Free Amended Document (NOT Motion/Complaint) - District Court of Arizona - Arizona

EXHIBIT A
Case 2:04-cv-00078-FJM Document 199-3 Filed 04/18/2008 Page 1 of 49

1

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA SHIMKO & PISCITELLI, et al., ) ) ) vs No. CIV-04-78-PHX-FJM

3 Plaintiffs,

5

6 7 8 9 10

) DAVID GOLDFARB; RICHARD ROSS, ) et al., Defendants. )

The telephonic deposition of TIMOTHY SHIMKO, called for examination, taken pursuant to the Federal Rules of Civil

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27

Procedure of the United States District Courts pertaining to the taking of depositions, taken before PAUL H. LANDSMAN, RPR/CR No. 50478 of the State of Arizona, taken at the law offices of JABURG & WILK, P.C., 3200 North Central Avenue, Suite 2000, Phoenix, Arizona, on the 24th day of March, 2008, at 10:08 a.m.

Prepared by: PAUL H. LANDSMAN, RPR/CR CR #50478

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Dropkin and Associates Certified Court Reporters 7600 North 16th Street,Suite 216 Phoenix, Arizona 85020 Tele p hone (602) 997-8066 DROPHIN AND ASSOCIATES . (602)997-8066 04/18/2008 Document 199-3 Filed

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2 I N D E X 2 3 WITNESS TIMOTHY SHIMKO BY MR. COHEN 5 6
7

DX

CX

RDX

RCX

4 89 101

126 136

BY MR. MCDANiEL BY MR. GOLDFARB

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DROPKIN AND ASSOCIATES (602)997-8066 NUMBER Shimko Deposition Exhibit No. 1 Billing statements No. 2 12/11/2000 billing document No. 3 4/28/2003 letter from Woodcock to Shimko No. 4 Letter from Shimko to Brill No. 5 Letter from Shimko to Woodcock No. 6 No. 7 Letter from Woodcock to Shimko No. 8 Excerpts from ethical rules No. 9 Operating agreement of Aztec Medical 5 16 78 80 82 89 87 57 65 EXHIBIT INDEX PAGE

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6 1 2 3 4 A. Q. 6 7 8 9 10 11 12 13 through, let's see, some worksheets following an April 23, 2003, billing statement. Do you have all that? I have a 171 page document, yes. Okay. The total of the attorney fees reflected in

-Exhibit 1 by my calculation is about $817,000. Is that consistent with your understanding? A. Q. A. Q. Well, I wouldn't think so. You would nbt? No, I don't think it comes to that. Have you taken any steps to calculate the total

amount billed? A. Q. Oh, yeah, sure. We sent total billage. I'm sorry? I'm sure they were nowhere near 850,000. You do not believe they were near 850,000? I think they were closer to about 580 some

15 16 17 18 19 20 21 22 23 24 25

A. Q. A.

thousand; 480 to 500 some thousand. I think we had $350,000 that remained unpaid, and we were paid 135,000. That's my recollection. Q. A. Q, A. All right. now, you were, in fact -- I'm sorry? Go Page 164, Bates stamp 164. Okay. They are p a yments due of 342,000. Let me see if I

can get a later one than that. DROPKIN AND ASSOCIATES (602)997-806 6 04/18/2008 6 Document 199-3 Filed

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7 I think the last statement I have is on Page 1 -2 yeah, okay. Yeah, if you go to Ross 168 you'll see that past balance at that time, but that's the end of it, April of '03, 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 72 23 24 was $346,000. My recollection is that we were paid somewhere in the vicinity of 130 to $150,000 over and above that. So the total amount that we would have billed would have been somewhere in the vicinity of $500,000, not $800,000. Q. And are all the payments that you received

reflected in Exhibit 1 also? A. Yes; and the way they are reflected is -- well, the

payments? No, no -- yeah, sure, there's payments. We have reflected payments. You can see where payments were made in each of those documents, yeah. Q. Just so I'm clear because I want to go back and

recalculate if I need to, all payments for legal fees are reflected somewhere in these documents; is that your statement? A. The payments for these fees should be reflected in

the months of let's say November, 2001, to about December of 2002, maybe a week or two into January of 2003 but I don't think -- there were no payments after January of 2003 to my recollection. .So an'y records of p a y ments, yeah, there should have been current fees, balance, credit for p ayments and the total due. I don't think you will find any p ayments after DROPKIN AND ASSOCIATES (602)997-8066

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8 1 2 3 January of 2003. Q. Look at Ross 017. That's a January 2, 2002,

billing statement, correct? A. Give me a moment. This computer doesn't respond

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21

all that q uickly. January 2. Yes, I have it. Q. All right. And the total billed on that invoice is

$9,240, correct? A. Q. Yes, I see that. And that is an amount that was billed to CORF

Management Services, L.P., correct? A. Q. A. Q. Right, right. Was that bill paid? I am sure this bill was paid. Can you show me anywhere in Exhibit 1 where it

shows that that bill was paid? A. You're right, it doesn't show it in that bill. You

know, I didn't take a look at that first one. I saw the format of the last one, and the first format doesn't follow the last format. So the bill doesn't reflect payment, but we certainly can reconstruct it Q. What records do you have, what records exist, of

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yo u r self and y our law firm that would show a1.'.. amounts billed and all amounts paid by CO2= Management? Well, the records you have in front DROPKIN AND ASSOCIATES (602)997-8066 04/18/2008 Document 199-3 Filed you show all

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9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 A. amounts billed. The records we have would be the records of wire transfers; and I believe if not 100 percent of the payments were by wire transfers, 95 percent of them were made by wire transfer. Q. And you are telling me that the only documents that

you have that would show the amount that was paid on these bills would be wire transfer records? A. Well, I'm not saying that. I'm saying that is a

document that would show how much was paid. I'm sure for the last trial we did a summary and did a calculation of it ourselves, but that was at trial. Q. And has that summary been produced to my clients in

this lawsuit? A. Q. I don't know if you asked for it. Well, we've asked for all relevant documents, but

I'm not going to argue that. Let me ask you this: Does Shimko & Piscitelli -And, Roger, don't take that as God's word there was At the time we went to trial, I can't imagine

one, you know.

I wouldn't have summarized this for them. Q. I understand. Do you or does your law firm

maintain accounts receivable ledgers for its clients? ?.. Q. We sure do. Yeah, you're looking at it.

