Free Transcript - District Court of Arizona - Arizona

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA _________________ ) ) ) ) Plaintiff, ) ) ) vs. ) ) PETER THIMMESCH, et al., ) ) Defendants. ) ______________________________) BILTMORE ASSOCIATES, as Trustee for the Visitalk, Creditors' Trust,

CV 02-2405-PHX-HRH Phoenix, Arizona March 5, 2008 8:48 a.m.

BEFORE:

THE HONORABLE H. RUSSEL HOLLAND, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS BENCH TRIAL VOLUME #3 Pages 362 to 584

Official Court Reporter: Elizabeth A. Lemke, RDR, CRR, CPE Sandra Day O'Connor U.S. Courthouse, Suite 312 401 West Washington Street, SPC. 34 Phoenix, Arizona 85003-2150 (602) 322-7247 Proceedings Reported by Stenographic Court Reporter Transcript Prepared by Computer-Aided Transcription

Case 2:02-cv-02405-HRH

Document 503

Filed 04/22/2008

Page 1 of 223

363

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

A P P E A R A N C E S

TIFFANY & BOSCO By: Christopher Reed Kaup, Esq. Andrew M. Ellis, Esq. Tracy Shelden Morehouse, Esq Robert A. Royal, Esq. 2525 East Camelback Road, 3rd Floor Phoenix, AZ 85016 For the Defendants: MARISCAL, WEEKS MC INTYRE & FRIEDLANDER, PA By: Gary L. Birnbaum, Esq. Timothy J. Thomason, Esq. Scot L. Claus, Esq. 2901 North Central Avenue, Suite 200 Phoenix, AZ 85012

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1 2 3 4 5 6 7 8 9 10 11 12 Exhibit No. 567 13 Exhibit No. 606 14 Exhibit No. 608 15 16 17 18 19 20 21 22 23 24 25 Exhibit No. 610 Exhibit No. 774 Exhibit No. 775 EXHIBIT NO.: Exhibit No. 101 Exhibit No. 116 Exhibit No. 259 Exhibit No. 392 Exhibit No. 393 WITNESSES RICHARD ROTHWELL DEBRA KUHNS CHARLES PULASKI MICHAEL DONAHEY

INDEX OF WITNESSES Direct 366 421 465 544 Cross 399 447 530 Redirect 418 462 543

INDEX OF EXHIBITS DESCRIPTION: Spreadsheet authorized to issue 110,000,000 shares Outline of Likely Tax Consequences e-mail thread from D. Kuhns to K. Post re: Debs Friend Notice of Special Meeting Special Meeting of Shareholders 12-27-99 January 1, 2001 Statement of Financial Affairs Goldman Sachs and Wit Soundview "Information Sheet" Wall Street Journal article September 23, 1999 July 14, 1000 Lexis-Nexis Business and Industry Monthly Operating Report December '02 Business and Industry Monthly Operating Report July '04 RECEIVED:

493 495 443 399 399 381 453 452 455 371 378

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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 late.

P R O C E E D I N G S (Called to the order of court at 8:48 a.m.) THE COURT: and gentlemen. This is the continuation of the trial in Biltmore v. Thimmesch and others. Mr. Schweigert -- oh, no. Wrong name. Please be seated. Good morning, ladies

Mr. Rothwell, do you understand you're still under oath, sir? THE WITNESS: Yes, sir. And I apologize for being

I got caught in tremendous traffic. THE COURT: Well, we hope that people will try and Try

plan ahead for that because even I know what happens here. and plan ahead for that. THE WITNESS:

The drive took fifteen minutes yesterday I apologize.

and an hour-and-a-half this morning. THE COURT: every day. believe. MR. CLAUS: Yes.

I'm glad I don't have to deal with that

We're continuing with the cross-examination, I

Good morning, Your Honor.

Good

morning, Mr. Rothwell. THE COURT: MR. CLAUS: Good morning. A few housekeeping matters. Just

We have marked, for identification, Exhibit 776.

so there's no ambiguity -- and I believe your court deputy has UNITED STATES DISTRICT COURT Case 2:02-cv-02405-HRH Document 503 Filed 04/22/2008 Page 4 of 223

366 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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. Do you see up in the right-hand corner it says "Rothwell Q sir? A Q Yes, I do. Could you please turn to the front page. Are you there? BY MR. CLAUS: Q provided you with a copy, sir and I have it in front of you in a folder. THE WITNESS: BY MR. CLAUS: THE COURT: MR. CLAUS: 776. I thought we already had a copy of that. Well, Your Honor, there was a little bit I'm sorry. What was that number again?

of potential question from Mr. Rothwell yesterday whether Exhibit 9 to his deposition really was composed of the Unanimous Consent and I want to just make sure that there is no ambiguity about that. THE COURT: Understood.

RICHARD ROTHWELL, WITNESS, SWORN CROSS EXAMINATION (cont'd) Do you have Exhibit 776 in front of you,

Exhibit 9"? A Q Yes. Do you agree, sir, that the first three pages of Exhibit 9

to your deposition are composed of the Unanimous Consent of the Board of Directors of Visitalk.com In Lieu of Special Meeting UNITED STATES DISTRICT COURT Case 2:02-cv-02405-HRH Document 503 Filed 04/22/2008 Page 5 of 223

367 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q where Peter Thimmesch and Michael O'Donnell authorized to themselves 7.65 million dollars -- or 7.65 million warrants for visitalk.com? MR. KAUP: Objection, Your Honor. The document speaks

for itself and goes beyond the use Mr. Claus indicated he was going to use it. THE COURT: THE WITNESS: MR. CLAUS: BY MR. CLAUS: Overruled. Yes. Thank you. Another housekeeping matter, sir, we have

put in front of you also Exhibits 774 and 775. Can you pull those out, sir? We have marked those for identification this morning, Your Honor, because, again, there was a suggestion by Mr. Rothwell in his cross-examination yesterday that he may have prepared or there may exist a Monthly Operating Report for visitalk.com which listed the pre-petition liabilities of the shareholders of visitalk.com. MR. KAUP: Objection, Your Honor. These documents

were never disclosed. exhibit lists. MR. CLAUS:

I believe they were never on any of the

Your Honor, they were part of the

Bankruptcy Court case. THE COURT: I feel a little uncertain as to what was

and what wasn't in the bankruptcy filing, so I want to see this UNITED STATES DISTRICT COURT Case 2:02-cv-02405-HRH Document 503 Filed 04/22/2008 Page 6 of 223

368 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 stuff, frankly. Q A Q BY MR. CLAUS: Okay. First, do you agree, sir, that the complaint in this matter Sir, let me have you look at 774 first.

that you authorized for filing was filed in November of 2002? A Q That sounds like the correct date. And if you look, sir, up at the top of the Business and

