usa-v-karron-07-cr-541 bj lide direct cross redirect recross trial-transcript

7/28/2019 USA-V-KARRON-07-CR-541 BJ LIDE Direct Cross Redirect ReCross Trial-Transcript

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862ZKAR3 Openi ng - Mr . Rubi nst ei n

1 Gover nment ' s f i r st wi t ness?

2 MR. KWOK: Government cal l s Bet t i J oyce Li de. Wi t h

3 your Honor' s permi ssi on, we woul d l i ke t o hand out j ur y

4 bi nder s.

5 THE COURT: These are exhi bi t s t hat wi l l be admi t t ed

6 i n evi dence, you bel i eve?

7 MR. KWOK: That ' s cor r ect , your Honor .

8 THE COURT: Members of t he j ury, t he government has

9 pr epar ed i ndi vi dual j ur y f ol der s whi ch cont ai n exhi bi t s t hey

10 expect t o have admi t t ed i n evi dence. I woul d al l ow t hem t o

11 di st r i but e t he i ndi vi dual books t o each of you, but you' r e not

12 t o l ook at any of t he exhi bi t s unt i l t hey' ve been admi t t ed i n

13 evi dence. So when t he t i me comes t hat I admi t somet hi ng i n

14 evi dence, t hen you ar e ent i t l ed t o l ook at t hat exhi bi t and

15 onl y t hat exhi bi t unt i l i t ' s admi t t ed, t i l l t he ot her exhi bi t s

16 are admi t t ed i n evi dence.

17 So wi t h t hat i nst r uct i on, I ' l l al l ow t he books t o be

18 di st r i but ed t o t he j ur y and t hey' l l be kept at your - - t hey' l l

19 be r eady f or you i n t he morni ng so you can check your book.

20 I don' t want t o t ake up t he t i me i n t he morni ng.

21 Whi l e t hey' r e di st r i but i ng t he book, I shoul d gi ve you

22 some i nst r uct i ons about t he t r i al day whi l e we' r e wai t i ng f or

23 t hi s wi t ness. I ' d l i ke t o begi n at 9: 30 i n t he mor ni ng and r un

24 unt i l 1: 00 o' cl ock wi t h a si ngl e br eak somet i me bet ween 11: 00

25 and 11: 30, 10 mi nut es. Then come back at 2: 00 af t er l unch and

SOUTHERN DI STRI CT REPORTERS, P. C.

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862ZKAR3 Li de - di r ect

1 MR. KWOK: Thank you, your Honor .

2 Q. Good af t ernoon, Ms. Li de.

3 A. Hi .

4 Q. How ar e you empl oyed?

5 A. I am wi t h t he Nat i onal I nst i t ut e of St andar ds and

6 Technol ogy, par t of the U. S. Depar t ment of Commerce.

7 Q. What i s your posi t i on now i n t hat?

8 A. I am now a physi cal sci ent i st i n t he i nf or mat i on t echnol ogy

9 l abor at or y.

10 Q. What was your posi t i on bef ore t hen?

11 A. I was wi t h t he advanced t echnol ogy pr ogr am ser vi ng as

12 program manager and t he compet i t i ons manager .

13 Q. What i s t he advance t echnol ogy program?

14 A. The advanced t echnol ogy pr ogr am i s a f undi ng agency, a

15 f undi ng par t of t he Nat i onal I nst i t ut e of St andar ds and

16 Technol ogy whi ch hel ps U. S. i ndust r y per f orm r esear ch t hat i s

17 t oo hi gh r i sk f or t he i ndust r y t o per f or m al one.

18 Q. You ment i oned you were a compet i t i ons manager ; what do you

19 do i n t hat capaci t y?

20 A. As compet i t i ons manager , I over saw t he r ecei pt of al l of

21 t he pr oposal s t o t hat pr ogr am, and t he eval uat i on of those

22 pr oposal s l eadi ng t o whi ch ones woul d r ecei ve f undi ng.

23 Q. Progr am manager , what di d you do i n t hat capaci t y?

24 A. As a pr ogr am manager , I oversaw t he t echni cal

25 commer ci al i zat i on pr ogr ess of each of t he pr oj ect s t hat I


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1 managed.

2 THE COURT: What year ar e we t al ki ng about ?

3 THE WI TNESS: We - - I st ar t ed wi t h t he advanced

4 t echnol ogy pr ogr am when i t began i n 1990, and I l ef t i t i n

5 2005.

6 Q. Ms. Li de, who ar e t he t ypi cal r eci pi ent s of t hi s advanced

7 t echnol ogy pr ogr am or ATP gr ant ?

8 A. The r eci pi ent s are U. S. i ndust r i es, and t hey can par t ner or

9 subcont r act t o uni ver si t i es and non- pr of i t s.

10 Q. How compet i t i ve i s t he sel ect i on pr ocess?

11 A. I t i s a ver y compet i t i ve pr ocess.

12 Q. Can you gi ve us a sense of how compet i t i ve i t i s?

13 A. Cer t ai nl y. Most compet i t i ons see onl y about one i n t en

14 proposal s bei ng gi ven an award.

15 Q. And what i s t he amount of t he grant awarded t o each

16 successf ul appl i cant ?

17 A. A si ngl e appl i cant can r ecei ve a t ot al of $2 mi l l i on, and

18 t hat coul d be spread over anywhere f r om one t o t hree years.

19 Q. And where does t hat money come f r om?

20 A. The money comes f r om t he f unds t hat t he U. S. Congr ess gi ves

21 t o t he Nat i onal I nst i t ut e of St andards and Technol ogy.

22 Q. How does t hat money get i nto t he hands of t he successf ul

23 appl i cant ?

24 A. When t he appl i cant i s successf ul , t hat money i s put i nt o a

25 f und, basi cal l y, l i ke a bank account , agai nst whi ch t hat


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1 appl i cant can draw.

2 Q. Now what , i f anyt hi ng, does t he gr ant - -

3 THE COURT: I n whose i s name i s t he bank account?

4 THE WI TNESS: I ' m sor r y?

5 THE COURT: I n whose name i s t he bank account ?

6 THE WI TNESS: The bank account i s i n t he name of t he

7 f or pr of i t company. Thank you.

8 THE COURT: The f or prof i t company.

9 THE WI TNESS: Cor r ect . The money must f l ow t o a

10 company t hat i s f or pr of i t . I t cannot f l ow, f or exampl e, t o a

11 uni ver si t y.

12 Q. And what , i f anythi ng, does t he gr ant reci pi ent have t o

13 cont r i but e t o t he cost s of t he r esear ch?

14 A. A si ngl e appl i cant must pay al l of t he i ndi r ect cost s and

15 can cont r i but e t o t he di r ect cost s.

16 Q. What ar e t hese di r ect ver sus i ndi r ect cost s?

17 A. Di r ect cost s ar e t hose f unds t hat go di r ect l y t o t he

18 r esear ch, such as i ndi vi dual sal ar i es or equi pment needed t o

19 per f or m t hat r esear ch.

20 Q. How about i ndi r ect cost s?

21 A. I ndi r ect cost s are t hi ngs t hat woul d be spr ead over al l of

22 t he act i vi t i es of that company, such as f aci l i t i es, rent ,

23 el ectr i c i t y, l egal f ees, secretar i al support , admi ni str at i ve

24 suppor t , l ooki ng f or ot her f undi ng, t hat sor t of t hi ng.

25 Q. So i f a grant has t he cost shar ed r equi r ement , where does


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1 t he cost r eci pi ent pay t he cost s shar e amount t o?

2 A. The r eci pi ent must pay hi s or her par t of t hat cost shar e

3 di r ect l y t o t he expenses of t he pr oj ect . So i f a bi g pi ece of

4 equi pment was bought - - was pur chased, t he government woul d pay

5 i t s percent age and t he r eci pi ent woul d pay i t s percent age.

6 Q. And what i s t he t ypi cal per cent age of what t he cost shar e

7 i s?

8 A. I n addi t i on t o t he i ndi r ect cost s, ther e i s no t ypi cal

9 cost s, but what ever per cent age i s put i n t he or i gi nal pr oposal

10 must be adher ed t o f or the l i f e of t he pr oj ect .

11 Q. Now, what , i f anyt hi ng, gover ns how gr ant ees can spend

12 awar d money t hat t hey get ?

13 A. Ther e ar e many document s out l i ni ng how awar dees can spend

14 t he money begi nni ng wi t h a ki t i t t hat t he pr oposer gets when

15 he - -

16 MR. RUBI NSTEI N: Obj ect i on, your Honor . Thi s i s

17 hear say.

18 THE COURT: Do we have t he document s t hat - -

19 MR. KWOK: Yes, I do.

20 THE COURT: Obj ect i on sust ai ned. But t hi s i s

21 i nt r oduct or y, and t he j ur y i s i nst r uct ed t hat they wi l l be

22 gui ded by t he document s t hemsel ves t hat deal wi t h t hi s

23 par t i cul ar gr ant . Thi s i s mor e of a - - what ever you' ve been

24 hear i ng i s not di r ect l y r el evant t o t hi s gr ant .

25 BY MR. KWOK:


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1 Q. Let me j ust ask a gener al i nt r oduct or y quest i on, i f I may.

2 What i s t he gener al r ul e t hat gover ns how gr ant ees can spend

3 t hei r money?

4 A. They can spend money on t he di r ect cost s of t he r esear ch.

5 Q. You ment i oned ear l i er t her e' s a budget . What obl i gat i ons

6 do t hey have under t he budget ?

7 A. They must adher e t o t he budget under whi ch t hey appl i ed.

8 Q. Ar e t here ci r cumst ances under whi ch t hey can devi at e f r om

9 t hat budget?

10 A. Yes. Ther e ar e cer t ai n ci r cumst ances. 10 per cent of t he

11 annual amount t hat t hey are goi ng t o spend can be moved wi t hi n

12 exi st i ng cat egor i es.

13 THE COURT: I s t her e any document at i on t o suppor t

14 t hi s?

15 MR. KWOK: Yes, I can i nt r oduce t hem now.

16 THE COURT: Ot her wi se, I don' t t hi nk t hat ' s admi ssi bl e

17 t est i mony.

18 MR. KWOK: Okay. May I approach?

19 THE COURT: Yes.

20 Q. Mi ss Li de, I ' m handi ng you what ' s on t op marked f or

21 i dent i f i cat i on gover nment Exhi bi t 1. And i f you coul d al so

22 l ook at act ual l y gover nment exhi bi t s t wo, t hr ee and f our as

23 wel l . Do you r ecogni ze t hese document s?