T_bis is a_. accounts receivable ledger? Yeah. Ro'ver, you h.'..ie to understand, 99 p ercent o_ DROPKIN AND ASSOCIATES (602)997-8066

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P..

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10 my practice at that time was contin g ent fee. This was -- this 2 3 was a very unique experience for us. It was perhaps the only client at this time that we would bill by the hour. Q. 5
G

Okay. And I'm not drawing any conclusions at this

point, but I'm just tryin g to understand what exists. Is there a ledger, or a set of computer documents or anything else that simply shows bills and payments without any other detail? A. to this. The way we did it was -- yeah, sure. All the ones that were paid, all right; if you want to know which ones were paid, which invoices were paid -Q. No, that's not my question. My question is is Well, let me take a look at this. Let's go back up

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there a ledger other than this document that shows what bills were paid and the dates of payment? A. Not created in the ordinary course of business, no.

There have been some kind of summary prepared for the last trial, but that would have been it. .Q. And if that was prepared for the last trial, would

that have been introduced as an exhibit? A. Q. Yes, it would have been. A1.1 right. Would von look at -- well, before I get

to that, you believe that you _=ceiiied somewhere In the ' neighborhood of $140,000 worth of payments. DROPKIN AND ASSOCIATES (602)997-8066

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11 1 2 Is it true that CORE Licensing Services or one of its affiliates paid additional monies to you for things not related to attorneys fees? A. 5
0

Not that I know of, no. Did you loan $250,000 to a CORF ehtity?

Q.

It was a sum of money, yes, and I_ never got that
back, or I never got most of it back. Q. When did you loan 250 -- well, first of all, do you

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know what the sum of money was? A. Q. A. It was 200 or 250,000. I'm not sure which. And when was that loan made? In the fall of 2002. Dick Ross called me up and

said that they had a cash crunch and they needed to make payroll and could I lend it to him and he would have it back to me in ten days or two weeks. Q. request? A. Q. I think I -- I know I loaned him the money. What kind of documents were created in connection And then what did you do in response to that

with the loan? A,

I know there were checks, but I don't know that

there were any other documents created. Q Was there a pr o missory note ? I don ' t believe sc. Q I'm sorry? DROPKIN AND ASSOCIATES (602)997-8066

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12 1 2 3 A. Q. I'm not remembering one. Was there a letter of any sort that you sent

explaining the terms? A. Soy, I'd have to go back and check the records.

just don't know. I haven't seen one in -- this is 2002. That 6 7 8 9 10 11 12 i 13 14 15 16 17 '8 19 20 21 22 was six years ago.. I haven't -- I don't know, Roger. I would have to go back and look at the file to see if such a letter exists. QDid you ask for post-dated checks to make repayment

of the loan? A. Q. loaned to? A. I don't know. I'd have to check -- I'd have to Do I have what, I'm sorry? Did you request -- first of all, who was the money

find those checks to look at them. Whoever the checks were made out to that's who you loaned the money to? A. Q. Apparently. All right. And did you receive post-dated checks

from that entity contemporaneously with the loan? A. Yes, yes. You've refreshed my recollection. Yes,

there was a series of checks, and that's what ha p pened. d them a che c k, and Dick Ross sent me or gave to me

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time I was out there, _ don ' t know which, but gave me a series of post-dated checks, that's correct. DROPKIN AND ASSOCIATES ( 6 199-3 6 Document 02)997-8066 04/18/2008 Filed

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13 1 2 3 Q. When you originally filed this lawsuit, did you not

include claims on those checks? A. Q. A. Yes,

I

did.

How much were you seeking on the checks? Well, I think there was 75 to $80,000 that remained

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un p aid. That's what I think. I could be wrong. Q. All right. In other words, do I understand, then,

that of the 250,000 loan, payments were made of around 175,000? A. Q. Yes. Not timely, but yes, they were made. At the time that the loan was made, was there an

outstanding amount due to you for legal services? A. Q. A. Well, there's always an amount outstanding. Well, approximately when was the loan extended? I don't know. I want to -- my recollection is

sometime in the fall of 2002. Q. A. Okay. Or November; something like that. That's just a

recollection. Q. All right. Well, you'll agree with me that as of November 20, 2002, there was an outstanding bill owed to you by CORP in the amount of $161,547. That's at Ross 116. A. Q. What are you Inn
I

g

Roger?

'm looking at Ross

Ross 116, okay. DROPKIN AND ASSOCIATES (602)997-8066

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14 Q. 2 3 Q. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. or 161,547. That's what it shows, yes. Now, When monies were paid by CORE after that date, That shows that the balance due to you was $161,000

who made the decision to a pply those monies to the loan or to the outstanding balance of your legal fees? A Well, the loan, I just cashed the check. It had

nothing to do with the bill. So the decision to -- how the loan was repaid was whatever checks he gave me on that date or a date thereafter he said it was okay to cash it, I cashed it. Q. But at that time you'll agree with me that CORE

owed you two different sums of money. It owed you money for le g al fees and it owed you money for repayment of the loan, correct? Yes, it did. And you'll agree with me that you could if you had

wanted have applied the money to -- or the checks to fees rather than the loan? A. Well, Roger, I could probably do anything

I damn

well please, but that wasn't the understanding.- The understanding was I gave them a $250,000 check that was good, and they gave me a series of checks that totaled $250,000 that I was to cash at certain intervals. Q. Did you advise Dick Ross in writing that payment.,

received by cashing Checks would be applied to the loan even DROPKIN AND ASSOCIATES (602)997-8066

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15 1 2 3 if it meant that there was a balance due on legal fees? A. Q. No. And at the time of this loan, did you believe that

A. 6 7 8 9 10 11 12 13 ) 14 15 16 17 18 19 20 21 Q. who she is? A.

And, again, I couldn't do that because that would

be contrary to my understanding with Mr. Piscitelli. Q. Okay. Well get to that in a minute. At the time that you made the loan to CORF, did you believe that Dick Ross was personally responsible for all of the legal fees? P.. Q. A. Yes. He's one of the four guys that hired me. Have you ever spoken to Marsha Ross? I'm sorry? Have you ever spoken to Marsha Ross. Do you know

Yes, a number of times. I've been over to her

house. I've been out to dinner with Mrs. Ross. I have spoken
with Mrs. Ross.