Industry Monthly Operating Report that comprises Exhibit 774, it is the Monthly Operating Report for the month of December 2002, correct? A is. Q Well, sir, if you look at the file stamp to the immediate Well, that date is handwritten in there, so I suppose it

right of the handwritten "Dec. 2002," you see that it was filed with the Clerk of the United States Bankruptcy Court for the District of Arizona on February 10 of 2003, correct? A Q Yes, that appears to be correct. Both of those dates are after the date on which the

complaint in this matter was filed, correct? A Q Correct. And if, again, sir, you look at the bottom, it says the

person to contact regarding this report is you, sir, correct? A Q Correct. You were the acting CEO of visitalk.com, Inc. at the time

this report was filed under penalty of perjury with the UNITED STATES DISTRICT COURT Case 2:02-cv-02405-HRH Document 503 Filed 04/22/2008 Page 7 of 223

369 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 Bankruptcy Court, sir, correct? A Q Correct. And if you turn, sir, to the one, two, three, fourth, fifth

page, but it has an Arabic numeral 4 at the bottom of the spread sheet, are you there? A Q Yes. Again, sir, it lists total pre-petition liabilities,

correct, in the third block of columns and rows? A Q Correct. And, again, the same number is there, isn't it,

$7,901,782.64, correct? A Q The same number as what? The same number as the pre-petition liabilities you

submitted under oath to the Bankruptcy Court in the Business and Monthly Operating Report that we showed you yesterday, correct? A Q I don't recall that number. Sir, you would agree that the total pre-petition

liabilities that you identified under oath for the Bankruptcy Court in December 2002 were $7,901,782.64, correct? A Q I didn't prepare this report. Sir, would you agree that you were the acting -- you

already admitted that you were the CEO in bankruptcy at the time this report was filed, correct? A That's correct.

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370 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q You admit that you were the person identified to contact

regarding the report, correct? A Q Correct. Sir, you did not, while you were the CEO in bankruptcy of

Visitalk, permit false statements to be filed under oath to the Bankruptcy Court, correct? A Q Not knowingly, certainly. Okay. So let me just ask you this. Would you agree, sir, that Exhibit 774 is a Business and Monthly Operating Report that was filed while you were the CEO of Visitalk? A Q A Q Yes. Filed under penalty of perjury, correct? Yes. And, sir, this Business and Monthly Operating Report,

Exhibit 774, identifies total pre-petition liabilities as $7,901,782.64, correct? A Correct. MR. KAUP: Objection, Your Honor. Foundation. He

hasn't even established that Mr. Rothwell saw this document before this trial. THE COURT: THE WITNESS: MR. KAUP: He signed it, didn't he? No, I didn't.

This document, this Business and Industry

Monthly Operating Report, I do not see a signature on it of UNITED STATES DISTRICT COURT Case 2:02-cv-02405-HRH Document 503 Filed 04/22/2008 Page 9 of 223

371 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Mr. Fallon. THE COURT: THE WITNESS: at the time. Q A Q BY MR. CLAUS: Correct. You were responsible for ensuring that correct information And you were the CEO at the time, correct? The signature is a scribble. It's Carl Zeidler who was the controller

was transmitted from Visitalk to the Bankruptcy Court at all times you were the CEO, correct? A To the best of my knowledge. MR. CLAUS: 774 in evidence. MR. KAUP: Your Honor, we object. It's not signed by Your Honor, we would like to offer Exhibit

Mr. Rothwell and he doesn't have Mr. Zeidler in the courtroom to authenticate the document or the person who is listed as the preparer who, I believe, is also Mr. Zeidler, but blue I can't read that last signature either. THE COURT: It appears on its face to be a Visitalk It's admitted.

Bankruptcy Court filed document.

(Exhibit No. 774 admitted into evidence.) BY MR. CLAUS: Thank you, Your Honor.

And, again, sir, you were the one who testified yesterday that there may exist some Business and Monthly Operating Report that identifies the alleged claims as Series A, B, C, D, E shareholders as comprising pre-petition liabilities of UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 10 of 223

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372 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q you? A Q Yes. Exhibit 775 is the Business and Industry Monthly Operating UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 11 of 223 sir? THE COURT: MR. CLAUS: BY MR. CLAUS: Certainly. Thank you. Sir, do you have Exhibit775 in front of wish. THE COURT: MR. CLAUS: Yes. Can I ask him about this exhibit first, Visitalk, right? A Q I don't recall testifying to that fact. Could you please look at Exhibit 775. Well, sir, would you agree before you look at Exhibit 775 now that to your knowledge there was absolutely no Business and Industry Monthly Operating Report filed in the Visitalk bankruptcy case under penalty of perjury that identified any alleged claims of shareholders as comprising pre-petition liabilities of visitalk.com? A Q No. Okay. I can't do that. Then please look at Exhibit 775. THE COURT: Mr. Claus, the $7,900,000 figure is How do we know that there aren't some

obviously a composite.

kind of shareholder claims buried in it? MR. CLAUS: Your Honor, I can tie that up, if you

Case 2:02-cv-02405-HRH

373 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 Report for the month of July 2004? On the first page up at the top right-hand side underneath the file stamp? A I see that date, but there is contradictory information The date filed, the signatures of

here that is confusing me.

people who weren't around then, so I'm not sure what this document is for sure. Q Sir, the document is titled "Business and Industry Monthly

Operating Report, Month of July, 2004," correct? A Q A Q It's titled that way, correct. And it also has a file stamp, correct? Yes, but it's unreadable to me in my copy. I'll show you my copy, sir. My copy says Filed 2004, August 17 a.m. 10:19. Yours doesn't say that, sir? It appears to. It's not completely legible, but it looks

that way. Q Now, you are aware, sir, because you were still involved

with Visitalk at the time the Second Amended Plan of Reorganization was filed, correct? A Q A Q A What was the date that the Second Amendment was filed? June 22, 2004. No. I'm not certain of that.

You're not certain of that? No. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 12 of 223

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374 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A Q A Q Yes. Sir, if you look, please, at page 57 of Exhibit 657? THE COURT: MR. CLAUS: I'm sorry? Page 57 of Exhibit 657. There are Arabic Q Well, sir, could you please turn again to the fifth page of

Exhibit 775. A Q Okay. Do you see, sir, that again, total pre-petition liabilities Do you see that?

are listed again as $7,901,782.64. A Q Yes.

Now, the judge asked me a question or suggested a question. If you give me a moment, Your Honor, I do need to find

the exhibit.

Thank you. Could you

Exhibit 657, sir, is that in front of you? please check and I'll go over to the box. A Q What was the number again, please? 657. Do you have that in front of you, sir?

numerals at the bottom of the page to assist you, as well. THE WITNESS: BY MR. CLAUS: Oh. Yes. Okay. And sorry to seem like I'm tricking you, because I just UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 13 of 223 57. Page 7?

Page 57?

