Free Supplemental Brief - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ALFRED ALOISI, et al., ) ) Plaintiffs, ) v. ) ) THE UNITED STATES, ) ) Defendant. ) ______________________________)

No. 95-650L Judge Lawrence S. Margolis

SUPPLEMENTAL STATEMENT OF FACTS AND BRIEF IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS OR, ALTERNATIVELY, FOR SUMMARY JUDGMENT Pursuant to the Court's Order dated February 28, 2008 (Dkt. No. 126), Defendant hereby submits this Supplemental Statement of Facts and Brief in Support of Defendant's Motion to Dismiss or, Alternatively, for Summary Judgment, filed February 6, 2008 (Dkt. No. 120). In its February 28, 2008 Order, the Court ordered the Parties to supplement their motion papers within twenty days from the date of the last deposition of Plaintiffs taken by Defendant. Defendant took 30(b)(6) depositions of Plaintiffs Energel, Inc. ("Energel") and Dynatech Corp. ("Dynatech") on April 24, 2008, and the deposition of Plaintiff James Kendle on April 28, 2008. Consequently, the Parties were to supplement their motion papers by May 19, 2008, which the Court extended to May 28, 2008. See Order, dated May 20, 2008 (Dkt. No. 135). Based upon the discovery obtained during these depositions, it is evident that Plaintiffs did not preserve documents relating to their alleged investment in the mining operation. Consequently, Plaintiffs lack documentary evidence showing the extent of their investment, which is an important part of the liability analysis required to assess Plaintiffs' claims. Additionally, the depositions of Messrs. Kendle and Finkelstein highlight that Plaintiffs were unable to go forward with their project, not because of any alleged action or inaction by the federal government, but because Plaintiffs lacked sufficient funds.

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SUPPLEMENTAL STATEMENT OF MATERIAL FACTS NOT IN DISPUTE 1. Myron Finkelstein, an accountant employed by Maste Consulting Group, Inc., retained the records of both Dynatech Corp. and Energel Inc., among other entities owned and/or operated by the late Plaintiff, Donald Goodman. See Donald C. Goodman Tr. at 7:5-18 (Ex. A, hereto); see also Myron Finkelstein Tr. at 22:24-23:14 (Ex. B, hereto); Affidavit of Myron Finkelstein, Jan. 11, 2008, ¶ 3 (Dkt. No. 114-2, attached hereto as Ex. C for the convenience of the Court) ("Finkelstein Aff.").1/ Mr. Finkelstein had retained over 30 boxes of "business records that related to Mr. Goodman and his entities." Finkelstein Aff., ¶ 10. 2. Mr. Finkelstein did not keep the books for Liberty Mining, Inc., which had its own accountant located in Oregon. See Finkelstein Tr. at 28:25-29:13. Mr. Kendle confirmed that Liberty Mining had its own accountant, whose "first name was Clay, and his business was Valley Accounting in Central Point, Oregon."2/ Kendle Tr. at 61:16-62:5, 73:24-74:8 (Ex. D, hereto). 3. In about June or July, 2007, after Plaintiffs failed to keep him apprised of this litigation, Mr. Finkelstein intentionally destroyed the business records of Plaintiffs Dynatech and Energel. See Finkelstein Tr. at 9:6-10, 22:24-24:7; see also Finkelstein Aff., ¶ 10.3/
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The excerpts of deposition transcripts of a particular witness cited herein are compiled as one exhibit so, for example, all citations to the Donald C. Goodman Tr. are compiled as one exhibit, Ex. A.
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Mr. Kendle could not recall Clay's last name. Kendle Tr. at 62:2-5. Based upon the name of the firm provided by Mr. Kendle, Valley Accounting, Defendant was able to locate Mr. Clay Ver Bryck Sr. formerly of Valley Accounting. See Declaration of Clay Ver Bryck Sr., ¶ 3 ("Ver Bryck Decl."; Ex. F, hereto). Previously, Mr. Aloisi erroneously testified that Liberty Mining's accountant was "Clay Vanderbrick." Oct. 31, 2007 Aloisi Tr. at 105:6-18 (attached at Ex. E).
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Mr. Finkelstein produced one box of documents of Dynatech and Energel in response to a subpoena issued by Defendant, which included any responsive documents in the possession of the late Mr. Goodman's bookkeeper, Ms. Nancy Pinkham. See Finkelstein Tr. at 26:20-27:11. -2-

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4. Mr. Finkelstein also destroyed a report that he had prepared purportedly to show the funding Plaintiff Goodman had allegedly provided for the mining project at issue in this action. See Finkelstein Tr. at 24:12-25:6; see also Jan. 12, 1998 Aloisi Tr. at 30:21-31:4 (attached at Ex. E, hereto). Several years ago, in 1998, counsel for the United States inquired about Plaintiff Goodman's investment in the mining project. See Jan. 12, 1998 Aloisi Tr. at 30:21-25. According to Mr. Aloisi, Mr. Goodman was providing the funding since 1989. Id. at 30:2131:6. Plaintiffs promised to submit Mr. Finkelstein's report to show Goodman's investment in the mining claims at issue. See Jan. 12, 1998 Aloisi Tr. at 30:21-32:1. Plaintiffs, however, never provided a copy of Mr. Finkelstein's report to the United States. 5. Plaintiffs also did not keep Mr. Ver Bryck Sr. apprised of this litigation. See Ver Bryck Sr. Decl., ¶ 4. Mr. Ver Bryck Sr. also destroyed any documents and electronic files he had in his possession relating to Liberty Mining and Energel, including, among other documents, balance sheets, check registers and bank statements. See Ver Bryck Decl., ¶ 5. 6. During the time period from about 1985 to 1988, Plaintiffs Messrs. Aloisi and Kendle estimated that several millions of dollars would be required to put their mining claims into production. See Kendle Tr. at 55:15-19. 7. In 1989, one estimate put the amount of money required to go into full-scale production at $6 million. See Kendle Tr. at 53:17-55:24 & Kendle Ex. 3 (attached at Ex. D). 8. Mr. Kendle's testimony that Plaintiffs needed several millions of dollars to go into production and Exhibit 3 to his deposition are both consistent with statements made by Plaintiff Goodman in letters dated February 4, 1992 and February 24, 1992. On February 4, 1992, Plaintiff Goodman stated that "for the past 6-12 months [Liberty Mining] [has] been for all intents and purposes closed down while the investors are trying to find additional capital to -3-

