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Профессиональный Документы
Культура Документы
RUSS A. BAKER
Texas Bar No. 24045440
russ@boyd-veigel.com
BOYD-VEIGEL, P.C.
P.O. Box 1179
McKinney, Texas 75070
Telephone: 972-562-9700
Telecopier: 972-562-9600
v. EXHIBITS TO
ARMSTRONG’S REPLY IN SUPPORT OF
CONNIE C. ARMSTRONG, JR. 28 U.S.C. § 2255 MOTION
Defendant
Armstrong submits these Exhibits to his Reply in support of his pending motion under 28
U.S.C. § 2255 and in traverse of the factual allegations and legal argument provided in the
FBI memo disclosing political influence and lack of probable cause, March 8, 1991 ..................19
Financial report showing creditor’s claims, including $100 million whistleblower claim............23
Status memo from FBI deputy Director Potts to Howard Baker, Pelosi, and Boxer.....................43
Hearing transcript of January 13, 1997 discussing late-produced audio tapes ..............................44
Affidavit of FBI Special Agent Hatcher disclaiming prior knowledge of audio tapes ..................56
FBI memo showing prior authorization for tapes given to Hatcher by AUSA Yamaguchi ..........60
Hearing transcript of January 27, 1997 discussing late-produced audio tapes ..............................61
Government brief authored by Yamaguchi in opposition to law of the case instruction ..............69
Partial FBI 302 disclosing Hamilton Taft problems prior to Armstrong’s acquisition .................81
FBI 302 re. between FBI and counsel for bankruptcy trustee .......................................................84
FBI 302 wherein witness stated bankruptcy trustee was doing the work of the FBI.....................87
FBI memo regarding meeting between prosecution team and trustee to plan prosecution ...........89
Dear Clerk:
I represent Connie Armstrong, Jr., who is the Defendant-Appellant in the above styled and numbered
cause.
On June 4, 2007, I sent your office a letter asking about the status of two pleadings filed in this case
by Mr. Armstrong. One of those matters was a pro se petition for panel rehearing and petition for
rehearing in banc which was apparently received and filed in your office on May 29,2002.
We received a prompt reply from you on June 13,2007 providing us with an order from the Court
which was filed in your office on January 31, 2003 (the" Order"). The Order denies Mr. Armstrong's
petition for rehearing and petition for rehearing in banco
Mr. Armstrong was never provided with a copy ofthe Order or given any notice as required by Rule
36, F.R.A.P., thatthe Court had denied the relief requested. It is my understanding of Rule 13 of the
Supreme Court Rules that he is entitled to file a petition with the Supreme Court for a writ of
certiorari within 90 days after entry of the Order, and, if no such petition is filed, he is entitled to
seek habeas corpus relief pursuant to 28 U.S.C. §2255 within one year after the time has expired for
the filing of a petition for certiorari.
Accordingly, it is obvious that, due to the lack of notice of the entry of the Order, Mr. Armstrong has
been prevented from exercising any further review of the proceedings which resulted in his
conviction. We therefore are requesting that the Court re-establish the date of the issuance of the
Order so that Mr. Armstrong will be able to retain his rights to take a further appeal and/or review
of the Order.
Since Mr. Armstrong is a federal prisoner who was entitled to have the Order and his conviction
reviewed by further proceedings authorized by law, his request should be given special consideration
A. Signature
• Complete items 1, 2, and 3. Also complete :_c . . ~ Agent
item 4 if Restricted Delivery i,s desired.
• Print your name and address on the reverse
x - - I
LS 0 Addressee
so that we can return the card to you. B. R~ceived by ( Printed N~me) C. Date of Delivery
U·
• Attach this card to the back of the mail piece,
or on the front if space permits.
j ~ 1
D. Is delivery addreS§ different from it~eS
1. Article Addressed to: If YES. enter delivery address trelow: 0 0
Fl.£.D _ ,.,-\j-\l
--~" ,',_.- .. -- . ~ -~ .- '--~I
DOC~E:. \ t.u---- Op.'l
.::r-
CI Certified Fee
Clerk of the Cour t ;i
CI
Return Receipt Fee
CI
(Endorsement Required)
!------ ....o.... ...j
U. S. Court of Appe als
:i=! Restricted Delivery Fee
P. O. Box 1939 39 3. 3 rvice Type
CO (Endorsement Required) 1---- ----- 1 lJQ. Certified Mail 0 Express Mail
ru San Francisco, CA 94119 o Registered .iJ Return Receipt for Merchandise
Total Postage & Fees '-'-_ _ _ _----' o Insured Mail '0 C.O.D.
Clerk of the Court 4. Restricted Delivery? (Extra Fee) DYes
FILED
APR 22 2008
Defendant-Appellant.
construed, the motion is granted. We recall the mandate issued on February 10,
2003.
The panel has voted to deny the petition for panel rehearing .
The full court has been advised of the petition for rehearing en bane and no
judge has requested a yote on whether to rehear the matter en bane. See Fed. R.
App. P. 35.
The petition for panel rehearing and the petition for rehearing en bane are
KBiResearch
1 - Addressee
/1 - San FranClSCO ((196A-2868)
RES/bfa
(2 )
~
further information could be obtained regarding the allegations /
.'
---
presented, he would reconsider his opinion.
Based on AUSA Yamaguchi's declination, our office will
close its investigation into the captioned matter.
Very truly yours,
RICHARD W. HELD
Special Agent in Charge
b7C::
By: I f
Superv~sory Speclal Agent
2*
b7C
EXHIBITS to Section 2255 Reply~!- 9(;ff-
D
Page d15t.:~
8
/ q / .L1 - rJ':: - q '?:J c-< -:- I 11
taxes. Unemployment taxes and other various tax liabilities are
also paid by Hamilton Taft. When a company becomes a client of
Hamilton Taft, it notifies Hamilton of the companies payroll
dates, pertinent payroll information, the state in which the
company is required to pay taxes and the type of taxes which need
to be paid and on what dates. Hamilton collects monies from
these various clients and in turn pays the clients tax obligation
whether they be local, county, state and/or federal income taxes,
unemployment taxes and/or other tax liabilities.
b7C I I advised that when a client company enrolls
with Hamilton Taft, the company notifies Hamilton of its payroll
dates, pertinent payroll information the state in which the
company is required to pay taxes and the type of taxes which need
to be paid. The company then remits to Hamilton Taft on a timely
basis its payroll tax liability. The client company will also
remit funds to Hamilton Taft which would be used to pay the
aforernentionedtax liabilities. Historically the funds were
either wired to a Hamilton Taft Impound Account each time a
payroll is paid by the company or Hamilton Taft gains access to
the companies account by a depository transfer check.
Hamilton Taft was also responsible for filing all
applicable federal, state, county and local tax filing
information on behalf of its client and pay their various taxes
as they become due for the service Hamilton Taft charges its
clients a fee based on the number of times a client renders a
payroll and the number of areas taxing agencies which have to be
ultimately paid. Hamilton Taft also receives the interest in
which it can generate on the funds its clients deposit with it.
All this information is revealed to the client prior to a
contract being entered into by the client and Hamilton Taft.
This is also done orally by Hamilton Taft's sales
representatives.
As Hamilton Taft grew, the company became concerned
with what its liability may be with the funds they were
collecting on behalf of their clients. Because of this internal
concern in 1981, the firm contacted Baker and McKenzie Attorney's
at Law, 555 California street, San Francisco, California, 94104
and requested that this firm provide Hamilton with an opinion of
the characterization of the funds it was holding on behalf of its
clients for tax payments.
On October 29, 1981, Baker and McKenzie issued an
opinion that basically stated that at the time a payroll is
rendered, that is paid by the employer, the funds representing
the withheld taxes belong to the federal government. The
employer becomes a trustee for those funds and as such the duties
and responsibilities of a trustee are mandated under common law.
~.F"'-l;;'--
the funds are still trust funds and the holder of these funds () I~~~ s~
in an unrelated transaction.
hJ--l:--\"'"
In order to assist you in preventing your opinion from fs
a historical point of view~ Yle are enclosing a copy of the actual r ~I~
7 [~
b7C
FD-302 noting interview Of, I
with appropriate copies of -J /~'~ '1\
documents provided byl to our agent. --/-t G
I
was also interviewed in December of
1988. I~--:===~Ih~a~d~b~e~e~n~hiired by Hamilton Taft as Treasurer-
Manager of the firm. I I is a Certified Public Accountant
I
(CPA) having become a CPA in the state of ta~;f:rnia
Ibasically stated that shortly after became
:': t986.
