Free Response to Motion - District Court of Federal Claims - federal

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 1 of 11

wi tness:

Timothy Seaberg
Page 1

1 2

UNITED STATES COURT OF FEDERA CLAIMS
ALPHA I, L. P., BY AND THROUGH *

CONDENSED

3

ROBERT SANDS, A NOTICE *

4
5
6

PARTNER, *
Plaintiffs,
* * * * * *
* *

TRANSCRIPT

vs.
UNITED STATES OF AMERICA,

NO.

06-407-T

7

Defendant.
8 9

10

** * *** * * *** * * ** ** ** **** * * * ** ** ** **** * **** * * *** ** * **** * ** * ** *** *

11

ORAL DEPOSITION OF TIMOTHY SEABERG
12 13
* * * * * * *** * * * * * * ** ** *** * * **** * * * ** ** * * ** * ** ** **** * * ** ********* * *

14

15
16

i 7 ANSWERS AND DEPOSITION OF TIMOTHY SEABERG, produced

18 as a witness at the instance of the Defendant, taken in the
19 above-styled and -numbered cause on the 29th day of August,

20 2007, A.D., beginning at 1:05 p.m. before Andrea Reed, a
21 Certified Shorthand Reporter in and for the State of Texas, in
22 the offices of United States Department of Justice, located at

23 717 North Harwood, Suite 400, Dallas, Texas, in accordance with
24 the Federal Rules of Civil Procedure and the agreement

25 hereinafter set forth.

~ GOVERNMENT

HUNDT REPORTING

L _ EX~

214-220-1122

APP-A-00015

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 2 of 11

wi tness:

Timothy Seaberg

Page 6 Page 8
1
2 3

3 (Pages 6 to 9)

The cardinal rue is let's tr to kee it down
to one peron taking at a time. So ifhe ha something, if

1 2 3

ten years?
A. The Heritage Orgaiútion, and The Oak Group.

you'll stop and let him say it and then pick back up again. If
I'm askig a question, you probably will wait til

4
5

i finish

4
5

Q. Okay. Now, from what years to what years did you work for The Heritage Organization?

before you anwer. I probably won't wait til you finish anwerg before I ask the next one, but I'll tr and that way

A. Heritage was, I believe -- i thnk it was '97. '97
to 2004.
Q. Okay. And is that -- you worked for them up until the time that Heritage went into bankrptcy?
A. Uh-huh.

6 7 8 9

6 7

the cour reprter can get everg down. And then if you
could anwer verbally as opposed to a nod or somethg so the
cour reprter can get that recorded as well.

8 9

10 11 12
13

Will that be all right with you?
A. Yes. Q. All right.
Let's sta off with some basics.

Could you state your full name and your address,

14 pleae. 15 A. Timothy Wiliam Seaberg, 9421 Blacktorn Trail, 16 Frisco, Texas 75034.
17 19
Q. Okay. And could you tell me YOW' education from
A.

10 Q. And then you shifted over to The Oak Group? 11 A. Uh-huh. 12 Q. All right. And then you stayed at The Oak Group till 13 what time? 14 A. Till around December of '05. 15 Q. Okay. Now, the events that we're going to focus on 16 here are going to happen between 2000, 2002, but i stil need
17 to go back a little bit further as far as your work with

18 after high school on?
I've got a bachelor's degree in maketing from Iowa

20 State UlÚverity, and an MBA from the Univerity of Nort 21 Texas. 22 Q. And what yea did you receive those in, pleae? 23 A. BBA was in '91 and the MBA in '92. 24 licenses? Q. Okay. Now, do you hold any professional 25 A. I don't know if they're curent at the moment. i

18 Heritage. 19 So when you went to work for Heritage, what did 20 you go to work doing? 21 A. I was making phone calls to set appointments. job? Was 22 Q. All right. How did you happen to get that
23 it just something you applied for? 24 A. Yes, I just answered an ad in the newspaper. 25 Q. Okay. And we had a gentleman in yesterday name of

Page 7
1 have had in the past a Group I life insurance and a Series 6
2 securities license.

Page 9
1 Chester Decker. Are you familiar with Mr. Deker')

2 A. Somebody asked me that. i don't remember his name.

3 Q. And how about professional associations, do you
4 belong to any right now?

3 Q. All right.
4 A. I mean, it sounds vaguely familiar, but I really
5 don't remember.

5 A. i don't think so.
6 Q. Would you have belonged to any baek in, say, 2000,
7 200 I ?

6 Q. Okay. Well, I think he testified that was what he
7 did, is he made phone calls for basically to solicit clients.
8
9

8 A. i can't think of any that I would have belonged to.
9 Q. Okay. How are you currently employed?

A. Okay.
Q. Is that something that you were doing when you

lOA. I'm currently employed by Financial Marketing
11 Services.
12 Q. And what does that company do?

10 staed for Hertage?

11 12 13

A. Yes.

Q. And how long did you do that)
A. About a yea.
Q. Okay. Owing that year, what did that job entail?

13 A. It does financing for consumer electronic items.
14 Q. Okay. Is that company somehow connected to Gary

I 14

15 Komman?

A. The scheduling appointments position?

16 A. It's connected with his family.
17 Q. Okay. In what respects?
18 A. I assume one of

I 15
18

16 Q. Was it scheduling appointments, or was it actully 17 calling for prospective clients?
A. Well, it was calling prospective clients to schedule
19 appointments.

his family entities owns the company.

19 Q. All right. And how long have you been working for

2 a that company?

20 Q. And by calling a prospective client, was it more or
12 1 less -- complete cold call. Youwhat some idea that these people 22 not a as i understand it from had Mr. Decker, he said, well,

21 A. I've been working for the fàmily for ten years.
22 Q. All right. And by the family, again, one company own

23 -- a company owned somehow by one of the family organizations? 2 3 might be interested. But you were approacliing them first.

