Free Appendix - District Court of Delaware - Delaware

Case 1:04-cv-01565-SLR

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Crowley - Cross/Levy 8
1

MR. BRESSLER: We do not for Judge Adams. I think

2 you've made your call, Judge?
3

MR. LEVY: I think I can be more effective with a

4 little time. Can we take a short lunch break?

5 THE COURT: Well, do you want to take a short lunch
6 break then, and come back at quarter of one.

7 MR. LEVY: Thank you.
8 THE COURT: All right, we'll stand adjourned.

9 (Luncheon recess)

10 THE COURT: You mäy.

11 CROSS EXN1INATION

.)

P BY MR. LEVY:

13 Q Mr. Crowley, a few moments ago you told Judge Walrath tha14 your salaiy was $650,000; j-s that ri_ght?

15 A Yes.
16 Q
And that you never ~ecetved a raise; is that right?
(No verbal respon8e)

17 J'.
18 Q
19 A

Over the three years you'vc been at Coram.

Yes.

20 Q

Equi ty Exhibit -- Equi ty Cü~ni ttee Exhibit 12 is a W-2

7.1 earnings summary for the year 2002 for Daniel D. Crowley. Tha
2? says your wages, tips and other comp during 2002 were not

23 650,000 but were $921,298.08, correct?

It

24 1\
25 Q

It misrcprGsents what my waqes were, sir.

I'rn sorry?

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o

1 A

It misrepresents what my wages were, sir.

My ba8e salary
i

2 was 650,000.

I received gross-ups for corporate facilities inl

3 which I resided when I'm in Denver and life insurance and othe

4 emoluments that go to the total. My base salary is 650.
5 publicly available and known.

It's

6 Q It costs coram $921,00 for 2002 to have you around,

7 co.erect, si.t"?

8 A Health insurance, life insurance, dental, vision,
9 pharmacy, corporate faciJities, travel. This is what it says.

Thank you. Now, in May of 2002 you had a face-Lo-face 11 meeting with Stephen Feinberg of Cerberus, correct?
10 Q

)

12 A
13 Q

Yes.
The reason you had the meeting is because you thought

14 Cerebus owed you a lot of money, right?

15 A
16 Q

CercbÜs OliVes me a lot of money, sir.

At that ti,me you thought iL was mOre than $10 mi llion,

17 right?
18 A
Testified too that I didn't know what the amount was. I

19 was trying to ascertain it, but L have a belief tha Lit' s 20 significant.
21 Q
Between ten and fifteen million, is that what your belief

22 was when you went to New York to meet with Mr. Feinberg?

.

23 A

It's significant. I have never been able to receive the

24 information that would allow me to know for certain what it is

25 Q

But you think it's more than 10 mi l.lion, corrcct?

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I

8 ~

1 A

I believe it' s more than 10 million.

2 Q Now you tried to discuss this on the telephone with
3 Feinberg, and 'loll told him YOll Vlanted a number, correct?

4 A I had been asking Mr. Feinberg to pay me -5 Q Sir, can YOLl answer that yes or no'?

6 A 1'd like to put it in context.
7

THE COURT: Woll, first answer the question.

8.

THE WITNESS: Ask iL again, please?

9 BY MR. LEVY:

10 Q

You tried to discuss it on the phone with him and told hi

11 you wanted a number.

)

12 A
13 Q

Yes.
He's told you he djdn't want to give you il number on the

14 phone, right?
15 A
J6Q

Yes.
He said he wanted to see you eyeball, face-to-face.
He wished to discuss it in person.

17 A
18 Q

He told you he didn't owe you any money when you got to

19 New York, right?

20 A

He had no proposal. He Lold me he thought I was not due

21 anythinq.
22 Q
But he did say at that same time that if you weren't

.

23 associated with Coram you could go right back to work for

21 Cerberus if you wanted to, eJldn't he?
25 A
What he said was that ir in the future it became

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Crowley - Cross/Levy 8
1 appropriate, and I was no longer affiliated with Coram and I
2 wished to return to Cerberus, that I may.

3 Q And you told him at that meeting you'd take S5 millic,n
4 even though you thought he owed you ten or fifteen million,

5 right:.?

6 A What J said was I believe that I'm owed significant
7 monies. We tal ked about the deal s that I believed that relat d

8 to those significant monies, that if we could get the thing
9 settled, I'd been trying for two and a half years, that night I
10 would accept $5 million and call jt a ddY and move on.

11 Q

And you also told him thdt if Judge Walrath decides that

..

12 Coram -- strike that, please.

13 You also told him that if Judge Adams decides that Coram
14 should pay you something under the NIP you wanted him to be

15 supportive, r-iqht? Whò.t I said 'tJas 16 A
17 18
i 9

Q

Can

Y01J

ansvier

that yes

O:L

no'?

A
Q A

Yes.
And he
He

said he would be supportive, right?
viha teve.r

20

said speci.fically that

\..as done would

be wi

h

21 full aw~reneS8 of the Trustee, in full public vi.ew in front f

22 Judge Walrath _ He would be supportive to the extent that th

.

23 Trustee made a decision to pay me something.

21 Q

Since that dinner in May you're pretty sure you' vc talk d

25 to Feinberg, right?

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8l

1 A

I have talked to Feinberg.

2 Q But you don't know how ToaDY t imes.

3 A A number of occasions.

4 Q And you don' t know whether in ~ny of those conversations
5 you talked to him abo~t the money that you claim is due to yo

6 from him, riglìt?
7 A I'm certain on

"some of those occasions I did. I don't

8 recall.
9 Q
So, you \..ent to the meetinq.

You expected a proposal r y U

10 expected a number, and thE:re vias none, right'?

.

11 JI,

I answered that, yes.

12 Q

And you came away from the meeting disappointed?
I wonde~ed why I was asked to come to New Yor.k to recei e
i

13 A

14 a proposal if the proposal waS nothinq.

15 Q

Five days after the iueettng YOll sat down at your computer

16 and you typed a document relating to that meeting, correct?
17 18
A
Q

I wrote
Can you

a

draft. ans\'ier that yes
you wrote

or no?

19

A Q

Yes.
And

20

the draft

--

do you have

the documents

u

21 there, Mr. Crowley?

22 A

Yes, I do.

.
I

23 Q

Will you look at 8C-8, please? The draft you wrote, Lie

24 first t"iü pages of EC-8, the on0.S that have Sa tes numbers C x-

25 63 and 64, correct?

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1 A
2 Q

Yes -

And in that draft you wrote -- the very next to the last .
no, the very last thing you wrote was, "1

3 thing you wrote

4 just wanted you to know how I am feeling on this purticular
5 day, rr correct?

6 A Thüse a-i-e the words. 7 Q And that is how you felt on that particular day, correct?

8 A Of Çourse I testifj_ed for hours with you in the depositi n
9 and told you this was --

10 Q Excuse me. The judge was not at the deposition. Could
11 you just answer my question, please?

~

12 A No.
13 Q That' s not how you fal t on that. day'?

14 A It':3 out of context.
15 Q
16 p,,
17

How is it out üf context r Mr. Crowley?

Mr. Levy, 1 see IIOW you would like to characterize it, bit

this was pa__ct of my life has been -- I write something dmvn,

18 19

think about it the next day. In this case 1 wrote something
down, the first two pages.

sent it to my attorney. I re-

20 crafted it the next day. 1 was ready to send that.

sent

21 that to my attorney- Neither one of these letters went beyo d

22 me to my attorney. I haven' t seen this thing in darn near a
23 year until my attorney showed it to me again a week ago-

24 Q

Well, you talked to your attorney about it -- let's see,

1&

25 this is May 6th. You tell -- you went it to Mr. Schreiber,

I
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1 looks like from the fax mL\.r:ks on ¡"Jay 6, correct?

9

2 A I sent to Hr. Schreiber. I aclnÜ tit.
3 Q And you talked to him about it almost immediately
1 thereafter, didn't you?
5
.n.

I don' t know that.
You deny that, sir?
I don't. know if I talked La him immediately thereafter.