President of Hamilton Taft, she told him t a sewall e making
the day to day investment decisions regarding the funds of
Hamilton Taft. She instructed him not to make any investment
unless she okayed them. He explained to her that any monies b7C
collected from the clients only had a two or three day "window"
during which they could be invested prior to having to be paid to
taxing entities. Thereafter, all investments he made, other than
into commercial paper, were done at the direction ~ L
I I In connection with his responsibilitiesC: ~would
assist in the preparation of the monthly financial statements for
Hamilton Taft. Each month a meeting would be held to discuss a
just completed financial statement for the previous month. At
the close of such a meeting in April, 1988, after the close of
the April financial statements,l lstated that he had a
conversation with in her office. During this
conversation was bragging on the financial strength of
Maxphrama an ow axphrama was in the process of purchasing C &
H Nationwide Incorporated, a specialized trucking company.
Apparently, in order to sUbstanti~te herr statements and the
strength of Maxphrama, she showedL _ the Hamilton financial
statement which listed Hamilton Taft's assets in excess of
30,000,000. r I
financial picture was quite different than
the financial statements which he had prepared for Hamilton from
the month of April, 1988. J3i{))~. x ~~'lJJ~~ l~.~'~~~~'~;} - , :~: ~~'J~t::1JDL~~~ ~/~:.~~,
~r::'~:,:~~~ i,"'" t"'"'' ''''U' k'" '.' I
~~~~.
'-:
b7e
By: b7C
6*
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Dear Marc:
During the ?eriod the funds are held i~ trust, the person
holding the f~ndsassumes, with a few except~ons discussed
~elow, the duties and resDonsibilities of a ~rustee as such
duties and responsibiliti~s are mandated under common law.
~arsh v. Home Federal Savinas & Loan Assn, 66 Cal. App. 3d
674, 136 Cal. Rptr. 180 (4th D.C.A. 1977). In general, a
trustee is a fiduciary and is bound to act in the highest
good faith toward his beneficiary, must make full disclosure
of material facts, must not acquire any adverse interest, and
must not use his position to gain any advantage over the
beneficiary or to make any special ~rofit. Cal. Civ. Code §§
2228-2233. A trustee normally should not ~ingle trust
property with his own, but if he do.es willfully mingle the
trust funds with property of his own, he is absolutely liable
for their safety and for the value of thei~ use. Cal. Civ.
Code §§ 2236.
Penalties
t;;jY,
~id L. Kimpert
DLK/aw
..
I
0]
_
pros e cntiOIL This
l.sck OJ prosecution..
lJlck
_it
This matter was
was handled under--SF
it was
was investigated by S .
and was closed ~h
196A-2868 and
under--SF 196A-2868
--- -7
-7
August, 1988.
with regard to
with to information supplied
supplied byl byl writer
writer I
was reluctant to
was to initiate
initiate any
any overt
overt investigation
investigation for
for fear
fear that-
there potential liagility
~uld~ Eotential
there would~ liability qttached
attached wherein the
governin~nt £.QB1dJ2e
governm~nt £QB1d1;!e accused..Q.t
accused.Qf initiatipg thethe pownfall
downfall ,of
captioned company
captioned byjthe mere
COmpany bvl'the mere fact that
that it was
was making
making overt
overt
inquiries. [I ..- ' .has provided detailed informat.ion
,has which,I ~
information which
of this date, has'been
of has· been unable to be
unable to be thoroughly corroborated.
corroborated.
is being
Progress is
Progress being mademade to
to effect such coriOEorat2on.
effect such corroDorat2on. .
I. I. I~ expressed apprehension in
expressed apprehension in his
his mind
mind regarding
regarding
the "extensive
the "extensive"n time-it
time-it was taking for the
was taking the government
government to to decide
decide
whether or
Whether or not
not to
to initiate
initiate an
an investigation
investigation and
and to effect some
to effect some
criminal process. He
criminal He was
was told
tolc:1 tbat
that the
the government
government haJl._:t.Q ......ll9.;.~_
@~_
ha_g._:t.Q.........
victim before
victim before any
any process
process would
would bebe forthcoming.
forthcoming. He
He was
was further
further
Of the
Of the mornin:
mornin: ofof March
March 7, H91, II
7, 1991, Ithrobgh
I,throtgh' .....
his associatel
Security-.
l,
I, an investigator
investigator for
Department of un Micro Systems, facsirniled
the COJ;.porate
for the Co~porate
Securit~Department facsimiled 16/pages
l~~ages 0,£ oj
documents
documents to the writer. The
The most salient point of these
point of t~ese
documents was
documents letter to
was aa letter to Sun Micro systems
Sun Micro Systems dated
dated February
February 13,13, "', ,'.' '
1991 from the ,.IRS in-- Fresno..
1991 Fresno. The The let}:er
letter refers
refers toto aa particular
particular ,/' ;) >')'
tax identification
identification number utilized by Sun Micro Systems
number utilized by' Sun Micro Systems and . and . '~:
references aa tax
references tax period
period ending
ending september
september 30, 1990.'- The
30 I 1990.; The letter
letter ~,l~:?,.,.
}}
goes on
goes to thank
on to thank taxtax payer
payer (Sun
(Sun Micro Systems)
Systems) forfor its
its reply
reply t·t -.~, '; if
'
4*
• Scheduled
Amounts
Proof of
Oalm
Maximum
Potential
• Hamillon1aft Claims
1,346,135.60
204,873.85
1,535,6Hl.13
•
DRESDNER PETAOIL,.EUM
• Scheduled
Proor 01
Claim
Maximum
Potential
Amounts
•
/:OlIlOhtdoc C-1
•
WTS1U,DOt C-2
• EXHIBITS to Section 2255 Reply - Page 24
•
COHBOLIDIl'mD E6n'I'E •
"iIAHILTOH n r r CUS1"OWlm CI..JUNS
MAXIMUM
PROOF OF CLAIM Ital. POTENTIAL
CREDITOR AMOUNT ~ CLAIM
$845.20
$296,991. 48
$6,285.72
S296,991.46
$845.20
BOSTON & MAINE CORPORTATION $5,572.54 $5.512.54_
aOYLE MIDWAY INC, $4,314.91 $4,314.!H
BOYLE-MIDWAY $7,61£!.24 S7,618.24
BRINKMANN INSTRUMENTS $'72,034.16 $72,034.16
BRtlNSWICK SEAT COMPANY $1,096.8S $1,096.88
BUD ANTLE, INC. 5229,477.87 $229,477.87
BUD ANTLE, I Ne • $890,046.01 S890, 046. 0')
BW I rp INTERNATIONAL, INC. $310,691.23 5386,932.78 $18&,932. IS
C .. R CLOTHIERS $324,523.13 5324,523.13
CALIFORNIA PACIFIC KED. CTR. Sl,106,353.90 $1,102,264.05 Sl,l02,204.0S
CARTEX CORPORATION $24,663.04
•
S24,663.04
c)l.STLE &. coox.s $1,899.86 51,BS9. B6
CASTLE & COOKE PROPERTIES $28,I14B.13 $28,648.13
CASTLE & COOKE RESIDENTIAL S74,se8.42 S74,59B.42-
CAST~E ~ COOKE. INC. $223,640.91 $223,640.91
CASTLE COOKE RETAIL. INC. $21,522.14 $27,522.14-
CITY OF PIEDMONT 53,518.58 $3,57.9.58
$2,843.17
•
CITY OF PINOLE $1,211.71 $1,221. 71
CITY 01:1' PINOLE $3,232.54 $3,232.54
CLA.'ts CC:RPQAATION $164,378,45 $164,332.89 $164,332.89
CLEVITE aRIDGESTONE CO. $2,733.94 52,733.94
COAST FEDERAL BANK 57,476.29 5'7,476.29
caVIA PARTNERSHIP $1,793,303.81 $1, ]92, 401. En 51,792,401.B1
C'JANOKEH $49,063.07 $49,063.07 549,063.07
U~GUSSA CORPORATION $146,680.78. s9n,077.10 $971,077 10
• DEL MANUFACTURING COMPANY
OELAWARE SEAT COMPANY
DELHI GAS PIPELINE CORPORATIOII
522,552.14
$14, gO!'>. 38
547.209.72
$22,851.14
S50, 209.72
522, as!. 14
S14,905.3B
$50,209.72
DIAMOND WALNUT GROWERS $.5,996.84 $',421.34 57 ,421. j4
DOLE FOOD COMPANY, INC. 51,592,062.34 53,142,906.64 $3,142,906.64
DONNELLEY RECEIVABLE lNC. SlOB.26 $108.26
DUBLIN/SAN RAMON SRVCS DSTRCT $45,012.29 $45,352.57
•
$45,352.57
ELECTRIC POWER RESEARCH INST. S117, 9SD. 60 $138,982.22 $138,982.22
ENSR CORPOAATION DELAWARE 5nO,506.19 $110.506.56 $110,506.56
" ~.
