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

Case 1:06-cv-00407-ECH

Document 75-11

Filed 10/15/2007

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1 CWC PARTNERSHIP I, BY AND )

Page
1 2 3

4

APPEARANCES

THROUGH TRUST FBO ZACHARY ) 2 STERN UI A FIFTH G, ANDREW ) No. 06-4 I \ T STERN AND MARILYN SANDS, )
3 TRUSTEES, A NOTICE PARTNER. )

4 )) YS. 5)

4

Plaintiff. )

FOR THE PLAINTIFFS: Thomas A. Cullinan SUTHERLAND ASBILL & BRENNAN. LLP 5 999 Peachtree Street, NE Atlanta, Georgia 30309-3996 6 404-853-8075

THE UNITED STATES. )
7

tom.cullinn§sabIaw.com
FOR THE DEFENDANT:
8 9

6 Defendant. )
7 MICKEY MANAGEMENT. LP. BY AND) THROUGH MARILYN SANDS. A )

8 NOTICE PARTNER )

YS. 10 ))

9 ) No. 06-8IOT
10
UNITED STATES OF AMERICA. )

Plaintiff. )

Thomas Hemn and Michelle C. Johns US DEPARTMEN OF JUSTICE
7 I 7 Nort Harwood Street, Suite 400

1 1 Defendant. )

12 M.L.R & R. BY AND THROUGH )

13 PARTNER ) No. 06-8\ IT

14 )) YS. 15 )
17

RICHARD E. SANDS, TAX MATTERS)

Plaintiff. )

Dallas, Texas 75201 214-880-9762 Michelle.C.Johns§usdoj-gov 11 12 And Elaine Hams 13 INTERNAL REVENUE SERVICE 4050 Alpha Road, Suite 1300 14
Dallas, Texas 75244

16 Defendant. )

UNITED STATES OF AMERICA. )

18 *************************
19 ORAL DEPOSITION OF

20 RITA DAUGHERTY 21 AUGUST 30, 2007 22 YolumeNo. i
24 25

23 *************************
Page 3
1 ORAL DEPOSITION of

15 16 17 18 19 20 21 22 23

972-308- 7980

24 25

Page
1 2
3

5

RITA DAUGHERTY, produced

INDEX
PAGE

2 a~ a witness at the instance of the Plaintiffs, and

Appearances. . . . . . . . . . . . . . . . . . . 4
Stipulations. . . . . . . . . . . . . . . . . . . 6 RIT A DAUGHERTY Examination by Mr. Cullinan. . . . . . . . . 7 Examination by Mr. Herrin. . . . . . . . ., 52 Further Examination by Mr. Cullinan. . . . . 60 Further Examination by Mr. Herrin. . . . . . 67

3 duly sworn, was taken in the above-styled and numbered
4 cause on the 30th of August, 2007, from I :59 p.m.

4
5

5 to 3:36 p.m., before Sherr Folchert, CSR in and for the
6 State of Texas, reported by machine shorthand. at the

6 7
8 9

7 ot'ces of Department of Justice. Tax Division. 717 North

8 Harood, Suitc 400, Dallas, Texas, pursuant to the Texas
9 Rules of Civil procedure.

Signature and Changes. . . . . . . . . . . . .. 68
Reporter's Certificate. . . . . . . . . . . . .. 70

10 11

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

EXHIBITS 10 11 NO. DESCRIPTION 12 88 Notice ofIntent 13 89 Time Line 14 90 Index 15 16 17 18 19 20

PAGE
7

25 32

22 121

I ~ GOVERNMENT

24 25

24 1123

125

J EXHIBIT

HUNDT REPORTING

l

.t

214-220-1122
APP-A-00049

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

Document 75-11

Filed 10/15/2007

Page 2 of 13

Ri ta Daugherty

Page 14 Page 16
1

5 (Pages 14 to 17)

investors, not names.

1 is the basement of Lain & Faulker?

2 3 4

MR. HERRIN: That's fine.

2
3

A. Building, yes. Well, it's not their building.
But the building that they're in.

THE WITNSS: And so I got like their agreements, their contracts, their -- copies of

4

Q. Who assisted in you terms -- if anyone, who

5 debriefings, e-mails, phone conversation trnscripts.

5 assisted you in reviewing the materials that you were --

6 got magnetic tapes from computers and computer hard

6 that you received or are now being given access to?

7 drives. And little video cassette tapes that i couldn't 8 read because my -- they -- there was no cassette player
9 that would read them. A lot of dust. Old beat-up boxes

7 A. Everybody?

8 Q. Yes.
9
A. Well, the fit day we went Elaine Hans and

10 that were busted. Folders, notebooks, their little
11 promotional gifts, calendars, handwrtten notes.
12 Do you want me to keep going?

10 Kim Tung were with me. Ki Tung is my manager. Elaine
11 left right soon after. So Kim and i looked at them for a
12 couple of

hour. Then on the 4th of December i -- I was

13 Q. (BY MR. CULLINAN:) No, I'm getting the gist.
1 5 is that when you n

13 back again and I staed my review and it looked like I
15 DarIa Hunter, another revenue agent in my group, to
1 6 assist me. She wasn't there every day, but she was there

14 And you said you issued the sumons October 12, 2006 or 14 was never going to get fmished so Kim Tung assigned

16 A. That's when I delivered it.
17 Q. That's when you delivered it.

17 quite a bit. And we finished -- we finished our review
1 8 on December the i 4th.
19 Q. What was the date? Excuse me.
20 A. The 14th of

18 A. I delivered it at 2:25 that day.
19 Q. And you remember that why?
20 A. Because I have to wrte it down on my summons.

December.

21 Q. All right. And when did -- who responded to the
22 summons? 23 A. Dennis Faulkner. 24 Q. Who is Dennis Faulkner? 25 A. Dennis Faulkner is the Lain & Faulkner. He's

21 Q. That's 2006?

22

A. Yes.

23 Q. Were there any subsequent productions to you
24 from Mr. Faulkner?

25 A. What do you mean?

._.____......u.__.._".....n.........u.".____.._...n.___..."...__,,_.. .. .....__

-...-..--.--.-.-------.-.---......~_._-_...." ._.__.;:.~:-._.~~.I
1 Faulkner of Lain & Faulkner. It's the banruptcy trstee I
2 for the Heritage Organization.
1 Q. Well, you said there was a huge batch of

Page 1 7
stuff
2 delivered to you or that you were given access to on

3 Q. What is Lain & Faulkner?

3 November 29,2006. And that there were 372 boxes of
4 data. And you completed your review on December 14,

4 A. It's a law finn I guess.

5 MR. HERR: I will tell you from my
6 understanding, I don't know whether it's a law finn or an
7 accounting finn. But it's one of

5 2006.
6 What I'm asking is did the bankruptcy
7 trstee grant you access to any additional documents past
8 that date, or deliver any additional documents past that
9 date or is that the universe?
10 MR. HERRIN: Answer if

those two. I

8 Q. (BY MR. CULLINAN:) And when did Mr. Faulkner I

lOA. i 1/29/2006. I
9 respond?

you know.

