Transcripts, Week 3, 10-12-11

206
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Criminal Action No. 09-cr-00266-CMA UNITED STATES OF AMERICA, Plaintiff, v. 1. 2. 3. 4. 5. 6. DAVID A. BANKS; DEMETRIUS K. HARPER, a/k/a KEN HARPER; GARY L. WALKER; CLINTON A. STEWART, a/k/a C. ALFRED STEWART; DAVID A. ZIRPOLO; and KENDRICK BARNES,
Defendants. __________________________________________________________ REPORTER'S TRANSCRIPT (Jury Trial Day 12) __________________________________________________________ Proceedings before the HONORABLE CHRISTINE M. ARGUELLO, Judge, United States District Court, for the District of Colorado, commencing at 9:02 a.m. on the 12th day of October 2011, Alfred A. Arraj United States Courthouse, Denver, Colorado. A P P E A R A N C E S FOR THE PLAINTIFF: MATTHEW T. KIRSCH and SUNEETA HAZRA, U.S. Attorney's Office - Denver, 1225 17th St., Suite 700, Denver, CO 80202 FOR THE DEFENDANTS: Pro Se
DARLENE M. MARTINEZ, RMR, CRR United States District Court For the District of Colorado
207
I N D E X WITNESSES: JOHN SHANNON DIRECT EXAMINATION BY MR. BANKS DIRECT EXAMINATION BY MR. WALKER DIRECT EXAMINATION BY MR. ZIRPOLO CROSS-EXAMINATION BY MS. HAZRA REDIRECT EXAMINATION BY MR. BANKS COLLIN REESE DIRECT EXAMINATION BY MR. WALKER DIRECT EXAMINATION BY MR. BANKS CROSS-EXAMINATION BY MR. KIRSCH REDIRECT EXAMINATION BY MR. WALKER REDIRECT EXAMINATION BY MR. BANKS JOSEPH THURMAN DIRECT EXAMINATION BY MR. BANKS DIRECT EXAMINATION BY MR. WALKER DIRECT EXAMINATION BY MR. BARNES DIRECT EXAMINATION BY MR. ZIRPOLO DIRECT EXAMINATION BY MR. HARPER CROSS-EXAMINATION BY MR. KIRSCH REDIRECT EXAMINATION BY MR. BANKS REDIRECT EXAMINATION BY MR. WALKER SAM THURMAN, SR. DIRECT EXAMINATION BY MR. WALKER E X H I B I T S NO. D403 D404 No. ......................................... .......................................... .......................................... ADMITTED 272 277 REFUSED PAGE 214 234 251 252 259 265 279 283 285 287 308 339 344 347 349 352 383 392 394
208
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
OCTOBER 12, 2011 (Proceedings commence at 9:02 a.m.) (The following is had in open court, outside the hearing and presence of the jury.) THE COURT: You may be seated.
Any matters to be brought to my attention before we bring in the jury? MR. WALKER: Yes, Your Honor. Your Honor, we would
request the entire transcript from yesterday's court session. THE COURT: All right. You need to submit it in And just submit that to
writing the way you normally do.
Ms. Martinez, and then I sign off on that. MR. WALKER: THE COURT: MR. WALKER: That would be good. All right. And also we will move -- we move for a
mistrial for extreme prejudice and our inability to receive a fair trial before the current jury after hearing Mr. Barnes' cross-examination during his testimony which he was compelled to give, which violated his fundamental right not to testify. As well, Mr. Barnes was not advised
of his rights, and the Tenth Circuit has adopted the Curtis Advisement, which he was not provided before testifying. Further, we request that you, Your Honor, recuse
209
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
yourself from this trial and this case based on our view of your bias and partiality towards the Government. is all I have, Your Honor. THE COURT: MR. KIRSCH: All right. Mr. Kirsch? That
Your Honor, those all sounded like the The
same motions that were made yesterday to me.
defendants didn't articulate any new grounds for any of those motions. We would rest on the responses that we
made yesterday and on the record that the Court made yesterday in response to all of those motions when they were made yesterday. THE COURT: All right. Court has ruled on the
motion for mistrial. Mr. Barnes? MR. BARNES: I would say, in addition, I did suffer
extreme prejudice, not -- basically, when I took the stand again, I was required to basically, over and over again, repeat the Fifth Amendment to the additional questions that the Court had, instead of having the jury be informed that Mr. Barnes will no longer testify because he is going to exercise his Fifth Amendment right. Now, I did not knowingly, willingly or intelligently give up my right to testify. compelled by the Court to do so. I was
And basically relying on
the Court's authority, I understood I needed to testify.

210
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
But, again, that was severe prejudice in front of the jury, because sitting there making me have to go through, over and over again, pleading the Fifth, is going to give them an assumption that I am basically hiding -hiding something for -- just hiding with the other defendants, and not being truthful. So, to me, and to the Court, that is going to look very tainted, as if, you know, all of a sudden now he is not willing to talk when, really, I was not under the impression that I waived my Fifth Amendment right. thought I had a right not to speak. MR. KIRSCH: Your Honor, the decision that I
Mr. Barnes made yesterday was clearly a knowing and voluntary choice. He had the option of having his entire He had the option of having no He
testimony stricken.
additional cross-examination, and getting it stricken. had the option of answering those questions. The Court fully informed Mr. Barnes before that testimony resumed what his options were; that included having the testimony stricken or answering the questions
or asserting the Fifth and having the jury draw an adverse inference from that. That was a fully informed choice
that Mr. Barnes made yesterday, and he should not be heard to claim now that it was not. MR. BARNES: But, Your Honor, I was not going to
211
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
give up my right for an appeal because he wanted to strike things from the testimony. I am not going to give
up things that were stated on the stand and then have things stricken and not be available for appeal. option was not a good option. The issue is, the Court could have said, you know, Mr. Barnes is not going to continue to testify, he is going to assert his Fifth Amendment rights and not continue and not taking the stand again. But when asked, So that
you said, take the stand again, and I was required to answer several questions back from Mr. Kirsch and plead the Fifth to each question. situation happened. THE COURT: Yes, because you are attempting to do But And that is why that
all you can to make sure you have appellate basis. you were given the option of having your testimony
stricken before you had to plead the Fifth to anything. advised you prior to that time that by taking the stand, under Tenth Circuit law, you had waived your right to the Fifth Amendment privilege, and you would be either
required to answer the question, or if you pled the Fifth, that the Government would be able to argue an adverse inference to the jury. That is the choice that you made, and I believe it was fully informed. I already ruled on the motion for
212
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
mistrial, which is denied.
The motion for recusal, I do If
not think there is any basis for me to recuse myself.
anything, I've leaned over backwards to let the defendants introduce into evidence, evidence which on the cusp of being excludable, in an effort to ensure that the defendants have a fair opportunity to present their defense in this case. So for those reasons, the defendants' motions are denied. All right. MR. BARNES: Anything else? Another issue. On the minutes it is
stating "Lawanna Clark program" and "Lawanna Clark software." THE COURT: Ms. Seeman. I have already addressed that with That
She is not familiar with the case.
should be "CILC" in both of those places. All right. MR. ZIRPOLO: Mr. Zirpolo? I have a question based on the One of the things that I noticed
proceedings yesterday.
yesterday that didn't happen when the prosecution was up, is you had us go through each one of our witnesses and explain why some of the witnesses were going to be testifying. I don't understand why that didn't happen
with Mr. Kirsch, because now some of the witnesses that he may not have understood why they were coming up to
213
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
testify, now he has informed information about those witnesses that we would not have provided previously. THE COURT: Well, the reason is because for three
days in a row you have had me send the jury home after only about a half a day's worth of testimony, despite being warned that you needed to have a full day of testimony here. more. I was not going to delay this case any
I needed to know which witnesses you subpoenaed,
which witnesses were intended to be here, and what the relevance of some of the witnesses was where it was not apparent, whether their testimony was relevant at all. And that is the reason why I had you go through your witness list. And I hope today you are going to be
prepared to give a full day's worth of testimony from your witnesses. MR. ZIRPOLO: THE COURT: the jury. (The following is had in open court, in the hearing and presence of the jury.) THE COURT: Welcome back. The defendants may call their next witness. MR. BANKS: Shannon.
Thank you. Ms. Seeman, would you please bring in
You may be seated.
Good morning.
Your Honor, the defense calls John
214
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
COURTROOM DEPUTY:
Your attention, please.
JOHN SHANNON having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: THE COURT: MR. BANKS: John Shannon, J-O-H-N S-H-A-N-N-O-N. You may proceed. Thank you, Your Honor. DIRECT EXAMINATION BY MR. BANKS: Q. A. Q. A. Q. A. (BY MR. BANKS) Good morning. Can you tell us where you currently work? I work for a consultant company. And what is your role with the consulting company? I manage IT projects; information technology Good morning, Mr. Shannon.
projects. Q. And prior to your work for your current -- in your
current company, where did you work previously? A. Directly before that, I worked for a security Before that I worked for IRP. Before that I was
company.
with the New York City Police Department, Sergeant. Q. Okay. And in your role at the New York City Police Can you describe
Department -- I will say NYPD for short.

215
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
a little bit of your duties there at the NYPD? A. At the end of my career as the Commanding Officer of
the Investigative Liaison Unit, which basically provided support for the New York City Police Department's Detective Bureau; information technology support, cold case homicides for, specifically, the federal housing properties, confidential informants. things. Q. Budgets, et cetera. So not so glamorous
But that was my role.
In your role, did you, as a commanding officer of the
Investigative Liaison Unit, did you evaluate technology and recommend technology solutions to the Detective Bureau? A. Q. Yes, I did. And you also mentioned budgets. Can you explain a
little bit about your budgetary work there at the Detective Bureau? A. Sure. Specifically, the budgets that I managed were At the time, there was not a
for some of the divisions.
Special Victims' Division within the New York City Police Department. It was actually different detectives just So I created the
assigned to special victims' crimes.
budget for them for the new Special Victim's Division. Further, I was engaged by the Department to always review officers that accumulated too much overtime. Q. Now, during the course of your time there at the
216
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
NYPD, did you come in contact with a company by the name of IRP Solutions? A. Q. Yes. Can you describe how you were contacted or how that
first contact took place? A. I cannot clearly recall how the meeting took place,
but I know it was focused on evaluating investigative software. Q. And at such a time, do you remember the individuals
that you were engaged with from IRP? A. There was you, David Banks. There was a gentleman,
who at that time I believe was introduced as a judge, a retired judge. There was -- actually, other than those --
than you two, I can't quite remember who that was at the first meetings. Q. Okay. And were you -- and was that at the time that
you were with -- still employed by the NYPD? A. Q. A. Q. Yes, it was. And on about what time did you retire from the NYPD? Toward the end of 2003. Okay. And after your retirement, were you contacted
again by members or representatives of IRP? A. Q. Yes. And do you remember -- recall what purpose you were
contacted for?
217
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Yes.
They wanted to engage me as a subject matter
expert. Q. And if you can explain "subject matter expert" to the
jury, what that would entail? A. It was to bring my experience with investigative life
cycles, to bring that experience and apply it to the software that IRP was developing. Q. A. Did you have any other roles with IRP? Yeah. They wanted to use me to engage or target
specific individuals in the New York City Police Department or other agencies that may have contacts that I became aware of or knew over the course of 20 years in the police department. Q. And do you recall the first time that you reviewed
the first version of the software that you saw from IRP? A. Q. Vaguely. Okay. Let's move on. What activities did you
perform, not only within the NYPD, but other agencies on behalf of your -- of being a subject matter expert with IRP? A. Q. I'm actually not sure if I understand your question. Just describe a little bit of the work you'd done at
the NYPD on behalf of IRP Solutions, as well as any other agencies you may have interfaced with as far as the CILC software was concerned?
218
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Well, after I retired, if there were individuals that
I thought would be interested in investigative software, I would try to contact them. If there were individuals that
already retired from the police department and moved on to other agencies, whether it was different counties, different cities, I would try to engage them. And if I
knew of any other individuals that may be interested, whether it was federal, state, local levels, I would try to engage them, even if they weren't retired New York City, if they were people who over 20 years that I became familiar with from different law enforcement agencies. Q. Now, did you attend a number of presentations
regarding the CILC software? A. I can remember -- I can remember vaguely about two of
them, yes. Q. Okay. Do you recall providing specific, what you
call subject matter expertise, for the software specifically related to the NYPD? A. Q. Yes. Now, do you remember the goal of -- set forth by IRP
Solutions as it related to the NYPD? A. Well, the goal, I would think, is to get them
interested in the software to eventually procure it. Q. Okay. And can you tell us a little bit about your
knowledge -DARLENE M. MARTINEZ, RMR, CRR United States District Court For the District of Colorado
219
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Can I add on to that?
And it was also to -- you have
to realize, it was the New York City Police Department. So many of the things that they did could be copied at different agencies. And what they incorporated in their
software may be useful to another large enterprise or large agency, like a Philadelphia or an LA or something like that. So some of the things were similar across
large agencies, the way they conducted investigations. Q. Now, during the course of your -- during the course
of you working at headquarters for the Detective Bureau, did you generally deal with a lot of vendors? A. We've dealt with some vendors over the course of my
tenure, yes. Q. Okay. What was the general process -- I'll withdraw
and ask a different question. What was -- during presentations of the IRP software at the NYPD, what was the general view of the software? A. Q. As I recall, it was very well received. And would you classify -- what was your view of the
software? A. At that time, I thought it was cutting edge. I
thought it did a fantastic job of rationalizing the investigative process. I thought it pretty much
encompassed all of the contributors to an investigation

220
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
along the entire life cycle of an investigation.
thought, at that time, that it was the best software I had ever seen. Q. And describe a little bit, if you can, about how the
Detective Bureau goes about through -- the process the Detective Bureau goes about to procure software. A. Q. A. Q. I don't actually remember how they do it. You don't? No. Would you say that -- I'll withdraw that. Now, on occasion -- well, who did you interact with most at IRP? A. Q. David Banks, Sam Thurman, Mr. Walker and Mr. Stewart. Okay. And during those -- were you aware of -May I have one moment, Your Honor? You may. During your process of -- would you
MR. BANKS: THE COURT: Q. (BY MR. BANKS)
say you, in your role with IRP, socialized the software throughout various places within the department? A. Socialized the software; spoke about it, its ability
to help the PD, yes. Q. Did you -- do you recall whether or not you engaged
Chief Zeigler with regard to the software? A. I actually don't remember. I know he was, but I
don't remember when or -- I know I had engaged him in

221
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
conversation about it. Q. Okay. Do you recall a presentation done for Chief
Zeigler? A. Q. No, I do not. What about Chief Robert Gianelli? Do you remember
Mr. Gianelli being engaged with regards to the software? A. Q. No, I do not. I will get back to some more things at the NYPD. How
were you employed through IRP to do work on behalf of IRP? A. Q. I was employed through staffing companies. Okay. And do you recall how many staffing companies
you worked for? A. Q. Not specifically. Okay. I remember several.
Do you recall having any sort of conversations
with the staffing companies about your belief about IRP's software being a thing of value for the NYPD? A. Q. No, I don't remember that. All right. Do you recall having conversations with
David Banks regarding a pressing need to close business at the NYPD? MS. HAZRA: THE COURT: now it's not. Objection, Your Honor, hearsay. Well, the answer would be, but right
Overruled. Thank you, Your Honor. Did you have any conversations with
MS. HAZRA: Q. (BY MR. BANKS)
222
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Mr. Banks regarding the NYPD or closing business at the NYPD? A. Q. I'm sure I did. Let me ask you this. Can you give your view of the
IRP executives as it relates to them doing business at the NYPD? MS. HAZRA: lack of foundation. THE COURT: Q. (BY MR. BANKS) Sustained. Did representatives at IRP attend Objection, Your Honor, speculation and
presentations with you at the NYPD? A. Q. Yes. And during those presentations -how did those --
what was the result of those presentations? A. I'm not really sure what you mean "the result." In
terms of what? Q. A. Q. Of the IRP executives' presentation? As I recall, it was very positive. Very positive.
Did you expect that IRP would be able to gain a
contract from the NYPD? MS. HAZRA: THE COURT: Q. (BY MR. BANKS) Objection, Your Honor, relevance. And conclusory. Sustained.
What was your view -- can you
describe a little bit about your thoughts regarding IRP Solutions gaining a contract with the NYPD?
223
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
MS. HAZRA: THE COURT: (BY MR. BANKS) MR. BANKS: THE COURT: (BY MR. BANKS)
Objection, Your Honor, relevance again. Sustained. Describe for me, Mr. Shannon -May I have one moment, Your Honor? You may. Was one of your roles at the NYPD to
sell the software -- one of your roles with IRP to sell the software to the NYPD? A. Q. I was not engaged as a salesman, no. Did you assist in sales-based activities and
presentations related to sales activities? A. Q. A. Q. I can recall one, yes. One time? One time that I can recall. So -- and in doing -- let me ask you this. When
there were presentations from IRP to the NYPD, can you describe a little bit about what those presentations involved? A. It was, as I recall, it was an overview of the
features and functionality of the software. Q. I'm going to -- do you recall the executives at NYPD
that attended certain presentations and demonstrations of the software? A. Off hand, I can't really remember who was at the
presentations.
224
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Do you recall a meeting with you, Chief Gianelli,
Inspector Hines at the Millennium Hilton Hotel? MS. HAZRA: THE COURT: Q. (BY MR. BANKS) Objection, Your Honor, leading. Sustained. Did you ever have a presentation at
the Millenium Hilton Hotel? A. Q. Actually, I don't recall that. Did you ever discuss IRP's debts -- did you have a
conversation with Mr. Banks regarding IRP's debts? A. I can't remember a specific conversation about debts,
other than -MS. HAZRA: Objection, Your Honor, hearsay if he is
going to say what Mr. Banks said. THE COURT: Q. (BY MR. BANKS) Sustained. What was your knowledge -- were you
aware if IRP had business debts? A. Q. Yes. And was one of the purposes -- was IRP engaged in
gaining a contract at the NYPD? A. Q. Yes, I would say so. Was that one of your stated -- one of your
responsibilities; to help IRP gain a contract? A. yes. MR. BANKS: Your Honor, I would like to admit
Through my subject matter expertise and contacts,
225
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
defense exhibit -- ask for Defense Exhibit 356.0 -- let me lay a little more foundation, Your Honor. Q. (BY MR. BANKS) Do you recall an e-mail communication
you sent to Mr. Banks after the raid -- after he contacted you the day of the raid by the FBI? A. Q. I remember an e-mail, yes. Okay. Do you remember saying that IRP went beyond
the call of duty with regards to the NYPD? A. I don't know. MS. HAZRA: hearsay. THE COURT: MR. BANKS: Sustained. Your Honor, I would like to move to It's an e-mail communication. Get him to lay Objection, Your Honor, this is all
admit Defense Exhibit 356. THE COURT:
Show it to the witness.
the foundation, then you can offer it. MR. BANKS: THE COURT:
Have it marked.
It is already marked, Your Honor. What number is it? Defense Exhibit D356.0. And do I have a copy of it
COURTROOM DEPUTY: THE COURT: up here anywhere? MR. BANKS: THE COURT: MR. BANKS: THE COURT:
All right.
Does the Judge have a copy? Is it in the notebook? It is in the notebook, Your Honor. What is the letter number?
226
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
MR. BANKS: THE COURT: found it. MR. BANKS: THE COURT:
One moment, Your Honor. I see it. It is in my notebook. I
Okay. Go ahead, lay the foundation, ask him
if he recognizes it. Q. (BY MR. BANKS) Do you recognize that communication,
Mr. Shannon? A. Q. A. Portions of it, yes. When you say "portions of it," what do you mean? This document, there are things contained in it that I just don't know
I actually believe probably were said. if this is my document. THE COURT: actual document? THE WITNESS: THE COURT: (BY MR. BANKS) Correct. All right.
So you don't know if this is your
Did you -- after reviewing that
document, do you recall having conversations with -- as far as that document refreshes your recollection, as to conversations with -- that you had with Mr. Banks concerning the need to close business at the NYPD? A. Q. No. I -- no.
The section related to -MS. HAZRA: I object, Your Honor.

227
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
THE COURT: evidence.
Mr. Banks it is not admitted into He doesn't
He has not laid the foundation.
know if it is his document. contents of that document.
You can't testify as to You can ask him direct
questions, but not in a leading basis. Q. (BY MR. BANKS) Is your e-mail address
JohnShannon@optonline.net? A. Q. Yes. And if that document came from
JohnShannon@optonline.net would that reasonably be your document? A. Q. No. Would you be able to explain how that document --
would you explain how that document came from your e-mail address -- how it would come without your knowledge? A. Well, I don't know that this came from my e-mail Secondly, by looking at the document, it is
address.
quite clear to me that I did not word submit this entire document. Q. Did you have a conversation with Mr. Banks after the
raid regarding the raid? THE COURT: THE WITNESS: it, yes. Q. (BY MR. BANKS) And what was your thoughts -- I will
Go ahead. I recall having a conversation about
228
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
withdraw that question. MR. BANKS: THE COURT: Q. (BY MR. BANKS) Can I have a moment, Your Honor? You may. Mr. Shannon, you said you remember
portions of that document. A. Q. I remember saying some of these things, yes. And what do you remember saying? MS. HAZRA: Objection, Your Honor, hearsay, to the
extent it is asking him to actually talk about the document, the statements in the document. THE COURT: Q. (BY MR. BANKS) Sustained. What do you recall -- does that
document refresh your recollection to some things you had communicated to IRP? A. Q. Yes. And can you tell us what those things are? MR. KIRSCH: THE COURT: Objection, Your Honor, hearsay. Well, do you have an independent
recollection now that you actually said those things? THE WITNESS: THE COURT: There are a few items. Okay. You can testify to anything you
have an actual recollection of, not reading from the letter, itself. MS. HAZRA: Your Honor, then I would also object on
relevance, since these are conversations after February of

229
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
2005. THE COURT: Mr. Banks, what is the relevance of
what he told you after the raid? MR. BANKS: Well, Mr. Shannon was actually pulled
from a staffing company shortly after the raid, Your Honor, and -THE COURT: MR. BANKS: What is the relevance? The relevance is it's Mr. Shannon's
opinions -- this was prior to -- he's testifying about information prior to the raid, not necessarily in the document. said. THE COURT: MR. BANKS: But these are his personal opinions. Yes. Not necessarily opinions, but his He has an independent recollection of things he
personal recollection of things he said to representatives of IRP. THE COURT: relevance. Q. I'm going to sustain on the basis of
It is not relevant. Mr. Shannon, what -- in your dealings Was the goal to
(BY MR. BANKS)
at IRP -- I guess I will ask this again. gain a contract with the NYPD? A. Q.
IRP's goal was to gain a contract with the NYPD. And did they fulfill requests and field requests from
the NYPD regarding modification to the software? A. As I recall, yes.

230
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
And how did they -- how effective was their response
to the request of the Department? A. Q. Extremely effective. So can you explain a little bit about presentations Did requests to
that would happen -- let me ask you this.
see different modifications or functionality come from presentations or meetings? A. Q. Probably sometimes, yes. And IRP, to the best of your recollection, would go
back, make changes to the software; correct? MS. HAZRA: THE COURT: MS. HAZRA: Q. (BY MR. BANKS) Objection, Your Honor, leading. Sustained. Hearsay. Once you made a request, can you
describe for the Court how IRP responded to those requests? A. Q. In a very efficient, timely manner. Would you say -- can you describe a little bit -- do
you recall any of the functionality that they were doing on behalf of the Department? A. I believe there was a -- not only for the NYPD, but
throughout law enforcement, there appeared to be a -- for link analysis among cases, a desire for. That
intelligence information was given to IRP, and they created additional features and functionality in their
231
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
software to allow, perhaps, cases -- individual, disparate cases, they would find the link between those cases. that comes to mind. Q. Now, did you ever have a conversation with the And
Philadelphia Police Department regarding software? A. Q. Yes. And what was the result of those presentations? MS. HAZRA: THE COURT: THE WITNESS: positive. Q. (BY MR. BANKS) Do you recall who you spoke to at Objection, Your Honor, relevance. Overruled. As I recall, it was very, very
Philadelphia Police Department? A. Q. No, I do not. Do you recall how many meetings you had with the
Philadelphia Police Department? A. Q. A. Teleconference or in person? Either one. I can recall a minimum of one in person. But I'm
fairly sure there were more, at least teleconferences. But at least one in person. Q. A. Q. Now, did you engage with Nassau County? Yes. And what was the results of that, of your work for
IRP with Nassau County?