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continue mining operations." Feb. 4, 1992 Letter from Donald W. Goodman to Consolidated Credit Bureau, Inc. at FINKLE000430 (attached hereto at Ex. G). A few weeks later, Plaintiff Goodman wrote to David Davies seeking funds for the Eddy Gulch mining project, stating, "Total funding required - Four Million Dollars (4,000,000.00)."4/ See February 24, 1992 letter from Donald Goodman to David Davies at FINKLE000769 (attached at Ex. G, hereto). Of the estimated $4 million, $2 million were needed to "finance the processing plant and operating costs to produce gold bars." Id. at FINKLE000770. Mr. Finkelstein confirmed seeking capital in the form of a "credit source" at this time and, in May 1992, Mr. Goodman went into Chapter 11 bankruptcy with two of his companies, including Dynatech. See Finkelstein Tr. at 47:1849:22. SUPPLEMENTAL ARGUMENT A. Plaintiffs Cannot Show Frustration of Any Reasonable Investment-Backed Expectations Because Plaintiffs' Accountants Intentionally Destroyed Relevant Evidence In its motion to dismiss, the United States argues that Plaintiffs cannot show frustration of any reasonable investment-backed expectations, as required under Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124 (1978), because of the pre-existing regulatory regime, including regulations governing mining within National Forests and protecting the northern spotted owl. See Def.'s Mem. Supp. Mot. Dismiss Alternatively Summ. J. ("Def.'s Opening Br.") at 36-39; Def.'s Reply Supp. Mot. Dismiss Alternatively Summ. J. ("Def.'s Reply Br.") at 12-13. After the Rule 30(b)(6) depositions of Dynatech and Energel, it is now plain that Plaintiffs cannot show that the government frustrated any investment-backed expectations

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In his February 24, 1992 letter, Mr. Goodman addressed it to "David Davis," but the addressee's correct last name is Davies. See Finkelstein Tr. 51:3-8. -4-

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because they also cannot show the quantum of their investment in the mining claims as both Mr. Finkelstein and Mr. Ver Bryck Sr. intentionally destroyed the most relevant evidence. The Court of Appeals for the Federal Circuit recently concluded that the reasonable expectations prong [of the Penn Central analysis] also requires that the expectations be investment backed, and in this regard further analysis is required. The first step of the analysis is to determine the actual investment that the general and limited partners made in the property. Cienega Gardens v. United States, 503 F.3d 1266, 1289 (Fed. Cir. 2007). Plaintiffs, however, did not preserve evidence of their actual investment and, therefore, do not have documentary proof to satisfy this important step of the Penn Central analysis of the Plaintiffs' reasonable investment-backed expectations. The accountant for both Dynatech and Energel, Myron Finkelstein and his employer, Maste Consulting Group, retained the corporate records of both entities. See Supplemental Statement of Material Facts Not in Dispute, ¶ 1, supra (hereinafter, "SSOF"). At one time, Mr. Finkelstein and his company held more then 30 boxes of business records relating to Plaintiff Goodman and his entities. SSOF, ¶ 1. Mr. Finkelstein prepared a summary report of Plaintiffs' investment in the mining claims, which Plaintiffs intended to submit to Defendant to show the amount of their investment. See SSOF, ¶ 4. However, Plaintiffs failed to keep Mr. Finkelstein apprised of the status of this litigation, so Mr. Finkelstein intentionally destroyed his summary report, along with Dynatech's and Energel's business records, during the pendency of this litigation. See SSOF, ¶¶ 3 & 4; see also Finkelstein Tr. at 22:24-25:6. Moreover, Mr. Ver Bryck Sr. intentionally destroyed business records of Liberty Mining and Energel in 2003, because Plaintiffs failed to keep him apprised of this litigation. See SSOF, ¶¶ 4, 5. Plaintiffs thus did not preserve the most relevant evidence purportedly relating to their investment in the mining -5-

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claims.5/ Because Plaintiffs did not retain evidence to show the quantum of their investment, they do not have sufficient objective, documentary proof to establish that the government frustrated any reasonable investment-backed expectations. Moreover, where a party fails to preserve evidence, it is appropriate for the Court to presume that the evidence destroyed was favorable to the opposing party. See United Medical Supply Co., Inc. v. United States, 77 Fed. Cl. 257, 263, 268 (2007) (noting that the oldest remedy for spoliation of evidence is "an `adverse inference,' under which the finder of fact may infer that the destroyed evidence would have been favorable to the opposing side," and the aggrieved party need not show bad faith) (citation omitted).6/ For this reason, and the reasons stated in Defendant's Opening and Reply Briefs, the Court should conclude that the government did not frustrate any reasonable investment-backed expectations. B. Plaintiffs' Inability to Obtain Sufficient Funds for Their Proposed Mining Operations Is Fatal to Their Case In its Opening and Reply Briefs, Defendant argues that Plaintiffs cannot show economic harm due to any alleged action or inaction by the federal government, because their claim of lost

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In addition to Defendant's inquiry regarding Mr. Goodman's investment in Liberty Mining during Mr. Aloisi's January 12, 1998 deposition (see SSOF, ¶ 4, supra), Defendant also sought documents relating to Plaintiffs' alleged incurred costs in its Second Set of Interrogatories and Requests for Production of Documents to Plaintiffs dated July 31, 2007 at 7-8 ("Defendant's Second Set of Discovery") (Ex. H, hereto). Defendant's second set of discovery requests incorporated by reference its instructions and definitions from Defendant's First Set, including the instruction that its discovery sought documents "in the possession of plaintiffs' attorneys . . . accountants . . . or other professional persons or experts . . . ." See Defendant's Second Set of Discovery at 1; see also Defendant's First Set Interrogs. Request Prod. Documents to Pls. at 1 (Ex. I, hereto). Defendant also subpoenaed such documents from Mr. Finkelstein, directly. See Subpoena Duces Tecum to Myron Finkelstein (Ex. J, hereto).
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The Court of Appeals for the Federal Circuit, however, apparently has not yet addressed whether the negligent destruction of records creates an adverse inference. See Jandreau v. Nicholson, 492 F.3d 1372, 1375-76 (Fed. Cir. 2007). -6-

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profits is speculative. See Def.'s Opening Br. at 33-36; Def.'s Reply Br. at 10-12. As discussed in Defendant's prior briefs, Plaintiffs' claim of lost profits is speculative because Plaintiffs' mining operations were in the exploration and development phase, were not approved to enter into the production phase of operations, and were not close to realizing any profit. See Def.'s Opening Br. at 33-36; see also Pls.' Mem. Supp. Mot. Summ. J. at 35 (arguing that the Plaintiffs suffered economic harm "in the lost profit and income from the property"). Indeed, as discussed more thoroughly in Defendant's Opening and Reply Briefs, Plaintiffs failed to submit to the Forest Service a sufficiently detailed plan of operations, during the time period relevant to their takings claim. See, e.g., Def.'s Opening Br. at 22-27. It is now clear that Plaintiffs also were not prepared to go into production because they did not have sufficient funds. Plaintiff Kendle testified that he and Mr. Aloisi estimated during the time period of 1985-1988, they needed several millions of dollars to go into production. See SSOF, ¶ 6. In 1989, one estimate, consistent with Messrs. Aloisi's and Kendle's assessment, concluded that as much as $6 million would be necessary to scale up their operations for production. See SSOF, ¶ 7. And in early 1992, Plaintiff Goodman estimated that $4 million were needed for the project, including $2 million to "finance the processing plant and operating costs to produce gold bars." See SSOF, ¶ 8. Mr. Goodman admitted in February 1992, that Liberty Mining's operations were on hold while the investors were searching for funding. Id. Accordingly, Plaintiffs did not have sufficient funds to enter into the production phase of operations and produce gold during the time of the alleged taking. Consequently, Plaintiffs did not suffer economic harm that supports the finding of a taking under Penn Central. Indeed, it now is clear that Plaintiffs' mining operation did not go forward due to Plaintiffs' own lack of funding and not because of any alleged action or inaction by the Forest Service. See SSOF, ¶ 8. -7-

