12-2297 Karron CoA Appendix v10

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12-2297prTo be argued by:D. B. KARRON

FOR THE SECOND CIRCUIT

Docket No. 12-2297

DANIEL B. KARRON,

Petitioner - Appellant,

v.

UNITED STATES OF AMERICA,

Respondent - Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF NEW YORK

APPENDIX Volume 10 FOR THE PETITIONER - APPELLANT

D.B.KARRON

pro se

348 East Fulton StreetLong Beach, New York 11561

(516) 515- [email protected]


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Table of Contents

NOTE: Page Numbers are not correct and need to be hand entered because

of hand insertion of PDF. Contents for ordering, not for reference. Citations intopage numbers are being checked.


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Contents

Table of Contents ............................................................................................. 2APPENDIX VOLUME COVERS .................................................................. 6APPENDIX Volume 1 FOR THE PETITIONER APPELLANT ................ 7APPENDIX Volume 2 FOR THE PETITIONER APPELLANT ................ 9APPENDIX Volume 3 FOR THE PETITIONER APPELLANT ..............11APPENDIX Volume 4 FOR THE PETITIONER APPELLANT ..............13APPENDIX Volume 5 FOR THE PETITIONER APPELLANT ..............15APPENDIX Volume 6 FOR THE PETITIONER APPELLANT ..............17APPENDIX Volume 7 FOR THE PETITIONER APPELLANT ..............19APPENDIX Volume 8 FOR THE PETITIONER APPELLANT ..............21APPENDIX Volume 9 FOR THE PETITIONER APPELLANT ..............23APPENDIX Volume 10 FOR THE PETITIONERAPPELLANT ............25APPENDIX Volume 11 FOR THE PETITIONERAPPELLANT ............27APPENDIX TABS ........................................................................................29Case Docket ..................................................................................................... 1District Court Amended Opinion and Order ................................................... 2Docketed Briefs ............................................................................................... 3Originating 2255 Form Motion ....................................................................... 4Originating Brief Memorandum of Facts and Law ......................................... 5Reply Brief Corrected Sur Reply Memo of Facts and Law ............................ 6Audit and Accounting Forensics (short) .......................................................... 7GX114 .............................................................................................................. 8GX114 in Focus ............................................................................................... 9GX110 Year 1 ................................................................................................10KARRON PERSONAL ACCOUNTS ..........................................................11GX112 Year 1 ................................................................................................12Year 1 SF269A ..............................................................................................13Year 1 Source of Funds .................................................................................14

Karron Co-Funding Year 1 Schedule.....................................................15Karron Co-Funding Check 1166 .........................................................16Karron Co-Funding Check 5339 .........................................................17


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Karron Co-Funding Check 5341 .........................................................18Karron Co-Funding Check 1222 .........................................................19Karron Co-Funding Check 1228 .........................................................20Karron Co-Funding Check 1142 .........................................................21Karron Co-Funding Check 1243 .........................................................22Karron Co-Funding Check 1152 .........................................................23Karron Co-Funding Check 1153 .........................................................24Karron Co-Funding Check 1154 .........................................................25

Karron 75K Payroll Advance and Repayment......................................26Salary Advance and Repayment Schedule .........................................27

Year 2 Source of Funds .................................................................................28GX113 Year 2 Source of Funds ....................................................................29Year 2 Karron Checks Source of Funds ........................................................30

Karron Co-Funding Year 2 Schedule.....................................................31Karron Check 1142 for $5000 ..............................................................32Karron Check 1152 for $2,500 .............................................................33Karron Check 1153 for $2,500 .............................................................34Karron Check 1154 for $2,500 .............................................................35Karron Check 1166 for $2,000 .............................................................36Karron Check 5339 for $2,000 .............................................................37Karron Check 5341 for $1,000 .............................................................38Karron check 1222 for $1000. ..............................................................39Karron check 1228 for $20,000 ............................................................40Karron Check 1243 for $25,000 ...........................................................41Program Purchases during Program on Karron Personal ...............42

KARRON PERSONAL MASTERCARD ....................................................43STATUTES ...................................................................................................4415 USC 278n(2001) .....................................................................................45Rules and Regulations ...................................................................................4615 CFR 24.30 Changes ................................................................................47


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15 CFR 14 DoC Uniform Administrative Rules ........................................48OMB Cost Principles 2001 ............................................................................4948 CFR Ch. 99 9903.2015 Waiver (2001) ................................................50Government Exhibits .....................................................................................51Government Exhibit Contracts ......................................................................52GX1 Proposal Preparation Kit .......................................................................53GX2 ATP General Terms and Conditions 2001............................................54GX3 DoC Financial Assistance Standard Terms and Conditions .................55GX4 Grants and Agreements Management Division GAMA ......................56GX12 Co Operative Agreement ....................................................................58GX13 Special Conditions ..............................................................................59GX14 Special Conditions ..............................................................................60POPA Newsletter 1 ........................................................................................61POPA Newsletter 2 ........................................................................................62Case Law........................................................................................................63Institute for Technology Development v. Brown, 63 F.3d 445 (C.A.5

(Miss.), 1995) ...........................................................................................................64Scholarly Writing ...........................................................................................65Legal Scholarly Writing ................................................................................66Say What You Mean J Levine .......................................................................67Financial Assistance And The Bona Fide Need Rule ...................................68The Use of Sentencing Findings ............................................................69THESE PAGES INTENTIONALLY BLANK .............................................70TRIAL and Sentencing TRASCRIPT (Long) ...............................................77DUNLEVY FORENSIC RECONSTRUCTION (Long) ..............................77


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APPENDIX VOLUME PAGES

Volume V1 KA-1 KA-300Volume V2 KA-300 KA-599

Volume V3 KA-600 KA-899




Volume V7 KA-1800 KA-2200a (oversize)




Volume V11 KA-3100 KA-3332 END

Table 1 Appendix Volume Pages


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869zkar 1 Benedi ct - di r ect

1 MR. EVERDELL: Yes.

2 THE WI TNESS: Yes, si r .

3 MR. RUBI NSTEI N: I obj ect t o Gur f ei n.

4 THE COURT: Obj ect i on sust ai ned.

5 Q. Was t hat t he onl y cal l you r ecei ved aski ng your advi ce on

6 spendi ng r el ated quest i ons?

7 A. No, si r . I recei ved maybe t hr ee ot her phone cal l s f r omDr .

8 Kar r on, as wel l as Mr . Ger f ei n, and basi cal l y t hey wer e al l

9 aski ng t he same quest i ons, how do I get t he r ent cover ed i n t he

10 ATP grant .

11 Q. And what was your r esponse on al l t hose occasi on?

12 A. Al l t hose occasi ons i t was t he same r esponse; i f i t ' s not

13 i n t he budget , you have t o go get an ATP budget amendment and

14 ATP aut hor i zat i on t o i ncl ude i t .

15 Q. Di d you t el l hi m whet her r ent was gener al l y i ncl uded as an

16 al l owabl e expense?

17 A. No, i t ' s an i ndi r ect expense and i t ' s not usual l y al l owed

18 i n a si ngl e gr ant .

19 THE COURT: Di d you t el l hi m t hat?

20 THE WI TNESS: Yes, si r , I di d.

21 Q. And approxi mat el y when di d t hese phone conversat i ons

22 happen?

23 A. They happened ever y t hree or f our mont hs dur i ng 2000, t he

24 end of 2001 and 2002.

25 Q. Di d you gi ve t he def endant or Lee Gerf ei n any general

SOUTHERN DI STRI CT REPORTERS, P. C.

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1 advi ce about spendi ng ATP f unds dur i ng t hese conver sat i ons?

2 A. Do what ' s al l owed i n t he budget .

3 Q. And di d you r ecommend t hat they do anyt hi ng i n par t i cul ar

4 t o f ami l i ar i ze t hemsel ves wi t h t he r ul es?

5 A. Yes, si r , I di d. I gave t hem t he cat al og f or management

6 concept s, whi ch i s an organi zat i on t hat does gr ant i ng educat i on

7 f or bot h f under s of gr ant s and r ecei ver s of gr ant s. I t ol d

8 hi m - - I gave hi m t hei r websi t e, I gave hi m t he cat al og and I

9 suggest ed t hat t hey go get t he educat i on.

10 Q. To your knowl edge, do you know i f t he def endant or anyone

11 on hi s st af f ever got t he educat i on t hat you were r equest i ng?

12 A. Not t o my knowl edge, no.

13 Q. How do you know t hat ?

14 A. Wel l , when I became empl oyed wi t h ATP, I di scussed t hi s

15 wi t h Dr . Karr on, and he sai d he di d not know t hat .

16 Q. I ' m sor r y, he sai d empl oyed - -

17 THE COURT: Empl oyed wi t h ATP?

18 A. I mean wi t h CASI . Dr . Karr on sai d he di d not do t hat .

19 Q. Di d t her e come a t i me when you became mor e i nvol ved i n t he

20 CASI ATP grant?

21 A. Yes, si r .

22 Q. And how di d you become mor e i nvol ved?

23 A. I had f i ni shed my consul t i ng work wi t h I BM at t he end of

24 2002, and r ecei ved a cal l f r om Dr . Karr on, who i ndi cat ed t hat

25 he was not get t i ng what he needed f r om hi s ATP admi ni st ers and


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1 was wonder i ng i f I woul d come t o work f or hi m as t he grant

2 admi ni st r at or .

3 Q. When di d he cal l you t o do - - t o ask you t hat?

4 A. That was December 2002.

5 Q. And di d he say why he want ed t o hi r e you?

6 A. Because I had gr ant admi ni st r at i on backgr ound.

7 Q. Di d you accept t he j ob?

8 A. Yes, s i r , I di d.

9 Q. What was your under st andi ng of what your j ob

10 r esponsi bi l i t i es woul d be at CASI ?

11 A. My j ob, as I under st ood i t , my j ob r esponsi bi l i t i es woul d

12 be t o admi ni st er t he gr ant t hat he had, whi ch was a si ngl e

13 gr ant , woul d r equi r e my l ooki ng at t he books assuri ng al l t he

14 expendi t ur es were al l owed by t he gr ant , and t hat the r eport s - -

15 and get t he r epor t s f i l ed t o ATP.