232
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
They voiced an interest in the software. Do you recall -- now, did you also -- what about, did
you have an opportunity to engage with Suffolk County with regard to the software? A. Q. A. Q. Yes. I would ask about another agency, Miami-Dade? I don't recall Miami-Dade. Do you recall any other work that IRP was engaged in
at the federal level? A. I know IRP told me they were working with -- actually
thought it was the FBI, on looking at their case management software. Q. Did you ever provide IRP with any documents related
to that that would assist them in developing features and functionality for the NYPD? A. Q. Probably, yes. Do you recall any conversations regarding the need to
close business with the NYPD for the purpose of paying debts? MS. HAZRA: THE COURT: Q. (BY MR. BANKS) Objection, Your Honor, hearsay. Sustained. Can you describe the discretionary
spending, say, for the Detective Bureau and how that works? MS. HAZRA: Objection, Your Honor, relevance.
233
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that. Q. Q.
THE COURT: (BY MR. BANKS)
Foundation, sustained. During the course -- you said you
handled budgets at the NYPD; correct? A. Q. Yes. And during the course of that work at the NYPD, was
any sort of discretionary -- did you handle any sort of discretionary money for the NYPD? A. ago. Q. With confidential informants -- that was a long time I think with confidential informants we did. Okay. Can you explain how discretionary spending
works at the Department, say for the Detective Bureau you worked? MS. HAZRA: THE COURT: Objection, Your Honor, relevance. I still don't think you laid an Sustained. Your Honor.
appropriate foundation. MR. BANKS: (BY MR. BANKS) Okay.
At the time that IRP Solutions -- the
CILC solution was presented to the NYPD, would you say from -- that it was the only software of its kind? MS. HAZRA: foundation. THE COURT: MR. BANKS: THE COURT: Sustained. Your Honor -You have to establish how he would know Objection, Your Honor, lack of
234
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
MR. BANKS: THE COURT: (BY MR. BANKS)
I thought I established it earlier. No. Did you work and bill hours to a
staffing company? A. Q. Yes. Did you ever falsify any hours with a staffing
company? A. Q. No, I did not. Did anybody ever ask you to falsify your time with
the staffing company? A. Q. No. Did you ever perform work on behalf of another person In other words, did you
and they got paid from your work?
ever give your paycheck to somebody else? A. No, except for my wife. MR. BANKS: I have nothing further, Your Honor. I
will turn it over to Mr. Walker. THE COURT: All right. Mr. Walker?
DIRECT EXAMINATION BY MR. WALKER: Q. Mr. Shannon, I know it has been many years since you
did this work, so I can understand how it is hard to recall some things, so I will try to get through these things and lay some foundation to refresh. In your role as subject matter expert with IRP
235
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Solutions, you were working with the company to help improve the software; is that true? A. Q. That's true. And in helping the company to improve the software,
at some point you received -- did you receive a copy of the CILC software? A. Q. A. Q. Yes. And did you work with that copy of the CILC software? Yes. And do you recall making recommendations to help
improve the software? A. Q. Yes. Do you recall specifically making recommendations
about -MS. HAZRA: Objection, Your Honor, to the leading
nature of these questions. THE COURT: MS. HAZRA: THE COURT: Q. I am sorry? Leading, Your Honor. Yes, sustained. Do you remember any areas where you
(BY MR. WALKER)
may have made suggestions for improvement? A. Yes. There could be quite a few. From the original
software that I saw while I was still a member of the New York City Police Department, to where it eventually evolved, there were a whole bunch of different features
236
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
and functionalities added to it, based on the type of investigation and the different contributors to that investigation. few changes. Q. And would you agree that you were instrumental in So I would say, yeah, there were quite a
helping to make those improvements to the CILC software by way of suggestions? MS. HAZRA: THE COURT: THE WITNESS: Q. (BY MR. WALKER) Objection, Your Honor, leading again. Overruled. I would like to think I helped, yes. Do you recall, or are you familiar
with a form at the NYPD called the DD5? A. Q. Yes. Can you explain what that form -- what that form's
purpose is? A. After an initial investigative document, the So the New York City
follow-up documents are called DD5s.
Police Department -- the initial document is called a 61 or a complaint report. And the follow-up tracks -- the It
DD5 is actually the follow-up to that initial report. tracks -- it is supposed to track everything an
investigator does relevant to that specific investigation, and literally everything. If they pulled a witness and the witness wasn't there. If they were on a stakeout. If they had
237
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
additional information on the crime. out the crime. crime.
If they were closing
If they were changing the status of the
It's a critical piece of information for a police
department. Q. And in the time period where you were engaged with
IRP Solutions, how was that form filled out? A. It was filled out manually by the police officers.
So you could have one initial form and literally hundreds of DD5s attached to that one form that were relevant to one case. Q. And do you recall identifying that as a need at the
NYPD to automate? A. Q. Yes. Do you remember working with IRP to produce software
to automate the DD5? A. Q. A. Yes. And do you recall that software being completed? I recall -- I recall what I believe to be a completed
software; a demo that was given to me, with that completed, yes. Q. And with the completion of the CILC DD5, do you
recall at any point talking with the NYPD about that capability? A. Q. Not specifically. Do you know a Mr. Belrose at the NYPD?
238
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
Yes, I do. What is his role, or what was his role at that time
at NYPD? A. Q. He was my successor after I retired. And as a successor, would he also be evaluating
software for NYPD? A. I don't know if his roles or responsibilities changed But if it was still the same roles and
after I left.
responsibilities, yes, it would. Q. Do you remember at any point discussing the DD5
capability provided in CILC with Mr. Belrose? A. Q. A. Q. A. No. Did you know a Mr. Onalfo at the NYPD? Yes. And what was his role at the NYPD? He is the Commissioner of Information Technology for
the New York City Police Department. Q. Do you recall having meetings with him or discussing
CILC with him? A. Q. No, I don't. Were you aware of IRP doing any demos for Mr. Onalfo
or his staff? A. Not that I remember. I am sorry, you said and his
staff? Q. And his staff.

239
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
Yes. Do you recall IRP doing demonstrations for
Mr. Onalfo's staff? A. Q. Yes. Did Mr. Onalfo or his staff provide feedback to you
on the CILC software? A. Q. Yes. And what was their feedback? MS. HAZRA: THE COURT: Q. Objection, Your Honor, hearsay. Sustained. And did you interpret their feedback
(BY MR. WALKER)
as positive about CILC? MS. HAZRA: THE COURT: Q. Objection, again, Your Honor. Relevance. Sustained.
(BY MR. WALKER)
You had mentioned earlier that at
the time that you reviewed the CILC software that -- I believe I am quoting you correctly. That at that time it
was the best software you had ever seen? A. Q. Yes. Did anyone at NYPD repeat that to you about CILC? MS. HAZRA: THE COURT: Q. Objection, Your Honor, hearsay. Sustained. In your role as a subject matter
(BY MR. WALKER)
expert for IRP at NYPD, and also talking with others at NYPD about the CILC capability, did you have expectations
240
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
that we would be able to sell the software to NYPD? MS. HAZRA: THE COURT: Sustained. Q. (BY MR. WALKER) Mr. Shannon, in your role with IRP Objection, Your Honor, relevance. Conclusory. Also lack of foundation.
at the NYPD, did you also, in addition to being a subject matter expert, provide guidance to help sell software? A. Q. Yes. And what type of guidance did you provide IRP to help
sell the software at NYPD? A. Well, I think by adding different features of
functionality, made the software more attractive to a large agency like the New York City Police Department. we discussed earlier, for example, the DD5 piece of it, that would be something that would help IRP sell that to a larger agency like the LA Police Department. Q. NYPD? A. Q. I believe so, yes. Did you think IRP would be able to sell the product Did you believe IRP had a viable product to sell to As
to NYPD? MS. HAZRA: THE COURT: MR. WALKER: THE COURT: Objection, Your Honor. Speculation. Sustained.
Could I have one moment, Your Honor? You may.

241
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
(BY MR. WALKER)
So, Mr. Shannon, we were discussing
sales.
And you said that you believed IRP had a viable
product for the NYPD? A. Q. Yes. And in your opinion, was it a product that would be
beneficial to NYPD? MR. KIRSCH: THE COURT: Q. Objection, Your Honor, relevance. Sustained. Mr. Shannon, let's go back a little
(BY MR. WALKER)
bit and talk about the DD5's capability that you mentioned earlier. And do you recall a letter from IRP Solutions to
NYPD concerning the DD5? A. Q. No, I don't. Were you aware of IRP sending copies of the CILC DD5
software to NYPD? A. I know they sent copies. I didn't know that it was
specifically CILC DD5. Q. So you were aware of IRP sending copies of CILC to
the NYPD? A. Q. Correct. As the liaison and subject matter expert for IRP at
NYPD, were you contacted about that software by the NYPD? A. Q. As I recall, I was, yes. And what was the nature of the conversations? MS. HAZRA: Objection, Your Honor, hearsay.
242
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
THE COURT:
Sustained. Did the NYPD utilize the software
(BY MR. WALKER)
that was sent to them from IRP? A. Not that I am aware of. MR. WALKER: THE COURT: Could I have one moment, Your Honor? You may. So, Mr. Shannon, you just said that
(BY MR. WALKER)
you were aware of IRP sending software to NYPD? A. Q. A. Q. Yes. And did the NYPD utilize that software? Not that I'm aware of. And as far as you know, was that software maintained
by the NYPD -- or retained, I am sorry, by the NYPD? A. Q. A. IRP. Q. A. And why was it sent back to IRP? Because -MS. HAZRA: speculation. Objection, Your Honor. I suspect it is Not that I'm aware of. Do you know the disposition of that software? Yes. If it is the same software, it was sent back to
Lack of foundation. Lack of foundation, sustained. Lay
THE COURT: more foundation. Q.
(BY MR. WALKER)
Mr. Shannon, were you involved in
any conversations regarding the NYPD sending that software

243
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
back to IRP? A. Q. Yes. And who did you have a conversation with or
communications with regarding that? A. As I recall, I had a conversation with, most likely,
David, and also someone from the New York City Police Department. Q. And what did that person at NYPD relate to you? MS. HAZRA: THE COURT: Q. Objection, Your Honor, hearsay. Sustained. And in your conversation with
(BY MR. WALKER)
Mr. Banks regarding the software being sent back, what was your understanding of the reason? MS. HAZRA: THE COURT: Objection, Your Honor, hearsay. Sustained, to the extent it's something
that was related to him by Mr. Banks. MR. WALKER: Q. (BY MR. WALKER) Understood, Your Honor. Mr. Shannon, again, in regard to the
CILC software for the DD5, were you aware of communication being sent to the different -- to the different divisions at the NYPD concerning the DD5? A. Q. A. Q. After the fact, yes. And how many different precincts was that sent to? I really don't know how many they went to. And who did you have communications with regarding
244
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
the DD5 being sent to the NYPD at the NYPD? A. David Banks, as I recall. I believe it was David,
and a representative from the New York City Police Department. Q. A. Q. Do you recall who that representative was? No, I don't. And what happened at the NYPD after the squad
received that software? MS. HAZRA: foundation. THE COURT: Q. Sustained. You said you had conversations with Objection, Your Honor, lack of
(BY MR. WALKER)
someone at NYPD regarding DD5 software that was sent to the NYPD from IRP. A. Q. Yes. And based on your conversation with that person, what
happened after the software was received? MS. HAZRA: THE COURT: move on. Your Honor, objection hearsay. I am going to allow it, just so we can
Overruled. Just repeat it again one more time. And you, in your conversation with
THE WITNESS: Q. (BY MR. WALKER)
the representative at the NYPD, what was your understanding of the reaction, or what happened at the NYPD after that software was received from IRP?
245
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
As I recall, the person that I spoke to -THE COURT: I don't want to you tell me what he Tell me what happened as a result
said, that is hearsay. of that conversation. THE WITNESS: Q. (BY MR. WALKER)
The software was sent back to IRP. And why did he say it was sent back?
Why was it sent back? A. As I recall, they were furious that it was sent out
to begin with. Q. A. Q. A. Q. They were furious they received free software? Yes. And for what reason were they furious? I suspect because it didn't go through the channels. And did he state the reaction of the NYPD to the
software, itself? MS. HAZRA: I'm going to object in terms of the
statement part, Your Honor. THE COURT: Q. NYPD? MR. KIRSCH: foundation. THE COURT: Q. Sustained. Mr. Shannon, did you know a Objection, Your Honor, lack of Sustained. Was that software in demand at the
(BY MR. WALKER)
(BY MR. WALKER)
Mr. Beltran at the NYPD?

246
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q. A.
Yes. And what was his role there? I believe back then he was the commanding officer of
the Real Time Crime Center. Q. Do you recall having meetings with IRP concerning the
Real Time Crime Center? A. Q. Yes. And do you recall IRP putting together a
demonstration for Mr. Beltran at the Real Time Crime Center at the NYPD? A. yes. Q. A. Did you attend that presentation? If it was done, yeah. If it was done at the NYPD. I remember a presentation that they put together,
If I remember, probably. THE COURT: THE WITNESS: Q. (BY MR. WALKER) Do you recall or don't you recall? No, I do not recall. And, Mr. Shannon, do you recall an
interview that you had with the FBI in September of 2008? A. Q. Yes. And in that interview, do you remember discussing or
telling the FBI that -THE COURT: in that report. Mr. Walker, you cannot repeat what is
We have been through this many a time. Yes, Your Honor.

MR. WALKER:
247
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
(BY MR. WALKER)
And, Mr. Shannon, did you relate to
the FBI your role at IRP? A. Q. I don't recall. Did you relate to the FBI the status of IRP's
meetings with the NYPD? A. Q. I actually don't recall. Do you recall if you had indicated to the FBI that
there was any level of success in those meetings with the NYPD? A. Q. Again, I do not recall. Mr. Shannon, in your interview with the FBI, did you
-- do you recall saying what your expectations were at NYPD for IRP? A. Not specifically, no. MR. WALKER: Your Honor, I would like to refresh
Mr. Shannon's memory of his interview with the FBI with this document. THE COURT: MS. HAZRA: Objection. Your Honor, I don't object to
refreshing, but I think the subsequent testimony is all going to be -- require hearsay. THE COURT: identification. COURTROOM DEPUTY: Exhibit D402.
You may refresh.
Mark it for
I am marking this as Defendants'
248
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. first?
MR. WALKER: MS. HAZRA:
Page 4. Your Honor, if I could make it clear,
Defense Exhibit D402 is just one page of a 9-page document. THE COURT: All right. Which page? Is it the
MR. WALKER: THE COURT:
Page 4, Your Honor. All right. Mr. Shannon, if you would let me
(BY MR. WALKER)
know once you have had a chance to read that to refresh your memory. Earlier you said that IRP did have a viable product that could benefit the NYPD; is that right? A. Q. Yes. And in your statement there, there is one area that Could you read that, please. Objection, Your Honor. Sustained. It is not admitted. Ask
is highlighted.
MS. HAZRA: THE COURT:
him the question you want to ask him, and if he gives you the same answer or the answer, then you need to move on. Q. (BY MR. WALKER) Mr. Shannon, regarding that software
being sold to the NYPD, do you remember why it was difficult to sell to the NYPD? MS. HAZRA: THE COURT: Objection, Your Honor, to relevance. I am going to overrule.
249
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
THE WITNESS:
I honestly didn't need that to In my opinion, the reasons
refresh my memory for that. are -MS. HAZRA: opinion. THE COURT:
Objection, Your Honor, relevance of his
Sustained. Mr. Shannon, did you have -- did you
(BY MR. WALKER)
work with the NYPD with another company after IRP, another software company? MS. HAZRA: THE COURT: Objection, Your Honor, relevance. I don't understand it. He worked with
the NYPD for another software company. the question. MR. WALKER: THE COURT: MR. WALKER:
I don't understand
That is my question, Your Honor. He didn't work for the NYPD. I am asking if he worked at the NYPD
on behalf of another company. THE COURT: But he wasn't working for the NYPD, he
was retired at this time. MR. WALKER: Yes, Your Honor. I am talking about
after his engagement with IRP. THE COURT: Okay. So you are asking if he went
back to the NYPD as an employee? MR. WALKER: THE COURT: No, Your Honor. Then you need to rephrase.
That is how
250
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
I am understanding your question. Q. (BY MR. WALKER) Mr. Shannon, after leaving IRP, did
you work for another software company? A. Q. A. Q. I don't think it was a software company. Did you work for a company called Datamax? Yes. What type of company was Datamax? MS. HAZRA: THE COURT: Q. Objection, Your Honor, as to relevance. Sustained. Mr. Shannon, did you ever work with
(BY MR. WALKER)
other companies to provide subject matter expertise or help them get their software into the NYPD? MS. HAZRA: THE COURT: Q. Objection, Your Honor, relevance. Sustained. Mr. Shannon, did you tell the FBI
(BY MR. WALKER)
why the software wasn't purchased at the NYPD? MS. HAZRA: THE COURT: may answer. THE WITNESS: THE COURT: THE WITNESS: Again, it was my opinion -No, not your opinion. Then I do not know specifically why Objection, Your Honor. I'm going to give him some leeway. You
it was not picked up by the NYPD. Q. FBI?

(BY MR. WALKER)
Mr. Shannon, what did you tell the
251
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MS. HAZRA: THE COURT: MR. WALKER: THE COURT:
Objection, Your Honor. Sustained. It's irrelevant.
No further questions, Your Honor. All right. Anybody else? Mr. Zirpolo.
DIRECT EXAMINATION BY MR. ZIRPOLO: Q. A. Q. Good morning, Mr. Shannon. Good morning. Were you aware of a letter campaign to IRP, by the
squads regarding the CILC software? A. Q. After the fact, yes. And do you have knowledge of the response from the
squads regarding the software? A. Q. No, I do not. And what did you observe at headquarters regarding
the letter campaign? A. I don't recall observing anything at Police
Headquarters regarding the campaign. MR. ZIRPOLO: One moment, Your Honor. Your Honor,
may we admit document D402. THE COURT: MR. ZIRPOLO: Your Honor. THE COURT: Anybody else? No. You may not. One moment. No further questions,
Cross-examination?
252
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MS. HAZRA:
Thank you, Your Honor. CROSS-EXAMINATION
BY MS. HAZRA: Q. A. Q. Good morning, Mr. Shannon. Good morning. Let's talk first a little bit about the timing. You
retired from the New York Police Department the end of 2003; is that right? A. Q. A. Q. A. Correct. You started working at IRP in January of 2004? As I recall, it was around January 2004; correct. And you worked there until November of 2004? I don't recall the specific date, but that's probably
somewhere around there. Q. A. Q. You weren't there in 2005? No, I don't think I was there in 2005. And you believe -- you testified on
cross-examination -- on direct, excuse me, that your work for IRP, your goal was to get the New York Police Department interested in the software so they would eventually procure it; is that right? A. Q. Repeat the question, please. Certainly. On direct you were asked about what your
role was, and your role was to sort of do outreach to the New York Police Department and other law enforcement
253
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
agencies about the CILC software; right? A. Q. That was one of my roles, yes. And the goal of that outreach was to get those
agencies to eventually buy the software; is that right? A. Q. Yes. And you mentioned several agencies that you Did the Philadelphia Police Department buy IRP
contacted. software? A. Q.
Not that I am aware of. Did the Nassau County office that you contacted buy
the CILC software made by IRP? A. Q. Not that I'm aware of. Did the Suffolk County office that you contacted buy
IRP software? A. Q. A. Q. Not that I remember. Did the New York Police Department buy IRP software? Not that I am aware. Mr. Shannon, you are familiar with the New York
Police Department's procurement process, are you not? A. I am a relative -- I would consider now -- novice
compared to what really goes on with the procurement processes. Q. But I am familiar with it.
You certainly know the New York Police Department has
a procurement policy? A. Absolutely.

254
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q. A. Q.
And it is a very defined policy; is it not? Yes. And you are aware that before anyone can sell
anything to the New York Police Department, they have to be an approved vendor, isn't that right? A. I would not say that is a strict rule. In most
cases, yes. Q. And there is paperwork that needs to be filled out to
do all of that? A. Q. Yes. And to your knowledge, did IRP fill out all this
paperwork? A. Q. Not that I am aware of. So they were not really in a position, then, to start
this procurement? MR. WALKER: Your Honor, that calls for speculation
on Mr. Shannon's part. THE COURT: Q. (BY MS. HAZRA) He said not that he was aware of. Let's talk about some of these
presentations that you attended at the New York Police Department. At that time, you were attending the
presentations as an employee of IRP; is that right? A. It depends on what time. There was at least one And then
presentation while I still was a member.
post-retirement, I can remember at least one that I was

255
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
at. Q. So let's talk about the one where you still were a That would have
member of the New York Police Department. been in 2003; is that right? A. Q. Correct.
At that time, did you have the authority to buy
software on behalf of the New York Police Department? A. Q. No, I did not. Did you make any promises at presentations of IRP
that you would be buying the software on behalf of the New York Police Department? A. Q. No. Did anyone else at that meeting make a promise to
purchase the software on behalf of the New York Police Department? A. Q. Not that I am aware of. Let's talk about the second presentation at the New That's the one you would have
York Police Department.
attended as an employee of IRP; is that right? A. Q. Correct. At that time, you still again presumably did not have
authority to buy software on behalf of the New York Police Department; is that right? A. Q. That's correct. And you didn't make any promises at that presentation
256
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
that the New York Police Department would buy the software? A. Q. Not that I'm aware of. And did anyone else at that presentation make a
promise that the New York Police Department would buy the software? A. Q. Not that I'm aware of. You were asked some questions about the free software That software
that IRP supplied the Police Department. was returned, was it not? A. Q. Yes.
I want to talk to you about your time at IRP.
You
worked as an employee paid by staffing companies; is that right? A. Q. Yes. And I know you don't exactly remember, but do the
staffing companies Headway, Manpower and Technisource sound like the three companies that payrolled you at IRP? A. Q. A. Q. A. Q. Yes. Did you work for all those three at the same time? Not that I'm aware of. So you went from one to the next to the next? Yes. Do you know why you kept switching staffing
companies?
257
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Toward the end of my employment, one of the staffing
companies told me -- I can't remember which one it was, that IRP was not paying their invoices, basically. Q. And so were you then fired from that staffing company
as a result? A. Q. Yes. And just to be clear, you were fired from the other
two, as well? A. I don't remember. I actually don't remember having
too much communication with any of the staffing companies. But I believe it was the last one, was the only one that I'd actually spoke with. Q. They contacted me.
And that is the company that told that you IRP wasn't
paying its invoices to the staffing company? A. Correct. MS. HAZRA: THE COURT: Q. (BY MS. HAZRA) Could I have one moment, Your Honor? You may. You were asked about your time cards
that you filled out while you were employed at IRP; is that right? A. Q. Yes. And these are time cards that were submitted to the
staffing companies to report the hours that you worked? A. I do not know -- I don't recall if they were I actually
submitted to the companies or directly to IRP.

258
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
don't remember. Q. IRP? A. Q. Yes. And I believe you -- let me ask it a different way. Didn't IRP give you some direction on the number of hours to record on those time cards? A. Q. I'm not sure. No, I don't remember. But there are time cards that related to your work at
Didn't IRP tell you to put down a minimum number of
hours on those time cards? A. card. Q. A. Q. IRP told you to put 40 hours down? Yes. Did it matter whether or not you had actually worked I remember they said you put 40 hours on the time
the 40 hours? A. I believe the conversation was around, as I recall,
overtime. Q. A. And what was that conversation, specifically? Being an ex-city employee, overtime was turn out. I
thought many times we were engaged post-normal business hours, I guess, because I was on Eastern Standard and they were on Mountain Time. And I just wondered if I was able
to put in, as I recall, additional 40 hours, or anything over and above.