6
7
8

Q
A
Q

You talked to him shortly thereafter.
I talked to him thereafter.

9

A
Q

10
11

About this document.

A
Q

About this document
And that was pay before I took you r deposition last week.

~

12

13
14

A
Q

I talked Lo him about this document in May 2002, yes.
No"" in this document, t he port ion you wrote, OIl Page 2

15 beginning in the second paragraph, some rather -- some
16 complai.nts about the job that David Friedman did and after

17 complaining you said, "I dido'L have to recite the answers tha
18 Friedman gi1ve me t.o say in court." Did you wrote that'?

19 p., Yes, I wrote thaL.

7.0 Q Did you rnøan it when you said it?

21 A Absolutely not. I told you that.
22 Q
You wrote it but didn't mean it, absolutely.

;n A

Again, this was a melodrama, a noontime drama. I wrote

lI

24 what :r felt vias -- that David Frj admari could have done a whol

25 lot better job and didn't do as well as he could have. There

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91

1 was significant evidence he could have presented

di fter-ent

2 ",iays he could have handled this case to supply Your Donor with
3 the information that you have, 1,635 pages of it that had he

4 done that, we may have had a diffE,rent decision. J--nd I don't

:s think t_hat he did do that.
6 Q He did hand you a list of questions and anSwers before yo 1
7 took the stand last December, didn't he?

B A He gave me a list of quest ions and probable answers and
9

a s ked me t.o

read them over and
of
my

',.iC

1tlOlild

discusó;

it.

I

10

testified to the best
recite -I couldn ( t

11

ability the tnitli. I did noL reci te OL' wouldn't recite anythÜig that

,~

12 anybody gave me.
13
L gave my own answerS.

14 Q

Can you give me any explanation then of why you chose

J
i

15 word "i__eel te" iii here?
16 A
Here's a letter that's a year old. I was completely

17 sidev¡ays because I'm calling c'einberg saying, "I want to be

18 paid, for '99, 2000, 2001. Yoü and I know what the deals are.

19

"Send them to Bob Gadigan."

20
21

1 sent him a list. I said, "Where are we?"
He said, "Send them to 80b Gadlgan."
J said, "I did."

22

-

23
24

He said, "Send them again."

ni think I'm due a lot ot money."
"What do you think you'r8 due?

25

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Crowley - Cross/Levy
i i

1

"A lot."

" ¿
3

"You have to give me. the source dolt-a."
"What do you think I'm due?"

I i I I

4 "I don' t know."

5 "Steve, wlìat. -- I think I'm due something. J'd like to e
6 paid."

7 He pushed me off in '9B, in 2000 and 2001. The contract
8 was dead. I'm not taking anything from ¡Üm, I'm simply askin
9 for ,,¡hat I'm due.

10 I asked for proposals, I didn' t get it, he drags me to N w
lJ York for a proposal that he gives me is -- there is none. many letters that l ve
12 This letter is, you know, not in my

e

13 written, when I sit them on the side of my desk it':3 Draft 01 c

14 of two drafts. You don't show me Draft Two, but there is Dr ft
15 Two that I was willing to sign my name to that says, "I'm 16 putting whatever jt is in here in front of Judge Walrath and

1-1 he Un i ted S ta t esT Histee 2ìn d Judge .ß"dams. I'm happy to do iv,

18 and if they say no, then nO it is." 19 But you'ra -- I did not recite anythinq DavÜI Friedman
20 provided to ine.
21 Q
22
i¡lhy
,

Is that, sir, your complete explanation to my question of

you chose

the word "recite"?

. .

23 A
24
Q

I ch 0 s e
Can
yOlo)

the word
answer

"reei teN

-no?

that yes or

25 A

I have no

idea.

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9

1 Q

Okay, thank YOIl.

2 Let's go now to the next paragraph which says -- you wrot
3 on your computer, "I suppose if I had been more trusting,

4 maybe, paren, maybe I would not have written the memO about
5 trying to get upside on your position if I did a great 10b at
(- Coram. 11

7 See that, sir?
8 A Ye~.

9 Q Nmv, would you look at EC-9.
10 A
11 Q
Yes -

And I'm sure you'll recall that that document that was

~

12 marked in evidence at the hearing, that document which is dated

13 November 12th, 1999 was marked in evidence at the hearing haa d
14

iri this courtroom in December of 2000.

Remember tlia t?

I ; i i 1 I I

15 A

Yes, I òo.

16 Q And do you remember that you denied at that t ille t:hrlT F: ..
17
18

9, then EC-20 indicated an intention n indicated an int:~t~:,11
to get. upside on the position if I did a great job at Coram-?

19 l\

You know, my testimony's in the court as to this pre-

20 employment letter to which \ve did not agree. T don't know wh t
21 else to say.

7. Q

Well, why did YOU tell Mr. Friedman, that you -- quote -~
I

.
L

23

I'm sorry,

you dido't tell that to Mr. Friedman.

24 Why did you write in this letter, quote, "1 would not ha e
25 written the memo about trying to gel upside on your position. 11

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9

1 A

Well, this is not a letter. Thj s is draft one or two

2 drafts of material I sent simply to my lawyer that never went 3 to anybody.

4 Q I'll correct the -- 1'11 correct that -5 A I thought -6 Q What -- I'm not sure I see the importance, but why did yo
7 write in this draft, "I would not have written the memo about

8 trying to get upside on your position if I did a great job at.
9 Coram"?

10 A

I think what I'm saying

you know, I don't know.

I jus_"

11 didnft trust the man, I guess.

-i

12

Q You do agree, by

the way, don't you, that the reference

13
14

here in this document that we're looking at, EC-B, is a

reference to EC-9, the older document? No question j n your
I

15 !lÜnd about tliat; is there?

16 A No.
17 Q Now, let's look at the next page, CRX-65. And we have 18 we agree, ~onr t we, that this was written by Mr. Scott

19 Sch r,:eiber'?

20 A 21 Q

This was written by Scott Schreiber.

i!l.id that that's iiis handwritinq wherè it says "insert"?
I believe it is.

22 A

.
L

23 Q 24 A

And Mr. Schroiber was your lawyer?
He is my lawyer.

25 Q

Was and is your lawyer.

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1
') /.

9

A
Q

Yes.

Was on May 6Lh, 2002.
Yes.
And there's no doubt in your -- now, Mr. Schreiber writes
CRX-65, "Hence, I expect that you'

3
4

A
Q

5

iri

11 honor the commitment

6 that you made to me over dinner." You see that?

7 II Yes.

8 Q Do you have any idea where Mr. Schreiber could have gotte
9 information suggesting that Feinberg made a commitment to you
10 over dinner other than from you?

11 A

I never saw this document, Mr. Levy.

~

12 Q Can you answer that? My question is, do you have any
13 idea?

14 A
15 Q

No.

Do you have any idea where Mr. Schreiber could have gotte i

16 Lhe idea that the commitment specifically was that Corum's pIa
17 is confirmed -- j f Coram's plan i:; coni irmed or its assets

18 sold, you'd be reinstated with Cerebus and receive $5 million?

19 A 20 Q

I --

Yes or no, do you have any idea?

21 A
22 Q

No.

Good.
MR. KIPNES: Move to strike, Your Honor.

.

23 24 25

MR. LEVY; I
THE COURT: Sustained.

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1

9J

MR. LEVY: Okay. 1 withdraw it.
BY ('1R. LEVY:

2 3
4

Q And I assume you had no idea of any source of inforrnati.on
that Mr. Schreiber might have had that you had received a
commi tment from Mr. Feinbe:rg that Ccrebus viouid indemn:i fy you

5 6

for legal fees f correcl?

7 A No, because they haven't.
8 Q And finalJ y f perhaps most importüntly, do you h21 ve an ide
9 where Mr. Schreiber could have gotten information that would
i-o lead him to write that you had a commitment from Mr. Feinberg

11 to pay you the difference between what you ultimately received

~

12 from Coram by way of bonuses and $11,200, aDO?

