Trials That Should Not Have Happened - The Who's Who Debacle and Tragedy

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8834

19 20 Court Reporter: HARRY RAPAPORT, CSR
United States District Court
21 Two Uniondale Avenue
Uniondale, New York 11553
22 (516) 485-6558 23
Proceedings recorded by mechanical stenography, transcript
24 produced by Computer-Assisted Transcription 25

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8836

1 M O R N I N G S E S S I O N 2 3 (Whereupon, the following takes place in the
4 absence of the jury.)
5 THE COURT: Everybody here?
6 MR. DUNN: My client had a problem with a tooth.
7 He was at a dentist at 7:30 this morning. He should be
here shortly. But he explained to me and he wanted me to
9 tell you that it is okay to proceed.
10 THE COURT: He waives his presence and 11 understands he has a right to be here? 12 MR. DUNN: Yes, your Honor. 13 THE COURT: Going over the open matters now. 14 I revised the multiple conspiracy charge to 15 reflect the language that we discussed. Namely, if the 16 government establishes beyond a reasonable doubt that the 17 conspiracy, a conspiracy existed, the government must 18 prove that it is the single conspiracy alleged in the 19 indictment, etcetera. 20 Now, with respect to the Pinkerton charge, I have 21 somewhat revised the government's submission, which is the 22 Sand instruction, 19-13, as follows: There is another 23 method by which you may evaluate the possible guilt of all 24 the defendants other than the defendant Martin Reffsin -- 25 this having to do only with the mail fraud -- for The Book of Mister-Shortcut
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8837
1 substantive mail fraud charges in the indictment, even if 2 you do not find that the government satisfied its burden 3 of proof with respect to each element of the substantive 4 crime. If in light of my instructions you find beyond a 5 reasonable doubt that the defendant you are considering 6 was a member of the conspiracy charged in Count 1 of the 7 indictment and thus, guilty of the criminal charge, then you may also, and you are not required to -- and I 9 underlined this in the charge, then you may also, but are 10 not required to find him or her guilty of the substantive 11 mail fraud crime charged against him or her, provided you 12 find beyond a reasonable doubt each of the following five 13 elements. 14 First, that the mail fraud crime charged in the 15 substantive count was committed. 16 Second, that the person you find, person or 17 persons you find actually committed the charge were 18 members of the conspiracy you found existed. 19 Third, that the substantive crime was committed 20 pursuant to the common plan and understanding you found to 21 exist among the conspirators. 22 Fourth, that the defendant you are considering 23 was a member of that conspiracy at the time the 24 substantive crime was committed. And I am underlining 25 that also.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 Fifth, that the defendant you are considering 2 could have reasonably foreseen that the substantive crime 3 might be committed by his co-conspirators. 4 If you find all five of these elements to exist 5 beyond a reasonable doubt, then you may find the defendant 6 you are considering guilty of the substantive mail fraud 7 crime charged against him or her, even though he or she did not personally participate in the acts constituting 9 the crime, or did not have actual knowledge of it. 10 The reason for this rule is simply that a 11 co-conspirator who commits a substantive crime pursuant to 12 a conspiracy is deemed to be the agent of the other 13 conspirators. Therefore, all of the conspirators who were 14 members of the conspiracy at the time the substantive 15 crime was committed must bear criminal responsibility for 16 the commission of the substantive crimes. 17 If, however, you are not satisfied as to the 18 existence of any of these five elements, then you may not 19 find the defendant guilty of the substantive crime, unless 20 the government proves beyond a reasonable doubt that the 21 defendant personally committed, or aided and abetted the 22 commission of the substantive crime charged. 23 I will leave the lesser included for the time 24 being and get back to it. 25 The reliance charges. I am going to charge the

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 reliance charges by both the defendant Gordon and the 2 defendant Reffsin on the Tevya theory. 3 Is that similar to the res ips loquitur? No, it 4 is not. 5 MR. TRABULUS: Are you going to strike the other 6 charge, your Honor, the one we talked about. 7 THE COURT: I am going to charge exactly as you set it forth in your request, your second request to the 9 charge. 10 MR. TRABULUS: My concern with respect to the
11 Reffsin charge, the second paragraph, on the other hand -- 12 I think we talked about crossing out, on the other hand, 13 you are persuaded beyond a reasonable doubt that because 14 that can shift the burden. 15 THE COURT: Right. Correct, that comes out.
16 That portion comes out. 17 Now, as to the three defendants not in the 18 conspiracy during the periods of time, I have accepted -- 19 let's take Osman first, I have added to it. For example, 20 it says, if you find that the government proved beyond a 21 reasonable doubt the existence of the single conspiracy 22 alleged in count one of the indictment, I instruct you as 23 a matter of law the defendant Oral Frank Osman cannot 24 found to be a member of the conspiracy. And I added, or 25 guilty of the subsequent mail fraud counts.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 MR. NELSON: Thank you, your Honor. 2 THE COURT: For the period of time. Correct? 3 MR. NELSON: Yes. 4 THE COURT: And then I add at the end, the 5 verdict sheet will set forth the names of each defendant 6 you will consider with regard to the mail fraud counts, 7 two through 52. MR. NELSON: That's acceptable, your Honor. 9 THE COURT: Then for I also added 10 the same thing I instruct you as a matter of law the 11 defendant Mr Shortcuts, cannot be found to be a matter -- 12 guilty of the conspiracy or any of is substantive counts 13 before March of 1994 since he was not employed before that 14 date. And also, he cannot be found to be a member of the 15 conspiracy, or guilty of the mail fraud counts for the 16 period of time after March 17th, 1995. 17 Mr. Jenks, as far as the defendant Sterling Who's 18 Who. 19 MR. JENKS: Yes, your Honor. 20 THE COURT: The same thing with Sterling, 21 Mr. Jenks. Can't be guilty of the substantive mail fraud 22 count. 23 MR. JENKS: The verdict sheet seems to sort of 24 explain that. 25 THE COURT: I wanted to explain it anyway.
H ARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8841
1 MR. JENKS: Yes. 2 THE COURT: That leaves the interesting subject 3 of the lesser included counts. 4 I have checked the law to the extent I could -- 5 of course, I can't keep up with Ms. Scott, but I try 6 because I have more help than she has. And as to the 7 Starnas, S T A R N A S, there is an interesting case that came back after -- came down after Starnas, and the point 9 is, should the jury be instructed that they must find the 10 defendant not guilty before they go to the lesser 11 included? Or should the jury be instructed that either 12 they find the defendant not guilty, or they are unable to 13 agree on a verdict. 14 Now, I happen to have written an opinion in the 15 Appellate Division -- I don't remember what it was or 16 when -- in which I soundly criticized the Starnas case. 17 And we were affirm by the New York Court of Appeals, but 18 we say in the state court it has nothing to do with this. 19 And I want to put on the record I am not a state court 20 judge. I don't have any state court leanings. I forgot 21 everything I learned in the state court. Please put that 22 on the record. But in the opinion I wrote I said that the 23 People have a right to get a decision on the main count 24 which they put in the indictment, which they tried to 25 prove, to put all their resources behind to prove that

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 count, not anything else, just that. And I said they have 2 a right to get an up or down decision on that. 3 Now, Judge Friendly did not agree with that. And 4 that was way before my time. But in a case called United 5 States against Torres, T O R R E S, decided many years 6 after Starnas, and the citation is 901 F.2d 205, Second 7 Circuit, 1990, cert. denied, 498 U.S. 906, and the Second Circuit again took up the interesting question. 9 The defendant contended in Torres, that in 10 accordance with Tsanas, he sought an instruction that -- 11 the judge in this I believe was Judge Mahoney who wrote 12 this, said in reviewing Starnas it calls for the Court to 13 instruct the jury to consider the greater offense first, 14 and then charge either, one, that it should consider the 15 lesser offense only, if it unanimously acquitted on the 16 greater; or, two, it should consider the lesser offense if 17 it could not agree on the greater. We added that neither 18 charge was wrong as a matter of law, but that the 19 defendant's preference should be honored upon request. 20 In this case the defendant made a request that 21 there be a unanimous decision on the main count, that 22 there be an acquittal before you go down to the lesser. 23 Then there was some talk about a special 24 interrogatory, which the Second Circuit said, don't use. 25 This is the interesting part of this decision,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8843
1 and it is a field of law that is up in the air in the 2 federal court. It is about time that they took another 3 look at it. I am not suggesting that this case be the 4 vehicle for it, but listen to what the Second Circuit said 5 in 1990. 6 Quote, in any event, we do not believe that any 7 error which may have occurred in the District Court's instruction calls for reversal. As the foregoing recital 9 should make clear, this is a difficult and unsettled area 10 of the law, end quote. 11 I am going to charge the jury that they have to 12 acquit on the tax evasion before they may consider the 13 lesser included. I think that that is the proper rule of 14 law. It prevents compromises which we should not 15 tolerate. And that's what I am going to charge. 16 MR. TRABULUS: Your Honor, for the record, I 17 would except. 18 As I submitted the further request to charge 19 yesterday there was a drafting error. And as I submitted 20 it to you it left out the fact that the jury could 21 consider the lesser after acquitting. The one that I 22 submitted today on 7207 contains the correct language. 23 And I want to clarify what I would be requesting, and I 24 know your Honor has denied it. 25 It should read, and it is the final paragraph on

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 page 2 of the defendant Gordon's further request to 2 charge. 3 THE COURT: Is this your second or third? 4 MR. TRABULUS: The second one, the one I handed 5 up yesterday. The last sentence on the second page, after 6 the words "if you," the first two words, there should have 7 been included "unanimously find the defendant Bruce Gordon not guilty of tax evasion, or if you -- then it goes back 9 to the text. 10 The complete sentence would read: If you 11 unanimously find the defendant Bruce Gordon not guilty of 12 tax evasion, or if you should, after all reasonable 13 efforts be unable to reach a unanimous verdict on tax 14 evasion, you may then proceed to determine whether the 15 defendant has been proven guilty of the lesser offense of 16 willful failure to pay a tax when due. 17 Thank you. 18 THE COURT: All right. 19 With respect to the lesser included, this is 20 what -- first of all, Mr. Wallenstein, have you decided 21 whether you are entitled to it? 22 MR. WALLENSTEIN: I may be entitled to it, but I 23 don't want it, particularly if they have to find him first 24 not guilty on the first charge, and I will settle with 25 that.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 THE COURT: I am a little confused myself on your 2 last request to charge, the one received this morning. 3 In your second request to charge where you raised 4 the lesser included, you say there is -- 5 MR. TRABULUS: What page? 6 THE COURT: Where you talk about 7203, and you 7 say failure to pay tax.
MR. TRABULUS: Willful failure to pay tax. 9 THE COURT: Yes.
10 7203 says that any person required by this title 11 or by regulations or authority thereof to -- requires to 12 make a return or willfully fails to make a return -- 13 MR. TRABULUS: You have to continue. 14 THE COURT: You mean the latter part of the 15 statute? 16 MR. TRABULUS: Yes. 17 THE COURT: I have to take a look at it. So hold 18 on for now. 19 I see now. I read this from another charge. 20 MR. TRABULUS: There is no Sand charge for this 21 arrangement. 22 THE COURT: I know that. And that's why I asked 23 you for help, Mr. Trabulus. 24 MR. TRABULUS: Yes. 25 THE COURT: Here is what I am going to charge on

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 the lesser included. 2 To get it straight again, the two lesser included 3 are filing a false tax return and willfully failing to pay
4 tax. 5 MR. TRABULUS: False document. I don't think it
6 should be a return. 7 THE COURT: The document being -- MR. TRABULUS: The document being some document 9 fi led in connection with the offer in compromise or the 10 offers in compromise. 11 THE COURT: What documents were those? 12 MR. TRABULUS: It is a whole bunch. I don't 13 think it should be a return. That would be wrong. 14 MS. SCOTT: The filing of a false return is a 15 felony, which is also charged. 16 THE COURT: All right. 17 Let's see if I have it here, and you can listen 18 to this and give me any corrections you want. 19 Lesser included offenses. 20 The law permits the jury to find the accused 21 guilty of any lesser offense, which is necessarily 22 included in the crime charged in the indictment. In this 23 case tax evasion. 24 Whenever such a course is consistent with the 25 facts found by the jury from the evidence in the case, and