259
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q. A. Q. A.
So you were told to put down a minimum of 40 hours -Uh-huh. -- by the people at IRP? Yes. MS. HAZRA: I have no further questions, Your
Honor. THE COURT: MR. BANKS: Redirect? Yes, Your Honor. REDIRECT EXAMINATION BY MR. BANKS: Q. Mr. Shannon, you were just questioned regarding --
did anybody else say -- did anybody else express that they were going to purchase the software, correct, at presentations? A. Q. Yes. Let me ask you this. Did anyone else, during those
presentations, express strong interest in the IRP software? A. I recall, not specifically who, but there was
interest in the software. Q. And when you worked -- you were also asked -- let me Were you ever an IT contractor for IRP?
ask you this. A. Q.
An IT contractor? Did you ever work doing information technology work
at IRP?
260
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
I'm assuming that that was the umbrella -- I really
don't understand the question, actually. Q. You didn't perform any sort of computer systems type
work at IRP, did you? A. Q. No, I did not. Okay. Now, the contract you were on was a full-time A 40-hour a week contract?
contract; correct? A. Q. Correct.
Now, you mentioned that some people are -- you You
mentioned two presentations that you spoke about.
just said on cross that you attended one while at the Department, and another while you were with IRP; correct? A. Q. Correct. And in both of those cases, was there interest
expressed in the software? A. As I recall, while -- after I retired, there was
interest -- significant interest in the software after I retired, at that presentation. Q. A. Okay. Was there executives at that presentation?
Actually, I don't remember who was at that
presentation. Q. And when you speak about -- would you say executives
have influence in the purchase of software at the NYPD? MS. HAZRA: foundation.
Objection, Your Honor, lack of
261
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. Q.
Sustained. Do you care if the NYPD pays their
bills? MS. HAZRA: THE COURT: MR. BANKS: (BY MR. BANKS) Objection, Your Honor. Irrelevant, sustained. One moment, Your Honor. Also, you mentioned that the
software -- you mentioned a minute ago that the software was returned. A. Q. Yes. Can you explain any knowledge you have on why the
software was returned? A. As I stated, I believe I recall that the Department
was furious that it had not gone through the proper channels. Q. And how were they aware that it didn't go through the
proper channels? MS. HAZRA: foundation. THE COURT: (BY MR. BANKS) Sustained. Do you have knowledge of what Objection, Your Honor, lack of
channels it went through? A. I believe it was -- I believe it was sent directly to
precincts. Q. That's the best of your knowledge, that it was sent

262
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
to the precincts? A. I was not part of that. But, as I recall, I thought
it went directly to squads, or it might have went directly to -- it actually might have gone directly to the chief of detectives. Q. Okay. I actually don't remember how it got there. Do you recall anything, as far as the squads,
you say; their response? A. Well, I recall IRP -- I don't remember who -- had
said -THE COURT: any of this? THE WITNESS: THE COURT: he can't speculate. MR. BANKS: Q. (BY MR. BANKS) MR. BANKS: Well, he just -- all right, Your Honor. Are you aware? I will ask him a more specific No. If he doesn't have personal knowledge, Do you have any personal knowledge of
question, Your Honor. Q. (BY MR. BANKS) You mentioned a minute ago that the
Department was furious because the software didn't go through proper channels; correct? A. Q. Correct. How did you become aware that it didn't go through
proper channels? A. As I recall, I think it was somebody from the Police

263
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Department called me. Q. And you don't recall, or do you recall a letter
campaign to the squads, that you just mentioned? A. I was not part of that campaign. So, no, I couldn't
speak to it. Q. A. Q. Were you aware that a letter campaign took place? After the fact, yes. Being aware of the letter campaign, what did you
observe -- what did you observe resulting from the letter campaign, if anything? A. I recall the Police Department asking me, was I Did I have anything to do with the
involved in it?
delivery of software, et cetera, and that they were furious that it was done. Q. Are you aware of any interest in the software
resulting from the letter campaign? A. No. MR. BANKS: THE COURT: MR. WALKER: MS. HAZRA: THE COURT: MR. BANKS: THE COURT: are excused.
I have no further questions. Anyone else? No, Your Honor. No, Your Honor. May this witness be excused? Yes, Your Honor. Thank you very much Mr. Shannon, you
264
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Reese.
All right. 15-minute recess. be in recess.
We are going to go ahead and take a We will reconvene at 10:55. Court will
(A break is taken from 10:40 a.m. to 10:55 a.m.) (The following is had in open court, outside the hearing and presence of the jury.) THE COURT: You may be seated. Any matters to be
brought to the Court's attention before we bring in the jury? MR. KIRSCH: MR. WALKER: THE COURT: Not from the Government, Your Honor. Not from the defense, Your Honor. Ms. Seeman, please bring in the jury.
(The following is had in open court, in the hearing and presence of the jury.) THE COURT: You may be seated.
Defendants may call their next witness. MR. WALKER: Your Honor, defense calls Collin
COURTROOM DEPUTY:
Stand here, please.
Your attention, please. COLLIN REESE having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record.
265
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
THE WITNESS: THE COURT:
Collin Reese, C-O-L-L-I-N R-E-E-S-E. You may proceed. DIRECT EXAMINATION
BY MR. WALKER: Q. A. Mr. Reese, who are you currently employed with? The Colorado Bureau of Investigation, Grand Junction
office. Q. And how long have you been with the -- we will say
CBI for short? A. Q. A. I have been with CBI for approximately 10 years now. And what is your current role at CBI? Agent in Charge of Criminal Investigations, Western
Slope. Q. A. Q. A. Q. What was your previous role there? Agent. And how long have you been an Agent in Charge? About 2 years now. Agent Reese, do you have any responsibilities related
to technologies at CBI? MR. KIRSCH: Objection, if the question pertains to
Mr. Reese' duties today. THE COURT: Sustained. Q. (BY MR. WALKER) Agent Reese, do you recall Please limit your time frame.
interacting with a company called IRP Solutions or Leading

266
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Team? A. Q. I do. And what time frame did those interactions first
begin? A. As I recall, it was between 2004 and 2005. So in
that time frame. Q. And in that time frame, did you have any
responsibilities regarding technology at CBI? A. Q. A. I did. And what were those responsibilities? I was a forensic computer examiner in our computer
forensic laboratory, and I was also tasked with investigating a case management system for the investigative section of CBI Denver. Q. And in doing your evaluation and investigation for
case management systems, what type of activities did you undertake? A. I did research. I contacted vendors. I visited
vendors.
Vendors visited my location.
I reviewed
different software packages; custom software packages, off-the-shelf software packages, et cetera. Q. And at that time, between 2004 and 2005, while you
were doing these investigations, where were you located? A. Q. 710 Kipling, Lakewood. And in the course of doing this work, did you
267
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
encounter a company called IRP Solutions? A. Q. I did. And how did you first come to know about IRP
Solutions? A. You know, I can't recall. I have been trying to
think how I actually came in contact with IRP Solutions, also known as, I believe, CILC at one point in time. I just -- you know, there were a lot of vendors I was looking at. And I just don't recall how I actually -- if I just But
I initiated contact or if they initiated contact. can't remember. Q.
Do you recall an individual at IRP Solutions by the
name of Clinton Stewart? A. Q. I do. Do you recall his role at IRP Solutions, or the role
he played in communicating with CBI? A. As I recall, Mr. Stewart was spokesman. I dealt with
him on, I think, all occasions that I had contact with IRP, also known as CILC. Q. And you just mentioned CILC. Is it possible that
CILC was the name of the product rather than a company name? A. It could be. I'm not sure. I just remember that
moniker.
But I don't know if it was the name of the
company or a product.
268
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
And once you were engaged in conversations with IRP
Solutions, what was it you were looking to determine about their software? A. Well, if it would suit our needs as a case management
software for our agents. Q. And can you describe some of the key capabilities you
were looking for? A. Sure. Input/output, search ability. Pretty basic
requirements. Q. And did you have any requirements along the lines of
multi-user capability? A. Q. We did. What size user base -- minimum user base would
successful candidates need to support in order to be selected by CBI? A. time. I don't know what numbers we talked about at the But I would assume it would have been somewhere in
the area of 35 to 50 users. Q. And do you recall having a demonstration by IRP
Solutions of the CILC product? A. Q. I do, yeah. And do you recall the time frame when that
demonstration may have occurred? A. Q. I am sorry, I do not. But it would have been within the 2004, 2005 time
269
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
frame? A. As I recall, we went live with a product in 2005.
And so I'm thinking it would have probably been latter part of 2004. Q. And can you recall if you had one or multiple
demonstrations of the CILC product by IRP? A. As I recall, I had multiple demonstrations of the
product. Q. Okay. And for what reason would you have had more
than one demonstration of the product? A. I'm sure that I had questions about the capability of
the software, functionality, things of that nature. Q. And at CBI, were you solely responsible for making
initial evaluations of case management software? A. Q. I was. And after doing your initial evaluations, if a
product was deemed to be suitable at that level, what would your next step be? A. Well, obviously I did not have purchasing authority So I would have taken that product and made
at that time.
it known to my supervisors. Q. A. And who were you supervisors? At that time, I'm thinking Bob Sexton. The Director
at that time was Bob Cantwell. Pete Mang.
The Assistant Director was
270
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
And do you recall at any point relaying your findings
concerning IRP Solutions' CILC product to your supervisors? A. Q. I am sure I did. And do you recall sending them an e-mail about the
CILC product? A. I'm sure that we would have had some e-mail
correspondence back and forth through that evaluation period. Q. And can you -- again, I know it has been several Can you recall what your synopsis of the review of
years.
CILC would have been to your supervisors? A. As I recall, I think the functionality from the
demonstrations that I saw was adequate for our use -actually, probably more than adequate for our use. the price was out of our reach. Q. Okay. Do you recall making a recommendation to your But
supervisors? A. I do not, no. MR. WALKER: Your Honor, I would like to refresh
Mr. Reese' recollection with an e-mail he sent. THE COURT: that? MR. WALKER: Large book, D400. D, for delta. It Have it marked. Do I have a copy of
probably has a marking of A 1.

271
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
THE COURT: MR. WALKER:
All right. A two-page document, Your Honor. I am marking this as Defendants'
COURTROOM DEPUTY: Exhibit D403. THE COURT: MR. KIRSCH:
All right. Your Honor, I am sorry, can I see that
to make sure I have the same one? THE COURT: to the witness. COURTROOM DEPUTY: THE WITNESS: (BY MR. WALKER) Okay. Yes. Ms. Seeman, you need to hand it
Thank you. Mr. Reese, I will give you time to
look at that and refresh your memory about what you said. A. Q. Okay. All right. So does that refresh your memory on the
communications? A. As stated earlier, my evaluation was that I believed As I
the software would more than suffice for our needs.
said, it was not an issue of whether or not the software would perform for what we needed it to do. factor for us. Q. Okay. And, also, if you could, at the top, just read It was a cost
for us the date that you sent this e-mail? A. Q. The date? Yes.
272
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
November 6, 2002. Okay. And so this was a couple of years earlier than
your initial recollection? A. Q. Yes. Correct. Okay. And the e-mail was sent -- could you
read who that was sent to, and tell us who they were in the organization? MR. KIRSCH: Your Honor, I don't object to this
coming into evidence, but I do object to this procedure. THE COURT: MR. WALKER: THE COURT: evidence. Do you want to offer it? Yes, Your Honor. Exhibit D403 will be admitted into
If you want to publish you can publish.
(Exhibit No. D403 is admitted.) MR. WALKER: Q. (BY MR. WALKER) Thank you, Your Honor. I will display the first page of And would you agree that that
this e-mail, Mr. Reese.
e-mail was sent to Pete Mang and Robert Sexton; cdps.state.co.us.? A. Q. A. Q. Yes. What do the CDPS stand for? Colorado Department of Public Safety. Okay. So would those individuals be your supervisors
that you mentioned at the Colorado Bureau of Investigation?

273
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
That's correct. First we'll go to your statements at the bottom Do you see that
concerning the evaluation of the product. line? A. Q. A. Q. A. Q. Do I need to blow that up? I am sorry, what was your --
The last paragraph that begins, "My evaluation." Yes. And is this the evaluation as you recall it? It is. So it says here that you feel strongly that it is a
product that would be a tangible solution for long-term agency use, and you recommend and request we be given the opportunity to demonstrate the software; is that correct? A. Q. That is correct. And also you mentioned pricing a couple minutes ago. Is that what you
If you can refer to the pricing there.
recall our conversations were about regarding pricing for CILC for CBI, in the middle of the page there. A. That sounds about right to me. As I recall it, it
was way out of our reach. familiar. Q.
So, yeah, those figures look
Since you just stated those prices were beyond your
reach, budget wise, do you recall any conversations with IRP about being able to obtain moneys? A. I believe that there was some conversations about
274
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
grants.
There would be some assistance for grant writing
and that sort of thing. Q. And can you explain to us how a grant would work, and
how it assists you in being able to acquire the software? A. Well, basically, just like any other grant, you would You state your needs. If it is approved,
apply for it.
you get the money and you purchase what you need, and you make reports on the purchase, depending on what the requirements are. quarterly. Q. Okay. It could be monthly. It could be
It could be yearly. And so you mentioned earlier that you made the
recommendation to your supervisors that IRP be afforded an opportunity to demo software. Do you recall IRP
demonstrating the software to your supervisors? A. You know, I recall being in a conference room, and I I don't
recall seeing some demonstrations up on a screen. recall actually hands-on using the software.
What I
recall is IRP showing us -- I don't know if there were screen shots or if they were actual live demonstrations. But that's what I remember. It wasn't like we were
sitting at a computer actually going through manipulating the software. It was we're watching it on the screen, and
one of the partners here was actually moving through the screens. Q. So just to clarify, do you know if that was a demo of
275
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
the software that was provided in the instance you are talking about there? A. I don't recall. I tend to think that it was. From
my recollection, it was a demo of the actual software. But, you know, as I said, it very well could have been just slides of screen shots or something of that nature. Q. And do you recall, subsequent to these initial
meetings and demonstrations, you making any recommendations to your supervisors as follow-up? A. I think, as you mentioned earlier, the software, from
what I saw, and documentation, and what we saw in demonstration, that the software would provide us with the functionality that we needed, which our needs were pretty basic. Q. Okay. And do you remember suggesting to your
supervisors a review of the software? A. Review? Such as them sitting and using the software,
or our agents using the software? Q. Let me clarify for you. Do you recall recommending a
beta review period of the software? A. that. Q. And do you recall what the time period would be, or I do believe we did have some conversation about
the time frame from your review of the software in-house? A. I'm sorry, I do not.
276
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
MR. WALKER:
Your Honor, I would like to refresh
Agent Reese' memory with another e-mail that he sent. THE COURT: MR. WALKER: Just have it marked. I would like to have it marked. Could
I have one moment, Your Honor? THE COURT: MR. BANKS: You may. Your Honor, do you happen to have in
your section D, does it say A2 on the document? THE COURT: MR. BANKS: THE COURT: MR. WALKER: Defense Exhibit 404. THE COURT: All right. D404. I do not. You have A? A. Your Honor, this has been marked as I have A and A1.
COURTROOM DEPUTY: THE WITNESS: (BY MR. WALKER)
Thank you. Agent Reese, if you could look at
that just to refresh your memory. A. Q. Okay. Okay. So do you recall that particular communication
to the staff at CBI? A. I don't recall it. But I'm sure that I sent it and
had those communications, because obviously it is an e-mail. MR. WALKER: Your Honor, I ask to admit defense
277
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Exhibit 404. THE COURT: MR. KIRSCH: THE COURT: Any objection? No objection, Your Honor. D404 is admitted.
(Exhibit No. D404 is admitted.) MR. WALKER: THE COURT: Q. Your Honor, may I publish that? You may. Okay. Collin Reese -- Agent Reese,
(BY MR. WALKER)
sorry. send.
You just said that this is an e-mail that you did You are saying here that in this area, we want to
go forward with a review period of the CILC product for 6 months; is that right? A. Q. Yes. And it goes on to explain that on-site training is
going to be included with that; is that right? A. Q. That is correct. And can you explain who these key planners are; what
their roles are within the Colorado Bureau of Investigation? A. Sure. Bob Cantwell was the Director. Pete Mang was
the Deputy Director at the time. at the time.
Bob Sexton was the AIC
Jim Lynn was director of IT at the time, I
was an agent at the time. Q. A. And can you explain what AIC means? Agent in Charge.
278
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
And so at this point in time, just let me know if you
agree with these statements. A. Q. Okay. You would perform initial review of the CILC product;
is that right? A. Q. A. Q. I am sorry? You performed an initial review of the CILC product? Yes. And that review let you know that it was suitable for
use at CBI? A. Q. Yes. And you also wanted to have a review period in-house
of the CILC application for CBI; is that right? A. Q. That is correct. And you realized that the price of $375,000 was more
than your budget could accommodate; is that right? A. Q. That is correct. And at this point, you mentioned that grants might be
available for you to obtain a product like this for CBI? A. Q. That was some discussion that we had, yes. So can you go into the discussion that was had within
CBI about obtaining the software, given the price, as it relates to grants? A. I'm sure that the conversations were, nice software,
too expensive, let's move on.

279
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Do you recall at any time working with IRP to attempt
to get a grant for the Colorado Bureau of Investigation for the software? A. that. I do remember that we had some conversations about But I don't think that there was any work actually
done on pursuing a grant. Q. Would -- do you recall being included on any letters
between anyone at IRP Solutions and CBI management on a teaming arrangement to get a grant for CBI? A. As I said, I'm sure we had some conversations looking As I said, obviously we didn't
at those possibilities.
purchase the software, so I can't imagine that we would have gone any further with that. MR. WALKER: THE COURT: MR. WALKER: questions. THE COURT: MR. BANKS: All right. Mr. Banks? May I have one moment, Your Honor? You may. Your Honor, I have no further
Thank you, Your Honor.
Your Honor, permission to republish 404. THE COURT: MR. BANKS: THE COURT: D 404 may be republished. Your Honor, my apologies, 403. 403 may be published. DIRECT EXAMINATION BY MR. BANKS:
280
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Mr. Reese, in that second paragraph, can you tell us
who Danzena DeGuzman is? A. I believe at the time she was involved in purchasing
somehow. Q. A. Q. You don't recall her specific role at the time? No, I don't. Okay. And you mentioned in the first paragraph that
this solution would be viable for a "Korean prostitution ring." Can you explain a little bit about how you felt
this solution would be viable with regards to that? MR. KIRSCH: I object to the relevance, Your Honor,
Mr. Reese testified that the software wasn't purchase. THE COURT: THE WITNESS: Overruled. Thank you. You may answer. What we were looking for
in a case management software, hence the name, case management, we were looking for a software that would allow us to collect and do link analysis, et cetera, et cetera, for cases that we were involved in. This probably
happened to be a particular case we were working at the time. We were probably having difficulty managing large So, basically, that's what we were
amounts of documents. looking for. Q. A. Q. (BY MR. BANKS)
Okay.
Tools to manage documents involved in our cases. So would you say you were impressed with the
281
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
capabilities of the CILC software? A. From the discussions that we had and from the visuals Again, I said that I never had a hands
that I saw, I was. on.
As a matter of fact, no one in our agency had hands So, basically, what we saw was
on with the software.
displayed to us by the company. Q. Would you agree that if you are engaging in a beta
implementation of the software, that is going to give the agency their hands on -- their hands-on capability that they required; correct? A. Q. I would agree with that, yes. And based on the purchase price that had been offered
of $375,000, and IRP's assistance with a grant to purchase that software, would you say that that was of interest to CBI to still acquire that software under those conditions? A. It was obviously an interest. If we could leverage
grants to purchase the software, yeah, absolutely. Q. Do you recall why -MR. BANKS: Honor. Q. (BY MR. BANKS) Now, during the presentation, would I will withdraw that question, Your
you say there was interest expressed by others in CBI? A. Well, I really can't speak for others. I can only
speak to my interest in the software.
I can assume that
there was some interest from other people.

282
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
So if you get -- based on the beta release of the
software, who would approve for beta implementation to move forward in the department? that? A. Well, that would have to come from the department Who would have to approve
head, who at that time was Bob Cantwell. Q. So based on the information you reviewed today to
refresh your recollection, Mr. Cantwell had signed off on the beta implementation, correct? MR. KIRSCH: for speculation. THE COURT: Q. (BY MR. BANKS) Sustained. To your knowledge, had the beta Objection, lack of foundation. Calls
implementation been approved to move forward? A. Q. Unfortunately, I don't remember. Would you say the e-mail communications you have used
discussed the -- that you just reviewed, discussed the actual date of the beta implementation? A. There was discussion about when a beta implementation But, obviously, again, that didn't take
would take place. place. Q.
There was no beta implementation.
But you did gather all of the necessary parties with
regards to the beta implementation to move that process forward; correct? A. Well, obviously there was some discussions.
As I
283
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
said, it has been awhile ago.
I'm not able to recall word All I can say at this It never happened.
for word how that moved forward.
point is that it didn't take place. Q. All right.
And did -- you said later on in 2005, CBI
went ahead and purchased another solution at the time; is that correct? A. Again, rough estimate. I did some research before I
came here today, and it appeared that in the solution that we're using today, our first records started in 2005. I used 2005 as a starting point. Q. Okay. MR. BANKS: THE COURT: No further questions, Your Honor. Anyone else? All right. So
CROSS-EXAMINATION BY MR. KIRSCH: Q. Good morning, Agent Reese. From looking at those
e-mails, did you agree with the dates in those e-mails, that your initial meetings with the people from Leading Team were back in about 2002? A. Q. I have no problem with that date. Okay. And you recommended, in the course of at least
one of those e-mails, that other folks at CBI attend a demonstration of the CILC product; right? A. Q. Yes, that is correct. You never recommended that CBI actually purchase the
284
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
software? A. Q. That is correct. In fact, CBI didn't actually purchase the software;
right? A. Q. That is correct. Your budget at the time -- you said this was way out What was your agency's budget at the
of your league. time? A. Q.
We ended up spending $49,995.99 for product. Did you give the folks at Leading Team an indication
that that was the range of budget in which you were operating? A. Q. I am sure I did. Okay. And this grant that there was discussion
about, CBI never got the grant; right? A. Q. A. Q. That is correct. And didn't do the beta testing? That is correct. How many other kinds of software was CBI looking at
while it was looking at this CILC software; do you remember? A. Q. A. Pertaining to the same -Case management software, yes. Okay. All right. I would say probably 8, 10
different products.
285
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
And do you remember -- you said the person you talked
with for Leading Team was Clint Stewart? A. Yes. Clinton Stewart was one of the persons. Gary
-- I can't remember the last name at this point in time. Q. All right. Do you remember having a conversation
with Mr. Stewart about their sale of the software to the New York Police Department? A. I think that the New York Police Department, along
with some other agencies, were mentioned as using the software. Q. Okay. So Mr. Stewart told you that the New York
Police Department was using the software? A. Q. That's what I recall, yes. And that would have been in the time frame of late
2002, early 2003; right, based on those e-mails we looked at? A. Yes, sir. MR. KIRSCH: THE COURT: MR. WALKER: Thank you, Agent Reese. Redirect? Yes, Your Honor. REDIRECT EXAMINATION BY MR. WALKER: Q. Agent Reese, you just responded to a question about
Mr. Stewart's representation about someone using the software.