01/19/92
HllXIMUM
• CR.EIH'!OR
SCHEDULED
AMOUNT
PROOF OF CLAIM
AMOUNT
POTENTIAL
CLAIK
FEDERAL EXPRESS CORPORATION ..s..:J,_"-', 530,432,796.91 $28,319,089.05 S28,.319,089.DS
FIRST CAPITAL LIFE INSRNCE CO. $1:27,193.73 $139,054.00 5139,054.00
GENSTU STOW PRODUCTS COMPAID;: 551B,023.:.15 $603,765.00 $603,165.00
GLENDALE AOVEN'l'I Sf MED. CTR. $625,353.80 $625,109.60 $625,109.80
• LUCASF'lLH, LTD.
KABON, NUGENT & COMP AllY
HASON, NUGENT & OOKPNAY
$21,432.34
$954,798.68
S2,OOD.OO
S2.00D.OO
$22,175.B4
$985,407.53
S12,17S.B4
59B5,407.53
$2,000.00
HAINE CENTRAL RAIL~OAOS CO. $411.01 S411.01
MCCUTCHEN,DOYLE,BROWN& ENERSEN $99.993.14 $100,959.51 $100,959.51
Me! TELgCOMUNrCATIONS CORP. $102.95 $102.95
METROHEDr,.. COKPANY $60,6B5.10 S6.l
S6l ,317.00 $61,317.00
HILLS COLLEGE
MILLS S2,163.98
$2,163.98 Sl1,508.89
$11,508.89 Sl1, 50a, 89
511,508,89
MONROE SYST~MS FOR BUS1~SS S660,777.55 $650,177. SS ~660,j77.SS
INC
HT. DIABLO HOSPITAL Sl46,OJ3.47 SH.a,724.1>0 5160,724.60
NATIONAL DAT~ CORP. $6B,911.30 $84, .l4 7. B2 $80\1,141.£12
NATION~ DAT~ PAYMENT SYSTEMS S14,454.42 514,454.4'
NEe ELECTRO~ICS, INC. 5285,282.60 S33D,S9l.G9 5330,591. 69
$4,643.63
$45,222.8")
$45,222.81
$16,828.51
S4,643.63
RM MARKETING INC. $5,231.14 $5,231.14
ROCHESTE~ INSTITUTE OF TECH. Sl05,673.S7 $105,673.57
ROOT-LOWELL MANUFAC7URING CO. $35,745.10 $36,340.00 $36,340.00
ROSS STORES, INC. $701,843.46 5101,843.46 S"1 0 1 • 84.3 . .4 6
• S , S CREDIT COKPANIES, INC.
S.D. WARREN CO.
5158,'329.53
53,206,607.68 S3,206,607.68
$158,929.53
$3,206,607.68
02/19/92
C-4
KJl"XIMUH
• CREDITOR
SCHEbULEO
AMOUNT
PttooP' OF c:LAIH
AMODN'J'
POTENTIAL
CLAIM
Sl,590.29
$10,347.03
$2.366.56
510,347.03
S2,:ibG.S6
$1.590.29
50S ENVIRONMENTAL TCHNLG, INC. -S675.S3 $8,362.82 $8,362.82
SOSTAA 53,836.03 $6 1 306.52 $6,306.52
50UTRLAND CORP. EMPLOYEES TRU. 5178,993.18 5178,993.14 S178,993.14
'SPRINGFIELD SUG~ , PRDCTS CO. $351,.36(1.47 $446,261.18 $446,261.19
SPRINGFIELD TERMINAL RAIL. co. $51,705.83 551,705.83
SPRINGFIELD TERMINAL RAIL. CO. 5188,420.35 $296 1 014.77 $296,014.77
STANFORD UNIVERSITY HOSPITAL 53,512,722.32 $.3,512,722.32 p,512,722 • .l2
STATE OF ARKANSAS 550,011. S6 S50,01l.Se.
SUN MICROSYSTEMS FEDERAL, INC. :)23,660.37 524,011.79 $24,011 • .,e
SUN MlcR05YSTEMS or CALIFORNI~ 53,085.14 53,070.86 $3,070.86
SUN MICROSYSTEKS, INC. $801,887.97 5191,227_64 $791,22'.64
•
$1,101,103.57 51.1Q1,/03.57
UNITED SAVINGS BANK 595,71LlS ~96,6?S. 7S 596,675.15
VALLEY FIG GROWERS 55,988.90 $7,227.26 $7,227.26
,/ ~ • f
02/19/92
c-s
• EXHIBITS to Section 2255 Reply - Page 27
•
COMSOLln~~ BB~
•
HAMILTON 'rAPT C::US'l'OMER c:LJI.IM5
MA..XIMUK
• CREDITOR
SCHEDULED
AMOUNT
PROOF OF CLAIM
AMOUNT
POTENTIAL
CLAIM
• WOODBRIDGE
HooDBRIOGE
WOODBRIDGE
HOLDINGS, INC.
INOAC, INC.
SALES & ENGINEERING
$458.47
$30,799.40
$4,285.'36
$209,353.81 $209;353.81
$30,199.40
S4.2QS.96
•
02/19/92
6
•
MAXIMUM
SCHEDULED PROOF OF cr.l\I:X POTENTIAL
CREDITOR AMOUNT AMOUNT CLAIM
•
ASDOUJlIAN, JEI\NNE $124.78 S724.78 S724.78
BENIPAYO, CONSUELO
CONSUELa SB21.76 $3,903.90 53 / 903.90
BERNSTEIN, MATTHEW sioa.77 $708.71 5708. n
BE~EY, ELIZABETH LABRADO S1,606.80 $1.606.80 Sl,606.S0
ilLACHAASKI, DAN $1,003.89 $1,003.89 51,003.89
BRISCOE, EDWARD E. $6,167.64 S/1.J9i.Ol $71,397.01
SULDA, ERLnm~ 5574.74 $514.74 5574.14
•
BtJ'R.R.F!ARDT, DIANE 5527.81 $527.BO $527.80
BUSENBARRICK, DIANA S580.03 $643.28 $643.28
CALLAHAN, PATRICIA $160.35 $160.35 $160.35
CARRIZALES, JUAN-JOSE $334. BS $334.89 5334.89
5334,89
CATAH, RODEL $335. &2 $335.62 $3.35.62
CHANG, ALBEJIT $1,120.66 $1,120.66 .!il, 120. 66.
CHENG, ).!ELODY $2,OSO.65 $2,050.65 $2,050.65
CONOVER, SALLY $439.B7 5439.87 S439.97
• CORPUS, ANDREW
CROWE, CINDY
DANCEL I JUnE
$416.60
$2,255.22
::;56L01
S416.59
$2,255.22
$561. 01
~416.
S2,25!>.22
$561.0:'1
59
• BOLLOWAY, FREDERIC
HUNPHRIES, THOMAS
A • aACH:KJ>.
J AHJ A RACH:KJ>. T
KEEL I JAMES
S690.34
$2,366.Bo
$6'1-.01
$1,623.93
$5,90B.El2
$2,366.60
567.01
$1,623.92
55,908.82
52,366.80
567.01
$1,623.92
KLEINBERG, JERRY 53,674.74 $3,674.14
\tRAU'l'HAM'ER, KtrRT S2,000.00 52,000.00
KWOK GLORIA $1,646.86 $1,646.86 $1,646.B5
• LAFLIN, FlOBERT
LANDIG, MICHAEL
LAU, STEVEN
$144.03
$2,119.46 S1,391.B.3
$16,000.00
$16,000-00
$744.03
$1,391. 83
OOQ. 00
SHi, 000.
LEE, curoY $453.44 5453.44 $453.44
LILLEF, .JOHN SI,189.50 $3,321.45 $3,321.45
MAGEE, ELIZABETH 51,643.53 $1,643.53 51,643.53
HANLEY, P1l.UL $988.10 5988.10 $988.10
• MJl.THERS, LINDA
MENDOZA, ARACELI
MILLER, HARILl{N
SlBB.54
SlBB.S4
$432. BB
$38.86
S288.54
$432.88
538.86
$288.54
5432.88
531,,. 136
$31.,.