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8847

1 with the law given and the instructions of the Court, if 2 the jury should unanimously find the accused not guilty of 3 the crime charged in Count 57, while finding Bruce Gordon 4 not guilty of the crime charged in Count 57 of the 5 indictment, namely, tax evasion, then you must proceed to 6 determine whether the guilt of the defendant has been 7 proven as to the lesser offenses which are necessarily included in the crime charged. The crime of willfully 9 attempting to evade or defeat a tax, which is the crime 10 charged in Count 57 of the indictment, necessarily
11 includes the lesser offenses of filing a false tax 12 document, and willful failure to pay tax when due, the 13 elements of which I shall now describe to you. 14 Filing of a false tax document. Section 7207 of 15 Title 26 of the United States Code provides as follows: 16 Any person who willfully delivers or discloses to the 17 Secretary of the Treasury any list, return, account, 18 statement or other document known by him to be fraudulent 19 or to be false as to any material matter shall be guilty 20 of an offense against the United States. 21 In considering this offense -- with regard to 22 this offense you should consider it independently of -- I 23 don't want to use "consider" twice. 24 See if you have any objection to this: With 25 regard to this offense you should consider it
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8848
1 independently of your review of the lesser included 2 offense of willfully failing to pay a tax when due. The 3 two lesser included offenses are independent of one
4 another and your verdict may properly be not guilty on 5 both, not guilty on one lesser include offense and guilty 6 on the other; or guilty on both lesser included offenses, 7 depending which course is consistent with the facts you find from the evidence in the case, and with the law given 9 and the instructions of the Court. 10 I shall now describe to you the elements of 11 filing a false document with the Internal Revenue Service 12 in violation of Section 7207 of the Internal Revenue 13 Service. 14 I have taken your instructions. I find they are 15 correct and I am adopting them, since I couldn't find 16 anything else. That's strange. 17 MR. TRABULUS: Yes. 18 THE COURT: Section -- I have already said what 19 the section provides. 20 I instruct you that filing a document with the 21 Internal Revenue Service constitutes delivery or 22 disclosure of that document to the secretary of the 23 treasury. 24 In order for the government to establish the 25 charge of filing a false document with the Internal

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 Revenue Service, it must establish beyond a reasonable 2 doubt each of the following two elements. 3 First, that the defendant Bruce Gordon filed a
4 document with the Internal Revenue Service which he knew
5 to be fraudulent or false as to a material matter;
6 Second, that the defendant Bruce Gordon did so
7 willfully; that is as a voluntary and intentional
violation of a known legal duty.
9 It is not necessary that the government be
10 deprived of the payment of any tax by reason of the filing
11 of the document, or that the document was filed with the 12 intent of evading the payment of any tax. 13 The time of the offense would have to be included 14 within the same time period as alleged in the tax evasion 15 counts. 16 The document or documents filed would have to

17 have been filed in connection with the offer in compromise 18 or the amended offer in compromise. 19 Therefore, if the government establishes beyond a 20 reasonable doubt that the defendant Bruce Gordon filed a 21 false or fraudulent document with the Internal Revenue 22 Service, knowing it to be such as to a material matter, 23 and he did so willfully in the deliberate violation of a 24 known legal duty, and not as a result of accident or 25 negligence, then you would have a sufficient basis on

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 which to convict him of that offense. 2 The second lesser included, willful failure to 3 pay tax when due.
4 I shall now instruct you as to the elements of
5 willful failure to pay tax when due.
6 In order for the government to prove the charge
7 of willful failure to pay tax when due, it must establish
beyond a reasonable doubt each of the following three
9 elements:
10 First, that at the time of the alleged offense
11 the defendant Bruce Gordon owed a federal tax that was 12 then due. That tax would have to be the same tax that is 13 alleged in the tax evasion count -- taxes representing an 14 income tax liability of Bruce Gordon from the years 1981 15 through 1990 at the time of the offense would also have to 16 be included within the same time period as alleged in the 17 tax evasion count. 18 Secondly, that the defendant Bruce Gordon did not 19 pay that tax at that time. 20 Third, that the defendant Bruce Gordon failed to 21 pay that tax knowingly and willfully. 22 An omission to act is done knowingly and 23 willfully if it is purposeful and willful, and not because 24 of mistake, accident, negligence, inability to perform the 25 act or other innocent reason.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 A failure to act is done willfully, if it is a 2 voluntary and intentional violation of a known legal duty. 3 Therefore, if the government establishes beyond a
4 reasonable doubt that the defendant Bruce Gordon knew that
5 he had taxes which were then due, owed taxes which were
6 then due and he intentionally failed to pay them, and not
7 as a result of accident, negligent, or financial inability
to pay, then he would have willfully failed to pay taxes
9 when due, and you would have a sufficient basis on which
10 to convict him of that offense.
11 MR. TRABULUS: Your Honor, on that same further 12 request to charge that I filed yesterday, beginning on the 13 first page, there was material in bold type which 14 distinguishes tax evasion from willful omission to pay a 15 tax that is due, and sets forth the difference between tax 16 evasion which requires an affirmative active evasion, and 17 a failure to pay tax when due, it simply has the omission 18 to pay the tax. 19 I think it is important that that language, or 20 language that is substantially the same import, be 21 charged, so the jury understands that tax evasion requires 22 an affirmative act of evasion. 23 THE COURT: I will charge it. I agree. You are 24 referring to the matter in bold type? 25 MR. TRABULUS: Right.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 THE COURT: And it goes to the middle of the 2 second page? 3 MR. TRABULUS: That's right.
4 THE COURT: Very well.
5 Anything else?
6 Now, I have --
7 MR. NELSON: Your Honor, over the evening I was
reviewing some of my notes, and there is one other request
9 to charge I would ask of the Court, and that's with
10 respect to judicial notice, Sand's 5-5. I asked the Court
11 to take judicial notice of the existence of the statute 12 under McKinney's law -- 13 THE COURT: I have not understood the first part, 14 judicial notice on what? 15 MR. NELSON: 5-5, the statute is McKinney's 16 Consolidated Law, McKinney's General Business Law, Section 17 396M, subdivision 3(b), as in Boy. 18 THE COURT: Have you got it there? 19 MR. NELSON: Yes, I do, your Honor. 20 THE COURT: Can I see it? 21 (Handed to the Court.) 22 THE COURT: That's the one about the 30-day 23 delay. 24 MR. NELSON: Yes, and the Court took judicial 25 notice on page 4,688 of the transcript during the

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 examination of Mr. West. 2 THE COURT: I will do that. 3 MR. NELSON: Thank you.
4 THE COURT: Anything else?
5 MR. NELSON: No, your Honor.
6 THE COURT: I wanted to ask counsel, Mr. Trabulus
7 and Mr. White, how to put the lesser included offenses in
the verdict sheet. And my idea is as follows: After I
9 put the tax evasion.
10 After Count 57, alleged evasion of payment of
11 tax, I will have to put that in the event the jury finds 12 the defendant Bruce Gordon not guilty of Count 57, you are 13 to answer -- you are to determine the two lesser included 14 offenses listed immediately below, something like that. 15 MR. TRABULUS: Your Honor, in light of your 16 Honor's ruling on the Starnas request that sounds correct, 17 and I say that without waiving my Starnas exception. 18 THE COURT: What do you think of that, 19 Mr. White? 20 MR. WHITE: That's fine, your Honor. 21 THE COURT: Anything else before we bring in the 22 jury when they get here? All ready to go? You are all 23 set, Mr. White? 24 MR. WHITE: I am ready, your Honor. 25 THE COURT: Are you sufficiently alert and a good

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 night's sleep and all of that? 2 MR. WHITE: I am alert. I wouldn't say I had a 3 good night sleep though.
4 Can I ask, your Honor, are we planning to take a
5 break at 11:00 o'clock?
6 THE COURT: Yes.
7 What I propose to do is to tell the jury what
will happen, the order of summations, which I am going to
9 get right now.
10 I am going to tell the jury the order of
11 summations which I will confirm with you now, so make sure 12 there is no change. 13 The government's initial, or summation in 14 chief -- I will tell them that the government has a15 rebuttal summation also -- followed by the defendant 16 Martin Reffsin by John Wallenstein, the defendant Tara 17 Garboski by Gary Schoer, the defendant Who's Who and 18 Sterling Who's Who Who's Who by Edward Jenks, the 19 defendant Oral Frank Osman by Alan Nelson, the defendant 20 Mr Shortcuts, by Thomas Dunn, the defendant Annette Haley by 21 Martin Geduldig, the defendant Laura Weitz by Winston Lee, 22 the defendant Scott Michaelson by James Neville, the 23 defendant Bruce Gordon by Norman Trabulus, followed by the 24 government's rebuttal. 25 Any objection to my telling the jury that?

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8855

1 MR. TRABULUS: No. 2 THE COURT: All right. 3 The jurors have all not arrived. As soon as they
4 are here we will start. They are filling out their menus

5 now, as a matter of fact.
6 MR. SCHOER: Judge, as you know, last night we
7 tried to establish a list of the exhibits. I have two
8 exhibits which I am just not sure of with respect to the
9 defendants, as to whether or not, first of all, they were
10 introduced, and what exactly they were.
11 I understand that your Honor was keeping an 12 informal list. So I would ask if you could just look at13 that list.14 THE COURT: Do you want to take a look at it?15 MR. SCHOER: Yes, Judge. 16 THE COURT: I don't think I put down any notes 17 that would be revealing next to these. 18 MR. SCHOER: The first question is whether in 19 fact they are in evidence. I am not sure they are. 20 THE COURT: Which are they? 21 MR. SCHOER: AK and AU. 22 THE COURT: I have AK as being in evidence. It 23 was an information charged against Steven Watstein. 24 MR. JENKS: Yes, that's in evidence. 25 MR. SCHOER: And AU?

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 THE COURT: AU I have for identification. 2 MR. TRABULUS: I am pretty sure it is a document 3 I questioned the witness about and it is not in evidence.
4 I can check. But I don't have it with me.
5 THE COURT: A letter from Sandra Barnes to
6 Bailey, April 8th --
7 MR. SCHOER: That's not in evidence.
8 THE COURT: Right.
9 MR. SCHOER: Thank you, Judge.
10 MR. TRABULUS: Can we take a five-minute break?
11 THE COURT: Sure. 12 MS. SCOTT: I have something --13 THE COURT: After Ms. Scott tells us.14 Before you do that, do you have the indictment in15 good shape? 16 MS. SCOTT: Yes, I do. 17 THE COURT: Did you make some for your 18 colleagues? 19 MS. SCOTT: Yes, I did. 20 THE COURT: Give them out to them, please. 21 (Distributed.) 22 THE COURT: This is the final one? 23 MS. SCOTT: Yes, but I forgot on the last page to 24 take out the reference to 7201 and the money laundering 25 count, so I have to print out the last page and

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 redistribute it. It is not the last page, but I believe 2 it is the second to the last page. 3 THE COURT: I don't know what you mean.
4 MS. SCOTT: Yesterday your Honor deleted the
5 reference to the tax code and the money laundering count.
6 And I had forgotten to do that, take that out and I will
7 do that.
8 THE COURT: That leaves only the concealing
9 count?
10 MS. SCOTT: Yes.
11 I have a question with respect to the defendant's 12 request to charge on 7203, and there is a section here13 that your Honor read into the record that an omission to14 act is done knowingly and willfully if it is purposeful,15 willful, and not because of mistake, accident, negligence, 16 inability to perform the act or other innocent reason. 17 I would just ask if you can take out inability to 18 perform the act or inability to pay? I have not found it 19 anywhere in Sand? 20 MR. TRABULUS: How can it be willful if someone 21 wasn't able to pay? 22 THE COURT: I will leave it in. Probably with 23 this kind of an offense, and I think it is a misdemeanor, 24 isn't it? 25 MR. TRABULUS: Yes.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 THE COURT: With this kind of offense if you are 2 financially unable to pay it cannot been willful. I will 3 leave it in.
4 MS. SCOTT: All right. But it is not in Sand.
5 THE COURT: I know that. But I think it is so.
6 MS. SCOTT: Thank you, your Honor.
7 THE COURT: We will give you five minutes.

9 (Whereupon, a recess is taken.)
10
11 THE CLERK: Jury entering. 12 (Whereupon, the jury at this time entered the 13 courtroom.) 14 THE COURT: Good morning, members of the jury. 15 Please be seated. 16 Thank you again for your continued diligence, 17 sense of responsibility. 18 We are entering the closing phrase of this 19 trial. You will hear the summations or closing arguments 20 of counsel. 21 MR. NEVILLE: Your Honor, speaking of diligence, 22 can I go get Mr. Geduldig? 23 THE COURT: Surely. 24 (Whereupon, at this time there was a pause in the 25 proceedings.)

