Free Proposed Findings of Uncontroverted Fact - District Court of Federal Claims - federal

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 1 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 1

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

NO. 06-211T (Judge Victor J. Wolski) JAMES R. THOMPSON, Plaintiff, V THE UNITED STATES, Defendant

----------------------------------ORAL DEPOSITION OF JAMES R. THOMPSON APRIL 23, 2007 Volume 1 ----------------------------------ORAL DEPOSITION OF JAMES R. THOMPSON produced as a witness at the instance of the DEFENDANT, and duly sworn, was taken in the above-styled and numbered cause on the 23rd of April, 2007, from 3:50 p.m. to 5:21 p.m., before Diana Pereira, CSR in and for the State of Texas, reported by machine shorthand, at the law offices of WINSTEAD, 5400 Renaissance Tower, 1201 Elm Street, Dallas, Texas, pursuant to the Rules of the Court of Federal Claims.

1:1

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 2 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 2

1 2 3 4

A P P E A R A N C E S FOR THE PLAINTIFF: MR. STUART M. REYNOLDS, JR. WINSTEAD 5400 Renaissance Tower 1201 Elm Street Dallas, Texas 75270 (214) 745-5360 (214) 745-5400 FAX FOR THE DEFENDANT: MR. JEFFREY R. MALO MR. STEVE FRAHM US DEPARTMENT OF JUSTICE, TAX DIVISION COURT OF FEDERAL CLAIMS SECTION P.O. Box 26 Ben Franklin Station Washington, DC 20044 (202) 305-7539

5

6

7 8 9

10

11

12

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

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 3 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 3

1 2 3 4 5

INDEX PAGE Appearances........................................... 2 JAMES R. THOMPSON Examination by Mr. Malo.......................... 4 Signature and Changes................................. 51

6

Reporter's Certificate................................ 53
7 8

EXHIBITS
9

NO.
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

DESCRIPTION

PAGE

9 10 11 12 13 14 15 16 17 18 19

Response to Interrogatories...................... 41 Business overview for the period of early part of 2002 through the end of 2004..................... 43 Statement of assets, liabilities, and member equity income tax basis for Mountain Air Charter, LLC... 43 2002 partnership return for Mountain Air Charter. 44 2003 partnership return for Mountain Air Charter. 45 James R. Thompson's personal 2002 return......... 45 James R. Thompson's personal 2003 return......... 46 Bill from E&Y relating to Mountain Air Charter from 2002........................................ 46 The PC-12 insurance policy for the year 2002, May 2002 through May 2003........................ 46 James R. Thompson's logbook for 2002-2003........ 49 Calendar from December 31st of 2001 through January of 2004.................................. 49

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 4 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

P R O C E E D I N G S MR. MALO: Malo. Good afternoon. My name is Jeff

I'm joined by Steven Frahm with the United States We are here representing the United

Department of Justice.

States in the matter of James Thompson versus the United States. Our deponent this afternoon is Mr. Thompson, and he is

joined by his counsel Mr. Stuart Reynolds. First, I would like to acknowledge that this deposition was scheduled by agreement of the parties, and I would like to express my thanks for everyone's cooperation and agreeing to be here today. Second, I'd like to state that this deposition is being taken in accordance with the Rules of the Court of Federal Claims. JAMES R. THOMPSON, having been first duly sworn, testified as follows: EXAMINATION BY MR. MALO: Q. A. Q. Mr. Thompson, have you ever been deposed before? Yes. Okay. Then you're probably fairly familiar with the I will be asking you a

process, but I will summarize for you. number of questions. you not answer them.

If my questions are unclear, I ask that I will rephrase them at your request. If

you don't know the answer, please tell me.

I don't want you to

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 5 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

speculate, but if you have some idea what the answer is but you're not absolutely certain, please provide the information you have and describe the limits on your level of certainty. We can take a break at any time. if you would like to take a break. certain questions that I ask. Please tell me

Mr. Reynolds may object to

He may object on grounds of

privilege, such as attorney/client privilege, and he may instruct you not to answer. instructions. However, if he does not claim privilege and he may object on other grounds, such as the form of my question, and I will have three options. I can either withdraw my I ask you to follow his

question, rephrase the question, or ask you to answer the question as posed. If at any time during this deposition you remember additional material or additional information, please provide it even if we have moved on to another topic. If you

wish to revise an answer or believe that you were mistaken about a prior answer, please advise me of this fact at any time during the deposition. Now, the years at issue are 2002 and 2003. questions I ask, unless otherwise specified, relate to that period. A. Q. Do you have any questions? No. Mr. Thompson, would you please state your full name All

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 6 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

for the record. A. Q. A. Q. A. Q. A. Q. A. Q. James Russell Thompson. Your date of birth? 12/20/54. Your address? 5555 Winston Court, Dallas, 75220. Your telephone number? Work or home? Both, please. Okay. Home is 214-361-0266. Work is 214-237-2001.

When you refer to your work number, can you specify

what you -- what your -- where are you employed? A. Q. USA Corporation. Thank you. Mr. Thompson, would you please describe

your educational background. A. Q. A. Q. I have a ninth grade education. Can you elaborate on that? What more would you like? Did -- you completed through your freshman year of

high school; is that correct? A. Q. A. Q. A. That's correct, yes. Okay. And where did you perform your education?

Culver Military Academy. I'm sorry? Culver Military Academy.
1700 Pacific Avenue Suite 4750 Dallas, Texas 75201

Esquire Deposition Services

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 7 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 7

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A.

Can you describe your current employment. I'm the chief executive officer of ORIX USA

Corporation. Q. A. Do you hold any other positions with the company? I'm on various subsidiary boards in both an executive

and non-executive capacity. Q. A. Can you identify these subsidiary entities? Not all of them. There are -- there's approximately

95 subsidiaries.

