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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Criminal Action No. 04-cr-103-REB UNITED STATES OF AMERICA, Plaintiff,

NORMAN SCHMIDT, GEORGE ALAN WEED, CHARLES LEWIS, MICHAEL D. SMITH, Defendants. _______________________________________________________________ REPORTER'S TRANSCRIPT TRIAL TO JURY - VOLUME XXIV _______________________________________________________________ Proceedings before the HONORABLE ROBERT E. BLACKBURN, Judge, United States District Court for the District of Colorado, commencing at 8:50 a.m., on the 9th day of May, 2007, in Courtroom A701, Alfred A. Arraj United States Courthouse, 901 19th Street, Denver, Colorado. APPEARANCES WYATT B. ANGELO, MATTHEW KIRSCH, Assistant United States Attorneys, 1225 Seventeenth Street, #700, Denver, Colorado, appearing for the Government. Suzanne M. Claar, Official Reporter 901 19th St. Denver, Colorado, 80294-3589 (303)825-8874 PROCEEDINGS REPORTED BY MECHANICAL STENOGRAPHY TRANSCRIPTION PRODUCED BY COMPUTER

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APPEARANCES (Continued) PETER R. BORNSTEIN, 1600 Broadway, #2350, Denver, Colorado, THOMAS J. HAMMOND, 1544 Race Street, Denver, Colorado, appearing with Defendant Schmidt. THOMAS E. GOODREID, 1801 Broadway, #1100, Denver, Colorado, appearing with Defendant Weed. RONALD GAINOR, 6414 Fairways Drive, Longmont, Colorado, appearing with Defendant Lewis. DECLAN J. O'DONNELL, 777 Fifth Street, Castle Rock, Colorado, RICHARD N. STUCKEY, 2150 West 29th Avenue, #500, Denver, Colorado, appearing with Defendant Smith.

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

P R O C E E D I N G S (Proceedings resumed at 8:50 a.m.) THE COURT: gentlemen. Thank you, and please be seated, ladies and

Mr. Schmidt, good morning. Good morning.

MR. SCHMIDT: THE COURT: MR. WEED: THE COURT: MR. LEWIS: THE COURT: MR. SMITH: THE COURT:

Mr. Weed, good morning. Good morning, your Honor. Mr. Lewis, good morning. Good morning, your Honor. Mr. Smith, good morning. Good morning, your Honor. Ladies and gentlemen, good morning. Ladies

and gentlemen of the jury especially, good morning. THE JURY: THE COURT: Good morning. We presumably are prepared to proceed

again, and therefore, Mr. Angelo, you may commence your cross-examination. MR. ANGELO: THE COURT: Thank you, your Honor. You are welcome.

(George Alan Weed was recalled to the stand.) CROSS-EXAMINATION

Mr. Weed, I would like to talk to you a little bit about And I don't want to be repetitive but I

your background, okay?

missed some of that yesterday about the degrees that you

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George Alan Weed - Cross 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 obtained? A Q A Yes, sir. Can you tell us about those? Certainly. When I got out of high school, I started Duke

University Technical Institute where I obtained an industrial engineering degree, associate's degree. Q A Q A That would be an two-year degree then? Yes, sir. Okay. And then I took on top of that called the Capstone program.

Two more years and I got a management degree from Purdue. Q A Q A Master's degree? Management. Management degree. I see.

It was called -- the degree was supervision but it was

basically management. Q A And then you had some post-graduate degrees? I certainly did. I went to Butler University and was able

to achieve my master's in business, MBA. Q A Q And when did you get your MBA? '72. And you also went on to get some degrees in the mining

engineering field, did you not? A Yes, sir. After I went to southern Illinois in '74, I got

my master's in mining engineering in '82.

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Q

Okay.

George Alan Weed - Cross And what was the attraction to you with respect to

the mining business? A I received a call from a headhunter, and they told me that

General Dynamics had hired a new president for their division, and they wanted someone to double the size of the company, and the president was looking for someone that would do that, and so I was hired in that position to help the new president double the size of the company, which was a full mining company. Q A How big a company was General Dynamics? At that point in time, our company was division was about

fourteen, 1500. Q A Okay. Yes. And this position was where, if you can tell us? It was Benton, Illinois. I am sorry. Well, West Franklin,

Illinois. Q

Which is seven miles down the road.

And then you decided to go back into the mining business for

compliance coal? A Q A Yes. And when did that start again? Um, I would say probably -- not exactly sure. Let's see.

Probably '8 -- late '80s, early '90s. Q Between those two engagements, did you keep track of the

regulatory things that were going on in the coal business? A Q Yes, sir. And I am assuming that knowledge that you had about the coal

business and about what was going on by way of regulation was

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George Alan Weed - Cross something that you employed when you became involved with compliance coal, correct? A Q Yes, sir. You also talked a little bit about the contracts that you Tell us about those,

negotiated on behalf of compliance coal. if you would. A

I worked with several different power companies and

industrial accounts to generate coal sales, and the first one I was able to get was with Kentucky Utilities, and they have a plant in Lexington, Kentucky, and so that was the first one. And then during that time also South Carolina Gas and Electric, and STE in South Carolina Gas Electric Company, and those are the two, both of them being utility power companies. Q A Q And did you negotiate the contracts? Yes, sir. And the value of those contracts, as I understood your

testimony, was $40 million? A Q Yes, sir. You were also involved with some other coal companies, were

you not? A Q A Q A Yes, sir. Blackfire? Yes, sir. Tell us about that. Blackfire is an eastern Kentucky -- a company that is

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George Alan Weed - Cross surface mining company. It doesn't mine any gold but it has permits. Q A Okay. And what's your position with respect to Blackfire?

I organized it and pretty much provided just the knowledge

of engineering, and that type of thing. Q Now, as part of your participation in the coal business, you

were also involved in assessing the coal reserves on a given lease; is that correct? A Q A Q A Q A Yes. I have done that.

