2009-10-24 reply in support of motion for discovery (10-24-2009)

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REPLY IN SUPPORT OF MOTION TO CONDUCT DISCOVERY IN 2255 PROCEEDING PAGE 1

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CONNIE C. ARMSTRONG, JR.

8309 Laughing Waters Trail

McKinney Texas, 75070

Telephone: 469-212-2316

e-mail: [email protected]

Petitioner Pro Se

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION


Petitioner

v.

UNITED STATES OF AMERICA

Respondent

No. CR 94 276 PJH

REPLY IN SUPPORT OF MOTION TO

CONDUCT DISCOVERY IN 2255

PROCEEDING

Petitioner Connie C. Armstrong, Jr. submits this Reply following the governments

submission of its opposition to his request for discovery in this section 2255 proceeding.

The governments opposition is based on two grounds. First, that Petitioners allegations

are speculative and, second, that the requested discovery would not entitle Petitioner to section

2255 relief. [Opposition at 1.] As a threshold observation, the government has not opposed or

made complaint as to the scope of the requested discovery; rather, the government opposes

discovery in its entirety. This position is curious in that the government is already conducting

discovery.

While the Rules governing section 2255 cases are somewhat inconsistent as to how

parties are identified, Rule 6 is quite clear that leave of court is required before any party


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conducts discovery. Despite this requirement, the government has identified the need for

discovery to properly present this case and is actually conducting such discovery. For example,

the government reveals that it required consultation with FBI personnel as to the contents and

form of documents at issue in this case. [Opposition at 7; Declaration of Laura Beeler at 1-2

(disclosing meetings with FBI counsel and outlining future discovery efforts]. To the merits,

however, the governments opposition fails to controvert the good cause demonstrated by

Petitioners motion for discovery.

1. Discovery concerning the prior investigation.

The government opens its opposition with discussion of the undisclosed prior

investigation, which is appropriate given the gravity of this omission. In discounting the

seriousness of its failure to disclose, the government states its prior investigation did not

conclude that Armstrong did not commit a crime but instead merely determined that it did not

have sufficient evidence to prosecute as of September 1988. [Opposition at 2]. The

government is making the Petitioners point. The government had the burden to establish guilt,

and it was not Armstrongs burden to establish innocence. Courts do not find people guilty or

innocent. . . . A not guilty verdict expresses no view as to a defendants innocence. Kansas v.

Marsh, 548 U.S. 163, 194 (2006)(quoting People v. Smith,708 N.E.2d 365, 371 (Ill. 1999).

Rather, it indicates simply that the prosecution has failed to meet its burden of proof. See id.

The suppression of a recent investigation of Armstrongs company that reached a

contrary prosecution decision obviously implicatesBrady. SeeU.S. v. Fernandez, 559 F.3d 303

(5th Cir. 2009);Reid v. Simmons, 163 F. Supp.2d 81 (D. N.H. 2001). But the improper benefit to

the government in meeting its burden is also obvious, is more serious, and casts doubt upon the

fundamental fairness of Armstrongs trial. See U.S. v. Boulware, 558 F.3d 971, 974 (9th Cir.


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2009)(Due process requires that criminal prosecutions comport with prevailing notions of

fundamental fairness and that criminal defendants be afforded a meaningful opportunity to

present a complete defense.)

Here, the prosecution of Armstrong involved the presentation and explanation of complex

financial transactions to lay jurors who are, generally, ill-equipped to evaluate such evidence.

See U.S. v. Hinojosa, 958 F.2d 624 (5th Cir. 1992)(HoldingBatson not implicated when the

structuring of financial transaction was at issue and all jurors without a high-school education

were struck);Memorex Corp. v. IBM Corp., 458 F. Supp. 423 (N.D. Cal. 1978) (approving court

fact-finding after jury disagreement in complex case);Bernstein v. Universal Pictures, Inc., 79

F.R.D. 59 (S.D. N.Y. 1978) (jury disallowed in complex case);In re U. S. Financial Securities

Litigation, 75 F.R.D. 702 (S.D. Cal. 1977) (same). Indeed, one of the key financial concepts at

issue in this case was actually decided in a collateral bankruptcy proceeding after Armstrongs

indictment. Yet the suppression of the prior investigation completely relieved the government of

the heavy burden of explaining the conflict between the two investigations. Specifically, a

redacted FBI 302 reveals that Hamilton Tafts operations at the time of the prior investigation

under different ownershipshowed the same characteristics as those for which Armstrong was

prosecuted. [Exhibits, pp. 4-6].

Again for example, the government notes that a portion of Armstrongs conviction was

based on evidence that he misappropriated more than $16.5 million for personal use.

[Opposition at 2]. The trial evidence was undisputed that Armstrong was the sole owner of the

company in question and the Ninth Circuit held that the company was the sole owner of it cash.

But ignoring the interesting philosophical question of whether one can misappropriate ones own


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assets, the foregoing FBI 302 shows that the ten to fourteen million dollars were loaned from

the company to its owners in the year prior to Armstrongs acquisition. [Exhibits, p. 4].

That year was 1988, the same year as the prior investigation. The government calls the

Petitioners allegations speculative, but the government agrees that the prior investigation

occurred, agrees that the prior investigation did not result in a prosecution, and avers that

Armstrongs later conviction was based in part on loans he took from the company. The FBI 302

shows that these or similar loans were in place at the time of the prior investigation. Far from

speculative, these allegations are supported by the governments own admissions and FBI

memoranda, which show that the government received a material advantage in this case by

avoiding the necessity of explaining a prior investigation which reached a contrary conclusion.

Good cause exists for discovery related to this issue.

2. Discovery concerning the undisclosed political pressure.

Had the government disclosed its prior investigation, the jury in this trial would have

faced the additional question of which investigation to believethe September 1988 version or

the February 1991 version. One element that would have aided the jurys determination,

however, was suppressed by the government; namely, the high level of political involvement at

the onset of the 1991 inquiry. [Exhibits, p. 7-10, Redacted FBI Memo of March 8, 1991]. This

memo describes the interplay between a disgruntled former Hamilton Taft employee, the IRS,

the staffs of Sen. Boxer and Rep. Pelosi, the Wall Street Journal, and the FBI. On the last page

of this interesting memo, the writer discloses a conversation with AUSA Yamaguchi, who noted

the need for additional probable cause before seeking a search warrant for the Hamilton Taft

offices. About this same time, Hamilton Taft became engaged in a contractual dispute with one

of its clients, Federal Express. [Exhibits, pp. 11-17, Original Complaint filed by Federal

Express]. One week later, the Wall Street Journal publishes a negative article about Hamilton


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Taft, citing the disgruntled employee. [Exhibits, pp. 18-19]. FBI memoranda reveal that the

employee was directed to the Wall Street Journal by Nancy Pelosi. [Exhibits, p. 8]. The article

was published on Friday, March 15, 1991. On Sunday, March 17, two days after the articles

publication and nine days after Yamaguchis statement that he lacked probable cause to pursue a

warrant, the DOJ published a press release detailing its investigation of Hamilton Taft. On April

3, 1991, two weeks after the Federal Express filing, FBI Deputy Director Larry Potts sends a

status report to Howard Baker, then a director of Federal Express, and copies the report to

individuals associated with the staffs of Pelosi and Boxer. [Exhibits, p. 20]. This memo is the

only communiqu produced which reveals contact between Mssrs. Baker and Potts. All

documents initiating the involvement of Mr. Potts are missing, as are the follow-up reports

promised in the memo. These documents are among the documents Petitioner seeks in his

discovery motion.

In short, the investigation of Armstrongs company began with the polite rebuffing of a

disgruntled former employee by an FBI agent on March 8 and quickly escalated to the Deputy

Director of the FBI sending a status report to a politically-influential director of Federal Express

(but not to any of its corporate officers) and to staff members of Pelosi and Boxer on April 3. It

must have been an exciting 26 days in the San Francisco field office.

Among all the facts proven or suggested by this evidence, the government only questions

whether the Mr. Baker referenced in the L.A. Potts memo was actually Howard Baker of

Federal Express. Discovery is the precise mechanism for answering such questions.

The governments failure to disclose this information deprived Armstrong of the

opportunity to argue that his prosecution was politically motivated. See U.S. v. Inzunza, 580

F.3d 894, 910 (9th Cir. 2009) (Finding defense theory that prosecution was politically


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motivated entitled government to submit rebuttal argument). ABrady materiality analysis must

consider the cumulative effect of the suppressed evidence. See U.S. v. Blanco, 392 F.3d 382 (9th

Cir. 2004). Under this standard, the political influence both underscores and explains the

governments reversal on the question of criminal culpability, which found no violation of

federal law in 1988 but commenced a public prosecution 30 months later. This suppression

undermines confidence in the outcome of the trial, and would require the reversal of

Armstrongs conviction. U.S. v. Bagley, 473 U.S. 667, 682 (1985). For this reason, the

Petitioner is entitled to discovery on this topic.

3. Discovery concerning the undisclosed audio tapes.

In opposing Armstrongs request for discover surrounding the 70 hours of late-disclosed

audio tapes, the government asserts that he has procedurally defaulted his claim. The

government misapprehends the issue. The issue is not whether, on the record before it, the trial

court abused its discretion in denying a continuance to allow review of the tapes. Instead, the

issue is that the record before the trial court included a) the oral assurance of Special Prosecutor

Smetana and b) the sworn affidavit of FBI SA Hatcher, both stating that the audio recordings

were recently discovered and were made by the Dallas FBI office in connection with an

unrelated investigation. [Exhibits, pp. 21-32 at p. 32 as to Smetana; and pp. 33-36 at pp. 35-36

as to Hatcher.]. Both of these statements were lies.

In its opposition to Petitioners discovery motion, the government speculates that both the

FBI in San Francisco and U.S. Attorney Yamaguchi perhaps forgot about these tapes.1 While

1 In a latter case, the government and the court were significantly less open-minded on thetopic of late production. During the 2008 case ofU.S. v. Roberts, No. CR-07-0100 MHP, thecourt and the government were confronted with 18 pages of emails produced the day before trial.[Exhibits pp. 37-57 at p. 38, 45]. The pages were not withheld by a party but were withheld by athird party, not before the court, in response to a proper subpoena. [Exhibits p.42]. Unlike the70 hours of tapes withheld in the instant case, Roberts involved merely 18 pages among


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the governments generous speculation is admirable, it is not supported by the record. For

example, the lead investigatorSpecial Agent Hatcherdid not make a minor, forgivable

misstatement under the pressure of a deposition or under intense cross examination. Instead,

after the unpleasantness had already hit the fan in the course of trialand in the face of defense

motions for a mistrial after more than six weeks of trialthe agent prepared a detailed,

deliberative four-page affidavit where he affirmatively states that the tapes were recently

discovered. [Exhibits, pp. 33-36].

Documents recently delivered to Armstrong pursuant to a FOIA request reveal that both

the oral statement of Smetana and the affidavit of Hatcher were false and the tapes were actually

prepared by the Dallas FBI office at the express authorization of AUSA Yamaguchi in support of

his prosecution of the instant case. [Exhibits, p. 58]. In its opposition, the government argues

that authorization means something other its ordinary meaning, points to FBI procedures on

this topic, and disclaims wrongdoing. The Petitioner disagrees, and the requested answer the

questions raised by this evidence. See Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351

(1978)([D]iscovery is not limited to issues raised by the pleadings, for discovery itself is

designed to help define and clarify the issues. Nor is discovery limited to the merits of a case,

for a variety of fact-oriented issues may arise during litigation that are not related to the merits.)

The Ninth Circuit has explained fraud on the court as follows:

Fraud upon the court should, we believe, embrace only that species of fraudwhich does or attempts to, defile the court itself, or is a fraud perpetrated byofficers of the court so that the judicial machinery can not perform in the usualmanner its impartial task of adjudging cases that are presented for adjudication.

terabytes of information. [Exhibits p. 47]. InRoberts, government counsel requested andreceived a continuance, and the judge twice called the conduct outrageous. [Exhibits pp.48-49, 51].