286
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
New York City, yes. Was that information related to you by Mr. Stewart
via e-mail, or do you remember how he told you that they were using the software? A. As I recall, it was just general conversation.
Probably took place something like, who else is using your software? references? Q. Okay. Who else can I contact? Things of that nature. And so are you saying that he gave you NYPD as What are your
a reference in response to requests for a reference list? A. I'm not exactly sure how that conversation, you know, But I do recall that New York City was And, as I recall, some other law enforcement
unfolded. mentioned.
agencies throughout the state were mentioned, but I can't remember who actually it was. Q. So he mentioned some law enforcement agencies
throughout the State of Colorado? A. Q. No, throughout the United States. Throughout the United States, okay. And did he state
to you that the NYPD had actually purchased the CILC software? A. I don't recall. I can't say for sure that we got
into that detail. Q. Okay. MR. WALKER: No further questions from me, Your
287
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Honor. THE COURT: excused? MR. BANKS: THE COURT: I have one. Okay. Mr. Banks. All right. May this witness be
REDIRECT EXAMINATION BY MR. BANKS: Q. Mr. Reese, a minute ago you said you couldn't
remember what Danzena DeGuzman did really there, and that she was a part of -- you could not remember what Danzena DeGuzman did at CBI? MR. KIRSCH: THE COURT: Q. (BY MR. BANKS) Objection, beyond the scope. Sustained. You specifically remember Mr. Stewart
using the term, as you said, quote, NYPD was using the software; correct? A. New York City. As I recall, we spoke about New York
City Police Department. Q. A. Q. It has been a long time, correct? It has been a long time. So are you altogether certain that Mr. Stewart
said -- used the words "using the software" after all that time? A. I can't be absolutely sure about the specifics. As I
said, we had conversation about other agencies using the

288
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
software. MR. BANKS: THE COURT: All right. MR. WALKER: THE COURT: are excused. THE WITNESS: THE COURT: witness to take? MR. BANKS: substantial. THE COURT: Then we are going to take an extra long Next witness coming up will be Thank you. How long do you expect your next No further questions, Your Honor. Anyone else? May this witness be excused? Yes, Your Honor. All right. Thank you very much. You
lunch, because I have a 12:15 meeting that will go until about 1:30. So rather than start a witness, then have to
interrupt, we are just going to go ahead and recess at this time. If the jury can be back by 1:30, we will
reconvene then. Remember, you are not to discuss this case with anyone or with one another. see you at 1:30. Court is in recess. (Lunch break is taken from 11:40 p.m. to 1:30 p.m.) (The following is had in open court, outside the hearing and presence of the jury.)
Have a good lunch, we will
289
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
THE COURT:
You may be seated.
All right.
Any
matters to bring to the Court's attention before we bring in the jury? MS. HAZRA: Your Honor, I have one scheduling
issue, then Mr. Kirsch is going to have an issue on the expert. I just found out over the lunch hour a hearing has been set in another case on Friday, and the two people I had lined up to cover are not available Friday. I don't
know if the Court planned to recess earlier on Friday, and then I would try to move the hearing in front of Judge Krieger earlier. THE COURT: MS. HAZRA: I do not plan on recessing early. With the Court's permission, I would
try to set it at 8:00, if the Court will start at 9:00 on Friday. THE COURT: Mr. Banks? MR. BANKS: Your Honor, a couple of matters. First Yes.
one -- I guess we can get this one out of the way with regard to Mr. Thurman's testimony. During the break, we
provided the Government with an outline of what Mr. Thurman would be testifying about. few issues there. During -- our recollection, during your order, you
Mr. Kirsch has a
290
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
annotated things within the motion that were relevant given -- based on rebuttal purposes, given what the Government/s witnesses had testified to, as well as the content within Mr. Thurman's report. What we would like to do, is the Government, based on what has been provided to them, from our understanding, there is only one thing related to vendor management systems that's actually out of scope for what we provided them, unless the Government has any objection to the information provided, and we can provide the Court with a copy of that, as well. THE COURT: I don't quite understand what it is you
are trying to tell me. MR. BANKS: Mr. Thurman -- or the defense outlined
what Mr. Thurman will be talking about consistent with the motion and consistent with his expert report, just as an overall outline of what he will be testifying to before the Court. We provided that to Mr. Kirsch as a precursor
for him to review, as far as is that consistent with everything that was in your order, but also in Mr. Thurman's report. And Mr. Kirsch had some objections to how we outlined that for the purpose of testimony today. We
would want to hear any sort of objections that he would have and have that heard on the record by the Court.
291
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. report.
THE COURT: calling next? MR. BANKS: witness. THE COURT:
All right.
So who do you anticipate
Mr. Joe Thurman.
He is the expert
All right.
Now, my order said you were
supposed to give that to Mr. Kirsch 24 hours before you called Mr. Thurman. MR. BANKS: No, I thought you said anything outside
of what was in the expert testimony. THE COURT: Right. If it is not contained in his
So are you saying everything you have given to
Mr. Kirsch is contained in his report? MR. BANKS: With the exception of one area, Your
THE COURT: MR. BANKS:
All right.
And what is that area?
Well, the vendor -- we did discuss --
Mr. Kirsch had, to our understanding, was complaining or opposed to vendor management system type of language that was in the actual expert report. That's the only thing
that we view, in what we provided to the Government, that is outside. If the Government has any objection or thinks
something is outside of that, we just want the Government to put that on the record. Because everything that we put there is our understanding of what is in the expert report and what you
292
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
approved based on our motion -- response to the Government's motion in limine. THE COURT: All right. Mr. Kirsch, what is the
Government's position? MR. KIRSCH: Well, Your Honor, the Government's
position is that clearly the defendants did not comply with the Court's order that we have 24-hours notice. Instead we have been provided with about 2 hours of notice with respect to what these additional areas of Mr. Thurman's testimony are going to be. We are interested in having this trial continue to move forward. There are several areas contained in the
supplement that were provided to us before the lunch break that we do object to. for the Court. this outline. THE COURT: MR. KIRSCH: I do not. If the defendants have any additional I can very briefly outline those
I don't know if the Court has a copy of
copies, I suspect that would make this process easier. THE COURT: All right. Mr. Banks, would you please
hand that to Ms. Seeman. MR. KIRSCH:
All right, thank you.
Your Honor, I'm starting with the page
that says "Staff augmentation" at the top. THE COURT: MR. KIRSCH: Okay. The last entry in that category is
293
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
"Answer general questions about staff augmentation."
The
Government has no idea what those questions might be or what Mr. Thurman's testimony might be, what his opinion would be, what the bases for the opinion would be. And we
would object to general questions that are not set forth earlier in that topic or that are not contained in his previously disclosed report. THE COURT: MR. KIRSCH: All right. The next, under the category of "Answer other
"Payrolling," the last entry is the same. general questions about payrolling."
We would have the
same objection to additional testimony about payrolling that is not enumerated either in the list above or in Mr. Thurman's previous report. In fact, there is no information about payrolling in Thurman's previous report. We don't object to him I am not sure that
talking about payrolling generally.
that testimony is helpful or relevant to the jury given as much testimony as they've heard about payrolling before. I don't expect Mr. Thurman to say anything different than any of the previous witnesses have, based on what is disclosed here. that. The next category we object to in its entirety, that is the one that says "VMS or on-site recruiting
But that would be our only objection to
294
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
management services."
I believe that this testimony is
designed -- is supposed to be similar to what was contained in the previous report that was titled "Company vendor list/staffing firm management." The Court has already ruled, and the defendants have already agreed, that that testimony is not relevant and shouldn't be admitted during this trial. There has
been no testimony from any staffing company that pertained to that at all, and no testimony from any of the defense witnesses that would show how that testimony could be helpful or relevant to the jury. basis. At the bottom of that page, there is a category titled "The relevance of representations made by defendants." That was not contained in Mr. Thurman's That was one of the things that We would object on that
previous expert report.
the defendants identified in their response to the motion in limine as an additional area about which they would like to have Mr. Thurman testify. It is my memory that that is one of the areas that the Court ruled had not previously been included and wouldn't be relevant. The Government believes -- would
object to Mr. Thurman offering any opinion about that, because he's not qualified. The opinion, to the extent
that it is set forth below, appears to be an opinion about

295
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
the legal effect of a contract or the legal processes required to modify a contract. Mr. Thurman has no qualifications to give that opinion, and his testimony should be excluded under Rule 702 for that reason. It should also be excluded as
irrelevant and unhelpful to the jury. Finally, on the other page, under the category of "Reporting of hours," there is an entry that says, "Hours can be filled in prior to actually working time if pre-approved by the client/manager based on certain circumstances and pre-determined work schedule." The
Government contends that testimony is also irrelevant. There has been no evidence in this case that there were any hours filled in to time cards in advance of hours actually being worked. The only evidence that has been introduced in this case that relates to that is evidence of signed, but otherwise uncompleted, time cards. address that issue. This opinion doesn't it is not
And it will, therefore --
relevant, and it will, again, potentially be confusing to the jury. So we would object to Mr. Thurman offering
testimony on any of those areas I have just identified. THE COURT: All right. And I did -- the three
areas that I included in my order yesterday as not having even been referenced in Mr. Thurman's prior report were,
296
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
one, payrolling; two, relevance of representations made by defendants and; three, general practices within in the staffing industry related to this case, which I indicated the third was way too vague to give notice of anything. MR. BANKS: Your Honor, with regards to -- we'll The Government, during the
start with the first page.
course of their testimony, did ask each representative to differentiate, in many cases, between staff augmentation and payrolling. And that was a routine form of
questioning by the Government to each of these representatives. Obviously, he says, "Answer other general questions about staff augmentation." We are not necessarily looking
for the answer to general questions, but the jury has -in our opinion, needs to understand further more information about staff augmentation. THE COURT: Why wouldn't that fall under the
definition or any of the prior three? MR. BANKS: THE COURT: Prior three in that area, Your Honor? Yes, definition, why companies use it,
standard recruiting practices. MR. BANKS: outline. areas. THE COURT: All right.
Your Honor, I guess, this was a general
I guess it will be covered in those particular
297
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MR. BANKS: THE COURT:
So we'll agree to -Essentially, I am not making a ruling
on it, but it may be subject to objection unless it falls into one of the three. MR. BANKS: THE COURT: payrolling. Okay, Your Honor. Then the same thing with respect to To the
"Answer other general questions."
extent that they may be objectionable, Mr. Kirsch may make objections, and in the context I will know whether or not I need to sustain or overrule those objections. MR. BANKS: Very well, Your Honor. We agree with
the Government with regards to the VMS, that that was an area that was not in play during the trial. THE COURT: questions on that. MR. BANKS: Yes. Yes, Your Honor. As far as the All right. So we won't have any
relevance of representations made by the defendants, as it relates to materiality and reliance upon statements, our purpose for Mr. Thurman is to basically outline that these are not things that are typically relied on by a staffing industry representative in general. And, I guess, due to the fact that everything is based on managing risk, talking about managing risk and credit, which is part of his expert report, that these statements -- and these are not really relevant as it
298
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
relates to engaging in staffing business.
And, obviously,
you are saying we have argued that point repetitively on cross-examination with virtually all of the Government witnesses as it related to materiality of these statements and the reliance on any statements outside of the credit area, Your Honor. And Mr. Thurman would be able to opine
on those types of issues. THE COURT: I think what you are asking him to do
is to render a legal opinion, and I don't think he has the qualifications. You have not established qualifications
for him to opine as to a legal issue. MR. BANKS: As far as no legal issues, but reliance
on contracts in general is what the staffing industry relies on as far as the agreement, the actual agreement between client and staffing company. As far as any sort
of content of any sort of legal clause or something that may be in a contract, the defense is not going to bring any sort of testimony with regards -- outside of general reliance on the contract; it's the general agreement that sets in stone, the agreement between the client and the staffing company. THE COURT: headed. I'm not sure exactly where that is Mr. Kirsch can But to the
I will reserve ruling on that.
object at the time with respect to that.
extent you are going to seek a legal opinion from him

299
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
about the meaning of a particular provision in a contract, that would be outside the scope of his expertise. MR. BANKS: those lines. THE COURT: All right. Then the final one is the We will not bring any testimony along
reporting of hours, the last clause there, whether they can be filled in prior to actually working time if pre-approved by the client. I do not recall any testimony
with respect to that being an issue in this case. MR. BANKS: moment, Your Honor? THE COURT: MR. BANKS: You may. We don't -- the defense would agree I don't think -- may I have just one
with the Government, that doesn't have to be included. THE COURT: further issues? MR. KIRSCH: thank you. MR. WALKER: Yes, Your Honor. For Mr. Thurman, his And so if Not for the Government, Your Honor, All right. With that being said, any
expert testimony, he would be our next witness.
we may just have a couple of minutes to give him the items he is not to address. THE COURT: No, you just don't ask him. He should
not even have a copy of this. MR. WALKER: All right, Your Honor.
And as -- by
300
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
way of statusing the Court on our witnesses, we have one witness we would -- I am assuming we would ask assistance of the Court, who has been served and refuses to appear. THE COURT: MR. WALKER: Who is that? Gary Hillberry. He was one of the
former, I believe, FBI agents, and -THE COURT: MR. WALKER: THE COURT: MR. WALKER: THE COURT: MR. WALKER: THE COURT: MR. WALKER: THE COURT: Where was he served and when? I believe he was served on Saturday. All right. Where was he served?
At his residence. In Colorado? Yes, Your Honor. I believe Littleton.
What has been his response? He's not going to show up. All right. Have you submitted a
certificate of service? MR. WALKER: THE COURT: MR. WALKER: THE COURT: Yes, Your Honor. All right. Was that docketed?
No, it hasn't been docketed. You need to docket certificates of
service, and you need to follow up if you want me to take further action, you need to follow up with a formal request. MR. KIRSCH: Your Honor, I'm sorry, but just to
give the Court some additional information on this topic,

301
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Mr. Hillberry called our office yesterday.
What
Mr. Hillberry told our office was that he had been served, and that he had been -- he had returned a call, and had asked for a call back to talk about scheduling and had never gotten a call back. And it is our understanding that Mr. Hillberry intends to comply with the subpoena, once he gets a returned call from the defendants in which they will explain to him when they need him to appear. THE COURT: MR. KIRSCH: All right. And, again, for the record,
Mr. Hillberry is a retired Customs agent. THE COURT: MR. WALKER: All right. So return his call.
Your Honor, he has been spoken with
subsequent to his being served, and he was given a date and a time. I'm getting this information secondhand. But
the person dealing with him says that he said he would not be appearing. THE COURT: Well, you better follow up, because
he's apparently contacted the Government to indicate he is willing to appear if he's given the right time. MR. WALKER: THE COURT: MR. WALKER: Okay, Your Honor. So have them follow up on that. We'll follow up on that. Also, on
witness Bill Witherspoon, who appeared earlier, he is

302
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
saying he is not coming.
He's been belligerent.
He left
me several disturbing calls, messages saying he is not going to be coming, and just being generally evasive and belligerent, and we would ask for the Court's intervention in that matter. THE COURT: So he appeared to testify on the
Government's case, and you chose -- you did cross-examine? MR. WALKER: Yes, Your Honor, we did cross-examine
and reserved the right to recall him in our case. THE COURT: You need to follow up in writing with
me setting forth that, and I will need to give notice to Mr. Witherspoon. MR. WALKER: Okay, Your Honor. Status on witness
Steven Cooper from the Department of Homeland Security. He was served a document and initially refused, being a government employee, to accept, and then refused to provide information for counsel who would be able to accept on his behalf. out to him. We made several attempts to reach
And just, basically, within the last hour, I
believe, he did respond to a phone call, and has just provided information about counsel who will be able to accept his subpoena. But, basically, he has been refusing that for about a week and a half at this point. But we have just gotten
that information about his counsel, and we'll provide that

303
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
to his counsel, and we'll attempt to get him here as quickly as possible. We're going to ask that he appear If not, it will be on Friday.
tomorrow, if possible. THE COURT: MR. WALKER:
All right. Your Honor, we have four other
witnesses who made travel plans, as a result of the change we were notified of by the Government, so they moved trips to another time, and those four witnesses will not be returning to town. THE COURT: We are not going to continue -- we are
not continuing this trial. MR. WALKER: THE COURT: MR. WALKER: So that impacts four of our witnesses. Who are those four witnesses? Lorne Cramer, Dwayne Fuselier, Tiffany
Zellenbaba and Vince Rosales. THE COURT: All right. Who gave them authority to
not appear at this time? MR. WALKER: We didn't give them authority. They
had trips in place that they had scheduled based on our time. THE COURT: MR. WALKER: THE COURT: Have they been subpoenaed? No, Your Honor. I am sorry, if they had trips If you didn't subpoena They need to appear
scheduled, that is your problem.
them, I have no authority over them.
304
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
here, because we are going to finish this trial up without delay. So you better contact them and tell them, if you
want them as witnesses and you didn't subpoena them, you need to get them here one way or another. MR. WALKER: Okay, Your Honor. That is -- those
are all of the updates I had. THE COURT: appearing today? MR. WALKER: expert witness. Mr. Thurman, the expert opinion, Who do we have other than Mr. Thurman
And we have Sam Thurman, former employee
of IRP Solutions. THE COURT: MR. WALKER: available on Monday. THE COURT: No. He was to appear -- I thought he What about the other experts? The other expert, Mr. Vilfer, he's
was flying into town yesterday at 4 o'clock. MR. WALKER: Your Honor, the update I got was
that -- that was John Shannon, Your Honor. THE COURT: Okay. Mr. Vilfer -- we are moving I am not waiting until Monday for So he better get himself here.
forward with this case. your expert to appear. MR. WALKER:
Your Honor, he is on another case that
wraps up the end of this week. THE COURT: I am sorry. He needs to be here, I am not
because we are going to move forward this case.

305
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
delaying until Monday just for one witness. MR. WALKER: Well, Your Honor, at this point, with
Mr. Fuselier, Mr. Hillberry, who did not show, Mr. Rosales, Mr. Cramer, Ms. Zellenbaba, we don't have any witnesses scheduled for tomorrow. THE COURT: Well, we better get some witnesses
scheduled for tomorrow, because I am not continuing the case. I told you that since last Thursday. You need to
have your witnesses going. that is your problem. MR. WALKER:
If you didn't subpoena them,
Yes, Your Honor.
And we had informed
them of the dates, and they made travel arrangements based on those dates. THE COURT: I am sorry. You need to tell them they
either change their travel dates, or they are not going to appear here to testify, because I am not waiting until next week, and we are not continuing this case merely because you failed to get your witnesses here. The jury
has been inconvenienced as it is with having to come in and then go home early because you have not been prepared with your witnesses. since last Thursday. MR. WALKER: Yes, Your Honor. And we've made our I have told you this repeatedly
best attempt to schedule around the changes and the Government's completion of their case in chief.
But, as I
306
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
said, some of these people, we told them when the time would be, maybe a day or two fluctuation. plans. Now they are away. They made trip
They are saying they can't get
back until early next week. THE COURT: I am sorry. You get them here or they
are not going to testify. MR. WALKER: Okay, Your Honor. That is all of the
status I have on witnesses. THE COURT: MR. BANKS: All right. Just one final quick note, Your Honor.
With regards to -- given the fact that the six defendants in this case heard certain language, we just want to put on the record regarding the bench conference, we want to preserve all records associated with our bench conferences, all of them, including electronic or otherwise, for any sort of appellate type of issue. THE COURT: MR. BANKS: record, Your Honor. THE COURT: MR. BANKS: THE COURT: Is there anything else? No, thank you. So I want to make sure you understand, If you The record is always preserved. Okay. I just wanted to put that on the
we are going to have your witnesses tomorrow.
don't have witnesses, I am going to consider the defendants to have rested their case.
307
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MR. BANKS: prejudicial.
Obviously, Your Honor, we find that
We will -I have given you fair notice since last
THE COURT:
week that you needed to have your witnesses ready to go. Tomorrow is Thursday. You are saying you don't even have
your expert here -- to be here until Monday of next week. That is too wide a delay. I have given you fair notice.
I am telling you right now, if you don't have witnesses to go forward, I will consider you have rested your case. MR. BANKS: THE COURT: Okay. Very well. You may call -- Ms. Seeman,
All right.
you may bring in the jury. (The following is had in open court, in the hearing and presence of the jury.) THE COURT: You may be seated.
Defendants may call their next witness. MR. BANKS: Defense calls Joseph Thurman. Your attention, please.
COURTROOM DEPUTY:
JOSEPH THURMAN having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: J-O-S-E-P-H. Joseph Marcus Thurman. Joseph,
Thurman, T-H-U-R-M-A-N.
308
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MR. BANKS:
Thank you, Your Honor. DIRECT EXAMINATION
BY MR. BANKS: Q. A. Q. A. Q. A. Q. Mr. Thurman, where do you currently work? Currently work for a company called Innovar Group. What does that company do? IT staffing firm here in Denver, Colorado. And what is your job title with Innovar? I am the director of business development. Okay. And can you describe your job responsibilities
at Innovar? A. My responsibilities include managing engagements
between our organization and different clientele, government clientele, Fortune 1000 companies, small, mid-size businesses, basically managing the day-to-day staff augmentation engagements that we have with them. Additionally responsible for our organization's response to RFPs. I manage a team internally, recruiters, and
account managers, as well. Q. A. Q. A. Okay. How long have you been at Innovar?
I have been at Innovar Group for just over 3 years. And prior to Innovar, what did you do? I worked for another IT staffing organization in
Denver, Colorado, by the name of Client Solv, S-O-L-V. Q. Okay. And what did you do for Client Solv?
309
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Similar role.
Managed the engagements from a client
perspective, and a group of recruiters in the office. Q. Okay. How many accounts do you currently manage at
Innovar? A. Q. A. Q. Me personally? Yes. Roughly 12 to 15. And what type of revenue is associated with those
accounts? A. A monthly revenue of about half a million dollars per
month. Q. And that revenue is generated from what type of
business? A. IT staff augmentation agreements. So staffing IT
contractors and payrolling services. Q. Okay. Is there any other additional type of staffing
transactions that you manage outside of what you call staff augmentation and payrolling? A. Not included in that number. Additional revenue So placing a
would be from full-time staffing services.
full-time employee or helping a client find a full-time resource that they will take onto their own payroll. Q. Okay. Now, is there a term -- you said "full-time Is there another term associated with that?
staffing." A.
For the full-time side or for a contractor?

310
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q. A. Q.
For the full-time side. Headhunter. Okay. Something of that nature.
I want to start off just with your -- let me How many total years of experience do you
ask you this.
have in staffing and IT? A. In IT, I have approximately 9 years of IT sales and In staffing specifically, focused
marketing experience.
100 percent on staffing would be 6. Q. Okay. And of those accounts you mentioned, what is
the largest account, as far as revenue, that you actually manage? A. They vary. I manage a $9 million contract for the I manage multiple other contracts
Department of Energy.
for the Department of Energy, National Security Technology in Las Vegas, which falls under NNSA, Nation Nuclear Security Administration. accounts. I manage many commercial
I manage Comcast, Visa, Qwest, CenturyLink,
currently that I manage here in Denver. Q. Okay. MR. BANKS: MR. KIRSCH: it is unnecessary. THE COURT: MR. BANKS: Sustained. Go ahead, ask it. Your Honor, based on Mr. Thurman's -I object to this question, Your Honor,
I didn't finish the question so I
didn't know what Mr. Kirsch was objecting to or what was