And you did that with respect to compliance, did you not? Yes. You did that with respect to Blackfire? Yes. What kind of process do you have to go through to do that? Well, it's basically pretty simple process, if you know what You know that the coal covers so many acres, and

you are doing.

you know that there is the seam thickness, so that gives you the acreage, which is the area, and into the thickness that gives you the volume, and then you know that coal basically weighs 80 pounds per cubic foot so just a basic calculation. Q Now, as I understand, you also obtained at one point a

securities license? A Q A Yes, sir. What did that process involve? A lot of study, and my wife had a large coal account where

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George Alan Weed - Cross she had the life and the health and the workers comp and their retirement plan. When the retirement plan first started, it was

just a straight retirement plan that the company put money into an account, and that account generated so much interest. That particular type of deal doesn't require anything but an insurance license to, you know, a regular insurance license. However, the next year or so they decided to go to an interest sensitive like a variable annuity or they would have risk in the market, and with the risk in the market, you then are required to have a variable annuities license, so I again went to school and got my variable annuity license so that the Weed Agency -- I think I testified yesterday that I was my wife's aide-de-camp and errand runner or whatever, so I got that variables annuities license so that we would legally be licensed to get permission for that particular job. Q As part of that course of study, did you learn what an

investment contract was? A Q A Q I would assume I did. Don't remember today? No. Have you held any other executive positions with

corporations or companies that we haven't talked about? A Yesterday I think that I said I had started out my first job

as a plant manager for one of the first display manufacturers

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George Alan Weed - Cross that made -- manufactured or made displays out of wire and sheet metal and wood. When a client like Blue Lustre Rug Shampoo or Eastman Kodak wanted to -- well, like Eastman Kodak is a good example, they have never sold film on racks. The film was always sold by

the lady or man going into the drug store and say, here Mr. Druggist, I am out of film, and they would take the film out, put a new roll in, and he or she would go out and take more pictures while they developed those. So Eastman Kodak decided they could sell film, and you may remember the ad on TV where the guy on the surfboard put the film into the camera as he came into the bank and showed how easy it was, and for that job we made 50,000 displays for Texas as a test program to see if Eastman Kodak could sell film in the pay racks at the cash register. So that was the first job.

And then during that time I was going to night school. I told you I got my two degrees. And then my department

chairman at Purdue said, I want to hire you, and so I went from that job to Purdue and taught management, and did supervisory training programs where I would go to a company and have fifteen or twenty people in a hotel. Freeman Coal. Q A Freeman Coal? Yes. It was another coal mining company which is a division And then from that I went to

of the general Dynamics, which General Dynamics happened to call

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George Alan Weed - Cross their resource group which contained Freeman coal, marble headline, brick and clay, and material service. If you were in

Chicago you see the huge concrete mixers that are on the road so that was all part of the resource group. Q Is that all the executive positions that you have held in

corporations? A Q Yes, sir. Have you ever held an executive position with Capital

Holdings Company? A Q No, sir. Why don't you take a look at Government's Exhibit No. 534, It will have to be handed to you in a

if you would, please. notebook, Mr. Weed. MR. ANGELO:

5034.

I am sorry, Mrs. Kramer. 5034?

THE COURTROOM DEPUTY: MR. ANGELO: if you would. THE WITNESS: BY MR. ANGELO: Q A Q A Q A 5034. Okay. That's correct. Yes.

And turn to page 2 of the exhibit,

That's 5034?

And turn to page 2, if you would, please. Okay. Do you recognize the body of that e-mail message? Yes.

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Q A Q

Okay.

George Alan Weed - Cross You authored it, correct?

Yes, I did. Uh-huh. And you sent that to a gentleman by the name of

Juan Carlos Diaz? A Q A Q Yes, I did. And that was on February the 17th of 2003? Yes, sir. And that e-mail was concerning setting up an international

business corporation? A Q Yes, sir. And you signed it Alan Weed, president, Capital Holdings

Company, Inc. didn't you? A I certainly did, but I missed an R there. Sometimes

compliance and capital are awfully close, but I had nothing to do with Capital Holdings. Q A That should be Compliance Holding.

Compliance and Capital is awful close, is it? It is for an old man. MR. ANGELO: Your Honor, at this time I move for the

admission of Government's Exhibit No. 5034. THE COURT: Any objection by any of the defendants? Your Honor, may I have a moment, please? You may, counsel.

MR. GOODREID: THE COURT:

Thank you.

MR. GOODREID: counsel on this? THE COURT:

Your Honor, may I confer with government

Thank you.

You may.

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George Alan Weed - Cross MR. ANGELO: Your Honor, Mr. Goodreid has indicated that he may have an objection to page 1 of the exhibit, but has no objection to pages 2 and 3, so at this point my understanding is we would be admitting pages 2 and 3 only. remark page 2 with another exhibit sticker. republish at this time. THE COURT: by the government? MR. ANGELO: THE COURT: of the defendants? Hearing none, Government's Exhibit 5034, as modified for identification, is admitted in evidence, as to pages 2 and 3 only, with the exhibit to be remarked as soon as practicable, but not now, and with leave to now publish. MR. ANGELO: We would ask that page 2 be published at It is, your Honor. Any objection to the modified offer by any And is that the revised and modified offer We would have to I would like to

this time, your Honor. THE COURT: BY MR. ANGELO: Q Mr. Weed, you can either look at the document in its Very well.

original form there or you can look at it on the screen, whichever works best for you. A Q A Yes, sir. Looking at the signature line there? Yes, sir.

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Q A Q A

George Alan Weed - Cross Do you see it? Yes, sir. How does that read Compliance Coal to you? As an error on my part when I typed the thing up. As you

can see, in line 2 I was talking about our industry is very cap intensive, and I already put Compliance Holding, I just put Capital there. I mean it's ridiculous to even think it had something to do with Capital Holdings, No, 1, and No. 2, Mr. Schmidt was president of Capital Holdings, and I had nothing to do with his organization, except as I testified to help him, and this is -this is one of those -- I can't call it -- it was just an idiot thing. Q A Freudian slip? Well, I don't think so because that would indicate I wanted It was just

it to be that way, as I recall from psychology. dumb. Q

Mr. Weed, would you agree with me that you are not exactly

the simple farm boy that you like to portray yourself to be? A No, sir. I don't know what you mean by that remark, but I

am very proud of being a farm boy. Q A And you like to tell people that, don't you? Well, I am very proud of my background. I mean if there is

something wrong with farmers, I don't know, but if it wasn't for farmers, people wouldn't eat.

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Q

George Alan Weed - Cross Let's talk a little bit about the contact with Leon Harte in

1999? A Q Um-hm. That phone call came out of the blue. You had no prior

knowledge of Mr. Harte, did you? A Q Not at all. And during his phone conversations with you, what did he His insurance needs? He said that he was

tell you about what his needs were? A

He was very, very, clear and accurate.

a -- formerly in a financial company, and he had a trust, and the name of his company was Reserve Foundation Trust. He told me that the people who were putting money into that trust as a holding -- financial holding account, were very upset and insecure about an offshore account that had no insurance against the bank failure. Because, you know, offshore

banks can be very volatile to failure. And he said he wanted an insurance policy, and to insure bank failures, and then he said he was going to have a trustee, and he wanted a second policy for crime or theft with that -- with his trustee, so he said he wanted two policies, and that was it. Q So as I understand it from your testimony yesterday, he told

you that he -- the way the account was to be set up was that the money couldn't be touched, correct? A Exactly.

