Free Appendix - District Court of Delaware - Delaware

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 1 of 35

Page

395

CERTIFICATE HEREBY CERTIFY
and that the are

proceedings
contained

evidence
and

objections in the on that

fully

accurately
taken by me and

stenographic

notes

Wednesday
true and

March
correct

2007

this

is

transcript of

same

10

14 is 16 17 18

Cynthia

Whyte

RPR

The
this

foregoing
not same

certification of
apply by any
to

transcript does
of the of the

any

1.9

reproduction
unless under

means
and/or

20 21 22 23 24 25

direct

control

supervision

the

certifying

reporter

li

.-bac_S

..

A1381

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 2 of 35

Marabito

Allen

415/2007

IN THE UNITED STATES DISTRICT FOR THE DISTRICT OF DELAWARE Case

COURT

Certified

Co

No

04-1565

VIDEO

DEPOSITION 2007 April

OF ALLEN

MARABITO

ARLIN ADAIVIS Chapter 11 Trustee of the Post-Confirmation of EstateS of Coram Bankruptcy HEALTHCARE CORPORATION and of CORAM INC Delaware corporation

Plaintiffs

vs
DANIEL

CASEY

CROWLEY DONALD PETER and SMITH

ANARAL
SANDRA

WILLIAM

SMOLEY

Defendants

APPEARANCES
SCHNADER SEGAL LLP LEWIS Bressler Esq 1600 Market Street Suite 3600 19103-7286 Philadelphia Pennsylvania 215-751-2050 HARRISON

By Barry

bbressler@schnader corn Apºaring on behalf of
KEKER

Plaintiffs

VAN NEST LLP By Laurie Carr Mims Esq 710 Sansome Street San Francisco California 94111-1704 415-391-5400 [email protected] on behalf of Defendant Appearing Daniel Crowley

Also

Present

Cane

Finegan

Videographer

LiveNote

World Service

800.548.3668

Ext Page

A1382

Case 1:04-cv-01565-SLR

Document 126-14
Marabito
Allen

Filed 04/17/2007

Page 3 of 35

4/5/2007

now
Deponent
examined

exhibit
undercut
was

Yes its accurate
in

But
it

its been

and

so

while

apparently
of the

not

fully expansive that

description Crowley had

consulting

arrangement

Mr

with Cerberus

That
the
--

wasnt my question
that
is

though
here

Is

the

information
in

written

accurate
10

your opinion

MR BRESSLER
His

Ill object
and

to

the

forth

11
12 13

answer

was

explanatory

complete

but

he

may

answer
At the it

time that
was

this

was

written
was

14
15 16 17 18 19

believed
its

that

accurate

and

convinced

of

actuality

By Ms Mims
Kasowitz firm ask you

Did

anyone

from the

--

the

for more with

information
--

about

Mr Crowleys

consultancy

to

Cerberus
to the

MR BRESSLER
Do you mean at
this

Ill object

form

20 21
22 23 24 25

time
At this

By Ms Mims
It --

time
asked specific
as

dont

recall being

questions
put

about

Mr Crowleys
the

consultancy perfecting

you

it during
by the

process

of

this

document

Kasowitz

firm

LiveNote

World Service

800.548.3668

Ext Page
93

A1383

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 4 of 35

Marabito

Atlen

4/5/2007

Do you

recall

asking

anyone
about

including
this

Mr Crowley

for more

information

issue

TheAt At
--

this

time
would have said or

this time have

asked
is this

and

would

said you know
of the

Dan

an

accurate
is

description an be accurate

information
of the

or

you

know

this to

portrayal
Is --

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

included
to

you

know
to

is

this

what would

were going
have been

use

And

the

answer
in this

that

yes

because

its

document

Pausej
Do you anyone from the
of

remember Kasowitz

any conversations law firm regarding
this

with
the

importance

this issue to

document

No
Do firm telling between you you recall that and
--

anyone
that

from the
the

Kasowitz

relationship
in very
--

Crowley

Cerberus

was

was

important for

this document

MR BRESSLER
can

Ill object

to

the

form

answer
Before
this

document
For Lhis

By Ms Mims
before
Not

document

Not

before

For this

document

LiveNote

World Service

800.548.3668

Ext Page
94

A1384

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 5 of 35

Marabito

Allen

4/5/2007

Oh

for this document
for

Important conjunction with

this document.

In

this document

No
particularized
was

dont
--

--

dont

think
of the

this all

received
It the

to the

the exclusion

else

just part
is

of

document
it is

In

process
back
if

document

developed
the outside
cut the at

exchanged

and you

forth with

attorneys
the

having
and

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

the

final
to

document
it as is to

then

preparatory approved by

filing

read
its

through
its

the

attorneys

legality and and

creation
perfected

and on

then the not

its

ready

for filing
the

thats

law
--

firm side of
the

process
sitting there

Were

--

Im
Hey

companys
sufficient

not

saying

this is and
do

legal

document

lets go ahead
So

file not

it
recall
--

you

any

particularized

attention

to

this issue

MR BRESSLER By Ms Mims
document

Object
--

to

the

form
with this

in

connection

MR
answered

BRESSLER
He

Object

to

the

form

asked

can

answer

No
MS
MIMS Lets break
for lunch

LiveNote

World Service

800.548.3668

Ext Page
95

A1385

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 6 of 35

Marabito, Allen J.

