12-2297 Karron CoA Appendix v10
-
Upload
d-b-karron-phd -
Category
Documents
-
view
213 -
download
0
Transcript of 12-2297 Karron CoA Appendix v10
-
7/28/2019 12-2297 Karron CoA Appendix v10
1/306
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]
-
7/28/2019 12-2297 Karron CoA Appendix v10
2/306
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.
-
7/28/2019 12-2297 Karron CoA Appendix v10
3/306
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
-
7/28/2019 12-2297 Karron CoA Appendix v10
4/306
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
-
7/28/2019 12-2297 Karron CoA Appendix v10
5/306
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
-
7/28/2019 12-2297 Karron CoA Appendix v10
6/306
APPENDIX VOLUME PAGES
Volume V1 KA-1 KA-300Volume V2 KA-300 KA-599
Volume V3 KA-600 KA-899
Volume V4 KA-900 KA-1199
Volume V5 KA-1200 KA-1499
Volume V6 KA-1500 KA-1799
Volume V7 KA-1800 KA-2200a (oversize)
Volume V8 KA-2200 KA-2499
Volume V9 KA-2500 KA-2799
Volume V10 KA-2800 KA-3099
Volume V11 KA-3100 KA-3332 END
Table 1 Appendix Volume Pages
-
7/28/2019 12-2297 Karron CoA Appendix v10
7/306
967
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.
( 212) 805- 0300
A-2800 KA-2800 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
8/306
968
869zkar 1 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2801 KA-2801 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
9/306
969
869zkar 1 Benedi ct - di r ect
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2802 KA-2802 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
10/306
970
869zkar 1 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2803 KA-2803 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
11/306
971
869zkar 1 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2804 KA-2804 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
12/306
972
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2805 KA-2805 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
13/306
973
8697KAR2 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2806 KA-2806 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
14/306
974
8697KAR2 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2807 KA-2807 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
15/306
975
8697KAR2 Benedi ct - di r ect
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 .
23 A. Yes, s i r , I di d.
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2808 KA-2808 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
16/306
976
8697KAR2 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2809 KA-2809 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
17/306
977
8697KAR2 Benedi ct - di r ect
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?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2810 KA-2810 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
18/306
978
8697KAR2 Benedi ct - di r ect
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 ?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2811 KA-2811 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
19/306
979
8697KAR2 Benedi ct - di r ect
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2812 KA-2812 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
20/306
980
8697KAR2 Benedi ct - di r ect
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 .
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2813 KA-2813 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
21/306
981
8697KAR2 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2814 KA-2814 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
22/306
982
8697KAR2 Benedi ct - di r ect
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?
11 THE WI TNESS: Yes.
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2815 KA-2815 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
23/306
983
8697KAR2 Benedi ct - di r ect
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2816 KA-2816 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
24/306
984
8697KAR2 Benedi ct - di r ect
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 .
5 THE WI TNESS: Yes.
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 - -
12 THE WI TNESS: Yes, si r .
13 THE COURT: - - because of st orage probl ems or
14 what ever .
15 THE WI TNESS: Yes.
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2817 KA-2817 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
25/306
985
8697KAR2 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2818 KA-2818 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
26/306
986
8697KAR2 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2819 KA-2819 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
27/306
987
8697KAR2 Benedi ct - di r ect
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?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2820 KA-2820 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
28/306
988
8697KAR2 Benedi ct - di r ect
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2821 KA-2821 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
29/306
989
8697KAR2 Benedi ct - di r ect
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2822 KA-2822 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
30/306
990
8697KAR2 Benedi ct - di r ect
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 ?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2823 KA-2823 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
31/306
991
8697KAR2 Benedi ct - di r ect
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2824 KA-2824 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
32/306
992
8697KAR2 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2825 KA-2825 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
33/306
993
8697KAR2 Benedi ct - di r ect
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 .