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Q A

Okay.

George Alan Weed - Cross And he used the term "non-depleting"? He told me

He certainly did, and that was not new to me.

two things.

One, it was going to be -- he needed to have

capacity for 500 million, and it was going to be a non-depleting account where the money was never moved out of that account. Well, I had worked with DW-1, and the same term non-depleting because I knew what DW-1 was going to do. It

wasn't a new term to me because I had already been introduced to it. Q And when you were working with DW-1, you are referring to

the Darrell W. Dunham, No. 1 trust? A Q Yes, sir. And you were familiar with the documents related to that

trust, were you not? A Q Yes, sir. And that's what you are basing your testimony on today, is a

review of those documents? A Q I don't understand the question. The documents that Mr. Dunham had prepared for his investors

would have reflected the protection of the non-depleting account, correct? A I don't know that I saw the documents for his investors.

When I went with him to the bank to open his account, he did have his trust document which had the word "separate beneficiaries" in it. So I had no recall or I had no reason to

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George Alan Weed - Cross see his documents, as you indicated, for his investors. know what they would have signed. Q

I don't

Well, the non-depleting account was a safety feature, was it

not? A Definitely. Not only as a safety feature but as he

explained it to me, Mr. Dunham did -Q Now, hold on a second. It's also a term of art, isn't it? It's a very specific

It's not a generic term at all, is it?

term in the banking world, according to your testimony, correct? A No. To me, it was a term which had very important meaning One is that any money put into that account

for two reasons.

would stay in that account and not be touched, and second of all was that because of the -- it collateralizing whatever it did, it had to be in there for whatever they did. Q A Q Very important factors with respect to investors, correct? That's what I was told. Okay. Now, let's take a look at Government's Exhibit No. 6,

if you would, please. A Q I don't believe I have that. I think the clerk will be passing that to you momentarily.

You may have to remove that from the sleeve, Mr. Weed. A Q A Okay. Do you recognize what that document is? Um, it appears to be a letter that I wrote to Jeff

Kesselring about Mr. Dunham's DWD-1 trust, uh-huh.

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Q

Okay.

George Alan Weed - Cross Take a look at the bottom, if you would, please.

Is

that your signature, Mr. Weed? A Q A Q A Q A Q A Yes, sir. Turn to page 3 of the document, if you would, please. Okay. You acted as a reference for Mr. Dunham? Yes, sir. Now, take a look at page 4 through page 15, please. Did you say 4 through 15? Um-hm. I only have 12 pages. Okay. Oh, I see down at the corner you

circled 15. Q

Now, do you recognize that as a document that you submitted

with Mr. Dunham's application? A Q I would assume so, yes, sir. And that's the document creating the trust for his

investors, correct? A Q A Yes, sir. Do you see the word "non-depleting" account in there at all? On page 2 it doesn't say -- on page 2 it says, force B, each

trust shall be held as follows for a period of sixteen months at the execution of this trust. of any funds from this trust. Q A Do you see the word "non-depleting" account? I do not, sir. But that indicates that, but it doesn't say No party shall have a withdrawal

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George Alan Weed - Cross 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the word. Q A Q A Q Do you know Mr. Dunham to be a lawyer? Yes, sir. An exacting person? Yes, sir. You would expect to see the term "non-depleting" account in

that document, wouldn't you? A Not necessarily. The intent was there. To be a

non-depleting account, but it doesn't really itemize it. Q If he used it at the bank, why didn't he use it in all his

documents? MR. GOODREID: speculation. THE COURT: BY MR. ANGELO: Q Let's take a look at Government's Exhibit No. 43, if you Sustained. Objection, your Honor. Calls for

would now, Mr. Weed. A Q A Q A Okay. Okay.

Do you recognize those documents? Yes. Do you recognize them from where? I think the first time I saw this document was when He brought a copy of this

Mr. Landsman came to my office. document or faxed it to me. Q

You know who Gordon Hulbert is, don't you?

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George Alan Weed - Cross 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q Yes, sir. You sent him information about the insurance coverage, did

you not? A Q I certainly did. You recognize these contract documents as his high-yield

Cooperative Private Placement Agreement? A Yes, sir. But all I did was the insurance. I had nothing

to do with Mr. Harte's business.

And everybody seems to want to

portray the fact that I had a part of this business, which I had none. Q All I did was insure the account.

Mr. Weed, would you take a look at that document and tell me

if you can find in Mr. Harte's document the term non-depleting account? A See, he is 100 percent bonded. You have to excuse me. My

eyes are not that great anymore, but I will do my best, sir. Q Well, maybe to save you some time, turn to page 3, if you

would. A Q A Q A Okay. Appreciate that.

See paragraph 3 there? Yes, sir. Look at the last sentence. The bond assures funds cannot be encumbered or hypothecated

and cannot be moved without party A's written consent, which is what Mr. Harte told me verbally on the phone that's the way it's going to be when I wrote the insurance.

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Q A Q

George Alan Weed - Cross You don't see non-depleting account there, do you, Mr. Weed? No, I do not. Mr. Weed, the term "non-depleting" account came from you,

didn't it? A Q No, sir. Now, let's talk a little bit about your dealings with St. Turn to Government's Exhibit No. You

Paul in this particular case. 1, please.

If we can focus on the second paragraph.

recognize that letter, don't you, Mr. Weed? A Q A Q Yes, sir. You got that letter on or about July 8th, 1999, didn't you? Yes, sir. And you looked at that second paragraph. There is some

express concern there by Mr. Bailey? A Q A Right. What did you understand that express concern to be? As it says, he wanted to make sure that the certificates

don't suggest to the depositors that they have a direct access to the bond. Q Okay. That was important to St. Paul, and you knew it,

correct? A Certainly. Important to me, too. That's why I wrote the

separate beneficiary because they did not have a direct to the bond. Q Okay. Now, as I understand it, you had no indication that

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George Alan Weed - Cross Norman Schmidt had any association with the Reserve Foundation Trust, correct? A Q That's true. Let's turn to Government's Exhibit No. 3, if you would, Do you recognize that document?

please. A Q A

Yes, sir. What is it? It's a letter from me to Jeff Kesselring sending in the

Reserve Foundation Trust wanted to purchase $2 million sole obligatory bond. Q And you are sending in the application for that bond, aren't

you? A Q Yes, sir. And that's an application that came to your office from Leon

Harte? A Q A Q Yes, sir. And that's an application you reviewed before sending it? Only that it was completely filled out. Okay. Well, let's take a look at the bottom of Government's Let's just make sure of

Exhibit No. 3, Mr. Weed, if you would. something, if we can. A Q Say it again.