13 1\

None at al lAnd do you n~cognize $11;200,000 as a number that you once

i4Q

15 perhaps toJ_d Judge Adams was the amount you thought was due

16

from Cerebus?

i-

lI Il is not.
Judge Adams was wrong?

18 Q

19 A It's not a nuniber that I provided. The numbers arB
7.0 public, they're available in every form of SEe document.

21 They've been testified in court, you've subpoenaed them, I've
22 provided them to the office of t.he TL"ustee, the current numbe

. L

23 is almost i--rnillion.~9. Back then it was 1S-million-7. This

24 number represent.s nothìrig I ~iould know.
25 MR. KIPNES: Your Honor, for the purpose of the

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Crowl_BY - Cross/Levy

91

1 record, Mr. Levy said owed by Cerberus.
2

THE COURT: All rIght, just to clarify, it's owed

by'

3 Coram is whilt you're question -4

MR. LEVY: It is, and I thank you.

5

THE COURT: All right.

6 BY MR. LEVY:
7 Q Now, the next letter,

the n8xt communication, the next

8 draft if you like, is EC-IO, a May 8th, 2002 document with

9 number 71

CRX-71, 2 and 3 on it; is that correcL-?

10 A
11 Q

Yes.

Something you wrote.
Yes.
And this one you signed.

.j

12 A
13 Q 14 A
15 Q

Yes.

And you wrote, "Dear Steve," and you wrote Steve in,

16 correct?
1" A
1.8 Q

That's my handwriting.

Right, and just exactly the same way, if you look back a

19

EC-9, the 1999 document,

same way you wrote, "Dear Steve, n /

20 right? 'l'he first two pages of the pri.or equHy commit.tee are a 21 A
22 draft thilt I wrote, first two pages, the memo that' 5 dated Ma

.

23 8th that' s ~c-io i wrote and I signed, both of them were

24 drafts, neither of them were sent. They both went to my
25 attorney and nowhere else.

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1 Q And with respect to EC-IO, the May 8th letter, you did
2 discuss that letter with Mr. Schreiber some time in May,

3 correct?
'1 l- I must_ have. I don' t recall ì. t.

5 Q And do you look specifically now at EC-J 0, and
6 specifically on the last page in the third paragraph from the
~ bottom, about the middle, you say, "Stever I am also anxi,ous

8 that unforeseen events sometimeS overtake good intentions. yot
9 could get hit by a bus and be gone. Cersbus would get bought

10 out or whatever. The point is that then I would be left with

11 nothing. Now, that's not right or fair, is it?H

~

12 You see that?
13 A

Yes.

14 Q And YOll wrote that.

15 A Yes, I "irote that.
J 6 Q Now, why would it be unfair to you? Mr. Feinberg wouldn't
17 like it, but why would it be unfair La you if he was hit by a

18 bus and VJas gone? I
19 A Well, in December of 2001 I received my last payment fro 1

7.0 th:L.s guy. I've asked him to pay me for '99, 2000, 2001. I
21 have tried more ways than I know how to terminate this contra.t
22 and be paid up front, in the public, in front of Your Bonor 0_'

.

23 anyone what I'm doing for what? Nothing for Coram. Never

24 asked. Don't expect. Not going to accept. Nothing relates 0
25 Coram.

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J

i

I'm saying to this man, "You know that, and I know that,

2 how about let's just get this over and be done with it and put
:3 it on public? l' m okay with that."

4 There isn't any conspiracy. Let's get it ov~r wi th. He' . 5 saying, "Good, let's do that. Let' 5 put it in front of
6 everybody."

7 And I'm saying, "fine. What's the number'?"
8 We're going bnck and forth, and I believe that the man
9 he's a terrific businessman. He' 5 playing hide the ball. I

10 don't know why or what's going on here, but I would just like
11 it over.

~

12 Lord knows, you've accused me of everything under the sw (
13 Mr. Levy, and it's not true. So, I'm left to this guy saying,

14 I'll pay you." What? When'? For what? I'd like to be done

15 with it.
16 Here's what for, here's how much, h~re' 5 the
17 doculr(3ntalion, do it. That's alll'm saying. That's vJhat 'ch s
18 let tar says.

1 didn'l send it, though. Cooled down and thre

19 it jn the circular file, the trash.

20 Q
21
22

Mr. Crowley, your claim is not

for all his money you' e

.

23
24

talking about was not against teinbe.cq personally; it \..as against CerberLls, wasn't it? In many \.¡ays Steve's the prj,ncipal there. A You have -- still have -- or there js a wr it ten contrac Q

25 between you and Cerberus, correct?

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J

1 A

Sur-e, and it':"

~ Q And it's that contract that defines the rights you think
3 you have for certain upsides; isn't that right?

4 A That's right.
5 Q Well, then why -- and presumably Cerberus has records of
6 what those upsides were, though you' va neve~ seen them, right?

7 A 1'd like toO.
8 Q Okay, then why is Mr. Feinberg's being gone going to
9 affect your right -- will leave you with nothing?

10 A

I must have come. to the same conclusion as you, 'cause J

11 threw the letter away and never sent it to him. I thought thib

.)

12 was attorney-client privilege, 'cause it v1ent from me to my

13 lawyer to the trash. But here I gue8s I'm testifying.
11 Q
15 16
Equity Committee Exhibit --

THE COURT: Thi rteen,

MR. LEVY: Thi rtecn, thank you, Your Honor.

17 BY MR. LEVY:

18 Q

__ is i. document- bearina iiumbers CH.X-486 and 487 dated
( think you'

19 Jl.pri1 Jst, 2002.

va testified you prepared this

20 document?

21 A
22 Q

I did testify that.

And it reflected your intentions as to what you wou ld 1i"8

ie
i

23 to see in the termination i:igreement on or about the date you

24 wrote it?
25 A
Again, I --

L

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1
2 3
1
Q A Q

102

Yes or no, sir?

Generally.
And in the

one, two, three, four, five, six paragraph

5

MR. KIPNES: Could you identify the document for: the

6 record, please'?

7 MR. LEVY: I t_hought .L did. CRX 486 and 487. It's
B document dated April 1st, 2002 the witness has identified as
9 something he prepared.
10

Okay?

11 BY MR. LEVY:

~

12 Q On that date you were a8king Cerberus, its principals and
13 affiliates to indcmni. fy you from litigation current-ly being

14 threatened by the Equity Con~ittee of Coram Healthcare

J 5 Corpoi:ation( correct?
16
17
18

l'1R. GODNICl\: Your Honor, Objecti.on.

MR. KIPNES: Object to the question.
MR. GODNICK: 1'11 go to the microphone. Thank you.

19 Objection. I dori't t.hink there's any foundation that in fact
20 this letter was sent, and therefore, the question assumes tha ,
21 j n fact, Mr. Crowley was asking Cerebus for something.

22 Therefore, the question has no foundation.

.

23

MR. LF;VY: 1'11 wi lhdrai,¡.

24 BY MR. LEVY:

25 Q

It was your state of mind, sir, on April 1st that you

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Ii !i I I

.

Crowley - Cross/Levy
1

101

believed that Cerberus, its principals and affiliates should

2 indemnify YOll 2ìgainst derivative litigation currently beinq

3 threatened by the Equity Commit tee, correct?

4 A My stat.e of mind -5 Q Yes.
6 A -- was my lawyer, Scott Traver, waS going to be
7 negotiating with Cerberus and thesc were some ideas as to what

8 elements he should decide ought to be included. Ultimately l

9 suggesting to my lawycr take a look at these things.

10 NOv.I, this document, of course, is not on letterhead, it's
11 not signed by me, and it was sent by myself to my attorney and

~

12 never went to anybody.

13 Q

And you other than for the purpose of telling your

14 attorney what you desired him to negoLiate on your behalf,
15 including thiE; indemnity against the r:quity Committee, proposc

16 derivate suit, correct?

i 7 fl,
18 Q
.19 A

Of course, I' il not a lawyer.
Yes or. no?
1'm not a lawyer. This is me writing to my attorney

20 giving him suggestions as to what areas I might be interested

21 in.
22 Q
EquJty Committee E;xhibit 14, also identified as Cr-owley

.