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 THE COURT: All right, first is now here. 2 Everybody was here very early this morning, 8:30, 3 as a matter of fact.
4 I will tell you what will be happening over the
5 next two days.
6 You will hear the summations and closing
7 arguments of counsel, probably in the following order.
First, the government's summation -- initial
9 summation or summation in chief, because the government
10 will have two summations, the first summation and the last
11 summation. 12 Following the government will be the defendant 13 Martin Reffsin by John Wallenstein. Then the defendant 14 Tara Garboski by Gary Schoer. Then the defendants Who's 15 Who Worldwide and Sterling Who's Who, by Edward Jenks. 16 Then the defendant Oral Frank Osman by Alan Nelson. Then 17 followed by the defendant Mr Shortcuts, by Thomas Dunn. 18 Then the defendant Annette Haley by Martin Geduldig. 19 Which is then followed by the defendant Laura Weitz by

20 Winston Lee. Scott Michaelson by James Neville. Then the 21 final defense summation, the defendant Bruce Gordon by 22 Norman Trabulus. 23 After the defense summations the government will 24 have a rebuttal summation. That will conclude the 25 summations.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8860

1 Now, I want to work as late as possible today and 2 tomorrow, so we can conclude the summations by tomorrow, 3 so I will be able to instruct you on the law on Thursday.
4 I would like to work as late as 6:00 o'clock tomorrow
5 afternoon if it is not going to inconvenience you very
6 much. The same thing tomorrow. Tomorrow we will
7 hopefully finish, whatever time it will be. Hopefully by
that time.
9 When you start your deliberations, we will work
10 until 6:00 o'clock. If you do not reach a verdict, you
11 will go home, come back the next day at 9:30 and start 12 deliberations again. 13 On Friday I have made a commitment to one of the 14 jurors to cease deliberations at 4:00 o'clock. You will 15 be under no time restraints of any kind. Take all the 16 time you need to fully consider the evidence, the issues 17 and the law. 18 You will have lunch at the expense of the United 19 States District Court. You will have from now on at our 20 expense, the Court's expense, lunch until you have reached 21 your verdict, your unanimous verdict, and that will be at 22 12:30 today hopefully. It may not fit in exactly right 23 with the summations, so we may have to change it around a 24 little bit. 25 Members of the jury, please give your attention

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 to the summation in chief of the government by Assistant 2 United States Attorney Ronald White. 3 Mr. White.
4 MR. WHITE: Thank you, your Honor.
5 Well, good morning.
6 It has taken quite a while, but you have now
7 heard all the evidence in the case. Soon you will be
called upon to decide it.
9 Now, first of all, as all the lawyers give their
10 closing arguments, it is a pretty good bet that we are not
11 going to agree on very much. But the one thing that I am 12 sure all of us, the government and the defense counsel, 13 what we will agree upon, is that we owe you, the jury, a 14 debt of gratitude for your service at this trial. 15 The trial has been long, I know. I am sure it 16 was boring at times. But throughout you have been 17 attentive, diligent, and your service as jurors is 18 something that we really do all thank you for. 19 Now, as Ms. Scott told you in the government's 20 opening statement back in January, this trial is about the 21 web of lies that was spun by the defendant Bruce Gordon 22 about the fraudulent schemes that he devised and he 23 carried out with the assistance of the other defendants. 24 Now, for the last nine or ten weeks you have 25 heard evidence about how Mr. Gordon, with the

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 participation of the other defendants, lied to the IRS, 2 lied to the bankruptcy court, and lied to tens of 3 thousands of customers of his business, all to line his
4 own pockets, cheat his customers out of their money.
5 You have heard that the defendants in the case
6 are charged with multiple counts and a variety of
7 different offenses. But all the charges basically fall
into two categories. The first category is the charges
9 against Mr. Gordon and Mr. Reffsin, arising from their
10 scheme to hide Mr. Gordon's income from the IRS and evade
11 payment of his back taxes. 12 Now, Mr. Gordon and Mr. Reffsin are charged with 13 tax evasion, and with conspiring to defraud the government 14 by impairing the IRS in the collection of his outstanding 15 tax liability, the three and a half million dollars that 16 you heard about. 17 As part of that overall scheme they are charged 18 with other more specific substantive offenses. 19 Mr. Gordon is charged with filing three false 20 collection information statements, those forms 433 that we 21 have seen during the trial. 22 Mr. Gordon is charged with filing false tax 23 returns for the years 1991 through 1994, where he 24 misrepresented his true income. 25 Mr. Reffsin is charged with assisting Mr. Gordon

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER

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1 with filing those same four false tax returns. 2 You also heard that in order to cover up this tax 3 fraud scheme Mr. Gordon and Mr. Reffsin are charged with
4 obstruction of justice for trying to obstruct the Who's
5 Who Worldwide bankruptcy proceedings by submitting phony
6 documents to the Court and lying under oath in those
7 proceedings.
Now, there are two obstruction of justice
9 counts. The first charge is Mr. Gordon and Mr. Reffsin,
10 relating to the phony usage logs for the Manhasset
11 condominium and that Manhattan penthouse. 12 Mr. Gordon and Reffsin are charged with 13 obstructing justice by ordering Maria Gaspar, the Who's 14 Who Worldwide controller who testified here to create 15 those logs, and by lying under oath about the use of the 16 condominium and the penthouse in the bankruptcy 17 proceeding. 18 Now, the second obstruction of justice count 19 relates only to Mr. Gordon, and that relates to his lying 20 about the ownership of Who's Who Worldwide. It relates to 21 his false statements in the bankruptcy petition and in his 22 sworn testimony where he said that his relatives, the 23 Grossmans, owned Who's Who Worldwide, and not him. 24 And you heard that Mr. Gordon is also charged 25 with money laundering, with taking the proceeds of a

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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Summation - White

1 crime, namely, the mail fraud that is charged here, the 2 Who's Who scheme, taking that money from Who's Who, 3 sending it to Publishing Ventures, Inc., that shell
4 corporation that he formed, and then using it to buy that
5 condominium and furnish it and maintain it. That was done
6 so nothing would be in his name. He did it to conceal his
7 ownership, his control in that money.
Now, the second category of charges relate to the
9 scheme to defraud the customers of Who's Who Worldwide and
10 Sterling Who's Who that Mr. Gordon devised and which the
11 other defendants helped him carry out, Tara Garboski, 12 Mr. Osman, who are managers there, Annette Haley, Scott 13 Michaelson, Laura Weitz, and who are 14 salespeople there. 15 In addition, the two corporations themselves, 16 Who's Who Worldwide and Sterling Who's Who are charged 17 with a conspiracy to commit mail fraud, and numerous 18 counts of mail fraud, for making the false 19 misrepresentations to customers. 20 You also heard in order to cover up the fact that 21 Who's Who Worldwide hadn't actually held a conference in 22 Vietnam and Hong Kong, and that Mr. Gordon lied at a civil 23 trial where he said it actually had taken place, and for 24 that he is also charged with perjury. 25 Now, the government submits that the evidence you

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 heard at this trial establishes that the defendants 2 knowingly participated in these fraudulent schemes, and 3 that it proved beyond a reasonable doubt that they are
4 guilty of these crimes.
5 So, what I would like to do now is to review the
6 evidence that you heard at the trial and explain how the
7 government believes it proves the defendants' guilt.
Because the evidence at a trial, especially one
9 as long as this one, is kind of like a jigsaw puzzle. The
10 evidence comes in different forms from different
11 witnesses, at different times. It could sometimes be 12 difficult to figure out the significance of a particular 13 piece of evidence if you just look at it in isolation. So 14 what you need to do is to take a step back and look at the 15 whole picture and see how the pieces fit together. 16 So, what I am going to try to do is to show you 17 how all the pieces in this case fit together, and how, 18 when you look at them together they paint an unmistakeable 19 portrait of the defendant's guilt. 20 I will start with the first category of charges I 21 mentioned before, the one arising how Mr. Gordon's and 22 Mr. Reffsin's scheme to cheat the IRS. But first I need a 23 drink of water. 24 Now, you heard that by late 1991 Mr. Gordon owed 25 the IRS about three and a half million dollars in back

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 taxes, including the penalties and the interest on that. 2 You heard that the back taxes and penalties were

3 the result of Mr. Gordon investing in and promoting what
4 we called abusive tax shelters between 1981 and 1990.
5 Now, there is no dispute at this trial that
6 Mr. Gordon owed the IRS this money. He even signed
7 agreements with the government to pay it back. So,
whether or not he owes these taxes isn't in issue. There
9 is no question that he did, and that he was supposed to
10 pay back those taxes and penalties.
11 What he and Mr. Reffsin are charged with doing is 12 evading the payment of that three and a half million by 13 concealing his income and his true financial condition 14 from the IRS when the IRS was trying to collect those back 15 taxes. 16 You heard Mr. Gordon sign two agreements with the 17 government with regard to the payment of those back taxes, 18 one was called the installment agreement, the other was 19 the collateral agreement.

20 The installment agreement was between Mr. Gordon 21 and the IRS. He signed it in September of '91. You will 22 remember it was signed by the IRS by a woman by the name 23 of Robbie Peters, whom you may recall was the very first 24 witness at this trial. In that agreement Mr. Gordon 25 agreed to repay his approximately three and a half million

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1 dollars in back taxes in installments of a hundred dollars 2 per month. The agreement provided that any change in his 3 financial condition would be grounds for the IRS to adjust
4 the amount that he was required to pay.
5 So, even though he owed over three million
6 dollars, he had to pay just $1,200 a year under the
7 agreement. And you will recall he was able to get such a
good deal because he told Ms. Peters that he was so

9 strapped for money, that he had recently been living in
10 his car. And he submitted a disclosure form, one of those
11 433-A forms, where you said he was basically in desperate 12 financial straights. 13 Now, the second agreement he signed with the 14 government was the collateral agreement, which was with 15 the Department of Justice, Tax Division. And it covered a 16 particular portion of his tax liability, the one called 17 promoter penalties. And you will recall that those were 18 with respect to the tax shelters he created, and those 19 penalties added up to about $254,000. 20 Under the agreement he was required to pay those 21 penalties back based on a sliding scale of his income. 22 The more money he paid -- excuse me, the more money he 23 made, the more he would have to pay. And the scale went 24 to the point that he would have to give the government 25 half of everything he made over $50,000.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 The collateral agreement also contained an 2 important provision, that the income of any corporations 3 which he owned or controlled, would also be subject to
4 that same sliding scale.
5 So, even a part from whatever salary or
6 compensation that he got personally, any income that his
7 corporations, including Who's Who Worldwide, made, would
also have to be paid over to the government according to
9 that formula in that agreement.
10 Now, Mr. Gordon's huge back tax liability, and
11 these two agreements that he signed are the backdrop to 12 everything else that goes on after this. 13 So, as of the early 1990's, Mr. Gordon had a 14 built-in incentive to try to hide and minimize his income, 15 because he knew that the more money he made, the more 16 money he would have to pay to the IRS. If he told them he 17 was making a lot of money, they would tell him he has to 18 pay back as much of the three and a half million that he 19 could. If he told them that he didn't have much money and 20 that he was barely getting by, maybe they would allow him 21 just a small amount of what he owed. 22 So, I want to review with you chronologically all 23 the tax returns, disclosure forms, and financial documents 24 and letters that Mr. Gordon and Mr. Reffsin submitted to 25 the IRS between '91 and '95. And I am going to do that to

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 show you how the evidence clearly demonstrated that they 2 were engaged in an illegal scheme to evade payments on the 3 back taxing and cheat the government.
4 Before I do that I want to mention a few points
5 you should keep in mind in analyzing the statements that
6 Mr. Gordon and Mr. Reffsin made to the IRS over those
7 several years.
Now, first of all, Mr. Trabulus in his opening
9 statement and in his questioning of various witnesses, he
10 suggested that this case was really just a technical
11 dispute about the tax law. That he and Mr. Gordon, they 12 desperately want you to believe that this is a case which 13 is about some narrow technical tax issue. They would have 14 you believe that Mr. Gordon just made an honest mistake, 15 he didn't know any better. That he and Mr. Reffsin, they 16 just didn't think certain things, like his loans from 17 Who's Who Worldwide had to be included on the tax returns 18 or on the 433s. 19 I suggest a couple of things you should keep in 20 mind as you review the evidence in determining what you

21 really think if that is really what went on here. 22 First of all, before we look at the specific 23 evidence, take a step back and look at the big picture. 24 As I mentioned before, Mr. Gordon has a big incentive to 25 make it look like he has very little income.

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1 So, how do Mr. Gordon and Mr. Reffsin arrange 2 Mr. Gordon's finances? Look at how his entire financial 3 life is organized.
4 He reports to the IRS he has no assets, and he is
5 just getting a basic salary from his company. In fact,
6 you heard that he is getting paid less than some of his
7 own employees. He is the president of the company and he
is making less than some new employees.
9 But then he has his company pay all his living
10 expenses. His utility bills, his Cablevision bills, his

11 medical and dental bills, his credit card bills, his 12 clothing, his jewelry, his vacation. 13 The company first pays his rent in 1990 through 14 '92. Starting in 1993 they actually own or rent two 15 luxury apartments for him. 16 The company leases a series of luxury cars for 17 him, a BMW, then a Lexus and then a Mercedes Benz. 18 What does that tell you? When you look at the 19 big picture, what does it tell you? 20 He has an incentive to make it look like he has 21 no assets. Do you think it is just a big coincidence that 22 he and Mr. Reffsin have structured his finances in a way 23 so that there is nothing in his name and the company pays 24 all his expenses? 25 They are not stupid people, Mr. Gordon and

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1 Mr. Reffsin. Do you think it just happened to work out 2 that way? 3 You heard Mr. Reffsin even admitted in his
4 testimony that he thought when he saw that situation, that
5 maybe Mr. Gordon was doing that to conceal his income.
6 Even he thought that, he admitted.
7 Now, his whole financial life is arranged in a
way that conceals just how lavage his lifestyle is. But
9 they would have you believe that that has absolutely
10 nothing to do with his outstanding back taxes, just a big
11 coincidence. 12 But you know, that if he paid for all those items 13 himself, his cars, his luxury apartments, his American 14 Express bills and everything else, he would have to pay 15 himself a bigger salary. But if he did that, the IRS 16 would see that big salary, and say, hey, if you are making 17 that kind of money, you can pay back the IRS some of the 18 three and a half million you owe us. 19 The IRS would say, hey, rather than using that 20 money to buy Armani suits and $16,000 watches, you can 21 give us some of it. 22 Now, if we can figure that out, don't you think 23 Mr. Gordon and Mr. Reffsin figured that out? 24 On top of that Mr. Gordon has not just one, but a 25 maze of different dummy corporations funneling him money

