transcript of tom lawler first hearing

8/10/2019 Transcript of TOm Lawler First Hearing

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UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

SECURITIES AND EXCHANGE )COMMISSION, ) ) PLAINTIFF, ) ) DOCKET NO. 1:14-CV-2468-AT -VS- ) )THOMAS J. LAWLER, ET AL., ) ) DEFENDANTS. )

TRANSCRIPT OF TELEPHONE CONFERENCE PROCEEDINGSBEFORE THE HONORABLE AMY TOTENBERGUNITED STATES DISTRICT COURT JUDGE

THURSDAY, JULY 31, 2014

APPEARANCES:

ON BEHALF OF THE PLAINTIFF:

PAT HUDDLESTON, II, ESQ.

ON BEHALF OF THE DEFENDANTS:

THOMAS J. LAWLER, PRO SE

ELISE SMITH EVANS, RMR, CRROFFICIAL COURT REPORTERUNITED STATES DISTRICT COURTATLANTA, GEORGIA

Case 1:14-cv-02468-AT Document 23 Filed 08/20/14 Page 1 of 53


2/54ELISE SMITH EVANS, RMR, CRR

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1 (Thursday, July 31, 2014; Atlanta, Georgia.)

2 THE COURTROOM DEPUTY CLERK: Good afternoon, counsel.

3 This is Amy McConochie, Judge Totenberg's Courtroom Deputy Clerk.

4 The Court is joining the conference call in Civil Action

5 1:14-cv-2468. If we can have everyone who is on the line please

6 identify themselves for the Judge and then you will be on the

7 line with Judge Totenberg.

8 MR. HUDDLESTON: Sure. This is Pat Huddleston from the

9 SEC. I represent the plaintiff here in this case. With me here

10 in my office Jerry Parisi, who is a summer Honors intern, and

11 Nana Jorgoladze, who is my paralegal.

12 MR. LAWLER: And I am here, Tom Lawler, representing

13 the Freedom Foundation USA.

14 THE COURT: Mr. Lawler, this is Judge Totenberg. Are

15 you basically representing yourself or are you an attorney?

16 MR. LAWLER: I'm representing myself.

17 THE COURT: Okay. All right. And does Freedom -- is

18 Freedom Foundation a corporation? Is it incorporated?

19 MR. LAWLER: It's an LLC.

20 THE COURT: It's an LLC. All right.

21 MR. LAWLER: Uh-huh.

22 THE COURT: All right. All right. And is there anyone

23 else on the telephone?

24 MR. HUDDLESTON: Nobody else, Judge. This is Pat.

25 THE COURT: All right. Mr. Huddleston, would you go




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1 ahead and tell me what efforts you have made to notify any other

2 named parties here of this hearing?

3 MR. HUDDLESTON: Certainly. Judge, Mr. Lawler who's on

4 the call covers all but one of the named parties. He --

5 obviously he is the founder and operator of Freedom Foundation.

6 There's nobody else to call with regard to them.

7 THE COURT: All right.

8 MR. HUDDLESTON: Order Processing, LLC, is an LLC he

9 set up and he's the sole person with authority there. Divine

10 Spirit, LLC, is in the same category.

11 Order Processing is the company they've used to receive

12 money from investors. Divine Spirit is the company they use to

13 pay their bills, they transfer investor money to Divine Spirit.

14 Violet Blessings is an LLC that I believe Mr. Lawler

15 set up for his wife's benefit. I spoke to him when I told him

16 about the conference call and asked him, if he could, to get his

17 wife on the line since I believe she has an interest in that

18 business.

19 And, so, the one left open there is Prosperity

20 Solutions, LLC. Up until six weeks, two months ago, it was the

21 company to which Mr. Lawler paid commissions to salespeople and

22 paid other payroll obligations. The person who set that up, I

23 believe, is Judith Harris is her name. She left Mr. Lawler's

24 employ, again, two months ago, roughly.

25 I found a phone number for her. I have called and I




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1 left her a message as quickly as I had dialing information,

2 telling her what it was and what the matter was regarding, but

3 apparently I struck out there. That was the only number I called

4 for her. She answered, identified herself as Judy Harris, and I

5 left the information.

6 THE COURT: All right. And, Mr. Huddleston, have you

7 provided copies of the complaint and TRO motion and proposed

8 order in this case to Mr. Lawler?

9 MR. HUDDLESTON: I have e-mailed them to his -- the

10 e-mail address he gave me, [email protected].


12 MR. HUDDLESTON: I can't tell if he's been able to open

13 them up.


15 MR. LAWLER: And I have not yet seen those, by the way.


17 MR. LAWLER: And would like time to address that

18 certainly before I could fully comment on them. I received

19 notice just like five minutes before this call that this meeting

20 was to happen, so I have had zero time to prepare any -- at all,

21 but I'm here on your request and --

22 THE COURT: I appreciate that. And obviously this

23 is -- the SEC here proceeded on an emergency basis, and I

24 responded as soon as I could in terms of my own availability.

25 Well, first of all, Mr. Huddleston, at the conclusion

mailto:[email protected]:[email protected]



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1 of this hearing, would you go ahead and file a -- immediately

2 file some -- a document where you verify that you -- your efforts

3 to provide notice of the hearing and what exactly you provided

4 and sign it.

5 MR. HUDDLESTON: Certainly will, Judge.

6 THE COURT: All right. All right. It appears to me

7 from the motion that this is something that the SEC has been

8 investigating for a while and has interviewed Mr. Lawler and

9 perhaps other witnesses as well. Mr. Huddleston, tell me what

10 type of investigation has been conducted to date and also what

11 you have pre -- what information has previously been shared about

12 the concerns of the SEC with Mr. Lawler.

13 MR. HUDDLESTON: Well, we -- the investigation has

14 actually not been going on very long --

15 THE COURT: Okay.

16 MR. HUDDLESTON: -- despite the fact that the conduct

17 has been going on very long. We got it as a referral from

18 another law enforcement agency, I would guess, three or four

19 months ago maybe and began gathering bank records, which is our

20 first order of business. I had to do it fairly quickly because

21 it looked to us from the bank records that something was going on

22 and then it might have to be an emergency.

23 After we gathered the certain bank records, we did

24 decide that the smart thing to do was call Mr. Lawler in for

25 testimony so that he could have a chance to explain what we




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1 thought that we were seeing. And, so, he came in and testified

2 here in our office late June, I believe it was. So, roughly a

3 month ago. We showed him documents, we asked him questions about

4 our concerns, and he gave his sworn testimony, excerpts of which

5 are attached to our memorandum in support of our application.

6 We also at that time took Mrs. Lawler's testimony,

7 because the bank records show transfer of investor funds to her,

8 and we wanted to satisfy ourselves as to whether she was -- she

9 was an equal partner in this thing or whether she was ancillary.

10 So, those are the two folks that we've taken sworn testimony

11 from.

12 In addition to that, we have spoken to, you know, a

13 couple of investors here or there. Folks don't seem to know an

14 awful lot. A lot of folks are reluctant to talk to us. I

15 believe that they are more inclined to believe Mr. Lawler. But

16 those are the efforts we've made to try to get our arms around

17 this thing.

18 THE COURT: All right. Do you contend that the

19 transcripts of the interview and the one affidavit attached as

20 Attachment 2 from Ms. Zaki factually supports the allegations in

21 the complaint?

22 MR. HUDDLESTON: Yes, Judge.

23 THE COURT: All right. Because Mr. Lawler hasn't had

24 the benefit yet of reviewing these, would you go ahead and

25 summarize what the contentions are of the SEC and what violations




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1 of law you are contending exist, what the emergency is, and what

2 relief you are seeking at this moment.

3 MR. HUDDLESTON: Sure. Yeah, I'll do that.

4 Mr. Lawler, the evidence we put before the Judge, as

5 she referenced, is -- in terms of the number of pages, mostly

6 transcript -- excerpts from the transcript of your sworn

7 testimony, a couple of pages from your wife's testimony.

8 In addition to that, we have a Declaration of Matthew

9 McNamara who's an Assistant Director of Enforcement here, who has

10 spent some time reviewing the Freedom Foundation web site and

11 certain YouTube videos, so he has brought himself up to speed on

12 what Freedom Foundation is representing to the world.