24 A. Yes, I do.

25 Q. How are you abl e t o r ecogni ze t hem?


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1 A. I hel ped pr epare t hem, I used t hem, and t hey were gi ven t o

2 me as proj ect manager .

3 Q. Were al l of t hese document s prepared by someone wi t h

4 knowl edge of or made f r om i nf ormat i on t r ansmi t t ed by per sons

5 wi t h knowl edge of t he i nf ormat i on appear i ng on t hem?

6 A. Yes.

7 Q. And were t hese document s made at or near the t i me t he

8 i nf ormat i on cont ai ned i n t hem became avai l abl e?

9 A. Yes.

10 Q. I s i t t he r egul ar pr act i ce of NI ST or t he ATP pr ogr am t o

11 prepare such documents?

12 A. Yes.

13 Q. And are t hese document s kept i n t he cour se of a r egul ar l y

14 conduct ed busi ness act i vi t y?

15 A. Yes.

16 MR. KWOK: Government of f ers Exhi bi t one, t wo, t hree

17 and f our .

18 THE COURT: Any obj ect i on, Mr . Rubi nst ei n?

19 MR. RUBI NSTEI N: Yes, your Honor . These are

20 mul t i - page document s t hat t hey j ust have a coupl e of pages on.

21 MR. KWOK: No. Can we approach, your Honor ?

22 THE COURT: Let ' s t ake - - l et ' s l et t he j ur y go, and

23 we' l l deal wi t h i t because t hat wi l l t ake t i me. I t ' s af t er

24 4: 00 o' cl ock. So I ' l l excuse t he j ur y. Why don' t you go t o

25 t he j ury r oom wi t h Mr . Mont eagudo so he can gi ve you t he proper


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1 i nst r uct i ons about how t o get back her e f or 9: 30 i n t he

2 morni ng. So t he j ur y i s excused unt i l 9: 30 i n t he morni ng.

3 ( J ur y exi t s t he cour t r oom)

4 THE COURT: Wat ch your st ep.

5 ( I n open cour t ; j ur y not pr esent )

6 THE COURT: You want t he wi t ness t o st ep out or - -

7 MR. RUBI NSTEI N: I don' t have a probl em because she

8 mi ght be abl e t o hel p us.

9 THE COURT: What ?

10 MR. RUBI NSTEI N: She mi ght be hel pf ul , J udge. My

11 concern i s t hat i t was my underst andi ng t hese document s are

12 mul t i pages, and I ' m t aki ng a l ook at what t he government has

13 gi ven me, and i t seems l i ke t hey' ve ext r act ed cer t ai n port i ons.

14 MR. KWOK: No, I t hi nk t hat ' s a mi sunder st andi ng. I

15 t hi nk Mr . Rubi nst ei n' s associ at e r ecei ved t he f ul l set of t he

16 gover nment exhi bi t s. What we handed out t o t he j ur y j ust now,

17 t he j ur y bi nder s onl y cont ai n t he set t hat we i nt end t o publ i sh

18 t o t hem. So t hey do have a f ul l set of t he document s i n t hei r

19 ent i r et y.

20 THE COURT: What i s t hi s? Thi s f i r st document i s

21 cal l ed - - i t ' s t i t l ed Advanced Technol ogy pr ogr am pr oposal

22 pr epar at i on ki t .


24 THE COURT: I s t hat compl et e?

25 MR. RUBI NSTEI N: No, i t ' s not compl ete, your Honor .


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1 I t mi sr epr esent s what t he document i s.

2 THE COURT: That ' s what I ' m aski ng.

3 MR. KWOK: No, t he j ur y bi nder s cont ai n - - t he j ur y

4 bi nder s cont ai n sel ect ed pages t hat we i nt ends t o publ i sh on

5 t he scr een so t hey can f ol l ow al ong, but t he exhi bi t s t hat

6 woul d act ual l y be i nt r oduced i nt o evi dence, t hat copy i s t he

7 compl ete copy. And we have al so pr oduced f ul l set s of al l t he

8 document s t hat t he gover nment i ntends t o i nt r oduce.

9 THE COURT: Thi s i s t hi s document t hat you' ve j ust

10 handed me, whi ch you sai d i s not compl et e.

11 MR. KWOK: No, t hat i s - -

12 THE WI TNESS: That i s compl ete, si r .

13 MR. KWOK: That i s a compl et e copy.

14 THE COURT: Thi s i s compl et e.

15 MR. KWOK: Exact l y.

16 THE COURT: What you handed t he j ury i s onl y sel ect ed

17 par t s of t hat ?

18 MR. KWOK: Onl y par t s t hat we i ntend t o put on t he

19 screen and publ i sh t o t hem whi l e t hey can f ol l ow al ong, t hat ' s

20 cor r ect .

21 THE COURT: So, but gover nment Exhi bi t 1 wi l l be t hi s

22 f ol der .


24 THE COURT: Thi s part wi l l onl y cont ai n t hose port i ons

25 of t he f ol der , of t he f ol der you bel i eve ar e r el evant t o t hei r


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1 consi der at i on.

2 MR. KWOK: That ' s cor r ect .

3 MR. RUBI NSTEI N: J udge, I obj ect t o t hat . And I t hi nk

4 t hey coul d j ust as easi l y - - t hey want t o publ i sh cer t ai n pages

5 t o t he j ury, I thi nk t hat ' s f i ne. But I t hi nk i t i s mi sl eadi ng

6 t o have i n a bi nder two pi eces of - - t wo pages of somethi ng

7 t hat i s - - has si gni f i cant l y mor e pages. And I , t hat - - so I

8 don' t have a pr obl em i f t hey gi ve t hat document t o t he j ur y and

9 say we' r e r ef er r i ng t o page so and so. But t hey' r e goi ng t o

10 of f er one i n evi dence, I assume, not , not t he ext r act ed ver si on

11 t hat t hey have i n t hei r bi nder s.

12 THE COURT: Wel l , ext r acted i s no di f f er ent i n pages,

13 as I under st and i t . I t ' s - - t hey' ve mer el y got those sect i ons

14 t hat they f eel are r el evant to - - f or t he j ur y' s consi der at i on

15 t o demonst r ate t hat t here' s cer t ai n, I suppose, agr eement s t hat

16 were made bet ween t he grant or and t he grant ee. But , so I ' m

17 i ncl i ned t o l et them i n evi dence, but wi t h i nst r uct i on t o t he

18 j ur y t hat Exhi bi t 1, what t hey have i s mer el y excer pt s, what

19 t hey have i n t hei r books i s merel y an excerpt of government

20 exhi bi t one, i f we' r e deal i ng wi t h gover nment Exhi bi t 1. I

21 pr esume t here' s a gover nment Exhi bi t 2, and t hat i s - -

22 THE WI TNESS: Woul d you l i ke - -

23 THE COURT: Gover nment Exhi bi t 2 doesn' t seem t o have

24 t he f ol der . What i s i t ?

25 THE WI TNESS: I t i s t he general t erms and condi t i ons


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1 t hat , t hat t he pr ogr am used f or al l awar dees.

2 THE COURT: And who r ecei ves a copy of t hi s?

3 THE WI TNESS: I t ' s al ways avai l abl e and i t ' s wi t h t he

4 awar d document when i t ' s gi ven t o t he company.

5 THE COURT: What ' s t he government Exhi bi t 3?

6 THE WI TNESS: I t ' s t he f i nanci al assi st ance st andar ds

7 t er ms and condi t i ons. Her e, agai n, i t ' s al ways avai l abl e.

8 I t ' s on t he websi t e, but i t ' s a par t of each awar d t hat i s

9 gi ven t o each r eci pi ent .

10 THE COURT: I t ' s del i ver ed t o each gr ant ee?

11 THE WI TNESS: Yes, si r . Yes, si r . I t ' s par t of t he

12 awar d document .

13 THE COURT: What ' s government exhi bi t 4?

14 THE WI TNESS: Those are power poi nt present at i ons t hat

15 we provi de at what we cal l a ki ck of f meet i ng. We meet wi t h

16 each awar dee r i ght af t er the pr oj ect star t s. And exhi bi t 4 ar e

17 t he sl i des t hat we used whi ch go over once agai n r ul es,

18 r egul at i ons, r epor t i ng r equi r ement s, et cet er a.

19 THE COURT: That are present ed at t hat meet i ng?

20 THE WI TNESS: Yes, si r .

21 THE COURT: Seems t o me, as l ong as t her e' s an

22 adequat e and a cl ear st at ement made as r egards each of t hese

23 matt er s t hat t hey - - each of t he mat t er s i nt r oduced i n evi dence

24 and t hei r r el at i onshi p t o t he marked document and t hei r

25 exhi bi t , t hat i t ' s admi ssi bl e.


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1 MR. RUBI NSTEI N: Your Honor , I have no obj ect i on t o

2 t he exhi bi t . I have an obj ect i on t o what t he gover nment i s

3 gi vi ng t o t he j ur y. Because I submi t that i t ' s mi sl eadi ng t o

4 t he j ur y because a pi ct ur e' s wort h a t housand words. I f

5 t hey' r e goi ng t o t ake and t hey t ake t hese bi nder s i nt o t he j ur y

6 r oom, when t hey go t o del i ber ate t hey' r e goi ng t o see t wo

7 pages, and I submi t that t hat ' s not t he evi dence. The evi dence

8 i s t he ent i re - -

9 THE COURT: Al l r i ght .

10 MR. RUBI NSTEI N: - - t he ent i r e exhi bi t .

11 THE COURT: That may be a good poi nt i n t er ms of what

12 goes i nt o t he j ur y r oom wi t h t hem. But why aren' t t hey al l owed

13 t o - - why i sn' t i t f ai r f or them t o l ook at i t , excerpt s t hat

14 t he gover nment f eel s ar e r equi r ed f r om each of t he exhi bi t s?

15 Act ual l y t he ot her s ar e not excer pt s. The ot her s ar e - - t he

16 ot her mat er i al s ar e not excer pt s. I t ' s onl y t hi s f i r st

17 exhi bi t , exhi bi t one.

18 MR. RUBI NSTEI N: J udge, i t ' s mi sl eadi ng. Somebody

19 l ooki ng at t hi s t hi ng woul d t hi nk t hat some - - someone pi cki ng

20 up t hi s exhi bi t , we t ur n t o t hi s page, wi t h t hi s i nf or mat i on i s

21 post ed and wher e - - i f a r easonabl e per son - - as a mat t er of

22 f act, i t st ar t s at page si x.

23 THE COURT: I have i t .

24 MR. RUBI NSTEI N: I mean t hat ' s t he f i r st page i s page

25 si x.


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1 THE COURT: Wel l , I got - - t hat ' s not what I have. I

2 have t he f orward comes f i r st .