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CONCLUSION For the reasons stated herein, and in Defendant's Opening and Reply Briefs, the Court should grant Defendant's motion and dismiss this action. Respectfully submitted, RONALD J. TENPAS Assistant Attorney General Environment and Natural Resources Division s/ Bruce K. Trauben BRUCE K. TRAUBEN Trial Attorney Natural Resources Section Environment and Natural Resources Division U.S. Department of Justice P.O. Box 663 Washington, D.C. 20044-0663 (202) 305-0238 Phone (202) 305-0267/0506 Fax WILLIAM J. SHAPIRO Trial Attorney Natural Resources Section Environment & Natural Resources Division U.S. Department of Justice 501 I Street Sacramento, CA 95814 (916) 930-2207

OF COUNSEL: Rose Miksovsky, Esq. Office of General Counsel U.S. Department of Agriculture 33 New Montgomery St., 17th Fl. San Francisco, CA 94105-3170 (415) 744-3158

Dated: May 28, 2008

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ALFRED ALOISI, et al., ) ) Plaintiffs, ) v. ) ) THE UNITED STATES, ) ) Defendant. ) ______________________________)

No. 95-650L Judge Lawrence S. Margolis

LIST OF EXHIBITS TO SUPPLEMENTAL STATEMENT OF FACTS AND BRIEF IN SUPPORT OF DEFENDANT'S MOTION TO DISMISS OR, ALTERNATIVELY, FOR SUMMARY JUDGMENT Exhibit A B C D E F G Description April 24, 2008 Donald C. Goodman Tr. (excerpts) April 24, 2008 Myron Finkelstein Tr. (excerpts) Affidavit of Myron Finkelstein, January 11, 2008 April 28, 2008 James Kendle Tr. (excerpts), with Kendle Ex. 3 Jan. 12, 1998 & Oct. 31, 2007 Alfred Aloisi Trs. (excerpts) Declaration of Clay Ver Bryck Sr., May 27, 2008 Letters (2) from Donald W. Goodman dated February 4, 1992 and February 24, 1992 Defendant's Second Set of Interrogatories and Requests for Production of Documents, July 31, 2007 (excerpts) Defendant's First Set of Interrogatories and Request for Production of Documents, October 24, 1997 (excerpts) Subpoena Duces Tecum to Myron Finkelstein, November 2, 2007

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EXHIBIT A

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ) ) Plaintiffs, ) ) v. ) ) UNITED STATES OF AMERICA, ) ) Defendant. ) ) _____________________________) ) ) ) ) ) ) ) ) ) ) ) ALFRED ALOISI et al.,

DEPOSITION OF DONALD CARL GOODMAN

T R A N S C R I P T of the stenographic notes of JANE MESSINEO, a Certified Shorthand Reporter and Notary Public of the State of New Jersey, taken at the offices of VERITEXT, NEW JERSEY, 25B Vreeland Road, Suite 301, Florham Park, New Jersey, on Thursday, April 24, 2008, commencing at 9:48 a.m.
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A P P E A R A N C E S: FOLEY & LARDNER, LLP Washington Harbour 3000 K Street, N.W., Suite 500 Washington, D.C. 20007-5101 BY: LAWRENCE G. McBRIDE, ESQ. (202) 295-4017 [email protected] For the Plaintiffs U.S. DEPARTMENT OF JUSTICE 601 D Street, N.W. Washington, D.C. 20004 P.O. Box 663 BY: BRUCE K. TRAUBEN, ESQ. (202) 305-0238 [email protected] For the Defendants

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Aloisi, Bates-stamped FINKLE 000548

Request For production Page Line 6 7 8 9 10 Page Line 11 61 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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Directions Not to Answer

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1 I N D E X 2 WITNESS PAGE 3 DONALD CARL GOODMAN 4 Direct Examination By Mr. Trauben 6 5 Cross-Examination by Mr. McBride 100 6 Redirect Examination by Mr. Trauben 107 7 8 E X H I B I T S 9 EXHIBIT DESCRIPTION MARKED 10 Exhibit 1 Revised notice of deposition for 5 Dynatech Corp. 11 Exhibit 2 Copy of letter from Robert M. 47 12 Simmons to David Nawi with attachments 13 Exhibit 3 Copy of letter to whom it may 63 14 concern dated April 19, 1991 15 Exhibit 4 Copy of letter on the letterhead of67 Donald W. Goodman to Steve Bennett 16 with attachments 17 Exhibit 5 Copy of letter August 20, 1994 from74 Don to Victoria West, Bates-stamped 18 FINKLE 000535 through 537 19 Exhibit 6 Copy of document headed FLK&S 82 ledger summary, Bates-stamped 20 FINKLE 000579 21 Exhibit 7 Copy of 571-S Business Property 86 Statement 1992, Bates-stamped 22 FINKLE 001245 through 1249 23 Exhibit 8 Copy of composite exhibit, DGBR 102 0163 through 8187 24 Exhibit 9 Copy of letter April 22, 1987 on 111 25 the letterhead of Princeton Club of