13 We also have the Declaration of Karaz Zaki, who is an

14 Enforcement Accountant here, who has poured over the bank records

15 and gave a declaration about the movement of funds, mostly from

16 the Freedom Foundation or Order Processing to the other relief

17 defendants.

18 And, so, our allegations are that you and Freedom

19 Foundation, those are the two named defendants accused of

20 wrongdoing, have violated certain provisions of the federal

21 securities laws, specifically to begin with the registration

22 provisions; that is, that securities have to be registered before

23 they're sold unless there's an exemption from registration. Our

24 argument is that the -- the administrative remedies, the ARs that

25 you sell to people, are under the securities laws investment



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1 money, we're -- we need not borrow anything because we've -- you

2 know, we've got this trust fund in all our names. And that the

3 banks are, you know, ripping us off and that the courts are

4 complicit. And we don't believe that's true. That's what you're

5 telling people.

6 You're telling them that the administrative remedies

7 are to some extent a solution to that problem, and that you can

8 help them paying judgments that can eliminate the debt. And that

9 they will also be eligible for these massive payouts on their

10 investment when the AR funding supposedly happens, which we

11 understand is going to be brought about by a series of

12 international events. I'm not sure I know all of them. That --

13 the web site describes a few of them. Some of them involves the

14 Pope, Vatican. Some of it is -- you, in your testimony, you

15 referenced having written letters to the IMF and the UN and

16 President Obama trying to make all this happen.

17 So, we believe what you're telling people is untrue and

18 that you're selling these ARs to them through those

19 misrepresentations. That constitutes a violation of the

20 anti-fraud provisions of the federal securities laws, so those

21 are the violations.

22 Now, with regard to why this is an emergency, you

23 remember in your testimony we asked you when the last time you

24 sold one of these was, and I believe you told us that it might

25 have been as early as two days before your testimony. And, then,




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1 you also said that sales would continue. And, so, any time we

2 have a situation where we believe there are violations and that

3 they're continuing, we don't have time, in the investors'

4 interests, to file a lawsuit and wait so many days and go through

5 the discovery process while people continue to be ripped off, in

6 our estimation. We have to do something quickly. And, so,

7 that's the reason for this emergency hearing and sort of the

8 nature of the emergency relief that we're asking for.

9 And, so, the details about what we're asking for.

10 We're asking Judge Totenberg to issue a temporary restraining

11 order that prohibits you from continuing the conduct that I just

12 described. The order will be more specific if Judge Totenberg

13 signs the order that we've proposed. And in addition, we're

14 asking for an asset freeze against you, Freedom Foundation, that

15 would lock down those assets. You would be unable to move money,

16 spend money. We believe that that money belongs to investors who

17 were separated from it in violation of the law, and so we don't

18 believe it's yours rightfully to spend. And, so, that's why

19 we're asking for the asset freeze.

20 In addition to you and Freedom Foundation, we have

21 asked the same -- those two things, that is, an asset freeze,

22 more particularly, and disgorgement, that is, to give up the

23 wrongfully obtained proceeds from those relief defendants I

24 mentioned, you know, Divine Spirits and Order Processing and

25 Prosperity Solutions and Violet Blessings. So, there is no




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1 wrongful conduct alleged against those four entities, but it is

2 alleged that those entities received that money without giving

3 consideration, that they've been unjustly enriched by the amount

4 that they received, that the money is in fact investors' money,

5 defrauded from investors, and that it ought to be repaid.

6 So, Judge, I think that covers all of the matters you

7 asked me to cover.

8 THE COURT: All right. So, the proceeding we're having

9 right now, Mr. Lawler, is on the Motion for Temporary Restraining

10 Order. It is an emergency order with minimal notice, as you well

11 know. Any order issued would not last more than ten days, at

12 which point -- by that point I would basically have to have

13 another hearing and either renew the order or else have a longer

14 hearing. But it wouldn't be -- in other words, this is not the

15 only time I would hear from you by any means. It is an emergency

16 motion -- order that would expire with -- ten days hence.

17 Assuming that I were to hear this again in ten days or

18 less, I would obviously schedule -- have scheduled a hearing well

19 enough in advance for you to have counsel present.

20 I will tell you that under the rules of the Court, that

21 an LLC must be represented by counsel. So, while you're

22 appearing here today on behalf of all of the various entities

23 that the SEC alleges you have control over or are affiliated

24 with, technically under the rules you can only represent

25 yourself. But because of the emergency nature of the proceeding,




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1 I'm going to simply -- basically consider that you are here on

2 behalf of anyone you've indicated that you are representing.

3 If there's any entities that the defendant -- the

4 Government has identified that you don't feel like you are --

5 sort of part of your operation, then you should probably tell me

6 that now. But assuming we have another hearing about this,

7 you're going to need to get an attorney. You would always be

8 allowed to represent yourself as an individual, though.

9 So, the concerns I have in looking at this is that it

10 sounds from the submissions provided that there is in fact a

11 legitimate basis for the Government's concern about continued

12 solicitation of investors and potential also movement of the

13 assets here so that they would -- the Government would not be

14 able to recover the assets in any event if it proves its case

15 altogether and would not therefore be able to protect the

16 investors who've already deposited funds with you. The

17 Government has asked for a freeze of the assets, among other

18 things. And I wanted -- and as part of that, I also understand

19 that there might be some money that has been moved out of this

20 country. I'm not sure of that or not.

21 Mr. Huddleston, can you clarify what the contention of

22 the Commission is in that regard?

23 MR. HUDDLESTON: Yes. Yes, ma'am. During the

24 testimony, Mr. Lawler testified that he and Ms. Harris at one

25 point had opened an account in New Zealand and had deposited some




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1 money there. And we asked him what the balance was. I believe

2 his testimony, and I'm quoting here, was five grand or so. I

3 have no idea what the correct balance is, but we have it from Mr.

4 Lawler that he opened the account there. And, so, that's the

5 basis of what we allege in our papers.

6 MR. LAWLER: Would it be appropriate for me to speak

7 now?

8 THE COURT: Yes. I want to ask one other question of

9 the Government so that you can respond to everything at once.

10 Does the Government have knowledge about where the

11 assets are right now of the defendant?

12 MR. HUDDLESTON: Judge, we know about the bank accounts

13 that we've been able to subpoena. Because these organizations

14 are frequently closed down by the banks, they have to open

15 accounts at lots of different places in succession, and so

16 there's still quite a bit that we have to gather. But we do have

17 some account numbers, and we are in a position to serve any order

18 on those banks very quickly, this afternoon, to lock that money

19 down. And, of course, once we're able to get additional records,

20 we'll be able to identify other things. And we will spread the

21 order far and wide to try to capture everything that we have.

22 But aside from the bank accounts and the account in New

23 Zealand -- by the way, we don't know the name of that entity.

24 That's why we've asked for a repatriation order. We're not aware

25 of any other hard assets.




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1 THE COURT: All right. Mr. Lawler, go ahead.

2 MR. LAWLER: Okay. And actually listening to Pat's

3 summary here, if what he said was true and accurate, I would be

4 leaning in his direction. I would probably be taking, about

5 those issues, the same path he has taken.

6 It's all based on some presumptions that are not

7 correct, the first one being that we're selling a security. A

8 security would be a promise of some particular outcome. We do

9 not guarantee any outcome. We do not make any promise at all.

10 In fact, we do not sell anything. What we do is provide a

11 educational program, period. Okay? That's what they're called,

12 an educational program.

13 If I sold a book on how to win in the stock market, I

14 guess that -- it could be construed maybe as security to some

15 people, but I don't think in your mind or mine it would. Or, if

16 we gave an education on the web site that showed people how to

17 take information, discuss it, discern if it's true or not. We

18 don't ask anybody ever -- that's a key point. We've never asked

19 anybody in our ten year history to ever do any process.

20 We have multiple processes we provide, by the way. The

21 administrative remedy is just one -- just as it sounds,

22 administrative remedy. We provide the administration if somebody

23 chooses to go forward with an educational program.