3 MR. RUBI NSTEI N: No, on Exhi bi t 1, your Honor .

4 MR. KWOK: I t hi nk your Honor has t he f ul l set of t he

5 bi nder s. Wi t h what t he j ur y - -

6 THE COURT: I don' t have t he bi nder s. Ar e t he bi nders

7 di f f er ent t han my - - t he bi nder s ar e di f f er ent t han what I

8 have? Al l r i ght .

9 ( Handi ng t o t he cour t )

10 THE COURT: I guess you bet t er get - - I guess I di dn' t

11 get one of t hose. My gover nment exhi bi t s, I see wher e you' r e

12 sayi ng, Mr . Rubi nst ei n.

13 Wel l , what about t hat , Mr . Kwok? Thi s doesn' t seem - -

14 MR. KWOK: No, your Honor .

15 THE COURT: How woul d you - -

16 MR. KWOK: The r eason we di d i t t hat way i s because of

17 t he bul ki ness of some of the document s.

18 THE COURT: That i sn' t t he i ssue, t hough. The i ssue

19 i s whether t her e can be j ur y conf usi on.

20 MR. KWOK: No, because I bel i eve when t he j ury r et urns

21 t o t he j ur y r oom, what i s i nt r oduced i nt o evi dence wi l l be, i f

22 t hey r equest i t or i f t he Cour t agr ees, wi l l be t he document s

23 t hat t hey br i ng back t o t he j ur y r oom.

24 We have no pr obl em wi t h keepi ng t he bi nder s j ust here

25 i n cour t so t hey can f ol l ow al ong whi l e t he par al egal shows t he


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1 pages on t he scr een and t hey can l ook down, wi t hout havi ng t o

2 f l i p t hr ough 100 pages of t hi s book, 99 of whi ch we do not

3 i nt end t o show.

4 Si mi l ar l y, f or t he bank r ecor ds we di d i t f or , t o

5 conser ve - - t o, f r ankl y, make i t readabl e, i nst ead of f l i ppi ng

6 t hrough 3, 000 pages of bank r ecords.

7 THE COURT: Wel l - -

8 MR. KWOK: They can - -

9 THE COURT: Then my i nst r uct i on t o t he j ur y, as I

10 unders t and i t , t he r eason f or t he Gover nment ' s pr oceedi ng i n

11 t hi s way, Mr . Rubi nst ei n, i s t hat because t he scr een i s t he

12 other si de of t he cour t r oom, and somet i mes i t ' s hard t o r ead

13 f r om t he pr oj ect or t o t he screen, t hat t hey' r e pr ovi di ng t he - -

14 want s t o pr ovi de t he j ur y wi t h t hose pages t hat wi l l be

15 pr oj ect ed on t he scr een. And i f t hat ' s t he case, t hen i f I

16 i nst r uct t hem t hat t hey ar e onl y t o l ook at t hose exhi bi t s when

17 t hey' r e pr oj ect ed on t he scr een; i n other words, l ook at t he

18 page of t he exhi bi t t hat i s i n t hei r books, whi ch i s bei ng

19 pr oj ect ed on t he scr een, and t hat ' s al l t hey' r e t o l ook at ,

20 t hat seems t o me t o be f ai r .

21 MR. RUBI NSTEI N: I suggest , your Honor , i f t hat ' s - -

22 THE COURT: They woul d not go i nto t he j ury r oom and

23 need onl y be used because of t he di st ance bet ween t he si ze of

24 t hi s cour t r oom and t he quest i on about eyesi ght of peopl e bei ng

25 abl e t o see i t , wher eas t hey can r ead r i ght al ong and check i t ,


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1 check t he wor ds i f t hey are havi ng di f f i cul t y r eadi ng what ' s up

2 on t he scr een.

3 MR. RUBI NSTEI N: Wel l , why do t hey need t he scr een?

4 Why do t hey need t he scr een i f t hey' r e gi vi ng, i f t hey - -

5 THE COURT: Wel l , some j uror s woul d see i t on t he

6 scr een and some j urors woul dn' t .

7 MR. RUBI NSTEI N: J udge, I t hi nk i t j ust as easy i f

8 t hey gi ve t hem t he whol e document , as t hey apparent l y gave your

9 Honor and t hey sai d t ur n t o page si x, and t hey publ i sh page si x

10 on t he scr een. I mean, I don' t see why - - peopl e who are used

11 t o handl i ng document s, t hey see i t i n t hei r mi nd a t wo page

12 i t em, and i t ' s a t en page or 20 page i t em, t her e i s a huge

13 di f f er ence. Al l r i ght . And I thi nk t he j ur y has - - t hat i t ' s

14 mi sl eadi ng t o t he j ur y t o pr esent i t i n t hi s f ashi on. They

15 have t he bi nder marked as gover nment exhi bi t s. They' r e not

16 government exhi bi t s. They' r e ext r act s of gover nment exhi bi t s,

17 and t hey - -

18 THE COURT: Wel l , maybe t hey shoul d be mar ked

19 ext r act s.

20 MR. KWOK: We' r e happy t o do t hat i nst ead of sayi ng

21 exhi bi t s, we can put t hat wor d ext r act on t op of ever y si ngl e

22 page. But t he r eason why we have t he scr een i s so t hat t hey

23 can see whi ch page we' r e t al ki ng about , and l ook at t he

24 appr opr i at e page i n t hei r bi nder s.

25 THE COURT: Be sure t hey have t he r i ght page.


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1 MR. KWOK: Exact l y. And t hat ' s exact l y r i ght , your

2 Honor .

3 And wi t h r espect t o Mr . Rubi nst ei n, i t ' s t he

4 government ' s case and wi t hi n r eason I t hi nk we are al l owed t o

5 t r y t he case t he way we t hi nk t hat i t woul d be most make sense

6 t o t he j ur y.

7 THE COURT: Al l I ' m t r yi ng t o do i s be sur e t hat what

8 you do i s f ai r and t hat i t ' s not - - I don' t gi ve a wr ong

9 i nst r uct i on t o t he j ur y, whi ch I al r eady have because I t hought

10 t hey wer e t he exhi bi t s, and I ' l l cl ar i f y t hat i n t he mor ni ng.

11 I ' l l make i t cl ear t hat t hey' r e ext r act s, and you bet t er have

12 some mar k t hat i t ' s an ext r act . And I ' l l make t he cl ear t hat

13 t hey' r e ent i t l ed t o f ul l exhi bi t s i n t hei r del i berat i ons, and

14 t he j ur y bi nder s won' t go back wi t h t hem. I t hi nk t hat seems

15 t o me t o be f ai r .

16 I don' t see how t hat hur t s you, Mr . Rubi nst ei n. We' l l

17 have t o make t hose changes.

18 Al l r i ght , i s t her e anyt hi ng el se t o t ake up?

19 MR. RUBI NSTEI N: No, your Honor .

20 THE COURT: At l east we cl ear ed up one t hi ng, we don' t

21 have t o do i t t omor r ow. I t pays t o go t i l l 4: 00 o' cl ock.

22 Okay.

23 MR. RUBI NSTEI N: You went past 4: 00, J udge.

24 THE COURT: What ?

25 MR. RUBI NSTEI N: We' r e on overt i me.


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1 THE COURT: Wel l , I know, but t he j ur y - - i t al ways

2 pays t o get t hese t hi ngs cl ear ed up. At l east we cl eared i t up

3 and woul dn' t have a del ay i n t he pr oceedi ngs t omor r ow.

4 Al l r i ght , I have t o go t o ot her busi ness, unl ess you

5 al l need me f or somet hi ng.

6 MR. KWOK: Thank you, your Honor . Not hi ng f ur t her

7 f r om t he government .

8 MR. EVERDELL: Thank you.

9 ( Adj our ned t o J une 3, 2008 at 9: 30 a. m. )

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1 I NDEX OF EXAMI NATI ON

2 Exami nat i on of : Page

3 BETTI J OYCE LI DE

4 Di rect By Mr . Kwok . . . . . . . . . . . . . 55

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15 MI CHAEL J . GARCI A

15 Uni t ed St ates At t orney f or t he

16 Sout hern Di st r i ct of New Yor k

16 BY: STEVEN KWOK

17 CHRI STI AN EVERDELL

17 Assi st ant Uni t ed St ates At t or neys

18

18 RUBI NSTEI N & COROZZO, LLP

19 At t orneys f or Def endant

19 BY: RONALD RUBI NSTEI N

20

20 Al so Present : Rachel Ondr i k, U. S. Dept . of Commerce

21 Ki r k Yamat ani , U. S. Dept . of Commerce

22

23

24

25


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1 ( Tr i al r esumed; j ur y not pr esent )

2 THE COURT: Al l r i ght . Thank you f or bei ng on t i me

3 t hi s mor ni ng. Let ' s make a pr act i ce of get t i ng her e at l east

4 at 9: 15 so t hat we don' t hol d t he j ur y up i f t hey' r e her e at

5 9: 30. I s t her e anythi ng t o t ake up t hi s mor ni ng?

6 MR. KWOK: Yes, your Honor . There are j ust t hr ee

7 i ssues about whi ch I want t o br i ef l y addr ess t he cour t . Fi r st ,

8 I submi t t ed a l et t er l ast ni ght . I don' t t hi nk we necessar i l y

9 need t o t ake t hat up now.

10 THE COURT: We haven' t got i t . I haven' t got i t .

11 MR. KWOK: I have an ext r a copy, act ual l y my onl y

12 copy. Do you want me t o hand i t up?

13 THE COURT: Wel l , I bet t er r ead i t .

14 I have r ead t he gover nment ' s l et t er . I s t her e any

15 comment ?

16 MR. RUBI NSTEI N: Yes, J udge. They are t r yi ng t o

17 backdoor the f act t hat t hey don' t have r ecords. They br ought a

18 case based upon r ecor ds and i nappr opr i at e spendi ng, and t hey

19 can' t back i t up wi t h any evi dence t hat i s admi ssi bl e i n cour t ,

20 so now t hey want t o get i n ot her t est i mony t o suggest what

21 r ecor ds t hey ar e t al ki ng about . They don' t speci f y a

22 par t i cul ar document , and t hey don' t have any document s, f r om

23 what I under st and, f r om t hi s submi ssi on t o suppor t i t , so I

24 t hi nk t hat i t ' s i nappr opr i at e.

25 THE COURT: Wel l , I don' t know what t he si t uat i on i s


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1 wi t h r espect t o t he document s. Thi s l et t er r eal l y onl y deal s

2 wi t h t he st atement s and act i ons of the def endant .