11 Q. And that's when he produced all of these items
12 that you were describing before, the gift, investor
13 data, debriefings. all thafJ

11 THE WITNESS: He granted us access to the
12 Tillostin boxes, which is the name i give them.
13 Q. (BY MR. CULLINAN:) Okay. What are the

14 A. Yes.

15 Q. It was the volume of the response?

14 Tilostin boxes? 15 A. They're an additional 75.
16 Q. Boxes?

16 A. 372 boxes of data.
17 Q. How was it produced? Did they just give you
18 access to a room? Did they drop it off in semi-trck or?

17 A. That came from Mr. Tillostin's offices and
18 finally arrived at the Lain Faulkner's offce. 19 Q. And what was in these Tillostin boxes?
2 0 A. More investor data.

19 A. They stored a lot of it in the basement. And
20 down there was also their other clients. So they

21 wouldn't grant us access to the basement. When we would
22 finish whatever they trolleyed up. we would tell them it
2 3 was finished and they would take it down and bring us up

21 Q. Such as?
2 2 A. Debriefings and phone conversations and

2 3 contracts and stuff.

24 another load. 25 Q. And this is -- when you say the basement, this

24 Q. And when were you granted -- were you granted 2 5 access to the Tilostin boxes in the same manner that you

HUNDT REPORTING

214-220-1122

APP-A-00050

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

Document 75-11

Filed 10/15/2007
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were with the initial 372 boxes that were kept in the basement of the building and they were just hauled up or were these actually physically delivered to you? A. They were just in that room.
Q. SO it was the same process? A. Except they didn't keep these in the basement.

Q. When did you know that? A. Because when I went to review the 372 boxes, I

4
5

was asked to look in there for Sands inormation. Q. You were. Okay. Who asked you to do that?
A.

5
6 7

Elaie Hans.

6 7 8
9

8
9

They were just all stacked in that room that I used. Q. And when were you granted access to these
Tilostin boxes?

Q. When was that? A. The day i was there in December. Q. SO that's December -A. 2006.
Q. A.

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. i don't have the exact date for that one. So if i say Mayor June will you be upset because i didn't keep
track of the date.
MS. HARRIS: Just to the best of your

10 11

-- 4th or --

Probably the 4th.

recollection. MR. CULLINAN: Yeah.

THE WITNESS: Mayor June.
Q. (BY MR. CULLINAN:) Of2007? A. Yes. Q. Prior to the materials issued -- regarding these -- or provided in response to these summonses, did you issue any Information Document Request to the
Heritage Organization or --

MR. HERRIN: I'm going to object. That's beyond the scope of 30(b)6 inquiry. And I'm going to limit her to the testimony requested pursuant to the

12 Q. Okay. 13 A. But I'll have to say probably. 14 Q. Okay. 15 A. It was early on in it for sure. 16 Q. Maybe that November 29th date, someplace between 17 November 29th and December 4th, 2006? 18 A. Right. Yeah. Give or tae. 19 Q. Did Ms. Hans tell you why you should be 20 looking for docwnents pertining to the Sands Family? 21 A. Because there was litigation. And Sands was 22 unagreed. 23 Q. I'm sorr. i didn't catch your answer. 24 A. And Sands was unagreed. 25 Q. Were you infoTIned that those documents might be

Page 19
1 Supplemental Request No.9 here. Category No.9.
1 subject to various discovery requirements?

Page 21

2 Q. (BY MR. CULLINAN:) Are you aware that the
3 Heritage Organization appear to have taped conversations
4 with members of

2 A. At that point in time?
3 Q. Yes.

the Sands Family?

4 A. No.
5 Q. When were you informed that they were subject to
i 6 discovery requirements?

5 A. I don't know the Sands Family. I'm aware they
6 taped conversations. Because i saw them in the boxes.

7 Okay. The cassette tapes. i never listened to them
8 because I couldn't read them -- I couldn't -- my cassette

7 A. On the i 3th of July 2007. There was an e-mail
8 sent to Peter Brokus, with a carbon copy to me, that said

9 player and no cassette player i could get access to could
10 play them. So did i witness it, no. I'm not sure what
i 1 else you want to know.

9 identify, review these --

10 THE WITNESS: Am I okay?
11 MR. HERRIN: That's fine. Go ahead.

12 Q. Were these tapes in the box -- the first 372
13 boxes of data or in the Tillostin boxes?

12 THE WITNESS: Review -- for Peter to review
13 these documents to make sure that there was only Sands
14 documents on that disk. That's when I knew there was

14 A. They were in both. But they were mostly in the
1 5 first set. 16 Q. You said that the first time that you became -1 7 well, let me ask again, I don't want the mischaracterize

15 discovery probably going on.

16 Q. (BY MR. CULLINAN:) Who sent the e-mail?
1 7 A. Elaine Hams.

i 8 what you said.
19 When did you first become aware of

18 Q. And attached -- there was some type of
the

19 attachment to the e-mail then?
2 0 A. No. She -- no.

2 0 lawsuit that's captioned on Deposition Exhibit 88?

21 A. Well, with all the names of all the parters and
2 2 things, when i got the notice to show up for the
23 deposition. Which would have been while i was on

21 Q. I thought you testified just review the
I 22 documents on this disk to make sure they only pertained
2 3 to the Sands. So where did disk --

2 4 vacation last week i guess. I knew the Sands were
25 litigating their Son of

24 A. Because she mailed the disk to him. She didn't
2 5 e-mail the data to him. It's

Boss transaction.

too big (indicating).

HUNDT REPORTING

214-220-1122

APP-A-00051

Case 1:06-cv-00407-ECH

Document 75-11

Filed 10/15/2007

Page 4 of 13

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Ri ta Daugherty

Page 22 Page 24
1 Q. When you went though the initial production of
2 data and you leared that these boxes contained what

7 (Pages 22 to 25)

1 Q. All right.
2 A. So the 28 boxes they delivered was the copies
3 that we wanted of the data we selected.

3 appeared to be transcripts of conversations and tape
4 recordings, did you brig that information to the

4
5

Q. Documents you thought to be importt?
A. Right.

5 attention of anybody else?

6 A. My manager and Elaine Hars.
7 Q. And who is your manager?

6

7

Q. Were those documents indexed in any form? A. No, not then.

8 A. Kim Tung, T-U-N-G.

8 Q. When did they become indexed?
9 A. On April the 30t I began to review them. On

9 Q. And what were you instrcted to do -- or what 10 was Mr. Brolrs instrcted to do in the July 13th e-mail?
11 A. I can't do a verbatim. Okay. Review the pages

10 May the 1st some other agents anved to assist me. And
11 by Februar -- by May 23rd we completed the indexing and

12 and make sure they all belonged to Sands and not to

12 by June the 5th, a spreadsheet was completed that was
1 3 searchable, or our index.

13 another par.
14 Q. And then do what with it?