24 We have another one that's called GSA, which is on the

25 site. You can, you know, look that up on your own. It's another




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1 methodology. Actually, it comes from -- and he mentioned the

2 Pope, so I'll bring it up here. There was a "Pap-al" -- a

3 "Pay-pal" decree back in September 1st of last year -- you can

4 look it up on the web site on your own if you like.

5 And you may wonder what the "Pap-al" decree or

6 "Pay-pal" decree has to do with anything in our world, but indeed

7 there is a trust account that the Vatican does control. Okay?

8 And you can verify that yourself. It's a factual evidence. You

9 can do your homework. And, now, it does take a little digging,

10 and I do a lot of that. And that's what we do is research.

11 The Papal decree is out there and it says basically

12 that the officials -- all government officials such as yourself

13 and Pat and any -- anyone of this nature within the Government,

14 their immunities are no longer in place. It's an informational

15 piece, but it is very important. And, in fact, if they violate,

16 they can be arrested as anyone else can. Okay?

17 So, the protections that the police, the Government

18 officials, attorneys have had, judges, banks who are lending --

19 who are doing, if you will, fraudulent or anything that is

20 contrary to law -- can indeed be prosecuted just as anyone else

21 can. So, the Papal decree is the core element behind the GSA

22 process, which is not in question here, but it is valuable from

23 one standpoint. The Roman empire created the -- the concept of

24 corporations. If you do your history, you'll discover that. And

25 the Vatican is now the keeper of that in trust as well.




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1 And, yes, there is a world trust. If you go back and

2 do world history, in 1933, FDR declared Joint House Resolution

3 192 -- this is all factual stuff, you can look it up on your

4 own -- that there was a bankruptcy of the United States. We're

5 still in it. Okay? It's the third one, actually.

6 Well, in place of money, when you're bankrupt, that

7 means the country has no money. You might recall all the

8 coins -- gold and silver was collected -- okay -- from the people

9 and replaced by paper, a promise that one day you'll be able to

10 redeem your gold certificates for gold and silver once again.

11 Later it became silver certificates. If you remember, back in

12 the sixties those were available.

13 In 1971, Nixon nixed it all by removing us from the

14 Bretton Woods agreement and no longer backed our money by gold.

15 If you're around in that time period, you might recall inflation

16 went through the roof. So what backed money was in fact this

17 trust account. They had to come up with a substitute, pretend

18 money if you will. The substitute money, when all gold and

19 silver was taken out of circulation -- it's illegal today to

20 trade in gold and silver, as you know, as money. So, therefore,

21 a substitute was created. Well, something had to back the --

22 excuse me, the substitute. Well, that is the birth certificate.

23 I'm sure I'm not telling you anything new here, Judge

24 Totenberg. I'm certain in your travels and in your education

25 you've learned about these various things, so I'm just repeating




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1 a little bit what we do share on our calls. Now, this is the

2 education we provide people. So far here we're not selling

3 anything other than education.

4 Now, if people want to buy this education and indeed do

5 a process to reclaim, that's their business. We never ask them

6 to do anything. It's totally voluntary. Okay? But the basis of

7 money -- the basis of money is not gold and silver any longer.

8 Now, one day that will return. I suspect not too far in the

9 distant future. But for today, those dollars are backed by the

10 Federal Reserve. As you know it's not federal and that there's

11 no reserves. It's a private banking cartel. The Treasury has an

12 association with them, but they are private. And that came in

13 1913. Okay? So, all money made today is controlled by a whole

14 other mechanism than what we think.

15 So where does money come from when you borrow money?

16 You and I have mortgages; right? Credit cards, student loans

17 perhaps. Where did that money come from? All right. It came

18 from the trust account. They just put digits in upon your birth

19 and said, okay, that's the basis of all our money. That is the

20 full faith and credit of the United States, the sum of you, me

21 and everybody else in this country. That's where money comes

22 from.

23 Now, this information was never asked for, even though

24 I -- I had wished to share it with Pat and his other friend at

25 the time. They had no interest in finding the real truth. They




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1 were more interested in looking at -- all they looked at, by the

2 way, were bank accounts. They made no inquiry at all as to the

3 basis of what we do. All they looked at is we took in money and

4 they presumed these were securities, which is not the case. We

5 do not provide any instrument or guarantee or anything of the

6 kind.

7 We say if indeed the money that you allegedly borrow

8 from a bank did not come from the bank's vault or their resources

9 or assets, but in fact came from your own trust account at your

10 birth -- okay? That is true and prove me wrong, if you like. If

11 that is true, then that means each individual, when they sign

12 that promissory note, was really funding their own loan. Think

13 about it, the bank --

14 THE COURT: Well, Mr. -- let me ask you this, Mr.

15 Lawler --

16 MR. LAWLER: Yeah.

17 THE COURT: -- is that there's a declaration attached

18 to the motion of the Government --

19 MR. LAWLER: Uh-huh.

20 THE COURT: -- that specifies that you have told

21 investors that Freedom Foundation pays the investors 70 percent

22 of the recovery obtained and retains the remaining 30 percent.

23 MR. LAWLER: Well, first of all, there are no

24 investors. We don't use that term. We don't have investors.

25 That's foreign to us. What we have are folks who buy an




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1 educational program. If they wish to --

2 THE COURT: All right. Tell me, your people who bought

3 the -- the people who have bought an educational program, have

4 they been told that there will be a 70 percent rate of return?

5 MR. LAWLER: Okay. What you're referring to are the

6 early Gold members. We have Gold members that came in early.

7 Then we have Silver members, and then later and currently we have

8 what we call the early Bronze members. Each program has

9 different terms and conditions. However, none are investors.

10 They are simply buying different educational programs.

11 The folks who came in early, whatever awards would

12 come -- okay -- and right in their contract which everyone signs

13 and agrees to, it's right on the web site, and you can go out and

14 read it if you're -- if Pat wants to do that, you can go out

15 right now and we'll look at it on the site or I can provide it to

16 you, no problem. It says, as it did from the very first day,

17 that there are no guarantee of results. This is a best efforts

18 process to -- that you are engaging in. We are simply providing

19 the administration of it.

20 Now, back to your 70 percent, the early folks we call

21 the Gold members -- okay -- came in under the premise that

22 whatever proceeds would come forth, if any, on the basis of best

23 efforts from the methodologies that were put in place that would

24 be paid, 70 percent of that would come to them. 30 percent would

25 be coming to the club, which would be distributed to the various




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1 folks -- we called them consultants back then, I believe it was.

2 And they would get their share and a portion of that would

3 come -- the remaining part would come back to the club for

4 benevolent purposes.

5 I am a Reverend. I started this club because I had a

6 deep passion to help people. I saw the plight ten years ago of

7 where this country was going, and it's gotten absolutely exactly

8 what I expected, it would be worse. It's horrendous.

9 Foreclosures are outrageous today.

10 Now, if the presumption is correct that banks never

11 loaned you that money, then indeed the Supreme Court has ruled

12 that if you collect money from somebody that you never loaned

13 money to, that's called conversion. And you would know that in

14 your -- I'm sure in your teachings, Judge Totenberg. That if

15 somebody extracts money from you, such as a bank, every time they

16 demand a payment every month and then never loaned you that

17 money -- okay? Keep in mind, if you signed a promissory note at

18 the time of the loan, that is treated as a check. In bankruptcy,

19 a promissory note is the same as money.

20 So, what does the bank do? They stamp it for deposit,

21 the promissory note. It goes to the Federal Reserve. They don't

22 have any money. What do they do? They dip into the trust

23 account. That's where the money extracts from. That's where

24 all --

25 THE COURT: What is the web site which has this




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1 information on it that you're talking about?

2 MR. LAWLER: Freedomclubusa.com.

3 THE COURT: Thank you.

4 MR. LAWLER: And we are simply educating people on what

5 if. Now, at that point, if they want to do the process, that's

6 up to them. If they don't, that's perfectly fine. They've come

7 for the free education, we're here to share. If indeed they see

8 something in question or don't want to do it or have better

9 information, we're more than willing to listen. And we've

10 learned a lot from our members over the years. However, the

11 trust account is the basis in a bankruptcy -- and this is not

12 just the U. S., it's Canada and virtually every country in the

13 world is doing the same thing. We just are a little better at it

14 than others.