3 MR. RUBI NSTEI N: Wel l , hi s st at ement s are admi ss i ons

4 t hat he made i f t hey' r e r el evant . Thei r al l eged obser vat i ons

5 of hi m, t hat ' s what they' r e l ooki ng t o - -

6 THE COURT: Act i ons are admi ss i bl e.

7 MR. RUBI NSTEI N: Yes, as l ong as t hey don' t t al k about

8 t he document . I mean t her e i s no document t hat I know of t hat

9 t hey' r e r ef er r i ng t o, so we don' t r eal l y know. Act ual l y I

10 t hi nk i t shoul d be kept out on t he pr obat i ve val ue on 403, your

11 Honor , because i t i s so conf usi ng t o t he j ur y. Unf or t unat el y

12 i t won' t be conf usi ng t o t he j ur y, i t wi l l be mi sl eadi ng t o t he

13 j ur y f or t hese wi t nesses t o t al k about unknown document s t hat

14 we don' t know i f t her e were proper changes t hat he was maki ng,

15 i mpr oper changes. Thi s i s al l specul at i on on t hei r par t . Can

16 t hey i dent i f y what speci f i c document t hey ar e t al ki ng about ?

17 THE COURT: Wel l , aren' t t hey goi ng t o have ent r i es

18 t hat t hey are t al ki ng about ?

19 MR. RUBI NSTEI N: That ' s t he pr obl em, I don' t bel i eve

20 t hey do. I f t hey do, l et t he gover nment t el l you.

21 THE COURT: I t may not be a document , but i t may be

22 ent r i es.

23 MR. RUBI NSTEI N: That ' s f i ne. That ' s f i ne. Let t hem

24 addr ess and l et us know what ent r i es t hey are t al ki ng about .

25 THE COURT: Wel l , I don' t t hi nk t hey have t o t el l you


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1 what ent r i es i n advance t hat t hey are t al ki ng about , but t he

2 t est i mony wi l l have t o r el ate t o ent r i es and showi ng

3 expendi t ur es of some sor t i n order t o pr ove t hat t hey were

4 i mproper expendi t ures. There has t o be a document somepl ace, I

5 don' t mean t hat i t i sn' t on comput er as opposed t o a l edger,

6 but i f t hat ' s t he way t he def ense kept i t s books.

7 Mr . Kwok? Ar e you not goi ng t o of f er any evi dence

8 f r om comput er r ecor ds or - -

9 MR. KWOK: Act ual l y, t o gi ve your Honor backgr ound t o

10 why t hi s i ssue even arose, we do have a snapshot of t hi s Qui ck

11 Books l edger t hat we have been t al ki ng about , but i t ' s j ust

12 t hat , a snapshot .

13 THE COURT: What do you mean by a snapshot ?

14 MR. KWOK: I t i s what t he l edger l ooks l i ke at a

15 par t i cul ar poi nt i n t i me, j ust l i ke i f you wer e wor ki ng on a

16 document , you save i t , you pr i nt i t out , t hat ' s what we have,

17 what we bel i eve t o be t he f i nal or cl ose t o f i nal ver si on t hat

18 one of t he audi t ors l ooked at .

19 THE COURT: But don' t you have anyt hi ng t o prove

20 expendi t ur es?

21 MR. KWOK: On t hat l edger i t shows a number of

22 expenses t hat were pai d f or usi ng grant money t hat shoul d not

23 have. But what we are r eal l y t al ki ng about - -

24 THE COURT: Ar en' t you goi ng t o go beyond t hat at some

25 poi nt i n t he t r i al and show t hat X, Y and Z suppl i er r ecei ved


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1 payment of t hat ?

2 MR. KWOK: Yes, your Honor . And t he pr i mar y way we

3 ar e goi ng t o pr ove t hat i s not act ual l y t hr ough t he l edger s, as

4 I ' ve t ol d Mr . Rubi nst ei n numer ous t i mes. The way we are t r yi ng

5 t o pr ove t hat i s t hr ough t he bank r ecords, t hr ough i ndependent

6 r ecor ds t hat we got f r om t hi r d par t i es. So t her e can be no

7 di sput e t hat ther e i s some conf usi on about t he books and i t ' s

8 uncl ear what ' s goi ng on, we are l ooki ng out si de t he company, t o

9 l ook at vendor s, t o l ook at cr edi t car d st at ement s, t o l ook at

10 bank r ecor ds. That ' s how we' r e goi ng t o est abl i sh t hat f unds

11 were mi sappl i ed.

12 Now, I have been t r yi ng t o work wi t h Mr . Rubi nst ei n t o

13 get what he consi der s t he accur at e set of l edgers. We haven' t

14 been abl e t o come t o any agreement , because he consi der s my

15 l edger t hat I provi ded t o hi m t o be i ncompl et e or i naccur ate or

16 coul d possi bl y be t ampered wi t h.

17 So, now t hat we are unl i kel y t o come t o an agr eement

18 on what t hat l edger i s goi ng t o l ook l i ke, I submi t t ed t he

19 l et t er t o t hi s cour t because I bel i eve t hat our wi t nesses can

20 t est i f y j ust l i ke any per ci pi ent wi t ness can as t o what t hey

21 observed. Si mpl y because t he t opi c of t hei r t est i mony r el at es

22 t o a document doesn' t make t hei r t est i mony hear say.

23 THE COURT: That ' s r i ght .

24 Mr . Rubi nst ei n?

25 MR. RUBI NSTEI N: Your Honor , I t hi nk you have t o l ay a


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1 f oundat i on. Let ' s assume t hat what t he wi t ness i s r ef er r i ng t o

2 i s an expense f or l unch at a r est aur ant and t hi s i s what t he

3 wi t ness put i n or suggest s i s a non- NI ST expense. Ri ght ? I f

4 t hey i dent i f y t hi s expense, t hen I i nt end on cross- exami nat i on

5 t o show t hem t he backup t o show t hat i t was a NI ST expense.

6 THE COURT: That i t was a?

7 MR. RUBI NSTEI N: That i t was an appropr i at e expense.

8 J ust because t hey say i t wasn' t appr opr i at e, l et ' s see t he

9 expense. And t hen you wi l l know whet her he i s changi ng

10 somethi ng because he i s t r yi ng t o cook t he books.

11 THE COURT: Wel l , whi ch way i s t he government t o

12 pr oceed? I s i t goi ng t o st ar t wi t h t he snapshot s of t he

13 l edger , or i s i t goi ng t o st ar t wi t h t he expendi t ur es t hat wer e

14 made and t hen el i ci t t he t est i mony about t he l edger ?

15 MR. KWOK: I t hi nk i t ' s t he l at t er . We ar e goi ng t o

16 i nt r oduce t he government audi t or very soon who i s goi ng t o t al k

17 about t he bank r ecor ds, basi cal l y t he r ecor ds I r ef er r ed t o

18 out si de of t he company, t o show t hat f unds were mi sappl i ed.

19 Then we are goi ng t o have anot her set of wi t nesses who

20 worked wi t h t he def endant i n hi s company, who are goi ng t o t el l

21 us t hat when t hey worked wi t h hi m t hey woul d make cer t ai n

22 bookkeepi ng ent r i es onl y t o have t hem changed back t i me and

23 agai n i nto a gr ant expense when t hey have t ol d hi m r epeat edl y

24 t o st op doi ng t hat . We ar e not goi ng t o el i ci t any - -

25 THE COURT: But aren' t you goi ng t o el i ci t t he


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1 r el at e t o expendi t ur es - -

2 MR. KWOK: They wi l l .

3 THE COURT: - - whi ch were act ual l y made.

4 MR. KWOK: They wi l l . By t hat poi nt i n t i me when t hey

5 wi l l t est i f y, a r ecor d wi l l al r eady I bel i eve have been made by

6 t he government audi t or that t hose wer e t he t ypes of t hi ngs t hat

7 gr ant f unds wer e mi sspent on, such as ut i l i t i es, meal s and so

8 f or t h, and t hey ar e goi ng t o r el at e back t o t hose t opi cs wi t h

9 quest i ons and answers.

10 THE COURT: You say t he t ypes of t hi ngs. Don' t t hey

11 have t o be t he exact t hi ngs?

12 MR. KWOK: I don' t bel i eve t hey do, because t he way we

13 est abl i sh t hat t hose exact thi ngs wer e mi sspent usi ng gr ant

14 money i s t hrough our government audi t or .

15 The ot her wi t nesses are goi ng t o show not so much t hat

16 t hose moni es were i n f act spent - - because we wi l l have al r eady

17 est abl i shed t hat - - but t o show t he def endant ' s cr i mi nal i nt ent

18 i n maki ng t hose t ypes of expenses, t hat he knew t hat he wasn' t

19 supposed t o spend money t hat way, and because he t r i ed t o hi de

20 i t , that ' s how we' r e t r yi ng t o est abl i sh cri mi nal i nt ent . We

21 don' t have t o est abl i sh l i ne by l i ne.

22 THE COURT: I know how you' r e t r yi ng t o est abl i sh

23 cr i mi nal i nt ent , but what I ' m concer ned about i s whet her i t ' s

24 possi bl e under t he r ul es of evi dence t o pr esent t o t he j ur y i n

25 a manner i n whi ch t hey can under st and t he si gni f i cance of t he


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1 t est i mony of t hese i nsi de empl oyees at the t i me t hat thi s was

2 pr esent ed t o t hem. I t ' s j ust a mat t er of sequence.

3 MR. KWOK: I under st and t hat , and i t wi l l be t he

4 gover nment ' s burden at summat i on t o t i e al l t he l oose ends

5 t ogether .

6 THE COURT: Wel l , I under st and t he summat i on, but

7 t her e i s some benef i t somet i mes t o havi ng t he j ur y not be

8 compl etel y surpr i sed i n summat i on as t o t he way everyt hi ng f i t s

9 t ogether .

10 MR. KWOK: I under st and, and I appr eci at e your Honor ' s

11 poi nt , but we wi l l do our best . I t hi nk when t he t est i mony

12 comes out , i t wi l l be cl ear why we ar e el i ci t i ng t hat t ype of

13 t est i mony.

14 THE COURT: Wel l , I ' m not goi ng t o i nt er f er e wi t h your

15 manner of pr esent at i on. That ' s your manner of pr esent at i on.

16 But I am goi ng t o make r ul i ngs on evi dence as t he quest i ons are

17 asked, and whet her t her e i s a f oundat i on. Foundat i on, I have

18 f ound t hat f or some r eason at t or neys i n t he U. S. at t or ney' s

19 of f i ce don' t al ways r ecogni ze t he si gni f i cance of , and I of t en

20 have t o sust ai n f or l ack of proper f oundat i on, and t hen you

21 have a pr obl em. I t ' s an obj ect i on t hat appar ent l y has f al l en

22 out of f avor i n some cour t r ooms, but i t ' s one whi ch i s

23 per f ect l y val i d.