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1 and paying his personal expenses. 2 Now, remember this chart, 3 Government's Exhibit 837.
4 I am going to go over this in more detail later,
5 but look at all the corporations and bank accounts. What
6 is the explanation for all of this? What is the
7 explanation for hundreds of thousands of dollars being
shifted back and forth from one account to another? It
9 goes in one day, and a few days later it goes off to
10 somewhere else.
11 Well, you heard from Neil Ackerman, who was the 12 attorney for Who's Who Worldwide, he was Mr. Gordon's 13 friend, and that Mr. Gordon told him that one of the 14 reasons for the transfers among the corporations was 15 because of his personal tax situation with the IRS. 16 That is not the government telling you that. 17 That's Mr. Gordon's friend and attorney, Mr. Ackerman, 18 telling you that. 19 As I said before, when you are analyzing all the 20 individual pieces of evidence in the case, keep this in 21 mind. He owes the IRS millions of dollars, the more he 22 shows, the more he has to pay back. Ask yourselves, is it 23 just a coincidence that he merely set it up that all his 24 expenses were paid by the companies. 25 Another thing I ask you to keep in mind when

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 analyzing the numerous tax charges is the numerous lies 2 that Mr. Gordon and Mr. Reffsin told the IRS. 3 Now, if, as Mr. Trabulus suggests, Mr. Gordon
4 made an honest mistake, he just didn't realize that
5 certain monies should be considered income, or certain
6 items should have been disclosed on those forms, then
7 there is no reason at all to lie. If they honestly
thought that what they were doing was proper, they would
9 have no reason to lie.
10 But you heard evidence that they lied repeatedly
11 to the IRS. And I will review these items specifically as 12 we go through the evidence. But I want to highlight a few 13 of the most blatant lies they told the IRS. 14 Now, first of all, you heard that Mr. Gordon lied 15 to the IRS about getting a loan from his sister, Joyce 16 Grossman to pay for his son's funeral expenses. You will 17 remember that in late '93 or early '94, when the IRS was 18 evaluating Mr. Gordon's offer in compromise, 19 Mr. Gagliardi, he was the revenue officer who was the 20 second witness at the trial, that he asked Mr. Gordon and 21 Mr. Reffsin for copies of Gordon's personal bank account 22 statement. And he noticed several unusually large 23 deposits in the summer of '93. And he asked Mr. Gordon 24 through Mr. Reffsin what those deposits were for. 25 You will recall Mr. Reffsin wrote back to him,

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1 and in the letter he explained that Mr. Gordon's son had 2 died in July of '93, and that the money he saw -- that 3 Gagliardi saw, was transferred into Mr. Gordon's account
4 around that time from Joyce Grossman, that it was a loan
5 from Ms. Grossman to help him pay his son's funeral
6 expenses.
7 As proof of the loan Mr. Reffsin's letter
actually attached a copy of the written promissory note.
9 It was signed by Mr. Gordon, in which he promised to pay
10 the $15,000 back to Joyce Grossman.
11 This is it, Exhibit 425-A, this is the note. 12 But you heard that this story was completely and 13 utterly bogus. You heard that the $15,000 wasn't from 14 Joyce Grossman. It was really just a wire transfer of 15 money from Who's Who Worldwide to Mr. Gordon. It was one 16 of these so called loans of his. 17 You will remember that the date on the promissory 18 note, which is July 25th, 1993, that's when he supposedly 19 borrowed the money from Joyce Grossman. But the date of 20 his son's death, according to the death certificate is 21 July 28th, 1993. The dates just don't match. Mr. Gordon 22 was supposedly borrowing money to pay his son's funeral 23 expenses. But on that day his son hadn't even died yet. 24 Now, when the death certificate was admitted in 25 evidence, it was with Mr. Gagliardi.

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1 Now, Mr. Trabulus asked some interesting 2 questions. You will remember that it was Mr. Gagliardi 3 from the IRS on the witness stand, and Mr. Trabulus asked
4 in substance, well, if that was an emergency situation and
5 somebody needed a loan in a hurry, they might just loan
6 the money, especially to a family member, and then go back
7 and make up a promissory note later, right? That's what
he asked him.
9 And Gagliardi said, in substance, yes, that
10 sounds reasonable. I guess that can happen.
11 Mr. Trabulus went on, well, if they did that, 12 when they were upset from a death in the family, they may 13 not be careful and put the wrong date on the promissory 14 note? 15 Again, Gagliardi said, well, I guess so. 16 That's a nice theory, and you might have been 17 saying to yourself at the time, well, that's possible. 18 Maybe that's what happened. But there is one problem. 19 That's not what happened. How do you know that? 20 Because a few days later Mr. Gordon's own sister, 21 Joyce Grossman, came into this courtroom and she told you 22 she had never loaned Mr. Gordon that money, and she had 23 never seen this promissory note. 24 So, what were all those questions that 25 Mr. Trabulus was asking Mr. Gagliardi?

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 You see, they are desperately hoping that you 2 will not focus on Mr. Gordon's lies. 3 Now, what does this incident tell you about
4 Mr. Gordon's intent, his state of mind?
5 Well, if he has nothing to hide, why is he
6 lying? If he has nothing to hide, why is he making up
7 this phony story about his sister, about a loan from his
testimony? If he has nothing to hide, why is he creating
9 and submitting bogus documents to the IRS?
10 Ask yourselves, if he is just an honest taxpayer
11 who made an innocent mistake in filling out some 12 complicated tax forms, why, as Mr. Trabulus would have you 13 believe, is he lying? 14 As you analyze all the other evidence in the 15 case, and you try to decide what Mr. Gordon's intent was, 16 just stop and think for a moment about what Mr. Gordon did 17 here. He lied about his own son's death just to save 18 himself from paying a few extra dollars in taxes. He 19 exploited his son's tragic death, just so he can pocket a 20 few extra bucks. He took a terrible tragedy, like the 21 loss of a child, and tried to use it to help his plan to 22 cheat the IRS. 23 When you consider Mr. Gordon's intent here, keep 24 that in mind. That's the kind of man you are dealing with 25 here, the kind who takes the unkindly death of his young

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1 son as an opportunity to make a quick buck. 2 Now, what other lies did Mr. Gordon and 3 Mr. Reffsin tell, which would show you that they are
4 knowingly defrauding the IRS information?
5 Well, you heard that they lie about the ownership
6 of Who's Who Worldwide and Mr. Gordon's other
7 corporations. In all the 433 forms they specifically ask
for what stocks you own and what assets you have.
9 Although Mr. Gordon owns 75 percent of a
10 corporation that is doing millions of dollars of business,
11 he never mentions it. 12 Again, you know he owns 75 percent because his 13 own sister, Joyce Grossman, and her husband, Dr. Richard 14 Grossman, told you that they always owned 25 percent and 15 Mr. Gordon owned the rest. And there are letters from 16 Mr. Gordon to Dr. And Mrs. Grossman explaining that they 17 are going to own only 20 percent -- 25 percent. 18 You heard that Mr. Gordon testified on several 19 occasions that he owns 75 percent. And you saw how he and 20 Mr. Reffsin created backdated and phony documents. 21 Remember, there were letters, stock certificates 22 and other documents to try to show that he owned nothing 23 and the Grossmans owned 100 percent. 24 Again, I will go into more detail about those 25 things later. But ask yourselves again, why are they

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1 lying?

2 Remember that Dr. Grossman told you that he 3 confronted Mr. Grossman after he learned that Mr. Gordon
4 had been misrepresenting that the Grossmans owned the
5 whole company.
6 Remember what Dr. Grossman said Mr. Gordon's
7 response was? He said Mr. Gordon said, I forgot. I
thought you did own 100 percent of the company.
9 He forgot? Ladies and gentlemen, he forgot? He
10 forgot he owned the company? It is hard to say that with
11 a straight face. That's about the lamest story anybody 12 ever heard. I forgot. It is the legal equivalent of the 13 dog ate my homework. How could he forget he owned the 14 company? 15 He works there day after day, five years, running 16 the whole show. And he just forgets he owned the 17 company? 18 Think of a real life example to show you how 19 ridiculous that that story is. Think about the single 20 most expensive thing each of you own, your biggest asset, 21 your most valuable possession. For some of you it might 22 be your home if you own it. For some of you it might be 23 your car or maybe a piece of jewelry, or something like 24 that. Do you think you would ever just forget that you 25 own your most valuable possession?

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1 If you owned a home and you are out in front 2 raking your leafs and a neighbor comes by and says, do you 3 own this house?
4 You say, gee, I don't know, maybe my sister and
5 brother-in-law own it, but I am not really sure.
6 So, why did they lie about that?
7 The big reason again is the collateral agreement.
It says if Mr. Gordon owns or controls any
9 corporation the income is subject to being repaid to the
10 IRS subject to that agreement.

11 These companies are making a lot of money. Half 12 of what they make is supposed to go to the IRS if they 13 come under that agreement. And that is precisely why 14 Mr. Gordon doesn't want the IRS to know that, because then 15 he will have to end up paying back what he owes. 16 How else do you know that this is just not an 17 honest mistake of what needed to be included in the tax 18 forms? 19 Look at the conflicting statements that 20 Mr. Reffsin made at different times. He can't even get 21 his story straight. 22 First let's talk about these loans, the supposed 23 loans that Mr. Gordon took. 24 Now, when he was interviewed by Agent Jordan, 25 Mr. Reffsin said that Mr. Gordon had made little or no

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1 repayments on these loans; that Mr. Reffsin said that he 2 and another accountant that worked for him were concerned 3 that this was really income. And he says, he talked to
4 Mr. Gordon and told him, that those loans, if you don't
5 pay them back, could be a problem. And Mr. Gordon said
6 basically I will deal with it at that time. I will deal
7 with it when it becomes a problem.
Now at the trial Mr. Reffsin has got another
9 story. This one is, well, they are not income. They are
10 just loans. I was concerned before, but no, that really
11 wasn't true. 12 Now at the trial he says, well, there really were 13 repayments, and that's why I thought that it was okay. 14 That they really were loans. But before he said there 15 were little or no repayments. 16 Then he also, all of a sudden, remembers that 17 when he had this conversation with Mr. Gordon, Mr. Gordon 18 told him he would repay the loans back.

19 The first time he told him Mr. Gordon didn't say 20 anything about paying him back. Now he is here and he 21 knows that's the big issue, he is going to say, well, 22 Mr. Gordon, he told me that, too. 23 What else did Mr. Reffsin change his story 24 about? 25 Again, he told Agent Jordan in an interview that

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1 he thought, Mr. Reffsin thought, that what Gordon was 2 telling him about using the condo for business was, in his 3 words "bullshit."
4 That was his words "bullshit," which is a pretty
5 strong word to tell federal agents, that what Mr. Gordon
6 was telling Mr. Gordon was bullshit.
7 Now at the trial he says, I don't know, maybe
Mr. Gordon was BS'ing, maybe I don't know one way or
9 another.
10 You also said that in an interview with
11 Mr. Jordan, Mr. Reffsin changed his story about the phony 12 logs submitted to the bankruptcy court. 13 First he denied everything about the logs. He is 14 putting as much distance between him and those logs as he 15 can. He says, I have never even seen them. I don't know 16 what was in them. I don't know who prepared them, I 17 didn't have any conversations with anyone about them, and 18 I don't know if they were falsified. 19 Then he is asked about them again later in the 20 interview, and he miraculously recovers his memory. Now 21 he recalls he really did talk to Mr. Gordon about the 22 logs, and he has a whole story about that. All of a 23 sudden he knows an awful lot about these logs. 24 You also heard that there was money that was 25 transferred from Who's Who Worldwide to Sterling and

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
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1 Publishing Ventures, and there were various notes created. 2 You heard that Mr. Gordon gave -- I am sorry, 3 Mr. Reffsin gave a whole series conflicting stories about
4 when he first saw those notes. He said four different
5 things at different points in the interview.
6 He said, first, they were prepared at the time
7 the loans were made; then they were prepared at a later
date, but he didn't know when; then he didn't learn of
9 them until three or four months before the bankruptcy
10 filing; then it was, I learned about it the night before
11 the bankruptcy filing. 12 You know all four of them are false, because as 13 he admitted in his own testimony, Mr. Adler, who also 14 testified here, he is the one that Mr. Reffsin hired for 15 Who's Who Worldwide, that Mr. Adler hadn't even created 16 those documents until after the bankruptcy.

17 Then you heard Mr. Reffsin lied under oath in his 18 deposition in the bankruptcy case, and the transcript is 19 an exhibit here at the trial. 20 A month after he created those notes, Mr. Reffsin 21 testified they were created back in '93, the time when the 22 condo was purchased. 23 So look at all the lies Mr. Reffsin and 24 Mr. Gordon told when you are trying to determine if they 25 are knowingly defrauding the IRS or they are just making

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1 an honest mistake. 2 Ask yourself if those are simple errors, just 3 honest mistakes or just a pattern of deception.
4 You will see the common thread, the common theme
5 of these lies, and that is that they all conceal
6 Mr. Gordon's income and lifestyle.
7 Ask yourself if you feel it is just a big
coincidence, that all the information that just doesn't
9 happen to get disclosed to the IRS, just happens to be
10 information about his lavish spending and true income. Do
11 you think it just innocently turned out that way? 12 Now, let's go back to the beginning. You will 13 remember in December of '91 Mr. Gordon owes three and a 14 half million in taxes. So, before they sign any agreement 15 with Mr. Gordon, the IRS wants to know what his financial 16 condition is, so Ms. Peters, the IRS revenue officer asks 17 Mr. Gordon to fill out a 433-A form. And let's take a 18 look at that form. 19 Now, as I said before, Mr. Gordon is charged with 20 not just conspiring to defraud the IRS and submitting 21 these documents as part of that, but as a substantive 22 crime for submitting this false documents. 23 How is it false? 24 Look at page 22, box 22, and asking here for bank

25 charge cards, he writes NA.

