Document 24-5
Filed 07/30/2008
Page 1 of 25
All Star Works, Inc.
March 22, 2001
Met with Mr. Alex Sore at his place of business. He accompanied us to four different sites under construction. The following is an accounting of wirer we observed:
1. Los Indios Bridge: Items
Complete
100% 100% 100% 100% 50% 50% 25% 0% $50,000
a, Design b. Bonds c. Concrete d. Steel Framing e. SteelRoofing f. Booth g. l~ting ¯ h, Electrical i. Lighting
Mr. Sore will Still bill approxh'nately Will get 25% of bond ($g5,000) $21,250 How much money does hv need to finish this project:
Net Profit
Target Date for ~mpletion (60 days)
2. Los Tomates Bridge: Items
Completion
a. Design b. Bonds c. Concrete d. Steel Framing
e. Ste~l Roofing
£ Booth g, Painting h. Electrical i. Lighting
Mr. Soto .will still bill approximately Wi!l get 25% ofbond ($85,000) $21,250 How much money does he need to f'mish this project: Net Profit "
Target Date for completion (90 days)
$80,,
$
APP 061
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 2 of 25
U.S, Customs Servives-RPC 6026 Lakeside Boulevard Indianapolis, Indiana 46278 REF: Contracts # TC-1-96-013 CS-I-99-2474g-g CS-I-99-24749-6 CS-1-99-25600-1 CS-1-99-24747-0 ATTN:William Mynatt ACO. PFSG U.S, Customs Please make referenced to enclosed Notice of Assignment date January 14, 2000. In this notice the government had agreed that all payments due or to bei:ome due on abovv contracts would be made tothe Assignee, Mereedes National Batik. We have seen copies of several checks.that have been made directly to All Star Iron Works. At a minimum, checks should be made jointly to our Bank. Please call.us and inform us why this agreement has not been complied With. Mr. Soto hasMen a eusiomer of our bank for several years, bm the fact that these jobs have had.,... numerous change orders and have gone beyond the projected time of~ompletion does eoncem us. Please call me so that we can discuss this matter. Wewould like to know if your agency is paying some of the sub-contractors directly. This will definitely have an impact on how we structure any future advances. Your prompt and courteous attemion to this matter would be greatly appreciated. We do not want to interrupt the normal progress of work to complete these contracts.
Sincerely,
Executive Vice President
APP 062
P,O. Box 777
Mercedes, Texas 78570 (956) 565-2485 Fax 956-565.5050
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 3 of 25
ACE .CO UR T REPORTING SER VICE
& Digital Videography ¯
Statewide & Nationwide Scheduling
ORAL DEPOSITION OF Aaron Gonzalez Taken on March 25, 2008
Cause No. 07-00355C; Texas National Bank f/k/a Mercedes National Bank United States; in the United States Court of Federal Claims
Ace Court Reporting Service,
& Digital Videogl;aphy Leideker Building 200 E. Cano Edinbui'g, Texas 78539 Fi~'m Registt'ation No. 476 Expit.ation Date: 12/31/09 (956)380-1100 Fax: (866) 380-1135 ww~. aeeeout'treporting, eom i~!fo@aeeeou~"treporting.eom
APP 063
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 4 of 25
Deposition of Aaron Gonzalez
Taken March 25, 2008 Page 53
1 2
A. Q]
No, I was not working with her. Were you still involved with All Star loan file? ¯
........ A~ .....As--o~that_da~e,_ no. 4 Q.