311
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
sustained, Your Honor. THE COURT: question. Q. You can go ahead and ask him the
Ask him the opinions you want. Mr. Thurman, describe for the jury a
(BY MR. BANKS)
typical payrolling relationship in the staffing industry. A. Okay. Payrolling, specifically, we would basically
be engaged -- have a master service agreement in place with a company. They would reach out to us with a
resource that they are interested in bringing on board, ask us, basically, if there is some additional things, such as background checks, things like that that we have to service, we could do that. But, ultimately, we would bring that person on as either a W2 employee, as a 1099 contractor, or a corp-to-corp type of engagement, and basically manage that payroll at the request of the client. Q. Now, in your experience in payrolling, does the
client company normally refer the contractor to you? A. In payrolling, that is one of the differentiating Payrolling is that the client already knows They bring that person to us, The other scenario, if we
factors, yes.
who they want to engage.
thus, we bring them on payroll.
go and find the contractor, would be staff augmentation or contractor services. Q. Okay.
312
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
So, yes, in payrolling, yes, they always have the
resource. Q. So you would say that in a payrolling situation,
again, in the majority of the situations, that person is already known to the client? A. Q. Correct. Okay. And describe a little bit about how a typical
payrolling transaction would take place, as far as the pay rate and bill rate and how the company gets compensated for that? A. Q. A. How our company gets compensated? The staffing company, yes. So, in a payrolling situation, they would come to us And in payrolling, they
with the resource that they want.
obviously negotiate the rate, because they know the resource. So nine times out of 10 they tell us we are Then we have a
going to pay this resource $40 an hour. markup.
That markup could be a percentage, it could be a
set rate, depending on what is in our master contract with them. And at that point, we put our markup onto that $50 an hour -- for the sake of this discussion, and for every hour that that person works, we make whatever our margin is. If that is $20, then we make $20 for every hour that
person works and bills at the client, then our firm makes
313
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
$20 per hour. Q. Okay. And you, as the director of business
development for the account, are you compensated as a result of every hour that that person works? A. Q. Yes. You described a moment ago how another service that
the staffing company provides is to headhunt and find a resource that they can hire full time; is that correct? A. Q. Correct. What is the general compensation for that sort of
direct hire work? MR. KIRSCH: of that testimony. THE COURT: Q. (BY MR. BANKS) Sustained. With regards to staff augmentation, Your Honor, I object to the relevance
describe a little bit about how staff augmentation works, and contrast between staff augmentation and payrolling and how a company is compensated in that fashion? A. For staff augmentation, rather than engaging with us
for a particular person, saying we want to payroll John Doe, they would come to us and say, we need an Oracle developer, or we need any other variety of resources in the technology space where we work. And that being said, we go out and use our database and recruit a resource that then we present to the client.
314
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
And, basically, we do not disclose what we are paying that person. So we negotiate with the candidate or the Again, if it is
contractor what we are going to pay them. $50 an hour, it would be $50 an hour. our markup.
We would again have
The client, at the end of the day, the only
thing they see would be a rate of, let's say, $75 an hour. Q. A. Okay. So we would basically just bill them, no further
insight into the workings or the rates or anything of that nature. But the breakout is the same. We are compensated
every hour.
We pay that person $50 an hour, and we take
$25 every hour. Q. What is the general -- so what does a staffing
company -- the service they actually perform, actual day-to-day service that they perform for a particular contractor that is with a client? A. Q. A. For the contractor, not for the client? For the client, correct. For the client, I mean, it's -- there is multiple Obviously, recruiting services Additionally, we manage So
services we would provide.
to get them the right resource.
paying all of the contractors that are working there. a lot of back office.
For the government it is different.
I mean, we obviously have to manage where the funds are coming from and show different reports.
So we manage all
315
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
that kind of stuff. But for the client, recruiting services, payment of those contractors, and then we invoice, basically, the client at the end of the day for all hours worked. Q. So would it be safe to say, in the $50 an hour model
that you just talked about, with the $25 an hour markup, that on a year-long contract, you would make approximately $50,000 just to process payroll? A. yes. Q. Okay. Now, I want to talk to you a little bit about Our staffing firm would, correct, on that one person,
the various staffing industry professionals that are part of staffing -- of supporting a client. recruiter do? A. In general terms, a recruiter, in a situation where a What does a
client comes to us and says, I need, again, an Oracle developer, the recruiter is responsible for going out, screening those candidates, talking to, let's say, 10 candidates to narrow down to three, that we can then present to the client and say, here are three candidates for your review with the matching skill set you requested. They also usually manage the relationship -ongoing relationship with the contractor. That's open to
interpretation, as far as how long, how much management that is, basically just checking in with them
316
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
periodically, making sure that everything is going well at the client. Q. And they manage the contractor side.
Now, as far as the account manager, what is their
role and responsibility in a staffing transaction? A. They manage the opposite side. They manage the
client relationship.
They work with hiring managers, the
directors, the different people at the client, basically getting their requirements, bringing those back to the recruiters, and they manage more so the customer facing side of the engagement. Q. Would you say that most account managers and
recruiters are part of -- engage in sales? A. Q. Correct. And as a salesperson, how are account managers,
recruiters, as well as individuals like yourself, directors of business development, how are they compensated? A. Well, our largest -- the majority of their income If
comes from those margins that I previously discussed. there's a $25 margin, obviously some of that goes to overhead.
A set amount would go to the account manager.
So for one person that is working, let's say they are making $5 an hour. So for each person, if they have 10
people working, then you can do the math, and that is how they accumulate their income, basically.
For contractors,
317
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
working with a decent margin, and for every hour they work, the account manager, the recruiter, and others within the company are compensated. Q. Would you say it benefits them for contractors to be
working as many hours as possible? A. Based on math, yes. I mean, the more hours they And that is our
work, the more revenue the company makes. motto. Q.
That is the standard motto within the industry. Now, have you had any, in your experience --
Okay.
in your experience, who's responsible for the work performed at a client site? A. The client. Who is responsible for that?
The client is responsible for what work
is done on client site. Q. Okay. Do the staffing companies ever question the
client with regards to how they handle that contract employee? A. Q. A. In a staff augmentation or a payroll engagement? You can comment on both. That's not the standard. I mean, we give them the
resource.
Basically, we enable them to successfully do a
project, which is different from an outsourcing model where we are responsible for deliverables, if that makes sense. I mean, if we are responsible for delivering a product or a solution or an end component to a client,
318
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
then we would have say.
But that is not staff With staff augmentation, we What
augmentation or payrolling. give them the resource.
That is the deliverable.
they do for the person for the terms they agreed with us is at their discretion, basically. Q. So if a client wanted -- let me ask you this first.
In your experience, have you seen contractors that possess a diverse set of skill sets? A. Q. Yes. And have you seen client requisitions or job
descriptions, is what I would call it, that would require more than one skill set for a particular resource they were seeking? A. Q. Regularly. Okay. Now, let me ask you this. In your experience, Do
obviously, you've -- you have a number of clients. these clients have multiple projects going on in the company at one time? A. Q. Yes.
And as a staffing company, are you providing -- doing
staff augmentation and payrolling resources sometimes for multiple projects across in a company? A. Q. At the client's request, yes. Yes.
So, for instance, I'll -- for one of your $9 million
client, does that client have multiple projects that

319
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
they're engaged in? MR. KIRSCH: Your Honor, I object to the relevance
of what the $9 million clients do. THE COURT: Q. (BY MR. BANKS) Sustained. So what you said is, one company
could have -- could a company have one, two, three, four, five projects going at once within one company? A. Yes. I mean, standardly -with contracting, it is
much more of a line item.
So it comes from project So if
funding versus head count -- overall head count. they have different projects, then you would have
resources working on those specific projects within the company, yes, correct. Q. Now, would these projects be managed, in many cases,
by separate project managers? A. Q. More than likely. And in some cases, would you agree that those project
managers would have different directors or managers they would report to in the company? MR. KIRSCH: THE COURT: Q. (BY MR. BANKS) Objection, leading. Sustained. Describe for us how projects are
aligned in client companies that you support? A. Okay. My experience, obviously both commercial,
government, small and large businesses, it breaks down

320
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
into -- as I previously mentioned, you have head count numbers, which is the overall head count or number of employees that work for a company, let's say company ABC. You have a head count, which is these are the number of employees that are ours. utilize. These, you have to
I mean, if you want to let them go, you either
have to go through mass layoffs, you have to go through the processes to scale those resources. Staff augmentation -- and to the project question -- is the scaleable way of doing that. Right.
You can bring in, if project A has certain funds allocated to it, you bring in a resource for that project. bring in five resources for that project. You
Simultaneously,
if you have project B that also has whatever funds that you are allocating to that, you can bring in resources to that. It is driven by project. And, again, it is all
about scaleability, which is why people will use companies such as us, then they don't have to go through mass layoffs, go through the process. They don't expose
themselves to risk of wrongful termination suits or anything like that, because they are our employee, and they can scale up, down, add five, subtract five, based on project workload, project completion dates. It is just a better way to manage their workforce.
321
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
And it is, again, it is a line item. utility bill, basically. It's a bill.
It is like your We will bill you
for you these 10 resources.
It is not head count, it is
just a bill that we bill them for, basically, for that payroll. Q. What are some of the business drivers in the staffing
industry? A. Q. A. For us? Say for a staffing firm. Well, the simple business driver is revenue. I mean,
that's what drives our business. higher profit, high risk business. profit and revenue. driven by. Q. A. Q.
It is a lower overhead, But it's driven by
I mean, that's strictly what it is
Are account managers paid on a commission basis? Yes. So the more contractors they have, the more
commission; correct? A. Q. Generally speaking, yes. I want to get to -- for you to describe for us, what
is a full-time contractor? A. Okay. A full-time contractor is, I mean, it's It's assumed to be a 40-hour In the
basically what it states.
contract that we're going to place a resource on.
staff augmentation model, they will engage with this

322
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
person for usually 3 to 6 months, is the industry standard. contracts. Obviously, you can issue 12, 24-month But it's basically a full-time contract, which
is 40 hours a week, versus a part-time contract, which is obviously just close -- less than 40 hours a week. Q. Now, in recruiting for full-time -- you mentioned Just describe a little bit about a
part-time contract. part-time contract. A.
A part-time contract, we have to clarify with the That is both for us to be
client, what does that mean?
aware and for the contractor we are engaging with to be aware of what this means. Sometimes people are leaving a Obviously, we need
full-time job to go and do a contract.
to tell them that you can expect 20 hours a week, or the client is guaranteeing a minimum of 20 hours a week, 30 hours a week, something like that. part-time contract. Q. Okay. That would be a
That's basically what that means.
Now, do -- what type of contracts do staffing
companies typically -- in your experience, prefer, full or part time? A. Q. Preference is full time. The majority are full time.
And why would you want -- why would a staffing
industry professional want a full-time contract versus a part-time contract? A. Because of our business model. I mean, it's simple.
323
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
It's similar to the more cups you sell, the more money you make. The more hours your contractors work, the more I mean, it's the same exact scenario.
money you make. Q.
Have you had any experience where a contractor will
work, say, 20 hours in a day? A. Yes. Yes. Recently had a contractor working for the
Department of Energy who actually billed 104 hours one week, 107 hours the week following. much he worked. And that's just how
I mean, you can do the math, and it works
out to about the number you questioned. Q. A. Q. Okay. Yes. Did the staffing company typically question those Did the client approve those hours?
type of hours if the client approved those hours? A. No. I mean, in just reviewing documentation, I saw It doesn't raise a red flag or anything
the information.
if it is approved by the client. Q. A. Q. Would you say that is typical? Which portion? Would you say it is typical that client-approved
hours are not typically questioned? A. Q. Correct. Obviously, Mr. Thurman, from your testimony earlier,
a contractor billing 104 or 107 hours is definitely beneficial to -- would you say, to the account managers?
324
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Working -MR. KIRSCH: THE COURT: Objection, leading. Sustained. In your professional opinion, why
Q.
(BY MR. BANKS)
would a staffing company -- it may be simple -- want people billing? A. That's how we make money. That's why we would want If people
people billing.
That is how we make money.
aren't billing, we are not making any money. Q. You don't really like it when people take long
extended vacations that are under contract to your company, do you? A. Well, we see it in the bottom line. We do see the
revenue drop. Q. Okay. Now, how difficult is it to fill part-time
contracts? A. Part-time contracts are more difficult. There is
usually more stipulations. the contractor.
There is more negotiating with
Because if I'm coming to an Oracle
developer and telling them that I have an opportunity for them that's 20 hours a week, they're obviously not going to choose my opportunity over someone who is offering them 40 hours a week. Thus comes into play many things such as opportunity to work remotely 90 percent of the time, so
325
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
that they never have to come into the office.
Usually, so
that they can supplement their incomes in some other kind of way, holding a separate contract or something of that nature. Q. Have contractors made -- in your experience, ever
made demands, as far as guarantee of hours are concerned? A. I mean, in those situations, it is regular. And we
would expect that, because our firm wants to know that if we engage with you, that you are committed to this contract. So what are your terms and conditions as a
contractor for engaging with us and committing to providing 20 hours that the client is looking for? If that means you need to work remote, if that means that you need to be guaranteed 20 hours, then that's what it is. a contract. And those terms are pre-negotiated and set in And that ensures that we can deliver what we
stated we would, which would be this contractor for 20 hours a week. expect them to. Q. Okay. What are some other type of demands that So, yes, they regularly would, and we would
you've seen from contractors over your career? MR. KIRSCH: scope, Your Honor. THE COURT: Q. (BY MR. BANKS) Sustained. I will come back to that.
Object to the relevance and beyond the
326
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Are you familiar with -- can you describe for us the standard models of compensation for on-call contracts, or on-call tasking on a contract? A. On-call basically means if you are on a full-time
contract or something of that nature, on-call means that the client needs to have access to you on call, basically; off hours, weekends, or if you are on another engagement, they need to be able to have access to you. Ways that I can speak to directly that we have contracts set up for developers, if it's a developer who worked on an application, we set it up with a guaranteed number of hours. For example, 60, 80 hours in a month So it is usually on a monthly basis
that are guaranteed.
and a multi-month contract. And that basically means the client has access to this developer for 80 hours before they are charged anything additional. That also means that if that person Because that is the
works one hour, we bill 80 hours. minimum guarantee.
If they work 5 hours, we bill 80
hours, and we compensate the contractor for 80 hours. Once they cross over 80, if they work 81, we will bill them for 81 and beyond. But it is basically a
minimum contract so that they can have access to the person who has knowledge about their system. And, again,
it comes back to the fact that they need to be able to

327
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
retain access to people who have either the intellectual property about a specific software or who have the knowledge to bring a system back up. So, in that example, obviously, it is on call with a guaranteed minimum, which is billed whether they work that or not. The more standard, which is because there is more workers in this field, is a support model, which is basically carrying a pager. Most people are familiar with
that model, where if you are a tech support guy, you have to carry a pager. The standard -- the standard ranges as But there is a standard
far as the number of hours.
expectation that if you are on call for the weekend, and you have to carry the pager, then you will bill -- you are guaranteed a minimum of 5 hours, let's say. And that means you can't go to the mountains. can't go away. You
You have to stay accessible so that they You can play with your kids
can get the system back up.
if they never call you, you are still guaranteed those 5 hours for Saturday, those 5 hours for Sunday. It is not
that you worked 5 hours, it is basically that you have to carry this pager, and you're guaranteed these 5 hours. is a support model, and it is on call. It
You are paid to be
accessible and available and, basically, to change, kind of, your plans for the client.
328
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
So would you say if a contractor was sleeping on the
weekend and he would still -- or after hours, if he was sleeping, he would still get paid for those 5 hours; correct? A. If he's on call, then that's the negotiated way that I mean, they don't call him, he still
that works, yes.
bills those hours because he is carrying the pager and he is accessible. Q. A. Q. What happens if they call him and he takes 5 minutes? He's already billed 5 hours, so it's covered. Okay. Now, you mentioned a moment ago that there's
some pre -- you mentioned an 80-hour model per month that would be negotiated for a particular contractor. to talk a little more about that. I want
If a contractor under
that model worked one hour, would he still get paid for 80? A. Yes. It's the client's responsibility to use those They basically pre-purchased 80 hours that they
80 hours.
are going to be billed for whether they use one of them or whether they use 80 of them. yes. Q. Now, in your experience, have you seen contractors To answer your question,
that work for your company multiple contracts? A. That work multiple contracts through our company or
that work -DARLENE M. MARTINEZ, RMR, CRR United States District Court For the District of Colorado
329
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q. A. Q. A.
Simultaneous contracts while working at Innovar. Yes. Did Innovar permit that? If there were -MR. KIRSCH: Objection to the relevance, Your
Honor. THE COURT: Q. (BY MR. BANKS) Sustained. Is there any policy that Innovar has
that prohibits contractors from working multiple contracts? MR. KIRSCH: THE COURT: Q. (BY MR. BANKS) Same objection. Sustained. What is Innovar's policy regarding
contract work? MR. KIRSCH: THE COURT: MR. BANKS: Q. (BY MR. BANKS) Same objection. Sustained. Could I have a second, Your Honor? In your experience, tell us a little
bit about contractors, industry practices, as related to contractors working multiple contracts. A. It really falls on the contractor. In most cases --
and this is not just us, in speaking with multiple people in the industry, and in my experience in the industry, the only way that it affects or that we have a concern with a contractor working multiple contracts is if it affects our
330
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
client. So if I have you staffed at client ABC, and you are doing other work with client 123, then as long as ABC is happy, then I don't care what you do with your spare time. We don't think of it as anything different from someone working at Wal-Mart and working at 7-Eleven. people can maintain two jobs. not suffering. I mean
As long as our client is
If our client begins to suffer, then we
would have some discussions. Q. In your experience, have you ever seen a staffing
company bring a second contract to a contractor who is already working for them on a contract? A. Yes, we do that. There is a small -- in certain
skill sets, there is a small percentage of people who actually have the skills to do -- who has the certain tech set to provide a service. have -MR. KIRSCH: Your Honor, I object to what is We have that happening now. We
happening now in his company. THE COURT: THE WITNESS: that. Q. (BY MR. BANKS) Okay. In your experience, is that Sustained. Yes. To answer your question, we do
had -- how does that -- in your experience, how does a staffing company benefit from a contractor working
331
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
multiple contracts? A. The same simple answer; that it drives more revenue.
I mean, we're in business to make money, as most people are. And the more contracts that someone is working, or
the more hours that one of our resources can work, the more money we make as a company. Q. A. Q. Also as an individual getting commissions; correct? Correct. I want to talk a little bit about staffing agencies,
and what is common in the industry for engaging a new client. Over the course of your career, how do staffing
companies make determinations on whether or not they are going to engage in business with a new client? A. It's obviously vetting their viability to pay us.
We're fronting them for payroll services, whether it is staff aug or full time, and we want to make sure, as we extend ourselves to cover payroll services, that we can be compensated, and that, obviously, for the invoices that we extend, that we will be receiving those funds. basically a vetting process. Q. Explain a little bit about that vetting process. So it is
What does a staffing company typically do to vet a company? A. It varies. For private companies, it is obviously
much more difficult or much -- it is very difficult to get

332
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
in depth information about how much they can pay, things like that. The industry standard is a Dun & Bradstreet
report, which is used to track a company's viability, and I guess their credit history. Again, you look at just the different things that you would -- it's all you can really do. You may do a
little more research on-line to try to figure out how comfortable you are working with this company. Q. Is it a common industry practice for small businesses
or private companies, as you say, not to divulge financial information? A. It's not a standard in our industry to ask that Most companies won't -- I can't think of many
question.
companies that, at the request of a vendor, would disclose their financials. So, no, that is not standard for us to
request that, nor for us to receive that. Q. How does the staffing industry, in your experience, Do staffing companies
in general -- let me ask you this. do yearly and quarterly projections? A. Q. Yes.
Can you talk a little bit about how a company does
their projections? MR. KIRSCH: scope. THE COURT: Sustained.

Objection, Your Honor, outside the
333
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
(BY MR. BANKS)
How does a staffing company determine
in general -- how does a staffing company determine whether or not they're going to engage with a client -let me ask it a little different way. this. Let me ask you
What do staffing companies rely on in order to sign
a contract with a client? A. Well, it's a mixture. We rely on what types of Can we deliver those
services they're looking for. services? services.
How much profit we can make in providing those Credibility of the company. I mean, if its a But it
smaller business, that obviously comes into play.
is a balance of risk and reward, as I had mentioned. There is only so much vetting you can do. And my current firm, we plan for approximately three to four -MR. KIRSCH: THE COURT: THE WITNESS: Objection, Your Honor. Sustained. In the industry, you plan for funds In the
that will not be paid, that you have to write off. industry, we plan for that. And that's where, when
engaging with small businesses, that is what I say when I say it is a risk and reward. You manage how many risky companies you engage with, because you have the understanding that you're basically extending yourself. And if for whatever reason
334
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
they're unable to pay that, then you are out. matter of managing risk.
So it is a
Like managing a portfolio, you You will have several very
will have several high risk.
sustainable clients, and then you will have some that are middle of the road. But it comes down to a mixture of up-front vetting, and then the internal process of managing risk, with an understanding that you are extending yourself for all of the clients, all of the contractors that you have. So if
you have too many that are risky clients -- and you can classify them through vetting. If they are risky, then Don't
you, as a company -- the standard is not any more.
work with any smaller, start-up companies, anything like that. Q. (BY MR. BANKS) MR. BANKS: THE COURT: Q. (BY MR. BANKS) Okay. Can I have one moment, Your Honor? You may. In your experience of servicing staff
augmentation clients, is your company -- is it typical that only one company services a client? A. all. Q. A. What is typical? It's typical for them to be engaged with a variety of It's actually usually encouraged.
No.
That would be -- that would not be typical at
staffing companies.
It
335
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
opens up for competition, competitive rates, a variety of candidates, things of that nature. It ranges from -- if
it is managed from a hiring manager perspective, a hiring manager may maintain three to four staffing firms that specifically he works with. That means, adding up for a company -- you can do the math, add up if there are 10 hiring managers, an assumption that they could work with anywhere from 20 to 40 staffing companies simultaneously. Also simultaneously
they have contractors on site with multiple staffing companies. I mean, if they are engaged with us, the expectation is that they are engaged with one of our competitors. It is a very competitive market. We know
most of our competitors, and clients are working with many of us at the same time. Q. Okay. I want to go back and discuss two terms you
mentioned earlier called "accessibility" and "availability." In your professional opinion, why do
companies hire people -- hire contractors to just be accessible? A. It is essential to their business operations.
Technology and computers drive everything from Chipotle's invoicing system, to a variety of things. driven by technology. Everything is
So they must have the talent to --
336
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
they must have access to the talent to fix that.
I mean,
a simple explanation would be if it is payroll week, and the network goes down, and there is no one there to bring that network back up, then that is a very bad situation for a company to be in. If there is nothing for that network person to do but simply sit there, and sit there and to twiddle his thumbs until the network breaks, then that is what they are paid for. Again, it is a small percentage of people
who actually have the talent to do this, to do technology and to actually bring a system back up if it goes down, to actually keep a system up and running. simple scenario. A payroll system, that's one of the most simplistic that you could bring up, but it is essential. If they And that is a
don't have someone that they can quickly get in place to fix that system, then they will be in a bad situation, and it is worth them to pay an hourly rate to keep that person engaged. Q. It sounds like -- would you say that companies hire
contractors to be accessible and available just for insurance purposes? A. Q. I mean, that's a good way of putting it, yes. Let's talk a little bit about reporting of hours that Who manages -- I will ask this
contractors engage in.
337
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
question first.
Who manages the hours or provides work
for the contractor in a payrolling or staff augmentation relationship? A. Q. A. Q. Who provides tasks? Who provides the tasking for the contractor? The client does. And does a client have full rein over what to assign
a particular contractor? A. In essence, yes. They are paying for it. So, yeah.
I mean -Q. So if a client -- in your opinion, if a client
chooses to use a resource in another capacity or another skill set he may possess than what he was hired for, is that the client's determination? A. Yeah. We would have no way of knowing that that And in most situations, yes, it would be the
happened.
client's discretion. Q. And do you really care that the client has
re-assigned a contractor to do something else other than what was on the service agreement for him to be doing? A. No. It's standard in our individual contracts to
have the line item that says, and "other tasks as directed by client," for that particular reason. what you use them for. Q. Have you ever seen, in your experience, where a
You can drive
338
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
client would report for work but could not be actively engaged in actual tasking? A. Q. I don't understand the question. I'll rephrase. MR. BANKS: THE COURT: Q. (BY MR. BANKS) May I have one moment, Your Honor? You may. Are there scenarios in the staffing
industry where a contractor would show up for work -MR. BANKS: different question. I have no further questions, Your Honor. THE COURT: MR. WALKER: direct. We would ask for a quick bathroom break at this point, if we could, Your Honor. THE COURT: hour. MR. WALKER: One of the co-defendants expressed an We have only been going for about an All right. Mr. Walker? I am sorry, Your Honor. I will ask a
Yes, Your Honor, I do have additional
urgent need to go right now. THE COURT: We will be in recess for 10 minutes.
We will reconvene at shortly after 3:00. MR. WALKER: Thank you, Your Honor.
(A break is taken from 2:51 p.m. to 3:05 p.m.) THE COURT: Ms. Seeman, would you bring the jury
339
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
in. You may be seated. Redirect. I am sorry, direct. Still on direct.
Mr. Walker, you may proceed. DIRECT EXAMINATION BY MR. WALKER: Q. Mr. Thurman, you were talking previously about how
staffing companies make money and that there is a markup involved, right? A. Q. A. Correct. And how do you go about determining that markup? Through negotiation. It's on a case-by-case basis.
Depends on the client. dollar amount.
Their percentage markup is a
It is pre-negotiated and placed in the It varies.
contract with the client. Q.
And since you said it is a negotiated rate, what
factors play into negotiating the final mark up? A. For W2, it's -- obviously we have a standard overhead
cost, as far as operating costs, just to keep our office running. There is also payroll taxes, which are roughly
about 13.5 percent, which is what adds into a burden cost, so on top of that $50 before we make profit. Add another
13.5 percent, that care of most of your taxes, Social Security, things like that you have to pay for W2 employees. Overhead costs, then profit.
340
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
So, from a staffing firm's perspective, that is kind of the different cumulative values that go into whatever gives us our markup, or the minimum markup we would accept, I guess I should say. everything is profit. Q. Okay. And is that markup determination different for Then, above that,
a payrolling situation? A. Q. A. Usually. And how does it differ for payrolling? Payrolling, in most cases, the markup, the standard And that is a standard given
is that the markup is lower. by clients.
They will -- if a client is mandating a rate,
you will see a staffing rate, which is a set percentage, and then the payrolling rate is a lesser percentage because we are doing less work. We are being given the
person and we are making a margin, basically sight unseen for the person that we are basically paying, and making a profit on paying. Q. And does the size of the company ever enter into your
determination of markup? A. It's not a major factor. Length of contract goes
into it. more.
If it is a short-term contract, the margin is
It is not worth our investment or our back office
time to do a short-term contract at a low margin where we make a thousand dollars. That's not the business we are
341
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
in. play. Q. A. Q.
So that would not be beneficial.
So that goes into
But the size of the company, not necessarily. Would risk play a role in your markup determination? In the overall markup, not necessarily. And in staffing IT professionals, is it common for
you to see time sheets with long hours worked in a day? A. With long -- with long time -- with a lot of hours
worked in a single day? Q. A. Q. Correct. Yes. Is it common for you to see a contractor work long
hours in a span of a week? A. Yes. My previous example of a hundred plus hours,
which doesn't raise a flag, because it is not outside of the norm. Q. Would long hours over the course of 2 to 4 weeks
raise a flag to the consulting company? A. Q. A. To our consulting company? Yes. No. In all honesty, the flag -- it goes back to if And, I mean, if it gets -- no, it
the hours are approved.
wouldn't, would be the answer. Q. Okay. In your experience in working with
contractors, when the client terminates a contractor, who is the person they contact at the contract company, the
342
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
staffing company? A. They would contact, obviously, the person who was
their customer-facing relationship; the account manager, or whoever they deal with. manager. Q. And in doing those terminations, does the staffing But usually the account
company train people on how to terminate contractors? MR. KIRSCH: relevance. Your Honor, objection to the
I believe the question was when the client
terminates a relationship. THE COURT: Q. Sustained. Have you had the occasion to
(BY MR. WALKER)
terminate contractors on behalf of your staffing company? A. Q. Yes. And what type of reactions have you gotten from
terminated contractors? MR. KIRSCH: THE COURT: Q. Objection, relevance. Sustained. And in your years of working with
(BY MR. WALKER)
staffing companies, have you seen IT contractors working multiple contracts? A. Q. Yes. Have you seen contractors working multiple contracts
at different clients? A. Yes.