Q. Mrs. Ross? A.

Did you ever talk about any business matters with Business was a general topic of discussion around

the table, yes. 23 QHow about. legal z
-2_ s ^

that she might ow
'

did you

ever talk to her about that?
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I have no recollection of talking to Mrs. Ross DROPKIN AND ASSOCIATES (602)997--8066 04/18/2008 Document 199-3 Filed

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17 1 2
7

A.

About a year before everything started we were yes, we did;

asked to come out to sit through a seminar, and, yes, we charged for 1t Q.

And who physically performed the work that's

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reflected on Exhibit 2? I think Mr. Q. Piscitelli did.

At the time that Exhibit 2 was created, were any

lawsuits pending against the CORE entities or their principals? P.. Q. I do not know. Did this work relate to defending any lawsuits or

claims against the entities or the principals? A. That we were not asked -- no. As far as I know, we

were not asked to review any lawsuits or discuss

any

lawsuits.

We were asked to come out, attend a seminar, review the web site and some questions and answers. Q. A. Q. I'm sorry ? Yes, that's what we were asked to do. And I'm trying not to talk over you.

Unfortunately, with a telephonic deposition sometimes it's hard; but I will endeavor to let you finish. No offense taken. Q S ure. Did you ent e
r

into a

agreement with any

of the CORE entities in or about December _l, 2000?

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18 Q. 2 3 4 A. Who hired you to do the work in December of 2000? I received aphone call from Paul Woodcock who said

he was involved in something THE REPORTER: I'm sorry, sir, can you begin your answer again? I did not get the beginning.

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Zr

BY THE WITNESS: A. I received a phone call from Paul Woodcock, and he

indicated to me that he was involved in an interesting venture and he'd pay my expenses and my fees to come out there and sit through a seminar. And I said fine; but I can't do it, my scheduled was otherwise. And my partner went out and attended the seminar and submitted this bill. BY MR. COHEN: Q. Did Mr. Piscitelli produce any written reports in

connection with the work that he did in December of 2000? A. You know, I don't remember seeing one, but, you

know, Frank was a good lawyer and it would be uncommon for him not to have made some notes or memoranda about it, but I don't remember seeing one. Q. All right. Do you know whether he provid e d any

sort of an o p inion or summary of any sort either verbal or in writing to the client in or about December of 2000? ?. Well,

Roger,

i t was kind of strange. We went out
.5

and we attended this sem_n^r, and my recollection ,

that We

_ didn ' t hear anything from these peo p le for about another people DROPKIN AND ASSOCIATES (602)997-8066 04/18/2008 Document 199-3 Filed

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19 seven months. We submitted our bill, they paid it, and you 2 3
4

know, I didn't hear from Paul Woodcock. He didn't ask for my o p inion on anything. There's just, you know, nothing after that. Q. All ri g ht. This bill was addressed to Dana at

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CORE'. Do you know who Dana is? A. Q. A. Yes, I remember Dana. Who was she? She was a bookkeeper. That's who we were directed

to send the bill to and that's who we sent it to. Q. A. And who or what was CORE'? CORF, Comprehensive Outpatient Rehabilation

Facility. That was the, you know, the business that your client and his partners were selling. Q. A. Was that the business entity? You know, at that time I did not know. I didn't

know anything at all about CORE' at that time. It was CORF's seminar. We went out to it. I -- you know, really, Frank flew out there. It was no more than this, Roger: The seminars took place on a Saturday. He flew out there on a Friday. He attended the seminar on Saturday I don't even

know if he met with anybody outside of -- yeah, there was a telephone with -- just for -- no. was a two-day trip,

that's what __ was. Nothi n g ever came of it DROPKIN AND ASSOCIATES (602)997-8066 04/18/2008 Document 199-3 Filed

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20 1 2 3 Q. Well, on December 5, 2000, Mr. Piscitelli reviewed

a web site, correct? A. Q. Yeah; yes. Do you know what was on the web site?

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A.

I

have reviewed that same web site. I knew at one

time. I have a vague recollection of what I remember. Q. Well, the web site reflects the name of the entity

that was offerin g the CORE seminars, didn't it? A. Q. I have no memory of what it was. Do you have any reason to think that the web site

did not disclose the name of the company? A. I'm not saying that either, Roger. I'm saying it's

a six-year-old web site. If you have a copy of the web pages back six years ago I would know, but sitting here today, I have no recollection. I know generally what was in it. There was a profile with the four principals. There was newspaper articles about David Goldfarb. There was an explanation about what a CORF was. There was a question and answer -- you know, frequently asked questions format. There was that; but beyond that, Roger, you've exhausted my recollection of the specifics web page. Q. Okay. On December 8 when Mr. Piscitelli attended

the seminar, he reviewed materials handed out at the seminar? P.. Q. Yes. Do you know what mate r ia l s those were? DROPKIN AND ASSOCIATES (602)997-8066

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21 A. 2 3 Yes. It would be the same materials that these

gentlemen handed out to all the participants who came to that meetin g . Q. And did those materials reflect the name of the

company that was p utting on the seminar? 6 n, Yeah. I think it was probably the same information

that the web site had. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Okay. And I have no specific recollection. I mean I

can't imagine these guys were selling to the public without revealing to the public their name. Q. Exactly. So at the time that you sent the bill on

December 11, 2000, you agree with me that at least Mr. Piscitelli must have known the name of the entity, correct? A. Q. A. Q. Piscitelli. When did you and Mr. Piscitelli become partners? It may have been after December of 2000. Okay. You know, I'm trying to think here. You know, It Yes. All right. They knew the address because we sent it there. Now, you referred to an agreement you had with Mr.

may have been in 2000. Q. Were you doing business under the name Shimko & DROPKIN AND ASSOCIATES (602) 997-8066