To tie it all together, after you wrote the
5 letter -- after you responded to the government's July 6 4th, ~2001 letter and, wel!, I guess, you didn't provide the
7 electronic.fund transfer information but you saw that that
8 was done; is that correct? A. That's correct. 9 Am I correct, is it your testimony that you had I0 Q.
ii 12 13 14 no further personal involvement in collecting the money owed to the bank under the assignment? A. I believe I made an inspection .o£ the properties
but I can't recall what date it was. Q. A. Why would you have done that? .Just to confirm or try to verify what, what
15
16 17
completion~of workhad actually been done, but in the absence of having .the change orders which we did not have. (Exhibit marked for identification as Deposition Exhibit Number 21.) Q (By Ms. Stentiford) Can you tell me what
18
19 20 21 22 23 24 25
Exhibit 21 is? A. ~. Q. Is this a complete report or -
It's what I was provided by your counsel that
apparently that's what's in the bank's file. Is this your
Ace Court Reporting service
APP 064
(956) 380-1100 (866) 380-1135 (Fax)
Case 1:07-cv-00355-NBF
Deposition of Aaron Gonzalez
Document 24-5
Filed 07/30/2008 Taken 5 of 25 ¯25, 2008 Page March
Page 54
1 report?
2 A. It could have been, but I'm sure I would have
3 signed it. Q. Is March 22nd, 2001, consistent with your 4 5 recollection Of when you would have made a visit to the
6 7 site? A.
Yes. It appears this is not complete because it deals
8 I0
Ii 12 13 14
Q.
9 with two of the projects and there were fou~? A. Right. Q. Do you have a personai file this report might
still be in? No. What was the purpose of you visiting the job
15 site?
16 17
A.
It's standard procedure that we visit the.sites
that we're funding and I would have gone .out to make an inspection to see what,¯ based on the initial contracts, to see what we had actually completed. Q. What will that tell you in connection with
18
19 20 21 22 23 24 25
getting the bank paid under the assignment? A. It was marked to see whether the bank had
advanced properly based oncompletion of~work. Q. So you say t~at was standard practice in
connection with any, in any commercial loan, not
Ace Court Reporting Service & Digital Videography
AmP 065
(956)380-1100 (866) 380-1135 (Fax)
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 6 of 25
Deposition of Aaron Gonzalez
Taken March 25, 2008 Page 55
necessarily, a loan that was being paid through an assignment; is that right? ...........Tha-~-<~s-eo~ect ................ ..... -A: ...... ¯
was that the first visit you made? .It appears like it was, and that's around the
4
Q. A.
5
6 7
time that I got Lnvolved with the file. Q. Okay. Did you -- you met with Mr. Soto right
8 there. It says there. Did you on this meeting ~eflected 9 on March 22nd page of your report, do you remember what i0 you t~iked about?
II A. Q.~ A.' With Mr. Soto? .Yes, with Mr. Soto? It says that we went to four different sites and
12
13 14
there's only two, an accounting of two. Q. A. Q. Right. Right. But it says you do remember meeting with Appears to be an incompl.ete document?
15
16 17
18 Mr. Soto on or about March 22nd?
19 20 21 22 23 24 25 A. Q. Yes. Was that the purpose of that to discuss the
outstanding balance ofAll Star's loan? A. Xes. Well, the outstanding completion of work,
not necessarily his loan at the~bank. We were looking at the completion of work in place for the four different contracts he had with the bank. APP 066
Ace Court Report,ing Service (956)380-1100 (866) 380-1135 (Fax)
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 7 of 25
Deposition of Aaron Gonzalez
Taken March 25, 2008 Page 5 6
1
My recollection of that meeting was that
2 there were several additional change.orders that he was ~-f~--t-o--pr0vide-the--ba.~..and__tha
i0
Ii 12 13 14 15 16 17 18 19 20 21 22 24
A.
A~ditional expenses, yes.
Q.. Additional exp~nse. In other words, All Star would have beenentitled to additionalpayment from the government.based on the change ~orders? A. Q. A.. Q. Yes. ht least that was your understanding? That was my understanding. And is it still your understanding the bank
hasn't received those change orders? A. Q. No, not to my knowledge. Okay~ So what's the connection between this,
the visit you made onMarch 22nd to see the completion of work and the letter you wrote ultimately on June 6th, 2001, that we've marked as Exhibi9 5, I think? A. Well, the fact that he had already performed
25 some of the work and we hadn't seeh any of the payments.