14 Q. You're refening to a document as you're

15 A. Give that information to Elaine Hars
1 6 (indicating).
i 7 Q. Do you know when the documents on that disk

15 anwering my questions. What document is it that you

16 are-17 A. This is a time line that i created because
18 there's no way i was going to remember all these dates.
19 MR. CULLINAN: Can I have a copy of

18 first came into the possession of the IRS?

19 A. I don't understad.
20 Q. Well, there's a disk?
2 1 A. Right.

the

2 0 time line please?

22 Q. There are documents on it that pertin to the
23 Sands Family?

21 22

THE WITNESS: I only have one copy. MR. HERRIN: Want to take a break and we'll

2 3 make one.

24 A. Right.
25 Q. Well, let's lay a foundation. Did those

24 25

MR. CULLINAN: Sure. Take a break.
(A break was taken 2:27 p.m.

Page 23
1

Page 25
1

documents come -- did any of those documents come out of
372 boxes of data that were reviewed in late November')
A.

to 2:3 i p.m.)

2
3 4 5 6

2
3

I think what you did was jump a whole bunch of

steps. There were 372 boxes of documents. We whittled

4 5 6
7

that down to 66 full or parial boxes that had -- that we, DarIa Hunter or I identified as data that we mayor

(Exhibit No. 89 was marked.) Q. (BY MR. CULLINAN:) i want to circle back to my question again which is with respect to the tapes and transcripts or purprted transcripts of the tapes that
are at issue in this case. Do you know what I'm

7 8
9

may not need. Okay. Then we went through a process
where we got permission to pay a whole lot of money to

get them photocopied and electronically copied. Because

10 we got hard copies and electronic copy. 11 Q. Okay. 12 A. l1ien it took the vendor a while to do that. So
13 then on April i i, 2007, the vendors delivered to 405 14 Alpha Road where I work 28 boxes and the electronic copy.

15 16 17 18 19

28 boxes of

hard copies and the electronic copy.

refening to when i say that? A. I assume you're refening to the transcripts of 9 the phone conversations that had various Heritage i 0 employees and investors talking. 11 Q. Okay. Are you aware of one specifically that 12 purports to be transcript conversations with members of 13 the Sands Family? 14 A. I never read them. 15 Q. Do you know what I'm refening to?
8

Q. A.

That date was, I'm sorr?

your April i i tho So if

question was when was it

in the hands of

IRS I guess you want April 11th. Righe

16 A. Yes. 17 Q. Okay. Do you know whether those transcripts 18 were in the 372 boxes of documents that you were given
i 9 access to on November 29 --

Q.

Well, initial -- that came from the same -- the

20 documents that the vendor delivered to you on April i I th
21 essentially were the documents that -22 A. We selected.

20
21 22 23 24 25

A. Yes.

Q. -- of2004?
A. Yes.

23 Q. -- that you had in your possession in late 24 November, early December of2006? 25 A. It was partiaL. We didn't want all of them.

Q. They were?

A. (Witness indicates.)
Q. And i believe you testified that Ms. Hanis

HUNDT REPORTING

214-220-1122

APP-A-00052

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

Document 75-11

Filed 10/15/2007

Page 5 of 13

Ri ta Daugherty

Page 26 Page 2~
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8 (Pages 26 to 29)

asked you to keep a special eye out for documents that pertin to the Sands Family; is that right?
A. Yes.

1 A. Do the question again.

2 Q. Was somebody especially assigned to look for
3 those documents?

4
5 6 7 8
9

Q. And did you do that?
A. Yes.

4 A. No. We were just going through the documents
5 looking for what we needed. For matters unrelated to the
6 Sands and to the Sands.
7 Q. Now, if

Q. Okay. So what did you do with those trscripts
when you found them in the 372 boxes of data? A. I marked it as one of the 66 boxes to be photocopied.

you would walk me through the process

8 from beginning to end of what happened once you located

9 the documents that Ms. Hams asked you to keep an eye

10 out for regarding the Sands. I'm not asking about these 10 Q. Did you alert Ms. Hans that you had found 11 other tapayers. Those specific documents regarding to 11 documents that pertin directly to the Sands Family? 12 the Sands what did you do with them? 12 A. I guess indirectly, yes. 13 A. So if I opened a box and saw a document that had 13 Q. I don't understad what you mean by indirectly? 14 Sands in it, that's what you want to know? 14 A. I told her I had transcripts. I told her I had 15 Q. Yes. 15 transcripts of phone conversations. I told her I had 16 e-mails. But whether I mentioned Mr. and Mrs. Sands or 16 A. If! opened a box and it belongs to Mr. Sands, 17 not I don't know. That's what I'm saying.
17 then I n I didn't read every page. You're talking 372

18 Q. Well without -19 A. So she -- she could assume. 20 Q. She could assume? 21 A. I mean I never said I have them for Mr. and Mrs. 22 Sands. 23 Q. What did you tell her? 24 A. That I had them. That I had found in those 25 boxes trnscripts of phone conversations where Heritage

boring information. Things that 19 I mayor may not need. So I skimmed through it 20 (indicating). If it was all Mr. Sands, I marked the
18 boxes. Okay. A lot of 21 whole box. If

there was data in there that didn't--

2 2 wasn't material to what I needed, I would just mark a

23 portion of the box. And I put it in the boxes to be -24 photocopied pile.

25 Q. Were these boxes that you marked with respect to

Page 27
1 recorded and then transcribed.

Page 29
i the Sands treated any differently than the other material

2 Q. Did Ms. Hams ask you -- I don't want you to
3 identify any other taxpayers -- did Ms. Hams ask you to

2 that you thought nceded to be copied?

3

A. No. It was all stacked. It was all stacked on
that one side and waiting for pennission to photocopy it
and get the funds to pay (indicating).

4 keep an eye out for tapes and transcripts pertaining to
5 other taxpayers aside from the Sands?

4

I 5
6

6 A. Yes.
7 Q. SO when you told Ms. Hams that you would found
8 tapes -- you had found tapes and transcripts, were you
9 telling her that you had found tapes and transcripts with

Q. How do you obtain pennission to photocopy
A. It was work. I had to prepare and mail to my

7 something?

i :

manager a memo. Okay. In which I not only put how much I needed but the justification for it. All right. Thcn

10 respect to all of the taxpayers that she had asked you to 1 1 keep a special eyc out for? 12 A. Yes.
13 Q. Okay. And when was that?
14 A. During the two weeks that we looked through the
15 372 boxes, which would have been December 4th through

110 it -- depending on how much money you need it has to go , 11 112 through the layers of management until you reach the 113 level of the manager that can sign off on that amount.
I

I 14 And when they approve it, the money's set aside by the I 15 budget people and you go out and blow the bucks

16 December the 14th, 2006.
17 Q. Out of

the people that were reviewing the boxes

18 you've given me a couple of names. Was anybody

I 16 117

(indicating).
Q. How much of this material pertined -- how much of the material that you marked for copying pertained to

118
I~~

19 especially assigned to look for these specific documents,

the Sands?
A. That's a good question. And there's no way i

20 the ones that you were asked to keep an eye out or was it
21 just as you go through them if

you come across them you 22 mark them or something else altogether?