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375 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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. And the description of that class is Unsecured Creditors, A Q A Q Yes. And then if you go to the page 57, are you there? Yes. There is a Class 7. Do you see that? There is a 7 in a matrix. realized that the thing I need you to look at first was on page 55, so if you just go back two pages. A Q Okay. I'm there.

This is the disclosure statement submitted in support of

the Second Amended Plan of Reorganization, correct? A Q That's what the heading says, yes. And on page 55 there is a Section D that says

Classification and Treatment of Claims as a section heading. Do you see that?

correct? A Q A Q Correct. And if you go below that, there is a No. 8, correct? Yes. And the words next to that are Equity Security Holder

Interests, correct? A Q Correct. And the amount of unsecured creditor's claims in Exhibit Correct?

657, page 57, is approximated as being $8,500,000.

Case 2:02-cv-02405-HRH

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376 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 Correct. Whereas, the amount of the equity security holders'

interests is more than $40 million, correct? A Q Correct. Now, look at that $8,500,000 number. And I want to you

keep it in your head for a moment, okay? A Q A Q A Q A Q Yes. Now, I want you to go back to Exhibit 775. Okay. Are you there? Yes. The matrix again, the third block down. Which page? Page -- it's the fifth page. It's Arabic numeral 4 is at

the bottom of the page. A Q Okay. Yes. And

It says under the heading Pre-Petition Liabilities.

that's in the black -- it's a little difficult to read, but I'm hoping you can read it on your copy. Pre-Petition Liabilities, correct? A Q Yes. I can read it. It's a section called

And it says Unsecured Debt and it says Schedule Amount Correct?

$7,557,173.57. A Q Correct.

And then the column over says Current Month, correct? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 15 of 223

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377 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 Honor? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 16 of 223 A Q A Q Correct. And that says $8,818,784. Correct. And I understand it's $300,000 off, but the amount of Class Correct?

7 Unsecured Creditor's Claims in the Second Plan of Reorganization Disclosure Statement is approximated at $8.5 million, correct? A Q Correct. You would agree, sir, that the more than $40 million

identified in the Exhibit 657, the Disclosure Statement submitted in support of the Second Plan of Reorganization, the $40 million worth of shares held by equity security holder interests in visitalk.com is not included in the schedule of Total Pre-Petition Liabilities that is Exhibit 775, correct? A Q No. You agree, sir, that the number $7,901,000 is less than $40

million, correct? A Yes. I didn't prepare either of these documents and I wasn't the CEO at the time. Q A Q Of 775? Of either of them, either the 657 or 775. Could you please -- do you have 567 in front of you, sir? You don't because I have it here. Approach, Your

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378 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q sir? A Q Yes. Exhibit 567 is the Statement of Financial Affairs of THE COURT: MR. CLAUS: Yes. We offer 775 in evidence, Your Honor, by

the way, the file-stamped copy of the Business and Industry Monthly Operating Report filed in the United States District -or the United States Bankruptcy Court for the District of Arizona in the visitalk.com bankruptcy matter on August 17, 2004, at 10:19 a.m. MR. KAUP: THE COURT: We will agree to the admission, Your Honor. Very well. 775 is admitted.

(Exhibit No. 775 admitted into evidence.) BY MR. CLAUS: Do you have Exhibit 567 in front of you,

visitalk.com. A Q Yes. If you turn to the very last page, sir, there is a date of Correct?

1/3/01. A Q

Correct. You admit you were the CEO of Visitalk in bankruptcy as of

January 3, 2001, correct? A Q Correct. And you claimed before that you had as of that date worked

seven days a week, 20 hours a day conducting a vigorous investigation, correct? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 17 of 223

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379 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A Not exactly. Sir, you did -I did -- I was working seven days a week, 20 hours a day.

But at that time my to focus wasn't on a vigorous investigation of the past financial affairs of the company. My focus was on keeping the door open and trying to generate revenue. Q Well, sir, if you turn to -- and I apologize. It's the way It's not

the Bankruptcy Court, I guess, takes these filings. paginated, but it is Schedule F and it is -A Q A I'm there. You're at Schedule F? Yes. MR. CLAUS:

I'll wait for His Honor to get there.

I

apologize, Your Honor. THE COURT: THE WITNESS: MR. CLAUS: pages from the back. THE COURT: BY MR. CLAUS: I have it. Do you see the third paragraph under the Creditors Holding Unsecured Nonpriority I'm in the middle of it somewhere. It's about ten pages from the back. Thank you, Mr. Rothwell. It is about ten

heading Schedule F: Claims? A Yes. THE COURT:

I'm sorry.

I'm now uncertain as to where

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380 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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. Now, again, the total amount of creditors holding unsecured Q you are. MR. CLAUS: May I just approach, Your Honor, so I can

get you to the right place or have David pull it up on the screen? THE COURT: I think I have it now.

What do you want us to look at? MR. CLAUS: Schedule F: The third paragraph under the heading

Creditors Holding Unsecured Nonpriority Claims.

Do you see that? THE COURT: BY MR. CLAUS: I have it. And the paragraph says:

"If the claim is contingent, place an X in the column labeled Contingent." Did I read that correctly?

nonpriority claims in the Statement of Financial Affairs listed on the bottom of Schedule F is $11,275,061. A Q Correct. And there is a column for Contingent, correct? It's the -Correct?

I'm sorry. column over. A Q Yes.

Yes, a column -- one, two, three, four, fifth Do you see that?

And then there is an attachment to Schedule F and it's the It starts the next page. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 19 of 223

next page.

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381 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 Q Would you agree, sir, and you can just look through it, because Visitalk didn't even include a column for Contingent Claims. Would you agree, sir, that in Schedule F filed with the Bankruptcy Court on January 3, 2001, visitalk.com, Inc. did not identify any contingent claims? A Q Yes. Turning to a different subject and then we will be done. THE COURT: MR. CLAUS: MR. KAUP: MR. CLAUS: MR. KAUP: THE COURT: Is 567 an admitted exhibit? Let me look, sir. I don't believe so. If it is not, we offer it. We will agree, Your Honor. 567 is admitted.