24 A. Right. Correct.
25 Q. SO which companies have you worked for in the last

24 They had not contacted Hertage?

25

A. Yea, I would say that it was pretty cold.

HUNDT REPORTING

214-220-1122

APP-A-00016

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 3 of 11

wi tness :

Timothy Seaberg

Page 10 Page 12
1 Q. Okay. So a typical phone call, walk me though how
1 Q. Okay. Now, what did a contractor do? You say going
2 out on the road.

4 (Pages 10 to 13)

2 tht happened.

3 A. We would just -- basically had a list of people to
4 call. It was prett strightforward. You just made phone
5 calls and tr to get people on the phone. We clearly took a
6 lot of phone calls to get those kind of people on the phone.

3 A. Okay_
4 Q. But what did a contrctor do?

S A. Just went out and the primar job was to have an
6 initial meeting with someone that we had a cold call

7 Q. Okay. And would those phone calls be reorded?
8 A. If

7 appointment scheduled with.

they were in a state where you could record phone

S Q. Okay. So the person who was making the phone calls
9 doing what you had done before would set up a meeting with a
1 a client, and then Heritage would send a contrctor like yourself

9 calls, yes.
10 Q. And was that typical practice for Heritage? Were you
1 1 supposed to reord all of your phone calls?

11 out to meet with the clients?

12 A. Only the ones that were in states where you could 13 record, yes.
14 Q. And, again, I'll take that as a given. I'm not 15 trying to suggest that you were violating any state laws.

12 A. Correct.
1 3 Q. And what was your purpse in going out to meet with

14 that client?
lS A. Basically to -- the main purpose was to gather

16 A. Right.
17 Q. Durng that time frme, what actually was Heritage 1 S doing? Wht was its business?
1 9 A. Estate planng.

16 information, to find out, you know, as much information as
17 possible about the client's current estate tax planing

lS situation, family situation, their business, what they'd done

1 9 as far as tax planning.
2 a Q. Now, how much information were you given at that

20 Q. And what would you be contacting these prospective
21 clients about, asking them to?
2 2 A. Just asking for a meeting to discuss estate planning.

2 1 point -- how much more information were you given with respect
22 to what Heritage actually did or what product it was promoting?
23 A. Well, I was never given information about the methods

23 Q. And I apologize for that, but in this room it always
2 4 comes though. i don't know if we can turn it off.

24 of achieving results. I was only given information about what
2 S the results would be or what we could do.

25 All right. Now, when you went to work for

----------. page--i~------------ ---------.---_. .-.--~~~~.--;;.
1 Heritage to make these phone calls, what did they tell you 1 Q. Okay. And we'll get mto that mJust a second. To

2 about the company business? 2 prepare for one of these meetings, what would you do?
3 A. It was -- at that time, it was pretty much just we do 3 A. There was a file created by the research department
4 estate ta planning, sophisticated estate tax planning for 4 that just researched puhlic information about the individual or

wealthy people. S the family, and so I would just read the file.
6 Q. And did they provide you with detailed background as 6 Q. Would there be anything else in that file?
7 to the nature of

that business, or was this more or less a 7 A. No. Usually it was just -- it was a cold call, so we

8 scripted thing that they provided you enough information to tr S didn't really have any information other than public

9 to get the other -- the prospective client interested? information.
lOA. Yes, it was very scripted. 10 Q. Okay. What about the call itself, would you have

11 Q. All right. 11 that information available to you?
12 A. It was not much background given at alL. 12 A. No. There would be n I'm tring to remember if
13 Q. Okay. And you say you did that for ahout a year') 13 there was a n i can't remember. There may have becn a

14 A. Uh-huh. 14 transcript in there of the phone call, but I don't think there
1 SQ. And then what did you do? 1 S was in all the files.
16 A. Then i staed going out on the road having initial 16 Q. Okay. Well, we'll look fuher into that. Now, you
17 meetings with people that were -- who decided to meet with us. 17 would go out to this prospective client.
1 S Q. All right. Now, is that

just something that the one lS Would you go out to more than one meeting for

19 job evolved into the other, or was there like an intemal -- 19 this client, or would it vary? How would that work?

20 you applied for the joh n tred doing it, that tye of work?
21 A. Well, there was still a group of

20 A. For one particular client?
21 Q. Yes. 22 A. i would go to the initial meeting. And if i
23 convinced them to meet with us again, i would bring somebody

people making phone

22 calls, so I was promoted, i guess, to that position.

23 Q. All right. And in this going out on the road, what
24 did they call yow' position then?

24 else back to come with me to the second meeting.
25 Q. And this somebody else, what capacity with Heritage

25 A. Contrctor.

HUNDT REPORTING

214-220-1122

APP-A-00017

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 4 of 11

wi tness:

Timothy Seaberg

Page 14 Page 16
1 would that person be in? 1 Q. SO how was it that you could get a client interested?
2 A. Like a pricipaL. 2 What tye of information would you be telling them? 3 Q. Okay. And for Heritage, what was a pricipal? 3 A. Well, again, it was -- mainly, it was tring to get
4 A. It was somebody that was the lead on the case that 4 information from them. But it wasn't much. It was basically

5 (Pages 14 to 17)

S would do the -- you know, everyg from the second meeting S we have a way to eliminate or reduce your capital gains taxes.

6 though the implementation. 6 It really was -- some of the meetings were i 5 minutes.
7 Q. All right. And I preswne the pricipal would have 7 Q. And you say you didn't really know how they were

8 the ability to actully contrct with the clients? 8 eliminating or reducing the taxes?

9 A. Yes. 9 A. No. I was never involved in any ofthe meetings
1 a Q. And did you have that ability, or did you need the 1 a passed the point of 11 principal for that? 11 never a discussion of

the contract being signed, and there was

the methods until after the contrcts

13 Q. Okay. 13 Q. In the meetings that you would have attended, would
14 A. I just went to the meetings up until the point where 14 the emphasis have been more on eliminating or more on reducing

12 A. No, I did not have that ability. 12 were signed.

1 S there was a contrct signed, and then I didn't go to meetings lS capital gains taxes?

16 after that. 16 A. i don't really know how to answer that. i mean, it
17 Q. Now, was it more or less just to be the liaison to 17 was a general discussion about, you know -- I mean, I don't
1 8 introduce the principal to the client, or did it go actully 18 think we ever promised in those meetings that we could

19 beyond that? 19 completely get it all the way to zero. And, I mean, I think I
20 A. No. It was a liaison position, and I was responsible 20 said in the initial meeting we can reduce or eliminate.

