two paragraphs. This one and this
14 one. Okay. Just read that to yourself and then let me know
15 when you're done.
17 Q. Have you had a chance to review that?
18 A. Yes.
19 Q. All right. Now, does that refresh your recollection
20 as to who you spoke with from Head Financial Services after you
21 received the postcard and made the phone call?
22 A. Yes.
23 Q. And you spoke to Domonic McCarns, correct?
24 A. That's what's stated on there, yes.
25 Q. And that was in 2007 that was that statement,

1 correct?
2 A. Yes.
3 Q. So you didn't speak to Charles Head, you spoke to
4 Domonic McCarns, correct?
5 A. I believe I spoke to both.
6 Q. All right. Well, you didn't indicate that to the
7 agent, did you?
8 A. Not at that time.
9 Q. Not at that time?
10 Well, let me ask you this, you gave a statement in
11 March of 2007, correct?
12 A. Correct.
13 Q. And that was to Special Agent Fitzpatrick, true?
14 A. Yes.
15 Q. And at that time you did not tell him you had spoke
16 to Charles Head, correct, you said you spoke to Domonic
17 McCarns, true?
18 A. True as what I remembered.
19 Q. I'm sorry?
20 A. True as what I could remember.
21 Q. Well, you've had a chance to review the report,
22 correct?
23 A. Correct.
24 Q. And that's consistent with what the report shows,
25 true?

1 A. True.
2 Q. Consistent in that you spoke to Domonic McCarns, not
4 A. Correct.
5 Q. All right. If I could have -- well, strike that.
6 During this entire process in which you were dealing
7 with your property, your contact was Domonic McCarns, correct?
8 A. Correct.
9 Q. And you spoke to Domonic McCarns throughout this
10 process, correct?
11 A. Correct.
12 Q. All right. And then later on in December of 2005,
13 after you were late with your mortgage payments, you spoke to a
14 guy by the name of Jack Corcoran, correct?
15 A. I don't recall if I did speak to him. That was who I
16 made the payments to, and that's who supposedly took care of
17 the special financing.
18 Q. And that's this -- you called it Nations Company,
19 that's who you made the payments to?
20 A. I would call the number that was provided on the
21 paperwork.
22 Q. All right. But you didn't talk to Mr. Charles Head,
23 though, correct?
24 A. Not that I recall.
25 Q. Okay. Now if we could have CH-G1 put on the monitor,

1 please. It's been previously admitted pursuant to stipulation,
2 Your Honor.
4 stipulation, G-1 is admitted.
5 (Defendant's Exhibit CH-G1, “Equity Purchase
6 Agreement” re: 633 Hudson Lane, Modesto, admitted into
7 evidence.)
8 Q. BY MR. TEDMON: I'm going to expand a portion of this
9 to make it a little easier to see. This is the Equity Purchase
10 Agreement, correct? Do you see at the top here, that's what it
11 says anyway, correct?
12 A. That's what it reads.
13 Q. Okay. Do you recall signing this?
14 A. Possibly, yeah.
15 Q. All right. Well, let's do this. Let's work
16 backwards. Can we go to page five of the document, please.
17 Okay. Do you see the signature right there?
18 A. Yes.
19 Q. That's your signature, correct?
21 Q. All right. And you're aware you entered into an
22 agreement, correct? You've testified to that?
23 A. I'm sorry?
24 Q. You entered into an agreement, you testified to that,
25 correct?

1 A. Yeah. I don't really understand that question, but
2 yeah.
3 Q. Okay. Well, that's fine. But that's your signature,
4 true?
6 Q. All right. So if we can go to page one of the
7 exhibit again. And if we can expand this top section, okay.
8 The Equity Purchase Agreement indicates on
9 February 7th, 2005 you entered into an agreement with Creative
10 Loans, correct?
11 A. That's what this page indicates.
12 Q. All right. And the page also indicates that you are
13 the seller, correct?
14 A. Correct.
15 Q. All right. And Creative Loans is the purchaser,
16 true?
18 Q. Right. So then we go to the next paragraph,
19 Agreement to Sell and Property Description. And it reads, "in
20 consideration of the covenants and agreements hereinafter
21 contained, seller" -- that's you, correct?
22 A. Yes.
23 Q. -- "agrees to sell and convey to purchaser" -- that's
24 Creative Loans, correct?
25 A. Yes.

1 Q. -- "and purchaser agrees to purchase from seller the
2 real property which is commonly described as 633 Hudson Lane,
3 Modesto, California," correct, that's what it says?
5 Q. And you signed this agreement, correct?
6 A. I could have signed it in the paperworks. I signed
7 everything I was needing.
8 Q. Well, this is part of what you signed, you indicated
9 this was your signature on page five, correct?
10 A. I indicated that looked like my signature.
11 Q. Are you saying it's not?
12 A. No. I'm not saying it's not.
13 Q. Well, you testified on direct you signed some papers,
14 true?
15 A. True.
16 Q. And this was one of them that you signed, correct,
17 that got you into the program, right?
18 A. Yes.
19 Q. And the agreement clearly states you're selling your
20 property, correct?
21 A. That's what this paper states.
22 Q. All right. If we can go to CH-G3, Your Honor, and
23 have that displayed.
24 THE COURT: Is that covered by the stipulation?
25 MR. TEDMON: Yes.

1 THE COURT: As covered by the stipulation, G3 is
2 admitted.
3 (Defendant's Exhibit CH-G3, "Residential Lease After
4 Sale" re: 633 Hudson Lane, Modesto, admitted into evidence.)
5 Q. BY MR. TEDMON: Now, Ms. Romero, we're going to
6 expand the top section. This says "Residential Lease After
7 Sale," correct, at the top?
8 A. Yes.
9 Q. And it says that, "the buyer/landlord is Creative
10 Loans," do you see that?
11 A. Yes.
12 Q. And "Delma D. Romero is the seller/tenant," do you
13 see that?
14 A. Yes.
15 Q. And this is an agreement where the landlord, who is
16 Creative Loans, is agreeing to rent the property to you as the
17 tenant, correct, that's what that says?
18 A. That's what that says.
19 Q. And it was your understanding at the time you signed
20 the documents that you were allowed to stay in the home, true,
21 that was one of the benefits of the program?
22 A. Yes.
23 Q. All right. And that's what this relates to, correct?
24 A. That's what this reads, yes.
25 Q. Okay. Now you also recall getting $1,000 from

1 Creative Loans, correct, at the outset?
3 Q. And they paid you that, correct?
4 A. Yeah. I had to call them for it, but, yes.
5 Q. Well, they paid it?
6 A. They did.
7 Q. And that was consistent with the agreement that you
8 entered into, true?
9 A. Yes.
10 Q. All right.
11 THE COURT: That brings us to time for our second
12 break of the morning. So let's take our second break. Another
13 15-minute break. During that break, as always, please remember
14 my admonitions. I will see you back here at noon.
15 (Jury out.)
16 THE COURT: You may be seated. Anything before we
17 break? Mr. Tedmon?
19 THE COURT: Mr. Haydn-Myer? Mr. Anderson?
20 MR. ANDERSON: No, Your Honor. Except that if we
21 finish with our witnesses today, we'll have to figure out what
22 the plan is from there so that the jury can be informed.
23 THE COURT: You're still looking at Botari,
24 Sommercamp, and Fitzpatrick after Ms. Romero, and that's it?
25 MR. ANDERSON: I don't think we're going to call

1 Ms. Botari. I think we're just going to call Agents Sommercamp
2 and Fitzpatrick. I don't know how long it will take, but we
3 may finish today.
4 THE COURT: Mr. Tedmon, do you know at this point
5 what you would do once the Government rests?
6 MR. TEDMON: Well, I need to hear the testimony of
7 the agents to really know that for sure.
8 THE COURT: Are you prepared to move forward with the
9 case in defense, if you decide you wish to put on a case in
10 defense, today, if there's time to begin that?
11 MR. TEDMON: Possibly. I'd have to check on a few
12 things.
13 THE COURT: Let's see how close we get to 1:30 by the
14 time the Government rests, and we'll go from there.
15 If we need a break, if there's time for a break, I
16 would give you a five- to ten-minute break at that point.
17 If we're close enough to 1:30, I would excuse the
18 jury for the day.
19 MR. TEDMON: And I would say this, just as some
20 guidance from my perspective, if we finish with Agent
21 Sommercamp and Agent Fitzpatrick, even 1:15 or 1:20, if we can
22 take just a very brief recess, I could talk to my client. I
23 may be able to indicate what we're doing at that point.
24 THE COURT: And Mr. Haydn-Myer, if Mr. Charles Head
25 does not put on a case in defense, do you have some witnesses

1 that could proceed tomorrow, assuming you decide to put on a
2 case in defense?
3 MR. HAYDN-MYER: No, Your Honor. All of my witnesses
4 I'm trying to fly in, and they are not due to fly in until
5 Wednesday evening.
6 THE COURT: So no one would be available until
7 Thursday?
8 MR. HAYDN-MYER: Correct.
9 THE COURT: And there is no way to speed that up?
10 MR. HAYDN-MYER: No, Your Honor. The U.S. Marshal's
11 Office requires several days notice. And Mr. Anderson and
12 Mr. Morris have actually been excellent about trying to adjust
13 their schedules. It's difficult. I understand the positions.
14 But the best guidance we had as of last Friday, I believe it
15 was, was that the Government's case would finish no later than
16 Wednesday and possibly earlier, so I scheduled everything for
17 Thursday.
18 THE COURT: Understood. Once the Government rests,
19 if it's today or even tomorrow morning, we'll take a break and
20 see what the next steps are.
21 And you're going to meet and confer about one of the
22 JMH exhibits?
23 MR. ANDERSON: HH. I'm sure we can work something
24 out. That should be easy.
25 THE COURT: I'll ask about that before the end of the

1 day.
2 (Break taken.)
3 (Jury in.)
5 and gentlemen. We will continue with the cross-examination of
6 Ms. Romero. Mr. Tedmon.
8 Q. BY MR. TEDMON: Ms. Romero, just to kind of re-set
9 this very briefly, you indicated you signed a series of
10 documents relative this program, correct?
11 A. Correct.
12 MR. TEDMON: If we could have, pursuant to the
13 stipulation, Your Honor, CH-G4, put on the screen.
14 THE COURT: All right. That is admitted. It may be
15 published.
16 (Defendant's Exhibit CH-G4, "Acknowledgement By
17 Seller" re: 633 Hudson Lane, Modesto, admitted into evidence.)
18 Q. BY MR. TEDMON: Ms. Romero, this is called an
19 "Acknowledgement by Seller," do you see that?
20 A. Yes.
21 Q. And this is your initial there, correct?
22 A. Those are my initials.
23 Q. And it indicates in here in paragraph one, "seller
24 acknowledges that the purchaser has not made any
25 representations, promises, or verbal agreements regarding the

1 purchase of seller's residence that are not contained within
2 the Equity Purchase Agreement or the other documents executed
3 concurrently herewith," correct?
5 Q. And you initialed that, true?
6 A. I initialed -- those are my initials.
7 Q. If we could have the full document, please. And then
8 if we can just have paragraph four expanded.
9 Those are, likewise, your initials, correct?
10 A. Yes.
11 Q. All right. And it says "seller." Now that's you,
12 correct?
13 A. It reads "seller."
14 Q. All right. Well, under the initials it says
15 "seller's initials," and those are your initials, correct?
16 A. That's what the document reads.
17 Q. Right. So it says, "seller understands" -- that's
18 you -- "that the Equity Purchase Agreement which seller has
19 entered into with purchaser is not a loan, and it is not a
20 mortgage, pursuant to the terms of the Equity Purchase
21 Agreement, seller is selling his or her entire interest in the
22 property to purchaser," correct?
24 Q. Right. And you initialed below that paragraph, true?
25 A. Those are my initials, but I didn't initial this

1 paper, not in this --
2 Q. Well, let me ask you this. You are not disputing
3 those are your initials, correct?
4 A. I'm not disputing those are my initials.
5 Q. You're disputing that you initialed them sometime at
6 a different point in time, is that what you're saying?
7 A. No.
8 Q. Right. Those are your initials, true?
9 A. They are my initials.
10 MR. TEDMON: All right. Nothing further, Your Honor.
12 MR. HAYDN-MYER: No questions, thank you.
14 MR. MORRIS: Just briefly, Your Honor.
15 THE COURT: You're displaying an admitted exhibit?
16 MR. MORRIS: 46-A, pages 36 and 37.
18 BY MR. MORRIS:
19 Q. Ms. Romero, is that your name where my pen is?
20 A. That's -- yes, that's my last name and my first name.
21 Q. And do you recognize the address where my pen is
22 pointing?
23 A. Yes.
24 Q. Now in May of 2005, did you know somebody by name of
25 Abraham Urena?

1 A. No.
2 Q. In May of 2005 did you know anybody with the initials
3 CCH?
4 A. No.
6 THE COURT: Any recross, Mr. Tedmon?
10 THE COURT: May this witness be excused?
16 MR. MORRIS: The United States calls John Sommercamp.
17 THE COURT: Please come forward.
18 (Photograph taken of Mr. Sommercamp by the Clerk.)
24 THE WITNESS: John Sommercamp, J-o-h-n,
25 S-o-m-m-e-r-c-a-m-p.

1 THE COURT: Mr. Morris, you may proceed.
2 JOHN SOMMERCAMP,
7 BY MR. MORRIS:
8 Q. Mr. Sommercamp, what's your occupation?
9 A. I'm a special agent with the FBI here in Sacramento.
10 Q. How long have you been in that line of work?
11 A. Since 1998.
12 Q. In the course of your job duties, did you become
13 involved in the investigation of Charles and Mike Head?
14 A. I did.
15 Q. I'm going to ask you to -- in the course of that
16 investigation, did you speak to Charles Head?
17 A. Yes.
18 Q. If I can direct your memory back to approximately
19 December of 2005. Do you recall speaking with Charles
20 Christopher Head?
21 A. Yes.
22 Q. And do you recall whether that was in person or by
23 telephone?
24 A. Telephonic.
25 Q. Did you ask Charles Head about his business?

1 A. Yes.
2 Q. What did Mr. Head tell you about how long he had been
3 in business?
4 A. I believe seven years.
5 Q. Did you ask him what it is that his business does?
6 A. Yes, I did.
7 Q. And did he indicate -- did you specifically ask him
8 whether or not his business was involved with foreclosed
9 properties?
10 A. I did.
11 Q. And what did he respond?
12 A. That the business was not involved in foreclosed
13 properties.
14 Q. Did you ask him if he was familiar with the business
15 known as Patriotic Adventures?
16 A. Yes.
17 Q. Do you recall what his response was to that question?
18 A. He indicated who the owner of the company was. That
19 was my recollection.
20 Q. Did Charles Head describe work that that company did
21 for Charles' company?
22 A. I'd have to review the 302 specifically to answer
23 that question.
24 Q. Would that refresh your recollection?
25 A. Yes.

3 THE WITNESS: Okay. I read it.
4 Q. BY MR. MORRIS: And what did Charles Head tell you
5 about the relationship between Patriotic Adventures and his
6 company?
7 A. He knew the owner to be James Russell, and that
8 Mr. Russell and Patriotic Adventures did upgrades to his
9 properties.
10 Q. Did you ask Charles Head whether he had ever heard of
11 a company known as Meridian Financial?
12 A. I did.
13 Q. And what did Charles Head respond?
14 A. He did not know that company.
15 Q. Did you ask Charles Head whether he had ever heard of
16 somebody named Eduardo Vanegas?
17 A. I did.
18 Q. And what was Charles Head's response?
19 A. He did not know Mr. Vanegas.
20 Q. Did you discuss with Charles Head the fact that
21 Eduardo Vanegas had purchased properties and listed Head
22 Financial's address as the mailing address for those
23 properties?
24 A. Yes.
25 Q. Did Charles Head respond to that?

1 A. Yes, he did.
3 A. He indicated that sometimes people purchasing
4 properties listed his business address on their documents or
5 paperwork.
6 Q. Did you talk to Charles Head about a home in
7 Sacramento owned -- previously owned by somebody named
8 Ms. Turner?
9 A. I did.
10 Q. And did you ask him whether one of his employees was
11 involved in the home sale involving Ms. Turner's home?
12 A. Yes.
13 Q. And what did Charles Head respond?
14 A. He indicated that Elizabeth Huerta had handled that
15 transaction or part of it.
16 Q. Did you ask or did you speak with Charles Head about
17 whether or not he had paid to fly Ms. Huerta and a notary to
18 Sacramento to handle that sale?
19 A. Yes.
20 Q. And what did he say?
21 A. Said that it was just as inexpensive to fly someone
22 up there as it was to hire someone locally.
23 Q. I would like you now to change your timeframe that
24 you're thinking about to the October 2006 timeframe.
25 And, Your Honor, Mr. Anderson reminded me, this might

1 be a good point to do the instruction with respect to the
2 consideration of the statements with respect to one defendant
3 only. We're about to discuss the other defendant.
4 THE COURT: Repeating the preliminary instruction
5 that was already given?
6 MR. MORRIS: With respect to consideration of the
7 statements against the defendant only as to that defendant and
8 not to the other.
9 THE COURT: All right. I know what you're talking
10 about. Let me see if I can find that. Any objection?
13 THE COURT: Do you have a copy of your proposed
14 language handy?
15 MR. MORRIS: Just a moment, Your Honor.
16 THE COURT: I've just provided my copy to my staff in
17 anticipation of next steps, so I don't have it right in front
18 of me.
19 MR. MORRIS: Approach your Clerk, Your Honor?
20 THE COURT: All right. I'm looking at Docket 710,
21 page three. Understood, Mr. Tedmon?
22 MR. TEDMON: Yes.
23 THE COURT: And Mr. Haydn-Myer?
25 THE COURT: No objection to the giving of that

1 instruction now?
3 THE COURT: All right. So the first name in the
4 bracket would be?
5 MR. MORRIS: Perhaps we could instruct that with
6 respect to the testimony that they just heard, that they are
7 going to hear witness -- regarding Charles Head making
8 statements to the witness, and it should be considered only
9 with respect to Charles Head.
10 And then the instruction in a moment as we speak with
11 another statement would be that you're about to hear testimony
12 that Michael Head gave a statement, and it's to be considered
13 only with respect to Michael Head.
14 THE COURT: I'm going to read to you, and it's my
15 instruction you should listen to, having sought clarification
16 from the attorneys.
17 So you have heard evidence that Charles Head made one
18 or more statements to the witness who is currently on the
19 stand. I instruct you that this evidence is admitted only for
20 the limited purpose of establishing the guilt of Charles Head,
21 and, therefore, you must consider it only for that limited
22 purpose and not for any other purpose. You may not consider
23 statements made by Charles Head to determine the guilt of
24 Jeremy Michael Head.
25 MR. MORRIS: Thank you, Your Honor.

1 Q. BY MR. MORRIS: And now if I could turn your
2 attention forward to the October 2006 timeframe. Did you have
3 the occasion in the course of this investigation to speak with
4 Jeremy Michael Head?
5 A. Yes.
6 Q. Do you recall whether that was in person or by
7 telephone?
8 A. Telephonic.
9 Q. Had you sent anything to Jeremy Michael Head prior to
10 that conversation with the intent to discuss those items with
11 him?
12 A. Yes.
13 Q. What had you sent to him?
14 A. Faxed him three letters out of a loan file that we
15 had subpoenaed.
16 Q. If we could bring up 13-B, page 11, I believe.
17 Do you recall what those letters were that you had
18 sent?
19 A. Yes.
20 Q. What were the letters that you had wanted to talk to
21 him about?
22 A. They were in relation to a property in Tulare,
23 California, and they related to offering -- offering a job to
24 Sarah Mattson.
25 Q. And did Jeremy Michael Head indicate to you in this

1 conversation that he had received those three letters that you
2 had sent to him?
3 A. Yes.
4 Q. And did you ask him whether he had ever seen those
5 letters before?
6 A. I did.
7 Q. And how did he respond when you asked him whether he
8 had seen those letters before?
9 A. He said he had not seen the letters before.
10 Q. Did he say anything to you about the signatures on
11 those letters?
12 A. He said the signatures were not his.
13 MR. MORRIS: That's all the questions I have, Your
14 Honor. And I would suggest one more curative instruction with
15 respect to the jury.
16 THE COURT: And with regard to the testimony you have
17 just heard, ladies and gentlemen of the jury, you have heard
18 that Jeremy Michael Head made one or more statements to the
19 testifying witness. I instruct you that this evidence is to be
20 admitted only for the limited purpose of establishing the guilt
21 of Jeremy Michael Head. And, therefore, you must consider it
22 only for that limited purpose and not for any other purpose.
23 You may not consider the statements made by Jeremy Michael Head
24 to determine the guilt or not of Charles Head.
25 All right. That concludes your direct.

1 Cross-examination, Mr. Tedmon?
2 MR. ANDERSON: Your Honor, we found the document that
3 Mr. Morris was looking for.
5 MR. MORRIS: 13-A, page 11, please.
6 Q. BY MR. MORRIS: Is that one of the documents that you
7 had previously sent to Michael Head prior to --
8 A. Yes.
9 Q. And the next page, please. And was that one of the
10 other letters you had previously sent to Michael Head?
11 A. Yes.
12 MR. MORRIS: No further questions, Your Honor. Thank
13 you.
17 BY MR. TEDMON:
18 Q. Good afternoon, Special Agent Sommercamp.
20 Q. You testified that you had a telephone conversation
21 with Charles Head in December of 2005, correct?
22 A. That's right.
23 Q. It was actually December 7th of 2005?
24 A. Yes, sir.
25 Q. All right. And you asked him some questions about

1 the status of your investigation, correct?
2 A. Yes.
3 Q. All right. This entire phone call lasted about five
4 minutes, is that correct?
5 A. That's probably about right.
6 Q. All right. And he indicated in response to you that
7 -- I'm talking about "he" being Charles Head -- started his
8 business about seven years ago, do you recall that?
9 A. Yes.
10 Q. And he indicated to you that when he first started
11 the business, that they were doing loans, do you recall that?
12 A. I don't recall that, no.
13 Q. All right. Well, you asked him what his business was
14 doing, correct?
15 A. Correct.
16 Q. And according to your testimony, and you refreshed
17 your recollection with your report, I think, that his business
18 didn't focus on foreclosure properties, correct?
19 A. That's right.
20 Q. All right. What he told you was his business didn't
21 focus on foreclosure properties when he first started the
22 business, that's what he told you, correct?
23 A. Correct.
24 Q. All right. And that was true, based on your
25 investigation, correct?

1 A. Investigation at what point?
2 Q. Well, this is in 2005?
3 A. Yes, sir.
4 Q. All right. Mr. Head indicated at the beginning of
5 his business he did not engage in foreclosures; he was doing
6 loans, correct?
7 A. Yes.
8 Q. And you know that to be a true statement, correct?
9 A. As part of my investigation, no.
10 Q. Okay. Well, let me ask you this, part of your
11 investigation you know that Head Financial Services started out
12 doing loans?
14 Q. And they didn't do foreclosures at the outset?
15 A. That's right.
16 Q. And that's what Mr. Head was talking about when he
17 answered your question about not doing foreclosures, it was
18 when the business was first starting, correct?
19 A. That could be assumed.
20 Q. Okay. So it's not clear to you what he was referring
21 to then, it sounds like?
22 A. No. Because as I took this down, even referring to
23 this document that I wrote, we were talking about buying leads
24 regarding area properties.
25 Q. Okay. Well, it's also true that this interview took

1 place on December 7th, 2005, right?
2 A. Yes, sir.
3 Q. All right. And the date of transcription is
4 January 4th, 2006, almost a month later, correct?
5 A. Yes, sir.
6 Q. Did you record this conversation?
7 A. Not audio, no. Just my notes.
8 Q. Just your notes. All right. Do you still have those
9 notes?
10 A. Yes, sir.
11 Q. And you used those notes to write this report,
12 correct?
13 A. I did.
14 Q. All right. So again, during this approximate
15 five-minute phone call with Mr. Head -- he agreed to talk to
16 you first of all, obviously, true?
17 A. Yes.
18 Q. You covered what his business started out doing at
19 the outset, which was loans, correct?
20 A. Yes.
21 Q. And at the outset they didn't do foreclosures?
22 A. Correct.
23 Q. All right. And that's what his response was to you
24 in terms of that question, true?
25 A. Yes, sir.

1 Q. All right. Now, you testified you asked him about a
2 company called Patriotic Ventures, correct?
3 A. Yes.
4 Q. Actually, at least according to the report you asked
5 about Patriotic Adventures, Incorporated, correct?
6 A. According to the report, Patriotic Adventures
7 Incorporated, yes.
8 Q. Not Patriotic Ventures?
9 A. No. I know it as Patriotic Ventures.
10 Q. Well, the report says Patriotic Adventures?
11 A. "Adventures." Yes, sir.
12 Q. So that would be a mistake in your report?
13 A. No. That's just now -- at the time that's what he
14 indicated, but I knew it to be something different later.
15 Q. Okay. Well, again, I don't want to split hairs here,
16 but you asked him if he knew of a business known as Patriotic
17 Adventures, Incorporated; that was your question?
18 A. Yes, sir.
19 Q. Right? And then he responded?
20 A. Yes.
21 Q. Now during this phone call, he acknowledged that
22 there was some dealings with a Ms. Turner, correct?
23 A. Yes.
24 Q. He also acknowledged that Elizabeth Huerta was
25 involved, correct?

1 A. Yes.
2 Q. All right. And he also indicated to you that he had
3 an attorney at that time, correct?
4 A. Yes.
5 Q. Right. He didn't invoke his right to have an
6 attorney, did he?
7 A. No. He just told me that at the end of the
8 statement.
9 Q. Right. He told you his attorney was a guy named John
10 Caballero, correct?
11 A. Yes.
12 Q. He also told you -- "he" being Charles Head -- he
13 told you, you can come to my office any time you want, correct,
14 with the permission of his lawyer, do you recall that?
15 A. No.
17 A. No, sir.
18 Q. Do you recall him indicating that he and his lawyer
19 would like to come and talk to you and the prosecutor about the
20 case?
21 A. I don't recall that, no.
22 Q. You do not?
23 A. No. I remember we did speak with some other
24 attorneys throughout, so that's possible.
25 Q. Okay. In fact, you spoke with an attorney named Jeff

1 Kent, do you recall that name?
2 A. I remember Jeff Kent name, yes.
3 Q. And that was an attorney for Mr. Head?
4 A. I believe so.
5 Q. Charles Head?
7 Q. And then there was an attorney named Sherman Ellison,
8 do you recall that name?
9 A. I remember Sherman Ellison.
10 Q. And he was an attorney for Charles Head as well?
11 A. Yes.
12 Q. And they were communicating with you during the
13 period of time between December of 2005 and the Indictment
14 which was 2008, correct?
15 A. Yes.
16 Q. All right. And amongst the various lawyers, they
17 offered to meet and talk to you, didn't they?
18 A. I'd have to refer to the statements from the
19 attorneys to verify that.
20 Q. Well, you don't have any independent recollection of
21 that?
22 A. As I said, I spoke with probably four or five
23 attorneys throughout at various times, so I don't recall
24 whether they said they would come up specifically and meet with
25 us.

1 Q. All right. They certainly didn't indicate to you,
2 "don't call us, we'll call you"?
3 A. No.
4 Q. There was open communication between you and
5 Mr. Head's lawyers, correct?
9 CROSS-EXAMINATION
11 Q. Good afternoon, Agent.
12 A. Hi.
13 Q. Now in regards to Mr. Michael Head, how long did you
14 speak to him for?
15 A. Just a few minutes.
16 Q. And you sent him a fax?
17 A. The previous week.
18 Q. The previous week. He said he reviewed it. He
19 called you back, or did you call him?
20 A. I don't know.
21 Q. Is it possible he called you back?
22 A. Absolutely.
23 Q. And in regards to the documents, I believe it was
24 13-A11 and 13-A12. Can I have 13-A12, please.
25 You said that he didn't recognize the letter and the

1 signature was not his, is that correct?
2 A. That's what he told me.
3 Q. And the signature on that document is whose?
4 A. Sarah Mattson.
5 Q. And that's the same Sarah Mattson that testified
6 earlier today, is that correct?
7 A. Yes, sir.
8 Q. And can I have 13-A. I believe it's 11. And you see
9 the "Mike H." written there, is that correct?
10 A. Yes, sir.
11 Q. Now we've had plenty of examples of Mr. Head's
12 signature throughout this case, is that correct?
13 A. Yes, we have.
14 Q. That's nowhere near what it looks like for his
15 signature, is it?
16 A. I couldn't say.
19 Q. BY MR. HAYDN-MYER: Showing you JMH-GG.
20 A. Okay.
21 Q. Showing you JMH-GG. Those signatures don't look
22 anything at all alike, do they?
23 A. No, they don't.
24 MR. HAYDN-MYER: I have no further questions. Thank
25 you.

3 BY MR. MORRIS:
4 Q. Just one item, Your Honor.
5 Agent Sommercamp, if we could go back to the
6 December 2005 discussion with Charles Head.
7 On this question of when he was involved with
8 foreclosed properties, was it your recollection that your
9 conversation where he denied being involved in foreclosures
10 focused only on when he started his business, or is your
11 recollection that that conversation focused on a broader
12 timeframe?
13 A. As I sit here now, I can't specifically say it's one
14 way or another.
20 THE COURT: Is Agent Sommercamp excused as a witness?
21 MR. MORRIS: He is, Your Honor.
24 THE COURT: Government's next witness.
25 MR. ANDERSON: United States calls Special Agent

1 Fitzpatrick.
2 THE COURT: All right. Agent Fitzpatrick please come
3 forward.
4 (Photograph taken of Special Agent Fitzpatrick by the
5 Clerk.)
11 THE WITNESS: Chris Fitzpatrick, C-h-r-i-s,
12 F-i-t-z-p-a-t-r-i-c-k.
13 CHRIS FITZPATRICK,
18 BY MR. ANDERSON:
19 Q. Good afternoon, Agent Fitzpatrick.
21 Q. What do you do for a living?
22 A. I'm a special agent for the Criminal Investigation
23 Division for the IRS.
24 Q. How long have you worked for the IRS?
25 A. Since the summer of 2000.

1 Q. What are your job duties for the IRS?
2 A. I investigate the Internal Revenue Code and other
3 financial crimes such as mortgage fraud.
4 Q. What's your current assignment?
5 A. I'm assigned to a mortgage fraud task force here in
6 the Eastern District of California.
7 Q. Did you receive any training or education that
8 assists in the performance of your job duties?
9 A. Yes.
10 Q. Could you describe for us what sorts of training
11 you've received?
12 A. I attended the Federal Law Enforcement Training
13 Academy in Glynco, Georgia for six-and-a-half months. And
14 throughout my career I've attended various conferences and
15 seminars.
16 Q. Do you also have some formalized education?
17 A. I do.
18 Q. What is that?
19 A. I have a Bachelors of Administration, concentration
20 in accounting, and another Bachelors in Economics from Sac
21 State University.
22 Q. Did you become involved in the investigation of Head
23 Financial Services, Financial Enterprises and related
24 companies?
25 A. Yes.

1 Q. What was the nature of your involvement in that
2 investigation?
3 A. I was a co-case agent along with FBI John Sommercamp.
4 Q. In that role, have you participated in surveillance,
5 the conducting of search warrants, other things related to the
6 investigation including interviews of witnesses?
7 A. Yes, I have.
8 Q. And in the course of working as a special agent
9 involved in the investigation, in your particular role have you
10 also reviewed documents seized through search warrants,
11 obtained by subpoena, and through other means?
12 A. Yes.
13 Q. In preparation for your testimony today, have you
14 reviewed any of those types of documents?
15 A. Yes.
16 Q. So before we get there, I'd like to talk about
17 surveillance. Do you recall conducting surveillance back in
18 2006?
19 A. Yes, I do.
20 Q. Was that approximately July 2006?
21 A. Correct.
22 Q. Do you remember the days?
23 A. I believe around the 15th or 16th of July.
24 Q. Where were you?
25 A. In Orange County.

1 Q. Who were you surveilling at that time?
2 A. Charles Head.
3 Q. What locations did you see Charles Head at during the
4 course of that surveillance?
5 A. The first day we observed him going to a 24-Hour
6 Fitness work-out facility, coming back home, and then departing
7 to the Head Financial Services offices in Costa Mesa.
8 Q. What address was that at?
9 A. 949 South Coast Drive.
10 Q. And that's by South Coast Plaza?
12 Q. What other locations did you see Charles Head at
13 during the course of those few days?
14 A. Okay. That was the first day. Still the same day we
15 observed him having lunch with some individuals who we don't
16 know who they were. Then eventually leaving to go to the Bank
17 of America and also Washington Mutual. And then going to the
18 Double Tree Hotel. And eventually going back to his residence.
19 That's the first day.
20 Q. Where was his residence?
21 A. 961 North Citrus Drive in La Habra, California.
22 Q. What vehicle did you see Charles Head in during that
23 surveillance?
24 A. The first day when he went to work out he was driving
25 a Ford Expedition, and then when he went to the business, he

1 was driving an SL500 Mercedes Benz.
2 Q. Let's move on to the second day of surveillance.
3 What did you observe that day?
4 A. We observed him leaving the house, then going to the
5 business at South Coast Plaza.
6 Q. Did you observe anything else that day?
7 A. We observed him going to lunch. And eventually he
8 left. He was on a motorcycle that day. Ducati motorcycle. We
9 allowed him to leave, and then we established surveillance at
10 his residence and saw him come back to his residence.
11 Q. Was there any additional surveillance that day?
12 A. I don't believe so, no.
13 Q. Did you do any surveillance the following day?
14 A. No. Just two days, I believe.
15 Q. Now in reviewing search warrant evidence -- well, let
16 me ask it more generally.
17 Did you have an opportunity to review evidence seized
18 at search warrants from various locations?
19 A. I did.
20 Q. Did you observe that any of the documents seized in
21 the search warrants were unusual in their treatment of the
22 signature page?
23 A. Yes.
25 MR. HAYDN-MYER: Join.

2 Q. BY MR. ANDERSON: Did you find any signature pages in
3 the documents?
4 A. Yes.
5 Q. Did you find any signature pages without documents
6 that they were signature pages for?
7 A. Correct.
8 Q. Let's talk about how the files came in that were
9 seized from the business locations. What did they look like?
10 A. They were copies of mortgage records related to a
11 real estate transaction.
12 Q. Were they contained in files?
14 Q. How were the files labelled?
15 A. They had the homeowners' name and property address,
16 and sometimes it listed the straw buyer.
17 Q. I would like to go to Government's Exhibit 22-D.
18 Do you recognize this as a document that was
19 previously discussed today with Delma Romero?
20 A. I do.
21 Q. And do you recall this document also from the items
22 that were seized during the course of the search warrants?
23 A. Yes.
24 Q. What is this document?
25 A. That is a California Residential Purchase Agreement.

1 Q. What page of that -- let's zoom in on the bottom.
2 What page of the document is this?
3 A. Page 8 of 8.
4 Q. Did you look to see if there were pages 1, 2, 3, 4,
5 5, 6 and 7?
6 A. Yes.
7 Q. Were there?
8 A. No.
9 Q. Do you recall cross-examination regarding
10 Government's Exhibit 43-F regarding the Bates numbering that
11 was on the bottom of that page?
12 A. I do.
13 Q. And it was pointed out that the Bates number for that
14 document had a different search location than the defendant
15 Charles Head's house --
17 Q. -- is that right?
18 A. Yes.
19 Q. Were you able to identify another set of the same
20 document that was Bates numbered indicating it came from
21 Charles Head's house?
22 A. Yes.
23 Q. Did you review the document to make sure that each
24 page was identical?
25 A. Yes, I did.

1 Q. Were there any differences?
2 A. Just they were arranged in different order but exact
3 same content.
4 Q. And is that marked as Government's Exhibit 43-K?
5 A. Yes.
7 Government's Exhibit 43-K be admitted.
9 MR. TEDMON: Just one moment, Your Honor.
10 THE COURT: Has the Court been provided a courtesy
11 copy of 43-K?
12 MR. ANDERSON: I believe so, Your Honor.
14 MR. TEDMON: That's fine, Your Honor. 43-K is fine.
17 THE COURT: All right. 43-K is admitted.
18 (Government Exhibit 43-K, Email from Liz Re:
19 Foreclosures – dated 8/26/2004, admitted into evidence.)
20 Q. BY MR. ANDERSON: So aside from the numbering added
21 after the fact at the bottom, and the order of the documents
22 found at the two locations, the documents are otherwise the
23 same?
25 Q. Did you have the opportunity to review records from

1 the Secretary of State's office and from various bank entities
2 showing who controlled various accounts and businesses?
3 A. Yes, I did.
4 Q. Were those records voluminous?
6 MR. ANDERSON: Your Honor, pursuant to the
7 stipulation, I would ask that Government's Exhibit 2 be
8 admitted into evidence.
9 THE COURT: As covered by the stipulation, 2 is
10 admitted.
11 (Government Exhibit 2, Business Entities, admitted
12 into evidence.)
13 Q. BY MR. ANDERSON: What is Government's Exhibit 2?
14 A. It's an illustration of information obtained from the
15 Secretary of State. Also as it relates to the various entities
16 that received equity during the investigation. Also it lists
17 the corresponding bank account, who the signature authority
18 over the account.
19 Q. So if we start on the left-hand column at "name,"
20 what's listed in the "name" column?
21 A. That would be the person who is a registered agent
22 for the business.
23 Q. Are the names that you've selected names of people
24 that have come up through the documents in testimony, that have
25 been brought into court here?

2 Q. And under "Secretary of State business name," what's
3 in that column?
4 A. That is the shell company that was created to receive
5 the equity at the close of escrow.
6 Q. And then "entity name on bank account," what's listed
7 there?
8 A. The same name. It's a corresponding bank account to
9 the Secretary of State business name.
10 Q. And then the final column, "signer authorized for
11 bank account," what does that list?
12 A. That lists the signature holder on the bank account.
13 Q. Let's look at some examples.
14 For example, we have this line with Charles Head,
15 Creative Loans. Is that indicating that the Secretary of State
16 business name for Creative Loans that is registered to Charles
17 Head?
19 Q. And then when you go to the bank signature card, it
20 shows Charles Head and Kou Yang on the signature card?
22 Q. Now there are some asterisks, what do those refer to?
23 A. That reflects the change in the signature card from
24 when it was first opened. An additional signer was added to
25 the bank account.

1 Q. So in certain cases there was initially one signer
2 and then another signer was added later?
4 Q. And that's what you've indicated there?
5 A. Yes.
6 Q. Did you have the opportunity to also review escrow
7 records?
8 A. I did.
9 Q. Did you create a summary chart based on information
10 contained on HUD-1s?
11 A. Yes.
12 Q. And HUD-1s -- just for example let's go to
13 Government's Exhibit 10-B. Is this an example of a HUD-1?
14 A. Yes.
15 Q. A type of document we have been discussing throughout
16 the trial?
17 A. Correct.
19 Government's Exhibit 1 be admitted pursuant to the records
20 stipulation.
22 stipulation, 1 is admitted.
23 (Government Exhibit 1, Escrow Summary Chart, admitted
24 into evidence.)
25 Q. BY MR. ANDERSON: What is Government's Exhibit 1?

1 A. It's a summary chart reflecting -- well, first, it
2 only relates to Castlehead Escrow transactions, the escrow
3 files.
4 Q. So is this a limited snapshot of what was going on?
5 A. It is. It was only a one-year period of time.
6 Q. What period of time is it for?
7 A. March 8, 2004 through March 14, 2005.
8 Q. And that's listed at the top of the chart?
10 Q. And then this particular chart says "chronological"
11 underneath it, why is that?
12 A. It's sorted by date, the closing date.
13 Q. Is there another chart as part of this exhibit that
14 sorts these in a different way?
15 A. Yes.
16 Q. How does it sort?
17 A. By alphabetical. By the property owner.
18 Q. So you said there was some limitations to this chart
19 as far as what was pulled in to look at?
21 Q. What was pulled in to look at for this chart?
22 A. Three things. One is, it's only Castlehead Escrow
23 transactions as the escrow company; two, it's a short period of
24 time during the one year; and, third, it only relates to money
25 directed at the close of escrow to one of the companies on the

1 previous chart from the Secretary of State.
2 Q. So limited to the companies in Exhibit 2?
3 A. Correct.
4 Q. Now I noticed on Exhibit 2 there weren't companies
5 like Dynasty Realty that we have heard from. Why not Dynasty
6 Realty?
7 A. That wasn't a shell company that received victims'
8 equity at the close of --
9 MR. TEDMON: Your Honor, I'm going to object to the
10 characterization as a shell company.
12 Q. BY MR. ANDERSON: Could you say it again but without
13 using --
14 A. That was one of the companies that did not receive
15 equity at the close of escrow.
16 Q. It was used for some other purpose?
17 A. Correct.
19 THE COURT: Well, sustained. Leave it at that.
20 Q. BY MR. ANDERSON: Okay. So where did you get the
21 information from that makes each of the entries on this chart?
22 A. All the information contained on this illustration
23 came from the settlement statement.
24 Q. So if we go -- do an example. What's listed in that
25 first column?

1 A. First column is the property owner.
2 Q. For example here, Richard Figueroa, right?
3 A. Correct.
4 Q. What's on the second column?
5 A. The property owner's address.
6 Q. And then the third column?
7 A. That's the close of escrow date listed on the
8 settlement statement.
9 Q. What's a close of escrow date?
10 A. That's the date the real estate transaction closed
11 escrow.
12 Q. And then in the fourth column what's listed there?
13 A. That information is left blank during this
14 transaction here.
15 Q. In the columns where it's not blank or the rows where
16 it's not blank what's listed in that column?
17 A. That's the mortgage broker listed on the settlement
18 statement that handled the transaction.
19 Q. Where it's blank, what does that mean?
20 A. It does -- it indicates that a mortgage broker wasn't
21 paid on the transaction according to the settlement statement.
22 Q. In other words, that line in the settlement statement
23 is blank?
25 Q. So it's blank on the chart?

1 A. Yes.
2 Q. And then in the fifth column what's listed there?
3 A. That's the straw buyer, the listed purchaser.
4 Q. So here we see Justin Wiley, Akemi Botari, Sarah
5 Mattson, two of Adam Coffman, one of Ryan Wiley; is that
6 correct?
8 Q. And then in the second to last column what's listed
9 there?
10 A. That is the company where the equity was distributed
11 at the close of escrow.
12 Q. So in Richard Figueroa's case it was sent to Charles
13 Head, and in Benjamin and Shannon Taylor's case Financial
14 Enterprises?
16 Q. What does the final column show?
17 A. That is the amount of equity directed at the close of
18 escrow to the company listed to the left in the next column.
19 Q. Is there an additional limitation -- not limitation
20 -- but an additional focus of this chart that excludes other
21 potential money generated from these properties?
22 A. Correct.
23 Q. What is that limitation?
24 A. We didn't include any properties that were flipped to
25 another investor, or to an innocent third party, nor did we

1 include any of the losses sustained by the lenders.
2 Q. And are lease payments made under these agreements
3 included --
4 A. No.
5 Q. -- as losses? No.
6 Okay. Let's zoom out. Does this chart show examples
7 of Charles Head purchasing or allowing his name to be used to
8 purchase multiple properties in a short timeframe?
9 A. Yes, it does.
10 Q. For example, on these four properties, is that right?
12 Q. Now with money being then diverted to Matrix --
13 MR. TEDMON: Objection, Your Honor. Object to the
14 characterization being diverted.
15 MR. ANDERSON: Signed out of escrow.
17 THE WITNESS: That's correct.
18 Q. BY MR. ANDERSON: To Matrix, Matrix, Dynamic
19 Partners, Dynamic Partners?
20 A. Correct.
21 Q. Let's go to the second page. Is this a continuation?
22 A. Yes, it is.
23 Q. And these all reflect property transactions where
24 equity was sent out of escrow?

1 Q. Did you total up how much money was sent out of
2 escrow in this one-year period for transactions involving only
3 Castlehead Escrow?
4 A. I did.
5 Q. What was the total?
6 A. $4,278,676.38.
7 Q. I want to point out one item on this. Let's go to
8 the top of that page. Do you see the "Jonathan Bowman
9 homeowner"?
10 A. I do.
11 Q. And there is a date listed as the close of escrow,
12 9-2-20. Why is it listed as 9-2-20?
13 A. This information was obtained directly from the
14 settlement statement. There is an error on the date that was
15 listed on the settlement statement.
16 Q. So you didn't change it to make it look like the year
17 you thought it was?
18 A. No. I know it closed in September of 2004. That's
19 why I arranged it during -- in this column, this section.
20 Q. So you believe that it's in the right spot for the
21 date if the date had been correctly written down?
23 Q. Now did you have an opportunity to look through bank
24 records showing what happened to money coming out of escrow as
25 well?

1 A. I did.
2 Q. Let's turn to Government's Exhibit 10-C.
3 A. Do you want me to look in the binder?
4 Q. Yes. Well, it's actually admitted. Do you recognize
5 page one of Government's Exhibit 10-C?
6 A. I do.
7 Q. What is it?
8 A. It's a signature card for Charles Head for an account
9 at Washington Mutual Bank.
10 Q. And if we look to page two of Exhibit 10-C, what are
11 we seeing?
12 A. That is a page of a bank statement for the same bank
13 account.
14 Q. What's the significance of this page of the bank
15 statement?
16 A. This part of the statement shows where money was
17 directed from a homeowner directly into Charles Head's bank
18 account.
19 Q. Could you identify for us where that is?
20 A. It's May 2007. A deposit for $80,841.54.
21 Q. And this is for the Richard Figueroa property?
22 A. I believe so. One moment. That's correct.
23 Q. Let's go to Government's Exhibit 11-C. What is this?
24 A. This is a copy of a bank statement for Bank of
25 America related -- relating to Financial Enterprises, LLC.

1 Q. What does this particular statement show?
2 A. Can you blow it up just a little bit bigger?
3 Q. Which portion?
4 A. Just the middle section where the numbers are.
5 Q. We can make it bigger if you'd like.
6 A. Yes, please.
7 Q. Highlight which portion you want bigger.
8 A. (Indicating.)
9 Okay. This shows on May 14th a wire transfer from
10 Castlehead Escrow for the amount of $95,613.43. And then two
11 days later another deposit wire transfer on May 18th also from
12 Castlehead Escrow for $81,153.22.
13 Q. Are you able to tell which transactions those are
14 for?
15 A. I do have to refer to my chart here. The one on May
16 14th relates to the Shannon Taylor transaction, 54 North Shelly
17 Avenue in Fresno, California.
18 Q. That was the $95,000 transaction?
19 A. That's correct. And I don't have it in my notes. I
20 don't recall the other transaction on May 18th.
21 Q. Let's go to Government's Exhibit 12-C. Is this
22 another example of a bank statement?
24 Q. If we go to 12-B first, page two. So this is the
25 second page of a HUD-1?

2 Q. And does it show an amount of money being sent out of
3 escrow to Financial Enterprises?
4 A. Yes.
5 Q. How much money?
6 A. $81,153.22.
7 Q. So that's 12-B. And let's go to 12-C and see if
8 there's a corresponding entry.
9 Do you see a corresponding entry where the money was
10 received by Financial Enterprises?
11 A. Yes.
12 Q. Where is that?
13 A. Right there on May 18th. A wire transfer from
14 Castlehead Escrow.
15 Q. In the amount of $81,153.22?
17 Q. Let's go to page three of this exhibit. What's shown
18 on page three?
19 A. This is a Bank of America cashier's check from
20 Financial Enterprises to Charles Head.
21 Q. In what amount?
22 A. $41,765.82.
23 Q. So now let's go back into the statement, go to 12-C,
24 page two. Is there a corresponding entry for that check?

1 Q. Where is that?
2 A. Right there. (Indicating.)
3 So after the money was wired on May 18th from
4 Castlehead Escrow, a cashier's check was obtained to Charles
5 Head.
6 Q. Now are there similar documents for many of the
7 properties that have been discussed during the trial?
8 A. Yes.
9 Q. And can they be reviewed in a similar way?
10 A. Yes.
11 Q. And we won't subject everybody to that, but that's
12 available if somebody were to look at one of the HUD-1's that's
13 been introduced as an exhibit, and then the corresponding bank
14 records with the same exhibit number, are there exhibits that
15 match up so they can follow the money?
16 A. Yes.
17 Q. Did you have an opportunity to look at loan
18 applications as well?
19 A. I did.
21 Government's Exhibit 32, the whole 32 series, be admitted
22 pursuant to stipulation.
23 THE COURT: 32-A, -B and -C are admitted as covered
24 by the stipulation.
25 (Government Exhibit 32-A, 32-B, 32-C, (see index for

2 Q. BY MR. ANDERSON: In these 30-series exhibits, like
3 32 -- and we will pull up 32-A so we can start with that.
4 What is this document?
5 A. That's a Uniform Residential Loan Application.
6 Q. And who is listed as the borrower for that
7 application?
8 A. Stephen Goldizen.
9 Q. Now in these 30-series, 32, what type of documents
10 were put into the 32 series?
11 A. I believe Uniform Residential Loan Applications.
12 Q. Are those all loan applications related to Stephen
13 Goldizen?
14 A. Correct. For his multiple property purchases.
15 Q. And then 33 series, are those also all applications
16 related to a particular straw buyer?
18 Q. 34 series as well?
19 A. Correct.
20 Q. 35 series?
21 A. Correct.
22 MR. ANDERSON: Your Honor, I would ask that the 35
23 series be admitted if it hasn't already.
24 THE COURT: 35. All right. 35-A, -B and -C are
25 admitted as covered by the stipulation.

1 (Government Exhibit 35-A, 35-B, 35-C, (see index for
3 Q. BY MR. ANDERSON: So if we go to the 35 series, 35-A,
4 who is the straw buyer for this particular loan application?
5 A. Jason Marshal.
6 Q. If we go to 35-B, do you we see that it's another
7 Jason Marshal?
8 A. Yes.
10 Did you also have the opportunity to review Grant
11 Deeds obtained from various county recorders' offices?
12 A. Yes, I did.
13 MR. ANDERSON: Your Honor, at this time I would like
14 to read into the record and the jury a stipulation agreed to by
15 the parties.
16 THE COURT: All right. Any objection, Mr. Tedmon?
20 THE COURT: All right. You may read that
21 stipulation.
22 MR. ANDERSON: The United States of America through
23 its attorneys of record, the defendant, Charles Head, through
24 his attorney, and defendant, Jeremy Michael Head, through his
25 attorney, hereby stipulate to the following facts: A grant

1 deed is recorded by a county recorder's office to make a public
2 record of the fact that there has been a transfer of ownership
3 in a particular property. When a grant deed is received by a
4 county recorder's office, the deed is reviewed to see if it
5 meets legal requirements, and then it is recorded. It is given
6 a stamp in the upper right-hand corner of the document, which
7 indicates, among other things, the county in which the deed is
8 recorded, the name of the county recorder, the date of the
9 recording, and a particular number for the recording. The
10 document is then scanned and indexed electronically. The
11 original paper version of the recorded deed is then mailed
12 shortly thereafter, via the United States Postal Service, to
13 the address designated by the party that requested the
14 recording.
15 Q. BY MR. ANDERSON: Let's take a look at Government's
16 Exhibit 12-E. What is this document?
17 A. It's a filed or recorded grant deed.
18 Q. And so a grant deed is something that transfers an
19 interest in property, is that right?
21 Q. How do you know it's filed?
22 A. It's stamped in the upper right-hand corner of the
23 document.
24 Q. And that's that stamp with the number that we see
25 right there?

2 Q. And then if we go to the top left of that particular
3 document, what's listed in the top left?
4 A. On this particular grant deed lists Dynasty Realty,
5 949 South Coast Drive, Suite 450, Costa Mesa, California.
6 Q. What is that indicating?
7 A. That's indicating where the grant deed is going to be
8 mailed to.
9 Q. And let's look down lower on this document. Where it
10 says, "for valuable consideration receipt of which is hereby
11 acknowledged, Karie B. Joest, an unmarried woman, hereby grants
12 to Ryan Wiley, a single man," what is this grant deed doing?
13 A. Transferring ownership of the property from Joest to
14 Ryan Wiley.
15 Q. Is it transferring it solely to Ryan Wiley?
17 Q. Let's look at Government Exhibit 11-F. Is this also
18 a recorded grant deed?
19 A. Yes, it is.
20 Q. And who does this transfer the property to?
21 A. It transfers the property to Adam Coffman.
22 Q. And if we could go to 11-F, page four. There is
23 something I should have pointed out on page one first. Let's
24 go back to page one and look at the top right.
25 What's the date?

1 A. The date is Friday, May 14th, 2004.
2 Q. Let's go to page four. What's the date on this grant
3 deed?
4 A. Can you make it bigger, please? Monday, July 31st,
5 2006.
6 Q. And what does this grant deed do? If we could zoom
7 out and then go in the middle section.
8 A. This grant deed, Adam H. Coffman is granting the
9 property to David Willborn and Shauna Willborn, husband and
10 wife, as joint tenants.
11 Q. Let's go to Government's Exhibit 13-E. And actually
12 we could look at -- let's go to 13-F. That's a more complete
13 exhibit.
14 What's the date that this was listed as recorded?
15 A. On June 15th, 2004.
16 Q. And then if we look from who to who?
17 A. "Mary Salazar, an unmarried woman, hereby grants to
18 Sarah Mattson, a single woman."
19 Q. And is that indicating solely to Sarah Mattson?
21 Q. Is there any company or entity LLC listed as also
22 going on title?
23 A. No. Just Sarah Mattson.
24 Q. Is Ms. Salazar remaining on title with this grant
25 deed?

1 A. No, she is not.
2 Q. Let's go to the top left. Where does it indicate
3 that this is to be mailed to when filed?
4 A. States, "Dynasty Realty, 949 South Coast Drive
5 Suite 450, Costa Mesa, California."
6 Q. Is that the location you surveilled Charles Head at?
8 Q. Let's go to page three of this exhibit. What's the
9 date on this one?
10 A. August 10th, 2005.
11 Q. Now if we look down below, who is this property being
12 granted from and to?
13 A. From Sarah Mattson to Andrea Ramos.
14 Q. Is there any mention of an LLC or Ms. Salazar going
15 back on title?
16 A. No.
17 Q. So we've looked through that. Let's look at 13-E,
18 page one. I want to point this out because -- is this page one
19 the same as page one of 13-F? We can put them side by side.
20 A. Yeah, a comparison. If we could do a side by side,
21 please. They appear to be the same.
22 Q. Are they exhibits identified for -- because they go
23 to specific charged counts.
24 A. Correct.
25 MR. ANDERSON: Let's go to Government's Exhibit 14-F.

1 It's not in. Your Honor, I would ask that the 14 series be
2 admitted. And I think that's 14-A, -B, -C and -F.
3 THE COURT: There is an A1 and an A2?
4 MR. ANDERSON: Both of those, please.
5 THE COURT: So 14-A1 and -A2 are admitted, and -C and
6 -D. B is already in.
7 (Government Exhibit 14-A1, 14-A2, 14-C, 14-D. (See
9 Q. BY MR. ANDERSON: And if we could go to 14-F, what's
10 the date of recording on this document?
11 A. June 21, 2004.
12 Q. And who does it grant the property from and to?
13 A. From Robert C. Lee to Marrisa Page.
14 Q. Let's go to 14-B. If we look at page two. Does this
15 -- does this show money being sent out of escrow?
16 A. It does.
17 Q. To who?
18 A. On line 1309 it's Financial Enterprises, LLC, seller
19 proceeds in the amount of $58,697.92.
20 Q. Let's go back one exhibit to 14-A. It's actually two
21 exhibits, 14-A1. Who is listed as the buyer on this property?
22 A. Marrisa Page.
23 Q. Is she listed as the buyer on several other
24 properties as well?
25 A. Yes.

1 Q. Is this one listed as primary residence? We can go
2 up on the page?
3 A. Yes, it is.
4 MR. ANDERSON: Let's go to Government's Exhibit 15-F.
5 And I'd ask that it be admitted pursuant to the records
6 stipulation.
7 Q. BY MR. ANDERSON: Let's go to page two. What is this
8 document?
9 A. It's a grant deed where Pamela Speights is granting
10 the property to Marrisa Page.
11 Q. Is it solely going to Marrisa Page?
12 A. Yes.
13 Q. This is another Marrisa Page transaction?
15 Q. If we look at the top right of this document, is
16 there something indicating it was filed?
17 A. Yes.
18 Q. What is that?
19 A. It's the number 041695448.
20 Q. So it's a little different type of stamp than the
21 other ones we've seen?
22 A. That's correct. I believe it's the previous page
23 goes along with it.
24 Q. So if we look back at that first page?
25 A. Correct.

1 Q. We see this is Los Angeles County?
3 Q. Just organize it a little bit differently?
4 A. Yes.
5 Q. So going then to page six -- excuse me -- that was --
6 it was page 15-D, page one.
7 In the course of going through documents seized
8 during this case, did you also come across documents that were
9 notarized but not filled out?
11 Q. Is this an example at 15-D, page one, of that?
13 Q. Are you familiar with whether or not that's
14 appropriate for a notary to notarize a blank document?
15 A. That's not appropriate.
16 MR. TEDMON: Object. Calls for speculation. Depends
17 on the document.
20 MR. TEDMON: And move to strike.
23 Q. BY MR. ANDERSON: Do you have any knowledge of what
24 the rules are for a notary?
25 A. Yes.

1 Q. Have you gained that knowledge in the course of
2 investigating mortgage fraud cases?
3 A. Yes.
4 Q. Based on your experience investigating mortgage fraud
5 cases and learning the rules for a notary, is it in accordance
6 with the rules that notaries abide by for a notary to notarize
7 this document with it not being fully filled out?
9 speculation. He is not an expert.
11 THE COURT: Hold on one second. Sustained. You may
12 still attempt to lay the foundation, if you're able.
13 Q. BY MR. ANDERSON: Let me ask this way, in addition to
14 finding documents that were not filled out at the top that were
15 notarized, did you also see copies of some of the same
16 documents that were otherwise the same that had the information
17 filled out at the top of them?
18 A. Yes.
19 Q. Typically where did you find the unfilled-out
20 documents?
22 Q. BY MR. ANDERSON: In this case, where did you find
23 the unfilled-out document?
24 A. Search warrant evidence.
25 Q. All right. And in this case, where did you find the

1 filled-out version?
2 A. In the loan or escrow file. Actually, it's in the
3 escrow file.
4 Q. So the search warrant evidence would have come from
5 where?
6 A. From one of the locations that we searched.
7 Q. And in this case do you know which location that is?
8 A. I need to see the bottom portion.
9 Q. It's cut off.
10 A. It's the FCO location.
11 Q. And the documents that came from escrow, how were
12 those obtained?
13 A. Through a subpoena.
14 Q. So when the documents went to Head Financial Services
15 from the signer, they would have been not filled out?
18 Q. BY MR. ANDERSON: Well, based on the order that
19 documents are submitted to escrow, at what point would the
20 information have had -- between what points would the
21 information have had to have been added to the wire
22 instructions?
23 MR. TEDMON: Objection. The question is vague. Also
24 compound.

1 Q. BY MR. ANDERSON: All right. So what's the last
2 point that we know the escrow instructions are not filled out
3 at?
4 MR. TEDMON: Objection. Vague. Need a specific idea
5 of what we're talking about.
6 Q. BY MR. ANDERSON: All right. Government
7 Exhibit 15-D, what point is that?
8 A. This would have been before it went to the escrow
9 office.
10 MR. TEDMON: Objection. That's speculation, Your
11 Honor. He does not know that. Move to strike.
12 THE COURT: Given that answer, the motion is granted.
13 The phrasing of the answer. So the jury shall disregard that
14 last answer.
15 THE WITNESS: This was found in the search warrant
16 evidence. Was not found through -- in the escrow file. The
17 one that I found in the escrow file was completed. It had the
18 bank account information. Where it says "file copy."
19 Q. BY MR. ANDERSON: And we can actually see that. If
20 we pull 15-D, page one, up, and 15-B, page three. 15-B, page
21 three. So that's what you mean stamped "file copy" at the
22 search warrant location?
24 Q. And filled out at the escrow company or by the time
25 it's put into escrow?