23 405, is a one-page letter marked personal and confidential
24 dated August 20th, 2002 from Mr. Crowley to Mr. Feinberg.

25 A

Thank you.

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!I

-

i

Crowley - Cross/Levy
1 2
3
4

10~
I

Q

Mr. Crowley, you wrote that lotter on about August 20th,

200n
Po.

I

~fes ,

Q

And you sent it to Mr. Feinberg?
Yes i

5

A
Q

6

And as late as August of 2002 you were askinq -- and in

7 fact, you were saying he should reasonably agree that you were¡
8 eligible to receive payments for termination witho\.it caus8 tha.
9 ",'ould include payments for the months that have gone Lmpa id j.n

10 2002, plus one additionaJ year for severance, right?

11 Yes or no, r.ight:

~

12 A
13 Q

It's not a yes or no.

Okay.
The fact is that the contract says that if I'm released
i

14 Q

1!) withoLit caUE:e there's a liquidatedclamage section that says I'lm
¡

16 due certain amounts of money. This is what I thought I was dJe I
i

17 under the termination without clause section. This is not
18 about paying me for services rendered in 2002. This is about
19 the contract's dead, we've ended it, I'm not going 2nything t

/.0

create

ups ide

for you.

I'm noL being

paid, I'm not going to

e

21
22

paid, but we're terminatinÇj the cont riJct, ending it. I'm seeking to receive ti.IO things from Mr. Fei.nberg.

an

.

23 15 payment for the deals I wor.ked on, not Coram, and the othe ,-

24 i s we terminated the cont ract without cause. I thj nk I'm 25 thinking, J'm not an attorney, b0t J can read, and it says th' s

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.

Crowley - Cross/Levy 10
1 section under "wi thüut cause," and that's what I thought it
2 was.

3 That's what I wrote.

4 Q Did you have your attorney look at this before you sent

5 it?
6 A I don' t know.

7 Q And these payments for the months, I take it, were
8 payments at the rate of $80, OOO? Yes or nOT sir-?

9 A They were at $80,000, yes. 10 Q Equity Committee 14 is a letter dated September 20th, 200
11 signed--

~

12

THE COURT: No, it isn't. Equity Committee iS?

13

MR. LEVY: I have 14. Maybe I'm not reading your

11 handwriting.
15

Equity Committee 15, letter signed by Scott Schreibe

16 sent to Cerbcrus dated September 20th, 2002.

i 7 THE COORT: Thank you.
18 BY fvlR. LEVY:

19 Q The exhibit in front of you, sir, Equity ComnÜttee 1:" I
20 believe, did you authorize Mr. Schreiber Lo send that letter
21 terminating your agreement?

22 A

1 did.

.

23 Q And I note that you reserved all your rights under the
24 agreement with Cerberus including but not limited to those sc
25 forth in the agreement?

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io~
.1

1 A That's \",hat the la,,¡yer wrote. 2 Q That means you reserve the right to sue Cerberus.

3 A I believe that is an element and an alternative that is
Ii available to TI18.

!

I i

5 Q Now, during all this time you were doing what I think you6 call pro bono work for Cerberus, correct?

7 A I~8 Q All this time being the year 2000 up to the date that you
9 terminated.
1 (1 1\

Yes.
MR. KII?NES:

11

2002.

~

12 BY MR. LSVY:

13 Q
1.4 A

2002 up to the date you terminated.

Yes, in 2002, that's right.
Why were you doing favors for Peinberq and Cerberus afte

15 Q

16 all this frustration, their refusal to pay you this large sum

17 of money?

18 A

1he work that I'm in, what I liked doing, I like working

19 on deals. I -- it was mindful of Judge Adams' instruction.

20 The work I did in 2002 had nothing to do with Coram. It didn t
21 -- it took 15, 20 hours in total out of the two or:- 3, 000 hour:
22 I put in fOJ: Coram.

I didn't get paid anything for it.

I --

.

23 if you called me from TPC and asked me to take a look at

24 something I would do it. Why? Because it mi.ght be a custome 25 of mine one way. Madison Dearborn called, Liberty Partners

, .."__~.~.,~~', :_.:....;.':..,~'~.:~-'. " ';'_~';_.~~_',-~ -:t:i''

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"'

.

Crowley - Cross/Levy
1 cal 1 -- if you called, Mr. Levy, and asked me to look at

10 :

2 something, Bank of Amerj.ca. Lots of people do.
3
4

I take a look

at it, and if I \"rite one sentence saying, "Thi.s lookiò' like

it's worth looking at," I don' t view that as the kind of due

5
tî

diligence that I was doing in the many other deals before,

arranqing accountants and lawyers and advisors and researching'
putting due diligence teams on the

7
8 9

in the company, meeting

wi th management, understanding the corporation.

I didn't do that kind of work in 2002. Why I did it --

10 Peter Lockett at Cerberus, maybe one day he's at Sor05

11 (phonetic) and we're working together. He says, "Would you

-t

12 look at t.his as a favor?" I takes fifteen minutes. I looked

13 at it.
14 "What do you think?" "Look8 like junk to me. i woùldii' t
15 pursue it." "Looks okay, why don't you pursue it?"

16 Q But you had already told Mr. t'einberg that you would
17 go back to work for Cerberus; isn't that true?

18 A I think you've mischaracterized me for whatever intentio 19 you have. What I've said was 1 don't think we'll ever work
20 together again. 1 don't see it. Milybe tt happens, but :i don't

21 seC it.

22 Q l'li.

.

23 A
24 Q

It's not been great.

Mr, Crowley, you testified in response to MR. Kipnes' 5

25 question as to why YOU'r8 still at Coram, it was a long unswe

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.

Crowley - Cross/Levy

1 but one of the things was your pride and your self-respect,

2 your desi~e to finish a job, correct?

:~1

3 A Well, one of the things was Judge Adams asked me. And
4 of the things is I would like to see it through.

oni

i

5 Q Let me ask you this, sir. If this Court presently denies
6 you the million-dollar bonus and the S80, 000 raise, will -- an

7 defers, let's say, for example, to the client hearing

8 confirmation as the United States Truste~ has suggested the 9 Court do, will your pride and self-respect keep you at the

10 company?
11
MR.

KIPNES:

Obj ee t

to the question.
an $80,000

~

12

THE COURT:
MR.

Overrule.

13

KIPNES:

First of all, it's not
I COJ:rect the:t.

raise,

14 Your Honor. One mis-statement of -15
MR.

LEVY:

16
17

TIlE COURT:
l'1R.

80,000 per montb.

KIPNE.S:

Sorry.
Mr. Levy, I

18

THE WITNESS:

think you've tortured

mC

0

19 death and ruined a fair part of my life. I've not been paid ,,¡hat I've 20 vi rtually anything by vid..ue of \-ihat. I've done,

21
22

earned.

I entered j_nto good

faith negotiations
We

vJÍLh

t.he

.

23

Chapter 11 trustee and his lawyers. December of 2002. I'm Ii ving up to

struck

a ba1:qain iri

my

end of the bar.gain. I

2-1 would expect the Trustee to -- he is -- try to live up to his

25 end of the bargain.

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I;

i

.

!

Crowley - Redirect

1 If Judge Wal raLh decides against that, then 1'11

decide ioi

2 what I want to do. I don't know \1hat. that is.
3
4
Q

Thanks a lot i l1r. Cr0\11c:y.
THE COUET:
MR.

Any

5 6
7
BY

KIPNES:

redirect? Very briefly,

Your Honor.

REDIR~CT EXANINATION

l'R.

KI PNES :

8 Q 1'-1.c. Crov.iley, would you turn to Equit,y COfrunittee-8'? E:quit.'
9 Committee 8.

10 A
11 Q

Yes, sir.
The exhibit you marked is Equit-y Committee 8, the May 6,

~

12 2002 draft.
13 A Yes.
14 Q

Would you turn to the third page.