24 MR. KWOK: Cer t ai nl y, your Honor .

25 THE COURT: And t hat ' s what Mr . Rubi nst ei n i s


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1 basi cal l y sayi ng, t hat t he way you ar e appr oachi ng i t , you need

2 t o est abl i sh t he pr oper f oundat i on wi t h t est i mony.

3 MR. KWOK: We wi l l cer t ai nl y t r y t o est abl i sh t he

4 proper f oundat i on, but I want t o make t he argument t hat t o t he

5 ext ent - -

6 THE COURT: Foundat i on shows r el evance, and t hat ' s why

7 I have proceeded t he ot her way mysel f . But you do what ever you

8 want . I want t hi s case t o go f orward pr ompt l y and ef f i ci ent l y,

9 and you deal wi t h t he expendi t ur es f i r st and t hen you have a

10 f oundat i on f or t hose quest i ons. When you don' t , I don' t know

11 how you' r e goi ng t o est abl i sh t he f oundat i on. You may be abl e

12 t o.


14 I f I may j ust r ai se one qui ck ot her poi nt . Wi t h

15 r espect t o t he f i r st wi t ness, bef or e we paused yest er day I

16 bel i eve def ense counsel obj ect ed on hearsay gr ounds. I j ust

17 want t o make cl ear t he scope of your Honor ' s r ul i ng.

18 I mi ght have negl ect ed t o ask a wi t ness cer t ai n

19 f oundat i onal quest i ons about whether she was personal l y

20 f ami l i ar wi t h t he r ul es and r egul at i ons of t he pr ogr am. I f I

21 have asked t hat , I don' t bel i eve I ' m bound by si mpl y

22 i nt r oduci ng document s and have her r ead f r om t hose document s,

23 i f she i s goi ng t o expl ai n t he r ul es of t he pr ogr am t hat she

24 per sonal l y knows about .

25 THE COURT: Wel l , t he bet t er t hi ng t o do i s t o l ay t he


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1 f oundat i on by havi ng t he r ul es of t he pr ogr am of f er ed i n

2 evi dence, and t hen she can t est i f y about them.

3 MR. KWOK: Very wel l , your Honor .

4 MR. RUBI NSTEI N: Your Honor , we l ef t actual l y wi t h t he

5 i ssue of what t he bi nders cont ai n, and t hat your Honor was

6 goi ng t o gi ve an i nst r uct i on t o t he j ur y.

7 THE COURT: I ' m goi ng t o gi ve t hem t he i nst r uct i on.

8 MR. RUBI NSTEI N: Coul d I st ep out f or a personal

9 mat t er , your Honor?

10 THE COURT: Sure. Maybe we al l ought t o. The j ury - -

11 apparent l y t her e i s a hol d- up on one of t he subway l i nes. Si x

12 j ur ors wer e not here at 9: 30.

13 ( Recess)

14 THE COURT: Counsel , J uror 8 i s mi ss i ng, Mr . Naveen.

15 I t hi nk we have t o go ahead wi t hout hi m i f he i sn' t her e by 10

16 o' cl ock. I have about t wo mi nut es t o t en. Or Naveen J ohn I

17 guess hi s name i s.

18 DEPUTY COURT CLERK: He' s her e.

19 THE COURT: OK.

20 ( Cont i nued on next page)

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1 ( J ur y pr esent )

2 THE COURT: Pl ease be seat ed. Good morni ng, l adi es

3 and gent l emen. I ' m sorr y. I under st and t he subway, one of t he

4 subway l i nes had a pr obl em t hi s mor ni ng. I f i t woul d do any

5 good, I woul d speak t o t he mayor about i t , but I r ecogni ze i t

6 wasn' t your f aul t , but l et ' s pl ease be on t i me. I get t he

7 l awyers her e 15 mi nut es ear l y so we can t ake up any mat t ers

8 t hat need t o be t aken up bef ore you get i nt o t he j ur y box.

9 Yest er day, I gave you some i nst r uct i on, and I wi l l

10 have t o r evi se t hose i nst r uct i ons because I di d not f ul l y

11 comprehend how t he government was goi ng t o proceed here.

12 The books you have i n f r ont of you cont ai n excerpts of

13 t he exhi bi t s t hat t hey i nt end t o of f er at t he t i me of t r i al ,

14 and t he excer pt s are what t hey are goi ng t o show on t he board

15 up her e. However , f or your conveni ence, because some peopl e

16 may have di f f i cul t y i n r eadi ng what ' s up on t he scr een, t her e

17 i s an ext r a copy i n t he books. So, i f you don' t have any

18 di f f i cul t y r eadi ng what ' s up on t he board, you don' t have t o

19 use t he books. I f on t he ot her hand you f i nd i t di f f i cul t

20 r eadi ng what ' s up on t he boar d because of t he di st ance, t hen

21 you have f r eedom t o l ook at t he books and wi t h r espect t o t hat

22 par t i cul ar exhi bi t . So, don' t l ook at ot her exhi bi t s or

23 excer pt s of exhi bi t s unl ess t hey have been admi t t ed i nt o

24 evi dence al r eady.

25 Al l r i ght . Wi t h t hat i nst r ucti on, I t hi nk we' r e r eady


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8637KAR1

1 t erms and condi t i ons, Advanced Technol ogy Progr am.

2 THE COURT: Al l r i ght . That i s admi t t ed i n evi dence

3 wi t hout obj ect i on.

4 ( Gover nment ' s Exhi bi t 2 r ecei ved i n evi dence)

5 MR. RUBI NSTEI N: That ' s corr ect .

6 MR. KWOK: Government Exhi bi t 3 i s Depar t ment of

7 Commer ce, f i nanci al assi st ance, st andard t er ms and condi t i ons.

8 THE COURT: That ' s admi t t ed i n evi dence wi t hout

9 obj ect i on.


11 MR. KWOK: Gover nment Exhi bi t 4 i s a sl i de

12 pr esent at i on. The f i r st page i s gr ant s and agr eement s,

13 management di vi si on.

14 THE COURT: Of t he Advanced Technol ogy Pr ogr am.

15 MR. KWOK: That ' s cor r ect .

16 THE COURT: Exhi bi t 4 i s admi t t ed wi t hout obj ect i on.


18 THE COURT: Go r i ght ahead.

19 DI RECT EXAMI NATI ON ( Cont i nued)

20 BY MR. KWOK:

21 Q. Ms. Li de, are you per sonal l y f ami l i ar wi t h t he r ul es and

22 r egul at i ons of t he Advanced Technol ogy Progr am?

23 A. Yes, I am.

24 Q. How i s i t t hat you ar e f ami l i ar wi t h t he r ul es and

25 r egul at i ons of t hat pr ogr am?


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8637KAR1 Li de - di r ect

1 A. I hel ped devel op some of the r ul es and r egul at i ons, and I

2 have f ol l owed t hem i n al l of t he pr oj ect s t hat I manage.

3 Q. What ar e a gr ant ee' s obl i gat i on under t hat pr ogr am wi t h

4 r espect t o t hei r budget ?

5 A. Thei r obl i gat i on i s t hat t hey adher e t o t he budget and al l

6 of t he r ul es and r egul at i ons i n t hese document s.

7 Q. Ar e t here ci r cumst ances under whi ch t hey can devi at e f r om

8 t he budget ?

9 A. Yes, t her e are. For any gi ven budget year , f or t he amount

10 of money al l ocat ed t o t hat year, t hey can move up t o 10 per cent

11 f r om one cat egory t o anot her as l ong as t hose cat egor i es exi st

12 i n t he budget .

13 Q. What i f t hey want t o move money t hat exceeds t he 10 per cent

14 annual budget amount ?

15 A. They must ask f or per mi ssi on and get wr i t t en pr i or appr oval

16 bef ore t he new budget i s aut hor i zed.

17 Q. What i f t hey want t o add a new cat egory al t ogether?

18 A. They must ask f or per mi ssi on and get wr i t t en pr i or appr oval

19 bef ore t hey add t hat cat egory.

20 Q. Ms. Li de, ar e or al appr oval s ever gi ven?

21 A. No.

22 Q. Ar e t her e si t uat i ons wher e grant ees can spend t he money

23 f i r st and seek appr oval af t er t he f act ?

24 A. I t i s t he except i on t o t he r ul e. That happens

25 occasi onal l y, but when t hat happens, any of t he money spent


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1 bef or e t he wr i t t en appr oval i s gi ven i s at t he gr ant ee' s r i sk.

2 Q. Now, ar e t her e cer t ai n pr i nci pl es t hat di ct at e whet her ATP

3 wi l l pay f or cer t ai n expenses or not ?

4 A. Yes, t her e are, and t hose are al l i n t hese document s.

5 Q. What are some of t hose basi c r ul es?

6 A. Basi cal l y ATP wi l l not pay i ndi r ect cost s f or si ngl e

7 appl i cant s, such as r ent , f aci l i t y r enovat i ons, l egal f ees,

8 admi ni st r at i ve cost s f or secretari es and t hat sor t of t hi ng,

9 whi ch i s spread over t he whol e company' s act i vi t i es.

10 Q. And do you pay f or expenses i ncurr ed bef ore t he st ar t of

11 t he grant progr am?

12 A. No, we cal l t hem sunk cost s, and nothi ng i ncur r ed bef ore

13 t he act ual st ar t dat e of t he pr oj ect can be charged t o t he U. S.

14 gover nment .

15 Q. How do gr ant ees know about al l of t hese r ul es t hat you j ust

16 descr i bed t o us?

17 A. They know about t hese r ul es i n t hese document s t hat ar e

18 exhi bi t s 1 t hr ough 4 t hr ough conf er ences t hat we gi ve, t hr ough

19 t el ephone advi ce t hat we al ways have avai l abl e, and t hrough a

20 ki ckof f meet i ng whi ch i s what i s pr esent ed i n Exhi bi t 4.

21 Q. What i s a ki ckof f meet i ng?

22 A. A ki ckof f meet i ng i s a meet i ng bet ween t he grant ee and t he

23 proj ect management t eam at NI ST wher e we go t hrough al l of t he

24 r ul es and r egul at i ons, ask i f t her e are any quest i ons, and make

25 sur e t hat t he gr ant ee under st ands t he r esponsi bi l i t i es of bei ng


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1 good st ewar ds of t he government ' s money.