1 A. Yes. So the one on the left we had seized and
2 located through the search warrant evidence. The one on the
3 right was obtained directly from the escrow company, Castlehead
4 Escrow, through a subpoena.
5 Q. And the information on the one on the right where is
6 that saying to send?
7 A. It's saying to send the money to Financial
8 Enterprises at Bank of America.
9 Q. And the signature part, does that appear to be the
10 same signature as Pamela Speights?
11 A. It does, yes.
12 Q. And the notary part, does that appear the same?
13 A. Correct.
14 Q. And if we look at 15-B, page two. 15-B, page two.
15 Then can we see the money actually being sent out of
16 escrow to Financial Enterprises?
17 A. Yes.
18 Q. And if we go to 15-C, do we see it received by
20 A. Yes, you do. On July 2nd.
21 Q. Now for a number of the properties that we have
22 discussed in the course of this trial, are there title
23 documents related to those properties included in the exhibits?
24 A. Yes.
25 Q. And they follow the same sort of pattern that we've

1 just discussed with the other title documents?
2 A. Correct.
3 Q. And we just talked about the money going into the
4 bank account. Did you create any charts to show examples of
5 how money was distributed once it went into the bank accounts?
6 A. I do.
8 Government's Exhibit 4 be admitted pursuant to the records
9 stipulation.
10 MR. TEDMON: Which is that again?
11 MR. ANDERSON: Four.
12 THE COURT: As covered by the stipulation, 4 is
13 admitted.
14 (Government Exhibit 4, Proceeds Summary Charts,
16 Q. BY MR. ANDERSON: Let's look at page one. What does
17 this chart show?
18 A. First, it relates to 240 West Queen Street, Number
19 One, Inglewood, California, which is Richard Figueroa's home.
20 Q. He was one of the witnesses who testified early on in
21 the trial?
23 Q. What are you showing with the boxes and arrows on the
24 chart?
25 A. It's showing the flow of the equity from when it

1 leaves Castlehead Escrow into Charles Head's bank account, and
2 then how it's spent.
3 Q. Is every expenditure listed on this chart?
4 MR. TEDMON: Actually, Your Honor, I'm going to move
5 to strike the last answer. It's not Charles Head's bank
6 account. It's Washington Mutual. I mean, I don't want it to
7 be misstated here. It's not a personal account.
9 MR. ANDERSON: I'll ask whose account it is and why
10 the agent has indicated the way he has on here.
11 THE COURT: Clarify. And then I'll consider the
12 motion to strike.
13 Q. BY MR. ANDERSON: What specific bank account did this
14 go into?
15 A. A Washington Mutual Bank account.
16 Q. Whose name was on that bank account?
17 A. Charles Head -- excuse me -- Charles Christopher
18 Head.
19 THE COURT: Are you renewing your motion?
20 MR. TEDMON: No. I just want it clarified.
21 Q. BY MR. ANDERSON: So here we indicate $80,841.51,
22 what is that number?
23 A. That's the equity that belonged to Richard Figueroa
24 that was removed from his home.
25 Q. And beneath that there is what appears to be a date,

1 what is that?
2 A. May 7th, 2004, the date of the wire into Charles
3 Head's bank account.
4 Q. And you indicate wire by placing it in parentheses?
6 Q. And we show Washington Mutual Bank account, and then
7 there's a "-2890" what does that mean?
8 A. That is the last four numbers of that account number.
9 Q. So a method of identifying the specific account?
11 Q. And then I think we covered it, but "Charles
12 Christopher Head," that's because the account was in his name?
14 Q. All right. And then there is a line coming down from
15 that account. What does that line show?
16 A. These are some of the withdrawals that were made
17 using the equity belonging to Richard Figueroa.
18 Q. Why do you say some of the withdrawals?
19 A. During the investigation we have a cut-off period,
20 say 1,000 or 1,500 dollars, to keep the records that we
21 received from the bank account down, to keep the cost down.
22 Q. Do you know how many records were received even with
23 this cut-off in this case?
24 A. Tens of thousands of bank records.
25 Q. So if we zoom out, and then I'll highlight a

1 different portion.
2 If we follow that line down, what expenditures did
3 you see shortly thereafter within that -- above that cut-off
4 range?
5 A. The first one is May 11th. There were two checks
6 written totalling $3,556.65 to Washington Mutual. That same
7 day another check was written to cash for $14,251.69.
8 Q. When you say "written to cash," what do you mean?
9 A. I believe he was obtaining a cashier's check. So
10 that's a means of how you can acquire one.
11 Q. And then what do you show?
12 A. Between May 11th, 2004 and May 15th, 2004 three
13 checks were written totalling $55,000 to Head Financial
14 Services.
15 Q. And beneath that?
16 A. On May 12th, 2004 a check was written to Kou Yang for
17 $2,444.39.
18 Q. And then the final entry?
19 A. On May 14th, 2004 a check was written to Landsafe
20 Title for $13,071.50.
21 Q. Did you do any additional charts like this one?
22 A. I did.
23 Q. Let's look at the next example, page two. What does
24 this chart show?
25 A. This chart represents the property located at 54

1 North Shelly Avenue, Fresno, California, Shannon Taylor.
2 Q. Shannon Taylor also testified earlier in this trial?
4 Q. Could you walk us through the entries on this chart?
5 A. Sure. On May 14th, 2004, Castlehead Escrow wired
6 $95,163.43 to Financial Enterprise ending in bank account
7 number 3515.
8 Q. From the Financial Enterprises account what happened
9 to the money?
10 A. That same day a cashier's check was obtained from
11 that account for $35,200 payable to Charles Head. And that
12 same day Charles Head -- or that cashier's check was deposited
13 in Charles Head's Washington Mutual Bank account ending in
14 2890.
15 Q. And if we look down to the next entry on this chart,
16 did anything else happen?
17 A. Yes. Also on May 14, 2004, check number 1001 was
18 written to cash for $55,306. And I also believe a cashier's
19 check was obtained for this transaction.
20 Q. Let's look at page three. This chart's a little bit
21 busier than the others. What are you showing here?
22 A. I'm actually showing two property transactions. The
23 first one is 117 Steckel Drive, Santa Paula, California, and
24 that relates to Gwen Lee. And then on the right is 823 West
25 San Joaquin Avenue, Tulare, California, and that relates to

1 Mary Salazar.
2 Q. What do you show happening?
3 A. First part on the left here is on June 21, $58,697.92
4 of the Gwen Lee's equity was wired into the Financial
5 Enterprise bank account ending in 3512.
6 Q. What else do you show?
7 A. Few days before, as it relates to the property at 823
8 West San Joaquin Avenue, Tulare, California, which was Mary
9 Salazar, on June 17, 2004, $28,070.59 of her equity was
10 deposited into the same Financial Enterprise bank account
11 ending in 3512.
12 Q. From that Bank of America account ending 3512 what
13 happened to the money over the next week or so?
14 A. Sure. The first was on June 17, 2004, $5,000 was
15 transferred electronically into another Financial Enterprise
16 bank account ending in 3515.
17 On June 21st several check card debits were made from
18 the account. One being to Littman Jewelers for $1,872.50.
19 Another one to Helzberg Diamonds for $4,706.92. And then
20 another one to Whitehall Jewelers for $3,873.75.
21 Q. And then let's go down and look at what else
22 happened. What was the next entry after that?
23 A. On June 22nd a check was written to Robert Lee for
24 $3,000. Also that same day a check -- two checks totalling
25 $10,300 were written to Sarah Mattson. A check card

1 payment/debit card was made to Countrywide Mortgage for
2 $1,757.46. Also on June 22nd a $2,000 check card payment to
3 American Express. Same day, on June 22nd, 2004, $8,000 cash
4 withdrawal.
5 Q. And one more entry for that day, is that right?
6 A. That's correct. It was to Littman Jewelers again for
7 $1,657.43.
8 Q. What about the next day?
9 A. The next day there was a check card for $2,400 to
10 Light Nightclub, Incorporated, and then also a check for
11 $10,000 to Christina Bell, another check for $5,000 to Marrisa
12 Page, and then a check to Head Financial Services for
13 $2,134.05. And then on June 24th, another check card payment
14 to Helzberg Diamonds for $2,461.
15 Q. Let's go to page four. Is this another example?
16 A. Yes, it is.
17 Q. What property is this for?
18 A. It's 1929 West 65th Street, Los Angeles, California,
19 and it relates to Pamela Speights.
20 Q. What's shown here?
21 A. It shows that on July 2nd, 2004, $83,022.43 of Pamela
22 Speights' equity was wired into the Financial Enterprise bank
23 account ending in 3512.
24 Q. From there what happened to the money?
25 A. Four days later, on July 6, 2004, a $30,000 wire was

1 transferred to Charles Head's bank account.
2 Q. And then what?
3 A. Then on July 7th, 2004, a check card payment to Delta
4 Airlines for $1,895.74.
5 Q. Let's go down to the second half of the page.
6 A. On July 8th, 2004, a check was written to American
7 Education Systems for $1,500.
8 Q. What other purchases were made on July 8th?
9 A. There was two checks totalling $6,500 written to
10 Sarah Mattson. Also a check card purchase to Expedia Travel
11 for $3,114.92. And then lastly there was a check card payment
12 to Hotel Ritz in Barcelona for $1,732.06.
13 Q. Let's go to page five. Does this deal with another
14 property?
15 A. It does.
16 Q. What property is this?
17 A. 14713 Condon Avenue, Lawndale, California, relates to
18 Brenda Clark.
19 THE COURT: Can you get through this in one minute?
21 THE COURT: All right. Let's take our break for the
22 day. We are close enough to 1:30.
23 So ladies and gentlemen, that concludes today's
24 proceedings. Tomorrow we will go from 8:30. At this point I
25 do anticipate until 1:30 p.m. I may have an update on the

1 schedule tomorrow, but I'll let you know first thing. So you
2 should plan to be here at 8:30.
3 Overnight, please, as always, remember my
4 admonitions. Please do no homework of any kind, electronically
5 or otherwise, and don't consult dictionaries, don't talk to
6 anyone about the case, including family members or close
7 friends, also your fellow jurors.
8 If anyone attempts to contact you in any way, let me
9 know first thing in the morning. We will see you tomorrow,
10 ready to go at 8:30. Thank you.
11 (Jury out.)
12 THE COURT: All right. You may step down. You may
13 be seated. How much longer do you think you have,
14 Mr. Anderson?
15 MR. ANDERSON: 30 minutes.
16 THE COURT: All right. At this point can you
17 estimate time for cross, Mr. Tedmon?
18 MR. TEDMON: I would say maybe 30 minutes.
20 MR. HAYDN-MYER: 30 to 45 minutes.
21 THE COURT: All right. So that will take us probably
22 past our first morning break, and then will you need time to
23 consider, Mr. Tedmon?
24 MR. TEDMON: I would.
25 THE COURT: All right. So we'll conclude with Agent

1 Fitzpatrick. Then the Government does anticipate resting?
2 MR. ANDERSON: Yes, Your Honor. We'll have to
3 finalize the exhibits, some things will come in through
4 stipulation, but other than that, yes.
5 THE COURT: All right. So I'll be prepared at this
6 point -- I mean, if there is any way to use this afternoon to
7 tee up any defense witnesses, if there will be cases in
8 defense, so they are ready to go as soon as the Government
9 rests. I really hesitate to take such a long break, but if we
10 need to. It sounds as if Charles Head -- I'm not making any
11 assumptions -- but if Charles Head does not put on a case, then
12 we would adjourn until Thursday morning. That's what you're
13 telling the Court, Mr. Haydn-Myer?
14 MR. HAYDN-MYER: I have three witnesses under
15 subpoena that are all going to probably fly in. And it's the
16 U.S. Marshal's policy -- and I understand the policy is, you
17 know, we have to put as an order, a 17-day to them, and they
18 have to fly them usually a day early, so they have to make the
19 plans in order to do so.
20 MR. ANDERSON: Which witnesses are those?
21 THE COURT: Well, I don't need to hear that right
22 now. But how long will they take in terms of your presentation
23 of them?
24 MR. HAYDN-MYER: Oh, I'd imagine all three of them
25 won't take more than an hour to an hour and a half.

1 THE COURT: So we could be concluded on Thursday, I
2 believe. Unless Charles Head puts on a case in defense that
3 takes longer and moves into Thursday.
4 Are you prepared to take a break in any case in
5 defense on behalf of Charles Head to allow the witnesses to
6 proceed on Thursday?
7 MR. TEDMON: Yes.
8 THE COURT: So we don't lose them.
9 MR. TEDMON: Yes. Absolutely.
10 THE COURT: It would be important to keep them
11 scheduled.
12 All right. We'll see how tomorrow goes. We'll see
13 what Charles Head determines with respect to any case in
14 defense.
15 MR. ANDERSON: Your Honor, depending on the defense
16 witnesses, we may or may not have a rebuttal case, too. I
17 don't know which ones he's calling.
18 THE COURT: Well, here's my suggestion. That if we
19 end up having a block of time, we will work on jury
20 instructions. There is no question about that. I think we
21 should begin in any event.
22 And we'll decide on a time for doing that tomorrow
23 once we know better how the schedule is going to go this week.
24 In the meantime, if you can make certain you are addressing all
25 the redactions in the JMH exhibits and get that taken care of.

1 MR. TEDMON: Your Honor, I noticed some Social
2 Security numbers in the Government's exhibits as well. We'll
3 review those and make sure those are out.
4 THE COURT: Review all exhibits. And if there are
5 any redactions you need to bring to my attention, let me know.
6 But I will assume that you are making redactions consistent
7 with the local rules. In time so exhibits can go promptly to
8 the jury. Is JMH-HH in?
9 MR. ANDERSON: Your Honor, we reached a stipulation.
10 It would be that it could be admitted identifying it as a
11 document seized during the search warrant at the Arizona
12 business location. Just because it's bank record, but it
13 didn't came from the bank. It came from the search warrant.
14 THE COURT: So I'll let the jury know that in the
15 morning, or I'll acknowledge one of you to make that
16 representation, and JMH-HH will then come in.
17 (Defendant's Exhibit JMH-HH, Overdraft letter from
18 Bank of America, dated 5/25/06, admitted into evidence.)
19 THE COURT: I didn't find 43-K. So if you can make
20 certain I get the Court's copy of 43-K.
21 And then are there other jury instructions that any
22 party is contemplating proposing at this point in time other
23 than what I've already received? I'm putting together a first
24 working packet for us to go through, and I would like to know
25 if there is anything else being recommended. Mr. Anderson?

1 MR. ANDERSON: We don't have anything right now. We
2 are going to go through them with a careful eye to make sure we
3 have everything that we need.
4 THE COURT: Mr. Tedmon, do you know at this time?
5 MR. TEDMON: No. Other than the ones I proposed
6 already before the trial I don't think there is any others that
7 I would be submitting.
9 MR. HAYDN-MYER: No, Your Honor. I was actually in
10 agreement with Mr. Tedmon's.
11 THE COURT: If you can let me know by tomorrow,
12 Mr. Anderson, what your thinking is?
13 MR. ANDERSON: I don't think we'll have any, but I
14 just want to make sure.
15 THE COURT: All right. Anything else we need to
16 discuss? Mr. Anderson? Mr. Morris?
22 MR. TEDMON: I guess there is one other thing. I'm
23 just curious about this.
24 If Mr. Haydn-Myer cannot put his witnesses on until
25 Thursday, now Thursday is an 8:30 to 1:30 period of time. If

1 the totality of his witnesses takes an hour to an hour and a
2 half, and, of course, it depends on the Government's rebuttal
3 case, should we be prepared to do our closings on Thursday, or
4 are we going to come back on Tuesday and start fresh?
5 There is a volume of evidence here, and to organize
6 it kind of on the fly I think would be difficult. But I wanted
7 to ask the Court.
8 THE COURT: How much time will you be requesting for
9 closing, Mr. Anderson? Is Mr. Morris giving the closing?
10 MR. ANDERSON: Mr. Morris is giving the closing, and
11 I will give the rebuttal closing.
12 Mr. Morris thinks he can do his in two hours, and
13 then we need additional time. I would say three hours. But
14 we're not planning to use it all. But just three hours to be
15 safe. We'll be under that.
16 THE COURT: And Mr. Tedmon, how much time?
17 MR. TEDMON: I try to keep mine to 45 minutes to an
18 hour.
19 THE COURT: And Mr. Haydn-Myer?
20 MR. HAYDN-MYER: Under an hour.
21 THE COURT: All right. Well, once we know what's
22 happening with Charles Head's case, we can re-visit that
23 question.
25 THE COURT: I think it's most likely that closings

1 plus jury instructions will go forward on Tuesday, the 28th,
2 just to keep it all together. Once we start, I would rather
3 not split those up. But there should be enough time, say if we
4 get everything else done, we could begin the morning of the
5 28th, and it would go to the jury that day.
6 MR. TEDMON: That would be my preference, Your Honor.
7 Keep it in one piece.
8 MR. ANDERSON: I think so especially over a three-day
9 weekend.
10 THE COURT: All right. Unless something changes with
11 the schedule, generally that will be the plan. See you
12 tomorrow at 8:30.
14
15 CERTIFICATION
16
20
21 /S/ DIANE J. SHEPARD

23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
Volume 9
CHARLES HEAD AND JEREMY Pages 1205 to 1292
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
17
18
19
20
21
22
23
24
25

1 I N D E X
3 CHRISTOPHER FITZPATRICK
DIRECT EXAMINATION BY MR. ANDERSON (CONT'D) 1218
RECROSS-EXAMINATION BY MR. HAYDN-MYER 1284
6
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25


3

6 15-A 1929 West 65th Street, Los Angeles – Loan 1219
File
7 16-A 14718 Condon Avenue, Lawndale – Loan File 1219
21-A 2171 South Prospect Street, Porterville – 1219
8 Loan File
15-C 1929 West 65th Street, Los Angeles – 1220
9 Related Bank Records
16-C 14718 Condon Avenue, Lawndale – Related 1220
10 Bank Records
17-C 9311 Monte Vista Street, Rancho Cucamonga – 1220
21-C 2171 South Prospect Street, Porterville – 1220
17-B 9311 Monte Vista Street, Rancho Cucamonga – 1220
13 Escrow File
16-D 14718 Condon Avenue, Lawndale – Search 1221
14 Warrant Documents
17-D 9311 Monte Vista Street, Rancho Cucamonga – 1221
15 Search Warrant Documents
19-D 3646 Milton Way, North Highlands – Search 1221
16 Warrant Documents
19-E County recorder title documents from 1221
17 Sacramento County
34-A 3221 Island Ave, San Diego, CA - 1222
34-B 3956 Merced River Road, Ontario, CA - 1222
34-C 7210 Conejo Drive, San Bernardino, CA - 1222
21
22
23
24
25

1
3
40-A Email from mhead@financial-enterprises.com, 1223
4 Re: File Number 07050423 dated 5/12/2005
40-E Email from Charles Head – FW: Christine 1223
5 Musthaler, dated 1/27/2005
40-F Email from Charles Head – FW: Massey, dated 1223
6 4/21/2005
40-G Email from Charles Head – NOD Call Backs, 1223
7 dated 3/2/2005
40-K Email from Liz Re: Foreclosures – dated 1223
8 8/26/2004
40-L Email between Akemi Bottani and Charles 1223
9 Head – Taxes
40-Q Email from Charles Head, Re Figueroa, dated 1223
10 7/23/04
40-R Emails mhead@financial-enterprises.com, Re: 1223
11 Funding, dated 4/29/05
40-S Email dated 4/2/03 re: Hey 1223
12 40-T Email dated 5/5/03 re: Situations 1223
40-V Email dated 7/26/04 re: List Exchange 1223
13 40-W Email dated 8/3/04 re: AW: Olsen 1223
40-X Email dated 8/25/04 re: Conclusion 1223
14 40-BB Email dated 7/27/04 re: 5-21-13 5-21-13 1223
40-CC Email dated 6/29/04 re: Vanegas 1223
15 41-A Email from Samantha – FW: Page, Marissa, 1223
dated 6/9/2004
16 41-D Email dated 5/17/04 re: Loan Application 1223
41-E Email dated 5/24/04 re: 832 W San Joaquin 1223
17 Ave Tulare, Ca
41-F Email dated 5/24/04 re: 823 San Joaquin, 1223
18 Tulare
41-G Email dated 6/23/04 re: These should help 1223
19 with tracking
41-H Email dated 7/6/04 re: Denial Notice for 1223
20 Page files
41-I Email dated 10/27/04 re: Financial 1223
21 Enterprises Letterhead.doc
22
23
24
25


2
CH-D1 “Equity Purchase Agreement” re: 3646 Milton 1257
3 Way, North Highlands
CH-D4 "Acknowledgement By Seller" re: 3646 Milton 1257
4 Way, North Highlands
CH-D6 "Affidavit Of Deed" re: 3646 Milton Way, 1257
5 North Highlands
CH-E1 “Equity Purchase Agreement” re: 4104 1257
6 Stephen Drive, North Highlands
CH-E3 "Residential Lease After Sale" re: 4104 1257
7 Stephen Drive, North Highlands
CH-E5 "Notice Of Cancellation" re: 4104 Stephen 1257
8 Drive, North Highlands
CH-E6 "Affidavit Of Deed" re: 4104 Stephen Drive, 1257
9 North Highlands
CH-F1 “Equity Purchase Agreement” re: 1161 1257
10 Saratoga Court, Tracy
CH-F3 "Residential Lease After Sale" re: 1161 1257
CH-F4 "Acknowledgement By Seller" re: 1161 1257
CH-F5 "Notice Of Cancellation" re: 1161 Saratoga 1257
13 Court, Tracy
CH-F6 "Affidavit Of Deed" re: 1161 Saratoga 1257
14 Court, Tracy
CH-G5 "Notice Of Cancellation" re: 633 Hudson 1257
15 Lane, Modesto
CH-G6 "Affidavit Of Deed" re: 633 Hudson Lane, 1257
16 Modesto
CH-H1 “Equity Purchase Agreement” re: 2171 South 1257
17 Prospect Street, Porterville
CH-H3 "Residential Lease After Sale" re: 2171 1257
18 South Prospect Street, Porterville
CH-H4 "Acknowledgement By Seller" re: 2171 South 1257
CH-H5 "Notice Of Cancellation" re: 2171 South 1257
CH-H6 "Affidavit Of Deed" re: 2171 South Prospect 1257
21 Street, Porterville
CH-I1 “Equity Purchase Agreement” re: 240 West 1257
22 Queen Street #1, Inglewood
CH-I5 "Notice Of Cancellation" re: 240 West Queen 1257
23 Street #1, Inglewood
24
25


No. Description
2
CH-J1 “Equity Purchase Agreement” re: 117 North 1257
3 Steckel Drive, Santa Paula
CH-J2 "Option Agreement" re: 117 North Steckel 1257
4 Drive, Santa Paula
CH-J3 "Residential Lease After Sale" re: 117 1257
5 North Steckel Drive, Santa Paula
CH-J5 "Notice Of Cancellation" re: 117 North 1257
6 Steckel Drive, Santa Paula
CH-J6 "Affidavit Of Deed" re: 117 North Steckel 1257
7 Drive, Santa Paula
CH-K1 “Equity Purchase Agreement” re: 1929 West 1257
8 65th Street, Los Angeles
CH-K2 "Option Agreement" re: 1929 West 65th 1257
CH-K3 "Residential Lease After Sale" re: 1929 1257
10 West 65th Street, Los Angeles
CH-K5 "Notice Of Cancellation" re: 1929 West 65th 1257
CH-L3 "Residential Lease After Sale" re: 14718 1257
12 Condon Avenue, Lawndale
CH-N1 “Equity Purchase Agreement” re: 15425 Ross 1257
13 Drive, Adelanto
CH-N3 "Residential Lease After Sale" re: 15425 1257
14 Ross Drive, Adelanto
CH-N5 "Notice Of Cancellation" re: 15425 Ross 1257
15 Drive, Adelanto
CH-P1 "Equity Purchase Agreement" re 8345 Terhune 1257
16 Avenue, Sun Valley
CH-P3 "Residential Lease After Sale" re 8345 1257
17 Terhune Avenue, Sun Valley
CH-P4 "Acknowledgement By Seller" re 8345 Terhune 1257
CH-P5 "Notice of Cancellation" re 8345 Terhune 1257
20
21
22
23
24
25


2
3
CH-P6 "Affidavit Of Deed" re: 8345 Terhune 1257
CH-Q1 “Equity Purchase Agreement” re: 2717 East 1257
5 Victor Hugo Avenue, Phoenix
CH-Q3 "Lease Agreement" re: 2717 East Victor 1257
6 Hugo Avenue, Phoenix
CH-Q4 "Acknowledgement By Seller" re: 2717 East 1257
7 Victor Hugo Avenue, Phoenix
CH-Q5 "Notice Of Cancellation" re: 1257
8 CH-R1 “Equity Purchase Agreement” re: 1321 East 1257
Bankers Drive, Carson
9 CH-R2 "Option Agreement" re: 1321 East Bankers 1257
Drive, Carson
10 CH-R3 "Residential Lease After Sale" re: 1321 1257
East Bankers Drive, Carson
11 CH-R5 "Notice Of Cancellation" re: 1321 East 1257
Bankers Drive, Carson
12 CH-R6 "Affidavit Of Deed" re: 1321 East Bankers 1257
Drive, Carson
13 CH-T1 “Equity Purchase Agreement” re: 185 West 1257
232nd Place, Carson
14 CH-T3 "Residential Lease After Sale" re: 185 1257
West 232nd Place, Carson
15 CH-T4 "Acknowledgement By Seller" re: 185 West 1257
232nd Place, Carson
16 CH-T5 "Notice Of Cancellation" re: 185 West 1257
232nd Place, Carson
17 CH-T6 "Affidavit Of Deed" re: 185 West 232nd 1257
Place, Carson
18 CH-U1 “Equity Purchase Agreement” re: 1606 1257
Silver Cup Court, Redlands
19 CH-U3 "Residential Lease After Sale" re: 1606 1257
20 CH-U4 "Acknowledgement By Seller" re: 1606 1257
21 CH-U5 "Notice Of Cancellation" re: 1606 Silver 1257
Cup Court, Redlands
22 CH-U6 "Affidavit Of Deed" re: 1606 Silver Cup 1257
Court, Redlands
23 CH-V3 "Residential Lease After Sale" re: 4005 1257
Sunswept Avenue, Santa Ana
24
25

1 DEFENSE EXHIBITS RECEIVED IN EVIDENCE Page

No. Description
2
CH-W1 “Equity Purchase Agreement” re: 718 1257
3 Mendell Street, San Francisco
CH-W3 "Residential Lease After Sale" re: 718 1257
CH-W4 "Acknowledgement By Seller" re: 718 1257
CH-W5 "Notice Of Cancellation" re: 718 Mendell 1257
6 Street, San Francisco
CH-W6 "Affidavit Of Deed" re: 718 Mendell 1257
7 Street, San Francisco
CH-X1 “Equity Purchase Agreement” re: 1284 West 1257
8 Victoria Street, Rialto
CH-X3 "Residential Tenancy Agreement" re: 1284 1257
9 West Victoria Street, Rialto
CH-X4 "Acknowledgement By Seller" re: 1284 West 1257
CH-X5 "Notice Of Cancellation" re: 1284 West 1257
CH-X6 "Affidavit Of Deed" re: 1284 West 1257
CH-Y1 “Equity Purchase Agreement” re: 7429 1257
13 Orien Avenue, La Mesa
CH-Y3 "Residential Lease After Sale" re: 7429 1257
CH-Y4 "Acknowledgement By Seller" re: 7429 1257
CH-Y5 "Notice Of Cancellation" re: 7429 Orien 1257
16 Avenue, La Mesa
CH-Y6 "Affidavit Of Deed" re: 7429 Orien 1257
17 Avenue, La Mesa
CH-AA1 “Equity Purchase Agreement” re: 1517 1257
18 Georgetown Avenue, Palmdale
CH-AA2 "Option Agreement" re: 1517 Georgetown 1257
19 Avenue, Palmdale
CH-AA3 "Residential Lease After Sale" re: 1517 1257
CH-AA5 "Notice Of Cancellation" re: 1517 1257
CH-BB1 “Equity Purchase Agreement” re: 19410 1257
22 Tillman Avenue, Carson
CH-BB2 "Option Agreement" re: 19410 Tillman 1257
23 Avenue, Carson
CH-BB3 "Residential Lease After Sale" re: 19410 1257
CH-BB5 "Notice Of Cancellation" re: 19410 1257

1
4 CH-CC1 “Equity Purchase Agreement” re: 3221 1257

Island Avenue, San Diego
5 CH-CC2 "Option Agreement" re: 3221 Island 1257
Avenue, San Diego
6 CH-CC3 "Residential Lease After Sale" re: 3221 1257
Island Avenue, San Diego
7 CH-CC5 "Notice Of Cancellation" re: 3221 Island 1257
Avenue, San Diego
8 CH-CC6 "Affidavit Of Deed" re: 3221 Island 1257
Avenue, San Diego
9 CH-EE1 “Equity Purchase Agreement” re: 7210 1257
Conejo Drive, San Bernardino
10 CH-EE2 "Option Agreement" re: 7210 Conejo Drive, 1257
San Bernardino
11 CH-EE3 "Residential Lease After Sale" re: 7210 1257
Conejo Drive, San Bernardino
12 CH-EE5 "Notice Of Cancellation" re: 7210 Conejo 1257
Drive, San Bernardino
13 CH-EE6 "Affidavit Of Deed" re: 7210 Conejo 1257
Drive, San Bernardino
14 CH-FF1 “Equity Purchase Agreement” re: 37025 1257
Bordeaux Street, Palmdale
15 CH-FF3 "Residential Lease After Sale" re: 37025 1257
16 CH-FF4 "Acknowledgement By Seller" re: 37025 1257
17 CH-FF5 "Notice Of Cancellation" re: 37025 1257
18 CH-FF6 "Affidavit Of Deed" re: 37025 Bordeaux 1257
Street, Palmdale
19 CH-GG1 “Equity Purchase Agreement” re: 17739 1257
Seville Avenue, Fontana
20 CH-GG3 "Residential Lease After Sale" re: 17739 1257
21 CH-GG4 "Acknowledgement By Seller" re: 17739 1257
22 CH-GG5 "Notice Of Cancellation" re: 17739 1257
23 CH-GG6 "Affidavit Of Deed" re: 17739 Seville 1257
Avenue, Fontana
24
25


2
3 CH-HH1 “Equity Purchase Agreement” re: 16309 1257

Windcrest Drive, Fontana
4 CH-HH3 "Residential Lease After Sale" re: 16309 1257
Windcrest Drive, Fontana
5 CH-HH6 "Affidavit Of Deed" re: 16309 Windcrest 1257
Drive, Fontana
6 CH-II1 “Equity Purchase Agreement” re: 1612 East 1257
Poppy Street, Long Beach
7 CH-II3 "Residential Lease After Sale" re: 1612 1257
East Poppy Street, Long Beach
8 CH-II6 "Affidavit Of Deed" re: 1612 East Poppy 1257
Street, Long Beach
9 CH-JJ3 "Residential Lease After Sale" re: 265 1257
East Pleasant Street, Long Beach
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

3 ---oOo---
6 for jury trial, and today is day ten.
8 Acknowledge supplemental proposed jury instruction, so I will
9 look at that. What's the JMH list? Is this the complete list
10 of JMH exhibits?
11 THE CLERK: I just made it yesterday to help us keep
12 track.
13 THE COURT: With respect to the stipulations that
14 have been read in. I think at least two stipulations have been
15 read into the record. We have not put those in the jury
16 binders. If you want them in the jury binders, let us know.
17 We would put them in in a sanitized form. You can think about
18 that.
19 Is there anything else we need to discuss before we
20 bring the jury in?
21 MR. ANDERSON: Not really. Your Honor, Mr. Tedmon
22 and I have reached an agreement to admit most of the remainder
23 of the stipulated exhibits through this witness. So the
24 Government will be introducing a large number of exhibits right
25 at the beginning, and Mr. Tedmon will be when he has a chance

1 for cross-examination.
2 MR. TEDMON: And the idea, Your Honor, is that we're
3 going to do it en mass so it's quicker. I think that would
4 make the most efficient sense.
5 THE COURT: Is Mr. Haydn-Myer not opposed to that
6 approach?
7 MR. HAYDN-MYER: No, Your Honor. That's fine.
8 THE COURT: Do you know which exhibits they're
9 talking about?
10 MR. HAYDN-MYER: I have a general idea, Your Honor.
11 THE COURT: Well, if there is any objection from
12 Mr. Haydn-Myer, I'll consider it at the time. It didn't sound
13 as if he was fully a party to that stipulation.
14 All right. Anything further?
16 MR. TEDMON: No.
18 (Jury in.)
20 court, ladies and gentlemen. Thank you for your patience this
21 morning. We were doing a bit of work while you were waiting.
22 I just wanted to let you know it does appear that
23 we're somewhat ahead of schedule. I'm going to give you a more
24 complete update later today to give you a sense of where we
25 think we are after further conference with the parties.

1 But for now we'll continue with the direct of Agent
2 Fitzpatrick. Mr. Anderson.
3 CHRISTOPHER FITZPATRICK,
7 DIRECT EXAMINATION (CONT'D)
8 BY MR. ANDERSON:
9 Q. Agent Fitzpatrick, good morning.
10 A. Good morning.
11 Q. In a bit I would like it pick up where we left off
12 with Exhibit 4 yesterday.
13 But before we do that, I would like to have some
14 other exhibits admitted. And, Your Honor, I would ask that
15 Government's Exhibit 12-F, 16-F, 17-F, 19-F, all be admitted as
16 title records pursuant to the records stipulation of the
17 parties.
18 THE COURT: All right. No objection? Mr. Tedmon?
22 THE COURT: All right. 12-F, 16-F, 17-F and 19-F are
23 admitted subject to the stipulation.
24 (Government Exhibits 12-F, 16-F, 17-F, 19-F, (see

1 MR. ANDERSON: And, Your Honor, I would further ask
2 that Government Exhibit 15-A, be admitted as a mortgage
3 document from the Residential Mortgage Assistance Enterprise,
4 LLC; 16-A be admitted as mortgage documents from Plaza Home
5 Mortgage, Incorporated; 21-A be admitted as mortgage records
6 from Long Beach Mortgage Company. All pursuant to the records
7 stipulation.
8 THE COURT: All right. Any objection? Mr. Tedmon?
12 THE COURT: All right. So 15-A, 16-A and 21-A are
13 also admitted.
14 (Government Exhibits 15-A, 16-A, 21-A, (see index for
16 MR. ANDERSON: And I would ask that the following
17 bank records be admitted pursuant to the records stipulation,
18 Exhibit 15-C, 16-C, 17-C, 21-C.
19 THE COURT: All right. Mr. Tedmon, that's
20 acceptable?
21 MR. TEDMON: Yes.
24 THE COURT: All right. 15-C, 16-C, 17-C, 21-C are
25 admitted.

1 (Government Exhibits 15-C, 16-C, 17-C, 21-C, (see
2 index descriptions), admitted into evidence.)
3 THE COURT: And I would ask that Government's
4 Exhibit 17-B be admitted as Castlehead Escrow records pursuant
5 to the records stipulation.
11 (Government Exhibit 17-B, Castlehead Escrow records,
13 MR. ANDERSON: And then I would ask that Government's
14 Exhibit 16-D be admitted as documents obtained during a search
15 warrant at 4111 East Valley Auto Drive, Suite 201, in Mesa,
16 Arizona; that Government's Exhibit 17-D be admitted as
17 documents found during a search warrant at A-1 Investment
18 Management, Suite 307, 3700 Newport Boulevard in Newport Beach,
19 California; and that Government's Exhibit 19-D be admitted as
20 documents found during the course of a search warrant at FCO,
21 Incorporated, 1520 Nutmeg Place, Suite 210, Costa Mesa
22 California. All being found on November 16, 2006. Pursuant to
25 MR. TEDMON: No.

3 THE COURT: 16-D, 17-D, 19-D are admitted.
4 (Government Exhibits 16-D, 17-D, 19-D, (see index for
6 MR. ANDERSON: And then I would ask that Government's
7 Exhibit 19-E be admitted as county recorder title documents
8 from Sacramento County pursuant to the records stipulation.
13 THE COURT: 19-E is admitted.
14 (Government Exhibit 19-E, County recorder title
15 documents from Sacramento County, admitted into evidence.)
16 MR. ANDERSON: Then I would ask, Your Honor, that
17 Government's Exhibit 34-A from Pacific Mercantile Bank; 34-B
18 from Long Beach Mortgage Company, and 34-C from the Mortgage
19 Store Financial, Incorporated, be admitted pursuant to the
20 records stipulation.
25 THE COURT: 34-A, -B and -C are admitted.

1 (Government Exhibits 34-A, 34-B, 34-C, (see index for
3 MR. ANDERSON: And, Your Honor, the final list is a
4 fairly lengthy list of e-mails. Should I read them all or do
5 them in groups of five or ten?
6 THE COURT: If I can do "one through," for example,
7 that would be fine.
8 MR. ANDERSON: Well, it's not inclusive.
9 THE COURT: Well, then rattle off.
10 MR. ANDERSON: I'd also ask that the following
11 e-mails -- let me get the exact language from the
12 stipulation -- that the following exhibits be admitted pursuant
13 to the records stipulation as copies of e-mails found through
14 forensic computer analysis of computers seized from the
15 following locations: 3700 Newport Boulevard, Number 307,
16 Newport Beach, California; 17621 Irvine Boulevard, Suite 210,
17 Tustin, California; 1520 Nutmeg Place, Suite 210, Costa Mesa,
18 California; 4111 East Valley Auto Drive, Suite 201, Mesa
19 Arizona; 961 North Citrus Drive, La Habra, California. And the
20 exhibit numbers are 40-A, 40-E, 40-F, 40-G, 40-K, 40-L, 40-Q,
21 40-R, 40-S, 40-T, 40-V, 40-W, 40-X, 40-BB, 40-CC, 41-A, 41-D,
22 41-E, 41-F, 41-G, 41-H and 41-I.
23 THE COURT: All right. Mr. Tedmon, no objection?
24 MR. TEDMON: No.

2 THE COURT: All right. Ms. Schultz, did you get all
3 those?
5 THE COURT: All right. Without repeating that entire
6 list, the 40 series just recited and the 41 series just recited
7 are admitted.
8 MR. ANDERSON: Thank you, Your Honor.
9 (Government Exhibits 40-A, 40-E, 40-F, 40-G, 40-K,
10 40-L, 40-Q, 40-R, 40-S, 40-T, 40-V, 40-W, 40-X, 40-BB, 40-CC,
11 41-A, 41-D, 41-E, 41-F, 41-G, 41-H and 41-I, (see index for
13 Q. BY MR. ANDERSON: Agent Fitzpatrick, I'd like to turn
14 to Government's Exhibit 40-A, which is one of those e-mails
15 that was just admitted, and if we could pull that up on the
16 screen.
17 If we go back to page three of that exhibit, do you
18 see the e-mail between mhead@financialenterprises.com that is
19 being sent to charleshead@headmortgage.com on Thursday May 12,
20 2005?
21 A. Yes.
22 Q. And in that e-mail from J. Michael Head does it --
23 what does it discuss?
24 A. It discusses coming up with an idea of using a power
25 of attorney to have documents signed.

1 Q. And is Michael Head recommending this process to
2 Charles Head in this e-mail?
3 A. Yes.
4 Q. And this is May 2005, correct?
6 Q. And if we go to the second page. The second page of
7 the exhibit, in the top line of the e-mail from Charles Head
8 back to Michael Head, does he state whether or not he has used
9 that procedure before?
10 A. Yes, he has.
11 Q. With respect to NOD documents has it been used?
12 A. Not with NOD documents, no.
13 Q. And where we've seen the homeowners' documents, have
14 you seen evidence of powers of attorney being used to sign
15 homeowners' names?
16 A. Only one instance I've seen an actual power of
17 attorney.
18 Q. Let's go to the first page of this exhibit. Does
19 Charles Head indicate to Michael Head that they have some
20 pissed off clients?
22 Q. I would like to go to Government's Exhibit 40-R. Can
23 we highlight the top e-mail on the first page.
24 Does that e-mail discuss Michael Head having made
25 Charles Head money?

1 A. Yes, it does.
2 Q. If we go to Government's Exhibit 40-T. Is this an
3 earlier e-mail from 2003?
4 A. Yes. May of 2003.
5 Q. And if we zoom out on that. Does this e-mail also
6 discuss Michael Head working with Charles Head?
7 A. Yes, it does.
8 Q. And splitting commission proceeds?
9 A. Correct.
10 Q. If we could go to Government's Exhibit 40-V. Is this
11 a July 26, 2004 e-mail?
12 A. Yes.
13 Q. From Charles Head to Anh Nguyen and Kou Yang?
14 A. Yes.
15 Q. Does it discuss purchasing postcards?
16 A. Yes.
17 Q. Let's go to Exhibit 40-W. Is this an e-mail between
18 Anh Nguyen and Charles Head?
19 A. Yes, it is.
20 Q. Does it discuss what appears to be a foreclosure
21 transaction?
22 A. Yes.
23 Q. How is the equity from the property referred to?
24 A. Profit.
25 Q. Let's go to Government's Exhibit 40-X -- excuse me --

1 40-BB. Is this an e-mail from Charles Head to Tracy Thompson,
2 blind copy to Kou Yang?
3 A. Correct.
4 Q. Does it reference Queen?
5 A. Yes.
6 Q. Work on Queen?
7 A. Correct.
8 Q. Is there an address in this case that that may refer
9 to?
10 A. Yes, I believe it goes back to Richard Figueroa.
11 Q. Let's turn to Government's Exhibit 40-CC. Start at
12 the bottom of the chain. Who is this an e-mail from and to?
13 A. From Kou Yang on June 29th, 2005 to Charles Head.
14 Q. And do you recall the testimony of Agent Sommercamp
15 yesterday?
16 A. Yes.
17 Q. Do you recall his testimony that Charles Head told
18 him he did not know Eduardo Vanegas?
20 Q. What's the subject line of this e-mail?
21 A. Vanegas.
22 Q. What's the subject of the e-mail?
23 A. It's discussing the Marcelano deal with Omar and
24 Lenny about grant deeds and Vanegas.
25 Q. Let's go up to the next e-mail in this chain. How

1 does Charles Head respond to Kou Yang about the grant deeds?
2 A. States: "All should be in the name of the owner's
3 LLC. My half is understood, so I don't think I need to go on
4 with them as half owner."
5 Q. And understood is in quotations marks?
7 Q. Let's go up to the top e-mail. How does Kou Yang
8 respond?
9 A. She states: "Okay, I will do that and also for Kidd.
10 I will do it for Creative Loans bc" -- stands for "because" --
11 "it is solely yours."
12 Q. Let's go to Government's Exhibit 41-D. Who is this
13 an e-mail from?
14 A. It's from a prospective straw buyer.
15 Q. We can look at the second page.
16 A. Yes. From Andy and Michelle Mainiero.
17 Q. And if we could go to the first page. Are those
18 individuals expressing a concern to Andrew at
19 headmortgage.com --
20 A. Yes.
21 Q. -- regarding the transaction?
22 What is the concern that's being expressed?
23 A. They believe their income is inflated on the loan
24 application, and they don't feel comfortable signing the loan
25 application because it states on the loan application that it's

1 a federal crime to knowingly sign a false loan application.
2 Q. So let's look up at the next step in this chain of
3 e-mails, who does Andrew Vu write to next?
4 A. To Mike Head.
5 Q. What does Andrew Vu say?
6 A. Says: "Mike, I am working the file that you passed
7 on to me. Andrew Mainiero. They only make $15,000 a month and
8 want to buy a $350,000 home. They don't want to state their
9 income for reasons they stated below. They don't qualify with
10 income they currently make, and they don't want to state their
11 income. Do you want to cancel their loan???"
12 Q. How does Mike Head respond to this?
13 A. "Just tell him to cross the income part off and
14 initial it. We can still do a stated income loan for him, and
15 we will not jeopardize his integrity."
16 Q. Whose integrity then would be jeopardized?
17 A. It would be the borrower.
18 Q. If this process Mike Head is suggesting is followed?
19 A. I'm sorry? What's the question?
20 Q. So the people who are supposed to sign this
21 application are concerned about the overstatement of income?
23 Q. What is the solution that's being proposed by Mike
24 Head?

2 Q. BY MR. ANDERSON: Let's go to Government's
3 Exhibit 41-E. What property is this e-mail discussing?
4 A. 832 West San Joaquin Avenue, Tulare, California.
5 Q. Whose address, if you know, is that?
6 A. I think it's Mary Salazar.
7 Q. And who are the people on this e-mail?
8 A. Initially it's from Charles Head to Mike Head, Josh
9 Coffman and Justin Wiley.
10 Q. Let's go to Government's Exhibit 41-G. What is this
11 e-mail?
12 A. It's an e-mail from Mike Head to Charles Head,
13 josh@headmortgage.com and justin@headmortgage.com. The subject
14 line states, "these should help with the tracking."
15 Q. And if we go to the pages that were attached to the
16 e-mail. Go to page two. If we could flip that.
17 Do you recognize any of the names on that list?
18 A. I do.
19 Q. For example, Mary Salazar?
20 A. Correct. Mary Salazar, Robert and Gwen Lee, Dorothy
21 Gist.
22 Q. Are each of those people people whose properties
23 appear on Exhibit 1, that chart of the properties dealt with in
24 2004?

1 Q. If we go to page three. What is this document
2 entitled?
3 A. "Mike's foreclosures."
4 Q. Do you recognize some of those same names there?
5 A. I do.
6 Q. Let's go to Government's Exhibit 41-H. What is this
7 e-mail?
8 A. It's discussing a denial notice for Marrisa Page, a
9 transaction.
10 Q. What's the reason given?
11 A. One moment to review it.
12 Q. Let me ask it this way, is there an attachment to
13 this e-mail?
14 A. Yes.
15 Q. Let's go to page two, the attachment. Why was this
16 loan declined?
17 A. Because multiple loan applications were submitted for
18 various property addresses, and those were forwarded to the
19 investor.
20 Q. And who was the particular straw buyer who the
21 application was declined for?
22 A. Marrisa Page.
23 Q. So if we go back to the first page and look at the
24 date, and who it was sent to, Mike Head knew by July 6, 2004
25 that homes would be declined if multiple applications --

3 Q. BY MR. ANDERSON: This was sent to Mike Head's e-mail
4 address by July 6, 2004, is that correct?
6 Q. Giving notice that Marrisa Page's application was
7 denied because of multiple applications?
9 Q. I would like to go through some of the E exhibits
10 briefly. If we could go to Government's Exhibit 11-E.
11 What is the significance of this particular exhibit?
12 A. Can you make it larger, please?
13 This is a cashier's check from Shannon Taylor to
14 Matrix Investment Group for $1,200 on, I believe, September 16,
15 2004.
16 Q. And I won't ask you to repeat testimony, but this was
17 testified to by Shannon Taylor?
19 Q. And let's look at 12-E. What's the significance of
20 this mailing?
21 A. This is a filed grant deed whereby Karie B. Joest is
22 transferring ownership of the property solely to Ryan Wiley.
23 Q. And this was mailed to Dynasty Realty sometime
24 shortly after May 17, 2004, according to the document?

1 Q. Let's look at 13-E. Is this another mailing?
3 Q. And according to this document, it was mailed shortly
4 after June 15th, 2004 to Dynasty Realty, is that correct?
6 Q. And this transfers title from Mary Salazar to Sarah
7 Mattson alone?
8 A. Correct.
9 Q. If we go to 19-E. What is this document?
10 A. This is a filed grant deed by the Sacramento County
11 Recorder. This grant deed was mailed to Eduardo Vanegas in
12 Costa Mesa, California, and it shows that Terri Turner is
13 granting ownership of her property to Eduardo Vanegas.
14 Q. So this was another mailing sent to -- this one to
15 South Coast Drive?
17 Q. According to the document?
18 A. Correct.
19 Q. And if we look to Government's Exhibit 19-D, was this
20 a search warrant document?
21 A. It is.
22 Q. And what do we see on the first page of the search
23 warrant document?
24 A. The top right corner says "filed copy." It's just a
25 not filed copy of a grant deed.

1 Q. And that particular grant deed grants to Eduardo
2 Vanegas from Terri Turner?
3 A. That's correct. It was the same grant deed that was
4 seen in the previous exhibit, but this one is not filed.
5 Q. And if we look to page two, does this appear to be
6 another grant deed?
7 A. Yes, it is.
8 Q. Is it signed?
9 A. No, it's not.
10 Q. Is it notarized?
11 A. No.
12 Q. What does this one purport to do?
13 A. This one shows that Eduardo Vanegas is transferring
14 the property to Meridian Financial, LLC, and Terri Jean Turner.
15 Q. Did you see any evidence of this deed being filed?
16 A. No, I didn't.
17 Q. If we look to Government's Exhibit 19-D, page three,
18 what is this page?
19 A. This is a grant deed that shows that Meridian
20 Financial, LLC, is granting the property to Terri Jean Turner.
21 Q. Is this one signed?
22 A. No.
23 Q. Is there anything to indicate that this document was
24 filed?
25 A. No.

1 Q. Let's go to Government's Exhibit 21-E. What's the
2 significance of this mailing?
3 A. This is a postal money order from Emily Silva to
4 Financial Enterprise in the amount of $1,000 on or about
5 January 13th, 2006.
6 Q. We can take that down. Now let's go back to
7 Exhibit 4 where we left off yesterday.
8 If I remember correctly, we were on page five?
9 A. Correct.
10 Q. What property is this chart for?
11 A. It's for 1718 Condon Avenue, Lawndale, California.
12 Brenda Clark.
13 Q. What does it show?
14 A. It shows that on July 21, 2004 and July 28, 2004 two
15 wires totalling $71,259.06 was wired from Castlehead Escrow to
16 Bank of America Financial Enterprise bank account ending in
17 3512.
18 Q. Who, if you know -- do you know who the person that
19 was a signer for that 3512 account was?
20 A. I believe it was Michael Head and Sarah Mattson.
21 Q. Now if we go down on that chart, what happens to the
22 money once it's in the Financial Enterprises' account?
23 A. On July 22, 2004 a check is written to Brenda Clark
24 for the amount of $9,029. That same day two checks totalling
25 $8,260 was written to Sarah Mattson. Also that same day a

1 check card payment for $2,000 to American Express is made.
2 Q. What happened on the 26th?
3 A. On the 26th there was a transfer of $6,500 from the
4 Financial Enterprise bank account to another Financial
5 Enterprise bank account ending in account number 3515.
6 Q. If you know, who controlled the account ending 3515?
7 A. Sarah Mattson and Jeremy Michael Head.
8 Q. Now going on to the next two entries, what else is
9 there?
10 A. On July 26, 2004 a check card payment to Linder's
11 Furniture for $6,377.56. And then on July 29, 2004, a check
12 for $10,000 to Crevier BMW.
13 Q. Now in addition to these large entries that you
14 tracked, is there a place where you're able to see smaller
15 purchases out of the accounts that you're following?
16 A. Yes.
17 Q. Where were those seen?
18 A. Physically seen on the bank statements.
19 Q. And are examples of the bank statements included in
20 the exhibits as C exhibits?
21 A. Yes, they are.
22 Q. What types of purchases are on those?
23 A. Daily living expenses, food, gas, entertainment,
24 airline flights, hotels.
25 Q. Let's go to page six. And do you recall the

1 testimony yesterday from Agent Sommercamp that Charles Head
2 said he was not aware of a Meridian Financial Group?
4 Q. Were you able to find an example where money went
5 from Meridian Financial to an account controlled by Charles
6 Head?
7 A. Yes.
8 Q. Is that shown on this chart?
9 A. Yes.
10 Q. So what properties do you look at on this chart?
11 A. There's two. The first one is 3646 Milton Way in
12 North Highlands, California. That relates to Terri Turner.
13 And the second one is 1161 Saratoga Way, Tracy, California.
14 And that relates to Sarah Malentino.
15 Q. So let's follow the first property. What do we see
16 with 3646 Milton Way?
17 A. On November 18th 2004 Castlehead Escrow wired
18 $89,142.99 into the Meridian Financial Group, LLC, bank account
19 held at Wells Fargo Bank.
20 Q. And just to refer back to what we looked at on
21 Exhibit 2 yesterday, who controls Meridian Financial Group?
22 A. Elizabeth Huerta.
23 Q. From Meridian what happened to the money?
24 A. On November 23, 2004 she obtained a cashier's check
25 for $45,053.38 which was subsequently deposited into the

1 Creative Loans bank account at Pacific Mercantile bank.
2 Q. Who controls the Creative Loans account according to
3 the bank records?
4 A. Charles Head, Kou Yang, and then at a point in time
5 John Corcoran was added to the bank account.
6 Q. So pause where we are with the Creative Loans account
7 and let's go to the Saratoga Way property. If we could zoom
8 out.
9 So what happens with the money from escrow from
10 Saratoga Way?
11 A. On November 22, 2004 Castlehead Escrow wired
12 $68,933.66 into the Statewide Financial Group, LLC, bank
13 account held at Bank of America.
14 Q. What was done with the portion of that money?
15 A. That same day, Omar Sandoval, who controlled that
16 account, obtained a check. He wrote a check off that account,
17 payable to cash, for $51,547.53, and obtained various cashier's
18 checks.
19 Q. Could you walk us through those cashier's checks?
20 A. Sure. The first cashier's check was for $36,547.53,
21 which was deposited into the same Creative Loans bank account
22 held at Pacific Mercantile Bank.
23 Q. And just take a moment and pause. Do you know where
24 a branch location for Pacific Mercantile Bank was in
25 relationship to Head Financial Services?

1 A. Yes.
2 Q. Where?
3 A. It was in the same building.
4 Q. Now there were three other cashier's checks. What
5 were those made out to?
6 A. One was for 5,000 to Eduardo Vanegas, who was the
7 straw buyer in this transaction; $5,000 who was the homeowner,
8 Lisa Malentino; and then $5,000 cash withdrawal.
9 Q. Now let's go to the Pacific Mercantile Bank and
10 follow what happened to the money from there.
11 So from the Pacific Mercantile bank account for
12 Creative Loans what happened next?
13 A. On November 22, 2004 a check is written for $20,000
14 to PMB to CC. And I've learned through my investigation that
15 means Pacific Mercantile Bank to cashier's check. So a
16 cashier's check was obtained.
17 Q. Then what?
18 A. Then another check was written for $50,000 to Head
19 Financial Services.
20 Also that same day, on November 23, 2004, $20,000 was
21 wired into Charles Head's personal bank account at Washington
22 Mutual Bank.
23 Q. That's that 2890 account that we discussed yesterday?
24 A. Correct.
25 Q. And then there is another entry?

1 A. Then on November 24, 2004 another wire for $35,000
2 was wired into Charles Head's personal bank account at
3 Washington Mutual Bank.
4 Q. In the course of looking at these transactions, did
5 you see any evidence that money was being set aside in trust
6 for any homeowners?
7 A. No.
8 Q. What was the standard appearance of the bank accounts
9 with respect to the balances they kept?
10 A. Money --
11 MR. TEDMON: Objection. Vague, Your Honor.
13 Q. BY MR. ANDERSON: Did you observe large balances
14 being kept in any of the bank accounts?
15 A. No.
16 Q. What did you observe?
17 A. I observed money coming in and money leaving the
18 account.
19 Q. And how did the money leave the accounts?
22 Q. BY MR. ANDERSON: What sort of expenditures caused
23 the money to leave the accounts?
24 MR. TEDMON: Objection, Your Honor. Vague. There's
25 multiple accounts. Expenditures, I don't know what that means.

1 Q. BY MR. ANDERSON: All right. How about the accounts
2 controlled by Charles Head?
3 A. Used to pay employees, daily living expenses, some
4 payments on mortgages, travel.
5 Q. And what about the accounts controlled by Michael
6 Head?
7 A. Same thing. Mortgages, daily living expenses,
8 travel, commissions.
9 Q. Did you do charts reflecting deposits and withdrawals
10 on a monthly basis from some of the accounts?
11 A. I did.
12 Q. Let's turn to page seven. Looking at the top of that
13 page, what is shown in the top chart?
14 A. This is a Financial Enterprise, LLC, Bank of America
15 account ending in 03515.
16 Q. What are you showing in this chart?
17 A. I'm showing the total deposits and total withdrawals
18 for the time period April 12, 2004 through December 29, 2004.
19 Q. Now do you recall the testimony elicited yesterday
20 about the amount of mortgage payments being made by Financial
21 Enterprises on a monthly basis?
22 A. Yes.
23 Q. How did that compare to the amount of money being
24 made by Financial Enterprises according to the charts --
25 MR. HAYDN-MYER: Objection. Vague.

2 THE WITNESS: If you take into account this Financial
3 Enterprise along with the two other Financial Enterprise bank
4 accounts, it's minimal, very small fraction.
5 Q. BY MR. ANDERSON: A very small fraction being spent
6 on mortgage payments?
7 A. Correct. Compared to the deposits being made into
8 the bank account.
9 Q. And the other withdrawals as well?
10 A. Correct.
11 Q. So this first account ending 3515, do you know who
12 was the signer for this account?
13 A. This account was opened up by Justin Wiley, and I
14 believe Michael Head may have had access to that account also.
15 Q. And what do you show under the column "date range"?
16 A. Those are the date range listed on the bank
17 statements.
18 Q. So April 12th through April 28th is the first bank
19 statement, April 29th through May 26, 2004, the second bank
20 statement?
21 A. Correct. Yes. The account was opened on April 12,
22 2004, and the last transaction was approximately December 29th,
23 2004.
24 Q. So if we look at the April 29th, 2004 through May 26,
25 2004, what do we see in the deposits column?

1 A. One, $184,266.65 was made.
2 Q. So that reflects the total deposits into that account
3 during that time period?
5 Q. And in the withdrawal column what do we see?
6 A. The amount of total withdrawals for that time period
7 is $150,325.63.
8 Q. And if we follow this chart to the bottom, did you
9 total up the deposits and withdrawals for that time period?
10 A. I did.
11 Q. And what was the total deposit?
12 A. $576,412.94.
13 Q. And the total withdrawals?
14 A. $576,582.87.
15 Q. So that's for the time period between April 12, 2004
16 and December 29, 2004?
17 A. Correct.
18 Q. Let's look at the next chart. So we're on the same
19 page but on the second chart on page seven. What account is
20 this for?
21 A. It's for another Financial Enterprise, LLC, Bank of
22 America account ending in 41711.
23 Q. Who were the signers on this account?
24 A. Sarah Mattson and Michael Head.
25 Q. Did you use the same process in order to get these

1 numbers that you did for the previous chart?
2 A. I did.
3 Q. And so on this account the date range started
4 April 21, 2005, the first month ending April 27, 2005, and you
5 followed all the way through to March 14, 2006?
6 A. Correct.
7 Q. And so if we look at a sample month, June 29, 2005
8 through July 27th, 2005, what were the total deposits?
9 A. $100,043.85.
11 A. $99,005.
12 Q. Looks like the biggest month is November 29th, 2005,
13 is that correct?
15 Q. And how much was deposited that month?
16 A. $286,136.08.
17 Q. How much withdrawn?
18 A. $284,306.77.
19 Q. So what was the total for the time period covered?
20 A. Total deposits was $1,266,244.18.
22 A. $1,228,588.42.
23 Q. Let's go to the next chart. Does this chart start on
24 this page and continue to the next?
25 A. Correct.

1 Q. What account does this chart summarize?
2 A. This is the third Financial Enterprise, LLC, bank
3 account at Bank of America, ending in account number 03512.
4 Q. Who were the signers for this account?
5 A. Also Sarah Mattson and Mike Head.
6 Q. Looks like the time period begins April 12, 2004, is
7 that correct?
8 A. Correct.
9 Q. And if we go to the next page, we can see what the
10 final date is. And ends March 14, 2006, is that right?
11 A. Correct. That's not the date the account ends.
12 That's the date range within the Indictment.
13 Q. And so as of March 14th, 2006, what were the total
14 deposits into that account?
15 A. $3,490,182.04.
16 Q. Total withdrawals?
17 A. $3,467,818.01.
18 Q. Did you also create similar charts for accounts
19 controlled by Charles Head?
20 A. I did.
21 Q. If we could turn to page nine. What account does
22 this summarize?
23 A. It's Head Financial Services doing business as
24 Dynasty Realty Group, Washington Mutual Bank account ending in
25 341-8.

1 Q. Who was the signer on this account?
2 A. Charles Head.
3 Q. And does this chart work just the same way the others
4 do?
5 A. Correct.
6 Q. So between January 1st, 2004 and September 30th,
7 2004, what were the total deposits?
8 A. $1,843,450.67.
9 Q. Total withdrawals?
10 A. $1,867,132.36.
11 Q. Let's go to page ten. What account does this
12 summarize?
13 A. This summarizes a Creative Loans, LLC, bank account
14 at Pacific Mercantile Bank ending in 995.
15 Q. Who was the signer for this account?
16 A. Charles Head, Kou Yang, and then eventually Jack
17 Corcoran was added.
18 Q. And does this chart work just the same way as the
19 others?
20 A. Correct.
21 Q. So between October 12, 2004 and March 14th, 2006,
22 what were the total deposits?
23 A. $11,152,669.60.
25 A. $10,780,824.85.

1 Q. Is there anything to indicate that this money was the
2 proceeds of foreclosure properties?
3 A. Yes.
4 Q. What was it?
5 A. A large percentage of these deposits were made by
6 Castlehead Escrow, also Alliance Title, which were the two
7 escrow companies that Creative Loans and Head Financial
8 Services used.
13 BY MR. TEDMON:
14 Q. Special Agent Fitzpatrick, good morning.
15 A. Good morning.
16 Q. I want to start with these various searches, okay?
17 A. Okay.
18 Q. Because I think there may be some confusion about
19 this. The searches took place on what date?
20 A. It was November 16th, 2006.
21 Q. And that was true as to all of the searches, they
22 were all done on the same day, correct?
24 Q. Now there was a search -- and I'm going to call it
25 the search sites just so the jury can follow.

1 There was a search conducted at 3700 Newport
2 Boulevard, Number 307, in Newport Beach, California, correct?
3 A. Correct.
4 Q. And that was A-1 Investments, correct?
5 A. Correct.
6 Q. Now you're the case agent, true?
7 A. Yes. I'm one of the case agents.
8 Q. One of the case agents. So you were generally
9 responsible under your umbrella of authority for all the
10 searches, would that be fair to say?
11 A. Not necessarily. Each search site has a team leader
12 assigned, and that agent oversees those particular sites.
13 Q. But you're kind of the agent in charge in terms of
14 the investigation, true?
15 A. I'm one of the two, correct.
16 Q. So you're aware of the various searches that were
17 done?
18 A. Yes.
19 Q. So staying with the search at Newport Boulevard, A-1
20 Investments, that particular company used to be called A-1
21 Property Management, you're aware of that, correct?
22 A. Correct.
23 Q. And that's owned by Jack Corcoran, is that right?
24 A. It was ran by Jack Corcoran. I'm not sure if he
25 actually owned it.