02/19/92
C·7
C-7
•
EXHIBITS to Section 2255 Reply - Page 29
• , CONSOLID~D B8~ATE
•
HAMILTON TAn BKPLOY'E!: CLAIMS
• CREDITOR
SCHEDULED
AMOUNT
PROOF OF CLAIM
AMOUNT
MAXIMUM
POTENTIAL
CLAIM
• MURPHY, KATflLEEN
MG, DON
OBERHOLTZER, DONNA
5&64.14
5414 .10
SSB4.B4
$564.14
5884.94
SS64.14
$414.70
SSB4.84
PMAOAN 1 EDWIN $387.54 SlS1.S;I $387.54
PATERA, JEnNIFER $411. 9B S41L9B $411.9B
QUIGLEY, JOHN $240.52 5240.52 $240.52
. ROY, JO'flAN'NA
SAHAROFF, BASIL
SANCHEZ. LORENE
SARMIENTO, ROMULO
51,011. S9
$620.14
$1.39
$453.98
S2,09B.B8
$620.14
$1,703.33
$2,098.88
$6:20.14
$1.39
$1,703.33
SCHORA, BARSRA Sl,BHL 71 511,115.l'1 $11,715.11
S HEENAN. RICHA.R.D Sl,296.45 Sl,298.45 51,298.45
SrKlN, ROBERT $717.70 S737.70 Si3i.iO
S'l'RUTZ, STEPHEN 51,88:2. 10 $1,882.10 Sl,882.10
• SOSHANSK~,
TARTAXOVSK~,
ANATOLY
'XABANGCtl'R1t., TONY
YEVGENIYA
TUR.t,A • FLORA MlER.XEY
$667.20
$193.00
SlOO.02
$427.20
5667.20
5793.00
S427.20
5661.20
S793.00
$lOO.02
$427.20
TUTT, GEORGE 5346.37 $346.37 5346.37
TYLER, JAMES WM. 52,043.44 51..4,501. 17 S14, 501 . .,.,
VIRAY, DIVINA (DEBBIE) S721. 56 S72l.S6 S121.S6
WATSON, iCATIE $848.00 S848.00 S848.00
ZAMBRANA, LILLIAN $835.03 SBlS.03 5B35.03
•
.
•
•
02/19/92
•
EXHIBITS to Section 2255 Reply - Page 30
•
CONSOLIDATED ~S~TE
•
IiA.MILT'OH T..I\.l"'X TR.1U)E CIJUMS
• CREDITOR
SCHEDULED
AAOUHT
PROOF OF CLAII-I
AMOUNT
MAXIMUM
POTENTIAL
CLAIM
• ASSOCIATEO LIHOUSINES
ASSOCIATED LOOSE LEAF
AT'T
5692.94
SaSL33
51,759.09
$779.76
$851.33
$179.16
$851.33
$1,759.09
AT&T $55.31 SSS.31
AT&T $542.28 $542.28
AT&T $1,475.39 Sl,'75.39
BANe ONE LEASING CORP. 57,390.40 P ,390 .4Q
• BANK OF KAWAU
BEKINS
BOISE CASCADE OFFlCE PRODUCTS
$1,360.25
5170.13
5571. S3
Sl, )60. 25
$170.13
$571.53
$1,360.25
S170.13
BROOK FURNIT(JJ.U: RENTAL $428.:.11 $10,270.94 $10,2'10.94
C.lI.LHODN GUHP SPILU'.J\1'l & STACY 59,0:21.47 S8 ,an. 47
CATAPULT S175.00 S175.00 $175.00
CELLtTL.AR ONE $400.83 $4.00.83
COCORlCO PATISSERIE $158.39 $158.39
COMP IJ TOWN $651.65 5651.65
CONTRACT OFfICE GROgp $134. Ei4 $134.84
DUPL~X PRODUCTS, INC. $3,270.14 S3,270.14 53,270.14
E..P.TON' FINANCIAL S22,669.50 $22,669.50
ENTRE COMPUrER CENTER $11,822.75 $11,822.75
EQUITABLE LIFE ASSURANCE $4,233.52 $5,650.40 55,660.40
• FOX HARDWARE
GENERAL ELECTRIC CAPITAL CORP
GILTSPOR/SAN FRANCISCO
$62.36 562 • .36
5962.64
$6,620.96
$62.36
$962.64
$6,620.96
GOLDEN GATEWAY CENTER 5B15.91 $815.91
GOODWIN, THOMPSON W. $700.00 $700.DO
KAKILTON MANAGEMENT pO,ODO.DO $30,000.00
RE.ADQtl1l.RTERS COMPANIES S83.81 $83.81
D2/19/92
C-9
• EXHIBITS to Section 2255 Reply - Page 31
•
CONSOLIDATED E~A~
•
BAMlLroH n.P'T 7:MJ)E c:::::t.JI.IHIll
MAXIMUM
• CREDITOi<
SCHEDULED
.!\MOUNT
PROOF OF CLAIM
AMOUN'f
POTENTIAL
CLAIM
$1.B7
$'20,350.90
$3,t!97.58
$166.62
$20,350.90
SJ,t:I97.sa
$166.62
S1. 87
VULCAN BINDER &: COVER $84.40 584.40
WEINBERG, DORON $16,000.00 $16,000.00
wtSTCORP SOFTWARE SYSTEMS, IN. $549.9/ $549.97
• WORD POWER
Tot.al:
$293.92
$1,894,052.76 51,146,1.3$.60
$293.92
~===,::;:==:::::::.=======
Sl,53S,Sl'3.13
•
02/19/92
10
• EXHIBITS to Section 2255 Reply - Page 32
•
COHSOLIDAXED BSTArE
•
o:J:'BER lU.NIUMN TAJ"1' CI..AIHS
• CREDITOR
SCHEDULED
AMOUNT
PROOF OF CLAIM
AMOUNT
AAX.IMUH
POTENTIAL
CUlM
•
02/19/92
C-11
•
EXHIBITS to Section 2255 Reply - Page 33
1
GILMORE F. DIEKMANN
PATRICIA H. CULLISON
2
BRONSON, BRONSON & McKINNON
505 Montgomery street
3
San Francisco, California 94111-2514
.4
Telephone: (415) 986-4200
8
UNITED STATES DISTRICT COURT
9
NORTHERN DISTRICT OF CALIFORNIA
10
Z
0 18 follows:
~
:0
19 I.
20
PARTIES
21 1.. Plaintiff FEDERAL EXPRESS CORPORATION ("Federal
22 Express ll ) is a corporation organized and existing 'under and by
23 virtue of the laws of the state of Delaware, and maintains its
24 principal place of business in Memphis, Tennessee.
25 2. Plaintiff is informed and believes and thereon alleges
26
that Defendant HAMILTON TAFT & COMPANY (IIHamilton Taft tl ) is a
27
corporation organized and existing under and by virtue of the
28 laws of the State of California and maintains its principal place
3
II.
A
JURISDICTION AND VENUE
5
3. This is an action for breach of contract, breach of
6
fiduciary duty, and breach of agency relationship arising, inter
7
alia, under the California Civil Code section 2322 et seg. The
8
amount in controversy exceeds the sum or value of Fifty Thousand
9
Dollars ($50,000) exclusive of interest and costs. The
10
jurisdiction of this Court is invoked pursuant to 28 U.S.C.
Z 11
.......
'.....J section 1332 .
Z
Z ..". 12
;:;;
~
4. Venue properly laid in this Court pursuant to 28
~
':.J I- :;
13
~ .::=.-
t.!J <:
l.I.l CI
u.s.c. section 1391(a), in that the claims involved arose in this
i-Z
:d
~ ~ 8 lA.
district.
~ ~ t;;
.;,
'CI
:>
15
z; ...J i""
~ o ~
:::E U
z; 16
=:::::i
~ ""
Q <
ct
III.
Z "" L:.
0 z 17
V'l
.(
III
GENERAL ALLEGATIONS
Z
0 18
c:::
~
19
Count One
20
(Breach of Contract)
21
5. Plaintiff realleges and incorporates by reference as
22
though fully set forth herein each and every allegation contained
23
in paragraphs 1 through 4 of this Complaint.
24
6. In December of 1989 Federal Express entered into a
25
payroll tax service contract with Hamilton Taft. Pursuant to
26
this agreement, Federal Express would wire transfer its employee
27
payroll taxes to Hamilton Taft. Under the contract Hamilton Taft
28
was then obligated to make disbursements to the appropriate
t..J !;j ~ 13
:2 ~ '<! rather than paying plaintiff's payroll taxes with the money
;1 f: Z
~
..,
5g
~ ~
14
transferred for that purpose, the money would be held for an
~
C\
15
additional 30 to 90 days. Plaintiff is informed and believes and
16
thereon alleges that in some cases defendant then used a
17 different client's incoming funds to pay Federal Express taxes
18 and any federal or state taxing agency penalties for late
19 payments.