16 Q. How l ong di d you work f or CASI ?

17 A. I worked f or CASI f or about ei ght mont hs.

18 Q. So t hat ' s r oughl y unt i l when?

19 A. August - -

20 Q. Of ?

21 A. 2003.

22 Q. And wer e you pai d anyt hi ng f or t hi s j ob?

23 A. Yes.

24 Q. What ?

25 A. $60 an hour . I wor ked 20 hour s a week.


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1 Q. Di d you have any par t i cul ar t ask concerni ng t he budget when

2 you st ar t ed worki ng at CASI ?

3 A. Fi r st t hi ng Dr . Kar r on want ed me t o do was t o submi t a

4 budget amendment . I bel i eve at t he t i me what he was t r yi ng t o

5 do was move money f r om - -

6 THE COURT: J ust what he t ol d you.

7 THE WI TNESS: Par don.

8 THE COURT: J ust what he t ol d you.

9 THE WI TNESS: He t ol d me t o do a budget amendment t o

10 move money f r om t he sal ary l i ne i n hi s gr ant , t o t he equi pment

11 l i ne i n hi s gr ant , because he needed addi t i onal equi pment f or

12 t he pr oj ect .

13 Q. Do you know what sor t of equi pment he want ed t o buy?

14 A. No, s i r , I don' t .

15 Q. What f acet s of t he budget - -

16 THE COURT: Par t i cul ar year?

17 THE WI TNESS: Par don?

18 THE COURT: What year of t he grant are you r ef er r i ng

19 t o?

20 THE WI TNESS: I ' m r ef er r i ng t o t he year 2003.

21 Q. So t hat woul d be t he second year ?

22 A. Yes.

23 Q. What f acet s of the budget revi si on di d you work on?

24 A. I worked on doi ng t he budget amendment , I got t he f i nanci al

25 number s l i ned up, as he had r equest ed, and was r eady t o submi t


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1 t he budget amendment , but Dr . Kar r on added a si gni f i cant number

2 of t echni cal suppor t i ng document at i on t o t he amendment . I

3 advi sed he di dn' t need t hat data; t hat t he budget peopl e wer e

4 not goi ng t o be i nt er est ed i n i t ; i t woul dn' t mean anythi ng t o

5 t hem; t hey woul dn' t r ead i t , and i t woul d sl ow down t he

6 pr ocess. He t ol d me t hat t hat ' s what t hey l i ke. And we

7 i ncl uded t hat when we submi t t ed t he budget amendment .

8 Q. At t he t i me, t o your knowl edge, was t hi s t he f i r st budget

9 r evi si on t hat CASI submi t t ed?

10 A. To my knowl edge, si r , i t was.

11 Q. And what l ed you t o bel i eve t hat ?

12 A. I t was - - t her e were no budget amendment s number ed pr i or t o

13 t he one t hat I submi t t ed.

14 Q. Di d you l ear n l at er whet her t hi s was i n f act t he f i r st

15 budget amendment ?

16 A. No, si r , i t was not . There were numerous ot her budget

17 amendment s submi t t ed pr i or t o my get t i ng t o CASI .

18 ( Cont i nued on next page)

19

20

21

22

23

24

25


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8697KAR2 Benedi ct - di r ect

1 BY MR. EVERDELL:

2 Q. Were t hose i n year one of t he grant ?

3 A. One and t wo, as f ar as I under st and.

4 Q. Di d you r ecei ve a r esponse f r om ATP on t he proposed budget

5 amendment t hat you wor ked on?

6 A. No, si r , we di d not .

7 THE COURT: When di d you f i l e i t ?

8 THE WI TNESS: Fi l ed i t i n J anuar y 2003.

9 Q. So, was i t approved?

10 A. No, i t was not , not t o my knowl edge.

11 Q. Di d you ever vi si t t he si t e where CASI was conduct i ng i t s

12 research?

13 A. Yes, I di d.

14 Q. Where was t hat ?

15 A. I t was i n Manhat t an on 33r d St r eet , I bel i eve, East 33r d.

16 Q. Was t hat an apar t ment or an of f i ce?

17 A. I t was an apar t ment / of f i ce. Ther e was a ki t chenet t e, a

18 bathr oom and a bedr oom i nt act , and t he r est of t he apart ment

19 had been gut t ed and t ur ned i nt o a sof t ware devel opment l ab. I t

20 had t abl es t hat r an bot h si des of t he mai n r oom, wi t h comput ers

21 on bot h si des.

22 Q. And whose apar t ment was i t ?

23 A. Dr . Kar r on' s.

24 Q. When di d you f i r st go t here?

25 A. J anuar y 2003.


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1 Q. Why di d you go t o t he apar t ment ?

2 A. I went to t he apar t ment to l ook at t he f i nanci al r ecor ds

3 and t o submi t t he quar t er l y r eport f or t he f our t h quar t er of

4 2002.

5 Q. Why di d you need t o pr epare a quart er l y f i nanci al r eport ?

6 A. I t ' s r equi r ed by t he ATP gr ant .

7 Q. What materi al di d you l ook at i n order t o pr epare t he

8 repor t ?

9 A. I l ooked at t he Qui ck Book f i l es, whi ch i s t he account i ng

10 syst em used by CASI , and deter mi ned t hat we coul d not f i l e t he

11 r epor t based on t he dat a t hat was i n t hose r ecor ds.

12 Q. Wel l , what , i f anyt hi ng, di d you not i ce when you wer e

13 l ooki ng at t he books of CASI ?

14 A. I not i ced t hat al l of t he f unds wer e commi ngl ed, whi ch i s

15 not al l owed by ATP.

16 MR. RUBI NSTEI N: Obj ect i on. Move t o st r i ke, your

17 Honor .

18 THE COURT: Di sr egard t he par t "whi ch i s not al l owed

19 by ATP. "

20 Q. J ust t o cl ar i f y. You sai d you not i ced t he f unds wer e

21 commi ngl ed, i s t hat r i ght ?

22 A. Yes, si r .

23 Q. We wi l l get t o t hat i n a second. What el se di d you not i ce?

24 A. I not i ced t hat there were no document ed pr ocedures of any

25 ki nd i dent i f yi ng how t he account i ng r ecords wer e t o be t r eat ed


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1 or how t he benef i t s package was t o be admi ni st ered.

2 Q. Di d you not i ce anyt hi ng el se? Who had cont r ol of t he books

3 and r ecords?

4 A. Dr . Kar r on had al l cont r ol of al l t he document at i ons.

5 Ther e were no separat i ons of dut i es.

6 Q. OK. Let ' s t ake t hose one at a t i me. So you ment i oned

7 wr i t t en pr ocedur es.

8 A. Yes, s i r .

9 Q. Or l ack of wr i t t en pr ocedur es. Can you expl ai n what you

10 meant when you sai d t her e were no wr i t t en procedures.

11 A. I n a nor mal busi ness envi r onment you woul d have procedures

12 t hat t el l you when t o pay bi l l s, what bi l l s t o pay, how t o

13 t r eat checks as t hey come i n, wher e t o deposi t t hem. There was

14 not hi ng wr i t t en of any ki nd.

15 Q. And why do you have t hose procedures i n pl ace nor mal l y?

16 A. So you can ensure a consi st ent oper at i on wi t hi n t he

17 f i nanci al r eal m.

18 Q. Di d you di scuss t he l ack of Wr i t t en pr ocedur es wi t h Dr .

19 Kar r on?

20 A. Dr . Kar r on sai d t hat t hei r busi ness was so smal l , he knew

21 what t o do and he di dn' t need t o spend t i me doi ng wr i t t en

22 procedures.

23 Q. Were wr i t t en pr ocedur es ever i nst i t ut ed whi l e you were

24 worki ng at CASI ?

25 A. They were not as f ar as I know. I know t hat we spent some


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1 t i me t r yi ng t o buy a handbook, an empl oyees handbook, and spent

2 some t i me t al ki ng t o peopl e t o do an HR, human r el at i ons or

3 human r esour ces manual , but t hat was pr i mar i l y done by J oan

4 Hayes.

5 Q. You ment i oned al so commi ngl i ng.

6 A. Yes, s i r .

7 Q. Can you expl ai n what you mean by t he f unds wer e commi ngl ed.

8 A. Commi ngl i ng i s when you are t aki ng t he grant money, and you

9 are put t i ng i t i n t he same account s as nongr ant money.

10 Q. And what i f anyt hi ng di d you not i ce about t he books at CASI

11 wi t h r espect t o t hat ?

12 A. They were al l t oget her.

13 Q. What do you mean t hey were al l t oget her ?

14 A. Al l t he moni es wer e t oget her , al l t he expenses wer e

15 t ogether . Ther e was no separat i on, so you coul d not t el l what

16 money was spent on ATP proj ect ver sus what money was bei ng

17 spent on other pr oj ect s.

18 Q. Di d you have any di scussi ons wi t h t he def endant about t hi s

19 i ssue?

20 A. He di d not seem t o be ver y i nt erest ed or ver y concer ned

21 about t hat .

22 THE COURT: No, j ust answer .


24 Q. What di d you t el l hi m?

25 A. I t ol d hi m he coul d not do t hat , and I r equest ed t hat t hey


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1 separat e t he books.

2 Q. And what do you mean by separat e t he books?

3 A. Separat e t he books so t hat we coul d t el l what was ATP

4 spendi ng and i ncome versus what was not non- ATP spendi ng and

5 i ncome.

6 Q. And what was t he def endant ' s r esponse t o t hat ?

7 A. He agr eed t o have t he bookkeepers do t hat .

8 Q. Were t he f unds i n f act separated out ?

9 A. Not bef or e I l ef t . They wer e wor ki ng on i t , but t hey never

10 compl eted i t .

11 Q. Coul d you t el l what sour ces of f unds t he CASI was r ecei vi ng

12 f unds f r om?

13 A. I ni t i al l y I coul d not , but over t i me i t became appar ent

14 t hat t he onl y i ncome comi ng i n was t he money comi ng i n f r om

15 ATP.

16 Q. Di d you see any ot her sour ce of i ncome besi des t he ATP

17 f unds?