2 Q. When does t hi s ki ckof f meet i ng t ypi cal l y happen?

3 A. Shor t l y af t er t he st ar t of t he pr oj ect , as soon as

4 possi bl e, dependi ng on ci r cumst ances. And bef ore i t occur s, we

5 are al ways avai l abl e by t el ephone.

6 Q. How do you know t hat t hat ' s what happened at t hese

7 meet i ngs?

8 A. I was t here, I was par t of t he pr oj ect management t eam, and

9 I par t i ci pat ed i n t hese meet i ngs.

10 Q. Now, l et ' s t ake a l ook at t he exhi bi t s I have i nt r oduced

11 i nt o evi dence j ust a moment ago one at a t i me. Let ' s t ake a

12 l ook at Government Exhi bi t 1.

13 Your Honor , may we publ i sh t hat t o t he j ur y?

14 THE COURT: The excer pt s?

15 MR. KWOK: Yes, t o page 6.

16 THE COURT: Al l r i ght . Government Exhi bi t 1 can be

17 publ i shed t o t he j ur y on t he scr een, and i f you have di f f i cul t y

18 i n r eadi ng t hat - - and I can under st and why you woul d - - I

19 t hi nk you bet t er t ake out your books and l ook at t he excer pt s.

20 Can i t be bl own up anymore, counsel ? The par al egal

21 can' t bl ow t hat up more?

22 MR. KWOK: I t hi nk we need t he bot t om par t of t he

23 page. I ' m j ust di r ect i ng Ms. Moussa t o t he bot t om par t of t he

24 page.

25 THE COURT: The whol e t hi ng can' t be bl own up so t hey


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1 can r ead t he whol e t hi ng on t he boar d? You are usi ng l ess t han

2 hal f of t he screen. You' r e st i l l usi ng l ess t han one hal f of

3 t he scr een. You bet t er get someone t her e who knows how t o use

4 i t .

5 Can' t you do t he whol e t hi ng?

6 MR. EVERDELL: Your Honor, I t hi nk t hi s i s as bi g as

7 i t get s on t he screen. I t hi nk t hi s i s as bi g as i t get s on

8 t he scr een.

9 THE COURT: Why not show t he whol e page?

10 MR. EVERDELL: I t hi nk when you show t he whol e page,

11 i t shr i nks on t he page. We can' t show i t any bi gger t han t hat .

12 THE COURT: You can do mor e.

13 MR. EVERDELL: I don' t t hi nk so. That i s why we have

14 t he j ur y bi nder s as wel l .

15 THE COURT: You need t he j ur y bi nders. I have f ai r

16 eyesi ght , but t he j ur y - - can al l t he j ur y r ead t hat , or does

17 everyone have my probl em? I can' t r ead i t .

18 Al l r i ght . I see some shaki ng t hei r head sayi ng t hey

19 can' t read i t . Al l r i ght .

20 MR. EVERDELL: I bel i eve Mr . Kwok was aski ng f or a

21 speci f i c par t of t he document , whi ch can be bl own up.

22 THE COURT: Somet i mes we have smal l er boxes f or t he

23 j ury t o wat ch. Ar e we goi ng t o have much more of t hese

24 document s i n t hi s case?

25 MR. EVERDELL: Yes, your Honor , we wi l l .


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1 THE COURT: Why don' t we cal l t he peopl e downst ai r s,

2 J oel , and he can set up i ndi vi dual scr eens - - not i ndi vi dual ,

3 but one f or ever y t hr ee or f our j ur or s.

4 MR. EVERDELL: We can t r y t hat , your Honor , but we

5 al so have t he j ur y bi nder s t here so t hey can l ook at t he paper

6 copy i f t hey can' t see t he copy on t he scr een. The document s

7 are i n t he bi nder s.

8 THE COURT: But t he ot her di f f i cul t y i s t hat usual l y

9 when you show t hese t hi ngs on t he boar d you have a l aser or

10 somethi ng l i ke t hat to poi nt t o t he exact l anguage t hat you are

11 t ry i ng t o i sol at e. But , al l r i ght , al l r i ght . Proceed.


13 BY MR. KWOK:

14 Q. Ms. Li de, di r ect i ng your at t ent i on t o page 6, par agr aph 5,

15 can you j ust descr i be t o us what t hat says?

16 A. Yes. That i s descr i bi ng some of t he cost s t hat ar e

17 unal l owabl e under t he Advanced Technol ogy Pr ogr am.

18 Q. What ar e some of t hose exampl es?

19 A. Some of t hemare t he const r uct i on of new bui l di ngs or

20 r enovat i ons of exi st i ng l abor at or i es, i ndi r ect cost s, as we

21 have al r eady di scussed, pr of i t management f ees, i nt er est ,

22 f aci l i t i es capi t al cost , i f money, and t hat goes on t o page 7

23 i f you want mor e exampl es.

24 Q. What ar e t hose?

25 A. Such as bi d and pr oposal cost s - - whi ch are exampl es of


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1 sunk cost s whi ch we di scussed - - t ui t i on, sur veys,

2 commer ci al i zat i on st udi es and t he l i ke.

3 Q. I am showi ng you t he next page. I t ' s marked as - -

4 THE COURT: Page 7?

5 THE WI TNESS: 7, sor r y.

6 MR. KWOK: Ms. Moussa, can we have t he next page up?

7 THE COURT: Page 7 i s up.

8 MR. KWOK: The next page i n t he j ury bi nder .

9 THE COURT: Page 7 i s t he next page, I bel i eve af t er

10 page 6.

11 MR. KWOK: I am r ef er r i ng t o t he next page i n t he j ur y

12 bi nder , your Honor . I t ' s t he i nst r uct i ons f or f or m NI ST 1262,

13 i t em K.

14 THE COURT: Sorr y. I ' m unabl e t o f ol l ow you.

15 Page 6, and t hen t here i s page 7. You use t he t erm

16 page 6, I pr esume you mean page 7 when you say t he next page.

17 Thi s does not seem t o have a number ed page.

18 MR. KWOK: I t does not have a number ed page, but i t i s

19 t he next page i n t he j ur y bi nder s.

20 MR. RUBI NSTEI N: The ext r act , your Honor .

21 THE COURT: Af t er 7?

22 MR. RUBI NSTEI N: I t ' s not t he next page i n Exhi bi t 1,

23 your Honor. I t ' s t he next page i n what has been gi ven t o t he

24 j ur y, t he ext r acts of Exhi bi t 1.

25 MR. KWOK: I f we coul d zoom i n t o i t em K.


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1 THE COURT: These are t he i nst r uct i ons f or f orm NI ST.

2 MR. KWOK: 1262.

3 THE COURT: I see. Al l r i ght .

4 Q. Mi ss Li de, can you t el l us what t hat says.

5 A. Yes. I t em K says t hat al l of t he i ndi r ect cost s must be

6 absor bed by t he proposer .

7 Q. And once agai n, what are i ndi r ect cost s?

8 A. I ndi r ect cost s ar e t hose t hat you cannot cl ear l y i dent i f y

9 wi t h onl y t hi s ATP pr oj ect but r at her ar e i ncur r ed by al l of

10 t he act i vi t i es of t hat company.

11 Q. And when do you t ypi cal l y hand out t hi s bookl et t hat we are

12 j ust l ooki ng at ?

13 A. Thi s bookl et i s avai l abl e t he mi nut e we announce a

14 compet i t i on. I t i s sent t o t housands of peopl e on our mai l i ng

15 l i st . We hol d conf er ences and we gi ve i t out t her e, and i t i s

16 el ect r oni cal l y avai l abl e on our websi t e.

17 Q. Let ' s go t o t he next Government Exhi bi t , Government Exhi bi t

18 2.

19 THE COURT: J ust so I unders t and, ever yt hi ng i n

20 Exhi bi t 1 i s sent t o a pr oposed gr ant ee, i s t hat cor r ect ?

21 THE WI TNESS: That i s cor r ect , si r , yes.

22 Q. Mi ss Li de, what i s Government Exhi bi t 2?

23 A. Thi s i s t he general t er ms and condi t i ons of t he Advanced

24 Technol ogy Pr ogram.

25 Q. And when i s t hi s document gi ven out ?


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1 A. Once agai n i t ' s avai l abl e on t he web. I t ' s avai l abl e by

2 anyone who r equest s i t . I t ' s di scussed at t he pr oposer' s

3 conf er ence, and i t i s part of t he award t hat i s made when t he

4 company r ecei ves an awar d.

5 Q. Di r ect i ng your at t ent i on t o page 3 of t hat document - -

6 THE COURT: When t he company get s t he awar d?

7 THE WI TNESS: When t he company get s t he awar d, when

8 t hey get t he document t hat says you are now a r eci pi ent , t hi s

9 goes al ong wi t h t hat .

10 THE COURT: Thank you.

11 Q. Zoomi ng i n on par agr aph 9, up t o t he end of A.

12 Di r ect i ng your at t ent i on t o t hat paragr aph - -

13 MR. RUBI NSTEI N: Excuse me. What page ar e you on?

14 MR. KWOK: Page 3 of Gover nment Exhi bi t 2.

15 MR. RUBI NSTEI N: Thank you.

16 Q. What does t hat paragraph say?

17 A. Thi s paragr aph i s r epeat i ng what we sai d earl i er , t hat we

18 need pr i or wr i t t en appr oval f or any change i n t he budget over

19 10 per cent of t he annual amount .

20 Q. And what does i t say your obl i gat i ons are i f you cr eat e new

21 budget cat egor i es i n t he budget?

22 A. One must al so get pr i or wr i t t en appr oval t o cr eat e a new

23 cat egory.

24 Q. Let ' s go t o sect i on 12 of t he same page t i t l ed equi pment .

25 I t al so goes on t o t he next page, on page 4 of Gover nment


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1 Exhi bi t 2. Can you j ust summar i ze f or us what t hat paragr aph

2 says?

3 MR. RUBI NSTEI N: J udge, I ' m goi ng t o obj ect t o t he

4 summar i zi ng. Thi s i s i n evi dence, and I submi t t hat

5 summar i zi ng i s not adequat e.

6 THE COURT: Wel l , coul d you r ead what t hat par agr aph

7 says, Ms. Li de.