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In re Levander, 180 F.3d 1114, 1120 (9th Cir. 1999)(Recognizing the inherent power of a court

to set aside a judgment when a party deceives the court through perjury, and the perjury was not

discovered until after trial.) See also Weldon v. U.S., 225 F.3d 647 (2nd Cir. 2000)(Sotomayor,

J.)(Explaining that the submission of a false document is one form of fraud on the court.)

Of course, the late disclosure of the subject tapes implicatesBrady. See U.S. v. Shaffer,

789 F.2d 682, 690 (9th Cir. 1986)(If the arguably exculpatory statements of witnesses ... were

in the prosecutor's file and not produced, failure to disclose indicates the tip of an iceberg of

evidence that should have been revealed underBrady.) But the issue for the Special Prosecutor

and the FBI agent was not the content of the tapes; rather, the issue was opposition to a trial

continuance proposed by the defense. [Exhibits, pp. 59-66, trial transcript of hearing discussing

the volume of material and the time needed to review.]

To oppose that continuance, these men lied to the court. Petitioner cannot explain why

they lied, but lie they did. As noted above, this Court has the inherent power to set aside a

judgment obtained through fraud on the court. SeeIn re Levander, 180 F.3d at 1120;In re

Intermagnetics America, Inc., 926 F.2d 912, 916 (9th Cir.1991)(finding fraud on the court

provided an appropriate remedy where an officer of the court made a false declaration.) The trial

court believed the lies and based his denied of a new trial in great part on his belief that the

existence of the tapes was disclosed just as soon as it was learned. [Exhibits pp.67-80 at p.

78].

The actions of Smetana and Hatcher were inexcusable and harmed the integrity of this

Courts judicial process. The discovery requested by the Petitioner is not speculative. Indeed,

most of the relevant facts are not in dispute. Because the requested discovery concerns issues at

the heart of the judicial process, good cause exists for that discovery.

4. Discovery concerning collusion with the bankruptcy trustee.


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During trial, U.S. Attorney Yamaguchi argued to the trial court that In re Hamilton Taft

was inapplicable to the instant trial because the government was not a party to the bankruptcy

proceeding. [Exhibits pp. 81-92 at pp. 89]. To the contrary, documents delivered to Armstrong

after trial show a close alignment between the prosecution team and the bankruptcy team, such

that the two are in privity for purposes of collateral estoppel. [Exhibits pp. 93-94, FBI memo

describing a meeting between the lead prosecutor (Yamaguchi), the lead FBI agent (Hatcher),

and counsel for the bankruptcy trustee to discuss prosecution strategy;].

Under collateral estoppel, once a court has decided an issue of fact or law necessary to

its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of

action involving a party to the first case. Dodd v. Hood River County, 59 F.3d 852, 863 (9th

Cir.1995). Under both California and federal law, collateral estoppel applies where it is

established that

(1) the issue necessarily decided at the previous proceeding is identical to the onewhich is sought to be relitigated; (2) the first proceeding ended with a finaljudgment on the merits; and (3) the party against whom collateral estoppel isasserted was a party or in privity with a party at the first proceeding.

Younan v. Caruso, 51 Cal. App. 4th 401, 406-07 (1996). Here, elements one and two are

established. Thus, the remaining inquiry turns on whether the suppressed evidence is probative

of the privity issue, such that the defense was deprived of the opportunity to argue collateral

estoppel.

Privity is a legal conclusion designating a person so identified in interest with a party to

former litigation that he represents precisely the same right in respect to the subject matter

involved. U.S. v. Schimmels, 127 F.3d 875, 881(9th Cir. 1997). Parties are in privity when they


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are aligned such that the have the same legal interest. See Ferrell v. West Bend Mut. Ins. Co.,

393 F.3d 786 (8th Cir. 2005).

Here, suppression of FBI documents revealing collusion and cooperation between the

prosecution and the bankruptcy trustee deprived Armstrong of the opportunity to demonstrate

privity and invoke the mandatory strictures of collateral estoppel. The alignment in interests is

and wasobvious: Armstrongs conviction would allow the bankruptcy trustee to benefit from

more than $50 million in insurance proceeds triggered by criminal conduct. See Stanford

University Hosp. v. Federal Ins. Co., 1995, WL 912346, *1 (N.D. Cal. 1995)(not designated for

publication)(Hamilton Taft did carry such a bond with Lloyds, with primary coverage of $20

million and umbrella coverage of $30 million.).

While the law of the case argument was a justifiable attempt to fit a square peg into a

round hole, a collateral estoppel theory was fully on point and was mandatory under the facts

suggested by the forgoing evidence. Good cause exists for further discovery on this issue.

SUMMARY

[W]here specific allegations before the court show reason to believe that the petitioner may, if

the facts are fully developed, be able to demonstrate that he is ... entitled to relief, it is the duty of

the court to provide the necessary facilities and procedures for an adequate inquiry. Harris v.

Nelson, 394 U.S. 286, 300 (1969); see also RULES GOVERNING 2255CASES, Rule 6(a)(adopting

theHarris standard as the test for good cause.) Because the Petitioner has made the requisite

showing, he respectfully asks the Court for an order authorizing discovery.

Dated: October 23, 2009.


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REPLY IN SUPPORT OF MOTION TO CONDUCT DISCOVERY IN 2255 PROCEEDING

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8309 Laughing Waters TrailMcKinney Texas, 75070Telephone: 469-212-2316

e-mail: [email protected]

Petitioner Pro Se

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

OAKLAND DIVISION


Petitioner

v.

UNITED STATES OF AMERICA

Respondent

No. CR 94 276 PJH

EXHIBITS TOREPLY IN SUPPORT OF MOTION TO

CONDUCT DISCOVERY IN 2255PROCEEDING

Petitioner Connie C. Armstrong, Jr. submits these exhibits to his Reply in Support of

Motion to Conduct Discovery in 2255 Proceeding. The exhibits in this document are

sequentially numbered and correspond to page references in the accompanying Reply.

DATED: October 23, 2009.

Exhibits 1

CHAMBERS

COPY


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Exhibits 2


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Exhibits 3


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( R ~ v 11-15-83)

b7Cof FD-302 of On 2 / B / 9 3 J Page 2--- ......1...- _-----=.-----.;____ _ _

She sa id t h a t it was apparen t to h er w ith in th e firsttwen ty- four hours while reviewing Hamilton Taf t f i n anc i a l recordst h a t Hamilton Taft was in a cash flow c r i s i s . She sa id it wasthen he r job to look a t inves tments and /or loans to dete rmine th el ike l ihood o f th ese as se t s genera t ing any i n c o m e ~ She was toi n su re t h a t any fu tu re cap i t a l outf low was urea l inves tments" .She found out t ha t almost immediately a f t e r Maxpharmapurchased Hamilton Taft from cigna corpora t ion t h a t Hamilton Ta f t

c l i e n t funds were wire t r an s f e r r ed out of Hamilton Taf t . Thesefunds were in the form of no tes and were booked a t Hamil ton Taf ta s in ve stm en ts . But she saw no evidence of an a t t empt t o co l l e c ton t he se notes by Hamilton Taf t . She sa id t h a t some o f thet r an s ac t i on s were i nc red ib ly complicated .

She sa id t ha t she had f requen t meet in gs conce rn ingthese notes with Hamilton Taf t of f i c e r s . She discovered t h a tI I (PHD), Chief Financia l Off i ce r , l IPHO), Di rec to r of Opera t ions , I 1President~ ~ ~ - - ~ ~ ~ ~ ( P H O ) , Comptro l ler , were th e only Hamil ton Taf to f f ~ c e r s a knew abou t th e loans by Hamilton Taf t which Wereouts tand ing and unco l lec ted .

She fu r ther exp la ined t h a t she r e ca l l s te n to four teenmi l l i on do l l a r s in loans had l e f t Hamilton Taf t with no paymentsr e tu rn ing to Hamilton Taf t . She discussed t he se loans withI Ibut not with I , A ll of these loans were"brokered ll through th e Maxpharma o f f i c e in Dallas, Texas. Shediscovered t h a t Maxpharma of f i c e r s would t e l ephone r 1a tHamilton Taf t and i n s t ruc t her to wire money to M a ~ p h a r m a nDallas a9d then a , ~ e r the fact.Maxpharma would then send theC notes toL Jln San FranC1SCO.

She f e l t t h a t th e o f f i c e r s a t Hamil ton Ta f t werep ro t ec t i v e o f I of ten l I W Q u l ~ accuseI IOf r a id ing th e funds of Hamilton Taft .1 )was notvery h elp fu l in her aud i t . She f e l t tha t t h i s was because he wasth e person who ac tua l l y wire t rans fe r red th e funds from Hamil tona l I a s . She unders tood th e process being t h a t (FNU)of Maxpharma in Dal las wouldo t r ans f e r un s an c::: Iwould then i n s t r uc tr---. . . . . . ~ o = - ~ w i r e th e monies. I ~ ( P H O ) , a d i r e c t o r , of tengo t i r a t e a t he r i nqu i r i e s regard ing Hamilton Ta f t loans . A dayor two a f t e r she s t a r t ed working a t Hamilton Taf t she discovered

Exhibits 4


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(Re.v 11-15-83)

of FD-302 of _ . . . . . = ~ ~ ~ ~ ~ ~ ! ! ! ! ! ! ! l ! I I On __2-:,./_8...:;/_9_ 3 PAgo __3__

C

a "funny" t ransact ion where two to th re e m ill io n dol la r s ofHamilton Taf t funds was wired to Dallas , Texas. She understoodthat l ~ w e r e working on some deal to ra ise funds.She was t o ld t h a t these funds were supposedly to be used to"recapi ta l ize" Hamil ton Taf t . I l inst ructed her t h a t thede ta i l s of the t ransaction was none of h er b us in es s l but shebel ieves t ha t the funds went to e i th e r Amerimac Company inCal i fornia or to Gulftex, a r ea l es ta t e bus iness in Texas.I ~ s a i d t h a t from her examination of HamiltonTaf t f inanc1ai records she discovered t ha t a l l th e funds sen t ou tfo r these loans had to be dedicated Hamilton Taf t c l i en t funds.She said t h a t ' lhad to know t ha tHamilton Taf t c l i en t funds were being used to f inance theseinvestments. She understood that l lactual ly ass i s ted inthe creat ion of the notes to Hamilton Taft . One of these loansin 1988 in the amount of approximately $200,000 .00 was to aCONNIE CHIP ARMSTRONG, JR. business in Dallas , Texas by the nameof Dresdner Corporation (PHD).She said that l 1 (PHO) I Sales Manager, and1 ~ - - - - - - - - - - - - l ( P H O ) , Vice Pres lden t of dpera t ions , a t Hamilton

Taft were both concerned and upset a t the news of the loans .These loans viola ted Hamilton Taf t ' s written cash managementpol icy which s ta ted t h a t Hamilton Taft can onJY invest c l i en tfunds in safe overnight type of investments . I I said t ha tshe r eca l l s tha t most of the notes for the 1988 loans were fo r a90 or 180 day per iod . She s ta ted that in or around March 1989I Iwas f i red byl I res igned .She said t h a t Arthur Anderson C.P.A. firm withdrew fromthe Hamilton Taft audi t a couple of days a f t e r they gave HamiltonTaf t t he i r appointment l e t t e r . At t ha t point she said tha tmanagement a t Hamilton Taft f e l t t ha t Hamilton Taf t did not haveenough i n t e res t money to pay Arthur Anderson. Therefore,

Hamilton Taft did not receive any audi ted f inancia l s ta tements togive the increasingly concerned Hamilton Taf t c l i en t s . EDS oneof Hamilton Taf t ' s la rges t c l ien ts was request ing audi tedf inancia l s ta tements .I 'said tha t she s ta r ted taking l ega l act ion onthe debtors at the notes to Hamilton Taf t . She was takingaggressive co l lec t ion a c t i ~ s h e f e l t t ha t she could havecol lected on th e Amerimac'L----Jandl r a t e s i f not fo r

