docket 340-3 - plaintiffs' motion for reconsideration of...

Exhibit C

Case 4:11-cv-00655-ALM Document 340-3 Filed 04/14/14 of 269 PageID #: 7059

Plaintiffs’ Motion for Reconsideration of Court’s Rulings Granting Defendants’ Two No Evidence

Motion for Summary Judgment and Plaintiffs’ Motion for New Trial – Page 1

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CAUSE NO. 11-15415

BRUCE BERG, STUART CARTNER,

KEVIN DOYLE, WALTER

HAYDOCK, EDWARD LEH, KEVIN

MURPHY, PHILIP SCHANTZ, DAIS

PARTNERS, LP, SINGER BROS.,

LLC, SKELETON LAKE, LLC,

WILDCAT LAKE PARTNERS,

Plaintiffs,

vs.

HALO COMPANIES, INC., HALO

ASSET MANAGEMENT, LLC, HALO

PORTFOLIO ADVISORS, LLC, B.

CADE THOMPSON, PAUL

WILLIAMS, REIF CHRON, TONY

CHRON, HALO ASSET

MANAGEMENT GENPAR II, LLC,

HALO GROUP, INC.

Defendants.

§ IN THE

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§ 191st DISTRICT COURT

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§ DALLAS COUNTY, TEXAS

PLAINTIFFS’ MOTION FOR RECONSIDERATION

OF COURT’S ORDERS GRANTING NO EVIDENCE MOTIONS FOR

SUMMARY JUDGMENT AND PLAINTIFFS’ MOTION FOR NEW TRIAL

In the interest of justice and fairness, Plaintiffs move this Court for

Reconsideration of this Court’s Orders Granting Defendants’ Two No Evidence

Summary Judgment Motions and Plaintiffs further move this Court for an Order

granting Plaintiffs a New Trial and respectfully show this Court the following:


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Filed 1/21/2014 1:45 PM Gary Fitzsimmons District Clerk Dallas District

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Plaintiffs’ Motion for Reconsideration of Court’s Rulings Granting Defendants’ Two No Evidence Motion

for Summary Judgment and Plaintiffs’ Motion for New Trial – Page 2

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I. SUMMARY OF ARGUMENT

In their Response and their Amended Response to Defendants’ first No Evidence

Motion for Summary Judgment (“First Motion”), and in their Response to Defendants’

Second No Evidence Motion for Summary Judgment (“Second Motion”), Plaintiffs

presented well more that a scintilla of evidence in support of each element of each of

their claims against Defendants. However, as set forth more fully below, with regard to

the First Motion, because there were inadvertent errors in the citations to the record, the

instant motion should sufficiently clarify the record to illustrate why Defendants’ First

Motion should have been denied, and why Plaintiffs’ Motion for Reconsideration

and/or Motion for New Trial should necessarily be granted.

At all times relevant to this action Defendants have taken two different positions

with regard to one substantial issue. When the Halo Defendants were trying to

convince Plaintiffs to invest funds, the Halo Defendants held Temme out as their

authorized agent and representative. The evidence demonstrates that they did so orally

and in writing. However, in connection with this litigation, the Halo Defendants

vehemently deny that Temme was ever an authorized agent or representative of the

Halo Defendants. Even though their positions are polar opposites, one truth remains the

same; under either position the Halo Defendants have caused Plaintiffs to collectively

incur nearly $5 million in economic damages.

Plaintiffs submit that the evidence shows that the Halo Defendants held Temme

out as an authorized representative and agent of the Halo Defendants. It is well-settled

that, “[a]n agency relationship may be implied from the conduct of the parties.” See

Jarvis v. K&E Re One, LLC, 390 S.W.3d 631, 641 (Tex.App.-Dallas 2012). Both “the

agency and the extent of the agent’s authority may be proved by circumstantial

evidence.” Id. After the trier of fact has the opportunity to consider all of the relevant,




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admissible, evidence, including witness testimony, Plaintiffs are confident that the trier

of fact will agree that Temme was an authorized agent and/or representative of the Halo

Defendants. Even at this stage in the case, with only some of the discovery completed,

there is substantial evidence that Halo authorized Temme to act on behalf of Halo and

to solicit investors to participate in Halo sponsored investments, certainly more than a

scintilla. As a result, there should be little doubt that the Halo Defendants will be liable

for the wrongful conduct of their authorized agent/representative. That wrongful

conduct includes, but is not limited to, negligently or intentionally defrauding Plaintiffs.

On the other hand, if the Halo Defendants somehow persuade the trier of fact to

find that Temme was not an authorized representative or agent of the Halo Defendants,

the Halo Defendants nevertheless remain liable to Plaintiffs. If such a finding were

made, there is more than ample evidence showing that when they were attempting to

solicit funds from Plaintiffs, the Halo Defendants were falsely representing to Plaintiffs

that Temme was an authorized agent/representative of the Halo Defendants. As shown

through the evidence submitted to the Court in support of Plaintiffs’ responses to the

No Evidence Motions, specifically the affidavits of each Plaintiff and through

deposition testimony, based on the oral and written representations of the Halo

Defendants, each Plaintiff believed that Halo and Temme were one in the same – that

Temme was an authorized agent/representative of the Halo Defendants. (See

Appendices A-8 through A-18 (which were filed contemporaneously with Plaintiffs’

Response to the First Motion); See also Exhibits 1-1 through 1-11 (which were filed

contemporaneously with Plaintiffs’ Response to the Second Motion)). Moreover, each

Plaintiff made their investments relying on those representations.

What is clear from the record is that there are issues of material fact relating to

these, among other, core issues. And, as further demonstrated below, more than a

scintilla of evidence exists in support of each of Plaintiffs’ claims against Defendants.




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A no-evidence summary judgment is improper if the respondent presents more than a

scintilla of probative evidence to raise a genuine issue of material fact. TEX.R. CIV. P.

166a(i); Kastner v. Jenkens & Gilchrist, P.C., 231 S.W.3d 571, 576 (Tex. App. Dallas

2007). The plaintiff need not marshal his proof, the response need only point out

evidence that raises a genuine issue of material fact. San Saba Energy, L.P. v.

Crawford, 171 S.W.3d 323, 330 (Tex. App. Houston [14th

Dist.] 2005). As further

demonstrated below, more than a scintilla of evidence exists in support of each of

Plaintiffs’ claims against Defendants. Because genuine issues of material fact exist

here, Plaintiffs’ Motion for Reconsideration and/or Motion for New Trial should be

granted.

II. INTRODUCTION

A. Defendants’ First No Evidence Motion for Summary Judgment

(1) Citations to Thompson and Chron Deposition Transcripts

In Defendants’ Objections to Evidence to submitted by Plaintiffs in connection

with their Response to Defendants’ First Motion, at paragraphs 54 through 65,

Defendants claim that the deposition testimony cited in Exhibit B-41 does not support

the proposition referenced by the Plaintiffs. As the Court will recall, Plaintiffs sought

leave of Court to briefly continue the hearing date on the First Motion so that certified

versions of Defendant Thompson’s and Defendant Chron’s deposition transcripts could

be lodged with the Court in connection with the hearing. When Plaintiffs’ counsel

drafted the Response to Defendants First Motion, only rough drafts of the transcripts

were available. Because Plaintiffs’ Response to the First Motion had to be filed on July

30, 2013, the citations to the transcripts in the Response (included in Appendix B-1 and

B-4) were to the rough transcripts.

1 The citations to the Appendices and Amended Appendices are referring to those Appendices filed in

connection with Plaintiffs’ Response and Amended Response to Defendants’ First No Evidence Motion for Summary Judgment and which are part of this Court’s record.




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After the hearing, it was discovered that the court reporter sent two rough drafts

of the deposition testimony of Defendant Thompson. (See Exhibits “A” (7/25/13 email

transmitting first version) and “B” (7/29/13 email transmitting second version) hereto).

When drafting the Response to the First Motion and making citations to the record,

counsel for Plaintiffs cited to the 7/25/13 rough draft of Defendant Thompson’s

Deposition. (The 7/25/13 rough draft is attached hereto as Exhibit “C”). However,

when Appendix B was created, the 7/29/13 revised draft deposition transcript was

inadvertently included at Appendix B-4 instead of the 7/25/13 version which was used

in connection with the preparation of the Response. The 7/25/13 rough draft is 275

pages in length. (See Exhibit “C” hereto). The 7/29/13 revised rough draft is 292

pages in length. (See Appendix B-4). As a result, portions of the text in the initial

rough draft were not located on the same pages of the same text in the revised rough

draft, and the citations in the Response to the First Motion were not a clear as they

should have been. Still, the substance of the testimony and the integrity of the evidence

remained consistent.

When the citations in the Response to the First Motion are compared to the

testimony in Exhibit “C” hereto (the 7/25/13 rough draft), it is clear that the sections of

the transcript cited in the Response stand for the propositions for which they were cited.

The deposition testimony cited supports the elements of Plaintiffs’ claims against

Defendants.

Moreover, to ensure that the record was clear, Plaintiffs’ filed an Amended

Response on August 8, 2013 changing the citations from Appendix B-1 (Chron rough

transcript) to citations to Amended Appendix B-1 (certified copy of Chron transcript).

Plaintiffs likewise changed the citations from Appendix B-4 (Thompson rough

transcript) to Amended Appendix B-4 (certified copy of Thompson transcript).

Because the Court continued the hearing to allow for the lodging of the certified




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deposition transcripts, it was proper for Plaintiffs to file an Amended Response to

ensure that the certified transcripts were correctly cited in the record. As such, this

Court’s ruling that the Amended Response is stricken should be set aside. And more

importantly, because the citations to the certified transcripts are admissible proof of the

elements of Plaintiffs’ claims, the Order granting summary judgment should likewise

be set aside.

(2) Citations to Exhibits in Appendix C

With regard to the citations to the exhibits in Appendix C, Defendants seized on

the opportunity to take advantage of the inadvertent exclusion of one document cited in

the Response Brief. Footnote 21 of the brief refers to a NASDAQ 5 year Report (which

was to be attached include as Appendix C-7). However, when the exhibits in Appendix

C were compiled, the NASDAQ 5 year Report was inadvertently omitted (see Index to

Appendix C). As a result, the citations in the brief from Appendix C-7 forward were off

by one exhibit number.

For example, because of the inadvertent omission of the NASDAQ 5 year report

in the Appendix C binder and index, the citation to Exhibit C-8 in footnote 22 of the

brief (December 21, 2010 email from Mr. Thompson to Mr. Temme) is referenced as

Exhibit C-7 of the Appendix C and that email is behind the C-7 tab in the Appendix

binder. The December 21, 2010 email states, in part, that “You are worth $18M more

today.” The proposition for which the December 21, 2010 email is cited for in the brief

is, “[b]y uniting with Halo, according to Mr. Thompson, Temme became a multi-

millionaire overnight.” (See footnote 22 of Response). It is easy to see in the Index to

Appendix C, while looking at footnotes 21 and 22 in the Response, that the NASDAQ 5

year report was not included as Appendix C-7. It is also easy to see that the December

21, 2010 email referenced in footnote 22 of the Response is identified as Exhibit C-7 in

Appendix C.




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When the Exhibits cited in the footnotes in the Response are compared to the

Exhibit’s contained in Appendix C and the index thereto, it is apparent that the

inadvertent omission of the subject NASDAQ report caused the citations to the Exhibits

to be off by one number. While it is unfortunate that the inadvertent omission of the

NASDAQ report created some confusion, by understanding that circumstance it is

apparent that the Exhibits contained in Appendix C each support the elements of

Plaintiffs’ claims against Defendants. Appendices A, B and C contain well more than a

scintilla of probative evidence that raise genuine issues of material facts as to each

element of each claim asserted in Plaintiffs’ Third Amended Petition. As such,

Plaintiffs’ Motion for Reconsideration should be granted and the Court’s ruling on

Defendants’ No Evidence Motion should be reversed in its entirety. See TEX R. CIV.

P. 166a(1); Kastner v. Jenkens & Gilchrist, P.C., 231 S.W.3d 571, 576 (Tex. App.

Dallas 2007).

Additionally, good cause exists to grant Plaintiffs a New Trial. As shown below,

and in Plaintiffs’ Response and Amended Response to Defendants’ First Motion, and as

supported by Appendices A, B and C filed in connection with the Response (the

Response, Amended Response and each of the Appendices are incorporated by

reference herein), Plaintiffs have presented substantially more than a scintilla of

evidence on the elements of the case and are, therefore, entitled to a trial on the merits.

Ford Motor Co. v. Ridgway, 82 S.W.3d 26, 29 (Tex. App. – San Antonio 2002) (a non-

movant produces more than a scintilla when the evidence “rises to a level that would

enable reasonable and fair-minded people to differ in their conclusions.”). When

evaluating that evidence, the trial court must: (1) assume all the non-movant’s proof is

true; (2) make every reasonable inference in favor of non-movant; and (3) resolve all

doubts about the existence of a general issue of material fact against movant. See M.D.

Anderson Hosp. & Tumor Inst. v. Willrich, 28. S.W.3d 22, 23 (Tex. 2000). When that




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evaluation is performed here on the record that has been clarified, this Court should be

compelled to find that it erred when it granted Defendants’ First Motion. As such,

Plaintiffs’ Motion for New Trial should be granted.

B. Defendants’ Second No Evidence Motion for Summary Judgment

After this Court granted Defendants’ First Motion, Defendants filed their Second

Motion on Plaintiffs’ sole surviving claim, control person liability under Article 581,

Section 33(F)(1) of the Texas Securities Act. After briefing2 and hearing on the Second

Motion, on December 18, 2013, setting forth no reasoning or analysis, this Court

granted the Second Motion. Plaintiffs respectfully submit that the Court erred as a

matter of law when it granted the Second Motion because Plaintiffs provided the Court

with more than a scintilla of evidence supporting each element of Plaintiffs’ control

liability claim. When the reasonable inferences of the evidence are construed in favor

of the non-movants as required under controlling precedent, reasonable minds can

conclude that the Halo Defendants possessed, directly or indirectly, the power to

control the specific investment transactions and the activity upon which the alleged

securities violations were predicated. As such, this Court is urged to reconsider its

ruling on Defendants’ Second Motion and to instead enter an Order denying the Second

Motion and/or granting Plaintiffs a New Trial.

C. Plaintiffs Have Presented More Than a Scintilla of Evidence in

Support of Their Claims Against Defendants

At all times relevant to this action, through the actions and representations of

Halo Companies, Temme was held out to be a duly authorized agent of Halo

2 Plaintiffs’ Response to Defendants’ Second Motion, Exhibits 1-1 through 1-11, 2-1 through 2-5 and 3-1

through 3-49, and Plaintiffs’ Post-Hearing Brief are incorporated by reference herein. All citations to Exhibits 1-1 through 1-11, 2-1 through 2-5 and 3-1 through 3-49 in this Motion refer to those exhibits filed in support of Plaintiffs’ Response to the Second Motion.




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Companies and its subsidiaries and affiliates. Halo and Temme were held out as being

one and the same.3

As set in Plaintiffs’ Response and Amended Response to the First Motion and in

Plaintiffs’ Response to Second Motion (which have been incorporated by reference

herein), there is more than a scintilla of evidence that shows that the Halo Defendants

held Temme out as their authorized agent/representative. Although Defendants deny

that to be the case, there is substantial evidence which supports Plaintiffs’ position that

when Halo was attempting to solicit funds from Plaintiffs, the Halo Defendants

represented to Plaintiffs that Temme was an authorized agent/representative of the Halo

Defendants. In fact, in their affidavits and in the depositions, Plaintiffs represented that

they Halo’s relationship with Temme was a critical factor in their decisions to invest. At

worst, reasonable and fair-minded people could differ in their conclusions, and the First

and Second Motions should have been denied.

Because Plaintiffs arguments in their prior pleadings are incorporated herein by

reference, the sections below focus on specific evidence that supports the elements of

Plaintiffs’ claims. While an evaluation of the evidence below may not definitively

prove each element of Plaintiffs’ claims, it is not intended to so as it need only raises a

genuine issue of material fact, which the evidence does. See, San Saba Energy, L.P.,

supra.

3 See Tony Weber Deposition (Appendix B-6 at 20:13-15; 20:17; 21:5-8; 68:15-16); See also,

Appendices A-8 at ¶¶ 6, 7, 8 and 10; A-9 at ¶¶ 4-7; A-10 at ¶¶ 4-7; A-11 at ¶¶ 4-6; A-12 at ¶¶ 4-7; A-13 at ¶¶ 4-6;

A-14 at ¶¶ 4-7; A-15 at ¶¶ 4-6; A-16 at ¶¶ 4-7; A-17 at ¶¶ 4-9; and A-18 at ¶¶ 4-7; See also, Tim Weber

Deposition, (Appendix B-4 at 43:18-20). See Exhibits 1-1 through 1-11.




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III. NEGLIGENT MISREPRESENTATION

A. Defendants in the course of business or a transaction in which they

had an interest.4

The evidence below strongly supports a claim for negligent misrepresentation as

the Defendants had an interest in Plaintiffs’ investments5:

Emails from R. Chron to Temme re: LP Agreements, showing their business

together. (Appendix C12-C17).

Halo Asset Management, LLC Confidential Offering Memorandum, (Appendix

2C-26. (Appendices C-26, C-29 and C-30; Appendix A-8 through A-18, Exhibit 1-1

through 1-11; Exhibit 3-33).

Halo signature block in subject LP Agreements. (See, e.g. Amended Appendix

B-1 at 85:20-86:23; 115:6-118:5; Exhibits 1-3 at Exhibits “B”-“D”; 1-4 at Exhibits

“B”-“D”; 1-6 at Exhibit “B”; Exhibit 1-7 at Exhibit “B”; 1-8 at Exhibits “B” and “C”;

1-10 at Exhibit “B”; 1-11 at Exhibits “A” and “B).

The General Partner, comprised of Halo management, had back end participation

in the investments. (Amended Appendix B-4 at 66:23-70:20; 183:2-184:13; Appendix

C-32).

Cade Thompson testified, “Mr. Temme and I were there to explain how the

business plan worked, how the investment worked, track record, what we intended to

do, what Halo intended to do with the – the capital as acquiring the assets.” (Amended

Appendix B-4 at 73:17-23).

4 Elements cited in Kastner v. Jenkens & Gilchrist, P.C., 231 S.W.3d 571, 577 (Tex. App. – Dallas

2007). 5 These citations are also incorporated by reference in the sections below addressing the Breach of

Fiduciary Duty, Negligence, Breach of Contract and Violation of Texas Security Act claims.




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The Halo Defendants affiliated themselves with Jay Temme to help raise the

funds necessary to purchase the assets. (Amended Appendix B-4 at 49:15-18; 53:15-

20).

Temme, Halo Defendants’ agent and representative, had the background and

contacts to purchase the tapes more quickly and economically than Halo. (Amended

Appendix B-1 at 88:10-15; Amended Appendix B-4 at 40:18-41:8; 57:11-58:3).

Based on the Halo Defendants’ oral and written representations, it was clear to

Plaintiffs that the Halo Defendants and Temme were in business together and that

Temme was Halo’s authorized representative. (See Appendix B-5 at 29:8-13; 30:12-

20; Appendix B-3 at 10:2-24; See Appendix A-8 at ¶¶ 3, 5, 6, 7, 8, 9 and 10; A-9 at ¶¶

3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at ¶¶ 3-7; A-13 at ¶¶ 3-6; A-14 at ¶¶ 3-7; A-

15 at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-7; See Appendix B-6 at

20:13-15; 20:17; 21:5-8; 68:15-16; See also, Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at ¶¶ 14,

15; 1-4 at ¶¶ 11, 12; 1-5 at ¶ 6; 1-6 at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶

4, 12, 14; 1-10 at ¶¶ 9-11; and 1-11 at ¶¶ 5, 9).

Based on Halo’s representations, Halo and Temme and his related entity

Stewardship were viewed by Plaintiffs as one and the same. (See Appendix B-5 at

33:17-25; Appendix B-3 at 66:8-10; See Appendix A-8 at ¶¶ 3, 5, 6, 7, 8, 9 and 10; A-9

at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at ¶¶ 3-7; A-13 at ¶¶ 3-6; A-14 at ¶¶ 3-7;

A-15 at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-7 ; See Appendix B-6

at 20:13-15; 20:17; 21:5-8; 68:15-16; See also, Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at ¶¶

14, 15; 1-4 at ¶¶ 11, 12; 1-5 at ¶ 6; 1-6 at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at

¶¶ 4, 12, 14; 1-10 at ¶¶ 9-11; and 1-11 at ¶¶ 5, 9).

On or about December 13, 2010, Halo Companies and the members of Equitas

Asset Management, LLC (“EAM”), with 100% ownership interest in Equitas Housing

Fund, LLC (“EHF”), entered into an Assignment and Contribution Agreement instead




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of the originally anticipated merger agreement. (Amended Appendix B-1 at 60:13-

63:5, 71:3-72:7 and 75:5-77:11; Appendix C-6; Exhibit 3-5).

In connection with the EHF assignment to Halo Asset Management, Halo

created, among other things, a confidential offering memorandum and Pitch Deck.

(Appendices C-8 and C-29; Exhibit 3-6). In those materials, Halo held Temme out to

be a principal of the general manager, right alongside of Halo officers and directors,

Defendants Cade Thompson, Reif Chron, Tony Chron and Paul Williams. (Appendices

C-8 and C-29; Exhibit 3-6). Halo and Temme had become one in fact, all operating and

attempting to sell securities under the Halo name.

On or about June 21, 2011, Thompson and R. Chron (Halo Companies’ General

Counsel) met with Temme and A. Karl Kipke (“Kipke”). During this June 21, 2011

meeting, Thompson, R. Chron and Temme again confirmed that Halo Companies

and/or related entities, its agent Temme, and Stewardship GP were working together to

raise funds to purchase distressed mortgage packages under the direction of Halo and

under the Halo corporate umbrella. (See Appendix B-3 at 37:10-20; 38:21-39:6; 67:4-

13; 134:10-135:7).

B. Defendants Supplied false information for the guidance of others.

As set forth above, when attempting to persuade Plaintiffs to invest, Defendants

represented, orally and in writing, that Temme was an authorized representative and/or

agent of the Halo Defendants. At all times relevant thereto, Defendants held Temme

out as their authorized agent/representative. Defendants now disclaim any such

relationship. (See Amended Appendix B-4 at 99:3-101:4, 208:21-209:10, 247:24-

249:3; Appendix B-5 at 29:8-12, 30:12-20, 33:17-25; See Appendix B-3 at 66:8-10,

168:6-9, 198:16-19, 224:4-6).

Defendants falsely represented in documentation provided to Plaintiffs how the

investments were going to be managed. (See Plaintiffs’ Affidavits, Appendix A-8 at ¶¶




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3, 5, 6, 7, 8, 9 and 10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at ¶¶ 3-7; A-

13 at ¶¶ 3-6; A-14 at ¶¶ 3-7; A-15 at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at

¶¶ 3-7; See also, Exhibits 1-1 through 1-11; see LP Agreement at Appendix C-13, see

pitch deck at Appendix C-14, see also Appendices C-26, C-29 and C-30; See Amended

Appendix B-4 at 73:19-23 (Thompson and Temme met with Weber, Cartner, and Berg

to “explain how the business plan worked, how the investment worked, the track

record, what we intended to do, what Halo intended to do with the capital as acquiring

the assets.”).

The investment documents contain statements about the General Partner’s role

and responsibilities for the investments, and the GP was comprised of both Halo and

legacy Stewardship members. (See Amended Appendix B-4 at 68:1-6; 89:1-92:23;

107:24-109:24; 245:4-19; 256:7-258:3). The managers were held out to investors as

being responsible to oversee the process. (See Amended Appendix B-4 at 68:1-6; 89:1-

92:23; 107:24-109:24; 245:4-19; 256:7-258:3).

C. Defendants falsely represented Temme as Halo’s agent.

If Defendants are to be believed now, their representations to Plaintiffs in 2010

and 2011 regarding Halo’s relationship with Temme were false. These representations

included:

Halo Asset Management, LLC Confidential Offering Memorandum. (Appendix

C-26). Defendants’ due diligence materials and offering memorandum “holds [Temme]

out as part of the management of the fund.” (Amended Appendix B-1 at 143:2-6;

Amended Appendix B-4 at 89:1-92:23, 107:24-109:24, see also Appendices C-29 and

C-30).

Temme held out as President of a Halo entity in Halo created documents.

(Amended Appendix B-4 at 245:4-19). Temme is held out as a manager of Halo

entities. (Amended Appendix B-4 at 256:7-258:3).




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The LP Agreements have a signature block with Temme’s name on it and Halo’s

address. (Amended Appendix B-1 at 99:2-8).

Temme held 1/3 of the company’s stock, and was by definition an insider.

(Appendix C-6; Amended Appendix B-1 at 167:3-13).

D. Without exercising reasonable care or competence in providing the

information.

Defendants failed to monitor Temme’s conduct and failed to exercise care in

providing information to Plaintiffs. If Temme was not an authorized representative

and/or agent of the Halo Defendants, the Halo Defendants should not have held him out

as an authorized agent/representative as Plaintiffs relied on those representations when

making their investments. (See Appendix A-8 at ¶¶ 3, 5, 6, 7, 8, 9 and 10; A-9 at ¶¶ 3-

7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at ¶¶ 3-7; A-13 at ¶¶ 3-6; A-14 at ¶¶ 3-7; A-15

at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-7; See Appendix B-5 at

33:17-25; Appendix B-3 at 10:2-24); See Appendix B-6 at 20:13-15; 20:17; 21:5-8;

68:15-16); See also, Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at ¶¶ 14, 15; 1-4 at ¶¶ 11, 12; 1-

5 at ¶ 6; 1-6 at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14; 1-10 at ¶¶ 9-

11; and 1-11 at ¶¶ 5, 9).

Temme was given materials and had an opportunity to go talk to potential

investors. (Amended Appendix B-1 at 77:12-78:22; 85:5-87:10; Amended Appendix

B-4 at 53:15-20, 68:1-6, 71:13-22, 73:19-23, 107:24-109:24, 110:17-109:24, 230:4-

232:6).

Halo wanted Temme to act exclusively for Halo’s benefit, but didn’t pay

attention to Temme’s activities. (Amended Appendix B-4 at 49:19-50:2, 110-111;

Amended Appendix B-1 at 84:6-12).




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E. Plaintiffs justifiably relied on the information.

Cade Thompson admitted that he intended for investors to rely on

representations in the documentation. (Amended Appendix B-4 at 107:24-109:24).

Plaintiffs actually, justifiably relied on the representations made in

documentation and verbally. (See Appendix B-5 at 33:17-25; Appendix B-3 at 10:2-24;

See Appendix A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at

¶¶ 3-7; A-13 at ¶¶ 3-6; A-14 at ¶¶ 3-7; A-15 at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9;

and A-18 at ¶¶ 3-7 ; See Appendix B-6 at 20:13-15; 20:17; 21:5-8; 68:15-16; See also,

Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at ¶¶ 14, 15; 1-4 at ¶¶ 11, 12; 1-5 at ¶ 6; 1-6 at ¶¶ 8–

10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14; 1-10 at ¶¶ 9-11; and 1-11 at ¶¶ 5,

9).

F. Proximately causing the injury.

Plaintiffs would not have invested but for the representations made regarding

Halo and Temme’s business relationship and the structure of the investments being

managed by Halo using its proprietary software. (See Appendix B-5 at 33:17-25;

Appendix B-3 at 10:2-24; See Appendix A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-


at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-7 ; See Appendix B-6 at 20:13-15; 20:17;

21:5-8; 68:15-16; See also, Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at ¶¶ 14, 15; 1-4 at ¶¶ 11,

12; 1-5 at ¶ 6; 1-6 at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14; 1-10 at

¶¶ 9-11; and 1-11 at ¶¶ 5, 9).

Because Plaintiffs believed in the investments as they were presented to them by

Halo and Temme, they invested millions of dollars, which never were managed

according to Halo’s representations. (See Appendix B-5 at 33:17-25; Appendix B-3 at

10:2-24; See Appendix A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6;

A-12 at ¶¶ 3-7; A-13 at ¶¶ 3-6; A-14 at ¶¶ 3-7; A-15 at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at




1007916/999-9999

¶¶ 3-9; and A-18 at ¶¶ 3-7 ; See Appendix B-6 at 20:13-15; 20:17; 21:5-8; 68:15-16;

See also, Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at ¶¶ 14, 15; 1-4 at ¶¶ 11, 12; 1-5 at ¶ 6; 1-6

at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14; 1-10 at ¶¶ 9-11; and 1-11

at ¶¶ 5, 9).

VI. BREACH OF FIDUCIARY DUTY

A. A fiduciary relationship existed between Plaintiffs and Defendants.6

The general partner owes a fiduciary duty to the limited partners.7

Halo Asset Management, LLC and Halo Group, Inc. are listed as signatories on

behalf of the General Partner in the LP Agreements. (See Appendix C-13 and C12,

C14-C17; See Amended Appendix B-1 at 96:21-99:12; See, e.g. Amended Appendix

B-1 at 85:20-86:23; 115:6-118:5; See also, Exhibits 1-3 at Exhibits “B”-“D”; 1-4 at

Exhibits “B”-“D”; 1-6 at Exhibit “B”; Exhibit 1-7 at Exhibit “B”; 1-8 at Exhibits “B”

and “C”; 1-10 at Exhibit “B”; 1-11 at Exhibits “A” and “B).

Cade Thompson, Paul Williams, Reif Chron and Tony Chron are among those

who were part of the GP. The GP was comprised of both Halo and legacy Stewardship

members. (See Amended Appendix B-4 at 89:1-92:23). The managers were held out to

investors as being responsible to oversee the process. (Amended Appendix B-4 at 89:1-

92:23).

Cade Thompson admits that he had a fiduciary duty to manage Halo and its

subsidiaries appropriately. (Amended Appendix B-4 at 21:4-8).

B. Defendants breached their fiduciary duties to Plaintiffs.

Plaintiffs’ investments were not made according to the LP Agreements, nor

managed as stated therein. (See Plaintiffs’ Affidavits, Appendix A-8 at ¶¶ 3, 5, 6, 7, 8,

9 and 10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at ¶¶ 3-7; A-13 at ¶¶ 3-6;

6 Elements cited in Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App. – Dallas 2006).

7 Graham Mortg. Corp. v. Hall, 307 S.W.3d 472, 479 (Tex. App. – Dallas 2010); Crenshaw v. Swenson,

611 S.W.2d 886, 890 (Tex. Civ. App. 1981).




1007916/999-9999

A-14 at ¶¶ 3-7; A-15 at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-7; See

also, Exhibits 1-1 through 1-11; see LP Agreement at Appendix C-13, see pitch deck at

Appendix C-14, see also Appendices C-26, C-29 and C-30; See Amended Appendix B-

4 at 73:19-23 (Thompson and Temme met with Weber, Cartner, and Berg to “explain

how the business plan worked, how the investment worked, the track record, what we

intended to do, what Halo intended to do with the capital as acquiring the assets.”).

C. Defendants’ breach resulted in injury to Plaintiffs or benefit to

Defendants.

Plaintiffs’ investments were never made, and Plaintiffs suffered a loss of the full

amount of their investment $4,898,157. (See Appendix B-5 at 33:17-25; Appendix B-3

at 10:2-24; See Appendix A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-


at ¶¶ 3-9; and A-18 at ¶¶ 3-7 ; See Appendix B-6 at 20:13-15; 20:17; 21:5-8; 68:15-16;


at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14; 1-10 at ¶¶ 9-11; and 1-11

at ¶¶ 5, 9).

V. NEGLIGENCE

A. Duty.8

Defendants also had a duty to ensure that prudent and proper measures were in

place to adequately monitor and oversee the fund raising efforts of their

agent/representative Temme. When Defendants allowed Temme to take Halo created

documentation out to market investments to potential investors, like Plaintiffs, they

undertook a duty to ensure that the investments were made and managed according to

the process outlined in the Halo documentation.

8 Elements cited in Kroger Co. v. Elwood, 197 S.W.3d 793, 794 (Tex. 2006).




1007916/999-9999

Defendants had a duty to ensure adequate due diligence was performed on

Temme/Stewardship before allowing Temme to market investments on behalf of, and

under the name of, Halo.

B. Breach of the duty.

Defendants, through their management, determined they would not monitor

Temme’s activity or ensure that investments were managed properly. (Amended

Appendix B-4 at 49:19-52:2). Reif Chron testified, “I’m not sure what all Jay Temme

was doing.” (Amended Appendix B-1 at 185:4). Nor did Mr. Chron care. (Amended

Appendix B-1 at 84:6-12).

Halo admits it did not receive responses to its due diligence requests to Temme.

(Amended Appendix B-1 at 22:1-17; Amended Appendix B-4 at 225:6-226:21). Halo

representatives believed that Temme was disorganized and that his historical data and

Stewardship’s performance records were difficult to comprehend. (Amended Appendix

B-4 at 202:17-203:8).

C. Damages proximately caused by the breach.

Plaintiffs invested, and lost, $4,898,157. (See Appendix B-5 at 33:17-25;

Appendix B-3 at 10:2-24; See Appendix A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-


at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-7 ; See Appendix B-6 at 20:13-15; 20:17;

21:5-8; 68:15-16; See also, Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at ¶¶ 14, 15; 1-4 at ¶¶ 11,

12; 1-5 at ¶ 6; 1-6 at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14; 1-10 at

¶¶ 9-11; and 1-11 at ¶¶ 5, 9).




1007916/999-9999

VI. BREACH OF CONTRACT

A. A valid contract between Plaintiffs and Defendants.9

Plaintiffs entered into the LP agreements as stated in the Third Amended Petition

at ¶¶ 91-98. (See Appendix B-5 at 33:17-25; Appendix B-3 at 10:2-24; See Appendix

A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at ¶¶ 3-7; A-13 at

¶¶ 3-6; A-14 at ¶¶ 3-7; A-15 at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-

7 ; See Appendix B-6 at 20:13-15; 20:17; 21:5-8; 68:15-16; See also, Exhibits 1-1 at ¶

6; 1-2 at ¶ 6; 1-3 at ¶¶ 14, 15; 1-4 at ¶¶ 11, 12; 1-5 at ¶ 6; 1-6 at ¶¶ 8–10; 1-7 at ¶¶ 8-

10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14; 1-10 at ¶¶ 9-11; and 1-11 at ¶¶ 5, 9).

B. Plaintiffs performed or tendered performance.

Plaintiffs invested $4,898,157. (See Third Amended Petition at ¶¶ 91-98. See

Appendix B-5 at 33:17-25; Appendix B-3 at 10:2-24; See Appendix A-8 at ¶¶ 3, 5-10;

A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at ¶¶ 3-7; A-13 at ¶¶ 3-6; A-14 at ¶¶

3-7; A-15 at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-7 ; See Appendix

B-6 at 20:13-15; 20:17; 21:5-8; 68:15-16; See also, Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at

¶¶ 14, 15; 1-4 at ¶¶ 11, 12; 1-5 at ¶ 6; 1-6 at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9

at ¶¶ 4, 12, 14; 1-10 at ¶¶ 9-11; and 1-11 at ¶¶ 5, 9).

C. Defendants breached the contract.


Temme’s activity or ensure that investments were made and/or managed properly.

(Amended Appendix B-4 at 49:19-52:2). Reif Chron testified, “I’m not sure what all

Jay Temme was doing.” (Amended Appendix B-1 at 185:4). Nor did Mr. Chron care.

(Amended Appendix B-1 at 84:6-12). The investments were not made as represented in

the agreements. (See Appendix B-5 at 33:17-25; Appendix B-3 at 10:2-24; See

9 Elements cited in Gold’s Gym Franchising, LLC v. Brewer, 400 S.W.3d 156, 162 (Tex. App. – Dallas

2013).




1007916/999-9999

Appendix A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at ¶¶ 3-

7; A-13 at ¶¶ 3-6; A-14 at ¶¶ 3-7; A-15 at ¶¶ 3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-

18 at ¶¶ 3-7 ; See Appendix B-6 at 20:13-15; 20:17; 21:5-8; 68:15-16; See also,

Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at ¶¶ 14, 15; 1-4 at ¶¶ 11, 12; 1-5 at ¶ 6; 1-6 at ¶¶ 8–

10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14; 1-10 at ¶¶ 9-11; and 1-11 at ¶¶ 5,

9).

D. Plaintiffs sustained damages as a result of the breach.

Plaintiffs lost $4,898,157. (See Appendix B-5 at 33:17-25; Appendix B-3 at

10:2-24; See Appendix A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7; A-11 at ¶¶ 3-6;


¶¶ 3-9; and A-18 at ¶¶ 3-7 ; See Appendix B-6 at 20:13-15; 20:17; 21:5-8; 68:15-16;


at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14; 1-10 at ¶¶ 9-11; and 1-11

at ¶¶ 5, 9).

VII. VIOLATION OF TEXAS SECURITIES ACT SEC. 581-33

A. Aiding and abetting liability.

1. A primary violation of the securities laws.10

The investments were not made as presented to Plaintiffs. (See Appendix B-5 at

33:17-25; Appendix B-3 at 10:2-24; See Appendix A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-

10 at ¶¶ 3-7; A-11 at ¶¶ 3-6; A-12 at ¶¶ 3-7; A-13 at ¶¶ 3-6; A-14 at ¶¶ 3-7; A-15 at ¶¶

3-6; A-16 at ¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-7 ; See Appendix B-6 at 20:13-15;

20:17; 21:5-8; 68:15-16; See also, Exhibits 1-1 at ¶ 6; 1-2 at ¶ 6; 1-3 at ¶¶ 14, 15; 1-4 at

¶¶ 11, 12; 1-5 at ¶ 6; 1-6 at ¶¶ 8–10; 1-7 at ¶¶ 8-10; 1-8 at ¶¶ 6-13; 1-9 at ¶¶ 4, 12, 14;

1-10 at ¶¶ 9-11; and 1-11 at ¶¶ 5, 9).

10 Elements cited in Navarro v. Grant Thornton, LLP, 316 S.W.3d 715, 720-21 (Tex. App. –Houston

2010).




1007916/999-9999

2. The alleged aider had general awareness of its role in the violation.

Defendants met face to face with several of the Plaintiffs. (Amended Appendix

B-4 at 73:17-23; Appendix A-8, A-16, A-17, the affidavits of Stuart Cartner, Timothy

Weber, and Bruce Berg).

Defendants drafted the documentation that was given to Plaintiffs. (Appendices

C-8. C-26, C-29 and C-30; Appendix A-8 at ¶¶ 3, 5-10; A-9 at ¶¶ 3-7; A-10 at ¶¶ 3-7;


¶¶ 3-7; A-17 at ¶¶ 3-9; and A-18 at ¶¶ 3-7; Amended Appendix B-4 at 68:1-6; 89:1-

92:23; 107:24-109:24; 245:4-19; 256:7-258:3; Amended Appendix B-1 at 143:2-6;:24-

109:24).

Defendants knew that Temme was taking Halo branded documents and LP

agreements into the marketplace to look for investors. (Amended Appendix B-1 at

77:12-78:22; 85:5-87:10; Amended Appendix B-4 at 53:15-20, 68:1-6, 71:13-22,

73:19-23, 107:24-109:24, 110:17-109:24, 230:4-232:6).

3. The alleged aider rendered substantial assistance in the violation.

Defendants were aware of at least one investment that was diverted by Temme

away from Halo in March 2011, and continued to ignore Temme’s business activities.

(Amended Appendix B-1 at 106:4-8).

Defendants had credible evidence that Temme had defrauded investors in early

August of 2011, but never contacted any of the Plaintiffs to alert them before they made

the single largest investment on August 26, 2011, Stewardship Philanthropy 4.

(Appendix C-37 and C-38, Cade Thompson and Reif Chron Amended Discovery

Responses).




1007916/999-9999

4. The alleged aider either intended to deceive Plaintiffs or acted with

reckless disregard for the truth of the representations made by the primary

violator.

Reckless disregard means liability can attach if the aider rendered assistance “in

the face of a perceived risk” that its assistance would facilitate untruthful or illegal

activity by the primary violator.11


Temme’s activity or ensure that investments were managed properly. (Amended

Appendix B-4 at 49:19-52:2). Reif Chron testified, “I’m not sure what all Jay Temme

was doing.” (Amended Appendix B-1 at 185:4). Nor did Mr. Chron care. (Amended

Appendix B-1 at 84:6-12). Defendants acted with reckless disregard of the truth.

B. Control Person Liability.

Control person liability in Texas is used in the same broad sense as in the

federal statute. Busse v. Pacific Feeding Fund #1, LTD., 896 S. W. 2d 807, 815 (Tex.

App. – Texarkana, 1995); see also, Darocy v. Abildtrup, 345 S.W. 3d 129, 137 (Tex.

App. – Dallas, 2011). While the Act does not define “control person,” the word control

is used in the same broad sense as in federal securities law and means ‘the possession,

direct or indirect, of the power to direct or cause the direction of the management or

policies of a person, whether through the ownership of voting securities, by contract, or

otherwise. Given the broad interpretation of the Act, “otherwise” necessarily includes

agents and representatives of the entity.

Halo Companies, Inc., Chief Executive Officer, Cade Thompson, testified that

Halo had a direct relationship with Temme “and it was our understanding, yes, that Mr.

Temme would assist Halo and its subsidiaries in the process of raising funds to acquire

assets.” (Exhibit 2-2 at 49:8-18). According to Defendant Thompson, “Halo controlled

11 Sterling Trust Co. v. Adderley, 168 S.W.3d 835, 842 (Tex. 2005).




1007916/999-9999

all of the drafting, reviewing and approval of all documents utilized to raise funds on

behalf of Halo.” (See Exhibit 2-2 at 242:16-18.)

Halo prepared a series of documents to effectuate an investment into an entity

called Stewardship Philanthropy Fund (“SPF”). (Exhibit 2-2 at 68:1-6). Halo expected

Temme to send the SPF documents to Plaintiff Wildcat Lake Partner’s representative

Tim Weber. (Exhibit 2-2 at 71:13-22).

As set forth more fully in the Response to the Second Motion, Plaintiffs have

presented more than a scintilla of evidence in support of their claim that the Halo

Defendants had the power to control the specific transactions and activity at issue. A

issue of material fact exists as to the control liability claim.

VIII. CONCLUSION

Based on the foregoing, Plaintiffs’ Response and Amended Response to

Defendants’ First No Evidence Motion for Summary Judgment, the Appendices and

Amended Appendices, Plaintiffs’ Response to Defendants’ Second Motion, Exhibits 1-

1 through 1-11, 2-1 through 2-5 and 3-1 through 3-49, and Plaintiffs’ Post-Hearing

Brief, Plaintiffs respectfully request that this Court reconsider its rulings on Defendants

First and Second Motions and to instead deny those motions, or alternatively, grant

Plaintiffs’ Motion for New Trial. Both the interest of justice and fairness dictate that

such relief be granted.