¡2i
I

can tell you the exact number of pages.
Q. Rough approximation?

¡ 22

2 3 A. You mean the indexing process?

A. Thousands. Hundreds. I don't know.
24 25
Q. About a boxry Two boxes?

24 Q. No. In looking tor the documents that you'd 2 5 been asked to keep an eye out for?

1123

A. A bunch. There's 28 boxes and whole lot of

HUNDT REPORTING

214-220-1122

APP-A-00053

Case 1:06-cv-00407-ECH

Document 75-11

Filed 10/15/2007

Page 6 of 13

wi tness:

Ri ta Daugherty

Page 30 Page 32
1 people. And I can tell you how many exactly. There were
2 89,994 Bates stamped documents.

9 (Pages 30 to 33)

1 A. Yes. 2 Q. Okay. You said parially finalized it on May
3 23rd?

3 Q. How much?
4 A. 89,994.

4 A. i finished all the parial boxes that were left
5 when the other agents left.
6 Q. Oh, okay. i thought you said you had parially
7 finalized it. You completed the process on May 23rd?

5 Q. To be clear that's -- doesn't all pertin to the
6 Sands?
7 A. No, no.

8 9

Q. How were they Bates stamped? A. One through 89,994. Q. Did they have a special designation? A. You mean on the Bates stamp? Q. Yes.
A. I

8 A. Yes. 9 Q. Okay.

10 11 12
13

10 (Exhibit No. 90 was marked.) 11 næ WITNSS: You want me to look at it?
12 MR. CULLINAN: Yes, ma'am.

just called it THO I through 89,994.

13 næ WITNESS: Sorr.
14 Q. (BY MR. CULLINAN:) Can you identify that
1 5 document?

14 Sands Q. With respect to the smaller subset of 15 material within that production -- and would you have 16 needed permssion to just get that smaller subset copied? 17 A. I needed permission to get one copy. 18 Q. You needed permission to copy a single page? 19 A. Yes. I have no authority to sign for funding of 20 summons costs. Managers have to do that.
2 i

16 A. Well, this is our index. When the agents were
17 there we created this index. So this is our index.

18 Q. SO this index was created then sometime prior to
19 May 23rd of 20077
20 A. Well, depends on how you -- i don't know -- I'm

Q. Did you ever personally provide any ofthe

21 not sure about that question. Okay. All I can tell you
22 is that all of us showed up and on April the 30th we

22 documents that pertain to Sands to the Department of 23 Justice? 24 A. No. 25 Q. Did you provide them to anybody else other than

23 decided what the index was going to look like. And this 24 is how we decided we were going to tye all that stuff
25 together. So we had a column for the investor. We had a

Page 31
1 Ms. Hams?
2 A. No -- well, wait a minute. Depends on how you
1 column for the description of

Page 33
what it was we saw when we
2 scanned through the boxes (indicating). And document
3 types. we didn't put dates on it. And we had the THO --

3 mean that. i gave access to 28 boxes to all the agents
4 that indexed it. But I didn't -- they didn't tae -- i
5 didn't provide it. I mean they had access to help me do

4 like 6 through 9 was based upon the Bates stamps that

5 were assigned to each document (indicating). So the
6 agents created how it was going to look.

6 it.
7 Q. How many agents had access to these documents? 8 A. All in all... I can only tell you about the
9 indexing process.

7 Q. All right. So the index would have gone from

8 THO 0001 all the way to THO 89,994?
9 A. 89,994. 10 Q. And as you go through this you'll note that -1 i and by this I mean Exhibit 90, there are various Bates

10 Q. Okay. Tell me about that. 11 A. Rita Daria, Denise, Judy, David, Randy, that
i 2 other David guy, Nick. Eight.

12 ranges within that i to 89,000 that pertain to the Sands?
i 3 A. Right.

13 Q. SO eight agents assisted with the indexing
14 process?

14 Q. Is that correct?
1 5 A. Right.

1 5 A. Right.

16 Q. When did the indexing process take place? 1 7 A. From April the 30th through -- well, there was
18 two different sections of it. April 30th through to 19 May 4 when i had all the help. But when they all left,
2 0 there were parial boxes that were incomplete. I
2 1 personally finished it on May the 23rd.

16 Q. Including the -- it looks like the very first
17 documents THO 000 I, right?
i 8 A. Right.

19 Q. SO those were the first documents to actually
20 get indexed were the Sands documents?

2 i A. They were in box one.

22 Q. Okay. When was it finalized?
23 A. Don't know what that means.

22 Q. Okay.

23 A. We -- each agent that indexed got a box. One-24 one got one. One got two. One got three. One got four. 25 And they went through their box. When they finished that

24 Q. Have you completed the index at this point in
2 5 time?

HUNDT REPORTING

214-220-1122

APP-A-00054

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

Document 75-11

Filed 10/15/2007

Page 7 of 13

Ri ta Daugherty

Page 34 Page 36
1 box whatever was next in line .- like if eight agents
2 were there, you picked up Box 9 when you finished Box I.

10 (Pages 34 to 37)

1 2 3

and you were given access to the 372 boxes of documents?
A. Yes.

3 We just kept them in order.

4 Q. How long would it tae you to complete a box?
5 A. A whole day.

4

of

5 and

Q. You -- did you at that point in time review any the boxes or just come check out and see what's there figue out what kind of resources you're going to
A. Yes. But i did look at boxes. Q.
You did review some of

6 Q. And when you completed the -- let's see. On
7 there, Deposition Exhbit 90, it looks like the Sands

6 need?
7

8 documents or documents that pertin to Sands kid of run
9 straight though at least all the way to THO 2043; is
1 0 that accurate?

8
9

the boxes on that date?

A. Right.

11 A. It's looking good so far. Yeah. i agree with 1 2 that.
13 Q. Did you alert anyone once you had completed this 14 porton of the index that we've got some of the Sands 15 documents and they've been indexed?

16 A. No. My process was indexing. I didn't alert
17 anybody to anytng. Just completing the 28 boxes was my
1 8 goal.

19

Q. Okay. You didn't separate out the Sands and 20 expedite your work with respect to Sands? 21 A. No. They were all the same to me. 22 Q. Okay. 23 A. Everybody was an the same. 24 Q. An right. So nobody told you to expedite
2 5 the -- or did anybody ever ask you to expedite the Sands

10 Q. Who was with you at that point in time? Again, 11 it was Ms. Hams and Ms. Tung. 12 A. (Witness indicates.) 13 Q. Anybody else? 14 A. Mark O'Lear. 15 Q. Anybody else? 16 A. Wen, there were people from Lain Faulkner. 17 Q. Okay. Anybody from the IRS? 18 A. No. 19 Q. Anybody from the Department of Justice? 20 A. No. 21 Q. Anybody else from the Government? 22 A. Not that i know of. 23 Q. And did Ms. Hams, Mr. O'Leary and Ms. Tung 24 also review boxes on November 29th? 25 A. Ms. Tung did. Ms. Hams did. i don't remember

Page 35 Page 37
1 2 3
materials or your review of

the Sands materials?