Exhibits 5


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(Rev 11-15-83)

of FD-302 of _ ~ ~ ~ ! ! ! ! ! ! ! ! ! ! ! ~ , - - - - , On __2-.;.1_8....;1_9_ 3 Pngc: _ 4 _

t h e ARMSTRONG t a k e o v e r o f Hamilton T a f t in March o f 1989. Shesaid tha t the I and Amerimac n o t e s t o t a l e d a p p r o x i m a t e l y $6m i l l i o n d o l l a r s . She p e r s o n a l l y t o l d ARMSTRONG a t t h e P e t i t andMart in law o f f i c e s about t h e n o t e s o u t s t a n d i n g and h e r c o l l e c t i o ne f f o r t s a t Hamilton T a f t . She t o l d him t h a t he s h o u l d be a b l e t oc o l l e c t on some o f t h e s e l o a n s . She s a i d t h a t he d i d n o t seemi n t e r e s t e d .She s a i d t h a t i n March o f 19891 I concluded t h a the was n o t a b l e t o r e c a p i t a l iz e Hamilton T a f t and t h a t Hamil tonT a f t would have t o f i l e f o r Chapter Seven bankruptcy p r o t e c t i o nC so he conceded Hamilton T a f t t o ARMSTRONG 4 She r e c a l l s a $20

m i l l i o n d o l l a r f i g u r e being used a t Hamilton T a f t around t h e t i m eARMSTRONG t o o k c o n t r o l o f Hamilton T a f t . She s a i d t h a t t h e $20m i l l i o n d o l l a r s r e p r e s e n t e d t h e negative c a p i t a l and t h e n e g a t i v ecash flow a t Hamilton T a f t . She s a i d t h a t s h e f e l t a t t h a t t i m et h a t t h i s much c a p i t a l would be n e c e s s a r y t o keep Hamil ton T a f t av i a b l e company. The f i n a n c i a l c o n d i t i o n o f Hamil ton T a f t wasc o n s t a n t l y being communicated t o ARMSTRONG and h i s a t t o r n e y sd u r i n g t h e l e g a l a c t i o n s . I ' s a i d t h a t she s a t t h r o u g ha l l o f the d e p o s i t i o n s d u r i n g ARMSTRONG's l e g a l a c t i o n t o g a i nc o n t r o l o f Hamilton T a f t .

She s a i d t h a t she unders tood t h a t ARMSTRONG's p l a n f o rHamilton T a f t was t o recapi ta l ize Hamilton Taft by investing $20m i l l i o n d o l l a r s , r e h i r e l I t o s a t i s f y Wells Fargo Bank andexpand Hamil ton T a f t ' s customer base t o i n f u s e more revenue i n t oHamilton T a f t .

Exhibits 6


19/106

Memorandum

To . SAN FRANCISCO (196A-SF-93255) (P) Date 3/8/91From sAJ _ (SQ' 5) b7CSubject CHIP ARMSTRONG, J r . , dbaHamilton Taft and Company1 Market PlazaSpear s t r e e t TowerSan Francisco, CaliforniaFBW; MFi Tax Fraud;00: SAN FRANCISCO

The purpose o f t h i s memo i s tO 'document even t s t h a t~ ~ ; ; ; : " " : ~ ~ I o 6 . . J I I ' o I I I e l . . . , e since 6bruary 13 I 199 whi,?h is the date t h a t~ ~ ~ ~ ~ w a s l a s t interviewed by the wri te r . On t ha t__________~ p r o v i d e d a numbs ocuments to i t e r whichhave been disse ~ n e y he wri te r to ~ or the IRSC ~ h e r e in San F ranc is co , te le phone number 556-6850. I t should:a l so be noted. t h a t a copy o f these documents a long with a s u m m ~ r yof the wri te r ' s review of San Francisco f i l e 196A-2868 ha s beenprepa red and d i s semina ted to AUSA MICHAEL YAMAGUCHI a t 556-1328.A copy o f t h i s summary i s a matter of record under a separa tecommunication which i s a par t of th i s f i l e .

Due to th e f a c t t h a t AUSA YAMAGUCHI was on annual l e aveand did not re turn to h is office unt i l March 4, and/or 5, 1991 noovert investigation was undertaken. This matter was referred toMr. Y GUCHI because of h is r ev ious r e f e r r a l w' he handledr e a rd i n Haml on Taft in which he subse en t l f r- ~ lJlck 0] prosecution.. T his matter was inves t iga ted by S -I _it was handled under--SF 196A-2868 and was c losedAugust , 1988.w ith re ga rd to information suppl ied byl I wr i t e rwas re luc tan t to i n i t i a t e any ove r t i nves t i g a t i on fo r f ea r that

t h e r e w o u l d ~ Eotent ia l l iab i l i ty attached wherein theg o v e r n m ~ n t .QB1dJ2e accused.Qf i n i t i a t i pg the down f a l l ,ofcap t i oned company bvl'the mere fac t t h a t it was making ove r tinquir ies . [ . ' ,has provided detai led i n fo rma t i on which,of t h i s date , has ' been unab le to be thoroughly co r r obo r a t ed .P rogress i s being made to e f f e c t such cor roDora t2on . .

I. expressed apprehension in h is mind r ega rd ingth e " ex te ns iv e n t im e - i t was t ak ing for th e government to decideWhether o r no t to i n i t i a t e an i nves t i g a t i on and to e f f e c t somec r imina l process . He was to ld t h a t th e government ha_g._:t.Q .........@ ~ vic t im be fore any process would be for thcoming. He was f u r the r

C

Memorandum

To

From

Subject

SAN FRANCISCO (196A-SF-93255) (P)sAJ ....___ ----1 (SQ' 5) b7CCHIP ARMSTRONG, J r . , dbaHamilton Taft and Company1 Market Pl azaSpear St ree t TowerSan Francisco, CaliforniaFBW; MFi Tax Fraud;00: SAN FRANCISCO

Date 3/8/91

The purpose of this_memo i s to 'document events t h a t" ; ' : : ' : : ~ ; ; " " " ' ; ~ ~ I " - I : . G . i i I I o l ~ e since ~ b r u a : ; y 13 I which is the date t ha t~ ~ ~ ~ ________~ w a s l a s t interviewed by the wri ter . On t ha t___________prov ided a numbe ocuments to i t e r whichhave been dis se ~ n a e y he wri te r to qA o r the IRSC ~ e r e in San Franc isco , te lephone number 556-6850 . It should:a l so be noted. t h a t a copy o f t hese documents a long with a summqryof the wri ter ' s review of San Francisco f i l e 196A-2868 has beenprepared and disseminated to AUSA MICHAEL YAMAGUCHI a t 556-1328.A copy o f t h i s summary i s a matter o f record under a separa tecommunication which i s a par t of th is f i l e .

Due to the f a c t t ha t AUSA YAMAGUCHI was on annual l e aveand did not r e t u rn to his office unt i l March 4, and/or 5, 1991 noovert investigation was undertaken. This matter was referred toMr. YAMAGUCHI because of h is previous re fer ra l which he handled~ g . . a r d i n g HamHton Taf t -in which he subsequently QIilCl j.n:p f o rl .sck OJ pros e cntiOIL This matter was investigated by S . --I _ i t was handled under--SF 196A-2868 and was c losedAugust , 1988.

with r egard to information supplied by l I wr i t e rwas r e l u c t a n t to in i t i a te any over t invest igat ion fo r fear thatthere ~ u l d ~ poten t ia l l iagi l i ty qttached wherein theg o v e r n i n ~ n t QB1d1;!e accused..Q.t in i t ia t ipg th e p o w n f a l l ,o fcaptioned COmpany byjthe mere fac t t ha t it was making over tinqui r ies . I .- .has provided detai led informat.ion whichof t h i s date , has been unable to be thoroughly corroborated.Progress i s being made to e f fec t such coriOEorat2on.

I . I expressed apprehension in h is mind regardingthe "extensive" t ime- i t was taking for the government to decidewhether or not to in i t i a te an invest igat ion and to e f f e c t somecr imina l process . He was tolc:1 t ba t the government haJl._:t.Q .....l l 9 . ; . ~ _ vic t im befo re any process would be for thcoming. He was fu r t he r

C

Memorandum

To

From

Subject

SAN FRANCISCO (196A-SF-93255) (P)sAJ ....___ ----1 (SQ' 5) b7CCHIP ARMSTRONG, J r . , dbaHamilton Taft and Company1 Market Pl azaSpear St ree t TowerSan Francisco, CaliforniaFBW; MFi Tax Fraud;00: SAN FRANCISCO

Date 3/8/91

The purpose of this_memo i s to 'document events t h a t" ; ' : : ' : : ~ ; ; " " " ' ; ~ ~ I " - I : . G . i i I I o l ~ e since ~ b r u a : ; y 13 I which is the date t ha t~ ~ ~ ~ ________~ w a s l a s t interviewed by the wri ter . On t ha t___________prov ided a numbe ocuments to i t e r whichhave been dis se ~ n a e y he wri te r to qA o r the IRSC ~ e r e in San Franc isco , te lephone number 556-6850 . It should:a l so be noted. t h a t a copy o f t hese documents a long with a summqryof the wri ter ' s review of San Francisco f i l e 196A-2868 has beenprepared and disseminated to AUSA MICHAEL YAMAGUCHI a t 556-1328.A copy o f t h i s summary i s a matter o f record under a separa tecommunication which i s a par t of th is f i l e .

Due to the f a c t t ha t AUSA YAMAGUCHI was on annual l e aveand did not r e t u rn to his office unt i l March 4, and/or 5, 1991 noovert investigation was undertaken. This matter was referred toMr. YAMAGUCHI because of h is previous re fer ra l which he handled~ g . . a r d i n g HamHton Taf t -in which he subsequently QIilCl j.n:p f o rl .sck OJ pros e cntiOIL This matter was investigated by S . --I _ i t was handled under--SF 196A-2868 and was c losedAugust , 1988.

with r egard to information supplied by l I wr i t e rwas r e l u c t a n t to in i t i a te any over t invest igat ion fo r fear thatthere ~ u l d ~ poten t ia l l iagi l i ty qttached wherein theg o v e r n i n ~ n t QB1d1;!e accused..Q.t in i t ia t ipg th e p o w n f a l l ,o fcaptioned COmpany byjthe mere fac t t ha t it was making over tinqui r ies . I .- .has provided detai led informat.ion whichof t h i s date , has been unable to be thoroughly corroborated.Progress i s being made to e f fec t such coriOEorat2on.

I . I expressed apprehension in h is mind regardingthe "extensive" t ime- i t was taking for the government to decidewhether or not to in i t i a te an invest igat ion and to e f f e c t somecr imina l process . He was tolc:1 t ba t the government haJl._:t.Q .....l l 9 . ; . ~ _ vic t im befo re any process would be for thcoming. He was fu r t he rExhibits 7


20/106

196A-SF-93255PKM/sgc

advi sed on more than one occasion by th e wr i t e r o f th e po t en t i a lc i v i l l i a b i l i t y which miggt a t t a ch to th e r eve l a t i on to th egeneral public tha t the FBI was conducting or maybe conducting aninvest igat ion in to certain alleged criminal ac t iv i t i e s on thepa r t o f Hamil ton Ta f t . .

Nonetheless, on February 1-1, 1 9 9 1 ~ r = lsaw fit toco ntac t th e congressional o f f i c e s he re in San Franc i s co o fCongress persons NANCY PELOSI and BARBARA BOXER.~ p r e s e n t a t ' on resswoman PELOSI's o f f i c e to whomspoke ave arne o f an i nve s t i a t iv e re o r t e r e~ h o u l d consider contacting.. with b ~ infOrmat.iQD. On F e l ; > r u a r ~ , ' ;~ 1 the w ~ i t ~ r as well as ~ g e n t l lo f the Cln r e p o ~ e d- rece iv ing t e l ephone ca l l s from an a t to rney a t th e Depar tment o fJ u s t i c e making inquiry as to the FBI and/or IRS' connect ion i fany with Hamilton Taft .