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1 If you look at page 4, it also has a box asking 2 for other liabilities. And it says include other charge 3 account.
4 One way or another it is supposed to be there.
5 Now, you heard he had an American Express card
6 since November of 1990. This is in September of '91. And
7 this very same months he is using his Amex card like
crazy.
9 Now, is that just an innocent mistake? Did he
10 just forget he had an American Express card? Do you think
11 he didn't think he had to list it? 12 Of course not. 13 How do you know that? 14 He got a look at this form in context. Because 15 if you remember, about a year and a half later when they 16 submitted that offer in compromise and Mr. Gagliardi is 17 making requests for information, he is asking them for all 18 documents regarding Mr. Gordon's monthly payments if they 19 are not paid by his personal check. 20 You know that American Express charges are paid 21 by corporate check for Mr. Gordon. 22 So, if Mr. Gordon had nothing to hide, if he just 23 didn't understand this form, or forgot about it, or didn't 24 think it applied, you would think that when he is asked 25 for that information he would give it to Mr. Gagliardi.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8885
Summation - White

1 But he doesn't. Gagliardi gets nothing on that score. 2 Why? 3 Because if Gordon and Reffsin gave Gagliardi
4 that, he would find out the astonishing amounts of money
5 that Mr. Gordon was charging on his American Express
6 bill.
7 This is a perfect illustration of what I said
earlier, is that you have to look at Mr. Gordon's and
9 Mr. Reffsin's lies as the backdrop to everything else in
10 the case.
11 When you look at the answers on this form in 12 context, you see the pattern. You see that it was done 13 intentionally. It was done to deceive the IRS. It is not 14 an innocent mistake or omission. 15 Look at page 3, line 29, where it asks for 16 stocks, bonds and investments. 17 He said he has basically no equity in any stocks, 18 bonds, investments. 19 But the Grossmans told you they own 25 percent 20 and Mr. Gordon owns 75 percent of the companies. And you 21 heard Mr. Gordon testify to that in other lawsuits. 22 If you look at the company's 1991 return, which 23 is the comparable one, it tells you how much the company 24 is worth. Line 25, it has the profits that the company 25 has made that are still unaccounted for basically. It is

HA RRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8886
Summation - White

1 $16,000. So, he owns 75 percent of that, and stock worth 2 about $12,000. It is not listed. 3 Now, how else do you know that he is trying to
4 hide his ownership? Look at page 1, box seven where
5 Mr. Gordon lists his occupation.
6 He is the head of the company, however he wants
7 to call himself, president, chairman, CEO, whatever. He
called the shots. And there is no dispute that he is in
9 charge of the company.
10 Do you think it is odd that he describes himself
11 as the sales manager? Doesn't it sound that he is just 12 trying to make himself sound like just another company 13 employee? 14 Now, let's look at necessary living expenses on 15 page 4. 16 He lists his household expenses. And where he 17 has other, he has $175 a month. 18 When you look at his American Express bills, he 19 is charging $8,000 a month at this time. 20 From January of '91 to September of '91 when 21 Mr. Gordon is filling out this form, the company has paid 22 over $101,000 in his personal expenses in those nine 23 months immediately preceding this form. 24 Now, Mr. Trabulus suggested that this category, 25 necessary living expenses means just the necessary ones,

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8887
Summation - White

1 not the actual ones. 2 He suggested that maybe Mr. Gordon thought he 3 didn't have to list all his expense, just the absolute
4 bear necessities.
5 So, let's humor him and let's take a look at that
6 theory.
7 As I said before, when you look at Mr. Gordon's
answers in context, you will see that that argument is
9 ridiculous. Under Mr. Trabulus' theory, Mr. Gordon is not
10 trying to hide he is spending a lot of money on
11 unnecessary things. He thinks he just has to list the 12 necessary ones. 13 Again, if that's the case and he really has 14 nothing to hide and he just misunderstands the question, 15 why do he and Mr. Reffsin conceal his expenses when 16 Mr. Gagliardi asks about them a little bit later in '93? 17 Again, Gagliardi asks for all the checks that 18 Mr. Gordon writes, proof of all the payments, if not paid 19 by his personal check. Both of those items would reveal 20 Mr. Gordon's extravagant spending. If they are not trying 21 to conceal anything, you would expect they disclose that 22 to Gagliardi when he asks for it, but they don't. 23 What does it tell you as to whether this answer 24 on this 433 form is just an innocent mistake, or whether 25 it is an intentional lie?

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8888
Summation - White

1 That's not the only time that Mr. Gordon conceals 2 his true expenses from the IRS. In August of '93 they 3 submitted an offer in compromise. Included in there is a
4 list of the Mr. Gordon's expenses, actual expenses through
5 1991, and a projection up through 1996. And it showed
6 that Mr. Gordon couldn't even begin to pay back all his
7 debts. It said his income barely covered his expenses.
Now, this was not a form prepared by the IRS.
9 This is their own summary of Mr. Gordon's expenses.
10 Of course, you would expect that all of his
11 lavish expenditures would be listed here, especially 12 all -- in the column for 1991, which would be actual 13 expenses. 14 If he wasn't trying to hide anything you would 15 expect the real expenses to be listed on this form, on 16 this projection, but they are not. 17 Again, what does the whole context, the whole 18 pattern tell you about whether or not this answer is 19 intentionally false? 20 It tells you that he is intentionally trying to 21 hide his expense, not only that he thought he had to list 22 necessary ones. 23 Now, how else do you know that this theory that 24 Mr. Trabulus has about necessary expenses is wrong? 25 Well, for one, Mr. Trabulus is not even

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8889
Summation - White

1 consistent in his theory, because his argument is 2 apparently that Mr. Gordon -- 3 MR. TRABULUS: Objection as to my argument, your
4 Honor.
5 THE COURT: Overruled.
6 MR. WHITE: Mr. Trabulus' argument is apparently
7 that Mr. Gordon didn't list his true expenses, just the
ones that are necessary. So, therefore, he didn't list it

9 if he spent money on things that were not strictly
10 necessary, like all the money he spent on expensive
11 clothing and what not. 12 Remember at one point Mr. Trabulus was 13 questioning a witness, and he suggested that Mr. Gordon's 14 Armani suits, and his custom-made suits, and his cashmere 15 overcoats were necessary expenses because he was an 16 executive, and he had to look good when he met with 17 important Who's Who members. Do you remember all that? 18 I am sure you recall it. And if you remember, 19 that's when on redirect I was pointing out that Mr. Gordon 20 was spending money on $35 a pair of underwear, and I don't 21 think you impressed important Who's Who members with your 22 underwear, no matter how fancy it is. But I don't know, I 23 am just a regular government employee. Maybe I don't 24 attend the same kind of top level executive meetings as

25 Mr. Gordon.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8890
Summation - White

1 But Mr. Trabulus' point was that his designer 2 suits and fancy clothes were necessary to his job. 3 They can't have it both ways. If it is
4 supposedly necessary, it should be listed, even according
5 to Mr. Trabulus' theory.
6 How else do you know that Mr. Gordon was
7 intentionally trying to give the IRS a false picture of
his expenses?
9 Well, if he is really spending a lot of money and
10 makes no bones about it, that he has plenty of money to
11 spend, and this is just the bear necessities, why does he 12 write this at the bottom: After taxes there is a 13 substantial deficit? 14 He is saying, here is the money I make. And here 15 is the money I pay out. On top of this I have to pay 16 taxes, for that particular year, and not the back taxes. 17 And after taxes there is a substantial deficit. 18 He is not saying I have plenty of money left 19 after taxes, and I just list the necessary expenses here, 20 I am living great. 21 No, he says there is a substantial deficit. He 22 is trying to tell the IRS I can't barely make ends meet. 23 I am almost in the poor house is what he is saying. 24 Now, you will remember that Mr. Reffsin testified 25 that the IRS only wants to know what your necessary

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8891
Summation - White

1 expenses are. 2 Remember that I gave him a few days ago an 3 example of someone who lived in a mansion and paid rent of
4 $20,000 a month, when only $2,000 a month was reasonable
5 and necessary. And he said that that person would only
6 have to list what is necessary, 2,000 a month.
7 And I asked him, and the answer was so amazing, I
had to write it down.
9 I asked him:
10 Question: Are you saying if a taxpayer is
11 squandering $18,000 a month on unnecessary luxuries, the 12 IRS doesn't want to know anything about it? 13 Do you remember what Mr. Reffsin's answer was? 14 Quote, no. They have no desire to know, unquote. 15 Think about that for a minute. Use your common 16 sense. Do you really think that's the way the IRS 17 operates? You owe them three and a half million dollars, 18 you are wasting tens of thousands of dollars a month that 19 you could be using to pay them back, and they don't care? 20 Does that really sound like the IRS we all know, they 21 don't care? They have no desire to know? 22 Now, what else does Mr. Gordon not disclose on 23 this form? 24 Well, he doesn't disclose the fact that he is 25 getting all this compensation from Who's Who Worldwide by

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8892
Summation - White

1 means of them paying his personal expenses. 2 Now, you know that these are not really loans 3 like he is calling them, because he never really intended
4 to pay them back. You know that from the evidence.
5 A little later I will go through the numerous
6 ways you know that.
7 For now, let's humor him and let's assume that
they are loans.
9 Even if they are loans, they should be listed on
10 this form, box 28, other liabilities. He listed a lot of
11 debts he has. If he really owes that money it should be 12 listed there. It is a liability, something he has to pay 13 back, money he owes to someone else. 14 Why aren't they listed on page 3 under the 15 liabilities? He lists a lot of other debts he owes there. 16 By this time he owes Who's Who Worldwide about 17 $160,000. Why isn't it listed there? 18 Think about it for a minute. If these are 19 genuine loans and he really thought he would have to pay 20 them back, he has every incentive to put it on the form. 21 Keep in mind that the IRS is trying to determine what his 22 assets and income are, and how much he owes to other 23 people. 24 If he disclosed that in addition to those loans 25 he owed even more to his company, in theory it would show

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8893
Summation - White

1 that he was in even worse financial hole when this 2 existed, he was in the deeper hole than this form says, in 3 addition to everything listed, he owes another 160,000.
4 Think about it. The worse his financial position, the
5 more in debt supposedly, the less IRS will require him to
6 pay. So the real incentive was to list those loans if the
7 real incentive was to pay them back.
It was suggested to you that Mr. Gordon didn't
9 lists the loans because he would eventually get paid
10 enough to pay the loans in compensation. In other words,
11 the money owed him by Who's Who Worldwide would be equal 12 to what he borrowed and one day that debt would be 13 cancelled out. 14 That theory doesn't make any sense, however. If 15 he was expecting to receive five or six or seven hundred 16 thousand dollars some day from Who's Who, the IRS should 17 have been told about it. Under that collateral agreement 18 the government comes first. They are first in line. They 19 are entitled to half of everything over 50,000 that he 20 makes. 21 And if he is expecting some big pay day in the 22 future, then the IRS is entitled to some of that. He 23 can't unilaterally decide when he gets that money sometime 24 in the future, that the one debt of all the ones he has 25 that he is going to pay is the one to his own company,

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8894
Summation - White

1 basically paying himself back. 2 How else do you know he is trying to hide these 3 supposed loans from the IRS rather than just innocently
4 thinking he doesn't have to report them?
5 Well, use your common sense. Put yourself in
6 Mr. Gordon's shoes for a minute, look for a motive.
7 If he knows if he tells the IRS he is in a
position to borrow hundreds of thousands of dollars from
9 his company, they will say, you should buy some back to
10 pay back the government. They will say if you can borrow
11 money to buy Armani coats, fur coats, suits, jewelry, you 12 can borrow some to pay us back. 13 How else do you know all this? Look at the 14 context. Look at what happens when the IRS is asking for 15 more information. 16 You heard from Mr. Rosenblatt, the government's 17 expert witness about the transfers into Mr. Gordon's 18 account in July of '93, the one supposedly for his son's 19 funeral expenses. We discussed that before. 20 Again, when Gagliardi asked about them, does 21 Mr. Gordon say, well, those are loans to me from my 22 corporation. But, don't worry, eventually I expect the 23 company will owe me so much in compensation, it will 24 eventually cancel out my debt. Does he say anything 25 approaching that?