And many of the board meetings and other

corporate formalities are held in concert, so -- not all of them. But the principal subsidiaries are ORIX Capital Markets,

ORIX Real Estate Capital, and ORIX Financial Services. Q. And do you have a title at each of these Could you identify them?

subsidiaries? A. Q. A. Q. A. Q. A. No.

When did you start working with ORIX? 1990. How about ORIX Capital Markets? 1997. What was your original position with ORIX? I was engaged by ORIX in 1990 as an advisor to assist

them with the development of an effort that they wanted to make in a segment of the mortgage markets -- in the commercial mortgage market segment, I guess is the best way to put it. Q. And what prior experience or training did you have to

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 8 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

function in your role as an advisor with the development of -I'm sorry -- what did you say, common mortgage? A. Q. A. Q. A. Q. A. Q. Commercial. Commercial mortgage? Yes. Portfolios? Commercial mortgage markets -Markets. -- is really probably the best way to put it. Markets. What prior experience or training did you

have for commercial mortgage markets? A. I had been involved -- well, the issue at hand was It was whether or not commercial

primarily a technical one.

mortgages would ultimately be securitized the same as residential mortgages had come to be securitized. So the

experience that I had at that point was primarily of a technical nature, and it began in 1979 when I first got involved in the mortgage markets and was subsequently involved in a number of -- or by virtue of a number of positions that I held in the early stages of the securitization of residential mortgage. Q. A. Can you describe your responsibilities at ORIX. Initially I was an advisor. And I was retained in

connection with a joint venture that I had put together between ORIX and Wells Fargo Bank relating to the origination,

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 9 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

securitization, and sale of commercial real estate loans. Q. From your original position as advisor, what role did

you subsequently move to in the company? A. In 1994, I became an employee with responsibility for

directing their investment activities in the commercial mortgage securities markets. Q. employee? A. was. Q. A. Q. A. Do you know how long you held that position? Well, until 1997. And what happened in 1997? I -- ORIX acquired a company called Bank One And how long did you hold that position as an Did you have a specific title associated with that? I'm sure I did, but I really don't remember what it

Management Consulting in Dallas, and at that point, I became chief executive officer of that company. Q. A. Of Bank One? Bank One Mortgage -- well, it was Bank One Management It became Bank One Mortgage

and Consulting when we bought it.

Capital Markets after we bought it, and then it became ORIX Capital Markets. Q. So am I correct in stating that you became CEO in --

of this Bank One Mortgage entity in 1997 and retained this title through today, although the entity has undergone several name changes?

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 10 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A.

I'm no longer chief executive officer of Bank -- or

of ORIX Capital Markets. Q. A. Q. Markets? A. I think it was April 1st of 2006. It could be 2005, But you are of ORIX USA? Yes. When did you cease becoming CEO of ORIX Capital

but I think it's 2006. Q. Over the course of your employment with ORIX or any

ORIX subsidiary, what is the nature of your compensation, salaried or hourly or -A. Q. It's salary plus bonus. Is that the nature of the arrangement when you served

as an advisor? A. Yes. Well, there was no salary. Well, there were

advisory fees.

I don't recall how -- there was a -- there was

a -- an advisory fee and then there was compensation that was tied to their ultimate profit. Q. And when you became an employee, you moved to a

salary plus bonus structure for compensation? A. Q. That's correct. Do you maintain regular business hours for ORIX

Corporation? A. Q. No. How many hours a week do you work for ORIX or ORIX

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 11 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 11

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

subsidiaries? A. Q. A. Q. As much as I need to. Are there any minimum requirements? No. Would you be comfortable estimating average hours

over a week or a month for any given year? A. Q. No. Okay. Mr. Thompson, I'd like to ask you about some I'm aware

of your other investment or professional activities.

that you have an ownership interest in a hay and donkey farm. Is there a name of this farm? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Yes. What is the name? Hog Heaven. There's a reason for it.

What is the reason? It has a major infestation of wild hogs. Where is this farm located? In Kaufman, Texas. How many acres is it? 760-something. Do you know how many head of donkey you have? Now? How many -- how large was the farm -- or how many

head did you have in 2002, 2003? A. Somewhere between 80 and 100.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 12 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 12

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A. Q. A. Q. A. Q. A.

How about now? Ten. Do you sell hay or do you sell livestock? Not anymore. But you did? I did. What were the years during which you sold hay? Well, I bought it in 1998, and we sold hay for a But it -- I wasn't capable of

couple of years, and donkeys.

making any money, so all that's left are animals. Q. A. Just donkeys? No. There's 26 buffaloes. Is it buffaloes, plural,

or buffalo? MR. REYNOLDS: on that. We probably each have an opinion

I think buffalo is plural. MR. FRAHM: I think so. Yeah. But that doesn't explain the I'm with Stuart on it.

MR. REYNOLDS: THE WITNESS:

baseball team, the Orix Buffaloes. MR. REYNOLDS: THE WITNESS: MR. FRAHM: THE WITNESS: MR. MALO: No, it doesn't. They're the Japan league. Really? Uh-huh.