343
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Have you seen contractors working multiple projects
for a single client? A. Q. A. Q. A. Q. Working multiple projects for a single client? Yes. Working multiple projects for a single client? Multiple projects, yes. Yes. Would that be unusual for an IT contractor to have --
to be working on multiple projects? A. It goes back to what I previously stated, as far as
who -- if the initial contract begins to suffer, that's where the issue comes into play. Outside of that, it
comes back to whether the client -- I mean, from a staffing perspective, we don't have an issue with it, no. Q. And, Mr. Thurman, do you have any type of
relationship with the six co-defendants in this case? A. Q. A. Q. A. Yes, I know them. You know all of the co-defendants? Correct, I do. How do you know the co-defendants? Professionally and personally. Several have worked
for -- worked on contracts for me or for a firm that I work with. Q. And so you were, in that respect, responsible --
played a role for getting them staffed with clients of

344
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
your company? A. Q. Correct. Did you play a role in getting any of the
co-defendants staffed for IRP or Leading Team? A. Q. No. Did any of the co-defendants work for any company
that you were working for through IRP or Leading Team? A. Not to my recollection, best I can recall. MR. WALKER: THE COURT: MR. WALKER: questions. May I have one moment, Your Honor? You may. Your Honor, I have no further
My co-defendants do. Mr. Barnes? DIRECT EXAMINATION
THE COURT:
BY MR. BARNES: Q. Mr. Thurman, could you explain the on-boarding
process that takes place when a new contractor comes on, either in a payroll arrangement or under a staff augmentation arrangement? A. Q. A. They differ. Explain. For a contracting engagement -MR. KIRSCH: THE COURT: Q. Objection. Sustained. Do you identify the contractor you This is outside the scope.
(BY MR. BARNES)
345
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
are hiring when you bring them on to staffing, in industries that -A. Q. Do we meet them? Do you meet them or somehow verify who they are? MR. KIRSCH: THE WITNESS: THE COURT: THE WITNESS: Q. A. (BY MR. BARNES) Same objection. Yeah. Overruled. Yes. Would you explain how you do that?
On verification, obviously looking at their
identification for any type -- obviously, we are paying these people, so we have to get account information. A
lot of times we have to do background checks, depending on the client's requirements, which requires Social Security numbers. Q. So, yes, we verify who these people are.
Another question is, would you consider certain
contractors career contractors? A. Q. Yes. Could you explain what you would describe as a career
contractor? MR. KIRSCH: THE COURT: Q. Objection, outside the scope. Sustained. Okay. Also, how would a staffing
(BY MR. BARNES)
agency identify fraudulent time reported on a time sheet? MR. KIRSCH: Objection outside the scope.
346
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
THE COURT:
Sustained. Are there steps staffing agencies
(BY MR. BARNES)
take to verify time being reported to a client in a contract? MR. KIRSCH: THE COURT: THE WITNESS: Same objection. Overruled. Yes. I mean, those hours must be
approved by the client, ultimately which generates our invoice, which is what we bill our client with. how we track invoices and things of that nature. far as time, it has to be approved by the manager. So that's But as We
don't pay any contractor for time that is not approved by their manager. Q. (BY MR. BARNES) What would need to happen if a time What would happen?
sheet was sent and it wasn't approved? A.
We would reach back to that contractor and tell them Or we would reach out to
that they need to get approval.
their manager and tell them we need to get approval so we can pay the contractor. Q. Is there any formal process that you follow or any
standard for that? A. Well, it depends. Sometimes you have -- some
organizations have automated time tracking systems, which obviously inserts it, and it goes to an approval, which would then be a click of the button, if you have that type
347
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
of system.
Some are done via paper time sheets that then But, ultimately, I mean,
require a manager's signature.
there is not much of a process, because it's only -- it's one step of circling back and saying we need approval for this time sheet. And that's what it is. I have no more questions, Your Honor. Anybody else? Mr. Zirpolo?
MR. BARNES: THE COURT:
DIRECT EXAMINATION BY MR. ZIRPOLO: Q. I have a few questions regarding time sheets. On the
approvals for the time sheets, is it typical for a client to have more than one person included in time sheets? A. For a client in general, yes. We would have approval
for more than one person. Q. I have a question back on the terminations. So you
have had an opportunity to terminate consultants? A. Q. I have terminated consultants. And has that been because a contract ended early, the What were the different reasons? Objection, relevance. Overruled. All of the above. I mean, contracts Those are the
contract was over? MR. KIRSCH: THE COURT: THE WITNESS: end.
Funding is lost.
Performance issues.
reasons that usually someone is let go. Q. (BY MR. ZIRPOLO) And when you have done that, the
348
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
responses you have received back from those consultants, what were they like? MR. KIRSCH: THE COURT: MR. ZIRPOLO: THE COURT: THE WITNESS: Objection, relevance. Overruled. That is relevant because -Overruled. In general, we have a lot of
contractors that I have seen. Q. A. (BY MR. ZIRPOLO) Specifically, a contract ended. Nine times
A contract ended, they know it's ending.
out of 10, they either know that the contract is coming to an end, because of the duration that they previously set. Contractors are a different mentality. They know that I They know
am not going to be at this company for 2 years. I am going to be here for 3 months. there 6 months. It shows on their resume. different.
I am going to be
It shows in -- it is
If you work for a company for 20 years and you If
get fired, you are going to have quite the reaction. you work for four different companies a year and your contract ends, that's what contracting is.
Your contract Nine
has ended, and you go and find the next engagement.
times out of 10, they are already looking for the next engagement already. MR. ZIRPOLO: May I have a moment?
349
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
THE COURT: MR. ZIRPOLO: THE COURT: MR. HARPER: THE COURT: proceed.
You may. I have no further questions. Anybody else? Yes, Your Honor. All right. Mr. Harper, you may
DIRECT EXAMINATION BY MR. HARPER: Q. Mr. Thurman, you stated earlier that the recruiting
in account management in regard to staffing is quite competitive? A. Q. Correct. And you also informed the Court that account managers
and recruiters, being a competitive market, they make margins off of -- for commissions? A. Q. Correct. So, again, the more people they staff, the more money
that account manager and recruiter can make? A. Q. Correct. As well, if a recruiter is reaching out to a new
client, or account manager is reaching out to a new client -- and as you stated earlier, they do some initial research and vet that customer; is that correct? A. Q. You are asking me, is that standard process? Is that one of the processes?
350
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
Yes. So during that vetting process, can a recruiter come
back to his account manager, his or her account manager, and give a brief summary of what they initially found to do business with this new client? A. Q. Yeah. And upon them explaining that information to the
account manager, and the account manager doesn't make a decision, and they have to go to a third party, meaning their boss or the owner, would there be cases, in your experience, where they have made a false statement to get that business signed? MR. KIRSCH: THE COURT: Q. Objection, relevance and leading. Speculation. Sustained.
(BY MR. HARPER)
And you mentioned earlier that
consultants, in your experience, have worked multiple contracts at one time; is that correct? A. Q. A. Correct. Is this behavior encouraged in the staffing industry? Again, it's on a consultant-by-consultant basis. And
depending on the skill set, the answer would be yes. There are some skill sets that you just do not have enough talent for, and if there is opportunity that can be well managed and delivered upon, then, yes, we would engage them on multiple contracts.
351
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
As well, are you familiar with the term "billable
consultant"? A. Q. I am. Okay. And you mentioned earlier in regards to being
on call. A. Q.
Do you recall those?
I do. And you stated that being on call, regardless, is
almost like an insurance policy, as you stated earlier; is that correct? A. Having accessibility or having that consultant be
available? Q. I am sorry, accessible. Has there been cases where
the billable consultant gets in his or her car and starts billing the client? A. Yes. I mean, that ties back to what I mentioned as There is a lot of
far as there is a lot of negotiations. mandates that can come down.
It's a -- that's standard if
there is a decent amount of travel, you are going to pay for those hours. They would be paid for drive time, plus Yes, it can be
milage, plus housing, possibly per diem.
lucrative for that contractor if they negotiate it the correct way. Q. Okay. So having you state that, a contractor could Drive
conceivably work 10 hours and bill 14 or 15 hours. time -DARLENE M. MARTINEZ, RMR, CRR United States District Court For the District of Colorado
352
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Many conceivable ways that could happen, yes.
That's
possible. Q. And could you describe the difference -- you In
mentioned a full-time employee versus a contractor. your experience, what would, some people want to be full-time employees.
Some people want to be contractors.
Would you explain, in your experience, why people would want to be a contractor or a billable consultant? MR. KIRSCH: speculation. THE COURT: Q. Sustained. It is also irrelevant. Objection, Your Honor, calls for
(BY MR. HARPER)
You also mentioned being in a Have you ever, in your experience,
competitive market.
seen a contractor be let go from a contract at client A and then be picked up by the same client shortly thereafter being let go? A. Yes. MR. HARPER: THE COURT: MR. HARPER: THE COURT: MR. WALKER: THE COURT: MR. KIRSCH: Could I have a moment, Your Honor? You may. No further questions, Your Honor. Anybody else? No, Your Honor. All right. Cross-examination?
Thank you, Your Honor. CROSS-EXAMINATION

353
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
BY MR. KIRSCH: Q. A. Q. Good afternoon, Mr. Thurman. Hello. I am sorry, but I have to ask you first. Did you
testify today, in 2011, IT professionals are regularly carrying pagers? A. Blackberries, IPhones, pagers. Some do actually
still carry pagers I would say. Q. Okay. And then I think you also said that in
response to a question about people working 20 hours a day, you referenced an experience you had where a person billed 104 or 107 hours in a particular week. A. Q. Correct. That actually works out to more like 15 hours a day,
doesn't it, as opposed to 20? A. Are you doing it in five or seven? Are you doing it
in seven, or a normal business week? do that. Q. A. Q.
Depends on how you
You are breaking it down under five days? Are you asking me the specific situation? No. I am asking you how it was you got to 20 hours. You got to 20 hours by assuming the
Now I understand.
person worked only five days. A. Q. Correct. Okay. In a normal business week.
Now, you testified earlier that you knew all

354
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
of the six defendants in this case; right -A. Q. A. Q. Correct. -- before you came here today? Correct. In fact, you've grown up with just about all six of
these defendants; right? A. Q. A. Q. A. Q. A. Q. I have known them all for quite awhile. How long? It varies. I would have to --
What is the longest you have known any of them? Probably 22-plus years. You are how old? I am 27. All right. And you didn't work at IRP at all; is
that right? A. Q. A. Q. Correct. Okay. I did not.
But your father, Samuel Thurman, did? He did.
Correct.
He was some sort of vice president of marketing
there? A. To the best of my recollection. I am not sure if it
was that title, but I know he worked there. Q. A. Q. Do you know that marketing was what he did? I honestly don't know. You don't know what his job was there?
355
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q. A. Q. A. Q. A. Q.
No. Okay.
I am not sure. Your mom worked there as well; right?
I don't believe so. What is your mom's name? Regina Thurman. She didn't work there? To the best of my knowledge, I don't believe so. Okay. If her name was on some sort of an employee
list, you wouldn't have an explanation for that, then? A. To my knowledge, no. I know she volunteered there.
She did do that. Q. Okay. Then what do you mean by she didn't work
there. A. Q.
She didn't get paid? I don't know.
That's outside of my knowledge. All right.
You know a person name Lawanna Clark
also, don't you? A. Q. A. Q. A. I do. You know Lawanna Clark didn't work there; right? To the best of my knowledge. She didn't work there; right? I'm not sure who all worked at IRP. I apologize, but
that is outside of the scope of what I'm here to testify about or my knowledge. Q. You have -- you have testified under oath before,
haven't you, Mr. Thurman?

356
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
I have. Okay. And you've, in fact, testified under oath
before about whether or not Ms. Clark worked at IRP, haven't you? A. Q. I guess. I'm not a hundred percent sure.
And in that previous testimony, under oath you said
Ms. Clark didn't work at IRP, didn't you? A. Q. I would have to read a transcript to tell you that. All right. MR. KIRSCH: Your Honor, can I approach the clerk
and ask for a transcript to be marked for purposes of identification. THE COURT: MR. ZIRPOLO: THE COURT: You may. Objection, relevance. It is for impeachment. Overruled.
COURTROOM DEPUTY: Exhibit 1011.00. THE COURT: Q.
Marking this as Government's
Marked for identification as 1011.00. All right. Do you have that now
(BY MR. KIRSCH)
Mr. Thurman? A. Q. I have it. Can I direct your attention in the top right corner, I just ask you to read the
it will have the number 235. first half of that page. A. Starting at No. 1?
357
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q.
THE COURT:
Just to yourself. Just read it to yourself.
(BY MR. KIRSCH) To myself? Yes, please. First half.
Did you have a chance to do that? Yes. Now, having looked at that, does that refresh your
memory that you previously testified under oath that as far as you knew, Ms. Clark didn't work at IRP? A. Specific words, "No. Not to the best of my Not to the best of
knowledge."
Same thing I said today.
my knowledge. Q. Thank you, Mr. Thurman. MR. KIRSCH: And --
Your Honor, could I please publish
Government's Exhibit 50.01, page 8? THE COURT: MR. KIRSCH: Special Agent Smith. Q. (BY MR. KIRSCH) Have you ever heard of the company You may. Enlarge that list for us please,
Analysts International, Mr. Thurman? A. Q. A. Q. Yes, sir. You know that is a staffing company, right? I do. So based on your professional experience, if
358
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Ms. Clark wasn't working at IRP or DKH, there would be no reason for her to be hired as a tester through Analysts International; would there? MR. WALKER: THE COURT: THE WITNESS: best of my knowledge. Q. (BY MR. KIRSCH) My question, sir, is, if she was not Your Honor, calls for speculation. Overruled. Through my comment, no, not to the
working there, would there be any reason for her to have been hired as a tester? A. Q. If she wasn't, no. Okay. And then, again, based on your professional
experience in the industry, have you ever hired a person as a software architect who wasn't able to log on to the internet by herself? A. That's -MR. BANKS: this question. THE COURT: THE WITNESS: Overruled. Have I ever hired an architect who Objection, Your Honor, no relevance to
was unable to log on to the internet? Q. A. Q. A. (BY MR. KIRSCH) Yes.
Not to the best of my knowledge. That is not something you would want to do? No.
359
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q. it? A.
That wouldn't give your client good service, would
Correct. MR. KIRSCH: Thank you, Special Agent Smith. Now, I want to make sure that I Did you say you worked at the
Q.
(BY MR. KIRSCH)
understand your experience. Innovar Group for 3 years? A. Q.
I believe it is a little over 3 years. A little over 3 years, okay. You worked at Client
Solv for 2 years? A. Q. Just shy of 2 years. Okay. And did I hear you correctly then say that you
had 6 years of experience in the staffing industry? A. Q. Okay, just shy of 6 years. All right. Just shy of 2 at Client Solv, and just
over 3 at Innovar, and that adds to just shy of 6? A. Q. A. Q. Okay, 5 point something. All right. I apologize.
I just want to make sure --
Not a problem. -- we're clear about that. And prior to that, you
worked in sales? A. Q. Correct. Okay. Now, in your 5 years or so of experience, how
many clients have you had to do payroll? A. You need an exact number, or can I give you a range?
360
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q. A. Q. A. Q.
I assume you don't have an exact number. I don't have an exact number. Between 7 to 10.
Between 7 to 10 clients have done payroll? Correct. And how many small clients -- how many startups have
you dealt with during the course of your 5 years? A. Q. Probably about the same. Maybe a little bit more.
How many start-ups doing payrolling over the course
of your staffing career? A. two. Q. One or two is the number of start-ups you have dealt That's rare. That's more rare. I would say one or
with who have done payroll? A. Q. Uh-huh. All right. Now, you testified a little bit about the
engagement process for getting new clients for staffing; right? A. Q. Correct. And am I right that one of the things, I think you
said you do, is you try to gather information about your potential client; is that right? A. Q. Correct. And does that include information about their
business? A. In general, what they do.

361
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Okay.
You want to know, in general, what the
business of your client is? A. Q. Correct. Okay. And I think you said that the primary thing
that you wanted to determine was whether or not they were going to pay your bills? A. Whether or not we would get paid for invoices we Pay our bills. Pay the bills we sent to
sent; correct.
them is the question? Q. A. Q. Yes. Correct. That is your main interest; is your client going to
pay your bill? A. Q. A. Q. Correct. Because that is how you get paid? Correct. Right. Because when -- if you, for instance -- if a
staffing -- if a business development manager or an account manager or recruiter, anybody who is getting paid on commission in your industry, if the client doesn't pay, they don't get paid; right? A. Q. A. Q. No, that's not always -They don't get that commission? That is not always the case. You get a commission whenever, even if a client
362
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
doesn't pay? A. It depends. We have a lag. So it depends how it is
structured.
Multiple companies can structure it to
whether either you are paid up front in a month, some companies do that. Some companies are paid if it is a So that
lump sum, once that invoice is received. statement is not always true. Q. All right.
Sometimes true.
Is it fair to say that you don't know how
other companies do it? A. Q. A. No that's not fair to say. Okay. I have worked for multiple. I have had offers from
multiple staffing companies.
I am solicited to work for
other staffing companies, in which I see their compensation packages; how they pay, when they pay and when you are paid. Q. So I do know that.
Is it your testimony that the majority of time, if
you -- in your industry, if a person couldn't collect from a client, that they would still get to keep his or her commission from that client? A. Keep his or her commission, they probably would not. They would be paid. Would they
Would they be paid it? have to pay it back? Q. All right.
That is very possible.
And I think that you said that when you
were trying -- when you were thinking about doing business

363
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
with a private company, that means a privately-held company; right? A. Q. Yes, correct. Okay. It is harder to figure out whether or not that
company is going to be able to pay; is that right? A. It is harder to obtain financial information about
those companies; correct. Q. Okay. One of the things that you would want to know,
if you were engaging a potential client like that, if you were deciding -- I am sorry, if you were deciding whether to engage with a potential client like that, you would want to know whether they had paid their debts to previous staffing companies, wouldn't you? MR. HARPER: THE COURT: THE WITNESS: Objection, speculation, Your Honor. Overruled. That is not a standard question. No,
we didn't question on whether they have paid previous staffing companies. Q. (BY MR. KIRSCH) I didn't ask you if it was a
standard question, Mr. Thurman, I asked you if that is something you would want to know. A. Since we don't usually ask that, then the answer to We
that would probably be, it's not a standard question. don't ask that. would be no.
So the answer to your question, I guess, I would have to
Would you like to know?
364
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
speculate on that. them? Q.
Would I like to know everything about
I am not asking you to speculate.
I am asking you,
as you sit there in the chair right now, is that something that you would like to know? A. Q. A. time. Q. Isn't that the point of doing the Dun & Bradstreet It is not something we ever ask. You have never asked that? Have you paid your other staffing companies? Not one
inquiry, is to try to find out if a company has paid its bill? A. That is different from asking, have you paid other Two different
staffing companies you are engaged with. things. Q. A. All right.
Dun & Bradstreet covers -- doesn't just cover
staffing debt, it covers company debt and their credibility. Q. A. Q. You asked me, would I ask that question.
I actually asked you whether you wanted to know. Would I like to know? And what about in those kind of instances when you
are dealing with a private company, do you sometimes do reference checks? A. Sometimes.
365
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q. A. Q.
Okay. Yes. And if a company provides you references, you would
check with those references, wouldn't you? A. Q. A. We would. It's rare, but we would.
What's rare? It's rare that you ask your client for references.
It's relatively rare in staffing. Q. Your training and experience in the staffing industry
tells you that it is rare for a staffing company to ask potential clients to provide references? A. It's not for the companies that I have engaged with
and for the people I work with, correct. Q. All right. And if you do get those references, then
did you say you would check them? A. Q. Correct. Okay. And am I right that you would be interested to
know whether or not the people providing the reference had some sort of business or personal relationship with the potential client? A. Standard references or professional reference, or is
it a personal reference, correct. Q. A. Okay. You were asking to differentiate, is this a personal
reference or a professional reference.

366
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Okay.
And a professional reference, you wouldn't
expect to come from a family or a close personal friend, would you? A. If there is business engagements between the two,
then that classifies itself as a professional reference. Q. All right. You wouldn't -- would you care whether or
not the person -A. We could possibly ask for another reference if we
don't feel that the references we have been given are adequate for us to do that, then we could ask and say, we have these three, we would like to request one additional reference. Q. We could do that.
I believe that you also said that when you are trying
to decide whether to do business with a private company, that the credibility of the company is important. hear you right? A. Q. Did I say "the credibility of the company"? That is what I heard. That is why I am asking Did I
whether I heard you correctly. A. that. I mean, the -- I don't know if I specifically said But, of course, the credibility of a company comes But that's hard to gauge. That is up to -- it
into play.
is hard -- there is not a report you can pull on that besides the Dun & Bradstreet. Q. It is a hard thing to figure out whether a company's
367
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
credible; right? A. Right. Goes back to risk and reward, as I mentioned.
We take certain risks in the hope of reward. Q. And it is especially hard to figure out whether a
start-up company is credible; right? A. Q. Correct. And when you are trying to -- when you are trying to
make that determination, one of the things that you would look at would be your personal interactions with the people who worked for that company; right? A. Q. Correct. And am I -- is it fair for me to say that when you're
doing that, that you generally believe what that company is telling you about its business? A. Well, that's what the vetting process is. The The So do we
vetting process is not, do we generally believe. vetting process is, how viable is this company? believe everything we hear? No.
There are companies we
walk from -- that you walk from because you don't believe what you hear. So, no, that's why it is called vetting. believable? Is it not believable? Is it
Is it a risk we are
going to take?
Risk is based on what we are told, but not So it is vetting.
quite believe what we are told. Q.
I take it, then, the companies you don't walk away

368
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
from, those are the ones that you believe what they say? A. Q. Correct. All right. Now, in the process of hiring, I think
that you said that you generally would meet with an employee. If you were going to hire someone, you would
meet with the employee that was going to get payrolled. A. them. Q. A. Payrolled, no. If it is staff augmentation, we meet
If it is payroll, it is rare we meet them. You don't usually meet with payrollled employees? Payroll, it is someone that the client refers. So we
usually -- there is no need for us to meet them.
We are
not vetting them, we are basically payrolling them. Q. Do you still gather from a payrolled employee the
kinds of documentation that you described related to identity, such as the I-9 employment eligibility documents? A. Correct. Sometimes HR will do that via fax or some
other method. Q. A. Q. They don't always do it in person? Correct. But you still get that information about the identity
of the employee? A. Q. Correct. You get their name and their date of birth and their
Social Security number and that sort of thing; right?