APP 067
Ace Court Reporting Service (956) 380-1100 (866) 380-1135 (Fax)
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 8 of 25
Deposition of Aaron Gonzalez
Taken March 25, 2008 Page 57
1 2
Q.
All right. At this March 22nd meeting you
learned apparently All Star had received partial payments, progress paYments? A. I was not sure on that. Okay. What I was sure is that some of the work had
5
6
Q. A.
7 been complete.
8
Q.
Okay. And so being completed, would it be --
9 would it be fair statement¯that you concluded All Star was
I0 at least entitled {o be paid for that? A. Correct. Ii
12 13 14 Q. And did you later determine that, in fact, it had been paid for that work? A. Q. I've never made that determination, no. If All Star had, in fact, received a progress
15
16 17
payment for work completed under the four task orders that were in the assignment that money, those payments
18 rightfully belong to the bank pursuant to the terms Of the
19 assignment, correct? A. Q. That's correct. So if it were determined that progress payments~
2O
21 22 23 24 25
had been paid to All Star, the bank's conclusion would be that money really was rightfully the bank's? A. Correct. MS. STENTIFORD: Thank you, Mr. Gonzalez.
Ace Court Reporting Service & Digita! Videography
~P068
(956)380~Ii00 (866) 380-1135 (Fax)
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 9 of 25
Subj: URBENTIPLEASE RESPOND Dais: 6/6/01 2:06:5t PM Pacific Daylight Time From: MNBTT;777 ............. To:_ V~/1LLI/~M .L.MYN~TT@CUSTOME; .TREAE], GOV Jun~ 6, 2001 U.EL Customs ~e~ices-RPC 6026 Lakeside Boulevard Indianapolis, Indiana 46278 REF: Contracts # TC-1-95-013
CS-1-99,.24741~-6 CS.l.ZJ9-24749.6 CS-l.gg-25801)-I P-~-1-gg-24747.0 ATIN: .William l~ynatt U.S. Customs
Please make referenced to enulosed Noti=e of Asslg.nment date Januap~ 14, 2000. In this notice the government had agreed that all payments dos.or to become due on above contracts would be made to the Assignee, Mercedes National Bank. We. have seen copies of several checks that have been made directly to All Star iron Works, At a minimum, checks should be made jointly to our Bank.
Please call us and inform us ~vhy this agreement has not been complied with. Mr. Soto has been a oustomer of our bank for several yeans, but the foot that these jobs have had numerous change orda~s and have gone beyond the projected time of completion does concen~ us, Please call me so that we can discOss this matter. We WOuld like to know if your agency is paying some ofthe subcontractors directly. This will definitely have an impact on how we structure any future advances. Your prompt and courteous attention to this matter would be greatly appreciated. We do not want to interrupt the normal progress ofwork to comptete~hese contraots. Sincerely, Aaron R, Gonzalez Executive Vice President
APP 069
Juno 0G, 200~ ,~u~o=l== Onllno~ MHBTXT/7
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 10 of 25
Subj: Re: URGENTIPLEASE RESPOND Date: 0~/11/'2001 5:11:38 AM Central Daylight'time ................. F~ ram: WI~.__LMYN&_TT@CUSTOMS.'TREAS. GOV Sander. WILUAM .L MY ~I'~@C---~'I~MS~I"REAS;GOV .................................................... Reply-to: ~LUAM,LM [email protected] GOV To: [email protected] Mr. Gonzalez, '
U.~;. (3ustanm has a "privy of contract" with All Star Iron Wod~s to provide ¢,nstrudian pmjedm. Customs does not ha~ a co~tra~t or any oblig~o, v.~th any suboontractor that All Star utilized or any bank that proddes the contractor ~ith sen~es:
Customs does not issue progress payments to eub=ontmctom.
The undem|gned agreed to mail progress payments for some of the task arden to your bank as s courtesy to All Star. "the problem.seams to I~ I changed the meJling address in my oamputam at Indianapolis, IN howsvar the ~inance oflioe that mails ~he checks in Pennsylvania did not change the a~ress they ha~ in their oomputer. I ~tll contact ~he tinancs o~i=e to assure that the mailing address is ~hang~d b match your ~an~ address.