Let's establish that Mr. Schr.eiber wrote those words,

15 correct?
16 A 17 Q 18 A
19 Q
He "/rote them.

When did you see them?
Last week M~. Schreiber showed them to me.

What did you say to MR. Schreiber when you read the five

20 lines that appear on U-ie third page of Equity Committee Exhib't

21 8?
22
A Q A
Q

i
A

.

23
24

verbatim response
you

it

not.

required.

-- really
Just what did

25

tell

li.irl?

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Crowley - Recross/Levy 11
J A
I was really angry. I -- this is bullshit. I'm sorry. I
2 apologize to the Court.

3 Q Did you have any conversation at that time wi th Mr.
4 Schreiber about the accuracy of what appears on that page?

.5 A I did.
6 Q And what did you say?

7 A This is absolutely wrong. It's not in context with that
8 meeting. None of this happened. Where in the hell did you ge
9 this? And why am I looking at -L a year later, an insert that
10
11

I've never seen before? What is this about?

Q Does Cerberus owe you any money in your view for any work
you have done at any time frrnn the date of your birth to now

~

12 13

that has anything to do with Coram?
Not a penny.

)4A
15 16
17

MR. KIPNES: No further questions.
R8CROSS ~XAMINAT ION
BY. MR. 1,EVY:

18

Q Perhaps I misunderstood you, Mr. Crowley.

I thought you

.
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.

Crowley - Recross/Levy 11
1 went. The next time I sawi t was Mr. Schreiber's calling me
2 saying, "I would like to talk to you about this draft letter 0

3 Nay 6 and i-ihatever the next date is ~ /I
4 And I said, "What letLcr? Fax it to me. Let me see it.

5 i want to see what that is. /I

6 He faxed it to me. I said, "Scott, I think this i9
7 attorney-çlient privilege. I only sent it to you. I .never
8 sent th8 darn thing."

9 And he said, "Oops. /I

10 And I said, "What is this insert? I don' t recall. /I I
11 said, "Where did that come from';' I don't remember it." I

)

12 said, "It's just out of context. IL's just wrong." That's th
13 nature of all of it.

14 Q

Sir, you answered when you first saw it. My question was

15 didn' t you discuss Page CRX-65 with Mr. Schreiber shortly afte

16 sometime in May of 2002?

17 A No.
18 Q
Let me mark as EC-16 a letter addressed to me dated

19 Pebruary 28th, 2003 last Pri.day from Mr. John H. Ward, an

20 attorney at Cellic~. (phonetic).
21
Have you seen th 1 5 letter before I just handed it to you?
A

?2
23

I think so.

Q

And Mr. Ward is one of your lawyers?
He's a colleague of Mr. Schreiber's.

e

21

A
Q

25

1'm sorry'?

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.

Crowley - Cross/Levy

iii
,i i i ;

1 A

He's a colleague of Mr. Schreiber's.

2 Q And would you -- I had asked Mr. Ward to un

redact certain

3 materials. There's a letter in which he indicates why he won'
4 unredact it, but theri he g08S on to say in the middle of the

5 second paragraph on the first page, "As you now know from the

6 deposition testimony, as well as from ~Ar. Valiusis' (phonetic)
7 telephone call to you before the deposition, the process was
8 that Mr. Crowley drafted Exhibit' 19 and sent it to Mr.
-,

9 Schreiber. Mr. Schreiber then marked it up and composed an
10 insert; however, he did not send any of these materials to
11 Crowley, but instead discussed the draft with Crowley. U

)

12

You see that?
I do.

13 A
14 Q

Mr. Crowley. Thank you.

15 Does that not indicate to you, sir, docs that not refresh
16 your recollection, sir, that you diSCllssed Page 65, which is

17 part of Exhibit 19, wiLh Mr. Schreiber?

1S A

You can characterìze this any way you wish. I'm teiiing

19 you I didn't discuss it with him. I don't remember, and I -20 I'm sending the letter to my lawyer that I don't see for

21 another year, that never went outsido Lhe office in court, so I

22 no.
23 Q But when you had Lhis conversation with him j n -- the one

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~

.

:1

Crowley - Further Redirect

111

1 idea that there was a commitment?"
2 3
4 5
A Q

Did you?
(No

verbal :i:esporise)
or no, did you?
badgered
me

Yes

A

You know, you' 'Ie

for two and

a

half years, so

6 I get a chance to ta ke a breath.

7 For the entirety of 2002 myself and my lawyers have been
8 trying to negotiate a termination and payment from Cex-berus.

9 did not discuss that insert with Scott Schreiber. I have no
10 recollection of it. It's flat wrong.

I re j ect it. I'm

11 absolutely on the record here wiLh something that was signed.

)

12 I didn't send it, but I signed it, saying whatever we do I'm

13 going to submit in court.

14 I'm not afraid of that. I'm open to that. Bring it on..
15 Q
16
Thank you, sir.

MR. L8VY: No more questions.
MR. KIPNES: Your Honor, if I may.
FURTHER REDIR8CT EXAMINATION

i18

19 BY MR. KI E?NES:

20 Q

Do you have EC-16 in front of you? That's the February

21 28th letter from Mr. Ward to Mr. Levy.

22 A

Yes.
Let's read together, Mr. Crowley. I'm in the middle of th

.

23 Q

24 second paragraph on the first page. "The process was that Mr.
25 Crowley" -- mis-spelled, "drafted Exhibit 19 and sent it to Mr.

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.

Crowley - Further Recross/Godni¿k
1 Schreiber. If Did I i'ead that correctly?

11j
¡

2 A I drafted it, SGnt it to Mr. Schreiber_
3 Q Nr. Schreiber then marked i.t up and composed the quote,
4 insert, close quote. Did I re~d that correctly?

5 A Yes.

6 Q However, he did not Bend any of these materials to 'i Crowley, but instead discussed the draft with Mr. Crowley. Di
8 I read that correctly?

9 A
10 Q

Yes.
Does it say that he discussed the insert with Mr. Crowley

1l in this letter, marked Equity Corrnittee Exhibit 16, sent by

;)

12 your lawyer -- one of your ) awycrs to Mr. Levy?

13 P.

It doesn' t s~y anything about the insert being di scussed

14 \ü th me.

15

MR. KIPNES; No further questions from the Trustee.
MR. CODNICK: Your

16
17

Hünor, vary briefly?
FURTHER RECROSS EXAMINATION

18 BY r.Ill. GODNICK:

19 Q

Mr. Crowley, with regard to EC-8 and EC-IO J think your

20 testimony is very clear ttiat these documents a re draft and

21 never were sent to Mr. Feinberg; is that correct?

22 A Yes.

.

23 Q

Okay, puttj ngaside the Lact that they weren't seli did

24 you ever discuss with Mr. Feinberg the fact that you had

25 prepared draft documents and were intending on sending them t

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.

Crowley - Further Recross/Godnick
1

11 .

him?
A
Q

2
.,

No.

J
4

Okay,

you never discusse.d EC-8 or 8C-IO with Mr. Feinberg
I

correct?

5 A Or anyone else, just Scott Schrej..ber.
6 Q Thank you very much.
7
8

THE COURT: All right, than you. You may step down.

THE WITNESS: Yes, ma' am.
MR. KIPNES: Your Honor, the Trustee would like to

9

10 mOve Trustee Exhibit 2 into evidence, please.

11

THE COURT:
(vIR.

Any obj ection?

~

12 13
14

LEVY:

And I would now

THE COURT:
MR. LEVY:

like to move the -Any objections to that? Oh, I'm sorry, I thought -- nO obj ection,

15 Your Honor.

16
17

THE COURT: All dght, it's admitted.
MR. LEVY: And I would now like to move into evidenc_

18 the documents on which you withheld a ruling earlier, the May.
19 6th letter and the May 8th letter.

20 21

THE COURT:
MR.

Exhjbit
No

EC-8 and 10.

Any

objections?

KI PNES:

obj ect ion, Your HonQr.

22

THE COURT:
MR.