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36 1 2 3 proceedings, was he? A. No. He was the accountants for one or more of

those people. Q. And Mr. Goldfarb was not your client in those

matters either, was he? 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No, he was not. Now, you've alluded to most of your work being on

contingency cases. What types of cases generally were you handling in December of 2001? A. Q. A. In December of 2001? Yes. Stock churning cases, ledger liability cases,

medical malpractice cases, commercial loss cases, breach of contracts. Q. And I take it because they were contingency cases

that those were all plaintiffs cases? A. Yes. Even today, 95 percent of my work is referred

by other lawyers. Q. What percentage of your work in December of '01 was

defense litigation? A. Q. What kind of litigation? Defensive, where you are representin g defendants as

opposed to plaintiffs. A. Well,
'i t

was such a rare occurrence. Less than a DROPKIN AND ASSOCIATES (602)997-8066

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37 p ercent. 2 3 Q. P_. Q. Other than this set of litigation? I'm sorry, Roger, I didn't hear that again. I'm saving other than the CORF litigation that we

are talking about now or going to talk about, right? 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 A Yep. The CORF litigation was the first big bit of

defense work I ever did. Q. Had you ever represented Dick Ross in any matter

before you came out to Arizona to take on these cases? A. I have no recollection of that, but I'm getting to

be an old man, Roger. Q. A. Q. litigation? A. No, no. No, I did not represent him. I met him We're all getting old. And I hope we all get a lot older. Had you ever represented Mr. Goldfarb in

before, but I have not represented him. Q· Was there a meeting, a specific meeting, that

everyone attended to talk about your taking on the project? A. Q. A. Yes, there was. Where did that meeting take place? The first time I went out there, I landed and I

drove right from the airport to a restaurant that is not far from Mr. Ross ' home. I do not remember the name of the

2

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42 1 of business? A. Did they tell me that they were planning to go out

of business? No, but they did tell me that they, you know, anticipated that a lot of people would try to put them out of 5 b 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 2^_ 25 what? A. Oh. Ross talked about the financials, Goldfarb business. Q.: But they never said and we're going to give in to

that, did they? A. They paid a shit load of -- I'm sorry, they paid an

awful lot in settlement to avoid that. Q. Exactly. When you had the first meeting, who said

talked about, you know, what a great opportunity this was for everybody, and I remember Guenther and Woodcock talking mostly about the regulations that had to be followed and their efforts to follow regulations, and how the company was put together. I mean for me it was a fact-finding meeting, and I just listened from beginning to end and asked appropriate questions; but to -- you know, this was

a

meeting that lasted

three or four hours sitting arounding that table. Q. Now, when Mr. Piscitelli had come to Arizona the

previous year, wasn ' t it true that the pur p ose of that tri p in part was for Mr. P i scitelli to look at the program and see if there were any potential al pitfalls?

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43 A. 2 3 Q. A. That's what we thought. Okay. When Frank and I went out there and when he was

going out there, I thought that ' s what we were going out there for; but when we came back, it was more like we were pitched. Frank felt like he was pitched to get involved and buy a 7 8 9 10 11 12 13
14

license. So our expectation was that, yeah, they want us to come out and take a look at some things and give an opinion, but when Frank came back, my impression is that he thought it was more of a sales pitch to him than anything else. Q. Did you ever say anything to Dick Ross about Mr.

Piscitelli's feeling that he had just been pitched rather than brought out to express an opinion? A. Like I told you before, Roger, he went out to the

15 16 17 18 19 20 21 22 23
74 25

meeting, and I don't recall any contact with any of those fellas until Paul Woodcock called me about nine months later. Q. Well, in that nine month period, did -- I'm sorry? During that nine month period, did Mr. Piscitelli write or communicate in any way to the CORF people telling them that they had serious legal problems with their business practices? A. Didn't ask if he could do it. Maybe he did not do

it at tie time because he would have sent a bill. If he would have done that, we wbuid have sent a bill for that. Q. Aside from tha- , if he had come out and he observed DROPKIN AND ASSOCIATES (602) 997-8066

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44 1 2 circumstances that indicated that there were serious problems with the business model, would you not have felt an obligation to impart that to the client? A. I don't know if Frank would have known enough about

the CORF regulations or the way the businesses were operating 6 7 8 9 10 11 12 13 ) 14 15 16 17 18 19 20 21 22 23 ^a 25 out in
this

or the truth of what Mr. Goldfarb was espousing at these meetings that he could have come to any opinion about it. We weren't Medicare lawyers. We weren't skilled in any kind of CORF regulations at all. We were litigators. Q. A. Okay. That's why Frank said he felt like it was more of a

pitch than anything else. He sat through it, went into breakfast the next morning and came home. Q. Did he write a letter or communicate to

Dr. Woodcock or any of the other principals that you weren't skilled in CORF licensing and didn't have the skills to render an opinion? A. We weren't asked. We weren't asked to do anything

but come out there. Q. A. Q. So it was just kind of a paid vacation, then? Say it again, Roger? I'll withdraw the question. I do want to go back to this meeting when you came would probably have been in November of 2001 ? Late October, November. I know we were doin g crock DROPKIN AND ASSOCIATES (602)997-8066

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51 1 give them any reasonable degree of the probability of success in defending against these claims. 3 The question was can we be sued directly. Answer, yes, you can. No question about it. Q. 6 7 8 Did you talk about conflicts of interest during

that conversation? A. Well, I don't know if the term conflict of interest

came up, but, you know, it was clearly understood that these people wanted a joint and cooperative sense among the four of

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

them. And I had already told them that the corporations would not save them at all. Q. When they told you they wanted a joint effort or

joint cooperative representation, did you tell them that there were conflict issues that needed to be discussed before you could accept that representation? A. Q. discussed? A. No, not from that discussion because what was I didn't see any conflict issues to be discussed. Did you ever see conflict issues that needed to be

discussed was here's your problem: You're the corporate. They are going to be sued, you're going to be sued, everybody ' s going to be sued. They can be found l iable; you can you be found liable. Q. Did you tell Dick Ross that if you agreed to
_ _s

Y

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52 you would not be subject to the attorney/client privilege? 2 3 A. Q. Why wouldn't his communications -- he's my client. Did you tell him that any confidential

attorney/client communications that you had with Dick Ross 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19, 20 21 22 23 24 25 would be shared or shareable with Dr. Woodcock, and Mr. Goldfarb and Mr. Guenther? A. Not since they had told the entire story to me in

the presence of each other and did it repeatedly, and the reality is I'm not sure that I ever met with less than two or three of them at any one time. Q. Did you ever talk to Dick Ross about his personal

financial situation? A. Only very generally. I mean I don't know what his

personal financial situation is. I know he owns a home in Arizona and I think he owns someplace in California. That's all I know about his finances. Q. Did you ever talk about the source of the money

that was used to buy the house in Arizona? ^. No, I have no knowledge of what money he used to

buy his house in Arizona. Q. Well, in fact, do you know that he doesn't own the

house in Arizona; that his wife owns it and bought it with money that she inherited from her mother: A before. DROPKIN AND ASSOCIATES (602)997-8066 You ' re telling me something I ' ve never heard

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53 Q. 2 3
4

You never had that conversation with him? No, I never had that conversation with him. If Dick Ross had been your client and was being

A. Q.

sued p ersonally, do you think it would have been important to know what his financial ca p acities were to pay a judgment? A. Q. important. Do you believe that Paul Woodcock, Dick Ross, Milt Guenther and David Goldfarb all had exactly the same financial strength? A. I have no knowledge of their relative financial To be honest, no. You don't think that that would have been

5

6 7 8 9 10 11 12 13 '4 15 16 17 18 19 20 21 22 23

strength to each other. Q. Do you believe that if a judgment was entered

against the four of them jointly and severally that their differing financial strengths might have created a conflict? A. No, because -- Mr. Cohen, we stunted 40 lawsuits.