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Donald Carl Goodman, 475 West End Avenue, apartment 02, North Plainfield, New Jersey, sworn. DIRECT EXAMINATION BY MR. TRAUBEN: Q Can you please state your name for the record? A Donald C. Goodman. Q My name is Bruce Trauben and I represent the United States in the case of Aloisi versus the United States. I am here to take your deposition. I'll ask some questions. Hopefully you can provide some answers. If you don't understand a question, please let me know and I will rephrase it and try and make it clearer. If you have any need to take a break for any reason, just say so and we will. Do you have any questions before we get going? A No, sir. (Revised notice of deposition for Dynatech Corp., marked Exhibit 1 for identification.) Q I am going to hand you what the reporter has just marked as Exhibit 1 to your deposition. If you want to take a moment to look it over, just go through it. Have you seen this document before? A Yes.
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Q You understand you are here today to represent Dynatech? A Yes. Q Turn to the attachment. I think it's, to shorten this process, if you could tell me whether you can review this list of items that we are going to discuss today, and let me know if there are any on the list that you are not prepared to testify about today? A No. There's nothing I can't comment on really. Q What did you do to prepare for your deposition today? A I was provided with lots of documents and I briefly scanned through them all. Q Did you search for any documents on your own? A I read and went through every single page and looked at it. Q I mean, rather than reviewing only -just reviewing what was provided to you, did you also search any records for documents on your own? A Aside from what was provided? Q Yes. A I looked to see what I had of my own,
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A Yes. Q Did Mr. Finkelstein provide any documents to you? A No. I don't think I received anything from him. Q To prepare for your deposition, did you speak with anybody who was previously involved with Dynatech? A Only talking to the bookkeeper about, you know, documents or Myron about if we had -- what records still existed. Q What did the bookkeeper tell you? A She gave everything to the accounting firm that she had. Things were disposed, in addition. You know, there was stuff that was so old it might have been destroyed. Q Do you know where Nancy Pinkham resides today? A I don't have the exact -- I don't know the exact address, but it's in Wantaque. It's not far from here. Wantaque, New Jersey. Q What is the current status of Dynatech? A Basically, it's just inactive. It's not operating at all. Its equipment all has been dissolved. It's dormant.
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yes. Q Where did you look? A Just in my garage or anywhere that I had, you know, I looked around. Q Is there any sort of repository for the corporate documents of Dynatech? A The person, the bookkeeper in charge, and our accountant had pretty much kept all the records. I didn't keep those records with me. Q Who is the bookkeeper in charge? A The bookkeeper was Nancy Pinkham. Q Did you speak with her prior to your deposition? A Yes. Q Does she still have any records? A No. Q And the accountant is who? A Myron Finkelstein. Q Did you speak with Myron Finkelstein prior to your deposition? A Not in the very recent, but a little bit, maybe. Just in general that this was going to occur. Q Did you ask him about documents he may have?

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Q Did you at any time hold any office in Dynatech? A I was an officer in the company, yes. Q What was your title? A Probably secretary. I don't really recall exactly which. Q Do you know when you held the position of secretary? A I don't know the exact days. Q Was it recently? Within -A The company's been active a while so it was over -- could have been for ten years easily. It could have been right until the end, from -Q I'm sorry. From the late 1990s? A I would say probably from the early, from even the '80s, it's possible. I really don't know. MR. McBRIDE: There may be some confusion. Are you asking when it went dormant or when he was an officer? MR. TRAUBEN: When he was an officer. A I believe I was an officer probably the last -- at least from the early '90s on. I don't know what the actual filings show. I don't have those to see.
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EXHIBIT B

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ) ) Plaintiffs, ) ) v. ) ) UNITED STATES OF AMERICA, ) ) Defendant. ) ) _____________________________) ) ) ) ) ) ) ) ) ) ) ) ALFRED ALOISI et al.,

DEPOSITION OF MYRON FINKELSTEIN

T R A N S C R I P T of the stenographic notes of JANE MESSINEO, a Certified Shorthand Reporter and Notary Public of the State of New Jersey, taken at the offices of VERITEXT, NEW JERSEY, 25B Vreeland Road, Suite 301, Florham Park, New Jersey, on Thursday, April 24, 2008, commencing at 2:15 p.m.

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A P P E A R A N C E S: FOLEY & LARDNER, LLP Washington Harbour 3000 K Street, N.W., Suite 500 Washington, D.C. 20007-5101 BY: LAWRENCE G. McBRIDE, ESQ. (202) 295-4017 [email protected] For the Plaintiffs U.S. DEPARTMENT OF JUSTICE 601 D Street, N.W. Washington, D.C. 20004 P.O. Box 663 BY: BRUCE K. TRAUBEN, ESQ. (202) 305-0238 [email protected] For the Defendants

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Energel Copy of Energel, Incorporated 70 Exhibit 10balance sheet January 31, 1990, Bates-stamped PLTF 002323 through 2338

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I N D E X WITNESS PAGE MYRON FINKELSTEIN Direct Examination by Mr. Trauben E X H I B I T S EXHIBIT DESCRIPTION

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Energel Copy of Revised Notice of 12 9 Exhibit 1 Deposition of Energel, Inc. 10 Energel Copy of 2553 form, Bates-stamped 28 Exhibit 2 FINKLE 000401 and 400 11 Energel Document from the Siskiyou County 33 12 Exhibit 3 assessor, Bates-stamped FINKLE 000431 through 432 13 Energel Copy of deed, Bates-stamped FINKLE 36 14 Exhibit 4 000280 through 282 15 Energel Copy of checks No. 1120662 with 38 Exhibit 5 attachment, Bates-stamped FINKLE 16 000266 through 271 17 Energel Copy of notice of default and 43 Exhibit 6 election to sell under deed of 18 trust, Bates-stamped FINKLE 000816 through 817 19 Energel Copy of letter dated 1/29/92, to 47 20 Exhibit 7 Donald W. Goodman from Veronica, with attachment, Bates stamped 21 FINKLE 000429 and 430 22 Energel Copy of letter on letterhead of Don 50 Exhibit 8 Goodman Enterprises, Inc. to David 23 Davies, Bates-stamped FINKLE 000769 through 771 24 Energel Copy of handwritten notes, 64 25 Exhibit 9 Bates-stamped PLTF 002339 through

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Myron Finkelstein, 9 Ronarm Drive, Mountain Lakes, New Jersey, sworn. DIRECT EXAMINATION BY MR. TRAUBEN: Q Can you please state your name for the record? A Myron Finkelstein. Q Mr. Finkelstein, I'm Bruce Trauben. I represent the United States in a case of Aloisi et al. versus United States. I have questions for you today for your deposition and hopefully you can provide some answers. A I will try. Q You understand that you are here today as a representative of Energel? A Yes. Q Let me go over basically some of the rules of the deposition. A Okay. Q First, for me to ask questions and for you to provide answers and not ask questions of me. But if you do have any questions about the procedure or if you don't understand my question, please ask and I will try and clarify as best I can. A Okay. Q It works best if we speak one at a time.
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Although sometimes it will be clear to you where I'm going with a question, and you'll want to jump in with an answer before I finish, for the court reporter, we need to speak one at a time. A Okay. Q I will try to let you complete your answer before I begin my next question. Sometimes I am guilty of not doing that, but I will try. Also, because we have a court reporter, you need to verbalize your responses. You can't just nod or shake your head, but you need to give an oral response. If you need a break at any time, just say so and we can take a break. Anything before we begin, any questions? A No. Let's go. Q Okay. I want to get a little background information. Did you graduate from college? A Yes, I did. Q Where did you go? A I went to City College of New York, Baruch College was the actual division I went to. When I graduated, it was called Baruch College. Q Did you have graduate school after that? A No, I did not.
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do specific kinds of accounting. Do you want the detail behind it to make it easier for you? Q Briefly. A Okay. I promise. The clients that I handle in most instances are small companies. They may have an office manager or have their own accounting system. I assist in putting together financial documents and I do corporate tax returns. Corporate also means LLCs these days, entity returns for lack of a better word, and in a lot of instances, I do the personal returns of the principals that are involved. Q Was there a time when you began working for Don Goodman Enterprises or Don Goodman? A The year would be, I believe, 1973. Q Were you employed directly by Mr. Goodman or one of his entities? A No. I was a partner in a CPA firm at the time and he employed that CPA firm. Q What firm? A Finkelstein Amsterdam & Company. Q And for how many years after that did Finkelstein Amsterdam & Company do accounting work for Mr. Goodman or one of his entities? A Ten years.
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Q What was your degree? A BBA in public accounting. Q Are you a CPA? A No. Q Were you ever a CPA? A Yes. Q When were you a CPA? A 1965 to 1983. Q Even though no longer a CPA after 1983, did you work in accounting? A I've never not worked in accounting. The answer is yes. Q Have you worked for various firms as an accountant? A Yes. Q Are you currently employed? A Yes. Q Where at? A Maste, M-A-S-T-E, Consulting Group, Inc. Q What do you do for them? A I am an accountant. Q So I understand, are you an accountant for Maste or are you doing forensic accounting for clients? A Maste Consulting Group has clients -- I