They're admi t t.ed .
P:nd

.

23

LEVY:

did I mark elnything else?

And

also

24 EC-12 through 16 which were marked during this testimony.

25

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'I

--

Saracco - Direct
1

iij

MR _ KI PNES: No obj ection.

2
3
4

THE COURT: Admitted.
UNIDENTIFIED ATTORNEY: Permission to --

THE COURT: Yes.
UNIDENTIFIED ATTORNEY: Thank you.
MR. BRESSLER: The Trustee is goinq to call Michael

5 6

7 Saracco, one of the sequ8stered witnesses, and Mr. Barkasy wil
8 do his examination.
9

TH8 COURT: Okay.
MR. BRESSLER: Since I was at one deposition while h

10

11 was at anóther one with him.

~

12

MR. BARKASY; Your Honor, for his next witness, the

13 Trustee calls Nichael Saracco.
14
THE COURT:

lUl right.
, I

15 16

Please remain standing.
COURT CLERK, Pl.ce your I.ft h.nd Dn the Bible. J

17 Would you please state your full name and spell your last nam~

18 for the Court?

19

THE. WITNESS: Michael A. Saracco, S-a-r-a-c-c-o.

20 21

MICHAEL ß. SARACCO, TRUSTEE'S WITNESS, SWORN

TIlE COURT: PI ease be seated.

22 DIRECT EXA¡.¡INATION

.

23 BY ~'1R. BARKASY:

24 Q

Good afternoon, Mr. Saracco. You work for Coram; is tha

25 right?

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Saracco - Direct

11

1 p,.

Yes, I do.

2 Q Whät do yüu do for Coram?

3 A I'm currently the president of speci alty servi ces and the!
4 president of Solunet (phonetic).

5 Q What are your duties as president of specialty services? 6 A Specinlty services encompasses five strategic business
7 uni t.s called SBU' B. The marketing department and Coram's
8 research division are ca lled crr. I oversee those divisjons.

9 Q And what do you do with regard to Solunet?
10 A
Solunet is a very new entity that's -- has been formed to

11 Coram's pharmacy and distribution network in an efforL to
12 see if we can generate some new business by providi ng pharmacy

¿)

13 services to hospitals. vJhcre's your office? 11 Q
15
16
17
18
A
Q

My
'1'0

office is in the Cornm facility on Totowa, v,hom do you report on a day-to-day basis?
Crowley.

New

,Je rsey.

A
Q A

Dan
Hovl

long have you been

at

Coram?
wa:.

19

Well, the way I came to Coram

through lhe

acquisitio

20 of Caramark (phonetic). I joined Cdramark in 1982 and
21 continued through various roles and responsibilities through
22 1995, and then Caramark was acquired by Coram, and I continue

.

23 on s tnea then.
24 Q
What position did you have with Coram in November of 199

25 when Dan Crowley became CEO?

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I

.

i

'saracco - D1 rect

~18
i

1 A

1 was the area vice president of sales for the northeas~ .

2 Q

And has Mr. Crowley since promoted you?

I

3 A Yes, he has.
4 Q You worked at Coram for many years before Dan Crowley
5 became CEO, and you've been there the entire time since ho's

6 beGn CEO?

7 A Yes, sir.
8 Q Did Mr. Crowley make any changes in the way the company is
9 operated ùfer he became CEO?

10 A

Well, the initial time that we had met Dan Crowley was

.

11 when \.¡e were summoned to a meeting in the Monica Hotel when

12 took over. And he and a few others were brought into the rO

13 and introduced by Vito Ponzio. And a couple of things were
14

rather immediately discussed and we had -- we were advi sed t
i

15 16
17

immediately -- looked around the room and at that point in time
the management group was aJ_lowed to have dress-down for

kinds 0 f meet ing s, "nd so he imm_dio t cl y said t loa t Cors," t :::j in

18

a rather serious si L ua tion that needed a serious approach. $0,
lhinç-s that changed was the dress code was changed immedi ate y.

19 20

Dress-down Fridays at the corporate officer was changed. and he

21 a lso canceled all vacation. He said that the senior managem nt 22 group needed to stay focused on the job at hand, and until

.

23 further notice no vacations would be allowed.
24

On Lhat same day we spent the better part of the day in
that meeting.

25

We needed to introduce ourselves, talk about

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.

I

~~aL'3CCO - Direct
1

119

responsibilities, give a business update. And then he went
through the various types of information and reporting systemJ

2
3

that we ought to kIlO., about or undeL-stand if \..e L..erer in fact,1

4 going to be senior executives to run the company_

5 Q Did Mr. Crowley ma ke any changes in the way the company is
6 managed ,after that first day?

7 A Well, we -- you know, he outlined those various activitie~
8 and kinds of systems that would be put in place, and then fro
9 tha t time on, continually workod and focused on implemonting

10 those kind of systems.

11 -Some of the immediate changes were the need to be abJ e to

I

12
1") -'

undorstand and get sales information on a much more routine,

consistent basis. And so Lhe early months of him coming in was

14 set ting up policies and procedures. and systems so that those f

15 us that were responsible to deliver performance and sales for

16 the compùny lrlQuld have access to solid information ,,¡bout
17 revenue sales, èost of goods, cash collections.

18 He also irnplemon Lcd a system where he ieI t that we neede_
19 to k.now how much we had -- hovi much Coram had in the bank and

20 what our accounts receivable -- I'm sorry, what our accounts

21 payable were. So, we also began to get access on a daily bas' 5
22 to OUr cash collections, our cash balance in the bank and wha

.

23 our accounts payable were.

24 Q

How has the financial performance of the company been

25 under Dan Crowley?

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1 A

Well, from -- from my perspective it' 5 been rather

2 stelldr, really exciting. When we looked at the performance
3 today or along that process since he joined, there's more cash
4 in the bank today thdIl there was when he got here. After the 5 former individual left I -- some of the management team then
6 leilrned that in fact the company had had a credit 1 i oe, and

7 that credit line was almost completely maxcd out. So, there
8 was aJ most -- not much cash left to run the company.

9 Our venders today are very happy with us. And they've
10 been very happy with us lhrough the time period of him coming
11 to the company, because we now pay our bills timely.

~

12 E'reviously we had trouble .iith some of our locations, qetting

13 access to drugs and supplies to service our patients, because
11 of our cash flow situation we weren't paying our bills timely.
1S And all of those things have since improved dramatical1.y, been

16 erased, and we just had a phenomenally stellar quality service
17 that we can now present to our cus Lamors.

18 Q

What's it like to work for Dan Crowley?

19 A

It' 5 pretty difficult. It has its days, it has its times.

20 He's a tough manager, He' 5 very demanding. There's no such
21 thing as no for an answer. If he asks you a new question, and
22 there's some information that you didn't previously know, and

.

23 you should have known, you can say, ni don't know, U on one or

24 two occasions, but you need to know your information, you nee 25 to know information down to the basis point, and you need to

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i have a strategic plan and opera Le by that plan.
2
3
4

12

As ho~riblR as that sounds or difficult and challenging a ~
I

that may sound, the roali Ly is that the group that he has

helped succeed has learned a tremendous amount of information

5 and guidance and lGadcrship of how to manage a business from
6 him.

7 Q How closely does Dan Crowley moiiJtor. sales?

B A Daily.
9 Q Does Dan Crowley put Bny pressure on senior management to

10 increase sales?
11 A
I'm sorry, you know, as I said previously, the real! ty is

)

12
1 -' ",

thÇit

it

doesn't matt er
We

hoi-i

well we're doing.

We

need to do

better.
b¿ì.sis _

need to think of
how

better

wnys
a

to

groVl

sales.

We

14
1S

need to know

to improve our mix on

daily, monthly, weekly

16 And if we do well, he says, "Hey, you know, good job,
17 thanks, but what are you going to do later today? What are you

1 ß going to do tomorrow for US?H Because Coram has a long way to
19 go. We've come a very long way, and we're going to continue to

20 success (sic).
21 Q
What is your view as to the impact on the company if Dan

22 Crowley's employmont with the company ended?

.