15 I'm not here to discredit anyone or harm anyone in this

16 process. We're not here to harm the banks, we're not here to

17 harm the system. What we are here to do is to help members claim

18 their -- their portion of the proceeds that are due them.

19 Now, you might wonder where do we get the money? And

20 if you will give me a moment here, I'd like to explain.


22 MR. LAWLER: The source of money, as I said, is from

23 the birth trust account. You were born, I was born, everybody

24 was born, the account was created; the idea that is your Social

25 Security Number. Okay? And that's identified as your particular




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1 account in the trust. It's just digits. They just threw in at

2 your birth, they said, well, they think you'll make this much, an

3 average person, in your lifetime, let's show them that amount.

4 So when you signed the promissory note, I said it goes

5 through the process. The Federal Reserve simply dips into the

6 trust account, but what they do is they replace, they exchange.

7 See, a promissory note is money, so they exchange. They put the

8 promissory note into the trust and take out, oh, say, 100,000

9 loan in digits. So, therefore, the account stays equal, doesn't

10 it? You take out what you put in, so therefore the account is

11 perpetual, it never runs out of money. And they then wire those

12 hundred thousands down to your local bank and it looks like the

13 bank loaned you that money.

14 Now, you can get a bank charter today for $50,000, by

15 the way. Okay? You can become a franchise of the Federal

16 Reserve and have a bank. Guess what? In a year from now that

17 same bank may have a billion dollars of loans outstanding. So

18 you tell me, how does 50,000 turn into 1,000,000,000? How can

19 they loan out a billion if they only started with 50,000? And,

20 of course, the math says you can't. So, it's pretty obvious the

21 bank is doing something other than what we presumed they did.

22 They did say they loaned money, and they're right, they

23 do. But they don't loan you the bank's money because that's

24 actually illegal in their own charter. If you read a bank's

25 charter, it will tell you you cannot loan your own money or your




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1 credit or your depositors' money. So, the only thing left is --

2 the only source of money is the borrower, you and I.

3 THE COURT: All right. Let me ask you this. How many

4 participants do you right now have in your -- what you regard as

5 an educational program?

6 MR. LAWLER: We have over the history about 10,000

7 folks who've become members. Now, I don't know how many of those

8 have remedies. We do a number of things. We also offer what's

9 called quantum energetics. We offer prosperity calls which are

10 informational calls, and those are -- some are free, some are

11 modest costs, so we do a lot of things. So when a member comes

12 in, one of the choices and only one is an administrative remedy.

13 Some might do a GSA process, some may do QE we call it, or

14 prosperity. You know, it's -- it's a smorgasbord of choices. We

15 do educational calls. Some just come for the calls, some take a

16 year to make up their mind what to do, some do nothing.

17 THE COURT: All right. All right. Let me hear from

18 the Government's counsel if you want to respond to any of that

19 and then let's go on from here.

20 MR. HUDDLESTON: Sure, Judge. Very briefly, I would

21 say Mr. Lawler testified that people paid $300 for the membership

22 that he's referring to, and that's -- I believe that's the 10,000

23 folks he's talking about. And what he testified to is that the

24 $300 gets you that education he's talking about.

25 Now, I want you to remember you have the option to buy




24

1 these administrative remedies. That's what we say these

2 securities are. We're not claiming just the $300 membership that

3 gets you the education is a security. We're claiming only those

4 folks who bought these administrative remedies for prices ranging

5 from 1,000 to 10,000 promising payouts from over 300,000 to a

6 million dollar are the folks who bought the securities.

7 And as regard to his -- his statement that he's not

8 selling them, they don't sell anything, it's quite plain that,

9 you know, the more you put down on the AR, you more you're

10 supposed to get at payout. And it's curious that they pay people

11 25 percent commission to go out and sell these ARs if it's a

12 purely voluntary process. That's all.

13 THE COURT: And, of course, any type of investment

14 process is voluntary, so I'm not sure that -- the distinction

15 voluntary or involuntary. But do you have -- any of the cases

16 that you cited in your brief, do they deal with clubs of this

17 type?

18 MR. HUDDLESTON: Well, I can't say which ones might be

19 closest factually, Judge. I do know that sort of the trend in

20 these offering frauds is to have a level like the membership

21 level so that when you come to the Court you can argue under

22 Howie that this isn't really a security. It's sort of -- it

23 allows you to make the argument and then also to say -- also to

24 get a mailing list of people who are willing to listen to what

25 you have to say. So, you start with the club level and then you




25

1 go on from there to sell other things. I mean, we've had the

2 mobile billboards cases, we've had different people buy kiosks.

3 I mean, everybody is trying to look like Amway, but not quite

4 getting there. It's -- there's always this sort of weird element

5 at the beginning by which they qualify people who later wind up

6 buying the securities.


8 MR. LAWLER: Well, let me -- let me -- may I respond?

9 THE COURT: Yes, you may respond, but this time

10 briefly. Okay? Go ahead.

11 MR. LAWLER: Well, yes. And in respect for Pat, he has

12 bits and pieces of information, but they're not cohesive. He

13 mentioned the 70 percent and so forth. Well, that was what years

14 ago. We haven't done that for many, many years. The Silver

15 Program had a different payout, and that was a straight 90 -- or,

16 excuse me, straight million dollar payout.

17 What he's referencing on today is on the early Bronze.

18 Yes, we do have a tiered program. As the economy has worsened,

19 we found that at $2,700 to buy an educational program was under

20 the reach of most people, so we dropped the price to a letter --

21 a lesser amount.

22 But here's the key. Where do we get paid? And I think

23 this is the critical piece that you -- we're not addressing. I

24 offered that information, but -- and the folks were not

25 interested during the hearing. We have since last June been in




26

1 contact with President Obama, at least mailing to him, one-way

2 communication so far, and to Treasury Secretary -- oh, boy. I

3 dropped -- forgot his name right now. Who's our Treasury

4 Secretary?

5 THE COURT: I'm sorry. Go head.

6 MR. LAWLER: Well, anyway, he has been contacted.

7 However, due to the bureaucracy that we have discovered in the

8 White House, the information got waylaid and never got there.

9 And I have probably a dozen different communications that I had

10 offered to give to Pat if he has an interest in them to sup -- to

11 validate this. And, basically, I'm telling the President and

12 Jack Lew -- there we go -- exactly what we're doing. Okay?

13 We're not hiding anything.

14 THE COURT: Well, what I'm -- will you just try and

15 answer? Where do you get your money from, then? What are you --

16 MR. LAWLER: That's exactly what it is. It's going to

17 be coming from the U. S. Treasury.


19 MR. LAWLER: Why? Because the U. S. Treasury is

20 responsible for all debts in the bankruptcy. So, as we

21 present -- in other words, here's the violation. Let's say bank

22 loaned you $100,000. And, yet, you thought they loaned you their

23 money. They actually loaned you your own money. Therefore --

24 again, check the Supreme Court ruling. It was Cleopatra

25 Haskowitz versus some insurance company. And they ruled that,




27

1 yes, that's called conversion. If in fact you're collecting

2 money, as the banks do every month from somebody where they

3 didn't even loan them the money --


5 MR. LAWLER: -- that's conversion.

6 THE COURT: But we're not -- we're not talking about

7 the Treasury at this point. At this point, though --

8 MR. LAWLER: Well --

9 THE COURT: -- you and the Foundation and the various

10 organizations affiliated with you, are you -- you are the

11 beneficiaries, though, of the -- whatever amount of money that

12 people are either -- are sending your way, whether we call it an

13 investment or we call it an educational program. Is that

14 correct?

15 MR. LAWLER: What we are doing is we're collecting on

16 behalf of our members what is due for them in this conversion.

17 This is an illegal process banks do. We're not here to harm the

18 banks, but we are here to give retribution to the member without

19 harming the bank. And here's the key.

20 When we have a judgment, which we acquire in 90 days --

21 or, excuse me, 30 days -- and if you're familiar with the

22 administrative process or administrative remedy, it goes back to

23 ancient times. And that's what the banks are doing when they

24 foreclose, they're sending you a notice one, a notice two, and a

25 notice three. At that point they take you to court in a judicial




28

1 state or they take you to the sheriff and steal your home in the

2 third -- in the remaining states.