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8895
Summation - White

1 MR. TRABULUS: Objection. There is no evidence 2 of any conversation between Gagliardi and Mr. Gordon. 3 THE COURT: It is up to the jury.
4 If anything Mr. White says conflicts with your
5 recollection of the evidence, you use your own
6 recollection. That is true with all the lawyers. They
7 are going to tell you what their view of what the evidence
is. If it doesn't coincide with your view, disregard all
9 of that. You use your own recollection of the evidence.
10 I can't see anybody with all these charts here,
11 but I think they all heard me. 12 MR. WHITE: What happens when he makes up that 13 request? He makes up the bogus note. There is not just 14 one bogus note, by the way, but there are two. Gagliardi 15 asked about unusual deposits in October of 1993, and the 16 answer to that is another bogus note, this one from 17 Madeline Middlemark who testified, she didn't think she 18 owed him the money. She wasn't sure but doesn't think she 19 did. And she knew she had not seen this note before. 20 Again, what does that tell you about his intent? 21 His state of mind? Does he innocently think he doesn't 22 have to disclose this on the form, or is he intentionally 23 concealing it from the IRS. 24 When you look at this Form 433, don't look at 25 each of the four statements in isolation. Look at it in

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8896
Summation - White

1 context in light of all the facts and circumstances. Look 2 at the specific areas that are false. 3 His American Express card. His true income and
4 expenses. His so-called loans and his ownership of Who's
5 Who. All are things, if disclosed would expose his
6 extravagant lifestyle. Do you think it is a coincidence
7 that those things were left off? Do you think it happened
to work out that way by chance because he didn't
9 understand the questions or didn't feel he had to list
10 something?
11 Now, just stop and think for a minute about how 12 he was living. From reading this 433, you would think he 13 couldn't even make ends meet. But he is living like a 14 king, according to the evidence. He is Mr. Armani suits. 15 He is Mr. BMW. He is Mr. Tiffany's. But you wouldn't 16 know that from looking at this form 433. 17 He is Mr. $7,000 overcoat, Mr. $35 a pair 18 underwear, Mr. $16,000 watch, Mr. Palm Beach vacation. 19 You would never know that from looking at these forms. 20 He is Mr. Mercedes Benz, Mr. Million dollar 21 condo, Mr. Persian rugs, Mr. Jacuzzi, Mr. Manhattan 22 penthouse. 23 You would never know that by looking at these 24 forms. 25 One more. He is Mr. $50,000 European vacation,

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8897
Summation - White

1 Mr. Fur coat, Mr. Custom-made designer clothes, 2 Mr. Four-star restaurants. But you would never know it 3 from looking at these forms, because he didn't want the
4 IRS to know.
5 Given his motive to hide his income so he
6 wouldn't have to pay it back, do you really think it was
7 just a coincidence that they never were disclosed to the
IRS?
9 What happens next after this is submitted?
10 Well, you heard Ms. Peters say that based on his
11 poor financial picture she agreed to let him pay back just 12 $100 a month to satisfy his liability. Remember, she said 13 that Gordon told her he had been living in his car. 14 The agreement he signed was to pay back $100 a 15 month. 16 Now, that was signed eight days after his form 17 433 was submitted in September of 1991. 18 Again, if you look at the American Express 19 records and other documents, you will see that in the time 20 period right before or right after he signed this 21 agreement, he went on a wild spending spree. It is almost 22 as if after pulling the wool over the government's eyes, 23 he goes out and celebrates with a luxury shopping spree. 24 Keep in mind the IRS determined based on the 25 information he has given them the most he can pay is

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8898
Summation - White

1 $1,200 a year. But in the three weeks immediately 2 preceding before he signs the installment agreement, he 3 spends $6,000 on designer clothes. He spends over $7,800
4 in a one-month period from mid-September to mid-October
5 1991. It is enough to pay his $100 a month payment for
6 the next six and a half years.
7 Do you really think it was just an honest
mistake?
9 What happens next?
10 November 1991, Gordon signs that collateral
11 agreement, and that's the one, again, that we talked about 12 before, that makes his income subject to this sliding 13 scale. And also the corporation's income. 14 He has this huge incentive now to hide his 15 income. He has three and a half million reasons to 16 conceal his true income and lifestyle. 17 Now, from late '91 Mr. Gordon is paying the IRS 18 the $100 a month he is owing them under the installment 19 agreement. But how he is paying tells a lot about his 20 intent. 21 Instead of having Who's Who write a check to the 22 IRS each month just like it is doing with all the other 23 monthly payments, he writes a company check to cash. Then 24 he has his trusted employee, Liz Sautter, the woman 25 referred to repeatedly here as his right-hand person, go

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8899
Summation - White

1 down to the bank and cash the checks and get money 2 orders. That's what Maria Gaspar told you. 3 Agent Rosenblatt when he was here showed you the
4 checking records with respect to those payments.
5 Why do this? The IRS takes checks, personal,
6 corporate, whatever you want. If you want to give them
7 money they are taking it. So why create the extra work
and the hassle of sending someone down every month to get
9 money orders when you don't really need them.
10 It is because he doesn't want the IRS to see that
11 he has his company paying his taxes for him. 12 Remember, he told Robbie Peters that he was just 13 the sales manager at Who's Who and he wasn't the owner. 14 If he sent in his personal payments by corporate 15 check, they might start asking questions like, why is your 16 company paying the tax bill? And those $100 payments are 17 not the only example of that. 18 Remember Government's Exhibit 797, a note from 19 the files of Who's Who that came from Mr. Reffsin's firm 20 addressed to Liz, presumably, Liz Sautter. And it is 21 dated June of '91. And they are forwarding Mister -- 22 Mr. Reffsin's firm are forwarded Mr. Gordon's returns they 23 prepared for him to send to the IRS. This is in -- for 24 1990, and taking place in June of 1991. 25 The note says to Liz Sautter, that since

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8900
Summation - White

1 Mr. Gordon has no personal checking account, I suggest you 2 get money orders to pay the tax. Sending a Who's Who 3 check isn't a good idea.
4 Why isn't it a good idea?
5 Because then the IRS might start asking
6 questions.
7 Now, what does that tell you about Mr. Gordon's
and Mr. Reffsin's intent.

9 What happens next?
10 You see an interesting thing when you look at the
11 Who's Who 1991 and 1992 tax returns. The collateral 12 agreement that requires him and his corporations to pay on 13 a sliding scale. It is signed in late '91. The '91 14 returns are signed mid-'92. Mr. Reffsin signs those as 15 the preparer. 16 When he does that he puts the correct ownership 17 figure on that. He says Mr. Gordon owned 75 percent of 18 the company. And that's what the Grossmans told you, too. 19 If you look at the Who's Who returns after that, 20 all of a sudden he owns nothing. It says he owns none of 21 Who's Who Worldwide. The '92 return, filed in '93, all of 22 a sudden Mr. Gordon owns zero and the Grossmans own 100, 23 the '93 return filed in '94, shows the same thing. 24 Again, do you think that's a big coincidence? A 25 few months after the collateral agreement makes his income

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8901
Summation - White

1 subject to this sliding scale, all of a sudden, I don't 2 own anything. 3 Keep in mind by that time Who's Who Worldwide is
4 really starting to take off. They are making a lot of
5 money.
6 What happens next?
7 By the end of '91, Mr. Gordon has had Who's Who
pay for about $145,000 of his personal expenses in that
9 year. In '92, the company pays another $237,000 in
10 personal expenses.
11 By the way, you may say, how do you know that 12 these are Mr. Gordon's personal expenses? We tossed that 13 term around a lot. You may say who says they are his 14 personal expenses? 15 The answer is Mr. Reffsin and Mr. Gordon say that 16 in the books of Who's Who Worldwide. Because they put it 17 in Mr. Gordon's loan account. They acknowledge that it is 18 personal and not business. That's not the government's 19 position, it is how Mr. Gordon and Mr. Reffsin 20 characterize it. They were the ones who decide that they 21 were his personal expenses. 22 In addition to paying his expenses like his rent 23 and everything, Gordon decides to have his corporations 24 buy him a condo in late '92 or early '93. 25 You heard around that time Mr. Gordon bought the

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8902
Summation - White

1 Manhasset condo at 200 Hummingbird Road for $600,000. 2 You heard from Ms. Callahan, the manager of the 3 development, telling you what a beautiful place it is,
4 with pool and tennis courts and everything else.
5 But you heard that the $600,000 condominium, it
6 just wasn't fancy enough for Mr. Gordon. It just wouldn't
7 do.
So, he has his corporation spend another half a
9 million dollars renovating it and furnishing it.
10 You heard from Matchless Construction,
11 Mr. Dukoff, if you remember him, about the work he did on 12 the condo. He got paid around $224,000 in work. He told 13 you about the marble and granite floors and countertops 14 they had. $34,000 kitchen cabinets and all those other 15 stories about how lavish they were. 16 You heard from Ms. Ruggieri who made the 17 custom-made furniture there for $43,000. 18 You heard from Mr. Gordon's own sister, Joyce 19 Grossman who was an interior decorator also who paid a lot 20 of vendors and furniture from what she got, and she was 21 paid over $150,000. 22 You heard he didn't put the condo in his own 23 name, he created another company, PVI, and Who's Who 24 Worldwide transferred all the expenditures to PVI who paid 25 for all the work on the condo.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8903
Summation - White

1 You heard PVI is a dummy corporation, no 2 employees, and just exists on paper to own the condo. 3 He owns the IRS three and a half million dollars,
4 he is having his company pay the personal expenses, do you
5 think it is a coincidence he doesn't want the condo in his
6 name? It just fits the same pattern of deception you
7 heard before.
You heard Mr. Gordon gave testimony that the
9 condo was used for business meetings. It was available
10 for Who's Who Worldwide members who were in New York from
11 out of town. 12 Let's look at that, is that really true? 13 The best response is Mr. Reffsin's own words. He 14 says that that is bullshit, to quote him. That's what he 15 told Agent Jordan, that's what Mr. Gordon was telling him 16 about using the condo for business, that's bullshit. 17 That's not the government saying that. It is 18 Mr. Reffsin, Mr. Gordon's confidant, his long time 19 accountant, who reviewed all these financial transactions, 20 he says it is bullshit, right from his own mouth. 21 How else do you know that that is true? 22 Well, look at all the solicitation letters and 23 all the pitch sheets of Who's Who Worldwide and Sterling 24 Who's Who. They list a lot of so-called benefits, and I 25 am sure when the defense attorneys get up you will hear a

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8904
Summation - White

1 lot about that. But they describe every possible benefit 2 of being a member. 3 But never, not once in all the hundreds of pitch
4 sheets and solicitation letters between '92 and '95 that
5 are in evidence does it even mention that members could

6 stay at the condo.
7 Think about it. If they really could stay
there? If that's really why Mr. Gordon got this
9 condominium, don't you think it would be in the pitch
10 sheets and solicitation letters? Wouldn't they say, oh,
11 by the way, as a member you can stay at our lavishly 12 furnished luxury condo, complete with jacuzzi, tennis 13 court, swimming pool. Isn't it a great selling point if 14 members could really stay there? 15 No, not a single mention anywhere, no place, with 16 respect to customers being allowed to use the condo. 17 There is not a single mention of members using 18 the condo anywhere in all the hours and hours of tape 19 recordings of sales calls in evidence. There is not a 20 single, solitary mention of it anywhere. 21 What does it tell you? It tells you the condo 22 was not for members. It was for Mr. Gordon himself. 23 It tells you that Mr. Reffsin was right when he 24 says that that claim was bullshit. 25 How else do you know it is so?

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8905
Summation - White

1 The bogus logs submitted to the bankruptcy court 2 with respect to the condominium. 3 Again, I will discuss some more in depth later,
4 but what did they tell you about it?
5 The Court in effect said, if you are really using
6 it for business, prove it. Give me the logs.
7 Instead they order Maria Gaspar to make up phony
logs.
9 When they are given the opportunity to show that
10 the condo is used for business purposes, they lie and
11 submit phony documents. Do you think they would do that 12 if the condo was really used for business? Of course not. 13 Now, you heard that Mr. Gordon is charged with 14 money laundering. Now, what is that? 15 Well, the judge is going to give you legal 16 instructions and you should, of course follow them. But 17 let me just try to explain it in layman's terms. 18 Money laundering is when you engage in financial 19 transactions, a crime, in this case mail fraud. You have 20 to know it is from the proceeds of a crime. And it has to 21 be for the purpose of concealing the source, the ownership 22 of that money. 23 So, here you know he is taking money from Who's 24 Who Worldwide. That's the proceeds of the mail fraud. 25 You will remember about the last thing that the

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8906
Summation - White

1 government -- the last piece of evidence the government 2 put in was a stipulation about where certain credit card 3 charges were credited. When customers use an American
4 Express card, a Visa card, it is credit to a particular
5 bank, when you look at the bank statement, it goes from
6 there to Who's Who Worldwide, and then to PVI. And they
7 are transferring it to PVI to furnish and purchase this
condo. And the indictment charges him with doing all that
9 to conceal his ownership and control of his money.
10 He doesn't want the IRS to see, to know that he
11 controls all this money. 12 Take a look at this. It is a chart that Agent 13 Rosenblatt prepared summarizing all these financial 14 transactions, he did one a year. This is in 1993. The 15 condo was purchased around this time. 16 Look at the money he is spending going out of 17 Who's Who Worldwide to Publishing Ventures, and they are 18 spending all this money. These are the transactions that 19 he is charged within that money laundering count. 20 All these transactions that Publishing Ventures 21 is using, where they are using this money, to purchase it, 22 to make mortgage payments, to pay the taxes, to make all 23 the improvements like Matchless Construction, furnishings, 24 the condo fees and various other things. 25 Now, here is 1994. The money is coming in from a