8 THE WI TNESS: Cert ai nl y. "Upon expi r at i on of t he

9 pr oj ect per i od, t he r eci pi ent shal l submi t t o t he NI ST gr ant s

10 of f i cer an i nvent ory of equi pment acqui r ed wi t h f eder al f unds,

11 as prescr i bed i n 15 CFR 14. 34, al ong wi t h an equi pment

12 di spos i t i on cert i f i cat i on. "

13 Q. I t goes on t o t he next page.

14 A. Ri ght . "Consi st ent wi t h t he r equi r ement s of t he gover nment

15 per f ormance" - -

16 Q. Sorr y, t hat ' s not t he next page.

17 A. No. Cont i nui ng t hen, "The cer t i f i cat i on pr ovi des t he

18 r eci pi ent an oppor t uni t y t o r equest aut hor i zat i on t o cont i nue

19 t o ut i l i ze t he equi pment f or t he pur poses of t he

20 commer ci al i zat i on i ni t i at i ve. I f appr oved by t he NI ST gr ant s

21 of f i cer , t he r eci pi ent shal l r epor t t o NI ST ever y t wo year s t he

22 condi t i on of t he equi pment as l ong as t he cur r ent market val ue

23 i s more t han $5, 000. "

24 Q. What does t hat mean i n pl ai n Engl i sh?

25 A. I t basi cal l y means t hat the equi pment i s pr oper t y of t he


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1 U. S. gover nment , and i f appr oval i s gi ven i n wr i t i ng, t he

2 r eci pi ent can cont i nue t o use i t f or t he pur poses of t hat

3 pr oj ect as l ong as t hey cont i nue t o r epor t ever y t wo years t hat

4 i t ' s wor t h over $5, 000.

5 Q. What happens t o t he equi pment i f i t f al l s bel ow market

6 val ue of $5, 000?

7 A. I t bel ongs t o t he company.

8 Q. That means t hey can keep i t .

9 A. Ri ght .

10 Q. Let ' s t ur n t o t he next exhi bi t , Gover nment Exhi bi t 3.

11 THE COURT: Government Exhi bi t 3 i s?

12 MR. KWOK: Depart ment of Commer ce, f i nanci al

13 assi st ance st andard, t erms and condi t i ons.

14 Q. Ms. Li de, what i s t hat document ?

15 A. I t i s a Depar t ment of Commerce document wi t h r ul es and

16 r egul at i ons f or f i nanci al assi st ance, and agai n i t i s gi ven t o

17 ever y award t hat i s made.

18 Q. Di r ect i ng your at t ent i on t o page 2, par agr aph 4A and B, can

19 you expl ai n t o t he j ur y what t hat means?

20 MR. RUBI NSTEI N: I obj ect agai n, your Honor t o

21 expl ai ni ng somethi ng wher e i t hasn' t been addr essed f i r st .

22 MR. KWOK: Your Honor , i t ' s i n evi dence. The wi t ness

23 has t est i f i ed t hat she has per sonal knowl edge of t hese r ul es

24 and r egul at i ons, and she r egul ar l y conduct s t hese meet i ngs as

25 par t of her j ob and r esponsi bi l i t y.


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1 THE COURT: Wel l , gi ve t he j ur y a chance t o r ead t he

2 document f i r st . Then I wi l l al l ow her t o expl ai n what i t

3 means. But f i r st the j ur y i s i nst r uct ed t o r ead t he document .


5 May I proceed, your Honor?


7 Q. Now, Ms. Li de, now t el l us what t hat means.

8 A. Par t A i s t he i nst r uct i on on how t o suggest a change one

9 want s t o make, and t hat i s put i n wr i t i ng t o t he pr ogr am

10 of f i cer , t he change i n budget one want s. The pr ogr am of f i cer

11 r evi ews i t and sends a r ecommendat i on t o t he gr ant s of f i ce.

12 The second part , par t B, i s r epeat i ng t hat thi s must be done

13 f or any percent age over 10 percent .

14 Q. Now, asi de f r om handi ng out these document s t hat we j ust

15 l ooked at , what el se do you do t o make sure t hat grant

16 r eci pi ent s unders t and t he t er ms and condi t i ons of t he gr ant ?

17 A. Once agai n, we do go over t hem at any pr oposer ' s

18 conf erence, whi ch i s an open meet i ng f or anybody who want s t o

19 appl y, and we are ver y cl ear at that . But agai n once t he gr ant

20 i s made, t hese document s become par t of t he awar d package, and

21 we have t hi s ki ckof f meet i ng I r ef er r ed t o, and we go over

22 t hese r ul es and r egul at i ons yet agai n.

23 Q. Let ' s now t ur n t o Gover nment Exhi bi t 4. What i s t hat

24 document ?

25 A. Thi s i s t he Power Poi nt pr esent at i on t hat was used f or the


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1 Regul at i ons ( CFR) part 14? I s t hat r el evant her e?

2 MR. KWOK: I t may be at some poi nt , your Honor , but

3 not r i ght now.

4 THE COURT: And t hen t he cost pr i nci pl es f ound i n t he

5 f eder al acqui si t i on r egul at i on par t 31, i s t hat - -

6 MR. KWOK: Agai n, i t ' s not r el evant di r ect l y at t hi s

7 poi nt . I wi l l ask t he wi t ness t o expl ai n t he l ast i t em, ATP

8 audi t gui del i nes.

9 Q. Ms. Li de, what i s t hat ?

10 A. Each pr oj ect must under go audi t s at speci f i c i nt er val s, and

11 f or a t hr ee- year si ngl e company t her e i s an audi t af t er year

12 one and an audi t af t er t he pr oj ect ends, and t hese are t he

13 gui del i nes f or t he audi t or t o f ol l ow t o make sur e t hat t he

14 pr oj ect has f ol l owed t he above f eder al r ul es and r egul at i ons.

15 THE COURT: Ar e t hose i ncl uded i n t hi s Exhi bi t 4, t he

16 audi t gui del i nes, or does someone get t hem at t he t i me of t he

17 awar d?

18 MR. KWOK: I t i s part of Gover nment Exhi bi t 4, t he

19 whol e set .

20 THE COURT: Par t of Government Exhi bi t 4.

21 MR. RUBI NSTEI N: What i s t hat ? I mi ssed t hat , your

22 Honor .

23 THE COURT: I asked about t he ATP audi t gui del i nes,

24 and I don' t want Mr . Kwok t o t est i f y, I want Ms. Li de t o

25 t est i f y. You are not a wi t ness, Mr . Kwok.


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1 MR. KWOK: I under st and.

2 THE WI TNESS: These audi t gui del i nes are avai l abl e on

3 t he websi t e. They' r e gi ven t o each pr oj ect , and we al so have

4 a - -

5 THE COURT: I under st and on t he websi t e, but f orget

6 t he websi t e f or a second. They go t o t hem.

7 Ar e t hey gi ven t o t hem at t he t i me of t he meet i ng?

8 THE WI TNESS: No. I ' m not sur e i f t hey ar e par t of

9 t he or i gi nal award package. I woul d have t o l ook t hat up.

10 THE COURT: Ar e t hey par t of t he ATP r eci pi ent

11 r egul at i ons package, r esponsi bi l i t i es?

12 THE WI TNESS: I woul d have t o l ook up t he cover page

13 of our awar d. I am not sur e of t hat , si r .

14 MR. KWOK: We wi l l come back t o t hat .

15 THE COURT: I want t o know whether i t ' s cl ear at t he

16 out set that t hey have t o adher e t o t he audi t gui del i nes.

17 MR. KWOK: Your Honor , I t hi nk we wi l l go i n sequence.

18 Ri ght now I j ust want t o est abl i sh t he t er ms and condi t i ons

19 t hat t hey have t o abi de by.

20 THE COURT: Wel l , t hat ' s one of t he t erms and

21 condi t i ons. I t says r i ght up above. That ' s why I ' m aski ng

22 about i t .

23 THE WI TNESS: Yes, si r , t hey are part of t he or i gi nal

24 awar d package.

25 Q. And where are you l ooki ng, Ms. Li de?


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1 A. I am l ooki ng at t he cover page of t he awar d t hat ' s gi ven t o

2 t he r eci pi ent .

3 Q. Let ' s go t o t he next page of t hi s sl i de show pr esent at i on.

4 What message are you t r yi ng t o convey by t hat sl i de?

5 A. The sl i de i s t r yi ng t o convey t he message t hat any change

6 of any si gni f i cance t o t he r esear ch pr oj ect must r ecei ve pr i or

7 wr i t t en appr oval bef or e i t can be i n ef f ect .

8 ( Cont i nued on next page)

9

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1 Q. What ar e some of the basi c r ul es governi ng whet her f r i nge

2 benef i t s - -

3 A. Wel l - -

4 Q. - - can be pai d f or usi ng ATP gr ant money?

5 MR. RUBI NSTEI N: I obj ect , your Honor, unl ess t hey

6 coul d poi nt t o some r ul es.

7 THE COURT: That ' s what we' r e aski ng, I t hi nk t hat ' s

8 what he' s aski ng f or .

9 Q. Ms. Li de, coul d you - - ar e t her e r ul es and r egul at i ons i n

10 t he ATP program governi ng whet her gr ant money can be spent

11 usi ng on f r i nge benef i t s, yes or no?

12 A. Yes t her e are. A company - -

13 Q. What are t hose r ul es?

14 A. A company must - -

15 MR. RUBI NSTEI N: I obj ect t o hear say. I f t her e are

16 r ul es, what exhi bi t ar e t hey i n?

17 MR. KWOK: Your Honor , t he wi t ness has j ust t est i f i ed

18 t hat she has personal knowl edge about t hese r ul es and

19 r egul at i ons gover ni ng f r i nge benef i t s.

20 THE COURT: I sust ai n t he obj ect i on.

21 Wher e are t he r ul es and r egul at i ons, Ms. Li de?

22 THE WI TNESS: I n t he f eder al acqui si t i on and

23 assi st ance t erms and condi t i ons.

24 THE COURT: And t hey' r e exhi bi t what ?

25 THE WI TNESS: Thr ee.


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1 THE COURT: Thr ee?

2 THE WI TNESS: Yes, si r .

3 THE COURT: Okay.

4 Q. So can you now t el l us what t hose r ul es are?

5 MR. RUBI NSTEI N: J udge, I ' m goi ng t o obj ect . Can we

6 go t o Exhi bi t 3?

7 MR. KWOK: Exhi bi t 3 i s i n evi dence.

8 MR. RUBI NSTEI N: What page?

9 THE COURT: I t ' s not , i t ' s not i n t hi s excer pt s, i s

10 i t ? I s i t i n t he excer pt s, Mr . Kwok?

11 MR. KWOK: I do not bel i eve so.

12 THE COURT: You' l l have t o r ef er t o t he actual

13 exhi bi t , Ms. Li de.