(Exhibit No. 567 admitted into evidence.) BY MR. CLAUS: Turning to a different subject, sir, you

mentioned yesterday that as of November 2000, you had a limited amount of information about visitalk.com's technology, financial affairs, and day-to-day operations. Do you remember that testimony? Yes. But you said that one of the things that provided you with

information about the company was information provided to you by Goldman Sachs and Wit Soundview. Do you remember that testimony? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 20 of 223

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382 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 A Q sir. Yes. Exhibit 606, please, David. You have it in front of you,

And we're pulling it up on the screen for you, Your

Honor, if you wish. First, look at the first page of Exhibit 606, Mr. Rothwell. A Q Okay. Do you see it says at the top. Banner visitalk.com

Information Sheet? A Q Yes. And do you see at the left there is a block that has the

name Goldman Sachs? A Q Yes. And that's the Goldman Sachs you know to be the banking

institution. A Q Yes. And you knew that at the time? At the time you made your

investment in visitalk.com and received information from Goldman Sachs? You knew what Goldman Sachs was? I'm -- I don't want to be evasive at all. That just

doesn't seem to be clear enough to answer "yes." At the time that I made my Series F investment, certainly, I did. Q If you look below that heading, as a matter of fact, you UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 21 of 223

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383 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q million. Correct? Correct. Is this the type of information you received and relied see there is a security identified as a Series F Convertible Preferred Stock, correct? A Q A Q Correct. Offering size up to 100,000,000. Correct. And then right next to that it has projected revenue Correct?

figures, correct? A Q Yes. It projects revenue of visitalk.com for $4.9 million. Revenue for visitalk.com in 2001 of $28.3 million. And revenue in 2002 for visitalk.com of $116.3

upon from Goldman Sachs? MR. KAUP: Objection, Your Honor. All of the

information in this document is hearsay. THE COURT: relied on it. It may be, but if he relied on it, he

You may answer. Could you repeat that, please? I'll even back up and make it easy

THE WITNESS: BY MR. CLAUS:

Sure.

for you. You said that some of the information that you relied upon was information that you received from Goldman Sachs and UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 22 of 223

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384 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 Q Q Wit Soundview, correct? A Q Yes. And this has at the top of the page Goldman Sachs and Wit

Soundview on the left and the right, correct? A Q A Q A Correct. And it says Visitalk.com Information Sheet, correct? Yes. You received a Visitalk.com Information Sheet, correct? I received -MR. KAUP: Objection, your Honor. He hasn't asked

whether he has received this document. Which information sheet? MR. CLAUS:

An information sheet?

Your Honor, these speaking objections are

telling the witness what to say. MR. KAUP: Your Honor, he needs to be specific as to

which information sheet. THE COURT: BY MR. CLAUS: Let's be careful. Thank you. Go ahead, sir.

You received an Information Sheet, correct? I received an Information Sheet, yes. And you said on your -Multiple ones. And you said -- in your cross-examination you admitted that

information you relied upon came from Goldman Sachs and Wit Soundview, correct? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 23 of 223

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385 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 correct? A I didn't say "second round." MR. KAUP: Objection. It's not -A Q Correct. Sir, I'm just asking, is Exhibit 606 the type of

information that you received and relied upon from Goldman Sachs and Wit Soundview? MR. KAUP: Objection, Your Honor. Vague. Ambiguous.

The type of information doesn't relate to this exhibit. THE COURT: THE WITNESS: Overruled. The format of this document is certainly

the type of information I received, but I can't attest to the specific numbers in here. In fact, I recognize this particular

sheet and who it was prepared for. Q BY MR. CLAUS: It was prepared for the proposed Series F

Convertible Preferred Stock purchasers, correct? MR. KAUP: THE COURT: THE WITNESS: Objection. Overruled. It was prepared for the second round of Foundation.

Series F Convertible Preferred Stock, which was limited to four or five large publicly-held corporations. Q And you were trying -- you testified yesterday that you That you bought 3,000 shares and

participated in both rounds.

then you bought 3,250 shares in the second round. That's what you said under oath yesterday, sir,

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386 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 Honor. MR. KAUP: Objection, Your Honor. The document Q THE COURT: Excuse me. Wait. Wait. Wait. Wait.

Everybody is talking at once. MR. KAUP:

One at a time, please. It

Your Honor, the question was compound.

also mischaracterizes the prior testimony. THE COURT: BY MR. CLAUS: I don't know. Sure. Try the question again.

You testified yesterday that you made two investments in something you called Series F, correct? A Q I testified that I purchased additional shares, yes. And I guess more fundamentally, you just testified now that

you recognize Exhibit 606, correct? A Correct. MR. CLAUS: We offer Exhibit 606 in evidence, Your

contains hearsay statements of persons not even identified, Your Honor, as being persons who -- and the persons who authored this are not even identified and were never brought up to be even deposed in this case, Your Honor. THE COURT: that is relevant? MR. CLAUS: THE COURT: MR. CLAUS: reasons, Your Honor. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 25 of 223 Why is it relevant? Yes. Well, it's relevant for a number of Mr. Claus, what does this document tell us

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387 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 Inc. This is a document prepared by and for visitalk.com, So to deal with hearsay objection -THE COURT: MR. KAUP: I'm not sure I heard him say that. And, Your Honor, there is no one I'm aware

of who is going to testify to that. MR. CLAUS: There is, Your Honor, but it's relevant to

address your relevance question. It's relevant because my client Snell & Wilmer is being accused of having disseminated false information regarding the financial condition, future earnings, future revenue, technological state, technological capabilities, commercial viability of visitalk.com. This is a information sheet for visitalk.com prepared by Goldman Sachs and Wit Soundview that projects $116 million in revenue for 2002. It is a document prepared for visitalk.com by Goldman -- with visitalk.com by Goldman Sachs/Wit Soundview that discusses the technological capabilities of visitalk.com that discussed the comprehensive -THE COURT: started then. If the witness said that this was prepared for Visitalk, I missed it. Q BY MR. CLAUS: Sir, you testified that you have seen this Okay. We're back to where I sort of

information sheet before, correct? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 26 of 223

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388 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 hear. A Q Correct. You saw it as part of your duties as CEO of visitalk.com,

correct? A Q A Q Correct. That's where I first came across it.

In visitalk.com's files, correct? I'm not sure. Well, the information that you received from Goldman Sachs

and Wit Soundview was information that you received in order to assist you in making a purchase in visitalk.com securities, correct? A Q Correct, but that wasn't this document. You said you saw a document in this format, but you just

can't recall if it has the right -- the same numbers, correct? A No. I recall that it definitely does not have the same

numbers. MR. CLAUS: MR. KAUP: THE COURT: MR. CLAUS: MR. KAUP: I apologize. THE COURT: MR. KAUP: THE COURT: Your Honor, we still offer Exhibit 606. Same objection. Not yet. Okay. Your Honor, what was your ruling? I didn't

Was your ruling it does not come in? I'm sorry. Say it again? I apologize.

What was your ruling?

I said "not yet," meaning your objection

is sustained at this point. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 27 of 223

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389 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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, isn't it a fact that at the December 27, 1999, meeting A Q Q MR. KAUP: BY MR. CLAUS: Thank you, Your Honor. Last topic, Mr. Rothwell.