We paid I think well over a million dollars. There were 40 other lawsuits looking at 40 times that. No, there was no conflict because the total amount of these judgments would have exhausted everybody's financial net worth. They all knew it. That's why I was asked to see if we could find some way to put it off. Sure. Y of in t e r est the reason you don ' t think there was a conflict because there was so much l iabilit y that none DROPKIN AND ASSOCIATES (602)997-8066

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54 1 2 3 of them could survive? A. Q. A. Singly or jointly. They were all just dead in the water? Well, you know, if the claims are -- now unless you

are telling me that somebody here is worth more than 25 or 30 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 around. DROPKIN AND ASSOCIATES ( 6 02)997-80 6 6 6 6 million bucks, you know I could -- if somebody's got that kind of net worth, then maybe like that, you know. Q. Well, you do know that eventually all the

defendants -- each of the individuals settled with the CORF plaintiffs; you know that, don't you? A. Q. No, I do not. Well, you know that each of them eventually hired

separate counsel and cut separate deals, don't you? A. No. You're telling me something I've only heard

for the first time today. Q. Did you ever talk to them about whether it would be

more advisable for one or all of them to have separate counsel so that they could make separate agreements and save their individual situation at the expense of the rest of the group? A Well, these were like the four musketeers, Mr.

Cohen. They were in for a penny and they were in for a pound. Q. And you never told them that there wasany other

way around it, did you? Other way around what? You tell me the other way

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58 1 2 3 an explanation of the implications of common representation? A. Q. I don't know if I did or I didn't, Roger. Did you explain to Mr. Ross the advantages and

risks involved in common representation? 5 6 A.

You know, at some point I did because the real

problem here was Goldfarb. Okay? You know, at some point Guenther and Woodcock

8 9 10 11 12 13
14

stopped. And that was my first. bit of advice to them: Don't appear at any more of these seminars. So long as you're personally representing, you will be personally liable. Q. A. Q. A. Okay. And when did you give that -Wait a minute, Roger. I'm sorry, you're right. Finish. The problem here is, hey, you can be treated

15 16 17 18 19 20 21 22 23 24 25

differently than Goldfarb over here because Goldfarb is the one who is doing all the nature of misrepresenting, okay, and Goldfarb was the one who's insisting on paying the shill. Okay? And I said to them -- I did have a conversation, maybe not in the beginning because I didn't know about the shilling he did. I didn't know about the im p ort of his comments at the beginning. But, yes, at some point I did have a conversation with Dick Ross and Paul Woodcock, and I don't remember about Guenther. What did you guys want to do about this, and they said we're stuck. Q. So, in other words, ar that p oint you were advising DROPKIN AND ASSOCIATES (602)997-8066

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59 one group of your clients to take a different course of action 2 3 Q. than another of your clients, right? No. I asked them what they wanted me to do. You were telling one of your clients that their
of

problem had tO do with the conduct of another 6 7 B Q.

your clients?

I recognize that to be the case, yeah. And if you had known that when you took to

representing -A. Roger, Roger, Roger, please don't talk over me.

10

Okay? They were all culpable. They all made

12 13

misrepresentations. They all paid the shill. That became clear to me by January or March of 2003 when I finally saw the spreadsheet. Okay? They all did that. All right? It's not

15 16 17 18 19 20 21 22 23 2= 25

like I didn't raise it. But there did become a point when most of the ire was being directed at Mr. Goldfarb. Q. And isn't it true that that's exactly the reason

there is danger in taking on the multiple representation of parties in litigation? A. Q. I don't know about danger. Isn't it true that if you had dug into the

relationships and the conduct a little more deeply bac in November o 2001, you might have re'cOgnized that the r e were p otential y rfffe ing interests between Mr. Ross, for e x am p le, and Mr. Goldfa r b? DROPKIN AND ASSOCIATES (602)997-8066

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60 1 2 3
4

A.

Well, if my parents had been Swedish, I might be

Swedish. So I don't know about this "if" thing, Roger. _ mean that's retrospective and I can't answer it. Q. All right. But the answer is you didn't tell Dick

5 6 7 B 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
24

Ross that depending on what you discovered, his interests might be different than Mr. Goldfarb's, did you? A. We had a frank discussion for four hours where

everybody told me what was being -- what was being said at it, and that this was going to be happening, and that what were their options, what could they do, and we had a very general discussion. Q. Did you ever write a letter to Dick Ross in

November or December of 2001 saying, you know, there might be potential conflicts and these are the concerns? A. Look, they did not want any conflicts. Okay? They

depended on David Goldfarb to go out there week, after week, after week and dispel these things. These guys were joined at the hip. Q. A. Do you -There was never any contemplation on their part

that they would do anything. In fact, even after I left, how long did they stay with Boates & Welsey together? You know, how long did it take them before they got the individual counsel? They never wanted individual counsel. QWe ' re not being sued by Boates & Welsey. DROPKIN AND ASSOCIATES ( 6 02)997-8066 6

25

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61 1 2 3 My question is did you ever send a letter to Dick Ross telling him that there was a potential conflict of interest in your re p resenting multiple parties? A. 5 oo 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
77

No, because I did not see a potential conflict of

interest at that time. Q. And you'll agree, then, that Mr. Ross did not

consent to multiple representation after being informed of the risks and advantages involved? A. Look, we would round table these things. Okay?