4512007

I
Q
A

1
Yes. "Effective August lst, 1999, Mr. Crowley

and an affiliate of Cerberus Partners, L.P. ('Cerberus') a party to the company's debtor-in-possession financing agreement, Senior Credit Facility and Security Exchange ~ ~ r e e m e n t , executed a three-year employment agreement whereby Mr. Crowley is paid $960,000 per annurn, plus the potential of performance related bonus opportunities, equity options and fringe benefits.

11

,

I Such agreement is

subject to automatic one year

extensions unless either party provides written no,ticewithin 60 days of the original expiration date or subsequent renewal dates. The agreement further provides that the Cerberus affiliate can unilaterally terminate the arrangement at any time by written notice; however, certain severance payments would be triggered by such termination. The services rendered by Mr. Crowley include, but are not limited to, business and strategic healthcare investment advice to executive management at Cerberus and its affiliates. Moreover,
.

Mr. Crowley is Chairman of the Board of Directors of Winterland Productions, a privately held affinity merchandise company, which is a Cerberus affiliate

LiveNote World Service

800.548.3668 Ext. 1 Page 209

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 7 of 35

Marabito, Allen J .

41512007

portfolio investment. On January 2nd, 2001, Winterland voluntarily filed for protection under Chapter 11 of the United States Bankruptcy Code in the Northern District of California."

Q
A

Does - End of paragraph. Does this reflect - - does this refresh

Q

your recollection - - recollection as to whether the SEC filings made by the company disclosed that it was an employment agreement? MR. BRESSLER: I'll object to the form

only as to which SEC filings.

Q
A

(By Ms. Mims)

As - - this SEC filing.

It - - it focuses my recollection. I - - I

recall that subsequent to its identification it was incorporated at the next public filing.

Q
A
Q

Do you - - do you remember if you took part

in drafting this language? I would not have been the draft person. Did you review this language? Yes. Do you think it accurately describes the

A
Q

employment agreement?
A
Q

It - - as best I can recollect, yes. And in the paragraph you read - -

LiveNote World Service

800.548.3668 Ext. 1

Page 210

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 8 of 35

Marabito, Allen J.

41512007

A

Yes.
- - it stated that it was -a three-year

I
I

Q

employment agreement; is that correct?

I

A

Yes And then it went o n t o say, "whereby

Q

Mr. Crowley is paid" - -

I
I

A

Yes.

. ,

Q
A

- - 960,000 per annum"?
Yes. Does this refresh - - refresh your

recollection regarding the you I Mr. Crowley was still beingfact thatCoramknewof paid by as April 2001?

I

I

Coram .
Q

1 yes.

I.
II

see it, but I t represent to you that this was the 11

I filed version since it was
LiveNote World Service

' . Q

MR. BRESSLER: A

1'11 object to the form.

You mis - - Mr. crowley was being paid by

(By Ms. Mims)

By Cerberus.

A

And he was also being paid by Cerberus, I believe that s correct. Does this have a signature date on the.

(Deponent examined exhibit.) Sometimes they're in the middle.' I don't

-- it Is on the SEC;S Web

800.548.3668 Ext. 1

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 9 of 35

Marabito, Allen J;

4/5/2007

site.
MR. BRESSLER:

would you like me to direct

the witness' attention?

I

MS. MIMS:

sure.

Thank you.

I

Got it. Okay.

April 16th

-'April

16th;

I
I

A 1.2001 was the filing date of this document. So at - -

at that time I would have known.

Q
A
Q

(By MS. Mims)

That Mr. Crowley - -

Crowley was receiving - Was still receiving.

A
Q
A

Still receiving salary from Cerberus. And that salary was the 960,000 per annum? Yes.

month?
A

Yes.
'

1

Q

So you did know as of April 16kh, 2001
-.-

that Mr. Crowley was,still receiving 80,000 A Yes.
.

I

.

Q
A

- - per month.
Yes. Was this public filing reviewed by coramfs

I board?

Q

I

I

A

Yes.

1t Is made available to 'them for

LiveNote World Service

800.548.3668 Ext. 1
Page 212

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 10 of 35

Marablto, Allen J.

41512007

Q

'

'

Was it made.available for Goldin

Associate's review?
A

I'm sure if they were interested

- - if

they were still an interested party at that time, yes.
Q

To give you a little chronology, they were

retained in March of 2001, so that would be preceding April 2001. A ~ n d - and I -would fully expect that :

their - - that the steps that they would take to know about the corporation, so-called due diligence, would have led them to this document, which they would have read. I assume they would have read.

Q

Isn't it true that anyone who was

interested in Coram could have accessed this document and read this paragraph about Mr. Crowley's employment agreement with Cerberus?
A

I --

think that's a true statement

Q

And do you agree with me that this

paragraph makes clear that Mr. Crowley is currently being paid, as of April 16th, 2001, 960,000 per annum? A Yes.
MR. BRESSLER:
A
. .