Is that your signature?

Is that your signature on the bottom of Government's Exhibit

No. 3, page 1? A Yes.

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Q A Q A Q A Q

Okay. Okay.

George Alan Weed - Cross Now, let's turn to page 2, if you would, please.

See that line down there for references? Yes, sir. What's it say with respect to Norm Schmidt? I see it says Norman Schmidt investor. Now, you would have faxed this application to St. Paul,

correct? A Q A Yes, sir. Now, initially the bank to be bonded was what bank? I didn't know who it was at that time and didn't need to

know. Q A Okay. The first bank we went to was, as I recall, was Commercial

American, or something like that. Q Well, take a look at the first page of Exhibit 3. See if

that helps refresh your recollection. A Q A Q National Commercial Bank, yes, sir. And that didn't work, did it? No, sir, it did not. And so another bank for the purposes of writing the bond on

was in fact suggested, correct? A Q I am sorry? Another bank for the purposes of writing that bond was

suggested?

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A

George Alan Weed - Cross The St. Paul -- I sent the materials in and the balance

sheet and everything for the National Commercial Bank, and which was represented as $1.8 million bank. Unfortunately, or

fortunately, whichever way you want to say it, when the exchange rate was made with their dollars, it was only about 800,000. The bank did not qualify. So I called Mr. Harte back and informed him. well, this bank is too small. I said,

He said, well, I have an account

at CIBC, so I submitted CIBC to St. Paul, and he said that was fine. Q A CIBC is located where? Well, it's located all over. It's, you know, the Canadian

bank, and they at that time told me that they had a branch there in St. Vincent in the Grenadines. Q So CIBC was the bank ultimately upon which the bond was

written? A Yes, sir. Because these bonds are only written on banks

that are, in the insurance company's mind, there is no risk of going belly up. Q So essentially when you write that bond, or St. Paul writes

that bond, it's underwriting the bank, correct? A Q Yes, sir. Against bank failure.

Let's talk briefly about Government's Exhibit No. 4, if you Do you recognize that document?

would. A

Yes, sir.

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Q A

George Alan Weed - Cross What is it? That's a letter I had sent to Sandi Woodbury, who was in

charge of the commercial crime, who was here and testified. Q And that's with the sending him the commercial crime

application to St. Paul for the Reserve Foundation Trust, is it not? A Q Say it again. That letter is a cover letter sending him the commercial

crime application for the Reserve Foundation Trust, is it not? A Q Yes. Did you send that to Ms. Woodbury on or about September 10th

of 1999? A Q A Q Yes. Would that have been faxed or sent by mail? Probably faxed. Now, your understanding of this insurance coverage is that

if the CIBC bank fails -A Q A Q A Q Yes, sir. -- the bond that you obtained for the Reserve Foundation -Yes, sir. -- would restore the money to the Reserve Foundation Trust? Definitely. Your understanding of the crime policy is that if Mr. Pitt,

the trustee, stole the money, then St. Paul would reimburse the Reserve Foundation Trust for that loss, correct?

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A Q

Yes.

George Alan Weed - Cross Yes, sir.

Now, as I understand it from your testimony yesterday, you

started -- you prepared certificates of insurance? A Q I did. And you sent those to investors in the Reserve Foundation

Trust, at least some of them, before you ever sent a copy to St. Paul, correct? A Yes, sir. That was the agreement I had with them. I said,

I will send you a copy of the certificate. Q Did you send the certificates to investors before you sent

the copy to St. Paul? A Q A Q A Q A Q A Q A Q Yes. Oh, yes.

Now, let's take a look at Government's Exhibit No. 46. Okay. Do you recognize the first page of that document? Yes, sir. Did you author that document? Yes, sir. Do you recognize the second page of the document? Yes, sir. Let's take a look at the second paragraph, Mr. Weed. Okay. Do you see that first line that says -- have you got the Your deposit is insured in your name?

second paragraph up? A Right.

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Q A Q A

George Alan Weed - Cross That's misleading, Mr. Weed, isn't it? Not to my knowledge. Mr. Weed, you are the insurance man here. I know. That's why I wrote that, Mr. Angelo, because if

you -Q Mr. Weed, the deposit is not insured in the investor's name.

It's insured in the name of the Reserve Foundation Trust, is it not? A Q A In my opinion -Mr. Weed, is it or is it not? In my opinion it is. That's why I worked so hard to make

these certificates and keep track of everything on the list. Q A Q A Q Let's take a look at the certificate on page 2. Pardon me? Let's take a look at page 2. Okay. Do you see the first sentence where it says, this

certificate insures? A Q A Q A Yes. Mr. Weed, this certificate doesn't insure anything, does it? Certainly it does. Policies are the insurance, are they not, Mr. Weed? You have to read this one other time. It says, the

certificate insures the settler beneficiary, and as I testified yesterday, the beneficiary was Reserve Foundation Trust, and

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George Alan Weed - Cross this individual here, Mr. Hulbert, was the settler. Q A Q Now, let's take a look at the last line. It's like when you have your car, sir -Mr. Weed, let's look at the last line. The certificate is

issued in the name of settler beneficiary as evidence of insurance on their individual deposits? A Q A Q Right. Those deposits were not individually insured, were they? Yes. Mr. Weed, the commercial crime policy and bond insured the

whole value of the account for the Reserve Foundation Trust, correct? A Well, if you look at page 1, page 1 says that your deposit

insured in your name or company name listed with the tax ID number is required. Q Mr. Weed, would you acknowledge that your letter and

certificate are misleading to people? A No. I thought I was doing the best I knew how to do at the

time, and making sure -- I spent hours making sure each individual investor was -Q We are going to talk about that some more. You carefully

crafted that letter, didn't you? A Q A Well, yes. And you carefully crafted that certificate? Yes.

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Q

George Alan Weed - Cross Can you tell me, Mr. Weed, if it was so carefully crafted to

be clear, why so many people thought they were individually insured? A I can tell you my opinion, yes, sir. My opinion is that

when their money was not starting to come back, they were grasping for straws and would say anything, you know, that, you know, people said I told them their investment was insured. Well, that's ridiculous. exactly the way it was. Q A Q A Q I wouldn't say that. I told everybody

I never misrepresented anything.