18 A. No, si r , I di d not .

19 Q. You ment i oned l ast l y t he cont r ol of t he books.

20 A. Yes, si r .

21 Q. Can you expl ai n what you mean by t hat .

22 A. Normal l y i n an account i ng oper at i on t her e i s a check and

23 bal ance. You can have one per son wr i t e checks, someone el se

24 has t o si gn t hem. Dr . Kar r on had compl ete cont r ol of

25 everyt hi ng. He wr ot e t he checks, he si gned t he checks, he


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1 cont r ol l ed t he checkbooks.

2 Q. And over t i me di d you not i ce anyt hi ng el se about Dr .

3 Kar r on' s cont r ol of the books t hat rai sed an i ssue i n your

4 mi nd?

5 A. Yes, si r . Whi l e we wer e t r yi ng t o separ at e t he books, the

6 bookkeepers woul d make changes t o t he books and separat i ng t hem

7 and cal l i ng cer t ai n expendi t ur es CASI expendi t ur es, cer t ai n

8 expendi t ur es ATP expendi t ur es. Dr . Karr on woul d - -

9 MR. RUBI NSTEI N: I obj ect t o t hi s, your Honor , unl ess

10 he has per sonal knowl edge.

11 THE COURT: Obj ect i on sust ai ned unl ess i t ' s shown t hat

12 t hi s wi t ness had per sonal knowl edge of t he f act s and hadn' t

13 heard t hem f r om bookkeepi ng.

14 Who were t he bookkeeper s at t he t i me?

15 THE WI TNESS: The J ackson group, Fr ank Spr i ng.

16 Q. Di d you have any di scussi ons wi t h t he def endant about t hi s

17 i ssue t hat you ar e t al ki ng about ?

18 A. Yes.

19 Q. What were t he nat ur e of t hose di scussi ons?

20 A. The di scussi ons were Dr . Kar r on had changed ent r i es t hat

21 t he J ackson group had made, and Dr . Kar r on sai d t hey j ust

22 di dn' t know what t hey were doi ng and he knew wher e t he

23 expendi t ures needed t o be.

24 Q. What i f anyt hi ng di d you t r y t o do t o addr ess t hese i ssues

25 t hat you not i ced wi t h r espect t o cont r ol of t he books?


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1 A. The f i r st t hi ng we di d was we no l onger gave Dr . Kar r on

2 t r ansact i on capabi l i t y. He coul d see, read t he account i ng

3 r ecor ds, but he coul dn' t make any changes t o t he account i ng

4 r ecords.

5 Q. When di d you make t hat change?

6 A. I made t hat change i n t he Apr i l t i me f r ame, I bel i eve.

7 Q. Of whi ch year ?

8 A. 2003.

9 Q. And how di d you achi eve t hat ?

10 A. We basi cal l y st opped gi vi ng hi m a wr i t abl e copy of Qui ck

11 Books.

12 Q. Who had cont r ol of t he Qui ck Books af t er you di d t hat ?

13 A. Fr ank Spr i ng.

14 Q. And di d you do anythi ng el se wi t h r espect t o t hi s i ssue t o

15 r emedy i t ?

16 A. Yes, si r , we met wi t h hi s boar d.

17 Q. When you say hi s boar d, you' r e r ef err i ng t o - -

18 A. The CASI boar d. Fr ank Spr i ng and I met wi t h t he CASI boar d

19 and t ol d t hem of our concer n wi t h hi m havi ng t ot al cont r ol of

20 t he checkbook, and asked t hat t hey t ake t he checkbook away f r om

21 hi m, and t hey di r ect ed hi m t o t ur n t he checks over t o Frank

22 Spr i ng and t o no l onger wr i t e checks.

23 Q. When di d t hat happen?

24 A. That was i n t he J une t i me f r ame, I bel i eve i n 2003.

25 Q. Di d you ever have check wr i t i ng aut hor i t y your sel f ?


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1 A. No, si r .

2 Q. Di d Dr . Kar r on abi de by t hi s r est r i ct i on t hat he coul dn' t

3 si gn checks anymor e?

4 A. No.

5 MR. RUBI NSTEI N: I obj ect t o t hat . The t est i mony i s

6 not si gni ng checks.

7 THE COURT: Sor r y?

8 MR. RUBI NSTEI N: There i s no t est i mony t hat he

9 coul dn' t si gn checks t hat I hear d.

10 THE COURT: Wel l , I haven' t hear d t hat , but wr i t abl e

11 aut hor i t y of Qui ck Books as I under st and i t . I ' m not goi ng t o

12 t es t i f y. I ' m not tes t i f yi ng.

13 Q. J ust so we' r e cl ear , Mr . Benedi ct - -

14 THE COURT: Di sr egar d my comment .

15 Q. Can you expl ai n what act i on t he boar d of di r ect ors t ook

16 wi t h r espect t o Dr . Kar r on?

17 A. The boar d of di r ect or s t ol d Dr . Kar r on t o t ur n al l t he

18 checks over t o Frank Spr i ng and t hat Frank woul d pr i nt checks

19 and gi ve t hem t o Dr . Karr on t o si gn.

20 THE COURT: Under t he Qui ck Books?

21 THE WI TNESS: Under Qui ck Books.

22 THE COURT: Qui ck Books i s t he manner i n whi ch checks

23 were wr i t t en?

24 THE WI TNESS: Yes, si r , Qui ck Books i s t he account i ng

25 syst em t hat both wr i t es checks and makes deposi t s.


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1 Q. Do you know whet her or not t hi s was t he onl y way t hat

2 checks got si gned and pai d af t er t hi s r est r i ct i on was put i n

3 pl ace?

4 A. No, i t was not .

5 Q. Can you expl ai n.

6 A. Dr . Kar r on used PayPal , whi ch f or al l i nt ent s and pur poses

7 subver t ed t he di r ect i on pr ovi ded by t he boar d.

8 MR. RUBI NSTEI N: Obj ect i on. Move t o st r i ke subver t ed.

9 THE COURT: Obj ect i on sust ai ned. That ' s a concl usi on

10 of your s. J ust t el l us what happened.

11 A. PayPal i s a ser vi ce t hat al l ows you t o use your cr edi t car d

12 t o pay bi l l s, and Dr . Kar r on used t he CASI cr edi t card and had

13 PayPal pay bi l l s t hat di d not go t hr ough Frank Spr i ng.

14 THE COURT: Does PayPal have check wr i t i ng capabi l i t y?

15 THE WI TNESS: Yes. PayPal , you use your cr edi t card,

16 you gi ve t he cr edi t car d t o PayPal , PayPal char ges your credi t

17 car d and t hen pays t he bi l l , so PayPal act ual l y wr i t es t he

18 check.

19 THE COURT: Wr i t es t he check f or t he payment of t he

20 bi l l ?

21 THE WI TNESS: Yes.

22 THE COURT: To what ever cr edi t card i t i s?

23 THE WI TNESS: No, t o what ever vendor you want t he bi l l

24 t o go t o.

25 THE COURT: To what ever vendor .


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1 Q. How di d you know t hat t he def endant was usi ng PayPal ?

2 A. We saw t he PayPal charge on t he Amer i can Express cr edi t

3 card bi l l .

4 Q. Di d you di scuss t hi s wi t h t he def endant ?

5 A. Yes, s i r .

6 Q. What i f anyt hi ng di d you say t o hi m?

7 A. He sai d he had t o pay t he bi l l s.

8 Q. Now, Mr . Benedi ct , i n t he cour se of r evi ewi ng CASI ' s books

9 and r ecor ds, wer e t her e any part i cul ar expendi t ur es t hat you

10 not i ced?

11 A. Ear l y on t her e was a $75, 000 payr ol l advance.

12 Q. To who?

13 A. To Dr . Kar r on. There were payment s f or r ent . There were

14 payment s t o an empl oyee t hat I di d not know and act ual l y never

15 met . And t her e were some medi cal charges.

16 Q. OK. And what di d you not i ce about t hese expendi t ures i n

17 par t i cul ar ?

18 A. They were ei t her not al l owed by ATP or t hey woul d be

19 quest i oned by ATP.

20 Q. Al l r i ght . Let ' s t ake t hem one at a t i me. You ment i oned

21 r ent payment s t hat you not i ced.

22 A. Yes.

23 Q. Can you expl ai n what you not i ced about r ent payment s.

24 A. Rent payment s were bei ng made wi t h ATP f unds, and r ent i s

25 not i n t he budget so are not al l owed by ATP. They woul d be


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1 di sal l owed cost s.

2 Q. Di d you t al k t o t he def endant about t hi s i ssue wi t h r ent

3 payment s?

4 A. Yes, I di d, and as I sai d bef or e he sai d, " I have t o pay

5 t he bi l l s. " And on anot her occasi on he sai d, l ook, i f I don' t

6 pay t he r ent , I ' m goi ng t o be out on t he st r eet and I can' t do

7 anyt hi ng f or t he gr ant t hen, so t hey ought t o under st and t hat .

8 Q. Di d he ment i on anyt hi ng el se wi t h r espect t o what he

9 pl anned t o do about the r ent payment s?

10 THE COURT: These are cur r ent r ent payment s?


12 A. He sai d t hat he was goi ng t o move t o Connect i cut and t hat

13 he woul d conver t t he ent i r e apart ment t o a pl ace of busi ness,

14 he woul d t ur n hi s bedr oom i nt o an of f i ce. However, none of

15 t hat act ual l y happened.

16 Q. What i f anyt hi ng di d you t el l hi m when he t ol d you about

17 t hi s Connect i cut pl an?

18 A. I t ol d hi m i t woul dn' t mat t er anyway because t he r ent was

19 not goi ng t o be al l owed by ATP.

20 Q. Al l r i ght . Let ' s t al k about t he empl oyee, the char ges t o

21 t he empl oyee t hat you di dn' t know. Do you r ecal l what t hose

22 char ges were f or ?

23 A. As expl ai ned by Dr . Kar r on t he char ges were f or an

24 i ndi vi dual t o scan dat a i nt o hi s database. The pr ocess was

25 t hat i nvoi ces and ot her dat a r el evant t o t he CASI busi ness


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1 woul d come i nt o t he of f i ce, t he data woul d be scanned i nt o a

2 pr ogr am cal l ed I bel i eve Paper Por t , and t hen t he or i gi nal

3 document woul d be shr edded.

4 Q. Di d you have any di scussi ons wi t h t he def endant about t hose

5 charges?