I'll object to the form.

Yes.

LiveNote World Service

800.548.3668 Ext. 1

Page 213

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 11 of 35

220

STATE

OF

COLORADO

ss
COUNTY OF DENVER Vanessa
that

REPORTERS

CERTIFICATE

Campbell

do

hereby

certify and
that the

am

Registered within

Professional Reporter State of
of

Notary

Public
to was

the

Colorado

previous deponent

the

commencement
to

the

examination
the

duly sworn further

testify to
this time

truth

certify that by me at
was the

deposition was and place
to

10 11
12

taken herein

in

shorthand

set

forth and

thereafter
the

reduced

typewritten
true

form
correct

and

that

foregoing

constitutes

13

and

transcript certify that counsel
for am not

14 15 16
17

further

related
the

to

employed

by

nor of

any of

parties or attorneys herein interested
in the In result of

nor otherwise
the

within have

action

18

witness
seal

whereof
12th

affixed my

19

signature and

this

day of

March

2007 2010

20

My commission expires November

I4
23

Vanessa RPR Campbell 216 16th Street Suite 650 Colorado 80202 Denver

24
25

..FlJ

A1386

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 12 of 35
4/6/2007

IN

THE FOR

UNITED THE

STATES

DISTRICT

COURT

DISTRICT

OF DELAWARE

ARLIN Trustee

ADAMS
of

Bankruptcy HEALTHCARE

Chapter 11 the Post-Confirmation Estates of CORAN Delaware CORPORATION

I.IIIU

Corporation and of CORAM Delaware Corporation Plaintiff

INC

CASE

NO

04-1565

vs
DANIEL

CROWLEY
WILLIAM and SMITH

DONALD

AMARAL
PETER

CASEY
SANDRA

SMOLEY

_______________/
---oOo-VIDEOTAPED DEPOSITION OF DANIEL 2007 CROWLEY

Defendants

Friday

April

---oOo-ASSOCIATES CHASE REPORTING FOR LiveNote World Service Suite 1250 221 Main Street 94105 San Francisco California Phone 415 321-2300 Fax 321-2301 415 SHEILA

Reported by LORRIE MARCHANT CSR No 10523

CSR

RPR

CRR

CLR

LiveNote

World Service

800.548.3668

Ext

Pagel

A1387

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 13 of 35
4/6/2007

And August

Coram

filed

Chapter

11

bankruptcy

on

2000
Approximately At some point company that

date
perform work
for

did you
as

Cerberus

related

to

known

Winterland
for

Yes
to

performed

services

Cerberus

related

Winterland
And did you you begin
to

perform

those

services

for

Winterland 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 different Some on
the time for