So they were wrong, not you? Yes, sir. I had them call --

Let's talk about Mr. Landsman right now, okay? Okay. Now, you were contacted by Mr. Landsman initially by

telephone, correct? A Q A Yes, sir. In early January of 2000? I think about the last of December he and this lady, who he

introduced as an attorney. Q And they expressed to you their concern about the

certificate that we just looked at, correct? A Um, basically been two men who had called me and applied

for -Q Mr. Weed, did they express, Mr. Landsman and this lady

attorney, concern about your certificate?

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A Q A Q A Q

George Alan Weed - Cross I don't recall that they did at that time. Okay. I did. Was that about January the 11th? Yes, sir. Now, he suggested to you that something wasn't quite right Now, you met with Mr. Landsman, right?

here, didn't he? A Yes. And I couldn't understand his point because the bank

hadn't gone belly up and the trustee hadn't stolen the money, so I asked, you know. Q A Q Trustee hadn't stole the money? Right. You don't understand Mr. Landsman's concern about your He told you, Mr. Weed, did he not, that it did

certificate?

exactly the opposite of what Mr. Bailey had told you about? A Q No. He didn't say that. Didn't he express to you that he believed the

All right.

certificate had language that indicated that the depositor would have direct access to the bond? A Q A Q Mr. Landsman's actions -That's a yes or no, Mr. Weed. Say again. Didn't Mr. Landsman indicate to you that he felt the

certificate was misleading in the sense that it suggested that the depositor or investor would have direct access to the bond?

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George Alan Weed - Cross 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q Yes. He also suggested to you that there wasn't something quite

right with this investment, correct? A Q A Q Yes. At that point in time.

And you were a little offended by that, weren't you? Yes. Because the trustee hadn't stolen the money and the bank

hadn't gone broke? A Q Right. As a matter of fact, he told you about the balance in the

account as CIBC on that date, didn't he? A Q Yes. That balance was substantially less than your records

reflected, isn't it? A Q Yes, sir. And you, I think, were a little surprised by that, or at

least acted surprised, didn't you? A Certainly I had no accounting, and it wasn't my job or

position or had anything to do with the balance in that account. All mine was keeping track of what was put in there. idea that it would be taken out of there. And when Mr. Harte told me he was going to open another account in the U.S. I said, well, you have to realize that the money you put in that account will not be covered because the only insurance we have is on St. Vincent in the Grenadines. I had no

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Q A

George Alan Weed - Cross And that happened after Mr. Landsman's visit to you? No. It was before that. He didn't tell me he was going to He

move money out of the account or take the money or anything. just said he opened up an account. insured trying to move -Q I said it wouldn't be

Did you tell Mr. Landsman that you knew that the money was

going to be moved or had been moved? A No. I didn't know that. I couldn't tell him something I

didn't know. Q But there wasn't a problem because the trustee hadn't stolen

the money and the bank hadn't gone broke, right? A As far as my insurance plan, that's the only part I had in

this. Q Now, you know that Mr. Landsman was going to contact

Mr. Harte and Mr. Schmidt after your meeting, didn't you? A Q A Q Yes, sir. You gave him their names, didn't you? Yes. So you knew Mr. Schmidt was involved at that point, didn't

you? A Q A Q Well -Answer yes or no, Mr. Weed. Would you ask the question again, please? I will ask it. So you knew that Mr. Schmidt was involved at

this point, didn't you?

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George Alan Weed - Cross 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A No, sir. You gave Mr. Landsman his name? I don't recall that. I know I gave him Mr. Harte's name. I

don't know why I would give him Mr. Schmidt's name. Q Now, you certainly talked with either Mr. Harte or

Mr. Schmidt after your meeting with Mr. Landsman, didn't you? A Q A Q A Q A Q A Q A Q A Well, certainly. To apprise him of his concerns? Yes. And of his suspicions? Yes. And his suspicions were they were a Ponzi scheme? That's what he said, and I never heard that word before. Let's take a look at Weed Exhibit No. 27. Okay. Do you recognize that document, Mr. Weed? Yes, sir. What is it? The Reserve Foundation Trust, they had about fifteen Mr. Boyd Brown was one of them.

individuals that I insured. Q A Q What is the document?

It's a document I sent to Mr. Boyd Brown. Looking at Weed Exhibit No. 27. Do you have that in front

of you? A Yes, sir.

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Q A

George Alan Weed - Cross Weed Exhibit or Government's Exhibit? Oh, this is Government's Exhibit. Sorry about that. No. Okay. I

don't think I have that notebook. Q A Q A Q A Q A Okay.

Do I?

Do you have the document in front of you now?

Yes, sir. Okay. What is the document that you are looking at?

This is a document that I had written to Mr. Leon Harte. And was this concerning a bank account? Yes, sir. Okay. Yes. MR. ANGELO: Your Honor, at this time we move for And did you author the document?

defendant Weed Exhibit 27. THE COURT: Any objection by any of the defendants?

Hearing none, Weed Exhibit 27 for identification admitted in evidence, with leave to publish. BY MR. ANGELO: Q A Q A Q Now, Mr. Weed, this document is dated December 22nd, 1999? Right. About twenty days before you and Mr. Landsman met? Approximately. Okay. And this is to Leon Harte about administrative

details? A Q Right. Okay. And you had obviously had a discussion with Mr. Harte

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George Alan Weed - Cross about movement of the money out of CIBC by the time of this letter, hadn't you? A Q A Q No, absolutely not. Not. Let's take a look at the document, Mr. Weed. I read it.

I did.

It talks about putting money -- the Reserve Foundation

account at Barclays Bank? A Q Right. Okay. And you didn't have a bond at Barclays Bank,

according to paragraph 2 of the letter, did you? A Q No, I did not. Okay. That's why I wrote this letter.

So you knew that Mr. Harte had or was planning to

move the money, correct? A No, I did not. That had nothing to do with him moving the

money.

He just said he was going to open up an account, and I

was telling him if he opened up that account what he needed to do. This was an insurance letter to make sure that he did what

was proper, not -Q If he wasn't putting investor money in that account, why

would he need a bond? A Because he was opening an account and he was putting

investor money in that account. Q A Q And he told you that, didn't he? He said he was going to. And he told you $5 million worth, didn't he?

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A Q A Q

George Alan Weed - Cross No, he did not. Why would he say that? We don't do the role reversal. Oh, I am sorry. You just surprised me with that.