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Q After 1983 did you continue to do accounting work for Mr. Goodman or one of his companies? A Yes. The entities that I worked for changed, but I still continued to work. Q Where were you employed at that time? A In '84 to '86 I was employed Marvin J. Amsterdam, CPA. 1986 through 1990 I was employed by R-O-C-H-E, Roche, Miseo & Co. 1991 until now I have been employed by Maste Consulting Group, Inc. Q Did there come a time when your work for Mr. Goodman or one of his entities ceased? A Actually, it didn't cease until he died. That was in 2005. Q Did you do any work for his estate? A I was actually the executor of the estate, but at the time of his death in June of 2005, most of the assets had been dissipated. The only, in quote, passing on to his three children who were his beneficiaries, was insurance policy that it was handled outside the estate. I just did the paperwork and they received one-third each of the policy. Q Was the estate probated? A No. Q Has it been wound up?
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sense that we filed returns. It was a while from the time -- we, that's the proverbial we, meaning the company, was paying lease payments to people as an annual thing that had to be done to maintain the status of all the leases. And that was being done. So the answer is no, they were not dormant. They became dormant after Don became sick. Q I know you said that he passed away in June of 2005. When did his illness become so severe that he was unable to continue working? A He was a diabetic and, unfortunately, it got very severe and they had to amputate a leg. This was sometime in late 2003. He then had to go to facilities like homes to be taken care of. I would say, so he spent the last 18 months or so of his life in that condition and, therefore, he was not functioning -- I shouldn't say he wasn't functioning. He spoke to his son still, but that really didn't relate to these companies. It related to the son's blast -- I think he tried to help his son's continuing business. But this company became dormant after he passed. But up until that point we were okay. Q Do you know what became of the company's records?
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A It hurt when I saw it came in in November because I think we got rid of everything, a realistic guess would be June or July of that year. Q Was the government's subpoena, the notice -- first notice to you that this litigation was still ongoing? A Yes, it was. Q Prior to that time, had you ever been contacted by anyone to produce records relating to this litigation? A I don't think so, no. Q Mr. Goodman didn't request that you provide any documents for the litigation? A The only thing I remember doing, we had put together -- we, me, I, use that word to make it easier on everybody. I'm sorry. I had put together summaries of the monies expended by, in quote, all the entities, his entities, the companies I have mentioned to you, and himself. It was up about 2.3 million dollars. That was done several years before. It probably was done when the case was more -- I don't know if the word is more active or not, probably relate back even into the '90s that that took place. I did that, but I was not asked to produce documents. So the answer
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A No. We had records for all the entities. Q When you say we, who is that? A Me, the company that I am with. Records were passed from each entity I was with until the next, so I had Redwells for lack of a better word, and so Maste Consulting had many Redwells on the different companies including Energel. He passed and we put everything into storage. Frankly, I heard nothing from anybody and I didn't even know if this case was still alive, and so we disposed of the files, unfortunately, about six or eight months before I found out the case was still alive. Q So how long after Mr. Goodman had passed away were the files disposed of? A Couple of years. I would say two years plus some months. Q Approximately sometime in 2007? A Latter part, yes. Q Do you recall receiving a subpoena from the government in this case in November of 2007? A Yes. Q So had the documents been destroyed by that time?

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is no to the original question. Q Do you know what became of your summary? A Same place everything else went. It was gone. I did not know it was still needed. I had hoped, in fact, that it had been turned over to Larry here, Mr. McBride, but apparently it was not. Q Did you have any discussions within the context of Energel or any of the related entities as to the risk associated with investing in gold mines? A I am not sure I understand that question. Q Did you ever have a discussion with Mr. Goodman about the risk involved in investing with gold mines? Or in gold mines? A Oh, over the years, yes. Of course. We discussed it as an investment, what it was. Because he kept spending more and more money over a period of time. He was very comfortable that it was a solid investment because there was gold there. That's what he said to me. Therefore, once we start mining, we'll be in fairly good shape. Q Were you involved in any analysis of the costs or potential gains from any of the gold mining operations? A The only thing that came back to me,
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because at one point in the '90s, there was work done by a third party whose name escapes me right now. It was done more or less to see at what point it was practical to mine, to do the mining. That was because Don had wanted them to be doing some mining just to bring in enough cash to keep paying the expenses. And I think -- I remember in the back of my mind, this comes to be that as long as the price of gold exceeded $275, it was a very prudent investment, that mining. Q You personally did not undertake any analysis? A No. I did not do that. No. Honestly, I did not. Q Are you familiar with any investment by Mr. Goodman in the Double Eagle Mine? A Double Eagle? Q Correct. A No, I am not. Q You did produce some documents to us pursuant to our subpoena, and I found among the documents some of Larry or Lambert Aloisi's personal documents. Do you know why those would have found their way into company records? A Well, really, what I did there, to
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there. (Copy of 2553 form, Bates-stamped FINKLE 000401 and 400, marked Energel Exhibit 2 for identification.) A I asked for this for a reason. This is a form that's filed with the federal government when you want to take a corporation and request that it be subchapter S, which means that instead of the corporation paying taxes on the income or losses, the individuals do. This looks like the original, dated back in early '89 and Fred was a 50 percent partner. I am trying to think in my mind, I thought he was for quite a while. And you have asked the question did he relinquish shares. And I am trying to remember whether Don became a hundred percent or not, which is what you are really asking. I don't know. I don't know. He may have. I know he did not fund anything in his company so it's possible. I don't remember specifically myself. Q If you look at the second page of Exhibit 2 to your deposition, there's a form for Liberty Mining. A Yes. Q Did you prepare this form?
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assist in giving you what we had, we -- we. I am going to add a person's name here. When I say we, I asked for assistance from Nancy Pinkham. She had been the bookkeeper for Donald W. Goodman for a period of time. Her mother previously had been the bookkeeper. Then she became the bookkeeper. And I asked if she had any files on the gold mine. I then put the two together, so to speak. Honestly, I did not really, being it said gold mine, I just turned it over to you. I didn't want to take anything out. Turned over all we had. So I can't answer your question. Q So you don't have any personal recollection of serving as a repository for Mr. or Dr. Aloisi's documents? A No. Not at all. Q When Energel was formed, were the only two shareholders Alfred Aloisi and Don Goodman? Donald W. Goodman? A I believe that's the answer, yes. Q At some point did Fred relinquish his shares to Mr. Goodman? A I see you have a 2553 there which is the subchapter S election. That election also shows the percentages that each owned. Should show that on