before

became

Corams CEO
Lacks

MR
You THE Winterland involved

PETERS

Objection

foundation

may answer

WITNESS
months

Yes
before

was

involved
of

with
or

many

heard

Coram

became

officially BY

with

Coram

MR BARKASY
that

Now
on for

do

you

recall

any of

projects you
the

you into

worked

Cerberus with when

from the Feinberg began
to

entered

your agreement and

Mr
you

advisorypositionin 1998
Winterland

work

on

Well

again
look

if you at

have

something

to

show

me

Id

be

happy As

to to

it
worked
on

my recollection some short
in

many some
at

projects

in duration New

longer

the

telephone

some

York

some

potential

clients

LiveNote

World Service

800.548.3668

Ext Page
16

A1388

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 14 of 35
4/6/2007

Some with Cerberus

of

the

names Black
--

that

would on

recall Beverly

worked Nursing

entity
to

Acre
to

Home transaction management and
the

trying

understand and
out the

the of it

and

the

business
of it

plan

viability

likelihood And give
in

working
as in to

right
on

thoughts states
as

reimbursement
the

Medicare

and to

the

which

nursing

homes
for

were going
an

operate

to and
to

potential Medicaid

liabilities and

investor

under

Medicare related advice

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

reimbursement

rates some

that
Sterrit
health
of

gave more of
we

on HRH

which

was But

systems systems

effort
and

rather did and

than review work

care

had

people

their hardware

and

software

and

technology

systems

design
with an

Provided assessment as could told
do
it

Cerberuss portfolio
whether
of the

manager

to

company that

was

scalable
was

and

the could

kinds

things
we

Cerberus view on

being

do
were

And

give going

that
in the
--

There
was

changes

on back

what
was

called

HCFA

Health over
in

Care Financing
to the

Agency
called

It

being
there

transitioned were

new

entity
of

CMS

and on

reductions
of

rates

reimbursement Medicare was

various

kinds

care

and

services

that

proffering
Cerberus sought view
of

what

those

changes

LiveNote

World Service

800.548.3668

Ext Page
17

A1389

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 15 of 35
4/6/2007

might be couple

and
of

whether
the

there would they

be

negative interested care

impact

on

entities

were

in
by the

Particularly name of been Vencor

there was that
or

subacute care

company that

provided

for folks had and gone were

had

paraplegic

quadriplegic were

and

through being

their benefits warehoused
in

and
the

on Medicaid

hospitals
that might and
laws

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

how

work
as

and

whether
to

new

rates
or

related

Nedicare bit
of

would

be

helpful
in HCFA

harmful
CMS of

And

did quite

inquiry

and
all

and

various
to

appropriation understand and homes
it

committees give them

and

that
on

try and

and

view

based

my own Vencor away
was

experiences had nursing

such
and to

And
notion
of

of

course
to
--

going

from Medicaid being

patients And asked

pure pay was
for

private my view

patients about
as

discussed
was
the

asked

that
to

and

ultimately thought

recommendation

whether

business should be

plan
an

the

management

team were credible

and

investment
an

And anyone And

investment

was

made

and
as

was

asked

if

that

might serve

properly who

board

member
became

recommended

fellow

ultimately

board

member
on
an

worked

HMO

in

Southern

Florida

And

my

LiveNote

World Service

800.548.3668

Ext Page
18

Al 390

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 16 of 35
4/6/2007

current fellow

memory who

is

it was do

called

PHP
as

And
to

we the

had claims was

could
in it

actuarial
the

work and

reserving being

and

pricing

the

risk that

taken And

on

an underwriting
of

basis
reimbursement was in
it

our view whether and be

what

Florida and meet
the its

this HNO

had

--

reasonably
the

could

plan

profitable
due

and

business

plan

management

team

diligence
in

for

it

And

recommended 10 11 12 13 14 invest
in

Cerberus were

invest about

that

and

they

did
was
an

We employee Pacific

asked

Magellan
was

Magellan by the

assistance

plan

It

owned

Texas

Group
Cerberus sought And
to

know had

whether

it

ought
the

to

that

Magellan and

purchased not working

Charter for

Behavioral 16 17 18 19 20 21 22 23 24 25 choice them or

Hospitals

it was

out

TPG
And having and done read
the

due

diligence

and

met

the
the to

management

team

the business

plan
was

done

analysis explored
read of the

divestiture

that

underway

behavioral
not

hospitals invest
it

recommended you

know

that

Cerberus

And
for

ultimately

turned avoided

out

to

be

the

right loss

Cerberus

They

tremendous

there
You

know

there may

have

been

any

other of

LiveNote

World Service

800.548.3668

Ext Page
19

A1391

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 17 of 35
4/6/2007

other investments

and

--

do

think

there were

other

investments
Sun did some work
--

Im

going

to

say Sun Nursing

Homes
on the

we

for

them
the

did some work mix of and

for them and

Sun

understanding were
the to

their business
the

states they
the it

operating

reimbursements them off of

and And

rules and turned
out

laws
be
the

and

waved

Sun

right choice company was interested
in

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

know

medical asked
to

record
come
to the

electronic New York

medical and plan meet and

record
with
the

and

was

management

team review
thought off of that that very

business would
It

assess

whether and them waved them

that

make

some sense
out to

one

turned

avoid

you

know

substantial was asked with and
to

loss
look
at

hospice team

company and look

in at

Florida
the

and

meet plan

the