1007916/999-9999

Respectfully submitted,

/s/ David W. Lunn_________________

David W. Lunn

admitted pro hac vice

NUSSBAUM GILLIS & DINNER, PC

14850 N. Scottsdale Road, Suite 450

Scottsdale, Arizona 85254

480.609-0011 (telephone)

480.609.0016 (facsimile)

Bobby M. Rubarts

State Bar No. 17360330

Bart Sloan (Of Counsel)

State Bar No. 00788430

KONING RUBARTS LLP

1700 Pacific Avenue, Suite 1890

Dallas, Texas 75201

214.751.7900 (telephone)

214.751.7888 (facsimile)

ATTORNEYS FOR PLAINTIFFS

CERTIFICATE OF CONFERENCE

On January 6, 2014, David W. Lunn conferred with counsel for Defendants regarding the

forgoing Motion and Defendants are opposed to the relief requested in the Motion.

/s/ David Lunn



for Summary Judgment and Plaintiffs’ Motion for New Trial – Page 25 1007916/999-9999

CERTIFICATE OF SERVICE

I hereby certify that a copy of this document was served upon the attorneys of record of

all parties to the above cause in accordance with the Texas Rules of Civil Procedure on this 17th

day of January, 2014.

/s/ David W. Lunn_____________

C. John Scheef III

J. Mitchell Little

Scheef & Stone, L.L.P.

2601 Network Blvd., Suite 102

Frisco, Texas 75034

(214) 472-2150 (Fax)


Exhibit A


1

Patricia Klank

From: Renee L. Barrett [[email protected]]Sent: Friday, January 17, 2014 7:51 AMTo: Patricia KlankSubject: FW: Cade Thompson rough draftAttachments: Thompson, B. Cade.txt

Per your request, I am forwarding you the original email of the rough draft to Mr. Thompson’s deposition.

Renee L. Barrett 214.321.5599 ALPHADEPO.COM

From: Lisa Durham [mailto:[email protected]] Sent: Thursday, July 25, 2013 8:40 PM To: [email protected]; [email protected]; [email protected] Subject: Cade Thompson rough draft


Exhibit B


1

Patricia Klank

From: Renee L. Barrett [[email protected]]Sent: Friday, January 17, 2014 7:51 AMTo: Patricia KlankSubject: FW: updated rough draft of Cade ThompsonAttachments: Thompson, B. Cade.txt

Per your request, I am forwarding you the original email of the updated rough draft of Mr. Thompson’s deposition.

Renee L. Barrett 214.321.5599 ALPHADEPO.COM

From: Lisa Durham [mailto:[email protected]] Sent: Monday, July 29, 2013 9:43 AM To: [email protected]; [email protected]; [email protected]; [email protected] Subject: updated rough draft of Cade Thompson


Exhibit C


Thompson B Cade

1

1 WARNING!

2 THIS ROUGH DRAFT OF THE PROCEEDING IS NOT CERTIFIED. THE ROUGH DRAFT TRANSCRIPT MAY NOT BE CITED OR USED IN 3 ANY WAY OR AT ANY TIME TO REBUT OR CONTRADICT THE CERTIFIED TRANSCRIPTION OF PROCEEDING. THERE WILL BE 4 DISCREPANCIES IN THIS FORM AND THE FINAL FORM BECAUSE THIS ROUGH DRAFT HAS NOT BEEN COMPLETELY EDITED OR 5 PROOFREAD, CORRECTED, FINALIZED, INDEXED, BOUND OR CERTIFIED. THERE WILL ALSO BE A DISCREPANCY IN PAGE 6 NUMBERS APPEARING ON THE ROUGH DRAFT AND THE PROOFREAD, CORRECTED AND CERTIFIED FINAL. 7

8

9 THE VIDEOGRAPHER: The date is July 25,

10 2013. The time is 9:29 a.m.. this is the deposition

11 of. And exam by.

12 Q. (BY MR. LUNN) Sir, will you please state your

13 name for the record?

14 A. Brandon Cade Thompson.

15 Q. Have you ever had your deposition taken before?

16 A. No.

17 Q. You understand that the oath you took is an

18 oath you'd take in a court of law and it's under penalty

19 of perjury?

20 A. Yes.

21 Q. Is there any reason you can't give your best

22 testimony today?

23 A. No.

24 Q. Any type of medications?

25 A. No.� 2

1 Q. It's important throughout the course of the day

2 that as we're going, that when we're talking, you let me

Page 1


Thompson B Cade 3 finish asking my question before you answer and I'll do

4 my best to let you finish your answer. As you can see,

5 this young lady next to us is taking down everything

6 that we say. It's also important -- it's videotaped.

7 You know, I was looking at a deposition transcript, that

8 you look odd /EUPBLy to a question so instead of an

9 uh-huh, huh huh, you say yes or no. Is that okay?

10 A. Yes.

11 Q. And throughout the course of the deposition,

12 your attorney may impose some objections. He may object

13 to the form of the question. He may not like the way I

14 phrased it. If you understand the question, you can

15 still respond. Otherwise, you can ask me to rephrase

16 the question. It's important to get your accurate

17 testimony. So I want you to make sure you understand my

18 question. Is that fair?

19 A. Yes.

20 Q. And there'll be times when he may want to me

21 because I may ask question that could invade an

22 attorney/client privilege and he may instruct you not to

23 answer. So we can address that when it comes up. Is

24 that fair?

25 A. Yes.� 3

1 Q. What did you do today to prepare for your

2 deposition?

3 A. Went to Chick-Fil-A for breakfast, had a cup of

4 coffee with Reif this morning. That's about it.

5 Q. Did you meet -- did you look at any documents?

6 A. Not this morning.

7 Q. What else did you do to prepare for yourPage 2


Thompson B Cade

8 deposition?

9 A. Today?

10 Q. Ever.

11 A. Well, I refreshed myself of some of the

12 documents, interrogatory responses, and met with John

13 and Mitch yesterday for a few hours.

14 Q. When you talk about interrogatory responses,

15 were those your interrogatory responses?

16 A. Yes.

17 MR. SCHEEF: Just let him finish.

18 THE WITNESS: Okay.

19 Q. (BY MR. LUNN) Did you review any other

20 documents that you can recall?

21 MR. LITTLE: Objection, form.

22 A. Specifically, what type of documents?

23 Q. (BY MR. LUNN) Well, you said when we were

24 talking about things you did to prepare for your

25 deposition, you said you went to Chick-Fil-A that� 4

1 morning?

2 A. Yeah.

3 Q. Met with your attorneys yesterday for a few

4 hours, reviewed interrogatory responses. Were there any

5 other documents that you reviewed in connection with

6 your deposition preparation?

7 MR. LITTLE: And I'll just caution you,

8 Cade. To the extent you reviewed any of those documents

9 in John's or my question and we discussed them, don't

10 answer his question. If you can answer his question

11 without invading the attorney/client privilege, feel

Page 3


Thompson B Cade 12 free.

13 THE WITNESS: Yeah.

14 A. The only documents that I reviewed for

15 preparation for this deposition was the production

16 documents associated with this litigation, and the

17 interrogatory responses that had been previously filed

18 months back to refresh my memory.

19 Q. (BY MR. LUNN) Did you -- have you seen the

20 deposition transcript of Tony Weber?

21 A. I have not.

22 Q. Did you review the deposition transcript of Tim

23 Weber?

24 A. I have not.

25 Q. How about Carl Cade?� 5

1 A. No, sir.

2 Q. When did you first meet Jay Temme?

3 A. I don't recall the specific date, but it was

4 late 2009, fall of 2009.

5 Q. Do you recall the circumstances under which you

6 met him?

7 A. Yes, I do. First time I met him, I was

8 introduced by my chief marketing officer as an

9 opportunity for us to Haley -- Halo, being us, to

10 potentially refinance through our mortgage company and

11 provide credit repair services for performing notes that

12 he claimed to be managing and servicing and owned.

13 Q. And I'm sorry. You said that was in --

14 A. Fall of 2009.

15 Q. At what point did you determine that Halo would

16 want to engage in business relationship with TemmePage 4


Thompson B Cade

17 representatives?


19 A. Could you rephrase the question?

20 Q. (BY MR. LUNN) Sure. At some point, did you

21 determine that you wanted to pursue business

22 opportunities with Temme?

23 A. Yes.

24 Q. And when was that?

25 A. The first agreement we entered into with Jay� 6

1 and stewardship fund was a joint marketing agreement. I

2 don't know the specific month and day that was entered

3 into, but it was to provide refinance, mortgage

4 refinancing, credit repair services for his assets that

5 he was managing.

6 Q. When is the last time you spoke with Jay Temme?

7 A. August 26th, 2011.

8 Q. And what was said during that conversation?

9 A. He actually wasn't verbally. He texted me,

10 thanks for all I'd -- the relationship and that he

11 was -- I don't remember specific text, but it was

12 something relating to his apologetic for failure and --

13 you know, a few other things.

14 Q. Do you sill have that text?

15 A. I do not.

16 Q. Did you respond to the text?

17 A. I did not.

18 Q. Do you know what prompted the text?

19 A. I do not.

20 Q. Do you know who Keith /A*R /SWRAT ais?

Page 5


Thompson B Cade 21 A. I do.

22 Q. Who's Keith /A*R vat a{, he is the receiver for

23 the stewardship fund state. He works for Brian cave law

24 firm?

25 Q. Have you met with him?� 7

1 A. I have.

2 Q. How many times?

3 A. More than five, less than ten.

4 Q. When is the first time you met with Mr. /A*R

5 /SWRAT a?

6 A. I don't remember the date.

7 Q. Do you remember approximately when?

8 A. October, sometime in October of 2011.

9 Q. And what was the purpose of that meeting?

10 A. I'm sure it was to try to find out what

11 information that we had relating to stewardship fund,

12 any assets that he might -- that we might have in our

13 possession, but I don't specifically remember the

14 discrete nature of the visit.

15 Q. Were you individual to perform any type of

16 violation in regard to your assets that you might have?

17 A. Could you say that again.

18 Q. Sure. Did /A*R /A*Z ask you to perform an

19 internal investigation to determine will whether or not

20 you had any steward an assets in your system?

21 A. I don't believe he asked me to do an

22 investigation.

23 Q. Did he ask you to do anything during that first

24 meeting?

25 MR. LITTLE: Objection, form.Page 6


Thompson B Cade� 8

1 A. Well, could you be more specific, please.

2 Q. (BY MR. LUNN) Yeah. You had a meeting. You

3 talked about some various topics. Did he ask you for

4 any follow up information?

5 A. I don't remember specifically, David, if he --

6 in that first meeting or if it was a subsequent meeting

7 or email what he asked, but ultimately what we produced

8 for him was a list of all the assets that were in the

9 AMX platform, which was subsequently also provide indeed

10 our production to you and the first request for

11 production. He also asked for a list of all the

12 collateral files for any of those assets that were in

13 our possession in Allen, Texas, where our offices were.

14 And I -- my memory vaguely remember him asking

15 circumstantial -- you know, details around our

16 relationship with Jay and similar questions you're

17 asking now.

18 Q. You mentioned the production that you gave to

19 us.

20 A. Yeah.

21 Q. Are you recalling that you provided a list of

22 the assets in the AMX platform. Is that right?

23 A. I believe that's right. I know I provided the

24 Keith Aruzada, in that's what you're asking.

25 Q. In connection with discovery responses, did you� 9

1 pride communications with Keith Aruzada?

2 A. Ask that again. I don't know if I asked --

Page 7


Thompson B Cade 3 Q. You were served in this case?

4 A. Yes, sir.

5 Q. With discovery responses and in connection with

6 those responses, your discovery responses, did you

7 produce any communications with the receiver?

8 A. Did I receive any communication from the

9 receiver in request to your production responses or --

10 I'm missing your question. Could you be more --

11 Q. No. We served interrogatory?

12 A. Yeah.

13 Q. Request for production responses. In

14 connection with your response to those questions, did

15 you produce any communications you had had with the

16 receiver?

17 A. Not that I'm aware of.

18 Q. Why not?

19 A. I don't remember --


21 A. I don't remember being asked for -- in my

22 interrogatory specifically, in my personal capacity for

23 any communications with Keith Aruzada, the receiver. I

24 may have. I don't remember that.

25 Q. (BY MR. LUNN) Have the Halo entities reached a� 10

1 settlement with the receiver?


3 A. Halo entities? Could you be more specific?

4 Which entity?

5 Q. (BY MR. LUNN) Any.

6 A. No, not that I'm aware of.

7 Q. Are there settlement negotiations going on withPage 8


Thompson B Cade

8 the receiver?

9 A. Yes.

10 Q. Do you have an understanding as to why the

11 receiver thinks that it's entitled to recover money from

12 Halo or its related entities?

13 A. I have no idea why the receiver thinks

14 anything.

15 Q. Has the receiver made a demand on Halo to pay a

16 certain sum of money into the receivership?

17 A. I'm not aware of any demands from the receiver.

18 Q. Then what are the settlement negotiations

19 about?

20 A. Well --


22 A. The receiver is in control of stock

23 certificates that belong to Halo pursuant to a breach of

24 an agreement between Jay Temme personally and /*EP /TAS

25 housing fund and we would like those stock certificates� 11

1 back.

2 Q. (BY MR. LUNN) Has the receiver made a demand

3 on Halo to -- for Halo to pay $1.2 million to the

4 receivership?

5 A. No, not that I'm aware of.

6 Q. Has the receiver sought to recover any funds

7 from Halo?


9 Q. What's your job title?

10 A. Chief executive officer.

11 Q. How long have you had that?

Page 9


Thompson B Cade 12 A. Since Halo group Inc. was formed in 2007.

13 Q. What are your job responsibilities?

14 A. Everything from cleaning the toilet to paying

15 the bills. They're broad. In a small public dump, 55

16 employees. Have a lot of responsibilities. Ish

17 employees.

18 Q. Have you ever been a CO before?

19 A. No.

20 Q. How did you become a CO of Halo company, then?

21 A. Well, I founded the company. I gave myself the

22 title.

23 Q. So what do you believe that your duties are as

24 the CEO of Halo companies Inc.?

25 MR. LITTLE: Objection, form.� 12

1 A. Well, the duties of any CEO, I would assume

2 specifically, mine as well, are to maximize the value of

3 the shareholders -- value of the stock are the

4 shareholders.

5 Q. (BY MR. LUNN) And how do you go about doing

6 that?

7 A. There's a lost different base. I mean --

8 Q. Well, how do you personally go about doing

9 that?


11 A. Well, are you speaking about my personal

12 capacity or --

13 Q. (BY MR. LUNN) As the ceor of Halo group Inc..

14 A. Well.

15 Q. What have you done to try to maximize the value

16 of the shares of stock?Page 10


Thompson B Cade

17 A. Make revenue, control expenses, create profits,

18 run a good business, create awareness in the

19 marketplace, same as most CEOs in America.

20 Q. Okay. What have you done to make revenue?

21 A.


23 A. What have I done to make revenue. I've been in

24 business since 2007 under Halo group Inc.. we have

25 multiple subsidiaries, have had multiple subsidiaries,� 13

1 in a number of different business sectors. All have

2 different business and revenue models. Do you want me

3 to go through each and every one of those specifically

4 or do you want a specific entity you want to know about.

5 Q. Not yet. We'll get there?

6 A. Okay.

7 Q. I'm just talking generally right now?

8 A. Yeah.

9 Q. What else?


11 Q. (BY MR. LUNN) You mentioned you've got

12 entities. What are you actually doing with those

13 entities to generate revenue?

14 A. Now or in the past? What point. Since 2007.

15 That's a long period of time to cover.

16 Q. Let's start in 2007?

17 A. 2007, we set up Halo group Inc. to consolidate

18 several independently owned companies. Halo credit

19 solutions, Halo debt solutions, Halo group consulting

20 and Halo group mortgage. We were in the mortgage

Page 11


Thompson B Cade 21 business. We were in the debt settlement business. In

22 the credit repair business. All of which have different

23 fee structures, service offerings predominantly to the

24 consumer, retail consumer.

25 Q. When did Halo group Inc. go public?� 14

1 A. 2009, fall of 2009, September of 2009.

2 Q. At that time did Halo group Inc. have any

3 related entities?

4 A. Related entity --

5 Q. Subsidiaries?

6 A. Halo group Inc. had -- had a number of

7 subsidiaries, yeah, sure did. They're all listed in our

8 first financial filings, our super eight k that was

9 filed along with our SEC filings for the reverse merger.

10 Q. And in the fall of 2009, what was the business

11 purpose of Halo group Inc.?

12 A. To provide consumer related financial services.

13 Q. Can you expand on that?

14 A. We provided mortgage origination services. We

15 provided credit repair services to consumers. We

16 provided debt relief and debt consolidation services to

17 consumers. At that time we provided real estate --ry

18 tail real estate brokerage services to consumers,

19 provided insurance services to consumers.

20 Q. Do you believe that your obligation as a CEO

21 changed once the company went public?

22 A. There is a distinct difference in reporting and

23 public filings that are required. But specific ally

24 it's a duty as a CEO to maximize the value of the

25 shareholders -- for the shareholders, I don't thinkPage 12



1 changed at all.

2 Q. What duties as a CO do you have to the other

3 officers and directors of the company?


5 A. Could you restate the question?

6 Q. (BY MR. LUNN) Yeah. Do you believe as the CO

7 of a company, that you owe any types of duties to the

8 officers and directors of the company?

9 A. Certainly.

10 Q. What duties are those, sir?

11 A. I have a duty to -- of transparency, a duty of

12 communication, duty to perform my services, my

13 responsibilities to the best of my ability. I have a

14 fiduciary responsibility to manage the company

15 appropriately.

16 Q. Your duty of transparency, what does that

17 entail?

18 A. Proper and good communication to the board,

19 timely communication to the board so they can make

20 appropriate decisions on behalf of the company,

21 disclosing all elements of any decisions that are board

22 level appropriate.

23 Q. And you have a -- you said you had a fiduciary

24 responsibility. What does that mean to you?


1 A. Well, a fiduciary responsibility is to ensure

2 that I am -- to me, it means ensuring that I am -- I put

Page 13


Thompson B Cade 3 the interests of the organization above my own interests

4 and ensuring that I manage the interests of the

5 organization appropriately.

6 Q. (BY MR. LUNN) Do you believe you have a duty

7 to ensure that there are proper processes and procedures

8 in place that employees and the agents of the company

9 don't steal from the company?


11 A. Could you restate the question.

12 Q. (BY MR. LUNN) Could you read the question

13 back, please?

14 (Requested text read)

15 A. We -- certainly I think any good company and

16 any good CEO would have processes -- policies and

17 procedures to prevent theft of any kind, but I don't

18 believe it's my responsibility to -- I can't police and

19 control if an employee or employees or ages of the

20 company steal from the company.

21 Q. (BY MR. LUNN) That wasn't my question.

22 A. Okay.

23 Q. My question is: As the CEO, do you believe

24 it's your duty to make sure that there's proper policies

25 and procedures in place to prevent employees from� 17

1 stealing from the company?

2 A. Define stealing.

3 Q.

4 A. There are roles and responsibilities in our

5 organization such as for embezzling funds, that those

6 responsibilities for the policies and procedures would

7 be controlled and developed and managed perhaps by ourPage 14


Thompson B Cade

8 CFO, for example. So my specific role as a CEO in the

9 company may or may not include responsibility for

10 policies and procedures depending on the type of theft

11 you're referring to.

12 Q. What input do you have with regard to the

13 policies and procedures of the company, of Halo?

14 A. I have a substantial input, I'm sure fall type

15 of policies and procedures. As the CEO, I have the

16 final authoritative say.

17 Q. Las the public traded company, isn't one of

18 your duties to protect the investments of the

19 shareholders?

20 A. Sure.

21 Q. And how do you go about ensuring the

22 investments of the shareholders?

23 A. Good policies and procedure.

24 Q. And what types of policies and priors are

25 those, sir?� 18

1 A. Well, if you're specifically going through

2 every single policy and procedure we have, I've supplied

3 most of those, if not all of the policy and procedures

4 in our request for production to guys pdocument me to go

5 through each and every one of them?

6 Q. I want to know your policies and procedures

7 that you have in place to ensuring that when investments

8 are made to Halo related entities, that those

9 investments are actually used as intended?


11 A. To my knowledge, no investment was ever made

Page 15


Thompson B Cade 12 into a Halo subsidiary related entity.

13 Q. (BY MR. LUNN) Ever?

14 A. I mean, there are investments made into the

15 public company, Halo companies Inc., and Halo group Inc.

16 for exchange for shares in the organization, but we're

17 not managing investments on behalf of others, except

18 for -- I guess the one caveat to that is the Equitas

19 housing fund that was a direct investment into a fund,

20 subsidiary of Halo companies Inc.

21 Q. What is the subsidiary?

22 A. Equitas housing fund.

23 Q. Okay. And there were investments made into

24 that fund?

25 A. Correct.� 19

1 Q. And what did you do to ensure that those

2 investments were actually made?


4 A. Rephrase the question again. What did I --

5 rephrase the question.

6 Q. (BY MR. LUNN) Okay. So you've got Equitas

7 housing fund?

8 A. Yes.

9 Q. There were private equity investments made into

10 that fund, right?

11 A. Sure. Private equity, I don't know if that's

12 the appropriate --

13 Q. What would you call it?

14 A. Well, it was a debt offering. So it wasn't an

15 exchange for equity. Soy /UF just wanted to clarify

16 that.Page 16


Thompson B Cade

17 Q. And what did you do to ensure that the --

18 strike that. We'll come back to it.

19 Do you believe that one of your roles at

20 Halo is to help raise funds from investors?

21 A.


23 A. Specifically, raising funds from investors, we

24 are a fee for service company.

25 Q. (BY MR. LUNN) Well, you are now. Let's talk� 20

1 about 2010.

2 A. 2010. Okay.

3 Q. In 2010, did you ever undertake activities to

4 get -- private investments to purchase mortgage tapes?


6 A. Rephrase the question again.

7 Q. (BY MR. LUNN) Sure. 2010, 2011, did you have

8 any responsibilities to try to raise money from

9 investors?

10 A. Halo companies Inc. made a decision to enter

11 the acquisition of -- and management of mortgage-related

12 products scenario real property.

13 Q. When was that?

14 A. The December of 2012 -- or excuse me, 2010,

15 excuse me.

16 Q. Okay. And what was your role with regard to

17 raising funds?

18 A. My role was to meet with the potential

19 investors.


Page 17


Thompson B Cade 21 A. On behalf of Halo, explain to them our process,

22 our model and ultimately my responsibilities were to

23 manage the assets subsequent to the acquisition.

24 Q. (BY MR. LUNN) How can you go about identifying

25 potential investors?� 21

1 A. Warm market, friends and family, /SPWRAOUBGZs

2 from third parties of other warm markets, referrals.

3 Q. And when you met with a potential investors,

4 what information would you provide them?

5 A. Depend ing onwhat meeting it was and what the

6 nature of that conversation, it would depend. So first

7 meeting, second meeting. Depends on their level of

8 interest.

9 Q. With the first meeting, you were introduced

10 through a friend to John Smith?

11 A. Yeah.

12 Q. Wants to get together, find out about what

13 you're offering. What information do you provide at

14 that time?


16 A. Well, typically speaking, the first meeting of

17 any prospective investor in Equitas would be to talk

18 about the business model, our history, what we do, what

19 our thesis was on the market, explain the business plan.

20 Q. (BY MR. LUNN) And can you have any materials

21 that you provide to illustrate what the business plan

22 was?

23 A. Yes. Equitas housing fund had a fund proposal.

24 It was a macro overview of our track record.

25 Q. Who created that?Page 18



1 A. Halo.

2 Q. Did you have direct involvement in the creation

3 of that?

4 A. Yes.

5 Q. What was your involvement?

6 A. It ranged from why boarding the elements of the

7 document to potentially creating some of the slides

8 myself.

9 Q. These are market material that is you would

10 distribute in order to try to raise funds?

11 A. I don't know if I'd say that specifically, but

12 it was to help explain in writing our thesis, our

13 investment thesis on what we believe the market was.

14 Q. And who within Halo was authorized to give this

15 information out to potential investors?

16 A. Officers of the company.

17 Q. Anybody else?


19 Q. Any agents of the company?

20 A. No.

21 Q. Why not?


23 A. Well, we wanted to control and there was very

24 few people in the organization that had the ability to

25 communicate effectively the business plan and we wanted� 23

1 to control that.

2 Q. (BY MR. LUNN) Did Jay Temme have the ability

Page 19


Thompson B Cade 3 to effectively and. The business plan?

4 A. I have no idea.

5 Q. Do you believe that he did?

6 A. I really don't know. I -- I don't know.

7 Q. Did you provide these materials to -- that we

8 were speaking of just a moment ago to Jay Temme to try

9 too raise funds?


11 A. I provided material to Jay Tim to review to get

12 his opinion on the content of the materials.

13 Q. (BY MR. LUNN) And Jay Temme was trying to help

14 raise funds for these same investments. Is that

15 correct?

16 A. No.

17 Q. So Jay Temme wasn't having communications with

18 potential investors about their investment?


20 A. I have no idea what Jay Temme communicated to

21 or about.

22 Q. (BY MR. LUNN) From December of 2010 through

23 September 2011, what policies and procedures did Halo

24 have in place to ensure that its officers, directors and

25 agents didn'tem bezel from Halo?� 24

1 MR. LITTLE: Objection, form. Asked

2 approximate answered.

3 A. As a public company, we have certain

4 requirements, both with the SEC and internal controls to

5 ensure that monies are nottem bezeled from the company.

6 [!EZ SPEAKER 102]: Inn colluding audits

7 from third party auditing firms.Page 20


Thompson B Cade

8 Q. (BY MR. LUNN) How often do the audits and

9 third party auditing firms take place?

10 A. Excuse me. /#KW-R8.

11 Q. Yell?

12 A. We have yell reviews and an annual audit.

13 Q. In 2011, what was your auditing firm?

14 A. 2011 would have been Montgomery /EUT and

15 guylet.

16 Q. How about 2010?

17 A. Same.

18 Q. So what internal controls did you have in place

19 to ensure that the officer directors of Halo companies

20 wouldn'tem bezel funds from investors?


22 A. Our internal controls in general, regardless of

23 what we were trying to protect, were limits to access to

24 the accounts, Dale SPE monthly reconciliation of those

25 accounts, dual authorizations for monies to be sent in� 25

1 or out of those accounts, audits of those accounts and

2 limited to appropriate signatories on those accounts.

3 Q. (BY MR. LUNN) What accounts are you speaking

4 of?

5 A. Same -- bank accounts of the organization.

6 Q. Do you believe that in you raising funds for

7 the benefit of Halo, that transparency is

8 superintendent?

9 A. Yes.

10 Q. Why is that?

11 A. I think anytime you raise funds, transparency

Page 21


Thompson B Cade 12 is important.

13 Q. And why is that?

14 A. Why do I think transparency is important when

15 raising funds?

16 Q. Correct.

17 A. I think anytime an organization receives money

18 on behalf of a third party for the purpose of investment

19 where proper transparency and reporting to those

20 investor system an innate part of that process and a

21 requisite for the investment.

22 Q. And you -- would you agree that the

23 shareholders have an expectation that there would be

24 transparency in that process?

25 A. Do I believe the shareholders of Halo companies� 26

1 Inc. expect transparency in the process of us raising

2 funds?

3 Q. Yes?

4 A. For the benefit of Halo?

5 Q. Yes?

6 A. I have no idea what our shareholders believe.

7 There's 4700 of them.

8 Q. Do you own any shares of stock?

9 A. I do.

10 Q. Outside of Halo?

11 A. Yes.

12 Q. And in what companies?

13 A. Well, can you define shares of stock?

14 Q. Do you have any investments in stock, where you

15 purchased stock?

16 A. Yes.Page 22


Thompson B Cade

17 Q. And describe for me the process you went before

18 determining whether or not to make the investment.

19 A. Predominantly went online, researched the

20 organization, read their filings, reviewed the

21 principles behind the organization, determined -- did

22 background research on those individuals who are running

23 the company, looked at their business plan, read their

24 filings, read research reports about them, made the

25 decision to invest or not invest.� 27

1 Q. Have you ever been made any private equity

2 investments?

3 A. Do I have any private equity investments, no,

4 sir.

5 Q. Have you in the past?

6 A. No, sir.

7 Q. Has Halo or any of its related entities ever

8 provided mortgage brokerage services?

9 A. Yes.

10 Q. And what entities within Halo?

11 A. Originally, it was Halo funding group LLC,

12 later changed to Halo group mortgage LLC.

13 Q. What is a mortgage brokerage service?

14 A. It's the act of providing a mortgage loan to a

15 borrower via brokering from a correspondent wholesale

16 bank so they can either refinance their home loan or

17 acquire a new home.

18 Q. So it's the act of acquiring mortgages?

19 A. Not an act of acquiring mortgage.

20 Q. It's not?

Page 23


Thompson B Cade 21 A. Let me restate what I said.

22 Q. Okay.

23 A. It's the act of brokering a new loan on behalf

24 of a borrower for the purpose of refinancing their

25 current mortgage or acquiring a new mortgage for new� 28

1 purchase.

2 Q. Does it include advising buyers or sellers

3 about the value of the mortgages?

4 A. No.

5 Q. How about credit counseling?

6 A. No.

7 Q. Servicing the mortgages?

8 A. No. Mortgage brokerage services is

9 specifically an industry that relates to origination of

10 new loans. Mortgage servicing would be mortgage

11 services. Credit counseling would be credit counseling.

12 Q. What mortgage servicing activities has Halo

13 companies engaged in?

14 A. Halo is not engaged in mortgage servicing

15 specifically.

16 Q. None of it's related entities?

17 A. No, sir.

18 Q. When were you born?

19 A. August 10, 1979, 9:58 in the morning, I

20 believe.

21 Q. Do you have any post high school education?

22 A. I do.

23 Q. And what is that?

24 A. I have a bachelor's from Abilene Christian

25 university.Page 24



1 Q. When did you obtain that degree?

2 A. 2002.

3 Q. What did you do for employment after you got

4 that degree?

5 A. Well, for two and I a half months, I worked as

6 an assistant golf pro at shade owe oaks country club in

7 Abilene, Texas. Excuse me. That was Baird. Subsequent

8 to that, I took a teaching job for a year at Mesquite

9 independent school district as a geometry teacher and as

10 a varsity girls soccer coach. While I was studying for

11 my securities licenses. Series 763 and my insurance

12 license group one. Ultimately, joined the broker dealer

13 world group securities, marketing firm world financial

14 group, worked there for a year and a half.

15 Q. What did you do there?

16 A. I worked for my father as an analyst for his

17 clients, for personal financial planning.

18 Q. What were your roles as an analyst?

19 A. To analyze information, accounts, products, and

20 provide him data and recommendations.

21 Q. Okay. What did you do after?

22 A. That I entered the mortgage business as a loan

23 officer at Morningstar mortgage, originating loans on

24 behalf of borrowers and fulfilling mortgage brokerage

25 services.� 30

1 Q. Such as?

2 A. Originating loans on behalf of borrowers for

Page 25


Thompson B Cade 3 refinancing their current loans or helping them acquire

4 a loan for a new home purchase.

5 Q. How long did you hold that position?

6 A. Well, I was a loan officer from November 2002

7 to, say, March 2003. Then I got to be a senior loan

8 officer at that time. So --

9 Q. What was the difference in positions?

10 A. Got paid more machine.

11 Q. Same responsibilities?

12 A. Predominantly.

13 Q. Okay. How long did you hold that position?

14 A. Between 2003 and 2 -- or say March 2003 to

15 probably May of 2003, and thin was promoted to vice

16 president of morning star mortgage at that time.

17 Q. And how did your job responsibilities change

18 then?

19 A. It didn't.

20 Q. Okay. How long did you hold that position?

21 A. Until November of 2004.

22 Q. Then what did you do?

23 A. I entered into acquiring the company from the

24 mortgage broker and the owner.

25 Q. How did you go about that?� 31

1 A. Had a meeting with him in high office and said

2 I'd like to buy the company from you.

3 Q. Okay. So you purchased the company?

4 A. I did.

5 Q. And that was in November 2004?

6 A. No. That was in February 2005.

7 Q. Okay. How long did you own that company?Page 26


Thompson B Cade

8 A. Well, morning star mortgage LLC, we actually

9 did an asset acquisition from the owner. So I never

10 owned morning star mortgage LLC.

11 Q. Is that what infect did you create?

12 A. Halo funding group, February 2005-ish.

13 Q. And what was the business purpose of Halo

14 funding group?

15 A. Provide mortgage brokerage services to

16 consumers.

17 Q. Okay. How long did you own that company?

18 A. So from February-ish of 2005, because I think

19 this was end of February, maybe beginning of March when

20 the deal closed. So from there until 2007 when Halo

21 group Inc. was formed. That the time Halo Group Inc.

22 acquired the interest of Halo funding group in exchange

23 for stock, and I received stock in Halo group Inc. and a

24 promissory note for $149,000.

25 Q. When Halo group Inc. was formed, who were the� 32

1 officers?

2 A. Myself as CEO, Jimmy /PHAULD /EUPB as president

3 {, Craig freeze listen as chief legal officer, Paul

4 Williams as chief financial officer, and that's it.

5 Q. Who were the directors?

6 A. Craig freeze listen was a director, Paul

7 Williams was a director. Richard G. Morris was a

8 corrector. I was a director, and Jimmy /PHAULD /EUPB

9 was a director.

10 Q. How did you meet Paul Williams?

11 A. Paul Williams was introduced to me by a man

Page 27


Thompson B Cade 12 named Lee Shaw, who they had had long-term relationship,

13 and thought that Paul could add value to our

14 organization in a number of different ways at the time

15 when we had our debt credit and mortgage services and

16 Paul had been in the financial services industry for

17 some period of time.

18 Q. Do you recall when you met Paul Williams?

19 A. I do not.

20 Q. When did you first start working with Paul

21 Williams?

22 A. Sometime I after I met him. Specifically, I

23 don't know, David. I think the time frame generally was

24 the end of 07-ish, maybe beginning of 2008.

25 Q. Okay. In the -- in connection with this� 33

1 matter, you were served by Bruce some interrogatory

2 requests. Do you recall that?

3 A. Yes, I do.

4 Q. And are those some of the documents you review

5 indeed preparation for with your deposition?

6 A. Yes, they.

7 Q. Were and interrogatory Number five says state

8 the date on which Halo company's Inc. or any of its

9 subsidiaries determined Halo would transfer stock to Jay

10 Temme and you responded after that determination was

11 made on December 17, 2010. Is that correct?

12 A. That's correct.

13 Q. So there wasn't any determination before that

14 that this is what was going to happen?

15 A. No.

16 Q. So how did -- how did this come about on thatPage 28


Thompson B Cade

17 specific day?

18 A. Well, there was a long iterative process

19 starting back in 2009 with Jay about how Halo could

20 assist stewardship fund in proving their processes and

21 procedures and business model. Over time we believed

22 Jay Tim to have value in being able to source mortgage

23 product, r e-O product. We believed Jay Temme to have

24 Kean relationships with investors at the time in

25 December of 2010, and Halo made the decision to� 34

1 establish its own fund to acquire the mortgages and r

2 e-O, the product. We decided to include Jay Temme in

3 assisting us in introducing potential sellers and

4 potential investors in fulfilling our business plan with

5 Equitas. In exchange for that, he received shares of

6 stock that had specific hurdles to be able to retain

7 that stock.

8 Q. What would be -- what went behind the decision

9 to include Jay Temme in that effort?

10 A. Could you know more specific?

11 Q. Sure. You said that you decided you were going

12 to trade a fund and go after money. Is that correct?


14 A. I don't.

15 Q. (BY MR. LUNN)

16 Q. Go find investors to get REO properties?

17 A.


19 A. I'm not sure what you're asking.

20 Q. (BY MR. LUNN) All right. What was the purpose

Page 29


Thompson B Cade 21 of including Jay Temme in this effort to create this

22 fund?


24 A. As I said, James Temme, we believed, had value

25 in his relationships with potential investors and� 35

1 potential sellers and we wanted those parties to be

2 introduced to us.

3 Q. (BY MR. LUNN) Okay. So what did you envision

4 Jay Temme's role being in that regard?

5 A. Introducing us to potential sellers and

6 potential investors that we could potentially buy assets

7 from and potential investors that might have an interest

8 in investing in Equitas housing fund in order to acquire

9 those assets.

10 Q. Interrogatory Number eight asks you to state

11 the date on which you first learn that had Jay Temme had

12 defrauded an investor and how you learn that had

13 information. You responded that on on or about

14 2:00 a.m. on October 10, 2011, we recovered information

15 we believed suggested Jay Temme stewardship had

16 defrauded.

17 MR. LITTLE: Do you want to show him the

18 interrogatory, David.


20 MR. LITTLE: Do you know that that's what

21 the interrogatory answer says.

22 THE WITNESS: It does not say that. First

23 of all, it says August the 10th, of 200011, which was my

24 birthday. So I remember that night vividly. Secondly,

25 that night, home solutions partners was boarding assetsPage 30



1 with us, and in that process, we identified a subset of

2 about 400 assets that they said were not going to be

3 boarded /SP-BGS to those 400 assets that they had

4 supplied were assets that I believe to be included in a

5 transaction with Equitas housing fund three months

6 before. It goes on further in my interrogatory to state

7 that subsequent to that finding, we got Jay Temme and

8 Tim SPE Chad Vose on the phone at 2:00 a.m. in the

9 morning to have a conversation about those assets where

10 Chad Vose instructed me that I was incorrect, that they

11 were working on a transaction that did not involve me

12 and to stand down. I believe that's a generalization of

13 my interrogatory. May not be word for word.

14 Q. (BY MR. LUNN) I think you said you believed

15 that the 400 assets were already on the system. Is that

16 what you said?

17 A. They were. They were in home solutions

18 partner's name in our system.

19 MR. LITTLE: David, is the interrogatory

20 answer say August or October.

21 MR. LUNN: Did I say October. It's August.

22 THE WITNESS: You did.

23 MR. LITTLE: I'm going to give you the

24 benefit of the doubt that you didn't intentionally

25 misread an interrogatory answer.� 37

1 MR. LUNN: Thank you, Mitch.

2 MR. LITTLE: Please make sure that you do

Page 31


Thompson B Cade 3 it right.

4 MR. LUNN: I think it was corrected. So

5 what's the problem.

6 MR. LITTLE: The problem is you misread a

7 document that's right in front of you without showing

8 the witness his interrogatory answer. Okay. So if you

9 want to read the witness's own statement to him, give

10 him an opportunity to read it or read it right. Do one

11 of the two.

12 MR. LUNN: It was corrected. It's not a

13 problem.

14 MR. SCHEEF: It was corrected because you

15 got caught on it.

16 MR. LITTLE: It's okay, John.

17 MR. LUNN: It wasn't an intentional effort.

18 MR. SCHEEF: You also heard the court

19 reporter read it back again.

20 MR. LUNN: I wasn't. I was actually

21 looking back the document.

22 MR. SCHEEF: And as she read October and

23 you said August, she was.

24 MR. LUNN: She was reading it back for him,

25 not for me.� 38

1 MR. LITTLE: That's all right. Go ahead

2 and ask your next question.

3 MR. LUNN: Thank you, Mitch. I will.

4 Q. (BY MR. LUNN) So after having this

5 conversation with Mr. Escrows, did you conduct any

6 further investigation as to whether or not this was an

7 appropriate transaction?Page 32


Thompson B Cade

8 A. I had nothing to further investigated.

9 Q. Why not?

10 A. Because the two counterparties that were

11 involved in the transaction both agreed that it was none

12 of my business.

13 Q. Do you have an understanding that it after you

14 formed this business relationship with Mr. Temme in

15 December of 2010, that Mr. Temme was pursuing

16 opportunities outside of Halo?

17 MR. LITTLE: Objection, form. You can

18 answer.

19 A. Read the -- restate the question again. I'm

20 sorry.


22 A. I was not aware that Mr. Temme was pursuing any

23 future opportunities outside of Halo. I was very aware

24 that he had his legacy stewardship fund business that he

25 had responsibility to wind down over a period of time.� 39

1 Q. (BY MR. LUNN) What was that period of time?

2 A. I have no idea. However long it takes to sell

3 and monetize whatever assets he owned.

4 Q. So the 400 assets that are on the system, how

5 do those -- how were those put on the system?


7 A. Which 400? Those home solutions partners.

8 Q. (BY MR. LUNN) That we were just talking about,

9 right?

10 A. Assets. In May of 2010, when the AMX system

11 was taken live, all of the assets that were put on the

Page 33


Thompson B Cade 12 system were done so by Jay Temme and by producing

13 spreadsheets that needed to be uploaded in the brand new

14 system. So that's how they got in there.

15 Q. So the assets that were on the system that Jay

16 Temme put on the system were not necessarily Halo

17 assets?


19 Q. And how did you go about segregating the two?

20 A. Halo didn't own any assets in May of 2010.

21 Q. Okay. And at what point did Halo own assets

22 that were on the system?

23 A. The first time Halo acquired any assets was in

24 December of 2010 or January of 2011, excuse me, when we

25 acquired 300 plus assets from stewardship fund through� 40

1 the Equitas housing fund. Was the first time we

2 actually owned any assets.

3 Q. So once those assets were owned by Halo related

4 entities what did you do to segregate those from assets

5 that were legacy stewardship assets?

6 A. Well, the AMX platform has a number of

7 different ways to both segregate from a tenant

8 perspective, which is multiple users. It has levels of

9 what we call imagines, that separates the individual

10 assets.

11 A. Those packages are separated by investor, which

12 is the entity that owns those packages, which is

13 separated by capital partners, which were the guys that

14 invested in the investors and then by a global tenant

15 that separates any individual user. And they all have

16 individual IDs to be able to uniquely identify eachPage 34


Thompson B Cade

17 assets.

18 Q. Did you have the ability to see all assets that

19 are on the system?

20 A. Di.

21 Q. Who else had that ability?

22 A. Jay Temme. I'm not sure who he gave

23 permissions to in his shop. So I would not be able to

24 answer that. James and Blount, our developer of vice

25 president technology. Michael Barry, the president of� 41

1 Halo asset management. And I'm quite certain a few

2 other individuals that operationally are involved in

3 Halo. I'm not a hundred percent who had every asset,

4 who didn't.

5 Q. The response to interrogatory Number eight goes

6 on to say that -- Reif, and that's Reif Chron I guess

7 you're talking with, and you contacted an investor group

8 led by Mr. Finch and Barry and alerted them to our

9 suspicion. Following our call, Mr. Fin and Barry

10 returned a call and also advised us that our suspicions

11 were incorrect and advised us to back down. Why did you

12 call finch and Barry?