On February 13, 1991, during the interview o f l ~ __conducted by the wri te r , he was aga in que st io ned as to the reasonfo r making c a l l s to th e aforement ioned cona ress i ona l o f f i c e s . Hes ta ted t h a t he was conce rned about II fo l lowing h is r e s i gna t i on from Hamil ton

~ T - a - Y - ~ t - - o - n - - F - l e - ~ b - - ' r - u - a - r - Y ~ 1 ~ 1 ~ , ~ 1 ~ 9 ~ 9 ~ 1 ~ . I t should be noted tha t I lduring th i s interview on February 13, 1991 r e -i t e ra te d th a t f a c t . -t h a t l I1 I He was J----again reminded of poten t ia l c i v i l l i a b i l i t y problems t ha t mightgn?ue from th e publ i ca t iQD Qf th e p o s s i b l ~ n t e r e s t o f th e FBIwith r e s ~ 9 t to-Jiamilton a f ~ .

On Wednesday, March 6 1991, th e wr i t e r r ece ivedte lephone ca l l from SAJ ; JIRS CID who advised t ha t hehad been cal led by a M-. RALPH :INW, an i nve s ti g at iv e r epo r te rfo r th e Wall s t r e e t Journal here in San Franc i s co . The purposeof KING's ca l l to SWAIN was to confirm t ha t the IRS wasc o n d u c t i n g ~ n Y s t i g a t i o n regarding Hamil ton Taf t . On themorning o f March 6 , 1991, the wri ter reviewed message s l ips t h a thad arr ived on Tuesday, March 5, 1991, th e wr i t e r having been ons ick leave t h a t day and one of, them was from RALPH KING of theWall s t r e e t Journal . The wr i t e r d id no t r e t u rn KING's phonecal l , however, in r e s ~ g to a page, for a telephone ca l Ionthe afternoon ca l l of ~ h - _ 6 J ) 1991, the wri te r became connectedto Mr. KING o f th e Wall s t r ee t , Jou rna l . The usual inquir ies weremade and the usual response, t ~ a t , is we can nei ther confirmand/or deny th e e xiste nc e of any investigation was provided toMr. KING who seemed per tu rbed y thi ~ e s p o n ~ .

2

b7C


advised on more than one occasion by the wri te r of the poten t ia lc i v i l ! i a b i l i t y which m i ~ t a t tach to th e reve la t ion to th egeneral public tha t the FBI was conducting or maybe conducting aninvest igat ion in to cer ta in alleged cr iminal ac t iv i t i e s on tnep a r t of Hamilton Taf t . '

Nonetheless, on February ]Ll, 1 9 9 1 ~ r = I saw f i t tocon tac t t he congressional off ices here in San Fran c i s co o fcongress persons NANCY PELOSI and BARBARA BOXER.~ t ' on resswoman PELOSI/s office to whomspoke ave arne o f an inves t i a t ive~ h o u l d consider CQDtactjng. . with b ~ s infdrmat-ion. Qn Fepruar}!'_12.';~ 1 , the w r i t ~ r as wall as ~ g e n t l lo f the eIn r e p o ~ e d rece iv ing t e l ep h o n e ca l l s from an a t to rney a t th e Depar tment o fJus t ice making jnquiry as to th e FBI and/or IRS' connection i fany with Hamilton Taft.

On February 13 , 1991, dur ing th e interview o f ~ I _________conducted by the writer , he was again questioned as to the reasonfo r making c a l l s t o th e aforement ioned o o n ares s io n a l o f f i c e s . Hes t a t e d t h a t he was concerned about IIfo l lowing h is r e s i g n a t i o n from Hamil ton

" ' r r l - a , ' " " ' I ' . r l l " ! " ' ~ t - - o - n - - " F ~ l e " " ' t b " " ' r " " ' u " ' a " " r - Y ~ 1 ~ 1 ~ , ~ 1 ! " ' ! 9 ! ! " ' ! ! 9 ! ! " ' ! ! 1 ~ . I t should be noted tha t I Id u r in g th i s interview on February 13 , 1991 r e - i t e r a t e d tha t f a c ttha t! !1 I He was J--'again reminded of poten t ia l c iv i l l i ab i l i ty problems t na t mightn?ue from th e publicat igo Qf th e p o s s i b l ~ n t e r e s t o f th e FBIwith r e s E . g ~ ~ - H a m i l t o n a f ~ .

On Wednesday, March 6 1991, th e wri te r received atelephone c a l l from SAJ ; JIRS CID who advised t ha t hehad been cal led by a M-. RALPH ~ N : , an invest igat ive repor terfo r th e Wall s t r e e t Journal h ere in San Fran c i s co . The purposeof KING's cal l to SWAIN was to confirm tha t the IRS wasc o n d u c t i n g ~ D Y s t i g a t i o n regarding Hamilton Taft . On themorning o f March 6 , 1991, the w r i t e r reviewed message s l ips t ha thad arrived on Tuesday, March 5, 1991, th e w r i t e r having been onsick leave tha t day and one of, them was from RALPH KING of theWall s t r e e t J o u rn a l . The writer did not return KING's phoneca l l , however, in r e s ~ g to a page, for a telephone c a l I o nthe afternoon ca l l of ~ h - ~ ) 1991, the wri ter became connectedto Mr. KING of th e Wall street Journal . The u s u a l inquir ies weremade and the usual response, t ~ a t , is we can nei ther confirma n d / o r deny the existence of any investigation was provided toMr. KING who seemed pe r t u rped y ~ e s p O Q s e .

2

b7C


advised on more than one occasion by the wri te r of the poten t ia lc i v i l ! i a b i l i t y which m i ~ t a t tach to th e reve la t ion to th egeneral public tha t the FBI was conducting or maybe conducting aninvest igat ion in to cer ta in alleged cr iminal ac t iv i t i e s on tnep a r t of Hamilton Taf t . '

Nonetheless, on February ]Ll, 1 9 9 1 ~ r = I saw f i t tocon tac t t he congressional off ices here in San Fran c i s co o fcongress persons NANCY PELOSI and BARBARA BOXER.~ t ' on resswoman PELOSI/s office to whomspoke ave arne o f an inves t i a t ive~ h o u l d consider CQDtactjng. . with b ~ s infdrmat-ion. Qn Fepruar}!'_12.';~ 1 , the w r i t ~ r as wall as ~ g e n t l lo f the eIn r e p o ~ e d rece iv ing t e l ep h o n e ca l l s from an a t to rney a t th e Depar tment o fJus t ice making jnquiry as to th e FBI and/or IRS' connection i fany with Hamilton Taft.

On February 13 , 1991, dur ing th e interview o f ~ I _________conducted by the writer , he was again questioned as to the reasonfo r making c a l l s t o th e aforement ioned o o n ares s io n a l o f f i c e s . Hes t a t e d t h a t he was concerned about IIfo l lowing h is r e s i g n a t i o n from Hamil ton

" ' r r l - a , ' " " ' I ' . r l l " ! " ' ~ t - - o - n - - " F ~ l e " " ' t b " " ' r " " ' u " ' a " " r - Y ~ 1 ~ 1 ~ , ~ 1 ! " ' ! 9 ! ! " ' ! ! 9 ! ! " ' ! ! 1 ~ . I t should be noted tha t I Id u r in g th i s interview on February 13 , 1991 r e - i t e r a t e d tha t f a c ttha t! !1 I He was J--'again reminded of poten t ia l c iv i l l i ab i l i ty problems t na t mightn?ue from th e publicat igo Qf th e p o s s i b l ~ n t e r e s t o f th e FBIwith r e s E . g ~ ~ - H a m i l t o n a f ~ .

On Wednesday, March 6 1991, th e wri te r received atelephone c a l l from SAJ ; JIRS CID who advised t ha t hehad been cal led by a M-. RALPH ~ N : , an invest igat ive repor terfo r th e Wall s t r e e t Journal h ere in San Fran c i s co . The purposeof KING's cal l to SWAIN was to confirm tha t the IRS wasc o n d u c t i n g ~ D Y s t i g a t i o n regarding Hamilton Taft . On themorning o f March 6 , 1991, the w r i t e r reviewed message s l ips t ha thad arrived on Tuesday, March 5, 1991, th e w r i t e r having been onsick leave tha t day and one of, them was from RALPH KING of theWall s t r e e t J o u rn a l . The writer did not return KING's phoneca l l , however, in r e s ~ g to a page, for a telephone c a l I o nthe afternoon ca l l of ~ h - ~ ) 1991, the wri ter became connectedto Mr. KING of th e Wall street Journal . The u s u a l inquir ies weremade and the usual response, t ~ a t , is we can nei ther confirma n d / o r deny the existence of any investigation was provided toMr. KING who seemed pe r t u rped y ~ e s p O Q s e .

2

b7C

Exhibits 8


21/106

196A-SF-93255PKMjsgc

On March 6, 1991,1 r head o f c orp ora tesecuri ty of Sun Micro Systems Inc. a t 2550 Garcia Ave ., MountainView, Cal i fo rn ia 94043, te lephone number (415) 336-0496 wascal led by th e wri ter in response to c a ll t h a t he had made t o ou roff ice on March 5, 1991.

t h a t h is off ice hadbeen con tac ted by wasaccompanied by an at torneJ one (ph) who advised tha tth e purpose ofl . _contac l c ro Systems was toadv i se Sun Micro Systems t h a t it had been th e v ic t im o f a f raudperpe t r a ted by Hamilton Taft ' on Sun -.Micro Systems and numerousother corporate cl ien ts of Hamilton Taft . I ~ d v i s e dth e wri ter t h a t he would fax cer ta in documents up to SanFranc isco a t th e wr i t e r ' s 5uggestiqn. These documents inc luded acopy of the service agreement tha l : exis t s b e t w ~ e n Sun .Mic1;"o .Systems and Hamil to n T af t dated (October 1, __.1987 as we l l a s cop ie so f ce r t a in Federa l tax forms whicn had been execu ted by employeeso f Hamilton Taf t Company. l a l so advised th e wr i t e rt h a t I rad o f h is own vo l i t i on convened a meet ing o f " " ~ ~ } : ' ~ ~ _. ' :seve ra l of th e c orp ora te represen ta t ives who he had con tac t ed . t ~ ~ ( ' - _ ~ , ' : ; ~ ' . ' . J _ ' J _ ' -presumably in th e first week o f March t e l l ing t he se corpora t ionswho a re cur ren t and /o r former c l i e n t s o f Hamil ton Taf t , t h a t theyhad in fa c t been ,defrauded by Hamilton Taf t . Sun Micro-Sys temsr e luc t an t l y agreed to "hos t" t h i s meeting which was to t ake p lace .I"'"dur ing th e a fte rn oo n o f March 8 , 1991 a t Sun Micro Sys tem's ';o ff ic e s in Mountain View. ,i ' " '.' , ..nf/, :':' ;

Of the mornin: of March 7 , H9 1 , I I , t h ro tgh 'h is associatel l, an invest igator fo r the C o ~ p o r a t eS e c u r i t ~ D e p a r t m e n t of un Micro Sys tems , facsimiled l ~ ~ a g e s o jdocuments to the wri ter . The most sa l i en t po in t o f t ~ e s edocuments was a l e t t e r to Sun Micro S ys tems da ted February 13, "', ,1991 from th e ,.IRS in-- Fresno . The l e t t e r r e f e r s to a pa r t i c u l a r ,/'tax i den t i f i ca t i on number u t i l i z ed by ' Sun Micro System s and . ' ~ re fe rences a ta x per iod ending september 30 I 1990.'- The letter ~ , l ~ : ? , . , .}goes on to thank ta x paye r (Sun Micro Systems) fo r i t s r ep ly t - . ~ , ';dated January 25, 1991 and its payment o f $260,784.25 in pena l t y J ; '.....fees and fo r its l a t e depos i t o f ($5,215, 6 8 4 ~ 8 6 ) . The - . , signifir i: lD:e Of t h ~ S : :mmunication i s t ha t Sun Micro Systems . , ' ..t h roughLJhas represented, as o f March 7 , 1991, t h a tit did l n a c ~ sen t e appropr i a t e money t h a t i s $5 ,215 ,684 .86to Hamil ton Taf t v ia a wire t ransfer in o rde r to pay employmentt ax o b lig at io n s do and owing th e IRS fo r th e ta x per iod endedSeptember 30 r 1990. Per an agreement o f which t h e wr i t e r i s inr ece ip t , t h a t i s , th e service agreement between Hamil ton Ta f t andSun Micro System?, Hamilton Taft i s respons ib l e fo r th epayment o f ~ - - L ~ e p e n a l t i ~ 4 It i s an in fe rence drawn by Sun