You know, Goldfarb didn't come to all of these round tables. But I would come out and -- you know, Frank would say to them: Now here's what it is. Here's what the evidence is. Here's what this is happening and then it was critical, you know. We had those discussions. All right. I didn't advise them on what they should or shouldn't do at that time, but I did let them know what was going on then. Q. Did you understand at the beginning that the CORE

entities were going to indemnify the individuals against liability? A. anybody. Q. Did you inform the individuals in writing of the I knew that the CORF entities couldn't indemnify

23 24 25

im p lications if the CORE entities we r e unable to provide indemnity? A. The_i knew that. They were _he CORE enti_i_s. They DROPKIN AND ASSOCIATES (602)997-8066

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62 ran the CORF entities. I didn't have to advise them. That 2 3 whenever money came in there, they immediately took it out. Carey Edgar told me there was never any money in the company. It was always disbursed immediately. 5 Q.
A.

Do you know whether they took out equal amounts?

No,

I do not know that.

Q. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
73

Do you know whether any or all of the individuals

from time to time put money back into the CORE entities?
A.

Would you say that a g ain, Roger? Do you know whether any of the individuals put

Q.

money back into the CORF entities?
A. I don't know that one way or another. You know, I

don't know where the money came to pay the settlements, I don't know where the money came to pay my fees, but... Q.
A.

Did you ever read the comments to ER 1.7?

I don't know if I did or I didn't, Roger.
Now,

Q. A.

are you familiar with ER 1.8?

You want me to look to ER 1.8; is that what you

want me to do? MR. COHEN: Yep. You know, we've been going an hour and-a-half. Do you want to take a short break? THE WITNESS: No, I'm fine. :-k· COHEN: Well, let me phrase rha I'd like _ ro take ke

a short break.
25

THE WITNESS: All ri g ht. Okay. DROPKIN AND ASSOCIATES (602)997-8066

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63 MR. COHEN: It will just be five or ten minutes. I just 2 3 need to go get a drink of water. THE WITNESS: No problems. (A recess was taken.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
74

BY MR: COHEN: Q. We're going to go back on the record. Mr. Shimko, we were talking about Ethical Rule 1.8. A. Q. Yes . Now, you previously talked about a loan that you

made to one of the CORE entities. Do you recall that? A. Q. Yes. Did you make a determination that the loan

transaction and the terms on which it was conducted were fair and reasonable to the client? A. Yeah. I didn't charge him any interest. He needed $250,000 and he said he'd give me checks back. Where else can you get $250,000 for nothing? Q. Did you advise the client to seek independent

counsel in connection with the loan? A. Well, they called me up and said we can't make

payroll tomorrow. Will you send me $250,000? I take it the answer, then, is no? You know, you take the answer as Q. Okay .

I g ave you.

The . answer is you did not give the client a seek the advice of independent

reasonable opportunit

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64 1 counsel, true? A. 3 No. I'm sure they had all the time in the world to

seek independent counsel if they chose. Q. A. Q. Did you tell them to seek independent counsel? No, I don't think I did. And did the client consent in writing to the terms

7 8 9 10 11 12 13 I 14 15 16 17 18 19 20 21 22 23

of the transaction? A. Yes. He immediately wrote me five checks back in

the same amount to be paid on various dates. Q. Was there any other writing where the client agreed

to repay the money or where it was explained how and when the money would be repaid? A. I don't know. I'd have to go back and check the

hard copy file. Q. Now, you also entered into another transaction with

Mr. Ross and the other princi p als in a related venture; isn't that true? A. just them. Q. Butyoudid enter into a transaction regarding Well, there were a lot of individuals involved than

Aztec Medical Group Partners, correct? A Q. I was involved in that project with them, yes. What was Aztec Medical Group Partne r s=.s I recall it now, the plan was to build a tissue recovery center in Mexico. City to harvest -- i='s been so lon g DROPKIN AND ASSOCIATES (602)997-3066

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65 ago, but basically to harvest tissue and to import that tissue into the United States and to make it available to the various 3 tissue banks, and blood banks and organ banks. Q. 5 6. A. Q. A. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Do you have Exhibit 9 in front of you? Do I have what? Exhibit 9 in front of you. I guess I've got that here somewhere. Yes, I do. And does your signature appear on Page Ross-205?

MR. GOLDFARB: Roger, this is David. Excuse me for just a moment. You are referring to an Exhibit 9 and I've only got 1 through 8. Tell me generally what Exhibit 9 is so I know? MR. COHEN: Sure. It's the operating agreement of Aztec Medical Group Partners, L.L.C.. I know it was sent to a separate e-mail. MR. GOLDFARB: It might have been a separate e-mail. That's possible. Okay. Thank you. BY THE WITNESS: A. You said 209? you by

BY MR. COHEN: Q. A. Q. I'm sorry, 205. 205. Yes, that's my signature. How much money did you invest in Aztec Medical

Group Partner s , L.L.C.? . WELLING: loe. don't see
dw

Aztec

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66 has anything to do with any of the issues in this case. 2 3 MR. COHEN: Okay. THE WITNESS: BY MR. COHEN: 5 Q A. Q. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Aztec? F. Q. No. Do you know how much money any of the other You can go ahead and answer. I think it was 200,000. Do you know how much money Dick Ross invested in I'll answer it.

individuals invested in Aztec? A. I don't -- collectively they invested a ton of it,

a couple million bucks; and how they divided that I don't know, but I know they invested a couple of million bucks in that deal. Q. How did it come about that you became a partner in

Aztec Medical Group Partners, L.L.C.? A. Shortly after I got involved with representing the

CORES I had dinner with Paul Woodcock, and he asked me -- or he told me of the project, and initially said we'd like you to dO the legal work on this; you know, some international work here. You know, Jed like to give you an interest in the CORE that's for your ..es. I said fine. And it a sma l l percentage, maybe

25

two,

t hree, four

.. ...

..3 ybe as much as five or six percent

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67 of the company. It was a real speculative venture, and if it 2 3 worked it was going to pay off terrifically. It was, you know, a high risk venture. Q. A. 6 Okay. But I initially, you know, undertook the -- took

that agreement. Q. So you did undertake to do the legal work for Aztec

8 9 10 11 12 13 14 15 16 17 13 19 20 21 22 23 24

in exchange for a percentage? A. Q, A. Yes, that's how it started. All right. And approximately when was that? Oh, I don't remember.

Q. Was that at about the time that -- well, looking at Exhibit 9, the very last page, you are shown as having a seven p ercent interest. Does that refresh your recollection as to what the deal was at the beginning? A. No. This was much later because -- I mean this

never got signed by anybody else but me as far as I know. Q. Well, isn't it true, though, that your percentage

at some point later on went significantly up from seven percent? A. Yeah. I think my final interest was up from seven interest was way below seven

percent, but I think my initia l percent. Q.