The -- I asked you yesterday at the end of your cross-examination if you were aware of a document that purported to reflect a meeting of only Series A shareholders where a Proposal 1 was voted on. Do you recall those questions? Generally, yes. Do you recall, sir, that a meeting was held on December 27,

1999, of Series A, B, and C shareholders? A Q Yes. Do you recall, sir -- strike that. You testified yesterday that you were sure that one of the topics that was discussed at the December 27, 1999, meeting was the release of claims of the Founder's Warrants issue. Do you recall that testimony?

of the Series A, B, and C shareholders, there was no proposal regarding the Founder's Warrants. A Q No. Isn't it a fact, sir, that you voted at the December 27,

1999, meeting of the Series A, B, and C shareholders by proxy? A No. I'm sorry. Do you mean that I wasn't present for the

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UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 28 of 223

390 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A Q meeting? Q My question was, sir: Isn't it a fact that you voted by proxy at the December 27, 1999, board meeting of the Series A, B, and C shareholders? A I don't recall specifically what the format of the

documents were presented at that meeting. MR. CLAUS: MR. KAUP: THE COURT: MR. CLAUS: THE COURT: MR. CLAUS: in front of you. Have you provided this to the Judge? May I approach, Your Honor. Yes. May I approach, Your Honor? Yes. Actually, I believe you already have 393

Okay, thank you.

Approach, Your Honor? THE COURT: MR. CLAUS: BY MR. CLAUS: Yes. Could you please look at the first page of Exhibit 393? Okay. Does it say Special Meeting of Shareholders Are we talking 393 or 392? 393, Your Honor. Do you see Exhibit 393, sir?

December 27,1999? A Q Yes. Does it say underneath, "This proxy is solicited on behalf UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 29 of 223

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391 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q of the Board of Directors." A Q Yes. And then there are four enumerated items for which one

could vote for, against, or abstain at the December 27, 1999, meeting, correct, on the first page? A Q Yes. You would agree, sir, that neither item 1, 2, 3, or 4 says

anything about Founder's Warrants, correct? A Q Not specifically. One is approval of certain changes to the rights and

preferences of preferred stock, correct? A Q Right, which included the Founder's Warrants. Sir, again, as a Series A shareholder, you had a right to

participate under the Series A term sheet in future offerings, correct? MR. KAUP: legal conclusion. THE COURT: THE WITNESS: BY MR. CLAUS: Overruled. I believe that's correct, yes. Objection, Your Honor. It calls for a

And I just want to make sure that I

understand you correctly. It's your testimony today that number 1 had to do with the Founder's Warrants. today? A I don't recall for sure. I know Founder's Warrants were Is that what you're testifying about

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UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 30 of 223

392 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 discussed at length at that meeting. And it appeared since

those Founder's Warrants affected our rights and preferences in our preferred stock, I'm making an assumption that it was included in No. 1. Q Sir, isn't it true that the proposal indicated at No. 1 was

to increase the size and per-share price in the definition of "qualified public offering" for each series of preferred stock from $8 million at at least $4 per share to $15 million at at least 8 million per share? A Q I don't recall. Isn't it true, sir, that the Proposal 1 included an

amendment for an adjustment to the conversion price of preferred stock which would be triggered upon the issuance of common stock; is that true? A I'm sorry. I totally missed that. Which number were you

reading? Q I'm asking you, sir, isn't it true that Proposal 1 included

amending the term sheets such that the adjustment of the conversion price of the preferred stock would be triggered upon the issuance of common stock or other securities? A Q I don't recall. Isn't it true, sir, that No. 1 included an amendment to

clarify that the issuance of common stock upon conversion of any preferred stock would not trigger an anti-delusion adjustment? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 31 of 223

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393 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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 Q A Q No. Oh. A Q I don't recall. That does sound vaguely familiar though.

Isn't it true, sir, that the Proposal 1 was for removing

the prohibition on issuing securities with senior conversion rights? A Q That sounds familiar too. Sir, I'm going to hand -- or I'm going to ask you to look

now at Exhibit -THE WITNESS: May I ask a question?

Are you suggesting that this exhibit represents the entire content of that meeting? MR. CLAUS: Sir, I'll go ahead and ask the questions

and I appreciate your question and I think I will get to your question right now. THE WITNESS: I'm sorry. I thought you said "sure" I apologize.

when I asked if I could ask a question. Q BY MR. CLAUS:

Could you please turn to Exhibit 392,

please, sir. Are you there? I haven't found it yet. I'm sorry. I apologize, sir.

Thank you. Do you have 392 in front of you, sir? Yes. If you go to the first page, it's the Notice of Special

Meeting, correct? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 32 of 223

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394 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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. Do you see any indication in the Notice of Special Meeting

that any attorney of Snell & Wilmer would be present? A so? Q Well, sir, you testified that there was another document I haven't read this document yet. Would you like me to do

somewhere that was for a meeting of only Series A shareholders where a Proposal 1 was voted on and that's the meeting where Richard Mallery got up and told everyone -- all of the Series A shareholders that they would be millionaires. I'm asking you, sir, first, did you receive a copy of 392 when you were a shareholder of visitalk.com? A Q I don't recall. Did you review Exhibit 392 as the CEO in bankruptcy of

visitalk.com? A Q I believe so. At the time you reviewed the document while you were CEO of

visitalk.com, did you see any reference to Richard Mallery, Michael Donahey or any other lawyer at Snell & Wilmer in Exhibit 392? A Q I don't recall. That was years ago.

Have you ever seen any minutes of the Special Meeting of

Shareholders of December 27, 1992, that reflect either the attendance of Mr. Mallery or any questions posed to Mr. Mallery? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 33 of 223

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395 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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. I want you to tell me where under Proposal 1 the Founder's A Q Yes. Sir, if you look at Exhibit 392, I want you to turn -A Q I don't recall. Have you ever seen any minutes of the December 27 Series A,

B, and C Shareholder Meeting that reflect any statements made by any lawyer at Snell & Wilmer to any shareholder? A Q I don't recall. Have you ever seen any minutes of the December 27, 1999,

Shareholder Meeting? A Q I don't recall. But we did look at minutes of the December, 1998, meeting

that was for only the Series A shareholders that did reflect questions to and answers from Joe Richardson of the Bryan, Cave firm yesterday. You remember that, correct?

there's an Arabic numeral page 3, but it is the one, two, three, fourth, fifth page in. Do you see that? The Bates stamp is VT011216.

Warrants are mentioned as being part of the proposal. A Q I would need to read this document to see if it is. Sir, do you agree that having reviewed this document as CEO

in bankruptcy, that you did not see anything under Proposal 1 having to do with the Founder's Warrants, correct? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 34 of 223

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396 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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. Would you agree that the text after that bullet point does UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 35 of 223 A A Q No. So it's your testimony under oath today that this document,

Exhibit 392, contains a discussion to be held and voted on at the December 27, 1999, meeting regarding the Founder's Warrants. Is that your testimony? I'm sorry. I'm getting confused with the change in these

questions. All I'm saying is that I don't recall off the top of my head the exact content of this document. And if I'm going

to answer specific questions regarding its content, I need to review it again. Q Well, sir, if you look at the heading, it says: Do you see that? The

Proposal. A Q A Q

Proposal No. 1? Yes. Yes. And then there is a paragraph. And then it says: The

Proposal.

Do you see that in bold letters?

"The Proposal."