23 A

Well, you know, having been in home infusion for twenty

24 years, fortunately or unfortunate) y 1 have been through a

25 significant number of changes in management, i arge numbers of

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1

12l

changes at Caramark, and then now followed on through Coram.

2 And so when you watch what happens to change personally, my
3 pet:spective, is that there's two things that happen. There's
4 an internal iinpact and there's an external impact.

5 The external customer only sees the company through the
6 internal employees and staff. And so I can tell you that wi-U~
7 almost every change that's happened in the previous companies
8 and through the previous management of CEO's and executives

9 above me, that there's fallout. And the fallout begins slowly
10 the first few weeKs or months, and then it begins to snowball
11 because the competition -- this is a very, very, very

;)

12 competitive industry. It' s a very difficult industry to find
13 patients and manage patients effectively, and so any changes i
14 managing the company that could impact the quali ty of Lhe

15 service or the relationships with vendors and suppliers or the
16 stQbility in the marketplace is deemed very negative.

i 7 And so, i would be very concerned about the fallout that
18 would impend in the potential reversal of the success that
19 Wo'vo had now wi th 18 consecuLive months of revenue and EBITD

20 growth.

21 Q
22

Mr. Saracco, are you aware that a Chapter i i Trustee has

been appointed in

this bankn\ptcy cases?
thü t
i ,.?

.

23 A
24 25
Q

Absolutely.
And do you know who
Tha t s

.: .

A

Judge Adams.

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1 Q
All right. Have you had the opportunity to meet Judge
2 .:ad.ams?

3 A I met Judge Adams on Lwo occasions, at -- in our corporat~
4 offices for our corporate management meetings, and then, also

5 along that period of time it waR determined that it would
6 really be beneficial for the judge to physically visit a Coran
7 location, see either singularly or in multiple.

And so not

8 only did we meet aftGr two corpurate meetings, but then I had
9 the pleasure of escortíng ~Jiidge Adams alonq with our senior

10 vice president of op8rations John Ellis to spend a day at the 11 Malvern Philadelphia -- I'm sorry, Lhe Malvern, Pennsylvania

~

l? facility. 13 At the facility there he spent the day with myself and
14
15

other senior executives as well as the br.anch management staff,

which would be bi:ë:;nch manager., pharmacy manager, nurse manager.

16
17 18

19 blood products division treating very severely ill, factor or

20 hemophilia patients, and there was a whole separate section 0

21 time that the judge spent with the hernophilii1 group ¿;lso,
72 learning about that business.

.

23 Q
24 A

Have you had any private meetings with the Trustee?

Yes, I have. One of the things that the judge announced

25 at his very fi rst visit was that he was there to learn and

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1

12'4

understand the business ( to evaluate what it was and who it

2 was, and so not only did he spend time in these group mBcting~,

3 but at each and every meeting he offered and set aside a 4 specific time for anyone of the group or anyone else that

5 wanted to visit with him und ask any questions that they might

6 of he about any issue whatsoever, and that was done pri va tely
7 and separately from the group. And he made that offer and in
8 fact did that on multiple occasions.

9 Q

And you met privately with the trustee?

lOA
11 Q

Yes, I did.
Did you discuss with Judge Adams what you thought would

)

12 happen 1:0 Coram if Mr. C.cowley was no longei:- employed by Cc)rar?

13 J'.
14 Q

I did do that.

And what did you tell Judge Adams?

15 A

Well, I availed myself of his offer to meet privately.

16 Personally I felt I had invested a significant number of year.

17 on my personal careB.c in our company, and I wanted to
18 understand what might be happening in the future. And I also

19 wanted him to understand th~ìt personally, from my perspective
20 having worked directly or indirectly with a large numJJer of

21 senior management folks above me, that quite honestly this gu
22 was doing a really good j oh. And I wanted to unde.cstand what

.

23 was going to he the process movi ng forward, because the team

24 had worked really hard together with Dan Crowley to bring thi 25 thing forward and improve it, and I had not been through a

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Saracco - Cross/Tomashefsky 125
1 bankruptcy before, und I wanted to understand what was qoing tp

2 happen.

3 And I told him that personally -- I wasn't speaking for
4 large nurnbGrs of folks, but with my twenty years experience, I

5 would be very worried and concerned if, in fact, the leadershi ~

6 was going to change once again, causing those of us who reall
"7

dGdicate significant hours to managing this business, that we

8

would have to rebuild it once again, and I would really be very
disappointed if that would happen.

9

10

Q Thank you, Mr. Sa r.acco.
THE COURT: Cross?
lJIR. TOMJ.SHEFSKY: Thank you, Your Honor.
CROSS EXAMINATION

n A Okay.

)

12

13
111

15 BY t-1R. TOMASHEFSKY:

16 Q Mr. Saracco, you said that among the things -- the chang s
17 that Mr. Crowley made were that he put in some sales 18 information systems, some accounts receivable, reporting
19 systems aiid some ca.'3h reporting systems; is that right?

20 A Yes, sir.
21 Q And now those systems are in place, correct? 22 A Yes, sir.

.

23 Q

And you have no reason to believe those systems would

24 simply faii ape:rt if Mr. Crov/ley were no longer in the compan

25 is that right?

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:i~6

1 A

That' oS right.

2 Q Okay. Now, I think you SQid you reported directly to Mr. 3 Crowley; is that right? 4 A Yes.
5 Q Okay, and Mr. Crowley handles your annual merit review?

6 A Yes, he does.
7 Q Okay, and Mr. Crowley decides what your salary is; is that 8 right?

9 A Yes, he does.
10 Q
Okay, in January -- well, at the lime Mr. Crowley became

11 CEO, your salary was $157,000 a year; is that right?

)

12 A
13 Q

Yes, sir.
Okay, and in January of 2000, shortly after Mr. Crowley

14 took over, you received a $~3, 000 rQise.

15 A
16 Q

Yes, I did.
Okay.
That was -- that was a merit change that was instituted

17 A

18 from a commitment that wa,s made by Rick Smith, the fanner CEO,

19 that had never been fulfilled with Mr. Smith's decj sj on to
20 leave the company.

21 Q
22 A

And Mr. Crowley decided to fulfill it.

Mr. Crowley learned of the promise that Mr. Smith had ma e

.

23 to me for assuming a new rssponsibility, managing the nutriti n
24\ business of Coram, which ts Coram's most important business.

25 Then when he learned of that, I voiced that through Vito

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1 Ponzio, bod subsequentl y, eventually learned that that, in
2 fact, was true, and then my sal_ary was brought up to Mr.
3 Smith' 8 comm -L tment.

j if

4 Q Mr. Crowley wenl along ioJth that.
5 A Yes.

6 Q Okay, and your current salary three years later is
7 $290,000 a year, rJght?

8 A Yes, sir-.
9 Q Okay, and that's 90,000 more than it was in January of
10 2000.

11 A

Yes, sir.

..

12 Q

Okay. Now, I -Since th~l time I've picked up -- I've assumed

13 lI
15
16

14 responsibility for two more divisions, the CTI Research

Division as \..eii as the marketing gy.oup.
not have a marketing department.
And 8.0

Previouslj!
the
abH ity

Cor'am

di
I

to lìelp

17 the field ~.ales group grow it's business is improved bV havin;i

18 ,3 market_ing department. So, I assumed another two divisions,
19 the research group, the marketing department, and another --

20 approximately four direct reports.
2JQ

Uro-hum. And Mr. Croviley ls -iE'sponsible for 91 ving you Ll
Urn-hum.

22 that new -- those new responsibilities; is that right?

.

:n
24

A
Q

Okay.
He

25

A

gi ves more responsibilities to people who perform we 1.

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1
Q A Q

1218

At least he's done that in your case.

2
..)

Thank you.
Now, I think you said before Mr. Crowley became the CEO

~

4 you were out in the field as an area vice president in the

5 east?

6 A Yes, sir.
7 Q Okay, and as a field person you really didn' t h~ve a ful
8 picture of everything that was going on in Coram's finances;

9 would that be true"?
10 A 11 Q
That' s true.