management
the

business

review

reimbursement

rates

and

risks and

rewards
And recommended
out to

that

Cerberus

invest And

in

that

turned
was

be

terrific the plan The

deal
was

the the

management

great and was

right

reimbursement and
lots

right
and

rules were that you

right

And made

mix

pricing
of

and

units And

places

they were

sense

Cerberus

made

know

substantial

LiveNote

World Service

800.548.3668

Ext Page
20

A1392

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 18 of 35
4/6/2007

profit

on

that
And from time to companies

time Dan Wolf would
and wide him my who ask and my

call

about

portfolio

view

Having care

had

fairly extensive

global
give

deep

health

background
And

could Bob

view
had different
--

Davenport

portfolio
Plattus and

new Ron

and

prospective and

investments Steve
at

and and

Seth
--

Goldstein his

Feinberg this view

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

remember

partners name time seeking
changes government
in the

time who
risk/reward
in the

from time to and and

of

investments

--

see

changes

reimbursement

rules

here

there and

everywhere
And depended
so it was

episodic

Up

and

down

It

on what

they
to

had
them

And
at

some days would

go by go

andl wouldnt talk

all
be

Some days would

by and
that

gosh

the

phones

would

ringing

So

like

Marked
Exhibit

for

identification

purposes

MR BARKASY
THE BY Crowley partner
of

Did

we

mark

that

Crowley

REPORTER

Correct

MR BARKASY
letter Cerberus from you
to

Mr Crowley
Steven dated

is

Exhibit general

Feinberg

Partners

April

1999

LiveNote

World Service

800.548.3668

Ext Page
21

A1393

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 19 of 35
4/6/2007

Yes
What Cerberus
to

were

you being

paid

$80000

month

by

do
want me
to

Do you testimony gave

recite

that
to

--

all

the

earlier

Im

happy

do

it

LetmeaskMR
the

PETERS

Go ahead

and

answer

the

---

answer

question
BY

MR BARKASY
answer

Answer

the

question

how

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

you

want

to

it
originally started myself had no idea with
the

Okay
Cerberus both
extent
to

Well when
Feinberg and
the

which

Cerberus would

portfolio take up my

managers

and

the

Cerberus

organization

time
talked hours about would and
that

And
$10000
be

you

know
you quick

originally we

day

and

know

how

many

and

just had

general

conversation

handshake
And more
we

then And

it

started
it it

to

ramp up more more

and

was

taking And then

time

then And
some the

was was

taking taking was

time time
called

adjusted And

it
at of

point day and

being

you

know

at

all

hours

night

Monday

Tuesday
It

Wednesday

Thursday
if

Friday Saturday
the

Sunday
July

didnt matter

it was

Fourth

of

or

you

know

LiveNote

World Service

800.548.3668

Ext Page
94

A1394

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 20 of 35
4/6/2007

Cynthias birthday
And thought
--

or

anniversary
of

or Christmas different than
he

the

amount

time was thought

Steve

Feinberg

and

thought
Goldstein else and Wolf on on

and

found myself Kindred and

fielding Seth on

calls on

from Ron something else and on

Plattus

Bob Davenport something Steve on

something Peter

Dan

else and something

Wolf

something

else

and

else know
the

And
10 11 12
13 the the

you

calls

were

coming

all

over have

place
ability Steve

And
to

where have

had

thought

that

would did have

other

clients

and

some

and

knew

that clarification
had suffering
so

Reporter
THE That other business
he

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

WITNESS
was

some

and

Steve

knew
to

that

in my ability

have

And

their rates

were

going

up

and

was

fine And

with

that
--

Im.not sure when this
certain

this

memorializing has being
to

date
It

but had

do believe gone

was

paid

that to

before
60 to

then

from something wished
to

something than an

80
and

And

you

know
an

had

more

handshake

this was

attempt

memorialize

that
for

Marked
Exhibit

identification

purposes

14

LiveNote

World Service

800.548.3668

Ext Page95

A1395

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 21 of 35
4/6/2007

THE document say that meeting include

WITNESS

My understanding

was

that

this to

said that
it of
--

other portfolio

companies
Coram and
it

except by the

by the print excluded minds excluded Coram

and

the

didnt

Coram
But those portfolio that they companies
that or

advised generated

on

to

the

extent that

made any money result
in

return

my efforts

would

compensation

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

BY companies

MR

BARKASY
work

Well

what

portfolio

did you

on
think never that
it
--

Well
talked with
of

for example And

forexample
the in

we

Kindred
the

really knew Cerberus made

magnitude

investment

Kindred
of

but for

tried to

learn

after repeated

attempts

asking

reconciliation

from Cerberus

that

never

got
went online and looked
at

the

public that
to

documents had
$100

on
in

Kindred

and And

found
it was

investments
in the 75-

Cerberus

made

there

million neighborhood

And
performance

you on

know

tried to you

track
at

the

equity

and
in

it and
is

know

some point
the

there my recollection equity on
--

there was investment

triple in would have

the

Cerberus

yielded

LiveNote

World Service

800.548.3668

Ext Page
98

A1396

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 22 of 35
4/612007

an

eight-digit and

reward

to

me

compensation did on

for the
So

advice

counseling

work

it

that

kind

of

thing
And subsidiary doing Black Acre
got

involved

as

Cerberus was

and

Beverly
in

Nursing and
lot

Homes because

spinout

Texas

Florida of
of

their nursing

homes and
did make an And 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
at