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8907
Summation - White

1 variety of sources to Publishing Ventures, and they are 2 dispersing it again, $185,000 worth. 3 Mr. Trabulus made a point in questioning certain
4 witnesses about the fact that Mr. Gordon paid rent with
5 respect to this condominium. So let's look at that for a
6 moment.
7 First of all, why is he paying rent? Ask
yourself that question.
9 The answer is simple. He starts paying rent in
10 early 1993 because he knows he has to submit an offer in
11 compromise in a few months, and he has to show that he is 12 paying rent. 13 When they ask him about his expenses, he has to 14 show he is paying rent. He can't say he owns a home. He 15 can't say my corporation owns it, and they let me live 16 there free. That would blow the whole plan. So he 17 strokes out a rent check to PVI so they can say he is 18 paying rent. 19 If you take a real look, is he really paying 20 rent? Is he digging into his own pockets to pay the 21 rent? 22 Agent Rosenblatt showed you if you trace the flow 23 of money from Mr. Gordon and his corporations, you will 24 see he is just shifting money around from one corporation 25 to another to make it look like he is paying rent.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8908
Summation - White

1 You see, here from Registry Publishing he gets 2 $12,500, from Who's Who he gets 5,000, and that's what he 3 is paying Publishing Ventures. 17,500. It is a big
4 circle. He is moving it around so there is a paper trail
5 which looks like he is paying rent.
6 How else do you know this is a big charade and
7 that Mr. Gordon really owns this condo?
A witness testified, named Stanley Chase. Of all
9 the witnesses you probably don't remember him because he
10 was here for only five minutes. But Mr. Chase rented this
11 condominium from Mr. Gordon after Mr. Gordon moved out, I 12 think it was around '95. Mr. Chase was paying $5,250 in 13 rent, not 2,000. Mr. Gordon is not even paying a decent 14 rent. At least he is jacking the rent up more than twice 15 as much when Mr. Chase moves in. 16 What happened to that money? 17 Well, the check stubs from Publishing Ventures 18 are in evidence. Mr. Chase sends in a check for 5250 and 19 it goes back out to Mr. Gordon. Mr. Gordon is the 20 landlord and collecting the rent. 21 What happened next? We are up to August of '93, 22 Mr. Gordon and Mr. Reffsin submit the offer in compromise, 23 the offer to settle with the IRS. The offer is Mr. Gordon 24 will give them 150,000 over three years to settle this 25 entire three and a half million dollar liability.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8909
Summation - White

1 Now, the offer they submit is Exhibit 420. 2 Now, Mr. Reffsin says in that cover letter that 3 Mr. Gordon talked to various relatives, and that the
4 offer -- they are going to loan him some money. And the
5 offer presented is based on a sum of money he feels he can
6 borrow.
7 Look at that for a minute. They are saying he is
going to borrow this money from relatives, and that's all
9 he can borrow. And that's all false.

10 Even if you accept his story, that he is getting
11 loans from Who's Who Worldwide, you know he can borrow a 12 lot more than 150,000 from the corporation. By this point 13 he borrowed hundreds of thousands of dollars. 14 If he can borrow money to buy Armani suits and 15 fur coats and European vacations, he can borrow some of it 16 to pay back the IRS. 17 He doesn't want the IRS to find out about that 18 money, because then they may take away all his toys, his 19 Mercedes, his suits, his jewelry and his vacation. 20 The letter even says that he cannot even pay his 21 back alimony to his former wife. But according to that 22 433 form he submits, he owes $60,000 in alimony. If he 23 wanted to he could borrow from Who's Who to pay that like 24 he can borrow to pay the IRS. It is part of a pattern to 25 show that he can't pay his expenses, when you know that he

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8910
Summation - White

1 can. 2 Now, Mr. Reffsin includes a projection in there 3 which we talked about before. This document puts the lie
4 to a lot of their phony arguments at the trial. It
5 exposes them as just excuses, and are made up after the
6 fact to justify their lies.
7 Now, for example, Mr. Reffsin when he testifies,
he told you that in late '92, he told Mr. Gordon, listen,
9 you got to pay off your loans to Who's Who by 1994, and
10 that if he didn't, Mr. Reffsin was going to declare them
11 as income and he would have to pay taxes on them. But he 12 said that one way or another this whole loan situation was 13 going to be resolved. He was going to take it as income 14 or pay it back by 1994. 15 To do that he would have to take a substantial 16 amount of income and then turn a round and pay off his loan 17 to the company. 18 If he was ever going to pay off the loan, which 19 is hundreds of thousands of dollars, he would have to make 20 that much in income. 21 If he expected he would be making all that money, 22 why isn't it on this projection? Because he doesn't want 23 to tell them, hey, I am expecting a big pay day. Then 24 they would say, we want a piece of that. 25 Another bogus argument disproved by this form is

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8911
Summation - White

1 Dr. Grossman loaned Mr. Gordon 235,000 to reduce his loan 2 account in early 1993. 3 You heard Dr. Grossman testify that Mr. Gordon
4 didn't say anything to him about it being a loan, only
5 that the company needed the money back to pay for the
6 printing of the directories.
7 Well, if this really was a loan, then, again, why
isn't it listed here as a debt that Mr. Gordon owes.
9 According to them he owes Dr. Grossman $235,000, you can
10 read this until you are blue in the face, and it is not
11 listed there. It would only help him to list it if it 12 really were a debt he owed. Because, again, it would make 13 him look like he was even deeper in debt. 14 But it is not listed, because it is not really a 15 loan. He has no intention of paying it back. 16 Dr. Grossman doesn't expect it back. He doesn't know that 17 it is a loan from Mr. Gordon. 18 The circumstances suggest he just sent the money 19 out to Dr. Grossman and got it back a week or two later so 20 he can say that it was a loan from Dr. Grossman. 21 Again look at the form 433 submitted with this 22 offer in compromise. 23 This one is July of 1993, and like the other one, 24 it is not only part of this conspiracy in this tax evasion 25 scheme, but it is also a separate charge of filing a false

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8912
Summation - White

1 collection information statement. 2 Now, again, I will not go into all the same 3 detail, but the same things are false about it.
4 Box 18, securities, he writes "none."
5 You know he owns 75 percent of the company. By
6 this time the company is probably worth three-quarters of
7 a million dollars. You look at the tax returns.
He also owns PVI, which is the owner by this
9 point of a million dollar condo. And that's not listed.
10 Again, bank charge cards, he writes none.
11 No other Amex cards listed in box 28 either, 12 although he has got it and he is spending up a storm. 13 Page 4, income. Again, the payment of his 14 personal expenses are not listed. 15 Even if you consider it a loan, why isn't it back 16 over here under other liability? It is not. 17 Again, the expenses, you know that those expenses 18 bear absolutely no relation to what he is actually 19 spending. 20 As I said before, you have to look at these forms 21 in context. Don't look at each alleged false statement in 22 isolation. Look at the big picture. 23 Again, all the things that are not disclosed on 24 this form have a common theme, that if you disclosed them 25 they would expose his lifestyle and income.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8913
Summation - White

1 Do you think that that is a big coincidence? 2 THE COURT: Is this a good time to take a break, 3 Mr. White?
4 MR. WHITE: Yes, your Honor.
5 THE COURT: I don't want to interrupt your train
6 of thought.
7 MR. WHITE: It is fine.

8 THE COURT: Members of the jury, we will take a
9 ten-minute recess. Please keep an open mind and please
10 recess yourselves.
11 (Whereupon, at this time the jury leaves the 12 courtroom.) 13 THE COURT: I assume -- I have to tell you 14 something so stick around, please. 15 I assume you are keeping track of the time, 16 Mr. White. 17 MR. WHITE: I am. 18 THE COURT: According to my unofficial time 19 keeping, we started at 9:42 a.m. 20 MR. WHITE: That's correct, your Honor. 21 THE COURT: Good. I am glad you are watching 22 me. 23 MR. WHITE: I have my timekeeper working on it. 24 THE COURT: All right. 25 I have two things to state.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8914

1 One is that I noticed during the summation of the 2 prosecutor that Ms. Haley left the courtroom for about

3 five minutes.
4 Is that correct, Mr. Geduldig?
5 MR. GEDULDIG: Yes, Judge, it is.
6 THE COURT: Did she waive her appearance during
7 that time.
MR. GEDULDIG: She does.
9 THE COURT: She knows she has a right to be here,
10 especially during summations.
11 MR. GEDULDIG: Yes, Judge, she does. 12 THE COURT: And it is not wise for her to leave 13 during summations unless it is some emergency. 14 Does she understand that? 15 MR. GEDULDIG: Yes, she does understand, Judge. 16 THE COURT: And she waives her appearance during 17 that time? 18 MR. GEDULDIG: Yes, she does. 19 THE COURT: Have a seat. 20 I have reviewed the cases again. 21 I have reviewed the cases again on Starnas and 22 the more recent case. 23 And I get from this, notwithstanding my feelings 24 about the Starnas case, that I have to go along with the

25 option given to the defendant.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8915

1 Another reason why I am doing that is just by 2 looking at it again more carefully, it just makes sense. 3 And the reason that it makes sense is that I was going to
4 charge the jury that they would have to find the defendant
5 Gordon not guilty on Count 57 before they could go to the
6 lesser included offenses.
7 What does the defendant need the lesser included
offenses under those circumstances? It just doesn't make
9 sense.
10 So, I have to reverse myself. And I am doing it
11 before Mr. White got to that portion. 12 I am going to charge, Mr. Trabulus, as you have 13 recommended that the jury either finds the defendant 14 Gordon not guilty on Count 57, or after a reasonable 15 inquiry, cannot reach a verdict. And then they are to go

16 to the lesser included offenses. 17 We will take a ten-minute recess.
18 19 (Whereupon, a recess is taken.) 20 21 22 23 24 25

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8916

1 THE COURT: Bring everybody in, please. 2 MR. WHITE: Your Honor, are we going straight 3 through until I finish?
4 THE COURT: We will take lunch at about 1:00
5 o'clock or thereabouts.
6 (Whereupon, the jury at this time entered the
7 courtroom.)
THE COURT: In order for us to try to conclude
9 the first summation at least, we are going to have lunch
10 at 1:00 o'clock or thereabouts. We ordered it for that
11 time. So this way we will permit Mr. White to conclude 12 his summation in chief. 13 You may proceed. 14 MR. WHITE: Thank you, your Honor. 15 Let's look and see what happens after the offer 16 in compromise is submitted. I will move a little more 17 quickly because some of these things we have already 18 talked about. 19 You know Mr. Gagliardi already asked Mr. Gordon 20 and Mr. Reffsin for more information. The first thing he 21 does is November of 1993, he writes this letter. It asks 22 for a whole bunch of things. Three things in particular 23 you need to focus on. 24 Number three, he asks for all the bank statements 25 and checks for which Mr. Gordon is a signator, paragraph

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8917
Summation - White

1 three. 2 Paragraph six, verification of all monthly 3 payments if not paid by monthly check.
4 Nine, motor vehicle registration, title
5 certificates and/or leasing agreements for vehicles you
6 own and/or operate.
7 Now, you know that virtually none of that was
given to Mr. Gagliardi. You heard in response to number
9 three, all he got was Mr. Gordon's personal bank
10 statements, not the checks of Who's Who, PVI, any other
11 corporation. With respect to number six he got nothing 12 although the company is paying his American Express bills. 13 With respect to number nine, although Mr. Gordon 14 is tooling around in a BMW at this time and the company is 15 paying the lease, he gets nothing. 16 Now, what happens after that? When Gagliardi 17 does gets the personal bank statement, that's when he sees 18 the abnormal deposits and they have sets for another 19 number of requests and he asks to explain the abnormal 20 deposits and that's when he gets the two phony notes with 21 respect to Joyce Grossman and Madeline Middlemark. 22 Now, so what happens next? 23 Let's go to February of 1994. Now you find out 24 that Sterling is renting a penthouse apartment on the east 25 side of Manhattan. They start in February of 1994 for

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8918
Summation - White

1 $8,000 a month. 2 Apparently living in this million dollar luxury 3 condo in Manhasset is too confining for Mr. Gordon. He
4 needs a nice pad in New York City. Not any apartment. It
5 has to be the best for Mr. Gordon, in one of those
6 penthouse apartments, with a doorman and concierge, and I
7 can barely pronounce it, so fancy.
You heard Mr. McDonald, the building manager tell
9 that Mr. Gordon's apartment covers the entire floor like
10 you see in the movies with an elevator opening right up to
11 the living room. 12 He said the apartment was sold for 1.25 million 13 dollars soon after Mr. Gordon left. 14 How do you know Mr. Gordon lived there? 15 You know it from a variety of sources, the 16 building manager came in and testified, the building 17 manager saw Mr. Gordon going in to work in the morning, 18 and he complained to him about the heat in the study. The 19 lease was signed by Who's Who Worldwide. And it says only 20 for residential use and no other purpose. If the tenant 21 is a corporation, the apartment can only be occupied by 22 designated occupant, the person listed on the lease as 23 occupant, and that's Mr. Gordon. 24 Think about it. If the lease is really for out 25 of town members to stay in, and if that's the original