13 A. We believed at the time that Leroy finch, Mr.

14 Michael Barry, had acquired a number of assets and

15 had -- fand b note holds. Those assets were acquired

16 purportedly from home solutions parks. Those were the

17 same assets that were in question the night of August

18 the 10th. On August the 22nd, we believed -- or on

19 August 22nd or abouts, we believed that we should

20 notify Mr. Finch and Mr. Barry that there could be

Page 35


Thompson B Cade 21 potential issues with that acquisition that they had

22 completed in April of 2000 -- I guess it was April 2011

23 or is it 12? I'm not sure which. I think it was --

24 Q. I think it's 11?

25 A. 11, yeah. So --� 42

1 Q. Did any of the Halo infects have a business

2 relationship with fand b holdings, net holders?

3 A. Do you mean. Do we have a business

4 relationship.

5 Q. Right. With finch and Barry?

6 A. Define business relationship.

7 Q. Did they provide funds to an entity of Halo to

8 acquire mortgages?

9 A. As part of the partnership agreement and the

10 purchase and sell agreement to acquire those notes,

11 finch and -- the finch and Barry entity was required to

12 remit ten percent of purchase price to Halo asset

13 /PH-GSment for operating costs associated with the

14 portfolio.

15 Q. After the stock exchange in December 2010, from

16 that point forward, did you -- was it your understanding

17 that Temme's stewardship efforts to raise funds were to

18 be done so directly in connection with Halo related

19 entities and Halo business?

20 A. Well, first of all, the answer is no because we

21 had nothing to do with stewardship in our efforts to

22 raise funds. It was directly with Mr. Temme and it was

23 our understanding, yes, that Mr. Temme would assist Halo

24 and its subsidiaries in the process of raising funds to

25 acquire assets.Page 36



1 Q. So you believe that it was exclusive

2 relationship that me wouldn't be doing deals on the

3 side?

4 A. I don't believe it was that conceit. We -- if

5 we had, we would have put him in a noncompete situation.

6 So it was our belief that the value of the stock that we

7 gave him would be enough inducement for him to put his

8 exclusive energies toward our venture.

9 Q. And with regard to -- so the stocks were

10 transferred to Temme related entities and he had certain

11 milestones he had to achieve. Is that correct?

12 A. Correct.

13 Q. And I believe there's a 12 month milestone and

14 three year?

15 A. There was two years.

16 Q. Two years. So was it important to ail hey to

17 Temme achieve those milestones?

18 A. It was.

19 Q. Why?

20 A. Because we believed that it was important to

21 our ongoing business plan to be able to acquire on our

22 own behalf our own assets in order to create scale and

23 Temme was what we believed at the time to be -- have

24 relationships that could help us do that.

25 Q. And what policies and procedures were put in� 44

1 place to insure that Temme was on track to meet those

2 goals?

Page 37


Thompson B Cade 3 MR. LITTLE: Objection, form.

4 A. Well, he was not an employee or an officer or

5 director of Halo. So there was no specific policy to

6 make sure he was on track to --

7 Q. (BY MR. LUNN) Well, at CEO of the company, one

8 of your primary duties, I think you said, was to make

9 sure that the shares of stock have value, increase in

10 value. Is that correct?

11 A. Correct.

12 Q. So what you want to do is protect the

13 shareholders interest in the value of Halo, is that

14 right?

15 A. Correct.

16 Q. So when you give or transfer a substantial

17 portion of the shares of stock to an individual or those

18 related entities and there's certain milestones built in

19 where you're supposed to be generating revenue for the

20 company, what did Halo do internally to ensure that

21 these milestones were being met?

22 A. Again, those mile phones, if they weren't met,

23 the stock would come back, when was the projection we

24 needed in order to ensure that either Jay Temme would

25 fulfill his obligation under the agreement, if he did� 45

1 not, then those -- that stock would come back and not be

2 dilutive to any other share holders.

3 Q. Do you believe that -- look at these different

4 Halo marketing materials and offering memorandum stated

5 that as early as 2010, that this market looked like

6 there was an 18 month window. Do you remember making

7 those representations in the materials?Page 38


Thompson B Cade

8 A. I'd have to look at it.

9 Q. So assume for the purpose of my question that's

10 true. That there's an 18 month window that we're

11 looking at to acquire these assets and giving Jay Temme

12 12 months to meet his obligations. Isn't it important

13 to make sure that he's could go that because the

14 window's so small?

15 A. Well, I believe that the -- the 12 month was

16 related to raising capital and the 24 month was to

17 /KROET profits for the company. So I think that the

18 window for the 12 month was an appropriate window for

19 him to be able to do that or not.

20 Q. Is and it if Mr. Temme was not raising the

21 capital and meeting his objections within the 12 month

22 window and clawed back those stocks, how would that

23 impact Halo in his financial position?

24 A. Restate the 83 again.

25 Q. Sure. If you're spending 12 months allowing� 46

1 Tim to raise his capital and he doesn't do it, how does

2 that impact Halo from a financial perspect itch?

3 A. Well, first of all, Jay was not exclusively the

4 only person attempting to raise capital on owe beautiful

5 of Halo as evidenced /PWAOEUF the money we raised in

6 December on our own based upon our own efforts. So you

7 know, what Jay was -- we believed to be --

8 Q. Ahead?

9 Q. I just want to object to that nonresponsive and

10 can you reread my question, please?


Page 39


Thompson B Cade 12 A. First all, let me reiterate, Jay Temme was not

13 raising capital for Halo. Jay Temme's responsibilities

14 was to introduce Halo to potential investors. So just

15 like Jay Temme, other officers of Halo were in the

16 process of meeting with other potential investors to try

17 to raise capital to acquire mortgages in roa.

18 Q. (BY MR. LUNN) I'm sorry for /SWRAOUPTing. /SW

19 who were those other officers at Halo?

20 A. Reif Chron, Tony Chron, Paul Williams.

21 Q. Anybody else?

22 A. I don't know.

23 Q. Yourself?

24 A. Obviously, yeah.

25 Q. And between December 2010 and August of 2011,� 47

1 how many investors had any of those officers you just

2 identified wrought to the table?

3 A. There was ever only one investment made into

4 the Equitas housing fund.

5 Q. Some that was in December?

6 A. Yeah, December 13-ish.

7 Q. Did Temme ever bring any investors to the table

8 that invested in Halo related /AO /HAO in Halo related

9 entities?

10 A. No.

11 Q. So nine months after the stocks were exchanged,

12 the directors of Halo were unsuccessful in getting other

13 investors to invest in the company, and you had no

14 knowledge of whether or not Temme had brought anybody to

15 the table?



Thompson B Cade

17 Q. (BY MR. LUNN) Is that right?

18 A. Well, depends success. I mean, depends on your

19 definition of success. As I stated, we did raise money

20 into the Equitas housing fund.

21 Q. Right. And that was in December?

22 A. Yeah.

23 Q. /TPWU as of August of 2011, there were no other

24 investments?

25 A. There were no other.� 48

1 Q. And Temme hadn't brought any investments to the

2 table?


4 Q. So how did that impact Halo's business plan?

5 A. It was impactful. We had to change our

6 business model to pursue -- from pursuing acquiring of

7 assets to becoming a third party fee for service. There

8 were other people who owned assets who needed what we

9 could do and our skill set, and instead of trying to

10 induce investors to invest in an 90 we owned and buy

11 assets ourselve, we shipped our model to servicing those

12 as /ETS as a third party.

13 Q. And when was that decision made?

14 A. Well twasn't a specific day, that kind of

15 decision is --

16 Q. Just a time frame?

17 A. Yeah, June of 2 /TH-PBLD 11. I remember going

18 to New York, sitting with an investor, potential

19 investor, myself and Reif, where they /KW-BSed us that

20 they would much rather own the assets themselves and let

Page 41


Thompson B Cade 21 us service them, and we took that as a sign to change

22 our model.

23 Q. Who was that investor?

24 A. It was -- it was -- well, he never invested.

25 So it's a group out of network network. I don't really� 49

1 remember his name specifically.

2 Q. All right. We've been going about an hour.

3 Let's take a quick five-minute break?

4 THE VIDEOGRAPHER: We're off the record at

5 10:32, end of Tape 1.

6 (A recess was taken.) AMX steward

7 stewardship Reif Chron Reif Chron

8 refinancing Chron Reif conReif Chron Reif

9 Chron Halo

10 THE VIDEOGRAPHER: We are back on the

11 record at 10:45, beginning of Tape 2.

12 Q. (BY MR. LUNN) Just for the record, at my

13 request, Mr. Little was kind enough to print off a copy

14 of the interrogatory responses, a clean version, so

15 that Mr. Thompson could actually correct he if I

16 unintentionally misspeak again.

17 The -- so going back to where we left off,

18 between December of 2010 and August 2011, the only

19 investors -- the only investments that were made to your

20 knowledge in Halo related /TPHA*EPBTs was the -- was the

21 400 assets in 2010?

22 A. No.

23 Q. Correct me, please.

24 A. The only investment into a Halo related entity

25 related to mortgage and REO was the 20101.2, plus orPage 42



1 minus, million approximate into Equitas housing fund.

2 There may have been other investments into a preferred

3 stock or to other securities that Halo companies Inc.

4 may have been offering, but not related to the nature of

5 the line of questioning.

6 Q. Thank you for clarifying.

7 A. Yeah.

8 Q. And I think you testified earlier that one of

9 the reasons that Halo companies knew or were attracted

10 to the /SKWR-D of bringing Temme in is because of his

11 contacts with investors. Is that correct?

12 A. That's one of the reason.

13 Q. And his success record. Is that correct?

14 A. Did you say success record?

15 Q. Yes.

16 A. Well, his track record.

17 Q. Track record?

18 A. Industry experience.

19 Q. What other factors were attractive to you as

20 far as bringing him in SFAS -- and giving him the shares

21 of stock?


23 A. Well, as I stated earlier, his ability to

24 source product from the sellers, mortgage banks and

25 investors, asset owners.� 51

1 Q. (BY MR. LUNN) Okay. And his track record,

2 prior to December 2010, what did you know about Mr.

Page 43


Thompson B Cade 3 Temme's track record?

4 A. Only really related to recommendations and

5 referrals from other people, like Mount Vernon, groups

6 like Mount Vernon, Tim /PWEBer, Rick doll son, Chad

7 /SROEFT, guy says that I had met with that were in the

8 industry as either professionals or investors themselves

9 who had stated and represented that Jay had done a good

10 job for them and had a successful business model.

11 Q. And who did you speak with at Mount Vernon?

12 A. Dave mum /ERT, Jerry Wheeler specifically {.

13 Q. And do you recall when those conversations took

14 place?

15 A. I do not.

16 Q. Was it prior to December 17, 2010?

17 A. It was.

18 Q. How do you know that?

19 A. Because as of May of 2010, when we took AMX

20 system live, we were aware of /PHOURPBT Vernon. So I

21 know I had conversations with Mount Vernon prior to that

22 date, so that's obviously prior to December of 2010. So

23 I could afirm /TEUFL answer the question.

24 Q. Okay. And did you mention a Dawson?

25 A. Rick doll son.� 52

1 Q. Doll son. Who's Rick doll son?

2 A. He is a partner at Jackson Walker.

3 Q. When did you have a conversations with Mr. Doll

4 son?

5 A. I've never spoken with Mr. Doll son.

6 Q. Oh, you didn't. I thought you said you did?

7 A. In. What I suggested was that from referralsPage 44


Thompson B Cade

8 of reputation, Rick doll son spoke to another friend of

9 mine, like Chad most, for example and had been

10 representing Jay for -- to my knowledge, for some period

11 of time and had given anecdotally given recommendations

12 to these other groups that Jay was a stand up guy.

13 Q. So you had no direct communication with Rick

14 doll son. Is that what you just testified to?

15 A. I never spoke with Rick doll son.

16 Q. Right. So you learned ever Rick doll son's

17 reputation through Chad most?

18 A. And other party, like Tim /PWEBer, for example.

19 Q. When did you meet Tim Weber?

20 A. /PHAEFT the 10th, 2011.

21 Q. So that was after the stock exchange in

22 December of 2010, correct?


24 Q. So nothing Tim Weber said or didn't say could

25 have had an impact on Halo's decision to do the stock� 53

1 exchange. You didn't know him?

2 A. Yeah. That's correct.

3 Q. All right. Chad escrows, when did you have

4 conversations with Chad escrows?

5 A. Starting back in 2000 -- early 2010.

6 Q. How do you know Chad escrows?

7 A. Chad was introduced to me by Jay Temme. Jay

8 was managing assets on behalf of Chad.

9 Q. Okay. What else did you do to -- did you do

10 anything else to confirm that these representations

11 approximate Mr. Temme's track record were accurate?

Page 45


Thompson B Cade 12 A. Repeat the question.

13 Q. Sure. Did you -- other than speaking to these

14 individuals you identified, did you take any other steps

15 to ensure that Mr. Temme's track record was accurate?

16 A. Well, I spent a number of meetings reviewing

17 and going over to the shop there in Plano looking at

18 their infrastructure. I spent a large amount of time

19 due diligencing the business plan and business model and

20 the data when we were building the AMX platform. So I

21 had in depth information related to the results of the

22 portfolios that had been on the system previously.

23 Q. Okay.

24 A. So I had direct insight into the performance of

25 the specific assets.� 54

1 Q. And after these conversations, during this

2 research you did intern /TERPBLly, what did you

3 determine about Mr. Temme's track record?

4 A. From all appearances, it seemed that although

5 not 100 percent of the time that the business model he

6 was running and the results he was achieving were

7 successful.

8 Q. Pretty consistent?

9 A. I don't -- I don't have all the numbers in

10 front of me to -- define consistent. I mean, these were

11 multiple entities, multiple assets. Not all assets had

12 the same outcome, so I don't --

13 Q. But you would agree that overall, has track

14 record showed a pattern of success on a system basis?

15 A. I would suggest that in December of 2010, we

16 believe that Jay Temme's track record and his monetizingPage 46


Thompson B Cade

17 /RA*SZ /ETS was a successful track record, yes.

18 Q. And you ex/PERBGTed him to bring that to the

19 table and that's why you did the stock exchange?

20 A. No. The reason we did the stock exchange

21 specifically was for him to introduce us to invest /OFRs

22 in the Equitas housing fund and to source product for us

23 and able to deploy that capital to acquire assets. The

24 intellectual property and the track record was

25 somewhatir relevant because each portfolio stands on its� 55

1 own two legs. /AOEFPL portfolio of assets that are

2 required are different. They have a different waterfall

3 disposition strategy. So depend ing onwhat type was of

4 assets were acquired would potentially demand a

5 different, you know, plan. So his track record and the

6 types of assets he bought prior to December 2010 may or

7 may not have been relevant going forward. We believe we

8 had the skill set at Halo to be able to work those out

9 independently.

10 Q. Well, what about his track record as far as

11 identifying investors?

12 A. Seemed -- seemed good. He had represented --

13 we even met with a number of people who had invested

14 with Jay and stewardship. They all provided us, you

15 know, what seemed to be glowing reviews.

16 Q. And it's your understanding that after

17 December 2010, that the fund-raising activities of Jay

18 Temme would be in connection with his relationship with

19 Halo?

20 A. That's our understanding.

Page 47


Thompson B Cade 21 Q. And so starting in December 2010, can you list

22 for me the potential investors that Mr. Temme introduced

23 to you approximate in Halo?

24 A. He introduced John pain. He introduced Stewart

25 cart /TPHER {. He introduced Tim Weber. He introduced� 56

1 Bruce burg. He introduced Vincent wood. He introduced

2 Laura finch and Michael Barry. I may miss one. So give

3 me a second here.

4 Vincent wood had a partner. For right now,

5 I can't remember his specific name, but he had a

6 partner.

7 Q. Okay?

8 A. That I introduced. He introduced me to Linda

9 Hayes. I believe that's it.

10 Q. Okay. And to your knowledge -- this is going

11 /AO straight to the time frame between December 2010 and

12 August 2011. Did any of these individuals or entities

13 provide funds to Jay Temme in connection with the

14 acquisition of REO properties?

15 A. Well, let me -- finch and Barry, their group,

16 as I stated earlier, made an investment in program of

17 2011 into an entity called fand b note holdings to

18 acquire a list of nonperforming loans, not REO

19 specifically {. So I assume that was to a stewardship

20 entity.

21 Q. Okay?

22 A. The plan was to then contribute those assets

23 into a Halo affiliated entity called Equitas housing

24 fund free.

25 Q. Okay. Other than that, what about these otherPage 48



1 investors?


3 A. Specifically what? Ask me question

4 specifically what did those investors do.

5 Q. (BY MR. LUNN) Let me just strike that?

6 A. Okay.

7 Q. And ask a different question?

8 A. Okay.

9 Q. After you had meetings with John pain, what did

10 you do, if anything, to follow up with Mr. Pain to see

11 if he was interested in making the investments?

12 A. I sent him a couple emails. I believe maybe

13 one email. I believe I sent him a perspective -- or

14 a -- in the a perspective. A pro forma of historical

15 data on performance portfolios, example portfolios.

16 Only met with him one time.

17 Q. Do you recall the time frame of that, sir?

18 A. Honestly, I don't specifically remember. It's

19 got to be sometime in early -- or -- yeah. It would be

20 early 2011 maybe. I'm not sure.

21 Q. That's fair.

22 A. I only had one meeting with him. I don't

23 remember.

24 Q. And what about Mr. Cart /TPHER. What do you

25 recall about meeting with Mr. Cart /TPHER?� 58

1 A. Met with Mr. Cart /TPHER on March the 10th,

2 2011 at his office at steel path.

Page 49


Thompson B Cade 3 Q. Who was present at that meeting?

4 A. Tim Weber, Bruce /PWERGS, Jay Temme, myself,

5 Stewart cart /TPHER, obviously.

6 Q. Anybody else that you recall?

7 A. No.

8 Q. And March 10, 2011, do you recall how long that

9 meeting lasted, approximately?

10 A. I don't. An hour, hour and a /HOFL.

11 Q. And what was discussed during that meeting?

12 A. We discussed want business plan, introduction,

13 the high level business plan of how to acquire the

14 assets /WHARBGS key do with the assets, how Halo had had

15 a track record in refinancing and improving the credit

16 of the performing assets once they were created and we

17 briefly discussed an investment in Equitas fund.

18 Q. What did you discuss about that investment?

19 A. We discuss that had we were raising fund to

20 acquire assets and we would be interested in having them

21 take a look at it.

22 Q. And did you provide them any materials related

23 to that fund?

24 A. We did not, other than what may have been left

25 /STPHR-RBGS I don't recall what materials were delivered� 59

1 in the meeting. But not subsequent to the meeting.

2 Q. In preparation of the meeting, did you gather

3 materials to take with you?

4 A. In, not that I remember.

5 Q. Do you know if Mr. Temme had any materials with

6 him?

7 A. Not that I remember.Page 50


Thompson B Cade

8 Q. So what was the -- how did that meeting

9 conclude?

10 A. How did it conclude?

11 Q. Yes.

12 A. Tim Weber said he would follow up with Jay, and

13 let him know what their interest level was. Amongst

14 proper citations and --

15 Q. Right. Do you know if Tim Weber ever followed

16 up with Mr. Temme?

17 A. I do remember an email from Tim to Jay that Jay

18 forwarded to me suggesting that -- that they wanted to

19 alter the economic model around the investment that Halo

20 was representing or proposing and to see if that

21 economic model would work for us. So I assume by that,

22 he was in communications with Jay.

23 Q. Okay. And what was your -- Halo's position in

24 that regard?

25 A. You know, Halo had a fund. We had to raise� 60

1 money in the fund. We were trying to close the fund,

2 Equitas housing fund.

3 We went to meet with cart /TPHER and burg

4 and Weber to get them to invest in that fund.

5 My recollection is -- is that they did not

6 want to invest in that fund because of the structure.

7 It was a debt fund, 25 percent return debt fund and they

8 wanted a different structure. They didn't want the name

9 Equitas. They wanted to keep it separate.

10 Tim Weber wanted to have a component that

11 went back to charity and generally, we were inclined to

Page 51


Thompson B Cade 12 move forward with the structure that Tim propossessed.

13 We weren't adverse to it. It was different than what

14 /WHAOE had with Equitas and was outside of that

15 investment, but we were inclined to move guard with it.

16 It put us in a position to acquire assets.

17 Q. Okay /WHAFPLT did you do to further that

18 investment?

19 A. We prepared -- Halo prepared a fund proposal,

20 prepared a series of documents in order to effectuate an

21 investment into an entity called stewardship if I /HRAPB

22 /THROPy fund. Supplied those documents for Jay's review

23 and had hoped to get back in front of the potential

24 investor its to consummate a deal.

25 Q. Would you have expected Mr. Tim to pass those� 61

1 documents along to Mr. Weber?

2 A. No.

3 Q. Why not?

4 A. Because I had communicated via the the email

5 with Mr. Web everybody and Mr. Card /TPHER, giving them

6 by information and wanted them to come to our shop to

7 due diligence our platform, basically, and they weren't

8 in final form. They weren't in final form when I sent

9 them to Jay for his review, and Jay never responded to

10 accept the documents.

11 Q. Okay. So do you say that you requested

12 that Mr. Cart /TPHER, berg and Weber come to your shop?

13 A. I essential remember in a meeting with Mr. Cart

14 /TPHER at his shop inviting them to come do you know to

15 our shop. I would find it -- know, I would just find it

16 a hard to believe that they would make an investmentPage 52


Thompson B Cade

17 without coming and taking a look at our operations,

18 sure.

19 Q. And -- but you knew that -- as you stated at

20 the end of the meeting, that Mr. Weber was due back

21 with Mr. Tim we the investment, correct?

22 A. Well, not necessarily. Next steps. It was a

23 high level meeting. It was very brief. There was not

24 any specifics /STKAOUSed.

25 Q. But you understood that Mr.en wither was to get� 62

1 back with Mr. Temme?

2 A. Well, Mr.

3 Q. That Mr. Weber was going to contact Mr. Timer

4 or /OEU were going to look at moving forward?

5 A. Well Weber said that he would get back with Mr.

6 Temme following the meeting with next steps.

7 Q. And did you say please call me as well?

8 A. Sure.

9 Q. You did?

10 A. Ien followed up with /ARPB email to Mr. Cart

11 /TPHER saying, call me with any questions or thoughts

12 you want to have. Absolutely.

13 Q. Can you follow up with any emails to Mr.en

14 wither?

15 A. I don't -- I don't believe so, other than the

16 email that I referred to where Mr. Weber suggested he

17 wanted to alter the economics of the Equitas deal.

18 Q. And then Halo was on board with that?


20 Q. (BY MR. LUNN) In concept?

Page 53


Thompson B Cade 21 A.


23 A. The concept of.

24 Q. (BY MR. LUNN) Okay. Let me ask the question

25 again?� 63

1 A. Yeah.

2 Q. Halo was on board with Mr. /PWEBer's concept of

3 about how to alter the deal to have a charitable

4 component, the things you discussed?

5 A. Halo was favorably inclined to accept an

6 economic waterfall that included a ten percent

7 contribution to charity, sure.

8 Q. And then Halo undertook the efforts to prepare

9 those documents?

10 A. Correct.

11 Q. And then why is it, then, sir, you wouldn't

12 give those documents to Mr. Weber?

13 A. I didn't have /AO /AOEUFPLT Objection, form.

14 A. I didn't have a direct relationship with Mr.

15 Weber.

16 Q. But you met with Mr. Weber?

17 A. Met with Mr. Weber.

18 Q. And you had a direct relationship with Mr. Cart

19 /TPHER. You sent him an email, right?

20 A. He's the only business card I had.

21 Q. Why didn't you ask Mr. Temme, I've got those

22 documents, I want to run them by Tim to see whether or

23 not this is what he's thinking about?

24 A. Request ask the question again.

25 Q. Yeah. Halo prepared these document necessaryPage 54



1 accordance with Mr. Weber's idea about how this deal

2 should be structured. Why didn't you ask in Tim itty

3 saying let's get these to Tim web /SPER his group to see

4 whether or not this is what they're E looking at?

5 Q. When you give the documents to Mr. Temme, why

6 wouldn't you have ex/PERBGTSed him to pass those to

7 206 Mr. Weber?

8 A. I certainly would have expected that.

9 Q. And do you recall -- what discussions do you

10 recall or strike that.

11 Do you recall -- strike as awell.

12 Did you have any follow up communications

13 with Mr. Cart /TPHER after that March meeting?

14 A. Just the one email.

15 Q. What about Mr. Berg?

16 A. No.

17 Q. Okay. After the documents were prepared by

18 Halo and even Mr. Temme, which set forth the investment

19 the way Mr. Weber envisioned it, did you have any follow

20 /UPL communications with Mr. Temme are these guy s

21 onboard, are they making an investment?

22 A. Sure.

23 Q. When did those occur?

24 A. Somewhere between March the 10th and June.

25 Q. Of 2011?� 65

1 A. Sure.

2 Q. And what were the natures of those discussions?

Page 55


Thompson B Cade 3 A. Where are they at, is anybody interested,

4 what's going on.

5 Q. And what was his response?

6 A. They're /AO /PHO*FT of the time Jay would

7 suggest that people were still considering it, but

8 they're interested and were looking at the opportunity.

9 Q. Did -- during the meeting you had in March at

10 still path, did any of the individuals there, Weber,

11 berg, or cart /TPHER, suggest that they have other

12 potential investors that might be interested in this

13 product?

14 A. /KWROERPLT them suggesting that.

15 Q. Did you ask them that?

16 A. I don't think so.

17 Q. Would that be something that you would have

18 been interested to know?

19 A. I was not in a position of authority in that

20 meeting. I was invited into the meeting. So I sat

21 quietly for most of the meeting.

22 Q. What do you mean as a position of authority?

23 A. Well, Tim was rung the meeting, so I was more

24 in an answering questions about the business plan and

25 our expertise at Halo. So it wasn't an appropriate� 66

1 setting to drive into -- driving for referrals more

2 other invest /OFRs at the time T. Was a very

3 introductory meeting.

4 Q. But you and Mr. Temme were there together to

5 pitch this product?

6 A. Mr. Temme and I were there to explain how the

7 business plan worked, how the investment worked, trackPage 56


Thompson B Cade

8 record, what we in/TEPLDed to do, what Halo intended to

9 do with the -- the capital as acquiring the assets. So

10 I don't know if that answered your question or not.

11 Q. You wanted -- your hope was that as a result of

12 that meeting, that Mr. Cart /TPHER and Mr. /PERG and Mr.

13 Weber would make these investments?

14 A. Sure. That was our hope, yeah.

15 Q. I'm looking at -- I want to go to these

16 interrogatories, which now you have a copy. And

17 interrogatory Number seven asked you whether you're

18 familiar with the flatten ten Lords, and you responded

19 that you met John pain by way of introduction to Jay

20 Temme on August 31, 2010. Is that correct?

21 A. That's -- yes, sir.

22 Q. And is that the one conversation you recall

23 with -- regular with Mr. Pain?

24 A. I think that's right.

25 Q. Did you ever try to reach out to Mr. Pain again� 67

1 about potential investments?

2 A. I don't recall ever reaching out to Mr. Pain

3 again. I believe in the meeting with Mr. Pain, my -- if

4 my recollection serves me right, he wasn't interested in

5 the investment with us.

6 Q. Do you know the ten Lords was successful in

7 garnishing the Comerica account, stewardship Comerica

8 account?

9 A. Only by way of reading the petition.

10 Q. So that's the first time you learned of that?

11 A. That's right. Now, I don't know that I'm aware

Page 57


Thompson B Cade 12 of -- of a garnishment per se. I know they sued him.

13 Q. Do you -- have you been reviewing the

14 receivership report that is come out?

15 A. Every now and then.

16 Q. Do you know there's a portal on the website you

17 can go in and see?

18 A. I'm aware.

19 Q. The activity that's going on in the

20 receivership action?


22 Q. And how close did you monitor the status want

23 ares and things of that nature?

24 A. Not closely.

25 Q. All right. I want to look at interrogatory� 68

1 Number nine and your response there, to. It states

2 about stating with specificity the due diligence Halo

3 companies Inc. conducted /TKPWHREUP Tim SPE you went on

4 to say that Lee Shaw referred you to Jay Temme and

5 that's consistent with your prior testimony, correct?

6 A. That is correct. Well, Lee Shaw referred Scott

7 Mcgain to Jay, and then I was subsequently introduced,

8 yes.

9 Q. Okay.

10 A. And I believe actually the /SPWRAOUBGZ also

11 went through Jay's partner, jess /HARBGer at the time.

12 Q. /HOBGer?

13 A. /HARBGer.

14 Q. Okay.

15 A. But I'm not sure. I was not involved in those

16 meets. I'm not a hundred percent sure.Page 58


Thompson B Cade

17 Q. I think you said that those initial meetings

18 occurred in 2009?

19 A. I think that's right, end of 2009, yeah.

20 Q. And then you go on to say at the bottom of Page

21 five of your responses, prior to the transfers of stock,

22 we spoke to Jerry wheel /SPER David -- or met at Mount

23 Vernon sometime in June of 20, 0010, and they were happy

24 clients. Correct?

25 A. Yeah.� 69

1 Q. And you go on to say, we met with Chad escrows.

2 And was that prior to the stock exchange in 2010?

3 A. It was.

4 Q. You talk about mark Smith, Rick doll son and

5 Jackson /WAUPBLGer. Did you speak with any of those

6 individuals?

7 A. No, sir.

8 Q. So that's just second hand knowledge that you

9 learned?


11 Q. And Tim Weber, we talk body that, and you

12 didn't speak to Tim Weber until manner 2011. So that

13 was after the stock transfer, correct?


15 Q. And what about Scott Miller. When did you meet

16 Scott Mueller?

17 A. I never met with Scott mute /STKPWHR*EFRL how

18 did you know that Scott Mueller was a happy client.

19 A. I believe I -- I believe in speak with Doug for

20 a -- and I may have been in the office one day when

Page 59


Thompson B Cade 21 Scott was necessary office asking who he was and got

22 anecdotally that exGoldman Sachs guy who have been

23 investing with Jay. I don't remember it being anything

24 meaningful other than that.

25 Q. Do you remember the tame frame of that, sir?� 70

1 A. I don't. I don't remember.

2 Q. Do you think it was prior to the stock

3 transfer?

4 A. I think it was. Yeah, I think it was.

5 Q. Okay. And, so, your answer to interrogatory

6 Number nine states that that's all the due diligence

7 Halo companies did. Is that correct?

8 A. Well, if I'm not mistaken, that's all it says,

9 that's correct.

10 Q. And you verify -- cent a verification for these

11 answers, correct?

12 A. I did.

13 Q. And, so, you read these /SPROGs, correct?

14 A. Uh-huh. As I stated early /TPHERL my testimony

15 here today that, we spent a significant amount of time

16 understanding -- when the business model when we were

17 being the business platform and looking at the data

18 behind the scenes. Whether that's characterized as due

19 diligence or not -- I think it's a form of it. But we

20 spent a lot of time you know, look at the actual an

21 littics behind the as /STKPWHRETS what it do to conduct

22 any type of research on Jay Temme himself.

23 A. Again, spoke with these party that is I

24 mentioned here, tried to Google him, run any background

25 information that was available on the web, didn't reallyPage 60



1 find anything other than just a public website. There

2 wasn't a lot of information available that you could get

3 your hands on from a formal perspective. So outside

4 meeting these guys, spending time with Jay and doing

5 what limited research was available on the web, that was

6 the depth of it.

7 Q. And, so, why did you include that information

8 in your responses to interrogatory as part of the due

9 diligence?

10 A. Well, some of it I didn't personally do. This

11 was my personal testimony. Some of that was done by

12 other party necessary our organization.

13 Q. But you were the one that went to Temme's shop?

14 A. Not all the time.

15 Q. Okay. Who else was involved in that?

16 A. Michael Barry would have been involved in that.

17 Jay man /PWHROUPBT would have spent some time looking at

18 the process maps, Scott McWayne, as mentioned in the

19 interrogatory, had spent significant time with Jay.

20 Q. Are these Halo employees?

21 A. They -- yes. They were at the time. Scott

22 McWayne if is no longer an employee of Halo's.

23 Q. Do you know where he's at?

24 A. In, I don't. I don't know where he's at.

25 Q. And /PWHROUPBT is he still with Halo?� 72

1 A. His name is Jamesen. He is still with Halo on.

2 Q. How about Mr. Barry?

Page 61


Thompson B Cade 3 A. That's not -- that's Michael Barry, different

4 than the --

5 Q. Barry and finch?

6 Q. But you also testify that you did research on

7 the internet to try to look into Mr. Temme's background?

8 A. Yeah.

9 Q. And why did you include that in /SWROUR finance

10 to interrogatory?

11 A. Because it /-TDZ some of that was done by other

12 parties like Tony Chron.

13 Q. So when you said you did it, you're talking

14 globally?

15 A. Yeah. Globally. The same as the we. We is n

16 this response.

17 Q. All right. Interrogatory Number ten asked you

18 to state the provisions of the Texas security act. You

19 contend that Tim Weber violated, as the subject

20 investments and the factual basis for that contention.

21 Is that correct did I read that right?

22 A. You did.

23 Q. Yes?

24 A. I didn't -- I state's exhibit hear the

25 question. I'm sorry.� 73

1 Q. I said did I read that correctly?

2 A. Read it again.

3 Q. Yeah. Well, read it to yourself, Number ten.

4 A. Okay.

5 Q. Okay. I just want to focus on a few sections

6 of your response to interrogatory Number ten?

7 A. Sure.Page 62


Thompson B Cade

8 Q. And your first sentence is, Tim Weber sold

9 unregistered nonexempt securities in violation of

10 Section 12ful the Texas security act. Do you believe

11 that to be true?

12 A. I do.

13 Q. Who did he sell them to?

14 A. The investors, most predominantly, the

15 plaintiffs.

16 Q. Which ones?

17 A. Berg, cart /TPHER, Doyle, lay, hay dock, dice,

18 wild cat, skeleton, lake. Sorry.

19 Q. Okay. And what evidence do you have that Tim

20 Weber sold unregistered securities to those individuals

21 and entities?

22 A. Only his affidavit, his fact that he -- as

23 evidence as part of the production associated with this

24 petition, that evidently monies were wired into an

25 account that Tim Weber was responsible for introducing� 74

1 those parties and selling security to those guys and

2 inducing them to make the investment.

3 Q. How did -- did Tim Weber receive any monies in

4 connection with the sale of securities?

5 A. I have no idea. I do know that Tim Weber

6 attempted to include Halo in a larger deal. He drew it

7 on a back of a napkin, where he would have received

8 compensation in that deal. I don't know if that deal

9 ever consummated because we decided not to participate

10 in it. So whether he did or didn't, I have no /SKWR-D.

11 Q. So you have no evidence that Mr. Weber received

Page 63


Thompson B Cade 12 any compensation for allegedly selling securities?

13 A. I have -- I don't know if he received

14 compensation, but compensation takes a lot of different

15 forms.

16 Q. Did you review the discovery responses of all

17 the other plaintiff necessary this action?

18 A. I did not.

19 Q. And you didn't review Mr. Hay dock's testimony?

20 A. I did not.

21 Q. Or Tony Weber's testimony?

22 A. I did not.

23 Q. And so you don't know if they testified in

24 their discovery sentences to state that they bought

25 their securities through Jay Temme and stewardship� 75

1 entity?

2 A. Do not.

3 Q. So what evidence do you have, then, sir

4 that, Mr. Weber sold these unregistered securities as

5 you? Is it speculation?

6 A. A couple things. Number one, Tim Weber in his

7 own /A*F /TKPWAEUFT suggested that he represented the

8 securities to his wife. She relied upon him to make the

9 investment. It also states in his affidavit that he

10 introduced it to other parties and he recommended the

11 investment.

12 I also know, sitting in a meeting with cart

13 /TPHER that, Mr. Weber represented that Goldman had

14 previously approved the stewardship investment in front

15 of Mr. Berg and that it was acceptable for him to

16 represent and that they didn't need to run it back upPage 64


Thompson B Cade

17 the flagpole. Soed /EFZ, both personally and through

18 the affidavit that Mr. Weber represented the investment

19 to parties who ultimately, by way of production and

20 petition, invested in an entity, suggests that he was

21 par dis/PA Tori in the sell of securities.

22 Q. Was Mr. Weber, did he have any interest in

23 those entities?


25 A. Did Mr. Weber have an interest in which entity.� 76

1 Q. (BY MR. LUNN) You just said there were secure

2 /*EUFTs /STOELD in connection with certain infects

3 D. Mr. Weber ever have any /SW in those entities?

4 A. I don't know if Mr. Weber had interest in the

5 entities that his investors invested in. No, I don't

6 know that.

7 Q. Do you believe there's a difference between

8 introducing somebody to an investment and selling an

9 investment?


11 A. Well, I don't -- I don't know the subtle

12 /STKREUFRPBGZ of the definition of introducing. Define

13 that.

14 Q. (BY MR. LUNN) You could be information as

15 opposed to out there abilitively quoting the /PRURBT?

16 A. Well, I do know in the State of Texas that

17 there is a finder that you can introduce to

18 counterparties as it pertains to an investment.

19 Q. And a finder under that scenario gets a fee,

20 correct?

Page 65


Thompson B Cade 21 A. May or may not.

22 Q. They get compensated, don't they?

23 A. May or may not.

24 Q. And, so, if he's a finder /STK-RBGS that mean

25 he's selling stocks?� 77

1 A. Well, depending on nature of his actions, he

2 could be defineded as a find /SPER he may be defined as

3 a seller. I'm not a securities attorney.

4 Q. Okay. You go on to say that Mr. /WEUBer sold

5 securities by way of misrepresentation of material

6 facts. What misrepresentation, were those, sir?

7 A. Well, I do -- am aware that monies went into

8 a -- an entity that was not -- into a bank account that

9 was not controlled or owned by Halo.

10 Q. That was stewardship Comerica account?

11 A. I don't know which account it went into T. Just

12 didn't go into a Halo account. So any securities that

13 allegedly sold in connection with this petition, someone

14 represented to Tim's wife where to send the money. That

15 was contrary to the series of document that is we

16 prepared. So it was --

17 Q. Has Halo ever directed funds to be wired to a

18 stewardship account?

19 A. Define -- be more specific.

20 Q. Yeah. Has the Halo company or you directed an

21 investor to wire funds to a stewardship account?

22 A. No.

23 Q. Going back to this 12 month claw back period of

24 time and the total lack of results, monetary results, at

25 some point, aren't you asking Mr. Temme who are youPage 66



1 meeting with, we need to see communications with those

2 people to make sure you're meeting these milestones?


4 A. Understand you read that question back to me.


6 A. No.

7 Q. (BY MR. LUNN) Did you expect, when the deal

8 was made in December 2010, that Mr. Temme's stewardship

9 would have complete transparency with Halo?

10 A. Read that back one more time because I.


12 THE WITNESS: First of all, the deal we

13 made in 2010 was with Mr. Temme, Mr. For aand Mr. Reif

14 Chron through Equitas housing fund.

15 A. There was no deal with stewardship. The deal

16 we cute with Mr. Temme for a variety of different

17 reasons was for him to introduce us to investors that

18 would invest in the ex/TAS housing fund and to help

19 create profits in the Equitas housing fund by

20 introducing us to sellers to take those founds to buy

21 assets for and work out under our model.

22 Q. (BY MR. LUNN) Right. So you guys are working

23 jointly in order to make this occur?


25 A. Jay's responsibilities, Mr. Temme's� 79

1 responsibilities were to introduce us to the

2 counterparties that would be potentially investing in

Page 67


Thompson B Cade 3 the deal. That meets your definition of jointly, I'll

4 /HR-PT you decide.

5 Q. (BY MR. LUNN) Well, you were also trying to

6 find individuals to invest in the deal, correct?

7 A. Separate and apart from Jay.

8 Q. But the whole purpose was to fill the Halo

9 business mod spell get investors into this Equitas fund?

10 A. The purpose of talking to investors was, yes,

11 to successfully get /TPEPL to invest in the fund, to be

12 able to acquire assets. That is correct.

13 Q. Did Halo exercise any oversight on over Temme's

14 efforts to bring investors to the table?

15 A. Certainly from a perspective of requesting to

16 be involved in meet little with potential investors,

17 requesting to meet those potential investors, you had

18 specific documents that we controlled and originated

19 that provided a level of oversight and /PROET oath /KOL

20 to avoid situations like this.

21 Jay had an ongoing business at stewardship

22 separate and apart from Halo and he was not an employee

23 or agent of Halo. So we could not micromanage him. It

24 was a relationship whereby he was being compensated to

25 deliver certain things and if he didn't, he wouldn't get� 80

1 his compensation. Simple as that.

2 Q. So in an effort to help increase the stock

3 value of Halo companies, what Halo determined to do is

4 give one of the shares of stock to Tim and hole that he

5 produces something in 12 months and not have any

6 oversight about how he's achieving those goals?



Thompson B Cade

8 A. Again, you've asked the question a number of

9 times. I'll try to say it again. Stock had two claw

10 back provisions. One was more monies raised, very easy

11 to identify whether they occurred or didn't. Two was

12 whether we created net profits out of Equitas housing

13 fund. Easy to identify, it either was or wasn't.

14 To the extent Jay Temme, Doug for aand Reif

15 Chron were unable to produce those two elements, we

16 would get the stock back into the treasurer of Halo

17 companies Inc.. the nature of the relationship between

18 Halo and Jay Temme was one where we believed he was a

19 professional. We believed, based upon representations

20 and meetings with other people that he had a long track

21 record in this business. We believed that he could

22 introduce us to investors through our efforts gain their

23 investment into our Equitas fund to be able to secure

24 assets to move forward with. To the extent he didn't,

25 it would be very obvious in a very short period of time.� 81

1 June, from December to June, six months, not 12, not 24.

2 We made the decision that we were unsuccessful through

3 our efforts, both individually at Halo and through Jay

4 Temme's referrals, that we weren't going to be able to

5 raise sufficient /PUPBDZ to pursue the business plan and

6 alter the business plan.

7 Q. (BY MR. LUNN) Yeah. But wasn't Jay Temme,

8 along with you and other members of Halo, held out as

9 sponsors and managers of those funds?


11 A. Well, the fund proposals.

Page 69


Thompson B Cade 12 Q. (BY MR. LUNN) Right?

13 A. We would have prepared, would have listed

14 individuals who would be involved with effectuation of

15 the business plan.

16 Q. A number of different roles and perspent

17 itches. They may have been lumped into a category

18 called managers, but that takes a number of different

19 definitions. It can be --

20 Q. Right. But that's what you're representing to

21 potential /SR*EUPB vestors that's correct these are

22 managers from these funds, correct?