3 All right. That same process is governed under the

4 Uniform Commercial Code, the UCC. Okay? That's how all commerce

5 is governed, as you well know, are aware. All we do is use the

6 same process the --

7 THE COURT: Mr. Lawler, have you been able to obtain

8 funds that you have in fact returned to --


10 THE COURT: -- any of the participants in your program?

11 MR. LAWLER: That's what I'm getting to, Your Honor.

12 We reversed the process, send notice one, notice two on behalf of

13 our member to the bank. They have an opportunity to be heard.

14 If they don't, in 30 days they have a judgment. We take the

15 judgment to, in this case, Secretary Jack Lew and President Obama

16 for distribution, for payment. They have an obligation under the

17 bankruptcy to pay all debts.

18 And as a result, those have gotten waylaid, so

19 therefore we took -- came in the back door, went to Christine

20 Lagarde of the IMF. And I have supporting documents for all of

21 this. We also went to the UN, Konowitz and Ki -- I forget his

22 name now, the president, and also some --

23 THE COURT: All right. All right. I understand your

24 theory of how you're proceeding. Let me hear from the Government

25 about, tell me what -- the core relief you're seeking at this




29

1 point just for the TRO and -- because there's a lot of different

2 relief that you've asked for in your -- in the TRO, which

3 included, for instance, extremely abbreviated discovery. And I'm

4 trying to find out, given the emergency nature of this

5 proceeding, what is the -- what are the -- what's the most

6 fundamental thing that -- elements here that you are looking for

7 that -- for the next ten days?

8 MR. HUDDLESTON: Well, Judge, we think the expedited

9 discovery is important. We've got the former employee out there

10 who I believe was in charge of the QuickBooks program. We will

11 have some more detailed information about just how much money

12 they collected and where it went. We suspect that being able to

13 get to that information quickly might lead us to other assets

14 that we don't yet know about and help us to serve whatever order

15 you enter on those -- those assets so that they get wrapped up.

16 So, we've got the asset freeze, the TRO. We've got the

17 expedited discovery. We also have asked for the repatriation

18 order so that -- so that Mr. Lawler is required to go get that

19 money back from New Zealand. And it could be that once we look

20 at the QuickBooks account, we find other overseas account. And

21 they could be ordered to re --

22 THE COURT: All right. Well, it seems to me

23 repatriation within three days is a pretty difficult thing to

24 achieve. It may be something that is realistic on a longer range

25 basis, and --




30

1 MR. HUDDLESTON: Yes.

2 THE COURT: -- if there's more -- other funds out that

3 you identify elsewhere, then we can deal with that. But, I mean,

4 are you considering the repatriation within three days really, A,

5 feasible and, B, essential?

6 MR. HUDDLESTON: No, ma'am. It's not -- it's not

7 feasible.


9 MR. HUDDLESTON: We think it's eventually essential,

10 but it's not feasible. I take your point.


12 MR. HUDDLESTON: So the asset freeze and the TRO and

13 the expedited discovery are the three most important things.


15 MR. LAWLER: First of all, there's been no securities

16 involved in any way, shape, or form. If I sold books to people

17 on how to do what I'm doing, would that be a security? Of course

18 not. If it's presented on an electronic form on our web site or

19 verbal form, it's no different. We are doing nothing at all

20 other than educating people. If they want to come forward and

21 they have, would you like a hundred or 500 testimonials -- I have

22 them -- of people who are elated with the education they've

23 gotten.

24 Now, you asked if we paid anyone. That's in the hands

25 of the Secretary and President Obama and with the help of




31

1 Christine Lagarde at this moment. Now, if you want to discredit

2 those folks or at least verify with them that this is in process,

3 I think that would be most appropriate. They have their very

4 sharp attorneys looking this over and also the balance of the

5 international world court to get their opinion, and thus far

6 everything looks thumbs up.


8 MR. LAWLER: Now, they're a little busy with the world

9 revaluation right now, but as soon as that happens, we will be in

10 line for our payouts.

11 Now, that was your question. Have we paid anybody out?

12 It's in their hands. So, why don't you check with them? Before

13 you take any actions against anybody, why don't you find out

14 here's the very high source who says we like what we hear.

15 Christine Lagarde, head of the International Monetary Fund,

16 President Obama, Jack Lew, check with them. Get their -- get

17 their two cents.

18 Now, if they say this is absolutely nonsense or

19 whatever, then they'll tell you that. If they say this is

20 absolutely incredible and it's bringing billions and trillions of

21 dollars to the families of America who are hurting, which is our

22 mission, wow. Now, you want to stop that?

23 THE COURT: Mr. Lawler, thank you for your comments.

24 Obviously you disagree on the most fundamental issue here as to

25 whether or not the interest being conveyed here is a security or




32

1 not, and that is ultimately a mixed question of fact and law.

2 Based on what currently is available to me, I think that there is

3 substantial evidence and likelihood that it may be viewed as a

4 security. You may convince me otherwise when we have a

5 full-fledged hearing, but right now I think the evidence would

6 point to it -- under the Court's current definition of security,

7 that it would constitute that. I understand --


9 THE COURT: -- your argument. Let me just continue.

10 MR. LAWLER: Sure.

11 THE COURT: I understand what your argument is, and you

12 can certainly present it more fully and hopefully with the

13 benefit of an attorney next week. I'm going to schedule this

14 case for a TRO at 2:30 on -- I need -- for 3 p.m. on Friday,

15 August 8th, in my court --

16 MR. LAWLER: But I have to --

17 THE COURT: What? Excuse me?

18 MR. LAWLER: Might I ask this?

19 THE COURT: Yes.

20 MR. LAWLER: Since I have had an entire three minutes

21 for this call to prepare --

22 THE COURT: Yes.

23 MR. LAWLER: -- or, you know, this kind of short -- I

24 haven't seen the documents.

25 THE COURT: Right.




33

1 MR. LAWLER: I've had absolutely no opportunity. So to

2 do -- take any action against us, could we not postpone this for

3 at least a week or whatever you suggest, and longer if need be,

4 so I can prepare and get to you, you know, the various documents

5 I spoke of? I can provide you every document I've sent to

6 President Obama, Jack Lew and so forth, Christine Lagarde, to

7 support what we're doing. It spells out in plain terms exactly

8 what I told you here.

9 I know this is new to most people. You've been taught

10 statutory law and I understand that. I respect that. However,

11 common law is what the basis of this country came from and this

12 is what we're going back to.


14 MR. LAWLER: Under opinions of statutory law and the

15 lower superior law. That's what this is based on. Now,

16 that's --

17 THE COURT: All right. I certainly understand your

18 concern and this -- it has proceeded on an emergency basis, but I

19 also understand the emergency basis that -- and why the

20 Government considers it an emergency. Because I'm going to be

21 having a hearing within eight days of the -- of this, I don't --

22 I do not see that you're going to be impacted in such a way that

23 it will cause you significant harm. And I think the public

24 interest here will be served by getting some transparency here as

25 to what is going on. The --




34

1 MR. LAWLER: Why don't we use ten days or eight --

2 THE COURT: Well, the eight days -- I'm using eight

3 days because otherwise we would be here on a Sunday, and so we --

4 if we were talking about a -- ten days. That's why I scheduled

5 it as late as possible on Friday to give you the maximum amount

6 of time possible. But I think that the request for relief is

7 supported and by substantial evidence, and there is a substantial

8 showing here --

9 MR. LAWLER: It's not evidence. I'm failing to hear

10 it, one piece of evidence.