369
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
We get whatever is necessary for the process.
If we
actually do a background check, if we did have to do drug screening, then obviously a Social Security is required. We get what we need to basically on-board them, maintain them -- it ranges. If it is a W2 employee, if it is a corp to corp or 1099, that changes how much information you get about that person. And it -- basically, for payrolling, the ultimate
goal is that we are on-boarding them, and we are payrolling them, and we can get them their pay. Q. If you are going to have a person be an employee of
your company, you have to get the I-9 forms? A. For W2, correct. For a W2. If it is a corp to corp,
a 1099, that is not -- it is a business-to-business relationship. Q. I am asking about a person that is going to be your
company's employee, that is a W2 employee. A. That is why I am clarifying. We have spoken about
all three today. the case. Q.
So I want to clarify that is not always
W2 employee, I do.
We are clear that my question is about W2 employees.
Is that clear now? A. Q. Yes. Am I right that for a W2 employee, you are going to
gather your -- any staffing company is going to gather all

370
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
of the information that is relevant to do I-9 employment eligibility verification? A. Q. Correct. And for a W2 employee of your company, that's the
person -- the person that you get the information from, that's the person that you expect to be doing the work reported on a time card for that person's hours; right? A. Q. Correct. You wouldn't expect someone else to be doing work and
then reporting time under your employees' time cards? A. Q. No. And you would -- and there would be a problem if you
found out that was happening; right? A. If it came to our attention, yeah. I don't know how
we would be made aware. MR. BANKS: direct examination. THE COURT: Q. Overruled. If you learned that, you would want Objection, this is outside the scope of
(BY MR. KIRSCH)
to investigate? A. Q. A. Q. Correct. And anybody in the staffing industry would? Correct. Now, let me ask you a little bit about this idea
about the availability and people who are on call.

371
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
Okay. Whenever that kind of arrangement is going to be put
into place, when someone is going to be on call, when they are going to have either an 80-hour minimum or any of the scenarios you described -A. Q. Yes. -- that's something that a staffing company is going
to set up and approve in advance with its client; right? A. That's something that the client will approve, I
guess you should say. Q. The client is going to approve it in advance of it
happening? A. The client will approve it, yes, because we are going Because it is a bill we are
to bill them in advance. going to send them. doing that. Q. Right.
So, yes, the client would approve us
And that is something you -- I thought I
heard you say that that is something that would be arranged up front; that you would have a discussion with the person -- either the person who was going to provide those services or the client, and you would talk about what's the minimum number of hours that are going to be paid? What is the amount of time you need to have a Did I hear that right?
person on call, for example? A. You did.
372
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Okay.
And that's true in any of those kinds of That's true for the type of
arrangements; right?
arrangement that you described where a person might bill, for instance, 80 hours for a month? A. Q. Uh-huh. Okay. And that is also true for the other
arrangement that I think -- where you talked about the person who might work -- be on call 5 hours each day on the weekend. A. Yeah. That is usually at the up front. The second,
the latter, is recurring. discussed. contract. Q.
So, yes, it is usually
Then it continues on for the duration of the
And you, as a staffing company representative, would
know that that arrangement is in place? A. Q. Correct. All right. And did you testify that it's -- then
once you get that arrangement in place, it is the client's responsibility to use that time? A. Q. A. Right. Right. -- to make sure that that person is either working 80 It is the client's responsibility --
hours or working one, with the understanding they are going to be billed. Q. Because they are going to be billed for 80 hours.
In
373
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
that example, the client will be billed for 80 hours no matter what? A. Q. Correct. It wouldn't make very much sense for a client to pay
for 80 hours if the person was only going to work for one; right? A. No. It wouldn't make much sense, but it gets back to And it's something where if they need to
availability.
have access to this person -- and it is usually -- like I say, it is usually 3- to 6-month types of contracts. for the first month you may know you need 80 hours. the next month you may not need it. need it. We will not necessarily let you end the contract. You could try to end the contract. doesn't make a lot of sense. But, logically, no, it So For
For the third you may
But it happens regularly in
our industry because they need access to this person. Q. All right. But if a company didn't have a business
reason to do that, you wouldn't expect them to do that, would you? If they didn't have a business reason to need
to have a person available, you wouldn't expect them to pay for that availability? A. Q. A. If they didn't have a business reason to do it? Right. I guess not. I don't completely understand your
374
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
question.
If they don't have like a set project to do it? It is a little vague.
I don't necessarily understand. Q. A.
I am asking a more general question. That is what I am saying. So it would be a general
answer in this case. Q.
Basically, it depends on the client.
You also were asked some questions about employees
working on multiple contracts at the same time. A. Q. Correct. Okay. I want to ask you a little bit about that
topic, as well. A. Q. Okay. So you testified, I think, that in your experience it
is common for companies to be working with multiple staffing companies at the same time. A. Q. Correct. Okay. Now, when you said that, you were talking
about some of the big companies that you work with, the Fortune 1000s; right? A. Both. I mean, it's rare -- it's very rare that any
company would work with one staffing company. Q. All right. And so let's talk about the small clients
that you've worked with. A. Q. Okay. Can you give me scope on what small is?
Earlier -- I think we talked about start-ups before.
I think you said you worked with about 10 or 12 start-ups.

375
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Now, those 10 or 12 start-ups, they weren't working with multiple staffing companies at the same time, were they? A. Yes. It's very rare that you would work with one You are going to work with
staffing company at one time.
multiple staffing companies at the same time. Q. What about the one start-up that you worked with that
was doing payrolling, were they working with multiple staffing companies at the same time? A. It's very rare. You are going to have a low
percentage of any company, start-up or otherwise, that is working for one staffing company. Q. Okay. That is abnormal.
I am asking about your experience,
Mr. Thurman. A. Q. That is what I am speaking about. So, no.
That start-up company was working with more than one
staffing company at one time? A. I have never worked with a company that has worked To clarify -- I mean, has
with one start-up company.
worked with one staffing firm. Q. A. Q. At the same time? Simultaneously, correct. All right. The start-up company that you worked with
that was doing payrolling, how big was it? A. Q. Revenue? Employee number?
How many employees did they have?

376
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q.
MR. WALKER: THE COURT: THE WITNESS: MR. ZIRPOLO: THE COURT:
Objection, Your Honor relevance. Overruled. My guess would be -Speculating. Overruled. About 50 employees?
(BY MR. KIRSCH)
That would be my guess. That doesn't include the people that were payrolled
there? A. It's a guesstimate of how many employees are there.
I mean, so -Q. A. Q. You are not sure? I'm not sure. All right. And that company, with the 50 or so
employees, how many staffing companies do you know that they were engaged with at a given time? A. Q. A. Q. A. Q. The specific company? Yeah. That I was aware of? Yes. Specifics that I was aware of, I would guess three. Well, which is it about that? Is it were you aware
of three, or are you guessing that there were three? A. You are asking me specifics? When I tried to state You are asking me
specifics previously, I couldn't.
377
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
specifically about one specific account? Q. Yes. Now I am asking you about one specific account
I am asking you if you specifically remember how many staffing companies that account had at the same time. A. Q. Oh, no. All right. The times when you are aware of an
employee working on multiple contracts for different staffing companies -A. Q. Uh-huh. -- that employee was also working for different
clients at the same time; right? A. Q. Can you restate that? Yes. You said that you were aware of employees who
would work on multiple contracts with different staffing companies at the same time; is that right? A. Q. Correct. Okay. Now my question is, your experience of that
has involved people working on multiple contracts for different staffing companies for different clients; right? A. Q. Majority of the time. Okay. You also said that there were -- that a person
could work on multiple projects for the same client? A. Q. Correct. Right. And that person -- that gets set up, again,
as a part of the initial arrangement that is made with the

378
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
client; correct? A. No, not necessarily. If you are working multiple
projects within the same client? Q. A. Uh-huh. No, that goes back to it is at the client's If they want to engage you on project ABC,
discretion.
and they want to engage you on project No. 2 and project No. 3, that goes back to it's driven by the client. That's not a pre-negotiated type of thing. Q. Okay. If the person would do -- had the ability to
work on multiple projects and complete that work within 8 hours -A. Q. A. Q. Okay. -- that's the premise of my question. Okay. All right. If the person had the ability to complete
the work within 8 hours, you wouldn't expect your -- a client company to pay for that person to be 8 hours at one staffing company and 8 hours at another staffing company, would you? A. Now you're changing -- I'm not quite clear. We were
talking about projects.
Now we are talking about two So I
different staffing companies at the same client. don't understand completely your question. projects.
You are asking Then you
Can you work on multiple projects?

379
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
brought in the previous question, which was sort of the question about two staffing firms at the same time. am not quite clear. Q. Let's start with multiple projects, all right. So So I
you have one employee who is capable of working on multiple projects, and that person is an employee of one staffing company. A. Q. Okay. Okay. Now, that person -- if that person can
complete that work on the multiple projects in, say, 8 hours -A. Q. Okay. -- you wouldn't expect the client to want to pay for
more than 8 hours for that employee, would you? A. It's the client's discretion. There is a variety of
things that are pre-negotiated. demands the contractor's make.
It comes back to what There are situations where
a person, due to workload, due to time of work, due to everything, is guaranteed to be able to add additional hours based -- if their manager approves it, and if this is done. So it's -- that could happen. They could bill
for more than 8 hours, though their work was done in 8 hours. Q. A client might agree that a person could bill for
more than 8 hours, because the client, for instance,

380
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
really valued the services of that particular person. A. Q. Correct. The client really wanted to make sure that that
person kept working for them, as opposed to maybe going to one of their competitors; right? A. Q. That is correct. Okay. But in an ordinary circumstance, you wouldn't
expect, unless the contractor somehow demands it or negotiated it, you wouldn't expect a person, a client, to want to pay for more hours than the employee actually worked; right? MR. HARPER: THE COURT: THE WITNESS: you bill 8 hours. Q. (BY MR. KIRSCH) Now, let me ask you about an Objection, speculation. Overruled. By standard, yes. You work 8 hours,
employee who is working on multiple contracts, with multiple staffing companies. A. Q. Okay. Okay. And I want to ask you about that person being
at the same client. A. Q. A. Okay. Why would that happen? It's rare, but it happens. Depending on what kind of
-- depending on how the client is working -- and, again,

381
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
if it is by project, sometimes you will have a project manager one and a project manager two. you see it is during transition. Most of the time
So let's say they are
wrapping up project one, and they are through staffing firm ABC. This manager over here, project manager No. 2
is working with a different staffing firm, but looking for a similar resource. And so then this staffing firm would reach out to this contractor, basically staff them here. have some overlap. So you could
It happens, and it depends on the So does that make sense?
company on how that is managed. Q. I think so.
It happens, as I understand what you are
saying, it happens not very often, and primarily in periods of transition? A. Q. Correct. It's not something that you would expect to see be a
regular practice of one of your clients? A. For someone to work multiple times -- for someone to
work -Q. At the same time through multiple different staffing
companies but at the same client. A. Q. A. Q. That wouldn't be standard. That is not standard? Correct. And when that happens, it happens with two clients;
382
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
right, two different clients? A. Q. A. We were talking about one client. I am sorry, two different staffing companies? In the scenario you gave me, that was the example I
gave, yes, two staffing companies. Q. You haven't seen that happen with three different
staffing companies, have you? A. Could that person go from one to the other, then go
to the other? Q. No, all three at the same time. You haven't seen
that happen? A. Go through three? MR. KIRSCH: Honor? THE COURT: Q. You may. You, I think, testified earlier, I haven't seen that happen.
Can I have just a moment please, Your
(BY MR. KIRSCH)
Mr. Thurman, that as a staffing company executive, you wouldn't like it if your employees were scheduling -- were taking as much vacation time when they were supposed to be working on projects; right? A. I think I was asked that question, would I like it?
I said it affects the bottom line. Q. And it affects the bottom line even more if your
clients don't pay a dime on any of their invoices, doesn't it?

383
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Correct.
As I mentioned, we plan for that, three to
four times a year. MR. KIRSCH: THE COURT: MR. BANKS: Thank you, Mr. Thurman. Redirect? Yes, Your Honor. REDIRECT EXAMINATION BY MR. BANKS: Q. You were asked about companies paying on time. In
your experience, have large companies not paid your staffing company? A. The lag for larger companies traditionally has been
slower than smaller companies, yes. Q. What is the longest that you've been in arrears from
a large company? MR. KIRSCH: THE COURT: THE WITNESS: THE COURT: THE WITNESS: THE COURT: of a large company. THE WITNESS: specific time? THE COURT: If you can't answer the question, say Objection, relevance. Overruled. There are certain scenarios where -Question is, what is the longest? What is the longest? You have been in arrears from payment That is the question. To give you -- do I have to give a
you can't answer that question.

384
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. Q.
THE WITNESS: (BY MR. BANKS)
I can't answer that question. So is there any large companies that
you have engaged with that haven't paid for, say, 6 months? MR. KIRSCH: THE COURT: (BY MR. BANKS) Objection, relevance. Sustained. Now, you mentioned the credibility of
the company. company.
You were asked about the credibility of a
And you had mentioned the credibility can be
determined primarily by a Dun & Bradstreet report; is that correct? A. It's one of the tools we use for -- it's one of the
reports that can be pulled, correct. Q. A. And what is on a Dun & Bradstreet report? It basically shows their -- basically, their credit The exact things that it outlines on the Dun &
viability.
Bradstreet, I would have to go back and look at it. Q. Does it show their credit payment history? MR. KIRSCH: THE COURT: (BY MR. BANKS) Objection, lack of foundation. It's leading also. Sustained.
Now, you were asked by -- in your
cross-examination about believing what a company tells you; correct? A. Q. Correct. Now, if a company tells you they have a great
385
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
opportunity, is that what you are going to base your decision on to engage with that company? A. Q. A. No. Why is that? Because whoever starts a company, whoever has an idea That is not a
is going to believe their idea is great. vetting process for us.
That's -- it comes down to the
fact that -- I mean that's not a viable or -- that's not a reasonable way for us to track credibility. They wouldn't
be in business if they didn't believe their product was good. So it comes down to, you know, whatever information
we can get our hands on, looking through the internet. Again, there are only certain questions we can ask. We can pull certain reports. And then we have to make a
go, no-go decision on that risky business, if that is what we believe it to be. decision. We have to give a go or no-go
But, no, we don't go work with someone because
they say I have a great product. Q. Okay. Would you -- if a company told you they're
anticipating gaining a government contract, would that be material? MR. KIRSCH: THE COURT: THE WITNESS: government contract?
Objection, outside the scope. Overruled. If they told us they were expecting a
386
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q. A.
(BY MR. BANKS)
Correct. That can mean
We would have to further qualify that.
a lot of different things.
It also could mean that --
that doesn't tell us anything about what they currently have, which is the thing that is important to us, can you pay your bill? Depends on how it is positioned to us.
But that, again, goes to we have a great product. We have -- we think we have a contract coming. That's not
the best way to engage in risky business as a staffing firm, because, again, that is just going off of what they say. Q. That's not a trackable or a measurable thing for us. Okay. Now, you mentioned -- I will go back to In your experience, have you
credibility of a company.
known large companies that didn't pay their bills on time? MR. KIRSCH: THE COURT: Q. (BY MR. BANKS) Objection, relevance, Your Honor. Sustained. Give us some examples of credit
issues you have experienced with large companies. MR. KIRSCH: THE COURT: Q. (BY MR. BANKS) Objection relevance. Sustained. How do you determine credibility with
a large company? A. I mean, if they're public, there is certain things It is the same You assume Coca
that you don't just consider that risk. thing as stocks, something like that.
387
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Cola is going to be able to pay their bills. going to be able to pay their bills.
Lockheed is
That's what it is.
It could be even less scrutiny that we may put a larger company through, because we assume they are going to pay . Q. In your experience, have you known a large company
not to pay their bill? MR. KIRSCH: THE COURT: THE WITNESS: Q. (BY MR. BANKS) Objection, relevance. Overruled. Yes. Now, you also were asked about
whether or not a company would have a business reason to have IT support type of -- or support type of people working; correct? A. Q. Correct. Is it a common practice for information technology Is it a
professionals or -- let me ask it this way.
common practice that information technology professionals are the ones that are engaged in on-call type of engagements? A. Q. Versus what? Is it a common practice that IT professionals can be
on call? A. Q. Yes, they would be. In your career -- you were asked briefly about In your overall career have you
multiple contractors.
388
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
known any contractors to work three or four engagements simultaneously? A. Q. A. Q. The contractor, themselves, to work three or four? Yes. Yes. Does any red flags come up because a contractor is
working three or four engagements? A. It goes back to the same answer. If our client is
not being affected by that work or by them managing multiple contracts, then it's a non-issue. If that is not
the case, then, obviously, it becomes an issue. Q. You were also asked if a contractor had worked with
more than one staffing company at the same client; correct? A. Q. A. Q. Correct. Have you seen that in your career? As I mentioned, I have. Now, you also mentioned that -- on how the majority
of the time, the model of the staffing companies, as far as people working for multiple staffing companies, is not -- the majority of time that does not happen with the scenario we just set forth, correct? A. The scenario of two different staffing companies at
the same client? Q. Yes.

389
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
It doesn't happen very often, no. Would it raise a red flag if a company chose to do
that, in your professional opinion? A. Q. Can you elaborate? "Chose to"?
You said -- have you had an issue with a company that
has done that in the past? A. There would be probably discussions that would come We probably would bring that up with the
up about that. client.
If it was through -- if we saw a contractor that
we had placed through a different staffing company to that same client, we probably would bring that up. Q. A. What would be your motivation for bringing that up? Specifically, the motivation and the reason it would
be brought up would be because if it's at the same client that we're currently working with, then we would press on our client to be leveraging us for that work. If it is the same contractor, we would have -- I mean, there are certain contracts in place that we would try to leverage to say, hey, this contractor signed up with us, and we believe that we should have access to him on this other project. It would be that contractually we
would feel that person should be going through us. Q. So, basically, you would want those hours that the
other contractor was working; correct? A. True.

390
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
So you would rather have that particular contractor
billing multiple engagements or multiple projects back to you; correct? A. If it's at the same client, and we're already engaged
with that client, and there is more work to be done, correct, we would want to capture that work. Q. Would you say that is for -- because you would like
to have that revenue, as well? A. Q. A. Q. Yes. Again, we are a revenue-driven business.
So that would be your underlying motivation; correct? Correct. Would you agree that if the contractor wanted to work
for another staffing company, that would be his option? MR. KIRSCH: THE COURT: Q. (BY MR. BANKS) Objection, leading. Sustained. Who determines -who determines
what projects to take on, the contractor or the staffing company? A. Q. A. Within a client where we have them placed? In general? I mean, the contractor would determine what projects
they do. Q. Okay. Why would a contractor choose to go through
another company and not through your company? MR. KIRSCH: Objection, calls for speculation.
391
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
Sustained. Are there instances where a
contractor would get paid more for another staffing company than from your staffing company? MR. KIRSCH: THE COURT: (BY MR. BANKS) Objection, calls for speculation. Sustained. In your professional opinion, have
you seen that one staffing company, on the same bill rate, will offer more money than another staffing company? A. Yeah. We have different margins, different markups, So, yes, we can pay -- yes, to answer
different overhead. your question. Q.
So, basically, a contractor would see the same job
with -- where he could have increased pay with one staffing company versus the other; correct? A. Q. Correct. Now, you also talked about -- let me ask you this. Does your knowledge or your relationships with the defendants in this case take away from the experience you had in the staffing industry? A. No. Staffing is staffing. I am established in this
industry.
I report directly to the COO of our
organization. MR. KIRSCH: non-responsive.

Objection, Your Honor, this is
392
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.
THE COURT: MR. BANKS: THE COURT: MR. WALKER: THE COURT:
Sustained. No further questions, Your Honor. Anybody else? Yes, Your Honor. Mr. Walker, you may proceed. REDIRECT EXAMINATION
BY MR. WALKER: Q. Mr. Thurman, you were asked earlier about on-call Would you agree
arrangements a couple of different ways.
that those type of arrangements can be made between the contractor and the client without your knowledge? MR. KIRSCH: THE COURT: Objection, leading. Sustained. Mr. Thurman, would you require your
(BY MR. WALKER)
contractors to get your approval before making any type of agreement on call? A. Would we require the contractor to communicate with
us before they agree to any specific terms for hours that they work or hours they can bill, is the question? Q. A. Q. For on call? For on call. No, it is not always through the firm.
And you were also asked about scenarios where there Are
are multiple contract companies involved at a client.
there times you are aware of when a contractor has worked for a client through multiple contract companies?
393
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
A contractor has worked for a client through multiple
contract companies, not simultaneously, as the examples we have talked about in the transition, just at different times? Q. A. At different times. Yeah, that's pretty normal. MR. WALKER: THE COURT: All right. MR. BANKS: THE COURT: No further questions. Anybody else? No.
May this witness be excused? Yes, Your Honor. All right. Thank you very much,
Mr. Thurman, you are excused. All right. MR. WALKER: The defense may call its next witness. Your Honor, this witness' testimony Do you still want us to --
should take several hours. THE COURT:
Approach.
(A bench conference is had, and the following is had outside the hearing of the jury.) THE COURT: Mr. Thurman. THE WITNESS: THE COURT: MR. BANKS: THE COURT: It is. He was an employee? Vice president of sales and marketing. Why would this take several hours? It I thought this next one was
should take 20 minutes.

394
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
MR. WALKER: marketing.
His testimony will encompass sales and
Making calls, meetings. Let's call him. We'll get started.
THE COURT:
(The following is had in the hearing of the jury.) MR. BANKS: THE COURT: MR. BANKS: Your Honor, defense calls Sam Thurman. Sam Thurman, Sr. Senior, yes. Sam Thurman, Sr.
COURTROOM DEPUTY:
Stand here, please.
Your attention, please. SAM THURMAN, SR. having been first duly sworn, testified as follows: COURTROOM DEPUTY: Please be seated.
Please state your name, and spell your first and last names for the record. THE WITNESS: S-A-M-U-E-L. Samuel Thurman. First name
Last name Thurman, T-H-U-R-M-A-N. Mr. Walker you may proceed. Thank you, Your Honor. DIRECT EXAMINATION
THE COURT: MR. WALKER:
BY MR. WALKER: Q. Mr. Thurman, did you work previously for a company
called IRP Solutions? A. Q. Yes, I did. And do you recall the time frame that you worked at
IRP Solutions?
395
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
Started around the latter part of 2003, as far as --
I volunteered a little bit before that. Q. And what type of work did you do in that time frame
that you worked there? A. I did a couple of different things. Then also sales and marketing. Did some
security. Q.
Previous to IRP Solutions, since you just mentioned
security, did you have any security experience? A. Q. A. I did. And what was that experience? I was in the Air Force for 4 years. I was a Captain
in the Air Force as a Space Operations Officer, and also a training officer. As an additional duty, I had security,
both information security and personnel security. Following that, my time in the Air Force, I was with a small company, start-up company called Northern EDF. Northern EDF, with them I was a training analysis -- training development and analysis developer. We developed training programs basically for Air Force spacemen. for them. Then also I was the corporate security officer Following that, I was the -Your Honor, I object to the relevance
MR. KIRSCH: at this point. THE COURT: MR. WALKER:
Sustained. Your Honor, we are showing his

396
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
previous background as related to IRP for work he did. THE COURT: Q. Sustained. And, Mr. Thurman, what was your --
(BY MR. WALKER)
did you have at some point a title at IRP Solutions? A. Q. A. Q. I did. And what was that title? Vice president of sales and marketing. And in your two roles that you mentioned at IRP
Solutions, for your sales and marketing, what type of tasks did you do in that role? A. Q. A. plan. As far as sales and marketing? Yes, sales and marketing? Helped, as far as the sales strategy for the sales Putting together plans, as far as reaching out to And then also
the different agencies in law enforcement. putting together presentations.
Those presentations were
used also for web-based demonstrations, as well as in-person demonstrations. marketing effort. Also included contacting the publications that were relevant to law enforcement with regard to putting together advertising plans, helping to lay out advertising, putting together the layout of it, also coordinating with the various publishers of the magazines to try to get the word out about IRP and the solution that
So it was an overall sales and
397
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
had been developed in case investigative life cycles. Q. A. Q. Let me stop you right there. Okay. And you mentioned several different things there in
your role in sales and marketing, including the sales and marketing plan. A. Q. A. That's correct. Can you talk about what that encompasses? The sales and marketing plan, one of the things I
wanted to do was to try to -MR. KIRSCH: THE COURT: MR. WALKER: Your Honor, I object to the relevance. What's the relevance? Your Honor, this will go to the
efforts at DHS, NYPD and other agencies, and legitimize those efforts and talk about the conception of it. THE COURT: Q. I will sustain the objection. And in your -- you mentioned
(BY MR. WALKER)
presentations and overall sales -A. Q. A. Q. Correct. -- at IRP Solutions? Correct. Did you participate in presentations to potential
customers? A. Q. I did. And can you recall any of the agencies you
398
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
participated in presentations with? A. Sure. NYPD. Philadelphia PD. Department of New York
Homeland Security. State Police.
The Department of Justice.
Orange County, Florida. Atlanta PD.
Orange County
Sheriff's Department.
There were also They were
several small agencies in Missouri, California. pretty extensive. Q.
And so your role as the VP, I believe it was, of Did it also involve
sales and marketing, involved that? supervising other sales personnel? A. It did.
I mean, we didn't have a formal sales staff,
per se.
But we did have several folks who -- I say not
formal, it was formal, in the sense their responsibilities getting on the phones and contacting the small agencies, and we more so targeted the investigative bureaus or the investigative branches of the agencies. And just basically dialing them and trying to identify if there was a need with regard to investigative software. on-line. MR. KIRSCH: non-responsive. THE COURT: Q. Sustained. And so you mentioned the sales staff Objection, Your Honor, it is Another thing that we did also was registered
(BY MR. WALKER)
at IRP Solutions -DARLENE M. MARTINEZ, RMR, CRR United States District Court For the District of Colorado
399
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
Yes. -- and you said no formal. Can you talk about what
type of people elected to do that sales effort? A. mean? Q. Let me clarify that for you. Were these people Well, when you say "what type of people," what do you
dedicated to sales? A. You had several people that did several things. A
typical start-up type environment.
And so you may have
someone who might have been doing some testing, and they might not have been doing testing that day, and if we wanted to try to get in so many calls, just look, and we had printouts of folks that we were trying to use. And
everyone just pitched in and jumped on the phone and tried to establish some contact. Q. And you mentioned that there was a period when you
volunteered at IRP Solutions; is that right? A. Q. That's correct. Do you remember what you did during that volunteer
period? A. Some of the same. I was in sales prior to that. And
so in another capacity.
And so I would go by -- and I was So I had the flexibility
in commission sales positions.
whereby I could actually go and lend a hand, and I would basically tell you guys that whatever you needed me to do,
400
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
point me the right direction.
You know, if there were
books, or however we could find out leads and start to establish a foundation or a database of leads. Q. And in working these sales leads, did the company
have any priority of how they approached the different potential customers in law enforcement? MR. KIRSCH: THE COURT: Q. Objection, relevance. Sustained. And working for IRP Solutions, a
(BY MR. WALKER)
small company, were there -- were their priorities to be worked? MR. KIRSCH: THE COURT: MR. WALKER: Objection, relevance. What is the relevance, Mr. Walker? Your Honor, I am getting to the sales
efforts and how they were worked and how they were determined to be outreached by Mr. Thurman. THE COURT: MR. WALKER: THE COURT: Q. What is the relevance? Then that gets to DHS. Get to DHS. Sustained.
(BY MR. WALKER)
And so, Mr. Thurman, did those sales
efforts at IRP Solutions specifically target large agencies like the NYPD? A. Q. Yes. And what were the -- what were some of the mechanisms
for reaching those large agencies?