Myn~
APP 070
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 11 of 25
............................................................................ N fm l-B - "-
Men.des
REF: All Star Iron Works ATTN: Lee Sullivan .
As per our conversation a few minutes ago, I am sending you the following: I. 2. 3. 4. 5. 6. Notice of Assignment listing all contracts by numb'er under one master number. Letter of Approval fromyour.Agency. Security Agreement assiging contracts. UCC Original Filing. ,U.CCFiling of amendment addingthe four (4) US.Customs contracts." UCC Continuation Filing,
Please review the enclosed information and call so that we can correct any instrument that you agency feels needs modification, To this date we are not r~eiving checks payable to our bank.
Executive Vice President
APP 071
P.O. Box 777 Mercedes. Texas 78570
(9561 565-2485 Fax 956-565-5050
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 12 of 25
U.S. Customs Service Field Procurement Services Contracts Section lndianopofis, Indiana
REF: All Star Iron Works ATTN: Bill Mynatt
June 12, 2001
Thank you for responding to oar letter concerning the above client in a.timdy manner. O~ files are presently h~ing reviewed by OCC, Office of Comptroller of" Currenoy, and All Star Iron Works is one of the files they have selected for review.
In our loan toAll Star Iron Works, we tried to por~et oar lien on spcoifio gov~nmem nontn~ that All ~tar k~d with the goverament. In this fi~n instn~m, the. four" con~ amt we previously mentioned arefisted. It was both the bank's .and All Star's intent that checks be madejolntly to the bank and All Star.. In tbo letter that wq..~n.t to your agency, you agreed to make tim cheeks solely in the name of the'bank. T~.....~.c~..-be modified to include both the.bank and All Star. "'
OCC wants us to assure them that the collateral for this loan is intact ~nd that the bank does haven good handle on the.application ofproce¢ds that are paid to A.I1 Star. We have agood relationship with All Star Iron Works and the owner does provide as with copies of checks issued by your department.
W~ ~p.uld appreciate anything you can do to assist us in making sure that the ~heoks are
made jointly t0our bank and All Star in the ~uture, This wilI give us better.control of the funds and get us in compliance with our original intent. It willalso satisfy OCC with their findings. ¯ I realize how a change of address can to.replicate issues, Please contact me if further oompiications should o~ctu'i
Executive Vice President
APP 072
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 13 of 25
July 4, 2o01
Mr. Aaron Gonzalez r/ Mercedes National B.-ink POB 777 Mercedes, TX 78570 Dear Mr. Gonzalez
Reference: Attached letter dated June 12, 2001 Please be advised the reason pregmss payments for All Star Iron Works lnc have not been forwarded to your bank is the Electronic Funds Transfer (EFT) information has not been provided to the United States Customs Service Accounts Servia, as Division (ASD).
Attached is a standard form 3881 with a pink cover sheet. Please coordinate with All Star Iron Works inc and complete the payee/Company Information and the Financial Institution Information blooks and sign the form and send to the ASD. Additional questions should be directed to the undersigned at telephone 317.298-1180 ext, 1270 or FAX 317.298-1344 or E-mail at WILLIAM,L.MYNATT@¢ustoms.treasa-0-~ or in writing at the following address: U.S. CUSTOMS SERVICE ATTN: William L, Mynatt Field Procurement Service Branch 6026 Lakeside Boulevard Indianapolis, IN 46278 Sincerely, ~X/il~am L. Mynatt Contracting Officer CC: File
TKADIT|ON
Ho~o~
APP 073
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 14 of 25
ACH VENDOR/MISCELLANEOUS PAYMENT ENROLLMENT FORM
This form is used for Automated Clearing House (ACH) payments with an addendum record that contains payment'-related information processed through the Vendor Express Program. Recipients of these paymen'tsshouid bring this information to the attention of their financial institution when presenting this form for completion.. PRIVACY ACT STATEMENT ..... Th-e-~f~l.15~ih-g-information--is-provided-tD-comply-with-the_Pri.vacy_Ac_t of 1 974 (P.L. 93-579). All information collected on this form is required under the provisions of 31 210. This' information will be used by the Treasury Department to transmit payment data, by electronic means to vendor's financial institution. Failure to provide the requested information may delay or prevent the receipt of payments through the Automated Clearing House Payment System~
ADDRESS:
Accounting Sgrvices Division, 6026 Lakeside B!vd,, P,O, BSx ~.~a'~. ~.?.?' ~ '. .,..~, ~,,~,~:. 7~' '""" Indian~lls, IN 46268 GL2 ....