6 A. Those charges are not i n t he budget , t hey are not r el evant

7 t o t he per f ormance of t he gr ant , so t hey woul d not be al l owed.

8 Q. What was hi s r esponse?

9 A. Agai n he sai d he had t o pay t he bi l l s.

10 THE COURT: What sor t of document s are you t al ki ng

11 about ?

12 THE WI TNESS: Al l document s, or i gi nal i nvoi ces,

13 l et t er s, ever yt hi ng was scanned i nt o t hi s system cal l ed Paper

14 Por t .

15 THE COURT: Di dn' t t hey have backup f or bi l l s?

16 THE WI TNESS: No, t hey shr edded everyt hi ng.

17 THE COURT: What per i od of t i me was t hi s?

18 THE WI TNESS: Whi l e I was t her e f r om J anuary unt i l

19 August 2003.

20 THE COURT: When di d t hi s par t i cul ar event t ake pl ace

21 t hat you l ear ned about shreddi ng?

22 THE WI TNESS: I was t her e when he was doi ng i t . Dr .

23 Karr on' s vi ew was t hat he was r unni ng a paperl ess of f i ce and

24 t hat he coul d f i nd any dat a or any document s he needed t o f i nd

25 i n Paper Por t , he di dn' t need or i gi nal s.


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1 THE COURT: And what do you cal l t hi s comput er sys t em?

2 THE WI TNESS: I t hi nk i t ' s cal l ed Paper Port .

3 THE COURT: So i t woul d be r ef l ected t hough i n t he

4 computer .


6 THE COURT: The t r ansact i on woul d be.

7 THE WI TNESS: Yes, t he document s woul d be t her e.

8 THE COURT: I n comput er f or m.

9 THE WI TNESS: I n computer f or m.

10 THE COURT: Ret r i evabl e, but t he or i gi nal s woul d be

11 shr edded - -


13 THE COURT: - - because of st orage probl ems or

14 what ever .


16 Q. Di d you ever t r y t o access t he document s on Paper Por t ?

17 A. I di d. I t was di f f i cul t .

18 Q. What do you mean by di f f i cul t ?

19 A. The data woul d be f i l ed i n numerous pl aces. You coul d f i nd

20 t he data. For exampl e, i f you wer e l ooki ng f or a vendor , you

21 coul d f i nd t he data by t he date t hat i t was submi t t ed or

22 ent ered i nt o t he syst em, you coul d f i nd i t by t he vendor , but

23 some of t he dat a had comment s on i t . The same i nvoi ce st ored

24 i n another pl ace di dn' t have t hose comment s on i t , so you coul d

25 never t el l what the sour ce document real l y was.


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1 Q. Al l r i ght . You ment i oned medi cal expenses as wel l , r i ght ?

2 A. Yes.

3 Q. What di d you not i ce about t he medi cal expenses?

4 A. I n a t r adi t i onal busi ness you have a f r i nge benef i t s

5 package t hat ' s associ ated wi t h payi ng a heal t h care pr ovi der

6 l i ke Bl ue Cr oss/ Bl ue Shi el d or Humana or Uni t ed Heal t h Care,

7 any one of t hose t ypes of pr ovi der s. I n CASI ' s case t he

8 medi cal expenses wer e al l pai d di r ect l y t o a medi cal pr ovi der ,

9 a doct or , a pharmacy, somethi ng, and as such every medi cal bi l l

10 woul d be quest i oned.

11 Q. What do you mean by t hat ?

12 A. They woul d want t o l ook at ever y medi cal bi l l and want t o

13 know exact l y what ever y medi cal bi l l was used f or .

14 THE COURT: Who i s t hey?

15 THE WI TNESS: ATP.

16 Q. Di d you have any conversat i ons wi t h t he def endant about

17 t hi s medi cal benef i t s i ssue?

18 A. Yes. Dr . Kar r on' s vi ew was - -

19 MR. RUBI NSTEI N: I ' m goi ng t o obj ect as not r el evant

20 i n vi ew of your Honor ' s i nst r uct i on.

21 THE COURT: Thi s doesn' t go t o t he nat ur e of t he

22 expenses. You are i nst r uct ed not t o - -

23 MR. RUBI NSTEI N: Then I wi l l wi t hdr aw t he obj ect i on.

24 THE COURT: - - get i nto t he nat ur e of t he expenses.

25 A. Dr . Kar r on j ust sai d he had t he f r i nge benef i t money i n hi s


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1 gr ant and t hat he was under hi s f r i nge benef i t s budget , so he

2 coul d use hi s f r i nge benef i t expendi t ur es.

3 Q. Do you know whet her a wr i t t en benef i t s pol i cy i s r equi r ed

4 i n t he ATP r ul es?

5 A. I do not t hi nk so.

6 THE COURT: You do not t hi nk what ?

7 THE WI TNESS: That t her e i s a speci f i c r equi r ement

8 t hat you have a heal t h benef i t pl an. I don' t know of any such

9 gui del i ne i n ATP.

10 THE COURT: I n connect i on wi t h t hi s gr ant ? Di d you

11 exami ne t hi s gr ant ' s - -

12 THE WI TNESS: No, si r , I di d not .

13 Q. Let ' s t al k about t he $75, 000 payment t hat you ment i oned

14 bef ore.

15 A. Yes, si r .

16 Q. Who i s t hat payment t o?

17 A. Dr . Karr on.

18 Q. And when di d t hat payment occur ?

19 A. Ri ght af t er he dr ew down t he f i r st money f r om ATP.

20 Q. Di d you have any di scussi ons wi t h Dr . Kar r on about t hat

21 expense?

22 A. Yes. I t ol d Dr . Karr on t hat payr ol l advances wer e not

23 al l owed by ATP gr ant s, and he sai d t hat he woul d pay t he grant

24 or pay t he payr ol l advance back.

25 Q. To your knowl edge, di d t he def endant ever pay back t he


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1 sal ary advance?

2 A. No, si r .

3 Q. I n general what di d Dr . Karr on do wi t h your advi ce

4 concerni ng expendi t ures?

5 A. My experi ence was i f i t f i t what he want ed t o do, he

6 accept ed i t ; i f i t conf l i ct ed wi t h what he want ed t o do, he

7 i gnor ed i t .

8 Q. What ul t i mat el y happened t o CASI ' s ATP grant ?

9 A. The grant was suspended.

10 Q. And when was t hat ?

11 A. I bel i eve i t was J une/ J ul y 2003.

12 Q. Di d you do any f ur t her work f or CASI af t er t he gr ant was

13 suspended?

14 A. Yes, I di d.

15 Q. What di d you do?

16 A. I worked wi t h t he audi t or on t he f i r st and second audi t .

17 The i nt ent was t o t r y t o hel p t hem f i nd whatever t hey needed.

18 I al so pr epar ed t he - -

19 THE COURT: Who was t he audi t or you wor ked wi t h?

20 THE WI TNESS: Bel i nda Ri l ey.

21 A. I al so pr epar ed t he f i nanci al r epor t s f or t he f our t h

22 quart er 2002, f i r st quart er of 2003 and t he second quart er of

23 2003. The i nt ent ther e was t o cor r ect pr evi ous r epor t s t hat

24 wer e f i l ed i naccur at el y.

25 Q. So t hese wer e r evi sed f i nanci al r epor t s?


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1 A. Yes, si r , t hey wer e.

2 Q. Wer e t hese quar t er l y f i nanci al r epor t s?

3 A. Yes, si r , t hey wer e.

4 Q. Whose i dea was i t t o cr eat e r evi sed f i nanci al r eport s?

5 A. Mi ne.

6 Q. Why di d you want t o do t hat?

7 A. Because t he i ni t i al r epor t s had i ndi cat ed t hat CASI had

8 cont r i but ed t he match f undi ng r equi r ement t hat they had i n t he

9 gr ant , when i n r eal i t y t hey had not , t hey had not cont r i but ed

10 any i ncome t o t he grant .

11 Q. How di d you l ear n t hat CASI had not cont r i but ed t o t he cost

12 share?

13 A. By l ooki ng at t hei r books. You coul d t el l t her e was no

14 money comi ng i n f r om any ot her sour ce ot her than ATP, so t here

15 was no money t o cont r i but e t o t he proj ect ot her than t he ATP

16 f undi ng. There was nothi ng evi denced i n hi s books t hat

17 i ndi cat ed t hat any ATP mat ch had occurr ed.

18 Q. Di d you t al k t o t he def endant about cr eat i ng t hese r evi sed

19 f i nanci al r epor t s?

20 A. Yes, si r , I di d. The r eport s wer e compl et ed i n t he mi ddl e

21 of J ul y, and i t t ook us about a mont h t o act ual l y f i l e t hem

22 because we were r eworki ng t he cover l et t er .

23 Q. Bef ore we get t o t he cover l et t er , l et ' s l ook at some of

24 t he r eport s. Fi r st , who di d you send t he r evi sed r eport s t o?

25 A. I sent t he r epor t s t o ATP.


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1 Q. I f you coul d l ook at Gover nment ' s Exhi bi t s 40A, 41A, 42A

2 and 43A, t hey shoul d be i n f r ont of you i n t hat st ack.

3 A. Yes, s i r .

4 Q. Take a l ook at t hose.

5 A. The number s agai n?

6 Q. 40A, 41A, 42A and 43A.

7 A. Yes, s i r .

8 Q. Ar e t hose t he r evi sed f i nanci al r epor t s you r ef er r ed t o?

9 A. Yes, si r , t hey ar e.

10 Q. Now i f you coul d l ook at 40, 41, 42 and 43. Do you see

11 t hose documents?

12 A. Yes, si r .

13 Q. Ar e t hose t he or i gi nal f i nanci al r epor t s t hat you r evi sed?

14 A. Yes, si r .

15 Q. Let ' s t ake an exampl e. I f you coul d l ook at 40 ver sus 40A.

16 We wi l l put t hose up on t he scr een.

17 A. Yes, si r .

18 Q. Whi ch t i me per i od do t hese r epor t s cover?

19 A. Oct ober 2001 t hrough December 2001.

20 Q. I s t hat t he f i r st quar t er of t he gr ant ?

21 A. I bel i eve so, yes, si r .

22 Q. And whi ch i s t he or i gi nal and whi ch i s t he r evi sed?

23 A. The or i gi nal i s 40, the r evi sed i s 40A.

24 Q. I f you coul d l ook speci f i cal l y at l i ne I .

25 A. Yes.


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1 Q. Li ne I i n Gover nment Exhi bi t ' s 40, f i r st of al l , what i s

2 l i ne I supposed t o be? What i s t hat number supposed t o mean?