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A I may have. I think I did not. I believe there was an accountant in California. It says Oregon, who prepared it. Q Did you do any work for Liberty Mining? A No. Q Didn't keep any Liberty Mining books? A That, I did not. I saw records, but that was records passed to me by an accountant. The more I think about it, I think it was a he, from Medford, Oregon. Q Do you know the individual's name? A No, I don't. So we prepared this, we meaning myself. Q When you say this, you are referring to page 1? A Excuse me. I am fairly certain that the 2553 form for Energel was prepared here, and it was signed by Donald Goodman here and then mailed out to them to then forward. An accountant in Medford, Oregon prepared the Liberty Mining and then forwarded it. The dating is close because it had to be done, you have 75 days from the beginning of the year to become a subchapter S. That's the statutes. It had been that way forever. So let's see. It had to
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Mr. Goodman about using funds from another entity of his to cover the amount due? A Oh, we always did. That's basically how we paid things. Q But specifically with respect to this debt, did Mr. Goodman make the decision, to your knowledge, to not -- pay off the amount loaned? A If the amount was 6,000 and change, he would have probably made the attempt through another company to pay it. I can't -- I don't know if this was paid or if this was removed. I keep having this 150 stick in my mind. That's what Davies wanted, 150 -- I mean, that's what he was entitled to, I should say, not that he wanted. We had situations. The way things worked back around '91, which is the time of this, the chances are it would not be paid directly by Dynatech, nor paid directly by Capricorn. The third company that he had which is the overview company, like a management company, was Don Goodman Enterprises, Inc. So if it were to be paid, it would have been paid through there. Q So is it your understanding that the loan accelerated then and the full amount was due? A At some point in time the full amount
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First, turning to the second page from Donald Goodman, do you recognize the signature? A That's Donald's signature, yes. Q Have you seen this document before? A I'd have to say yes, I have seen the document before. Q And this was among the files that you produced in response to the government subpoena? A Seeing the letter here this way, the answer would be yes. Q Second paragraph, second sentence, and I will quote for the record, it says, "For the past 6 to 12 months, they have been, for all intents and purposes, closed down while the investors are trying to find additional capital to continue mining operations." Do you see where I am reading? A I see the paragraph, yes. Q Did you have any discussions with Mr. Goodman about the search for investors during this time period? A No. I don't remember investors. I do remember looking for credit source, but not for investors, no. Q Do you have any reason to question the
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became due. That I'm certain of. You are showing me here '91 and I thought it was a little bit later than that, to tell you the truth. That's why the confusion to me is if it was later than that, if he made the installment payments or not. Actually, the installments were less. 6,875 was not the installment. I think, looking at this as I glanced, I think it's 1,375 a month. So that would make this a five-month delinquency, just looking at it here. So I don't know at what point the acceleration would have taken place for the 150. I just don't remember. Q Okay. That's fine. (Copy of letter dated 1/29/92, to Donald W. Goodman from Veronica, with attachment, Bates stamped FINKLE 000429 and 430, marked Energel Exhibit 7 for identification.) Q Mr. Finkelstein, you have been handed what the reporter has marked as Exhibit 7 to your deposition. A Yes. Q First page is a letter dated January 29, 1992 from Consolidated Credit Bureau. The second page is a letter dated February 4, 1992 from Donald Goodman to Consolidated Credit Bureau.

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conclusions Mr. Goodman stated here? A The conclusions? Q Well, do you have any information that is contrary to what's stated here in the letter? A Well, it's a little confusing because Liberty Mining actually was whatever operations were going on. They were the ones spending the money. But I am looking at the dates on this. Unfortunately, right after this, and I don't have it here, is when we had to put -- he and his two companies into Chapter 11. It was around May of 1992. Q Referring to which companies? A Dynatech, Capricorn and Donald W. Goodman, all three had to go into Chapter 11, which they did. Q Donald W. Goodman personally? A Yes. Personally, yes, yes, yes. So obviously, dollars are very, very tight at that point for him. He responded to this letter personally -sent him the letter personally. That's why. I look at the first page. Q It's addressed to Donald W. Goodman and Capricorn. A Yes. I see that. Liberty Mining at a
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different address in Oregon, no longer Medford. These were the times when things were difficult and somewhere about April or May of '92 is when he -- his two main companies went Chapter 11. Q Did you have any discussions with Mr. Goodman about the funds necessary to develop the mining operations in California? A You asked earlier if we had a plan or whatever, if I had done anything. And other than knowing what was needed -- I am going to say it in a way that might sound strange. I will say Don's side of the equipment as opposed to Freddie's side of the equipment. Don was in construction so his initial side of the equation was building the road, getting the equipment in there, getting the excavation done to start doing the gold mine. And frankly, that was done where he just -- the money had to be spent and he spent it, so to speak. I can't tell you specifically the breakdown of the operation itself. I think he may have left that towards Freddie's side, Mr. Aloisi's side. So no, I did not have that discussion where I can be specific about it. (Copy of letter on letterhead of Don Goodman Enterprises, Inc. to David Davies,
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while we called it a management company and they paid fees to it for him, this was where he advanced funds out for investments, if you want. Q Okay. Let me direct your attention to the first page, the second paragraph. The last sentence says, total funding required, 4 million dollars. Do you have any recollection of having a discussion with Mr. Goodman about the need for 4 million dollars investment around this time, 1992? A I don't believe that I worked those numbers up. To be very truthful with you, but this entity worked up in some fashion between what he was told by Fred or he and Fred worked up, and maybe even another accountant that he would run by me the numbers. But no, I didn't remember this specific amount which is the question you really asked me. So no. Q Or do you recall having any discussion with Mr. Goodman around this time frame about a need for funds? A I would have had to. I would have had to. Q In the first paragraph, second line, Mr. Goodman wrote, "It's just that time is of the essence if I want to slow down Fred from triggering
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Bates-stamped FINKLE 000769 through 771, marked Energel Exhibit 8 for identification.) Q You have been handed what the reporter just marked as Exhibit 8 to your deposition. It's a letter dated February 24, 1992 from Don Goodman to David Davies. I believe, even though it's identified as David Davis, the correct addressee is Davies. A I believe you are right, yes. Q Do you recognize Don Goodman's signature on that page? A That is his signature, yes. Q Prior to today, had you seen this letter? A I'm sure I had at some point. Q Do you recognize the letterhead, Don Goodman Enterprises? A That was his entity. As I said to you before, he had two operational companies. Now, the operations that he was in was blasting contractor. Dynatech was a blasting contractor in the State of New York. Capricorn was a blasting contractor in the State of New Jersey. That was their differences and why he had two companies instead of one. Unions and all the rest of that. This was his company, if you will, that