20
9. Plaintiff is informed and believes that in other cases,
21
Federal Express taxes simply were not paid, and penalties may be
22
accruing.
23
10. Defendant has further breached the contract by not
24
providing original tax receipts evidencing the tax payments as
25
requested by plaintiff.
26
11. As a result of defendant's breach of contract plaintiff
27
has been damaged in excess of $50,000~ In order to discovery the
28
true extent of its damages plaintiff is in need of information
6
count Two
7
(Breach of Fiduciary Duty)
8
12. Plaintiff realleges and incorporates by reference as
9
though fully set forth herein each and every allegation contained
10
in paragraphs 1 through 11 of this Complaint.
z 11
0 13. Plaintiff is the trustee of the tax funds withheld from
z
Z "'!'
:;;
12
the wages of its employee. Plaintiff, as trustee of these funds,
~ ~
;J f- ~ 13
I.Il a\
Ul < is a fiduciary of the withheld funds for the purpose of paying
~
r:
III
z:
:::: 0
14
- >- C
y :.:.:
0
C; the required amounts to the united states, and state and local
..0
:c
c:">
15
~
agencies.
Z ..J
:.n
:z
::! 0 - 16
-.t!. u
co .....
Z.
.0( 14. As custodian of these funds, defendant owed a fiduciary
0::
Z ..... ;.:.
- 0
0 z 17
"J")
<{
(,f.J
duty to the plaintiff to transmit these funds to the appropriate
Z
0 18
:::::: taxing agency promptly and in the full amount. Defendant also
;::0
19
had a fiduciary duty to invest these funds as a reasonably
20
prudent investor investing his own money would have done so as
21
not to jeopardize the principle. On information and belief
22
plaintiff alleges that by investing in high risk non-liquid
23
loans, defendant has breached this fiduciary duty.
24
25
Count Three
26
(Breach of Agency Relationship)
27
15. Plaintiff hereby realleges and incorporates by
28
reference as though fully set forth herein paragraphs 1 through
8 Count Four
9
(Injunctive Relief)
10 23. Plaintiff hereby realleges and incorporates by
Z 11 reference as though fully set forth herein paragraphs 1 through
0
Z
z 12 22 of this complaint.
~
u ~ 13 24. Unless defendant is restrained by appropriate
~ ~
~ ~ 0 14
>-
Z ,...
c
M
"<:T
injunctive relief herein from destroying or otherwise disposing
:is
0'1
~
15 of tax receipts and other information in its control documenting
zv~
~ 0 ~
~ ~ ~ 16 the use and transfer of plaintiff's employee tax funds, and
.r'\ <t
Z~ ~ fl:
0 z 17 unless defendant is restrained by appropriate injunctive relief
IJ') <t
III
Z
0 18 from continuing to operate the "ponzi scheme", and unless
c::!
~
19 defendant is ordered to immediately produce tax receipts and/or
20 other information regarding the transfer and use of funds,
21 plaintiff will suffer immediate and irreparable injury for which
22 there is no adequate remedy at law herein.
23 WHEREFORE, plaintiff prays for judgment against defendant as
24 follows:
25 1. For preliminary injunctive relief restraining or
26
otherwise preventing defendant from destroying tax receipts
27
and/or other information regarding the transfer of payment of
28
plaintiff's payroll taxes as alleged, pending trial;
13
JURy DEMAND
1.4
Plaintiff Federal Express Corporation hereby makes demand
15 for jury.
16
BY:Qz(~~
19
20
PATRICIA H. CULLISON
21 Attorneys for Plaintiff
22
23
24
25
26
28
-
FedEx Frets Over $16 Million
log eU of tNsc fUndS W'ttb the ptOflel' fav·
4'mnltl'lt ~f!CY as tUpub1ted by ecmtr!l.~!.
~tr, Af!TIlIt1'I)!\g 6.lyeNd INJfY nullkmJ to
1111 0\Im f>rlllllf IrU"S III a bnd of Pom::\
scheme now 01\ Ult verre o( collll.p5!- Some
By B.4U'H T, K(NC Ja. Ham1ItM Tall CWlICl'1N!tIl cc.nfirm tile dl
SltaIl iltorll"'>rll'" orr" .. w....... a"l"ll~~ '''Ull''' ..... \ets.!tm.!, alId Mr, Solodor! uttmateS !.hat
Wt year s FO!1l1!1 of JuJy p!rty at t.bt tht-y t.lXa.I nearly noo mUllan.
l,l')(,lG-acre COu\:llt C raneb near Hl!.!ntllon T1i!t. It rul'1l!l out. Is (1M (J{ llie
TexlS. "'U II l'CeDt neb!
0111 hllliitlit IA>; r.ftlCl!Ul:Il'I in tnt ClllllltrY. But
The 2&0 rutsts ft\'t [Nate<! to B. rodeo In ~ tblS 1.i'I11 a ~t ~ to be II! rigM
lJ'!!D3, !he R'lWI)t 01 C1lill'llry IUi1 1I0W. I.ASt Yt lif. Ibt [RS ~t tfIe lag 'I1m.e
~twetfl p.ayday and ux payment" from
SI.rn1t, 2M 8.ft hour of firelJrOl'ki a.f-
Ur e slt'dOlllll dinner. Hlnt 4aY1 to one wlth I! JU'ilJJn1Wd de·
tM host ~d rmtll o-.mer. COOrue C. ~I pt«est, sharply eulU.lhng /'!W"ttllS.
"c."IIP~Anm;lrong Jr .. was ulebrQl.\llr 11 ~tg playetJ lite ADP artd Qa.nltAmtr1ca
I
pefS4!lalldfld of il'Id~lulenee day: HJs b· I!enmtt Ill!' better lees by Ollertnc e«n-
mer hId )USt eDmDltle4 an l8'f1\Onth jlU f1\tte payroll se~ !
A«.Dtdlt1f 1£1 Mr. Bi>lodaH. t!'Ie lure for
Il.'nn for J.!I.W)6erlng druC' !'!'lotie)'.
'Tbe eX'Q'tvara.n.u was DOU!wortl:\y. lven Mr. AmlStrllllf \IIU flat proftts 00\ hue. I
lOWly \lQT'tfUlIttO cash (laws. Al:te:S'& to
by !.be S'W!dard$ of Texas' bytone nI)'
boom ~ 1l.Iltfi at! lSS8 Oup ihat money bAs htlped hlm c~&ee It Uti )
.lliNtronr. IIOW yean llld. warked u a rtyle lie cou.!rl ooly lIre.!un of durin: Ul\cw' I
S16.,{lOO-a yw I'trem.an e.ni1 b.ad a l\.I.slOI'Y Oi tlreba.lst shifli. II \lfe style ttw would al· r
1:101 tepam baJlk Joans in 19a!l. lI.e de· low hmi to ,tar In hI.s own ~ lUiyQme i
hr V/tshK and m~ 'OallM WCIlIUI\ he
clared Iltrr.on.tl DWl:tIptty .ftu the fatl·
ure I)r i tDUlU bUSU'less be ran ()41 ~ U!l'd UI rut It Irt lOOl!t;' pam. I
&Ide-l.I!mporary worken; IIJred by Mr •
Al1'Il.Str onr sprayed Ilre-ri!ta.rdanl mateMalI
How It WlIrUd
~re'i how !It.tt &ebeme ~e(I, tw)N'
I
II
00 tile .r.eel tta.mts af amunetdal tKItld· llIi tc Mr, SQlodoffs memClr611i1um filed
Ing&. With ted,raJ !!.Olin doeltmtnts: ~ ».1IJ.c: I
r
~tJEIIIs til ~ • idc.1. w;u It1l1U.Sk the loti",yment 01 tAxes
- tleq:in SUCb nven:a..l1. Mr. .ums:tn:lng tn" s:u.rting quwr.lt'a not too t.oog1I. AU j
ytIl.1 dA I.s repc.rt to W ~ lil!ncy tbJit you
t:h.e.pt'St t&o c:a.m:t UJj VII1tl1 b\lI-
are
~
maid. tbl! ~ p!Llf'rIlent \aU 11.9
lIew qualUf bq:!ns. 10\1 t&ke W fIN
I
f\lla.rtl!t' a fill last q\l.lll'teT"& 1
bole. 1M villi forward Dtlt'
qlJJ:!'!!r, WIUle Pl)"Rlefits recelft!j mew . I
~'Yt qllUfElr Iftep .lmUI, It n.e bl.r
I1vranj for all !.bill ~l~·filltnr la the. ehunk
01 UI'lpal6 \.IU~ tram tM ttart.lI:Ir QIlAI'!.eT
Irs; tou.1Id R\Oory.