21 for calling them back to set meetings up until the point that 21 Q. Uh-huh.

22 the agreements were signed. 22 A. And so I think it was just reduce or eliminate.
23 Q. All right. So it could actully be a couple of 23 Q. All right. And we've got a couple of

transcripts we

24 meetings before you could get a -- oh, I'm sorr . You said you 24 can look at in a few minutes, and maybe that'll help refresh
2 S might be setting up the meetings, but you might not necessarly 25 your memory. But -- so you say you would go through the file,

Page 15
1 go back out to the other meetings?
2 A. i might go back to a couple more meetings, yeah. It

Page 1 7
1
2 3

the research fie, before going out to these meetings, as I
recalL. You're not sure whether or not it would be a
transcript from the cold call.

3 depended.
4 Q. All right. And that was probably because you had a

4
5 6
I

When you got to the meetings sites, is therc

S rapport with the prospective -6 A. Yeah, it was

anything special that you would have to do before you engaged

just kind ofa handoff.

the meeting -- went into the meeting? More specifically, did
you record the meetings?

7 Q. All right.
8 A. Yeah. I didn't really say much at all after the
9 first meeting in the meetings.

7 8

A. Some of the meetings were recorded.

I

1 a Q. All right. Now, you say that initially that Heritage
11 work was mostly estate type work.
I i

Q. Okay. And was the determination on whether to record 10 them or not record them based upon whether state law permitted 11 a recording in that state?
12 13
A. Yes.

9

12 Did that evolve into something else, say, in
13 time frame of about 2000, 200 i?

14 A. Yeah, it went to capital gains estate planning.
lS Q. Okay. Now, what was your understanding as to what

Q. SO if it was the state where it was pem1itted, was it 14 the customary practice to go ahead and record the conversation')

11S
I ~~ 18

A. It wasn't always recorded.

16 Heritage was promoting on capital gains planning?

17 A. The contractor's understanding was that there was a
18 way that we could show someone to reduce or eliminate their

Q. Okay. In what instances would you make the decision to or not to record?

A. I'm just tring to remember. Sometimes if it just

19 capital gains taxes.
20 Q. Okay. And how much information did Heritage give you

19 was more of a -- if I didn't think there was going to be any

20 significant material discussed in the meeting, if it was just a 21 lunch meeting or a short meeting that, you know, I didn't 22 anticipate being a -- having a lot of value, I guess, sometimes
23 I wouldn't do it. 24
Q. SO it was kind of a judgment call on you going into

21 with regard to what you were out there promoting?
2 2 A. Not that much. I was never allowed in the analytical

2 3 department. There was a fingerprint code, and I couldn't get

24 in there. So the idea was that the contractor didn't know what

2 S it was that achieved the resuIts that he told people about.

2S it?

HUNDT REPORTING

214-220-1122

APP-A-00018

Case 1:06-cv-00407-ECH
Wi tness:

Document 75-5

Filed 10/15/2007

Page 5 of 11

Timothy Seaberg
6 (Pages 18 to 21)

Page 18
1 2
3

Page 20
1

A.

Right.

A. Right.

Q. And would it more than likely that you would choose

2 3

Q. Was there a trscription deparent? How did that
work?

not to record it, or that you would choose to record it and
then erase it?

4
5

4
5 6 7

A. Well, there was sort of a secretaal deparent. i

A. No, I would never erae it.

mean, they weren't referrd to as a trscription deparment.
That was one of their jobs.

6 7
8

Q. Okay. So you either recorded it or you didn't record
it?

Q. Okay. And they would tae the tape and then

A.

Right. Yeah.

8
9

trscrbe it?
A. Yes.
Q. And then what would happen to the trscripts?

9 Q. Okay. And then after that meeting -- let's just deal 10 with meetings where they were recorded. 11 What would happen when you got back from the 12 meeting? 13 A. I would turn in a -- the tape to the marketing 14 support department. just a second. 15 Q. Okay. And let me backtack 16 Was it importt to Heritage that these meetings 17 be recorded, that the conversations be recorded? Was some 18 emphasis placed on that? 19 A. Yeah. I mean, it was -- yeah, it was expected that 20 it was to be done in importt meetings.

10
11 12 13

A. It would just be added to someone's file.
Q. Would it be retued to you afterwards to review it?
A. No.
Q. Okay.

14
i5

THE REPORTER: I'm sorr. Did he say, "Huh-uh"?
THE WITNESS: I said, No.

16
17

Q. (BY MR. HERRIN) Okay. And I'm sony. I mean, I'm 18 guilty as you, but she caught you, so -19 Did you have any other responsibilities with 20 regard to that meeting when you got back to the offce?
21
23
A. No,just tu in the tape. If

21 22
23

Q. SO it was standard practice; is that correct? A. It was commonly done, yes.

there was a follow-up

22 meeting scheduled, to get it on the calendar.

Q. All right. If it was not done, it would be a 24 deviation from standard practice? 25 A. It was one of those policies that, you know, it was

24 25

Q. Would you do a debrief of those meetings? A. Oh, yeah, i would do a debiief.

Q. And what was a debrief?

Page 19
1 sort of there for a long time, but it didn't always happen.

Page 21
1 A. It was just a recollection ofthe meeting basically.
2 Q. Okay. And how soon after you completed the meeting
3 would you do your debrief?

2 Okay. I wouldn't say that it was strictly enforced. i don't
3 remember anybody being punished for not recording.
4 Q. Do you recll -- do you know what the Contrctor
5 Training Manual was for Heritage?