24 A. Well, first of all, I never say in any

25 recommendation or fund proposal, use the word promoter,� 82

1 so I don't know what the definition of that. But

2 certainly as managers and there was a number of

3 different people sJay Temme, Doug furrow, dug Henry. In

4 some /SPHAPBS, Ron laurel, myself, Reif Chron. Were all

5 responsible in some element depend ing onour competency

6 in our roles, to produce value and operational /*EFRT

7 into the Equitas housing fund or any other found this

8 /HAEUPL was involved with.

9 Q. (BY MR. LUNN) Correct. But as a corrective

10 group, you're being held out as that group who's going

11 to make that fund suggestful, correct?


13 A. Depending on -- I don't think that the nature

14 of the word -- the term manager in a fund proposal is --

15 fits that definition, but --

16 Q. (BY MR. LUNN) Why wouldn't it?Page 70


Thompson B Cade

17 A. Well, there's other people involved. I mean,

18 have you servicers, subservicers, employ /AOES, that are

19 all responsible for the success or nailure of a specific

20 portfolio and its monetization. So the business plan is

21 not -- was not one predicated on 6 or 7 individuals. It

22 was predicated on a large /R*EUPB /TPRA structure with

23 dozens of /AOFPLys responsible for doing their part to

24 make the fund work, which was clearly defined in the

25 rest of the proposal about how our business model works� 83

1 and what the role of each individual participant,

2 whether it be employees or vendors do in this business

3 plan. So I don't know if that answers your question.

4 Q. Well, you certainly as testifying /PHR-RG --

5 what's the purpose of identifying managers then?

6 A. Those responsible for overseeing the process.

7 Q. Right. So you're holding out to potential

8 invest /O*Rs that this group of managers work,

9 /KHRERBTively is going to ensure that this fund is

10 successful?


12 A. Well, each and every -- we Kent ensure that any

13 fund is success employ. So I mean, I think that that's

14 the first and more /TPOEFT. In nigh experience, there

15 are portfolios that are acquired in funds, that lose

16 money, make money, break even. It's an investment.

17 Q. (BY MR. LUNN) /HR-TS me rephrase my question,

18 then?

19 A. Yeah.

20 Q. When you're making these representations in

Page 71


Thompson B Cade 21 these documents that are going to potential /S*EUPB

22 vestors that this is the management /THAEPL that's work

23 being collectively, that these are the team of people

24 who we believe can return value on your investment?


1 A. Those were the -- I'll state it again. The

2 managers that were defined in any of the fund proposal

3 we put out would be the managers responsible for

4 overseeing the day-to-day operations, operative /TPHERPL

5 in execution of the business plan.

6 Q. (BY MR. LUNN) All right. Going back to the

7 interrogatory responses in paragraph -- or response in

8 interrogatory Number ten, Paragraph one, you state that

9 Jay Temme was offering a /TPOPBZy scheme which, in fact,

10 Tim Weber could have discovered by the exercise of

11 reasonable carry. How do you say that?

12 A. Tim /WERer was, from my perspective, a close

13 friend of Jay. That's what Tim represented to me.

14 That's what Jay represented to me. Jay represented to

15 me. The Tim a/TPAEURPL that had he had made a number of

16 different investments with Jay that were successful

17 investments and was -- had a longer history with Jay

18 than -- than certainly I did and the Ponzi scheme that

19 was identified subsequent to the SEC stepping in, Tim

20 had he in his -- all his investments and time with Jay

21 Temme should have and could have, you know, identified

22 those as a professional investment adviser.

23 Q. Why shouldn't you have done that?

24 A. We weren't looking at it as an investment in

25 stewardship fund. Our role and our play in thePage 72



1 involvement with stewardship fund was to provide

2 software, vendor management, refinance cam page pains,

3 subservicing, more operational deals. We never looked

4 at the investment side of the -- of stewardship fund.

5 So I would have had no reason to go back and

6 reunderwrite any legacy stewardship fund investments.

7 Q. What investments, prior to December 2010 were

8 legacy stewardship funds and Mr. Weber have?

9 A. I'm not aware. I'm not /STHUR.

10 Q. Okay?

11 A. Only anecdotally through what Jay and Tim both

12 affirm that they have had previous investments, that

13 they were successful and Tim was a massive proponent for

14 Jay as evidenced in the meeting when he explained to

15 cart /TPHER and berg how whether he had done with Jay in

16 the past.

17 Q. Okay. Again, that was after the stock

18 exchange. And you were good friends with Jay Temme,

19 whereabouts you?


21 A. I'm not -- your definition of good friends and

22 mine may be different, so --

23 Q. (BY MR. LUNN) You thought he was -- treated

24 him like a brother?


1 A. Well, you don't know how I treat my brother.

2 Q. (BY MR. LUNN) Well, certainly you felt you had

Page 73


Thompson B Cade 3 a very close relationship with him?

4 A. I mean nall seriousness, /KWRAS, I thought Jay

5 was a good man. I thought he was a nice guy. I thought

6 he had a good business plan, yeah.

7 Q. And you worked with him /KHRAOESly from 2009

8 until 2011?

9 A. N, no, that's not accurate. We didn't begin to

10 work close CLO with each other until middle of 2000

11 /TERPB. I didn't know him in 2009, other than maybe the

12 last month I sent him an email. So I mean, I would

13 suggest to you that we were not unlike many of my other

14 relationshipings I have with my clients.

15 Q. Pardon me?

16 A. I said I would suggest to you that I didn't

17 treat him any different than unlike any of my other

18 clients. I have -- I'm a personable guy. I'm easy to

19 get along with. Generally find good if people and I

20 have good relationships with people. So I don't

21 necessarily know what you're asking for.

22 Q. Lyou said that Tim Weber was -- believe that

23 Timer was a good friend of Jay Temme?

24 A. That was out of Tim Weber's mouth. I'm /TPHOPL

25 says they believe anything. Tim Weber told me in front� 87

1 of cart /TPHER, that that he /-BLTed in Jay. Those were

2 out of his mouth. I'm not opining whether -- what was

3 and wasn't.

4 Q. When I asked you the question about that Tim

5 Weber could have discovered the exercise that this was a

6 Ponzi scream with reasonable care, you said he's just a

7 good friend. So I'm trying to find out why you thinkPage 74


Thompson B Cade

8 that's relevant?

9 MR. LITTLE: Objection, form. Misstates

10 the testimony.

11 A. What I said in this interrogatory was that he

12 didn't -- should have inquired, he failed to inquire

13 with Temme a number of different things. From my

14 perspective, someone who's invested money with an

15 individual or group, especially /WOFRPB who's licensed

16 an a registered representative as are and a

17 professional, being one previously myself, there's a

18 certain level of care and duty when you make an

19 investment or recommend an investment that you should

20 take. I think /TEUPBLG /WEUBer should have taken that.

21 That's what I state.

22 Q. (BY MR. LUNN) All right. So the March

23 meeting, you sit in there with Bruce cart /TPHER, Bruce

24 berg, Jay Tim SPE yourself and holding yourself out as

25 doing this investment together. Tim Weber says I'm� 88

1 going to get back with Jay Temme. Don't you believe you

2 could have done more to ensure that didn't occur?


4 A. I don't -- that's -- that's vague. I don't --

5 Q. (BY MR. LUNN) Down the u think that Halo could

6 have put different measure necessary place to ensure

7 that Jay Temme /KAOBLT get away with /AO /AOFRPBLGS like

8 what, Dave?

9 Q. Well, for example, having oversight about what

10 Jay /TEPLy's doing, Jay was not an employee ear agent of

11 Halo?

Page 75


Thompson B Cade 12 Q. He was your business partner, was he not?

13 MR. LITTLE: Hey, hold on, guys. David,

14 please don't talk over the witness. Let him finish his

15 question.

16 A. No.

17 Q. (BY MR. LUNN) How did you say that?

18 MR. LITTLE: Objection, form. Don't answer

19 the question. It's harassing. If you have a question.

20 MR. LUNN: That is a question.

21 MR. LITTLE: Why don't you ask it.

22 MR. LUNN: I'll follow you what. Why

23 /TKOEFRPBT you have no speak objections and then I'm

24 just ask the question. And you can object to form.

25 Q. (BY MR. LUNN) Why do you not /THABL Jay Temme� 89

1 was not your business partner?

2 A. When?

3 Q. Start nothing December of 2010.

4 A. Well, I don't consider any of the 4600

5 shareholders in our company as defined as the word that

6 normally goes with the word business /PA*RPB. So if you

7 want to define.

8 Q. Was there any type of a merger between any Halo

9 entities and stewardship entities?

10 A. No.

11 Q. Was -- so any time was the stewardshiping role

12 Halo companies?

13 A. No.

14 Q. Were stewardship employ /AOES being moved over

15 to the Halo companies?

16 A. They -- Halo asset management did, in fact,Page 76


Thompson B Cade

17 hire some of the stewardship fund employees that Jay was

18 terminating, yes.

19 Q. /PHOUPL of those employe it's?

20 A. Specifically as I sit here, I don't know the

21 exact count. Somewhere between 10 and 15.

22 Q. Well, weren't there specific discussions

23 between Halo and Temme about bringing stewardship over

24 and integrating stewardship into the Halo /TPHAEPBTS?

25 A. No. The conversations between Jay Tim SPE� 90

1 myself and our organization weritier attive, as you can

2 imagine. What you're suggesting is quite a large

3 undertaking, requires a number of different thing being

4 especially being a public entity. It requires board

5 approval, due diligence. Proper structureings,

6 potentially a shareholder vote. So as we got to know

7 Jay, the stewardship fund, we discussed a number of

8 different /OPLGs of how to further the relationship in a

9 profitable and creative manner.

10 The ultimately, just to give the short

11 version, David, Jay was very segregated and

12 compartmentallized as it pertains to stewardship funds

13 and rightly so, because the way and the nature as I

14 understand stewardship fund to be set up really wasn't

15 operating in any per se as much as it was a hold are of

16 all assets.

17 A. We didn't buy those assets.

18 A. We weren't involve indeed raising of funds for

19 those assets. We weren't involved in the front end

20 management much those /ATSZ /ETS. Soy our conversation

Page 77


Thompson B Cade 21 with Jay was Jay, our infratracture, our public company,

22 we believe we are -- we are apprised and set up better

23 to manage this business going forward. How do we do

24 that together. Ultimately, we could /TPHEFRPB come to

25 any kind of common ground, never -- the deal never� 91

1 manifested.

2 Q. Yeah. But when you're meeting with Mr. Cart

3 /TPHER, Mr. Weber Mr. Berg?

4 A. Yeah.

5 Q. In March of 2011, you were essential telling

6 them that this was what we're doing. This is our plan?

7 A. What's this?

8 Q. That we're joining together?

9 A. No, I never said that.

10 Q. You never represented that stewardship employ

11 /AOES were going to be made Halo employees?

12 A. Sir, are you specifically referring to that

13 time or when?

14 Q. Yes?

15 A. At that meeting, no. I never represented that

16 to anybody at that meeting.

17 Q. How about after that meeting?

18 A. That's a pretty broad statement and pretty long

19 period of time: Fact that the employees did come, a

20 certain number of employees were hired by Halo asset

21 management, whether or not I ever speak to anyone about

22 that, it's possible. Certainly was not berg, cart

23 /TPHER or Mr. Weber.

24 Q. How about Carl?

25 A. I don't believe I ever spoke about that withPage 78



1 Carl cup key.

2 Q. Have you ever met Carl cup key?

3 A. I have.

4 Q. When did you meet Carl cup key?

5 A. Somewhere in June, June 10 /*GTS, 13th of 2011.

6 Q. And that's about the same time that stewardship

7 employ /AOES were moving into Halo?

8 A. No.

9 Q. All right. I'll come back to your answer to

10 interrogatory Number ten, you said Weber recklessly

11 disregarded the fact by failing to inquire to Jay Temme

12 as the source of the repayment of Weber's various

13 personal investments with Temme?

14 A. Yeah.

15 Q. How do -- what's misrepresentation is is that?

16 What are you referring to?

17 A. What do you mean misrepresentation?

18 Q. Okay. You say that --

19 A. I don't want see whyy --

20 Q. Securities including but not limited to by?

21 MR. LITTLE: . And you said Weber

22 recklessly disregarded the fact by failing to inquire

23 with Jay Temme as to the source of repayment of webby's

24 personal and.

25 A. Yeah, so the first paragraphs are preamble� 93

1 about to the answer suggests -- the first sentence said,

2 sold unregistered violation of seek sigh I the business

Page 79


Thompson B Cade 3 /TWEPL. The third comma lists the. That is not /TORB

4 all encompass. Ment answer to Number one as it pertains

5 to recklessly.

6 THE REPORTER: Slow down.

7 A. Recklessly disregarded by the fact of failing

8 to inquire with Jay Temme as the source of repayment

9 simply comes from my of the systems that Jay Temme was

10 /AOUT /HRAOEUSZing when we deployed the AMX system

11 provided investors with little to no reporting,

12 communication, transparency. I simply state that Weber

13 got his money back anecdotally in his affidavits. I

14 understand that to be true. Jay Temme suggested that

15 was true. Tim Weber suggested that was /TRAOUF to me,

16 that Tim had made previous investments that were

17 successful. I simply am stating how would he know now

18 /TPHO define success because I am Keanly aware that

19 prior to our arrival on the /SKAORPB, there was limited

20 to me reporting based upon how to determine success in

21 those investments.

22 Q. (BY MR. LUNN) Lyou don't know the name of Mr.

23 Weber's prior investment?

24 A. /TPHO, /KWREPBT. You're right.

25 Q. So you don't know what reporting was given?� 94

1 A. I know what reporting was available when I due

2 diligenced their tracker software. I do know that.

3 Q. Okay. So when -- under the Halo business

4 model?

5 A. Yeah.

6 Q. Say there's an investment made, there's 400

7 mortgages acquired. When typically would an investPage 80


Thompson B Cade

8 /OFRs start to expect return s ontheir investment?

9 A. I /AO /AOEUFPLT Objection, form.

10 A. It's too vague. I don't -- every fund --

11 /STKPWHREU meanwhile, what would you represent.

12 A. I wouldn't represent going.

13 Q. So your meeting with Mr. Cart /TPHER and Mr.

14 Weber and Mr. /WERG, and they say, okay, this looks

15 attractive to us. What do you think the time frame is

16 of your return for investment. So /AO?

17 MR. LITTLE: Objection, form: Is there a

18 question.

19 Q. (BY MR. LUNN) What would you tell him?

20 A. So couple things. I would like to go on the

21 record. Number one, in this business, in the Halo asset

22 management business model specifically, not Halo's

23 business model at large because we have other

24 businesses, but the Halo asset management business model

25 is dependenting on a number of things. Type of assets� 95

1 you buy, the price you pay for them, your disapproximate

2 position strategy associated with it, the type and

3 patient duration of your cap tam. All of those things

4 would determine the velocity and the duration /-FTD --

5 of when people can expect to get their capital back.

6 Okay.

7 Of historical results, although can provide

8 some insight, don't necessarily guarantee future

9 resultless. So /TKEP pending on what the assets were,

10 what they paid for, what the specific investor

11 /STRARPBLG was, could determine the outcom of that

Page 81


Thompson B Cade 12 happen time flame. So I assure you that there was no

13 specific representations about time frame ever return of

14 capital. Now, that being said, certainly we had the

15 ability to run models based upon a number of sensitive

16 assumptions to determine based upon a wide variety of

17 sincetivities, of when something could potentially

18 happen. But again, until you have a specific portfolio

19 that's acquired, there's no way to answer that question

20 or give any representation.

21 Q. Well, the are Equitas fund, you didn't have

22 any -- you were talking to investors saying an investor

23 asked you, okay, I get the business model. I understand

24 what you're doing. Conceptually, what do you think,

25 /KWRAOURB u we're going to see six months, 12 months� 96

1 before we see any return. You wouldn't be able to give

2 them any information?


4 A. We have financial mod /HELs we /SKR run. Based

5 upon the type of assets that are acquired that. Can

6 affect the outcome and the time and duration of that

7 capital. That was all explained to those invest ors.

8 In those presentations. So I don't /-RPBL that any

9 investor had a specific duration of their capital in

10 mind, at least the one that invested with us, of when

11 they were going to have the return of capital back.

12 Q. (BY MR. LUNN) Do you recall any

13 representations during that meeting from you or Mr.

14 Temme that the VIN restors shouldn't expect to see any

15 returns until at least 6, 9 months after the assets are

16 acquired?Page 82


Thompson B Cade

17 A. The which meeting.

18 Q. The March 11th meeting?

19 A. I don't recall. I don't recall Jay Temme

20 suggesting time frame. So I don't remember that. It's

21 been several years. I don't remember that.

22 Q. Okay.

23 MR. LUNN: All right. We need to go off

24 the record.

25 MR. LITTLE: Do you want to have your call.� 97

1 THE VIDEOGRAPHER: We are off the record at

2 11:45. End of tape Number two.

3 (A recess was taken.) Temme REO Temme REO


5 record at 1:09, beginning of Tape Number three.

6 Q. (BY MR. LUNN) All right, sir. When we took a

7 break, we were -- I believe talking about interrogatory

8 Number ten. If not, go back there. On interrogatory

9 Number ten, Paragraph two, you stated that Jay Temme was

10 not obtaining the mortgage. What fact Temme Weber could

11 have discovered by the exercise of reasonable care. Why

12 do you say that?

13 A. Well, obviously, in the petition, that Temme

14 Weber filed against stewardship fund in Dallas

15 didistrict court in his affidavit, it's apparently that

16 they never had any assets that were acquired with the

17 monies that Temme invested or encouraged others to

18 invest in. How you could determine whether or not those

19 assets were titled appropriately is a simple title

20 search or public record search, request for

Page 83


Thompson B Cade 21 documentation to insure that the entity where you

22 invested your money did, in fact, acquire assets that

23 you would own as collateral. So to the extent you

24 didn't have the proper deeds or assignments of mortgage,

25 it's pretty baseline principles in investing in real� 98

1 estate. It's something he should have been aware of.

2 Not to mention others made the same mistake. I'm just

3 simply --

4 Q. Right. You were going forward /AFRB

5 December 2010 through at least June of 2011 with the

6 understanding that Jay Temme was raising /PHOPBee /AO

7 when he was raising money, he was sue doing it on but

8 half of Halo and the related entities, correct?

9 A. No. Again, there's the Sult distinction --

10 what I'm trying to communicate is we did not want Jay

11 Temme representing to anybody anything on behalf of

12 Halo. We wanted Jay Temme to introduce us to

13 counterparties, whether it be investors or sellers, so

14 that we could interact with those counterparties because

15 Jay had no authority to represent Halo. So when you ask

16 a question, Jay was representing those investments, no,

17 Jay's responsibility was to introduce us to those

18 counterparty.

19 Q. What documentation tough to support that that

20 was a limitation of Jay Temme's role?

21 A. Well, I mean, the entire Equitas agreement

22 with Mr. Temme where he received his shares clearly

23 defined what his roles were and how he would be getting

24 compensated.

25 Q. Yeah, but what about the documents that you'rePage 84



1 giving to potential investors which lists Temme as the

2 manager of these entities at well. What in those

3 documents would show that Temme's involvement doesn't

4 include making representation on behalf of Halo?


6 A. The documents that were created for any fund

7 that Halo was sponsoring would have included a series of

8 documents T. Would have included potentially a fund

9 proposal. It would have included ultimately some kind

10 of partnership document of sorts. It would have

11 included a subscription agreement. It would have

12 included a credited investor questionnaire, and on any

13 of the documents that required execution, it would have

14 clearly denoted who was the authoritative entity

15 responsible for executing that agreement and managing

16 that agreement, along with any of the provisions in the

17 document about rules and responsibilities. So all of

18 those document necessary their entirety as a series of

19 document system what we were utilizing to raise capital

20 into the Equitas housing fund or any other fund that

21 Halo was sponsoring.

22 Q. (BY MR. LUNN) And when you created those

23 documents, did you intend forever investors to be able

24 to rely on the represent anticipations made within those

25 documents?� 100

1 A. I would assume so, yes.

2 Q. You didn't put anything in those document that

Page 85


Thompson B Cade 3 is you intended to be misleading?

4 A. No, sure didn't.

5 Q. Okay. And, so, when you were expecting Temme

6 to be introducing investors to Halo during that time

7 frame between December 2011 and June of 2 understood --

8 /AO I'm sorry -- December 2010 and June of 2011, it was

9 your expectation that he was solely raising money for

10 those types of investments for Halo?

11 A. Define those types. I mean, Equitas housing

12 fund was the fund we created.

13 Q. Correct?

14 A. Equitas housing fund was the fund where Jay

15 Temme received as compensation stock that he had --

16 milestones he had to accomplish with Equitas housing

17 fund to receive said stock and yes, we believed that Jay

18 Temme and Jay Temme's role was to introduce us to

19 counterparties that could either invest in the fund or

20 sellers that would sell assets that the fund could

21 acquire.

22 Q. So during that time frame, December 2010

23 through June 2011, what were you doing to insure that

24 Temme was brings /PHOPB to the table for that fund? Not

25 for any other funds?� 101

1 A. Well, again, there was no exclusivity. Jay

2 Temme, although we believe that the incentive was

3 sufficient to direct his attention to our efforts, there

4 was no exclusivity to Jay Temme. He was not an agent.

5 He wasn't an employee. He was not bound by any

6 exclusive arrangements whereby he could been raising

7 money for a nob of different things. For example, I wasPage 86


Thompson B Cade

8 aware that /THAE /HAO another entity called /AEUPBG

9 /HRERZ and hunters. There was no proclivity from him to

10 be able to go raise additional capital. The arrangement

11 was not such that he had to exclusively raise it for

12 Equitas, but it was our intent that we cylinder incent

13 vise him to introduce those counterparties to us in

14 order for him to earn his stock in an organization.

15 Q. Well, assuming for the benefit of the

16 shareholders of Halo companies, that Temme was doing

17 that.

18 A. I mean, obviously, it was our intens for him to

19 do that. We wanted him to introduce us to those

20 counterparties. We hope that had he would introduce us

21 to counterparties or we would never go through the --

22 the rig a/PHA row of the transaction of the Equitas

23 housing fund with the shares. Obviously, that was our

24 intent, yes.

25 Q. Tell me about some of the investors between� 102

1 December 2010 and June 2011 that you personally reached

2 out to about investing in one of these funds?

3 A. What would you like me to tell you about them.

4 Q. Well, identify one and then I'll tell you what

5 I'd like to talk about?

6 A. Okay. For example, Matt Hawkins.

7 Q. When did you speak with Matt Hopkins. {?

8 A. Started in early January of 2011 probably is

9 the first time there was any communication. I was

10 introduced to Matt Hawkins.

11 Q. By whom?

Page 87


Thompson B Cade 12 A. By -- that's a great question. Who did

13 introduce me to Matt Hawkins? I'm not real sure who

14 introduced me to Matt Hawkins, to be /KAPD /EUTD. I

15 don't know.

16 Q. So you get the /SPWRAOUBGZ to Matt Hawkins?

17 A. Sure, yeah.

18 Q. And then what do you do to keep the ball

19 rolling with Matt to try to get him to invest?

20 A. Invited him to come see /SUS, had a

21 conversation about what he was doing. He was in the

22 business of buying single family residences, REO. We

23 were in the business of trying to do the same and manage

24 it accident assets. His interest was in moving into the

25 nonperforming loan space. He was not an operator. He� 103

1 was a fund manager. He had access to capital himself.

2 He was looking for a place to place it.

3 And we met several times, even went as far

4 as a term sheet to have him put up capital into a fund,

5 ultimately, they passed on the investment.

6 Q. Was Jay Temme involved in those meetings?

7 A. A few of them.

8 Q. What was his role in those meetings?

9 A. To explain to Matt his nature of relationship

10 to the sources source of the assets. That he would be

11 sourcing for the fund.

12 Q. Anything else?

13 A. I assume that his track record of working out

14 previous funds and relationships and investors that he

15 had worked on behalf of was an important part of Matt

16 Hawkins consideration in moving forward with us. So himPage 88


Thompson B Cade

17 being in that room with his relationships and refers was

18 also an important factor.

19 Q. So the fact that you guys were working together

20 you believe was important to Matt Hawkins?

21 A. No. I don't know that I'd go that far.

22 Q. Okay. Going back to interrogatory Number ten,

23 answer Number three, you state that Jay Temme was

24 involved in a variety of fraud related litigation,

25 which, in fact, Temme Weber could have discovered with� 104

1 the exercise of reasonable care. Why do you say that?

2 A. Why do I say he could have discovered an

3 exercise of reasonable care?

4 Q. Right.

5 A. Temme Weber was investing with Jay. Temme

6 Weber could have found the litigation out on the web.

7 Q. Could you have found the litigation out on the

8 web?

9 A. Sure.

10 Q. And at no point between January -- or

11 December 2010 and June of 2011 the fact that Jay Temme

12 was bringing no money to the table didn't -- let you to

13 wonder what he was doing out there?

14 A. I knew what he was doing. What he was doing

15 was manage miss legacy assets.

16 A. He had 4 or 5,000 assets that he was manage ing

17 ona day-to-day basis, so didn't -- he wasn't /TWEUDling

18 his thumbs in his office.

19 Q. What about all these other potential /S*EUPB

20 /TREFTors that he was talking to and introducing you to?

Page 89


Thompson B Cade 21 A. Well, Jay Temme only introduced me to about 8

22 or 9 different investors, all of which in, my mind, had

23 con/KHRAOUGS of conclusions to the conversations,

24 whether they passed or weren't entered or were

25 continuing to be /SW-D but needed more time. So there� 105

1 was no need to wonder what Jay was doing with them.

2 Q. Do you have an understanding that between

3 January 2011 and August 2011 that Halo was involved in

4 preparing or at least reviewing certain LP agreements

5 where what Halo entity was the general partner?


7 A. Yes.

8 Q. (BY MR. LUNN) And what agreements were you

9 aware of?

10 A. Stewardship if I /HRAPB /THROPy fund LP and

11 stewardshipship if I /HRAPB two LP.

12 Q. Was that it?

13 A. That's it.

14 Q. How about singer brothers? Ever hear of singer

15 brothers?

16 A. I have through the petition.

17 Q. Do you have an understanding that Halo

18 represent /TEUFPs reviewed the LP agreement with singer

19 brothers?

20 A. Only by -- through this petition.

21 Q. You had no firsthand knowledge of it?

22 A.

23 THE REPORTER: Is that a no.

24 A. No. Excuse me. Odd ible.

25 Q. (BY MR. LUNN) And why was that -- why were youPage 90



1 looking at that document?

2 A. So when we met with cart /TPHER and berg the

3 first time the only time the take away from the meeting

4 was a couple. One, they were going to get back to us if

5 they wanted to see our operations, further due

6 diligence, and two, should they have further interest,

7 they would continue to communicate with Jay, which was

8 the nexus of the relationship. Jay suggested through

9 email and phone calls that they were interested. They

10 weren't prepared to move forward, but they were

11 interested in a deal different than the Equitas housing

12 fund.

13 Q. Right.

14 A. The deal they were interested in was not a

15 25 percent debt fund T. Was an equity structure that

16 included some economic elements that we've discussed

17 previous in this deposition. However, the premise was

18 still that Halo would be responsible for the investment.

19 Halo would be responsible for managing the assets that

20 would be acquired, and it would still be under Halo's

21 wholly owned structure. So in light of that, as part of

22 our responsibilities, we established the fund proposal

23 in conjunction with what the idea had been agreed to.

24 We created the documents necessary to execute an

25 investment in said fund and sat and delivered those� 107

1 documents in entirety to Jay and sat back way /EUTing

2 for the next step.

Page 91


Thompson B Cade 3 Q. Why didn't you do anything proact /AEUFLT. You

4 queue that Steve cart /TPHER and Bruce berg were

5 investing and you went through all the work to set up

6 the fund?

7 A. Yeah.

8 Q. Why aren't you reaching out to them saying

9 where are we at on this?

10 A. Well, it wasn't my place, it wasn't my

11 relationship. Those relationships belong to Jay and

12 Temme Weber and there was no need for me to reach out to

13 urge anyone on to do anything. It was -- people make

14 investments when it's appropriate in time for them to

15 make investments and I'm not in the business of forcing

16 anyone to do anything. So --

17 Q. Y by preparing these documents and getting

18 ready for the investment mechanism, you're actual leash

19 allowing Jay Temme to use these documents to then take

20 funds and divert them away from Halo?

21 A. Well, I don't think it's allowing him to do

22 request of that.

23 Q. Lthat's what happened?

24 A. May have been what happened. I don't know that

25 that was something we allowed to happen. In the� 108

1 documents -- have you seen the documents?

2 Q. This is my deposition.

3 A. Well, the documents include discreet

4 instruction s onhow to make an investment in that fund.

5 So whether someone chose not to follow those

6 instructions, I -- we didn't allow that to happen. It

7 was outside of our knowledge.Page 92


Thompson B Cade

8 Q. So you're creating if I /HRAPB /THOP haddy one,

9 you know it's sitting out there. Now you get

10 presented -- or how does stewardship flan two come

11 about?

12 A. Jay calls me and said, /HAERBGS listen, got a

13 different group of guys that are interested in doing a

14 deal. /THERPB Weber, cart /TPHER and his group.

15 They're not prepared to move forward yet, but since

16 we've already done the proposal, it's a different group.

17 We need to set up a gnaw entity called flan fund two. I

18 emailed Jay and we prepared the documents because it was

19 a simple find and replace. Jay, here's fund two at your

20 request. However, what's going on with one. Response

21 was still work ing onit.

22 Q. So the documents for stewardship flan one?

23 A. Yeah.

24 Q. That you reviewd and put out, did they identify

25 who the investors were?� 109

1 A. No.

2 Q. Did it identify what the investments were?

3 A. No.

4 Q. So why wouldn't you tell me /AO just use flan

5 one, it's already ready to go and if these guys decide

6 to invest, we'll set up two?

7 A. Because Jay had already suggested that the guys

8 who had committed to do flan fund one hadn't wired their

9 money in or weren't prepared to execute and didn't want

10 to cloud the -- confuse the issue.

11 Q. That's my point. If they don't want to go

Page 93


Thompson B Cade 12 forward with it?

13 A. Well, they didn't suggest -- Jay never

14 suggested to me they did not want to go forward with it.

15 Q. Did he tell you they did want to go forward

16 with?

17 A. It he asked an email and phone call multiple

18 times that they were very interested to move forward

19 with the investment.

20 Q. And as a co/SPOBSer of this fund, why weren't

21 you then reaching out and saying where are we going with

22 this?

23 A. Well, first of all, we weren't cosponsored with

24 Jay. Halo was the sponsor of the fund, and Jay kept

25 constant communication or relative constant, once a week� 110

1 or so, of updates of guys are still mulling it over,

2 having conversations with Temme /WEUR Weber, doning to

3 have dialogue, very interested. But we're talking about

4 a time frame of March the 10th, between that and June.

5 So you're talking about 60, 75 days /KH-RBGS in this

6 business is not a long period of time. So --

7 Q. Well, don't you agree that through your -- the

8 materials that you created, that there was just a small

9 wind over of opportunity that you believed for this

10 opportunity. So time was of the essence?

11 A. Ive would have to see what you're referring to

12 because I don't remember specifically in our business

13 plan /-Z still don't to this day -- we're still

14 operating that there was a short period of time.

15 Q. Okay?

16 A. And any -- furthermore, any prediction of whatPage 94


Thompson B Cade

17 the market was going to do in the future, especially

18 pertaining to distressed mortgage ass /ES was that

19 employ ise, a prediction. No one can tell. It was a

20 thesis.

21 Q. It was based upon the time and --

22 A. Sure.

23 Q. I agree. You go on in Paragraph two to say,

24 this is talking about the fraud related litigation, that

25 Weber recklessly disregarded this fact Temme with asked� 111

1 this about his due diligent process. Did you ask Jim

2 Temme about that during your queue /#2KEU68 /SKWREPBS

3 process?

4 A. Absolutely.

5 Q. What did he say?

6 A. He said the claims were relating to a timing of

7 a transaction, it had nothing to do with anything

8 material and by the time I found out about it, the case

9 had already been settled /SOEFPLT there was nothing --

10 it was dismissed. There was nothing further it discuss.

11 Q. So then why should Temme Weber care?

12 A. Because he was investing with Jay.

13 Q. Buzz you were having him as your business

14 partner?

15 A. I did not.


17 Q. (BY MR. LUNN) Well, you gave him a significant

18 portion of the shares of your company, correct?

19 A. Well, I'm not partners with all 4700

20 shareholders. I don't know 4633 of them.

Page 95


Thompson B Cade 21 Q. But it's more than that. You were putting out

22 proposals where you and Jay Temme and the same section

23 were identified as the managers to those funds?

24 MR. LITTLE: Objection, form. There was no

25 question pending. If you have a question.� 112

1 MR. LUNN: Let me finish. Let me finish my

2 topic.

3 Q. (BY MR. LITTLE) As much as I'd like the

4 witness to let me finish before he where wases, I'll ask

5 to you let me finish my question before you voice an

6 objection?


8 Q. (BY MR. LITTLE) Is that correct?

9 A. Jay Temme's name, along with several others,

10 were in a section in a fund proposal with a header

11 called managers.

12 Q. Right. And that's more than a shareholder. Is

13 that correct?

14 A. Sure. I think those are independent.

15 Q. Right.

16 A. /THOETSZ are independent -- those are

17 independent issue necessary my mind.

18 Q. With independent duties and responsibilities?

19 A. I would say so.

20 Q. Number four says /AO- and I don't know what.

21 It says that Jay Temme was completely disorganized and

22 /KPHAEUBL of managing investments purported to manage,

23 the facts tick Weber was /TAOELS owe aware of. Why do

24 you say that?

25 A. Well, I think multiple times and for the samePage 96



1 reason why we insisted upon managing and sponsoring our

2 own fund at Halo, the recordkeeping, the data

3 surrounding the stewardship fund legacy platform was

4 insufficient and weak. Temme had expressed concern to

5 me in a meeting with Jay that to go forward in a more

6 scaleable manner, there needed to be more belts and

7 suspenders, my words, maybe not his, around the

8 platform, which is what Halo had. So Temme had

9 indicated that he was not comfortable, you know, putting

10 friends and families in a deal with historical controls.

11 Q. And you assured him that that's what his

12 involvement was, took care of that issue?

13 A. Halo absolutely would be responsible to create

14 that transparency and scale ability that stewardship

15 historically had lacked, sure.

16 Q. Number five says that Temme Weber was prevented

17 by NASD rules 3040 and 3050 from engaging in private

18 security transaction says that were not approved by his

19 broker dealer, sax, and identified the books and records

20 of the broker deal every /-RPLT why did you say that?

21 A. For selling away. That's simply what that is.

22 Q. How is that obvious?

23 A. Well, as a former -- for me, as a former series

24 seven security license registered representative, it's

25 obvious to me that you can go on fen /RA and do any due� 114

1 diligence on anybody and determine the status of their

2 securities licenses and it was obvious that he was

Page 97


Thompson B Cade 3 terminated under his U-five.

4 Q. Does it say the reason why?

5 A. It's /TKPWHREUP some the way.

6 A. Sure does.

7 Q. Okay. Do you know whether any of the

8 plaintiffs who are Goldman Sachs employees had their

9 investments in the funds approved by Goldman Sachs

10 before they were made?


12 Q. Do you know whether Temme Weber did?

13 A. Ask the the question again on Temme?

14 Q. Yeah. Do you know whether or not he had his

15 investments approved prior to making investments?

16 A. All I know about Temme is simply from one

17 comment he made in front of /PWAOUS and Mr. Cart /TPHER,

18 was that the investment -- the stewardship fund and he

19 used quotations, had been previously approved by Goldman

20 Sachs, and as it pertained to this -- the Equitas fund

21 deal and any future investment with stewardship outside

22 of that the Equitas fund deal that, he didn't believe

23 they needed to be reapproved. That's all I /-PBLT. So

24 whether or not Temme's prior investments had been

25 approved or not, I have no idea.� 115

1 Q. Number six, that Temme Weber was prevented by

2 FINRA, from engaging in the 50 million debt equity

3 transaction for /STAOURTSDZ that he described in his own

4 handwriting?

5 A. Why.

6 Q. How is that a misrepresentation or omission?

7 A. Well, I think at -- Number one, to his firm, asPage 98


Thompson B Cade

8 a registered rep, you know, unless the oBA was approved,

9 which it obviously wasn't based upon the consequences of

10 his actions, participating in an investment /STKRAPBLG

11 or representing an investment strategy outside of your

12 firm is a violation.

13 Q. Did he do that?

14 A. Well, all I suggested in my interrogatory was

15 that he had prepared a drawing and for the further was a

16 participant in an LOI that I've seen as part of this

17 production also was /SWR-FLed in, that he was an

18 investor or a partner in that deal.

19 Q. Was that deal ever consummated?

20 A. I have no idea. An LOI was executed.

21 Q. So the fact that they're out there looking at

22 different business opportunities that never occur, isn't

23 an investigation at all, is it?

24 A. I'm not a securities attorney.

25 Q. Lyou make the repation here that because he was� 116

1 looking at these $50 million fund, this is a material

2 fact or mmission?

3 A. No. What I said was he was prevented by fen

4 /RA rule 32 /S*EFBT in engaging that that. I didn't

5 every say he did engage. Made any money by it. It's a

6 statement. He's that are unapproved by his broker teal.

7 Er. It's as simple as that. Whether it was approved or

8 not ultimately, whether he did anything about it, I

9 don't know.

10 Q. How so is this a misrepresentation or omission

11 to make him in /SR-LGSZ of Section 12 of the security

Page 99


Thompson B Cade 12 act?

13 A. Well, again as a stated earlier before lunch,

14 the preautomatic Bell to the bullet points, it you take

15 it out of context or try to compartmentallize, that may

16 or may not have been an omission. However, a material

17 fact is that as a registered representative who was /SEU

18 partner in an investment, who would be attempting to

19 in/KAOUS investors to make investment in, could be, in

20 fact, in violation of Section 12 and certainly was that

21 in conjunction with other things listed would have,

22 caused his broker deal tore terminate him. So that

23 speaks for itself.

24 Q. That speaks upon your speculation. You have no

25 knowledge of why Goldman Sachs and Temme Weber's� 117

1 relationship --

2 A. I haven't made any why. I've simply suggest

3 that had to get U-fived by a broker dealer, that's not

4 something usually voluntarily.

5 Q. But you don't know the facts and circumstances

6 that surrounds that?

7 A. No. And I don't believe that in the answer to

8 the interrogatory, I suggested that I did.

9 Q. And that u go on in Number seven saying that

10 Temme Weber used Carl cup key as proxy. Was not

11 permitted to elicit himself?

12 A. Yeah.

13 Q. How do you say that?

14 A. That's /TPWR Carl himself suggesting that Temme

15 made it clear it Carl that he couldn't directly solicit

16 investments from his Goldman account, which is why hePage 100


Thompson B Cade

17 needed to use his Southwestern Bell email account, why

18 he did all of his communication from there and that most

19 of his communication needed to be channelled from

20 /KHARL. That was out of Carl's mouth, not mine.

21 Q. So how does that mean that Temme Weber's using

22 Carl cup key as a proxy?

23 A. Sorry about that.

24 Q. Yea. How does that mean that Carl cup key's a

25 proxy that listed Goldman Sachs firm clients?� 118

1 A. So if I wanted someone to communicate to

2 someone I knew but I didn't want to do it directly, I

3 might ask Mitch here to /TKW-PBLG and having

4 conversations and correspondence with them so that I

5 don't have that direct occur /SPOPBD /TOEPBS. That

6 would be a proxy N. This situation, Temme could not

7 solicit investors or employees of the firm without

8 getting an oBA approved. So, therefore, Carl was

9 engaged, compensated through whatever participation of

10 equity in the new deal that they were working on to be

11 the front person for that investment.

12 Q. What firm or what Goldman Sachs clients did

13 Carl cup key solicit on behalf of Temme Weber?

14 A. Well, I'm aware only through this petition

15 because I have no idea of any of the investors other

16 than Mr. Cart /TPHER and Mr. Berg, which I didn't find

17 out until after this petition came out, that he had

18 spoken with most or all of them.

19 Q. Who?

20 A. Murphy, Doyle, /SHAPBTS, hay dock.

Page 101


Thompson B Cade 21 Q. Goldman Sachs client?

22 A. I think so, yeah.

23 Q. /SHAPBTS?

24 A. Yeah.

25 Q. Singer?� 119

1 A. I think so.

2 Q. You're just guessing, aren't you, I mean, I'm

3 going off of what information Jay Temme had suggested to

4 me?

5 Q. When did he suggest that?

6 A. During the time that he was talking with Temme

7 Weber early on in 2011.

8 Q. And Temme Weber introduced you to Bruce berg

9 and stew cart /TPHER?

10 A. Correct.

11 Q. Who were affiliated with the Goldman Sachs at

12 some point, right?

13 A. It's my understanding that berg was an employee

14 of Goldman, and that. And /TKPWHREUPS was a former

15 client of Goldman Sachs. That's my understanding of the

16 /SWRAOUBGZs.

17 Q. So the other gentleman you've mentioned,

18 Murphy, /SHAPBS, those all came after the March meeting,

19 correct?

20 A. I've never met those guys, don't know those

21 guys.

22 A. Haven't spoken to those guys. I'm just simply

23 suggesting that James Temme represented to me that Carl

24 and Temme had a number of potential investors to talk to

25 and most of them were related to Goldman in some form orPage 102



1 fashion. That's the basis.

2 Q. But you don't know as we sit here today whether

3 or not Temme Weber, asked Carl to solicit certain

4 Goldman Sachs investors to invest in any of these

5 projects?

6 A. All I know --

7 Q. /TPHUPBDZ /S-FRPBLTSZ that Carl suggested to me

8 in a meeting that he would be the front person for

9 communication going forward and asking why. I suggested

10 a Number seven. That was the reason, that there needed

11 to be very careful about how Temme interacted with the

12 investors because of his relationship with Goldman.

13 That's the basis of the claim?

14 Q. When did you 50 meet cup key again?

15 A. June 13th, 10th, 13th rank, on or about of

16 2011.

17 Q. And what was the nature of that meeting?

18 A. He was conditionaling to discuss a couple of

19 things. One was a platform, wanted to see our

20 operations, wanted to see our technology that we had

21 built. Wanted to discuss our vendor management

22 processes. Secondarily, he was consider ago /AO it was

23 proposed that he was considering an investment or

24 setting up a structure to -- to ag regate investments to

25 acquire assets and wanted to meet with us.� 121

1 Q. Okay. What else was discussed?

2 A. That was all I was a part of.

Page 103


Thompson B Cade 3 Q. Who was present?