1 Q. But it was run by Jack Corcoran?
2 A. Correct.
3 Q. So we've seen some exhibits in this trial, and the
4 designation is from the search sites now, "Head-SW-" and then
5 there's a string of letters and numbers, correct?
6 A. Correct.
7 Q. So the documents that have been introduced that would
8 be Head-SW-A1PM, those that have been seized from the location
9 3700 Newport Boulevard, Newport Beach, correct?
10 A. Correct.
11 Q. That's not Charles Head's company, right?
12 A. Well, Jack used to work --
13 Q. Strike that. On the date of the search, that's what
14 I'm asking about.
15 A. I'm not sure if Jack bought that portion of the
16 business from Charles. I'm not sure.
17 Q. Okay. Well, you're aware, based on your
18 investigation, that prior to November, the November search,
19 Charles Head had sold his businesses, correct?
20 A. He sold his businesses, yes, correct.
21 Q. So he didn't own the company at the time the search
22 was conducted, true?
23 A. True.
24 Q. And in fact, the Newport Beach location, 3700 Newport
25 Boulevard, Number 307, is different in location from any of

1 Mr. Head's prior business locations, true?
2 A. I'm not sure when -- Jack used to be the accountant
3 for --
4 Q. That's not what I'm asking. I'm asking about the
5 location site of Mr. Head's businesses.
6 A. I'm not sure when that location first started, so I
7 can't say for certain that it was started -- it could have been
8 started, say, in 2005, which it would relate to Charles Head.
9 I'm not sure exactly when they moved that portion of the
10 business to Newport Beach.
11 Q. Well, you know Mr. Head had his offices in Long Beach
12 at one point, correct?
13 A. Initially. Correct.
14 Q. Then he moved to Costa Mesa, correct?
15 A. Correct.
16 Q. And when he was in Costa Mesa, prior to the search he
17 sold his businesses, true, you know that?
18 A. Correct.
19 Q. All right. Now moving on to the search site at 1520
20 Nutmeg Place, Suite 210, Costa Mesa. Do you recall that
21 search?
22 A. Yes.
23 Q. What company was that relating to?
24 A. It's FCO.
25 Q. That's FCO?

1 A. Correct.
2 Q. Okay. And FCO is the company that purchased Head
4 A. It's right before the search warrant.
5 Q. I'm not asking you that. I'm saying, before the
6 search took place, Mr. Head sold his businesses, you've already
7 testified to that, correct?
8 A. Just prior to the search.
9 Q. All right. And, well, it was about a month or so
10 before, correct?
11 A. I don't exactly recall the date, but I know it was
12 just prior to the search.
13 Q. Well, you've investigated the case, true? You also
14 know that FCO purchased Head Financial Services on or about
15 August 25th, 2006, correct?
16 A. I don't recall the date. I know it was prior to the
17 search.
18 Q. All right. And the search was in November?
19 A. Search occurred in November, correct.
20 Q. And what was the date again of the search?
21 A. I believe it was November 16th.
22 Q. All right. So as of November 16th, Mr. Head did not
23 own Head Financial Services, true?
24 A. Correct.
25 Q. All right. Lavar Fletcher owned what used to be Head

2 A. Correct.
3 Q. And Lavar Fletcher is the one that was the owner and
4 operator of FCO, correct?
5 A. Correct.
6 Q. So when the jury sees an exhibit that says
7 Head-SW-FCO, the reason that that designation is on the
8 document is because it was seized from Lavar Fletcher's
9 business, FCO, correct?
10 A. That evidence that was seized from that location, all
11 those documents were dated prior to --
12 Q. Special Agent Fitzpatrick, let me do it this way.
13 I'm asking a question and you just answer.
14 I'm asking you this, on the date of the search at
15 FCO, that company was owned on that date by Lavar Fletcher,
16 correct?
17 A. Correct.
18 Q. Lavar Fletcher purchased Head Financial Services
19 prior to the date of search, correct?
20 A. Correct.
21 Q. All right. Also FCO is located at 1520 Nutmeg Place
22 in Costa Mesa, correct?
23 A. Correct.
24 Q. That is a different site location from where Mr. Head
25 had his offices, which were located at 949 South Coast Drive,

1 correct?
2 A. Correct.
3 Q. So all of Mr. Head's documents had to have been moved
4 from his prior location on South Coast Drive to Nutmeg,
5 correct?
6 A. What was your question?
7 Q. My question is, the documents seized from FCO were
8 seized from a location on Nutmeg Place, correct?
9 A. We seized some documents there. We also --
10 Q. I'm asking about the FCO documents.
11 A. Yes, from Nutmeg, correct.
12 Q. And that would be from Nutmeg Place, true?
13 A. Ask the question again? I'm sorry.
14 Q. The documents seized from the company FCO were seized
15 from 1520 Nutmeg Place, Suite 210, Costa Mesa, correct?
16 A. Correct.
17 Q. All right. Mr. Head's former location for Head
18 Financial Services was 949 South Coast Drive, Number 450, Costa
19 Mesa, correct?
20 A. Correct.
21 Q. So where you seized the documents from Mr. Fletcher's
22 business is different in location from where Mr. Head had his
23 business, true?
24 A. Yes.
25 Q. All right. So the documents had to have been moved?

2 Q. And in fact, Mr. Head, once he sold the business, had
3 given up possession and control over all the documents that
4 were located at FCO, correct?
5 A. That I have no idea.
6 Q. All right. Well, he didn't own FCO, did he?
7 A. He didn't own FCO.
8 Q. Lavar Fletcher did, correct?
9 A. Correct.
10 Q. Now there was another search location. The address
11 is 4111 East Valley Auto Drive, Suite 210, Mesa, Arizona,
12 correct?
14 Q. And what company did that relate to?
16 Q. All right. So when the jury sees a document that's
17 enumerated as Head-SW-Arizona, that would relate to the search
18 in Mesa, correct?
20 Q. All right. And then there was another search that's
21 already been testified to relating to the home in La Habra, do
22 you recall that?
23 A. I do.
24 Q. All right. In fact, I think Special Agent Paul
25 Howard testified to certain documents taken from that location?

1 A. Correct.
2 Q. Correct. And when the jury sees a document that says
3 Head-SW-NCitrus, that relates to that La Habra location, true?
4 A. True.
6 Q. BY MR. TEDMON: And then I just have one thing I want
7 to ask you about with regard to Government's Exhibit Number 2.
8 If we could have that on the screen, please.
9 Just as a point of clarification, Special Agent
10 Fitzpatrick -- if we can just have that upper section blown
11 up -- this document indicates the various companies and the
12 names and the signers, correct?
13 A. Correct.
14 Q. Okay. Now the first entry here, Akemi Botari, that's
15 Dynamic Partners, is that correct?
16 A. Correct.
17 Q. Do you know when that was incorporated?
18 A. Either, I believe, in 2004 or 2005.
19 Q. Okay. You're not certain?
20 A. No.
21 Q. Okay. And if we can go to Government's Exhibit 1,
22 please.
23 Now this is a document you testified to yesterday
24 relative to certain amounts of money that were taken out and so
25 forth, correct?

1 A. Correct.
2 Q. And then you also testified today relative to bank
3 records, summary charts, correct?
4 A. Correct.
5 Q. Now Government's Exhibit 1, which is a listing of the
6 various items taken out of escrow -- and we can take that down.
7 I just want to use that for reference -- and then the documents
8 that you prepared today relative to the bank records -- and I'm
9 talking about the last series that you testified to, okay --
10 the summaries?
11 A. Okay.
12 Q. -- none of those documents, particularly the ones you
13 finished with today, backed out any expenses Mr. Head had to
14 run his business, did they? They are deposits and withdrawals
15 only?
16 A. That's correct. I took the total deposits for a
17 given month and the total withdrawals.
18 Q. There was no itemization given as to anything he had
19 to expend specifically as it relates to the business expenses,
20 true?
21 A. Those charts just give a general description of total
22 deposits, total withdrawals.
23 Q. Right. No itemization beyond that?
24 A. That chart does not, no. I can go into those if
25 you'd like.

1 Q. No. I'm just asking about the charts.
2 MR. TEDMON: Now Your Honor, at this time there are a
3 series of CH exhibits that I've talked to Mr. Anderson about,
4 and I've spent some time talking to Special Agent Fitzpatrick
5 about, that have not yet been admitted. And I've covered the
6 search sites that those items came out of with Special Agent
7 Fitzpatrick this morning.
8 My proposal is that I move the remaining CH exhibits
9 that have not already been introduced pursuant to the
10 stipulation and I guess through Special Agent Fitzpatrick. I
11 can move them kind of en mass, or I can go through each one
12 individually, whatever is best for the record.
13 THE COURT: You want to cross-examine based on those
14 exhibits?
15 MR. TEDMON: No. I want them admitted.
17 MR. TEDMON: And the documents speak for themselves.
18 The jury has had an inordinate number of documents presented to
19 them. They are Equity Purchase Agreement, lease agreements,
20 and the like on numerous properties. I don't have any interest
21 in talking to Special Agent Fitzpatrick about that. I just
22 need to get them introduced.
23 THE COURT: Is it every CH exhibit that has not been
24 admitted or a subset?
25 MR. TEDMON: No. It's the ones that have not been

1 admitted.
2 THE COURT: All right. With that understanding, I
3 think we can clarify the list. But if it is the balance of
4 what has not been admitted, let's just refer to that group as a
5 group.
6 Any objection to the balance of the CH exhibits not
7 yet admitted coming in, Mr. Anderson?
11 THE COURT: All right. Then all of the CH exhibits
12 not yet admitted are now admitted, not including those
13 reserved.
14 MR. TEDMON: Correct. And those that have been
15 indicated as reserved are not being presented in this trial.
16 THE COURT: All right. So all of those are now
17 admitted. And if need be, we'll clarify the exact list without
18 going through the entire list in front of the jury.
19 MR. TEDMON: Thank you. With that, Your Honor, I
20 have nothing further.
21 (Defendant's Exhibits - remaining CH series, (see
24 /// /// ///
25 /// /// ///

1 CROSS-EXAMINATION
3 Q. Good morning, Special Agent Fitzpatrick.
4 A. Good morning.
5 Q. May I please have Government's Exhibit 4, page two,
6 displayed. And you recognize that address, correct, Agent?
7 A. I do.
8 Q. And this -- can I have it blown back up, please, to
9 the full size.
10 And this is a diagram that you put together as part
11 of the investigation, for the jury, to show the transfer of
12 funds, is that correct?
14 Q. And you've got Financial Enterprises with an account
15 number of 3515, is that correct?
16 A. Correct.
17 Q. Now just to be clear, you were here when Justin Wiley
18 testified and said that he had a checking account that had
19 Financial Enterprises on it, but it had a different number, is
20 that correct, 3515?
21 A. Correct.
22 Q. And Justin Wiley was rather adamant stating he was
23 the only one that was a signator, he was the one that wrote the
24 checks, that was his account, correct?
25 A. I don't recall him saying that. I believe he said

1 that he along with Michael Head were on the initial Financial
2 Enterprise bank account. When he moved out to California, he
3 had established that account.
4 Q. Wasn't his exact testimony he was a signator on that
5 account?
6 A. He was "a" signator, yes. "The," I don't know.
7 Q. Can I have 11-C3, please. Page three. By looking at
8 that Government exhibit, can you tell who is a signature on
9 that account or who signed it, that check?
10 A. It looks like Justin Wiley. I'm not sure what his
11 signature exactly looks like.
12 Q. Well, isn't that Government's Exhibit 11-C3, and
13 wasn't there already testimony about that check saying that was
14 Justin Wiley?
15 A. I remember this being -- I can't recall Mr. Wiley
16 said that was his signature or not. It appears to be his
17 signature.
18 Q. Weren't you sitting here when Justin Wiley looked at
19 this and said it's his signature?
20 A. I was sitting in the courtroom, correct.
21 Q. It's obviously not Mike Head's signature?
22 A. It doesn't appear. It appears to be Justin Wiley's
23 signature.
24 Q. And that account is 3515, isn't that correct?

1 Q. Can I have 11-C, page four, please.
2 What account number is that one?
3 A. Also ending in 3515.
4 Q. And the signature of the person that signed that is?
5 A. Justin Wiley.
6 Q. And how many checks from 3515 did you examine that
7 you have before you that were actually written by Mike Head?
8 A. You'd have to show me the check.
9 Q. No. I'm asking you, as a course of your
10 investigation how many did you find?
11 A. I couldn't tell you without going through them. I
12 can't give you a number.
13 Q. One?
14 A. I'm sure there was multiple checks in there. He was
15 a signator on the accounts.
16 Q. Do you have a specific memory of any check from 3515
17 written by Mike Head?
18 A. The specific memory, no.
19 Q. Can I have I believe it's Government's Exhibit 1,
20 please.
21 And you recognize that of course, Special Agent
22 Fitzpatrick?
23 A. I do.
24 Q. And this was a document that you put together for
25 purposes of investigation in regards to escrow, correct?

1 A. Yes. This document was created from information
2 obtained from settlement statements.
3 Q. And there is a -- where I put the arrow is Karie
4 Joest, but right above it is Shannon Taylor, is that correct?
6 Q. And then as you slide down towards the right there is
7 Adam Coffman, and then there's Financial Enterprises, is that
8 correct?
9 A. Correct.
10 Q. Now that deal that we just talked about, that account
11 was the one that Financial Enterprises -- that's 3515, is that
12 correct?
13 A. No. This information that was used to make this
14 chart doesn't specify which account it went into. I would have
15 to look at the bank statements to see which of three Financial
16 Enterprise bank accounts it went into. Or it's on the chart
17 here. So, yeah, it's 3515. That's correct.
18 Q. So that is Financial Enterprises, but it's Financial
19 Enterprises based on the testimony, based on all the records,
20 that Justin Wiley did, isn't that correct?
21 A. That account was opened at the direction of Michael
22 Head.
23 Q. I'm sorry. Was this Justin Wiley's deal or not?
24 "Yes" or "no"?
25 A. Correct.

1 Q. And that Financial Enterprises, that one we're
2 looking at, is account 3515, isn't it?
3 A. The money went into 3515, correct.
4 Q. Going down one. Benjamin Taylor -- I'm sorry --
5 Karie Joest, 1325 West Evergreen Court, Visalia.
6 Now when Mr. Wiley was testifying, he said he put
7 together a couple deals with his brother, Ryan, isn't that
8 correct?
10 Q. And as you slide down that it also says Financial
12 A. Correct.
13 Q. But that Financial Enterprises, that account right
14 there, is also 3515, isn't it?
15 A. One moment. I would have to look at the bank
16 statements to see if it was that account. It's not one of my
17 charts here for that address, West Evergreen.
18 Q. Do you have any reason to believe it's not 3515?
19 A. It's possible it could have went to one of the other
20 two Financial Enterprise bank accounts.
21 Q. Do you have any reason to believe it's not 3515 as
22 you sit there, after reviewing all the documents since 2008?
23 A. It's possible it went into one of the other
24 Financial --
25 Q. Do you have any reason not to believe it didn't go

1 into 3515 as you sit there? It's "yes" or "no"?
2 A. I can't tell you if it did without looking at the
3 bank statement.
4 Q. The bank statements? The wire instructions? What do
5 you need?
6 A. Yes. The escrow documents would show what account it
7 went into.
8 Q. Let's look at Government's 46-B.
9 Now 46-B was put together, as you sat here and
10 learned, by Kou Yang, correct?
11 A. Correct.
12 Q. And Government's 46-B has Karie Joest, and that was
13 the same property we were just talking about, is that correct?
15 Q. And you can see the loan officer on it is Justin,
16 isn't that also correct?
18 Q. And that's Justin Wiley?
19 A. Correct.
20 Q. Now looking at that document, isn't it true that the
21 Financial Enterprises you have listed in your escrow chart the
22 money went into 3515?
23 A. No. I would have to review the bank statement for
24 those three accounts to see which Financial Enterprise it went
25 into. Justin Wiley did four deals.

1 Q. One second. I'm going to ask the question. You can
2 answer. I'm sure Mr. Anderson is going to give you plenty of
3 time to get back into it.
4 Did you ever research any numbers which would tell
5 you which bank account Financial Enterprises that Joest deal
6 went into, 3515 or another one?
7 A. Yes. The bank records would reflect which account it
8 went into.
9 Q. Did you ever do any research into it before you
10 prepared the charts?
11 A. Well, I didn't prepare a chart for this transaction.
12 Q. Going back to I believe it's Government's Exhibit 1.
13 Did you prepare that chart?
14 A. I did.
15 Q. Do you see where it says Financial Enterprises right
16 here?
17 A. Yes.
18 Q. Now you prepared that chart, and that's the same
19 transaction I was talking to you about in regards to 46-B,
20 wasn't it?
21 A. This chart was prepared by --
22 Q. "Yes" or "no," please?
23 A. What's your question?
24 Q. I was just asking you about 46-B, which was prepared
25 by Kou Yang, a Government's witness, correct?

1 A. Correct.
2 Q. And I just asked you if it refreshed your
3 recollection as to whether or not the Karie Joest monies went
4 into the accounts that Justin Wiley testified to were his
5 accounts, "yes" or "no"?
6 A. It went into a Financial Enterprise bank account. I
7 cannot say it went into account 3515 without looking at the
8 bank statements. I'm more than happy to look at them, and we
9 can decide if it went into that account or another Financial
10 Enterprise bank account.
11 Q. Let me finish through the statements, and we'll get
12 to that. Okay?
13 A. Okay.
14 Q. Can we expand that please, a little bit, Government's
15 1.
16 Lorraine Mack, that also says it went into Financial
18 A. Correct.
19 Q. And you see the name right there is Ryan Wiley,
20 correct?
21 A. I do.
22 Q. And you also heard the testimony from Justin Wiley
23 that he did a couple deals with his brother Ryan Wiley, is that
24 correct?
25 A. That's correct, yes.

1 Q. Now do you have any reason to believe that the money
2 in regards to Lorraine Mack didn't go into account 3515?
3 A. I can't answer that question without looking at the
4 bank statements.
5 Q. Do you have any reason to believe that it didn't?
6 A. Well, yes, because there's three Financial Enterprise
7 bank accounts. That's reason. There's three of them. I can't
8 say for certain it went into one without looking at it.
9 Q. Is it possible it went into 3515?
10 A. It's possible, yes.
11 Q. I'm sorry, could I have it expanded again, please.
12 Looking at Esther Florin, this is also part of the
13 chart that you put together, is that correct?
14 A. Correct.
15 Q. And you also see there is a name down there that says
16 Ryan Wiley, correct?
17 A. Yes.
18 Q. And as I asked you before, you were here when Justin
19 Wiley testified that he put together deals with Ryan Wiley, is
20 that correct?
21 A. Yes.
22 Q. Now do you have any reason to believe that the
23 Financial Enterprises that's listed there is the account 3515,
24 or do you still need to look at your records?
25 A. I would still need to look at my records to

1 accurately answer your question, yes.
2 Q. Can I have an expansion again, please, of
3 Government's Exhibit 1.
4 Now referring to the Thomas Crane, that's also part
5 of the document that you put together, correct?
6 A. Correct.
7 Q. Going down to see where it says Laurie Coffman and
8 Financial Enterprises, do you know which account the money went
9 into?
10 A. I would know if I reviewed the bank statements, yes.
11 I don't know without looking at them, no.
12 Q. Thank you. We can take Government's Exhibit 1 down.
13 Can I have Government's Exhibit 12-B put up, please.
14 Now we spoke earlier about Karie Joest and how she is
15 actually on Government's Exhibit 1, which is the escrow chart,
16 is that correct?
18 Q. Do you see the name of the borrower is Ryan Wiley,
19 which is Justin Wiley's brother, is that also correct?
21 Q. Can I have Government's Exhibit 12-B2 put up, please.
22 And that of course says Financial Enterprises, correct?
23 A. Yes, it does.
24 Q. Can I have 12-B4 put up, please. Showing you 12-B4,
25 you recognize it from trial of course?

1 A. Do I recognize the document?
2 Q. Yes.
3 A. I recognize the document, yes.
4 Q. And do you see where it says "Joest proceeds"?
5 A. Yes, I do.
6 Q. And do you see what account the monies actually get
7 wired to?
8 A. I do, yes.
9 Q. And what's the name of that account?
11 Q. The account number?
12 A. Ending in 3515.
13 Q. So in regards to Joest we know the monies went into
14 3515, which was the one that Justin Wiley testified about,
15 correct?
16 A. Correct.
17 THE COURT: We've come to 10:00, so we should take
18 our first break of the day.
20 THE COURT: All right. Ladies and gentlemen of the
21 jury, this is our first break of the morning. It will be a
22 15-minute break. During that break, please remember all of my
23 admonitions, and we'll see you at 10:15.
24 (Jury out.)
25 THE COURT: You may be seated. You may step down.

1 Just be back in your seat, Agent, at 10:15.
2 Anything to discuss?
5 THE COURT: All right. See you in 15 minutes.
6 (Break taken.)
7 (Jury in.)
9 and gentlemen. We will continue now after our break with the
10 cross-examination of Agent Fitzpatrick by Mr. Haydn-Myer.
11 Q. BY MR. HAYDN-MYER: And can I have Government's 1
12 back up, please.
13 Special Agent, I believe when I was speaking to you
14 earlier I asked you a few questions about the Taylor account,
15 is that correct?
16 A. Yes.
17 Q. And I asked you if it was possible that the money got
18 wired into 3515, is that correct?
19 A. Correct.
20 Q. Can I have Government's Exhibit 11-B, page four,
21 please.
22 Now as you look at this Government's Exhibit 11-B,
23 page four, do you see it's from the Taylors, is that correct?
24 A. Correct.
25 Q. And then of course Financial Enterprises?

1 A. Correct.
2 Q. And you can actually see the account number for the
3 wiring transactions, is that correct?
4 A. Yes.
5 Q. And that's into account what?
6 A. Ending in 3515.
7 Q. Thank you. You can take it down.
8 Going back to Government's Exhibit 1, do you have a
9 pencil and paper?
10 A. I do.
11 Q. How well can you see the exhibit?
12 A. Pretty good.
13 Q. Would you please add the total for the Taylor
14 account, the Joest account, the Mack account, the Florin
15 account, and the Crane account?
16 A. Do you want me to ballpark it or actually sit down
17 and add all those together?
18 Q. What do you feel comfortable doing?
19 A. I can ballpark it here.
20 Q. Go ahead.
21 A. So it was the Taylor, Joest, Mack, Florin -- what's
22 the other one?
23 Q. Crane.
24 A. Okay. One moment here. (Brief pause.)
25 Okay. Approximately 437,000.

1 Q. Thank you. You can take the exhibit down.
2 Can I please have Government's Exhibit 4, page five,
3 displayed. And this is a flow chart that you prepared before,
4 is that correct?
6 Q. And that's for the Clark account, is that also
7 correct?
9 Q. And you were here during the testimony from Ms.
10 Clark, and you heard her say she hadn't paid rent or mortgage
11 for, what was it, five years?
12 A. At some point in time she stopped paying her mortgage
13 to Financial Enterprises based upon some information she found
14 out.
15 Q. Were you here or were you not here when she said she
16 hadn't paid rent or mortgage in four or five years?
17 A. I was here. I don't recall her exact testimony about
18 four to five years. I know there was a point in time she
19 stopped paying the rent, yes.
20 Q. When you're creating a chart like this, did you
21 include the mortgage payments that were being made on all of
22 the Financial Enterprises transactions for a month, or was it
23 just a short specific period of time?
24 A. This particular chart was an illustration of the flow
25 of equity that was removed from the property and what happened

1 to that equity. It doesn't take into account if someone is
2 paying a mortgage, no.
3 Q. Does it take into account what Financial Enterprises
4 was doing to cover the mortgage for 14718 Condon Avenue?
5 A. No. This --
6 Q. I'm sorry. "Yes" or "no"?
7 A. No.
8 Q. But you could have actually included a monthly, and
9 included this property with the mortgage payments that were
10 going out, and still prepared that type of chart, is that also
11 correct?
12 A. You're asking if I can prepare a chart that shows the
13 checks written to pay mortgages from Financial Enterprises?
14 Q. Yes.
15 A. Sure.
16 Q. Can I go to Government's Exhibit 4-7, please. And
17 what we're looking at is obviously a document that you put
18 together that includes deposits and withdrawals, is that
19 correct?
20 A. Correct.
21 Q. And can I go back to the regular size, please. And
22 can I have Government's Exhibit 40-R displayed. Can you see
23 40-R, Special Agent Fitzpatrick?
24 A. No.
25 Q. Now I believe there is -- you were asked about this

1 e-mail in your direct, is that correct?
2 A. Correct.
3 Q. And you were asked about whether or not Mike Head
4 said that he made Charles Head money, was that also correct?
5 A. Correct.
6 Q. Based on your investigation, you know that Michael
7 Head was working as a loan officer for Chris Head before the
8 foreclosure business started, is that correct?
9 Thank you. You can take 40-R down.
10 A. I'm not sure when --
11 Q. I'm sorry --
12 A. I don't know.
13 Q. Were you here when Kou Yang testified -- and do you
14 remember who Kou Yang was?
15 A. I do, yes.
16 Q. She is a Government witness, correct?
17 A. She is a Government witness, yes.
18 Q. And she was the one that was running the office at
19 Head Financial Services, is that correct?
20 A. She was not running the office. She worked in the
21 office, did various duties there.
22 Q. Do you remember what year she said she began when she
23 testified in front of us?
24 A. I believe it was in 2003 or '04.
25 Q. And do you remember her testimony that she said they

1 began and they were working as a loan office?
2 A. There came a point in time when -- they were doing
3 refinances first.
4 Q. I'm going to get into it with you. "Yes" or "no"?
5 A. What's your question?
6 Q. Did they begin as a loan office, "yes" or "no"?
7 A. What do you mean by loan office? They did real
8 estate transactions. They did re-fi's and purchases.
9 Q. Were they doing any foreclosures to begin with, "yes"
10 or "no"?
11 A. No.
12 Q. So they were working in loans and real estate, is
13 that correct?
14 A. Correct.
15 Q. Do you have any specific knowledge, based on all of
16 the investigation and work that you put into it, that says that
17 when Michael Head first started with the office, they were
18 doing any foreclosures whatsoever?
19 A. I don't know when Mike Head started. So if he
20 started prior to foreclosures, then --
21 Q. Sorry. Do you have any knowledge whatsoever that
22 when Mike Head started -- it's "yes" or "no" -- he was doing
23 foreclosures or loans?
24 A. I don't know when he started.
25 Q. Do you have any knowledge whatsoever that says when

1 Mike Head started, Head Financial Services was doing
2 foreclosures, "yes" or "no"?
3 A. I don't know when he started.
4 Q. It's just do you have any knowledge?
5 A. I don't know when he started. So if I don't know
6 when he started, I can't tell you what part of the timeline --
7 if he started with doing refinances or foreclosures.
8 Q. You're not the case agent, but you're a co-case
9 agent, is that correct?
10 A. Correct.
11 Q. And how many witnesses have you interviewed in this
12 case?
13 A. 150.
14 Q. During that specific period of time, did you ever
15 hear anybody mention that Mike Head started a specific date or
16 not?
17 A. That I don't recall asking, no.
18 Q. Can I have 41-D, please. I believe you were asked on
19 direct about 41-D, is that correct?
20 A. Correct.
21 Q. And you were asked questions about the loan for I
22 believe it's pronounced Mainiero, is that correct?
23 A. Correct.
24 Q. Now do you know what type of a loan that was, "yes"
25 or "no"?

1 A. No.
2 Q. Did you speak with Andrew Mainiero about this loan?
3 A. No.
4 Q. Did you speak with Andrew Vu about this loan?
5 A. No.
6 Q. Do you know how the computer system worked in regards
7 to the loans before the foreclosure business began?
8 A. Where? What computer system?
9 Q. At Head Financial?
10 A. No.
11 Q. Do you know whether or not Mainiero had done a loan
12 application two years before this e-mail was written?
13 A. I do not know that, no.
14 Q. Did you do any investigation to check?
15 A. No. I can't -- no, I didn't do any investigation
16 that he submitted a loan two years ago, prior to 2004.
17 Q. Do you know whether or not their computer system at
18 that time would actually keep the information that it had from
19 two years prior and then just re-send it back to, in this case,
20 Mainiero?
21 A. I'm not familiar with their computer system there.
22 Q. Do you know whether or not this was a loan or a
23 foreclosure loan?
24 A. I don't know, no. During that time period --
25 Q. Sorry. I haven't asked a question. And thank you.

1 You can take that down.
2 Can I have one moment, Your Honor? I believe I'm
3 almost done?
6 MR. HAYDN-MYER: Thank you very much. I have no
8 THE COURT: All right. Mr. Anderson, any redirect?
9 MR. ANDERSON: I do, Your Honor.
11 BY MR. ANDERSON:
12 Q. Look at Exhibit 1. What does the information on
13 Exhibit 1 summarize?
14 A. This information summarizes information that was
15 obtained from the settlement statements.
16 Q. And the information on it is only from the settlement
17 statements?
18 A. Only from the settlement statements.
19 Q. Let's look at an example of a settlement statement.
20 10-B. Is this a page of a settlement statement?
22 Q. And then the next page, is this the second page of a
23 settlement statement?
25 Q. Are these the two pages that you would rely on to get

1 information about this transaction in order to put on that
2 summary chart?
3 A. Yes.
4 Q. Do you have an independent recollection of every
5 single document involved in this case?
6 A. No.
7 Q. Do you know approximately how many documents were
8 involved?
9 A. To include the computer media, over a million
10 documents.
11 Q. Now you got asked a lot of questions about the Joest
12 transaction by Mr. Haydn-Myer. Do you recall those questions?
13 A. Yes.
14 Q. And which account the money was deposited into?
15 A. Correct.
16 Q. Was there a specific document that would help assist
17 you in determining which account that money went into?
18 A. Yes. It would be from the escrow transaction, the
19 wire form.
20 Q. And what about the bank records?
21 A. That also.
22 Q. The escrow records show which portion of the
23 transfer?
24 A. I'm sorry. I don't understand the question.
25 Q. The escrow records show the money moving out from the

1 escrow company, right?
2 A. Correct. Into the bank account.
3 Q. And then the bank account shows the money coming into
4 the bank account?
5 A. Correct.
6 Q. Okay. And what was the account that Justin Wiley and
7 Mike Head were involved with? What was the --
8 A. That was the Financial Enterprise, Bank of America
9 account, ending in 03515.
10 Q. Okay. So 3515. And then the 3512 account, whose
11 account was that?
12 A. Sarah Mattson and Michael Head.
13 Q. So let's look at Government's Exhibit 12-C. Are
14 these the bank records for the Joest transaction?
15 A. Can you make it larger, please.
16 Q. Sure. We can look --
17 A. I do recall testifying that it went into 3515.
18 Q. All right. So according to this, it went into -- it
19 did -- sorry. Did I pull the wrong exhibit?
20 All right. So with this account, 3515, that was the
21 Justin Wiley/Mike Head account, correct?
22 A. Correct.
23 Q. And then let's go down on this page. Do you see the
24 3512 account number mentioned?
25 A. One moment. Yes, I do.

1 Q. How is it mentioned?
2 A. There was an online banking transfer on May 14th into
3 -- it says "CHK" stands for checking -- 3512 for $5,000.
4 Q. So that would be money came in from escrow,
5 $95,613.43, correct?
6 A. Correct.
7 Q. Check is written for $55,306?
8 A. Correct.
9 Q. Some withdrawals, processing fee, and then an online
10 banking transfer to the account that has Mike Head on it but
11 not Justin Wiley?
12 A. Correct.
13 Q. And if we were to look at some of the other C
14 exhibits, could we also tell from those which account the money
15 was initially deposited into?
16 A. Yes.
17 Q. Let's go to Government's Exhibit 13-C. Which
18 account?
19 A. Account ending in 3512.
20 Q. Whose account?
21 A. Financial Enterprise controlled by Sarah Mattson and
22 Mike Head.
23 Q. Go to 14-C. Highlight that same portion. Which
24 account?
25 A. 3512.

1 Q. Controlled by who?
2 A. Sarah Mattson and Mike Head.
3 Q. Go to 15-C. Which account?
4 A. 3512.
5 Q. Controlled by Sarah Mattson and Mike Head?
6 A. Correct.
7 Q. Go to 16-C. Which account?
8 A. 3512.
9 Q. I would like to zoom out on this one. Let's go to
10 page two. Do you see a transfer from the 3515 account?
11 A. Correct.
12 Q. In what amount?
13 A. $1,600.
14 Q. Let's go to 18-C. What account number?
15 A. 3512.
16 Q. And 21-C. What account number?
17 A. 3512.
18 Q. You were asked whether or not you looked through the
19 computers in regards to an e-mail to look if there was a
20 transaction two years earlier, is that right?
21 A. Yeah. I believe he asked if I, in my investigation,
22 was aware that the previous loan had been submitted or an
23 application two years prior to 2004.
24 Q. Do you know if copies of those computers were imaged
25 and provided to defense?

2 Q. So they had equal access to them?
4 Q. Let's talk about Charles Head. Are you aware of any
5 information that Charles Head was aware of your investigation
6 prior to the execution of the search warrants in November 2006?
7 A. Yes.
8 Q. What information are you aware of?
9 A. My name was written done in some evidence that was
10 seized at his residence. Therefore, he had to know of the
11 investigation.
14 MR. TEDMON: Move to strike the last portion.
16 disregard the last portion of the answer.
17 MR. ANDERSON: The first portion stands, Your Honor?
18 THE COURT: It does.
19 Q. BY MR. ANDERSON: And how long prior to those search
20 warrants had Charles Head allegedly transferred his business to
21 someone else?
22 MR. TEDMON: Objection, Your Honor, to the
23 characterization of question. "Allegedly." The testimony is
24 he sold his businesses. It wasn't allegedly.

1 Q. BY MR. ANDERSON: All right. How long before the
2 search warrants had Charles Head transferred, at least on
3 paper -- transferred on paper ownership of his business?
4 MR. TEDMON: Objection. Same objection. He's
5 characterizing the transaction.
6 THE COURT: That's overruled.
7 Q. BY MR. ANDERSON: Okay. You can answer.
8 A. I don't recall the exact date, but I know it was just
9 prior to the search warrants.
10 Q. And when you searched the Costa Mesa location, was
11 there evidence that the office had been recently cleared out?
12 A. Correct. There was --
13 MR. TEDMON: Your Honor, just for clarification.
14 There is a couple of Costa Mesa locations, so I want to make
15 sure we're clear on which one it is.
16 Q. BY MR. ANDERSON: Good point. The place near South
17 Coast Plaza, the former headquarters of Head Financial
18 Services.
19 A. Correct. When they went in there, there was
20 approximately five or six boxes remaining that said "shred" on
21 them that related to mortgage documents.
22 Q. And in the other locations was there anything to
23 suggest that those documents had come from Head Financial
24 Services?
25 A. Yes.

1 Q. What was that?
2 A. Based upon the dates of the transactions, the real
3 estate transactions themselves.
8 MR. HAYDN-MYER: Yes, Your Honor. Just briefly.
9 Thank you.
12 Q. Agent Fitzpatrick, I believe you were just asked on
13 redirect about different documents that you could use to show
14 where the proceeds after escrow were going into which account,
16 A. Correct.
17 Q. And I realize it was a short break. It was only 15
18 or 20 minutes. Did you have an opportunity to at least look at
19 or review of those documents?
20 A. No.
21 Q. But you're going to look for them and try and provide
22 them later?
23 A. I'm sorry. What's your question?
24 Q. Are you going to try to look through those documents
25 to figure out where the wires were to see where the proceeds

1 went?
2 A. I can tell you based upon the --
3 Q. I'm sorry. Are you going to look, "yes" or "no"?
4 A. Look when? I don't understand your question.
8 THE COURT: Mr. Tedmon passed.
9 MR. ANDERSON: I'm sorry. I missed that. All right.
10 No, Your Honor.
11 THE COURT: All right. Is this witness excused?
12 MR. ANDERSON: He is.
16 THE COURT: You are excused, Agent. You may step
17 down. Does the Government have additional evidence to present?
18 MR. ANDERSON: No, Your Honor. The United States
19 rests its case.
20 THE COURT: All right. Ladies and gentlemen, at this
21 point, given that the Government has rested, we need to take an
22 additional break for the Court to confer with the parties to
23 understand what the next steps are.
24 So during this additional break, my admonitions, of
25 course, continue to apply. Please keep them in mind. Let's go

1 ahead and take another 15-minute break. I think that will be
2 enough time. If not, Ms. Schultz will let you know. So we'll
3 see you in 15 minutes. Thank you.
4 (Jury out.)
6 Do you need time to contemplate your next step,
7 Mr. Tedmon?
8 MR. TEDMON: Just about five minutes.
9 THE COURT: All right. As soon as you're ready,
10 Ms. Schultz will let me know.
12 (Break taken.)
13 THE COURT: All right. We're back on the record with
14 all counsel and the parties. Mr. Tedmon, your plan?
15 MR. TEDMON: Your Honor, on behalf of Charles Head we
16 are going to rest.
17 THE COURT: All right. I'll allow you to say that in
18 front of the jury.
20 THE COURT: And then it's still the case that you
21 would not be ready, Mr. Haydn-Myer? You plan to put on a case
22 in defense?
24 THE COURT: And the earliest you would be ready is
25 8:30 Thursday morning?

2 THE COURT: Then my plan is to tell the jury that I'm
3 excusing them for a long break. During which, of course, all
4 the admonitions continue to apply. Until Thursday morning at
5 8:30. And you expect to be done with your case in defense on
6 Thursday?
8 THE COURT: All right. Then the Government will let
9 the Court know if it wishes to put on a case in rebuttal. If
10 there is a case in rebuttal, do you have any idea how long that
11 would go?
12 MR. ANDERSON: I don't think it would be long based
13 on the notification I got from Mr. Haydn-Myer yesterday of who
14 the witnesses are going to be.
15 If that's the complete list, then I don't think that
16 we need to plan too much time for the Government's case in
17 rebuttal. If he comes up with another witness, or, if Mike
18 Head testifies, it might take longer. But I don't think it
19 will be exceptionally lengthy.
20 THE COURT: All right. In any event, it seems clear
21 at this point that the case will go to the jury next week at
22 some point.
24 MR. TEDMON: Yes, I agree.
25 THE COURT: My suggestion would be that we set a

1 working session on jury instructions for tomorrow afternoon.
2 MR. TEDMON: Okay.
3 MR. ANDERSON: Okay.
4 THE COURT: But I think that can be 2:00 tomorrow
5 afternoon. And before then Ms. Schultz will e-mail you an
6 initial working set of jury instructions just for discussion
7 purposes. So you can look at that before you arrive at 2:00
8 tomorrow.
9 MR. TEDMON: Okay.
10 THE COURT: It's the Court's standard instructions.
11 Merging some of what you've proposed with some questions.
12 MR. TEDMON: And, Your Honor, we're going to do this
13 in open court?
14 THE COURT: Yes. Well, let's bring the jury back in.
15 MR. ANDERSON: Your Honor, is it possible, since it's
16 an individual right to testify, that we could just hear from
17 Mr. Charles Head directly that he understands it's his right
18 and his choice, and that he is waiving his right to testify?
19 THE COURT: Well, Mr. Head is represented.
20 Mr. Tedmon, do you have a response?
21 MR. TEDMON: I'm not letting my client speak. We're
22 resting.
23 MR. ANDERSON: All right.
24 THE COURT: The Government's request is made of
25 record.

1 (Jury in.)
2 THE COURT: You may be seated. Ladies and gentlemen
3 of the jury, at this point it is Charles Head's decision
4 whether or not to put on a case in defense, and I'm going to
5 acknowledge his attorney to advise the Court.
7 Ladies and gentlemen of the jury, on behalf of my
8 client, Charles Head, the defense rests. Thank you.
9 THE COURT: All right. And with Charles Head having
10 rested his case, it then becomes a question for Jeremy Michael
11 Head as to whether or not he is going to present a case.
12 My understanding, Mr. Haydn-Myer, is that Mr. Head
13 will present a case in defense.
15 THE COURT: Again, it's his choice. Given the
16 timing, as I mentioned to you yesterday, it appeared that we
17 were ahead of schedule. And as of today, it's clear we are
18 ahead of schedule. The attorneys, I think, as is clear to you,
19 have been working diligently. They've communicated with each
20 other.
21 Based on everything that Mr. Haydn-Myer knew at the
22 end of last week, the earliest that his case would be ready for
23 presentation was Thursday of this week. And so the witnesses
24 that he plans to call are not available until Thursday morning
25 at 8:30. And that's -- again it's just the kind of thing that

1 sometimes happens in trial. Things went more quickly. The
2 parties worked, as you can tell, on the presentation of
3 exhibits without the need for testimony.
4 So what that means is that I am going to excuse you
5 until Thursday morning at 8:30. You're getting a longer break
6 than typically we would hope for and planned for, but it's just
7 what we need to do under all of these circumstances.
8 During this long break, that means you don't need to
9 come in tomorrow at all, the first you will report back is
10 Thursday morning, be ready to go at 8:30, when Mr. Haydn-Myer
11 will begin with Jeremy Michael Head's case in defense.
12 So during that long break, as always, please remember
13 each and every one of my admonitions. Do not discuss this case
14 with anyone, family member or friend. Do not do any research
15 of any kind, electronic or otherwise. Don't consult a
16 dictionary. Don't begin to think about the conclusion of the
17 case. You still have evidence to hear.
18 At this point it does appear, and the parties agree,
19 that the case will go to you some time next week. Some time
20 next week. I'll give you a better schedule either Thursday or
21 next Monday. You'll hear the closing arguments. You'll hear
22 my final instructions. It's only once you retire, that you
23 will begin to discuss the case and work to determine a verdict.
24 JUROR 3: You said Monday. Monday is a holiday.
25 The court: I'm sorry. As always you are way ahead

1 of me. It will be next Tuesday. So Monday we will not
2 convene. It's Thursday, and then Tuesday we will pick up at
3 8:30.
4 So with those admissions, thank you, as always, for
5 your service, and we will see you on Tuesday at 8:30. Have a
6 good break in the meantime.
7 (Jury out.)
8 THE COURT: All right. You may be seated. So again,
9 it's up to you to make certain exhibits are redacted, to make
10 certain you're clear on the exhibits that will go to the jury.
11 I mean it's not until next week, but it's your responsibility
12 to agree on the set of exhibits that go to the jury. So you
13 have plenty of time to get ready for that based on what we have
14 so far at least. If you have any question about whether or not
15 an exhibit has been admitted, Ms. Schultz has that list. You
16 can check with her.
17 And then if you want any of the stipulations that
18 have been read to the jury included in the jury binders, just
19 let us know as soon as possible. Ms. Schultz can arrange for
20 that.
21 The final instructions will go into the binders. I
22 will have the final instructions once they are finalized. The
23 jury will have their own sets. Each juror will have his or her
24 set during the reading. And I will let them know they can
25 follow along by reading the written document if that helps them

1 stay focused.
2 Is there anything else we need to discuss at this
3 time?
4 MR. TEDMON: I don't think so.
8 THE COURT: All right. So I'll see you tomorrow at
9 2:00 for jury instructions. Thank you.
10 (Court adjourned. 10:58 a.m.)
11
12 CERTIFICATION
13
17
18

21
22
23
24
25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
Volume 10
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
SETTLEMENT OF JURY INSTRUCTIONS
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
17
18
19
20
21
22
23
24
25

3 ---oOo---
6 for jury trial, and today is day eleven.
7 THE COURT: All right. Good afternoon.
8 MR. TEDMON: Good afternoon.
9 MR. ANDERSON: Good afternoon.
10 THE COURT: All the people we need are present. So I
11 did distribute to you just a working set of final jury
12 instructions, just for discussion purposes, and proposed
13 verdict forms as well.
14 So if we could start with my set of jury
15 instructions, and then we'll go through the additional
16 supplemental proposed instructions that have been coming in.
17 So the first several are pretty standard. But maybe
18 just to be clear let's go page by page and see if there is any
19 comment on any page. I'm not committing to this order.
20 Sometimes upon final review the order seems that it should be
21 switched. So if you have a sense of a different order, let me
22 know now. Probably I'll give you a final set that might
23 reflect some changes. Just moving things around. Anything on
24 page two?

3 THE COURT: Page three?
4 MR. TEDMON: Yes, Your Honor. On page three, I
5 submitted last night a proposed similar instruction. It's
6 Ninth Circuit Criminal Jury Instruction 3.2. The only thing
7 that I think the Court's instruction doesn't have that I think
8 needs to have in it, and the Ninth Circuit approves, is the --
9 at the end of what the Court has it ends at reasonable doubt.
10 I think two additional sentences need to be included,
11 as I proposed, which would read: In addition, the defendant
12 does not have to testify or present any evidence to prove
13 innocence. The Government has the burden of proving every
14 element of the charges beyond a reasonable doubt.
15 THE COURT: Any objection to adding that language,
16 Mr. Anderson?
17 MR. ANDERSON: No, Your Honor. I noticed that as
18 well. And it looked like some of that language ended up
19 getting picked up in the next instruction. When we get to page
20 four, we can discuss that.
23 THE COURT: All right. So we will add that. On page
24 four then?
25 MR. TEDMON: I think it's fine, Your Honor.

1 THE COURT: You thought there was some language here,
2 Mr. Anderson?
3 MR. ANDERSON: Right. So the last sentence of the
4 instruction Mr. Tedmon's requesting, which is the pattern for
5 page three, the Government has the burden of proving every
6 element of the charges beyond a reasonable doubt. That gets
7 picked up at the first sentence of the second paragraph in this
8 instruction. So it's a correct statement of the law. It's
9 just now we've repeated it because we have moved it.
10 And the first paragraph, which talks about the burden
11 on the Government and the presumption of innocence is now in
12 the instruction that we just discussed before this one.
13 THE COURT: Well, taking into account pages three and
14 four, why not delete the last sentence from Mr. Tedmon's
15 proposed supplemental instruction and leave page four as is.
16 Any problem with that?
17 MR. TEDMON: Actually, that would be fine.
19 MR. ANDERSON: It's fine either way.
21 MR. HAYDN-MYER: Yes, Your Honor, I'm in agreement.
22 THE COURT: All right. All right. Page five?
23 MR. TEDMON: That's fine, Your Honor.

1 THE COURT: And if we need to modify that depending
2 on the Jeremy Michael Head case, we will. Page six?
4 MR. ANDERSON: There is no objection from the
5 Government, Your Honor. I noted that three, any facts to which
6 the parties have agreed, and I don't know that we've defined
7 for the jury that a stipulation -- when we say stipulation,
8 that's facts to which the parties have agreed.
9 And there is a stipulation instruction, a pattern,
10 2.4, which we could give, or we could say something like facts
11 to which the parties have agreed to through stipulation.
12 THE COURT: Any thoughts on that, Mr. Tedmon?
13 MR. TEDMON: I think that's a good clarification so
14 they don't have to interpret what "agreed" means.
15 THE COURT: "Any facts to which the parties have
16 agreed through stipulation." Does that work for you,
17 Mr. Haydn-Myer?
19 THE COURT: All right. Page seven?
20 MR. TEDMON: Your Honor, the only correction that I
21 noted, it's on paragraph three. The pattern instruction reads,
22 "charts and summaries were shown to you only to help explain
23 the evidence in the case." It looks like the word "were" was
24 just inadvertently left out.
25 THE COURT: Well, actually, that was modified for

1 consistency. But here's my question. There are charts and
2 summaries that have actually come into evidence.
3 MR. ANDERSON: That's right, Your Honor. The charts
4 and summaries used by the Government have been admitted into
5 evidence. I don't know if Mr. Haydn-Myer is intending to use
6 charts and summaries that haven't been admitted, or if there
7 are other charts and summaries only shown to them. But I don't
8 know of any others. We're not planning on using any charts or
9 summaries that would fit this definition in closing argument.
10 THE COURT: If you look on page 22 currently -- 22
11 and 23 -- those are the two charts and summaries instructions.
12 So so far 23 definitely applies and should be given.
14 THE COURT: Agreed, Mr. Tedmon, Mr. Haydn-Myer?
15 MR. TEDMON: I agree.
17 THE COURT: So at this point does the Government plan
18 to use any other charts and summaries?
20 THE COURT: Not in closing or --
21 MR. ANDERSON: No. We'll use a Power Point
22 presentation, but that will incorporate admitted exhibits.
23 THE COURT: All right. So I think the question is
24 back to page seven. Do we need three at all there?
25 MR. TEDMON: I don't think so, actually. I would

1 like to leave in page 22 just in the event either defense
2 counsel wants to use a chart or summary in closing. At least
3 that way it's explained.
4 THE COURT: All right. So we'll check back on that.
5 Any objection to deleting three, Mr. Anderson?
9 THE COURT: So three on page seven is deleted, and
10 number four on page eight becomes three. Anything else to say
11 on pages seven and eight?
15 THE COURT: On nine? Direct or circumstantial. Mr.
16 Anderson?
22 THE COURT: Page ten? Credibility. Mr. Anderson?
23 MR. ANDERSON: Your Honor, this appears to pick up a
24 portion of pattern instruction 3.10 beginning in the last line
25 on page ten starting: "You are here only to determine whether

1 each defendant is guilty or not guilty of the charges against
2 him in the Superseding Indictment. Neither defendant is on
3 trial for any conduct or offenses not charged in the
4 Superseding Indictment."
5 I don't really have a problem with that language,
6 it's just --
7 THE COURT: It doesn't belong there.
8 MR. ANDERSON: It is pulled in from another
9 instruction. I don't know how defense counsel feels about it.
10 THE COURT: Is it duplicated currently in this set?
11 MR. ANDERSON: I don't think --
12 MR. TEDMON: I don't think it is.
13 THE COURT: Should it be a separate instruction?
14 MR. ANDERSON: I think that would actually make
15 sense. We could use the pattern from 3.10.
16 MR. TEDMON: I would agree with that.
17 MR. HAYDN-MYER: Yes, I agree.
18 THE COURT: All right. I think we have some other
19 language in here. It's the same point. This is one reason to
20 do this at this stage. Page twelve? Mr. Anderson?
23 MR. TEDMON: No objection, Your Honor.

1 THE COURT: All right. Page 13? Do we need this
2 one?
3 MR. TEDMON: I don't think we do. There's been no
4 expert.
5 THE COURT: Agreed, Mr. Anderson?
6 MR. ANDERSON: I agree.
7 MR. HAYDN-MYER: I agree.
8 THE COURT: You don't anticipate calling an expert,
9 Mr. Haydn-Myer?
11 THE COURT: All right. Then I will delete this.
12 Page 14? Mr. Anderson?
18 THE COURT: All right. Page 15?
19 MR. ANDERSON: Your Honor, this one appears to
20 duplicate portions of the instruction found on page 12 and on
21 page 16. It comes from a pattern, 1.13, that's a preliminary
22 instruction. So again, I don't have a problem with the
23 statement of the law. It's just whether or not this is
24 duplicative of other instructions that will be offered.

1 MR. TEDMON: Your Honor, I would prefer that it stay
2 in. The reason I say that is it does kind of ring the same
3 theme as the instruction on page 12, but it does indicate they
4 need to determine which evidence in the case applies to each
5 defendant. And I think that's different in terms of what the
6 instruction on page 12 is, so I would ask that it stay in.
8 MR. HAYDN-MYER: I'm requesting the instruction.
9 THE COURT: All right. I'll review that.
10 MR. ANDERSON: Your Honor, if both defense counsel
11 are asking for it, I'll withdraw any opposition to it.
12 THE COURT: All right. Page 16? This is just
13 repeating the Bruton instruction.
14 MR. ANDERSON: Yes, Your Honor. I would suggest that
15 "one or more statements to certain witnesses," which occurs
16 twice, once in paragraph one and once in paragraph two, be
17 replaced with "one or more statements to John Sommercamp" since
18 he was the only witness who testified to those statements.
19 THE COURT: Agreed, Mr. Tedmon?
20 MR. TEDMON: Yes. That would be fine.
22 MR. HAYDN-MYER: Agree, Your Honor.
23 MR. TEDMON: Your Honor, my client is having a
24 coughing attack here. Would the Court allow him to be excused?
25 THE COURT: Absolutely. Do you want us to wait for

1 you, Mr. Head?
2 DEFENDANT C. HEAD: No.
3 THE COURT: Page 17 at this point we would not give,
4 obviously, unless that changes before the end of the trial.
6 MR. TEDMON: Yes.
7 THE COURT: 18. Is this duplicative in part?
8 MR. ANDERSON: Yes, Your Honor. This is the way that
9 the pattern instruction 3.5 is written, which is duplicated on
10 page four, where that same language is used but with the
11 addition of the sentences at the beginning.
12 THE COURT: Agreed, Mr. Tedmon, this duplicates page
13 four and therefore can be omitted?
14 MR. TEDMON: Yes.
17 THE COURT: Page 19. What's the Government's
18 position on this, which obviously needs some editing if it is
19 given?
20 MR. ANDERSON: Your Honor, the Government, in an
21 abundance of caution, noticed certain evidence that it intended
22 to introduce as 404(b) evidence saying that we thought it was
23 intrinsically connected to the crime and wasn't actually
24 404(b), but to preserve our rights we noticed it.
25 Defense counsel hasn't challenged use of that

1 evidence, in particular Ms. Daniel's testimony. You'll recall
2 that her transaction took place after Mr. Jeremy Michael Head
3 had relocated to Arizona.
4 So that would be the one that we would have thought
5 this instruction might have needed to be used for, but it
6 appears that there wasn't a dispute that that was still part of
7 the scheme, at least as alleged by the Government.
9 MR. TEDMON: Well, my only concern in terms of the
10 jury's understanding is there was evidence that came in that
11 related -- that didn't relate to a specific substantive count.
12 Obviously, the Government's position I think it would be
13 related to the conspiracy.
14 MR. ANDERSON: Right.
15 MR. TEDMON: But just trying to --
16 MR. ANDERSON: Well, that, and because it's alleged
17 as a scheme to defraud, a mail fraud scheme to defraud. We can
18 go outside the unit of prosecution, which would be the simple
19 mailing. So it actually would apply in most cases to those
20 other --
21 MR. HAYDN-MYER: Your Honor, I'm going to be asking
22 for it, but if we want to just specify which bracketed we're
23 using, that would be fine. Preparation, plan, motive.
24 MR. ANDERSON: I think we need to identify what
25 evidence it would apply to first. And the Government's

1 position is it doesn't apply to any of the evidence, but
2 Mr. Haydn-Myer may be able to clear that up.
3 THE COURT: Well, Mr. Tedmon, do you have specific
4 evidence in mind?
5 MR. TEDMON: I'm trying to kind of go through my hard
6 drive here and see if there is anything that would really apply
7 to this. I can't come up with anything offhand.
8 THE COURT: Well, let's come back to this.
9 Mr. Haydn-Myer, in your case, the evidence?
10 MR. HAYDN-MYER: The only one I'm thinking of, Your
11 Honor, would be Nickadia Daniels.
12 THE COURT: So you think that would be then relevant
13 to the question of preparation and plan?
15 Well, I assume the Government was going to present --
16 actually, Mr. Anderson gave me some warning in regards to
17 Nickadia Daniels possibly being 404(b). And I understand that
18 the Government could have admitted it in other ways. But just
19 in an abundance of caution I would rather have the jury
20 instruction read, Nickadia Daniels, and have it for --
21 THE COURT: So identify Jeremy Michael Head and
22 Nickadia Daniels.
23 MR. HAYDN-MYER: And have it for plan.
24 MR. ANDERSON: Well, in that case it would be intent,
25 motive, plan, absence of -- well, I don't know about absence of

1 mistake -- absence of mistake or accident. And it should
2 specify Jeremy Michael Head because in that case if
3 Mr. Haydn-Myer can establish that that's 404(b), or Mr. Tedmon,
4 in that case it would only be admissible as to Jeremy Michael
5 Head most likely.
6 MR. TEDMON: I agree. That was going to be my
7 comment.
8 MR. ANDERSON: So we'd want to be clear that it
9 wasn't evidence being used against Charles Head in that case.
10 But again the Government's position was that that's part and
11 parcel of the overall scheme, and even though it happened while
12 he was in Arizona, that was still part of the conspiracy.
13 THE COURT: So Mr. Haydn-Myer?
15 THE COURT: Same response to the 404(b)?
16 MR. HAYDN-MYER: Yes, Your Honor. That's what I'm
17 asking. I'm asking that the instruction be given with intent,
18 motive, plan, absence of mistake, absence of accident, as to
20 THE COURT: All right. And are you asking for the
21 defense to make more of a record, Mr. Anderson, or, with this
22 including the specific information, that satisfies your
23 concerns?
24 MR. ANDERSON: It's one of those situations where I
25 think we're legally right, but I also don't see any harm.

1 Obviously, it benefits the defendant to have this instruction.
2 The Government doesn't have a strong dog in this fight.
3 I'm hesitant to say it because I really do believe
4 that it's part of the overall conspiracy, but I really don't
5 see a harm to the Government in giving this instruction.
6 THE COURT: All right. I'll take that into account.
7 I'll plan at this point to revise this, narrowing it to Jeremy
8 Michael Head and the Nickadia Daniels transaction.
9 Number 20? Mr. Anderson?
15 THE COURT: Number 21?
16 MR. TEDMON: Your Honor, on this one I think we just
17 need to add Justin Wiley to the list.
18 MR. ANDERSON: Agreed.
19 MR. TEDMON: With that addition, I'm fine with it.
21 MR. HAYDN-MYER: Join, Your Honor.
22 THE COURT: Page 22 we have already covered. Page 23
23 I do anticipate giving. Any comment on that language,
24 Mr. Anderson?

5 THE COURT: Pages 24 and 25. I believe this is the
6 Government's proposed instruction. Mr. Tedmon, you had also
7 proposed.
8 MR. TEDMON: Yes, I have, Your Honor. That was my
9 proposed instruction number one. And this goes directly to my
10 in limine motion where my position is that the Government has
11 charged a conspiracy where the homeowner is the target or
12 object of the conspiracy, and the lenders are simply the manner
13 and means, which we covered in our motions in limine hearing.
14 So I don't really have anything else to add to the
15 argument, but I am requesting that defendant Charles Head
16 proposed jury instruction number one be given and not the
17 Government's proposed jury instruction 8.20.
18 THE COURT: All right. Is there any Ninth Circuit
19 authority addressing this proposed instruction? I note this is
20 an Eleventh Circuit --
21 MR. TEDMON: An Eleventh Circuit case. I wasn't able
22 to find anything specifically on that other than to say that
23 the jury instructions need to stay within the curbings of the
24 indictment, and my position is that the indictment does not
25 allege that the lender is a victim nor should the Government be

1 allowed to argue that.
2 THE COURT: Are you joining in this request,
3 Mr. Haydn-Myer?
4 MR. HAYDN-MYER: Yes, Your Honor, as it would apply.
5 THE COURT: All right. So Mr. Anderson, do you care
6 to respond to that looking at the specific proposed
7 instruction?
8 MR. ANDERSON: Right. Your Honor, we strongly oppose
9 the underlying premise of what Mr. Tedmon and Mr. Haydn-Myer
10 are advocating. The indictment does cover the false statements
11 to both the lenders and the homeowners. It's very clear in the
12 indictment for the reasons that I've put forward strongly
13 before. We really could not disagree more with the position
14 that Mr. Haydn-Myer and Mr. Tedmon are taking.
15 I think it's very obvious to everybody that we put on
16 the case that we said we'd put on in the indictment, and that a
17 part of that was the false statements to the lenders as
18 outlined in the indictment. Even the types of false statements
19 that we've elicited from the witness have been exactly what was
20 put in the indictment, and that's what we're going to argue.
21 As far as the specific instruction, Mr. Tedmon's also
22 deviated from the Ninth Circuit pattern, and the Government has
23 proposed using the Ninth Circuit pattern instruction.
24 I would like to ask for one revision to what we've
25 written, which is in paragraph two where it says "first

1 beginning on or about January 1st, 2004 and ending on or about
2 March 14th, 2006 there was an agreement between two or more
3 persons to commit," I would like to substitute "mail fraud" for
4 the words "at least one crime."
5 So it would read, "persons to commit mail fraud as
6 charged in the indictment," and then change "indictment" to
7 "superseding indictment."
8 THE COURT: Mr. Tedmon, any comment on that proposed
9 change?
10 MR. TEDMON: Actually, Your Honor, that absolutely
11 mirrors what I was going to ask if the Court was going to give
12 this instruction. So at least Mr. Anderson and I agree on that
13 part.
14 THE COURT: Mr. Haydn-Myer, would you also agree?
15 MR. HAYDN-MYER: You mean with the interlineation
16 from mail fraud and superseding, yes. As to the rest of it,
17 no.
18 THE COURT: Assuming that I go with the Government's
19 proposed instruction. But I'm not making a final decision. I
20 will make my own record on this question when I present you
21 with final instructions.
22 MR. TEDMON: Very good.
23 THE COURT: Any other comment on pages 24 and 25?
24 Mr. Tedmon?
25 MR. TEDMON: No.

3 THE COURT: All right. Page 26?
9 THE COURT: Page 27, I think this is the Government's
10 language. Help me understand lines 7 through 11. Is that
11 really what you mean? This is a Pinkerton instruction, right?
12 MR. ANDERSON: Right. This is from the pattern Ninth
13 Circuit Pinkerton instruction. So what we substitute -- I
14 think it is, Your Honor.
15 Is there a particular concern the Court would like us
16 to address, or is it something that we should -- I will note
17 that we again have "indictment" where "superseding" should be
18 -- that would be line 9, line 13, line 16. That change I would
19 request.
20 THE COURT: Mr. Tedmon, you agree this is the way
21 this instruction should read?
22 MR. TEDMON: No, I don't. I think it's very
23 confusing. The first paragraph, lines 2 through 6 is fine.
24 Lines 7 through 11 I think is very confusing, and I don't think
25 it states really what the Government is trying to get at. And

1 I have some proposed language that might be able to help in
2 that regard. So if I can just start there.
3 I think what this should read, Your Honor, is as
4 follows, beginning at line 7: "Therefore, you may find a
5 defendant guilty of conspiracy to commit mail fraud as charged
6 in Count 1 of the superseding indictment if the Government has
7 proved each of the following elements as to the defendant
8 charged in that particular count beyond a reasonable doubt.
9 First, the person or persons named in Count 1 of the
10 superseding indictment committed the crime of mail fraud as
11 alleged in that count; second, the person was a member of the
12 conspiracy charged in Count 1 of the superseding indictment;
13 third, the person committed the crime of mail fraud in
14 furtherance of the conspiracy; fourth, the defendant was a
15 member of the same conspiracy at the time the offense charged
16 in Count 1; and fifth, the offense fell within the scope of the
17 unlawful agreement and could reasonably have been foreseen to
18 be a necessary or natural consequence of the unlawful
19 agreement."
20 To me that states the Pinkerton theory appropriately
21 as it relates to the charged Count 1.
22 THE COURT: Why is that not correct, Mr. Anderson?
23 MR. ANDERSON: First of all, it talks about Count 1
24 that we prove the conspiracy. And the Pinkerton charge is a
25 method of proving the substantive counts where the defendant

1 didn't undertake the action himself but was part of a
2 conspiracy, and it was in furtherance of that conspiracy that
3 the substantive mail fraud count was undertaken.
4 So that would be the primary problem I would have
5 with it. And I don't have a written version in front of me of
6 what Mr. Tedmon said, so I'm going off my memory.
7 MR. TEDMON: Well, Your Honor, I think it is
8 addressed in these five elements. Starting at line 12 first,
9 "the person or persons named in Count 1 of the superseding
10 indictment committed the crime of mail fraud." That's a
11 substantive count. As alleged in that count.
12 THE COURT: And those elements are covered. The mail
13 fraud is covered on page 29.
14 MR. TEDMON: Correct. And then secondly, "the person
15 was a member the conspiracy" -- which is exactly what
16 Mr. Anderson is asking for -- "charged in Count 1 of the
17 superseding indictment; third, the person committed the crime
18 of mail fraud in furtherance of the conspiracy" -- which is
19 what Mr. Anderson is asking for -- "fourth, the defendant was a
20 member of the same conspiracy at the time of the offense
21 charged in Count 1," which talks about withdrawal. I know
22 Mr. Haydn-Myer has asked about a withdrawal instruction. That
23 covers the time continuum. And then "fifth, the offense fell
24 within the scope of the unlawful agreement." I think that's
25 the appropriate way to handle this.