4 A. Y ca, that can be anywhere from ten minutes to a
5 couple of days.
6 Q. All right. Would you -- if

6 A. I mean, it was the -- I'm not sure I understand the
7 question. It was a --

you were going to do it

7 in ten minutes, I presume you'd be out ofthe offce.

8 Q. And you're familiar with that document, right?

8 Would that be something that you would
9 tape-record?

9 A. Yeah. I haven't seen it in years, but-1 a Q. And it actually is quite voluminous, correct, you

10 A. Yes.
11 Q. And that would just be turned over to trascription

11 know, several hundred pages?

12 A. Maybe. It may have evolved since i was trained.
13 Q. All right. Do you recall provisions in that manual
the 14 that actully said that a fine would be imposed if
15 conversations were not recorded?

12 to be trascribed?
1 3 A. Uh-huh.
14 Q. You nee to say, "yes." I'm

soiiy.

15 A. Yes. Sorr.
16 Q. And after that wa~ trscribed, what would happen to
17 that debrief?

16 A. No, I didn't -- I don't remember reading it in
17 detaiL.

18 Q. All right. Would that surrise you, though?

18 A. Same thing. It would just go in the file.
19 Q. Okay. Would you look at the debrief

19 A. I've never -- I don't think anyone was ever fined.

before it went

20 Q. Okay.
21 A. i don't remember anybody being fined for anything

20 into the file?

21 A. No.
22 Q. Now, if you were going out on a subsequent meeting

22 actually.

23 Q. All right. Now, I'm sorr. Let's go back then.
24 Now, you say you would come back with your tape, and you'd hand

23 with the client, what would you do to prepare at that time?
24 Would you go back and read these things in the file or whatl

25 it off to people to trnscribe it.

25 A. Generlly, yeah. Usually not the trscripts.

HUNDT REPORTING

214-220-1122

APP-A-00019

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 6 of 11

wi tness:

Timothy Seaberg

Page 26 Page 28
1 presentation of these. 1 just skipped the reduce part -2 Q. Okay. Do you have any knowledge of

8 (Pages 26 to 29)

how the 2 Q. Okay.

3 presentations were handled as far as preparg documents and 3 A. -- to increase their chances of getting in. I don't
4 submitting to clients that kind of stufI 4 remember what the instrction was at that time.
5 A. Huh-uh. No, I really wasn't exposed to that. 5 Q. At some point, did it evolve to a point where they

7 please. 7 A. Not tht I recall.
6 Q. All right. If S A. (Witness complies.) 8 Q. All right. If

you could tur to Exhbit No.3, 6 were supposed to say zero?

you would turn, then, to Exhibit No.

9 Q. And let me represent to you that yesterday, Mr. 9 4.
1 a Decker identified this document -- the CRD being Chester or lOA. (Witness complies.)
11 Chet Decker, his initials. And I'm sorr. He probably told 11 Q. And this is another transcript. It's got the
12 us -- he might have told us who ALK was, but I don't remember. 12 initials TWS.

13 Do you know who ALK is? 13 Does that stand for yourself, Tim Seaberg?
14 A. Somebody in the -- obviously, someone in the 14 A. Yes.

15 transcription department. But I can't remember which person it 15 Q. RLB. Do you have any idea who RLB was?

1 6 really was. 1 6 A. I have no idea.
17 Q. Well, i can't even remember whether he told us 17 Q. Okay. I hate to hit you cold on this thing, but if
lS yesterday, so you're not doing any worse than I am. 1 S you'd take a look at ths and tell me if 19 Could you take a look at this document. .lust nii 9 you would think ths is not a trnscription of

there's any reason why
the meeting tbat

20 well, just quickly, the question is going to be, first off, do 20 you had on May 31 st with Richard Sands?

21 you remember seeing this before? And the second question is, I 21 A. It seems like -- I don't see any reason so far.
22 is this somethig that you might have seen before you went out 22 Q. All right. And we're going to ask some specific

23 and did your first meeting with the Sands? 23 questions. If something changes, we can either take it up
24 A. I don't rcmember if I saw it. I didn't normally read 24 then. Or if you want to hear the tape itself, we can do that 25 through the entire transcript. A lot of times i just read 25 as well. But for a little background purposes, Richard Sands

Page 27
1 the -- whatever memo is in there from the initiator.

Page 29
1 is listed as Pc.
2 What does "PC" stad for?

2 Q. And does this look like a typical transcript that

3 would have been prepared by an initiator -- or I mean, a
4 transcript -- a rccording of the initiator's conversation? Is

3 A. Potential client.
4 Q. Potential client. All right. I wasn't sure whether
5 it was prospective, potential or something else altogether.

5 this kind of typical?
6 A. Yeah. i mean n
7 Q. Obviously, the conversation would --

6 A. All iight.
7 Q. Obviously, the meeting appea to have been recorded,
S so typically how would you have gone about recording the

S A. Right.
9 Q. Would you say you were fàirly scripted, right?

9 converation of this meeting?

lOA. It was fairly scripted in what minimal results the
11 initiators could talk about. So, i mean, just like he says
12 there n how much we can say initially.
13 Q. If

lOA. Oh, just put a recorder in my pocket.
11 Q. Okay. And was it a little micro recorder, wa~ it a
12 stadad recorder? How would that work?

you'd look at the very last entry on this -- going

13 A. Yeah. it was just a small one that would fit in yOil
14 pocket.
15 Q. And it would be like a vest pocket, a coat pocket?