1M tVllnrua.ll.:r. hCll ....5.!tl.nr rea wry
c.mly. Than wIltre tht Panii aspect
emnts l.h. 'I'M u:tS t.sse'f.ll,eS A. lCl"/. fIe!lAlIV
phls U!.tete:JI on even' Ill"' ~I. UJ)-
~ ~ Ut t:e.m1I\.r at least ltl"h q\lluterly
l~ &.n.nually I lie ~our "foond Vlo.ney"
&CId p..u.s It along to me \.aX man, yOI.I wl!!
have til dI.r the holt that !Dnell< deeper u.cn
tIm.t ....n:lUnd to rep.alr tilt ~.
.u th~ bltH. itt birrer LTId rnt.rI"t c:.Ilel\1S
I
• II'f.. blnfll, 1M el'Wlee mcna.s:es that 50l'1'l.I.'
tUttll Will rtt a peNlJty nCilkt Slid aJIk '
~l1i questions. llUlcI! HamIltOn tatl' l
EXHIBITS to Section
~ .
• 2255 l.U
Reply - Page 41
~ 1!S'''6Ii!\\S!thit'' ~I.teQtt,
Ali. Col\l:l1l.ltJ
"I._~. "",,_ .... ):1404>
ae-
..
- ·~
-L
~STRONG'
Mr · Baker:\f7
RE: CONNIE/C. JR.,
AKA 9HIP~STRONG;
DBAvHAMILTON TAFT AND COMPANY;
32ND FLOOR, SPEAR STREET TOWER,
SAN FRANCISCO, CALIFORNIA;
FRAUD BY WIRE; MAIL FRAUD; TAX FRAUD i
00: SAN FRANCISCO
L.~S
Enclosure
1 - Mr. Jones 1 - Mr. OIHara
1 - Mr. Baker 1 - Mr. Esposito
1 - Mr. Potts 1 - Special Assistants, CIn
1 - Mr. Bryant
GDM:gdm/sw (9)
(JA~
EXHIBITS to Section 2255 Reply - Page 43
COURT
NORTHERN DISTRICT
CT FORNIA
I CALIFORNIA
MONDAY JANUARY It 1997
VOLUME PAGES 286B
868 - 3048
FOR PLAINTIFF:
FF:
450 AVENUE
SAN , CALIFORNIA 94102
BY: GEORGE D.
D, HARDY ESQ.
I
RONALD D
D. SMETANA, ESQ.
ASSISTANT UNITED STATES
SANTA 90404
SOLOMON
lBB MARKET STREET, SUITE 1080
388 10S0
SAN 94111
COURT REPORTER!
REPORTER I
COMPUTERIZED BY XSCRIBE
EXHIBITS to Section
JAMES YEOMANS,
2255 Reply
REPORTER, USDC, 415
- Page 44
863-5179
415-863-5179 1
2885
MATTER HERE.
THIS.
DATES ARE WRONG. APPARENTLY,I IT WAS TWO YEARS AFTER THE FACT.
APPARENTLY
STATEMENTS BY ARMSTRONG.
STATEMENTS.
THIS MORNING TALKED WITH THE FBI SPECIAL AGENT INVOLVED WHO
DIFFERENT COMPANY.
YOUR ATTENTION.
THEY CAN REVIEW THEM, THEY CAN DECIDE WHETHER OR NOT THEYJRE
ROBINS?
'.u ...... n~ WITH WHAT WE'VE GOT AND THAT THE ONLY QUESTION THEN
WE GO ..~~~=~
WITNESS?
GOVERNMENT COUNSEL HERE AND MS. ROBINS, WHICH SHE WAS ASSISTING
EXHIBITS
YEOMANS, to Section
OFFICIAL REPORTER, 2255 Reply - Page
USDC, 415-863-5179
47
2888
COMPUTECH AND THAT SHE WAS PAID BY THE FBI FOR WHAT, I DON'T
KNOW, TIME, EXPENSES, I'M NOT SURE WHAT. SHE DID RECORD
AND WHEN WE'VE FINISHED WITH THE TESTIMONY THAT THE PLAINTIFF
LOW ON WITNESSES.
THE COURT: HOW SOON DO YOU THINK YOU CAN GET THE
OR TYPEWRITTEN FORM?
THAT'S POSSIBLE.
EXHIBITS to Section
JAMES YEOMANS I
2255 Reply - Page 49
REPORTER, USOC! 415-863-5179
2890
REVIEW AND IF NEED BE WE COULD BRING HER BACK BEFORE YOU START
YOUR CASE.
FOR YOU TO REVIEW IT AND FIGURE OUT WHAT YOU WANT TO DO.
OF MR. FOWLES. I'M NOT SURE IT'S FAIR FOR US TO HAVE TO BEGIN
UP ON CROSS-EXAMINATION.
BEFORE YOU SEE THE STATEMENTS. WHAT I'M DEBATING HERE, SHOULD
EXHIBITS
JAMES YEOMANS, to Section
OFFICIAL REPORTER, 2255 Reply - Page
USDC, 415-863-5179
50
2891
OF ALL, A
A GREAT OF FFI THE GOVERNMENT'S
YET.
AND I DON'T EVEN KNOW IF MR. SMETANA OR MR. HARDY KNOWS AT THIS
Jk~ES
EXHIBITS
YEOr4ANS, to Section
OFFICIAL REPORTER,2255
USDC, Reply - Page
415-863-5179 51
2892
MATTER.
NOT FAIR TO THE DEFENSE TO HAVE THEM HAVE TO TAKE MS. ROBINS ON
CROSS AND TIPTOE AROUND THE QUESTION WITHOUT KNOWING THE WHOLE
STORY, THAT YOU GOT THE -- KNOW THE WHOLE STORY. AND BY THE
YOU CROSS-EXAMINE.
MR. BROWN: BUT I'M GOING ONE STEP BEYOND THAT FOR MY
OUR DEFENSE, IN AND ANALYZING ALL THESE CASES AND RECEIVING ALL
THE WORK THE GOVERNMENT DID SO NICELY IN ALL THESE BINDERS AND
BOOKS AND LOOKING AT ALL THE 302'S, WE HAD TWO 302'S FROM THIS
TIME AND SHE HAD GRAND JURY TESTIMONY. IT'S NOT MENTIONED
CASE AT ALL, BUT I'M NOT PREPARED TO STRIKE HER, BUT CERTAINLY
NOT GOING TO FORCE YOU FOLKS TO DO YOUR CROSS BEFORE YOU HAVE A
THIS PERSON HAS HAD CONSTANT CONTACT WITH THE FBI AND
NO INDICATING
MUST HAVE MET WITH MR. YAMAGUCHI, AND MR. SMETANA AT POINT
EXHIBITS
JAMES YEOMANS, to Section
OFFICIAL REPORTER, 2255 Reply - Page
USDC, 415-863 5179
53
2894
AGGRESSIVE WAY.
THAT I SHOULD NOT LET MS. ROBINS TESTIFY HERE TODAY UNTIL
RE READY TO CROSS.
THE WHOLE STORY. AND ONCE YOU HAVE THE AND THEN,
TO BE A WITNESS AT ALL.
STAND NOW AND VOIR DIRE HER OUTSIDE THE PRESENCE THE
JURy WHAT SHE DID, WHAT THE STATEMENTS WERE, AND TRY F
EXHIBITS
JAMES YEOMANS, to Section
OFFICIAL REPORTER, 2255
USDC, Reply
USDe, - Page
415-863-5179 54
2895
COMBINED IN SOME WAY AND SHE KEPT THAT INFORMATION FROM THEM.
SEE THE ?
RECENT ADDITION.
THE TAFT.
usnc, 415-863-5179
EXHIBITS to Section 2255
JAMES YEOMANS, OFFICIAL REPORTER,
Reply - Page 55
1 MICHAEL J. YAMAGUCHI
United states Attorney
2
JOEL R. LEVIN
3 C~ief, Criminal Division
41 RONALD D. SMETANA
Special Assistant U.S. Attorney
5 GEORGE D. HARDY
Assistant U.S. Attorney
6
450 Golden Gate Avenue
7 San Francisco, CA 94102
Telephone: (415) 436-6851
II
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
10
UNITED STATES OF AKBRlCA, ) No. OR 94-0276 CAL
11 )
Plaintiff, ) All!'lI!'IDAVIT Oll!' WILLARD L.