did quite

work

on

that

And

they

investment
was that which
for

told

by Peter
an

Wolf

believe
return being gave
PHP at

at

Black
35

Acre

they had would

annualized put me
into

percent

have

compensated And like that
35 in

the

advice

and

counsel told they would
that

on

that
much

remember Florida and

being
that

was

had have

baked-in been
in

percent
on
--

return
on

and

that

the

money

that
advised And on

And money on

Sterritt and

know

they on

made

Sterritt
that
to

didnt get any upside

investments opportunity
loss

they

didnt make
and

didnt have
anything on
--

the

participate

earn

on

auoidance
You

know
it

so

for

example
$45

in

Winterland
of

Rich
debt

some point

was And

roughly

million worth
it was

on Winterland
to $20

through my
of

work
And
so

trimmed down
the

million worth

debt

saved

LiveNote

World Service

800.548.3668

Ext Page
99

A1397

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 23 of 35
4/6/2007

company

$24

million
so it was in

didnt get anything
about
the

on

that
to

And be

gain

and

my ability

compensated

companies

in which

there were

gain

other than

Coram
bonus with regard
to the in

Your potential
in Winterland was

upside

increased
to 30

from 20 percent
in

the

incentive Cerberus

agreement that you

percent
into

this agreement

with

entered

in November

1999

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

Yeah
increase activity that but and

Id

been

---

Id

been

asking

for

an and saved

in Winterland

vis-a-vis my engagement

and

value
--

creation

And

you

know
in

company saved made and

it

didnt end up that way
and saved and
--

the

end
jobs

that

company

couple you

hundred both

material

difference and

know
the

the

equity and
the

the noteholders

management

vendors

employees
And went into
it

with
to

the

understanding portion
it of to

receive

an opportunity

earn that

gain be that

there was and

one

And been

thought

ought

greater

Id

asking

And

this reflected

ask
And
as to

portfolio entitled
is that

companies
to

other than
of 20

Winterland
of

you

were

bonus

percent

Cerberuss upside

correct

LiveNote

World Service

800.548.3668

Ext Page
100

A1398

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 24 of 35
4/6/2007

MR

PETERS

Oh
Its

see
the

MR BARKASY
BY And
if

letter wrote upside

to to

Mr Feinberg Mr
Feinberg
this

MR BARKASY
guy what
is

You
the

am the

that

covers

effort
And my question ever answer

Mr Crowley
that question

is

did

Mr

Feinberg
was

for

you

what

the

upside

that

covered
this
--

your

effort
is
if

Well
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 recognize because
be the