1 2
3

what Mark did.
Q. You testified earlier that it was at some point in this range November 29, December 4th that Ms. Hams

A. No.

4
5

6
7

Q. Anybody ever ask you to expedite the copy of the Sands materials? A. No. Q. Anybody ever ask you to expcdite the indexing of

4
5 6 7 8 9

asked you to keep a special eye out for documents that
pertain to the Sands. Looking at this do you know if it

the Sands materials?
A. No.

8 9

was November 29th or the next entry on December 4th? A. i can't tell you. Q. Next entr December 4, 2006, you began a

Q.

i want to go through what we've marked as

10 Deposition Exhibit 89 just so i understad your time line 11 here and your remarks. And the first question is, you 12 created this document?
13
A. Yes. Q. SO these A. Yes.
are your notes?

I

10 11 12
13

box-by-box review of documents at the trustee's offce? A. Right.
Q. That was you and Ms. Hunter? A. Yes.
Q. Anybody else? A. No. Q. Was Ms. Harrs there with you? A. No. Q. All right. So then is it -A. We were the Lone Rangers.

14 15 16

Q. What did you review to create this document?

17 A. Everyhing in my fies. E-mails, my history 18 sheet. Everyhing in my files. 19 Q. Okay. Well, let's go through it date by date 2 a and I think some of this -- somc of it will be

14 15 16 17 18

Q. Does it make it more likely then that she asked

21 self-explanatory. The first entr is October 12, 2006. 22 That's the date that you served the summons on the 23 bankptcy trstee? 24 A. Right. 25 Q. November 29th you went to the trstee's offce

20 you to keep an eye out for the Sands documents on 119 November 29th? , 21 22 A. i don't know. Okay. Give me a break.
23
Q. Were there phone conversations about the

24 documents? 25 A. Yes, there were.

HUNDT REPORTING

214-220-1122

APP-A-00055

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

Document 75-11

Filed 10/15/2007

Page 8 of 13

Ri ta Daugherty

Page 38 Page 40
2 the documents? 2 A. Peter Brokus. 3 A. My manager and Elaine Hams. 3 Q. When did that occur? 4 Q. Anybody else? 4 A. July the 13th.
1 Q. Who did you have phone conversations with about 1 electronic copy of the Sands documents were distributed?
5 A. No. Well, Lain Faulkets people. 5 Q. Okay. Going back to the chronologicaL. The

11 (Pages 38 to 41)

7Q.A. No. the Deparent of Justice? 8 A. Yes. Delivered April i I. 7 10th; is tht right? 8 Anybody from
9 A. Never. 9 Q. On the 12th -12 getting prepared for this deposition? 12 Q. Okay. The entry on April i 9th, counsel

6 Q. Anybody else from the IRS? 6 scanning began around March 29th and was completed April

10 Q. SO you have ever spoken to anybody at the lOA. i opened a couple to see what -- how much work,
11 Deparent of Justice about these documents before 11 what resources I was going to need.
IT

13 A. No. 13 creating ten copies of disks for distrbution of
14 Q. All right. The next entr December 29th, 2006, 14 electronic copies. What does tht mean?
1 5 let's see -- well, over the next couple of entres you're 15 A. We only got one copy of -- of the scanned

16 looking for approval to photocopy; is that right? 16 documents, the whole 90,000.

17 A. That's correct. 17 Q. You mean the electronic copy, the disk?
18 Q. What do you mean on the February i 2, receive the 18 A. Yeah, we only got one. We have numerous agents

2 0 What does that mean? 20 made.

1 9 approval for the funding of the summons. 1 9 that's going to need the data. So there were ten copies
21 A. Well, I sent the memo up through channels. And 21 Q. Okay. What is counsel IT?

22 I didn't know the volume of paper that was in a box. So 22 A. i -- IT is like our -- I can't think of what IT
23 I guessed that I need $7,000. Okay. So that meant 23 means. But our commuter technology people, our

24 that -- my manager's Kim Tung, terrtory manager is 24 computerized specialists, they're computer gurus. IT.

25 Denise Jennings, the DFO, director of n 25 Q. Okay.
Page 39
1
2 3

Page 41
1

Q. Field operations? A. -- field operations. Thank you. Sergio Alreno.

A. Technology. Q. And what's the reference to counsel? Do they work for IRS counselor -A. Well, just about every division has their own IT

2
3

4
5
6

7

8
9

It's his level that approves it. So when it was supposed to be $7,000, I received his signature on the 12th of February that i could spend $7,000. Q. Okay. I'm sorr. i was confused when it said received the approval tor the funding of the summons. But you're still pertining to funding of thc photocopy cost?

4 5
6 7

people. Q. All right. You received the disk back on the
27th?
A. Yes. Q. And then on the 30th, you're talking about how

8
9

10 10 A. Yes. 11 11 Okay. And then we've got several additional Q. 12 12 entries here, again, pursuant to your request to get 13 photocopying. And it looks like we -- go down to March 113 14 28, 2007. And is it at that point in time when the next I 14 15 15 day that you began to actually get the boxes copied, 16 16 right? 17 17 A. Yes. 18 18 And you said that you got them scanned into Q. 19 19 electronic fomi, right? 20 20 A. And a hard copy. 21 21 Q. What did you do with the electronic form?

the spreadsheet would be presented. Does the spreadsheet refer to the index?
A. Yes. Q. The portion of which we havc in Exhibit 90? A. Right.
Q. And then you have agents amving on the I st to

assist you with indexing. You said there were eight agents that assisted you in the process? A. Over the course of that week, yes.
Q.

And then you say: Continued to work on the

summonsed documents.

22 23 24 25

A. We made copies and distrbuted to agents.
Q. To Internal Revenue agents? A. Yes.

Q. Do you know to what agents copies of the

At that point what you're doing is just 22 indexing them on May 2nd and May 3rd; is that right? 23 A. Right. 24 Q. Same thing on the 4th? 25 A. Right.

HUNDT REPORTING

214-220-1122

APP-A-00056

Case 1:06-cv-00407-ECH

Document 75-11

Filed 10/15/2007

Page 9 of 13

wi tness:

Ri ta Daugherty

Page 42 Page 44
1 Q. Then there's a gap between the 4th and the 23rd. 1 A. I didn't personally didn't do it.

12 (Pages 42 to 45)

2 Was any work done durig that point in time? 2 Q. Who did it?
3 A. Yes. But me alone. 3 A. Whoever counsel got assistance from.
4 Q. Just you alone. You were continuing to work on 4 Q. Explain to me what you mean by this entry on

5 the indexing? 5 June 7th. Counsel requested assistance using an index to 6 A. Right. The parial boxes. So I only entered 6 isolate documents relating to different taxpayers due to
7 the last day I _. when I -- it was done and that was May 7 disclosure concerns.