And then there are bullet points? A Q Yes. First bullet point: Do you see that?

Do you see that?

Increase the Size and Per Share Price.

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397 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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. Would you agree, sir, that that bullet point doesn't A Q Yes. Would you agree, sir, that the text after that bullet point not contain the word "founder," the word "warrant," or the phrase "Founder's Warrants"? A Q Yes. The next bullet point: No Otherwise Required

Anti-Dilution. Do you see that?

doesn't contain the word "founder," the word "warrant," or the phrase "Founder's Warrants"? A Q Yes. The bullet point after that: Clarify That The Issuance --

That that goes over to the -- well, so that doesn't go over to the next page. I apologize.

Would you agree, sir, that the text after that bullet point doesn't contain the word "founder," the word "warrant," or the phrase "Founder's Warrants"? A Q Yes. The next bullet point on the next page: Remove The

Prohibition. Do you see that?

contain the phrase "Founder's Warrants" or the words "founder" and "warrant"? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 36 of 223

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398 RICHARD ROTHWELL - CROSS EXAMINATION (cont'd) 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. And I'm going to ask you, sir, just so we don't take up too Would you agree that

much time, the next three bullet points.

the next three bullet points don't contain the words "founder," "warrant," or phrase "Founder's Warrants"? A Q Yes. Sir, the meeting of December 27, 1999, took place after

December 13, 1999, correct? A Q Correct. And you signed your Series A Release on December 6, 1999,

correct? A Q Correct. So you would agree, sir, that as of the December 27, 1999

meeting, even if Founder's Warrants were discussed by anyone, you had already decided to and executed your Release of Claims regarding the Series A shares, correct? A Correct. MR. CLAUS: THE COURT: No further questions, Your Honor. Thank you.

Redirect, Mr. Kaup? MR. KAUP: THE COURT: Yes, Your Honor. Oh. Wait. Wait. Wait. Wait. We've got

a couple of exhibits that -MR. CLAUS: I'm not offering them, Your Honor. They were not I used

them to refresh the witness' recollection.

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UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 37 of 223

399 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q BY MR. KAUP I'm fine. Could you look at Exhibit 562. It's one of the documents identified on the exhibit list of the plaintiffs. will be objecting to their admission today. THE COURT: MR. CLAUS: Excuse me? They were not identified on the witness Forget it. And so we

list of the plaintiff -- you know what, Your Honor. We withdraw our objection.

We will move for the admission of Plaintiff's Exhibit 392 -- and I apologize I can't remember -THE COURT: MR. CLAUS: THE COURT: MR. KAUP: THE COURT: 392 and 393. Yes. I assume that's okay with the plaintiffs? Yes, Your Honor. They're admitted.

(Exhibits No. 392 and 393 admitted into evidence.) MR. CLAUS: I apologize. REDIRECT EXAMINATION Good morning, Mr. Rothwell. How are you? It will take me a second to get my stuff.

Mr. Claus went through with you yesterday. A Q A Q Okay. Are you there, sir? Yes. Do you recall Mr. Claus asked questions to you about this UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 38 of 223

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400 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q document and the questions related to Mr. Cardwell -- your earlier testimony regarding Mr. Cardwell standing up and objecting to matters relating to the treatment regarding the Founder's Warrants? A Q Generally, yes. You see that this document Exhibit 562 is -- are minutes of

a Special Meeting of the Board of Directors of Visitalk? A Q Yes. You've never asserted that you were present at that

meeting, correct? A Q Correct. And your prior testimony regarding the objection by

Mr. Cardwell regarding Visitalk's treatment relating to the Founder's Warrants was with regard to a shareholders' meeting at which you were present? MR. CLAUS: THE COURT: BY MR. KAUP: Leading, Your Honor. Sustained. When you testified earlier, sir, about

witnessing Mr. Cardwell stand up and raise an objection, what type of meeting were you at at that time? MR. CLAUS: THE COURT: MR. CLAUS: Disclosure, Your Honor. I'm sorry? Disclosure, Your Honor. This is the first

time I'm ever hearing it. MR. KAUP: Your Honor, it's in direct response to the

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UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 39 of 223

401 RICHARD ROTHWELL - REDIRECT EXAMINATION 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 questions he raised in cross-examination regarding the objections by Mr. Cardwell and which meeting that occurred at. THE COURT: THE WITNESS: I'll take the answer. I believe your question misstates my

testimony from yesterday. Q BY MR. KAUP: What -- tell me what you recall your

testimony was, sir. MR. CLAUS: THE COURT: THE WITNESS: Relevance, Your Honor. Overruled. That in early December of 2000 in Mark

Cardwell's backyard with Mike O'Donnell present, that Mark Cardwell informed me about the fact that he had objected to this -- the Founder's Warrants issued to the board which was -had something to do in part with his termination from the company. But I didn't testify and don't know at what meeting or if it was at an official board meeting where that objection occurred. Q A BY MR. KAUP: Have you ever --

I'm sorry, but I was just going to state. However, I did testify that at the December 27, 1999,

shareholders' meeting, Mark Cardwell stood up in response to Mike O'Donnell informing the shareholders that he was leaving the company and going on to bigger and better things and he just stood up to be recognized and acknowledged for his work at UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 40 of 223

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402 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Q Q Visitalk. Q Then just to be clear, you don't -- you never intended to

say to the Court that you had any knowledge about what Mr. Cardwell may or may not have done at this meeting on November 24, 1999? MR. CLAUS: THE COURT: BY MR. KAUP: Leading. Sustained.

Did you ever -- you were never at this

meeting on November 24, 1999? MR. CLAUS: BY MR. KAUP: Leading.

Did you attend the meeting -Try not to suggest the answers to him.

THE COURT:

This is redirect examination. MR. KAUP: BY MR. KAUP: I apologize. Do you have any knowledge about what

Mr. Cardwell may have done at this meeting on November 24, 1999? A Q A Q No. Could you look at Exhibit 638 please, Mr. Rothwell? Okay. Do you recall Mr. Claus asked you a number of questions

about Exhibit 638? A Q A Yes. Can you read the date on the first page? August 8, 2000. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 41 of 223

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403 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Do you recall the date on which you signed your Series F

Purchase Agreement? A Q I believe it was in June of 2000. Do you recall when you wrote a check for your second

purchase of Series F Preferred Stock? A I believe it was in June of 2000 -- no. I'm sorry. Could

you restate that question? Q Do you recall when you wrote a check for the purchase of

your second piece of stock in this Series F Offering? A I only wrote one check. I just made the decision to

purchase the number of shares in Series F a few days apart from one another, I believe. Q A Q And when did you write that check, sir? In June of 2000. Did you see this Confidential Information Statement,

Exhibit 638, dated August 8, 2000, before you wrote your check to purchase the Series F Preferred Stock? A Q No. Under -- you see the words "visitalk.com" on the first

page? A Q Yes. Do you see it says: 30 units at $100,000 Per Unit. Each unit consists of