So you think It might have been a co^._in ,uum of DROPKIN AND ASSOCIATES (602)997-8066

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68 1 2 things? A. Q. Yeah. It wasn't just one jump. Did you
al

close in writing to your clients the

terms of your a g reement pertaining to Aztec Medical? A. 6
7

Well, I think you're locking at it right here. It

was the membershi p agreement. Q. Did you disclose to your clients in writing the

8 9 10 11 12 13 nq 15 16 17 18 19 20 21 22 23 2=' 25

terms of your agreement whereby you were going to perform legal services in exchange for an interest in the company? A. Q. A. Well, it morphed out of that. I'm sorry? I said it morphed out of that.

Q. But before it morphed out of that, did you disclose in writing to the clients the terms of the agreement regarding legal fees and your having an interest in the company? A. I don't know. I haven't looked at that file in a long time, Roger. I don't even know if I have that file any more. I suspect I may well have. Q. A. You could have, but you don't know? You know, this is dated, you know, 2001, and I

haven't even looked at the file in seven years. QDid you advise your clients to seek the advice of you an interest in

independent counsel before agreeing to give the company in exchan g A.
e

for le g al fees? The

That's the dea l that they ap p roached me with.
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81 him that there might be several strategies available to him 2 that are different or conflicting? A. No, because there weren't any settlement strategies

that were different for him. You saw the strategies that Mr. Chifez approached me with, and this is all coming to a head at 6 7 8 9 10 the same time, was that they wanted the cooperation of Joel Brill and Mr. Ritchie, and that for that they were willing to let these people go. Q. Did you ever discuss with Mr. Chifez whether his

clients would be willing to settle with Dick Ross separately from the other defendants?

12 13 14 15 16 17 18 19 20 21 22 23 24_ 25

A.

I had dinner with Mr. Chifez in April when we

discussed the full gamut of settlement. Q. And did you discuss specifically whether you could

enter into a settlement with Dick Ross whereby he would provide testimony and they would continue the litigation against Mr. Goldfarb, Dr. Woodcock and Dr. Guenther? A. settlement. Q. But did you propose a separate agreement on behalf I asked all terms that Mr. Chifez had for

A.

Roger, there's not going to be any good answers.

Let me finish. Q. Sure. How can tois case settled? I had no settlement

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82 1 2 proposal to bring co Mr. Chifez. I made no settlement pro p osal to Mr. Chifez. He told me, no, he wanted money and he wanted lots of money; that he was goin g to chase it I

told him: Well, have at et. Good luck. He said the only ones he would treat differently of the ownership was Joe ' and Ritchie. He ·would. let them out if they would press 7 8 9 10 11 12 13 19 15. 16 17 18 19 20 21 22 23 Q. I'm sorr Well, I sent this res p onse and it seems to be the next day I r eceived the letter. So 25 Q. Does th is r _ -esh our recollection as to whether e_'^^e_ charges. Q. Okay. Did you make an offer separately on behalf
EE

ri ll

of Dick Ross? A. to listen. Q. P. Okay. I had no authority to make any settlement offer

I made no offer on behalf of anybody. I was there

from anyone. Q. Exhibit 5? A. Q. correct? Right. Is this the response to Exhibit 4 -- of Exhibit 3, Yes. This is a letter that you wrote to Dr. Woodcock, Would you look at Exhibit 5? Do you recognize

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83 1 2 3 it? Q. What you say in the second paragraph is that -5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
74

you requested a personal guarantee? Direct me at some point in the letter where I said

well, you were referring to Dr. Woodcock's decision not to pay you the 350,000

in.

past fees nor to quote, "guarantee payment

of our services to be rendered in the future." Do you see that? A. Q. Where are you reading again? Starting with the -- well, it's the first three

lines of the second full paragra p h on Page 1. A. You state as the reason for your decision not to

pay me the 350,000 in past fees that you owe the firm nor to guarantee payment of our services to be rendered. I'm just saying what he stated, he was stating as a reason. Q. And this refreshes your recollection, doesn't

that you asked for personal guarantees for the payment of fees in the future? A. No, no, no. I didn't ask for a personal guarantee. security.

I wanted mortgages; Q.

Well, you will agree with me that nowhere in

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84 1 2 3 Q. Well, it does refer to their decision not to guarantee payment of our services to be rendered in the future, doesn't it? A. Roger, Roger, please. Please, Roger. I was

quoting his letter. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Isn't it true, Mr. Shlmko, that during that

conversation you told Dr. Woodcock and whoever else was there that you wanted the group to personally guarantee the payment of fees rendered in the future? MR. WELLING: Objection; asked and answered. BY MR. COHEN: Q. A. You can answer. The answer is no, I didn't say that I looked for

mortgages. I asked for mortgages. I wanted mortgages on their property. Why would I be looking for a guarantee from someone who already owned me the money? Q. I take it that was a rhetorical question because

there's no question pending. A. Would their guarantee have been any better than

their promise, okay? Common, Roger; give me a break here. Q. Do you know whether Dick Ross owned a house?

A. We went all through this, Roger. If you ' re going to start the deposition over again, you can talk to somebody else. Q. Do you know whether David.Goldfarb owned a hou DR.OPNIN AND ASSOCIATES (602)997-8066
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85 1 2
2
4

A.

Look, it didn't matter who owned the house.