8 23rd (indicating). 8 What does that mean?
9 Q. Okay. And now on the 5th you said you received 9 A. Counsel had somebody do a search for Sands

10 the database and spreadsheet index of summonsed 10 documents and then copy them over to its own private disk

11 documents. 11 (indicating).
15 handle the volume of

12 What does that mean? 12 Q. Okay. And that occurred on June 7th?
13 A. You have to understad this spreadsheet was a 13 A. Right.
14 huge spreadsheet. Okay. And no one computer could 14 Q. Okay. What happened between June 7th and June

this spreadsheet. Okay. So we had 15 19th? Anything or just working on something else? 16 a CAS tae everybody's piece of the spreadsheet and put 16 A. Yeah, i have ten cases. i work on all kinds .just work on... 17 it together and make a searchable -- make it searchable. 17 i don't
18 So that if you wanted all the documents that belonged to 18 Q. Same here. Although sometimes I doubt that,

19 Mr. and Mrs. Sands, you went in there in description and 19 working with Mr. Hemn over here.
20 you hit _. and you tyed in Sands and whalah all of them 20 So between June 7th and June i 9th you were

21 showed up. 21 working on unrelated matters? And the only reason I ask 22 Q. SO that was -- 22 is because there was a gap in your dates here before
23 A. That was what i received. 23 where you just listed May 23rd as the last date of your
24 Q. That was on June 5th it became searchable. 24 completion. So I'm

just tring-2 5 A. Yes. Right. Up until that point it was a whole 25 A. Like i said i got ten cases.
.... ...._..__...............___....._............. ................u................._.............................................._.............._1....................._ . .._.........____u_..._............................. ............_

Page 43
1 2
3

Page 45
1

bunch of pieces that had to be -- I'm not very good at

terms -- but glued together. You know, made one whole I 2

Q. I'm just trying to make sure. So you didn't do anything else between June 7th and June -A. Not on the Sands.

thing. Either.. or a person would have to search Sands I
through eight different spreadsheets. Q. And then on June 6th this index database was
sent to other agents. That's the ten other agents that
I I I I

3

4
5
6

4
5
6

Q. Were you working on Heritage documents during

that period of time?
A. I don't know.

7 8
9

were involved?
A. Q.

7

Yes.

8
9

Q. June i 9, budget analyst classified $781 paid for electronic copies as illegal procurement.

SO on June 6th all ten of those IRA agents had 10 access to this index database? 11 A. If they were in the offce and got it, yes. 12 Q. Was it on a disk that can you sent out? 13 A. No. That was an e-maiL.

July i Oth. On July i 0 you have an entr

10 here: Counsel advised agents regarding disclosure issues 11 relating to docs.
What does that mean? A. Some of the agents got full disks of the whole
90,000 things. The reason they did was they had matters

14 15 16 17 18 19 20 21 22 23

Q. Okay. And then on June 7th it says: Counsel requested assistace using index to isolate documents

i ~~ I 14

relating to different tapayers due to disclosure concerns. i don't want you to talk about other
taxpayers. i think before you told me that Ms. Hams

which required them access to all of it. But if they were going to close some case -- okay, their case, they I ~: couldn't put the whole ten-disk set in their work papers 117 because they would have docs for beaucoups people or 19 companies. So they had .- thcy were advised they had to

asked you on July i 3th to segregate out documents that

118 20 do what counsel did for the Sands documents, pull them
21 out, make their own set and put that in the case fie 22 (indicating). 23 the agents that got Q. Was Mr. Brokus was one of 24 the full ten-disk set? 25 A. i don't know.

pertined to the Sands. So i want to make sure. Were you asked as of June 7th to segregate out documents that pertined to Sands or was it July 13th?
A. Counsel requested assistace. I didn't do it. Q. You didn't do it?

24 25

HUNDT REPORTING

214-220-1122

APP-A-00057

Case 1:06-cv-00407-ECH

Document 75-11

Filed 10/15/2007

Page 10 of 13

wi tness:

Ri ta Daugherty

Page 46 Page 48
1 Q. All right. Next entr is July 13th, segregated
2 disks -- does that mean you segregated disks and

13 (Pages 46 to 49)

1 A. No.
2 Q. When you correct the index, you'd already
3 distrbuted the searchable index to several other agents.

3 distrbuted to other agents?

4 A. No, the segregated disk means that if Peter

4 So how did they get corrected copies?
5 A. They didn't.

5 Brokus got the Sands thg, he didn't get it with

6 somethng else in it.
7
Q. Okay.
8 A. Unless it accidentaly got on there. Because
9 that's why it says identity inadvertent disclosures.

6 MR. CULLINAN: I th I'm just about done.

7 Why don't we tae a break and let me make sure.
8 (A break was taen from 3:05 p.m.

9 to 3:1 i p.m.)
10 MR. CULLINAN: Back on the record.

10 Q. Okay. And then so on that date you sent a
1 1 specific disk pertining to the Sands documents to Peter

11 Q. (BY MR. CULLINAN:) Ms. Daughert, I asked you
12 about a lot of dates and I've kind of lost trck myself.

1 2 Brokus? Is that what that means, the Sands disk?

13 A. The disk was sent to Peter Broku, but I didn't 14 send it.
15

13 I want to be clear on one date.

Q. Elaine Hans sent it?

14 When did you tell Ms. Hans that you had 1 5 found tapes and trcripts that pertined to the
16 tapayers she asked you to keep an eye out for documents?

1 6 A. I don't know that for sure. But I assume so,

17 yes.
18 Q. Okay. And you mentioned before an e-mail that
19 you were copied on from Ms. Hams to Mr. Brokus and that

1 7 A. Prett much every day that I was there we talked

18 on the phone. So I don't know.

19 Q. IS this -- but ths is back in the November 29th
2 0 to December --

20 e-mail was July i 3th as well

21 A. Say that again.
22 Q. SO you mentioned earlier that you were copied on

21 A. 14th area, was what you're talking about, right?
22 Q. Yes. So you would have told her back in

23 an e-mail from Ms. Hams to Mr. Brokus asking that he

2 3 November 29 -24 A. Yeah. Prett much we talked most days. I'm not

24 review a disk to ensure the documents on the disk only
25 pertined to Sands?

25 going to say every day.

Page 47
1
2
3

Page 49
1

A. Yes. Yes.

Q. But would have been during that i 1/29 to
12/ i 412006 time frame?
A. Yes.
Q. I'm going to show you what's been marked as
Deposition Exhibits -- a couple of

4
5 6 7

Q. And that was also on that July i 3th date? A. Right. When you said copied, my mind went off into hard copy. Sorr.
Q. July i 9th, 2007, some of the discrepancies in

2
3

4 5
6 7 8

them in a series. But

the database index are corrected.

Did any of those discrepancies relate to
Sands?

Deposition Exhibit 3. Are you familiar with that document?
A. I looked at 90,000 sheets of

8
9

paper.