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the lawsuit against the government prior to having at least a tentative agreement with Fred and me." Do you know what he's referring to there? A Yes. Here he wanted to make certain that he had in writing with Fred that his equity holdings in the, in quote, gold mine. I don't think he had one. Q But do you know, is he referring to this present lawsuit that brought us all here today? A I don't think this was in place at that time, to tell you the truth, but -Q I would imagine that at this time, maybe it was just anticipated. A It could be. I'll take a step back. Fred was very upset because, in quote, the government had stopped him from actually mining the mine. I don't remember the exact dates and so that's why I'm being a little careful here. If the, in quotes, Spotted Owl situation was precedent to this. Then he was thinking along the lines of a lawsuit. Don is always -- is a businessman, was always thinking of a venture to make money, so that would be what he's referring to. If I'm wrong in dating, I can't answer your question.
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EXHIBIT C

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EXHIBIT D

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

ALFRED ALOISI, et al, Plaintiffs, vs. THE UNITED STATES, Defendant. NO. 95-650L Judge Lawrence S. Margolis

DEPOSITION OF JAMES KENDLE

Taken on Behalf of the Defendant Monday, April 28, 2008

Beovich Walter & Friend

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BE IT REMEMBERED THAT, the deposition of JAMES KENDLE was taken before Charlotte A. Powers, Certified Shorthand Reporter and Registered Merit Reporter, on Monday, April 28, 2008, commencing at the hour of 9:42 a.m., the proceedings being reported in the offices of BEOVICH WALTER & FRIEND, 1001 SW 5th, Suite 1200, Portland, Oregon. APPEARANCES STEVEN PARKER, ATTORNEY AT LAW By Mr. Steven Parker 1400 SW Montgomery Street Portland, Oregon 97201 and FOLEY & LARDNER, LLP By Mr. Lawrence McBride (via telephone) 3000 K Street, NW, Suite 500 Washington, DC 20007 Appearing on behalf of Plaintiffs U.S. DEPARTMENT OF JUSTICE By Mr. Bruce K. Trauben (via telephone) PO Box 663 Washington, D.C. 20044 Appearing on behalf of Defendant *****
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***** JAMES KENDLE, was thereupon produced as a witness on behalf of the Defendant and, after having been duly sworn on oath, was examined and testified as follows: EXAMINATION BY MR. TRAUBEN: Q Mr. Kendle, my name is Bruce Trauben. I represent the defendant, the United States, in the case of Aloisi versus The United States. And before we begin, I just want to go over a few basic ground rules for the deposition. And one of them -- you might already know this -is that only -- because we're on the telephone -- some of us are on the telephone -only one person can speak at a time; otherwise, we get cut out. So if you don't mind, try to be patient, let me get my question out before answering; and likewise, when you're speaking, giving your response, I'll try not to jump in and start asking additional questions until you're finished. Also, because we have a reporter who is
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1 EXAMINATION INDEX 2 Page 3 Examination by Mr. Trauben................... 4 4 Examination by Mr. McBride................... 175 5 Further Examination by Mr. Trauben........... 184 6 7 8 9 10 EXHIBIT LIST 11 Page 12 13 1 Agreement, dated 17th day of 37 December, 1984 14 2 Listing with BLM of mining claims 41 15 3 Fax, dated 3/31/89 56 16 4 Loggers and Contractors Supply, 78 17 Inc., invoices 18 5 Professional Register System 78 19 6 Letter from the Department of the 94 Treasury, dated 1/1/90 20 21 22 23 24 25

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taking down everything that we say, you need to give a verbal response; in other words, nods of the head, things like that, don't translate well onto the transcript. So -- and also, I can't see you. So that won't work. You'll have to give a verbal response to my -- to my questions. Similarly, things like grunts, you know, uh-huh, that kind of stuff doesn't go well on the transcript. And, you know, if you could respond with a "yes" or "no" answer, that -- that's ideal. Sometimes my questions will not be clear and you'll want me to rephrase. Don't hesitate to ask me to clarify my questions. And if I ask a question and you begin to respond, I'll assume that you understood it and were able to give a response to the question asked. And if at any time you need to take a break, just say so. Usually it seems that we go about an hour, maybe an hour and a half, and take a short break. It's hard to go much longer than that without a break. So there will be breaks throughout the day. Do you have any questions before we begin? No, sir.
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Q A Q A Q

A Q A Q A Q A Q A Q A Q A Q

Do you have a current fixed address? 5310 Highway 66, number 22, in Ashland, Oregon. Is there a zip code? 97520. Thank you. Before we get into some of the details of the -- of the case, I want to just get some background about you. Can you tell us, did you graduate high school? Yes, I did. And about when? 1972. Did you attend college? Yes, I did. Where at? Southern Oregon University. Did you graduate? No, I did not. How many years did you attend? Four-and-a-half years. What was your major? Science and mathematics. Did you work at any time between high school and college; did you work full time anywhere?
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Q A Q A Q A Q A Q A Q A Q A Q A Q A Q

Were you incorporated or something like that? No. How long did you do that? Approximately two years. Until sometime in 1982? That's correct. And then what did you do for employment? I actually became involved with Mr. Aloisi in the mining endeavor. In which year? I met Fred in 1982, and I started in business with him in 1983. How did you meet Mr. Aloisi? We met in Lamaze natural childbirth class. Where were you at that time? Ashland, Oregon. Then, to set the parameters, when did your affiliation with Mr. Aloisi cease? Approximately 1991, I believe. Just to get an idea what you've been doing since 1991, did you have subsequent full-time employment? Yes, I did. And can you just tell us briefly what you did after working with Mr. Aloisi?
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A Q A Q A Q A Q A Q A Q A Q A Q A Q A Q A

Yes, I did. Where did you work? I worked for my father's log truck business. Would that be Kendle Trucking? That's correct. What years did you attend college? From 1972 until 1977. Did you continue working for Kendle Trucking after college? Yes, I did. How long did you work there? Approximately three years. Until about 1980? Yes. What kinds of assignments were you working on at Kendle Trucking? I was a logging truck driver and also a logging truck mechanic. After your work at Kendle Trucking in 1980, where did you go? I went into business for myself. What type of business? Buying and selling timber. What was the name of the company? James Kendle.