this paragraph
the

saying

first

off

Im

not and and

sure can

Im

person
this

And

am the save this these

person
company
jobs

improve

company and

and

generate

earnings

profits and

save am

and

turn

this into How
do

better

company

how

compensated

participate

for this performance around
sure one

And

look
be

lets get everybody
the

table
want
to

may not

person
all see was the

Im
people

not
in

person

But

put

room and

lets talk Thats
--

about1t and thats what

what

everybody back

thinks

thinking

then

Marked
Exhibit THE BY

for identification

purposes

18
Twenty

VIDEOGRAPHER

minutes
do

MR BARKASY
Crowley

Mr Crowley 18
it

you

Exhibit

Yes

do

recognize

LiveNote

World Service

800.548.3668

Ext Page
119

A1399

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 25 of 35
4/6/2007

What

is

it
letter
the

Well
Steve which
to

this is
in
--

from myself
of

to 1999 if in

Feinberg was

on

12th
to be

November

exploring Coram could

ways

compensated

were

accept

the
If

position
save if

that

company

if

could
to

improve paid

that

company

generated
that

earnings
might

be

fairly for the And

contribution
--

make
about was

this piece and
of in

of

course

testified

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

it

in an

open

court

depositions

endlessly
an

but
of

not

employee

Coram
of

wasnt

officer
in

Coram
of

wasnt
Coram
sure

director

Coram
with

wasnt
Coram letter

charge

wasnt
would But

anything
as

wasnt

even

be

wrote had and

this

had

conversation think
he

with

Don

Amaral
that forth
he

who was

was the

the

chairman

represented back and

largest what
do

individual you want
to

shareholder
do

around Smith

with

the

company

after

quit
He said he

didnt know who

was

going

to

step
to

in that

said

Ill

be

crisis manager

Id

like

try

met with

the in

board

Made

proposal

They

werent interested
He was

that
to

going

hire

recruiter and

find

CEO

LiveNote

World Service

800.548.3668

Ext Page
120

A1400

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 26 of 35
4/6/2007

and

then the

ultimately

came back

and

said How

about

you

being

CEO
got

this relationship other

with

Cerberus not

and
in

others
giving

Im
that He

doing stuff spoke

things

Im

interested

up
with

Cerberus

Feinberg

left

any with
save

number And

of

messages

Had

conversations
if

Spoke here and

me
this

said to you

Don

Look

come
to

in

thing
10 11 12 13
14 all

havent been
able that
if to

able

do

it

Rick was

Smith guy

hasnt been
before that
So

do

it

And

there to

some

hadnt been
could
of

able
in

do

it
this firm and

come

and

save

those

thousands earnings

jobs save this enterprise
cash flow to and sales and like
to

generate improve
for

and

mix and rewarded

15 16 17 18 19 20 21 22 23 24 25

this thing

from

Id

be

that
And

didnt like what
what earn
it

he

had

proposed
or

said

you

know
to he

get

an on

upside

get

an

opportunity And couple
was on of

something about

Cerberuss
We talked be

position
about
if
it

thought And he

it
It

times
equity went

said

would

okay

it

your
So

position
back
to

Cerberus

and

said Id like

an

opportunity
an

to be

recognized and

if my performance

generates

improvement

saves

this company

LiveNote

World Service

800.548.3668

Ext Page
121

Al 401

Case 1:04-cv-01565-SLR

Document 126-14
Crowley
Daniel

Filed 04/17/2007

Page 27 of 35
4/6/2007

You And
in the

know
Don
In

in

the

end

he

didnt agree with it

end

didnt agree with what was being end Coram
an agreement with Coram that drew
get

talked

about
that

the

signed

an

agreement

with

Cerberus

excluded signed that

And bright paid
line

said if And

got paid
--

on Coram up until earned

from Coram

thats
what

you

know

you

guys stiffed something 10 11 12 13 14 15 16 17 18 19 20 21 22 23
in the

me thats
to 17

--

think that

close

million bucks
that

didnt

get

paid

for the And

work then
--

did on
the

formula
bonuses and

board

resolved

contract

and

mean

did my

part

Everybody

benefitted

except

me
to

you
that

know
comment
in

Ill
But
In

get

minute

could
the

ask
12

question
letter
--

November

MR
THE ask me

PETERS WITNESS

Hold

on
ask
to
--

Could

question
the

before

you

question

Ive
We

got can need

use

bathroom
for

MR BARKASY
THE THE

just ask

break

WITNESS

break
the

VIDEOGRAPHER
--

This marks
in

end

of of

Tape

deposition Crowley
at

Volume Going from

the

deposition

24
25

Daniel

158
taken

off

the to

record

Recess

158

210

LiveNote

World Service

800.548.3668

Ext Page
122

A1402

Case 1:04-cv-01565-SLR

Document 126-14

Filed 04/17/2007

Page 28 of 35

CERTIFICATE LORRIE duly authorized
8211 of the to

OF

DEPOSITION

OFFICER
CSR

MARCHANT

RPR

CRR

NO 10523
to

administer oaths Code
in of the to

pursuant

Section hereby

California
the

Civil

Procedure

certify
was

that

witness
to the

foregoing

deposition
the

by me

sworn but

testify

the the at

truth

whole

truth

and
that

nothing

truth in
was the

within-entitled
the of time said

cause
place was

said deposition

taken

and

therein
10

stated
by me

that and

testimony

witness

reported under

was

thereafter
of

transcribed

by me or

11

my direction
that of

by means
the

computeraided
is

12

transcription and
was

foregoing

full
that

complete
the

13

true given

record
an

said testimony
to

and

witness

14

opportunity
to

read

and

correct

said

15 16

deposition

and

subscribe
that

same
am not
of the of

further attorney foregoing interested
for

certify
or

counsel
in

or

17

either

any

parties

the
in in

18

deposition
in the

and

caption
of the

named
cause

nor

any

way

19 20 21

outcome

named

said

caption
IN

WITNESS
this

WHEREOF

have day
of

hereunto

subscribed

22

by

my hand

________________

2007

LOR
25

L.1

MACHANT/ RPR

CRR

CSR

NO

10523

A1403

Case 1:04-cv-01565-SLR

Document 126-14
Danitz Scott

Filed 04/17/2007

Page 29 of 35
416/2007

IN

FOR

THE UNITED STATES DISTRICT THE DISTRICT OF DELAWARE

COURT

if

Case

No

04-1565

VIDEO April

DEPOSITION 2007

OF SCOTT

DANITZ

ARLIN ADAMS Chapter 11 Trustee of the Post-Confirmation of Estates of Bankruptcy HEALTHCARE CORPORATION and of CORAN Delaware corporation

Corarn

INC

Plaintiffs

vs
DANIEL

CASEY

CROWLEY DONALD PETER and SMITH

AMARAL
SANDRA

WILLIAM

SMOLEY

Defendants

APPEARANCES
SCHNADER SEGAL LLP LEWIS Bressler Esq By Barry 1600 Market Street Suite 3600 19103-7286 Philadelphia Pennsylvania 215-751-2050 HARRISON

bbressler@schnader
Appearing KEKER on

corn

behalf

of

Plaintiffs

VAN NEST LLP By Laurie Carr Mims Esq 710 Sansome Street San Francisco California 94111-1704 415-391-5400 [email protected] on behalf of Defendant Appearing Daniel Crowley