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

9 A. To be trthful with you I got several e-mails in Q. Are you familiar -10 A. So I didn't memorize it. that period of time in which diffcrent agents had 11 different things that had been misclassified. So i can't Q. The Bates Stamp, you see there's a couple Bates tell you exactly if a Sands or not. Okay. But there was 12 stamps there, but that -A. The THO-discrepancies noted and thcy were corrected. Okay. 113

Q. Okay. Then July 24th, Mr. Brokus finished review of the Sands document and sent corrections to index to avoid inadvertent disclosure. What does that mean?
A. He must have u he had misclassifìed documents

Q. IS that yours? I 14 A. Yeah. I 15 I 16 we were to go Q. SO if I 17 were to look at THO -A. 379. I 18

back to Exhibit 90 and if

I

and that was fixed.

Q. Okay. And at that point did you rctake possession of this disk or all you did was just correct
the index?

Q. 379, that's going to be the same THO 379 that's I 19 20 here on your index that says transcript? 21 A. Yes.

. 22

A. Corrected thc index.

Q. Okay. And Deposition Exhibit 4, same thing. I 23 That's THO-000343, that's going to be the same 343 that's
--

24 Q. Did you inform anybody that the index had been 2 4 here on your 2 5 A. Yes. 25 corrected?

HUNDT REPORTING

214-220-1122

APP-A-00058

Case 1:06-cv-00407-ECH

Document 75-11

Filed 10/15/2007

Page 11 of 13

wi tness:

Ri ta Daugherty

Page 50 Page 52
1 Q. -- index?
2 A. Yes.
3 Q. Show you what's been marked as Deposition
4 Exhibit 5, same question, THO 000261 --

14 (Pages 50 to 53)

1 A. Immediately?

2 Q. Yes. 3 A. I explained before I don't have authority to
4 approve paying for a copy without funding approval. And

5 A. You mean 291.
6 Q. I can't read upside down.

5 there was a huge amount of volume of documents. I mean

6 you don't know how many documents are in 90,000 sheets of
7 paper.

7 A. That's okay. I'll give you a break on that one.
8 Yes, it's marked "transcrpt".

8 Q. Believe me I do.

9 Q. Okay. And Deposition Exhibit 6, can you read
1 0 for me the Bates stamp number.

9 A. So -- and I also couldn't ask Lain Faulker to
1 0 do it without incurrg a cost from them. So i couldn't

11 A. 260.
12 Q. That's your Bates stap number again?

11 do that until somebody said I could spend that money.
12 Q. SO you just made her aware that they were there

13 A. Yes.

14 Q. IS that indexed here on your index?
15 A. Yes. Yes.
16 Q. Okay. Deposition No. 7?

just waited for direction or-14 A. Yes. 15 Q. Okay. 16 MR. CULLINAN: I'm done.
13 and then

17 A. 176. I have a No. 176.
18 Q. That's your number?

17 EXAINATION
18 BY MR. HERRIN:
19 Q. Ms. Daughert, when you first served the summons

19 A. Yes. Potential client meeting.
2 0 Q. IS that the document that's on the index?

2 0 and were given access to the Heritage documents it says
21 on i 1/29 you went and saw 372 boxes of documents. Is
2 2 that correct?

2 1 A. Yes.
22 Q. Okay. Deposition Exhibit 8?

23 A. 174.
24 Q. For the record when we went through Exhibit 3,

23 A. Yes. Well, I didn't see them. I knew they were
24 there. Okay. They're in the basement.
25 Q. There were a bunch of

25 4, 5, 6, 7 and 8, can we agree that all we're talking

boxes?

....................-_....._-.........__._- _.............._..........-. .-........_.__... '.. ...-

Page 51
1 about is the first number of -- the Bates stamped series.
2 We can go back if

Page 53
1
A. A bunch of

boxes. Yeah.

you want to look through the--

2
3

Q. And between the work on the 14th of

December you

3 MR. HERRIN: We'll stipulate to that.
4 MR. CULLINAN: So we'll stipulate.

4

went through those boxes and you pulled folders out of boxes that 372 boxes and ended up with a total number of
A. 66. Q. 66 boxes?

S THE WITNESS: i don't know what that meant.
6 Thank you.

5 ofwhat?
6 7

7 MR. CULLINAN: We'll stipulate that the
8 series of pages within Deposition Exhibit 3, 4, 5, 6, 7
9 and 8 correspond to the indexing -- the -- the Bates

8
9

A. There were full or partial boxes that needed copied.

10 stamping on the index.
i 1 MR. HERRIN: i think the stipulation took

12 longer than the fact, but yes.

13 MR. CULLINAN: Okay. It may have.

10 Q. Now, the other documents and the other boxes 11 they remained at the trustee's, right? They all 12 technically remained -13 A. I guess they all remained at the trustee's
14 offce. But they were segregated in a special room away

14 Q. (BY MR. CULLINAN:) Deposition Exhibit No.9, do 15 you see that the Bates stamp number's there?
16 A. That's our number.

them. Is that what you mean? 16 Q. What was your criteria in pulling out the -- 66?
15 from the rest of

17 Q. That's your Bates stamp. Is that on the index?
18 A. 251. Yes.

i 7 68? 66 boxes from the 372 boxes?
i 8 i 9

A. My criteria? IfI actually explained my
criteria, i would be discussing matters unrelated to the

19 Q. I trunk that might be it. That's it.
2 0 If Ms. Hanis had asked that you keep a

21 special eye out for these documents, why weren't they
22 produced in piecemeal fashion? When you came across

20 Sand. I 21 Q. All right. But is part of that criteria would

122 the Sands documents have been included?
23 24
A. Yes.

23 documents that pertined to the Sands, why weren't they
2 4 just either scanned in or copied and mailed off or

25 somehow directed out to the people who needed them?

25 Heritage documents, which to the best of

Q. Okay. So now you've got 60 some-odd boxes of your belief

HUNDT REPORTING

214-220-1122

APP-A-00059

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

Document 75-11

Filed 10/15/2007

Page 12 of 13

Rita Daugherty
15 (Pages 54 to 57)

Page 54
1

Page 56
1 2
3

include the Heritage -- the Sands material in the
trstees -- Heritage files, correct?
A.

been seachable and indexed so that you could segregate

2
3

the Sands documents from the rest of documents that would
be which date?

Right.

4
5 6

Q. Now, those 66 boxes you then had to have them

4 5
6

A. June 5th.
Q. June 5th. Now, at that point -- well, let's see -- and I believe your earlier testimony was on June 7th counsel asked that an index be created to isolate the

copied. The trtee wasn't going to let you just walk

7 8
9

off with any of those pages, was he? A. No. They don't own them. They're just a
third-par record keeper.

7 8
9

Sands documents from other documents; is that correct?

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. Okay. A. They can't grt me that. Q.

A. Not an index. Using the index they searched out
the Sands documents and then put them over on a separte

And the IRS didn't own those documents, did
No.

they?
A.

Q. Over the next couple of month you had to make arangements to get funding to have the 60 some-odd boxes

copied; is that correct?
A.

Right.

Q.

SO is it accurate that the first time the IRS

actually had possession, physical possession of the

documents was April i i, 2007?
A.