11 THE COURT: Well, all right. The evidence --

12 MR. LAWLER: You mentioned we eliminate debt. We don't

13 do that. Never do that. We never say that. That was a false

14 claim. We don't sell --

15 THE COURT: Well, this is obviously something that's

16 contested. And, you know, I perfectly well respect the fact that

17 you may in fact present substantial other evidence. But let me

18 just say, I don't think evidence as to whether you transmitted a

19 letter to the President one way or the other is the really

20 relevant issue. The most relevant issue here is the one you put

21 your finger on right from the start, which is really what is the

22 nature of this interest, is it a security or not, and are the

23 representations false. So --

24 MR. LAWLER: What representation?

25 THE COURT: -- and that's what I would expect to hear




35

1 from --

2 MR. LAWLER: What representations have we made? I

3 haven't heard anything that we've said that it's false. We speak

4 the truth. People can buy a book, read it. You can process it

5 as they choose. That's what they do with us. They take the

6 information. They can do something with it or nothing with it,

7 and we don't ask them. In fact, it's forbidden that our folks

8 will ask anyone to do a process. If they do, they're removed

9 from the call. You know, I mean, we're that strict. We don't

10 ever ask anyone to do anything. We freely give the information.

11 What they do with it is --

12 THE COURT: All right. Well, the contention as

13 described by the Government and as supported in their -- the

14 materials they've submitted, including the affidavits and the

15 reference to the web site, is that -- and the YouTube videos is

16 that in fact that you are --

17 MR. LAWLER: Well, what --

18 THE COURT: -- in fact making representations as to

19 individuals' likely recovery based on their having made an

20 investment and you -- or a transmission of funds to you. And

21 that -- that the basis upon their investment -- the investment in

22 the common enterprise is one of a promise of return that is --

23 that is --

24 MR. LAWLER: There are no --

25 THE COURT: -- that is not supported by the facts.




36

1 MR. LAWLER: There is no promise. In fact, it's

2 very -- look at our contract. It's very specific. This is on a

3 business basis --

4 THE COURT: Well, I am happy to look at it further, but

5 I am proceeding here to enter the relief requested on a emergency

6 basis. And we will revisit this, of course, on Friday -- next

7 Friday at 3 p.m. The Court will send you a notice. Obviously if

8 you -- I would urge you to get an attorney so that the entities

9 that are represented here beyond yourself, the Freedom

10 Foundation, et cetera, can be properly represented, because as I

11 started this out by saying is that while you can represent

12 yourself in court, the -- all the entities that are LLC would

13 require legal representation.

14 And I will hear from you again on this. But for now, I

15 think for the very reason that this poses some very significant

16 legal issues and risks, I want to be able to in fact preserve the

17 status quo and be able to be provided with the information

18 concretely that will allow us to move forward one way or the

19 other next Friday.

20 MR. LAWLER: Well, what happened to innocent till

21 proven guilty? There is accusations. I've given you a very

22 strong defense that --

23 THE COURT: And you have been very articulate. But

24 we're not in a criminal proceeding, and the criminal

25 proceeding --




37

1 MR. LAWLER: Well, whether it's criminal or civil --

2 THE COURT: Yes. This is a civil proceeding, and I

3 think that the Government has borne its burden. I know that

4 Mr. -- I well understand that you have not read yet the

5 materials, from what you've said, that Mr. Huddleston has sent to

6 you. I will make sure that the order entered here is provided to

7 you by e-mail and will ask Mr. Huddleston to -- when I issue the

8 order, to immediately transmit it to you, because I don't have

9 your address at this juncture on the record and I don't want to

10 have you have to wait until you get something by mail.

11 MR. HUDDLESTON: Judge, if I might on the record. This

12 is Pat.

13 I might ask for an alternative, an e-mail address,

14 because I've just looked and there's a bounce-back from the one I

15 sent that requires me to click on something and be on an approved

16 list from Mr. Lawler before he'll accept my e-mails. And I'm not

17 sure my IT person is going to be too excited about that, so --

18 MR. LAWLER: A spam blocker, which I will find and

19 accept. There's no problem with that.


21 MR. LAWLER: You can use anyone I have. It's out

22 there.

23 Since you said this is an emergency matter, yet for ten

24 years we've had success after success of testimonials from

25 people, which you have not accounted for, and were extremely




38

1 happy and pleased at the education they've gotten and are very

2 pleased, without having received one cent. And you haven't taken

3 any of this into account. You said it's an emergency. Well,

4 it's -- what about the ten years of successes that people have

5 shared with us? Why is this suddenly an emergency now? We do

6 very little AR business, by the way. A tiny bit. The bulk of it

7 is in other areas.

8 THE COURT: Well, this is --

9 MR. LAWLER: The economy is such. So, I mean, it's not

10 like --

11 THE COURT: This order is principally directed to the

12 AR business, and whatever you do on -- on other items may be well

13 your business. But, Mr. Huddleston, to what extent are you

14 seeking any type of relief as to the parts of the entity's

15 business that do not relate to ARs?

16 MR. HUDDLESTON: None at all, Judge.

17 THE COURT: And what about the accounting? Are you

18 looking for an accounting of the non-AR business or not?

19 MR. HUDDLESTON: No. We need an accounting of the

20 security sales, and that would involve the ARs. Now, in our

21 discovery of third parties or discovery with Mr. Lawler, we would

22 expect to have access to the QuickBooks at this point. They may

23 allow us to segregate out things. But we're focused on the

24 securities here and those are the ARs.

25 MR. LAWLER: Well, let me bring up another point. You




39

1 mentioned Judith Harris was to be a party on this call. Judith

2 Harris left our group.

3 We don't have employees, by the way. Everybody is a

4 contractor and everybody is contracted under certain terms,

5 including Ms. Harris, who has left voluntarily about two months

6 ago. And following her path, we have found she has been very

7 destructive, let's say, and has misused money. She was totally

8 in control of the office and its staff and what we did. She

9 misused monies quite extensively and then left -- and the records

10 of which you speak are in a mess. And that's what we're sorting

11 through right now trying to discover them. In fact, my own

12 computer was hacked recently and wiped out. So, all my records

13 are not available either.

14 So, we've been through a lot here. Whatever the

15 precipitating energies are behind that, I don't know. However,

16 we've done absolutely nothing improper. Ms. Harris has, well,

17 done a number on us and she was -- became vindictive for whatever

18 reasons, and she can explain that for herself, and throwing

19 accusations left and right. However, she is the only one who

20 opened that foreign account and it was -- just opened an office

21 in New Zealand, period, of which we've since closed. So, we also

22 are being billed for it, so we're picking up her mess.

23 So, what we have here is a total destruction of our

24 attempt to destroy our club by one person who -- and then, yes,

25 we always have grumblers, some people who expected their monies




40

1 and lost their home. It wasn't our doing. We're here to help

2 them. And we're doing our very best. But if we are being

3 hindered or handcuffed to help people, that's a gross injustice.

4 MR. HUDDLESTON: Judge, might I?

5 THE COURT: Yes.

6 MR. HUDDLESTON: We -- if you're inclined to sign the

7 order, I would just ask if there is a chance we could get it

8 tonight, we'd love to get it out there today.

9 THE COURT: All right. I will get it out. I think,

10 you know, there are many short timelines on this and hopeful that

11 there can be complete cooperation. If some time -- on any

12 particular one, there needs to be a little bit of flexibility --

13 MR. HUDDLESTON: Of course.

14 THE COURT: -- that's another matter. I'm going to

15 modify it a little bit. We will get you out the order in the

16 next half hour. You can serve it, Mr. -- Mr. Lawler, I encourage

17 you to, if you're going to be representing yourself in this

18 proceeding, you need to provide all contact information to the

19 Court as to how to reach you.

20 MR. LAWLER: What is the way we reach you and the

21 court?

22 THE COURT: All right. You're going to reach us

23 through the Clerk of the Court. And I'm going to have Ms.

24 McConochie who is a deputy clerk here provide you the information

25 as to how to reach -- basically filing information with the




41

1 court.

2 THE COURTROOM DEPUTY CLERK: Okay. In order --

3 MR. LAWLER: The --

4 THE COURT: Mr. Lawler, I'm just going to have -- Ms.

5 McConochie is going to speak to you about your question.

6 THE COURTROOM DEPUTY CLERK: Mr. Lawler, in order to

7 file documents in your case, you have to send them to the Clerk's

8 Office. You can do that in person between the hours of 8 a.m.

9 and 6 p.m., Mondays through Fridays. From 8 a.m. to 4:45 p.m.,

10 the Clerk's Office is staffed so you can leave your pleading with

11 the staff person who will file stamp it immediately in front of

12 you. Between the hours of 4:45 and 6 p.m., you place it in a

13 dropbox that's available and it is stamped for the date that you

14 drop it in the dropbox.