Now, in anticipation of moving those funds, you asked him in

paragraph 6 if you needed to send new certificates to all present certificate holders, didn't you? A Yes. You have to realize also what that means is if that he

opened a new account then, and he had investors in that account, then there would have to be new certificates in. Q Can we agree, Mr. Weed, that once the money was removed from

CIBC to Barclays the money would have been touched? A Q Yes. And you understand that the investors were told that those

monies would be in a non-depleting account? A Q And I was too. And you knew from your conversation, prior to writing that

letter, that Mr. Harte was going to be depleting the account, didn't you? A No, sir, I did not. This was completely different business

deal with completely different trustees and bank. Q Really. Then why does the letter have administrative

details for the Reserve Foundation Trust on it? A Because Reserve Foundation Trust was going to have two bank The company name doesn't change just because they

accounts.

want to open another account.

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Q

George Alan Weed - Cross And after Mr. Landsman's visit, you knew specifically at

that time that Mr. Harte had taken the money out of CIBC, did you not? A Q A Q A Yes. Now, which Barclays branch did the money go to? I have no idea. Was it offshore or onshore? I am not even sure that it went there. I don't know where

the money went.

I mean all I know was he called me and said, I

want to open up an account at Barclays, and I didn't know where he was getting Mr. Feddick's name as the trustee, and as far as I was concerned, they set it up to deal with the St. Vincent's money or the St. Vincent's trust. Q You knew that the St. Vincent's money had been depleted as

of the time of Mr. Landsman's visit? A Q Yes, sir, that was my first. Now, let's understand what the effects of the movement of At the time it moves out of CIBC to

that money was on the bond.

another non-CIBC bank, the bond has no protective qualities, does it? A Exactly. It only protects that account at St. Vincent's.

That's what I wrote the insurance for. Q Now, let's take a look at Weed Exhibit No. 30. Do you

recognize that document, Mr. Weed? A Yes, sir.

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Q A Q A Q A Q

George Alan Weed - Cross What is it? A couple of gentlemen called me on a conference call. What is the document, Mr. Weed? Pardon me? What is the document? It's a document I wrote to Richard Gardner and Ted Hanson. And were they persons interested in investing in the Reserve

Foundation Trust? A Yes, they were. And I told them they could not because they

were crooks. Q Mr. Weed, let's back up a second. They were interested in

investing in the Reserve Foundation Trust, correct? A Q Yes. And they came to you for insurance information about the

insurance protections on the account, did they not? A Not exactly. They came to me with a cock-and-bull story

about they wanted to use this insurance to borrow money against on some type of construction project, and I said, no, sir, you are violating the Appleton Act, and I will not insure you, and I will call Mr. Harte and tell him not to insure you. Q A Q You were offended by somebody violating the Appleton Act? Yes, sir. Look at the letter. Did you in fact respond to their

inquiry? A Yes.

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Q A

George Alan Weed - Cross And this is the response at Weed Exhibit No. 30, isn't it? Right. MR. ANGELO: I ask that Weed Exhibit No. 30 be admitted

at this time, your Honor. THE COURT: Any objection by any of the defendants.

Hearing none, Weed's Exhibit 30 for identification admitted in evidence, with leave to publish. MR. ANGELO: Thank you, your Honor. We would ask that

it be published at this time. THE COURT: BY MR. ANGELO: Q Mr. Weed, you are in fact telling these gentlemen on January Thank you, and it may.

the 3rd of 2000 that the St. Paul bond was going to be their protective umbrella, correct? A No. This was completely different insurance policy that I They could not get into

told them that they would have to get.

the RFT because what they were wanting to do was not what that insurance was. But there was other insurance, such as insurance

on their project, and things like that. Q Let's take a look at paragraph 2, shall we? You are talking

about St. Paul having a complete bank financial package? A Q A I do. You are referring to CIBC, were you not? No. No. I was talking about St. Paul has a humongous

financial package.

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Q

George Alan Weed - Cross And the insured on the bond you referred to is CIBC,

correct? A No. This has nothing to do with CIBC. This is completely

different insurance policy.

I am trying to talk to these

individuals; if they want insurance, then I will discuss what kind of insurance they want outside, but not the way they want to play ball. And that's what got Mr. Landsman all upset, and

they went to him, and from the point -Q Mr. Weed, you are in effect representing to these people

that the St. Paul bond will be in effect if they invest, correct? A No. No. I told these gentlemen I would not insure them. I called him and said, don't let these I

told Mr. Harte. individuals in. Q

You didn't have to insure them.

You insured the Reserve

Foundation, didn't you? A Q Yes, sir. But they didn't qualify for the policies I wrote.

Now, in your testimony yesterday you indicated that

Mr. Landsman was wrong when he attributed a statement to you at the time of your meeting that you thought you were in trouble? A Q A Yes. That didn't happen, did it? That's exactly right. Why would I have said that because as

far as I was concerned, I told him before, the bank had not gone belly up and the trustee had not stolen the money, so why would

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George Alan Weed - Cross I be in trouble. Q A But the money was gone from the bank, Mr. Weed. But I didn't steal it. I didn't know it was gone, and my So why would --

two insurance policies had not had a loss. Q

So Mr. Landsman was wrong when he attributed that statement

to you? A Mr. Landsman was trying to protect St. Paul in case there

was a claim. Q A Q You are not trying to protect yourself today? No. I am telling the truth the way it is, sir.

Now, Mr. Weed, you are aware that Mr. Landsman memorialized

his conversation with you in a lengthy letter to Mr. Bratcher, aren't you? A Q A Q A Q A Q Oh, yes. And it's in that letter, isn't it? What's that? The statement he attributed to you? Oh, yes. Now, you didn't memorialize anything at that time, did you? No. And when you testified yesterday that Mr. Bratcher was wrong

when he told you that this was a scam in your meeting in January or February, you indicated that he didn't say that to you, correct? A No, sir. Mr. Bratcher and I, as I said yesterday, we went

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George Alan Weed - Cross out and set in the car, and I explained the entire involvement I had with what had gone on, and he did not indicate anything. His end of our conversation was, well, I appreciate you talking to me and appreciate you explaining to me what was going on. Q You were aware that he had a copy of the letter authored by

Mr. Landsman? A Oh, sure. He gave it to me, and I wanted to, you know, go

irate.

It's a bunch of craziness here in that letter about me.

It was wrong. Q A Q A Let's turn to Exhibit No. 180. Which one? I am sorry?

Exhibit one eight zero. Exhibit one eight zero. I guess I have to have another

book. THE COURTROOM DEPUTY: MR. ANGELO: THE WITNESS: BY MR. ANGELO: Q A Q A Q A Q Do you recognize that document, Mr. Weed? Yes, I do. Did you author that document? Yes, I did. What is it? It's a letter to Mr. Podeschi. Mr. Podeschi from the state of Illinois regulatory agency? 180. Okay. Government's Exhibit 108?