3

196A-SF-93255PKM/sgcOn March 6, 1991,1 r head of corpora t esecuri ty o f Sun Micro Systems Inc. a t 2550 Garcia Ave., Mountain

View, California 94043 1 t e lephone number (415) 336-0496 wascal led by the wri ter in response to ca l l t h a t he had made to ouroff ice on March 5 , 1991.off ice hadbeen contacted by wasaccompanied by an at torney one (ph) who advised tha tth e purpose o f I . _ ontac J.cro Systems was toadvise Sun Micro Systems t ha t it had been tBe vict im of a f raudperpetrated by Hamilton Taf t ' on Sun . Micro systems and numerousother corporate c l ien t s of Hamilton Taft . I 'advisedthe wri ter tha t he would fax cer ta in documents up to SanFrancisco a t the wri te r ' s s u g g e s t i ~ n . These documents 'included a .copy of the service agreement that( exis ts b e t w ~ e n Sun . l ~ i c l ; " o ..systems and Hamilton Taft dated (October 1, ..1981 as well as copiesof cer ta in Federal tax forms whicn had been executed by employeeso f Hamilton Taft Company. I I also advised the wri te rtha t I pad of h is own vol i t ion convened a meeting of " " ~ ~ , 1 ..0,severa l of the corpora te representat ives who he had contac ted . t ~ / ; r : ~ , : ' -presumably in the f i r s t week of March t e l l ing these corporationswho are current and/or former c l ien t s of Hamilton T a f t , t h a t theyhad in f ac t been defrauded by Hamilton Taft . Sun Micro-Systemsreluctant ly agreed to "host" th is meeting which was to take place . f t" 'during the afternoon of March 8 , 1991 a t Sun Micro System's "off ices in Mountain View. ,1 ' "

, , [ ) i f / ,Of the mornin: of March 7 , 1991 , I I throbgh .....h is associatel I, an inves t iga tor for the COJ;.porateSecurity-. Department of un Micro Systems, facsirniled 16/pages 0,documents to the wri ter . The most sa l i en t point of t hesedocuments was a l e t t e r to Sun Micro systems dated February 13,1991 from the ,.IRS in-- Fresno.. The let}:er refers to a par t i cu la rtax ident i f ica t ion number ut i l i zed by Sun Micro Systems and .references a tax period ending september 30, 1990 . ; The l e t t e r }goes on to thank tax payer (Sun Micro Systems) fo r i t s reply t if 'dated January 25, 1991 and i t s payment o f $260,784.25 in penal tyJ ,fees and for i t s la te deposit of ($5,215, 684 .86) . The "Sign i f i rn : e of t h ~ S ~ m m u n i c a t i o n i s tha t Sun Micro Systems .. .

t h rough__has represented, as of March 7, 1991, t ha tit did 1nact sen t e appropriate money tha t i s $5 , 215 , 684 . 86to Hamilton Taf t via a wire t r ans fe r in order to pay employmenttax obligations do and owing the IRS for the tax period endedSeptember 30 r 1990. Per an agreement of which th e w r i t e r i s inreceipt , t h a t is , the service agreement between Hamilton Taf t andSun Micro S y s t e m ~ , Hamilton Taft is responsible fo r thepayment o t ~ - - L ~ e p e n a l t i ~ 4 I t is an in ference drawn by Sun3

196A-SF-93255PKM/sgcOn March 6, 1991,1 r head of corpora t esecuri ty o f Sun Micro Systems Inc. a t 2550 Garcia Ave., Mountain

View, California 94043 1 t e lephone number (415) 336-0496 wascal led by the wri ter in response to ca l l t h a t he had made to ouroff ice on March 5 , 1991.off ice hadbeen contacted by wasaccompanied by an at torney one (ph) who advised tha tth e purpose o f I . _ ontac J.cro Systems was toadvise Sun Micro Systems t ha t it had been tBe vict im of a f raudperpetrated by Hamilton Taf t ' on Sun . Micro systems and numerousother corporate c l ien t s of Hamilton Taft . I 'advisedthe wri ter tha t he would fax cer ta in documents up to SanFrancisco a t the wri te r ' s s u g g e s t i ~ n . These documents 'included a .copy of the service agreement that( exis ts b e t w ~ e n Sun . l ~ i c l ; " o ..systems and Hamilton Taft dated (October 1, ..1981 as well as copiesof cer ta in Federal tax forms whicn had been executed by employeeso f Hamilton Taft Company. I I also advised the wri te rtha t I pad of h is own vol i t ion convened a meeting of " " ~ ~ , 1 ..0,severa l of the corpora te representat ives who he had contac ted . t ~ / ; r : ~ , : ' -presumably in the f i r s t week of March t e l l ing these corporationswho are current and/or former c l ien t s of Hamilton T a f t , t h a t theyhad in f ac t been defrauded by Hamilton Taft . Sun Micro-Systemsreluctant ly agreed to "host" th is meeting which was to take place . f t" 'during the afternoon of March 8 , 1991 a t Sun Micro System's "off ices in Mountain View. ,1 ' "

, , [ ) i f / ,Of the mornin: of March 7 , 1991 , I I throbgh .....h is associatel I, an inves t iga tor for the COJ;.porateSecurity-. Department of un Micro Systems, facsirniled 16/pages 0,documents to the wri ter . The most sa l i en t point of t hesedocuments was a l e t t e r to Sun Micro systems dated February 13,1991 from the ,.IRS in-- Fresno.. The let}:er refers to a par t i cu la rtax ident i f ica t ion number ut i l i zed by Sun Micro Systems and .references a tax period ending september 30, 1990 . ; The l e t t e r }goes on to thank tax payer (Sun Micro Systems) fo r i t s reply t if 'dated January 25, 1991 and i t s payment o f $260,784.25 in penal tyJ ,fees and for i t s la te deposit of ($5,215, 684 .86) . The "Sign i f i rn : e of t h ~ S ~ m m u n i c a t i o n i s tha t Sun Micro Systems .. .

t h rough__has represented, as of March 7, 1991, t ha tit did 1nact sen t e appropriate money tha t i s $5 , 215 , 684 . 86to Hamilton Taf t via a wire t r ans fe r in order to pay employmenttax obligations do and owing the IRS for the tax period endedSeptember 30 r 1990. Per an agreement of which th e w r i t e r i s inreceipt , t h a t is , the service agreement between Hamilton Taf t andSun Micro S y s t e m ~ , Hamilton Taft is responsible fo r thepayment o t ~ - - L ~ e p e n a l t i ~ 4 I t is an in ference drawn by Sun3

Exhibits 9


22/106

7C

196A-SF-93255PKM/sgcMicro Systems personnel t ha t t h i s document t ends to corroboratewhat I Iwas alleging in h is representa t ions to thegovernment. '

On the afternoon of March 7, 1991, AUSA YAMAGUCHI waspersonally vis i ted by the wri ter and a brief update was providedto him of events t ha t have taken place. On March 8, 1991, copieso f th e aforement ioned f a c s im i l e s were prov ided to AUSA YAMAGUCHIfore h is review. On March 8, 1991, Mr. YAMAGUCHI suggested tothe wri ter , that effor ts continue to accumulate enough probablecause to cause the i s suance of a search warrant fo r the o f f i c e sa t Hamilton Taft a t the ea r l i e s t pos sib le d ate .The fo l lowing corporat ions have been con tac t ed by ]

I land/or h is attorney and ~ d ~ ~ ~ e d tha t they' have been thevictims of fraud perpetra ted on them by Hamilton Taft . Theseco rpo ra t i on s a re Cos ta l Savings Bank, Sun Micro Systems, AmericanWest Air l ines , and one or two chemical companies located a t theeas t coast . In addi t ion, I I advised wri te r t ha t hehas been con tac t ed by r e p r e s e n t a t ~ v e s o f Lloyds o f LondonInsurance company with respect to Hamilton Taft . I t i s - y , n k n o ~ ~~ ~ ~ ~ ~ ~ t d y a l ~ ! ! ! p ~ ; ~ _ ! , ~ ~ _ , ~ . w i l . ~, h _ e , Y , ~ ~ , } , ~ E ? i . ~ ~ , ~ ~ ~ ! ~ , ! : ~ ~ ~ , ~ , __"_9! ..J)}.em e ~ t ~ n g _ " " , I : . o - ; - o e , , h e ~ d _ ~ , a t , . S u n . , M ~ c _ r o __systems, ( ) . f : ! : ~ p e s ,on th e . a f ternoonat-March 8 , 1991.

San Francisco a t San Francisco, Cal i fornia :Invest igat ion i s cont inuing.

4*


Micro Systems personnel t h a t t h i s document t ends to cor robora t ewhat I I was alleging in h is rep resen ta t ions to thegovernment.

On the af te rnoon o f March 7, 1991, AUSA YAMAGUCHI waspersonal ly vis i ted by the wri te r and a br ie f update was providedto him o f events t h a t have t aken place . On March 8, 1991, copiesof th e aforementioned f acs imi les were provided to AUSA YAMAGUCHIfo re h is review. On March 8, 1991, Mr. YAMAGUCHI suggested toth e w r i t e r - tha t e f f o r t s cont inue to accumulate enough probablecause to cause th e i ssuance o f a search warran t fo r t h e o f f i c e sC a t Hamilton Taf t a t th e e a r l i e s t poss ib le da te .

The fo l lowing corpora t ions have been contac ted by ]I land/or h is attorney and ~ d ~ ~ ~ e d t ha t they' have been thevict ims o f fraud p e r p e t r a t ed on them by Hamilton Taf t . Thesecorpora t ions a re c o s t a l Savings Bank, Sun Micro Systems, AmericanWest Air l ines , and one or two chemical companies located a t theeas t coas t . In addi t ion, I I advised wri t e r t ha t hehas been con tac t ed by r e p r e s e n t a t ~ v e s of Lloyds of LondonInsurance company with r e s p ec t to Hamilton Ta f t . It i s "'y,nkno..wIl~ ~ ~ ~ ~ ~ ~ d y a l ~ ! ! ! p ~ ; ~ _ ! , ~ ~ _ , ~ w i l . ~ , h _ e , Y , ~ ~ , } , ~ E ? i ~ ~ ~ ! ~ , ! : ~ ~ ~ , ~ ___"_9! .. )},em e e t l . n g _ " , L o - . - o e " h e ~ d _ ~ " a _ t , . S u n " , , M ~ c _ r o __Systems ( ) . f f ~ ~ e s ,on t h e af te rnoono ~ M a r c h 8 , 1991.

San Francisco a t San Francisco, Cal i fo rn ia :Inves t iga t ion i s cont inuing.

4*


Micro Systems personnel t h a t t h i s document t ends to cor robora t ewhat I I was alleging in h is rep resen ta t ions to thegovernment.

On the af te rnoon o f March 7, 1991, AUSA YAMAGUCHI waspersonal ly vis i ted by the wri te r and a br ie f update was providedto him o f events t h a t have t aken place . On March 8, 1991, copiesof th e aforementioned f acs imi les were provided to AUSA YAMAGUCHIfo re h is review. On March 8, 1991, Mr. YAMAGUCHI suggested toth e w r i t e r - tha t e f f o r t s cont inue to accumulate enough probablecause to cause th e i ssuance o f a search warran t fo r t h e o f f i c e sC a t Hamilton Taf t a t th e e a r l i e s t poss ib le da te .