4 A. The first part of the meeting, which I have no

5 idea how long it last. I was not present in. So I

6 believe it was Robert boys and I'm not sure who all --

7 believe he was in the meeting. I don't recall who else

8 was in the meeting with him. I step indeed. Jay Temme

9 was in the meeting, obviously. I stepped in the last 30

10 minutes to discuss the software, to discuss Halo being a

11 public entity and Carl suggested that he didn't like the

12 idea of raising capital under a public entity. He

13 wanted to discuss the options of going private. So we

14 just -- that's my involvement with discussing those

15 matters.

16 Q. Did you have other conversations with Mr. Cup

17 key?

18 A. The other -- /KWRAEFPLT the only other

19 conversation I remember having with Carl cup key was in

20 September, sometime in September, I think. We were in

21 Mexico on vacation. He called me. He asked, you know,

22 what I knew about Jay Temme. I shared with him the

23 knowledge I had gained since August the twixt or 27th

24 and shared that information with him and told him that

25 he needed to call Jay, that I didn't have any knowledge� 122

1 of any investments. He shared with me on that call for

2 the first time that they had made substantial

3 investments with Jay, I told Carl I had no knowledge of

4 those investments. He asked if we were servicing those

5 assets. I said don't even know what assets you're

6 referring to, never seen any as /A*ETS /SRERBT sod the

7 investments, never seen any investment dollars with anyPage 104


Thompson B Cade

8 investments, Carl. You're talking to the wrong guy.

9 Haven't heard from you in months.

10 Q. The meeting you had with Carl cup key, was that

11 at the Halo offices?

12 A. It was.

13 Q. And you have an understanding that after that

14 June 11th meeting, that Carl was in the Halo offices

15 quite a bit?

16 A. I was not aware of that, and I would have to --

17 what's white a bit?

18 Q. Well, he was -- do you have any understanding

19 that Mr. Cup key was ever back at the Halo offices after

20 June elevenths?

21 A. I am aware that he was back at the office at

22 least one time.

23 Q. And what's your awareness of that?

24 A. Through this petition and also through

25 conversations with Reif as he was a participant in that� 123

1 meeting.

2 Q. Were those -- were those conversations

3 contemporaneous with the meeting or after reading the

4 petition?

5 A. I was out of town when Carl came into the

6 office the second time. So it was obviously subsequent

7 to the meeting.

8 Q. Okay. So you knee /HAOFS the in the Halo

9 offices at least twice?

10 A. As of today, that's my knowledge, yes.

11 Q. Then in -- after Paragraph seven, it says /*ULT

Page 105


Thompson B Cade 12 meatally Temme Weber had the ability to control the

13 transactions in question and provided material to

14 stewardship at a time when he was subjectively aware,

15 that is, assisting with the primary violators

16 stewardshipship. Give me all facts to support that

17 sentence.

18 A. Well, all facts, we might run out of time here.

19 I'll give you at least one fact. One fact is -- is that

20 in reading the production associated with this case and

21 the receiverships case, Temme had an investment with

22 stewardship. That investment from eye timing

23 perspective, aparentsly was returned the same time as

24 investments that were coming in from Temme's family and

25 friends. To me, with no explanation of the results or� 124

1 packages that were bought or any indication of any real

2 business. I would suggest that the returns, he was

3 receiving I believe he should have asked more questions

4 about that as being an investor with stewardship and

5 aparentsly, he didn't.

6 Q. In 2010, 2011 when Jay Temme was providing

7 /PHOPB to /HRAEUL, did you ask him where that money was

8 coming from?

9 A. I was not -- I was not an investor with

10 stewardship, and the money that was coming to Halo was

11 for services being /RERPBDerred to Temme and not as a

12 return of my investment.

13 Q. Yeah. But did you ask where the money was

14 coming from? I mean, these plenty of emails saying Jay,

15 we need X amount of dollars to meet play roll, help us

16 out?Page 106


Thompson B Cade

17 A. Yea. Jay /REUPTed to me on a number of

18 occasions that he had a substantial portfolio yielding

19 substantial cash dollars that he ownd and stewardship

20 fund owned directly and that he was using to fulfill his

21 obligations to us, whether it was for bPOs, which is

22 broker price opinion, other vendor service, like title

23 reports, whether it was for paying the subservicing

24 payroll for lender live that he was responsible for via

25 invoice or whether it was for covering some of the G & A� 125

1 of Halo pursuant to the consulting and other work that

2 is we were helping Jay with in stewardship.

3 Q. And you just took his word for that, that he

4 had a substantial part?

5 A. I didn't have to take his word for T. They were

6 in the AMX system. The assets /-RPTS tilted to

7 stewardship fund LP. I mean, not only did I have his

8 word, but there was evidence to support it.

9 Q. So were you then tracking the payments made by

10 stewardship with the assets that are on the system?

11 A. No. What I was tracking was the payments

12 associated with the collections /K-PLTing into the

13 stewardship platform because it was coming through the

14 AMX, the cash was from the /PWOURP owers that were

15 associated with the /STAOURBDZ fund LP assets. The cash

16 flow was easy to track from my side.

17 Q. So your testimony is because Temme Weber made

18 an investment with stewardship and he was paid back one

19 of the investments around the same time frame other

20 people that he knew were investing that he subjectively

Page 107


Thompson B Cade 21 knew he was being paid out of his friends funds?

22 A. I'm not suggest that. I'm suggesting it that's

23 a fact /PAPS pattern that is /OEPS the question of when

24 he knew, what did Temme didn't know. What he asked,

25 what he didn't ask. I'm just suggesting as a know an� 126

1 investor, /STKH his friends and family wouldn't have

2 known about Jay but through him, that that would be a --

3 probably a normal question you'd want to ask.

4 MR. LUNN: Objection, nonresponsive.

5 Q. (BY MR. LITTLE) Let's go to interrogatory

6 Number 11.

7 Q. (BY MR. LUNN) Let's go to interrogatory Number

8 11. There you again state that color cape key -- if

9 well, in are for the first time sold. And state all

10 facts which support that statement.

11 A. Based upon the production, based upon the

12 affidavits that I have seen, the facts speak to that

13 Carl introduced people to Jay Temme to invest in

14 stewardship deals and in my understanding is that Carl

15 had compensation to gain for those investments. To my

16 knowledge, Carl is not a registered rep in the State of

17 Texas or licensed to solicit investments for third

18 parties for compensation. So the fact that he sold

19 unregistered nonexempt securities, I don't remember

20 seeing any red b filings as well. Based upon

21 representations that were at least incomplete, seemed

22 pretty obvious.

23 Q. He didn't really -- he just said Carl made an

24 introduction to /STAOUF art to stewardship to these

25 people. That doesn't mean he sold securities, does it?Page 108



1 A. Well, to the extent -- again, I'll defer to the

2 securities counsel. My understand suggest it and I've I

3 suggested this toy nab of times today already. That

4 Carl represented an investment to people. That I know

5 based upon production. Those people made an investment

6 in that invested dollars in that investment and my

7 understanding was from Jay Temme that he was

8 compensating Carl for that. So --

9 Q. Was Carl compensated for that?

10 A. That's what Jay Temme represented.

11 Q. Y so you don't know?

12 A. No fact.

13 Q. So Equitas fund, just to renearby my

14 recollection with the notes, there was an investment

15 made in Equitas fund in 2010?

16 A. Yes.

17 Q. By whom?

18 A. Martin Williamson.

19 Q. And how do you know Martin Williamson?

20 A. He's the stepdad to Reif Chron.

21 Q. And who spruced Martin Williamson to this

22 investment opportunity?

23 A. Ken Williamson.

24 Q. And who's Kim Williamson?

25 A. Reif's mom.� 128

1 Q. So do you believe Kim Williamson sold Martin

2 Williamson these securities since he made the

Page 109


Thompson B Cade 3 introduction?

4 A. No, because he wasn't paid, compensated for

5 that introduction and he ultimately -- Martin and Kim

6 are invested in it together. So I don't want -- it

7 wasn't -- it wasn't.

8 Q. And you have no evidence that shows that Carl

9 cup key was ever compensated for bringing -- introducing

10 any investors to stewardship?

11 A. No, only through two things. Only facts I have

12 related to that, which I've never made the statement

13 that he did. The facts I have is Number one /-FRBS was

14 that he had a plan with Weber and /STAOURTS -- and

15 stewardship to raise a fund whereby he would get

16 compensated /-FPLTD so I know that that was the plan.

17 And I do know that Jay suggested that any investors that

18 Carl brought to the table he who to compensate Carl for.

19 That's all I have.

20 Q. Okay. Then it goes on under interrogatory 11,

21 question one that Jay Temme -- this talks about Carl see

22 sold securities by way of misrepresentation of material

23 facts and omissions, to. Including but not limited to.

24 That Jay Temme was offering a Ponzi scheme which, in

25 fact, Carl cup key was plainly aware. What facts do you� 129

1 have to support that?

2 A. Carl's own petition, if my memory serves me

3 right, he made an investment or gave a bridge loan to

4 Jay Temme. Subsequent to the -- one of the flan fund or

5 other investments into stewardship, he was repaid that

6 bridge loan was paid back. So he was -- had to be aware

7 or should have been aware that when you give someone aPage 110


Thompson B Cade

8 bridge loan and it gets paid back, plus interest and

9 there's no conversation that, you should at least ask

10 some questions related to that loan.

11 Q. Do you know whether or not that that loan was

12 documented?

13 A. Have no idea.

14 Q. Do you know that there was a promissory note?

15 A. No idea.

16 Q. Do you think there's a difference between a

17 loan and an investment?

18 A. I do believe there is a difference between a

19 loan and investment, however, some loans can be

20 investments and some investments can be loan.

21 Q. Sure?

22 A. So what that or wasn't, I was not a party to

23 any of those conversation.

24 Q. So you were just aware there was a bridge loan

25 made and Carl got paid back. You don't know of any� 130

1 documentation to support that?

2 A. No.

3 Q. So how did is that mean that Carl /-PBLs that

4 Jay Temme's offering a Ponzi scheme. You're just making

5 that a/SUFTion, aren't you?

6 A. I believe that Carl knew through the

7 conversations that I was in and about that -- and it

8 seems obvious after the fact that Carl knew that his

9 money was being paid back by other people's money. And

10 in fact, Jay suggested to me -- and I remember seeing an

11 email at Jay's office where Carl was banging on Jay to

Page 111


Thompson B Cade 12 return his money and Jay need more time. It was not a

13 timely return of that capital. And Jay -- remember the

14 conversation with Jay. He was under duress about that,

15 and never heard any of the resolution until the

16 affidavits and petitions come out and I see, oh, he did,

17 in fact, get his money back and my mind led me to

18 believe that it potentially came from the invested

19 dollars that came in immediately preceding that return.

20 Q. Right. But make being assumptions based upon

21 representation made by Jay Temme who's now under

22 investigation by the SEC?


24 A. I am making an educated decision based upon a

25 number of different facts, not just Jay Temme's� 131

1 conversation. Based upon --

2 Q. (BY MR. LUNN) Do you think it -- I'm sorry. I

3 cannot know you were still going?

4 A. I was just restating my previous judge for you.

5 Saw an email. Understood he was calling Jay. Seen a

6 petition. Seen a production of I've seen /AFRPB know

7 /A*R other than aAnn /TKAF /A*EUFT. All of those facts

8 wear out. I'll leave it to the court to decide whether

9 it was or wasn't. I'm not opine ing onthat.

10 Q. But would you agree that to make an educated

11 assumption, it should also be relevant to you to see the

12 loan documents?

13 A. I don't think it was any of my business. It

14 was my business.

15 Q. That's not my question: That's not my

16 question?Page 112


Thompson B Cade

17 A. /AORBG.

18 Q. Trying to analyze the situation like you were

19 just analyzing and coming to this conclusion, do you

20 think it would be relevant to your consideration that

21 there's loan documents in place and the timing of

22 repayment of the loan and things of that nature?

23 A. I definitely think that documentation and the

24 nature of that documentation is critical in evaluating

25 the merits of any claim or any investment, absolutely� 132

1 agree with that.

2 Q. Okay. Let me ask you another question.

3 A. Okay.

4 Q. You say unequivocally that Carl cup key knew --

5 was plainly aware that Jay Temme was -- that Jay Temme

6 was running a Ponzi scheme. How can you make that

7 statement and believe that Carl cup keyee making

8 introductions to his friends and family to Jay Temme to

9 invest in a fund?

10 A. This statement was made predicated to several

11 things. One, the facts and sI was involved with

12 directly. Second, by the man's own petition and

13 affidavit. What else you want?

14 Q. I want to know how you can say that Carl cup

15 key was plainee aware that Jay Temme was running a Ponzi

16 scheme while introducing his friends to him to make

17 investments?

18 A. Well, let's --

19 Q. How does that make sense?

20 A. Let's be clear. Whether Carl admitted it was a

Page 113


Thompson B Cade 21 Ponzi scheme at the time or not, okay. Let me give you

22 that. But in Carl's own affidavit, Carl suggests that

23 he wired in money, didn't get paid back timely. It's my

24 understand /TPR-G Jay and he was paid back money

25 subsequently with investment dollars that were wrought� 133

1 in.

2 Q. And, so, that's really the basis of this

3 statement?

4 A. Yeah, sure.

5 Q. Nothing else?

6 A. Had, no, not nothing else. Again, the

7 conversation that is I had with Jay, the email I saw

8 from Carl and the communication in his petition or his

9 affidavit, excuse me, is enough to come to that

10 conclusion.

11 Q. So let me just be a little bit more specific.

12 The fact which supports this statement that Carl was

13 aware, the fact relates to the fact -- relates to Carl

14 giving /PHOPB to Temme and Carl giving the money back

15 and all of the factors you've talked about relating to

16 that. Is that what you're saying?

17 A. Could you restate that for me.

18 Q. I'll restate it?

19 A. Yeah. I don't know what you just said.

20 Q. All the conversations you had seem to be

21 related to the transaction of Carl giving /PHOPB to

22 Temme and Temme giving the money back to Carl, which is

23 the factor which indicates that Carl should have known

24 there was a Ponzi scheme?

25 A. No. I was not aware that Carl should have kneePage 114



1 anything /TKPH-L he gave his /A*F /TKPWAEUFT. I'm just

2 telling you in the time looking backwards with

3 hindsight, what I knew at the time /WHARBGS I learned

4 through the affidavit, what I've learned through the

5 petition seems to me that he was aware. If he was

6 aware, he definitely turned his head to it.

7 Q. Okay. Other than interests Carl may have

8 received on the bridge loan,ure aware of any other funds

9 that Mr. Cup key received from Jay Temme or stewardship?

10 A. No.

11 Q. Go down to Number three on your answer in

12 paragraph 11. Another /PHEUTS representation of

13 material fact or omission that Jay Temme was involve

14 indeed a variety of fraud related litigation, a fact

15 which color capeee was aware. Because Temme told him

16 about the litigation. How do you know about that?

17 A. I was in the meeting with -- when he was at my

18 office and it came up and Temme respond indeed that

19 meeting.

20 Q. So how is that reckless or how that an omission

21 if you know about it and cup key knows about it and

22 neither one of you care?

23 A. It wasn't relevant to -- it wasn't relevant to

24 anything I was doing.

25 Q. That fact that you have flan funds that Halo� 135

1 company system trying to raise money through Jay Temme

2 and he's related in fraud related activity, that's not

Page 115


Thompson B Cade 3 relevant?

4 A. No. Let's back up. The fraud related

5 activity that I was aware of at the time was a

6 litigation filed by bark Clay Smith, mc Smith. My

7 understanding associated with that was that the case was

8 dismissed and that they had reached an accord sorted

9 with that litigation.

10 Q. Okay?

11 A. And all of that was dropped.

12 Q. I understand that.

13 A. Okay.

14 Q. So you knew that and Carl knew that because you

15 were together with Temme when he explained that?

16 A. No. I didn't say that. What I said /-FSZ Carl

17 asked the question what was going on with it and Temme

18 explained that it was dismissd and being settle.

19 Q. And that's what you understood?

20 A. Yeah. That's what I understood.

21 Q. So how is that -- so if that's /REL /SRARPBT to

22 color cup key's knowledge about the -- Temme's Fred?

23 A. Because I was in/KAOUSing my friends and family

24 to invest in.

25 Q. No. But you're in a relationship with Jay� 136

1 Temme where he was raising funds for Halo entities?

2 A. No, he was not. He was introducing investors

3 to us, which they would have had the opportunity to meet

4 us, our officers and directors.

5 A. Be /AEURBL to see our operations at Halo and

6 make an independent whether they wanted to make that

7 investment or not.Page 116


Thompson B Cade

8 Q. They were not?

9 MR. LITTLE: Don't /SPWRAOUPT the witness,

10 please.

11 Q. (BY MR. LUNN) I thought you were done. Were

12 you done?

13 A. No.

14 Q. Go ahead?

15 A. They were not, any of the investors were not

16 investing with stewardship fund or Jay Temme directly.

17 Just as they were not investing with dug dura {or Tony

18 Chron or Reif Chron or me personally or directly. It

19 was into a fund sponsored by a Halo companies entity.

20 Q. Yeah. But, sir, you formed the business

21 relationship with Jay Temme wherein you're setting up

22 these funds is it to have Jay Temme help you raise

23 money, whether it was through introductions or whatever

24 it may be?

25 A. Okay.� 137

1 Q. And in connection with that, you are producing

2 documentation with the LP agreements, with ppms, with

3 all sorts of documentation relating to Halo and what

4 Halo's going to do when this's raised, is that correct?

5 A. Correct.

6 Q. And you're giving this information to Jay Temme

7 to use to raise funds, correct?

8 A. No.

9 Q. But you're giving the material --

10 A. To review the material.

11 Q. And to show to investors. How else is he

Page 117


Thompson B Cade 12 /SPAOUZed to introduce new investors, correct?

13 A. By setting up a meeting and.

14 Q. Okay. But when you give him these materials

15 and throughout the materials it's list that had he's the

16 manager of these funds, aren't youem powering him to

17 then commit a fraud?

18 A. No.

19 Q. Why not?

20 A. I'm not -- how can -- how am I?

21 Q. Well, isn't that really the case, that you're

22 sitting here and saying that Carl cup key should have

23 known because he was involved in a fraud related lawsuit

24 back here, al/TKHOE it was resolved and /TEUFPL said it

25 was re/SROFed /-TZ and /EFRGS's, setsed, that that� 138

1 somehow should be relevant to Carl cup key making

2 investments to investors, but it's not /REL /SARPBT to

3 Halo having Temme making investments to /R*EUPB vestors.

4 How that possible?


6 A. Again, I'll reiterate it, try to state it

7 again. Our fund or any fund that Halo was response

8 orring, which were limited, few. Were directly

9 controlled and sponsored by Halo. Investment dollars

10 were intended to come into Halo's bank accounts where

11 there are proper controls and procedures. /SWOERBGTed

12 with the appropriate documents. So transfer, it could

13 be administratored effectively and in conjunction with

14 investors's /STKRAOEURs. What stewardship did prior to

15 Halo, outside of Halo or ancillary to Halo would not

16 impact what Halo did. Just as if any other one of ourPage 118


Thompson B Cade

17 clients or vendors would not directly impact what bee

18 did moving forward. The elements of the case that was

19 filed against stewardship fund and Jay Temme in the mark

20 Clay Smith case listed fraud as one of those elements.

21 That was ultimately dropped. The case was dismissed or

22 settled, as far as I on the other hand. It's all

23 confidential.

24 All that I'm suggesting in this

25 interrogatory answer is that Carl introduced investors� 139

1 to stewardship who put money in, whether it was -- and

2 his own money in through the bridge loan or whatever the

3 the case may be. At the time we all thought -- thought,

4 I think Carl thought, though I can't speculate, that the

5 case associated with mark Clay Smith was a transactional

6 issue and resolved. Now looking back as to where we're

7 at today, it seems obvious that anyone who would put

8 money in would due diligence that and be concern body

9 that situation, especially if they were wiring money

10 into a bank account controlled by the infect in

11 litigation, if nothing more for insolve /EUPBSy issues

12 or bankruptcy issues or anything else related to that.

13 Q. (BY MR. LUNN) But you -- sure. Looking back,

14 don't you wish you would have looked back and looked

15 more into that case and those details in the case at

16 that time?

17 A. I don't know what I wish or -- I mean, I don't.

18 Q. Don't you think it would have had an impact on

19 your /STKEUGSZ too hard afford?

20 A. I'll trike that question.

Page 119


Thompson B Cade 21 Q. After learning of that lawsuit, did -- what was

22 that time frame. That's when you and Carl were

23 together, so it had to be June?

24 A. I'm not sure when I first learned of the

25 lawsuit. I certainly believe that it was aware because� 140

1 it came /#U67 in the meeting with Carl and Jay at my

2 offices.

3 Q. Okay. So that was in June?

4 A. So it was prior to that.

5 Q. So you knew that?

6 A. Yeah.

7 Q. When you found out about that, did you think to

8 yourself, maybe I should look at out there and see if

9 stewardship and Temme itty are involved in any other

10 litigation?

11 A. I think I did.

12 Q. How did you find out?

13 A. I don't believe I found anything.

14 Q. And what was the time frame that would have

15 doctor ked?

16 A. Well, obviously somewhere on or about the time

17 that I learned he was in litigation in the /TPHEUFRT

18 time.


20 A. Obviously before the meeting with Carl.

21 Q. Sometime in that time frame, though?

22 A. Yeah.

23 Q. I'm not trying to put words in your mouth?

24 A. Yeah. I don't remember when I found out about

25 the mc Smith lawsuit, as I stated and I'm not sure whenPage 120



1 I went and did further re/SREFRP on /TKWAOG toll find

2 out if there was anything else out there.

3 Q. Okay. So you state in Paragraph three that cup

4 key made no further inquiriy during this is due kill

5 /SKWR*EPBS process which /HE vetted as investment for

6 friends and family. How do you know what due process

7 cup key did?

8 A. I don't know what he did. All I sudden that

9 friends and family of Carl cup key or at least friends

10 of Carl cup key invested and borrowed money to

11 stewardship fund.

12 Q. Okay. You say in -- /AOPLT /TPHO wordsmith

13 you, but in Paragraph three, Jim Temme was involved in a

14 variety of fraud related litigation. What's variety?

15 A. Well, he had multiple mcs entities against him.

16 Q. So you think it's just the one litigation?

17 A. That's the only one I was /AERBGS wear of at

18 the time.

19 Q. /TPWU you were comfortable that was Inn aim

20 /PABLGT. Your decision to have stewardship trying to

21 raise money for Halo?

22 A. No more than once in litigation is resolved, I

23 don't believe it will have an impact on us going forward

24 because the truth will be known.

25 MR. LUNN: Move to strike as nonresponsive.� 142

1 Q. (BY MR. LUNN) Number four that, Jay /TEUFPLS

2 completely disorganized and incapable of managing the

Page 121


Thompson B Cade 3 investments he purported to manage, of which fact Carl

4 was title owe aware. And that's /TPAOBGT /-TSZ you knew

5 as well?

6 A. Absolutely.

7 Q. And that's facts why --

8 A. Why Carl came to my office.

9 Q. To find out what Halo's involvement was and

10 make sure this wasn't going to be a problem, right?

11 MR. LITTLE: Rights.


13 A. He came to do due dial /SKWREPBS, wanted to

14 meet some of our personnel. We accomplished that. I

15 assume to his satisfaction because he never met with me

16 again.

17 Q. (BY MR. LUNN) But he was at the Halo offices

18 again?

19 A. That's the record.

20 Q. Right. All right. So let's go to Number 12?

21 A. Okay.

22 Q. It says state the factium basis for the ass

23 eitherion in defendant's response to request for

24 disclosure the defendants owed /PHR-FRs no duty,

25 fiduciary constitute ear otherwise. You respond that� 143

1 none of the plaintiffs invested money in any fund in the

2 liability or partnership, and not a party. Within the

3 plaintiffs which would give rise to me owing any of the

4 plaintiffs any fiduciary duty or otherwise. Is that

5 your response?

6 A. Yes, it is.

7 Q. Why do you say that, to my knowledge, I'm notPage 122


Thompson B Cade

8 aware of any monies that were wired into a Halo related

9 bank account in conjunction with any investment intended

10 for any Halo entity. I'm not aware until this

11 production in this lawsuit was filed that any investors

12 ever wired any money. I'm not aware, wasn't aware that

13 there were ever any assets pout. You who would I be

14 abear of their assets bought if there was never money

15 wired. It's completely compartmentallized out of that.

16 No knowledge of any invested dollars being made. So how

17 in the world would I have /-RPBLG of a fiduciary

18 responsibility to those investors which I did not know

19 existed other than one meeting with the guys where I

20 /SPWAOUS introduced in an hour and a half a 50,000-foot

21 mack owe view of the business plan. I have no idea?

22 Q. Well, don't you agree you should have known

23 that those investors were out there and that they

24 invested funds?

25 A. It's saying should I know what my neighbor's� 144

1 doing right now. How could I have known.

2 Q. Well, you don't have you're not giving your

3 neighbor documents which purport to show that Halo

4 companies was involved in an LP in order to /SPHREUS

5 /EUT funds from investors, do you?


7 A. Ask the question again.

8 Q. (BY MR. LUNN) Sure. Not providing your

9 neighbors with LP agreements, offering memorandum, which

10 shows that you want to get investments made to Halo to

11 your neighbors, are you?

Page 123


Thompson B Cade 12 A. No, I'm not offering those to my neighbor.

13 Q. But you're giving them to Jay /TEUPLT to go out

14 there and raise funds, help raise funds to fund these

15 l/TP*S, crept?

16 A. I mean, you've asked me that question five

17 /TAOEULTZ. I've I given /UPT the same answer all five

18 /TPAOEUZ. . Intent was for his reraw. As part of the

19 operational p and the deal going guard. And his penalty

20 for those documents were to provide us introductions to

21 investors that we could solicit their investment into

22 our -- our funds.

23 Q. Yeah. But what policy and /WROERs or checks it

24 you have in place to make sure that Jay Temme wouldn't

25 use those documents the way he did?� 145

1 A. The entire subset of documents is crystal

2 clear. What to do and whatnot to do that /WAOFP

3 prevented that entire thing. Whether or not those

4 investors follow those instructions is it a whole nother

5 issue such as return the documents and execute the

6 limited partnership /SKAOUPLT. Return the documents

7 executed to Halo. At Halo's address. Wire your /PHOPB

8 to a Halo bank account with the appropriate fund name on

9 it.

10 Q. Where does it say that?

11 A. In all of the communications supplied to Jay

12 Temme.

13 Q. Did you ever -- okay. So you never any part of

14 directing any invest /TOR to wire monies to stewardship

15 fund?

16 A. Absolutely not.Page 124


Thompson B Cade

17 Q. All right. Let's go to page -- let's read the

18 interrogatory Number 15, state the factual basis for

19 moving -- for leave to designate Carl cup key as a

20 responsible third party providing the source of the

21 information provided in this designation. Let's look at

22 the second paragraph. You say look with the, fore

23 mentioned reasons, Carl cup key stole confidential

24 information, intellectual property of Halo's and

25 pretented to represent it himself?� 146

1 A. Yeah.

2 Q. State all fact that is support that statement?

3 A. As part of the production associated with this

4 litigation, I have seen a fund proposal or presentation

5 deck that had Carl cup key as a named principal in that

6 with a Halo co email address on the final page. Carl

7 cup key never had a Haley email address ever.

8 Q. Who put that on there?

9 A. Whoever -- I can't speculate who put it on

10 there.

11 Q. Carl /KAOEUP key?

12 A. Probably.

13 Q. Jay Temme?

14 A. Possibly.

15 Q. Somebody at Halo?

16 A. No.

17 Q. Why is that not possible?

18 A. Because I control those documents, and I didn't

19 do it.

20 Q. Nobody else has access to those documents?

Page 125


Thompson B Cade 21 A. No. Not even on the server. They're on my

22 personal hard drive.

23 Q. So you /TKORPBT know that Carl cup key

24 pretended to present himself as a representative of

25 Halo. You just saw his name on the document?� 147

1 A. Let me be clear. Did not see his name on the

2 document. What I saw was his name aa presentation that

3 had Halo all over it with a Halo co email address. I

4 assure you we have policies and procedures around

5 issuing email addresses and he never got one.

6 Q. Okay?

7 A. So how that got there, I have no idea as I just

8 stated.

9 Q. Right. So you don't know that Carl made that

10 representation?



13 Q. (BY MR. LUNN) Sure. You're saying

14 specifically that Carl cup key pretended to present

15 himself as a representative of Halo companies Inc. and

16 you're saying that there was a presentation adding

17 Carl's name to a Halo address?

18 A. Yeah.

19 Q. You don't how do you know that -- you don't, do

20 you?

21 A. I guess in this situation, phrase that had way,

22 I don't have facts because I didn't sit there in the

23 room with Carl changing the name. I don't. But his

24 name is well O there. It was with.

25 Q. You don't know how it got there?Page 126



1 A. I don't know how it got there.

2 Q. So if I could add your name to my letter head,

3 is that doesn't mean you did it?


5 Q. Then /TKPWU on to say that Carl cup key also

6 modified pro/PREU fare Halo company's Inc. documents and

7 used documents to make mis/RAEPT /AGSZs and statements

8 about Halo companies. /STEUT all facts to support that?

9 A. I just did.

10 Q. So you do I want know that he did it or not.

11 You just saw that these documents were changed?

12 A. Correct.

13 Q. Do you know whatever happened with those

14 documents?

15 A. No.

16 Q. Were they sent out to the public?


18 Q. So you see a document. There's an I'm on it.

19 You're just /SAUPLT okay /AO?

20 A. Well, actually, one of the /PHR-FRs produce

21 today, so I'm assuming they goat it somehow. I don't

22 know who sent it to them. I don't Don who created it.

23 Already stated that. I don't know.

24 Q. I just want to make sure. Excuse me. You go

25 on to say, that Carl cup Dee has no relationship,� 149

1 contractual or otherwise, with Halo companies and /SEUB

2 Sid /KWRAERs and Carl cup key never sought or received

Page 127


Thompson B Cade 3 permission from Halo or any of its officers or

4 correctors with regards to the use of Halo inter/RERBGT

5 /HRURBGT present or confident /KWRALD information. And

6 you don't knowledge whether or not he actually used

7 Halo's confidential information for anything, do you

8 /AFRPBLTS as I just stated, no. But that statement

9 simply suggests that he never received that. It's

10 aaffirmative statement?

11 Q. Pardon me?

12 A. The statement suggests is not making a claim.

13 The previous sentence made the claim that he use today.

14 This sentence claim that is he never had /ARPB

15 authorization to use it. Those are discreet and

16 distinct comments.

17 Q. Has Carl cup key ever represented to you or

18 anybody you know that he was an authorized

19 representative of Halo?

20 A. I do not know that.

21 Q. He's never done to to you. He's never told you

22 that --

23 A. I've only met with Carl one time and that

24 /THAET think, no, he did not suggest he was a represent

25 at this point of Halo.� 150

1 Q. Did he suggest he wanted to become a

2 representative of Halo?

3 A. He suggested he was very /STKPW-D in

4 potentially recapitalizing Halo and becoming private and

5 putting himself on the board of directors. He sure did.

6 Q. Okay. Nothing ever came of that?

7 A. No, sir.Page 128


Thompson B Cade

8 Q. Okay. You go on further to say, on the

9 contrary, it is made clear to cup key on multiple

10 occasion /THAGS Jay Temme spoke for stewardship fund LP

11 and the officers of Halo who are listed in Halo's public

12 SEC filings authorized to act on behalf-Halo's as

13 reinforced by their items disclosed. State with

14 particularity when those represent /AEUGs were made?

15 A. The first meeting with Carl, we were discuss

16 being the elementings of a potential transaction that

17 Carl may be interested in recapitalize regular Halos in

18 con/SPWR*UFRPBGZ why E investment into assets. Jay

19 started to speak up. Also pertaining to the AMX

20 platform and I made it very crystal clear to everyone in

21 the room, with witnesses available that you can doe

22 pose, I made it very clear to Carl, Carl, Halo is Halo.

23 We're a public company. We have a board of directors

24 and officers. Stewardship does not represent Halo. Any

25 decisions that affect Halo will be made at Halo and� 151

1 they're not going to be made in that room. It was very

2 crystal /STKPWHRAOER clear.

3 Q. Who are those witnesses?

4 A. /RORB /ERT boys was in the room. Jay Temme was

5 not room. Carl was in the room and I believe either

6 Michael Barry, Jeffrey /RAFBG row. I'm not a hand

7 percent sure which of the other was there, but I

8 remember somebody else being in the room. But certainly

9 Robert boys was in the room.

10 Q. So Robert boys who's still employed with Halo,

11 is going to agree with you?

Page 129


Thompson B Cade 12 A. Absolutely.

13 Q. Is Jay Temme going to agree with you?

14 A. I don't know what Jay Temme will say or won't

15 say.

16 Q. And Michael Barry, you don't know if he was

17 there or not?

18 A. I don't.

19 Q. The last sentence of that paragraph, you can

20 read that to yourself. How did Carl cup key attempt to

21 benefit from the confidential information intellectual

22 property of Halo?

23 A. Do you just want one example or multiple.

24 Q. I want to you tell me the basis of this

25 statement?� 152

1 A. Well, one conform of that is the fact that

2 subsequent to the petition and he always had his eye on

3 it, was very /STKPW-D in our soft bare platform because

4 it is first class, it is best in class. Even after the

5 petition was filed, Carl Carl called Reif, happened to

6 be in the office listens to the conversation where Carl

7 suggested he wanted to license our software /TOFPLT to

8 the extent he weren't willing to license it to him, he

9 was going to go get his /STKPWR-P /SPERZ license it to

10 him so he could go raise his own funds and do his

11 business. I assure you the Nation he gleaned in the

12 tour and the demo on the software, he learned quite a

13 bit of confidential /*EULT information because we were

14 versus /TRARPBZ parent about what the software did. And

15 he made the claim, almost as a threat, that he intended

16 to redevelop to if we weren't willing to work with itPage 130


Thompson B Cade

17 him. Owe story /TPA statement, he did make /K-FTD

18 /KWRAFD /TPHEUFPL /ARBGZ and /*EUBT /KWREBLT /HRURPBGT

19 property, and /TPA make the /KHRA.

20 Q. It he?

21 A. Eye have no idea. I'm saying /HAOy had the

22 intention to.

23 Q. So when you're saying he use today for his

24 wife, you don't know fully if he did use it for his

25 benefit?� 153

1 A. All I'm suggest suggest he attempted to

2 benefit.

3 Q. He attempted?

4 A. That's what this statement says.

5 Q. But you never be -- did he --

6 A. It doesn't say he did or didn't. It said he

7 attempted to. /AUFPL I know is that Carl cup key saw an

8 opportunity to make a ton of money in this deal based

9 upon limited due dill /SKWR*EPBS and came into our shop

10 one time that I'm aware of, lookedal all of our

11 information and very shortly thereafter, all of this

12 came to light and he calls me and says, license me your

13 software, I'm going to do this business on your own.

14 This is unfortunate, Jay's a bad guy. Sorry this all

15 happened. Will you license me /TPWHROUR software.

16 A. Let's be men about this. Let's be practical.

17 We told them it was highly in/PRAOEPT and imprudent for

18 us to engage in a business relationship with someone

19 we're -- and he suggested he was going to go and develop

20 the software for his own benefit. To me, if he did

Page 131


Thompson B Cade 21 that, he would be taking defend Yale information that he

22 learned by being on premise to further benefit himself.

23 Q. But if he didn't, it's no big deal, right?

24 A. No different than any other confidential

25 information issue. If he deceases is tee cyst, then� 154

1 certainly not. To the exdepartment we are aware that he

2 did that, will be other actions, you bet.

3 Q. And Halo hasn't lost any money because Carl

4 /TKPWAOU this information, correct?


6 Q. Then /TKPWU on to state in the next paragraph,

7 Carl cup key is also responsible to the plaintiffs as a

8 result of /O*EUB vesting in the stewardship fund LP with

9 the knowledge other investor money was /AOUFRZed to

10 return his investment plus interest. How do you know

11 that?

12 A. How do I know that he was returned upon

13 /PHOERBy was returned to him was from his are other

14 investorring /HOER how do you know he got his money

15 back.

16 Q. How do you know everything in that sentence?

17 A. Well, let's break it down. Carl cup key's also

18 responsible to the plaintiffs. /EUPB that because he's

19 got a relationship with some of the plaintiffs that

20 invest indeed this deal. /SE as an /SPWRAOUBTing

21 apartment /*RS he's got some responsibility yet to be

22 determined what /EFL L. As a result of investing with

23 stewardship and Jay Temme. With the knowledge that

24 other in/SROEFTor money.

25 THE REPORTER: Slow down.Page 132



1 A. Sorry. With the knowledge that the other

2 investor money was used to return his investment plus

3 interest. His investment was returned with interest

4 immediately upon the receipt of stewardship fund

5 receiving Murphy Doyle /SHAPBTS investment dollars.

6 Q. (BY MR. LUNN) Okay.

7 A. So you could argue that money in that account

8 is /TPEUFRPBLG ible. You could also argue that the

9 delay in the return of his bridge loan was only sate

10 greated by the fact that new money came in, /SKH

11 happened to be Mr. Murphy, Mr. Doyle and Mr. /SHAPBTS.

12 That's the basis of fact on that paragraph.

13 Q. Okay. So you're making a lot of assumptions?

14 MR. LITTLE: Object to your argument.

15 Object to your sidebar. Ask a question, please.

16 MR. LUNN: Overruled.

17 Q. (BY MR. LUNN) You're saying because of the

18 timing of events -- have you seen the bank records to

19 show -- to trace the money?

20 A. Seen some of the bank /HROERDZ employ not all.

21 Q. Have you seen the bank records to trace this

22 transaction?

23 A. I have not specifically seen this bank record

24 forward this transaction.

25 Q. And then this all occurred right at the end of� 156

1 August 2011, correct?

2 A. When he got this is money back?

Page 133


Thompson B Cade 3 Q. Correct?

4 A. I'm assuming so, near the end of August.

5 Q. ? Declaration can /TKPWHREUP b4, right?

6 A. That's the -- to I /PHAOPBLG, that's the

7 funds Mr. Murphy Dale and /SHAPBTS invested in.

8 Q. And it was within a couple of week that is the

9 SEC was in there and this whole thing blew up, correct?

10 A. My understanding, the petition was filed by the

11 SEC in October of 2011. This /TPH-FS August. So

12 depending on your definition of shortly thereafter,

13 possible, but maybe not.

14 Q. When did you know Temme was a fraud?

15 A. Well, I personally believe that until proven

16 guilty, everyone has the presumption of innocence. So I

17 believe there are a mound of evidence that would suggest

18 there were some improprieties in his practices. There

19 were people who swear under oath that there were and

20 they had knowledge of it. But I personally have not

21 made a judgment on a man that hasn't had his day in

22 court yet.

23 Q. I'll rephrase the question?

24 A. Yes, please.

25 Q. When did you first suspect that Temme may be� 157

1 involved in fraudulent activity?

2 A. Well, it's suggested in my interrogatory and

3 also in a question earlier today, the first time that I

4 had any suspicion that there may be improprieties,

5 fraudulent activity is not necessarily mean impro/PREU

6 /*ETs, it could beir regularities in /K-TSing or

7 otherwise or just /PHUS communications, /AFS atPage 134


Thompson B Cade

8 August 10th of at 2:00 a.m., when I noticed that a

9 /TR-RBGZ that I thought had been consummated months

10 before had not and /SEU got the court parties that were

11 involve indeed that transaction on the phone and asked

12 them about it. The resolution of that phone call was

13 the fact pattern that you're presenting and Jay is

14 suggesting is accurate from Chad escrows. Therefore,

15 /STOPBD down P. Everything's okay. Give us some time to

16 work this out.

17 A. That was the first time that I had any

18 suspicion. It was quickly quashed and the next time was

19 when I notified on August the 22 /*RPBD that finch and

20 Barry investors that there could be potential

21 impro/PROEU /*ET /ESs that, they did not receive their

22 assignments and that they needed to check into it.

23 However on that foreign calm, Mr. Finch told me that

24 they were in communication with Jay and were /WOEURBGing

25 out and expecting to have it resolved in the next two� 158

1 weeks and that I needed to sit tight. That was the

2 resolution of that call. It wasn't until October the

3 11th or sometime in October 2011 when the SEC came out

4 with a -- /UL at affidavits in the petition on the civil

5 case that I was aware of all the facts.

6 Q. Let's go to interrogatory 16. State the

7 factual basis for moving to leaf to designate Temme

8 Weber as a responsible party, and the source of

9 information relied upon. The first /S-PBLGSZ is even

10 /AO of the plaintiff was was a relative client of

11 Goldman Sachs calling Temme /WERP /SP*EFRB Temme Weber

Page 135


Thompson B Cade 12 directly solicited and advised /TKPWHREUP of their

13 investments. State all facts to support that and your

14 basis -- if support of those /TPABTD?


16 A. Could you narrow the question down specifically

17 what you want me to answer?

18 Q. (BY MR. LUNN) Sure. Tell me all the fact that

19 is you know that Temme Weber solicited and advised the

20 plaintiffs about their investments?

21 A. Well, I'll start with the most obvious and work

22 backwards, if that's -- you can tell me to stop whenever

23 you want. The first and most obvious is the affidavit

24 that Temme Weber provided as an exhibit to the SEC

25 petition where Temme stated under oath that he provided� 159

1 investment advice and recommendations to his own wife to

2 induce her to invest in this -- in this stewardship fund

3 and other investments that, he relied upon him to make

4 those recommendations, which would sate great the fact,

5 in my humble opinion, /RARLGS of what I know, Temme

6 Weber directly solicited and advised the afore mentioned

7 of their investments and provided them with information

8 on how to make the said investments /HAOEFPLT said it

9 himself in his affidavit. That's one.

10 Number two, sat in a meeting with Bruce

11 berg, Stewart cart /TPHER, where Temme set up the

12 meeting, solicited berg and cart /TPHER to attend the

13 meeting, suggested that the investment was a good

14 investment, that it had been good for him in the past

15 and unbeknownst to me until after this /PE /TEUBGZ came

16 out, had, in fact, successfully gotten them to wirePage 136


Thompson B Cade

17 /PHOPB to stewardship fund. So to me, as it pertains to

18 satisfying the elements of soliciting advice, those are

19 two direct examples. Further, I have seen emails where

20 Temme is forwarding information and also directing

21 investors on how to participate in the investment as

22 well as packages that would support those facts that are

23 all part of the production that's been supplied in the

24 tens of thousands of pages we've supplied you guys.

25 Q. And what did Temme Weber say as far as the� 160

1 investment to get ahold of Jay Temme to see if he wanted

2 to invest?

3 A. You want me to speak to every sickle instance

4 of communication or do you want to speak to specific.