One 8 Percent Convertible Promissory Note? A Yes. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 42 of 223

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404 RICHARD ROTHWELL - REDIRECT EXAMINATION 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 Okay. Do either Section 1.1 or 1.2 reference the purchase of witness. Q A Q BY MR. KAUP: Yes, I do. Could you just read Section 1 on the first page to Do you have Exhibit 304 up there? Q Did you ever buy a Visitalk -- the unit of Visitalk

Convertible Promissory Notes? A Q A Q Yes. And what was that? That was my Series F purchase. Could you look at -I apologize, Mr. Rothwell. Purchase Agreement? MR. CLAUS: Mr. Kaup, I think it is still up with the We will just get that

yourself, sir. There's a Section 1.1 and 1.2.

promissory notes? A Q No. What did you purchase through this Stock Purchase

Agreement? A At the time that I wrote the check and signed this And

agreement, I thought I was purchasing preferred stock.

over the next -- I don't recall exact time period, but four to six weeks -- I was informed that there was some legal issue UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 43 of 223

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405 RICHARD ROTHWELL - REDIRECT EXAMINATION 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 this. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 44 of 223 seen -MR. KAUP: He had -- I asked him, Your Honor, whether with the number of preferred shares outstanding or something and that they were going to be issuing convertible promissory notes instead. effect. Q The legal document that you received to that effect, was it And then I received a legal document to that

Exhibit 638? A Q Definitely not. Prior to purchasing your Series F Preferred Stock through

Exhibit 304, had anyone -- rather, had anyone -- had Visitalk given you a document which disclosed the financial information that Mr. Claus pointed you to at page VT9095 in Exhibit 638? MR. CLAUS: Objection, Your Honor. Best evidence.

The witness said that he received the document and it hasn't been identified by either the witness or Mr. Kaup. And now Mr. Kaup is asking him to testify about what the document had or didn't have in it. THE COURT: I thought he said he hadn't relied or

he received any document which had the information that Mr. Claus pointed him to in Exhibit 638. MR. CLAUS: But he did receive a document, according

to his testimony, Your Honor. THE COURT: Help me understand where we're going with

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406 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q THE WITNESS: MR. KAUP: I didn't receive this document.

Your Honor, the -- Mr. Claus was attempting

to attack Mr. Rothwell's credibility about not having seen financial information about the company and -- while he was an investor before he became a CEO and he had relied on this document in doing that and the financial information on the page that I just pointed to. And I just wanted to try to establish whether there was any document that Mr. Rothwell received which had the financial information on this page to which Mr. Claus had directed him. THE COURT: BY MR. KAUP: Yes. Did you receive any document from Visitalk prior to making Well, go ahead, but make it quick. Mr. Rothwell?

the purchase of your Series F Preferred Stock that had the financial information to which Mr. Claus pointed you on page VT9095 of Exhibit 638? A Q No. Sir, could you look at Exhibits 747, 748, and 750. 752 and

753 as well. A Q All right. I have them in front of me. You're faster than I

Let me just get them in front of me.

am, sir? Sir, if you could just look through 7 -- each of those UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 45 of 223

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407 RICHARD ROTHWELL - REDIRECT EXAMINATION 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 documents and we'll finish with these very quickly. Have you had a chance to review back through them, Mr. Rothwell? A Q A Q Three out of the five so far. Okay? Okay. I have generally reviewed them.

As to Exhibit 747, 748, and 750, did you prepare these --

those three documents before you were the CEO of Visitalk? A Q No. Which of these documents did you prepare after you were the Which of these three, the three I just

CEO of Visitalk? mentioned? A

747, 748, and 750? None of

Which of them did I prepare after I was the CEO?

them. Q That's what I wanted to get at, Mr. Rothwell, and you may

have misunderstood my question or I may have misunderstood your answer, so let me ask the question again. Did you prepare any of these documents after you were the CEO of Visitalk? A Q No. Now, when you prepared 747, 748, and 750, did you have as

much knowledge about Visitalk's financial condition, operational matters, and legal issues as you did after you were the CEO of Visitalk in 2002? A No. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 46 of 223

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408 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q Q MR. CLAUS: Relevance.

Did the court rule on my objection, Your Honor? THE COURT: MR. CLAUS: I'm sorry. I didn't hear it.

I made a relevance objection, but

apparently you didn't hear it so. THE COURT: BY MR. KAUP: Go on. Mr. Rothwell, do you now believe that the --

you had incomplete information regarding the company at the time you prepared 747, 748, and 750? MR. CLAUS: relevance. THE COURT: BY MR. KAUP: Okay. Now, these two documents were prepared after you were the Sustained. Leading. Calls for speculation and

Could you look at Exhibit 752 and 753?

CEO of Visitalk? A Q Correct. At the time prior to preparing these two documents, what

was your focus as the CEO of Visitalk? MR. CLAUS: THE COURT: THE WITNESS: Relevance. Overruled. You may answer.

My primary focus was trying to generate

cash as quickly as possible in order to keep the Chapter 11 bankruptcy from converting to a Chapter 7, while simultaneously beginning my investigation of further details of the company. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 47 of 223

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409 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Q Q BY MR. KAUP: When you prepared these two documents, did

you have as much information regarding Visitalk's financial condition, operational problems, and legal problems as you did as the -- in 2002 as the CEO of Visitalk? MR. CLAUS: THE COURT: THE WITNESS: BY MR. KAUP: Leading. Calls for speculation.

You may answer. No.

In 2002 did you ever -- as CEO of Visitalk,

did you ever prepare any letters to investors in Visitalk asking them to invest additional funds in Visitalk? A Q I don't recall the timing. I don't believe so, no.

Could you look at Exhibit 754, sir? THE COURT: MR. KAUP: 754? Yes, Your Honor. Okay.

THE WITNESS: BY MR. KAUP:

Now, you recall Mr. Claus asked you a number

of questions about this document? A Q A Q Yes. Do you recall having prepared this document? I recall overseeing the preparation of this document. When you signed this document on February 15,2001, did you

have the same amount of information regarding Visitalk's financial problems, operational problems, and legal problems as you did in 2002? MR. CLAUS: Leading. Calls for speculation and

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UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 48 of 223

410 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Q relevance. THE COURT: BY MR. KAUP: Sustained.

Mr. Rothwell, when you signed this document

on February 15, 2001, did you have complete information regarding Visitalk? MR. CLAUS: THE COURT: BY MR. KAUP: Calls for speculation. Sustained. Leading.

Could you look at Exhibit 513, please,

Mr. Rothwell? A Q All right. Sir, you recall Mr. Claus asking you a number of questions

about this document? A Q Yes. What do you understand this document relates to? MR. CLAUS: knowledge. Objection, Your Honor. Foundation. Personal

Competence.