Probably because it's a Japan league. Probably it's a good thing that

THE WITNESS:

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 13 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 13

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

it's not its first language. MR. MALO: Q. 1998? A. Q. A. Q. Uh-huh. And sold hay and donkeys, or animals, for a time? Yes. When did -MR. REYNOLDS: ambiguity in the record. I don't want there to be any And (BY MR. MALO) That's right. You stated that you bought the farm in

Mr. Thompson is alive and well.

the phrase "bought the farm" has a -- has a connotation that just to the average reader might be unsettling. MR. MALO: Q. A. Q. A. Q. (BY MR. MALO) Yes. And for a while sold hay and donkeys? Yes. Do you know when you stopped selling animals and hay, I'll rephrase. You purchased the farm in 1998?

approximately? A. Q. A. 2002, I'm guessing. Okay. Why did you purchase the farm? I moved here from an

Well, it was complicated.

environment where I was involved in a lot of underwater activities. steel. I wasn't used to seeing all that concrete and

I needed to do something outside, and that was the

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 14 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 14

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

answer that I came up with in 1998. Q. Now, I believe you just stated -- and correct me if

I'm mischaracterizing your statement -- that the hay and donkey sales did not generate profits? A. Q. That's correct. Did you purchase the farm with the intention of it

being a revenue-generating operation? A. Q. No. But the fact that the farm did not generate revenue

was a factor in your decision to scale back operations? A. revenue. Q. A. Q. Yes. Well, generate -- excuse me. It generated

It just couldn't cover its expenses. Okay. So it didn't generate positive cash flow?

That's right. Okay. Would you characterize your investment in the

farm as a hobby -A. Q. A. (Nods head affirmatively.) -- as an investment? In the -- in the ranch itself? I never really

thought of it one way or the other. Q. A. Q. Are you aware of any appreciation in the land value? Yes. Okay. Was the value of the land a consideration in

your decision to purchase the farm? A. Yes.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 15 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 15

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q.

Prior to owning the farm, did you have any interest

in farming activities? A. Q. A. Q. A. Q. A. Q. A. for kids. Q. A. Q. A. lessons. Q. You said you picked it up again. Was there a period Casual interest. Did you have any background in farming? No. Mr. Thompson, when did you start flying? The first time? Yes. In 1966. How did you learn how to fly? I was in the Civil Air Patrol, and they had a program And the first flying I did was in a sailplane. What is a sailplane? A glider. What was the next step in your flight training? In 1982, I picked it up again and took flying

during which you did not fly? A. Q. A. Q. A. Q. Yes. Can you define that? 19 -- well, from 1967 until 1982. And in 1982, you said you took flying lessons? Yes. Can you define that?

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 16 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 16

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. Q.

I just need a better question. Okay. Certainly.

I mean --

When you say you took flying lesson, do you mean you received formal flight instruction? A. Q. A. Yes. From whom did you receive instruction? Well, I don't want it to sound flip, but a flight I have no idea what the name of that fella was.

instructor. Q.

How much flight instruction did you receive from this

flight instructor? A. Enough to get a private pilot certificate and an

instrument rating. Q. Do you know approximately over what period of time

your initial training began -- between when you began training and received your initial qualifications? A. Q. Three or four months. During those three to four months, approximately how

often did you fly or receive instruction? A. Q. I don't know. I'd have to look it up.

To the best of your recollection, was it daily, two,

three, five days a week, something? A. Q. I'd be speculating. Okay. It's simple to look it up.

And what was the initial qualification that

you received as a pilot? A. I'm not sure what the -- what you mean.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 17 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. initial -A. Q. A. Q.

What was the initial license you received or

It was a private pilot's license. What was the type or rating? There wasn't one. What aircraft were you authorized to fly with a

private pilot's license when you first received it? A. Well, just about anything that didn't have two

engines or was not a turbine -- turbojet airplane or was not a seaplane. Q. So lots of them. But there were restrictions on what you could fly as

a private pilot? A. Q. Yes. Beyond that initial private pilot's license, have you

gained additional flight qualifications or flight credentials? A. Q. A. Yes. Could you list those out and when you received them? I have an airline transport pilot rating. That was

received in 2006; commercial pilot rating, 2006; L-39 letter of authorization, that was received in -- which is the equivalent of a type rating -- functional equivalent anyway -- in 2005; and a type rating for a Cessna 525 airplane in 2006, July of 2006; and a multi-engine rating and multi-engine instrument rating in January or February of 2006. Q. If I understand your testimony thus far correctly,

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 18 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 18

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

you held a private pilot's license from 1982, beyond which you did not obtain any additional flight qualifications or credentials until 2005. A. ambiguous. Is that an accurate statement?

That's a tough one to say yes to because it's What I think I can say to you is that I didn't

obtain any additional ratings between, let's really say, April of 2000 -- or 1983 until January or February of 2005. Q. ratings? A. And what is the significance of that additional What does that mean? Well, if you want to fly a multi-engine airplane, you I only flew single engines, so I

need a multi-engine rating.

didn't need a multi-engine rating until I needed one, which was January or February of 2006. In the early part of 2005, I got

my L-39, which is a turbojet letter of authorization, which, as I said, is the functional equivalent of a type rating. And I

did that because I needed to buy -- or I needed to have that or it would be illegal to fly an airplane. But my practice was typically to only have what I needed. Q. And from 1983 until 2005, I had what I needed. Is it an accurate statement, then, that the universe

of aircraft that you were restricted from flying, as you described; no multi-engine, no turbo engine, no seaplanes, the universe of restrictions on aircraft that you could fly was constant from 1983 through 2005? A. I think that's true. The regulations changed

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 19 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 19

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

considerably during that period.

So, you know, with -- with an

exception for regulatory changes that may have come into play, the answer would be yes. Q. period? A. Q. Well, I have about 5,400 now. Which period? And do you know how many hours you flew over this

From 1982 or 1980, whenever you started officially

tracking and logging your hours, through the present. A. Q. About 5,400, I think. Maybe 53.

Do you know how many hours you had when Mountain Air

was started? A. Under 5,000. 4,800, something like that. Well, it

was less than that.

Above 4,000.