.
',D~A~ ~ NA~: ADD~ONAb IN~R~O~.
¯ Accounts Payable - Commerci~ Accounts
'[~ ~ ~L~ ~ ~'~"
" "
I( 817 ) 298-1200, Ext. 5001
TELEPHI~NE NUMBER: NO. DR TAXPAYER ID NO.
NA~' "
PAYEEICOMPANY INFORMATION
33~L STAR IRON WORKS, INC ADDRESS., ?_ 0 1~0~ 83 ]~RCEDES, TEXAS
nONTA~r ~%'RSON
"
74-2303378
78570 TELEPHONE NUMBS: 956 ) 565-49B7 FINANCIAL INSTITUTION INFORMATION
~d~EX BOTO
MER~EDES NATIONAL BANK
~,DDRESS: ; '
'
"
P O BOX 777 M£RCEDES, TX
~CH COOR!~,;I/NATOR NAIVE:
(201 S. TEXAS)
78570
.
ITELEI~IONE NUMBER:
BOhT~IE DE IA FUENTE
~'~.OUTINB .31~ANSiT NUMBER: ...........
~~CCOUNT Trn~: ALL I STAR IRON. WORKS ~, INC. ,,.,
DEPOSWOR ~CCDUNT NUMBER:
011~-334-.1
,~NATLIFE:"~D ~ ~ A~DR~ED D~ICIAE (Dould ~ tha ~ame as A CH Coordinator)
~
~
....... , ,
e£, ,
074
I
TEL~PHDNE NUMBER:
, I ~6~-24~
3B81 (Rev12/90) \F ~rlbed by Department of TreasUry,. U S C 3322; 31 CFR 210 [\ ~J
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 15 of 25
¯ ACE COURT REPORTING SER VICE
& Digital Videography Storewide & Nationwide Scheduling
ORAL DEPOSITION OF Cheryl Bellany Taken on March 26, 2008
Cause No. 0 7-003 55C; Texas National Bank. f/k/a Mercedes National Bank v, ''
Ace Court Reporting Sewiee
& Digital Videography Leideker Building 200 E. Cano
Edinbttrg, Texas 78539 Firm Registration No. 476 Expiration Date: 12/31/09 (956)380-1100 Fax: (866) 380.1135 . www.acecourtreporting.com inf o@aceco urtreporting.com
APP 075
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 16 of 25
Deposition of Cheryl Bellany
March 26, 2008 Page 3 2
1 2
orders. So he -- he would do the work,, the bank would provide the money to do the work, and we would assume that -t-he-mon~es-~ere~_stJll out there but it might be two years
4 down the road before he got paid.. And that was thecase ,5 in several instances. And the bank never really knew what 6 was out there that was stil! to.be paid. We tried. We
7 made an attempt several times to determine what was still
8 there. You remember that this was a revolving line of
9
credit and we loaned money based on 80 percent of
i0 contracts that were .still outstanding. And if we did not
ii 12
¯!
get something to show us that payments had been received, we assumed that the money was still to come in. Q. Did you ever request Mr. Soto thathe tell you
13 14
when he got .a check from the government .on any of these assignments at any point after -A. Not -- not -- after we started having these
15
16 17
problems. Then it became o~vious thatwe had problems.