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8919
Summation - White

1 reason as to why the apartment was obtained, why does he 2 sign that lease that says that Mr. Gordon, and only 3 Mr. Gordon can live there? When the landlord gives him
4 the lease, does he say, this is unacceptable, I can't sign
5 this? The whole reason I am here to rent this place is
6 because I want out of town members staying here.
7 He signs on the dotted line because he knows he
is living there.
9 How else do you know he is living there?
10 Early in 1996 you heard Mr. Mendelsohn, a defense
11 witness coming in. 12 Mr. Mendelsohn says the trustee came in and 13 locked him out, if the company is paying for the penthouse 14 we should be in charge for it. 15 What does Mr. Gordon do? He changes his tune 16 pretty fast. Before he was saying it is all for 17 business. Now that they got his stuff in there and he is 18 locked out. Hey, man, now it is personal. You got my 19 stuff and I want it back. 20 So, he writes a letter to Mr. Ackerman demanding 21 that he get his personal stuff back. He asks Mr. Ackerman 22 to sue Mr. Mendelsohn and others for ten million dollars 23 for taking his personal stuff. 24 Well, Mr. Ackerman won't do it. But eventually 25 you know that another lawyer did file the complaint, and

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8920
Summation - White

1 that complaint is in evidence. 2 Mr. Gordon admits there that he used the condo as 3 his residence. That he stayed there with his child. That
4 he had numerous personal items there.
5 Also, as I said before, the condo is -- the
6 penthouse is not listed on any pitch sheets or anything.
7 You know that if members really could stay there that it
would be.
9 Now, what happens next?
10 There is a big problem. In March of 1994, March
11 8th, 1994, is when you heard that Marquis Who's Who wins 12 this lawsuit against Who's Who Worldwide for 1.6 million 13 dollars. 14 Who's Who can't pay that so they have to declare
15 bankruptcy. And they file the bankruptcy petition March 16 21st, 1994. 17 Now, this upsets the apple cart that Mr. Gordon 18 and Mr. Reffsin have set up. The whole set up is that the 19 company is paying his personal expenses. 20 Now, in bankruptcy you have to have financial 21 disclosure. He has no choice. He can't pay the 1.6 22 million dollars to read, so he has to be into bankruptcy. 23 What does he do? He transfers, he transfers all 24 sorts of money out of Who's Who Worldwide, right after 25 that judgment. He knows he can't continue to be paying

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8921
Summation - White

1 his personal expense out of there. So he gets that money 2 out of Who's Who as fast as he can say it. It goes to all 3 those other companies. He doesn't want the gravy train to
4 end. He filters it out to all these other corporations
5 which ends up paying all his personal expenses.
6 THE COURT: Can all the jurors see those charts?
7 If not I would suggest you move the lectern out of the
way.
9 Anybody not see it, raise your hand?
10 MR. WHITE: A suggestion as to what is the best
11 spot to see it? 12 THE COURT: Move the lectern back a little bit to 13 give them more vision. You don't have to be that close. 14 MR. WHITE: Okay? 15 THE COURT: That's good. 16 MR. WHITE: Now I am going to quit. 17 THE COURT: That gives you an extra minute. 18 Do you have it down, 60 seconds? 19 MR. WHITE: Good, because I can use it. 20 Again, Mr. Gordon's own friend, Mr. Ackerman 21 says, why did you do all those transactions? He asked 22 why? 23 He said because it was his own personal tax 24 situation. It doesn't get clearer than that. It is right 25 from Mr. Gordon's own mouth.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8922
Summation - White

1 Now, they have a problem though. This bankruptcy 2 has interrupted their cozy little arrangement. In the 3 bankruptcy court they don't want to say that Mr. Gordon
4 owns 75 percent of the company. So they have
5 Mr. Reffsin's friend, Steven Adler, a lawyer, preparing
6 the backdated documents showing that the Grossmans always
7 owned 100 percent of the corporation, which is wrong.
You have the documents, Exhibit 671, the fax from
9 Mr. Adler to Mr. Reffsin.
10 Think about it for a minute, and let me back up.
11 The documents he uses and that he creates here are 12 completely bogus. You heard Ms. Grossman coming in here 13 saying I own 75 percent and I authorize my brother, Bruce 14 Gordon to tell other people he owns my shares. 15 She said it is not the case. The information is 16 just inaccurate. 17 Why did they tell Mr. Adler to prepare those 18 documents? Why did they use Mr. Adler? 19 You heard they had a respected bankruptcy 20 attorney on retainer, and you heard the legal bills he 21 charges, goes to the bankruptcy court. They don't want 22 all that showing up on a legal bill, creation of phony 23 documents, $1,500, so they have Mr. Adler do it. And 24 Mr. Reffsin pays his fee. 25 He is doing work for Who's Who, but Mr. Reffsin
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8923
Summation - White

1 is stroking out the check to him. Does that sound odd to 2 you? Does it sound to you like someone who wants to go 3 and wants to have Mr. Adler do some kind of black bag job
4 and create these phony documents that they can use?
5 Now, you also heard that those blank stock
6 certificates were signed by Dr. Grossman, you remember
7 that? And he said he did this around this time. And he
estimated he signed them around early '94. You know that
9 because if you remember there was an IRS lab expert who
10 came in here and testified that one of these documents
11 that Mr. Adler created was on top of the stock certificate 12 when it was signed, so she knows, and you can tell from 13 the impression as to when it was created. 14 Since you know that this wasn't created until 15 March of 1994, you know they are going back and creating 16 these phony documents. 17 Now, take a look at this letter, here is the 18 letter, Exhibit 582, that Mrs. Grossman says is completely 19 bogus. 20 Now, why does it say this? 21 Look at the situation that Mr. Gordon is in in 22 March of 1994 when this was created. He knows he 23 testified numerous times under oath previously that he 24 owns 75 percent. And that was before he decided to change 25 his tune. He said that three different times,

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8924
Summation - White

1 Exhibits 802, 815 and 804, all are in evidence. 2 He said it three times under oath that he is an 3 owner. But he doesn't want to put on the bankruptcy
4 petition he is the owner. He wants to say the Grossmans
5 are the 100 percent owner.
6 What does he come up with? It is a great plan.
7 He wants to say he owns 100, and he knows he is on record
saying 75. So he has Mr. Adler draft this letter where
9 Joyce says she owns 75, but, Mr. Gordon, you can say to
10 other people that you own my 75. It is the perfect
11 solution to his problem. That way he can say, I am not 12 the owner. But I said it before because I got this letter 13 and Joyce said I can do that. 14 Of course, you know that none of the information 15 in this letter is true as Mrs. Grossman told you. 16 And then you heard that they submitted a 17 bankruptcy petition that says the Grossmans owned 100 18 percent, and Mr. Gordon testified numerous times under 19 oath, Exhibit 799 and 800, both of which are in evidence, 20 where he said falsely that the Grossmans owned 100 21 percent. 22 Now, Mr. Trabulus and also Mr. Reffsin when he 23 testified said that Mr. Gordon was going to pay back his 24 loans until the bankruptcy intervened, that that kind of 25 threw things off, that that somehow made his future income

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8925
Summation - White

1 questionable and he couldn't pay it. 2 It is a nice theory, but it doesn't fit with the 3 facts. Look at how he is living after the bankruptcy. He
4 is not living like someone who has future income in
5 jeopardy. He is spending like a maniac. When you look at
6 the money, the American Express receipts and others, he is
7 living more lavishly than he ever did before. He spends
about three times as much in '94, as he does in the year
9 before that. He is not slowing down on his spending. He
10 is speeding up, to borrow a phrase we heard from Judge
11 Spatt during this trial, he is reaching flank speed on his 12 spending. All he has done is he shifted $500,000 out of 13 this bankrupt corporation to the others, and then he is 14 continuing business as usual. 15 Now, it is the summer of 1994 he takes this 16 lavish vacation to Europe that cost $50,000. 17 In the summer of '94, things are heating up in 18 the bankruptcy case. The trustee -- excuse me, the 19 creditors are saying why are we spending money on your 20 personal condo and your penthouse? And they ask the Court 21 to appoint a trustee. 22 They don't want a trustee. That is going to 23 upset things. Because the whole plan is dependent upon 24 Mr. Gordon being in charge of the corporations, and being 25 able to have his corporations pay his expenses. If a

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8926
Summation - White

1 trustee comes in then the gravy train is over. 2 So, you heard that the bankruptcy court ordered 3 them to keep logs, and that's August of '94.
4 Now, Mr. Reffsin said that Mr. Gordon didn't want
5 the creditors to have these logs, Reffsin testified that
6 Gordon was ranting and raving about it, and that he didn't
7 want to do it.
Then you hear again, September of '94, there is
9 another one of these 341 Hearings in the bankruptcy court
10 where Mr. Gordon and Mr. Reffsin and Maria Gaspar are
11 present. 12 Now, after this meeting you heard Ms. Gaspar tell 13 you that in the car on the way back, Mr. Reffsin and 14 Mr. Gordon ordered her to create these phony logs. They 15 said it in Mr. Reffsin's car on the way back to the Who's 16 Who Worldwide office. She was told to get a calendar and 17 go and make up the meetings. They gave her phony topics 18 she could use. 19 Now, she said she didn't feel comfortable doing 20 this. And this takes place on the drive back to the 21 office. But then you also heard testimony from Debra 22 Benjamin. She said that around this time Ms. Gaspar came 23 into her office one day, and she was upset. She said she 24 had come from a meeting with Mr. Gordon and Mr. Reffsin, 25 where they asked her to do something.

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8927
Summation - White

1 Now, she doesn't prepare the logs right away, 2 Ms. Gaspar. Eventually Reffsin calls her and says, hey, 3 we need them today. So she does them. And Mr. Gordon
4 gives her suggestions about what to put. And they fax it
5 to Mr. Reffsin for his approval. And he says it is okay.
6 She then sends it off to the attorneys, who then produces
7 them to the creditors. Here they are. Here is her
pencilled, handwritten logs. It is Exhibit 643.
9 Now, in addition to being part of this whole
10 conspiracy to conceal Mr. Gordon's income and expenses,
11 they are also charged with obstruction of justice for 12 this. 13 Now, there is no dispute that these logs are 14 completely bogus. Maria Gaspar told you she made them 15 up. And a number of Who's Who employees came in and 16 testified that they never attempted the meetings listed on 17 those logs. 18 It was obviously an attempt to obstruct the 19 bankruptcy proceedings. The bankruptcy court says show us 20 the logs. Put up or shut up. You say you are using it 21 for business use, so show us. 22 What do they do? They fabricate them. 23 Now, the defendants have attacked Maria Gaspar as 24 a liar. And lets look at that for a minute. 25 Now, put yourself in Ms. Gaspar's shoes at the

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8928
Summation - White

1 time of these bankruptcy logs. She has absolutely no 2 personal motive to create those phony logs on her own. 3 She is an employee of the company with no financial
4 interest. Why would she care on her own if Who's Who won
5 or lost a motion in the bankruptcy case.
6 There are only two people in the entire world who
7 benefit from the submission of those phony logs. They are
Mr. Gordon and Mr. Reffsin. Mr. Gordon, because it keeps
9 the gravy train flowing. He gets to live in the condo, in
10 the penthouse, it puts off the appointment of the
11 trustee. And Mr. Reffsin, because their secret is not 12 exposed, along with Mr. Gordon he has been telling the IRS 13 that Mr. Gordon is barely scraping by. He doesn't want to 14 admit that there are these two one million dollar 15 apartments for Mr. Gordon's use. 16 How else do you know that Ms. Gaspar is telling 17 the truth? Her testimony is corroborated by Ms. Benjamin 18 who says a few years -- weeks before Ms. Gaspar left, she 19 came into her office saying she was upset. 20 If you look at Debra Benjamin's testimony, it is 21 not just some normal workplace disagreement Ms. Gaspar was 22 having with Gordon or Reffsin. These were the words 23 Ms. Benjamin used to describe Ms. Gaspar at the meeting: 24 Very, very rattled. At the verge of tears, very upset and 25 nervous. She was falling apart. That's what Debra

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8929
Summation - White

1 Benjamin said about her. 2 You remember Ms. Benjamin. She was friendlier to 3 the defendants than she was to the government. Yet her
4 testimony corroborates what Gaspar says.
5 You have testimony from two witnesses who
6 according to Debra Benjamin, they have not spoken for two
7 or three years. That meshes perfectly.
How else do you know that they ordered Ms. Gaspar
9 to create the phony logs?
10 Well, you know the condo and the penthouse were
11 not used for business. You know that from all the 12 evidence. They know it wasn't used for business. 13 Mr. Reffsin tells Agent Jordan that it is bullshit they 14 were used for businesses. So if it has to be given to the 15 bankruptcy court it was bogus, and they know that. 16 How else do you know that they were involved in 17 creating it? 18 The records for Mr. Ackerman's law firm indicates 19 that they were both faxed copies of the logs on that day, 20 the same day they were sent to the creditor's attorneys. 21 Do either of them call up and say, wait a minute, 22 Mr. Ackerman, this doesn't look right to me. Gordon is 23 living there. He knows they are not having business 24 meetings there everyday. 25 The logs list Mr. Gordon as attempting meetings

HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8930
Summation - White

1 at the condo a week before they are produced to him, to 2 the creditors and fax to him. But his Amex records show 3 he is staying at the Beverly Wilshire Hotel and buying
4 suits on Rodeo Drive.
5 Does he say wait a minute, I was in California,
6 and you have me at the condo.
7 Every man says he is a