Probably just -- I could

look it up, but just below 4,500 would be a good -- a reasonable estimate, I would say. Q. A. Q. A. Q. A. Q. A. Q. A. What was the first aircraft that you owned? A Mooney 231. And when did you purchase that? In December of 1982. How long did you own it? Until 1988. What was the second aircraft you owned? Well, I owned a pair of Cessna 152s. When did you acquire those? '83.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 20 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 20

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A. Q. A.

And how long did you own them? A couple of years. Okay. '84, '85, something like that.

What other aircraft have you owned?

The -- another Mooney in 1994, which was sold in Early part of 2003.

2003, I think. Q. A.

What was the model on that Mooney? It was called a TLS. And the L-39 -- what -- what's

the cutoff of the period that you're inquiring about? Q. A. Through the present. Oh. The L-39 and a -- through Mountain Air Charter, And the Pilatus through -- also through

a Citation 525.

Mountain Air Charter. Q. A. Q. I'm sorry. 525. When did you acquire the -- I'm sorry. You said the Citation --

Mooney TLS, '94 through 2003? A. Q. A. Yes. The L-39? 2005 through the present. The Pilatus was May 2002

through January of 2007. 2006 through the present. Q.

And the Citation was September of

And could you describe the category or type of

aircraft that each of these are? A. Yes. The L-39 is a single-engine turbojet. Both The

Mooneys were single-engine piston-driven airplanes.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 21 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 21

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Cessna 152s were single-engine piston airplanes. is a single-engine turboprop. multi-engine turbojet. Q.

The Pilatus

And the Citation is a

How would you describe the range of each of these

aircraft in terms of their flying capability? A. The -- I don't know what the range of a 152 is. That

was a long time ago, so I -- I won't -- I'll just -- I just won't deal with that. airplane. But the -- the Pilatus was a 2,000-mile The

The Citation is about an 1,800-mile airplane.

L-39 is a 500-mile airplane.

And the Mooney was -- you could

get 1,800 -- an 1800-mile airplane, both of them. Q. What type of insurance did you maintain on each of

these aircraft? A. Well, I don't remember -- I'll just run through them The Mooney in 1982, I have no idea. The TLS, I don't remember. The 152s, I

in sequence. have no idea.

The Pilatus was full

hull value, one million liability in 2002, going up to three million in 2003, and then I think five in 2004. Citation is 10 million. The L-39, all you can get is a The others And the

million, but it's got 100,000 per seat limitation.

are smooth -- what we call smooth, meaning they apply to all the seats without any sub-limits. Q. So those coverage levels that you've just described

would be per seat? A. No, total.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 22 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 22

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A. you.

Total? But sometimes -- without regard to how many seats sue

In the case of the L-39, you've got what I call -- or So each --

what the industry calls a sub-limit of 100,000.

each seat can only recover 100,000, but you have a million in liability. Now, it's only got two seats, so why -- you know, But the

why you pay for a million in liability, I'm not sure. others were without sub-limits. Q. A. Q. And which did you describe as being smooth? The Citation and the Pilatus. Which again? I'm sorry.

If I could get you to

define that term "smooth" again. A. Smooth means without sub-limits, without per seat

limitations. Q. Okay. For each of these aircraft, are the insurance

requirements for a pilot to fly the aircraft the same as FAA requirements that are required to fly the aircraft? A. No -- well, they might be, but it would be probably a

coincidence. Q. Okay. And do you know enough about them to comment

on the differences? A. Q. Just on the basis of my own experience. Okay. And from your experience, as far back as you

can go on any of these aircraft, do you know what was required in terms of a pilot's experience or pilot's qualifications to

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 23 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 23

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

fly either the Mooneys, the Cessnas, the Citation, the Pilatus, the L-39 from an FAA regulatory standpoint? many hours were required? A. I'm not sure that -- well, first of all, the answer I can kind of speculate based on my own I'm not aware of any FAA-mandated minimum I've got a reasonable Do you know how

to that might be no. personal experience.

number of hours for those airplanes. confidence level on that. requirement.

It is typically an insurance company

If you have an instructor sign off for a complex

airplane, meaning retractable gear, more than 180 horsepower in a piston -- I think that's right. 200 in flaps, I think, is

the other thing -- you can fly any complex airplane for which you have a rating. So if you just have a single-engine rating, You're --

you can go out and fly any single-engine airplane. it's completely legal.

It's not smart and you might not be

able to get insured for doing that, but you can do it. Here's another example. The day that I bought

the Pilatus, I could have flown it off the field and been completely legal. I had my high altitude signoff, which is

another signoff that you have to have to go -- for airplanes that can go above 25,000 feet. And that's all I needed. But

it wouldn't have made a lot of common sense and I would have been uninsured. Q. If I understand you correctly, then, it's your

understanding that the FAA does not establish requirements that

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 24 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 24

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

are expressed in terms of hourly minimums for any specific flight privileges as it relates to specific aircraft? A. There is a minimum requirement for a private pilot

certificate of about 40 -- of 40 hours, if I -- I think that's still in play. And if you take a checkride in a simulator for

a jet that is certificated for single-pilot purposes and you don't hold any other single-pilot ratings, you could have it -you could come up with a 25-hour supervised operating experience requirement. But if you do a checkride in the Those

airplane, in a single pilot, then you don't have that. are the only things that I'm aware of.

There is a minimum number of hours that the FAA publishes before you can get your instrument ready, although I think they may have done away with that one. MR. REYNOLDS: THE WITNESS: They've done away with it. So, by and large, I think it's

safe, if not fair -- certainly fair to say, if not safe, that there aren't minimum-hour, really, requirements that are published for different kinds of airplanes. Q. purposes? A. That's a whole different matter. The -- and it's all (BY MR. MALO) Okay. What about for insurance

over the plot.