18 But up unti! this time, we had done what any prudent
19 banker would do to take steps to ensure that we were
20 getting the funds or were aware of the funds and that we
21 22 23 24 could control the funds. And that was by making an assignment and asking the government to make those checks at least jointly payable, ifthe checks had been made jointly payable, he could not have deposited them into the
25 account without getting our approval. And that was the
" ....................................................... Ace Court Reporting Service APP 076
(956)380-1100
Case 1:07-cv-00355-NBF Document 24-5 Deposition of Cheryl Beliany
Filed 07/30/2008
Page 17 of 25 26, 2008 March
Page 33
1 2 3
reason we wanted that. We had no control over what he did with those funds. We don't even know if all the funds came into this bank.
Zd t--yo=~ [ ........................ -kn-~w~ -a-t--Te-a-s t - some- o-f- -the- funds- came ........ 4- ..........Q-J .........
5 into this bank?
6 7 A. Well, we knew that -- we knew that -- we weren't there. We did.not typically make it a policy to
8 go in and monitor his everyday, account for deposits that
9 camein, there. That would be impossible for us to do. I
i0 mean, every -- checks that come in here are processedsome
ii 12 13 14 place else. I mean, I guess if he came in and physically deposited them and somebody knew. him. But we had no reason -- we had no reason t6 do that, because we had gotten the approval from the government that they were
15 going to make the checks jointly payable. Once we
16 17 realized that that was not happening, well, then wetook better control. But this was after things had already
18 happened.
19 Q. And that -- thatsituation existed -- the
2O assignment is dated January of 2000, Mr. Gonzalez's letter
21 22 23 referring to checks that he received. At some point between January 14th, 2000 andJune 6th, 2001, that's a year-and-a-half. There was -- the bank was powerless in a
24 year-and-a-half to take any action?
25
A.
We weren't powerl~ss. We just -- we didn't see
AceCourt Reporting Servic~ APP 077 & Digital Videography
(956)380-1100 (866) 380-1135 (Fax)
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 18 of 25
Deposition of Cheryl Bell~ny
March 26, 2008 " Page 34
1 2
any reason to do anything. We were -- we were supplying funds and we were very prudent with where the funds went. -T-he~ f~n~ds wentinto the jobs, And we -- we could show that. I mean, you know, we can go -- because we did
5 have --we did not al!ow checks to be written on that
account unless we knew where the funds were going. So we 7 knew that we had an .assignment on these contracts. We
8 knew those contracts were still out there. So we knew 9 that, eventually, we were going to get paid, particularly I0 since we felt like we had control.of the funds, but
ii 12 13 14 because of the fact of the assignment. Q. But with as much care as you described you
disbursed .the funds, only for~specific purposes, only upon verification of those specific purposes, you made no
15 effort to ensure that the money would be paid back to the~
16 17 bank in accordance with the assignment? A. Remember, it is a revolving line of credit.
18 There's no way that $240,000 is going to -- to even pay
19 for $400,000 unless that money is revolving. It ended up
2O that these jobs were not $400,000, it was a millioh
21 dollars plus, which wewere not a~are of, and there were .a 22 lot of change orders that happened in there which
23
24
everybody lost control of. And I made several attempts to try to even get a handle on where we were. So it's .a
25 revolving line of credit. The way a revolving line of
Ace Court Reporting Service
(956)380-1100
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 19 of 25
Deposition of Cheryl Bellany.