Arizona is a community pro p ert y state, and it was clear they were going to save the house for their wife because wives were certainly the beneficiaries of whatever misconduct these four guys en g aged in. If the house was in their wife's name, that's

6

what they were looking to protect. Q. Did you you ever counsel David Goldfarb on the

8 9 10 11 12 13 14 15 16 17 18 19 20 21

advantages or disadvantages of property being maintained as sole and separate property? A. I never advised -- no -- well, yes, I did. Yes, I

did because -- I mean part of that was and could they transfer assets. By the time we completed our research and the claims are coming in hot and heavy, it was my opinion that I could not participate ethically in any kind of transfer of assets of that client at that time. Q. How about the reverse; did you ever counsel Dick

Ross not to comingle his wife's sole and separate property with community assets? A. I wasn't asked to re p resent them on that. _ was

asked to represent them on two things. Okay? Could they shelter assets? I _searched that one. And the other thing I

23

was asked to re p resent them on was these lawsuits and these claims. I was not asked to re p resent =.hem on their estate

25

planning. I'm not an _s____ planner. I ' ve drafted about six DROPKIN AND ASSOCIATES (602)997-8066

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86 wills in my entire thirty years at the Bar. So I don't do 2 3 that work. No, I wasn ' t consulted on it. There ' s a lot of

things they could ask me to do. That COP had its own lawyer on staff, all right, for the regulatory issues. I wasn't

5 6 7 8 9 10 11

their lawyer for all purposes. I was there for this litigation. Q. A. they owned. Q. Did they all own property? That's my question. Do Whose property did you want a mortgage on? I don't know. Their property; whatever property

you know that they all owned property? A. Yeah, I knew they all owned homes. Yeah, I knew

they all bought homes; yeah. Everyone of them had a home; Q. A. 16 17 18 19 20 21 22 23 24 25 law? A. Q. Not a wits worth. Do you know that by granting a consensual lien a Q. Did you advise them in writing -- I'm sorry? I've been to three of their homes. Okay. Do you know how much equity each one had in

their homes? A. Q. I have no idea. Do you know anything about the Arizona homestead

party waives the homestead? A Q. I don't know anvth_- about homestead law. I take it, then, that when you asked for the DROPK 1 N AND ASSOCIATES (602)997-8066

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126 had my fax number at home. Now you are telling me that these correspondences having to do with protection of assets were sent to the CORE' company-.. So which is it? A That's wher$a was directed to send them, David. I

wasn't directed to send these to your house. MR. GOLDFARB: Okay. That's all I wanted to hear. I don't ha.Ke.any other. further questions, and I want to thank everybody for their - patience with me this morning. MR. COHEN: I just have just a very few just to follow up on some of the thing$ t3lat just carne through. REDIRECT EXAMINATION

First of

Mr: 5himko, you said something at one

point that nothing goes Out-of your office that you didn't review? A. Q. A. Q. Right. S ,h . L. "2

Did that ir:c]rude.'athe bills? Yes; yes. Were you aware, then, that Mr. Welling's time was

being billed out at $350 an hour? A. That was pointed out to me by Craig Boates not but

a few weeks after we sent those bills. That's when I first noticed it. Okay? It was a complete oversi g ht in his bills going out. I talked to Mr.'Boates at the time that we'd made DRQ?KIN AND ASSOCIATES (602)997-8066

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a

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127 1 2 3 an adjustment on that. That has never been in dispute. It was in error. You know, I review them, and I'm just not perfect and I missed that. Q. You understand Mr. Welling's time consisted of

'

something in the neighborhood of 335 hours? 6 A. Yeah; and I would -- if I-had that to do all over

again, I think a fair rate at that time would have been about 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q.A. $125 an hour. Q. When are you saying you first realized that Mr.

Welling's time was being billed at $350 an hour? A. Q. A. Q. company? A. Exactly. By no means should his experience level When Craig Boates pointed it out to me. Was that before or after April 23rd, 2003? After. So it was after you were no longer representing the

have commanded that kind of volume fee. I don't dispute that. Q. I wasn't exactly clear. You told Mr. Goldfarb that

^t some point towards the end you recognized that there was a potential conflict. When as best you can tell did you come to that realization? It could not have been before the de p ositions. Okay. Do you know when the depositions were?

I want to say within a week or two at the latest o
Document 199-3 Filed (602)997-8066 04/18/2008
DROPKIN AND ASSOCIATES

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136 1 2 3 4 5 the originals, I'm going to have the court reporter attach to the transcript a set of the exhibits as they were e-mailed to everyone, and those include the exhibit number at the bottom of each -- the bottom of the first page of each exhibit. David Welling, is that acceptable or anything else that you would like us to do with the exhibits? 7 8 9 10 MR. WELLING: That's fine. Is that okay with you, Tim? THE WITNESS: Yeah, that's fine. Whatever is easiest. MR. COHEN: One other thing to comply with Arizona procedure, I need to tell you you have the right to read and sign the deposition or you can waive signature. I think 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. BY MR. MCDANIEL: Q. If you look at Ross Exhibit No. 1, page 168. Okay. Hold oh Yeah, _ got it. It says the total due amount $354,949. Is that the DROPK.IN AND ASSOCIATES (602)997-8066 04/18/2008 Document 199-3 Filed sign. MR. COHEN: All right. Rich, did you have something? MR. MCDANIEL: Yes. This is Rich McDaniel again, and I have a couple of follow-up questions. RECROSS = EXAMINATION because of the potential for miscommunications over the phone line, it would be preferable if you would read and sign, but it's up to you. THE WITNESS: No, no. By all means, I will read and

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137 amount you contend you are owed in this case? 2 3 A. Q. I believe it has been. Does that reflect any amount still owing on the

loan that you gave to the CORF entities? 5 A. Q. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 No. How much was left unpaid on the. loan that you gave

to the CORE entities? A. It's either 75 or $150,000. I think what happened

is that I -- one of the checks I cashed, and then that check came back. So, yes, there was a check that bounced and one I didn't even bother to cash. Q. Do you have records we can see that show the amount

paid on the loan and the amount left unpaid? A. they are. Q. This final bill of $354,949, does that reflect the adjustment made for Mr. Welling to reduce his time to 125 per hour? A. No, it does not. You are absolutely right. It that adjustment should be made. I'm sure I do. I just have to figure out where

would have to -- yes, Q.

Do you have anything writing that shows what the

adjustment would be? A. I think I wrote Mr. Boates that I thought an amount

of $125 a_n hour was the fair amount. I just had a
recollection of that. DROPKIN AND ASSOCIATES (602)997-8066 04/18/2008 Document 199-3 Filed

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138 1 2 3 Q. Did you send Mr. Boates or anyone else any

correspondence showing what the adjusted bill would be? A. No, we were in litigation at the time. Boates was

representing them in litigation. He was their lawyer. Q. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DROPKIN AND ASSOCIATES (602)997-8066 04/18/2008 Document 199-3 Filed Right, but did you send any of the individuals such

as Mr. Woodcock or their attorney at the time a.bill showing the adjustments reduced Mr. -A. No, no, no, no, no, because -- no.

MR. MCDANIEL: That's all I have. Thank you. MR. COHEN: Okay. I think we are done. everybody. MR. WELLING: All right. (The deposition concluded at 1:40 p.m...) Thank you

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