1 THE COURT: Mr. Haydn-Myer, so we're clear on your
2 position, do you agree with one of these two parties, or do you
3 have a third position?
4 MR. HAYDN-MYER: No. I think Mr. Tedmon's is more
5 accurate, Your Honor.
6 THE COURT: So help me understand again your
7 position, Mr. Anderson?
8 MR. ANDERSON: Your Honor, if I could have a moment
9 to read what Mr. Tedmon has written, I think it will be easier
10 for me to understand.
13 MR. ANDERSON: Your Honor, the way that Mr. Tedmon
14 has the first sentence, that would be starting on line 7
15 written, "therefore, you may find a defendant guilty of
16 conspiracy to commit mail fraud as charged in Count 1 of the
17 superseding indictment if the Government has proved each of the
18 following elements as to the defendant charged in that
19 particular count beyond a reasonable doubt."
20 What this is essentially doing is providing the jury
21 with a second instruction on how to convict somebody of
22 conspiracy, like a competing set of elements.
23 But what the Pinkerton instruction is for is not for
24 when the jury can convict somebody of conspiracy to commit mail
25 fraud, it's talking about when the jury can convict someone of

1 mail fraud based on a theory of liability based on the
2 conspiracy.
3 I know that uses the words "mail fraud" and
4 "conspiracy" a lot, so it may be a little confusing, and we
5 could file something on paper if that helps a little bit.
6 THE COURT: Well, one way or the other, I think this
7 needs to be clarified. If you want to submit revised proposals
8 including a stipulated proposal, that's fine.
9 MR. TEDMON: We can work on it, Your Honor.
10 THE COURT: The Court will also work on it.
11 MR. TEDMON: That's fine, Your Honor. We'll put our
12 heeds together and see if we can come up with something to
13 provide with the Court. Together, or, if not, then
14 independently.
15 MR. ANDERSON: Right. Or together we will provide
16 competing proposals.
17 THE COURT: All right. Mr. Haydn-Myer may
18 participate in this discussions or not, as he wishes.
20 THE COURT: Page 29.
21 MR. TEDMON: When I say "we," Your Honor, I'm
22 including Mr. Haydn-Myer, for the record.
23 THE COURT: All right. Page 29. Here, as well,
24 Mr. Tedmon, is your proposal materially different?
25 MR. TEDMON: Your Honor, pages 28 and 29 is the

1 substantive mail fraud instruction, and I have provided the
2 Court with a modified 8.121 instruction, which really is
3 essentially the same except the important aspect for me relates
4 to page 1, line 13, where I am asking that section to state,
5 "second, the statements made or facts omitted as part of the
6 scheme are material, that is, they had a natural tendency to
7 influence or were capable of influencing" -- and this is where
8 I depart from what the Government has -- would say, "the
9 homeowner identified in the count charged to part with money or
10 property."
11 Again, that's my position as it relates to what the
12 Government's charged. Beyond that, I think the rest of the
13 instruction is fine.
14 THE COURT: Any problem with that edit, Mr. Anderson?
15 MR. ANDERSON: Yes, Your Honor. For the same reasons
16 that we opposed the other instruction.
17 THE COURT: That Charles Head one instruction?
19 MR. TEDMON: And it would be my defendant Charles
20 Head's proposed jury instruction number two that was filed.
22 MR. ANDERSON: Right. And I'm saying that we're
23 opposing number two for the same reason we opposed Charles Head
24 instruction number one.
25 THE COURT: Mr. Haydn-Myer, you join in the request

1 for Charles Head number two?
3 THE COURT: All right. Page 31.
4 MR. TEDMON: Your Honor, if we could go back to that
5 last instruction so the Court is clear --
7 MR. TEDMON: -- clear on the position I'm taking and
8 why.
9 As I indicated in the motions in limine hearing, the
10 indictment, when you look at the substantive counts,
11 specifically identify a homeowner and never identifies a lender
12 as far as the -- whether it's the mailing of the deed or a
13 check. So, again, that's another basis -- is a basis upon
14 which I think my instruction is appropriate.
15 THE COURT: That's your second motion in limine?
16 MR. TEDMON: That is correct.
17 THE COURT: Motion in limine number two, which I
18 denied but said we might address in jury instructions.
19 MR. TEDMON: Yes. Number two. Exactly.
20 THE COURT: All right. I understand that.
21 MR. ANDERSON: And if I may, Your Honor, part of the
22 Government's opposition as to this specific count because -- in
23 addition to the conspiracy count, when Mr. Tedmon makes that
24 argument, I think it shifts what a mail fraud conviction or
25 charge is.

1 A mail fraud charge is the scheme to defraud. And
2 what Mr. Tedmon's referencing is simply the mailings, the
3 jurisdictional element, which obviously are important to the
4 charge in the crime, but I think alters what we're looking at
5 with these jury instructions and the specific parts which are
6 referring to the scheme to defraud, which is the scheme as laid
7 out in the indictment which references both the false
8 statements to the lenders and the homeowners.
9 THE COURT: All right. I understand those competing
10 positions. Anything else on pages 29 and 30?
14 THE COURT: Page 31?
15 MR. TEDMON: Your Honor, I had -- make sure I have
16 the right pages here. We were dealing, I think, with pages 28
17 and 29 because page 30 I have is a different instruction.
18 THE COURT: Page 30 is the last part of the
19 instruction that begins on page 29. That's all part of 8.121.
20 MR. TEDMON: Okay. I'll just move forward. All
21 right. Your Honor, I understand.
22 THE COURT: It's the same as your last paragraph.
24 THE COURT: On Charles Head two. All right. Page
25 31, Mr. Anderson?

6 THE COURT: Page 32? This is Government's proposed
7 instruction. I assume you're standing by this, Mr. Anderson?
10 MR. TEDMON: I'm objecting, Your Honor.
11 THE COURT: Do you want to explain the grounds?
12 MR. TEDMON: Well, I don't know that there's ever
13 been an assertion that the homeowners, lenders, or escrow
14 companies with gullible, and I don't think the instruction
15 applies to this case, and I don't think it should be given.
16 It's not necessary.
17 The focus is whether the defendants had the specific
18 intent to commit the crime, and I don't know that we need this.
19 I would object to it.
21 MR. HAYDN-MYER: I agree, Your Honor. It almost is
22 re-classifying the Government's argument and shifting the
23 burden to the point where they are saying the homeowners are
24 gullible, therefore -- you know, that shouldn't be an issue you
25 should look at. But the issue for the jury is the specific

1 intent of the defendants, not the gullibility or
2 non-gullibility of the homeowners.
3 THE COURT: Mr. Anderson, your response to that?
4 MR. ANDERSON: I think that's what we were trying to
5 accomplish with the instruction was to keep the focus on the
6 specific intent of the defendants.
7 Obviously, we submitted this before we got too far in
8 the trial. And what I'm hearing from defense counsel is that
9 they're not going to make that argument, then it may be less
10 valuable, but the Government does stand by this instruction.
12 MR. TEDMON: There is another problem with this, too,
13 Your Honor, I think, on the lender's side. Because it says
14 "were gullible or did not act prudently."
15 Well, there is a materiality element that the
16 Government has to prove, and I don't want them to stand behind
17 some argument that the lenders -- we can't argue the lenders
18 didn't act prudently. We can certainly argue that what
19 happened with the lenders wasn't material to the
20 decision-making. I think this runs counter to the materiality
21 issue. So for that reason in addition I don't think it should
22 be given. It's confusing.
23 THE COURT: All right. I'll resolve that question.
24 Page 33, one of the standard closing instructions.
25 We will get to the other instructions we haven't covered yet.

1 Any problem with the wording of 33?
5 THE COURT: Pages 34 and 35?
6 MR. ANDERSON: Your Honor, I noticed that the last
7 paragraph was modified. The Government doesn't have any
8 objection to the modification on page 35 as modified from the
9 pattern.
22 THE COURT: 38?

5 THE COURT: All right. First of all, help me
6 understand what you're thinking about how the jurors are
7 informed regarding the specific charges. It seems to me there
8 are a couple -- yes, the indictment could go into the jury
9 room, although there are dismissed counts and other defendants
10 named. No place in the proposed instructions are the specific
11 charges summarized. Doesn't that information need to be
12 included in the mail fraud counts? The conspiracy charge has
13 the date range.
14 MR. ANDERSON: You mean as far as this count charges
15 this date, that count charges another date?
16 THE COURT: How do they know which charge is which
17 otherwise? They are going to get a verdict form with Counts 2,
18 3 -- so far nothing has told them which count is which.
19 MR. ANDERSON: Well, we could revise the verdict form
20 to specify the date and particular mailing.
21 THE COURT: Would that be your preference?
22 MR. TEDMON: That was going to be my recommendation.
23 We've done that in other cases as well, so it's clear in terms
24 of what count it relates to. So that it's not an instruction
25 which guides them toward a decision. It's just a verdict form

1 in terms of the identifiers.
2 THE COURT: Would you agree with that approach,
3 Mr. Haydn-Myer?
5 THE COURT: Pardon me?
7 THE COURT: All right. Then I'll make proposed
8 revisions to the verdict form and have you review those.
9 The Government has proposed an instruction based on
10 California Civil Code 2924k. Did you want to make any further
11 record regarding that request, Mr. Anderson or Mr. Morris?
12 MR. ANDERSON: Mr. Morris is going to handle this
13 one, Your Honor.
14 MR. MORRIS: Only, Your Honor, that certainly it's
15 the purview of the Court to instruct the jury on the law. You
16 know, the only reason we proposed this toward the end here is
17 that it's actually -- this has become something that's been
18 elicited in testimony that both Mr. Sandoval and Ms. Russell,
19 formerly Huerta, testified under cross that it was their
20 understanding that these folks would have lost their equity
21 anyway. And also under cross, a number of homeowners -- or at
22 least a couple of homeowners -- have testified that the
23 document purports to give them time to consult an attorney.
24 And I think the jury could reach the incorrect
25 conclusion that under California law that they would have --

1 the homeowners would have lost their equity anyway, and falsely
2 believe that there was a dilemma between go through
3 foreclosure, lose the house and lose equity, or agree to this
4 and lose the equity but not the house.
5 And so just to ensure that the jury is not
6 misinformed about the law, it may be that Mr. Sandoval did
7 believe that they would lose the equity, and Ms. Huerta, or in
8 fact the defendants may have believed that, but under the law
9 in California, the homeowners would not have lost their equity
10 if they had gone through foreclosure. And that's relevant --
11 facts contrary, beliefs contrary to that have been elicited
12 under cross-examination.
14 MR. TEDMON: Your Honor, I'm objecting to this on a
15 couple of bases. One, I think what Mr. Morris has explained is
16 now adding testimony to other witnesses to somehow bracket or
17 explain their understanding. That's their understanding.
18 That's their testimony. That's point one.
19 Two, the fact that the homeowners were or were not
20 going to receive equity is something that could have been
21 elicited by the Government in their questioning. And I think
22 at this point it's too late, and I don't know that it's all
23 that relevant to begin with.
24 And then the final thing is, I don't think this
25 instruction even properly states the law. I mean, you look at

1 2924k, and it's very wordy, but the section that they're trying
2 to get at is 2924k(a)(4) where it reads: "To the trustor or
3 the trustor's successor in interest. In the event the property
4 is sold or transferred to another, to the vested owner of
5 record at the time of the trustee's sale."
6 Now, you know, we look at laws all the time. I don't
7 know that -- that doesn't say that the equity goes to the
8 homeowner. Doesn't say that at all. It's talking about
9 successors in interest, if the property is sold or transferred,
10 to the vested owner of record at the time.
11 And we're un-layering the onion here as far as what
12 that actually would -- what would actually take place given
13 particular circumstances of each property.
14 And so to just generalize it in this instruction I
15 don't think is a correct statement of the law, one. It adds
16 testimony of witnesses that previously testified, which is not
17 proper. And I don't think it's relevant at all. And if it is,
18 it's marginal. And certainly the value of it is overrun
19 completely by the confusion it's going to cause. So I would
20 object on all those bases.
22 MR. HAYDN-MYER: I'm joining in Mr. Tedmon's
23 objections. And I'm also looking at the language. And I
24 believe it would actually have to draw a comparison to every
25 single mortgage contract, lender contract, and determine

1 exactly what had happened with the trustor/trustee language
2 before you can even come to this conclusion.
3 THE COURT: Mr. Morris, any rebuttal?
4 MR. MORRIS: Simply that under the California law the
5 trustor is the homeowner when they've granted a trust deed to a
6 mortgage -- or to a lender as a mortgage. So it's very clear
7 that after you've paid the cost of the power of sale and then
8 paid the obligation secured by the one that's being foreclosed,
9 and then paid any outstanding balance of other junior liens or
10 encumbrances, so second mortgages or tax liens and so forth,
11 number four in priority, the money that's left over goes back
12 to the trustor.
13 THE COURT: So why did the Government not seek to
14 establish that through the introduction of evidence?
15 MR. MORRIS: Because we can't use -- you can't
16 establish the law through testimony, Your Honor.
17 THE COURT: Did you seek a stipulation?
18 MR. MORRIS: We didn't, Your Honor. But, again, a
19 stipulation would be to a stipulation of fact. This isn't a
20 fact. It's a question of law.
21 THE COURT: All right. I'll think on that one.
22 Then Mr. Haydn-Myer has proposed some additional
23 instructions, withdrawal from conspiracy 8.24. Anything to say
24 about that, Mr. Haydn-Myer?

1 THE COURT: Mr. Anderson? Mr. Morris?
2 MR. ANDERSON: Your Honor, there are two reasons why
3 this instruction wouldn't apply. The first is that the pattern
4 and the notes to it make it clear that this is an instruction
5 when there is an overt act. The charged conspiracy in this
6 case does not require an overt act, so this instruction
7 wouldn't apply for that reason.
8 The second is in order to obtain this instruction a
9 prima facie case would have to be made of withdrawal from the
10 conspiracy. And at least from my view, I haven't seen that
11 evidence introduced in this trial. I don't know -- I know
12 Mr. Haydn-Myer still has three witnesses to call or four
13 witnesses to call, but so far we haven't seen it.
14 MR. HAYDN-MYER: If I may, Your Honor? I believe
15 that there is a separation that was discussed by Sarah Mattson
16 where she talked about -- I believe it was elicited under
17 direct -- where she said that they had an argument over
18 finances, and then Mr. Head left to go to Arizona. I believe
19 Kou Yang also testified to it.
20 I believe if you look at Government's Exhibit 40-A2
21 at the very bottom there is an e-mail between Jeremy Michael
22 Head and his brother, Charles Head, where Charles Head
23 discusses that he believes there is a conflict between the two
24 of them. He refers it to a Bill Gates and Steve Jobs, the CEO
25 for Apple. How he doesn't want to be with his brother because

1 he believes there is a conflict.
2 I believe there is another e-mail, 40-R of the
3 Government, where Charles Head is telling his brother at the
4 very end "good luck with your new endeavor in June, whatever
5 that may be." And I believe the June date is 2005. So I
6 believe there is substantial evidence that has been put in
7 through the Government's case in regards to a separation of the
8 two.
10 MR. ANDERSON: Mr. Haydn-Myer hasn't addressed the
11 act -- excuse me -- he hasn't addressed the first point I
12 raised.
13 The second issue is with the evidence that was
14 introduced the Government attempted to talk about the move to
15 Arizona on direct examination with Sarah Mattson, but our
16 recollection is that defense counsel objected. The Court
17 sustained the objection. And the Government was unable to and
18 did not return to that discussion area.
19 The e-mail that Mr. Haydn-Myer is referring to about
20 where Steve Jobs is mentioned is an e-mail where Mr. Head,
21 Michael Head, provides information about how to do these
22 transactions and strategies to Charles Head. So to suggest
23 that that's an e-mail showing a withdrawal from the conspiracy
24 I think is quite a stretch.
25 THE COURT: Mr. Haydn-Myer, on the overt act as a

1 threshold requirement? Anything to say on that point?
2 MR. HAYDN-MYER: Yes, Your Honor. I believe the
3 overt act would be the leaving to Arizona. And I believe there
4 is sufficient evidence to get the jury instruction to the jury.
5 THE COURT: Mr. Tedmon, anything to say on this?
6 MR. TEDMON: Not on this one, no.
7 THE COURT: And then multiple conspiracies. Anything
8 to say as the basis for this being given, Mr. Haydn-Myer?
9 MR. HAYDN-MYER: I'm basically going to be relying on
10 the same arguments I made before, Your Honor.
12 MR. ANDERSON: I don't think this is supported by the
13 evidence either, Your Honor. What's the second conspiracy?
14 THE COURT: Arizona?
16 And also, if I may, Kou Yang -- I believe it's
17 Government Exhibit -- I'm sorry. I don't have this one in
18 front of me. I think it's 46B where Kou Yang testified as to
19 the different transactions and the monies paid out.
20 You can clearly see from the exhibit that Mr. Michael
21 Head was being treated differently. And it was like they were
22 separating him. So I believe there is sufficient evidence
23 combined with everything else and 46-B.
24 THE COURT: So that latter argument would be while
25 Mr. Jeremy Head was still in California?

2 THE COURT: I understand the argument. Anything
3 further to say, Mr. Anderson?
4 MR. ANDERSON: Your Honor, I'm not persuaded that
5 Mr. Haydn-Myer is right on what the jury will ultimately find.
6 But I think he's established enough where the Government's
7 comfortable that he could have this instruction. I think it's
8 enough for the Court to give it. So I will withdraw my
9 objection.
10 THE COURT: All right. Mr. Tedmon, anything to say?
11 MR. TEDMON: I would join in this as well. Because I
12 don't want to be on the other end of the argument that somehow
13 there is two conspiracies, and Mr. Charles Head is being
14 dragged into the second one. Kind of the reverse situation.
15 So I would join and ask the Court give the instruction.
17 MR. ANDERSON: Your Honor, can I make a comment on
18 what Mr. Haydn-Myer said on the previous instruction, the
19 withdrawal from the conspiracy? Just a clarification.
21 MR. ANDERSON: The comment says that it's not an
22 overt act in withdrawing from the conspiracy. The instruction
23 should be given -- let me read the exact language -- "use this
24 instruction only when the conspiracy charged in the indictment
25 requires proof of an overt act," which would obviously

1 disqualify --
2 THE COURT: With that clarification on the threshold
3 requirement for overt act, anything further to say?
4 MR. HAYDN-MYER: No, Your Honor. If the Court would
5 allow me, I would like a little more time to research the finer
6 points that have been brought up. And I can easily get to the
7 Court by tomorrow morning with an answer.
8 THE COURT: All right. That sounds good. I think
9 we've covered now everything in terms of supplemental proposed
10 instructions. Am I right about that?
14 THE COURT: And thinking about the verdict forms, so
15 is your suggestion simple parentheticals following, so "as to
16 Count 1 of the indictment," paren...
17 MR. TEDMON: Yes. Count 1 would be the conspiracy so
18 we wouldn't need one for that.
19 THE COURT: Right. Count 3.
20 MR. TEDMON: But for Count 2 we could just take the
21 straight language from the indictment that states: Date,
22 June 2004, from Tulare County Clerk/Recorder to Dynasty Realty,
23 with the address, and then item grant deed, homeowner KJ of
24 Visalia, California.
25 I mean, to me, that keeps it consistent with the

1 indictment -- superseding indictment. So we're not changing
2 anything there.
3 THE COURT: And the homeowner is?
4 MR. TEDMON: That would be Karie Joest. And I would
5 have no objection having the parties agree to, with the initial
6 part of this, to putting the name because the initials would be
7 confusing.
8 THE COURT: Agreed with that approach, Mr. Anderson,
9 generally? Subject to seeing a further proposed verdict form?
10 MR. ANDERSON: Subject to that, yes, Your Honor.
11 Putting the full name, though, just so everybody is aware, that
12 will put this person's name on the docket. It will -- the
13 verdict form will be filed. Obviously, she's testified.
14 That's public record. I'm sorry. She didn't testify,
15 actually.
16 MR. TEDMON: She did not.
17 MR. ANDERSON: But some of the others did testify.
18 So their names already are in the public record, and
19 Ms. Joest's name is as well.
20 THE COURT: Alternatively, the initials could be used
21 and there could be a stipulation couldn't there? Parties
22 agree --
23 MR. TEDMON: Yes. Like a separate jury instruction?
24 MR. ANDERSON: All that will be filed.
25 THE COURT: I file the instructions.

1 MR. ANDERSON: One way that this could be handled is
2 to use the initials, and we can clarify in closing statement
3 where it says K.J., that means Karie Joest. It means this
4 particular transaction.
5 MR. TEDMON: That works. That keeps their name out
6 of the verdict form.
7 MR. HAYDN-MYER: I agree, Your Honor.
8 THE COURT: All right. That's the convention I will
9 follow. Is there anything further we should discuss?
10 MR. TEDMON: The only other thing we talked about,
11 Your Honor, not on jury instructions or verdict form, as far as
12 the exhibits go --
13 THE COURT: Yes.
14 MR. TEDMON: I know we're all going through them with
15 a fine-tooth comb to make sure that the local rules are
16 complied with in terms of identifiers, personal identifiers.
17 My suggestion is that tomorrow, when we finish, can
18 we have the courtroom left open so the parties can go through
19 the exhibit binders together and work our way through them.
20 Not only for doing a final check for personal identifiers and
21 making sure there is nothing in any of the Government or
22 defense binders or defense exhibits that shouldn't go to the
23 jury.
24 And if we do that all at once, I found that that is
25 far more efficient. It takes an hour or two, but once it's

1 done, it's done.
2 And then on Monday, because we will have no time --
3 I'm sorry -- Tuesday, if we're going to argue then, everything
4 is queued up. And when the Court instructs, all the evidence
5 can go into the jury room without any delay.
6 THE COURT: Is that a joint request?
9 THE COURT: That should work, shouldn't it,
10 Ms. Schultz?
12 THE COURT: So we will do that. I will aim to get
13 you some further jury instructions by tomorrow.
14 So at this point, Jeremy Michael Head's case will
15 proceed tomorrow. Do you expect to conclude tomorrow,
16 Mr. Haydn-Myer?
18 THE COURT: Then the Government will need just a few
19 minutes to know whether or not it's putting on a case in
20 rebuttal, Mr. Anderson?
21 MR. ANDERSON: I think that's right, Your Honor.
22 I've reviewed what we expect from Mr. Haydn-Myer's witnesses,
23 so I don't think it will be a problem. If Jeremy Michael Head
24 testifies, there may be a little additional delay that the
25 Government requests.

1 THE COURT: So there is a chance presentation of
2 evidence would spill over to Tuesday?
3 MR. ANDERSON: There is a chance, but I don't think
4 it's a big chance.
5 THE COURT: All right. Is anything likely to change
6 for Charles Head based on Jeremy Michael Head's case?
7 MR. TEDMON: Not from the statements I've reviewed,
8 no. In fact, his name doesn't even come up. So, no, I don't.
9 THE COURT: All right. So is it possible to use some
10 time on Friday to review jury instructions?
11 MR. ANDERSON: I think that's a good idea because we
12 may still have some questions or issues, and we can resolve
13 them before Tuesday.
14 THE COURT: Because I do allow you to use jury
15 instructions in your final argument as long as it's the final
16 instructions and the verdict form.
17 Remind me, Ms. Schultz, do we have still have a civil
18 law and motion, or has that cleared?
19 THE CLERK: You have one matter at 10:00 a.m.,
20 motion to withdraw as counsel.
21 THE COURT: How about 10:30 on Friday?
22 MR. ANDERSON: That's fine with the Government.
25 THE COURT: So 10:30. By sometime tomorrow I'll get

1 you revised jury instructions, revised verdict forms. And then
2 Friday we'll have hopefully a final session. And then I would
3 get to you, by the end of the day Friday, the final jury
4 instructions.
6 MR. ANDERSON: That's fine.
7 THE COURT: Okay. See you tomorrow morning at 8:30.
8 MR. ANDERSON: Your Honor, can I raise two things?
9 THE COURT: Yes.
10 MR. ANDERSON: The first is there is a forfeiture
11 allegation against Charles Head, and I just wanted to put
12 everybody on notice that the Government, assuming that there is
13 a conviction -- if there were a conviction, will be asking to
14 set something three or four weeks out, and does not believe
15 that a jury is necessary for the determination.
16 MR. TEDMON: I can speak to that, Your Honor. I'm
17 glad Mr. Anderson brought that up now because we can deal with
18 it.
19 If there is a conviction, we would agree to waive
20 jury and proceed with a court trial on that issue. And then in
21 the interim, my practice is to sit down with the Government and
22 see if we can work out something with the forfeiture unit by
23 way of a stipulation or proposed order. If not, then we go
24 forward with the court trial on that issue.
25 THE COURT: All right. So the waiver of jury trial

1 is noted.
2 MR. TEDMON: Yes.
3 THE COURT: And this is only as to Charles Head?
4 MR. ANDERSON: That's correct. There was no
5 forfeiture allegation as to Jeremy Michael Head.
6 THE COURT: Okay.
7 MR. ANDERSON: And then the second issue I wanted to
8 raise was the Court has been taking photographs of witnesses in
9 view of giving a binder to the jurors so that they are able to
10 see that.
11 I would like an opportunity for myself and also for
12 defense counsel to inspect a copy of that binder before it goes
13 back to the jury. Just in case there is any objections that
14 anybody wants to raise.
15 THE COURT: No problem. Is looking at a single copy
16 sufficient?
18 MR. TEDMON: Yes, I would join in that.
20 (Discussion between Court and Clerk.)
21 THE COURT: Ms. Schultz is proposing that she put
22 together actually an inspection copy of the binder in case
23 jurors have made any notes on the copies on their chairs. But
24 she can make an exact duplicate of the original she's given to
25 them.

1 MR. TEDMON: That would be fine.
2 THE COURT: And that can be your inspection copy. So
3 that binder should have in it now only the preliminary
4 instructions and the photographs. Correct, Ms. Schultz?
6 THE COURT: And it will have the final instructions.
7 MR. ANDERSON: That would be great. Thank you.
9 THE COURT: And by Friday, Ms. Schultz?
11 THE COURT: So by Friday at the latest you'll have
12 that. Anything further?
15 THE COURT: All right. See you tomorrow morning.
17
18 CERTIFICATION
22

25

---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
Volume 11
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
17
18
19
20
21
22
23
24
25

1 I N D E X
2 DEFENSE WITNESSES PAGE
3 PATRICK HARDING
DIRECT EXAMINATION BY MR. HAYDN-MYER 1344
4 CROSS-EXAMINATION BY MR. ANDERSON 1349
REDIRECT EXAMINATION BY MR. HAYDN-MYER 1354
5
ANNELIE DURBIN
6 DIRECT EXAMINATION BY MR. HAYDN-MYER 1356
CROSS-EXAMINATION BY MR. ANDERSON 1362
7
9
11 JMH-HH Overdraft Letter from Bank of America, 1366

Dated 4/25/06
12 JMH-KK Check #1275 for $5,000.00, payable to 1366
Emily Silva
13
14
15
16
17
18
19
20
21
22
23
24
25

3 ---oOo---
4 THE CLERK: Calling criminal case number 08-93,
5 United States versus Charles Head and Jeremy Michael Head.
6 This is on for jury trial, and today is day twelve.
8 The parties are present. Are we ready to go?
10 THE COURT: You're ready, Mr. Haydn-Myer?
12 THE COURT: All right. Let's call the jury in, and
13 we'll have you call your first witness.
14 (Jury in.)
16 court, ladies and gentlemen. As I told you earlier this week,
17 Jeremy Michael Head is now going to present a case in defense.
18 Mr. Haydn-Myer.
19 MR. HAYDN-MYER: Yes, Your Honor. Our first witness
20 is Patrick Harding. May I?
21 THE COURT: Yes, you may.
22 (Photograph taken of Mr. Harding by the Clerk.)

3 THE WITNESS: Patrick Harding, Patrick Harding.
4 P-a-t-r-i-c-k, H-a-r-d-i-n-g.
5 PATRICK HARDING,
6 a witness called by the Defendant, Jeremy Michael Head, having
7 been first duly sworn by the Clerk to tell the truth, the whole
8 truth, and nothing but the truth, testified as follows:
11 Q. Thank you. Good morning, Mr. Harding.
12 A. Morning.
13 Q. Do you know the person sitting over there in the
14 corner?
15 A. Yes.
16 Q. Who is that?
17 A. Mike Head.
18 Q. And how long have you known Mr. Head?
19 A. Since 2000 -- since 2000, 2001.
20 Q. Where did you meet?
21 A. University of Pittsburgh.
22 Q. Is that where you went to school also?
23 A. Yes.
24 Q. Did you graduate from the University of Pittsburgh
25 with Mike or not? I'm sorry. Mr. Head.

1 A. Yes. I graduated in 2001, but I stayed until 2004.
2 I did my masters, and Mike, I think, left in 2001.
3 Q. In approximately May of 2005 did you go to work for
4 Michael Head?
5 A. Yes.
6 Q. Where did you go to work at?
7 A. Arizona. His offices in Arizona.
8 Q. Do you remember the name of the company of the
9 offices in Arizona?
10 A. Yes. Financial Enterprises.
11 Q. And who was working at the office in May of 2005 when
12 you first started?
13 A. It was Mike, Sunny -- Sunny Rock, Jeff McGee, Sarah
14 Mattson, and Waddy Freeman.
15 Q. When you said Sunny twice, were you referring to the
16 same person?
17 A. Yes. The same person.
18 Q. Did you receive any training while you were there?
19 A. Yes.
20 Q. Who trained you?
21 A. Mike. Mike Head.
22 Q. And what were you trained in? What were you doing?
23 A. He trained me to negotiate with clients to help them
24 with their foreclosure process, help them through their
25 foreclosure process.

1 Q. And approximately how long was the training process?
2 A. It was ongoing, I would say, for a month.
3 Q. Did you make any phone calls after you went through
4 the training process?
5 A. Yes.
6 Q. Who did you call?
7 A. I don't -- people who submitted forms to the
8 website -- to the website that he used. I don't remember the
9 names of people.
10 Q. Do you have any idea in the two months you were there
11 approximately how many people you spoke to on phone?
12 A. Quite a few. Maybe I spoke to two or three people a
13 day, and then I do follow-up calls. I had a list of maybe ten
14 people that I tried to work with during that time.
15 Q. As you understood it, what were you telling people
16 that the program was about?
17 A. Most people called, and they wanted to either
18 refinance or sell their homes because they are about to lose
19 their houses and get kicked out. So some of them didn't want
20 the foreclosure on their records, and some of them didn't have
21 anywhere to go and wanted to stay. So I discussed all options
22 with them.
23 Q. In regards to the people that you were speaking with,
24 the homeowners, did you tell them anything in regards to title?
25 A. No.

1 Q. Did you ever tell them that they would remain on
2 title or Financial Enterprises would do something different?
3 A. No.
4 Q. What did you tell them, if at all?
5 A. I would review their -- listen to what they wanted to
6 do and present possible options. Most of the times they wanted
7 to refinance, so we tried to get them refinanced. But these
8 are people with bad credit and couldn't be refinanced. So we
9 offered to buy them out and give them an opportunity to stay
10 there temporarily while they get on their feet.
11 Q. Did you ever leave Arizona and quit Financial
12 Enterprises?
13 A. Yes.
14 Q. Where did you go after that?
15 A. Florida.
16 Q. What did you do in Florida?
17 A. I eventually purchased a Sprint Nextel store. I did
18 some real estate on my own. And I worked for AT&T.
19 Q. You and Mr. Head remained in contact when you went to
20 Florida, is that correct?
21 A. Correct.
22 Q. Did you talk to him on a regular basis?
23 A. For a few months after I left we didn't speak, or
24 maybe even a year, because of the terms of how I left. But
25 then later on we caught up because we've been good friends.

1 Q. When was the last time you saw Mr. Michael Head
2 before you came to court today?
3 A. Yesterday.
4 Q. What did you do yesterday?
5 A. We met. We had dinner.
6 Q. Did you discuss the case?
7 A. No. But, I mean, sort of, you know, he said that
8 he's obviously --
9 Q. Let's not go into that. Did he tell you what to say
10 in regards to your testimony today?
11 A. No. No.
12 Q. When was the last time you saw Mike Head before
13 yesterday?
14 A. Homecoming at Pitt a few years ago.
15 MR. HAYDN-MYER: Can I have a quick moment, Your
16 Honor?
17 THE COURT: Mr. Anderson or Mr. Morris?
18 MR. ANDERSON: I think Mr. Haydn-Myer is asking for
19 an additional moment, Your Honor.
20 THE COURT: I'm sorry. I didn't hear that.
21 MR. HAYDN-MYER: Thank you. I have no further
22 questions.
23 THE COURT: All right. Now Mr. Anderson or
24 Mr. Morris?
25 /// /// ///

1 CROSS-EXAMINATION
2 BY MR. ANDERSON:
3 Q. So you worked at the Arizona location for Mike Head
4 from May 2005 through July 2005, is that right?
5 A. Correct.
6 Q. So about three months?
7 A. Sure. I mean, I don't remember if it was the
8 beginning of May or end of May. Yes, two to three months.
9 Q. And Mike was in charge of the office, is that right?
10 A. Correct.
11 Q. And Sarah Mattson worked for Mike, is that right?
12 A. Correct.
13 Q. Did you know a Stephen Goldizen?
14 A. No.
15 Q. And your training, that was done by Mike Head as
16 well?
17 A. Correct.
18 Q. The people who called asking about refinances, when
19 you say you tried to qualify them, what do you mean? What did
20 you do?
21 A. Had them give us some information. The information
22 came in on a web form.
23 Q. Would you pass that information along to somebody?
24 A. Yes.
25 Q. To who?

1 A. To Sunny Rock.
2 Q. And then Sunny Rock would tell you that that person
3 didn't qualify, is that right?
4 A. Correct. Whether they did or not.
5 Q. And in almost every case Sunny Rock would say the
6 person doesn't qualify, is that right?
7 A. Correct. For the ones that I dealt with.
8 Q. Now, when you explained the program to the
9 homeowners, did you tell them that an investor would become
10 involved?
11 A. I don't think so. To clarify that, I may have -- I
12 may know that an investor is involved, but whether I discussed
13 that with them, no.
14 Q. What did you know about the investor?
15 A. I know about my transactions. The ones that I dealt
16 with. That I would purchase the property from them.
17 Q. In these foreclosure transactions -- you know which
18 transactions we're talking about, where somebody else takes
19 title and the equity comes out of the home, do you know those
20 types of transactions?
21 A. Yes. I mean --
22 Q. You seem a little uncertain about the program. Did
23 you ever do any of those transactions?
24 A. I did not close any transactions when with Mike.
25 Q. Did you pitch any of those transactions to

1 homeowners?
2 A. The transactions that I pitched -- so the program, I
3 don't know what you're referring to as the program. Pretty
4 vague.
5 But the transactions that I pitched to the homeowner
6 was to do one of two things, try to get them refinanced or
7 purchase their home.
8 Q. When you say purchase their home, directly purchase
9 their home?
10 A. Correct. And offer them an opportunity to stay in it
11 if it was possible.
12 Q. Did you tell the homeowners in that situation what
13 would happen to the equity in their home?
14 A. No. Most people when they are in foreclosure are not
15 concerned about that. They just want to not lose their home,
16 not get kicked out in the street. So it was never a discussion
17 about equity.
18 Q. So you never told anybody that all the equity would
19 be removed from their home?
20 A. No.
21 Q. Did you know that all the equity would be removed
22 from the people's homes?
23 A. I know that as a real estate investor your goal is to
24 purchase property below --
25 Q. I'm sorry. I'm going to have to ask you to answer

1 the question.
2 Did you know that for these people 100 percent of the
3 equity was going to be removed from the home?
4 A. Not 100 percent, but I know that equity would be
5 removed.
6 Q. So you didn't know how much equity would be removed
7 from the home?
8 A. Correct.
9 Q. Who was it that explained this program to you?
10 A. Mike.
11 Q. And you thought it would be an investor who would be
12 purchasing the home, is that right?
13 A. Correct.
14 Q. Who found those investors?
15 A. I was going to be the investor for the properties
16 that I worked with Mike.
17 Q. Were you going to put up any money to purchase the
18 home?
19 A. If I need to put down a down payment, yes.
20 Q. Did you ever actually do that?
21 A. No. I never purchased a property while with Mike.
22 Q. And when you told people that an investor would
23 purchase the home, did you tell them that you were the person
24 who was going to be the investor?
25 A. No. No.

1 Q. And what about the title to the home, did you tell
2 people that title would be taken out of their names?
3 A. Never discussed title with the clients that I spoke
4 with.
5 Q. So when you provided information to the homeowners,
6 were you trying to be honest with them about what the program
7 was?
8 A. I'm not familiar with what the program is. That word
9 is pretty vague to me. So I apologize for my hesitation in
10 answering your questions.
11 Q. That's okay. Let me try and make the question a
12 little more specific.
13 Did you tell them all the terms of the deal that you
14 were proposing, did you tell that to the homeowner?
15 A. Yes. And the deals that I proposed there were
16 simple. I didn't propose anything complicated, so, yes, I
17 explained what I was proposing.
18 Q. But you didn't know how much equity was going to be
19 removed from the homes in these deals, did you?
20 A. No.
21 Q. Because Mike never told you?
22 A. Correct.
23 Q. So you wouldn't have been able to give them accurate
24 information about that, isn't that right?
25 A. Correct. I mean, I was negotiating to purchase the

1 property from them at a specific price. We weren't talking
2 about splitting equity or equity.
3 Q. So in these types of deals that you were pitching
4 with you becoming an investor in these properties, how many
5 people given the information that you were sharing with them,
6 how many people agreed to do that type of deal?
7 A. Over the two months I was there I was not able to
8 close anyone.
9 Q. So providing all of the information that you had
10 about the program, talking to two or three new people each day,
11 zero of those people agreed to do this type of deal?
12 A. Correct.
15 MR. TEDMON: Nothing, Your Honor. No.
16 THE COURT: Mr. Haydn-Myer, any redirect?
20 Q. Do you know what a buy-back number is, Mr. Harding?
21 A. A buy-back number?
22 Q. Yes.
23 A. I can assume what it is. I don't know the technical
24 term.
25 Q. Were you ever given numbers to go back to the

1 homeowners and say this is what we will buy your property for?
2 A. Yes.
3 Q. And that was part of what you were doing in Financial
4 Enterprises, is that correct, in Arizona?
5 A. Yes.
6 Q. So when you were discussing the numbers with Michael
7 Head, he was giving you numbers to actually purchase the
8 properties?
9 A. Correct.
10 Q. I believe you said you also did some real estate
11 deals in Florida, is that incorrect?
13 Q. Did you close any real estate deals in Florida?
14 A. Yes.
15 Q. Approximately how many?
16 A. Six.
18 Honor.
21 THE COURT: And Mr. Tedmon?
23 THE COURT: All right. Is Mr. Harding excused,
24 Mr. Haydn-Myer?

6 Your next witness, Mr. Haydn-Myer?
7 MR. HAYDN-MYER: Annelie Durbin, if I may, Your
8 Honor.
9 (Photograph taken of the witness by the clerk.)
15 THE WITNESS: Annelie, A-n-n-e-l-i-e, Durbin,
16 D-u-r-b-i-n.
18 ANNELIE DURBIN,
19 a witness called by the Defendant, Jeremy Michael Head, having
20 been first duly sworn by the Clerk to tell the truth, the whole
21 truth, and nothing but the truth, testified as follows:
24 Q. Good morning, Ms. Durbin.
25 A. Good morning.

1 Q. What was your job in December of 2004?
2 A. I managed the UPS store, which also we do notaries
3 for the business.
4 Q. Were you a notary in 2004?
5 A. I was.
6 Q. How long had you been a notary?
7 A. That was my first commission. I got it in 2001, so I
8 was into my third year of being a notary.
9 Q. What are some of the duties of a notary?
10 A. Basically to make sure that people who need a
11 signature, have complete documents, everything is filled in.
12 If it's something for property, you have to make sure you take
13 a thumb print. And basically it's to serve the public for
14 notaries.
15 Q. And this is something you were doing while you were
16 in Porterville, California, is that correct?
17 A. Yes. Yes.
18 Q. And did you bring the notary book today?
19 A. I did.
20 Q. And that was because I sent you a subpoena, is that
21 correct?
22 A. Right.
23 Q. If I can, can we please have Government Exhibit 21 --
24 I believe it's F -- on display.
25 Do you recognize that stamp, Ms. Durbin?

1 A. Yeah, that's my stamp.
2 Q. Do you recognize the signature?
3 A. My signature you mean?
4 Q. Yes.
6 Q. And there is a date that appears on there, is that
7 correct?
8 A. December 9th. Yeah, that would be correct. That's
9 what I have in my book.
10 Q. If you would please, could you look at your logbook
11 for December 9th?
12 A. Okay.
13 Q. Do you see a signature in your logbook for an Emily
14 Silva?
15 A. Yeah. I have Emily Rocha Silva. And actually I have
16 her in there three times.
17 MR. HAYDN-MYER: What I would like to do, if I may,
18 Your Honor, is approach with JMH-F.
19 And can I speak to Mr. Anderson?
22 Q. BY MR. HAYDN-MYER: Showing you JMH-F, would you
23 please take a look at that, Ms. Durbin. Thank you. You can
24 take down the Government's exhibit.
25 A. Okay. That looks like what I have in my book.

1 Q. Looking at the document that I just gave you --
2 A. Uh-huh.
3 Q. -- could you please look through all of the pages
4 that are in it and then compare them to what you have in your
5 notary book?
6 A. Grant deed -- yeah, those look to be what they are in
7 the book.
8 MR. HAYDN-MYER: I believe JMH-F has previously been
9 admitted, Your Honor.
10 THE COURT: Do you want to display that?
13 Q. BY MR. HAYDN-MYER: When you examined your notary
14 book that you have before you, Ms. Durbin, and I handed you
15 JMH-F, what you're looking at on the screen is a copy of what
16 you have in your notary book, is that correct?
17 A. Yes.
18 Q. And based on your procedures, what you did was you
19 would take the person's name from an identification?
20 A. Driver's license usually.
21 Q. And then you would have them sign?
22 A. Yes. I would fill in my book first, have them sign,
23 and then I would record all the information like what it is,
24 the date, the time, and her address from the driver's license.
25 And, of course, they have to have a photo ID. So it would be a

1 driver's license. That's usually what California requires.
2 Q. And as we look to this -- these words right here --
3 A. Grant deed is what it was on that one. And then an
4 Affidavit of Deed I did on two of them.
5 Q. Did you write all of the information that we're
6 looking at on this first page?
7 A. Yes.
8 Q. And I'm going to show you the second page of JMH-F.
9 Now, did you write the name Emily Silva here?
10 A. Yeah. That's my writing. Emily Rocha Silva.
11 Q. And did you write this information right here?
12 A. Yeah. That's the expiration on her driver's license.
13 Q. And I see it looks like a signature on the far right?
14 A. Yeah. In those days we could make the line down, and
15 that means that she signed for both signatures.
16 Q. So that's Emily Silva's signature, is that correct?
17 A. Yeah. It would have to be the person that, yeah,
18 that was there in front of me, yeah, because she would be the
19 one signing my book.
20 Q. And I'm showing you page four of JMH-F.
21 A. Okay.
22 Q. Does that page also appear in the notary book that
23 you have before you?
24 A. Yes, right here. Uh-huh.
25 Q. And there's also a signature and a thumb print, is

1 that correct?
2 A. Correct.
3 Q. And the thumb print, whose thumb print is that?
4 A. It would be the person's -- the person that appeared
5 in front of me, and I always used their right thumb print.
6 MR. HAYDN-MYER: May I have Government's Exhibit 21-F
7 put back up, please.
8 Q. BY MR. HAYDN-MYER: We looked at this document a
9 little bit earlier, is that correct?
10 A. Yes.
11 Q. Now there is information that is written in above the
12 signature line for Emily Silva?
13 A. It looks like it was typed in. It's probably the way
14 it came in.
15 Q. Do you have any specific memory of this grant deed?
16 A. Not particularly. That was so long ago. I probably
17 looked for the entirety of it, which, like I said, that the
18 description wasn't the best. But that, you know, we're not
19 supposed to change anything on their documents or anything.
20 But that would have probably been typed in before I would have
21 done the notary.
22 Q. What I'm asking specifically about is --
23 A. The name of the person?
24 Q. Do you see where it says grant to Jason Marshal?
25 A. Right. That would have had to -- for me to do that,

1 I would have had to have seen that in there.
2 Q. Why do you say that?
3 A. Because if it's not filled in, we're not supposed to
4 do the notary. And I can't be 100 percent sure that -- I mean,
5 I can't be 100 percent sure, but it does have to have the
6 description on there and everything before I would do the
7 notary.
8 Q. Ms. Durbin, I've already asked you whether or not you
9 can remember it?
10 A. Right.
11 Q. What you're saying it was your policy and
12 procedure --
13 A. Policy.
14 Q. -- back on this date to have the grant part filled
15 out before?
16 A. Before you can do the notary. Everything has to be
17 done before you can do a notary.
18 MR. HAYDN-MYER: Thank you. You can take that down.
19 I have no further questions. Thank you.
20 THE COURT: Mr. Anderson.
22 BY MR. ANDERSON:
23 Q. Good morning, Ms. Durbin.
24 A. Hi.
25 Q. As a notary, is it your job to explain the document

1 to the person who is doing the signing?
2 A. No. We're not supposed to give information. We just
3 need to tell them if it's not filled in, they need to fill it
4 in before we can do anything to the document.
5 Q. So it's important for a notary to have the document
6 completely filled in before it's signed?
7 A. Correct.
8 Q. And you don't know a notary by the name of Cindy
9 Gastelum, do you?
10 A. No.
14 THE COURT: Mr. Haydn-Myer, any redirect?
15 MR. HAYDN-MYER: No further questions. Thank you.
16 THE COURT: Is this witness excused?
23 Mr. Haydn-Myer, your next witness?
25 At this time, Your Honor, we still have some exhibits

1 that need to be marked, and a stipulation that needs to be
2 entered into. Barring that, the defense rests.
3 THE COURT: All right. Do you want to address the
4 exhibits on the record now?
5 MR. HAYDN-MYER: No, Your Honor. There is a couple
6 of them that need to be marked, and I'm still working on the
7 stipulation for those documents.
8 THE COURT: All right. With that understanding,
9 let's take a short break so I can confer with the counsel and
10 determine what our next step is.
11 So during this break -- let's make it a 15-minute
12 break -- please, as always, remember my admonitions. And we'll
13 call you back as soon as we're ready. Thank you.
14 (Jury out.)
16 Mr. Haydn-Myer, do you know exactly what it is you
17 want to mark now, and do you need to reach stipulations yet?
18 MR. HAYDN-MYER: I need to modify the stipulation. I
19 didn't do it. Mr. Anderson gave me the correct agreement
20 yesterday, and I need to complete it.
21 There's just two exhibits. And I just have to make
22 sure that they are in the right order. So I was going to check
23 with Madam Clerk, Ms. Schultz, before I did that.
24 THE COURT: So how long will that take you to clarify
25 all that?

1 MR. HAYDN-MYER: If I have them with me, it's going
2 to take me a couple minutes, maybe five at the most.
3 THE COURT: All right. And then, Mr. Anderson, do
4 you know at this point do you plan to put on a case in
5 rebuttal?
8 MR. TEDMON: No.
9 THE COURT: All right. Well, I'll take a five-minute
10 recess. You can let me know when you're done, Mr. Haydn-Myer.
11 And then I guess we would excuse the jury again until Tuesday.
12 MR. ANDERSON: I guess so, Your Honor.
13 THE COURT: Because we're not ready for closing.
15 MR. ANDERSON: And then if we could get a definitive
16 statement on the record that Mr. Jeremy Michael Head is
17 choosing not to testify. I know it's implied by what
18 Mr. Haydn-Myer has done.
19 THE COURT: Well, that's the Government's request.
20 Anything to say in response, Mr. Haydn-Myer?
21 MR. HAYDN-MYER: Your Honor, obviously, Jeremy
22 Michael Head is not going to answer that himself, but he will
23 not be testifying.
24 THE COURT: All right. Five-minute recess.
25 (Break taken.)

2 Mr. Haydn-Myer, I've been handed the stipulation with
3 some hand annotations. So HH and KK.
5 THE COURT: So those would come in without objection,
6 Mr. Anderson?
10 (Defendant's Exhibits JMH-HH and JMH-KK, (see index
11 for descriptions), admitted into evidence.)
12 THE COURT: And you want to read the stipulations as
13 to those two exhibits, Mr. Haydn-Myer?
15 THE COURT: All right. And then you would rest?
16 MR. HAYDN-MYER: Yes, Your Honor. I believe after
17 those two exhibits are admitted, all of the rest of the ones
18 are already admitted. So that would be the end of the case of
19 the defense.
20 THE COURT: Were II and JJ admitted.
21 MR. HAYDN-MYER: No, Your Honor. They were not.
22 THE COURT: Do you want them admitted?
23 MR. HAYDN-MYER: No, Your Honor, I do not.
24 THE COURT: All right. Well, then I'll allow
25 Mr. Haydn-Myer to do that, to announce that he rests. I'll

1 inform the jury that they are excused for the day. I'll
2 explain that in order to be ready, the parties need to review
3 the exhibits, get them prepared. We need to finalize jury
4 instructions. But that we do anticipate they will hear closing
5 arguments -- and my hope is that you don't eat up all the time
6 among the three of you -- the four of you -- on Tuesday such
7 that they are instructed by the close of business on Tuesday.
8 I think that's realistic.
9 MR. TEDMON: I think it is. And we have a full day
10 on Tuesday.
11 THE COURT: Yes. 8:30 to 1:30. But that's five
12 hours.
13 MR. TEDMON: We should be able to get the whole thing
14 done, instruct them, and send them out on Tuesday.
16 THE COURT: All right. So I'll tell them that's the
17 plan barring unforeseen circumstances.
18 And I have a few questions for you just about jury
19 instructions before we recess for the day.
20 MR. ANDERSON: We've actually been discussing them,
21 so we have a few things that may simplify it for the Court,
22 too.
23 THE COURT: All right. Let's bring the jury back in.
24 (Jury in.)

1 again, ladies and gentlemen of the jury.
2 Mr. Haydn-Myer has some stipulations he would like to
3 read into the record. I'm going to acknowledge him for that
4 purpose.
6 The United States of America, through its attorneys
7 of record, Michael D. Anderson, Matthew Morris, and Nicholas M.
8 Fogg, Assistant United States Attorneys, Charles Head, through
9 his attorney, Scott Tedmon, and Jeremy Michael Head through his
10 attorney, Christopher Haydn-Myer, hereby stipulate to the
11 following facts: Defense Exhibit JMH-HH is admitted as a
12 document that was found during the course of a search warrant
13 performed by agents of the United States Government. Defense
14 Exhibit JMH-KK is admitted as an admissible bank record.
15 And I believe that completes all of the evidence that
16 I need admitted, Your Honor. And the defense rests.
17 THE COURT: All right. Jeremy Michael Head rests his
18 case in defense. And then you may be seated.
20 THE COURT: Mr. Anderson, does the Government wish to
21 present a case in rebuttal?
23 THE COURT: And Mr. Tedmon, your client is standing
24 on his having rested?
25 MR. TEDMON: That's correct, Your Honor.

1 THE COURT: Ladies and gentlemen of the jury, again
2 it's never possible to predict with complete accuracy how much
3 time things are going to take. We are done early today.
4 Here's what needs to happen before we can present you with the
5 parties' closing arguments and the jury instructions.
6 The parties need to assemble all of the exhibits so
7 they are ready to go to you promptly once you are excused.
8 They need to carefully review them to make certain they agree
9 on the set of exhibits that you will have. That's going to
10 take them some time. They're going to work on that today yet.
11 I'm going to meet with the parties tomorrow and work
12 on the final jury instructions that are my responsibility to
13 give to you.
14 So at this point our schedule is for you to come back
15 on Tuesday. We will meet from 8:30 to 1:30 on Tuesday. And
16 the schedule that day will be closing arguments. You'll hear
17 first from the Government, then from Charles Head's attorney,
18 Mr. Tedmon, then from Jeremy Michael Head's attorney,
19 Mr. Haydn-Myer, and then possibly rebuttal from the Government
20 again. And then I will give you the final jury instructions,
21 and then you will retire.
22 Having consulted with the attorneys, we believe that
23 we can get through all of that on Tuesday, so that you will
24 retire perhaps close to the end of the day on Tuesday to begin
25 your deliberations. So that is the schedule.

1 I'm going to excuse you at this point for the rest of
2 today. It's another long weekend, particularly with our short
3 schedule today. So during that long weekend, particularly
4 given that all the parties have rested, please keep in mind
5 very carefully all of my admonitions. No thinking about where
6 the case may go, no talking to anyone about the case, family
7 members or friends, or fellow jurors. Please do not do any
8 research of any kind, going on the internet, or looking up a
9 dictionary definition. Continue to keep an open mind until
10 you've heard the closing arguments and my instructions. And
11 then and only then may you begin to discuss the case and think
12 about its ultimate conclusion.
13 Thank you for your service, your diligence so far.
14 We will see you on Tuesday for closing arguments and jury
15 instructions. Have a good long weekend and a good holiday
16 weekend.
17 (Jury out.)
19 My questions on the jury instructions. What are your
20 thoughts on the Pinkerton instruction?
21 MR. ANDERSON: Your Honor, we've discussed it. And
22 in light of fact there's going to be a vicarious liability
23 instruction, the parties all agreed we all want to withdraw it.
24 THE COURT: That was one of my questions is do you
25 really need it. So it's withdrawn by the Government.

1 Withdrawn by Mr. Tedmon. Mr. Haydn-Myer, you agree with that?
3 THE COURT: Then I had a further question I think for
4 Mr. Morris on the escrow proceeds instruction.
5 Can you remind me what you think the record would
6 reflect, that is, was there cross-examination to probe that
7 question?
8 MR. MORRIS: My memory, Your Honor, is this, that at
9 least Omar Sandoval, and I think Liz Russell, on
10 cross-examination both testified that their understanding would
11 be that during foreclosure the homeowners would have lost the
12 equity anyway.
13 And I also think that at least one homeowner, perhaps
14 two, on cross-examination about the Equity Purchase Agreement,
15 and particularly about the cancellation period, that the
16 comment was made that that was time in which you could have
17 consulted a lawyer. And so that's my memory of what the
18 testimony was.
19 THE COURT: And were there objections, did you
20 object?
22 THE COURT: And did you explore the question on
23 redirect?
25 THE COURT: All right. Anything in response to that?

1 I'm thinking about that requested instruction from the
2 Government.
3 MR. MORRIS: Could I add one more thing, Your Honor,
4 which is that this is another one that we've been talking
5 about. And I think we may actually reach language that we're
6 all happy with. And perhaps if we can do that, we can get it
7 to the Court this afternoon.
9 MR. TEDMON: Your Honor, so you know what we're
10 talking about. I've already made my record as far as the
11 instruction that was proposed and that stands.
12 However, we have discussed this between the parties.
13 And my concern, fundamentally, is that, one, if it's stated
14 under California law that it's accurate, and, two, that on this
15 equity remaining, the language of the original instruction said
16 "any equity that remains after those parties are paid will be
17 returned to the homeowner." That is an incorrect statement of
18 law.
19 However, in talking to Mr. Morris and Mr. Haydn-Myer,
20 and going through California Civil Code 2924k, Section (a)(4),
21 I think the appropriate language, which I would be comfortable
22 with -- and it doesn't take away from anybody's argument in
23 terms of what the witnesses testified to -- would be this:
24 "Any equity that remains after those parties are paid will be
25 returned to the vested owner of the property," because that's

1 what the law says.
3 MR. TEDMON: Now, you know, clearly I don't think the
4 homeowner term is appropriate. I think I would be comfortable
5 with that. It doesn't take away from the ability to argue as
6 to what the witnesses testified to. But that's the law.
8 MR. HAYDN-MYER: No, Your Honor. Mr. Tedmon was very
9 diligent about providing me with the information, but I wanted
10 more time to think about it. But as I sat here, I do not want
11 the instruction. I'm going to be objecting to it.
12 THE COURT: All right. Well, to the extent there is
13 any proposed instruction along those lines from two of the
14 parties, you can present that by the end of today?
15 MR. TEDMON: If we can come up with an agreement, or
16 we'll notice the Court that we can't come up with one. Is that
17 okay?
18 THE COURT: All right. Did you want to provide
19 alternative language that would be acceptable to you as an
20 alternative for the Court's consideration?
21 MR. MORRIS: Your Honor, we're happy with the
22 language Mr. Tedmon has proposed, so we would join in that
23 proposed instruction, and we would withdraw our other one in
24 lieu of that one. I think that gets where we want to go.
25 THE COURT: Can you e-mail that language?

1 MR. TEDMON: I will.
2 THE COURT: I will think on that later today.
3 I don't have any other questions on the proposed jury
4 instructions. Anything else to say about jury instructions?
5 MR. TEDMON: Your Honor, there was one other
6 instruction that talked about the gullibility of the
7 homeowners.
9 MR. TEDMON: In fact it's Government's -- it was on
10 page 32 of the court's packet. Whether the homeowners,
11 lenders, or escrow companies were gullible or did not act
12 prudently is irrelevant to whether a defendant committed a
13 crime charged in the superseding indictment.
14 We have discussed this one as well. I objected to
15 it. Mr. Haydn-Myer objected to it.
16 THE COURT: It was included for discussion purposes.
17 MR. TEDMON: We have an understanding on this, but
18 maybe I can just indicate to the Court where we're at at least.
19 I think the agreement is that the Government would
20 withdraw it. However, there is an understanding that the
21 defense -- if the instruction is going to be withdrawn -- is
22 not going to then argue that somehow the homeowners were
23 gullible. That would be completely disingenuous. I'm not
24 doing that. I will let the Court know that. I've told the
25 Government that as well.

1 The one thing I do want to make sure that we're clear
2 on, though, is on the lender side there is testimony -- well,
3 strike that.
4 There is an issue of materiality. It's an element of
5 the crime. And obviously we're going to address that in terms
6 of whether the decision of the lenders was material in terms of
7 the information they were given. It doesn't eliminate that
8 argument. But I don't think that's what this instruction is
9 aiming for.
10 So with that understanding, I will represent to the
11 Court and counsel I am not going to argue that the homeowners
12 were gullible, and therefore they deserved to be victimized.
13 It's a dumb argument anyway. I'm not going to do it.
14 And with that understanding, I think the Government
15 is willing to withdraw that particular instruction.
16 THE COURT: Are you joining in that representation,
17 Mr. Haydn-Myer?
18 MR. HAYDN-MYER: Yes, Your Honor. I wasn't going to
19 argue that they were gullible.
20 THE COURT: With that understanding, is the requested
21 instruction withdrawn?
22 MR. ANDERSON: Right. We were just trying to
23 anticipate what might be argued by defense counsel, but it
24 turns out they weren't planning to argue that, so there is no
25 reason for the instruction. We'll just withdraw it.