March 26, 2008 Page 35
credit works is, I advance the funds based on the fact that I had $400,000 that I knew was coming back. I -.ad-vanced_.$2~,900, plus another $125,000, or at least 4 $85,000, I know, which was the $85,000 for.the CD that was
5 put up on the bond, which, by the way, was eventually 6 depleted also somehow. I advanced those funds. That¯
7 money thatI advanced went into the bridges. Mercedes
8 National Bank paid for the bridges. And we still to-date
9 have those loans outstanding on our books, despite the
I0 fact that monies came in. The monies came in because we
ii 12 13 14 started something. We -- we had an obligation to finish it. Mr. Soto had ¯an obligation to finish it. The only way that was going to get¯ finished was if Mercedes National Bank would continue to provide the~ funds. So if
15 funds came into his account, then what we would do would
16 17 be to look to see -- he still has to complete those jobs. So we would still see if we would pay checks¯to complete those jobs, which we did. So we put -- I don't know how much money we put into those jobs. We put $750,000 into
18
19
2O those jobs. And we still have on our books the original
21 22 23 2.4 monies, because it was a revolving line of credit. And we were not able to control -- the reason we weren't able to control it was because U.S. Customs could not providethis bank with. numbers as to the amounts that were left to be
25 paid on those jobs. And I asked several times. I dealt
APP 079
Ace Court Reporting Servi(
(956) 380-1100
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 20 of 25
Deposition of Cheryl Bellany
March 26, 2008 Page 36
1
with Mr. Lee Sullivan trying to get that. Because that's
2 how we make outdetermination whether or not we're going
4
80 percent of the value of contracts left, you know, on
5 our revolving line.
6 Q. Right. But -- I mean, I UnderStand that. I
7 8 9 i0
ii 12 13 14 15 16 17
understand the bank's frustration here. I understand that the bank,s out a lot of money thanks to All Star. But, I mean, here's a check dated December 15th, almost a.year after the assignment was made,, for $70,000. It doesn't ,wouldn't it have been possible for someone -- for the bank to have put a hold on government checks being deposited into All Star's bank account,, if only for the purpose of ascertaining what that $70,000 was for, whether that was part of the assignment? That's a lot of money. A. We didn't do that. We -- we asked the
government tomake checks jointly payable. And if we had
18 received it then, then maybe we would have taken a look to
19 see what was happening. But we never -- we never -- we
20 never got notice during that year-and-a-half period of
21 22 23 24 time. And it was not uncommon for us -- I mean, this -- a bank has more customers than this one customer. And you just can't -- you can't -- you can do so much. And we felt like that by putting the: government on notice and
25 them agreeing to make the checks jointly payable and
..................................... ................................... Ace Court Reporting Service
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(956)380-1100
Case 1:07-cv-00355-NBF
Document 24-5
Filed 07/30/2008
Page 21 of 25
Deposition of Cheryl Bellany
March 26, 2008 Page 37
1 monitoring where the checks were~going to make sure that 2 those monies were going into the bridge~ that we had the c~ntracts On, that we should be okay, until a year-and-a-half later when we found out that -- and I think the problem.was that nobody, at that' point, then,
6
7
knew where we stood on what was left to be paid on these jobs. And to this date, I have not received an answer,
.8 although.I have. asked in writing and I have asked numerous 9 times. And I have never, to ,this date, received anything I0 to tell me what was still left to be paid on those jobs,
II 12 13 although I left in 2005 and I think people gaveup after that. Q. Did the bank have other lines Of credit,
14 revolving lines of credit, for $240,000?
15
16 17
A. Q.
I'm sure they did. I mean, was All Star -- was AIi Star one of the
bank's larger clients? A. I don't know if you'd say larger. We had.
19. clients that owed us.S800,000 loans. So they weren't our
2O largest client.
21 22 23 24 Q. A. Among the largest ten clients? No. I wouldn'tsay so, no. We were -- well,
we had a list of the largest clients and they were on the list of -- what we did that was $.75,000 and over. But
25 they weren't our largest client.
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Deposition of Cheryl Bellany
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1 2
assignment of January 14th, 2000? A. Not in connection with the assignment. We had
-- the bank had received --.not the bank. But as I 4 recall, Mr. Soto had received a letter and it appeared --
5 it seems like it was -- I don't remember -- 2000, maybe,
6 when things were going to change] And it was not
7 necessarily for U.S. Customs, but it was for all
8 government payments,, that they wanted government payments
9 to be done electronically. The bank did not receive any
i0 kind of -- as I recall, the bank did not -- did not
ii 12 13 14 15 16 17 receive anything at this date when we asked for this that indicated that we needed to do something electronically. Q. assignment? A. is that 4? MR~ SNYDER: That's my handwriting The notice of assignment. Exhibit 4 -- well, And you're referring to. the notice of
18 That's a 4,~ yeah.
19 -20 21 22 23 24 25 (By Ms. Stentiford) Let me show you Exhibit i0 and I'll ask you a .couple of questions about it. Can you Q. tell me what Exhibit i0 is. A. That's an ACH enrollment form. And is that your signature at the bottom?. Yes. Why did you sign this?