Okay. And to the extent you then came into the full

J

12 picture later, that was largely because of information that y u
13 L-eceived from Mr. Crowley; is that right?

14 A
15 Q

I'm sorry? I don't understand the question.
To the extent you later, after Mr. Crowley came on board,

16 learned more about Coram's historical past performance, that

17 information came to you largely fr'om Mr. Crowley; is that
18 riç¡ht.
19 A
That came to us through now being included in the meetin
20 of the rest of the management team who managed the c:orporatio

21 meaning the eFO, president contracting, marketing. Informati n
22 is distri~uted, reviewed, analyzed and evaluated now to

.

23 evei~yone in the organization. And today that information f
24 I were to use a similar scenario, comparing today to

25 previously, today in my -- if I was in myoId role today I

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1219

1 would be knowing and learning the information from the
2 corporate group that historically you only learned as a very,

3 very senior execu ti ve.
4 Q All right, but what information that you have todày abou

5 Coram's performance before ¡'J)r _ Crowley waS not information yo
6 hèJd received contemporaneously; it was only j.nformation you

7 received later from other people 8econdhand; is that right?

B A Not -- I'm not clear on the Cji,iestion.
9 Q You wei-e not in the information flow for the whole compa y
10 until after Mr. Crowley became CEO; is that correct?

11 l\

That's correct.
Now, I know you view Mr _ Crowley as having done a good j b

~

12 Q

13 for the company, and I kno¡.i you've. expressed some concern tha

14 if Mr _ Crowley were to leave that there would be some de15 stabilization in the compçiny; is that right?

19 you -- a single Coram employee who has told you that they wou d
20 be concerned if Mr. Crowley left the company, the name?

21 A

When you and I spoke abouL that, you're correct, 1 had

22 said th~it to you_

23 Q

And that. was on Friday.
That was on Friday. And the situation is the fact that

..

24 A

25 staff become very concerned and were very concerned in the

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i initial year, year and a haJ f, because things were not

1310
i ¡

2 improvinq yet. The questions have ",topped and have decl i ned in
3 this last year and a half when things have been very well
4 directed, very focused and that we have a plan.

5 Q But there was some concern in late 2002, because people
6 knew that Mr. Crowley's contract was up at that point, right?

7 A (No verbal response)
8 Q Mr. Crowley's original contract expired?

9 A Yes, sir.
10 Q
Okay, and my question is, and I think your answer is yes,

11 is that you cannot tell me the name of a single Coram employe

~

12 who has said to you that they would be concerned if Mr. Crowl y

13 were to leave the company. Thal's correct, right?
14 A 15 Q
16 A
17

We had said that. And I would also say to you that -J think that's your answer.

Well, but -¡VIR. TOMASHEFSKY: Move to strike. It's beyond the I

:1 a scope of the questi.on.
19

THE COURT: Well, he' s an~wered. He can expJain --

20 he can
21

explain his answer.
t.IR. TOMASHEFSKY:

You may.

All -eight.
you, Your Honor.
furthe r?

?2

THE WITNESS: THE COURT: THE WITNBSS;

Than k

.

23
24

Anythj_ng

Well, I would

just

want to say
you

that
also

25

after

rnanagín9

the folks for t¡./enty years, I think

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1 2

1311
I

have to be concerned and aware of the things that your staff
doesn' t say to you.

I i I

3 HY MR. TOMASHEFSKY:

4 Q ThaL about covers tho whole ball of wax. If Mr. Crowley
5 is terminated or leaves Coram for some reason, Mr. Ponzio, it's
6 fa ir to say you personally haven't made up your mind what you

7 would do.
8
9
A
Q

I'm Micht.ìel Saracco.
Mr. S¿iracco.
Tha t s

10

A

okay,

'tie

both have J talian

last

names.

Woul d you

11

ask the questic;m again, please?
Yes, if Mr. Crowley leaves Coram, it's fair to s~y you

)

12 Q

13 personally have not made up your mind about what you would do.

14 A

NO, I shared wi th you on Friday that I really cannot tel

15 you that I would want to go through another change, so I -- Y u
16 asked me j_f I would stay, and r told you I can't tell you tha

17 I would want to do that again.

18 Q

No, what I asked you is you haven't made up your mind

19 about what you would do if Mr. Crowley were to leave the
20 company.

21 A

And I think I said I wou Id have to think long and hard

22 about tha L.

.

23 Q

Well, that's not exactly what you did say. As -- in you

2'1 deposition I asked you, Pi':JC 63 to 64 of your deposition.

25 "If Mr. Crowley quits or is terminated for Coram --"

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1
A
Q

13Q
¡ I i

Um-hum.
" is it your feeling that you would quit as well?

2
3

And you said, "First of all, I certainly would hope that
i I

4 would not happen. Someone who' 5 dedicaLed a significant

5 portion of his life, the commission to helping people better
6 home, in the hospital, from personal perspective, he made a

1t
;

7 difference in who we are today. If he were not here, that's
8 something I would have to sit back and think about personally. U

9 And then I said, "You haven't come to any conclusions on
10 that score yourself as of today; is that right?U

11 Your answer, "That's right. I really -- you may Lhink I'm

-)

12 just a pie in the sky kind of guy. I don't spend a lot of ti e
13 thinking ¿ibout competition or those kinds of issues."
14
A
Q

Urn-hum.

1S

"I spend my time focusing on things I'm responsible foru -

16
17

A Q

Um- hum.

18 19

-- "in the company. U That's what you testified.

A
Q

Okay.
And, indeed, in your career Mr. Ponzio -- eXCU8e me, Mr.

20

7.1. Saracco.
22 IA

It's okay.

.

23 Q

You've been through a loL of changes, and you've survive

24 them, haven't you?

2!) p,.

Urn-hum. There's a difference, though, surviving them in

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1 your thirties and forties and thi nking about doin~ something

¡ i I

2 like that again. And so that's why I share with you, I could
3 not -- if you ask me today, I could not tell you what would
4 happen if a change was made with Dan Crowley.

5 Q JI.nd you haven' t told the Trustee \-/hat would happen,

6 ei ther _

7 A No.
8 Q Thank you.

9 REDIRECT EXAMINATION
10 BY MR. BARKASY;

11 Q

Mr. Saracco, whon you just answered that läst question I

J

12 took it to mean, and tell me if you disagree with me that you 13 haven't told the Trustee whether or not you would leave the
14 company because Dan Crowley was no longer with the company.

15 A

We don't have those kinds of conversations, because in m

16 world people that do a good job arcn't left to leave -- I'm
17 sorry, aren't asked to- leave.

18 So, when I think about and look at what Dan Crowley's do e
19 for Coram Healthcare. I can't even imagine that there waul d b
20 a reason that he wouldn' t be here, because he's done the most

21 stellar job of any CEO, and I/ve probably reported directly 0
22 indirectly to six or seven folks.

.

23

So, I'm under oath, and I'm being extremely honest.

I

21 don' t think about talking to the judge about what happens if

25 certain person leaves. If it happens, myself and significant

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1

i 3f.

other people will have to make a hard decision, but the judge

2 and I have not spoken about that.
"' __J

Q

Arc you concerned as to whether people who report to you

4 might consider leaving if Dan Crowley's employment is

5 terminated?

6 A Absolutely.
7 Q And what do you base that on, other than a conversation
8 with one of t-hose folks who comes to you and says, "If Dan

9 Crowley's employment's terminated, I'm going to leave"? What
10 do you base it on?
11

MR. TOMASHEFSKY: Object to the form of the questio ,

)

12

Your Hono.r.
THE COU RT :

13
14

Overruled. You can answer.

THE WiTNESS:

Thank you.

15 16

I base H. on thirty-two yearo in h..lth care, twent~

yean3 managing people, and as I Bajd e¡:rlier to the gentleman,

17 if you manaqe your staff and you know thcm well, and you're
18 tj_ghtly working on your strategic plan, etcetera, etcetera, y u

1