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2826 KA-2826 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
34/306
994
8697KAR2 Benedi ct - di r ect
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2827 KA-2827 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
35/306
995
8697KAR2 Benedi ct - di r ect
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 ?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2828 KA-2828 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
36/306
996
8697KAR2 Benedi ct - di r ect
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 ?
4 A. Yes, s i r , I di d.
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?
24 A. Yes, s i r , I di d.
25 Q. And what di d you t el l hi m, i f anythi ng?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2829 KA-2829 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
37/306
997
8697KAR2 Benedi ct - di r ect
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 .
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2830 KA-2830 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
38/306
998
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 .
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2831 KA-2831 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
39/306
999
8697KAR2 Benedi ct - cr oss
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2832 KA-2832 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
40/306
1000
8697KAR2 Benedi ct - cr oss
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?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2833 KA-2833 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
41/306
1001
8697KAR2 Benedi ct - cr oss
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?
7 THE WI TNESS: Yes, si r .
8 THE COURT: I s t hat bef or e - - i n t he spr i ng? Al l
9 r i ght .
10 THE WI TNESS: Yes, si r .
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2834 KA-2834 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
42/306
1002
8697KAR2 Benedi ct - cr oss
1 al l owabl e and what wasn' t al l owabl e, cor r ect ?
2 MR. EVERDELL: Obj ect i on.
3 THE COURT: Obj ect i on sust ai ned.
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?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2835 KA-2835 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
43/306
1003
8697KAR2 Benedi ct - cr oss
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2836 KA-2836 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
44/306
1004
8697KAR2 Benedi ct - cr oss
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.
24 MR. EVERDELL: Obj ect i on.
25 THE COURT: Obj ect i on sust ai ned. When you st ar t wi t h
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2837 KA-2837 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
45/306
1005
8697KAR2 Benedi ct - cr oss
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?
17 MR. EVERDELL: Obj ect 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 ?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2838 KA-2838 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
46/306
1006
8697KAR2 Benedi ct - cr oss
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?
19 MR. EVERDELL: Obj ect i on.
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2839 KA-2839 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
47/306
1007
8697KAR2 Benedi ct - cr oss
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?
7 MR. EVERDELL: Obj ect i on.
8 THE COURT: Obj ect i on sust ai ned.
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?
11 MR. EVERDELL: Obj ect i on.
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2840 KA-2840 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
48/306
1008
8697KAR2 Benedi ct - cr oss
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2841 KA-2841 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
49/306
1009
8697KAR2 Benedi ct - cr oss
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2842 KA-2842 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
50/306
1010
8697KAR2 Benedi ct - cr oss
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.
9 MR. EVERDELL: Obj ect 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 ?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2843 KA-2843 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
51/306
1011
8697KAR2 Benedi ct - cr oss
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.
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2844 KA-2844 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
52/306
1012
8697KAR2 Benedi ct - cr oss
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 ?
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2845 KA-2845 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
53/306
1013
8697KAR2 Benedi ct - cr oss
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 ?
17 A. Yes, s i r , I di d.
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)
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2846 KA-2846 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
54/306
1014
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 .
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2847 KA-2847 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
55/306
1015
869zkar3 Benedi ct - cr oss
1 Q. She was wear i ng mul t i pl e hat s f or CASI , corr ect ?
2 MR. EVERDELL: Obj ect i on.
3 THE COURT: Obj ect i on sust ai ned.
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 .
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2848 KA-2848 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
56/306
1016
869zkar3 Benedi ct - cr oss
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 ?
9 MR. EVERDELL: Obj ect i on.
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
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2849 KA-2849 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
57/306
1017
869zkar3 Benedi ct - cr oss
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 ?
24 MR. EVERDELL: Obj ect i on.
25 THE COURT: I ' l l al l ow t he quest i on. I ' d l i ke a t i me
SOUTHERN DI STRI CT REPORTERS, P. C.
( 212) 805- 0300
A-2850 KA-2850 KA-
-
7/28/2019 12-2297 Karron CoA Appendix v10
58/306
1018
869zkar3 Benedi ct - cr oss
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