5 Q. Generally.

6 A. Generally.

7 Q. Do you think Temme Weber told anybody send me

8 the money and I'll make your investment for you?

9 A. Oh, I never saw an email where Temme Weber said

10 send me the /PHOPB.

11 Q. Okay?

12 A. The email that is I did see or the

13 /KPHAOURPBication I had -- I was part of suggested that

14 make stewardship.

15 Q. So to contact stewardship if you want to

16 invest?

17 A. Sure.

18 Q. Right?

19 A. But I think the question that I was responding

20 to, if I'm not mistaken and may have to read it back to

Page 137


Thompson B Cade 21 me, was the facts of Temme Weber directly solicited and

22 advised to make their investments with Jay Temme and

23 Temme controlled entities. So the fact that Weber said

24 to wire the /PHOPB to stewardship and Jay Temme is

25 consistent with the sentence that I provided my answer� 161

1 here.

2 Q. What advice did Temme /WEUBer give to stew cart

3 /TPHER with the investment?

4 A. Said it was a good judgment. He'd been a long

5 time investor with Jay Temme and had had several

6 successful investments with him that had been returned

7 with good returns and he should seriously consider it.

8 Q. So he's talking about his history with Temme,

9 yeah?

10 Q. He's not talking about the suit ability of

11 thatment have, is he?

12 A. Specifically, we didn't talk in detail. Really

13 fnigh memory serves me right, at all about any specific

14 at all because the meeting, as I stated earlier, was

15 predominantly for the opportunity to review the business

16 plan to these guys who had not -- or had heard it for

17 the first final. So it wasn't about a specific

18 investment in that meeting.

19 Q. All right. So he wasn't recommending

20 investment. He of the just saying that he's had good

21 experience in the past with these investments?

22 A. Yeah. I didn't say he recommended the

23 investment in that meeting.

24 Q. He was advising him on the investment?

25 A. Well, advising and recommending is a completelyPage 138



1 different word. Advising means giving him pros, cons,

2 giving him advice. Recommendation is saying do it.

3 Q. How can he give advice on an investment that

4 you're not sure that you're investing in?

5 A. Well, again, I want to be clear what you're

6 asking. Okay.

7 Q. Sure?

8 A. Because if you're asking about a specific

9 meeting or are we back to your question where you were

10 talking about generally.

11 Q. I'm talking -- just asked you specifically

12 about ash individual?

13 A. Okay.

14 Q. I said -- what advice did /TEUFPL Weber give to

15 Bruce berg about investing in that particular

16 investment?

17 MR. LITTLE: Objection, form. Asked and

18 answered.

19 A. Try again. In the meeting, the one

20 communication I had with Bruce berg was in that meeting.

21 Q. (BY MR. LUNN) I understand.

22 A. Well, you keep asking me, so I'm trying to help

23 you.

24 In that meeting, we spent time discussing

25 the macro 30,000-foot business plan. What is a� 163

1 mortgage. How do you bee them. What do you do with

2 them when you buy them. What's the model look like.

Page 139


Thompson B Cade 3 What infra/TR-BTure is it it take. The end to end plan

4 around /PWAing distressed assets N. That meeting, Temme

5 Weber suggested and advised Bruce berg and Stewart cart

6 /TPHER that his previous investments in the same

7 business model with Jay Temme had been success. And

8 that he -- he suggested that they should take a serious

9 look at participating in the deal that -- whatever keel

10 was going to be put together. That's --

11 Q. That's your testimony. So that's -- the advice

12 was about previous investment that is he had made that I

13 advise you that I've made investments before and they

14 are successful?

15 A. That was -- that was the advice given in that

16 meeting.

17 Q. And -- okay. Then /TKPWU on to state that each

18 of the afore mentioned plaintiffs?

19 A. Introduced to Jay Temme by Temme Weber and made

20 their investments solely on the recommendation of Temme

21 /WER, based upon Temme Weber's trust in previous good

22 investments and history with Jay Temme. What facts do

23 you have to support that, sir.

24 A. Well, in several of the petitions that I -- and

25 affidavit that is I received and seen, some of the� 164

1 investors suggest I never spoke to Jay Temme. Show E so

2 how would they have known about the investment but for

3 somebody else and the nexus to Jay would have been

4 Temme. So it's clear to me, as to most people, that

5 Temme Weber recommended that they invest with

6 stewardship based upon his previous experience, which is

7 much like me recommending that you do or don't go try aPage 140


Thompson B Cade

8 restaurant. It's because I've been there and I either

9 liked the food or didn't like the food. Most people

10 operate under that system.

11 Q. Did you read the -- each plaintiff's discovery

12 responses?

13 A. Well, the discovery responses were significant.

14 So to the extent if you're asking deputy I read -- them

15 in their entirety, the answer is no. If you're asking

16 me did I read any of them, I did read some of them.

17 Q. Okay. So tell me which plaintiffs did not have

18 communications with either Temme or you.

19 A. Well, the -- let's break that down.

20 Q. Okay. Let's start with Temme. Which lives had

21 no communications with Temme.

22 A. My understanding is that Temme's wife never had

23 communications.

24 Q. Okay?

25 A. With Temme. My understanding that /SHAPBTS� 165

1 never had communications with Temme for starters. I do

2 believe that Doyle, hay dock, lay were on conference

3 calls with Temme because Temme represented that. So

4 that's what my belief pattern is -- is based upon. I

5 know cart /TPHER and berg met with Temme because I was

6 in that meeting. And I don't know who all of the

7 individuals that are associated in all the limited

8 partnerships and /HREUBGS luxury c. So I couldn't --

9 couldn't represent that.

10 Q. So it's not really fair to say that each of the

11 plaintiffs, every plaintiff is what you're saying, made

Page 141


Thompson B Cade 12 the decision to invest based on recommendations of Temme

13 Weber? That's not really accurate, is it?

14 A. Well, I don't know any plaintiff that wasn't

15 introduced to Temme through -- without Temme Weber. So

16 I don't -- the first part of that, I would suggest is

17 accurate that, he did introduce all of the plaintiffs to

18 Temme. So that part's true.

19 I'm not sure what information was provided

20 to any of those plaintiffs to induce helm to make their

21 investments F. Had to be limited information. And I

22 certainly believe that the recommendations of Temme

23 Weber, based upon previous good investment history, was

24 the reason they invested or the main reason, if not the

25 only reason, because none of those investors ever came� 166

1 to my knowledge to see me, other than that one meeting

2 with berg and cart /TPHER or. Kim /TKPWHREUP never

3 called me, never emailed me, never wrote me. So that to

4 me is a true statement. I wouldn't have made it if if

5 wasn't.

6 Q. It's based upon a bunch much assumptions that

7 you choose to make, correct. You don't know -- have you

8 had a conversation with stew cart /TPHER asking him why

9 he invested in the funds?

10 A. No.

11 Q. Have you had a conversation --

12 A. Excuse me.

13 Q. You answered the question.

14 A. Okay.

15 Q. How about with Bruce berg? Did you have a

16 conversation with him that's like?Page 142


Thompson B Cade

17 A. I advise you to make this investment.

18 A. No.

19 Q. So these are just based upon your I don't know

20 /SO*R a/SUFPLTS /#KWR0*679 knows that, statement?

21 A. No.

22 Q. You don't have any facts?

23 A. Deapproximate /OEPBDZ what you call the. And

24 the Temme had made.

25 Q. I'm not disputing?� 167

1 A. Okay.

2 Q. The fact that there were certain investors that

3 were introduced to Jay Temme and to Halo through Temme

4 Weber?

5 A. Okay.

6 Q. The there's a difference between that and

7 saying that it was based solely because of Temme web's

8 recommendations that they made their investment?

9 A. I'm defer at this point to the time that we ask

10 ask them. I don't know. All I do know is that the

11 facts -- the statement that is I /TPHAED in mere, to my

12 knowledge, are true and accurate, that they all were

13 introduced through Temme, that they made -- Temme made a

14 recommendation to those people to invest and it was

15 based upon his previous history. Those are facts that

16 I -- I believe in. Now, whether or not you want to

17 wordsmith it and take elements of the sentence such as

18 solely or each and break it down, that's no more unlike

19 any of the claims in the petition that all defendants

20 did all things. So I'm trying to answer your question

Page 143


Thompson B Cade 21 in good faith, but I feel like -- yeah.

22 Q.

23 MR. LUNN: Object to nonresponsive.

24 A. Okay.

25 Q. (BY MR. LUNN) Interrogatory 18 states, state� 168

1 the factual basis for the assertions state indeed

2 defendants response to request for disclosure that are

3 plaintiffs wanted Halo to get out of the way, let them

4 invest as much money as fast as they could. You respond

5 Halo was not aware of the plaintiffs investments with

6 stewardship or Jay Temme. There was only a few for

7 service vendor O. Information was obviouslyir relevant

8 to plaintiffs decision to invest money with Temme.

9 That's your answer?

10 A. Appears to be.

11 Q. And their investments made before

12 stewardship -- or sorry. Strike that. Before Halo

13 decided they just want to be a fee for service, correct?


15 Q. Let me just restate T.?

16 A. Okay.

17 Q. So I think you said that /TP-FS in June of 2011

18 time frame?

19 A. Yes.

20 Q. When Halo decided we don't want to do this back

21 end participation /-FPLTD we want to be a fee for

22 service, correct?

23 A. Correct.

24 Q. And you /KWRAO*ure aware there were investments

25 made prior to /THEPBL?Page 144



1 A. I'm I was not aware at that time. I'm aware

2 today reviewing the /PE /STKPWHREGZ right /SP-FPT you

3 were aware there were meetings, you had a meeting with

4 Bruce berg, cart /TPHER. I'm not going to rehash that,

5 where the repations were made that Halo was going to be

6 participating back end of this.

7 A. That representation was never made in that meet

8 /STPWHR-G you anyhow that -- okay. But then you did --

9 after getting feedback from Temme Weber, create a no fee

10 agreement which shows that Halo's going to be

11 participating in the back end of the investments.

12 A. Well, first of all, Halo was the -- and its

13 subsidiary of a general partner of the stewardship flan

14 fund.

15 Q. Correct?

16 A. An economic waterfall was n that that was a ten

17 percent return, return of capital, 40 percent to the

18 /TPW-RBGS f, 50 percent to the limited partners and

19 50 percent to charity. I want to be clear on back end

20 because that can be very vague /KPHAOEPBTS. First

21 approximate of all, I just want to clarify that. But

22 that said, could you repeat the question?

23 Q. Well, you know, we talked about a couple of

24 thingses. One in particular, that you emphasized with

25 Weber and cup key. They recognized the importance of� 170

1 Halo being involved in these funds because of how

2 unorganized Temme was, correct?

Page 145


Thompson B Cade 3 A. Disay that, yes isn't that /O*RPB kin /S-FRT

4 /SEUPT that plaintiffs wanted Halo to get out of the way

5 so they could start throwing money at Temme.

6 A. Well, that statement is representative as a

7 response to the fact that none of the in/SROEFTors

8 aftered aring the petition in their affidavits in the

9 production followed the instructions that were supposed

10 to be provided. I never provided it to them.

11 Q. Why not?

12 A. I never have spoke to them. Department know

13 they existed.

14 Q. But you were giving /TRAEPLTs 206 Temme knowing

15 that he could take those out and get money, correct?

16 A. Well, let's -- again, I can provide you

17 directions to my house and whether you follow those

18 directions or not arir relevant. You're reading them.

19 Want instructions in the series of document that is were

20 created for /TPHROPB fund were very precise and complete

21 and specific as to how to effect great an investment

22 into flan fund. This statement suggests that they

23 weren't followed, that Temme /AO obviously represented

24 /THEUPBLGs to them that were not accurate. We all know

25 Temme is a bad guy. Is being investigated for a number� 171

1 of different things. Whether or not the investors

2 follow the instructions that were in had our documents

3 or not, I can't even begin to surmise why they did or

4 didn't except for the fact that whatever Temme or Carl

5 or Jay was telling them was more important than what was

6 in our documents or they would have followed if and none

7 of this would have happened.Page 146


Thompson B Cade

8 Q. Well?

9 MR. LUNN: Let's take a break.

10 MR. LITTLE: Okay.

11 THE VIDEOGRAPHER: We've are off record at

12 2:45 and end of Tape 3.

13 (A recess was taken.)

14 THE VIDEOGRAPHER: Individual we are back

15 on have had record at 3:01, beginning with Tape Number

16 four.

17 Q. (BY MR. LUNN) /WAO*L mark our first exhibit,

18 Exhibit 1?

19 (Deposition Exhibit 1 was marked.)

20 Q. (BY MR. LUNN) I'll ask to you read this email

21 to yourself. Have you seen this document before?

22 A. This email or this document? I mean, this --

23 Q. The email?

24 A. Yeah. I'm sure I sent it.

25 Q. And what was the purpose of sending that email?� 172

1 A. It was -- if my memory serves me right, this

2 was the initial conversation of the very firstitieration

3 of talking about potentially trying to do toy

4 transaction with Jay, with Halo.

5 Q. What are you talking about a retirement plan?

6 A. Oh, it was a joke. It was kind of an attempt

7 at failed humor whereas Jay -- the real genesis of the

8 entire transaction concept was Jay was frustrated with

9 this technology. Jay was frustrated with operations.

10 He was not /ARPB operator, self claimed.

11 Jay was not a details guy, self claimed.

Page 147


Thompson B Cade 12 And Jay was -- and I had a lot of /K-FRGSs around how

13 Halo could pick up some of the burden where we had

14 strengths in those areas. So it was an attempt at humor

15 to Jay to retire from the things that he didn't enjoy

16 doing also, obviously to make some money.

17 Q. Okay.

18 MR. LUNN: Here's Number two /PHARBLG mark

19 two.

20 Q. (BY MR. LUNN) Another email from you to joy.

21 I'll ask I to read that to yourself?

22 A. Okay.

23 Q. And, so, April 22, 2010, what are you asking

24 about the three /H-RPBD thousand dollars for?

25 A. I'm not sure. I'd have to go back and dissect� 173

1 specifically what the request was for. I don't

2 remember.

3 Q. Were you trying to make cash flow arrangements?

4 A. Yeah. Jay, as I explained early /TPHER my

5 deposition today, Jay /REU lied upon and Halo provided

6 services in a number of different manners. We had

7 contracts with vendors such as /AOEP owe provide /PERZ,

8 title providers, tax providers, /TPH-PGs, property

9 preservation and those types of things where we didn't

10 have relationship. Brought those to the table, signed

11 those contracts. Jay ordered products through our

12 software and we had -- we controlled the billings. So

13 in some instances, emails assumption as this, part that

14 was money could have been for off setting direct

15 expenses associated with the management portfolio. It

16 could have been related to invoices due to -- forPage 148


Thompson B Cade

17 specific servicing or component servicing deals that we

18 had with Jay. So whether it was a refinance campaigns

19 we may have been rung, credit repair campaign we may

20 have been running, a lot of different things. So as it

21 pertains to cash flow arrangement /-PS, we -- /SRAEU

22 a/AO our joint marketing agreement and asset management

23 agreement with /STAOURTDZ provided for us to have to

24 deliver a number of services and him to pay for those.

25 So I would have to assume not being able to have other� 174

1 documents in front of me that, it was one or all of

2 those things.

3 Q. Okay.


5 Q. (BY MR. LUNN) And /TPEUBT three, which is the

6 email from you to Jay Temme dated May 11, 2010. Read

7 that to yourself, sir.

8 A. Yeah.

9 Q. All right. So does that refresh your

10 recollection what the $300,000 is for?

11 A. Well, again, not specifically for where the

12 $300,000 would be applied. I think there are over the

13 couple year relationship, I had with stewardship and

14 Jay, there's dozens -- maybe dozens of emails like this.

15 And, so, specifically, again, the nature of our

16 relationship -- Halo's relationship as a vendor to Jay

17 was very ambiguous. There were alot of thing that is

18 when we met Jay, identified he had short comeings and

19 needs in his organization. We attempted to provide and

20 fill those gaps.

Page 149


Thompson B Cade 21 There was not a good revenue model that was

22 out on the market of how to do business in that way. So

23 Jay and I had an arc rangement that we would help

24 stewardship -- Halo would help stewardship with a number

25 of different things and for that, sometimes there would� 175

1 be direct off setting costs for /STEFRBS that I

2 recommending where we were able to make a mark up.

3 Sometimes it would just be a -- a direct contribution

4 for off set for consulting or time spent or my

5 employees -- Halo's employees over there working or

6 whatever the case may be or development on some of the

7 technology or in other instances, because we were

8 carrying overhead and infrastructure that was not

9 directly able to try to direct discreet revenue,

10 sometimes Jay would -- depend ing onwhat our cash flow

11 needs, provide capital to Halo to be able to cover those

12 shortfalls.

13 Q. Okay. And at the beginning of this email, it

14 says I need to /HUPL /PWHRAOE ask for help again. So is

15 that what this is, is you're asking him to help

16 contribute?

17 A. Well, yeah /TKWRA /STPHRUPBDZ to the overhead.

18 A. Again, as a said, there probably a dozen emails

19 like this, and there was not a -- there was not a

20 contractual arrangement whereby he was obligated to do

21 anything. So it's all predicated upon the value we were

22 providing in his operations and what we were delivering.

23 And, so, because there was no discreet and specific

24 manner to compensate that or to be able to calculate

25 that, then any request that was out of the ordinaryPage 150



1 would certainly -- certainly this is how I would

2 approach it.

3 Q. All right. A few sentences in, it says I

4 assume based on our last /K-RGSZ regard negligence that,

5 that was not proper timing to mention any of this to

6 Chad, /KWH I appreciate. What do you mean by that?

7 A. Oh, yeah. Back in early 2010, Chad had

8 approached me and -- I assume approached Jay as well in

9 wanting to own a piece of Halo. He wanted to invest in

10 Halo. He wanted an option to buy Halo because Chad

11 wanted to move some of his assets that were being

12 serviced elsewhere to Halo. And, so, Jay -- because he

13 was the nexus to this relationship, I channelled all my

14 communications through Jay. And because we were in a

15 capital crunch at that time accident you know, I what --

16 Chad was an obvious opportunity to pursue that and Jay

17 asked me to the to pursue it, and I tried to respect

18 that. That's the nature of that whole conversation or

19 any subsequent emails involving Chad around capital.

20 Q. Okay.

21 A. Never manifested into anything.

22 MR. LUNN: Mark the next exhibit, Exhibit

23 Number 4.


25 Q. (BY MR. LUNN) Exhibit 4 is two page email.� 177

1 The top one from you to gen rear fen he. Who's Jennifer

2 Henry?

Page 151


Thompson B Cade 3 A. That was Jay's assistant.

4 Q. All right. And the bottom line, bottom email

5 on the first page looks like the first of the /KHRAEUB.

6 It's from you to Jennifer and Jay?

7 MR. LITTLE: Hey, Dave, before we get

8 started, it looks like got two emails stapled together

9 here. Did you mean to? There's a June 11 email on the

10 last page?

11 MR. LUNN: Yeah. That's not supposed to be

12 part of that.

13 THE WITNESS: Do you want me to pull it

14 off.

15 Q. (BY MR. LUNN) All right. Thank you?

16 A. Do you want this back, David?

17 Q. Sure. All right. So the bottom email is an

18 email from you to Jay and Jennifer. What are you trying

19 to communicate with them about?

20 A. Let's see. Looks like I'm trying to

21 communicate thatal 11 is a safe city. Is this the

22 entire chain?

23 Q. Well, you're saying the subject line is we can

24 move you guy necessary this weekend. What is the

25 purpose of saying that?� 178

1 A. Well, there was conversation, as I stated

2 earlier,itier attive, that there could be a potential

3 number of transactions structures whereby stewardship

4 and Halo understand benefit for -- benefit each other by

5 taking the relationship further than what it was as a

6 client vendor relationship. One of those was that we

7 had significant rental space or office space in AllenPage 152


Thompson B Cade

8 and one of those was that some of the staff that was

9 performing services on the AMX platform could be housed

10 in Allen to off set some of that empty space. And I'm

11 sure this is part of that conversation. I'm not -- I'm

12 not a hundred percent sure. This is, you know, almost

13 three years ago. I'm not a hundred percent sure what

14 this with Jennifer was.

15 Q. But there's conversations about bringing

16 stewardship people into the Halo offices?

17 A. In. At the time -- at this time we were

18 considering -- and it was proposed to the board a

19 potential transaction with the infrainstructure of

20 stewardship merging with a clean entity whereby legacy

21 stewardship employees would become employ /AOES of the

22 new entity and we could convey stock to the owners of

23 that new entity in exchange for the infrastructure

24 moving under the Halo banner. Part of that it would

25 obviously mean moving /SPHO of the personnel to the� 179

1 Allen facilities. I'm assuming this was part of that

2 conversation.

3 Q. Okay.

4 MR. LUNN: Next exhibit, Exhibit 5.


6 Q. (BY MR. LUNN) June 11th email. Read that to

7 yourself?

8 A. Yeah. I already read it.

9 Q. Sorry to ask for F. You're asking for more

10 money from Jay?

11 A. That's what it appears.

Page 153


Thompson B Cade 12 Q. Okay. What about bouncing checks in the Halo

13 account?

14 A. That's what it says.

15 Q. Is that what you're worried about. I know

16 that's what it /-TSZ?

17 A. Today or --

18 Q. Then?

19 A. Well, obviously, you don't ever want to bounce

20 checks out of a bank account, Number one. Number two,

21 if it involves Jay, then it likely involved the /TPARBT

22 that we were responsible to certain vendors to keep them

23 afloat and Jay would be responsible for paying those

24 bills to us. So I have to assume that that's what

25 they're referring to. I don't know.� 180

1 Q. Why would you say /SOR to ask for this. As I

2 said before, this is the last time /-FRPL?

3 A. I have no idea. I /-RPBL, as it per/TAEURPBZ

4 to wires from Jay Temme, I do believe, if I'm not

5 mistaken on this -- correct me if I'm wrong, but I do

6 believe we supplied a full accounting of all of the

7 wires in and ought of Halo to you and as a request for

8 production recently. We also supplied in our request

9 for production to the receiver, which is the invoices

10 that were accrued and incurred and working in

11 conjunction with /STAOURZ. So I'm not going to be able

12 to sit here in this /KP-FT today to analyze email after

13 email specific to what that email is referring to at

14 that specific time without more information in front of

15 me. I just can't do it in good faith.

16 (Deposition Exhibit 6 was marked.)Page 154


Thompson B Cade

17 Q. (BY MR. LUNN) This Exhibit Number 6, you were

18 just hand an email dated June 14th from you to Jay

19 Temme, partnership investment, xls?

20 A. Yeah.

21 Q. Do you recall seeing this document?

22 A. This, mail, yes.

23 Q. Okay. This is June 14, 2010, it we have had

24 some conversations with some new potential investors.

25 Do you know who those investors might have been at that� 181

1 time?

2 A. I don't remember. We had a lot of

3 conversations.

4 Q. Okay.


6 Q. (BY MR. LUNN) Exhibit 7 is an email from you

7 to Jay Temme dated August 4, 2010.

8 A. Yeah.

9 Q. It says in this -- be, thanks again for your

10 support and assistance. I sincerely mean it when I say

11 I love you, man. You have done much help -- much to

12 help me and my family, realize our dreams of -- and

13 having you as a partner in them?

14 A. Yeah.

15 Q. What do you mean by that?

16 A. Well, we were in -- at this time as I've cited

17 a number of times, we were in negotiations with trying

18 to complete a transaction with Jay and his team to

19 create a better entity going forward, and that's what

20 that was referring to.

Page 155


Thompson B Cade 21 Q. So you think in this time frame, you had a

22 pretty close relationship with Jay Temme?

23 A. I would assume so.

24 Q. Then a few sentences down, the last paragraph

25 from the bottom, as I mentioned in nigh text, I have� 182

1 some ideas on how to fully capitalize Halo Inc. and get

2 your money back to you. What do you mean by that?

3 A. Well, at this time again, part of the

4 transaction was to capitalize -- recapitalize Halo with

5 our infrastructure that we had in place. The revenue

6 models that we had with Jay was unwieldy because it

7 was -- it was ambiguous and vague about how we would be

8 compensated for our effort. So the services pre were

9 providing him outside of the vend /O*R management and we

10 were talking to a number of institutional groups to

11 reTAP /TALize Halo. As I stated in my -- in my

12 interrogatory, either this one or the first one -- I

13 don't remember which one it was -- there was certainly

14 monies that Jay wired to Halo that were for G & A and

15 not specifically allocatable and I'm sure this is

16 referring to that. Not to mention obviously -- I don't

17 think this is going to be a consistent email with many

18 other emails from atone ality. I was probably a little

19 emotional. I was about to have my first son. So, you

20 know, take that for what it's worth.

21 Q. All right. But certainly it's /SRA*EUF to

22 infer that when you say get your money back to you, that

23 that's money that he ad/SRAOPBSed to Halo other than for

24 invoices and things of that nature?

25 A. I mean, is that an assumption?Page 156



1 Q. Why would you say that? I won't assume. Tell

2 me why you would say we'll get your money back to you?

3 A. It's -- would you read my response back just so

4 I'm /AO if you don't mind.


6 THE WITNESS: You can stop. Thank you.

7 A. So this -- anything that wasn't allocatable

8 directly to a vendor or contract or services or whoever

9 the case may be, /AEUZ mention, I believe that that's

10 what that was referring to. But I'd have to have a

11 direct accounting to know specifically what amounts

12 you're talking about on this date, at this time because

13 because it was all over the place.

14 MR. LITTLE: I'm sorry. I need two minutes

15 to use the rest room.

16 MR. LUNN: No, no problem.

17 MR. LITTLE: Can we take a break.


19 THE VIDEOGRAPHER: Off the record at 3:20.

20 (A recess was taken.) Time stop

21 THE VIDEOGRAPHER:

22 Q. (BY MR. LUNN) We are back one record, 3:26?

23 Q. [!ATTORNEY1] ?

24 Q. (BY MR. LUNN) All right, sir. Going to hand

25 you Exhibit 8?� 184

1 A. Okay.


Page 157


Thompson B Cade 3 Q. (BY MR. LUNN) Exhibit 8 is an email dated

4 August 6, 2010, from you to Jay Temme copying, is that

5 correct?

6 A. It is.

7 Q. And it looks like you were forwarding some

8 documents to Mr. Temme for him to execute. Is that

9 right?


11 Q. And why were you doing that, sir?

12 A. I believe this is the entity we set up

13 originally to begin the process of the four triangular

14 merger with stewardship advisers, which was a new entity

15 through which the concept was at the time to contribute

16 the intellectual property, if you will and move the

17 employee necessary that entity into a four triangular

18 merger with that /TPHAERPBT. I believe that's what this

19 is. I may be mistaken.

20 Q. Okay. So these are entity that is you. Ed to

21 form in order to accomplish that goal?

22 A. That's right.

23 Q. These are document that is were generated by

24 you or somebody at Halo?

25 A. That's correct.� 185


2 Q. (BY MR. LUNN) Exhibit 9 is an email from you

3 to -- well, it's 18, mail from to you John Henry and you

4 and copy ing-Jay Temme and Doug /TPER a?

5 A. Yeah.

6 Q. What does this email deal with?

7 A. Oh, let's see here. Troy, Ryan, /TPHAEUGPage 158


Thompson B Cade

8 Ann -- we were /#2ER7 Nate ago /AO as we were /WAOEUPBGD

9 down or debt selling business, we were terminating some

10 people, laying them off /OEUGS or downsizing, and these

11 were solid sales guys and stewardship /TPAUPBD was

12 interested in hiring them. So we support them over

13 there to interview with them. And I think they took the

14 jobs and that's what this is referring to.

15 Q. Why is the subject line Halo sales start date?

16 A. These guys were Halo sales guys.

17 Q. But they were going to stewardship fund?


19 Q. Were they to /WARBG out of the Halo office?

20 A. No.

21 Q. So what was -- they were all supposed to be

22 with stewardship?

23 A. I think there was some sales role selling

24 assets or something. I didn't hire them. I referred

25 them over to John, which was the VP of the sales over� 186

1 there, and he hired them. You'll have to ask John.

2 Q. Okay.


4 Q. (BY MR. LUNN) The court reporter's handed you

5 Exhibit 10?

6 A. Yeah.

7 Q. A series of emails between you and Jay. Tell

8 me what this email refers to, sir.

9 A. Just a second. Let me read it.

10 Q. Sure.

11 A. Yeah. There's a number of different elements

Page 159


Thompson B Cade 12 do you want me to go through them never --

13 Q. Llet's start with the first paragraph?

14 A. Ee.

15 Q. And you're talking about this is a draft of the

16 investment economics PDF, I believe?

17 A. Yeah.

18 Q. And then you go on to say, I think having

19 something like this will make it easy tore demonstrate

20 the mod toll /STPHEUFT /KWAEUTed investors. Is that

21 correct?

22 A. Yes.

23 Q. Why do you say that?

24 A. Well, Jay's /TKAT aas I stated earlier, was

25 disorganized and all over the place. It was hard to do� 187

1 any direct analysis on the historical performance. Once

2 we had the data inside our. And extrapolate that data

3 and create financial models to actually what was the per

4 fore /ARPBGS, what was the historical modeling

5 /SOERBTSed with this type of investment. So Jay had

6 suggested to me that in doing -- having investors due

7 diligence on stewardship funds legacy /TKAT awas it was

8 very difficult for them to get their arms /WRARPed

9 around it. Our team created an actual excel spreadsheet

10 model of how far to look at it, with assumable factors

11 that you could put in there to play with the

12 servicetivity of it. Deliver today to Jay. The felt it

13 could help due diligence going forward.

14 Q. And that something with regard to formation of

15 business relationship with Jay's entity or with

16 investors in different funds down the road?Page 160


Thompson B Cade

17 A. Well, at this time Jay was still -- still doing

18 stewardship fund. So I think one of the things as I

19 suggested we did was we provided a lot of random value

20 ads to stewardship and Jay to help improve their

21 organization. One of them for example was an littics.

22 They who no analyst.

23 [!EZ SPEAKER 102]: Ings.


25 A. Excuse me. /STHAEU did not have the spell� 188

1 competency. Our team about. Being in the mortgage and

2 finance disagree, we had that. So we created a model

3 based upon the data, supplied it to Jay so that he could

4 use it to raise funds at stewardship.

5 Q. (BY MR. LUNN) So are these the type of models

6 you'd use in your 56 to /TKPWHREUP down the road to help

7 invetors with their due diligence. I'm not saying the

8 specific one?

9 A. In. Generally speaking, these needed to be

10 specific to a portfolio. So whether -- it could be used

11 either way. It could be used to show historical perform

12 /APBLS on a history portfolio or it could be used to

13 project future result s ona new portfolio. So whether

14 it was in conjunction with a fund proposal or not was

15 dependent on the /S*RBGs. There were a number of those

16 and may or may not have been depend ing onwhich one

17 you're referring to.

18 Q. Sure. Again, September 3rd, the last

19 paragraph, you state, I want to thank you again /TP-RP

20 your willingness to help us out cash wise?

Page 161


Thompson B Cade 21 A. Yeah.

22 Q. So you believe that was cash that was just

23 allocated to general overhead, things like that?

24 A. That's exactly right and I think it's probably

25 relevant to pint out here that any of that capital was� 189

1 al-Kated to a preferred X that was notated in all of our

2 public filings. So that series X was redeemable and at

3 such time that we /AO either recapitalized the /OERGSZ

4 or got a consistent revenue stream associated with newer

5 clients, then the indent was to reteem that preferred X.

6 So there was the direct to thing of any monies not

7 directly socialitied with vendor or service provider.

8 Soy it was very, very /TKHREUB /RALT and accurate in how

9 we /KPWEPT the data and that's all public record, just

10 FYI.

11 Q. Okay.


13 Q. (BY MR. LUNN) Then on September 3, 2010, as

14 reflect indeed Exhibit 11, Jay's looking for some help

15 with a pitch deck. Is that right?

16 A. I'm assuming so, a deck, yeah.

17 Q. Do you have any understanding why -- what the

18 purpose of creating the pitch deck?

19 A. Well, John pain was a potential prospect that I

20 met with one time that Jay was trying to induce to

21 invest in assets. So I'm assuming the deck was to

22 /AO*ERT further explain any elements of the business

23 plan or the opportunity at large. I'm not sure what he

24 delivered to John pain. Here, I guess he's asking for

25 one page where it talks about credit repair and debtPage 162



1 structuring. I'm sure we delivered that to him.

2 Q. Okay. So you're helping Temme at this point

3 get pitch decks together and things that of nature?

4 A. The answer to no to that.

5 Q. Oh, it's not. So what are you doing here,

6 then?

7 A. Well, in the email, credit repair and debt

8 /REPB structureings with the end goal, what we did at

9 Halo at the time. That was a component service as to

10 our service that is we provided at Halo. So I

11 personally wouldn't construe that as helping him get

12 this is pitch decks together. Whether or not -- how he

13 delivered that /T-FRBGS guaranteed it was clear if Halo

14 services, we werelet /ORPBL one licensed to to do

15 mortgage /R-RPBLGation. We were the only one licensed

16 to do /TKERBT settlement that. Was a service we

17 provided to numerous clients, nation star wide,

18 /PHAOEUDed that to Morgan /STPHEUGT barner. Which is

19 how I even got ton GI. So to answer your question

20 discreetly, no, we were not creating pitch decks. Now,

21 I will suggest to you that in the ton sentence, that

22 itself we would be list to spruce it up, not preparing

23 but making it it /KHRAOBG graphically better, something

24 that I'm sure we offered to do. /AOEPB /KWRO if we ever

25 did it or not.� 191


2 Q. (BY MR. LUNN) I'll hand you Exhibit 12 e email

Page 163


Thompson B Cade 3 from Tony /KROEPB?

4 A. Yeah.

5 Q. To Jay Temme, copying you and Reif /KROEPB. Do

6 you see that?

7 A. Yes, sir.

8 Q. Just tell me about the draft merger

9 /#2K3WR5E6789?

10 A. So we had come to the structure agreement with

11 Jay on how we would contemplate a merger between the new

12 entity we had set up and established in and Halo. This

13 was a -- the agreement that would govern that

14 transaction and it appears here that -- and as I

15 remember, what the next step was to engage in necessary

16 due diligence to be able to effectuate that transaction.

17 Q. And what did that due diligence entail?

18 A. Well, there was a memo -- believe was sent to

19 Jay. Should be in one of my emails somewhere. That had

20 a list of about 30 thing that is we needed. It was

21 probably a 10-page document of items that any

22 responsible organization would look at in conjunction

23 with doing a transaction of this sort.

24 Q. Have you produced that memo?

25 A. I believe I did, yeah. I don't know -- I� 192

1 didn't see the communication between you, but I'm happy

2 to do it if it's not.

3 Q. Okay.


5 Q. (BY MR. LUNN) Have you seen this document

6 before?

7 A. Yes.Page 164


Thompson B Cade

8 Q. And you recall the purpose of this document?

9 A. Yes.

10 Q. What is that, sir?

11 A. Subsequent to the contemplated merger, all of

12 the employees would be employ /AOES of Halo, and

13 therefore, would be subject to our health insurance

14 plans and this is an email reviewing those rates and

15 plans.

16 Q. And that's the consistent with the

17 representations you made to Temme Weber and to Bruce --

18 or Bruce berg and stew cart /TPHER that stewardship

19 employ /AOES were going to become Halo employ /AOES?

20 A. Well, we would not have been able to represent

21 this to anyone because this was confidence /KWRAL

22 because we're a public entity. So I would have never

23 represented that to Temme Weber /OEF Bruce cart

24 /TPHER -- or Stewart cart /TPHER or Bruce berg. So I

25 don't know where that came from.� 193

1 Q. So if stew cart /TPHER, Bruce berg and Temme

2 Weber has testified that you made those representations

3 to them, they wouldn't be telling the truth. Is that

4 what you're telling me?

5 A. That's exactly what I'm telling you.


7 Q. (BY MR. LUNN) Exhibit 14, do you have any idea

8 why Temme Weber, stew cart /TPHER or Bruce berg would

9 make something like that up?


11 A. I can't conjecture on why they would do

Page 165


Thompson B Cade 12 anything.

13 Q. (BY MR. LUNN) All right. You've just been

14 hand Exhibit 14, and it's talking about log in

15 information with different domains?

16 A. Yeah.

17 Q. What is the REO fund.com?

18 A. That is the stewardship fund's main email

19 account.

20 Q. So you initiated change necessary account s

21 ontwo domains?

22 A. Correct.

23 Q. And buy investment properties.com. What did

24 you change?

25 A. Probably the dns routing, dns record.� 194

1 Q. And why would you do that?

2 A. Because AMX in about this time we had developed

3 an email platform as part of that technology and for

4 them to be able to use that email interface instead of

5 outlook, they had to have the dns routed through that

6 software.

7 Q. Okay.


9 Q. (BY MR. LUNN) 15. Exhibit 19 is an, mail from

10 you to Jay Temme where you talk about the merger. Is

11 that correct?

12 A. Yes.

13 Q. And you're asking him if he's had a chance to

14 review the documents?

15 A. Yes.

16 Q. At this point, had the merger been approved byPage 166


Thompson B Cade

17 the board of Halo?

18 A. No.

19 Q. Had it been discussed with the board of Halo?

20 A. I'm not sure on this date, October 19 /*PGT, if

21 it had or /H-PBTD. I'd have to review the minutes of

22 the board meet /TOGS determine whether or not it was or

23 wasn't.

24 Q. You were agree that you were in this time frame

25 pretty anxious to get the merger done?� 195

1 A. /OEPBLT anxious /STPH-FPLS there was a lot of

2 wood to chop prior to getting a transaction done, which

3 ultimately was why I didn't ever get consummate the

4 because none of that wood ever got /TKHOPed. So I think

5 there was an extreme value add that could have been add

6 adto the /PROEUSZs that stewardship had developed over a

7 period of time adding our infrastructure and stale

8 ability compliance and governance in with it, and the

9 industry could benefit from it. I think historical

10 investors and future investors could have benefited from

11 it. So, yeah, I think there was a lot of value added in

12 that proposition.

13 Q. This is October 19th?

14 A. Yeah.

15 Q. So --


17 Q. (BY MR. LUNN) I'll give you Exhibit 16. I'll

18 have you read this email to yourself.

19 A. Yeah.

20 Q. All right. And, so, just a couple days after

Page 167


Thompson B Cade 21 sending the email, asking Jay tell me about the merger

22 document it is. You sent him another email with some

23 urge /ERPBSy about sending the merger documents. Is

24 that correct?

25 A. Yes.� 196

1 Q. And why is that?

2 A. Why -- why is what?

3 Q. Why there was a /SEFRPBLS of /*URPBS /EPBSy to

4 get the merge /ERPBL documents sent?

5 A. Well, as it's fully described in Paragraph two

6 and at that point, the conversations had been going on

7 for months with really no movement in it, and I --

8 wassy -- need to to move the transaction forward or kill

9 it.

10 Q. You had that -- at this point on October 21,

11 2010, had the board approve the /PHERBLGer?

12 A. No.

13 Q. So why are you moving forward with the merger

14 without getting the board's consent?

15 A. Well, if I'm not mistaken, this was referring

16 to the letter of intent. I don't think this is the

17 consummation of the merge.

18 Q. It says towards the bottom, I think Paragraph

19 two, I think we -- still appear the bank has called talk

20 to them on Monday. We need to be shows signs of poor

21 /PHRO /TKPWRESZ?

22 [!EZ SPEAKER 102]: Re, merger agreement.

23 A. Yeah.

24 Q. (BY MR. LUNN) Who are you talking to there, an

25 LOI?Page 168



1 A. Well, the -- well, we needed to retire the bank

2 loan that is we had at legacy Texas bank, which was

3 identified in the first sentence. One of the ways that

4 we contemplated retiring that was through the reTAP

5 /TALization through the merger. So one of the caveats

6 of the transaction was that. So in order to satisfy

7 that issue, the merger needed to be consummated. I

8 don't know what else you're looking for.

9 Q. Well, okay. And then in the next subparagraphs

10 1 of two, it says are you prepared to execute the merger

11 supplied to the bank?

12 A. And yet you still haven't got approval for the

13 merger.

14 A. It's the leverer of /AOEUPB tenth. Letter of

15 /*EUPBL tenth. There was never a merger agreement

16 signed -- or maybe there was that was a letter agreement

17 about the merger, about you not the actual merger

18 agreement. The merger never happened. The board never

19 approved it. There was a board meeting where we

20 presented the opportunity to the board. There was a

21 full board vote that /W-PBTS over that.

22 A. We were given the authority to Purdue diligence

23 and engage in conversations around the merge every

24 /WAOEFPLT never /-RBGD get the due dill /SKWRERPBS

25 consolidated. We never could move forward with anything� 198

1 on his end, assest /#-6D by the last three emails and

2 /R*ULT maltly we advised.

Page 169


Thompson B Cade 3 Q. The well, didn't that throw up any red flag

4 /TOGS you that Jay couldn't provide you the requested

5 due dill /SKWRERPBS to even get the merger done?

6 A. No, only inasmuch as Jay didn't have time to

7 focus on it. /TPH-FS not a priority for joy. So I

8 don't know what red flags that that would have thrown up

9 inasmuch as the guy is a busy guy.

10 Q. He has people work, for him, though, right?

11 A. Yeah. Look at first sentence. 2:34 a.m.

12 night. I work until 2:00 in the morning, too. This guy

13 was busy and he had a lot on his plate and this was

14 obviously something that he was interested in /HOER he

15 couldn't have continued the dialogue with me.

16 Q. But you notified earlier you'd been, /WO ing

17 onthis for months?

18 A. Yeah.

19 Q.

20 A. Some companies have their records in pristine

21 order like hours where you can grab it quickly. Some

22 don't. His wasn't. As I also testified earlier, that

23 he -- his recordkeeping and organizational skills were,

24 you know, to be desired.

25 (Deposition Exhibit 17 was marked.)� 199

1 Q. (BY MR. LUNN) Exhibit 17, 2 days later, looks

2 like Reif /KROEPB sending another draft of the merger

3 agreement to GI Temme, correct?

4 A. Yeah.

5 Q. Copying Paul William and Chron?

6 A. Yes.

7 Q. And, so, at this point, you're still movingPage 170


Thompson B Cade

8 forward with the merger?

9 A. October 22 Inn. It appears so.

10 Q. Yeah.

11 Q. Why would you know pressing so hard for Jay

12 Temme to sign a merger agreement when the merger hasn't

13 even been approved by the board?

14 A. Well, I would have to let the attorney speak

15 for the transactional structure of the documents

16 specifically. I'll give you my best faith judge.

17 Q. I want to know why you personally were pushing

18 so hard for the merger agreement when it wasn't approved

19 by the board?