When -- and it varies by insurer, it varies by

airplane, it varies by the perception of the experience level of the pilot. It can vary with the accident experience that an

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 25 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 25

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

insurance company has had with an airplane or with owner pilots, for example. It's all over the place. But there --

that is where you're going to find minimum requirements. Q. And, to the best of your recollection, again, going

back as far as possible on each of the aircraft you own, do you recall what specifically hour -- what specific hourly requirements were -- were required for insurance purposes on either of the Mooneys, the Cessna, the L-39, the Citation, or the Pilatus? A. was one. Some of them I do. The Mooneys, I don't think there You just had

The 152s, I don't think there was one.

to hold a private pilot -- pilot license in the case of all of those. And with the Mooneys you had to have a complex

signoff -- or a signoff for complex aircraft. With the Pilatus, there were -- I had an hour requirement. one. Tom Travis had one. Mike Holderread may have had

With the Citation, there was one, both for my 135 pilot And the L-39, there was one. I don't recall how

and for me. long it was. Q.

Do you recall what the specific hourly requirement

was for each of these aircraft? A. Some of them. It would be -- first of all, it would

be -- the fact would be in the insurance policy because it would be listed either in the -- on the face of the policy or in the endorsements relating to a pilot. So it's possible to

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 26 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 26

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

establish definitively what they are. In 2002, I think Tom's requirement was 25 hours; mine was 200. was 100. In the Citation, mine was 100 and my 135 pilot's Mike Holderread

So we had identical requirements.

might have been 25 hours for the PC-12. Q. If I can interrupt you for a moment. You said in

2002 your requirement might have been 200. Pilatus? A. Q. I think it was, yes.

Was that for the

And the requirements you mentioned for both

Mr. Travis and Mr. Holderread were both for the Pilatus as well. A. Yes. But as a -- if we need to establish

definitively what those are, we should go back and look at the policies. Q. That's my recollection. Okay. Would the insurance requirements in terms of

hourly -- accumulated hourly experience have varied between pilots? A. Q. Oh, yes. And what would be the factor of that? Who's

responsible for that variance? A. The experience -- the professional experience and

prejudices that an insurance underwriter might have. Q. When you acquired the PC-12 in 2002 -- or allow me to

rephrase that.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 27 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 27

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

When Mountain Air acquired the Pilatus PC-12, were you authorized to fly the plane? A. Q. By whom? You mentioned already for FAA purposes you could have What about for insurance purposes?

flown it right off the lot. A. Q.

No, I would not have been -- or I was not. And do you know what you were lacking in terms of

insurance authorization? A. SimCom. As I said, I think it was -- well, they wanted the They wanted the -- they wanted me to complete the

SimCom instruction, and I think the requirement was 200 hours. Q. A. Q. Do you know how far short of 200 hours you were? 200. In other words, you needed 200 hours on the actual

Pilatus PC-12 or that -- that make and model? A. Q. Yes. Okay. And you didn't have any experience on a

Pilatus PC-12 at the time that Mountain Air acquired the aircraft? A. Q. A. Q. That's correct. Were you interested in flying the PC-12? Yeah. Yes.

And you were interested in acquiring the 200 hours'

experience that you needed to fly the PC-12? A. Yes.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 28 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 28

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. A.

And when did you hire Mr. Travis? Well, we could -- first of all, we could establish

the fact definitively from the payroll records, but I think it was 30 to 45 days before the delivery. Q. A. Q. A. Q. So 30 to 45 days before May 15th -The May 15th delivery, yes. -- 2002? Yes. Okay. And what was the job description that you

provided Mr. Travis? A. Well, it was more a question of the one that he I wanted a guy who could do as much as And Tom had some -- he had his own

provided me with. needed to be done. requirements.

One of them was he didn't do paperwork, any

paperwork except that which the op specs said that he, as the pilot in command, would have to do. know, all the flying was his. So -- and he was -- you

I asked him if he would help

work on the negotiation with the FAA, because I figured he would be -- it would be helpful for them to see who the pilot was. What were some of his other requirements? Well,

the main was -- the main one was that he didn't -- wasn't going to do any paperwork and his duties would just be limited to the flying and whatever he was required to do by the op specs. Q. Okay. And, in addition to kind of the requirements

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 29 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 29

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

that you say that Mr. Travis specified, what activities did you expect him to perform in his role as pilot in command in addition to the -- to the op specs? What activities was he

expected to perform in the course of his employment for Mountain Air as pilot in command? A. not. This is going to sound like a flip answer, but it's

He had -- he had to -- his job was to avoid bending metal

or hurting people, period. Q. A. Q. A. Did that entail preflight and post-flight activities? Yes. Were they all safely -- safety-related? Well, I mean, that was the main requirement. You

know, there's all kinds of little things.

First of all, with

respect to any flight, it was his -- where he was flying as a Part 135 pilot, he was responsible for the preflight and the post-flight. It doesn't mean I didn't do my own, but he -- he

was legally responsible for that, and it was his job to comply with that. So I expected him to do whatever he was obligated

to do by virtue of the regulations and, as I said, to avoid bending metal or hurting anybody. Q. In the course of interviewing Mr. Travis, did you

discuss with him the possibility of providing you with flight instruction? A. I don't think so. I don't think I thought I was

going to need it.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 30 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 30

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q.

How did you intend to acquire 200 hours of time in

the Pilatus PC-12? A. minute. Q. A. Q. A. Q. When was the last minute? Two or three weeks before the airplane was delivered. So late April, maybe? Something like that. And once you learned about the requirements of actual I didn't find out about the 200 hours until the last

operating time that you would need, did you discuss your need to acquire hours with Mr. Travis? A. Q. A. Yes. And what did you say to him. Well, that was five years ago. I have no idea. But

he had a requirement that had to be -- I think he had a requirement that had to be fulfilled. I had a requirement.