3 A. I t ' s supposed t o mean t he amount of money t hat t he grant

4 hol der used of hi s own f undi ng t o mat ch t he money t hat t he ATP

5 peopl e provi ded.

6 Q. I s t hat t he cost shar e?

7 A. Yes, s i r .

8 Q. What number i s r ef l ect ed i n 40 f or t he cost shar e?

9 A. $12, 320.

10 Q. And i f you l ook at 40A, whi ch i s t he r evi sed r epor t you

11 i dent i f i ed bef or e.

12 A. Yes, si r .

13 Q. What i s r ef l ect ed on l i ne I as t he cost share?

14 A. Zero.

15 Q. So, what does t hat mean?

16 A. That means t here was no CASI mat ch.

17 Q. And f or t he other r eport s I showed you t hat I had you l ook

18 at , does t he same t hi ng appear i n al l of t hese r eport s

19 compar i ng t he ori gi nal t o t he r evi sed?

20 A. Yes.

21 Q. And do you see al so i n 40 t he l i ne J ?

22 A. Yes.

23 Q. The f eder al shar e of net out l ays?

24 A. Yes.

25 Q. What i s t hat number supposed t o r epr esent ?


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1 A. That amount i s supposed t o r epr esent t he amount of money

2 t hat you spent on ATP' s pr oj ect .

3 Q. And i s t hat number i n f act accur ate?

4 A. No.

5 Q. Why not ?

6 THE COURT: Whi ch document ?

7 MR. EVERDELL: St i l l l ooki ng at 40, l i ne J .

8 Q. I s t hat number i n f act accur at e?

9 A. No.

10 Q. Why not ?

11 A. Because t her e was no way t o subst ant i at e any number based

12 on t he condi t i on of t he books.

13 Q. What about i n 40A, t he same l i ne, l i ne J ?

14 A. That number i s t he amount of money t hat Dr . Kar r on drew

15 down f r omATP. I t ' s not an accur at e number ei t her , but i t was

16 mor e accur ate t han anythi ng el se t hat I coul d put i n t her e, and

17 my i ntent was t o make sur e, r egardl ess of any ot her number s on

18 t hose r eport s, t hat t he f act t hat t here was no match

19 cont r i buted was r ecor ded.

20 Q. And your i nt ent meani ng your i nt ent i n submi t t i ng t hese t o

21 NI ST?

22 A. Was t o make sur e t hat t hey under st ood t hat t her e was no

23 match and t hat t hey woul d t ake a harder l ook at t hi s pr oj ect .

24 Q. I s t hat why you submi t t ed t hese r evi sed r eport s t o NI ST?

25 A. Yes.


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1 Q. Di d you submi t a r evi sed f i nanci al i nf or mat i on wi t h a cover

2 l et t er?

3 A. Yes.

4 Q. Di d you dr af t t he l et t er ?

5 A. I draf t ed t he i ni t i al l et t er . Thi s i s not t he i ni t i al

6 l et t er . Thi s i s a r evi sed l et t er t hat , as I sai d, we wor ked on

7 f or approxi mat el y a mont h.

8 Q. Al l r i ght . Let ' s l ook at t he l et t er you' re r ef err i ng t o,

9 Government ' s 48. I f you coul d put that on t he scr een.

10 MR. RUBI NSTEI N: I s t hat i n evi dence?

11 MR. EVERDELL: I t ' s al r eady i n evi dence.

12 THE COURT: I s i t i n evi dence?

13 MR. EVERDELL: I bel i eve so. I t was i n evi dence

14 t hr ough Hope Snowden.

15 THE COURT: I don' t see i t .

16 DEPUTY COURT CLERK: J une 4. 48.

17 THE COURT: Oh, yes.

18 Q. Do you see t hat l et t er , Mr . Benedi ct ?

19 A. Yes, si r .

20 Q. I f we coul d bl ow up t he f i r st t wo paragr aphs.

21 I f you coul d pl ease r ead t he f i r st par agr aph of t he

22 l et t er ?

23 A. "Ms. Snowden, pl ease bel i eve Dr . Karr on di d not knowi ngl y

24 mi sst at e hi s SF269A submi ss i ons t hr ough year one. He si gned

25 document s pr epared by hi s pr oj ect admi ni st r ator , who, al ong


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1 wi t h Dr . Karr on, di d not under st and t he ATP gui del i nes or cost

2 pr i nci pl es FAR31. 2, and mi st ook cer t ai n f i nanci al deposi t s by

3 Dr . Karr on f or member cont r i but i ons. "

4 Q. Now, Mr . Benedi ct , di d you wr i t e t hat paragr aph?

5 A. No.

6 Q. Who wr ot e t hat paragraph?

7 A. Pr i mar i l y Dr . Karr on. He di d ask me t o i ncl ude t he

8 f i nanci al number s t hat I was al ways r ef er enci ng.

9 THE COURT: Di d anyone el se par t i ci pat e i n t he

10 dr af t i ng?

11 THE WI TNESS: No, si r .

12 Q. But j ust t o be cl ear, t hat f i r st paragr aph was added at t he

13 r equest of Dr . Karr on?

14 A. Yes, si r .

15 Q. Al l r i ght . I f you coul d pl ease r ead t he f i r st t hr ee

16 sent ences i n t he second par agr aph.

17 A. "We acknowl edge t hat ther e are di sal l owed expenses and t hey

18 do go back t o year one, but t hey pr i mar i l y come f r om t wo

19 sour ces. Fi r st , Dr . Karr on was t r yi ng t o do t he bookkeepi ng

20 hi msel f and he i s not an accountant , mi st akes were made.

21 Secondl y, t her e wer e di f f er i ng opi ni ons on what i s and i sn' t

22 al l owabl e bet ween t he pr i or admi ni st r ators of t he CA and t hose

23 now admi ni st er i ng t he CA. "

24 Q. What was t he CA?

25 A. That ' s t he gr ant .


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1 Q. That f i r st sent ence, "We acknowl edge t hat t here are

2 di sal l owed expenses and t hey do go back t o year one, " who wr ot e

3 t hat sent ence?

4 A. I di d.

5 Q. What about t he second t wo sent ences, Dr . Kar r on was t r yi ng

6 t o do t he bookkeepi ng hi msel f , he i s not an account ant ,

7 mi st akes were made and t her e were di f f er i ng opi ni ons about what

8 i s and i sn' t al l owabl e bet ween t he pr i or admi ni st r at or of t he

9 CA and t hose now admi ni st er i ng t he CA?

10 A. Those were added by Dr . Kar r on.

11 THE COURT: What di d you say wer e added?

12 THE WI TNESS: The second and t he t hi r d sent ence.

13 THE COURT: "Secondl y" or " f i r st " ?

14 THE WI TNESS: "Fi r st " and "secondl y".

15 Q. As f or t he f i r st sent ence whi ch you wr ote, why di d you

16 wr i t e t hat sent ence?

17 A. Because I want ed t he ATP - -

18 MR. RUBI NSTEI N: I obj ect t o t he why quest i ons.

19 Q. What was t he pur pose f or i ncl udi ng t hat sent ence?

20 MR. RUBI NSTEI N: Obj ect i on, your Honor . I t speaks f or

21 i t sel f .

22 THE COURT: I wi l l al l ow t he answer .

23 Thi s i s t he sent ence "we acknowl edge"?

24 A. The l et t er as I or i gi nal l y wr ot e i t st ar t ed "Mi ss Snowden,

25 we acknowl edge t her e are di sal l owed expenses and t hey do go


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1 back t o year one. " What I want ed t hem t o underst and was t hat

2 t her e wer e di sal l owed expenses i n addi t i on t o t he f act t hat

3 t her e was no match. I was t r yi ng t o get ATP' s at t ent i on.

4 MR. RUBI NSTEI N: Coul d we have t he dat e of t hi s

5 exhi bi t , your Honor?

6 THE COURT: Sor r y?

7 MR. RUBI NSTEI N: The dat e.

8 THE COURT: The dat e on t he l et t er i s August 13,

9 accor di ng t o t he copy.

10 MR. RUBI NSTEI N: 2003. Thank you.

11 THE COURT: Al l r i ght .

12 Q. You can put down t he l et t er. Mr . Benedi ct , ar e you

13 f ami l i ar wi t h someone named J oan Hayes?

14 A. Yes, si r .

15 Q. Who i s J oan Hayes?

16 A. J oan Hayes was t he audi t or empl oyed by CASI .

17 Q. Di d you ever have any di scussi ons wi t h t he def endant

18 r egardi ng J oan Hayes?

19 A. Yes.

20 Q. What were t hose di scussi ons?

21 A. Dr . Kar r on was general l y not happy wi t h J oan Hayes. He

22 f el t t hat she j ust wasn' t doi ng what he want ed her to do.

23 Q. And di d he say t hat t o you?

24 A. Yes, si r .

25 Q. What ul t i mat el y happened t o t he grant ?


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1 A. The grant was suspended.

2 Q. And af t er t he grant was suspended di d you have any

3 di scussi ons wi t h t he def endant about t he st ate of t he pr oj ect ?


5 Q. What was t he nat ur e of t hose di scussi ons?

6 A. As t he audi t pr ogr essed i t became apparent that t he

7 di sal l owed number s and t he quest i oned number s were goi ng t o be

8 ver y l ar ge. I had t ol d Dr . Kar r on t hat thi s was ver y ser i ous.

9 MR. RUBI NSTEI N: I obj ect t o what he t ol d Dr . Karr on.

10 THE COURT: Ar e you r ef err i ng t o an audi t by J oan

11 Hayes or an audi t by Bel i nda - -

12 THE WI TNESS: By Bel i nda Ri l ey.

13 THE COURT: - - by Bel i nda Ri l ey?

14 I s t hat what you' r e i nqui r i ng about , Mr . Ever del l ?

15 MR. EVERDELL: Yes.

16 Q. Al l r i ght . So, you are f ami l i ar wi t h someone named Bel i nda

17 Ri l ey?

18 A. Yes, si r .

19 Q. Who i s Bel i nda Ri l ey?

20 A. Bel i nda Ri l ey i s t he Of f i ce of I nspect or Gener al ' s audi t or .

21 Q. And di d she compl ete an audi t r epor t ?

22 A. Yes.

23 Q. Di d you di scuss t hat r epor t wi t h Dr . Kar r on?


25 Q. And what di d you t el l hi m, i f anythi ng?


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1 A. I t ol d Dr . Kar r on t hi s was ver y ser i ous, he coul d go t o

2 j ai l f or t hi s, he coul d have bet ween 300 and 500, 000 of

3 di sal l owed expendi t ur es.