1 THE COURT: That's a helpful clarification. I had
2 consulted the case law on the question and was prepared to
3 resolve the dispute, but I will not now. Anything else?
4 MR. HAYDN-MYER: Yes, Your Honor. There is one
5 additional matter. I asked for 8.24, withdrawal from
6 conspiracy. Mr. Anderson argued the footnotes. I did review
7 them.
8 Mr. Anderson is correct in regards to 8.24. But what
9 I would like to do is research it just to make sure there is
10 not an alternative jury instruction in regards to a withdrawal
11 from conspiracy. So if it's okay with everyone I would -- I
12 can get something to the Court, if there is a proposed jury
13 instruction, by this evening. But I would like more time to
14 research it.
15 THE COURT: All right. When you say this evening,
16 what does that mean?
17 MR. HAYDN-MYER: 5:00.
18 THE COURT: What time?
19 MR. HAYDN-MYER: 5:00.
20 THE COURT: 5:00. That works.
21 Particularly in the Pinkerton context. Would you
22 concede there is anything there, Mr. Anderson? Or is the
23 Government's position there is no possibility of a withdrawal
24 of conspiracy?
25 MR. ANDERSON: No. I think the position is that it's

1 adequately covered by the other instruction that explains that
2 people can enter and leave conspiracies at different times.
3 THE COURT: All right. Well, I'll look for whatever
4 you may have by 5:00, and then we'll discuss that question more
5 tomorrow. But 8.24 itself is withdrawn?
7 THE COURT: All right. That's also helpful.
8 Anything else on jury instructions?
9 MR. TEDMON: I don't think so, Your Honor. No.
11 THE COURT: Well, I will get to you this afternoon by
12 5:00 an updated packet, taking into account that we still have
13 certain things to discuss, and also updated verdict forms with
14 proposed parentheticals as we discussed yesterday.
15 Is there anything else we need to discuss now? At
16 this point you may stay in the courtroom and work on exhibits
17 beginning now.
18 MR. TEDMON: Nothing on behalf of Mr. Charles Head.
19 MR. ANDERSON: Nothing for the Government.
20 MR. HAYDN-MYER: No, Your Honor. Nothing further.
21 THE COURT: All right. Then I will see you tomorrow
22 morning at 10:30. Thank you.
23 (Court adjourned. 9:40 a.m. )
24
25

2 CERTIFICATION

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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
Volume 12
MICHAEL HEAD,
Defendants.
---oOo---
TRIAL PROCEEDINGS
SETTLEMENT OF JURY INSTRUCTIONS
FRIDAY, MAY 24, 2013
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
12
16
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20
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22
23
24
25


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15-F County Recorder Title Documents (pgs 6 & 7, 1397
5 withdrawn)
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25

2 FRIDAY, MAY 24, 2013
3 ---oOo---
6 This is on for jury trial, and today is day thirteen.
7 THE COURT: Good morning. All the attorneys are
8 present, and Charles and Jeremy Michael Head are present.
9 So this is to review jury instructions and the
10 verdict forms in a final conference, I believe. If need be,
11 we'll set an additional time. I've provided you with a
12 modified set of proposed final instructions. It addresses the
13 issues with regard to the substantive instructions on the
14 counts.
15 I understand the withdrawal from conspiracy charge is
16 completely withdrawn?
18 THE COURT: So the one outstanding issue not
19 addressed in the proposed packet is the California Civil Code
20 2924 issue. And I do want to discuss that, but first let's
21 talk about the proposed packet.
22 I've made minor edits to certain instructions, and I
23 just switched the order of the instructions that I believe show
24 on pages 12 and 13. Just for what I thought was a slightly
25 smoother reading.

1 So let me just ask looking at the -- I think we can
2 group at this point the introductory instructions. Looking at
3 1 through 13, are there any comments on any of those proposed
4 instructions? We'll start with Mr. Anderson.
10 THE COURT: All right. Then on page 14 I've modified
11 that based on our discussion. Any comment on those
12 modifications? Do they appear to be right, Mr. Anderson?
13 MR. ANDERSON: They do, Your Honor. The final
14 paragraph could specify statements to John Sommercamp, but I do
15 think it's clear from the context.
16 THE COURT: What was that last thing that you said?
17 Could specify?
18 MR. ANDERSON: So the first two paragraphs specify
19 one or more statements made to John Sommercamp, and in the
20 final paragraph it doesn't specify to John Sommercamp. I think
21 it's clear from the context.
22 THE COURT: That was my thought. Mr. Tedmon?
23 MR. TEDMON: I'm fine with the way it is.
25 MR. HAYDN-MYER: Yes, Your Honor. I'm fine.

1 THE COURT: All right. 14 is set then.
2 15, I modified to specify -- did I spell Nickadia
3 Daniels correctly?
4 MR. ANDERSON: I believe so.
5 MR. TEDMON: I think that's right.
6 THE COURT: All right. So page 15 looks okay?
7 MR. TEDMON: Your Honor, there is one change. The
8 very last sentence. I think it should say, "you may not
9 consider this evidence as evidence of guilt for any crime for
10 which Charles Head is now on trial."
11 THE COURT: Charles Head only?
12 MR. TEDMON: Yes.
13 THE COURT: Do you agree with that, Mr. Anderson?
14 MR. ANDERSON: Yes, Your Honor. I would like to make
15 a record of why the Government thinks that this instruction is
16 not appropriate. But that is the right change to make if the
17 Court is going to give this instruction.
18 THE COURT: Do you agree with that, Mr. Haydn-Myer?
20 THE COURT: All right. The Government's record.
21 MR. ANDERSON: Yes, Your Honor. We believe the
22 Daniels transaction is still part of the conspiracy or
23 intrinsically intertwined with the evidence of the conspiracy.
24 Some of the evidence presented at trial that establishes that
25 is the method that the conspirators were using to take in new

1 amounts of money in order to help pay mortgages on previously
2 obtained properties.
3 Part of that came in through Agent Fitzpatrick, who
4 testified that very low balances were kept in the accounts;
5 therefore, new money would need to be brought in in order to
6 continue maintaining the mortgages and thus delaying discovery
7 of the fraud on the earlier victims. So even though there was
8 a move to Arizona, the Government's view is that was still part
9 of the conspiracy.
10 In addition, as some of the e-mails introduced at
11 trial showed, there was still communication between Jeremy
12 Michael Head and Charles Head regarding specific methods of
13 carrying out the fraud. So they were still communicating and
14 working together, talking about division of territory, and
15 whether they needed to, and what they should do in order to --
16 in order to solicit fraud victims.
17 THE COURT: Is that a new argument since yesterday?
18 MR. ANDERSON: No, Your Honor. That's the same that
19 I brought up yesterday. I just want to make it more clear. I
20 feel like I jumbled it yesterday. Hopefully, that's a little
21 more --
23 MR. HAYDN-MYER: No, Your Honor. We're still
24 requesting the jury instruction based on the reasons we stated
25 yesterday. With the modification we're accepting on I believe

1 it's number 15.
2 THE COURT: Anything more to say, Mr. Tedmon?
3 MR. TEDMON: No, Your Honor. The instruction is
4 appropriate. It should be given.
5 THE COURT: All right. I'm going to give the
6 instruction. I need a short break.
7 (Break taken.)
8 THE COURT: All right. We're back on the record. I
9 don't know if it's allergies or a spring cold. I don't know.
10 Hopefully by Tuesday I'll be able to get through the jury
11 instructions. I am following doctor's orders.
12 So just to clarify on 15, I am going to give that
13 instruction as modified. I think it properly focuses the jury
14 on how to handle Ms. Daniel's testimony, which is before it.
15 MR. TEDMON: Your Honor, the last sentence, is the
16 Court going to do it in the negative, or in, I guess, lack of a
17 better word, positive? It reads now, "you may not consider
18 this evidence as evidence of guilt for any crime for which
19 Charles Head is now on trial," or, is the Court going to say,
20 "you may consider this evidence as evidence of guilt for any
21 crime only for which Jeremy Michael Head is now on trial"?
22 THE COURT: I thought I was tracking the standard
23 instruction here. Does anyone have that in front of them?
24 MR. TEDMON: I don't.
25 THE COURT: Do you have a position? I mean, I know

1 the standard isn't necessarily correct all the time. Do you
2 have a position on that?
3 MR. TEDMON: I would prefer we just substitute
4 Charles Head's name in for Jeremy Michael Head.
5 MR. HAYDN-MYER: I would prefer that also, Your
6 Honor. It's clean.
7 THE COURT: Mr. Anderson, any position?
8 MR. ANDERSON: It's all the same to us.
9 THE COURT: All right. I'll substitute Charles Head.
10 Page 16?
14 THE COURT: All right. Page 17. I don't think this
15 has changed except to add Mr. Wiley. Mr. Anderson?
21 THE COURT: Now 18 is a place holder. Are we going
22 to need this or not? Is anyone using charts and summaries not
23 already seen by the jury?
24 MR. MORRIS: I'll be using Power Point, but anything
25 that's in there other than text is drawn out of actual copies

1 of evidence that has been admitted. So I don't think it would
2 apply to us other than the fact that Power Point itself, I
3 suppose, could be considered a chart. But, no, we're not
4 creating any new charts that haven't already been seen.
5 THE COURT: All right. Mr. Tedmon, do you anticipate
6 using any charts or summaries that have not already been
7 introduced?
8 MR. TEDMON: No.
10 MR. HAYDN-MYER: Possibly, Your Honor. Maybe a
11 couple of diagrams and an Excel spreadsheet or two, but they're
12 going to encompass all of the evidence that's already been
13 presented to the jury. There's nothing additional. And I
14 won't be asking for them to be presented to the jury in
15 deliberations.
16 THE COURT: So that might apply to you?
18 THE COURT: Should this be modified to read "certain
19 charts and summaries"? I'm going to be reading after your
20 closing. "Certain charts and summaries" --
22 THE COURT: -- "have been shown to you by
23 Mr. Haydn-Myer" or "by an attorney"?
24 MR. HAYDN-MYER: By an attorney.
25 MR. ANDERSON: How about "an attorney in closing

1 argument"?
3 MR. TEDMON: Yes.
4 THE COURT: That's how I start. "During closing
5 argument certain charts and summaries have been shown to you by
6 an attorney in order to explain his or his client's" --
8 THE COURT: -- "his interpretation of the evidence?"
9 MR. TEDMON: Yes.
10 THE COURT: All right. So that will stay in with
11 that modification.
12 And then 19 is for those charts and summaries that
13 have been admitted. Any objection, Mr. Anderson?
19 THE COURT: Now 20 and 21 is the substantive
20 instruction on Count 1. You can see what I've done here after
21 thinking quite some time about how to square your respective
22 positions.
23 I don't think it can be error to quote from the
24 indictment itself, and so that's what I've done. The Grand
25 Jury scribe could have been more clear in drafting, but I think

1 this tells the jury what the Grand Jury found. So any comment
2 on this, Mr. Anderson?
3 MR. ANDERSON: Obviously, we prefer the instruction
4 that we offered, Your Honor, but I don't have any further
5 comment.
10 THE COURT: All right. Then this is how Count 1 will
11 be provided to the jury.
12 Page 22, any objection, Mr. Anderson?
18 THE COURT: Page 23, Mr. Anderson?
24 THE COURT: Page 24 is the mail fraud counts. In
25 this case I have not modified the instruction. I've left it as

1 is. Finding it to be sufficient and accepting the Government's
2 argument. I don't know that it makes a huge difference. But
3 any comment on this, Mr. Anderson?
6 MR. TEDMON: Your Honor, I would just object and
7 request the Court provide the instruction that I submitted.
8 With that, I have no further comment.
9 THE COURT: All right. That objection is overruled.
10 Mr. Haydn-Myer?
11 MR. HAYDN-MYER: Join in Mr. Tedmon's argument.
12 THE COURT: All right. And that objection is
13 overruled. This is how the instruction will be given.
14 On page 26, Mr. Anderson?
20 THE COURT: And then the balance of the instructions
21 are standard closing instructions, I believe. Any objection to
22 any of those, 27 through 33, Mr. Anderson?

3 THE COURT: All right. So I think that leaves only
4 the Civil Code 2924 instruction. Am I right about that,
5 Mr. Anderson? Mr. Morris?
6 MR. ANDERSON: I think that's right, Your Honor.
7 MR. MORRIS: Yes.
8 THE COURT: Mr. Tedmon? Mr. Haydn-Myer?
9 MR. TEDMON: Yes.
10 MR. HAYDN-MYER: I believe so, Your Honor.
11 THE COURT: So then help me understand the parties'
12 respective positions. I understand the Government and
13 Mr. Charles Head agree that the Court can or should give the
14 proposed instruction, and this is the second supplemental.
15 MR. TEDMON: Your Honor, could I be heard on that?
17 MR. TEDMON: Yesterday when we discussed this, you
18 know, we had spent some time talking about how we can make this
19 instruction accurate under California Civil Code 2924k, and
20 that's what we were doing, and that's where I left with the
21 Court yesterday.
22 However, I went back through my notes of my position
23 relative to this instruction generally, and I do have an
24 objection because there were three areas within which I
25 objected initially. One was it didn't accurately state the

1 law. I think that's been cleaned up. But the other two was
2 that the instruction just isn't relevant. There was no
3 questions asked of any homeowner regarding their understanding
4 of foreclosure or the process. And then the third objection
5 was that it improperly adds evidence that wasn't adduced at
6 trial.
7 And so after reviewing my notes and reconsidering the
8 status of the whole thing, I would renew my objection on those
9 two areas. That it's not relevant, and it adds evidence that
10 wasn't presented. And on that basis, I would need to object.
11 THE COURT: All right. And you continue to object,
12 Mr. Haydn-Myer?
13 MR. HAYDN-MYER: I do, Your Honor. And for the
14 additional reasons I'm not familiar enough with contract law,
15 and I don't know if there are provisions written into the
16 mortgages where there is some sort of addendum that says a
17 different state would apply. And I don't know if it's proper
18 to do that. I don't know if it's improper. But I have not
19 looked at every single mortgage that's been presented in the
20 evidence to state that maybe California law applies, maybe it
21 doesn't.
22 THE COURT: All right. My question for you,
23 Mr. Morris -- you're handling this one?
25 THE COURT: Clarify for the Court why you believe

1 this is needed. I have reviewed rough transcripts of
2 Ms. Russell's and Mr. Sandoval's testimony. Ms. Sandoval -- I
3 mean Ms. Russell in particular, when asked about what portion
4 of the equity the homeowners was supposed to retain, said,
5 "that, I honestly don't remember." And I don't think she ever
6 re-visited that question.
7 And then Mr. Sandoval, it's true the Government did
8 on redirect ask some questions about whether or not the
9 homeowners had gotten correct advice about the equity in their
10 homes. The Court did sustain objections.
11 Why is this needed? The focus has been on whether or
12 not the homeowners were given all the complete and accurate
13 information, and the focus has been on 50 percent as opposed to
14 100 percent of the equity.
15 MR. MORRIS: I think it has been. But I think as the
16 Court just read, certainly that we delved into this question
17 with Mr. Sandoval. And my recollection was Ms. Huerta or
18 Ms. Russell also. So I think it has been brought in already.
19 And as to why it's relevant, I think an accurate
20 statement of law, especially when it's the law that deals with
21 where this money would have gone, which has become part of the
22 case because of the testimony elicited on cross, an accurate
23 statement of law is always relevant.
24 THE COURT: One, I don't think that there is any
25 evidence that's in. Unless you can point me to something

1 Ms. Russell said.
2 MR. MORRIS: I think probably Mr. Sandoval I think
3 was the one who said that --
4 THE COURT: Mr. Anderson asked a question and an
5 objection was sustained.
6 MR. MORRIS: I think that was because it was raised
7 on cross, Your Honor.
8 THE COURT: Where on cross was the misleading
9 impression created that is prejudicial, that really raises a
10 problem such that the jury would be misled?
11 Again, I reviewed Mr. Sandoval's testimony. I'm not
12 seeing.
13 MR. MORRIS: I don't have a transcript in front of
14 me, obviously. So if the Court is not seeing it, then I'll
15 accept the Court's representation that it's not in there. And
16 I think we've clarified -- I think both counsel and both sides
17 now agree that that is what California law states.
18 And again, I think the Government's position is that
19 an accurate statement of California law would be appropriate,
20 and it's within the range of what the Court not only has
21 discretion to do but ought to do.
22 THE COURT: If a misleading impression had been
23 created that was contrary to California law, then I might
24 agree. But again, having reviewed both Ms. Russell's and
25 Mr. Sandoval's testimony, I don't believe that's the case.

1 MR. MORRIS: Understood, Your Honor.
2 THE COURT: And so the record is made. You're
3 requesting this. The Court is sustaining the objections to
4 this instruction.
5 MR. MORRIS: Okay.
6 THE COURT: And so it will not be given. So anything
7 else on the jury instructions?
10 THE COURT: Then on the verdict forms. I've provided
11 parentheticals. They are fairly complete. So is this what the
12 parties contemplated? Any comment on the parentheticals to
13 clarify the timeframes and the details of the mail fraud
14 counts?
15 MR. ANDERSON: Just one, Your Honor. The addition of
16 words "on or about" prior to the date.
17 THE COURT: So if that were at the beginning of each
18 parenthetical?
21 MR. TEDMON: I agree.
24 THE COURT: All right. Then otherwise the verdict
25 forms are acceptable to the parties? Mr. Anderson?

1 MR. ANDERSON: There is one typo, Your Honor, on the
2 Jeremy Michael Head verdict form. "As to Count 1 of the
3 indictment" is what it reads, but it should read as to "Count 1
4 of the superseding."
5 THE COURT: All right. That will be added.
6 MR. ANDERSON: But other than that, no objection.
8 MR. TEDMON: With that correction, it's fine. No
9 objection.
12 THE COURT: All right. So those are your jury forms.
13 Is there anything else we need to discuss for you to
14 be ready for closing argument first thing on Tuesday?
15 Mr. Anderson?
16 MR. ANDERSON: Your Honor, we've received copies of
17 the exhibit list from the Court showing what's been admitted,
18 and we've reviewed it. We've gone through the binders. And we
19 agree with what's contained on the list that we have gotten
20 from the Court.
21 THE COURT: All right. Do we need to make a record
22 with respect to 15-F, or is that resolved?
23 MR. ANDERSON: I think it is, Your Honor. But just
24 in case there is any ambiguity in the transcript, we asked or
25 thought we had asked and had 15-F admitted pursuant to the

1 documents stipulation with the exception of pages 6 and 7,
2 which were withdrawn as discussed by the parties on the record.
3 So I'd ask that that be reflected as admitted.
5 MR. TEDMON: No. That's a correct statement of what
6 happened. So no objection to that.
9 THE COURT: 15-F is in, not including pages 6 and 7.
11 Documents (pgs 6 & 7, withdrawn), admitted into evidence.)
12 THE COURT: All right. Anything else? The exhibits
13 are ready or will be ready first thing Tuesday.
14 MR. ANDERSON: The Government exhibits and Charles
15 Head's exhibits are ready right now. And then I believe Jeremy
16 Michael Head's exhibits aren't quite ready, but will be ready
17 on Monday -- or Tuesday.
18 MR. HAYDN-MYER: Yes, Your Honor. They are in a
19 binder. I believe I've done the redactions. But I'd
20 appreciate it if Mr. Anderson, Mr. Morris, and Mr. Tedmon would
21 review it. And I should have it to Madam Clerk 30 minutes.
22 MR. TEDMON: I can stay and do that right now.
23 THE COURT: All right. You may have access to the
24 courtroom for that purpose.
25 And in terms of your estimates on argument, any

1 change? Up to two hours for the Government, with an hour for
2 rebuttal?
3 MR. ANDERSON: Yes, Your Honor. But with the
4 expectation that we'll try to keep it less than that.
5 THE COURT: Mr. Tedmon, no more than an hour?
7 THE COURT: Same for Mr. Haydn-Myer?
9 THE COURT: All right. Assuming you don't use all of
10 that time, then I'll have time for my instructions. I'll mail
11 you -- Ms. Schultz will e-mail to you later today yet sanitized
12 versions of the instructions, the final instructions, and the
13 final verdict form. And you may use the sanitized versions in
14 your closing argument.
15 Have you had a chance to review a copy of the jury
16 binder? Mr. Anderson?
17 MR. ANDERSON: Yes, Your Honor, and there is no
18 objection.
20 MR. TEDMON: Yes. No objection.
22 MR. HAYDN-MYER: I'm going to review it, Your Honor.
23 I haven't reviewed it yet.
24 THE COURT: If you have any concerns, please notify
25 the Court today yet.

1 MR. HAYDN-MYER: Of course.
4 MR. TEDMON: Just one other procedural question.
5 Once the jury goes out, what's the Court's policy as far as
6 availability of counsel and clients in terms of if we get a
7 note or a verdict, how quickly do we need to be here?
8 THE COURT: I ask you to stay within ten minutes
9 range.
10 MR. TEDMON: Okay. My office is three blocks away,
11 so I can get here inside of ten minutes.
12 THE COURT: Just make sure Ms. Schultz has all of
13 your contact information and be here within ten minutes. We,
14 of course, let the jury know that they need to wait for a
15 response to a note.
16 And on the alternates, what I will do is ask them to
17 wait in the jury assembly room. Both of them. I don't want to
18 excuse one of them just in case something happens during
19 deliberations. I'm inclined not to excuse them. So I will
20 tell them to wait in the jury assembly room.
21 One time before we've had a doctor request a chance
22 to leave the building, and we told him just to be available
23 within ten minutes, I believe, in case we did need him. So
24 that's my practice with alternates. Just in case.
25 MR. ANDERSON: That's fine.

2 THE COURT: And you know that their schedule, they
3 want to go 8:30 to 1:30 every day, including Wednesday. I told
4 them that's fine with the Court.
6 MR. TEDMON: They are well-trained.
7 THE COURT: Well, they like that schedule. I know it
8 keeps us on our toes, but it gives them part of a day.
9 Did they say they would continue on Friday,
10 Ms. Schultz?
11 THE CLERK: They do not want to deliberate on
12 Fridays.
13 THE COURT: Not on Friday. So if they don't conclude
14 next week, then it will roll over to the following Monday. I
15 may have another trial starting then, but they can keep
16 deliberating even if I have another trial. I think we can find
17 another jury room.
18 All right. Anything further?
22 THE COURT: Thank you very much. See you on Tuesday.
23 Have a good weekend.
24 (11:05 a.m.)
25

1 CERTIFICATION

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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
Volume 13 & 14
MICHAEL HEAD,
Defendants.
---oOo---
CLOSING ARGUMENTS
---oOo---
JURY DELIBERATION

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
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10 SCOTT L. TEDMON
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1 INDEX
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VOLUME 13 - MAY 28, 2013
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CLOSING ARGUMENT BY MR. MORRIS 1405
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CLOSING ARGUMENT BY MR. TEDMON 1469
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CLOSING ARGUMENT BY MR. HAYDN-MYER 1517
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REBUTTAL CLOSING ARGUMENT BY MR. ANDERSON 1538
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8 VOLUME 14 - MAY 29, 2013
9 JURY EXCUSED 1574
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3 ---oOo---
6 This is on for jury trial, and today is day 14.
7 THE COURT: Good morning.
8 MR. ANDERSON: Good morning.
9 MR. TEDMON: Good morning.
10 THE COURT: All counsel are present. The parties are
11 present.
12 Just a couple things. I received the stipulation of
13 the parties regarding the last two JMH exhibits. That is
14 accepted. I assume you've taken account of that in preparing
15 the exhibits for the jurors?
17 THE COURT: So those two, HH and KK, are in subject
18 to stipulation. I understand Mr. Tedmon thinks he might go
19 more than one hour?
20 MR. TEDMON: I hope not, but it's possible.
21 THE COURT: Well, my hope is we get to jury
22 instructions today, but if you're within the range of times you
23 gave me originally, I'm not going to cut you off. If you go to
24 one hour and fifteen minutes, I will then cut you off. Any
25 other adjustments in time? Mr. Haydn-Myer?

1 MR. HAYDN-MYER: Well, it depends on how fast I talk.
2 I could be an hour and five, so if the Court gave me a few
3 minutes warning.
4 THE COURT: All right. Ready for the jury?
5 (Jury in.)
7 court, ladies and gentlemen of the jury. We hope you had a
8 good holiday weekend. I understand one of you had a flat tire
9 but managed to work out arrangements and still be here pretty
10 much on time. So thank you for all of those logistics on your
11 behalf this morning.
12 So we are ready for closing arguments. I'm going to
13 first acknowledge the Government for its closing argument.
14 It's reserving some time for rebuttal. Then we'll hear from
15 Mr. Tedmon on behalf of Charles Head and Mr. Haydn-Myer on
16 behalf of Jeremy Michael Head. We'll take breaks as we go
17 along. Probably after each argument unless we need one before.
18 And then my hope is that I get to the final jury instructions
19 today yet. So Mr. Morris. You're going to lead off for the
20 Government?
21 MR. MORRIS: Yes, Your Honor. Thank you, Your Honor.
22 Good morning. Bait and switch were the first three
23 words you heard in this trial. My colleague, Michael Anderson,
24 began his opening with those words and told you that the
25 evidence would show that Charles Head and Mike Head were part

1 of a group who used false statements to acquire money and
2 property. They made false statements to homeowners, and they
3 made false statements to lenders to acquire title to property
4 and equity that was in those houses. The evidence has shown
5 you that.
6 This is my opportunity this morning to talk to you
7 about that evidence, to preview what the judge will instruct
8 you the law tells you about the case, and how the evidence fits
9 in with that law. And at the end of this morning, myself and
10 my colleague, Mr. Anderson, are going to ask you to return
11 verdicts of guilty against Charles Head and Mike Head.
12 This is an overview of what I'm going to talk about
13 this morning. First I'm going to talk very briefly about what
14 the charges are. Then I'm going to give you a roadmap of the
15 Government's evidence.
16 You've heard a lot of exhibit numbers being thrown in
17 at various times, and they didn't go in order. So I want to
18 give you the scheme of where to look for evidence when you go
19 back to deliberate amongst the Government's evidence. Then I'm
20 going to focus for awhile on the scheme to defraud, both
21 overall as an overview of what the scheme to defraud is, and
22 focusing in particularly on Charles Head and Michael Head.
23 Then I'm going to move and talk about the specific mail fraud
24 counts. And then I'm going to finish off talking about
25 conspiracy, which is Count 1 in the Indictment.

1 So the charges, Count 1, Charles Head and Mike Head
2 are both charged with conspiracy to commit mail fraud.
3 In Count 2, Charles Head is charged with a count of
4 mail fraud, and that's the mailing of the grant deed on Karie
5 Joest's home. In the verdict form, Karie Joest will be
6 abbreviated K.J.
7 Count 3 is a mail fraud count involving both Charles
8 and Mike, and that's the mailing of the grant deed on Mary
9 Salazar's home. She'll be M.S. on the verdict form.
10 Count 5 is a mail fraud count involving Charles only.
11 And that's a rent payment mailed from Shannon Taylor. And she
12 will be abbreviated S.T. on the verdict form.
13 Count 6 is a mail fraud count involving Charles.
14 That's the grant deed on Terri Turner's home. And she'll be
15 abbreviated T.T. on the verdict form.
16 And finally Count 11 is a mail fraud count involving
17 Mike Head, and that's a rent payment mailed by Emily Silva to
18 Mike Head in Arizona. And Emily Silva is abbreviated E.S. on
19 the verdict form.
20 We'll go more in depth on all of those counts later,
21 but that's the overall -- the charges that are laid against the
22 defendants.
23 Now, the Government's exhibits, I'll go through in
24 order of the numbers. Exhibit 1 is the property summary chart.
25 That was a chart that Special Agent Chris Fitzpatrick testified

1 that he had taken all of the escrow files from Castlehead
2 Escrow and had totaled them up, and who was the homeowner, what
3 was the address, and how much money came out of it. So that's
4 Exhibit 1.
5 Exhibit 2 is the business entities chart. That's the
6 chart where Secretary of State records and bank records showed
7 that a particular company was owned by and controlled by
8 particular other people.
9 There is no Exhibit 3. Skip to Exhibit 4, and those
10 are the proceeds summaries. Those were the times where Special
11 Agent Fitzpatrick said, I looked at where the money came in
12 from a transaction and traced some of the major expenditures
13 after that. He had a filter, a cut-off line. He didn't trace
14 every particular subsequent transaction, but the major
15 expenditures of where that money went.
16 We skip then up to 8 and 9. Those are postcards
17 records from Postcard Mania and Kalen's Press.
18 Now Exhibit 10 through 26 are individual property
19 transactions. Some of those numbers are not in there. There
20 is no 23, 24 or 25, for example. But each one of those they
21 have subsets. A is the lender files. B is the escrow files
22 from Castlehead Escrow. C are selected bank records. D are
23 items that were found during execution of search warrants that
24 are related to those properties. E are mailings that there's a
25 charged mail fraud count associated with that property. F are

1 the title documents associated with that property transaction.
2 And then G, in a couple of cases, are just miscellaneous
3 documents that didn't fit into other categories.
4 So for example, 10 is Richard Figueroa. You heard
5 from him on the first day of trial. So 10A are lender files
6 associated with Richard Figueroa's house. B are the escrow.
7 C are the bank transactions for Richard Figueroa and so forth.
8 We skip then up to the 30-series documents. These
9 are additional loan files for straw buyers, and they are broken
10 out there 30 through 36. So Sarah Mattson, additional straw
11 buyer loan files above and beyond what might be included in the
12 10-through 26-series.
13 Moving up to 40. Those are e-mails involving
14 primarily Charles Head. 41 are e-mails primarily involving
15 Mike Head. 42 are e-mail involving other people.
16 And you'll recall that when we brought those e-mails
17 in, we mentioned that there was a stipulation that in those
18 e-mails when you see Charles, Charles Head, that is the
19 defendant Charles Head. If you see Mike or Mike Head, that is
20 the defendant Mike Head.
21 43 and 44 were items recovered during a search
22 warrant at Charles Head's house. Those were items that Paul
23 Howard talked to you about that he had found in the desk in the
24 study or next to the desk in the study.
25 45E is a sales script that some of the salespeople

1 testified that they had received and were told to use.
2 46A and -B, those are foreclosure spreadsheets.
3 You'll recall Kou Yang identified those and said, that was my
4 handwriting on there. This was the spreadsheet that we used
5 internally to track all of these transactions and who the loan
6 officer was, and what the address was, and what the amounts of
7 the mortgages were.
8 And finally 51, some photographs that came in from
9 one of the locations from the search warrant. So that's the
10 roadmap of the evidence.
11 So we've talked about charges. Talked about the
12 exhibits. Now I'm going to focus for awhile about the scheme
13 to defraud, what the evidence shows about the scheme to
14 defraud, the homeowners in this case.
15 The Judge will instruct you that a scheme to defraud
16 is a scheme to obtain money or property by false statements or
17 promises. She'll also instruct you that the false statement or
18 omission has to be material. And we'll define that as being
19 material if it has a natural tendency to influence somebody to
20 part with money or property, or was capable of causing somebody
21 to part with money or property. And she'll instruct you that
22 the defendant must have acted with the intent to deceive or
23 cheat. The intent to defraud is the intent to deceive and
24 cheat.
25 Now stop for a second here and say that -- when I say

1 that the Judge will instruct you on something, I'm basing that
2 on having prepared for what we believe the Judge will instruct
3 you. If there is any conflict between what I tell you and what
4 the Judge later tells you, her version takes precedence over
5 mine. But this is my best guess of what that instruction will
6 be to you. And that will apply throughout my closing argument
7 today.
8 So what are these false statements? You'll recall
9 that Mr. Anderson told you that there would be two categories
10 of false statements. Some of them are statements to the former
11 homeowners, and those were statements such as "you'll remain on
12 title with an investor" or "you'll retain the equity in your
13 house" or "we're going to help you fix your credit," or "at the
14 end of the year, we're going to refinance this back into your
15 name, and the investor will come off of title."
16 The false statements made to the lenders included
17 that the straw buyers would actually owner-occupy these houses.
18 And then there were false statements about income, or work
19 experience, or the buyer's work histories. And we'll talk
20 about these individually, focusing in on some of them.
21 The reality was that those statements were not true.
22 So the reality was the homeowners' name immediately came off of
23 title. They didn't stay on title for the year. They didn't
24 remain on title jointly with the investor. They were removed
25 from title immediately.

1 The reality was all equity was immediately stripped
2 out of the houses. Half of that money went to Charles Head,
3 and half went to the loan officer. And you'll recall Kou Yang
4 testified that that ratio wasn't the same for Mike Head. That
5 he had a slightly better deal than the other loan officers.
6 But that she showed you a split sheet that showed where the
7 money went. When it came from the equity from the house, it
8 got divvied up between Charles and the loan officer.
9 The reality is the straw buyers never occupied the
10 houses. Contrary to repeated representations in loan documents
11 that they would occupy the houses, they didn't. They didn't
12 move into these houses. The reality was at the end of the year
13 they would evict the homeowners. Not refinance it back into
14 their name. Evict them. And the reality was there was no
15 credit repair.
16 So as we talk with these false statements, I'll talk
17 about what the statement was and then what reality was. What
18 was told to the buyers, and what did reality end up showing
19 afterwards.
20 Let's talk about the first false statement that
21 "you'll remain on title with the investor."
22 Let's talk about what the witnesses told you.
23 Shannon Taylor told you, Josh Coffman and Charles Head sat at
24 our table, and they told us we'd stay on title. Josh did most
25 of the talking, but Charles was there nodding and agreeing as

1 he told us this.
2 Mary Salazar told you, I thought I would stay on
3 title to the house. Lisa Malentino said, I specifically asked
4 if I would stay on title, and I was assured that I would.
5 Brenda Clark said, they never told me that I wouldn't be on
6 title during this one-year period.
7 Emily Silva said she thought she was staying on
8 title. Delma Romero said -- you will recall that she actually
9 called in the middle of signing the papers because the notary
10 gave her a bit of advice that perhaps this isn't what you think
11 it is. And she calls and get assurances while she's signing
12 the papers that she was not going to be removed from title to
13 the house. And then Nickadia Daniels said that her
14 understanding was we'd both be on title.
15 People from Tulare County, Fresno County, Ventura
16 County, San Bernardino County, Los Angeles County all said the
17 same thing. They were told that they would stay on title to
18 the house.
19 Where would they get that idea? Well, you can look
20 at Exhibit 43A. This is the one-page sales script found in
21 Charles Head's house on Head Financial Services letterhead.
22 The "Foreclosure Sales Pitch." And about two-thirds of way
23 down, the instruction to the salespeople, in all capital
24 letters, "stress to the homeowners you will still be on title,
25 but the investor will be on title with you."

1 The homeowners told you that they were told that.
2 And they were told that because that was exactly what the plan
3 was, to tell them that they would stay on title.
4 You can look at Exhibit 40-U. It wasn't just one
5 document found in Charles Head's house that talks about staying
6 on title. Here's an e-mail from Charles Head to Liz and Omar
7 and Andrew and Mario. Subject "sales." "Typically here is
8 what I" -- I, Charles Head -- "here's what I say to clients
9 when I pitch this program." And again all capitals - "stress
10 you will stay on title, but the investor will want to be on
11 title with you." That's what the homeowners were told because
12 that's what Charles Head told his salespeople to tell them.
13 So the homeowners tell you that they were receiving
14 these assurances orally. And the documents internal to Head
15 say that that's how we're going to pitch the program.
16 Some of them actually received written promises.
17 This is 17-D, page one. 17-D -- 17 is Janet Hickman. That's
18 the series of Janet Hickman. You didn't hear testimony from
19 her. D means it's items recovered in a search warrant.
20 And this is the first page. "A written, explicit
21 promise - if all terms of the lease are met by Janet Hickman,
22 Matrix and Janet Hickman will both remain on title for the
23 duration of lease." A written promise that she would not be
24 removed from the title.
25 It wasn't just her. 18-D12. Mike Stewart. "If all

1 terms of the lease are met by Mike Stewart, Financial
2 Enterprises" -- Mike Head's company -- "will remain on title
3 with him for the duration of the lease."
4 That was the false statement. "You'll stay on
5 title." "You'll be a partial owner of your home." Reality was
6 immediately in every instance the homeowner was removed
7 entirely from title to the home. Every time.
8 Your exhibits that show that are the F-series of
9 exhibits. Those are the title records. And in every case it
10 will show that the former homeowner lost 100 percent of the
11 ownership of the house immediately.
12 Here's just one example. 17F. 17 means it's Janet
13 Denise Hickman. And if we zoom in, "Janet Denise Hickman
14 grants to Charles C. Head 100 percent ownership of the house on
15 July 13, 2004." They didn't wait until Janet Denise Hickman
16 bounced a rent check eight months later. They didn't wait
17 until Janet Denise Hickman was one day late with the rent one
18 month later. They didn't wait until the end of a year to see
19 if Janet Denise Hickman complied with all the terms of giving
20 notice that she wants to re-purchase the house. Immediately,
21 the day she signed these documents, she no longer owned the
22 house. Who owned it? Charles Head. This is one of the
23 transactions where Charles Head is the straw buyer.
24 Let's move to the next false statement. The false
25 statement is, "you'll maintain equity in your house." You

1 heard that repeatedly from the witnesses again. Shannon
2 Taylor, I had no intention of giving them the equity in my
3 house.
4 Richard Figueroa told you: I thought what I had
5 signed up for was to give them power of attorney to negotiate
6 with my bank for me. I didn't know that they were taking
7 equity out of my house.
8 Pamela -- at the time she went by Pamela Speights --
9 she's now Pamela Graham -- told you, when I finally got a copy
10 of the papers, after asking for them, and I saw what had
11 happened, I cried when I realized what had happened to the
12 equity in my house.
13 Mary Salazar told you, they never mentioned anything
14 about the equity in my house. Lisa Malentino said, I thought
15 the equity would stay there. Emily Silva said, I didn't know I
16 was losing the equity. Delma Romero said, we didn't discuss
17 the equity.
18 Time after time the witnesses told you that either
19 they were told they would keep the equity, or nobody said they
20 would lose their equity.
21 Where might they have gotten that idea? Well let's
22 look at Exhibit 43-C, page 24. You recall that Paul Howard
23 said he found this document in Charles Head's house. And we'll
24 talk later in this about why it is that you know that this was
25 Charles Head's manuscript. But look on the left side. Here's

1 the benefits. And if you read the benefits, it sounds an awful
2 lot like what the witnesses told you. You're not going to lose
3 your house. You stay in your home. Monthly payment's going to
4 be reduced. And, look, you'll retain most of your equity.
5 This one was so important that Charles Head writes an
6 extra bullet, an extra paragraph: "Don't let it go. If they
7 balk at losing equity, ask them what would work for you. Find
8 out what would."
9 Remember Omar Sandoval. The mentality was tell them
10 whatever it takes to get them to sign the documents. And there
11 you see it in the script. If they balk at losing equity, push
12 back. Find out what will work for them.
13 Remember what Patrick Harding told you? Remember the
14 last day of testimony Patrick Harding came in. He is an old
15 college friend of Mike's. He learned the sales pitch from Mike
16 in 2005. And when Mr. Anderson asked him, well, what did you
17 tell clients about the equity in their house, that part of
18 program? And there's sort of this pause, and Mr. Harding
19 couldn't tell you what he said because he didn't know that
20 there was a part of the program that involved equity.
21 So Patrick Harding pitching the program, as he was
22 taught it by Mike Head, didn't even know that equity was coming
23 out, didn't even know that that was one of the key things that
24 these homeowners might want to know.
25 What was reality? They were told they would keep

1 their equity. The reality was their equity was taken out
2 immediately. You can find that in Exhibit 1. That's the
3 equity chart from Castlehead Escrow that Agent Fitzpatrick did.
4 You can also look at the B-series exhibits. Those
5 are the escrow files for each of these transactions. And it
6 will show on the second page at the bottom, seller proceeds.
7 Where is the equity going? It's being wired back to the
8 companies controlled by the defendants and their co-schemers.
9 You can look at Exhibit 4. Those are the individual
10 property proceeds charts that Agent Fitzpatrick did where the
11 equity comes in, and then he showed in bubbles where it went.
12 The major transactions after that.
13 But you can also look back into that handwritten
14 manuscript, Exhibit 43-C, page 25, also found in Charles Head's
15 home. At the top of the page, it's specific. Once they sign
16 the Equity Purchase Agreement, you buy the house and you take
17 out all the equity. The sales pitch is, you keep most of the
18 equity. Reality is, as soon as they sign the document, we're
19 taking all of it. They told them one thing, and they did
20 something else.
21 Another false statement, "we will pay for credit
22 repair." Once again, it's listed as one of the major benefits
23 here on the handwritten manuscript found in Charles Head's
24 house.
25 It's also in 45-E. "During the twelve months we'll

1 have our credit repair people fix your credit. We pay for this
2 service for you."
3 Did you hear any testimony or evidence that that
4 actually happened?
5 Look at the one-page sales script. Exhibit 43-A.
6 Number four, "we will pay a firm to handle credit repair for
7 you so you can use your credit again."
8 Look at Exhibit 40-U, the e-mail from Charles Head to
9 the sales force -- to some of his sales force -- "here's what I
10 say to the clients, we'll pay a firm to handle credit repair
11 for you."
12 What was reality? There was no credit repair.
13 Remember what Lisa Malentino told you. At the end of the year
14 I finally finished, I was finally done, I had done my one year
15 foreclosure rescue, fixed myself, get out of trouble program,
16 and they came back and said the best they could give me was a
17 loan for $4,000 a month. $1,500 a month more than she paid
18 before she got into this. Why? Because her credit wasn't
19 fixed yet.
20 Remember Mary Salazar told you at the end of the
21 program she couldn't get back into her house, and the only
22 resolution for her was to have her daughter buy the house so
23 she could rent the house back from her daughter, and she still
24 is. There was no credit fix. Never happened.
25 What was another false statement? "Well, in one year

1 the investor is going to come off of title." Remember Shannon
2 Taylor told you, I thought this was a one-year program.
3 Richard Figueroa said, I thought this was just to have them
4 negotiate for me until I was back on my feet, and then I
5 couldn't get out of the program. Mary Salazar, I thought it
6 was this up-front fix, and that the year long process was me
7 paying back for the up-front fix.
8 Lisa Malentino, this was supposed to be one or
9 two years. Brenda Clark, this was a short-term deal from my
10 perspective. That's what I was told.
11 Where would they get that idea? Well, in the
12 handwritten manuscript of the benefits, what are we going to
13 tell them. "At the end of twelve months we will guaranty
14 financing. Creative Loans will" -- underlined three times --
15 "come off title."
16 Who is Creative Loans? Exhibit 2 will tell you
17 Creative Loans is a company owned and controlled by the
18 defendant, Charles Head.
19 It's not just in the handwritten manuscript. The
20 five-page sales script, "at the end of twelve months we will
21 finance the loan back into your name. Our company does loans,
22 so this is how we make money."
23 No, it isn't. They make money by taking equity from
24 people's houses. They don't make money by financing things
25 back into someone's name a year later. It didn't happen. It's

1 a false statement.
2 What was the reality? The homes were lost for good
3 in almost every case. So you look at 10-F through 26-F, those
4 are the title documents. Those will show you that the homes
5 are gone, and then the subsequent transaction is not back into
6 these homeowners' names.
7 You can look at the B-series exhibits. Those are the
8 escrow files that will show that it was an actual transaction
9 where the people lost their houses.
10 Remember what Omar Sandoval told you. That was my
11 plan. That was the point of this. That was the point of what
12 we were doing is we wanted to take their homes. We wanted to
13 get their homes.
14 Remember the Clarks? You'll recall that the Clarks
15 only got put back on their title after two things happened.
16 First, they spent several months fighting just to get copies of
17 the documents that they had signed. And when they finally get
18 those copies of the documents, then they have to fight to get
19 put back on title. They were the only ones -- I believe the
20 only testimony of anybody whoever got successfully back on
21 title. Everybody else lost it immediately and permanently.
22 Where might they have gotten this idea? Look at
23 Exhibit 40-L, an e-mail from Charles to Akemi Botari: "We
24 don't record the deed that transfers title jointly back into
25 the buyers. For that matter, we just hold it if we even bother

1 to sign it. (We should.)" Right. "Why? What will end up
2 happening is that the seller will default on the lease, and we
3 sell the property."
4 Omar Sandoval told you that was the plan all along.
5 Charles Head is telling Akemi Botari that that was the plan all
6 along. We're not going to even bother signing or recording
7 these other leases -- or deeds because they are going to
8 default, and we're going to keep their houses. That was the
9 plan.
10 So here's all these false statements that are told to
11 the homeowners. And in every case the false statement is not
12 the same as reality.
13 Let's focus in then on false statements to lenders.
14 Straw buyers will owner occupy the homes. And then repeated
15 false statements about the straw buyer's income and employment
16 situation.
17 Here's just one example. This is Exhibit 11-A. This
18 is the loan application for Adam Coffman, when he is taking out
19 a loan on what used to be Shannon Taylor's house. You'll
20 recall Shannon Taylor from one of the first days of testimony.
21 In fact, she was the first witness.
22 What does Adam Coffman say on this application? The
23 property will be his primary residence. It's so important they
24 ask it twice. You go to page three, the declaration section of
25 the Universal Residential Loan Application. And down there at

1 line K, "do you intend to occupy the property as your primary
2 residence?" What's checked? "Yes, I do." Adam Coffman is
3 telling the lender, I'm going to go live in this house that I'm
4 asking you to loan me money on.
5 And you'll see in many of these files, in the
6 A-series files, it's such an important question that the
7 lenders frequently will ask a third time and have the borrower
8 sign a separate occupancy agreement, which says that the
9 undersigned borrower, Adam Coffman, understands that a
10 condition of receiving the loan -- in order to even receive the
11 money as part of this loan I have to affirm to you, the bank,
12 I'm going to live in this property. So repeatedly, time after
13 time telling the lenders that the straw buyers would live in
14 the property when they wouldn't.
15 What was reality? Homeowners didn't move out.
16 Several times we asked witnesses, well, you were living there
17 afterwards, did Adam Coffman, or Abraham Urena, or Eduardo
18 Vanegas, did they move in with you? No.
19 This was pitched to them that they would stay in
20 their houses. So of course the straw buyers didn't move in
21 with them. They were all staying. The original sellers were
22 staying in their houses.
23 You also know it's not true because the straw buyers
24 were applying for two, three, four, five loans at a time
25 claiming it was going to be their primary residence every time.

1 To look at that, look at the 30-series exhibits.
2 Sarah Mattson, Eduardo Vanegas, Charles Head. Time after time,
3 multiple loan applications within a short period of time,
4 always claiming that this was going to be their primary
5 residence.
6 It's not true. You'll recall that some straw buyers
7 didn't even live in the same state. And you'll look, and
8 you'll see in the exhibits areas where Adam Coffman had to have
9 his signature notarized in Pennsylvania because he was still
10 there. He hadn't even moved to California.
11 So you know that the statements that the straw buyers
12 would occupy was a false statement. Remember, Omar Sandoval
13 sat and ran through a series of places where Charles Head was
14 the straw buyer. And Omar said I knew him back then, 2004 to
15 2006 I knew him. I considered him a friend. I worked with
16 him. He didn't live there. He didn't live at that location.
17 He didn't live at that address. Time after time the address
18 was not an address that Charles Head was going to live in.
19 Sarah Mattson told you, I never intended to occupy
20 the homes. She talked about the Tulare home in particular.
21 No, I wasn't going to move to Tulare.
22 So that's the reality. The false statement is
23 they're going to occupy the home. The reality is the straw
24 buyers never occupied these homes.
25 The next category of false statements to the lenders

1 is information about employment. We will talk about some of
2 those more in depth when we talk about Charles and Mike
3 individually. But you'll recall an e-mail, Exhibit 40-Y, where
4 Charles and somebody named Tracy Thompson have this
5 you-scratch-my-back-I'll-scratch-yours relationship. "I
6 thought that you were going to do false employment
7 verifications for my borrowers, and I was going to do the same
8 thing for you."
9 You recall that Kou Yang in Exhibit 40-Z is an e-mail
10 where she's bragging and describing to Charles about how she
11 just falsely verified somebody's employment. And we'll look at
12 that in a bit more detail later also.
13 Remember if you look in the file there is this bogus
14 offer from Financial Enterprises to Sarah Mattson to go work at
15 the branch office in Tulare. And Sarah said there is no branch
16 office in Tulare. Financial Enterprise, it was me, and Mike,
17 and then not until Arizona was there anybody else even involved
18 with Financial Enterprises. There was no branch. I was not
19 going to become a branch manager in Tulare.
20 But you'll find that document in the lender files.
21 You'll find in the lender files a letter written to make the
22 lender think that Sarah Mattson was moving to Tulare to occupy
23 the home.
24 Remember time after time after time we talked to
25 Sarah Mattson through multiple loan applications. Said, well,

1 at this point had you been working for him for two years? No.
2 Okay. Well, at this point had you been in the mortgage
3 industry for five years, as was written on the application?
4 No. Okay. At this point did you have $22,000 in your IRA or
5 401K? No, that's not true either. At this point were you
6 making $15,000 a month, $18,000 a month? No, I wasn't. I was
7 making probably $5,000 a month. Time and again false
8 statements on the loan applications by the borrowers.
9 Remember Omar Sandoval's testimony. We talked about
10 Abraham Urena and Juan Urena and Eduardo Vanegas. And he said,
11 no, that was my ex-father-in-law, that was my
12 ex-brother-in-law. No, Eddie Vanegas was my buddy from growing
13 up. And he told you, no, they didn't work in the mortgage
14 industry. They worked at a machine shop, or they worked at an
15 auto body shop. They didn't make 5, 10, 15 thousand dollars a
16 month working for Financial Enterprises. They worked at other
17 places and made far less than that. So Omar told you that the
18 people that he knew the information on these loan applications
19 was false.
20 So you know beyond a reasonable doubt that there was
21 a scheme to defraud. There is a scheme to obtain money or
22 property by false statements and promises -- false statements
23 to the homeowners -- false statements to the lenders -- to
24 obtain money and property. Property being title to the houses.
25 Money being the equity and the rent payments that come later.

1 So you can check that off.
2 The Court will instruct you that false statements or
3 omissions must be material. That is, that they have a natural
4 tendency to influence somebody to part with money or property,
5 or that they are capable of influencing somebody to part with
6 money or property. And that's a question for you to determine.
7 You can use your reason and common sense, and you can look at
8 the evidence.
9 What does the evidence show you about whether these
10 false statements were material? Well, what do the homeowners
11 tell you? Every time that they were on that stand, we would
12 ask them questions like, was your belief that you were going to
13 stay on title, was that important to you in deciding to undergo
14 this program? And they would say yes. Was your belief that
15 you would keep your equity, was that important to you in
16 deciding to sign these papers? And they say yes.
17 Time after time they told you that these false
18 statements, the things that you know now were false, they were
19 important. They influenced them to part with money and
20 property, to sign the documents.
21 You can also look at how people behaved. So one
22 thing, remember Liz Russell, at the time she went by Liz
23 Huerta. She was the one who pitched one sale to Terri Turner
24 up here in Sacramento and realized it was fraud midway through.
25 And she told you, I approached Charles about that. I told him

1 this is fraud. And he laughed it off was the word she used.
2 He laughed off the fact that I was saying this fraud.
3 But she told you she was so concerned about this, she
4 was still getting phone calls, right? There's thousands of
5 postcards out there. She's getting calls every day. And she
6 told you, I started telling them the truth about the program.
7 And when I started telling people the truth, when I told them
8 you're going to give up your house, when I told them we're
9 going to take your equity, when I told them all the actual
10 details of the program, nobody signed up. Thousands of
11 postcards out there. But once she told the truth, nobody
12 wanted to take her up on the deal.
13 It wasn't just Liz. Remember Patrick Harding told
14 you, 2005 I get brought into this by Mike Head. We're doing
15 two to three phone calls per day, two to three months. That's
16 somewhere between 80 and 180 phone calls that he is taking.
17 Now this is after people have already been identified as a
18 lead, either by postcard or website. So he has contacted that
19 many people, and told them we're buying your house, we're going
20 to take it from you. We want to buy your house from you. He
21 told you that that was how he pitched the program. Not a
22 single person wanted to do it.
23 So time after time people testified to you that when
24 they were told false statements, when they were told they would
25 stay on title, when they were told that they would keep their

1 equity, they fell for it. But time after time when Liz or
2 Patrick tells people the truth, nobody wants to take part in
3 the program. The lies were material.
4 Let's talk about the false statements to the lenders.
5 What did the lenders tell you? You recall Irma Valdez from
6 Fremont Investment told you 25 years in the loan industry.
7 These things matter to us. Owner occupy matters to us. Credit
8 scores matter to us. Her testimony was, when asked about straw
9 buyers, if we found out that this was a straw buyer on a loan
10 application, we would immediately decline the loan. They
11 matter.
12 You recall she also said, well, we looked for a
13 minimum of two years on their current job. And when you go
14 back and leaf through all of the evidence and see all the
15 places where somebody falsely claims to be working for
16 Financial Enterprises, look at how many times they just have
17 magically been working there for just over two years. It's in
18 the industry.
19 The industry standard is we want to know someone has
20 been in the job for two years. And all of the false employment
21 verifications say they've been working there for just over two
22 years.
23 Remember Sarah Mattson went through loan after loan
24 after loan. Had you been working there for two years yet?
25 Nope. Had you been working for years yet? Nope. Two years

1 matters to banks.
2 Remember what Heydi Galindo told you. She was the
3 one who was an underwriter for Olympus Mortgage. She said
4 owner occupied makes a difference for us in terms of rates and
5 in terms of what loans we offer. We approve loans based on
6 credit and income and employment stability. These things
7 matter to the underwriters of the loans.
8 You can also look what the lenders said to the
9 defendants, to the members of the scheme. Exhibit 40-I is an
10 e-mail that starts with a guy named Steve Cangrow, a
11 representative of a lender. And he says, we've got an
12 overstated problem. We have debt-to-income issues on this one.
13 So he's kicking it back. He's pushing back saying you're not
14 meeting our lending and underwriting standards. And what's the
15 solution that Kou and Charles do? Let's throw a different
16 straw buyer on there. Let's add another fake buyer. But we're
17 going to have to falsify where she's living right now to make
18 it look realistic. That she's actually part of this.
19 If the statements didn't matter, Steve Cangrow
20 wouldn't have pushed it back. If the statements didn't matter,
21 Charles and Kou wouldn't have had to create more straw buyers
22 to create more false statements to get the loan approved.
23 Look at Exhibit 41-B. That's -- it originates from
24 somebody named Marian Nguyen. She's a lender representative
25 also. The subject line of the e-mail, when you read it, is

1 Mattson. This is talking about Sarah Mattson, one of the many
2 straw buyer loan applications for Sarah. We're going to pass,
3 she says. She bought five properties in the last six months.
4 This is a red flag. So you know that it's true what Kou told
5 you, and what Irma told you, and what Heydi told you, it's
6 true. It matters to the lenders if there's multiple properties
7 being brought in two, three, four months.
8 Remember, Kou told you one of their challenges was
9 juggling straw buyers because once you use them on the first
10 one, you only have a certain amount of time until that shows up
11 on their credit, and then they're burned as a straw buyer.
12 That's why she told you you'll see multiple applications in one
13 or two months for the straw buyers. Not spread out over
14 18 months. The entire time.
15 What did Charles Head write in his manuscript in
16 Exhibit 43-C. What lenders focus on? Loan-to-value. Debt to
17 income. He knew when he wrote in that document that the things
18 that they were lying about on these loan applications mattered
19 to the lenders. They care about loan-to-value. They care
20 about debt-to-income ratio.
21 You might recall this page that was being discussed
22 by Paul Howard on that same manuscript. And looking at it
23 briefly, it looks like it might just be scribbles. Bunch of
24 letters and numbers. But now put it up next to the declaration
25 page from a Universal Residential Loan Application. It's a

1 cheat sheet. This is the crib sheet. This tells you how to
2 falsely fill out the loan application.
3 And it starts at line A, put a "no" there. "No" all
4 the way down to line J, which is, "are you a U.S. citizen?"
5 And then from J, K, and L, you go "yes," "no," "yes."
6 If you could get a loan funded regardless of how you
7 answer these questions, why not answer the questions
8 truthfully? Why not put the honest answers in there. The fact
9 that they had to have a cheat sheet to show you how to fill out
10 the declaration tells you they knew that the answer to those
11 questions mattered. They knew that the lenders cared about
12 those answers.
13 So you know that the false statements were material.
14 You know that they were material to the homeowners. You know
15 that they were material to the lenders. You know that they had
16 the natural tendency to influence people or were capable of
17 influencing a person to part with money or property. To part
18 with the title to the house, or to part with the equity, to
19 part with the money that's being loaned to the straw buyers.
20 So the final question with respect to scheme to
21 defraud is, does each defendant act with the intent to defraud,
22 the intent it deceive and cheat? And now we'll break off and
23 talk individually about Charles and Mike.
24 Let's start with Charles. Back to Exhibit 43-C,
25 found in his house, in the desk in his office. "You pitch

1 they're going to retain most of the equity." Reality? "You're
2 going to take out all the equity." That's the intent to
3 deceive and cheat. I'm going to tell them one thing to get
4 them to sign papers giving them something else. That's the
5 intent to deceive and cheat.
6 How do you know it's Charles? Because right down
7 below the benefits, "at the end of twelve months Creative Loans
8 will come off title." Creative Loans is Charles Head's
9 company. Exhibit 2 tells you that. Exhibit 44 also contains
10 the Secretary of State documents for Creative Loans.
11 How else do you know Charles Head had the intent to
12 deceive and cheat. Take a look at 45-E: "Talking about
13 pitching the program to homeowners. They'll respond
14 differently depending how desperate they are. Pound them again
15 and again with mailers until they respond. They're more
16 desperate as it gets closer to the sales date. In fact, if
17 it's been more than 90 days since they were told they were
18 going to lose their house to foreclosure, they will be scared
19 to death because the sale date is pending."
20 According to Charles, this is the best time to make a
21 deal. The intent to deceive and cheat.
22 It goes on. Most of these people do not know much
23 about loans or real estate in general. They don't know what a
24 grant deed is. They don't know what's going on in the
25 foreclosure, but you, my sales force do. And you saw that in

1 the witnesses.
2 Remember Lisa Malentino. I showed her the grant deed
3 whereby she lost her house. Eight years into this. And asked
4 her, do you know who this document is? She said it's something
5 having to do with the county and the property. Here she is
6 eight years after losing her house, and this is still true.
7 It's still true that she doesn't know the effect of a grant
8 deed. But guaranteed Charles Head's sales force did, and they
9 took her house.
10 Here's a clue. If paragraph four of your five-page
11 sales agreement or sales method is entitled "bait and switch,"
12 you have the intent to deceive and cheat.
13 Look at the last paragraph of this five-page sales
14 script: "If you have the cash, give them a check at the time
15 they're signing these various documents. They'll be so anxious
16 to sign at the chance of them asking questions about the huge
17 profit you're taking will be reduced."
18 If this is such a great program, if we're doing such
19 a favor for these people, why are you instructing your sales
20 force to dangle money in front of them in the hopes that they
21 will be so transfixed by the check, that they won't realize
22 what they're signing away. That's the intent to deceive and
23 cheat.
24 You don't have to look at only that document. Take a
25 look at Exhibit 40-U. We've already looked at it once.

1 There's the e-mail from Charles telling Liz, and Omar, and
2 Andrew, and Mario: "Here's how I pitch it. Always tell them
3 they'll stay on title with you." You know that's not true, but
4 Charles is telling people to sell the program that way.
5 Let's look at Exhibit 40-P. You'll recall this is an
6 e-mail exchange between Charles and Liz, August of 2004. So
7 just a month after he says here's how I always sell it, I
8 always tell them they're going to stay on title. Now he says
9 to Liz, "are you interested in doing this?" The subject being
10 foreclosures. "I've heard around the office you might not be
11 interested in it. I need to know if you're with us or not."
12 We will come back and talk about that sentence when we talk
13 about conspiracy later, but we need to know if you're with us
14 or not on the foreclosure program.
15 Well, Liz responds, "kind of worried about getting
16 involved in something involving fraud." Uh-oh, the F word.
17 Right? Somebody has finally said this might be fraudulent to
18 Charles. And his response is, oh, no, no, I always tell them
19 the truth. I always tell them that they're coming off title.
20 Since when? Right?
21 Four months earlier he said, I always tell them
22 they're going to stay on title. But now, when Liz has said I'm
23 kind of worried this is fraudulent, oh, no, no, I always tell
24 them the truth. But look at how he finishes this off. "Some
25 of my guys are a little misleading, but the documents they sign

1 are direct and to the point." We will come back to that when
2 we talk about a conspiracy to commit fraud later also.
3 But for now let's just focus on this particular
4 sentence with respect to what Charles knows. If you only
5 looked at the second half of that sentence, that could have
6 been a preview for what you've seen in trial here for the past
7 two or three weeks. Every time one of these homeowners got on
8 the witness stand, they were confronted with documents. You
9 signed it, didn't you? It's direct and to the point, isn't it?
10 It says you're selling your house, right?
11 That's only the second half of what's going on,
12 though. That's a script that was written by Charles Head in
13 2004, eight, nine years ago. The first half of the script is
14 the first half of the sentence. In order to get them to sign
15 these direct-and-to-the-point documents, "some of my guys are a
16 little misleading." That's fraud. If you mislead somebody to
17 get them to sign documents that give up their house, it's
18 fraud.
19 So let's talk about these documents briefly. First,
20 even if you believe that these documents are bullet proof, even
21 if you think that these are iron clad, clear, well-developed
22 documents, it's still fraud. If there's a false statement to
23 get somebody to sign the document whereby they lose their
24 house, or whereby the money is loaned on the house, or the
25 equity comes out, if there's a false statement to get you

1 there, it's still fraud.
2 When the Court instructs you on what is a scheme to
3 defraud, there isn't going to be an extra instruction that
4 says, oh, but it's not fraud if the final documents are really
5 well-prepared and look like they are really clear. If there's
6 a false statement to get them to sign it, it's still fraud.
7 But in this particular case, the documents actually
8 tell you that this was a shady program. Time and again we find
9 areas where the documents show that what was being pitched was
10 not what actually was going to be happening.
11 Here's one example. Remember Shannon Taylor says to
12 you, those look like my signature and my husband's signature,
13 but those don't. And she was referring to Exhibit 11-F and
14 11-B9. 11-F is on the top and left. 11-B9 on the bottom and
15 right. And she said, that's not our signatures. I have known
16 Benjamin for 17 years -- or had known him for 17 years at the
17 time of the transaction. That's not my signature, and that's
18 not his. She was the first witness.
19 Well, you know internally from documents you've
20 already seen that there were fraudulent signatures going on.
21 There were forgeries. Here's Exhibit 40-H. Josh asked Kou,
22 "what's up with the Taylors?" This is a year later. They are
23 being evicted at this point. Kou replies to Josh, "info'ing
24 Charles." Bringing the boss in on this one. "Any day now as
25 far as the eviction goes, just waiting for the sheriffs to get

1 the writ to kick them out."
2 Now here's where it's get interesting. "Just so you
3 know" -- dot, dot, dot -- "the Taylors called Nora and asked
4 for all the documents they signed in escrow." You met Nora.
5 Nora Rivas from Castlehead Escrow. And Kou told you that's who
6 I was talking about in this e-mail. I was talking about Nora.
7 "Nora says she will have to release it because it's all
8 rightfully theirs." If you think the documents are that good,
9 if you think that the Taylors knew what they were getting into,
10 why are you phrasing it that Nora will have to release it
11 because it's rightfully theirs. Why is the mentality not,
12 thank goodness they're asking for the documents because now
13 they're going to see, they're going to be reminded of the fact
14 that they gave up their house knowingly and voluntarily.
15 If your mentality is, uh-oh, we might have to let
16 them see the documents in escrow, you know that there is an
17 intent to deceive and cheat. And you know that the documents
18 are not good. You know that they're worried.
19 Look at the last sentence. It's no more blatant than
20 this. "I know that you had Cindy sign the escrow instructions
21 for the sellers." That's a fancy way of saying, I know Cindy
22 forged the sellers' names on the documents. And you see this
23 throughout the documents. Not just the Taylors.
24 If you have any more doubts, let's look forward at
25 this point to April 2005. This is Exhibit 40-H. So you're

1 getting a push back from somebody named Diane Singleton.
2 Right? "She wants clarification of the following paragraphs in
3 the documents I'm trying to get her to sign."
4 What's one of the paragraphs saying? For example,
5 she's selling her entire interest in the property to the
6 purchaser. This goes from Heather to Kou. Kou says, "Charles
7 has to be the person to answer that question." Sure enough,
8 "Charles, can you please advise me on this." "Tell them it's
9 from our legal department," says Charles. There was no
10 testimony or evidence that there was a legal department. What
11 legal department at Head Financial? There was none. "Put a
12 line through it and initial it." "It's not important."
13 You heard time and again when a homeowner sat there
14 and said I didn't know that I was losing my house, they were
15 confronted with this exact language in these documents. Didn't
16 you know how important it was? Can't you see that it said that
17 you were losing your house? How could you have not known you
18 were selling your house? It's because when they pushed back
19 eight years ago, oh, it's not important. Tell them whatever it
20 takes to get them to sign the documents.
21 So when someone pushes back saying, I'm kind of
22 worried about this thing that says I'm losing my house to you,
23 don't worry, it's not important. When those witnesses were on
24 the stand saying that they didn't know what happened, it was
25 sure important then, wasn't it.