14 on into the next page -- and it's Mr. Sands saying, Okay. And

15 are we eliminating the capital gain tax entirely? Followed by

16 Mr. Decker saying, Entirely. Mr. Sands saying, Zero.

16 A. Normlly, yea.
17 Q. I'm

17 A. I'm sorr. Where are you at? 18 Q. I'm sorr. This is the-19 A. Oh, okay. Bottom ofthe page. Okay.
20 Q. And Mr. Decker saying again, Zero.

just cwious. This is -pocket, you know.

lS A. Yea,just in yaw'

19 Q. Like in yOil shirt pocket or something. So I just
20 didn't know whether n

21 Is that the kind of infonnation that would
22 typically be told during an initiated call
2 3 A. Well, I don't remember if they were instructed to say

21 A. Shirt or coat, either one. It didn't really make any
22 diftèrence.

24 reduce or eliminate at that time. If they were instructed to
2 5 say reduce or eliminate, i suppose, you know, a lot of them

23 Q. All right. And how long would the tapes tyically 24 ru?
2 5 A. Maybe two hour, i suppose, depending on the spee

HUNDT REPORTING

214-220-1122

APP-A-00020

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 7 of 11

Witness:

Timothy Seaberg

Page 30 Page 32
1 that you set your recorder on.
1 MR. HERRI: At the -- 21. So of

9 (Pages 30 to 33)

the transcript

2 Q. Okay. So they could be a variable speed.
3 A. Probably, yeah. Yeah.

2 itself, it's Page 8. I hadn't picked up on that page number.

3 MS. JOHNS: Why don't you use the THO number.

4 Q. And did these tapes automatically start -- reverse
5 and start recording the backside?

4 MR HERRN: All right. We'll use the THO
5 numbers.

6 A. Yea. It seems like they lasted two hour, so
7 usually not.

6 A. All right.
7 Q. (BY MR HERR) So that's 350.
8 A. Yeah.
9 Q. We're all on the same page?

8 Q. All right. If, in fact, the tape ran out before the
9 meeting ended, how would you handle that?

lOA. You just wouldn't have the end of the meeting. 11 Q. All right. So you wouldn't change the tape durng
12 the meeting or excuse yourself?

10 Okay. TWS, again, that would be yourself?
1 1 A. Correct.

12 Q. Okay. When it says, We can eliminate the capital
1 3 gains taes on that, any reason to believe that's not what you
14 told Mr. Sands?

13 A. No.
14 Q. All right. With regar to ths trnscript, when you
1 5 would have gotten back to the offce or anytime thereafter, 1 6 would there be some reason to alter the recording itself,
17 delete parts of it, leave part of it on?

15 A. Unless it was altered, no. I don't have any
16 knowledge it was being altered.

17 Q. Well, I mean, would that be inconsistent with what

18 A. No.
19 Q. Okay. When you got the transcript back, would there
2 a be reasons that you'd go in there and alter the trnscribed

18 you would have done -- what you might have said?

19 A. You know, like i said, I can remember reduce or
2 0 eliminate, so I don't really remember why I would have said

2 1 portons, or would the trnscript just stay as it was
2 2 transcribed?

21 just eliminate as opposed to reduce or eliminate.
22 Q. Well, would you be more inclined to talk about 23 eliminating the capital gains tax if that's what the client was
24 particularly interested in?
2 5 A. Well, I mean, I didn't want to get myself in a

23 A. I usually didn't ever look at the transcriptions.
24 Q. Okay. You're not aware of anybody who would go in

25 and alter the transcripts afterwards, right, or are you?

Page 31
A.
2 3 4 5 6 7
S

Page 33
1

No, I don't think so. No.

position where we couldn't, you know, do what I said we could

Q. Okay. Now, in this time trame, which is May of2001,

2 3

do. So I would think that I would have rather said reduce or

do you recall if it was the practice of the contractor at this
time to tell the prospective client or potential client that

eliminate. Clearly I said eliminate here. Q. There's some discussion in this transcript where Mr.
Sands -- well, i tell you what, let's just go to THO 353.
A. (Witness complies.)
Q. And about the middle of

4
5 6 7
S

you could eliminate capital gains as opposed necessarily
reducing them?
A.

No, I don't remember.
Okay.
If

the page, Mr. Sands asks, Do

Q.
A.

you would turn to u

you guarantee your results?
Do you see that?

I'm sure it's in here.

1 a Q. u Page 2 I of the transcript at the top. And the

1 a A. Yeah.

11 very first entry, if you'll read that, it says, That we can
12 eliminate the capital gains.

11 Q. Typically, without looking at the transcript, if
12 somebody asked you to guarantee your results, what would you

13 A. 2J?
14 Q. Yes. I'm sorry. You're looking -- Oh, wait a
1 5 second. We got -- oh, I see.

13 tell them?

14 A. I iyouid generally say that we don't.
15 Q. Okay. Would you expand on that if

they wanted a

16 Is the page different?
17 A. Oh, you're talking about this number?

1 6 guarantee?

17 A. No, I certainly wasn't authorized to give anybody a
lS guarantee.
19 Q. Okay. Well, if

lS MS. JOHNS: Which number are you talking about?

19

MR. HERRIN: Well, I was looking at APP 2 i.

you'd take a look, you actually said want more
didn't get

20

21 hopefully, you're on a different page. 21 22 MS. JOHNS: Which one do you want? 22
24 Q. Oh, i see, you're on n I 24
25 MR. CULLINAN: Now I'm confused. Where are we? I 25

Q. (BY MR. HERRIN) You're looking at APP 34. So

20 what they'll propose down at the bottom of the page where you
say, Typically, the deal is 25/75 split, butyou if

23 MR. HERRIN: 21 123

than that, there was a system where you could put SO percent of

you the potential tax savings into an escrow, and if
Do you recall u

audited, Heritage would keep that 50 percent plus any interest.

HUNDT REPORTING

214-220-1122

APP-A-00021

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 8 of 11

wi tness:

Timothy Seaberg

Page 34 Page 36
1 A. Yeah, tbat sounds vaguely familiar. I don't th
1 Q. And why would his name come up in a meeting where you
2 were tring to promote a Heritage product?
3 A. I don't know if

10 (Pages 34 to 37)

2 anybody ever did it, though. I thi it was -- it was
3 unsuccessfully used.

they brought his name up first or--

4 Q. All right. That was somethng that was to throw out
5 in case the client wanted more assuraces. But you said,
6 tyically, I guess, without exception, nobody really wanted to

4 no, I think -- well, according to what I'm reading -- it was in
5 the -- somehow i had that information when i went into the
6 meeting.