And the whole issue was kind of bound up in the fact that at the last minute the insurance company -- when I started working on the insurance before I hired Tom, which was probably six months before the delivery of the airplane, what I had expected in terms of a policy was $10 million in liability, a 25-hour requirement for supervised operating experience for myself and likely for one that -- anybody that I hired. What got delivered at the -- there was a little bit of a change-up by the insurance company at the last minute

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 31 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 31

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

blaming 9/11.

And what I walked away from after the -- at the

delivery, or what I walked away with, was a million dollars in liability, a 200-hour requirement, and various other restrictions, if I recall correctly. different can of worms, really. Q. you? A. Q. A complete surprise. At the time that you learned of the insurance So the insurance requirements came as a surprise to So it was a much

requirements, when were you expecting to complete Part 135 certification? A. Well, one had nothing to do with the other. I mean, I

they weren't interrelated, or they weren't related at all.

was expecting to have the Part 135 shortly after the airplane was delivered. We started on it well before the time the

airplane was delivered. Q. Okay. Did you at any point ask Mr. Travis to provide

you with flight instruction? A. Q. Well, I must have. And did you ask him to provide you with flight

instruction for the purpose of satisfying the 200 hours you needed for insurance requirements to fly the plane personally? A. Well, it was kind of yes and no. I mean, it was kind

of all wrapped up in a larger issue.

When Tom found out that I

had only a million dollars in liability insurance, he asked me

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 32 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 32

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

for a personal indemnification; in other words, running from me to him because, you know, a million dollars just doesn't go very far anymore. I mean, you can't -- you can't have an

accident with one person in the airplane and have that -- and reasonably expect that to cover anything. And I declined to

provide that indemnification for a variety of reasons. And his requirement was, Well, then, you've got to be prepared to let me fly this airplane as much as I want so that I'm completely comfortable doing what I'm doing. And you

know, I was -- I mean, it wasn't -- it's not a cheap airplane to operate, but I was kind of in a position where I felt like I couldn't say no based on my denial of an indemnity to him. I understood his situation. request. provide. So, on the one hand, you had his desire to -- in his own -- to -- you know, to kind of be as comfortable as he wanted to be. And you've met him now. You understand that he And

I mean, it wasn't an unreasonable

It was just something I didn't think I wanted to

has his own idea about what's required, and it's a lot different than what, you know, other people might assume is the case. And I also had a requirement to complete hours. So, I mean, it was one of those things where we just said, "Okay, I'll fly with you, you fly with me, and at the end of it, you know, hopefully" -- you know, this is me speaking to

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 33 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 33

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Tom -- "you'll have what you feel you need and I'll have what I need." Q. If I understand you correctly -- and correct me if

I'm wrong in this statement -- it's your assertion that there were dual purposes for the flights that occurred between the date that the aircraft was delivered and the date in which Part 135 certification was achieved? A. Q. Well, that's how we got to that point, yes. And those dual purposes were specifically Mr. Travis'

familiarization with the aircraft, his own comfort level with flying the Pilatus PC-12, is what he benefitted from; and you gained an opportunity to acquire the hours needed for insurance purposes to fly the aircraft solo. statement? A. Q. That's correct. Okay. During this period in which these dual purpose Is that an accurate

flights occurred, did you ever have any passengers in the aircraft? A. Q. A. I believe so. Could you identify them, either individually or -Not off the top of my head. I mean, I heard some

conversation.

I wasn't listening to all of it today, but I

heard some of it and I recall some of those flights. Q. Could you identify them collectively as a group of Do --

such as friends, family, coworkers?

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 34 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 34

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. Q. A. wanted.

I think there was a little bit of everything. A little bit of everything? You know, with Tom, I kind of gave him whatever he I mean, you know, I suggested to him that he bring his

wife on a couple of trips because he's the kind of guy who just recently retired, didn't want to be away from home that much, you know. And I wanted him to be as comfortable as he wanted

to be in the airplane, so there were a number of occasions, Okay, bring Cheryl, or do whatever you want. happen. Q. And on any of these flights that occurred during this And so that did

period between the date of delivery of the aircraft and the date on which Part 135 certification was obtained, were there any other purposes for these flights aside from the dual purpose that you described earlier? A. I don't think I can answer that without referring to

my logbook and looking at every flight. Q. A. Q. Okay. We'll save that for followup.

I'm sure there were maintenance flights, for example. Prior to the inception of Mountain Air Charter and

prior to the company's ownership of the Pilatus PC-12, could you describe your use of some of the prior aircraft you owned, particularly the Mooney, I guess, was the most recent plane you owned prior to the Pilatus. Mooney from '94 through 2003? Can you describe how you used the

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 35 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. it. Q.

I'm not sure what I -- what you mean by how I used

Okay.

Did you -- for example, did you use the Mooney

to fly yourself to business destinations? A. Q. A. Q. Sometimes. For meetings? Sometimes. And did you use the Mooney as an alternative to

commercial air travel to provide your own transportation? A. Q. A. Q. A. Q. A. Q. Yes. For activities related to ORIX? I think I did, yes. Did you ever fly coworkers at ORIX on the Mooney? I think so. Did you fly them to business destinations as well? I don't think so. And to the extent that you flew ORIX' personnel on

the Mooney, it was for recreational use? A. The one trip that I can remember off the top --

offhand, yes, that's what it was. Q. A. Q. one? A. No, I remember one. I'd have to consult the records You said you remember one trip? Yes. Do you remember any other trips, or was there just

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 36 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 36

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

to figure out whether there was anything else. Q. Is that information that you would have recorded in

your pilot log? A. Q. I may have. To the extent that you flew yourself to ORIX-related

business destinations, did you receive reimbursement from ORIX for your flying expenses? A. Q. A. No. And were they personal expenses? Well, if they were business expenses, I -- you know,

it's -- it would have been small enough, I wouldn't have bothered with it. Q. Am I correct in understanding, then, that you didn't

deduct or otherwise treat these on your personal tax return as business-related expenses? A. Q. Yes, you are. Okay. Did ORIX have a stated company policy on

reimbursement for employment-related travel expenses? A. Q. A. Q. Yes. And can you -- do you know what that policy is? No. To the extent that you flew the Mooney to ORIX'

destinations or for business at locations on behalf of ORIX, can you describe what type of activities that would entail? this for client meetings, for management or -Is

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 37 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 37

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A.