15 You can also remit the filing via mail to the Clerk's

16 Office and I'm going to give you an address to which you can mail

17 them. Are you ready to take down that address?

18 MR. LAWLER: Go ahead.

19 THE COURTROOM DEPUTY CLERK: Okay. It is Office of the

20 Clerk, Room 22 --

21 MR. LAWLER: Hold on.

22 THE COURTROOM DEPUTY CLERK: Okay.

23 MR. LAWLER: By the way, is Judge Totenberg still with

24 us?

25 THE COURT: Yes.




42

1 THE COURTROOM DEPUTY CLERK: She is. She is. I'm just

2 going to finish giving you that address, Mr. Lawler.

3 MR. LAWLER: All right. Because I do have a final

4 word.

5 THE COURTROOM DEPUTY CLERK: Okay. It is -- the

6 address is Office of the Clerk, Room 2211, 75 Spring -- that's

7 S-p-r-i-n-g -- Street, Southwest, Atlanta, Georgia, 30303.

8 MR. LAWLER: Okay. All right. Thank you for that.

9 THE COURTROOM DEPUTY CLERK: You're welcome.

10 MR. LAWLER: Is there a phone number, by the way, a

11 direct number?

12 THE COURTROOM DEPUTY CLERK: Well, there are two

13 numbers. I can give you my telephone number. It's 404-215-1437.

14 MR. LAWLER: Okay.

15 THE COURTROOM DEPUTY CLERK: And if you want to check

16 on the status of any of your filings, the Clerk's Office

17 maintains a help line from the hours of 8 a.m. to 4:45 p.m.,

18 Monday through Friday. And that telephone number is

19 404-215-1655.


21 THE COURT: And you can simply advise them of your

22 address so that you get all mailings in the case by writing them

23 a letter. You can't do it by phone, though. You have to

24 actually submit a letter and they will file that.





43

1 THE COURT: Have you provided at this juncture

2 information to the SEC that will help them identify your --

3 the -- your account and what might be accounts associated with

4 the administrative --

5 MR. LAWLER: My accounts? What are you referring to?

6 THE COURT: -- bank accounts, because that's what

7 they're seeking to freeze.

8 MR. LAWLER: Oh, I've been asked for nothing. I was

9 pretty much railroaded in the meeting and was given no idea of

10 the nature of the call. What I was expecting, quite frankly,

11 was -- is we'll be coming forth and a notice from our Treasury

12 Secretary setting up our relationship to fund these accounts.

13 Okay? That's what I was expecting from the SEC meeting, which

14 I -- you folks rather scoffed at when I brought that up, because

15 they had knowledge of this. And I do understand they didn't have

16 any knowledge of this, but -- so it was kind of -- kind of

17 strange here.


19 MR. LAWLER: I spent ten years of my life working to

20 bring relief to the American public and bring monies to them,

21 proper monies that is owed to them, without harming anyone and --

22 MR. HUDDLESTON: Judge --

23 THE COURT: Yes.

24 MR. LAWLER: -- it's an interesting reflection that you

25 would take this action.




44

1 MR. HUDDLESTON: Judge, this is Pat. If I might just

2 very briefly.

3 We got -- we chose not to serve this right away and got

4 information directly from the banks. To the extent that we can

5 analyze those things, it appears to us that the monies from the

6 ARs were commingled with other sources of income, so we're going

7 to need at least the eight days, if you're willing, to have the

8 asset freeze apply to all assets.


10 MR. HUDDLESTON: So, we'll do our best to sort out

11 what's what, but we are quite certain there is not a discrete

12 account for the ARs and everything else is unrelated. It's all

13 mingled together.

14 THE COURT: All right. Well, how would you propose --

15 MR. LAWLER: Have you discovered --

16 THE COURT: Let me just ask you this, counsel. How

17 would you propose to leave Mr. Lawler himself individually with

18 sufficient funds so he can take care of any personal needs or

19 obligations in the next eight days?

20 MR. HUDDLESTON: Judge, I hadn't considered it. I

21 mean, whatever he's spending, I guess, would be investor money

22 since -- or I would assume so. I don't know what he's taken in

23 from other sources, if the Court is inclined to -- and I don't

24 know what's due for him in the next eight days. Maybe he could

25 tell us.




45

1 Well, here's the thing that concerns me. His wife has

2 a retirement from the Ohio Teachers Pension Plan and she draws

3 Social Security. So, they do have other sources of income. To

4 say --

5 THE COURT: But I don't know that that's not being

6 invested in these other bank accounts that you seek to freeze.

7 MR. HUDDLESTON: Oh, I see what you mean. I see what

8 you mean. To the extent they're in Violet Blessings?

9 MR. LAWLER: Yes. That is exactly what is happening.

10 That's where her money goes.

11 THE COURT: Okay. Well, here's a suggestion. The

12 testimony we have on Violet Blessings is that from the ARs

13 $55,000 was transferred to Violet Blessings.

14 MR. LAWLER: I believe it was 50.

15 MR. HUDDLESTON: The transcript shows 55. One of 50,

16 one of one and then one of four, three separate transfers

17 totaling $55,000.


19 MR. HUDDLESTON: Mrs. Lawler testified that she did not

20 spend that money, she didn't consider it hers. To the extent the

21 Court wants to limit the freeze to Violet Blessings, at least in

22 the interim while we gather more discovery, to $55,000, perhaps

23 that's a way to free up some --


25 MR. HUDDLESTON: -- so that there's no -- no freeze




46

1 over and above that on her pension or on her Social Security.

2 THE COURT: So you would just be seeking a freeze of

3 the assets of Violet -- in any bank accounts held by Violet

4 Blessings; is that what you're saying?

5 MR. HUDDLESTON: Yes, that's right.

6 THE COURT: All right. All right. Okay.

7 MR. LAWLER: In regards to -- we do many other

8 activities, as I said, within the club. The AR business. I'm

9 try -- in the last couple of weeks, I think we've had at most

10 three or four and those are very small ones, thousand dollar ARs

11 that have come in. In fact, the vast majority of our funds come

12 from other contributions for other purposes, like the other

13 educational assets, so they are, yes, in one account because that

14 is how we do business. So, to freeze them would be extremely and

15 extraordinarily disruptive --

16 THE COURT: Well --

17 MR. LAWLER: -- to all of our operations that are even

18 outside of the AR venue.

19 MR. HUDDLESTON: We recognize that, but there's --

20 there's no other practical way to protect the investors here.

21 Mr. Lawler just told the --

22 MR. LAWLER: I don't think that --

23 MR. HUDDLESTON: -- things in the last couple of days,

24 so --

25 MR. LAWLER: There's no such thing as an investor. We




47

1 don't use that term. We never have.


3 MR. LAWLER: We don't have investors.

4 THE COURT: All right. Well --

5 MR. LAWLER: We sell an educational program, gentlemen

6 or lady.

7 THE COURT: -- it sounds to me that limiting this to

8 Violet Blessings so that we're not freezing the individual

9 account of Mr. Lawler or the Freedom Foundation is a --

10 MR. HUDDLESTON: Oh, no, ma'am. I'm sorry. I

11 misunderstood. We absolutely have to have the freeze on Mr.

12 Lawler and Freedom Foundation.

13 THE COURT: All right. All right.

14 MR. HUDDLESTON: What I'm suggesting --

15 THE COURT: What are you suggesting, that I just

16 repeated to you what you had -- what do you want to do about --

17 then to --

18 MR. HUDDLESTON: What I would say is Violet Blessings

19 is on -- you know, this -- according to Mr. Lawler's testimony

20 and according to the bank records, there's been 1.1 million

21 dollars raised in last eight months. Right? 50,000 bucks won't

22 do it. That's what Mr. Lawler sent to his wife's LLC, we believe

23 to hide it from other -- other prying eyes. Okay?