14 THE WI TNESS: I ' m sor r y, I don' t t hi nk i t ' s i n t hi s

15 one. I t hi nk i t ' s i n t hat CFR number ed one. I t ' s not i n

16 Exhi bi t 3. I t ' s i n CFR - -

17 Q. Let ' s t ur n t o gover nment Exhi bi t 4.

18 THE COURT: Whi ch one?

19 MR. KWOK: Government Exhi bi t 4, page si x.

20 THE COURT: I s t hat i n t he ext r act s or i s i t not?

21 MR. KWOK: I t i s i n t he ext r act . I t ' s t he bul l et

22 poi nt f i ve.

23 Q. Ms. Li de - -

24 THE COURT: I ' m sor r y.

25 MR. RUBI NSTEI N: Excuse me.


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1 THE COURT: Gi ve me a chance t o check t hi s.

2 MR. RUBI NSTEI N: My pages ar en' t numbered.

3 ( Pause)

4 THE COURT: She says i t ' s i n t he CFR, Mr . Kwok.

5 THE WI TNESS: Yes. I t ' s i n i t em one, t wo, t hr ee, f our

6 and f i ve on t hat chart .

7 MR. RUBI NSTEI N: I f Mr . Kwok woul d - -

8 THE COURT: What about - - wher e i n t hose i t ems i s i t ?

9 BY MR. KWOK:

10 Q. Wel l , Ms. Li de, do you - -

11 THE COURT: I ' m sor r y, I ' m aski ng t he quest i on, Mr .

12 Kwok. I want i t answer ed, al l ri ght .

13 THE WI TNESS: I ' m - -

14 THE COURT: Fr om t he wi t ness .

15 THE WI TNESS: Yes, si r . I am t he t echni cal per son on

16 t hi s pr oj ect , and I bel i eve my col l eague, who wi l l be her e

17 l at er , wi l l be abl e t o poi nt t o t he exact par t of t hat . She' s

18 f r om our gr ant s of f i ce and she knows t hose document s par t by

19 par t . So i f you woul d al l ow me t o def er to her , I bel i eve I

20 woul d appr eci ate t hat .

21 THE COURT: Then I don' t want t o hear any t est i mony

22 about t he r egul at i ons on benef i t pl ans, at t hi s t i me.

23 MR. KWOK: That ' s f i ne. We' l l move on.

24 Q. Ms. Li de, di d t her e come a t i me when you became i nvol ved i n

25 a gr ant i nvol vi ng Dr . Dani el B. Kar r on?


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1 A. Yes.

2 Q. Do you see Dr . Karr on i n t he cour t r oom her e t oday?

3 A. Yes.

4 Q. Coul d you poi nt hi m out and descr i be an ar t i cl e of cl ot hi ng

5 he' s wear i ng?

6 A. He' s at t he second t abl e wi t h t he dar k sui t and gl asses

7 and, l et ' s see, l ong - - l onger hai r .

8 MR. KWOK: Your Honor - -

9 MR. RUBI NSTEI N: J udge, t hat ' s not f ai r .

10 A. Okay, behi nd a bl ue box.


12 MR. KWOK: Your Honor , may t he r ecor d r ef l ect t hat t he

13 wi t ness has i dent i f i ed t he def endant ?

14 THE COURT: The r ecor d wi l l so i ndi cat e.

15 Q. Ms. Li de, how di d you f i r st meet t he def endant ?

16 A. I met t he def endant at a ki ckof f meet i ng f or a pr oj ect t hat

17 was awar ded t o hi s company by t he Advanced Technol ogy Pr ogram.

18 Q. And what was t he name of t hi s company?

19 A. CASI , Computer Ai ded Surgery I ncor por at ed.

20 Q. And, appr oxi mat el y, when di d t hi s meet i ng t ake pl ace?

21 A. Ear l y November of 2001.

22 Q. Wher e di d t hi s meet i ng t ake pl ace?

23 A. At t he Nat i onal I nst i t ut e of St andards and Technol ogy.

24 Q. And wher e i s t hat ?

25 A. I n Gai t hersbur g, Maryl and.


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1 Q. Who at t ended t hi s meet i ng on behal f of CASI ?

2 A. Dr . Kar r on, Mr . Lee Gur f ei n, and Dr . Ri ck Sat ava.

3 Q. Now, what was your underst andi ng as t o t he def endant ' s r ol e

4 i n Comput er Ai ded Sur gery, I nc. ?

5 THE COURT: How do you spel l t hat l ast name?

6 THE WI TNESS: S- a- t - a- v- a.

7 THE COURT: Thank you.

8 THE WI TNESS: Cer t ai nl y.

9 A. The def endant ' s posi t i on i n t he company was bot h chi ef

10 t echni cal of f i cer and pr esi dent .

11 Q. And you ment i oned Lee Gurf ei n. Who i s Lee Gur f ei n?

12 A. Lee Gur f ei n was par t i ci pat i ng as a busi ness cont act .

13 Q. How about Ri ck Sat ava, who was he?

14 A. Ri ck Satava was a cl i ni cal and t echni cal consul t ant .

15 Q. And who at t ended t he meet i ng on behal f of t he ATP program,

16 on behal f of NI ST?

17 A. Mysel f and t wo col l eagues, Mi ss J ane Or t hwei n and Mi ss hope

18 Snowden.

19 Q. And who was Hope Snowden?

20 A. Hope Snowden r epr esent ed t he NI ST grant s of f i ce and was t he

21 gr ant s speci al i st f or t hi s awar d.

22 Q. How about J ane Or t hwei n?

23 A. J ane Or t hwei n was my par t ner i n managi ng t hi s f r om a

24 t echni cal per spect i ve. She was al so part of t he Advanced

25 Technol ogy Pr ogram.


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1 Q. What happened at t hi s meet i ng?

2 A. As i n - - we used Exhi bi t 4 t hat pr esent at i on, t he sl i de

3 show. And as i n al l of our ki ckof f meet i ngs, we al l ow t he

4 r eci pi ent of t he award t i me t o gi ve us any updat es on t he award

5 t hat happened si nce i t was awarded. And t hen we go over t hose

6 sl i des aski ng i f t her e ar e any quest i ons on r epor t i ng

7 r equi r ement s, r ul es and r egul at i ons and ot her gover nment

8 response.

9 Q. What i f , any r ul es, about the pr ogr am di d you f ocus on i n

10 your pr esent at i on?

11 A. Wel l , as you saw i n t he pr esent at i on, we f ocus on maki ng i t

12 ver y cl ear t hat t he pr oposal i s - -

13 MR. RUBI NSTEI N: Obj ect i on, your Honor .

14 THE COURT: Obj ect i on sust ai ned. I t ' s a concl usory

15 st at ement .

16 What was sai d at t he meet i ng wi t h r egard t o t he r ul es

17 and r egul at i ons, not - - don' t char act er i ze i t . J ust say what

18 was sai d.

19 A. We r ei t erat ed t he need t o adhere t o government r ul es and

20 regul at i ons.

21 Q. And what are t hose r ul es t hat you ment i oned?

22 A. The r ul es t hat we ment i oned are par t of t he award document ,

23 some of t hem i n t he exhi bi t s, t he need f or pr i or appr oval among

24 t hem.

25 Q. And - -


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1 THE COURT: Pr i or approval .

2 THE WI TNESS: For any maj or change.

3 THE COURT: Over 10 per cent .

4 THE WI TNESS: Over 10 per cent of t he budget or i n key

5 per sonnel , and anythi ng t hat woul d af f ect the t echni cal aspect

6 of t he pr oj ect .

7 Q. What , i f anythi ng, di d you di scuss about di r ect ver sus

8 i ndi r ect cost s?

9 THE COURT: About what , si r ?

10 Q. Di r ect ver sus i ndi r ect cost s?

11 A. We went over the f act t hat di r ect cost s are pai d by t he

12 U. S. government , and any cost shar e t hat the pr oposer, pr oposed

13 i ndi r ect cost s must be pai d f or by t he pr oposer .

14 Q. What , i f anyt hi ng, was di scussed about how gr ant ee woul d

15 f i nd out whet her a r equest f or more occasi on, t he budget woul d

16 be grant ed or deni ed?

17 A. The onl y way t he r equest can be submi t t ed t o, whether i t

18 was deni ed or appr oved i s submi t t ed i n wr i t i ng t o t he gr ant

19 r eci pi ent , f r om t he gr ant s of f i cer at NI ST.

20 THE COURT: What woul d be gi ven - - t he approval i n

21 wr i t i ng woul d be gi ven t o?

22 A. That i s cor r ect , t he appr oval i n wr i t i ng i s gi ven t o t he

23 awards r eci pi ent i n t he f orm of an amendment t o t he award. The

24 or i gi nal award i s an award document , and t hen t he f i r st

25 approved change i s amendment one, et cet era. And t hat ' s an


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1 of f i ci al document si gned by t he gr ant s of f i cer at NI ST.

2 THE COURT: That woul d be Mi ss Snowden?

3 THE WI TNESS: No. Act ual l y i t ' s Mi ss Snowden' s boss

4 at t he t i me, i t was Mi ss Mar i l yn Gol dst ei n.

5 Q. At t he t i me t he pr oj ect was approved at CASI , di d you have

6 an under st andi ng as t o wher e Dr . Kar r on woul d be car r yi ng out

7 hi s r esear ch?

8 A. I t was our under st andi ng t hat of f i ce space was bei ng l ooked

9 f or i n l ower Manhat t an, and t hat t her e was a possi bi l i t y of

10 of f i ce space or l ab space at CUNY or at t he New Yor k Medi cal

11 Cent er .

12 Q. And how di d you l ear n t hi s?

13 A. I t was i n t he or i gi nal proposal and i t was di scussed.

14 Q. Ms. Li de, I ' m showi ng you what has been marked f or

15 i dent i f i cat i on gover nment exhi bi t exhi bi t s 10, 10A, 10B, 11,

16 12, 13 and 14. Can you t ake a moment t o l ook at t hese?

17 THE COURT: These are not i n evi dence yet .

18 MR. KWOK: No t hey' r e not . I t ' s j ust f or

19 i dent i f i cat i on.

20 THE COURT: The j ur y shoul dn' t l ook at t hemunt i l such

21 t i me as t hey' ve been admi t t ed i n evi dence. J ust hol d on. Al l

22 r i ght . So we st ar t wi t h one document at a t i me Mr . Kwok.

23 THE WI TNESS: Okay.

24 MR. KWOK: Sur e, l et ' s l ook at government exhi bi t 10.

25 THE COURT: Do you know what t hat i s, Ms. Li de?


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1 THE WI TNESS: Yes, I do.

2 THE COURT: And what i s i t ?

3 THE WI TNESS: I t i s t he f i r st par t of t he pr oposal

4 submi t t ed t o t he Advanced Technol ogy by CASI .

5 MR. KWOK: Government of f er s government exhi bi t 10?

6 THE

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