20 A. Well, this email wasn't from me.

21 Q.

22 MR. LITTLE: Not talking.

23 A. Okay.

24 Q. (BY MR. LUNN) I see that email. I've I seine

25 the subsequent email it is?� 200

1 A. Okay.

2 Q. And you testified earlier there was some

3 urgency to get this merger agreement done. You were

4 pressing hard to get it done. Why was it so important

5 to you to get the merger agreement signed by Jay Temme

6 when you didn't have the board approval to even enter

7 the merger. Wasn't that puttinglet cart before the

8 horse?

9 A. No, I disagree with that.

10 Q. Why?

11 A. Well, first of all, there are steps in a merger

Page 171


Thompson B Cade 12 that have to happen. One, set up the proper /TPHAEPBTS.

13 You have an email. I think it was Exhibit 9, 11,

14 determine the entity that was set up as stewardship

15 advisers. Had a subsidiary called stewardship merger

16 coor Halo stewardship mergee /KOERB. Soy you had to set

17 up the entity to merge into. You had to come to /ARPB

18 agreement on the form of a merger document because to

19 engage in a transaction not having all the terms

20 /STKPWROERBT negotiated on the front end to make sure

21 everybody's on the same page is a waste of time. Three,

22 we needed a letter of intent for a number of different

23 reasons to show appropriate parties what we were doing

24 in keeping our board in the loop.

25 Four, we had to do due diligence. We had� 201

1 to go through the exercise. We were responsibility for

2 to appropriately underwrite any legacy liabilities or

3 anything that we would be own assets crewing or

4 associated with anything we were merging with. So in

5 these specific emails, this /PHERBLGer agreement, I have

6 not looked at this /PHERBLGer agreement since October

7 of 2010, and I do not remember all of the elements of

8 this specific agreement. However, there were

9 multiplitier attive documents that -- on multiple

10 structures that range from an LOI to a contingent merger

11 agreement to a final definitive form. So my impetus for

12 pursuing a transaction and keeping the ball moving

13 forward was because Jay had a propensity to be slow and

14 drag his feet and not stay focused on the transaction at

15 happened /TH*FPLT transaction was important to us for a

16 number of different reasons, from a revenue perspectivePage 172


Thompson B Cade

17 /TPR-RBGS a business perspective. We had a lot of

18 things up in the air structurally what we were doing to

19 do moving forward. So it was important for me to move

20 the transaction forward as best /EUBGSD. Ultimately,

21 you're exactly right. A merge could not be effectuated

22 until the board approved it.

23 Q. All right. Let's look at Exhibit 19 {} 19?

24 THE REPORTER: Actually 18.


1 Q. (BY MR. LUNN) Oh, Exhibit 18, sorry.

2 A. Yeah.

3 Q. This is an email from you to /SKWR*EPB /TPER

4 /HEPB related entities /-RPBLGTSDZ yeah?

5 Q. And Jennifer to you?

6 MR. LITTLE: Do you have a copy.

7 MR. LUNN: Oh, I'm sorry. Did I not give

8 you one. My a/POGs.

9 MR. LITTLE: That's all right.

10 Q. (BY MR. LUNN) Saying that, yes, he's already

11 signed the docks?

12 MR. LITTLE: I have that.

13 A. That's what she said.

14 Q. (BY MR. LUNN) And, so, you said okay, I'm

15 going to go pick them /UF after lunch. You were ready

16 to get those documents, /WR-RPT you?

17 A. What documents?

18 Q. The merger documents?

19 A. I don't know if this is referring to that.

20 Q. Okay. What documents do you think it's

Page 173


Thompson B Cade 21 referring to?

22 A. I have no idea. I have a lot of -- there were

23 a lot of documents between stewardship and Halo.

24 Q. All right.


1 MR. LUNN: Exhibit.

2 Q. (BY MR. LUNN) Here's Exhibit 19. What's this

3 document say?

4 A. Huh?

5 Q. What's this document, sir?

6 A. It's an agreement and plan of merger.

7 Q. This is the merger agreement that was produced

8 by your attorney's office. Is this the merger agreement

9 you recall seeing?

10 A. I don't know. I'd have to read all 47 pages.

11 I saw a lot of other versions. It looks similar.

12 Q. All right. And, /SOERBGS the agreement was

13 between stewardship LLC, Halo companies Inc., Halo

14 stewardship LLC, Halo stewardship merger company LLC?

15 A. Yes /SKPWHRAE.

16 Q. Is that right?

17 A. Yes, sir.

18 Q. And that's your understanding of the party to

19 the merger?

20 A. Yes.

21 Q. Now, go to page -- what's the 50 page back?

22 A. 50 page back.

23 Q. From the front?

24 A. Okay. What section?

25 Q. It is d and then there's -- small I one, smallPage 174



1 I two. There's no page number on it?

2 A. Well, that's right. So what article section

3 and subsection sI'll be able to find it.

4 Q. You support Article II?

5 A. Okay.

6 Q. Sub/TEBGZ 2.1 d?

7 A. Got it.

8 Q. All right. Now, this -- describe if you would,

9 what had refers to?

10 A. This was a financial and economic structure by

11 which the stock would be issued and clawed back if the

12 elements of the /HURD /EL were not met.

13 Q. Okay. And who was supposed to meet the

14 hurdles?

15 A. The parties to the merger, whoever was

16 receiving share necessary exchange for the merger.

17 Q. Who is to be the surviving company of the

18 merger /STPH-FRPBLGTS here, let's do this.

19 A. Merger /KO*E, whoever merger co. Stewardship

20 is surviving company of the merger.

21 Q. Okay. Let me given you Exhibit 20?

22 A. Halo's stewardship do LLC is the merger

23 entity.


25 Q. (BY MR. LUNN) All right. So this is the� 205

1 /S*FRT merger. Have you seen this as Exhibit A?

2 A. Yes.

Page 175


Thompson B Cade 3 Q. And this identifies the surviving company as

4 stewardship advisers LLC?

5 A. That's what it a/PAO*ERZ to be, yes, sir.

6 Q. And it indicates -- strike that. So do you

7 recall ever receiving a signed merger agreement from Jay

8 Temme?

9 A. I do believe, I think -- I'm having a hard time

10 remembering. No, I don't know. The I don't believe I

11 ever received a signed copy.

12 Q. Okay. You don't recall going to the office and

13 picking it /EUP?

14 A. There was so much back and forth at the last

15 second because we /KAOEPBT get the due diligence

16 completed. The deal never -- the deal never happened.

17 The certificate /*FTS merger was never filed. The

18 public filing never happened. The share were never

19 issued under this merger. So I don't remember if

20 specifically this document, this plan and agreement --

21 agreement planning and /PHERPLer was ever executed by

22 which matters because it never got fully consummated.

23 That's what I do know.

24 Q. So this is all going forward at the end of

25 October 2010?� 206

1 A. Yeah.

2 Q. And you're saying that even if Jay Temme had

3 signed the merger agreement, that the merger agreement

4 was never approved by Halo?

5 A. Correct.

6 Q. And one of the primary reasons for that is you

7 didn't get the due diligence information that you werePage 176


Thompson B Cade

8 looking for in order to complete the merger agreement?

9 A. Correct.

10 Q. Okay.


12 Q. (BY MR. LUNN) I'm handing you Exhibit 21. All

13 right. So this is an email from you to Jay and Reif

14 talking about the Halo stewardship special asset fund

15 chart. Do you see that?

16 A. Yes, sir.

17 Q. And you prepared this document?

18 A. No. I don't think I did.

19 Q. What was your purpose in sending this to Jay

20 and Reif?

21 A. I don't believe I certainty it to Jay and Reif.

22 I think they sent it to me, and I forwarded if on to

23 Jay.

24 Q. Okay.

25 A. So I'd have -- I don't recollect specifically� 207

1 /STKPWHR-PB I think you're correct. Soy looking at the

2 abottom, Reif certainty to to you.

3 A. Yeah.

4 Q. And you revied it. Did you make any

5 modifications to it?

6 A. Not they remember.

7 Q. And then you forward today to Jay?

8 A. Yeah.

9 Q. And so what was the purpose of this chart?

10 A. I believe this was the seconditieration because

11 of the merger conversations had basically evan /RAEUTed

Page 177


Thompson B Cade 12 and we weren't going to move forward. I think this was

13 the seconditieration of a potential transaction

14 structure that might work.

15 Q. See we know looking at the /PHAERBGS mail its

16 was maybe as late as October 29th when they there were

17 still discussions about getting the merger agreement

18 back from Jay?

19 A. Direct.

20 Q. And then it appears to be an email that says

21 you gotlet agreement, but you weren't sure that was an

22 agreement. So sometime between the end of October

23 of 2010 and November 15, 2010, was there a board meeting

24 during which the merger agreement was rejected?

25 A. Well, there was a board meeting with which we� 208

1 presented the officers presented to the board that we

2 did not want to move forward with the plan of merges.

3 Q. Do you recall when that was?

4 A. Late October, I think, maybe middle October to

5 late October.

6 Q. Okay. And, so, then you decided to change

7 paths?

8 A. Yes.

9 Q. And Exhibit 21 shows proposal in doing so?

10 A. Yes, sir, correct.

11 Q. Okay.

12 Q. And, so, between the time of the board meeting

13 when it was determined not to do the merge /SPER this

14 November 15th, 2010, proposal, what additional due

15 diligence did Temme respond to at your request?

16 A. Regarding what transaction?Page 178


Thompson B Cade

17 Q. Well, because in order to do the merger?

18 A. Yeah.

19 Q. You asked for a laundry list of items?

20 A. Absolute /HRE.

21 Q. And the merger fell apart?

22 A. Yes /STPWHRA late October. And now you're

23 going down a different /PAFPGT. Did you acquire Jay

24 Temme to provide you any additional information before

25 going down this path.� 209

1 A. Well, first and foremost, a merger, as I

2 remember, this structure, a completely different

3 structure, have different ram /EUFRBGs of the

4 consequences.

5 Q. My question is specific. You keep going /AOUF

6 and telling me what things are?

7 A. Okay.

8 Q. I'm asking you did you require Jay Temme to

9 complete the due diligence questionnaire you sent him

10 before deciding to go down a different path with him?

11 A. Jay Temme never completed the due diligence

12 memorandum requested item that is we had.

13 Q. Diddy /HAO /PROEUT you anything that was on

14 that list?

15 A. I do believe he provided me a couple of things,

16 or Tony /KROEPB was actually responsible for the due

17 dill /SKWR*EPBS and I do believe he provided some things

18 like employee rost/OERZ and those type of things

19 /PWURBGS nothing material that we /HRAEL needed to

20 understandlet liabilities /SAOERBGTS quod this entity.

Page 179


Thompson B Cade 21 Q. I understand. Thank you. So this is the

22 list -- this is /APBG organizational chart you sent to

23 /STKPHRAEURBGS and did you have discussions with Jay

24 about this organizational chart?

25 A. Excuse me. You're still on this exhibit.� 210

1 Q. Yes.

2 A. I don't believe I did, no.

3 Q. Okay. Did he ever provide you a marketed up

4 copy?

5 A. Not they remember, no.

6 Q. Exhibit 22?


8 Q. (BY MR. LUNN) Exhibit 22?

9 A. Yeah.

10 Q. December 1st, 2010, demand from you to GI,

11 correct?

12 A. Correct.

13 Q. And that indicate necessary this email that

14 Temme provided some more funds to Halo?

15 A. That's what it suggests.

16 Q. Do you have any reason to believe /#234509S not

17 true?

18 A. No.

19 Q. It seems to me by December 2000 continue, you

20 formed a pretty close relationship with Jay Temme?

21 A. I think actually if you go back to the

22 August 4th email when I was about to have a baby, I

23 heard had a pretty close leadership with him. So the

24 judge is yes.

25 Q. And that relationship just kept building overPage 180



1 time?

2 A. I would suggest that's a fair statement.


4 Q. (BY MR. LUNN) Exhibit 23. Is that why you

5 decided just to have Jay Temme let -- have free rain

6 after December 2010 through August 2011 without having

7 any checks and balances in place to keep the tab s

8 onwhat he was doing?


10 A. No.

11 Q. (BY MR. LUNN) It wasn't?

12 A. I fundamentally /AO V & E elementally assistant

13 district attorney with the whole statement. And the

14 question and answer. So if you break it apart, I'll try

15 to answer it better than no.

16 Q. We'll move on. All right. /KHA what does

17 Exhibit 23 refer to?

18 A. Excuse me me again.

19 Q. Exhibit 23?

20 A. Yeah.

21 Q. A series of emails, correct?

22 A. Yes, sir.

23 Q. And what is this fund-raising memorandum that's

24 referenced in here?

25 A. Well, as you refer back to and review back to� 212

1 all the subsequent or previous emails, excuse me, over

2 the previous months, we were unable to come to a

Page 181


Thompson B Cade 3 transaction, an entity transaction with stewardship for

4 Temme. Couldn't do it. For a number of different

5 reasons that I've already discussed. So what the end

6 result was that we were going to set up a fund. We were

7 going to control it at Halo, and Jay was going to -- the

8 economic relationship that we had defined in the plan of

9 merger was going to basically be transposed into this

10 deal, which would not contemplate a merger, which would

11 not contemplate any combination of any companies, and we

12 could go out and raise funds, which this ultimately

13 became Equitas. This line of emails became Equitas.

14 Q. Okay.

15 A. What was known as the Equitas housing fund and

16 the agreements associated with that. This was just the

17 ideation of that -- we had flushed all of the

18 /PHERBLGerred conversation and any man of that and moved

19 on to another concept.

20 Q. Let's look at December 6 /*BLT when this email

21 was and you were contemplating different names for the

22 fund?

23 A. Yes.

24 Q. And this turned out to be the Equitas /PUPBD?

25 A. Yes, sir.� 213


2 MR. LUNN: Exhibit 24.

3 Q. (BY MR. LUNN) Exhibit 24. Have you seen this

4 document before?

5 A. Yes, sir.

6 Q. And describe what this document is?

7 A. This is the -- well, this is an email /OERPPage 182


Thompson B Cade

8 doff up/TKOUPTD this --

9 Q. I just didn't give him a copy.

10 A. All right. Well, the email defines a series

11 of -- of documents that don't -- maybe they don't appear

12 to be here, but -- looks like this is a complete subset

13 of documents. Maybe it is. I don't see the technology

14 platform in here.

15 But this is what -- the collateral that we

16 were going to utilize to post the funds out to investors

17 for Equitas.

18 Q. And, so, after these documents were complaint

19 completed, who were the intended end users of the

20 documents?

21 A. Well, ultimately, the -- the officers of Halo

22 who were responsible for raising the capital for this --

23 for this Equitas housing fund would utilize the

24 documents to meet with potential proppive investor.

25 Q. What about the managers of the fund? Wouldn't� 214

1 you expect them to ibleto go out and find /*EUFRPBLT

2 vestors for this fund?

3 A. Well, no, not necessarily.

4 Q. Why not?

5 A. Because some of them did not provide that

6 competency whatsoever.

7 Q. What about Jay Temme?

8 A. Jay Temme's responsibility was to provide

9 introductions to us, perhaps use this to email the

10 amount and set up following up meetings with us to

11 discuss the elements of the investment.

Page 183


Thompson B Cade 12 Q. So you expect for Jay Temme to entice investors

13 to come in and have a meetings that, he would send

14 translates relating to the proposed investment?

15 A. Yes.

16 Q. So he was authorized to send these documents

17 out to proposed /S*EUPB /OEFT ares?

18 A. These specific documents that we created, yes.

19 Q. Document that is Halo created?

20 A. Yes.

21 Q. Looking it get investments for different funds

22 /KWR-FRBLTS?

23 Q. Jay Temme was authorize to the /TKPWHREUP to

24 those pro/POERBL investors?

25 A. Yes.� 215

1 Q. So we look at -- I'm on the Mr. First

2 confidential offering memorandum. And I'm looking about

3 eight pages back, historical returns?

4 A. Yes, sir.

5 Q. And what are those figures come from?

6 A. Those are funds that Jay Temme had previously

7 managed in a number of different entities.

8 Q. Okay. So in order to promote those funds, you

9 were looking at Jay Temme's historical resorts --

10 historical returns, to help promote the fund?

11 A. Well, first of all, these aren't Jay Temme's

12 historical returns. These are returns of partnerships

13 that were managed in a number of different ways, some of

14 which were on our platform, some of which weren't. So I

15 want to be careful how and I /SPOPBD to that question.

16 Q. I thought you said these historical returnsPage 184


Thompson B Cade

17 came from stewardship 99s?

18 A. I thought you said Jay /TEUFPLT I just want to

19 make.

20 Q. My apologies?

21 A. I differently /SPRAEUPT the two. Okay. So

22 yes. These portfolio of assets were assets that

23 stewardship fund either owned or managed on our platform

24 on the AMX platform that we were able to -- to analyze

25 their returns and provide that as a sample return.� 216

1 Q. Okay. And, so, we go back a couple more pages.

2 It /TAURBGs about the management team /KWRO*EUFRPBLGTS?

3 Q. It's got James, Temme, Doug, John?

4 A. Yeah.

5 Q. /ROUPB?

6 A. Yes, sir.

7 Q. You, Williamson and Tony /KROEPB?

8 A. Yes, sir.

9 Q. And then a couple pages back there was another

10 document, manager, management team?

11 A. That's just their bio.

12 Q. And their bios?

13 A. Yeah.

14 Q. And, so, you formed a business relationship

15 with Jay Temme, Doug /TPER a, John Henry. Who's Ron

16 Lawrence?

17 A. He was a property preservation expert at

18 stewardship who had been in the business for sometime.

19 Q. So you agree that you individuals would serve

20 as the management team there this fund?

Page 185


Thompson B Cade 21 A. Say that again, question, please.

22 Q. You agreed or you were representing -- strike

23 that.

24 When you were giving out these -- this

25 /KAFD /KWRAL offering memorandum to potential VIN rest� 217

1 ors, you were renting that this group of /SR-TDs would

2 service as the management /TAEPLTS /TPH*R this fund?

3 A. Yes.

4 Q. And you guys would be working /T-GTD to achieve

5 the heights you could with this fund?

6 A. Correct.

7 Q. And then there's another confidential offering

8 memoranda?

9 A. Yeah. I think that's a/AO I think that's eye

10 bust.

11 Q. It looks like there's only a couple pages?

12 A. Yeah. I don't think that this -- I think

13 this -- I don't know why you got this, but I think this

14 is just a duplicate insert. Goes from -- see if you

15 look at the page /TPHAEUGSZ, it /STPHOU /SKUFPLs to Page

16 28. There's something missing here. Something's messed

17 up on this.

18 Q. Fair enough. So this is December 8, 2010?

19 A. Yeah.

20 Q. And who did you send this pitch deck out to or

21 these materials out to for -- because which -- strike

22 that.

23 Which potential investors did you send this

24 information out there?

25 A. A large number of potential in/SREFTSor.Page 186



1 Q. And who did you have further conversations with

2 about --

3 A. I would have to go back and look at my prospect

4 list. I kept great records of what we sent it, any

5 conversations we had, their level of.

6 Q. But these only one ultimate investor in the

7 fund?



10 Q. (BY MR. LUNN) Exhibit 25. Have you seen this

11 document before?

12 A. Yes judge and why you send this to Jay Temme.

13 A. Because Jay Temme subsequent to receiving his

14 shares in Equitas -- or in Halo companies Inc. through

15 the Equitas fund transaction now owned public /SHRAEUR

16 necessary our company and it appears this day the stock

17 price jumped and it's an attempt at humor.

18 Q. Okay?


20 Q. (BY MR. LUNN) What is Exhibit 26?

21 A. It appears that it is the eight k we filed in

22 conjunction why Equitas transaction.

23 Q. Okay.

24 A. Yes, sir.

25 Q. And then three pages or four pages back is the� 219

1 assignment and contribution agreement?

2 A. Yes, sir.

Page 187


Thompson B Cade 3 Q. And if you look at Page two?

4 A. Actual Page two.

5 Q. It's actual Page two. It says Page two at the

6 bottom?

7 A. Yeah. Got it.

8 Q. And it talks about the claw back provisions?

9 A. Yes, sir.

10 Q. And these claw back provisions are similar to

11 the claw back provisions that were contemplated in the

12 merger?

13 A. Exactly.

14 Q. Okay. And the first claw back provision took

15 place when?

16 A. I'm not sure I understand that question.

17 Q. Okay.

18 A. The first --

19 Q. What was the first milestone that Temme had to

20 reach to ensure that his shares of stocks were not

21 clawed back?

22 A. It was 12 -- I believe it was 12 months

23 subsequent to the execution of this agreement.

24 Q. So it says under subsection b one in that first

25 --� 220

1 A. 12 months. Yeah, 12 months squint to closing?

2 In the event that Equitas fund does not /SKROEPB /RAEUT

3 at least $3 million cash to Halo in, that Halo would

4 have the right to claw those stacks back.

5 A. Yes, sir.

6 Q. And what can you to to ensure that progress was

7 being made in that regard?Page 188


Thompson B Cade

8 A. Well, what Halo did was raised $1.2 million

9 into the fund, which we subsequently use to acquire

10 assets. That what asking, what we did?

11 Q. Yes.

12 A. We raised a million $2 into the fund.

13 Q. Okay. And then how much did /STAOURSDZ bring

14 to the fund?

15 A. Stewardship -- bring /SWRAOERee to the fund.

16 Q. How many did Temme bring to the fund?

17 A. 0 to the fund.

18 Q. Did Halo ever exercise its claw back rights?

19 A. Yes, we did.


21 A. Well, I would assume -- not assume. I believe

22 it's been several days subsequent to the end of the claw

23 back period.

24 Q. Okay. And I think you testified that during

25 the claw back period, Halo undertook no efforts to� 221

1 ensure that Temme was fulfills his obligationings?

2 A. I don't believe I suggested that. I don't

3 think my testimony suggested that. I'd be /HAEUP for

4 her to go back and read it.

5 Q. No, you don't have to do that. Tell me what

6 efforts you made to make sure Temme was going to reach

7 his mile /STAOEPBZ?

8 A. Again, what I suggested the first, second and

9 third time is that Halo was in the business of trying to

10 raise cap tool to acquire assets. /THAOT fully disclose

11 indeed all of these document that is prepared. Halo had

Page 189


Thompson B Cade 12 a number of different networks and groups to pursue

13 prospective investors. Jay Temme was one conduit. We

14 were not relying on exclusively on Jay Temme as

15 evidenced by the fact that we were able to raise some

16 /PHORPBy into the fund, outside of Jay Temme. Okay. So

17 Jay Temme was not exclusive to Halo, and not exclusive

18 to Equitas housing fund. However, Jay Temme was

19 compensated to the extent he was able to perform. There

20 was no reliance com plightly /AO Jay whether we were

21 going to be complete success or failure whether Jay was

22 able to deliver under this. We talked with a number of

23 investors ha let of conversations, ultimately we were

24 able to get one to commit. So the answer to your

25 question is I had a number of conversations with Jay� 222

1 Temme to see where he was at, if he was making any

2 progress, when went to a couple meetings with him to try

3 to raise the capital into this fund. None of them ever

4 manifested anything and by June of 2011, we decided that

5 it was not going to happen. /HAOEPBGD not perform and

6 it made sense to -- in the best interest of our

7 shareholders, to go a different direction.

8 Q. Did -- you were never concerned that Jay

9 Temme's out there sending out these materials to raise

10 funds for Equitas housing fund, sending out the pitch

11 deck, the memorandum and was taking /PHOPB /OEU the

12 side. You didn't want to check that out. Because you

13 knew he was meeting with investors?


15 A. Ask the question again, please.

16 Q. (BY MR. LUNN) /SHUFRPLT you provided Jay TemmePage 190


Thompson B Cade

17 with materials to go and solicit funds from investors

18 /KWRO*EUFRPBLTS?

19 Q. And you knew that Jay Temme had a good track

20 record before of /SHREUS /EULing funds from investors,

21 correct?

22 A. Correct.

23 Q. And how for this period of time from December

24 through June or -- whatever it is, June or July, no --

25 Jay Temme has brought nobody to the table to invest� 223

1 money?

2 A. Correct.

3 Q. So didn't that raise any flags saying Jay

4 Temme's got all this material. Maybe he could be using

5 it for his own benefit?

6 A. No. Jay Temme set /UT up and we met with a

7 number of different investors. None of them just ever

8 /*EUFRPB vested to my knowledge. So it wasn't that Jay

9 Temme was doing nothing or that Jay Temme /TPHAOFS not

10 putting effort to or that he wasn't trying or that he

11 was out trying to pronote miss own self and. It just

12 seam that had Jay Temme was unsuccessful in building

13 able to deliver /ARPB investor interested in invest

14 nothing our fund is what it appeared to be.

15 Q. But don't you /-RPBG he could have had it set

16 up better to where there are more /EBG comes and

17 balances in place that if he's giving. Temme Weber,

18 Bruce berg, that you could actually follow up with them

19 yourself to shake that you are that he's not /R*EPL

20 /PWEZling funds?

Page 191


Thompson B Cade 21 A. Well, /AEUFRT of full, the answer is no. No.

22 All of our documents were crystal clear about where we

23 were located, who was involved /WHARBGS they needed to

24 do. So what other controls -- you've asked me what

25 could have done more. I'm not aware of anything I could� 224

1 have done more.

2 MR. LUNN: Okay. Object to nonresponsive

3 after no.


5 Q. (BY MR. LUNN) You've been handed Exhibit 27,

6 /ARPB email from Reif /KROEPB to Jay, copying you. Have

7 you seen this before?

8 A. I believe so, yes.

9 Q. And this is talk ago /AO what's this document

10 refer to?

11 A. What document, this emaim.

12 Q. The email, yeah?

13 A. It appears it's referring to language

14 previously used in the stewardship fund partnership

15 agreements relating to a concept of the general partner

16 removal.

17 Q. And, so, this is consistent with your testimony

18 that Halo would either draft or review or revise the

19 different investment entities partnerships?

20 A. Yeah. Halo control.

21 Q.

22 A. Yes, sir. Halo controlled all of the drafting

23 reviewing and approval of all the documents utilize

24 toyed raise funds on behalf of Halo.

25 Q. Okay?Page 192




2 Q. (BY MR. LUNN) Be Exhibit 28?


4 Q. (BY MR. LUNN) Later on that day, /SKWR-RPB

5 19th, 4:32 p.m. according to Exhibit 28, Mr. /KROEPB is

6 sending you, Temme and Tony /KROEPB a copy of the

7 revised agreement. Is that right?

8 A. It appears so, yes.

9 Q. So this agreement has gone through Halo. It's

10 been vetted by Halo and this is what Halo agrees the

11 agreement should be like?

12 A. I think this is a form document so I don't

13 believe it's specific to any investment, but this is a

14 norm document that appears Reif has updated some

15 elements in it.

16 Q. Okay. So it's fair to presume that you look at

17 the other language, went through the agreement, decided

18 to change general park. You've reviewed the agreement,

19 the form agreement. Is that correct?

20 A. Have I reviewed the.

21 Q. Yes?

22 A. Form agreement. ? I don't know that I read the

23 entirety of this agreement. I rely on Reif /KROEPB for

24 the legal matters of our organization.

25 Q. Sure. And so, this agreement was intended to� 226

1 be the form that could be tweaked to fit different funds

2 down the road?

Page 193


Thompson B Cade 3 A. I'm not -- I don't think -- I don't know 236

4 that's accurate or not because the fact remains at this

5 time. The fact re/TPAEUPBZ at this time we had the

6 Equitas housing fund which was a debt fund. So I don't

7 know if this was an attempt to just cleanup a

8 partnership agreement in case it ever came up and have

9 it in our hip pocket. I really don't upon. But at this

10 time oJanuary 19th, 200011, weaver were promoting the

11 Equitas housing fund which would not involve a

12 /HREUFPLTed partner.

13 Q. Were you attempting to change that agreement?

14 A. Were we've attempting to change what?

15 Q. The /*EBGitiy housing fund, what type of an

16 entity was that?

17 A. Equitas housing fund was a limited liability

18 company.

19 Q. Okay. And were you looking to change that into

20 a partnership?

21 A. No.

22 Q. That was going to be -- weren't looking to

23 change that structure at all?

24 A. I don't think so, no.

25 Q. And /-RBGSZ so, this agreement here� 227

1 contemplates different structures down the road for

2 different investments?

3 A. Again, I've just stated I'm not sure what

4 this -- the intended purposes of this form document were

5 for at this time.

6 Q. Okay?

7 A. /KWRAO*ULT have to ask the gentleman involvedPage 194


Thompson B Cade

8 in generating it.

9 Q. And if you look at Page 30 of the agreement,

10 this agreement identifies Jay Temme as present, Halo

11 asset management LLC. Is that correct?

12 A. That's what it shows on this document.

13 Q. Okay. And this is a document that was produced

14 by your attorneys.

15 A. Again, I haven't seen the email. I'm assuming

16 that this was all connected to the same email.

17 Q. I represent that it was?

18 A. Okay. So that appears so.

19 Q. And then at the back, the address 700 central

20 xp /SOUPGT, /WRAOSZ that?

21 A. Our Halo offices, corporate offices.

22 Q. Who are the members of Halo asset management

23 LLC at that time?

24 A. Halo group Inc.

25 Q. And who are the members of Halo group Inc.?� 228

1 A. Well, Halo group Inc. is a corporation. It

2 doesn't have members. So the shareholders of Halo group

3 Inc. included Halo companies Inc. and a number of the

4 preferred shareholders in the series aB and C to the do

5 you know of about 48 different share /SHOELDers.

6 Q. Who were was the manager of Halo asset LLC?

7 A. Halo group Inc.

8 Q. And so you're not sure why in document was

9 created?

10 A. Not sure.


Page 195


Thompson B Cade 12 (Deposition Exhibit 29 was marked.)

13 MR. LITTLE: Ma'am, where are we at on

14 time.

15 MR. LUNN: Huh.

16 MR. LITTLE: I'm asking where are we at on

17 time.

18 MR. LUNN: Are you /*EUPBD tending to stop

19 the deposition in time.

20 MR. LITTLE: You get six hours undered

21 rules, so I was just checking.

22 MR. LUNN: Is that when you're attending to

23 stop the deposition.

24 MR. LITTLE: Yes, at six hours.

25 MR. LUNN: Let's take a break.� 229

1 THE VIDEOGRAPHER: We're are oftened record

2 at 4:25. End of Tape Number 4:stop.



5 record at 4:38.

6 Q. (BY MR. LUNN) All right. Exhibit 29?

7 THE REPORTER: He's already got 29.

8 Q. (BY MR. LUNN) What is Exhibit 29?

9 A. It'sage email between myself and Jay and a

10 series of other counterparties.

11 Q. All right. Start ing on-Page two at the

12 bottom, there's an email from Reif to you, Steven and

13 Tony talking about getting Jason ham business cards?

14 A. Yes, sir.

15 Q. Why are you dog that that?

16 A. Lat this time there was conversationsPage 196


Thompson B Cade

17 about Jay coming on as a full time employee of Halo

18 companies Inc.. so we were going through the process of

19 preparing for that event if it ever happened, which

20 never did, unfortunately, fortunately.

21 Q. (BY MR. LUNN) But thyself are a -- but you

22 were haven't representing to the /R*EUPB /SROEFRTors is

23 that's what happens happening, stewardship and Halo one

24 and the same?

25 A. No.� 230

1 Q. You weren't?

2 A. I wasn't.

3 Q. /THERPB how would they get that impression?

4 A. You're asking me how I would know how they got

5 an impression that I didn't give them?

6 Q. /TPHA*EUR in a meeting with you, Bruce berg?

7 A. Yes, sir.

8 Q. Temme Weber, stew cart /TPHER?

9 A. Yeah.

10 Q. Left that meeting with the understanding that

11 Halo and /SHRAOURDZ are one and the same, and that the

12 companies are being rolled into one another. How is

13 that possible?

14 A. Well, I can't either affirm or /TE nigh that

15 they left that meeting where that impress. This may

16 suggested they /HR-FTS that meeting with that

17 impression, then I would suggest that they were in a

18 different meeting than I was in. How the other

19 investors and plaintiff necessary this got that

20 impression, I certainly don't know because I never spoke

Page 197


Thompson B Cade 21 to /THEUPLT, never emailed them, never communicated with

22 them, never met them. So I fundamentally disagree with

23 the premise that continued to be lob indeed me that I

24 represented to anyone that Halo and stewardship were one

25 entity.� 231

1 Q. Well, don't your documents suggest that?

2 A. No. What documents? No. That suggest that

3 we're one entity.

4 Q. No, no. The that you -- that Jay Temme is an

5 authorized representative?

6 A. No.

7 Q. Of Halo?

8 MR. LITTLE: Let him finish his question.

9 A. Sorry. Forgive me.

10 Q. (BY MR. LUNN) That James Temme is not a

11 representative of Halo asset management LLC. He's

12 /HR-GSed as the manager of Halo's sayset management LC

13 in the documents you produced. Why /TKAEPBT investors

14 rely on that?

15 A. Let's back up. First of all, a manager of an

16 LLC is different than management of an LLC. They're not

17 one and the same. With Secretary of State, you either

18 file a member governed LLC or a manager /TKP-FRPBed LLC.

19 Management in an LLC may or may not have the authority

20 to bind the entity. So I want to distinctly rely to

21 your question, which is nowhere did I provide in any

22 documentation or in any conversation that Jay Temme had

23 the authority to mind mail companies /*EUFRPBLG or any

24 of its affiliates or associated entities never,

25 anywhere. So again, your previous question, how didPage 198



1 they leave that meeting, I don't know. Wasn't the

2 meeting I was in because we didn't even talk about that.

3 Q. All right. And, so, the fact that here in

4 January 2011 that you're telling Jay Temme he's going to

5 be an employee, giving him business cards, you're giving

6 him a phone that, has no impact on your last answer?

7 A. Well, first of all, nowhere in this

8 communication or any communication did I tell him he was

9 an employee or he's going to be an employ each. It was

10 a conversation that we discussed, a potential option

11 as -- in conjunction with a lot ofitier attive options

12 including a plan of merger, /AORTS Halo asset management

13 special fund one, the Equitas. There was a lot

14 ofitierations, David, going back and forth of how we

15 could work /T-LT. This never manifested either. To my

16 knowledge, he never got the business cards. He never

17 distributed them. There's no record of anyone having

18 them. I don't even believe they were ordered. So --

19 Q. When you you sigh at the top, I've I hearded

20 your business cards, you /PHA I not be -- you may not be

21 telling the truth there?

22 A. That's exactly right. I don't functionally

23 order the business /KARTSDZ. I direct other employes to

24 order them. And whether -- I think there was a

25 subsequent event where I said stop, don't order them.� 233

1 So -- before /HE got out the door.

2 Q. So when you said you didn't order them, you

Page 199


Thompson B Cade 3 didn't mean it, then?

4 A. /STKAOUPL.

5 Q. When you say at the top of the Exhibit 29 I've

6 ordered your business cards, you're saying that's not

7 true now?

8 A. At the time of this email when I wrote this

9 email, I directed the responsible person to order the

10 business cards. What I'm asking to you is something

11 occurred subsequent to that because the business cards

12 never got there. They were never distributed. They

13 were never handed out.

14 Q.

15 A. Because Jay Temme never became an employee of

16 Halo asset management.

17 Q. Okay. Exhibit Number 30?


19 Q. (BY MR. LUNN) What's this document, sir?

20 A. It's an email between myself, Jay Temme,

21 Jennifer Henry, Reif /KROEPB regarding some questions

22 that a Mr. Guy has relating to the partnership agreement

23 associated with some investment fund.

24 Q. And there's documents?

25 A. /KPWHREUP fund.� 234

1 Q. And attached to this as confidential offering

2 ma'am /RUPBD /UPL and the fund agreement, correct?

3 A. Yes, sir.

4 Q. So this is an April 12, 2011, --

5 A. Well, first of all, this -- yeah. The

6 attachments that are there. Yeah. Gotcha. Okay.

7 Q. So this happened April 12, 2000, /HREFPL. GuyPage 200


Thompson B Cade

8 this time, you'd met stew cart /TPHER, Bruce /WERG?

9 A. Yes, sir.

10 Q. So now you're sending out in more information,

11 which is entitled stewardship LLP?

12 A. Yeah.

13 Q. Why are you send Thanksgiving information out?

14 A. Because we were still in the process of

15 providing all of the formal documents to Jay and

16 Jennifer for the fund.

17 Q. /AORBG.

18 Q. And if you look at the investment summary?

19 A. Investment summary. Which page is that. Page

20 11.

21 Q. They don't have a back ten. Page /HREFPBL?

22 A. Yeah.

23 Q. Talks about the general partner?

24 Q. Asset management. Owned by Halo asset

25 management LLC?� 235

1 A. Uh-huh.

2 Q. Yes and then if we look down -- or sorry. On

3 the top of /PAEURPBLG 12, it talks about the

4 distributions?

5 A. Yes, sir.

6 Q. This is 50 percent to the LLP?

7 A. Yes, sir.

8 Q. Ten percent to designate /AOD and was that how

9 the prove /TPREUTSZ this fund were intended to be

10 distributed?

11 A. Is that a question? Is that how they

Page 201


Thompson B Cade 12 in/TEUPBDed to be distributed.

13 Q. I say is that how?

14 A. I didn't hear the ask. I'm sorry. Yes, that's

15 how it was intended to be distributed.

16 Q. And then it talks about management, initial

17 principles. What's a principle?

18 A. Operative personnels and running the at a to

19 day.

20 Q. Someone that's authorized to make decisions on

21 behalf of the --

22 A. In.

23 A. Not necessarily.

24 Q. And how would you know that by reading this?

25 A. How would you know -- that they do or they� 236

1 don't.

2 Q. How would you know that anybody's listed as a

3 principal of the general partner is or is not authorized

4 to make decision s on/PWRE half of the partnership?

5 A. Well, I don't think that header and those --

6 that statement is intended to convey whether they do or

7 they don't.

8 Q. What's it intended to convey?

9 A. Who is going to be experience iblefor operating

10 the day-to-day management of stewardship flan fund.

11 Q. It is principles. It's not talking about the

12 operational. So if you're a principal of the /SKWR-RPBL

13 partner, would it be safe for an investor to time --

14 that means if a principal of the general park, that

15 you're going to be authorized to makedecisions on behalf

16 of the general /PA*RP?Page 202


Thompson B Cade

17 A. I wouldn't say that's safe to assume.

18 Q. Why not?

19 A. The word principal has a dozen different mean

20 /-PBGSZ and in this specific /-FBGS so does management.

21 Q. So their /PHAPGment and /PRAPLs, at which point

22 you presume that they would have the ability to bind the

23 general partnership?

24 A. Well, this entity was wholly owned by Halo

25 asset management, which was holily owned by Halo group� 237

1 Inc., which was 99 percent owned by Halo companies Inc.,

2 which is a publicly traded entity. And all of the

3 officers and directors or anyone that has the capacity

4 to bind any one of those entity system public

5 information. So this is intended to convey who would be

6 responsible for the management, the operational aspects

7 of the business, of the fund. Does not intend to convey

8 who was specifically authorized to bind the entity.

9 Where that would be found is on -- on our financial

10 filings or on the signature block associated with any

11 document that is were prepared or in the subdescription

12 agreements or instructions.

13 Q. All right. Well, let's keep going.

14 A. Okay.

15 Q. Let's look at page 20. It talks about the

16 opportunity of the fund. It says Halo asset management

17 LLC, the sponsor. What's that supposed to mean?

18 A. Well, it's the wholly owned manager of

19 stewardship flan fund or the gen par, excuse me, which

20 is the general partner in the fund.

Page 203


Thompson B Cade 21 Q. Okay. What is sponsored to you?

22 A. Sponsor means the ultimate entity responsible

23 for administratoring or proposing the fund.

24 Q. Sure. And then when you look at Page 28?

25 A. Huh.� 238

1 Q. It talks about the /SPORPBSor and management,

2 principals of the sponsor again. And everybody the but

3 /OESZs of those individuals?

4 A. The /SPAOPBSor is designated on Page 30. So if

5 the header covers two categories.

6 Q. Right?

7 A. And the management is synonymous with Page 9 or

8 10 in the tab -- in the table format, and it does

9 include their but s ons, correct. It's still the

10 mixturement of the deal. The sponsor is the general

11 partner Halo asset management gen partner, principal

12 person.

13 THE REPORTER: You've got to slow down.

14 A. Excuse me. I'm reading. The /PRAPL purpose

15 ever Halo asset management gen partner of one LLC

16 generally acts as the general partner of the fund. The

17 general partner is managed by its members. The initial

18 members of the general partners are an affiliate of Halo

19 companies Inc., which was Halo asset management.

20 Q. (BY MR. LUNN) So you're having Halo and Jay

21 Temme as a manager of a Halo entity. Is that correct?

22 A. He is included again, as I -- I stated earlier,

23 so I'm going to need you to further define. There are

24 multiple /TKEF /TPHEUGs of manager. Which one are

25 referring to?Page 204



1 Q. I'm referring to what's in your document, sir.

2 He's being held out at aas a manager of a Halo entity.

3 A. Well, if you're /AO*U /AO.

4 Q. You're reviewing that, right?

5 A. Well, if you're referring to part of the

6 management team, yes, that's what /HAO /AO he is being

7 held out as that. If you're being referred to the legal

8 definition of a manager of an LLC that is the authority

9 to bind an entity, you're incredibility. That is not

10 what he's being held out to be. That is being held on

11 on Page 30, the general partner and its manager or

12 member.

13 Q. All right.


15 Q. (BY MR. LUNN) Exhibit 31. Investment -- asset

16 investment /TAOUPBTS dated March 1, 2011. You've seen

17 this document?

18 A. Perhaps. I'm not a hundred percent sure.

19 Doesn't look like something I put together.

20 Q. So you have no idea where this comeings from?

21 A. I'm just suggesting it looks very similar to

22 what's include indeed this previous exhibit, 30.

23 Q. Sure.

24 A. On pages 9 and 10 or 11. But I'm suggesting to

25 you that that doesn't look like I put it together.� 240

1 Q. But it's consistent with the other document.

2 Is that correct?

Page 205


Thompson B Cade 3 A. It potentially could be identical except for

4 the cover page.

5 Q. Okay?

6 A. But I don't believe I've every seen a document

7 where it had asset investment opportunity. That would

8 not be something our organization would put out as a

9 header. We have a style that we utilize. This is Inn

10 /-FRPB inconsift /EPT with that. It may have, but I

11 don't remember it.

12 Q. Okay.

13 MR. LUNN: /TPEUBT 32.



16 before?

17 A. Yes. Yes, sir.

18 Q. All right. So March 17, 2011, at the bottom of

19 the page, there's an email from you to Temme talking

20 about existing relationships and you identify some

21 individuals?