You know, I -- I felt okay kind of speculating that I feel a little less comfortable trying to

there were some.

define what they were, because I'm not -- without benefit of an examination of the record, you know, my flight logs, that's just a little too far. Q. Do you have flight logs from the Mooney in your

possession and control? A. Q. tomorrow? A. Q. A. Q. I could bring my logbook. Your logbook? Yeah. That would be -- we'd appreciate that. MR. REYNOLDS: MR. MALO: I thought I produced the logbook. Yes. Is that something you might be able to bring with you

The only logbook that I have relates It's a spreadsheet with --

to the period 2002 and 2003. MR. FRAHM: THE WITNESS: electronic. MR. FRAHM: THE WITNESS:

It's electronic as opposed to paper. Well, the whole thing is

The whole logbook is electronic? Yeah, 20-something years ago. I

mean, I've got the logbook -- the paper logbook with nothing more than the endorsements that are required to be handwritten. And then pasted into that are the electronic pages going -- I

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 38 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 38

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

think I converted it in -- 15 years ago, or something like that. MR. REYNOLDS: Well, I guess I've -- I hate to I

create more paperwork that's not related to the lawsuit. mean, I gave you the flight logs for the period that we're involved in the lawsuit, right? MR. MALO: Yes, sir. All right.

MR. REYNOLDS:

So now you're asking

the witness to bring other flight logs for other periods of time for what purpose? MR. MALO: Well, a number of questions that I'm

asking relate to the nature of the witness' use of aircraft, which is directly relevant to the issue at play in the years in question. MR. REYNOLDS: but I now hear you say that. Well, I don't agree with that, So I -- but I'm not happy about

having my witness go home tonight and pull out a bunch of documents for periods unrelated to the issues in the lawsuit, although I'm going to think about it. MR. MALO: Okay. But, I mean, do you need the kind

MR. REYNOLDS:

of specificity that you are seeking in the pilot logs, because I thought you were getting the witness' recollection of the uses of the airplane, and pinning it down flight by flight may not be necessary.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 39 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 39

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

MR. MALO:

Well, I'm -- I agree it's not However, the

necessary to pin things down flight by flight.

witness has responded a few times that he feels uncomfortable responding to some of these questions without the benefit of the flight log and that he would like to reference -- or could reference it as a resource to more completely respond to these inquiries. MR. REYNOLDS: Right. Well, I understand that.

And that's certainly understandable for the witness not to be able to recall flight by flight, but this has nothing to do with the witness. This has to do with my concern that we're

expanding this discovery into a lot of areas that is going to require homework by my client. And I'm not real sure that it's

relevant to our lawsuit, although I've heard what you've said. MR. MALO: Okay. So can you -- well, we'll go off

MR. REYNOLDS:

the record when you complete today -MR. MALO: We can discuss it off the record. -- and talk about what homework

MR. REYNOLDS:

I'm going to make my client do. MR. FRAHM: Certainly. Certainly. And maybe

Jeff and I can talk a little bit before our conversation with you. MR. REYNOLDS: Q. (BY MR. MALO) Okay. That's fine.

And prior to the inception of Mountain

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 40 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 40

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Air Charter, did you ever fly ORIX' personnel for profit? A. Q. A. No. Or loss.

And what do you mean by that? Well, literally your question was, did I ever make a And I'm just saying no, nor did I ever do it

profit doing it. and make a loss. Q. A.

Because it wasn't a business activity? Well, because I never flew for revenue. I didn't

have a 135 certificate. Q. Right. So to the extent you flew any ORIX' personnel

it -- there was no profit or loss equation? A. Q. There was no revenue whatsoever. Correct. Aside from ORIX' personnel, did you ever

fly other passengers to destinations of their choosing? A. Q. I don't think so. So to the extent that you flew any passengers in the

Mooney, you flew them to destinations that were consistent with your stated objective, your stated destination? you in your travel? A. Q. I think so. Would you feel comfortable providing an estimate of They joined

the percentage of time that you used the Mooney for personal use versus business use? A. Q. Yes. And how would you break down that percentage?

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 41 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 41

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A.

Very high 90s personal use.

If there were a dozen

uses over five years of business use, I wouldn't be shocked, but I'd be surprised. Q. Would you ever use the aircraft, this -- the Mooney I

referred to, for other -- well, I guess this was prior to owning the hay and donkey farm, for example, so you probably would not have used the Mooney for the hay and donkey farm; is that correct? A. That's correct. MR. MALO: with exhibits. Okay. Let's spend some time here

I'd like to mark this Exhibit 9. (Exhibit No. 9 was marked)

Q. document? A. Q. A. Q. A. Q. A. Q. A. Q. A.

(BY MR. MALO)

Mr. Thompson, can you identify this

How would you like me to identify it? Do you know what it is? It looks like it's a response to interrogatories. Have you seen this before? I may have. Did you prepare this document? Did I prepare it personally? Yes. No. Do you know who did prepare this document? Either counsel or tax people.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 42 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 42

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q.