12 ) HATCHER, JR. Illi SUPPORT
v. ) OF GQVBRmU!JIIT'S EX-PARTE
) SUBHXSSION
CONNIE C. ARHSTRONG, JR., Iilnd )
14 RICHARD A.FOlllrLES, )
)
15 Dllfondanta. )
---------------)
16
14 indictment of Armstrong.
15 9. After review of the tapes and documents by myself,
24 authorship, that document has been copied for the Court's review.
26 the Dallas FBI are being made available for the Court's in camera
AFFIDAvrrOF wn.LARD L HATCHER, JR
IN SUPPORT OF GOVEIlNMIlNl"S !lX-FARTE
SUBMISSION 3
Ii
8
COUNTY OF SAN FRANCISCO )
9 ) SS.
STATE OF CALIFORNIA )
10
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Notory N:>IIc - Co1IlomlrJ
Son FrancIDCO CounIV
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Date 8/4/93
TO DALLAS, SAC
2 - DALLAS
(1) - SAN FRANCISCO
WLH/wlh
1. " '
NORTHERN OF
UNITED OF AMERICA, )
)
PLAHITIFF,
PLAINTIFF, )
}
VB.
VS. )J\ CR 94-0276 CAL
)
CONNIE C. ARMSTRONG, ,.• ,
I )}
A. FOWLES, )
)
DEFENDANTS. )
SAJ.V
SAN FORNIA
27, 1997
PAGES 3441 - 3639
ATTORNEY
AVENUE
,CALIFORNIA
I CALIFORNIA 102
BY:
BY; GE()RG~E
GEORGE D,.
D. I ESQ.
RONALD
n.'•./L'''.M..I..IJ.J D. SMETANA,
D.
ASSISTANT UNITED STATES
COMPUTERIZED BY XSCRIBE
EXHIBITS
JAMES YEOMANS, to Section
OFFICIAL 2255 Reply - Page 61
-863-5179
3446
3446
1 THE COURT;
COURT: YES. COMPUCHECK
COMPUCHECK INVESTIGATION?
INVESTIGATION? IS
IS THAT
THAT
5 SAW.
9 MR. ARMSTRONG.
PROVIDED TO COUNSEL FOR MR. ARMSTRONG.
12 TO DO?
13 MR. BROWN:
BROWN: LET'S TALK
TALK ABOUT
ABOUT THESE
THESE TAPES.
TAPES. II KNOW
KNOW --
,
....".1',
14 FIRST, I KNOW THE COURT IS PROBABLY
PROBABLY VERY
VERY CONCERNED,
CONCERNED, II KNOW
KNOW WE
WE
22
22 WAS CLEARLY REPRESENTED BY COUNSEL
COUNSEL AND
AND WHILE
WHILE THERE
THERE WAS,
WAS, II
23
23 BELIEVE, GRAND JURY GOING ON IN
IN THIS
THIS CASE,
CASE, MS.
MS. ROBINS
ROBINS WAS
WAS
24
24 ACTING AS AN INFORMANT FOR THE
THE FBI
FBI DOWN
DOWN IN
IN DALLAS.
DALLAS. IT
IT REALLY
REALLY
2S
25 IS HARD TO IMAGINE, WITH THE FACT
FACT THAT
THAT SHE
SHE WAS
WAS A
A GRAND
GRAND JURY
JURY
JAMES EXHIBITS
JAMES YEOMANS,
YEOMANS, to Section
OFFICIAL
OFFICIAL REPORTER, 2255
REPORTER, USDC, Reply
USDC, - Page
415-863-5179
415-863-5179 62
3447
3447
1 HERE, THE
WITNESS OF THE GOVERNMENT HERE, THE FBI
FBI HERE
HERE IN
IN LOS
LOS ANGELES
ANGELES DID
DID
22 ARMSTRONG ON THEM, SO --
--
23
23 MR. BROWN: I'LL TELL
TELL YOU,
YOU, YOUR
YOUR HONOR,
HONOR, WE
WE WERE
WERE TOLD
TOLD
25
25 SPECIFICALLY MENTIONED HAMILTON
HAMILTON TAFT.
TAFT. THE
THE GOVERNMENT
GOVERNMENT
EXHIBITS
JAMES YEOMANS, to Section
OFFICIAL REPORTER, 2255
REPORTER, USDC, Reply
USDC, - Page
415-863-5179
415-863-5179 63
3448
3448
3 ARMSTRONG BUT
18 GO AHEAD.
22 WERE ARRIVING.
23 THE
THE COURT: DOUBT YOU HAVE NOT HAD
HAD TIME TO
TO LI
LISTEN
STEN
EXHIBITS
JAMES YEOMANS, to Section
OFFICIAL REPORTER, 2255
USDC/ Reply - Page
415-863-5179
415-863-5179 64
3449
3449
1 TO TAKE
NEED AN OPPORTUNITY TO REVIEW THESE AND/ IF WE NEED TO TAKE A
A
5 THERB'S
THERE'S ALL KINDS OF MOTIONS, AS THE COURT
COURT KNOWS,
KNOWS,
19 FOR.
23 ANOTHER I WOOLDN'T
WOULDN'T THINK YOU'D WANT TO DO THAT.
THAT. YOUR
YOUR
10 THE GOVERNMENT.
18 HOURS.
24
24 CASE. THESE TAPES HAVE THREE HOURS OF COMMENTS BY -- -- AND
AND
EXHIBITS
JAMES YEOMANS, to Section
OFFICIAL REPORTER, 2255
USDC, Reply - Page
415-863-5179
415-863-5179 66
3451
3451
8 THEY'
THEY' ,, SO
SO BE
BE RUDE
RUDE
12 WHAT YOU'RE TO DO
II AND YOU'RE
YOU'RE WITH
WITH
14
15 MR.
MR. BROWN: WE CAN
CAN DO IT
IT TOMORROW.
TOMORROW. II UNDERSTAND
UNDERSTAND WHAT
WHAT
18 IT AND IT EVERYTHING.
EVERYTHING.
19 COURT: I DON'T
DONIT SEE
SEE HOW.
HOW. II CAN'T
CAN'T
23
23 VERY LITTLE OF SUBSTANCE, IF ANYTHING
ANYTHING AT
AT ALL,, NOTHING
NOTHING THAT
THAT
24
24 HASN'T BEEN SAID OR HEARD
EXHIBITS to Section
REPORTER, 2255
JAMES YEOMANS, OFFICIAL REPORTER, USDC, Reply
USDC, 415-863- 5179
415-863
Page
5179 67
3452
6 MR.
EXHIBITSCIAL
YEOMANS, to Section
REPORTER, 2255 Reply - Page 68
415-863-5179
I
1 MICHAEL J. YAMAGUCHI
United states Attorney
2
JOEL R. LEVIN
3 Chief, Criminal Division
4 RONALD D. SMETANA
Special Assistant U.S. Attorney
5 GEORGE D. HARDY
Assistant U.S. Attorney r ",
6
' . ·~t ., .":t':
. ~''''
''''"''
450 Golden Gate Avenue
7 San Francisco, CA 94102
Telephone: (415) 436-6851
8
19 .L.. Introduction
\
23 the reasons set forth below, the government opposes this motion.
24 II. Argument
25 ~ Statement of facts.
000156
26 II
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 2
0001.57
J EXHIBITS to Section 2255 Reply - Page 70
1 .a.... Defendant's Reliance on In re Hamilton Taft & Co. is
misplaced.
2
20 the government was not a party to the litigation at the time the
21 opinion was rendered by the Ninth Circuit. When the petition for
22 rehearing was filed the Court obviously recognized that its opinion
23 could well interfere with the government·s right and ability to
24 collect employee taxes and thus invited the government to
25 participate in the case as an amicus curiae. The government did
26 file a brief advocating the theory that the funds were held by
26 taxes with Client B's and Client C's money;" the government would
000160
EXHIBITS to Section 2255 Reply - Page 73
1 expect that all of A, Band C's payments would be made from the
2 collective contributions from A, Band C. Rather, defendant is
3 before the court, in part, because he bought a ranch with A's money
4 paid to Hamilton Taft for a January tax payment (while
5 intentionally failing to make A's tax payment), and then used Band
6 C's funds paid to Hamilton Taft in April for their April tax
7 payment to make A's January payment while failing to make Band C's
8 April tax payment.
9 Indeed, the description of a Ponzi scheme in In re United
10 Energy Corp., 944 F.2d 589, 590 at fn.l (9th Cir. 1991)2 describes
11 precisely what defendant was doing. Defendant made tax payments
12 for clients with monies obtained from later tax payments from other
13 clients. By funnelling later payments to earlier taxes defendant
14 created the illusion that taxes were being timely paid and that
15 (bankrupt) Hamilton Taft had the financial wherewithal to pay the
16 taxes, inducing continued use of Hamilton Taft's services, all the
17 while siphoning out funds for defendant's personal benefit. The
18 only sorcery involved was the defendant's sleight of hand;
19 unfortunately for him, the audience caught on to the trick!