Potentially calls for a

legal conclusion. THE COURT: Sustained. I'm not sure what his

understanding of this adds. Q BY MR. KAUP: Mr. Rothwell, do you see right under the

words "visitalk.com" the words Minutes From Special Stockholders' meeting held December 2, 1998 at 6:30 p.m. up here? A Q Yes. Did you attend that meeting? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 49 of 223

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411 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Q A Q Yes. Now, when Mr. Claus asked you questions about this

document, he attempted to suggest that this is the meeting at which a lawyer stood up and made statements about Visitalk that may have been the meeting at which you had recalled that Dick Mallery had stood up and made statements to shareholders. What I want to know, Mr. Rothwell, is are the -- was the meeting on December 2, 1998, a meeting which was different from a meeting at which you recall Mr. Mallery stood up and made statements to shareholders? MR. CLAUS: Argumentative, Your Honor. Move to strike

the preface to the question and leading. THE COURT: to answer this one. THE WITNESS: BY MR. KAUP: Yes. It is leading, but I'm going to allow him

Are you -- there was a little bit of

ambiguity that I think Mr. Claus may have attempted to create about that December 1999 meeting and Mr. Mallery's attendance at that meeting. MR. CLAUS: THE COURT: BY MR. KAUP: Argumentative, Your Honor. Just ask a question, please.

Are you -- Mr. Rothwell, are you certain that

Mr. Dick Mallery stood up at the shareholders' meeting in December of 1999 and made the statements about which you testified earlier? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 50 of 223

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412 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Q A MR. CLAUS: Asked and answered, Your Honor. He

testified yesterday he wasn't sure. MR. KAUP: I think that mischaracterizes his testimony

and I just want to make it clear -THE COURT: THE WITNESS: BY MR. KAUP: We'll take the answer. I'm absolutely sure.

And why is that?

Because it was a very significant event for me and it

appeared to the rest of the shareholders at the meeting to hear such confidence from a partner and legal counsel that represented Visitalk and it affected me very much. Q A How so? I became more excited about the organization and more And, in fact, I went out and

ambitious about my investments.

bought a new Cadillac because I was a millionaire. MR. KAUP: THE COURT: MR. KAUP: May I approach, Your Honor? Yes. I'm going to be looking at Exhibit 281. It

is in the Plaintiff's Exhibit Notebook Volume 7. THE COURT: MR. KAUP: THE COURT: BY MR. KAUP: That was 251? Your Honor, it is 281. 281.

Mr. Rothwell, this morning Mr. Claus asked

you about whether there were -- there was any reference in a document to Mr. Rothwell actually -- I mean Mr. Mallery UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 51 of 223

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413 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q actually appearing at the December 27, 1998, meeting. Do you recall that? MR. CLAUS: THE WITNESS: THE COURT: Wait. Argumentative, Your Honor. And I believe you have the year wrong. Sustained.

Sustained. Oh, sorry.

THE WITNESS: BY MR. KAUP:

Could you look at the page of Exhibit 281

with the Bates numbers at the bottom SWDS1488? A Q All right. Do you recall when you were the -- while you were the CEO

of Visitalk, did you review any of the prior billing statements for attorneys' fees incurred by Visitalk? A Q Yes. Mr. Rothwell, let me first have you look at the last page

of this exhibit which is SWDS1490. A Q Okay. Do you see about a third of the way down the page the name

Richard Mallery? A Q Yes. And to the left of that do you see two initials? Can you

read those two initials? A Q A R M. Could you look back at the page SWDS1488? Okay. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 52 of 223

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414 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Q Do you see about a third of the way down the page the Text. And then in the next column a date of

initials R M.

December 27, 1999? A Q Yes. Do you see the first clause in that entry reads: Work. Research and preparation over course of

Conferences.

day for special meeting of stockholders? A Q Yes. And then towards the bottom of that billing entry, towards

the right-hand side, do you see the words, "Meetings with individual shareholders before and after meeting. Participation in meeting. Strategic session afterwards with

J. Hirschberg regarding next phase of process." A Q Yes. Mr. Rothwell, does that reference show for you that

Mr. Mallery did, in fact, participate at the meeting about which you've testified? MR. CLAUS: Leading. Document speaks for itself.

Misstates the document. THE COURT: You may answer. It's simply reflective of

what's in the document, but you may answer. THE WITNESS: THE COURT: THE WITNESS: BY MR. KAUP: I'm sorry, Your Honor. You may answer. Yes. Certainly. Could I didn't hear.

I'm all most done here, Mr. Rothwell. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 53 of 223

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415 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A Q you look back at Exhibit 775. THE COURT: already admitted? MR. KAUP: MR. CLAUS: THE COURT: MR. KAUP: BY MR. KAUP: Okay. Do you know who Gerald Mayo was -- is? Yes. Do you know if Mr. Mayo had any relationship to Visitalk in I believe so. It's stipulated in, Your Honor. 281 is admitted by stipulation. Thank you, Your Honor. Could you look at Exhibit 775, please. Excuse me. Before you go to 775, is 281

2004? A Q Yes. Can you tell me what your understanding is about Mr. Mayo's

relationship to Visitalk in 2004? A Q A Q A Q A Q A He replaced me as CEO of the organization. Do you known when he replaced you as CEO of Visitalk? I believe it was February or March of 2004. Two thousand when? Of 2004. Early spring, 2004.

It's not your signature on the first page of Exhibit 775? No. You didn't review this document before it was filed? No, I haven't and I didn't. UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 54 of 223

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416 RICHARD ROTHWELL - REDIRECT EXAMINATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A Q A Q A Q Could you look at Exhibit 774. All right. On the first page do you see two signatures? Yes. Is either signature your signature? No. Did you prepare this document? No. Did you review this document before it was filed with the

Bankruptcy Court? A Q A Q No. Could you look at Exhibit 567 please, sir. Okay. Mr. Claus asked a number of questions regarding this Do you recall those questions?

document. A Q A Q Yes.

Did you prepare this document, Exhibit 567? No. Would you look again at the last page to which Mr -- last

page of the document to which Mr. Claus had pointed you? A Q Okay. Do you see it's a declaration concerning debtors'

schedules? A Q Yes. Could you read the date? UNITED STATES DISTRICT COURT Document 503 Filed 04/22/2008 Page 55 of 223

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417 RICHARD ROTHWELL - REDIRECT EXAMINATION 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 Q A Q A January 3, 2001. How long had you been the CEO of Visitalk as of that date? Twenty-one days. Is that your signature next to that date? No. Do you know whose signature that is? Yes. It's Ray Gaston's, the controller of Visitalk at the

time. Q Did you review this document before it was filed at the

Bankruptcy Court? A Q A Q A Q No. Could you look at Exhibit 657, sir. Okay. Could you look at page 98. All right. You could read the date next to the words "respectfully

submitted" a third of the way up from the bottom of the page? A Q A Q 22nd day of June, 2004. Were you the CEO of Visi