22 A. Absolutely.

23 Q. What type of information did you provide to Sam

24 Reidy, David /SPHOPBLG scherry hunter in regard to the

25 investment opportunities?� 241

1 A. Well, some of these would not be potential

2 investors. Some of these are exit relationships,

3 meaning the ability to acquire reperforming notes,

4 either through residential refinance or through a whole

5 loan portfolio sale. So in the investor category, it

6 would have supplied them the same Equitas housing fund

7 investment opportunity fund description and anyPage 206


Thompson B Cade

8 associated exhibit that is we would have sent out to it.

9 Q. And that's consistent with what you'd

10 expect Mr. Temme to be sending to potential /SR*EUPB

11 /OEFT /OFRs?

12 A. Absolutely.

13 Q. So at the bottom of this, from Jay Temme, he

14 says I've sent information, sent out requests of funding

15 to Scott Mueller, GS, web dog -- do you know who /WERB

16 dog is?

17 A. Temme Weber.

18 Q. Rick doll son. Do you know who he is?

19 A. As I've duce /TKO* /EZed earlier, Jackson

20 Walker partner that's Jay's attorney.

21 Q. And he says checking with people they than, so

22 keep your fingers cross said?

23 A. Yes.

24 Q. Would you anticipate if information was given

25 to Temme Weber about the opportunity and they're� 242

1 checking payment, that he would pass that information

2 on, be an information conduit. That I would or?

3 Q. That Temme would. So you're saying you

4 ex/PERBGT Jay Temme to give investment. To discipline

5 Jay Temme's telling that you that they're checking with

6 other people. So you expect whoever to pass that on as

7 well, right?

8 A. Well, I don't know what they are all checking

9 with people they know. So keep your fingers crossed.

10 /#50*E78 /TPHOEUT follow spur what that imply.

11 Q. What do you think so it is?

Page 207


Thompson B Cade 12 A. I'm not requesting to opine on.

13 Q. Looking for some investors?

14 A. Potentially.

15 Q. Itself the first sentence, sent out your

16 request for funding two. So they're looking for

17 funding?

18 A. Yeah. So requesting founding to Scott Mueller,

19 Dougary /HART, what that says to me is that Jay sent a

20 request for funding into a fund to those four

21 individuals.

22 Q. Correct?

23 A. What they're all checking with people they

24 know, so keep your finningers crossed, it's hard to

25 ascertain. It's very vague this its formation and I� 243

1 would not want to opine on what Jay meant.

2 Q. Sure.



5 Q. (BY MR. LUNN) Exhibit 33 is a string of emails

6 starting at the bottom with Temme web tore Temme?

7 A. Uh-huh.

8 Q. And Temme back to Weber and then Temme sending

9 a copy of this email to you?

10 A. Yes, sir.

11 Q. And is this the split you were talking about

12 before?

13 A. What do you mean by that?

14 Q. Well, because you talked about, like, the

15 structure of the LP agreements and?

16 A. Sure.Page 208


Thompson B Cade

17 Q. And Temme Weber gave me some input that

18 /PHAEURB we should have ten percent go to charitable?

19 A. Yeah, correct.

20 Q. So is this the series of events you were

21 referring to?

22 A. I had one conversation with Temme Weber prior

23 to the meeting with cart /TPHER. I aa number of

24 /TK-FRGZs with yea and then subsequently this is an

25 email. Temme Weber communicated that Jay did not want� 244

1 to invest in Equitas fund because of the economic struct

2 /STKPHREUR we don't have to go through that again.

3 A. So necessary the struct /EUR that he wanted to

4 incorporate /STKPWO the flan fund, yes.

5 Q. And you had no objection to that?

6 A. No, sir.


8 (Deposition Exhibit No. 34 was marked.)

9 Q. (BY MR. LUNN) So from you to a host of people,

10 email March 22, 2001, Exhibit 24. Talks about the final

11 version of the due diligence memorandum /WAOEFBG /PWAORB

12 are /WO*, on?

13 A. U/HRURBGS.

14 Q. The is purpose of this /PHEPLT owe to to be

15 able to provide first time /S*EUPB restors or investors

16 seeking understanding -- /TOPBD our process more

17 thoroughly?

18 A. Yes, sir.

19 Q. So you're intendings for this memo to be used

20 to help get investors /SR-FLTed, /STPW-D in the funds?

Page 209


Thompson B Cade 21 A. Well, it says here clearly that the purpose of

22 this memo so to provide.


24 A. Again, the purpose of this mentalee is to be

25 able to provide to first time investors and/or /REUPB� 245

1 vestors seeking to understand our processes more

2 thoroughly. That was the intenth of the memo.

3 Q. (BY MR. LUNN) And so you're telling me

4 /THAOETSZ /SR-TD that is you can produce it, but I would

5 still provide it under an nDA or at least a confidential

6 /KOFRP?

7 A. Absolutely.

8 Q. So you're intending for these individuals to

9 use this updated due diligence memo to try to attract

10 investors?

11 A. Well, again, this due diligence mental /RABD

12 /UPLT is a memo of how Halo conducts due diligence on

13 assets and portfolios, specifically the process we go

14 through, the time line, the products and services that

15 we utilize and the an littics we do on portfolios prior

16 to acquisition. This in and of itself it would not be

17 used to induce an incest /TOR make an agreement. This

18 would be to 0 any questions that they might have in

19 their due dill /SKWR*EPBS process. Prior to this

20 memorandum, it was all verbal and it was all /WAUFRPing

21 it on a screen. This was an attempt to memorialize it

22 so it could be easily communicated and very trains

23 /PAEURPBLT what /AOUR processes are, which is one of

24 those policies and procedures to control what's commune

25 kited. Soy /KOTS phone cyst /EBTS, concise and veryPage 210



1 read annual to every investor. Versus each investor

2 getting a different story depend ing onwhat conference

3 call on.

4 Q. So your goal is to coal information that goes

5 out or /WROPBS it goes out, you have no controls in

6 /PHRAEUSZ to figure out how it's used?

7 A. Well, the nDA would control the how it's used

8 part.

9 Q. I'm just talking not this document, but any

10 other document. You control information you want to

11 /TKESZ /EUPL in a minute, but you /TH*E then you don't

12 /#R5E68 control how /HOTS used. Once you authorized is

13 /SR-S the authority to second to out. You don't have

14 /KPW-S control?

15 A. Is there a question there. I didn't hear.

16 Q. ? Yeah. You don't have any controls in place

17 to how you those documents are used?

18 A. That a statement or question.


20 A. That's a statement. That's not a question.

21 Q. (BY MR. LUNN) Do you?

22 A. Have controls on how /TAOUPLTs are used?

23 Q. Yeah?

24 A. Yes. In those documents, it's clear what their

25 intent and purpose of those documentings are. Typically� 247

1 in/KHRAOUPDed in a cover letter in the email or

2 pre/A*PLT Bell. This document, my suggestion the

Page 211


Thompson B Cade 3 control would be to have it under an nDA, which would

4 clearly dictate what the purpose of the memorandum was

5 for, how it should be used and when it should be used.

6 So whether or not a /ROEG individual does something

7 outside of our control is /AO it's not something that I

8 can control.

9 Q. Why is that?

10 A. It's no more than I can control anything you

11 do, David /-FPLTD I can't control.

12 Q. You what do you mean by that? I don't

13 recollect work for you?

14 A. That's right and I can't -- /TPHAOERBT did Jay.

15 Q. Jim Temme certainly was a representative of

16 Halo. He was out there soliciting funds on behalf of

17 Halo. Is that not correct?

18 A. In, that's not correct. He was a shareholder

19 in Halo who was compensated as a contractor to introduce

20 us to court parties that might be entered in investing

21 in in our fund.

22 Q. What /KO*FPL /SAEUGZ did he receive, sir?

23 A. He received in the patients company mark 35.

24 Q. All right. So it's March 29, 2011. More email

25 little. Here's an email from Cade, that's you, getting� 248

1 back to timing or transition and review of the time

2 line. What's that all about?

3 A. Well, at this point in the process, Jay had

4 come to the conclusion that he needed more assistance

5 from /OURB operational teams to be able to more

6 efficiently manage the portfolios. And we also were

7 engaging a third party serveser at the time because JayPage 212


Thompson B Cade

8 had been servicing his own assets internally. To timing

9 of the transition revealed the time line that would have

10 been associated with that. Employee changes since last

11 time we met was --

12 Q. You don't have to go through any okay?

13 A. Okay. Are you sure.

14 Q. You don't have to read the whole document.

15 Would you yeah that this timing of the transition is

16 consistent with everything talk being before the merger

17 of getting stewardship employees into Halo?

18 A. No, this doesn't have anything to do with that.

19 Q. All right. Exhibit 36?


21 Q. (BY MR. LUNN) What's this document, sir in

22 May 4, 2011.

23 A. This was an email to the -- it was a draft

24 email that I sent to Jay for his review to the finch and

25 Barry counterparties as we were negotiating out the� 249

1 terms of the partnership in Equitas housing fund three,

2 sir.

3 Q. And did Jay Temme have the authority to bind

4 that fund?

5 A. Jay Temme was through the stewardship entity

6 was a coGP in the partnership. However, this

7 partnership had not been in existence because there was

8 no assets to contribute into it. It was talking about

9 the go forward. Stewardship fund, if my memory serves

10 me right, was a coGP in this partnership.

11 Q. Okay. So this has to do with finch and Barry?

Page 213


Thompson B Cade 12 A. That's correct.

13 Q.


15 Q. (BY MR. LUNN) Exhibit 37. What is that, sir?

16 A. This was the transition of certain employees

17 into Halo asset management and a time line of a lot of

18 other thing.

19 Q. Okay. So if you look down on the to do list?

20 A. Yeah.

21 Q. On Page two, Number seven, preliminary meeting

22 with employees, that's Jay?

23 A. Yeah.

24 Q. So does that mean -- what's that mean to you?

25 A. Means Jay needed to meet with his employees to� 250

1 let them know what the plan /STKPWHR-FS and what's the

2 plan.

3 A. The plan was to off load some of the internal

4 infra/STUBGTure of the operations to Halo instead of

5 keeping it inside the stewardship fund.

6 Q. How many employees are you talking about?

7 A. At this time I'm not -- can't remember.

8 Ultimately, in August of 2011, about 12 or 13 came over.

9 Q. Weren't you get ago /AO how much was the

10 expense of that?

11 A. What was the expense of what?

12 Q. Didn't you have to get some space built out for

13 that?

14 A. I think we contemplated building out some

15 someways. I don't know if it ever actually happened. Ic

16 we had it -- I think there was some questions from aPage 214


Thompson B Cade

17 licensing standpoint whether we needed to add some

18 doors or whatnot. But I don't think we ever had to

19 actually do it.

20 Q. Mark this as Exhibit 38 and show you this.

21 /PHRARBG mark 38?

22 A. Do you want me to hold that.


24 Q. (BY MR. LUNN) What's this document, sir?

25 A. Oh, Jay wanted to -- I do remember this. Jay� 251

1 wanted some offices added in because he didn't want some

2 of the people in a cube. So he wanted in offices and

3 this was the cost associated with that. This was never

4 done.

5 Q. So the time was to bring some stewardship

6 employees over and build out some space approximate are

7 /THEZ employees and that's when thosy estimates were?

8 A. That's right.

9 Q. All right. Going back to exhibit /THREFRPB?

10 A. Okay.

11 Q. Number 12, present new entity to sf employees

12 D. That meeting ever happen?

13 A. No.

14 Q. Why not?

15 A. Because they couldn't get it done. They

16 couldn't get everything in order. It took too long.

17 Q. That /SAOEFPLed to be a chronic problem dealing

18 with Jay Temme, didn't it?

19 A. Yeah. Tell me about it.

20 Q. Didn't that throw up any red flags for you,

Page 215


Thompson B Cade 21 that here he is not getting things accomplished. He's

22 been working, trying to raise funds for Halo for several

23 months, yet there's been so results. Didn't /PWOPLTer

24 you at all?

25 A. Listen, working with Jay Temme, and even some� 252

1 of his employees was very frustrating. They're very

2 disorganized. They seemed to drag everything out and

3 make a mountain out of every mole hill. It was very

4 frustrating to work with them.

5 As /EFTSDZed boy our frustration with the

6 AMX flat form, the merger agreement, the /SKWERPBT

7 transaction, his ability to -- inability to raise any

8 funds from Equitas, and I think what you will see along

9 the way, David sevidented in all of this, if you step

10 book and look at a/TPHROEBLly and that we continued to

11 separate ourselves and distance ourselves as he

12 continued to not be able to perform in a manner that was

13 pair a/PA suit with our performance. Sore the idea

14 started out to be warm and fuzz SPE all in, very quickly

15 evan greated to it nothing felony an agreement for him

16 to help Zeus people to us and if he could do it, great.

17 If not, if not.

18 Q. What are you doing then -- you're getting all

19 these signs but you're meeting with potential investors

20 and all the documents show that you're one and the same.

21 The part of the management team. How are you

22 distinguishing yourself to these investorring saying,

23 well, this is all that we're /TKAOLG. There's nothing

24 in these documents to show that. How are you doing

25 that?Page 216



1 A. Could you rephrase the question.


3 A. I don't understand the question. Could you.

4 Q. (BY MR. LUNN) Sure?

5 A. So I make sure I know what you're asking.

6 Q. From before the merger agreement as time

7 progrosses, you continue to have concerns about Jay

8 Temme, his operation, what's going on. So you -- Halo

9 starts taking the direction to distance themselves from

10 Jay them. Is that your testimony?

11 A. Well, distance themselves necessary a manner of

12 pair a/PA sue. We believe that Jay Temme still retained

13 value in certain elements. Those elements were not

14 timeliness. Those elements were not organization.

15 Those elements weren't those things. So in thingses

16 where the relationship would require him to provide

17 those attributes, we /TKEUFT /ARPBSed himself from it.

18 Q. But it never occurred what he was supposed to

19 be doing for Halo. So the fact that he's supposed to be

20 raising /PHOPB and and you're having all these concerns

21 about Jay Temme being able to meet all these /OGSZs,

22 were you concerned what's going on when guy and inquiry

23 you representing to investor that is were doing with --

24 A. Yeah. We deputy /#123-6RBGS on June 23rd, we

25 told them done. /TPHO the moving forward with you� 254

1 anymore. We're going to go for a fee for service. You

2 can't perform. You're not performings. We want /TPHAOG

Page 217


Thompson B Cade 3 to do with this. And we communicated with /EFRBG we met

4 subsequent to that that we knew was /STKPWR-D in

5 anything, that we weren't to go that. Thatty we were a

6 fee service.

7 Q.

8 A. I didn't talk to Carl cup key after John 28th

9 until we went to Mexico, which was long after all of

10 that. Only time I met with Carl cup key was prior to

11 that.

12 Q. Here's a -- -- Exhibit 39.


14 Q. (BY MR. LUNN) Here's an email from Matt

15 Hawkins?

16 A. Yeah.

17 Q. And he's centing an email to you and Jay. He

18 goes primary visit so to understand more about Halo's.

19 So even that. And why would he believe that, to your

20 knowledge?

21 A. Well, the same reason that we just went through

22 the last time on the last three exhibit system there

23 were certain employees and certain functions that Halo

24 needed to perpetuate its business model and Jay needed

25 to out source an off load because he didn't want to� 255

1 manage it anymore. So what was critical to a guy like

2 Matt hawk /EUPBSZ that l was that the /*EUPBT /HREBLT

3 rum property and the experience with managing these.

4 What Halo contained is the trans/PAEURPBS SPE the

5 systems and the tech /TPHOPLG and the of management and

6 what most of thesis in/SROEFTors wanted to see is what

7 the final outcome going to be. Ultimately, Matt wasPage 218


Thompson B Cade

8 very /KHRAOEUR on what the nature of the investment was

9 going to be in the Equitas partnership, which did

10 include Jay Temme and the Equitas fund. There was no

11 question about that.

12 Q. So at what point -- strike that.

13 MR. LITTLE: What's our time on the record,

14 ma'am.

15 THE REPORTER: 5:37.

16 THE REPORTER: Did I mark that.

17 THE WITNESS: Exhibit 40.

18 MR. LUNN: Oh, sorry.



21 before y?

22 A. Yes, I have.

23 Q. May 18th, still put on the /K-LTD Friday

24 morning, May 30. And you say that meeting never

25 happened?� 256

1 A. I'm not sure. I wasn't there. I'm not sure if

2 it did.

3 Q. Do you have any reason to believe it didn't

4 happen?

5 A. Well, I have lots of reasons to believe it

6 didn't happen. A lot of thing s onthe time line has

7 never happened.

8 Q. All right. So you don't know whether the

9 meeting happened or not?

10 A. That's what I stated. I don't know if the

11 meeting happened or not.

Page 219


Thompson B Cade 12 Q. But then you're presuming it did because a lot

13 of things didn't happen?

14 A. In, I didn't plume it didn't. You asked me if

15 I had any reason to believe it didn't and I said there's

16 a lot of reasons to believe it department. I just of

17 didn't say I made that presumption. I'm just giving you

18 aa specific answer.


20 Q. (BY MR. LUNN) Who's mark Perkins?

21 A. Insurance.

22 Q. And, so, Sherry /REPB Shaw?

23 A. Yeah, Sherry /REPB Shaw.

24 Q. Shery?

25 A. Shar ER.� 257

1 Q. Marked June 1, employ /AOES are coming on

2 board. Is that right?

3 A. That's correct. That's accurate, yes.

4 Q. And, so, that's corn cyst et cetera with all

5 the representations you made that stewardship and Halo

6 are coming one and the same?

7 A. Well, I never made that representation, no

8 matter how many times you ask. Stewardship employees

9 becoming employees of Halo asset management, nowhere to

10 suggest that the entities are one.


12 Q. (BY MR. LUNN) 42. So this is another

13 confidential offering mental /RAUPBD /UPLD dated May 16,

14 2 /#3-67BD 11. Is that correct?

15 A. Yes, /STKWHR-TS and consistent with the other

16 memorandums you've put out, on Page 12, it testifies thePage 220


Thompson B Cade

17 managers, Jay Temme, you and other folks. Is that

18 correct.

19 A. Identifies the management.

20 Q. /KH*FS the managers. Initial principals of the

21 manager?

22 A. 93, the manager is not those people.

23 Q. You can wordsmith how you want?

24 A. You can, too.

25 Q. That's what it says?� 258

1 A. Yes.

2 Q. And then back on Page 28, it talks about the

3 principals of the manager again?

4 A. Yeah, same document.

5 Q. Right. So even though your relationship may be

6 coming more strained with Jay Temme, still going forward

7 with the same, mod /EPL /HR-RPBLGTS, /TH-Z of May 17th

8 and 93 the 10th. So I think we've kind of jostled in

9 time lines here. I think that's not a fair attempt. It

10 wasn't until June the /TWAELTth which I communicated

11 with Jay, which was really the imminent blow up between

12 myself and Reif pursuant to our relationship. So at

13 this time, I would not say that?


15 Q. (BY MR. LUNN) Exhibit 43. What's that

16 document, sir?

17 A. What is this? This was an LOI to purchase a

18 portfolio of loans from g mack.

19 Q. And the buyer of the loan system who?


Page 221


Thompson B Cade 21 Q. Look at Page one of 12?

22 A. Stewardship fund apparently.

23 Q. This is something that was certainty to you?

24 A. Yeah.

25 Q. Is this something you typically receive when� 259

1 funds are perfected?

2 A. Well, Number one, which was an LOI, which had

3 would mean that /SPWHREPBT to this, we /SKWHR-B entering

4 due /#2K50EU8 /KEPBS, which I was generally /AFRB a

5 certain point in the leadership was /SP-PBTS iblefor in

6 our AMX system, as I've I already /PEUR ported /SOFPLTy

7 yes. The answer to nigh question is yes, I would be in

8 the loop if there were assets being acquired.


10 MR. LUNN: Marked exhibit.

11 THE REPORTER: 44.

12 MR. LUNN: 44. Thank you.


14 Q. (BY MR. LUNN) What's Exhibit 44?

15 A. Yes, sir.

16 Q. Is this a confidentiality agreement?

17 A. It appears to be.

18 Q. And it's between stewardship fund, is that

19 correct?

20 A. It's -- come again? Judge yeah /-FPLTD and who

21 is the parties to the agreement.

22 A. It appears that by and /PHOPBG GMAC mortgage

23 LLC, home /KUPL accident financial LLC, residential

24 funding company LLC, who are the disclosing parties and

25 stewardship fund LP is the receiving party.Page 222



1 Q. And, so, this is confidential information

2 that's being released to stewardship fund, correct?

3 A. That's what it suggests, yes.

4 Q. And you would expect to see that confidential

5 information, correct?

6 A. Ask --

7 Q. Before these assets are purchased, as part of

8 the due kill /SKWREPBS, you'd want to see these this

9 information that's being /KOEZed, right?

10 A. Well, there was a lot of information, some of

11 which may or may not have been applicable it this

12 confidentiality agreement. So I don't know how to

13 answer that question.

14 Q. Why wasn't Halo or one of its fiants a party to

15 this agreement?

16 A. Because I was not a potential buyer of this

17 portfolio.

18 Q. But you were going to be the general partner?

19 A. Where does it say that?

20 Q. Okay.

21 Q. Why was Jay Temme sending you that, that

22 document?

23 A. As suggested in the previous answer to your

24 question our responsibility, we were engaged to provide

25 due diligence on portfolios and order the productses and� 261

1 services and DOT /ARPB /HRAOEUZations of the portfolios.

2 So to the extent that he was due dill /EPBSing the

Page 223


Thompson B Cade 3 portfolio, we would be involved through Halo. That's

4 what we.

5 Q. And then why wouldn't you know a party to the

6 confidentiality agreement?

7 A. I'm not. Because GMAC only deals with the

8 potential buyer of the portfolio. Vendor, I'm assuming

9 somewhere in the document, I read the document, not a

10 party to the document, allows for Jay to provide certain

11 information to vendors or whatever he needs to do to

12 /TKPO its due kill /SKWREPBS. I.e., the tape, the

13 mortgage tape itself is not confidential. It was shared

14 -- put out for bid in the general public.

15 Q. Okay. You've answered the question?

16 A. Okay. I'm sorry.


18 Q. (BY MR. LUNN) June 7, 200011, Jay Temme, had

19 really good call with the GS /KPWAOEUS /KWRO*EUFRPBLTS?

20 Q. What guys were that?

21 A. I have no idea, GS, Goldman /S-BGS.

22 Q. You didn't have any follow up with him?

23 A. No, sir.

24 Q. Why not?

25 A. Because this was typical.� 262

1 Q. What time it's typical?

2 A. Tip cat. Typical response from Jay. Jay, how

3 we doing. As going back to your question. What did he

4 do to try to ensure he was mutualing forward. Follow up

5 with him. The response we get /SWAOB very big and

6 ambiguous. Very good. /PWAORBG on it nine this was

7 likely Temme /KEB /*ER because Temme web every was thePage 224


Thompson B Cade

8 next to /AUPL the Goldman Sachs and it was reported for

9 the stewardship flan fund. That's what it was for. I

10 don't know who GS guys is, but certainly implies Temme

11 web /STPWHRER how do you know this was for the

12 stewardship flan fund.

13 A. This is the only deal we /HAO working with

14 Goldman Sachs and Temme /WER /STKWHRER how do you know

15 it's Temme Weber.

16 A. Because it's the gold Goldman Sachss he /WAORB

17 /RUFRing to as guy.

18 Q.

19 A. As I've I suggested to you, I've had plenty six

20 conversations with Jay Temme about who was involved with

21 Goldman Sachs with Temme web /EF. Guys meaning

22 /TPHRURL, I'm not sure who all would be include indeed

23 that bucket of guys. I don't know.

24 Q. All right.

25 MR. LITTLE: Leave what ton there.� 263

1 THE WITNESS: Huh.

2 MR. LITTLE: /HRAOEFPLT that out here {}

3 46.

4 (Exhibit No. 46 marked.)


6 before?

7 A. I have.

8 Q. And did you getlet na/TPHR-B for this flatten?

9 A. I can't say that I did.

10 Q. But you forwarded it to on to various parties?

11 A. Yes, sir.

Page 225


Thompson B Cade 12 Q. And it list the address /TPER the stewardship

13 flan fund two, management, Jim /TKPWHREUP. That's the

14 Halo offices?

15 A. It is, direct.

16 Q. Why were you setting up this fund?

17 A. Jay suggested, as I think there was a previous

18 question you asked, that he was still working on getting

19 a commitment /#234-6R fund, but had others entered in

20 fund two and needed a new entity set up to keep it

21 separate. So we set /UPL a new infect.

22 Q. So at 46?

23 MR. LUNN: So at 46 now.

24 THE REPORTER: This is 46.

25 MR. LUNN: So at 47.� 264


2 Q. (BY MR. LUNN) Have /SAOPL this document

3 before?

4 A. Yes, I have.

5 Q. So what does this document refer to?

6 A. Sell being a pool of assets to one of our

7 relationships on behalf of Jay Temme and a broker

8 relationship to a company called lamp cofunded by cap

9 west. This was a term sheet and to -- to stewardship

10 for the sale of those assets.

11 Q. And the wiring instructions are to where?

12 A. Stewardship fund.

13 Q. Why is that?

14 A. Because they own the as /STKPWHRETSZ did you

15 ever monitor the Comerica bank account.

16 A. No, sir.Page 226


Thompson B Cade

17 Q. Why not?

18 A. Why would I?

19 Q. Because your partner's out there trying to

20 /RAEUTZ funds on behalfer /KWRO entities. Don't you

21 want to see if he's doing that ear not?


23 A. Ive was not a partner in stewardship fund, had

24 no economic interest or employee relationship of any

25 kind to stewardship fund. I had no access to the� 265

1 /WAEUFRPLG accounts ever. So I have no interest in

2 managing Jay Temme's bank accounts. Nothing to do with

3 me.

4 Q. (BY MR. LUNN) Exhibit 48?


6 Q. (BY MR. LUNN) What do you know about this

7 document?

8 A. What do I know about this document? /TKWR

9 yeah.

10 A. I need to read it for a second. Looks like a

11 request for -- for a first set of interrogatories from

12 the plaintiff, pets owe gives, which is -- would assume

13 is 25 different plaintiffs perhaps from stewardship fund

14 and Jay Temme.

15 Q. And Jay Temme?

16 A. Yes.

17 Q. What do you know about this lawsuit?

18 A. What do I be about it?

19 Q. Yeah. /TH-FRPBLGS was a lawsuit between mount

20 /SRERPB /ORPB entities and stewardship fund?

Page 227


Thompson B Cade 21 Q. Do you know when it was filed /TPHEFRPBLGTSZ?

22 Q. When did you learn about this lawsuit?

23 A. I'm not even sure. Maybe -- I don't know.

24 Maybe late September, October. I don't know.

25 Q. Why would this be included in your production?� 266

1 A. Because subsequent to August the 26th, mount

2 /SRERPB /ORPB became a client of Halo's asset management

3 and they needed to replace Jay Temme as a general

4 partner in their funds and provided me with

5 documentation that they had appropriately

6 administratored that process.

7 Q. So it's your testimony you didn't know anything

8 with this lawsuit until after October 2011?

9 A. I don't believe that was my testimony.

10 Q. What was your testimony?

11 A. I don't know when specifically it was David

12 said it was somewhere in November, October. So I did

13 not specifically after October.

14 Q.


16 Q. (BY MR. LUNN) Exhibit 49, have you seen this

17 document before?

18 A. Let he see here. Huckleberry sent an email to

19 Jason T. Appears -- informing me attach side a revised

20 count. /SHR-RP /SR-RPT slow down. I'm just reading.

21 Maybe I can read to myself.

22 A. Okay.

23 Q. . Question?

24 Q. Have you /SAOEPBG this document before?

25 A. Yes, sir.Page 228



1 Q. And up at the top, there's an email from you to

2 Jay Temme after Jim subject you an email saying are you

3 available tomorrow with Carl. It says, sure. Just let

4 us know. And that's Sunday July 10, 2011. Do you

5 have -- do you recall meeting with Carl cup key?

6 A. Uh-huh. I don't think he ever made it in. I

7 don't think he ever made this meeting. Only time I met

8 with him, I /-PBL /PH-FS in June. I don't remember a

9 second -- I never met with Carl for a second time.

10 Q. And forgive me.

11 A. Yeah.

12 Q. Was that after that meeting you had with him,

13 did you have any conversations with him on the phone?

14 A. No, sir.

15 Q. . Other than the September time frame in

16 Mexico after this whole thing had blown up?

17 Q. Okay.

18 A. Yeah.

19 MR. LUNN: 50.

20 THE REPORTER: Yes.


22 Q. (BY MR. LUNN) On July 19, 2011, you send Jay

23 Temme this email and all these temperature. It is,

24 collateral. Do you see that, sir /KWRO*EFRPBLGS?

25 Q. Why did you send Mr. Temme those documents at� 268

1 that time?

2 A. I'm sure he requested a copy of what we had in

Page 229


Thompson B Cade 3 our collateral information. He may or may not have had

4 a copy. May have been out of the office. I'm not sure

5 why he asked if, but he requested if nonetheless and I

6 Lloyded if.

7 Q. With this time frame, you have the confidential

8 offering mental /RARPBD /UPL and if you whether or not

9 being at page /TWEF, it's not the /SOEUPL /AOFRPBLGTS

10 that says sample fund lt?

11 Q. Sure?

12 A. This is just a sample fund. This is just a

13 sample set of our collateral filings that were all in

14 PDF. So they weren't editable. They weren't --

15 Q. But why are you sending them these files if at

16 this point you decide to already be --

17 A. Well, because Jay Temme infended to perbet

18 /KWRAETing his judgment and raising funds and our teal

19 with him would be a third party service provider at this

20 time. See we had no use for these documents anymore

21 because we made the /STKEUGSZ not to raise any more

22 /TPAOUPBDZ. He wanted a sample of them I'm sure to

23 create this is own form of /TKPWOUPLTs and obliged. It

24 wasn't of value to us.

25 Q. So you were giving the information to Jay Temme� 269

1 to use how he saw fit?

2 A.


4 A. Giveings what information.

5 Q. (BY MR. LUNN) This /KWRUFPL's offer ingma'am

6 /RABD /UFPLD?

7 A. Well, this confidential offering mental /RARBDZPage 230


Thompson B Cade

8 /UPL fI'm not mistaken, is in a PDF. So that's not Ed

9 /EURBL /EUTable. So what we /R*EUPB tended to do with a

10 sample /#E68 fund lapproximate with specific term

11 necessary it, it was reallyir /R*EL /SRAPBT. There's

12 not a specific fund. It's not a specific offering.

13 It's not specific to any deal /T-FPLTS was an example of

14 what we had used in the past.

15 Q. Wouldn't you consider these memorandum

16 proprietary information of Halo?

17 A. Sure, absolutely.

18 Q. And so then you just abandoned that and gave to

19 to Jay Temme to do with what he will?

20 A. Well, Jay Temme is -- as I suggested, no less

21 than half dozen times, we had a number of different

22 services that we provided, /SKWA*EU consulting,

23 technology, inner management, due kill /SKWREPBS,

24 cleaning up documents, cleaning up /KWR-Fices. He

25 department have in/TPRABLGT /STRUR. /R*FPLT so knowing� 270

1 that we whereabouts going to raise any more funds, this

2 interlengthual property, /TKH was all documented with

3 sample all over it, this was 24069 meaningful to anybody

4 was not value to us. So handing it over to a gentleman

5 who we wented to main tan as a client going /TORD so he

6 could grow his business was -- seemed illogical

7 reporter.

8 MR. LITTLE: What's our time.

9 THE REPORTER: 57, 5:57.

10 MR. LITTLE: You've got three minutes,

11 David.

Page 231


Thompson B Cade 12 MR. LUNN: Exhibit 51.


14 Q. (BY MR. LUNN) This email dated June 5, 2011?

15 A. Yeah.

16 Q. If you're just going to doing a fee for

17 service?

18 A. Yeah.

19 Q. Why are you involved with Jay Temme and

20 fund-raising?

21 A. Well.


23 A. First of all, is there I /AF specific question

24 about this email.

25 Q. (BY MR. LUNN) Well, the /PHAERBGS mail -- this� 271

1 is talking June 5th?

2 A. Yeah.

3 Q. Letting you think about the Goldman Sachs guys?

4 A. Yes, sir.

5 Q. Then there's always for that fob 1 and 2 and I

6 think two was created after fee for service?

7 A. No. Fee for service was June 28, 2011. So

8 this is June 25 /*LGT. So it would be prior to that.

9 So I don't know what you're talk being.

10 Q. Okay?

11 A. Yeah.

12 Q. At what point did you communicate to Temme

13 Weber that the structure was changed if you're going to

14 invest, it would just be fee for service?

15 A. Never.

16 Q. Why not?Page 232


Thompson B Cade

17 A. Because I never had any contact with Temme

18 /WEBGer outside /*FTS meeting at /TKPWHREUP's office and

19 one follow up meeting in the crescent. Didn't have any.

20 Q. You had Carl cup key in the office and you know

21 he's setting up aa fund /KWR*FRPBLTS, that's correct?

22 Q. And you understood that Halo was going to be

23 /SR-FLT indeed that process. Why /KWR-PBT you telling

24 Carl Kim key?

25 A. We did.� 272

1 Q. When did you tell them that?

2 A. I did not specifically. Reif met with him when

3 I was on the the office and toil him that. Which is why

4 one of the /HREPLTDs of our production was a memorandum

5 that showed Halo in there approximate a big X on it. We

6 were out. I can't tell you how many /TAOEUFPLDZ, we

7 were out.


9 Q. (BY MR. LUNN)

10 A. April 8 /*GTS, okay.

11 Q. And this is yet another stewardship flan

12 subscription agreement?

13 A. Come again.

14 Q. I'm sorry. This is another agreement limited

15 partnership between dated May 24, 2012.

16 A. This is the agreement of limited partnership.

17 Q. /KWREBGT?

18 A. Correct.

19 Q. Yes.

20 A. Yes, sir.

Page 233


Thompson B Cade 21 Q. And who were -- when you were asked to create

22 this document, when who were /AO?

23 A. U-uh-huh.

24 Q. Pardon me?

25 A. I said uh-huh.� 273

1 Q. Who were the in/SROEFTors supposed /TOBG?

2 A. Well, they hadn't been identified. As

3 evidenced by June 5th email in your previous Exhibit 51.

4 I will let you know signs hear from the GS /TPAOEUS,

5 June 5, 2011. May 24th, how would I have known when it

6 was still in progress?

7 Q. All right.


9 Q. (BY MR. LUNN) Have you ever seen this

10 document, sir?

11 A. Sure.

12 Q. And what is it?

13 A. This is an analysis of -- for Jay Temme, who

14 got very /AEUPBGSry that we wanted to /SW*EUFP for a fee

15 /TOR service mod /ELG, not be his partner anymore in the

16 Equitas fund-raising money to convince him that the

17 economic benefits of using us as a fee for service

18 organization was actually economically more beneficial

19 /THARPB trying to raise it through splits, GP splits.

20 Q. So you prepared this document?

21 A. I did prepare this document, yeah.

22 Q. And had /WR* did you get the information on

23 this document?

24 A. What do you mean?

25 Q. The numbers. How did you derive the numbers?Page 234



1 A. They're all advantages /KWROEUFPLT /KWHR-PBs.

2 Q. A/S-FPBLGS /SUFPLTions?

3 A. Yeah.

4 Q. Okay.

5 MR. LITTLE: I think that's all she wrote,

6 David. I've E got --

7 MR. LUNN: What's that supposed to mean.

8 MR. LITTLE: You're done.

9 MR. LUNN: Why is that.

10 MR. LITTLE: You have a six hour time limit

11 under the Texas Rules.

12 MR. LUNN: Under Level two, but we're

13 supposed to be Level three.

14 MR. LITTLE: No. David you have a six hour

15 time /HRAOEUFPLTS on any /TKPEP decision under the

16 rules. Under a Level three schedules order, you would

17 have a total period of time to depose a total number of

18 westbounds.

19 MR. LUNN: Right.

20 MR. LITTLE: What's our scheduling order

21 say. Do we have a scheduling in order.

22 MR. LUNN: I've I given it to you.

23 MR. LITTLE: Yeah. You can under level

24 until we've actually published a.

25 MR. LUNN: Well, I've I presented it to I� 275

1 several /#250EU678D.

2 MR. LITTLE: Your six hours are up. Okay.

Page 235


Thompson B Cade 3 MR. LUNN: I don't agree with that.

4 EXAMINATION

5 BY MR. LITTLE:

6 Q. I want to you you that tricycle a look at

7 exhibit /TPRAOEUF and Exhibit 51 under /TPHAOEULGT

8 there?

9 Q. These are two emaim that is -- and what are the

10 date s onthose two emails, exhibit /TPROEUF and 51?

11 A. 45 and /KWRAOUPB 7, 200011 and Exhibit 1 is

12 June 5, 2011.

13 Q. Do these two emails /KORB /KHRAOUSively did he

14 mean /STKRAEUT is that Jay Temme was lying to you about

15 having raised money from Goldman Sachs?

16 A. Absolutely.

17 MR. LITTLE: I don't have any other

18 questions /R-RPBLT reporter often the record.

19 THE VIDEOGRAPHER: We're off the record at

20 5:39.

21 (End of proceedings at 5:36 p.m.)

22

23

24

25

Page 236


Jamar v. Patterson, 868 S.W.2d 318 (1993)

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 1

868 S.W.2d 318Supreme Court of Texas.

Hewell JAMAR, Petitioner,v.

Gayle PATTERSON, Individually and asNext Friend of Brandi Istre, Respondent.

No. D–3860. | Nov. 17, 1993.| Rehearing Overruled Feb. 16, 1994.

Appeal was taken from judgment entered by the District CourtNo. 280, Harris County, Tony Lindsay, J. The Houston Courtof Appeals, Fourteenth Judicial District, dismissed for lack ofjurisdiction, and writ of error was sought. The Supreme Courtheld that appellant's new trial motion was conditionally filed29 days after judgment, and thus was effective to extend timefor filing of appeal bond, even though filing fee was not madeuntil 47 days after judgment was rendered and clerk did notfile-stamp motion for new trial until filing fee was paid.

Reversed and remanded.

West Headnotes (3)

[1] RecordsFiling Written Instruments or Copies

Thereof

Document is “filed” when it is tendered to clerk,or otherwise put under custody or control ofclerk; issue of whether document is file-stampedis not controlling.

41 Cases that cite this headnote

[2] Appeal and ErrorNature and Grounds of Right

Rules of Appellate Procedure are construedreasonably but liberally, when possible, so thatright to appeal is not lost by creating requirementnot absolutely necessary from literal words ofrule.


[3] Appeal and ErrorMotion for New Trial

Appellant's new trial motion was conditionallyfiled 29 days after judgment, and thus waseffective to extend time for filing of appeal bond,even though filing fee was not made until 47days after judgment was rendered and clerk didnot file-stamp motion for new trial until filingfee was paid. V.T.C.A., Government Code §51.317(b); Vernon's Ann.Texas Rules Civ.Proc.,Rule 329b(a); Rules App.Proc., Rule 41(a).


Attorneys and Law Firms

*318 Martin L. Peterson, Stephenville, for petitioner.

Russell Scott Briggs, Houston, for respondent.

Opinion

PER CURIAM.

This case presents the issue of what constitutes “filing” amotion for new trial for purposes of calculating the appellatetimetable. After a jury trial the trial judge signed a judgmentfor Gayle Patterson, individually and as next friend of BrandiIstre (Patterson), against Hewell Jamar. The judgment is datedOctober 16, 1992. On November 12, 1992, counsel for Jamartendered his motion to the district clerk, who did not “accept”the motion for filing because Jamar had not paid the requisite

$15.00 statutory filing fee. 1 Despite its other deficiencies, 2

the clerk file-stamped the motion on November 30, 1992,when the $15.00 filing fee was received.

Jamar then filed an appeal bond which was timely if hismotion for new trial were timely filed to extend the appellatedeadline, but untimely if he were limited to thirty days afterjudgment. See TEX.R.APP.P. 41(a). The court of appeals,in a two-paragraph unpublished opinion, stated that Jamar'smotion was “filed” on November 30, 1992, when it was file-stamped, and dismissed his appeal. The court of appeals didnot state either that the file-stamp was controlling or thatpayment of the filing fee was a requirement for *319 filing,but presumably it impliedly made one or the other of thoseholdings.


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Jamar v. Patterson, 868 S.W.2d 318 (1993)

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 2

[1] In a long line of cases, this court has held that adocument is “filed” when it is tendered to the clerk, orotherwise put under the custody or control of the clerk. Mr.Penguin Tuxedo Rental & Sales, Inc. v. NCR Corp., 787S.W.2d 371, 372 (Tex.1990); Biffle v. Morton Rubber Indus.,Inc., 785 S.W.2d 143 (Tex.1990); Standard Fire Ins. Co.v. LaCoke, 585 S.W.2d 678, 681 (Tex.1979). We thereforeassume the court of appeals did not mean the file stampwas controlling. That means the court held that payment ofthe filing fee controlled when the document was “filed” forappellate timetable purposes.

[2] [3] TEX.R.CIV.P. 329b(a) provides that “[a] motionfor new trial, if filed, shall be filed prior to or within thirtydays after the judgment or other order complained of issigned.” The rule does not define “filed.” It is our policyto construe rules reasonably but liberally, when possible, sothat the right to appeal is not lost by creating a requirement

not absolutely necessary from the literal words of the rule.See McRoberts v. Ryals, 863 S.W.2d 450, 455 (Tex.1993);Pool v. Ford Motor Co., 715 S.W.2d 629, 632–33 (Tex.1986).Consistent with that rule and our prior holdings that the dateof filing is when the document is first tendered to the clerk,we hold that Jamar's motion for new trial was conditionallyfiled on November 12, 1992, when he tendered it to the clerk.That date controls for appellate purposes. The filing wascompleted, as the trial court clerk implicitly recognized, when

Jamar paid the filing fee. 3

Without hearing argument, a majority of the court grants theapplication for writ of error, holds that the date of originaltender of the motion for new trial governs for appellatetime calculation purposes, reverses the judgment of the courtof appeals and remands the cause to that court for furtherproceedings consistent with this opinion. TEX.R.APP.P. 170.

Footnotes

1 TEX.GOV'T CODE § 51.317(b).

2 The motion also failed to conform to the county's local rules because it did not include a proposed order or a submission date, but

such local rule requirements may not impose additional restrictions on what constitutes a “filing” under the Texas Rules of Civil

Procedure or Rules of Appellate Procedure.

3 The filing is not completed until the fee is paid, and absent emergency or other rare circumstances, the court should not consider

it before then.

End of Document © 2014 Thomson Reuters. No claim to original U.S. Government Works.


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