Can you specify what you mean by "either counsel or

tax people"? A. Well, it could have been his -- I mean, it looks like

it's been cut and paste -- cut and pasted from the master Mountain Air Charter log, with some exceptions. So, I mean, it

could have been counsel, it could have been Paul Wilson, it could have been Andy Lasner (phonetic). Q. A. Q. A. Okay. I'm not sure who did the cutting and pasting. Okay. But you recognize the document?

I didn't recognize -- I don't recognize the header,

but I recognize this stuff -- or this material, yes. Q. A. Q. You recognize the data? Yes, I do. And can you express an opinion as to whether or not

this is a true and accurate statement of flight log data maintained by Mountain Air? A. I believe it is. MR. REYNOLDS: We'll have a subject of scrivener

error exception if anybody discovers anything. MR. MALO: Understood. But we believe it to be a fair

MR. REYNOLDS:

and accurate answer to your interrogatory. MR. MALO: I'd like to identify the following as

Exhibit Number 9 -- I'm sorry, 10.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 43 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 43

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

(Exhibit No. 10 was marked) Q. document? A. Q. A. Yes. What is it? It is a business overview for a period running from (BY MR. MALO) Mr. Thompson, can you identify this

inception, roughly 2000 -- or early part of 2002 through the end of 2004. Q. A. Do you know who prepared this document? I did quite a bit of it. I think it was edited by --

it may have been edited by Paul Wilson. Q. But it appears to be a fair and accurate

representation of the document that you recall from the time? A. Yes. MR. MALO: I'd like to mark this as Exhibit 11.

(Exhibit No. 11 was marked) Q. document? A. Q. A. Yes. And what is it? It's a statement of assets, liabilities, and member (BY MR. MALO) Mr. Thompson, can you identify this

equity income tax basis for Mountain Air Charter, LLC. MR. MALO: Off the record.

(Break taken from 5:02 p.m. to 5:03 p.m.) Q. (BY MR. MALO) Mr. Thompson, can we, for the sake of

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 44 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 44

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

convenience, refer to these as financial statements? A. Q. Yes, that's fine with me. And did these financial statements refer to the

operations of Mountain Air Charter, LLC for the period -periods ending December 2002 through December 2005? A. Yes. MR. MALO: Exhibit 12. (Exhibit No. 12 was marked) THE WITNESS: MR. REYNOLDS: THE WITNESS: MR. REYNOLDS: addition to the one we marked? THE WITNESS: somehow. I'm giving it back. MR. MALO: Number 9? THE REPORTER: MR. MALO: No, I don't. Do -- do you have an Exhibit I don't know. I ended up with it That's a duplicate of -What is this, Jim? That's a duplicate of 9. Did you give the witness one in And I'd like to mark the following as

You don't? It's right here (indicating). Yeah, we may just have an

THE REPORTER: MR. MALO: extra copy on the table. Q. document?

Okay.

(BY MR. MALO) Mr. Thompson, can you identify this

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 45 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 45

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. else.

It's a -- well, let me make sure there's nothing But it looks like the 2002 partnership return for

Mountain Air Charter. Q. Does it appear to be a fair and accurate

representation of that return? A. Yes. MR. MALO: Please mark the following Exhibit 13.

(Exhibit No. 13 was marked) Q. document? A. Q. 2003 return for Mountain Air Charter. Does it appear to be a fair and accurate (BY MR. MALO) Mr. Thompson, can you identify this

representation of that return? A. Yes. I'm sorry. I'm just checking to make sure all

the pages are here. Q. A. Certainly. Yes. MR. MALO: Mark this as Exhibit 14. Take your time.

(Exhibit No. 14 was marked) Q. document? A. Q. It is my personal 2002 return. And does it appear to be a fair and accurate (BY MR. MALO) Mr. Thompson, can you identify this

representation of that return? A. Yes.

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 46 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 46

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

MR. MALO:

Identify the following as Exhibit 15.

(Exhibit No. 15 was marked) Q. document? A. Q. It is my personal 2003 return. And, again, does it appear to be a true and accurate (BY MR. MALO) Mr. Thompson, can you identify this

copy of your 2003 return? A. Yes, except for the blank pages at the end, but -MR. MALO: We can discard those. Okay. Oh, they -- yeah, just

THE WITNESS: looks like copy machine. MR. MALO: Exhibit 16.

Yeah.

Mark the following as

(Exhibit No. 16 was marked) Q. documents? A. Q. A. Yes. And what are they? This is a bill from E&Y relating to Mountain Air (BY MR. MALO) Mr. Thompson, can you identify these

Charter from 2002. Q. bill? A. Yes. MR. MALO: Please mark the following Exhibit 17. Does it appear to be a true and accurate copy of the

(Exhibit No. 17 was marked)

Esquire Deposition Services

1700 Pacific Avenue Suite 4750

Dallas, Texas

75201

214.257.1436

1.800.852.9737

214.965.9205

7fbb0d73-2cf3-4273-a5d5-5e266ff96f63

Case 1:06-cv-00211-VJW

Document 30-2

Filed 06/11/2007

Page 47 of 54

James R. Thompson, Vol. I

April 23, 2007
Page 47

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q. document? A.

(BY MR. MALO)

Mr. Thompson, can you identify this

This is the policy for the PC-12 -- well, the cover This looks like the 2003 policy. Wait a

letter is misleading. minute.

Well, they're different -- there's a number of I'm not -- I'm not sure how you want

different things in here. to manage that. Q.

When you say "there's a number of different things in

here," what do you mean by that? A. Well, for example, there's a certificate of insurance

here for Hanks Corporate Maintenance for the $5 million combined single limit. There -- there's a cover page from 200