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A Q A Q A Q A Q A Q A Q A Q A Q A Q A Q

I was employed by my father's trucking company. About what years? Until 1992. And then where did you go? I was off work after an accident for a period of time, and then I returned to my father's business. Was this in around 1993? That's correct. How long did you stay there? Two more years. So about 1995? Yes. And then did you go to a specific company after that? No, I didn't. I returned to school. Where at? Portland Community College. Did you earn a degree there? No, I did not. What were you majoring in? I was in -- enrolled in a legal secretary and the legal assistant program. What years did you attend the community college?
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Q Did you and Fred obtain loans from any others? A It seems to me that we did. I don't recall any specifics, however. Q In that time frame, 1985 to 1988, before Don Goodman got involved, had you and Fred, or Fred, done any kind of an analysis on how much money it would take to develop these mining claims? A I believe that there are documents that indicate that. Q You did undertake that analysis, then? A I believe so. Q Do you remember approximately how much money it would have taken to develop the mining claims? A I don't understand your question. Q Well, did you come up with an estimated dollar amount that was needed to develop the mining claims into a producing-gold mine operation? A I don't recall any specific number. Q Okay. Then, if you could look at the next document, I think, that should be on the top of the stack. If you set the other ones aside, we'll work down. The top. There should be a single page. MR. PARKER: Single-page document?
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1 (Deposition in recess at 11:07 a.m. - 11:15 a.m.) 2 THE WITNESS: Excuse me. Mr. Trauben? 3 MR. TRAUBEN: Sure. 4 THE WITNESS: I'm feeling much better now. 5 And I was thinking about a couple of things in 6 the restroom. And I'm -7 MR. TRAUBEN: Could we go on? 8 MR. MCBRIDE: Should we go back on the 9 record? Are we back on the record? 10 MR. TRAUBEN: Yes, we are on the record. 11 Okay. Go ahead. 12 THE WITNESS: Yes, I misspoke. I actually 13 did see the complaint. 14 MR. TRAUBEN: Oh, okay. 15 Q BY MR. TRAUBEN: About what time? 16 MR. MCBRIDE: That's getting into that 17 same issue, again, of privilege, but I think he 18 answered -- he answered something about he 19 wasn't sure he'd seen it before. But that's -20 that's what he's correcting. I hope that's 21 what he's correcting. 22 MR. PARKER: Is that what you're 23 correcting? 24 THE WITNESS: Yes, yes, that's -- yes. 25 Q BY MR. TRAUBEN: Well, had you seen the complaint
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MR. TRAUBEN: This is a fax from around 1989, actually. MR. PARKER: Do you have an FS number or a Bates stamp there? MR. TRAUBEN: Do you see it? I'm not sure you found it yet. MR. PARKER: Can you reference it by Bates stamp, please? MR. TRAUBEN: Yes. It's Finkle, F-I-N-K-L-E, 000392. THE WITNESS: Yeah. MR. PARKER: Because it's not in the same order. MR. TRAUBEN: I'm sorry. MR. PARKER: That's okay. Hang on a second. Just give us a second. Let me -MR. TRAUBEN: We'll probably take a short break soon, too. Should we do it while you're looking for the document? Why don't we take a short break. MR. PARKER: That's fair. MR. TRAUBEN: Okay. We'll go off the record now and reconvene in about five minutes. Don't hang up. MR. PARKER: Okay. We're off the record.

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before it was filed in 1995? MR. MCBRIDE: I'll make that same objection that we've been discussing, Bruce, with respect to this record, which you've asked me to look into. MR. TRAUBEN: And you're instructing him not to answer? MR. MCBRIDE: As to when, yes. BY MR. TRAUBEN: Let me ask, Mr. Kendle, then, do you recall how it came into your possession, the copy of the complaint, whether it was provided by counsel or someone else? It was by counsel. Was it by counsel that -- one of the counsel that is representing you today? That's correct. Looking now at the single-page document that is Bates number Finkle 000392, that's a fax, and it looks like it's a page of a fax. And the reason why I wanted you to look at this is that there's an estimate here in the middle of the page, maybe one-third of the way up from the bottom. There's a note that says "scale-up requirements estimated at 6 MM," which I understand to be 6 million.
14 (Pages 50 to 53)

Beovich Walter & Friend

Case 1:95-cv-00650-LSM

Document 137-6
James Kendle
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Filed 05/28/2008

Page 6 of 11
April 28, 2008
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But let me ask you whether that figure refreshes your recollection of any estimates that you and Fred had conducted of the amount of money that you needed to get into production. Well, Mr. Trauben, I'm trying to be forthright and honest in my answers, and, of course, this has been many years ago. And when I turn the page upside down, it says "Haber." And I specifically remember a gentleman named Norm Haber. And I have seen this, and the answer is yes. And a lot of your questions I'm just trying to get up to speed so that I can answer you. Okay. That's fine. Okay. MR. MCBRIDE: Mr. Trauben, is that going to be made Exhibit 3, or we don't need to, or what? MR. TRAUBEN: Well, not -- not yet. BY MR. TRAUBEN: Do you recall -- Mr. Kendle, do you recall seeing this document before? Yes, I do. And what were the circumstances that you've seen this before?
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MR. TRAUBEN: Why don't we go ahead and have this marked as Exhibit 3. You can hand it to the reporter. THE WITNESS: Okay. Q BY MR. TRAUBEN: And just for your knowledge, the reporter will collect the exhibits today and she'll make them part of the transcript, so just be sure you don't walk out with any. A Okay. Q That does happen from time to time. (Deposition Exhibit 3 marked for identification.) BY MR. TRAUBEN: Q Around this time in the timeframe '85 to '88, or towards the latter part of that time frame, were you and Fred looking for investors? A Yes. Q Did you find any investors? A I believe we did. Q And who would that be? A When Mr. Goodman came into the picture. Q Was he introduced to you by Fred's father, Larry Aloisi? A Yes. That's correct. Q So was there any kind of understanding when Mr. Goodman invested; was he buying into the
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Well, that's the hard part. I just don't remember. I'm trying to recall if Norm Haber wasn't -- was in Salt Lake City. That -- that may be a correct recollection. I believe we were doing research on what it would take to be in production. Had any of that kind of analysis been done before this time? The date on this fax is from 1989. Well, I would answer yes to that. It's some like -- somewhat like due diligence. You try and get many opinions on the same question and do your research so that you can make an informed decision. So previously, during the time frame of 1985 to 1988, did you and Fred estimate that it would take several millions of dollars to get into production? That -- that would be correct, yes. So when you saw this estimate from Mr. Haber on just the scale-up requirements, was that consistent with your prior understanding of the kind of money it would require? In a general sense, I would say that's true. Okay.

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mining claims, or was he more or less just loaning you and Fred the money? I would say that he was buying in. Perhaps loaning, also. Okay. So were you involved in any discussions with Fred and Mr. Goodman on how you would go about this operation; in other words, what companies you might need to form, transfer ownership interest in any of the money claims, things like that? Well, yes, I was. I'd like to make a note here that in 1988, I had a broken leg from a logging accident. So when I was coming b