4 Q. What i f anyt hi ng was t he def endant ' s r esponse t o t hat?

5 A. He sai d don' t worr y about i t , my mom' s got i t .

6 MR. EVERDELL: No f ur t her quest i ons, your Honor .

7 THE COURT: Al l r i ght , Mr . Rubi nst ei n.

8 CROSS EXAMI NATI ON

9 BY MR. RUBI NSTEI N:

10 Q. Good morni ng, Mr . Benedi ct .

11 A. Good mor ni ng.

12 Q. Now, Exhi bi t 48 t hat was j ust shown t o you, t he l et t er t hat

13 you wr ot e t o Hope Snowden - -

14 A. Yes, si r .

15 Q. - - t hat was wr i t t en by you, r i ght ?

16 A. By mysel f and Dr . Kar r on.

17 Q. Was i t wr i t t en i n conj unct i on wi t h J oan Hayes?

18 A. No, si r .

19 Q. How di d you send t hat l et t er t o Hope Snowden?

20 A. Mai l ed i t .

21 Q. Di d you f ax i t t o Hope Snowden?

22 A. No, s i r , I di dn' t .

23 Q. Wel l , di d J oan Hayes f ax i t t o Hope Snowden?

24 A. I don' t know whet her she di d or she di dn' t , si r . She i s on

25 copy of t he l et t er .


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8697KAR2 Benedi ct - cr oss

1 Q. Now, i n f act you advi sed Dr . Kar r on i n August of 2003 t hat

2 t he f i nanci al di sal l owances pur suant to t he audi t wer e ver y

3 ser i ous, cor r ect ?

4 A. Yes, s i r .

5 Q. And i n August of 2003, t hi s i s af t er t he gr ant was

6 suspended, r i ght ?

7 A. Yes, s i r .

8 Q. And t hat i s t he f i r st t i me t hat you ever tol d Dr . Kar r on

9 t hat i t ' s possi bl e he coul d even go t o j ai l f or t hi s, r i ght ?

10 A. That ' s possi bl e, yes, si r .

11 Q. Hi s r esponse was he di dn' t t hi nk t hat was possi bl e, r i ght ?

12 A. I t ol d you what hi s r esponse was. He sai d don' t worr y

13 about i t .

14 Q. He f el t t hat i f you pai d back t he money t here i s no

15 pr obl em.

16 A. I don' t know what he f el t , si r . He di dn' t say t hat t o me.

17 Q. Wel l , di dn' t he t el l you t hat hi s mom has t he money?

18 A. Yes, si r , but Dr . Kar r on of t en gave me ver y f l i ppant

19 answer s.

20 Q. But he di d say t hat hi s mom had t he money, cor r ect ?

21 A. Yes, si r .

22 Q. Now, you were cal l ed a number of t i mes pr i or to t he t i me

23 t hat you became t he grant manager , t he busi ness manager

24 actual l y of t hi s CASI gr ant , cor r ect ?

25 A. Yes, si r .


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1 Q. Pr i or t o t hat t i me how many cal l s woul d you say you got

2 f r om members of CASI aski ng your advi ce and your opi ni on on

3 al l owabl e expenses?

4 A. Four maybe.

5 Q. And you spoke t o Dr . Karr on hi msel f , cor r ect ?

6 A. Yes, s i r .

7 Q. And he spoke t o you about the r ent , r i ght ?

8 A. Yes, s i r .

9 Q. He al so spoke t o you about ut i l i t i es expenses, cor r ect ?

10 A. I don' t recal l , s i r .

11 Q. Di d you ever i n t hose conver sat i ons bef ore you came t o be

12 empl oyed by CASI ever say t o Dr . Kar r on, you know, i f you do

13 t hi s you mi ght wi nd up i n j ai l ?

14 A. No.

15 Q. Now, i t i s a f act , si r , t hat Dr . Kar r on had pr oj ect

16 admi ni st r at or s, di d he not , pr i or t o you?

17 A. Yes, si r .

18 Q. He had Lee Gur f ei n, r i ght ?

19 A. Yes, si r .

20 Q. You spoke t o t hat gent l eman?

21 A. Yes, si r .

22 Q. He cal l ed you f or advi ce?

23 A. Yes.

24 Q. He had Peter Ross?

25 A. I never spoke wi t h Pet er Ross.


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1 Q. Ar e you aware t hat Pet er Ross i s t he i ndi vi dual who

2 preceded you?

3 A. I l ear ned t hat af t er I j oi ned CASI , yes, si r .

4 Q. So i s i t f ai r t o say t hat t he st at ement t hat you have - - by

5 t he way, you aut hor ed t hi s l et t er , cor r ect ?

6 A. Yes, s i r .

7 Q. You put your si gnatur e on i t .

8 A. Yes, s i r .

9 Q. Ar e you t el l i ng t hi s j ur y t hat you l i ed t o Hope Snowden i n

10 t hi s l et t er ?

11 MR. EVERDELL: Obj ect i on.

12 THE COURT: I wi l l al l ow t he quest i on.

13 A. No, si r .

14 Q. And Dr . Karr on i ndi cated t o you t hat he had pr i or pr oj ect

15 admi ni st r ators who di dn' t unders t and t he ATP gui del i nes and

16 cost pr i nci pl es, cor r ect?

17 A. Yes, si r . But I know t hat ATP i sn' t goi ng t o pay any

18 at t ent i on t o t hat because i gnorance i sn' t an answer .

19 Q. But you knew t hat t here was a l ot of i gnor ance here i n

20 CASI , di d you not ?

21 A. Yes, si r .

22 Q. And when you f i r st met Dr . Kar r on, t he f i r st t hi ng he di d

23 bef ore you ever met hi m was st and up i n an open meet i ng and

24 sai d he needs hel p on t he f i nanci al si de, under st andi ng t he

25 f i nanci al si de, cor r ect?


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1 A. Yes, s i r .

2 Q. Now - -

3 THE COURT: What year was t hat ?

4 THE WI TNESS: 2001.

5 MR. RUBI NSTEI N: 2001 at a NI ST - -

6 THE COURT: I n t he spr i ng?


8 THE COURT: I s t hat bef or e - - i n t he spr i ng? Al l

9 r i ght .


11 Q. And, by t he way, t hese pr oj ect admi ni st r at ors , at l east

12 Gur f ei n, i s somebody t hat was cal l i ng you f or gui dance,

13 cor r ect ?

14 A. Yes.

15 Q. Di d you ascer t ai n t hat i n t he ver y begi nni ng of CASI t hat

16 Dr . Kar r on was i n f act doi ng t he bookkeepi ng hi msel f ?

17 A. Af t er I got t her e, yes, si r .

18 Q. And i n f act he i s not an account ant , r i ght ?

19 A. That ' s cor r ect .

20 Q. And t hat ' what you' r e t el l i ng us he asked you t o

21 i ncorpor at e i n t hi s l et t er , r i ght ?

22 A. Yes, si r .

23 Q. That ' s t r ue, r i ght ?

24 A. Yes, i t i s .

25 Q. And i n f act ther e wer e di f f er i ng opi ni ons on what i s


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1 al l owabl e and what wasn' t al l owabl e, cor r ect ?



4 Q. Wel l , you had di f f er ences of opi ni on wi t h Dr . Kar r on as t o

5 what was al l owabl e and what was unal l owabl e, cor r ect ?

6 A. Yes, s i r .

7 Q. And i n f act CASI , pr i or t o t he appear ance of Bel i nda Ri l ey,

8 you were at t empt i ng t o get al l t he books st r ai ght ened out , were

9 you not?

10 A. Yes, si r .

11 Q. You wer e i n t he pr ocess of doi ng t hat , cor r ect ?

12 A. Yes, si r .

13 Q. And your exper i ence wi t h NI ST ATP was based upon your

14 backgr ound wi t h I BM and t hi s company Compl ex, r i ght ?

15 A. Yes.

16 Q. How l ar ge a company i s Compl ex?

17 A. Say agai n?

18 Q. How l ar ge a company i s Compl ex?

19 A. You mean t he consor t i um?

20 Q. Wel l , you sai d you worked f or Compl ex. I s t hat a

21 consor t i um? I don' t know.

22 A. I di dn' t say anythi ng about a compl ex. I wor ked f or I BM

23 managi ng si ngl e gr ant s and consor t i um gr ant s. The consor t i um

24 grant s are mul t i - company gr ant s.

25 Q. And di d you work on grant s f or anybody el se?


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1 A. Axi om.

2 Q. Axi om. I ' m sor r y. And how l arge a company i s Axi om?

3 A. Axi om i s a r el at i vel y smal l sof t ware devel opment company

4 t hat worked wi t h I BM.

5 Q. When you say r el at i vel y smal l , how many empl oyees di d Axi om

6 have?

7 A. 250.

8 Q. 250 empl oyees?

9 A. Um- hum.

10 Q. And Axi om, what ki nd of gr ant di d t hey get ?

11 A. They di dn' t have a gr ant . I was a consul t ant worki ng f or

12 t hem, and t hey hi r ed me out t o I BM. So al l of my grant

13 exper i ence i s r el ated t o I BM exper i ence - - or ATP exper i ence

14 was al l r el at ed t o I BM pr oj ect s.

15 Q. Wi t hout bei ng f acet i ous, I BM i s a gi ant company, r i ght ?

16 A. Yes, si r .

17 Q. Now, were you t he sol e - - were you t he busi ness manager f or

18 I BM deal i ng wi t h t he gr ant s?

19 A. Yes, si r .

20 Q. And what ki nd of gr ant s di d I BM get ?

21 A. Sof t ware devel opment , hi gh- r i sk sof t ware devel opment

22 grant s.