1 Look at Exhibit 40-AA if you want to talk about the
2 intent to deceive and cheat with respect to Charles. Kou is
3 telling Heather: "Hey, instead of using Creative Loans, now
4 we're going to start using Nations Property Management for
5 these verifications of rent. Charles, can we set up a phone
6 line with this name?"
7 Right? They know that Dynasty is part of Head
8 Financial or they can find out. Remember Kou told you her
9 concern was we're changing to a new name. We're going to start
10 using Nations Property Management. I was worried that the
11 phone would ring in our office, and I would answer with the
12 wrong name. And if I answered Head Financial, then they would
13 know that Nations Property is associated and the gig would be
14 up. Right?
15 How does Charles respond: "Nations Property is a DBA
16 of our company, Creative Loans, LLC. They cannot find out.
17 Whatever you do, don't let all these banks realize that when
18 they call Nations Property Management, they're actually calling
19 part of the Head Financial Group." That's the intent to
20 deceive and cheat.
21 Look at Exhibit 40-Y, right. This is what I talked
22 about earlier that we'd go into a bit more depth. This is an
23 e-mail between Charles and Tracy. It says, "the last time we
24 talked, I agreed to use Dynasty and Head to do verifications of
25 employment for you, if you needed them. I thought you were

1 going to do the same for my guys, if needed. Will you help 'em
2 out or not?"
3 You can conclude that Tracy did not help out Charles
4 because the next exhibit is 40-Z. And here comes Kou to
5 Charles, info Josh: "I already verified employment on the
6 Parker" --
7 Subject line is Tracy. So five days later we're
8 talking about Tracy again, who we just talked about wanting to
9 do verifications of employment with.
10 "I verified employment. I called the account
11 manager. They couldn't get through to where they were going."
12 Right? To Dynasty. "I gave her another number to call. I
13 answered. I said I was Tracy, and I verified the employment."
14 So a lender now is talking to Kou, pretending to be
15 Tracy, pretending to be an employer for whoever the Parkers
16 are. And how does Charles respond to that? "Okay, nice work."
17 That's the intent to deceive and cheat by Charles Head.
18 Look at what other folks tell you. What did the
19 witnesses tell you about Charles? Omar says, I learned it from
20 him. He taught me how to lie about this program. Remember
21 that Omar said the mentality was tell the victims whatever they
22 need to hear. And that that was the mentality that he heard
23 not only in his own methods of selling it, but that he heard
24 that from Charles and Mike.
25 Liz Russell told you, I realize it was fraud. I told

1 him it was fraud. And he laughed it off. That's the intent to
3 Kou Yang sat on the stand and went through e-mail
4 after e-mail describing what she and Charles were doing to
5 deceive people. Verifications of employment, straw buyers,
6 adjusting amounts of income. All these e-mails that you'll see
7 in the 40- and 41-series that Kou told you, yes, this is us
8 working together to deceive people.
9 Remember what Justin Wiley told you. Remember he
10 talked about the Karie Joest transaction. He said it was his
11 first transaction, and he went with Charles, and that he
12 watched Charles do the sales pitch. And that the pitch that
13 they made was that she would stay on title. That's the intent
14 to deceive and cheat.
15 What did Charles tell Agent Sommercamp when he was
16 called in December of 2005? Oh, I don't know Eduardo Vanegas.
17 I don't know Meridian Financial. But you'll see in the
18 e-mails -- and Omar talked about some of those e-mails -- back
19 and forth, extensive dialogue with Omar about Eduardo Vanegas.
20 You'll recall that Eduardo Vanegas is going to be coming off
21 title. They didn't want to use him as a straw buyer anymore.
22 They're trying to figure out what to do with all these
23 properties. Back and forth. What are doing about Eduardo
24 Vanegas' properties?
25 But months later, when confronted by the FBI, I don't

1 know anybody named Eduardo Vanegas. Why do people lie? They
2 lie to get things, and they lie to stay out of trouble. I
3 don't know Meridian Financial. He received $35,000 from Liz
4 Huerta's company, Meridian Financial, for the Terri Turner
5 transaction. But months later, oh, I don't know Meridian
6 Financial. I don't know who they are. Not true.
7 So you know that Charles Head acted with the intent
8 to defraud, the intent to deceive and cheat. You know that
9 beyond any doubt. Let alone beyond reasonable doubt.
10 Let's talk about Mike Head. Let's start with Mary
11 Salazar. This is the 13-series of exhibits. Right? Mary says
12 Mike Head gave me the sales pitch, the pitch that turns out to
13 be false. We've already talked about the details of how the
14 scheme to defraud involves this false sales pitch.
15 If you have doubts about that, take a look at
16 Exhibit 41-E. Charles says, "hey, 832 San Joaquin in Tulare,
17 whose files is this?" He sends that to Mike, Josh, and Justin.
18 Mike responds, "it's 823 San Joaquin, and it's mine." So you
19 know Mike Head did make that sales pitch because he's claiming
20 credit for it.
21 The internal documents will show that he gets credit
22 for it. Right? Kou Yang told you this is the spreadsheet I
23 used to keep track of who made the pitch, who got credit for
24 it, who gets the money. Mary Salazar is in Mike's column. 823
25 San Joaquin, Tulare, California.

1 Take a look at other false statements. Right? This
2 is the false Tulare office. There's several of them in there
3 in the 13A-series. There is the offer from Mike to Sarah
4 Mattson. "I would like you to become the manager of the Tulare
5 branch." And Sarah responds, "yeah, I'll accept the offer to
6 become the manager of the Tulare branch." And they are all
7 found in 13A, the lender's files. This is information sent to
8 the lender to get them to loan the money on the property. They
9 were retaining it, and here it is years later as part of the
10 lender's files.
11 And you'll recall, by the way, Sarah Mattson said,
12 Financial Enterprises, it was me and Mike at this time. This
13 is before Arizona. This is back when it was the two of us.
14 And she told you when I asked her, why did you sign this
15 document that said that you were going to become the manager in
16 Tulare? Mike gave it to me and asked me to sign. Mike had the
18 Look at the 14-series. This is Gwen and Robert Lee.
19 So again, from the spreadsheet in Exhibit 46-B we know that
20 Gwen and Robert Lee was one of Mike's transactions.
21 What do we do here? Well, we tell the escrow company
22 to send all the document s to this mailing address which has no
23 relationship to Gwen and Robert Lee. We wouldn't want the
24 escrow company to accidentally send documents to Robert Lee
25 where he learns what's going on prior to the closing of the

1 transaction. So let's divert all the mail down to Huntington
2 Beach, California.
3 And this is one of many places where you'll find
4 these blank wire instruction forms. You'll recall that Annelie
5 Durbin told you when asked, what are your duties as a notary?
6 One of the first, if not the first thing she listed off was to
7 make sure the documents are completely filled out before they
8 get signed. And all through these files you're going to find
9 these blank wire instruction forms, signed by the homeowner,
10 signed by a notary, usually Cindy Gastelum. That with all the
11 key information, where is the money going, not filled in yet.
12 Later on in the escrow files you'll see it filled in.
13 Remember we asked repeatedly folks on the stand about these
14 documents. Well, these account numbers, and routing numbers,
15 and "for the account of," do you recognize that? I've never
16 seen that before in my life. I'm not even sure I remember
17 seeing this form before in my life. That's the intent to
18 deceive and cheat. If you won't let them know where the money
19 is going after the transaction is done, it's the intent to
21 Also in 14-D for the Gwen and Robert Lee transaction
22 is one of the places where you'll see these page eight-of-eight
23 of a Residential Purchase Agreement. You'll recall that Agent
24 Fitzpatrick said I've gone through all the search warrant
25 files, and time and again we find this weird thing. We find

1 the eighth page of a sales agreement but no page one through
2 seven. Eighth page being the signature page. Who cares about
3 the first seven pages of the terms of deal. Let's just get a
4 signature on page eight and stick it in the file in case we
5 need it later. That's the intent to deceive and cheat.
6 Look at the Exhibit 15-series. That's Pamela Graham.
7 She went by Pamela Speights at the time. How do you know it's
8 one of Mike's transactions? Exhibit 46 tells you so. And she
9 told you, Mike reassured her that she was not selling the home.
10 Promised me I was keeping my home.
11 On the same transaction, Marrisa Page, the straw
12 buyer, where does she work? Financial Enterprises, LLC. Mike
13 Head's company. And what do you know? When they call
14 714-840-0720 to verify that Marrisa Page works at Financial
15 Enterprises, who do they talk to? Mike, the manager. How long
16 has she been working there? Two and a half years. Just what
17 the bank needs to hear.
18 Remember that Sarah Mattson told you there was me and
19 Mike. That was it at Financial Enterprises. Mike has the
21 Look at the Mike Stewart transaction. That's the
22 Exhibit 18-series. You know it's one of Mike Head's
23 transactions because it says so in Exhibit 46-B3.
24 Now once again, let's not let Mike Stewart get the
25 escrow documents. Let's make sure they get mailed to 949 South

1 Coast Drive, the address in Costa Mesa where Financial
2 Enterprises and Head Financial were working at the time.
3 Explicit written promise to Mike Stewart that he would remain
4 on title. This is a Mike Head transaction with a written
5 promise to Mike Stewart that you're not going to be taken off
6 title. But when you look at Exhibit 18-F, you'll know he was
7 taken off title immediately. Not after a late rent check. Not
8 after a bounced rent check. Not anything other than after a
9 day or two to take his property from him.
10 Now when we talk about Mike Head, consider the
11 transaction of Nickadia Daniels. You heard from her at the end
12 of the trial. This is the 26-series exhibit. Now you're going
13 to receive an instruction from the Judge about Nickadia
14 Daniels. Because this is a transaction that happens when
15 Mike's in Arizona after he has moved out of California. So you
16 can't consider this against Charles Head. And more
17 importantly, it's relevant as to Mike to the question of Mike's
18 knowledge, intent, plan, absence of mistake.
19 So this particular transaction is not part of the
20 scheme that's charged in this Indictment, but you can consider
21 it to consider whether or not Mike knew what was going on.
22 So look what happens here. She says, I called the
23 number. I speak with Mike Head. He assured me that I wouldn't
24 be removed from title. Now when you look through the 26-series
25 exhibits, who is the straw buyer? Steve Goldizen. And Sarah

1 Mattson told you that was one of the folks we worked with over
2 in Mesa, Arizona. The loan application signed by Mike Head.
3 Same false statements. Steve Goldizen was not going to be
4 moving to California. He was working in Arizona. And all the
5 proceeds go to Financial Enterprises, the Arizona account.
6 You can't blame this one on Kou Yang. Mike Head
7 signs the loan application, and it's being done when he is in
8 Arizona, after he is no longer in the same office as Kou Yang.
9 You can't blame anybody else in California for this one. This
10 is Mike and Mike alone. And it's the exact same pattern. The
11 same false statements told to the homeowner. The same false
12 statements on the loan application. The same false statements
13 that Steve Goldizen would be the owner occupying the house.
14 And the money goes back to Mike. So you can consider that
15 particular transaction just for the question of Mike's
16 knowledge and intent.
17 Now we talked about some of the inconsistencies in
18 the documents for Charles Head's transactions. You'll see the
19 same thing for Mike Head's transactions. One would be the
20 Clarks. Remember Brenda Clark testified to you, if you
21 compared 16-D4 and 16-B3, another one of these cases where one
22 file has the filled-out wire authorization forms, one form has
23 a notarized and signed but blank document. You don't do that
24 if you don't have the intent to deceive and cheat. You don't
25 do that if you think your documents are as strong and as honest

1 as you're portraying them to be later.
2 Look here at Emily Silva. In this case, remember she
3 testified that some of the those signatures look like mine,
4 some don't. Some of those initials are mine. Some don't. On
5 the left is the notarized deed, 9th day of December 2004. And
6 it's true, she signs with all three initials on the 9th of
7 December. Look at the B-series exhibit, and that's an example
8 where it's only two. And she said that's weird. I've never
9 signed my initials with just two. It's always all three. And
10 then she looked at the date and said, well, I know I didn't
11 sign it that day because December 2nd is my birthday. I'd
12 remember if I was signing documents about my house on my
13 birthday. So more inconsistencies in these documents that are
14 allegedly direct and to the point.
15 And here we have initials and potentially signatures
16 for somebody that were not actually acquired. So you know that
17 Mike Head has the intent to deceive and cheat. You know that
18 he had the intent to defraud. And so the scheme to defraud is
19 proven.
20 Where does that leave us now in our overview? Now
21 we'll talk about individual counts of mail fraud, and then
22 we'll talk briefly about conspiracy. The judge will instruct
23 you that to find the defendants guilty of a count of mail
24 fraud, you have to find that they devised or joined a scheme to
25 defraud, that is, a scheme to obtain money or property by false

1 statements or promises. Those statements or omissions have to
2 be material, and they have to do it with the intent to deceive
3 or cheat. And that then they used or caused to be used the
4 mails as an essential part of the scheme.
5 Well, we know that the first part is proven. That's
6 what we have been talking about for the past hour. So the
7 question is, did they use or cause to be used the mails to
8 carry out an essential part of the scheme?
9 The Judge will instruct you with respect to acts of
10 co-schemers, if you find that there is a scheme to defraud --
11 and there is -- if you find the defendant was a member of the
12 scheme to defraud -- and they both were -- they are responsible
13 for other co-schemer's actions if they could reasonably foresee
14 those actions as part the scheme, and they were a necessary and
15 natural consequence of the scheme, even if the defendant didn't
16 know what that other co-schemer did or said.
17 So if you find that Mike Head was a part of the
18 scheme to defraud, if you find that Charles Head was a member
19 of the scheme to defraud, they are liable for the actions of
20 their co-schemers if those actions could be reasonably foreseen
21 as necessary and natural consequences of the scheme.
22 So let's go count by count. Count 2 is a charge
23 against Charles Head alone. And this is the Karie Joest house.
24 Exhibit 12 is the series of exhibits on that. And you'll find
25 that on April 20th, 2004, Karie Joest deeded her house over to

1 Ryan Wiley. This is the transaction that Justin Wiley talked
2 to you about and testified that he went up and did the
3 transaction with Charles. He learned the pitch from Charles.
4 Charles trained him. They went to Karie Joest together. We
5 misled her about the title to get her to sign the papers.
6 What's the payoff? What's the money and property as
7 part of the scheme? You'll find that in Exhibits 12-B and
8 12-C. May 18th about $81,000 is wired into the Financial
9 Enterprises bank account. The next day, Justin Wiley obtains a
10 cashier's check for $41,000 payable to Charles Head. That's in
11 12-C in your exhibits. What's the mailing? That's 12-E. The
12 grant deed conveying the property from Karie Joest to Ryan
13 Wiley, mailed by the Tulare County Recorder to Dynasty Realty.
14 Who is Dynasty Realty? Exhibit 2 and Exhibit 44 will tell you
15 it's Charles Head.
16 Now you'll see in this and all the other mail fraud
17 counts that the Indictment says "on or about a certain date."
18 And that means on or about. It doesn't have to be the date
19 actually listed in the indictment. If you think it's close.
20 If it's on or about that date, that's the date we're talking
21 about.
22 Here is the mailing. This is your Exhibit 12-F. On
23 the upper right-hand corner, stamped as having been recorded by
24 the Tulare County Recorder's Office. And up in the upper
25 right-hand corner, where is it going to be mailed to you.

1 You'll recall that there was a stipulation from the parties
2 that the way this works is that when a deed is recorded by a
3 county recorder, that they will mail it to the address
4 designated in the upper left-hand corner.
5 So it's been stamped. Stamped on or about May 17th.
6 And what were the mailing instructions? "When recorded, mail
7 to Dynasty Realty, address 949 South Coast Drive, Suite 450,
8 Costa Mesa." So you know that this deed was mailed to 949
9 South Coast Drive, Dynasty Realty. Charles Head's company.
10 So was the mailing an essential part of the scheme?
11 It was. These deeds officially record the transfer of
12 ownership of the property. This was the documents by which
13 Karie Joest lost her house. This is the document by which any
14 future person, if she claims that she is the owner of the house
15 or has a right to live there, will say, no. You gave up all
16 your ownership of the house in May of 2004. It also makes it
17 easier to evict her down the road. It's essential to the
18 scheme that these deeds get mailed.
19 Moving to Count 3. This is a count that involves
20 Charles Head and Mike Head. And this is Mary Salazar. Mary
21 Salazar will be M.S. on the verdict form in Count 3. Karie
22 Joest in Count 2, K.J. Count 3, Mary Salazar, M.S.
23 You recall Exhibit 13 will show that around May of
24 2004 Mary Salazar deeded her house to Sarah Mattson. One of
25 Mike Head's straw buyers. Her testimony was she we received a

1 postcard. She talked to Mike Head. She thought she was doing
2 this one-year pay back of an up-front fix. That they were
3 going to somehow get her fixed on foreclosure, and over the
4 course of twelve months she pays back to get herself back with
5 them right side up. Not true of course. We know that wasn't
6 true based on the documents in the sales pitch.
7 What was Sarah Mattson's testimony? At Mike Head's
8 direction she signs the document that she's going to go become
9 the branch manager in Tulare to convince the back to loan money
10 on Mary Salazar's former house. She told you she never
11 intended to occupy the house. They were living in Southern
12 California at the time. She wasn't moving to Tulare.
13 How do you know it was Mike's transaction?
14 Exhibit 46 tells you it was Mike's transaction. There she is,
15 Mary Salazar, San Joaquin, Tulare, California. Not to mention
16 the e-mail that we talked about previously where Mike says,
17 that's mine. It's 823 not 832, and that's my transaction.
18 What's the payoff in this one? What's the money and
19 property? Well, we get the house. We also get $28,000 in
20 equity wired from Castlehead to Financial Enterprises. That's
21 in Exhibit 13-B and 13-C.
22 The mailing is Exhibit 13-E. Another grant deed
23 deeding it from Mary Salazar to Sarah Mattson. Once again,
24 recorded by the Tulare County Recorder's Office. So you know
25 it was received and processed. And by the stipulation you know

1 that they mailed it to Dynasty Realty, 949 South Coast Drive,
2 Suite 450. Charles Head's company. So you know that Charles
3 and Mike caused a mailing in furtherance of the scheme to
4 defraud Mary Salazar.
5 Why was it essential? For the same reasons that the
6 Karie Joest's deed was. This is the document whereby she loses
7 ownership of the property. This is the document whereby they
8 can use it to evict her later. This is the document whereby
9 they can get the Sarah Mattson loan on property because she can
10 prove now that she owns the property by this deed. A necessary
11 function of the scheme to defraud.
12 Moving forward to Count 5. This is a count involving
13 Charles Head himself, only, and the Taylors. You remember
14 speaking with Shannon Taylor. Exhibit 11 is the series you're
15 talking about here. Shannon Taylor's testimony to you is she
16 is received the postcard. She talked to Josh Coffman,
17 eventually met with Charles and Josh at her house at the
18 kitchen table. She was told that an investor would be on title
19 with her. That Josh made the sales pitch, but Charles was
20 sitting there and nodding along and agreeing throughout the
21 process. She told you she mailed her rent checks down to
22 Southern California as part of this deal.
23 What was the scheme to defraud? What's the payoff?
24 What's the money and property? In addition to her house,
25 Castlehead takes $95,000 and wires it to Financial Enterprises.

1 That is a cashier's check as part of Exhibit 11-C that will
2 show that 35,000 of that has been given straight to Charles
3 Head. That's the payoff.
4 The mailing. This is Exhibit 11-E. On or about
5 September 17th, 2004, a rent check, $1,200, sent by Shannon
6 Taylor, payable to Matrix, Josh Coffman's company, mailed to
7 Southern California. There it is. Remitted by Shannon Taylor
8 in the bottom left corner. Amount $1,200. And the date,
9 September 14th, 2004, payable to Matrix Investment.
10 And she told in her testimony, yes, that was one of
11 the rent checks I would have sent. That was my bank. I used
12 to get these cashier's checks and mail them down to Southern
13 California.
14 Was the mailing an essential part of the scheme? Of
15 course it was. Because they were obtaining more money from the
16 Taylors by this check. The rent checks keep coming in. You
17 keep on gathering more money in addition to the equity. In
18 addition to the title on the house let's get them to pay us
19 monthly too.
20 It's also essential to the scheme because it makes
21 the Taylors think that they are living up to their end of the
22 bargain. As long as things click along and keep happening,
23 keep on sending their checks and nothing bad's going on,
24 they're not going to raise a ruckus. They're not going to rock
25 the boat. Keep on paying. Keep on getting money. The scheme

1 continues.
2 Let's look at Count 6. This is a count against
3 Charles Head. This is Terri Turner. T.T. will be the
4 abbreviation in the verdict form for you. Exhibit 19 are the
5 documents that relate to the Terri Turner transaction. You
6 look in the loan application. That's Exhibit 19-A. Eduardo
7 Vanegas says this is going to be his primary residence. Omar
8 told you that's not true. His employer is Financial
9 Enterprises and has been for four years. Sarah Mattson and
10 Omar told you that's not true. There is a gross monthly income
11 13,000. Omar told you that Eduardo didn't make $13,000.
12 What was Liz Russell's testimony? I was following
13 the training I received from Charles. And you can go and look
14 at the July 2004 e-mail from Charles to Liz where he says, yes,
15 I always tell them that they will stay on title. When I told
16 Charles this was fraud, he laughed it off. And then Liz went
17 and said, I told Terri Turner she would stay on title as part
18 of this.
19 What did Charles Head tell Agent Sommercamp? Yeah, I
20 sent the notary and Liz to Sacramento because it's cheaper to
21 fly two people from Southern California to Sacramento to
22 notarize a couple of signatures. Or is it that you want your
23 person and your notary there to notarize the documents that
24 you've already seen are suspicious. Charles Head was part of
25 it. He admitted that he sent Liz and the notary up to take

1 part in this. And Liz was following the script that Charles
2 Head wrote.
3 What's the payoff? That's exhibits 19-B and -C.
4 $89,000 wired to Meridian Financial. Exhibit 2 will tell you
5 that that was -- at the time Liz Huerta -- now Liz Russell's
6 company. And then she cuts a cashier's check for 45,000 of it
7 to Creative Loans. And recall from Exhibit 44-C and Exhibit 2
8 Creative Loans is Charles Head.
9 What's the mailing? That's Exhibit 19-E. A grant
10 deed from the Sacramento County Recorder to Eduardo Vanegas at
11 949 South Coast Drive, Suite 450, Costa Mesa, California.
12 There is the mailing. There is the recorded stamp. There is
13 the directions that was given. Mail it to Eduardo Vanegas.
14 And you'll recall the stipulation says that when the deed is
15 recorded, we're going to mail in our ordinary course to the
16 address listed in the top left-hand corner. The mailing was
17 done in furtherance of the scheme.
18 Essential? Same as all the other deeds. This is how
19 Terri Turner loses her home. This is how Eduardo Vanegas
20 becomes the record owner of the property. This is now Eduardo
21 and the other co-schemers will say to Terri, you have no rights
22 in this property if she ever dares to challenge them down the
23 road. This is how you enforce the eviction later on even if
24 Terri claims this is my property.
25 Finally, Count 11. This involves Mike Head and Emily

1 Silva. You recall Emily Silva's testimony. She received a
2 postcard. And in fact this is one of the ones where there is a
3 G-series exhibit because, remember, Emily whips out the
4 postcard from her purse and says and here it is. Much, I
5 think, to everybody's surprise that day.
6 And she told you, I was told an investor would be on
7 title with me. Who did she hear that from? Mike gets credit
8 for the sale. And she said she talked to Mike. So this is a
9 Mike transaction.
10 What's the payoff? Look at Exhibits 21-B and -C.
11 $66,000 wired from Castlehead Enterprises to Financial
12 Enterprises (sic). Mike Head's company.
13 What's the mailing? This is 21-E. On or about
14 January 13th, 2006, a money order, $1,000, mailed by Emily
15 Silva, Porterville, California, to Mike Head in Mesa, Arizona.
16 There's the exhibit. $1,000 money order to Mesa, Arizona,
17 where Mike Head moved the business in the spring of 2005. That
18 was the testimony from Sarah Mattson.
19 Once again, just as the previous rent check, is it an
20 essential part of the scheme? Of course. This is how you get
21 more money from Emily. This is how you make Emily think that
22 she's complying with the program and living up to her
23 obligations.
24 We've covered everything now except for the
25 conspiracy, and I'll start briefly on that. The Judge will

1 instruct you that a conspiracy is an agreement between two or
2 more parties to commit, in this case, mail fraud. The
3 defendant -- to find the defendant guilty of conspiracy to
4 commit mail fraud, you have to find that that individual
5 defendant entered the agreement knowing of its objectives and
6 intending to help accomplish the objectives.
7 The conspiracy, you'll be instructed, is a kind of
8 criminal partnership. Now the crime in conspiracy is the
9 agreement itself. It's not the underlying mail fraud counts.
10 That's Counts 2 through 11. Count 1 is the conspiracy. The
11 crime there is to enter into the agreement, to take part in the
12 process of committing mail fraud.
13 How do you know that there is an agreement to break
14 the law, and how do you know that Charles and Mike are a part
15 of it? We can go through every stage of one of these
16 transactions, and you'll find that there is an agreement
17 between the parties and evidence of an agreement at every
18 stage.
19 Let's start at the marketing level. Here's
20 Exhibit 40-P, the e-mail between Charles and Liz. Talking
21 about we're going to start the marketing soon on these
22 foreclosure, sending the cards next week. If you back out, we
23 can still use the cards for somebody else. We won't lose the
24 marketing money. So let us know. Right? We need to know if
25 you're with us or not.

1 You know there is a conspiracy when you start off by
2 saying, I need to know if you're with us or not on the
3 agreement we're doing. The agreement to market these cards
4 together.
5 Look at the postcard records. Notice Omar didn't go
6 out and get his own postcards on one day, and Charles on
7 another day, on the 20th, and Mike on the 22nd. We all send a
8 coordinated mailing to Postcard Mania. We're going to sequence
9 when each person's postcards go out there. We don't want to
10 send everybody's cards to the same people the same day, so Omar
11 and Elizabeth the first day, Andrew and Anh the second, Cindy
12 and Charles and Leonard, third, Justin and Josh, the fourth,
13 Mike and Xochitl on the fifth. Even down to the point of
14 instructions about, well, our list is only 7,500 names. We're
15 doing 10,000 mailings a day. So do 7,500 good ones, and then
16 2,500 will be duplicates that day. Coordinated agreement among
17 all of the parties to sequence their mailings so that they
18 don't all hit the same people on the same day.
19 Look at Exhibit 40-N. Talking again about leads and
20 postcards and mailings. How do you get somebody lured into the
21 program to start with. Charles to Kou, tell everybody to get
22 onto leadbull.com. I got a VIP account from leadbull.com. So
23 Kou, get everybody on there. So Kou, says, yeah, all loan
24 officers get on there today, start pulling leads.
25 Look who she e-mails it to. To Andrew. To Anh.

1 Back to Charles. To Cindy. To Josh. To Justin. To Leonard.
2 To Liz. To Mike. To Omar. All these names that you've heard
3 of all throughout the process of the last three weeks.
4 Omar is Omar Sandoval. Well, Kou told you who all
5 these people are. But you heard from Omar Sandoval. You heard
6 from Liz. You heard from Justin. Charles and Mike are the
7 defendants. So we're coordinating our lead pulling off of
8 leadbull.com.
9 There is the next one. Exhibit 40-G is an e-mail
10 from Charles to Brian and Domonic. All right. Subject at the
11 bottom there "foreclosure help form" that comes off the
12 website. And he says, "call them, there's at least $500,000
13 worth of money in there." "Find it for me," says Charles Head.
14 And then a reward. Two of something to the first person to
15 sign foreclosure documents on one of these. An agreement among
16 Charles Head and others -- in this case Brian and Domonic -- to
17 get money out of these foreclosure referrals.
18 What's the next stage? Well, you have to pitch the
19 program, right. So Exhibit 40-P tells you that Charles Head is
20 telling in August of 2004, some of my guys are being misleading
21 in getting folks to sign these documents. You can't have "my
22 guys" if you don't have a conspiracy with "me and my guys."
23 And he's pitching this to Liz to get her to be one the guys.
24 And this is after the July e-mail where he says,
25 here's what I do, here's how I pitch it, here's how I always

1 tell them they're going to stay on title. That's evidence that
2 there's an agreement.
3 Look at 43-A. We've already talked about a lot of
4 this. About the stuff that shows about how false the sales
5 pitch was. But look what the advice is for new people in the
6 office. If these clients are asking questions while you're
7 pitching the program, ask someone in the office, like Kou or
8 Anh, or myself, we will get you an answer and get it back to
9 them. That's evidence of an agreement that you're conspiring
10 together to make the sales pitch that is described in 43-A. A
11 sales pitch that contains false information.
12 Look at Exhibit 40-U. This is the e-mail that I just
13 talked about from Charles to several of the sales people
14 telling them, "oh, I always tell them that they're going to
15 stay on title."
16 Look at Exhibit 40-B. We have now got them hooked.
17 We've made the sales pitch. They've signed the documents.
18 What do we need to do next? We need to coordinate our straw
19 buyers.
20 Kou told you -- Kou asked Josh Coffman, who is your
21 straw buyer for this file? Charles said he would take care of
22 that. What does Charles say -- or what does she say to
23 Charles? Who did I use because Omar said not to let me use
24 his. So coordination among the people. Who has got straw
25 buyers available right now? How can I use them?

1 And you'll recall that Kou's testimony was we had to
2 coordinate straw buyers because once we used that first loan
3 application, the clock was ticking. They were going to be
4 useless after a certain number of weeks or months. So once we
5 had them in the process, we needed to share straw buyers
6 amongst us so that we could maximize the number of loans that
7 an individual straw buyer could be used for.
8 What's the next step on these loan applications?
9 Well, we coordinate the false information that we give to the
10 lenders about employment information. Recall the e-mail
11 between Charles and Tracy. You scratch my back. I'll scratch
12 yours. I'll falsely verify your applicants if you falsely
13 verify mine.
14 Recall the coordination between Charles and Kou.
15 Hey, look what I just did, Charles. I managed to get them to
16 call this other number over here, and I picked up the phone and
17 said I was Tracy, and I verified the employment. And Charles
18 says, good job, well done.
19 As you go through and review the exhibits, look at
20 the number of times that Mike, at Financial Enterprises, is
21 verifying employment in the lender files. That's the evidence
22 of conspiracy. Falsely verifying employment.
23 And then look at the end. What's the end result of
24 splitting up this money? How are we going to divvy up the
25 proceeds of the crime?

1 Exhibit 40-W2. That's an e-mail between Charles and
2 Anh Nguyen. "You agreed if I loaned you the money up front and
3 showed you how we are doing things here" -- August of 2004 --
4 "you would help out around the office." An agreement. An
5 agreement to teach how the program works in exchange for some
6 money up front and we'll split the money up later.
7 How about 40-CC. This is when we're talking about
8 getting Eduardo Vanegas off of title. And there is this
9 conversation of should people remain on title? What are we
10 going to do? Who are we going to put the title into? And
11 Charles says to Kou, "my half is understood." Proof that there
12 is an agreement that half ownership, half of the proceeds go to
13 Charles. And that confirms Kou Yang's testimony to you.
14 Other testimony. Omar said when asked, why did you
15 give Charles 50 percent on this transaction? That was the
16 agreement. I was supposed to give him 50 percent as my part
17 for learning how the program works. Justin told you. We were
18 doing this together.
19 Take a look, when you go back, remember Kou told you
20 about splits. She told you that she had a particular sheet
21 that they used to split up and divvy up the proceeds. And one
22 of the examples would be 11-D. That was the Taylor one, which
23 you've already seen. And it shows to the penny who gets what
24 portion of the proceeds of the crime. So agreement to divvy up
25 the proceeds.

1 Look at Exhibit 40-R. And this is the last thing
2 I'll say about conspiracy. This is an e-mail between Charles
3 and Mike. An e-mail trail between Charles and Mike.
4 Charles says: "You doing foreclosures, my
5 intellectual property, outside of my office is wrong" --
6 This is the spring of 2005.
7 "-- wrong to me, people around me, the core system.
8 You're taking my ideas and working them outside of my office.
9 That's the risk I'm talking about."
10 What's implicit in that e-mail is that there was the
11 agreement that I'm going to teach you to do this, and you're
12 going to do it exclusively within our group. You don't take my
13 ideas and go outside of my office. You stay here and you use
14 our ideas to benefit our group. That's evidence of a
15 conspiracy.
16 How does Mike respond? "I've done a lot for you in
17 the development of your business for the time I've worked for
18 you." "Do you think I owe you 50 percent of the money I make
19 for the rest of my life?"
20 That's evidence that there was previous to this an
21 agreement that they would split their money. Mike is saying
22 I'm not going to do it anymore. I'm tired of giving you half.
23 But that's evidence that there was a conspiracy between Charles
24 and Mike. So that's the completion. That's the conspiracy.
25 Every step of the way, from marketing to postcards,

1 to straw buyers, to fake employment information, to divvying up
2 the proceeds. Every step of the way there is evidence of an
3 agreement.
4 Your Honor, I have about three more slides. Can I
5 just continue through?
6 THE COURT: Yes.
8 Two last thoughts. One is reasonable doubt. You'll
9 be instructed that reasonable doubt is what guides your
10 deliberations.
11 What is reasonable doubt? It's proof that leaves you
12 firmly convinced the defendant is guilty. It is not proof
13 beyond all possible doubt. Just the proof that leaves you
14 firmly convinced that Charles Head or Mike Head is guilty of a
15 particular count. It's based upon your reason and your common
16 sense. You can take your experiences with you back there and
17 look at what was said, look what happened, and you can apply
18 that to the evidence in this case.
19 But it's also based on a careful and impartial
20 consideration of all the evidence. The evidence, you'll be
21 instructed is the exhibits, the testimony of the witnesses, and
22 stipulations to which the parties have entered.
23 Stipulations like the fact that county recorders will
24 mail these documents after they are recorded. Stipulations
25 like the fact that when you see Charles Head in the e-mail, it

1 is the defendant, Charles Head. When you see Michael Head, it
2 is the defendant, Michael Head.
3 You'll be given a verdict form. There is one for
4 each defendant. You check it and make sure that you're looking
5 at the right verdict form for the right defendant. This is the
6 one for Charles Head. There is one for Mike also.
7 You'll notice that you start off with Count 1,
8 conspiracy to commit mail fraud. And to the left of that are
9 check boxes. And after your deliberations, you check either
10 guilty or not guilty.
11 Count 2. Now this is a bit more in depth. It says
12 on or about a particular date, from Tulare County to Dynasty
13 Realty, at this address, what was mailed, a grant deed,
14 homeowner K.J., Karie Joest, of Visalia, California. So that's
15 Count 2. And below that, mail fraud. And you'll check guilty
16 or not guilty, if you believe that in this case Charles Head is
17 proven beyond a reasonable doubt to be guilty of making that
18 mailing, causing that mailing to be made as a part of the
19 scheme. And so on for each of the charged mail fraud counts,
20 and likewise a similar form for Mike Head. At the bottom of
21 each form is a spot for the foreperson to sign and date.
22 I'm done speaking to you now. The defense will have
23 a chance to talk to you, and then my colleague, Mr. Anderson,
24 will have one last chance to address you, and then it will be
25 your opportunity to deliberate.

1 And when you do, Mr. Anderson and I will have asked
2 you to return verdicts of guilty against Charles Head and Mike
3 Head in each of the counts. Thank you for your attention this
4 morning.
5 THE COURT: All right. That actually brings us right
6 to the point when we normally would be taking a break after
7 about an hour and a half. Let's take a break. It can be a
8 15-minute break.
9 And during that break, as always, it's more important
10 than ever that you remember my admonitions not to begin
11 discussing the case among yourselves, not to be thinking about
12 its ultimate conclusion. You still have two more arguments to
13 hear, and possible rebuttal argument, and then my instructions.
14 So have a good 15-minute break. We'll be back here at 10:25.
15 (Jury out.)
16 THE COURT: You may be seated. Do you have any idea
17 at this point how long you're rebuttal would go, Mr. Anderson?
18 Assuming you have rebuttal.
19 MR. ANDERSON: It depends on what defense counsel
20 says. It could be anywhere from 20 minutes to an hour. I'm
21 hoping it's more on the 20- to 30-minute range, but I just
22 don't know.
23 THE COURT: All right. We're pushing on getting to
24 instructions today at this point, but we'll take the time we
25 need. So 15 minutes.

1 (Break taken.)
2 (Jury in.)
3 THE COURT: Welcome back, ladies and gentlemen. We
4 will now turn to the closing argument by Mr. Tedmon for Charles
5 Head.
6 MR. TEDMON: Thank you, Your Honor. Good morning,
7 ladies and gentlemen.
8 You've heard from the Government, Mr. Morris, in
9 their opening closing. This is my one opportunity to talk to
10 you. And the reason for that is this, the Government has the
11 burden of proof. They have to prove each and every element of
12 each charge beyond a reasonable doubt.
13 So when I finish, Mr. Haydn-Myer will get up and
14 speak on behalf of his client, Mike Head. And then
15 Mr. Anderson will have the opportunity, if he chooses, to do a
16 rebuttal argument. This is my one opportunity.
17 Now there's several things that Mr. Morris didn't
18 talk about, and I'm going to. First, Charles Head is presumed
19 to be innocent. Didn't hear that. The Court's going to
20 instruct you on that. That's the law. That's the starting
21 point. And from there you move forward. So that's point one.
22 Two, the Government has to prove their case beyond a
23 reasonable doubt. And Mr. Morris is correct when he says it's
24 not beyond all doubt. It's a doubt that leaves you firmly
25 convinced, or it's the state of the evidence that leaves you

1 firmly convinced that the Government did prove their case
2 beyond a reasonable doubt.
3 I would submit to you there are a multitude of
4 reasonable doubts in this case on every count. Mr. Morris
5 didn't touch on very many of them. I will indicate all of
6 those to you. I will enlighten you on those things. And when
7 it's all said and done, you will come up with verdicts of not
8 guilty. The Government has the burden. And, secondly, it
9 never shifts to Charles Head, ever.
10 We talked in voir dire -- I'm going to remind you of
11 a couple things. We talked in voir dire, and I asked some
12 questions of each of you. Could you keep an open mind? You
13 said yes. You agreed not to make up your mind until all the
14 evidence is in, all the arguments are in, and the Court
15 instructs. You're not there yet. You should not have made up
16 your mind either way. That's your oath.
17 And finally, the defense doesn't have to prove
18 anything. I don't have to stand up here and prove to you that
19 Charles Head is innocent. He didn't testify. You can make no
20 inference of that. We didn't produce any defense witnesses
21 although we did introduce significant documents that I'll get
22 to later. We don't have to. Because the burden stays right
23 there at that table and never moves.
24 And that's a critical and foundational element of our
25 criminal justice system. So keep that in mind today when you

1 listen to the arguments, when you're instructed by Judge
2 Mueller, and ultimately when you deliberate. That's the
3 starting point.
4 Now, there's going to be some jury instructions the
5 Court will give you, and I'm not going to go through all of
6 them with you. They are instructions relating to presumption
7 of innocence and reasonable doubt. But there is a couple of
8 others that I do want to touch on.
9 One is that each defendant is entitled to their own
10 separate deliberation. Even though Charles Head and Mike Head
11 are joined for trial, they are each entitled to their own
12 deliberation. That's very important. They are brothers, but
13 they are individual defendants. And again, we touched on that
14 in voir dire. You need to deliberate individually as to each
15 defendant and as to each count. That's very important to
16 understand.
17 The other thing that I want to kind of highlight for
18 you right now is beyond giving each defendant separate
19 consideration is that the Court is going to instruct you in
20 terms of how to handle certain things. And this is what
21 Mr. Morris didn't touch on at all, and it's critically
22 important in this case.
23 And it has to do with witnesses. The Court will give
24 you a general instruction that you can consider the demeanor of
25 the witness, or how they act, whether they are believable,

1 whether there is evidence that contradicts what they say. And
2 there's going to be evidence in that regard with regard to the
3 homeowners, the lenders, and the witnesses that got up and
4 testified for the Government. All three of those areas. So
5 keep that instruction in mind.
6 Another instruction that the Court will give you,
7 which Mr. Morris did not talk about at all, is that if a person
8 is cooperating with the Government, that you should view their
9 testimony with greater caution than any other witness.
10 There is a reason for it. They come in with a
11 natural bias. Mr. Morris talks about Kou Yang. She's not
12 credible. Justin Wiley. He's not credible. Omar Sandoval.
13 He's not credible. Elizabeth Huerta. She's not credible.
14 Elizabeth Huerta got immunity. And the Court will
15 give you another instruction that states if a person is given
16 immunity, you should view their testimony with greater caution
17 than other witnesses. Mr. Morris didn't talk about that.
18 And the reason is very clear. They have a motive to
19 lie. They are on the team of this table, and they know it.
20 They know which side their bread is buttered, and they are
21 going to continue to swipe it on that side.
22 And when it's all said and done, you're going to
23 agree that they are not credible, and you're going to find my
24 client not guilty along with some other things.
25 So keep those in mind as yard sticks or guide posts

1 in terms of how to deal with the witnesses and the evidence
2 that came through in this case.
3 Now I'm going to start with the conspiracy charge.
4 Mr. Morris has done a very good job of going through the
5 various counts, so I'm not going to repeat that.
6 Count 1 is the conspiracy count. Mr. Morris spent a
7 lot of time saying there was a scheme and all the rest of it.
8 No, there wasn't. Not with regard to Charles Head there
9 wasn't. And I'm going to give you the context. And I'm going
10 to use some of the same e-mails that he talked about.
11 Because here's what's happened, in this trial the
12 Government has thrown a lot of evidence in the courtroom, but
13 they haven't put it in context. And these e-mails are a
14 critical part of that. I'm going to point that out to you
15 right now.
16 I want you to consider two e-mails in 2003. 40-S and
17 40-T. These are Government exhibits. 40-S is an e-mail from
18 Akemi Botari to Charles Head, and then his response. And the
19 date of this is April 1st, 2003. The response is April 2nd,
20 2003.
21 Now to set the stage for this, understand that there
22 is a big difference between my client, Charles Head, and all
23 the other people that testified in this case. He had a
24 business in 1999. Pyramid Properties. Omar Sandoval testified
25 to that. And then in 2001 he incorporated into Head Financial

1 Services. Omar Sandoval talked about that. Those are
2 empirical facts. Not capable of interpretation.
3 He had a business. He was successful. He was doing
4 things. There is no evidence that anything was going on
5 illicit, improper, or illegal when he was running his
6 businesses. Where it started was when he trained people, and
7 they went out and violated what he told them to do.
8 I'm going to demonstrate that to you. That's where
9 the thing went off the rails. Not because he instructed them.
10 Because that's what they decided to do. And Mr. Morris is
11 right. The testimony indicated Charles Head agreed to train
12 people, and his deal was he got half the money. That doesn't
13 make him a criminal. They have to prove beyond a reasonable
14 doubt that he involved himself in a scheme, and they did not.
15 So in 2003 Akemi Botari asked Charles Head, "hey,
16 Wells Fargo still hasn't paid." She's talking about mortgages.
17 And Charles Head in 40-S says: "All the mortgages are paid. I
18 verified this myself. And as far as Wells Fargo, I'll take
19 care of that."
20 Now that's important in this sense, there is no
21 evidence in this case at all that Charles Head didn't take care
22 of his obligations. He paid the mortgages. I'll get into that
23 later with Kou Yang and some e-mails with regard to that. But
24 in 2003, he is conducting his business in an appropriate
25 manner.

1 Then later on in May of 2003 there is an e-mail from
2 Charles to Mike Head. And he's telling Mike Head, in part,
3 that there is a 90-day learning curve, and that I'll train you
4 because you're my brother. What you do with it is up to you.
5 That's what he says here. And then he also says, if you don't
6 want to work at the office full time or at all, I'm okay with
7 that. There is no forced labor here. There is nobody making
8 people do anything. Now this is back in 2003. This sets the
9 context of how Charles Head ran his business.
10 Then we move into 2004. This is Government 40-O. Anh
11 Nguyen writes to Charles Head and inquires as to training.
12 Charles writes back, Justin and Josh, a possibility Liz will
13 need daily draining. Exactly. They need to be trained
14 properly. And so they say, okay, that's what we need to do.
15 So that's 40-O.
16 Then we go to the infamous 40-U that Mr. Morris talks
17 about. July 22nd, 2004.
18 I think the battery went out.
19 THE COURT: Ms. Schultz can provide you with a new
20 battery.
22 MR. TEDMON: So we're at 40-U. Now this is the
23 e-mail that Mr. Morris talks about where Charles Head is
24 supposedly saying that this title issue with the investors is a
25 key thing.

1 Now here's what it actually says. It's July 21st,
2 2004. It's from Charles to Liz, Omar, Andrew and Mario.
3 Here's what he says, typically, here is what I say to clients
4 when I try to sell the foreclosure program. He says, we give
5 you money, we pay off your mortgage, we do a credit repair,
6 your monthly payment will be less.
7 And then he says, the only real draw back is that
8 since the investor has paid off your mortgage, you're going to
9 want to be on title with you (sic). Stress, you will still be
10 on title, but the investor will be on title with you. That's
11 what he says in July of 2004.
12 Now here's the key. This is July of 2004. First, he
13 says "typically." He doesn't say in every instance. And I
14 told you in opening statement look at the contract. That's
15 what they signed. And don't forget this, Mr. Morris didn't
16 mention this, there is a cancellation clause they can get out
17 of this in a week. They can go see a lawyer. They can do
18 whatever they want. Did hear anybody complain about that? No.
19 This wasn't forced down their throats. These people decided to
20 do this with the information in front of them. And in certain
21 instances that was represented that the investor would be on
22 title with the owner.
23 Now there are documents in the CH-series, and the two
24 defense binders are right here. You'll get those in the jury
25 room. And in or around the same period of time, June 25th,

1 2004, Melinia Contreras signs a contract, and addendum one says
2 very clearly "the Contreras will refinance in order to remove
3 investor from title on or before September 1, 2005." There is
4 an example where they are supposed to be on title. But there
5 is a condition, "if all terms of the lease are met by
6 Contreras, Matrix Investment Group and Contreras will both
7 remain on title for the duration of the lease." There is
8 nothing going on here. It's right there in the contract.
9 Now some of the contracts don't have this. And let
10 me ask you this -- because this is a reasonable doubt -- if
11 they're going to put it in this contract as a term, and it's
12 not in the terms of the other contracts, it's because it wasn't
13 negotiated for. Irrespective of what these homeowners may have
14 said on the stand -- and I'll get to them later -- this is a
15 contract. That's a reasonable doubt. There is one.
16 June 29th, 2004, just before this July e-mail, Janet
17 Brown and Dynamic Partners. Equity Purchase Agreement,
18 addendum number one, item four, "if all terms of the lease are
19 met -- "if all terms of the lease are met by Janet Brown, then
20 Janet Brown and Dynamic Partners will remain on title for the
21 duration of lease."
22 It's right in the contract. It's in these contracts.
23 And if it's not, it's because it wasn't a term of the deal.
24 And I asked these homeowners repeatedly. That's your
25 signature, correct? Yes, it is. It says you're selling your

1 home. Yes, it does.
2 The Government has handpicked a few people to get up
3 here, and they're saying the clients misrepresented. Well,
4 first of all, you got to believe them. Secondly, you got to
5 believe that Charles Head told these people to misrepresent
6 things. He did not. He did not. Look at the context, and the
7 date, and the sequence of documents. Don't just let them throw
8 them at you, and you fill in the blanks. That's not how it
9 works. They have the burden of proof, and they failed.
10 Michael Stewart. Mr. Morris talked about this one.
11 Michael Stewart refinanced in order to remove investor from the
12 title on or before October 1st, 2005. Doesn't tell you when
13 they're going on title. Then it says, "if all terms of the
14 lease are met by Michael Stewart, then Financial Enterprises
15 and Michael Stewart will both remain on title for the duration
16 of lease." It's right on the contract.
17 Now Mr. Morris says, well, the same day this was
18 signed there was a grant deed. Well, no, there wasn't. This
19 is dated August 6th. The first grant deed -- and Michael
20 Stewart didn't testify. He didn't say he didn't sign this and
21 didn't understand what was going on, by the way. It's dated
22 August 16th, and it deeds from Michael Stewart to Sarah
23 Mattson.
24 So there are conditions in the contracts that can be
25 put in. These are just three examples. And if it's not in the

1 contract, it didn't exist. And people weren't duped into this.
2 They were going to lose their homes. They were going to be
3 thrown out. And Charles Head had a program to allow them to
4 come in, get money they wouldn't have gotten otherwise, be able
5 to stay in their home, not be dislocated, moved out of the
6 area, kids can't go to the same schools, and all the rest of
7 it. That was the program. And the contracts controlled the
8 terms.
9 Don't fall for this idea that somehow they were just
10 bowled over by these fraudsters. That's not what happened.
11 They had plenty of time to review these, and they signed them.
12 And without exception every one of them said, yeah, that's my
13 signature, and I signed that contract. The only one we don't
14 have a series of documents on is Shannon Taylor. But Shannon
15 Taylor told you that she remembers signing a whole series of
16 documents even though we don't have them in court here. We
17 have them on almost everybody else.
18 And I asked her. I said, what was it? And she said,
19 well, one was like an RPA, Residential Purchase Agreement.
20 Well, that's to sell your home. That's right. You had an
21 opportunity to talk to somebody. Well, I don't remember that,
22 but there were a lot of documents. You know what they are,
23 folks. We've been here for three weeks. It's the same
24 sequence of documents for Shannon Taylor.
25 But here's the thing where she falls apart. And I

1 think Mr. Morris misstated the evidence. Not intentionally for
2 sure. But I think it was stated -- at least the way I heard
3 it -- was that Government's 11-F is the grant deed. I'll show
4 that to you later. But it's 11-F. It's the grant deed for
5 Shannon Taylor.
6 And I asked her specifically, "is that your signature
7 on the grant deed? She said, yes. Then I asked her, well, the
8 grant deed says you're giving your home over to Ryan Wiley.
9 You're deeding to him. Your ownership is gone, correct? Well,
10 I guess so. Well, you bought a house before.
11 She knew what she was doing. This was their option,
12 and they decided to take it. That's what this is all about.
13 Nothing more. Nothing less.
14 Now getting back to the e-mails. Let's go to 40-P.
15 This is August 26, 2004. Mr. Morris talked about this. Now
16 keep in mind this fact, and it's clear and unequivocal, Charles
17 Head was a businessman. He had been running a business since
18 1999. I've already covered that. Two, he used lawyers,
19 accountants. We have heard and seen and read e-mails about
20 that. And he also indicated through his correspondence this
21 program changed over time and evolved.
22 And that's exactly what this e-mail talks about.
23 August 26, 2004. 40-U is July. Now it's a month and a half
24 later. And Liz is telling Charles, in pertinent part, you're
25 telling me to sell the program one way, others are saying

1 different things. I know the business is legal. Now this is
2 Liz Huerta. You should speak with everyone individually to
3 find out how they are selling the program. You will get
4 different responses all around.
5 So she's telling him, hey, these guys out here --
6 that own their own companies, by the way. Mr. Morris
7 conveniently wants to put them all in the same basket. That's
8 not true. They have their own exhibit. It shows they have
9 their own companies.
10 And remember what Omar Sandoval said on
11 cross-examination, when he was finally telling the truth for a
12 change, versus his direct testimony, I said, Mr. Sandoval, when
13 you went out, and if you misrepresented something to somebody,
14 that's on you, correct? Correct. That's not on Mr. Head.
15 Well, that's correct. That's what he said. That's his
16 testimony. You can take that to the bank.
17 And if other people misrepresented themselves to
18 somebody, that's on them. Not on Mr. Head. That's true.
19 That's Omar Sandoval. He's the first guy the Government called
20 that's a cooperator. And let me tell you why they did that.
21 Their goal was to hang the lender and the homeowners' side of
22 this scheme through Mr. Sandoval's testimony, and it fell flat
23 on its face. He went through line and verse how the program
24 was supposed to be represented, how Mr. Head trained him to do
25 it. And then he said, well, if there's a misrepresentation,

1 that's on me, not on him. And that's true for other people.
2 That's their own witness. You can believe that. If
3 that isn't a reasonable doubt, I've never seen it. That's the
4 Government's own witness, the very first one out of the box,
5 when it came to really explaining the inside of the program.
6 So getting back to 40-P, Mr. Head tells Liz, "I
7 expect a different answer all around from each party because
8 there is not a set way to sell them." And he goes on, "I had
9 two sets of attorneys guide me as to how to minimize the risk
10 involved with lawsuits," and he talks about that.
11 He's dealing with lawyers here. And then he says:
12 "In other words, the business we are in is evolving and there
13 is not a set way to sell it. I'm trying to develop a system
14 so it is easier for the guys to propose to the clients rather
15 than having everyone trying different things."
16 His goal is to standardize it. Not to have these
17 guys running amuck all over the place. You know, to convict
18 Charles Head you have to believe he plugged into the scheme.
19 This shows you that he was not plugging into any scheme. He
20 was trying to standardize it, give uniformity, have some
21 continuity to it.
22 And from July to August he goes on to state there's
23 been a change. And here's what it says: "I want uniformity,
24 but I have yet to receive the final form from the last
25 attorney. Once I get it, I will go over everything once again

1 with our group. Until I have all the revised forms, I cannot
2 train people on how to proceed."
3 As far as the fraud issue goes, he's addressing it.
4 He's not running from it to Liz Huerta. He says: "I know you
5 do not want to do anything that would be in the least bit
6 misleading. If this is your concern" --
7 And this is critically important. Mr. Morris didn't
8 give you any of this.
9 -- "you can sell them" -- in caps -- "up-front and be
10 very frank about it." This is Charles Head's statement. Not a
11 bunch of cooperators that are making a deal with the
12 Government.
13 And he goes on, "maybe you should listen to me sell."
14 You know why? Because I don't misrepresent things to people.
15 You want to do it, fine. If you don't, fine.
16 And then he goes on to say, "I constantly tell the
17 client that it is not a loan." In caps. "I tell them a buyer
18 will" -- in caps -- "outright purchase their home and give
19 them a portion of the equity."
20 That's exactly what he did. The portion of the
21 equity was the consideration, 5,000, 10 ,000, 20,000, that
22 those homeowners wouldn't have had but for this program.
23 Omar Sandoval testified he had been in the lending
24 industry for a while. He understood foreclosures. And then if
25 those homes are foreclosed, his testimony was those people are

1 kicked out and they got nothing. They got consideration under
2 the contract. It's more than they would have had otherwise.
3 That's a scheme?
4 They are in a better position than they were if they
5 let the foreclosure go through. Plus they got to stay there
6 and with the understanding they had to pay rent. If they
7 didn't, their options were eviscerated. And Omar Sandoval
8 said, that's correct, that's the program. There is no scheme
9 there. Not on his part.
10 He goes on: "In a year they can buy it back. If
11 they are not cool with that, I move on. I don't want to have
12 any issues."
13 Then he says: "Some of my guys are a little
14 misleading, but the forms they sign are direct and to the
15 point. You should have no problems."
16 Now Mr. Morris can interpret this however he wants.
17 He wants to say "guys" that proves the scheme. He's answering
18 her e-mail. That's the context. She's saying some of these
19 guys may be saying things that you're not saying. So he's
20 saying, well, some of the guys may be misleading people. Not
21 at his direction. He's answering the e-mail.
22 Does he say prior to this, I don't want to be frank
23 with them, I don't want to be up front? No, he doesn't say
24 that. He says, be very frank with them, tell them what it is.
25 You shouldn't have any problems with that. "If you're not a

1 hundred percent down to do this, please let me know."
2 Now the context of the e-mail is, look, if you don't
3 want to do this the way I'm suggesting, watch me sell, be frank
4 about it, be upfront, that's what he's saying, then, fine,
5 don't do it. That's the e-mail. That's 40-P. That's the
6 context.
7 And I would submit to you that is a huge reasonable
8 doubt. And let me remind you of this. You cannot convict
9 Charles Head of any count unless and until you are convinced --
10 firmly convinced is what the Court will tell you -- beyond a
11 reasonable doubt. That's singular. It's not like, well, you
12 know, the Government answered a bunch of things, but I got
13 three things left over, so that should be good enough. No.
14 There's a reasonable doubt in your mind, singular, you cannot
15 convict. That's the burden that they are under. That's what
16 the law requires them to do. They haven't done it. That
17 e-mail proves it. Don't misread it. Read it.
18 Now as far as the deeds go. 40-L, this is dated
19 February 10th, 2005. And Charles Head says to Akemi Botari:
20 "We do not record the deed transferring title to the LLC and
21 the former buyer's name for tax purposes. We simply hold the
22 deed at the office. If we even bother signing it. We should.
23 When the tax forms come in, the person or LLC that owns the
24 house files the taxes." Now he's talking about how to deal
25 with the tax side of this.

1 But then he says: "Anyone can file. It is not
2 necessary that title be transferred to the new LLC at the
3 county recorder's office to be valid. Deeds do not have to be
4 recorded to be valid. We simply hold them at the office in
5 case we need them."
6 Now here's your answer to the deed. When these
7 people get into the program, and they sign their property over
8 to the investor or straw buyer, whatever you want to call them,
9 if they complete the program, they either can get their
10 property back, or, read the contract, there is an equity split
11 where the house is sold, if both parties agree, and the equity
12 is split. So that requires additional deeds later on. That's
13 what he's talking about. This explains the whole process.
14 And then he goes on to say: "What will end up
15 happening is the seller will default on the lease, and we sell
16 it."
17 There is nothing illegal about any of this. This is
18 exactly how the program is run. And that's the reality.
19 That's 40-L. That answers the deed question.
20 Now there is another document that Mr. Morris talks
21 about. That's 40-EE. And this is the Diane Singleton e-mail.
22 And what he wants you to believe is that somehow this proves
23 fraud. I think it proves just the opposite.
24 This is from Heather Wartz to Kou Yang where a person
25 named Diane Singleton is asking about the terms of the

1 Acknowledgement of Seller document. And I'm sure you remember
2 those documents. Where it says in paragraph four very
3 specifically this is a sale of my home, I know I'm selling it,
4 and nothing other than what's in writing is what I've agreed
5 to.
6 And by the way, when you read the contracts, read
7 them fairly and objectively. Every one of those contracts, the
8 Equity Purchase Agreement, the Acknowledgement of Seller, says
9 very clearly I understand what I'm doing, I'm selling my house,
10 and there is no other representations, verbal or written, other
11 than what's in this contract that's having me sign this. The
12 affidavit of deed said I'm not acting under duress or coercion.
13 Now look, they can say what they want today, but they
14 didn't keep their mortgage current, they didn't pay their rent,
15 and they lost their homes. And now they are coming in crying
16 foul. It doesn't make sense. Look at the documents.
17 Well, I didn't really look at it when I signed it.
18 Well, you had a cancellation agreement. You had a week to look
19 at it. You could have taken it to a lawyer. That's the
20 reality.
21 Proof beyond a reasonable doubt on a conspiracy? No
22 chance.
23 So this goes from Heather Wartz to Kou Yang. And
24 then this is at 1:37 p.m. on April 21st. At 2:38 p.m., Kou
25 Yang writes back to Heather Wartz and says, "well, Charles has

1 to be the person for these kinds of questions." So Heather
2 Wartz writes at 2:32 p.m., the same day, to Charles. "Hey,
3 Charles, would you please advise." And 15 minutes later
4 Charles says, "tell them it comes from our legal department."
5 Well, Mr. Morris says, well, they don't have a legal
6 department. He's hired lawyers. I just read you an e-mail
7 that said he's had three lawyers. Two sets of them looking
8 through it, and another one he's waiting on. And if they want
9 to, line it through and initial it. Re-negotiate the contract.
10 That's what this says.
11 These homeowners had every opportunity to do that.
12 And let me explain something to you right now. Look, these
13 people were in a difficult situation. I understand that. And
14 I have empathy for them to that extent. But Charles Head
15 didn't put them there. He gave them an opportunity to stay
16 where they were and get their house back, ultimately, if they
17 followed a set of conditions. When they signed that original
18 mortgage, they agreed to make their payments for probably
19 30 years. Because of their circumstances they couldn't do it.
20 Okay. That's unfortunate.
21 But they take advantage of this program that Charles
22 Head had laid out in terms of how it was supposed to go, and
23 he's not responsible, like the Government would have you
24 believe, for everybody else doing things. He didn't train
25 people to commit fraud. That's just not true, and the evidence

1 doesn't show that. And then they didn't follow through with
2 their rent payments, and they lost any opportunity they had.
3 That's the evidence.
4 And this e-mail tells you something else. There were
5 a couple of people that testified, well, I tried to call, and I
6 couldn't get ahold of anybody, and this was terrible. Like it
7 was a dodge. Well, according to this e-mail, Diane Singleton
8 had no problem getting an immediate response. There was an
9 e-mail inquiry at 1:37 p.m. And at 2:58 p.m. Charles Head
10 responded. I think that's pretty quick for a guy running a
11 substantial business.
12 So don't be so sure or don't believe at face value
13 when people say, oh, I tried to call, and I couldn't get ahold
14 of anyone. At least as far as Charles Head is concerned he's
15 responding within a matter of fifteen minutes on somebody that
16 has a question about the program. That's 40-EE.
17 Now we go to May 31st, 2006. This is 40-DD. Another
18 Government exhibit. Now this is from the esteemed Kou Yang.
19 The double felon. I'll get into her later. Let's just go to
20 the e-mail.
21 Kou Yang writes to Charles Head and Jack Corcoran,
22 May 31, 2005. And she says: "This is the updated list of all
23 mortgages Charles is responsible for. I paid all of May, so
24 June is due. Please make sure that all mortgages are paid
25 monthly before the last day of the month."