Also

Present

Cane

Finegan

Videographer

LiveNote

World Service

800.548.3668

Ext Page

A1404

Case 1:04-cv-01565-SLR

Document 126-14
Danitz Scott

Filed 04/17/2007

Page 30 of 35
4/6/2007

can

answer

Yes

By Ms Mims
than
it was

Was

CPS

using more

cash

generating

dont
the

have

the

--

dont
front of

have me
was at

any of
this

financial
in
--

information What

in

point were

time
it

seem

to

recall
at

that

they
So

was

negative before

EBITDA

the

time

negative 10 11 12 13 14 15 16 17 18 19
at

earnings and

interest
So just

taxes

depreciation
Is

amortization
as

loss
defined

EBITDA
--

youve
or of

it

--

measure

of

of one

profit measure measure

loss
profit was or used

Its
Was

loss
frequently

it

that

Coram Yes
Is it

used

at

other companies

Yes
Why
was
it

used

at

Coram
in the

20 21
22 23 24
as the to

wasnt
why
it

involved
at

decision

making
--

was

used

Coram
means
of

Its
of

just in

in

financial
--

world

its

identifying

how

its
be
and

measurement
the
--

generating
of

cash
flow
cash

It

might not receipts

true

measurement

cash net

cash

25

and

disbursements

and

flow

LiveNote

World Service

800.548.3668

Ext Page
34

A1405

Case 1:04-cv-01565-SLR

Document 126-14
Danitz Scott

Filed 04/17/2007

Page 31 of 35
4/6/2007

but

its

financial

measurement

thats used

commonly

used
During
1999 was

there

decision offer CPS

--

do

you by

know

it

decision

was made to

for sale

Coram Yes
Do you know know who
the

made

that

decision
--

dont
it

individuals
and
the

know

was

the

senior

executives

board

of

10 11 12
.13

directors
Was
--

do

you

know

when

that

decision

was

made
--

it

was

in

1999

dont

recall what

14 15 16 17 18 19

month
Was
CEO of it prior to

when Dan

Crowley

became

Coram Yes
So

by senior

executives

do

you mean Don

the

individuals Rick Smith

you previously and Wendy and

mentioned

Amaral

20
21 22 23 24

Simpson
couple

Yes well

there were

others

as

Do you
--

recall

who no

for certain know why

dont
was

25

Do you

the

decision

made to

LiveNote

World Service

800.548.3668

Ext Page
35

A1406

Case 1:04-cv-01565-SLR

Document 126-14
Danitz Scott

Filed 04/17/2007

Page 32 of 35
4/6/2007

Yes
Turn TRUSTEE
in 1999

to

the

next

page
is

which

is

Chapter

11

000362

This page

also entitled

Coram

continued Yes
The

correct

first bullet point

reads
you have

Negative
an

cash

flow from

operations
of

Do

understanding

what

that

means

Yes
10 11 12 13 14 15 16 17 18 19
was the

What On categories
and the of

does cash

it

mean theres various
and

flow statement cash cash
--

identifying category
the
--

inf low

outflow
from
as it
--

first so

is the

generated business
--

operations
as it

the

stands
It

operationally
was not

and

and

it

was was using

negative

generating

cash

it

cash
Do

youhave

an

understanding

of

why

that

case Yes
It

20 21
22 23 24 described

would

have

been

the

reasons

Ive

before
The

next

bullet

point

states

CPS using

cash

diverting

management

from core

profitable

business Yes

.25

LiveNote

World Service

800.548.3668

Ext Page
48

A1407

Case 1:04-cv-01565-SLR

Document 126-14
Danitz Scott

Filed 04/17/2007

Page 33 of 35
4/6/2007

Do you

agree

with

that

characterization

Yes
Under
sub that

bullet

point
13% 29%

guess

theres

bullet

it

reads
which

CPS had
can run at

gross margin gross those

vs

base Did

business

margin
values

you or your department

provide

Yes
What does that statement

mean

if

you

know
10 The revenue
less the some

direct

cost

of

its

11
12 13 14 15 16 17 18 19

drugs
with
was that

and

there might be The
--

other costs lower

involved

that
less

CPS

just the

had

margins and business
at

profitable
in

than

infusion

point

time

Pause
Lets Yes
This page
is

turn

to

Chapter

11

TRUSTEE

000365

also entitled abbreviation

Coram
for

in

1999
correct

with

an abbre

--

continued

20 21
22 23

Yes
The threatening
Do

second
dis

bullet
--

point

states
--

NYSE

to
what

de-list
refers

share

shares

24 25

you know

that

to

Yes

LiveNote

World Service

800.548.3668

Ext Page
49

A1408

Case 1:04-cv-01565-SLR

Document 126-14
Danitz Scott

Filed 04/17/2007

Page 34 of 35
4/6/2007

compete revenue and
the

in terms of standpoint public

its

levels

of

operati.ons

from

and

profitability
the

standpoint

market
as

investors
in

were

recognizing
for of

that

they
that

traded had
an

the marketplace
on the

Coram
the

stock
in

and
the

impact

value

stock Was

marketplace
of the

the

value

stock
to

low
form
but
he

MR BRESSLER
can 10 11 12 13 14 15 16 17 18 19 20

Object

the

answer
Low
to
--

compared

to

what

By Ms Mims

Okay

Pause
The fourth Stark bullet
II

point

states
Do you know

Borderline
what that

for

exception

refers

to

Yes
What Stark required Coram stockholders
the if

does
Ii

that

mean
regulatory minimum
at that of

was have and

requirement
$75

that

to

million of nearing where

equity

time it was
to

21
22 23 24 25

low
it

--

nearing below Stark Was
it

the

$75

million level
it

fell the

that
II

then

wouldnt qualify

under

requirements
for

important
II

Coram

to

qualify

under

the

Stark

requirements

LiveNote

World Service

800.548.3668

Ext Page
51

A1409

Case 1:04-cv-01565-SLR

Document 126-14
Danitz Scott

Filed 04/17/2007

Page 35 of 35
4/6/2007

Yes

Why
We

received

referral sources

from Medicare and
law

and Medicaid
the
--

referrals from physicians
of the

under
is
if

my understanding
not

Stark
II

II

you

do

qualify

under you

Stark can and no

with

the minimum receive those

equity

requirement

longer

referrals for would 10 11 12 13 14 15 16 17 18 19 Danitz
fall

Medicare
as

then

actually

Medicaid

in place

well
business

Was significant

the

Medicare/Medicaid
of

portion

Corams business

Yes

Pause
Handing Exhibit you what will be marked Exhibit

Its
1999 to

letter dated Ernst

December stamp
is

15th

Young 1683

The

Bates

COR-EQTY

0001681

through marked

Exhibit

No

for

identification

20 21
22 23 24

By Ms Mims

Please

review

that

document

andAll right
--

let

me

know

when

youre ready

Pause
MR BRESSLER
Is

25

this

good

time

while

LiveNote

World Service

800.548.3668

Ext Page
52

A1410