23 Q. And what dol l ar amount ?

24 A. The f i r st one was t he same si ze as Dr . Kar r on' s. The l ast

25 t wo were 24 and $26 mi l l i on grant s.


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1 Q. Now, t he f i r st one i s what i s cal l ed a si ngl e gr ant ?

2 A. Yes.

3 Q. And t he ot her s were consor t i um, whi ch meant t hose grant s

4 i nvol ved mor e t han one company?

5 A. Yes, s i r .

6 Q. Now, i n your si ngl e gr ant , di d you wr i t e t he budget f or

7 t hat gr ant ?

8 A. No, s i r , I di d not .

9 Q. Di d you ever have - - was t he budget i n pl ace when you

10 became t he gr ant manager?

11 A. Yes, si r , i t was.

12 Q. And t hat ' s t he onl y budget , si ngl e gr ant budget , deal i ng

13 wi t h NI ST ATP. Was t hat - - I ' m sorr y. Was t hat t he onl y

14 si ngl e gr ant budget f r om ATP NI ST?

15 A. Yes, si r .

16 Q. That you ever wor ked on?

17 A. Yes, si r .

18 Q. I n t hat budget wer e you pai d? Was I BM pai d up f r ont ? Di d

19 t hey have t he grant money up f r ont , or di d t hey have t o be

20 r ei mbur sed?

21 A. Rei mbur sement .

22 Q. So t hat I BM woul d have t o spend t hei r money f i r st , r i ght ?

23 A. Yes.


25 THE COURT: Obj ect i on sust ai ned. When you st ar t wi t h


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1 "so" - -

2 MR. RUBI NSTEI N: Al l r i ght .

3 Q. I BM spent t hei r money f i r st , cor r ect ?

4 A. Yes, s i r .

5 Q. Then woul d i t be your j ob t o r equest r ei mbur sement f r om t he

6 gr ant ?

7 A. Yes, s i r .

8 Q. And how woul d you do t hat ?

9 MR. EVERDELL: Obj ect i on. Rel evance.

10 THE COURT: I ' m goi ng t o al l ow t he quest i on.

11 A. I woul d submi t a r eport t o ATP aski ng t hem f or

12 r ei mbursement based on t he detai l ed expendi t ur es I r evi ewed.

13 Q. And wer e you ever t urned down?

14 A. No, si r .

15 Q. Now, when you were doi ng t he consor t i um pr oj ect s, was t hat

16 a r ei mbur sement al so si t uat i on?


18 THE COURT: Obj ect i on over r ul ed.

19 A. Yes.

20 Q. And di d you submi t the r epor t s r equest i ng r ei mbur sement ?

21 A. Yes.

22 Q. And, by t he way, how much of t he 2 mi l l i on t hat I BM

23 r ecei ved i n t he f i r st gr ant , t he si ngl e gr ant , was act ual l y - -

24 I wi l l wi t hdr aw t hat .

25 How many years was t hat gr ant f or , t he f i r st gr ant ?


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1 A. Two.

2 Q. Two years?

3 A. Yes, s i r .

4 Q. For $2 mi l l i on?

5 A. Yes, s i r .

6 Q. And how much of the 2 mi l l i on di d I BM spend?

7 A. Al l of i t .

8 Q. And t he t wo consort i um gr ant s, t hose wer e f or 24 mi l l i on a

9 pi ece?

10 A. 24 and 26.

11 Q. And how much of t he $24 mi l l i on grant di d I BM spend, t he

12 consor t i um?

13 A. The consor t i um spent al l of t he money.

14 Q. And how about t he $26 mi l l i on grant , how much di d t he

15 consor t i um spend on t he 26 mi l l i on gr ant ?

16 A. They spent al l t he money.

17 Q. When you woul d submi t a document t o ATP, wer e any of t he

18 r ei mbur sed expendi t ur es ever r ej ect ed?


20 THE COURT: Obj ect i on overr ul ed. Can I hear t he

21 quest i on agai n?

22 A. I don' t r ecal l any bei ng r ej ect ed.

23 Q. What year s were t hi s t hat you were deal i ng wi t h NI ST ATP on

24 t hese gr ant s?

25 A. 1994 t o 2002.


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1 Q. Now, di d you ever have occasi on t o speak t o any of t he

2 gr ant admi ni st r at or s f r om ATP?

3 A. Yes, s i r .

4 Q. And who di d you speak t o? I am t al ki ng on behal f of t he

5 I BM gr ant s. Di d you ever have occasi on t o speak t o any of the

6 admi ni st r at or s?



9 Q. Di d you ever have occasi on t o submi t any budget revi si ons

10 on behal f of any of t he I BM gr ant s?


12 THE COURT: I wi l l al l ow t he quest i on.

13 A. Yes.

14 Q. What ki nd of budget r evi si ons di d you r equest ?

15 A. As t he pr oj ect s pr oceeded, you l ear n your i ni t i al budget

16 doesn' t have al l t he money i n al l t he r i ght pl aces, and so you

17 r equest movement of t he money f r om one budget l i ne t o anot her

18 budget l i ne. I don' t speci f i cal l y r ecal l any of t he det ai l s,

19 but , yes, t hey occur r ed.

20 Q. That ' s a common t hi ng i n t hese ki nd of hi gh- t ech, hi gh- r i sk

21 t ypes of gr ant s, r i ght ?

22 A. Yes.

23 Q. Now, you were i nvol ved, were you not , i n CASI ' s or i gi nal

24 budget submi ss i on?

25 A. No.


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1 Q. Wel l , di d you di scuss wi t h Dr . Karr on t he ori gi nal budget

2 t hat he was submi t t i ng?

3 A. No.

4 Q. I n f act you were never approved by ATP NI ST f or the CASI

5 pr oj ect .

6 A. I f ound t hat out l at er , yes, si r .

7 Q. When di d you f i nd t hat out ?

8 A. Dur i ng t he audi t by OI G, by Bel i nda Ri l ey.

9 Q. You wer e never f or mal l y r ej ect ed, cor r ect ?

10 A. Corr ect .

11 Q. And i sn' t i t a f act that ATP woul dn' t speak t o you bef or e

12 Bel i nda Ri l ey showed up because you were not approved by t hem?

13 A. They di d not r et ur n phone cal l s.

14 Q. But you di d cal l t hem bef ore t he gr ant was suspended on

15 J une 27, cor r ect .

16 A. Yes, si r .

17 Q. And af t er t he gr ant was suspended you l ear ned f r om Ri l ey

18 t hat you were not appr oved, cor r ect ?

19 A. Yes.

20 Q. And when woul d you say t hat was i n t i me f r ame?

21 A. J ul y/ August somet i me.

22 Q. Had you r ecei ved any r emunerat i on, any payment f r om CASI

23 f or the wor k you had done as manager ?

24 A. Yes.

25 Q. And i n f act Dr . Kar r on brought you aboard and t ol d you when


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1 you came aboar d he needed somebody who r eal l y knew what t hey

2 were doi ng?

3 A. Yes.

4 Q. And di d you hel p ear l y on? Bef ore wer e you actual l y hi r ed,

5 when you were get t i ng t hese cal l s f r om CASI , di d you r ecommend

6 t hat any category be added t o t he budget cal l ed "other s" ?

7 A. I don' t r ecal l anyt hi ng l i ke t hat , no, s i r .

8 THE COURT: For what? For ot her ?

9 MR. RUBI NSTEI N: "Ot her s" .

10 Q. That i s a cat egor y i n t he budget , i s t hat cor r ect ?

11 A. No, si r , not as f ar as I know i t i sn' t .

12 Q. Now, you say you were get t i ng $60 an hour , cor r ect ?

13 A. Yes, si r .

14 Q. Were you aware what Lee Gur f ei n was bei ng pai d?

15 A. No, si r .

16 Q. Di d you become awar e of what Lee Gur f ei n had been pai d?

17 A. No, si r .

18 Q. Di d you ever say t o Dr . Kar r on t hat what CASI pai d Lee

19 Gur f ei n was i nsane?

20 A. I don' t recal l , no, s i r .

21 Q. Wel l , di d you have occasi on as t he manager - - you submi t t ed

22 r evi si ons, di d you not ?

23 A. Yes, si r .

24 Q. Revi si ons f or t he whol e budget , cor r ect ?

25 A. We submi t t ed a budget amendment , yes.


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1 Q. Di d you r evi ew t he pr i or budget s?

2 A. The onl y pr i or budget t hat I saw was t he one t hat was

3 or i gi nal l y f i l ed wi t h t he gr ant .

4 Q. And t hat had a sal ar y f or Lee Gur f ei n, di d i t not ?

5 A. Yes.

6 Q. Ar e you t el l i ng t hi s j ur y t hat you di dn' t not i ce what

7 Mr . Gurf ei n was bei ng pai d?

8 THE COURT: Obj ect i on t o t he f orm of t he quest i on.


10 THE COURT: He di dn' t say he di dn' t not i ce.

11 Q. Wel l , di d you see i n t hat budget - -

12 THE COURT: He sai d he never made t he st at ement t o Dr .

13 Karr on i s what he sai d.

14 Q. Wel l , di d you see i n t hat budget what Lee Gur f ei n was bei ng

15 pai d?

16 A. Yes, I saw what he was bei ng pai d.

17 Q. And how much was Gur f ei n bei ng pai d?

18 A. I don' t r ecal l .

19 Q. Af t er you saw t hat , di d you ever have any conver sat i on wi t h

20 Dr . Kar r on as t o t he amount t hat t hey were payi ng Lee Gurf ei n?

21 A. No, si r , not t o my memory I don' t .

22 Q. Di d you di scuss wi t h Dr . Karr on t he 10 per cent rul e?

23 A. Yes.

24 Q. And di d you advi se hi m t hat i t ' s r eal l y a 20 per cent rul e,

25 t hat you can add 10 percent i f you t ake 10 per cent of f ?


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1 A. I don' t under st and t he quest i on.

2 Q. Wel l , t he 10 per cent rul e per mi t s you, does i t not , si r , t o

3 i ncr ease any l i ne i n t he budget by 10 per cent ?

4 A. Yes, i t ' s a pl us or mi nus 10 per cent r ul e.

5 Q. So you woul d have t o r educe by 10 per cent i n order t o

6 i ncr ease by 10 percent ?