1 Okay, Jack, it is now your responsibility, and there
2 are in this attachment, which is 40-DD2 through 40-DD6, sixteen
3 mortgages attached to this.
4 Now Charles Head is running a business. Kou Yang is
5 basically running the place. There is ample testimony.
6 Charles Head is hardly there. She's running the place. She's
7 doing the loan processing. She's signing documents. She's
8 actually forging his name on some stuff. She's making payroll.
9 She's paying the mortgages. She's running the place. She's
10 not just a loan processor.
11 That's why she writes this e-mail. And she says,
12 make sure, Jack, you pay the mortgages on time. Why? Because
13 he's running a respectable business, that's why. There is not
14 one piece of evidence that Charles Head didn't make the
15 mortgage payments on every single property. Not one. That's a
16 guy that's running a fair business and an appropriate business,
17 and is following through with his end of the obligations even
18 when the homeowners aren't making their rent payments.
19 I want to point something else out. Agent
20 Fitzpatrick gets up here, and he puts all these numbers in
21 front of you. Oh, $10 million went through an account,
22 $3 million went through an account. Well, Charles Head is the
23 only guy out of everybody that's been in this trial that had a
24 business before, and was successful, and was running it all the
25 way through. So those numbers are like sticker shock. That's

1 all that is.
2 Who was making the overhead for the business in Long
3 Beach and then in Costa Mesa, which is a pretty ritzy place?
4 Charles Head. These people that he trained, and then they went
5 out and did their own thing, whatever representations they
6 made, those are on them, as Omar Sandoval said. He allowed
7 them to work out of his office for periods of time. You didn't
8 hear any evidence that they were paying anything.
9 He's making all the overhead. He's paying all the
10 bills. He's paying his mortgages on time. He's not involved
11 in any scheme. He's running his business in an appropriate
12 manner. So his fee is 50 percent for training somebody. Not
13 to commit a fraud but to do the program legally. Like Omar
14 Sandoval testified in cross-examination. Their big witness.
15 And he's responsible for all the overhead.
16 I asked Agent Fitzpatrick, does that back out any
17 expenses? Oh, no, it doesn't do that. Because they want to
18 throw a big number at you. Sticker shock.
19 But the reality is he was paying bills, he was
20 conducting his overhead, he was responsible for his payments,
21 he was paying the mortgages and all the rest. Like any
22 businessman would do.
23 And then there's another e-mail that comes up. The
24 Government -- this is how far they're reaching to try to
25 convict my client. This is 40-A. It's all redacted. And then

1 at the bottom it says, from Charles to Mike, "we have some
2 pissed off clients." This is important apparently. They put
3 it in. That's supposed to prove they're committing a fraud?
4 Anybody run a business? Work for a business?
5 Families? Relationships? It's not always great. He's been
6 running a business since 1999. And he says to Mike, "we have
7 some pissed off clients." That doesn't mean he's committing a
8 fraud. That's how far the Government is reaching in wanting to
9 throw things at you and have you fill in the blanks. That's
10 the type of evidence they really have. Proof beyond a
11 reasonable doubt? Not close. Not close.
12 Now there is a few other e-mails here that I'm just
13 going to quickly go through. These are the 42-series. Okay.
14 42-A, -B, -C, -D, and -E. This is the Government's own
15 evidence.
16 Now I want to harken back to Kou Yang's testimony.
17 And she said this, "I always cc Charles." That's what she
18 said. "I always cc him." Because she knows her job is to try
19 to put him in the loop all the way through her testimony.
20 Unfortunately, Kou Yang lies, and the documents can prove it.
21 Because in every one of these exhibits -- and look at it when
22 you get back to the jury room -- these are e-mails from Kou
23 Yang -- or either from or to her, 42-A, -B, -C, -D and -E, in
24 2006. And Charles Head's name doesn't show up anywhere.
25 And what this really shows you is this. Charles Head

1 started this program in 2004. He was doing loans before. He
2 had never had a problem at all. He trained people. They went
3 out, and they contacted individuals. And if they're
4 misrepresenting themselves, that's on them, not on him. But
5 Kou Yang says, "I cc Charles Head on everything."
6 Well, she didn't. And let me tell you why, why these
7 are important. Because once she figured out that he's gone all
8 the time, she can run her own show. She's got the keys to the
9 palace. And all these other people she can then manipulate and
10 move around. And that's what these e-mails talk about. One
11 says it's the Fusco-Scalen deal, the Ferrentello-Wallace deal,
12 the Queen deal, the Freeman deal, the Castillo-Siplin inquiry.
13 He's not even there.
14 Sandoval testified to that. Kou Yang testified to
15 that. Liz Huerta testified to that. He's supposed to be the
16 puppet master of all this? No, he's not. He came up with a
17 program, and they didn't follow it.
18 Let me point something else out. Mr. Morris spent
19 some time talking about, well, they searched his house, and
20 they find all this stuff. I asked the agent who was the
21 finder, Paul Howard, is there any date on that? No. Is there
22 a date on this? No. Is there a date on that? No.
23 As a matter of fact, the Terri Turner contract he
24 claims he found at the residence had the FCO Bates stamp number
25 on it. That was Lavar Fletcher's business.

1 Now the Government wants to say, for example -- and
2 this is what you got to look at -- when John Sommercamp --
3 Special Agent Sommercamp interviewed Charles Head over the
4 phone, that he lied. Charles Head lied to him. I didn't know
5 about Vanegas, and I didn't know about this other company,
6 Meridian.
7 Now Charles Head is called on the phone by an FBI
8 agent. John Sommercamp testifies that he also told him I don't
9 do foreclosures. But in cross-examination, Agent Sommercamp
10 very honestly said, well, you know what, that actually wasn't
11 right. My testimony wasn't right. What he was talking about
12 was during the time he was running loans he didn't do
13 foreclosures. So my report was wrong. You're right about that
14 Mr. Tedmon. And on redirect he was asked that, and he goes no,
15 that's right.
16 Now Agent Sommercamp got it wrong. Does that make
17 him a liar? No. Not at all. And remember what he also said.
18 After that telephone interview, Mr. Head had his lawyers in
19 contact with the FBI and there was an open line of
20 communication.
21 They are trying to make a silk purse out of a sow's
22 ear. That's what they're doing with that. And whether Charles
23 Head said he did or did not know Vanegas, and did or did not
24 know about Meridian, there is no context to those questions.
25 It's an initial inquiry from an FBI agent. That's hardly a

1 confession. That's what they want you to believe.
2 He said I've got lawyers. Talk to them. I asked
3 Agent Sommercamp, weren't they willing to come up and talk to
4 you guys? Well, I don't know about that. But there was an
5 open line of communication, correct? Yes.
6 Does that sound like a guy that's trying to
7 manipulate things when he's trying to contact the Government
8 and talk to them? No. No. Not at all.
9 And again these series 42 e-mails tell you who is
10 really running the show. It's Kou Yang. That's who's doing
11 it. And she lied when she said, I contacted Charles Head, and
12 I cc'd him all the time. Because he's not on here. And that's
13 in 2006.
14 I'm going to go to the substantive counts, but I'm
15 going to finish on the conspiracy in a second. Because the
16 substantive counts do bleed in a little bit.
17 You have got to believe that these cooperators and
18 some of the homeowners that the Government has brought in here
19 put Charles Head into the scheme to convict. And you have to
20 believe that beyond a reasonable doubt. And I'm here to tell
21 you that when we go through the homeowners and the cooperators,
22 there is no chance. Because they are not credible.
23 It's competent evidence. Not any evidence. And if
24 you have a reasonable doubt, a reasonable doubt, you can't
25 convict. And I would submit to you that those e-mails in

1 context show exactly what Charles Head was doing, shows you
2 exactly what his state of mind was, and shows you exactly what
3 his intentions were. And if others violated that, to quote
4 Omar Sandoval, "that's on them." He is not guilty of Count 1,
5 conspiracy to commit mail fraud.
6 Now the other thing that I do want to point out --
7 there is one other thing -- and that is this, in the conspiracy
8 count the Court's going to instruct you that the object or
9 target of the conspiracy was the homeowner, not the lender. So
10 listen carefully when the Court instructs you. Because in
11 order to fine anyone guilty on Count 1, they have to devise a
12 scheme to defraud the object of the conspiracy, the homeowner.
13 Mr. Morris talked about the lender. That's not the
14 object or target the conspiracy. It's the homeowner. So all
15 that stuff about false verifications and phony information in
16 Uniform Residential Loan Applications, that's not the
17 homeowner. That's the lender.
18 Listen to the instruction carefully. Because that's
19 what you have to follow. You took an oath to follow the law
20 whether you liked it or not. That's what the law is on Count
21 1. Not the lender. It's the homeowner. And it will be very
22 clear to you when Judge Mueller reads that instruction.
23 Now moving on to the substantive counts. The first
24 thing that I'm going to cover is this whole issue of
25 materiality. And Mr. Morris talked about it a little bit. But

1 here's what it is in a nutshell. The Court will instruct you
2 that for something to be material, which is an element of the
3 crime, it has to lead someone into an act because they relied
4 on it. That's basically what materiality is.
5 And I'm going to start with the lenders because
6 there's four areas within which it makes it very clear that the
7 lenders fail on the materiality element. You have to have a
8 natural tendency to influence a person to part with money or
9 property. But you take the person in the position they're in.
10 And here's what happens when the materiality issue.
11 The Government called Irma Valdez from Fremont Investment. Now
12 Irma Valdez got up here, and she was the world's leading expert
13 on loans on direct examination.
14 Well, if you knew this, would that be material? Oh,
15 absolutely. If you knew this wasn't their precise employment,
16 income, would that make a difference? Absolutely. That's what
17 she says.
18 But on cross-examination, what did she have to admit?
19 One, Fremont Investment and Loan went bankrupt. That's one.
20 And she fenced with me, but finally she had to admit, yeah, we
21 went through Chapter 11. Now we're under the umbrella of this
22 other company, Signature. And I told her the reason you went
23 bankrupt is because you were taking bad paper because you
24 didn't care. Well, I don't know about that.
25 And I said, well, how about this one. The attorney

1 General for the State of Massachusetts sued Fremont Investment
2 for deceptive practices in their loans. You're aware of that,
3 aren't you? Yeah I'm, aware of that. The Attorney General for
4 the State of Massachusetts. She knows that. Materiality?
5 They cared? No, they didn't. They took anything that went
6 through them. That's what happened.
7 And then I went further. I said, well, you're aware
8 you're a sub-prime lender -- you're not a bank, you're a
9 sub-prime lender. That's true. And you know as a sub-prime
10 lender you take risky paper. That's true. And then you bundle
11 it up, you send it up the line, all the way to Wall Street.
12 Remember that testimony. And you all take your piece.
13 Materiality? No chance.
14 They were a bigger part of the problem than they ever
15 were the solution. And I'll tell you something. Irma Valdez,
16 as positive as she was on direct, was not so sure of herself on
17 cross. That's the demeanor of the witness. Listen to the
18 instruction on how to evaluate a witness.
19 There is no materiality, there is no reliance by
20 Fremont. There is no natural tendency to influence a person to
21 part with money or property in terms of Fremont. Well, there
22 is one witness down the tubes for the Government. Fremont
23 wanted paper, and they wanted profit. That's what they wanted.
24 Then the Government calls Heydi Galindo from Olympus.
25 Now this is a young lady who had no experience in the mortgage

1 or loan industry, got hired, and she was a document processor.
2 She filled in information. And inside of six months or so she
3 becomes an underwriter. Now her testimony was there's four
4 levels - one, two, three, and four. I got to level two.
5 And I asked her, okay, well, you needed second
6 signatory authority to approve a loan of any amount, sizable
7 amount? She said that's true.
8 Then she said this, and this is what's important in
9 terms of her testimony, it's critical. I said, well, listen,
10 if you get a loan, and you write conditions for the loan that
11 need to be satisfied before that loan is approved, you send it
12 off to an account manager, don't you? Yes, I do. And once
13 it's sent to the account manager, you never see it again, do
14 you? No, I don't. So you don't know what the policies and
15 procedures really are of Olympus at all because you never see
16 it again? You don't know if the conditions are ever met? She
17 goes that's true. And by the way, Olympus went out of business
18 after you worked there for a year. That's true. I was there
19 the day they closed the doors.
20 This is their underwriter expert, for lack of a
21 better term. She's not an expert in a legal sense. But the
22 Government trots her up here like she knows what she's talking
23 about. When in fact she's a second-level underwriter who sends
24 the paper off to an account manager and never sees it again.
25 Now where in all of that has the Government proved

1 beyond a reasonable doubt that Olympus materially relies on
2 anything. I would suggest the opposite is true. There is no
3 evidence that they rely on anything. They want paper, and they
4 want profit, and they went out of business on the day she
5 worked there. They shut the doors.
6 Just like Fremont. Get in the pattern, paper and
7 profit and move on. They didn't care. And remember what Omar
8 Sandoval said. I knew the lenders just wanted paper. That was
9 on cross-examination. These are their own witnesses, folks.
10 Materiality on the lender side? No chance. That is reasonable
11 doubt with a capital R.
12 And then finally, we get to exhibit JMH-FF. Now let
13 me pull that one for you. Give me one moment. Well, I can't
14 find it right now. If I can, I'll get back to it.
15 But basically JMH-FF said this, it was from a lender
16 that -- Mr. Haydn-Myer had a document introduced to Sarah
17 Mattson. I'm sure he's going to cover this anyway. The
18 document says, well, we can't really do this on a ratio basis
19 and a DTI, debt to income. So I'll tell you what, just send it
20 back to us and just don't put any income in and don't put any
21 DTI in. That's from a mortgage banker. Does that sound like
22 materiality to you? On the mortgage banker side? No.
23 It's just another example of the reality of the
24 situation. On the lender side they didn't care. There was no
25 materiality. They wanted paper, and they wanted profit. And

1 on the sub-prime level, they just they moved it up the line all
2 the way to Wall Street. Bear Stearns. I asked Ms. Galindo,
3 are you familiar with Bear Stearns. She wasn't familiar with
4 that. Well, use your common sense. It was one of the biggest
5 financial institutions in the world. They went broke because
6 there was so much bad paper because of companies like that.
7 Materiality? No chance. No chance.
8 So where that leaves us is the homeowners. Those are
9 Counts 2, 3, 5 and 6 for Charles Head. And I'm going to take
10 them one at a time. This is on substantive mail fraud. This
11 is what we're talking about.
12 Count 2, Karie Joest. Did you see Karie Joest come
13 in here and testify? It's the Government's case. Their burden
14 of proof. Did you see her come in and say, I was misled. This
15 is a substantive count. No. You didn't hear that.
16 What you did hear was Justin Wiley. The failed male
17 model, Mr. Wiley. I'll get to him in a second. The only thing
18 you have on Karie Joest is the reliance on Justin Wiley. Karie
19 Joest didn't come in here and testify. And I went through the
20 documents with Mr. Wiley and said, well, you went through this
21 with her, right? Oh, yeah. Those are her signatures. That's
22 right.
23 Read the contracts. That's a reasonable doubt. I
24 mean, first of all, the Government doesn't even produce the
25 witness that's supposed to be the victim. Go through documents

1 CH-A1, -A2, -A3, -A5 and -A6. That's the Joest packet in the
2 CH binders. And you're going to see line and verse that she
3 understood and she agreed to the program. It's very clear in
4 the contracts.
5 And I know the Government wants to run away from the
6 contracts. You know why? Because they lose. That's why.
7 Where is their witness? Except for a cooperator, Justin Wiley.
8 That's what they got.
9 And then Mr. Anderson pointed out, well, Mr. Head got
10 money. Yeah, I already told you that. He trained people to do
11 things the right way. And if they misrepresented, that was on
12 them. Not him. That is not proof beyond a reasonable doubt.
13 And as far as Count 2 is concerned, they haven't even
14 produced Karie Joest. Why not? That's a problem. Ask
15 yourselves that. How can you convict him of Count 2 when they
16 didn't even bring her in here. And you're relying on the
17 testimony of a cooperator, that the Court will tell you to view
18 his testimony with greater caution than that of another
19 witness. That's a huge reasonable doubt. You can't convict
20 him of Count 2.
21 Let's go to Count 6. You know what, let's do this.
22 Let's stay with Count 2. How about that. Let's just cover
23 Mr. Wiley right now since he is the one that got up and
24 testified that Charles Head was involved in this crime to
25 defraud Ms. Joest, who didn't testify.

1 Here's the resume of Mr. Wiley. He was charged in
2 February of 2008 in this case. He pled guilty almost two years
3 later, November of 2009. And he admitted on the stand that he
4 had gone through all the discovery with his lawyer. He knew
5 the statements. He knew the Government's theory. He loaded
6 himself up with information. So when he joined the team, he
7 had the script. And that's what he tried to do here.
8 It was a disaster for the Government, this guy's
9 testimony. But that's the set-up. He agreed his maximum
10 penalty was five years, and his guideline range was --
11 60 months is what he's looking at. And he is earnestly hoping
12 the Government will come into this court when he's sentenced --
13 and he hasn't been sentenced yet, as none of these cooperators
14 have -- to get his sentence cut in half. Bias and motive to
15 lie? You betcha. Absolutely.
16 Now remember his demeanor when he testified. He's up
17 there trying to make himself out to be a big deal. And I asked
18 him on this modelling thing, which, I think, is an insight into
19 his personality and psyche a little bit -- well, I was in New
20 York City. Well, that's pretty good. Anywhere else? Miami.
21 New York and Miami. Wow, you're a pretty big shot. How did
22 that go? Pretty well. How long did it last? Six months,
23 eight months maybe. Six, eight months, that's it? He failed.
24 So he came out to California to get a job. He didn't
25 have anything else. This is Justin Wiley. He testified -- he

1 admitted he needed to perform for the Government to get his
2 deal, and that's exactly what you saw. And just like Kou Yang,
3 every single time he had to, he would make a statement, well, I
4 went here and I talked to somebody else, and Charles Head. I
5 got up in the morning, brushed my teeth, had breakfast, drove
6 the car, went to my office, and Charles Head.
7 Kou Yang did the same thing. I mean, look at the
8 demeanor of the witness, look at their motives, look at their
9 bias. Follow the law. Greater caution than any other witness.
10 That's Justin Wiley.
11 And the Government comes in here and tells you to
12 convict Charles Head on Count 2 on that guy's testimony alone?
13 And they don't even bring in Karie Joest. That's Count 2. You
14 must acquit him of Count 2.
15 Count 6, Terri Jean Turner. She didn't testify.
16 There is no statement from her. The Government relied on the
17 testimony of Elizabeth Huerta Russell. Same dynamic.
18 Homeowner's not here. They are relying on a cooperator.
19 And look at the documents, 43-F through 43-F10, and
20 in the C binders, CH-D1, -D3, -D4 and -D6. Now the 43-F
21 document is the one that Special Agent Howard testified he
22 found in Charles Head's home. But the Bates number shows it
23 came from Lavar Fletcher's place. Either way, who cares. Read
24 the contract. In the CH-series we put them all in there. Read
25 them. She signed the contract that says what it says. But for

1 the testimony of Elizabeth Huerta.
2 Here's Elizabeth Huerta's dossier. She wasn't even
3 charged. She got a complete pass. She got immunity. And the
4 Court will tell you, the person that gets immunity you must
5 look at with greater caution than that of another witness.
6 That's your starting point. She's the former girlfriend of
7 Charles Head, and mother of two of his children. And I would
8 submit to you in watching her, she's a little bit hostile
9 toward Charles Head. Just coming into the door, that's true.
10 And then the Government gives her immunity on top of it, a
11 complete pass.
12 She can say whatever she wants. She put all the
13 blame on Charles Head. But you know what's interesting about
14 this? She had to admit when she met with Ms. Turner, she was
15 with Cindy Gastelum, and Charles Head wasn't there. So she can
16 conveniently get up here and say, oh, he told me to do this,
17 and he told me to do that, and I was so concerned later on when
18 I found out all these horrible things.
19 Go back to the e-mail where Charles is saying, hey,
20 watch me do it then. Be up front about it. You can't square
21 those two things. You know why? Because Elizabeth Huerta is
22 lying, and Charles Head is telling the truth in that e-mail.
23 That's what's going on here. That's the reality. She cannot
24 be touched. She's got immunity.
25 And then she comes in, and she says later, well, I

1 came back, and I was so offended because I found out all these
2 horrible misrepresentations were going on. That's what she
3 would like you to believe.
4 Well, first of all, let me ask you this as far as the
5 contact with Ms. Turner. Liz Huerta gets up here -- or Russell
6 gets up here and testifies. You don't have the homeowner.
7 She's not here. Who is the one person who could have come in
8 here and said, well, yeah, you know, we went there, and, you
9 know, we did tell her that she was going to get her equity, and
10 she was going to be on the title. Cindy Gastelum. She's all
11 over these documents all over this trial. Did the Government
12 produce her? They are giving immunity to people. They gave it
13 for Liz Huerta. They gave it to Nora Rivas. Cindy Gastelum
14 doesn't ever show up. That's a reasonable doubt, folks. Why
15 not? It's their burden. It never shifts over to my client.
16 Ask yourselves that.
17 The Court will give you a very important instruction.
18 You need to listen carefully to this. You should consider
19 evidence or lack of evidence in making your decision. Check
20 that one out when the Judge reads that to you. There is a
21 substantial lack of evidence here. They are cherry-picking the
22 documents they want. They are cherry-picking the witnesses
23 they bring up here. They are giving immunity or cooperation
24 deals to all of them. And that's the type of testimony they
25 want you to convict Mr. Head on. That's nonsense. Where is

1 Cindy Gastelum? Nowhere to be seen.
2 And then finally on Ms. Huerta. She says, well, I'm
3 so offended. This is horrible. I'm an honest person. But
4 what happens is on cross-examination I ask her, well, you were
5 so offended that your current husband, James Russell, a year
6 later does a deal with a guy named Leonard Ambrose that Charles
7 Head has nothing to do with, and you ripped him off.
8 Well, that was really my husband's thing. So all of
9 a sudden, well, we'll shove it off on Mr. Head for her ex. And
10 then when I put it in her face. And this is CH-KK1 through 11.
11 Look at those, CH-KK1 through 11. Those are the documents that
12 Elizabeth Huerta used, fraudulently produced, had her current
13 husband sign them, to go and take property from a guy named
14 Leonard Ambrose who lives in Oakland. Did you ever intend to
15 live in Oakland, Ms. Huerta? No.
16 But she was so offended that Charles Head would do
17 something illegal a year before. You can't have it both ways.
18 He did not tell her to go lie. She went up there and gave the
19 documents to Ms. Turner. She signed them. The contracts speak
20 for themselves. And later on with her new love, Mr. Russell,
21 she goes and does a deal. But Charles Head has nothing to do
22 with, has no involvement in, doesn't even know about. That's a
23 reasonable doubt. That's Elizabeth Huerta. That's Count 6.
24 Let's go to Count 3. Mary Salazar. Mary Salazar
25 never once mentioned Charles Head's name in all of her

1 testimony. Not once. That's compelling evidence? That's
2 evidence to convict somebody beyond a reasonable doubt? They
3 bring the homeowner here finally, and she never mentions his
4 name. Well, that's a little curious.
5 Again, the Government's trying to bootstrap this
6 scheme and throw him in the middle of it. But yet the very
7 person that's supposedly the target of it never once mentioned
8 Charles Head's name. Not once.
9 She said she dealt with Mike Head and Cindy. Well,
10 there's Cindy again. Cindy Gastelum. Government didn't
11 produce her. Well, she could have answered a lot of questions.
12 A lack of evidence is a basis to acquit. Why aren't
13 they here? The homeowners aren't here. Cindy Gastelum is not
14 here. It's a bunch of snitches. That's what they're relying
15 on. Who are inherently unbelievable.
16 And Ms. Salazar -- and you can look though documents
17 CH-B1, -B2, -B3 and -B6 -- admitted she signed the documents.
18 But she never mentions Charles Head's name anyway. That's
19 proof beyond a reasonable doubt to convict him of substantive
20 mail fraud? No chance. It's not there.
21 Finally, Count 5. Shannon Taylor. Now, Shannon
22 Taylor testified that she dealt with Josh Coffman. She had one
23 meeting with Charles Head. And Mr. Morris recited her
24 testimony accurately in his opening closing. She testified
25 that Josh Coffman did all the taking, and Charles Head nodded

1 from time to time. And then she testifies that she didn't
2 understand what was going on, that she was misrepresented and
3 all the rest. But there is one document that belies everything
4 that she's saying. One document. And it's 11-F. It's a grant
5 deed. I covered that earlier today.
6 Ms. Taylor testified that she looked at the grant
7 deed on cross-examination, and that was her signature, and that
8 was her husband's. And that grant deed clearly passes title
9 from her to another person. So she can say what she wants
10 about she didn't know. She signed the grant deed. She knows
11 what it is. She's not confused. And she also testified that
12 while we didn't have all those documents, she signed a bunch of
13 them. And you know what they are. We have two binders full of
14 CH exhibits.
15 That same sequence of exhibits applies to Ms. Taylor.
16 And the key is 11-F. She signed the grant deed deeding the
17 property over. And she also testified after the meeting that
18 she had, she dealt with Josh Coffman, not with Charles head.
19 She wasn't misled. She was given the documents. She had an
20 ability to cancel if she chose to. She could go to a lawyer
21 like everybody else. She signed them. She signed the grant
22 deed. And off she went.
23 And she also testifies that in September 2005 she
24 stopped making the payments. A violation of the contract. But
25 you know what, she was allowed to live there. She didn't get

1 evicted. There was some legal proceedings going on, and
2 ultimately the house was sold and the proceeds were split.
3 That's what happened. Where is the misrepresentation there?
4 She gets money. $20,000 I think it was. She's able
5 to live there. This is totally consistent with the contract.
6 She signs the grant deed. She violates the contract, so she
7 has no option or right to do anything. But yet she's allowed
8 to live there, and ultimately the house is sold, and she splits
9 the proceeds. Tell me where there is a crime there in any of
10 that. There isn't. And you must find Charles Head not guilty.
11 Now I've got a couple other things and then I'm going
12 to be done. There is some other individuals in this case that
13 testified. And I want to cover two of them that I haven't
14 covered already.
15 Kou Yang and Omar Sandoval. Omar Sandoval admitted
16 he pleaded guilty to vehicle theft. So he has a prior for
17 stealing. He's a thief. That's your starting point for
18 credibility for Mr. Sandoval. Then he's charged in
19 February 2008 in this case. He pleads guilty on March 13th.
20 He had the discovery for almost five years. March 13th of this
21 year, couple months ago, he finally plead guilty. Had the
22 discovery for five years. Then he decides to plead and
23 cooperate. He has all the discovery, and he acknowledges he
24 went through it with his lawyer, Mr. Bigelow. He knew all the
25 statements and all the rest of it.

1 Then at the eleventh hour he pleads guilty, and the
2 Government trots him up there like he's a credible guy. He's
3 completely incredible. He's looking at 20 years. His
4 guideline range he admitted was 78 to 97 months, and he's
5 hoping the Government will recommend the low end and half off
6 of that. Now it's up to the Judge to decide. That's true.
7 That is the credible guy that you convict somebody on? No way.
8 But then on cross-examination, finally he's forced to
9 tell the truth. And here's what he says. I worked for Charles
10 Head in 1999, and then I left. Then I came back in the early
11 2000s. Then I left for five months, and then I returned.
12 And here's what he said. He had admitted the details
13 of the program were proper. He agreed that the deals he did
14 were his deals. He confirmed that Kou Yang ran the office, not
15 Charles Head. Kou Yang ran the office. So he impeaches Kou
16 Yang. He said any misrepresentations are on him, not Charles
17 Head. And he also testified the lenders didn't care with
18 regard to the loan information.
19 And then I want to talk about Mr. Figueroa. Remember
20 Mr. Figueroa said in December 2003 there was an unknown
21 Hispanic male that came knocking on his door? Do the math. It
22 was Omar Sandoval. And look through Exhibits D2 -- sorry --
23 10-D2, 10-F2, and 40-Q.
24 40 Q is an e-mail that Charles Head writes about the
25 Figueroa matter. It's not his deal. It's Sandoval's deal.

1 That's Omar Sandoval.
2 Then we go to Kou Yang. Prior felony conviction for
3 grand theft. Skimming from a bank. She went to state prison.
4 She got out. And who referred her to Charles Head to get a
5 job? Liz Huerta.
6 Charles Head gave her a job. And I told you in the
7 opening, she violated the trust. That's exactly what she did.
8 She is a felon who went to prison. She figured out the lay of
9 the land, and then she ran her own thing. That's Kou Yang.
10 She was charged in this case in February of 2008. She pled
11 guilty on March 13 of this year. A couple months ago. Sound
12 familiar? Like Mr. Sandoval? She also had the discovery for
13 over five years. Admitted she had gone through it with her
14 lawyer. Knew the lay of the land. Knew what she had to do.
15 She's a confirmed fraudster, a two-time loser. That
16 case and this one. This is the kind of evidence you're going
17 to rely on to convict anyone, much less Charles Head? No
18 chance.
19 Her guideline range is 108 to 135 months. The
20 maximum penalty is 20 years. She's hoping for the low end and
21 half off. That's the starting point. That's why the law
22 requires you to look at her testimony with greater caution than
23 other witnesses.
24 She ran the office. She forged Charles Head's
25 signature. She lied about always cc'ing Charles Head. As I've

1 already covered, on direct examination she always said "and
2 Charles Head," "and Charles Head." Throw a quarter in the
3 monkey. "And Charles Head." It was a joke. She's not
4 credible at all. And she said, I never signed a 1003 form,
5 which is the loan application. But we know that's an absolute
6 lie because Nora Rivas testified that when she bought her house
7 in Whittier, Kou Yang helped her. And Kou Yang filled out the
8 1003 and put false information on it. So there you go.
9 Direct impeachment of the Governments's star witness
10 that's going to come in and say this is how the inside of the
11 operation worked. That's credible evidence? It is not
12 credible evidence. It is not the kind of evidence you can use
13 to convict my client. That's Kou Yang.
14 THE COURT: You're at 1:10, Mr. Tedmon.
15 MR. TEDMON: Just wrapping it up, Your Honor. These
16 binders here are the CH exhibits. Look through them. And I
17 want to give you just a little bit of guidance, and then I'm
18 going to finish.
19 In those binders here's what you will find. There is
20 CH-A, -B, -C, and so forth. And here's the series. The
21 1-series are the Equity Purchase Agreements. So in every
22 single transaction if there is an Equity Purchase Agreement,
23 there is a 1, A1, B1, C1, et cetera. That's the 1-series.
24 The 2-series are the option agreements. The 3-series
25 are the Residential Lease After Sale. The 4-series is the

1 Acknowledgement By Seller. The 5-series is the Notice of
2 Cancellation. And the 6-series is the affidavit of deed.
3 There are 31 separate transactions in those two
4 binders that we put in. The defense. Go through them all, and
5 you're going to see the same thing time after time after time.
6 They are contracts. They say what they mean, and they mean
7 what they say.
8 And the Government has come into this courtroom with
9 cooperators that have an ax to grind, a bias, and a motive to
10 get their time off, and that's the meat on the bones.
11 I've covered the homeowners. It's not credible.
12 I've gone through every count of the conspiracy count. When
13 you look at the totality of all the facts, and you assess this
14 case for what it really is, not what the Government would like
15 it to be, you will come up with verdicts on not guilty on
16 conspiracy to commit mail fraud as to Charles Head, and you
17 will come up with verdicts of not guilty on Counts 2, 3, 5 and
18 6, mail fraud.
19 I'm going to leave you with one other thought. Did
20 you see one witness that came in here that was associated with
21 Charles Head or worked with Charles Head that was neutral?
22 That came in here without a cooperation deal? That came in
23 here without immunity? Not one.
24 He ran his business since 1999. And they couldn't
25 come up, with a million pages of documents and seven years of

1 preparation, to come up with one witness that sits in that
2 chair and says, I don't have immunity, I'm not a cooperator,
3 I'm a neutral independent person, and let me tell you all the
4 horrible things that Charles Head did. Not one.
5 There is your final reasonable doubt. Homeowners
6 that aren't called to the witness stand. Cooperators that have
7 a deal. And people given immunity. And witnesses they don't
8 call. That's their case.
9 And when you return to this courtroom with a verdict,
10 I'm confident you will come back with verdicts of not guilty on
11 all counts. Thank you very much for your time and attention.
13 concludes closing argument on behalf of Charles Head. We're
14 going to take another break. Another 15-minute break. Let's
15 be ready to go no later than 11:55. And I'm going to give you
16 an update on where I think we are, as we're proceeding through
17 the morning. But during this break, as always, please remember
18 my admonitions. They do remain as important if not more than
19 ever. Have a good break, and we will see you in about
20 15 minutes.
21 (Jury out.)
23 All right. Just in terms of our time. Assuming
24 Mr. Haydn-Myer goes for an hour, maybe an hour and five, and if
25 the Government has a 20-minute rebuttal, that brings us right

1 to 1:30. I'm asking Ms. Schultz to see if the jury is willing
2 to stay until 2:00 today.
3 Because if the Government has a longer rebuttal, then
4 I'm assuming we can at least get through that, if the jury is
5 willing to stay until 2:00. And then I would read jury
6 instructions tomorrow morning from 8:30 to 9:00. I have a
7 calendar at 9:00.
8 And right now that calendar is scheduled to run into
9 the afternoon. So either the Government will be done by 1:30,
10 and if the jury is willing to stay, I'll read instructions. If
11 the Government needs more than the 20 minutes, I still think I
12 can read instructions tomorrow morning. If the Government
13 needs to run over until tomorrow morning, then I need to
14 readjust my criminal calendar.
15 MR. ANDERSON: I think it's going to take more than
16 20 minutes. Just given the length of what Mr. Tedmon discussed
17 and the breadth of it.
18 THE COURT: All right. I'll ask for an update before
19 you begin. And Ms. Schultz will see if the jury is willing to
20 stay until 2:00 today. I think that helps us one way or
21 another. So you will be ready to go at 11:55, Mr. Haydn-Myer?
24 (Break taken.)
25 (Jury in.)

1 THE COURT: You may be seated. Welcome back, once
2 again, ladies and gentlemen. Thank you for checking your
3 schedules. We'll let you know how we think the rest of closing
4 and jury instructions will proceed after the next break.
5 At this point, I'm going to acknowledge
6 Mr. Haydn-Myer to present closing argument on behalf of Jeremy
7 Michael Head. Mr. Haydn-Myer.
9 Ladies and gentlemen, you've heard some of the jury
10 instructions. And as you know, I represent Mike Head. One of
11 the jury instructions that you've heard is about reasonable
12 doubt, and you've also heard about specific intent.
13 And as you can see, the prosecution must prove beyond
14 a reasonable doubt that the defendant acted with the intent to
15 defraud, that is, the intent to deceive or cheat.
16 And what happens is when you go back in your jury
17 deliberation room, you're going to be given a packet. And the
18 packet, of course, has a bunch of the instructions and has the
19 numbers on it. And then the exhibits, the ones everybody keeps
20 talking about, they're going to be given to you also.
21 The exhibits are in different binders. This is the
22 binder that we put together for Jeremy Michael Head. And when
23 I was going through this and trying to put together the
24 closing, a lot of the exhibits that I'm going to be showing you
25 are actually marked on the display. And then you can find them

1 in the binder later, when you go back in the jury deliberation
2 room, to help you look at the exhibits and look at the law.
3 The first person I would like to talk to you about is
4 Emily Silva. And Emily Silva, of course, has been mentioned
5 several times already today. And Emily Silva is one the
6 counts. And when the lawyers say one of the counts, that's
7 means that's one of the charges that you're go to be asked to
8 make a judgment call about when you go back into chambers.
9 The next person up there that you see is Annelie
10 Durbin. And Annelie Durbin was the notary public that was the
11 last witness that we called. She was from Porterville, and she
12 actually brought her book. And I asked her several questions
13 about her notary book for Emily Silva.
14 Now if you remember, when Emily Silva testified, she
15 said she had never seen the grant deed before. That's the
16 grant deed that Emily Silva was discussing. The reason Annelie
17 Durbin testified was because Annelie Durbin was the notary that
18 had Emily Silva sign her name on the grant deed.
19 What's important about the grant deed, and it goes
20 back to specific intent, is because the issue is not what the
21 homeowners thought. When you go back and you start
22 deliberating, you're not going to be asked what the homeowners
23 thought. You're going to be asked, like the first slide I
24 showed you, what the specific intent was of Michael Head. Mike
25 Head was not there when Emily Silva signed the grant deed

1 that's shown before you.
2 And if you look at it, it says that Emily Silva is
3 granting it to Jason Marshal. What that means is in
4 Porterville, Emily Silva went out and found a notary, Annelie
5 Durbin. The deed was already completed, and it says that it
6 goes to Jason Marshal. Michael Head was not there during the
7 transaction.
8 So how does this go to Michael Head's specific
9 intent? Michael Head is sitting back in his office, and he
10 receives the grant deed. In his mind, he knows that Emily
11 Silva went out, found a notary, the notary signed it, and it
12 says that another person is coming onto the grant deed.
13 There is Annelie Durbin's stamp and name. There's
14 the notary book. There have been many accusations about false
15 grant deeds. That notary book was brought, and she discussed
16 it, by Annelie Durbin. Emily Silva, one of the counts, signed
17 over the grant deed in front of Annelie Durbin, and then it
18 went to Michael Head.
19 Wire instructions. Questions asked of Emily Silva.
20 Did you know the money was going somewhere else? No, I didn't
21 know that.
22 The wire instructions. The wire instructions are
23 Government's Exhibit 21-B3. Annelie Durbin discussed also wire
24 instructions. She was there. They were filled out. Annelie
25 Durbin's policy was to make sure that the documents were

1 completed. Emily Silva signed in front of Annelie Durbin, the
2 notary, the wire instructions to transfer the money.
3 But once again, the importance to the grant deed, the
4 importance to the wire instructions are what Michael Head did
5 with both those when he got them in his office. In his mind,
6 he knows that he's entering into a contract with Emily Silva.
7 There is a close up of 21-B3.
8 What does it say in the contract? This is one of
9 those times where I've also included it so you can find the
10 exact portion of the contract, CH-H1. Mike Head has gotten the
11 grant deed back, has gotten the wire instructions. And in the
12 contract that he has with Emily Silva it says he has to give
13 her $5,000. That's the contract.
14 Emily Silva had a little trouble remembering it. But
15 if you note, that's JMH-KK. Once again, that's JMH-KK, which
16 is in the binder for you to review. Mike Head sends Emily
17 Silva $5,000 to begin the contract.
18 What does Emily Silva do? Even though there is a
19 binding contract, even though there is a grant deed, even
20 though there is wire instructions, she doesn't make payments.
21 What you're looking at was a document that was
22 prepared by Sarah Mattson. You can also look at the stickers
23 on this one, JMH-J.
24 What's important about JMH-J? Emily Silva does not
25 pay on the contract. And you've heard over and over and over

1 again that the conspiracy, the scheme was to actually take
2 people's property if they missed one payment, if they didn't
3 miss any payments. What you're looking at is a document
4 prepared by Sarah Mattson from Financial Enterprises where
5 Emily Silva doesn't make payments for five months.
6 This is JMH-LL. This is what Emily Silva sent to
7 Financial Enterprises coming up to date. Five months she
8 doesn't pay. Is she evicted? No. Is she evicted in the first
9 month? No. Is she evicted in the second month? No. The
10 third? No. The fourth? No. The fifth? No.
11 Mike Head is in a contract where he can, according to
12 Sarah Mattson, take her house. She's not on the grant deed
13 anymore. And what does Mike Head do? He allows her to remain
14 in the house. He's trying to complete the contract. He does
15 not evict her. Everything you've heard about everybody being
16 evicted, right now you should pause because you're looking at a
17 document -- you're looking at several documents where it didn't
18 happen.
19 What else is going on during this period of time?
20 Sarah Mattson mentioned it. There are actually two mortgages
21 being paid. This is just one portion of it. JMH-K. JMH-K is
22 one of the checks. Jason Marshal's name is on it. Prospect
23 Street, Porterville. Financial Enterprises is making payments
24 on Emily Silva's property even though she is not paying on a
25 monthly basis. She's $5,000 behind.

1 You heard time and time again from the Government,
2 this is what they were looking for, this is what they wanted,
3 they wanted to throw people out of their houses. Nope. He's
4 making payments on the mortgages. There's two of them -- you
5 can see it in EE -- for her house, and he's not throwing her
6 out. He wants her to complete the contract.
7 What's the fair market value of her house? CH-H1.
8 It's in the middle of it. $360,000 for Emily Silva's house.
9 360,000. How much were the two loans on it? About 175? You
10 can look it up. Government's Exhibit 21-B.
11 How much equity is in the house when Emily Silva is
12 not making payments pursuant to the agreement to Financial
13 Enterprises? Over $185,000. Financial Enterprises could have
14 evicted her five times over, taken the equity for $185,000, but
15 Michael Head is keeping her in the contract.
16 Specific intent. Specific intent. Specific intent.
17 If you're looking at this, and you're going that's right,
18 that's what they said, and I'm looking at documents which is
19 showing a completely contrary picture for Michael Head, and
20 you're getting pause. You're thinking, he could have. He
21 absolutely could have taken the 185 grand. He could have taken
22 more. There is no exact expert testimony, but we lived through
23 2004, 2005. Prior to 2006 property values were going up. He
24 doesn't evict her. Specific intent to cheat? No.
25 What did Ms. Silva testify to? She got her house

1 back. Go back and look at her testimony. The last question I
2 asked her -- next to last. Did you get your house back? Yeah,
3 I did.
4 Everything you heard about people losing their houses
5 and getting evicted immediately is completely blown out. It's
6 negated by the documents you've just seen, by the testimony of
7 Ms. Silva. And remember, it's not one individual. It's
8 homeowners. It's plural.
9 When you're going back and you're deliberating, and
10 you've got these documents laid out in front of you, and you're
11 thinking about Ms. Silva, think about what Mike Head's specific
12 intent was for Ms. Silva. Start an eviction process, get her
13 out, take the 185 grand? Nope. Put her in her house. Keep
14 her in her house. Give her the $185,000 plus. She was going
15 to be evicted anyhow by, I guess, the bank or trustee, whatever
16 she testified to. That's not Mike Head. She got her house
17 back.
18 This is part of a chart. Name, of course, says
19 Silva. At one point was she late or was she under foreclosure
20 -- not with Mike Head and Financial Enterprises but with the
21 lending institution? Yes. Did she get her house back? Yes.
22 Was she late to Mike Head's Financial Enterprises? Yes. Five
23 months. We have seen the documents. Was she evicted? No.
24 Ms. Salazar is the other count. The other count we
25 keep talking about. Remember, I told you when you go back

1 you're going to actually see the counts.
2 Ms. Salazar said that she did not know, on the
3 witness stand, that she was selling her property. But there is
4 a letter. There was a letter that was written by Ms. Salazar
5 to Financial Enterprises.
6 And it's Exhibit JMH-E. "I, Mary Salazar, will be
7 exercising the right to purchase back my home as it states on
8 our agreement. I hereby will be assigning my daughter, Andrea
9 Ramos, the right to complete all transactions. Please call me
10 at" -- and I knocked the phone number out -- "within one
11 business day of receiving this certified letter, so that we can
12 begin the process, so I can retain all documents needed to
13 purchase my home."
14 This is 2005. She wrote the document to Financial
15 Enterprises. To Mike Head. To Sarah Mattson. She wrote that
16 she wants to buy back her home. She wants to buy back her home
17 because she knew she sold it. But most importantly, what does
18 Mike Head think when he receives the letter? He thinks that
19 she knows that she sold her home to him because that's what
20 she's writing in the letter.
21 What does he do? Does he try and get her out of it?
22 She's assigning her rights to her daughter. Was she behind?
23 She was only behind by about one month according to Sarah
24 Mattson's Exhibit JMH-U.
25 But once again, you heard it time and time again,

1 according to the Government the scheme was to get people out of
2 their houses, to get them out. Was she evicted? No.
3 Were they paying the mortgage? Was Financial
4 Enterprises paying the mortgage on her house? Yes. It's
5 Exhibit JMH-V.
6 Now who ends up with Ms. Salazar's home? As it said
7 in the letter, as was her testimony, her daughter ended up with
8 the house. She assigned the rights of the contract to her
9 daughter. And what did Mike Head do? He followed her wishes
10 and put her daughter back in the house. She wasn't evicted.
11 The daughter is the one that bought -- picked up the rights to
12 the house.
13 As I wrote before -- as I said before, you're going
14 to get the letter in the jury deliberation room. Read it. And
15 if you're Mike Head, and you get that later, what do you do?
16 You give her what she wants. She completed the contract. The
17 rights go to the daughter. And he gave the rights to her
18 daughter. There is no specific intent to cheat.
19 I did the same thing for Ms. Salazar. Was she late
20 to the bank? Yes. Did she get her house back? Yes. Was she
21 late according to Financial Enterprise records, Sarah Mattson?
22 Yes. Was she evicted? No.
23 Two properties, both done by Financial Enterprises,
24 both done by Mike Head, no eviction. No plan to evict, no plan
25 to cheat.

1 Pamela Speights. She was one of the other witnesses
2 that was called by the Government. Ms. Speights denied and
3 denied and denied the fact that she got a check for $3,500.
4 She finally admitted it. She said, yeah, I did finally get a
5 check for $3,500. And I said, well, is the reason you didn't
6 want to say that you got the check for $3,500 is because $3,500
7 was in the affidavit of the deed? She said yeah.
8 That's right. She knew that she had signed a deed.
9 She knew that she received a check for $3,500. And there it
10 is. JMH-B. She entered into a contract with Financial
11 Enterprises. Mike Head sent her the check for $3,500.
12 And what does she do next? This is JMH-C, written
13 4-14-05. And you can see that there is not enough selected
14 funds, uncollected funds in March. Sorry, Speights/Graham, the
15 same person. She bounced a check. She didn't make payments.
16 JMH-S. There is the record that was compiled by
17 Sarah Mattson. Started missing payments. And look at this,
18 JMH-T. And I want to you look at the date, May 26, '06, and
19 then look at NSF.
20 This is JMH-T. What's important about this?
21 Ms. Speights/Graham was not making payments to Financial
22 Enterprises. That NSF is because Financial Enterprises didn't
23 have enough money in that account because it's May of '06.
24 You've heard the testimony. You've seen some of the records.
25 Financial Enterprises began losing money. They were going

1 under in '06.
2 What does this check signify? Ms. Speights/Graham is
3 not making payments to Financial Enterprises. She has stopped.
4 Financial Enterprises is making the payments on the mortgages
5 to the point where they run out of money in their accounts.
6 Specific intent to defraud. Think about it. If
7 Financial Enterprises, run by Mike Head, just wanted to take
8 the money and run, they would have taken the money and run.
9 Mike Head on this one check is emptying Financial Enterprises'
10 accounts to the point where they don't have the money, trying
11 to cover Pamela Speights' mortgage. They are running out of
12 their own funds to cover a person that's not even giving them
13 money that's in breach of the contract.
14 I believe it was 14 months of the mortgage, 12 to 14,
15 right in that range. You can see it in the documents.
16 Financial Enterprises continues to pay the mortgage for Pamela
17 Speights/Graham even though she's not paying for 12 to
18 14 months.
19 Specific intent to defraud. You're in business with
20 somebody else. They breach the agreement. Mike Head wants to
21 keep them in the agreements to complete it. He wants to do it
22 so bad that he's actually making payments even though they are
23 not giving him anything back pursuant to the agreement.
24 Ms. Speights did get her house back, and there was,
25 as she mentioned on the record, some litigation. But look at

1 it. Was she late to the bank/lender? Yes. Did she get her
2 house back? Yes, with litigation. Was she late paying
3 Financial Enterprises? Yes. Was she evicted by Financial
4 Enterprises, Mike Head? No.
5 Brenda Clark. One of the other witnesses called.
6 Brenda Clark denied and denied that she ever received a check
7 from Financial Enterprises. I had to show her the check, ask
8 her about the signature on the back. This one is for 2,000.
9 This one is for 9,000.
10 $11,000 that Financial Enterprises gave to her
11 because they wanted to get into the contract. What happens?
12 Mike Head did not meet with her. That was somebody else from
13 Financial Enterprises. And she calls up and says, I'm not on
14 the deed, put me on the deed. We have heard this before. Did
15 he stonewall her? Did see say no? Did he give her the
16 runaround? Did he say, absolutely not, that's not part of our
17 agreement? No.
18 What did he do? He put her on the deed. What you're
19 looking at is JMH-I. And as you can see, Brenda Clark has been
20 joined, and her husband, with Financial Enterprises.
21 What else do we know about Brenda Clark, the deal,
22 the transaction? JMH-N. The other document that was put
23 together by, Sarah Mattson. She quit paying, based on her own
24 testimony on the record, after she was put back on the deed.
25 Stopped paying completely. Thousands and thousands of dollars

1 of mortgage being paid out. Who's paying it? Financial
2 Enterprises.
3 Brenda Clark has not only breached the contract. She
4 has completely disintegrated it. What does Financial
5 Enterprises do? They keep sending her bills, and they keep
6 paying the mortgage. Right here alone, ladies and gentlemen,
7 as you're looking at it, think about the Government's argument
8 again and again and again. Get them out of their homes. Get
9 them out of their homes. Evict them. Evict them. Evict them.
10 Even if they are a little bit late. Even if they're not late.
11 $32,000. How much was paid out, 20 months,
12 22 months, 24 months, by Financial Enterprises for the
13 mortgage, and Brenda Clark was still living there.
14 Specific intent to cheat or defraud. To throw them
15 out of their house. Mike Head is doing what he can to keep
16 them in their homes. And it's in the documents that you are
17 going to receive.
18 Now we've talked a little bit about the checks.
19 Sarah Mattson put together JMH-EE. And that's an entire list
20 of all of the mortgages that are being paid. When I'm showing
21 you the checks, it's usually just like for the first or the
22 second. It's not a combination of the two. You can look at
23 JMH-EE and do the comparisons for yourself.
24 But this is another example of them paying on the
25 Clarks. So Clark, was she late to the bank or lender? Yeah.

1 According to Ms. Clark she lived in the house for four or
2 five years afterwards. Was she late to Michael Head? Yes.
3 Repeatedly. Month after month after month. And it's in the
4 exhibits. Was she evicted? Not by Michael Head.
5 Ms. Daniels. This is instruction number 14.
6 Ms. Daniels was called by the Government for a specific
7 purpose. Only for the intent, motive, preparation, plan,
8 absence of mistake or of accident and for no other purpose.
9 Ms. Daniels said, I did not bounce a check. I
10 didn't. However, Ms. Daniels, that's a return for
11 non-sufficient funds for $2,350. And it's Exhibit JMH-HH. She
12 did. What else did she say? She got the contract while she
13 was at PG&E. Her direct testimony was she didn't have a job,
14 and that was the reason she wanted to meet with Financial
15 Enterprises.
16 However, then she testifies that, no, she was still
17 working at PG&E. I believe that's where she got her contract.
18 She said she didn't have copies of the agreement that she
19 signed, however she faxed the contract back to Financial
20 Enterprises. You've all run fax machines. You run it in. You
21 run it right back out. That's what the contract came back to
22 her as. She obviously had copies.
23 She went to a notary to have the deed stamped. She
24 had the deed in her hand, went out and had it stamped. She
25 obviously had plenty of time to read it, and Mike Head wasn't

1 there. That was Ms. Daniels going to a notary.
2 But if I may, I'm going to show you another one that
3 was just brought up by Mr. Morris, the Lees. This is another
4 example of specific intent not to throw somebody out of their
5 house.
6 Robert and Gwen Lee did not testify. This is JMH-P.
7 If you go down to the very bottom of it, you're going to see
8 $8,350. The $8,350 is how much they were late paying, and
9 Financial Enterprises was still covering their mortgage also.
10 How do you know? Because you can match the bottom of the check
11 to the other portion. And as you can see, $2,286.42.
12 So as you look through all of them, excluding Lees',
13 excluding Daniels', look at Silva, Salazar, Speights, and
14 Clark. Were they all late to their lenders before they ever
15 met Financial Enterprises? Yes. Did they get their house
16 back? Silva, yes. Salazar, went to her daughter. Speights,
17 yes. Clark, lived there for four or five years and didn't pay
18 anything. Late to Financial Enterprises? Yes. Yes. Yes.
19 How many of them were evicted by Financial Enterprises? None.
20 Not a single one of them was evicted by Financial Enterprises.
21 The Government's theory to prove to you beyond a
22 reasonable doubt that that's what the scheme was about is
23 wrong. It's wrong based on the documents. It's wrong based on
24 everything you're going to receive when you get back there.
25 That was not Mike Head's intent.

1 He goes to Arizona. And I'm going to start going
2 through these rather quickly JMH-R. And I want you to look at
3 the dates. The date that the check is drawn. 5-24-06,
4 1-27-06, 1-27-06, 1-27-06, 1-26-06, 1-26-06. Again, again.
5 3-22-06. All of those were made to other mortgages during that
6 timeframe. '06 was when Financial Enterprises started to go
7 under.
8 How much did Sarah Mattson say based on JMH EE? And
9 you're going to get that one. How much were they paying a
10 month in mortgages? $46,983.66. That's what we have in
11 JMH-EE.
12 How much did they pay in other things? Sarah Mattson
13 was making 60,000 a year. You heard about all the other
14 employees, several others. And still they kept making the
15 payments on the mortgages.
16 Patrick Harding. Patrick Harding did not work in the
17 Los Angeles area or Southern California. Patrick Harding was
18 working in Arizona. Why is this important? Because Patrick
19 Harding was trained by Mike in Arizona.
20 What did Patrick Harding say? He testified based on
21 his training he never ever told anybody anything he thought was
22 fraudulent. Nothing. Did he ever tell people that they were
23 going to remain on title when they really weren't? Nope. Who
24 trained him? Mike. Didn't close any deals there, closed seven
25 in Florida. Did it make any difference to Mike? Nope. Think

1 about all the specific intent, all the times Mike Head has
2 tried to keep them in, all of the other documents you've seen
3 where they are still paying the mortgages, and then think
4 Patrick Harding and the training. Mike Head didn't tell him to
5 lie.
6 Mr. Tedmon briefly touched on this. Lenders. This
7 is JMH-FF. There was argument brought up by the Government
8 about, no, the lenders were fine, everything was going well
9 with them, they weren't into anything. But remember, this case
10 is not about the lenders. It's not what happened to the
11 lenders. The only reason I'm bringing this point up to you is
12 to show some counter evidence. It's about specific intent in
13 regards to the homeowners.
14 But this e-mail is not written from Mike Head or to
15 Mike Head. This e-mail is from Gary Gordon. Gary Gordon is
16 out of Austin, Texas, and he's a mortgage banker. Irma Valdez
17 was the one that said, no problems, you know, we had to do
18 things by the book, we had to make sure that they really worked
19 in. Otherwise it would have been an issue.
20 What does Gary Gordon tell Sarah and Sunny Rock to
21 do: "By going no ratio we do not have to address either income
22 reasonableness or calculate DTI. Please send me revisions on
23 this basis. 1008/1003 on both first and second liens. Do not
24 disclose income or calculate any DTI. Please fax at your
25 earliest convenience. We want to get underwriting proceeding."

1 Sarah Mattson has sent him a packet. He didn't
2 reject the packet. He knows that the numbers will not match
3 the book. What does he tell Sarah Mattson to do based on that
4 e-mail? He tells Sarah Mattson to change the numbers in the
5 loan so that person will qualify. That's what he's doing.
6 That is a lender in black and white, ladies and
7 gentlemen, who knows he's not going to get caught because
8 everybody is doing it. Think about how bold that e-mail is
9 from that mortgage broker. Not a phone call. Not, oh, please
10 don't tell anybody. Not side step it. He is blatantly telling
11 several people to make sure those numbers are changed otherwise
12 their company, their underwriter is not going to approve it.
13 So when you hear all of the other evidence and the
14 testimony, remember this e-mail when you're going back there
15 and looking. Remember how open it was.
16 The Clarks. Going back to it again. The Clarks were
17 the ones that didn't pay for a couple of years. There has been
18 a diagram that was put up at one point during the trial where
19 it talked about where the money went and where it didn't go.
20 But if you look at the Clarks' deal and run it all the way
21 through, you can see that in about 20 to 24 months -- 24 months
22 approximately -- Financial Enterprises paid 45,000 on the
23 first, the second was 16, the consideration given was 11, for a
24 total of 72,000. The Clarks did pay four months rent.
25 Subtract it. That's 62,590. Financial Enterprises got 71,000

1 minus the 62 is a total of $8,000 in about 24 months. But, the
2 Clarks lived there for another two years.
3 If you run one of these transactions out, you can see
4 that the Clarks were up $15,000. Think about specific intent.
5 Think about everything that you've just seen. Think about all
6 the exhibits as they match up and look at them.
7 Because when you're going through and you're laying
8 them out, you're going to see that Mary Salazar knew she was
9 selling her house. She got it back. Her daughter did. You're
10 going to see Emily Silva, the other count. And when you're
11 thinking about conspiracy, as the Government said again and
12 again and again, evict, take their homes, think about all of
13 the efforts that Financial Enterprises did to keep the people
14 in their homes by paying their mortgages.
15 The Government has not proven their case beyond a
16 reasonable doubt. If you're sitting there, and you're going
17 I'm not just not sure about the specific intent. I'm not.
18 Because it looks like Mike Head was trying.
19 That's not guilty, ladies and gentlemen, because the
20 Government has to prove their case. It's not guilty. Thank
21 you.
22 THE COURT: All right. That concludes the closing
23 argument on behalf of Jeremy Michael Head. Let's take another
24 break, and we can make this a 15-minute break again. Continue
25 to remember my admonitions, no discussion of the case or

1 thinking about its conclusion. That only begins once you have
2 received my final instructions.
3 When you come back, I believe the Government will
4 have a rebuttal argument. And at that point I will give you a
5 schedule for the rest of the day, and we'll hear whether or not
6 you're able to stay until 2:00. There is no pressure, but if
7 you are, I think that might help us get the case to you sooner
8 rather than later. So we'll see you in 15 minutes. Thank you
9 very much.
10 (Jury out.)
11 THE COURT: You may be seated. Can you estimate, at
12 this point, how long you need, Mr. Anderson?
13 MR. ANDERSON: I would estimate, but it would be more
14 of a guess than an estimate. Hopefully under 40.
15 THE COURT: Ms. Schultz will find out what the jury
16 is saying. And if that's the case, if it's 40 minutes or less,
17 and the jury is willing to stay until 2:00, I think we can get
18 through jury instructions at least. I think we can at least
19 get through rebuttal. It sounds likely at least.
20 MR. ANDERSON: I will give it a really good try. I
21 think we can give it a try.
22 THE COURT: And jury instructions at 8:30 tomorrow
23 morning is the fall-back position. See you in 15.
24 (Break taken.)
25 THE COURT: All right. Assuming Mr. Anderson can be

1 done by 1:30, 1:35, we will move straight into jury
2 instructions. And I think we'll be able to get through them by
3 the end of today. So I will let you know when we reach 1:35
4 because that would be your 40 minutes.
5 MR. ANDERSON: Okay. Is that my absolute outside
6 limit?
7 THE COURT: You had requested up to an hour.
8 MR. ANDERSON: If you will let me know at 40 minutes,
9 and I will try to wrap it up at that point.
10 THE COURT: Okay. If need be, I can instruct
11 tomorrow morning at 8:30. Let's bring the jury back in.
12 (Jury in.)
14 and gentlemen of the jury. Thank you again for checking your
15 schedules. I understand we are able to go until 2:00 today.
16 The Government is going to make a rebuttal closing
17 argument, and Mr. Anderson will do that. He believes it will
18 take him approximately 40 minutes. I'm going to let him know
19 when the 40 minutes is up. And if he is able to conclude by
20 then, I think I will be able to get through the instructions
21 before we adjourn at 2:00 today.
22 So let's see where we are in 40 minutes. If need be,
23 I can instruct you first thing tomorrow morning at 8:30. Just
24 so you know. Mr. Anderson.