The fo l lowing corpora t ions have been contac ted by ]I land/or h is attorney and ~ d ~ ~ ~ e d t ha t they' have been thevict ims o f fraud p e r p e t r a t ed on them by Hamilton Taf t . Thesecorpora t ions a re c o s t a l Savings Bank, Sun Micro Systems, AmericanWest Air l ines , and one or two chemical companies located a t theeas t coas t . In addi t ion, I I advised wri t e r t ha t hehas been con tac t ed by r e p r e s e n t a t ~ v e s of Lloyds of LondonInsurance company with r e s p ec t to Hamilton Ta f t . It i s "'y,nkno..wIl~ ~ ~ ~ ~ ~ ~ d y a l ~ ! ! ! p ~ ; ~ _ ! , ~ ~ _ , ~ w i l . ~ , h _ e , Y , ~ ~ , } , ~ E ? i ~ ~ ~ ! ~ , ! : ~ ~ ~ , ~ ___"_9! .. )},em e e t l . n g _ " , L o - . - o e " h e ~ d _ ~ " a _ t , . S u n " , , M ~ c _ r o __Systems ( ) . f f ~ ~ e s ,on t h e af te rnoono ~ M a r c h 8 , 1991.

San Francisco a t San Francisco, Cal i fo rn ia :Inves t iga t ion i s cont inuing.

4*Exhibits 10


23/106

123.4

56789

1011

...,. 12:ri- 13Q\

0 14.-b:c 15-!!!:::

- 16uzLl. 17z-rll'" orr" .. w ...... a " l " l l ~ ~ ' ' 'Ull''' ....Wt year s FO!1l1!1 of JuJy p!r ty at t.btl,l')(,lG-acre COu\:llt C raneb nearTexlS. " 'U II l'CeDt neb! 0111The 2&0 rutsts f t \ ' t [Nate

1:101 tepam baJlk Joans in 19a!l. lI.e declared Iltrr.on.tl DWl:tIptty . f tu the fatlure I)r i tDUlU bUSU'less be ran ()41&Ide-l.I!mporary worken; IIJred by Mr Al1'Il.Stronrsprayed Ilre-ri!ta.rdanlmateMalI00 tile .r.eel tta.mts af amunetdal tKItldIng&.

~ t J E I I I s ti l - tleq:in SUCb nven:a..l1. Mr .ums:tn:lngt:h.e.pt'St t&o c:a.m:t UJj VII1tl1 b\lI-

III U\! past tew daY$ .':er AnnI$.TOng em\llo1!t Stelle &.l'lodoH. be:ran to'PI'Wltely proV\6t I number ofmaiot trlllllf IrU"S III a bnd of Pom::\scheme now 01\ Ult verre o( collll.p5!- SomeHam1ItM Tall CWlICl'1N!tIl cc.nfirm tile dl\ets.!tm.!, alId Mr, Solodor! uttmateS !.hattht-y t.lXa.I nearly noo mUllan.Hl!.!ntllon T1i!t. It rul'1l!l out. Is (1M (J{ lliehllliitlit IA>; r.ftlCl!Ul:Il'I in tnt ClllllltrY. ButtblS 1.i'I11 a to be II! rigM1I0W. I.ASt Yt l i f . Ibt [RS tfIe lag 'I1m.e~ t w e t f l p.ayday and ux payment" fromHlnt 4aY1 to one wlth I! JU'ilJJn1Wd deptest, sharply eulU.lhng /'!W"ttllS.~ t g playetJ lite ADP artd Qa.nltAmtr1caI!enmtt Ill!' better lees by Ollertnc enf1\tte payroll s e ~ A.Dtdlt1f 11 Mr. Bi>lodaH. t!'Ie lure forMr. AmlStrllllf \IIU flat proftts 00\ hue.lOWly \lQT'tfUlIttO cash (laws. Al:te:S'& toihat money bAs htlped hlm c ~ & e e It Utirtyle lie cou.!rl ooly lIre.!un of durin: Ul\cw'tlreba.lst shifli. II \lfe style ttw would allow hmi to ,tar In hI.s own lUiyQmehr V/tshK and 'OallM WCIlIUI\ heU!l'd UI rut I t Irt lOOl!t;' pam.How It WlIrUd~ r e ' i how !It.tt &ebeme ~ e ( I , tw)N'llIi tc Mr, SQlodoffs memClr611i1um filedWith ted,raJ !!.Olin doeltmtnts: .1IJ.c:idc.1.w;u It1l1U.Sk the loti",yment 01 tAxestn" s:u.rting quwr.lt 'a not too t.oog1I. AU

ytIl.1 dA I.s repc.rt to W lil!ncy tbJit youare maid. tbl! p!Llf'rIlent \aU 11.9lIew qualUf bq:!ns. 10\1 t&ke W fINf\lla.rtl!t'a fill last q\l.lll'teT"&bole. 1M villi forward Dtlt'qlJJ:!'!!r, WIUle Pl)"Rlefits recelft!j mew .~ ' Y t qllUfElr Iftep .lmUI, It n.e bl.rI1vranj for all !.bill ~ l ~ f i l l t n r la the. ehunk01 UI'lpal6 \ . I U ~ tram tM ttart.lI:Ir QIlAI'!.eTIrs; tou.1Id R\Oory.1M tVllnrua.ll.:r. hCll ....5.!tl.nr rea wryc.mly. Than wIltre tht Panii aspectemnts l.h. 'I'M u:tS t.sse'f.ll,eS A. lCl"/. fIe!lAlIVphls U!.tete:JI on even' Ill"' ~ I . UJ)

Ut t:e.m1I\.r at least ltl"h q\lluterly&.n.nually I lie ~ o u r "foond Vlo.ney"&CId p..u.s It along to me \.aX man, yOI.I wl!!have til dI.r the holt that !Dnell< deeper u.cntIm.t ....n:lUnd to rep.alr tilt I.u t h ~ bltH. itt birrer LTId rnt.rI"t c:.Ilel\1S II'f.. blnfll, 1M el'Wlee mcna.s:es that 50l'1'l.I.'tUttll Will rt t a peNlJty nCilkt Slid aJIk '~ l 1 i questions. llUlcI! HamIltOn tatl'l. l.U 1!S'''6Ii!\\S!thit'' ~ I . t e Q t t , ae- " I . _ ~ . "" , ,_ .... ):1404> Ali. Col\l:l1l.ltJ

Exhibits 18


31/106

..-L'ax Question: WM Big-Spender 'Chip' ArmstrongJust Spending Money That Others Owed to IRS?

c.LlStornen wUl !ruffer at 01'.1 Ha.m.t.ltOb talt'sat'llhly 1.0 ge.ne'!1kte q,u.\clQy from UI"tUn In ~ . s t m . e D U 0fI tb br:lo.ks. All Ilf Dee. ,31. It beld tot.al1ng I f i mWlon frOmC'ompa.roe.S by Of amJla1ed wIth Mr.Armrtn:lflg, J.C;C(lrQml UI an I.I1WldJtedeompany b.aLa.nee

"Tbere .ISun


32/106

- ;-.

Mr Baker : \ f7

.RE:

/ ~ ftL P -iitpf1-s f 9 d r 4/3 /91

CONNIE/C. ~ S T R O N G ' JR. ,AKA 9 H I P ~ S T R O N G ;DBAvHAMILTON TAFT AND COMPANY;32ND FLOOR, SPEAR STREET TOWER,SAN FRANCISCO, CALIFORNIA;FRAUD BY WIRE; MAIL FRAUD; TAX FRAUD i00: SAN FRANCISCO

San Francisco has in i t ia ted a Fraud By Wireinvest igat ion based on information received from the formerComptroller of Hamilton Taf t and Company (HTC) t ha t the sUbject,Armstrong, has'embezzled over $100 mil l ion from the f i rm'sc l i en t s over th e l a s t three years. ,These al legat ions continue tobe f ront-page news in San Francisco and on 3/15/91, the Walls t ree t Journal ran a front7page ar t i c le deta i l ing the al legat ions(copy at tached) .HTC contracts ,with companies who owe taxes to numerouss t a t e and loca l taxing author i t i es . Client companies make a lumpsum wire t ransfer of funds to the HTC account, and thereaf te r ,HTC i ssues checks to whatever taxing authori ty i s owed money.The former Comptroller, I I, has alleged t ha tArmstrong diverted lump sum payments to h is own use andt he r ea f t e r , i n cu r r ed pena l t i e s assoc ia t ed wi th l a t e payments andpassed these cos t s along to the c l i en t companies who were notnot i f ied o f the l a te charges. In essence the a l l ega t ion i s tha tArmstrong i s running a "Ponzi scheme l l o f con si de rabl e magnitude

Which requi res increasing amounts of cash to keep th e o pe ra t'o ngoing J -3:1,:;"& -"l e f t HTC in Februar of 1991 and on 3

You wil l be kept apprised of per t inen t developments.NOT APPROPRIATE FOR DISSEMINATION TO THE PUBLIC

L . ~ SEnclosure1 - Mr. Jones1 - Mr. Baker1 - Mr. Potts1 - Mr. BryantGDM:gdm/sw (9)( J A ~

1 - Mr. OIHara1 - Mr. Esposito1 - Special Assis tants , CIn

Exhibits 20


33/106

COURTNORTHERN CT FORNIA

BEFORE THE HONORABLE CHARLES A. LEGGE, JUDGE

UNITED STATES OF AMERICA, ))))))))))

PLAINTIFF,VS. NO, CR 94-0276 CAL

CONNIE C. ARMSTRONG, JR . /AND RICHARD A. FOWLES,

FOR FF:

I CALIFORNIAMONDAY JANUARY I 1997VOLUME PAGES 868 - 3048

BY: GEORGE D.

SANTA

RONALD DASSISTANT

SOLOMON

94102

90404

388 MARKET STREET, SUITE 1080SAN 94111

(APPEARANCES CONTINUED ON NEXT : )

REPORTED BY: YEOMANS J CSRCOURT REPORTER!

COMPUTERIZED BY XSCRIBE

JAMES YEOMANS, REPORTER, USDC, 415 863-5179

DISTRICT FORNIABEFORE

UNITED OF AMERICA,PLAINTIFF,

VS.CONNIE C. AJU4STRONG, JR . ,AND RICHARD A. POWLES,

DEFENDANTS.

FOR PLAINTIFF:

A. LEGGE I JUDGE

450SAN

))))))))))

, CR 94-0276 CAL

CALIFORNIAt 1997

PAGES 286B - 3048

AVENUE, CALIFORNIA 94102BY: GEORGE D, HARDY I ESQ.

lBBSAN

RONALD D. SMETANA, ESQ.ASSISTANT UNITED STATES

90404

10S094111

CONTINUED

REPORTED BY: YEOMANS I CSRCOURT REPORTER I

COMPUTERIZED

JAMES YEOMANS, REPORTER, 1 415-863-5179Exhibits 21


34/106

2885

GOVERNMENT COUNSEL COME IN , PLEASE, I NEED TO SEE THEM ABOUT AMATTER HERE.

(PAUSE IN THE PROCEEDINGS)THE COURT: I RECEIVED FROM THE GOVERNMENT THIS

MORNING A DOCUMENT ENTITLED, IIEX PARTE SUBMISSIONS" REGARDINGWITNESS TERRI ROBINS.

NOW, IS SHE GOING TO BE COMING IN THIS MORNING?MR. SMETANA: IT WAS OUR INTENT TO DO SO IF MR. HARDY

WAS IN THE PROCESS OF PRE-TRYING YESTERDAY WHEN HE DISCOVEREDTHIS.

MR. HARDY: ONE CORRECTION TO THE SUBMISSION. THEDATES ARE WRONG. APPARENTLY, IT WAS TWO YEARS AFTER THE FACT.IT WAS 1993 AND 1994.

THE COURT: BUT NOW WHAT BOTHERS ME IS THAT SHE DOESHAVE AND DOES KNOW OF STATEMENTS BY ARMSTRONG. YOU NOW KNOW OFSTATEMENTS BY ARMSTRONG.

MR. HARDY: WE KNOW SHE APPARENTLY DID RECORD SOMESTATEMENTS.