7 pay the 50 percent?

7 Q. All right. It wasn't something tyically that would
8 have come up?

8 A. Right.

9 Q. But you do recall making that tye of a pitch?

9 A. No.
1 a Q. Okay. And you weren't coached ahead of time about if

lOA. Well, now i see it here, so clearly -11 Q. But it's not a pitch tht you're unfamiliar with?

11 certain names come up, have certain responses?

12 A. I mean, I vaguely recalL.
13 Q. Okay. 14 A. I don't -- I know that I never had any success with
1 5 it, so --

12 A. Well, no, I don't n
13 Q. All right. Well, I'll leave it at that. But you say
14 some of

this stuftwas scripted because they only gave you

15 certin information n

16 Q. Okay. 1 7 A. I knew no one was going to like it, so i didn't like
1 8 to talk about it because I thought they were going to thnk I
1 9 was an idiot, but --

16 A. Right.
17 Q. -- rolling out of these things?
1 8 A. Right.

19 Q. On Page 353, two references. First ottthere, about,
2 Doh, the eighth line down, Mr. Sands asks you whether or not you
21 can eliminate entirely the capital gains. And, again, i think

20 Q. I don't suppose anybody at Heritage has told you that
21 they'd just assume have something that they could reject, but

2 2 at least you put it out there?
2 3 A. I suppose, yeah.

22 I asked this before, but do you recall that being an emphasis
23 of

his main interest?

24 Q. There's some discussion over the next page or so
25 where you discuss the fact that if you gave an absolute

24 A. I certainly don't recall any of those, no. 25 Q. Do you have any reason to think that the tape would

Page 35
1 2 3

Page 37
1

guarantee, there might not be econoilÚc substance to the deaL.

have been altered to -- or the transcript would have been
aItered to change the words that he would have said?
A.
i don't know of anyone altering any of

Do you recall making pitches like that?
A.
An explanation of

2
3 4
5

why we couldn't guarantee')

the tapes.

4
5

Q

Right.

Q. Okay. You see also a little bit lower down -- or I'm

A. That seems like the explanation -- the best one for

sorr. Your response is that absolutely you could eliminate.

6

why we couldn't give a guarantee.
Q.
Do you recall making those kind of

6

And then it asks, Do you guarantee results? And your answer is
basically you don't want to guarantee, so we could come as close to it as we can.

7
8 9

pitches if

7
8
9

somebody had asked?
A. i mean, it's hard to answer that question. It sounds

Would that be something you think you might have
A.

10 familiar. I don't recall specific situations where I said -11 you know, where I used that. 12 Q. If it was -- says those basically to that effect in
13 this transcript, you don't have any reason to believe you 14 didn't do it here, do you? 15
A. Right. Q. All right. On 351, you mentioned the name Jonathan

10 said?
I

11
12 13

I mean, obviously, I did. It's in here apparently.
All right.

Q.
A.

I mean, i don't -- obviously, i don't recall saying

14 it. 15 16
17
Q.
A.

And I understand. This is a long time ago and -I just don't want to say i remember saying when I

16

17 Blotmocker (phonetic). 18 Are you familiar with Jonathan Blotmocker

clearly don't remember anything i said during that year.
Q.

18

Do you recall in general what you would tell a

19 (phonetic)? 20 A. I am familiar with his name. I've never -- I don't 21 think I've ever met him. 22 Q. And what is basically your knowledge ofMr. 23 Blotmocker (phonetic)? 24 A. He's an estate planning attomey, I think is his 25 reputation.

19 client -- a prospective client ifhe asked you what's our audit

20 risk?
21
22
A.
Q

Do I -- I'm sorr.
What would you normally h if a client asked you,

23 What's going to happen? What's our audit risk here? Are we 24 going to get caught? Did you have something that you would 25 call them and tell them?

HUNDT REPORTING

214-220-1122

APP-A-00022

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 9 of 11

wi tness:

Timothy Seaberg

Page 62 Page 64
1 A. Yes, because that's what happened. It would have
2 been an exception:
1 with a client where the tape did something, the machine did

17 (Pages 62 to 65)

2 somethg that caused the client to be informed that he was

3 Q. Well, the note would have been for you for your
4 benefit, correct?

3 being taped? You know, I don't know, making a whistling noise
4 or something like that?

5 A. Well, the note is not to me. It's to marketing
6 support.

5 A. Not that I remember.
6 Q. All right. And do you know what Heritage would do
7 with the tapes after you brought them back and they were

7 Q. But the reason for it is so that you can go back and
8 reread the trcript and update the debrief?

8 transcribed, what would happen to them?

9 A. That's what the note says.

9 A. No, I have no idea.
10 Q. Okay. And if

10 Q. Okay. Well, support wouldn't have written the note.

you wanted to look at the transcripts

11 It would have been somethng you put in it, correct?

11 afterwards, you say they would be in the client fie? Is that
12 where they would be maintained?

12 A. Correct.
13 Q. Okay. And would this possibly be a situation where

13 A. Yes.
14 Q. Okay. Let's take a quick break, and then I got a few

14 you did your -- stre that.

15 If you'd tu to 252, please.
16 A. (Witness complies.)

15 follow-up ones or we'll get back to you.

1 6 A. All right.
17 Q. Or we'll tur you over to Mr. Cullinan.

17 Q. The firt paragraph, there's some discussion about
18 the Sands wanting some involvement by Nixon Peabody.

1 8 A. All right.
19 (Break was taken at 2:34 p.m. to 2:40 p.m.)
20 Q. (BY MR. HERRIN) Once again, I want to look back at

1 9 Do you recall the conversations or ths being

2 0 brought up in the meetig?

21 A. No.
22 Q. On a general basis, if somebody suggested to you
23 during a meeting that we want to get our attorneys to look at
24 this thing, what would your response be?