Q.
A.
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Deposition of Cheryl Bellany
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A.
To allow funds to be transmitted
electronically. ...........0_~.~_~ ...... e .......... ~_ ~_~_J~__~_~._if you can see, 4 there's .a date stamp in the center of the document. A. Q. Is that our date? I believe, if you look carefully, and feel free
5 6
7
to disagree with me, but I believe, it says U.S.C.S, which
8 suggests to me U.S. Customs Service accounts payable
9 group, in scratchy letters -A. Q. I see that. -- July 20th, 2001.. And Mr. Gonzalez testified
i0
ii 12 13 14
yesterday that the.information for the financial institution would have been provided by this Bonnie De La Fuente, whose name appears on that. Do you think that is .
15 correct?
16
17 A. Where is her name? Oh, there. Yeah. ~here it is. ACH coordinator, Bonnie. Yeah. Q. So is it your understanding that Ms. De La
18
19
Fuente would have filled out the financial institution
2O information on this form?
Yes.
22 23 24
Was she one of your employees? Yes.
~.
Andyou said this was a form to allow payments And this suggests that the -- well, this form
25 to be made.
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1 allows payments to be made into Mercedes National Bank's 2 account with Mercedes -- I'm sorry. This form provides 3 information to allow electronic payments to be transferred 5 Bank; is that correct?
6 A. Yes. And is it -- I'll just -- looking at this, Q. .7 8 based on the date stamp that's on -- July 20th, 2001, ,I 9 would think that this Exhibit i0 was provided to the
I0 government in response to Exhibit No. 9, the letter from
ii Mr. Mynagt, requestingform3881 of which Exhibit I0 is an Is that -- do you disagree with me? I mean, I don'[ know for a fact that that's 12 example. 13 14 A.
what happened.. I mean, I see the dates are close. Q. So my question, then, is if the bank's goal is
15
16 17
to have money -- have .the government send payments under the assignment to it rather than to All Star, why on
18 Exhibit I0 is All Star Iron Works given as the payee?
19 A. Because that's the way it would haveto be.
20 Mercedes National Bank has -- has no right to the monies
21 22 23 24 of All Star Iron Works. They have a right, to be notified about those payments. But this is the way that any funds -- this is the type of -- this is aform that would have been used for any funds to have been sent into the bank
25 electronically. And it's just -- you would normally put
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1 2 3 4
the customer's account that it's going to go into. Q. A. But here, this is =And we would not have put it -- I mean, we
wouldn't have put it going into Mercedes National Bank's
5 account.
6 7 Q. Well, how then would the government be expected. to make payment~s -- electronic payments under the
8 assignment? How would you expect that to be done?
9 A. I don't know that -- really, I don't know .on
I0 thatone.
ii 12 13 14
Q.
Because it appears that Exhibit i0 was provided
in response to the government's request, "Please tell us," you know, "we haven't been paying -- we -- the government hasn't been sending Mercedes Bank the assignment, payments
15 because we don't have electronic funds transfer
16 17 information," and then you provide electronic funds transfer information to pay All Star Iron Works directly. MR. SNYDER: I'll also object that that's 19 20 21 .22 23 24 25 not really what Exhibit 9 says. It doesn't really say that the reason we haven't been paying. Mercedes National Bank directly. It just says the reason we haven't been .. forwarding payments to All Star to the bank. It does say that. "The progress payments for All Star Iron Workshave not been forwarded to your~bank.'' That -- that implies to me that there was a question, as to A.
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