THE COURT: YOU HAVEN'T SEEN THE STATEMENTS?MR. SMETANA: AGAIN, WE FOUND OUT YESTERDAY AND SINCE

THIS MORNING TALKED WITH THE FBI SPECIAL AGENT INVOLVED WHOCONFIRMED FIRST, THAT IT WAS AN INVESTIGATION OF AN ENTIRELYDIFFERENT COMPANY.

THE COURT: HE STILL MADE STATEMENTS.MR. SMETANA: AND, SECONDLY, SHE WAS INSTRUCTED NOT TO

JAMES YEOMANS, OFFICIAL REPORTER, USDe, 415-863-5179

2885

GOVERNMENT COUNSEL COME IN , PLEASE, I NEED TO SEE THEM ABOUT AMATTER HERE.

(PAUSE IN THE PROCEEDINGS)THE COURT: I RECEIVED FROM THE GOVERNMENT THIS

MORNING A DOCUMENT ENTITLED, "EX PARTE SUBMISSIONSII REGARDINGWITNESS TERRI ROBINS.

NOW, IS SHE GOING TO BE COMING IN THIS MORNING?MR. SMETANA: IT WAS OUR INTENT TO DO SO IF MR. HARDY

WAS IN THE PROCESS OF PRE-TRYING YESTERDAY WHEN HE DISCOVEREDTHIS.

MR. HARDY: ONE CORRECTION TO THE SUBMISSION. THEDATES ARE WRONG. APPARENTLY I IT WAS TWO YEARS AFTER THE FACT.IT WAS 1993 AND 1994.

THE COURT: BUT NOW WHAT BOTHERS ME IS THAT SHE DOESHAVE AND DOES KNOW OF STATEMENTS BY ARMSTRONG. YOU NOW KNOW OFSTATEMENTS BY ARMSTRONG.

MR. HARDY: WE KNOW SHE APPARENTLY DID RECORD SOMESTATEMENTS.

THE COURT: YOU HAVEN'T SEEN THE STATEMENTS?MR. SMETANA: AGAIN, WE FOUND OUT YESTERDAY AND SINCE

THIS MORNING TALKED WITH THE FBI SPECIAL AGENT INVOLVED WHOCONFIRMED FIRST, THAT IT WAS AN INVESTIGATION OF AN ENTIRELYDIFFERENT COMPANY.

THE COURT: HE STILL MADE STATEMENTS.MR. SMETANA: AND, SECONDLY, SHE WAS INSTRUCTED NOT TO

JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179Exhibits 22


35/106

ASK OR DISCUSS HAMILTON TAFT.THE COURT: BUT SAY -- IT'S NOT JUST

THE WITNESS ITSELF I'M CONCERNED ABOUT, IT'S ALSO POSSIBLYEXCULPATORY THINGS THAT WERE SAID. I THINK THE DEFENSE HAS ARIGHT TO THOSE STATEMENTS BOTH BECAUSE THEY ARE, AISTATEMENTS OF THE WITNESS AND, B, BECAUSE THEY'RE POTENTIALBRADY MATERIAL. I DON1T KNOW WHETHER THEY ARE OR NOT.

MR. HARDY: WE I VE NEVER SEEN THEM. WE I RE NOTTHAT CONCLUSION AT ALL, THAT'S WHY WE BROUGHT

YOUR ATTENTION.THE HOW CAN WE GO AHEAD ROB INS?MR. HARDY: CAN WE DO THIS? WE REVEAL THE FACT

THAT THE PAYMENT OF MONIES BY THE FBI TO TERRI ROBINS DURINGTHE PER

DEFENSEHERE,

CROSS SHE

1993 TO 1994?THE COURT: DIRECT?MR, HARDY: IN OUR DIRECT OR WOULD BE LEFT TO THE

NOW, THEN ORDER UP ALL OF THAT/ GET IT FAXEDFEDEXED OUT HERE.

SHE'S RELEASED FROM TESTIFYING AFTER DIRECT ANDBE RELEASED SUBJECT TO RECALL FOR THE

CROSS-EXAMINATION ON THOSE POINTS. IS THAT IBLE?TO THEO THAT WE CAN TURNOVER THE

THEY CAN REVIEW THEM, THEY CAN DECIDE WHETHER OR NOT THEYJREISSUES WANT TO BRING UP.

THE COURT: YOU DON'T THINK IT MIGHT BE BETTER TO

JAMES YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179

6

ASK OR DISCUSSTHE COURT: BUT

TAFT.SAY - - IT'S NOT JUST

THE WITNESS ITSELF I'M CONCERNED ABOUT, IT'S ALSO POSSIBLYEXCULPATORY THINGS THAT WERE SAID. I THINK THE DEFENSE HAS ARIGHT TO THOSE STATEMENTS BOTH BECAUSE THEY ARE, AISTATEMENTS OF THE WITNESS AND, B, BECAUSE THEY'RE POTENTIALBRADY MATERIAL. I DON1T KNOW WHETHER THEY ARE OR NOT.

MR. HARDY: WE I VE NEVER SEEN THEM. WE I RE NOTTHAT CONCLUSION AT ALL, THAT'S WHY WE BROUGHT

YOUR ATTENTION.THE HOW CAN WE GO AHEAD ROB INS?MR. HARDY: CAN WE DO THIS? WE REVEAL THE FACT

THAT THE PAYMENT OF MONIES BY THE FBI TO TERRI ROBINS DURINGTHE PER

DEFENSEHERE,

CROSS SHE

1993 TO 1994?THE COURT: DIRECT?MR, HARDY: IN OUR DIRECT OR WOULD BE LEFT TO THE

NOW, THEN ORDER UP ALL OF THAT/ GET IT FAXEDFEDEXED OUT HERE.

SHE'S RELEASED FROM TESTIFYING AFTER DIRECT ANDBE RELEASED SUBJECT TO RECALL FOR THE

CROSS-EXAMINATION ON THOSE POINTS. IS THAT IBLE?TO THEO THAT WE CAN TURNOVER THE

THEY CAN REVIEW THEM, THEY CAN DECIDE WHETHER OR NOT THEYJREISSUES WANT TO BRING UP.

THE COURT: YOU DON'T THINK IT MIGHT BE BETTER TO


6

Exhibits 23


36/106

2887

ROBINS?MR. SMETANA: WE PROPOSE TO REST

WE'RE ABOUT DONE.OR WEDNESDAY.

THE COURT: I THINK WE'RE NOW AT A POINT WE HAVE TOTELL THE DEFENSE ABOUT THE PROBLEM. NOW, SO YOUR SUGGESTION ISWE GO .. '.u ..... WITH WHAT WE'VE GOT AND THAT THE ONLY QUESTION THEN

WHAT TO DO ABOUT THE STATEMENTS THEMSELVES?OULD

THEMMR HARDY: CORRECT THEY MAY NOT WANT TO GO INTO

THEY LOOK AT THEM.THE COURT! THEY MAY BE JUST TOTALLY IRRELEVANT. BUTIT'S A PIECE OF MEAT FOR TO JUMP ALL OVER AND I

HAVE TO BE CONCERNED THAT IF SHE HAS RECORDED IT AND THEY AREPRODUCED AS WITNESS STATEMENTS AND WHETHER THERE'S POSSIBLY ANYBRADY MATERIAL IN THERE, YET NONE OF US KNOW THAT.

(PROCEEDINGS HELD IN OPEN NOT PRESENT:)THE COURT: LET THE RECORD I 'VE RECEIVED THIS

A STATEMENT FROM THE GOVERNMENT WITNESS TERRIROBINS, AND THIS RAISES SOME ABOUT MS. ROBINS AS AWITNESS AND'S, I GUESS, ANTICIPATED TO BE YOUR NEXTWITNESS?

MR. HARDY: THAT'STHE COURT: APPARENTLY, IT CAME TO LIGHT OVER THE

WEEKEND IN THE PRE-TESTIMONY BETWEEN THEGOVERNMENT COUNSEL HERE AND MS. ROBINS, WHICH SHE WAS ASSISTING

YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179

ROBINS?MR. SMETANA: WE PROPOSE TO REST

WE'RE ABOUT DONE.

2887

OR WEDNESDAY.

THE COURT: I THINK WE'RE NOW AT A POINT WE HAVE TOTELL THE DEFENSE ABOUT THE PROBLEM. NOW, SO YOUR SUGGESTION ISWE GO ~ ~ ~ = ~ WITH WHAT WE'VE GOT AND THAT THE ONLY QUESTION THENWOULD WHAT TO DO ABOUT THE STATEMENTS THEMSELVES?

MR HARDY: CORRECT THEY MAY NOT WANT TO GO INTOTHEM THEY LOOK AT THEM.

THE COURT! THEY MAY BE JUST TOTALLY IRRELEVANT. BUTIT'S A PIECE OF MEAT FOR TO JUMP ALL OVER AND I

HAVE TO BE CONCERNED THAT IF SHE HAS RECORDED IT AND THEY AREPRODUCED AS WITNESS STATEMENTS AND WHETHER THERE'S POSSIBLY ANYBRADY MATERIAL IN THERE, YET NONE OF US KNOW THAT.

(PROCEEDINGS HELD IN OPEN NOT PRESENT:)THE COURT: LET THE RECORD I 'VE RECEIVED THIS

A STATEMENT FROM THE GOVERNMENT WITNESS TERRIROBINS, AND THIS RAISES SOME ABOUT MS. ROBINS AS AWITNESS AND'S, I GUESS, ANTICIPATED TO BE YOUR NEXT

WITNESS?MR. HARDY: THAT'STHE COURT: APPARENTLY, IT CAME TO LIGHT OVER THE

WEEKEND IN THE PRE-TESTIMONY BETWEEN THEGOVERNMENT COUNSEL HERE AND MS. ROBINS, WHICH SHE WAS ASSISTING

YEOMANS, OFFICIAL REPORTER, USDC, 415-863-5179Exhibits 24


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2888

THE FBI AND ANOTHER INVESTIGATION OF HAMILTON TAFT INVOLVINGCOMPUTECH AND THAT SHE WAS PAID BY THE FBI FOR WHAT, I DON'TKNOW, TIME, EXPENSES, I'M NOT SURE WHAT. SHE DID RECORDCONVERSATIONS WITH MR. ARMSTRONG.

NOW, AS I TOLD GOVERNMENT COUNSEL, I THINK THOSESTATEMENTS THAT SHE RECORDED HAVE TO BE PRODUCED TO THE DEFENSEBOTH AS STATEMENTS OF THE DEFENDANT AND FOR POTENTIAL BRADYMATERIAL. NOBODY HAS YET REVIEWED THESE. IT'S MYUNDERSTANDING GOVERNMENT COUNSEL DOESN'T KNOW WHAT'S IN THOSE

STATEMENTS, JUST FOUND OUT ABOUT IT THIS WEEKEND.MR. HARDY! THAT 1 S CORRECT.THE COURT: SO THE STATEMENTS HAVE TO BE PRODUCED. SO

THE QUESTION IS WHAT WE CAN DO WITH MS. ROBINS WHO'S COMING INTO TESTIFY TODAY. THE GOVERNMENT SUGGESTS - - WELL, MAYBE YOUBETTER STATE THE SUGGESTION.

MR. HARDY: GOVERNMENT SUGGESTS THAT WE PROCEED TODAYAND WHEN WE'VE FINISHED WITH THE TESTIMONY THAT THE PLAINTIFFCROSS-EXAMINATION, WHATEVER CROSS-EXAMINATION THAT YOU GO INTO,THAT SHE BE RELEASED SUBJECT TO RECALL FOLLOWING THE REVIEW OFTHOSE STATEMENTS, SHE BE CALLED ON CROSS ON THOSE POINTS.

WE DON'T KNOW IF YOU'RE GOING TO WANT TO GO INTO THOSEPOINTS OR NOT. WE DON'T KNOW WHAT'S THERE, BUT WE'RE RUNNINGLOW ON WITNESSES.