24 MR. LAWLER: Well, let's back up --

25 THE COURT: No. I need to hear precisely --




48

1 MR. LAWLER: The $50,000 --

2 MR. HUDDLESTON: All right. Here we go.


4 MR. HUDDLESTON: Here's what we need.

5 MR. LAWLER: (Unintelligible).

6 MR. HUDDLESTON: Yeah. I was trying to help out Mr.

7 Lawler. I believe what the evidence calls for, Judge, what we

8 need in order to protect investors, is a complete freeze on all

9 Mr. Lawler's accounts, all Freedom Foundation accounts, all the

10 accounts of the LLCs that are named as the relief defendants. We

11 believe that anything not frozen is going to get gone between now

12 and Friday. And Mr. Lawler has been spending investor money for

13 ten years now. I think he --


15 MR. HUDDLESTON: -- can figure a way to make do for the

16 next --

17 THE COURT: What are you saying will be exempted?

18 That's all I'm asking. What that you're seeking to exempt so

19 that he has some source, so we're not taking his wife's pension

20 fund money or that there's some money for them to live on and pay

21 any obligations personally they have in the next eight days. I'm

22 just being very clear.

23 MR. HUDDLESTON: We would feel comfortable exempting

24 any deposits from her pension or from Social Security to the

25 extent she wants to arrange -- you know, any amounts that come in




49

1 from those two sources could be exempt from the freeze.

2 THE COURT: Well, how would that be practically

3 effective right now? If you put a freeze tonight on their

4 account, how will -- how will --

5 MR. HUDDLESTON: The way we've done this -- it wouldn't

6 help tonight or maybe this week, but on Monday -- usually what

7 happens is I get a -- I've done this before -- the bank will call

8 me and confirm that Mr. Lawler and Mrs. Lawler will be in there

9 and they will be asking to open a separate account in order to

10 receive those funds into a separate account. The bank will have

11 the order. They'll be uncertain about whether that's allowable

12 under the order. I will tell Mr. Lawler and Mrs. Lawler have

13 them call me, I will get on the phone with the bank officials,

14 and we'll make it -- we'll make it happen.

15 THE COURT: All right. Well --

16 MR. HUDDLESTON: To the extent --

17 THE COURT: -- how many funds -- how much funds right

18 now are in the Violet Blessings, LLC, account to your knowledge?

19 MR. HUDDLESTON: I do not know, Judge. You know --

20 MR. LAWLER: Most of those monies are my wife's. Those

21 are her earnings over the years from her retirement -- or

22 pre-retirement work.

23 MR. HUDDLESTON: Yes.

24 MR. LAWLER: 50,000 or perhaps the 55, whatever it is,

25 was what was paid to her as a cumulative for ten years of work.




50

1 That's peanuts.

2 MR. HUDDLESTON: That's not what she said. So, if we

3 want to just be --

4 MR. LAWLER: Well, the intentions were --

5 THE COURT: I don't desire to get -- I'm just trying to

6 figure out a practical solution, because I'd like to at least

7 preserve $5,000 for these folks to have access to in the next

8 week. And the thing is if they're going to hire an attorney,

9 which is going to be to everyone's benefit here, he has to have

10 probably even more than that in order to hire an attorney, and

11 it's more like $10,000, between his personal expenses and needing

12 to hire an attorney. So, tell me what you would propose to

13 accomplish that?

14 MR. HUDDLESTON: Well, I would -- I guess I would

15 propose that anything like that come from the Violet Blessings

16 account. I don't know that any other accounts currently have

17 $10,000, Judge.


19 MR. HUDDLESTON: And, so, that way we could keep the

20 others frozen. And we could just know that anything that's being

21 unfrozen is coming out of Violet Blessings, because at least we

22 know that that is funded in part by nonpayment sources.


24 MR. LAWLER: Let me make a thought here. We have

25 multiple web sites that are being supported by all over the




51

1 place. We have future -- there's a back-in system that's $1,700

2 a month that we have to pay, which is the automated process, once

3 the funds come in, that will be available. We've invested huge

4 amounts of those member fees, but they've paid into that. And

5 for that to go way or not to be paid on a monthly basis is going

6 to be horrendous, because then to restart that up would cost our

7 members, the very folks we're trying to help, additional money.

8 So by shutting down or freezing for even eight days -- again, why

9 am I guilty of something that, you know, is -- let's prove.

10 Let's just prove this first and then you decide what to do.

11 As you said, there's modest amounts in those accounts.

12 Well, those modest amounts are being utilized. They're automatic

13 deposits. They cover all kinds of expenses that the -- that the

14 club encounters. These aren't -- I have never received one dime

15 directly from the club in commissions or salary in ten years. I

16 do this from the goodness of my heart. Okay? Everything that is

17 paid out are either commissions or are expenses to get the word

18 out to people, period. So, to harm the club is to harm the

19 people, the members, the ones you're trying to protect. The

20 only --

21 THE COURT: Well, I'm going to make sure that -- I will

22 craft this order so that $10,000 is absolutely accessible to you,

23 as well as any deposits from the pension fund or from Social

24 Security. And we are going to have this hearing, obviously as

25 promptly as possible, and if there's a -- at that juncture, we




52

1 have the hearing, I would ask the Government to attempt to more

2 narrowly define what has to be frozen.

3 One of the ways that this is going to be least invasive

4 to you, Mr. Lawler, is if in fact if you cooperate in terms of

5 identifying what is actually -- what accounts are being fed by

6 the AR money versus anything else, because then this can be much

7 more narrowly crafted.

8 All right. That's the plan. I will issue the order.

9 I'm going to require the Government to immediately serve you at

10 the e-mail account. And I will see everyone on Friday. Thank

11 you very much.

12 MR. HUDDLESTON: All right. Thank you.

13 MR. LAWLER: Friday -- you're talking about tomorrow

14 Friday?

15 THE COURT: No. I'm talking about Friday at 3 p.m.

16 August 8, at the courthouse, at 75 Spring Street on the 23rd

17 floor.

18 MR. LAWLER: Now, Your Honor, I totally respect your

19 position and I can see why you would be leaning toward being

20 conservative, but who's being harmed here? By freezing all

21 our --

22 THE COURT: And these are all arguments you can

23 address. I've listened to you very carefully and considered --

24 MR. LAWLER: But we're harming others --

25 THE COURT: -- and I -- you know, I'm prepared to




53

1 listen to all of this again on Friday. I hope that you secure --

2 MR. LAWLER: Well, why don't you -- Your Honor --

3 THE COURT: All right. That's -- I am -- I am -- this

4 is the ruling at this time and I will issue it. Thank you

5 everyone for your making yourself available. Thank you, Mr.

6 Lawler, for making yourself available on quick notice. And good

7 evening.

8 (End of proceedings.)

9 *****

10 UNITED STATES DISTRICT COURT

11 NORTHERN DISTRICT OF GEORGIA

12 CERTIFICATE OF REPORTER

13

14

15 I do hereby certify that the foregoing pages are a true

16 and correct transcript of the proceedings taken down by me in the

17 case aforesaid.

18 This the 13th day of August, 2014.

19

20

21 ____________________________

22 ELISE SMITH EVANS, RMR, CRR OFFICIAL COURT REPORTER

23

24

25



54/54

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA

)

______________________________, )

Plaintiff(s) )

) Case No.V. )

)

______________________________, )

Defendant(s) )

NOTICE OF FILING OF OFFICIAL TRANSCRIPT

Notice is hereby given that an official transcript of a proceeding has been filed by the

court reporter/transcriber in the above-captioned matter. Counsel/Parties have twenty-one (21)

days from the date of delivery of the transcript to the Clerk to file with the Court a Request forRedaction of this transcript. If no Request for Redaction is filed, the transcript may be made

remotely electronically available to the public without redaction after 90 calendar days.

Any counsel or party needing a copy of the transcript to review for redaction purposes

may purchase a copy from the court reporter/transcriber or view the document at the Clerks

Office public terminal.

______________ __________________________________

Date Court Reporter

VERIFICATION OF FINANCIAL ARRANGEMENTS

Proceeding Type: ______________________________________________

______________________________________________

Proceeding Date: ______________________________________________

______________________________________________

Volume Number: _____________________

transcript of tom lawler first hearing

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