401
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
We did by phone calls.
And then also personal
visits. Q. And in the course of working at IRP Solutions, did
you attend presentations to NYPD? A. Q. A. I did. And can you recall on how many occasions? Not specifically a specific number, I cannot. I
don't remember exactly.
But there were -- there were more
than two or three, I know that. Q. And these presentations, were they just PowerPoint
presentations? A. Q. No. They were software demonstrations, as well.
And at what levels of NYPD were these presentations
and meetings held with? A. They would get up to the commissioner level. Not
commissioner of police, but the commissioner of a particular area within the NYPD. Q. So just -- so to be clear, can you give some examples
of some of those commissioners of specific areas? A. Like, there was one individual commissioner, Onalfo, And then
I believe he was over part of the IT section.
there was another gentleman, Inspector Beltran, he was part of what they were establishing at the time as a real time crime scene. And then also there was a Sergeant John He evaluated
Shannon, who we initially made contact with.

402
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
products for coming into the NYPD. Q. And in the course of doing these different
presentations, did the companies solicit input from the agencies? A. Q. A. Q. A. Q. A. Q. A. Yes. And what type of input was received from the NYPD? Well, as with any -Answer the question, please. Subject matter expertise. Subject matter expertise? That's correct. Was provided by? By the NYPD, as well as other law enforcement
officials and other law enforcement agency representatives at all levels, whether it be local, state or federal. Q. And in getting this input from the agencies, would
the company take any action as a result of that? A. That was direct correlation to how the product With any software development effort, you need
developed.
requirements and you need input from those who use the software or use a product that you are developing, and so that was consistent with the industry. Q. And for these large agencies, and given their input,
was there conscious efforts to make changes to the product?

403
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. that? Q.
Yes.
Do you want me to elaborate a little bit on
Hold it right there.
And what was the primary
product that IRP Solutions was marketing to these large agencies? A. Q. It was Case Investigative Life Cycle software. And was there an acronym associated with that
product? A. CILC. Q. And so you mentioned just a minute ago that changes Well, the acronym was CILC. C-I-L-C, but pronounced
would be made to the application based on feedback? A. Q. Changes were made to accommodate the customer. And in your role over sales and marketing, were there
certain features of the product or abilities that were key differentiators? MR. KIRSCH: THE COURT: Q. Objection, lack of foundation. Sustained. And so you just mentioned that after
(BY MR. WALKER)
these presentations, the agency would provide feedback to the company? A. Q. Yes. And the company would make changes to the
application? A. That's correct.

404
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
And as a result of these specific points of feedback,
did the company take any action specific to the software? MR. KIRSCH: answered. THE COURT: Q. Sustained. Mr. Thurman, in -- while doing Objection, Your Honor, asked and
(BY MR. WALKER)
presentations and conducting meetings, would agencies express any, either reluctance or an inability to purchasing? MR. KIRSCH: THE COURT: Q. Objection, hearsay. Sustained. Mr. Thurman, were there any -- talk
(BY MR. WALKER)
about the efforts that the company had in place to attract business. MR. KIRSCH: THE COURT: MR. WALKER: Objection, relevance. What's the relevance? Your Honor, we are going to the
specific actions taken at DHS, NYPD and other agencies to -THE COURT: generally. MR. WALKER: THE COURT: Q. Okay. Sustained. Mr. Thurman, were there specific Address those specifically not just
(BY MR. WALKER)
actions taken when an agency had concerns about purchasing

405
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
the software from IRP Solutions? A. Q. There were different actions that people took, yes. Okay. Did the company have a grant policy in place? Objection, relevance. What company are you talking about? IRP Solutions, Your Honor. All right. Overruled. There were small
MR. KIRSCH: THE COURT: MR. WALKER: THE COURT: THE WITNESS:
Yes, we did.
agencies that were particularly challenged, as far as the cost of the software. And so once we recognized that was
a challenge for several of the agencies, we started to offer grant assistance, from the standpoint of helping to identify grants that could help law enforcement. Then
also offering assistance, as far as writing the grants, to help them overcome that challenge they were experiencing. Q. (BY MR. WALKER) And did this funding problem come
into play with the Colorado Bureau of Investigation? A. Q. It did. And did the company offer grant assistance to the
Colorado Bureau of Investigation? A. Q. A. no. Q. And, as well as grants, were there other facilities
The company did, yes. Were you involved in the grant proposal with CBI? I was not personally involved in the grant process,
406
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
in place to help agencies overcome budgetary problems? A. Q. Yes, sir. And those other programs, did they ever include
giving software to agencies? A. Q. A. They did. Did IRP Solutions ever give software to the NYPD? IRP offered software to the NYPD, yes, for their -- I
believe it was DD5, is what it was called. Q. And then after providing that software to the NYPD
free, did the NYPD utilize that software? A. They didn't. MR. KIRSCH: THE COURT: how he would know. MR. WALKER: Q. (BY MR. WALKER) Yes, Your Honor. And in your role as the vice Objection, lack of foundation. Sustained. Lay more foundation as to
president of sales and marketing, you were aware of the company providing that software free to the NYPD; is that right? A. Q. Yes, sir. And were you involved in subsequent discussions with
the NYPD about the status of that free software? A. Q. Yes. And in those discussions, were you provided the
status of that software?

407
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. Q.
MR. KIRSCH: THE COURT: THE WITNESS: (BY MR. WALKER)
Objection, hearsay. Overruled. Yes. And what status were you provided by
the NYPD? MR. KIRSCH: THE COURT: Objection, hearsay. Sustained. Did the NYPD send that software back
(BY MR. WALKER)
to IRP Solutions? A. Q. Yes, sir. And did the NYPD provide a reason for returning that
software? A. Q. They did. And what did they tell you about the return of that
software? MR. KIRSCH: THE COURT: Objection, hearsay. Sustained. Mr. Thurman, in the dealings of IRP
(BY MR. WALKER)
with NYPD, were there -- were there meetings with decision makers? A. Q. Yes, sir. And in those meetings with decision makers, and
specifically, subsequent to the return of the software, why was the software returned? MR. KIRSCH: Objection, hearsay.
And I object to
408
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
the vagueness of the term "decision makers." THE COURT: Q. Sustained. Mr. Thurman, were there meetings at
(BY MR. WALKER)
the NYPD with chief level personnel at the NYPD? A. Yes, sir. THE COURT: about? During what time frame are we talking
This is after or before the software was provided? MR. WALKER: This was after the software was
provided. THE COURT: your time frame. Q. (BY MR. WALKER) In the time frame following IRP You need to ask him. You need to set
Solutions providing the free software to the NYPD, were there subsequent meetings with chiefs at the NYPD? A. Actually, the time frame -- the meetings with the
chief level and so forth was actually -- was before the software was provided. Q. It was before.
And so in that time frame, prior to providing the
software -- the free software, were there presentations for -- specifically for chiefs, specifically? A. Q. There were. Within the detective bureau.
Did the company ever conduct presentations or
meetings for the NYPD outside of the department? A. Q. Yes, sir. And where were these meetings held?
409
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A. Q.
In hotel conference rooms. Do you recall having a meeting with a Chief by the
name of Chief Gianelli? A. Q. A. Q. I do. And what was the topic of this meeting? CILC. In the meeting with Chief Gianelli regarding CILC,
what product was presented to the Chief? A. Well, you mean modules within CILC? The CILC product
was the topic. Q. A. Q. A. Q. A. Q. A. Q. A.
And it was actually branded as CILC NYPD.
And did you coordinate that meeting? I didn't coordinate that particular meeting. Who did coordinate that meeting? Mr. Banks or -- no, actually I think John Shannon. John Shannon? John Shannon coordinated that meeting. And did Mr. Shannon attend that meeting? Yes. After that meeting, did you follow up with the NYPD? Well, I don't remember personally following up on
that specific meeting, no. Q. Did the Chief provide a disposition after that
meeting? A. Q. He did. And what was that disposition?

410
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
MR. KIRSCH: THE COURT:
Objection, hearsay. Sustained. You mentioned earlier that the
(BY MR. WALKER)
company conducted programs to help agencies get software at lower costs from IRP Solutions. A. Q. A. Q. Yes. Is that right? Yes. And you also mentioned the company provided free
software to some agencies; is that right? A. Q. That's correct, as part of our early adopter program. Can you explain just a little bit about the early
adopter program, and how it benefited agencies? MR. KIRSCH: THE COURT: MR. WALKER: Objection, relevance. What is the relevance? That goes to providing software at
reduced prices to agencies, including -THE COURT: MR. WALKER: And what is the relevance to this case? Your Honor, that shows that we were
able to provide software to agencies that they actually utilized. THE COURT: Sustained. And, Mr. Thurman, did IRP Solutions
(BY MR. WALKER)
offer the NYPD an early adopter agreement? MR. KIRSCH: Objection, relevance.
411
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.
THE COURT:
Sustained. In the course of doing sales and
(BY MR. WALKER)
marketing efforts at IRP Solutions, did you have the opportunity to work with or talk to anyone from the Department of Homeland Security? A. Q. Yes, sir. And in those contacts with the Department of Homeland
Security, who was the first individual that you talked to? A. Q. A. I was contacted by Steven W. Cooper. And what role was Mr. Cooper in? He was the program manager for an initiative that
they had, which is called Consolidated Enforcement Environment Initiative. Q. A. Q. Was Mr. Cooper your first contact at DHS? He was. And in your initial contact with Mr. Cooper, did he
describe the program that he was over? MR. KIRSCH: THE COURT: Objection, leading and hearsay. Sustained. Did Mr. Cooper -- I am sorry, let me
(BY MR. WALKER)
rephrase.
Was Mr. Cooper the program manager of the
Consolidated Enforcement Environment program? A. Q. Yes. And as the program manager for the Consolidated
Enforcement Environment program, did he have the ability

412
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
to evaluate software products? MR. KIRSCH: THE COURT: Q. Objection, lack of foundation. Sustained. In dealing with the Department of
(BY MR. WALKER)
Homeland Security, Mr. Thurman, and for the Consolidated Enforcement Environment project, was IRP's software evaluated by that department? A. Q. Yes. And do you know the name of the individual
responsible for the initial evaluation? A. It was actually a working group. The Consolidated
Environment Enforcement Initiative had a working group which was made up of FBI, Secret Service, Federal Air Marshals, Immigration and Customs Enforcement. that group together did the initial evaluations. And so And then
there was a technical lead that was part of the group, as well, by the name of Paul Tran. Q. And you mentioned that you had communications early Did Mr. Cooper also do an
with Mr. Steven Cooper.
evaluation of the CILC project, CILC program? A. He did, actually, the initial evaluation via web He wanted to.
demonstration. Q.
And did Mr. Cooper do subsequent demos or have
subsequent presentations of the CILC software? A. Yes, he did.

413
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
Did Mr. Cooper, after initial demos, ask IRP
Solutions for particular capabilities? A. Q. A. Yes, he did. And in what form did he provide that to the company? Well, he provided materials that he wanted to see if
the software could be developed to incorporate some of their requirements. And then he also stated that he
wanted it to have federal -MR. KIRSCH: THE COURT: Q. Objection, hearsay. Sustained. Was IRP free to disseminate that
(BY MR. WALKER)
information? A. Q. A. No. And why was that? We were specifically requested by the Department of
Homeland Security to not disseminate the information outside of IRP Solutions. Q. And subsequent to receiving that information, did
Mr. Cooper request additional meetings or follow-up meetings? A. They scheduled meetings with the working group,
again, to put -- there was a lot to continue to follow-up with and to get the meetings scheduled. Q. A. And did you schedule that meeting? I worked with Mr. Cooper and a Mr. Witherspoon.
414
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q.
And was that meeting -- let me ask you this first.
What was the period -- what was the time frame that that meeting was scheduled for? A. Q. A. And which meeting? You mentioned the working group. The initial working group meeting was in late -It was in late 2003, early 2004 time
well, let me see. frame. Q.
And do you recall the groups at that meeting; the
inner working group? A. Q. A. Yes. Who was it? Secret Service, FBI, Federal Air Marshals, Then there were actually a couple Lockheed Martin was in Maybe Deloitte.
Immigration Customs.
aerospace companies there.
attendance at a couple of the meetings. Q. Okay.
And were there -- did DHS provide additional
material after that? A. Q. Yes, sir, they provided scenarios. And can you tell us what those scenarios were that
they provided? A. Scenarios incorporated or encompassed different
situations that they can even consider, whether it be border patrol, shipping/transport, so forth, and looking specifically at how terrorist activities could occur, and
415
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
wanted to ensure that the software could accommodate that. Q. And so I believe I heard you say at the end there
that they wanted to see if the software could accommodate those scenarios? A. Q. Yes, sir. And following DHS providing those scenarios, did they
ask that you schedule additional meetings? A. Q. That's correct. And who were you working with to schedule the
follow-up meetings? A. Again, Steven Cooper and Bill Witherspoon. And,
actually, it got handed off a couple times.
Paul Tran
ended up taking responsibility for scheduling one of the meetings. Q. A. Q. A. And in -- when was the next meeting scheduled? You mean following the initial meeting? Yes. Oh, I don't remember exactly, but the Department of
Homeland Security had a round of evaluations that they were doing and evaluating several companies. were in contact with Paul Tran. And so we
And he indicated that
they had had -- that the Department of Homeland Security, the CEE working with it, had another round of meetings, and that they wanted IRP to participate in the next round. Q. And so the company was requested by DHS to
416
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
participate in the next round of evaluations; is that correct? A. Yes. MR. KIRSCH: answered. THE COURT: Q. Sustained. Was IRP provided an opportunity to Objection, leading, and asked and
(BY MR. WALKER)
demonstrate its software again after the first meetings? A. Q. A. Yes. And was this the second round of evaluations? Probably so. I can't be specific if that was the
second or third meeting. Q. And do you recall who contacted IRP about this second
round of meetings? A. Paul Tran. Again, that may have been the second or
third. Q. A. And with whom was this next meeting conducted with? There was Paul Tran, Bill Witherspoon and a gentleman
by the name of Gilbert Trill. Q. A. Do you know the role of Mr. Witherspoon at DHS? He was with Immigration and Customs at the time, and
then I believe he was acting in the role of procurement officer. Q. A. And did you know Paul Tran's role at DHS? He was -DARLENE M. MARTINEZ, RMR, CRR United States District Court For the District of Colorado
417
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q.
MR. KIRSCH: THE COURT: THE WITNESS: (BY MR. WALKER)
Objection, lack of foundation. Overruled. He was the technical lead. And you also mentioned Mr. Gilbert
Trill was at that next meeting. A. Q. A. Q. A. Yes. Was he a member of a working group? Yes, sir. And do you know his role at DHS? He was an end user. From my understanding, he would
be one of the user agencies using the software, as well as, I guess, a technical advisor or functional advisor, it would boil down to. Q. And during this period, did you have other contact
with DHS employees outside of the specific meetings we just discussed? A. There were other members of the CEE working group
that we did have contact with or communicate to us. Q. And what was the nature of your communications to
them outside of those meetings? MR. KIRSCH: THE COURT: THE WITNESS: (BY MR. WALKER) Objection, hearsay. Overruled. I'm sorry? You can answer.
After one of the presentations with the working

418
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
group, I was actually contacted by a Mr. Paul -- I believe his last name is Path. I can't remember exactly. But he
was with Martin Marietta.
And he actually was concerned
as to whether or not we had had non-disclosure agreements signed by all of the people that were there, because it was a mixed audience with the government, as well as contractors. So he was concerned about IRP's protection
of the software and the proprietary nature of the software. MR. KIRSCH: THE COURT: Your Honor, objection, hearsay. We don't want to get into discussions
of what they told you because that is hearsay. MR. WALKER: Q. (BY MR. WALKER) All right. Thank you.
And as a results of these meetings
and DHS, did the company make any changes to the software? A. Q. Yes. And which product of IRP's was changed as a result of
the meetings with the DHS? A. There was a product called CILC Federal, and one of
the modules -- gosh, I drew a blank, but I will come back to it. Q. A. Q. You answered my question. CILC Federal. You said CILC Federal?
It has been a long time, so --
And what was the differentiation between CILC Federal
and the other CILC products?

419
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A.
CILC Federal was specifically designed -- it was a
robust web-enabled solution, whereby federal agencies across the board would be able to share information and collaborate on investigative data. Q. And did the company utilize personnel to help build
that software? A. Q. Software developers. And did the company have advisors as to how to
provide functionality for that product? A. Q. Yes, they did. Do you remember what type of personnel the company
retained to provide that expertise? A. Retired FBI, retired Immigrations and Customs. And
then the working group, itself, actually provided input into how the software should work. Q. And for this CILC Federal product that you mentioned,
did the DHS representatives communicate directly with you about the changes to the software that they would like to see? A. They communicated with me, as well as the team.
Because it wasn't a single point of failure, as far as that goes. Generally, when we did a demo, we had the
technical representation on -- either in the meetings or on a web demonstration, as well as the sales side. was more on the sales side. So I
And if issues came up with
420
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
regards to technical foundation and capabilities, then I would have to defer that to the technical team. Q. And these meetings you just discussed with DHS, were
they PowerPoint presentations, or were they software demonstrations? A. Q. Both. And what form would the typical meeting take for DHS
and IRP? A. Some of the follow-up meetings, DHS was really
interested in seeing what -- if the requests that been previously made were incorporated into the software, as far as updates were concerned. THE COURT: Mr. Walker, it is 5 o'clock. Why don't
we go ahead and recess for the day.
The jury is excused.
If you can be back at 9 o'clock tomorrow morning, we will be ready to proceed. Remember, you are not to discuss this case with anyone. You are not to do any independent research on any So the jury is excused.
of the issues.
Counsel and parties, if you would remain. (The following is had in open court, outside the hearing and presence of the jury.) THE COURT: All right. You may be seated. So how
much longer do the defendants believe they will take with Mr. Thurman?
421
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor.
MR. BANKS:
At this point, Your Honor, it is kind I expect another hour, maybe hour
of hard to determine. and a half. THE COURT:
All right.
And how long do you think
cross-examination will be? MR. KIRSCH: Not more than half an hour, Your
THE COURT: after Mr. Thurman? MR. BANKS: Your Honor.
All right.
So who do we have lined up
We'll have that for you in the morning,
You told us to reach out to someone. So you are going to do that. And if
THE COURT:
you don't have those people -- I assume that the four that you indicated, you did not subpoena, if they can't show up, you have other witnesses to show up. MR. BANKS: tomorrow. THE COURT: MR. BANKS: tomorrow. THE COURT: tomorrow morning. All right. We'll see you at 9 o'clock And your expert, when will he be here? We'll have that determination for you Yes. We'll have some witnesses here
If there are issues that need to be
addressed -- well, actually why don't you all be here at 8:45, because if there are issues that need to be addressed, I would like to address them and get the jury
422
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
in here at 9:00, so we don't keep them waiting at this point. So 8:45 for the parties. will come in. right. If there are issues, I All
If not, we'll just start at 9:00.
Court will be in recess. (Court is in recess at 5:02 p.m.)
R E P O R T E R ' S
C E R T I F I C A T E
I, Darlene M. Martinez, Official Certified shorthand Reporter for the United States District Court, District of Colorado, do hereby certify that the foregoing is a true and accurate transcript of the proceedings had as taken stenographically by me at the time and place aforementioned.
Dated this 10th day of November, 2011.
_____________________________ s/Darlene M. Martinez RMR, CRR

Transcripts, Week 3, 10-12-11

Загружено:

Сведения о документе

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Transcripts, Week 3, 10-12-11

Загружено:

Авторское право:

Доступные форматы

206

writing the way you normally do.

Your Honor, those all sounded like the The

same motions that were made yesterday to me.

And basically relying on

the Court's authority, I understood I needed to testify.

mistrial, which is denied.

The motion for recusal, I do If

not think there is any basis for me to recuse myself.

She is not familiar with the case.

I needed to know which witnesses you subpoenaed,

Thank you. Ms. Seeman, would you please bring in

You may be seated.

Your Honor, the defense calls John

Your attention, please.

projects. Q. And prior to your work for your current -- in your

Department -- I will say NYPD for short.

But that was my role.

In your role, did you, as a commanding officer of the

for some of the divisions.

assigned to special victims' crimes.

They wanted to engage me as a subject matter

expert. Q. And if you can explain "subject matter expert" to the

Well, after I retired, if there were individuals that

them, yes. Q. Okay. Do you recall providing specific, what you

Can I add on to that?

And it was also to -- you have

software? A. At that time, I thought it was cutting edge. I

encompassed all of the contributors to an investigation

along the entire life cycle of an investigation.

MR. BANKS: THE COURT: Q. (BY MR. BANKS)

don't remember when or -- I know I had engaged him in

you worked for? A. Q. Not specifically. Okay. I remember several.

Do you recall having any sort of conversations

MS. HAZRA: Q. (BY MR. BANKS)

Did you expect that IRP would be able to gain a

What was your view -- can you

Do you recall a meeting with you, Chief Gianelli,

other than -MS. HAZRA: Objection, Your Honor, hearsay if he is

Through my subject matter expertise and contacts,

admit Defense Exhibit 356. THE COURT:

Show it to the witness.

One moment, Your Honor. I see it. It is in my notebook. I

Okay. Go ahead, lay the foundation, ask him

if he recognizes it. Q. (BY MR. BANKS) Do you recognize that communication,

So you don't know if this is your

Did you -- after reviewing that

The section related to -MS. HAZRA: I object, Your Honor.

THE COURT: evidence.

Mr. Banks it is not admitted into He doesn't

He has not laid the foundation.

know if it is his document. contents of that document.

You can't testify as to You can ask him direct

JohnShannon@optonline.net? A. Q. Yes. And if that document came from

Go ahead. I recall having a conversation about

relevance, since these are conversations after February of

2005. THE COURT: Mr. Banks, what is the relevance of

(BY MR. BANKS)

the NYPD regarding modification to the software? A. As I recall, yes.

And how did they -- how effective was their response

that would happen -- let me ask you this.

IRP with Nassau County?

THE COURT: (BY MR. BANKS)

Foundation, sustained. During the course -- you said you