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A Q A

Yes.

George Alan Weed - Cross He was the gentleman that was here.

And he was concerned, wasn't he? I don't know if he was concerned, but he had an

investigation he had to complete. Q A Q Okay. Okay. Tell us, please, how many times in response to Now, if you take a look at page 2 of that exhibit.

Mr. Podeschi's questions that you said, the Weed Agency only sells insurance in the Reserve and has no knowledge of the Reserve's business? A Q A Q A Q A Q A I don't know, but that's the way it was. Why don't you count them up for me. Pardon me? Count them up for me. In the letter? Yep. One -Eight sound about right? Yes, sir. I can't read that fine print that fast, but I

would say it a hundred times because it was true. Q A Q Okay. Right. Has no knowledge of the operations of the Reserve Weed Agency only sells insurance?

Foundation, right? A Right.

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Q

George Alan Weed - Cross Now, that may be true of the Weed Agency, but it's not true

as to you, George Alan Weed, is it? A Q A Q A Q A Q A Q Well, certainly. Well, let's take a look at Weed No. 33. Okay. Do you have that letter in front of you? I do. What is it? It's a letter to John Estes and David Franco. And you authored it, didn't you? No. Why don't you turn to the third page. Do you see your

initials there, Mr. Weed? A Q A Q Yes, sir, I do. Signing for Leon Harte? Yes, I do. You sent that letter to all the investors after your meeting

with Mr. Landsman, didn't you? A No. Let me think. There is no date on it, but Mr. Harte

was in New York with Peter Moss and Larry Dunn, and they were putting the Reserve Foundation -Q Well, let's back up just a little bit. You saw that letter

enough to sign it on Mr. Harte's behalf, did you not? A Yes. He sent it to me and he asked since he was in New York

if I would do it for him, and I said, yes, I will.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 No. 33.

George Alan Weed - Cross MR. ANGELO: Your Honor, we would offer Weed Exhibit

MR. GOODREID:

And, your Honor, again, may I confer

with government counsel, please? THE COURT: And again, you may. Thank you.

MR. GOODREID: about this.

Your Honor, just so there is no secret

On page 1 of Weed Exhibit 33, there is a little bit That's actually my handwriting, and It's part of a sticky that

of handwriting on there.

that's not properly on the exhibit. shouldn't about been photocopied.

So I have no objection to the

admission if we take off the handwriting. THE COURT: MR. ANGELO: Mr. Angelo. I would like to publish it at this time.

Maybe we can publish it on the ELMO and block that out. Mr. Kirsch, my technical assistant, has indicated that we can obviate the handwriting by zooming in on the text portion rather than the handwriting. THE COURT: Hearing no other substantive objection,

Weed Exhibit 33 for identification admitted in evidence, and may be published to the jury, sans the handwriting of Mr. Goodreid, which apparently appears on page 1 of the exhibit. MR. ANGELO: Thank you, your Honor, and I think

Mrs. Kramer maybe can check her screen to let me know that the handwriting is not on there. THE COURTROOM DEPUTY: It's not.

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George Alan Weed - Cross MR. ANGELO: Okay. Thank you. BY MR. ANGELO: Q Mr. Weed, do you still have Weed Exhibit No. 33 in front of

you? A Q Yes, sir. Let's talk a little bit about that. You sent this after you

received the letter from Mr. Landsman, didn't you? A It had nothing to do with Landsman. It had to do with the

event, sir.

It was a very important event that Mr. Harte and

Mr. Moss and Mr. Larry Dunn were in New York putting the Reserve Foundation Trust. Q It references a letter from Mr. Landsman in the first

paragraph, doesn't it? A Q Let me see. Yes.

This letter is in response to a letter that Mr. Landsman

sent to all the investors, correct? A Q I don't recall, but it could very well be. Okay. And looking at the second sentence in the first

paragraph, it says, due to my schedule, I have asked Alan Weed to write this letter? A Q A Q A Yes. So you wrote it, didn't you, Mr. Weed? Mr. Harte dictated it to me. Did you or did you not write the letter, Mr. Weed? No. I mean --

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Q A

George Alan Weed - Cross So that's not true? That's not true. If I can explain to you that Mr. Harte

dictated this to me over the phone and I typed it up, yes. Q A Q And whose fax number is that at the top? Probably mine. Okay. Now, let's take a look at the first paragraph there. First numbered paragraph there. Do you see that,

I am sorry. Mr. Weed? A Q

Yes, sir. You are talking here -- this is a letter to the investors,

correct? A Q A Q Yes. It was sent to all of them, correct? Yes. And you are telling them that the Reserve Foundation Trust

bond is still in effect, aren't you? A Q A Q Let me read it and see. Okay. Yeah. You gave Mr. Landsman a list of your investors at the time Yes. And --

Let's move on just a little bit further, shall we?

of your meeting, did you not? A Q A Q Yes. But this letter was faxed -I didn't catch your answer.

Did you not? Yes, I did.

So you were aware by this time Mr. Landsman had written

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George Alan Weed - Cross individual letters on behalf of St. Paul to all the investors? A Q A This letter is dated -That's a yes or no. I say no because this letter is the 9th, and Mr. Landsman, I

don't think, sent those letters out until the 11th or 12th. Q Let's take a look at the last sentence on the first page,

Mr. Weed. A Q Okay. It says, Mr. Landsman's using the list to write you the This is the list that you gave him at the time of your

letter.

meeting, correct? A Q A Q A Q A Q No. Yes or no, Mr. Weed? No. No. Okay. Did you say no? Because -- can I tell you why I said no?

Let's take a look at the second page. Okay. See that sentence that says, if the bank would fail, about

the middle of the page? A Q Yes. If the bank would fail, the Reserve Foundation's trust is in Did you write that, Mr. Weed?

St. Paul and your trust is in us. A No. That's Mr. Harte's.

This whole letter was sent to me

by Mr. Harte, and I just put it in the form.