,
20 IL.. There is no basis for the dismissal of Counts Seven through
Twenty-One.
21
Regardless of how the relationship between Hamilton Taft
22
23 2"A Ponzi scheme is a fraudulent arrangement in which an
entity makes payments to investors from monies obtained from later
24 investors The fraud consists of funnelling proceeds
received from new investors in guise of profits from the alleged
25 business venture, thereby cultivating an illusion that a legitimate
profit-making business opportunity exists and inducing further
26 investment.
GOVERNMENT'S OPPOSITION TO ARMSTRONG'S
MOTION TO DISMISS AND/OR REQUEST FOR
PRETRIAL INSTRUCTION 6
000161
J EXHIBITS to Section 2255 Reply - Page 74
1 and its clients is categorized, Counts Seven through Twenty-One
2 withstand attack.
3 Defendant appears to argue that the government can
4 proceed on counts One through Six, the fraud in the inducement, but
5 that proceeding on the other counts is "illogical, excessive and
6 totally prejudicial • • • " (Defendant's Memorandum 14:15-16) As he
7 has done throughout these proceedings, defendant has made a lengthy
8 and colorful argument all the while ignoring the one document
9 relevant to the inquiry -- the Indictment. It does not depend on
10 the existence of any particular relationship between defendant and
11 the victim companies. Rather it alleges a fraudulent course of
12 conduct in addition to and beyond the inducement to keep the money
13 flowing into Hamilton Taft. The Indictment alleges fraud on an
14 ongoing basis to keep money flowing into Hamilton Taft by a cover-
15 up3, false tax returns 4 , a change in cover-up methodology5, the
000162
EXHIBITS to Section 2255 Reply - Page 75
1 Defendant argues, however, that all allegations of the
2 Indictment, other than the fraud in the inducement allegations, are
3 legally insufficient to charge criminal activity because of the
4 Ninth Circuit opinion of In re Hamilton Taft & Co. which
5 establishes (or so defendant claims) the "law of the case" contrary
6 to the government's charging theory. The "law of the case" that
7 defendant sees in that opinion and on which defendant focuses his
8 argument is the conclusion that the relationship between Hamilton
9 Taft and its clients was one of "debtor-creditor", and not a trust
10 relationship. From that "law of the case", the defendant seeks to
11 extrapolate to the further conclusion that the defendant was free
12 to do with the clients' tax money whatever he wanted, because it
13 was Hamilton Taft's "property". Hence, he argues that any criminal
14 fraud allegations in the Indictment which describe what the
15 defendant did with client's tax money after the contracts were
16 signed must be legally insufficient, and therefore dismissed. His
17 argument is further based on the factual predicate that Hamilton
18 Taft complied w-ith the terms of the contracts with its clients.
1 the legal relationship between Hamilton Taft and its clients was
2 one of "debtor-credi tor", the further coneIus ion that the defendant
3 could do whatever he wished with the tax money (send it to a secret
4 Swiss bank account?) does not logically, or legally, follow. Can
5 a debtor never defraud a creditor? The answer is obvious. In
6 fact, the defendant acknowledged as much when he said:
7 "For instance, had Mr. Armstrong s imply taken clients'
monies and opened a Swiss bank account, while totally
8 ignoring his contractual duty to pay their taxes, he
almost certainly could be charged with engaging in a
9 scheme to defraud." (Motion, p. 9)
10 The defendant asserts as a matter of fact that he complied
11 with his contractual duty to pay the taxes of the Hamilton Taft
12 clients. The government intends to prove that he did not comply
13 with his contractual dutiesl Jury trials are the vehicle by which
14 such factual disputes are resolved, not motions to dismiss. There
15 is no basis for this Court to dismiss counts Seven through Twenty-
16 One.
17 .L. The Court should not make a finding of "the law of the case."
18 The government is persuaded by defendant's eloquence in
19 arguing that this court should not follow In re Hamilton Taft & Co.
20 (Defendant's Memorandum, 15:16-18), but cannot agree that the
26 trusts, as noted above it is not "the law of the case", and clearly
000164
EXHIBITS to Section 2255 Reply - Page 77
~
I
1 should not be used to justify making a ruling on an issue that is
2 nothing but a red herring.
3 It is clear what the defendant is attempting to do. He
4 wants the jury not to hear relevant evidence. He doesn't want the
5 jury to hear about the Ranch acquisition, or the limousine rides,
6 or the luxury jet purchase. He also doesn't want the jury to hear
7 what his lawyers and senior management were telling him--that he
8 couldn't use client tax money for long-term personal investments.
9 He also doesn't want the jury to hear about the lies he told his
10 employees regarding the source of funds for his ranch and other
11 purchases. He doesn't want the jury to hear about the lies he told
12 the victim companies in order to lull them into a false sense of
13 security. But all of this evidence is relevant to prove the
14 charges in the Indictment.
15 To his credit, the defendant spells out the remarkable
16 ramifications of a decision to declare that In re Hamilton Taft &
17 Co. represents the "law of the case". He wants:
18 1. Defense counsel to be able to refer to monies at
issue, in both opening and closing statements as the
19 property of Hamilton Taft or Hamilton Taft cash
flow;
20
2. The government not to refer to those monies as
21 "client monies" or "client funds" and not to state
or imply that Hamilton Taft held those monies in
22 trust;
23 3. The government not to present evidence of any advice
which Mr. Armstrong received from lawyers or other
24 experts, to the extent that such advice was
inconsistent with the "law of the case";
25
4. The court to instruct the jury that monies, once
26 delivered to Hamilton Taft, became the property of
1 III. Conclusion
2 For the foregoing reasons, the government respectfully
3 submits that the motion to dismiss be denied and that the Court
4 deny the request to make In re Hamilton Taft & Co. the law of the
5 case.
6 DATED: November 5, 1996 Respectfully submitted,
7 MICH~~J. YAMAGUCHI
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
HOnlG1
J EXHIBITS to Section 2255 Reply - Page 80
fD-302a (R~v 11-15-83)
196A-SF-93255
b7C
~onlmuahon of FD-302 of ~- - - - ......1...- • On _-----=.-----.;____
2/ B / 9 3 J Page _ 2 _
196A-SP-93255
196A-SF-93255
million dollar figure being used at Hamilton Taft around the time
ARMSTRONG took control of Hamilton Taft. She said that the $20
million dollars represented the negative capital and the negative
cash flow at Hamilton Taft. She said that she felt at that time
that this much capital would be necessary to keep Hamilton Taft a
viable company. The financial condition of Hamilton Taft was
constantly being communicated to ARMSTRONG and his attorneys
during the legal actions. I
'said that she sat through
all of the depositions during ARMSTRONG's legal action to gain
control of Hamilton Taft.
- 1 -
FEDERAL BUREAU OF INVESTIGATION
-.]ID
Invesligationon 2/10/~:J at Sa);} :P'];a1=lci~co, Caloi.;fornil ile 11 J96A-SF-93255 Sub C
~I I b7C
by SA f,YNN HATCHER PKM la an Dale dictated 2 11 0 192
~M I ; I - ..
If This document conta.in~ neither recommendations nor conclusions of the FBI. It Is the property of the FBr and is loaned to your agtncy;
1\ and ils contents are not to be c1blrlbuted outside your aaency.
f:>A-SF-93255 Sub C
---_... _-- - - - -
EXHIBITS to Section 2255 Reply - Page 85
FD-301a (~cv. 11-15-83)
~5A-SF-93255 Sub C
b7C
196A-SF-93255
196A-SF-93255
I
Hamilton gaft International
Jsaw the bUdget that_
ae
d make SOme sorf of deal.
. prepared for
ARMSTRONG. The bUdget indicated that some $50 million dollars of
capital was to be introduced back into HT this month and
eventually catch up all the delinquent taxes due by October of
this year.
b7C
I Ibelieves what' Istated in his written
statement about the actions of the client response unit is a lie.
He was managin; tn~! unit. The intent was not to mislead ~
clients. r _ ~hO was the supervisor in that
department weu d verIfy the unit's intent.
~
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EXHIBITS to Section
b7C2255
I Reply - Page 89
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