7 A. Yes, si r . You weren' t goi ng t o get any more money.

8 Q. The dol l ar amount , i n t hi s case $800, 000 f or t he f i r st

9 year , was your seal i ng, t op amount .

10 A. Yes.

11 Q. So, i n ef f ect i t r eal l y was 10 percent up and 10 per cent

12 down; you wound up wi t h t he same dol l ar amount budget .

13 A. Yes. You can go pl us or mi nus 10 per cent on any budget

14 l i ne wi t hout get t i ng a budget amendment .

15 Q. And are you f ami l i ar wi t h whet her or not t her e are speci al

16 condi t i ons t hat are somet i mes i mposed by ATP as par t of t he

17 gr ant ?

18 A. Ther e ar e sect i ons i n gr ant s t hat ar e cal l ed speci al t er ms

19 and condi t i ons. I don' t recal l what they wer e, i f t her e wer e

20 any wi t h Dr . Karr on' s gr ant .

21 Q. Wel l , you t ol d us t hat you r ecommended t hat Dr . Kar r on get

22 grant manager t r ai ni ng?

23 A. Yes.

24 Q. You sent hi m a cat al og, r i ght ?

25 A. Yes.


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1 Q. Di d you al so suggest t hat t he peopl e who work f or hi m i n

2 t he admi ni st r at i on do t he same?

3 A. Yes.

4 Q. And you l earned i n f act t hat nei t her Dr . Karr on nor anyone

5 i n t he admi ni st r at i on t ook t he cour se, cor r ect ?

6 A. That ' s cor r ect .

7 Q. And di d Dr . Kar r on advi se you t hat he woul d r el y upon hi s

8 net wor k of assi st ant s t o get hi m t hr ough t he gr ant pr ocess?

9 Ri ght ?

10 A. I don' t r ecal l t hat comment , no, si r .

11 Q. Wel l , when di d you speak t o somebody i nvol ved i n t he

12 pr osecut i on i n t hi s case?

13 A. Coul d you r epeat t he quest i on, pl ease.

14 Q. Yes. When were you f i r st approached by anybody at t hat

15 f i r st t abl e about t hi s case?

16 A. Two year s ago?

17 Q. And who wer e you approached by?

18 A. Agent Ondr i k.

19 Q. Do you see t hat agent her e?

20 A. Yes. She i s si t t i ng over t her e at t he t abl e. Ki r k was

21 al so t her e. He' s si t t i ng at t he end of t he t abl e.

22 Q. And how about the prosecut or s her e, when di d you meet t he

23 pr osecut or s f or t he f i r st t i me?

24 A. Two mont hs ago.

25 Q. 2008, corr ect ?


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1 A. Yes, s i r .

2 Q. Do you r ecal l t el l i ng t he agent s t hat i nst ead he, meani ng

3 Dr . Kar r on, depended on hi s network of associ ates t o get hi m

4 t hr ough t he process?

5 A. Dr . Karr on woul d - -

6 Q. Do you r ecal l sayi ng t hat t o t he agent s her e under oath?

7 A. Not speci f i cal l y, no, s i r .

8 Q. OK. Let me show you t hi s document whi ch has been

9 pr evi ousl y marked as 3506- A and ask you f i r st t o l ook at t he

10 t op on t he back, and t hen I wi l l di r ect you t o a speci f i c pl ace

11 i n t he document . Di d you r evi ew t hat , si r ?

12 A. Number 3?

13 Q. Wel l , f i r st of al l , di d you r evi ew t he f act t hat t hat ' s an

14 af f i davi t t hat you si gned and swor e t o?

15 A. Yes i t i s . Yes, s i r .

16 Q. And you r ead i t bef ore you swore t o i t ?


18 Q. And you i ni t i al ed every page?

19 A. Yes, si r .

20 Q. I di r ect your at t ent i on t o what I have as number t hr ee and

21 ask you i f t hat ref r eshes your r ecol l ect i on t hat Dr . Kar r on

22 t ol d you he depended on a net work of associ at es t o get hi m

23 t hr ough t he process.

24 A. That ' s not what he t ol d me, si r . I t ' s what he di d.

25 ( Cont i nued on next page)


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869zkar3 Benedi ct - cr oss

1 BY MR. RUBI NSTEI N:

2 Q. You observed t hat , t hat he r el i ed upon other peopl e t o get

3 hi m t hr ough t he pr ocess?

4 A. Dr . Karr on woul d ask a quest i on. I f he got an answer he

5 di dn' t l i ke, he' d ask somebody el se unt i l he got somet hi ng t hat

6 was cl ose t o what he want ed, and he woul d go i n t hat di r ect i on.

7 Q. And had you, i n your pr i or exper i ence wi t h ATP NI ST, ever

8 have occasi on on, asi de f r omCASI , of negot i at i ng as t o what

9 was al l owabl e or al l owed; di d your have t hat occasi on,

10 exper i ence?

11 A. Yes, si r .

12 Q. Now, somebody di d t ake t hat cour se t hat you r ecommended,

13 r i ght ?

14 A. Yes.

15 Q. And t hat was J oan Hayes, r i ght ?

16 A. Yes.

17 Q. And who pai d f or t hat cour se?

18 A. I have no i dea, si r .

19 Q. Ar e you aware t hat whet her or not CASI pai d f or t hat cour se

20 f or J oan Hayes?

21 A. I have no r ecol l ect i on of t hat , si r . J oan Hayes was a CASI

22 empl oyee, not an ATP empl oyee. What CASI di d wi t h CASI ' s

23 money, I di dn' t care.

24 Q. She was t hei r account ant , she was CASI ' s accountant ?

25 A. She was CASI ' s accountant CPA, audi t or .


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1 Q. She was wear i ng mul t i pl e hat s f or CASI , corr ect ?



4 Q. Wel l - -

5 THE COURT: Let ' s - -

6 Q. I f Dr . Kar r on - - when you r ecommended t o Dr . Kar r on t hat he

7 or somebody i n CASI t ake t hi s cour se on audi t i ng - - i t was ki nd

8 of an audi t i ng cour se f or t he budget?

9 A. The cour ses t hat are of f ered by management concept s cover a

10 number of subj ect s. One i s t he A- 133 audi t , whi ch i s t he

11 f ederal government audi t i ng pr ocess. There were cour ses on

12 grant management , t her e were courses on grant wr i t i ng. I mean,

13 t hey have a number of cour ses.

14 Q. So t he per son t hat went down f or the course on grant

15 management was t he accountant , cor r ect ?

16 A. Yes, si r .

17 Q. And t hat was pr i or t o t he t i me t hat you came aboar d,

18 cor r ect ?

19 A. I don' t know when she went .

20 Q. And i s i t your vi ew t hat that woul d not , woul d not be an

21 al l owabl e expense?

22 A. I t ' s not an al l owabl e expense t o t he gr ant , no, si r .

23 Q. Di d you ever di scuss t hat wi t h anybody at ATP?

24 A. No, si r .

25 Q. Di d Mark Stanl ey speak at t he conf erence wher e you met Dr .


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1 Karr on?

2 A. I don' t recal l i f he spoke at that conf er ence or not ; no,

3 s i r .

4 Q. Have you been present when Mark Stanl ey spoke t o grant , t o

5 hopef ul gr ant r eci pi ent s?

6 A. Yes.

7 Q. And i t ' s f ai r t o say t hat Mar k St anl ey sai d t hat t hey woul d

8 at t empt i ng t o, t o hel p anybody who got a grant ?


10 A. I don' t speci f i cal l y r ecal l hi m maki ng t hat comment .

11 Q. Wel l , di d you advi se Dr . Kar r on t hat NI ST ATP was one of

12 t he most f r i endl y or gani zat i ons t o t he r eci pi ent s?

13 A. That was my exper i ence.

14 Q. And - -

15 THE COURT: Di d you t el l hi m?

16 THE WI TNESS: I don' t r ecal l maki ng t hat , t hat

17 st at ement .

18 Q. Di d you advi se Dr . Kar r on t hat t her e i s al ways a way t o get

19 amendment s; di d you advi se Dr . Kar r on of t hat ?

20 A. I don' t under st and t he quest i on.

21 Q. There' s al ways a way f or an expense t o be consi dered, t o be

22 al l owabl e?

23 A. I don' t r ecal l t hat st at ement . That woul d seem t o be t oo

24 broad.

25 Q. Ar e you f ami l i ar wi t h t ypes of equi pment t hat Dr . Karr on


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1 had i n t he NI ST ATP pr oj ect ?

2 A. I was f ami l i ar t o t he extent t hat t hey wer e l ar ge and ver y

3 powerf ul pi eces of equi pment . Ot her t han t hat , I don' t know.

4 I ' m not a t echnol ogi st .

5 Q. And are you aware t hat you coul d r evi se t he budget af t er

6 t he year was up?

7 A. Af t er what year was up?

8 Q. Wel l , i n t hi s case CASI had a budget f or - - st ar t i ng

9 Oct ober 1st , 2001 r unni ng t i l l Sept ember 30t h, 2002, cor r ect ;

10 f i r st year of t he gr ant ?

11 A. Yes.

12 Q. And t hat had you had t o r eappl y f or t he second - - di d you

13 have t o r epl y f or t he second year?

14 A. No, si r .

15 Q. I t was aut omat i c?

16 A. I t was a t wo year grant .

17 Q. I sn' t i t a f act t hi s was a t hr ee year gr ant ?

18 A. Thr ee year gr ant . I don' t r ecal l whet her i t ' s t wo or

19 t hr ee.

20 Q. I BM was a t wo year gr ant ?

21 A. Yes.

22 Q. Now, i s t her e any r evi ew af t er t he f i r st year by, that

23 you' r e aware of , by ATP NI ST of t he gr ant peopl e, t he CASI ?


25 THE COURT: I ' l l al l ow t he quest i on. I ' d l i ke a t i me


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1 f r ame, t hough, Mr . Rubi nst ei n.

2 MR. RUBI NSTEI N: Okay. I ' l l wi t hdr aw t he quest i on,

3 J udge, even t hough you al l owed i t .

4 Q. Ar e you aware t hat af t er t he f i r st year of t he gr ant , you

5 are r equi r ed t o submi t an audi t ?

6 A. I don' t remember

Documents

12-2297 Karron CoA Appendix v10