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Q

George Alan Weed - Cross And the purpose of this letter is to essentially allay the

fears that might have been caused by Mr. Landsman's letter, isn't it? A I think it was more of an explanation of Reserve Foundation

Trust and the -- been a while back, but trying to recall. Q Didn't Mr. Harte tell you he was concerned about what effect

Mr. Landsman's letter would have on his investors? A No. I think he was more concerned about getting this letter

out to them, which he had put together, because he felt very good telling me verbally over the phone that he and Peter Moss and Larry Dunn had everything put back on track and RFT resolved. Q Now, you recall telling Mr. Podeschi during the course of

his investigation that the Weed Agency only sells insurance, right? A Q Right. This is a little more than selling insurance, isn't it, You are playing a role in the Reserve Foundation now,

Mr. Weed?

aren't you? A No. I am the insurance agent for the Reserve Foundation I sold them two policies, and anybody I sell a

Trust, sir.

policy to, I do my darndest to represent that policy and represent the clients and work with them and keep them informed, and I never ever was part or agent of the Reserve Foundation Trust.

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Q

George Alan Weed - Cross You put your fax number on the top of that letterhead,

didn't you? A Q A Machine did. Um-hm. No. You authored the letter?

I told you Mr. Harte sent me this letter, and he called

me, he said, I have a letter I want written, would you send it out, and I said, yeah, I would be happy to. Q Now, this would have been an ideal time for you, Mr. Weed,

would it not, to notify investors that the money was going to be moved or had been moved from the CIBC account? A Q A Q Yes. You didn't do it in this letter, did you? No. Because I think Mr. Landsman did, as I recall.

There was no explanation in the letter about the fact that

the money was no longer insured by the bond, is there? A Q No, because -That creates the impression that the money is still insured

by the bond, does it not? A I believe -- I maybe wrong, Mr. Angelo, but I think it was

insured until St. Paul went to court, which is sometime in February or March. Q If the money was in Barclays, St. Paul didn't insure it, did

they? A You are leading the witness. I have no idea where the money

was.

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Q

George Alan Weed - Cross Yes, I am. THE COURT: Now, what's the question?

BY MR. ANGELO: Q Now, as I understand it, after St. Paul canceled the

policies and the bond -A Q A Q Um-hm. -- you tried to get a policy from Lloyd's of London? I certainly did. And you had a new trustee that was proposed for the trust,

right? A Q Yes, sir. Peter Moss. And you knew who the beneficiaries of that

Peter Moss.

trust were, did you not? A Yes. The beneficiaries of that trust would be Reserve

Foundation Trust. Q Surprise you if I told you that the beneficiaries of the

trust in St. Vincent in the Grenadines were Norman Schmidt and Leon Harte? A Q Yes, it would. You didn't even ask for a copy of the trust documents before

you insured it? A No. Because I didn't insure, Mr. Angelo. I insured bank

failure on bank and theft of the trustee.

Now, when I go and

write a guy's insurance, I don't ask the wife and family and all the other stuff. I have an insurance policy to write, and I had

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George Alan Weed - Cross no reason, no business, to delve into that. Q Well, while you were going through the procedures of trying

to obtain insurance from Lloyd's of London, you became aware that they were at least concerned about investigating who they were insuring, right? A Q Say it again. You knew from your conversations with the people at Lloyd's

that they were concerned about investigating the trust and its principals, did you not? A Q A That's common practice. It is, isn't it? Yes, it is. Same way St. Paul did when they insured

Mr. Pitt. Q And those investigations are in-depth investigations, aren't

they? A Q Yes, they are. And Mr. Moss decided not to show up for those

investigations, correct? A Q A Q A Q That's true. So no policy was ever written? That's true. Now, Mr. Weed, didn't that raise a red flag for you? Maybe it should have, but -You are just a country boy, right? Everything is done on a

handshake?

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A

George Alan Weed - Cross I resent your negative connotation of a country boy.

I mean

I would say as a rational individual, I accept that, but not as what you said. Q I think that's degrading.

Mr. Weed, after a warning by Mr. Bratcher, a warning by

Jerry Landsman, Mr. Moss not showing up for the insurance investigation, you don't think that's a red flag? A No. Because my whole purpose of staying in this, you have

to realize I wasn't making any money, but I was trying to help the people who had put money in, which, looking back, hindsight is twenty twenty, as you well know. Q As a matter of fact, you continued after the money

disappeared to tell investors everything was okay, didn't you? A I called Mr. Harte, and if that's what Mr. Harte said,

that's what I would tell them, exactly what he said, because I had no knowledge. Q So instead of just answering questions about insurance, you

were now dealing face-to-face with investors for Mr. Harte, correct? A No. I was doing it for the investors because I was trying

my best to help. Q A Q Mr. Weed, they were not your clients, were they? Yes. The investors were your clients? Who paid the premium,

Mr. Weed? A Mr. Harte.

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Q A Q

George Alan Weed - Cross Thank you? But they were the insured, and they were my clients. Now, you started getting phone calls from investors when in

relationship to the fact that they weren't getting their payments anymore? A Q A Q Seemed like it was the last of December, in that area. Last of December of what year, if you can help us out? '99. Okay. So as of '99, the last of December, before

Mr. Landsman even came to visit you, you were aware that the trust was not even paying the people as required? A Q Yeah. They were paying them but not as required.

People were complaining that they weren't getting their

payments, correct? A Q A Q Yes. I would say so.

That wasn't a red flag for you, Mr. Weed? Red flag to do what, sir? That people weren't being paid when they requested their

funds, that wasn't a red flag? A Q Well, it was their concern, which I passed onto Mr. Harte. But you were still telling investors they had insurance,

right? A Q A They did. Make them feel comfortable with their investment? No.

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Q

George Alan Weed - Cross Now, after you learned that payments were not being made to

investors of their earnings or their principal, you took on a role that you described yesterday as a gofer and information provider. A Q No. Do you recall that phrase?

But I would say that, yes. And you would then take the phone calls from the

Okay.

investors about their concerns with respect to their investment, and you would call Mr. Harte, right? A Q Right. And after a while, Mr. Harte no longer answered the phone.

So who did you talk to? A The investors could not get ahold of Mr. Harte but I could,

and I called Mr. Harte's office, and occasionally Mr. Schmidt would answer the phone. Q A Q A Q A Q Now, you called Mr. Harte at his office? Yes, sir. This would be the office of the Reserve Foundation Trust? To my knowledge. And Mr. Schmidt was answering the telephone? Yes, sir. At that time did it kind of flash on you that Mr. Schmidt

had something to do with the Reserve Foundation Trust? A No. Because he did not answer the phone. The fact that he

was there, but he just come over to see Leon, was his statement. So he was not there as a employee or part of it. He just come

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George Alan Weed - Cross over to visit. Q Mr. Weed, do you know what the term "running interference"

means? A Q A Q A Q A In football I do. It happens in the business world, too, doesn't it? I guess it does. And that's what you were doing, isn't it? I don't understand. Let's take a look at Exhibit No. 5030