21 Exhibits 5, 6 -- 4,5 and 6. Now, those are going to be the
22 transcripts of

the meetings between -- that you attended with

23 the Sands. And specifically, I think you told me that you did
24 this in the ordinary course, and that you -- well, let me just
2 5 specifically ask the questions.

25 A. Just to tr to get another meeting without their

Page 63
1 attorneys.

Page 65
1 Were the tapes -- was taping itself done in the
2 regular course of your work for Heritage?

2 Q. Okay. And why was that?

3 A. Just to kee it from getting too complicated too

3 A. What do you mean? I'm not sure.
4 Q. Did you tape them as part of your business practice

4 fast.
5 Q. Did the people back at Hertage tell you to tr to
6 discomage getting the -- from geting other attomeys -7 outside attorneys involved?

A. Right. I 56 working for Heritage?

. 7 Q. Okay. And you took them back to the otTce and

8 A. Well, in the second meeting. We tred to have second

8 transcriptions were made in the regular course of Heritage's

9 meetings without other attorneys involved.
1 a Q. All right. And the reaon for that, again, would be

9 business? They were made for your --

LOA. Correct.
11 Q. -- continued use?
1 2 All right. And then those were kept by Heritagc
13 as part of its file during its normal course of

11 so that it wouldn't get too complicated?
12 A. Yea, just to keep it simpler in the beginning ofthe

13 process. I mean. we knew that they would be involved
i 4 eventully.

business?

14 A. That was the process, yes.
15 Q. Okay. And it's your understanding that those
1 6 transcripts then were maintained in the Heritage fies in

15 Q. Okay. There's an entry on Page 252, TWS, bring

16 copies of new cour cases out of Missour and have it at the
17 next meeting.

1 7 accordance with their nonnal business practices?
18 A. Uh-huh. Yes.

18 Would you tyically bring cour cases? And I
1 9 presume -- would this fall into presentation tye materal?

19 Q. Thank you. And it's your understanding that that was

2 0 A. That's not ver tyical right there.
21 Q. All right. Since it's not tyical, do you recall -22 does it stand out that you can remember it because this was an
23 exception or --

20 a regular practice of Heritage to record these conversations,

2 1 transcribe them and then maintain the trnscriptions in their 2 2 files?

23 A. That was the process, yes.
24 Q. Okay. Now, if

24 A. No, I don't remember it.
2 5 Q. Was there ever an instance in one of yom meetings

you'd look at Exhibits 7, 8 and 9, the

2 5 debriefs, and specifically it was the general practice of

HUNDT REPORTING

214-220-1122

APP-A-00023

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 10 of 11

wi tness:

Timothy Seaberg

Page 66 Page 68
1 Heritage that you go back and be debriefed -- or do a debrief 1 Q. What were the topics that were covered durng those
2 when you got back to the offce from one of these meetings? 2 depositions?

18 (Pages 66 to 69)

3 A. Yes. 3 A. Just issues relating to the case that they had
4 Q. And that these debriefs would then be transcribed, 4 against Gar at that time, which was -- i mean, it was a

5 and the transcription kept into the Heritage's client files? 5 six-hour deposition with the SEC, so it was long.
6 A. Yes. 6 Q. Did any of the questions cover

the Heritage

7 Q. And then -- and that was just the day-to-day business 7 Organtion's recording conversations?

S practice of Heritage, right, tht you would tape-record, you S A. Uh-huh. Yes.
9 trancribe, they'd make a trancription and keep it in the 9 Q. Can you descrbe for me in -- the cirumstaces

1 a fies, correct? 1 0 behind that recording or those recordings?

11 A. Correct. 11 A. The cirumtaces behind them? I'm not sure -12 Q. All right. Do you know of any intace where these 12 Q. Well, what conversations were recorded?

13 tye of trancriptions -- or the tapes the transcriptions were 1 3 A. There was discussions about conversations that were 14 made for would have been altered by somebody on behalf of 14 related to the case that was involved. 15 Heritage? Heritage would have gone back in and said -- or Gar 15 Q. And those conversations were recorded by the Heritage
16 Komman would have said these things need to be changed and, 16 Organiztion?

17 therefore, they were changed? 17 A. Corrct.
18 A. I don't remember that happening. 1 SQ. SO there were tapes of -- or were those tapes of
19 Q. All right. As far as today's deposition, how did you 19 recordings or trscripts of recordings?

20 prepare for it? 2 a A. Well, they were tapes made, and then they were

2 1 A. I didn't. 2 1 trscribed.
22 Q. And did you have any meetings or conversations with 22 Q. And were both the tapes and trscripts in

23 Mr. Cullinan or his offce prior to today's deposition? 23 existence -- ar they stil in existence, do you know?

24 A. One conversation maybe. A. Oh, I don't have no idea.
25 Q. And could you tell me briefly what was discussed Q. Do you know what the SEC was alleging in that case?

Page 67
2 A. That, I -- it was ver brief I think there was a 2 specific --

Page 69

1 durng that converation? 1 A. Insider trading, I guess. I'm not sure what the
3 question related to what you just asked me. 3 Q. Were they alleging that Mr. Komman was trading in
4 Q. All right. About whether or not the tapes would have 4 securities based on nonpublic information?

5 been altered or something? 5 A. You know, i really can't say what the actual charge
6 A. Well, no, just whether -- i thik it was -- honestly, I 6 was. i mean, i really don't know. i don't remember what
7 i don't remember. Wheter the -- I attended the meetings and I 7 the -- it may have been more than one. i don't know.

S whether i did these debriefs. I think. S Q. Where did Mr. Komman get the inside information, do

9 Q. All right. 9 you know?
1 a MR. HERRIN: Pass the witness. 1 a A. I'm not saying he-11 MR. CULLINAN: Thank you. 11 Q. Where did the SEe allege that he got the inside

i 2 EXAMINATION 12 information from, do you know?

13 BY MR. CULLINAN: 13 A. Meetings, I guess.

14 Q. Good afteioon, Mr. Seaberg. 14 Q. Meetings that he personally attended?

15 A. Hello. 15 A. That i personally attended?

1 6 Q. You testified that you've been depsed before. 1 6 Q. That he personally attended?