THE COURT: HOW SOON CAN YOU HAVE THE STATEMENTS?MR. SMETANA: I DON'T EVEN KNOW AT THIS POINT WHAT


2888

THE FBI AND ANOTHER INVESTIGATION OF HAMILTON TAFT INVOLVINGCOMPUTECH AND THAT SHE WAS PAID BY THE FBI FOR WHAT, I DON'TKNOW, TIME, EXPENSES, I'M NOT SURE WHAT. SHE DID RECORDCONVERSATIONS WITH MR. ARMSTRONG.

NOW, AS I TOLD GOVERNMENT COUNSEL, I THINK THOSESTATEMENTS THAT SHE RECORDED HAVE TO BE PRODUCED TO THE DEFENSEBOTH AS STATEMENTS OF THE DEFENDANT AND FOR POTENTIAL BRADYMATERIAL. NOBODY HAS YET REVIEWED THESE. IT'S MYUNDERSTANDING GOVERNMENT COUNSEL DOESN'T KNOW WHAT'S IN THOSE

STATEMENTS, JUST FOUND OUT ABOUT IT THIS WEEKEND.MR. HARDY! THAT'S CORRECT.THE COURT: SO THE STATEMENTS HAVE TO BE PRODUCED. SO

THE QUESTION IS WHAT WE CAN DO WITH MS. ROBINS WHO'S COMING INTO TESTIFY TODAY. THE GOVERNMENT SUGGESTS - - WELL, MAYBE YOUBETTER STATE THE SUGGESTION.

MR. HARDY: GOVERNMENT SUGGESTS THAT WE PROCEED TODAYAND WHEN WE'VE FINISHED WITH THE TESTIMONY THAT THE PLAINTIFFCROSS-EXAMINATION, WHATEVER CROSS-EXAMINATION THAT YOU GO INTO,THAT SHE BE RELEASED SUBJECT TO RECALL FOLLOWING THE REVIEW OFTHOSE STATEMENTS, SHE BE CALLED ON CROSS ON THOSE POINTS.

WE DON'T KNOW IF YOU'RE GOING TO WANT TO GO INTO THOSEPOINTS OR NOT. WE DON'T KNOW WHAT'S THERE, BUT WE'RE RUNNINGLOW ON WITNESSES.

THE COURT: HOW SOON CAN YOU HAVE THE STATEMENTS?MR. SMETANA: I DON'T EVEN KNOW AT THIS POINT WHAT



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THEY'RE IN, WHETHER HAVE BEEN TRANSCR WHETHERTHOSE ARE JUST TAPED, WHETHER THERE'S TAPES THEY HAVE BE

THE COURT: DO YOU KNOW THE VOLUME?MR. SMETANA: I KNOW WHAT WE

ONE OF THE AGENTS WHO IS HERE IN COURT IN TOUCHFBI AGENTS IN DALLAS AND ARRANGE TO HAVE THOSE

ALONG THE WAY FIND OUT.

IS HAVETHE

AND

ONE OF THE PROBLEMS WE APPARENTLY ENCOUNTERED IS THEREIS APPARENTLY ICE AND SLEET IN DALLAS AND THE FBI OFFICE ISOFFICIALLY CLOSED. AS IT HAPPENS, THE AGENT WENT IN, BUT IGUESS THEY WERE GIVEN AN ADMINISTRATIVE DAY OFFWEATHER, SO WE HAVE A PAGER NUMBER FOR THE FBIHAVE HIM PULL THAT

TO THEWE CAN

THE COURT: HOW SOON DO YOU THINK YOU CAN GET THESTATEMENTS HERE, EITHER - - IN WHATEVER FORM THEY'RE IN , TAPESOR TYPEWRITTEN FORM?

MR. SMETANA: AT A MINIMUM 1 EVEN I F THEY WERE TOLOCATE THEM IMMEDIATELY AND SEND THEM I IT WOULDBE TOMORROW UNTIL WE HAVE SOME - - SOME TIME BY FEDEX. THAT'STHE FASTEST WE CAN POSSIBLY DO IT, AND I DON'T KNOW WHETHERTHAT'S POSSIBLE.

THE COURT: THEN, OF COURSE, THE DEFENSE WOULD NEED AREASONABLE TIME TO GO OVER THEM TO DECIDE WHAT THEY WANTED TO

WITH THEM OR DO WITH MS, ROBINS.

JAMES YEOMANS I REPORTER, USOC! 415-863-5179

2889

THEY'RE IN , WHETHER HAVE BEEN TRANSCR WHETHERTHOSE ARE JUST TAPED, WHETHER THERE'S TAPES THEY HAVE BE

THE COURT: DO YOU KNOW THE VOLUME?MR. SMETANA: I KNOW WHAT WE

ONE OF THE AGENTS WHO IS HERE IN COURT IN TOUCHFBI AGENTS IN DALLAS AND ARRANGE TO HAVE THOSE

ALONG THE WAY FIND OUT.

IS HAVETHE

AND

ONE OF THE PROBLEMS WE APPARENTLY ENCOUNTERED IS THEREIS APPARENTLY ICE AND SLEET IN DALLAS AND THE FBI OFFICE ISOFFICIALLY CLOSED. AS IT HAPPENS, THE AGENT WENT IN, BUT IGUESS THEY WERE GIVEN AN ADMINISTRATIVE DAY OFFWEATHER, SO WE HAVE A PAGER NUMBER FOR THE FBIHAVE HIM PULL THAT

TO THEWE CAN

THE COURT: HOW SOON DO YOU THINK YOU CAN GET THESTATEMENTS HERE, EITHER - - IN WHATEVER FORM THEY'RE IN , TAPESOR TYPEWRITTEN FORM?

MR. SMETANA: AT A MINIMUM 1 EVEN I F THEY WERE TOLOCATE THEM IMMEDIATELY AND SEND THEM I IT WOULDBE TOMORROW UNTIL WE HAVE SOME - - SOME TIME BY FEDEX. THAT'STHE FASTEST WE CAN POSSIBLY DO IT, AND I DON'T KNOW WHETHERTHAT'S POSSIBLE.

THE COURT: THEN, OF COURSE, THE DEFENSE WOULD NEED AREASONABLE TIME TO GO OVER THEM TO DECIDE WHAT THEY WANTED TO

WITH THEM OR DO WITH MS, ROBINS.

JAMES YEOMANS I REPORTER, USOC! 415-863-5179Exhibits 26


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MR. HARDY:" IT'S MY UNDERSTANDING WE'LL BE BREAKING,AFTER THE GOVERNMENT FINISHES ITS WITNESSES THIS WEEK, UNTILTHE DEFENSE BEGINS. THERE WILL BE A GOOD BIT OF TIME FORREVIEW AND IF NEED BE WE COULD BRING HER BACK BEFORE YOU STARTYOUR CASE.

IN OTHER WORDS, I THINK THERE WILL BE A BLOCK OF TIMEFOR YOU TO REVIEW IT AND FIGURE OUT WHAT YOU WANT TO DO.

MR. SABELLI: WE MAY HAVE RELEVANCE OBJECTION TO ANYOF THIS AREA. THERE MAY BE 403 CONCERNS AS WELL, 404(B)CONCERNS. IT MAY BE A BASIS FOR A MOTION TO SEVER ON THE PARTOF MR. FOWLES. I'M NOT SURE IT'S FAIR FOR US TO HAVE TO BEGINOUR CROSS-EXAMINATION WITHOUT KNOWING THE NATURE OF THISMATERIAL. MAYBE SOMETHING THAT WE CAN USE TO

MR. HARDY: YOUR COMMENTS SUGGEST WE HAVE SOMEINTEREST IN PUTTING SOME OF THAT MATERIAL IN AND USE IT IN SOMEWAY, WE DO NOT. WE HAVE NOT SEEN IT. WE DON'T KNOW WHAT'S INIT AND HAVE NO INTENT USING ANY OF THAT MATERIAL.

MR. BROWN: AT THE VERY LEAST, THIS WITNESS - - WETHINK THIS WITNESS ALREADY HAS A TREMENDOUS BIAS AND SHEINDICATED IN HER GRAND JURY TESTIMONY III'M UPSET, I'M ANGRY,I 'M VINDICTIVE. II NOW WE FIND OUT SHE BECAME A GOVERNMENTINFORMANT. CERTAINLY THAT'S SOMETHING WE WOULD WANT TO BRINGUP ON CROSS-EXAMINATION.

THE COURT: I WOULD IMAGINE THAT COULD BE DONE EVENBEFORE YOU SEE THE STATEMENTS. WHAT I 'M DEBATING HERE, SHOULD


2890

MR. HARDY:" IT'S MY UNDERSTANDING WE'LL BE BREAKING,AFTER THE GOVERNMENT FINISHES ITS WITNESSES THIS WEEK, UNTILTHE DEFENSE BEGINS. THERE WILL BE A GOOD BIT OF TIME FOR

REVIEW AND IF NEED BE WE COULD BRING HER BACK BEFORE YOU STARTYOUR CASE.

IN OTHER WORDS, I THINK THERE WILL BE A BLOCK OF TIMEFOR YOU TO REVIEW IT AND FIGURE OUT WHAT YOU WANT TO DO.

MR. SABELLI: WE MAY HAVE RELEVANCE OBJECTION TO ANYOF THIS AREA. THERE MAY BE 403 CONCERNS AS WELL, 404(8)CONCERNS. IT MAY BE A BASIS FOR A MOTION TO SEVER ON THE PARTOF MR. FOWLES. I 'M NOT SURE IT'S FAIR FOR US TO HAVE TO BEGINOUR CROSS-EXAMINATION WITHOUT KNOWING THE NATURE OF THISMATERIAL. MAYBE SOMETHING THAT WE CAN USE TO

MR. HARDY: YOUR COMMENTS SUGGEST WE HAVE SOMEINTEREST IN PUTTING SOME OF THAT MATERIAL IN AND USE IT IN SOMEWAY, WE DO NOT. WE HAVE NOT SEEN IT. WE DON'T KNOW WHAT'S INIT AND HAVE NO INTENT USING ANY OF THAT MATERIAL.

MR. BROWN: AT THE VERY LEAST, THIS WITNESS - - WETHINK THIS WITNESS ALREADY HAS A TREMENDOUS BIAS AND SHEINDICATED IN HER GRAND JURY TESTIMONY III'M UPSET, I'M ANGRY,I'M VINDICTIVE. II NOW WE FIND OUT SHE BECAME A GOVERNMENTINFORMANT. CERTAINLY THAT'S SOMETHING WE WOULD WANT TO BRINGUP ON CROSS-EXAMINATION.

THE COURT: I WOULD IMAGINE THAT COULD BE DONE EVENBEFORE YOU SEE THE STATEMENTS. WHAT I 'M DEBATING HERE, SHOULD



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WE START ROBINS AT ALL, DIVIDE HER UP AS THE GOVERNMENTSUGGESTS, OR THE BETTER THING TO DO IS POSTPONE HER UNTIL THEDEFENSE HAS THE MEANS EVEN MAXIMUM SPEED IT

GETS HERE OVERNIGHT, YOU GET IT TOMORROW, IT'S GOING TO BEWEDNESDAY BEFORE WE CAN WI MS. ROBINS.

MR. BROWN: I DON'T WE'RE ING TO HAVE, FIRSTOF ALL, A GREAT OF FFI THE GOVERNMENT'S

WE'D BE ABLE TOIT SEEMED THAT WAY. I

WITNESSES THIS WEEK. THINK THROUGHCOMPLETE WHATEVER, WOULDN'T YOUWOULD LIKE JUST A MOMENT OR TWO TO CONFER WITH COUNSEL.

YET.

THE COURT: APPARENTLY, THE U"-\ .JI\ . .; ; ) MEN' T ALL HERE

MR. BROWN: I F WE COULD HAVE A FEW MOMENTS.THE COURT: GO AHEAD AND CONSULT.

(PAUSE IN THE PROCEEDINGS)MR. BROWN: YOUR WEtRE STILL IN THE PROCESS OF

DISCUSSING IT AND IF WE DID A LITTLE FOR A FEWMOMENTS, WHAT - - T