Yes.

Q.
A.

And at that time it was 28 boxes of documents.
Except for the last one.

Are those going to be full boxes?
Q.

All right. And at the same time you also

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

disk.
Q. All right. So the document -- as the index

would have identified them as a Sands document they were
pulled frm the wealth of documents out there and

combined onto one disk?

A. Its own separate disk.
Q. Its own separate disk. And then that one disk, what had to be done with that disk before it could be
turned over to DOJ? A. We had to make sure that every document on it
belonged to Mr. and Mrs. Sands.

Q. And is that what Mr. Brokus was asked to do?
A. Yes.

Q. SO that disk was sent out to Mr. Brokus sometime in -- well, June of 2007?

Page 5
1
2 3

Page 57
1

received electronic copy of what was in the boxes, so presumably they were scanned in at the same time they
were copied?

A. July.
Q. July of2007, right? And then he had to review

2
3 4
5

all the documents on that disk to make sure there wa~n't

4
5
6

A. Yes.

somebody else's document contained in that)
A. Right.

Q. Now, at that time were the Sands documents -documents related to Sands segregated from all the other

7 8 9

documents? I 7 A. The hard copies? 8
6

Q. And when does it say that Mr. Brokus completed
that review?

2 A. right?,I2 3 3 Right. 2 4
Q. Okay. And that would have included the Sands, 122
24 25
Q. SO the first time that those 28 boxes would have 25

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

Q. Yes. 9
A. No.
A. Right.

A. July 24th.
Q. And is it your understanding by the fact that he

1 0 sent corrections that he detennined that there were

Q. Could you have taken that disk and immediately said, okay, these are all the Sands documents and gathered them together? A. No. Not until the index was created. time creating Q. Okay. So then you had a period of
the index?

11 documents on that disk did not -- were not attrbutable
1 2 to Sands?

13 A. Yes.
I 15 documents and culling out the nonSands-related document~ 14 Q. SO it would have been after his review of the
, 16 that for the first time there would have been a disk of

Q. Now, the purpose of the index was so that you could tell what documents in those 28 boxes were
attbutable to which individuals or investors?

18 A. Yes. With the corrections made.

A. Right. 21

19 Q. Do you know what Mr. to Sands? 117 documents that related solelyBrokus did with that disk
2 0 after he had the corrections?

A. He sent it to Elaine.
Q.
A.

Do you know what Ms. Hams did with it?

She gave it to you -- or the Deparent of Justice. I assume you.
Q. At any time prior to when Ms. Hans sent us

HUNDT REPORTING

214-220-1122

APP-A-00060

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

Document 75-11

Filed 10/15/2007

Page 13 of 13

Ri ta Daugherty

Page 58 Page 60
2 July 24th, 25th of2007, were any of

16 (Pages 58 to 61)

1 that disk around September 24th, 25th of -- I'm sorr. 1 that it was somebody with a name that was similar enough

these documents 2 to the Sands that it was probably somebody else?

3 provided to the Deparent of Justice? 3 A. Right. I did do that.
4 A. Before that date? 4 Q. SO to your knowledge the Sands haven't actually
5 Q. Before that date. 5 gone to the trstee with their own request to see the

6 A. No. 6 documents, have they?
7 Q. And could they been provided to us without the 7 A. Not to my knowledge (indicating).

8 risk of disclosure? 8 Q. All right.

9 A. Prior to July the 24th? 9 MR. HERR: I'll pass the witness.
10 Q. Yes. 10 FURTHER

EXAMINATION

11 A. No. There would be a risk of disclosure. 11 BY MR. CULLINAN: 12 Q. And basically it took from the time you 12 Q. Mr. Herrn just asked you a series of questions
13 initially got the boxes back in -- access to the boxes 13 going through your time lines and saying you had to do

you 15 the process of reviewing and segregating the Sands 15 were following the procedure with respect to this huge
14 back in December 2006 until July 24, 2007, to complete 14 this, you had to do this, you had to do this, as if

16 documents? 16 volume of information to ensure that it was accurately
17 A. Yes. Because of the volume and the number of 17 indexed, accurately disseminated among the right people,
18 persons and entities unrelated to the Sands. It all had 18 that it was reviewed to make sure that there wasn't an

19 to be segregated. It had to be separated. Because under 19 inadvertent disclosure.

2 0 6 I 03 if we made an inadvertent disclosure, there were ten 20 When you initially went through these
21 agents out there who have civil and criminal penalties, 21 documents back in late November of 2006 and early

22 loss of pension, jail, whatever. i mean we have to be 22 December of 2006, if Mr. Hemn or Ms. Hams had asked

23 extremely carefuL. 23 you and said, listen, when you're going through these
24 Q. Now, with respect to the time that you'd been 24 documents i want you to take anything that pertains Sands
2 5 over at the trstee office looking at documents, i 25 and just put it over in a separate comer, could you have

Page 59
1 2 3 4

Page 61
1

presume that's prett much off and on since December since you testified earlier that you have the Tillostin documents that had you had to look at later?
A. Yes. Q. And have, in fact, the Tillostin documents been
segregated yet?

done that?

2
3

A. Well, I guess.
Q. If

they had said here, here's a couple hundred

4
5

dollars to go out and copy all those documents, could you
have done that?
A. No.

5
6

6 7

7
8 9

A. Well, I'm still trying to get funding approval.
Q.

Q. Why not?

I'll take that as a no. But during the time

8
9

A. 200 wouldn't have covered all these documents.

that you've been back and forth with the trustee's offce has anybody else asked for access to the Heritage documents so that they can inspect and copy them, to your knowledge?
A. Yes. Q. Do you have any information that the Sands or

Q. All right. Several hundred dollars. There

10 11 12 13 14 15 16 17 18 19

10 was -- what I'm trying to ask, there was nothing
11 preventing you, the I RS or anybody else from actually 12 segregating and copying those documents in November 2006 13 or December of 2006; isn't that true? 14 A. No, i don't think that is tme.

their counsel asked to inspect those document and make their own review of the Heritage documents with Sands material?
A. i thought it was Sands. But i have never gone back and talked to Lain Faulkner to confirm. Because there was conversations and, you know, you're busy doing all this stuff and people come in and talk to you. Q. Is it your understanding -- because I don't want to suggest something that may not be correct there -- you told us last week that you thought somebody had requested the Sands documents and when we checked it it turned out

20 21
22 23 24

15 Q. Please explain. 16 A. The way we safeguard a taxpayer's privacy is to 17 make sure that all the mles and all the approvals are in 18 place. And you can call it govemment red tape or you 19 can call it whatever it is. But we can't -- I didn't 20 have approval -- you don't jump a gun. You have to
(indicating) -- A has to -- A is before Band C and if --

121 if Elaine told me to segregate the Sands, i believe that 22
23 she and I had would have had a conversation with Kim 24 Tung, tenitory manager and a lot of people would have 25 gotten involved because my job was to secure and review

25

HUNDT REPORTING

214-220-1122

APP-A-00061