1 All right. You've heard from both defense counsel.
2 I want to take us back to what this case is really about.
3 Because if you look at even the way that we ended with
4 Mr. Haydn-Myer talking about the Clarks' residence, how they
5 lived there for several years not paying apparently on their
6 mortgage.
7 Think about that for a second. What were the Clarks
8 supposed to do? They had found out that they had been
9 deceived, that they had been lied to in order to get them into
10 this program, and they were supposed to keep making payments to
11 the very person who deceived them in order to get title to
12 their property, who had taken the equity out of their property?
13 They were supposed to keep making those payments, and somehow
14 it is a defense for the defendant that he maintained the
15 property for some period of time that was not in the Clark's
16 name.
17 Mr. Haydn-Myer kept referring to it as the Clarks'
18 house, Clarks' residence rather that title had been gone. It
19 had been moved over. And only because the Clarks fought were
20 they able to get their names added back to the title. And you
21 saw that story over and over again. Each and every one of
22 these people who somehow didn't get evicted, that wasn't the
23 full story.
24 The full story was much different than that. You
25 heard from Mary Salazar. That's Mary Salazar. She got her

1 house back, Mr. Haydn-Myer says, but that's not what happened.
2 Remember Mary Salazar had the equity stripped from her house
3 one time. They take out the equity to the full appraised value
4 of the house. All of it gone. Then she makes payments like
5 she was supposed to, even according to them, and she thinks
6 that she has paid it off. She thinks she's done.
7 But what really happened with that house? They
8 forced Ms. Salazar's daughter to buy back that house, stripping
9 out the equity again, buying it at an even more inflated price
10 so more of the equity is gone. That is not the deal she signed
11 up for.
12 Emily Silva, she lost her house, too. I don't know
13 what that chart says, but you heard the story. She's the mail
14 carrier who delivers mail to that very house now and no longer
15 has it. So if you look at a very clear view of what actually
16 happened to these people, they weren't benefited by this
17 program at all.
18 But that's not really the point either. Because when
19 you look at the elements and the law that the judge is going to
20 instruct you on, what the judge will instruct you is that it's
21 a crime to make false statements in order to get money or
22 property. And that's where the crime happens.
23 Mr. Haydn-Myer's closing argument was almost entirely
24 focused on what happened later. But that's not where the crime
25 occurred in this case. The crime occurs when the defendant,

1 Michael Head, or the defendant, Charles Head, or one of the
2 people that they are working with, one of their conspirators,
3 makes false statements to people in order to get them to sign
4 up for the program. Once they've made those false statements,
5 those material false statements that convince people to enter
6 into the program, that's the crime. It happens then.
7 And it continues on. The conspiracy continues on by
8 collecting payments and stringing people along. But the mail
9 fraud and the initial conspiracy, which is the agreement to
10 commit the crime, happens much earlier. It happens when the
11 decision is made to lie to these people. It happens when the
12 lies are told that get them to do the program.
13 So is it ok to lie to these people because they are
14 in foreclosure? Is it ok to take advantage of somebody because
15 they're in hard circumstances? No. No, you don't get to lie
16 to somebody, you don't get to take equity from somebody just
17 because they're not sophisticated. You don't get to lie to
18 somebody or take advantage of them just because they are in
19 difficult circumstances or they are poor. That's not how the
20 law works. It protects everybody equally, and it protects
21 people who need help, who need to be told the truth about what
22 the program is they are entering into.
23 So let me get to the specifics. The false
24 statements. Mr. Haydn-Myer -- and I'm focusing first on
25 Michael Head's defense -- talks only about title. Well, first

1 of all, you know that people were told false statements about
2 title. And you know this for a couple reasons. And I want to
3 point something out that Mr. Haydn-Myer and Mr. Tedmon both
4 did. And that's that they looked at each piece of evidence
5 sort of individually. It's almost like you took a big puzzle,
6 a box full of puzzle pieces, and you looked at each piece,
7 pulling it out of the box, looking at it, can't tell what this
8 puzzle is, and throw the piece away. One piece, the next
9 piece, throwing it away. We'll never be able to know what the
10 puzzle looks like.
11 That's not what happens here. Because what you can
12 do is you can take people's testimony, and you can see how it's
13 corroborated by other evidence. And that's how you should look
14 at evidence, in totality. Look at it together.
15 So Emily Silva testifies, and maybe you believe her.
16 And if you do, that's enough right there. But you don't have
17 to just believe Emily Silva. You don't have to just believe
18 Mary Salazar. You don't have to just see the documents found
19 at Charles Head's house, or the e-mails. What you can do is
20 you can see how Emily Silva's testimony is supported by Mary
21 Salazar's testimony, which is supported by Delma Romero's
22 testimony, which is supported by Shannon Taylor's testimony,
23 and the Clarks' testimony.
24 Why is it all supported? Well, these people there is
25 no evidence they know each other at all. They are from all

1 different places. They have different jobs, different careers,
2 totally separate. Yet somehow each of these people from
3 different places, different walks of life, just different
4 backgrounds, all heard the same false statements. Little
5 variations but all leading to one similar goal, which was to
6 get them to sign over title and not understand that they were
7 doing it.
8 And is there anything else corroborating those
9 people? Sure. You have testimony from people who worked on
10 the inside with Charles Head, who worked on the inside with
11 Michael Head. People who in some cases pled guilty, in other
12 cases who have immunity agreements. And I know Mr. Tedmon
13 talked about that, and there is an instruction, absolutely an
14 instruction saying you should view their testimony with a
15 little bit more skepticism than you would with anyone else's
16 testimony. Completely true. Right?
17 But again, corroborate it. And again, Mr. Tedmon
18 talks about, well, where is the person who hasn't pled guilty,
19 who doesn't have immunity, who was witness to all of these
20 goings on at Head Financial Services, who is completely
21 innocent? Well, I think it's reasonable, and you can use your
22 common sense to infer this business was crooked. It was very,
23 very crooked through and through. What type of people are
24 going to be working at that business? Was the Government going
25 to be able to bring in a bus load of nuns who witnessed what

1 happened at Head Financial Services, who were told the inside
2 scoop about what was going on? No. You're going to see the
3 type of people that you saw.
4 And how do you evaluate their testimony, you evaluate
5 it on the basis of the corroboration and the way that it fits
6 together with the other evidence.
7 Kou Yang, yeah, she has a prior conviction, but her
8 testimony is corroborated by the documents, corroborated by the
9 e-mails, corroborated by the other people who worked at Head
10 Financial Services, corroborated by the homeowners. And you
11 can see how that evidence fits together and supports it,
12 supports each other.
13 So let me give a couple of examples of what we're
14 talking about. And one of the things I want to look at is
15 actually a defense exhibit. You saw the e-mail, the e-mail
16 that Mr. Haydn-Myer referred to as how bold is it that they
17 were -- that this lender representative was able to send to
18 Financial Enterprises an e-mail talking about redoing a loan
19 and covering up what was going on. Yes, very, very, very bold
20 to do something like that. And where would someone get the
21 confidence to be that bold in an e-mail saying, hey, let's do
22 something fraudulent together.
23 Well, reason would tell you, and from what you've
24 seen in this trial you would know, that the reason this person
25 is comfortable talking about committing fraud on loan

1 applications is because the type of people he works with at
2 Financial Enterprises commit fraud on loan applications. There
3 is nothing to be worried about like there would be sending to a
4 company that was completely honest.
5 How dare you send me an e-mail like this saying that
6 we do something fraudulent. I'm going to tell your supervisor.
7 It's not a risk with Financial Enterprises. We know that.
8 Because we know they are constantly committing fraud as well in
9 the form of Sarah Mattson's straw buying activities, the other
10 straw buyers, the multiple false statements on the loan
11 applications that were just part of the normal run of business.
12 This brings me to something else I want to talk
13 about. So what you didn't hear from anybody in defense closing
14 was a claim that the statements on the loan applications were
15 true. You think about what you heard. There is not a single
16 statement about, well, those people really were working at
17 Financial Enterprises, or, oh, that income information really
18 was true. Right?
19 It's pretty well established from the evidence that
20 those things were all false. So what you hear instead is this
21 claim that it's not material; in other words, that it doesn't
22 matter to the lender. The lender didn't care if you lied.
23 But what's the evidence of that? There's essentially
24 no evidence of that. None. You heard from two witnesses,
25 Heydi Galindo, who talked about underwriting, and you also

1 heard from Irma Valdez, who talked about underwriting. And
2 this is the point where I want to remind you that your memory
3 of the evidence controls, not defense counsels'.
4 Because Mr. Tedmon talked about his cross-examination
5 of Irma Valdez. You remember her. She was the lady from
6 Fremont. And Mr. Tedmon raised his voice and got a little bit
7 aggressive with her, and talked to her -- tried to get her to
8 essentially admit that her company had no reason not to do
9 fraudulent loans. And she responded to that and she stood up
10 to Mr. Tedmon and said, no, we have to buy back the loans if
11 they're bad. She said, no, we didn't go through bankruptcy.
12 Our parent company went through bankruptcy.
13 Again, this is a point where don't trust necessarily
14 the attorney's argument on it, trust your own memory and your
15 own notes of what happened. She said, no, her lender was sold
16 out, and they still had to buy back loans. They still bought
17 back loans that were bad.
18 So if they are buying back loans that are bad, they
19 have an incentive to do good loans. But it goes beyond that.
20 You don't even necessarily need the testimony of Irma Valdez or
21 Heydi Galindo to know that the statements on the loan
22 application are important. And the reason you don't need that
23 is because your common sense would tell you.
24 The types of questions that are being asked which are
25 about income, about employment, are exactly the sorts of things

1 that a person would want to know before lending money. Right?
2 You would want to know if somebody could pay it back. You
3 would want to know what your security was. You would want to
4 know if they were living in the house so you would know whether
5 or not there were going to be payments made.
6 So the testimony of Irma Valdez and Heydi Galindo is
7 supported by your common sense. But more than that, too.
8 Think about Charles Head and Mike Head. They were both working
9 in this industry. Charles Head for quite some time before they
10 did this. Why lie if it wasn't important? If it didn't matter
11 how long a person had been employed, if it didn't matter what a
12 person's income was, why submit false information on these loan
13 applications? There is no reason to do it unless you know that
14 you need the false information in order to get the loan
15 approved.
16 And they knew that. Because otherwise if they didn't
17 need the false information, you just put down Adam Coffman, not
18 going to live there, Adam Coffman lives in Pennsylvania, very
19 low income, hasn't had a job for very long. You just put that
20 information on the application if it didn't matter. So that's
21 how you know it's material, and that's how you know that
22 argument goes nowhere. And so that's important for the mail
23 fraud counts, but it's also important for telling you what the
24 defendants were doing as they were going through this.
25 So I want to talk about the homeowners a little bit

1 more. And the homeowners are important because each of them
2 has given a statement that testified about what was being told
3 to them. And I talked about how they are separated in
4 geography, separated in life.
5 But there's something else that's important, and
6 let's show Exhibit 1. You heard from homeowners like the
7 Taylors -- look, this is in chronological order. March 2004.
8 You heard from people like Richard Figueroa and Shannon Taylor.
9 Shannon Taylor, of course, who Charles Head went out to her
10 house and sat down with Joshua Coffman as Joshua Coffman told
11 her false statements about what would happen to her title and
12 equity.
13 Now, remember, you've heard from Mr. Tedmon about how
14 this was an evolving program. Let's go to the next page still
15 in chronological order. And you see toward the end that you
16 heard from Emily Silva, you heard from Delma Romero at the very
17 end. And what's interesting about that is that the people at
18 the beginning and the people at the end corroborated each
19 other. But the story that was being told to people remained
20 approximately the same, and that the false statements were
21 still being made.
22 So where in all of this did Charles Head send his
23 e-mail? He sent it right in the middle, in July of 2004,
24 saying "here's how I pitch the program." Kind of toward the
25 beginning, but in 2004, after Taylor. Taylor says, I was told

1 by Joshua Coffman that I would remain on title. I wasn't told
2 about the equity being removed from my home. Those sorts of
3 facts. And sure enough her statement to you is corroborated by
4 Charles' e-mail to his co-conspirators where he explains that's
5 how it works.
6 So the defense documents. And we saw a lot of these.
7 And I actually would like you to go through those Charles Head
8 exhibits. I think that would be a very good idea. Because
9 something you're going to notice about these Charles Head
10 exhibits is that they are very well attuned to doing exactly
11 what Charles Head and Mike Head are doing now. Hey, these
12 people knew what they were signed up for. What's interesting
13 is they are so inconsistent with what people heard and actually
14 were told. There are some that are forged. Some maybe are.
15 Some maybe aren't.
16 And what's also interesting is if these are
17 legitimate, actual contracts, what happened with them? Because
18 you heard witness after witness saying they didn't give me
19 copies of all the documents or any of the documents. Is there
20 any corroboration in Charles Head's exhibits for that having
21 happened? I would suggest to you there is. Because as you
22 look through those exhibits, what you'll notice is they've been
23 very good about getting homeowners' signatures, either real or
24 forged signatures from the homeowners, but on a large
25 percentage of those documents, a majority, what they don't have

1 is they don't have the signatures from the other side of the
2 contract. It's not a real contract. This is not something
3 where they went to the people, they are trying to do a
4 legitimate deal with them, the homeowners signs, then Charles
5 Head or somebody working on the other side of the deal signs.
6 No. Because what's important is the homeowners' signature.
7 Everything else can be added later.
8 So when the homeowners tell you, I didn't get all the
9 full documents, well, the search warrant evidence even
10 introduced by Charles Head confirms a lot of that, right?
11 Because these documents aren't signed on the other half.
12 That's what you would expect if you were the homeowner, right?
13 You would get your document, have your signature on it, and it
14 would have their signature on it, too. That's a contract.
15 These aren't contracts. These are devices set up for
16 exactly the purpose you've seen here. Something to bring into
17 court later, something to cover up for what you've said to make
18 the documents very clear. And Charles Head is clear about that
19 in the e-mails, too. People are misleading but the documents
20 are very clear.
21 So whose fault is it? I think one of the interesting
22 themes that we've seen during Mr. Tedmon's closing was a
23 discussion of how everybody else seemed to be at fault. So you
24 had the lenders, which I've talked about, you had the
25 homeowners, who Mr. Tedmon said took advantage, and you had the

1 employees, who did everything without Charles Head's knowledge.
2 I'm going to point out something about the employees
3 that you may have noticed already, which is, who are these
4 employees? They are the friends, the family members, the
5 girlfriends, people all close to Charles and Mike Head. These
6 aren't strangers. These aren't people who were just hired off
7 the street and then run amuck. These were people who were
8 specifically selected in order to do this program. These are
9 people that they are close to. People that they have more of a
10 close relationship with.
11 And they are people who are controlled by Charles and
12 Mike because they have interactions with them daily. Sarah
13 Mattson, you heard about her relationship with Mike Head. But
14 the others you also see e-mails. For example, Kou Yang. One
15 of the interesting things in Kou Yang's e-mails is that the
16 question goes one way and the instructions go the other way.
17 Questions go from Kou Yang to Charles Head. And instructions,
18 and in some cases compliments like good job on doing that phony
19 verification on employment, go from Charles to Kou Yang. They
20 don't go the other way.
21 For the e-mails that you see where Charles isn't
22 involved, you see pretty routine e-mails. Like the boss isn't
23 cc'd on everything. And those are kind of run of the mill.
24 You can look through them. Possibly what you see is false
25 statements or discussion of false statements in those e-mails

1 or setting up money in order to make purchases. But those are
2 routine with the accountant. But when there's unusual
3 situations, verifications of employment that need to be done,
4 things that aren't fitting together quite right, it's Charles
5 that Kou Yang goes to.
6 So what is it that's being told to the homeowners as
7 the money is being taken out? Remember the false statements
8 are at the time the property is purchased. What's being
9 referred to? And that's another important factor here, too.
10 Because throughout the documents and throughout the things
11 found at Charles' house, it's profit. It's profit. And it's
12 Mike Head, too. And they always refer to it as profit.
13 When we heard from Agent Fitzpatrick, who testified
14 about what was happening with the financial records, there are
15 a couple of things that are noticeable. First, the money that
16 comes in always goes out. Each month, remember, the amount of
17 money that comes in goes out almost to the penny. Not exactly
18 but very close. So the money's coming in and going out at
19 pretty much an even pace. So what does that mean about these
20 mortgages that the company is carrying? It means that in order
21 to pay Mary Salazar's rent, money has to be coming from
22 somewhere -- or mortgage, the money is coming from new
23 transactions.
24 So every time that a mortgage is being paid by Mike
25 Head or Charles Head, that money is coming through the system

1 from somewhere else, and that money is coming from somebody
2 else's property, one of the later victims, one the later
3 homeowners. And that's also not being disclosed in this that
4 your equity is going to be used to pay our personal expenses,
5 and some small portion, as Agent Fitzpatrick talked about, will
6 be used to pay mortgages on these other houses that were
7 previously brought in.
8 And that's why when you see toward the end of the
9 scheme that there's bounced checks. Well, these bounced checks
10 aren't the result of people not paying rent, which doesn't even
11 matter, these checks are the result of money not being set
12 aside for these mortgages. Because this scheme needs to feed
13 on itself.
14 These two defendants and their conspirators needed
15 money on a regular basis. And if you look at some of those
16 exhibits that Mr. Haydn-Myer introduced, you can see this. The
17 checks. Money comes in, and then there is a flurry of activity
18 as they pay all the bills and take money out for themselves.
19 The accounts go down to nothing, and they do it all over again.
20 So that's the intention with this. It's not to give
21 people money. It's not to give them anything back.
22 But in the end, I just want to take you back to those
23 false statements. Charles Head and Mike Head. They are
24 experienced in the industry. They know how it works. They
25 have to know how it works because they are taking all the

1 equity out themselves. Yet, simultaneously, Charles Head is
2 telling people to tell people that they remain on title.
3 Simultaneously, Charles Head and Mike Head are making
4 statements to people about their equity remaining in the home.
5 That equity is taken out. Those people are left in the
6 situation that they are left in.
7 It was their choice to make whether or not to get
8 involved in the program with Charles Head. You heard that when
9 people are told honest information, either by Mike Head's
10 friend who worked for him in Arizona, which wasn't even the
11 full amount of information because, remember, Mike kept some
12 information from him, or by Liz Huerta, people didn't do the
13 deal.
14 I want to be very clear. The Government has all the
15 burden in this case. It never shifts to the defendant. It's
16 our burden to prove it beyond a reasonable doubt. You didn't
17 hear from every single victim you see listed on this sheet.
18 But you saw the defense can call witnesses, too. And you saw
19 the witnesses the Government called.
20 Where is the homeowner that wasn't defrauded? Where
21 is the homeowner that was told the truth about what this
22 program was? People who were told the truth, as you heard from
23 Liz Huerta, as you heard from Mr. Hamilton (sic), didn't do
24 this program.
25 Having very few options is not the same as having no

1 options. These people had equity in their homes. They had
2 relatives. They had options. But because they were lied to,
3 because false statements were made to them, because important
4 information was omitted, they signed up for a program that they
5 wouldn't have. And you heard that from each of the people, and
6 you heard that from each of the witnesses.
7 We ask you to carefully consider all the evidence.
8 Look at it all as a totality. Look at how each piece supports
9 the other pieces. Look at how the testimony of one witness
10 supports the testimony of another witness.
11 And I ask you to look at that evidence, work
12 together, listen to each other, and I ask you to consider this
13 evidence and return verdicts finding the defendants guilty on
14 each and every count. Thank you.
16 concludes the Government's rebuttal argument, and it does give
17 us enough time for me to read the jury instructions to you this
18 afternoon before you adjourn.
19 Copies of these instructions are in your binders.
20 They've been added. I believe they would be the last tab in
21 your binder. You do not need to follow along, but if it would
22 help you in following along, you may do so. It's entirely up
23 to you. I haven't found a way to make this a dramatic reading.
24 It's very, very important that I read them out loud. I'm
25 required to read them to you. I just want you to have the

1 tools to make certain you can follow along.
2 Members of the jury, now that you have heard all the
3 evidence, it is my duty to instruct you on the law that applies
4 to this case. A copy of these instructions will be available
5 to you in the jury room. You may take those binders with you
6 when you retire.
7 It is your duty to weigh and to evaluate all the
8 evidence received in the case and in that process to decide the
9 facts. It is also your duty to apply the law as I give it to
10 you to the facts as you find them, whether you agree with the
11 law or not.
12 You must decide the case solely on the evidence and
13 the law and must not be influenced by any personal likes or
14 dislikes, opinions, prejudices, or sympathy. You will recall
15 that you took an oath promising to do so at the beginning of
16 the case.
17 You must follow all of these instructions and not
18 single out some and ignore others. They are all important.
19 Please do not read into these instructions or into anything I
20 may have said or done any suggestion as to what verdict you
21 should return. That is a matter entirely up to you.
22 The Superseding Indictment is not evidence. The
23 defendants have plead not guilty to the charges. Each
24 defendant is presumed to be innocent unless and until the
25 Government proves him guilty beyond a reasonable doubt. In

1 addition, a defendant does not have to testify or present any
2 evidence to prove innocence.
3 Because of the presumption of innocence, again a
4 defendant does not have to prove innocence. The burden of
5 proof is always on the Government and never shifts to the
6 defendant.
7 The burden on the Government is to prove every
8 element of the charges beyond a reasonable doubt. Proof beyond
9 a reasonable doubt is proof that leaves you firmly convinced
10 that the defendant is guilty. It is not required that the
11 Government prove guilt beyond all possible doubt. A reasonable
12 doubt is a doubt based upon reason and common sense and is not
13 based purely on speculation. It may arise from a careful and
14 impartial consideration of all the evidence or from lack of
15 evidence. If after a careful and impartial consideration of
16 all the evidence, you are not convinced beyond a reasonable
17 doubt that a defendant is guilty, it is your duty to find that
18 defendant not guilty. However, if after a careful and
19 impartial consideration of all the evidence, you are convinced
20 beyond a reasonable doubt that a defendant is guilty, it is
21 your duty to find that defendant guilty.
22 A defendant in a criminal case has a constitutional
23 right not to testify. You may not draw any inference of any
24 kind from the fact that a defendant did not testify.
25 The evidence you are to consider in deciding what the

1 facts are consists of: Number one, the sworn testimony of any
2 witness; number two, the exhibits received into evidence; and
3 number three, any facts to which the parties have agreed
4 through stipulation, as has been stated to you.
5 In reaching your verdict, you may consider only the
6 testimony and exhibits received into evidence. The following
7 things are not evidence, and you may not consider them in
8 deciding what the facts are:
9 Number one, questions, statements, objections and
10 arguments by the lawyers are not evidence. The lawyers are not
11 witnesses. Although you must consider a lawyer's questions to
12 understand the answers of a witness, the lawyer's questions are
13 not evidence. Similarly, what the lawyers have said in their
14 openings statements, closing arguments, and at other times, is
15 intended to help you interpret the evidence, but it is not
16 evidence. If the facts as you remember them differ from the
17 way the lawyers state them, your memory of the facts controls.
18 Secondly, any testimony that I have excluded,
19 stricken, or instructed you to disregard is not evidence. In
20 addition, some evidence was received only for a limited
21 purpose. When I have instructed you to consider certain
22 evidence in a limited way, you must do so.
23 Third, anything you may have seen or heard when the
24 Court was not in session is not evidence. You are to decide
25 the case solely on the evidence received at trial.

1 Now evidence may be direct or circumstantial. Direct
2 evidence is direct proof of a fact such as testimony by a
3 witness about what that witness personally saw, or heard, or
4 did. Circumstantial evidence is indirect evidence. That is,
5 it is proof of one or more facts from which you could find
6 another fact. You are to consider both direct and
7 circumstantial evidence. Either can be used to prove any fact.
8 The law makes no distinction between the weight to be given to
9 either direct or circumstantial evidence. It is for you to
10 decide how much weight to give to any evidence.
11 In deciding the facts in this case, you may have to
12 decide which testimony to believe and which testimony not to
13 believe. You may believe everything a witness says, or part of
14 it, or none of it.
15 In considering the testimony of any witness, you may
16 take into account the following: Number one, the witness'
17 opportunity and ability to see, or hear, or know the things
18 testified to; number two, the witness' memory; number three,
19 the witness' manner while testifying; number four, the witness'
20 interest in the outcome of the case, if any; number five, the
21 witness' bias or prejudice, if any; number six, whether other
22 evidence contradicted the witness' testimony; number seven, the
23 reasonableness of the witness' testimony in light of all the
24 evidence; and, number eight, any other factors that bear on
25 believability.

1 The weight of the evidence as to a fact does not
2 necessarily depend on the number of witnesses who testify.
3 What is important is how believable the witnesses were and how
4 much weight you think their testimony deserves.
5 You are here only to determine whether each defendant
6 is guilty or not guilty of the charges against him in the
7 Superseding Indictment. Neither defendant is on trial for any
8 conduct or offense not charged in the Superseding Indictment.
9 A separate crime is charged against one or more of
10 the defendants in each count. The charges have been joined for
11 trial. You must decide the case of each defendant on each
12 crime charged against that defendant separately. Your verdict
13 on any count as to any defendant should not control your
14 verdict on any other count or as to any other defendant.
15 All the instructions apply to each defendant and to
16 each count unless a specific instruction states that it applies
17 only to a specific count.
18 Although the defendants have been tried together, you
19 must give separate consideration to each defendant. In doing
20 so, you must determine which evidence in the case applies to
21 each defendant, disregarding any evidence admitted solely
22 against the other defendant. The fact that you may find one
23 defendant guilty or not guilty should not control your verdict
24 as to the other defendant.
25 An act is done knowingly if a defendant is aware of

1 the act and does not act through ignorance, mistake or
2 accident. The Government is not required to prove that a
3 defendant knew that his acts or omissions were unlawful. You
4 may consider evidence of the defendant's words, acts or
5 omissions along with all the other evidence in deciding whether
6 a defendant acted knowingly.
7 You have heard evidence that Charles Head made one or
8 more statements to John Sommercamp. This evidence has been
9 admitted only for the limited purpose of establishing the guilt
10 of Charles Head, following all of my other instructions.
11 Therefore, you must consider it only for that limited purpose
12 and not for any other purpose.
13 You have also heard evidence that Jeremy Michael Head
14 made one or more statements to John Sommercamp. This evidence
15 has been admitted only for the limited purpose of establishing
16 the guilt of Jeremy Michael Head, following all of my other
17 instructions. Therefore you must consider it only for that
18 limited purpose and not for any other purpose.
19 You may not consider the statements made by Charles
20 Head to determine the guilt of Jeremy Michael Head. You also
21 may not consider the statements of Jeremy Michael Head to
22 determine the guilt of Charles Head.
23 You have heard evidence that Jeremy Michael Head
24 committed some acts that are not the subject of any criminal
25 charge. Namely, those acts related to a transaction with

1 Nickadia Daniels. You may consider this evidence only for its
2 bearing, if any, on the question of Jeremy Michael Head's
3 intent, motive, preparation, plan, absence of mistake or of
4 accident, and for no other purpose. You may not consider this
5 evidence as evidence of guilt of any crime for which Charles
6 Head is now on trial.
7 You have heard testimony from witnesses who have
8 received a grant of immunity from the Government. Namely,
9 Elizabeth Russell, previously known as Elizabeth Huerta, and
10 Nora Rivas. Their testimony was given in exchange for a
11 promise by the Government that the testimony will not be used
12 in any case against these witnesses. For this reason, in
13 evaluating the testimony of Ms. Russell, previously known as
14 Huerta, and Ms. Rivas, you should consider the extent to which
15 or whether their testimony may have been influenced by this
16 factor. In addition, you should examine the testimony of
17 Ms. Russell, previously known as Huerta, and Ms. Rivas with
18 greater caution than that of other witnesses.
19 You also have heard testimony from witnesses who have
20 pled guilty to a crime arising out of same events for which
21 each defendant is on trial. These witnesses include Omar
22 Sandoval, Kou Yang, Justin Wiley, and Sarah Mattson. These
23 persons' guilty pleas are not evidence against either
24 defendant, and you may consider those pleas only in determining
25 these witnesses' believability. For this reason, in evaluating

1 the testimony of Mr. Sandoval, Ms. Yang, Mr. Wiley, and
2 Mr. Mattson, you should consider the extent to which or whether
3 their testimony may have been influenced by their plea
4 agreements. In addition, you should examine the testimony of
5 Mr. Sandoval, Ms. Yang, Mr. Wiley, and Ms. Mattson with greater
6 caution than that of other witnesses.
7 During closing arguments, certain charts and
8 summaries have been shown to you by an attorney in order to
9 help explain his interpretation of the evidence in the case.
10 These charts and summaries will not be admitted into evidence
11 and will not go into the jury room with you. They are not
12 themselves evidence or proof of any facts. If they do not
13 correctly reflects the facts or figures shown by the evidence
14 in the case, you should disregard these charts and summaries
15 and determine the facts from the underlying evidence.
16 At the same time, certain charts and summaries have
17 been admitted in evidence. These charts and summaries are only
18 as good as the underlying supporting material. You should
19 therefore give them only such weight as you think the
20 underlying material deserves.
21 Now turning to the counts in the Superseding
22 Indictment. Each defendant is charged in Count 1 of the
23 Superseding Indictment with conspiring to commit mail fraud in
24 violation of Section 1349 of Title 18 of the United States
25 Code. The Superseding Indictment alleges that the object of

1 the conspiracy was for the defendants to target homeowners near
2 foreclosure, and through materially false and fraudulent
3 pretenses, and by making materially false and fraudulent
4 representations and promises obtain title in order to gain
5 control of their property and steal any equity that existed in
6 the homes.
7 It also alleges that a further object of the
8 conspiracy was for the defendants to mislead and lull targeted
9 homeowners into inaction and a false sense of security so as to
10 postpone any complaints to law enforcement or any actions by
11 the targeted homeowners that could potentially disrupt the
12 scheme to defraud.
13 In order for a defendant to be found guilty of this
14 conspiracy charge, the Government must prove each of the
15 following elements as to each defendant beyond a reasonable
16 doubt.
17 First, beginning on or about January 1st, 2004 and
18 ending on or about March 14th, 2006, there was an agreement
19 between two or more persons to commit mail fraud as charged in
20 the Superseding Indictment; and second, the defendant became a
21 member of the conspiracy knowing of at least one of its objects
22 and intending to help accomplish it.
23 A conspiracy is a kind of criminal partnership, an
24 agreement of two or more persons to commit one or more crimes.
25 The crime of conspiracy is the agreement to do something

1 unlawful. It does not matter whether the crime agreed upon was
2 committed.
3 For a conspiracy to have existed, it is not necessary
4 that the conspirators made a formal agreement, or that they
5 agreed on every detail of the conspiracy. It is not enough,
6 however, that they simply met, discussed matters of common
7 interest, acted in similar ways, or perhaps helped one another.
8 You must find that there was a plan to commit at least one of
9 the crimes alleged in the Superseding Indictment as an object
10 of the conspiracy, with all of you agreeing as to the
11 particular crime which the conspirators agreed to commit.
12 One becomes a member of a conspiracy by willfully
13 participating in the unlawful plan with the intent to advance
14 or further some object or purpose of the conspiracy even though
15 the person does not have full knowledge of all the details of
16 the conspiracy. Furthermore, one who willfully joins an
17 existing conspiracy is as responsible for it as the
18 originators. On the other hand, one who has no knowledge of a
19 conspiracy but happens to act in a way which furthers some
20 object or purpose of the conspiracy does not thereby become a
21 conspirator. Similarly, a person does not become a conspirator
22 merely by associating with one or more persons who are
23 conspirators nor merely by knowing that a conspiracy exists.
24 A conspiracy may continue for a long period of time
25 and may include the performance of many transactions. It is

1 not necessary that all members of the conspiracy join it at the
2 same time. And one may become a member of a conspiracy without
3 full knowledge of all the details of the unlawful scheme or the
4 names, identities or locations of all of the other members.
5 Even though a defendant did not directly conspire
6 with other conspirators in the overall scheme, the defendant
7 has, in effect, agreed to participate in the conspiracy if the
8 Government proves each of the following as to that defendant
9 beyond a reasonable doubt:
10 Number one, the defendant directly conspired with one
11 or more conspirators to carry out at least one of the objects
12 of the conspiracy; number two, the defendant knew or had reason
13 to know that other conspirators were involved with those with
14 whom the defendant directly conspired; and, number three, the
15 defendant had reason to believe that whatever benefits the
16 defendant might get from the conspiracy were probably dependent
17 upon the success of the entire venture. It is not a defense
18 that a person's participation in a conspiracy was minor or for
19 a short period of time.
20 You must decide whether the conspiracy charged in the
21 Superseding Indictment existed, and, if it did, who at least
22 some of its members were. If you find that the conspiracy
23 charged did not exist, then you must return a not guilty
24 verdict on the conspiracy charge even though you may find that
25 some other conspiracy existed.

1 Similarly, if you find that any defendant was not a
2 member of the charged conspiracy, then you must find that
3 defendant not guilty even though that defendant may have been a
4 member of some other conspiracy.
5 Charles Head is charged in Counts 2, 3, 5 and 6 of
6 the Superseding Indictment, and Jeremy Michael Head is charged
7 in Counts 3 and 11 with mail fraud in violation of Section 1341
8 of Title 18 of the United States Code.
9 In order for a defendant to be found guilty of a
10 charge of mail fraud, the Government must prove each of the
11 following elements beyond a reasonable doubt:
12 First, the defendant knowingly participated in or
13 devised a scheme or plan to defraud, or a scheme or plan for
14 obtaining money or property by means of false or fraudulent
15 pretences, representations, or promises; second, the statements
16 made or facts omitted as part of the scheme were material, that
17 is, they had a natural tendency to influence or were capable of
18 influencing a person to part with money or property; third, the
19 defendant acted with the intent to defraud, that is, the intent
20 to deceive or cheat; and, fourth, the defendant used or caused
21 to be used the mails to carry out or attempt to carry out an
22 essential part of the scheme.
23 In determining whether a scheme to defraud exists,
24 you may consider not only the defendant's words and statements,
25 but also the circumstances in which they are used as a whole.

1 A mailing is caused when one knows that the mails
2 will be used in the ordinary course of business, or when one
3 can reasonably foresee such use. It does not matter whether
4 the material mailed was itself false or deceptive so long as
5 the mail was used as part of the scheme, nor does it matter
6 whether the scheme or plan was successful or that any money or
7 property was obtained.
8 If you decide the defendant was a member of a scheme
9 to defraud, and that that defendant had the intent to defraud,
10 that defendant may be responsible for other co-schemer's
11 actions during the course of and in furtherance of the scheme
12 even if that defendant did not know what the others said or
13 did.
14 For a defendant to be guilty of an offense committed
15 by a co-schemer in furtherance of the scheme, the offense must
16 be one that that defendant could reasonably foresee as a
17 necessary and natural consequence of the scheme to defraud.
18 Now regarding your deliberations. When you begin
19 your deliberations, elect one member of the jury as your
20 foreperson who will preside over the deliberations and speak
21 for you here in court. You will then discuss the case with
22 your fellow jurors to reach an agreement on each count, if you
23 can do so. Your verdict, whether guilty or not guilty, must be
24 unanimous. Each of you must decide the case for yourself, but
25 you should do so only after you have considered all the

1 evidence, discussed it fully with the other jurors, and
2 listened to the views of your fellow jurors. Do not be afraid
3 to change your opinion if the discussion persuades you that you
4 should. But do not come to a decision simply because other
5 jurors think it is right. It is important that you attempt to
6 reach a unanimous verdict, but, of course, only if each of you
7 can do so after having made your own conscientious decision.
8 Do not change an honest belief about the weight and effect of
9 the evidence simply to reach a verdict.
10 Because you must base your verdicts only on the
11 evidence received in the case and on these instructions, I
12 remind you that you must not be exposed to any other
13 information about the case, or to the issues it involves,
14 except for discussing the case with your fellow jurors during
15 your deliberations.
16 These are your ground rules. Do not communicate with
17 anyone in any way, and do not let anyone else communicate with
18 you in any way about the merits of the case or anything to do
19 with it. This includes discussing the case in person, in
20 writing, by phone or electronic means, via e-mail, text
21 messaging, or any internet chat room, blog, website, or other
22 feature. This applies to communicating with your family
23 members, your employer, the media or press, and the people
24 involved in the trial. If you are asked or approached in any
25 way about your jury service or anything about this case, you

1 must respond that you have been ordered not to discuss the
2 matter and to report the contact to the Court. Do not read,
3 watch, or listen to any news or media accounts or commentary
4 about the case or anything to do with it. Do not do any
5 research such as consulting dictionaries, searching the
6 internet, or using other reference materials. And do not make
7 any investigation or in any other way try to learn about the
8 case on your own.
9 The law requires these restrictions to ensure the
10 parties have a fair trial based on the same evidence that each
11 party has had an opportunity to address. A juror who violates
12 these restrictions jeopardizes the fairness of these
13 proceedings, and a mistrial could result that would require the
14 entire trial process to start over.
15 If any juror is exposed to any outside information,
16 please notify the court immediately. Your verdicts must be
17 based solely on the evidence and on the law as I have given it
18 to you in these instructions. However, nothing that I have
19 said or done is intended to suggest what your verdict should
20 be. That is entirely for you decide.
21 Now some of you have taken notes during trial.
22 Whether or not you took notes, you should rely on your own
23 memory of what was said. Notes are only to assist your memory.
24 You should not be overly influenced by your notes or those of
25 your fellow jurors.

1 The punishment provided by law for this crime, the
2 crimes charged in the Superseding Indictment, is for the Court
3 to decide. You may not consider punishment in deciding whether
4 the Government has proved its case against each defendant
5 beyond a reasonable doubt.
6 A verdict form for each defendant has been prepared
7 for you. After you have reached unanimous agreement on each
8 verdict, your foreperson should complete the verdict forms
9 according to your deliberations, sign and date them, and advise
10 the Clerk that you are ready to return to the courtroom.
11 If it becomes necessary during your deliberations to
12 communicate with me, you may send a note through the clerk,
13 signed by any one or more of you. No member of the jury should
14 ever attempt to communicate with me except by a signed writing,
15 and I will respond to the jury concerning the case only in
16 writing or here in open court.
17 If you send out a question, I will consult with the
18 lawyers before answering it, which may take some time. You may
19 continue your deliberations while waiting for the answer to any
20 question. Remember that you are not to tell anyone, including
21 me, how the jury stands numerically or otherwise on any
22 question submitted to you, including the question of the guilt
23 of the defendants, until after you have reached unanimous
24 verdict or have been discharged.
25 Ladies and gentlemen, those are your instructions.

1 The Court is going to excuse you now. I'm going to have a
2 security officer sworn to escort you to the jury room.
3 The alternates -- we have two alternates at this
4 point -- you should leave your notebooks on the chairs, but you
5 can retire through the jury room to collect your belongings.
6 And then while the jury is deliberating, if you can remain
7 available in the jury assembly room. We will let you know if
8 you are needed. We understand the schedule is 8:30 to 1:30
9 from here on out, and so we will remain available to you. That
10 would be the schedule for the alternates as well.
11 You do not need to report to the courtroom tomorrow
12 morning. You may report directly to the jury room. At the end
13 of each day, however, if we haven't heard from you otherwise, I
14 will bring you into the courtroom to excuse you at 1:30.
15 Again, ladies and gentlemen, those are your
16 instructions. You may stay until 2:00 today, but we won't
17 expect you to stay after that. We understand you will report
18 at 8:30 tomorrow morning, and then we'll wait to hear from you.
19 Thank you very much. Ms. Schultz, if you can swear the
20 security officer.
22 You do solemnly swear that you will well and truly
23 keep every person sworn on this jury in some private and
24 convenient place and will not let any persons speak to them nor
25 speak to them yourself without leave of Court, except to ask

1 them whether they have agreed upon their verdict in this case,
2 or, until they are discharged by the Court, so help you God?
3 CSO: I do.
4 THE COURT: All right. You are excused.
5 (Jury out.)
6 THE COURT: All right. You may be seated. Is there
7 anything to make a record of at this point?
12 THE COURT: All right. We will keep you posted. I
13 don't expect to hear anything today yet. Between 8:30 and 1:30
14 even though I will be in court for some of that time,
15 Ms. Schultz will let you know. And if all counsel can stay
16 within ten minutes of the courtroom. I will call the jury in
17 at 1:30 tomorrow afternoon and excuse them.
18 MR. TEDMON: Do we need to be here for that, Your
19 Honor?
20 THE COURT: It's up to you. It's not required.
22 THE COURT: But you might compare notes. If one of
23 you is, it would be obvious that others of you aren't. I'll
24 leave that up to you.

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3 ---oOo---
7 (Jury in.)
8 THE COURT: Good afternoon, ladies and gentlemen. It
9 is just the Court. The attorneys are excused just so you know.
10 I did not require that they be present.
11 But I do like to count noses and make certain you're
12 all still standing and then excuse you for the day.
13 So thank you for your service today. It is concluded
14 now. And as you leave, particularly now that deliberations
15 have begun, please do keep in mind that my admonitions remain
16 as important as ever. The admonitions provided in the final
17 jury instructions. So of course you can discuss the case
18 amongst yourselves, but no other discussion, no other research.
19 And if anyone attempts to contact any of you in any way, please
20 let me know first thing tomorrow morning.
21 You don't need to report to the courtroom tomorrow
22 morning. You can go straight to the jury room. And then if I
23 don't see you before, I'll see you at this time tomorrow.
24 Thank you very much. Have a good afternoon and
25 evening.

1 (Jury out.)
4 CERTIFICATION
10

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---oOo---
---oOo---
Plaintiff,
vs. No. 2:08-cr-0093
Volume 15
MICHAEL HEAD,
Defendants.
---oOo---
VERDICT
---oOo---

1 APPEARANCES
4
BENJAMIN B. WAGNER
7 MATTHEW A. MORRIS
8
10 SCOTT L. TEDMON
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25

3 ---oOo---
7 THE COURT: Good afternoon. All counsel are present.
8 The parties are present.
9 The Court has received a note as of 12:10 saying the
10 jury has reached a verdict. It's not signed, but I'm assuming
11 it was prepared by the foreperson. So we will find out who the
12 foreperson is when the jury is brought in.
13 The Court's plan would be to bring the jury in, ask
14 the foreperson for the verdict. I'll review it. Assuming it's
15 in order, I'll have Ms. Schultz read it into the record. I
16 will then give any party the chance to have the jury polled if
17 they wish.
18 And then it's the Court's practice to take a brief
19 recess. I excuse the jury. I go thank them. I have
20 certificates. I do this in every case. Thank them. I don't
21 discuss the case. And then I come back for any motions.
22 Any objection to that practice in this case?
23 Mr. Anderson?

2 THE COURT: All right. So anything else we should
3 discuss?
4 MR. TEDMON: No.
6 THE COURT: All right. Let's bring the jury in then.
7 (Jury in.)
8 THE COURT: You may be seated. Just waiting for the
9 alternates.
10 THE CLERK: They're coming.
11 THE COURT: All right. They'll be present in the
12 audience.
13 Welcome back to the courtroom, ladies and gentlemen
14 of the jury. I understand that you have reached a unanimous
15 verdict. I've received a note. It's not signed, but I assume
16 your foreperson signed this. Is that Mr. Mason?
17 JUROR 11: Yes.
18 THE COURT: All right. So you have the verdict in
19 hand?
20 JUROR 11: I do.
21 THE COURT: I would like to ask you to provide that
22 to Ms. Schultz.
23 All right. The forms appear to be in order. I'm
24 going to ask Ms. Schultz to read the verdicts into the record.
25 THE CLERK: Ladies and gentlemen of the jury, listen

1 to your verdict as it will stand recorded:
2 In the United States District Court for the Eastern
3 District of California. United States of America, plaintiff,
4 versus Charles Head, et al, case number 2-08-cr-93 KJM.
5 Verdict form - Charles Head.
6 We, the jury, find the defendant, Charles Head as
7 follows:
8 As to Count 1 of the Superseding Indictment, guilty,
10 As to Count 2 of the Superseding Indictment, on or
11 about June 2004, from Tulare County Clerk/Recorder to Dynasty
12 Realty, 949 South Coast Drive, Suite 450, Costa Mesa,
13 California, grant deed, homeowner K.J. of Visalia, California,
14 guilty, mail fraud.
16 about May 4th, 2004, from Tulare County Clerk/Recorder to
17 Dynasty Realty, 949 South Coast Drive, Suite 450, Costa Mesa,
18 California, grant deed, homeowner M.S. of Tulare, California,
21 about September 18, 2004, from homeowner S.T. of Fresno,
22 California, to Matrix Investment Corporation, $1,200 monthly
23 payments, guilty, mail fraud.
24 As to Count 6 of the Superseding Indictment on or
25 about October 1st, 2004, from Sacramento County Clerk/Recorder,

1 to E.V., 949 South Coast Drive, Suite 450, Costa Mesa,
2 California, grant deed, homeowner, T.T. of Sacramento,
3 California, guilty, mail fraud.
4 Dated May 30th, 2013. Signed, the foreperson.
5 In the United States District Court for the Eastern
6 District of California. United States of America, plaintiff,
7 versus Jeremy Michael Head, case number 2-08-cr-0093 KJM.
8 Verdict form - Jeremy Michael Head.
9 We, the jury, find the defendant, Jeremy Michael
10 Head, as follows:
11 As to Count 1 of the Superseding Indictment, guilty,
14 about May 4th, 2004, from Tulare County Clerk/Recorder to
15 Dynasty Realty, 949 South Coast Drive, Suite 450, Costa Mesa,
16 California, grant deed, homeowner M.S. of Tulare, California,
19 about January 13, 2006, from the homeowner E.S. of Porterville,
20 California, to Financial Enterprises, $1,000 monthly payment,
22 Dated May 30th, 2013. Signed, the foreperson.
23 THE COURT: Those are the verdicts as returned to the
24 Court. Let me ask if any party would like to have the jurors
25 polled?

1 The parties have the right to request that each of
2 you be asked individually if that is your verdict.
3 Mr. Anderson, Mr. Morris, would you like the jury
4 polled?
10 THE COURT: All right. Ladies and gentlemen of the
11 jury, that completes your service to the Court. Thank you very
12 much for your service as jurors, and also to those of you who
13 were on call as alternates, you are allowed now to retire to
14 the jury room. I'd like to ask you to remain there for just a
15 few moments. I would like to come and give you a certificate
16 of appreciation. I do this in every case. It's the best and
17 the least that the Court can do to thank you for your
18 performance of an important responsibility, exercise an
19 important right of American citizenship.
20 So if you can wait for me there briefly. Also as I
21 excuse you, I want to make certain you know that the
22 admonitions that I've given you throughout trial and were given
23 in the final instructions are now lifted. If you wish to
24 discuss the case, you may. If the attorneys approach you, you
25 may answer their questions. But it's up to you. So it's clear

1 those admonitions are lifted.
2 Thank you again. You are excused. Please wait for
3 me, and I'll be there in a few moments. The alternates may
4 follow them into the jury room as well.
5 (Jury out.)
6 THE COURT: You may be seated. Again, I'll be back
7 in just a few moments.
8 (Break in proceedings.)
9 THE COURT: All right. We're back on the record. I
10 thanked the jurors. There was no substantive discussion. One
11 juror did volunteer that it was very difficult, just so you
12 know. But that's all I know. They are excused. And with the
13 Court's thanks.
14 So are there any motions, Mr. Anderson?
15 MR. ANDERSON: Yes, Your Honor. The Government moves
16 for detention of both the defendants now that they stand
17 convicted. The presumption has now shifted, and it's now on
18 them to show by clear and convincing evidence that they are not
19 likely to flee or pose a danger.
20 That's a flip of the burden that was before where it
21 was on the Government. And in that case it was a very hard
22 fought detention hearing, or series of detention hearings over
23 a long period of time, particularly with respect to Charles
24 Head.
25 And now that both defendants are facing very

1 substantial prison time, the guidelines that the Government
2 calculates show in the neighborhood of 25 years for Charles
3 Head, slightly less for Mike Head under the guidelines. These
4 are significant sentences, and they certainly are a factor that
5 was not present before now that they are convicted, that
6 suggests they are likely to flee, plus with the shifting of the
7 burden to the defendants, I think detention is warranted.
9 MR. TEDMON: Well, Your Honor, Mr. Anderson is
10 correct as far as the shifting of the burden goes. But history
11 speaks just the opposite of what Mr. Anderson is arguing.
12 As this Court well knows when Your Honor was
13 magistrate, you issued the release order on May 5, 2010.
14 That's been over three years. Mr. Head has had no violations
15 of pretrial release conditions. The bail was a combination of
16 both secured bail and unsecured bail in the total amount of
17 over $300,000 -- $313,000 to be exact.
18 In addition, speaking to Mr. Anderson's point that he
19 calculates the guidelines as they are, whether he is accurate
20 or not, the reality is Mr. Head knew what the penalties were
21 when the Court advised him. He knew what the penalties were at
22 the time of the arraignment, and that hasn't changed. He has
23 appeared for every court appearance. He has complied with the
24 conditions of pretrial release. He has cooperated with me in
25 every instance.

1 As this Court knows, I went back to Pittsburgh and
2 met with him in preparation for trial. He has also come to
3 Sacramento to prepare and went back to Pittsburgh and has
4 returned.
5 There is nothing the Government can give this Court
6 other than Mr. Head now stands convicted that changes any
7 factor that this Court had back three years ago which would
8 indicate that he won't appear. He will appear.
9 Beyond that, as far as the secured bail goes, the two
10 properties are his brother Joshua's. He's not going to leave
11 his brother high and dry despite the fact he stands convicted.
12 Also, the other secured property is owned by a gentleman named
13 Oliver Conner down in Los Angeles, who is a close, personal
14 friend of Mr. Head. He is not going to leave Mr. Connor high
15 and dry and take off.
16 As far as the unsecured bail is concerned, his
17 parents have signed off for not only third-party custody but
18 also for unsecured bail. The total amount of unsecured bail is
19 $225,000, and his parents have each signed for $25,000, his
20 brother Joshua signed off for $75,000, his grandparents have
21 signed off for $50,000, and then he has three separate friends
22 that have signed off for $25,000.
23 Your Honor, the evidence is clear and convincing he's
24 not going anywhere. He is not going to leave his family left
25 with a $300,000-plus -- family and friends with a $300,000-plus

1 bail obligation to the Government by taking off. He knew what
2 the penalties were. If there was any chance for him to leave,
3 he would have done so already despite the fact he stands
4 convicted.
5 In addition, we have another trial set in September,
6 September 9th in this court, on the 116 case. Mr. Head has
7 been very active in helping me prepare for that, and that
8 process is going to start on a full-time basis basically next
9 week. He has a lot to look forward to. He has appellate
10 issues here that he will move forward with when the time is
11 appropriate.
12 We still have the sentencing sitting out there. This
13 Court has a lot of information, will have a lot of information
14 that it doesn't have right now in terms of what its ultimate
15 sentence will be.
16 So really, the only factor that Mr. Anderson can give
17 this Court is that Mr. Head now stands convicted. And that
18 does not substantially change anything from what was presented
19 to the Court three years ago. Mr. Head knew what the penalties
20 were. He went to trial. He now stands convicted. But every
21 other factor is in place, and is undisturbed, and does not
22 necessitate nor does it in fact lead this court to the decision
23 other than what it made three years ago, and that is to allow
24 Mr. Head to stay on bail.
25 THE COURT: What is Mr. Head doing with his time?

1 What would he be doing with his time?
2 MR. TEDMON: He would be going back to Pittsburgh.
3 He's working in the medical field, being a consultant. He is
4 working. He's hoping to continue to do that, if the Court will
5 allow him to stay out. He's providing for his family. He has
6 a young child back in Pittsburgh. That's where his family is.
7 That's where his support system is.
8 And he will continue to report as necessary with the
9 courtesy supervision out of that district, the Western District
10 of Pennsylvania, and will make all appearances as the Court
11 orders, and will cooperate with counsel and probation in the
12 preparation of a report in this case.
13 THE COURT: Let me hear from Mr. Haydn-Myer regarding
16 Michael Head has been exemplary in meeting with me.
17 He has come up several times to Sacramento. He has shown up to
18 court early. We've met numerous times on the weekends. I
19 can't think of a single time where he hasn't immediately
20 returned my phone calls.
21 His property bond, I believe, has been posted by his
22 grandmother. And as part of the evidentiary motions in limine,
23 the Court knows that he doesn't have a mother. She passed.
24 His grandmother and he are extremely close. He would not flee
25 at the risk of his grandmother, his surrogate mother losing her

1 house.
2 He's always known that there was a very good
3 probability that the jury would return guilty verdicts, and it
4 doesn't stop him from being here today again early.
5 As far as his activities in Los Angeles, which is
6 where he would be returning, as the Court also knows from the
7 evidentiary hearings and some of the items, he does help with
8 non-profits, and he works as a waiter on tables. He's not
9 going to flee, Your Honor. He also has a daughter who is
10 coming up on her 16th birthday, and he wants to be present for
11 that.
12 THE COURT: Mr. Anderson, any information on pretrial
13 services compliance? Any dispute with the characterization of
14 compliance?
15 MR. ANDERSON: As to these two defendants?
16 THE COURT: Yes.
17 MR. ANDERSON: I can't offer any information to the
18 Court.
20 MR. TEDMON: Your Honor, if I can point out one other
21 thing that I neglected to mention. And this goes to the extent
22 Mr. Head's understanding of his conditions of release and his
23 compliance with it.
24 While working in the medical field -- and this is
25 back in 2011, March -- he was asked to attend a conference as

1 part of his employment. It was outside the District of
2 Pennsylvania. And he contacted me. I contacted the pretrial
3 services office here. They contacted the pretrial services
4 officer in Pennsylvania. They confirmed all of this
5 information through pretrial services officer Gina Faubion here
6 and Officer John Kookler in Pittsburgh.
7 And before he went, we received permission, did a
8 stipulation and order, and had Magistrate Judge Hollows sign
9 the order. So when there was a need for special permission, it
10 was sought and approved. And that is the manner in which
11 Mr. Head and I have proceeded over the last three years since
12 he has been released. And if there's a need to do so, we will
13 do so again. But he has complied and he should stay out.
14 THE COURT: Let me just ask, Ms. Schultz, what date
15 would we set for sentencing? Would that be in August sometime?
16 (Discussion between Court and Clerk.)
17 THE COURT: Would you be requesting continuation of
18 sentencing or proceeding with sentencing in this case without
19 knowing the result of the other?
20 MR. ANDERSON: What the Government's asking for in
21 this case is to set Jeremy Michael Head's sentencing in the
22 normal course, send it out to probation, and let's set a date
23 just like we would in any other case.
24 For Charles Head what we would like is we'd like a
25 two-week -- or in two weeks to set a status of J&S and

1 forfeiture, so that we can talk to Mr. Tedmon about what's
2 going to happen with the forfeiture and see if there's a
3 resolution to be had on the other case. And then if there's
4 not, then at that point determine what date we want to set the
5 sentencing for.
6 THE COURT: All right. So two weeks from today -- or
7 two weeks from this week?
8 MR. ANDERSON: Two weeks from today. But we could
9 set it at a date convenient for the Court on the Court's
10 regular calendar.
11 THE COURT: Thank you for being willing to
12 accommodate my schedule.
13 All right. Having heard from all parties and noting
14 that the burden has shifted, at the same time based on the
15 representations made by the defense, I am prepared to grant the
16 defendant's release from this hearing.
17 But it is with the understanding and with the order
18 that they continue to comply with all pretrial services
19 conditions. Any violation, no matter how technical, will be
20 brought to the attention of the Court. I will personally reach
21 out to pretrial services and make certain they know that they
22 are to let me know if there is any violation. And at that
23 point, I would be the one considering whether or not that is
24 cause for remand.
25 I'm also going to set dates now. And it's on the

1 condition that you are ordered to appear. You should assume
2 you should appear at all future dates in this matter. If you
3 do not, that will make you subject to a bench order. And
4 failure to appear at judgment and sentence will also result in
5 the issuance of a bench order, and also, most likely, the
6 bringing of additional charges simply for failure to appear,
7 with additional penalties over and above what you're already
8 facing.
9 It's given the representation, which I have no reason
10 to question, that you have fully complied with all conditions,
11 you've been present when the Court has required, including at
12 the trial confirmation hearing, that I am releasing you.
13 Judgment and Sentence for Jeremy Michael Head will
14 be?
15 THE CLERK: August 21, 2013 at 9:00 a.m.
16 THE COURT: All right. That is your date, Mr. Head,
17 when you must be here. You'll have a chance to be interviewed
18 by probation beforehand with Mr. Haydn-Myer present. You will
19 have a chance to file informal objections to a draft
20 presentence report. You'll have a chance to file formal
21 objections -- all through Mr. Haydn-Myer -- to the final
22 report.
23 At the sentencing hearing, I will hear from the
24 attorneys as to the appropriate sentence, and I'll hear from
25 you before I impose sentence. The Government also can file

1 objections.
2 For Charles Head, the best date approximately two
3 weeks out is?
4 THE CLERK: June 19, 2013, at 9:00 a.m.
5 THE COURT: All right. So that's a status. That
6 time may change a day or so before hearing. A status as to
7 sentencing and forfeiture. And the parties are instructed to
8 meet and confer to clarify their either joint or respective
9 positions on judgment and sentence.
10 MR. TEDMON: Your Honor, could I ask for one
11 concession from the Government -- or at least an order from the
12 Court. On the June 19th date, Mr. Head is going back to
13 Pittsburgh. It's a status conference appearance. I will
14 certainly be in touch with him, but whatever dates we set for
15 sentencing he will accept, and I'll put that on the record
16 right now. He's willing to do that. Also as far as forfeiture
17 goes, I'll be in touch with the Government and Mr. Head as it
18 relates to how we need to handle that.
19 I would ask the Court that Mr. Head, since he has a
20 waiver of appearance on file, not be required to be at that
21 appearance. I will contact him immediately thereafter and give
22 him the status.
23 THE COURT: With that one exception, is that
24 acceptable given the Court's order, Mr. Anderson?
25 MR. ANDERSON: May I have a moment, Your Honor?

1 Your Honor, we're okay with that. I think it's
2 implicit, but could the Court explicitly inform Mr. Head that
3 he's responsible for showing up on whatever date the Court sets
4 through his attorney, that he's still responsible for showing
5 up at that date.
6 THE COURT: What I just said to each of you applies.
7 Even though I'm allowing your waiver to apply to that one
8 hearing, you should assume the waiver doesn't apply to any
9 other hearings. And the Court does anticipate setting dates on
10 June 19th, and you are bound by those dates.
11 So if you do not appear at the dates that will be
12 set, then everything I said applies to your non-appearance if
13 that's what happens.
14 MR. TEDMON: That's understood and accepted, Your
15 Honor. Thank you.
16 THE COURT: All right. And everything I said about
17 sentencing would apply to you if we set the sentencing date on
18 that date.
19 DEFENDANT C. HEAD: I understand, Your Honor.
20 THE COURT: Anything further today?
21 MR. TEDMON: Not on behalf of Charles Head, no.
23 THE COURT: All right. We will see some of you on
24 June 19th then and others in August. Thank you very much.

1 CERTIFICATION

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Case 2:08-cr-00093-KJM Document 472 Filed 08/02/11 Page 1 of 5

1 UNITED STATES DISTRICT COURT

2 EASTERN DISTRICT OF CALIFORNIA

4 UNITED STATES OF AMERICA, ) Case No. 2:08-cr-00093-KJM

1 SACRAMENTO, CALIFORNIA, WEDNESDAY, APRIL 2, 2008, 3:19 P.M.

4 Criminal Case 08-116-LKK, United States v. Charles Christopher

5 Head. This is on for arraignment and defendant's initial

8 MS. ENDRIZZI: Good afternoon, Your Honor. Ellen

9 Endrizzi for the United States.

10 MS. NEGIN: Good afternoon, Your Honor. Lexi Negin

11 from the Federal Defender's Office on behalf of Mr. Head. Mr.

12 Head does qualify for appointed counsel. I understand that Mr.

13 Scott Tedmon is going to be the lawyer that is appointed for

14 him, but I am going to have him sign the financial affidavit,

15 and I think that Mr. Tedmon is going to be here tomorrow asking

16 for appointment, but our office has already made those

18 THE COURT: All right. So you're going to be asking

19 that it go over for one day for status of counsel?

20 MS. NEGIN: I can -- yes, I think that's the best way

21 to proceed, if I can just have a moment with Mr. Head?

22 THE COURT: All right.

23 (Pause - counsel conferring with defendant.)

24 MS. NEGIN: Thank you, Your Honor. That is the right

1 THE COURT: And you also wish for it to go over for

2 full arraignment and entry of plea tomorrow?

3 MS. NEGIN: I think that makes the most sense, and

5 that's the most appropriate way to proceed if that's acceptable

6 to the Court and the government.

7 THE COURT: It's all right with me, although I'd

8 prefer not to do a partial arraignment today given the fact

9 there's two indictments and it's fairly lengthy.

10 MS. NEGIN: I'd prefer everything to go over when Mr.

11 Tedmon can be here.

12 MS. ENDRIZZI: No objection to that, Your Honor.

13 THE COURT: All right. Mr. Head, I will advise you

14 that you have the right to counsel in these proceedings. In

16 choosing. If you're unable to afford to retain counsel, the

17 Court will appoint counsel to represent you.

18 Ms. Negin indicates that you qualify for appointment

19 of counsel. I will be appointing counsel to represent you.

20 It's anticipated that that is going to be panel attorney Scott

21 Tedmon who is available tomorrow afternoon at 2:00. Ms. Negin

22 from the Federal Defender's Office has indicated that it's

23 agreeable to you to put the matter over to tomorrow at 2:00 so

24 Mr. Tedmon can be here; is that correct?

25 THE DEFENDANT: Yes, Your Honor.

1 THE COURT: All right. And I'll advise you, you've

2 been charged in two indictments, the first numbered 08-93-FCD,

3 the second 08-116-LKK. Both indictments charge you with

4 conspiracy to commit mail fraud, various counts of mail fraud

5 and conspiracy to commit money laundering. I'll advise you in

6 full regarding the maximum possible penalties tomorrow when we

7 do a complete arraignment as well as entry of plea on both

9 What is the government's position with respect to Mr.

10 Head's custody status?

11 MS. ENDRIZZI: We move for detention as both a danger

12 and a flight risk.

13 THE COURT: And you wish that matter to be put over

14 till tomorrow as well, Ms. Negin?

15 MS. NEGIN: Yes, Your Honor. Yes, we do, Your Honor.

16 There's a report that Mr. Tedmon can review tomorrow and

18 sense to put everything over.