17 When was that? 17 A. Yes.
21 A. Oh, I was deposed by the SEC in Gar Komman's case. 21 A. i don't know if

lS A. Oh, let's see. When was I deposed? lS Q. Do you know, did they also allege that he obtained
i 9 Q. And let me limit that. If it's more than, say, ten 19 information from transcripts of

recordings that employees of

20 yea ago, I don't care. 2 a the Heritage Organization have with clients?
they alleged that or not. I'm not

22 I was depsed by the Justice Dearment for the same case 22 sure about that one. 2 3 Q. i want to talk a bit about your time as an initiator 23 briefly.

24 Q. Was that it? 2 5 A. I thi that's it.

2 4 before you were a contractor where you were making these phone
2 5 calls.

HUNDT REPORTING

214-220-1122

APP-A-00024

Case 1:06-cv-00407-ECH

Document 75-5

Filed 10/15/2007

Page 11 of 11

wi tness :

Timothy Seaberg

Page 102 Page 104
1
Q. All right. And so what they would be doing is they'd

27 (Pages 102 to 105)

1 wil handle it that way for puroses of the deposition.

2 tell you, Hey, I don't have it all. Would that be, if you'd

2 Q. (BY MR. HERRIN) I'm going to stop ths trscript as
3 we go along just to ask you whether or not there's been
4 anyting that you would change on the trscripts. And I'm

tur to Exhibit No.4, why, for instance, on the first page
4 there, you might have a question mark or an ellipsis?

5 A. Yes.
6 Q. I mean, they would leave it out as opposed to put

5 going to represent to you that I've listened to the fit one.
6 I went to Alaska and missed the second one, but Ms. Johns has

7 their own words in?

7 heard it.
time where there's nothing going on, so

S A. Well, that i can't say. S At the beginning, it sta. Then you have a
9 Q. All right. 9 considerable period of

1 a A. I never was there when they did it, so I don't know. 1 a I'm going to move it forward to that point and pick it up

11 Q. I mean, is there -- do you think the transcribers 11 again.
12 would fabricate conversations to put on the transcriptions? 12 Okay. Now, ths, for the record, will be

14 "fabricated." 1 4 trscripts.
13 A. You mean, maliciously? Or I'm not sure what you mean 13 Exhbit No. -- if 16 You know, whole statements attributed to one of

you'll tu to Exhibit No.4, the 5/31

1 5 Q. Well, I don't know whether it would be maliciously. 15 A. (Witness complies.)
the parties 16 Q. And, again, this actully stas before the meeting,

17 here that they would have made up in transcription as opposed 17 so I'm going to sta you there. Like i said, we'll stop and

1 S to trying to transcribe from the tape? 1 S go.
19 A. I'm sure that -- that it varied by transcriber. But, 19 (Tape is playing at 3:57 p.m. for less than a
20 you know, if

they're straining to hear what somebody is saying, 20 miute.)
them would have been more likely to put a 21 Q. Okay. Now, i paused that so I can fid these

21 I'm sure some of

22 question mark and some would have been more likely to try and, 22 controls. I'm going to have to -- and then sta over again.

23 you know, kind of interpolate what was said. 23 But for the record, do you recogniz that as
24 Q. All right. So an interpretation not a fabrication? 24 your voice? 2 5 A. Well, I think interpretation would be more accurate 2 5 A. Yes.

Page 103
1 than fabrication. Fabrication would

Page 105

just be completely making 1 Q. Okay. Now, I'm going to go ahead and try to fàst

2 up when they couldn't hea anytng, I guess. 2 forward this now. 3 Q. Right. Okay. I'm going to -- I'm going to take you 3 (Tape is playing at 3:58 for less than a
4 through the tapes that we have. Actually, they're parial 4 minute.)
5 tapes of the May 31st and the Jwie 13th meetings. I 5 (Off the purses of

the record at 3:59 p.m. to 4:00 p.m.)

6 MR. HERRIN: For

ths record, 6 (Tape is playing at 4:01 p.m. tor less than a

7 I'm going to ask the cour reprter while we're playing the I 7 minute.)

S trscription simply to wrte down "tape playing," and then we 8 Q. (BY MR. HERRN) For thc record, I've moved this
9 wil include a copy of the trscripts disks themelves in the I 9 forward about 40 minutes, which is something the court reporter

1 a record as exhibits, and we will ask the cour reporter as par 1 a wil need to know whenever she's trying to transcribe it, too.
11 of

her transcription duties to go in and also trscribe those. I 11 And this 40-minute gap, Mr. Seaberg, would that

12 So it'll be extr work tor you, but I guess you 12 be indicative of

the tàct that you started the tape prior to

13 get paid by the page, right? 13 the meeting, and it took perhaps that long tor the meeting to

14 THE REPORTER: (Affnns.) 14 begin?
15 MR. HERRIN: So that'll be something tht we'll 15 A. That would make sense. 16 ask you to do. And that is something that you're able to do, 16 Q. Okay. 17 right? You'll be able to sit there and play them? 17 MR. CULLINAN: So it's going to start with,
1 S THE REPORTER: It depends on the quality. lS "Hello"?

19 MR. HERRIN: Well, right. i mea, you should be 19 MR. HERRIN: It should start with, "Hello."
20 able to play them. Well, if

you can't trscribe them, can we 2 a Again, I'm going to star this thing. I'm close enough now,

21 have it for the record that you'll put in a question mak or 21 and ¡ don't know exactly where it begins. We may have a minute

22 something, that you won't be adding yOil own words? 22 of chitchat with the receptionist or something. i don't know.

23 THE REPORTER: The cour reprter's job is to 23 (Tape is playing at 4:0 i p.m. for less than a

24 put in inaudible. 2 4 minute.)
25

MR. HERRIN: All right. That will work. So we

25

Q. (BY MR. HERRIN) Don't get concemed. i think this

HUNDT REPORTING

214-220-1122

APP-A-00025